Full text of Commercial and Financial Chronicle : March 30, 1950, Vol. 171, No. 4894

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jfi^jtvERSITY

O
,

yuf

ESTABLISHED 1839

OF MICHIGAN

business mmm
LIBKARY

Volume 171

Number 4894

New

Price 30 Cents

York, N.' Y., Thursday, March 30, 1950

Copy [

EDITORIAL

Pensions and Politics

As We See It

By DONALD R. RICHBERG*
.Former Chairman, N. R. A. Board

lead labor unions from economic to political
gram, with socialised suicide the end of the road.
ways

The President has felt it necessary to interrupt
an

of his party members in Congress on behalf
the Administration's plan for foreign aid.

There

those, doubtless, who will feel that the

are

President over-argued his case—or as a matter
of fact begged the question—-in this "warning"
to

Congress and the country. "These measures,"
he/says, "are not acts of charity. Neither are they
of the

waste

resources

of the United States.

least in broad outline.

■

pro¬

•

earners.

His

lifelong

attitude was
resolution adopted in

At the close of 1949 and the opening of
Was

quite

cisely^ any amount at all) deducted from what

casters

enacbnent, excepting insofar, as regu¬

that 1950

in the past, again declares
that the question of the regulation
of wages and the hours of labor
should be undertaken through trade

Of course, the

Donald

apparently envisaged by the Chi^f Ex¬

ecutive.

marily

marshal

public support in such
of

members

hesitant

the employ¬
ment" of women and minors, health
and morals; and employment by Fed¬
eral, State or municipal government."
or

govern

Congress and the Senate

*An address by Mr. Richberg- before Pension Conference, Chamber
Commerce of the United States, Cincinnati, Ohio, March
29,
Mr. Richberg is a member-of the law firm of Davies, Richberg,

1950.

Beebe, Busick & Richardson, Washington, D. C.

■.

Continued

page

to page

TAXES

FEDERAL INCOME

TOWN

TURN

EXfiMPT FROM ALL PRESENT

page

yield .95%—1.75%

{When, as and if issued)

construction

with

and

Members New York Stock

Exchange

\ 40 Wall Street, New York 5
CHICAGO

BOSTON

such

will¬

are

renewing their assurances

as a

whole will match the

prosperity of 1949

or even the some¬
higher level of 1948. Only a

what

few days ago, I read in one promi¬

business magazine: "A bust iri
1929—simply is not in"

nent

Franklin

Funds,

the cards in the foreseeable future.
bust are lacking now.

A Mutual Fund

Lo« Angeles

„

Elements of

Continued

page

Canada

upon request

PREFERRED STOCK FUND

nrm?

iHIV

THE NATIONAL CITY BANK

INCOME

CANADIAN BANK

OF NEW YORK

UTILITIES FUND

OF COMMERCE

(BALANCED) FUND

Prospectus

request

Head Offices Toronto

FRANKLIN DISTRIBUTORS, Inc.
64 Wall Street,

New York 5

Bond Dept. Teletype:

NY 1-708

New York Agency:

Distributors of

Stocks and

Municipal

and

20 Exchange PL

Bond Department

bonds & stocks

bonds

ESTABLISHED 1891
MEMBERS NEW YORK STOCK

Grporahoti

Denver

Buffalo

IOS W. ADAMS ST.

NEW YORK

CHICAGO

Dallas

Toledo

New

England

Public Service Co.
workout situation

IRA HAUPT & CO.

Teletype NY 1-702-3

WHitefcall 4-8161

Exchange
Principal Exchanges

Members New York Stock

and other

40 Exchange Place, New York 5, N.Y.
115 BROADWAY

Chicago
Columbus

Dokihiox Securities

EXCH.

CLEVELAND
Cincinnati

THE CITY OF NEW YORK

Booklet available for

(Incorporated)

New York

<dr- ■*institutions and Dealer»

Goodbodya Co.

1899

NATIONAL BANK

An interesting

OTIS & CO.
Established

THE CHASE

Francisco Lm Angeles

CANADIAN

Canadian

BOSTON

Monthly Commercial Letter

COMMON STOCK FUND

Ill Devonshire Street

Chicago

Business outlook is for relatively

Corporate Securities

New York

Nourse

Address by Edwin G. Nourse at 14 th ArtnualCentral States
Group' Conference, Investment Bankers Association of America,
Chicago, March 29, 1950.

across

inc.

Underwriters and

Prospectus from authorized dealers or

550 Branches

Custodian

Massachusetts

VAXCK, SANDERS & CO.

Edwin

business—a

2 for this week's participants and their selections in the CHRONICLE'S
"Security I Like Best" Forum.

v-V'

Investors Trust

this year,' ther^|

of prosperity seem to be "in the;
bag." While in some quarters, notes
of caution are being sounded as to
the second half of 1950, other fore¬

Seattle Portland, Ore.' San

the part of the
consumers that another three months

ingness to spend

BOND FUND

White,1WelmCo.

State and

1.60% Bonds
April J, 1953-69

harmonious chorus of optirristic forecasts;

Montclair, N. J.
Due

made

ing effort of partisan socialists to convert trade unionists
Years later I

into line.

Prices to

not

to their economic and political theories.

to force

a way as

Richberg

and

Gompers fought bitterly and successfully the continu¬

President's letter is pri¬

political appeal doubtless intended to

activity,

lations affect

conse¬

quences

uniod

:the President's advisers in their wisdom have set
"minimum" would entail the

read:

"The American Federation of La¬

bor,

1950. Now, the first quarter is closing on. a note of j
prosperity practically up to the level of the forecasts!?
In spite of some drag as a result of
strikes, it appears that we shall' enter
the second quarter with; a good mo¬
mentum of activity in such
basic*
areas as coal, steel, autontiobiles, and

subjects of laws through legislative

'
{

for

expressed in

the convention of 1914 which

)
Above all, stresses as crucial the gov^v.
ernment's fiscal and monetary, operations as the crucial
r
factor in our future.
I

Unfortunately for the President's effectiveness,
hbwever, there are those who would call into
question, at least in part, some; of the President's
underlying philosophy, and certainly there will
be; a, good many who will raise their eyebrows
oyer, the claim that a half-billion dollars (or if
one is to interpret the President's position pre¬

/»

pension plans.

definitely opposed to government
regulation of working conditions,
even
in. the interest of the wage

of $2.8

ing labor's political power.. He was

down

pdugictl of Economic Advisers

(1) the ^injection" stimulating current prosperity in form
billion G. i. insurance premiums; (2) the support
from unprecedented increases in instalmentscredit, and;
drawing-down of wartime savings;. (3) tremendous increase in mortgage credit; (4) vulnerability of supported
farm commodity market; (5) poslponabilily of further
capital goods expansion; and (6) national sweep of

Mr.

Some, thirty years ago I had arguments with Samuel
Gompers qver the political policies of - the American
Federation of Labor, of which he was the guiding genius.
It seemed .to me that he was unduly fearful of develop-

They are, indeed, the keystone of our protection
against the destruction of another war and against
the terrible weapons of this atomic age." Now,
of course, if all this is literally true, there could
be no argument about what must be done, at

Chairman,

While depicting the fundamentals as strong, Dr. Nourse
cites the following fac|dri as "gravely disquieting"—

Richberg offers following pension observations: (1) oldage dependency cannot be solved by industrial pensions
alone; (2) single employer pensions are inadequate pro¬
tection;/(3) charity should be met by self-supporting
taxation; (4) government's present insurance premium
technique constitutes embezzlement; and (5) government
should use pension taxes to purchase pension insurance
from private insurance companies.
' /

urgent appeal

one

Former

Former New Deal official holds socialist guides will al¬

Foreign Policies

•

The Basis of Current Uncertainties About
*

By EDWIN G. NOURSE*
«•

his "vacation" in Florida to send

American business in 19S0

lit

Broadway, fh Y. 6

WOrtb 4-8000

Teletype NY IdNI

Boston Telephone:

Enterprise 1820

■

THE

(1306)

MARKETS

TRADING

The

Pacific G. & E. Rts. & Stock

COMMERCIAL

A continuous forum in

which, each week,

in the investment and

Cincinnati G. & E. Rts. & Stock

participate and give their

1920

There is

12® Broadway, New York 5

best

Teletype NY 1-583

BArclay 7-5660

Goods

Corporation
Established

exceptions

Partner, Jesup & Lamont, N. Y. C.

(Capital

for

and

the

issue

one

guilty

all

Not

shown

construction.

seems

industrial

stems from

ties than it is

planners to

him

Members
New

York

Stock

Exchange

New

York

Curb

Exchange

2,800

The

issues
on

the New York
Stock

Edward

and

Carpenter

Exchanges alone.) Further¬
more, the widely accepted prin¬
ciple of diversification in all port¬

American Air Filter Co.
Common

The only sound basis for secur¬
ity analysis is comparison.
The

American Turf Association
Common

stock

BANKERS BOND E

Incorporated
1st

Kentucky Home Life Bldg.

Floor,

LOUISVILLE

Long Distance 238-9

KENTUCKY
Bell Tele. LS 186

one

company

should be

the

whole do

not

provide at¬

BUY

tractive

SAVINGS

U. S.

Irving McDowell,
McDowell, Dimond &

Company

During the acute depression of
the 'thirties, capital goods
activity
was
below normal, and the en¬

suing

commitments.

war saw

production

BONDS

tary.
an

machine

mid-1949,

are

virtually all heavy

diverted

After the

war

unprecedented

A good

MARKETS
have

far

indicator

tember,

1946,

reached

which

WURLITZER
■

eight

However,
that to

common

"• *

nance

all

companies

sense

These

dictates

well

will

industrial

any

depressed
not

expendi¬
extremely
(And this task
eased
by the rigid
save

highly

arose

demand

for

came

N. Y.

activity
$171 million,

was

the

1939

than

monthly

about

Telephone WOrth 4-5000

as a

result of deferred

Activity
cyclical

generated is
and
eventually
so

must exceed the demand.
;

Teletype BS 259

;

this

peak

times

clearly

Tel. CA. 7-0425

amount

demand.

high of 1946 incorporated consid¬
erably inflated construction costs,
ithe greatest part of this
upsurge

148 State St., Boston 9, Mass.

broad,

very

aware

are

organized

The

future

all

primary

indus¬

Crown

prevent

Since the 1946 peak, industrial

succeeding month, with but two

government
a

that
to

its

and

■

continued de¬

the demand' for capital
instigates a general reces¬
sion, I believe that capital goods

41% June 30
May 27
June 23
Cities Service
72% May 31
Nickel PI. Pfd.139
Sept. 25
Park & Tiiford. 42%

Skelly Oil

.109

Booklet

Puts

and

275.00
275.00

350.00
650.00

Calls

Request

Filer, Schmidt & Co.

Members Put & Call
Dealers

Assn.,

Brokers h

30 Pine

St., N. Y. 5

Inc.

WHitehall 3-9177

Winters & Crampton

and

Atlantic City Electric

market

ap¬
ap-

pekr

Harshaw Chemical

Philadelphia Electric Common

very

ties

other company whose securi¬
are

listed.

The

history of the
Crown Zellerbach Corporation has
shown
,

that

the

management

Continued

page

Allan Wood Steel Com. & Pfd.

Indiana Gas & Water

Philadelphia Transportation Co,

;

Mercury
Insurance Co.
on

Issues

Henry B. Warner & Co., Inc.

Members

123
>

National

Assn.

Securities Dealers

South Broad St., Phila. 9, Pa.

Phila. Telephone

BEnnypacker

Bell System

5-2857

New York City Tel.:

Teletype

771

BOwling Green 9-4818

N. Q. B.
OVER-THE-COUNTER

INDUSTRIAL STOCK INDEX

Request

11-Year Performance of

SECURITIES

OLIVE

162.50

250.00
262.50

Richfield Oil..

preciation

Report

509

request

10% Sept. 30 $137.50
137.50

Araer.Tel&Tel. 152% Oct.
2
Richfield Oil.. 38% June 10
Amer. Distilling 37
June 26

a n

MUNICIPAL BONDS

Analysts

SPECIAL PUTS OFFERED
Northwest Air..

dend rate

CAROLINA
INVESTMENT

300.00

Pipe. 47% June 20 350.00
Railway 33% Aug. 18 375.00

increased divi¬

goods

Stix & Co.

June 30

Pan. East.

pros¬

o r

Bought—Sold—Quoted

Richfield Oil.. 42
South.

price,

the

pects

any

cline

current

American
NORTH and SOUTH

The corporation is as well di¬
power
of the consumer appears
to be well entrenched and on the -i versified in the paper
industry as

to New York Canal S-161M

(PLUS TAX)

average

not

Bought—Sold—Quoted

STREET

35 Industrial Stocks

■F. W.BOOKLET

ilPWM &

3®* South La Salle St., Chicago
YekRAndoIph

CRAIGIE&CO.

COMPANY

6-4696

Tel. CG 451

RICHMOND, VIRGINIA
Bell System Teletype: RH 83 & 84
Telephone 3-9137

ST.Lomsl.Mo*
.

MEMBERS

MIDWEST

STOCK

EXCHANGE

143

MagnaYox Co.. 20% May 20 $137.50
Radio Corp.
17% July 3 200.00
Con. Edison
31% Sept. 30 225.00

2904

SPECIAL CALLS OFFERED

secur¬

market

rise.

Tele.

Enterprise

Hartford, Conn. Enterprise 6800
Open End Phone

likely.
Also,
income
this security is
which was approximately $1,200
not only suit¬
in 1920, has risen to $3,500 today.
able for indi¬
This trend is continuing,, as evi¬
Joseph Andrews
vidual h o 1 ddenced by higher wages, increased
ings but also is eligible for pur¬
social security,
unemployment in¬ chase
by trustees and insurance
surance, hospitalization and pen¬
companies
sions.
In short, the
purchasing
the

In*.

undervalued

the realm of possible government
action in the future, ;the fact re¬
that

Me.

Dealers

10, Mass.

selection

appears

doles

reoccurrence

2-5500

The

this

ity

anything approaching the per¬
sonal privations of 1932.
Beyond

Whether

construction has declined in each

the

Securities

Cor¬

stock.

for

incapable
of supporting the boom in capital
goods, however, it does not follow

mains

HUbbard

reason

numer¬

Zellerbach

common

government is

any recession

Assn.

Portland,

security I like best for the

poration

VIRGINIA—WEST VIRGINIA

bonds

Tel.

(Crown Zellerbach Corporation)

the

will

Nat'l

75 Federal St., Boston

ob¬

are

and

that there

Since 1932 Specialists in

Mexican Railways

J. B. Maguire & Co., Inc.

Members

level.

structure in these the most

wage

there

\ of normality and that, the record

non¬

utilities

and

classifications

viously

tries.)

have been below various
concepts

request

appeal

remove

underwrite

mili¬

average of $21 million.
Despite
the fact that the latter
figure may

analysis available
on

less

for investors than consumers'

tool

speak of a "correction" rather
that a depression in any. industry.

the

capital goods
trends is supplied by the level of
industrial construction.
In Sep¬

TRADING

sec¬

companies

However,

branch offices

our

Wood, Investment Counsel,
Louisville, Ky.

Satisfying this de¬
mand
has
understandably
re¬
that its efforts will not be more
sulted in
record-breaking expan¬ effective in other areas.
It ap¬
sion, modernization and retooling. pears certain that in the event of

Revised

Direct wires to

of the capital
goods (among which I include airlines)
on
the whole present better op¬
business,war-created
backlogs
than
steels,
nonare
rapidly becoming a thing of portunities
ferrous metals,
coal, machinery
the past.
manufacturers, farm equipment,
It is more fashionable nowadays
building supplies and railroads.
to

tures

capital goods.

Richard

—

NY 1-1557

Mobile, Ala.

Partner,
Co., Providence, R. I.
Glidden

Exchange

New Orleans, La. - Birmingham, Ala.

Co.—J.

ance

major swings from ous
only after it has been
exceptions on both sides of
the
cyclically
inclined
capital the
compared with numerous other
fence, not to mention impor¬
goods industries, we must first
ventures in
the
tant industries I have by default
same
industry. abolish
wars, which give rise to
left on the fence, such as automo¬
Therefore, the work of the ana¬
backlogs, followed by abnormally
lyst is given considerably more
biles, oils and chemicals.
Some
high production, and finally the
direction when he realizes that a
may
disagree with the conclu¬
inevitable recession which is apt
sions I have reached.
study of industries per se is a
Neverthe¬
to permeate the entire economy.
vital
prerequisite
to
less. I believe such an approach
individual
Some economists believe that gov¬
to the problem of
security selection.
In this con¬
security selec¬
ernmental expenditures directly,
nection I am going to limit
tion is more provocative, if seem¬
my
and credit policies indirectly, will
observations to industries—more
ingly less profound, than isolated
keep the economy, including the
specifically, to two broad indus¬
praise for one issue.
capital goods industries, moving
try classifications.
at a
fast
rate.
Despite its in¬
At the present time, and for
JOSEPH ANDREWS
creasing importance, in the na¬
the foreseeable future, I believe
Hooker & Fay,
tion's
economy,
I question the
that the capital goods industries
San Francisco, Calif.
ability
of
the
government
to

Preferred

chosen

Kentucky Stone Co.
,

precludes the necessity for
seek "a favorite
security."

one

costs

Stock

St., New York 4, N. Y.

HAnover 2-0700

Massachusetts Bonding and Insur¬

segments

Curb

folios

whom

York

New

25 Broad

industry is
durable goods and services.
Food
an
example of a capital goods
and drink processors, containers,
industry currently enjoying a re¬
tobaccos, drugs, retail stores, fi¬
covery after a premature decline

than

listed

are

Tel. REctor 2-7815

Members

Co., New York City.

ondary considerations.

know.

(More

Steiner, Rouse & Co!

Cowin,
Hettleman &

Dept.,

ried out at the behest of economic

humanly
possible
for

120 BROADWAY, NEW YORK 5

Research

component.

securi¬

frfcPONNELL & CO.

Foote Mineral Co.—Daniel

industry relatively
assured of its limited return by
regulatory commissions; and pub¬
lic construction is obviously car¬

working
knowledge of

Since 1917

Bought—Sold—Quoted

con¬

government support of mortgages;
public utility construction demand

im-

Louisiana Securities

Consumers

vs.

Carpenter,
Partner,
Jesup
Lamont, New York City.

Ap¬
40%
of residential
is
dependent upon

construction

* *}

Goods and Services—Edward N.

industrial

Other types of

proximately

Capital Goods

the

rather

De¬

struction, in fact, are currently
singles out doing far better, although these do
especial praise is 'not reflect the forces underlying
the economy as accurately as does
•

plying

and

—

Joseph Andrews, Hooker & Fay,
San Francisco, Calif.

capital goods industries

valuing
h i s
analytical
ability,
but

Rights & Scrip

1948,

ti"

Alabama &

Participants and

Crown Zellerbach Corporation

cember, 1949, stood at $68 million,
drop of some 60%.t

much of over¬

Specialists in

particular security.

Li* I

Their Selections

who

man

for

not

Forum

of experts

group

decline

security I like
It

have established the definite

Services)

one

future.

that the

Consumers

,vs.

for favoring

reasons

Members, New York Stock Exch.

New York Hsnseatic

■

different

Thursday, March 30,; 1950

This Week's

advisory field from all sections of the country

EDWARD N. CARPENTER

NET PRICES

CHRONICLE

Security I Like Best

Pacific Tel. & Tel. Rts. & Stock

Southern Pacific 3/60 & Rights

FINANCIAL

REQUEST

Peter P. McDermott & Co.
Members New York Stock Exchange
Members New York Curb Exchange

44 Wall Street, New York 5
Tel. DIgby 4-7140

Tele. NY 1-1817

National Quotation Bureau
Incorporated
46 Front Street

New York4, N.Y.

.Volume 171

THE

Number 4894

COMMERCIAL

FINANCIAL

CHRONICLE

(1307)

INDEX
Article* and New*

Page

American Business in 1950—Edwin G. Nourse

____.__Cover

Pensions and Politics—Donald R. Richberg

Under the Havana Charter

Cover

Price of Full Employment Under the Havana Charter
—Edward D. Wilgress

The Growing Demand for Common Stocks—Robt. S. Driscoll—

Citing failures of British Labor Government

Sources of Investor Information—George F. Shaskan, Jr._____

of "full

Where Are We and Where Are We Going?
—Sumner H. Slichter

By EDWARD D. WILGRESS

Devaluation—Six Months After—August Maffry

Outlook for Profits in 1950—V. Lewis Bassie

Outlook fr International Trade—Thomas R. Wilson

11
It

Bankers' Growing Responsibilities in Instalment Credit
—F.

Raymond Peterson

bunked

Instalment Credit in the Months Ahead—William F. Kelly-..,- 13

ment"
<

ing

Herman W.
i

5 h

Commerce

dream

Batt Takes Issue

With Views Expressed by

Heilperin

Dominican

Cuban

Bank

Sugar

Republic

Bad?" Discussed

President

Television—!——"

"Aggression"

Denies

structural and

■

fiscal

9
<

tion spells out

____—„13

Montreal

Comments

Canada's

U. S. and the Sterling Area—

Trade

the writing on
the wall—for

With ; - '
17 !

Gap

———

Iceland's Krona Rate Changed-

Prices

———

unemplo.y-4

ment

Rising Industrial Activity
era! Reserve Bank

Eastern Seaboard Noted by Fed-

must

Thus

of New York-

shortly

will

entire

Business Outlook for 1950 Is Good, Says Garfield V. Cox

mentation.

Report Life Companies Buying Corporate Stocks

Guaranty Trust Co. Discusses Farm Price Mess
The

Depreciation

Problem

Analyzed

Home Loan Bank Reports Over $6 Billion Savings in 1949

Cars-

to Buy and Lease

fundamental issue in the

making election that

Regular Feature*
See

Bank

and

Business

(Editorial)

Insurance

Man's

Canadian

—;

Cover

—

Stocks

Bookshelf

Dealer-Broker Investment Recommendations

Einzig—"Fall in the Price of Gold"
Indications

of Business

Bargeron

Activity.

—

News About Banks and Bankers.—

Observations—A.

Wilfred

Public

Security

*
,47

Utility

—

Securities.—

Securities

„

Salesman's Corner

Securities Now in

45
23

Railroad Securities

The

Offerings

——

Registration

Security I Like Best—.

Tomorrow's Markets

2,,k

The State of Trade and Industry.

(Walter Whyte Says)

Washington and You

—

1 y

brief, now that
blueprint has

the Keynesbecome
re¬

clarification of the economic

5
38

vitally

the

significant.

public

has

For

nomic

available this week.

Published Twice Weekly

The

COMMERCIAL

FINANCIAL

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

been

hopelessly

descending

woes

CHRONICLE

S. Patent Office

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

WILLIAM B. DANA COMPANY, Publishers

REctor

2-9570

9576

WILLIAM DANA SEIBERT, President

.''

•

the

under

post

the
'/

office

Act

New
March

■*

Every

vertising

Pan-American

Other

of
Canada, $38.00 per
Countries, $42.00 per year.

Thursday (general news and ad¬
issue)-and' every Monday, (com¬

year.

Other Offices!

Chicago

HI.

135-South

(Telephone:

Salle

State

St.,
0613);

Other Publications

Bank

and

Monthly,
$25.00 per year. (Foreign postage extra.) <

upon

bring

culmination of

in Britain that
consequence

remain un¬
months

are

the inevitable

socialist

woes

Quotation Record

the rate of exchange; remittances'for for¬

eign subscriptions and advertisements must
made

New

York

funds.

California.

;

Analysis of this Company And
a

review of the Cement IflduO- *

try available on reqti&t..

Selling about

CO. *

Investment Securities

II Post Office Square, Boston I, Mill
Tel. HUhbwd 2-1990

TDAntDC A complete

I KrtUtnO

"THE CHARTCRAFT METHOD

"The

hopelessly burden¬
budget,
the
intolerably
tightened consumption and import
controls, the further debauching
of the pound, diminishing dollar
aid and a widening dollar gap, the
frustrated expedients of an unwieldly,
harassed
bureaucracy.
Gradual paralysis will overcome
a

•

nation—even

the

unable

now

concise and

easily redd
practical method that
slock mat ket trading to a

most

book

reduces

mechanical science."
6x9

(10

For

97 pages,

t'
/

copy,

from,

: ;

PRESS

potential corporate financ¬

buy the raw materials needed to

ing consult

keep her industries going — and
seemingly sudden, swelling unem¬

our

"Securities

Registration"

sectiotf.

ployment will spread throughout
the country.
Nor can this next
crisis be camouflaged by the same
old

excuses

cocky,

back

the

her aspirations towards

multilateral trade by at
least 20 years.
Just glance at the
Charter's employment articles:
freer,

;

Article
•

prosperity

defines

Continued

page

WHY MISS ORE
when

you can

Covering the financial market
telling

cials, professional

security buyers

investors

Exchange

New York Stock

HAnover 2-4300

rely

Chicago

baftk-*

and institutional

—

and individual

The New

newspaper

York
they

upon.

»' Members New York Curb Exchange

York 4 ; 50 Congress Street, Boston 8
! ■ "'
Hubbard 2-8200
Teletype—NY 1-5

Albany

Times... the

Spencer
Members

your story to

investors. You reach all: kinds

PREFERRED STOCKS

25 Broad Street, New

reach all?

ing executives, corporation offi¬

High Grade Public Utility and Industrial

GlenS Falls'

;

Schenectady

;

Street, New York 1, N. Y.;

complete record of

;

100 descriptive

over

WILLIAM-FREDERICK
313 W. 35th

day return privilege).

inches;

charts

The very skeleton of the economy
seem to fall apart under the

impact

TEXT ROOK!

OF POINT AND FIGURE TRADING"

will

some

$9.ZS

LERNER &

policy.

interested in offerings of

Note—Oh account- of the fluctuations In

(common) STOCK

leading producer of cement
fast-growing Southern

the

few

Union-,-$35.00 per year; in

Dominion-

plete statistical issue — market quotation
records, corporation: news, bank clearings,
state and city hews, etc.)v
*
w
*

are

S.
of

..Thursday, March 30, 1950
'

economy

the' next

Subscriptions in United States, U.
•Possessions, Territories' and Members

WILLIAM1 D. RIGO S, Business Manager'
'

condemned

fact, if the present trends in
British

will

the jargon of so-called

Subscription Rates '

HERBERT D. SEIBERT, Editor & Publisher

who

second-class matter Febru¬

8,1879.

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

CLASS B
A

■

Company
as

RIVERSIDE CEMERT (0.

means

WE SUGGEST

upheavals—

and

Reentered

Reg.

baffled by

C., Eng¬

set

world, and even more hopelessly
",

WHitehall 4-6551

crushing

numerous

and urgent problems to be met.

scene

years,

confused by the succession of eco¬
*Not

propounded by
a
doctrinaire parliamentary
majority.
With the continuing crisis in
by the tragically disappointing reBritain,
the
Havana
Charter,
results
of its performance.
Its drafted
by socialist governments,
succession „of
failures
can
no
will be presented to the Ameri¬
longer
be attributed
solely to
can Congress for approval.
If, as
temporary war dislocation
and
the
Administration 4 hopes,
the
disruption, for the myriad highly Charter is
ratified, the United
complex economic situations ' of
States will have condoned the evil
the. immediate post-war period
series of events culminating in
are greatly simplified today. This
economic disaster.
She will have

Our Reporter on Governments.

balance

ality in England, it is no longer
to be judged by the dazzling lit¬
erary brilliance of its author, but

May

Our Reporter's Report.

Prospective

ian

6
40

—

——

eternal

difficulties—the ruinnationalistic commercial

code of the Havana Charter.

—

Funds

From Washington Ahead of the News—Carlisle
Mutual

o u s

Coming Events in the Investment Field

and

payments

marks

swing to the right. Simi¬

strictions

——

Securities

history-

now

larly "full employment" was thd
crucial question in the ill-fated
ITO debates, where employment
slogans—"more jobs than applica¬
tions," "steadily increasing aggre-;
gate demand," and the like—hood¬
winked American delegates into
accepting permanent trade
re¬

George Romney Predicts Rise in Auto Demand and Credit— 33

forgotten, has been La¬
bor's paramount objective, and a

Freight

government's errors were judged
reactionary,
maladjusted
pessi¬
mists.
Today
their
so-called
theoretical predictions are the real

checked,

The resolution

Dept.

NEW YORK

economists

the

Britain's

remained

economic

our

For

they're

Large Appreciation Potential

crisis, the convertibility
fiasco, the repeated restrictions of
imports, the failure to achieve, or
even
inspire, real European co¬
operation — has been overridden
by the Labor government.
Of
course in many of these instances,
an
elemental
historical
change
could partially explain Catastro¬
phe; so that the electorate was led
to accept partial explanation for
the-whole.
In that process, the
government's role in deepening,
extending
and
prolonging
the
Crises by their own immortal folly
Was overlooked by many, and the
few ' clear
sighted,
courageous

settled,

never

——

experi¬

of this issue will be of great mo¬
ment. "Full employment," it must

—————

Equitable Life Assurance Society

socialist

economic debates.

Frederick Shull Heads Connecticut Division of Gold Standard

for

Thus will

-—

despite

employment, long the most bitter

Industrial

League

employ¬
shattered, and

National

Conference Board

brief

Government

also the verbal polemics over full

its head.

rear

"full

myth be
it, the Labor Government's

with

Purchasing Agents Report Rapid Recovery From Coal Strike- 22

the

ment"

N. Y. State's Quota of New Savings Bond Drive Announced— 21

Bad, but True! (Boxed)

Wilgress

economy the government has pro¬
moted and maintained,

Edward

policies lie the seeds
of depression/ In the
maladjusted

—

Labor's

frustrated

Allan B. Kline Warns Against Government-Guaranteed Farm

Irving S. Olds Explains Steel Price Increase—

reforms

Since devalua¬

Against

WALL STREET,

Telephone:

fuel

the

fun damental

Foreign Dollar Reserves in 1949-—9

Labor

become idle

so,

Obsolete Securities
99

confusion, alone, explains,how

cession

undertake

babies!

and, .trumpeting failures.
It is remarkable that such* a suc¬

govern¬

market?

t
that

bonds

fallen in price and

the

stocks

own

experts, who could not speak the
layman's language..
Indeed, this

defeats

you

have

very

American

office

ris¬

seas

The

"Big Business—Good

employ¬

sinking fast.

L.on ITO

"full

was

disaster is

Steinkraus to Address New York State Chamber:

Reports No Drain

than

sooner

the

de¬

ment's failure

-t

for

socialism's

may

thatbuoyed up
omy

Estimate Hour's Work Doubled in Purchasing Power Since '14

Contends

Britain's econ¬

Babson

claims

even

thought,

Productivity Under Free Enterprise—Frederick C. Crawford-- 18
At Forty the Worker Will Be "Over-Age"—Roger

looks

now

prosperity

The Next Five Years in Export Trade—John F. Chapman

unchecked, its

remain

economy

delegates to
Havana Conference were hoodwinked by "full employment"
slogans into accepting ITO Charter, and if Charter is approved
by Congress it means condoning events leading to economic
disaster. Concludes relaxing of trade controls is impossible if
"full employment" principle in Charter is carried
through.

Banking and Business in the So-Called Welfare State
The Current Utility Scene—Donald C. Cook

British

skeleton will be shattered.

—Roy L. Reirson__

FALLEN IDLE

destroying myth
employment" doctrines, author maintains that if pres¬

trends

ent

THE

'All the News That's Fit to

Print"

Worcester
wtSmmSA

COMMERCIAL

THE

(1308)

From

The Growing Demand
For Common Stocks

ever,

FINANCIAL

experience,

own

tell

can

that

you

CHRONICLE

Sonrtes of Investor Information

sub¬

portion of this sum does
represent new money and, in my
judgment,

the

percentage

By GEORGE F. SHASKAN, JR.*

the

Partner, Shaskan & Co., Members New York Stock Exchange

total growth which represents new

will

increase

Thursday, March 30, 1950

how¬

stantial

money

By ROBERT S. DRISCOLL*

time

lecture

investors, Mr.

women

passes.

Pension

Mr.

Driscoll

maintains

important institutional changes have

(1)

grow

stocks;

common

such

(3) rising

(a) premise

on:

soundly based

strongly

pension
the

lators. I should like to discuss the

first two of these in

kets. This is such

Open-End Investment Companies

broad subject,

to add, that I
not at¬

familiar

detail.

end

fully. I
going

the

of growth

to
all

make

has been

the

net

market

stock

assets

every

total

mately

prising

that

from

Robert

Driscoll

net

important to our economy over
important

approxi¬

were

It is not

billion.

total

the

assets

companies

increased

stocks

common

acceptance

man" rule

the

"prudent

by trustees and legis-

by Mr. Driscoll before Gradu¬
ate School of Banking of Rutgers Uni¬
versity, at Biltmore Hotel, New York
City, March 18, 1950.

WALL

STREET

NEW YORK 5, N. Y.

1949 when uncertainties about the
outlook

existed

the

minds

generally

was

low ebb.

Further evidence of the

public

interest

growth

investment

stocks. I know of

going

are

one-third

be in

may

plans

—

who

there

stock

own

Dec.

1949,

31,

shareholders.

will not

hand, tjhere are some
pension funds already in existence
which

have

centage

that, the

moment

will ob¬

you

share¬

average

holder in these funds has

equities.
though we

Even

adequate
would

in¬

slightly under $2,500.
relatively low figure will

This

that

you

responsible for
most of the growth.
I

think

are

that all of

will be

you

primarily interested in the amount
of money which is being directed

are

companies, as you
obligated to repurchase

demand

Thus,

during the

The

the

and

in¬

the

sales

repurchases

year.

increase

net

funds

between

owned

the

available

new

1941

was

increase

crease

I
York

New

Exchange

Chicago
'

Exchange,

Board

New Orleans Cotton
And

other

Trade

Exchange
'■

by the public, but

that

over

the

growth

are

several

open-end

good
years

invest¬

ment companies will
average $200
million to $300 million a
year.
I wish that I could
give you an

this growth represents

PITTSBURGH

GENEVA, SWITZERLAND

investment

accurate estimate of how much of

NEW YORK 4, N. Y.
DETROIT

purchases

figures that the chances
the

N. Y. Cotton Exchange Bldg.

CHICAGO

$182

You may not be as optimistic as
am
about the outlook for in¬

company shares

Inc.

Exchanges

$226 mil¬

I think you will agree from these

Commodity

was

of $278 million.

creased

Exchange

Cotton

York

Curb

amounted

1946, it

lion, $178 million in 1947 and $146
million in 1948. The year 1949
topped all records with a net in¬

Members

New

'.....

in¬

have

not

believe

that,

guess

sizable

money to the market

statistical

estimate.

fair assumption

the next

over

that

several years most

union

members

has

estimated

employed
been

never

research

Never¬

that

into
us

in¬

officially

by the unions.

some

have made
to

this problem in¬
that of the total

Commercb at $132 billion, ap¬

proximately $50 billion
to union employees.
Since

new money

coming into the equity markets.

Unfortunately, there

are

reli¬

able records kept on this
subject

the

cost

was

most

paid

pension

funds in the initial stages is esti¬
mated at 6% of wages, I think it
is

fair

that

say

the

early

least $3 billion a year
paid into pension funds.
10% of this $3 billion figure is
$300 million which may be avail¬

years

will

able for common stock investment
each year.
I want to say

again that in set¬
ting up this figure we are making
no
more
than a rough estimate.
You may disagree with me as to
the percntage of pension funds to
be invested in

equity securities and

the

$300 million guess which I
have made about the size of this
annual

agree

net

Exchange

fair

think it is

ever,

million. In

Stock

statistics,

subject

not commence until 1945 when the

York

per¬

assets

each year.
The amount of money to be
paid
into pension funds each year is

only $8 million. Large growth did

New

total

vested in

vestment of

DIgby 4-2727

large

very

for

open-end funds,1

made

their

new

H. Hentz & Co.

stocks at all.

use common

On the other

salaries and wages for 1949, which
are estimated by the
Department

Referring back

difference

1856

much

to the $2 billion of total net assets

crease

Established

use

percentages: Some funds

dicates

approximately 850,000

were

stockholders.

Exports—Imports—Futures

stocks. Other

the

for

funds

union

know,

Liquid

pension

companies lies in the number of

Refined

the

common

call

smaller

banks that

some

administer these
that as much as

feel

common

shareholders

end investment

SUGAR

who

funds

employees will be covered
by pension plans. The number of

through
investment companies. The open-

—

around

de¬

its

fiscal

year,
and the
earnings and ex¬
during that year. Recently,

statement of its
penses

bal-

invested

magnitude will produce

to the investment markets

Raw

end

center

port—its

will

flow of

small investors

which

important

that this growth should have con¬
tinued in the years 1947, 1948 and

immediately suggest

LAMBORN & CO., Inc.

also gives us the cor¬
poration's balance sheet as of the

most

several years in the past.

and indicative of the future trend

serve

*A talk

tools

re¬

theless,

ing

nual report

certain

financial

shareholders.

vestment; and, four, the increas¬

curities
use

rive

their portfolios; three, the grow¬

stocks for in¬

We now turn to the second prin¬ ministration is
enlightened,
cipal section of our course—find¬ whether it appears to be interested
in
its stockholders,
ing and
understanding
sources
etc.—factors
used in the analysis of securities. which will reflect sooner or later
To analyze sein its securities' prices. The an¬

corporation's

many of them will provide
equity investment. •
One can only speculate on the
percentage of pension funds that

ing interest of life insurance
common

maga¬

brokerage .house studies. Depicts advantages,
faults, and omissions, in each medium.

for

dustry

panies in

with

are

these companies. On Dec. 31, 1940,
there were approximately 300,000

com¬

months

Common stock investment of this

wartime

ness

inclusion

the

market, but it is remarkable

stock

early
of

in
prospect:
one, the growth of open-end in¬
vestment
companies;
two,
the
growth of pension funds and their

any

had

average, 10% of the pension funds
will be invested in common stocks.

the

influence

investors and the securities busi¬

are

have

people
responsible for setting up
pension funds lead us to believe
who

sur¬

the next 20 years. Four

developments

six

last

investment

Nevertheless,

that

and

40's under the
rising

during
Institutional Changes

n
Instead, I should like to call
your attention to certain institu¬
tional changes that are occurring
in our equity markets because it
seems to me
these changes will

open-end funds in
the end of 1949,

assets

investment

now.

in the total

year.

months
year

$450

increase

will be six
or

assets

million. The
total assets of this group declined
by approximately $50 million fn
1941. But since that time, there

forecast of
where

total

had

approximately

equity invest¬
ments, nor am
I going to try
to

funds

ment

facets

this

with

associated

industry. It has had a rapid rate
in the last 10 years. At
the end of 1940, open-end invest¬

describe"

cause

tempt to cover
it

ground

talking about the growth of openinvestment
companies
be¬

will

not

the

available

included

plan.

services material, the trade journals, the financial

that

I hasten

may

amount

make

equity

not

discussions

today deals with the
theory of equity investment and
the outlook for the equity mar¬
a

will

that

should

bonds; and (c) growth in
real value of equities and their relation to market prices.

some

the

about

they

sory

zines,

any

for equity
investment must be
tentative. I know that many seri¬
ous students of the problem
feel

versus

My talk

development that

new

funds

serious depression is unlikely; (b) wide dif-

ferential in yields on stocks

conclusion

participation of life insurance companies in equity investment;
and (4) increasing acceptance of "prudent man" rule by trus¬
tees and legislators.
After citing long-term bullish factors,
concludes current increased interest in stocks is

Funds

investment companies
for q
moment, the creation of
pension funds on a broad scale is

develop¬
h of open-end investment companies; (2)

pension funds with inclusion of

discusses

appraising securities, including the
annual report, company prospectuses, Stock
Exchange listing
reports, reports of "insiders" transactions, statistical and advi¬

Leaving

taken place in equity markets because of following
ments:

Shaskan

various tools available for

Partner, Lord Abbett & Co., Investment Managers

increment.

that

with

money

the

equity

source.

time, there are
approximately 12,000 pension
plans
registered with
the
In¬
plans

cover

Department. These
excess

of 4 million

people. The amount required to
be paid in each
year for these

pension plans is
Since there

over

billion.

are

million people

approximately 40
employed in indus¬

try, there

can

question but

that

the

into

pension funds

amounts

few years are

money

paid

the

over

going to be sizable

and that the figures which I have
estimated may prove, to be far
too conservative.
..

The

ents.

described.

We-

the

shall, study
these

tail

growth, in

the

Continued

.assets

bia is

"F* Shaskan»Jr-

But while

financial

re¬

ports most frequently tell us about
what has occurred

what

the

past

condition

present

be, they sometimes
tle

can

tell

may

lit¬

the future which may be
equally important or even more
important in appraising a security

page

briefly

have just

begins

and

1949 of

System
by

listing

directors

the

subsidiary

holding company. It then
highlights important fig¬
1949.

for

ures

At greater

length,

it describes the company's activi¬
ties
in
1949, including the tre¬
mendous

overall

demand

for

na¬

tural

gas, the company's efforts
discover new sources of gas,

its successful acquisition of greater

gas supplies,
and its expansion.
Moreover, while the Plans for the immediate future
financial
are
reports re¬
reviewed and the company
flect many of the important fac¬ tells of its
program to bring na¬
tors influencing business and eco¬ tural
gas to Baltimore, the Central

correctly.
figures in

nomic conditions, we cannot learn
what these factors specifically are
from
such
figures
and
conse¬

Hudson

The

Valley
and
elsewhere.
then shows how the

report

has

company

quently must also look elsewhere number
for
in

of the information

some

analyzing securities.

other information
and

where

formation

find

can

will

now

reduced

the

total

of
employees
despite
increased
business
but

greatly

Just what how average wages have increased

make

used

use

this

from

some

while

our

occupy

in¬

have

attention.

The Annual Corporation Report

$1,500 to almost $3,000

benefits

other

than

wages

jumped from under $100 to
than $300.
The report com¬

ments

the dismissal

law¬

suit

against the company in the
The first great repository for corporation's favor, the need for
information is, as we might ex¬ additional financing to meet the
pect, in the reports issued by cor¬ company's growing business, and
porations themselves.
Most cor¬ the increase in the number of
porations issue an annual report, stockholders in the company, who
which

generally

includes

some

they

are

and how much stock they

discussion of the important factors

own.

relating to the corporation's busi¬
both past and future.
Such
discussion may include considera¬
tion of the general economic pic¬
ture, the important activities in
the industry in which the corpora¬
tion
partakes, and, specifically,

financial statements for the year,

ness

how these

are

poration's

own

outlook

for

its

to the

cor¬

activities and
own

the

business and

and
ous

The

report closes with the

comparison with previ¬
years' figures.
some

While all annual reports are by
no

means

this

complete

serves

amount of

this

one.

to show the extensive

information carried in

such reports, most of

which is im¬

portant to an adequate analysis of
securities.

earnings.

The report may com¬
ment on specific steps taken by
the corporation during the past
year to

what
the

improve its business and

plans

ensuing

are

contemplated for

year.

Some

picture

will

usually be given of the cor¬
poration's relationship to its em¬
ployees, including the number of

employees,
wages,
and
employee programs such
sion

plans,

half

the

special
as

pen¬

hospitalization,
law

suits,

if
or on

etc.
any,

be¬

will be
commented on. specifically as to
how
such
suits may
affect the
affairs of the corporation.
New
financing plans, if any, will be
described and the reasons given
for such plans.
Usually, an an¬
nual

Intra-Year

the

;

corporations listed on an
exchange also issue semi-annual
reports and some even quarterly
reports which briefly present the
type
of
information
given
in
greater fullness in the annual re¬
port. These are important because
they provide information rela¬
tively more up to date so that we
can
have a current appraisal of
the
corporation's activities and
standing.

corporation

renort will comment on

Reports

Most

Prospectuses issued by corpora¬
tions

are

connection with

new

fi¬

have already seen,
also important sources of in¬

nancing,

as we

formation.

pectus

Turning to the pros-'

issued

Consumers

in connection with

Power

Co.'s

new

fi¬

nancing, we find an extended re¬
corporation's stockholders, their
port of the company's business,
number,
average
shareholdings,
including
the
territory
served
and such other interesting items
with electricity and gas, operating
as
their location, occupation, etc.
statistics
for
previous \ years, a
All of this information is im¬
description of the corporation's
portant in attempting to assess property., and
franchises, regula¬
whether the corporation is grow¬
tion as a utility, employee rela¬
ing or stagnating, whether its ad- tions and other information with
♦Transcript of part of the fourth lec¬
of a series on "Investment Planning

ture

f^r

Women," griven under the au^oices of
ShasVan & Co., at^ the Hotel Barbizon,
New York City.
The subsequent sessions
will
s'm'farlv
he
published
in
the
"Chronicle"—-Editor.'
*
\
1
<

respect to rates bearing on the
company's business and earnings.
The

prospectus also includes a
description of the stock issued,

officers

for

operating companies since Colum¬
'

later

lectures.

Gas

company, and names of

con¬

siderable d

Columbia

figures

report for

illustration of what

against the corporation

that

new

present

ternal Revenue

annual

profit

and loss state-

thought

markets from this
the

This

financial

the

its

Important

substantial amount of
is going to flow into
At

how¬

annual reports have also included

sheets

a n c e

and

of you will dis¬

one

the

1 think,

from

Continued

on page

—-

Volume

171

Number 4894

FINANCIAL

COMMERCIAL

THE

T-1XUT

/^TTn/-\TVTT/^T

/ioii\

CHRONICLE

(1309)

Where Are We and

Steel Production

The

Electric

the

industrial output for the nation

191,234

cars, or an increase of

period

year

whole moved into

coal production

rose

145,384

However,

ago.

cars above the corresponding
slight decrease of 744 cars was

noted

below the preceding week this year.
Steel production last week registered full

recovery from the
coal strike with the ingot rate rising to 95.5% of
capacity, the
highest since the week of April 11, 1949.
Production increases
were quite general
throughout the country the past week.

High-level

steelmaking

operations

assured

are

for

going?

war

boom

or a

But trade authorities expect

catching-up period
when demand
was

tons,

largest

was

cold

field

output

made

the

This

...

would be

sum

now

pay

terms

same

the

■

headway

and

latter

cur¬

half

of.

s—

"self-

The

peak

occurred

1948—in

third quarter in the case of

in
the

prices

production. During the catching-up period, between 1945 and

civilian

1948,

employment

in¬

creased nearly 6

million, or about
11%, and the wholesome price
level and the price level of con¬
sumer
goods each rose by more
than half.' In the preceding six

wholesale prices rose by a
little, more Jhari one-third and
prices of consumer goods a little

years,

less than one-thirds (Table I.)
'

The Slow Downward Drift

peak in the post¬
employment,
pro¬
duction, and prices : have been
slowly drifting downward. ; Be¬

it added.

1949,

the agency

similar month

and

prewar

in the

1949
the

1940.
OUTPUT

SET

96.7% OF CAPACITY—HIGHEST IN

OVER A YEAR

company

working
more

spring brought a swarm of buyers into steel
offices, according to "The Iron Age," national metalweekly.
They had a common objective—to wheedle

tonnage from

From

all

producers.

predictions made earlier this year on
demand may have been too con¬
servative.
Where steel producers formerly were talking terms of
a somewhat softer market after the second quarter, the thinking
the

duration

appearances,

strong

leans toward

steel

strong third quarter, and perhaps beyond that.
frankly they don't know when it's going to
But the accent is on optimism—the negative thinkers are

now

Some steel people say

end.

becoming harder to find.
One of the big reasons for the optimism among steel peoDle
this week is the apparent soundness of the market.
Most con¬
sumers

This

have had little opportunity to build up heavy inventories.
cited as one reason why demand is less likely to take a

The upsurge in conversion deals and the entry

sudden nosedive.

small consumers into these

relatively

evidence supporting this belief.
As is usual in

talk

business

are

cited

tight market, producers are finding it easier
consumers who had formerly done their

with

buying from other mills.
>

arrangements

This means that when demand
Continued,

eases

npage

the fourth

than

10%

of
of

below

peak of August, 1948 and the
of
consumer
prices was

down
war

about

3.4%

from

the post¬

peak.
far

Thus

transition

the

catching-up

economy

from

based upon current de¬
proceeded
rather

economy

has

mand

The first days of

was

The index
at the end

1949.
prices

;

the
STEEL

index

■

of 58

running

184 in December,
private investment

biliion

$35

wholesale

According to Dun's Failure Index, which relates casualties to

above

rate

1940.

operation, there were 35 failures for
10,000 active businesses in February.
This rate was slightly
the previous February's 30, but
below the prewar rate

Gross

quarter

the number of businesses in
every

been

dropped from an annual rate of
$48 billion in the fourth quarter
of 1948 (the peak to an annual

slightly in February, dipping 6%

200 less than in the

stood

1948,
1949.

of 1949, the rate of increase appeared to be slack¬

some

had

in the last months of

around 200

ening. Although more concerns succumbed this February than in
any other February since 1942, they were 100 fewer than in that
year

which

put,

While casualties exceeded the 685 which occurred

to 811.

De¬

declined

and

1948

dropped from 59.4 million to 58.6
million. The index of factory out¬

daily overtime and six-day operations,
♦

failures

December,

cember, 1949 civilian employment

said.

Business

the

boom,

tween

Corp. is settled, industry production totals are likely to shoot to
record levels, Ward's said.
Chrysler's plans call for daily overtime
and a six-day work week for a schedule of 42,750 cars and trucks
weekly, 25% more than the corporation turned out in its record
in

Since

war

United Auto Workers' strike against Chrysler

This schedule calls for

May's column

"catching-

Steinkraus to Address
N. Y. State Chamber

Of the drop of $13

smoothly. Indeed, the smoothness
of the transition has been it3 most

annual
to

other

little

address

by Prof. Slichter before
Industry Supply Association,

billion

year

$1.5 billion a year.

there

words,

was

very

investment ex¬
H. W. Steinkraus
James G.
Blaine^.
penditures on plant, equipment,
and
housing.
Personal incomes
Herman W. Steinkraus, Presi¬
decreased only a little more than dent of the Chamber of Commerce
3%, from an annual rate of $216.6 of the United States, will be the
in

drop

billion in the last quarter
to

of 1948

guest
speaker at the monthly
meeting of the New York State
Chamber of Commerce on April

$210 billion in the last quarter

1949, and expenditures on con¬
goods fell only a little more
than 1%—from an annual rate of
sumer

6 at 65

last

o'clock

Doubled in

The period of transition from a
catching up economy to a cur¬
rently-supported 'or a self-sus¬
taining economy is not over. Dur¬
ing the year 1949 the demand for
goods was sustained by a large
catching-up demand for automo¬
.

housing.

■

Estimates Hour's Work

Catch-Up Period Not Over

and

noon.

1949.

December,

biles

Cb.

Blaine, President of the
local chamber, will preside at the
meeting
which
will
be
at: 12

has caused some increase in

output

and

James G.

unemployment—from 1.9 million
in December, 1948 to 3.5 million
in

Chairman

Board

President of Bridgeport Brass

The transi¬

quarter of 1949.

tion

Liberty Street. Mr. Stein¬
*is

kraus

$180.9 billion in the fourth quar¬
ter of 1948 to $178 billion in the

new

the number of

Indeed^ the

Purchasing

Power Since 1914
Conference

Industrial

National
'

Board

study shows in last three
decades factory workers wages

automobiles and

•

twice

rose

much

prices.

housing starts

new

all, records.
PurchasingT power of an hour's
There was also a large amount of work almost doubled from 1914 to
public construction that repre¬ 1948, according to a study on what
sented the meeting of accumulated sn hour's work would buy in 1914
broke

1949

The

demand.

•

pentrup_ demand for

and 1948 which has

automobiles and housing is likely
sustain

the

level

general

eventually drops,
decline in the total
goods. Can the tran¬
sition from catching-up economy

and

housing

there may be a

demand for

substantial
and

based on current
completed
without
drops in production

economy

demand

What can be
transition

employment?

done to assure that the

will

smooth

that

and

will

unemployment

Living

•

almost

standards

every

area

increased in
of family ex¬

penditure, the Board found, and,
as
a
result,
"the
1948 factor#
worker had to work only about
half the number of hours that the
1914 worker did to pay

the family

bills."

severe

avoided?

just been com¬

pleted by the National Industrial
Conference Board; This, the Board
notes, is because the average fac¬
tory worker's wages rose twice as
much as prices.
-

production for some months more.
When the demand for automobiles

Although the 1914 wage-earner
over
51
hours a week,

worked

What is the short-run outlook for

"some other member of the

the

had

after the transition
to an economy based upon current
demand
has
been
completed?
What is the long-run outlook for
the
economy?
What significant
economy

trends

long-term
Are basic

visible?

are

changes occurring in the

economic institutions of the coun¬

These are some of the ques¬
on which my remarks will

try?
tions

additional

earn

family

income"

supply the average amount of
and
services.
The
1948

goods

worker

had

work

"only 34
his family with

hours" to supply
the

higher

was

considered

living

standard that
in 1948,
according to the study.
<
The

average

Average Factory

Worker,

1914 and 1948

attempt to shed a little light.
In

from

Dairy

annual rate of

lation of inventories to reductions
♦An

rate

reduction in inventories at an

the

quarter

accumulation of inventories at the

important characteristic.
The ad¬
justment that has occurred thus
far has been brought about in the
main by shifts from the accumu¬

Inc., Chicago, March 17,

investment

fourth

during

social

ingly, the offer stated.
This proposal and what goes with it in improved insurance
and contract provisions, Chrysler pointed out, make it all the
more senseless and inhuman for 89,000 Chrysler employees to be
kept out of work for any issues in this strike.

week

i»^

between the
of 1948 and the
fourth quarter of 1949, $10.5 biljlion represented a shift from the

private

security benefits increase, the deposit would be reduced accord¬

When the CIO

>,'|i

billion in the annual rate of gross

and the fourth quarter in the case

than sufficient to fund pensions for

continued.

the postwar boom

the

by stating the company
in a fund to back its good faith,
pensions for life to its employees

contract

upon

rent need

life, at the time of retirement, to people who retire in the next
five years of a pension contract.
If the contract is not renewed,
the remaining deposit would be used to fund, as they retire,
the

de¬

develop¬

ment

Prof. S. H. Slichter

•

pensions for other employees in the order of their retirement

demand

goods

the

'30s

largely

U. A. W. union to end the 8^2-week strike

$30,000,000

and

pends pretty

■

would deposit

the

for

the
past week, notwithstanding the continuing strike at Chrysler
Corp., an important segment of the car and truck industry.
The
advance of course was of very modest proportions.
On Saturday, last, Herman Q. Weckler, Vice-President and
General Manager of Chrysler Corp., made a new offer to the

ability and willingness to
as they retire.

during

period when

sheets, 711,813
■

further

war

sustaining economy."
-i ■

that

accumue

the

*
-

the-automotive

the depression

record.

rolled

being watched closely, with cutbacks in steel needs being anticipater in event General Motors plants are struck.
To what extent
consumers' anticipated forward requirements earlier in the year
is uncertain, the magazine adds.
January mill shipments of fin¬
ished steel, it notes, however, totaled 5,482,691 net tons, largest
Movement of

large

needs

had
l

purchasers, while pressing for deliveries of cur¬
rently tight-supply products, are placing new orders cautiously,

year.

volume

this trade paper states, and are apprehensive of being caught with
large inventories.
Labor developments in the auto industry are

April last

supported

Industrial

since

are

letdown until well into

where

making the
period of post¬

We.

transition from

second

position, uncertainty for business after midyear

summer.

in transition from postwar

we are

and

are,we

Increasing number of sheet sellers, oversold for the period, are
temporarily withdrawing from the market.
Despite the strong
persists.

available this week.

not

in inventories.

Where

quarter, "Steel" magazine currently states.
Producers will enter
period with large order backlogs, especially in light, flatrolled products.
Overflow tonnage from first quarter will be
substantial.
Shipment delays will continue to be experienced.

market

..ft

the

current

A. Wilfred

up" period to a current-need "self-sustaining" economy wherein
employment and production drift slowly downward.
Con¬
cludes (1) supplies, particularly of agricultural products, will
become more abundant;
(2) production costs will rise;
(3) deficits will cause slow hesitant price level rise; and
(4)" increasing costs will worry businessmen - into expanding •;
technological research.

than three times the low level of the similar 1949 week.
week ended March 18, 1950, coal
loadings amounted to

♦. »•<!

Professor, Harvard University

Lamont University

Dr. Slichter states

moderately higher ground the past week
For

.»>.,»

Business Failures

-J
Total

Going?

By SUMNER H. SLICHTER*

Auto Production

Industry

•'

"OBSERVATIONS"

Where Are We

Commodity Price Index
Food Price Index

and

|d.

■n

Output

Carloadings
Retail Trade

State of Trade

-flr

1914, the study shows, the
factory worker spent 51.5
hours on the job. He received 25

average

Can Avoid Further Drops
believe

that

the

transition

cents

hour

amounted
a

catching-up economy to a

self-sustaining

can

page

economy

Continued

i950.

and

total

$12.72

earnings

per

week.

However, the study points out, he

required $16 per week to support
his family.
The deficit of $3.28
per

week

had

made

Dec.

through 14 hours of work by other
members of the family in order to

1945

1948

1949

1948

1949

make ends meet.

105.8

165.1

154.9

162.4

151.2

1948,

TABLE

1939

Index of wholesale prices,
Index

sumer

100

prices

goods,

99.4

The peak of

reached

45.7

wholesale prices

128.4

52.8
was

171.2

59.4

169.3

58.7

171.4

59.4

168.6

58.6

in August, 1948, when the

169.8, and Of the consumer prices in August and

^September, 1948, when this index reached 174.5.

factory worker in

other

the

hand,

spent

the job and received

weekly pay
per
week;
required to support his
family and a surplus of, $9 peij
$1.47

1935-39 =

___

average
on

39.7 hours

con¬

Employment (millions)

index

The

77.1

1926-100

hour.

amounted

$49.52

His

$58.52

was

week remained for

provement of the
of his family.

•

savings

or im*

living standard
^

COMMERCIAL

THE

(1310)

FINANCIAL

CHRONICLE

outstanding fact, however, is that
the rise in imports began before

Devaluation—Six Months After

devaluation—in August, to be ex¬
act—and

By AUGUST MAFFRY*

the

increased exports. Holds devaluation has had little
impact on
U. S. money market or gold movements. As to
foreign trade,

pectation of the devaluation of
sterling and other currencies.
Devaluation was preceded and

contends, though full effects

followed,

imports have not yet been felt,
there is some shifting of demand for
foreign goods. Ascribes
recent weakness in U. S.
exports to import restrictions and to
higher prices of American goods in devalued currencies. Fore¬
sees

therefore, by increased
imports in terms of dollar values.

had

much

the

pound

sterling and numerous other cur¬
rencies is now six months behind
At the time of these devalua¬

us.

tions

and

for

and

such

ports

the

reversal

delays in
purchases and payments for ster¬
ling-area goods accounted for half

several weeks

afterward,

deficit

there

million

was

the

reduction
from

dollar

the

of $500
first three

average

during
the
quarters of
1949 to

lot of opin¬
ions expressed

nothing in the fourth quarter.

regarding the

this

effects

deficit of the sterling area not ac¬

de¬

valuation

United
trade

o n.

trade

the

countries

annum.

amount of

had

assistance

extraordinary financial
being received by
Kingdom, chiefly in
of receipts under the

now

devalued.

the

United

confess

the

form

having

con¬

tributed

•

Marshall Plan.

•share. Now, however, six months
after the event, we can do with

fewer opinions and
Let us,

•

the

therefore, reexamine in

light

available

evidence

of the statements

some

the

facts.

regarding

effects

devlauation

which

.were

current last Autumn. The
first two of these statements fall
in the field of finance, most of the

others have to do with the effects
of devaluation upon trade.

it,

(1) At the time of devaluation
was generally
stated that the

■devaluation of sterling would
rest but not
stop the drain

sterling-area

reserves.

ar¬
on

mat¬

ters turned out, British
holdings
of gold and dollars increased
from

Sept. 19 until the end of the year
by nearly $350 million, and early
in

1950

that

Sir

they

Stafford

Cripps said

still

were

The next official

increasing.

report

duction

25%

and

June

ascertaining
since

the

what

first

has
the

year.

Sir Stafford's figures made
pub.lic in January show that

dropped

to $31
.an

million,

compared with

average deficit of $500 million

during the first three quarters of
Receipts by the United
Kingdom under the Marshall Plan,
drawings on the Canadian credit
the year.

in favor of the United
Kingdom,
and drawings by Australia on the

International Monetary Fund to¬
taled $294 million
during the last
quarter. Hence, reserves increased
during this period by $263 million,
that is, to the extent of $294 mil¬
lion less the dollar deficit of
$31
million.

According to the official

state¬

ment, the factors involved in the
reduction

the

sterling-area

•dollar deficit in the fourth
quarter
Of 1949 as compared with the
pre¬

ceding quarters

the

lower
are

have

whether

valuation

imports
in

cuts

dollar

not appear until late

may

1950.

factors

These

monetary

sterling

provement

indicate

significant

the

trade

im¬
the

with the dollar area,
renewed drain upon British re¬
must

Plan

For

Effort of Devaluation

anticipated

assistance

the time

re¬

being, how¬

It
the

remains

ling

.second

dollar
area

sterling were apparently
importance.
Increased

exports

were

the

from
least

terms

the Marshall Plan.

the dollar deficit of the
sterling area may be approxi¬
mately offset by receipts under and
A second

observation

gen¬

hence
lower

by Mr. Maffry before the
Get-Together
of
Export
Managers Club of New York, New York
City, March 21, 1950.
Annual

the

imports,
maximum

that devaluation would

tion.

significant impact on the
United States money market. This
opinion has to be qualified in the

time

have

light of the facts.
of

funds

lowing

out

The movement
the

devaluation

market

fol¬

measured

any,

demand

presumably

was

erally made at the time of deval¬
was

stimulus,

prices

uation

for

shortly after devalua¬
will

It
goes

diminished
a

result

the

rise in costs of production in the
of

area

devaluation.

Whether

foreign producers have yet taken
full advantage of their improved
competitive position in the Amer¬

by increases in the deposits of ican market is another matter and
foreign central banks and other is not susceptible of statistical
official

agencies

Federal

Re¬

Banks and by sales of gold
to foreign central banks and treas¬

verification.

serve

uries. Foreign deposits at Federal
Reserve Banks increased by $476

million from the middle of
Sep¬
tember 1949 to the end of the first
week of March 1950.

Sales of gold

$304 million during the same
Thus the movement of

were

period.

foreign funds out of the market
since

devaluation

million.

This

should

has

loss

been

must

in¬

although

not all of it
attributed to devalu¬

the

upon *

One of these

devaluation

would

not

was

for¬

that

result

sharp increase in imports into

the United States.
The dollar value of
imports has
recovered

since

devaluation.

$623 million in January, 1950
compared with $530 million in

means

and

has

been

steadily

the

upward.

trend

The

or,

increase

dollar

would
to

serve

not

ex¬

any

dollar

the

our

British

example,

Kingdom
find that

exports in terms of

ster¬

ling reached a new high level in
January, which is the last month
for which figures are available,
that

dollar

exports

pondingly
to

ports

from

earnings

were

increased.
the

United

not

corres¬

Dollar

ex¬

States

and

January were both
higher than the average levels of
the

third

and

fourth

quarters of

1949 but still below the averages
of the first quarter. The total dol¬
lar value of exports to Canada

the

to
to

increasing

month,

United

but

States

political greed,
State Depart¬

being

coherent

Senator

among

says

foreign policy.

other nations

Nothing

injure

can

the department
than it has in recent

years injury itself.
As an example, last
diplomats abroad were perfectly willing to

our

year

feed
visiting American correspondents on the conduct of
touring Senators and Congressmen, about how their debaucheries
embarrassed them and put us in a bad light before the foreigners.
stories to the

But

after

the

frank

discussion

about

the

homosexuals

the

department developed, Bob Ruark, the roving Scripps-Howard col¬
umnist, decided to write of an experience he had had a year ago
while enroute to Africa.
ment

On the

boat

several

were

State Depart¬

going to African posts.
One, according to Ruark, was
an
alcoholic, two were flagrant homosexuals and they were the
laughing stock of the Arabs and Egyptians on the boat. One of the
homosexuals kept crying at the bar over how he would miss his
boy friend back in the States.
men

Every informed person in town knows that the unwieldy State
Department is a hotbed of intrigue and is stewing in a cauldron of

intellectualism,

highly developed, that it has no relation to
An utterly unrealistic premise is evolved in fev¬
ered minds and other fevered minds take it as a proven fact and
reality

facts.

intrigue around it.

Outside.this

near insane atmosphere, gossip
indignant at Senator McCarthy's charges
of disloyalty, know there are disloyal personnel who
slip them
secrets calculated to belittle their superior or to break
up the
designs of a rival group, an^i these columnists play the game.
'

columnists who

become

Chiefly underlying the department's high indignation against
McCarthy is, as an example of intrigue, its plan to recognize Com¬
China.

Britain

wants to do it, so does our government.
recognition off is what the Republicans are
mainly trying to do in their general attacks on Secretary Acheson.
McCarthy's charges are unquestionably delaying that move. When
it comes, then our "foreign policy" which former
Secretary of State
Stimson and Senator Vandenberg are so solicitous
about, will pre¬
sumably be to "contain Communism" in Europe but embrace it in
Asia.

No, I don't look for the department to be improved until a
Republican Administration comes in and cleans it out from top to
bottom. We would be amazed at how the international tensions
would be relieved.
or

have

Continued

from

exports

tended

page

To put it mildly, there would be more realistic
thinking than the high intellectual and wholly
thinking which we now have.

common

factless
The

sense

outcome

McCarthy's charges, one way or the other,
The best thing to do then is to look
upon the fracas as a sports event, the U. S. Government and its
propaganda legions, versus this one man. Will they get him down,
or not?
They are saying around here that if he just pins one per¬
isn't going to change things.

down

son

out of

all

the

security risk

he has presented, he

cases

wins.
The

seemingly hysterical efforts of his opposition is to prevent

his doing this. It is downright fun to study the moves of the ad¬
versaries. The opening gun of the government
propagandists was
a

smear

McCarthy unmercifully. He was said to have gone to
clergyman and asked what he could best do to get

Catholic

reelected, and to
was

hot

have

one.

been

advised

develops that

that

the

Communist

issue

he doesn't have to be worried

about reelection until 1952.
But regardless of the smears and the wails of anguish and
indignation of those whose names were mentioned as security
risks, McCarthy has kept pounding away, demanding that the

Senate committee be permitted to look at the loyalty files of the

department
servers

take the United

month

and

value

no,

gap of these countries.

seems

1949,

produce

significant,

total

devalued

September

regard¬

ports from countries which have

but

Foreign Trade

statement

would

least,

ac¬

ation.
Effect

valuation

several

Another

ing devaluation, closely related to
the preceding one, was that de¬

$780

significant market

(4)

was

•An address

aotb

imports have been felt. Whether
they have or not depends, I think,
upon whether one is talking about
probabilities or potentialities. In

ever,

the

sterling
important.

whether

seen

full effects of devaluation

eign trade.

ster¬

our

An effort to head this

straight price competi¬
tion, the decline in the effective
dollar prices of imported goods,

(2)

the
Carlisle Bargeron

munist

U. S.

Imports

that,

area

Marshall

or not, are lead,
textiles,
gloves, dinnerware, flower
bulbs, synthetic pearls, and sew¬
ing-machine heads.
!
|
" '
'

affecting British

reserves

there

unless

the

any

into fthe

as
being
by
increased
related to de¬

affected

imports,

area, was the most important
of these elements.
Delayed pay¬

imports

mentioned

seen

seriously

sev¬

instances, the imports repre¬
sent a resumption of imports of
low
priced merchandise from
Japan. Among the lines which I

ments of

dollar

eral

Canada

other

been af¬

tributable to devaluation.

British

from

indicates that the decline

apparently

fected during recent months by
cheaper imports, although not in
every case by cheaper imports at¬

(3) I turn now to a number of
statements having to do with the
effect of devaluation

available

now

sources

dollar prices.
;
domestic lines

some

fabric

ticipation of devaluation. Informa¬
tion

prices.

quantities imported from the
United Kingdom, a principal
source
of
manufactured imports
among countries which had de¬
valued, was not sufficient to off¬

fluence,

lar imports into the
sterling area,
and (3) delayed
sterling payments
which had been deferred in an¬

dollar

later, the increase

see

can

claim it has

some

On the other hand the

effects

counted

decline in dol¬

shall

full

-sterling area, (2)

effective

would be the International Mone¬

(1) an exJ^ansion in dollar exports from the
were

1952.

the United

been

man's

nullified all over the world,
foreign policy is being wrecked?
this way because there is nothing
basically new in the Senator's charges; I am
yet to see the department's effectiveness any¬
where in the world, except the distribution of
American dollars, and its best friends do not

depleted in¬

have

also

effectiveness

our

physical quantity
of imports but at greater reduc¬

tary Fund.

during

the last quarter of 1949 the dollar
deficit of the
sterling area

The
Canadian
Kingdom is
also running out, so that the only
extraordinary existing source of
dollar funds for the sterling area

serves

aid

1950-51, another
reduction in 1951-52,

30,

credit

duced.

means

Plan

ment

the

when

Much larger

must

which

discontinuance of aid after

ster¬

Marshall

substantial

ling -area reserves is not due until
early in April, so that we have no
.happened

there

increase

altar

the

when

quantities
imported at somewhat lowe?
dollar prices.
With re¬
spect to imported manufactures;

There

Looking ahead into 1950 and
beyond, the prospect is for a re¬

ficed

effective

set

Looking Ahead

tremendously grave. How can one be so cal¬
lous when great reputations are being sacri¬

third

quarters of 1949. Im¬
materials went up

ventories.

of propa¬

the

raw

and to fill up

ments

to be the spectacle

come

artists, those on its payroll and those among
journalists, trying to down the Senator and
their seeming inability to do it. It is fascinating.
Oh, how silly, what a small mind to become
so engrossed when the problems raised are so

smear

were

August Maffry

tions

per

gandists and

alone

the

mind the most interesting phase of the Mc-

perverse

becauseof heavier buying to meet
larger current industrial require¬

quarter or $1 billion
This is about
the

per

of the whole United States Government and its legions

move¬

increase

between

imports
fourth

million

which

total

factors must be reckoned at $250

the

guess,

counted for by such nonrecurring

States
and

correct

was

practically

the

fourth

Again according to the official
statement,
nonrecurring
factors
as

CarthyrState Department inbroglio has

imports of coffee

higher prices accounted

for

with

Heavier

ment.

of the News

By CARLISLE BARGERON

It is doubtful that devaluation has

dollar devaluation.

Ahead

increase after Sep¬

tember, that is, after devaluation,
represented
delayed
purchases
which had been postponed in ex¬

finds improvement in British gold and dollar reserves has been
due more to Marshall Plan aid and reduced
imports than to

Washington

upturn in

the continued

Reviewing devaluation effects in various categories, Mr. Maffry

devaluation

From

obviously related to

was

industrial produc¬
tion beginning in July. A part of

Vice-President, Irving Trust Co., New York

The

Thursday, March 30, 1950

that

and

the

FBI.

The

impression

the

unbiased

here is that in this he has the Administration

the

ob¬
run,

has

particularly embarrassed Senators Tydings
and
McMahon, Democrats on the investigating committee, who are up
for reelection this year.

there be

So far

Their mail is crowded with demands that

whitewash.

have

the

situation

of the

Senator

tions and those accused simply denying them.

making

accusa¬

The refusal to turn

up the loyalty files is realized by the Administration to be full of
political dynamite. So it called on J. Edgar Hoover in an effort
to be bailed out.

files

was

out

Hoover testified that to let anyone look at these
the question.
Hogwash!
Let a business man

come down here before an
investigating committee, the first thing
they do is to get his incoipe tax return and dangle it before him
by way of intimidation.

But if the committee

thought Hoover's attitude would squelch

McCarthy they

were mistaken. He came back with another fusil¬
information furnished him by State Department employees

lade

and

paradoxically enough,

the quiet, by the

toughest nut the Administration
time.

has had

deal

FBI.
with

He is the
in

long

Volume

171

COMMERCIAL

THE

Number 4894

CHRONICLE

FINANCIAL

(1311)

associated with residen¬ portant limiting factors in recSiit
Continued strength months, t Employment has been
in automobiles was a further fea¬ maintained at high levels, but new
ture.
employment opportunities are not
Despite all this, aggregate pro¬ developing as fast as the growth
duction in the economy has not in the labor supply and, as a re¬
returned to
the peak levels of sult, unemplbyment has increased.
1948, although admittedly strikes With business brisk, commodity

closely

Banking and Business in the
So-Called Welfare State
By ROY L. REIERSON*

Vice-President, Bankers Trust Company, New York City

months, and consumer credit and

tial building.

real

firmed

have

prices

in basic industries have been im¬

irt

estate
mortgage . debt are
reaching successive peaks. The
rapid disbursement of the divi¬
dend

the National Service Life

Insurance has helped to hold re¬

tail trade at dollar levels not far

Continued

recent

page

After reviewing economic phases of the postwar economy along
with government policies in relation to business and banking,

Mr. Reierson finds there

are potent inflationary pressures caused
by national budgetary deficits, price support programs, and
easy credit policy.
Looks for these forces to prevail and pre¬

New

Issue

dicts decline in dollar purchasing power over

period of years.
real prob¬
involves politicalization of ctedit and

Says steady expansion of government lending
lem for bankers since it

highly competitive banking. Points out, despite its "wel¬

fare state" policy, government cannot
Current-day
in

trends

cardinal
which

appraisals

business
with

reckon

must

$18,000,000

poses

and

importance,

banking

factors

two

tire

neither

Business

Government Action and

4%, 2% and

Activity
The

second

major

international

intervention in gen¬
somewhat
more
predictable, but its impact
is much more difficult to appraise.

situation

The proponents

eral economic affairs, is

The first

these is

mplexity

c o

and confusion.

The

greatly

panded

and

the

that

terest

even

the

Federal

Government

Roy L. Reierson

economic

conditions.

Together,

these

two

factors will have incisive bearing
on
the future course of business
and

banking in this country.

The
The

fairs.

International

Situation

impact of international af¬
on

the

are

which

economy

readily

state of troubled peace

our

preparedness
dominates the scene.

gram

cold

war

record

better

might have been

without

government

the
case, there are some elements of
truth in both positions: in some
respects, government action was
probably
helpful
on
balance,
while in others, it certainly had
a retarding effect. A brief survey
of
our
major postwar business
developments will perhaps clarify
this
question and also indicate
how
government policies affect

Principal and semi-annual interest (July 1 and January 1) payable at the principal office of
The Chase National Bank of the City of New York or, at the option of the holder, at
the office of the Government Development Bank for Puerto Rico, San Juan,
P. R. Coupon bonds in denomination of $1,000, registerable as
to principal only or as to both
principal and interest.
~

has inflated

pro¬

The

Federal

ex¬

opinion of counsel, these Bonds and the income therefrom are exempt from
Government of the United States, or by the government of
Puerto Pico or of any political or municipal subdivision thereof, or by

taxation by the

(

State, Territory, or possession, or by any county, municipality,
or other municipal subdivision
of any State, Territory, or pos¬
session of the United States, or by the District of Columbia

any

Acceptable at

—The American economy

third

phase

its

with

began

the

is in the
de¬

about

developments, how¬
ever, is a futile task. The Ameri¬
can
public does not possess the

demands

for

basic information required for an

modities

were

the

end

sometime

terminated

war

the

second-half of 1948, was a

reconversion,

prices.

rising

period
and
accumulated

shortages

Large
most

major

fed

com¬

These Public Improvement

Bonds, to be issued under authority of Acts of the
Congress of the United States and of the Legislature of Puerto Rico, in the opinion
of counsel will constitute valid general obligations of The People of Puerto Rico,
and the good faith and taxing power of The People of Puerto Rico will be irrev¬
ocably pledged to the payment of the principal of and interest

war-in¬
independent appraisal of the in¬ flated money -supply, greatly
ternational political situation. In increased
public
holdings
of
addition, developments in the in¬ government securities, and sub¬
ternational sphere are largely be¬ stantial
holdings of dollars by
yond determination by the United many foreign countries. The in¬
evitable result, in the face of lim¬
States.
A reasonable working assump¬ ited
production of many - com¬
tion for looking ahead seems to modities, was a rapid increase in
be

that

international

neither

will

conditions

deteriorate

into

world-wide

and

return

peaceful

normal

of 'life.

way

This

portends high levels of govern¬
ment spending
for defense and

guar¬

decline in the ag¬
gregate level of economic activity.
While

this

assumption

great change in the international
situation

seems

reasonable for the

immediate future, it is
not realistic

over

admittedly
the longer term.

Within the next decade

shall

probably

solved
peace

see

two

the

issue

800,000

1953

1.00

phase of our post¬
business history began in the

850,000

1954

1.10

850,000

part of 1948 and continued
into the second half of 1949. With

850,000

second

latter

Peace would make

stimulus to the economy. If peace
should come suddenly, however,

some

the

temporary

aggregate

level

business

activity. The alternative,

would

war,

mean

regimentation

the

another
complete

major

every

1967

2.05

1968

2.10

urgent wants, the supply-demand

1960

1.65

1,200,000

1969

2.10

shifted

position

led

Annual

Mr.

Reierson

Reunion

Graduate School

New York City,

and

March 18, 1950.

the

Confer¬

Banking,

iy4

to be

(Accrued

large Treasury
a result, inflation¬
subsided and ,twere
followed by modest price and in¬
ventory
adjustments.
Industrial

ary

pressures

added)

The above Bonds

peak levels,

near

did

offered when,

are

and if issued and received by us, and

subject to prior sale and approval of legality by Hie Attorney General of
Puerto Rico and Messrs. Mitchell and Pershing, Attorneys, New York, N. Y.

production declined fairly sharply,
but most of the aggregate dollar
measures of economic activity re¬

The Chase National Bank

Kidder, Peabody & Co.

Halsey, Stuart & Co. Inc.

chased by consumers.

Prices soft¬
ened, but significant price correc¬
tions were limited to agricultural
commodities and
materials.
ous

There

few basic raw

was

conspicu¬

absence of credit crises or
or

price

Banco Credito y

and

Stroud &

The third phase of our postwar
of

business
several
came

1949.

activity
factors.

necessary

same

The

The Ohio

upturn

was

sparked by

For

R. W. Pressprich & Co.

Incorporated

Newark

Ira Haupt & Co.
i

Blunt Ellis & Simmons

Hayden, Miller & Co.

Company

Detmer & Co.

Blair, Rollins & Co.

Fidelity Union Trust Company

Company

Incorporated

experience began shortly after the
middle

Ahorro Ponceno

Ponce, P. R.

liq¬

collapse,

Phelps, Fenn & Co.

Bear, Stearns & Co.

Goldman, Sachs & Co.

rates remained low.

Paul H. Davis & Co.

Kebbon, McCormick & Co.

one,

it be¬
restock busi¬

Whiting, Weeks & Stubbs

Martin, Burns & Corbett, Inc. William R. Staats Co.

inventories, which had been
in

the

950,000

com¬

many

buying

address

1,100,000

sumer

Also, high Government

surpluses.

duced
*An

2.00
2.05

1%
1%

changes in

Thirteenth

1965
1966

1,100,000

ence

1,100,000

1.60

down

1,000,000

1.55

drawn

economic institu¬

1.45

1959

ness

our

1957
1958

segment of our economic life. The
tions would be so fundamental

1.35

lead to

deterioration

1.20

1956

uidation

and localities which could

1955
;

1.85%

900,000

money

industries

1.95

@ 100

900,000

production

rise

satisfaction

the

problems

dertain

1.90

1964

1,000,000

1962

900,000

gradual

it might give rise to reconversion

for

1963

Yield

Maturity

the
and

mained

or war.

1%
1%
i3A
1%

$ 950,000

the physical volume of goods pur¬

possible substantial tax reductions
which
could
provide
a
major

1961

1,000,000

prices.

directi9n either of

Due

"%%
1%

950,000

re¬

the

$800,000

Rate

Amount

Maturity

.90

revenues

constitute

Due

.80%

this would

not

Price

Rate

1952

modities.

against

Yield to
Amount

1951

war

these Bonds.

AMOUNTS, COUPON RATES, MATURITIES AND YIELDS OR PRICE

The

foreign aid, close to current rates,
for some time to come. However,
antee

800,000

large scale shooting war, nor im¬
prove to the extent of permitting

security for Public Deposits, eligible to secure deposits of
Savings Funds, and eligible at par as security for
insurance company deposits in Puerto Rico

postwar

velopment. The first phase, which
and

par as

Postal

Postwar Business Developments

penditures and has complicated
our budget situation. To speculate
future

In the

the outlook for the future.

apparent. Our economy shows that
we

year

the

intervention. As is frequently

part of the

proof

tervention. The critics contend

broadened in¬
on

past

efficacy
government planning and in¬

ex¬

the

record

convincing

second

July I, 1951-69, incl.

Subject to redemption, at the option of the Treasurer of Puerto Rico, either in whole on July I, 1955
or
any date thereafter, or in part in inverse numerical order on July I, 1955 or any interest
payment datie thereafter, at 102 if redeemed on or prior to July I, I960, at 101 if redeemed
thereafter but on or prior to July I, 1965, and without premium if redeemed thereafter.

government

Due

economic life cite the busi¬

our

ness

Dated January I, 1950

of an ever-widen¬

participation

ing

unparalleled

l%% Public Improvement Bonds

factor,

new

government

genera tion
ago.

(Insular Possession of the United States)

political and economic future.

was

significant

People of Puerto Rico

abolish business cycle.

require reappraisal of our en¬

business

time, there

continued
the

face

orders.

con¬

Breed & Harrison, Inc.

re¬

the

was a resurgence

building and construction, and
in many consumer durable lines

New

York, March 29, 1950.

Paul Frederick & Company

Pohl & Company, Inc.

COMMERCIAL

THE

(1312)

FINANCIAL

dividends went up

The Current

Utility Scene

Cook

lists

all

utility industry
about

these
sults

first subjected
regulation

was

largely

ago,

years

be¬

been

achieved.

ascribe

consumers.
ized by
Finally
the vestors and
and confidence was restored to a point
"high
1 o w" finance where corporate managers were
of the '20s. The investing in their own securities.
ii

Let

in e r o u s

late figures

some

to the extent of the progress

made.
From Dec. 31, 1935 to Dec. 31,
1949, 696 companies with assets of

bankruptcies

preferred

ana

quote

Dealer-Broker Investment

Dec.

Recommendations and Literature
It is understood that the
to

send

firms mentioned will he pleased

interested parties

the

accomplish¬
operation of the

the

not

Canadian

Bond

Quotations

Bulletin—A. E. Ames
2. Wall

& Co.,

Street, New York 5, N. Y.

arrear¬

major importance to
day-to-day work as
Over-the-counter Index—Book¬
securities analysts, and I want to let
showing an up-to-date com¬
say more about that later.
parison between the thirty listed
in

your

industrial stocks used in the Dow-

Old-Time Tycoon Gone

has

There

been

Jones

another

de¬

five

Averages

and

the

over-the-counter

thirty-

industrial

velopment in this industry which stocks used in the National Quo¬
I want to mention.
The capital tation Bureau Averages, both as
structures and
complicated cor¬ to yield and market performance
porate systems which flourished
in the '20s reflected, in
part, the

eleven-year period—Na¬
tional Quotation Bureau, Inc., 46
over

among

ages

remarkable

showed

stability

the great liepttssion.

operations. In addition to the to their investors, consumers, and to
Motorola, Inc., and Zenith Ra¬
figures just cited, 250 companies the areas they serve. These men dio
Corp.—Eastman, Dillon & Co.,
with assets of $5,470,000,000 have also tend to feel
obliged to con¬ 15 Broad Street, New York 5, N. Y.
been divested
by holding com¬ sider the interests of the public
panies but remain subject to the in every important decision
Utility Stock Analyzer
Tabu¬
they
Act by reason of their relation¬ make.
To the
extent
that
the lation of utility stocks as of April,
ship to another registered holding management
of
any
particular 1950—Geyer & Co., Inc., 63 Wall
company.
company contains such men—and
Street, New York 5, N. Y.

own

1 lm*jK it is

to prove this statement. Kilo¬
hours
genera tea
declined

easy

watt

only 15% from 1929 to 1932, while
in the same period, for example,
the Federal

Reserve

of industrial

—

production fell 47.3%.

We know,

companies,
and

private

Systems Continuing Under

utility

Commission

depreciation

before

taxes

tnat the net oper¬

too,

income

ating

bo..,a

While

in every
year during the '30s than it was
in 1928—a year which itself was
better

greater

was

than

industry's

was

ac¬

tually higher in 1932 than it was
in 1928. The utility industry was
too
important
to
the
nation's'
economy

American Gas &

New

tem

free

branded

enterprise,

the

was

handiwork

that

before

was

the

American
Central

pany

Act

two

the

break

hold ng

create

Southwest Corp.

Gas System,

Inc.

Delaware Power & Light Co.
Derby Gas & Electric Corp.

Interstate Power Co.
Middle South

National

•

New

Gas

Edison

Union

Utah Power & Light Co.
West Penn Electric Co.

operations

and

companies

returned

Electric Co. of Missouri.

Comparable
achieved

results

under

centralized

—

Circular

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

Northern

Pacific Railway Co.—
Analysis—H. Hentz & Co., 60 Bea¬
ver Street, New York 4, N. Y.

Northwest Airlines, Inc.

—

Spe¬

cial review—John H. Lewis & Co.,
63 Wall Street, New York 5, N. Y.
Pacific

Petroleums, Ltd.—Anal¬

ysis—Walston, Hoffman & Good¬
win, 265 Montgomery Street, San
Francisco 4, Calif.
Reading Co.—Complete study—
write

John

Laughlin,

McLaughlin,
&

Mc¬
Wall

are

detailed anal¬

Reuss

Co., 1
Street, New York 5, N. Y.
Also available

of Missouri-Pacific general 4s

yses

of 1975

vs.

Missouri Pacific 5 V2s of

1949; Southern Pacific Convertible
debenture 3s of 1950; a rebuttal to

the Senators
fic

the Missouri Paci¬

Reorganization

Plan; and
study of Allen Industries, Inc.

Republic

Natural

Gas

—

Memo¬

randum—Goodbody
&
Co.,
Broadway, New York 6, N. Y.
Riverside

—

Cement

Co.—N

115

e w

Group

have

choosing,

own

needs and the

the

—Newburger & Co., 1342 Walnut

Competitive Bidding
I

not

competitive
influence

here

talk

biaaing,

corporate
As
you

about

wnich

was

relation¬

may

be said

about it, competitive bid¬
ding has divers.fied .tne manage¬
of

security

Commission's

offerings.

Fifteen to

represents
Walt Disney Productions—Anal¬

ysis—Batkin

Co.,

Broad

Street, New York 4, N. Y.

bution of the company's stock, but
no

ties

Bulletin

—

Corporation,

Aetna

111

Securi¬

Bake

part of

The

Inc.—Re¬

company

grocery

the

involved
from the

of various stockholders.

subsidiaries

Shops,

the

offering coming

holdings

Broadway,

New York 6, N. Y.
Federal

financing
the

Douglas & Lomason Company—, in
Current

The offering

the first public distri¬

company itself, the stock

Tne

Annual

A. G. Becker & Co. Inc. and Mer¬

rill, Turben & Co.

Street, Philadelphia 7, Pa.

the

overcome

irauitional

ships between banking houses and
public utility companies, and its

ment

—

made on March 28 by an under¬
according to its New York 5, N Y.
requirements of its
Columbia Gas System—Analysis writing group managed jointly by

consequent deleterious effects

been

Of Cook Coffee Go.

control

ards
&
Co., 621 South Spring
given operating
Street, Los Angeles 14, Calif.
opportunity of
Public
offering of 101,250
doing its own planning and of
Bankers Trust Co.
shares of common stock of Cook
Circular
hiring
banking,
servicing \ and
First Boston Corp., 100 Broadway, Coffee Co. at $13 per share was
other technical assistance of its"

financing. But whatever else

Wisconsin Electric Power Co.

industry pattern of (a)

Corp.

insti¬

the

designed, in part, to

Co.

The Southern Co.

industry: First,
the non-integrated
systems

Aerovox

•

Service

for

tutions and dealers—Ira Haupt &

has

area.

Philadelphia Electric Power Co.

Com¬

utilities

Co.

England Electric System.-

Ohio

break-up

over

Utilities, Inc.

Fuel

Northern States Power Co.

utility
up

substantial

Public

available

Under the "old

management

intended to perform

company

operating

Co.

surgical

was

major

upon

Holding

Gas

Consolidated Natural Gas Co.

•

the

Columbia

•'

Two Major Surgical Operations

Primarily,

Natural

Co.

Allegheny Gas Co.

processors

built the Bomb.

Electric

•

wild-eyed and impractical Wash¬
ington visionaries, or—and even
worse—college
professors!
But

England

Market Com. Stock

in the finest traditions of

England conservatism, was
bitterly fought by interests stand¬
ing for radical finance. Oddly
enough, the Act, which demon¬
strably was a bulwark of our sys¬

intangible asset
importance.
' 1

early to deter¬

New

Co.—Booklet

A. G. Becker

frenzied
finance.
The
Holding
.Company Act, one of the great
and enduring New Deal reforms,
was soon
forthcoming. The statue,
drafted

too

—

permit it to remain
the tangled web of

ensnared

Railwavs
Analysis—
Zippin & Co., 208 South La Salle
Street, Chicago 4, 111.

regime," by and George D. B. Bonbright & Co., analysis—Lerner & Co., 10 Post
mine precisely which companies
Powers
Building, Rochester
14, Office Square, Boston 9, Mass.
large, financial policy for most of
or systems will remain subject to
New York.
Also available is a brief review
the nation's operating
companies,
the Commission's jurisdiction, it
of the Cement Industry.
whether
they
were
located
in
Amerex Holding Corp.—Report
is estimated that some $6 or $7
Maine or California, was deter¬
—New York Hanseatic Corp., 120
billion of assets (including elecRudolph < Wurlitzer
Revised
mined by a small group of hold¬
analysis — Raymond & Co.,
148
trict gas, and retainable non- ing company executives and their Broadway, New York 5, N. Y.
State Street, Boston 9, Mass.
utility assets) may remain sub¬ affiliated investment
'
bankers in
American Mercury Insurance Co.
ject to the Act after integration New York
City or Chicago. In¬ —Report—Peter P. McDermott &
proceedings have been completed. vestment
banking business of in¬ Co., 44 Wall Street, New York 5,
Present indications are that the
dividual utility companies tended New York.
following systems, among others, to be
monopolized by a traditional
are
likely to continue under the banker.
Avon
Allied
Products,
Inc.—
Competitive bidding was
Act:
then a theory—not a reality. The
Summary and analysis—Hill Rich¬

The

years.

income

gross

managements do—it has

many

ysis—Laird, Bissell & Meeds. 120
Broadway, New York 5, N. Y.

course,

you

Manufacturers Trust Co.—Anal-

—

Inc.,

type of men who then dominated Front Street, New York 4, N. Y.
this industry.
Today, the utility
Puts and Calls—Booklet—Filer,
*9,106,000,000 have been removed tycoon, with his unresponsiveness
Schmidt & Co., 30 Pine Street,
bot.i
electric from the jurisdiction of the Act to investor and consumer
needs, New York
5, N. Y.
operating through divestment. For the most is gone—or almost gone. In his
companies part, these were properties and place a new generation of utility
Railroad
Margins
of Safety—
ana
holding securities of companies found by executives has grown up. The new
Donald C. Cook
Analysis as a test of quality—
c Owipa nies
the Commission to be non-retain- generation
executives
recognize
Barney & Co., 14 Wall
in the '30s were primarily, if not able by holding company systems. the social responsibility of man¬ Smith,
exclusively, auributacne to these Some of the properties divested agement. In varying degrees, they Street, New York 5, N. Y.
financial practices, lor the oper¬ were sold to neighboring utilities tend to be aware that
they stand
Television—A second look at the
ating
electric
ut lity
industry who integrated them with their in a sort of trustee relationship
industry with particular reference
stock

the following literature:

But I

Holding Company Act. The clean¬
Chartcraft Method of Point and
ing up of the industry's accounts Figure Trading — William-Fred¬
and the corporate simplification
erick Press, 313 West 35th Street,
which
has taken place are,
of New York 1, N. Y.—$2.00

process
benefits to in¬

with demonstrable

verely victim¬

Commission

some

ments

re¬
The

the

ences

simplification

corporate

se¬

seen too many of these im¬
provements emerge from confer¬

system

company

industry

had

remarkable

go,

been

increased

1937

have

after
another
emerged from the integration and

mis bas¬

cause

things
have

have

since

better economic conditions.

prophets of confiscation and ruin
were confounded as
one
holding

Federal

intensive

companies, with • $6-$7

the electric

know,

from 1.9 times'

31, 1948, generating capacity of
privately owned utilities has in¬
creased by 42% and generation is
up by 107%.
Of course, much of
this progress must be ascribed to

billion of
assets, still subject to Holding Company Act after completion of
integration proceedings. Expects broader investment in indus¬
try's common stocks. For proper capital financing, he disap¬
proves of too great reliance on retained earnings, and advocates
liberal dividends. Urges "as-you-go-poKcy" instead of bettingon-the-stock market in the timing of stock financing. Endorses
competitive bidding.
'

10.3%

about

Securities and Exchange Commission

Commissioner

stock

preferred

By COMMISSIONER DONALD C. COOK*

Thursday, March 30, 1950

■

While total debt and

2.7 times.

CHRONICLE■

operates through

than

760

retail

"wagon routes" in vari¬

simplification
section.
ous parts of the country.
Operat¬
or
Report to Congress for the fiscal
(b) regional in¬
port—Cohu & Co., 1 Wall Street,
know, many unnecessary holding
year ending June 30,
holding company sys¬
ing company headquarters are in
1949 con¬ New York
companies and other useless but tains a table
5, N. Y. Also available
tems most of which, because of
covering 24 com¬
Cleveland.
The
business
was
expensive corporate entities have
their interstate nature, would re¬
panies whose securities have been are analyses on Foremost Dairies,
been eliminated, and the pyra¬
established in 1921 and has oper¬
marketed at competitive
main subject to the
bidding Inc., Landis Machine Company
Holding Com¬ mided
holding company system is on at least four occasions
ated profitably in every year
pany Act; and second, drastically
during and Winn & Lovett Grocery Co.
becoming as archaic as the Pyra¬ the last five
to
since that time.
years.
The
table
simplify corporate structures
Sales last year
mids of Egypt.
shows the number of
by eliminating pyram'ded holding
Hugoton Production Company— amounted to more than
managing
$18 mil¬
local

control

tegrated

companies,

trick

securities,

and

Financial

excessive leverage. As vou
know,
the ideal in thb letter resoectwas
a

simple,

understandable

and

Health

Tremendously

Improved

Practically

all

underwriters who have been suc¬
in purchasing the securi¬

cessful

ties of

pertinent

ratios

one

these

instance

companies.
was

reflect the

single

only
man¬

Report—G. A. Saxton & Co., Inc., lion, with net income of
$817,499,
70 Pine Street, New York 5, N. Y.
equivalent to $2.02 per share on
Also available

are

brief data

the

405,000

common

tremendously improved ager able to win all securities of¬ Black Hills Power &
Light Co., stock
outstanding. There is no
financial health of this industry
fered
which wou'd inspire investor con¬
by a
particular company Iowa
Southern
Utilities
Co., other
since 1935. More than
class
of
securities;
The
$1,300,000,- over this five-year period.
fidence and permit public utilities
This Northern Indiana
000 of sheer
Public Service
wind, or, as it is manager had not been that com¬
to attract, on economical
company has indicated its inten¬
terms, sometimes
referred
to, "balloon pany's traditional
Co.,
and
Southwestern
Public tion
to declare a dividend of 25
the
banker, and a
vast
sums
of
new
capital juice," has been eliminated from
number
Service Co.
well-balanced

needed

capital

by them

structure

finance

their

uninterrupted growth.
In

relativeh

short

utility property accounts. Ratios
depreciation and amortization

reserves

time,

up
*An

address

Commissions

Cook

hefore N, Y. Society o<
Security Analysts,
New York, March 29, 1950.

from

gross

10.8%

at the end of

all

fixed

property

1948.

charges

1937

went
21.7%

Coverages of
and

preferred

mitted

other

for each

bids

of the

were

sub¬

issues

In only one other instance

24 companies

the

any

manager

chasing

studied

successful

many

Continued

half
on

cents

per

of¬

fered.

was

pur¬

page

the

McDonnell
dum—du

Milk

Pont, Homsey & Co., 31

Street, Boston 9, Mass.

Also available is
randum

share,

payable

about

Aircraft—Memoran¬ June 15, and to consider payments

brief

Hoffman Radio.

memo¬

quarterly

intervals

thereafter.

On the $1 annual basis thus indi¬
cated

the

yield

price is 7.69%.

the

offering

Volume

171

Number 4394

THE

COMMERCIAL

FINANCIAL

CHRONICLE

(1313)

LETTER TO THE EDITOR:

The decline, took

Reports No Drain
On Foreign Dollar

Takes Issue With Views

Expressed By Heilpeiin

Commerce

William L. Batt, Chairman of Committee for the International
Trade Organization, says attack on ITO is dominated by theo¬

latest

Charter

attack

the

"In
we

Havana

I have had the pleasure of debat¬

tion

ques¬

with

and

for

the

think

has

the

Batt

issue

readily

Mr.

regards

with

Charter

charter

appro¬

ITO

'good'

month

10,

Trade

when

so,

Avenue,

New
Paper—25c.

for

York

Organization,

21st Street, Northwest,
Washington 6, D. C.

its
af¬

and

;

International

816

war

Figure
erick

Trading

William-Fred¬

—

Press, 313 West 35th Street,
1, N. Y.

Guide
and

for

Retail

Selling,

Better

Advertising

A—Association

Business

Bureaus,

actions with

dollar balances by

they

had

year,

Chrysler Building, New York
Y.—Paper—$i.oo. :

earlier

Because

that

increase

States

able—for the first

time since the war—to go tnrougn
to

How

Stay

Democratic

The

Rich:

American

Story

whole

year

without

having

tries

the

United

States

Street, New Yo.k 16, N. Y.—Cloth

—$2.75.r

merchandise imports
largely by the seasonal
expenditures by United

travelers

Klein—Favrar,

Company, 53 East 34th
Ty

The.

8 John
London,

Row,

the

fourth

Gold

Walter

—*

Spahr — The
League, 1 Lloyd

Standard

Latrobe, Pa.—Paper—3
(minimum order), $1.00;
(lower prices for quantity orders).

•

the

financial

ment in

symposium

"Big

Business

will be held

position of

The

countries.

foreign

thus

1949

considerable improve¬

ment

quarter of

New York

improve¬

the

Bad?"

TV Station

WPIX,

Good

City, Thursday, March
p.m.

tion resulted, however, from a re¬

investment banker and

copies

duction

Wilma

Public

Transforming

Definite

Regulation:

Utility

Program —John

Bauer—

New

N.. Y.—

16,

York

from

States

nual

first

rate

half of

the

1949

Shareholders;

Lipsett,

labor

President,

an¬

store

directed

billion

The show is

Gilbert

Busch

of record only and is under no circumstances to he construed as an offering of
offer to buy, or as a solicitation of an offer to buy,any of such
securities. The offering is made only by the Prospectus..'
.•

This announcement appears as a matter

sale,

or as an

(Italics added.)

Mr.

kind

admits1

readily

Heiiperin
the

"that

the.

that

ITO

properly join,
would find in the world of today
United Stated might

2,000,000 Shares

very few adherents."
Aside from
the fact that it is highly doubtful

that

States

United

the

Congress;

did quotas,

would approve a charter that
not

permit the

subsidies

of some
discrimi¬

use

and

certain

Common Stock

natory trade practices (such as ex¬

port controls for security reasons),
but wonder what

cannot

one

use;
.

charter
"right" or
sound it were theoretically—if it<
had no adherents.
The present:
-trade

international

would

be—however

represents
L.

Michael

out (N. Y.

($8.50 Par Value)

•

y.v

preliminary;
agreement among-54 nations.-and.
charter

;

*'■

Price $24.25 per

pointed

Hoffman,

;•

•

,/V1

"Times,." Feb. 2, 1950),

the General Agreement on
and Trade has

Tariffs

demonstrated "that*

incomplete adherence to thef

even

principles of a common trade pol~
icy is infinitely better than having ;
no agreement at all."

Copies of the Prospectus may be obtained in any State in which this
is circulatedfrom only such of the underwriters, including

•

announcement

the

undersigned,

may

legally offer these securities in such State.

Heilperin's theoretical world
is, apparently, devoid of political
■

Mr.

for

problems,
his

article

relationship

any

point

does-

there

that

reflect

all

is.

between

Merrill Lynch, Pierce, Fenner & Beane

Kidder, Peabody & Co.

White, Weld & Co.

economic realities and the day-to¬

day political forces which have to
be dealt with both in terms of
domestic

legislation

Eastman, Dillon & Co.

encouraging

A. G. Becker & Co.
Incorporated

tional action.
It

and interna¬

Paine, Webber, Jackson & Curtis

that this in¬

Hemphill, Noyes. Graham, Parsons & Co.

Central Republic Company
(Incorporated)

H. M. Byllesby and Company
(Incorporated)

tellectually stimulating, but rela¬
tively

unrealistic

dominate

not

those

approach

the

responsible

does

foreign policy—or those segments
of

business

which

have

Lee

given

Stroud & Company

Moore; Leonard & Lynch

Laurence M. Marks & Co.

thinking of
for
national

Incorporated

Blair, Rollins & Co.

Singer, Deane & Scribner

Higginson Corporation

Incorporated-,

careful consideration to the many

political

and

economic

W. C.

facts vi¬

G. H. Walker & Co.

Langley & Co.

tally affecting American interests
today.

interests

uniquely aware
of

American

March

of the

business,

xl
■3'

"Business Week" magazine,

which

28, rgyo.

„

and

department

and

Frank-Guenther Law.

Albert

that year.

retail

division, CIO.

for

these securities for

Alex¬

expert

educator; and Jack Altman, Vice-

in the

$14.5

half of

economist;

Soss, President,, Federation

Women's

ander

exports of goods

$17.3 billion

second

increase

and services declined from an

Cloth—$5.00.

than

United

Adminis¬

Harper & Brothers, 49 East 33rd

Street,

rather

purchases

foreign sales in this country.

The par¬

ticipants will be Robert S. Byfield,

Avenue,

foreign

question,
or

—

30, from 7:30-8:00

the foreign reserve posi¬

Bad?"

international

Irredeemable Currency

Our

System

"Big Business—
Coed

balance

reflected

England—Cloth—10s.

coun¬

transportation.

overseas

payments of the United States for

Reid—Macdonald & Evans,

Bedford

foreign

Money and Organization—D. C.

Street,

including their payments for

country.

Straus and

supplement the aid received from

Capital¬

drawing
upon their own reserves in order
to meet their obligations in this

ism— Ernest

the

offset

decline

these gains, foreign

possible the
reduction of for¬

and

goods

was

were

remainder

purchases of for¬
services did not
change from the
third
to
the
fourth quarter of last year.
The

reports.

countries

in
ac¬

United States

eign

nomics, U. S. Department of Com¬

17,

the

the rate of $700 million during the
second 1 alf.

the Office of Business Eco¬

decline
can

eign reserves at an annual rate
of $600 million during the first
half of the year to an increase at

1949, off¬
setting the losses of $420 million

merce

the

by the reduction in
aid
disbursements.

lor

change from

the last three months of

Inc.,

in 1948.

in¬

approxi¬

export decline made

the United States in

sustained

States

transfers

However,

Foreign countries increased
their gold and

same

half

government

United States.

Y.—

New York

poli¬

monetary

21,

United

abroad—were

counted

were

supplement aid received from

Latin

Chartcraft Method of Point and

trative

the

Angel,

About

without having

year

income

mately the

about $440 million tnrougn trans¬

the

Congress
the weight

discriminatory

and

trade.

1950.

to remain

commercial

con¬

weaknesses,

before

comes
a

economi¬
cally solvent without the use of

cies."

trade.

founda¬

free

that

sure

Committee

duty of every

to
conduct
country's domestic economic
fairs as to make it possible

restrictive

could

feel

March

practices.

trade

declare it

country

world
us

(Signed) WILLIAM L. BATT.

prohibit the use of import
quotas, exchange controls, sub¬
sidies of all kinds, and all dis¬

that

give

policy represented by Mr.
Heilperin's article.
Sincerly yours,

would

government

freer

nomic

priate scepticism.

criminatory

for

Secre¬

that

support of the ITO
will effectively refute the theo¬
retical approach to foreign eco¬

his criticisms of

would

countries

of evidence in

one may assume

that

"The

the

which

within

admits

Heiiperin
this, from which
Havana

ap¬

itself would strengthen

would

charter

regard
for the realities that surround it.

the

Our

believe ITO must be given its
chance."

important

the Charter with almost

the

can

examine

taries—Juvenal

it.

promote
Recognizing afl the

theory

that

tinue

dominated

behind

drive

tion

ghly

o rou

proposed

and

American Institute Press, 900 Park

rejects

fear the U. S. may return to
isolationism.
Our ap¬

And

thinking

become

t h

effort

Specialized

interna¬
it

We have supplied much of

proval in

permitted
s

for

can

economic

Mr.

h i

in
if

affairs

charter.

now

unfortu¬

Heiiperin

charter

leadership

confidence

that

proval of the charter would give

How¬

nate

Feb.

the United States may

trade

idea.

grasp
economic

ever,

the

his

theory.

the

ti.-at

its

tional

respect

lose

I have the ut¬
most

its

spite of all its weaknesses,

think

ness

Mr.

Heiiperin

help knock down the trade bar¬
riers between nations—and so, in
the end, benefit American busi¬

by Michael A. Heiiperin.

ing this

editorially

issue:

In your Feb. 9 issue you reprint

the

Careers

states

Chronicle:

through

surround it

Financial

services—including transportation
vestments

merchandise

whole

able for first time since

retical considerations, with almost no regard for realities that

Editor, The Commercial and

nerchand se.^ Total U. S. sales of

Department estimates

foreign countries

place entirely in

exports and other transfers of

our

Reserves in 1949

ITO

THE

(1314)

COMMERCIAL

margins
are
generally
satisfactory at the present time,
and both capacity and labor sup¬
ply are adequate to fill orders,
any further price changes seem
likely to be moderate, leaving the
general- price level relatively

University of Illinois

Specialist in business analysis forecasts favorable profits for
business in 1950, ranging upward to 15% higher than in 1949.
Holds outlook also provides most favorable climate for security

stable.

business
strike

activity

rebound of

from

coal-

the

lows

reinforces the optim¬
ism with which the spring months
have

been

.viewed

business

most

which

tion,

factors, like
funds and making
the

analysts.

mainly

view

the latter part
of

the

year.

These
in

doubts

emphasis

gain

the

minds

of
many as
the
stock

ad¬

market

vances toward

resistance
Lewis

Bassie

the

upward

movement

on
other grounds,
these factors may act primarily to

anticipated

which

continue

should

into

the

versal.
If the decline in prices at which

inventories

end,

valued

are

comes

profits before
income taxes would automatically
move up $2.6 billion' (the amount
of the downward adjustment in
an

reported

1949), or almost 10%.
In addi¬
tion, rising volume and produc¬
tivity which, as indicated above,
seem

than in 1949.

continued

prosperity, stable prices, and ris¬
ing
profits provides the most
outlook

favorable

business.

for

Therefore, for whatever they may
be worth, we present briefly the
following results of our own re¬

Productivity — The economic
problem of 1950 seems likely to
be the creeping increase in un¬
employment. Lack of jobs for 4.5
million workers is just too- much

and

view:

business caution, the situation will

level

the

1946

highs.

ignore, especially

pective
General Business Conditions

There

both

are

negative

factors

positive
the

and

current

ing toward higher levels.
(1) Inventories were still being
liquidated at the end of 1949.

inventories

still

are

below

normal, even allowing for the
long-term downtrend in their re¬
lation to sales, it is likely that
liquidation will cease before the
of 1950 and be replaced
limited rate of accumulation.
end

(2)

Government

pros¬

activity is
with the

not sufficient to keep up

business picture, on balance point¬

Since

expansion

the

by a

growth in the labor force.
Manufacturing employment
moved down

steadily in 1949, re¬
leasing more than a million work¬
ers.
Only part of the decline can

for goods and services, other than

foreign

aid, are still definitely
pursuing an upward trend.
(3) The foreign aid
program
will begin to decline after mid1950, though the decline will be

10% from December, 1948,

December, 1949, and there

was

addition

a
slight decline in
hours of work per week.

average
In

the

contrast,

index

Reserve

manufacturing

Federal

produc¬

tion declined only 5V2%.
As a result of these
there
tion

changes,

an increase in produc¬
man-hour of about 5%.

was

per

offset by the increase in
military assistance for Western
Europe.
However, net foreign

This increase in

investment

and

partly

dropped

new

postwar low in the fourth quarter
1949; and since net exports

were

the

then

considerably less than
being granted, a higher

aid

level of exports is to be expected.

(4) The

sparked

construction

new

boom

highs

resi¬

dential building. Various explana¬
tions are offered to show why

this high rate of housing construc¬
tion is only temporary; but none
of these

seems

simple

forceful

direct

and

the

explanation

that the country
really needs the
houses which are being built.

(5) Business

outlays

for

plant

and

the result of

productivity was
concerted campaign

management
put

efficient

basis

much

were

Results

same

goods

durable

industries.

the former, there was
erate
decline
in
output

larger

decline

mod¬

and

man-hours

employment; in the latter, higher
production
smaller

obtained .with

was

working force.

tion of this

trend of

Continua¬

productivity

through 1950 will tend to increase
profits
and

industries

prices

tain them

are

where

backlogs have almost disappeared.
Hence, a normal response of cap¬
ital

expenditures
to
generally
conditions would call
slight increase rather than

where declines

fore

business

the

forward.

are

also

provides the

climate

for

the

Stock prices
long way to rise be¬

relations

with

earn¬

ing.
but

some

extent in 1949

prices

materials

Prices of farm products fell more
than 10% during 1949, and some
further
declines
are
.expected.

semi-manufactured
showed

There
the

raw

materials and
articles

considerable

nothing

seems

now

possibility

increased

also

declines,

free

ENG.:
One of the
war 'and
its after¬

the

development of

price of gold

summary, our view of the
situation is: Prosperity will pre¬

trends toward

The
and

establishing

relation

a more
security

between

prices and earning

should

power

continue.

Ralph W.

Wood

San

Fran¬

cisco has been appointed Manager
the- newly
created
Business

Extension

Department

Rollins

Co.,

nounced

President.

Inc.,

was

Warren

Blair,
an¬

Snow,

He will make his head¬

quarters in the New York office,
44

with
the

Wood
the

Pacific

From
with

Coast

1932

the

been

has

investment

for

through

investment

identified

business
25

1942

years.

was

subsidiaries

of Transamerica

Corporation. Af¬
three years in the

ter

The

$35 per ounce,
the
in

free

East

Far

and

price

Middle

the

export

business

and

rose

East
well

$50

over

was

the

part¬
result

produced
will

hoarding

Dr. Paul Einzig

however,

the
the

gold

the

population

premium

the

was

widespread

feeling

really worth more
than
its
prewar
price. Jewelry
and other objects made of gold
was

rose

was

justified by the appreciation

much

higher degree than

dollar

tional

currencies

terms

of the

concerned

by the rise in the cost of
facture
were

these

objects.

prepared to

for objects of

and

manu¬

high prices

pay

gold, because they
prewar,

result of the

hoarding and
and the high

industrial demand,
price gold commanded for hoard¬
ing and industrial purposes, much
of

the

new

the

gold output found its
free markets where

satisfied the non-monetary de¬
mand.
This meant that less gold
available

was

United

for

States.

tributed

export

This

the

factor

extent

some

scarcity of dollars.

con¬

the

Even

though
the International
Monetary Fund
did its utmost to prevent the di¬
version of newl.y produced gold

non-monetary uses by object¬
ing to the sale of gold at a pre¬
mium, this rule could not be en¬

forced

effectively

long

the

premium remained

very wide and
the temptation to sell gold in the
free markets remained strong.

recent

months

there

was

sharp fall in the free market price
of gold. Recently the premium on
the

official

clined
rose

American

about

price

10%,

de¬

mough

somewhat towards the middle

March.

The

gold

the

tracted

there

much

fall

Paris

the

price

market

attention

at¬

because

information

avail¬

able about that market than about
the Eastern markets. It puzzled
French and

foreign observers con¬
siderably because it was not jus¬
tified by any improvement in con¬

try

remained

Industrial

unsettled,

and

coun¬

and

her

Mr. Wood will devote a major
not as large. » However,.
part of his time in his new asso^ dently the fall in gold was not due
(6) A more definitely negative recenVfirming tendencies in these
to any local conditions.
ciation to contacting dealers
in
factor will be the reduction of prices suggest that any further
There is reason to believe that
*'
weakening in the price structure the East and Middle West.
consumer
purchases
on
credit,
is likely to be limited.
the disappearance of Chinese de¬
which reached a very high rate
mand for gold played a
The
leading
at the end of 1949, supported by
stability of prices other
E. W. Ackley, Admits
part in the world-wide falling
products
and
foods
peak automobile sales. .However, than farm
trend.
It was the result of the
a moderate
BOSTON, MASS.—Edward W.
decline in sales will during the last six months reveals
of
a
Communist
not greatly affect the auto indus¬ no tendency to reduce prices at Ackley has
admitted E. Holley establishment
Poe to partnership in the firm of regime,
under which there ap¬
Little
try and will allow some reversal the expense of margins.

inclination to lower margins was

Edward W.

expenditures from nondurable to

displayed by business,

Street.

durable goods lines.

scare

the

1949

-Summing

shift

consumer

thus far, the net
effect by the end of 1950 should
up

♦Reprinted from the Illinois Business
Review, -published by the Bureau of Ecotoomic and Business Research of the

versity of Illinois.

Uni¬

the

even

in the

Ackley & Co., 30 State

recession; and
there has been

recently,
some
tendency to improve mar¬
gins by raising prices—exempli¬
fied by the increases in steel and
tire prices at the end of the year.
On the other hand, some declines

to be little scope for private
hoarding
demand
to
continue.
pears

Simultaneously with this decline

1949

J. F. Lewis, Jr. Opens
PHILADELPHIA,
F.

Lewis, Jr., is engaging in

curities

business

from

505 Brinton Street.

a se¬

offices

demand, there appeared to

PA.-^Toseph
at

the

increase of the

free

supply of gold
market, due to the

circumvention of the ban imposed

by,, the
Fund

International
the

and

bal¬

dehoarded

available

effect

for

Monetary

marketing

gold

export

The

psycholog¬
disappearance of

reas¬

suring.

Unfortunately there is no reason
expect that the premium on
gold will disappear in the near
to

future.

is likely

time

some

chances

to remain for

come,
and
the
that it will widen

are

again. It is true, from an economic
point of view there would be

justification for its contrac¬
tion. After all, considerable prog¬
ress has been made towards con¬
some

solidation
all

post-war economies

the world. Industrial and

over

agricultural

production

creased, and

the

has

depleted

extent.

danger of

there

was a

countries

con¬

There

less

chaos than

currency

year or two ago.

have

in¬

stocks

have been reconstructed to

siderable

artificial.

was
a

na¬

Buyers

felt the official American

price

as¬

towards

the premium would also

where

result

ical

distrusted the stability of the na¬
tional currency. To some extent,

that

towards

way

progress

the United States.

strong

countries

the dollar gap of' goldproducing and gold-hoarding
countries, in so far as the newly

per ounce.

some

ancing

This

of the premium is
favorable symptom,
complete disappearance

sisting

downward

its

the

dollar gap was no nearer solution
than the British dollar gap.
Evi¬

though

part of the year.

the

started,

decline

would

political conditions in that

and

concrete evidence

Once

distinctly

ditions ia France.

Francisco.

may also
Russian selling;

fall.

unaltered at

tenant Commander he entered the

San

this.

American

serving
Navy, with a final rank of Lieu¬
import

There

some

price remained

Wall Street.

been

but there is

gathered
through wholesale dehoarding in France and elsewhere
by holders who expected a further

official

for

Wood Heads Dept.
Of Blair, Rollins

premium.

have

momentum

vail for another year at least.
outlook for profits is good;

movement

mar¬

While

kets.

way

normal

the

wide premium in the

international tension to block the
advance.

ex¬

helped to
by more rapid

was

of the

markets.

normal

were

for

further decline in the latter

outlook

security

Mr.

Prices—Profits

Prices of other

give

move

favorable

still have

perienced.

prosperous

any

This
most

sales

firm, and to main¬

than in those of finished products.

confidence to

declines

based

continued

most

rates

investment

such

for

make

expenses

of * the

possible.

the

nondurable

and

cut

operations

equipment have been declin¬
ing, with the result that excess
of

should

explained by reduced rates of ings
and
bond
yields
are
re¬
production,
as
man-hours were established; and the action of the
cut about twice as fast as output. market during the last six months
The number of production work¬ suggests that the postwar freeze
ers
in manufacturing was down on
speculative psychology is end¬

expenditures

Although synthetic pessimism
concerning the last half of 1950
has been given wide circulation,

almost

maths

demand

combination

The

Affecting Profits

LONDON,
effects

the

first half of 1951.

Other Factors

in the price of gold on
markets, Dr. Einzig ascribes it to better currency situa¬
tion in Europe due to Marshall Plan aid.
Holds, though decline
in gold price is
favorable, there is no reason to expect it to
fall to official value of dollar, and looks for another rise in
gold premiums after 1952.

wide

profits
Changes

reasonably in prospect,
bring activity up more quickly,
should also tend to increase prof¬
with a leveling thereafter, rather
its.1 Hence, reported net profit
than
any
definite decline.
In
on
a
rough estimate, be
other words, we seem now to be may,
something like 15% higher in 1950
moving toward a higher plateau

the

test

strikes," whose stimulating
will soon disappear.
In

effects

veterans' re¬
up deficiencies

rary

the

reported

tory revaluation adjustments were
largely the result of the price re¬

continued

gain

will

support from the increase in popu¬
lation.
Consider, also, the tempo¬

Doubts arise
as

To this must be added

Noting recent and substantial decline

free

during the last two years.
in both sales receipts and inven¬

coordinate increase in consump¬

By PAUL EINZIG

movements

for

responsible

were

fluctuations

power.

be upward.

Inventories—Price

markets, and predicts rise in stocks prices still has long way
to go, since postwar freeze on speculative psychology is coming
to an end. Looks for more normal relations between security

prospective

Fall in the Price oi Gold

like automobiles, which are
affected by special situations.

ties,

Director, Bureau of Economic and Business Research

prices and earnings

Thursday, March 30, 1950

Since

By V. LEWIS BASSIE*

The

CHRONICLE

in particular commodi¬

may occur

Outlook for Profits in 1950

FINANCIAL

succeeded

Most

ar¬

resting the non-stop depreciation
of their currencies, even
though
the

situation

and

prospects

are

still far from ideal from this point
of view. The scarcity of dollars

has

been

reduced

Marshall

Aid and by a decline of American

exports.

Nevertheless, the state of un¬
certainty which in the past was
mainly responsible for hoarding
demand for gold continues to pre¬
vail. In the East in particular the
in

events

China

foreshadow

great deal of trouble and anxiety.
The possibility of Communist in¬
vasion

infiltration

likely to

induce the inhabitants—or at any
rate those of them who possess
means—to hoard gold.

political horizon

Nor is the

Europe
reassuring. French hoarders,
they have recovered from
shock

very
once

the

caused

by the unexpected
fall in the price of gold, are sure
to

their

resume

traditional

role.

Throughout modern history, the
secular trend of the price of gold
has

been in

upward direction.

Although there were many set¬
backs, some of them substantial,
in the long-run
a
rising trend
prevailed. There is

for

reason

supposing that it would be other¬
wise

the

occasion.

present

After 10 years of incessant hoard¬

ing demand the technical position
was ripe for a setback. But once
the

technical

rected

itself

position has cor¬
through the liquida¬

tion of excessive hoards, it seems
probable that the rising trend will
reappear

once

The

more.

possibility for a complete
lasting disappearance of the
mium

tion

gold lies in

of the

situation.
very

little

only
and
pre¬

consolida¬

international political

Unfortunately there is
reason for hoping that
Moreover,

this could be achieved.
there
about

is
a

ficulties

also

much

after

the

termination

Marshall Aid in 1952.

unduly

optimistic,

consider
more

uneasiness

relapse into currency dif¬

the

than

nomenon.

slump
a

It would be

therefore,
in

gold

temporary

to
as

phe¬

-*->■<

Volume

a nr\ a

rriJT7'

Number 4894

171

THE

rvYR/nun?'Dr«T A T

st*

COMMERCIAL

the

Outlook for International Trade

TPTAT A MPT A T

FINANCIAL

strengthening

institutions.
values

democratic

have been strongly reinforced.

By THOMAS R. WILSON*

hope for the
political as well

means

Chief Areas Division, Office of International Trade,
U. S. Department of Commerce

economic disaster.

may cause

between U. S. exports and imports and
ance

during

since

war.

bringing import

year,

Sees

gap

need of maintaining

given

recovery

most of the

Notes declining gap
looks for its continu¬

to $3'billions, lowest
U. S. exports at current

war

torn areas i

and

re¬

the

building

international

There is

world.
any

goods

length on the devastating
effect of the war on the exchange
the

were

between nations which
theaters of hostilities.

Leaving the United States out of
the

picture, the volume of world
in the first full postwar
1946, was about 25% below
tion has taken
prewar
levels.
This might per¬
place in West- '
ern
Europe haps not seem like a decline of
more
rapidly overwhelming magnitude, but it
than after presented exceedingly acute prob¬
Tbomas R. Wilson
The main difficulty which
World War I lems.
existed then, and which has been
despite the greater magnitude of
intensified
in
each
succeeding
destruction and production is well
above 1938 levels. The volume of, postwar year, was that virtually
trade network.

Reconstruc¬ exports
year,

exceeds

nations

all

between

trade

rates by
margin,
even

siderable

now

prewar

con¬

though

and Japan, third and
fifth ranking trade countries be¬
Germany

unhesitatingly,

motivated
humanitarian con¬

five billion dollars

cannot

need to dwell

have given, we have

war,

indefinitely.

This

taper off.

that has been
built and the character of the out¬
for

both

look

ourselves

other democracies.
structure
be

can

the

We appreciate

international trade
strong, it
vital basis of sound and

the

that

and

What

this

going to mean to
Has there been
real sign of world trade re¬

trade

is sound and

strong economic and political re¬
lations. With this in mind, I want

forced

were

draw

dollar

their assets

channels?

for us?

What

our

will

even

sustained?

Will

face

serious

well?

heav¬

terms

dated

review

our

own

trade de¬

velopments very briefly
past

several

over

the

years.

1938.

ports at $15.3 billion and

While these figures are encour¬

aging

the

between

present

at $5.7

billion.

imports

Considerable im¬

provement occurred in 1948 when
the

gap fell to
there was little
in

1949

was

when

$5.5 billion, but
apparent change,

the

$5.4 billion.

export surplus
I

say

apparent

change because, while the figure
for the year remained little dif¬

and

the difference between

ports and imports.

Our aid

ex¬

might

add

that

the

prospects for

con¬

tinuing recovery, and at an accel¬
erating rate, look promising,
suddenly to be
What I mean to say is that the
withdrawn, not only would our
trade picture changed drastically
exports drop-by $3 billion or $4
over the year.
Exports were run¬
billion, if not more, the .whole
ning at annual rate of $13.5 billion
structure of world trade would
at their high point in the second
suffer a far-reaching and funda¬
Quarter of the year, reflecting an
mental blow. In other
must look not

our

export level.

words, we
only at total world

figures, but at United States
trade figures simultaneously.
Is

trade

this

excess

imports

exports

our

over

shrinking?
Has
there
sign of improve¬

been any recent

Can

ment?

to close by

off?

For

the

this

elimination

the

assistance

not

be expected

gap

the time

our

aid tapers

were

our

so,

financial

1952 or '53 would
major blow to world

trade, and it might be possible to
achieve continuing
world trade

acceleration

under

deliveries

the ECA program.

This was con¬
siderably higher than the rate
reached in the year before.
In
that quarter, imports contracted
sharply in response to domestic
recession and in part on the ex¬
pectation of devaluation and lower
prices.
In consequence, the ex¬
port surplus shot up to $7 billion
at

annual rate which was very

high indeed.
drain

was

The resulting dollar
major feature con¬

tributing toward the devaluation

Continued

for

page

beyond the dan¬

foreign
the

let

yet

dollars,—that is
price rises. progress on a self-sustaining basis

prewar

corrected

of sound monetary

Together,

are

this

financial aid

mark from the point of view
considerations.

ger

not

year

declines, must our exports drop
tinues to sustain
correspondingly or can they be If this aid
was

their gold and short term value
reserves.
Many reduced

below

further gains
took place and while full figures

covers
mean

ily

only about 7%

Last*

the prewar situation is the
ferent from the total for -the year
continuing existence of purchases
previous, there was an important
any
from the United States over and
real change
emerging over the
covery
not only in terms of a
above what is being sold here. It
year as a whole not revealed by
higher volume of goods, but in
is this fact that gives the world
the annual total.
terms
of
the achievement of a
trade situation its relatively un¬
better balance?
Are there signs
Likening the trade gap problem
stable and unbalanced character
to a disease, I think we can say
that with this marked improve¬
despite the apparent return to that the trade crisis was
ment in the return of production
reached
prewar levels. In other words, our in the second
quarter of last year,
abroad, a larger volume of goods
trade gap. can only exist because
and the patient has been .on the
will be available to move in world
our
foreign financial assistance mend since that time.
I

the trade picture?

competition in third markets as
Europe's capacity to export at
comparable prices is restored, or
can
world markets expand suf¬
all countries of the world had to
turn to the United States as their ficiently to absorb an increased
flow of goods not only from Eu¬
main source of supply of many
foods and essential manufactured rope, but from the United States

tions

then

were

difference

are

foundation

the

saw

indicating rapid
and
year, h;he Administration has rec¬
marked
improvement, one must
ommended a substantial reduction
not be misled into thinking that
in our foreign financial assistance
the network of international trade
below last years level with the
is in as relatively a sound posi¬
expectation that our help must
tion as before the war. The major
rapidly

slight improvement in after our aid terminates, in which
shipments, but in 1948 a gain all nations might share.
"•
change for the better
Review of U. S. International
took place.
World exports ex¬
Trade
cluding
United
States
exports
With these questions in mind,

year

goods without being able to send
Let us look briefly at recent
sufficient goods in return to make ;
still far from
full payment. As the main supply world trade figures and consider
their
previous
relative impor¬
source,
the United States found the trends which seem to be
tance.
itself responsible for one-third of emerging
and
what light they
;
But most Americans are not world
exports in 1947, in con¬ throw on some of these questions.
concerned with recounting
step
trast to only 14% in 1938.
This
I have
said
that in 1946 the
by step, the role that we have
highly one-sided or unbalanced volume of world exports exclud¬
played in helping to make these trade
obviously
introduced
an ing our own was about 25% below
gains possible. Rather, are we in¬ acute balance of payments prob¬
1938 levels.
And by volume, I
terested in appraising the strength lem.
To buy our goods, most na¬ mean
the
value of exports
in
the

fore

marked

four

deed, for much of the rest of the
at

economic

(1315)

available, our pre¬
I have already pointed out that
not
only by
liminary estimates indicate that
by 1946 our exports had dropped
cern but out of full awareness of
trade volume was running about
from their 1944 peak to $10.2 bil¬
our
own
political and economic 5% above prewar. With our own lion.
With imports in 1946, $4.8
stake in the great gains which exports added to those of the rest
billion, the trade gap was $5.3
have been made.
of the world, we conclude that
billion.
The following year, the
the volume of world trade ran
What of the Future!
export surplus shot up to its post
nearly 20% higher last year than war
peak of $9.6 billion with ex¬
But aid at the rate of three,

This nation can take justifiable- allowance
for
the
price
rises
pride in the contribution we have which had taken place.
made during the relatively brief
The Postwar Foreign Trade
period since the end of the war
Problem
in helping toThe trade picture at the close of
effect a re¬
markable rate the war was very different, in¬

economic

both

1947

t er

these

prewar.

The aid

high level, and advocates encouraging greater imports.

future

terms.

Foreign trade specialist of U. S. Department of Commerce,
ascribing imbalance in U. S. international trade to heavy for¬
eign demand for our goods due to war's devastation, upholds
policy of Marshall Plan aid and warns if this is cut off too
abruptly it

defend

war

/101AV

CHRONICLE

It has meant that the

went

r,ur?rwrm T?

nations

four

and

liqui¬

one

This is not

made only by means of the
purchase of these Bonds.

Offering Circular. The offer of these Bonds is

Circular, which should be read prior to any

half

post war years over $5 billion of
briefly about some of the. their
holdings exclusive of their
highlights in world and United sales of
newly mined gold. Be¬
States trade developments since
tween
the
war's
end
and
the
the end of the war, to say a few
start of the Recovery Program,

Offering

to talk

words about the trade outlook as

consider

ahead and of

it for the year

see

briefly

implications

few of the

the

ERP countries had

current

pic-^

ture.

their

over

monetary reserves.

measure

lost

the

Tnis

urgency

their needs.
The

acute

dollar

shortage

$25,000,000

30%

has

Chicago, Burlington & Quincy Railroad
Company

There is no need to dwell here

•

trade

of the

effect

the

nations.

war

We,

been the dominating problem in
the. the post war trade picture. There

of course,

has

been

First and

continuing need for
unprecedented amounts of Amer¬
cies and continued throughout the ican goods for relief, reconstruc¬
war to ship a constantly increas¬
tion
and
economic development
ing supply of goods both to the and almost no countries have had
fronts in the East and the West,, a sufficient supply of goods and
and to the people behind those services to trade in
exchange, or
fronts.
From a value averaging adequate
gold
and
dollar
re¬
about $3

billion in the

years

im-. sources

Refunding Mortgage Series of 1990 3% Bonds

the arsenal for the democra¬

were

with

which

cover

Bated

February 1, 1950

Interest

Due February 1, 1990

payable February 1 and August 1 in New York City.
.

The issue and sale of these

the

Bonds

are

subject to authorization by the

Interstate Commerce

Commission

mediately preceding the war, our- trade deficit.
exports rose to $4 billion in 1940,

We have given full recognition
$8 billion and- to this problem in the financial
time peak aid we have made available. Our
While our im¬ grants and credits since the end

by 1942 were over
in 1944 reached the
of

$14.4

billion.

war

ports rose somewhat over this of the war have totaled more than
period,, their increase was com¬ $23 billion. This has made pos¬
paratively moderate. The mount¬ sible a continued outflow of our
ing difference .between exports exports far in excess of our im¬
and

imports was financed

well

know

During the four years, 1946
through
1949
our
exports
ex¬

ports.

largely by our LendYou will- recall; ceeded our merchandise imports
that through the Lend-Lease pro-. by more than $25 billion and by
gram, nearly $50 billion in goods about $32
billion if services as
were
made available to our Al¬ well as goods are included.
Lease

lies.

Price 100% and Accrued Interest

Copies of the Offering Circular are obtainable from only such of the undersigned
as may legally offer these Bonds in cotnpliance with the
securities laws of the respective States.

program.

was

these

funds

which*,

know

how

much

this

aid

MORGAN STANLEY & CO.
BLYTH H CO.,

INC.

THE FIRST BOSTON CORPORATION

GOLDMAN, SACHS & CO.

made

possible an export surplus has meant abroad as well as to
in 1944 of $10.5 billion, the all ourselves. Overseas, it has helped
time trade gap high. . With the to make possible the rapid re¬
termination

the

war, our ex-, construction of plants, the revival
ports fell to.$10.5 billion in 1945, of farm production, the rebuilding
and 10 $10.2 billion in 1946. This ., of homes and community facil¬
was stilf over twice the volume- ities.
Today .in Western Europe,
of or prewar exports after -full. industrial production is
running
v

*An

address

currently, at somewhat

over

KIDDER, PEABODY & CO,

SALOMON BROS. & HUT'lLER

Incorporated

STONE &

WEBSTER SECURITIES CORPORATION

DREXEL & CO.

HARRIS, HALL & COMPANY

DICK & MERLE-SMITH
LEE HIGGINSON

CORPORATION

(Incorporated)
R. W. PRESSPRICH & CO.

LAURENCE M. MARKS & CO.

20%

Mr. Wilson before,
prewar levels.
This is a
the Export Managers Club of New York, • above
New York City, March 21, I960.
signal achievement. It has meant

HARRIMAN RIPLEY & CO.'

March £9,1950.
I' M

COMMERCIAL

THE

(1316)

FINANCIAL

CHRONICLE

guaranties
and
Insurance
and power and destruction of individabout $3 billion of commitments ual freedom that it carries with it.
for guaranty and insurance. Ag- Yet here at home, we are fosterricultural
loans
and
guaranties ing the growth of Socialist philosexceed $4 billion. The balance of ophy and practices through our

Bankers' Growing Responsibilities
In Instalment Credit

than

loans

By F. RAYMOND PETERSON*

and

business

President, American Bankers Association

billion represents
credit guaranties for

An
established
credit terms as
standard
credit terms disturbs
this flexibility,
policy

easy

Instalment
are

t00

easy

credit

«tv tend to Drovide

ment. Karl Marx's disciple, Lenin,

railroads,

stimulant

Eventual

unnecessary

repayment

short-cut to

one

that

terms

in times of prosper-

pointed out that

industry,

and

flexible.

kept

trend
toward
centralization
of
credit in the hands of the govern-

and other borrowers.

Chairman of ths Beard, Firit Natl Bank & Trust Co., Paterson,

Thursday, March 30, 1950

business

activity,

these
growth
of Socialism is this very centraliza- "easy" loans is a depressant when
government-sponsored credit tion of credit in the hands of the business
activity
is
declining,
since the* war ended is asto _mdmg.
state.
First seize the police and Consumer credit lenders can make

N. J.

The

year-by-year

this

Association head observes

consumer

credit lending

whole

as a

Last year

has grown to be very big business, and 40% of instalment
loans are now extended by banks. They amount to $4% billion,

banks participating therein.

Urges country's
responsibility to preserve sound pol¬
icy here as in other credit fields*

six out of

seven

Consumer instalment lending is

care

in extending these

very

ing.

you are

ually
are
small loans,
comparison

I should like to turn now to a

broad influence on the field
as
a
whole, in which

credit

playing an increasingly

important part. The main function
and the main reason for the exist¬
ence of the banks is the adminis¬
tration of credit, whether it is

Instalment

loans individ-

loans and

fixing their terms.

stalment lend¬

business, agriculture, mortgage, or

with other

types of bank

banks

The

credit.

consumer

are

chartered

credit.

by the states and the
Federal government to accept de¬

Con¬

posits, and to assume • financial
risks for the business, industries,

credit ;

sumer

lending

a-*

and individuals in the

whole,
how-/,
distinct¬
ly is hotsmall

ties

ever,

assume

communi¬

They
these risks by providing
This is
the traditional,

where

they

operate.

business.

credit.

There

present and future economic justi¬

now

total

F. Raymond

Peterson

fication for banking.

than $18

billion

consumer

credit

In
ever

years, however, an
increasing trend toward the

nationalization

department store charge accounts,
service credits, utilities bills, and veloped. From

credit has de¬

a very

development. We tin-:*
derwrite risks that are sound-uses,
First for the funds of oiir depositorsSession qf the 81 st Congress..
■* -This necessarily means that* wereceived

and

v.:'

Congress is in progress, oiir
are

faced

with

tude of demands from
atfAnMpc

agencies

for more

leg: cial

multi-

modest be¬

turv

cially sound for the economy as a
as

bor¬

and lenders.

The

well

for the

whole,
rowers

tremendous

economic

sig¬
credit has
fully recognized

Under

abnormal

conditions, in

times of great economic stress, in
war
or
other
national
emer¬

sion.that

could

come

from

come

to be

consumer

American standard of living. This,
of course, is an indispensable, if
we

are

enjoy the advantages
of mass production.

and economy

welfare

state.

total

government

The

$26-billion
loans and

guaranties outstanding today does
not include any loans to foreign
governments.
It
includes
only
loans and guaranties for domestic

.By fulfilling its responsibility
provide adequate instalment business and
industry, transporta¬
credit,
on
appropriate
terms,
tion, home owners, and farmers.
banking can increase its services
During the past two years/these
to the public, and enhance its
government loans and guaranties
present position in the instalment
have been increased by more than
credit field/This calls for the ex■fercise of initiative and farsighted 33%%. Of the total outstanding,
to

| *From an address by- Mr. Peterson be¬
fore the National Insta'merit Credit Conksrance^..apAns<Mted
its*. .Arrrjr
Bankers Association, Chicago, IUL, March
p? Its©.-

' •'

—

;

than

loans

billion

are

direct

borrowers, and another

that

some

jndustrv

sociation

ex-

imates

$20 billion.

lending sell M. Ergood, Jr., Stroud & Co.,
Inc., Chairman;Newton J. Aspden,

is"

todav

what

North

the

one

Co» Inc*; Lewis P. Jacoby, Jr.,
Thayer, Baker & Co.; Thomas J.

by the more than
highly competitive banks,
their own commu®nder charters granted
by the Federal and State

ing

der,

individl al

th_

hank

J«zens

with

which

want

da business. -This freedimi does*
not exist

under

Chartered
-

™s

statist govern-

^liehTnaii; Robert J. Camp^11-Jj-' Stroud & Co., Inc.; Henry

the

Co.;DeLong H. Monahan, Provi-

heiieve

that

assures

■£SLtia"£

merijs

the
of dent Mutual Life Insurance Co.;
the borrowers, and is not depend- Osborne
R.
Roberts,
Schmidt,
t
political considerations. Pooie & Co
Third; chartered banking guarai}- '
-tees people their right of privacy
Membership Committee: Frankjn their financial need and trans- lin L. Ford, Jr., E. W. Clark &
.

actions.

Government

loans

must

necessarily be exposed to public.
interest.
If they are not, then

Chairman*

James

Gies
r

Smith' Barney & Co., George R.
Harrison, Laird, Bissell & Meeds,

public. Fourth, chartered banking - William A. Lacock, E. W. Clark
guarantees individual citizens & Co.; Alfred W. Piatt, The Fideltheir opportunity for personal fi- itv Mutual Life Insurance Co
nancial

lty Mutual Life Insurance Co*

Under chartered

success.

banking, ths right cannot be deSpeakers Committee: Paul W.
n|ed them by the whims or direc- Bodine, Drexel & Co., Chairmah;
tives
of
government
adminis- Krank H Bailie ^ Phiiadeiphia
trators.
Finally, we believe that
~
,,
^
^

banking

chartered

focuses

^avmSs Fund Society; Walter W.

the

life-giving functions of credit on Buckley,
Walston, Hoffman &
local
communities, upon whose Goodwin; Harold F. Carter, Hornwelfare and growth the best in- blower & Weeks
terests

of the

nation

whole

depend.
On the other hand, govPublicity Committee: Howard
ernment-sponsored credit is es- York, III, Doremus & Co., Inc.

sentially

impersonal, central-

function

,iZed

which

dispenses

Joins Shields Staff
(Special to The Financial Chronicle)

tion for it.
The

LOS

ResponsibUity

ANGELES, CALIF.—Paul

^* Anderson has joined the staff

Consumer

Credit Lenders

who favors any

it^Sl receiv/cre^t

hankina

ouWk toat

of this

Government..

Ecrpyd, Jr., Provident Trust Co.;
James G- Long, Smith, Barney &

cprnnfi

Tywm+

paves the way for a social¬
ized nation. I utter the charge of

eral

Co.;

Educational Committee: Melvin
T- Thomson, Kidder, Peabody &

rhoo«?e

thev

that

tralized in the hands of the Fed-

are

for

it is also nationalization of credit

no one

Peabody

criticizing. We believe that Co. Inc.; Harry B. Snyder, YarnaH
the system of chartered banking & Co.; Harold J. Williams, Boen^l?nlees ..fe r/a 1 ? economic ning & Co.; Howard York, HI,
rights for the American people. Doremus & Co. Inc
Amom* these riitots
freedom r,uie?nu8«vo*».lllu

this lend-

legislation. I do ssy, how¬
ever, that we are treading, perhaps unwittingly, on dangerous
social and economic ground if the
administration \of credit is cen-

_We $9 .nat criticize for the sake Schloesser, Jr., Halsey, Stuart &

credit broadly and. without regard
economically unsound, but for community need and justifica-

socialist at

I'3!"

governments

But one

oppose much of

rnr?Sphanee

op'erating8 in'
them

Llewellyn

ministration

bill
mentioned,
the Full Employment Bill, which
has long been dormant although
it stilLisa possibility, could provide qp to $45 billion of government-sponsored and guaranteed

America;

£isheTr' Sheridan Bogan Paul &

in the most

not believe

Aspden, Robinson & Co.; W. E. A.
Davidson, Insurance Company of

The hank-

^tm^onofcrertftad!

which I have not yet

and

Committees for 1950-51

fniinac¬

as ionows.
AirangementsCommittee: Rus-

may say

competitive industries
14 000

has
As-

bills,* Probably, it approx- .government no longer serves the

these

AskkLS

anr*°"nce<* the appointment of As

and

credit aeenHe*

believe in oomnetitinn

countrv

the Philadel-

fear competition from

«overnment

cen-

government

becauslfwe

all

gencies, the government's creditgranting and loan guaranty func¬
in recent years. To the extent that tions
may
be appropriate and
hew loans exceed the repayments justifiable.
We approve of gov¬
ernment lending and loan guar¬ credit.
and outstandings are increased, it
in
national
adds to the nation's cumulative anties
emergencies
mi*
The n'li 4
Bill to 4i»
the To,
Taxpayer
purchasing
power.
It
creates such as the Great Depression of
broader markets for the products the '30s and during the war.
Let me emphasize that when we
But
of industry and
contributes to since 1945, there have been no speak of government credit, we
Widespread distribution of these grave national emergencies that really mean credit that is proproducts. It thus helps to sustain could conceivably justify the great vided at the expense of the taxemployment and business activity. growth in government loans and payers. The real meaning of this
It makes mass distribution possi¬ loan guaranties that
has
been government lending activity goes
ble on a scale demanded by the brought about in the name of the far deeper than this fact alone,
nificance of

underwritten

•

aware
onno<?p

up^tolp5 billion of bUsi—

of credit rather than the govern¬
ment.

have

guaranteed this progress and
pansion. -

allow it to make loans with

PA.—Newliix
.

.& Co. president

«xpandttg''5ito

an
For more than

y' Te V .T

legisia-

government loans and guaranties.
One proposal would permit the
RFC to participate up to 90% in
small business loans by the banks,
and

Appoints Committees
p. Davis, Jr., of Kidder, Peabody

economic

progress

economy.

w-io

the
similar forms of consumer credit. ginning in the 1920's and early maturities far longer than
They are not consumer instalment 30s, direct lending by the govern¬ present legal maturity of 10 years.
ment to private borrowers, and Another proposal would authorloans. Consumer instalment loans
government guaranty
of loans ize a creation within the Federal
now amount to approximately $11
made by private lenders have ex¬ Reserve System of 36 investment
billion; and of this total, more
the corporations to provide credit for
than $4V2 billion or 40% are in¬ panded enormously. Today,
loans, loan guaranties, and com¬ business and industry
It would
stalment loans by the banks.
mitments of more than 20 govern¬ permit the 36 corporations to inWell over 12,000 banks—six out
ment lending and credit agencies
of every seven banks in the coun¬
exceed $26 billion.
loans not exceeding $10,000, with
try—now make consumer instal¬
The total amount of loans out¬ a
maximum
maturity
of
five
ment loans. They finance home
standing on the books of the years. These corporations would
appliances; automobiles; home re¬
also be authorized to make direct
14,000 commercial banks through¬
pairs
and
improvements;
and out the nation is $42 billion. loans to business borrowers.
consumer borrowing for medical,
Government loans, loan guaran¬
Another proposal would create
/\nouier proposal wouia create
education, and similar personal
ties, and credit commitments now an entirely new business loan
purposes.
The nature of these exceed more than half of this
guaranty agency within the govloans
emphasizes the
growing total of loans extended
by the ernment. It. would be authorized
responsibility placed on the com¬ commercial banks.
Operating to insure
mercial banks that engage in this
through its various loan and loan ness loans Another would create
type of lending. The, banks are
guaranty agencies, the Govern¬ a Veterans Economic Developcarrying a great social as well as ment of the United States is
today ment Corporation to make loans
economic
responsibility because the
world's largest banker and to.business up to a total amount
most of these loans have a per¬
guarantor of credit. Its lending of $5 bilUon
The Commodity
sonal or family-purpose nature.
agencies reach out into every field
;! So we as bankers have a dis¬ of credit. They make business authority to increase its borrowtinct obligation on our part not loans and loans to farmers, to
lendlngpower byano'her
only
to
supply
the American state and municipal governments,
$2 billion.
i
people with the instalment credit to home owners, to railroads, and
It is impossible to estimate acthey need, but also to supply this to others who normally should
credit wisely, in volume and on look to the banks as their source curately the total amount of government-sponsored loan expanterms that are socially and finan¬

fargains or sofrom being

opposed to

government

*1-0

fnr

Sees. Assn.

PHILADELPHIA,

Now that the becond ^p.sinn of
Now that-the Sennnrt bession of

islators

during.The

MrftlUaltaow Demands

credit

recent

There are the increases that gov--economic

ernment credit agencies .'demanded

tion enabling them to make more

Credit Nationalization

out¬

standing. Of this total, of course,
more than $7 billion
consists of

rcsl contribution toward main—

SeSt

bankers to shoulder their

coming to play a more and more
important role in banking. What
affects banking also affects in¬

alone, increases exceeo— the army, and then control the

ing $5 billion in the loan ana loan administration, and granting of taining sound credit terms by
guaranty limits of all government credit, and you will control almost taking thp lead in adontins sound
credit agencies were authorized, everything." This was the philospolicies
banks as speThe Reconstruction Finance Cor- ophy and teaching of Lenin.
cialists in the extension'of this
poration was granted another $1
I am aware that the banking in- credit, have a responsibility to
billion to buy mortgages through dustry is often criticized as con- take
the
lead
in
encouraging
the
Federal National Mortgage servative. It has also been said sound
lending policies among ail
Association. The Federal Housing that we are "opposed to everylenders, just as they have a reAuthority was authorized to in- thing." But I want to point out sponsibility to encourage sound
crease its loan insurance by more
that this country's economic ex- credit practices on the part of the
than $1 billion. I he Fublic Hous- pansion throughout its history has government. Our success in fill¬
ing Authority was granted an ad- been due in large measure to the filling these responsibilities will
ditional
$2
billion
m
its, loan progressive, productive, and ere-. be the measure of our competence
guaranteeing a u t ho r i t y.
The ative credit policies of banking.. and the guaranty of our future, as
Rural Electrification Admmistra-; By assuming-economic risks, we 1.
administrators of credit
tion was authorized to increase its .have pledged both our Capital and l
'
loans by
more;than $225 ,inillion. our faith in this country and its-

of Shields & Company, 510 West

of Sixth Street. He was previously
credit in any form, in good or bad with Harris, Upham & Co.
times, is to help qualified individuais and farmers acquire goods
The

fundamental

purpose

and1 services and thus contribute'
to toe

growth and stability of the
national: economy.' You, as coh-

With H. Irving Lee

(Special to the financial

sAN JOSE

'chronicle)

CALIF.—Harry W

Strangely enough, this country /sumer credit lenders, 'carry.alarge<TV .
"
part ofthis respbnsibility. Credit
erfhas ^been added .to the
policies: mUst; be* geared: to Cur- staff of H. Irvmg Lee & Co., First
rent conditions.
They must be -National Bank Building.

billion are commitments "to isspending billions of dollars for
make these direct loans.—The total • defense ^a
g a i n s t-Communism
includes over- $12 - billion of v loan. abroad-and toe centralization of

Volume

171

Number 4394

cf the

Instalment Credit in

all'

buy

12 million

borrowers from the banks, constituting

ment

stand

here

this

were

morning

instal¬

consumer

and tell you,

with certainty, what
developments are to
be expected in

significant

business

dur¬

ing 1950. May¬
be

would

ing

services.

met

recently
review¬

after

ing all of the
cided that our

during

banks,
the

business

volume with

mum

maxi¬

minimum of

collection

and

When

can

difficulties.

trying to estimate what

conditions

will

by the end of

this year, we should keep in mind
what
Mark
Twain
said, "The

things that
the

are

things that

human

about most

worry

happen.

never

has

the

power

accurately predict the future, and
pernaps it is just as well.
Even
weather

good

forecasters

wrong

of the

percentage

weather,

cause

are

time

be¬

business,

Million Borrowers

Financial

dull.

statistics

can

the

total

that there

say

are

million

consumer

rowers

from

When

instalment

the

banks,

bor¬
are

an activity.
borrowers
have

their local bank because

than

summarizing
these

and

resources,

supply, and give

money

of other figures.

lot

usually

are

talk about the total

deposits, the total
a

months

ahead,

Most of
to

come

they need

banking

business,

and

could

say
that consumer instalment
credit is the banking function that

is of

interest

cause

have
to

most

be¬

people

instalment

consumer

loans

satisfactory living. Many of these
borrowers are engaged in small
business enterprise.

Their instal¬

ment loans represent

the purchase
equipment which increases ef¬
ficiency and earning power in

business

their

security.

bank

and

So the

borrower has

adds

their

credit

consumer

crease

this

Credit

National

Instalment

Conference,

therefore, we
attempting to provide you
with
information about general
business conditions, about general
developments which may affect
the credit business; but in no way

are

relieving

banks

you as managers

the

trade

your

for

you

needs

There

will

wise

the

meet

are

promising

many
a

bearing

on con¬

instalment lending.

One of

days

States sugar

which

will prove helpful to you

quota in pro¬

your

portion to

day-to-day banking operations. It
is also our hope that this Confer¬
will help to maintain the ag¬
gressive, the imaginative and yet
sound
policies which have led
banks into their present dominant
position in the consumer lending
The rewards »of

field.

are

success

substantial, the most fruitful being
the

knowledge

services

that

through the

that,

i our

banks

render,

justify the existence * of pri¬
vately owned and operated bank¬
we

been

in¬

United

hope that you

information

receive

Republic
seeking only

to be assigned

this

Domini¬

the

its

normal annual
Rafael L.

output

Trujillo

compared
that of Cuba—the whole

Cuban

"Aggression"

country.

our

Two With Amott,

Baker

(Special to The Financial Chronicle)

BOSTON, MASS.
Moore

Russell

and

with

associated

become

have

Skinner

Charges

Office

with

formerly

was

Math¬

Funds.

and i Trusteed

Co.

ews

Edward

Trujillo, declared:
avoid

"To

tations

Moore

Mr.

Square.

ment for our sugar in the United
States market." Continuing, Presi¬

dent

mistaken

our
attitude, I would
that what we are seek¬
ing is solely that we be treated
fairly.
We believe that if the

With Bennett, Smith

35% of

MICH.

DETROIT,
Mahoney

now

Earl

—

with

affiliated

Bennett, Smith & Co., Penobscot

members

Building,
York

the

New

Stock

Detroit

and

our

exports

the

two

"We

are

not

countries

States maiket

what can properly
monopoly, for not
only aoes she enjoy a preferential
tariff whicn does not permit com¬
petition,
but
she
profits
from
practically tne total import quota
be

termed

that

product

States.

into -the

United

;

Geographical

Good Neighbor/
Policy Wanted

"We

sincereiy believe that if
problem is properly consid¬
ered,
substituting for the hi%

the

torical

concept

present quota

which

Peddling Credit Terms
intensification

decided

geographical Good Neighbor

competition at the retail level has
a weakness in price and

to domestic

industries of

"Our sugar production is ap¬
proximately one-tenth of that of
Cuba, and therefore should we be
assigned in the American market
a quota in proportion to our pro¬
duction, compared with the quota
and production of Cuba, it could

"What the

to any other

Dominican Republic

wants is to arrive at

this

point

among

interested; but despite
certain quarters

wanting to
"The

agreement

the
our

in Cuba

parties
desire,

accuse us

open a sugar war.

Dominican

Republic has
victory of its just
cause," the President concluded,
"and although there has been an
attempt to distort the nature of its
in

the

claims, we will not renounce the
right to be given equitable treat¬
ment in international trade, since
the

future

people depends

the
on

Dominican

it."

Seaboard Air Line Railroad

revealed
seller's

margin

profit.

attempt to protect profit margins,
there has been considerable ad¬

Equipment Trust, Series G

vertising of easier terms, smaller
down-payments, and longer ma¬
turities

durable

sales.

goods

2%%

This represents peddling of credit
terms rather than sale of mer¬
excessive

ate
if

carried

consumer

reduce normal

there

evidence

American

credit

mature

„

$471,000 annually from April 1, 1951 to April 1, 1965, inclusive

be'guaranteed unconditionally as to payment of principal and dividends by endorsement
by Seaboard Air Line Railroad Company.

indicate

Priced

public cannot

yield 1.35% to 2.50%, according to maturity

afford to

petence

buying later when

being liquidated. How¬

the

them, and probably the most im¬
portant, is that character and com¬

could

Committee believes that

ever, our

that

debt and,

extreme,

Equipment Trust Certificates
(Philadelphia Plan)

cre¬

permanent factors to
be considered in the granting of
are

instalment loans. We have learned
from

experience that

even

of the borrower is im¬
paired, character and competence

safeguards

are

repayment of

which

our

rather

insure

the

terms.

Purchasing

is still high compared

with

therefore,

are,

banks

our

continue

flexible and sound
tions

that

will

urging
to

such

HALSEY, STUART & CO. INC.

opera¬

rent

loans.

7he

that

carry

lending

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

Issuance and sale

power
prewar

levels.

if the

capacity

buy goods on reasonable
than
excessively liberal

geared to cur¬
conditions and on terms that

will

meet

A. G. BECKER

ume

constantly

increasing

of instalment credit in

vol¬

banks

this phase of our business
of the most important of bank¬

makes
one

ing functions. At the present time,
are
approximately *12 mil¬

there
lion

♦An

people
address

National

category

one

the

words

estab¬

exchange for the

dollar

the

financial

basis

and

gram

operations could be freely trans¬

ket

largely confined to deal¬
ings in the new Alberta refund¬
ing issue.
The market for inter¬
nal

bonds continued dull and in¬

active but
be

some

revived

interest is likely

following the

nouncement of the call for the

demption

an¬
re¬

forward into

"It has been

wartime
needs

price

has

fectly

been

year

clear

support

system

but

revision,

ment
year

recognized that the
adjust¬

the

postponed

the face

indications

condition

from

per¬

that

has

been

de¬

veloping," the "Survey" continues.
"In theory, the law provides for
control

production

over

through
marketing

acreage allotments and

quotas which
the

place

supposed to take
free-market
price

are

fluctuations

adjusting demand

to supply. The practical effective¬
ness of these

very

the

hands

remained

steady in the neighbor¬
9%%, but as a result of
the June redemptions there were
increased offerings of funds for
future delivery.
The corporatearbitrage rate was steady and vir¬
tually unchanged at 14%%-14%.
hood

CANADIAN BONDS
Government
Provincial

Stocks

continued

to edge
forward led by the Western oils,
among
which Pacific Petroleum

Municipal
Corporation

and Royalite

Industrials

Traction,

mostly

figured prominently.

were

Canadian

CANADIAN STOCKS

and

also

firm

Vickers,
the

with

Brazilian

paper

group

oarticularly active. Base metals
steady largely throhgh sup¬

held

port

accorded

Smelters
the

golds

and
were

A. E. Ames & Co.

Sullivan, but
mixed and mostly

(Special to The Financial Chronicle)

New York 3, N. Y.
WORTH

4-2400

flY

1-1045

far

the

control

tends

divert

In this

postwar

is,

experience

broadly

speaking,

repetition of that before the
It

impossible

ended

ties

tell

experiment

prewar

the

had

not
such

caused

soar

to
the

were

quickly absorbed

abnormal

accumulated

hostili¬
to

heights

surpluses
and it

necessary

the

have

demand

that

found

war.

how

would

outbreak

was

stimulate

rather than restrain farm
produc¬
tion.

Dubious
"There
that

production

suppose

controls

will

more
successfully now than
they did before the war, and the

recent

accumulation

—

Fifty Congreii Street

(Special to The Financial Chronicle)

are

MILWAUKEE, WIS.
A.

—

William

Seligman is with Seligman &
Co., 735 North Water Street.

many

allow

in¬

they
their

form

have

never

control,

but

demonstrated

practical effectiveness as a
long-run regulator of output. Any

accu¬

unmanageable

agriculture

stand

feet in the future

own

the

past,

and

still do.
such

Price

sur¬

industries

political obstacles to

course' are well

adjustments

but

alternative

its

it did in

other

The

pleasant,

less

recognized.

may

un¬

any
possible
so
in the long

In any case,

continuance of
practice of postponing

recent

the decision from year to year can
end only in disaster."

Charles Lob Joins
Dallas Rupe & Son

over

one

crop

farm

use

creating

new

assumption
quotas

—

that

marketing

be made to work—the

can

natural

tendency would be for

product after another

one

sub¬

jected to such control until in the
end the farmers become

agents

ating
of

fees, while the

the

bill

and

the

high

prices

smaller supply of food

products

than

available

ket.

the

duction

other

over

that

seems

would

them

control

effective

for

Charles

have

been

free

mar¬

cannot

long

pro¬

made

term,

has

become

las

resorting

Lob

1950
to

hope of early
improvement in the

situation

seems

with

first

the

official

plantings.

PA.

An¬

—

have

publication
estimate

Farmers

total

crop

present intentions

intend

only

1949 and

acreage,

are

Joseph

Euler as
Co., Inc.,

Euler

1518

Walnut Street, members of
Philadelphia-Baltimore Stock
Exchange, following a change in

the

firm's

form

corporation from

of
a

business

general part¬

nership.
Other officers of the corporation

autumn,
be

PHILADELPHIA,

President

Even with the large decline
winter-wheat
plantings
last

will

Euler Go. Officers

com¬

larger acreage to 17
major crops than they did a year
in

his

Orleans.

election

devote

ago.

conducted

business in New

mass

reasonable

the

formerly

investment

own

Plantings Blast Hope

disappeared
of

Dal¬

nouncement has been made of the

substantial

general

Lob

with

government must

to the
destruction of surplus farm

"An-

associated

Rupe & Son, Kirby Building.

Mr.

eventually face the alternative of
allowing
the
system
to
break
down

Lob

TEX. —Charles

DALLAS.

and other

hand, if

the

form

in the form of

once

artificially

paid

consumers

twice—once

of taxes

virtually

the government, oper¬
directed for a schedule

Charles

are:

Kauffman, Vice-

President; A. E. Euler, Secretary;
and Albert R. Christman, Assist¬
ant Treasurer.

carried out,

smaller than in

Bittner Co. Admits

will be the fourth larg¬
John

est in the

past 13 years. Not only
will the reduction in
plantings of

mitted
&

under

crops

allot¬

acreage

smaller

than

the

gov¬

ernment

requested, but most of
the land left idle by these curtail¬
ments
will
be
planted to un¬
controlled

crops,

illustrating

it under control.

G.
to

Cravin

has

partnership

been

ad¬

Bittner

Co., 80 Broad Street, New York

City.

Mr.

Cravin

was

formerly

associated with Allen & Co.

J. W. Dorsey

the

ways

population, the

"Even under the most favorable

Opens

DETROIT, MICH.—John Worthington Dorsey is engaging in a
securities business from offices in

the Edison Hotel Building.

"The

proposal of Secretary
Brannan to allow prices of farm

P. L. Goddard

commodities to seek their natural

creasing yields per acre. Market¬ levels and
ing quotas are
a
much
more
difference
stringent

Boston 9. Mass.

conse¬

situation

liquidate the whole program in as
orderly a manner as possible, and

surpluses tendency for a surplus in one com¬
certainly does not encourage such modity to 'spill over' into others
an
expectation.
Acreage allot¬ when an effort is made to bring

there

Seligman & Co.

existing

surplus problems.

ments

reason

possible

the farmer, as well as the rest
the people, would not be to

eight

Production Control Success

the

question whether the best service
to

the

land to other crops,

government

PORTLAND, ORE.
John G.
ments are
obviously inadequate,
Van Laningham is with Donald C.
because production is so
largely
Sloan & Co., Cascade
Building. controlled
by weather and because

With

the

respect
thus

prewar years.

work

With Donald C. Sloan

incorporated

during the

Consolidated

East

lower.

Two Wall Street

form

by the accumulation of surpluses

ad¬

wholesale destruction
products—it seems an open

the face of guaranteed

considered—the regimentation

Maintains continuance

regulatory devices in
modities.
high prices
doubtful, as was shown
1950

June 1 and June 15,
respectively, of the $95 million
Dominion 3s of 1955 and the $643
million 3s of 1951.
Free funds

Canadian

greater

pluses, the

must face

the

expense

end only in disaster.

structure of

conditions, according to "The
Guaranty Survey," tnonthly re¬
view of the
Guaranty Trust Co.
of New York, published March 29.

mar¬

was

the
pro¬

natural consequence of

unsound

During the week activity in the

support

time

trade

acted.

price

can

farm prices that was devised to
meet the wartime
emergency and
that is wholly unsuited to
peace¬

commercial pay¬

rate of

both

decision

movements

In other

ments.

would
in this

step

the

progress

than

place

lish

south

other

greater

direction

tragic, but

Guaranty Trust Survey.

says

agricultural

capital

were

flinching and without self-deception.

meantime the chances of averting
difficult economic situation in

ment

ad¬

any

the present system

of the

mulation

While the need for revision of wartime
support system has
been recognized, its adjustment has been
postponed from year

base

ures

case

control

difficult

warrant

and

of the farm

Our Mess With Farm Prices

of the

and

vanced

without

later stage also

asbestos,
various
possibly certain

metals,

tem¬

convenience."
views

"When
quences
are

run?

following greatly increased

metals,

matters

ministration.

solemn

treats

plan offers

over

complexity

increasingly cur¬
imports from

external section of the bond

period immediately ahead

value

should eventually be further cor¬
Canadian

vantages

fuel

S.-Canadian

rected

production

the

sufficient

to be the basic truths of this matter.

seem

The truth in this

produc¬

able

have been avoided.

These

degree the

present disequilibrium

recent

which will

tail

matter of

as a

for

remain.

how

see

long be

can

some

Canadian

the

of Canadian

pace

maintained.

alone

reasons

would

recently
expressed by Lewis L. Strauss,
a member of the Atomic
Energy
Lewis L. Strauss
Commission, who added that
under such conditions it was
impossible to come to
terms "with the foes of
democracy on a basis of
agreement founded on mutual respect for solemn
obligations evidenced by treaties and pacts."

the

that,

that

These

aluminum.

For

which

current

regard

necessity

subscribe if it

record of action to demon¬

porary

highly competitive Ca¬
nadian exports, notably of lumber

account

operations, it is prob¬
that this reckless dissipation
vital exchange reserves would

embarrassing

dustries of

Canadian

commercial

with

strate

sional circles here there is mount¬
concern

nation

covenants

S. surpluses of farm products.
in industrial and Congres¬

devoted

has

Also

border.

place during this period. Had

greater

extent, but production would
certainly not be restrained.
The

doctrine, rejects religion, denies
the authority of moral law, and

achieve

excessive

likely shortly
negligible factor. What

disquieting, Cana¬
dian exports to this country will
inevitably register to an increas¬
ing extent the political and eco¬

billion the

Canadian authorities viewed with

complacency

even

exchange

consequence

in¬ ing

of foreign investment funds
prime necessity.

flux

"is

account

this

This apparent attitude, how¬
fails to take into account the

try.
ever,

fact

commercial

trade

tax rather than a price.
Con¬
sumption might be stimulated to

governed by the moral stand¬
a

of his

part

payment would take the form of

be assumed to

can

ards to which

ECA purchases are

the

but

the

would

consumer

pay,

some

"No nation

exports of wheat and farm prod¬
ucts.
Furthermore U. S. offshore

account, the role of
capital account funds in the Ca¬

The
to

States.

commercial

establishment

producer.
continue

unlikely that Britain will be

current

concerned—

was

is, output would respond not
open-market price, but to

the

the total payment received
by

"No

By WILLIAM J. McKAY
While it would

that
to

and

pay the farmers the
between those
prices

support

prices

alluring, but offers
the

main

is
no

problem.

prices would

politically
solution to
The

fictitious

'free'
as

far

Opens

(Special to The Financial Chronicle)

LOS

ANGELES,

CALIF. —P.

Lund berg Goddard is engaging in
a
securities business from offices
at

720

vard.

West

Washington

Boule¬
i

Volume

Number 4894

171

(1329)

The

complicated the picture,

Depreciation Problem

result

the

Advantages of accelerated depreciation and replacement cost
policies weighed by Conference Board. Replacement cost
system seen providing relief during inflation and burden

computed

lently

Private domestic investment has
been overstated by
approximately
$17 billion in the period from the
end

of the

war

through 1948,

times

perous

and

Frank

substantial"

Gaston,

Senior

Research

Specialist of the National Indus¬
trial

Conference

that

ment

conventional

manner

study points out.

(original

Had it been

en¬

tered at what it would cost to

re¬

place this capital equipment,

de¬

preciation

would

have

amounted

to $50 billion.
The

rising price level that has

prevailed since World War II, the
analysis points out, has brought
into "sharp relief" the
disparity
between

industry's

charges

and

depreciation
replacement re¬

its

quirements.
American business
management

"feels

corporate

years

the

had been used.
which

great

the

replacement

"In 1932, the year
additional
burden

taxes,
however,
would have been $470 million, or
$88 million greater than the $382
million actually incurred."
But in those years, the

additional

any

the future

income

resulting from the

replacement

taxable

depreciation

charged

over

costs

uniform

profit figure

in
use

would

Accelerated Depreciation Used

The

device

accelerated

de¬

preciation has been used twice in
the United States, but in each case
it was adopted as an
emergency
in wartime.
The purpose was to
private

encourage

plant

and

expansion

equipment

produce

rate

goods.
It was an incentive
provided to manufacturers to un¬

dertake

new

investment under the

uncertain conditions of

The

the

use

ciation

the

accelerated

first

was

war.

sufficient

Revenue

depre¬

provided for in

Act

1916.

Since

munition profits at that time

were

rate

and

replenish

when

those urging complete freedom for

reserve to

replace
equipment the businessman to select and per¬
and haps vary his annual charge from

capital

becomes

obsolete

out."

worn

to year to those which shorten

year

the

Accelerated

Depreciation vs. Re¬
placement Cost Controversy

As remedies, the
analysis points
cut, attention has centered about
the

point

should
inal

charged

cost

ment

whether
basis

orig¬

upon

replace¬

cost—that is, whether upon

retrospective
cost.

But

has

depreciation

been

erated

cost

prospective

recently, attention

directed

toward

accel¬

period
of depreciation
but
various other restrictions
upon the freedom of the business¬
place

Replacement costs

capes

leveled

against most other plans
seeking to alleviate the problem
of
depreciation under changing
price levels. It is based upon cost,
the

and

remedy

amount

charged

against
the

which
the

asset.

the

would

descending
be

reduced

prosperity but the

years."

life

The problem is

"essentially one
changing price levels. If prices
constant over time, the

remained

question

would

never

arise

the

live

Changing Price Levels and LongTerm Capital Investments

capital assets are longterm ones, "there is ample
oppor¬
tunity for a discrepancy to arise
between

o^ginal cost and replace¬

cost.

able, it

From

appears

the

data

that fixed

avail¬
assets

are

turned

in 25 years. That is to
say,
annual depreciation
in

over

the

average

once

any

would be sufficient to elim¬
inate the gross property account
year

corporations

made

only once in 25
if no new acquisitions were
in that period.
This is cer¬

tainly

asset

greater

and that

years

than

kept in

operation by the firm for the
riod

of its

the

usefulness

period

recovered.
set

will

the

for

not

It follows that the

firm

and

pe¬

which its cost is

over

as¬

producing income for
a

different

problem

from

time

the

time

asset

earlier

when

fur¬

the

earlier

the later

Since

years

"Taxes

five

year."

set with

Cost

use

suppose

in¬

first
later

that

as¬

useful life of ten years

come

tax

the

$100,000 and the cost is to be

charged off in in ten

will

Moderating Effect of Replacement

of the lifetime of the asset.

example,

from

low

come

times

taxes

relative

years

For

will

further

asset

come,'the study continues, a like
shift will take place in this
charge,
assuming no change in tax rates.

sume

the

years."
income

turned

one

with

assuming no
change in rate of operation. In a
sense, income will be shifted from

costs

over

compared

years,

arising from the change in
prices of inventories which are

that

The

the

Act
an

rate

that

the

use

As¬

years.

the
of

gross

the

in¬

asset

$20,000 annually. The

can

assumed

20%.

replacement cost has

being

ended

emergency

national defense.

had

for

necessary

•

Shall Heads Gone.

move

with the business cycle,

becoming larger in good times and
smaller

that

prices

bad
move

times,
in

assuming

accord

with

good and bad times. Profits would
thus be reported lower in pros¬

net income.

would

The only change that
have
taken
place is a

bunching of income in the last five
years.

"If the assumptions made actu¬

ally neld true and

other factors

There have been

who have

men

aver¬

always best to back

find

your

proper basis for your call.
It is
interviews with steady newspaper

advertising and also direct mail.

You don't throw seed into
sandy
expect it to grow.
You plow, you irrigate, you fertilize
and you cultivate—and you exercise patience.
There are too many
dealers who expect salesmen to
go out and sell their friends and
soil

and

relatives—they do not advertise enough and back up their men.
So first of all, spend some money. But
spend it wisely. Find an
and to help.

for

reason

Give them

some

call.

Send your men out to serve

tools with which to do it.

Don't

ex¬

pect business to fall into your lap.
Next step is to obtain a large enough list of stock
buyers in
your neighborhood that can be conveniently covered without too
much waste.

Stockholder lists are available and they are the best
obtaining names. Other lists of prominent people can be
circularized.
Newspaper advertising will also bring in prospects
of

means

but you must be prepared to cull out some
curiosity seekers, etc.
After you have planned your
campaign, and have secured your

lists, then send out your advertising. Keep it up. Follow each in¬
quiry until you have determined that it is useless to keep the name
on your list.
After you have prepared the way with advertising,
and if

one

possible have developed

new

better.

all then see five

This does not
call.

You

can

two of them

see

new

just

see

much the

without any accounts at

man

more.

though that you will just make
going in to see your prospect because

you

You

not

are

inquiries, go out and

some

day.
If you
Of course, if you are a
person

first of all

mean

to visit with him.

going in to sell.

are

That

friendly
desire

Div. of Gold Letgae
Frederick

Haven,

G.£ Shull

New

Conn.,
recently
retired
Aluminum;
Company
of
after

been

service,

years

ap¬

Con¬

necticut

one

can

tell you how to do

means

that—you have to

that there is

more confusion, more
indecision, and more downright
by investors than any other class in this country today. What
a clientele
you could build if you just took the bull by the horns
and showed people that
you could help them solve their investment
problems.

worry

fill

the

overall

details.

plan for building

is based

upon

business.

common

You

solving

sense,

other's

problems, a willingness to work intelligently and consist¬
ently, and faith in the plan.
It will work—try it!
I have proof
based upon the experience of others who have tried
it, and not
once did it fail to
produce exceptional results and substantial busi¬
that continued to expand and grow.

ness

After

started, it gains momentum—satisfied
your prospecting problem.

service business

customers

eventually solve

State

The

Reports Over $6 Billion Savings in 1949

for

Gold

League.

Home Loan Bank Board says selected types of

The

ings has reached

appointment

was

nounced

an¬

yes-

terday

stitutions

bonds

Philip M. McKenna.
tional

Frederick

Shull

Standard, making all
currency redeemable in gold coin
upon demand at $35 per ounce.
The purpose of the League is to
give to the people the power to
prevent deficit spending and fi¬
nancing and to prevent extreme
losses
in
purchasing power
through
the
use
of
the
Gold
Standard.
Mr. Shull, as Connecticut State
Cha;rman,
will
apooint
Vice-

turn

each

Congressional

Vice-Chairmen

who

will

members

secure

League

for

the

known
their demands for sound money to
their Senators
Congressmen and
candidates

1949,

make

for office.

League,
has

people.
the

returns

Bill

the

Standard.

than $6

ranging from less than 1% to.6%.

Bank

March 25.

the

term

Loan

selected

savings

Board

By the

types

covered

H.R.

country

Passage

For

an¬

longby
the

Although
level

nual

down

the

war

June

all

states

3262

which

the

Gold

bill

expected in the next 12 months.

yeai*

postal savings.

insurance

about $50

from

years,

consecutive

drop in the balance

ing

sharply

net additions

second

was

life

new

high of $169 billion.
the

the

Of the various types of
savings*
studied, the greatest amount was*
represented by the cash value of

year-

1949.

policies, aggregat¬
billion

U. S.

en<f

was a

close second

with

statement said.

the

savings bonds held

by individuals

an¬

savings are
continuing well above the record
for any year prior to 1942, the

third.

Except

for

postal

savings,

nearly $49 billion and time
deposits
in
commercial
banks,
amounting to $35 billion, ranked
During the past five

the

years

amount reported in each category

ings

showed

1949.
Accounts in savings and loan as¬

almost

sociations and similar units and in

other

mutual

sav¬

ranged from 35 to 47%.

types
tered

some

gain

during

savings

banks, the onlyof institutions that regis¬
greater net gains than in

loan

and

association

doubled

savings,

while

forms

1948

1948, rose by 13.6% and 4.8%,
respectively.
Savings
held
by

holdings of
increases in the

and

crease

the

during

savings

studied

gives estimated,
of 1949 and

end

percentages

in¬

1949.
Percent of

Amount-

tDec. 31. 1949

have

their

The table below

savings

Dec. 31, 1948

Increase

-COO.OOO's emitted

Savings and loan associations-.

formed

members

The League is supporting

Reed

Board's report had reached

Gold

banks, life insurance
companies and in the form of sav-*
ings
bonds
reported
increases

Home

end

The League advocates return

Chairmen

savings

there

nounced

at its
headquarters
in Latrobe,
Pennsylvania.

District.

the

League

the

increased

Life

Postal savings

g—.

U. S. savings bonds
Total

13.6%

—

$12,469

$10,964

50,000
19,270
35,100
3,300
48,600

47,139

6.1

18,385

4.8

34,970
3,442

—4.1

47,500

2.3

$168,730

insurance companies

Mutual savings banks
!itCommercial banks

♦Time

$162,400

0.4

3.9%

deposits.

NOTE—A

tPreliminary estimates.
three-page report carrying these

figures (or the years 1920Board,
101
Indiana Avenue, N.W.,
The Home Loan Bank Board report does
not
cover
the entire field of savings, but is designed to measure long-term
accumulations of individuals in major savings channels.
Mere comprehensive
studies of savings are; made by the U. S. Department of Commerce and the
Securities and Exchange Commission.
1949

available

Washington

25,

;

sav¬

high of $169 billion.

during
1949,
continuing
the steady growth of recent years,

the

and

long-term

commercial

billion

Na¬

Chair-

m a n

a new

Savings of American people in
the leading types of financial in¬

cal

cost

manage

This is the broad

and Chairmen in 14 states.
Ac¬
"moderating effect" on the cycli¬
swings of corporate profits. come to $20,000. Net income after tivities of the League have re¬
"Instead of remaining fairly stable taxes will come to
$80,000.
Over sulted in
widespread support from
in good and bad times (when cal¬ the full lifetime of the
asset, the
individuals,
members
of
culated upon original cost) depre¬ total income taxes paid would be many
ciation charges upon replacement the same as before and so would Congress, banking and insurance
a

task.

day without much difficulty at all.
Surely any¬
five calls a week on new people in addition to

their regular accounts.
The first step is to

can

The

"Over the lifetime of the asset,
the total income taxes paid will

can

one

ex¬

A corporation in¬

facilities

pointed

base

Since

years

The

certified

has

depreciation ther depreciatioin charges will be
charges upon replacement cost or permitted. As a result, net income
from the particular asset will be
upon original cost: the two would
be identical."
high in the later years of the life¬
whether

years.

aged two calls

Standard

time

the

less

would be true in depression

ment

sooner.

be as?umed that the actual useful

Taxes

verse

they have been suc¬
instance, there is no doubt about it. If
will follow the plan of making only one call a day on a
quali¬
fied prospect—just five calls a week on
prospective new accounts—•
you should build up a very substantial business in about two

selling yourself.

re¬

prices.

But

learn this by living.
Next, you try to find a basis for helping him.
I don't think this can be overstressed.
Frankly, I honestly beFeve

Chairman

deflation

ideas in this column and say that
there are certain procedures

any

work—positively.

emergency facilities was permitted

The accelerated rate, it is
hoped,
will make for economic
expan¬
sion.
"To find the answer it must

will

to write off the cost in 60 months

America

Operation

Revenue

made

curring costs in the expansion of

from

Accelerated Depreciation in

This remedy would, in turn,
create difficult problems in a
pe¬

Second

cess-profits tax

cannot

revenues

cost

the

was

1940, which also contained

can

firm
base
is
provided
for
charging of depreciation."

ing.

his annual charge.
depreciation "es¬
the criticism that has been

Accelerated

exceed

amortization.

"would provide relief in
many in¬
stances while prices were ascend¬

riod

to vary

man

accelerated amortization

they

along

which have been tested
again and again and
cessful.
In this particular

idea—a purpose—a

problem
responsibility above and
method of obtaining a more
equi¬
of
beyond
depreciation under changing
regaining of
past
ex¬
table definition of taxable income.
penditures; in order to perform its price levels "would be to use some
This law was repealed as of Jan.
1,
obligations to its customers, its plan of acceleration." Many con¬
1918, by the Revenue Act of 1917.
workers
and
its
stockholders, cepts have been put forth, the
In World War II
provision for
management must somehow ob¬ study
notes.
They range from
tain

By JOHN DUTTON
I hesitate to pass

This is not much of

During World Wars I and II

nearly three
derived
mainly
from
contracts
obtaining in the
with foreign
governments, the de¬
great depression."
vice was adopted not as a means
of securing expansion of manu¬
The Acceleration Plan
facturing facilities, but rather as a
Another solution to the
times

Securities Salesman's Corner

you

war

study
the corporate tax rate
was relatively
low, less than 14%
compared with 38% at present.

continues,

as¬

$8,000."

cost

income

"Thus

vio^-

taxes

last

porate

cost), amounted to $33 billion, the

trast,

depression "would not have been

would have been the greatest, cor¬

the

fluctuate

the lifetime of the

over

result

capital
estimated

up,

additional

most

end

make

profits would be zero in the first
five years and then
jump to $16,000 in the last five
years. By con¬

equip¬

period,

used

The

Board.

de¬

Effect Upon Taxes

ac¬

income

the

accelerated
be

the useful life of the asset would

cording to an analysis of the eflects of depreciation
policy which
has
just been
completed

higher

pressions."

would

In the above
example, dollar

set.

during deflation.

use

depreciation

Home

Loan

C., Room 740.

Bank

THE

(1330)

COMMERCIAL

Velsor

Wolf,

Maryland

FINANCIAL

a director of the
Guarantee Co. of

Title

Baltimore,

CHRONICLE

according to the Bal¬

timore "Sun."

Mr.

Wolf is

con¬

close of business
the

issuance

record

tional
No

bury, Miller & Evans.

holders

that Paul L. Plack
serve

ant

action

by
of

time

each

the

addi¬

one

part

necessary

held.

stock¬

regards

presently outstanding certificates.

that

stated

line

taken

increasing

action

the

with

was

policy

already

the

bank's

wide¬

spread ownership of the bank.
The plans to reduce the par value
shares

the

our

government seizure and

op¬

noted

were

issue of Feb. 23, page 812.

Title Officer and Assist¬

He has been asso¬
company for 15

Secretary.

ciated

elected to

was

that

March

stockholders

share for

nected with the law firm of Mar-

It is added

Thursday, March 30, 1950

the

with

Continued

from first

page

years.

Robert

elected

Bank

over

York

board

Mr.

McNeill,
Trust

trustees

McNeill

President

Co.

New

has

March

been

21.

Vice-

Central

December,

that he

was

regular meeting of the

since

Jr.,

trustee of Central Han¬

Hanover

Prior

1940.

President of Central

was

Farmers Trust Co. and of Atlantic
National

Bank

West

Palm

Beach, Fla.
*

Trust Building

ities.

He will retain his director¬

ships

Trust Co.,
Inc., The

Marine

the

Marine Midland Group,

First

Tonawanda,

Co.

Trust

National

Bank of New York died
22

after

was

Clean,

illness
years

certified public account¬

Institute of Technology
Oglethorpe University.

March

Georgia

and also at

old.

Mr.

Mc¬

years

after five

lecturer at the

Professor and

weeks.

six

with

the

also

was

formerly

member

of the Committee on Appeals and

the

States

United

Oliver

First

which

later

First

the

Aas

received

of Equitable in 1929, he became a

Accountants.

the

University

Second
Chase

Vice

Equitable

President

the

time

the

Thompson

director

and

Chase-

Smith,
the

Chair¬

Committee
Home

Title

Guaranty Co., has been elected
director

Co.

New

nounced

American

York,

was

Smith

the

trust

company.

President

The

Real Estate Board of New York,
Inc., and the New York Board of
Title

Underwriters.

He is also

Governor of the Mortgage Bank¬
Association of New York and

ers

director of

extensive

City and

Suburban
He is identified with

Homes Co.

civic

also

was

Mr.

Corp.
Vice

that

Walter

Wiley of the bank's Branch Loan

Administration has been made
Vice

after

and

the

nounced

taraugus, N. Y., from $100 each to

$20 each and increasing the
ber

1932.

At .the

the

same

time, it

in
was

announced that James B. Agnew,
of the bank's office at Fifth Ave¬
nue

and 43d

Assistant

Street,

made

was

Secretary.

has been with the

Mr. Agnew

since

company

1937.

Ground

Neck,
new

I., on March 27 for a
$250,000 building to house
Neck

branch

the

Queens

County Savings Bank of
Flushing, N. Y.; the branch is now
located at 250-01 Northern Boule¬
vard.

The

located

Northern

First

the Marine

Life

eral

Hickmott,

Co., was
Vice-President

cently

Vice-President

Trust

ford, Conn., and President of the

late

London

Northern

positions

Group,
tion

Co.

banks.

been

and

Midland
elected

Fischer
rine

Woodward.

General

Connecticut

Midland

Gruen, Vice-

Treasurer

duty

will

not

relinquish

his

other

banking and business inter¬

ests.

He will

the

16th

maintain

floor

the

office

Marine

1946.

Wars, Mr.

Aas

Secretary

President in
ident

1937,
1947

1949.

Second

and

Vice-

Vice-Pres¬

has

been

Savings Bank

Peoples
Trust

last

war

degree from
Minnesota

both

World

served

held

was

the

Navy.
He
Lieutenant-

National

Bank

that

the

voted

&
an-

directors

increase

share.
cents

This is

increase

share annually

per

Cloud,

Minn.,

The Board of
Federal

increased

Governors of the

Reserve

nounced

System

an¬

the

ap¬

March

its

pointment of Dr. John M. Gallalee,
of

President

payable
of

the

Bank

of
the

the

March

27.

Downie,

earn-

making

declared
10

cents

per

extra

share,
total dividend of $1.70
for

Dividends

1949.

year

by the

The bank at the

year-end had total

amounting

per

capital funds

$30,063,489.

Last

$2,000,000 was added to sur¬
plus, increasing the total capital
and surplus to $26,000,000.
year

Ijs

Announcement

was

made

March 16 of the election of G. Van

the

United

the

States

a labor
front party into a socialist party.
This process is inevitable, because

for

Atlanta

the

unex¬

Chairman
is

the

board

announced.

according

who,

Mr.

the

resorting to politi¬

what

they

agree

to do.

labor

will

not

beyond

reason, when

compulsory

rule

and

their

struction of individual

de¬

liberty and

rights of property, except the so¬
dogmas that support the

cialist

creation of

office

the

Anglo's
Sacramento, it

ager

Allard

capital

the

advisory

department of the Hawaiian Trust

Co.,

Ltd.,

While in
ident

Honolulu,

Honolulu

Hawaii.

labor

dom

the

workers

to¬

act

have

the

employers
to

government

compel

competing workers

submit to their orders.

They not only opposed compul¬
sory arbitration of labor disputes,
but

Gompers
made

opposed

even

eight-hour

remote

days

the

Republican

President

law-

day!
In those
senatorial boss
Party

the

said

A.F.

to
L.:

"Once you get the government to
do things with men, you never
know

what

the

end

going

be." And President Gompers com¬
mented in writing: "This was in

coincidence

exact

with

active
Red
a

own

Gompers be?

what would Sam
It must be admitted

vigorously against tyranny in

Community

was

Chest

and

Mr. Johnson is

Stockholders

Francisco,

"reactionary,"

Cali¬

Cross work.

Don Richberg is now a

years,

that

native of San Francisco.

America

Pres¬

fornia Alumni of Hawaii and

always

reacted
any

form, by anybody!
chosen

The

million

leaders

organized

are

wage

some
-

earners

clamoring to have the

government regulate the working

the

both

today

Bank
of

San

and

living conditions of American

workers

from

the

"cradle

the
par
mon

special

directors to reduce the stated

value
stock

of the

com¬

outstanding from $12.50

to $6.25 per share, and to increase
the number of shares outstanding

from 10,238,052 to 20,476,104.

change will be effected

The

of the

"Labor

practices"

bargaining

are

made

collective

"fair"

"unfair"

by volumes of bureau¬
cratic rulings. When the produc¬
tion

failure

necessities
of

stopped

voluntary agreements,
labor 'Maders advo¬

outstanding

•:

power, com¬

fuel,

and

transportation.

They clamor for government guar¬
antees of social security and eco^
nomic

security in

braying chorus

which would drown out all oppo¬
sition to these advances of na¬

socialism

tional

under

the

false

"welfare state."

Socialized

Relief in
these

Suicide

socializers march

into

the

Utopian realms of socialized
housing, socialized education, so¬
medicine

cialized

and

essential to

are

socialized

the main¬

communist

state, it
comforting to realize that, with
of

the development of

atomic

energy,

socialized

completely

any

state

will be able to find relief from its

financial and

spiritual bankruptcy
That appears

in socialized suicide.
to be the

principal objective today
of
the great socialized state of
Russia, which opposes any effec¬
tive restraints upon atomic war¬
fare.

historically interesting to

the

processes

labor

whereby

movement

the
40

has been transmuted
into
the utterly
different labor
movement of today.
It is well to
ago

years

that

remember

the

Socialists

yesterday were as vigorously op¬
posed by the strong-minded lead¬
ers of that day, such as Gompers
and

Stone, as the Communists of

today

opposed by such men as

are

Murray and Green and Lewis. But
we
must
also
remember
that,
when the labor leaders of the '30's

induced

were

political,

collaborate with government, and
to

become

partisan, in order to
organizations and

their

rescue

their members from

calamitous

depression, they accepted, at first
reluctantly but eventually with
enthusiasm, the coercive aid of
political power as the easiest way
to
solve
their problems of the
hour.
We

can

assume

that

if Russian

Communism had not demonstrated
and

soon

nomic

the eco¬
the
social

and the industrial weak¬
national
socialism, the

wrongs
of

ness

forcibly

unsoundness,

drive to socialize our entire econ¬
omy

and to develop an all power¬
government, would

national

ful
have
it

advanced

has

even

further than

Happily, we now
find hesitations developing, obvi¬
ously among the farmers and less
clearly among industrial workers,
against making themselves com¬
pletely dependent on the govern¬
ment for relief against the hard¬
ships and uncertainties of life in a
complex industrial civilization.
Rural

today.

Population Not Seduced by
Brannan

the

meeting grave."
Minimum wages, maxi¬
voted in favor of the proposal of mum hours are
prescribed by law.
a

sup¬

govern¬

monopolistic

long

University of

the

They

extend,

controls of food,

munication

American

was

would

trace

investment

organization.

and

ment monopolies and

all powerful, tyran¬

is an¬ point of view."
Calkins,
"How Times Have Changed"
President.
Mr. Johnson recently
joined the Anglo Bank staff after
How times have changed!
If,
serving for three years as Man¬ after fighting labor's battles for
nounced

port,

workers to join or not to

state.

tional Bank, of San Francisco, has
been
placed in
charge of the

of
an

unions

economic pressures and appeal to

William H. Johnson, Vice-Pres¬
ident of the Anglo California Na¬

dom

join

tenance

they consistently opposed the
Herald," resigns to
establishment by law of terms or
give more attention to his per¬
conditions of employment,
even
sonal business, will remain as a
when supposedly for their benefit.
director.
He was, it is said, one
of the principal organizers of the
bank which began business Sept.

They

which

for

reason

of the Empire State Bank of Dal¬

Texas,

unions.

ple

gins

favored

politically

cal action is to compel other peo¬

pired portion of the term ending gether for their common benefit,
so long as
they sought only equal¬
Dec. 31, 1950.
Dr. Gallalee suc¬
ceeds J. Roy Faucett, a member ity of opportunity and of bargain¬
of the firm of Faucett Brothers, ing power, and relied on voluntary
agreements to protect their inter¬
Northport, Ala., deceased.
ests, they did not need nor desire
*
*
if
The resignation of Ellis C. Hug-

government aid
workers to
join

all

psychiatry, beyond which lie the
alluring vistas of socialized labor
and
socialized
thought
control

organizations
Reserve sought only to establish the free¬

Federal

for

industries.

denounce laws protecting the free¬

are

hurried transformation of

Birmingham

partment

The

April

record

Mr.

directors

dividend

seeing

call

forcing

transforma¬

party in Great Britain.

University nical
Alabama, Tuscaloosa, Ala., as

director

newly created public relations de¬

the

seen

They
in

entire

labor party into a social¬

When

the

ingswise, 1949 was the best year
in the history of the bank.
Net
operating earnings amounted to
$2,030,039, or
$3.38
per
share,
compared with $1,896,825, or $3.16
per share, for 1948.
In December,
the

ist

per

quarterly dividend to 45 cents

have

banners of

Transformation

they seek to compel
all workers to join
them, and all
capital, effective March 14, from
other community interests to be
$100,000 to $150,000 by a $50,000
subservient to theirs, no theory of
stock dividend.
political action will justify their
i»
if
if
St.

Co., of Pittsburgh, has

March

labor

organized to gain, or
for industrial workers.

Socialist

tion of

the

First

hounced

The

which

cate

eration

so¬

eventually
liberties, com¬

very

voluntarily

rank,

Commander.

<',

sjf

Downie, President of

other

securities

are

to preserve,

had

affairs.

20, 1948.

Robert

The

socialists and that

and

unions

briefly in
the Army in 1918 and during the the

Financial

forts

years,

civic

law

veteran

Connecti¬

Secretary

General

bank since 1867.

retiring from active

cut

Mr.
Ma¬

two

and

1937

Aneta, North Dakota, Mr.

1925,

Assistant

succeed

Although

1925.

Dallas "Times

was

have been paid each

officer of these corporations, Mr.
Fischer

his

and

wrong

impossible."

destroy those

program.

active

appointed

1917.

has

of the

been

lege in

Inc.,

Corp.

relations

Huggins,

Ma¬

Treasurer

was

also

Mr.

since

socially

Mr.
active in the bank's pub¬

graduation from Dartmouth Col¬

Group,
to

Midland

organiza¬

lic

past

las,

According to

Midland

Marine

Edward

President
rine

service

the

Gom¬

unsound,
industrially

cialist government will

the

Hickmott has been associated with

of Buffalo,

the Marine

Inc.,

for

RR.

succeeds

Charles

stockholders

was
recently announced.
Mr. Fischer has also been a Vice-

re¬

elected
of
the State Savings Bank in Hart¬

Joseph

Corp.

President

Vice-

Samuel

was

Vice-President

the

Branch

Insurance

dividend

N.
Y., and Vice-President and
Treasurer of the Marine Midland

600,000 shares outstanding.

retirement

Fischer,

Boulevard

Street.
*

The

building will be

new

and 251st

it;

President of the Connecticut Gen¬

Little

num¬

since 1942.

broken

was

1,000

value of $100 each to
5,000 shares of the par value of
$20 each.
par

trustee of the State
*

the

from

shafes

the

these

Administration

Aas

of Cattaraugus, at Cat¬

the Bank

New

several

Division

Loan

Banking

certificate reducing the
value of shares of stock of

given to

Mr.

transferred to

was

Brooklyn

Branch

During

March 17 an¬
that approval had been

Department

par

State

"economically

into

York

words

absorbed

The American National Bank of

New

The

1924

bank in

serving

branch offices
the

President.

came

Marine

announces

Wiley

Executive

Assistant

Midland Trust Co. of New York.

Allerton

Assistant

Midland

the

Harvey D. Gibson, President of
Manufacturers Trust Co. of New
York,

Textor

President

activities.

that

announced

George C. Textor has been elected
Assistant Secretary and Assistant

an¬

be¬

Society of Certified Public

Trust

by Harvey L. Schwamm,

President
Mr.

the

also

Institute

American

the

Treasurer of the Marine

of the Executive

man

longs

Gruen

Mr.

Court.

Tax

the

in 1930.

merger
#

Lee

things.
guides will

nated by

National

First

State

predecessor of the United States

Bank

elected Assistant Trust Officer of

moted to Assistant Vice-President

was

two

socialist

Co.,

Bank.

Born at

1917.

understand

that

Trust

was

National

of Accountants and the New York

was

Vice-

National

Minneapolis

Department which

Treasury

pers,

Assistant

First

appointed As¬
sistant Manager of the Equitable's
Foreign Department in 1921 and
Manager five years later.
Pro-

the

recent

Board

Aas,

One

thing I
of
Minneapolis, Minn., died on have learned, which Gompers ac¬
curately foresaw, is that any po¬
March 22.
He was 51 years of
litical labor party will be domi¬
age.
Mr. Aas in 1927 joined the

President

Review

staff

came

March

the

Express Co., joined the
Equitable Trust Co.

American

from

learned

the

effective

forceful

ant

Chase

changed

been
Bank,

System.

partment

the

15,

Pensions and Politics

Milwaukee,

Deposit Co.
Besides his banking
interests,
he is also
identified
with
various
corporations.
A
native
of Tonawanda, Mr.

Georgia, was formerly an Assist¬

has

Teutonia

always lead the labor unions away
from an economic program into a
political program, which, in the

ant in the states of New York and

Wis.,

Bank

Governors of the Federal Reserve

Gruen,

McClean,

State

nue

of the Teutonia Ave¬

name

announcement

Second

The

North
Tonawanda and the Marine Safe
Co.

Trust

State

The

Vice-President in the foreign de¬

John

in Buffalo to carry

his business and outside activ¬

The lure of

Brannan plan, to

guarantee a livelihood to farmers
at the cost of submitting to gov¬
ernment

and

controls

of
production
has
not
yet
the rural population to
the independent way of

distribution,

seduced
abandon

life that is still the main induce¬
ment to men and women to

Volume 171

Number 4894

the

difficulties and to
enjoy
freedoms of self-support.
The

industrial

THE

the

workers,

long

educated to resent
dependence on
an
employer for jobs and the im¬
provement

have

living

to accept
dependence on govern¬
ment otficials for
economic secur¬

ity,

particularly when they felt
through their own labor or¬

that

ganizations they would be able to
regulate their official regulators.
But, little by little, even the
industrial workers have come to
appreciate that

labor-controlled

individuals who accept its hazards
in order that they
may live as free
men.
An
economic
system
in
which
individuals

expend

energies

and

their

individually

standards, accumulated gains for the

been more
easily persuaded

COMMERCIAL &

purpose

of individual
support and security
suffer all tneir losses indi¬

and

vidually, but

are forced to accept
political distribution of all their

gains,

is "economically unsound,
socially wrong and industrially
impossible."

That, however, is the system of
enterprise whicn certain pressure
and

groups

politicians

government has

have

pleasant

illusion

CHRONICLE

that

tney are milking some
of those wicked
profits out of big
business and getting "free" insur¬

and

The

with

employer.
"you can't strike

the

menace of

economic

this

government," carries
chill warning of the
dependence upon a boss

against whose abuse of power
you
may iind that you have no

by
is

means

self-defense.

enslavement
under

state

ployments
tion

labor
the

States

debts,

em¬

denuncia¬

slavery"

competitive

United

penses,

Russia

monopoly

makes

"wage

present

the

rowed

actual

The

the

economy
sound

silly. Not until the
"welfare state" takes

our

future,
for

money

and

What this

long

con¬

described

process

financing."

that

mortgage

weap¬

ons

unsoundness

temporarily

the

"deficit

system

cealed

can

spend

bor¬

current

ex¬

avoid

paying our
living beyond
enjoy the pros¬

we can go on

and

means

perity of

father who is spending
the heritage which
belongs to his
children.
a

socializing

The social wrong of this
system
is concealed
by pious declarations

control

that

rather

social

justice

and

social

se¬

industry will there be any actual curity for all are its
objects. The
"wage slavery" in America.
communists avow this noble am¬
As

result of the current
in economic and

fusion

political

thinking,
America
are

the
are

labor

leaders

bition

the

phrase "to each
cording to his need, from each
cording to his ability." But

and

They

mits

politicians

our

reduce

actual

rewards

accumulation

capital
pand

and

surpluses,

labor.

the

investment
needed

industries, and the

the

Yet

of
ex¬

payment

the

sacrificing

Well

educated

socialists

government in opposite directions
at
the same time.
Mr. Reuther
told the Congress
recently that he

looked forward to the time when
all old age pensions would be
gov¬
ernmental. Then it would not be

necessary

bounce

back

and

forth, clubbing private employers
into
providing partial pensions
and pressuring
Congress into pro¬
viding additional pensions.
Any good socialist would agree
with Mr.

Reuther that the whole

job ought to be done by the gov¬
ernment. Then pensions would not
be used by
employers as "unfair
incentives" to keep
at

job,

one

Then

working

their

old

entirely

and

reminded

made to

once

protest

big business

exec¬

utive

against his continuance of
doing business in Nazi Germany.
I said:
"They take away all your
profits," and he answered, with

of heavy taxes to
support an ex¬
travagant government, are only pathetic irony:
"Yes, but they let
possible through the making of us make them."
the profits which these
Our
befuddled
socializers
today are at

leaders denounce.

least wise enough to permit sub¬
This hopeless conflict between stantial
profits to be made by
policies and objectives is particu¬ American
business
because, al¬
larly evident in the prosecution of though profit-making is
noisily
increasing demands for social se¬ denounced as the evil product of
curity—for pensions, unemploy¬ predatory business,
ment

insurance

earnings.
were

and

,it

and

guaranteed
labor
program

the

socialism it might fail,
would fail, be¬
of the weaknesses
inherent

pure

presumably

cause

political management of in¬
dustry. But, there would be at
least some logic in a demand that
a

the government rule

industry and

accept responsibility for employ¬
adequate wages, and the

ment,

accumulation of

sential

source

which
power

is the

the

es¬

with

revenue

maintain

political

of the socializers.

This

the

reason

why the in¬

dustrial

impossibility of socialism

will

concealed

when

until

the

time

industry is completely

so¬

cialized.
Until then private en¬
terprise will continue to produce
the

profits

ment

out

services

of which

govern¬

can

and

the

age

served,

how

can

the

government

years

tence.

become the guarantor of
employ¬
ment and economic
security? The
government can of course protect
and sustain the freedom of
private

enterprise to provide employment
and economic security for all
per¬
sons capable of useful work.
The
government can of
a

course

require

to develop social geese that
lay golden eggs of a quantity
quality comparable with the
put of the individual geese of
vate enterprise.
politicians and

the

pri¬

That is why both
leaders of

liberal-spending
or

and
out¬

labor

not decide whether

try

will

school

can¬

private indus¬

government should

re¬

fair distribution

upon

one's

Then

Government's Impossible Task

But the government cannot plan
and direct and spend the

course

for it
taxed

the people always pay

ultimately, but, if they are
too much directly by the

earnings government they may begin to
private enterprise in order to complain that
they want to spend
provide
employment
and
eco¬
more of their own
earnings them¬
nomic security for all, without de¬ selves.
However, if employers are
stroying the ability of private en¬ made to pay for the
people's in¬
terprise to achieve its primary surance, then both labor
of

and

of providing employment
economic security for those

purpose

sumers

and

will

(from

whom

con¬

employers
actually get the money) will

the

main

Seventh, for these

topic of
this gathering, the pension ques¬
tion offers a good example of the
unfortunate and confusing results

the

reasons

and

others, the government should be
required and authorized to use
pension taxes to purchase pension
insurance from private insurance

companies, which, by investment
divided, discordant, mud¬ of their funds in
private enter¬
leadership. If there
prises will insure the flow * of
were a
prevailing labor policy in
private accumulated capital into
favor of government pensions and
the
development
and
mainte¬
in opposition to
industrial pen¬
nance
of private enterprise, thus
sions, the issue would be clear. If
providing for additional private
labor
policy favored
industrial
employments and private income
pensions and opposed government
out
of
productive labor.
Thus
pensions—or even favored indus¬
private enterprise will be strength¬
trial pensions for industrial work¬
of this
dled

ers

labor

instead

ened

and

government pensions for

others, the issues would be clear.
But, organized labor, conscious of
in free enterprise,
yet half seduced by the glittering

tic

and industry to solve the
problem in different ways.

same

Program

exposing a greater
ignorance than I am willing to
confess I am going to suggest a
program of pensioning that might
be acceptable to all genuine be¬
lievers in
a
free economy, but
which, I am sure, will not be
acceptable to any partisan so¬
cialist.
The adoption of such a
program would however develop

weakened
a

socialis¬

pension program.

Eighth, in supplement to such
a

promises of socialized security, is
engaged in the unhappy effort of
trying to compel both government

would be the result of

its great stake

sacrifice

rendering

tues of

private enterprise.

national

provision for a mini¬
security against
old
age
disability, there would be avail¬
able, as a subject of employeremployee agreement, the estab¬
mum

lishment of local pension arrange¬
ments as an incentive to faithful,
continuous service, with appropri¬
ate provisions for an accounting
on

severance

either

party.

of employment by

With

such private
pension arrangements the govern¬
ment should have

cept to make
sion

concern, ex¬

that

sure

application of

provi¬
Federal

any

law should make it

impossible or
impractical to provide irrevocable
insurance for any kind of reason¬
clear issue between these fun¬ able old age pensions.

damental

to be

met

Fourth,

this

by taxation.

field

confused

national community,
in this day of easy transportation

might be able to

and

might be formed for

our

resettlement

throughout the
only one which can
justly be charged with the obliga¬
tion to supply charitable support
to persons beyond the age and
competence of self-support.
nation

is the

where

out

decisive

and

battle

see

conflict

and to

how

point

the

lines

clear and

between

free

the

enterprisers and the socializers.

Here is a problem emphatically
calling for social thinking, and for
a
social solution, without accept¬
Fiflh, in order to lighten this ing the ready-made solution of
burden every self-supporting citi¬ socialism—which
promises to cure
bargaining to produce a tempo¬ zen through his years of self-sup¬ all social ills by the
employment
rary coercive settlement in a per¬ port should be required to pay a of government m e d i c i n e-men.
manent conflict, a dictated peace tax sufficient to
provide for him First, they feed you political mor¬
intended to last only until re¬ in old
age the minimum pension phine
so
that you will dream
sources can be organized for the
which is to be provided for in¬ beautiful dreams and not realize
next battle in a never ending war. competents, or in the
alternative, what is being done to you. Then
This bargaining is for political
required to pay the premium for they bleed you white with taxes.
ends, in which existing political irrevocable
private
insurance Then they give you blood trans¬
power is called upon to help the which will guarantee him at least
fusions of a part of your own
contestants, with a clear warning such a minimum retirement an¬
blood—and, as the red oozes back
that the labor movement is now nuity.
into your pale cheeks, they cry
primarily a political movement
Sixth, the present collection of exultantly: "The operation is a
aiming at ultimate political con¬ insurance
premiums by the na¬ success. After a few more years

of the rewards
quired to provide social security.
private enterprise, and a trust¬ They can agree that
government
worthy management, responsive should order the
job done and
to public moralities and private should
supervise it, but the ques¬ trol of government and that
every
obligations.
tion is: Who should
pay for it?
politician should chart his course

future gen¬

honest

method, of
pension taxes in ad¬

but

vance

Ninth, perhaps I should point
opponents in the shap¬
out that if such local pension ar¬
ing of our political economy.
First, it will not shock "free rangements were made the em¬
gressmen.
enterprisers" to assert that the ployee covered would be relieved
But Mr. Reuther, as a demo¬ problem of old age dependency of his obligation to pay a Federal
be
solved
cratic labor leader, and defender cannot
by industrial pension tax through the payment
of free
enterprise, must frequent¬ pensions alone. Obviously millions by him. or in his behalf, of an
ly lay aside his comfortable red of persons on the farms, in the adequate premium, provided there
was
no
cloak and, donning the ill
right reserved to cancel
fitting professions and in domestic serv¬
ice would not be covered by in¬ the insurance and obtain a refund
fair deal
coat
of
many
colors,
of payments.
i
undertake the difficult task
of dustrial pensions.
In
Second, in order to avoid tying
browbeating employers into pay¬
venturing
these
summary
ing the cost of pension funds men down to specific employ¬ suggestions for the development
which will be administered—not ments, it is evident that single of a non-socialistic pension pro¬
by the employers, not by govern¬ employer pensions, the benefits of gram, I realize there may be pit¬
which are only reaped by con¬ falls in my propositions immedi¬
ment. not by impartial
trustees,
tinuous employment, are
but by a political-labor command.
inade¬ ately evident to such well in¬
formed students of this problem
Unfortunately the examples set quate protection for old age.
Third, a pension which is not as I am now addressing. If
by
the
tyrannical
demands
of
so, I
Johnlewisites at one extreme, and earned is a pure charity, that is have floated over them, not be¬
of communists at the other ex¬ not a proper charge against an cause of any Vain confidence that I
treme, of the labor movement, industrial enterprise, which should have found an answer to perplex¬
have made it very difficult for remain a profit-making and not ities
with
which
I
have
been
any
moderate
labor
leader
to an eleemosynary institution. Char¬ wrestling off and on during the
make reasonable proposals in col¬ ity to the unfortunate or incom¬ last 20 (years. On the contrary I have
lective
an floated them over because of the
bargaining
that
would petent is, socially speaking,
strengthen and preserve the vir¬ obligation of an entire community, hope that in a birdseye view of

expanded,
and to produce the surpluses for
private
investment with which

socializers have not yet been able

The

against collecting

At the risk of

would

surpluses, through
Disappearance of Real Collective
which
a
satisfactory livelihood
Bargaining
and economic
security for indus¬ deteriorated plants can be re¬
In fact real collective
bargain¬
trial workers might be assured.
placed and new plants can be
ing, as the peaceful adjustment of
If, however, in accord with the built to meet the increasing de¬
conflicting minor interests in the
professed
faith
of
our
labor mands of consumers and to pro¬
light of common major interests,
leaders, free enterprise must be vide additional employments for
has practically disappeared in the
maintained so that the economic a growing population.
relations
of
big labor and big
freedom
of
industrial
The most diligent and inventive
workers,
business.
Now we have political

and all other citizens will be
pre¬

war

souls

services valuable to others in the

of utterly selfservice to others.
So

view

change of scenery.

support

thrift

men

when

not depend

persuade

glory

political

erations.

dogmatic truculence of the face¬
In

vigorous compe¬
legal right to
charitable support by the work of
we
are
only asked to believe in other men
would
give "dignity
the virtue of a
competitive econ¬ and pride" even to those
most
the foundations of
capitalism with omy in which the successful com¬
unworthy of such support. Then
reckless denunciations of
profit- petitors are compelled to trans¬ labor
would not be compelled to
making and demands for oppres¬ fer most of their gains to the
strike perennially for higher
sive
pen¬
taxes
and
excessive
labor losers and thus are inspired to
go sions, but
merely to vote bien¬
costs, which can only be met
by on competing!
nially for liberal-spending Con¬
price increases which
of

uses

political power, whereby
they are aiding to extend and to
intensify political controls of in¬
dustry. They steadily undermine

free economy and a democratic,
republican form of government.

less, nameless Communists.

Riding Two Horses

yearned for

engaged in

what he takes in from consumers.

ac¬

not yet arrived at that
height
universal altruism which
per¬

socialists, by taxes imposed

The truth is that
employers

ac¬

pursuing policies that have

hopelessly in conflict.

put their faith

con¬

confirmed

understand full well that they are

must pay insurance
premiums out
of lower wages for labor
and/or

slogan,

against

Uddl)

levying taxes each
year to meet the pension obliga¬
Among the top labor leaders there tions of that year, has the defect
is every variety of political eco¬ of
not
requiring
each
income
higher prices for
consumers, be¬ nomic thinking, from tne lawless earner if possible to
provide for
cause
a
businessman hasn't any
despotism of John Lewis, through his own old age
security out of
money to spend for anything ex¬ the rudderless
drifting of William his own earnings, which should be
cept the difference between what
Green, to the suavely veiled so¬ the obligation of the individual in
he pays out
(largely to labor) and cialism of Walter Reuther and the a free economy.
ance.

a
capacity for mis¬ gling to develop in the United Walter
Reuther look forward to
tendency to tyranny, States today. Its socialistic vices the
happy day when they will not
under which the individual em¬
are
hidden
but
not
cured
have to struggle with the
by
pains
ployee is more helpless than when
camouflaging it as a "fair deal" and difficulties of
riding the two
dependent on the goodwill and —for
deserving Democrats.
horses of
private industry and
ability of a local
The

chief

munists

somehow

strug¬

are

the

FINANCIAL

for

that he will be counted either
or

against

the

on-marching

labor party.

Thousands of minor labor lead¬
ers, millions of the rank and

file,
have no understanding that they
are moving down this broad
high¬
way
that leads to national so¬
cialism. Hundreds of minor labor
leaders and thousands of the rank
and file,
who are either com¬

tional

government

penditure
current

expenses

comparable
of

trust

such

funds

the

and

the

ex¬

premiums for
is a procedure
embezzlement

which

would

not

be tolerated in a private trustee.
The deposit of government bonds
with the government pension ad¬
ministration does not provide so¬

cial

security

but leaves fulfill¬
ment of obligations to pensioners
dependent upon subsequent ap¬
propriations of money obtained

progressive

anemia

have you on your feet
We

are

decades

will

again"

beyond the

era

in which the charlatans of medical

science could
induce
intelligent
people to be bled to death. It is
my fond hope that we are nearing
the end of the era in which the

charlatans of political science have
been

able

intelligent
death.

induce

people

That

future of America.

nations

be bled to
hope for the

THE

(1332)

COMMERCIAL &

FINANCIAL CHRONICLE

end of the twentieth year of serv¬

Equitable Life to Buy and Lease Freight Gars

railroads find it

most

ice

Thursday, March 30, 1950

Continued jrom page

neces¬

practically to rebuild their
freight cars. Yet, after such re¬
building jobs the cars still have
such 20-year old disadvantages as
sary

Under the

proposal, railroads would be enabled to obtain
equipment immediately and without traditional 20% down
payment
A

plan to purchase

freight

new

manufacturers

from

cars

and

lease them to the railroads of the

United States has been developed

by the Equit¬
able

Life As¬

surance

Soci-

ety, it

was

announced
March

Thomas

Parkinson,
President. The

Equitable pur¬
chase

lease

revolutionary de¬
velopment
in
plan

rail road op¬

eration, will
enable Ameri¬
1.

Parkinson

can

railroads

secure

im¬

limitation

nation's

railroads

because

the

modern

size

and

excess

years

By the

Growing Demand

For Common Stocks

Many engineers contend

weight.

that it would be much more eco¬

equipment. At the same
nomical for the railroads to scrap
time, employment among car man¬
20-year old
cars
than rebuild
ufacturers and affiliated industries
them.
However, to get the pres¬
will be maintained at a high level
ent car fleet even close to the
and the country's economy will
ideal, where no cars could be over
generally benefit from this new 20
years old, would take far more
outlet for life insurance invest¬
money than the railroads will ever
ment funds.
have available — probably some¬
In traditional practice the rail¬
where between five to five and
roads have been required to make
one-half billion dollars. By com¬
at least a 20% cash down payment
parison with these requirements,
on
purchases of new freight car
freight car purchases reached a
equipment. As a result, orders for
high for the last 20 years in 1948
badly needed new equipment have of
only $417,000,000.
often been withheld whenever it
Under the Equitable's purchase
appeared that general business, and lease basis of
financing, the
and railroad earnings in particu¬
railroads are not required to pay
lar, might be on a down trend. a 20% cash down
payment As a
This occurred in 1949, when be¬
result their equipment purchases
cause
of' a
decline in
railroad
are not limited by their immedi¬
gross, the backlog of orders for
ate working capital problems.
new
freight cars almost disap¬
The Equitable plan is based on
peared.
two documents: A purchase agree¬
Over 30% of freight cars now in
ment between Equitable and the
use are more than a quarter of a
car manufacturer; and a lease of
century old and substantially ovet the cars between
Equitable and

mediately, without down payment,
as
much new freight car equip¬
ment as they need.
The result,
Mr. Parkinson pointed out, will
be speedier, better freight service one-half are more than
at lower operating costs for the old, Mr. Parkinson said.

The

the railroad.
Under

use

stocks by

common

pension
funds
should
provide
$400 million to $600 million

from
of

additional

These

funds

control

each

funds
will

year.

the

under

professional managers

creased

to increase more

institutional

management

for investment in common stocks

will

period of five years so long as the

cars

Actual and Prospective

Rail Financing

One characteristic of the railroad securities markets of the past
month

has been the extremely low level of activity in the

and high grade sections of the bond list. It had been
hoped in many quarters that the success of the Rock Island refund¬
ing, operation would stimulate interest in this group by institutional
buyers. There is still strong pressure of institutional funds seek¬
ing investment.
Yields on quality industrial and public utility
bonds are very low.
Comparable investment grade railroad bonds
are available to yields 25 to 50 basis points cheaper.
The earnings
outlook is bright.
Notwithstanding all of these factors no greatdemand has as yet developed.
Despite the lack of general market activity for some time past,
better grade

the nqw issue market is promised greater activity than has been
witnessed in four years.
So far as railroads are concerned, under¬

writers have had to subsist largely on equipment trust offerings
since the wave of refundings that took place in 1945 and 1946.

Now, presumably spurred by the low coupon that Rock Island got
in its refunding, there are a number of new issues in prospect.
To
raisfe new capital Southern Pacific has offered stockholders a con¬
vertible 10-year issue, the offering having been underwritten by a
grotiip of investment bankers. By the time this column is printed
Chicago, Burlington & Quincy will have sold at competitive bid¬
ding $25,000,000 of new long-term bonds, part for refunding pur¬
poses and part for property expenditures.
Early next month there will be a new issue of $4,000,000 of
Wheeling & Lake Erie 2%s, 1974. Proceeds from the sale of these
bonds will be utilized to pay off the company's short-term bank

rentals

increased

greatly

from

sources.

from the railroad.

to the railroad for an

initial term

giving the railroad an
option of returning the cars to
Equitable at the end of such term
or of continuing to lease all or any
•of them for
up

additional term of

to 10 years at 20 cents per day.

"The Equitable purchase

lease
freight car plan is one more good
example of life-insurance invest¬
ment funds in action," Mr. Park¬
inson pointed out. "It offers a fine
investment
opportunity for the
Society's reserve funds, enables
the

nation's

and

railroads

operate

efficiently and economically,
creates

and

stabilizes

jobs.

Jos.

Bnffinglon With

Arthurs, Lestrange

certified by the Interstate Commerce Commission

some

time

District Court hearings were scheduled to start on March
27. The investigation was proposed mainly on the basis of the lCC's
elimination of the old common as having no value and the limited
participation of the old preferred.
In earlier Commission plans
the preferred had aiso been eliminated but in the latest
one, hold¬
ago and

ers are

seven

allocated three shares of

new

Class "B"

common

for each

shares of old preferred.

The resolution calling for the investigation cited the "extraor¬
dinary industrial development" in the 11 states served by the
/

system, with a consequent substantial increase in potential earn¬
ing power, Loud senatorial outcries against the severity of ICC
reorganization plans and the elimination of stocks in such reor¬
ganizations are not any new phenomenon.
There were serious
attempts, accompanied by wild speculation, to bring political pres¬
sure

to bear in order to preserve some

roads as Rock Island and New

ooinion Drevailed.

equity for stocks of such
Haven, but in the final analysis ICC

Therefore, there

timism that the present

seems

little occasion for op-

maneuvers will result in any

common

stocks.

Employment
The

most
important of these
developments is the influence
that government has on the course
of business activity.
The govern¬
ment has proved in the past that
it will take action to keep em-"
ployment at a high level.
High
employment has been the corner¬
stone of our present government's
policy and interestingly enough it
is also the cornerstone of the pol¬
icy of the British Labor Govern¬

new

ment.

seems

will

that these

continue,

gains in productivity. So long as
have strong labor unions, the
hourly wage is not likely to break,
and industrial selling prices will

remain firm.
In

tax

rates
of the

High

plan.

progressive

wealth of

our

country.

The large

fortunes that had been
built up a few generations ago are
being whittled down by this tax¬
personal

ation, despite a growing national
income.
In 1914, for instance, our
national income was about $36
billion.

had

increased

500% by 1949 to $222
Most

over

billion.

important than the amount

of this increase is the distribution
of this income.

By examining the

reports of the Bureau of Internal
Revenue, you will find that in

1914, the first year for which the
records are available, 60 individ¬
and

uals

taxable

fiduciaries

re¬

incomes in excess of $1
million.
In 1946, the latest year
for which these records are avail¬
ported

whatever able, there were only 94 suchre¬
turns filed.
This is a small in¬
crease in relation to the large in¬

crease in the national income.
of money
The middle income group in this
keep employment stable and to
country has done well.
In 1914,
prevent a serious depression. Sec¬ there were
aproximately 200,000
ondly, I think that we have clear- individual income tax
returns,
cut evidence that the government
representing incomes from $5,000
will regulate production,
prices to
$50,000. In 1946, over 3,222,090
and marketing of farm commodi¬
taxpayers
reported incomes in

and to spend large sums
to

order

maintain

purchasing

power

the

a
fair level in relation to the rest of

the

Thirdly,
the
search for social security under
government auspices or by pri¬
vate planning will continue.
The
coverage of these plans will be
broadened so that they are bound
community.

these brackets.

figures suggest that the
for investment securities
has shifted from the very wealthy
to the middle income group in thi3
These

market

country and that the institutions
serve
the middle income

which

group have the greatest prospects
for continued growth.
The fig¬
great effect on our econ¬
ures I cited earlier on investment
omy over the future.
Fourthly,
growth confirm these
the government has taken the in¬ company
conclusions.
J. Buffington,
Jr.
itiative in providing housing. This
is a role that it will probably
HCL and Lower Bond Yields
PITTSBURGH, PA. — Arthurs, have to continue to play regard¬
Lestrange & Co. have announced less of
Meanwhile, two fiscal develop¬
political changes.
that Joseph Buffington, Jr., has
ments have
combined to make
The long-term interest of the
become associated with them as
common
stocks more attractive.
government in these affairs indi¬
manager of the trading depart¬
They are the, high cost of living
ment.
Mr. Buffington was for¬ cates clearly that public expendi¬ and the low yields on high grade
tures will be large for years to
merly with Stroud & Co., Inc., and
bonds.
come and that
the effect of the
The First Boston Corporation,
The purchasing power of the
The firm also announces the re¬ Federal budget upon the level of
dollar today is 40% lower than it
moval of their offices to the Frick business activity will be great.
was eleven years ago; high-grade
Under
these
conditions,
it
is
Building.
bonds yield 20% less than 11 years
probable that we do not need to
But common stocks yield
fear a depression of the magni¬ ago.
Leo A. Dunn Opens
50% mOre.
tude of the early 30's for quite
These contrasting trends high¬
some time to come.
CASPER, WYO.—Leo A. Dunn
is engaging in a securities busi¬
I think it is also likely that the light the story told by the ac-v
ness
from offices at 1432 South credit policies of the government companying table (Exhibit 1) of
Ash Street.
will not undergo
any
material monthly average yields on
to have a

•

D. F. De Beixedon

change. It now seems evident that
the Federal Reserve and Treasury

Moody's Aaa bonds and Moody's
200
common
stocks for the 30

Pacific

the na¬

have forced redistribution

gage in a securities business from
offices at 48 Main Street.

Missouri

depression.

altered

tion's investment mechanism.

expansion in the area and had taken it into account when it set up
the most recent proposed capitalization.

the

serious

have also

years,

chances

They

have come to some agreement on
SOUTHAMPTON. L. I., N. Y.— policy'.
Long-term interest rates
Daniel E. De Beixedon will en¬ may fluctuate more widely than

eralization

)

political and economic
developments have lessened the
sum,

further lib¬
After all, it appears
reasonable to believe that the ICC had also heard qf the industrial

lapidly and continue
rapidly than our

party is in power, and that in the
future our government will not
hesitate to* unbalance the budget

farmer's

Pacific old

was

interest in

Government Safeguarding

ties

the

The sudden spurt of activity stemmed directly from news
from-Washington, A group of 20 Senators called for a Congres¬
sional investigation of the proposed reorganization plan.
This plan

new

trends

About the only real excitement there has been in the rail field

of 15 years,

fairly quickly. Prominently mentioned in this connection are Gulf,
Mobile & Ohio and Kansas City Southern, both of which have 4%
first mortgage bonds outstanding.

larly around 6-6 ¥2.
Early last week, and on heavy volume, the
stock jumped to 10% and then almost as rapidly receded.
By the
end of the week it was down again to 8.

under

paid during the five-year period highly unstable and that the pe¬
ahead
in
on
the unpaid balances owed to riod
many
ways
is
the car manufacturer.
equally uncertain, there have been
over
the
past
Under the agreement with the developments
twenty years which have created
railroad, Equitable leases the cars

the purpose of redeeming the presently outstanding 1st 4s, 1996.
If this operation results in any considerable interest saving there
is a feeling in many quarters that a number of others may follow

past couple of weeks has been the gyrations of Missouri
preferred stock. Earlier this year the shares had sold
low as 4% and more recently they had been trading unspectacu-

conditions

for

loan. Later in the month it is expected that Seaboard Air Line will
sell some $32 million of new first mortgage bonds. This will b* for

economic

Despite the fact
the which we live.
Interest is that our economic past has been

received

are

Non-Collapsible

Structure

under

purchase agreement
All of this growing interest in
manufacturer, Equitable
investment
has, in my
makes a down payment for the equity
cars in cash and agrees to pay the judgment, a sound basis and is in¬
fluenced primarily by changes in
balance in equal instalments over
a

Credit

turn out that the amount of funds

with the

the

Federal debt will probably re¬
quire the continuance of an easy
money policy and low yields on
government securities.

fact, the entire credit struc¬
and will have a material effect ture, involving long-term obliga¬
on
the
equity markets over a tions and based in large part on
period of years.
non-liquid assets, has become ex¬
tremely rigid. It is almost impos¬
Life Insurance Cos. and Trustees
sible to think of any Administra¬
The other important develop¬ tion permitting it to collapse.
ments concerning life insurance
I think that in appraising the
companies and trustees, I will not period
which
lies
ahead,
we
go into at this time largely be¬ should assume that industrial sell¬
cause you gentlemen, I am sure,
ing prices will continue to be
have been following these trends
firm, chiefly because wage rates
more
closely than I have. You have
shown
a
strong
upward
all know of the "prudent man" trend.
Average hourly earnings
bill which passed the New York have
increased
approximately
State Senate two days ago. It may 130% since 1939.
They have in¬

these two

the

companies

investment

open-end
and the

they have in the recent past, but
the problems of servicing a large

In
Aaa

was

1920 to 1949.
1920, the

yield

Moody's

bonds was 6.12%. The yield

Moody's
5.5%,

200,

Bond

common

stocks

yields for that

Volume 171

Number 4894

year were 111%

THE

stock

common

year, it was only 40.1% of the
yields avilable on common stocks.

yields.
While

the yields on Aaa

were

stocks

the

average by

the

yields

ending with

possible

get

These

for

the

higher

figures bring forcibly to

investor

should
their

the

dollar

ingly

investing in Aaa bonds

and

that

vesting the

vestors

fiduciaries

individual

common

money

stocks.

lar

power

creased

from

the

dollar

Under

conditions,

pressure

seek

tect

such

the

higher yield

pro¬

purchasing power of his
through equity investment.
Starting with 1931, the income
advantage of Aaa bonds began to

4.55%.

Since then,

declined

1930

show

the

intrinsic

stocks.

averaged

but

2.66%

for

has

been

The yield on

stocks

was

4.54%

was

6.63%

for

1949.

bond

managers

will

sults
and

com¬

The

ratio

success

stock

yields, which was 107.8% for the
11-year period from 1920 to 1930,

trinsic

was.only

selected

66%

for

the

participate

scale.

years

from 1930 to 1949.

and

of
to

point in the ratio of bond yields
to common stock yields. For that

company

(i)

growth

in¬

Ratio of

Yields

to Common

15)35-351=100

6.12%

5.5%

1.113

69.8

1921

5.97

6.1

.979

13)

The

78.3

1.109

83.5

5.3

.966

82.0

5.00

5.2

.962

81.8

common

4.88

4.3

1.135

79.7

here

79.1

for good

80.6

tion
well

4.73

4.57

1928

4.5

4.55

1929

1.051

4.6

3.41

4.55

•

stock

going

within

81.6

competent

83.8

ment.
to

that

the

market

prices

4.58

6.17

.742

92.0

5.01

7.36

.681

102.5

use

further

some

is
of

capabilities
professional manage-

also

preface

remarks

1932

the

1931

use

intrinsic values in rela-

1.387

•

analysis.

indicate

1.002

4.54

not

1.167

4.73

1930

.993

3.9

the

The foregoing is a summary and
an exhaustive explanation of

4.6

5.12

1926

imnortant

character

5.10

1927

risk

the

1923

1925

about

4.49

4.42

1.016

108.2

intrinsic value, so that my specific
illustration
will
be
set
in
its

1934

4.00

4.11

.973

104.5

proper

1935

3.60

4.06

.887

101.9

1936_.___.

3.24

3.50

.926

1937

3.26

4.77

.683

3.19

4.38

.728

99.2

3.01

1933

■

1938
1939

4.15

.725

2.84

5.31

.535

99.8

2.77

6.25

.443

95.1

1942

2.83

6.60

.429

85.8

1943

2.73

4.89

.558

80.9

1944

2.72

4.81

.565

79.7

1945—

2.62

4.19

.625

77.9

1946

2.53

3.97

.637

71.8

1947

2.61

5.13

.509

62.8

3 948

2.82

5.78

.488

58.4

1S49

2.66

6.63

.401

59.1

years.

that
be

analysis of the

all aware, of course,

are

value

interpreted

sets which may

figures have

company's sales organization and
facilities.

alysis

industrial

Nevertheless,
the

book

if
value

companies

an-

were

made

Adjusted
1Dividends

1935.

$80.42

$6.61

$4.00

1936.

83.20

9.98

6.92

12.00

8.32

143.11-184.90

value

1937.

86.48

11.35

8.44

13.12

9.76

113.64-194.40

1938.

87.38

6.17

5.15

7.06

5.89

98.95-158.41

have produced additional earn-

—

...

8.22%

4.97%

Yearly Range
Low

High

96.71-148.44

1939.

90.20

9.05

6.15

10.03

6.82

121.44-155.92

1940.

92.39

10.94

7.00

11.84

7.58

111.84-152.80

106.34-133.59

1941.

1943.
1944.
1945.

—

...

95.45

11.50

7.39

12.05

7.74

97.94

—

1942.

9.18

6.52

9.37

6.66

6.31

9.68

6.21

119.26-145.82

105.40

10.05

6.52

9.54

6.19

134.22-152.53

110.29

10.56

6.69

9.57

6.07

151.35-195.82

119.22

13.63

7.50

11.43

6.29

163.12-212.50

1947.

126.65

18.80

9.21

14.84

7.27

163."21-186.85

1948.

148.12

23.07

11.50

15.58

7.76

165.39-193.16

162.46

*23.60

12.79

14.52

7.87

161.60-200.52

1946.

...

1949.

...

these companies were recog-

nized

well

competent

managed,
would

analysts as
changes in book

have significance.

fair

presumption that companies of this type have spent
their retained earnings well and

92.92-119.71

101.68

9.84

and

leverage 11.4%

have

common

made

such

stocks.

values

are

based

the averages.

net

tangible assets

7.02%

per

J5"de"ta«e

day reProduc-

costs. In that sense, they are
talupo
rea,
„

Nevertheless

stoiffcant

Jones

share adjusted

to
<■

analysis
companies in the Dow-

.•

which

figures will also
futility of trying to

portfolio

sideration
stocks

can

intrinsic

change

con¬

price

values

much in

the

face

our

thinking

of the past and

ranges

analyze the real values of securi¬
ties.
You

will

analysis

also

note

book

from

values

the

versus

price ranges that at market peaks
the Dow-Jones Industrial Aver¬
age has sold
book values.

substantially above
In 1937 the market

194.40.

was

This

level

was

than twice the book value of
Dow-Jones Industrial Aver¬

1937, which

was

86.48.

1946, the Dow-Jones Indus¬

trial

the book value of the

Average,

?an calculate the per cent of adearnings to book value and

which

book

period,

value.

For

find

the

that

15-year
adjusted

earninSs averaged 11.25% of book
value' Adiusted dividends averus a rough average of

ponded a^aUy^lo^y a|rws
w^j1

growth

the 15-year
period indicated in our table,
,,

over

...

^ ma^ be. ar&ued that this 15year period is not a normal period
a
the results obtained here
are

not

indicative

happen in the future-

Ufu
includes the
earnings
profits

war

were

what

may

This is

cer-

years

in which

restricted by

excess

taxes,
and
the postwar
in which earnings were

years

higher

percentage of book
they can normally be
expected to be. Also, many companies took advantage of the low
value

than

interest

rates

borrowed

funds

preference to diluting their
common
equities.
However, the
15-year period also includes the

latter half of the 1930's when business

activity was at a lower level
can probably be expected

to be in tbe future.

•

Furthermore, if you accept the
premise that the commodity price
leyel is likely to remain high be-

of the activity of the labor
unions ih increasing hourly wages

cause

Average reached

212.50.

This

Dec.

31,

was

1946,

peak price

78%

above
as

was

$119.22.
The

Secular

Bullish

You may find

Trend

it interesting and

profitable to speculate as to the
meaning of these book value fig¬
in

ures

of present

terms

market

prices and probable future trends,
but I would like to keep your at¬
tention focused on the great in¬
in

crease

occurred

book
over

values

from the retention of

earnings

that

values

has

years

portion of

corporate

for

purposes.
have in¬

All the evidence that

dicates

that

period

this

growth

will continue in

in book
the fore¬

seeable future. Under sound

man¬

agement, this process should pro¬
duce greater earnings and higher
dividends
The

over

investor

period of years.

stocks

common

has this trend

running in his fa¬
vor in addition to the higher re¬
turn that is presently available

from
In

the

stock investment.

common

conclusion, it

seems

increased

current

to me that

interest

stocks is soundly based—

common

First,

the

that

premise

serious depression is less

likely to

develop under present conditions;
Second, on the wide differen¬
tial in yields on common stocks
versus high-grade bonds;
Third, on the growth in the
real value of equities and their
relation to market prices.
Under these

circumstances, it is
management to
select
securities
offering
the
greatest intrinsic value
and to
function

the

protect the investors against un¬

optimistic appraisals of the
by taking proper defen¬

duly

market

With

action.

sive

these

precau¬

stock investment
on
a
long-term basis should be
successful and the growth in in¬
terest in equity investment should
tions,

common

continue.

Security Dealers

It is interesting to compare the

Association Outing

book values of the Dow-Jones Industrial Average at the end of

each

year

with the actual range of

the Dow-Jones price level for that
year.

In makipg this comparison,

the first thing to be noted is that
in only two of the 15 years did

the Dow-Jones Industrial Average
sell below book value. The first of
these periods occurred in 1942
when the Dow-Jones Average
reached a low of 92 92 as com9794

Average for the
15-year period from 1935 through
1949. The net tangible assets per

prices of the Average. These
adjusted book values were re-

Thoughtful consideration of
these figures may lead one to conelude that stock prices were much

lated

lower in terms of intrinsic values

yearly high and low

15-year period that such formula
planning becomes a hopeless un¬
dertaking.
What is required in¬

formula

historical

The

ranges.

entirely

age, at the end of

of stock prices

•

these

the

which is based

the

Industrial

to the

most

yeaJ la4~ °*
The second year in which the
Dow-Jones Industrial Average
sol.d. be,low bool5 val^ was' s"r"
share of each company were com- Pnsingly enough, 1949 when the
puted and
then adjusted to a / Average reached 161.60 as cornbasis consistent with the adjust^ Pared Wltb a book value of 162.46.
of the

ket

basis consistent with

xue. °°OK vaif figures which I
ngures wmcn i
ba^e
Qu°ted certainly widely
,

ments made to compute the mar-

•Estimated.
NOTE—Book

ings for their

than
%

as to the offensive
defensive character of an in¬

and

from

the earnings on \present book
value are likely to increase over a
period of years. Tms is because
have greater value the replacement of pre^eht facili-

Earnings

Book Value

think

stead is that

The book value

bear little

Values

Reproduction

Stated and the interest of the government
in maintaining full employment,

carefully.

Book

Book Value

and

Costs

ties will involve much higher
capital costs.
Earnings on tnese
new facilities must justify this
been made wisely or poorly, and additional cost.
Otherwise, they
they do not show the quality of a are n°t likely to be made,

Year

Values

physical assets. They do not
whether the expenditures
capitalized
on
the
books
have

Adjusted

indicate

vestment

show

Dividends
As % of

Dec.

than

Yearly Range of Prices From the Period 1935-1949

As %

Dow-

to book cost. They
give no value to the quality of
management or to intangible as-

Values of the Dow-Jones Industrial Average Compared

Adjusted

book

relationship

With Adjusted Earnings and Dividends and Related to the

Earningsi

growth of tangible values

book values sometimes

EXHIBIT II
Book

the

than it

changes in book value of our
major companies over the past 15

100.6

1940

perspective.

is evident from

97.4

1941

.•

The

100.9
,

Book,

range

company's business.

1922

narrow

change
mi

1924

stability

through
the
business
cycle
should
be
capitalized at a higher rate than
one
whose
earnings
fluctuate
widely.

Dollar

Stock Yields

Industrials,

com" ures gives

of earning
power. Other things being equal,
a
company whose earnings flue-

of Consumer's

Monthly Avge.

1920

value

^s- ^£^2 i£

growth

average

(2) The

Purchasing Power

Monthly Avge.

Year

book

Jones

1949

base decisions

rhcouryageAracL°-f ^eSetr thetTwo fig!

wito

rateof

averaee

h'wort™moregtrhant]a

pects

income.

on Moody's AAA Bonds and Moody's 200
Common Stocks for the 30-Year Period from 1920-1949

Eond Yields

and

The rate of secular erowth

tuate

Moody's 200

the rate of

earnings

in relation to the

to enable them to estimate

Common Stocks

dividends depends are the follow¬

Monthly Average Yields

Bond

The

By
computing
the
adjusted
earnings of the Dow-Jones Avera§e and the dividends pair, we

ing:

companies

produce

which

upon

capitalization

EXHIBIT I

Moody's AAA

circum-

The general characteristics of a

forecasting the market is
hazardous, professional manage¬
ment organizations have the re¬
sources

various

by noting the past return on
capital and projecting

While

The year 1949 represents a low

under

Capitalization

growth
the

accompanying tabre

(Exhibit II).

can

Company Characteristics for

made

are

in the

value

percentages of book
results of this study

The

is done

SyconnsSenTPwittthe char!

hand, the prospects for
are bright if the common

investments

income

actenstics of the company in order
to determine intrinsic value.

disastrous

larger

value.

appear in the

lows

Against the Historical Record

tte^'SesThand^ieear^g fge^L^rtht^douWed

the other

common

yields to

net
work

investment

equally

much

in 1930. It

then stated

the

peak

repeatedly

pension funds let this type of
thinking dominate them, the re¬

Yields

Moody's 200

mon

the

This

in the hope
quick profits the results have

people realized.

common

Stock

the

invested

company assets and the managers
of the common stock investments

endar year 1949.

Long-Term Rise in

way

been disastrous for most of them.

Average. Both earnings and dividends,
suitably
adjusted,
were

company's prod-

mon stock investment

cal¬

the

appraisal

the

general

demonstrated in past markets that

was

■

for

values

long-term ownership of

until

com-

prices of the Dow-Jones Industrial

and

results

investment people and try

many

this yield has

persistently

the

stances in the past. These conclusions can be checked in a

bonds

for

pay

against
the background of the company's

examining

the

Moody's Aaa

should

made.

when the public undertakes com¬

Yield

estimate

com¬

disappear, partly owing to the
change in long-term money rates
and partly owing to declines in
The

basis

the

(1333)

1935, was $80.42.
In every year
an
examination of the
since, book values have increased,
company's productive capacity; it moderately from 1935 to
1946, and
requires an investigation of prices
quite sharply since then to 162.46
and costs. By analyzing
separately in 1949.

gravely con¬
by these three problems.

psychology that
is
likely to absorb the attention

the

market.

made

requires

ucts

been

market

dollar

stock

stocks

common

going-concern value. Tne in-

demand

this problem, I
should like to try to divorce my
thinking from the bull and bear

there

sis

in¬

stocks.

investor

the various components of balance
sheet and income
statements, an

mon

in 1920 to 83 in 1930.

was

common

investment results exists in

in¬

approximately

possibility of securing satisfactory

the period

chasing

well

institutional

values

CHRONICLE

pany's ability to make profits and
pay dividends. This type of analy-

This brings us squarely to face
with the problem of whether the

also improving. Based on
1935-39 = 100, the pur¬

was

have

cerned

During the 1920's, the purchas¬
ing power of the consumer's dol¬

and

vestor

third, by increas¬
taxation.
We
all

heavy

know

than he would have gotten
by in¬
same amount of

intrinsic

FINANCIAL

Investment

been hit three ways: First,
by declining money rates; second,
by declining purchasing power of

1930,

stocks.

has

return

the

mind the fact that the bondholder

fluctuated widely

period

was

and

years

common

for

bonds

downward trend for the

COMMERCIAL

The

York

New

Association

ers

Security Deal¬
hold their

will

Outing Friday,

Annual

June

23,

1950, at the Hempstead Golf Club,

Long

will

all-day

There

Island.

Hempstead,

golf

tourna¬

for prizes with a soft-ball
scheduled for 6:15 p.m. and
dinner at 8:15.
For reservations
contact Edward Enright, Execu¬
tive Secretary, 42 Broadway, New
York City.
DIgby 4-1650; John J.
O'Kane, Jr., of John J. O'Kane,
ment

game

Jr., & Co., is Chairman.

Federal Transfer Co.
Federal
formed
42nd

Transfer Co. has been

with

152 West

offices at

Street,

New York

City, to

securities

business.

engage

Partners

a
arfe

Irving

Berg

and

COMMERCIAL

THE

(1334)

Continued

from

Thus,

page

Security I Like Best

possessed of unusual foresight. In

obtained

1947, the company

operations for their
in the following in¬

customers

dustries:

entered upon
expansion program, which, as
of this writing, appears to have

Ceramics

been

largely completed. This has
placed the company in an ex¬
tremely
advantageous
position.

Rubber and

The annual statement will not be

U. S. Government

Metallurgical

released until after the end of the

Air

year, April 30, 1950, but is
expected to show earnings in ex¬
cess of $6
a share.
The balance
sheet

will

ficient

probably

cash

current

alone

reveal

sui-

all the

pay

liability. It will also show

item, which is not carried as a
current asset,
of $5 million in
Treasury bonds as a reserve set¬
up for further plant expansion.
indication

the

petroleum

conditioning

cently made

re¬

high, but the

new

writer feels that the price is more
than
justified, and
the
future

prospects of the stock might easily
more than offset such a criticism.

about

downs), and in each year but one

will,

over

increases

Future
be

sales

may

this work is

"bread

The

butter"

and

this

lithium.

company

Foote is

the major pro¬

of lithium

stantial

lithium stearate

lubricating greases and renders
capable of withstanding ex¬

capi¬

degress below zero Fahrenheit and
as

may

look

industry
a

are

will

provide

pa¬

tient

Daniel

with

the

Cowin

uses

worthwhile

future

the

past As this viewpoint is far from
original, we must, of necessity,
eliminate

from

consideration

our

those securities which

presently
their

doing,

discounting
future

choose

the
is

feel

much

too

In
forced

been
of

stock

relatively

company

unknown—

Foote Mineral Co:
common

This company's
are traded over-

the-coihster, and presently sell
about

$40

earnings

share.

per

for

1949,

Based

after

at
on

special

write-offs, this would indicate

It has other future

which cannot be told at this

time.

The

also

company

sells

of Dec.

investor.

com¬

but

set up

and

diversified

volume

time.

dividual

anced

portfolio

and

insurance
take

companies,

the

(Glidden

therefore,

trusts, which brings us to the fact
they offer their stockholders
real

while

hedge
at

find

them

reasonable

some

ferent

marketing,

many

They

bests.

labor

costs.

around

operate this company. The man¬
agement has had long and varied
experience in the chemical field.
Conrad

Meyer, the President,

ity for 34

executive capac¬

and has

years

wide reputation

as an

industrial minerals.

world¬

authority
Other

exec¬

common stock.
All employees are
eligible to receive stock bonuses

after

utives
with
own

have

also

Foote

for

been

associated

many

substantial

years

amounts

and

company reveals the fact
that not only are the assets in a

than

10.

The

stock

pays

equal
price.

2%,

based

today's

The history of this company is

Richard

Wood

whether it
vation is

range

careful

over

the

stockholders.

The

the sole bene¬

are

earning power.

Permit

are

selling

there

liquidating

this much leeway;
that I believe the Con¬
Stock

vestment portfolio of an
ual at the present time.

Glidden

Preferred

the

enjoys

common

New

York

individ¬

listed

Stock

Exchange
fairly active market.

long one, with
of
growth.
It
a

steady record

was

originally

formed about 75 years ago, as

preferred is convertible is traded

portfolio

good

less

would

owned

Foote

employees,

are

including

hobby

last

ment

by its founder.
For the
years it has directed its
energies toward the procurement
and chemical analysis of rare ores
45

and the chemicals derived there¬

The company specializes in

and has

show

force,

outstanding

will

excellent

continue

growth

near-term.

them

feel is

not

market

price, is always

the

reduction

tain compounds to metals.
I Hie company uses the

cer¬

little

known but abundant elements of

lithium, zirconium, strontium and

the

long-term and may provide the
patient investor with unexpected

the processing of these ores, the
extraction
of
compounds from

and

over

re¬

appreciation

in
This

the

medium

factor, which I

discounted in today's

a valuable
company where em¬
phasis is predominantly on prod¬
uct development.
one.

securities
have

if he went into the securities
kets to buy them himself.

officers.

My feeling is that this company,
which enjoys excellent manage¬

than

for
pay

mar¬

One might
properly say that the

yield

than

stock into which the

the New York,
n,

Stock

Midwest, BosPhiladelphia - Baltimore
Exchanges.

This company was built on the
sound foundation of the old Glid¬

insurance stocks is lower

den Varnish
Company of Cleve¬
but land, Ohio, founded in 1875. The
if an investor is
life of the present Glidden Com¬
really interested
in buying today a
security for the pany began in 1917 and since that
future, particularly under present year the company has been ex¬
income tax rates, he should cer¬ panded tremendously under .the
tainly prefer that the directors of leadership of Adrian Joyce. He is

many

other

groups,

his company reinvest

now

his son,
ident.

a large part
present earnings for him in
order that his stockholdings should

show

growth

factor

for

the

future.
To
ance

pick
stock

Chairman of the Board and

Dwight P. Joyce, is Pres¬

the

particular

must

resolve

insur¬
itself

subsidiaries
as¬

has

avoided

one

has

the

error

man

been

company;
the guiding

the various divisions.

run

Divisions

company

should

add

considerably to the stability
earnings in slack times.

■

way

of thinking, there

strong analogy between com¬
panies and human beings, indeed
a

companies
than

are
a

nothing more or
of human be¬

group

ings and they have similar char¬
acteristics.
The

characteristic

which

especially refer to here is that
they are first young and imma¬
ture. It is impossible to say how
they will develop. Later they pass
through adolescent age and the
college age and come into young
^

manhood and have the possibility
of

establishing

definite

place

for themselves in the

Later they pass

community.
through maturity

and become decadent.

occurs

to me that the Glidden

Company has reached that age of
maturity where its future can be
judged with good degree of cer¬
tainty.
It is well established in
its new greatly enlarged position
in the country.
It is still in the
prime of corporate life and with
its vigorous management consid¬
erable growth seems to lie ahead
in the

company's path.

■

wishes to look for
romance, the company's develop¬
a

person

beginning the Glidden ment-of a new rubber emulsion
simply a manufac¬ paint which has tended to revolu¬
turer /and
distributor of paints tionize the paint industry, and its
and varnishes.
development of hormones, includ-

Company
one

the

Chemical

the

diversified

is well financed
earning power appears
bright. The Food and

less

The

widely

Most

which,

expansion has had
digested or consoli¬

to be very

of course, means that the investor

buying

and future

three years of employment
with the company.
Their distri¬
butions are based on an incentive

value,

The

the

say

from

discount

ity to

offers one of
the best opportunities for the in¬

Most insurance company shares
their

proc¬

light, nevertheless he has brought
into his organization men of abil¬

re¬

Company

while

diversi¬

point of view.

Preferred

common

result,

Glidden

this

building

My obser¬
deeper basis and on

Glidden

ficiaries of

the

formed with

was

Joyce

"goes up."

vertible

priority

research,
a

integral part of the Glidden Com¬
With his good sense, Adrian

danger
of being misinterpreted. So
many
people measure a stock solely by

property having

grave

reserves, without any bank loans
on

for

pany.

and

common

time

invest¬

best

let

mortgages

was

sets and business have become an

stock

bilities

wholly of

further

division

dated.

pur-

plan, and at present 45% of the

less

dividends of 20 cents quarterly—

All

ways

know.

along

almost

for

soybean.

dianapolis.

search, is the
best security I

highly liquid as well as an income
producing state, but that the lia¬
consist

interest
derived

essing plants at Chicago and In¬

fication, based

companies, unlike in¬

surance

another

picking

An analysis of the bal¬
sheet of any well-known in¬

first

have been dissolved and their

insurance

companies, do not have
investments in brick and

His

substitute

the

much

mortar.
ance

the

partment

posesin build¬

dustrial

large

•

attention.

with

best in dif¬

ing

cost is only
the volume of

one

leading manufacturers of

ment fund. To

average

10%

trade
as

ferent

high proportion
the

the

but his vision extended
beyond that and he formed a de¬

lieve

the

under

and serve dif¬

trouble, and in making an
today one should be
particularly careful to avoid those
companies with

number of

"Durkee's." It ranks

labor

and research problems which have
been ably solved by the men who

has served in

are

ferent

in times

have

name

trustees

investment

industries

Insurance

manufacturing

and

perfectly
frank,' I
be¬

Many

the food industry.
Company manufac¬

products

cide upon any one security which
I like "best" because there are

assurance

of investment protection
of deflation.

Glidden

destined to lead the

tures and distributes

quite difficult to de¬

inflation,
time giving

same

supply of linseed oil,

into

food

Company)

against

the

was

Company
I

The

aspect of investment

secure

The

Massachusetts

Counsel,
Louisville, Ky.

business.

All of these products have dif¬

This

Investment

that

also
produces
manganese
chrome ores and ferro alloys.

and

conservative nature.

bal¬

stocks.

purchased.

Joyce had
developed another unit to refine
vegetable oils.
Formed primarily

RICHARD V. WOOD

government

common

of tur-

Carolina

In the meantime Mr.

bonds, corporate bonds, preferred
stocks

North

casein,

have

conservatively

investors

and is of

•

was

Discoveries with respect to the
security, in my opin¬
ion, is considered suitable for in¬ soybean did not escape Mr. Joyce's

policy of continually investing

funds

mines

This

been built up over
many years by
a

were ac¬

source

Bonding & Insurance Co. at this margarine.

growth,
being

business

versity of industries served.
Large
surplus
accounts

mica

on the alert for an underpriced stock in a sound and grow¬
ing field, making an investment

the

Later

pentine^and in 1941 elmenite and

investor,

manu¬

Corpora¬
Southern

quired in 1933

careful

any

the

Company

earnings in the

warrant

Pine Chemical

company

would

Company to

assets

this unit

fact

pro¬

Patent

acquired.

were

The

reserves

future.

pigments.

secured from Ameri¬

were

bound to be reflected in per share

today

exceptionally well distributed
both
geographically and in di¬

tion

at the 1948 year-end.

near

Zirconium

organized to

was

the assets of Nelio-Resin

year),

—

American

Lecithin

can

were

loss

over

facture and refine lecithin.

over-adequacy
of
these
loss reserves in conjunction with
a
healthy volume of business is

The past history of our leading
insurance
companies is one of
their

the

took

soon

acquire zinc prop¬
County, Calif.

titanium

rights

time

The

the

1933

duce

adjustment
for
premium still

profit reported
from

recovered

business

would,

barium

Zinc Company was in¬

Corporation

underwriting

end

from

erties in Shasta

nearly

derwriting

insurance

course, dare

the

white

Chemical and Pig¬

Company

California

instance, the underwriting
for
1949
was
given
as

formed

was

lithopone,

produced

corporated

substantial

some

the

Company, which had
outstanding patents for manufac¬
turing white lead.
In 1927 the

In¬

$1,400,000—or about
$550,000 more than the total un¬

times

opera^

Bonding

increase

in force

and bad. Lack¬

the

$840,000
(after
acquisition costs

es¬
sential in both

II
Irving McDowell

ment

for

Euston Lead

the
equity
during that period will

profit

sure

coverage,

Joyce

become

The Chemical and Pig¬

Company, Inc.,

and zinc ores.

per

earnings, but in

upon
run

For

absolutely

ing

$37.05

was

thereafter.

product that is

steady

1, 1949,

1921

pigment

value

asset

profits for 1950 and for

selected

good

Mr.

subsidiaries

to manufacture

Co. for the last few years
in process of strength¬

built

one

ening its reserves tremendously.
Obviously, this policy has been a

issue

service

The

organize

ment

been

drain

selling

years, this
better than the

long

the

I
J.

two

share.

the

pany

industry the

price of about 13 times reported
earnings.
Based on earnings before these
charges, we have a security sell¬
ing at a price earnings multiple

from.

the

serve

must

tungsten products to the oil drill¬
ing equipment manufacturers. It

are

prospects.

have

which

tubes

vacuum

investors

rewards

method for enamel¬

new

ing of tin sheet steel. Zirconium,
another product,
in its powder
form, is used by the electronics
industry to prolong the life of

industry
and

zero

Several oil companies

pushing sales of this
Lithium is also impor¬

now

tant in

secur¬

convinced that

can

300 degrees above

product.

for

ity.
I
am
thoroughly
this

high

Fahrenheit.

chemical

such

which is used

them

treme temperatures—as low as 90

the

most

opin¬

ion,
best

compounds, one
interesting of which

risk.

current

the

should

one's future

that

busi¬

last

for 1950. Selling around
$33 per share and paying $1.60 per
annum, it offers a yield of 4.8%

has

tomorrow,

sales, returns should, on a
capitalization of only 55,795 com¬
mon shares, be very satisfactory.

gains, with

issue

security that
today and gone

be here

not

the

for

average

In the search for a

will

production of materials necessary
to the paint industry.

Co.

ance

buy insurance stocks.

into

ducer

minimum of

for

eventually translated

tal

insurance

For

less

period of time,
provide
sub¬

Bonding
Co.)

Insurance

shares.

common

has been
DANIEL COWIN
centered in several products, the
Research Dept., Hettleman & Co., most important of which is weld¬
ing-rod coating ingredients. This
New York City
business has grown along with
(Foote Mineral Co.)
the welding industry and appears
When asked to describe one's to be broadening further. Another
favorite security, it seems only product which appears to have im¬
natural that we turn to the one portant long-term possibilities is
believed

(Massachusetts

(1946J, part of the earnings have
paid out in dividends on its

the vision

was

that his company should

self-sustaining in raw materials
and he systematically set about

Massachusetts

been

For my

security I like best is
Bonding & Insur¬
Having lagged behind

wise

Partner, McDowell, Dimond & Co.,
Providence, r. l

write¬

(after

"special situ¬

of this moment.

the

surance

times

selecting

the other insurance stocks market-

j. irving Mcdowell

sales have actu¬

ally increased ninefold—and prof¬

ness

which it is

part,

Electronics
Since 1936, net

its

Thursday, March 30, 1950

Massachusetts

in valuations.

conserva¬

stock

has

one

seasoned

opportunities
with well defined potentials and
little defense against the unknown
elements which make for changes

dramatic, but important
tism of the management is shown expansion is expected to result
from the hugs sums that manage¬
by its investment in Fibreboard
ment has expended on research
Products, which is carried on its and
development of new ideas.
books at cost. In reality, it would
be safe to assume that the true During 1949, a per share amount
of possibly $6 (total of over $300,value
of this' asset
is approxi¬
000), has been estimated to have
mately $7 million in excess of
been spent by the company in its
cost.
As of April 30 next, the
research department. Part of this
book value of the common stock
sum was contributed by other in¬
is expected to approximate
$37 a
dustrial
companies working
in
share.
conjunction with Foote and part
Many critics might raise their
by the U. S. Government. When
eyebrows because the
An

romantic investment

Chemical

fiscal

interest in

security with a minimum of risk
usually encountered in "growth
situations," and a maximum of
intangible profit-making possibil¬
ities.
The intangibles are often
more
interesting than the un-

titanium in its

down

ation"

10 times

ipated for 1950, I believe

The

CHRONICLE

buying the stock at
earnings antic¬

less than

FINANCIAL

was

Volume

171

Number 4894

THE

ing progesterone and testorterone
well

cortisone,

offers

protected

While

ing

has

the

privilege

definitely not undertak¬ into the

predict the movement of
Glidden stock, I do believe

from

the

possibility
the

taking

future

growth

of the company.

their

the

corporation's financial struc¬

ture both

the

pectus

"Fitch."

preceding and following

sale

stock.

find the

this

of¬

Statistical services, either

briefly or in extended form, com¬
pile and present factual material

pros¬

names

known, perhaps, are "Stand¬
&
Poor's," "Moody's"
and

ard

about

company.

such,

and

they

fre¬

information

which

might

not

find elsewhere.

velopments

corporations

(generally
reports) which

from

corporation
important for

following:

probably the single most

plete

The

of information avail¬

source

able about

com¬

company.

Exchange Listing Report

dividends

third

corporate report which
have already seen is the Stock

Exchange

description of the
corporation's activities; a descrip¬
tion
of
its
various
securitiek;
names
of officers; capitalization;
record of sales,
expenses, earnings,
a

corpo¬

interested.

are

may provide us
significant information as to

Listing

with

for

These

years.

relatively

securities

ments.

the New York Stock

sheets

and

years

income

and expense statements for recent

Report issued
in connection with the listing of
on

number

balance

to date

usiiallyc kept

are

some

by supple¬
the

cases

statis¬

Exchange. In general such reports

tical

will include information compara¬
ble to that in a prospectus, al¬

forecast of future business, earn¬

though

even

usually
However, where
not

less

detail.

prospectus

available—and there will not
unless

one

there

securities

new

has

been

issue—the

listing
useful.
In

report can be very
this listing report of the

McCord

Corp., for example, we find a
description of the McCord Corp.'s
business, its properties, its man¬
agement,

employee
relations,
stockholders, earnings and divi¬
dend record, financial
structure,
description of its bonds and stocks
and

financial

cent

for

Corporations

years.

securities

statements

listed

are

tered exchange also make reports
the Securities and Exchange

Commission,
available
the

offices

exchange
are

which
the

reports

are

public, either at

the

SEC

the

which such securities

listed.

For

the

investor, the most im¬

portant of these reports

designated

the

reports

which

annual

financial

corporation and
nancial

those
10-K

effect

reports
but

the
fi¬

may

considerably

greater detail than those provided
in the corporation's annual
report
to its stockholders. On SEC forms
4

and

6, officers and directors of
corporation or any one owning
more than 10% of
any of the cor¬
poration's securities must report

ratings.

said

information

recommen¬

In general, it

that

the

carried

statistical

by such

ser¬

vices is accurate and

for

essary

any

However,
and
be

the

ratings

vitally nec¬
security analysis.
recommendations

generally

superficial

and

appear

have

something to be avoided for sound
investment planning.
The

Advisory Services and Their

the

vices

offer

overall

sues.

advisory

ser¬

services

recommendations

programming
specific security is¬

Typical

services

such

"Argus,"
"United
Service,"
and
"Value
Line." Again, speaking only from
experience, such

services

have
proved to be of
value in supplying important

security information than in the
actual recommendations made. As
conclusion,

therefore

the

lecturer

that

urge

the

would

advisory

services, like the statistical ser¬
vices, be used primarily as a
of information rather than

source

for investment

planning.

chases and sales and net amounts
still held.

Following the "Insiders"
1

way an investor may
the
investments
of
so-

called

"insiders"

companies.

their

However,

Trade associations

own

businesses.

efforts

is directed

determin¬

some

their

the day-by-

report

about

their

industry which the investor will
find useful.
In addition, they fre¬
quently

collect

tics"

their

all of which

dom

trade

own

Much
to

day activities of these businesses,
but
usually
such
organizations

investment program
by following the "insiders" is sel¬

ing one's

are
industry
representing indi¬

vidual

publish

this

The Trade Journals

organizations

able

upon

the

"vital

statis¬

industry, some or
they will make avail¬

request.

associations

Examples

which

the

lec¬

likely to work out profitably,
and after
studying for some time
the price action of securities with

ing information

the

Association which publishes an in¬

investment

siders" in those
conclusion

basis

"in¬

securities, it is

that

upon

should

activities
this

which

made.

not

the

investment

For

one

thing,

"insiders"

are
frequently so close
picture that they are not in
the best position for judging the
picture; in the short run, security

prices and business operations may
be unrelated; many "insiders" do
not

invest

securities

their

companies; "insiders" can possibly
avoid the requirements of report¬
ing security transactions by act¬
ing through dummies.
So much
for the reports which come direct¬

ly from

corporations themselves.

The Statistical Services

turn

are

useful in obtain¬
are

the Aluminum

teresting monthly report
of

uses

ments

aluminum

new

and

develop¬
the aluminum industry;

and the American Gas Association

whose

annual
yearbook
"Gas
carries important statistics

Facts"

about the gas industry.

Trade journal is the

given
magazine

name

the
newspaper
or
which specializes in the

developments
"trade"
read

and

trade.

There

many.

news

and

particular
is principally
by people in that
a

which

used

Their
seem

number
be

legion.

trade

journals
for orchid growers, chicken rais¬
and even star-gazers.
For
investor, the chief interest of
the trade journal is for the vast
ers,

amount of information which such

journals

"Coal

carry as to

cut

costs,
metals,

Age" covering the bitumi¬
coal

nous

pro¬
por¬

most

industry;

useful

the

government

publications—at least
turer—is the

Business"

this lec¬

"Survey of Current

the Department of
Commerce. The "Survey" provides
in

simple language

view

business

outlook.

overall

re¬

conditions

also

carries

and

monthly

figures

on a wide variety of busi¬
statistics, including wages,
prices,
production,
inventories,
etc., which collectively are the
signposts of the economic activity
ness

of the

country.,

The Federal Power Commission

publishes

overall

electricity

and

statistics

natural

and

gas

operations of companies in these
fields

which
of

source

are

important

information.

publishes

findings,

also

orders,

and

"Oil & Gas
Journal" for developments in the

hearings in connection with activ¬

oil and natural

Bureau of Mines makes available
overall information on
mining and

industry, and

gas

"Railway Age" for recent
the railroad

While

news

industry.

and

number

they

will

principally interesting to the
fessional
than

the

analyst

pro¬
more

investor, and should

see every

off

comes

not

sion

not be able to get to the li¬

you

brary to
it

security

trade journal

the

have

may

journal

the

indicated.

More¬

fluctuations

investor

with

approach.

the

is more important
interested in day-

trader

by-day

press, it might
as
this discus¬

serious

than

his

the

longer

term

general,

The

Financial Journals

financial

has its

world, of course,
journals which

which

omy

securities.

way,

nal"

likely

are

One

called

World."

"The
a

these,

"The
Wall

daily

affect

the

Financial

Street

trade

Jour¬

paper

for

the financial
of

community and one
most important
providing

the

up-to-the-minute

reports

in¬

etc. "The Commercial & Financial
Chronicle" is another of the im¬

portant
which

financial

supplies

reports' about

trade

journals

with

current

companies,

indus¬
tries, earnings, dividends, security
prices, overall economic forecast¬
ing; and almost any other subject
one might mention with a
bearing
on
security prices and invest¬
The editors of the "Commercial

Financial

tally,
this

have

Chronicle," inciden¬
been

thrice

good

First, they have sup¬
with copies of their ex¬
cellent journal so that we might
course.

plied

become familiar with it.

after
your

Secondly,
thumbing through a few of
lecturer's notes, they have

concluded

that

was

unfair

expect you good women to absorb
all of this material at the lecture
so

make

to you

that they have arranged
these lectures available

through their journal. Our
were printed in

first two lectures
the

econ¬

industry-wide.

able

for

particular

company.

However, to analyze the securities
of

any

know

one

company,

must

not

only the operations of
that company, but its position in
its industry, the outlook for the
industry as a whole, and for the
overall

No matter how

economy.

sound a particular company
may
be, if it is in a declining industry
(viz., the horse-and-carriage in¬

dustry about 1910),

or if the
destined to

economy

"Commercial

Chronicle" of March

sharply

over¬

turn

1930, its

se¬

considerable

analysis

Financial

amount

made

security
through

available

and

issue

during

series.

our

suc¬

Fi¬

nally, they have been willing to
share with us one of their
editors,
A. Wilfred May, who will be with
us

next week

How

tell

that

expected
The

have

may

one-half

affect

actual

into

gone

the

research
such

however, is often

paper,

consid¬

erable.

Many brokers

and dealers also
special departments for
assisting
their
customers
with
their investment
problems.
In

maintain

most cases these services
are also
rendered without cost so
long as
the customer transacts his
invest¬
ment business with the
particular

broker

dealer

assisting

him.
slight
made, the idea being
that this enables the
investment

However, in
charge

some

cases

advisor to maintain
of

gree

objectivity

pensation

greater de¬

his

independent

com¬

the

investment action which his cus¬
tomer
eventually takes.
If
a
charge is made,
however, the

broker or dealer must first be
registered with the Securities and

Exchange Commission
tered

Investment

suant

tain

to which

Regis¬

Advisor,

pur¬

he must file

information

with

the

cer¬
com¬

mission

principally as to his moral
conduct, and exhibit that he has *
had sufficient
experience to qual¬
ify him for this position.

Not

"How to

developments the Financial Section."

Read)

It should be noted at
this point
that it is not
necessary to conduct

business

order to

qualify

advisor.

There

uals

and

broker

dealer in
investment

as an
are

firms

some

which

individ¬

specialize

in investment

advisory work only,
also being
duly registered with
the Securities and
Exchange Com¬
mission.
The investor
using such
investment advisors may then

ex¬

ecute his orders with
any broker
or
dealer
that he chooses.
It
should also be noted that
banks,
trust companies and
lawyers also
exercise investment
;

advisory

services in much of their routine

relationship with

customers

and

clients.

H. G. Kuch & Co.
PHILADELPHIA,

Baltimore
nounce

than

brief

100

one-sentence

pages

summaries

Kuch

Co.,

members

PA. —H.

Widener

the

Stock

Building,
Philadelphia-

Exchange,

an¬

the

establishment
of
a
municipal bond department under

usually with specific reference to the
management
of
George S.
particular corporation or even Burgess.
Mr. Burgess was forto a particular security of that
merly with Wurts, Dulles & Co.
corporation, but occasionally deal¬
ing with an overall industry or
New York Stock Exch.
general economic data.
By and
large these reports are one or twoWeekly Firm Changes
page affairs stating the reasons
The New York Stock
why a security appears attractive
Exchange
has announced that on
and indirectly suggesting its
pur¬
April 6
a

chase.
sees

The lecturer almost

never

report emanating from a
broker or dealer discussing a cor¬

poration whose
be

sold

short

securities

held.

should

disposed

extent

some

this "occupational bias" reduces
the value of these reports but as
a

group they offer valuable in¬
formation which might not other¬

Brokers

and

dealers

also

pre¬

special analytical reports of
corporations and their securities
upon request of their customers.

pare

This

service

particularly

for

the

little

vestor's blind

excuse

and

for

purchase

considered. Mr. Whitney will con¬
as a limited
partner in Har¬
ris Upham & Co.

tinue

also

April 6
consider

the
the

Exchange will
transfer

of the

Exchange membership of the late
Eugene F. Malone* to Seth ? H.
Baker.

will

member of

understood
act

that Mr.

individual

the Exchange.

Yarnall Co. to Admit

valuable

investor

view of the willingness and us¬
ually the absence of charge with
which
such
reports are made,

there

transfer of the Exchange mem¬
bership of Richard R. Thomas to
C. Handasyde
Whitney will be

Baker

wise be available to the investor.

an'in¬

sale of

securities.

PHILADELPHIA, PA. —Benja¬
min

Rush, Jr. will

April 6 be

admitted to limited partnership

Yarnall & Co., 1528 Walnut Street,
members

the

New

York

and

Philadelphia-Baltimore Stock Ex¬

Co.

several

months

ago, for
duce a

changes.

Joins McDonald Staff

example, attempts to re¬
(Special to The Financial Chronicle)
fairly complicated reorganizational situation involving a
CLEVELAND, OHIO —Howard
holding company, that is a com¬ M. Bissell is with McDonald &
pany

whose

chief

assets

(and

are

securities.

ning

Shaskan

Read

they

the many brokers and dealers en¬
gaged in securities work.
These
range from extended reports run¬

the remainder of

and

one

se¬

In the

pages, it is possible only to iiighlight the important features as

must not forget the

This report on the International
Hydro-Electric System written by

Thursday

space

the

company.

George Burgess With

Work of Brokers and Dealers

Finally,

ceeding lectures will be available
each

the

curities may be unsatisfactory for
the investor.

already

ments.

Rarely is the information avail¬

useful

publi¬

trade

own

to the
average
investor in that they specialize on
the particular items in the econ¬
are

whole

omy as a

down

The

Investment Advisory Work

government

cations provide information
overall basis, either for the

all

curities
brief

metals.

point out that because of their

detail

ities of individuals companies. The

trade

journals are im¬
portant, however, it might be well

various

period

the

•

the statistical

services of which there

turer has found

for

dustry and company developments
and outlook, earnings and divi¬
dends, security prices, new issues,

monthly any changes in their se¬
curity holdings,
including pur¬

learned

metal

occasion
are:
"Oil,
Drug Reporter" for the
drug and chemical developments;
Paint

are

own

leading

developments of com¬
panies in this field. Other trade
journals which we still want to
consult

necessary to secur¬

Again, these will be

principally interesting to the
fessional analyst, and a good

and recent

advisory

Business

the lecturer's

has

outlook

trade

statistical

investment

well

the

are

which

the

how

over, much of the material in

Shortcomings
Similar

the

lecturer's experience proven to be

the

which

and

may

supplemental

reports

figures

carry

are

and

8-K

are

with investment

dation

re¬

regis¬

coupled with

ings and dividends, and sometimes

whose

information is

refiner

eco¬

formed investor will also want to
know
about
them.
One of the

operations

about

provide

overall

companies

production which

read

basic

normally carried
journals but which

In the statistical
pages of the jour¬
nal we find figures for
prices and

conditions

the

many

industry, out¬
look, etc.
Similarly, in this pub¬
Power
and
their compensation. is
an
appraisal hi- lication,
the
"Engineering
and
Actually, a prospectus will usually the securities of the corporation.
Mining Journal," used principally
include considerably more infor¬ This material
usually includes the. by the
mining industry, we may
mation than an annual report and
ficers and directors of Consumers

which

source

nomic data

are

tion of their data will have been
abstracted and made available in
the financial journals, but the in¬

rations in which

with

much

reorganization will be

publications

read of de¬

affect

another

ity analysis.

not

are

financial

Government

we can

industry,

which

(1335)

Government Publications

specific

quently provide the investor with

may

Best

proceeds from the sale

generally

reference

CHRONICLE

example, in this issue of
"Iron Age," which is one of the
trade
journals in the iron and

Sources oi Investor Information
what

FINANCIAL

industry

with

even

steel

of such stock will be used for and

For

page

converting

stock and there¬

common

has

advantage

that the preferred stock is amply

Continued

investment.

that addition, the preferred stockholder

romance.

the

COMMERCIAL

simple

language with

other

are

companies,
some

the

into
dis¬

cussion of what the effects of this

Co.,

Union

members

Commerce
the

New

Building,
York

Midwest Stock Exchanges.

and

Continued

retail trade are gen¬

soft Jines in

erally not doing so well as a year
but the hard goods and big
items show a signiiicant

ago,

ticket

improvement.
In

of the non-durable lines

some

there

signs

are

that

inventories

accumulating

may

that

and

decline from recent levels of

some

be expected later
this year.
Outlays for business
plant and equipment and lor farm
equipment are down, the latter at
least seasonally, but construction
and the automobile industry are

operation

still

may

operating at peak levels with
in de¬

apparent deterioration

mand.

An evaluation of business pros¬

summer

not

must

deterioration

economic

pros¬

favorable

environment

which

pects appears more plausible than many heavy goods are still in
further improvement.
The ques¬ short supply is far more likely to
tion, however, is, to what extent succeed than when such demands
Government

in¬

terest in the economy affected

the

has

the

basic

broader

the

economic

The

record

is inconclusive on
the question of the efficacy of
government' action in stabilizing
business activity. One of the ma¬
jor tests has been in prices of
agricultural products. In the ab¬
sence of price supports, it is clear
that prices of many agricultural
products would be substantially
below their current levels. Indeed,
past

year

government: policy

has not pre¬
vented prices from dropping be¬
low support levels on occasion.
At the same time, it is obvious
that

defensible
lem

solution

the

prob¬

agricultural pro¬
Our farm policies have

the expense of the consumer, and
be

cannot

been

sure

that

this

has

sound step.

The defenders
government policies can hardly
point with pride to a farm pro¬
a

that has the twofold defect

gram

economically unsound.

the money

ment

measures

market, govern¬
have

been

effective.

Early last year the au¬
thorities began to ease credit con¬

ditions.
uted to

Their

policies

contrib¬

rise in bond prices and

facilitated

long-term

prices.

1949

down

was

sharply compared with 1948.
terms

was

consumer

distribution.

The

effective in that

It gave a boost to some of the con¬
sumer durable industries last fall.
On balance, the easy money poli¬
cies
of
the authorities helped

term

Recently,

"welfare

broader

The

unfortunate.

has

state"

ever

for trying
economic con¬

and

noncontroversial

with

which

are

laud¬

lack

There may

opinion

be differ¬

to how far

But

the

role

govern¬

bank

any

credit

poses in the

widespread
for

use

speculative

postwar

pur¬

years.

In the field of residential build¬

general

underlying bias in, the di-

the

£7^" It,

rection of

means

and

state,

econo-

only

the

achieve

can

full

employment.
of the welfare

methods

which

ing

the current Governpolicies will generally augment inflationary
and price-sustaining forces iri the economy. At
least a
portion of the Treasury
will

deficits

the

financed

through

banking

system, thus adding
to the money supply.
The pricesupport activities of the Governannthpr inflatinnarv far
anotner lniiationary lac-

rrpnt c.re
ment

tor, and stockoiling activities proxririo

nnnnr-tirnitv

omno

ennrrnrf

\ide some opportunity

to support

,u_

key

imnortant
important

labor

loixe
force

ment

gains
gains

unions

concessions
concessions

of
01

all
ail

The power nf
tne nower of

continually
irom
from

faster

rate

in
in

Perhaps

factor
iacior

the pro-labor bias of

managemanage

than

productivity
proauctiviiy

level

the

Government seeks to achieve the

objectives of the welfare state. At
the heart of most of these prac¬

while

the

means
means

industrial

a
a

.Iinnortin:

signed to prevent

substantial

any

credit contraction in the economy,
It is difficult to avoid the conelusion that

inflationary forces are
likely to prevail and that the dollar will suffer

chasing

power

decline in its purover

period

Such
m

course

problems
prooiems

than for
the

for
ror

commodities

1nnn

real

departments
departments

trust
trust

there

pejee iniiation onen

favorable
thus,

postwar

Ffl

mav
may

the

be
oe

bamts.

somewhat
somewnat

iinJillinv tn"enne with
._rly in„
g
P..,.'b
dpr yl"g
rallv

-T™,

wi„

tbe world and under the pressure
0f postwar

business
re-

inflation,

nations

many

have founci it either necessary or
desirable in recent years to mod-

jfy

tbejr

cheap

policies,

money

by analogy, the conclu-

S°vernmentu bonds resulted" to:
large Purchases by;the Federal.

t,moment

remain

Dolicv

year

that

guess

fiscal policy were aired before

taken and

Economic Advisers has expressed

for

extreaie and untenable view,
not generally held in Washington,
that very low interest rates are
desirable at all times and under

the

prospects

though

even

all conditions.

the

However, it would be a mistake
the basis of a casual

be quite dif-

may

in Prospect.

none seems

Finally, the present Council of

favor somewhat lower rather than

higber priceSi
long-run trends

Policy.' No further action has been

seems

over

the

two

differences

- of
opinion in matters of credit and

Fo?

criticism.

some

More r recently,

market

uisite

prere

lending

reasonable

Lxt

mav

evoked a
public

amount

and

nn-

nrevented

not

which

banks;

considerable

t iJ™ cornrn^dmls

nrudent
a

bLis

sounde,

|° hut

to assume, on

ferent
.

Treasurv

Rlldffet

—

reading of the headlines

y I,ua® 1

earlier day of less
prnnnrnjct{;

sophisticated

crnvprnmpnts

fre-

wprp

economists, governments were fre
quently tempted to
in

nowPr

increase
blunt

their
de-

and

Dast months

■

over

the

that wide differences

past monins, inai wiue auierences
exlst among the responsible
Washington

aeencies

the mat-

vvdsningion agencies on tne.mdi
ter of interest rate policy. The

spending power in Diunt and ae
agreement is much lareer
liberate fashion by monetary de- f^ea ot agreement is mucn larger
ha<;prnpnt
The United States has
than the area of controversy,
basement, ine united states nas
difference of oninion
not been entirely free of guilt in inere is no ainerence ot opinion
j.
during our his- among them as to the necessity of
_

"lis 111<mei*

rnntinned

and

management

enn-

tory we Perpetrated a major de- continued management and convaluati

vamauon

and

earlier

on an
.

our

unit

monetarv

monetary unit,
occaslon we en"

substantial

flat

issue

paper

For the most

money.

bnwpvpr

have relied

and

tr°i
Th

the

over
.

markets,

money

dp<:irp

emhark

desire to emDark 011

really high interest rate policy

^
&
™arifPt tn
or to allow the bond market to
gather

momentum

great

one

s
e ^
u
w
f
.
doubtless will continue to rely, ^ecUon j another We face, fo^
upon the more sophisticated but the predictable future^^^the Trosequally effective device of deficit pert of s^ managed
ff
financing.
interest rates at levels that would
As government spending is one

he considered low by any reason-

of the major weapons of the wel-

fare

be hoped that some flexibility of
infer®sf rate policy will be maintained, with rates advancing

state, a decline in general
economic activity will inevitably

ernment

rise in the rate of govnutlavc.
Thie
counteroutlays,
inis counter

cyclical
*

increase

evoke

a
,

government

neriod

de-

accepted Dy economists as a use
ful tool of government policy.
„

under

The United States

Congressional subcommittee, and
the latter expressed
itself • in
lavor of a Congressional mandate
-V to establish the powers and pre^ rogatives of the Federal Reserve
be Board in toe field of interest rate

5?mr?altP?i? £j IS

large part of the However under
in
business Clal
philosophy
rise
.

interest rates and the

over

perhaps the most avid exponent
a
low interest policy in the
world
today
In other parts of

banking departments. On expenditures in a period ot ae
price inflation often clining business is now commonly

demands
qemanas

higher:
100%

developments

ex-

.hf'. Arf ? '

rfit

surface
suiidce,

appears

Loan
oan

course 91 developments

probably involve

ap_

Part' nowever we nave reneo, ana

ea<?v

the government>emoVe

mnnev
nnlicie<? and
easy money pone es ana
loan guarantee operations are de-

rinaiiy,

m0ney market

discussion

f.agea in tne suostanudi issue ui

Finallv

record

States

are Reserve',

costs,

rising

history in the

control

are

demands

basic materials.

The past

Policy

united

replacement basis.

orces

Certainly

Rate

tremely effective management and

more and more closely approach-

n^reh^nSenmi0sta?e »he eSSenCe
of the
hand-out state.
ment

demands

while

efflciency>

p"=*s

loans of the commercial banks

state

fleets the increased working capital requirements of business as the

there

the

finan-

easv

tne easy nnan
of

the

welfare

persistent

tend-

Siwrn!

somewhat

•

periods

activity

and

rising

nrices

and

business activity ana prices ana
declining in periods of sagging
nrices

However

the

business or prices. However, tne

changes
&

uKeiy
tions,
>

interest

in
,

and

the

rates

modest

modest
general
&

are

nrnnor-

propor
level

ci2nifi-

rates is not lixeiy to rise signin
cantly.
Having
weathered
the

ency

result

prices

of the

postwar increase in
Likewise inflation facili-

the results are decidedly tices will be Treasury fiscal policy, tates repayments 'by debtors. Part
mixed.
Government
action has which
comprises both spending of the favorable loan record of
reduced the monthly carrying cost and taxing.
Through unemploy¬ commercial banks in the past 15
per dollar of investment at the ment compensation,
disability pay¬ years can be ascribed to the gensame time that it has contributed ments,
old-age payments, and sim¬ erally inflationary environment
that has prevailed during most of
to an inflation of building costs. ilar social benefits
distributed or this
period.
Since its obligations
The "Fannie May" program, be¬ guaranteed
by the Treasury, ef¬ are payable in current dollars, the

ing,

IffWeMV

on the
these sustain Purchasing power; the critics describe

that

ground

interest

decade of financial

afreadyample'"lireincrelsing'ta

riL?tural

some

regard them
by which it

bank-earning assets.

an inflationary environN
,
Inflationary pressures ap- tivitles'of
pear to be an essential part of the
,Y
philosophy and equipment of the

mists

of
interest rates, the
supply and the volume of

conditions will still remain sion is sometimes expressed that
? major importance in determin- a reaj cRange in our interest rate
1"§ ,e Pnce movements of indi- policy will come either by choice
vl<~,
commodities. Production or under I the force of circum?.
demand for many commodi- stance.
*ief are comln§ m0F® closely into
The finer points of money and
on a w°rld~wlde basis, credit management in the postwar
international quest tor peri0d have been the topic of a
?°| J? ma.kes the American mar- g00(j deal of controversy. For a
,.
attractive. Here at home; sup- ^me in the midst of the inflation5 ? are, becoming more a bun- ary boom, ^he policy of supporting i

ment.

would

the

practices and devices
frequently of question¬

ment in the economy has been
avoiding a credit expanding for many years and
squeeze and a spiral of liquidation, the tempo is accelerating.
but much more important was the
We are all familiar with

somewhat

business and banking

upon

years.

have progressed into the "welfare
state."

The

—

force likely to be

acting

objec¬

able merit.
ences

nomenclature

It confuses

effects of

Pressures

the Administration,
tne Administration

responsibility

grave.

Inflationary

basic long-range

however,

ditions and for trying to take care
of the individual from the cradle
the

therefore, to point

the likely

prices of
the most
tne most

undertakes

to stabilize general

some

these practices and policies on cur
business and banking problems.

been applied to the collection of
policies and practices under which

government

It is necessary,
out

some

has been expressed of
desirability
of
maintaining
high levels of investment in fixed
capital.

The tives

credit

achieve

and

banking must expect to

stabilize the flow

are

the

able

ac¬

awareness

tal

relaxation

commodity
important aspira¬

Other

incomes
even

levels

and

ness

operate in the foreseeable future.

level

unexPected. Demand and sup- Reasoning

justify their policies

and significant declines

general

is the environment in which busi-

state

One of

achieve the levels of business

the

Any deterioration
bring
greater efforts to expand the size
and scope of these activities. This

proponents

much is heard these days, is to

spread

practices.

in the economic climate will

The

the primary objectives of the socalled "welfare state," of which
so

and

most of these programs

the

money

ac¬

efforts

government in the future.

continued

prevent

barked

maintain

provide a real test.
However, the record is not likely
to

„

and

not such as to

the other side. The prospect is
that over the next few years, even
spared a shooting war, the deficits will average larger than the
surpluses.
This outlook for the
budget has direct implications for

by highly

at¬

tivity, the record is far from con¬
vincing. In the 'thirties, the effort
failed; last year conditions were

borrowings.
However, the volume of new capi¬
raised

recent

when
government
tempted to stabilize economic

being politically unsatisfactory

and

history

helped maintain farm incomes at tions
one

occasions

two

—

deflation, that is, to forestall wide¬

surplus

duction.

the

Action

progress

welfare

...

Government

economically

made

have

arriving

;

tivity necessary to maintain r'easonably full employment.
A
closely related goal is to prevent

poses.
Future

Government Action in the Past
—

largely for replacement pur¬

are

forces?

Year

attained

gressive taxation.

ignore that the
price level is near its postwar
has not
reached considerably
peak and that for many industrial
products practically no price cor¬ higher levels.
On the whole, it appears that
rections have occurred.
Further¬
more, the economy has been sup¬ postwar conditions so far have not
ported by an extremely high level permitted a real test of the effi¬
of demand in heavy goods lines, cacy of government policy.
The
such as construction and automo¬ pent-up
demands
for durable
biles, ■ reflecting in part accumu¬ goods, carried over from earlier
lated deferred demands, and pro¬ years, were strong enough in 1949
duction in these lines has been to prevent the, minor inventory
running above what may be con¬ adjustment
from deteriorating
sidered normal in long-term per¬ into a more serious cyclical down¬
spective;
All this, together with turn, and helped to ma i n t a in
the lesson of historical analogy for employment and personal income.
what it is worth, suggests that a Government action in a generally
pects

Prices of agri-

income.

pro- does it mean that the immediate
More income is outlook is for a resurgent upward
1949, helped to ease the mortgage to be diverted from savings into movement in the price level.
A
credit
situation
in
some
areas.
comumption, again by progres- budget deficit of modest amount,
Also,
multi-family housing re¬ sive taxes. The share going to unless fed by rapidly rising bank
ceived a real stimulus in the latter wages and salaries is to be in- loans
or
investments, will not
part of last year from the liberal¬ creased, while the portion remain- mean an increase in the money
ized FHA Section 608 program. ing for profits is to be reduced, supply of inflationary proportions,
The decline in selling prices in With
a
rise
in
unemployment, Even a modest deterioration in
1949 was probably as much a re¬
Government expenditures are to business conditions would put the
flection of excessive cost and be increased and larger Treasury commodity price level under presbuilders' profits as of some easing deficits are to be incurred as a sure and would doubtless bring
of the persistent housing shortage.
deliberate
measure
designed to some decline in the general level
Much
is made of the fact that encourage business recovery and of prices over the near term.
residential starts in 1949 were at expansion.
Of late, increasing atLending officers should not bean
all-time peak, about 8 or 9% tention has been given to the en- come so entranced by the longabove the previous peak in 1925. couragement of capital investment term inflationary prospects as to
In the meantime, however, popu¬
through the use of Government ignore the real credit risks inherlation has increased by over 30%. credit or by direct Treasury fi- ent in short-run price fluctuations.
Considering the amount of gov¬ nancing.
Indeed, for the years immediately
ernment encouragement given to
ahead, some downward adjustresidential building, the surpris¬ Impact on Business and Banking ment from the present peak levels
ing thing is that postwar building
Already,
Government is ernmany postwar prices would not

The ginning notably in the

ago.

year

Thursday, March 30, 1950

commercial bank as a corporate gest that an expanding economy
entity escapes the unfortunate re- on the one hand, and careful and
cultural
commodities
and
thus percussions
of
price
increases prudent government housekeepfarm incomes are to be supported which bankers, as individuals, feel ing
on the
other, will bring a
through substantial outlays by tne so keenly.
gradual rise in tax revenues and
Treasury,
Disparities in personal
This inflationary bias does not the emergence of a Treasury surincome are to be reduced and a mean, however, that commodity plus.
The preponderance of evimore even distribution of income
prices will rise every year.
Nor dence, however, is certainly on
dividual

So-Called Welfare State
from

CHRONICLE

FINANCIAL

forts will be made to stabilize in-

from page 7

Banking and Business in the
different

COMMERCIAL

THE

(1336)

tnere is a persistent tend
b/
® h ,
interest
for government spending to ProbJfija Josed Iby low interest
run ahead of the willingness of rates in the yearsof violent postCongress to vote taxes, and this war price inflation, the money
^ truc in good as well as in bad managers in the near future are
years- Over the past two decades, hardly likely to face conditions so
toe Treasury has had a surplus in embarrassing as to require a
°nly tw0 years.
s gn ficant reversal of policy.
There are those who profess to
Government Lending Activities
n

—The use of government credit
deficits are only a passing phase or funds for business and other
brought on by the need for large nongovernmental
purposes
goes
defense expenditures. They sug- back almost 20 years/ Introduced
believe

that

our

current

budget

Volume 171

Number 4894

originally in

effort to amelio-

rate

distress

great
are

the

depression,

midst

these

THE

for

rather

general and
deficits mean

Treasury

devices

volume

now

part of the accepted
paraphernalia of government ac-

likely to rise

sphere. They
are
popular alike in periods of
inflation and depression.
One of

the safest
predictions
made about the

the
is

Treasury

over

ings of government securities
period will of

only

can

frequent
that

investments

the years. The
size of the increase in bank hold-

tion in the economic

that

bank

COMMERCIAL

staters

depend not

course

the

upon

amount

deficit,

over

the

also

The

new

use

credit

government

will

encourage

capital
higher

goods,
rate

foooxnr

heavy
to

activity

tration

the

4.\

and

activity."

thus

general

of the bank.

the

inTe%he°US/ng'the Senate,

type

one

ing activities, the trend
in

thp

Ll crldit
periods

avaUaWe

has

Hirpptinn

making

lower

rvF

creases

rY._i_

State

and

governments, or to business,
individuals, in order to encapital investment. All
of course, is in addition to

available

courage

this,
plans

expand

direct

govern-

ment
outlays for public
whenever required

This

exnansion

financing

problem

for

the

make

ie^J

nrnKoKilifxr

all

probability
their peaks,

nroductive
On
prOQUCtlVe ClIQIu KJIi

effort^

hand

and

c]Lang<Ls: ^u^er ^
the short
term

are

abundant

participate in

However, if the basic

!nt v0 ume. °f term loans in the
»*ace
serial repayments, lower
pa "tpS ^n^npfiB° ay s' and

per-

For

the

few

«nv

^S;

naeasure of economic sqpurity and
be for- stability. - But government cannot
years,

This

private enterprise. How to achieve

even more

the

thethe activities
line of de-

♦

betweeri

government

ana

tne

bankers in
How

can

many of these fields?
the extension of these

activtities be limited

general aspects of this
steady expansion of government
lending activities. Essentially this trend involves

the

credit.

politicalization

means
the
gradual
of
private lending institutions.
It means the substi-

atrophy
tution

social

political

cri-

term

for the financial
standards
generally used in the extension of

credit.

that

means

lenders and investors
act

der

xu—

their

are

program of loan
n

rmmrnin

guarantees,

.m/inrminnj

frequently

businesses

un-

are

t♦

It means all

that

inefficient

subsidized at pub-

are

competitive, and where productivity on which it depends
win
be
placed on is our cardinal problem.

premium

imagination

and

ingenuity

de-

vising

new, but appropriate, outlets for bank funds.

Jic expense

Banks

—

...

the

...

immediate

of this politicalization of

effects

our

have

solution

thought

will
and

panacea.

require
hard

find

plenty

work

eco-

nomic life lie certain fundamental
implications which need to be ap-

Tbey must spend

of
the

time

the

study of national problems,
They must enlist in the government

service

whenever

they can
make a contribution.
They must
pia.sed
dispassionately
and
in take the initiative in
devising conbalanced perspective. We must structive and positive programs
accept the premise that mass ununder which business enterprise
employment nas - become politi- will retain its freedom and will
cally and socially unacceptable be able to
join with government
and that the decision has
already in the solution of mutual probbeen mad« to avoid it at all costs, lems. They must make more of an
Demanos are growing lor greater effort to understand
the

social

security of employment, lor better problems and points of view of the
old-age pensions, for more social average American family
They
benefits, cind our society is dis- must convince the

Playin8

an
fLo

the

toward

public that last-

increasing intolerance ing
Hiciruco
nf
anr\tinm 1 r»

economic

distress

economic

progress

can

fe°aVd rto7omewhat
the

sets

trend

significant

stabflity

greater

total

of commercial

earning

as-

banks. This is

"output of
n€xt

the

tent

Associa-

hides

owning

one year.

broad

base

to^finance^

since

the

war.

greatest

windfall

the

automobile

should

in the past
But he said the banks

into

enter

nancing

clines,

<sPecial 10 the f^ancial chronicle)

S8theP^to'"SatfrhS F'SAN J?hE'
J°bn

®PP£111S?1

we^must recogmze!

Reschke,

loans

generally de- reaiassurai.ee oi lusaunny wcope r asi
bank holdings of govern-

securities

are

likely to rise

The

Treasury under such conditions is likely to have
larger deficits, and the monetary and fiscal
financing

will

not

much

averse

the

deficit

1950, against the 1949
million.
Taking into
estimated population

total of 35.5
account

increase of about 8 million and
reasonable

hide

and

motor vehicle
scraphe estimated new ve-

rate,

page

production

should

average

nearly 5 million vehicles annually
the next five years.

over

seiVes to the "orthodox" functions
commercial bank,

0f the
.

Fxnro„ina

ritdit

POnPprn over

Pnrnmprpinl

Sill
take full

hanks

rrpdit

!ipn

thp

Con^ar wise, when the business
upward and bank loans

tend

rise,

the Treasury deficit

w!!! ,^e jsma^er' aPd tbe. desire
will

finance

outside

banks in order to avoid

the

increasing

the money supply.

With

ments,

posi-

influence

and

exercise restraint in the extension
of retail credit.
:

He told the bankers that retail
tion

and

$6.5

sales

would

billion.

call

for

volume of

annual

average

about

Morgan Stanley Group
Offers $25,000,0C0

This

compares with
$6 billion-required to handle retail
automobile
instalment purchases

1949.

financed

cars

has

increased steadily since the end of
the war.
Last year it was 30%
to

40%.

Today

Discussing the long

)mney
•:
re
is

range

out-

tnZhiirindnstTv
industry,

f
he automobile
for the p

safd th°t
said that
v

whnP
while

encouraging,

faPtors

nirpic-

the
the

very

duvclfcc

Morgan Stanley & Co. and
ciates

offered

some

hiehwav

lax, parking
nroblems sk noten-

the

and

t]ally dlmimshlng the economic
A
...

pro-

throughout

towns
said.

Burlington

bonds at

100%

Needed

....

We a^ust also face

closed

were

As!

plus

ac-

Proceeds

ugecj

the

part

shortly

atter

mflHP

urac

sale

will

provide for theredemption on Feb. 1, 1952. of the
outstanding
$12,460,100
of
the
company's
first
and
refunding
mortgage

Construction
.

Chicago,

nf S ~
CTU

«-»—-»

+1^^

great

ini

yiding off-street parking facilities

Highway

subject

1990

economic

deal of work must be done

Commerce

000,000
o
•'
Quinc

cited

utility of the automobile.

and

28,

ICvJUUC

dimirfishine

tiailv

asso¬

public cn
authoriza-

commission
commission, a new issue of $25 a new issue oi wo,

attend'"Hecited'tM wfrkta* £2*1
books
tie

the

rpnmrp

latlUia

attention,

"the"interstate

March

running

ab0ve the prewar average of 60%.
,

Burlington R.R. Bonds

J He pointed out that the

percentage

A^Lombard C. M
H. F. Soderwall

regard to bank
downward

investpressure

characteristic of the early postwar

at an end. The

un-

derlying inflationary bias inherent
in the policies
of the so-called
state

and

the

prospects

oueeu

mr.

™

was

ih(L.e'[°n0mJcJuZ5,d?,,oi,la0 !?™erly wlth Cap,tal Securltles
Co.

4V?%

series

bond?)

dye Heb. 1. 1977,.and for payment
of

realistically

welfare sta*e W^1 not do away With Coburn & Middlbrook
the economic jonsequences
(Special to The Financial Chronicle)

^mn^tpnrl

it 'hfJ

expenditures smce March I,
jn ibe acquisition or con~

J949

economic

forecasting inherently inexact; in
a

poijtiCal atmosphere

jems

the

probEconomic

muitiPliecl.
will gain momentum be-

are

trencjs

tore Government takes action and

the trends will continue after
tion

lias

been

initiated.

HARTFORD, CONN.
C.

Weeks

always predictable
It

seems

clear

that

cycTe will remain with
More

business

promptness

with

which

needs," he said, "The nation faces
expensive construction
program if it is to avoid the

loss

resulting irom

potential
the retarded

of motor vehicles. '

use

George
N. H., is

—

Freedom,

•

that

said,

studies indicate,
about

$4.4

billion

should
snouid

and street work, to meet highway

man

Co.

and

Johnson

Co,

needs

be
oe

spent
spent

yearly
ye^y ®P^road

long-term basis and

to catch up with deficiencies resuiting from the depression and
war.
About $3.5 billion was spent
in

With John Nuveen

1949."

Among

(special to the financial chronicle)

CHICAGO, ILL. — Donald C.
Malmqbist has become associated
with

John
La

Nuveen

Salle

vCo.,

135

Street.

was

the. jjtwmerly >5yjth, Spenper. Trask^ &

Govern-

traffic

brook, 37 Lewis Street.
He was
formerly with Boardman, Free-

South

us.

important ..than

present-day

associated with Coburn & Middle-

Govern¬

immediate.

the

ac¬

policy frequently takes a
long lime to formulate,"enact, and
implement, and the results are not

meet

"and" Needle's

Missouri!
sborten

Co. and Lazard Freres & Co.

the highway problems
noted were (1> the continued

diversion of about $200 million
year

user
poses;

special

taxes to
(2) the

state

and

nonhighway

pur-

Junction

l'ine

wui

Chicag0>
Burlingt0n
that

payrQent for the
for
for

period

a
a

not

pay

less

company
haf{
after receipt of

new

bonds it will

10 business

than

1104%

days
day;

plut

accri,e<j interest to date of delivery

^or any serjes g bonds preat
j
p
Morgan & Co.

£ted

incorporated

yy-.i

Rerwvn T Moore
Wltn ^erwYn l' moore Co.
v'u>*
(special to the financial chronicle)

highway-

"dispersion" of

new

and

announced

an
larger yearly amount of state
highway-uSer faxes to roads and

even

The

improve the company?s route between Kansas City
The

prnnnmip

old PpnnLk

ment

the

years appears

handout

would

S their
of thL

advantage

si?d 1^

Romnev

hnnpr1

tenHen-

financing for this rate of produc-

in! cities
America,

million people or to limit fluctuations in the economy as a whole.

diagnosis is difficult and

trend

basis

railroad

authorities

ffl

wholesale

vehicles

unfavorable

ment

called

business has received
30 years"

only

registrations will total about 39.3
million

because

volume

cTntribution "perTaps lh°e

said,
in the

the
and.

pay

the
heavy
production and sale of motor ve-

Romney

should

the

required

the latter part

industry

months

for

a car

Romney praised the commercial banks for helping to ex-

some lowering

Mr.

just

involved

2Ms

worker

average

wages

fact, are running ments of an automobile dealernearly 25% above a year ago."
ship by extending services com—
Mr. Romney said present trends
parable to those of the old line
indicate private passenger car finance
companies, or limit them-

come

a.i

only from more production, and
fronn in the normgroup in the popu- that this in turn requires that enlatjon. The persistence with whicn terprise be allowed to remain virProposals for new Government ile and vigorous.,
action are advanced, the support

anv

any

sphere of Government indicate the

Conference

the

National

Bankers

year,"

C„°mUSaf°LE„ak?inT AfetS 1 lenLrr7vee'ratbdethyefrsdUofle^ Four With P. C. Rudolph
general,
Commercial

pf1 of businessmen and bankers.

some Fundamental l«nea
_

Beyond

rarA

and initiative

severely undermined.
too

private

simply to

agents for government

flexibility

scope?

Beyond these specific questions
which the individual banker
must
answer for himself are
some

Credit

American

income

the

marpatin
marcation
of

-9

Intaiment
the

1° e?,c,T

consequences, which will be

operating

at the La Salle Hotel here.
"Even allowing for the effect of

lhe sort of environment in which a reasonable amount of economic
lending operations will become security without sacrificing the

hnM

taxes

L ^ tion
and
in-

Whit IhnnJ ht iV,fnriC1fPS ?

thpv

weeks'

the

bethe

trends

We Ca"n0t

costs

Michigan,
speaking at

Romney

low

said,

nents norTh (ferities of th«f welfare sliShtly
below the record 1949 commensurate with their particiLf
1
from savines
nor the cntics of the welfare tolal of 5jll4)2e9 passenger cars pation in retail lines of
automobile
lnslltutlons'
and
a
motor vehicle total of credit. He
suggested that comThe postwar years have brought
The situation thus presents a 6,243,572 units.
mercial
banks
should
either
a combination of factors very fa- real challenge. Society demands
"Current
new
passenger
car
recognize the financing require¬
vorable to the expansion of bank that government underwrite some registrations, in

ing rates relatively low.

Khali

George

pres-

Presi-

Corp., Detroit,

undprminpd

natural

levy adds
about $95 to the selling price of
the average new car.
Along with
other taxes, the result is that it

George
-

heaviest

groups.

dent of Nash-

banks to maintain their

falls

was

Kelvinator

anpropriating

bankers

vnlvp

Vice

minim'um^iTomT'ltandard^o^th?

speaker scored the Federal

levy on motor vehicles as
unfair, pointing out that the tax

March

excise

Romney,

removinethefrar

py_amoving tne rear

Scores Excise Levy

This

forecast
made

„

The

than

1949.

but hasdone notMnff

contrarv

highway projects,

credit

higher
in

toll

instal-

somewhat

t^hntaue for^isSbut

highway-user tax on top of existing special-user taxes in the form

auto-

ment

soAeiai"a"

income
togstimXte
SllmUldl6

motive

this course

leads down the road to socializaL°

over

loans.

noses

very

high

employ¬
possible ad-

how?ver> the banks "W
real lunate to hold their existinS loan ?elivlr on such
unShall th^v volumeCompetition in lending less there are real incentives and
ventures whirh in
wlil "lclude Pressure to keep lend- rewards for creative effort under

steadv

ernment

works

imperil

»kely
modest even rf the dustrial resources and our greater strikes
If
-S business does not recede.
.P^u^vZ'hernmP SppThl^ the Probability of
I VYI1
eA incroasingly difficult have not yet become so noticeable. 0f demand during

longer
Recently

been

made

ume

and

Much of this has
rate of business activity at the
already
P°stwar level of prices. Except come apparent abroad.
In

and

the

proposed that when
if business
activity declines
Federal funds or
credit, or both

high and
require a vol-

which

vestment,

earnings" onthl

„

for

rates.

of production and

ment

taxation, together with
pro-labor and anti-business bias,

tes!

over

George Romney forecasts demand for cars and trucks will
strong during 1950-55 period, requiring volume of
instalment credit somewhat higher than in 1949.

remain

progressive

cheering
pr°fUs
ess cneenng.
ine present vol- 0tjjer and kigher
incentives are
ume 01 loa"s *°r working capital
from both
id
purposes already reflects a high
aes<

example of
Further-

funds available to small
business.
For established
government lend-

local

con-

Admini.^ although the rate of increase is
bkely to slow down later this year.

The

more, schemes abound for

oil

loans

sumer

h,ave not yet reached

thinking.

vears

lrvanc

Qiim^r

help

level

Real estate and

plan for financing middle

this

ent soundness of its economic policies.
For instance, the emphasis
of the welfare state upon hign and
a

Predicts Rise in Auto Demand and Credit

^ y defidencv^fs Xt the^ef
Sre state has develoned I hWhlv

ever-

changing economic scene is the
.underlying question of the inher-

cult to appraise.
Loan behavior X
will vary with the character of
the loan portfolio as influenced by
the location and type of business ?

use

investment

industries,

business

The outlook for the otner
major

and

their

contribute

maintain

funds

simple:

very

the

(1337)

levels

in-

component of bank earning assets,
norrwli„ inor>e 4o
namely, loans, is much more *u*i
diffi-

theory underlying the

with

cope

CHRONICLE

upon

vestment in the economy,

under which credits
will be made
available by the
government.

can

FINANCIAL

CHICAGO, ILL.—Demand for streets that properly should be
clearly endangers the attainment
money of an adequate volume of private *lf.w
l'assen§^r cars and trucks supported by local, general and
oonoroi
general canital investment. These policies this year and 'annually lor the property taxes, (3) the current
capital investment.. Thesp nnlirips
should
remain trend toward
aggre- invite an atrophy of private inperiod
imposing an extra

but

welfare
debt
and
management
that it will
that it will hrinmartot rw-kiinioo anH tVio
bring further expan- market policies and the
sion in the
scope of both the loan
relationship between the
and
guaranty functions
and
a
gate volumes of savings and

gradual liberalization of the terms

ment

LOUISVILLE, KY.—Berwyn T.
]yjoore
.T

Moore

'«

with

lor Building.

Berwyn

Maririri E
*»

Tav-

Continued

COMMERCIAL

THE

(1338)

from

page

FINANCIAL

CHRONICLE

No Relaxing of Trade Controls

Under ITO

pressiori

Charter

world,

trade controls is

Employment

cialist

policies

mand

Under the Havana Charter

tactics—cheap

supplemen¬
tary public investment and "pump

priming"

money,

pillars of
wise and permanent employment
policy.
Thus it completely for¬
gets that high employment is but
one aspect of a
well functioning,
be

the three

economy.
It ignores
completely the fundamental con¬

prosperous

dition

high

harmonious

employment

national

production within
world

utterly
effect

reverses

structure

harmonious

structure

—

production.

the

from what it

and American Draft Charter—the

trade—to what it
remain—the pursuit of na¬

pursuit of free
to

was

tional full
the

then, national prosperity depend¬
ent upon "full employment."

Inspired by Lord Keynes

revolutionary

ac¬

effective demand was, of

inspired by Lord Keynes.

course,
an

which

error

stems

from

certain confusions in its author's,
in his disciples', minds.
But it

stems, also, from the value judg¬
ments Keynesian extremists make
about the whole economic process,
in

toto.

These

value

judgments

blind them to the fact that

pol¬

icy of employment through
"planned inflation" is economic

folly; they seem to see only the
"planned" and not the "inflation."
In

their

ment

hands, such

employ¬

becomes

program

blue¬

print for national policy making,
experiment in methodology. In

their

hands, the "revolution

of ef¬

fective demand" becomes the
olution of artifically bloated
and

price

ment

structure,

intervention

of
and

rev¬

cost

govern¬

central

control, of econometrics and

bu¬

any

the world

has known.
Of course, the nationalistic dis¬

ruption

of trade engendered by
Keynesian definition of em¬
ployment was evident to most of
the

the conference

sequent

delegates. The sub¬

Articles

the

Charter

concerning

employment
were
drafted with a logic that belies
the verbosely diplomatic language
in which they, as Article
3, are
expressed. They show how clearly
the delegates understood that so¬
cialist employment policies must
lead to

balance of

dif¬

payments

ficulties. The relevant paragraphs
of Article 21, written with
just
this

contingency in mind, read

follows:
"The

Members

recognize

that,

result of domestic
policies di¬
rected toward the fulfillment of a

cle 3

relating to the achievement

and maintenance of full
and pro¬

ductive

employment and
large
and steadily
growing demand
.

such

Member may find that de¬

mands for foreign
exchange exer¬
cise pressure on its

monetary

serves

which

institution

would

justify

maintenance

re¬

the
of

restrictions under paragraph 3 of
this article.
Accordingly,
Member

shall

quired to withdraw

re¬

modify

restrictions which it is
apply¬
ing under this Article on the
ground that

policies

change in such

would

render

these

Contraction

Not Permitting

Means Inflation

the

governments pursuing
ment

policy

effective

Charter

fact that
employ¬
"steadily rising

inevitable;

was

shift

this

But

demand,"

traction in any sector

of the econ¬
omy, must maintain a continually
increasing inflationary pressure.
Such inflationary pressure invari¬
ably forces the national cost and
price structure out of line with
those of other countries, so that
the exchange rate soon becomes
far too high.
The overvalued ex¬
change rate, however, is never
corrected precisely because it per¬
mits maintenance
of artificially

high costs and prices within the
The inevitable result, of
course, is a drain on the country's
supply of foreign exchange, and
balance of payments difficulties.
Those
difficulties,
furthermore,
are heightened by the abnormally
large demand for foreign goods
the inflationary pressure has stim¬
ulated.
Exchange controls soon
nation.

"(ii) any Member applying im¬
port
:

restrictions

article

may

under

this

determine the in¬

cidence of the restrictions on
imports of different products
,

or classes of products in such

way

give priority to
the importation of those prod¬
as

na¬

international

Industries borne

ar¬

tifically on the seas of inflation¬
aggregate demand can hardly
in

stand

international

competi¬

ment's
more

control

total and far

addition,

restrictions

these

applied to "safeguard the balance
of

payments"

permanent.

cause

This

is true

be¬

the distortion of the national

cost and
tion

likely to

very

are

price structure by infla¬
more dif¬

naturally makes it

mind any longer.
Wilson
such

maintained

high cost

industry from falling foreign de¬
mand.

Under such

Thus

the

ducers and trade unions press

instru¬

maintenance

full

our

the

employ¬

ican

who, at Geneva
convinced the Amer¬

that quantitative
exchange control
temporary are finally

delegates

restrictions and

only

were

putting matters straight.
They
now proclaim a permanent policy
of restricting purchases abroad to

It should not be necessary,

insist

ever,

the

upon

policy

permits them to "pro¬
themselves from a drop in

tect"

demand.

conse¬

of arbitrary

economic

disintegration
of the world, and breeds increas¬
frictions.

cannot

otherwise, for there is

visible

hand"

"in¬

that

ensure

the

country will not

one

be pitted againsithose of another.
The bitter rubber and oil

which

have

stirred

disputes

passions

both sides of the Atlantic

sign of things to
"import selection"

eral

practice,

but

are

Should

come.

become

would

gen¬

endanger

other industry in the world
"non-essential,"

"re¬

placeable," by omnipotent bureau¬
crats who execute all-embracing
national
plans to protect their
employment

struc¬

tures.
It

tend,

quite

unrealistic

therefore,

did

pre¬

Keynes,

that

The

history

period

depressions

neutralized.

the

demonstrates

exactly

policies
those

"safeguard"

years—the

the

The national

used

quantitative

re¬

the

loser.

the

end, the
maladjusted national structures of
production—all protected by "im¬

economies, and the con¬
disruption of the world

market

and

monetary
standard, were among the root
causes
of the depression.
These
rigidities had, in fact, threatened
collapse throughout

the

United

States and

France withdrew

credits, the con¬
these deep malad¬

sequences

justments

became

apparent.

credits

contracted, and many even
failed to be repaid, international
exchanges declined drastically.
'/

breakdown

trade,

its

resiliency,

clearly deep¬
spread the business re¬

and

cession.

for

was,

most

set

the

remove

protection

given, for
that, too, would entail a readjust¬
ment

certain
of

once

industries

and

temporary unemploy¬

ment.

This

irrevocability
restrictions

of
a

socialist

vital

fact

usually ignored by national plan¬
who impose them. Such men

ners

quite

blindly, that

re¬

moving trade restrictions will be
easier

after

mies have

ment,"
dations
have

the

national

achieved

econo¬

"full employ¬

even when the very

been

restrictions.

national

laid

foun¬

employment
these

same

its neigh¬

coun¬

bors."
Such

echoes

argument

Britain

"Import
has

selection"

trade

have

general, less

less

severe.

the

national

Clearly,
hopes of recovery in
period, reviving
trade, and restoring

long, and
the two best
the interwar
international

flexibility to
economies, were

drive

along .Schachtian
towards autarchy,

manufactures

where

they

produced with least effort and

Instead,

exploit her

she

own

are
ex¬

is forced to

resources

ex¬

haustion; to resort to barter where
possible; and where impossible, to

dwell

quences

but

must

that

the

upon

that

was

conse¬

shortsightedness,

always

remember

far from accidental.

recommending a
policy of sauve-qui-peut nullifies
20

needs

ary

(1)

just when it most

obeyed.

fateful

most

By condon¬

commanding
it

pressures,

unites

elements

trophic depression.

the

inflation¬

the
of

two

catas¬

It makes the

the future

viability of the nation,
transitory stability which

most

crumble

months to
this

her

the

not

the

few

essential

ity

and

the

socialist

ef¬

de-

politically
expedient

to turn

Western

States

political stabil¬

prosperity in
that the United

Europe

must

restore

continue

its

Aid

structive,

with

really

policy
of
economic cooperation with Great
Britain.
In

short, the United States must

throw

out

the

wider

lines

life

imports, she can
adjust to a
new,
and
natural,
equilibrium
most effectively and realistically.
That natural equilibrium must, in
help

other

nations

fact, be established, for only then
hope for real and endur¬

can

ing

stability

western

States

Britain

world.

therefore,

must,

program

and

The

tariff

the

United

continue

reductions,

steadily preparing the way for
expanding world economy.
But

equally

important,

United States must
to

tariff

bargain

market

with

elimination

and

other

access

exchange

restrictions

tative

ef¬

most

She must be able to

individually

complete

program
the

countries, offering wide
her

the

keep its hands

this

pursue

reductions

for

the

quanti¬

exchange

controls.

Of
course,
the
possibility of
bargaining for the elimination of

foreseen

was

of the

der

the drafting

Reciprocal Trade Act.

the

provisions

Un¬
ITO

the

Charter,

however, it may prove
for the United States to
Yet
surely it would be

illegal
do

so.

United

irony

and

States—the

most

powerful of nations and the most

are

The dangers in such a situa¬

bilateralism and blatant discrimi¬

of economic disorder

tion—and

they

are

many—must
"Given the

squarely faced.
present political divisions

the

world, to recommend autarchy

general policy is to recommend

war

instrument for making

Here

theory

and

ployment
learns

the

"revolution

practice

the

domestic

policy"—reducing em¬
to absurdity,

problems

whence

any

be called

parrot

who

"effective demand"

say

nation.

economist.

Here

is the policy that would achieve
stability by accelerating inflation,
drown out structural maladjust-

Then, bound by

Lionel

Robbins, Economic Planning
Order, London, 1937,

International

321.

charter

which she had initiated to

equality

those

who

Samson, find her
pletely neutralized.
those

who

accord

treat

unequally, she would, like

autarchy possible."!.

the

By opening her

sincerely desirous of non-discrim¬
inatory multilateral trade—to find
herself
helpless in a world of

quences

con¬

long-term

height of ridicule

and

efforts

healthy world econ¬
She must, therefore, replace
a

the

her

enduring

powers

her

shorn
com¬

At the mercy

would

combat

her

good faith and superior efficiency
with the lethal weapons of eco¬
nomic
sorry

warfare,

she

champion of

would be a
liberal inter¬

nationalism.
Such

defeat, the United

States
possibly
allow.
Every
chance of reconstituting a world
economy depends upon her stay¬
ing in a position to lead the fight
cannot

for

all.

British

States

then?

struggling European

for

prop

friend. A strong and stable Britain

come.

neither

the

far

per¬

much

what

possibility of another 1929 terrifyingly real. Indeed, the effects
of such a depression today could

can

essential

gone,

United

fective way.

tragic mistakes today in

same

its analysis of the business cycle.
Article

likely,
to

feat

economically

nor

back

the

free

full

expense

continue

Aid

It seems
inconceivable, there¬
fore, that the Charter should make

from

fects

with

would

wise

severity of the 1929 de¬

pression

making these sacrifices, she has
only been able to maintain factice

But

its

not

remarkable

Marshall

need

economic

must

this

free

forego altogether what she cannot
produce herself.
Yet
even
by

employment at the

longer.

forgotten in the chaos of policies
deemed
more
"expedient."
We

felt.

pro¬

living.
In the
descending spiral of restraints on
trade, she is no longer able to
purchase raw materials, foodstuffs

form

States

doors

would

lower standards of

of trade

the

income; and
"full employment" at intolerably

United

elevation

the reduction of real

lines,

only meant

crisis

serious, for passions
will run bitterly when the ques¬
tion of responsibility for the crisis
arises, and the political conse¬

pense.

trade

calculated

try .against that

motion

the consumers, it can never refuse
them.
What is more, it can never

important

one

grants these interests further pro¬
tection, it increases their bargain¬
over

•.

vacuum.

con¬

forces

interests

obliged to accede to such private
reclamations; and every time it

ing strength. As long as it
tinues to give them priority

bill.

probably not possible, that the

and

increase

need

economic

economy, and this the government
has sworn to avoid.
It is thus

materials
and

can

if somebody
foot the raw

the

less

en¬

controls,

now

prepared

barriers,

permanent

there

unemployment — however
temporary—in some sector of the

function
is

plication
been

cannot

The British economy,

administrative

American market.

and

mean

England.

tries, the greatest single factor of
distress,: since without the multi¬

Article

States

artificially bloated, held together

coun¬

ing the maintenance of structural
maladjustments in the national

Indeed, their pressure can hardly
be resisted, for resistance would

Marshall

economies,

sub¬

United

omy.

Recession

by their domestic policies,

and

The

dorse these full employment poli¬
cies which have precipitated crisis

Breakdown of Trade Deepens

Policies

for the

loss

de¬

isola¬

U. S. and "Full Employment"

expansion, which caused an
illusory increase in world trade.

ened

whose

policies

increasing economic
from their neighbors.

This

governments

economic

mand

nations learn to provide them¬
selves with
full
employment

goods,

socialist

tion

they

a "full employment"
Full scope is thus given

domestic

the

'20s, but
hidden by international

been

soon

ever

when

part

only

had

therein—

organization

their removal

program.

sanctioned

the

can

else

credit

codified in Articles 3,
Quantitative restrictions

was

entirely

are

national

"when goods are homespun and

foreign

which

6 and 21.

port selection"—spelled disastrous
depression. The rigidities in the
sequent

has

poverty and discord to
Britain, and threatens world de¬
pression. This is the philosophy

export

subsidies, and
currency depreciation—were fruit¬
less policies of
suave-qui-peut. In
the desperate competitive
strug¬
gle to salvage markets, everyone
was

which

brought

are

interwar

living by indulging
This is the new eco¬

nationalism

suggest

be localized

can

the

"cheap"

nomic

nor

pressure,"

autarchy.

flationary

government for protection against
sidies for their unwanted exports.

standards
in

the

private

own

But

ment by
sterilizing the forces of
adaptation, raise international

quite fallacious to believe that, by
using Article 6's "safeguards for
members subject to external de¬

how¬

government "import selection." It
presages

they

which

international

protect the home market, and of
forcing sales abroad to maintain
essential imports.
/

quences

is,

credit

men

and Havana,

circumstances,

import and export barriers mount
ever
upwards, as high cost pro¬

the

programme."

every

it must shield its

permanent

economic position and

our

judged

finds

That

will invoke Article 6 of the Char¬
ter

and

exchange,

investment, will be

ensure

fulfillment
ment

location

the

foreign

the volume of

ments

Said Mr. Harold

those

having sterilized the forces of ad¬
justment
by planned
inflation,

slow in

very

Jan. 20: "Basic controls,

industry,

ficult for the country's industries

compete with those of other
nations.
Thus the government,

been

has

realizing this fact—or realizing it
publically, at least.
But there is
no doubt in the official diplomatic

interests

reaching.

home.

strictions,

the govern¬
foreign trade

cussions

within the world economy.
So long as such inflated econo¬
mies fail to adjust, the decontrol
grate

the

states

apply new restrictions
hope of staving off reper¬

the

opposite conclusion.

ing political

and

throughout

like-minded

tion; distorted national cost and
price structures borne on the same
seas
become impossible to inte¬

become necessary to protect mon¬
reserves,

ary

etary

maintain,

restrictions unnecessary;

any

Once

back to the decon¬

road

Britain

measure

"(i)

perfect

easy

as a

Member's obligations under Arti¬

permitted in

never

trol of trade.

tion.

reaucracy.
It becomes the revo¬
lution of neo-economic national¬

ism—as virulent

policy which never permits con¬

This grave error in perspective,

de¬

from the general
quantitative
re¬
strictions to their general applica¬ of trade will be impossible.
emphasis

levels

cent

It shifts

employment.

elimination

the real cause-and-

Proposals

in the

was

effective

anarchy, seek stability independ¬
ently from each other, there is

prosperity dependent
national
prosperity,
and,

national

bal¬
ance of payments difficulties.
It
shifts the emphasis of the Charter

ternational

expressed

links

full employment programs to

relationship, by making in¬

upon

light of such policies."

Article

Thus

tions,

so¬

carried through, and de¬

are

flation

sector of the economy.

ucts which are more essential

narrowly and superficially as high
aggregate
demand
within
each
nation.
It asks that depression

impossible if

felt

are

other

well

may

But, as we have seen, relaxing

Price of Fall

Thursday, March 30, 1950

economic

the

use

internationalism.

of traditional

instruments,

of international economic cooper-

171

Volume
ation
not

Number 4894

denied

were

hope

THE

her, she could

establish

enduring

stability in the western world.
Only by refusing to participate in
a

discriminatory system, and

negotiating
trade

free

the

controls

withdrawal

exchange

for

to her market, can she
the nucleus of a free

access

establish

trading system.
But

the

can

only

tariff

succeed

if
the American business
community
cooperates with the government,
and

within

American
must

itself.

economy,

whole

the

expanding

must

Among

many

real

world

meet

increased

competition.

to the

the

foreign

these,

able, and

are

ing, to adjust

while

enjoy

some

challenge
course,

For

business

inevitably

benefits

will¬

situation

new

easily,

and with a minimum
business
reorganization.

however,
could

Others,
they

feel

not

so.

that

would

obviously

be unfair that these few bear
the
full brunt of overall tariff
adjust¬
ment.

It is, therefore, most wel¬
that Secretary of State, Mr.

come

Acheson,

should

payments

reductions.

tariff

ments

not

advocate

relief

manufacturers

would

series

hurt

Such

pay¬

wholly justified,

inefficient, but

handouts

the

of spread¬

a means

ing the risk fairly. It would
tablish the principle that the

na¬

tion

the

whole must

responsibility
American
world

the

es¬

assume

adjusting
its

economy

the
new

position.

But

must

rests

success

business

tariff

primarily

must

said again

the

come

statesmanship
difficult

program

the

community.

American

From them

leadership

needed

times.

businessmen

that

reduction-

compensation

business

Already
heard

are

and
these

say

away the tariffs. It would
that I'd have to reorganize

business, but I'll

shall do."

attitude

This is

If it could

what

see

encouraging

inspire labor and busi¬

leaders

ness

discouraging world.

the

across

sea,
it
little to
problem seem
manageable again. Yet it is deeply
significant that many American

would

take

make

the

business

surprisingly

dollar

leaders

colleagues, a new means of really
effective American economic lead¬
throughout

the

world

(Special to The Financial Chronicle)

CHICAGO,
Stass

has

ILL.

which

rejoined

changes.

the

staff

has

recently been
Investment Co.

Barclay

With Slay ton &

Co., Inc.

(Special to The Financial Chronicle)

CHICAGO, ILL. — Warren A.
McCracken has become associated
South

Slayton
La

formerly
mick

Salle

Co.,
Street.

Inc.,
He

was

Kebbon, McCorCo. and Stern, Wampler

steel.

There

securities

City.

sobering factors in the steel market

satisfactory level they will

comparison of conversion costs also provides food for
This week the final cost of conversion steel
is about $50
to $65 above mill
prices.
This includes extra

thought.

freight charges for
transshipment, fees for rolling and all other extra charges. But
when conversion was in its
heyday two years ago steel procured
in this manner was
costing about $100 a ton above mill prices.
Much depends on what
happens in the auto
the balance of this
year.

The

sparring between the United Auto Workers

closely

and General

the May 29 contract dead¬

already warned its parts suppliers to
expect the worst—possible a
60-day shutdown.
If GM is struck
the steel market will feel it
quickly.

business

The scrap market also
points to a strong but sane market for
The crazy scrap market of two
years ago was supported by
three things: (1) Conversion
deals, (2) wild buying by consumers,
and (3) a ruptured
scrap cycle due to the war.
Today the scrap
market is strong, but it remains on an even
keel.
Time has
repaired the ruptured scrap cycle.
Consumers are buying cagily
in order to avoid
upsetting the market.
And conversion deals
lack the steam to push
scrap prices into crazy flight.
Steelmaking operations this week are scheduled at 96.5% of
rated capacity, up IV2
points from last week. Scrap prices remain

firm, supporting this high rate of steelmaking.
week
of

American

Iron

and

Steel

Institute

announced

this

that the operating

the

steel-making

rate of steel companies having 93%
capacity for the entire industry will be

96.7 % of capacity for the week
beginning March 27, 1950. This
an advance of 1.2
points from last week's rate of 95.5%.
Output this week will be the highest since the week of
March 21, 1949, when production reached
1,863,800 tons.
This week's operating rate is equivalent to
1,843,400 tons
of steel ingots and
castings for the entire industry compared
to 1,820,500 tons one week
ago.
A month ago the rate was
73.7% and production amounted to 1,404,900 tons; a year ago
it stood at 99.8% and
1,839,800 tons, and for the

average

1940, highest

prewar

year,

from

offices

Street, New York

formerly with Cor¬
Leaders of America and

porate
First Investors Corp.

week

•

mated

5,993,062,000

kwh.,

according

the

Edison

Electric

Institute.
was

ago.

CARLOADINGS FURTHER IMPROVE IN LATEST WEEK

Loadings of revenue freight for the week ended March 18,
1950, totaled 725,570 cars, according to the Association of American
Railroads.
This was an increase of 17,608 cars, or 2.5% above the
preceding week.
Coal

amounted

to 191,234 cars, an increase of
corresponding week a year ago, but a
decrease of 744 below the preceding week this year.
The week's total represented an increase of
117,648 cars, or
19.4% above the corresponding week in 1949 and
25,977 cars, or
3.7%, above the comparable period in 1948, in both of which
years loadings were cut by work stoppages at coal mines.

ILL.

—

Harry

cars

above the

motor

vehicle
an

production in the United States and Canada ex¬
estimated 134,978 units compared with the previous

Atkinson-Jones Adds

•

(Special to The Financial Chronicle)

PORTLAND, ORE. —Alonzo C.
K'eefhaver is

now

with Atkinson-

Jones & Co., U. S. Bank

Building.

figure

identical

with

that

$6.72.

The index represents the sum total of the price per pound of 31
foods in general use.
It is not a cost-of-living index.
WHOLESALE COMMODITY PRICE INDEX CLOSE TO HIGHEST
LEADING COMMODITIES

Price

movements last week were again mixed, but firmness
leading commodities held the daily wholesale commodity
price index, compiled by Dun & Bradstreet, Inc., around the high¬
est level of the year.
The index closed at 249.48 on March 21,
against 249.45 a week previous, and 256.23 on the like date a
in many

year ago.

Although there was some irregularity at the close, grain mar¬
on the Chicago Board of Trade showed considerable
strength,
deliveries of wheat, corn, oats and soybeans selling at
new
high levels for the season.
Cash wheat was rather quiet
with offerings small as farmers showed a tendency to hold their
surplus stocks.
kets

with many

There

improvement in the outlook for the

some

was

new

Winter wheat crop as the result of rains in parts of the West
and Southwest.

Trading in both the domestic and export flour markets con¬
on
a
very limited scale
with buyers showing extreme

tinued

caution in making commitments.
Cotton prices were irregular
tone

but developed a slightly firmer
Activity in spot markets declined rather

the week closed.

sharply.
Sales reported in the ten markets last week totaled 95,100
bales, as compared with 124,600 the week before, and 98,800 in the
corresponding week a year ago,
A

continuing supporting factor

was

the encouraging export

trade outlook.
In

the

latter

covering sent

of the

part

week, mill price-fixing and short
contracts to the highest levels of the sea¬
in check through profit taking and

new crop

Advances

son.

were

held

hedge selling against purchases of loan equities, and liquidation
prompted by continued slowness in textiles and uncertainty re¬
garding domestic mill consumption later in the season.
Exports of cotton during the week ended March 16 totaled
about 168,000 bales, or more than twice the volume of the previous
week, according to the New York Cotton Exchange. Exports for
the season through March 16 approximated 3,243,000 bales, as com¬
pared with 2,689,000 for the same period a year ago.
Consumption of cotton during February, as reported by the
Bureau of the Census, averaged 37,592 bales per working day,
against a January rate of 37,651, and the February, 1949, average
of 32,546 bales.
Loan entries in the latest week were again small while re¬
possessions continued in good volume.
Net loan stocks as of
March 9 totaled 2,639,000 bales, compared with 4,431,000 to the
corresponding date last season.
RETAIL TRADE AIDED BY PRE-EASTER APPAREL BUYING—

Spurred by

pre-Easter pick-up in apparel buying, total re¬
slightly in the period ended on Wednesday of
last week.
Sales were also aided by a continuance of seasonal
temperatures in some areas.
Dollar volume for the country was
slightly below the level for the comparable week a year ago, Dun
tail

volume

States output is 128,778
additional 25,000 contributed by Chrysler plants

be enough to top the record of 153,090 established last
July, Ward's noted.
The total output for the current week was made
up of 104,142
cars and 24,636 trucks built in the United States
and a total of

4,565

cars and

rose

Bradstreet, Inc., reports in its current summary of trade.
The demand for apparel rose noticeably last week in scat¬
promotions helped to stimulate the popularity
of many items with shoppers.
Millinery buying increased mod¬
erately, as did an interest in women's short coats, lingerie and
footwear.
The demand for sportswear, while high, fell slightly.
There was no marked change in the sales volume of men's coats
tered localities and

and suits.

Retail

purchases of housefurnishings and other durable goods
generally sustained at the previous week's high level. Some
items, noticeably television and radio sets, living room furniture,
bedding, and draperies, increased moderately in aggregate dollar
volume.
The interest in housewares responded favorably to pro¬
motions.
The demand for floor-coverings dipped slightly, while
that for large appliances was moderate.
Total retail dollar volume for the period ended on Wednesday
of last week was estimated to be from 1 to 5% below that of a
were

ago.
Regional estimates varied from the levels of
by these percentages:

year

ago

west

—1

year

to —1; East, South, Midwest, and North¬
+1 to —3; and Pacific Coast

Southwest

—5;

■f"2 to —2.
Over-all wholesale

buying continued to be virtually unchanged

the past week; dollar volume of orders was fractionally above the

would

moderately high level of the similar week in 1949.
The present
level was largely sustained by substantial bookings in durable
goods.
The number of buyers attending various wholesale mar¬
kets declined slightly from the previous week's figure and was
below that of

a year

ago.

Department store sales

on a

country-wide basis,

taken from

the Federal Reserve Board's index for the week ended March 18,

1,635 trucks built in Canada.

1950, showed

rise of 1% from the like period of last

year.

the preceding week a decline of like amount was registered from
For the four weeks ended March 18, 1950,

the like week of 1949.

BUSINESS FAILURES DECLINE FURTHER

week
Dun

industrial

and

failures

sales reflected

decreased

186

the

ended March 23 from 208 in the
preceding week, reported
Bradstreet, Inc. Despite a decline for the second consec¬

utive

week, casualties exceeded the 166 and 101 which occurred in
the comparable weeks of 1949 and 1948.
Failures remained below
the prewar level;
they were 46% below the total of 350 in 1939.
Failures involving liabilities of $5,000 or more accounted for
the week's decline; casualties of this size
dropped to 141 from 173
in the previous week and

compared with 129

casualties

year

ago.

Small

having liabilities under $5,000 increased to 45 from 35

and also exceeded the 1949 level.

•

a year ago.
It represents a decline of
the corresponding date of two years ago when the

New England -f 3

According to "Ward's Automotive Reports" for the past week,

Commercial

last week brought the Dun &

latest

the like date

from

index stood at

AUTO OUTPUT EXTENDS GAINS OF PREVIOUS WEEK

(Special to The Financial Chronicle)

Cain and Roland J. Hepp are with
Barrett Herrick & Co., Inc.

The

WHOLESALE TRADE DOLLAR VOLUME HOLDS ABOVE

The week's total compares with
120,341 units produced in the

Two With Barrett Herrick

earlier.

LIKE 1949 PERIOD

like 1949 week.

13.8%

at 1,281,210 tons.

ELECTRIC OUTPUT SHOWS DECLINE FROM
PREVIOUS WEEK
The amount of electrical
energy distributed by the electric
light and power industry for the week ended March 25 was esti¬

units. Even

was

CHICAGO,

recorded

steel.

The

week

industry during

In January, auto, truck and parts makers
received 21.7% of total estimated steel
shipments. Last year they
received an average of 18.8% of
shipments compared with 15.5%
in 1948.
This means that demand for new
cars will have to stay
at a very high level to
support a strong steel market during the
second half of the year.
Motors will be watched more
line approaches.
GM has

$5.81

LEVEL OF YEAR AS A RESULT OF FIRMNESS IN

few of the big
tonnage steel consumers who have been most
aggressive in their procurement tactics are
receiving steel faster
than they are using it.
This hasn't caused them to
stop grabbing
every ton of steel they can get their hands on.
But it does indicate
that when their
inventories reach a
exert less pressure on the
market.

of two cents

Bradstreet wholesale food price index for March 21 to $5.79, from

this week.

week's total of 134,453 (revised) units.
This week's estimated United

Manning Opens

East 42nd

are some

panded to

Carter Manning is engaging
at 51

exclusive

135

& Co.

Indnstry

consumer

supplies, incurring higher
costs to keep their
production lines running, there is a
growing
tendency not to depend on a single source of
supply for their

with

Carter

formerly considered

might have to share the available business with another
producer who had helped out in a
pinch. Also, among consumers
have had to scramble for steel

145,384

with

had

account

John J. O'Brien & Co., 231 South
La Salle Street, members of the
New York and Midwest Stock Ex¬
with

mills

further drop

The State oi Tiade and

years

Oscar

—

WHOLESALE FOOD PRICE INDEX EASES FURTHER IN

22,265,000 kwh. lower than the figure reported for the
previous week, 589,256,000 kwh., or 10.9%, above the total
output
for the week ended March 26,
1949, and 928,507,000 kwh. in
excess of the output
reported for the corresponding period two

Rejoins John J. O'Brien

(1339)

LATEST WEEK

in view.

CHRONICLE

are

courageously
showing the way. As they rally
the
increasing support of their

ership

FINANCIAL

Continued from
page 5

many
to

"Sweep
mean

who

negotiation

concessions

COMMERCIAL

year ago,

decline

but for the

year

from

the corresponding period a

to date show a drop of 3%.

Retail trade In New York last week showed seasonal expan¬

sion,
of

but

dollar

volume

dipped

slightly

under

period

1949.

According to the Federal Reserve Board's index, department
City for the weekly period to March 18,
1950, fell 2% from the like period last year.
In the preceding
week a decline of 2% was registered from the similar week of
1949.
For the four weeks ended March 18, 1950, a decrease of 3%
was reported from the like week of last year.
For the year to date
volume decreased by 6%.

store sales in New York

CnntinnpH imm nnno fi
jiur I pay;

^1*

IVlAVttflC

V| V

VCVWUdllUil

Thursday, March 30, 1950

by a set-aside from the
(8) Finally, I come to three* bring about a devaluation of the
appropriation of one-half billion statements regarding devaluation United States dollar. This amounts

llAvf *1*1

CHRONICLE

reduced

KsUMiriueu

FINANCIAL

COMMERCIAL

THE

(1340)

A#lAV

"MIUlHil

illlvl

dollars to underwrite the proposed which should
be recalled but to saying that the United States
European Payments Union. Im- which require little comment. It would be induced, in order to proports into the United States may was often heard at the time or tect the competitive position of
larger in 1950 than

be as large or

devaluation

that

would

not

American

producers

both

do-

the
rrtcikcs

apparentFyrunningTt

the "rate of
during the
fourth quarter of 1949.
(5) Another statement very frequently made following devatua$1

billion

tion

annum

per

would

devaluation

that

was

create financial incentives

dollars
remain high. The opposing
ment was that an increase
prices of American exports
area of devaluation of 44%
from

the

third

have

highly

to export

to dollar markets.

statement

of devaluation to
to 30% would

markets

the

area

would ance must be made for some fur- i am still unable to do so. If the
argu- ther accumulation of gold and dol- rather
drastic
devaluation
of
in the lar reserves by foreign countries,
sterling and other currencies does
in the
Even so, exports will certainly not achieve the results which
and a pick up from.the low level of Jan- were hoped for in some quarters,

reduction in the prices of exports

pro-

of devaluation

ducers in

This

thatTh<Tsupply* of

correct

was

area

adverse effects on
United States exports. But

many

properly interpreted. Take again
the example of the British pro-

let the facts speak for themselves,

ducer. Let

the

that, because of

say

devaluation, he was in a position
raise the sterling price of his

States

United

first

during

exports

months

three

de-

after

valuation, that is, during the last
of 1949, were below the

auarter

product but not enough to offset
the drop
in the value of the

levels of 1948

pound. At his new and higher
sterling price he has no greater
incentive to export to the dollar

quarter of 1949. Then in January

soft-currenty marindeed, to export at all

or,

preference

selling

domestic market

demand

the
from

non-dollar

markets

his

output.

However demand

his

product from the dollar

would

will

absorb

for

area

expected to strengthen
to
lower effective

response

dollar prices,
other

the

sponse

while demand from

would

areas

fall

off

re-

higher cost

of his

product in terms of sterling.
Some
trade

demand and
undoubtedly occurred

in response to
fluences.

tor

these opposing in-

However,

British

and

the

other

demand

goods

soft-currency areas has continued
strong and has been reinforced by
the

higher

price

has

be~n

havg

markets

his

position there is
in a number of ways
chiefly by the shortage of dollars
British

States

producer

seek

may

markets

the

United

in order to compensate for

falling

demand

sources

tives

simply with the

from

out

other

patriotic

mo-

ournose

of increasing his total business bv
taking advantage of his improved

competitive
markets.

position

These

the

are

dollar

only

centives for dollar exoort

in-

result-

ing from devaluation '
J

CfU

rninp

whil
v,

amnIes

come

Sie Xvin Sp
that it
Lh
.

..1

observers,

thp

flrt)thatCreewXLsn0Set
f

drastic

States

predicted

I include
re-

reduction

exports.

not

less

Otters
serious

decline.

exDianati0n

devaluation stressed

the

importance of factors other than

pricew in export trade esoeciallv
the inability of foreign comoetitors

lines to

many

thpfr

frprtrtpnt

„itLPr

Cdon^
imSDorts into the
J?

in
in

suppTy Tn
y
«

not

arp

united Kingdom
an

^"imonwealth couritnes anpffppf

ig49

Hl]rin(J

t°

cJTnriri

thp

ho1f

financed under

:nthpr

^rk^t is
some

words, it

tions

Dromised later this

are

Indonesian

year

should

market

by benefit of ExportBank credits and, it is
hoped, also by benefit of increased
now

open up

Import

was

would

the

United

States

could

devalue

tne

ercise

option

ex-

devaluing

currencies furtner

own

terms of gold.

(10) Fi^lly>
JI" .-the
common observation at the time
reduction in prices, there would be o£ devaluation that devaluation
no se?se m c0"'n1 uj11
C' Pc- alone would not solve the dollar
ess' 1 pelr1s0"ally ,doubt tba,t)1't problem of European and other
was p0
t0 ™a ' on s.! lctIy countries and that the effective^°"0r"'c
ne,ss °f devaluation in bringing a
£?s® |PIdavaluatl°" as* y8af- solution would depend upon colvear

°ation

S aeral,

rterlinv

the devaluation ot sterlin, a.
least was certainly a forced de(7) It was also generally pointed valuatlon undertaken in or^er to
out at the time of devaluation last arrest on unsupportable loss of
year that devaluation would be monetary reserves.
If the recent
followed by an immediate increase d®yaluatia,,sf ^n^e^Xrti de!
'

Effects of Devaluation on Costs

terms of devalued

aouar gap 01 countries wnicn ae-

currencies, of materials and com-

measures-measures re-

iating to national budgets, rate of
investment,

credit,

hours

wages,

of work> productivity of labor, eff1Ciency of management, financial
incentives to export, and all of

thf t°thercosts, relative prices, and
factors,w,hlch determine
relative

valu£d> 1 d° not see how any case
can be made for further devalua-

in the cost,

competitive power in international
ponents-imported from the dollar
™arkets. Now that six months
area and bnng m tlrrie a corre~
have Passed since devaluation, I
sponding increase in costs of pro(9) There is also a persistent am sure that this is one statement
duction. Thus it was reasoned that notion tnat the devaluation of for- on the subject on which we can
export markets from goods com
ing out of the area of devalaat*°n
would be increasingly offset by an
ea
and p].ices
terms of devalued currencies.

all agree.

—
..

Continued from

page 0

in
M

VP»r

me.

uanaaia," ^

¥he

all to

the dollar in terms of other currencies
is
moreover
doubtful,

country to cheapen the dollar cost their

imDOrt

panad;an

"at

In other since other countries could

be advisable for

may

^ of its exports in order to stimuimport prohibftiS ouf to be too small tH fs'et"^
restrictions have
to be too small to offset tne

II?

—

terms of devalued currencies has
not been confined to materials
coming out of the dollar area but
has applied also to materials com-

second half of the yeai as
compared with the first. The Argen1tlne mark!^ continued m a

Wf V UAIU
ilVif^

U/I|£TA ATA

tTrSL'Z

tjOlHCf

Uf A

llllvlv HiV

ing out 0f the area of devaluation
itself For example, not only has Jor?pleted w 11 h o u t substantial
the cost in terms of devalued cur- furtber drops m production and
rencies of American cotton in^arket went from bad to woise. creased sharply since devaluation, *urihei drop in production and
Impo.rt restnctl0ns imposed by but aiso the cost of rubber and employment is likely before the
Brazi1 because of dollar shortage w00l, to take two examples. Not transition has been completed. I
cut that market in half- The only has the cost of oil and oil d<> not believe that contraction in
philiPPine market has now been products gone up roughly in pro- production and employment will
restricted in order to stem the loss portion to the devaluation of for- begin until the latter half of 1950
of dollars- And there are other eign currencies, but also the cost at the earliest and perhaps not
examPles of the same kind.
of nonferrous metals, to take an- until 1951. For some months the

IIV

■

rung of 1949 were about $162.6
billion The replacement rate has
pHn

expenditures of about $4.7 billion
a year for replacement. To pro-

vide new plant for new workers
would require annual expenditures of about $1.5 billion a year
and to increase plant per worker
about 1.5% a year would require
additional expenditures of $2.4
Thus, the principal explanation other example.
demand for goods will be well billion. Total "normal" expendiof the general weakness, and it has
In the case of the United King- sustained by the disbursement of tures on industrial plant for rebeen general, in United States ex- d«m all import prices rose be- the special insurance dividend of placement and expansion may be
both

before

would

since

and

seem

However

de-

the

tween September and December
by 12%. Prices of imported raw

deoreciation

the

prices of finished products and

than

area

average
one-half

foreign

rencies. It took account of

$2.8

billion to veterans, by
large volume of construction

the
un-

effects of the higher sterling cost
of imported materials have yet to
be felt in

speeded

up
the adiustment and
willenable itto Bofurther than

would

have

not

been

the United

and

dollars

perrist

whinh

hn«:

hppn

devaluation^Should
aPd become w^
since

thP f<= nni!
gpnera'l

also

was

Kingdom it-

anticipated

living

would

tha^

nend

hrPP nmL
them

could

ratnertnan spend tnem, could it

which

deval-

ued their currencies, thus
oressure

and

for higher

increase

in-

eventually

countries

monev

costs

cause
wages

prodlc-

tion
.v j

hpnin

•

cur-

short

and

the

far too fragmentary to make
possible any firm judgment on

the

netiod

dwelling units. At

average

severe

last long.

estimated at roughly $6.4 billion
a

year.
T.oco

oofirv,otpc.

These rough estimates indicate
One reason for expecting the that normal expenditures on
transltlon to a self-sustaining equipment, plant, and housing
economy eventually to cause some are about $29.6 billion a year. Let
.

dr°P( ?" production and employ- us put the figure roughly at $30

ment is that the current rate of m- billion a year. In the last quarter

^'^ma?'1
a®®^® normal, it is impossiDie 10 running aflhf'annuSTate
at tne annual rate

estlmate precisely what a normal $36.5 billion a year, or roughly
rat« of investment should be. At 20% above normal. Since expenthe beginning of 1949 the country

rot;t

deDreHation

^rience

thiq

Gauioment

expressed

ourchasing
seems

less

dollars

power

indicate

ditures on private investment are
somewhat above normal, they may

expected

thev

slowlv

are

Ex-

eauipment

that

a?oind

and

declining
d

smaller in

and

ant

expected

are

l3%

Indeed,

decline.

outfavs 'on i^ustrial

1950

than

in l949

„

Farm Prices Above Normal

Uon

this aspect of the matter.

stocksTcumu ated before deval- Penmtures of about $11.6 billion a
S cmSed its effecds
year, f°r rePlaeaementa o£ .e9u'P;

the transition to a self-sustaining

nriees

economy

the fact

that many United States
products

believe that it will

fh^s eauipment needs to be rl? D? 1%
devaiul! placed aLthe rata o£ about 9%
cle!r ttot a ye?r' Thl? ru d.,r,efjr,r ex"

Drice controls have been effective

ii^g

needed to provide for
the
increase
in
families
and
another 200,000 to replace existing
a year are

little later there is likely to be $8,000 per unit, total "normal"
further contraction in production expenditures on housing may be

inal

a year.

dwelling units

new

Turning agam to the example of possessed about $129 billion worth
thf United Kingdom we find that Sf industrial equipment-the origretail prices have scarcely moved

sinCe devaluation. The price of
bread and flour was marked up,
for a decline but, this was offset by a decline
exports. The in the price of clothing. Retail

pertinent statistical information is

year or

put at roughly $8.6 billion
About 600,000

the

ofdew^nation?!trtthe o!rt

crease

Only if the accumulation of gold
progress

time

possible if they of

been devalued.

after the first half of the

not at*all, on the average, in export prices. In other words, the and then explain why I do not

European currencies undoubtedly self and in British export prices.

rather
j

the

mainly responsible
United States
effectivethat the re- in
prices
of time has been too

of the devaluation of

Continued

Shrinkage in Dollar

orires of'
il, ln ae
11118 outlook is for a continued
uct! and th^t
Jpi
Pr°
shrinkage in the supply of dollars
UnfteH <5tat« the prices of some available to foreign countries to
Fu.®d ? tes exP°rts were also buy American goods. The Marnrice
enmnlmf!ns "nrel?ted '.° shall Plan appropriation for the

now

ofthe

far

cost

S hvfna

to rise

laree

coming restive under the wage
freeze agreed between the Trades
Union Congress and the Labor

ment' To Provlde new equipment
for the annual lncrease ln the

A second

drop

reason

will

for expecting

produce

production and

further

employ¬

increase'eauipment P'"oducts are substantially above
,h
? of ,P5% a the level where they can be exreauira additional ex- pected to remain- During the presGovernment. It was possible to
nf
si q
billion Re- ent Jiscal year the government is
maintain the truce until the re- Siacenients and new investments sPending about $1.4 billion on
ef
0?
s next year of operations beginning cent elections. Whether it can be P dd
lilp outlavof
about
keeping the Prices of agricultural
the
based also on July 1950 will be substantially, re- held much longer is doubtful, par- *14 6 billion a vear on eauibment Pr°ducts t0° high to clear the
rt
f L.
tke defTia?d f°r duced, and the amounts allocated ticulart.v since the effects of de1
?
y.
q p
market. Consequently huge surUnitea,states products in foreign to Marshall Plan countries for cur- valuation on' retail
prices cannot^ea^ estate improvements ,oi pluses of corn, ..wheat,cotton,
markets is limited at
fn

tho

offered no alternative.

In the event' the price rise in

thp

Mlr

the

™ _/55L ?Tnf+^
nf

"J®

Mmtary Assistance rrogram. mar
kets m tne coriee-proau^

price competition in domestic and eign currencies would eventual

inc.

Commonwealth countries

goods coming out of the
devaluation

1n„f

pnnntries

manv

perhaps

L„..p

^.sl.ve °*

g0°ds and be said that price competition re?f marketing suiting from devaluation was

InH tSfnl
arlrnfnt ii=ng J
Son
duction

be-

lies in restrictions

imnnrt<?

„,uiph

had

The argument against any
sharp
drop in United States exports because

devaluation suggests that the

pean suPPLers are regaining a
it m ^aS m
,
more normal position in the trade,
^ncreased thereby displacing American supor. Ame"can pliers. This would have happened
ufur ■' ?if there had been no devaluation,

p®* *lpn,
J
among which

any

United

The

that

prevalence of payments difficul- materials alone went up by 10%. der contract, and by the strong
demand for automobiles. Let me
first explain why I believe that

scnppf

myself, said that it would
suit

un-

notice

observers then it is hardly conceivable

r?fn
ties. A subsidiary explanation ap- So far, however, these hi?her
moat con- pkcabie particularly to Latin prices for imported materials have
^xPart®rs- At American markets is that Euro- been only partly reflected in the

Ht1p

are

doubtedly cases of this kind, but
r
havp h*H vprv f
cnerific ex-

valuation

Exports

nnw

There

most

sense

have the United States attempt
to undo the devaluation of foreign
currencies which it encouraged
only a short time ago. Whether

foreign

depreciation

the

croods

QUt

forei<>n currencies

ports
Effect

iced

competing

protected

expanded

Amprican

that

therefore ^continued

strong;^ and

The

since devaluation

exnorts

and,

weak- exports of Indonesian products.

explanation of the
in

prm]H

dollar goods. The attraction to the
British producer of soft-currency
markets

during

figure since October 1946.

Hnilnr

shifting of

has

than

lower

1949 but
the third

tney dropped sharply to the lowest

market than to

kets,

and early

1950

uary

agree, will probably reacn $iu-n the experiment would be repeated
billion for the year as a whole, ex- unless under circumstances which

year

and

y a ® b
p!a ° fd
y8adip?rps

present only

rent dollar

imports

may

be further

much longer be postponed.

American industry at the

begin-

potatoes,

butter,

eggs,

and

other

Volume 171

Number 4894

THE

farm

COMMERCIAL

FINANCIAL

CHRONICLE

products are piling up. It
plain that the prices at which
farm products are supported will

$5 billion. These accounts include

would tend to increase the quan-

non-recurring expenditure of
$2.8 billion represented by the in¬

tity of

have to be substantially lowered.
Politicians will be reluctant to

surance
erans.

dividend payment to vet¬
Expenditures' on defense

ing to
during

face this unpleasant fact, and the
excessive support of the prices of
farm products will only be slowly

and

.the support of farm prices

catching-up economy to a selfin
the coming fiscal year will sustaining
one.
Extending the
probably be larger than in the last coverage and liberalizing the ben-

withdrawn.

year.

vis

Nevertheless, general
that prices of farm

knowledge

without

further

unemployment, I do not
expect that the drop in production
and
employment will be large.
There are six principal reasons
conclusion.

the

are no

longer -

important; source of money
supply, and the country has a
system of unemployment comperian

sation.V :.

,.Y

•

;

place, the hold¬
ings of liquid assets by individuals,
are large, in relation to the rate
at which they are spending money.
At the present time the annual
rate of personal expenditures for
consumer goods is only 3.6 times
the average personal holdings of
cash
and
demand
deposits
as
against 5.9 times the average
1939.

In the third

place, although the
private investment will

probably slowly decline for some¬
time, it will also remain above
„

for

"normal"

considerable

period and it may reverse its
trend before it declines to normal.
There is still

substantial back¬

log of demand for equipment, in¬

plant, and* housing. It is
possible to estimate the size
of this backlog accurately. At the
end of 1949, capital per worker
was about 5.1% less than it was
in
1929.
To
bring capital per
worker up to the amount in 1929
dustrial

not

estimate

the

I intend to do.

re-

result of

Four

drop in
increase
in

present

the

If "there

were

excise

substantial

taxes

and

economy

based

one

short-run
stand

with

They

hour

four questions about

economic

out

tance.

trends

upon

that

the

......

„

billion

for the annual average

monthly
to

ures

get

unemployment fig¬
up much
above 5

million.

siderable

upward

;

: On:

pressure

During most of the time
unemployment was only
4% of the labor force, prices were
rising. This suggests that some

Program

progress May be rapid, one must
expect wages to rise a little faster

than productivity.

The

drop in employment during
the next several years will pro¬

unsatisfied

continue so long that
demand for many kinds of indus¬
trial
equipment and plant in¬
may

creases

time

the

offset

drop in expenditures on

automobiles and

housing.

in the fifth place,

any drop in
employment will

production and
retarded

expenditures

great

need.

particular,

the

great rise in the number of trucks
and automobiles has made a large

which pay fairly liberal
benefits to employees of 25 or 30
years' service. A rise in unem¬
ployment would put the manage¬
ments of.these companies under
considerable pressure to limit the
plans

layoffs of younger men by putting
long-service employees on pen¬
sions.
Consequently, a recession
would
in

see

substantial

increase

the number of employees that

genuity

about 40%

chil¬

dren between 10 and 20 years of

than it had in the previous
decade. This creates a great need
for schools and playgrounds.
;
age

In the sixth place, any drop in

production and employment will
be

limited

unemployment rate of about
5%
is
compatible
with
stable
prices, but that a lower unemployment
rate « can
only
be
an

ment. In

by the deficit in- the

employment

500,000 to

produce

rise

million in the

num¬

ber of persons drawing pensions.
in

Transition

Self-Sustaining

Economy
What
that

the

can

done

transition

achieved by some inflation?
One may be skeptical that there
be such a difference in
the

conditions

associated

assure

with

more .and

will

make

for

in the main in the behavior

erably below present ones; (2) it

with

explanation

in 1949 was

the

that

rate.

is -probably

of inventories.

probably

it will have two characteristics:
(D it will make agricultural products available at prices consid-

associated

The

The drop in prices

undoubtedly assisted

reduction

inventories

going on during the last
three-quarters of the year. Had
business not been reducing inventories, the price level would not
was

fallen.

have

continued

would

probably

rise

slightly,

self-sus¬

I have said that I do not

crease.

believe that prices will be easily
raised in response to rising costs.
One reason why prices will not be

the modification of the program easily raised is that the course of
wiH take. I believe, however, that prices of most farm products will

4% unemployment rate and those

have

to a

slowly

downward.

will encourage a wait-andattitude among business con¬

This
see

cerns, toward all prices and will
make for hand-to-mouth buying.

will cost the government large Another reason
why prices will
amounts of money. The immediate not be
easily raised is that the
effect of the change may-be mild"strong trade unions and perhaps
^ deflationary, but this effect a
government that is not very
will not last for long. The government subsidies will limit the sympathetic to business will cause
managers and investors to take a
drop in the incomes of farmers;
•cautious view of the prospects Of
the large increase in population future
profits.
Consequently^ I
that has occurred -during the last believe that the
response to higher
*0 yeara will help prevent a dras; wages will be a mixed one—partly
tic drop in the prices of farm prod- a slow rise in
prices and partly
ucts; and, to the extent that, the
a slow rise in unemployment. In¬
Prices of farm products do de,

effect

The

Marshall Plan aid
jcan

The

economy.

Plan aid may
ous

some

serious

end

ployers, but it is hard to say at
what level of unemployment and
at what rate of price increase
labor costs will no longer rise
relative to prices.

of Mar-

threaten serithe

econ-

(4)

other countries-

that

aid

the

will

unemployment

raise the bargaining power of em¬

the Amer-

for

consequences

pmies of

end

the

upon

creases

will be released for
the purchase of other goods,
crease, money

The effect of the financial
of the government on

condition

some

the economy. The expenditures of
form is likely to be continued,
enterprises and ing at the problem. If one is more Even if it is not continued, how- the government will continue to
investment in old enterprises (in¬ interested in the volume of em- ever, the economic consequences be high; partly as a result of the
creasing the carry-forward provi¬ ployment than in the stability of to the United States are not likely cold war and partly as a result
sion of the corporate income tax prices, one might say that a cer- to be large or important. The ex- of the many demands for pay¬
from two years to five, eliminat¬ tain amount of inflation is neces- cess of exports over imports fi- ments based on need—pensions,
ing the "notch rate" on corpora¬ sary in order to get the rate of nanced by the Marshall Plan is old-age assistance, payments.,to
tions with net incomes of $25,000 unemployment down to 5% and only about 2% of the gross na- veterans. Today the defense ex¬
to $50,000, permitting new equip¬ that still more inflation is neces- tional
product of the country, penditures and payments based on
need together account for about
ment to be written off in five sary in order to get unemploy- Just
about
the.
time
that
Marshall Plan aid is scheduled to $24 billion of expenditures by the
years); (2) by cutting expendi¬ ment down to 4%.
Federal Government, or over half
tures and passing on the savings
v
end there will
be a large of the government's outlay. This
promptly in the form of general
;
increase
in
the
volume
of
does not include expenditures on
Let us look briefly at the short- United
tax reductions; (3) by opening up
States savings bonds
new investment opportunities
by run outlook for the economy after reaching maturity. The maturities the European Recovery Program.
encouraging the construction of the transition to an economy based of E bonds will jump from $1.1 The revenues of the government
to encourage new

but the most useful of all would

be cuts in

expenditures with off¬

current

upon

made.
..

The

demand has been
period that I have in

,Qy4C

ci-dijg .IS
million

and

force. >

unemployment, 2.1

the labor force

was

62.7

billion

1954.

They

will

was

2.3 million;
61.6 million

million; in 1948,
million and

It would mean that the

large

un-

proportion
from

derived
wjll

lssues

the money
E

01
or

«nVPrnmArtt

government

Other securities.

cntrtnerc

savings

A good

part of it, however,- Will be Spent
<« *00*.

Thf net

the Federar govern- people pf the country would. be unemployment prices were stable in l929.1 maturities' Will be to Offset pretty
the. present fiscal year,. given some hope of at least a slow' An important fact is that in 1929 trade j completely- within
the * United

it is

today.

^Stetes^naiqueBeesoftheena
of Marshall 'Plan aid.

money

held

by the

country and will help offset

bonds
new

probably fall short of its ex¬
penditures by at least $2 or $3
billion a year.
In view of the
great strength of trade unions, a
deficit in the budget will be badly
needed.
It will help increase the
volume

*4>

maturing

probably be invested in

bonds

■

force

a peak in 1954. In 1955 the
maturities will drop to $5 billion,
and in 1956, to $2.6 billion.
A

setting reductions in general taxes. employment, 2.1 million.
2 Back in
1929 with a
civilian labor
Such a policy would mean that
force of 49.2 million, unemployment averthe deficit in the Federal budget
aged 1,550,000, or 3.2%
ef the labor,
would be reduced only as the in¬ force. Joint Committee on the Economic
crease in incomes raised the yield Report, Report of the Subcommittee
of taxes.

1952, $5.6 billion in 1953, and

'1 $6.3

will

billion in 1951 to nearly $4 billion
in

averaged* 6o"i reach

unemployment,

1947, the labor force

and

the-cash -accounts of the-govern-- reduction in-taxes: -At the; same:
ment will show a deficit of-about time, the deficit, in the budget

will be
This

wages,

agricultural production abroad
wiU make the problem more
acute. I do not know what form

should

budget- of
-

rapidly as the unions raise
either prices will have to
rise or unemployment will in¬

tures of wel1 over a billion dollars
a Vear to keep the prices of farm
products so high that huge surPluses pile up. The recovery of

downward. Does this indicate that

on pensions.
It would not be
found
surprising to see a contraction of

are

part of the road system of the
country
obsolete.
Outlays ' for
limited-access, through highways
roads and bridges will be large
financed by tolls; and (4) by ex¬
and many of these projects will be
tending and liberalizing the oldfinanced
by tolls.
During the
age insurance and annuity scheme.
decade of the fifties the country
Each of the steps would be useful,
will have

public works for which there is
a

success

necessary.

eventual

of unions in

raising
wages will increase "the difficulty
of maintaining a satisfactory level
of
employment because
higher
labor costs :wilT not be easily and
quickly, translated; into r higher
prices. Business managements will
be ingenious in limiting their-use
Of the relatively expensive kinds
of labor, simply because such in¬

(1) Modification of the program

Hence even a 5% unemployment.
backlog of demand
for plant,
taining economy is smooth and rate may not be
compatible with
equipment, and housing. The ac¬
produces the least possible vol¬ stable prices.
Perhaps the rate
tual backlog is probably, some¬
ume of unemployment.
that would make possible stable
what higher because during most
Aggressive selling policies by prices would be 6% to 7% of the
of the last century capital per
business concerns accompanied by labor force/ With trade unions as
worker has been increasing.. The
willingness to cut prices in order powerful as they are, even this
fact that a large backlog exists
to make sales would help.
So rate of unemployment might not
does not, of course, mean that
also would aggressive policies in prevent unions from forcing inbusiness enterprises and individ¬
low- creases in prices by raising money
uals will choose to spend their replacing equipment with
cost, modern equipment.
wages faster than the engineers
money catching up on their needs
The government could help sus¬ and managers are..able.to raise
for plant and equipment at once.
tain employment: (1) by making output per man-hour.2
In the fourth place, the high
reforms in the tax laws designed
There is another way of lookdemand for automobiles and hous¬

ing

equipment and

new

Only now is the
economy beginning to feel the
full effects of the large
expen¬
ditures on new equipment made
during the last three years.
De¬
spite the fact that technological

output—op¬

methods.

new

Modification of Farm Price

prices.

when

increase

installation of

Marshall Plan aid?

(3) How will the economy
be affected by the strong upward pressure by1 trade unions

increase?
be great oppor¬

as wages

portunities that accumulated dur¬
ing the war and that depend on

end

rapidly

appear to

tunities

particular impor¬

are:

affected

There

(1) How will the economy
be affected by modifications
in the government's program
for supporting farm prices?
(2) How will the economy

cureent

are

pusning

up money wages. Will employers
be able to raise output per man-

Questions
There

to when the drop

unions to be successful in

Important Short-Run

require an investment of
about $23 billion. Certainly this
figure may be accepted as a very
low

pensions

who might be

probably avert of a labor force of 63.6 million, ~ on wages?
a
drop in production and ' em¬ an unemployment rate of.5.3%. ' V.' (4),How will the"economy
In 1946, 1947 and 1948, unemploy-' be affected " by the financial
ployment. In the absence of spe¬
cial measures to discourage con¬ ment was around 4% of the labor ',
condition of the government
traction, I would not * expectthe ; foirce.it;In- order* to fceep ;unem-; ';;ah^gchwhimeh.tiiscarpoIiey?
gross -national
product
during ployment down ,to around 4% off -Let us consider these questions
contraction to fall below - an an¬ the labor force,., demand had. to one bv one:
nual rate of about $240; or $245 be strong enough to exert con¬

would

the

persons

for supporting farm prices. It is
technological progress. If the re¬
measure of inflation is
necessary Plain,, as I have pointed out, that
sourcefulness
and
ingenuity of
to keep unemployment down to the
government's price support
duce a smaller rise in unemploy¬
4%.
In 1949, on the other hand, program will have to be drasti- managers and the technological
ment than it would have done in
progress made by the engineers
with an unemployment rate of calJy modified.
of the
The people will do
past. A large number of com¬
not raise output per man-rhour
5.3%, prices were slowly sliding ^ indefinitely tolerate expendipanies
have
installed
as
pension

Private Investment Will Decline

rate

retired

„

In the second

;

old-

tion in taxes would

national income and

Federal

demand, this is an appro¬
fairly substantial cut in expend¬ priate time to ask what is a nor¬
itures of the government, the def¬ mal volume of unemployment to
icit in the, next fiscal year would expect after the transition., In
remain around $5 billion: v Such 1949, the average. volume of un- *.
a deficit combined with a reduc¬
employment, was 3.4 million out -

first

;

increase

ceived

reduction

is better
before to
withstand contraction; Its banking
system' has been
strengthened,
; short-term private debts are no
:
longer large in relation to the

would

tion.

place,
the
economy
equipped than ever

time

drop in production and a further

this

reduced

are

the

employment.
This
in pro¬ pensions would help to halt the
drop in employment.
duction
and
employment
will
come, how far it will go, or how
IV
long it will last are not likely to
Normal Unemployment
be accurate. The result will partly
Since the country is in the midst
depend upon the reaction of busi¬
of making a shift from a catchingness and government to contrac¬

that the
transition to an economy based
upon current demand will not be
expect

accomplished

formula in the

from

and survivors' insurance plan

repealed. Another deficit of close
to $5 billion seems fairly certain.

taxes

(3) The upward pressure of
perhaps after 1952. It is not pos- trade unions on wages. The Amer¬
sible, of course, to foresee the ican trade union movement is
course of business two or three highly competitive and the
strong¬
years in advance. Nevertheless, it est
unions
are
very
powerful.
is possible to raise questions about Few employers are a match for
certain problems that will be con- these unions and most employers
fronting the economy and about do not believe in organizing to
the probable Consequences of cer- resist
union
pressure;
Conse¬
tain specific events. That is what quently, one must not
expect

transition

age

Speculations

Although

efit

the

excise

sustain

mind is sometime after 1951 and

individuals
thus helpprivate spending

some

xhe

economy.

for

particularly

held

and business concerns,

The yield from taxes may be

smaller,

products are bound to come down
will encourage conservative buy¬
ing policies throughout the entire

rise

cash

(1341)

the

; bad effects of trade unions upon
•

vigor of business enterprise.

the

Perhaps the deficit will be

enough

;

large

that prices will rise

rapidly as labor costs and a»
collective bargaining/will

I that

Continued

page

COMMERCIAL

THE

(1342)

high

Tomorrow's

before

215,

break will

real

Continued

FINANCIAL

from

CHRONICLE

Thursday, March 30, 1950
tralized

page

decision-making is highly

significant.

come.

making

Markets

The

for

reasons

Where Are We and

have

this

vantages.

One
decisions

most

Walter

Whyte

made out

I'm
was

one

of those

heart-failure periods,

carried

into the start of the

over

week.

rent

cur¬

not

with

case can

earnings,

except

my
I'm interested in what

own.

makes the wheels tick.

the
iS
i\S
*
figure
Up to a week ago the short
started a gleeful rubbing of
hands; sage nodding among position stood at about 2,500,the boardroomers and even 000 shares, the largest it's
jump

industrial

209.78

tentative

inquiries

A lot

been since about 1932.

the
order room window, some of of it is probably short sales
which
actually resulted in against the box. But whether
But

orders.

just

everybody
started to agree that things
would start popping, the mar¬
as

ket turned around and scared

new-born bulls out of
year's growth.

many

it's in the box

in the hands

of the broker doesn't

sustained rally

much.

too

matter

covering that will
take them up to the 215 fig¬
start

can

ure

customers

then

tell

them

information

latest

their

called

"the

of the

Chronicle.

They

presented

are

those of the author

only.1

employment.

The

general

things

will

Three With Connolly Co.
BOSTON, MASS. — Ralph S.
Murphy, Vincent P. Rafferty, and
Herman R. Schoeler have become

then

Rafferty

Production

with

Clayton

Ellis,

Tuesday's market would

Before

minor

hitting

Federal

and

mit

City.

price

level.

you

Pacific Coast

Meikle

Parcells &

MICH.
with

Charles

Co., Penobscot Build¬

the

past

and hesitant

will

the

Increasing costs
businessmen,
will

one.

worry

them

cause

wonder

whether

they can recoup their rising costs
by higher prices, and will greatly
stimulate their efforts to expand
technological research.

What

the

are

economy?

lieve

that

cialist

into

America

that

institutions

people

be¬

have

and

whether

been

that

new

many

kind

of economy

developing here. In order to
be better prepared to answer these
let

briefly a
important

note

the

Pacific Coast Exchanges

Schwabacher & Co.
Members

New York Stock Exchange
York Curb Exchange (Associate)

San

Francisco Stock Exchange
Chicago Board of Trade

Teletype NT 1-928
Principal Offices

Francisco—Santa

most

Financial

Torok

with

Bache

Eugene
&

Co.,

National City East Sixth Building.

them

seem

particularly important:
(1)

There has been

substan¬

tial shift in

political power from
businessmen
to
employees and.
farmers. In days past, the busi¬
nessmen

dominant

were

mak¬

ing public policies.
Today the
AFL, the CIO, or the American
Farm Bureau Federation each has

weight in Washington than
United

the

States

Bethlem Steel.

@ 35

Subject to prior sale

mos.

137.50

price change

THOMAS, HAAB & BOTTS
Members Put St Calls Brokers St

Deafer* Assn., Inc.

conditions
A

met.

third

that

advan¬

This

only

the

of these considers

one

method to be worth

new

receives

trying

trial.

Hence, de¬
decision-making great¬
ly increases the capacity of the
economy to experiment. And since
a new discovery
may be made in

centralized

economic

activities will reflect the political
influence of many kinds of groups,

any

of tens

one

of thousands

places, decentralized decision¬
making puts pressure on produc¬

and

public policies will represent
compromises. Some policies will

ers

improve their products and

be inconsistent in economic terms

their methods.
the

But

though the
and

run

ernment

will be
by the gov¬

economy

and

the

trade

of power

and

count for

great deal. The choices

businessmen

four

will

six million in

determine

other

run

what

will

words,

characteristic of the

will

omy,

union

rules

business
own

managers

judgment

and

how

and business managers
make their decisions will be more

themselves

consumers

conditions

restrictive, but

the economy will still remain one

which

cisions

made

millions

and business managers.

consumers

Decentralized Decision-Making "

run

fact

the most important de¬

are

that

large

the

is
by decen¬

economy

measure

using

it.

make

Fur¬

intervention of

the

with

run

technical

that they

can

satisfactorily
imposed

government

unions.
.

supply themselves

abundantly

knowledge

ness concerns

which

elaborate and

each

to what to

stimulating busi¬

are

collective

within

very

government and the activities of
trade unions

bargaining.
The framework of
laws, administrative orders, and
trade

prefers and

make

be wiped out by
intervention in eco¬
or

by tens of mil¬
each buying
by millions

thermore, the

econ¬

not

matters

main

consumers

his

de¬

cision-making, which has always
been

the

use.

what

produce

decentralized

are

lions

agriculture will each

and what methods it will

when far-reaching
occurring in economic
institutions, it is desirable to re¬

changes

that in some important
respects the economy is changing
very little.1
It does remain one

made, and
business enterprises
agriculture and about

taking place in the

member

consumers

million

outside

are

and

economy

unions,

consumers

Thus it helps make

economy more competitive.
In these days when great shifts

public policies.

distribution

incomes.

Continued

has done this partly by

the pro¬
gressive income tax and partly by
making
large
payments
based
upon
need.
Progressive income
tax means that recipients of in¬
of $25,000

comes

year

Ibng

the

them

adapt

trade

economy

in large measure by decen¬

tralized decision-making, it can be
counted

adaptable

progressive, and to
in

grow

and

rapidly

productivity.

20 years
ago.
In the meantime the total
of all personal income after taxes
has increased nearly
times.
The
government
is distributing
on the basis of need
about eight
times as much today as it did
20 years ago. This does not count
nature

made

temporary

veterans.

Total

on need, such as
old-age assistance, old-age pen¬
sions, unemployment compensa¬
tion,
general relief,
workmen's
compensation payments (but ex¬
clusive of payments to veterans)
totaled $7.1 billion in 1948, or al¬

most

much

all

dividend

payments of all American corpo¬

We See It

Techniques likely to be effective for such

Controls

are

naturally different from those which

use

are

It imposes ceilings
rates, electric light
and power rates, gas rates, and
telephone rates. It puts floors un¬
der wages and under the prices

of farm products.

all such

importance to

praised not

rendered the
for

all should be studied and

large direct

operator in some

ap-

the basis of appeals designed to win

difficult for those who would think

programs.

Root of the Problem

Senator
his

McCarthy has been nothing if not wild in

charges against almost

to his attention.
seem

to tumble to

could

bring

a sense
as

everyone

The way
the

whose

in which his

name
cases,

has

come

thus far,

ground when subjected to study

of false security to thoughtless people:

difficult to doubt that the various Govern¬

organizations have been seriously spy-ridden in

cent years

asdt is to believe

The Condon and

indications,

fully at

can

ease

many

re¬

of the McCarthy charges.

Hiss episodes, to say

the securities market.

dispassionate

by the poor record of officials and
others originating and supporting current policies
and by the equally low standing of many of those who
are now engaged in
attacking those policies and those

ment

Broadway, New York 4, Tel. BO 9-8470

and

themselves

It is about

(5) The government has become

careful

the masses, but upon their real merits. This sort of
appraisal is particularly difficult at this time by rea¬
son of the chaotic state of the world in
general. It is

government prescribes the rules of
game in more or less detail.
Two outstanding examples are the
field of industrial relations and

matters

The fact remains that matters of such fundamen-,
tal

(4) There has been a great ex¬
pansion of the areas in which the
the

a purpose

suitable for

addressing the relatively few who have given and

giving

commodities.
railroad

are

thought.

(3) The government controls the
prices of an increasing number of
on

page

after taxes than they had

payments

from first

today have one-sixth less income

Government

June 19 $225.00
325.00
325.00
225.00
July 17 112.50
May 26 325.00
June 16 237.50
Sept 26 225.00
June 10 200.00
June 17 287.50

Y'ngstown Sh.. @ 82%
HomestakeMi. @ 45%
Sharon Steel.. @ 28%
U.S. Steel... @32
Kennecott Cop. @ 50%
Pepsi-Cola
@ 11
6

intervention

the
un¬

works, it is imitated.

agencies and by the trade
through collective bargain¬
ing. The economy will not be a
planned economy.
The govern¬
ment

out,

administra¬

•

General Motors @ 77% May 29
Southern Pac.. @ 52% July 25
Western Union @ 22% June 23
Amer. Airlines. @ 11

unions

The

rations.

Per 100 Shares Plus Tax

but if

tive

government

SPECIAL CALL OFFERINGS

llantora]^—Oakland—Sacramento

Chronicle)
—

decisions

nomic

payments based

With Bache & Co.

Barbara

Fresno—Santa Rosa

was

Fahey, Clark

...

New York 5, N. Y.

Co.

to The

the

and

is
particularly
making of de¬
cisions concerning possible new
ways of turning out goods.
An
industry may have 100 enterprises,

the government through laws

changes that have been occurring.
of

and

ad¬

made

are

first-hand

important in

to? What sort of an economy
developing in the United States?
It is plain, I think, that the econ¬
run

second

are

making gives opportunity to small

will be

tage is that decentralized decision¬

minorities.

economic- of tens of millions of
will determine what is

American

changing
of the
are far-reaching.
Hence
it is natural to ask if private en¬
terprise «is on the way out and.

rapidly,
changes

derstanding

What do all of these trends add

omy

who
have

and

have

subsidies.

longer trends in
Some

going So¬
or, at least, is developing
planned economy.
It is

obvious

facts

fairly extensive system of

people

with other

some

Canton manager for

•

Orders Executed

Shi

price level, however, will not be
a buoyant rise, but rather a slow

the

Peden A.

—

(6) The government has devel¬
oped

him.

taken

(Special to The Financial Chronicle)

DETROIT,

Securities

Private Wires to

advance

(2) The government has under¬
far-reaching control over

Joins C. A. Parcells

CLEVELAND, OHIO

14 Wall Street

The

Chamber of Commerce.

(Special

OOrtlandt 7-4150

government to per¬
rise in the general

slow

ufacturers

Cleveland.

with
more, allow me to interrupt
to say I think the
averages
will go up again, maybe as

New

rising.

the National Association of Man¬

might develop ing, members of the Detroit and
into a full-blown spill. Well, Midwest Stock Exchanges.
Tuesday's market saved the
With Curtiss, House Co.
day. Prices opened plus from
the previous close and sighs
(Special to The Financial Chronicle)
of relief swept through the
CANTON, OHIO — Andrew G.
canyons of Wall Street with Catherwood has become associated
the strength of tornadoes.
with
Curtiss, House & Co. of
*

will

costs

Fox; and Mr. Schoeler was in the

continue,

show it and instead of
correction

Con¬

Co.,
Inc., 30 Federal
Street. Mr. Murphy was formerly
with Elmer H. Bright & Co.; Mr.
nolly

diately threw Tuesday into the
big question-mark category.
were

Walter

be
This

investment business in New York

❖

The break Monday was the
most serious of all. It imme¬

If the break

with

be summed up
Supplies
of
many

may

for

vantage is that decisions

parts of the economy.
For ex¬
ample, it is the largest lender
of money in the country.

Six

(Special to The Financial Chronicle)

associated

from

There will be large enough deficits
in the budgets of the state, local,

number

were

conclusion

becoming more
abundant.
will be particu¬
larly true of agricultural products.

questions,

what

doing." The mys¬
terious and omnipotent
"they" were bandied about in
sage fashion like pronounce¬
ments from on high.
It was
an awesome
thing to watch.
Everybody was hunting for
"reasons," and failing to find
them invented them to satisfy
palpitating hearts.
they

attainment of close-

this inquiry
as
follows:

here's the wet blanket: I don't

stocks will go up
The worst scare came Mon¬
very
much,
certainly not
day, March 27th, when out of
those held by the public. It
nowhere a drive started, re¬
will be the leaders, the highsulting in an overload on
priced babies, that'll probably
phone lines caused by worried
holders calling their brokers carry the load.
[The views expressed in this
to find out "why?"
Brokers
article do not necessarily at any
called up each other for assur¬
time coincide with those
and

to-full

Now

time.

short

think many

ances

the

prevent

good

Going?

earn¬

be
for almost any stock.
vitally
concerned

ings basis

By WALTER WHYTE=

Last week

Where Are We

and

income

balance sheets.

Says—
=e

with

rather

else

one

important ad¬

advantage is that

are made by each
for himself, not by some¬

person

nothing to do with statistics,

This kind of decision¬

has three

nothing of other

scarcely leave the informed and alert mind

about

many

of these questions. The attitudes

Volume

171

Number 4894

THE

COMMERCIAL

of the

Secretary of State and even of the President
hardly been of the sort to set doubts at rest.
But current doubts about the wisdom of

our

have

that be had

the

situation in 1939, and had learned but little
time that Pearl Harbor
plunged us

from

Great

of the currencies of

some

coun¬

tries early last Fall.
In the later months of last
year,

world

imports

by the

efforts

rose as

restore

depleted

made

were

inventories,

tually taking part. Documents recently made public
in Washington are now
reported to give little evidence

prices

that

at the end

even

of the

war

there

tivity
with

somewhat

the

crisis

All

through the war we had fed the masses upon the
that we (fighting by the side
figuratively if not
literally of one of the most notorious enemies of what we
as

democracy) were engaged in a war to end to¬
and imperialism.
The Kremlin, its tongue
cheek, had supported this propaganda consistently

talitarianism

with double

talk

about

democracy.

Very little evidence
of the
permit ourselves
to be drawn into a
fight characterized chiefly by a clash
among the four leading totalitarian states of the world,
all of which had ambitions,
usually conflicting among
themselves, of empire and domination. Precisely why we
should have for a moment
supposed that the winning
leopard in this gladiatorial contest would suddenly change
its spots, it is very difficult to understand.
existed of any awareness anywhere of
any grasp
fact that what we had
really done was to

Then

the

approached

war

obvious end,

ac¬

and

overseas

mounting

and,

re¬

dollar

the last
they be¬

costly in terms of

currencies,

re-

rela¬

were

tively stabilized.

Propaganda

nonsense

in its

quarter

the

months of the
year, when
came

valuated

think of

States

lower

third

sponse

when the

War

United

sharp¬

any

of the situation by which we
fighting ceased. Certainly, little that had
been said up to that time, by
any one in authority
gave any hint that understanding had come to them.
grasp

the

foreign markets in terms of dol¬
lars which resulted from devalu¬
ation. Our exports dropped

real
should be faced
was

came

In consequence,
the export surplus moved
rapidly

downward.
at

By the
trade gap

the

year,

annual

just exactly
been

end

the

was

half of

earlier in

running
of $3.5 billion,

rate

what

the year.

had

This is

startling,

trade

tinue

would

gap

seem

pate

decline

billion

export level,

antici¬

im¬

fourth

year's
total

and

increase

last

con¬

year.

reasonable

above

quarter rates to

$7.5

this

moderate

ports

well

may

of around

fairly stable
possibly a quite
a

moderate export decline from
annual rate of

the

$10 5 billion mani¬

fested in the fourth quarter.
Our view with respect to mer¬
chandise imports rests on the as¬

relatively

another,

suggested in the later

such
such

•

of the

war.

tially

notion has little of the realistic about it.

vacuum

called "democracies"
bitions of

one

sort

far from

are

another.

being without

can

well

only

a very

be cured

have been accepted as the real article

all

passing,

that

and

regard them

may

projected.

Exports

ary,

the

recent

which
at

most

data

in¬

Janu¬

month

available,

are

annual

trends I have

for

background, it is not
men
begin to wonder

that thoughtful
they read such statements

January were to set
the pattern for the year, a fairly
steep export decline might
be
in

considered

prospect.

not

believe this

mistake

likely.
It would be a
to
generalize from one

month's

figures.

The

variation

from month to month is large and

there

evidence

that

will be

January picture

yet

sus¬

Predicts Import Gap of $3 Billion
in

kind

are

haz¬

Florida the other

ardous at best, but if I am correct
in

day in support of the Administra¬
And, of course, there is no evi¬
dence of any ending of this enormous
outpouring of
funds to Europe and elsewhere. All of us, we are
certain, would feel more comfortable if we could
summon

analysis, the export sur¬
the trade account should
narrow
considerably
this
year
perhaps to a total of the order of
$3 billion.
We know that' the

measure.

faith in

those who lead

plus

gap

us.

must continue to

now

out

tively few

Skaife & Co.
SAN

FRANCISCO,
CALIF.—
Skaife & Co. is engaging in a se¬
curities

business

from

offices

110 Sutter Street.

(Special to The Financial Chronicle)

HILLS,

CALIF.—J.

Charles Sutherland has been added
to

the

staff

Waddell &

Reed,

Inc., 8943 Wilshire Boulevard. -•*

Chronicle)

Faroll

—

Sigmund

added

the

Co., 209 South

Salle Street.

(Special to The Financial Chronicle) *

Francoeur

with

Robert

Francoeur

—

Co., 39 South La Salle Street.

from
rela¬

But the question

are

all

concerned

will close both

exports

relatively

our

ILL.

relatively high levels.
I have pointed out that imports
of around $7.5 billion in contrast
to $6.6 billion in 1949 would seem

Joins Francoeur Staff
CHICAGO,

and our imports at
low levels or whether
imports can be raised signifi¬
cantly thus sustaining exports at
our

been

narrow

is whether the gap

BEVERLY

Financial

CHICAGO, ILL.
staff

With Waddell & Reed

The

Lawton. has

;

and

years.

with which

Faroll Co. Adds
(Special

1920, for instance, they
running today at the
rate of $15 billion.
To say that by the termination

within

bility this

the

year.

realm

of feasi¬

I would empha¬

size, however, that imports of $7.5
billion are
exceedingly low as

well

under

part in help¬

The

President

has

urged

upon

Congress' approval of the Charter

the

European Recovery Pro¬
imports at current
prices could reach a goal of $10
our

billion

might. be

modest

target.
Such a figure
make adequate allowance

too

propose

would

the

which

technological

have

changes

introduced

been

which have given us
synthetic substitutes for such na¬
tural

products

ber,

silk

and

rub¬

leading

imports before the
thinking about this goal,

war.

it should be remembered that

our

be expected to grow

economy can

the next three years.

over

tional

If our
output increases at the long term
historical

commercial

The

gram

recent

relations.

adjustments in

ex¬

change rates and the reduction in
exchange
controls
which
took
place
an

this

past

Fall

should

plan

increasing part in making

sible

larger

volume

national business.

change

controls

the

world

relieved by
import total.
~If

imports
low

Import and
will

ex¬

reduced

shortage is
higher American

these

action

remain

level

pos¬

inter¬

dollar

reject

courses

and

various

insist

their

relative

that

present

the

size

our

economy, our merchandise ex¬
port total might fall $4 billion, $5

billion
the

possibly

time

the

even

problem

recovery

terminates. Such

decline in the

of 3% a year, the value of exports would exert more
output of goods and of a deflationary effect than the
services at 1949 prices should be figures
alone
suggest.
Workers
running at over $285 billion com¬ making goods for export, thrown
pared - to
the
current
rate
of out of their jobs, would be forced
around $260 billion.
If this eco¬ to cut down their own buying and
rate

value of total

does in fact mate¬

rialize,

ratio

averaged

1920's.

conclusion

This

that

throughout

reinforces

the

$10 billion im¬

port level might, in fact, be con¬
sidered overly conservative. Were
it

possible

level

raise

another

1953

the

billion

import

dollars

$11 billion, we could an¬
ticipate that our exports in that
year
would be running at the
rates that obtained in

1949,

$12

billion.

While

have

goal of $10

characterized

$11

billion

not

unobtainable, it would be highly
unrealistic

that

assume

im¬

ports could reach this level with¬
out

the

<both

other

intensive

most
our

efforts

part and that of

own

nations

their

chain

reaction

increase

eager

dollar sales.

are

direction

move
we

in this

must

would

evident

that

back

gen¬

recognize

our

goods

must

buy.

our

clearly

seem

not

must

available

cut¬

abroad

An overly sudden decline
assistance

displacement
might result

national

income

also

true

ex¬

that

exports

are
highly concen¬
relatively few produc¬
fields, and the impact of a
sharp and sudden export drop

trated

tion

would

hit

them

localities

many

easily make
the

over

This

affecting
could

adjustment

course

does

hard,

which

not

not
even

several

years.

that

mean

the

American economy must maintain
its exports at present levels or be

threatened

with

recession.

could make the

course, we

neces¬

adjustments to lower foreign

sary

demand

because

capacity

our

for domestic economic growth. We
can
in time absorb this slack at

home,

but

must

that

recognize

this

could

frank

would

the

make

serious

effect

countries

which

were

by the

essential

United

sharp

exports would have

our

hit

ad¬

lower export level,

must face the fact that

decline in
a

foreign financial aid
program
too sharply.
If United
States imports are to increase, the
to

decline.

While

our

justment to

the steps that are called for.

First,

which

difficult process.

International Trade

eral

several times the value of the

Steps Needed to Balance

war.

sudden

cutoff

from

might

the

hard-

most

supplies

States

many

the

greatly

weaken their economies and
pre¬

cipitate political
which

neither

consequences

they

nor

can

could

produce well afford.
major economic dislocations
There have been few times in
abroad and imperil the entire in¬
our
history when we have been
vestment made in recovery since
confronted with so clear and im¬
the

1950

Forecasts of this

tion's ECA

did

would

war.

It would also

that sent from

con¬

play

Organ¬
siderably higher without injury to
ization which would
provide a
If our im¬
code of fair trade rules and a
ports today were to bear the same
mechanism for improving interna¬
relationship to production as they

were,

imports $7.5 billion, producing an
surplus of only $1.4

billion.

dollar

the domestic economy.

rate, $8.9 billion and

export trade

of the International Trade

re¬

highly preliminary and

tained.

in the

surprising
when

the

will remain relatively
year's
totals.
I

just

the

ago.

this

that

last

consistent with the

others which have been

few decades
with

Now

recom¬

subject constantly to revision.
Some of you may have seen the
trade figures for this past Janu¬

relatively
application. This ready-made cure, more¬
over, is to be applied precisely at the time that the his¬
torical champions of
"democracy" are themselves aban¬
doning it—or at the very least exchanging it for something
never

near

might add that

assumed

caution,

garded

successful in its

which would

estimates of this kind must be

by the imposition of
"democracy" upon the peoples of the wot;ld, including
those who have no
understanding of the word and have
shown repeatedly that they are without
any really abiding
interest in it

also

would

absurdity which still remains astride the cur¬
thinking involves the notion that all the troubles of

the world could be

par¬

Congress will authorize

funds

of payments

Another
rent

based

other major items in the balance

Leadership at Home

have

ary

Dubious

the total could

port

mended levels.

relatively unimportant by the side of the fact that
to the East lay a giant land with
expansionist ideas no
whit dimmed by the centuries and without
any trace
of any respect for the opinions of mankind — to
say
nothing of a conscience.

gest that

the

for

source

ing to achieve the import goal.

This would sug¬

gains. The statement with
exports

travel

joint at¬

our

increase

loss

to make

materials

expected

expanded

under

too

way and will

4V2%

on our

ECA

national product.

sential

set

that

tion

am¬

But their attitude

goods and services. This year
imports of $7.5 billion would be
equivalent to about 2.8% of gross

would

estimate of expected
imports and also on the assump¬

could

Here

imports of $10 billion
equivalent to about
3%% of total output against the

good

can

respect

course,

all

nomic growth

States will

tack.

and
are

considerable

would then be

further

long exist if neighboring lands are
flourish. It would in any event quickly cease to be
a result
of competitve nationalism. Even the so-

•

years

overseas

1929, purchasing power available
abroad.
imports averaged about 4.5%
A stockpiling
of the total value of the output of
program of es¬

remain

United

abroad

strong support there, although not in the extreme form that the then Secretary of the Treasury

are

our

throughout
the
and that the supply situation

the

year

not certain that it does not still

are

have

relation

recent years

The

form

easier

the size of the economy.
In the years 1920 through

ing from January to June.

sumption that economic conditions

one

international fairs

foreign merchandise will be
widely displayed. The obstacles

imports

prewar

considered

for

had strong support in

Washington, and in

significant
and,
in
encouraging contrast to
the $7 billion annual rate obtain¬

fact,

the peace concept of an economic (not to
say political)
in the center of Europe. And this
idea, too,

vacuum

compared
where

with the increase in industrial

had for

(1343)

page

officially into a
good while been ac¬

conflict in which

CHRONICLE

Outlook for International Trade

for¬

adequate

understanding of the real inwardness of

Continued

FINANCIAL

prospect in this country in which

eign policies and about the skill with which they are
being effected have much deeper origins. It is now all
too evident that the powers

must

made
the

recent

numerous

Burdensome
which

portant
seem

intensify

can

cess

our

years

reduce

customs

procedures
modified without
are

pro¬

of elimination and legislation

is being proposed which, if en¬
acted, would make further desir¬

able

choice. If

repeat the

trade policy history of the 1920's,
efforts when all too
many held the mis¬

barriers to imports.

legislative correction

evident that

modifications.

Reciprocal trade agreement
gotiations
will
recommence

taken

concept that exports could

move

outward in large quantities
when imports were held to

even

low

levels,

September.
Significant
mutual
gains have been achieved in the

again reap
policies.

If,

the

other

hand,

buy

abroad at high levels, we
be able to continue to sell at

shall
high

levels.
ne¬

may

the consequences of those

We
can
strengthen
only our own economy but
neighbors' overseas.
We

can

take

not
our

encouragement

through these negotiations from the fact that both in this
and further gains can be expected country and abroad the general
public is more than ever aware
again to be realized.
past

The Economic Cooperation Ad¬
is
working closely

ministration

of the mistakes made in the field

of trade relations in the interwar

period.

There is widespread ap¬
participating in the European Re¬ preciation of the vital stake we
all have in the promotion of a
covery Program as they seek to
improve their merchandising for higher/rate of international ex¬
this market.
change of goods.
with

representatives of countries

40<

THE

(1344)

COMMERCIAL

latest week

Business Activity

week

Latest

Indicated

operations

of capacity)

(percent

April

month ended

Month

Week

Ago

April

1,343,400

1,820,500

or,

1.404,900

NEW

(millions

1,839,803

(bbls.)

average

(bbls.)

Mar. 13

6 863.000

6,250.000

6.890,000

6,775.000

8.014.000

8,210,000

7,75J,0U0

8,411,000

Mar. 13

distillate fuel oil

fuel

oil

(bbls.)

135,234,000

131,547.000

AMERICAN

13.592,000

14,407,000

1 <,116,000

18.2ko.0J0

43,102,000

46,575.000

Si.OcO.OOJ

50,009,OOo

41,566.000

44,544,000

51 ,Ja>U,0O J

5j,234,009

CIVIL

CONSTRUCTION

ENGINEERING

—

Mar. 13

S 725,570

5707,962

5550,118

Construction

Mar. 13

St 674.9 70

5537,655

Sol i,95J

omitted

NEWS-

State

and

CONSTRUCTION

NEWS-RECORD

$213,207,000

$263,535,000

State

$130,930,00.

111,534,000

146,597,000

166,960,000

65,743,000

66,610,000

96,625.000

and

58,394.000

74.514.000

57,621,000

16,382,000

8,21o,000

22,111,000

5j,00k,0ot

PAPER

RESERVE

municipal—

Federal

Feu.

CONSUMER
DUN

OUTPUT

Bituminous

(U.

BUREAU

and

coal

Mar. 13

(tons)—

BANK

NEW

13,300.000

13,200.000

2.425.000

2,985,000

——Mar. 13

1,215,000

1.202.000

616.000

54,100

"13,400

2,500

LIFE

139,00c

Mar. lj

———

43,000

——

TEM—11)35-31)

SALES

AVERAGE

INDEX—FEDERAL

RESERVE

100

$258,000

$263,000

239.8

*276.9

$1,207,000

YORK—

omntedi

BRADSTREET. INC.
of

(iy:<5-iy:<9—

February

INSURANCE

—

LIFE

omitted.)

SYS¬
—Mar. 13

—

26:

253

231

$1,140,000

$1,154,000

3.000

203,000

375.000

635,000

402,000

132.000

$2,335,000

Group.

$1,745,000

$1,711,000

—

231

kwn.)_

000

(in

Mar. 23

—~—

5,S93,0G2

6,015,327

5,854.253

5,403,806

MALLEABLE

IRON

CASTINGS

(DEPT.

COMMERCE)—Month of January:
(short tons)

(COMMERCIAL

STREET

INC.

AND

INDUSTRIAL)—DUN

BRAD-

For

..Mar, 23

——

—

IRON AGE COMPOSITE

130

203

210

sale

Mar. 21

13.337c
$46.33

$46.33

$48.38

$28.42

$27.92

$27.42

orders,

3.837c

3.754c

(short

Electrolytic

QUOTATIONS):
•

refinery at
refinery at

Export
•Btraits

tin

(New

Lead

(New

Lead

(St.

Line

ANCE

copper—

Domestic

York)

Louis)

(East

Mar. 22

18.200c

13.200c

13.425c

18.425c

23.425c

77.375c,

76.500c

74.250c

103.000c

Mar. 22

10.500c

12.000c

18.000c

10.300c

11.800c

17.800c

9.750c

17.500c

at
at

—:

Mar. 22

Government

10.000c

Mar. 23

10.000c

103.17

Mar. 23

103.15

103.46
116.41

PERSONAL

INCOME IN THE

(DEPARTMENT
of

January

Total

Wage

and

121.25

121.46

salary

119.32

120.02

117.20

Public

Utilities

115.82

116.02

112.19-

108.88

108.70

104.83

Other

111.82

111.62

108.16

Proprietors'

Mar. 28

117.40

Mar!

Group-

113.89

120.22

117.60

—

insurance

BOND

YIEL1V DAILY
Government Bonds

Personal

2.8

interest

transf?r

income

dividends.._

and

2.26

2.24

2.38

2.83

3.00

CROP REPORTING

2.59

2.58

2.70

2.66

2.56

2.65

2.83

2.C5

2.85'

3.05

3.23

3.24

3.46

3.03

3.08

3.03

3.27

-—

Mar!

—

—.—Mar. 23
-

—

•

Mar

2.78

PROSPECTIVE

PLANTING

2.64

2.64'

—

Mar. 23

357.6

355.9

all
wheat

82,765
—

Other

spring

369.8

194,402

-Mar. 18

205.932

219,523

179,849

191,702

205,712

.-395,211

344,030

REPORTER

PRICE

103'

INDEX

—

—————————5

1926-36
>
!*.— Mar*'24

all

Peas,

DEALERS

AND

SPECIALISTS

THE

121.3

Number of
Dollar

shares—
„

Customers'

other

Mar'

total

otner

shares—Total

213

113

27,463

27,605

~Mar"

——a

sales

All

27,676

776,288

27,718

34,351

PRICES

NEW

IIIIII-IIIIIIIIZImIr! 1}

SERIES

DEPT.

287

34,064.

782,446

960,523

10.230

950,293

$27,697,212

$35,926,033

$15,897,496

Foods

246.820

324,980

150,970

246.8:$

324,980

150!970

272,720

270,150

258,730

278,640

218,040

Textile

*152.0

152.5

158.3

157.4

*159.2

153.9

171.1

164.6

165.5

162.6

160.7

196.6

201.0

199.5

211.4

155.2

lighting materials

and

metal

products—

Building materials
Chemicals and allied

—III"
~~

*155.5

158.3

163.0

212.5

*214.1

220.2

223.6

Mar. 21

145.4

*145.2

145.3

150.6

^ar- 21

136.2

*136.3

137.0

142.3

130.1

130.2

130.5

134.0

-—Mar. o1

products

Fuel and

Metals

"
~~

^-Mar.21

products

tofidal"e' SCl^Shf?5,!S2i

169.6

169.3

169.4

omitted):

(000's

January

$303,052
94,584
214,863
64.593

82,420

50,373

163,713

171,359

153,891

178,195

banks

$337,474

lending

199,858

.116.722

$1,125,200

$789,559

institutions-

$216,608

103,397

72.765

230,692

.174.195

$1,024,000

192.9

193.2

191.5

198.9

116.5

GUARANTEED

AND

TRANSACTIONS IN DI¬

MARKET

SECURITIES

A.—Month of February.

sales

$1,750,000

$275,000,000

256,865,375

252,721,282

27,029

26,110

$256,395,406

$256,892,405

—
_

$13,481,200

of Feb.

face

omitted):

(000's

amount

that

be outstanding

may

$275,000,000

time

one

anv

DEBT LIMITATION

STATUTORY

GOVT.

$6,577,800

27,051

purchases

OutstandingTotal

gross

public

Guaranteed

debt

obligations

256,368,355

not

owned

the

Treasury
Total

public

gross

debt

and

guaranteed

obligations
Deduct—Other

outstanding

public

debt

$252,747,393

obli¬
-

gations not subject to debt limitation—.—

741,851

785.345

$256,150,554

$251,962,047

18,849,445

23,037,952

739,111'

174.4

Mar. 21

.Mar. 21

~I~

;

SAVINGS

CORPORATION

—-——

Net

151.7

"Kar'21

--"I--—IIII

All commodities other than farm and
foods

NON-FARM

FEDERAL

—

Total

TREASURY

—As

Mar- 21

INSURANCE

Savings

Net

Meats

Miscellaneous

b,102

>*ar- 21
^ar- 21

Livestock

769

468.363

$28,150,205

r;ar- £1

I::::::::::

2,929
72.835

930"

476,465

4,078

778,368

LABOR—

products

FINANCING

Individuals

Total

Grains

2,570

-75.091

companies
and Trust companies.-

Mutual

17,631

commodities

Farm

1,177

—

Insurance

100;

1,192

Savings and Loan associations

17,898

8,235

253,730

>™r.

367

11,409

:—

LOAN

RECT

A/ro_

Hound-lot purchases by dealers—

——1-*——

ESTATE

Banks

sales

1926

527,257

sales

1,900

13.500

—.——

—Month

$20,577,307

Mar'

sales

Other

WHOLESALE

'893,951

$35,683,156

768,053

Short

808,763

$32,879,477

18,577

830,839

sales——

Hound-lot sales by dealers—

Number

29,848

$29,257,620

Mar

value

27.345

——————Mar'

sales

short sales

Customers'

Number

28,120

shares—Customers'

Customers'

Dollar

-I-IIIZ-IIm^!

short sales

Customers'

Number
•"

1,626:

281

—

AND

value

548v

1,582

^ar- 21

forei?K crude rins- }The wei3hted

115.8

115.3

Wished steel composite
,or

the 7

,e*K

1937

was

121.1

revised for the

1940

Grand

total
face

Balance
under

$255,656,294

outstanding

amount of obligations

above

authority!

—

issuable.
~

19,343,705

,nclus,Te *na
! * Revised

figure.

■

1,024.

£03

1,678

1_-

—

REAL

Mar

Odd-lot purchases
by dealers (customers' sales)—
Number of orders—Customers' total sales

^L—,—

edible

————-—

AREAS

orders

;

STOCK

EXCHANGE—SECURITIES EXCHANGE COMMISSION:
by dealers (customers' purchases)—
of

1,862.-

——

Hay

^dd-lot sales
Number

field"

dry

Peanuts

135.9

1.339

11,754

purposes—
—

dry

Beans,

121.9

5,199'<'

1,645

.-'14,568

Sugar beets

RTOCK TRANSACTIONS FOR THE ODD-LOT
ACCOUNT OF ODDLOT

11,203

,(4,027

——

—

Cowpeas
121.9

44.525

.113,879

—

'—.

potatoes
Tobacco

267,523

————

3,693
18,866 "

<-47.964

Sweet

382.006

16,467

——

Rice

166,999

-Mar. 18
—

22,559;

3,260

•

151.534

-Mar. 13

356.1

87.910

-19;727-

wheat

Oats

Soybeans

•

11.2

192.li

—.———

Flaxseed

-Mar. 18

—

——

Potatoes

(tons> at_

-—

17.0

♦12.2

—

spring

Sorghums for

Production (tons)

AVERAGE

*17.3

*191.4

ACREAGES

March

Durum

2.77

INDEX-

DRUG

17.4

199.5

——

19*0

FOR

BOARD

THOUSANDS—As

Corn,
All

2.96

—

NATIONAL PAPERBOARD ASSOCIATION:
Orders received (tons):

AND

2.3
2.0
48.5

2.79

-Mar!

——

Group

PAINT

2.2
♦2.1

*44.8

18.5

income.—

Barley

OIL,

20.3

2.2

payments

nonagricuitural

17.1

*21.0

46.2

income

rental

2.26

Mar. 28

—

IStrfilled orders

60.5
40.3

social

and

2.34

•

Percentage of activity—

133.2

*17.2

21.3

tor

income.,

Mar. 23

Railroad Group: Public Utilities Group—

MOODY'S COMMODITY

*40.2

—

Mar. 23

—_s

Industrials

*57.3

17.5

contributions

——Mar. 23

Average corporate
AaaAa

135.9

57.4

industries..—

AVERAGES:

Baa

labor

Total
Total

MOODY'S

214.6

*133.5
*135.7

40.2

producing

*209.8

134.1
136.9

disbursements

employee

Mar. 28

Group

218.4

total—

receipts,

Government

Less

Mar. 28

Industrials

COMMERCD— Month

billions):

119.00

119.32

——

UNITED STATES

income

employer

—Mar. 23

Group

(in

personal

113.12

Railroad

INSUR¬

LOAN

Service industries

116.41

,-Mar. 28

——

1,231

FORECLOSURES—

Distributive, industries

Mar. 28

—

1,597

—

AND

101.71

111.22

Aa
Baa-

ESTATE

SAVINGS

Commodity

Bonds

Aaa

126,393

sale

Deccrroer

MOODY'S BOND PRICES DAILY AVERAGES:
U.

26.943

60,835

1,343

—

REAL

Total

Average corporate

34,719

62,307

for

month,

71.376

23.200c

13.425c

—Mar, 22

—

33,836

CORPORATION—

Month

.Mar. 22

Louis)

St.

Mar. 22

—

York)

cancellation,

end

tons)

FEDERAL

33.040

27,000

tons)

$-.4.92

3.837c

NON-FARM

<E.

PRICES

29,679

29,956
34,390

(short

use

$4o.

Mar. 21

57,379

32.918

•_

tonsi

tons)

Unfilled

Mar. 21

(short

producers' own
Orders
booked,
less
(short

62.874
:—

For

161

PRICES:

Finished steel (per lb.)
—1
Pig iron (per gross ton)--——
Bcrap steel (per gross ton)—

METAL

286.1

Febru¬

—_>

Shipments
FAILURES

INSTITUTE:

EDISON ELECTRIC

output

—

.——I,

Total

Electric

INSTITUTE

—

INSURANCE —Month

(000'

ary

PURCHASES

Industrial
STORE

20.000,000

PURCHASES OF COMMODITIES—

Ordinary
DEPARTMENT

169,000.000

275,584,000

MINES):

lignite (tons)

anthracite

Pennsylvania
Beehive coke

189.000,000

63,668,0u0

—

OUTSTANDING—FED¬

(000

IU0)—Momh
COAL

374.000.000

211,840,000

$257,000

$563,000,000

428.051,000
487,424,000

210,443.000

Municipal—

$915,475,000

411,984,000
274,231.000

115,623,003

49,363,000

64,„01,00.

Mar. 23

EN¬

—

Month

—

construction

ERAL

$177,330,000

—Mar. 23

—

$204,000

„

Mar. 23
:

$530,200

DE¬

Month

construction

COMMERCIAL

Mar. 23

construction

Public construction

—

construction

Public

3,03a,

Mar. 23

$53,500

REPORTED

—

COMMERCE

iOOGs

GINEERING

607,922

Private

$53,800

13.200

February:

RECORD:
Total

9,500
14,700

$686,215,000

PUBLICLY

—

Federal

CIVIL

9,100

—

—,

ENGINEERING

Private

freight loaded (number of cars)
Revenue freight received iiom connections (number of cars)

—

13,800

$213,200

—

CORPORATIONS

PARTMENT

RAILROADS:

Revenue

$34,400

$30,800

9.100

$53,500

DIVIDENDS

Total

ASSOCIATION

$31,100

——

—.*

127,310,000

Mar. 13

135,052.000

Mar. 13

and

Ago

Jan.

dollars):

February
Mar. 13

oil,

Year

Month

Total

CASH

2,169.000

at—

Residual

Gas.

2,398,000

(bbls.) at

Month

—

COM¬

5,335,000

5.202,450

bulk terminals, in transit and in pipe lines-

unfinished gasoline

17,4 <0,000

—Mar. 13

Gas, oil. and distillate fuel oil output (bbls.)
fuel oil output (bbls.)—

Kerosene

5,278,000
1 /.617.000

2,429.000

Mar, 13

Residual

Btocks at refineries, at
Finished and

5,314,000
17,608.000

4,326,950

2,129,000

(bbls.)

output

4,844.000
H5.3S1.000
1 7,936,000

Mar. 1J
-—Mar. 13

;

4.936,850

DEPT.

SERIES

Retail

Mar'13

stills—daily

Gasoline output

Kerosene

(bbls.

average

—r

runs

output—daily

condensate

and

gallons each)
Crude

INSTITUTE:

PETROLEUM

oil

of that date:

are as

Latest

INVENTORIES,

Manufacturing

Crude

either for the

are

Mouth

BUSINESS

93.8

Wholesale
AMERICAN

of quotations,

cases

Ago
MERCE

ingots and castings (net tons)

production and other figures for the

cover

Dates si: own in first column

that date,

Equivalent to—
Bteel

Thursday, March 30, 1950

Year

73.7

S5.5

98.7

month available.

Week

INSTITUTE:

STEEL

AND

steel

CHRONICLE

The following statistical tabulations

Indications of Current

AMERICAN IRON

FINANCIAL

•'

THE

Number 4894

171

Volume

Continued from page 8

COMMERCIAL

dustry, but

FINANCIAL

CHRONICLE

conservative luctance for

a more

pattern is ciearly discernible.

I np

litllltv
,

issues offered.

Examination of the

VvVUV
«

control

.....

riod totals
tne rate ot

syndicates also reveals that indi-

TITl

$9 billion.

over

membership lists of underwriting

While

which

investors.
fully

are

important

Of course, dividend policy must
vary for each company ana must
take into consideration numerous

Most of the industry is factors such

aware

that

investor

confi-

participate in offerings under widely diverse leadership.
•
We at the SEC cannot

believe

is healthy

the utility company

pie

the

Logically,
believe

one

operations to
Jow's

and

the

free

yet

insist

its

scope

But

that

must

these

hard-

periodically

Not

long ago, a partner
the largest investment
firms in America, in a

one

banking
speech to

utility industry group,
industry "to institute
arrangement with competent

invited
an

the

people to advise
to your

financing."

,a"«Ui?CVJhf
course, for a

was,

with respect
In less euphe-

you

banking

which,

relationship

viously,

would

ftnancial

but

aDOUl

minion

kw.

retained

only by

the

capital ratios, the

volatility of the comload, size and history of

pany's

trend

of earnings,
margin of safety
of the proposed diviuend policy,
to mention only a few.
company,

rate

gooa,job in keePinS investors currently informed and is conscious
* fte
d of doing a better job
Many electric utility companies

few

Of course, tnis construction

pro-

continue to be financed

can

successfully only if utility secu-

problems,

i co not want to be understood
bv

what

gyneraI

electric

are still a
companies
and
a

ai]

have

said

dividend

urein<*

°eassesur^nu=

go" policy is similar to the policy
by insurance companies
in investing their funds "as they
go."
The "averaging" of prices
involved in "financing-as-you-go"
programs should result over the
years
in
relatively low money
costs.
A. "financing-as-you-go"
program reflects the growing
status of electric utility common

idlowed

stocks

them

relatively

vestment

in¬

stable

security and assigns to

constant and major role in

the financing of utility construe-

tio„.

of gas companies who
general release only to semiannual or even annual reports,

"to

see

weight to
involved.
One

factors
of

industry in the last 10

years.

elimination of

and

"wind

The

water"

the

high from
utility accounts and the
as we]j as on the low side,
simplification and integration of
considering the necessity of hav- holding company systems have
ing balanced ratios and financing now placed security analysis in
construction needs.
the utility industry on a rational

number

give

^hieh arewS m^nlLriS fWa"CIal SerV'CeS' '
wis wmcn are wiimn managerial
J1h®set t^ven sifffcient lt . Quarler>y Reporting
MJiiieuiiies iiui given suixicieni,
difficult
Eft allaln investor appeal.
pities in the electric anu
now 10
industries

the

may

"ties remain attractive to inves- While some of these companies
tors. Earnings, naturally, are basic appear willing to provide quarln tbjs respect arM, while, to a terly statements upon request, the
considerable extent, the trend of ordinary investor looks in vain
earnings-is beyond managerial for this information in the major

err,

are

the

course,

in the fourth

now

eiectric

utility

During

program.

the

1947 an(j 1943

years

first

two

manv com_

"heir exTanXt

« financed
through

year

expansion

heavv

reliance

upon

basis. In the past, with few operating company equities available
and with all the complexities and
uncertainties, including the effect

of excessive leverage, surroundholding

ing

securities,

company

s£nior securities particuiarly debt you could put only the speculative

whv

all

It is estimated

money

tnat

com-

investor

securities

into

this

mon stock and retained earnings industry -—others had
to he
should not, at a
were only 23%
of new money warred:
"Danger, stay away,
mum, pubus.i quarterly earnings financing, exclusive of intra- Today it is possible for you to
Indeed, the time will come system transactions, in the two- speak with relatively greater congas
mini-

Industry's Future Appeal

also

woulo

,,,^apltal marKets 10r suDstantiai. ments. However, there

ob-

be limited

not

advice

continuing

can

.41

mimon kw. at tne enu or tne r»au
mere is an optimum dividend polAs security analysts, your work
*n«electric utilities aieceminly nOW annou .ee monthly earnings
icy for each company, and I am has been greatly facilitated by
alaaaslryuDviousiy figures, and most companies pubexpressing doubt tnat all com- the developments in the utility
l"'s growth will lequire going to lisJi
quarterly
earnings
stale- panies have
given full

gram

seems

gains

won

® as compared with about 68

only the other fel-

business.

rewon.

proiess

competitive

system

restricting

011

peo-

business.

cannot

the

enterprise

and for

securities

for

both

cence

the industry 1S of tne policy of full and current disgeneral opinion tnat installed ca- closure.
The
word
"current"
pacity of all electric systems, in- should be emphasized.
By and
eluding Federal contributing to large, the utility industry does a

help but

that the diversification

underwriting

now

and

nature

declining,

vidual banking firms now

increase may

stock equity
'

common

financing.

I want to mention a number of
other factors within managerial

yf.il>.

LnTTAllt
VflllvUI

■

(1345)

ma,n

aDDeai

utiijtv

se-

when utili(y investors, some of year period 1947-1948, the balance fidence—I emphasize relatively—
whom are required to make im- being raised by 59% of debt and about this industry than perhaps
interested inLrue
P«rtant investment decisions al- 18% of preferred stock. For the about any other,
not believe that the history of the
e
™ 'a
i s
but m the m- most daily. will demand monthly year
1948 alone, common stock
Thp Analvs,.s Role
past quarter of a century can oe
^siorauicteaby tne industry s earnings dat,a from these and retained earnings were only
The Analysts Ro 8
erased so easily. I think we have
stabuil,aild
industries.
Publication of quar- 19.8% of the new money raised.;
You, as,security analysts, can
learned that a financial adviser to
D
> °
ea S
V„
f"ciine Id ter'y a"d monthly data not only The common stock market had P1?? a Dynamic role in keeping
a company should not also undert
t ey
bt* foveriimentS keeps investors informed, but also been very good in the first half utility securities a relatively
write its securities
The two func^setai™ additional function of of 1946, and, apparently, compa- stable investment. Your views
and t .e manv un- serves the
tions are
inconsistent, for, as a
A;ble chaiacteris ics of ore- keeping management "on its toes." nies could not reconcile them- <eud to be reflected m the investbuyer of the companys securities,.
D |. selves to selling common stock at ment advice people receive in all
the underwriter-financial adviser
{
7" ,nv«ttJ,'s " inrl,,dina insti
Playing With Depreciation
the materially lower levels pre- Parts of the country. Investment
include

underwriting the comsecurities
I
for one
do

panys

•

the comine

1 LuLL
."vestor

wUl

vears

la inl soLiikl-

„

t!LT

th«f Company Z

with

seller

shouZ^i

The

and cannot

buyer
be permitted, to sit

both

sides

seller.

does

doing

table

with

other

demand

the

1 believe

so.

learned

the

And

the

business

privilege of
have also

that, apart from combin-

ing the functions of adviser and
underwriter, it is unhealthy for a
to

company

into

enter

tacit

understanding whereby manageof the underwriting of its

ment

is.

securities

single

firm;

others

business

the

otherwise,
of

ment

monopolized
there are too

banking
given

easel

any

permits

its

the

irwnage-

investment

many

investment

who, in

business

banking

handled by

sin-

ment^ankin"1biSinLs ir^tich
th-tother^bLnkers wilfLt
way compel for t^e businTss
m

anv

other

the

infringeupon

respects

ti^ di t ionalba ker^sr el
n

ship.

The utility

•a

therefore

•

a tl on -

ancTotter ^advantagS ^f

Inlv
P

must
.

mo-

costs

utility capital, as you
turned over only once
four or five years, capital
therefore,

are,

factor

the fixing of

important

rates.^ The

Pliinterest of consumers
interest and tne

particular
in

low-cost power and the interest

utility investors in maximizing
their income require that the ini

terms.
veres

anct

Management,
its

efforts

preserve

tne

perse-

strengthen

private

utility

industry, must insist on following
course.

j
n

ine

oreat

construction

urogram

all know, the electric
industry is in the middle

you

utility
of

the

great
five

truism that.investors

are

Se7' st"/"

rince

June

pacity

construction
years

program.

since the

War,

J.®

fnc* speculative holding r^ccasionally noticed

es
been
? morestableco.nstocks of opei ating utilities,
^
.ls a ™aJ°r development in
American finance. Alio! you are
syre>
trend to
cban£e State laws to permit vafiou%types of institutional inves-

^p0

new

a tendency to

with depreciation allowances and other non-cash charges
to income or otherwise take steps

to efiect artificially reported
earnings.

In an industry where

everybody else
ratios

are

figures and

widely known, sophis-

Divide.tti Poliey

iritra-svstem

monev

"marsin" of

wil1 divert funcs to companies
which treat investors more considerately and more fairly.
I
would urge you to speak out, both
individually and through the society,
against
"unfair - to - investor" practices.
To the extent
y°u
reflect the long-run
needs of the investor as distin-

rh,:kUOi7,'l>r oM.rtheV'lo

tier ir^ortry-itr r.eomoo Stork,

exclusive of
tiong

the

^.6%

debt

balance

transac-

consisting

and

13.1%

Dreferred

that

T^'e

manv

comnanies

took that markets would be better

iri949 "n^idoff^But

^afa

garr)h]e
sen|or

an^

c o n s

securities

SmbBng

ticated investors will lose faith in

Oon'7' i'wiujia'i; Ne7,lYo[)kr'™^e
pending legislation to subSi-

i d

the

of
on

e r

the

n e

industrv

°"e
the most important at- not, any more than you or I, have holders.
And don't forget the
"prudent man rule" for tributes of a utility company to a crystal ball which can assure consumer.
His interest m a pub-»
the legal list—a substitution which investors is its dividend policy, them that the market will be bet- ^ ^rvice mid^stJy
^
wil1 Dermit trustees to invest in In the growing utility industry, ter "next fall" cr "the following
f'Pvnurrh'ents' an dt hi recommon stocks. Capital, from sav- ma«y companies find that they spring."
fore' tour interes s
ings banks' life insurance com- must utilize retained earnings to
foie, your-interes!s.
Panies» and Personal trusts is be- ass*t in financing construction.
Betting on the Stock Market
Foming available for investment Some utility companies, however,
jn many cases, appropriate uGfllGr PrOullCfS OOlllp
jn this industrv in ever-increasins

have attempted

amounts. The great growth which

construction programs through a

finance

their

taking place in common maximum of retained
earnings
trusts, in investment com- and a minimum of new common
panjes> anc| jj-j industry pension stock financing.
Our experience
fun(js will increase the supply of bas. been that it is difficult to
capjfaj for ^js industry.
maintain or attain proper capital
now

ratios

Balanced Capital Structures
Needed
These

this

manner

because

will gravitate earnings basis.
All other eleutility companies ments being equal, dividends

ticated

investors,

toward

those

financing

stock

common

nost-

p0ned because of the expectation
that the

six

months

the

assumption

that

the market

will

value those higher earnings on at
least as favorable basis as today's

the

market—which

business

not

electric

utility

balanced

ratios

ro
..

the
T

lu-

common

which
1939.

therefore,

consciously

uncon-

utility

investor

interested

pri-

is time

abandon

caPltal Pams. and it is to the investor for income to whom it
25% must look for new capital. If its

the

SEC

than

the

stock

spoke

equity price-earnings ratios

about

Obviously, of course,

no one

"as-you-go"

this

the view

policy,

the
an

exposes

vere

capital ratio formula is suitable it

for all the companies in this in- this,

too low,

itself to relatively

dilution

goes to

are

earnings

se-

when

sell common stock, and

turn,

intensifies

its

re-

basis.

Under

and in the light
company's
objective
as

optimum

permanent

always

minimum

ob3ectlve today, I think, should be
minimum

projects, money expended, and to
be expended, in the five-year pe-

As to what

competing for capital.

totaling over 17 million
been, or will be by the

lias

corporate

structure without undue leverage sciously, cheapening the price of
wi]1 not aPbeal to these investors its stock. If it errs too much in
and win be at a disadvantage in this
respect it is unfair to the

capital

f i n a n c i

structure,
n g

would

Include

the

proun

Perker

man-

Inc.

...

011 March 29 made public offering
of 133,000 shares of common stock
Gerber Products

0f
Dp

Co. at $29.75

Proceeds

sharP

are

tbe comPany f°r capital

used b^

ing capital.
charp<;

An additional 10,000
.

maintained and it will

assure

it-

attaining its ultimate

comPany direct to
the

same

the

yee

without under-

price,

writing.
Oerhpr

was

the

oioneer

the
,

Pr^Paratlon of canned baby footb
and

today

the

leader in the

industry, producing nearly 50 varieiies of food and doing an

secu

to finance expansion.

offered

being

are
,.

common
stock
rities offered
In this way
its capital ratios will be constantly
among

additions and for increased work-

company.

nnrfprwritin*?

the

best maintain the essential paid, rather than income earned, that new issues of electric utility
characteristics of this industry— are the most significant
price- common stock should be confined
stability and growth—and which determining
factor.
A
utility to "boom" markets. By and large,
treat
investor fairly. The com- management
which
relies
too the capital needs of the utility
pany which does not attain and heavily
on retained earnings is, industry should be financed on
maintain

next year will see better earnings.
Such
a
decision
involves
the

the large amounts of new capital earnings.
Of, course, that is
needed. It is well known that merely another way of betting on

of capital, electric utility common stocks sell
primarily in the hands of sophis- more on a yield basis than on an
great sources

higher

generating

New York

definitely

new

Insurance comptnTin

^ J ?ield 1latively conserva- entitled to accounting practices 1949 and
•
have° seen
sub- reflect
your recommendations,
investment as tnings go in which do not distort income re- s{an{iai amount of common stock Utility companies should realize
^
^ n°W S"hfu
accouming Practic€s financing^that, to the extent that their fi^„i., PS
utility common of the utility industry are un- Jt js estimated that" in 1949 com- "ancial policies and other pracaS \
? oouhtddly more standardized than mon stocj^ and retained earnings tices affecting investors minimize
l g J1°"}parJy
t'hin almost any other, we have CQilstituted 33 3% of
investor appeal, you, as a group,

ca-

1946-1950,
kw.

" >s

secu^};les be issuea an<J which
only on the most economical

^
sold

this

fund

every

vailing in 1947 and 1948. As you ™ns ™da

Allowances

Electnc

know,

tuuonaVones. into commo^stocks.

fntoi

esti-

vni„m0

mated 35% of the total volu"^e ot
business-of the industry.

are

located

Oakland,

Cal.,

Fremont,

and

Plant3
Mich,;

Rochester,

if^'^stL^y^^r^thwer™ N; Y„ and a newly organized con,public Service
Company, recently

pointed out,

"finar%ing-as-you-

Pany. 50% owned by Gerber, is
operating in Canada.

now

Continued

from

Sao Paulo

about

government

the moment has lost the initiative
in the cold

fered

war

indications,

are

the

from
week

talks

Acheson

and

from

both

however,

out of Key West that a new
stand is in the

last

wafting

rumors

policy

making which will

be comparable in

dramatics to the
the

announcement

too

that

structure

distributors
to

tomers

rules
at

those

market

analysis and product ac¬
ceptance surveys without which

today

joining with us for
the first time in our long history,

these facts to the kind

make it succeed.
As businessmen

must

never

allow ourselves to forget that the
last

thing Stalin wants is war.
blueprints on the walls be¬

Those

hind the table at which the Polit¬
buro
a

call

meets

much

for

conquest

basis.

cheaper

And

for

the very good reason that Russia

still lacks—and will lack for many
years

—-

either

the

industrial

So,

And

are

available

are

many

realize.

the facilities to reduce

of market

Business

Suffering

Still

Dislocations

From

Today, five years after the war,
States export business is

United

still

have to sell our

tions of both war and postwar. For

from

suffering

disloca¬

the

managements, and I hope they are

much of the six war years we

present again this morning to hear

little

politically,

let's

recognize

state

our

had

nothing to sell in export,
and for the last four years there
has
been
a
demand for almost

case:

Export is now big business.
Intelligently cultivated, it can be
held
at
$10,000,000,000 a year.
With today's vast mass production
machine we can't calmly watch
(1)

everything we had to offer.
It's
not surprising that a lot of the
shooting war; more ECAold drive and a good deal of skill
type business — this time in the
has temporarily gone out of over¬
Far East; and a gradually expand¬
seas selling.
our exports fall much below this
ing defense program at home to
There is a good deal of evidence
level
without
serious
domestic
help meet the threat from Mos¬
management can be con¬
repercussions. If that happens, it that
cow; It's not-the
easy-going kind would contribute as much as any vinced of the importance of ex¬
of outlook that we would
like, but other
single factor toward a de¬ ports if you present a factual story
certainly there is nothing in it
pression which Moscow still hope¬ dramatically. I know of one cor¬
that
the
red-blooded
exporter
fully predicts is going to overtake poration in this country doing a
can't face. Experience of the last
us.
We've
completely outgrown gross annual business of more than
the future for what it is:
No

four

are

has

years

stakes

are

proved'that

profitable

the

they

exciting.
The Economic Outlook

wish

about

the

could

some

certain

outlook

for

the next five years.
On

the

question

of us

overseas

imports

are

$1,000,000,000 and whose postwar
exports
were
rolling along at
$60 000,000. But when the export
department went to. management
with
the
full
export picture—

forced to operate.

can't

-unless

sell
we

tomers first hand.

fashioned

tac¬

tics but, unfortunately, you would
never know it from the way that

(2)

economic

in-and-out-of-the-market

today

successfully

know

our

showing

cus¬

win

half million dollar deal by

times

mail

S. exports

tliat total U.

their line

It's plain old-

to try to

When

supplies

promotion of their ex¬

wascircling

the

this company,

hitting

continent

world

American

Casualty Co., Chicago,

III.
(par $1).

Price—$2

per

share. Underwriter—M. A. Kern, President

of company, will sell the stock.

capital and paid-in surplus to

Alumitape Sales Corp.,

Proceeds

carry on

—

that

were

than ten

$60,000,000—they won

hearing from the top brass. For

Los Angeles,

When

share).

blind

Proceeds

tape

expenses.

are

This
which

not

will

kind

the

maintain

the

of selling

exports

our

Calif.
No under¬

to promote and advertise Venetian

and other products and for general selling
Office—5404 Alhambra Ave., Los Angeles,

African

•
American Investment Co. of Illinois
March 27 filed 31,892 shares of common stock
(par $1) to
be offered to employees.
Underwriter—None.
Price—

$15 per share. Proceeds—For general corporate purposes.
Anchor Casualty

stock

ceeds for operating
Ariz.

Co., St. Paul, Minn.
notification) 10,000 shares of capital

and

(par $10) at $25

per

share.

No underwriter.

Pro-

costs.

dominate

ing

per

Other
to

Ashland

Oil

today

have been

It's

and

refuse to detail

natural

gas

Boston

Philadelphia

Private JVires

Pittsburgh

San Francisco

pay

that most of

all

offices

offered

of the company.

Underwriter

Ashland, Ky.

Underwriter—None.
working capital.

Gas

No underwriter.

to stockholders at

for each two shares

writer.

now

thing

that

4 Moscow
the thing

that we have a
opportunity to sell at home

is something

important for

one

And—let's

of the basic tenets

not

forget

our sys¬

in this

room

for ourselves.

sell.

INDICATES

ADDITIONS

SINCE PREVIOUS ISSUE

held

notes

the

New

England Electric System

and

Bluegrass Life Insurance Co., Louisville, Ky.
10 (letter of notification) 100,000 shares of com¬

March
mon

lor

the rate

(par $25)
1%

held, at $30 per share. No under¬

The proceeds will be used to pay off $575,000

share. No underwriter. Proceeds
operation capital. Office—Marion E. Tay¬

stock at $2.50 per

for minimum

Bldg., Louisville, Ky.
Boston

Edison

Co.

(4/12)

filed

$18,000,000 of first mortgage 30-year
bonds, series B, due 1980. Underwriters—To be deter¬
March

mined

1,200 shares of class A

Dec.
to

the

understand, and to sell the head tem: The more successfully we
office, is the fact that more dol¬ meet the challenge of the next
lars are available now than most five years, the more profitable it
of us realize for the kind of goods will be—for our businesses, and

Office—2700 Uni¬

Beverly Gas & Electric Co.
20 filed 33,000 shares of capital stock

Chicago

Cleveland

familiar.

What

Boulder, Tulsa, Okla.

NewYork.

fine

us.

Co., Tulsa, Okla.
2,500 shares of common
Proceeds to
transmission line. Office—105 N.

share.

same

today than at any time I can re¬
call, because it means we can fight
a mounting crisis with the weap¬
ons
with
which
we
are
most

March 14 (letter of notification)
per

the

for all that other
countries would like to buy from
dollars

Statement effective March 20.

$100

bosses

your

better

not

are

You must

do best.

during the next five years enough

Proceeds—For

Natural

managers,

fears most because it is

clear, however,
going to be

perfectly
there

that

prior to July 15, 1958) to be offered to employees and

Associated

export

selling job that you've done over¬
seas.'

for five years ahead.

to you

Inc., Phoenix, Ariz.

Refining Co.,

share.

you

bank loans.

officers of company and subsidiaries.
per

economic think¬

your

with

going to be just as smart as they

Feb. 27 filed 50,000 shares of $1.20 cumulative (no par)
convertible preferred stock (convertible into common

im¬

develop the drive to do at home

outlined

have

speakers

Co., Inc., New York City.
&

our

should have the vision.

the dollar situation as of
and
tomorrow,
but I'm

you

by competitive bidding.
Probable bidders: HalStuart & Co. Inc.; Lehman Brothers; First Boston
Corp.; Harriman, Ripley & Co., Inc.; White Weld & Co.
sey,

$12,000,000 bank loans and
redemption of $6,000,000 25-year 3% notes due 1970.

Proceeds will be used to pay
for

Executive Vice-President

build

well.

What

long, you know this as well as I.
But have you sold it to the boss?

preferred stock and 3,000 shares
par value common stock, to be sold at $40
share, respectively, by Frederick Machlin,

—F. Eberstadt &

with

Cuba, have you made
issue of it? Successful overseas
or

Armstrong Rubber Co., West Haven, Conn.
8 (letter of notification)
1,000 shares of 4%%

outshine

first-hand knowledge
and
realistic
appraisal
of
the
an
world situation, can do is take the
selling in the next five years is
lead in holding our foreign trade
going to mean personal selling to
at today's healthy levels.
a greater extent than ever before.
You have the know-how.
You
If
you've been in the business
Mexico

cumulative convertible

stock

the

with Russia.

management has never
allowed you a trip beyond Canada,

March

•

avalanche

retreat

during the next five
this issue of our relations

years

which gave them an

If your

Address—Box 1468, Phoenix,

(letter of notification)

Price—$20

factor will

names.

Co., Inc., New York.

$14

the

It
already dominates our do¬
before the war. mestic as well as our international
They know their representatives political thinking.
And, unless we act fast, it can,
intimately, and a lot of their ulti¬
mate
customers
by
their first during the next five years, come

value common stock to be sold at $14 per share by
James A. Walsh, President.
Underwriter—F. Eberstadt

and

about

market

par

of class A

in¬

into

you

pushed out of a
China, they pour over
are

capitalist system and
call their bigwigs to plot another
coup in some other rich market.

countryside with the diligence and
perseverance

Armstrong Rubber Co., West Haven, Conn.

you

portance

American

Latin

(letter of notification) 50,000 shares of class A

the

decadent

capital stock (par $1) and 5,000 shares of class B capital
(par $1) to be sold in units of 10 shares of class A
and one of class B for $10 a unit.
No underwriter. Pro¬

March 24 (letter of

working capital.

Arizona Warehouse System,

March

frighten

loud-speakers

news

$10,000,000,000 a year level.
Our competition
in Europe, re¬
viving at a rapid rate during the
last few
months, is roving the

stock

Calif.

•

Iran

helping to put
its feet, they call

market like

in every five years.

once

versity Avenue, St. Paul, Minn.

March 20

Feb. 28 (letter of notification) 130,000 shares of common
stock to be offered at par ($1 per
writer.

ceeds for additional

For stated

business.

into

are

will

hope

Securities Now in Registration
All

pour

that

action.

just

average

for

major

every

•

Feb. 27 filed 1,000,000 shares of common stock

you

nation

port business despite the fact that you warmongers and hold feverish
it was rolling along at the highest midnight
meetings
to
scheme
level in its history. A single sales¬ and
plan some move that they

foreign

sufficiently

Moscow, a tight-lipped little
group
of men in the Kremlin
daily scan the news of what you
are
doing to sell your goods

enviable position in almost every

need if you are going
this business intelligently.

businesses.

American

our

Here's what

than

Export

that of
of

demand dropped to $14,-

after

rests

export

you

today.

managers

—

surveys you

ahead to some status above
a stepchild in the majority

years

markets

overseas

are

alert domestic sales manager
to operate. More facts on

any

refuses

opportunity to sell
them a four-point program which
must be adopted quickly if foreign
trade is going to rise in the five

machine

side.

our

the full impor¬
job and of your
their
business.
This
on

showdown with

big enough

efficient to risk

facturers

offers

company

whose gross

output in* thryears right after the
war totaled about $18,000,000. But

man

We can't strengthen our po¬
sition or expand our sales over¬
seas unless our bosses agree to es¬
tablish some of the same kinds of

your

of
apply

set

a
we

home.

meeting, in which our bosses in
the National Association of Manu¬

cannot

cus¬

(4)

selling management in

country

it to

our

with

operate

stable

export

owe

and

prices.

the

there is

why

one

cut out all

ceeded in

no reason

of another

know

much smaller

responsibility

shoulders

that

really

are

business for keeps,

this

peculiar
the

„

around the world.

our

years.

tance

A
on

last year

bring the crisis under con¬
trol again. And with our vast in¬
dustrial
strength, our organiza¬
tional genius, and our ingenuity
can

equal

share of the overseas

Export Managers

000,000 and the company naturally
was forced to cut costs drastically.
What shocked me was to see them

originally planned, we know
that no political shenanigans

limited confidence in our
Doctrine three years ago. If it is ability
to
solve
the
economic
comparable in boldness as well problem of the next five years
with the campaign we successfully rests squarely on the fact that you
waged for three years in Europe, export managers have not yet suc¬
it

price

ranges—according to the in¬

that-the-traffic-will-bear"

next year

will remove en¬
tirely that important prop to our
exports for at least another two

Truman

with

com¬

Peculiar Responsibility of

of surpluses at any price to "all-

know that

Washington

We can't meet foreign

petition

your

ECA aid will be smaller
than

export drive to capture an
sales.

going to be true during
ahead.

much of the five years

dustry—from deliberate dumping

while all

And

plane and handle the job
personal basis.

(3)

speakers.

and we have suf¬

tremendous setback. There

view of the
earlier

of
of

And this is

business was slip¬

their domestic

Today they are pushing a shrewd

ready to do what we do at home:

the point
optimistic

for

Our

feel that

would

executives

these

ping if they failed to supply less
than
15% of the home market.

hop

Export Tiade

but neither need there

it,

despair.

Our Euro¬

competitors need the busi¬
desperately that they will

ness

The Next Five Years
In

stranger

some

Bombay.

Thursday, March 30, 1950

be there ahead of us unless we're

pean

with

cable

page

CHRONICLE

FINANCIAL

COMMERCIAL

THE

(1346)

Expected about April 12.
•

Broad

Street

March 25 filed

—Broad Street

New York
250,00 shares of capital stock. Distributor
Sales Corp., New York. Business—An in¬

vestment company.

Investing Corp.,

Number 4894

Volume 171
•

.Brown

Scott

THE

Packing Co.,

Wilmington,

COMMERCIAL

FINANCIAL

CHRONICLE

Del.

March 21 (letter of notification) 221 shares of preferred

$100 per share, with a bonus of
one share of common stock to accompany each preferred
share purchased. No underwriter. Proceeds for working

(letter of notification)

Capper Publications,
gage 4%

Capital
Common

Lit Brothers

Inc.

United

(EST)

Utah Fuel

Capital
Common

—Bonds

Co., 11

(EST)—

a.m.

Common

——Common

April 11, 1950
Mississippi River Fuel Corp.——*
...Common
Pennsylvania RR., noon (EST)..Equip. Trust Ctfs.
State Loan & Finance Corp...
Debentures

Underwriter

April

Proceeds—To

12,

(The)

Chicago Fair, Chicago, III.
$1,006,000 of subordinated debentures, due
Price—At par.
Proceeds—
For construction, alterations and general administrative
expenses. Business—To hold an exposition in Chicago.

Bonds

—

Development Co, pf

Canada, Ltd
Reading Co., noon (EST)

Notes & Stock
-Equip.Trust Ctfs.
St. Louis-San Francisco Ry.___-Equip. Trust Ctfs.

Underwriter-£-None.

Cincinnati Gas & Electric Co.

18, 1950
Light Co—

Pacific Power &

15, 1950, at $28 per share, at rate of one new
(rights to expire April 7) and
58,000 shares will be sold to officers and employees.
Underwriter—None, W. E. Hutton & Co. headed groups

•

years,.

Proceeds—For constructioif.

White

State¬

Cuddy Mountain Mining Co., Spokane, Wash.
Lfc rch 17 (letter of notification) 1,000,000 shares of com¬
stock to be offered at par (10 cents per share), the
proceeds to complete the purchase of Blue Dog Mine A
Weiser, Idaho, and to develop this mine. UnderwriterExplorers, Inc., Spokane. Office—711 Hutton Building,
Spokane.

mon

Delaware

Power

& Light Co.
(4/5)
232,520 shares of common stock (par
$13.50) to be offered to stockholders of record April 5,
1950, at the rate of one share for each six held, and then
8

Bonds

(S. S.) Dental Mfg. Co.—

.Capital

May 22, 1950

Congratulations, Inc.
March 28 (letter of notification) 400 shares of common
capital stock (par $25) to be offered at public auction
through Adrian H. Muller & Son, 39 Broadway, New
York, on or about April 4. Bid expected to be nominal,
there being no market for this security.
Proceeds—
To go to two selling stockholders.
Office—515 Madison
Avenue, New York City.

March

1950

Gas Co

Iowa Public Service. Co

Colonial

•

April 19,
Public Service Electric

Acceptance Corp., Chicago, III.
March 27 filed 164,560 shares of first series convertible
class A common stock (par $1). Underwriter—Sills, Fairman & Harris, Inc.
Price—$5 per share. Proceeds—For
working capital and to reduce bank loans.

filed

be offered

employees with a maximum purchase of
150 shares per employee.
Rights will expire April 24.
Underwriter
(For unsubscribed shares) to be deter¬
mined by competitive bidding. Probable bidders: W. C.
Langley & Co. and Union Securities Corp. (jointly);
Harriman Ripley & Co., Inc.; Kidder, Peabody & Co.;
White, Weld &Co. and Shields & Co. (jointly); Lehman

for $12 per

Detroit.

share.

—Preferred

Underwriter—B. C, O'Donnell & Co.,

Office—1408 Elwood Ave.

Price—To be filed by amendment. Proceeds—
construction for the company and two sub¬

Tcr finance

Bids—To be received at company's office, 600
St., Wilmington, Del., up to 11.30 a. m. (EST) on

sidiaries.
Market

No underwriter.

Duval Sulphur &

Potash Co., Houston, Texas
shares of capital stock (no par) to
$13.50 per share at the rate
of %ths of a new share for each share held on Feb. 14,
1950.
[The United Gas Corp., owner of 373,557 shares,
or 74.71%
of the outstanding 550,000 shares of Duval
capital stock, has agreed to purchase at the subscription
price any shares of stock not subscribed for by other
stockholders.] Rights will expire March 9. Underwriter
—None, Proceeds—To be used, along with a $2,500,000
bank loan, to provide mining and milling facilities to
mines potash in Eddy County, N. M. Statement effective
Feb. 14.
•

Paso

Natural Gas Co.,

El Paso, Tex.

March 27 filed 65,000 shares of convertible second pre¬
ferred stock, series of 1950, no par value, to be offered
to common stockholders at the rate of one preferred
an unspecified number of common shares held
April 10, Underwriter—White, Weld & Co., New York.
supplied by amendment, along with divi¬
dend rate.
Proceeds—To pay for construction of new

share for
on

Price—To be

San Juan

Business—Investment company.

Exploration

(Western)

Ltd.,

pipe line.

(par
$1). To be sold to 17 subscribers (including certain part*
of Carl M. Loeb, Rhoades & Co., State Street Invest¬

ners

Business—

Elkhorn-Beaverhead Mines Co., Dillon, Mont.

(letter of notification) $200,000 of non-interest

bearing production notes and 200,000 shares of common
stock (par 10c), to be issued in units of $100 of notes
and 100 shares of stock for $100 a unit.
No underwriter.

mine properties.

CONFIDENT] Al

SERVICE

ment

Corp. and State Street Research & Management
Underwriter—None. Proceeds—For general funds.
Business—To develop oil and natural gas properties in
Co.)

SINCE

Western Canada.

Douglas Oil Co. of California
Feb. 3 (letter of notification) 15,000 shares of common
stock (par $1) to be sold at the market price of about
$3.75 per share by Woodrow G. Krieger, President. Un¬
derwriter—Shearson, Hammill & Co., Los Angeles, Calif.
Drewrys Ltd.; U. S. A., Inc., South Bend, Ind,
Feb. 20 (letter of notification) 8,015 shares of common
stock (par $1) to be sold by Carleton S. Smith, President,

for

each

week's "Chronicle."
Garfinkel

(Julius) & Co., Inc.
(letter of notification) 5,000 shares of common
(par 50c) to be sold by Mrs. Dee M. Schmid, Wash¬
ington, D. C., at the'market price of between $19% and
$16% per share. Underwriter—Auchincloss, Parker &
Redpath, Washington.
2

stock

•

General Fuse Co.

(letter of notification) 60,000 shares of com¬
at 50 cents per share.No. underwriter.
purchase of machinery and working capital.
Office—Robert Street, South River, N. J.
stock

mon

Proceeds for

bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Blyth & Co., Inc. and Kidder, Peabody & Co. (jointly);
First Boston Corp.; Union Securities Corp, and
Equitable Securities Corp. (jointly); Shields & Co. and
Salomon Bros. & Hutzler (jointly); Lehman Brothers;
Drexel & Co.; Morgan Stanley & Co.; Harriman Ripley
& Co. Proceeds—To finance construction program. Bids
—To be received up to 11 a.m. (EST) April 4. Statement
The

effective March 22.
Gold Strip Mines,

March 21
mon

stock

Inc., Seattle, Wash.
(letter of notification) 40,000 shares of com¬
to be offered at par ($1 per share).
No

underwriter.

Proceeds

properties in Alaska.
Seattle, Wash.
Granville

Mines

to equip and develop mining
Office—726 Republic Building,

Corp.,

Ltd., British Columbia,

Canada

100,000 shares of Common non-assessable
(par 50c). Price—35c per share. Underwriter—
Proceeds—To buy mining machinery and for
working capital.
Feb. 16 filed
stock

None.

•

of Canada, Ltd.,
Calgary (Alta,) and Montreal, Can. (4/12)
March 22 filed $10,000,000 of notes due 1965, bearing
from 1% to 4% interest between 1952 and retirement
date, and 500,000 shares of $1 par value capital stock
(Canadian currency). Underwriters—Dominick & Dominick and Kidder, Peabody & Co., both of New York, and
James Richardson & Sons, Winnipeg, Canada. Price—To
be filed by amendments. These securities are to be offer¬
ed in units of $1,000 of notes, with a detachable warrant
for 50 shares of capital stock, and 50 shares of capital
stock. Proceeds—For general funds. Business—Develop¬
ing oil and natural gas resources in Alberta, Saskatche¬
wan and possibly British Columbia.
Great Plains Development Co.

Co., Jacksonville,

May 27 filed 620,000 shares of class A participating ($1
par) stock and 270,000 shares (25c par) common stock.
Offering—135,000 shares of common will be offered for
-subscription by holders on the basis of one-for-two at.
25 cents per share. Underwriters—Names by amendment
and may include Blair, Rollins & Co., Inc.; John J. Ber¬
gen & Co. and A. M. Kidder & Co. on a "best efforts
basis." Price—Par for common $5 for class A. Proceeds
—To complete an ocean ferry, to finance dock and term-;
inal facilities, to pay current obligations, and to provide
working capital.
& Co., Inc., N. Y. City (4/1)
notification) 10,000 shares of class A
common stock and 2,000 shares of class B common stock
to be offered at $20 and $50 per share, respectively./
Proceeds will be used to place first mortgage loans on
homes and for other realty transactions.
Office—209
West 125th Street, New York 27, N. Y.
Gundel

SEIKO
PRINTING CO.; Inc.
80 SOUTH ST., NEW YORK 7, N.Y.

(J. B.)

March 8 (letter of

(.C

(4/4)

March 3 filed $15,000,000 of 30-year first mortgage bonds
due 1980.
Underwriter—To be decided by competitive

Florida

Jan. 30 filed $10,000,000 of notes, due 1960, with interest
at 1% in the first year, 2% in the second year, and

3% thereafter, and 249,993 shares of capital stock

Fitzsimmons

Gulf Atlantic Transportation

City
underwriter.
Open-end diversified investment company.

Proceeds to develop

Toronto, Canada

Expected in April.

Elfun Trusts, New York
March 24 filed 50,000 units.
No

•

Dome

•

March 20

underwriter.

Corp.
March 16 (letter of notification) stock purchase warrants
exercisable prior to July 31,1950 entitling holders there¬
of to purchase a total of 30,000 shares of common stock
(par $1) at $3 per share. Proceeds—To be added to
working capital. Office—4002 So. Clay Street, Littleton,
Colo. Correction—This corrects item published in last

be offered to stockholders at

seven

Fox- Metal Products

Dec, 21 filed 375,000

April 5.
Dodge & Cox Fund, San Francisco, Calif.
March 28 filed 25,000 shares of beneficial stock.

[At Feb. 10, 1950, 12,943 shares of class
A stock had been issued in exchange for 1,849 Roberts
stock.] Any additional shares not needed for the ex¬
change were to be sold at $10 per share, to stockholders,
officers and employees. No underwriter. Proceeds—Fori
working capital.

•

Drewrys Ltd., U. S. A., Inc., South Bend, Ind.
March 1 (letter of notification) 9,000 shares of common
stock to be sold at the market price by Alfred Epstein.

—

Brothers.

rate

Georgia Power Co.
-Bonds

share for each five held

ment effective March 15.

the

April

March

March 23

April 13, 1950
Delaware, Lackawanna & Western °RR.
Noon (EST)
Equip. Trust Ctfs.

Feb. 24 filed 556,666 shares of common stock (par $8.50),
of which 498,666 will be offered to stockholders of record

Stores, Ltd., Los Angeles, Cal.
(letter of notification) 30,000 shares of class A
stock, of which 22,778' were issuable in ex¬
change for 3,254 shares of Roberts Public Markets, Inc.

common

Feb.

1950

Boston Edison Co

March 24 filed

•

Common

Diego Gas & Electric Co.—

Great Plains

1960.

April 10, 1950
Hastings Manufacturing Co.—

Chemical Crops, Inc., Morrill, Neb.
March 20 (letter of notification) 170,000 shares of com¬

(par $1). Price—$1.50 per share,

a.m.

Fitzsimmons

Dec. 16

share of Roberts.

Wheeling & Lake Erie RR

•

Co., Denver, Colo.
build oil seed processing plant.

Preferred

Debentures

NationalMotor .Bearing Co., Inc

by amendment. Expected mid-April.

Bowers

Representatives, Inc.April 5, 1950

San

•

Debentures
noon

Delaware Power & Light Co.

Central Arizona Light & Power Co. *
March 21 filed 125,000 shares of common stock (par $5)
and 40,000 shares of cumulative preferred stock (par
$50).
Underwriters—First Boston Corp. and Blyth &
Co., Inc.
proceeds—To pay current construction loans
and for further construction costs.
Price—To be filed

—Robert, D.

vestment company.

10-year first

11:30

March 27

—Bonds

Tennessee Gas Transmission

6 five-year first mort¬

Equity Fund, Inc., Seattle, Wash.
filed 500,000 shares of capital stock.
Under¬
writer—Pacific Northwest Co., Seattle.
Business—In¬
.

(EST)—Bonds & Pfd.
Southeastern States Telephone Co
Common

$100, $500 and $1*Q00. Underwriter—None. Proceeds—
To redeem outstanding bonds and improve facilities.
Office—Eighth and Jackson Streets, Topeka, Kan.

stock

Equitable Securities Co., Indianapolis, Ind.
(letter of notification) $100,000 of 5% sinking
fund debentures.
Underwriter—City Securities Corp.,
Indianapolis. Proceeds—For working capital.
•

Common

April 4, 1950
Georgia Power Co., 11 a.m. (EST)

mortgage 5% bonds. Price—At par, in denominations Of

mon

Pfd. & Com.

April 1, 1950
Gundel (J. B.) & Co., Inc.

Metropolitan Edison Co.,

bonds and $2,000,000 of series 7

(par $10) to be offered at par to stockholders at
seven new shares for each eight shares held.
No underwriter. Proceeds to buy oil properties and for
operating costs. Office—403 Republic Bank Building,
Dallas, Texas.
Feb. 24

Indefinite.

March 20 filed $2,000,000 of series

Common

March 31, 1950
Iowa Electric Light & Power Corp

Canam Mining Corp., Ltd., Vancouver, B. C.
Aug. 29 filed 1,000,000 shares of no par value common
stock.
Price—800,000 shares to be offered publicly at
80 cents per share; the remainder are registered as "bonus
shares." Underwriter—Reported negotiating with new
underwriter.
Proceeds—To develop mineral resources.
Statement effective Dec. 9.

Corp

Palisades Nepheline Mining Co., Ltd.__
Trad Television Corp

Investment Corp., Los Angeles, Calif*

20,000 shares of com¬
mon stock to be offered at par ($10 per share).
No un¬
derwriter. Proceeds to complete drilling oil well. Office
•—1711.S. Kingsley Drive, Los Angeles, Calif.

stock

March 30/1950
Hoffman Radio

March 17

Empire Oil of Texas, Dallas, Tex.

the rate of

capital.
Calnev

March 10 (letter of notification) 13,868 shares of capital

NEW ISSUE CALENDAR

stock to be offered at

•

(1347)

Gyrodyne Co.

of America,

Inc.

(letter of notification) 150,000 shares of com¬
stock, class A (par $1) and 18,000 shares of 5%

March 3
mon

cumulative participating preferred stock (par $4). Price
—Preferred at par and class A at $1.50 per share. Under¬
i.oixfon Associate

MtCOKMIOC and HENDERSON, Inc,

//', YTbe LEAGRAVE PRESS, Ltd,

writer—Jackson & Co., Boston, on a

"best efforts" basis.

Continued

page

Continued from page
Proceeds—For

model,

York City.

capital
share). Proceeds for
the manufacture and sale of a patented aviation spark
plug.
No underwriter.
Office—2636 No. Hutchinson
stock to be offered at par ($1 per

•

III.
'

(letter of notification) 2,000 shares of com¬
mon stock (par $1).
Price—$20 per share. Underwriter
Paul H. Davis & Co. of Chicago.
13

March
of

series

and

bonds

and

other

Telegraph Co.

capital

stock,

the rate

shares; rights

Underwriter—None.

are to expire April
Price—At par ($1J)0 per share).

Telephone & Telegraph Co., and for corporate purposes,
including construction.

Expected May 22.

for

Proceeds—To pay indebtedness to its parent, American

•

Industrial Finance Corp.
2,500 shares of common
stock (par $20) and $100,000 of 7% certificates of indebt¬
Muskogee

(Okla.)

March 17 (letter of notification)

Telephone Co., Jefferson, Iowa
March 22 (letter of notification) $131,000 of series D
3V4% first mortgage bonds due 1970.
Underwriter—
Wachob-Bender Coip., Omaha, Neb. Proceeds—To retire
A

183,918

for each five

one

28.

Jefferson

series

filed

offered to stockholders of record March 27 at

edness.

underwriter.

will be used

Proceeds from

liquidate demand notes.

common

stock

Certificates of

indebtedness needed for loans in excess of surplus and

corporate

purposes.

Hastings Manufacturing Co. (4/10)
March 20 filed 300,000 shares of common stock (par $2).
Underwriters—F.

Eberstadt

Co.

New

York

and

Watling, Lerchen & Co. of Detroit. Price—To be filed
by amendment. Proceeds—To Aben E, Johnson (Presi¬
dent) and 52 other stockholders.
4

Helio Aircraft

Corp., Norwood, Mass.

sold

units

four

shares and one
No underwriter.
Pro¬
ceeds
helioplane prototype.
Office—Boston Metropolitan Airport, Norwood, Mass.
to

preferred

share for $25 per unit.
to
build
a
four-engine

common

Hoffman

Radio Corp. (3/30)
50,000 shares of 66% cents par value com¬
mon stock.
(In addition, warrants outstanding for pur¬
chase of 45,000 shares of common stock to be purchased
at $4 per share may now be exercised.)
The 50,000
block is being sold by Frances E. Hoffman and Jane
Leslie Hoffman, wife and daughter of H. L. Hoffman,
-President" of the company.
Underwriters—William R.
Staats Co., Los Angeles, and Paul H. Davis & Co., Chi¬
cago.
Price — To be* filed by amendment. Proceeds —
For working capital. Expected about March 30.

March 9 filed

•

Home Loan &

Investment Co.,

Grand Junction,

Colorado

notification)- $100,000 of 4% deben¬
par.
Underwriter—None. Proceeds-*~For working capital. Office—119 N. 5th Street,
March 20 (letter of
ture

Price—At

notes.

Grand Junction, Colo.

Howe Sound Co.
Feb. 28 filed 76,983 shares of

4J/2% cumulative preferred
stock, par $50 (convertible into common stock on or be¬
fore April 1, 1955), offered first to common stockholders
of record March 20 in ratio of one preferred share for
each six common shares held. Rights will expire April 4,
1950. Price—At par.

Underwriter—Union Securities Corp.

principal underwriter* Proceeds—To be used to complete
the development of the Blackbird cobalt mine in Idaho.
Hytron Radio & Electronics Corp., Salem, Mass.

March 10 filed 200,000 shares of 6% cumulative convert¬
ible preferred stock ($8 par value) and 440,000 shares of
common
mon

stock

(par $1), of which 40,000 shares of com¬

stock will be sold by four officers of the company.

Underwriters—Barrett Herrick & Co., Inc., New York,
and

Sills, Fairman & Harris, Inc., Chicago.

Price—$8

for the

preferred; the common stock price to be filed
by amendment. Proceeds—To finance expansion of Hy¬
tron and its subsidiaries.

Expected second

third week

April.
21

filed

March 24 filed 60,000 shares of capital stock. Underwriter

$10,000,000 first mortgage bonds due

1980 and

300,000 shares of cumulative preferred stock
(par $50). Underwriters—Merrill Lynch, Pierce, Fenner
& Beane for preferred not needed to exchange out¬
standing 200,000 shares of 4.70% preferred stock (on a
share-for-share basis plus
cash,
about April 5
to
April 19),
Underwriter
for
bonds
to
be
deter¬
mined by competitive bidding; probable bidders include;

Halsey, Stuart & Co. Inc.; White, Weld & Co. and Mer¬
rill Lynch, Pierce, Fenner & Beane (jointly); Harriman
Eipley & Co., Inc., and Glore, Forgan & Co. (jointly);
Union Securities Corp.; Kuhn, Loeb & Co., and Lazard
Freres & Co. (jointly); The First Boston Corp.
Price—
for preferred to be filed by

amendment. Proceeds—To
short-term bank loans made for construction.
Ex¬
pected in April.

pay

Inter-Mountain Telephone Co.

March 17 filed 129,000 shares of capital stock (par

Underwriters—None.

expire April 20.

•

ing capital and to pay
tional Bank, Chicago.

Proceeds—For additional work¬

Lincoln

Telephone

loan owing to the LaSalle Na¬

Telegraph

Co.,

Lincoln,

Nebraska

March 2

(letter of notification)

15,000 shares of com¬

stock (par $16.65%). Price—$20 per share. Under¬
writer—None. Offered—To common stockholders of rec¬
mon

ord Jan. 9, 1950; rights to expire April 3, 1950. Proceeds
—For working capital and expansion.

Lit

Brothers, Philadelphia, Pa. (4/4)
March 13 filed $6,000,000 sinking fund debentures (subr
ordinated) due March 1, 1970. Price—To be filed by
amendment.
Underwriter—Group to be managed by
A. G. Becker & Co., Inc. Proceeds—To retire $5,987,000
of 6% preferred stock. Expected about April 4.
Lowell Electric Light Corp.,

Dec.

Lowell, Mass.
shares of capital stock (par $25)
offered at $35 per share to common

30 fiied 55,819

Offering—To be

ttockholders at the rate of one new share for each three
shares held.
bank

Underwriter—None,

Proceeds—To repay

lo^ns, for construction and to make further im¬

provements.

Lyttoir (Henry C.) & Co., Chicago, III.
(letter of notification) 7,000 shares of common
stock
(par $1). - Price—$8 per share. UnderwriterStraus & Blosser, Chicago* 111. Proceeds—To two selling
March 1

McDonnell Aircraft Corp.* St. Louis, Mo.
March 23 (letter of notification) $100,000 worth of com¬
mon stock (par $1) and warrants to purchase this stock

at $10 peri share to be sold at the market price of about
$25 per share by J. S, McDonnell, President of the com¬

Underwriters—-Merrill Lynch, Pierce, Fenner &
Beane; Smith, Moore & Co.; G. H. Walker & Co., St.
Louis; and Smith, Barney & Co., New York,

Metropolitan Edison Co.

(4/4)

mined by competitive bidding.
Probable bidders: Drexel
& Co.; Harriman Ripley & Co. and Union Securities

(jointly); Carl M. Loeb, Rhoades & Co.; Halsey,
& Co. Inc. (bonds); Kidder, Peabody & Co.;
White, Weld & Co. (bonds); Lehman Brothers (bonds);
Kuhn, Loeb & Co. (bonds); Smith, Barney & Co. and
Goldman, Sachs & Co. (jointly on preferred); Glore,
Forgan & Co. and W, C. Langley & Co. (jointly on pfd.).
Proceeds—For

for

construction

and

capital expenditures.
pected at noon (EST) on April 4.
past

reimburse treasury

Bids—Tentatively

ex¬

$50 per share

on a

one-for-five basis.

Clark, Dodge & Co. Proceeds—To
additional working capital.

pay

Underwriter—

notes and for

Miller

certificates.

Services,

Inc.

Underwriter—

Co., Inc.
(letter of notification) 1,000 shares of 6%
preferred stock at par ($100 per share), Un¬
derwriter—George D. B. Bonbright & Co., Binghamton,

March

Iowa

March

Electric Light & Power Corp.
(3/31)
13 filed 108,834 shares of cumulative preferred

etock

(par $50) and 925,000 shares of common stock
(par $5). These new stocks, along with cash, will be
offered in exchange for the outstanding 49,290 shares
of series A 7% preferred stock, 15,605 shares of series B
6%% preferred stock and 43,939 shares of series C 6%
preferred stock. All unissued shares will be offered
publicly with a 10-day standby.
Underwriters—The
Firet Boston Corp., New York, and G. H. Walker & Co.,
Providence, R. I.t Proceeds—Will be used to redeem
unexchanged shares/of old preferred stock at $102.50
per

sh^re.

Expected /March 31.

N. Y.

Business—Invest¬

ment company.

Paine,

Webber,

Memorial Drive,
•

Proceeds—To assist in

Jackson & Curtis, Boston.
Cambridge, Mass.

Office—70

National

Sugar Refining Co., Denver, Colo.
(letter cf notification) $300,00p of first mort¬

March 23

gage serial bonds, series of 1950.
Price—At $l,C0O prin¬
cipal amount each.
Underwriter—Peters, Writer &
Christensen, Inc., and Boetteher & Co., both of Denver.
Proceeds—To retire balance of

•

Norlina Oil Development
28 filed 600 shares of

March

Co., Washington, D. C,
capital stock (no par) to

be offered at $5,000 per share.
No underwriter. Pro¬
ceeds to be used to explore and develop oil and mineral
leases.

Northwest Cities

•

Gas Co., Walla Walla, Wash.
(letter of notification) 21,370 shares of con¬
vertible preferred stock (par $5). Price—$10 per share.
Underwriter—None.
Proceeds—To
convert
plant in
March

Eugene, Ore., to propane gas and to improve mains and
facilities, as well as for working capital.
•

Norwich

(N. Yi)

Pharmacal Co.

March 24*filed

50,000 shares of series A convertible pre¬
ferred stock (par $30) to be offered to common stock-0
holders at the rate of one preferred share for each 16
common shares held. Underwriter — Hornblower &

Price—To be filed by amendment.
$500,000 chemical plant and ware¬
Norwich, N. Y., and to expand

Weeks, New York.
Proceeds—To build

house facilities north of

business.

Gas & Electric Co.

March 6 filed 97,900 shares common
to be

stock (par $20) to

offered stockholders of record on or about April

5, 1950, at the rate of one for each 10 now held. Rights
will expire in about 15 days after mailing of warrants.
Standard Gas & Electric Co., owner of 550,041 shares,

plans to subscribe to the 55,004 shares to which it is
Underwriter—No underwriter, but any NASD

entitled.

helping a stockholder with a subscription will
25 cents per share.
Price—To be filed by
amendment. Proceeds—For construction.
member

paid

•

Orchards

Telephone Co.* Orchards, Wash.
(letter of notification) 500 shares of common
par ($100 per share).
Underwriter—
Proceeds—To modernize plant.

March 16

Price—At

stock.

None.

Pacific Gas

& Electric Co.

stock (par $25)
stockholders of record March
14 at $30 per share on the basis of one new share for
each five shares held.
Rights will expire April 5,
Underwriters—Blyth & Co., Inc., heads group of about

Feb. 23 filed 1,656,156 shares of common
offered initially to common

200 investment firms.

struction program.

March

Proceeds—To finance in part con¬

Statement effective March 14.

1980.

(4/18)

of first mortgage bonds due
Underwriters—To be determined by competitive
filed $9,000,000

bidding.

Probable bidders: Halsey, Stuart & Co. Inc.;

Kidder, Peabody & Co.; W. C. Langley & Co. and The
First Boston Corp. (jointly); Union Securities Corp.,

Equitable Securities Corp. and Salomon Bros. & Hutz(jointly); Blyth & Co., Inc., White, Weld & Co. and
Harris, Hall & Co. (Inc.)
(jointly); Carl M. Loeb,
Rhoades & Co.; Lehman Brothers. Proceeds—To be used
to

pay

off 2%% promissory notes held by Mellon Na¬
payable May 1, 1950.

tional Bank & Trust Co. and

acquisition of 1216 shares

Pacific

Telephone & Telegraph Co.
shares of common stock (par $100)
be offered common and preferred stockholdersOof rec¬

Feb. 23 filed 814,694

Mississippi River Fuel Corp.

(4/11)

March 21 filed 245,708 shares of common stock (par $10)
to be offered first to common stockholders of record

ord March 21,

April 4,

Price—At par.

1950, in the ratio of

one

share for each four

held; rights to expire April 24, 1950. Price—To
by amendment. Underwriter—Union Securities
Corp. will head group. Proceeds—To be used to retire
$7,250,000 bank loans and balance applied toward con¬

be filed

shares held;

pay
can

1950 at the rate of one share for each six
rights expire April 21. Underwriter—None.
Proceeds—For Construction and to re¬

bank loans made for construction purposes. Ameri¬
Telephone & Telegraph Co., parent, owns 3,732,493
or 91.75% of the 4,068,165 common shares out¬

shares,

struction costs.

standing, and 640,957 shares, or 78.17% of the 820,000
shares
of
6%
preferred stock.
Statement effective

•

March

Mohawk Business Machines Corp.
March 21 (letter of notification) 58.612 shares of com¬
mon stock (par 10c).
Price—$1 per share. Underwriters

—Jacquin,, Bliss & Stanley, 44 Wall Street, New York
City. Proceeds—For working capital., Office—743 Fifth
Avenue, New York, N. Y.
«
v
*
-

;

outstanding note and
outstanding second mortgage income bonds.
an

ler

(Walter R.)

of company's common stock.

amount

Pacific Power & Light Co.

stock offered to common stockholders of record March 17

face

(letter of notification) 4,000 shares of common
offered at the market price for the
account of Clara A. Coolidge and others. Underwriter—

Corp.

Stuart

Cambridge, Mass.

Jan. 20 filed $7,000,000 of first mortgage bonds, due 1980,
and 30,000 shares of $100 par value cumulative Referred
stock (par $100).
Underwriters—Names to be deter¬

(4/5)

stock (par $1), to be

Oklahoma

•

Cumulative

Diversified

Feb.

stockholders.

Syndicate of America, Inc.,
Minneapolis* Minn.
March 28 filed $13,000,000 of series 15 and
$46,000,000
20

National Research Corp.,

March 20, (letter of

for unsubscribed stock.

Bearing Co., Inc.

which 87,000 shares are for account of

efective March 22.

Kropp Forge Co.
notification) 100,000 shares of com¬
mon stock (par 33¥3 cents) to be offered first to stock¬
holders of record March 22,1950, at the rate of one share
at $2.37V2 for each seven shares held.
Underwriter—
Blair F. Claybaugh & Co., New York, at $2.50 per share

Motor

$1), of
selling stockhold¬
ers. Underwriter—Blyth & Co., Inc., San Francisco. Price
—To be supplied by amendment. Proceeds—To be used
to pay off outstanding loans. Expected April 5.

If unsub¬

series

National

scribed stock exceeds 1% of the total, United Light may
consider competitive bids on this balance,
Statement

Investors

company.

Rights

acquired by Southern Bell Telephone & Telegraph Co.
and Chesapeake & Potomac Telephone Co.)
Under¬
writers—Group of six headed by Courts & Co. PriceTo be supplied by amendment. Proceeds—To be used
to
Investors

Business—An investment

stock for each five shares of United stock held.

Middlesex Water Co., Newark, N. J.
Feb. 9 (letter of notification) 5,200 shares of common

•

Mutual Fund of Boston, Inc.

—Russell, Berg & Co., Boston.

March 20 filed 95,000 shares of $10 par common stock to
be offered to holders of record March 31 in the ratio of
one share for each two shares held.
(42,776 shares to be

reduce short-term bank borrowings outstanding.

•

to be offered by United Light & Rys. Co., Chicago, at
$12 per share to United Light stockholders of record
March 23 on the basis of three shares of Kansas City

pany.

Illinois POwer Co.

March

capital stock.

Kansas City Power & Light Co.
March 3 filed 1,904,003 shares of common stock (no par)

are

March 22 (letter of notification) 9,000 shares of preferred
stock (par $1) and 9,000 shares of common stock (par $1)

bank loans and for construction.

Street, Philadelphia 33, Pa.
Hammond Instrument Co., Chicago,

Mountain States Telephone &

(5/22)

stock
(par $100). Underwriter—To be determined by competi¬
tive bidding.
Probable bidders; A. C. Allyn & Co.;
Harriman Ripley & Co. and Merrill Lynch, Pierce, Fen¬
ner & Beane (jointly); Kidder, Peabody & Co* and Blyth
& Co.
(jointly); Equitable Securities Corp.; Lehman
Brothers; White, Weid & Co.
Proceeds—For payment

Hahit Aviation Products, Inc., Phila., Pa.
March 9 (letter of notification) 100,000 shares of

Thursday, March 30, 1950

CHRONICLE

Feb. 21 filed 50,000 shares of cumulative preferred

Office—

etc.

FINANCIAL

Public* Service Co.

Iowa

development

80 Wall Street, New

March

COMMERCIAL

THE

(1348)

•

14.

Packard-Bell

Co., Los Angeles, Calif.

March 20 (letter of
stock (par $1) to

notification) 9.500 shares of common
be issued under warrants held by
Springs, Calif., at $7.50
share. Office—12333 W. Olympic Blvd.

Howard
per

Thomas, Jr.,. Palm

Volume

THE

Number 4894

171

Palisades
Feb. 21

Nepheline Mining Co., Ltd. (3/30)
1,000,000 shares of capital stock (par $1
funds).
Price—40 cents per share.
Under¬

filed

Canadian

writer—F. W. Macdonald & Co., Inc., New York . Pro¬
ceeds—For mining costs.
Business—Mining nepheline

syenite deposits. Statement effective March 27.
Pennsylvania
New
March

Southern

Gas

Westfteld,

Co.,

Jersey

15,761 shares of com¬
(estimated at $4 per share)
for account of R. Gould Morehead, Treasurer.
Under¬
writer—Bioren & Co., Philadelphia.
•

(letter of notification)

stock

mon

the

market

Plumbic Mines

Co., Salt Lake City, Utah
(letter of notification) 302,500 shares of com¬
mon capital stock (par 20 cents), of which 200,000 shares
will be offered at 12% cents per share. Underwriter—
Cromer Brokerage Co., Salt Lake City.
Proceeds—To
explore and develop mineral land in Piute County, Utah.
Office—39 Exchange Place, Salt Lake City, Utah.
March 23

Power Petroleum

Ltd., Toronto Canada
April 25 filed 1.150,000 shares ($1 par) common of which
1,000,000 on behalf of company and 150,000 by New York
Co.. Ltd.-

Price—50

cents

per

share.

Underwriters—

S. G, Cranwell & Co., New York, Proceeds—For admin¬
istration
expenses
and drilling.
Statement effective
June 27,
•

Preferred Fire

Underwriters, Inc., Seattle,

COMMERCIAL

State Loan &

FINANCIAL

CHRONICLE

15 filed

$4,000,000

pected about April

of 5%

Prospective Offerings
American Can Co., New York, N. Y.
.March 3

announced company is considering a program
long-term financing for working capital. Probable
underwriters:
Morgan Stanley & Co.; Clark, Dodge &
Co.; F. S. Moseley & Co.

11.

Sudore Gold Mines Ltd., Toronto, Canada
June 7 filed 375,000 shares of common stock. Price—$1

American Gas & Electric Co.
March 3 announced company plans in May to sell $27,-

share (U. S. funds). Underwriter — None. Proceeds
—Funds will be applied to the purchase' of equipment,
road construction, exploration and development.
per

000.000 of serial notes (to mature either in l-to-15 years
or
l-to-20 years). Probable bidders: Halsey, Stuart &

•

Co. Inc.; Union Securities Corp.; Salomon Bros. & Hutz-

March

ler;

Supreme Ferlite Corp., Phoenix, Ariz.
17 (letter of notification) 125,000 shares of (no
par) common stock at $20 cents per share. No under¬
writer. Proceeds for manufacturing and operating purposse. Office—5120 N. 13th Place, Phoenix, Ariz.

•

21 filed 100,000 shares ($10 par) common stock.
Offering—These shares are to be offered to holders of

•

writer., Proceeds to organize the Preferred Fire Assoc¬
iation. Office—1020 Virginia St., Seattle 1, Wash.

will

•

.Public Service Electric & Gas Co.

(4/19)

Underwriters-r-Names to be determined by com¬
petitive bidding., Probable bidders: Halsey, Stuart &
1980,
Co.

Stanley. & Co, and Drexel & Co.
(jointly); Kuhn, Loeb & Co. and Lehman Brothers
(jointly); Firist Boston Corp.; Union Securities Corp.
and White, Weld & Co. (jointly). Proceeds—To redeem
a
like amount of first and refunding mortgage bonds,
3%% series, due 1966, at 103%. Bids—Expected to be
received on or about April 19.
Inc.;

Morgan

•

Republic Investors Fund, Inc., New York
March 29 filed 2,000,000 shares of common stock.
eral Distributor—Leffler

Corp., New York.

Gen¬

Business-

•

Rough Creek Placer Co.,. Inc.,

Ketchum,

Idaho

March 13 (letter of notification) 140,000 shares of $1 par
value common stock at par ($1 per share). No under¬
writer.
Proceeds to explore and mine placer claims.

(Calif.) Gas & Electric Co. (4/5)
March 21 filed 500,000 shares of common stock (par $10).
Underwriter and Price—To be filed by amendment. Tra¬
ditional underwriter: Blyth & Co., Inc. Proceeds—To re¬
tire $4,800,000 of bank loan notes incurred for construc¬
tion, to reimburse the company's treasury for construc¬
tion expenditures, and for further construction.

ulative

stockholders

the

rate

one

for

each

five

held.

Price—To be filed by amendment.
Underwriters—Chas.
W. Scranton & Co. arid Day, Stoddard & Williams, Inc.
Proceeds—To increase

company's capital and surplus.

Sentinel Radio Corp.,

Evanston, III.

Feb, 15 (letter of notification) 40,000 shares of common
stock (par $1). Price—$6.50 per share. Underwriters—

Sulzbacher, Granger & Co., New York.
working capital.

Proceeds—For

Service Finance Co., Los Angeles, Calif.
(letter of notification) 65,000 shares of common
stock.
Price—Par ($1 each).
Underwriter—Depipsey

Dec. 19

Tegeler & Co., Los Angeles.
Proceeds—For working
capital.
Office—607 S. Hill Street, Los Angeles.
South Carolina

Electric & Gas Co.

Nov. 22 filed

$22,200,000 first and refunding mortgage
bonds, due 1979.
Underwriter—Names by amendment
(probably Halsey, Stuart & Co. Inc.; Kidder, Peabody &
Co.; The First Boston Corp.; Union Securities Corp.).
Proceeds—To redeem a like amount of outstanding
first mortgage 3% % and 3% % bonds.
Expected in April.
Southern New

preferred

stock

(no

par),

with

rights, to

debentures must first be approved by RFC,

•

England Telephone Co.

$25) to rie offered common stockholders of record March
28,1950, at the rate of one new share for each seven held.
Rights will expire April 21, 1950.
Underwriter—None.
Price — At par.
Proceeds — To repay advances from
American Telephone & Telegraph Co. and for further

Corp. (3/30)
March 23 (letter of notification) 600,000 shares of com¬
mon stock (par lc).
Price—35 cents per share. Under¬
writer—Tellier & Co., New York. Proceeds—For work¬
ing capital, etc.,
of

Honduras,

Inc.,

(letter of notification) 150,000 shares of com¬
(par 50 cents). Price—$2 per share. Under¬
writer—Willis E. Burnside & Co., Inc., New York City.
Proceeds—To pay indebtedness and for general corpo¬
rate purposes.
Officer-North American Building, Wil¬
mington, Del. Expected in April.

Telephone Corp., Vaslion, Wash.
March 9 (letter of notification) $49,000 first mortgage
5% serial and sinking fund bonds at $1,000 per bond,
plus accrued interest from Nov. 1, 1949. Underwriters—
Wm. P. Harper & Son & Co. Proceeds—To be used for
telephone equipment and other corporate needs.

State Bond & Mortgage Co.,

New Ulm, Minn.

Feb. 27 filed $500,000 of series 1305 investment certifi¬

cates; $1,000,000 of series4207-A accumulative savings
certificates^ and $10,000,000? of Series 1217-A accumula¬
tive savings certificates.1

No-underwriter: An investment

company..

•

Whitehall Fund,

Inc., New York

standing warrants through Nov. 1, 1952 at $1 per share.
*

Light Co., Manitowoc, Wis.
March-24 (letter of notification) 886 shares of common
stock; 'Price^-At par ($100 per-share).
Underwriter—
Kalman:&.Co;, Jnc.,'St. Paul. Minn. Proceeds—To* buy
outstanding-capital stock of Wausau Gas Co.
•

Wisconsin Fuel &

will sell from time

notified SEC

time, during a three months'

Illinois stock.
Central States
March 1 it
'

was

Electric Corp.

announced that under an amended plan

reorganization it is proposed to issue to holders of all
preferred stock for each old share the right
to buy a unit consisting of eight shares of new common
stock and $14 principal amount of new 4V2% income de¬
bentures for a package price of $18. The common stock,
except for approximately 4,600,000 shares held by Harri¬
son Williams and associates, would be offered the right
of

classes of 6%

buy a unit of one new common
income debentures for a package

share and $1.75 of new
price of $2.25 for each

The issue of new stock and
debentures would be underwritten by Darien Corp. and

five common shares held.

banking group headed by Hemphill Noyes, Graham,
Co., Shields & Co., Blair, Rollins & Co., Drexel
& Co. and Sterling Grace Co.
a

Chicago & Western Indiana RR.
Jan. 31 reported company will probably issue in the near
future some bonds to refund the 4% nonmailable con¬
solidated

Corp.

March 20 filed 300,000 shares of common stock (par $1);
also 112,000 shares to be reserved for exercise of out¬
Statement to be withdrawn.

Light Co.

Parsons &

March 25 filed 10,000 shares of capital stock. Distributor
—Broad Street Sales Corp., New York. Business — An
investment company.

Wilcox-Gay

Illinois

period, commencing March 20 on or off the New York
Stock Exchange, its holdings of 7,314 shares of Central

Welex Jet Services, Inc., Fort Wayne, Tex.
March 20 (letter of notification) 2,500 shares of common
stock (no par). Price—At market (about $16 per share)

Sta-Kleen

Bakery, Inc., Lynchburg, Va.
March 20 (letter of notification) 3,375 shares of common
stock to be sold at $11 per share by five persons. Under?
writer—Scott, Horner & Mason, Inc., Lynchburg.

Central

March 10 Commonwealth & Southern Corp.

•

For general corporate purposes.

$1).
Co., Chicago.
Price—
To be supplied by amendment. Proceeds—From 65,000
shares go to construction program of company; remain¬
ing shares are being sold for account of Allied Syndi¬
cate, Inc of Wilmington, Del. Expected April 4.
Republic

Hudson Gas & Electric Co.

program, estimated to cost approximately
Financing may consist of first mortgage
bonds and preferred stock. Probable underwriters for
bonds: Kidder, Peabody & Co. and Estabrook & Co.

George J. Martin Co., New York.
Proceeds—For addi¬
working capital.
Business—Assembles a coin
operated combination television and phonograph. Office
—701—7th Avenue, New York, N. Y.

Underwriter—Central

(4/4)

authorize the

$24,100,000.

tional

March 15 tiled 114,828 shares of common stock (par

construction.

1.000,000 shares of a new preferred stock

construction

Videograph Corp., N. Y. City
(letter of notification) 300,000 shares, of commqn
(par 10c).
Price—$1 per share. Underwriter-

(par $1). Price—35 cents per share. Underwriter—None.
Proceeds—Exploration and development work.

Central

stock

Mines, Ltd.,
Vancouver, B. C., Canada
filed 800,000 shares of common capital stock

gas.

financing

March 15 reported that the company may issue $19,100,000 of new securities to provide funds for its 1950-1952

Feb. 2

natural

(par $100), 505,000 shares of which can be issued at any
time.: Plans are being formulated for the issuance this
year, if market conditions ere considered satisfactory, <jf
an initial series of this new preferred stock which may
be convertible into common stock. Net proceeds would
be used in part for expansion of the business, including
additional production facilities.
Probable underwriters;
Dillon, Read & Co. Inc.; Morgan Stanley & Co.

Vashon

Feb.

Corp. of America
stockholders will be asked

creation

Representatives, Inc. (4/4)
(letter of notification) $300,000 10-year 6%%
debentures due April 4, 1960. Price—At par. Underwrit¬
ers—None. Proceeds—For development of financing for¬
eign shipments. Ofifce—250 Park Avenue, New York,
N. Y. Offering—Expected April 4.

Western Uranium Cobalt

4 on approving

Celanese

April

by Mr, and Mrs. Ramsey C. Armstrong. Under¬
writers—Laird & Co., Wilmington, Del.; Barron McCulloch and William N. Edwards &,Co., Forth Worth, Tex.

manufactured

Carolina, Clinchfield & Ohio RR.
4 reported company planning sale of $3,885,000
mortgage bonds. Probable bidders: Halsey, Stuart & Co.
Inc.; First Boston Corp. and Kidder, Peabody & Co.
(jointly); Dick & Merle-Smith; R. W. Pressprich & Co.;
Harriman Ripley & Co. arid Drexel & Co. (jointly)*
Proceeds to pay notes due to Louisville & Nashville RR.'

Wilmington,

to be sold

from

Feb.

stock

March

conversion

plans.

March 16

mon

Stockholders will vote May

Westinghouse Electric Corp.
March 2 filed 500,000 shares of common stock (par
$12.50), to be offered to employees under company's
employee stock plan. Underwriter—None. Proceeds—

•

cost

Trad Television

Mines

one-for-four basis and may be under¬

Co., Inc. and F. S. Moseley & Co,
Blyth & Co., Inc.
Moseley & Co. (jointly); Merrill Lynch, Pierce;
Fenner & Beane; Lehman Brothers; Kuhn, Loeb & Co.
and Lazard Freres & Co. (jointly); Harriman, Ripley
& Co., Inc. and First Boston Corp. (jointly). Proceeds—?*
To retire bank loans of $14,625,000, and to pay part of

which recently loaned the company $15,100,000. Under¬
Business—Oil production. Statement ef¬

Delaware

and F. S.

writer—None.

fective March 23.

bidders for bonds include:

Probable

(no par), represented by voting trust certificates; to be
issued under a plan of debt adjustment. Any interest

payable

may have a par value of $40 per
Latter will be offered for subscription to common

written by Blyth &

.dividends until 1956; and 2,000 shares of common stock

March 9 filed 400,000 shares of common capital stock (par

Southwestern States Telephone Co.

share.

United

^Security Insurance Co. of New Haven
March-22 filed 50,000 shares of capital stock (par $10)
and warrants enabling stockholders to purchase these
shares

Brooklyn Union Gas Co.
March 8 company announced it plans to issue $8,000,000
of mortgage bonds and sell 186,341 shares of convertible

preferred stock which

United

San Diego

income debentures due 1970; 30,500 shares of $5 class A
cumulative preferred stock (no par), with no rights to
dividends until 1956; 51,000 shares of $5 class B cum¬

Office—San Valley Agency, Ketchum, Ida.
•

Texmass Petroleum Co., Dallas,'"Texas
Jan. 13 filed $2,937,254 of 4%% senior cumulative in¬
terest debentures due
1965; $1,147,150 of 5% junior

•

Investment company.

edness:

White, Weld & Co., New York. Proceeds—To be added
general funds for use in construction./ Expected
April 4,
■ >
r
:
:
:
,

Atlantic Coast Line RR.

creating a new mortgage to be dated March 1, 1950,
providing for a maximum of $200,000,000 bonded indebt¬
The net proceeds would be used to refund $50,724,000 first consolidated mortgage 4% bonds due July
1, 1952, to refund $33,325,000 of general unified mortgage
bonds: due June 1, 1964, and the balance for construction
costs.
Probable bidders include Halsey, Stuart & Co;
Incorporated.:
;

filed

vote

March 28 announced stockholders will vote April 18 on

March 29 filed $26,000,000 first and refunding mortgage
bonds to be dated May I, 1950,. and to mature May 1,

this

$2,000,000 of convertible debentures. Stockholders
April 11 on increasing common stock from
1,172,000 shares to 1,400,000 shares. Probable underwrite*
ers: Union. Securities Corp.; Smith, Barney & Co.

year

1949, at rate of one share for each five held. Price—At
par.
Underwriter—None. Proceeds—For working capi¬
tal and the promotion of Zenith's "Phonevision" device,
whereby television users could pay a special fee for
costly television programs by calling the telephone com¬
pany and asking to be plugged in.

pating preferred stock. and 10,500 shares of common
stock, at $100 and $1 per share respectively. No under r

Atlantic City Electric Co.
it was reported company may sell later

March 21

stock in Zenith Radio Corp, of record July 15,

Amun-lsraeli

Housing Corp.
company will sell to public early in
April $10,000,000 of 15-year 3% first mortgage bonds.

Nov.

March

Inc.

March 8 reported

(4/4)
100,000 shares of cumulative preferred
stock (par $100).
Price—To be filed by amendment.
Underwriters—Stone & Webster Securities'Corp. and

1,500 shares of partici¬

Co.,

preferred stock and the balance to retire bank loans.

Teco, Inc., Chicago

common

First Boston Corp.L^Harriman Ripley &

Proceeds would be usecrto redeem $15,162,300 of 4%%

Tennessee Gas Transmission Co.

Washington
March 15 (letter of notification)

Finance Corp.

.(4/11)
10-year sinking fund
debentures. Underwriter—Johnston, Lemon & Co., Wash¬
ington. Price—To be filed by amendment. Proceeds—To
pay off serial notes and for working capital. BusinessHolding company for personal loan subsidiaries.
Ex¬
March

(1349)

first

mortgage bonds due July 1,

1952, Re-r
bonds,

funding of the first" and refunding mortgage 4%%

series A, due Sept. 1,1962, is also said to be a possibility.
Probable bidders: Halsey, Stuart & Co. Inc.; Morgan

Stanley & Co.; Lee Higginson Corp.; Harris, Hall & Co.
(Inc.); Drexel & Co.; Kuhn, Loeb & Co. and Salomon
Bros. & Hutzler (jointly); Harriman, Ripley & Co., Inc.J
First Boston Corp.; Lehman Brothers; Paine, Webber*
Jackson & Curtis; Kidder, Peabody & Co.
;r
*.

Continued

pa&446?

Continued

from

page

Cleveland Electric

•

Illuminating Co.

April 25 stockholders will vote on increasing authorized

preferred stock from 500,000 shares to 750,000 shares to
provide company with an adequate number of unissued
shares and to enable it to sell or exchange such shares,
if desirable, under future market conditions.
Probable
underwriter: Dillon, Read & Co. Inc.

Columbia

Gas

Inc.

System,

April 27 stockholders will vote on reclassifying 500,000
shares of unissued common stock (no par) into 500,000
shares of unissued preferred stock (par $50). They will
also vote on a proposal to amend the company's charter
so as to permit the public sale of common stock with¬
out first making an offering of the shares to its own
common stockholders.
While it is anticipated that addi¬

construction program will
been determined whether
not part of such requirements should be obtained from
the sale of preferred stock. Such determination will be
made when the financing "is closer at hand." The com¬
pany's program currently calls for the sale of $10,000,000
of additional common or preferred stock and $17,000,000
tional equity financing of the
be required in 1950, it has not

of debentures to finance its expansion program.

writers—May be named by competitive

Under¬

bidding Prob¬

able bidders for equities: Blyth & Co., Inc.; Shields & Co.
and R. W. Pressprich & Co. (jointly); Merrill Lynch,

COMMERCIAL

THE

(1350)

FINANCIAL

CHRONICLE

preferred stockholders.
Exemption from competitive
bidding has been requested. Proceeds—To retire 4%%
notes and for working capital.
Utilities Co.

Gulf States

preferred
in April
or May, this year.
Probable bidders for bonds: Halsey,
Stuart & Co. Inc.; Blair, Rollins & Co., Inc. and Carl M.
Loeb, Rhoades & Co. (jointly); The First Boston Corp.;
Equitable Securities Corp. and Union Securities Corp.
(jointly); Glore, Forgan & Co.; Kidder, Peabody & Co.
and

"new

$13,000,000

money"

bonds

Idaho Power Co.

•

23 announced stockholders will vote May 3 on
increasing common stock from 900,000 shares to 1,800,-

March

the additional shares to be reserved for fu¬
financing (probably not until 1951).

000 shares,
ture

Interstate

Power Co.

stockholders

will

vote

Brothers, Goldman,
(jointly); Mor¬
gan Stanley & Co. Probable bidders for debentures: Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; Morgan
Stanley & Co.; Lehman Brothers; Merrill Lynch, Pierce,

approving longterm borrowing of up to $6,000,000, the proceeds to be
used to redeem $2,320,500 first lien collateral 3% bonds
due 1961, $359,000 first mortgage 3%% bonds of Platte
Valley Telephone Corp., a subsidiary, and $150,000 of
bank loans, with the remainder added to working capi¬

Fenner & Beane.

tal.

Pierce, Fenner

Lehman

Beane;

Sachs & Co. and Union Securities Corp.

March 4 it

reported that in

was

case company

$77,000,000 of outstanding 3ysS, such operation
also involve retirement of $14,000,000 serials issued

may

under same indenture.

Probable bidders: Halsey, Stuart
Inc.; Morgan Stanley & Co.; Lehman Brothers;
Salomon Bros. & Hutzler; Merrill Lynch, Pierce, Fenner

& Co.

& Beane.

Iowa Electric Co.

March

Credit

that early registration with SEC is
expected of an offering of about $18,000,000 preferred
and common stocks through a negotiated deal. Probable
underwriters: First Boston Corp. and G. H. Walker & Co.

Keyes Fibre Co.

Subject to approval of stockholders on March 30, com¬
plans to sell $25,000,000 of new preferred stock
time next month.

A group of

underwriters, headed

by Kidder, Peabody & Co. and The First Boston Corp.,
are expected to offer the stock.
Dallas

Power &

Light Co.
Dec. 24 company reported planning sale, probably In
May, of $8,500,000 bonds, for new money. Probable
bidders: Halsey, Stuart & Co. Inc.; Equitable Securities
Corp.; Lehman Brothers; Salomon Bros. & Hutzler; First
Boston Corp.; Union Securities Corp.; Kidder, Peabody
& Co.; Blyth & Co., Inc.; Merrill Lynch, Pierce, Fenner
& Beane (jointly); Harriman, Ripley & Co.
Dayton Power & Light Co.
April 13 stockholders will vote on increasing the author¬
ized common stock from 2,000,000 to 4,000,000 shares and
on releasing from preemptive rights 50,000 shares of such
stock to be sold to officers and employees.
It is also
planned to offer between 200,000 and 250,000 shares of
common stock (first to
stockholders) and $7,500,000 pre¬
ferred stock, probably in May. Probable bidders: Mor¬
gan Stanley & Co.; W. E. Hutton & Co.; Lehman Brothers.
•

Delaware, Lackawanna & Western RR.
Bids

will

received

before

(4/13)

(EST) on
April 13 at the office of J. G. Enderlin, Treasurer, Room
2008, 140 Cedar Street, New York 6, N. Y., for the pur¬
noon

chase from it of $1,995,000 equipment trust
certificates,
series J, to be dated April 1, 1950 and to mature in 15
annual instalments of $133,000 each from April
to

April

1965,

inclusive.

Probable

bidders:

Stuart & Co. Inc.; Salomon Bros. &
Hutzler;

1, 1951
Halsey,

Kidder, Pea¬

body & Co.; Harris, Hall & Co. (Inc.).
•

Duquesne Light Co.

underwriter:

Probable

issues.

pany

Knott Hotels

Coffin

Burr.

Corp., New York, N. Y.

Montana

Power Co.

Dec. 20 reported the company may issue in a few months

approximately $22,000,000 in

securities, which

new

may

include bonds and debentures and possibly some addi¬
tional common stock. Financing of $10,000,000 or more
in bonds may be undertaken in May.
The proceeds are
to be used for expansion and extension of its gas and
electric lines.
&

tion to market

new stock
might be needed at some later
date to provide additional
working capital to cope with
the large volume of business on hand.

•

General

Computing Machines Corp., New York

March 20 it was announced
company plans public offer¬
ing of 100,000 shares of new split-up common stock.
Proceeds —For production
program.
Office —60 Dey

Street, New York, N. Y.
General

Public

Utilities

Corp.

March 13 corporation has received SEC
authorization to
solicit stockholder approval of a proposed charter amend¬
ment which would

permit the public offering of any of
the then existing
Stockholders prior subscription rights to such stock. The
its stock

for

cash

without according

proposal is to be voted upon at the annual
meeting to
be held May 1, and must obtain the favorable
vote of
the holders of two-thirds of the

company's outstanding

shares entitled to vote.

Georgia Power Co.

;

•

Peb. 21

company reported to be planning
$6,000,000 ad¬
ditional financing before the end of 1950
(in addition to

415,000,000 of bonds soon expected to be offered); $18,000,000 more in 1951 and $16,000,000 more in 1952.
Green

Mountain

Power

Corp.

March 7 amended plan of reorganization filed with SBC

provides

for sale

approximately

100,000 shares of
new common stock for cash to the public
through under¬
writers^ subject to prior subscription rights by present

company proposes to issue and sell
competitive bidding $52,000,000 of first mortgage bonds
or borrow $4,200,-

due 1980 and to issue additional bonds
from

000

include:

banks

instalment notes.

Probable bidders

Stuart & Co. Inc.; Morgan Stanley &
Co.; White, Weld & Co. and Glore. Forgan & Co. and
Union Securities Corp. (jointly); First Boston Corp. Pro-:
ceeds would be used to redeeming all outstanding first
mortgage bonds and serial notes of Ohio Public Service
Halsey.

Co.
•

Oklahoma Gas

March

Electric

reported

Co.

may issue in May
The proceeds would be used
retire $7,500,000 of 2>lk% bonds and the balance for
was

company

$17,500,000 in new bonds.

construction
costs.
Probable bidders:
Merrill Lynch,
Pierce, Fenner & Beane; The First Boston Corp.; Halsey,
Stuart & Co. Inc.; Lehman Brothers; Equitable Secu¬
rities Corp.; Harriman Ripley & Co.
•

Pacific

Petroleums, Ltd.

March 27 it

reported that registration with the SEC
in about two weeks of a public offering of
was

is expected
about

500,000 additional shares of

able in U. S.

currency) by

stock

common

(pay¬

underwriting group headed
by Eastman, Dillon & Co.. Proceeds are to be used to
expand oil operations in Canada.
an
.

•
Pennsylvania Power & Light Co.
April 17 stockholders will vote on authorizing

100,000
prefgerred stock and 12,000
additional shares of 4J/2% preferred stock. Latter issue
additional

series

exchange, share for share, for pres¬
outstanding 4%% preferred stock. It is expected not
75,000 shares of series preferred stock will be sold,
in late 1950 or early 1951. .V Traditional Underwriters —
First Boston Corp.; Drexel & Co. Proceeds—To finance
ent

over

•

Pennsylvania

RR.

(4/11)'

Bids for the purchase .of. the company of $10,110,000
equipment trust certificates, series Z, to mature $674,000
annually from April 1, 1951-1965, inclusive, will be re¬
up
to noon (EST) on April 11 at the office
George H. Pabst, Jr., Vice-President, at Room 1811,

will

constitute

Building, Philadelphia 4, Pa.

first

instalment

exceeding $20,115,000 of such certificates, series Z.
bidders:
Halsey, Stuart & Co. Inc.; Salomon
Bros. & Hutzler; Harriman Ripley & Co., Inc. and Leh¬
man Brothers (jointly).
*
1

•
Pfizer (Chas.) & Co.
April 3 stockholders will vote on increasing authorized
common to 2,000,000 shares from
1,500,000 shares. It is
not planned to sell any of the additional shares at pres¬

ent.

Traditional underwriter: F. Eberstadt & Co.

Philip Morris & Co. Ltd., Inc.

Merrill

March 20 directors authorized officers to

for

National

Fireproofing Corp.
April 6 debenture and common, stockholders will vote
plan to refinance the $2,636,900 5% income deben¬
tures due may 1, 1952, together with interest thereon
amounting to $635,790, and provide additional working
capital, by issuance of evidence of indebtedness not to
on

exceed

$3,500,000.

Probable underwriters: Kneeland &

Co.; Glover & MacGregor.

trtist

certificates is

reported that

which

bidders: Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutz¬

ler; Harriman Ripley & Co., Inc. and Lehman Brothers
(jointly). Expected in April.
New York State Electric &

new

shares of

Gas

Corp.

common

stock and

serial preferred stock.

Company

new

for each

shares held.

seven

Proceeds esti¬

mated to be between

$6,000,000 and $8,000,000, will be
used to finance this year's
portion of the construction
program, which, it is estimated, will cost over $55,800,000
in

the

three

First Boston

Corp.

Traditional underwriter: The
Other probable bidders for preferred
issue: Kuhn, Loeb &
Co.; W. C. Langley & Co.; Lehman
years.

Brothers and

Glore, Forgan & Co. (jointly); Harriman
Ripley & Co., Inc.; Salomon Bros. & Hutlzer; Kidder,
Peabody & Co. and Merrill Lynch, Pierce, Fenner &
Beane

(jointly). Registration of
expected about April 7.

common

stock offering

Northern Natural Gas Co., Omaha, Neb.
Jan. 20 announced that the
company proposes to issue
and sell at competitive
bidding $40,000,000 of 2%%
20-year debentures and to sell 304,500 shares of common
stock

the

basis

of one

outstanding, the latter to
$10,657,500 of new capital.

for eight

supply

from

now

$9,060,000

The net proceeds, together
with other funds, will be used to finance the
company's
construction program. Probable bidders for the deben¬
tures:

Halsey, Stuart & Co. Inc.; Blyth & Co.. Inc.; The
Corp.; Kidder, Peabody & Co. Offering of

First Boston

stock expected in May and of bonds in June.
•

Northwestern Public Service Co.

March 21

it.

was

announced

company

financing for its 1950 construction
to cost about
tire

$1,800,000.

plans permanent
estimated

program,

Proceeds would be used to

re¬

temporary bank loans which are to be secured by an
issue of $600,000 of 3V*% bonds to mature June
1, 1978.

Lehman Brothers.

„

;

Phillips Petroleum Co.
March 28, K, S. Adams, President, indicated that the
company may replace its $85,142,357 of bank debt tof
which $10,423,211
falls due in 1950) with permanent
financing, which may take the farm either of bonds or
convertible debenture issue.
Service

Electric &

Gas Co.

April

17 stockholders will vote on issuance of $90,000,000 new bonds for the purpose of refunding $50,000,000 3V8% bonds due 1965; $10,000,000 3V4% bonds due

$15,000,000

1968;
bonds
•

expects to presently offer 272,380 shares of the increased
common stock to present common stockholders in ratio
of one

financing of $25,000,000 to $30,000,000, part
might be in the form of additional common

Traditional underwriter:

Public

offering of $9,000,000 equipment
early in April. Probable

develop plans

•

expected

additional 800,000

public

stock.

New York Central RR.

Feb.

This

aggregate of

Probable

Probable bidders for bonds: Halsey, Stuart

Inc.; Blyth & Co., Inc.; Union Securities Corp.;
Lynch, Pierce, Fenner & Beane; Smith, Barney
Co.; First Boston Corp.; Lehman Brothers.

the

not

Co.

200,000 shares of

27, David McCulloch, Vice-Chairman of the
Board, announced that an extra 300,000 share authoriza¬

Co.

Broad Street Station

new unissued $5 par common
stock;. Proceeds will be used to reimburse treasury for
capital expenditures already made and to increase work¬
ing capital.

Foster Wheeler Corp.

Edison

fering of 100,000 shares of

bank loans.
•

authority to

for

ceived

Stockholders March 23 approved a proposal to authorize
a two-for-one
split-up of the common stock, the sale of

March

FPC

announced

March 2 the directors authorized discussion with Hayden,
Stone & Co. as principal underwriters of a proposed of¬

March 27 announced that
company will require $12,500,000 of new money in 1950 to finance this
year's construc¬
tion program, which is

temporarily being financed by

with

balance of 1950 construction program.

planning issuance- of a new
preferred stock and redemption of two present preferred

Co.

Ohio
21

filed

bonds to the Chase National Bank.

is to be offered in

10 reported

March 14 company reported

Commercial

some

decides to

refund

issue said

May 2 stockholders will vote on authorizing an issue of
250,000 shares of preferred stock (par $25). Company
also planning to issue in May or June $8,000,000 of bonds.
A group headed by Merrill Lynch, Pierce, Fenner &
Beane and Kidder, Peabody & Co. has been formed to
bid on the latter issue. Other probable bidders may in¬
clude: Halsey, Stuart & Co. Inc.; Smith, Barney & Co.;
First Boston Corp.
Investors Telephone Co.
March

Application has been

Feb.

Feb. 16 reported company may offer $7,500,000
stock

Thursday, March 30, 1950

due

bonds

1970

due

and

$15,000,000

1972.

Reading Co.

(4/12)

Bids for the purchase from company of

$3,810,000 equip¬
certificates, series R, will be received at or
(EST) on April 12 at the office of R. W.
Brown, President, Room 423, Reading Terminal, Phila¬
delphia 1, Pa. The certificates are to be dated April 15,
1950, and to mature serially in semi-annual instalments
of $127,000 each from Oct. 1, 1950 to April 15, 1965, in¬
clusive.
Probable bidders: Halsey, Stuart & Co. Inc.;
Lee Higginson Corp.; Salomon Bros. & Hutzler; Kidder,
Peabody & Co.; Harriman Ripley & Co., Inc. and Leh¬
man Brothers (jointly); Harris, Hall & Co.
(Inc.).
ment trust

before

noon

Rochester
March
some

Gas

company

time this year

Electric

Corp.

reported to be planning issuance
of about $7,000,000 new securities

(probably bonds and preferred stock).

Probable bidders
Corp.; Salomon Bros. &
Hutzler; Harriman Ripley & Co., Inc.; Lehman Brothers;
Carl M. Loeb, Rhoades & Co.; Union Securities Corp. and
Equitable Securities Corp. (jointly). Probable bidders
also for bonds: Halsey, Stuart & Co. Inc.
for

•

both

St.

issues:

First

Louis-San

Boston

Francisco

Ry.

(4/12)

March 28 company reported planning issuance of $2,250,000 equipment trust certificates, series F, about April
12.

Probable bidders: Halsey,

Stuart & Co. Inc.; Harris,
(Inc.); Harriman Ripley & Co., Inc. and Leh¬
Brothers (jointly); Salomon Bros. & Hutzler. >
..

Hall & .Co.
man

Schering Corp.
Jan. 26 announced the Alien

Property Custodian fs.preparing to offer at competitive bidding - 440,000 shares
of common stock (total issue outstanding) late in March
or early in April.
Registration with the SEC expected
shortly. Probable bidders: A. G. Becker & Co.1 (Inc.),
Union Securities: Corp. and Ladenburg, Thalmann &
Co. (jointly);. Merrill Lynch, Pierce, Fenner & Beane;
Kidder, Peabody & Co.; F. Eberstadt & Co.; Allen & Co,

Volume

Number 4894

171

THE

Seaboard Air Line RR.

Feb. 7 directors

COMMERCIAL

500,000),

FINANCIAL

financed

largely

CHRONICLE

equipment

trust

committee to proceed with

the

could

Probable bidders include Halsey,
Inc.; Kuhn, Loeb & Co.; Lehman Brothers;
First Boston Corp. and Harriman Ripley & Co.
(jointly);
Union Securities Corp.
Southern
March 3 it
this

California

was

summer

Edison

(Inc.);
Co., Inc., L. F. Rothschild & Co. and Schoellkopf,
Hutton & Pomeroy, Inc. (jointly); Bankers Trust
Co.,
•

Co.

would

to refund

be used

Southern California

Gas

Feb.

Pacific

16 directors

***

Co.

000,000 from banks.

associates, awarded the issue

named a 3% coupon and $735,688.20
compensation to be paid by company.
•

Southwestern

Associated

and sale of said

March 9,

•

will

used

Drexel &c

sell
like

Underwriters—To be determined

(S. S.)

Dental Mfg. Co.

(4/19)

the authorized capital stock (par $20) from
300,000 to 450,000 shares.
The company plans a 5%
stock dividend, the offering for sale to stockholders of
29,891 shares on a l-for-10 basis, and an offering of
20,000 shares for subscription by employees.
Under¬

President,

reports

company

1951, together

writer—Drexel & Co.

with

shares in the latter year and

•

Wisconsin

March

Expected April 19.

Electric

Power Co.

reported company plans to issue $25,000,000
of bonds. Probable bidders:
Halsey, Stuart & Co. Inc.;
Glore, Forgan & Co. and Equitable Securities Corp.
(jointly); Lehman Brothers and Salomon Bros. & Hutz¬
ler (jointly); Merrill
Lynch, Pierce, Fenner & Beane;,

Co.; Harriman Ripley & Co., Inc. and Union

Corp.
(jointly); Kidder, Peabody & Co.;
Weld & Co.; Lehman Brothers; Carl M. Loeb,

White,

and

refund

creasing

Securities

reported planning issue in April of
stock with Glore, Forgan &
Co. and Kidder, Peabody & Co. as underwriters.
common

issue

month

competitive

White

Probable, bidders for bonds: Halsey, Stuart & Co. Inc.;

company

Feb. 2 announced stockholders will vote
April 4 on in¬

to sell $10,000,000 of bonds, plus an

amount

early

bidding.
Probable
bidders:
Halsey,
First Boston Corp. and Kidder, Pea¬
body & Co. (jointly); Salomon Bros. & Hutzler; Lehman
Brothers; Harriman Ripley & Co. Inc. Expected April 5.

manufacturing of coke in Utah

Gadsby,

common

bonds

(4/5)
plans to

company

Stuart & Co. Inc.;

Light Co.

year

announced

amount of bank loans.

products.

$4,000,000

expand

150,000
165,000
shares in 1952, the proceeds to meet construction costs.

Spencer Chemical Co.
10

additional

16,500 shares of preferred stock (no par).

200,000 shares of

additional

Co.

and

Utah Power &

March

March 27 company announced plans to sell to the public

March

Proceeds

(4/10)

Utah and Colorado

plans late this

Telephone

line,

will cost about $175,000,000.

Wheeling & Lake Erie Ry.
March

The referee will offer at public auction at 11 a.m. on
April 10 all of the 100,000 outstanding shares of stock of
this corporation at the Guaranty Trust Co. of New
York,
140 Broadway, New York.
Business—Mining of coal in

underwriting

American

it was announced,

1950, of the
privilege to subscribe, at par, on or before March 31,
1950, for $37,727,600 of convertible debentures, due April
1, 1960, convertible into common stock at $55 per share.
Underwriters—Blyth & Co. Inc. and Salomon Bros. &
and

expected

operations.

the offer to stockholders of record March 10,

Hutzler

Arrangements will
It is
corporation will be formed to
construct and operate the American end of the line in
Washington, Oregon and California. The completed
be made to place in Canada
part of the securities.

Transcontinental Gas Pipe Line Corp.
27 it was announced that the
company will sell
$32,000,000 additional first mortgage pipe line bonds
(which may be placed privately) and will borrow $10,-

March 16 by ICC)

shares,
order to

•

Utah Fuel Co.

(and

to in¬

proposal

stock from 500,000

March

Co.

approved

common

par value, to 1,000,000 shares, par $5, in
provide for a 1.20-to-l split-up and for future financing,
acquisition of property and other puroses. No immediate
financing planned. Probable underwriter: Smith, Bar¬
ney & Co.;

Dec. 19 reported company may issue and sell approxi¬
mately $20,000,000 of bonds, probably in May. Probable
bidders; Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
Lehman Brothers; Harris Hall & Co. (Inc.); White, Weld
& Co.; Merrill Lynch, Pierce, Fenner &
Beane; the First
Boston Corp.; Shields & Co.; Kidder, Peabody & Co.

Southern

;the stockholders

$30,-

000.000 3V4% bonds and for construction costs.

the authorized

crease

of bonds.
Probable bidders:
The First Boston Corp. and Harris, Hall & Co.
(Inc.)
(jointly); Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
Proceeds

Thompson Products, Inc., Cleveland, Ohiho

March

financing

of the

Rhoades & Co.

First

Texas & Pacific Ry.
March

•

directors approved

Diesel-electric

locomotives

Underwriting Group
2,000,000
$24.25

offered

share, thereby bring¬
ownership of utility into

ing

per

dependent

to stockholders

first

mortgage

undertaken

Our

•

third

ner

March 28 with the

of the

this

public offering
shares of Equitable
Gas Company common stock.
At
2,000,000

Reporter's

^conclusion of this financing

will be a publicly
owiVad operating utility.
The
stock is priced at $24.25 per share
and is being sold for the account
of Philadelphia Company in com¬
pliance with a divestment order
of the
Securities and Exchange
the

Public

Utility Holding Company Act of
1935.
Kidder, Peabody & Co.;
Merrill Lynch, Pierce, Fenner &
Beane and White, Weld & Co. are
joint managers of a group of in¬
vestment

banking firms which is
making the offering.
The
current financing
is the
final

step

initiated
in 1947 for the reorganization of
the

natural

gas

program

properties in the

holding company system of Phila?
delphia Company, and as a means
of facilitating compliance by
Philadelphia Company with the
SEC order.
Philadelphia Com¬
has

pany

transferred

its

owner¬

ship of the entire common stocks
of Pittsburgh and West Virginia
Gas Company and Kentucky West
Virginia Gas Company to Equi¬
table Gas Company.
The result¬
ing three-company system will be
engaged in the purchase, produc¬
tion, transmission, storage, distri¬
bution and sale of natural gas.

Capitalization of Equitable Gas
to

Report
to

little

the intention

Company,

prospectus,

Equitable

according
establish

the

regular

quarterly dividend payment dates
on

March

1, June 1, Sept. 1 and

pressure

the

points.

win-

How-

bonds appeared

being

to offset

angle.

More-

railroad issue, this

sification,

something that has
not been too frequent of late.
At any

rate repriced at 100 for

indicated

Co.'s $12,000,000 of

new

first mort¬

fortnight

winning tender of 102.229 for a
2%% coupon down to 101.347 for
the
a

rate.

same

Priced
to

The runners-up in

field of eight bid 102.1932.
for

reoffering at 102.542
yield 2.75%, reports in dealers'

-circles

that this

were

to be another fast

working margin of
about $4.70 a bond, the issue
was taken quickly with several big
insurance companies and a num-

shares of common stock of Equit>able Gas Co. found investors

made ;
or

so.

lively,interest

the

was

destined

operation.

a share,
Underwriters and dealers

the

and

new

ket

pressure

Treasuries since their merchandise in this instance,
through a series of pre-offering
easier for under-f sessions attended by company of-

the turn of the year has not been-

making it

any

writers.

The effect of this operation by r
the

money

most

pronounced, of

ment

point,

The

flotation

though

ported to be

T**e

this

HELP

case

around
run

issue

on a

with

•

mid-week.

of corporates

plenty of

competition.

reoffering, notably of the
corporate
issues
involved,
dis¬
closed a much more lively interest

June
ers

per

15,

Stock,

1950

of record

upon

the

payable
stockhold¬

the close of

business May 15, 1950.
The

Goodyear Tire A Rubber Co.

By W. D. Shilts, Secretary
Akron, Ohio, March 27, 1950

The

Greatest
Name
in Rubber

only sizable bond deal
bids, to be opened on
Tuesday, involved $15,000,000 of
securities for Georgia Power Co.
And with at least six bids indi¬

cated, this looked like

issue

first

DIVIDEND NOTICES

day

SOUTHERN

STATES

Roofing Company
SAVANNAH. GEORGIA

WANTED

NATIONAL DISTILLERS

Dividend on Preferred Stock

CORPORATION

WANTED
A
quarterly dividend of
thirty-one and one-quarter
cents (31.25c)
per share on

)

TRADER

better coloring

and the Puerto

stockhold¬

the close of

for

ASSISTANT

business May 15, 1950.

appetizing.

Bidding for

of record

the $5

payable

PRODUCTS

re¬

itself strongfy,; particu¬
the new issue j market

June 15, 1950
ers

upon

Stock,

The

DIVIDEND

inve§tgiT> demand

Rican issue brought out

And

the

movihg gradually

week

World

was

of 1950

Preferred

since the termination, of the syn¬
dicate.

Things took

end

been

course,

today the fol¬

share for the second

per

quarter

Iron

ancLouasi-govern-

markets.

Bank's

has

managers

the municipal

NOTICE

of Directors

lowing dividends:
$1.25

$1.00

r ficials.

has declared

Common

Next Week Busy

the; set price of 24%

markets, both seasoned;;partiissue, are expected to be; cipating in this distribution had
looking up. The steady open mar-tjbeen carefully familiarized with
way

DIVIDEND

The Board

showing
Once this operation is out of

goodAear

gage, 30-year bonds, brought out a
host of bids, ranging from
the

likely the terms will be
known within

asserting
larly in

sanguine

Northern Indiana Public Service
trailed

Next week promises to provide
now
enough business to keep bankers
Treasury ber of New York and Philadelphia
and their
dealer affiliates
busy
bonds
appears
to
be subsiding savings
banks reported on the and
happy. True the bulk of the
somewhat.
buying side.
business will involve senior and
Belief now is that the Treas¬
junior equities. But then the ma-,
Equitable Gas Co. Stock
ury will undertake its next piece
jority of these impending under¬
Involving a turnover of $48,500,of
new
financing during the
takings were of the negotiated
coming month'and"that"" very
™0.the Public offering of 2 000,000 variety and, to that extent, the
the

000,000 of 2.80% instalment bank
loans,
and
2,000,000
shares
of

Gas

Nor. Indiana Public Service

inclined%nly

the outlook for debt securities

that

this

stock, $8.50 par value.

are

bid

full 1%

particular

over,

outstanding at the conclu¬
sion of the financing consists of
$31,080,000 of funded debt; $3,-

common

Investment bankers

DIVIDEND NOTICES

SEC divestment order.

undertaking afforded investors
an opportunity for a little diver-

thqo company

under

found

close pricing for reoffering

ever,

Commission

bonds

I ready reception.
A

the

issue next

Probable bidders:

18,'^keisa.me rate, ^Chicago, Burlington
& Quincy R.R.'s $25,000,000 of new

of record May

1950.

Equity financing amounting to
was

company may

bonds.'

upon

public hands.
$48,500,000

money

1 with the declaration

sarily

Stock Marketed by

reported that

was

$20,000*000 of "new

man

that would bring out the com¬
neces^on the part of buyers than had brought reports that about 80%
of the total had been sold, with
petition.
earnings, been the case in recent weeks.
the
balance
in
cash position and other relmmtS.
strong hands
The stock issues, all in the util¬
Burlimrton's Issue Moves
and unlikely to move below the
factors.
On March 21, 1950;- 4hei,.
Burlm«ton s lssue ^oves
ity field, indicated the market
board of directors of the compaafc,! Despite the rather wide gap be-r
syndicate price.
would face a reasonably good test
declared a quarterly dividend of.Jtween the bids of the winning
This
stock
was
sold
by
the
of its absorption powers.
32V2 cents per share on the com-. £rouP> 99-53 for a 3% coupon and
Philadelphia Co., subsidiary of
mon stock, payable June 1,
1950,-t*131 of the runners-up, 98.529 for Standard Gas & Electric under an
Dec.

Equitable Gas Com.

fall

$3.-

Boston Corp.; Union Securities
Corp. and Harri¬
Ripley & Co., Inc.
Proceeds—About one-half for
refunding and remainder for new construction. Expected
early in June.

Virginia Electric & Power Co.

March 27 it

purchase of 13 additional

(to cost approximately

The

By New York branch office
of

out-of-town

firm.

50c per

Box

Common,

R 330, Commercial & Finan¬

NOTICE

Board of

clared

Directors

has de¬

quarterly dividend of

Stock,

the outstanding
payable

May 1, 1950, to stockholders
of record on April 11, 1950.

cial Chronicle, 25 Park Place,

the Preferred Stock of this
company

payable

has been declared,
April 1, 1950 to

stockholders of record March

21, 1950.

The transfer books will not close.

New York 8.

THOS. A. CLARK

1,400 mile pipe line proposed by the West Coast
Transmission Corp., along with
Nesbitt, Thomson & Co.,
Ltd., of Montreal, Canada, and Wood, Gundy & Co. of
j
Toronto, Canada. The financing would be divided 75%
to bonds and the remainder to
preferred and common
stock.
A large amount of the bonds
are
expected to
be taken by life insurance companies.

New York.

reported that company expects to isSUe

Ltd.

Feb. 10 reported that
Eastman, Dillon & Co. and the First
Boston Corp. were ready to underwrite the

Blair &

$55,000,000

Shields & Co.

West Coast Transmission
Co.,

Harriman Ripley & Co., Inc.; Harris, Hall & Co.

arranged.

Stuart & Co.

Halsey, Stuart & Co. Inc.; Union Securities Corp.; Kuhn,
Loeb & Co.; White, Weld &
Co.; Stone & Webster Se¬
curities Corp.; Salomon Bros. & Hutzler.

certificated-(expected to total around $2,400,000). Prob¬
refunding of the approximately $31,800,000 outstaniP^ able biddets: Halsey, Stuart & Co. Inc.-; Lee Higginson
Corp.; Kidder, Peabody & Co.; Salomon Bros. & Hutzler;
ing first mortgage bonds, provided satisfactory terms
appointed

(1351)

March 23, 1950.

Treasurer

Ross G. Allen

COMMERCIAL i&

THE

(1352)

Thursday, March 30, 1950

CHRONICLE

FINANCIAL

BUSINESS BUZZ

process,

.by

some

ness.
I,'U.'"I,■"'■

■'■■""■I""*

•

V':'- C

V?'

" i-?'->«'.tain

■

hi;in.'11mi'

i'iiiii»imi»ii|.-;i

■

.■

BOODLE+C0t

O'Mahoney loves the
private enterprise system, and he
means it. He is every bit as con¬
vincing as the Wolf, expressing
for

solicitude

STOCKS v-BOWS

JL \JU/

XM.II/U/

Capital

v.-

Behind-tbo-Scene laterpratatioBi
from the Nation'*

"<t

Senator

—

"'■"

•

■

unexplained
has to match it with;big¬

ernment,

Little

Red

Riding

Hood.
Tax reduction is

important, and

something by golly had better be

C.—One of
phases
of
the

WASHINGTON, D.
little-noted

the

President's
schemes

reorganization

mass or

that

would subject the

face of it,

which,

na¬

it
debt creation.
lieving

the

was

Among the several plans which
the President proposed, in effect,
to
transfer every departmental

the agency to the
Secretary of the Department and
then permit the Secretary, in ef¬
fect, to delegate that power back
to the agency which handles it,

within

power

would transfet

which

one

was

the Secretary of the Treasury the

of the Comptroller of the
Currency to supervise national
banks. This an incidental but real

powers

point involved in the reorganiza¬
tion plan relating to the Treasury.
"In practice the Comptroller of
the Currency is semi-independent
within the Treasury.
..Its exam¬
iners and examining policy are

Treasury.
So
Jong as John Snyder is Secretary
of the Treasury, it is a safe bet
left

alone

banks will

national

the

that

by the

not

with by the Treas¬
be asked to submit, to po¬
litical policies.
be monkeyed
ury or

should be

there

Treasury Secretary

literally,
through, he
certainly try out a lot of
his

took

who

hand

other

the

powers

ahould this plan go
could

ideas

banks

the national

lend or invest

how they should

depositors' money.
As

idea—which is again at¬

the

report—of

tributed to the Hoover

ism.

Most

This

policy.

supervision

out later in hearings.

come

may
-

matter

before

less than

the

♦

About the defeat of

cooperative

This defeat was so de¬
cisive that cooperative housing is

housing:

radical

killed

coop¬

of these
£

survive is

that

ness,

not

committee

the sub¬

about-ready

the

housing

Senate,

is
then everybody can

what it

out

officials

REA

Scores

about.

have

been

seen

parading into and out of the in¬
quiry.
i;.

bills

"little"

whose

cost

eventually would be anything but
are

about to get a favorable

report from the House Education
and Labor Committee. They are
worth keeping an eye upon.

would

of these

set

was.

defeated

five

votes, and in the House, by 63
votes.
Conservatives
in
the
House

under

the

leadership of

Wolcott
(It.,
Mich.) took a long chance indefeating, sometimes by narrow
margins, every •Administration
move to "improve" the bill by
making it less costly, and hence
more palatable.
They insisted
upon killing the entire section,
thereby incurring the maximum
Jesse

Rep.

effort

the

Administration

They won, so it is a complete
victory. As a result of taking this
chance, they have laid that par¬
ticular ghost for years and it will
walk
again only if November,
1950 brings a strong flood tide for
the Truman forces in the election.
With
same
was

public housing, which this

gratis grants toward local
school
construction,
and
the
RFC

the

million would consist

loans

for

school

struction, loans to
and cost

The

2H%.

other

run

would

with

over-burdened

kicr eased

school enrollments tesuUing from

activities in the

Federal

these

another

means or

municipal ser.he.; in areas
of congested wiar production. Lo¬
calities got used to Federal help
during the war.
They want to
keep it.
Neither of these bills will

for

able that

neither

become law this
What

gives

the

O'Mahoney

complaint

be¬

double

corporation

it; the* corporation .income
being

about

inpome.

called

the

him

- a

If business kicks

"franchise

tax,"

then

why doesn't it go back to the in"Board

dividual

Room?

My goodness!

—

Are

business too?"

;

and

in the lumber

you

cd-partnership

way

doing business, the Senator in¬

fers.
ization
The

bill, from

sum

ably

this

Congress:
will be $500 million, prob¬
That will be $500

more.

would

but

depend

appropriating

gress

make

good

million for each of the two fiscal

allocated,

commencing July 1 next.
Congress is not inclined to give
more,
despite
the feeling that
roads have been neglected.

Con¬

upon

money

projects already

structed.

years

Congress probably will kill the

new-fangled idea of setting up a
special fund of $70 million or
more for especial use in inter-city,
highways, and

key

tioned

appor¬

basis of 75% Federal,

25% state contribution. The senti¬
ment

old

seems

to be for retaining the

50-50 formula.

other

the

there is a

hand,

that $150 million per
year of the $500 million will be
earmarked for the inter-city high¬

basis,

matching
down

able

conventional
thereby cutting

50-50

the

the authorizations avail¬

for

other

state

numbered,

urban, and secondary roads.
Another
pass

state

to
of

money

state

which

thing

permit the
Federal

to pay
to

use

highway

aid

bonds sold by a

finance

Federal

aid

pation of the 50% Federal con¬

explained,

was

however, that while permitting
receipts

from

Federal

Riverside Cement

man

Spokane Portland Cement

Oregon Portland Cement

vehicle for publicizing oneshows.

Coplay Cement Mfg.
Giant Portland Cement

much Senator
the Monetary sub¬

O'Mahoney

committee

report

Douglas.

Chairman

has

was

got

JEC

Senator

LERNER & CO.

that

subcommittees

special franchise
through these subcommittees to
conduct special one-man circuses
to propound and capitalize their
granted

are

Thus, Senator O'Mahoney,
Chairman

the

author¬

subcommittee,

Investment

10 Pott Office

Securities

Square, Boston 9, Matt.

Telephone HUbbard 2-1990

Teletype BS 61

Investment

"The

emphasized

known

the

"O'Mahoney fairy tale," not be¬
he

cause
cause

invented

spends

Cinderella

Analysis

Stock

1950"

Request

it,

but

be¬

much time

an*

Missouri[Pacific
General 4s 1975
Convertible

% s 1949

Common A and Pfd^-rWhen

Issued

riding this idea.
This

idea

big.

guaranteed,

Walt Disney Productions

throughout the report what has
come

purpose, the bonds would in no

Federally

Cement Stocks:

the

has to be big

that

primarily from
any
concept of studying broad
questions and instead has turned
into

views.)

re¬

JEC has departed

izations to be employed for that

way

Committee's

become certain

now

own

the

highway construction in antici¬

tribution.

publication

pet ideas and nostrums.

may

is the hew provision pro¬

posing

the

port on "Volume and Stability of
Private Investment," last week, it
has

pretation from the nation's Capital

the "Chronicle's"

Economic

Joint

con¬

re¬

and may or may not coincide with
tf

With

and

This report is as

possibility

approved,

(This column is intended to

flect the "behind the scene" inter¬

government

BATKIN & CO.

because business is

30 Broad Street, New York 4

that

Big government comes only

because

business

is big and

Tel. WH 3-3388

Tele. NY 1-1965

gov-

y.bout

prob¬

them

will

the

seems

House.

Southern New England

Firm Trading Markets

Telephone

them

compromises for the aid to educa¬
in

Teletype—NY 1-971

IIAnover 2-0050

ye;ir.

significance,
however, is that they are logical.

ied

ret

one

passage.

tion bill, which

,tee of cooperative housing loans

af¬

busi¬

much attention from the public

Leading opponents of coopera¬
tive housing attribute the defeat
not to the lobby against it by pri¬
vate .industry, which was weak

about the debt, and the "guaran-

to pro¬

vide

each other.

compared to the lobby conducted
against public housing; The de¬
was due to a growing worry

would

permanent law, parts of
the
war-time
Lanham
Act,- in
which the government undertook
one

little

something O'Mahoney

"franchise tax."

ready

feat

area."

propositions

generally, until tbvy

however, both Houses killed the
proposition within a few days of

gen¬

Govern¬
for primouy and second¬
ary
education of children "on
certain non-supportinp, Federallyowned property unci for school
children
residing' in
localities

capital

about

ways

rather

will of

people by keeping it
from the House, although the Sen¬
ate
had .passed it a couple of
tihfies/» With cooperative housing,

20 years

erally have the Federal

Both

equity

well

to
the

"nothing extraordinary"

tax

conservatives were thwarting the
the

con¬

ment pay

Congress passed last year, it

always complained that

constructions costs.

free

enact

forces.

million to finance

of $600

local school

other $300

cooperative

and

that

taxation

re¬

Half this fund would consist of

problem

There

port and that when the report

One

tax

capital,

Incidentally,
littles

the

announced

even

off the record is that

Two

the

largely overlooked.

subject of its REA inquiry.
All
that Chairman Hardy will say on

enough

has

find

out

incidentally,

fects big as

Congressional subcom¬
conducting an extensive
investigation and "it ain't saying
nothing to nobody/'
A subcom¬
mittee of the House Expenditures
Committee
under
Rep.
Porter
Hardy
(Dem.,
Va.)
for
three
months, off and on, has been hold¬
ing closed hearings on the Rural
Electrification Administ ration,

that

shortage

now

mittee is

and

time

equity

note,

One of the marvels of this town
is

show

age

being threshed out in conference.

tion, can liquidate about 50 con¬
servative members of the House,

conservative

for

can

take

Rep.

Massachu¬

has something to do with short¬

GI's, and
housing at universities.
How

many

did

and

sev¬

fund

dozen

setts

Taft

to give a few elementary figures

expansions

loans

government

Bob

Herter

Christian

government insurance, and direct
for

right in there and study

Senator

was

housing it did enact

other

eral

Senate

the

now

the tax problem.

long.
While

gov¬

years

government

dead for years to come unless Mr.
Tfuman, in the forthcoming elec¬

plus a half
.Senators.

better get

financing housing for all but the
"rich," if any rich were left that

erative

the

revenues

world peace. So, the Congress had

$2 bil¬

approved, it would be

were

cut

prosperity, world prosperity, and

agreed

However,

can't

because it must maintain domestic

Social¬

opponents

the tune cf either $1

small,

due to

was

that if "cooperative" housing to
lion

believes.

tor

Federal

ernment

making it possible for some future
Treasury head to mess into bank

not

was

the overall worry about

made public,

it is not known who
Administration thought

yet

within the

that

Second, the defeat

tional

banking system to complete
political domination.

done about it, the Wyoming Sena¬

did not confuse members into be¬

FOREIGN SECURITIES

to be stym¬

Stock and Rights

All Issues

The'teacher-

education lobby could concentrate
on

getting

passed,

"at
soon

least

this

much'

rAffl. MARKS & (~0. IKC.

possible,

and
save its fire for the big led era 1
aid to education bill later.
*

FOREIGN SECURITIES
SPECIALISTS

50 Broad Street
Here is about what is expected
in the way of a

highway vth-Xr-

Hill, Thompson & Co., Inc.
Trading Department

New York 4, N. Y.

120 BROADWAY, N. Y. 5
Tel. REctor 2-2020

Full text of Commercial and Financial Chronicle : March 30, 1950, Vol. 171, No. 4894

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