Full text of Commercial and Financial Chronicle : March 6, 1958, Vol. 187, No. 5722

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mar$58

ESTABLISHED 1S39

"""SBn*

Reg. U. S. Pat. Office

Volume 187

New York 7, N.

Number 5722

EDITORIAL

February issue of the "Survey of Cur¬
rent Business," the Department of Commerce has
presented several arrays of figures which are
well worth the study of all who wish to know
just what has been happening in business during
the past year or two, and to form a sound judg¬
about where

all that the

of the current

cause

mindful of his

earlier

prediction gone wrong, foresees first quarter of
marking recession's bottom followed by slightly
larger G. N. P. in succeeding quarter, and criticizes Ad1958

particularly pertinent at a time when
leaders of labor and a number of politicians who
value the so-called labor vote are trying to con¬
us

ministration's failure to take prompt antirecession steps.

Dr. Slichter denies
in

reces¬

terms

we are

suffering from excess capacity,

projected growth trend; notes expanding

of the economy are two and one-half times as

sectors

sion is to be found in

disproportionately small
part of current production paid to labor and a
correspondingly large part retained by corpora¬
tions as profit. They are particularly important
just now because they show so conclusively that
there is not a grain of truth in this notion. They
should once and for all put an end to demands for
higher wages at the present time—and mo§t cer¬
tainly to all such proposals as that of Mr. Reuther;
that a substantial part of the profits of employers
ibe drawn off and paid over to wage earners.
a

large

contracting parts; and concludes

will
continue to outstrip productivity necessitating a slowly '
rising price level to maintain full employment.
as

sions

A year ago I

in this and other countries

have

en¬

from

and in vain, to deter¬
precisely what does cause the ups and
; downs in business, usually termed the business

annual rate of

the

billion in the fourth. This sharp drop
of

quarter

DEALERS

At
was

billion—a

drop

Continued

page

address

Associated

Slichter

Dr.

Industries

before

the Annual

afforded

tial undertakings in

.'■]

migrants'

our

they leave for

_>'

;.i

dollar!

for

in the world, and, to¬
Canada, far above the

others in per capita purchases.

Now, National City Bank has ex¬
a

Teodoro Moscoso

good adver¬

But Puerto Rico's
growth proved too fast for them. Before this advertise¬
tising

agency.

ment

off

came

chases

the

the Commonwealth's

presses,

States

United

goods had

increased

"i"
•

Conitnued
'

•

„

pur¬

more?

than $100,000,000 to a total of over $600,000,000:

I don't

on page

26
^

address

Cleveland, Cleveland, Ohio, March 3, 1958.

and investors in corporate

with the SEC and poten¬

State, Municipal

38.

"Securities in Registration" Section, starting on page

and

Municipal-

STATE

and

MUNICIPAL

Public Housing Agency
Bonds and Notes

COPIES OF OUR

Securities

"ATOMIC ENERGY

BONDS

HAnovcr 2-3700

REVIEW"

CHEMICAL

FOREIGN

CORN EXCHANGE

Available

LETTER

ARE NOW AVAILABLE
ON

Request

BANK
BOND

THE FIRST NATIONAL CITY BANK

Burnham and Company

DEPARTMENT

MCMBCRS NEW YORK AND

30 BROAD

ST., N.Y.

15 BROAD STREET,

NEW YORK 5, N.Y.

120

•

Dl 4-1400

Bond Dept.

TELETYPE NY 1-2003

CABLE: COBUHNHAM

Underwriter

Distributor

•

Net
To

Dealer
^

(

■»«.

**'

•

'< v

Members New York Stock

OF NEW YORK
Teletypes NY 1-708

Active

Dealers,

T. L.WATSON &CO.

Markets

Commission Orders Executed On

New York Stock

American

Stock

Exchange
Exchange

' ■

FIRST

<^01lthW€4t COMPANY
DALLAS

DIRECT

J BRIDGEPORT

•

PERTH AMBOY

coast to

BANK

coast

Municipal Bonds
for California's

BONDS & STOCKS

Expanding

All

Canadian Exchanges

Economy
MUNICIPAL BOND

WIRES TO MONTREAL AND

TORONTO

Dohdoox Securities
(orporatioti

Goodbody & Co.

NEW YORK 4, N.Y.

from

Chase Manhattan

CANADIAN

Teletype NY 1-2270

25 BROAD STREET

offices

CANADIAN DEPARTMENT

Exchange

BROADWAY, NEW YORK

Maintained

SECURITIES

Members

THE

Banks and Brokers

CANADIAN

ESTABLISHED 1832

DEPARTMENT

BOND

REQUEST

Harris, Upham & C2

AMERICAN STOCK EXCHANGES

MEMBERS NEW YORK STOCK EXCHANGE

115 BROADWAY
NEW YORK

1 NORTH LA SALLE ST.
CHICAGO

{

by Mr. Moscoso before the briefing conference on
"Doing Business in Puerto Rico" sponsored by Bureau of National
Affairs of Washington, D. C., New York City, Feb. 6, 1958.
J

U. S. Government,

telephone:

now ;

market

Stale and

Commonwealth is

cellent economists and

Meeting of the

complete picture of issues now registered
our

our

billion

gether with

♦An

■

merchandise

$429
less than $4 billion below the last

advertisement on;

prepare an

goods from the United States. That,
by the way, makes Puerto Rico the
seventh largest consumer of U. S.

between the third and fourth
quarters of 1953 — which was the
largest quarter-to-quarter decrease
since the end of 1945. In the present

H. Slichter

rate, the theme of the ad

any

that

half

quarter production is at the annual rate of about

are

New York.

a year was almost as
the drop of $8.8 billion a

SECURITIES NOW IN REGISTRATION—Underwriters, dealers
securities

bank accounts before

year
Sumner

decided

tablished them to nab

$432.6

about

York

office and eight branches in Puerto
Rico. rSome
wags say they e$tab-

$7.4 billion

large

spent a
large part of his life trying to determine just
what happens in the so-called cycle. His contribu¬
tion was large but his facts were far from com¬
plete. It. would be a task requiring a great deal
more space than is available here even to list the
factors, or combinations of factors, various aucycle. In fact, one of the ablest of them

'page

third

few months ago, the First National City Bank;

New

Puerto Rico and its opportunities lor business.
The First
National has a main

$440 billion in

deavored for many years,

success of Puerto Rico's "OpeN
Bootstrap", to: tax policy allowing attractive sales
and investment profits; use of limited government spend¬
ing as a catalyst;: advantageous relations with USA; i
and helpful services provided the investor. Common- wealth's economic coordinator describes past, decade's
startling growth wherein private investment multiplied
140-fold with only a four-fold government investment
increase; notes most manufacturing is for USA market
and that Latin America offers potential future market;
and sees this program as solution to backward conntries' problems.

Only

predicted that the lull in business would
that it would
expansion.
I
predicted that the last quarter of
1957 would be the best quarter of
the year. The lull lasted about as
long as I suggested, but it was fol¬
lowed by contraction rather than by,
expansion. The last quarter, instead
of being the best quarter of the year,,
was the worst.
Production dropped

mine

Continued

last until about the middle of the year, and
be followed by slow

depres¬
precisely alike. Some of the ablest

are ever

economists

wages

The Current Recession in Business

It is doubtful if any two recessions or

San Juan, Puerto Rico

ation

are

vince

Administrator, Economic Development Administration

Mr. Moscoso attributes

Lamont University Professor, Harvard University

One of America's best known economists,

stand at this time. These

Copy ;

Why Puerto Rico"

SLICHTER*

SUMNER H.

By DR.

Cents

By TEODORO MO SCO SO

And Industrial Relations

In the

data

Cuirent Outlook for Business

As We

ment

Price 50

Y., Thursday, March 6, 1958

Bank of America
RViVcs ASSOCIATION

Exchange Place, New York 5,N.Y.

NATIONAL

300 Montgomery

Teletype NY 1-702-3

WHitehall 4-8101

DEPARTMENT

St., San Francisco,

Calif.

The Commercial and Financial Chronicl•

(1042)

'-■n'

The

Banks, Brokers, Dealers only

For

Security I Like Best

This Week's

which; each week, a different group of experts
fin the inrestment and advisory field from all sections of the country
participate and give their reasons for favoring a particular security.

Try "HANSEATIC"
We take

ity

pride in the abil¬

and
de¬

large

our

experienced
trading
partment to cover

(The articles contained in this fornm

they to be regarded,

are

extremely broad range of

Research

to take ad¬

vantage of our nation-wide
private wire service and
prompt service
in your
Over-the-Counter
prob¬

capacity

Analyst, New York City

research

analyst for

....I..

ano» stau

—v

week,

write

you

mar¬

your

wants to

EsfablisTied 1920

120 Broadway, New York 5
WOrth 4-2300
~ Teletype NY 1-40
EOSTON

PHILADELPHIA

CHICAGO

•

Private Wires

BAN FRANCISCO

•

to Principal

Cities

faithful

certain

idea

good

until
Welter K. Gutman

vene

allow your eyes to
Washington Steel Cor-

poration at less than 20 is certninlv
r>f
lfw#»Q nmnnrt thf»
tainly one of my loves among the
stocks.
I think there are good

Specialists in

RIGHTS

nnn

SCRIP

that it will have the

and

tunity to go
won't

This

might

IfcfiONNELL & CO.
Members

Exchange

Stock

oppor¬

lot higher than that.
next month, but

sometime in the next

yeThp° reaRnnyis%hat

Washineton

Steel

earning money now—I
figure at an annual rate of $1.50
a
share—even though operations

New York Stock Exchange
American

thinking it will go
its old high which was 33

back to

Since 1917

m-u

for

reasons

120 BROADWAY, NEW YORK 8

are

in
in

Trading Interest In
;

Eassett Furniture Industries

Life Insurance Co. of Va.
Commonwealth Natural Gas

STRJUIER and COMPANY, Inc.
LYNCHBURG, VA.

Private

Wire

York

City

Opportunities. Unlimited

high

IN JAPAN
■

■.

Write for

Monthly Stock
Digest, and our other reports
that give you a pretty clear
picture of the Japanese
economy as a whole.
our

Nomura Securities Co., Ltd.
Telephone: BOwling Green 0-0187

Iil Broadway,NewYork 6, N.Y.
rhls is not

offer or solicitation for

orders for any

particular securities

LAMBORN & CO., Inc.
99
.

WALL

STREET

NEW YORK 5, N. Y.

practical

importance

tolerance,

Refined

—

take

been

Before

minor

that

factor

$1.50

for

nickel contract in¬

19578

am more

•-

optimistic than most re-

believed

the

only
supplier of the type of stainless
sheet used in the Atlas missile—
is

rently

hot

to« purchase

the

semi-

finished steel it needs and Since
it has a small labor force per
dollar

of product

turned out, its

break-fven point is low. In 1956
it

brought into operation a large

Co., Lt9.

111 Broadway, N.Y/6 COrtiaatft 7-6SM

Radiog¬
Medical
.

for

Medium

and

'High

37 Wall Street, New York 5,

Power AM-FM-TV Transmitters:

It T.

However

p, * '* r'r

c-h JX, .p1

i*',.''!

MASSACHUSEnS
SECURITIES
X

* Trading
*

prtrnnips"' ambitious expansion • program in
ravpr<?
covers fl
a wiHp
wiae i the field of "Photo Sensitive" Shd C
v
i p t
n
pturage. tube types. Such tubes
a

ihclUdp the ^.Qi^icpri-""VidiV
types used in broadcasting
important and industrial television pick up

uroducti
com pa

One

f i

the

eve

During 1955, ,1956 and 1957

i°Pment

expenses

charged to

versely affected reoorted earnings

mar-

share anid profit margins dur-

Despite the/heavy charges, 1957

second -best in the company's 23

"the security I like best" because;

and 1959 is for substantial

(a) The company's business is
largely commercial (about 70%)
and its military business (about

/J11.my judgment, the investor
-(shares cunrently^auoted at 141

established

must

results will be reported as the

1956-

imProvem®nt'

little likelihood of ) ^960
'

for 44 Years

might be reviewingXhe fol-

lowing ♦ statistical record:

Natmal Quutatiwi Bureai

Earnings per
Profit

Sales

Quotation Services

/analyzing the Machlett record two
years from now, namely, early in

cutbackS.

Over-the-Counter

history and the outlook for

Year

30%) is on essential programs in
which there

'%IH^

ing these years. The full effect of

and development. In Machlett we
have this latter type company. ,
I
have
selected
Machlett
as

lines

HOV3|ff INo*

operations, have all ad-

current

large

I costs,, plus engineering and develL

enough to support such research

u c

;

the "expansion program" probably
wiU not be reflected until 1959.

its

Teletype ;• 8S-638S

ess.

If borne bv:the^PCr

be low.

itself, the profit margins
0f

>■

constructed, equipped and
started on its "shake-down" proc-

government

manufacturing profit

voiume

Telephone,Richmond 2-2530

was

development costs
the

ZERO,wsroii sS:

plant of 30,000 square feet

new

part

the

•*»"• used.in the "SAGE",'Contmental Defense System. t ; .
;;

and

ACuAjJUt84 CO., INC.

The burden of these large
successful»capital expenditures, "break-in!'

the

//•

rifMHHP.: ;•« c.i;#r.

tion" types such'

1 o pm ent

expenses

Character Presentaas the i"Scrip-

cameras and

r\
n

indus-

KELLEB

n^d

try is that red

"Vrv

hie s ^

characteristic
of

RAarkets

Retail Distribifttiofi

COmpany

■

"pi

gjns

•>
^ F°r the past-three, years the
company has been engaged in an

and thereafter

horne

p r 0

.*>

continuous.

and

Canadian and Donatio

companies must be substantial arid

future

Investment Securities:

Belmont Towbin

are

Biiierif"p'-Mi

:: V V?:

'*'■

;V/

total package of current recession for The Voice, of America-and
gl;ad<;. earm*\g Power» ufl!re
t Rhdio Free Europe; for Pick-up

bands, Washington
good position cur-

Yamaichi Securities

Broadcasting

Tubes

gating an industrial^

V* 1

;

Research.
:

• ■

,;,"W

■v.

for

"-V

•'■\ 1'-;';ij, TAfcy^ Ja|ian•.V j/*■ v
Brokers
^Jrivestbtent^Mitnkern'j':^

Televi¬
'

-v
•

Affiliate

Mn+oviol

Diagnostic
for Therapy; for

raphy:

•:

New York, fine.

Industrial
•

write

Securities Company

Voltage

o>-,rl

Wonnartioii

Yamaichi

High

Medicine

Tubes

in busi¬

would

for

•> P £?*.'

sion.

non-recurring

conservative estimate but I

tin

competitors have put in
Sendzimirs also, but Washington
Steel s
consistently
maintained
high standards and specialization
m stainless sheet
give it
a^ forceful
sales
position.
Washington
Steel

Call'

■>t

rnn+vnl

Duonoee

Analysis;

rUi

will

company

but had to be had to stay
ness.

had

the

Sendzimcr mill and revoiutionized
this branch of the industry. Now

Liquid

the

substantial

write-off in

helped Wash¬

plate business with run down
plants located about 40 miles from
Pittsburgh in the direction of
Wheeling, West Virginia. A group
mheaded by young Tom Fitch took
it over m
1945, put in a small

DIgby 4-2727

*♦

Nation tric Heating:

curred when the metal was scarce

ington Steel sell steel.
Washington Steel was the first
company to roll stainless on a
Sendzimir.

r. "For cnrrent

XXiXeTftscal ":ve£r for Process Control and Material

though

even

the

a
complement of some
probably not huge eco¬
nomic importance.
As the largest single buyer of

Exports—Imports—Futures

of'

current:'

vrbroadcastinr Sstry fnd
1 Over-VimolifiS^the -1
t^corwanv^

customer
pays for steel he doesn't need. I11
ordinary steels this doesn't matter
too much, but stainless is expen¬
sive. Ability to guarantee a much

stainless
—

million

$9.7

graphy and Thickness Gauging-

since

though

Raw

JAPANESE

a^eaSre°sLrag
SlltiiC aeCJUS nLslbl?m
pOsalUlc, lil WashVV disll

10%. This is of consider¬

this

SUGAR

interesting.
30th
balance sheet

Rectification;, for Industrial Racu-

stainless is sold by the pound. If
a mill rolls thick, but within the,

-closer tolerance has
;

at 01

very

allowed

20, the stock

the

fhp
the

able

TWX LY 77

to New

of MachlettV specialization'

ah-unreasonably

depends on how fa»i the

—5-2527—

not

At under

Direct wires to Our branch offices..

•

against $2.4 million of curtipn
rent liabilities.
Long term debt I?
{en
was
$1.5
million.
There: were
16,719 of $100 convertible pre- -{ ;
ferred and 595,661 common shares, acu^mes are.
, v
^
'PUrt
OKn
rtiiOT»4n**Lf
/Htrirlonrl
IAAIXC
'/
-"I*
The 25c quarterly dividend looks
Industry
safe—what
1958
earnings
will

ity.

LD 39

low—about 40% of capacTu*)es ^or. TV? Cameras.
V"^;C
At full capacity it could earn Hkeable^. hi^aag^n^nt
and _ the
National Defense W"
ranpp
nf
Washpossibilities
for
. future
develop¬
range of $5-$6-$7.
Wash
ment that such management 1mTubes for the Continental De-*
ington Steel has never earned
this, its top was $3.39 in 1955 but plief l00^ attractive to me. The fense Program: for Radar—Sonar
Mi
1 i tary Communication; for
it has never been able to fully st°ck 1S h-aded 10 the Over-theMissile arid Anti-Missile Defense.
use the capacity it now has.
Counter Market.
• :
Washington Steel specializes in
'
V
^Communications and Air
rolling stainless steel bands into
BELMONT TOWBIN
Navigation
-/;,X'/ .:■*
finished sheets. It buys hot bands
Partner> C. E, Unterberg, Towbin Co, (,: Tnb_ for Two Wflv T
from various suppliers and puts
aw vlrt fitv "
lut)es lor .iwo-waY Land<Mo->
them through its Sendzimir mills
y
...
;
bile MicrowqyeRelying: forHigh:
and
turns
out
extremely fine Machlett LaboratorloSf Inc.
< • Power? Long .Distant Communica- finished sheets. Washington Steel
rpb
ihP
fin-raiipn
qnmlipd weWtror»ir«;"'-irii'
PiPPTrnnrrs
,*or 1 ^ye^seas . Toll Radio
mTelephony;
for
Closed
Circuit

TEL. REctor 2-7818

American Furniture

the

for

NY 1-1557

Mobile, Ala.

Machlett^!

■

see

you

—

wander.

industry

Tubes for Induction and Dielec-

inter-

wait

just what the
actually do, although* $T.

death threat¬
ens

have

showed

stock

—

«el^ctronfcs»

Investors

too.

York 6, N. Y.

HAnover 2-0700

New Orleans, La.-Birmingham. Ma.

assets

and sometimes

this is

will

September

should

you

19 Rector St., Mew

looks extremely

even

new—so

off

estimate.

something

Associate Member
Stock Exchange

" ~ American

Mevibert Neta Yotft slock irchange
Members American'Stock ts&uMge hi

;

nickel

the

dribbled

hear

Boughf-r—Sold-*-~Quoted

facturer of x-ray tubes and an
jmp0rtanf manufacturer of spe-

oLnjckel -whichi in

less

pany can

that
public

feeling

Corporation

Louisiana Securities
,

cialized electronic tubes, Machlett

boom

wsman's

n e

rolling

shortage ended, demand for stain-

letter, the
I do, you
develop a

New Yoifc Hanseatic

}vas a shortage

has

;

near

large

ket

nor

■

of about 3,600 tons a
However, it has ' "never; ——
using this because

month.
come

way

be,

now

brokerage house is likely to have
a ''security he likes best" at least

weekly

intended

are not

Sendzimir and

Washington Steel Corp.

twice

lems.

X/.

Steel Corp, — Walter
Gutman, Research Analyst,
City (Page 2) <
Machlett Laboratories, Inc.-—Bel¬
mont
Towbin, Partner, C. E.
Unterberg, Towbin Co., New
York City. (Page.2)
K.

New York

offer to sell the securities discussed.)

WALTER K. GUTMAN

it'

Alabama &

Washington

contacts.
It will pay you

as an

;

Forum Participants; and
Their Selections

A continuous forum in

Thursday, March 6, 1958

...

Earnings

Share Based

Margins

588,000 shs.

Market

Range

BsMaisbet 1913/

8,000,000
10,000,000

12,500.000

16,000,000

293,000
400,000

750,000
1,000,00

0,00<j. ~ •

3.7^

.50

16-12

4.0

.68

18-11

6.0

1.25

20-12

1.73

35-20

46 Front Street
CHICAGO

New York 4, N. Yf
' BAN FRANC1BOO

Number 5722

Volume 187

Some Observations

INDEX

Business

Slumps and Recessions
By HON. HERBERT HOOVER*

•

Former President of the United States

;

—Sumner

of creating
terms

/'minor slump/' finds

economic interferences-to interrupt
says

L.""i

and

em-

ployment. The 1

"/ debate

/-is/

rgely on 'v
/ when - f
and
how we /

"willv get

out

':/> whether

our';

shall be hope-

provided

Herbert Hbover

friendly and
throw

dead cats.

Our country has invented a
Special nomenclature to describe
the stages "Of this sort of -misfor¬

slump, readjustment, .recession and depression.
If we use
the terms dip, slump, readjust-

;

ment, or recession, it makes the

-dip,

business

world

the

and

unem¬

ployed feel better.
The term depression carries reminiscent ter¬

ror.

Just

for

comfort

your

may

•

;

excessive speed. Then a tire leaks
and we have a bump. The spec¬
tators engage in extreme pessi¬

;•

mism.

their

■

own

actions

can

subject of depres¬

mention

may

that

the fabulous intellectual and eco¬
nomic power

world-wide

myself.
from
know

these

by which I created
depression all by

something

claim

might

least

that I

tributes

about

must

depres¬

that

depression we
were on our way out of a normal
dip, slump, readjustment or re¬

"we

recovery

*?An

the
New

address ' by

New

York

York
City,

struck

were

Hoover

Mr.

before

; ;

have

the

»;

...

;• •

;

z*'

•

...

the

HYCON
5

•

MANUFACTURING

*•■>'■

*f'

Ci;

"■

Vf"

••

J.F. Reilly & Co., Inc.

Members Salt Lake City Stock Exchi

Spokane Stock Exchange

1 Exchange PL, Jersey City

Stifle Banking Competition

Laws—Hon. Carl T. Curtis

Teletype: JCY 1160

—

the Mortgage Market

„

BOLSA CHICA

Time With Inflation

OIL
18

—

and

It was
the

inflation

vent

and

Public

Spencer Trask & Co*

Lithium Corp.

___

—;

in Registration

General Minerals

—-—-

The Security I Like

Corner.—

and You—By

The State of Trade

Offerings

Wallace Streete

Best

Published

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Thursday, March 6, 1958

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•

COMMERCIAL and

FINANCIAL

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—

Washington and You

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...

and Industry

Members New York Stock Exchange

BROAD ST., NEW YORK 4, N.

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Reporter on Governments^

Our

great contribuwe
had
cyclone.

Bankers

Wilfred May.——/.—.—.....—

Observations—A.

Direct Wires to

News About Banks and

inc.
PL, N. Y.

Teletype NY 1-1825 & 1-4844

ing of prices by industry. /.
There are some old and proved 1
wonder drugs useful both to pre- '
covery

—

recovery

Second, there should be no

British Disinflation

Mutual Funds

•

Mackie,

HA 2-9000 40 Exchange

Activity

Indfcations of Current Business

...

of the News—Carlisle Bargeron.

From Washington Ahead

loyally carried out such an agreement for three years beginning;
in 1929.

Recommendations—....^

Einzig: "Duel of Nerves Commences as
Continues"

every;

Singer, Bean

...

Investment Field.....

Dealer-Broker Investment

might remind you that
employers made and

idea.

.Cover
—

Stocks../

Coming Events in the

Stopping Recession

labor

Bought—Sold—-Quoted

...

(Editorial)

and Insurance

Bank

purchasing value of *

First, we have bo wave of wage
and fringe rises. This is not a new

Millionaire

Dollar and Becoming a

As We See It

Albany

Teletype: SU 158

Regular Featureg

specialized in

'Nashville

Exchange PL Salt Lake Citjr

DAvis S-S786

Municipal Finance

—Roger W. Babson—

WILLIAM B.

•

HEnderson 4-8504

DIgby 4-4970

i..i. 12

...

N. Calvert

Starting With
-

MINERALS

B. Klaman_;»_._J.—1—

—Geoffrey

The

TELEPHONE HAnover 24300

UNITED WESTERN

z—. •

■

Keeping Pension Benefits in

pension of $1,000.
If
we
want to stop it and at the
samfc time stop this recession in
its tracks, we need some home¬
work in the industrial world.

Chamber of Commerce,
Feb. 27, 1958.

Consultant—Robert E. Toolan.—

For many years we
1

•

get "

z—Saul

■

-r-August Ihlefeld

^
t

Thrift Institutions' Activities in

great

cession, whichever term you pre¬
fer.' But
in the midst of our

;

ating excessive expenditures and
irresponsible action in the opera¬
tions of our productive facilities. /
In the last 21 months inflation

started before the

By Growth Obsessed—Bascom H. Torrance—

the result of .pressure groups cre¬

tion

sions.

LITHIUM; CORP.

A Misuse of Taxation to

devaluation and the ex- /
of World War II have
reduced the purchasing power of
the dollar by about 50%k
Then
inflation was stopped for a while.
But it has struck again.
That is

once

upon a time my political opponents honored me as possessing

v.:

We by

dollar about $70 from

sions

;

route of inflation.

income and

And on the

Typical Questions Often Asked of

can

the

Expert on Depressions

^;//C-,z.:.7

-»•/

considerable
be done by the

Seldom in our history have
bumps developed into a de¬

and

the

■i

/ .Puerto Rico's Raw Materials—Morris Moses-l.^--_—^ 14

Inflation

into

That

trouble.

i.r

z/Bahkihg*s Role in'Puerto Rico's Development^_^-z

The first lesson is that a people
themselves

' ./•

•,

•

/ —Harry Rudick

the z.
vicissi¬

years.

experiences

Lesson

GETCHELL MINES
-

The Consequences for Investors Under Puerto Rican Law

Xfi-

tudes with booms and slumps.*
/

••

•

Facilities Available to

'''.■•*■•** 1

•

and

own

our

cut

•

world's

Cover

/; Fuerto Rlcan Industry—Rafael Pico___^___„___„_

lessons that can

has

pression.

from

Needed Labor-Management

are some

had

'./ •+ •/•-

•

commod-;

or; 10

every1 seven,

about

/come
(

In terms of time the bumps

HAILE MINES

/- "Puerto Rico: Island Workshop and Holiday Haven of
///- Caribbean—Ira U, Cobleigh-___-

penses

mention that even as a partly free
economic system proceeds down
the highway of progress it occasionally bursts into a joyride of

/.»

terms business-

We use the

:.i;.

v--i"

V Financial and Other

•

a war.

There

] I

tune.

/■/■;"*
.

hatched today—
of course we keep our
enemy, intimidated -. from

great
making

YORK

such ; economic':

are -no
cyclones being

our;

kv' 'r,] f

thereV;

WALL STREET, NEW

Telephone: WHitehall 4-6551

Articles Dealing With Puerto Rico ;

expert,qualifications I;have looked over
the fwo'fId, and i/may rsay /that <

;

Vital

Building Industry

Mason.

'—

W P~ •«:-»

//''Why Puerto Rico"—Teodoro Moscoso

my "acknowledged

joining "this;/
discussion I
t

suspended;£biiying

./With

dig
it
deeper. I n

•

>
V.

will
:

i>WV, ,-fWi.WMi*.

■">

Europe,/including the Bank -of J
!. Englahdic e a s ed
international
payments. //And" those countries

el;

'WU-

budgets,
inflation/and other governmental
foolishhess./'They gaVe birth to a
/panic in most of Europe. In/that;
panic/practically te^very .bank' in

of this hole

•"

M. -Soule—

—Norman

armaments, .unbalanced

—Don

The Washington Outlook for the

cyclone,from , Europe..- That .was?;
the result of *the aftermaths of
World War 1/ the Treaty r. of
Versailles,,-and sequent follies in

Where,

"•'I

'**'■

"put into

are

ness

•A"

be made without injuring national . defense

"Aside from Communists, Defense, Sputniks, Explorers, and
missiles, the major conversation
in the country is on this minor
slump in busi-

essential services if Hoover Commission recommendations:

f:\ ■

cash

---

/v Considerations—Hon. Richard M. Nixon_—

can

and

is 99 Wall!

May——

Will Credit-Ease Cushion the Business Downturn?

lays particular stress against reducing taxes without correspondSng reductions / in government spending, and /claims

which he

in the last depression/ and />prescribes a

■>

—

—between obsoletes

;

Brotherhood, Economic Recovery and Other

or
r

our recovery

inflation and speed; recnvefy.T Mr. rHoover

budget cuts

■<V

case

to avert

program

the

was

Wilfred

—A.

cyclonic

Foregin Aid aud Trade: Crucial Issues of 1958

world-wide depression, ex-President Hoover

current recession

THE LAST BRIDGE

Business Slumps and Recessions

Hoover——/

-—Herbert

Humorously absolving himself from.charges of being capable

Cover

Slichter

Some Observations

Chairman, Commissions on Organization of the Government

andf Industrial Relations

Current Outlook foi* Business

;

Page

Article* and New

;

(1043)

The Commercial and Financial Chronicle

for for
muat

eign subscriptions and advertisements
be made in New York funds.

Teletype NY 1-4040

& 4041

;
.

Direct Wires to

PHILADELPHIA

SALT LAKE Qltt

■

The Commercial and Financial Chronicle

(1044)

Facilities'!!

Financial and Other

Available to Pneito Rican Industry
By DR. RAFAEL PICO*

the

value of real estate.

Foreign Aid and Trade-

is made on regular amor¬
tization, usually monthly, and the
Bank requires a number of stand¬
clauses

Thursday, March 6, 1958

Re¬

pay merit

ard

Crucial Issues of 1958

protect itself and
the public interest, as well as to
improve marketability of the

By A. WILFRED MAY*

paper.

Development Bank for Puerto Rico

President, Government

Mr.

available to

outlined by Dr. Pico

Id industrialists in the Puerto Rico
Industrial Development Company.
The principal PRIDCO assistance

Rico

are

industrial

enterprises

asserts

recent

the Foreign Aid

promote

Puerto Rico also offers facilities

explaining the purposes of the island's Government Develop¬
ment Bank and Industrial Development-Company.

enterprise development in Puerto
in

private

encourage

May

Washington bipartisan meeting to
Bill has highlighted problems in
aid-trade area. Notes unwillingness
frankly to face program's
faults, as waste and duplication. Feels featuring of Aid Issue
has confused public over importance and nature of the
pending
Trade Agreements legislation. Points to difficulties in <edu-

PRIDCO Assistance

Financial and other facilities

;

its

building

program,
under which
part it arranges financing from
224 factory buildings with a total
eating the grass roots voting public; concluding that the v,
other sources. The total of all the
value of $42 million had been con¬
real facts must be given to the people directly by the President.
finance industrial and other de- financial arrangements completed
structed up to June 20, 1957. 'S
velopment enterprises in Puerto by the Bank from 1945 .to the
The giant bipartisan
A supply of standard PRIDCO
pro-For- Mr. Eugene Black's sound policies
Rico. These
present is more than $600 million.
This
assures
financing for the buildings of 6,000, 12,000 and 20,- eign Aid mass-meeting staged in in administering the $3,500 million
resources
are
000
with Eric Johnston World Bank. Would it not actusquare feet is always avail¬ Washington,
basic services such as highways,
largely com¬

pool of official resources of
more
than $100 -million helps to
A

mitted, but
part in
liquid funds
the

ports, water, electricity and able, ready to be occupied. Rentals master-minding
tions to the
schools, essential to economic range from 50 cents Uo 95 cents
per square foot, depending on the n-th degree
growth.
location and design of the build¬ under the EiLoans by Bank ing, and leases are offered for; a senhower
> Loans
made to
business and
has
10-year period. This helps indus¬ aegis,
other private borrowers made by
trial firms which do not wish to h i ghlighted
the Development Bank have ex¬
tie up their capital in real estate some of the
ceeded
$60 million from
1942 but want to conserve their funds interesting
through 1957. This includes $25 for
machinery and working capi¬ problems in
million of housing loans which
this aid-trade
tal.
V■' 7-'"' 5
helped to get the ball rolling in
In addition PRIDCO builds area.
large FHA projects in the late
W h i 1 e Mr.
special structures to order which
1940's.
Of the b u s i n e s s loans,
J o h n s t o n's
are
leased on negotiated terms,
which in total have surpassed $35 with the
building being amor¬ show demon¬
million, three-fourths have been tized over the
period of the lease. strated Madi¬
for manufacturing firms and in¬
In recent months PRIDCO has of¬ son Avenue at
dustrial ; buildings.
The
largest fered for sale a number of its its
very best,
loan
was
$4
million and the
buildings, and this program is ex¬ it has strongly

the

public

rela-

ally promote public confidence in
our whole foreign economic
policy
if

this

makes it pos¬

for the

sible

Common-

Gov¬

wealth

ernment

continue^ giv¬
ing support to
sound new

ac¬

commodations
are

Dr.

Rafael

Pico

not avail¬

able elsewnere.
investments

are

Furthermore, the
of a revolving

character so that the financial op-

eration

continue

can

the Puerto

s^ilest onl*

Rican economy progresses.
The Development Bank

The

Government

Development

with total assets of $66.8
million at the end of 1957, was
in

1942.
^

principal

Its

principles which

the Bank follows is to lend only

Bank,

created

$300

loan

Qne

to assist the finaneing of private industries and to
arrange, as fiscal agent, the shortterm
and long-term
borrowings
for the Commonwealth, its authorities and municipalities.
•

when normal sources of financing
are not available. The Bank ininsurance companies

vites banks,

lenders

oBier

and

participate

purposes are

deposits

the

made

provide additional
resources, the Bank borrowed $15
million in 1957 through general
obligation notes to mature an¬
nually in the next five years.
These notes, met with a very favorable response when they were
offered

number of banks

the continental United States and

Puerto Rico.

...

„

centers,

agent, the Bank plans,
coordinates, and executes the bor-

Occasion It
agencies,
'11

i*2.

lends

lestauiai ts, ai d ot er p
poses.

V The
quite

use

the

flexible.
of

expansion

loan

funds

is for

broadly

operations

the

initiation of a new enterprise. The
loans

buildings

working capital. The

maturity,

machinery,

finance

may

largely

depending

from 5 to as

10 years.

present,

charged

interest

Bank

rate

(following

loans. ; Collateral. is

PuertolCRic0" briefing required, and loans

are made

only

w«h^,^„u;r<£ New t0 so% of the raised value of
machinery and equipment or 60%

City, Feb. 6-7, 1958.

demand.

Another

its

And

PRIDCO

which is helpful to the new inves¬
tor is aid in assembling land.
It
has

authority to acquire, sell

lease

industrial

land.

Its

land
upon

projected future requirements

diversion

PRIDCO

Economist
are

the

INCORPORATED

PHILADELPHIA 9
NEW YORK

•

PITTSBURGH

LANCASTER

•

ALLENTOWN

ATLANTIC CITY

Asia

dam

our

semblage

final

authority

item

vestment

ble

given

interest

that
brings

votes,

in the Middle East may

the

can

off

opposition
be
merely "isolation-

PRIDCO

The

40%,

since

over-

the end

Anti-Waste Affirmation

Called

to purchase converti¬

securities.

of 25 to

of World War Two.

the

minority equity in¬

For

that

.385-hitter "Stan-ttie-Man" Musial

feiiow

Louisan

St.

Gashouse

and

Gang rooter, Harry Truman, was
out 0f the hall).'
V "1
Tiie "Hard-er Selling" of Trade
But

will

examination
avoidance

need

for

sell

international

trade> which doesn't enjoy the obsanctity of the pleas for

vious

Aid.

Furthermore the

motion

endeavor

tion.

trade pro-

definitely
the hand-out agitaplace, the con-

first

the

centration of the official show

the

public's ignorance
of the prior importance of
trade and the interacting effect
of the two, as well as furthering
disinterest

the

Recession

Steps Up Importance

re¬

given that

hard-headed

difficult

even

the

latter.

Assurances should be

there

approach. So
atmosphere at
Washington
asidentification
of

the

was

Johnston's

Mr.

greater embracing

completely stumped the sponsors
(As the London when it became his turn to be
"Congressmen introduced (presumably his former

disbursements, with

head

bring thanks.")

even

with that charged by the Govern¬
ment Development Bank.

waste; including
duplication of con¬

The
realize

public

should be made to
in

that

contrast

the

shot-in-the-arm of Aid, material
to tributions
through the United Na¬
exports provide the real bases of
make minority investments when tions
machinery, as in "technical
wealth abroad as well as at home.
its participation will assist in in¬ assistance" and the special Proj¬
This is particularly important at a
fluencing others to invest.
The' ects Fund. SUNFED apd the In¬ time
of
"recession-depression."
ternationalDevelopment Fund
total outstanding balance of mi¬
The reciprocal trade policy was
embody two typical proposals for
initiated
by
Secretary Hull during
nority investments by PRIDCO more of such overlapping joint
the depressed early 'thirties. Par¬
was
$2.9 million at the end of spending. These camouflaged give¬
ticularly at such times of business
away stunts are now superseded
1957.
decline will other nations, worried
The portfolio of common stocks by the so-called "Monroney Bank," over their
dollar
exchange re¬

to the

policy

se¬

public, after the enterprises
established
in

turn

the

will

creation

their

success.

capital

contribute

market

to¬

Mike

Monroney's

serves, act to reduce our exports to
sothem.
Already
Britain's
Prime
"loans," involving uneco¬
Minister Macmillan is reported to
nomic interest rates, unbusiness¬
be planning export subsidies or a
like risks—along with repayment

for

brain-child

extending

called

local

currencies, via disguised
always shunned by

subsidization

general
Puerto

Rico, to the benefit of all indus¬
trial operations.

STROUD & COMPANY

millions

plea for
lieu of

rarefied

public's

Madison

the

Toots

grass

the

co-signer or the parent company.
The interest rate is usually in line

local

of 12 largest Philadelphia Banks

the

enhanced

ward

Send for comparison

ajd

guaranteed

BANK STOCKS

moneys.

lateral

are

col¬

desperately

helpful

hindered

Under

his

support

Development ton jamboree in tailing to recogBank.
Generally these loans are nize justified criticism of past
secured by property or other col¬ waste in the $60-plus billions of

This

PHILADELPHIA

the

home

Government

have

Maintained in all

Also

and

Avenue selling of the Aid "prod-

which

curities will be available for sale
-

A. Wilfred May

conscious

one

Senator

Trading Markets

needed

California

democratic

bombardment

Secretary Herter
leagues for
the

$2.6 1st," "strackpot," or some other
million were outstanding at the variety of "ornery" Congressman.
end of 1957, are only granted to Instead,
the "pro-Aiders" might
firms which are unable to get well fill the vacuum shown elseloans from commercial banks or where as well as at the Washingloans,

toward

puts it:

very

built

while

brushed

and convertible bonds or other

Active

Indian's

accentuated.

Nor

PllIDCO Loans

advancing

\ prosperity." This in the face of the

realism

fit to tell the press that "India

saw

when

—

subsidy

another

off? On his return from Asia,
Henry Cabot Lodge, our Chief
representative to the UN this week
pay

tict" would be

dam

real¬

about the program's effects to date

ing the foreign help idea to the
grass roots.
This is only partly due to the

not

for factory sites.

wouldn't

manifested the difficulties in sell-

"recession"

operation

1955 to make

the

by the

oommefcial

over

buildings in advance

new

the

that it will

capital
rapidly and continue to put

directly'to thSe f"era! 1,CTe's, 01 Tates] J?, ®**
for the most ior industrial loans and 7 V2 fo for
,

"Doing Business in

York

hotels

although

turn

rna„„

tourists

high

As fiscal

charter

buildings,

office

for

the purpose, can run

Fiscal Agency Function

its

loans

shopping

Puerto

facturing enterprises, it also has

Rican Government and its instrumentalities.

able

bt ^ive a preference lo

A
second
major
of funds is about $20 mil-

million.

lion

the Bank

though

capital of the Bank plus
reinvested earnings now exceeds
source

and the loans in its portfolio are
acquisition policy is based
available for sale at any time. Althe

;The

$30

lts f°ans whenever possible,

pected to continue

project were
referred to

Aid vehicle?

projects when
financial

istically

""Excerpts from Mr. May's remarks on
broadcast Foreign Affairs Round Table,
(Christopher Emmett, Moderator)
Sta*
tion

1958.

WEVD,

New

York

City,

Feb.

28,

call

the International

Fund—either

vastly

of which

Monetary
would

costly to us than the

acceptance of imports.
The public does not
four

and

half

realize that

million

our

Volume

ment

137

Number 5722

depending

The Commercial and Financial Chronicle

export tradeonly 400,000 that
could be affected by an inflow of
competing tariff-reduced
goods.
on

Puerto

Puerto Rico—Island

contrasted with

Industries

And

importantly dependent

Jheir exports include coal min¬

ing

(with

10%

construction

Enterprise Economist

Rico

reach

export industries.on imports,
; is
needed.
Such;
dissemination of the realities

—vocalization
be

least

stepped

some

way

that

engaged in
interest
by . the

tions

could

for

the

that

by organiza¬

National

.million

Foreign
Top business fig¬
should be on the air, getting
„

Isla

airlines

and

good and' mad with slogans, as
perhaps "Protect our $20 billions of
exports," in lieu of platitudinous
lip service. Too often such indi¬

would
U.

Ira

viduals give the impression their
interests are divided.

Cobieigh

pare

favorably

with

com-

air

any

terminal, anywhere. If, instead of
flying, you'd prefer water travel,
threatening imported object; there are eight steamship lines
recognition of the fact that it is serving
Puerto
Rico
to
choose
necessary to import in order to from.
Whereas

voter

involves

export
a

the

can

the

see

difficulty

When you

arrive at this verdant

isle, at the Cross Roads of the
Caribbean, you will be immedi¬
analysis, the obstruction to edu¬ ately impressed by the mild in¬
cation from
over-slickness, from gratiating climate, averaging from
obscurity, from aloofness above 75 to 85 degrees the year around.
the
grass
roots, and otherwise, (There was quite a migration of
to

seems

that

in the

last

can
best ,,be
overcome
by
the
President himself giving the facts
directly to the people. And this

is far

this

sun-seekers from Miami to Puerto
Rico in the past 60 days.)
Ele¬

gant up-to-date

hotels invite you
to be their guest—the Caribe Hil¬

vital to the well-being

country and the world at
are his efforts pro-Aid!

ton, completed in

large than

Fenton

has

itors

City.

Mr.

Fenton

vision in

There

was

Dept. of Commerce
Opens D. G. Office
York

State

super¬

called "galleras."

arenas

horse

racing,

off-shore

But
is

getic, modern metropolis of 600,000 which spark-plugs a quite re¬

their

commercial

involving

Federal

This

dramatic

neither

H.StaHg, Asst. V.-P.

tal. It

Of N. Y. Hanseatic

was

The

New

York

ing

Cor¬

rate

growth

spontaneous

billion

Henry Montor

1940

above

Gulf

Oil,

Paper

Mate

been well received

(Only

this

the

week,

and in

1947

the

now

This

was

There

was

gram

for

sky & Co., Inc.

agricultural products.

- r

..i>

the

industries

Joins Murch Staff
,

Beaunit

Mr.

ment,

glass,

tobacco

sugar,

traditional

handicraft

sessed

property

Puerto

Rico

are

items:
well

corporation

Co.

Thus

'iff-

critical

V ;

;

There

the

over

reven-

record

Frank G. Plaisted

any

attractive.

The

recent

Joins

$25,000,000 issue of Puerto Ricb Water
Resources
Authority Bonds, offcred by a New York syndicate,
provided yields from 2.60%

i960 maturity, to 4.12%

of the

almost a miracle in the past decade, 'mi"■-**—and offers today both an eco¬
climate
which compares *favorably with
most of its Latin neighbors.

notable

are

problem

integrity.

As-

island, namely what to do about
its seething population of over 2J,4
milKon (663 to the square mile in
1956) is being solved, to an important extent.
Rising income
brings in its train better housing,
and
living conditions ($6,000$8,000 homes have been financed
mainly by a Rockefeller-backed
company, "IBEC"):<; In 1957 over
$66 million (out of total commonwealth outlays of $230 million)
was spent on education.

1995 maturity.

SAN

sociated with

as¬

Blyth. & Co., Inc.,
Russ Building. Mr. Plaisted was

formerly associated with William
R. Staats & Co.

Now With Bache & Co.
(Special to The Financial Chronicle)

CHICAGO,
Felsher

now

111. —Lazare

with

connected

Bache & Co., 140 South Dearborn
Street.
He was previously/with

enterprise

Calif.—

the

marketable securities representing

Rican

FRANCISCO,

Frank G. Plaisted has become

the responsibility of a sister unit,
the Puerto Rico
Aqueduct and
Sewer Authority which also develops and operates sanitary sewage systems throughout Puerto
Rico.)
<
••
In the non - tax - exempt area
Puerto

on Coast

the

(The Authority's function docs
not include the supply of commercial and domestic water. This is

•

Blyth

(Special to The Financial Chronicle)

not
too numerous, except through
Integral to the entire economic share purchase in companies cited
life of the island is the Puerto above, with branches on the isRico Water Resources Authority, a land. There are, however, South
Rico
Sugar
Co.,
Porto
public corporation and a govern¬ Puerto
Rico Telephone Company, Com¬
ment instrumentality created
to
monwealth Refining Co., whose
conserve, develop and utilize the shares
are
publicly held and
water
and
power
resources
of traded, and, of course, First, Na-

Cruttenden, Podesta & Co.

are

Hornblower & Weeks Add
(Special to The Financial Chtionicle)

CHICAGO, 111.—Harold F. Fill¬
has been added- to the staff

Hornblower

South

Salle

Weeks,

134

was

Street.

formerly with Dean Witter & Co.
and Central Republic Company.

'■

;

•

'■

■

We Own and Offer

Puerto Rico
'»■

Water Resources Authority

was

4% Bonds due January 1, 1984
at

allowed

4.10% Bonds due January 1, 1995
at

Market

pro¬

of
:

mumcipal Department

tax

Under

ciAllen

Company

set
30 Broad

any

these in4

■

in force.

Established 1922

annual
And. since 1950,
and corporate and indi-

by-virtue

Market

$100,000

vidua! income taxes have not been

Partly

--v/v

$100,000

desired.

Federal

was

previously with Edward N. Siegler
&

electric

because

default on a Puerto Rican obligation. Moreover, current yields

$1 billion; and Puerto Rico is a
$600 million a year customer of
the U. S.

but

and

valuations
now

Law, a corpora¬
given Federal (U. S.)
tax exemption for 10 years, and a

York

Davis

directly

record of Puerto Rico for financial

mainland

arrangement.

ing,

Exchange.

giving

are

mas¬

generous

rate

Stock

eXr

furic-

look. We would

Among the

attract

plant depreciation at

New

that

a new

inaugu¬

collateral

Murch & Co., Inc., Hanna Build¬
the

draw

plant.) All this industrial output
is in addition to expanded native
production in rum, molasses, ce-

Commonwealth

Davis has become connected with

Mills

ues,

tion could be

CLEVELAND, Ohio—Burton G.

members

housing

Puerto Rico

in the Ameri-

announced plans for a Puerto Rico

was

diversification

was

exemption

(Special to The Financial Ghjiontcle)

also

inducements

*
•

modern-RfghWays,

ceRent: port, facilities^ hnd

market not only because they. nomic and meteorological

famous

over-all

Kaplan was
previously with Arthur M. Kren:

island,

ter program designed to induce
industry to locate in Puerto Rico,

•

Mr.

- of
progress-—industrial,
commercial, cultural and educar

menfs

tional

(pens), and the Puerto Rican variety have
can

located

now

111.—Herman Kap-, and by greatly expanding indus¬
C. Patis have be¬ trial employment to raise the liv¬
come
connectedwith
Henry ing standards, and generate pros¬
Montor Associates, Inc., 134 South perity for the island population.

are

have

CHICAGO,

tame? goes

as.

tional—the

eral and state income taxes. They

American Can and Union Carbide

lan and Joseph

Street.

bigger and broader1

instrumentality' of .'-the/ Gbm—

Divisions of such
distinguished American companies

Economic Development
Administration was created in

Operation Bootstrap

Salle

the

1957.

rated.

areas,

acciden¬

nor

carefully planned. Dur¬
Depression, Puerto Rico

the

1942

325,000

growing

Authorities,

was

done.

president.

(Special to The Financial Chronicle)

serving

the

equally tax-exempt obli¬
gations of the Commonwealth it¬
self, plus some of the ^equities alluded to above, provide worthy
outlets for investible* funds ..in

cilities.,The bonds which the Aur ©n. *
... -/
• .•
thority;publicly;?sells^to ?finance ./-/It' would be difficult,, in.so short
these expansions, as Obligations bf a space, to outline all those ele-

didn't; and the economy was ham¬
strung by dependence on a single
crop—sugar. Something had to be

poration,
120
Broadway,
New
York City, investment firm, has
announced
the
appointment
of
Henry W. Seclig as assistant vice

Two With

$200 million in

in really bad shape. The pop¬
ulation grew but employment

Hanseatic

bonds

—a

Government.

•

The

($443 for 1957)Vis larger than in nionwealth of Puerto Rico, ^rq es-?
other Latin American coun- pecially; attractive to high-bracket
try except Venezuela.- National American investors. They are comincome has risen from a little over pletely exempt from U. S. Fed-

industrial development
development that has swelled
the factory count from a paltry 21
in 1945, to 504 at the 1957 year-end.

industrial

the

than

In common with all electric utii-

mainstay of
this bustling Caribbean oasis. The
leading city, San Juan, is an ener¬

markable

activities

and the

any

economic

New

and

serves

ca¬

than 300,000

transmission and distributing fa-

Munoz

force of 650,000 works the year
'round
and
per - capita
income

the

assist

businessmen

tourism, though important,

not

office at 1026 Seventeenth Street,
Northwest, Washington, D. C., to
York

total installed

Rico in 1958.

Depart¬

ment of Commerce has opened

baseball

are

game fishing; plus night clubs and
gambling casinos for those with
substantial, albeit expendable,
funds.
Over 200,000 tourists will
spend some $30 million in Puerto

Dreyfus & Co.

New

There

fighting under Government

N. Y.
The

from.

major leaguers in winter exhibi¬
tions. Boxing is popular and cock

become

formerly
with Cosgrove, Whitehead & Gam-

mack and

plenty of diversion to

parks featuring local teams, and

Neuberger & Ber¬
Broadway, New York

120

have

choose

associated with

man,

cost

$7,200,006; two other 300-room
hotels; and a smaller one with an
adjoining 18-hole golf course. Vis¬

Neuberger & Berman
W.,

1949, at

Gene W. Fenton Joins
Gene

Luis

York,

New

agency,

Authority has recurrent needs for Puerto Rico today; and the investcapital to expand generating; ment horizon there should prove

has

conceptual reaction.
It

Governor

Bank

a^so legal investments for Sav- like, however,, to salute: this CaVerde Airport
ings Banks in New York State.
ribbean
Commonwealth i and to
of San Juan, as General
Electric, St. Regis PaUtility bonds have-long ranked honor its-industrial vitality and
that serves 16 per,
Sylvania, Remington Rand, among our choicest investments; political integrity. It has achieved

Trade Council.
ures

facil¬

ity— the

ance

ities

zeal with

Bootstrap

Marin, thoresults have been quite
amazing)- 60%- of a- total labor

your

hay field
clearing, but
at.;1 a - modern,
functional, $20

Operation

been implemented under the guid-

from

any

organized
seems

d*'

aggressiveness'and

the

which

York;

plane doesn't
set down- in

scale4

their -self-

well

be done

comparable to

"high-tariff boys." 'If
more

up.

New

customers.

duccments, and especially due to

tant

stations with

rectangular
the Public?
semi-tropical isle about two-thirds
bring about public realization
as
large
as
Connecticut.
In five
of this
simple situation — the
swift airplane hours, you cm
dependence of our vitally impor¬
How Educate

kw.

favorable climate it offers for business and investment.
Puerto

It is

pacity rating of

and prosperity of Puerto Rico and the

progress

City

the major banking

with
huge $250 million nine branches on Puerto Rico. A
corporation that produces, trans- new, American financed, life inmits, distributes and sells over surance company,
International
99% of the electricity consumed in Life Insurance Co. of the AmeriPuerto Rico. It operates 19 hydro- cas is reported to be rapidly exelectric, four steam generating panding its sales on the island.
wealth.

By DR. IRA U. COBLEIGII

Workshop

and

Outlinhig the

tional

Rico, and to promote the
general welfare of the Common*

Holiday Haven of Caribbean

exported abroad),

mining equip¬
ment
(one-sixth
to
one-fifth),
agricultural equipment, raw cot¬
ton, and even textiles where more
is actually
exported than imported.

should

(1045)

•

EfT"Y—'

■

- 7 ; T

.:.

Telephone: HAnover 2-2600

Street, New York 4, N. Y.
*

•

"•

Jt 1, ;

- ————

—

■

—-

•

■

•

■

•

—*

The Commercial and Financial Chronicle

(1046)

this last provision is that Puerto -posed on the dividend any Puerto
does not wish to forego?a HicAn? taxes paid?, or deemed>:to

By HARRY

RUDICK*

York City

describes Puerto Rico's tax structure, ten-year
withholding tax exemption program under Indus¬
trial Incentive Act of 1954 for corporate and individual inves¬

Tax

expert

income and

correlates this with U. S. A. taxes to give ultimate

tors, and

position. Mr. Rudick appraises the relative merits of three
different corporate forms of investment (i.e., Puerto Rico,
Western Hemisphere and Section 931), and investments*
individuals residing in U. S. A. or in Puerto Rico. Finds
tax

starting point

pattern.

income

States—they

maximum

gain

about

income in excess of $200,-'

Rican In¬

83%

Tax Act

000.

However, income splitting is

come

adaptation

1954

not

dle

that in the mid¬

permitted

brackets

the

tax

rharried couples is

nal

that

Revenue

burden

comparable to
imposed on the mainland. v

the 1939 Inter¬

Hemisphere,*

or- more^ accurately.
North, CentraL and South Amer¬

ica, and' the West Indies.

Gross

38%, 14 points lower?than .the
general' tax7 rate.
: r;
If

Finally,

loss is recognized on the
shares of a tax-exempt

*Phitgd^States tax onnKhf income,
living the corporation* $48. fiet

7.8%: y on

income follow

resident on the Island.

generally

is reduced to 20% if the dividends

This rate

paid to citizens of the United
Harry J.
which we are States.
(A corporation, inciden¬
familiar here. For business, the tally, is not a citizen.)
most important difference between
The Industrial Incentive Act of
the systems is the special provi¬ 1954 has a two-fold effect on this

*..
Rui.ck
.

pattern with

are

sion on flexible depreciation.
A
taxpayer under Puerto Rican tax
law may, at his option, write off
all or any part of his investment
in any real" or personal
property

Puerto

Rico

be important during the post-ex¬

emption

period.

Another

major
difference is that partnerships are
taxed as corporations.
The

corporate rates in Puerto
Pdco range from 21% on the first

business and

the distribution

those

profits.
A corporation
which qualifies under the Indus¬
trial Incentive Act of 1954 is ex¬

the

period subsequent
exemption is taxed.

under the exemption program

correlation

The

this. Puerto

by Mr. Rudick before the
briefing Conference on "Doing Business
in Puerto Rico," sponsored by Bureau of
National Affairs, New York City, Feb. 6,
1958.

Rican

the

tax ".. on :

absorb :

only a 7.8% ,U.. S.
dividend, ' it. can't
tl^e;; rerhaiftder ' of ?, the
pays

the:

Rican

Puerto

dividend

tax

credit, arid the result is that the
tax; burden; becorhes ap¬

overall

In->tax-,x»f 25%.

establishing a plant under the
dustrial Incentive Act of 1954

proximately: 57%. Another-poten¬

objection^td

tial

a; Western HemTrade company is that
be subject to tixe penalty

isphex*e
it may

Presumably, some

tax

subsidiaries .Qlmain^

unreasonable ^ accumula¬

tions of income.

pends essentially upon the corp6-> Jjnd parepts will be cteqlyed:. at
rate form of organization adopted the vend of-; thp exemption; period

Section

;

931

•

;

Corporation

enterprise/ t° Jn*mir home^ the accumulated
The second United States cor¬
law,* a JP^f^ts.at a capitaljgamscost porate vehicle ? is a corporation
Puerto Rican corporation is a for-"- 'other than the 52 a, cost arid" the which qualifies under Section 931.
eign corporation.
As such, the business will thereafter beearned That section provides that a do¬
United States does not tax the in- on as a branch of the parent, i.e., mestic corporation which: derives
for

the

Under

come

Puerto

United

earned

Rican

States

tax

Rican/;

Puerto

operated-directly^by it.

States.

Western Hemisphere!Trade
,

against the United States tax im- its income is derived from the

80%

ac-

from

V"■ of

tico. exempts from the withhold-

The theory behind

law

tax

Singe the parent

sources.

Company

Puerto Rico.

Rican

sidered to be derived frpm Puerto

pattern with United States

(

*An address

Puerto

p^ept, company/^anduntil tlmt
taxation depends in the first in- t1^ ttie busmess woiR^ have^the
stance on whether the investmeht :.;".?.^ df -yh^u^Ytthat would otherin Puerto Rico is to be made by
?
.PMt111 taxes,
corporation or by an individual?^.11; tha other hand, if . the Puerto
Rican

under

wpjilcP.be that the United States 30 % withholding tax would - be
to the, tax would be deferred untiL such imposed on that part of its divi¬
^ " <>•
tfme as the Pucrta^Ricdn - profits dend distributions which was con¬

Thus, if a Puerto Rican.
Corporation'
empt from income tax for a period corporation is used as the vehicle - r
*
*
of ten years. Furthermore, Puerto for t h
e
investment, n o United -<y
other domestic,-corporate
States tax is imposed until the .vehicles are available for anrinig tax certain types of distribu¬
earnings are distributed bv. the;'Y®jJP1®rit in .Puerto Ri^^_One is
tions made by businesses exempt
subsidiary to its parent. When a a Western Hemisphere-Trade Cortinder the Act.
First, dividends dividend is
distributed, the United Ppr^tion an<P the other is a cor.distributed by such a company
States tax treatment is as follows
within 15 years of the commence¬
The whole of the dividend" is sub- ®31 of the 1954 Code; . A-» Western
ment of its operation paid out of
ject to tax—-the intercorporate Hemisphere Trade Corporation is
the first seven years exempt prof¬
dividend deduction permitted" on a • .domestic
corporation -- which
its are not subject to tax if paid
receipt of dividends from "a dothe following 4pts:. ^
either to
persons
residing, in mestic
corporation is not allowed.
(1) Ninety-fiver percent: or more
Puerto Rico or to persons not re¬
However, the United States cor- of its gross income is derived'from
siding in Puerto Rico who are not
poration is allowed a foreign tax > sources outside the United States;
obligated to pay tax elsewhere on
income
derived' by them from credit, that is, it may set off ' (2) Ninety, percent .or .more of
,

acquired by him
after Dec. 31, 1954 for use in agri¬
culture, construction or manufac¬
turing. For the period of indus¬
trial tax exemption, this provision
is of no consequence; but it could

It affects the profits of

pattern.
the

dividends paid, by* the
Hemisphere Trade ! Cor7

Western

in Puerto Rico, the only advantage isphere Trade Corporation is that

sale after the termination of

the exemption, only the amount of
the shareholder's gain attributable';t

Western. Hemisphere Trade

Corporation,

In addition to the corporate

the

United States tax; burden of

mum

First, let us consider the prob-: Rlcaa
w®^ toSB*
in¬ lems faced
by a corporate investor/®
•
income, de¬ come tax," a withholding tax of
,esvi ;v.| ,inod and then liquid^tpd,5the^result
ductions and approximately 30% is imposed on
Corporate Investor's Problem
wouldi b<e that dhe Puerto Rican
the computa¬ dividends paid by a Puerto Rican
The burden of United States profits would be received subject
tion of taxable corporation to
shareholders not taxation on a corporate investoronly United States capital gains
Code.

Such

corporation receives a .special de¬
duction which results in, a-maxi¬

.after Puerto, Rican dhdi;!United poration to its United Statesicorcorporation if sold on or-before ^tatesincome ta"x;- As cpmpared porate parent. A major roadblock;
the termination of the exemption. - with direct operation of the parent to the use of a Western Hem¬
sale

low of

*rr

;rits«business/- other

than incidental purchases, is done
in the countries of the Western

from

vary

and CV
(3) ^ All; of

were used for an in¬
Secondly, no tax is imposed on 'dend to the parent, Puerto Rico vestment iii Puerto Rico; a current
complete liquidation of an ex- wpuld withhold a tax of about $30 United States tax of .38% would
empt Puerto Rican corporation if onl
^ Widopd >Yhich the- corpo- be! imposed. In r."addition, ?tax
liquidated prior to the termina- ration could? creditragainst its ,$52 would be imposed at! the rate of

tion of the exemption.

conduct of a. trade, or ; busi¬

profits in
excess
of $133,000.
The rates of
tax imposed on individuals
are
lower than that in the United

fact, the Puer¬

taxable

maximum of 36.75%

lows the U. S.

brief de¬ $25,000

Thursday; March 6, 1958

the

;

Exemption Program is not a gimmick and that proper tax
planning offers unique opportunities to investors.
scription of the Puerto Rican tax
structure is in order.
Generally,
Puerto Rican income taxation fol¬

ness,

which will hot be a burden:1; have' been, paid- by it. Since ? in
to a foreign investor. For exam- this situation* the subsidiary would
pie, if a mainland recipient of have^paid no Puerto Rican tax,
a
dividend from a Puerto Rican the only* tax for• which credit eouid
company could credit the whole be ; claimed ^ wohld bey the .withof
tne P. R. withholding \tax-holding tax on divideii'ds. Tfie nbt
against his mainland tax, it or- return, to a corporate investor on
dinarily makes little difference the portion of earning? distributed
to him which jurisdiction collects as a dividend would, hence, be the
the tax and under such eircum- same as on; income earned. In the
stances, P. R. feels that its Treas-?Uhiteel States. To illustr^e^if a
ury, rather
than the mainland's Puerto Rican" cprppratioh .earhfed
should collect the tax.
*
? $100 and paid that $100 as a divitax

Under Puerto Riean Law
Lord, Day and Lord, New

tive

Rico

for Investors

The Consequences

of its gross income

within

sources

possession

the United States and 5.0%

of its gross income from the

active conduct of

trade

which

come

United

in gross
source

the U.

some

actually '

from

For

sources.

payments"

reason, -

ceived

States
its in¬

derived

States

busi-

ness, is subject to United
tax only on that part of

re¬

included

are

income regardless of the
which derived.

from

It is

therefore! important, if a Sec. 931
corporation, is used, ta see to it
that the income is actually re¬
ceived
once

Rico. -However,

Puerto

received

Puerto Rico,

transferred immediately
Paren¬
thetically, Puetro Rico is a com¬
may

mainland depository.

monwealth
session

than

rather
the

but

Code

pos¬

-.defines

"possession" to include the Com¬
of Puerto Rico.
In

IN PUERTO RICO...

mon wealth

Sec. 931 corporation is
generally, but not for all
foreign corporation
even
though incorporated under
United States law; and a dividend
received from such a corporationdoes not receive the benefit of:
the
intercorporate dividend de-!
duction generally allowable with
respect to dividends received from !
a
domestic corporation.
^
'■i
The major tax difference - be¬
tween
a
domestic
corporation
qualifying under Section 931 and
a Puerto Rican corporation is that
the former, being a domestic cor¬
poration, may be liquidated taxfree if the parent United States *
corporation owns at least 80% of*
its stock (other than non-voting
stock limited and preferred as to
dividends).
Thus, if the profits
of the Section 931 company are
all accumulated, they can even¬
tually be brought into the parent
company
free of .all tax.
The
effect,

YOUR

treated

purposes, as a

COLLECTIONS
i

■

GET THERE

!
I

PASTER

O ♦•••»»••

••••••

»,

WITH

-A/-.'.-

h*#'

.i.

- v

BANCO
POPULAR'S

BANCO

POPULAR

service effects

PUERTO

RICO'S

motorized

saving of time and insures prompt, effi¬
cient attention to all incoming and outgoing collections

MOTORIZED

entrusted

to us.

Puerto Rico's

largest banking institution
now in its
sixty-fifth year of service to world-wide, continental and
insular commerce.
!
*
*

COLLECnONS

...

SERVICE

,J~J

4 A

penalty tax on unreasonable ac¬
,

1113

ESTABLISHED

cumulations
of

threats for

it is not

BANCO POPULAR de PUERTO RICO

would

cluded

the

LARGEST BRANCH

FEDERAL

DEPOSIT

•

INSURANCECORPORAT1ON

reason-that

for

income
be

merits

Section
from

excluded.;

Investment

attempting to

relative

much

definition "of

the

gross, income and
931
corporation,

Appraises

NETWORK IN PUERTO RICO

applicable to income ex¬
from

Puerto Rico would

MEMBER

not

Vehicles

appraise the

of the three, cor-

Continued

page

Volume

Number 5722

187

.The Commercial and Financial Chronicle

(1047)

■J-'

abondon

Duel oi Nerves Commences

V*< fc -'"-v. •

•

By PAUL EINZIG

,"It is

war

realizes

Dr. Einzig observes,

now

that the former

vVf-'.?/' reversal in
•" i/h iVv
•

over

policy.

The British economist praises the

;;t

govern¬

were

■;

any

rate.

not

Socialist
Opposition.
Yet
it
is
arguable that the import of pound

even

notes constitutes ' an" additional
item of invisible, imports, and

tends to weaken the balance at
payments position. It also helps
towards the transfer of British
capital abroad in anticipation Of
a Socialist victory in 1960. There
is a strong likelihood of a flight
*£ *he present at- to meet the favorite trade unionist °f British capital as the date of
abandoned
there argument that if there is a "free- the general election will draw

£™^10n.

* The conception is gaining ground
that it is no longer unpatriotic to
exchange restrictions, salvage one's capital to the dollar
servative Government in the ef¬
The Treasury has now removed area
while
the
going is good,
fort to bring inflation to an end.
the limit for the import of pound Those who feel this
way argue

pared to cooperate with the Con-

•

nearer, owing to the prospects of
a change of Government.
*}

P°lltically- stead, the Government thas just
?ieJ?oti>re" taken a steP t0 relax further the

rSSlqlvi

physical controls to provide labor with face-saving concessions.
Writer weighs likelihood of flight of capital as
general election. draws near now that exchange restrictions
some

" '

Government

tempt(' were
might be no time for another at- f0r-all" for
capital there must be
tempt before I960.
But for the a]sp a "free-for-all" for labor. In-

t'&i-ST ment's resistance to inflation but disapproves refusal to impose
••£*

for the present at

The

prepared to facilitate retreat by
the trade unions by making a few
phry thing that would restore its face-saving
concessions.
If
the
popularity among those who nor-* trade unions intended
to give way
mally, vote Conservative would be their retreat would be greatly
V'c ury 0ver *
10n through jtacilitated if the Government were
achievement of a prolonged
prepared to agree to restoring
stability of prices before the gen- gome
degree of physical controls,

price inflation is necessary to win 1960
/election and the latter is hoping that a recession will cause a
victory

case,
•

„

of nerves" between Britain's Conservative party

and Labor movement,

higher

'ri?r^Sin r P®^lcal character,
>^Government is aware that the
•

their pressure for

wages./ Tne fight is assuming an

recently relaxed.

remaining

notes.

Duel of Nerves

This

that

■«.

long

the attitude of the

that pound notes trade unions is devoid of any pubsterling/.There ' Jtyremains to be seen how both formerly exported, legitimately or lie spirit and patriotism, it would
\Bfitafh is.not/,goingJtofbllbw the was a sharp recovery,"fully as'in-' .si"68 would react if the recession
otherwise, can now be returned to be too much to expect capitalists
+i,A
< should
become aggravated.
Both
>:• American example, of ".giving up explicable as the previous fall, on
the. United Kingdom and used in to submit to the gradual erosion

L O ND O N A Fng-

^-VAfterl'all,

securities and

means

—-

the resistance to inflation for fear
of

other than
depres-: etiological, grounds.

•

tne

ment; is /de-

.'I

termined
"•continue

the

adopted to

This

' *

4
,

had dost

„

•w-

into

action

and

ibdeed

throw the

their capital through non-stop
and the depreciation ot

Brit.1®n
follow the

Sees Flight of Capital -.*.
the trade unions and the political
Curiously enough, this?impor- wing of the Labor movement are
step was allowed to : pass determined to pursue their policy
that is not the without immediate protest by the of ruthless plunder.

would
by

however,

Macleod's

Mr.

tant

^f/'A-A

any

.circumstances to be construed as an offer to sell, or as a solicitation
of
of these securities. The offering is 'made only by the Prospectus.

offer to buy

; :

;

NEW ISSUE

///

March 5, 1958

250,000 Shares

'/,•

we
.

folly,
than folly, to.

worse

l'%

f >•

cou-

Now

It would

unions to speech,
— ••

-w///

went

soon.

are?tliere^;00vernlprLerit

This announcement is under

bave a better chance of achieving
price';.stability;.than':'-at. any time
since: the'war.

benefits of

too

reverse

inflation

made,/;/

because

the same wa^ as sterling balances.
It also means that the illicit ex-

unem

v ^

Mr. Macleod,

the full

/rageous

unemploythe Minister- of/. Labor. vt'Half a dozen
times since the war," he said, "we

ment,

re-

debate in the

House of-Commons

was

the part of the trade

Paai Einzi* V: >A& 1 s t inflation.

--'v/,.
quite clear, during

of laree s^ale

indications of-any willingness lead.^Judging

any

^measures

atraid

{

»xior

credit squeeze
and the other

dfmid

■.; ;

s^iouf recSn

uovern-^

•

on;

/•://>,

that the business

seems

„

now

It is argued
port of pound notes as a means Government loans.
th e r e recession in Britain would have to
that capital exported out of the
a
U is a duel
^r evading exchange control will
o m e
go much further than it has gone a serious recession, it is a auel ot derive
.Socialists
reach
is
salvaged for the
encouragement from
so
far ^ before"'the
Government .uerves, the outcome of which

though
r

Even

sib h.

any-ground

'■**

iphahCe^away^:v>'v>";r;?r

/^'Considering that

Mr. Mcleod is
reputed to, be in favor of the appeasement ;:of labor/ these; firm"

;

>•.;

//'

•

^ words may be taken

as conclusive
e^idetlce'-that the Government has. V

f no intention this time to

call off

$ the ' disinflationary/measures"
^

Jflrmness

i '

M 4This
displayof; "firmness has
•': v
ivtaken;:.the markets by surprise. It;
- A
i bad!; been expected -for some time-'
V /•;'
Svthatain^view/-of . the ifirmness '-of-^.
-i' sterling/the reduction of interest >> %•> 'A

$102 per Share

rufes. ;:intthe, United

share)

y i

per

;

'O'A'A,'

Surprise

(Par value $1.00

••

un-

less and-untilfthey have produced
their desired effects. v " •':'■■
!

5.05% Cumulative Preferred Stock

States

and

":|^1 (pl»^-accrued dividends from March 1, 1958)
•

;• _;

f.f/*,

•

'■

;.3t

•

■

I.t

^ -"T

^elsewhere,, the

; increase
of- the - :
gold reserve,; and the. steadiness'
^
vpf . the price; level; during the past;/ / (
twoA-.months, the * Government
/ might/ yield i the
temptation of v
lowering the Bank rate. When it...

/
r

Copies of the Prospectus may be obtained in any Slate in which this announcement is circulated from only
such of the und-ersigned or other dealers or brokers as 'may lawfully offer these securities in such State.
'{ Vv-V.'-i'-'
.'A'
f...\
" •••:
'
'•

■

raised

was

7% in September
few people expected it to be

very

still

that

level

•■''7

■

'■

March., The

>■

continuation

of
the
abnormally
high interest rates is causing much

discontent
sible

for

and

the

partly

unfavorable

of by-elections.

....

;

respon-

Ever since Janu-

the

announcement

rate reduction

was

Bank

;

Government securities.
/

J. Mr.
made it
a

•

rate

?
' '

reduction

not

mine lit.'; As a result, there
marked setback

f Goldman, Sachs 8C Co.

t.*.

tight

!/'

Stone 8C Webster Securities

Corporation

White, Weld 8C Co.

credit

Lee Higginson Corporation

; 1 "'a'*

Hemphill, Noyes 8C Co.

Hornblower 8C Weeks

Carl M. Loeb, Rhoades & Co.

Paine, Webber, Jackson 8C Curtis

should

Wertheim 8C Co.

Reynolds 8C Co., Inc.

>
f

Dean Witter 8C Co.

Wood, Struthers 8C Co.

Equitable Securities Corporation

Hallgarten 8C Co.

•.■

sterlings For several days during
the last week of February the
tendency on the Stock Exchange
on

been interpreted as a bull
point rather than a bear point for

and

r''-•'''/•
enough,
"-A

have

Clark^ Dodge 8C Co.

even
sterling was affected,. although the continuation of dear

and

Salomon Bros. & Hutzler

Kidder, Peabody 8C Co. j Lehman Brothers

Smith, Barney 8C: Co.

im-

was

;

•

Xhe Stock Ex^.

exchange.' Paradoxically

money

Eastman Dillon, Union Securities & Co.

The First Boston Corporation

Macleod's
statement
has
quite clear, however, that

Bank

expected every

Thursday.
Its
anticipation
was
largely responsible for the rise in

Merrill Lynch, Pierce, Fenner 8C Smith

;

Blyth & Co., Inc.

ary

results

;

•

r-''

Bear, >Stearns & Co.

the

ket ,.was

foreign exchange mar¬
anything, but favorable.

Before .the

however, dealers

that/taking
ernment's

the

week,

realize

came

Ladenburg, Thalmann 8C Co.

attitude

favorable

L. F. Rothschild & Co.

;

bound

effect

Laurence Mi Marks 8C Co.

R. W.

Pressprich & Co.

long view, the Gov-

firm

to produce

•

Spencer Trask 8t Co.

G. H. Walker 8C Co.

(1048)

The Commercial and Financial Chronicle

Epsco Inc.

■needed

Tea

nities to invest are

Co., Southwestern Public Service Company and Standard

Ilsley Bank—Report—The Milwaukee Company,
Michigan Street, Milwaukee 2, Wis.
Memorandum
Model, Roland &
Stone, 120 Broadway, New York 5, N. Y.
207 East

'
,

-i

5, N. Y. Also in the

—

■

Standard Pressed Steel

Co., 1 Wall

Street, New York 5, N. Y.
Copper Market—Discussion—Bache & Co., 36 Wall Street, New
York 5, N. Y. Also available are bulletins on Union Carbide
Corporation and Raytheon Manufacturing. 1
High Yield Stocks—Discussion of six
.

issues—Zuckerman, Smith
Co., 61 Broadway, New York 6, N. Y.
^
V.
Investment Lists—Lists of suggested stocks for
income, growth,
income and growth and
high yield — Reynolds & Co., 120
Broadway, New York 5, N. Y.
Japanese Electrical Machinery Manufacturing
&

Vitro Corp.

—

of America

—

Memorandum

—

Current information

—

of the

ian theory

turns

tural

report

must

The Business Downturn?

Johns Manville Corp.
Over-the-Counter Index
Folder

By DON M. SOULE

showing

up-to-date

University of Illinois, Urbana, Illinois

Illinois economist believes

if it

nomic

follows

holder

Co.

—

Annual report

—

Babcock &

Wilcox—Memorandum—A.

M. Kidder & Co., 1 Wall

Street, New York 5, N. Y.
California Oregon
Power—Data—du Pont, Homsey & Com¬
pany, 31 Milk Street, Boston
9, Mass. Also in the same
bulletin are brief
analyses of Foremost Dairies and
Oliver
Corp.

only on the private economy's
ability to maintain a reasonably
high average level of employment
but also on the effectiveness of

from Federal

downs of business

activity.

■

prescribing the cure for

Before

particular problem, the nature
cause of
the problem must

and

first

case

for

diagnosed correctly.

J
relatively mild UlViiWUi
monetary

The

greater reliance on the

AViUVA VViV

controls

V* VAXVI. VAM

rather than on \ strong fiscal conrather than on \strong
fiscal t con:
the verge
of trols rests mainly on an explanat
the leash would not cause the dog tion of business fluctuations which
to surge ahead.
But a vigorous does not imply that all
of how effec- young pup would
nearly always full employment area!
tive, a; policy be straining on the leash and indicative of basic de
of credit-ease would
likely surge ahead at the capitalist economic s>

predictions of a busiplus the Federal
Reserve s recent slight easing of
credit restraint* v^se the
question
downturn

can

Share¬

Relations Department,
Allis-Chalmers Manufacturing
Co., 1125 South 70th Street,
Milwaukee 1, Wis.

almost any
great doubt

not

and

tax, expenditure, and debt policy)
as a means of modifying the ups

phenomena, and ascribes a crucial, but not exclusive,
role to intelligent bank credit
management.

Numerous

ness

avoided

This theory casts

cost.

of credit as distinct

generally, that such a stimulus can suc¬
Jong period of exaggerated economic
activity. The author criticizes Keynesian concept of business
cycle, offers his own views of causes and cures of such eco¬

ceed

Manufacturing

success

be expected from credit-ease at the
present time though
he does not believe,

4. N. Y.

Allis Chalmers

system.

monetary controls (changes in in¬
terest rates and in the availability

considerable amount of

can

com¬

parison between the listed industrial stocks used in the
DowJones Averages and the 35
over-the-counter industrial stocks
used In the National
Quotation Bureau Averages, both as to
yield and market performance over a
19-year period —
National Quotation Bureau,
Inc., 46- Front Street, New York
Package of American Earning Power—Booklet
suggesting in¬
vestment goals and how the
package idea can help achieve
them—Dean Witter & Co., 14 Wall
Street, New York 5, N. Y.
Philadelphia Bank Stocks—Comparison of 12
largest Philadel¬
phia banks—Stroud &.
Company, Incorporated, 123 South
Broad Street,
Philadelphia 9, Pa.
Tax Reduction—An
Opportunity—Study—W. E. Hutton & Co.,
14 Wall
Street, New York 5, N. Y.

Assistant Professor of Economics

;

—

economic

implies that anything less
than continuous full employment

Review—Analysis of opportunities for 1958—Harris,
Upham & Co., 120 Broadway, New York 5, N. Y.
Industry—Survey—With particular reference to Imperial
Oil, Ohio Oil, Phillips Petroleum, Socony Mobile, Standard
Oil of Indiana and
Sunray Mid Continent Oil—Thomson &
McKinnon, 11 Wall Street, New York 5, N. Y. Also available
a

ab¬

are

It also

activity

indicative of struc¬
defects in the capitalist or
and

free-enterprise

Company of New York, Inc., Ill Broadway, New York
7,

New York.

is inadequate and even
It implies that down¬

in business

normal

Yamaichi Securities

Market

referred to as the busi¬
But as an explanation
business cycle, the Keynes¬

misleading.

Japanese Shipping trade,
five-year economic program

—

of over¬

would not be valid if it
to describe the
long-run economic process. Look¬
ing back at the economy's per¬
formance, it is clear that consump¬
tion has not become a smaller per¬
centage of income as income has
increased.
And opportunities- to
invest generally have been ade¬
quate over the long run.
The Keynesian theory of over¬
saving mainly concerns the shortrun fluctuations in business activ¬
intended

were,

ity qsually
ness cycle.

Hemphill, Noyes &

Corporation—Analysis in current issue
of "Business and
Financial Digest"—Loewi & Co. Incorpo¬
rated, 225 East Mason Street, Milwaukee 2, Wis.

■

Obviously, this theory

saving

Co., 15 Broad Street, New York 5, N. Y.

sis in current issue of Nomura's
Investors Beacon—Nomura
Securities Co., Ltd., 61
Broadway, New York 6, N. Y. Also
in the some issue are discussions of

Japanese Stocks

letter is

Wisconsin Bankshares

Industry—Analy¬

and of the new

same

tary, Skelly Building, Tulsa 2, Okla.
Study — Kidder, Peabody & Co., 17
Wall Street, New York
5, N. Y.
Telecomputing Corp.—Analysis—Wm. H. Tegtmeyer & Co., 39
South La Saile Street,
Chicago 3, 111. Also in the same cir¬
cular are brief analyses of Bell & Gossctt and Cook Electric.
Title Guarantee & Trust Company—Bulletin—Robert H. Huff
8c Co., 210 West Seventh
Street, Los Angeles 14, Calif.

Candidates for- Dividend Increases—List of companies m cur¬
rent issue of '.'Gleanings"—Francis I. du Pont &

are

ment.
:

analysis of Lorillard.
Richmond Homes,
Inc.—Memorandum—Cruttenden, Podesta &
Co., 209 South La Salle Street, Chicago 4, 111.
Rimrock Tidelands, Inc.—Report—T. J. Feibleman &
Company,.
Richards Building, New Orleans 12, La.
Skelly Oil Company—Annual report—Skelly Oil Co., Secre¬

35)—Analysis of fund investment in missile
field—Atomic Development Securities Co., Inc., 1033 Thirtieth
Street, N. W., Washington 7, D. C.
Burnham View
Monthly investment letter — Burnham ana
Company, 15 Broad Street, New York 5, N. Y. Also avail¬
able is -current Foreign Letter.

—

Reynolds Tobacco—Analysis in current ''Monthly Investment
Letter"—Hay den, Stone & Co., 25 Broad Street, New York

-Harris, Upham & Co., 120 Broadway,

Atomic Letter (No.

—

exhausted and

overstocked with
goods. Thus deficit spending by
government appears to be the only
feasible way of supplementing in¬
adequate private spending and
preventing widespread unemploy¬

Incorporated, 39 South La Salle Street, Chicago 3, 111.
Marshall

when

consumers

Mexican Telephone Co.
Atomic Energy—ReviewNew York 5, N. Y.

greater

International Bank (Washington, D. C.)—Report—Leason & Co.

following literature:

interest rates and
availability of credit is
profitable opportu¬

than lower

City Bank — Data — Oppenheimer, Vanden
Broeck & Co., 120 Broadway, New York 5, N. Y. Also in the
same
circular are data on Georgia Pacific Corp., National
Oil Company of Ohio.

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

March 6, 19o

expected

—

First National

Recommendations & Literature

Thursday,

tary controls could not be
to stimulate spending. Something

Analysis — Shearson, Hammill & Co., 14 Wall
Street, New York 5, N. Y.

Dealer-Broker Investment

"liyinrr

be.

—

old, sick, and

nearly always
of collapse, easing

slightest casing
i-aoing of
ut controls.
cuiiirois.
1

i_„

If aialit

>™Zin? a towed to run free, however, the

• -

Economic Fluctuations and

;

war/nr.Zic' pup might overexert itself, beGrowth
*sibn
del
xhausted and then not re- The normal pattern of growth
pression
It
a,ay stin}ulus- The effec- and change in a capitalistic econhas become .mnTni
• °+v!n-°neJal? controls lies omy is for economic activity
to
customarv
to economy
ln on
theirability
to keeP
the fluctuate than
aroundfull
an average
level
customary
to
a leash, soto
speak, of less
employment.
teach"that anri'ThirJ?" a leasiJ».f° to speak, of less than full employment.
monetary
"tits overexer- Normally, the desir
' - acquire
monetary con- ZVj%hyPreVe
tion
Pvh?.'y rLCVeJdesire to
trols not onlv
inability to more consumption fgoods and to
only remin Jbauff10n».antJ
in?i10nl-ancJ maJility
limited in ill™
t0uth?
itim,ulus of
Much
of th^laiif
°f credit- build more capital
caPital goods-is very
over-all efiecover-an
effec- monetarv
l JCh °! t!?e lack of faith in
™ stron£strong. Over
°ver the ye;
years, great in^
Don M. Soule
trinet of contro1?
doc— creases in the standard
stand;
tiveness but trinnc
^ stems from doc—creases
of living
matfirftv over+savmg
J?aVm£ 3
^ponomic and the stock of capi
capital goods has
also gre
economic
be
' inaturity
or stagnation.
The econ„un
be dlou
discouri<s
5 10nijTbe
ec<?n" failed to satisfy this basic desire
ban it
aged much easier than
be rather Vn
as
a^d
d., ' Nevert
ifln U
aPd sick to s p e n d.»
Nevertheless, - total
encouraged. It is odid
said that credit-'
credit- Insofar
Tnlnlf than young and
vigorous,
*n- vigoro.us* spending and emp
employment do
is ineffective because if
corrppf
correct ^ these
bese
doctrines
d®ctrines
are
influctuate,
and
the de_~
desire to ...
spend
UUiJC u A-uii- coriect. a reasnnahle •imnnr.i
^
_
and businessmen do not
reas°nable amount of sometimes
appears very weak,
or

Commercial Credit
Company—46th annual
report—Commercial
Credit
Company, Baltimore 2, Md.

resnon i

are

Edis011 of New York

Witter 8c Co., 45

con-

—

Memorandum

Montgomery Street, San

Diamond Alkali
Company — Analysis
29
Broadway, New York 6, N. Y.

—

Dean

Francisco 6, Calif.

Joseph Faroll

& Co.,

are

Inc- —Memorandum —Lloyd

Camden Drive,
Beverly Hills, Calif.

Arnold &

oneone

...

Di^etaLH?°ritoIies'
Co., 364 North

ease

nmv

can

0_„.

ease

con-

—

—j

sumers

desire to

borrow, even the lovvest
interest rates will ont be attractive

For Financial
Institutions—

Cement Stocks

Allentown Portland Cement

the

early 1930
unusual

attempts

However, those

times

when

other

to stimulate spending
After a long period of
credit expansion and

come

excessive

Giant Portland Cement

Lake Ontario Portland
Cement

„

exPlained by describing the necconditions for maintaining

d^^frfne6

oversavings doctrine of J.
T M. essarv conditions 7or maintaining
a LfL.
* to
.
essai^yspending, output, and emKeynes. According
this view, total
em¬
several years of high level eco- ployment at such a high level. nomic activity will almost cer\
hieh
A
high level
level Gf
of consumption
consumption
tainly lead to a business downspending could
could be
be maintained
maintained if
if
turn. At higher levels of national
consumers
continually felt that
income, savings become a larger
w»i
were
proportion and consumption a
to the
piuporxion and consumntion a
smaller proportion of national inin

H.5

cnendin^
burners conttou""^
S
then a disastrous forced contracn';L"
•' comDarSon
—
wuuauievei in
consumptiontowere
tion of bank credit accompanied
inade<luate
comparison
the
bv
novnlir^.'r.
u
by economic para^sis
at home
and come because
sat' many types of goods and services
abroad, it is little wonder that
isfy their mosturg^ntnee^
A offered for sale- Most consumers
S?m?iar
Cr?dlt;ease
had
little
business
downturn
could'
be
would have little difficulty spendstimulatmg effect. Since most of avoided if the increased ravines ing a11 or most of their incomes
those conditions do not exist at
offset by investment
But if new types of consumers "oods
the present time, a re-examination several years of hieh-level inv^t
could be inti'ociuced in such great
of the effectiveness of
monetary ment cause the best^
amounts and with sufficient regtrols is in order.
y opportunmesto betsedunZ ularity to make the current level
How much stimulative effect
ing only those investment
of consumption always appear
be expected from lower interest with
expected rates of ^LuSi^^^^^^ inadequate. Likewise, a high level
also failed.

American Marietta

The most often cited
.xbc-u
example is
example
is
credit-pa«p during
credit-ease

he
e failure
failure of

were

American Cement

spending sometimes be-

inadequate to maintain the
additional demand
deposits
The Oversavings Theory
economy at capacity output even
created by Federal Reserve
Current
v
•
though the desire to acquire more
market purchases will merely ]"e cvefe SLy
na lii!" business- goods
is normally very strong?
idle.
merely tie cycle theory and policy continues This seeming paradox can best be
creait ease.

open-

Currently Popular

tt0m 3 Why

ofTredit

and

econnmin

^4-

—

consumers

soon

Bought

Sold

were

TROSTER, SINGER
Members New York

Trinity Place, New

HAnover 2-2400

& CO.

Security Dealers Association
York 6, N. Y.

Teletype NY 1-376-377-378

c on

can

5^5

omy s

over-all state of health.

illustrate,

seems'ob
vim it
obvious
seems

of divestment
could be maintained
lurenfl,!?; if
businessmen continually felt
nronm?,n„ t that their productive facilities
income is dSessive were
j"adequate to supply the

greater availability of low to justify the cost of oanital

credit depends mainly on the econ-

might

like„

the

Akothefai

spending to Hse in
the rise in

SV ieash" 11 these
on incentives
to invest. Under
conditions, easing of mone-

tw if the dog were
that

hlgh*level
o£ consumer
demand
Continued
on page
45

Volume

1G7

Number 5722

The Commercial and Financial Chronicle

employment when the

W. Radefzky Asst. Sec.
Of N. Y. Hanseatic
PHILADELPHIA.

(1049)

advances
Steel

The

test

Production

Electric Output

Pa.—William

Retail

State of Trade

Radetzky,
manager
of
the
Philadelphia office of New York

and

Industry

Trade

course

according

bers

With

followed in past months.

(Special to The Financial Chronicle)

and

grew,

Philip Turnwall are
Hathaway Investment

with

now

Corp., 900 South Pearl Street.

•

COMING
EVENTS

dearth

of orders

respect

tive

news

release

it is worse, compared with 48%

For the second year in a
row,
as the nation's No. 1 user of

construction beat out automo¬
steel, "The Iron Age," national
on Wednesday of this week,
in

chance to repeat this year.
The growing importance of construction
is indicated by "The Iron
Age's" annual

This announcement is not

steel customer

analysis of steel ship¬

ments.

Of the 79,900,000 tons of steel
shipped last year, the con¬
struction industry received 16,500,000 tons. This
compared with

15,700,000 tons shipped to automotive. Oil, gas and mining, one of
the few industrial groups to use more steel in
1957 than in 1956,
was third with
8,300,000 tons last year,
compared with 7,600,000

in 1956.

Machinery, containers, exports, railroads; pressing, ^forming
and stamping; agriculture and
shipbuilding complete the top ten
steel users, in that order.
The metalworking magazine reports it has
received further
confirmation that the bottom of the recession in steel
may have
been reached. Several large mills have noted a

slight improve¬

ment in their order volume.

This does not

that a definite upturn is in
sight, this
It does however, indicate the probability

mean

trade weekly observes.

Continued

ojjer o] securities Jor sate

or a

solicitation oj

ojjer to buy securities.

the Waldorf-Astoria.

19, 1958

(St. Paul, Minn.)

Twin City Investment Women's
Club meeting at Town & Coun¬

New Issue

March 6,1958

try Club.
April

11, 1958

Toronto

(Toronto, Canada)

Bond

Traders

$40,000,00#

Associa¬

tion annual dinner at the King

Edward Hotel.

Olin Mathieson Chemical

April 23-25, 1958 (Houston, Tex.)
Texas Group Investment Bank¬
Association

ers

annual meeting

Corporation

at the Shamrock Hotel.

April 25, 1958

5V2% Convertible Subordinate Debentures

(New York, N. Y.)

Security Traders Association of
Din¬

New York Annual Spring
ner

due March 1, 1983

at the Waldorf-Astoria.

May 1 & 2, 1958

(St. Louis, Mo.)

Convertible into Common Stock at $50 per share on

St.
Louis
Municipal
Dealers
Group annual Spring Party.

before March 1, 1973 and $55 thereafter, conversion
prices being subject to adjustment-under certain circumstances.
or

June 9-12, 1958 (Canada)
Investment Dealers' Association
of Canada annual convention at

Manoir Richelieu, Murray Bay.

Quebec.
June

19,

■:

1958

..v;^

■

(Minneapolis-St.

Paul)
City Bond Club annual
picnic and outing at the White
Bear Yacht Club, White Bear
Twin

Price 100%

Lake, Minn.
June 27, 1958
Investment

plus accrued Interest from March 1, 1958
(New York City)
Association

of New

York

outing at Sleepy Hollow
Country Club, Scarborough on
the Hudson, Scarborough, N. Y.
Sept. 18-19, 1958

Copies oj the prospectus
writers named

(Cincinnati,

may

he obtained jrom such oj the undersigned (who are among the under¬
legally ojjer these securities under applicable securities laws.

the prospectus) as may

Ohio)

Municipal- Bond Dealers Group
annual outing — cocktail and
dinner party Thursday at Queen
City Club; field day Friday at
Maketewah Country Club.

(Colorado

Sept. 29-Oct. 3, 1958
Springs, Colo.)

National Security Traders Asso¬

ciation

Annual

Convention

30-Dec.

1958

The First Boston

Eastman Dillon, Union Securities & Co.

Corporation

Blyth & Co., Inc.

Kuhn, Loeb & Co.

the Broadmoor.
Nov.

Dillon, Read & Co. Inc.
.

(Miami

Goldman, Sachs & Co.

Lazard Freres & Co.

Smith, Barney & Co.

White, Weld & Co.

Beach, Fla.)
Investment Bankers Association
of
at

America

annual

Alex. Brown & Sons

convention

Harriman
Ripley & Co.
Incorporated

Hay den, Stone & Co.

Stone & Webster Securities Corporation

Dean Witter & Co.

Glore, Forgan & Co.

the Americana Hotel.

Nov. 2-5, 1959

(Boca Raton, Fla«>

National Security Traders Asso¬
ciation Annual
Convention at

the Boca Raton Club.

Kidder, Peabody & Co.

Construction first usurped automotive's traditional role as
leading steel consumer in 1956. It did it again last year when
it bought one of every five tons of steel
shipped and it has a good

"A seasonal improvement can have important psychological
effects, but it would be a mistake to confuse a purely seasonal rise
with real recovery. Ordinarily, total employment might be ex¬
pected to rise about 3J/2% between February and May, while
unemployment usually drops off. Industrial production normally
advances 3.%% during the first quarter, but loses about half that
gain in the second quarter. Retailers expect a pickup in sales soon
because of the relatively early Easter this year.
Construction,
agriculture, and other outdoor pursuits will step up activity and

sociation 32nd annual dinner at

showing

the

Monday of this week, the First National
City Bank monthly letter on business and economic conditions
stated that "hope of improvement in the early future rests largely
on
two possibilities.
One is that the usual spring pickup will
check the down-trend. Th« other is that in many lines at least
the decline in industrial operations has brought production so far
below consumption, and is cutting inventories so satisfactorily,
that a larger output will soon be called for.
a

say

metalworking weekly declared
its review of the steel
industry.

ago.

year

Last month

situation last month. These figures mark a reversal of the
downward movement in the new order situation that has
prevailed
for months," it further notes.

volume for the country at large the
perceptibly following blizzard conditions
which obtained in many areas in the week preceding, however,
a

...

poorer

rose

total volume held below that of

deferred."

"Only 31%

and

trade

March 7, 1958 (New York City)
New York Security Dealers As¬

March

ex¬

15% reported improvement.

The steel and auto¬

"Steel"

past week, buying

DENVER, - Colo. — Ediyard M.
Chase, Elsie D. Dingmore, William
H. Dobbs; William A. Galloway,
Merrill H. Gee, Floyd R. Petti-

exceeds normal

improved.

industry the past week showed little change from

has

„

Hathaway Inv. Co. Adds

The report states, on the other hand, that "one of our most
sensitive indicators, new orders, has taken a definite turn for the
better. About 24% say their situation has

States February car production would total about 393,units, the lowest output fo»the month in six years.
Auto
makers, it pointed out, had instituted major cutbacks during
February to reduce new car stocks in the field.

pickup falls short of

being cut. Employment is drastically down, with more mem¬
reporting reductions and many projects either being aban¬

doned

000

Philadel¬

These usual -seasonal

appraising the reports. "The

still

Production

United

Corporation,

Auto

magazine, "steel producers are revising
estimates of their 1958 output down to 95,000,000 tons. In Decem¬
ber they were talking in terms of 111,000,000 tons." In the case
of
automotive output "Ward's Automotive Reports"
estimated

phia National Bank Building, has
been appointed assistant secretary
of the firm.
'

improves.

We learn this week from the
monthly report of the National
Association of Purchasing Agents, that "production schedules are

Business Failures

motive industries continue to suffer from

Hanseatic

for

Food Price Index

Commodity Price Index

'lraae and

the

Radetzky

weather

allowed

pectations."

Carloadings

William

must

is whether the

page

Chronicle

The Commercial and Financial
10

siles

Thursday, March 6, 1958

bigotry and

its

Mr. Nixon affirms whatever action is ^
necessary will be taken as the nation "cannot afford a pro¬
longed depression;" urges we make known our record for a
lasting and just peace; and warns that in the worldwide strug- )
gle with communism, "racial and religious prejudice is a gun
we point at ourselves."
of

Part

have

than

wealth

1945

From

other

deterrent

na-

<:M.

considerations.
In

world-

the

wide

struggle

which

engaged.

are

racial and

re-

ligious

preiu-

dice

we'

vv.^Yv'^PYthat we do not lose—and we will ':;.
1958

spent not lose—the

abroad.

Fifty

World

thousand

■

the economic

in The potentials of outer space
hundred - so vast and so illimitable that

*r..

-•*-

wtaeh^esult whSr bur
;
is iSt-v afladel

space.^osts

died

rmo

cannot/afford toe* interna- p
;

are

--—4

WarY II/ this potential in all its aspects.

fected "by "what

happen^: to

the

overseas.

ship is the perhaps understandable

v'Y

Not because we want the eoun- ,reiuctance 0f military - people
our.national problems tries we aid to be dependent upon free science for the investigation
•
us: but because we want them to o( arcas j„ which an end "result
have more people from he strong enough to be independ- of particular military application
should

tourists

Our

at briefed

point

as we are
a

far

better

ent of any foreign domination.

at home,
effective

Not

because

want

but

war;

CallSY ;

The1 evidence

magnified
have

effectiveness

distortion

seen

in For-

in Viet Nam, in other lands.

states

thp

erpafpst

have today—greater

need
a

serm-itv

for

another

made

Brotherhood
o,olnernooa

Mr.

at the
dinner
of
a.nn.r
.1

Nixon

Award

National
Conference
of..
of. Christians
Jevi-s, Cleveland, Ohio, Feb. 27, 1958.

moon

announcement

—

Y'lu®0™4
^?in wltb us in the exProration, of outer space for peaceiui PurPOses.

Hn\0?.

the

not

'•>

Iowa Public Service

-fViorfc

predictors-

pressIon

are-

aid. and comfort to

giving

aH^Americans
k

'■

the

•

■

fha-Administration "has taken and

lhe Admmisaation ftas taKen. ana
1S prepared, to thke, the American
people can make their^ bihns for
Iealv.. .:;

continue
we

■

;

believe that if

NEW

Conn.

LONDON,

liam

Belgrade

with

Sheffield" &
1

"•

Co.,

—

Wil¬

affiliated

now

325

State

•

With De Haven, Townsend
•i

(Special to The Financial Chronicle)

STAMFORD. Conn.—William F.
a

summit

Keeshan

has
&

Haven

& Bodine,

joined; the

staff of

Townsend,

Crouter

1 Atlantic Street.

Special Opportunity for You:

"FOR SALE"

BROTHERS & CO.

Beautifully Bound Set of

INCORPORATED
,

HUTCHINSON & CO.

FIRST OF

Commercial & Financial Chronicles, 1938-1950

IOWA CORPORATION
.

Available in New York City^Write or

PATTERSON, COPELAND & KENDALL, INC.

Phone REetor 2-9570
March 4, 1958.

(Special to The Financial Chhonicle>

contribute to the
there must
be
peace
adequate preparation before it is
is

Sheffield Adds to Staff

so.

STIFEL, NICOLAUS & COMPANY

McMASTER

v.:v.- '

THOMAS & COMPANY

simply

forces which
delay; the recovery
•_L'l-' 1^1. '*
•"
*
1
want
"
»
f.

The United States

Here Is A

STERN

f-'ty

AUCHINCLOSS, PARKER & REDPATH

MULLANEY, WELLS & COMPANY

ALLISON-WILLIAMS COMPANY

President of the

calamity howlers and de-

Street.

That wherever there has been

INC.

FAHNESTOCK & CO.

KENOWER, MacARTHUR & CO.

determination.

have and will negoti¬

sought it out.

be obtained in any State in which this announcement is circulatedfrom onlv such
of the unde) signed and other dealers as may lawfully offer these securities in such State.

INCORPORATED

our

must clearly
deliheate our

reasonable; opportunity to reach
agreement, the United States has

may

RAFFENSPERGER, HUGHES & CO.

some

with the Soviet leaders.

But

The

unequivocably

Y; That
1, 198$

the

of normal

cause

are

negotiate

negotiated

have

meeting

HALSEY, STUART & CO.

for

Kn,°Y 'Because the economy vis basiabout-. tajjy sound und because of action^

diplomats

willing

attitude and

will

& COMPANY

goin^ .to talk

Y;; So, to the world

Price 100% and accrued interest

KAHai*

More
tan follow. But th?y inust-^and
can—only --follow alter the

ate

Due March

consider that the

United States.to have.,

diplomacy have
been traced to their logical—and
safe—conclusion. •'
YY> j'

Mortgage Bonds, 4H% Series due 1988

COURTS &, CO.

i0'Vinf

with the Soviet leaders.

They

'and

Dated March 1, 1958

major factor in the downturn has

agreements with the Soviet Union, f958 With cohfidence rathei: than Y
•

Company

When

ness.

whn^ yT

aie

than

and of their conliearly upturn in busi-

economy

dence in an

attitude

responsible

Our

paths

BLAIR

c."A 1.

Talking is not better than

allies and friends confidence, this is the only proper

our

Thlk-inrf

$10,000,000
',000,000

WILLIAM

to-

true

The favorite cliche of those who

only in the United States but been the expression of a lack of "

also among
abroad.

Prospectus

is-^-

offer to sell or a solicitation 6j an offer to buy these securities.
The offering is made only by the
Prospectus.

can

attitude
This

talks.

-■

The

American

summit

ward

peace

First

Negotiations

There is considerable Confusion

about

Yet we are pictured by the
Communists to the world as war-,

°* tbeir basic faith in The Ameri-

,4;*^

Summit

aiding

j '
\
stvely can 0„i;,.lead,to a,renewal

and pensions, as well as slice into
tional Advisory Committee for the paychecks of millions who do
Aeronautics Laboratory.
This not have the built-in-protectiOn
same
principle,
with perhaps *>f cost-of-living inci eases.
^
modifications
permitting
even
The President and others in his
greater latitude, must be applied Administratiohha ve been criticized ' '
to this country's space program,
because they haye dared to speak

-PSt?teSofaS r1/ mngelS a
iiei'chants of death.
t^^mstanles Stalking
ing and
peace
.S'" this^ b^ck imnfie'^We^m'ust S,ta',is alwa!'s better than
infL^T.
Peace',
,
h
,
■'
.
this
block
image,
vve
must
give
toy
j
This>
The-billions
spend for mis- the worlds people the true image c]10ice_ however, is not the only

is hot

he seen in Cleveland at the Na-

what j oil
This

f.\".

is „ot evident.
/■w:' WY A runaway inflation would be
One very successful application disastrous to tens of millions of
" of the civilian role in science may people.
It would affect savings;

under-developed- countries.4 That

program

for

program

than"the

satellite

missile which will hit the

—is for

npprl

that will conShall we blame the Formosans
vince people throughout the world
or the Vietnamese?
I do not be- that the military and foreign
pol•Remarks

disarmament

From the standpoint of United

>''*\

H is essential that the peaceful ment must take whatever actionr
uses of space be explored equally, is necessary to stop tlid.ecOhomicY;
as infen&vely.C^^^
downturn und stimulate -reeov^y One of the serious problems of; of .the economy. Y; .:.TYt.YY r
military-scientific relation- . , The difficult question is one of Y

•

gun

that the ;rFederalY Govern-Y

space will assume a minor role.,tiple

The onlv war we want to wage
practice progress toward brotherhood,
bigotry and
\The truth is America's most is the war against poverty, misery,
prejudice at home. Our enemies potent weapon. We cannot enlarge and the need in the worldY That
•magnify the smallest incident for upon the truth. We can expand is why we have offered to share
other people to see.
The result our efforts to make that truth with the world the benefits of
is a completely false impression more shinning,
peacetime atomic energy. That is
of the attitudes and practices of ' •
•
*
*
*
'Y
.
why we have offered to set aside
all but a small minority of AmeriBecause We Want Peace
V a portion of the, savings from any

the

the control of-m civilian agency.

and

Richard Nixon

National

un- i

-tional costs vin volvea' .where the
I. Y Two
we economies of our friends throughthousand-five-hun- must make positive plan? to probe out. the world are so directly afaujl—i—«

War

ninety-one

three

Americans

four-hundred

We must do

•nd

for outer

'£uctiv^ Carac?tv

vvYY'
:
are under arms today. ' "rvY
We mus* Practice equality at < why thig huge expenditure of
home as effectively as we talk it
and manpower9 >YYYv'v'-YabroadNot because we want territorv
We must be more judicious-and .
h
k d f
no f'
selective in the people we send °
*
acauired none

abroad.
:We cannot j
We must
preach
broth- abroad see

mosa,

race

billion for military pre.'Having said that, let m^ Say
paredness at home, and $64' billion that "it is important that our own
for
economic
and- .'military
aid; outer space development be under"~;r

ourselves.

this

There

primary.

factual.

We COsts > involved in excessive
concerned employ^ent^-'^^f5^

peace.,

been

$382.2

for

power

rightfully

in have

States

United

the

the past 50 years.

blame

the

material

tions

been, over the years, lieve we can;
concerned with brotherhood as a belongs to us.
(
'
moral issue.
The moral issue is
We can blame the Communists,
We

who symbolizes our interest in and

concern with

war-

Treasury Humphrey.

paints

prejudice, and civilian control of outer space development, are
topics Vice-President Nixon addresses himself to on the occa¬
sion of National Brotherhood Award to ex-Secretary of the Y

not

jure the cause otpeace by creating" '
World Brotherhood, a false sense of security followed mongers.
';Y^..pY'Y- [Ed,;--Note—Former Secretary of by disillusionment when the meetS George Humphrey, by reason, of the. Treasury George Humphrey ing failed. >;
his having been Secretary' of the was honored by National ConferTreasury, by his being one of our ence of Christians and Jews with
; Halting a Recession
greatest industrial leaders, by his National Brotherhood Award.]
One of the essential elements of
being one of our foremost ex*
our strength for peace is our,. d(>-.
ponents of foreign trade, has.been
.
Kace For Outer Space /
mestic economy,; and with' itTtbe
and
is labeled as a banker
to Y Our principal concerns in the econoniyYof the-.'free
,i,\ fdeath.
Y
"
'
vPYv. past six months have been to as--V ...The. United States cannot afford
This is bitterly ironic. -No na- sure
ourselves that the ./.United' a .prolonged recessipnYY* Y,
Y;
tion in history has given more ofT States - and its allies maintain a
we cannot--•affordV^he • human *

downturn and

summit negotiations, domestic

stimulate recovery,

which

ganda

HON,RICHARD M. NIXON*

Administration's commitment to stop economic

aid
will be of America—the America repre- held./A meeting which failed to
successfully, sented by George Humphrey, one reduce-major tensions would ,LL-"

foreign

counteract the Communist propa-

VlCfc-President of the United States

and

wasted

Brotherhood, Economic Recovery
And Other Vital Considerations

(1050)

Edwin L. Beck

c/o Chronicle, 25

Park PL N. Y. 7

Volume

Number 5722

187

The Commercial and Financial Chronicle

(1051)

The Washington Outlook
T<n the Building Industry

JSnrt

tmued healthy .economy. We are since 1950. Part of the improveeyei? thlPkln£ of the possibility ment can be attributed to the fact

ct'n

fadn
? f?
have been
pnrnnri^p
+rS ™on*hs to
inwff
deluding
mpntJTnr fwa &Jt*11?'

?£ insuring home

improvement that between 1950 and 1957 about
million units were added to
the supply; but the older housing
equipment that so definitely improved, and I feel

loans for completely modernized nine

thi

JBy NORMAN P. MASON *

Commissioner, Federal Housing Administration,
:^
Washington, -D. >C. - '

...

JLoL?

n!^hpr

thP

kitchens, including the installing

putntLfor SSSR

°f elecIrical
man-y Am.encan housewives, tell certain that building industry

Federal

•

Housing Administrator detects

the

iji<y

building industry in the coming

year.

recent

months, and to conditions favorable for

i
'

V Furthpr

•Cong!ess

'>•

-"J

4■

■":mortgages.

article

the

c;.

.'c:

..'

„■

one

to-fhe job

WTite

The

about their

biggest

*•...
•'*

•

fi-

nancial

head-

aches."

,Beef-

had received

;
-

great
a -n

e r

Taxes,

dip.

medi-

all have reason

' '

-i.

what

know

you

found

interesting, about the whole

thing? Tt .was the tact that
body.even mentioned housing

dollars

staking

are

them.

A practical

necessity.

Such

plan

housmg

"ew

ty.pe

loan

indicated, I think,

insurance

homes

were

ga^S

higher,

rati

aid

are

the

facts.

the

above-,

oVotPTn

D0Stn0nement

enfh

FHA

nprmiftin«

foreclosure

mf ?,wn-ers;:

has to

:Of

•

,t.

about the existence

starts

The

services.

market

actually is
potential

■

oversold.

never

But

'f customers don't think
need of theirs,

about

™

;

If .there is to be a market for
home improvement work, owners

January_.as reported by

^eir

0£

are

new

-thinking

things

million.

fPPi

people

part of was 'Treasurer of Worthington

jail the Corp., manufacturers of
obtain

can

Census

report

improvement

snows

the

sified

line

offer to sell

or a

solicitation of

offer to buy these securities.

offering is made only by lite Prospectus.

transactions.

appreciate the importance

tan*Juarez

>jsrs»5«JSK8!

f-g rsr-ss
sound so

eral economy must be
that people will not hesitate to
undertake such work, and there
must ibe

method

sound

fi-

*rom

viewpoint

not

What

now.

Baltimore Gas and Electric

previously described the side-

wise movements in 'the

conditions

•

nancing home improvements.

We .have these

onlv

™e^oim ^
^Pl°yment bUt °f ge 6r8 We
I

Favorable Conditions Exist

/;/:/]/': $30,000,000

sasS'

was

had

that

last

First

'economy;'':

year

Company

Refunding Mortgage Sinking Fund Bonds

mind

particularly,
when the up-

4% Series due 1993

war(I trend was strongest, the
unemployment increased housing industry was handicapped

Our-economy is sound. It is true
•

that
^

than

and this

seasonally last month,

cause

for

the

intelli-

gent tplanning that is being done
—but not

alarm.

for

does

not

Those
r

>■

who

what

level.

choose

the

description of

have receded from.

You

operates

know

on a

what

The

dead

charts

1 economic activity look like. There
are

continual

movements up

months

our

concern

controlling inflationary
President
recent

see

was

statement,
the start of

with

pressures,

Eisenhower said

"Every indica-

tion is that March will

;

so;'

commence

pickup in job

opportunities. That should mark
beginning of the end of the

the

downturn

vided

our

apply

economy,

ourselves

pro-

with

—
,,

N.«

„

SSiuw

Improvement
Atlantic

around.

to go

Iri>

by the FHA,

which the return

was

tional

mortgages

and

loans

P^ovement

home im-/,

The

Prospectus

may

be obtained in

any

State in which this announcement is circulated from only such
as may lawfully offer these securities in such Stale.

of the undersigned and other dealers

increased,' and

unsound home financing practices

began to reappear.
HALSEY, STUART & CO.

More Housing Money Available
Recent developments have had ^
the welcome
effect
of making'
more
money
available for the
building industry — the lowering
of the rediscount rate by the Fed-'eral Reserve Board and its reduction of reserve requirements, reduced yields on bonds—in general
the operation of the law of supply •
-

and demand is making loans for':.
housing
construction
and
improvement more attractive in the
money market.
This has already ;
showed itself in the rise in FHA

mortgage

insurance

applications

S ?nd in,theJncre?sing demand for

Contractors
Association,
City, Feb. 25, 1958.

Price 101.154% and accrued interest

simply - wasn't;,

there

money

Due March 1, 1993

1, 1958

and

down, and sideways, too. We are
experiencing a downward movement now, but we still are in a
period of relatively good, times,
During the greater part of the last
12

that

enough

limited, were less attractive
present conditions—a term I do to lenders than other forms of in^
not agree with—have to consider vestment.
The rates on conven-„
term recession

economy never

mands- of the economy were

great

Dated March

The de-

those circumstances, loans insured

indicate any basic weakness.

by shortages of money.

loans for home improvement.

the

Spring

building

season

gets

INC.

LADENBURG, THALMANN & CO.
DICK

BACHE

MERLE-SMITH

FRANCIS

& CO.

BURNHAM

WERTHEIM

I. duPONT & CO.

AND

CO.

FL S. SMITHERS & CO.

COMPANY

COFFIN

BURR

INCORPORATED

HIRSCH

&. CO.

WEEDEN

& CO.

SHEARSON, HAMMILL & CO.

INCORPORATED

GREGORY & SONS

COURTS & CO.

BALL, BURGE & KRAUS
FREEMAN

& COMPANY

IRA HAUPT L CO.

WM.

E. POLLOCK &.

CO., INC.

GREEN, ELLIS & ANDERSON
THE

ILLINOIS COMPANY
INCORPORATED

NEW YORK
March 5, 1958.

HANSEATIC CORPORATION

and

son'
1S a ■Girect°r
Glen Ridge Trust Company, Glen
'

The

the?;

diver-

eaufLen^wUh
oTfkesTn Harr"equipment with ottices in miri

This announcement Fi not.-an

machinery

quality of our housing inventory Ridge, N. J.

con-

not

are

ready to finance

are

and

infoimation

recent

d&bacidteu

retirement in 1956, Mr. Bellows

thnw

from any of the 8,000 lenders
A

associated

al:

that

qnrP

substantial

uccuuie

with them. From 1943 until his

that hold contracts of insurance.

lot

that will lead to
the grass roots,

hesitating to build or buy homes j
or
build new apartments, and;.
lenders

become

lldh

were less than w®

seems

about

P it

has

necessary

date

better housing at

f Bureau
ot Labor Statistics *and active industry,
at an annual rate of more
'

than

Oliphaol A Co.

nnpp

Jas.

the insurance because our insur- Bellows
piaim,,
WPrP
Ipe!1,
thar»
•DeiAUWb

« generation
n ",se4

^MhiSies.

payments

were

this

it won't be trans-

lated into business.

have to

jng

H. A. Bellows Joins

Oliphant
& Co., -61
a cent.
Jas.
Twice in a little more than three Broadway, New York City, memyears we have been able to reduce bers of the New York Stock Exthe premium that lenders pay for change, announce that Harold A.

above January,

75%

od-

™

Every American family must have
a good place to live.
Slums must

improvement loan insurance has

r?P,e5, 01 imeciosure

<year|o

home improvement 1957 Applications involving
multi-family construction are also
^The industry is one that never increasing. Total1 new housing
A

cember and

nnanh

low" not. cos.t the Government

hpph -for

2Le"SS,?d1t?on

the/re

Eight

all-time

*64%-?^ has worked

January 'a

than

14%

rafp

December

static

ever-eXPandinfi

our

portumties
and markets.
our cities must be revitalized.

?nc<5,.shows that most Arnencan
"*$«* their obligations.
?hey Pay 4?T dt*ts- Property

FHA home mart-

riparlv fhprp icn'f

Administration

Housing

January

the

defaults

proposed

received by

^e^u^be

^e-cannot l>e

readv,for

•

'*v mortgages for FHA home owners
7 in default. That sounds dramatic-,

by the fact that applications for
new

what new avenues

but let's-look at

mortgage

new

•>' " term^*at"a modest"^discount rate be made a thing of the past. We
Hefauited Mortgascs
at; amodestydiscount late must keep blight fromieven startThere is a housing bill before f,.pPiv nrpdthat th/rnvprnIndustry can*-do the job. The
Congress,, too, fhat we have not nient sfbod to' lose Heavilv bv in" economic climate is excellent for
asked for
d a
not think is nec.
heavily-by m- -t j predict it wiU do it
e
.r
a
hill
tn
havp
thp
swing such .notes. ..
f
.
Government step in and take over
But, gentlemen, FHA experi-

the

l lant icy

what

of assistance should be explored.

has

years

considering

Pr.°Sram

avail-

FHA home improvement loan in.This

As I have said, -we are

thin^s should be done to improve

able, as most of you-know, through

and the^surance.

S? !?*?}
hei^ JflS

opinions.
seriously

financing plan is

-'conliMe^fmlnly wellspe"nt^he- ®g5'hFHA ®PpUc$r*b^ready famiUar with this
' '
ing bomes were 26% above De- owners have set recordior keep- the FHA program and
^

done

Home Improvement

■;

American

inmortant

Jiiipuj. wai.

;

Confidence in the soundness of

lhe economy is

ex-

This, I think, is terribly impor-

new

-u-

ii—

continued

Housing Interest Is Up

Federal

pense as a source of trouble. Ap-••-pareittly -whatever the -families

•

work to

our

prosperity.'

no-

J-

Ip^that

..-Businessmen

millions

dozens of other items

most

$30,000

housing .ls built the proved its worth in 24
^0l'e competition it will provide successful operation.
more

if/they^ are sold
*!!mV
rijfhtCpf
omy
right out of ihiV
this business

education, car
Norman P. Mason
maintenance,
-r
grocery bills,
alone with
with
■f. were all-complained of
of, along
x,

duce more

the Presi-

What it thinks and what

than they used to, and

homes

change: hands there
is usually repair and improvement

is'^oasures should all help to-pro-

when

prominent
mists said recently: ' "Consumers
^
can
be- sold, and

many
w

indicated,

One

\ cal expenses,

;

...

around

at conditions

,,..

well-being
is

does

FHA's repair and modernization

confidence

lor

a thing
all like to

•-

the mayi-

increase

maintenance

the

sound-economy.

dent

do occasionally, and so he "

Administration

present

dedicated
a

^.ing is

?■

authorization

the

families.

shortcomings of older homes from
the viewpoint of modern requirements.
Then people are moving

zine

onthrMM-ro+isw,

mum mortgage amount to

ahead,

hofries
since 1950. '• All this new to;
construction calls attention to the

Congress will

confidence

in • place of the present $20,000,
Sunday supplements a week .or Americans we have a responsi^and that the interest rate dimitatwo ago-by an expert on family bility
to<%work -toward*the early*;,tions that now hamper our multifinances, who had invited readers.resumption .of sound growth : in family housing insurance operaof the magaour economy.; •
>
7 ;
tibns' will be removed.
These
saw

that we ,can speed up
;pur processing of mortgage insurance
applications. We ,hope that

proposals now ^before Congress, .and deplores bill now
pending to allow - Governmental. assumption of t defaulted

"c>-'

military

We have asked for

now.

.supplemental

;;;vi'unds

and
<

for

nmnneak

_.>Vn
a ..siinnlpmorrfol

Lists steps taken in recent months to encourage housing

ment.

funds

ment-aided building

upward trend in the volume of home construction and im proveV:;.'

additional

housing along with other Govern-

„

continued

the increased FHA applications and mortgage insurance in

that

closing costs be
paid in cash, and then the release

bright outlook lor
Mr. Mason points

can

; .
preSent dav living natternc in
^ G?.vfirni^e)? m+ WashingC1^IiXr holp mJn" °n 18 vitally interested in the
See and^mwLeZt
way the building industry is
haVe Silt ^
n^w ™eeting ^their responsibilities to
nave nuiit aoout nine million new the economy ot our nation—and

re-

quirement

*" g°°d ^ take credit for this.

conditions*13

STERN

BROTHERS & CO.

The Commercial and Financial Chronicle

(1052)

Attempts

A Misuse oi Taxation to

free

sume

Stifle Banking

Competition

By AUGUST IHLEFELD*

Trust Company, New York City

President, Savings Banks

resolutions by American

flaying commercial bankers, recent

use

underhanded, brazen attempt is being made to
Federal taxing power to stifle competition between mutual

public interest and economy's welfare would be jeopardized,
claiming measures contemplated would: (1) limit interest
rates on savings to that of commercial banks; (2) weaken

and surplus for
future growth; and (3) result in savings flowing to commercial
banks, because of their numerous branches and "departmentstore" appeal, without stimulation of savings needed for the

mutuals

by preventing sufficient reserves

fit

savings and loan asso¬
ciations, were chartered as mutual

ings to finance business, home
ownership and Government. Only
if new capital

institutions.

ered

deposits.

commercial

provided
mainly by
savings rather
than by com¬
mercial
credit
sion

mutual

this country has
competition be¬

the

Federal agency,
savings. These

Last

capita personal savings are far
higher in the United States than
in any other country of the world.

per

than half the total increase

liquid personal savings during
Stifling Competition

1957.

Our

laws

recognize

Adequate competition has been
in rendering savings ac¬
count service by the keen rivalry

vital

the

assured

economic role of the savings ac¬

efficient.

less

Curtis Bill

compared
rivals.

Why the Curtis Bill?

Stripped of pretense, the Curtis
bill would use the taxing power
Federal

the

Government

mutual

savings institutions,
the greater number of which are

force

national

commercial

state

becomes clear when

reason

review recent

banking history.

Commercial

deposits during most of their his¬

scriptive

titles

would
be
the
Competition for

They have preferred to con¬
on
attracting
demand
deposits on which no return is
paid, since they could not be sure
of earning a profit for their stock¬
holders from savings deposits after
paying a competitive rate of re¬
turn
to
the
saver.
During the
decade ending in 1956, the average
late of return paid on time de¬
posits by commercial banks was
less than half that paid by mutual
savings institutions. Commercial

novel

The

significant

bill is its Section 3,
tax up to 52% the

of the

part

most

and

which

would

return

credited by a mutual sav¬

institution

ings

counts in

savings

section

this

ac¬

of 3% per annum.

excess

Under

mutual

savings bank which now pays its
depositors 3J/4% would have to

income tax of 52%

pay an

the

1/4 of 1% distributed in excess of
3%. The depositor receiving 3V4%
on his savings, in turn, Would have

income tax on the
him, so
that payments to him in excess
of 3%
would be doubly taxed.

to pay personal

whole amount credited to

Such

double

turn

paid

taxation

pavings

every canon

the

re¬

violates

of sound taxation and

economics.

sound

tory.

centrate

banks have
leave

thus

content to

been

the

specialized mutual
thrift institutions the major part
of the savings account business of
the

tual

country ."As late as 1956, mu¬
savings banks and savings

and

make

INVESTMENTS
We offer

United States investon

complete facilities for the pur¬
chase of high grade Canadian in¬
vestments.

associations

loan

gained $6.8

cial banks had
billion

increase of $2.2

Department with

savings and other time

bill,

now

limited

Federal Re¬

regulation to paying*3%

mail.

department

of finance,

stores

can
safely pay more. It is pre¬
cisely because mutual savings in¬
stitutions specialize exclusively in

our

Canada.

savings service and are barred by
law from entering such profitable
but uncertain fields

Inquiries from investors
are

invited.

business

loans

and

consumer

higher
savings.

The Purpose of

commercial banks
unprecedented

year,

for

loans

all kinds

the

The

purpose

Company

the economy as a

Investment Dealers Since 1921

50 KING STREET WEST, TORONTO, CANADA
Montreal

Ottawa

Winnipeg

Vancouver

Hamilton

Calgary

Kitchener

Windsor

Edmonton

Sherbrooke

London

New York

GOVERNMENT,
AND

undue

taxpayers or

whole. To base
rate of re¬

tax upon the excess

turn

that

one

class

savings

institutions pays over that paid by
a
less efficient competitor is a
crude

perversion

the

taxing

process.

MUNICIPAL

CORPORATION

is to

SECURITIES

This

principle of taxation, once

.would

set

most

unwholesome

because

offices

and

"banking under one roof"
promotion appeal.4 The real ob¬
jective of the commercial bank
advocates

clearly

Curtis

the

revealed

bill

resolutions

Administrative

the

Committee of the American Bank¬

Association on January 18 and
by the New York State Bankers

ers

Association
winter

its

meeting

annual

mid¬

January

20.

The resolution of the latter Asso¬

ciation requests that the Curtis bill
be

amended

tax

apply the
return

any

a mutual savings institu¬
savings in excess of what¬

paid by
tion

income

52%

maximum rate of interest the

ever

Federal

authorities

Reserve

will

permit commercial banks to pay
on savings deposits.
With the re¬
cent downturn in interests rates,
commercial banks expect that the
maximum

rate

savings will
to

2J/2%.

they may pay on
be reduced again
event, mutual

soon

that

banks

savings

and

would

associations

loan

and

also

forced to lower the rate of return

they

because everything in
would be taxed at

pay

of 21,£%

excess

52%.
The

specialized mutual savings

institutions invest savings in longterm

loans

mortgage

and

bonds.

loans and other investments

gage
made

Reserve

policy of the Fed¬
limited

authorities

their ability to

expand loans and
Savings deposits

the period

during

enacted,

eral

rates.

The

would

of high

Curtis bill, if

tax

away

these

higher returns which could other¬
wise be paid out to savings de¬

and
so
stimulate the
personal savings over

demand deposits.

positors

seemed

desirable under
highly
conditions, and commercial
banks sought 'and received per¬

volume

such

the

mission from the Federal Reserve

expanded their business and other
short-term
loans
while interest

Board to pay up to

3% to compete
more
actively for such deposits.
A vigorous drive to attract savings

were

also

institu¬

thrift

mutual

the

But

tions

from

benefiting

since they
could invest funds at much higher
yields in gilt-edged bonds and
quality mortgage loans. A number
of mutual savings banks in New
York

interest

State

3.1/4%.

This

rates,

raised

rate

their

quite frustrating

was

to the commercial banks that were

hoping to attract

large volume

of savings deposits away from

mutual institutions.
mercial
a

bankers

the

In fact, com¬

found

soon

that

major part of the extraordinary

gain

savings

deposits

achieved at such high cost
the

past

year

from

tutions.

for

mutual

Thus,

they found them¬

3% on the very
previously had

nothing

thev

not

demand deposits.

Commercial
could

insti¬

savings

paying
funds

obviously

bankers

ask

legislatures

and

suoervisory authorities to clamp a
rigid ceiling upon the rate of re¬
turn

paid on savings bv mutual
institutions, so that these savings
could
to

diverted

banks.

Instead,

attain

was

State

the

means.

the
for

commercial

efforts
same

One

followed

result
such

effort

proDosal in New York
legislation to authorize

commercial

banks to

ahead.

years

Commercial banks,

rates

return

Hence, they will

high.

were

forced

by contrast, 1

rate

the

reduce

savings accounts
in many cases now that shortterm interest rates are dropping
paid

sharply.

American

The

Bankers

Association's Administrative Com¬
mittee

and

Bankers

the

York

State

Association hope to

commercial
basic

New

banks

see

this

escape

competitive disadvantage of

department store type of bank

by punitive double taxation of any
return paid by a mutual savings
institution in excess of that per¬
mitted

commercial bank.

The

ability of commercial banks
to stimulate needed new savings
in the years ahead
as

will be lessened

the rate of return

they pay on

declines.
They
that the effectiveness of

savings

accounts

they propose
during mutual thrift institutions in stimu¬

out of their
accounts
rather

came

checking

own

than

devious

adopted and upheld in the courts,

branch

strictive credit

Government

for

imposing

unfair burden upon

LIMITED

Quebec

revenue

without

of taxation

many

savings de¬

their

interest

selves

Taxation

mutuals

highest interest rates wit¬
nessed in decades, while the re¬

same

raise

credit

that they can pay a

rate of return upon

McLeod, Young,Weir

risk loans

from

Last

experienced
demand

higher

visory authorities do not feel thht
commercial banks, with the higher
costs and added risks they incur
as

across

It is true that commercial banks

savings deposits. But that limita¬
tion is imposed because the super¬

Correspondence Depart¬
deal in securities by

offices

3% rate under the Curtis

enacted,
hope to draw

dollars of

ceive for many years to come the
increased yields obtained on mort¬

and

paying

serve

ment to

Private wire service to

re¬

Once it is

banks

Hence, they will continue to re¬

practical matter be limited to

as a

are

up-to-date information on
major Canadian companies.

small additions to

good

deposits.

surplus to safeguard deposits was launched by commer¬
the additional savings that will be
cial banks all over the country,
entrusted to them in the future, with what looked like
impressive
mutual thrift institutions would initial results.

Our facilities include:

A Research

even

serves

their

billion in savings, while commer¬

CANADIAN

the

accurate and de¬

Savings Act," or the "Act to Dis¬
courage Savings."

commercial

adopted

J\'

The
we

and

More
of

mercial banks.

posits

the rate
This
is so improper and unsound a pro¬
posal that one inevitably wonders
why it is being pushed so vigor¬
ously, I might even say feverishly,
by its advocates, organzed groups

had

iniquitous pro¬
posal, which flies in the face of
every economic and moral prin¬
ciple, the persistent foes of com¬
petition turned to the equally
improper device of a Federal tax
law to stifle competition for sav¬
ings.
The Curtis bill has been
gleefully endorsed because it aims
to compel mutual savings institu¬
tions to reduce the rath they pay
on
savings to that paid by com¬

of return they pay the saver.

1957."

"Destruction

committee

to bury this

billions

banks, the depart¬
ment
stores
of
banking,
have
shown limited interest in savings

lative
sense

state chartered, to reduce

banks.

actively fostering the
However, and this of course is
development
of institutions
to between mutual and stock insti¬
provide such service to the Ameri¬ tutions to serve the saver. Great the purpose of the bill, it is very
can people.
First savings banks, as has been the contribution of doubtful that mutual savings in¬
competition to our well-being, it stitutions would be able to pay
♦An
address by Mr. Ihlefeld, before is
constantly threatened by those more than 3% on savings if this
the
Savings
Banks
of
Westchester who
prefer a less rigorous way of bill were to become law. In effect,
County, White Plains, N. Y.# Feb. 18,
all earnings of mutual savings in¬
economic life.
1958.
stitutions above 3%, whether paid
out or retained, would be taxed
at 52% by direct levy on these
organizations, regardless of their
need for adequate reserves and
surplus to protect depositors. To
count

lower

is officially, called the
"Savings and
Loan Association
and Mutual Savings Bank Tart Act

institu¬

institutions, by competing vigor¬
ously
with
each
other,
have
greatly stimulated saving.
Our
highly developed, keenly competi¬
tive savings system explains why

Ihlefeld

August

stock

and

to attract and hold

about $12 billion was added
savings < accounts.
This was

is the mainspring
enterprise
economy.

tions, and even

me¬

year,

Sav¬

public agency, was
provide
a
similar

active

favored

American

count.

The Postal

free

tween

people is the
savings *ac-

interest on savings
Credit unions also en¬

pay

Public policy in

with¬

empow¬

Competition

The favored

dium

were

in all branches of
industry based on
prices they charge as
with ' less
efficient

and

commerce

Missouri,

service.

out inflation.

savings

banks

ings System,

achieve

growth

Stockholder-owned

the field.

created

bank

can

tered

expan¬

the

The

later

and

are

today

This bill, introduced by Repre¬
sentative
Thomas
B.
Curtis
of

healthy, growing economy
needs an adequate flow of sav¬

generally, this principle calls for
a
surtax
upon
more
efficient

ahead.

years

institutions

thrift

Thursday, March 6, 1958

be used, for tual savings banks by merger after
distributing their surpluses. When
Senator Pierce and his joint legis¬

could

charge lower premium rates
their competitors.
Applied

competitors

designed to achieve this
result
is
deceptively brief and
simple.
But
legislative history
contains very few, if any,
ex¬
amples of so brazen a proposal to
use
the taxing power to under¬
mine and eventually destroy more
efficient competitors for the bene¬

that

than

the

rival.

example, to impose an added tax
upon mutual insurance companies

efficient

The bill

savings. The banker contends the

precedent.

vantage
that
a
more
efficient
competitor possesses over a less

count service.

commercial banks for the benefit of

the latter—with respect to

wipe out the ad¬

by a cunning
attempt to use a Federal tax bill
to stifle the competition they give
commercial banks in savings ac¬

thrift institutions and

Government to

threatened

and the Curtis Bill, Mr. Ihlefeld

State Bankers Association,

enterprise system, as¬
forms. A particularly

many

effective way to destroy competi¬
tion is to use the taxing power of

Mutual

New York

Bankers Association's Administrative Committee and

charges

competition,
principles

stifle

in violation of the basic

absorb

mu¬

lating

savings be likewise
by punitive
double
of a part of the return

new

diminished
taxation

they pay to savers.
If

Congress would want to
and penalize savings,
could hardly imagine a more
our

discourage
one

effective

way

than

enacting the Curtis bill.
From

12% to 5%

The Curtis bill seeks to prevent

mutual

thrift

serving

savers

institutions

from

effectively not only

by taxing the return they pay in
excess of 3% per annum, but also
by levying a tax on them for all
earnings not paid out where their

Continued

page

Volume 187

Number 5722

The Commercial and Financial Chronicle

Needed Labor-Management Laws
United

States

Senator

(Rep., Nebraska)

In order

movement.

before the law for all

persons

Committee member

proposes

well

The

have

carried

the

America

stories

which

haveunfolded before the Senate
Committee on Labor and Man¬

munities

alike.

must

the

sordid

relate

only

minority

the

too

an immunity from such
obligation?
If our laws prohibit individuals
and
businesses
from
conspiring
and boycotting another individual

Curtis

him,

many

leaders

through
the

the

have

nation's
to

come

violence.

labor

Too

power

much

money
has
been
There have been too

flagrant violations of laws
relating to political contributions.
Too many local unions have been

many

for

run

too

long by trustees and

supervisors.
have had
officers
have

rights

say

workers
about the

union.

There

where

cases

individuals

been violated.
for

many

their

too many

been

the

Too

nothing to
of

have

The time has

come

to turn our attention to

leg¬

islative suggestions that deal with
these
-

situations.

There

was

time when the

law,
as
administered
by our courts,
was
unfair tc the working man.
This situation prevailed in an era
when large business corporations
had a gross advantage in bargain¬
ing power with the individual
a

Our

workman.

decisions

court

affected by the traditional
sanctity of property, the doctrine
were

master

and

ited

from

low

servant

order

should

destroy
union
be

servant

acts?

inher¬

the

citizens, generally, cannot en¬
in a restraint of trade, such
interfering with the flow of

gage
as

goods

why

interstate

should

commerce,

unions

mitted to interfere with the right
of an individual to work?
If

ckurches, business organiza¬
tions, fraternal associations and

lence,
why
should
unions
be
granted an immunity from such
methods?
Our laws give to the
workers the right to organize and
the right to bargain collectively.
The law. does not give the union
officials and union organizers the
right to organize the workers who
do not waiit to be organized.
Was

intended

to bargain

either

that

the

condition

almost

amounted

subjugation.

All

ful

Swung;

Too

thinking people

that; that

Far

thank¬

are

condition

Ino longer

prevails. Likewise, when thought¬
ful people view some of the hap¬
penings in. our economic life to¬
day the question is asked, has the
pendulum swung too far the other
way? Has the doctrine of equal
before

treatment

abandoned?

the

Are

law

some

fended.
fore

the

need

essence,

law

My work
ened

ence

respect

has

land

union

gained

advantage of

some

local

the

Operating En¬
gineers unit in Philadelphia lost
their
local
autonomy in about
1941.

The International

through

system

Union,
supervision,

point of guns
their goons.
The

Committee

had

union since the local
in

men

1929.

proceeded 1o

union

union members

kick-back

When the local

union regained possession of their
union in 1948 they had to sign a

stipulation
the •*

agreeing not to de¬
accounting of money that

International

taken from them.
ward of
up

officers

had

million

need

the regulation of

for

are

not small business. The annual

$600 million
and

welfare

have

reserves

running between $25 and $30 bil¬
lion and have

billion

year.

increment of $5

;

Federal Democracy

Secondly, there must be legis¬
lation

that

will

insure

subject, S. 76, which I introduced

created.

was

boycotts
in

influ¬

matter

granted

cer¬

im-

*An address by Mr. Curtis before the
39th Annual Convention of Association of
General Contractors, Dallas,

Texas, Feb.

12,

1958.

have

different

labor

organ¬

money

that

money

fered

if he knew

the

flow

Reuther

all

goods

replied that that
before

the

Walter

This announcement is neither
Bonds.

costs

Boy¬

Reuther's

UAW-CIO

who work, I believe them

women

honest, upright citizens. The
committee
-is
dealing
with
a
minority of union leaders who

stated

that

his brother.

was

had

the

campaign in the state of Kentucky
in

Walter

1954.

Reuther's

Continued

will

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

Mortgage Bonds, 4V4% Series of 1958 due 1988

directed

Dated March 1,1968

of vio¬
destruction of

"...

;

•

...

„

>'VH1 *'»

•

•}'

Due March 1,1988

program

lence, boycotting,
property, racketeering, unlawful
political activities, and the misuse
of

? -r

•

■

Interest

payable Septem ber 1 and March 1 in Mew York City

funds.
We

not

to single out
deprive them
just rights. We do seek
equality before the law for all
persons and groups.

labor

seek

unions

Price 101.706% and Accrued Interest

and

their

Accounting of Funds

Copies of the Prospectus
',.

the

funds

They

Union

are

placed

were

bank

officials
in

officials

benefit

union.
the

must

their

MORGAN STANLEY & CO.

savings

company.

their

held

ac¬

BLYTH & CO., INC.

DREXEL & CO.

trusteeship.

the

for the

conduct

personal

officers

The nation

handling

was

of Dave

Beck

his

workers' money for
his own enrichment.
They were
outraged when he enriched him¬
a

fund set up

HARRIMAN RIPLEY & CO.
Incorporated

for the

STONE & WEBSTER
March 5,1968.

SMITH, BARNEY & CO.

the

shocked at

self out of

com¬

belong to
entitled to

e-:

insurance

countable

be obtained* in any State from only such

as may legally offer these Bonds in
pliance with the securities laws of such Slate.

These funds

protection

same

may

of the undersigned

enacted

SECURITIES

offer to sell

The

records

Ohio Edison Company
First

Privileges

where Roy Reuther had
contributed $5,000 in a senatorial

secondary boycott

be¬

political contributions be
$5. I asked Mr. Reuther
one Roy Reuther.
He

cent and neutral businesses.
cause

was

limited to

through commerce resulting in
damage to consumers and to inno¬
cotts

to a
far

Elections of the Senate upon
which I serve, he recommended
that

with

Michigan

Walter

They have applied to transporta¬
tion companies and have inter¬

use

self-government

arid

balances must have

place in the

When

been

form

the

that
in dues in that state

contribute

state?

that

rise, and all
sorts of trouble for many people
including contractors. The wide

has
take

fore the Committee

Secondary
carried

EQUITABLE SECURITIES CORPORATION

These

hope

political party operating in

com¬

be enacted into law.

can

LEHMAN BROTHERS

immunities.

that

greater
control of unions by union mem¬
bers. The principle of checks and
a

workers pay

mittee

66%

in politics.

right

czar

and

The pension

year.

funds

over

union

be outlawed.

months before the McClellan

among
the question of

that

report

surveys

What

union members did not want their

economic blackmail and it should

bill

surveys

or
not tliey wanted to
have their union in politics. Those

Secondary Boycott

individual

Two universities

whether

Third, the secondary boycott is
I have

the

conducted

union engaged

It may run up¬

dollars, perhaps
to four million dollars.
a

contrary

have

though
only
2,000
men
voted,
by
the
time
they
got
through with their estimating the
winning slate won with votes of
over 17,000.

their

tain

times

Even

even

to be

the workers.

didates, parties and issues, often¬

moun¬

ments,

and

making political

furnishing manpower, and the use
of
publications to support. can¬

tains to count the ballots.

not be
spent and wasted at the whim of

such

purposes,

member's views.

from the workers.

ef¬

contributions, providing research,

leaders

cabin in the

need,

fective method for preventing the
use
of union funds for political

erating Engineers, which I have
previously
mentioned,
held
an
election at which time about 2,000
Four

about

Political Funds

Fourth,

voted.

concerned

ondary boycott?

The San Francisco local of Op¬

men

the public welfare continue to fail
to enact laws to outlaw the sec¬

T h ey
counted 500 and got tired and de¬
cided
to
estimate
the
returns.

and

fare funds.

or group is entitled
immunity from the law.

are

has

founded

was

unions,

choice, and he pays a greater
price. How can a government that

nothing to do with choosing
officers
or
running their

No individual

practice,

goods * become
scarcer, the consumer has a lesser

where

case

in businesses

boycotted,

pretends

McClellan

The workers' money must

Today

hands

the

took possession of the assets, col¬
lected dues, worker permit pay¬

less¬

not

the

stand equally before the law.

law and-

When individuals
are

tified that the International seized
its assets and took control at the

$59,-

000.

admiration

and

be¬

that

without

this
same
Philadelphia
Operating Engineers tes¬

the Senate Labor

Committee

Rackets

equality

the powerful, the organ¬
ized, the rich, the office holders,
the
government itself, and the
weak, the poor, the unorganized
the individual

longer
have
their
by trustees supervi¬
The Presi¬

and guns.

$40,000,000

de¬

strong,

and

dent,

local

No Bias

means

run

public even though the Burt
Manufacturing Company has a
certified union, which their own
workers prefer, and there is no
dispute over wages and hours.

management

First, there must be legislation
requiring a thorough ac¬
counting of union dues nad wel¬

not

unions

the

been

that

right to resort to threats, in¬
timidations,
violence and
boy¬

groups

granted immunity from the law?
Equality before the law is a

principle

broken up in parcels, sold to
leaders who resold it and

was

collectively should give
unions

should

their

tract

of Akron, Ohio have
boycotted throughout the

the.

have
Pendulum

right

and

union

other

groups, cannot recruit new
members by intimidation and vio¬

the rank

one

income from dues amounts to

right of an individual to carry
his work,, why should unions
granted immunity and be per¬

in the hands

local union have

The

prod¬

been

brought to light

leaders.

The

Manufacturing

land for 10 years. This economic
war has
been carried on against

the members of

the

for the rank and file of

their

for

generally, are not
permitted by law to interfere with

collective

not
only put working men at a disad¬
vantage, but in some instances

Ifrnd

Burt

of. Company

$28,000 hut paid $33,500 fbr it, the
difference
going
to
their own

The

citizens,

cotts?

power,

the

hearings

our

Kohler strike.

ucts

holding conventions should

sors, "goons

;

the

ods of

Francisco local

tract

election

fully exposed in

officers and delegates, and meth¬
be

our

San

nominations,

should not, be

an¬

two

these funds is self-evident. Unions

old world, the fel¬
rule, the doctrine of
the assumption of risk and the
rules
as
to
contributory negli¬
gence.' All of these things, to¬
gether with the lack of organized

bargaining

immune

from such laws?

Government

file of members and not governed
the
top. from
top
down.
Workers

was

their

paid the dues.

funds.

mand

unions

affairs.

workers'

squandered.

why

granted immunity from the same

the fact remains that

international
mismanaged their

Too

business

Carl

many

have

blocking

granted

union

movement,

that

tales;

acts

required
to live up to the terms of their
contracts, why should unions be

these

such

If all other citizens arc

never

fact

for

w e

sight

law

answer¬

highways
overturning trucks,
destruction of property, and in¬
jury
to
persons, - why
should
unions be immune?
'

gangsterism.

lose

the

Workers

investigation
of the International Union of Op¬
erating Engineers has brought to
light a number of glaring viola¬
tions pertaining to the handling
of

are

ods,

investigation of the

where

recently-

purchased

they are damaging to
people and employers

trespassing,

and

public

and sidewalks,

power,

Whi 1

interest and

able

funds, corrup¬
tion, violence,
beatings, mis¬
collusion

the

If all other citizens

which involve
misuse
of

The

working

agement and

use

against

are

appeal
and /deter¬

Textile
case

those who

equality before the law.

restore

media

new

reason

officers,
Mr.
Valente
and
Mr.
Klenert, failed to preserve and
protect the funds i belonging to

pendulum of custom and law
swinging too far toward labor unions and believes his sug¬
gested program would correct this unbalanced situation as
■).

just

their

other;

The McClellan

program.

had

money.

equality

the

sees

dominate unions,
but our laws
should provide that voting meth¬

union

United

to achieve

and groftps, he

eight-point remedial labor legislative

izations.

wise,. the members of the bakers'
government
mine what their President, James
G. Cross, was doing with their

Senator Curtis expresses respect and admiration for ail but

minority in the union

widow of his closest friend. Like¬

By HON. CARL T. CURTIS*

(1053)

CORPORATION
-tli fit

•

'■

page

The Commercial and Financial Chronicle

(1054)

stable

By Growth Obsessed
By BASCOM H.

Committee

City Bank Farmers Trust Company
New

York

City

aspects of the problem of purchasing power pro¬

confusion in

utes

been

of security. The banking official attrib¬
years over the relative emphasis

to.

There

philosophy of trusteeeship be undertaken based on
record of past 15. years, but that a longer look and other
governing factors, which he reviews, be considered.
new

which

By MORRIS MOSES*
San Juan, Puerto

Mr. Moses

nomic consultant

not

taking

have

the

text those
admonish

well

safety of

the prob¬

ancient

phrases
not
simply be¬
cause
they
express
the

our

size

because

empha¬
dual,

the

sometimes the
Bascom

confl icting,
objectives of
trust investing;

Torrance

of
probable .income
and
probable safety. If there are such
things as ghosts, I am sure the
shades of those judges who were
sympathetic to the view that the
life tenant is generally the pri¬
mary object of a settlor's or tes¬
tator's bounty are listening when
the widow with small children to

but

chiefly

be¬

in recent years it seems to
there has been some confusion

cause

have

tives

trusteeship

and

confusion

the

mentioned between the dual objec¬

heart

they

type of thinking

wardrobe.

Hence

substance

and

birds,"

ent purposes. We don't buy swim¬
ming suits to use as overcoats, but
both garments have their place in

choosing

very

stigma, a mark of deca¬
dence; to others, any form of con¬
tractual investment was "strictly
a

which completely ignores the fact
that bonds and stocks serve differ¬

invested."1

these

most

for the

capital to

be
I

which

regard for "the prob¬

able income
able

words

familiar

bring up comes to your desk ask¬
ing for income. They know that
she cannot wait five
years,
10

the relative emphasis these

finds that

nonlocal

States,

of Puerto-Rico, mineral

raw

great majority of promoted plants'

material* but

upon

petrochemical plants.
Puerto Rico is

paradise. It has

ideal

climate, beautiful-beaches
countryside, a healthy and
energetic population, and a stable

persons, income, or even an
interest in income, had become al¬

little

the United

and

Purchasing Power
am

resources

depend^ as do firms*in
material flows from other areas in
meeting the acid test of achieving lowest cost, maximum invest¬
ment return and retained profits. Explains how plants auto¬
matically generate more supplies and markets—leading to
greater integration—as in the case of oil refineries inducing
use

No Legal Obligations in Terms of

some

reviews:physical

Administration

Rico

based industries, and guidance provided by feasibility projects
to determine whether commercial' opportunities eaist. The eco¬

to be discussed later.

are

Thursday, March 6, 1952

Economic Consultant, Economic Development

virtues, the defects, and the high¬
ly erratic record of these various
historical attempts at protecting
purchasing power. The important
point is that no one sure or magic
method has emerged.
Currently
our interest has turned to stocks,

recent

capital in trust administration to out concern over inflation
and "utter enchantment with the idea of growth." Suggests
no

resorted

Puerto Rico's Raw Materials

the

time here to discuss in detail the

objectives of probable income and probable safety of

the

corn,

of Savings Bonds redeemable at
premiums to compensate for a
rising cost of living. So the story
goes.
From time to time, gold,
commodities, real property, for¬
eign currencies, stocks—all have

tection, and crucial importance for keeping one't perspective
and sense of balance in deciding extent to which1 trustmen
should rely on any type

wool,

leather,

years

sals for issuance by the Treasury

Principal topics discussed by Mr. Torrance, in recapitulating
the trustee's role in our unpredictable society, include legal
and moral

as<

shoe

and

of this century, many
of you will remember Irving Fish¬
er's commodity dollar; and more
recently there have been propo¬

TORRANCE*

Vice-President, and Chairman of Trust Investment

products

beef,

early

view

of the

size

and

quality of
these deposits. All they would
have to ship in would be the soda
ash. Some of our mineral based

government. It has everything, industries are cement manufaethat is, except enough jobs, capi- ture; terrazzo, cement, mosaic, and
throughout this long period of tal, and raw materials. Part of structural tile; glass containers;
fluctuating money neither law nor my j°b is to see what can be done and
construction materials of
custom has ever specified or re- about increasing
the supply of various kinds. V
*
*
quired preservation of purchasing raw materials and utilising what
The metallic minerals are alpower, or judged a trustee's per- we have to the best; advantage, most all marginal either with rev
formance in terms of purchasing
Let us see what Puefto RicO has spect to amounts of reserves or to
power.
It is interesting to ask Plenty of in; its own right. We can metal content per ton. Among the
why. Certainly there is no reason count them on ope hand: sugar, metallic ores are iron, nickel;
to assume that trustees have been limestone, clay, and silica.: Ill a cobalt, copper, gold, silver, platiany
less concerned than others typical year we will produce about nuttr, manganese, and chromium,
over loss of purchasing power.
On 1^4 million tons of Sugar, 60 mil- Iron ore has the best chance for
the contrary, the whole history of lion gallons of molasSqs, and lVz being worked commercially in the
trusteeship is a long record of million tons of bagasse, the residue near future. Even then, the known
effort
to
provide protection of sugar cane. Most of the sugar reserves, and we must except
against economic adversity. From and? molasses is shipped here and limonite as a nOn-workable ore,
the first century of the Christian almost all the bagasse is buTftedr as will support only a small opera-;
era, when the historian Josephus fuel. Out Industrial Laboratory lias tion . like
making, sponge iron,
was
speaking of a trust: as- a! done - pioneer research Work ;on Considerable exploration; and re"sacred
and
divine
thing," on chemical and industrial: uses: for search are being accomplished for
down through the English com- sugar and its byproducts. .Some many minerals under a program
mon law to our own statutes andof the research has reached the conducted by our Department of
judicial decisions, the object has stage where the technical prob- Industrial Research, the U. S:
been to make the trust device a lems are solved. We are attempt- Geological Survey, the U. S.. Burefuge for those who sought secu- mg to determine whether" chm- rea'u of Mines, Princetorv Univerrity. Why, then, this absence of mercial scale operation is;feaSibie. sity, and private companies. The
any legal obligation in terms of Hlght now we have;^ perfected a
more
daring may want to put
rturnhaeintf
purchasing power?, "To me fhovo
there dry. process for ? makinghard- money into a hole in the ground—•
board from bagasse without the there is a possibility that petroare several reasons.
addition of resins.
If some ques- leum may be found in Puerto Rico
The Reasons Why
\ tions about marketing the product and the nearby island of Mona.
For

trustees

strikes

the

home

thing

that

fact

that

the

years, or perhaps longer, for a low
and some yielding stock to build up to a
uncertainty as to the basic mean¬ respectable return. ? True, in re¬
ing they may hold for present-day cent months, with our business
trustees. The causes of this con¬ boom
tapering off, and with some
fusion, this uncertainty, are our of the overgrown beanstalks of
-concern
over
inflation
and
our
the
stock
market beginning to
First there may be an implicit
utter enchantment with the idea
droop, there has been some return
recognition that the cause and the
of growth. These, in turn, are by¬ to
soberer views.
Nevertheless, cure if there is anv of inflation
products of our phenomenal boom our concern over purchasing pow¬
lies outside the trust field in the
of the past 15 years in business,
er,
and our enchantment with larger areas of economics and
and the stock market.

twin objectives deserve,

^re: answered satisfactorily, the We have a Mining Commission
Process will be made available to which issues prospecting permits
private industry. As you know, and mining leases for all cornGrace and Co is setting up mercial minerals on reasonable
^ mill to make paper from this terms and conditions,
growth, still remain. Therefore, politics, in the wastefulness of bagasse. A syndicate with experiThe timber in Puerto Rico is
It is hardly necessary to remind'
before we decide to build a whole
war, and in all the myriad factors ence is considering the manufac- limited.
The great variety of
anyone of the dimensions of this new
philosophy of trusteeship, in¬ that contribute to the
chronically ^urc
°f insulating board and species per acre tends to make
boom. By now I think it is recog¬
cluding new measurements of per¬ cyclical nature of our economv
hardboard
from
bagasse.
Yet
these
logging
expensive.
A sawmill is
nized as one of the most dramat¬
i

periods of sustained economic

expansion

record.

During this
time, Gross National Product has
grown
from
an
annual
figure
around $159 billion to an esti¬
mated
$434
billion,
corporate
earnings from close to $9.5 billion
a year to above $20
billion, divi¬
dend payments from about $4.25
billion to

$12 billion; and the

over

formance, largely on the record of
the past 15 years, it will be well
to take a little longer look.

Suppose we begin by
bering that fluctuations

remem¬

the

itself.

Ever since

invented the economic device of

ord-breaking high
tionally above 521,

been

this

advance

1956

frac¬

good part of
coming in the last
a

Unhappily,

been

concurrently

wonderful

chasing

with

the

growth,

pur¬

of the dollar
of its periodic

power

clines,

time

every

one

has

de¬

that at the moment it

stands

at one of the low points,
perhaps the low point, of its "cycli¬

cal swings for the past

150 years.

Small wonder then that
xise in stock values and

record

dividends,

while the value of the dollar

was

falling, lias led many1 investors, es¬
pecially those whose business ex¬
perience has encompassed chiefly
the past 15
years,
to conclude
without further question that the
obvious protection for purchasing

exchange, there have

fluctuations
in

the

from

value

time

were

little

•An
the

if not

address

39th

Mr.

Torrance

Trust

before

Conference,
Association, New York

City, Fib. 11, 1958.

....

important, it

, .

ihg constantly 1tblearn;more about
what

we^have.

found

much

of Puerto

cure

universal means

accomplishing the desired

re-

«As foF mineralsy we are# work-

iWe
Rico

would be measured by the

power

conse¬

Consumers

quence;
a
few were disastrous.
Just as persistent as these recur¬

Living.
fined

ring fluctuations have, been man's
recurring efforts and stratagems
to protect himself against them.

Index

the iCost

Even here, with the reimproved index we

and

control

the

rates

lenders,

charged by
Tiberius spon¬
farm¬

445, 461

<Mass.

1835)

Amory,

informer

than

chemical, and^industrial

nlants' hne td

uses.

wood excelsior and ,the. other

lightweight

bagasse, as

in his building
lt^ ,

best

the

about

aggregate^
con^

jnaterials. He

way

feserves/ifidplpmite ariddolomitiq for his excelsior machines./ Wp
Umestoiie remain to be determined gave him the information and theft
bid

iii^c^io^;are ^at they

suggested that
.

spar are

local source of

w°«d might be explored. We
visited, the^ Tropical .Forest Re-

search Center of the U.
whcre

present.^ Larger reserves Q;
granite, arS known samples

S. Forest

; wasl givM

te^find

fnr

the remainderman?

the

—

dollar

more?

above 1929, I do not

tenants

came

happy they

than

tell

how

a
a

factory.
bottle factory.

puzzled

the

■

major

Franklv.
Frankly,

failure

aboufc declining

corollary

s,ome fnms to establish plants for

ques-

should undertake to the manufacture of glass fibers,
legal status to a meas-1 flat glass, or even optical glass in

in purchasing

rising

purchasing

power ■ in

worth his while to build a

well

operation is

sawmill because his
so
a

recall'billions of tons. To date, its

us;

power, is
whether trustees-Would get creditfor

new

urement

irt

were

doUar values.

give1

be quarried;

1933, to cite, just one Loose, clean silica sand of excelwith
the
purchasing.
^ quality ls ■ calculated in

that either remaindermeri
remaindermen' or.life
-iiser is
or-life diser

tion,

can

example,
40%

tration'is financing an investiga-

the dol- tion to ascertain whether marble

rise while dollar values of dimension size

pan

decline.

power

of marble and

;

The purchasing power Of
lar

■

everybody,, today

life tenant

notes redeemable not in
currency,
but in stated quantities of such
College

far

years.

thp colleges of Oxford and Cam¬
bridge leased their lands in corn

Harvard

of wood for testing. As
to < exist.
Feme,ito' Program?; pf luek would have it, the most com^
Again, for whom do we pre•1?' PJJ" E eondmi e i De'\\-lo p m eiUr;Af1m i a is- ml>n ree- agrumo, prove
o
serve purchasing
power, for, the : v - '
su^erior for ]^ Mis purpose.It is

buys

ers, and price-fixing was tried by
Diocletian; In Elizabethan times

already started the

us about me oe«.
™
The transpoit. the dumbei he needed

money

.This

ppntipman had

and&ld-

prospect.

construction of two plants, oneto

same

dollar

example of how

unlooked-for dividend was dis-

covered:for

use

limestone % and J some
random
analyses "suggest rthat reseiwes of

have

well acquainted

sored government loans to

* an interesting

consists] of

with both deflation and inflation.
The Emperor Augustus undertook

were

fori

/inrnaro

know^thht

today, the individual coni- substantial; Among: the clays, the
ponents of the index are not of red burning-typ<y is almost unequal-importance to evgrstoody.\
UmUedf''arid<rthe«kinds;like«;reIn some things, both goods and
services, a dollar, which Is, the fractory,.white-burning;

The Romans

cement into building panels. This
an

Mineral Based Krms

Lrt

4-/\

Besides, there are practical dif- puce.limestone are very largev By;
ficulties. Presumably, purchasing ? pure I mead: pure enough- for

the

Mid-Winter

American I&iltrerd

flion

yicp

;

rents, and thus escaped the effect
of rentals payable in
depreciated
only sensible
investment program, is the pur¬ money. In Revolutionary times in
our
own
chase and holding of good stocks.
country, with inflation so
So
obsessed
by
growth had rampant that butter sold at one
time above $1(1 a
pound, and flour
many investors become in recent
at more than
$1,000 a' barrel; in
years that ahy stock which did not
sell at a fantastic price-earnings Continental currency, Massachu¬
setts actually experimented with
ratio, and yield only a niggardly
a tabular
current
standard, paying its sol¬
income, had.an almost
automatic demerit against it. To diers] in the Continental Army in
powetf,

CSM &£&

the

sult-

Some of these
of

of this im-

cntivno

source.

seems to
simple iact,Valready.
referred to, that no one has yet

practically
legal tender that has ever

fluctuations

j_.

served as money.

5 years.

this

medium

-Pi Knn
fiber

ma": 5% of the bagasse produced each

are

But most

me,

man

Dow-Jones Industrial Average has
climbed from around 92 to a rec¬

in the supplies

dent

that
preserving purchasby their nature

power

speculative

value of money are almost as old
money

recognitiol

lation, and
5

i„Me process of being established
now,
primarily to cut logs for
xinlh
LeT than STK incorporated^

enterprises would make barely a

■

A Backward Glance

"here mav^hSt
jfe

.£

large. We had already finished

feasibility study,

rtati6n which
We ^

Client

our

had been

value.

weed

wood

He is happy because

he saves lots of money.
to

needed!

happy becdiise up to now

yagrumo
of

this subject

that we had all the basic infor-

teach the rural

We have

people how to

„

Br,X,"ctTJ.JZ
in

Puerto Rico" sponsored1 by. Bureau of

log

these

brought in

trees so
a-

Fomentp has

Forestry expert ta

Pick.

Continued
on

!^"Affairs'e63egap-?ew

Continued

page

Volume

187

Number 5722

The Commercial and Financial Chronicle

Thrift Institutions' Activities

•

,{1055)

.types of savings institutions regarded mortgage investments with
maximum

Relative

Yields

This amount and ratio

While financial institutions with

was

main-

tained well into 1951 many months
after the Federal Reserve-Treas-

steadily increasing broad alternative investment out1946 through 1951).
lets have adjusted their mortgagor ury "accord." The sharp reaction
During these years, savings and flows more
frequently and widely
tight money did not show up

favor from

In the

Mortgage Market

By SAUL B. KLAMAN*

>"'•

loan

Author of

forthcoming study

System s*

marked differences in reactions by life insurance companies,
savings and commercial banks, and savings and loan associa¬

►

weighs the possible effects of

loan, and increasing FHA,

:•

■v

cor¬

;

.on

life.

higher than $& billion in 1957.w

•

the

affairs

...

finance,

institutions and mortgages
natural

pair

thrilt
as

are

Rodgers and Ham-

merstein, steak and mushrooms,
Romeo

and

Julie t.

This

tion,

The

lenders

types

few

past

with

than

years

limited

outlets, all
adjusted their

investors

*n ^ie figures until 1952, when net
mortgage flows dropped to less
than $2 billion even though net

assets rose substantially. The 1953
mortgage flow was only slightly
larger than in 1952. It was not
until 1954, months after the easing

I11 capital markets, that total and
relative mortgage flows of life
companies expanded appreciably,
all(! by 1955 had reached a new
Peak °f $3-5 billion. Again, al¬
ternative
investments.
For
life though monetary policy had once
insurance companies and mutual agam tightened and capital marsavings banks the relative reduc- hets wel'e under restraint in 1956;
tion reflected chiefly a favoring of hfe companies acquired as large
corporate
securities
relative
to a volume of mortgages in that
mortgages; for savings and loan year as in 1955. The sharp drop

tion reflected the

■

tllan

institu-

This unique ac¬
basically differ-

the savings institutions.

associations it reflected the acqui-

mortgage flow much larger sition

Cut-Off Date of 1951

The universal favor which mort*

Treasury obligations at
increasingly favorable yields following liquidation in earlier years.
The subequent easing in mone-

tary

policy

their mortgage investments
occurred in 1957 to $2.2 billion
representing only two-fifths of the
net increase in assets, the same
*n

amount and ratio

capital markets
after mid-1953 was accompanied
by a sharp relative and absolute
expansion in funds devoted to
mortgage investments to be fol-

the

wake

in 1953.

an^

Fmm

fwL
n,•

rnmrf

Tni?

wmI

^t4tona"nTeallpaitXafVo? ^solutely
so

.™nvtlt^^.Per*0<*;}

and

ne
nncomP?"

ftiiHp™ hntH

and relative to their

t'heUum To

the dozen

■

jis

ing

the

fection

with

af¬

these

institutions

gard mortgages in the

Klaman

Saul

will

years

re-

en(i

activity by savings institutions jdify

enjoyed
anc[

hag hadas
fjuence

structures, mortgage holdings in-

dil:ions

and

the

OVer

by financial instibeginning of a

the

nionctorv

ffovjiyirv

Wjnto"
™?rt«age debt at the end
of 1957. -Within their own asset
rrpnsprl frnvrt lpstf tnnn
creased
from less than

date

which

understand-

institutions

ix>licv

which

muchyif 'not

more in.
mortgage market conon

the

j-i--

role

thrift

in the various sectors

one-third for life insurance com- of
market as any other single
panies, from less than one-fourth factor. The reactions of the major
to three-fifths for savings banks types ' of savings institutions to
other (the highest proportion on record), oiihseciuent chances in monetarv

opera-

and from less than two-thirds to p0ijCy al1(j \n overall capital marwell

over

climate generally. Clues to future
variations in investment behavior

and

loan

also

Larplv 'since

rewt?i™I™s afSih?sefpofir will ^
illuminate
ences

the

nature

investment

differ-

reactions

fluctuated^ather
o^ne to thi

1950

alterSivf

outlet,
both.short and long term available
to them.

changes in capital market condi¬

S & L Assns. ancl Savings Banks

tions.
_

Life Insurance

undoubtedly vary, as it has
in the past, with changes in the

suitors for funds and with changes
in
the
financial
and
economic

"1^1^
b
^

institutions

savings

ahead

will

attractiveness

basic to

are

world.
It marked the
ing of present and future
the nearly unlimited liqulions
of

almpst^u^ons

two-thirds ofjixe total outstanding

historic

financial

of postwar mortgage lend*

lncreased.their^holdings to

The

degree

of^$1^15? billion. This domn

nance ~

have

ica

Pbel

flow

thrift insti¬

^fiectfng

££

de-;

tion, for about
century and
a half, as
long;

relative

the

over

markets ha§,,.gages found with institutional in¬ capital market'
stringency
and
? 111
year^since the vestors \in the first half of the
Within
end of * the
during which postwar; decade ceased with the and monetary tightness.
-n
d
the lag
these
broad
similarities
of
movetnne
^
7the net« fl^w-..of . nonfarm abrupt change iir the financial
ment lie important differences in S? ®
vcfUJ?«
mortga^e^fimdSifrom^ttoe lenders c]imate wrought by the Federal degree of change, in timing, and
amounted-: to almost $80 billion
lengthened considerably
IMs ot
Reserve-Treasury "accord." March in
types of mortgage investments
out of
£ considerably. It is o*
.total nonfarm .mortgage

of affec¬

which

tional'investors,

greatest relative growth in /•

much larger share of their
loans
and - investments
to

a
?

than the flow from other institu¬

Sharp Increase in Holdings

en¬

with

thrift

-111^ mortgage

scene."

ting

year, a

come

been

behaved

the

: , r
>.
- 4 4 cnt
investment programs and
and loan associations but objectives of commercial banks
liave never - again dominated the ancl tile
markedly greater volume
assets structure of life companies, of
Governments
held
by them
.

tions

tutions

from

savings

m o r e-

varying

the participation of thrift

dured

gree

-*•

associa¬

has

over,

banks

differently

mortgages hi the immediate postwar years than in any subsequent

if conventional

firms

sav¬

institutions in this period commit*

j ;
vu,et

lending increases;*and pre5V4% FHA loans will, with discounts; be in demand in ;
1958, and total net increase in mortgage flows at 5% to 8% /

V Commercial

quite

diets
'

mortgages, mutual

and Federal mortgage \

and the dependence of mortgage companies

insurance

ings banks expanded their net flows in accordance with
changing
mortgage investments from less yields.
Thus, not only life insurthan one-eighth to well over nine*
ance
companies but mutual savtenths of their total net capital
ings banks and savings and loan
market flows, and life companies
associations reduced their share of
t increased the proportion of their
net
capital market investments
net capital
market flows going going into
mortgages during the
into mortgages from about one¬
1951-53 period of capital market
s'
seventh to three-fifths.
stringency and rising yields on al-

terminating

notes a close

program;

relation between mortgage companies
program,

all

invest¬

market

Klaman

omist

devoted

capital

tions to

principal factors affecting the mortgage market as a
basis for providing an insight as to what we may
expect from
these thrift institutions in the present and the future. Econ-

■

-'/

mortgage companies assesses

net

ments

Board of Governors of the Federal Reserve

associations

their

„

Capital Markets Section, Division of Research aiid Statistics \J

;

Slower Reaction

„

Comparison
flows

with

net

the

supply

mortgage

long

Compared to the fluctuation in

mortgage flows from life

compa-

nies and commercial banks, flows
from savings and loan associations
and savings banks have been con-

term funds avadabie Do each

type
much

siderably more stable in recen*
kot conditions varied in accordyears.
For savings and loan asassociations.
Similar ailce wbk tbeir fundamental dif- stronger reaction, as well as the sociations,
net
mortgage
flows
sharp gains were recorded relative jwences including their degree of longer lag in response, of life actually
increased
substantially
of the main types of thrift insti- to the flow of savings into these
companies than of other savings
(after
a
slight
pause
in
1951)
sneHalization in mortcaces
tvnes
institutions to changes in the fitutions
mutual
savings banks, institutions
between
1945
and -peciaiizat on in
tgag , yp
throughout the early period ojJ
.savings and loan associations, and 1957.
<
T
;of mortgages preferred, and op- nancial climate. This is a reflec- credit stringency and accelerated
tion both of the wider investment
life insurance companies—may be •"'« The
during the shift to credit ease to
extraordinary expansion in portunities for alternative investfound in the record of their past
available
to
life an au time1 annual peak for any
mortgage activity Of savings iristi- menls. It is these differences in opportunities
companies
and
the
greater
mfluactivities.tutions relative"to other market reactions to
type of lender of $5.3 billion in
changes in the investTo achieve some perspective, it participants and to'other types of
,
piimato nnd in basic mort¬
I"
—ona
is of interest to note that while investment reflected, the unusually ment climate and in basic niortr
'each of the main types of thrift liquid position of financial insti- lia^e operations which it is lm- 1950, for example, net mortgage had bcen relying heavily on borinstitutions have, from their ea^- tutions and the strong ';pent-up portant to assess if we are to acquisitions of life c o m p a n i e s rowings from the Federal Homo
amounted to $3.2 billion, larger Loan
Banks
to
finance
their*
liest days, depended heavily on demands r for • housing land
other evaluate the future, role of thrift
than those of any other type of
mortgages as an investment outlet, real estate facilities at the :end of - fmtitutions in the mortease maiv
skarply expanded lending activi*
investor and nearly three-fourths
■
r*
j
it hasv been only within recent the.
war.': Neither Of these' condiof their net increase ip. assets. i
Continued, on pcige 2b>
-years as time is measured that the tions
exist 4oday.
Each "mf'r the
f" r ;
• *
mortgage
market
has
become main types?-of financial instituheavily dependent on thrift insti* tions held a larger amount and '
•
tutions.
Back, around the mid- proportion of their; assets in Gov;
v. • v ,.
All oj Ihese notes having been sold, this announcement appears as a matter of record only,
19th century? for example, mort* ernment securities - at: the end of gages constituted the largest single 1945 than in any preceding year. V? NEW ISSUE
•
'
• • -V .
asset of each of these institutions, Conversion of these large holdings ,
"
representing 80 to 90%
of the into higher yielding assets and
assets of life insurance companies, development
of new investment
,
a similar proportion of the assets
outlets for the inflow of savings •
of savings and loan associations, were common goals. Federal Reand; well over one-half
of the serve support of Government bond ~
four—fifths

foi

savings

institution indicates the

—

■

ZTT 'onTZZsTZTTm

Wtutions m me mortgage mat*

$1,000,000

assets of mutual savings banks.

Fifty

possible. to

sell ,guch securities

later while still in*
vesting the bulk of their funds iri

readily ancf without penalty.^As

mortgages,

atf.esi^

held

years

the

thrift

institutions

only about one-third of the

total nonfarm mortgage

outstanding.
uals

debt then

At that time individ-

and

other

•investors

were

non-institutional
still

the

main

of mortgage

credit. With
thecontinued growth of thrift institutions, their importance in mortgage V markets
increased, though
unevenly under the impact of the
'depression and war years!
By
sources

the end of World War II, they held
about
one-half; of the nonfarm

mortgagedebt,

compared

two-fifths in 1920.

with

Over the years,

ment

securities

were

volume,

acquired

mortgages
.

have
.

private demands froiii
capital, market.
'

ment outlet for savings banks and
'

created a financial climate in
which yields and other consideraturns - associated with,b mortgage

the

Graduate

Administration

University,

New

York

The $1,000,000

■i

•

principal

amount

of 6J 2% Secured Notes

are

direct obli¬

gation of the Company secured by whiskey warehouse receipts for not less
than 1,250,000 original proof gallons of Kentucky bourbon whiskey pro¬
duced by

the Company after March 1, 1957.

.
r

Price 100% and accrued interest

af conversion from Governments
to

mortgages varied among finanintermediaries reflecting dif-

ferences

tions,

Banking

Business

J?ans

and

policies, legal restricorganization problems.

tional

York

Due October /, 1962

Interest payable April 1 and October 1 in Chicago, Illinois

;

Mortgage

Dated October f, 1957

Whiskey Warehouse Receipts

facilities.:~J]^se«.actions*in - conJU^tion with generally. expansrve •
^,e£^era
?.rjr abd^fiscal poli-

Notwithstanding

New

with Warrants to Purchase

the

At the samextime„ the Federal
Government expanded and liberaJ^ed. Jts mortgageunderwjitrpg

Ann^a^Con'feJence^or ^en^oT Execuutts
School

Distilling Company
6Va% Secured Notes

liqurdotion oF Treasur^

pbhgations .proceededrapidly dur-lr)S
Peri°d
support and provided a large reservoir of funds.to

eontinued to be the prime invest-

—

especially,attractive^ to
in 'financial institutions
fhe. speed

except for the war when Governlarge

Barton

prices through early ..1951 made it

City,

b fi'S i C

differences,
...

„

Fulton Reid & Co., Inc.

ilistitU-

however,
,,

it is

,,.

clear that each of the three main

February 27, 1958

Mason-Hagan, Inc.

The Commercial and Financial Chronicle

(1056)

Growth Sector

THE MARKET... AND YOU

stress

,ueh

STREETE

By WALLACE

From

was

Litton

picture

little
"growth-' items,

there

the

Thursday, March 6, 1953

Neglected

With the market

uncertain,

Industries

dent but most of the

of
years, has become an im¬
portant factor both in elec¬
tronics and office equipment,
either of which could spark
good action in a better mar¬
ket. In partial explanation,

barometers

some

vvhich, in the short

Washington
the News

Ahead

span

live

StocKs

enjoyed a rally run¬
ning for several days for the
industrial

section

without

but

the

week

this

cooperation

of the rails and utilities which
indicated

far

was

there

and

dictions

companies

given to optimistic pre¬

were

was

trimming

inventory

bit

evi¬

industry
still in a

were

erosion.

was

the

industrial

Support had shown up steel

same

From the
came predic¬

industry

tions

to around the 435 area which

recession

with other

groups.

bottom

the

that

when the industrials declined

here

was

of the excitement over

Aircraft
apart when
required stock wasn't

merger with
Radio Corp. fell

of the

close by.

the

obtained.

the

case

could indicate
the top

several sink¬

breakout

side.

was

only

since

temporary

the

company

certain to continue its

seems

The

million tons

month from in¬

adding some ( $50
ventories, they are approach¬ the sales picture.

favoring any up¬ however, even this company less, as far as a cash payout is
side breakout. Certainly the estimates that last year's in¬ concerned,
and concentrate
news background was not one
ventory peak of 22! 2 million on future growth. Despite its
that called for buying enthu- tons will have to be cut to
steadily growing earnings
siasm what with dividend 12!^ million or so before the record, the stock dropped
cuts and omissions reaching a turn comes so there is still from above 56 at last year's
crescendo not seen in a score some more
liquidation pos¬ peak to below 40 currently.
sentiment

sible.

The chemicals—once billed
as

Soft Goods Issues at Ilighs

good first half or first
The "soft goods" industries
three quarters bolstering the
were the sturdy ones so far in
annual reports now being is¬
the recession, with food,
sued.
The
nearly universal
tobacco and store issues forg¬
tales of a sick final quarter
ing to new highs with persis¬
more or less
guarantee that
tence. Even Lorillard in the
the 1958 first quarter results,
which had been
to start wafting over the mar¬ tobaccos,
ket next month and reach a something of a wonder issue
peak around May, will add through 1957 still showed no
considerably more fuel to the sign of running out of steam
and only paused occasionally
pessimism.
for a breather. The company's
cases

the

premiere growth group
been restrained, too,

—have
as

far

the

market

con¬

cerned. There aren't many

the group

that

are

likely

didates for bad dividend
tion

can¬
ac¬

though earnings
were
ragged last year and, if
the economic upturn doesn't
arrive early, could be moder¬
ately lower again this year.
All of this has dropped prices
back

even

normal

ratios

against the high price-earn¬
report showed per
ings figures that prevail in
earnings
of
$3.79
the dividend news was that
bull swings. Union Carbide,
the market did a good job of against $1.34 the year before, for
instance, has sold at better
which was a good showing.
than 25-times earnings at its
discounting the bad news well However, the final
figure
was
in advance. The issues featur¬
peak in the last handful of
in the
upper range of
the
ing in this unhappy news
$3.65-$3.80
that had been years, but lately has slipped
were
generally.unruffled and bandied
below 20-times. From a be¬
around in advance.
a
good many held above their
low 3% yield the price has
1957-58 lows easily. In some Moreover, the quarterly im¬ declined to where the
yield
provement in results through
cases where the news was ex¬
1957 showed a strong uptrend lately has been above 4%. As
pected to be even more un¬
one source
put it: "when cor¬
of 36 and 48 cents, $1.02 and
favorable than it turned out,
porate
earning power does re¬
$1.93.;
! ,.y
there were buoyant periods
❖
*
*
cover, a well-run diversified
for the affected items even as
and expanding company such
Finally, industry reports
the news was circulating.
as Union Carbide will be one
are that the
company is keep¬
*
JF
of the first beneficiaries."
ing up the pace and could
Bucyrus Erie was one that show $2 or better for the first
New Diversifier
took a halved dividend a bit
An outfit that has changed
quarter this year to bolster
hard but it, too, held above
1958 results. Since the com¬ its nature
vastly in recent
its low on the first shock
pany has a reputation for a years that is a factor in the
despite a one-day loss of more
large dividend payout when chemical field is Food Ma¬
than 11% of its value. Sea¬
the going is good, the expecta¬
chinery & Chemical. Once its
board
Air
Line's
reduction
tion is that the recently hiked principal
business was ma¬
was
greeted placidly. And so
regular rate will be' larded chinery for fruit and packingannual

What

was

Tabulations

went.

from

apparent

divi¬

with

a substantial extra since
industries. It now is in petro¬
increased rate is only $2 chemicals, farm equipment,
already have a share.. To the technicians,
chemicals, consumer items
soared well over the century
even if the pace flattens this
such as lawn mowers, and is

dend omissions and reduction

the

far this year

mark.

Oils Do Better
For the first time in

while

the

shine

when

mate

the
a

was

case

oils

were

the

long

able

market

year

and

short

year, a

its

cli¬

still

good but here again
mostly

the

seemed to be

rebound

after

the

section

had been well

1959

earnings fall participating with National
and
American
over last Distillers
return of the issue to Potash in exotic fuels. To its

doubling

classic

10-times-earnings followers it has more growth
bit of room on potential than the more fa¬
miliar, established giants that
top for the stock which,
leaves

though, has to be tempered
bit

case

Jof

depressed
without any overriding news scares cropping
background demanding better future time.

new

dominate the chemical field.

health

at' some

the

about

House

hypo¬ timid little fellow, whom the gen¬
eral feeling has never had an evil
pressures thought in his mind.
commit¬

tee's
investigation
of
against Federal regulatory
cies

when

worst

agen¬

the

pres-

commission
with

ress

celebrated

Miami.

situa¬

ever

changed

there

will

have

the

time

for

the

views

not

his

From

sure.

wants

two

the

favor.

Mack,

side it

one

from

came

Smathers and
Holland of Florida, who had gotten
him his job. From the other side,

Carlisle Bergeron

sun.

all the

Department of Agri¬
culture pamphlet to a pension, or
a
job or a subsidy.
They want
radio and TV licenses, they want
air line routes, they want a gov¬
ernment contract. As long as they
want these things and importune
their Congressmen for them, the
manifold regulatory or purchasing
agencies in Washington which deal
from

un¬

according to - the evidence, had
subjected to all sorts of pres¬

asking
everything

way

from

been

Congress-

under

award

The fact is that the

same.

commission

another writes

his

abstained

who raised all
the stew had only one vote on the

Everybody
one

Channel

Had

successful applicant

human nature.

the

thing to do

voting the result would have been

change in

had not

the successful winner of the

th emselves.

that

His vote

not in order.

was

Cong

plenty of embar¬
that his resignation

rassment and

come

hasn't

the FCC

from members

Senators,

from

came

man

benefactor

his

who had been
since

ever

college

But from the benefactor he
received financial
On the other hand his po¬

days.

had admittedly

help.

litical future
a

at stake.

was

He was

fool not to have abstained from

voting.what

But

waiting to

see

is for Congress to pass legislation
introduced

by a couple of pur¬
indignant Congressmen
to make it illegal for anyone, in¬
gress
cluding members of Congress, to
The same
gooc for the White write a
regulatory agency about
House.
According
to the well- any matter
pending before it.
founded scuttlebutt in Washington When that
happens I will believe
the House committee investigation the millenium has arrived.
to
inquire
into
the
regulatory
agencies
came
from
a
feeling
among Democrats that they could
embarrass
Sherman Adams, the
will

these matters

with

from members
to deliver them.

pressure

be under

of Con¬

portedly

Warren, Sealy Are

assistant

is not the

President.

the

There

slightest doubt that the

Partners in Grimm Go.

Grimm & Co., 44 Wall Street,
this as in other
Administrations, exercises influ¬ New York City, members of the
New York Stock Exchange, an¬
ence over the regulatory agencies.
To just what extent is hard to tell. nounced that Robert H. Warren
and Robert Sealy, Jr., have been
An
applicant for an airplane
to
general partnership
route or for a radio or TV license, admitted

White

House, in

in the

firm.

being denied his request, for ex¬
Mr.
Warren
formerly was a
ample, will appeal to the White
House. It is a good old American Vice-President of Blair & Co. Inc.
and Mr. Sealy previously was a
right.
of
course,
the White House partner in Moore & Schley.
in

could

these

answer

cases

the

plaintiff with a statement that the
particular regulatory agency is the

William D. Coddington will be-?
come

limited partner in the

March
<•

known

never

that has taken such

White
a

House

stands In

He is entitled to

let¬

■

•

.«

(Special to The Financial Chronicle)

democracy, the White House may

treatment.

•

With Columbine Sees.

consider, or in the great game of
politics, it certainly does consider,
the plaintiff is entitled to better

firm

13.

last court in the matter but I have

DENVER.
has

been

Colo.—Lee D.

added

Columbine

,to

Iwata

staff

the

Securities Corp.,

1575

Sherman.

ter

saying that his case has been
with the particular regu¬
With C. M. Hathaway
latory agency. It may be that the
(Special to The Financial Chronicle)
White House will only forward
DENVER, Colo. — Howard B.
the correspondence to the regu¬
Stewart is with C. M. Hathaway
latory agency. But human nature
Company, Farmers Union Buildbeing what it is, the White House
Jng.
He was formerly with Co¬
may do something more than this.
lumbine Securities Corp.
It may express an unusual interest
in the "fairness" of the plaintiffs
taken up

case

which instance there is

Mitchum, Jones Branch

stiong hint that the White House
is
displeased at the regulatory

Jones &

agency's decision.

branch

makes
man

White

the

House,

like Sherman Adams, a very

powerful
ever

This, of course,

not

know how

more power

6363

Mitchum,

direction

Anza

Avenue

Henry

Winans.

government

With G. H. Walker

the system

than others. The

difference is that in
form

—

Templeton have opened
at

the

under

but has anyone
that he is that.

is going to be changed. Under any
form of government certain men
have

RIVERSIDE, Calif.

figure

doubted

totalitarian
a

much

smaller clique has

this power and
the clique has nothing to worry
about exposure.
In our govern¬
ment the threat of exposure is al¬
ways prevalent.
In Washington there is a general
feeling of sympathy for Federal

eocpressed in this Communications Commissioner
necessarily at any Mack. The movement which is
time coincide with those of the generally believed to have started
"Chronicle "
They are presented with a vew to embarrass Sherman
as those of the author only.]
Adams, has instead ruined this
rThe

article

This is not to say that he

caused

man

million to

Aircraft's
ing a point where the liquida¬ potential was only $10 mil¬
Unfavorable Earning Reports tion will have
depleted stocks lion. The company policy up
Awaited
to the point were new orders to
here, and no change is ex¬
In
fact, there was little are mandatory. Actually, pected, is to remain dividend-

of years. Earnings reports are
far from cheering, in most

critical

tion

This
setback

thinking, as the Jones & record of picking up likely
ing spells late last year and Laughlin officials put it, is acquisitions. Its latest, Mon¬
nothing in the way of a signif¬ that since users of steel have roe Calculating, more than
icant peak is yet in sight that been trimming around a doubled its sales potential by
was

By CARLISLE BARGEROX
There is something highly

sures

its

technical rebound trough.
February's general price

mostly
after

that

action. Some of the

(Special

ST.

The Financial Chronicle)

LOUIS,

Patterson

has

Mo.—Raymond
become

connected

with G. H. Walker & Co., 503 Lo¬

Street, members of the New

cust

York

and

Midwest

Stock

Exchgs.

Joins Yates, Heitner
(Special to The Financial Chronicle)

ST. LOUIS, Mo.—Frank P.

liams has become

Wil¬

associated with

Heitner

Brown

Building, members of the

Woods,

Paul

Yates,

New York and Midwest Stock Ex¬

changes.

Number 5722

187

Volume

The Commercial and Financial Chronicle

(1057)

sinking

(c)

Typical Questions Often Asked
Of Municipal finance Consultant
j

; y

•

themselves

financing

advance in order to raise questions

complicated

Who Asks Them?

•

about

involved than is usually the

../"//

members

asked

proposed

n'd i

s s u e

the

(8) If

joined as-to make it impossible for

uh-/.the. analyst to find time to attend
the.'information meeting, or to

prepared

retire

bonds

via

against

city grants

some

of its

water

open

franchise

duration

years

government, such as a
board, or perhaps

Lynch,

Smith and

(March 5)

exist

Public

Co.
.,

proximately

Fenner

offered 250,000 shares
Electric

cumulative

5.05%

par,

from

proceeds

the

sale

the shares will be used by

consisted

of
$566,910,600
longdebt; 999,995 shares of $100

2,534,515

stock;
no

common

209,654 shares of

Public

including payment of

Giving effect to the sale of the
preferred stock, outstanding
capitalization on Dec. 31, 1957*

preference

dividend

par

stock, and 12,par common

stock.

Service for general corporate pur¬
poses,

operations.

par ; preferred
shares of $1.40

at $102 per. share,
.

gas

term

preferred

accrued dividends.

Net

>■

Gas<

derived

was

electric operations and 31%

from

new

associates yesterday

Service

stock, $100
and

Pierce,

69%

from

part

of the cost of its current construe-

;

Richard Kohn

tion program.

Admit

NEWARK, N. J. — Richard E.
Kohn
&
a joint water and sewer board and
Company, 20 Clinton
option of the company at redemp30 years later the board desires tion
Street,
members of the New York
prices ranging from $108 per
Stock Exchange, will admit Her¬
to float a serial bond issue with share on or before March
31, 1963
a maximum
maturity of 30 years, to $103 per share on or after April/ bert M. Aibel to partnership on
March 13. Mr. Aibel will acquire
how can the bond holder be sure
1, 1973, in each case plus accumu¬
that the last, ten maturities .will; lated and unpaid dividends to the a membership in the New York
Stock Exchange.
be paid off since the
remaining, date of redemption.
However,
franchise life is only 20 years?- ;
prior to April 1, 1963, none of
j
these
shares
In this case the proceedings au¬
may
be: redeemed
Irving Lundborg Branch:
thorizing, establishing and creat¬ from proceeds of any refunding
REDWOOD CITY, Cal.—Irving
ing the board would at the same through the incurring of debt, or
time provide for the transfer of through
issuance
of
preferred Lundborg & Co. has -opened a
sewer

The

stock

is redeemable

at the

pres-

be so com-

may

situation

cheaper or otheradvantageous for the

arm

daily

other

of business

sures

Consultant

the

Merrill

population of New Jersey.

During 1957 operating revenues
totaled $322,488,939, of which ap¬

Elec. & Gas Pfd. Stock
&

case

the fact that vacations, peak work

formed to bid Toads,and
on

mandatory

calling bonds in the event refund¬
ing operations are contemplated?'

are

pub¬
lished call, is this permissible?
'

Another reason why questions
are

calls

the provisions for

issuerf to

pect to become

participating-

bond

Lynch Group

Offers Public Service

and

•;;/ 7;..

market purchase

however,^ince each bond analyst

syndicate

(b)

(a),

of the

Merrill

mon-

discretionary?

wise

ex—■■n,°tf-p®£*1icovered in the official
statement.

which,

investment houses

moneys

(7)
Should
whereby it is

These
technical: questions- are-ancTtoyestorthinks independently,
:quite naturally asked in the main ^
^at some detail
by the bond analysts of the vari--Quf?^onsrwill arise which have
ous

Are

(6) What

•

points raised by questionee Toolan in explaining the role and
functions performed by consultants on municipal finance. Con¬
sultant Toolan, in an aside, advices analysts and investors
that an information meeting shouldTbe their cue to prepare

City

Who are the typical questioners, what are the questions most
frequently asked and why are such questions raised, are the

(5)

& Ramsey, Inc., New York

from

eys

-Xc)?,
-

fund

combination of

■>

„

By ROBERT E. TOOLAN*

Wainwright

alone

•

(d)

real- stock where such interest cost or' branch office at 2600 Broadway,
vision 1; of!; the; read fully* the available material property(and
constructions dividend cost is less than the divi-*1 under the management of LeGrand
dend cost of this stock.
A.
Gould.
Mr.
Gould was for¬
C o nsultant.';on th^ proposed bond issue.
In- thereon) necessary for proper/ op-,
O f t en tirhes' cidentally,' the very fact that an / eration of the utility ..system/ by) ; V Public
Service supplies
elec¬ merly local manager for Mitchum,
der the super-

title

are" information meeting is being held
d, b y should tip off the alert analyst
salesmen of or investor that this piece of fi-

the

questions
a

KoDert

these firms,
independently

looian

nancing is somewhat more involved or complicated than usual,

and that he would be well advised
by the bond analyst of the same^to read fully the available mateof those asked

.;>/

This situation

firm.-

the analyst
available
formed

enough'! in-

fully

salesman's

the

answer

queries. Many questions are asked
by the staffs of the independent
professionals,
i.
e.,
the
rating
and/or- credit agencies, and investment

proposed

the

and

"of

source

frequent

investment

the

staff of the potential

search
chasers

the

mation meeting affords the best
opportunity for the analyst and
investor to meet and form first
hand impressions of the management and the team of legal, engineering,
financial
and
other

technical

companies, trust compension "funds, fraternal

which appeared in a bond
dealer's promotional circular on
the
bond issue;
by newspapers
and trade journals; and by state
and local government agencies in
the home state of the municipal

jurisdiction issuing the bonds.
Why Are They Asked?

prior to the bond sale, one
logically ask, why then is the

tions

the

many

ques-

aforementioned

parties?
This

terial furnished.
official

observe

disclosure,

cessity

the

gaged

and

make

sure

judgment in the prepaof the official
statement

to give the

investor enough

information to be able

the bidding houses and various
investors is an official statement
signed by an official of the issu¬

has shown

approach

de a

above question, hence, it is asked
of the Consultant,

that using this

makes

for

type

effective official statement;

*An

York

address

The

made by

Mr. Toolan be¬

Municipal Analysts Group,

City,

(2) What is the assurance of a
source of supply?

continued
.

tmt

"
ls a.
revenue issue, nas tne eng:lneeiing

report demonstrated that there is
an adequate source of water, elecor

whatever, for at least
outstanding bonded

0£ any

indebtedness?
TITU

the

net

received

revenues

CORPORATION

from

the retail distribution of this

same

to the payment of the prin¬
cipal of and interest on a proposed
30 year bond issue, how can an

Head Office: BASLE,

power

underwriter be

assured

Bienne

con¬

Feb. 14, 1958.

New

•

SWITZERLAND

LaChaux-de-Fonds

Neuchatel

•

St. Gall

•

Geneva

•

Schaffhouse

Lausanne
•

Zurich

tinuing supply of wholesale power
for the last 15 "years of the bond
issue?
The

underwriters

best

that

economic

there

and

for

need

con¬

retail

that the

Statement of

tracts

favorable

terms

into

where

much

asset

191,132,844,

Bills Receivable.

614,404,079

Short Advances..

11,266,662

the

existing

its

construct

own

contracts

Other Assets

9,556,597

Bank Premises and other Property...

11,250,000

..........

Total S. Fes.

generating fa¬

LIABILITIES

(10) Each investor is concerned
flow

funds

and

above

incidence

the

2,198,892,245

Deposits

Fixed
Bills

750,118,039

'..

Deposits ("Obligations")

248,171,000

Payable

14,240,373

Acceptances

16,873,846

Other Liabilities

70,520,143

Profit

31,775,772
Total S. Fes.

is
by far the
those posed to the
Consultant they represent at best
onlv a portion of the large variety

3,602,591,418

Guarantees S. Fes. 151,767,275

that the Consultant is called upon
to

Swiss Francs

180,000,000
92,000,000

Sight Deposits
Time

questions

greatest

Capital

the

3,602,5917418

Reserves

particularly interested in know¬
ing it after provision has been
made for paying the expenses of
maintenance and operation of a
revenue
project are there any
charges that enjoy a prior or equal
lien to debt service charges.
While

545,140,657
....

the

1,453,823,130

cilities?

about

Government and other Securities

pal utility's policy at the expira¬
tion

766,017,449

Due from other Banks.

Advances to Customers, etc

it may be the munici¬

Swiss Francs

Cash in hand and at Bankers

turned

Condition, December 31,1957
ASSETS

•

making other ade¬
quate advance provision for tak¬
ing care of such contingencies.
Then too, the very circumstance
that appears to be a liability may
necessary

RESERVES
100.000.000 S. Fes.

continuing
this

municipality
management that has dem¬
onstrated an ability to anticipate
such
developments and that is
capable of negotiating new con¬
power

has

CAPITAL
180.000.000 S. Fes.

protec¬

NEW

answer.

YORK

Main Office, 15 Nassau

AGENCY

Street, New York 5, N. Y.

49th Street Office, 10 W. 49th St., New York 20, N.

Named Director

volved in an earnings test which

will permit the issuance of addi¬
tional bonds; whether the addi-

tional

will

bonds

equal,

prior, or junior lien to the bonds
of the proposed and outstanding

issues and what will be the dilutionary effects of the provisions
for issuing additional bonds?
on

fore

could not very well
objective comment On the

Swiss bank

(9) Assuming that a municipal
utility has contracted to purchase
power wholesale for a period of
15 years and convenants to pledge

body, it

to'J?1(4)

opimon and yet not so much
that it becomes confusi g.
rience

Jones & Templeton.

maturity on any of the
outstanding indebtedness.

board's

of his duty
of full

exercise
so

presented

document

■

maximum

well

counsel engaged
by the management?

bond

the

by the manage-

ment

tricity and gas to about two-thirds

doctrine

scription of all the salient features
of the financing that an investor
must know. The Consultant must
ration

consulting engineer en¬

(c)

the Consultant,

that
sifted down into a presentathat is a factual, concise de-

it is

below

' '
(3) What are the provisions for
issuing additional bonds?
must realize the neThe investor always wants to
editing all available know what are the factors in-

information
tion

listed

questions

(i) What are the integrity and
ability qualifications of the
(a) management of the is¬
suing body

(b)

Thus, it is presumed
City, would extent the

the

tion in this instance is to be

(some of which are discussed) are
among the most frequently asked
of the Consultant:

in tricity,
of the majj£e

In preparing the

statement

while fully cognizant
to

ten

answered

question

part by the make-up

board.

that

vinced

The

tributed and information meetings

asked

as-

What Are the Questions Asked?

make

official state-

ments and other material are dis-

Consultant

have

be financed,

ing
Since prospecti or

who

experts

sisted the management in prepar-

point

may

that he

be sufficiently informed to
ask intelligent questions at the
information meeting.
The infor-

organizations, endowment boards
of various institutions, etc. Occasionally, the Consultant is asked
questions by graduate students
doing financial research work on
a
required thesis for a master's
or doctor's degree; by individuals
who are interested in checking a

held

re¬
pur-

such

bonds,

insurance

panies,

the bond issue

and

franchise life granted to the board
for a term at least equal to the

ing the material on the project to

,£•>.

Another1

questions

bond

subscribers

their

clients.

report

recommendations

make

concerning
issue

who

counselors

and

rial

is not always readilywill

nor

since

occurs

the personal

all

can

Goldsmith,

vestment

elected

propose(j

bonds
v

bond

be caned
A

issue

banking firm, has been

AFFILIATES
t

Mr. Goldsmith, who

was

gen¬

in White. Weld & Co.
1956, joined the in¬
banking firm in 1930.

1940

vestment

Canada: Swiss Corporation for Canadian

eral partner

from

OFFICES

99, Gresham Street, E.C.2, and 11c, Regent Street, S.W.I

director of El Paso Nat¬

ural Gas Company.

Investments Ltd.

360 St. James Street West, Montreal 1

Morocco:

?angue Franco-Suisse

pour

le Maroc

73, Avenue du General d'Amade, Casablanca

and

Whitehouse

from:

Admit

REPRESENTATIVE OFFICES

(a) certain
cess

LONDON

limited

What are the call provisions

the

Clarence E.

partner in White, Weld & Co., in¬

moneys in ex¬
of all fund require¬

ments

(b) general
alone

On March
will
in

fund
.

moneys

Whitehouse

way,

the

13, August J. Hoffer
admitted to partnership

& Co., 115 Broad¬
New York City, members of

New

York

Stock

Exchange.

France: 31, Avenue de l'Op6ra,

Brazil: Praga Pio X, No. 118,

Paris Ier.

Sala 1101, Rio de Janeiro

The Commercial and Financial Chronicle

Recommended

In Time with Inflation
By GEOFFREY N.

CALVERT*

Alexander & Alexander, Inc.

companies

properly

of living. Mr.
Calvert compares principal plans and contends cost of living
pensions, with appropriately invested funds, not only win
/./, employee approval but subject the firm to less risk and ,/./
expense than is inherent in many older types of plans currently
they

pension benefits directly to the cost

gear

this

type

less

with

lished

risk

invested
of plan

extra

surprisingly small

Recommends conversion, at

cost,

long

Pensioners

into

particularly vul¬

are

common

funds and to secure
capital
gains which
might be used to offset increased
pension liabilities; '
•
/

they

closest

the

breadline, and
'

able

least

-are

to do anything
to increase

their incomes.

,'The

more
standard types

pension
plans contain
no
provisions
for kee ping

concerned

Thursday, March 6, 1958

enhanced

Geoffrey N. Calvert

when they are

liberalized

made retro¬
The

seldom

are

active to existing pensioners.

the

pensioner thus emerges as
prime victim of inflation.
All

benefits has
brought relief to many hundreds
Social

Security
of

thousands

had

who
them¬

pensioners

previously
thought
well provided for

under

selves

corporate retirement plans.
It would

Security program, simply because
corporate pension plans fail to
meet the problem of continued in¬
All of the variable bene¬

in existence and in con¬
templation have resulted from a
recognition of this problem. - /■/
Large funds are set aside each
year

for the provision of pensions,

but

are

invested

often

without

sufficient thought for the basic ob¬

jectives
to
be
served
by
the
pension plan. For example, tre¬
mendous sums are paid each year
insurance

companies,

which

prevented by law from invest¬
ing in anything but fixed-dollar
investments, except for a very

are

small fraction of their assets. Until
recent

trustees also gener¬
ally placed pension reserves over¬
whelmingly into bonds and similar
years,

fixed-dollar
If

those

policies

investments.
kinds

investment

followed, the only
way to keep pensions in line with
living costs would be to undertake
are

substantial
extra

liabilities

new

pensions

problem becomes

the

Company feels that it

afford

these

new

many

cases,

this

been

Pensioners

for

times

such

the

done.

and
could

severe

liabilities.

has

not

have

been

instead

squeezed, and have become

seriously

disillusioned

security which

was

about

the

promised them

by the companies for which they
given a lifetime of service.

had

Pressure

has

come

for

bigger

Social Security benefits.
Changes In Pension Planning

whole situation has, how¬
also brought about many
changes in the approach to cor¬
This

ever,

porate

pension planning,

the investment

and

of pension funds,

including:

(a) The swing by trustee banks
♦An

address

Mr.

Calvert

of National Industrial
DigitizedMeeting
for Board,
FRASER
New York City.

ence

it.
In any
plan,
properly geared to
the concept of a long-term up¬
ward
trend
in
living costs or
living standards, the provision of
benefits which also recognize the
trends is not as costly as is gen¬
erally supposed.
/ / //_
sociated; with
where

this

$30 Million Bonds of t
Baltimore Gas 3 Elec.

be of the so-called .the viewpoint of the retired em¬

Offered to Investors /
Stuart & Co. Inc. is
an underwriting syn¬

Halsey,

manager

dicate

which

March

offered

$30,000,000
Baltimore
Gas
and
Company first refunding

Electric

mortgage sinking fund bonds, 4%,
series
due
March
1, "1993,
at
101.134%

and accrued interest, to

Award of the bonds

'yield 3.94%;
won

was

the underwriters at

in view;

cept, in which the pension of each
retired employee is based on his
earnings
ten

years

The

costly, both at the outset and
in the long run, especially if it is
linked with a funding and invest¬

less

during the last five or
before his retirement;

ment

The development of the so"equity unit" pension, un¬
der which the pensioner generally

before

Confer¬

called

part

dollars

movements

the

(f) Finally, the emergence of
the
properly designed "cost of
living" pension plan, providing a
pension directly linked to a mov¬
ing average based on Consumers
Price Index.

The

first

are

ures

•

three

of these

nieas-

aimed :to reinforce pen-

increased.
yields and capital growfh within
these Funds.
They,do not auto-maticaHiy pass to the pensioner,
sion

the

funds

benefit

through

from

these

improved

operations.
This would •
therefore require separate action,
from time to time. The remaining •
funding

three

measures

are

each designed

automatically to provide benefitsmore
nearly in line with living
costs.

Final-average
have

been

earnings

criticized

plans
some

quarters as involving unknown
commitments, but in fact they call
for a more realistic approach to
the funding of benefits than other

plans which permit a company to
go on blindly for years without
realizing the growing necessity for
readjusting its pension plan.
At
the same time, it could be unwise
to
-embark
on
a
final-average

saddled

with

the

burden

bonds will be redeem¬

able at regular redemption

they realize it or not.
are
already

employers

ad¬

justing their pension plans so a<
to bring their benefits from time
to
time
to
currently
accepted

of a
limits
which

new

prices

ranging from 106.14% to par, and
the sinking fund at redemp¬

for

tion
to

prices receding from 101.134%

par,

each

plus

Baltimore

interest/in

accrued
:

case.

/ /"• !

Gas and

Electric Co.

.:./'
/
'/'/• is engaged primarily in the busi¬
/ In many cases, however, proper ness of producing, purchasing and
consideration has not been given' selling electricity and gas within
For example, if the pension is
the State of Maryland and where
to the investment aspects implied
geared
to
a/ 24-month
moving
/by this need to make periodical all of its properties are located.
average, based on the Consumer
revisions and upward adjustments. Other business of the company'in¬
Price Index, a five per cent limit"
Companies
which fancy them¬ cludes the sale of gas and elec¬
may be placed on the extent of'
selves to be free of this responsi¬ tric appliances and the production
growth in pensions from one sixbility to
maintain pensions in and sale of steam. The area served
monthly point to the next. The
accordance with living costs and with electricity contains approxi¬
amount
of maximum .permitted ";
which/ have
failed
or
simply mately 2,283 square miles and has
growth will be found to contain
omitted' to
bring their funding an estimated population of about
almost every short-term inflation¬
arrangements into line/with that 1,725,000, the area served with gas
ary situation which has arisen in i
concept are therefore in the worst contains about 342 square miles
America during the past 130 years.
position of all and are likely in with an estimated population of
The pensioners covered by cost
- ;
•
\
the long run to face higher pen¬ about 1,425,000.*.
of living plans will certainly have
For the year 1957, the company
sion costs than those which have
less worries and uncertainties in
had
total
operating revenues of
studied/this problem and acted
their financial affairs than either
and net income of
accordingly.
: $141,735,000
those
covered
by
conventional;
$17,550,000. ■
,
In other words, the companies
plans or those covered by equity
which will pay the most in the
unit plans.
7
Many people think a; cost of; long run are not those which have Stalker Coast Exch. Member
living plan might be dangerous I established variable benefit plans,
LOS ANGELES/Ualif.—Alfred
from a company's point of view," but those which have failed to set
J. Stalker, general partner of the
because it may be risky.
Under-! up funding arrangements suitable firm of Kidder, Peabody & Co.,
the equity type of plan, the em¬ for the provision of these bene¬ has
become
a
member
of
the
pensions

thej stock

Whether
most

policy suited to its needs.
to safeguard the fund

grow

can
*

year. -

market;

Investment Aspects

order

against the consequences
possible runaway inflation,
are placed on the extent to

his pension in
per month, and the
other part in the form of shares,
the values of which are governed
receives

fixed

fit plans

(d) A continued increase in the
number of pension plans based on
the "final-average" earnings con¬

unfortunate if the

provision of pensions were to be
taken over largely by the Social

flation.

„

key to the longgood pension plan
lies in the investment policy as¬
primary

term costs of

by the company to
The use of
the cost-of-living
The equity unit plan may do
repay temporary bank loans made
index as a definite factor in the
better/ thanthis./ but > that is during the second half of 1957,
plan enables a more modest basic
"speculative/ If is lor each corpo- and for general corporate/ pur¬
benefit formula to be used, con¬
ratio.ii to decide whether it is pre* poses,
including proposed .con¬
sistently with the provision of
.pared to underwrite the fund to struction expenditure s." Increasing greater employee satisfaction and the extent which may be neces¬
demands
for : electric/and
gas
with a better chance of the .plan's
sary in order to place its employ¬ service require the
company to
standing up to the test of time.'
- ees in the
position of having that make substantial expansion of its
Hence, it does not follow that •stable real income after, retire¬
facilities. It is estimated that con¬
a plan of this type would neces¬
ment, which is the objective of struction expenditures in 1958 will
sarily be more costly than a con¬
total around $45,000,000.
every pension plan.
ventional plan. It may in fact, be

(e)

only the increase

often

too

benefit

can

these

policy which

can be a conventional plan
the
so-called career-average

these

meet current labor demands,

changes

investment

time

plans//'

„

hedge against infla¬

with the same objectives

Even

costs.

primarily

time

from

The

with ployee?,/ The cost-of-living plan
-competitive sale March 3 on a bid
the pension adjusted for changes
ralone assures him of a steady re¬ of 100.3099%.
■ '/
/::;/ //
a .;/
in the cost of living after retire¬
tirement income in keeping with
Net proceeds from the financing
ment only. ;
his living costs.
- /
/■ ; /
"■!//•-'..-•
will be used

livin'g

the-

unit plan it

met
same

final-average earnings type,

tion;

ris-

with

line

(b) The

in-

who

of-living plan, it is the employer
who is primarily interested.
11
the fund out-performs the cost of
living index,
the provision of
additional benefits will impose no

greatly

basic

Or,

migration of pension
plans from insurance companies
to trust funds/in order to capture
the advantages of a diversified in¬
vestment
portfolio,
both as., a
means
of reducing costs and; of
'

providing

pensions in
ing

pension

long-term

living

generally

are

infla¬

earnings type, in which case each
\unit of pension would be adjusted, strain upon the employer.
both before, as well as after, re¬ /
There is little question, as be¬
tirement, on account of changes tween these two types of plans,
in the cost of living.
which does the better job from

raise the yield

than other sections of the popula¬

tion,

and

structure
which underlies the cost-of-living
of

investments,

stock

both

order

mind

in his funding

Under -the .equity

plan

reasonable allowance

governs the opera¬
tions of the fund. Under the cost-

The

nerable to inflation because, more

is the. employee

ployee satisfaction.

or no

per-

em¬

with

and

long-term

face prospect
inflationary trend.
we

fund

make

than'as

the

in force.

its

the long-

basis, consist¬
ently With meeting United States
Treasury requirements as to even
tax-exempt funded plans.
v

be estab¬
real
financial

many

this

with

the
can

tion

older
types of plans currently in force,
in

that

over

for the effects of continued

can

corporation

the

inherent

fail

pensions which
keep pace, within limits with the
cost of living index or a moving
average based thereon.
The employer funds his plan
and sets the investment policy of

fund,

pension

extent

to provide

term,

change in pensions due to a sud¬
den, sharp inflation, and if estab¬
lished
in
conjunction
with
a

Executive of third largest insurance brokers in U. S. A. warns
may face serious increase in pension outlays unless

•;

the

form a nee may

erly equipped with safety features
which would control a too-sudden

Vice-President and Director

Consulting Actuarial Division,

fund

Plan

pension plan,
in its most fully developed form,
alone provides for the pensioner
an income based on what directly
concerns him. namely changes in
the cost of living itself. If prop¬
The cost-of-living

Keeping Pension Benefits

;

(1058)

any

"•/.

one

levels.

ployer is in a position of having

fits.

pension plan in which the costs
may be fixed in terms of a per¬
centage of payroll, that is, the
equity unit type, or fixed to the

not

same

extent

tional plan.
How much
■

under

growth

And if these higher costs are

the employees of these
companies face serious
disillu¬
met,

sionment.
It

has been said that a cost-.ol'-'

living pension plan might involve
more
financial risk than a con¬

conven¬

ventional plan. There have been
thousands of final-average earn¬

pension

out to
each employee is
something which lies beyond the
direct field of operations of the
goes

ing plans in force for years and,
no
doubt, there will be many

Pacific

Coast

Stock

Exchange

through the purchase of a mem¬

bership in the Los Angeles Divi¬
sion
E.

announced

was

Frank

Naley, Exchange Board Chair¬

man.

Kidder, Peabody & Co., a large
investment
banking
firm
with
headquarters

in-New

York,

re¬

cently announced the opening of
offices in Los Angeles on Jan. 2,

earnings plan without adopting an employer, since this growth is more, and yet it is a fact, I believe, 1958, at 210 West Seventh Street
that
a ' career-avera.ve
earnings which will be the headquarters
investment policy in keeping with generated within the pension fund.
The employee takes all the risk/ plan, with a cost of living adjust¬
for the firm's West Coast opera¬
the general aim to provide ade¬
suffers aril of the fluctuations, and
ment, which may take better care tions. Offices have also been es¬
quate benefits
at
the time of
of
the
receives all of the benefits from
pensioner, involves less tablished in the Russ Building in
retirement.
These
plans,
even
the anticipated capital growth of financial risk to the employer if San Francisco.
/
then, do not take care of a pen¬
equity values.
proper attention is given to the
Mr.
Stalker
has
been
in the
sioner who is caught in an uptrend
funding and investment aspects.
securities business in New York
in the cost of living after he has
Relieves Employee of Risks
'
retired and the
amount
of his
/ The appearance of risk and its since 1929, following graduation
Under the cost-of-living type of
real existence often turn out to from Syracuse University. He was
pension has been fixed.
plan, the emplojee is relieved of be very different things over the Manager of the dealer relations
Equity unit plans involve no the risks and fluctuations and can
years. Just as the apparent safety department of bis fine for a num¬
unforeseeable cost problems to the
be
reasonably assured that his of a bond investment may steal ber of years prior to becoming a
company, and in general hold the
standard of living will be main¬
quietly away in an inflation, so general partner and the firm's
promise of larger pensions with
tained, notwithstanding continued the. apparent finality of the costs representative on the West Coast.
automatic increases througji time.
inflation
of- any
but the' most of certain kinds of pension plans
However, these plans embroil the violent kind.
can turn out to be quite illusory
Shelbv Cu'lom Davis Branch
The
pension
fund
normally if the basic objectives of a pension
pensioner in the unpredictable
absorbs
short-term
fluctuations plan are to be attained and, in re¬
COLUMBUS, Ohio—Shelbv Culgyrations of the stock market, and
without either employers or the
verse, j the
amount of employee lum Davis & Co. has opened 'a
may provide pensions which are
employees being adversely af¬ security provided by these plans branch; office at 50 West Gay
falling when the cost of living is fected.
However, the employer, can- be quite illusory - if heavy, Street u"de-".fhP management of
in effect, underwrites the pension
Charles F. Steinman.
retroactive cost increases are not
rising, and vice versa.
.

Volume 187

Number 5722

The Commercial and Financial Chronicle

(1059)

New Orleans Exchange
NEW ORLEANS, La.

D. Kingston, Sr., bond

— Walter
department

manager
of
E.: F. Hutton

Company's
New

Orleans

office,
el-

GENERAL OFFICES

the; New
leans St

Marketing 14e«Kl«|iKiFters

President

Division Offices

CONDENSEP
ASSETS:

'7.;.

Cash

Walter D. Kingston

the

Arthur

officers

elected

•

current

assets

•

*•

SHEETS

* \
.

31r

1955!

1956

:1954

1953

28,758,172

27,429,314

...

$ 43,534,849

DECEMBER

1957

...

•

37,921,603

31,323,139

reserve

•

.«

23,887,972

23,629,613

23,253,366

18,364,539

17,669,700

•

30,461,932

,29,612,557

25,341,329

24,851,189

25,576,422

•

1,128,815

725*106

562,855

...

•

; $ 99,013,568

•91,888,879

80,480,689

•

-507,227

468,148

72,481,127

71,143,584

were

Total

;

Keenan, St. Denis J.
"Villere & Co., Vicer-President, and
JSrwin R. SchWeikhardt, Sqhweirkhardt & Company,

Other

securities

receivable, Iessr

accounts

Inventories

banking business since 1919.
Other

Notes and

investment

ahd marketable

BALANCE

;%.■

Com¬

pany-has been
.active

TULSA, OKLAHOMA
KANSAS CITY, iMISSOURI

CHICAGO, ST. PAUL, OMAHA, WICHITA; DENVER and DALLAS

•

Or¬

Exchange. V- *
Mr.
King¬
ston,, formerly
a
partnerVof,
W.
D.
King¬
ston

•
••

was

current assets

Investments and

long-term receivables, less reserves

Property, plant, and equipment, less

Treasurer.

Deferred

charges.

reserves

•

'•v

5,948,782

5,558,358

3,950,439

2,416,817

1,331,182

261*077*606

240,887,684

232,029,953

216,654,592

201*828,604

•

1,024,132

749,529

607,978

290,077

224,785

•

$367,064,088

339,084,450

317,069,059

291,842,613

274,528,155

$ 23,674,506

21,384,814

20,462,101

19,576,257

16,632,867

•

9,675,943

10,774202

10,094,963

8,481,876

12,015,002

$ 33,350,449

32,159,016

30,557,064

28,058,133

28,647369

5,607,000

6,327,000

8,485,000

8,818,000

10,535,000

50,833

130,700

213,452

102,580

166,304

382,945

424,709

536*444

513,576

Morgan Stanley Group

Total

LIABILITIES

Offers Ohio Edison

101.706%

bonds

priced

were

and accrued interest to

«-

•

STOCKHOLDERS'

payable

accounts

taxes

Total

underwriting group headed
by Morgan Stanley. & Co. and
comprising 29 investment firms

The

EQUITY:

•

»•

•

■a

•

.•

♦

•

■

•

Accrued

-placed on the market yesterday
(March 5) a new issue of $40,000,000
Ohio
Edison
Co.
first
mortgage,, bonds 4V4% series due

AND

arid

Notes

4]4% 1st Mige. Bonds

1988.

assets

income';

liabilities

currents,

Funded debt

Other deferred

obligations

Reserve for workmen's
-

....

Total ..liabilities

bid of 100.856% for the indicated

•

STATEMENTS

coupon.

368,357

2,541,958

1,381,640

2,436,101

1,271,987

1,296,943

143,652,930

...

Earnings employed in the business

yield
approximately
4.15%
to
maturity. The issue was awarded
to the Morgan Stanley group at
competitive sale yesterday on its

•

compensation and public liability risks

Unearned income
Common stock

•

181,492,561

155,050,219

131,299,803

109,402,539

89,715,533

•

$367,064,088

339,084,450

317,069,059

291,842,613

274,528,155

INCOME

FOR

THE

DECEMBER

ENDED

YEAR

31,

The
the

utility company will apply
major part of the proceeds

from

the

sale

its construction

which
calls
for
the
spending of an estimated $58,800,000 in 1958, principally for
new electric generating and trans¬

program

mission

will

facilities.

also

purchase

The

company

$2,100,000 of common stock of its;
wholly-owned subsidiary, Penn¬
sylvania Power Co., which has a
1958
construction program
esti¬
mated at $11,900,000.
The new bonds are subject to
redemption at 105.96% through
Feb. 28, 1959 and thereafter at
prices decreasing to the principal

operating

income

.......

Dividends, interest and other income

•

Total

231,639,059

251,391,986

$263,182*084

on
and
after March 1,
Special redemption prices,
under an improvement and sink¬
ing fund, range from 101.706% to
the principal amount.
As of Dec. 31,1957, the company
had a consolidated funded debt of

.$205,140,000 which included $27,598,000
debt
of
Pennsylvania
Power
Company. The company
had outstanding 636,300 shares of
$100 par value preferred stock
and its subsidiary had outstanding
81,049 preferred shares of similar
par
Value. Also outstanding on
that date
common

Ohio

6,386,749 shares of
stock of $12 par value.
were

Edison

furnishes

2,024,366

2,199,811

2,723,021

2,049,913

1,706,225

$265,206,450

253,591,797

234,362,080

213,131,807

217,022,749

$176,186,707

164,886,289

151,442,348

140,281,719

140,585,317

123,006

149,128

233,448

283,095

297,796

8,835,724

9,640,854

9,491,661

8,040,932

8,144,507

Costs; operating, selling and general expenses;
and

other than

taxes

Interest

taxes

income

•

funded debt

Exploratory costs and delay rentals

•

33,575,673

33,322,112

30,909,361

28,419,811

26,144,144

$218,721,110

207,998,383

192,076,818"

177,025,-557

175,171,764
41,850,985

Depletion, depreciation, and surrendered oil & gas leases
Total

,.»•»•••»•••••■••

Net income before

$ 46,485,340

45,593,414

42,285,262

36,106,250

9,700,000

11,500,000

10,045,000

6,651,000

10,574,200

......

36,785,340

34,093,414

32,240,262

29,455,250

31,276,785

provision for taxes

PROVISION FOR TAXES ON INCOME
NET

INCOME

....

income
.

Net income per

Shares of

•

6.40

5.93

5.61

5.12

5.44

stock outstanding at close of period

•

5,746,117.2

•

$ 10,342,998

10,342,998

9,768,244

9,336,669

share of

common

Cash dividends

paid

common

•

stock outstanding
•

•

SKELLY

1957

FINANCIAL

GroSs income

$265,206,450

CONDENSED

1956

$ 31,440,784

produced—barrels
Daily average—barrels
.

Net natural and

30,783,099

and

taxes)

$ 36,785,340

34,093,414

6.40

5.93

Net wells

electric

Per share

areas

Ohio

having

Principal

cities

served

include:

Akron, Youngstown, Springfield,
Lorain, Warren and Mansfield.
Pennsylvania
Power
distributes
electric

energy

area

Pennsylvania having an
250,000.
The company reported for the
1957 calendar year consolidated
revenues of $135,862,000 and con¬
solidated gross income before in¬
come
deductions of $30 505,000,
compared with $129,304,000 and
$29,857,000 in J956. '

Capital expenditures for proper¬
$ 55,647,441
ty, plant, and equipment
.
.

43,966,022

Working capital (current as¬
less current liabilities)

sets

Funded debt
Cash

dividends

western

Per

estimated population of

Shares of

paid
.

common

•

....

stock

standing at year-end
Net

•

$ 65,663,119

5,607,000

$ 10,342,998
$

1.80

59,729,863

6,327,000

10,342,998
1.80

book value per share

5,746,117.2

56.59

51.98

Number of stockholders

6,087

5,965

Number of employees

•

4,826

4,750

Net

completed

•

657

609

gas acreage

554,514

516,022

4,965,434

4,432,295

17,895,257

16,930,500

...

108,020,919

103,531,139

1,187,093,468

1,161,951,048

•

owned

wells owned

processed in

411

•

acreage

refineries—barrels
Gas

•

processed in

464

•

undeveloped

129,259,584
353,168

Net

128,891,879
353,128

•

producing oil and

Net

26,167,865
71,497

•

Gas

Net gas

69,077

•

Dry

wells

25,213,103

gas
.

»•«...•

oil

...

Oil

Crude oil

out¬

casinghead

produced—MCE .
.
.
Daily average—MCE

Net income (after all charges

1956

1957

Net crude oil

253,591,797

Depletion and depreciation
charged against income

FACTS

OPERATING

rural

215,316,524

COSTS AND EXPENSES:

service in 589 communities and in
.estimated population of 1,600,000.

1953

211,081,894

amount

1985.

1954

1955

•

Gross

additional

1956

1957

GROSS INCOME:

...

(326]

(247)

I 86J
4,431

4,172

company
.

company

gasoline plants—MCF
Sales of

petroleum productsgallons ,.

Now .North American Corp.
DALLAS, Tex.—The firm name
of First Guaranty Company, Inc.,
308
South
Harwood, has been
changed to North American Cor¬
poration.

dated March 6, 1958. The report also
president of the Company and various
Copies of the report may be had upon application to The Secretary, Skelly Oil Company, Skelly Building, Tulsa .2, Oklahoma.
and condensed facts published above are for general information and are not intended for use in. connection with any purchase or
offer .or solicitation of an offer to purchase or sell, any securities.
• • •

The foregoing; financial statements are condensed from the Thirty-Eighth .Annual Report to the stockholders,
contains the certificate of Arthur Andersen #c Co., independent accountants and auditors, the remarks of the

operating statistics.
The statements
sale

of,

any

The Commercial and Financial Chronicle

(1060)

outstanding—550,000 shares

News About Banks
NEW

BRANCHES

NEW

OFFICERS, ETC.

Bankers

and

scheduled opening this year

at $37.50 in Canaper share, to be is-

stock

japital

jian currency
ued

CAPITALIZATIONS

March

the

5th

jne

proportion
five

each

for

Trust

Manufacturers

Company,

by Hor¬

New York, is announced

C. Flanigan,

ace

Board.

Sylvester joined Manufac¬
turers
Trust
Company in, 1950
it

with

merged

Brooklyn
appointed

Trust Company. He was

Assistant Trust Officer in 1954.

he is assigned to
the bank's personal trust depart¬
present,

John

office.

New

Budinger, Vice-Presi¬

York

Company,

named

was

Vice-President of

the

* Senior

bank,

when he joined the WilState Bank. (He

career,

(Illinois)

mette
was

Cashier of that bank when he

resigned in 1928 to become Assist¬
Cashier

ant

National

Com¬

Trust

and

of
New
York.
He
was
elected
Assistant Vice-President

pany

Vice President in

1929;

and

Dec.

President.

1945

1936;
1944;

Vice-President

Senior

became

When the Commercial

National

and

Bank

•

■

Director

Scliroon

Ochs,

Chester

Bank,

Chester-

died

March

2 at

of 65.

age

Russell
First

the

National

Bank

died Feb. 27.

Mr. Blodgett, was 56 years of age.
He joined the Bank in 1940 and

President since

was
'

•

1950.

;

Edmund

Gettysburg,
years,

Thomas, President

First

the

National

Bank

last

the

for

Pa.,

died Feb. 22.

the saie of new stock, the
capital stock of the Pur¬
due National Bank of Lafayette,
Ind., was increased from $800,000
By

common

$1,000,000,

effective Feb. 21,
(number of shares outstanding—
50,000 shares, par value $20.)

Com¬

Trust

s*,i

merged into Bankers
The
Peoples Bank
of Grand
Trust Company, effective May 28,
Haven; Grand Haven, Mich., has
1951, Mr. Budinger was electee^
changed its title to The Peoples
Vice-President

Director

and

Bankers Trust

Company.

Bank

June

on
❖

"First
Bank

Young, Section Head
of Brokers
Loan, retired today
after 50 years of service with The
New York

Trust

a luncheon given in honor of
occasion, Mr. Adrian M. Massie, Chairman of the Board, and
Mr. Hulbert S. Aldiich, President,
congratulated
Mr.
Young
and
thanked him for his long record

faithful service

company.

Mr.
1908

with

the

trust

.•

Young recalled starting in
a
page with the Liberty

of Duluth,"

starting salary
of $4 a week.
The Liberty Na¬
tional
Bank
merged
with. The
New
York
Trust
Company
in

National Bank

Bowling Green,

was

$300,000 by the sale of

John

sjs

Sander

stock,

new

outstanding
value $20).

15,000 shares,

—

Schiff

Vice-Presidents

elected
Trade

Bank

Trust

Samuel

Louis

were

the

Co.,

New

Bank

Com¬

Trust

Carthage,

pany,

has

Tenn.,

changed its title to Citizens Bank.
sjs

First

Sjl

National

Robert A.

sjs

Savings

Irving

Bank

Trust

and

$585,000;

and

stock

common

Haywood

County
common

stock of $100,000 merged, effective
as
of Feb. 14.
The consolidation

effected
title

under

of "First

the

charter

National Bank

and Trust
,

Company in Asheville."
At the effective date of consoli¬

Bank, N. Y„ has retired, but will

dation the consolidated bank will

continue

have

as a

Trustee and honorary

Mr.

Chairman.

Barnet

Irving Savings Bank

joined the
executive

capital stock of $665,000, di¬
vided into 66,500 shares of com¬
stock of the par value of $10

mon

in each;4 surplus of $1,535,000; and
1936. In 1937 he became President und^Hed profits of not less than
and trustee. Upon the merger of $15,325.
i
dll
Vice-President

the

and

elected

Savings

Chairman

Bank,

was

chief

and

ex¬

ecutive officer. Henry R. Sutphen

Jr., President, will become
executive

officer

Hammett,

executive

dent.

will

trative

become

John

and

Vice-Presi¬

chief

officer upon

chief

adminis¬

Mr. Barnet's

troller
Bank

of
of

was

lando, Fla., increased the

capital

stock

from

$1,700,000 by the sale of
effective

shares
par

Feb.

the
Long

Franklin
Island,

Comp¬

National

Franklin

❖

new

stock

(number

outstanding—85,000 shares,

value $20.)
:je

sjt

stock

dividend

The

Na¬

Company,

be
19.

third branch

about

their

subscription

The

Juan.

San

branch

will

branches

Manhattan

Chase
in

capacity

dual

Puerto Rico.

First

mainland

long-time

become

the

Commonwealth.

Some idea of the bank's growth
in

the

Island—a

paralleled

growth that has

the

Commonwealth's

indexed

economic development and
has

been

integral part of if~-

be had from the increase: in
loans and deposits in the bank's

may

branches in the Island during the

past quarter

century.

As of Dec. 31,1934, after the first
full year

of operation, loans

reported

totaling

$2,816,000.
decade

of the

loans
outstanding, and
$9,628,000.
On Dec. 81,

$1,076,000

were

deposits
1954, these
to

By the end
(Dec. 31, 1944)

totals had

burgeoned

$25,642,000 in outstanding loans,

and

$27,802,000 in deposits. And
years these indices)of

recent

the bank's

activity have continued

to increase

remarkably. ?
of a single decade has
doubled the living standard of the
The span

Puerto Rican people,

which is the

second highest in all Latin Amer¬
ica.

The bank is proud of the part

Island. Added to this is their func¬

Puerto Rico's future.

part

banks

that

dinary progress, and confident of

B a

organization.
branches
with

the

level

provide

such

Chase

international

local

the

k's

Ricans

services

pavings accounts, special and regu¬
lar checking facilities, Christmas

personal

Clubs,

Howard F.Vulfee Joins

Eastman Dillon Firm *'

bank's

the

Puerto

consumer

•,

worldwide

the

comprise

Manhattan

Howard

Vultee

loans—ip short, a full roster of
banking services for the individual
that compares favorably with the

made

services

has

joined

Eastman

Dillon, Union Securities
Co., 15 Broad Street, New York
City, as financial and investment
advisor, it
&

automobile

and

urally, subscribers who have not
paid. in full will. ronk lor divi¬
dends to the extent that they have

account.
prohibits the of¬

out¬

it has had in the Island's extraor¬

banking network of branches, rep¬
resentatives
and1
correspondent

Nat¬

were

$698,000

standing, with deposits amounting

not

and

official

the

from

have

now

residents

the

staff

clerical

they are com¬
munity banks serving the people
and
business
enterprises of the
tion

April 30 to rank for the

full dividend payable June 1.

from

in the

Piedras,

Rio

Bayamon

new

function

by paying up any balance at
any time after having made the
original subscription.* The punpose
of this arrangement is to
make it possible for shareholders
who
have
paid up the whole
later than

1956

provide the same range of com¬
plete banking services as does its
three predecessor branches.

amount

town
miles

ten

members

the

> i

native-born, and

are

has

been

an¬

nounced.
Vultee

Mr.

formerly

was

the

administrative

of, or provision of rights in
respect of a fraction of a share,

inception of "Opera¬
tion Bootstrap" iri 1948, some 500

Midland Trust

after the

established in
of these
with the help of Chase Manhattan
loans. If listed, Chase Manhattan's
Puerto Rican corporate customers

payments

The Bank Act

indicated

that

of the offer any unsub¬
scribed' shares,* or shares repre¬
senting fractions, will be disposed
of. by the Directors and the excess
oyer. $37.50. a
share .distributed
pro rata to the shareholders af¬
fected for the
•»

reasons
.

jji

•

The

Since

The

plants

mentioned.

Bank

trust

Nova

com¬

Scotia

TYust

Company

(Bahamas)

ited,

with

headquarters

its

Lim¬

Nassau, is announced Feb. • 27' by
The Bank of Nova Scotia. Manag¬
ing Director of the new organi¬
senior assistant general
of Midland Bank Ex¬

formerly
manager

ecutor and Trustee Company Lim¬

ited, of England, who has close to
35

banking and trust ex¬
perience in the United Kingdom.
The
company
will provide a
full range of trust services
for
individuals and organizations, as
well as offering clients the special
tax
and
financial
advantages
years'

in the

available
is

there
ness
or

tax,

death

Bahamas, where
tax, no busi¬

BNS

and

duty

are

Eagle

have

of The Marine

been

Company

today would read like a blue-book
of commerce and industry.
The bank also makes important

that | help fi¬
nance the production of the Com¬
monwealth's three major exports:
cane,
tobacco and coffee.
financing from Chase Man¬
plays an important part in
the shipment to the mainland of
such additional exports as fruits
and nuts, textiles and pharmaceu¬

dent and chair¬

Vultee

Howard F.

the

Midland

rine

two-

Life

Mutual

service.

Insurance

Star

They are
Company

Limited, whose world-wide inter¬

tor

Office

the

and European

Economic

Mission to NATO
Regional Organiza¬

way street, the bank's financing
also lends support to Puerto Rican

tions, Paris, France. He was ap¬
pointed to this office with the

imports. These include purchases
of food products, wearing apparel,
electrical appliances, motor vehi¬
cles and
building materials, the

rank

vast majority

The

idea

the

volume

Minister

United

of which come from

of
Puerto Rico's trade with the main¬
Some

Eisenhower and

Form

the States.

in¬
the previous

amounted to $428.2 million, an
crease

year;

10%

over

purchases

from the main¬

$631.2 million, up
11.1%
over
the
1955-56 period.
Chase Manhattan financing, in di¬
totaled

land

include
Canada
and
the rect loans, letters of credit, and
Caribbean; Philip Hill, Higginson other instruments for overseas fi¬
and Company, the London invest¬
nancing, has filled a key role in
ment banking house that recently this trade
growth of the Common¬
acquired a substantial interest in wealth.
Harriman, Ripley and Co., Inc. of
The bank also points with pride
New York, and Sir Robert Mcto the part it plays in the Com¬
Alpine
&
Sons,
active
inter¬ monwealth as a corporate citizen
nationally in the engineering and and
employer.
Loans totaling

ests

construction fields.

1955 to

addition, from May,

July, 1956, Mr. Vultee was direc¬

Harold
been

President

confirmed by

was

States

Senate.

Zipperman Co.

Zipperman

formed

with

Co.

offices

land may be had from the totals Courtlandt
Avenue,
inheritance tax covering the 1956-57 trade year. City, to engage in
real estate.
business.
Partners
Shipments
to
the
mainland

participating with the
founding : this .new

Insur¬

Company of Hartford, Conn.

Affairs,
is

Ma¬
He

Corporation.

joined the bank in 1946. Prior to
that, he was financial secretary of
Connecticut

trade

parent

company,

ance

overseas

the

committee

Other

Since

man

administration

hattan

ticals.

York,
vice presi¬

and

loans

sugar

New

income

Three well-known British insti¬
tutions

vice president

the

agricultural

one

the Commonwealth, many

formation

bank's domestic branches.

fer

it is

available

has

515

York
securities

New
a
are

Harold

Zipperman and Sidney Zipperman.

First California Adds
(Spocial to The Financial Chronicle)

OAKLAND, Calif. —Vernon C.
Mingham is now affiliated with
First California Company Incor¬
porated, 436 14th Street. He was
formerly
cashier
for
Mason
Brothers.

So. States Sees. Adds
(Special to The Financial Chronicle)

ATLANTA, Ga.—A. T. Caldwell,
millions of dollars have
Horace F. DeFore, Bert N. Garstin,
helped the development of numer¬
ous
government bousing proiects Wiley L. Hutto, Alton E. Lutz and
many

Orleans,

La.,

increased

its

500,000 by the sale of
effective

Feb.

17,

new

com¬

stock from $4,400,000 to

$4,-

840,000 and from $4,840,000 to $5,-

Vice-President of

The
County
Trust

tional Bank of Commerce in New

mon

Square, L. I.
John J. Irish,

18,

common

$1,500,000

&•

elected

will

March

about

branch

reflected in

progress

Puerto Rico

Sauturce,'and fur¬
ther
growth of population and
business resulted in the opening

price of the* Uevtf Shares is
payable ip JO .equal installments
extending from June 10, 1958 to
March 20, 1959, nevertheless sub¬
scribers may accelerate their in¬
stallments by paying the whole
amount at the time of subscription

if,

The First National Bank at Or¬

He
*

warrants

Bahamian trust

retirement.
John Sadik

Island.

ond

be sold.

can

part and
phenomenal ecogrowth of

become

industrial

In 1951 the bank opened its sec¬

The

Secretary

Irving Savings Bank and the

American

the

zation will be E. Leslie Hammond,

Bank, Canton, N. C., with

and

Barnet, Chairman of

American

the

with

C.,

was

York.

such

for

scription price is payable in 10 in¬
stallments of $3.75, at intervals of
approximately one
month, ex¬
tending to March 20, 1959.
It is emphasized that while the
terms of the offer provide that

pany,
.•

Citizens

Murphy,

and

the

university

par

Company in Asheville, Asheville,

sjs

ing

effective Feb. 21 (number of shares

~
-

of
and

expiry

increased from $200,000
$250,000 and from $250,000 to

Ky.,

been with the

latter bank since that date.

has

parcel
nomic

is the date by which the
offer is to be accepted.
The sub¬

and

.; \

sjs

a stock dividend, the com¬
capital stock of The Citizens

By
mon

1921, and he has

Na¬

effective

'" "

!
sjs

Sjs

National Bank at

National

American

"First

March" 1.

years

territory

.thereof,, but, there

provided

being

United

the

June 10,

Duluth," Minn., changed

tional Bank

Company, N. Y.

the

sjs

American

and

title

its

Albert R.

sjs

.!■;

5, 1951.

Trust Company.

was

elected Chairman of the Advisory

Committee

not

the

was

pany

of .America

possession

re¬

conse¬

!'!

States

Subscription

•

Cooperstowh, N. Y.

mailed

President

Blodgett,

address

corded

not

would

transferable and

the

: it

■

in San Juan in 1933, in the ensu¬

are

Iloricon

town, N.

received

shareholders
subscription rights
Organizer which
though not exercisable are

the

being

or,

■

thereto, be¬

in
Canada.
shares
are

quence,

capital stock from $945,562.50
to
$1,050,625 effective Feb. 21,
(number of shares outstanding —
84,050 shares, par value $12.50.)

will

Bank

offered to shareholders whose re¬

which

quired

mon

Manhattan

by Chase Manhattan in
February and it came at a fitting
time, for this year Chase Manhat¬
tan will be celebrating its 25th
anniversary in the Commonwealth.
The bank, opening its first branch

bank

By the Yale of new stock, the
National Bank of Cedarhurst, N. Y. increased its com¬

branch of the

new

opened in modern, air-conditioned
quarters in Bayamon, a flourish¬
ing suburb of San. Juan.
Approval for the branch was

cause
so
doing would entail the
supplying of information by the

"v-

Commercial

The

Bank

over

Chase

Securities Act of

1933 and amendments

Peninsula

Feb.

26, it was announced by William
H. Moore, Chairman of the Board.
Mr. Budinger continues in his ca¬
pacity as a Director of the com¬
pany and serves as Chairman of
its Advisory Committees.
Mr. Budinger began his banking

1958

issue is not registered

new

under the U. S.

7
?•

and

Bankers Trust

The

is associated with the bank's main

George

marked

Y.,

of service on March 1.

years

ment, 55 Broad Street.

dent of

Plains,

Chairman of the

Mr.

when

White

economic

JUAN, Puerto Rico—Ac¬
cording-to present plans," before

held.'

appointment of Thomas A.
Sylvester "as a trust officer of
The

Thursday, March 6,1958

of another Chase Manhattan branch

SAN

record

shareholders

of Island's

evidence

Further

Koyal Bank of Canada has
the offer of shares of

The

announced

CONSOLIDATIONS

REVISED

*'■

Banking's Role in Puerto Rico's Development

value $10.)

par

stock

(number

Edouard Getaz, has been elected
member of the\board of control

of Swiss Bank Corporation, Berne,

Switzerland,
over

was

the week end.

announced

and in the construction of

dwellings

under

More than 95%
on

Chase

private

Clarence

provisions.

added

of the 330 people

States

FFA

Manhattan's

staff

the

Porter
staff

Securities

have
of

been

Southern

Corporation, 652

Peachtree Street, Northeast.

Volume

187

Number

5722

The Commercial and Financial Chronicle

New York Stock Exch.

engaged
in
the
production,
transmission, distribution and sale
of

Still

serving- about
communities -in portions of

Growing

The

number of

people working
in the New York Stock Exchange
community
increased
by
3,100
during 1957 to a total of 64.400,
.

Keith Funston,

^ ^ c hangc

'''A

electricity,

President, re¬
ported today.
This

western

the

and

Iowa,
east

north

central

including
and

Sioux

City

purchases natural gas from
Northern Natural Gas
Company

pany

228

and sells it at retail in 36

the

nities in Iowa, seven communities
South Dakota and two commu¬

nities in Nebraska.

-For the year

the

west, and about six communities

had

$33,878,039

South

Dakota

near

the

Iowa-

South Dakota Slate line. The

total

1957, the

operating

$3,857,124*

com¬

and
....

Two With Wakton

(Special to The Financial Chronicle)

HARTFORD, Conn.—G-eorge A.
Naprstek and Willis C. Warner

HARTFORD, Conn.—William J.

•

income
v

Hartigan has
staff of

been

added

the

of
of

Shearson, Hammill & Co.,

Lewis

Street.

was

previ¬

ously with Schirmer, Atherton &

.? V; v, Co.:' r.%"

■:;..

have

•:

associated

become

Walston'

company

revenues

net
.; ;;

;

Street.

Co.,

Mr.

Inc.,

Jll

Naprstek

Co.

Mr.

Warner

was

with

members,
registered
representa-

tives and other

employes-- b f
'member firms
and the: Stock

•

.Exchange,

G. Keith Funston
fis'

—y—

-Xn

;

tors—a
branch

said, reflected

■

offices,

fac¬

several

growth

;

This growth,
Mr.;., Funston

;

the

number

of,

small net gain in
the. number ' of ' member
firms,
larger sales forces, and expansion
a

of services offered to
He estimated that

—

the

public.

all personnel

etrmloyed in the securities indus¬
try" increased during 1957 from
110,000 to 112,000.
Personnel in
the

Stock
Exchange community
comprised about 57 per cent of the
overall total.

Included in the 1957

total

some

870 member

Exchange

employes
firm

are

employes

foreign offices.

'The third annual personnel sur¬

of the Stock Exchange com¬
munity, Mr. Funston said, showed
vey

that

500

some

ployed

people

Exchange

were

em¬

firms

im¬

mediately after graduation' from
college, jThis compared with 701
in 1956.

Total growth

of, the Ex-

chanjge* /community • in ^ 1956, / .he
added,

3,400 people,

was

Los

Angeles Bond Club

To Near Dr.
LOS

DuBridge

ANGELES,' Calif, 4- The
launching of the U. S.

successful

Explorer satellite will be the sub¬
ject of an address; by Dr. Lee A.
DuBridge, President of the Call-:,
l'ornia

Institute of

Technology, at

luncheon

meeting of The Bond
Los Angeles,' Thursday,

Club., of

Inarch "6th; at the Biltmore
..Dr.

steps

DuBridge
that

led

will
to

Hotel.

discuss

the

dramatic

orbiting of the American satellite
only 80 days after issuance of a
Department of Defense directive
the

Jet

the

Propulsion Laboratory

California

Institute

Technology,

A motion
picture,
Days—The Story of
the Explorer', will be presented
by Dr. DuBridge, and will show
the development, testing and final
launching of the American satel¬
'X

ALUS-CHALMERS

Minus 80

lite.

Halsey, Stuart Group
Offers $10 Million

MANUFACTURING

Pittsburgh, Pennsylvania

Boston, Massachusetts

Springfield, Illinois

Cedar

Terre Haute,

Halsey,

Stuart

March

Inc.
4

and

award

the

issue

proceeds

the bonds will

from

the

be used

Earnings per Share of Common Stock............

2.11

2.42

Dividends Paid per Share

2.00

Newcastle, Australia

Wisconsin

St.

Porte, Indiana

Oxnard, California

Thomas,

Ontario, Canada

Norwood, Ohio

Mexico, D. F., Mexico

the

tional
and

bid

sale
pay

the

Annual Report write-

off

Allis-Chalmers Manufacturing Co.

new

company's

bonds will be redeem¬

able at general redemption
prices
ranging from 105% to par, and at
a

special

100%,

plus

each case.

Iowa

redemption
accrued
-

Public

price

interest

*;'

Service

Company

" 465,598

635,857

16,374,763

16,044,658

Common stock

*..».

v..».

Earnings retained

10,363,500

12,289,900

162,055,251

159,852,403

Total share owners' investment....«..

125,108,613

124,129,723

Book Value per

Share of Common Stock

297,527,364

296,272,026

Working Capital
Ratio of Current Assets to Current Liabilities....
Number of Share Owners

■*

34.96

34.88

257,661,251

267,495,462

4.07 to 1

3.13 to 1

addi¬

property.
The

Preferred stock

S. 70th St., Milwaukee 1, Wis.

portion

for

Preferred stock

construction, improvements

extensions

122,899
8,141,435

company's

provide
required

funds

103,635

8,214,281

Share Owners' Investment in the Business

for copies of the

program,
and,
to¬
cash
derived
from

with

operations,
of

Common stock.

Preferred stock

1125

gether

Outstanding

Preferred stock

Common stock

Shareholder Relations Dept. "

construction

of Common Stock

Dividends Paid

temporary bank loans incurred in
the

20,355,045

Lachine, Quebec, Canada

connection

with

17,819,251

Essendine, England

of 99.0199%.

Net

33,822,287

Earnings.

offered

competitive sale March 3
•

$551,592,589

28,489,381

Harvey, Illinois

41/4 % series, due March 1, 1988, at
100 %o and accrued interest.
The
won

$537,191,443

Independence, Missouri

Allis, Wisconsin

$10,000,000 Iowa Public Service
Company first mortgage
bonds

group

Sales and Other Income
All Taxes.

West

associates

Indiana

Gadsden, Alabama

La Crosse,

Iowa Public Ser. Bonds

1956

PLANTS

Beardstown, Illinois

Rapids, Iowa

1957

HIGHLIGHTS

ALLIS-CHALMERS

Common stock

655

699

56,071

47,449

Employes
Number of employes

Payrolls

Eddy
■

includes

members,' al-

for¬

was

&' Co.

/..

with

Pearl

merly with Schirmer, Atherton &

lied

Shearson, Hammill Adds

commu¬

parts

Waterloo

(1061)

35,799

38,803

187,590,363

194,140,323

and Financial Chronicle

The Commercial
22

corporation

can

fers

has never been wholly satiswith this rule. It is aware
Except in of the fact that because of the

forms for an investment ury
Rico, it is difficult to fied

porate

Puerto

generalize abstractly.
special situations, a Western Hem- broad coverage offered by insurisphere ,Corporation will not be.'ance companies today, the imporan
attractive corporate form
in tance of title passage as a business
which to operate under the Ex- matter
is relatively slight; and

Any saving of that the olace of title passage can
pro- be arranged
for purely tax mo-

Program.

eruption

under the

tax

Rican

Puerto

United States tives without any serious accomtax
must
nevertheless be paid, panying commercial problem.
Moreover, the Puerto Rican within ijeu 0f the title passage rule,
holding taxes on dividends result the Treasury has at times in the
in a burden in excess of the 52% past urged and is now urging in
rate imposed here; and there is several
pending cases that the
no immunity from the penalty tax
source of income on a sales translost since

gram

of &ction should not necessarily turn

accumulation

unreasonable

earnings.

the

passed

title

where

place

Generally, investors under the and that, in some instances, at
Exemption Program have either least, it should be the place where
chosen
a
domestic
corporation the substance of the transaction
or occurred, e. g., the place where
In the sale was negotiated. Until this
the
choice
between
these
two issue is definitely decided, the
dorms several factors are involved, possibility that title passage does

Section

under

qualifying

931

corporation.

Rican

Puerto

Section 931 corporation has the

can

liqui-

not

determine the
not be

automatically

source

income

parent dismissed.
ultimately realize the
The somewhat
Thereby,

free.

dated lax

investor

it may

that

advantage

should

state

uncertain

profits free of both 0f
jaw jn this field has several
United States and Puerto Rican consequences
for
the
potential
tax.
On othe other hand, a U. S. investor.
If
sale
of
the
goods
Puerto

that

ice

poses

is
deemed to be derived from United
States sources or is apportioned to
the United
States, the company
would still not be subject to United
if

one

principal pur-

of the

of the liquidation is not the

4£tvGlclciriC0 oi. United St3t6s income

rulings

Such

taxes.

from United States sources to pre¬
vent

niifllifvinf?

rarely ^cre

are

domestic

corporation from
SpHinn

iindpf

Q/51

Because

all

for tax

income.

its

purposes

corporation, it would at
on only that part
of its income which could be allo¬
cated to the United States.
The
foreign

quirements imposed by that sec- problem
of pricing
where the
is absolutely
essential, and subsidiary sells its product to the
it
is
sometimes
difficult, as a parent, or an affiliate, is highpractical matter, to achieve such lighted if a Section 931 corporacompliance. As I have described, lion is utilized.
Such a corporasuch
a
corporation must derive tion is domestic and, hence, must
80% or more of its gross income file a United States return. The
from
Puerto
Rican
sources.
If returns of both parent and subsuch

corporation

Rico

Puerto

manufactures sidiary will normallv be audited
for sale in the at the same time and the split

States, there is some risk of total profit between the two
that
the
corporation might fail companies will therefore be apto qualify under Section 931. Let parent.
If the Internal Revenue

United

elaborate.

Service
of
ol

Snnrrp
Source

that

sees

the

lion's,

not

to Say ll0g'S share of the overall

Income
income

weigh

decision

The

made

must

ordinarily

considera¬

tion of the details of the operation

Both vehi¬

ducted in Puerto Rico.

Investor

Individual

The

tax

Puerto

under

Rico

in the United States

This

stock in

Rican

Puerto

corporation, he is
by the United States when

taxed

receives

dividend

from

the

•

The pattern is substantially
changed when an individual in¬

passage rule.
Title passes at
time
when the risk
of loss

the
Sec.

931

Difficulty

goods shifts from the seller'
There
is, however, a further
to the
buyer.
It is a matter of difficulty created by this pricing
the intention of the parties. This problem.
It is not inconceivable
intention
is
expressed
by
the in cases where the Sec. 931 comterms of the contiact of sale. For

pany

example^ it a corporation manufactures goods in Puerto Rico and
sells those goods F. O. B. San

the

carries

some

mainland,

activity

it usually does,
that the Service might take the
position that the excessive price
Juan, the source of income is gen-. charged by the Puerto Rican subera Uy
accepted
as
Puerto Rico sidiary to the United States parent
since title to the goods passed in
represented in part the price paid
Puerto Rico.
In contrast, if the - for goods and in
part the manugoods

sold

were

New facturing company's share of the
profits from distribution of the
goods in the United States. If this

YorK, title would have passed in
the Umtea States and the source
of

income

—as

attributable to the sale - position-were

to be taken and successfully maintained, the
effect
could be that the corporation operating in Puerto Rico would no

distinguished from manufac-

ture—would be the United States,
While all

of the court

cases

longer qualify under Section 931
raised, except one which was later because it derived more than 20%
reversed, have held that the geo- of its gross income from United
the

which

graphic

place

determined
,,

question

...

where title

the
,

has

source

been

passed

the

individual who is

income

received

from Puerto Rican

him

(He re¬

sources.

mains, however, subject to United
on income received
by
him from United States or foreign
States tax

An individual is

sources.)

bona

fide resident of Puerto Rico within
the

meaning

ties.

social

when

Code

Rico

Puerto

exemption

the

center

business

and

Consequently, all

the PueiJ°

of income

attnbutable to the sale, the Treas-

Rican income would become subject to the

United

States

tax

can

31/4%'to

pay

de¬

annual deposit growth

without reducing the ratio
"reserves
and
surplus to de¬
5%

Under the Curtis bill, this

posits.

savings bank would have to pay
a 52% income tax on annual earn¬

ings in excess of 3% of deposits,

activi¬

individual who

Puerto

United

es¬

the

and

of deposits.

surplus would be only about:
one per cent, enough

one-tenth of

margin deposit growth of only
1% per annum. Since this Savings
bank would have a much greater
to

deposit growth annually merely
by crediting 3% to its depositors,
the rate paid would have to be
reduced." Steps to discourage the
growth
have

would

deposits

taken

also

avoid

too

rapid a decline in the surplus to
deposit ratio.

Act

States

1954

and

tax

not subject to
on

the

income

Rican

side,

indi¬

dividends from

exempt busi¬

in Puerto Rico, does not have

Curtis

the

dorsement
measure

bill

base

alleged

principle

equality. ;They claim it would

Interest paid depositors by com¬

sple pronrietorship, the cor¬
poration and its dividends are ex¬
empt, but any salary paid the in¬
vestor would be subject to Puerto
Rican tax. As a sole proprietorship

mercial banks is deductible in full

all income earned by the

business

realized

investor

provisions of the Internal Revenue
code are not taxed at all to these

the

business

may

free

be
of

United

by the

States

and

Puerto

Rican tax.
In

This

from
come

their

taxable

income.

In¬

regulated', investment

companies and capital gains paid
with applicable

such

receipts.

But the Curtis
dividends paid

conclusion, I would like to
emphasize that the Puerto Rican bill would make
Exemption Program is not a gim¬ depositors in mutual savings banks
and share holders in savings and
micky It is soundly based on the
loan associations, payments exact¬

ecohqn^ic g^ds of Puerto Rico and

the'beedgnition of these needs by
the

mainland

proper

tax

government.

planning

With

offers

unique opportunities to investors.

Two With Jamieson y/v

ly comparable with interest paid
time deposits by commercial

banks, deductible only up to 3%.
Any
return
paid depositors or
shareholders
in
mutual savings
•institutions

above

would

taxed to these institutions and also

(Special to The Financial Chronicle!

to the depositors and shareholders.
FRANCISCO, Cal.—Harry This would'be blatantly unequal,
K. Edwards and Louis Gliickman .discriminatory taxation of mutual
have become connected
thrift*'institutions.
To
advocate
with H.

SAN

Jamieson

Co., Inc., Russ Bldg.

enjoy

such

legislation

the ground of

of this

reserve

adequate for the pur¬

unduly, favored position.

laws;

ourtax

under

selves

them—

are

major,' henefieiary

the taxation of
gains and
losses.
The
Revenue Act provides that banks
may deduct in full from taxable
income net realized losses on in¬
special
capital

favor

limit

without

vestments

privilege not accorded
other
classes
of corporate
and
individual
taxpayers.
Net long-

amount,

term

gains,

capital

the other:

hand, as with other taxpayers, are *
taxed

By deducting
investments

only-25%.

net realized losses on

ordinary income, while pay- *

from

ing

only 25% on net
gains, the com¬
their

tax

realized long-term
mercial

banks have reduced

by hundreds of millions of
a period of years.
to tax-free additions to

taxes

dollars over
Thanks

loss reserves and the

realized net

losses

deduction of

investment,

in full from taxable income, com-

paid

have

banks

mercial

much.,

less than the 52%

rate of income

corporate tax¬

applicable

tax

generally, even
though
stock enterprises con¬
for
the
profit of their

are

shareholders.
Let

;

hasten to add that

these

extraordinary
benefits accorded
commercial banks under our tax
laws
are,

entirely justified.

are

saving

and

the

disastrous
far

country

the

of commercial
which proved so

scourge

failures

bank

the early 1930's. It
important to have a

system than to'
millions of <
added income taxes.
1
ill
befits
commercial

banking

strong
collect

few hundred

dollars of

Yet

beneficiaries of these

bankers, as

special

favors, to agitate for>
taxes to un¬
the strength of* mutual*

tax
and

unfair

dermine

unsound

specious

savings institutions on the

equality."

ground of "tax
/

•

Special

vs.

The Public

Interest

sought to analyze the
bill objectively and dis-»

have

Curtis

viewpoint

from the
public interest.

passionately
of

They

in fact, a small price to pay
maintaining a strong banking

from

out in accordance

companies
because
the
share¬
holders pay personal income tax

years

If a

system

•

three times
loans during
of the bank's

Moreover,

for

con¬

that

legislation.
commercial
banks,
while making unfounded charges i
that mutual savings, institutions
tion

basis.

;

not

of stock and mu¬
tual institutions on a comparable
place taxation

corporation instead of

aid to pre¬

and many commercial banks
argued heatedly that it is
not—and I agree-ry; the amount
should be liberalized by regula¬

en¬

unwholesome

this

the

their

equality argument is in¬
tentionally fallacious reasoning.

Puerto Rican taxes

ducted

The commercial bank advocates

loss

experience.

they

Spurious Tax Equality

bona fide resident

income sums credited to a reserve

payers

under the Indus¬

Rico,

Puerto

ness

earnings

leaving

3.36%

business in Puerto Rico

which qualifies
trial
Incentive

the

Because of this United States

tablishes

^a*es sources;

mutual

from United States tax

all

ducted

the

is exempt
on

income.

Another

available for additions to reserves

933

to pay

allocated to it.

case

bank

thrift institu¬

worst

Code,

Section

income

the title

sound banking system,,
the Bureau of Internal Revenue a
decade ago authorized commercial
banks to charge against taxable
serving

the

positors and add Vz of 1% 'to its
reserves and surplus.
This would

margin

economy

tional structure.

make it

resideht of Puerto Rico

1954

Under

ordinarily referred to

bona fide

Rico.

vidual who receives the income of

not

take the

bank

national

average

after taxes of
Were this sav¬
ings
bank
to continue
to pay
3V4% to depositors, the balance

vestor intends to reside in Puerto

necessarily dis¬
qualify the company from being
exempt on the part of the overall

would

with 5% and

treatment

tax

strong banking and

the

currently earning
whether the investor will reside 334%
on
its deposits, after ex¬
in
Puerto
Rico
or
the "United penses, and having a reserve and
States.
In an individual residing surplus ratio of 10%> of deposits.

place where all right, title and
interest in the goods passes from
the seller to the buyer.
This is

Let

special

safeguard their financial strength.
One
of
the
cornerstones
of
a

replace

the. future.

savings

from his Puerto Rican venture. On

but

would

pace

Incentive Act of 1954 depend upon

owns

corded

have

Industrial

the

and

pose,

individual

mu¬

savings banks and savings
loan
associations,
are
ac¬

tual

with the growth of
an Ltheir.'-deposit- and share liabilities
keep

: of

consequences

investment

bill

Curtis

12%

the

But commercial banks,

additional reserves and surplus to

ings.

benefit

the

obtain

5%, rather than 12%, is similarly
proposed for the alleged purpose
equalizing taxation of stock and,
mutual institutions.
Ci

for loan losses equal to

savings.

The

earn¬

ings of mutual thrift institutions
when reserves and surplus exceed

size

contemplate that there will
be no current distribution of earn¬

geographic
source of income is of the Puerto Rican exemption,
the

would

large portfolios of mortgage loans
and that receive a steady flow of
new

retained

all

Taxation

impossible for mutual savings in¬
stitutions to accumulate adequate

cles

who becomes

which

the

1951, Con¬

Federal income tax in

of the business which is to be con¬

manufacturing in Puerto Rico is 0f the subsidiary's income to the
clearly from Puerto Rican sources., parent.
This would, of . course,
As to the sales activity, the gen- affect
the
amount
of
income
the

subject

made

first

were

determine

the basis of

his

that

mutual thrift institutions

When

through which they will op¬
erate; the advantage of possible

present.

Wonderland.

worthy of Alice

equality

tax

sound

makes

rule

ac¬

the safety margin exceeds 12% of cur¬
rent deposits of savings banks, or
of share capital
of savings and
associations,
are
retained
tax-free liquidation of a Section loan
931 corporation against the risks earnings taxed. The 12% ratio is
inherent in the use of this vehicle. modest for institutions that hold

had

accepted

12%

instead

counts,

form

prom jg attri5uted t0 the exempt
For
purposes
of determining subsidiary and only a small share
its
geographical source, income to the taxable parent, it may conderived from the manufacture and elude
that
the
subsidiary
has
sale of goods is divided into man- charged the parent more than a
ufactunng
and
selling
compo- fair price, in which case it may,
j-ients.
The portion derived from under Section 482, apportion part

orally

deposits

price of obtaining this greater de¬ gress recognized that the safety
of these institutions should be the
gree of certainty is, of course, that
;first consideration.
Hence, it was
as
a
minimum, capital gains tax
must be-paid in order to bring provided that earnings not paid
home the
corporation's accumu¬ out should be added to reserves
lated exempt profits. This, then, is and surplus accumulated by these
institutions
to
absorb
possible
the
ultimate
question corporate
losses.
Only
when
this
investors
in
Puerto
Rico
have future

purpose

tion

and surplus are in excess

reserves

this

Banking Competition

Stifle

be taxed

worst

to happen, the whole
of the arrangement would corporation or disposes of his
stock. Any Puerto Rican tax with¬
The biggest drawback of a do- be defeated since all of the inheld from dividends may be cred¬
rnestic corporation qualifying un- come of the Sec. 931
company
ited against the United States tax
der Section 931 is that meticulous would be subject to mainland tax.
compliance with the technical reAside
from
this danger, the imposed on that dividend.

£*ven*

income

its

some

tax

States

Rican

capital gains tax must be paid on produced in Puerto Rico will dethe liquidation of a Puerto Rican mand substantial sales activity in
corporation unless prior to the the United States, there is a dantransaction a
ruling is obtained ger that a sufficient part of the
from the Internal Revenue Serv- income might be deemed
to be

A Misuse of Taxation to

certainty.

greater safety and

Even

Under Puerto Rican Law

medium for

from page 12

Puerto Ri¬

investment in Puerto Rico of¬

Consequences for Investors

The

this,

contrast to

Continued

Form

Investment

Ultimate

Continued from page

.'. Thursday, March 6, lt>58

(1 r:C2)

the
Let

add

disappointment
over

commercial

ment

of this bill.

In a

personal note of

and

frustration
endorse-;

bank

dynamic economy,, changes-

required from time to time, in v
banking
laws ;. and ^regulations^
Leaders in commercial and sav¬
are

ings banking in

the empire state

.Volume 187

Number,. 5722

The Commercial and Financial Chronicle

conferred recently to seek a com¬
mon

program of legislation that,
would Strengthen tne ability of ail

banking institutions to
the public adequately and
ciently.
our;,

serve

effi¬

The breakdown of these promis¬

ing discussions coincided
with
formal approval of th Curtis bill

by the New York State Bankers
Association, coupled with its re¬
quest that the bill be.made even
effective

as a means

to stifle

competition between mutual and
stock institutions and to reduce
the return paid to savers.
/ The
State Bankers Association

thus allowed itself to go on record

favoring

the

vance

bill which, to ad¬

narrow

interests

self

of commercial bank stockholders,
would be highly inimical to the
public interest and the future wel¬

fare of our whole economy.
;

N. J.

Mtg. Bankers

R. E. Scott Mortgage Company of

ship

Elizabeth, New Jersey, Treasurer.

George M. Shackleton, a Junior,
who resides in Newark. The award

At the

•

Install Officers

pired
who.

President, to¬
gether with the following official
family.
Mr.
Stobacus
is
Vice
President of National Mortgage

Robert

Second Vice

Scott,

the office of Treas¬

the Mutual Benefit Life Insurance

Co.

Charles

President,

Newark,
J. Horn,

and
who

post; of Executive
the past 5 years.

I cannot believe that the

ma¬

SAN

R. T. Montin has become affiliated

First California Company,
Inc., 300' Montgomery Street He
was formerly Walnut Creed Man¬
ager for H. L. Jamieson Co., Inc.

Joins Mountain States

Newark);

Secretary

The

Scott, President of the

recipients

Sales

Manager' With

the scholar¬

Morgan & Co.

Coburn, Middlebrook

(Special to The Financial Chronicle)

Coast

Stpck Exchange. He was formerly

for

Assistant

With

South Spring, Street, members of
the New York: and Pacific

HARTFORD,.
Gentile

Middlebrook,
Avenue.

Conn.—Ralph P.

now

with

Inc.,
77
'■/'

jority of professional commercial
bankers

the

state

are

aware

that, by this action they have been
ranged behind the highly vocal
extremist fringe who have openly
dedicated their energies and their

talents to the extinction of mutual

savings institutions because they
stand in the way 6f local commer¬
cial bank monopolies.
Unsound

Curtis

The

measure

not

designed

good

to raise additional

Highlights from COMMERCIAL CREDIT'S
46th ANNUAL REPORT

Proposal

bill

revenue

tax

faith

for our

Government.
Its primary objective
vent

is to

pre¬

institutions,

thrift

mutual

from

paying higher rates of re¬
savings than do commer¬

turn

cial banks.

This is to be done by

double taxation of returns paid on
savings by these institutions above
rates which commercial banks

1957

FINANCE

GROSS INCOME.

NET INCOME:
<■

98 963 983

with

Fleet Lease Financing

interests

the

disregard of
over
25,000,000

Americans

who

save

mutual

thrift institutions and of the wel¬

fare of the economy as a whole.
Its second objective is to weaken
mutual thrift institutions by pre¬

venting them from building up the
reserves and surplus reqquired to
margin future growth. This is to
be done by taxing all additions to
reserves and surplus whenever the
latter exceed 5% of deposit liabili¬
ties or share capital. Such a low
ratio is obviously inadequate for
growing institutions that seek to
the

serve

needs

the

Rediscounting
Direct Loans

will give serious considera¬
tion to so spurious and unsound

;

Net income credited to earned surplus.....................

26 896 969

stock.....

on common

.J---.

37 133 947

51 264 443
24 367 474

end of period

51 536 103

25 057 432
26 478 671

$5 33

$5 26

5 045 565

5 033 645

RESERVES;
Losses

receivables

INSURANCE
Unearned income

COMPANIES
Unearned premiums--Insurance

Automobile Insurance

Available for credit to future

19 170 217

19 659 794

73 538 302

80 900 216

instalment receivables......

31 915 207

Companies......

operations:.,.....

33 676 702

131 985 640

126 874 798

821 342 285

794 433 539

Credit Insurance
Operations shown separately are, briefly:
Health Insurance
Life Insurance

/ J'

FINANCE COMPANIES:
Gross receivables

acquired:

•

Motor, finance leases and farm equipment
retail instalment....,

96 828 829

Other retail instalment.

COMPANIES

Direct and

Pork Products
wholesale notes and advances

Heavy Machinery
and Castings

Factoring, open accounts, notes, etc...

108 651 670

♦

1 553 479 488

Metal Products

Total receivables

120 314 599

131 365 861

personal loans....

Motor, farm equipment and other

Scattergood, Boenning
Philadelphia, has joined
the ranks of grandfathers. A ;;on

88 670 050

Factoring

proposal.

Grandpa-Scattergood

.I.¬

United States and Canadian income taxes.......

Net income per

MANUFACTURING

gress

operations, before taxes.._.......

Common shares outstanding at

loans and other long-term
securities involving some measure
I cannot conceive that our Con¬

gage

of risk.

Net income from current

Equipment Financing

economy

through investing savings in mort¬

161 568 389

47 699 540

Interest and discount charges...

Commercial Financing

contemptuous

;

can

to pay.

1956

$ 174 725 311

Instalment Financing

This is being pro¬
posed for the selfish benefit of the
stockholders of commercial banks,

afford

..........

COMPANIES
Wholesale Financing

acquired

1 184 503 981

1 179 184 205 ^

1 227 421 903

$3 830 438 366

$3 387 087 994

$1 447 184 063

$1 296 831 241

Harold

Co.,

Malleable, Grey Iron and
Brass

Metal

Pipe Fittings'

Total receivables

outstanding December 31

Net income of Finance

l(f 569

15 824 956

Companies.

774

Specialties

Roller and Ball Bearing

Equipment

INSURANCE COMPANIES:
Written premiums,
Earned

Machine Tools

prior to reinsurance

34 632 251
35 161 496

premiums

33 106 362
36 943 437

Net income

(including Cavalier Life
insurance Co.).

Toy Specialties

Pyrotechnics

Valves

born

was

HARTFORD,
has

Conn.—Henry
become

connected

Charles E. Thenebe & Asso¬

ciates,

Pearl

Street.

Net sales......

Net income

„

136 321 975

4 251 963

118 976 584

4 131 609

offices in the United States and the Dominion of Canada.

Commercial Credit Company
Copies of our 46th Annual Report available

With Chas. Thenebe
(Special to The Financial Chronicle)

Schmaltz

5 777 288

Offering services through subsidiaries in more than 400

Scattergood
his

daughter, Mrs.
Daniel P. McDevitt, Feb. 24 at the
Fitzgerald
Mercy
Hospital
in
Philadelphia.

with

6 820 050

MANUFACTURING COMPANIES:

Printing Machinery

FRANCISCO, Calif.—John

with

with William- R. Staats & Co., 640

succeeds
held the

Robert E.

With First California
(Special to The Financial Chronicle)

(he is Vice President of the Na¬
Bank

Rutgers

Paul J. Dutko, term expir¬ Connecticut.
(Special to The Financial Chronicle)
ing 195.9..
'♦
; DENVER, Colo. — Samuel M.
The Executive Secretary for the
Cavnar has joined; the staff of
Rutner With Staats
Mortgage Bankers Association of
Mountain States Securities Corpo¬
New Jersey is Robert J. Sinnen(Spepial to The Financial Chronicle)
berg, who was installed on Janu¬
LOS ANGELES, Calif.—John G. ration, Denver Club Building.
ary;1 of this year.
He is with Rutner
has
become
associated

tional

State

unex¬

from

urer,

Irvingtoh, New Jersey, Charles
Horn,

Co. of Clinton Ave., Newark, N. J,
Raymond A* Mulhern is First Vice
President, he is Vice President of
Underwood Mortgage & Title Co.
of

term

assumes,

year

Rutgers. Dr. Pearson of Upsala
College will accept the award: of
scholarship, for that University,, to
the
recipient
of
the
award,
William Feldmann, also a Junior,
whose-home is located in Durham,

Guempel,

Pulis, Jr., and to fill the

which time Frederick C. Stobacus

of
Governors: for. three
term expiring 1961, Robert

Ernest R. Hansen,
Max -Neuberger and- Arthur
G.

ing at the Robert Treat Hotel, at

this

will be accepted for Mr. Shackleton by Dean George R. Esterly of

Board
year

gage Bankers Association of New
Jersey held its 19th Annual Meet¬

installed

time, the following

same

were-installed.as- members of the

NEWARK, N. J—On Tuesday
evening, March 4, 1958, the Mort¬

was

(1063)

Baltimore 2, Maryland
upon

request

Coburn

Whitney
*

and Financ-ial Chronicle

The Commercial
24

Thursday, March 6, 1958

poultry
and
eggs.
A
modem])
slaughterhouse and packing plant
has just been promoted which wity*
furtner encourage the growing <>£*•

these

already reduced profits and handing them over to
wage earners? Would such a course tend to encourage a
higner rate of investment by business? To ask such a
question is to answer it. The trouble, or one of the greatest
of them, has been that higher labor costs have pushed
prices up to levels not wholesome for industry, and the
outlook is for continuous demands for still higher wages.

Continued from first page

(1064)

As We See concluded
It

thoruies have from
causes

still

time to time

in these ups and

greater task to

were

the major

downs in business. It would oe a

undertake to appraise the validity of

meat

page

produce our present problems is definitely the
proportion of current production which flowed to labor or
the proportion which corporations retained as profit. That
much is plain as a pikestaff from the data now available
in the current issue of the "Survey of Current Business."
The current business downturn started sometime after the
not

middle of last year

and became rather pronounced in

the

quarter of 1957. If as labor leaders and their political
the trouble, or one of the chief troubles,

final

friends assert,

or a disproportionately small share of labor
production, then one would expect to find the
volume of wages and salaries paid out during the first
two or three quarters of 1957 to be a good deal smaller
than is usual—and to be showing a declining trend.
was

decline

in current

anything of the sort to be found in these Depart¬
ment of Commerce figures? Let us turn to the record.
There we find, first of all, that wages and salaries (in¬
Is

cluding the various "supplements") were higher in 1957
than they had ever been in the history of the country.
What is more we find that when adjustments are made
for seasonal variations, each

of the first three quarters of

showed higher wage and salary payments than
the one immediately preceding it. Nor is that the whole
story. These payments in 1957 constituted a larger propor¬
tion of total national income than at any other time in our
last year

history—with the lone exception of a year or two of the
great depression when business was earning less than
nothing. What is more in each of the four quarters of last
year a larger proportion of current national income went
to the compensation of employees than in 1955 or 1956.
Nor is this all. Business employed more men in 1957
than it ever did in any other year of its history, paid out
more
in wages and salaries, and its payments came to
more
per full-time employee (or the equivalent thereof)
than at any other time in history. What is more, every
single one of the major industries listed separately by the
Department of Commerce paid out more wages and sala¬
ries last year, and paid higher rates than in either 1955
or
1956.; Whatever went wrong and started the rate of
activity in business to turn downward after the middle
of last year, it certainly could not have been any under¬
payment of labor or any parsimony in giving labor its full
share—and more—of what, was being produced.
And

definite downward trend

during the year. At

time in

the year, or

hold

struct

farmers

logging

Expanding
We

hopeful that this saw¬
make
economical the

are

mill

will

harvesting of
trees

wood-working

natural

this

leave

evident

that

even

utilization

short of achieving

chosen to

physical

have achieved

plants showed
the

rushes

promoted

ma¬

Puerto

development,

its

eco¬

and

good example is the petroleum

refineries.

fining oil,

the

of re¬
materials are
provided for the establishment of
process

raw

petrochemical complex.
is constructing a

great

Union

Carbide

large petrochemical plant to
utilize
the
tail
gases
from the

very

Commonwealth Refinery.

The in¬

creasing consumption of metal has
made possible the building of an
electric furnace which

local¬

uses

ly generated iron and steel scrap.
It

makes

local

reinforcing bars for
These

construction.

use
are

instances of integration in a grow¬

ing industrial
learned that
industrial

generate

economy.

and

We have
expanding

plants
automatically
additional supplies and

markets.
Yet

these

require
which

most

stock

take

usually

materials

many

found

not

Let's

Puerto

for

mo¬

Isn't this just the same for

plants

state
There is scarcely

Union?

any

could

which

plant

ern

plants

new

flow of

are

ment.

the
mod¬

sup¬

ported solely by the raw materials,
products and com¬

semifinished

The

and

got tired

for prospects to come to
witn their own projects when

they got good and ready. So we
we
would develop feas¬

decided

projects ourselves. ; Armed
study, for example, which
shows
that
the
manufacture of
ible

with

• ■

■

material
every

fr^~'iently

own

flows

vicinity.
not

part of the U.

all

from

only

S. but
the

over

world.

Case

The

the Flour Mill

Originally, we started to work
on projects designed to utilize our
natural

own

found

this

There¬

limiting.

too

started

upon,

Soon

resources.

to examine the

local market for additional oppor¬

tunities, particularly those of an
integrational
nature.
How
this
expanded our scope is best illus¬
trated

mill.

story of the flour
imports • about

the

Rico

Puerto

55,000 tons of flour each year,
packed in 100 or 200 pound sacks.
For years, people have speculated
that it ought to make good sense
to erect a flour mill but either the
time

This, then, is the
business
the

Question
answer.

Puerto

Rico

Doing

presents

questions you ask your¬
self about doing business on the
Continent. The essential question
is: what will be my materials cost
same

laid

down in

swer assumes

plant?

The

an¬

relevance only when

compared to what it costs you in
other locations.

things

fibers

rubber tires cheaper

all

But

again, this is

had

taken

place

I mentioned earlier.

drawing on
terials and

shorlf, the thousand

good,

and one

for an intelli¬
decision.
And
informa¬
tion, you determine whether this
is the place in which you will
realize the highest return on your
investment, and how much of your
answers

gent

^required

locational

when you have all your

We had come]

our

started

limited raw ma¬

have wound up by*

the one resource with¬
imagination.:
services are available to

drawing

out limit—the human

Our

prospect who wants to deter¬
whether his project is feas¬
for Puerto Rico.
The proce¬

any

mine
ible

simple—check with our
offices and they will
the ball rolling.
is

dure

Continental
start

Meet Mr. Smith

■

Rico

Puerto

Winthrop

time

identify

that

was

easy

For Mr.

will buy soybean oil and

feed

feed mill with fish
important protein in¬
Other ingredients for

available locally, such as

are

minerals

requirements

and

molasses,

for

phosphate and cal¬
will create local

carbonate

cium

projects to mine and process them.
This is only part of the story.
The availability of lower cost feed
will

give tremendous impetus to
raising of livestock, milk and
milk products, poultry, and eggs.
Puerto
Rico now imports about

can't find

Smith?] Now is the

—

Invest your

This meant that the flour

by creating facilities for
making animal feed, could profit¬
ably dispose of the wheat bran
and shorts generated in the mill¬
ing process. A soybean extraction
plant was under construction and
a major problem was how to dis¬
pose of the soybean
meal. Since
this
is
a
major ingredient for
animal feed, the two projects are
complementary with each other
and with the tuna cannery. * The

H. Smith

Merrill Lynch

rhyme

local

potential

large,

whether

opportunities

circle—we

full

the

steadily

gredient.

are

foundry for small

What?

scraps,

adequate,

and perhaps before too long:
iron castings"

yarns,

plan is to bring in shiploads
grain
unloaded in bulk into
great silos. The amount of animal
feed
imported
had been" rising

of
the
finished
buildings, power, land,
water, and so on? In addition to
costs, you want to know whether
the
kind of
labor you
need is
available, whether you can find an
appropriate site with the needed
utilities,
whether
schools
and
are

•

in*

imported

materials and shipped out*
product. Also, we!„
needs

—these integrational

product,

police services

you

your

the

transportation

churches

explored made a flour mill- ex¬
tremely attractive. The essence of

the

together with new projects being

supply

fire and

even

bility
study.
We succeeded -in
promoting a $5 million dollar pro¬
ject which is under construction
now, and this is how we showed
it could
make
money.
We dis¬
covered
that the growth which

cannery

do these

Rico

and
supplies generated by our
growing family of plants, so that
we promoted metal plating plants,?'
a tool and die shop, a plant to dye(

not ripe or various tech¬
objections were raised.
A
major drawback was that ample
milling facilities existed in' the
U. S. and no large firm was in¬
terested
in
expanding
milling
facilities.
Finally, Fomento de¬
cided
to
give this priority and
made this the subject for a feasi¬

other factors cost: labor,

one

Puerto

was

cost among many—what

only

synthetic

produce

nical

market.

Essential

frequently imported all their ma¬
terials, shipped their entire out¬
put, and provided jobs and income1
just as any of our projects did.
Then we learned that you could-

learned to watch closely the

idea to clients.

consumption.: But we got impa-'
tient again because you can't stay*
still in this business.
Why limit
ourselves to purely local arrange-,
ments
when
Continental - firms*

send our indus¬
trial representatives out to sell the
we

project based oni'
the local market is an ammonia
and
sulfuric
acid plant
which■],
manufactures fertilizer for
local

all your

Continent,

J .rtt

Circle

Full

The

Another huge

surplus funds

forthwith

mill,

The

.'»•

■

glass fibers would be more profit¬
able in Puerto Rico than here on
the

materials, intermediates, and
services become locally available.

Rico

Puerto

down

impatient

pretty

We
in

Fomento's; feasibility studies.

participate

asked

was

are

these

raw

that

forward

and

local

true

My last look

majority

or.no

nomic

major

our

about 500,

great

little

Rico

our

leave

at the count of Fomento

far

the

all

the level

have reached today.

terials.

us?

objectives.
Had
we
rely only upon our own
resources,
we
should

from

would

resources

economic

never

assistance.

myself learned the hard way.

I
I

and

information

this

getting

offers various kinds of

waiting

seems

use

es¬

indus¬

all

does

optimum
way

and

new

Where

of the scarcer

some

used

tablished
tries.

Integration

Industrial

than must be

figures of a decline during the first three quarters of last
either in the ability of the rank and file to buy what
they wanted or in their actual purchases. Personal income
rose quarter by quarter through the end of September.
So did the income left individuals after paying their per¬
sonal taxes. So, too, did their purchases of consumer goods
and services. In fact there was hardly more than nominal
decline in any of these items even in the last quarter of
the year. When buying for business inventory (or reduc¬
tion in inventories held) is eliminated, purchases of the
entire economy rose quarter by quarter through the first
three quarters, and declined but little in the last quarter.
The total output of goods and services declined during the
last quarter almost solely because private investment de¬
clined, and that decline was almost exclusively a matter
of inventory reduction. National income was down in the
last auarter chiefly because corporate profits declined
sharply.
Why, then, should anyone suppose that the current
recession could be cured by taking a substantial part of

to in¬

niques.

ponents found in its

year

profits you will hold on to. Just
tech¬ as you do anyplace else; with this
difference—Fomento will help you

series of field days

^n the year before for that matter, were cor¬
porate profits a larger proportion of total national income
regarded as perfectly normal in light of the
records of the past. Moreover, corporate profits were less
than $40 billion in 1957 against a national income of $358
billion and a wage and salary bill of nearly $254 billion.
Obviously, it would take a very substantial percentage
of corporate profits to add .very materially to the pur¬
chasing power of labor. \
\
As a matter of fact, there is no indication in the

■,

integration

mushrooming economy,*.

works in a
;■

how

clear

make

Going

Rico.

what of those corporate

profits which Mr."
Reuther and the others are so disturbed about? They-have,
of course, been substantial in recent years, but they were
lower, not higher, in 1957 than in 1956 and there was a
now

Pueito Rico's Raw Materials

our

brewer's grain

There are other

but

cations
to

breweries'?
ib£
ramifp"<
enough has been said
to

grits

spent

use

the feed.

Who Did Not Kill Cock Robin
It

In turn, it will,

processing of corn, will supply *

its

and

from

quantities of*"

large

The

brewer's

Continued

is, however, much easier to list some of the things
which did not cause our present troubles and to defend
these conclusions with facts. One of these things which

use

animal scraps for animal
flour and feed mill, in

supply
feed.

these conclusions.

did

and

feed, for fattening.

Merrill Lynch,

Fenner

Pierce,

Smith.

Geisel Coast Exch.

Member

Calif.—Mem¬
bership of C. W. Geisel, to repre¬
sent the firm of C. W. Geisel &
ANGELES,

LOS

Co. in the Pacific Coast

change through the
membership in the

Stock Ex¬

purchase of a
Los Angeles

Division, has become
was
announced
by

effective, it
Frank

Naley, Exchange Board Chairman.
Mr. Geisel has been in the secu¬
rities business in the Los Angeles
area since 1924 and has previously
been a member of the Exchange

representing Akin-Lambert & Co.
He is the principal partner in
the
recently organized firm
of
C. W. Geisel & Co., and will oper¬
ate

specialist odd-lot post on the

Exchange.

■

the

$60 million yearly
ucts

that

to shoot at.
ture

cattle

land

and

the

This
can

poor

market
means

With M. J. Ross
("Special to The Financial

of these prod¬
is

that pas¬

developed

land

devoted

for

Chronicle)

ANGELES, Calif. —Law¬
G. Rubin is with M. J. Ross

LOS

there

rence

Co., Inc., 6505

vard.

Wilshire Boule¬

Ydlume 187

Number 5722

Continued

from

The Commercial and Financial Chronicle

performances
government.

page

(1065)

where

Some Observations

Federal

spending Until we have a

and devotion

have in

last few days

the

balanced budget.

received

President Eisenhower pre¬
scribed this remedy in his address

Mr.

Eisenhower's able assistant whose

in Oklahoma last November when

purpose

penditures for defense would have

recommendations.

flow
from the work of the Commission

of non-defense pro¬

out

saying:
"Savings of the kind we need
can come about only through cut¬
ting out or deferring entire cate¬
gories of activities. This will be
grams,

"The

benefits

portant
addressed

able

will

dollar savings.

in closing

American

the

these

tions.

may

people have

the

often

past dealt with many re¬

cessions

and

with

great

have

and

stronger
we

than

ever

crises

Joins

Cooley, Staff

bigger

(Special to The Financial Chronicle)

before.

HARTFORD, Conn. — Henry
Knapp is now affiliated with4
Cooley & Company, 100 Pearl
Street, members of the New York
Stock Exchange.

out

come

will again.

Two With Hincks Bros.
(Special to The Financial Chronicle)

BRIDGEPORT, Conn.—Richard
M.

Anderson

and

Merwin

With Baron, Black

Bern¬

stein have become affiliated with

(Special to Thb Financial Chronicle)

Hincks Bros. & Co. Inc., 872 Main

Street, members
Stock Exchange.

the

Midwest

Special to The Financial Chronicle)

Hunt

with

Bank

has
H.

Street.

merly
ence

BEVERLY HILLS, Calif. —Jo¬
now with Baron,

seph F, Black is

Black, Kolb & Lawrence, Incorpo¬
rated, 253 North Canon Driye.

Hunt With Walker
BRIDGEPORT, Conn.

that

say

And

forces.

are
effective

control

And

recommend a lions
.

development of
scientific
discoveries and their new inven¬

standards of mankind and its gov¬
ernmental methods have been un¬

adequately in
im¬

cannot be, measured
terms

To¬

gigantic forces into our
civilization.
But as yet the ethical

He says:

which

of nature.

and

new

the adoption
part of these

is tc secure
of the administrative

economic

our

day the scientists with the aid of
the
engineers
have
introduced

Meyer Kestnbaum, President

he declared that the increased ex¬

come

fundamental laws

great complinient from

problems, the nation is faced with
Man's
curiosity to explore the unknown
and his impulses under freedom
to do it, have led him further and
further into the discovery of the

possible.
You

has made

from

another and parallel crisis.

those reports

made

Commission

addition

Slumps and Recessions
drugs is the elimination of waste
and the reduction of non-essential

the process of
This
is
an
area

enduring contribution."

Business

the

become
Walker
Mr.

R. L. Colbiirn Adds

Frank

—

(Special to The Financial Chronicle)

associated

Co.,

Hunt was

LOS

118
for¬

officer of Gaynor, Clem& Co., Inc.
v
an

Apple
staff

ANGELES, Calif.—Samuel
has

been

added

Colburn

West Seventh Street.

of the hardest and most dis¬

one

tasteful tasks that the coming ses¬
sion

Congress must face, and
groups will wail in an¬

pressure

guish."
The

President

prescription
his

State

added

this

further proposal in

the

Union

message

where he included also:

"Reducing expenditures on less
military programs and

essential

installations."
Sacrificial Ability

let

But

there

burden,
not

stress

endure

that

once

expenditure,
austerity that

order

BUSINESS

HOME-TOWN

tax

we can¬

protect
the United States from the great¬
est
enemy
of mankind
in
all
human history.
I

expand

can

point
sure

the

President's

to anguish. These
groups
include every
as

pres¬

seg¬
ment of the government bureauc¬

Their

racy.

nature is to
And they are sup¬

very

avoid anguish.

ported
zens'

than

pressure

1,200 citi¬
'quartered

groups

Washington wishing to safe¬
guard the Senators and Congress¬
men from anguish.
But to speed up recovery, we
need go much further than this—

and that is the job of the Congress
where

great economic statesman¬
ship will be needed.
should

penditures
for

cut

the

ance

only

not

additional

government

is nationwide

BELL SYSTEM

ex¬

provide
bal¬

THE

telephone business is

yet the

and

weapons

budget, but also to the
can have a tax

largely

local business.

point where we
reduction.

This

would

the

greatest possible stimulant to
covery.
However, there is
opiate

drug

should
That

being

proposed

resisted

reduce

with

without

corresponding reduction of gov¬
ernment expenditures or a bal¬
anced
budget/ That opiate willpoison you with more inflation.
No doubt the voices of the pres¬
sure

will

groups

rise

even

greater anguish over any such cut
in government expenditures.

manufacturing and

are

handled

ence

has

centrally because experi¬

proved it is the better

But the

time

must

see

that

one

locally is handled by the operating

companies throughout the country,
organized to fit the needs of the
ticular sections

they

serve.

Telephone Company is
It is
ness

distinctly

Those

who

know

not

these cuts in expenditures

how

can

lic Printer for
Most
not

you

need

few cents

each.:

in this audience do
be

bored

by quota¬
tions
by me from them.
You
helped to make them; And they
still

And

stand.

personal nature

Ninety-five out of

great savings
by the Congress.

Tonight

are

local.

ley,

who

General

were

Commission.

hun¬

every one

rFhey

niade-

the spot. On all

matters of sendee you

You

probably know

have the

have

seen

with the company

telephone

aged locally and it

home-town family to install color telephones. He and

around town. Courtesy rides with him wherever he

and

James

members

There

former

are

Far¬

the

here

other members of the Commission
and the leaders and members of
the Task Forces whose experience

goes:

pays taxes

and

women

who work for it and

and heard of their active

man¬

locally.

of maintenance, there are

local

jobs for

builders, architects, painters,

carpenters, plumbers, electricians and
many

Local

people have

investment in

others.

So the Bell

isn't

very

directly
and its people.

company

men

part in the welfare of the community.

the business

great advantage of dealing

Your

familiar sights

through their ownership
you

of A. T. & T. stock.

Wherever there

Telephone Company

something far

wherever

you

are

new

tele¬

phone buildings going up, or jobs

BELL

away

but close to

live and

friendly,

helpful part of the community. That
is the way

you'd like it to be and

trv vcrv hard to run it

from

great national leaders,

McClellan

Postmaster

right

INSTALLER visits

are

of them
await action

have heard

you

our

Senator

to-order

his truck

in your town

dred calls

TELEPHONE

many

with

two of

of these.

one

telephone service.

done without

injury to any essen¬
tial service, can find the answer
in plain language in the Reports
of the Commission on Organiza¬
tion of the Government.
These
reports can be had from the Pub¬

par¬

Your Bell

home-town busi¬

because of the

the country goes hungry or cold.

Readjustment from economic sins
j|s a tough operation.

way.

job of serving people

And

may.I add that \|vhen we
have the joyride of a boom, we
must just stand up and work out
our readjustments.
In the mean¬

certain amount of over-all direction

that

horror.

taxes

Research,

re¬

TELEPHONE

SYSTEM

that

wav.

Co.,

the
215

Financial Chronicle

The Commercial and

(1066)

Thursday, March 6, 1958

Continued

known

from first page

the

Results

Why Puerto Rico

whether the National City

know

But ours was

Bank's face was red.

a flush of pride.
Spanish, we call our Eco¬
nomic Development Administra¬

—with
In

Fomento.

tion

de-

"to

means

up,"

a lot of stirring up
place in the last few

me,

taken

obsolescence

rapid

the

years,

stir

foment,

velop,
Believe
has

of this ad shows.

What factors caused a

devise

people to
which would

program

put them on the way to eventual
salvation,
a
program

economic

would

which

gain recognition in
almost
every
underdeveloped
country of the free world?

Rico

Puerto

1940

looked

results

commenced

ment

catalyst. A little
what results
new approach.
Thirdly, and perhaps most im¬
portant, we learned the value of
the prudent utilization of the tax¬
ing power as a means of creating
we

will

got

as a

tell

from

the

out

you

this

the necessary

incentives to bring
creative

most

forces

had

erals

found

been

not

quantities and our
good forests had been cut
down
mostly for cooking fuel.
Our
economy
revolved / around
sugar cane like children around
a
maypole, with coffee and to¬
bacco

lagging behind and hardly
a rural population.
Manufacturing industry such as
we
had, consisted of a few rum

distilleries,
some
hand
work
shops
employing
fluctuated
cents

hour, and two
modern plants.
an

Our

needle¬

mostly
wages
which
between V/z and four

home-workers

income

net

three

1940

was

$225,000,000 and income per capita
$121. Why Communism never got
foothold in such soft and soggy
soil is something to wonder about.
a

Perhaps—I might

even

ably—it would have.

prob¬

say

But

had

another kind of revolution instead

peaceful revolution, a demo¬
cratic revolution, a modern indus¬

—a

trial revolution.
thank
in

For this

electorate

must

which

the

power

tax

is the

destroy, the power not
to
tax—when properly
directed
and under strictly enforced rules

study
the phenomenon
of
rapid economic growth based sub¬

political force that

year
ever

new

by substantial

future

that

era

the

1940's

majorities.

history

Advantageous U.S.A. Relationship

will

mainly behope it engendered
in thousands of hopeless hearts
during its first years of tenure.
And that hope was born of
faith,
reciprocal faith of a people in a
man, and of a man in a people.
of

cause

The

the

man

Munoz

our

Marin.

Governor,

But

must

to have warped my

Fomento
had

taken

the

1942.

rare
privilege of midcreature and through
proximity to the crib was made
nurse for the bawling infant. The

wifing the

has survived

our

care,

and

certainly- lias grown!

nomic

Between the

dustrialization
able

was

spirint.
ui>

stab

walk

the way

employmeot.

before

and

Our first five
experience

little else in

gov¬

development, in¬
crawled

finally

years

gave

but

very

much

and

of factories

The

period,

however, was not entirely wasted.
First, by planning, building and
operating
several
large
scale,
heavy industries (by Puerto Rican
standards)

we were

to ourselves that

able to prove
could

manu¬

facture other things besides sugar
and
needlework.
Second,
we
learned the

lesson of the

"multi¬

plier effect."
Rather

funds

than

direct

commit

industrial

all

our

invest¬

our

between

the

Federal

Government

S. citizens

Puerto

pay

and

come

Federal

vote

and its corporations and

ships

Common¬

wealth, Puerto Rico has
in

its

eco¬

Puerto

States.

Free Associated State

the

program,

Rico and the United

and

Rico

partner¬
on in¬

tax

profits earned in Puerto

Rico.

Our

that

honored

provide
electric

but the best

ment

was yet to be.
gained in experience, pri¬
vate initiative began to feel more

our

and other assistance without oner¬

must say
an

for

needs,

doubtful whether
reached

expanding
I am very

ever

our

power

ties

ous

conditions.

and

eco¬

Barring acci¬

tax

status

based

tradition

During the

Ten-Fold

Translated into terms of invest¬
ment

dollars, while in
had

ernment

1947 Gov¬

invested

$11,000,000
plants and equip¬
ment, private interests had put
up
only
$2,000,000.
Ten
years
later the multiplier effect of the
new
policy
becomes
evident.
industrial

Government

investment

$40,000,000, the private
sector had invested $275,000,000.
In other words, 10 years of Opera¬
tion Bootstrap, using the incentive
and promotional approach instead
of

depending

Government

plied

mainly

investment,

private

multi¬

investment

140-fold, with only

about

four-fold in¬

in Government investment.

crease

direct

hope this lesson will not be lost
those emergent nations and

upon

underdeveloped
countries
now
seeking to better the standards of
living of their peoples.
anything dog¬
approach to our eco¬

—"no

taxation without represen¬
tation." This, plus the free move¬

nomic

ment of

Puerto

aire, to roll with the punches, and,
in punching back against poverty,

for

nental

Rico

United

States

the

sets

and

framework

advantageous

relationship.
It is
an
advantageous relationship to
both parties, the big one and the
little

one.

achieved
without

could

much

and

never

are

have
have

grateful,

have proved by our loyalty
Sacrifices and the blood of

and

sons

two

wars.

the

hand, it is no free ride to
luxury land;.
What Puerto
Rico
has done, it did largely on its own
initiative
and

with

and

though

its

have

toil,
long

own

come

way, we still have only half
net
income
per
capita
of

poorest state

the

sissippi.
If

tariff
for
to

is,

American

walls, perhaps the market

our

the

factories would be limited
two

and

Coast

West

Puerto

maket

our

East

outside

were

quarter million

Rico, but

reaches

of Puerto

Coast

Rico

the United

Most of the 500 factories
now

manufacture

from

the

States.

have

preponderantly

for the U. S. market, and
many of
them are locating with an
eye to
the developing
Latin American
as

But let
to the
so

well.
me

return for

you

may

our

moment

progarm

understand what has

whether

non-doctrin¬

ef¬

worrying

it's right

our

about

trition

which

400

operations
whose

left.

beginnings, with govern¬
ment owned factories, were un¬
questionably socialistic, but we
had no other choice since private
initiative needed to be shown that

industry in
in

the

spected

Robert

forts

land was feasible
place.
Even so re¬

our

first

non-socialis1:
Taft

those

servation

Biit

limited

controlling interest other¬

manufacturing
of all

jobs, almost half
manufacturing employ¬

our

Our

ment.

mated

economists

the

investment

ernment
of leased

real

facturing

jobs
for
our
unem¬
Through the years, our

ployed.

have

capital

job

interests

our

' into

the

non-competitive

ventures

much

too

private
difficult.

indus¬

trial development companies were

recognized

having
public utility status they are
beginning to enjoy.
These

were

the

now

Price

setting

were

and

wage

understandably

complicated. A government owned
factory did not have the freedom
of the market

place. At the same
time it had to deal with strongly

employees

establishments^ cur¬

em¬

ployer in competitive fields. We
lacked experienced manage¬

visitors

last

■

year

$30

some

million.
.

1954, our program also as¬
major responsibility in the

sumed

pursuit of
the Administration's
objective ol' lowering food prices,
in

Puerto

tion

nels

Rico

through the

crea¬

balanced

competitive
condition to be brought about by.,
the development of modern chan¬
a

distribution.

of this program

The

results

have been the in¬
features

new

of
modernsuper¬
shopping centers. At
present
some
23%
of
weekly
island purchases are being done
in
modern
shopping units,
i.e.
supermarkets and superettes. But
in

the

form

markets and

significantly, progress has,
been made towards the
of our goal of reduc-v

already

realization

ing food prices in Puerto Rico by

which would represent an
saving to our community
of some $35 million. In furthering
this, development, we have had to?,
8%.,

annual

invest

$2 million.

some

view

limited

the

sources

agricultural credit—which
chiefly
available only for
of

are

our

traditional crops, sugar and coffee
—we have also found it expedient

culture, such
mill and

meat

Rounding
structure

o u

a feed and flourpacking plant,
t t h e/; Fomento*

Ports

the

Authority,

public corporation which is re¬
sponsible for all our airports ands
harbors, and in addition also runs/
the Metropolitan Bus System.

work

investor
standards

improved and

lightened

about

find.

put

basis

and
for

firm

called

our

some

$18

Our

Com¬

for the

improved living
the
employees is
an
example of en¬

capitalism

invest¬

million,' ;is

most

has

this

publicized
the

been

ven¬

renowned

Caribe Hilton hotel, but few have
realized that several years before
that

the

had

instrumental in

been

establishment

hotel.

apartment

early

1945,

the fact that

For

climate

beauty offered

and

enticing
natural

tremendous un¬

potential

tapped

even

aware

were

island's

our

small

tourist

center, and that the basic diffi¬
culty hampering this development
was = the
shortage
of
adequate
accommodations.

hotel

However,
satisfactory
operating experience of the Caribe
Hilton, it was not until quitb re¬
cently that our potential was fully
enough realized by private in¬
despite

result

in the construc¬

privately-financed facili¬
weekend, I attended

you

can

the

320-ioom

inauguration of the
San

Intercontinental.

Juan

present

have quite

ment.

tripling
the

trastedbetween

con¬

the

anticipate
capacity
period,: as con¬

result,

mere

date

hotel

our

1957-59

33%

the

increase

Hilton

Dollars

nonmanufacturing-

and

the

mento,

constitutes

program

whole

million enter¬

$425

Fo¬

sponsored

Fo¬

million repre¬
sented a 412-fold increase over the.
Fomento contribution in 1951-52.
This

mento.

$223

said

have

that tax exemption,

keystone of our develop¬
ment program. Yet we have found
that tax exemption by itself is not
the decisive element. When busi¬
nessmen
look into Puerto Rico asis

the

site

for

concern

plant,, their primary
profits with¬

is not alone

out taxes,

but profits before taxes.

struction, only one of which is
wholly financed by the "govern¬
a

facturing

Attractive Profits

a-dumber

projects under

Private

the public and pri¬
vate investment in both the manu-,

highly,

the

ties. Just last

for

of profit

Mostly

Combining

The

bulk

vestors

situation

con¬

Tourists1'".,

great

hotels.

tion

Enlightened Capitalism
The

under-

government in¬
than $21 million.

Hotels and
The

equable

other drawbacks to

government operation of the fac¬
tories.

non-manufactur¬

operating

struction, with

could

Ten years ago government

not

some

rently

ture

even

extent

and

were

that

the

ing activities, which has resulted

that the existence oi governmentowned plants made the promotion
of

realized

ourselves

ment,

sold to private interests. The in¬
dustrial climate had been much

led

tourism, commercial* de¬
velopment, and even agriculture,
and
today we have investments
in
luxury
hotels,
commercial
shopping
centers
and - poultry
farms.
Only recently have' we

people

make

realized, but which already repre-.
sents some 1,750 direct jobs, and is
responsible for a good share of
the
gross
expenditure
by
all,

will be translated into new rtVanu-/

monwealth

form

However, Foinento's operations,
surprising to many, extend : be¬
yond
the
quest
for
additional
manufacturing
capacity,
which

of other hotel

organization

the

physical plant whose
not yet been fully

has

mortgages, loans and minority to extend financial assistance to,
participation. That means several projects of an agricultural
capital
investment) per nature, such as numberless poultry
worker in our new factories now
and egg farms and several hydroamounts to some $9,600, a figure
ponie farming units. In addition,
roughly comparable ,to mainland we have promoted several indus-;
standards.
trial facilities in support of agri¬

our

sales

estate and machin¬

have

that

from outside and inside

budding

$1,000,000

Thus, today

stock

began to create

another

foster them.

ery,

change. So we changed. Our pro¬
gram today of inducing investors

are

invested

plants at some $345 million,
ol which only $45 million- is gov¬

began to negotiate for the sale of

improved tax ex¬
emption act had been enacted and
by 1950 all our factories had been

esti¬

these

ment.

much

have

investment

total

By 1947 the die was cast.
We
had obtained legislative approval
for our new industrial tax incen¬
tive act and we
simultaneously

factories provide some 36,000 new

begin to meet the needs of the
people.
It also became evident

organized

1948

concerns,

wise lies in mainland hands. These

vestment of

know-how

only

us.

government

the ob¬

the

was

ef¬

our

days with

left open

course

the late

endorsed

that

also

plants which we had built
during our first trial period. By

some

affiliated

hotel

enough;-restaurants,
supplementary facilities
necessary, too, and
we have

fields of

Post-1947

those

Puerto

Of these

either branch

are

lower

Rico than the U. S.

activities

Our

brought this rising tide of indus¬
try tp our tropic island.
Record of Achievement

without

negotiations

beginnings of

whichever fist is

use

fective

the

Union—Mis¬

problems, it has been

determination

fifteen years, we now
have, in round numbers, some 500
new factories operating in Puerto
Rico allowing for the rate of at¬

If there has been

matic in

our

result of the developments

the past

Increase

Naturally, additional
and other

troduction of several

program.

36,000.

which

goods between the conti¬

power

willing to carry redundant capac¬
opened: ity as a kind of insurance policy
for
the
economic
development
increased
to

employment

year ago.

rooms are not

would have

present stage of

our

nomic development.

last five years 423 factories

sparked the American Revolution

delays imposed by

World War II and

exemption

the fiscal and

are

relations

market

Three-Fold Program

ernment-owned

tax

keystone of

people of

objectivity.

born

was

years

the

child

industrial

buttresses

Luis
watch

words lest a score of
of association with him be

other

remembers

in Puerto Rican events in

14,800

improve¬

Quite

went up to

our

since

the first five year period to

for the second.

While

edly include Puerto Rico.

as
a

Rico

Puerto

that unless we had had
excellently managed and well
financed
public
corporation
to

our

started

second

become the power to create.
Some scholar will, I hope, some

voted

and has returned it to office

electric

and

opened and the available capacity
a

pay-off
of

case

Our tax exemption act and the
subsequent refinements thereof I
would call the keystone of our
economic
development program.

few

able to sustain

railroads

so,

the

has been always two steps
ahead of our needs, and as a re¬
sponsible public body it has been

commercial

power.

dents, their provision of adequate

trying to eke out a stantially on the willingness of
living from a million rather tired the State to forego taxes in order
and
generally ravaged acres of to achieve a higher standard ol
arable land.
Population, despite living for its people. Any case
a high mortality, was going up at
study of this nature will undoubt¬
Min¬

tne

unwilling

basic assump¬

were

per year.

years

evident

make

unable

are

choice—196 fac¬
during
this
five-year period and em¬
ployment jumped from 1,800 for
tories

five

interests

tions, about our sincerity and our
willingness to give financial aid

day

of 60,000

sagacity

the

The

many

confident about

ing population. In an island only
35 by 100 miles nearly two million

rate

the

under

started

first program.

our

private initiative.

—can

the

limited govern¬

use our

capital

later I

aegis of

program.

our

1942 to 1947, 19

years

were

of the

wisdom

change in policy in
factories

eloquently

of the

During the

decided to

of insufficient resources

\ people

words

underdeveloped country,
already developed
nobody but government can sup¬
ply adequate public services —
water supply, roaas, schools, Hos¬
pitals, adequate ports and airports,
and, in some cases where private
In any

speak

they would be frozen
until a plant had a number of
years of profitable experience, we

power

pretty much like a hopeless case
trying to
sustain a large and ever increas¬

than

ments where

Just

Revolution

Peaceful

and

States

United

Puerto Rico.

first

Tax exemption is the

all impor¬

tant

triggering device which as¬
sures that high profits before taxesare
retained by the corporation.
Profits before taxes still have to
be riiuch higher in Puerto Rico—
sometimes

two

higher—than

the

three

timcst

Continental

Volume

187

5722

Number

United States to induce investment

paid work in Puerto Rico or the

and

United States.

attract

increasing

ail

inflow

of risk capital.

During

the

Century,

19th

of the many good

relatively high returns on capital unemployment has remained very
of

of home is needed to in¬

duce

capital to venture into over¬

seas

investment.

makes allowance for this

fers the tax

exemption

and

of¬

ad¬

come;.

'We have not found this too

•

high

a;price to pay for our accelerated
rate of development—a rate which
few if any underdeveloped coun¬
tries in the world, including t*ose

•

despite

vestment,

and,

government

who

few

cutting

were

have

continued

stantially.
At

'■

the

one of Puerto
economists men¬

Caribbean,

leading
these

return

high

sales

and

caused

fact

remains

investment

and

quite
that

Puerto- Rico
pres¬

areas

conference

that

Yet the

stir.

outstripped other
at

percentages

rate

its

of development, due credit must be
given

to our willingness to assure

good

returns

investment,

as¬

satisfactory
management. Given a sound struc¬
ture of business law "profits," as

suming

Mr.

cou rse,'

Black

Eugene

"are

not

said,

recently
of

measure

■

One of the

tions

cisions

has been

locate
a

truly amazing variety

helpful services made available
through Fomento for get¬
ting them started and for keeping

to them

them

Our industrial

going.
include

ices

worker

serv¬

These

exceptional

the chief

among

services

reasons

are

that our

plant mortality rate is lower than
in the United States.
In 1956 the
United States
was

)!>Jant mortality

rate

9.4% of plants operating and
it was 6.8%.

Puerto Rico

from

rose

very

$1.70

1954

1957,

three

this

have

good

pro¬

ductivity records.

manufacturer
Puerto

that

claims

new

individual

within

man-hour

Most

the

goods

FROM

manufac¬

Both the

population and the la¬

young—average

Also

age

the natural rate

very

about

19.

of increase

is very

high for both—about 60,000
a year in population
and 20,000 a
year for the labor force.
*

On
our

top of this, the transition in
has caused drastic

economy

employment declines

in marginal

occupation# like subsistence farm¬

director of Bankers Bond

Sudler

Co.

THE

to. the states.
The market encompasses the East,
Gulf and West Coasts.
Since, for
many
ocean

rail

shipped

Continental Motors and its

sidiaries,

rates, many

Rico

31, 1957,

hinterland

for

bulk

the

•

built

and

rather

and

selection is given

"sunk

reduce

•

following termination of the strike

year,

for

highway program
unexpectedly slow in getting under

Although the $100 billion

Tests of the

other

mean?

than

reason

tion,

ity

the

for

Rico's

success

development.

economic

States
a

prosperous

uncommitted
rica

and

estimable

able

Puerto

point

Rico

America

value.

•

>:#
''

Because

almost

are

every

out

have left convinced
ful

that

collaboration with

1957

first continuous-flow fuel

the

1956

1955

1954

10,783,043

13,876,317

14,659,577

$125,116,269

$145,465,155

$182,061,693

23,073,000
$298,438,605

$3,583,301

$1,604,924

$2,502,287

$4,542,748

$6,023,812

$1.09

$0.49

$0.76

$1.38

$1.83

$0.35

$0.25

$0.70

$0.80

$64,454,365

$59,262,735

$56,115,700

$67,362,396

Current liabilities

$30,598,007

$28,304,638

$27,553,219

Net

$33,856,358

$30,958,097

$30,562,481

$35,667,076
$31,695,320

$104,895,088
$72,618,572
$32,276,516

shore

working copital

Ratio of current assets to
current

liabilities

2.1 to 1

1.9 to 1

1.4 to 1

$2,480,000

$2,760,000

$3,040,000

$3,320,000

$3,600,000

$16,223,841

$16,547,581

$17,219,239

$16,654,419

$14,085,545

$47,557,824

$45,129,523

$44,349,599

$44,157,312

$42,254,564

$13.68

$13.44

$13.38

S12J0

xvl-x-h-w*

Long-term debt
Property, plants ond equipment
Stockholders' equity
Book volue per common

and

shore

(net)

$14.41

power¬

country like the U. S. harbors

imperalistic designs towards a
small
countiy
freely associated

% ,/
;

- -v

1953

10,549,655

(horsepower)

Current assets

in¬

Beech J-35

$135,610,890

Dividends per

Puerto

see

added

production models in 1958. The former,
featuring geared propeller, powers the new
Cessna 175, due for introduction this Spring,
injection engine, powers the new
Bonanza, just announced.

Net earnings per common

underdeveloped

aircraft engines—the

and the latter, the

Net eornings

come

Continental

to the

1957 on two of the
Standard engines, de¬

Net sales

its programs.

Thousands have

new

small air-cooled Military

Engine output

country of the free world has sent
representatives to study the Com¬
monwealth and

Two

Ended Oct. 31

similar to
the problems of the underdevel¬
oped and often undecided-nations,
problems

expressly for

.STATISTICS.

IIP I
.

designed

Production started in late

Fiscal Years

United

nations of Asia, Af¬

Latin

series,

G0300-A and the 10470-G— are being

engine of modern design.

for this

Puerto

this troubled world, for the

•

If
en¬

continuing, and

after business in the

riding mower applications.

transporta¬
agricultural and industrial applications

##1

lightened self-interest, Americans
should feel a certain responsibil¬

heavy-duty

they forecast numerous military,

costs"

Motors' air-cooled industrial en¬

expanded riding mower field in 1958. It has
brought out a new 4-horsepower model in this

multi-fuel hypercyde engine men¬

tioned in the 1956 Report are

•

turbine air compressor, and controls.

Continental

gine division is going

Continental felt its stimulating effect in
1957, and it remains the promising source of
engine business in 1958.

veloped by Continental in

all

gas

way,

plant.

this

does

2 to August

normal profit return

Economies
What

and Engineering Cor¬

1957.

has been
'*

Underdeveloped

Lesson

requirements.

The Continental Aviation

MA-1A trailer-mounted starter for
passed all qualifying
tests and gone into production. Continental
Aviation and Engineering Corporation builds
the entire unit, consisting of trailer, Model 141

•

Planning

establishing

Motor

Assist¬

procedure.

easy

site

Industrial

Corporation experienced a

Wisconsin

good

many

dustrial facilities—for sale or rent

—already

1958 will be

poration

15, 1956. It produced a

industries,»the
of many modern in¬

For

availability

earnings per common share more than
1956 to $1.09 in

which closed it down from May

investment

the

Military engine production in

scheduled in keeping with the 1958 concept

large jet planes has now

by the entrepreneurs them¬

selves.

compared with $125,116,269 in

•

1957.

new

is also available
various
Fomento
We prefer, however, to

agencies.
made

Net

•

companies
through
the
see

doubled—from 49 cents in

assistance

production stage in 1958.

had net sales of

of defense

locations.
Financial

Additional models

fiscal 1956.

of Engineers, United States Army.
are expected to reach the

the Corps

consolidated sub¬

Motor Corporation and

$135,610,890 in the fiscal year ended October

mark'et can bo

from

than

cost

lower

Puerto

from

reached

Wisconsin

Gray Marine Motor Company,

products shipping rates over
are considerably lower than

ing, hand needlework and domes- with this great world power. But
these beyond the political effect, there
l'ow-rpaid jobs - have disappeared is undoubted advantage in show¬
since 1950 as people, especially the ing how social capitalism through
has been able to
younger ones, have left for better free initiative

die service;-.About 100,000 of

elected

.HIGHLIGHTS.

by stateside

Puerto Rico

are

Rico's

bor force of Puerto Rico are

F. L. Newburger, Jr.

Hough Adds

in¬

the

short time.

A. W.

(Special to The Financial Chronicle)

very

If I have

high.

Rican

operation workers
equaled the hourly output of their
mainland plant while rejects were
50% less. And he is comparing a
labor force with only 2 to 5 years
experience 1o a mainland labor
group averaging 10 to 20 years of
experience. Most managers agree
that where substandard perform¬
ance in a Puerto Rican operation
exists, it is almost without excep¬
tion the fault of poor management
or
supervision, or else that the
factory has been operating for a

Staats Co.

and

serve

equipment

Jackson

Webber,

and William R.

the
increasing proportion
plants has passed be¬
period

same

and 115% of U. S. mainland stand¬

electrical

Paine,

Curtis,

A recent survey indicates that
productivity per worker in a "wide
range of industries is between 85%

One

Hogle & Co.. 507 West
He was formerly

Street.

Division
and
by our office of Economic
Research in cooperation with our
Industrial
Development
Depart¬
ment.
We are really organized to

ards.

with J. A.

dustries has also been remarkably

our

ANGELES, Calif.—Robert

yond the".starting-up stage. Never¬
theless, the
rise in
output per

ance

Labor Productivity

have
take

Co.,
obtained for our 2451 Atlantic Boulevard.

achieved

PASADENA, Calif.—Roland M. & Mortgage Corporation of Phila¬
proportion to its size but quite Buffington has been added to the delphia.
in keeping with the spirit of its staff of A. Wayne Hough & Co.,
people.
Security Building-.
Two With Phillip Clark
The change in Puerto Rico goes
(Special to The Financial Chronicle)
■
well
beyond
the
economic.
In
A. M. Kidder Appoints
little more than ten years we have
DENVER, Colo. — Herman L.
POMPANO BEACH, Fla.—Wil¬ Batchelder and Paul Hardey have
changed
from
a
defeated and
liam
J. Eggleton, Jr., has been become associated with Phillip ,T.
hopeless community to a proud
appointed co-manager with Gar¬
Clark, 817
Seventeenth Street.
people. We are proud of what we land P. Wright of the local office
Both were previously with Amos
have done.
We are proud of the of A.
M.
Kidder
&
Inc.,

located in a
To the surprise of many, includ¬ 'variety of sites, makes the estab¬
ing some of our own people, our lishment of the average factory
workers have

cause

Newbur-

& Co., Philadelphia, has been

years.

fact that

of the

that

ger

all

increase of 69%.
Part of this phe¬
nomenal productivity increase is
attributable to the rapid expan¬
sion
of
more
highly capitalized
industries that was taking place

$2.88

recruitment,

training of workers and super¬
visors, installation of utilities, etc.
:

hour

Elected Director
Frank Newburger, Jr.,of

Cathcart has become affiliated

to say so

our Planning
manufacturing
results
industries "value added" per man-

firms

in their de¬
Puerto Rico

truly

can

done if the will is there.

for all

that

tured in

important considera¬

of management

what

example

It is estimated by

man's

morality, but of his efficiency."

D'.

Sixth

aircraft designs.

vanced

States.

(Special to The Financial Chronicle)

LOS

myself we should all be
proud of Puerto Rico and its role
ago' in this world—important out of

years

cane

United

With J. A. Hogle Co.

the

with

plicated electronic set-ups for ad¬

Board

recent economic conference

tioned

ent

ex¬

•

Rico's

has

tax

into

delved

point to adequate practical reme¬
dies and even fewer to a living

plant

ware

revenues
increase sub¬

have

derdevelopment; few however can

sugar cane

difficult

gratified
Sam

given Uncle
pride in us.
to

adaptability is considerable.

Workers

the

proud

are

mensely

diagnosis of the causes of un¬

able

field in which a chinawas
built, are now
making dinnerware sold through¬
with infinitely greater natural re¬ out the Mainland. Nimble fingers
sources, can match. Our profitable made deft by years of experience
firms average
19% on sales or in our traditional hapd needle¬
about 20% net return on the in¬ work now manufacture the com¬
emptions,

loss

problems of underdeveloped areas
and have com# up with reason¬

trade and

new

economists

great will¬

Our labor has shown

ingness to learn a
their

ditional inducement.

-'-T'

investors from

better answer to Karl
Marx's thread-bare theories. Many

urgent and why migration is
likely to continue for some years
to

find

will

You

point out

Rico

Puerto

without

freedom.

Asia,

ronment

eco¬

create

and

World

Western

the

under-developed coun¬ high—80 to 100,000 workers—15%
Latin America ajlcl of the labor force, compared with
Africa, required by European in¬ 5% or less in the United States.
vestors, was referred to as "colo¬ Moreover, with more than 700,000
nial exploitation."
There is, of young people enrolled in schools
course, a certain degree of truth and colleges and with the declines
in this charge—but the fact is that in agricultural and home-needle¬
we
are
now
employment
expected
to
realizing that a re¬ work
turn on investment higher than is continue, you can see why Puerto
obtainable in the familiar envi¬ Rico's need for more good jobs is
invested in

tries

obstacles

of our role in the
standard of living for our people world as an example to others.
rapidly approaching the level of We are proud of our relationship
the most developed countries of with the U. S. and we are im¬

jobs we have been creating,

new

insurmountable

overcome

nomic

spite

So,

the

(1067)

Financial Chronicle

The Commercial and

//'

Continental Motors Corporation
MUSKEGON, MICHIGAN

The Commercial and Financial Chronicle

(1068)

credit lightness and the 1955-56
period of renewed stringency. This

Continued jrom page

past
small

Thrift Institutions' Activities
In the
these

record $1.2 billion
compared with less than $700 mil¬
lion a year earlier.
Without this
net borrowing of half a
billion
dollars the association could not
have
extended
the
volume of
mortgage credit they did because
their
net inflow of
new
share
capital
As

result of these

heavy bor¬

system in the fall of
its member insti¬

FHLB

the

tutions "to follow a loan program

they

called upon to honor

them because

Similarly,

It was necessary for
of these associations to sell

the

Banks

Federal

meet

these

Even

though

the

before
ended, the associations, a
little frightened by 1955 develop¬
ments, pulled in their horns in
1956
seeking to regain greater
liquidity in the face of continued
tightening in the capital market.
Though the net inflow of savings
actually increased slightly in 1956
over
1955,
savings
and
Joans
sharply reduced their net mort¬
1955

and

large

acquired

volume

Savings

edly

different

companies

and

associations to
of capital

the mark¬

savings

life

loan

and

ease

strin¬

and

been the response of mutual

ings

banks.

These

sav¬

institutions

showed little change in their total
volume
of
net

mortgage

between 1950 and 1953

changed from
though there
relative

ease

was

their

flows

decline

following

however,

institutions

lenders

have

wide
been

fluctuations

characteristic
company

main their

institutions

large

part

1952

million in 1957.

uniqueness of the action of sav¬
ings banks lay in their aggressive
seeking of GI loans all through

home

from which

and

conventional

have

been

over

the

mortgages that

any

credit

were

expanding

the

other type

recent years
been tight they

funds

has

the

over

activity.
year

All

postwar

period savings and loans associa¬
tions
supplied more than onefourth

into

the funds which flowed

the

about

mortgage

much

market,
companies

life

and

savings banks and

ably

consider¬

than commercial banks.
detailing the nature of mort¬
gage flows from the main types
In

thrift

institutions

liberately
to

limited

the

have

de¬

discussion

home

mortgages, first because
the most important
and dynamic sector of the mort¬
gage market in the postwar period
this

has

which

been

fourths

life

have

and

mortgage
the

the

has

been

four-fifths

savings
has

insti¬

been

investments in the postwar period.
For savings banks
and life in¬

surance
and

companies,

two-thirds

three-fourth

respectively

their

postwar
mortgage
have been on the security
to

four

should
ever,

family
not

flows

properties.

overlooked,

one

how¬

that the latter two types of

institutions

life

from

mortgages—94% of their mortgage

smaller

period

1957

mortgages.
Savings
and
associations, of course, are
limited almost entirely to home

Conventional

1951-52

mortgages

and

loan

both

into

1945

home

lending activity

$120 billion which

security of homes, and of

flow

tutions,

Changes in FHA

lending

the

peak it dropped
less than $500

years.

flowed

between
on

1953, then
$1.1 billion

considerably

of the

funds

are

for

the largest

the

sources

housing

field

These

both

short and

the

front.

factors

are

these

loans

from

bor¬

My concern is that if the
World

for

program

is terminated

War

II *

contin¬

political

liberalized

basic

for the VA program. In any event,
it is to be hoped that Federally

substitute

long run outlook.
forecasting is always underwritten mortgage rates wiU
hazardous; with respect to hous¬ be permitted greater flexibility.
ing and mortgage finance it is For, after all, flexible,, rates on
especially so because this is a real estate mortgages are: just as
Economic

field

influenced

Well

by political as essential to the proper functioning
economic develop¬ of capital markets as are flexible
ments and I, at least, have not yields'; j on
corporate
securities.
found a way to predict what will Mortgage. 1 .borrowers
should?" be
be forthcoming from Federal ad¬ abl# foco'mphfe voh; the
$arrie

tpf m$

ministrators

i; non-mortgage
borrowers
the hatiOrx'a. available •

legislators.

and

One

for

important consequence of
sayings^ ■>
Congressional action, which has
rThe^likelih^dr^^nf expanded
already exerted a great influence FHA program over the years- in.
on
mortgage markets has been the possible absence of VA loans
the virtual disappearance of the raises
questions with respect to
.

VA loan.

The VA-guarantee pro¬

which

gram,
about

has

accounted

one-fourth

postwar

flow

the

for

entire

the

and

scheduled

ably to

mortgages, is
expire this summer

for World War II
if extended, and

tinues

effect

veterans.

though

for

Even

con¬

Korean

vet¬

erans

funds

FHA-insured

in this area, also. Sav¬
ings and Joan associations, 011 the
other hand, have had an aversion

stantially

kets.
The volatility of
mortgage
flows which has characterized the

activity
recent

thrift

years,

surance

institutions

especially

companies,

has

life

in¬

mortgages,

probably, react favor¬
expanded and liberal¬
ized program in the future. There
is every reason to expect that sav¬
ings banks will"expand their in¬
an

vestments

further.
Clearly, the
future of the VA loan
program is

institutions.

would

any case, it will not be
effective program at the 41/2%
rate until interest rates fall sub¬

thrift

life insurance companies
large .portion of their

program

funds placed

mortgage

reaction

Prior to the advent of the VA loan

and for more than two-fifth of the
l'Jow into residential

FHA

loans

ception
ance

detail

which

the

mortgage
24

program

reasons

since

ever

this

years

there is

in¬

insur¬
for

ago

need to

here.

Currently out of a
total savings and loan mortgage
portfolio of $40 billion, Only $1.6
billion

FHA-insured.

are

reflected

Savings and loans have been, as I
chiefly developments in the VA, indicated
earlier
however,
an
mortgage sector. If this program important factor in the VA loan
is eliminated from the
mortgage market holding almost as large a
scene

can

in the

from

will

answer

expect

reduction

volatility of mortgage flows
institutional investors? The
depend

Federal

long-standing FHA

and

the

nature

program,

changes

conventional loan practices.
Fixed

versus

Apart

front

Market

other

Rates

changes,

loan

1957

interesting question to pon¬
is" whether in the
years ahead the savings and loan'
industry'as a whole will? break
down thei r ' tradition of' hostility
FHA

loans

the

gap

the

event

Fed¬

erally insured mortgages, then

may expect a continued volatile
flow of mortgage funds in the
years

ahead.

outlined

The record, as I have
here, is clear in indi¬

cating that the influence of mone¬
tary policy on real estate markets

maintain

tradi¬

tions and attempt to expand their
loan' business to fill

inflexible

rates

end

conventional

maintaining relatively

the

L Assns. and FHA Loans

the Federal Government continues
its policy of

interest

der, therefore,

portfolio

life companies and savings
:

banks.

stituted, including modification of
the

the nature
be sub¬

programs

which
the

would
VA

left

loan

program

expires as scheduled. Long stand¬
ing traditions take time to break
down even when original circum¬
stances giving rise to these tradi¬
tions change.
My guess is that
the savings and loan associations
will

reluctant

embrace

the

has been intensified

by a structure FHA program for some time. They
of
inflexible
mortgage
interest have already, as you know, piorates.
As
monetary policy and posed a new program for insuring
capital
market
conditions
have conventional mortgage loans and
alternately tightened and eased, discussions continue of liberalizing
there has been an ebb and flow of provisions under which conven¬
VA and FHA mortgage funds co¬ tional loans may be made, includ¬
inciding
with
diminishing
and ing higher loan-value ratios and
increasing spreads between fixed longer maturities.

Federally
interest

underwritten

rates

and

contract

flexible

bond

Upon

the

success

such

pro¬

these, I feel, rests the
savings and loans to
mortgage
funds,
on
the
other continue effectively to invest the
hand, has fluctuated narrowly as bulk of their funds in conven¬
yields.

rates

The flow of conventional

have

been

free to adjust to

grams

ability

tional mortgage loans.

Should the
for a
program of insuring the
top 20% of loans (011 which inter¬

changing financial conditions. counter
With

ble

overall structure of flexi¬

rates
to

there

would

little

that the impact
changes in monetary policy on
mortgage markets would be any
greater than on other sectors of
reason

expect

the

capital

market, though

there

might be more lag in adjusting to
change because of the general
stickiness of mortgage rates. With
a

structure of free rates, volatility

mortgage

much

than of
It

flow

is,

markets
conditions

will

reflect

of demand

supply.
of

course,

true

that

the

of FHA mortgage funds in
multifamily mortgage market, the past decade has been much
with savings banks the leading less volatile than of VA funds,
lender by far; in the nonresiden¬ notwithstanding
almost
equally

relatively small

for

factors, including the flow ues ineffective because of subsavings, capital market yields, market rates,, there will be a
monetary policy on the eco¬ transference of volatility to the
nomic front,
and administrative FHA program, particularly if the
and
legislative
actions
in
the latter
program
is
increasingly

sharply curtailing their VA

all,

consideration

mand

many

some

when

companies, in fact, increased dur¬
ing

obscure

market.-

tailed their VA loan

sharply expanding and

precipitously

willingness to invest in Federally
underwritten mortgages, particu¬
larly those guaranteed
by the
Veterans Administration. The

Last year, of course, the
savings and loans along with all
other major lenders sharply cur¬

subsequently to
1954, further to $1.4 billion in

1955

the'

volatility
in
mortgage
lending
activity reflected changes in their

allowed

involves

mar¬

flows.

participation

rose

For all

not

because the thrift in¬
stitutions have played their major
role in this market. About three-

million

the

entirely appropriate,

mortgage

were

na¬

ity it is

necessary to look behind
overall totals into the main

mortgage

their flow of
mortgages together
with
savings
banks
while
life
companies and commercial banks

mortgage markets in the past
years, have also reflected in the

mortgage

mortgage market sectors.

gov-

market
reactions to thrift institutions and
their implication for future activ¬

varying

associations

home

of .lender and in

the

Mortgage Market
loan

appraisal of the future

of considerable
importance to the
future behavior of mortgage mar¬

and second,

insurance

understand the full meaning

the

been

years of the postwar decade,
in fact, they placed more funds in

compared

contracting VA mortgage market
activity.
For example, the net
acquisition of VA loans by life
companies dropped sharply from
$1.1 billion in 1951 to about $200

and in

has

emphasis of the role of

home

markets

mortgage

The

lowest level in the past five
years.
of

years

early

Conventional Mortgage Trend

thrift

market

significant contributors to the VA

areas
savings

lenders.

slight decline in 1956,
these
institutions experienced a
more
precipitous decline in their
mortgage
lending activity than
other

con¬

the fact that they have also been

ernrnent-underwritten mortgage
markets, as well as large local

institutions in the 1954-55 pe¬
was true also of the
savings
In the past year,

most

located.

arc

mortgage

tional

available

riod

banks.

where

banks have become important

longterm funds.
The sharp
rise in
mortgage lending characteristic of
all

two-thirds.

and

snould

with other institutional investors.
Since 1950, however, the savings

markets

tightness,

some

conventional

of-state

of the past few years has

gency

home

this

into

three

past

VA Home

amending of most state statutes
permitting the acquisition of outFederally underwritten
mortgages. Prior to this legisla¬
tion,
savings
banks
had
been
playing a steadily decreasing role

alternating periods

market

funds

While

increasingly large discounts
were required to bring yields into
competitive position with other
capital market securities.
In retrospect, I think it a fair
observation that perhaps the most
single significant development in¬
fluencing savings banks' postwar
mortgage o p e r a t i o n s was the

Banks

reactions

and

the
close

stringency reflected the fact
that many savings banks had al¬
ready built up their VA mortgage
portfolios to desired levels and

reduced inflow of savings.

Mutual

large

during the postwar

loans

contrast,
the decline
in
Gl
loan
activity
during the 1956-57 period of

that

Somewhere between

East

banks

All of this also without
any addi¬
tional
not,
borrowing from the

conventional

than half of the total

flow

i|t the capital surplus

the

mortgage flows at the 1956 level.

with

stitute

lender

credit

Banks

loans has been

by local markets, and that effec¬
yields on GI loans alter dis¬
counts were quite favorable com¬
pared to local investments avail¬

capital. market than in
1956* and sharp declines in mort¬
gage lending by other financial
institutions, m a i n t a j n e d their

Loan

flow

savings

tighter

Home

lute

steadily

of funds

many large banks had more funds
to invest than could be absorbed

able

Having improved their liquidity
ratios somewhat, the associations
in 1957 in the face of an even

Federal

their

mortgage funds from savings and

tive

Governments.

reduced

have

into Federally un¬
mortgages bearing in¬
flexible rates. Moreover, the abso¬

acquired the right to
boundaries, that

recently

by $200
relatively

flow

lend beyond state

the Home Loan Bank

million

acquired

lenders

derwritten

and

volume

tended

after 1951, that they had then only

billion
reduced their indebtedness

dollars,
to

increasing

thus

other

ing to understand why the savings

lending by about $1

gage

1.954

is of interest to remember, in try¬

banks industry

their relatively small reduc¬

period of credit
Savings
and
loans
to capture a
larger share of the home mortgage
market during periods of rising
interest
rates
and
yields when

declines in
FHA and conventional lending. It
flows

and

have

mortgage activity, while
stability of total mort¬
flows in the 1951-58 period

mortgage

gage

steadily increasing mort¬
acti vity in the 1.951-53 period

stringency.

reflected the nearly offsetting ef¬
fects of sharply increasing VA

eased

FHLB

role

home

tion in the 1956-57

years

during

their specialized

main

conventional

for their

gage

earlier

borrowing

en¬

the relative

slandbys.
restrictions

preceding

expansion

sharp

Loan

Home

the

mortgage
This .specialization
in
having flexible interest
rates has accounted in large part

and 1.95a reflected the acceleration

mortgage
loans
from
portfolio,
borrow from commercial banks or
from

almost;

mortgage

lenders.

Beyond State Boundaries

the market failed to ease later as

anticipated.
some

accounted

which

home

loans

tirely for the sharp drop in mort¬
gage flows from savings banks in
1957; conventional and FI1A mort¬
gage flows changed only slightly.

unexpectedly

were

in
as

mortgage sector and
capital market sectors. It
the decline in VA lending, in

fact

loan repayments."
Some associations had also gone
in
heavily for, standby commit¬
ments
and
were
caught
short

conventional

mortgage markets and reaction
changes in capital market con¬
ditions, described earlier, reflect

mortgage yields were clearly
of balance with those in the

was

of savings and

when

in other

which will meet loan demands out

and

Of course, when one talks about

non-insured

cautioned

1.955

compensate for declines in Feder¬
ally underwritten activity during
periods of rising yields in capital
markets.
I

out

minds of investors and in the de¬

veterans

The main contraction

rowings and sharp loan expansion

rates
until
recently.
varying flows have reflected
important differences however, in
the quality of these loans in the

ket

over

until last year when

inflexible

These

rowers.

market, one automatically thinks
of savings and loan associations.
Participation of these institutions

occur

Factors in Any Outlook
An

Thursday, March 6, 1958

ket for mortgages and of the role
of thrift institutions in that mar¬

the

did not

role.

participa¬
mortgage markets, and
hold correspondent organizations
together, tend to increase their
conventional
mortgage flows to

their new
position of leadership in this mar¬
ket was maintained through sub¬
sequent years of expansion and

contraction.

mortgage credit extensions.

cant

companies in

half of the total net flow of funds

into VA mortgages and

their net

than

less

was

for

accounted

had

banks

tial
mortgage market, however,
only life companies play a signifi¬

to maintain their

tion

period of credit strin¬
gency, while life insurance com¬
panies
and
commercial
banks
were
sharply curtailing such
activity.
By
1953
the
savings

been only a
The suggestion

decline.

order

the 1951-53

institutions

reserve

amounted to

has

clearly is that life

Ploitgage Market

late summer advances

lies and by

from

there

year

proposals

FHA

similar

est

would

rates

subject
acted

FHA

then

free,
review)

believe

difficult for

though
be en¬

it would

savings and loans to

ignore such

a program. Moreover,
general liberalization of con¬
mortgage
lending
is
permitted by
state
or
Federal
statutes, the other types of thrift
institutions might provide increas¬
ing competition for savings and
loans in this market, particularly
if a policy of inflexible interest
rates is maintained on Federally

ventional

insured loans.
In

any

likelihood

event, there is
that

the

strong

structure

Volume

Number

187

residential mortgage markets

will

undergo important changes in the

ahead.
The nature of the
market will, in the final analysis,
be determined as much
by the

years

reaction
in loan

borrowers

terms

any

changes

The

writing of term policies will
an important influence on
1958, but
competition from commercial
banks for sayings accounts may
lessen as interest rates generally

other single

factor.

Mortgage Companies
y

A change in the nature of mort¬

gage

lending by thrift institutions

will,

of course, have important
effects on other institutions

side

My study of mort¬
companies, soon to be pub¬
lished by the National Bureau of
Economic Research, showed con¬

clusively that the extraordinary
growth
of
mortgage
companies
has been directly related to the
introduction
and
expansion
of
,

insurance

and

guaranty programs. Greater em¬
phasis on conventional mortgage
loans by

small.

thrift
institutions may supplement their
savings
inflow
by
borrowing,
or
by sale of Governments in
order to
take
advantage
of
a
favorable
mortgage
market.
Admittedly the degree of liquid¬
ity
which
can
be
achieved
from
generally reduced govern¬
ment bond portfolios is small com¬
pared with the immediate postwar
years but for savings banks and
life insurance companies net sales
have not been inconsequential in
recent years. In the past two years
liquidation of Treasury obliga¬
tions has equalled 29% of the de¬
posit increase at savings banks

investing institutions will
clearly influence the operations of
mortgage companies. Only life in¬
surance
companies
and mutual
savings
banks
deal extensively
with mortgage companies and the
banks are subject to geographic and
restrictions

lending activities. The dependence
companies

surance

13%

the

Moreover,

the

increase

net

their conventional assets for life insurance companies.

Of mortgage companies on

life in¬

would

un¬

doubtedly increase, therefore, with
an
increased proportion of con¬

and loan associations,
which in the past two years have
reduced their borrowing from the

Savings

Federal Home Loan Banks to well
below

the

1955

record

level may

It is not likely again feel free to borrow in 1958.
Altogether while the flow of
that
mortgage companies
could
may
decline further in
find increased outlets for conven¬ savings
1958,
total long-term funds avail¬
tional .loans
among
commercial
and savings and loan asso¬

able to the thrift institutions may
little

ciations which are typically com¬

petitive originators with, rather
than
purchasers of, loans from
mortgage companies. Further¬
if savings and loans are
more,
bent on expanding the proportion
of their own conventional busi¬

greater

different

than

actually

1957.

that can be said with
certainty about the future course
of events in mortgage markets is
that if the thrift institutions and
others continue to rely as heavily
One thing

consumer

loans reduced, commer¬

cial banks will be in a better

expect the rate of increase in net
mortgage flows from life com¬
panies to be smaller than from
either savings banks
or savings
and loan associations.

The longer

lag in the response of life com¬
on Federal programs as they have
panies to changed mortgage mar¬
in the past, they will be vulner¬
ket conditions reflects, of course,
able
to
unpredictable statutory
the basic influence of the mortgage
and administrative Changes.
The
commitment process.
Their cur¬
alternative to such uncertainties
rent volume of mortgage commit¬
would be to accept the uncertain¬
ments is large relative to premium
ties of the market place and bear
inflows
and funds available for
the risk of error in judgment and
new commitments are not plenti¬
economic change with minimum
ful.
I would expect such com¬
reliance on Federal support, direct
mitments

indirect.

turn

after mid-year.

Turning,

specifically,

to acquisitions

for

The

issue,

shorter

vestments

several

months

run

from

thrift institutions

surance
companies during
1958,
question of therefore, may be expected to be
on Federally rather
small.
If a condition of
mortgages which I con¬ credit ease continues through
basic to longer run de¬ 1958 and into 1959, we may expect

encouraged.
The
flexible interest rates
is

insured
sider

will be of much less a substantially greater increase in
consequence in 1958 because com¬ life company mortgage flows in
petitive long-term
bond yields the latter year than inflows from
which have been declining recent¬ savings
banks and savings and
ly may be expected to stabilize or loan associations. For 1958, how¬
decline further.
The demand for ever, I would expect the reverse
funds by corporations will be less to prevail. A rough guess on total
in 1958 than in 1957 and, while volume would place the net in¬
demands for financing by state crease in mortgage flows from all
and local governments will con¬ three types of savings institutions
tinue large, the thrift institutions at
from
$81/4
to
$8^2
billion,
are only a minor source of funds
compared with less than $8 billion
in this market. In this setting the in 1957, a rise of from 5 to 8%.
5V4% FHA-insured loan, together If similar increases should become
with
permitted
discounts, will available from other types of
velopments

increasingly attractive to lenders, there would probably be
even
to the a much better balance between
point where discounts "may dis¬ supply and demand for mortgage
appear

institutions,

thrift

funds in 1958 than in 1957.

appear.

Slow-Down

this more favorable
is the expected
decline in the flow of

further

part,

Ellis, Holyoke Adds
(Special to The Financial Chronicle)

of the money

tion has
chases

competition from commer¬
cial banks paying new high in¬
terest rates for time deposits, and
the continued trend in the
insurance
business towards

in part

premium paying term

f*or both individuals and

low

been well received

policies
groups.

White, Weld Adds
(Special to The Financial Chronicle)

BOSTON, Mass.—Luke V.
wood is now with White,

Co., Ill Devonshire

Lock-

Weld &

Street.

has

and there

Baker, Jr., Vice Pres¬

the '

been substantial

hattan Bank in
New York, has

pur¬

by the commercial banks in spite of the beliefs that the

maturity is a bit on the long side as far as these institutions'
ownership of it is concerned. It had been expected that the Treas¬
would offer the deposit banks short-term securities in order
their liquid holdings.

ury

for them to build up

New Short-Term

term

issues

named

been

Treasurer and

Director

the New York

Convention
Visitors

and

Bureau,

suc-

ceedingJoseph
P. Binns, Vice

Offering Indicated

and longrefunding and new money raising purposes, has
not added to the supply of
short-term obligations.
This has
brought down the yield on the most liquid obligations., and is
getting the market ready for a sizable short-term new money
raising operation by the Treasury in the near future. Declining
short-term rates have in the past resulted in lower long-term
the Treasury by

However,

offering intermediate

for

President

Hotels

Hilton

Corporation,
is

who

J. Stewart

now

President

and

Chairman

the

The

new

%
ha? been well bought despite the

Treasury bond

opinions among not a few money market specialists that a shorterterm obligation would have been more to the liking of the commerical

banks.

deposit institutions, to be sure, went in for

The

available for the purchase
the modest cut in reserve
requirements. Also, the tax and loan account of the commercial
banks are being used to make payment for subscriptions to the
3s of 1966, and this gives some thing additional in the way of
appeal to the intermediate term Treasury bond.

organiza¬

civic

supervisory
de¬

Mr. Baker is senior

Money Supply Enlarged

Baker, Jr.

tion.

rates.

officer

the

metropolitan

partment of the Chase Manhattan
Bank, which manages the bank's
New York City business
at its
head
office
and
the
domestic
branches.

the 1956 bond, since funds were made
of Government securities by means of

In the amount that these new bonds were

mercial banks there
was

addition

was

the

taken by the com¬

creation of deposits which means there

money

supply.

This is

desirable

very

development at this stage of the economy since some reflation is
what is needed to overcome the decline which is now going on
Although public and private pension funds, savings banks as
as certain small insurance companies and charitable organ¬

well

izations, along with Government agency accounts, made purchases
of the 3s of 8/15/66, there was no real investment appeal in this
intermediate term Treasury bond for this type of buyer because

competitive with selected corporate and tax-free
;'%■.
/
/:<%/■•;/W'c/ /:•/'

the yield was not
bonds.

Issue Taken

by Investors

the opinion

not

was

there

was

line with expectations, it is be¬
commitments in the new money

above $10,000 which was in

25%

lieved

that

bulk

the

these

raising bond were made by those which could be
as

characterized

investors.
It

seems

though the opinions that money

rates will con¬

down, probably through a further decrease in the
rate, and that money and credit will be more plentiful,
most likely by another decrease in reserve requirements, helped
to put the 3s of 1966 into strong hands.
j
tinue

discount

Higher Yields

probably
the first of that month, there will be an opportunity for the money
market to digest the longer-term issues which were brought into
of

and sometime in April,

picture by the refunding and new money raising operations
Treasury. It is reported that there is some profit-taking

the

proceeds from these sales
certificates. However, it
appears to be the belief of many money market specialists that
most of the speculative positions in this bond will not be sold until
the six months holding period is over.
This will put profits on
going
being

•

been

President in charge

De¬

Mortgage Loan

New

the

has

Henderson

Paul

elected Vice

partment of Institutional Securi¬

announced
President. Organized and wholly owned by
Corporation, it

ties

was

the mutual savings banks

of New

State, Institutional Securi¬
Corporation performs various
services for savings banks includ¬

York
ties

ing mortgage servicing, appraisal
and

inspection

and

debenture

service.

Henderson will retain

which

ary,

<■

•

the

Secretary^ to
elected in Febru¬

Assistant

office

was

.1947.

Logan Adds to Staff
(Special to The Financial Chronicle)

PASADENA, Calif.—William L.

Davis, Nolan H. Gruenwald, David
P. Hilliard, Duane H. Robinson,
Joseph H. Schettler, and James A.
Strunk have been added to the
staff of J. Logan &

Co., 721 East

Union Street.

With Rogers Co.

3Vzs of 1990 Expected

In the interim between now

the

of Institutional Sees.

Mr.

of most money market followers that there
nearly as much speculative buying in the 3% of 1966
in the 31/2% issue due 1990. The intermediate-term
3% bond does not offer the same appreciation possibilities as were
or
are
available in the long-term 3y?%
bond.
Although the
allotments which were made to subscribers of the new 3s were
It is

•

P. G. Henderson V.-P.

by Clifford C. Boyd,

in business.

in the 3y2S of 1990, with the
reinvested in Treasury bills or

(Special to The Financial Chronicle)

FT.

COLLINS, Colo.

—

Joe B.

Meyer has been added to the staff
of
Rogers
and
Company,
155
North College.
He was formerly
with Tower Securities Co.

capital gains basis.

Also, there is practically no fear yet among those who
known as "not too long" holders of the 3y>% Treasury bond,

that

eventually go to new high levels.

the

u. s. Government
'

and

FEDERAL AGENCY

Another Cut in Bank Reserves
With

Specialists in

are

prices of this obligation will decline very much in the intervening
months. Prospects of lower interest rates and more ample credit
makes these owners of the 3y2S of 1990 feel that quotations will

debt limit pushed up

„

Envisaged

by $5 billion, it is expected

will be in the market soon for a sizable
of money. It should be large enough so that there will be
decrease in reserve requirements of the member banks

that the Treasury

SECURITIES

amount
another
of the

system. This new money borrowing will have to go mainly to the
deposit institutions and that should mean short-term liquid obliga¬
tions. It ought to help the market action of the longer-term issues.

Manager

TAMPA, Fla—Bernard Prescott
is now manager of the local office
of
A.
M.
Kidder
&
Co.,
Inc.,

thrift

in part

life

market is fitting the new money raising
bond due Aug. 15, 1966, into the broad pattern
market as a whole. This intermediate-term obliga¬

LINCOLN, Neb.—George S. Kil- 506 Florida Avenue.

the three main types patrick has been added to the staff
institutions.
The 1957 of Ellis, Holyoke & Co., 134 North
slowdown in savings represented Thirteenth Street.

savings

Now Tampa

Savings Flow

Offsetting
outlook

ident

Government

the

significantly

In the meantime

outlook, it seems ahead
Will
reflect the reduced
clear
that
the
capital
market volume
of
commitments
made
framework in 1958 will be one in during 1957. Any increase in total
which the flow of mortgage in¬
mortgage acquisitions of life in¬
the

Of N. Y. Visitors Bureau

Governments

J. Stewart

Moreover,

with the demand for business and

posi¬
tion to provide construction and
interim financing as a supplement
to long-term financing from sav¬
ness, mortgage companies would
face an important barrier in their ings institutions.
If previous patterns of investor
efforts to enter this lending area
behavior prevail then
we
may
on any scale.

By JOHN T. CHIPPENDALE, JR.

ventional lending.

banks

Reporter

Chase Man¬

In any event, the flow of liquid
savings generally tends to change
slowly from year to year and any
decline accompanying a deepening
of
the
recessionary
tendencies
which
are
now
evident
will

gage

mortgage

Our

decline.

J. S. Baker Treasurer

still be

life insurance savings in

in the market.

Federal

(1069)

Chronicle

The Commercial and Financial

5722

Merrill

R. D. O'Brien

Lynch Adds

(Special to The Financial

Chronicle)

111. — Charles
T.
Scott, Jr., Julian M. Hawes, and
CHICAGO,

Wilbur

Kanak

Building.

now

con¬

Opens

FOREST, 111.—Roy D.
O'Brien is conducting a securities
business
West

from

Lake

offices

Street.

at
was

& Trust Co.

Atjbrey G. Lanston
8c Co.
INCORPORATED

20 P.ROAD STREET

(Special to The Financial Chronicle)

RIVER

7727
for¬

Lynch, Pierce,
Smith, Board of Trade merly with the River Forest Bank

nected with Merrill
Fenner

are

Erwin Smith Opens
(Special to the financial chronicle)
ROCKFORD, 111.—Erwin Smith
is engaging in securities business
from offices on Guilford Road.

NEW YORK

☆

CI1ICACO

☆

BOSTON

The Commercial and Financial Chronicle

(1070)

Continued

Bank and Insurance Stocks

from first page

—

Thursday, March 6, 1958

spending 011 housing construction
was slowly rising. In
fact, the rise
began about June, 1957. During

Current Outlook for Business

the

early stages

there

of the

And Industrial Relations

Bank Stocks

opinion that 1957 will have turned
out

best earnings

the

year

Board quarter of 1957.

steel

ment,

motor car pro¬

scrap,

duction, etc., the current business
recession is not one to be merely

off.

shrugged
•

the

Yet,

New

York "Times" for Feb. 28 we read

that business loans for the

city

increased

with

compared

1950

week

same

crease

from 167 in December,
1956, to 196*2 in August. There was

% There'is general feeling that the

virtually

The

in¬

for this group of banks

this

year.

told

also

are

article

that

the

same

enjoying

good demand

are

rates

tracted

trimmed continue at the
which

they

that

were

con¬

though the
loans has been

even

prime rate for
lowered, the banks will continue
for

time

some

rates

the

receive

the

great bulk

old

their

loans.
In

the

meantime,

loss

any

loan volume will for the

greater

The
pattern may
using Bankers Trust,
for

each

seen

fairly

rep¬

seven

through

years

1956, the percentage change from
the year before in both U. S. Gov¬
ernment

be
a

The table shows

case.

holdings and in loans and

discounts:
% change
U. S. Gov't
:

Bonds

r54.__

22.2

0.4

—

1.1

1955-_

—20.8

195G_2-.1_h-

—

Thus,

for

9.2
2.4

that

able

will

banks

the

see

the

freeing of enough additional funds

this

give

them

The Antecedents of the
Current Recession

The lull which

preceded the re¬
displayed a number of
interesting characteristics which
cession

The past

prices and high yields.

few months have witnessed

cided

bond

better in

turn for the

de¬

prices, and this is working to the
benefit of bank portfolios.

trade

reaching

levels;

investment

record
less

breaking

and

equip¬
ment.
Let us look briefly at these
aspects of the lull.

(1) New orders of manufactur¬
New orders of manufacturers

ers.

were falling during the lull.
They
dropped from $29.2 billion in the
last quarter of 3956 to $27.1 bil¬

lion in the third quarter, just be¬
fore the recession.
The drop in

Finally, the bank stocks are new orders was concentrated in
giving an excellent account. Prices durable goods manufacturing.
are buoyant, and there appears to
(2) Unfilled orders of manufac¬
be good defensive buying, much turers. Unfilled orders of manu¬
of it

institutional.

facturers

were also dropping from
high of $64.2 billion in Decem¬

The

Bank

Electronics

Credit

Associates

ber, 1956, to $57.8 billion in Au¬
gust, 1957. Nearly all of this drop
was

in durable goods manufactur¬

ing.

(3)

Inventories.

There

was

net

ings

dinner

the first quarter of 1957, and
net increase in inventories in

jettisoned to enable the

were

banks

supply funds for loans,
because

course

tially

higher

loans

than

period
this

substan¬

return

being received on
Indeed,
one
may

was

how

ness

rate

investments.
wonder

of the

much

bond

prices

about

came

the

weak¬

during

this

result of

selling.

But

introduced

earnings
Federal

element

new

that

will

favorably.
Reserve

has

been

affect

bank

The

Board

reducing reserve requirements of
large New York (and Chi¬

cago) banks will add substantially
to invested
reserve

assets.

For

some

requirement

New

York

March

before

Hardie

Shepard

Payson

& Trask will be speaker. His topic
will be "Venture Capital Policy in
the Electronics Industry."

time

for the

Street.

with

previously

was

Stifel, Nicolaus & Co., Inc.

NATIONAL
GRINDLAYS

BANK

Ahna/gamating. National

than the normal rate.

inventories

Members New

<20

Fork

Stock

American

Stock

BROADWAY.
Telephone:
Bell

'L.

NEW

Exchange
Exchange

1954.

and

There

distribution of
were

was

Dept.)

aden

somauland

year

plete, the total of planned

expen¬

ditures increased.
In

spite

orders

were

duction

that

new

falling and that
durable
goods

the

pro¬

fact

was

dropping, the demand for credit
was
rising (though at a slower
rate than the year before), in¬

mal¬

—

re¬

successful in reducing

ratio

inventories

durable
from

increased

goods

2.15

August,
which
far

1957.

one

much

monthly
rapidly in
manufacturing
in January to 2.40 in

orders

new

Incidentally,

rarely

the
orders,

new

sees

significant

quoted, is
than

publicized inventory

the

sales

creased

the

part

the

lull

tries

These

durable

having

were

troubles

rising

costs

goods indus¬

their

troubles.

aggravated

were

by cuts and stretchouts in defense
procurement contracts and by the

overdoing
the

Federal

restraint

credit
Reserve.

straint had been

Credit

re¬

useful in check¬

ing the excessive accumulation of
inventories late in 1956, but the
stiffening of credit restraint con¬

tinued

after

even

the

middle

appreciable amount
of slack had developed in manu¬
facturing industries, particularly
an

durable

goods manufacturing.2

III.

The Early Phases of the

manufacturing

expression "inventory-sales
ratio," thoueh technically correct, is m;s-

kenya,

uganda,

protectorate,

northern and southern
rhodesia.

leading.
ing

Equally correct-but

would

the

expression

not mislpad-

"inventory-

The

third

the

lion

manifested

quarter

1957

was

This

change alone
meant drop in production at the
rate of $5.7 billion a year and ac¬
counted for most of the $7.4 bil¬
a

lion

year.

annual rate of
the third and
1957. New or¬
ders
of
manufacturers
dropped
from
$27.3 billion hi August to
$25.2 billion in December, and un¬
drop

the

between

output

fourth quarters of

filled

decreased

orders

the

period from $57.8 billion to

same

$51.0 billion.
Throughout
'

2 An

'in

the

excellent

dominant

view

contraction
fourth

statement

the

quarter,
Ihe

conditi-n

pre¬
t

in the Federa' R^se-v "-''cm
w*s
presented
by
William
McChesney
Martin, Jr. before the Committee on Fi¬
nance
of the U. S. Senate on Aug. 13, 14,
IS, and 19. "Investigation of the Finan¬

Hearings
nanre-,

cial

Condition

judging

orders

are

sometimes cancelled,

Mr.

how

before

the

United

Committee

States,"
on

8S*h Congress, F'rst S ss'on,

sier«if'—**♦
are

most

com-'-

new

large in the fourth quar¬

ter of 1957

plans

in the third quarter.

for

cutting this 'type of
spending by business were being
announced.

The second McGrawHill survey of investment
expen¬
ditures planned for 1958, based
returns from companies in
late September and
early October
announced
in
"Busines;?
Week" on Nov.
9, showed that
business
firms
at
that
.time
upon

and

planned to spend
lion

less

about

$2.3

bil¬

plant and equipment
1958 than they had
reported as
expecting to spend in the survey
on

;

March

and April.
This was 'a
drop of 6% in expected spell¬
ings for 3958. It was also a drop

of about 5.2% in plant and
equip¬
ment below .the fourth
quarter of
1957.

The contraction of business

aggravated

cuts

contract awards
in

the

first

billion

from

half

billion

$9.9

1957

the second

was

defense
to

$7.9

half of 1957

and

by the continuation of the
stiff credit restraint policy of the
Federal Reserve for about three
months after the downturn.
credit
rate

restraint

3.660%.

the bill rate

IV.

pushed

Oct. 14 to

Even

Stiff

the

bill

24 year

high

late

Nov.

3.473.

was

The Limited Nature of the
Recession

The

recession

confined to

pretty largely

limited

part of the

economy—production
consumer

and

sale

durables,

industrial
industrial build-

equipment, and

ing, and to related industries such
railroads

and

mining.

Other

and much

larger parts of the econ¬
omy—the service industries, resi¬
dential building, and government
purchases of goods and services—

expanding.

are

parts

the

The

are

than

times

large

expanding

economy, .measured

expenditures

The

replaced by disinvestment in these
inventories at a rate of $2.7 bil¬

receipt of orders and the inv->icinj» of g«ods, the dates at which sales
are
technically consummated are far less
-

starting

periods

are

con¬

expansion
takes time. But although
.spending
on
plant and equipment was al¬

for

two
as

their
and

goods,

one-half

the contracting

concentrated

nature

first

recesison

delivery ratio." In the durable goods in¬
dustries, where there is ordinarily a lag

'-an the Jales a* wh:"h orders
received—in
spite of
fact that

the

course

have

the

limited

and

recession

indi¬

cated

between

the

and

parts.

Recession

business

goods

pleted,
projects

which were pushing up prices.
It will be observed that during

the

1 The

Branches in:

Stocbt

some

inventories

many projects
struction
that

economy

the Government in: aden.
kenya,

tanganyika, zan7ibar

Trading

1958, they
mildly bullish,
since recent experience had indi¬
cated that, as the time for actual
spending approached and as in¬
vestment plans beeame more com¬

(4) During tlie lull the index of

SQUARE, S.W.I

india. pakistan, cfylon,
burma,

in.

itself in the form of a change in
July, 1957, just preceding .inventory policy. Production was
recession, as in the second half held below deliveries with the
of 1956, and below the
monthly result that an increase of $3 bil¬
average for fhe years 1952, 1953,
lion a year in business inventories

durable

YORK 5, N. I

Banb

about

esti¬

well

the

ratio.1

uganda, zanzibar & somauland protectorah

BArclay 7-3500

Manager

Bank oj India Ltd,

54 PARLIAMENT STREET, S.W.1

Bankers

the

The ratio of

was

these

that

London Branches:

Teletype—NY 1-1248-49

Glbbs,

StuecialittB

LIMITED

BISHOPSGATE, LONDON, E.CJ

request

Laird, Bisseil & Meeds

the

fact

being made

regarded

were

monthly deliveries

changed little and
same

Head Office:

13 ST. JAMES'S

Members

AND

and Grindlays Bank Ltd.

of New York
on

OVERSEAS

the

were

advance

second and third quarters was less

ratio of inventories to

Bulletin

ratio

White, Weld & Co., 30 West Mon¬

two central reserve cities

Irving Trust
Company

inventories

the

White, Weld

Lewis has become connected with

roe

20%

inventory-sales ratio, but the
was rising in
(Special to The Financial Chronicle')
manufacturing,
particularly
in
durable
goods
CHICAGO, 111. —Thomas A.
manufacturing.
The
important

large "downtown" banks in these
was

investment

tailers

With

the

17.

recent

action

the

meeting
on
Thursday,
March 20, at the Railroad Ma¬
chinery Club. Reception will be
at 5:30 p.m., with dinner at 6:30.
Tariff $5.50; reservations should
be made with Justin McCarthy,
Industrial
Bank
of
Commerce,

view
mates

1957, when

New York will hold their regular

usual, since

in periods of contraction there

of 7% below revised estimates of
reported to
McGraw-Hill preliminary invest-, actual spending in 1957.- Early in
ment spending plans for the year December the SEC-Department Of
1958 that were 6.2% below esti-. Commerce
survey
for the ; first
mated expenditures for 1957. In quarter of 3958 indicated a drop

unchanging

plant

since 1949 Government bond hold¬

The drop in the demand
for consumer durables led to fair¬
quarter.

II.

invested

back into the bond market at low

To Hear

period

At the present time the buy¬

ter.

are
worth noting because of the
light that they shed on the reces¬
assets.
Then
there is
the matter
of sion. Among the features, of the
lull were slowly falling new or¬
prospective security profits. Dur¬
ders
of
manufacturers;
slowly
ing the declining market for highgrade bonds the banks saw siz¬ rising unfilled orders of manufac¬
able paper losses in their holdings. turers; slowly rising inventories;
In some cases the losses were not irregularly falling output of dur¬
able goods;
Slowly rising retail
merely unrealized; some
banks

Bank Credit Associates

+4.7

5.5

+4.3

9.1

most

fall

addi¬

+10.9

—

fourth

+34.3

—17.0.

1932

Discounts«'

—-22.6

1953

—

Loans and

noV movement

largely in that cate¬

part bring about an increase in
took losses by making sales. But
holdings of Government bonds and
as
has been pointed out here on
in municipals and corporates. This
several occasions, this was done
will be a reversal of the trend for
for tax purposes. Where there was
some
time past when the large
commercial
banks were shifting liquidation, tax losses were real¬
ized, but the funds could go right
from
investments to loans.

resentative

output

dropped

ing of goods (including net for*
eign investment) may be roughly ly substantial cutbacks in the
pro¬
gory.
Otherwise much of it will estimated at around $434 billion duction of these goods in the first
a
year — about $5 billion more half of 1057.
find its way into investments.
At present the minimum legal than the current rate of produc¬
(6)
Investment in plant and
tion and only $2 billion a year, or
requirement for central reserve
equipment.
Investment in plant
cities is 13%. The American Bank¬ less than half of 1%, below the
and equipment changed little dur-.
all-time high of the third quarter
ers Association has been working
ing the first three quarters of the
*
for legislation that will fix a flat of 1957.
year 1957. In March and April of
10% reserve for all commercial
1957
business firms
the

utilize

will

loans

tional funds

cumulative
decline in loans
of $508,000,000
since Christmas, the total of loans
on
the banks'
books was $11,286,000,000, compared with $11,banks, eliminating the differen¬
121,000,000 a year earlier.
One
tials that now exist. But whatever
factor to be borne in mind is that
these results may be, it is prob¬
loans on the books at a time when
rates

despite

still

the
And it for

earlier.

consecutive

less than the drop
between the third and

quarters of last year. The5 down in the index of non-durable
the production of
goods' goods manufacturing.
;
has
been
accompanied by very
(5) Retail trade.
Retail trade
little change in expenditures for,
made new all-time highs in Feb¬
goods. While production was drop¬
ruary, April, May, June, and July,
treated differently, so far as de¬ ping by $7.4 billion a year be¬ and sales in August
were
only
posit reserves are concerned, than tween the third and fourth quar¬ slightly below the peak in July.
the reserve cities, where the re¬ ters of last year,
spending for But an important shift away from
goods (including net foreign in¬ the purchase of consumer durables
serve requirement is now 17V2%,
down from 18%.
The drop from vestment) decreased by less than was going on. Personal consump¬
$1
billion a year—from $437 bil¬ tion
20% to 19%% at the central re¬
expenditures
for
durables
serve
cities is expected to free lion a year in the third quarter to was less in the second and third
about $125,000,000; and banks that $436.1 billion in the fourth quar¬ quarters of 1957 than in the first
are

decline in

year

fourth

the

was

leading

the week to the
$42,000,000.
This

for

banks

26th

considerably

liability.

deposit

the leading New York City present reserve arrangement is
banks, it is to be doubted that the outmoded, and there is increasing
for
a
change. There
shift in earnings trend will be of sentiment
great consequence.
By most in¬ seems little reason these days for
the
central
reserve
cities to be
dustrial measurements, unemploy¬

for

This decrease

action reduced it to 19V2%.

the of

column

recession

virtually no drop in
expenditures on plant and
equipment.
A lag in these ex¬
penditures behind the movement
was

of general business is

this

While

actual

By ARTHUR B. WALLACE

This Week

Margin's

statement

sh«ws

Fi'

Part

ness

tail

personal incomes and

sales.

Betwen

re¬

August,

1957,
and January, 1958, the number of
wage and salaried workers in non-

agricultural
by 1,109,000.

industries
Of this

dropped
decrease,

712,000, or about 64%, was con¬
centrated in durable goods manu¬
facturing, which accounts for less
than

one-fifth

all

wage

and

salaried

employment outside of
agriculture.
In the three large
fields

wholesale

and

retail

trade,

government, and services
(including miscellaneous indus¬

tries),

which

together -provide

than three-fifths of all

agricultural

and

wage

non-

-salaried

employment, the drop in employ¬
between August and Jan¬

ment
uary

less

was

1%—too

than

small

one-tenth

statistically

significant.
Personal

income

dropped from
of last August.

the

tenths

high

January

scarcely

high

In January it was

less than 1% below

sales

has

all-time

August. Retail
only four-

were

below

the

all-time

July, and they were
(after adjustment for sea¬

larger

rlear'v

the Federal Reserve was mis¬
the condition of the economy in
late
summer
ri
1957
and
why it was
overdoing credit restraint.
badly

by the pattern of changes in
employment and by the steadi¬

sonal

factors)

vember

also 4.2%

than in eUher No¬

December.

They

were

larger than in January,

187

Volume

Number 5722

•

million

when
the
country
was
by inflation and when
•theie was widespread belief that

increased

threatened

tween November and

spending too much.
Perhaps
the
most - " remarkable
thing about January retail sales is

portant,

1957,

people

"that

Risihg

increase

over

December

-occurred in the face of the largest

■month

rise

month

orders

defense

be¬

December.
are

April;

im¬

-ployment that has occurred since

orders to

the"

effect..

survey

produce much economic

ment in January indicates, but

the

•parts of the economy.-

tact is also shown by the

quarters is probable.

mary

uary

industries

away

half

second

the

•' V'

later.4.

employ¬

ment

report for January. Between
'December and January wage and

the

•

■

point in the recession of 1953-54.
The
very
fact that disinvest¬

% %''•'

•

the

metals production in Jan¬
stood at 100 (1947-49 = 100)
comparison with 103, the low

ment in

inventories

ing

doubts

rate

go¬

raises
con¬

inventories

would

influence for expansion.

Investment in plant and
In January expendi¬
plant and equipment
and
were still
running at a high rate
governments has been rising re¬
—total industrial, commercial, and
ployment in durable goods manu- cently *by about $3 billion a year,
public
utility construction
was
"facturing (the heart of the reces¬ and a rise at this rate or slightly
4.5%
above January, 1957, and,
sion) dropped by 258,000. 7 There more, may be expected for some
after adjustment for seasonal fac¬
Hvere also other small decreases of time; Many states and cities are
tors,
was
only 1.5% below the
'employment in the manufacture having trouble findfng acceptable
monthly average for the last quar¬
"of non-durable goods, and in min¬ sources of revenue, but expendi¬
ter of 1957.
But, a drop in these
ting and construction. Oh the other tures1 will rise because the com¬
expenditures is ahead. This is in¬
hand, the expanding parts of the pensation of employees is going
dicated by the announced plans of
-economy continued to expand, in
upland the "need for schools,
companies and by the drop in new
«pite of the general drop in em1- streets/roads, more water supply,
orders for machinery that has al¬
ployment. Thus;"wage and salary and many other forms of public
ready occurred.
The decline in
employment, government, whole¬ works is pressing.
spending on plant and equipment
sale and retail trade, services, and
C3 j' investment in housing. In- in the second quarter of 1958 may
miscellaneous
occupations'
i n - '.vestment in housing has
been be
$3 billion a year below out¬
creased by 201,000 after adjustgrowing slowly without interrup¬
lays in the first quarter.
.'ment for seasonal factors between
tion every month since June. In
Spending plans on plant and
-December and January.,
'• December new construction conequipment are affected by the
tract,.'awards for housing were
widespread belief among business
V.
The'.Probable Duration of
3.5% above December, 1956, and
the Recession ;"
■"? in January new housing starts, men that the high rate of invest¬
ment
during the last two years
When will the recession end? \after adjustment for seasonal fac¬
has created a general excess of
The end will come when there is tors,
were
larger than in any
productive capacity. This is an il¬
a
rise
in
the so-called
income- 'month of 1957 except August and
lusion created partly by the fact
Al¬
determining expenditures — that 9.5%, above January, 1957.
that during 3957 both the demand
though
the
recession
discourages
is, (1) the outlays of the govern¬
for goods and the output of goods
ments (local, state, and national)
housing, the present rate of hous¬
failed to grow at the normal rate,
for
goods and services, and (2) ing construction is below current
and partly by overestimates of re¬
gross private investment. Changes requirements measured by house¬
cent growth in productive capac¬
demolitions,
in these outlays up or down tend hold Vformation and
ity. Let me digress briefly to dis¬
the growing availability of
to produce increases or decreases and
cuss
misconceptions about pro¬
in personal incomes and thus in¬ moltgage; money is an important
ductive capacity.
creases
or
decreases in personal Vfavqrable
influence.
Hence, in:consumption spending. Let us ex¬ ; vestment in housing seems likely
Questions Excess Capacity
amine briefly
the six principal to continue to expand slowly in
by Jocal

and state govern¬
purchases of goods
Services by local and state

ices

ments'.

salary
employment - outside
of
'agriculture (adjusted for seasonal
'factors) dropped 160.000. But em¬

-The

;(5)

equipment.

tures

was

from

fore the

this same
drop in the rate of dis¬

investment

(2) Purchases of ffoods and serv¬

been

whether it will

much .longer
But

has

rapid

tinue
rate.

year

than

faster

the

The foregoing analysis of the
probable changes in the principal
income-determining expenditures

the shift in demand

such goods, even be¬
during the lull
nine months of the

•

equipment and by in-

;

recession

first

second

and

tween

important obstacle to the growth
of output in the durable consumer

first
1958 will not be felt until

half of

to new
This latter

first

the

ments to increases in demand. An

^effect of orders placed in the

is riot spreading

'recession

edly continue to decrease. A drop
of around $500 million a year be¬

recession

After

foreign investment has been drop¬
ping and, in view of the conditions
around the world, will undoubt¬

during the^ last four months of the
year, by the recession. The condi¬
tions retarding the growth in phy¬
sical output during 1957 are even
more
obscure than
the impedi¬

1953-54, and the index of pri¬

far

primary contracts
-have been placed, sub - contracts
■was started in 1941.
The recession is getting deeper, must be arranged and often subsub-contracts. Hence, most of the
as the large increase in unemploy¬

labor -force

monthly

banks

parison with $771 million in the
corresponding period of last year.
The output of steel has dropped

not until May or June?
are required for the

member

dropped by $1,788 million in com¬

weeks

Some

unem-

reporting

weekly

...

but time is required for
them to produce effects.
When
will they be placed? Will the bulk
of them be placed by March or

were

the

$444

(1071)

The Commercial and Financial Chronicle

leads to the conclusion that these

outlays will probably be slightly
The growth of output also ; higher in the second quarter o£
seems
to have been impeded by •, of 1958 than in the first quarter.
difficulties in getting production It is a conservative estimate that

year.

out of

new

spending
(federal,
local, and state) will rise between
the
first
and
second
perhaps by inefficiencies in the >
quarters by
about $1.5 billion a year and that
shops.
•
:
v
Had demand for goods and the housing - outlays
will
continue
output of goods increased at a their increase of about $500 mil*
normal rate during 1957, expen¬ lion a quarter. If there is a drop
ditures for goods in the last quar- < of around $2 billion in disinvest¬
ter of the year would have been
ment
in
inventories, a drop of
at the rate of about $450 billion a around $3 billion a year in in¬
efficiencies

and

government

billion, and
of goods would have
the rate of about $450 bil¬

output

been at

lion

rate

other

around

was

vestment in plant and equipment,

and a drop of $500 million in net
foreign investment, there will be
instead of. a net rise in income-determining

little more)
of $432.6 billion.
In
words,
expenditures
for
goods in the last quarter of 1957
were
about
$14
billion
below
normal and the output of goods
(or

the

instead of $436

year

the

management,

below

billion

$18

between
the first
quarters at the rate
$500 million a year.

expenditures
second

and

around

This is

small amount, and it is

result

rough

estimates,

have

estimates

the

been

but

made

•

normal.

the

economy

eral

spending the.face of the recession.
private \ investment—(4) Investment or disinvestment
federal purchases of goods and in, inventories. Up to the present,
services, state and local purchases I disinvestment in inventories has
of goods .and services, investment been by far .the most important
elements in government

-and

•••

housing,.,'investment (or disin¬

.in

vestment) in inventories, .invest¬
ment in plant and equipment, and
'Met foreign, investment. ?;=;/ •
;

Federal purchases of goods
spending for

(1)

and services. Federal

been

It .has

economy.

the

occurring

mainly in durable goods manufac¬
turing. In the. last quarter of 1957,
disinvestment-in non-farm inven¬
tories

was

going

rate

the first

the

at an annual
$3.4 billion.
In
on

around '

goods

about $900

and, services dropped , by
million a year between
third and fourth quarters of

for ^contraction

influence

The concept

of a general excess
productive capacity (as distin¬
guished from an excess in a par¬
ticular industry) is a tricky one.
■

that ca¬
pacity is too large in relation to
the
ability of the economy to
general

means

excess

The de¬

create demand for goods.
mand for

goods depends primarily

(1) the spending plans of gov¬
ernment; (2) the ability of the
economy to create investment op¬

during the first half of

quarter of 1958 the rate,
portunities (and thus incomes);
is undoubtedly
and
(3) the disposition of con¬
greater — probably at least $5.0
sumers to draw on either their in¬
billion a year, and possibly closer

cash

to $6.0

but it will increase

1957,

slowly

1958. Total
outlays of the Federal Gov¬
ernment (which include transfer
payments) are expected f to >: be
abou\t $1.1 billion greater during
first half of

the

1958 than in the

disinvestment

ter

year.

pf 1957—January retail sales
durable consumer goods, after

rise reflects the
of

government is placing in the
first half of 1958; President Eisen¬

the

But

index

the

production

which was 152
of 1957, had

durable

hower reports

the

contracts

dropped to 143 in January.

from

half
first

that major defense
w'U
be
stepped
up

second
of 1957 to $13.4 billion in the
half of 1^58—an increase of
$7.9

billion

the

goods,

quarter

additional

tion

last

indirect

disinvestment

indica¬

inven¬

the

unfilled orders. The double
results fi"-m the fact that ♦he
unfi'led orders are not net, but
gross.
As parts of the primary contracts
are
farmed cut, sub-contractors get un¬
the figures on

3 This

situati-n

employment

counting

figures

illustrated by Mr.
Feb. 26 t'* a ques¬
stand on raising un¬

h~nefi*s

recommended in

Economic Me®sa»?e of 1954.

his
that

the

He reolied

had not been brought to
r»r«n"*'. and he su"«"sted

matter

attention

his

ask Secretary Mitchell
wi*h him so *hat
rememb-r it. Thus,
the President has t~ he r-mind-d to th:ok
of the 'pfwht of more than
fcur million
unemployed.

that

the

reporter

discuss

would

the

matter

tf* havo t~

long-term

ability

has dem¬

for goods

capacity to generate demand.
the rapid expan¬
sion of technological research in

its

On the contrary,

giving the economy
growing capacity both to create
investment opportunities and to
stimulate consumer spending, has

recent

years,

raised the capacity
increase the de¬
Furthermore, the demand

undoubtedly

of the economy to

mand.

goods is being more or less
steadily increased by insistence
that
the government provide us
with more badly needed services—

for

Eisenhower's replv
tion concerning his

its

demand

This increase makes 31, 1957, and Feb. 19, 1958, com¬
proposals for stepping up mercial and industrial loans of
public works look picayune.
4 It
should be noted that an orieinal
Largely due to new defense or¬
increase of 5.5 billion in government con¬
ders, the backlog of unfilled or¬ tracts will produce a much larger increase
ders in the transportation equip¬
in
the unfilled orders of manufacturers
because there is much d~uble counting in
ment industrv (mainly airplanes)
billion.

the

economy

increase
(expressed
in constant prices) by 3% to 3.5%
a year.
There is no reason to be¬
lieve that the economy is losing

onstrated

any

their

Over

American

tories is the fact that between Dec.

$5.5

goods.

buy
the

(such as
savings) to

other resources

credit

their

1957. ..This small .of
government's lack adjustment for seasonal factors,
familiarity with the problems were slightly greater than in any
of thq country and its inadequate, of the three months of the last
planning for dealing with the re¬ quarter of 1957; construction of all
cession.3
Under
pressures
from kinds in January, after adjust¬
Congress and public opinion, this ment for seasonal factors, was al¬
rate of spending will probably be most the same as in December;
exceeded by a small amount.
and housing starts in January, as
Much importance is attached to I have pointed out, were higher
the increased defense orders that than in any month since August.
of

half

second

comes

billion

consumption of most prod¬
ucts has been going on at almost
the same rate as in the last quar¬
The

' security,

research,

education,
satellites,

and better roads and water¬

ways,

and

multitude of other

estimated

the year 1957 both the
growth in the demand for goods
and the growth in the output of
During

goods were restricted by a variety
reasons
that are not vet well

overop-

productive capacity.

rise cannot be excluded. Far more

country has

likely, however, is the probability
that these expenditures will grow

rise

17%

over

capacity between
The McGraw-Hill

manufacturing
1956.

than my crude estimate

$500 million. In addition, per¬
sonal
consumption expenditures

will

increased

transfer

usual

the rise in
and
by the
recessions to

payments
of

tendency

of investment plans is an raise the proportion of disposable
piece of economic in¬ incomes spent on consumption.
formation, but it overstates the The general conclusion is that the
rise
in
manufacturing capacity. gross
national
product in
the
This is shown by the change in
second
quarter of 1958 will be
the actual rate of factory output
slightly larger than in the first

survey

invaluable

periods

between 'two
tories

at about

whole

were

when fac¬
producing

capacity—May and July,

quarter. In other words, the first
quarter of 1958 will mark the
bottom of the recession.

1953, and December, 1956.
dex

May and July,
of

factory

1953, the in¬
reached

VI.

of durable goods
reached
156
in
May and 157 in July and August.
At this time the manufacturing

What Should the Government
the Recession?

Do About

output

139; the index
manufacturing

The fact that unemployment has

increased rapidly

without spread¬

ing to new parts of the economy
or

without

significantly reducing

industries must have been operat¬

personal incomes indicates that
fairly close to capacity be-- the period of contraction will be
cause weekly hours
were 40.7 in short. These characteristics of the
ing

In durable recession, however, do not assure
manufacturing hours were that the eventual recovery will be
in July, and 41.1 either
vigorous
or
complete—
in August. In May, 1953, the steel though brisk buying to replace
industry, a key determinant of wastefully
depleted
inventories
general industrial capacity, was would not be surprising before the
operating at 100.1% of theoretical end of the year. The recession is
capacity.
obviously
causing
considerable
The next peak in factory out¬
suffering and waste of resources,
put occurred in December, 1956, and it is increasing the likelihood
when the index of factory output of long-run creeping inflation by
reached
149, and
the index of retarding the growth of produc¬
durable
goods
output,
167. In tive capacity and causing the com¬
December, 1956, average monthly munity to live off inventories.
hours in manufacturing were 41.0, Hence, the government should do
and in durable goods manufactur¬ what it can to stimulate revival.
ing, 41.9. The steel industry was There are two principal types of

May and 40.3 in June.
goods

41.5 in May, 40.8

operating at 99.6 percent of capac¬

proposals—tax

ity. • Hence, factory output in De¬
cember,
1956, must have
been
pretty close to capacity. The in¬
crease in factory output between

works.

the two periods

of capacity oper¬

and July, 1953, and
December, 1956—was only 7.2 per
cent
for all
manufacturing and

ation—May

only 6.4 per cent for durable goods
manufacturing. These amounts are
less
than
half the increase in
capacity

and

public

Any remedy, to do much

good,

within
the next two or three months. It
would be difficult to devise a tax
cut that would take effect promptly
and that would not be arbitrary
in its impact.
In order to avoid
a
dangerous inflationary
effect
next year when the cash budget,
even

McGraw-

show
have

cuts

would have to take effect

below the long-run

estimated

Hill and well

under
a

present

taxes,

will

deficit, the tax cut would

But the
3 per cent annual rate of rise in stimulating effect of a
tax cut
the real expenditures for goods.
known
to be temporary
would
to

temporary.

belief that the be small. The prospective cash
great excess deficit next year will be the re¬
cq^Pcity is m^faken. I do riot
believe that this
error will
be sult of requests for appropria¬
quickly corrected. Hence, it will tions beyond the President's orig¬
be a deterrent to investment for inal recommendations < Secretary
Although

things.

avoid

penditures will drop rather than

a
general excess of productive
capacity appears to be based in
part upon the McGraw-Hill sur¬
vey of capital expenditures which

gross

Of course, the

is suffering from a gen¬

excess

and

timism.

possibility
that total income-determining ex¬

The belief that the

1953

conservatively

that the

conclusion

erroneous

Concept

thousands

wonder

of American businessmen reached

country

the

possesses

to come.
Further¬ McElroy has recently indicated
although there is no general
that he will ask from $1.3 to $1.7
Federal
Government
spending over-capacity, some specific kinds
does n"t report a
of productive capacity, such
as billion beyond the amount origi¬
un^l'ed orders on
plans, by credit policy, by shifts
original increase of .*5.5 billion in - vernfactories for producing medium- nally recommended by the Presi¬
in demand from durables to nonment contracts might eventually raise un¬
durables which have affected in¬ priced automobiles, are probably dent), and of insistence by Confilled orders as reoorted bv manufacturer®
eXOPoo«VP.
by $10 billion. But some months may be
vestment plans in durable goods
Continued on page 32
required in order to bring
about this
0. Net foreign investment.
Net
manufacturing,
and,
especially
filled

result.

orders

but

the prime contractor
smaller net v-'u—«e
his books. Hence, sut

understood. The demand for goods
was

restricted in

part by cuts in

some

more,

months

The Commercial and Financial Chronicle

(1072)

ing costs of a policy of militancy
a
policy of appeasement have
forcing
many
companies
during the last five years to shift
to
the policy of
being fair but
firm.
This period too has seen
many important strikes provoked
by the determination of manage¬
ments, at long last, to enforce the

jrom page 31

been

Current Outlook for Business
And Industrial Relations
gross
on
appropriations
the President's requests.

expenditures

hcyoncl

many

desir¬

able because the United

States is

country and needs to
develop and conserve its natural
resources,
provide
itself
with
adequate
roads
and
recreation
areas,
and rebuild parts of its
cities.
But
pew
public works
programs would not produce in¬
creases in spending soon enough
to mitigate the recession.
Deci¬
sions to
accelerate construction
now in process or to speed up the
letting of contracts that will soon
growing

let

would do some
good—though on a limited scale.
anyway

The difficulties of getting prompt

increases

spending

illustrated

works

public
the slow

made on the interstate
system. Even in the present
fiscal year, federal aid highway
expenditures are rising only $802
million above the previous fiscal
progress
road

and

year,

increase

the

contem¬

plated in the coming fiscal year
is even less—only $611 million.
This
is
a
disgraceful
record.
Hence, proposals for new pro¬
grams
of public works, though
meritorious in themselves, are not
an effective way of dealing
with
recession.

the

Three

would

useful.

would

One

aggressive easing of credit by the
Federal
stimulate
the

This

Reserve.

would

by increasing
mortgages.
The

housing

demand

for

administrauou

contract

—

negotiation of contracts.

the

the administration of contracts

three

been

the

but

recently

expediency to policies based upon

long-run interests of the firm.

the

It is easy

to sec why newly organ¬
ized workers, who had never had
a
chance to get their grievances

adjusted through regular proce¬
dures, should prefer direct action,
or the threats of direct action, to
using the
grievance machinery
provided in the new union-man¬
agement contracts. Indeed, a few
unions, out of a sense of insecurity
for other reasons,

deliberately

encouraged direct action and even
trained
their plant
officers in
these practices.

managements from the
very start adopted the only policy
that will work in the long-run—
the

policy of being fair but firm.
policy consists of conceding
the union arid the employees

That

the

rights that the contract, fairly

but of
It also

interpreted, gives them,
conceding them no more.

consists of standing firmly for the

rights

the

that

The

programs.

greatest

oppor¬

tunities to accelerate the comple¬
of existing projects and to

tion

forward

move

by several months
new orders are in
Department.
I have

the

placing of

the

Defense

already stressed the fact that

con¬

siderable time is needed to trans¬

late

defense

into

orders

business

spending.

The time required be¬
fore sub-contracts actually begin
to produce orders in the business
world

the

emphasizes

prompt

for

need

placing of orders

by the

Defense Department. Incidentally,

placing

orders

several

months

gives

contract

pressure

later

our

will

resources

level.

will thus help

upward
A

assurance

third

re¬

of the price

creep

would

step

that the Federal Reserve

would

not

credit

policies

revert

its

last

extreme

year,

will permit the price level

but

to ad¬

just itself to rising costs.
Per¬
mitting the price level to rise as
rapidly as costs does not assure
that

any

individual

will

firm

allowed

shop

stewards to

peasement

what

the

retain

shops.

that Reserve policy will

terpreted

give

en¬

chance

make money.

Contract

Administration

economic
relations.

turn

from

situation
I

proper

tactics

from

shall

the
to

general

industrial

discuss

these

developments under two separate

meeting

managements

control

the

the union.

policy

of militancy
policy of fairness may arouse
tactics

because

in¬

as a
sign of weakness:
shift from appeasement
may be

interpreted

Developments in Indus¬

were

the
high
costs resulting from these
policies
grow with
the passage of time.
But when a management has been
meeting militancy with militancy
or
meeting militancy with ap¬
peasement, the shift to a policy
of being fair but firm is not a
simple matter.
In either case, a
change may temporarily stimulate

pressure

Let

aware

Furthermore,

be impeded until business believes

—

policv

and in the failure of

pressure

trial Relations

not

managements

doing.
Both

the

union

attempt bv management to under¬
mine the union.

For

these

As the

the

reasons

many

man¬

agements tmve been slow to aban¬
don the policy of
militancy or the
of appeasement
or
have
failed to carry through a complete

policv

abandonment
of \ their
previous
policies. Nevertheless, the mount¬

in management and

men

union

local

to know

agements

officers have

got

another better, man¬

one

have

that

seen

desirable to give union officers ad¬

information about manage¬

ment

actions—particularly about
proposed technological changes—
and about management problems,
such as problems of meeting com¬
petition. In many instances, union

both

Nevertheless,

mains to

be done.

have

policies
est

not

ity

for

their

procedures.

surrender

involve

rights by manage¬
recognition of a right

ment—no

of unions to veto management de¬

cisions.

simply
of

These

developments

the

fact

fearful

unions

that

changes

deal with if

are

recognition

a commonsense

less

are

easier

and

they understand what

is going pn.

The practice of noti¬
fying union officers about changes
and consulting with them seems
to be spreading.
(3)

The

growth

effi¬

labor

The present

company.

labor

good opportun¬

reform

policies—not

by at¬
tempting to
take advantage of
labor, but by making it plain that
their policies will be both fair and
firm and

that shop practices that
with efficiency
cannot

interfere

Developments in Industrial

Relations—Contract Negotiations
It

the

field

that

the

greatest

lems

industrial

bargaining

unsolved

prob¬

relations

exist.

Methods of

bargaining have been
improved,
preparations
thoroughly made and

greatly
are

presented

are

orderly
fashion. In a few cases, bargain¬
ing has been preceded by prenegotiation
meetings
that
have
more

explored the general situation and
paved the way for the later dis¬
cussions.

Furthermore, tested by

the ratio of
ments

collective

bargaining
The

success.

and

has

been

and aggres¬
pioneer in raising

strong

sive unions that
wages

in which settle¬

cases

reached without strikes,

are

suggestions

their

managements

benefits

re¬

still

are

the long-run inter¬

upon

the

based

recession offers

developments

much

There

and

plenty of companies that are fol¬
lowing a policy of expediency In
handling industrial relations and
that

getting

fringe

new

to have shown skill

seem

exacting from employers almost

the

last

cent

that

tained

without

down.5

These

could

forcing
unions

ob¬

shut¬

have

developed considerable
wh ipsa wing employers.

also

skill

collective

has

economic

produced

settlements

community

larger

than

the

afford to pay with¬

can

inflation.

out

ment has been

than twice

cient and workable administrative

large

arrangements

is indicated by the fact that hour¬

a 11

These

changes

forms.

Some

purely

procedures.

have

taken

them

many

have

administrative

it should have been. This

ly compensation of employees has

been

risen

have

manhour

than

twice

fast

productivity. The hourly
been outside the contract. Others
compensation
of
employees
in
have involved changes in the con¬ private
industry outside of agri¬
tracts, but essentially non-contro¬ culture increased 61.4% between
versial changes.
Among the im¬ 1947 and 1956, but real product
portant changes have been:
per employee hour increased less
(a) Developments in
ments

for

handling

—keeping

shop
on

both

stewards

the

foremen

better

terms

arrange¬

grievances

and

informed

the

contract,
improving methods of investi¬
gating complaints, speeding up
consideration

cases;

(b) The development of care¬
fully
considered
policies
for
handling discipline;
(c) Improvements in setting
production standards or wage
incentives. Industrial engineer¬
ing departments have been en¬

larged and given

tunity
many

better oppor¬
In
work.

their

where

cases,

the

tech¬

than half as much—by 26.1%. The
tendency for wages to outrun pro¬
ductivity has
been
particularly
strong in the last two years. In

this

period,

in all

output

manhour

per

ptivate non-agricultural in¬

dustries rose only 1.4%
and in
manufacturing only 1.1%;—or less
thai! .1% a year.
But the compen¬
sation

Fortunately, industry has
able

ing

pass

labor

most

costs

the

been

the

ris¬

form

higher prices so that the princi¬
pal effect of excessive wage set¬
tlements has
tion

rather

been

creeping infla¬

than

adapted to incentive methods of

unemployment.
Nevertheless, there has been a
mild
cost-price
squeeze
which

compensation,

(together with other causes)

nology

work

has

not

particularly

measured

been

day

substituted

incentives; in other

cases

for

plans

have been redesigned and made

equitable and, in many in¬
stances, simpler;
(d) The development of job
evaluation plans to reduce wage
inequities;
(e) The redesign of seniority
more

arrangements to meet better the

principal desires of both em¬
ployees and managements.
Changes in seniority arrange¬
ments

have

had

the

effect

reducing the extent to which
long service employees are laid
off while short service
ees

employ¬
reducing

working, of
bumping, of defining
more
clearly
and
objectively
the tests of
ability to do the
work, and of protecting man¬
are

multiple

agements

against excessive

re¬

have

contributed

recession.

the

may

current

Thus, between 1953 and

the proportion

1956,

of business
income after taxes going to profits
dropped from 6.5% to 6.2% and
the proportion going to employees
rose

from

trends

70.9%

72.5%.

These

continued

through
1957.
This it is apparent.
I think, that
through the development of col¬
lective
bargaining
a
powerful
instrument making for slow infla¬
tion has been built into

our

econ¬

omy.

The

tendency

5 If it
rate

that

were

should

portion

strike,
ments

but

for

so,

be computed, not
settlements made
on

reached

the

the strike

proportion

without

in¬

wage

possible to do

the

strike

the

automobile

steelworkers, and

few

settle¬

pioneering and aggressive unions —
building trades unions, the miners,
teamsters,

pro¬

without

workers,
others.

the
the
the
the

voluntary

part of unions-r
good possibility

with the passage of time the

become

will gradually
aggressive.
It
is

less

neither humane
sible

politically

the

pos¬

between

gap

rising wages and rising productiv¬
ity ; \by using, credit
policy to
create and maintain large armies
of unemployed,.Nor are there
any
feasible
changes
in, laws
that
would

eliminate

power

though

curb

other

the

unions

there

would

excessive

over

wages—

changes

are

which

of power

excesses

directions.

Proposals
to
big unions are both

break up the

impracticable and undesirable. If
the tendency for collective bar¬
gaining to raise wages faster than
the rise in productivity is to be
halted, this will have to be accom¬

plished either by increasing pro¬
ductivity by methods which da
not

simultaneously raise the de¬
goods or by stronger re¬

mand for

sistance

employers
'
0

wage demands.

unioa
<

j ;;

Productivity can be raised with.-*
out
increasing the demand for
goods
and

administrative

inventions

which

changes

raise

the

output of the existing plant and
equipment of industry. Examples
of such methods are better selec¬
tion

and

* training
of
workers,
scheduling of work, bet-,

better

maintenance

ter

of
equipment,
setting of production stand¬
elimination of make-work

better

ards,

practices, and redesign of products
to simplify manufacturing proc¬
But

esses.

one

eering
alone

and

the

between

the

engin¬
management
gap that

better

hardly expect

can

better industrial

and

wide

settlements

wage

growth

productivity.
If the gap is to be closed, this
must
be
accomplished in large
part through the process of collec¬
tive bargaining—by stronger re¬

sistance
to

the part of employers

union wage
The

will

demands.

present period of recession

probably

see

the gap between

rising wages and rising productiv¬
ity temporarily closed, or almost
closed. This will be accomplished,
however, not primarily by the
success of employers in negotiat¬
ing smaller wage settlements, but
rather by their success in raising
productivity
at
an
abnormally
fast rate.
The abnormally rapid,
rise in
productivity will occur
partly because the recession will
help employers correct bad shop
practices and partly because in
1958 employers will be getting the
the full benefit of many techno¬
logical changes made during the
*

last

two

years.

Auto Wage Settlement

employees has been ris¬
ing by around 5% a year.

the

though there is

Roughly, the aver¬
collective bargaining settle¬

age

future;

pioneering unions

exists

bargaining

has produced industrial peace and,
on
the whole, good industrial re¬

lations,

foreseable
restraint

and

Though

to outrun increases in pro-,

creases

ductivity cannot be halted in the

managements

unions.

officers have been invited to make

These

layoffs

during the last 10 years is

credit

VIII.

conceding the right of the unions
to veto (management decisions. A
few managements went to the op¬
posite extreme, and made some
decisions (such as putting in new
production standards or incentive
rates) only after union commit¬
teemen had given their approval.

The
great
progress
that
has
been made in contract administra¬
tion

discussion of problems with union
would be interpreted as

officials

when

costs

be tolerated.

and

shops freely,

being practiced at

was

shop

shift

VII.

was

management

rising costs in the
higher prices.
But the
expansion of new investment will
of

reasonable

the

the shop level in order to meet
production schedules, but higher

form

committees

roam

challenging
orders
of
foremen
and stirring up
grievances.
In
some
companies a policy of ap¬

able to pass on

terprises

work

policy of meeting militancy with
expediency resulted in high costs

now,

tard the

sickness
to

managed

expediency,

strikes, slow¬
re¬
epidemics,
overtime,
and

year

than

and

fusal

wildcat

militancy with militancy and the

tion

downs,

well

policy

tolerated

limit

hence when defense produc¬
will, be considerably larger

generally

adopted

than

rather

now

quite

newly-formed unions to a
They feared that even

training

must be made.

minimum.

vance

Some

eas¬

mediate results than starting new

contracts

plants. The current reces¬
sion is giving companies that have
not yet adopted sound long-term
industrial relations policies a good
opportunity to do so with less
than usual danger that the change
will provoke strikes.

the

policies

from

shift

The

slowly,

announced

the

their

clined to keep their contacts with

procedures.

management, even in the face of
harrassing tactics. But unions de¬
veloped so rapidly between 1937
ing of bank reserve requirements and
1945 and their growth co¬
is a moderate step in the direction
incided so closely with problems
of easier money.r A second step
of wartime production and post¬
would be for the government (1)
war adjustment
that many man¬
to speed up the filling of orders
agements
failed
to
base
their
for goods that have already been
industrial relations policies upon
placed (including the speeding up the
long-run interests of the firm.
of the completion of construction
Some firms adopted the policy of
projects), and (2) to speed up the
meeting militancy with militancy.
placing of orders that are almost
Many others adopted the policy of
ready to be placed and that would
meeting militancy with appease¬
be placed within the next two or
ment.
It is amazing how many
three months anyway. These two
large companies that had been
kinds of action promise more im¬
Reserve has moved rather

observance

principal
developments: (1) the shift from
policies of expediency to policies
based upon the long-run interests
of
the firm;
(2) the spread of
practices of notification and even
(2) The spread of practices of
consultation; and (3) the growth
notification and consultation. Many
of more efficient and workable
managements were at first in¬
administrative arrangements and
have

there

steps by the government

heads
and

forms of public works are

Thursday, March 6, 1958

Continued

Larger

Wage

settlements

affected

the

will

1958

by the determination

unions

press

stiff

de¬

mands

regardless of the recession,
and by the unwillingness of most
employers to take strikes.
The
principal wage negotiation in 1958
will, of
bile

course,

be in the automo¬

industry.
The
automobile
if they desired, could

companies,
probably
in

wages

hold
and

the total increase
fringe benefits to

around 2.5 per cent a year—about

the
be

highest increase that would
non-inflationary. But such a

settlement would differ
from

settlements

past

sharply

and

from

the expectations of the union rank
and file that it could

be
or

probably not
accomplished without a strike,
at

least

without

much

mis¬

understanding and bitterness.
The employers could undoubt¬
edly win a strike—at least if they
were
willing to stand together.
Their bargaining position is ex¬
ceptionally strong, partly because
of the recession and partly be¬
cause the public does not care for
the

1958

veniently

cars.

They

are

incon¬

long,
inconveniently
wide, inconveniently low, waste¬
ful of gas, expensive to maintain,
clumsy, and ugly. But I do not
expect to see the automobile com-

Volume 187

Number

5722

The Commercial and Financial Chronicle

panies

take
full
advantage of tries, employers could not do much
strong bargaining position, about closing the gap through barHence, I expect to see the auto- gaining except by accepting long
mobile industry raise wage and and
expensive strikes. I do not
fringe costs by considerably more believe that most employers would
their

than 2.5%

'Let

year.

digress

briefly

call

your attention to the fact that the

automobile industry will be meet-

ing increasingly
tion from many

competi-

severe

willing to do this in periods of

§°od demand and high employment, especially if their competitor*s
were
still
making
goods,
Furthermore, in some industries

(1073)

(such as steel or airplanes) long
strikes would not be tolerated by
the public. Consequently, I conelude that, during most of the
time in the foreseeable future,
wages
will continue to outrun

productivity
that

and

a small amount
maintenance
of

the

our

million

require

stock

Earnings
affected

Securities Salesman's Corner

badly obsolete.
The
growing competition being met by
automobiles is shown by the fact
1953

and

1957

tms

per¬

Prospecting in Bear Markets

Darts

increased

19 9

declining later on when they can't ride,

business activity, stock prices, and fight,

«nvPQtnr

•

latest

!^e

♦

(the

date

for

which

detailed

anatbv

tnwarH

spcnvities

anc?

dance.
.

In addi-

by relatively

gram rates.

as"compared1 with^1?!^
in 19^
Qf
jY imnor-

Periods

D.urinS

nor

KP£
mcieased by Id.9 per
cent. Between 19o3 and 19o6

adverseiy

throughout

However, for the full year 1957,
Canadian Pacific reported net in-

sonal

and

conditions

country and Canada.

low

consumption expenditures
by 21.6 per cent, but
outlays for new cars, used cars,

were

tion the road is hurt

By JOHN DUTTON

increased

year

Pacific

by the decline in general

business

cars

Canadian

Railway last

•

t* * +"

rnall

tiVp

Lw?.

tance to the load is its other

t,-

wavs

means

ing capital of about S74 million..
However, about S100 million ia
generated

from

Canadian
pense

internal

Pacific

accounts

sources,

charges its ex—
depreciation

with

of roadway and excludes amortization tax deferrals from current

income.
as

This understates income

compared with the accounting

Procedure used

*he railroads

in the United States.

in-

Semi-Bankrupt Business Firms: come, mainly from natural gas
figures
available),
when Iw
willDrovicte the resoureetol ,?°?p you! e?es.opea ior f'rras and oil Another principal source
auto?
provide the resouicetui ,hat
that may be having severe busi- of revenue
the dividends
spending for newt^'used auto!
havl?*
"usl- of revenue are the
dividends re:
mobiles increased by 11 per cent,
rent,
In
of these tostlnces "®SS, dlHfcultl®s'. P^sibly you can ceived from Consolidated Mining
c?me' ]"
stUl

are

Railway

slowly rising price level,

sources

present

that between

Canadian Pacific

reasonably full employment will

during the
next
several
years.
Hence, the
industry has strong need to make
all

„

are

,™„v
manv

come

important

many
sonal

kinds

expenditures

increased

faster:

far

„

increase

that

Higher education

Let

toi
missing
business
now.

sanatorlums

Medical

Electricity

21.4

;

■.

fees

and

other forms

competition for automobiles will
grow in the future and, as Ameriincrease the variety of things
they would like to own and would

cans

like to

do, the automobile induswill find competition for a

try

consumers'

incomes

in-

creasingly stiff. Of course, other
industries will find the same thing.
Prnhihlv

tor

iho

rise

i.irhidripA

-I

oil

interest

was

college.

The cost ot giving them
educational opportunities

proper

will

be ready for

soon

tax

the

millions

resources

of tens

families

ex-

pected that high school enrolliox
ment, for
example,
example, will
win increase
increase
,

from about
9.4

million
illlion
i

million in
be

8.3

million in

1957

19(10,
rrud

occ

1965.

and

even

12.1
m

The expected in-

in college enrollment

crease

pan|es that have a record of sizable losses during the past few
years.
The losses to a successful
company in the same line of busi•

pgss

can

dollar
t]lat

1»

worth

actual

assets

tax

/»

•

011

the

savings,

and

52c

has real value.

There

didnt have the time to
may be trademarks, patents, and
of these pi of liable other
intangibles, in addition to
that you might look at
inventory and fixed assets, that

Directors:

your

town

may

be of considerable interest to

the

buyer.

Sometimes

there are some well managed and who is alert and
Progressive

banks.

the

man

the iob gets
deal while others
on

will

greater in terms of

per-

durable consumer goods and new
activities will be particularly hard

the

medium-priced

matter

cars.

mediumpriced cars as a group have been
losing out for the past three years.
In 1955, these so-called mediumpriced cars accounted for 36.3 per
fact,

the

cent of ail automobile

production;

by 1957, their share of the market
was down to 29.9 per cent, and in
the first eight and a half weeks
nf
of

1 QnR
1958

rlnwn
down

Further more,
can

pons

comes

VV/IilV«tJ

crease

In
to

ppnt

npr

cent.

per

thV

snond

in-

in many new ways
uJ kJ
vv III
in
will
inII-

lllCIIl

their

llv

maintain.

»v

interest

economical

are

97
4
27.4

the desire of Ameri-

cars

to operate

that

and to

Hence, the prospect is

good that the automobile industry
will

soon

able

make

the

obsolete. °This ^vfll^eTpTusLIn
the demand for
be

good

new

cars

tor

Consumers,
dustry, and the country.

The'real

test

employers
tween

rising

few

vearq

the

close
wages

ocur

in-

and

rising

during the

affpr thp recp«?sion

believe

that

gap

can
be
narrowed," though
eliminated,
through
more

and

better

industrial

likely1

not

engineering

b^narrovved^o

is
to
substantial extent by collective bargaining.
In most indus-

gap

owns 51.4% of the common stock.
Dividend income from this source
alone last year amounted to $11,-

357,000.

This

1956.

was
slightly less
$13,881,000 received in
Naturally the wide fluctua-

tions

in lead

than
4

the

.mr

reflected

zinc

and

prices

are

the earnings of this
subsidiary.
Currently,

mining

prices of these basic commodities
do not appear encouraging.
The
mining company is diversifying
its
activities into the chemical

field

and

stable earning

this

gives

promise

're feeling very wtfr

power,

^ie>Jor
who~d<T Iden'tifv^vourseif iCnoZ local
Y, ? do.

icientiij yourseit 11 pos

issues,

selling

trading,
w'auAU»»

business,

buying
uuyuns

or even

landing

eral rights

acres
wai rigius on
uxi its
ns 11.3
xx.a million
nurnuu acres

and

now

has 6.4 million open for

j)anks

can

you

business

some

buy

source

This

sell.

business

new

be a

can

and

Two With Merrill Lynch

good

contacts,

—

company

Gas Company.

Officials of
state that geological

you're feeling

studies of land holdings in Alberta

(Special to The Financial Chronicle)

BOSTON, Mass.

Oil
the

are

George G.

very

encouraging.

Other interests include

steam-

oflicers antl Directors of Local Rhinehart and Joseph A. Simons ship fleet which comprises some
,5usiness Firms: The same situa" ai'e now with Mem11 L^cb' 35 vessels. Net pre-tax earnings
pon holds here a^with the bank- Pierce, Fenner & Smith, 18 Milk from the steamship subsidiary in
1956
aggregated
$3,843,000,
but
", institutions.
Sometimes these Street,
operations in the latter part of the
l'ontf.ct,s
a,ls° lead t?. a sVb"
ftantial finder s fee or fmanemg With Hornblower & Weeks year were reduced because of the
through an'.underwriting. Whether,

decline

>'ou tblnk ,that every
area Ilas been

firm m your
weU con"

nected

(Special to T ie Financial Chronicle)

BOSTON, Mass.

—-

George M.

iines

' '

Seek

Making
who

„T,

People

High

people
r

doing very well. If you
larger city notice the
of the people in the enter-

are

names

',a.l,,ua ^ UJe

m u,c c,,tcr

KANSAS CITY,-Mo.— Leonard
W. Jurden, III, is now with Burke
& MacDonald, Inc., 17 East lUtb
Street, members of the Midwest
Stock

Exchange:

^aiJ:irn<^nt w°i Id whom you may

Some of them have ad¬

cVrdacd*
visors,
.

others

making

are

large

Joins

weekly salaries and despite high
Still

taxes
saving

the

have
of

some

the

pioblcill

their

income

They

future'

Of
for

Schreiber, Dail

•

iar,
where you can gain a
^°ihold may lead you to others,
people in show business aie
usuaPy cooperative in recom^nchng
3 you to others. Some of

since

^oductivelife

insurance

safes hive beef mat

to show
devel-

Oi-d -meother very large sales.

line busiAir

30,000, miles

0ver

Lines

in-

routes, serving Australia, the Far East, South Amer¬
ica and
Europe.
Net profits of
air

the

line

1956

amounted

'If# living you want

iine p]ans to add additional routes

j^s system and this gives it
iong_term growth prospects.
It
is
believed the company's hotel

profitable, and the
in population

operations

are

continued

increase

industrialization of the

coun¬

enhance the road's long-term
prospects.
Business activity in Canada is

try

(Special to The Financial Chronicle)

ST. LOUIS, Mo.—John E. Krings
become
connected with
T L- V Pn
iVmh

has

some practical ideas. One particu-

—

Pacific

ternational

and

welcome aaa

ma^

operate

This rail¬

rates.

in the air

Canadian

ness.

$525,000 and dividends to the road
amounted
to
$459,000.
The air

.(Special to The Financial Chronicle)

Incomes

always

are

Joins Burke & MacDonald

„

Who May Be

Unusually

There

Now:

are

„

Out

in cargo

also

road

§?b^®lb
Seventh ^5?!
Street.

low

ebb

and

immediate

improvement is seen at the pres-

ent

time.

Inventory

reflected

were

adjustments

lower

carload-

Jutve

any

c!'"'j
procuring
life
insurance
at
standard
rates,
hockey
piayeis,
football

professionals, boxers,
^
Tu-."
'
•

wrestlers, and others in the entertainment

and

sports

world

can

P. de Rensis Adds

Residential building
was
down and grain traffic
hurt bv ower export activity

some

('Special to The Financial Chronicle)

also

BOSTON, Mass.-Hyman Litin-

fvj
St^t
mlmberfoftoe B^stottock^xchange.

was

The road is seeking to improve
its °p®fatin.g- e?ic!?n,cy-by..:lh-?
■

acquisition
and

American Sees. Associates
(Special to The Financial Chronicle)

MINNEAPOLIS, Minn.—Amerir

excellent Mutual Fund been formed with offices at 3426

sales if you are
do

business

fortunate enough
with

one

these

East Lake Street to engage in
securities

business.

Officers

diesel

locomotives

in the installation

of modern

signaling devices. By the end of
the year, it is anticipated that ap¬

proximately 83% of its traffic will
be hauled by diesels. Capital out¬
lays
have
averaged
about $87

are

years.

Present

budgets

call

Many

lion

over

the next 15 years.

Last

Davis, Vice-President, and Harry million in improvements and this

security, and having some capital S. Skarns, Secretary.

was

cancers can

detected

be cured

in time. That's

Sf1

why

Wi important for you to have
a

thorough checkup, including
a

chest x-ray for men and

pelvic examination for

women,

each and every

year

...

matter

how

weU you may feeL

for

the expenditure of about $1.5 bil-

PeoPle- The5r a11 have friends and William I. Davis, President; D. L. year the road spent about $167
they talk about such things

checkup yearly

ing declines.

offer y°u a possibility of breaking can Securities Associates, Inc., has million a year for the past 10
into

ings with most commodities show¬

the

over

road

'wiU i'e°Ple and radiation

ability of
the gap be—

productivity will
next

and

the

A™<?n^ tde directors and ollicers energy, your thinking, and your income account. Revenues from
;
e. institutions there may be acti0n constructively, you will this source in 1956 amounted to
<>ertain individuals who may wish create opportunities for doing $9,268,000. The road also has been
se
son},e °* their stock or buy business, either in bonds, stocks, buying back commitments of min-

or
not, you may be sur- Morris is now affiliated with
prised to find that there are still Hornblower & Weeks, 75 Federal
The competition from children
some
excellent opportunities for Street,
and from
many
new
forms of
(,eveloping business along these

centages.

re-

which

.There is a there first with a
Canadian Pacific has had rapw..ldf local interest in the stock sit around and don t try because jelly growing income from oil
these institutions. In periods of they think it is not worthwhile production and related transacdeclining investor confidence the to do so.
tions.
Beginning in 1956 these
,,a s 11\.^0ur non}e town enjoy
In the last anaiysis activity earnings were transferred from
)ie confidence of the public. creates activity. If you direct your the land surplus account to the

1945, and these children are now with other
people who would also
beginning to reach high school wish to
They will

com-

Smelting

^he United States beginning about
age.

broke

fxrpnt'?!
W
these institutions and a workable underwriting. Besides, development. Recently, to become
hirfhs
in
I •5°U Rie fortPnate. enough to ob- ftie man who is bUSy is not
more aetive in this field, the paronms m tam some orders in sound local to ilave ulcers from worry.
rier has formed Canadian Pacific

xviii

hppn

h'N

number

3.
Industry

automobile
v

many

crp

nnrvin^+i

antSmnhTfe

the

(and of

f*rnntr.«t

highs and

about

some

Bank

10.1

these

the

these

0j;

now'

21.8

Physicians'

you

aftei

accounts

in¬

surance

All

sibly
go

28.4

and hospitalization

care

new

investor

IhP

much greater than it is today pos-

29.2

—_

making

was

WhPlI

When

individual

31.0

Telephone and telegraph—
Fbrelgn travel

market

Interest on personal debt
37.2
Boats and pleasure aircraft—______ 35.0
Privately controlled hospitals and

lew

you
developing

and beauty parlors—_ 47.7

look at

worthwhile opportunities that
new

47.7

lastinto and beneficial toi

aie

may

Elementary and secoudary education 55.1

instances work out a substantial commission
auaU?J-!s, Jps. be negotiating the sale or merger

P0SSi^ ?■Z

many years.

Barber shops

Der;

reflected in a drop in work-

AMERICAN CANCER SOCIETY

The Commercial and Financial Chronicle

(1074)

Continued

Fulton Reid Group
Offers Barton Stock
An

underwriting syndicate headed

Distilling

1962 of Barton

Co. at

100% plus accrued interest
Oct. 1, 1957.
are offered with war¬

from

The notes

The State of Trade and
that

attached entitling the bear¬
to purchase for each $1,000

principal amount of notes a ware¬
receipt for five barrels of
Kentucky bourbon whiskey pro¬

house

duced

during December, 1957, at
a cash price of $1.50 per original
proof gallon (approximately $390
for

five

will

1961

barrels).

The

exercisable

Jan.

March

buyers

The recent

taking another

are

heavy

the

The mills

came

the

rescue

auto

tons

One

less

this

than

month

steel salesman

summed

steel for two

large auto companies
three

weeks

time.

1961 and will be detachable from

will continue at about the

It is intended that

$600,000

the

approximate¬
net proceeds

from the sale of the notes will be
used

the

for

repayment

the

short-term bank loans and the

re¬

care

of the next pe¬

canceled

makes

Executive offices at located at 134
North

LaSaile St.,

Chicago 2, 111.

However,
last

"Ward's"

third of

BROOKLYN, N. Y.—The Em¬
pire Planning Company has been

"Ward's"

and

21,743 trucks produced in the corresponding week
7777;777' 7 / /.' .7

2846 West

American

Motors

according to "Ward's."
Division

Fairman &

Co. has opened a branch office at
840 North Central Avenue under

Francis

Nixon.

Wayne,
Buick

Building

under

Homer B.

the

Central

direction

the

The

TAMPA,

Fla.—Sills and Com¬
has opened a branch office
the
Tampa
Street Building
of

week

Stude-

St.

Robert

i■:

Ford

some

Now Universal Shares

division

plants

had

shortened

for

schedules.

ANGELES, Calif.

of 1956

was

rose

$83,000,000 in January.

quarters of the year.

Shares, Inc.
-.v

Two With J. C. Roberto

000

SPRINGFIELD, Mass.

Frank
H. Sozaczka and Stanley S. Wolko—

cut

instalment

credit

outstanding put tire total

Two With J. F. Lynam
(Special to The Financial Chronicle)

ST.

LOUIS,

Biondo and

Mo.

Ben

affiliated

now

—

James' B.

Goodwin are
with J. F. Lynam

Co., Inc., Ill

South Meramec

Avenue.

With United Sees.
(Special to The

Financial

$6,200,000,000 ahead of the year-earlier total.

January instalment credit drop

was

gain of

some

Ledwell

is with

United

Secu¬

Co., Southeastern Building.

the

United

year

decline in

than

over

the like

States

•'

year-earlier^ halting
^

0.1%

revenue

cars or

are

28.3%

added.

December, they

were

reported

output

Monday

talking in terms of 111,000,000 tons.

-7 v
.

freight for the week ended Feb. 22, 1958,

reduction in loadings

was

at.d^t to the blizzard and storm conditions

or-

6f the country..;

21.4%
on

railroad

opera-

j;:
a

cars,/ a

belo>y the;corresponding 195.7 7"

Friday, and

A.-:.-

Wednesday.-""
tv.v..

decrease of 194,629

•

production for the

•

«•*"'.

1
:■

week

and^b,elow
-7;.:u7

7/ /

;
-•

ended

Feb.

23,- 1958,

temperatures in many parts 7-

car

; 7. 7/;-

output' totaled

93,025

(revised) in the previous week.

duction total of

zero

further, hampered "mid-month

•

with 89,977

cars

car selling,
.-x-.

•

units

increase

of 3,980

states "Ward's."

:
and

Last week's

week

by 3,048

cars

compared y,

units,
V

car^tiwt.kdvanced

cars,

pro-

or an/

that of the previous week's output,

the week.

and

above

The past week's

and trucks amounted to 111,440

units

^Ward's"

1958

below the corresponding week in 1956, when the

week's

Last

during

revising estimates of their

95,000,000 tons, "Steel" magazine

.7.7% ,helow the preceding week, the Associa-

Heavy snowfalls

at 52.6%

7/., '

previous week, but increased .12,000,-

R^iro^dygports. ^Tlte

134,241,cars;

of the country

1957, manufacturing building construction contracts fell 9%

Steel Mills Set This Week to
Operate
Of Ingot Capacity

according to "Ward's Automotive Reports," turned slightly upward. '?

77/

■/

Latest Week

news

-'77'.'

electric

abovia.dh^t of , the^cpmparable 1957>veek and by 1
above * that /of the week ended March, ,3, 1956. 7,

kwh.

Automotive

below 1956 to $2,168,070,000.

the

Automotive Output Registered Modest Increase in

;

week ende$ March 171958, output decreased 535,000,-:

under that of the
or

40,848

cars,

months

distributed

energy

Loadings Declined 7.7%! JJiider Preceding Week
and! 2l.i% Below a Year Ago
?
-,

decrease

and marketing
specialists, said it was the most
monthly decline in several years in this group. -For

producers

7'" '"*77"

week, when the holiday fell

•v

7;•'

•

weekly production -7

average

Loadings for the week ended Feb) 22, 1958, which included

January fell

One of the

last.

-'■■.V7777.7

Saturday Washington's Birthday holiday, totaled 492,389

1957

deepest declines among large categories of building
in January was the 53%
drop to $107,000,000 in industrial facili¬
ties.
George Cline Smith, economist and Vice-President of the

holiday fell

small, but sustained, upturn in housing awards.

Steel

pro-

production

indust^y7for the- week ended Saturday, March 1,7
^11^803,00Q,000Akwh., Recording /dp7fhe

1957, the sharpest year-to-

housing contracts fell below the level of

down

which seriously hampered industrial,/.mining; and

with nearly every major
kind of construction
affected, F. W. Dodge Corp. reported.For the first time since last
June, the dollar volume of all

(Special to The Financial Chronicle)

NEWTON, N. C. — Monroe M.
Redden, Jr., is now with Morrison
& Co., Northwestern Bank
Bldg.

contracts

from January,

Joins Morrison Staff

*90.7% and

weekly

Declined Further the Past Week,

electric

probably due in part

centered mostly in

January stood at nearly

$2,800,000,000

to $2,066,059,000

all of

*150.1%.'

tions in the entire' eastern1 part

10%

' i

Ronald

Construction

pronounced
—

the actual

ago,

iyear

./,r\v

;

tion of American

period, but down' $810,000,000 during the month.

construction

Chronicle)

GREENSBORO, N. C.
rities

Car

were

was

wicz have been added to the staff

Jay C. Roberts & Co., 18 Ver¬
non Street,

;

Loadings of

January at $33,700,000,000, the Board noted. «This

$44,000,000,000,

kwh.

$3,504,000,000 and repayments to

Total consumer credit at the end of

the

estimated ;at

was

604,000,000
7

auto paper, the report disclosed.

(Special to The Financial Chronicle)

that

announced

month ago the rate was

productiobis basecl

amount

000 kwh.

seasonally-

Non-instalment credit dropped $442,000,000 in
January, with
$496,000,000 decrease in charge accounts being slightly offset by
gains in single-payment loans and service credit.
' ;7/

Universal

1947-1949.

For the

month for the first three

under

name

Edison Electric Institute;Ktt

The rise for the final

about

the

Institute

week ago.

//7>'/v\:;.7-7

Index

1958,

Seasonally adjusted extensions of instalment

credit in January amounted to

The

like week

light and power

$109,000,000.

The
investment business of Joseph A.
Galambos, 9420 Airport Boule¬
vard," is now being
conducted
—

Slack 7

the

Electric Output

$368,000,600 in January, a sharper
January, 1957, the Federal Reserve Board reported.

adjusted basis, and about $200,000,000

the end of

1,475,000'tons,

for

1,457,000 tons.

seasonally adjusted basis, however, outstanding instal¬

credit

The

LOS

■

Mercury plants dtTLos Angeles,
inactive all week.
Pontiac,

were

$3,421,000,000.

Siska.

Steel

and

iron

placed at 2,411.000 tons,

was

January, 1957, decrease amounted to $259,000,000 while the

gloomy.

140,712,570 net tons compared with ^actual production of 54.6% 7
week before.
7'
77
7'
77' •. 7----

duction

observed by Chrysler
Atlanta, Ga., Janesville,

Chevrolet's

Louis

spotty.
energy

the

were

quarter of 1957 averaged $155,000,000 a month,

pany

direction

last

Monday.

are

atomic

week 'beginning March 3, 1958 is equal to*
52.6% of the utilization of the Jan. 1, 1958 annual capacity :

Output

For the

and

cut in the like month

Summers, Jr.

the

program

began

Automakers' orders for strip

■

decline than in

Sills Opens Branch

under

and

capacity, and

about

the past week, nor did De Soto,

Oakland, Calif., plants.
Mich,

year

Labor difficulties continued to disrupt
Chrysler Corp.'s Plymouth
and Dodge main activities in Detroit.

ment

five-day

which

cars

-7

profits'plague the industry, '"Steel" noted,

American

The

WAYNE, Ind. —Mullaney,
Company has opened a
office

Detroit

--'7.

operating rate of steel companies will average *88.3 of steel eapa- >
city for the week beginning" March 3, 1958. equivalent to 1,419.000
tons of ingot and steel for castings (based on average weekly pro- 7
duction for 1917-1949) as Compared with an actual rate of *91.8%

Instalment debt dropped by

branch

Wis. and

Mullaney Wells Branch
FT.

Wells

one-week shutdown

baker-Packard did not build

Elsewhere, three-day operations

New Fairman Branch

management

The

completed

principal.

the

demand and poor

estimated

total about

ago, "Ward's" reported.

7777■">7-'

indicate

/ The publication reported that the future of the
market is bright, but short-term prospects-remain

in six

cars

atomic energy industries.

preliminary sales/,returns
an upturn, maybe to the

United States February car production
393,000 units, the lowest output for the month
years.
Auto makers had instituted major cutbacks during
February to reduce new car stocks in the field.
would

prior to

—■

that

level realized early in the month.

27th Street to engage in a securi¬
ties business.
Nathan Klein is a

PHOENIX, Ariz.

declared

'
torthage." Instead of placing monthly orders,
buying^ fdf^!twprwe^li^P^io^s, a-practice which 7

temperatures in many parts
car selling.

February point to

Inquiries for-future7 delivery of stainless have picked up f
noticeably, a Pittsburgh, producer, reports. -Plates are moving in 7
substantial volume to makers 'of industrial equipment and the V

country further hampered mid-month

for the

of low operations.. Any improve¬

tj^ey will be buying in May and June quarter delivery., TFpr the year as a whole, the outlook :
is none too bright; The oil .industry estimates well drilling this
year will be 15%" below what it was last year.
Sales to drilling ;
firms are currently down ..about 70% because of excessive tubing
and casing inventories.
; :
*
"
.
*
-77

Scheduled at plants the past week were 93,025 cars and
18,415
trucks compared to 89,977 and 17,483 the week before and
140,362

Empire Planning Co.
formed with offices at

zero

February

Major oil firms

Friday last.

Heavy snowfalls and below

month

scheduling difficult for producers.'/ <7

for third

Reports"

of the

cutbacks iare

General Motors is

In the automotive industry new passenger car sales during
the Feb. 11-20 period slipped 6.5% on a daily rate basis, compared
to the first 10 days of the
month, "Ward's Automotive
on

back

"The Iron Age" says the appliance industry is a bit more
optimistic about 1958 business prospects than recent layoffs might
indicate. Major appliance makers actually expect to gross about
as much in
1958 as they did in 1957. A few manufacturers look
for a gain of as much as 4% on several
appliance lines.

stated

"Steel*1 Cautioned.

not opt of the woods yet,

are

7 7 General Motors €01*1). 7m(W"ed its February orders for sheets
to March and will' probably limit March buying
to -the

time.

some

remain

stretching out automakers'steel in¬
ventories to 22-26 days in- some cases, although the aim is still to
keep them at a 12 to =15 day level.
7U-■%%;.-7-:, i 77v-,l77h-' ,77;

mainder will be available for fi¬

nancing inventories of aging whis¬
key.
Barton Distilling Co. is one of
the largest privately owned dis¬
tilling companies in the United
States. In 1956 it was the largest
producer of Kentucky whiskey.
The present company was incor¬
porated in Delaware on June 20,
1944. Its modern distilling plant,
built in 1946, and its 18 warehouse
buildings are at Bardstown, Ky.

Production

industry believe business

low level for

same

7/ ;•/ - -7 v."
unchanged with
steel at $145,42 a; net ton and prime grade of scrap", at
gross ton.
' "*;7X
7 7,7'.' ■ 7,7' "/v'K;
V;

composites

be slight because of the battle between the
upturn of seasonal influences and continued softness in demand.

Every few weeks they

the secured notes.

ment this month will

ordering only enough

are

It said March will

back with another small order to take

$37.17

January and in

the auto situation this way:
"Even if we get some big tonnage orders, we still will not have
enough for a very good operating month."
77/7/,.;7
Some of the

77'" 7- ;7"-;

publication's Price

Steelmakers

Most steel offices close to the auto

? '

;

year ago.

finished

below February.

some cases even

The

its hands, according to
Reports from Detroit say that steel orders from

"The Iron Age."
the automakers will

7 "" "

Furnaces were operated at 53.5%
of capacity, 1 point above the previous week's rate.1 Output was
1,444,000 net tons of stebl for ingots and castings against 2,456,000

by pulling steel out of ice-locked

industry is still sitting

jbe arqund -19,000,000 tons,-the metal-

business Will-

quarter

began to materialize last week.

river barges and rushing it to customers.
The

Thursday, March 6', 1958

The inch-up in steel production predicted last week by "Steel"

snows

riod.

including

their policy
M

ropes.

come

and

Industry

look

be better because of seasonal
improvements and a slowdown Min inventory reduction.
Third
quarter business will'probably dip below the second quarter
level but surpass that of the-first quarter.
As. for the fourth
quarter, production is expected to be easily the year's best. r
7-

and cold wave had some steel users
They had let their inventories sink to the
danger point and when the big storm hit, they were in trouble.

hanging

warrants

from

steel

some

inventory cutbacks.

rants
ers

First quarter output will
working weekly declared.

page

Second

by Fulton Reid & Co., Inc., Cleve¬
land, Ohio, is offering an issue of
$1,000,000 6*4% secured notes due
Oct.

from

„

.abo'Vp'Hhat- of the previous

while truck output ..climbed by 932 vehicles '

In the corresponding week

last

21,743 trucks/were? assembled...

year
-

140,362

Last week the agency.reported there were 18,415 trucks made

in the United States.*: This compared .with .17,483
week and

21,743.

a year ago/

in the previous :

Canadian output last week was placed at 6,680 cars and 1,185

Volume

187

trucks.

Number 5722

the

week Dominion plants built 6,220 cars
the comparable 1957 week 9,029 cars and

and 1,240 trucks and for

approval by the House Appropriation Committee of a bill to
Soil Bank. The New
York Cotton Exchange estimated that cotton consumption for the
first twenty-six weeks of the current season amounted to 4,169,000
bales compared with 4,581,000 bales in the first twenty-seven
weeks of the 1957 season. Cotton exports in the week ended on
Feb. 25 totaled about 113,000 bales compared with 165,000 a week
earlier and 117,000; a year ago.
For the current season through
last Tuesday, exports amounted to about 3,281,000 bales, as against

the

increase the acreage reserve portion of the

1,682 trucks.

Lumber

;

Shipments Fell 3.8% Below Output in Week
Ended Feb. 22, 1958
of 481 reporting mills in the week ended
3.8% below production, according to the
In the same period new orders

Lumber shipments

Feb.

22,

1956,

were

National Lumber Trade Barometer.

10.8%

were

of stocks.

orders

new

the like\veek in 1957. ">

'■

;.,

Trade Volume Improved

15.6% below

below the previous week and

But Held Under 1957 Level

Business Failures Higher in Latest

Week and

Considerably Above Year Ago
Commercial and industrial failures

rose

moderately to 331 in
&

the week ended Feb. 27 from 317 in the preceding week, Dun

Bradstreet, Inp. reports. This increase lifted casualties consider¬
ably above the 284 in the similar week of last year and the 293
in 1956. Failures exceeded by 30% the pre-war total of 254 occur¬
ring in the comparable week of 1939.
All of the week's upturn was concentrated in casualties involving liabilities of $5,000 or more which climbed to 299 from
270 a- week ago; and 247 last year. A decline among small failures
under $5.000,. brought their total down to 32 from 47 in the pre¬
vious week and 37 in 1957. Liabilities in excess of $100,000 were

incurred

Iiv

failing

the

preceding week.

businesses

against

;

■

Wednesday of last week was 5 to 1% under that of a year ago,
spot estimates made by Dun & Bradstreet, Inc., reveal. Regional
estimates varied from the comparable 1957 levels by the following

percentages: Pacific Coast States —2 to +2%; West South Central
and Mountain —4 to 0%; Middle Atlantic and West North Central
—5 to —1%; New England, East North Central and East South
Central—6 to —2% and South Atlantic States —7 to —3%.
Attracted by numerous

from

51.

Manufacturing failures rose to

from

18.

and

retailing to 176 from 170 and commercial service to
In contrast, the-total for wholesalers fell to 27 from

among- construction contractors-dipped to 38 from 40b
More businesses-failed than a year ago:in.all-lines save construc¬

tion*' The most noticeable upswing from 1957 appeared in manu-

•'

facturing."

o=V:". Retailers reported

rise in the call for draperies, floor cover¬
ings and slip covers during the week, but volume slipped below
a
year ago.
Purchases of linens and electric blankets exceeded
those of both the prior week and the similar 1957 period. There
was
an
appreciable gain from a week earlier in sales" of gas
ranges, refrigerators and some lines of furniture, but moderate
year-to-year declines occurred.

Four of the nine major geographic regions accounted for all
of the week's rise. In fact, the Middle Atlantic States were prin¬
>

cipally: responsible, reporting 116 casualties as compared with 84
in the preceding week.
The East North-'Central total increased
to

from 41

and failures

the West North Central-and

East

South Central States edged up slightly:

In- the other five regions,
declines prevailed in the holiday shortened week; casualties in
the

South

Atlantic
from

States- to- 67

fell

States

Failures

74.'

from

their

exceeded

Bradstreet wholesale food price

index edged

Commodities quoted higher

television sets rose most notice¬
ably in New York City and Milwaukee the past week. Contrary
to the national trend, volume in men's apparel climbed consider¬
A ..noticeable{-rise- occurred in orders for

furnishings
that

during the week were hams, lard,
;:>

Lower in price were flour, wheat, corn,

Wholesale Commodity Price Index Hits 1958
On Feb. 19

stock

boosted

level

so-

year

High

the index stood at 280.40 compared with 280.17 a week

earlier and

291.02

moderately

at their

Midwest and

1957

levels

1958

crops,

last year.

from

lightweight

clothing

y.j.

moderate^(decline
,.v

i.ffr- .a-

Wholesale

y.!*:Cb./T.^/noticeable

r -bj-'/S

and

interest in

week earlier.

sluggish again the past week, but

•

was

the

order in trading in woolens,

wool. New England dyers and finishers re-

'^portcd slight dips in incoming orders.

futures.;*; Prices on rye, oats and soybeans ad¬

moderately oveF;those of a'week earlier.?*-/

vanced

in prices

slacks

close to that of

preciaMy, ;i.butftdtak sales of cotton gray goods continued to lag.
Another

the

The most noticeable. increase

was

■

that

prior week.

Retailers increased their buying of

slight improvement in purchases of man-made fibers, ace-

prlces last wdek. 'Domestic .trading in grains was close to f ^worsteds and carpet

Although orders

during the week, they were down

sportswear and

suits,

futures

occurred in wheat

preceding week's level.

-•^iate^fand:'<syn'thfeii^ occurred. The buying of sheetings rose ap-

cold'weather in the f

slight rise in export business, helped raise grain

at the

dresses improved

Over-all textile trading was
some

bill to freeze farm price sup-'

on-a

for

men's

fur-trimmed winter

occurred, which helped to sustain trading in spring

children's summer

the comparable date last year.

/'Reports of possible action
ports

Some expansion took place in wholesale vol¬

in re-orders for women's

slight rise

for summer

the Dun & Bradstreet

On Feb. 24

Interest centering pri-

furniture, floor coverings and draperies but notwithstand¬

dresses and suits

daily wholesale commodity price index rose to 280.97.

under

England Hardware-

garden-implements, barbecue equipment, dinnerware

Last

19, when

Feb.

but volume continued moderately

Bookings at the New

Show exceeded expectations.

coats and suits

most grains,

week,
ago.

lines of home

ing this, moderate year-to-year declines prevailed.

this

far

marily

ume

coffee, sugar and some live¬
general commodity price level to the highest

the

last

year

and kitchen utensils.

price per pound of
raw foodstuffs and meats in general use and its chief function
to show the general trend of food prices at the wholesale level.

Price increases

Housewares

The index represents the sum total of the

many

food

iains

buying expanded

an^lnned

v
last week, with the most

goods, poultry and fresh meat. Increased

over-alldrad/b ::-fib)itfice:rdd$efed wholesale inventories and slight declines in
iiig,; flotlr prices' climbed7 somewhat during^hd week.r Commercial H ii/purchases of-sugar, flour and coffee were registered.
: Department stores sales on a country-wide basis as taken from
sales of. flour foiv
the£seasqirj tlirough Feb. "21 totaled 40,200,000
Although heavy snows ih many areas reduced

•

bushels compared With 3 lV70O,OOOffor
There

was

national- .Wheat

period last

same

Agfeement^t^'Japan, • Venezuela

dur'

the

season.

increase in sales of:Wheat under the 1957-58 Inter¬

and Denmark

Federal Reserve Board's index for the week ended Feb. 22,
period last year. In the pre%/ceding' week Feb;*15, 1958, a decrease of 6% was reported. For

lb- %'tbe;

.1958, declined 18% below the like

Feb. 22,

1958 a decrease of 9% was reported.

1» 1958 to Feb. 22, 1958 a decrease of *4% was

^rccofded belo^
There

was

moderate": rise in

inventories Somewhat.

previous: week.
cocoa

futures

Low

Prices
crop

estimates' resulted'in

prices, but trading

Although coffee

sustained close to those of the"

were

was

showed

transactions

States

Dec.

expanded

Chicago

and

the

hogs;

but

prices

continued

receipts equalled those of

under the similar 1957 period.

the prior week in slack
on

steers.
A

l0% ;ahovevth^lvolume of the like period in 1957 due mainly

price war on small appliances

low temperatures,

trade observers reported.

According to the Federal Reserve Board's index, department

Purchases of

Coast

with

prices

store sales in New York
1958

slight rise in the buying

week

Hog

For

the

Cattle receipts fell noticeably from

1957.

trading.

There

was a

fqar weeks ended Feb. 22, 1958, a

registered.
*2%

were

City for the weekly period ended Feb. 22,

below that of the like

period last year. 'In

preceding week, Feb. 15, 1958 a decrease of 1% was

earlier, but

Lamb prices slipped as purchases

reported.

decrease of 6% was

For the period Jan. 1, 1958 to Feb. 22, 1958 a decline

was

registered below

that of the

corresponding period

slight rise in prices
^Comparison period begins with Dec. 30-Jan. 4 week

lagged.

slight increase in cotton futures prices_jwas

levels.

decreased 32%

moderately

week

stimulated by pur¬

Inventories of green

totaled 2,959,000 bags, up

Pacific

formerly under the "fair trade"

Trade during the week was also

unable to shop as a consequence of snow and

the

in Chicago reported

City last week spurted

5 to

chasers who were

steady.
Wholesalers

of 1957.

change from the

from the 2,806,000 bags held on Dec. 31, 1956.

sugar

r' "n-

regulations.

little

prior week, futures prices advanced slightly.
coffee in the United

increase in

sluggish.

fhal

Retail trade sales volume in New York

th&' buying of rice, reducing

attributed to

and with Dec. 31-Jan. 5 week

in 1957.

in 1958

and

Inc.

which- is offering" to-*

subordinate

tures due March

deben¬

1, 1983 at 100%.

debentures^ are convertible

common-

and at

stock

$50

peif

before March 1,

1973

$55 thereafter.

The net proceeds from the* sale
of the debentures will be* used

by the corporation1 to-redeem $17',-

682,600 principal* amount of series
A and series B subordinate • detoen-

tures and $20,871,100" par value of
convertible preferred stock, rep¬

of such debentures
preferred* stock outstanding;
price

resenting all
and

The' aggregate" redemption
these

securities

amounts

$39,812,005, excluding accrued in¬
terest and dividends.
A

sinking fund beginning in
is designed to retire 70%

1969

debentures

of the

before

matur¬

The debentures wilh be re¬
deemed for the sinking. fund at
ity.

100%

and the

redeemable at the

option of the corporation at
time

any

prices ranging from
through March V 1961
downward to 100% after March
105,//2%

1, 1982.
Olin Mathieson Chemical

Corp.

large producer of. chemicals,

and ammunition,, explosives;
plant foods,, drugs and pharma¬
ceuticals, cellophane,, paper, lum¬
ber products and metalsi
Upon
the completion of its present alu¬
minum
expansion program, the
corporation: will, become a major
integrated producer and fabrica¬

arms

tor

ably over, that of a year ago in Atlanta.

oats,, barley, sugar, cottonseed oil and hogs.

rye,

moderately from that of the prior week.

Sales of major appliances and

again last week to another new high for; 1958, touching the highest
level since March 1, 1955..'The index rose 0.2% on Feb.. 25 to
$6.60 from $6.59 a week earlier. It exceeded the $6.11 of the com¬
parable date last year by 8.0%.
eggs, potatoes and steers,

Principal gains were noted in canned fish, baked goods
Volume in fresh meat, poultry and dairy products

advanced

Wholesale Food Price Index Scores New High for 1958
The Dun &

purchases of Lenten specialties last

and macaroni.

in all

levels

1957

regions except the Mountain States.

Housewives boosted their

week.

the Pacific

and

Co.

day (March 6) $40,000,000 of Olin
Mathieson: Chemical Corp: 5%%

con¬

Winter cloth coats
and suits.; Interest in Spring dresses expanded moderately but
the call for Spring fashion accessories and sportswear was slug¬
gish. Increased buying of men's furnishings and hats helped boost
over-all volume in men's apparel substantially over that of the
prior week. Sales, however, were down from a year ago.

reduced-price sales promotions,

their buying of women's

stepped up

sumers

all'industry and trade groups except wholesaling and con¬

struction, casualties were higher.

The total dollar volume of retail trade in the period ended on

the

ing group

into1

in many areas in the
preceding week, consumer buying rose noticeably the past week,
but volume remained below that of a year ago.
Washington's
Birthday sales promotions encouraged purchases of men's and
women's apparel and some household goods. Spot checks indicate
that sales of new passenger cars improved from a week earlier,
but were again below those of the similar week last year.
Following the blizzard that occurred

Read

Dillon,

Eastman Dillon, Union* Securities1& Co. head an investment bank-*

The

Noticeably in Past Week

Olin Mathieson 6%%

convertible

1.8% below; shipments 3.6% below and

was

7.9%

were

4,189,000 in the corresponding period last year.

Unfilled orders amounted to 29%

below production.

Production

<1075)

The Commercial and Financial Chronicle

aluminum

and aluminum

products. The corporation is also
actively engaged in the develop¬
ment of high energy and nuclear
fuels.

'•*

The Commercial and Financial Chronicle

(1076)

Continued

trivia

from page 14

By Growth Obsessed
periods when dollar values were
actually falling.
From past ex¬
perience, I doubt it.
An

old

that

criticism

buy

bonds

trustees

because

think

too
much
of
preserving
principal for the remainderman.
Apparently this criticism must
now give way to the charge that
we do not think enough of the re¬

mainderman

because

not

coming in from time to time to
join in the discussion. Among the
others

before

ministration at Carnegie Institute

esses

crease

Technology, who points out that
history
is
decidedly
concerning the claims of
both schools of thought.
economic
mixed

another

For

thing,

remember that for the
since

to this

heretofore

might

first time

1750, we have so far escaped
the pronounced deflation that has
followed

inflations

is that
We
children, ask¬ generated by great wars.
ing for current, not future, in¬ might remember, too, that the
come.
How much growth should ultimate
reckoning after World
with

widow

am sure,

small

foe

the

target

with

predict

when

cannot

certainty

any

the

exact date of the termination of

trust any more than we can pre¬
dict what the purchasing power
of the dollar will be at any

time?

Appreciation

with

commensurate

given
principal

rise

the

War

did not

for 10 years

come

the

after the end of

There

war.

for

suspecting,
be enter¬
ing the first real test in peacetime,
if we can call this peacetime, that
some

reason

then, that

has

we may now

come

since the innova¬

tions of the New Deal and the end

choose

call

them, because of the underlying
tidal
wave
of
growth that
is
sweeping us irresistibly forward.
One
of
the
arguments strongly
advanced in support of this as¬
sumption is projected population
increase. In the days of Malthus,

Graduate School of Industrial Ad¬

invest with sufficient emphasis on
ultimate appreciation.
Listening

criticism, I

Dean G. L. Bach of the

was

recessions, readjustments,

whatever

deemed

was

bution and

consumption, and look
hopefully to
bumper
crops
of
babies to keep us booming. Yet al ¬

Reserve

Board
with respect
to
advertising the results of common

from

trust

economists

funds

strongly suggest

that

should not.

What

Is the

But

Obligation?

not

dispose of our
problem simply by noting the
absence of a legal obligation in
terms of purchasing power. There
remains

moral

may

the question
obligation ) we

within

the

limits

the

Which governs
The

the

means

that

faces

and

us,

the

threat

partly in

limitations within which

the

must

work.
As

the

threat,

necessary in

who

one

it is hardly
limited discussion
is not a technical

economist, to attempt analysis of
the

various

kinds

and

causes

Inflation, whether "cost - push,"
"demand-pull," and so on.
For
our purposes this
afternoon, what
we

mean

cant

by inflation is

rise

general

specifically in

signifi¬

prices,
the

cost

living, in a given period of time.
In limiting our definition in this
manner, we might remember Al¬
fred Whitehead's advice to natural

philosophers, quoted in a recent
foook by Charles Curtis,2 to "seek
simplicity and distrust it." Nor
need we attempt to arbitrate the
current arguments among profes¬
economists.
Certain facts
and certain
questions,

sional

however,

cannot ignore.

For
look

one

the

thing,
fact

asked,
victory

defeatest
not

assume

does

exist, both
to what extent,

cannot

over¬

disagreement

whether, and
have

we may

con¬

tinued inflation, and also as to the
probable effects of such inflation
we may have.
Many may have

done

Graduate

School

Busi¬

Administration at the Uni¬
versity of California in Los An¬
geles, representing the more or¬
ness

thodox

school

holds that

even

ing"'

of
a

thought
slow

inflation
is
Sumner Slichter

representing
tolerant
moderate

which

"creep¬
harmful, and
of

another

Harvard,
and

view, especially toward
inflation, with others

2 "A
Commonplace Book," Charles
Curtis, Simon and Schuster, 1957.

this

can¬

because the price of

time,

own

despite

ourselves

pose

risk of

reason

not to

recklessly

the

mighty

ourselves

be concerned

regarded

had

have

reason

what

over

have

the "London Economist"

of their
shattered so

was

basic

many

tions

Americans
since
his

swiftly
in

say¬

the

weeks

Khrushchev propelled
Sputnik into space."
It

has been
never

our good fortune so far
to have encountered a crisis

could

have

not

surmount.

This

Godkin lectures at Harvard

sidestep a final answer to these
questions
and
these
conflicting

years

ago

views

never

known the

the

time

same

pass

caveat

that

"so

far

few

have

tragedy, frustra¬
tion, and sometimes defeat, which

those who already know for sure
exactly what is going to happen
to us, by recalling Disraeli's com¬

other peoples."
We hope,
must hope, that this will

ment

that

"what

seldom occurs,

anticipate

what

least

ex¬

pect generally happens."
The Means Available

Leaving

the

determine
the

future,

whether

the

Slichters, or the Disraelis are
right, we come to the prac¬

to be
tical

means

available for combat¬

ing this specter of inflation.
convenient
I

have

battle

are

means

among those
recent years for

acceptance

common

addition to

vestment

For

about the only
ready to hand.

been

our

doing
wider

stocks

arsenal

some

are

other

the

past

and

15 years.

better

There

reasons

for

the fear of

inflation, for there

is little convincing proof that ris¬

ing

stock

prices are necessarily
and
soljely a function of the
changing value of money.
The one thought of my own I
would inject into the discussion
has to do with the very
prevalent

assumption
not

at- all

that,
about

need

such

Please

not

misunderstand

I do not say these
things be¬
cause of any Cassandra

me.

work.

rules, varying

different

agreement

tives

the

and

the

and

You

objec¬

need

not

know

the

statutes; the

com¬

rather

than

preserve

create;

the repeated

reduce

risks,

the

boundaries

us.

them.

general

govern

mand

detail

jurisdictions, but in fun¬

damental

cases

warnings to
to take them;

not

admonitions

"eschew

the

for contractual

ar¬

and

much interested in growth

prosperity

Moreover,

any

one

perseptive

else.

person

today can fail to be increasingly
impressed by the promise of the
technological age in which we are
well

changes it
will not

our

somewhat

the

over

may

far

con¬

reaching

portend.

But

bring this promise to-pass
attitude

"silly baubles" what

dismiss

the

President's

sory

Committee3 has described

"superlative

member of

Scientific

scientific"

Advi¬
as

instru¬

same

erty, something, incidentally, that
may not be equally easy in all

jurisdictions.

question,
how¬
ever, whether we are ready to re¬
duce our concept of a trust to
little

than

means

of trans¬

liberal state, the courts are ready
to reverse the view that a trustee

own

property."5

The

about

after state steps should have been
taken to restrict and protect
the

growth.

his

today there

opportunities

for

suggesting only that

may

than before for joining in a little
that Arthur Guiterman ad"Earth

Satellites

Policy," Lloyd V. Berkner
Affairs," January, 1958.

and
in

Foreign
"Foreign

become obsolete.

obsolete,
changed.
Right

they

must

here

due.

Who is it that works to
bring
about the needed change? With
all

due

recognition

those

and

lators who have given their
sym¬

pathy and cooperation, it is gen¬
erally
the
trustees
themselves,
chiefly
the
corporate
trustees,
through
their
associations
and
special committees, who have in¬
stituted
needed

and
brought about the
changes, especially in our

the

credit

for

moment

1830,
year of the Harvard College
It is easy to forget how few
porate securities
We

were

case.
cor¬

then avail¬

still predominantly

were

agricultural

the

only
people lived in
cities; what is now the great city
of Chicago was then little more
about 10%

than

•

economy;

our

trading post.

We had

railroads, no electric utilities, no
telephones, industries which today
provide the bulk of the corporate
obligations available to trustees.
A New

York Stock

prevailing,

natural

stated
in

that

only

seems

court

rule

should have

trust

investment

But

note

the

change by
1869, the year of the New York
decision in King v. Talbot.6
We
were
turning rapidly from
an
agricultural toward an industrial
economy.

ing
in

across

Railroads were stretch¬
the country, indulging

financial

some

they stretched.
the

panics

had

fought

high jinks as
We had suffered

1837

and

1857:

ground

The New York Stock

had

for

become

speculators

play¬

Jim

Fisk, Jay Gould, and Daniel Drew.

reprinted,
the Volume

along
with
other
"Gaily the Trouba¬

dour," E, P. Dutton.
5 Dumaine

220,
6

Dumaine,

N. E. 2nd 625, 629

King

been

some

times

able,

that the courts would
change than trustees,

too,

be slower to

for the law in general tends to
lag
behind the economy. By and

large,

however,

our courts
that
trustees

nized

completely

have recog¬
cannot

insulated

from

the

economy.
They have not over¬
looked
the
word
"probable" in

the

expression "probable income
probable safety." They have
judged us not alone on results, but
and

the

principles and
actions, and the

our

have

employed in
To do other¬

carrying them out.

wise would be to rate the luck of
the speculator above the discre¬
tion of the prudent man.
One respect,
however, in which
law still lags, perhaps less in

our

jurisdictions than in others,

some

has to clo with what I call the
doctrine of the separability of in¬
vestments.
Under
the
circum¬
stances

and

the

sponsibilities

principle

broadened

face

re¬

today,

accounting

any

which

concentrates on one transaction to
the exclusion of all others can be
described

only

iniquitous
theory
doctrine, that it dis¬

anachronism.
behind

this

the

know

speculation

one

in¬

vestment to make up a loss in

an¬

courages

other; and I am asking no immu¬
nity from examination or account¬
ability. : Under present-day cir¬

cumstances,

however,

trine

does

which

whole

program is
and a needless

any

not

interrelated

look

doc¬
at

performance

outmoded, unjust,
handicap to con¬

structive action.
On

the
our

other hand, our
courts,
trustees, should not be

led

down dangerous paths by this
Enchantress
known
as
Growth.

Many
from
a

you,

California,

recent

which

especially those
familiar with

are

decision

surcharged

that

state

trustee

not

only for capital gains tax incurred
in

the

but

sale

stocks

attempted to include
the

measure

probable
the

stocks

future

profit,
as

part

damages

any

appreciation

disposed of from

date

of sale to termination of the trust.

Happily, this portion of the lower

4 Later
verse,

have

decisions,

Civil War and seen
the fading of the boom that fol¬
a

war.

beneficiaries,
beneficiaries.

wtih

there

courts, it
the whole

judges,

general rather than in specific

terms.

our

many of them are without invest¬
ment experience. It is understand¬

repre¬

since

like trustees, are only
human, and
some reversible
errors, for

diligence

evolution

able.

and

course

that

Consider

their

tunes.

gratitude to

lawyers, judges, and legis¬

rules

sent efforts to guide trustees away
from a repetition of past misfor¬

where

ity fail to give credit where it is

these

and

be¬

critics of the trust fratern¬

many

primarily

experience,

and

can

When they

come

motives

actual

rules may be

origins, they

remember

reason

prayer

their

Exchange

and

But justifiable
in

thing

they
were not dreamed up
arbitrarily
by courts and legislatures for the
special annoyance of trustees. For
the most part they are the result
of

remembering

our recurring
crises, our fluctuat¬
ing corporate fortunes, the finan¬
cial growing pains that accom¬
panied our expansion as a
nation,
is it too surprising that in
state

derstanding

environment

of the 19th and into

the present century,

unfortunate

low the

his

As
re¬

trustees

status and powers
individual owner of prop¬

ments representing the beginnings
of a major advance in man's un¬

years earlier?

forward through the
years

tically the

then

nearly 40

come

rangements
under living
trusts
which would give a trustee prac¬
an

conservative view of trust invest¬
than
the
Massachusetts

should be said that
trustees
and
with

York

ments

investment laws.

in recent years

New

taken

know there have been arguments

just

complex,

that

have

exuberance of the speculator" and
"the optimism of the promoter." I

because I have any small view
of the future of this
country; I am

circumstances,

should

investment of trust funds?

The Rules That Govern

Exchange list
in 1827 showed 8 bonds, 12 bank
stocks, and about 30 insurance
company stocks. Under conditions

3 See

worry

temporary

always
right to

any

simply because we are
Americans,, and therefore des¬
tiny's darlings, that it will always

living,

buying stocks than either the fact

assume

cerned

prices and the cost of living
quite different from the rec¬

ord

but have

so;

of in¬

There have been considerable
pe¬
the relative trends of

were

all

and I natu¬
views about them.

weapons,

rally have

ingrained in the memories of

arc

be so?

then, to
Jacobys,

this is digressing, and we
need to say a word about the legal
framework within which

seen

assump¬

Mr.

first

the

economists, and at

States of America.

own

Fortunately, for the purposes of not the first time I have quoted
discussion, we can Adlai Stevenson's reminder in his

our

United

position of does not enjoy that "illimitable"
leadership
among
the
Western potentiality which an unrestrained
Powers.
Only a few week ago, individual possesses respecting his
our

this particular

the

of
Sir Winston ferring
legal
title
to
property
have witnessed sub¬ which
belongs
beneficially
to
liquidation of the once some one else. I question whether
British Empire.
even
in
Lately,
Massachusetts, that most

ex¬

ultimate "bust?"

care

constantly creeping
inflation which governments, for
political reasons, will not be will¬
ing
restrain until it becomes a
galloping inflation, then is there

stock

the

that

our

written

have

deflation is

view" between Neil

Jacoby, Dean

Churchill,

could

ing that "Few nations have

riods when

historians

the subject.

cannot

schoolboy

frus¬

books
In

full employment and the defeat of

followed the debate in recent is¬
the "Harvard Business Re¬

sues of

that

attitude

trustees, stocks

that

you

stantial

great

avoidance

dozen nations that
flourished and then faded.

name

protestations

not all the more

painting and
tration,
any

toward
may

the

suspend

But

which

affairs, why, it
in view of this
over
deflation,

take

such

surprising

maining

ordinary rules,

elaborate

business

bitterly criticized when first pro¬
posed; if we can rely upon in¬
creased government responsibility
economic

Continue

find,

Eminent

economists

same

miracles and other

esqteria,

placent belief that any company,
any industry, any nation, or civili¬
zation will continue to grow in¬
definitely and without serious in¬
terruption. Examples are easy to

have

should

lies partly in the

seriousness

incidentally,

fools,

And

too

Thursday, March 6, 1958

Under

court

With silent

court

in backward areas of the
Here, certain fundamental facts
earth, the rate of population in¬ must be
recognized. The first is
crease is causing worry, and some
that wherever a set of rules has
one has wisely said that increas¬
been
established, whatever we
ing the number of paupers will
may think of those rules, so long
not enlarge our markets.
as they are in force and are en¬
May I suggest that there is little forceable, they must be observed.
historical justification for a com¬ In
trusteeship we do have a set

about,

be equally effective at restraining
inflation? If the answer takes the

foackground I have already
sketched, partly in our views as
to

much

our

what

to do what

us,

answer

stabilizers

these

con¬

taking comfort

built-in
talk

have

have,

available and the legal framework
can.

deflation,

the

some

Moral

quered

stabilizers,

that

assume

years

ready

and elsewhere.
index of living costs does not nec¬ of World War II. What about the Our own record shows important
essarily mean a corresponding in¬ effect of increasing productivity, periods of instability and irregu¬
crease in income.
I have actually and the argument that the present larity, in Gross National Prod¬
heard complaints, not because of distribution of age groups in our uct, corporate profits, and particu¬
losses,
but
because
substantial population presages a sharp in¬ larly in stock prices. It is easy to
appreciation already present in a crease in the labor force in the forget
that
stock
prices
were
trust was not substantially great¬
early
1960s,
a
change
which longer than most parts of our
er.
Are trustees to embark upon could reduce the inflationary ef¬ economy in
recovering to former
fect of the "cost-push" in wages? levels after the 1929 crash. If our
a competitive race for growth in
speculative ventures?
The judg¬
One question we might ask has schools
gave
more
attention to
ments of a long line of cases, the
perhaps as much to do with logic such obsolete subjects as history
history of investment legislation, or psychology as with economics. and grammar, and less to finger
and the regulations of the Federal

.•

Providence, which looks after
children,
drunkards,
and

To¬

menace.

some

y
-

production, population in¬

day, having produced prodigious¬
ly, we turn our concern to distri¬

to Providence

through the columns of "The

ago

had mastered the proc¬

dressed

New Yorker"4:

Mass.

214,

(1938).

Talbot, 40 N. Y. 76,

(1869).

court decision was overthrown

appeal, but adoption of this line
of thinking would

fly in the face

Thng line of cases and open a

Volume 187

Number 5722

The Commercial and Financial Chronicle

veritable Pandora's box of prob¬
lems.
IV

Conclusion

Having sketched some back¬
ground, having posed some pres¬
ent

problems and

questions
about them, how do we tie these
several lines of thought into some
some

sort of conclusion?

think

concept of

conclude

can

hold

can

the

trust essentially as a
device still stands.
I

growth

all, I

that

protective
think

First of

conclude

can

often

both

that

capricious,

welcome

and

un¬

welcome surprises. I think we can
recognize that it may be prema¬
ture to build

new

vestment and set

theory of in¬

new

measure

performance on the record of
too short and too unusual a
period
of time. At the same

time, I think

must

any

ask

whether

there

reason

why trustees should
consider, and should not be

not

permitted

to
to

measures

take,

meet

reasonable

the

nomic threats that

same

come

prudent investors.

eco¬

other

corollary

question, is there

any reason why
be asked to at¬

trustees

should

tempt

difficult, perhaps

probable

im¬

achievement, and then,

alone among investors, be subject
for the slightest failure to
the
penalties of needless litigation and

attempts
ing?
In

legal

return

second

for

responsibilities and

jobs that trustees

guess¬

the

heavier
difficult

gladly

are

dertaking, is it too much
that

the

should

law

fully

creased

which

un¬

ask

governs

recognize

these

responsibilities

with them in

and

in¬
deal

just and enlight¬

ened manner?
If
we

conclude, then,

must, that

this

duty

our

I think
prudent

balance

sense

the investment field.
of

far

from

makes

for

order

quote

and

for

Headley

har¬

Some critics may argue that this
is an attitude of undue
caution,

Needed

Laboi-Management Laws

that

his

wasn't

put

Anti-Monopoly Law

regardless of who makes

predictions

indictable

offense, the
jails would be full of economists."
do

not

blind

economy

weigh
I

relative

pay

should be

values.

There

benighted souls, among
myself, who could

count

virtue

see

shifting currents in the
or dispense with efforts

were some

whom

that

mean

definite

time

contract

of money,

sum

the

future,

with reasonable rental for the
of that money in the

use

meantime,
especially with that rental com¬
paring favorably with stock yields
before

even

the

November
market

that

sudden

Federal

Reserve

lifted

back

must

frailties

-action

Board

lagging bond

life.

recognize

prediction,

mean

human

that

must determine the relative

respective

our

and that

last

rights

beneficiaries,

want, so far as possi¬
ble and appropriate in particular
cases, a balanced rather than a
one-sided hedge against the future.
It

up that
Therefore,
legal
(restraint
should
be
imposed
against the concentration of union
power by groups of unions when
that power becomes a threat to
the welfare and security of our
country.
What
right
has
one
group of citizens to combine and
drive somebody else out of busi¬

concentration.

and, at the same time, it is
unlawful for other groups to do

ness

likewise?

in terms

speak

chal¬

lenges, and then with unbounded
optimism
about our
ability to
meet them.
The challenges are

■;>yy

Law and Order

Sixth, the responsibilities for
maintaining law and order and
for the prosecution for assaults,
bombings,
a n d
like
offenses
should remain the responsibility
local

The

state

and

national

governments.
at

government

Washington should not undertake
to provide police protection for
every community in the United
Citizens

States.
states
a

business

Cites
The

union

ism, urged upon the workers of
America, "devotion to the funda¬
mentals of human liberty — the
principles of voluntarism." vIIe

some

localities need

and

our

to take

look at their local government.
Last fall the McClellan Com¬

mittee spent many

testimony

days taking the
the
situation
in

There

Tennessee.

received

Right to Work

went

And

has

eighth, union membership
should be voluntary and not com¬
pulsory. This goes to the very
heart of all of the problems in¬
No

cure

our

to meet whatever economic
prob-

citizen

grand chief of the Brotherhood of

Locomotive Engineers, said: "We
still think that labor in the long
run
has a good enough product
that you won't have to force men
to join."
•

American

required
ing any
chooses

his

hold

citizen

refrain

No
be

from

join¬
organization he

lawful
in

job.

should

order

secure

Compulsory union membership
corruption and abuse of
power on the part of union officers. Voluntary union membership makes for better unions and
for honest and faithful trusteeship on the part of their officers.
invites

hold his

job. The right to work
a
basic individual right.
Our
courts, including our
Supreme
Court, have held it so. Compulsion and compulsory membership
in any organization is repugnant
to our concept of liberty in this
country.
i V

When

Dave

Beck

was

from

abilties
we

encounter, how shall

about the job?

My answer
shockingly elementary.
It is
simply by preserving our perspec¬
is

tive and

of balance. Sev¬

our sense

eral years ago,
table addresses

of his

one

friend

our

Headley pointed to balance
of

the

foundations

no¬

Louis
as one

trustee's

philosophy. "In law," he reminded
"it

us,
and

sound

the

not

trust.
to

recollection

amount

because it is

the

for

mark
or a

between

precise dis¬

various
each

types of

and

every

It does

mean a willingness
weigh the merits of particular

prove
serve

our

to do the

are

them

obvious

istic

the

fore

the

exuber¬

orbit into uncharted space, is
least a little thought to the

earth.

safe

return

brilliant

Of the fortunate specu¬
On the other hand, it will

Form Rodner
The

been

Bodner
formed

Corp.

Corporation

with

offices

has

106

East 19th Street, New York

lator.

to engage in a securities business.

certainly not exclude, but in fact Officers
make

able

growth

that

prosperity
that
in

the

comes

have

sure,

the

reason¬

wholesome

with

national

those

companies

established

themselves

confidence

are

City,

Jacob Bodner, Presi¬

dent

and
Treasurer;
Anna
Bodner, Vice-President, and Abra¬

ham

Wilk, Secretary.

formerly did business

Mr. Bodner
as an indi¬

greed;

it will soften the blow
adversity strikes, and re¬
probability of its strik¬

the

ing.
The

principle

meates

our

whole

balance

per¬

ebonomy.

It is
imbalance between important in¬

terrelated
omy

that

elements
causes

the

trouble.

own¬

Hooker & Fay

Add

CSpecial to The Financial Chronicle)

SAN

FRANCISCO,

Calif.

—

union

the

New York

Stock

and

Pacific

Coast

lieve that

the

can

take

their

jobs

their officers

are

cor¬

rupt and that their union is fol¬

losing

effectively voice their protest

can

improper actions

their officers.

the part of

Voluntarism is the

American way.

their

elevator

left

union meeting. An attempt was
made to put his eyes out. One of
the blows that he received has

sulted in

death.

cancer.

before

taken

was

case

local

magistrate he re¬
anything and said,
just a union brawl
do not go into that."

fused

"Well

that

and

re¬

It may mean his

When that

There

Mail your Annual

Report to the Investment

are

Houses

two situations where

them

the

Investors look to

Country.

information

for

your

perhaps the Federal Government
should step in, and I am inclined
believe

should

that

consideration

Addrcs&oyraph Service

given to legislation in
those fields. First, in the case of
the
transportation of hoodlums
committing

violence

conflicts.

lieve

that

the

ment

will

have

labor

Secondly, I
Federal

graph

metal stencil in

for

our

every

Addresso-

investment '

be¬

banking and brokerage firm in the country,

Govern¬

alphabetically

arranged

property on
Federally financed projects. This
must be done to protect the Fed¬
eral taxpayers.
It is necessary if
we
are
going to hold down the
costs of our public building pro¬
grams such as the highway pro¬
gram.

Department

step in with
laws dealing with violence
destruction

and

We have

state lines for the purpose

across

some

company.

and

States

Cities, and within the Cities by firm names.

This list is revised daily and offers you
most

the

up-to-the-minute service available.
;

Our

the

union for

$7.00 per thousand.

Unions

their acts.

charge for addressing envelopes for the

complete list (United States or Canada) is

BEVERLY

HILLS,
Calif.—
Marcy Leondar has been added to
staff

members

Daniel

the

Stock Exchange.

Weston

Pacific

Coast

should be held responsible for the
acts of their members and officers
when

union

they are acting for the
just as employees and of¬

can

also supply the list on

labels at

gummed roll

small additional charge.

liability

that particular business.
there

But

Daniel Weston Adds
(Special to The Financial Chronicle)

Co., Inc., 9235 Wilshire Boulevard,

beaten

national

resources, a type of im¬
that has often signaled

losing

ficers of business create

Exchanges.

the

trouble in the past.

without

though they know and be¬

even

Larry K. Hatlett has been added
to the staff of Hooker & Fay, 221
Montgomery Street, members of

ership claims, between debt and
balance

em¬

stop paying dues with- lowing a course with which they
their jobs? He didn't totally disagree. The right to join
want to answer.
I had to keep
or not to join and the right to re¬
after him for 15 minutes. I finally
sign from an organization are not
got the answer from him. He very
reluctantly
admitted that they only basic freedoms but they are
could not.
In other words, the the way by which the members
out

Fixing Responsibility

At the

between creditor claims and

the

union and

Seventh, unions should be re¬
quired to adopt a form of organ¬
ization that fixes responsibility on

econ¬

present time, some of us are won¬
dering if in recent years we have
not been building up imbalance

compulsory

When we were investigating the
operative engineers in Philadel¬
phia, we received the sworn testi¬
mony of a Mr. Ed McCarty.
He
told
how
he
was
unmercifully

prudent in¬

It will moderate acquis¬
desire
before
it
becomes

when
duce

other

contracts,

vidual dealer.

vestors.

itive

failed

have "union shop"

duty.

successes

may

officials

union

pur¬

Quite frankly,
balance in investment affairs can¬
match

suggesting, be¬

embark upon any

light

declared

and

job

What I

scene.

the trust.

pre¬

some

determina¬

hope

Indeed, in

we want to do.
are trying to
hard-headed, real¬
judgments on our passing

lead to is

remainderman, and

not

local

What these remarks

possibility

poses of

performance, and
trusts.

our

tenant

between

bit late for

just

the future, or even
present, with the completely
unspoiled vision of youth, it cer¬
tainly does not follow that I am
any
the less interested in con¬
tinuing to reform our laws, im¬

relative rights of life

the

But

contemplate

ant

tion

certain

the

securities for particular purposes.
It does mean a recognition of the

and

experience.

Applied to the jurisdictions, we must not only
it obviously hope but work for further flex¬
ibility and wider latitude, if we

halfway
stocks and bonds,

securities

precise division

the

justice,

essence

readily confess to
the handicap of a certain amount

use,

mean

tribution

the

judgment."

securities

does

symbol

business

ployees cannot withdraw from the

Committee, I said
to him, "Suppose that your mem¬
bers believe these charges against
you and that you have misappro¬
priated their funds—can those
■! withdraw

contracts

membership

McClellan

members

Whenever

•

before

real

generation.

which, united, is invincible."
recently Guy L. Brown,

stories
of
beatings,
shootings, members of the Teamsters Union
enough, but to the more ebul¬ overturning of trucks, the bomb¬ are
captives.
They are pawns.
powers and the means
available, lient spirits among you, my com-- ing of warehouses, the destruction Even
though they lose confidence
and still judging our
performance ments may seem lacking in suffi¬ of property generally, the block¬
in their officers, disagree with the
on
the motives and
principles of cient optimism — more like the ing of highways, and all manner
course that the
union is taking,
our
action, is to do what we can croakihgs of a somewhat older of offenses. In too many cases the

trustees, within the limits

required to belong to
organization in order to se¬

American

the

to warn, "No lasting gain
come
from compulsion.
seek to force, we tear apart

ever

that

should be
any

Gompers

great Samuel Gompers, the

father of modern American union¬

unions

volved.

It is hot American.

corpo¬

czars
dominating
by placing them in
trusteeship or under some form
of supervision.
.

local

The public is

entitled to the protection from the
concentration of economic power

into court. It would
end to this shameful prac¬

can

from the concentration

come

of economic power.

to be the fashion these

seems

days

tice

Fifth, anti-trust and anti-mo¬
nopoly laws have been enacted to
protect the public from the abuses

remark that "if wrong
an

stockholder
ration

that

were

money,

UAW money.

was

protest

fair.

nor

was,

we should be able to judge
swiftly and shift boldly from one
type of security to another. Those
critics have forgotten Elliott Bell's

that

though they feel that
is being stolen, they
by withdrawing
from the
union
without losing
their jobs.
That is neither just
even

cannot

again,

"it distinguishes the reliable lead¬
er from the fanatic."

their money

judicial

mony.

and

page

ask

can

decisions; we can
apply it to our appraisal of eco¬
nomic or political affairs, and we
need have no apologies about it.
In practically all human affairs
it

Continued

beyond

(1077)

another

reason

why unions should be required to
incorporate or adopt some similar
type of organization. The individ¬
ual

members

some

would

rights which

are

then

and

record.

Publishers of

"Security Dealers of North

have

defined by

are
a
matter of public
They could go into court
and protect those rights just as a

law

Herbert D. Seibert & Co., Inc.
25 Park Place

REctor 2-9570

America?

New York 7

The Commercial and Financial Chronicle

(1078)

Thursday, Marchv6, 1958

* INDICATES

Now in

Securities
Aerotica
Feb.

Manufacturing Corp.
notification) 5,000 shares of common

10 -{letter of

$1). Price—S6 per share. Proceeds—To go to
selling stockholder. Office-—Germantown Road, Middletown, Ohio. Underwriter—Greene & Ladd, Middletown,
stock (par

Ohio.

Air-Shields

Inc.

(letter of notification) 4,650 shares of common
(par $1). Price—$21.50 per share. Proceeds—To
selling stockholder. Office—330 Jacksonville Rd., Hatboro, Pa. Underwriter — 'W. H. Newbold's Son & Co.,
Philadelphia, Pa.

Feb.

stock

★ American-Carribean

Oil Co.

options.

(N. Y.)

other

share.

per

and

lanta, Ga.

Underwriter—None.

corporate

Proceeds—For

Office

purposes.:

—

At¬

filed

400,000 shares
Price—$1 per share.

stock

(par 25
cents).
Proceeds—To reduce out¬
standing indebtedness and for working capital. Under¬
writer—McDonald, Holman & Co., Inc., New York.
common

★ Banner Fibreboard Co.

share).

Proceedst-For

working capital.

Address

inventory, equipment and
P. O. Box 390, Wellsburg,

—

Underwriter—None.

★ Bishop Oil Co., San Francisco, Calif.

share. Proceeds—For capital and surplus accounts. Office

(3/21)
Feb. 27 filed 112,565 shares of common stock (par $2) to
be offered for subscription by common stockholders of
record March 20, 1958, on the basis of one new share
for each five shares held; rights to expire on April 3;
Price—to be supplied by amendment. Proceeds—for re¬
duction of bank loans, expansion and general corporate
purposes.
Underwriter—Hooker & Fay, San Francisco,

—Fargo, N. D. Underwriter—None.

Calif.

American Life & Casualty Insurance

Co.

Bee. 3 filed 101,667 shares of common stock (par $1) to
be offered dor subscription by common stockholders at
the rate of

one new

share for each two shares held; un¬

subscribed shares to be offered to public.

Price—$10 per

American Mutual Investment Co., Inc.
Dec. 17 filed 490,000 shares of capital stock. Price—$10.20
per

share. Proceeds—For investment in first trust notes,

second trust notes and construction loans. Company may

develop shopping centers and build or purchase office
buildings. Office — 900 Woodward Bldg., Washington,
C.
Underwriter — None.
Sheldon Magazine,
Highland Drive, Silver Spring, Md., is President.
D.

1201

40,000
stock.

one

capital stock (par $1) to be offered
$50 debenture and 20 shares of capital

Price—$90

unit.

per

working capital.
Gould, Salem, Mass.

American

.Telephone & Telegraph Co.
Dec. 31 filed $718,313,000 of 4XA% convertible debentures
.due March 12,1973 (convertible into common stock, be¬
ginning May 12, 1958, at a price of $142, representing
$100 debenture and $42 cash) being offered for sub¬
scription by stockholders of record Jan. 24, 1958 at rate
of $100 principal amount of debentures for each nine
shares held; rights to expire on March 12, 1958. Price—100% of principal amount. Proceeds — For advances
to subsidiary and associated companies; for purchase of
offered

for

stockholders of record Dec. 31, 1957 at the rate of three
new
shares for each two shares held.
Price—$10 per
share. Proceeds—To construct new vessel. Offices—Port

Jefferson, N. Y.; and Bridgeport, Conn. Underwriter—
'F::/',//:

■■

Uranium

Underwriter—None.

filed

writer—None.

York

effective Jan.

17.

Corp.
Dec. 23 (letter of notification) 14,700 shares of class B
common stock (par
$1). Price—$12 per share. Proceeds
—To go to selling stockholders.
Office — 700 N. 44th
Street, Birmingham, Ala. Underwriters — Cruttenden,
Podesta & Co., Chicago, 111.; and Odess, Martin & Herzberg, Inc., Birmingham, Ala.
e

Andes Copper

Feb.

share of class B stock for each six shares of

capital stock (par $14) held as of Feb. 28, 1958; rights
to expire on March 18.
Price—-At par ($25 per share).
Proceeds—To pay outstanding obligations to Anaconda
Co., the parent, for funds advanced. Underwriter —
None.
Anita Cobre U. S. A., Inc., Phoenix, Ariz.
Sept. 30 filed 85,000 shares of common stock. Price—At
par ($3.75 per share). Proceeds—For investment in sub¬
sidiary and working capital. Underwriter—Selected Se¬
curities, Inc., Phoenix, Ariz.
★

City.

Atlas

capital stock.

a liquidat¬
the 3,000,000

Office—New

Price—At market.

Proceeds—For

in¬

Carolina Power & Light Co. (3/18)
Feb. 17 filed $20,000,000 first mortgage bonds due 1988.
Proceeds—To repay bank loans and for construction

Underwriter—To be

bidding.

Probable

competitive

Inc.; W. C. Langley & Co. and The First Boston Corp.
(jointly); Equitable Securities Corp. Bids—Tentatively
scheduled to be received up toll a.m. (EST)

March 18.

Central Mortgage & Investment
Corp.

Sept. 12 filed $5,000,000 of 20-year mortgage bonds and
500,000 shares of common stock (par five cents) to be
offered in units of $100 of bonds and 10 shares of stock.
Price—$100.50 per unit. Proceeds—For purchase of first
mortgages or to make first mortgage loans and for con¬
struction

business.

writer—Aetna
★

Office—Miami Beach, Fla.' Under¬
Corp., New York. Offering-

Securities

Jan.

★ Bankers Fidelity Life Insurance Co.
Feb. 28 filed 258,740 shares of common stock
(par $1),
of which 125,000 shares are to be offered
publicly and
133,740 shares to employees pursuant to stock purchase

determined ,by

bidders:

Halsey, Stuart & Co. Inc.;
Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fenner & Smith
(jointly); Lehman Brothers; Blyth & Co.,

Proceeds—To increase
York.

5.28

held; rights to expire on March 10.
share. Proceeds—To repay short-term

Price—$24 per
bank loans and for additions and
writers—W.

Hutton

Co.,

improvements.
New

Under¬

York; and

CAPITAL TO INVEST!
securities

advertising in the Chicago Tribune will reach more of these
jun in .any .other
;Chicago newspaper. The
is read by both professional buyers and the
general public.

midwesterners than when

Tribune
Your
you

nearest

Chicago Tribune representative will be glad

to give

details.

WOAiD'S

America's most

GREATEST

HJEWSSAPER

widely circulated market table

pages

★ Commonwealth Telephone Co., Dallas, Pa. *(3 20)
28 filed 71,200 shares of common stock '(par S10)
to be offered for subscription by common stockholders
of record March 7, -1958 at the rate of one new share
for

each

five

amendment.

^ce—5616 Park Ave.,
Jean R. Veditz Co.,
Feb.

Dillon,

Price—To

be supplied by
bank loans. Under¬
Securities & "Co., New

repay

Union

York.

(

Co. of N.

Y., Inc. 14/22)
March 3 filed $50,000,000 of first and refunding mortgage
bonds, series O, due April 1, 1988. Proceeds—To retire
short-term

bank

loans

for

and

construction iprogram.

Underwriter—To be determined by competitive/bidding.
bidders:
Halsey, Stuart & Co. Inc.; Morgan

Montreal, Canada. Underwriter—
Inc., 160 Broadway, New York.
(3/12)
of .cumulative

filed 130,000 shares
preferred
(par $100), Price—To be supplied by amendment.

Stanley & Co.; The First Boston. Corp.
on April 22.

ceived

Bids—"To be

re¬

' '

■ ■

Mining & Oil Corp.
(letter of notification) 250,000 shares of common
stock (par 10 cents).
Price—$1 per share. Proceeds—
For mining expenses. Office—1500 Massachusetts Ave- }■
nue, N. W., Washington, D. C. .Underwriter—E. U. Wolfe
Associates, 1511 K St., N.W., Washington, D. C. V/F
> ,,,
Dec. 9

Counselors
Feb.

filed

cent).

Research Fund,

100,000

Price—At market.

Underwriter

Louis.

Counselors

—

Inc., St. Louis, Mo.
capital stock, (par one I:

Proceeds—For investment.
Research

Sales

Corp.,

St.

Robert H. Green is President.

Cubacor

Explorers, Ltd.

Oct. 28 (letter of notification) 600,000 shares of common
stock (par $1-Canadian). Price—50 cents per share-U. S.
funds.
Proceeds — For exploration and drilling costs.

Office

Suite 607, 320 Bay St., Toronto, Qnt., tCanada.
Underwriter—Stratford Securities Co., Inc., 135 Broad¬
way,

—

New York.

Offering—Postponed indefinitely.

•

Daybreak Uranium, Inc., Opportunity, Wash. *
Jan. ,29 filed 1,156,774 shares of common stock <(par 10
cents), of which 630,000 shares are to be offered for ac¬
count of company and 526,774 shares for selling stock¬
holders. Price—At market.
Proceeds—For exploration
and drilling costs and other corporate purposes. Under¬
writer—Herrin Co., Seattle, Wash.
•
Diapulse Manufacturing Corp. of America

Jan. 29

(letter of notification) 150,000 shares ofjcommon
(par 10 cents). Price—$2 per share. Proceeds—
For general corporate purposes. Office—276 Fifth Ave.,
New York, N. Y. Underwriter—None.
stock

Digitronics Corp.
12 (letter of notification) 140,000 shares Of class B
capital stock /(par 10 cents). Price — $1.50 per share.
Feb.

Proceeds—For

general

corporate

purposes.

Office—Al-

bertson

Avenue, Albertson, Long Island, N. Y. Under¬
135 Broadway, New
6, N. Y.

writer—Cortlandt /Investing Corp.,

Disc, Inc., Washington, D. C.
Oct. 10 filed 400,000 shares of class A common stock (par

Price—$2.50 per share. Proceeds—For investment.
and development of real property,
acquisition of stock of business enterprises. Under¬
writer—None. Irving Lichtman is President and Board

$1).

Business—Purchase
and

Chairman.

Dixon Chemical & Research, Inc.

shares of

common

stock (par$l) to

offered for subscription by common stockholders at
the rate of one new share for each four shares held.
Price—To

expansion

and

supplied by amendment. Proceeds—For
general corporate purposes.
Office-—

Clifton. N.

New York.

Offering—Temporarily postponed.

Underwriter—P. W. Brooks

Co., Inc.,

★ Dresser Industries, Inc.
Feb.

28 filed

128,347 shares of common stock -/par 50b)
exchange for outstanding common stock

to be offered in

Proceeds—For construction and
improvements, to repay
bank loans, and for other
corporate purposes. Under¬

of the El gen Corp. on the basis of one share of Dresser

writers—Morgan Stanley & Co., W. E. Hutton & Co.,

Blyth & Co., Inc., all of New York.

Cincinnati Gas A Electric Co. (3/12)
1
Feb. 20 filed 450,923 shares of common stock
f(par $8.50)
to be offered for
subscription by common stockholders
of record March

11, 1958,

the basis of

Probable

Cincinnati Gas & Electric Co.
stock

held.

Proceeds—To

writer—Eastman

Dec. 24 filed 165,625

May 14 (letter of notification) 600,000 shares of common
stock
(par $1—Canadian).
Price—50 cents per share.
(U. S. funds). Proceeds—For exploration
costs, etc. .Of-

and
THE

/ Commerce Oil Refining Corp.
/-i;/F
16 filed $25,000,000 of first mortgage bonds due
Sept. 1,1968, $20,000.00 of subordinated debentures due
Oct. 1, 1968 and 3,000,000. shares of common stock to ;be
offered in units as follows: $1;000 of bonds and 48 shares
of stock and $100 of debentures and nine.shares«f stock.
Price—To be supplied by amendment, -proceeds — To
construct refinery. Underwriter—Lehman Brothers, New
York. Offering—Indefinite. > ^ V V
;
: -> / -i F::
1

Laird,

Wilmington, Del.

Chess Uranium Corp.

Chicago and Mid America there are over 1,400,000 stockholders.
They emphasise liowiavestment-coxiacious this -rich market is. Your

due 1933.
Underwriter—To

program.

Dec.

York

29 filed 20,833 shares xof common stock
(par $20)
being offered for subscription by common stockholders
of record Jan. 30, 1958 on basis of .one
new share for

each

competitive bidding. Probable bid¬
ders: Halsey, Stuart & Co.; Morgan Stanley & Co.; Mer¬
rill Lynch, Pierce, Fenner & Smith and White, Weld &
Co. (jointly).. Bids—Tentatively expected up/to 11 a.pi.
(EST) on March 6.
^ '

Chenango & Unadilfa Telephone Co.

Bissell & Meeds,

determined

vestment.

Date indefinite.

inventories, expansion, and reduce
Underwriter—Van Alstyne, Noel & Co., New

construction

Proceeds—For

owns.

Underwriter—None.

Sewing Centers, Inc. (3/7)
Jan. 6 filed $1,000,000
convertible subordinated
debentures, due 1973. Price—100% and accrued interest.
bank debt.

Mines

★ Canadian Fund, Inc., (N. Y.)
Feb. 28 filed (by amendment) 200,000 additional shares

gram.

(letter of notification) 6,277 shares of class B
capital stock being offered to minority stockholders at
one

Uranium

pro¬

Mining Co.

rate of

comes

Canadian

Co.,

Columbia Gas System, Inc. (3/6)
Feb. 7 filed $30,000,000 of 25-year debentures

Mines

of America, Inc.
3,000,000 shares of common stock (1 cent
par), all owned by Camoose Mines Ltd., which is in
liquidation rand has equivalent amount of stock out¬
standing (1 cent par). When registration statement be¬
Jan.

Proceeds-^F.or

Continental

Butler Brothers, Chicago, III. (3/4)
Feb. 12 filed 50,000 shares of its common.stock (par $15)
to be offered to certain Ben Franklin franchise holders.
Price—To be supplied by amendment.
Proceeds—For

effective, Camoose Mines will issue
ing dividend, on a share-for-share basis,

Statement

mort¬

-Bridgeport & Port Jefferson Steamboat Co.
/
(letter of notification) 30,000 shares of common
(par $5) to be offered for subscription by common

Camoose

held; rights to expire on March 26.

supplied by amendment.'

★ Consolidated Edison

subscription by such companies; for
extensions, additions and improvements to company's
own plant and for general corporate
purposes.
Under¬
Anderson Electric

retire

stock

general corporate purposes.

ISSUE

Underwriter—Mann

Jan. 30

None.

spectively.

Proceeds—To

gage notes and for

American, Provident Investors Corp.

stock

REVISED

Feb.

Inc., ftockport, Mass.
Sept. 17 (letter of notification) $100,000 of QVz% deben¬
tures dated Sept. 16, 1957 and due Sept. 15, 1972 and

Feb.

15, 1957, filed 50,000,000 shares of common stock
(par one cent). Price — $2 per share. Proceeds — For
working capital and general corporate purposes. Office
—Dallas, Tex. Underwriter—Peoples Securities Co., J.
D. Grey, of New Orleans, John S. Tanner, of Dallas,
and C. L. Edmonds, of Houston, three of the 22 direc¬
tors, are Chairman, Vice-Chairman and President, re¬

Blacksmith Shop Pastries

in units of

each

Stanley & Co., W. E. Hutton & Co., and Blyth
Inc., all of New York.
•./V
/

Feb. 25 (letter .of notification) 15,000- shares of common
stock to be offered to stockholders. Price —At par ($5

W. Va.

for

Price—To

ADDITIONS

SINCE

ITEMS

construction and improvements, to repay bank leaps, and
for other corporate purposes. Underwriters — Morgan

V Bankers Management Corp., Houston,
Texas (3/11)

per

stock (par 20C).
Price—To be supplied by amendment. Proceeds — To
discharge current liabilities and to drill ten wells. Un¬
derwriters—To be named by amendment.
Feb. 28 filed 500,000 shares of common

Price—To public, $6

expansion

Feb.

•

one new

Industries

common
for 3.4 shares of Elgen's common.
exchanges will be made unless the exchange offer
is accepted by the holders of at least 80% of Abe out¬
standing Elgen common, and Dresser will not be obli¬
gated to consummate any exchanges unless the offer

is accepted by the holders of at least 95% of Abe out¬
standing Elgen common. Underwriter—None.

1ST

Volume

Number 5722

(1079)

The Commercial and Financial Chronicle

ceeds—To the Attorney General of the United States
★ Eagie-Picher Co. /
.• t
.,V
(letter of notification) 9,677 shares of common 1 Underwriter—To be determined by competitive bidding
treasury stock " (par $10) to be offered pursuant to em- ;* Probable bidders: Blyth & Co., Inc., and The First Boa; ployee stock purchase plan ;for 1958 for all eligible sal-;/ ton Corp. (jointly); Kuhh, Loeb & Co., Lehman Brothers
and Glere, Forgan & Co.
(jointly). Bids —Had been
/ aried employees. -Price — 95%; of.closing price on New
scheduled to be received up to 3:45 p.m. (EDT) on May
York Stock Exchange; on April 10,-1958,' Proceeds—To
13 at Room 654, 101 Indiana Ave., N. W., Washington 21,
reimburse the issuer for purchase .of stock on the ExD. C., but bidding has been postponed.
V change. Office — The American Building, Cincinnati,

Stanley & Co.; Lehman Brothers; The First Boston
Corp.; Blyth & Co., Inc.; Kidder, Peabody & Co., and
Shields & Co. (jointly); Equitable Securities Corp. and
Eastman Dillon, Union Securities & Co. (jointly). Bids
—Scheduled to be received up to 11 a.m. (EST) on
March 20 at office of Southern Services, Inc., Room
1600, 250 Park Avenue, New York 17, N. Y.

Feb; *26

•

•'

<■-

Ellerbe

.offered

;

Glassheat Corp.

// : •/"•
// General Credit, Inc., Washington, D. C.
Company! Investment Fund/"';; /x/x'/'x; \ Aug. 17, 1956 filed $2,000,000 Of 6% subordinated sink¬
Saint/Paul,.. Minn.//j//*'.; ing fund debentures, due Sept. 1, 1971, with detachable
1
March 3- filed 240,000 shares of; participating ,stod/ to be
warrants to purchase 160,000 shares of participatinf

Ohio.; Underwriter—None.

common

ceeds—FOr investment.

Berkeley:

Great Divide Oil

For expansion and working capital Underwriter—None
named.
Offering to be made through selected dealers

Underwriter—None.

Eihodont Laboratories.

Street, New York 16, N. Y. Underwriter—James An¬
thony Securities Corp., 37 Wall St., New York 5, N. Y.

preference stock, to be offered in units of $500 of deben¬
tures and 40 warrants. Price—$500 per unit. Proceeds—

and to employees of

Price—-Initially at $10 per share.' Pro¬

that company.

ij4 ;-«W;

(letter of notification) 150,000 shares of class A
stock (par 10 cents). Price—$2 per share. Pro¬
ceeds—For general corporate purposes. Office—1 E. 35th
Feb. 12

only to Ellerbe Company

Calif.

Application is still pending with SEC.

tiori.
^

i i

To pay

balance on oil and gas properties, and unsecured
drilling and working capital. Office—-207
Bldg., Salt Lake City, Utah. Underwriter—
Birkenmayer & Co., Denver, Colo.

General Electronics Distributors Inc.' " /
Feb. 10 .(letter of notification) 2,090 shares of common
stock (par $25) to be offered to stockholders until May,

Unde r writer—-None.

Ex-CeH-O Corp./

Detroit, Micb.y

88,000 shares Of! comrnqn-' stock (par $3)
% to be offered in
exchange, for commojj. stock ,of Bryant
^ Chucking Grinder Co. ,,of. Springfiel^K
at/yate of
'3 four-tenthk;of ajft/ Ex-Ce 11 - O share for each, full Bryant
: share ;;Off£i/will- become effective upon- acceptance by
'

■-

—

^~ -x ~

—-■

' -"■••**-

Expanded Shale Products, lite,/: Denver, Colo.

.' Jam 29 filed

.60,00.0 shares of common stock (par $1) and

$180,000. of 6% callable unsubordinated unsecured deben¬
ture notes- due 1960-1964 to;be Qffeited: iTi units of $600

-■

fli-F

'iTift 'Oftft

Vlhtoc

cVinvoc

r\f

eirtolr .'PtMAO'.'''

*C1

rtOfl

nov

unit

—For

:
-

General Telephone Co. of California

Feb.

corporate

purposes,

Underwriter—-*Minor/ Mee &

XCo.A1 buquerquev N.' M.-•'

XX; Famous Virginia Foods Cori>.

(letter of notification) 16,900 shares of common
stock (par $5) ahd 390 common" stock;phrchase warrants
to

offered

units

shares of

and

stock

tors.

ital and

Hawaiian
Feb.

Airlines

Honolulu,

Ltd.,

subscription by stockholders
held;

at the rate of 100 of debentures for each 35 shares

$100,000 of debentures will be offered to employees; and
$150,000 to others. Price—At principal amount. Proceeds
—To be used to buy new airplanes, to repay certain

To finance construction program.
competitive bidding.
Halsey: Stuart & Co. Inc.; Morgan

—

Underwriterr—To be determined by

Probable

bidders:

Hawaii

$1,250,000 of convertible subordinated de¬
April 1, 1973, of which $1,000,000 principal

amount will be offered for

$24,000,000 first mortgage bonds due March

Proceds

18 filed

bentures due

(3/20)

Georgia Power Co.
Feb. 21 filed

incorporators, management, and/or direc¬
Price—$10 per share. Proceeds—For working cap¬
general fiflrptfrate purposes. Underwriter—None.

to organizers,

Corp. (Jointly); Equitable
be received up to 8 a.m.
:/ •

Corp/ Bids—To
March. 12.// /./

Continued

page

one

per unit.
Proceeds—For equipworking capital.
Office—922 Jefferson St.,
Lynchburg, Va. Underwriter — Whitney & Co., Inc.,
warrant.

/l ment

(3/12)

Securities

Webster

Securities

1, 1988.

Jan. 30

Aug. 16 filed 300,000 shares of common Stock, of which
200,000 shares are to be publicly offered and the remain¬
ing 100,000 shares reserved for Issuance upon exercise
of warrants which are to be sold at 25 cents per warrant

$20,000,000 of first mortgage bonds, series
L, due 1988. Proceeds—To repay bank loans and for con¬
struction program. Underwriter—May be determined by
competitive hidding. Probable bidders: Halsey, Stuart
& Co. Inc.; White, Weld & Co. and Kiddfer, Peabody &
Co.; (jointly); Paine, Webber, Jackson & Curtis and
Stone

Guardian Insurance Corp., Baltimore, Md.

filed

(PST)
X*. other

notes and for

Newhouse

1958, then to. the public. Price—$42 per share. Proceeds
loans payable to bank, inventory and working
capital. Office—735 Main Street, Wheeling, W. Va. Un¬
derwriter—None.
,/X ' " ...

'.':Nov?*25 filed

Corp,

Oct. 11 (letter of notification) 300,000 shares of common
stock (par 10 cents). Price—$1 per share. Proceeds—

/ expense .during the development -period of the corpora-

Price—$500

and

■

NEW

CALENDAR

ISSUE

Washington, D. C.
'

March

; Famous Virginia Foods Corp.
Nov. 6 (letter of notification) 5,000

/ stock.

Price—$6.67

:l:\ stockholder.

per

shares of common
share//Proceeds—To selling

(Bids

Office—922 Jefferson St., Lynchburg, Va

Farrar Drilling Co.

For

oil

and

*»'

March

Xxvi:"x

,;../X..

■

Price—$19 per share. Proceeds—For investment.
4.1 derwriter—The Crosby Corp., Boston, Mass.
>

(Bids

Saxon

(Milton

Un-

Price—$10 per share.

derwriter—the Crosby Corp.r

Ahg. 26 (letter-of notification) 100,000 shares of common
fctbek (par $1).- Price — $3 per share. Proceeds — For
capital and surplus and for first year's deficit. Office—

-X
*

3395

—

(Bids

(par five cents). Price — $5 per share. Proceeds — To
properties.
Underwriter — Whitmore, Bruce

General

Mangel

v-;

facilities and for other corporate purposes. UnderWriter
To be determined by.»competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; Merrill

Bonds

Securities

Union

Dillon,

New

Co.)

_Bonds

$50,000,000 to $60,000,000

to be invited)

Common

England Electric System

(Offering to

stockholders—bids to be Invited) 968,540 shares

April 16 (Wednesday)

-Bonds

Mississippi Power & Light Co
(Bids

$15,000,000

invited)

Common

Sierra Pacific Power Co
(Offering to stockholders)

57,362 shares

(Tuesday)

Bonds

Consolidated Edison Co. of N. Y. Inc
(Bids to be Invited)

Corp.-,—*.*.-—^--Debentures

Mississippi River Fuel
(Eastman

(Bids

April

$3,000,000

Corp.)

(Wednesday)

April 23

$30,000,000

$50,000,000

Bonds

Sierra Pacific Power Co.—•

gas

(Tuesday)

March

•

Commonwealth Edison Co.___—-—*

$20,000,000

PST>

a.m.

Higginson

(Lee

Corp——^—---^.Debentures

Stores
-

Morgan

Telephone Co. of California
(Bids

——Common

stockholders*—to be underwritten by
Stanley & Co.; W. E. Huttdn & Co. and
Blyth & Co., Inc.) $3,828,346
to

purchase

Bonds

•-

(Tuesday)

April 15

$16,000,000

Cincinnati Gas & Electric Co

27 filed 500,000 shares of class A common stock

Co., Washington, D. C.

(Bids to be invited) $45,000,000

Cincinnati Gas & Electric Co.—.*.
.Preferred
(Morgan Stanley & Co.; W. E. Hutton & Co. and
Blyth & CO., Inc.) $13,000,000

%/f*First Leaseback Corp., Washington, D. C.

-ir Florida Power & Light Co. (3/24;
Feb. 27 filed $20,000,000 of first mortgage bonds, series
due 1989.
Proceeds—To provide additional electric and

EST)

noon

(Monday)

England Telephone & Telegraph Co.—Debens.;

$40,000,000

Chicago, Rock Island & Pacific RR.^^__

(Offering

Nov.

New

(Wednesday)

Bonds

to be invited) $15,000,000

April 14

Debentures

Sylvania Electric Products, Inc

(Wednesday)

Duquesne Light Co..
(Bids

(Paine, Webber, Jackson & Curtis)

—Bonds-

Bonds

St., Englewood, Colo. Underwriter
Underwriters, Inc„ Englewood, Colo.

Bannock

American

Common

Corp.

Indianapolis Power & Light Co
;
•'
(Bids 11 a.m. EST) $8,000,000

March

—Bonds,
$30,000,000

$10,000,000

to be invited)

April 9

(McDonald, Holman & Co.. Inc.) $400,000

(Monday)

Idaho Power Co.———

(Tuesday)

April 1

...Common

Inc.) $450,000

Co.,

(Bids

Management

to be invited)

(Bids

(Tuesday)

March 11
Bankers

First International Fire Insurance Co.

Wisconsin Electric Power Co

Bonds

—

Blauner

(Thursday)

Northwest Bancorporation
Preferred
(The First BostonvCorp. and Blyth & Co., Ind.) $10,643,000

$20,000,000

EST)

noon

Corp.^-,.

Paper

Proceeds^—For investment.
Boston, Mass.

203,000 shares

(Monday)

Merrimack-Essex Electric Co...,:...,

Un-

fidelity Trend Fund, Inc.y Boston, Mass.
Feb. 6 filed 20,000 shares of capital stock, of which 10,000 shares were previously sold privately and the balance is to be offered to a limited, number pf investors.

March

(Friday)

Common

(White, Weld & Co.)

March
March

X'//;:>■

■

Fidelity Capital Fund, Inc., Boston, Mass.
Feb. 6 filed 20,000 shares of capital stock, of winch 10,000 shares were previously said privately and the balfence is to be offered to a limited number of investors.

$30,000,000

invited)

Stepan Chemical Co.—

.Bonds

$5,000,000

EST)

noon

Atlas Sewing Centers*4nc._—.Debentures
'/X/ (Van Alstyne, Noel & Co,/ $1,000,000

gas

Co., MiamiiiFla.

(Bids

Debentures"

Bell Telephone Co—.
(Bids to

$30,000,000

EST >

a.m.

New Jersey

.Debentures

drilling expenses. * Office—J16 Rogers
/ Bldg./Mt. 'Vernon, 111. Underwriter—Paul A. Davis &
/

;

(letter of notification) 150,000 shares of common
stock (par five cents). Prices—-$2 per share; Proceeds—

Feb.
:

(Tuesday)

March 25

(Thursday)

Virginia & Southwestern RR

Underwriter—Whitney & Co., Inc.* Washington, D. C.

Columbia Gas System, Inc

$3,000,000

to be invited)

(Bids

—

Lynch, Pierce, Fennel* & Smith and Kidder, Peabody &
Co. (jointly); The First Boston Corp.
Bids—To be received up to 11:30 a.m. (EST) on March 24.
Flubrspar Corp. of America

(Bids

stock,

Price—$3

Laboratories, Inc.
Aug. 28 filed 2001)00 shares of capital stock (par 10
cents). Price—$2.50 per share. Proceeds—For sales pro¬
motion of company's products, working capital, additional inventory and accounts receivable, for research
fend development and for other general corporate pur¬
poses. Office—Brooklyn, N. Y. Underwriters—Alfred L
Powell CO.. New York: and H
Carrnll & ry>.. Denver
Colo. Offering—Not expected for 4 to 6 weeks.
Freeman

Electric Construction Co., Inc.

Nov. 27

Gas Transmission
&

(Stone

Weld

{tetter of notification) 100,090 shares of common
stock (par 10 cents). Price—$3 per share. Proceeds—To
reduce accounts payable, etc., and for working capital
and general corporate purposes.
0?ffce — New York
Underwriter—Harris Securities

Corp., New York City

General Aniline & Film Corp.,

New York
A stock (no par)

Jan. 14 filed 426.988 shares of common
and
Digitized
for 1,537,500
FRASER shares of common

B stock (par $1). Pro¬

Co.)

(Bids to be invited)

Philadelphia Electric
(Bids

Texas Eastern

Bonds

Transmission Corp

Dillon,

Read

(Bids to be invited)

(Offering to
Dillon,

Telephone

Power Co
(Bids

a.m.

EST)

March 21

Bishop

Oil

(Offering

112,565

March

Florida Power & Light
11:30

T—Common

Merck & Co.. Inc.—
(Goldman, Sachs

New

$20,000,000

225,000 shares

July 1

Co._
$25,000,000

invited*

Bonds or Debs.

«25.000.000

invited)

$10,000,000

Bonds

(Tuesday)

Bonds

Florida Power Corp
(Bids to be

Bonds

(Wednesday)

England Power Co
(Bids

Common
& Co.)

June 11

EST)

(Tuesday)

Virginia Electric & Power
'Bids

$25,000,000

(Tuesday)

by Hooker & Fay)

(Monday)

invited)

(Bids to be invited)

June

Co.—•*.———*——j-Bonds

a.m.

June

(Friday)

—„^

Appalachian Electric Power

$24,000,000

to stockholders—underwritten

(Bids

Bondi

*-•—

Bonds

(Bids

Co.——
Common
stockholders—to be underwritten by Eastman
Union Securities & do.) 71,200 shares

Commonwealth

Georgia

Illinois Power

$12,000,000

(Tuesday)

May 20
(Thursday)

Bonds

Gas Improvement Co

$25,000,000

Co., Inc.)

March

$40,000,000

(Tuesday)

May 13
United

Bonds

—_—

invited)

$20,000,000

(Wednesday)

March

$30,000,000

(Tuesday)

April

and White,

__Bonds

Light Co

Puget Sound Power &

Inc.;

Co.—..-—^Preferred

Securities < Corp.

Webster

share.

Forest

Debentures

(Monday)

April 28

$20,000,000

EST)

a.m.

(Stone & Webster Securities Corp.; White, Weld & Co.,
and Halsey, Stuart & Co. Inc.) $30,000,000

Proceeds—For exploration work and work¬
ing capital.
Office—Portland, Ore.
Underwriter—To
be named by amendment. Sol Goldberg is President.

per

Transmission Co

Tennessee Gas

Tennessee

Dec. 26 filed 470,000 shares of common

Bonds

Carolina Power & Light Co

invited) $25,000,000

The Commercial and Financial Chronicle

(1080)

Continued from page

.,^v.:

•

and for other corporate purposes.

short-term bank loans,

Underwriter—None.

if Hedwer Drilling Co., Inc.
(letter of notification) 1,000,000 shares of

Feb. 26
mon

stock

Price

com¬

20 cents per share.
incidental to drilling oil wells.

(par one cent).

Proceeds—For expenses

—To

★ McCormick A Co.

bidders:

—-

Feb.

(letter of notification) 2,000 shares non-voting
stock (no par) to be offered to certain em¬
ployees. Price—At market. Proceeds—For working capi¬

Underwriter—None.

Office—Rangely, Colo.

common

if Hercules Powder Co.

4 filed $5,000,000 of interests or participations
company's employee savings plan, together with
125,000 shares of its common capital stock which may
be acquired pursuant thereto. Underwriter—None.

March

tal.

in the

Office—414

Light

St., Baltimore, Md. Underwriter

—None.

ic Merck & Co., Inc.
March

^Hoffman Electronics Corp., Los Angeles, Calif.
Feb. 24 filed $375,000 of interests in company's employee
thrift plan,
together with 14,974 shares of common
stock which may be acquired pursuant thereto.

filed

16'% cents).

(3/24)

225.000

common

ceeds—To

Nov. 1 filed 50,000 shares of class A common
B

stock to be
public at $5 per share and 116,366 sharei

common

stock to

to stockholders

be offered

at $6 per share at the rate of two new shares for each
five shares held. Proceeds—For working capital. Office

—Fort

Lauderdale, Fla. Underwriter—None.

Mines, Ltd.
Nov. 20 (letter of notification) 300,000 shares of com¬
mon stock.
Price—At par ($1 per share).
Proceeds—
To repay loan, to purchase equipment and machinery
and for working capital. Office—1551-A Eglinton Ave.
West, Toronto 10, Ont., Canada. Underwriter—D'Amico
& Co., Inc., Buffalo, N. Y
Indianapolis Power & Light Co. (3/11)
Feb. 14 filed $8,000,000 of first mortgage bonds, due 1988.
Proceeds—To repay short-term bank borowings, and for
construction program.
Underwriter—To be determined
by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.: Eastman Dillon, Union Securities & Co.;
White. Weld & Co. and Shields & Co. (jointly); Blyth
& Co.; Kuhn, Loeb & Co.; Lehman Brothers and Gold¬
man, Sachs & Co. and First Boston Corp.
(jointly);
Equitable Securities Corp. Bids—Expected to be received
up to 11 A.M. (EST) on March 11 at Room 3250, 120
Broadway, New York, N. Y.

if Industro Transistor Corp.,
28

filed

150,000

(N. Y.)

11 filed

like amount of 5%% series B bonds due 1987.

Underwriter—To be determined by competitive bidding.
bidders: Kidder, Peabody & Co. and White,

Weld

& Co.,

(jointly); Halsey, Stuart & Co. Inc.: First
Corp.; Merrill Lynch, Pierce, Fenner & Smith,
and Eastman Dillon Union- Securities & Co.
(jointly).
Bids—To be received up to noon (EST) on March 10 at
441 Stuart St., Boston 16, Mass.
Boston

Basin

Mining Corp.
notification) 200,000 shares of common
stock.
Price
At par ($1 par value). Proceeds — For
mining expenses. Office —1710 Hoge Bldg., Seattle 4,
Dec. 30 (letter of

if International Aviation Industries, Inc.
(letter of notification) 50,000 shares of common
stock (par $2). Price—$4 per share. Proceeds—For work¬
ing capital and improvements to hangar. Office—West¬
chester County Airport, White
Plains, N. Y. Underwriter
Feb. 25

—None.

Wash. Underwriter—None.
Minnesota

Development Corp., Minneapolis,

Minn.

Jan.

filed

Price—$50
purposes.

20,000

if Investors Croup Canadian Fund, Ltd.
Feb. 26 filed (by amendment) 10,000,000 shares of com¬
mon stock (par
$1). Price—At market. Proceeds—For

of capital stock (no par).
Proceeds—For general corporate
Underwriter—None. Walter M. Ringer, Sr., of

Minneapolis, Minn., is President.
Mississippi River Fuel Corp.

(3/12)

Feb. 17 filed $30,000,000 of 20-year sinking fund deben¬

tures, due 1978.

Price—To be supplied by amendment.

Proceeds—To repay bank loans. Underwriter—Eastman
Dillon, Union Securities & Co., New York.

if Morrison-Knudsen Co., Inc.
3 (letter of notification) 9,375 shares of common.
(par $10) to be offered to employees of company
and subsidiary pursuant to employees stock purchase

Feb.

stock

Price—At the market less $2 on the various dates
purchase between Feb. 12, 1958, and Dec. 10, 1958.
Proceeds—To partially reimburse company for purchase
of

of the stock.

Office—319

Broadway, Boise, Idaho.

Un¬

derwriter—N one.

Roanoke, Inc., Roanoke, Va.

Office—Toronto, Canada.

stock

(par 40 cents).

Price—$5

per

share.

Proceeds—

For

purchase of land, construction and working capital.
Underwriter—Southeastern Securities Corp., New York.
Motel Corp. of

Italy

shares of 7% cumulative convertible preferred,
publicly at a unit price of $101, representing

10,000

to be sold

share of preferred and two shares of common. Pro¬
ceeds—To be invested in the stock of Motels
one

Italian

Americano,
Office—Silver Springs, Mary¬

organization.

debenture and 10 shares of stock, or a $100 debenture
one share of stock.
Price—Par for debenture, plus
f2 per share for each 10 shares of Stock. Proceeds—For
construction of a shopping center and other
capital improvements; for retirement of present preferred shares;
and for working
capital, etc. Underwriter—None.

(par $1). Price—At market. Proceeds—For investment.
Business—Investment company, with Spencer R. Collins

«nd

Engineering Corp.
(letter of notification)

vertible

15-vear

$250,000

6h%

con¬

sinking fund debentures, due Jan. 1,
1973, to be offered for subscription by preferred stock¬

holders

the

of $3 of debentures for each
pre¬
$10) held. Price—At par (in de¬
nominations of $1,000 and $500),
plus accrued interest
from Jan. 1, 1958. Office—2995
Middlefield Road, Palo
Alto, Calif. Underwriter—None.

ferred

rate

(par

Keystone
Feb.
mon

Beryllium Corp.
(letter of notification)

com¬

stock.

Price—At par ($1 per share). Proceeds—For
mining expenses. Office—Suite 525. University Building,
Denver 2, Colo.
Underwriter—Mountain States Secu¬
rities Corp., Denver, Colo.

Lefcourt Realty Corp., New York
Jan; 29 filed 250,000 shares of common

stock (par 25
Price—To be supplied by amendment. Proceeds
—For development of
property in Florida. Underwriter
—Frank M. Cryan Co.,

Inc., New York.

Lorain Telephone
Co.,
Dec. 13 (letter of
ctock

Lorain, Ohio
notification) 1,785 shares of
(no par) being offered for subscription by
at

62.52 shares held

the
as

rate

one

new

filed

1,000,000 shares of class A

Eugene, Ore.,

stock

common

President.

or about April 28.
Underwriter
by competitive bidding. Probable
Halsey, Stuart & Co., Inc.; White, Weld & Co.
and Shields & Co.
(jointly); Morgan Stanley & Co.; The
First Boston Corp. Bids—Tentatively expected to be re¬

ceived

determined

about March 25.

Nichols, Inc., Exeter, N. H.
Nov. 14 filed 25,000 shares of common stock (no par).
Price—$27 per share. Proceeds—To repay short' term
bank loans and for working capital.
Business — Sella

hatching

eggs and day-old chicks.
Underwriter—None.
George E. Coleman, Jr., is President.

Nortex Associates Inc., Dallas, Texas

oil

and

exploration program.
Interests are to be
public sale in $10,000 units. Proceeds—For
exploration and development of gas and oil properties.
Underwriter—None.
gas

offered

for

—

Nuclear Science & Engineering Corp.
Sept. 20 filed 100,000 shares of common stock (par 25
cents). Price—To be supplied by amendment. Proceeds
—To prepay indebtedness to Norden-Ketay
Corp., to
purchase additional equipment and for working capitaL

Underwriter—Hayden, Stone & Co., New York. Offer¬
ing—Temporarily postponed because of market condi¬
tions.

"/v y

■

Oil & Mineral

Operations, Inc.
,
Nov. 4 (letter of notification)
100,000 shares of common
stock (par $1).
Price—$2.50 per share. Proceeds—For
development of oil and mineral properties. Office—208
Wright Bldg., Tulsa, Okla. Underwriter—Universal Se¬
curities Co., 201 Enterprise Bldg., Tulsa
3, Okla.

if Parnat Business Machines Corp.
(letter of notification) 60,000 shares of common
stock (par $1).
Price — $5 per share. Proceds — For
working capital. Office—1816 Boston Rd., Bronx, N. Y,
Feb. 25

Underwriter—Darius Inc., New York.

Peoples Security Investment Co.
1,000,000 preorganization subscriptions to

Oct. 28 filed

class A voting common stock and 250,000 preorganization

subscriptions to class B non-voting

common

offered in units of four class A shares and

stock to be
one

class B

share, the purchaser agreeing to donate each class B
share to the Peoples Security Foundation for Christian
Education, to be incorporated as a non-profit corpora¬
tion. Price—$2 per share. Proceeds — For
capital and
surplus to finance

a proposed insurance company to be
named Peoples Security & Endowment Co. of America,
Office
Montgomery, Ala. Underwriter*— None. T. J.

class

shares.

Price

—

$910 per unit.

repay bank loans and short-term
derwriter — Stone, Moore &

Proceeds

unsecured

Co., Inc.;
Offering—Expected early in February.

—

notes.

Denver,

Un¬

Colo.

Municipal Investment Trust Fund, Inc. (N. Y.)
May 9 filed 5,000 units of undivided interests in Munic¬
ipal Investment Trust Fund, Series A. Price—At market.
Proceeds—For investment.
•

Aviation

Sponsor—Ira Haupt

Co..

Corp.,

New York

held

(with

one

new

each

for

four

oversubscription privilege); rights to

March 13. Price—$20 per share.
investments. Underwriter—None.
on

ex¬

Proceeds—For

stocky (par $1).
capital,
6th

notification) 90,000 shares of common
per share.
Proceeds—For

Price—$2.50
expansion

and

equipment.

W., Salt Lake City, Utah.

Office—

Underwriter—

mortgage pipeline bonds
Price—To be supplied by amendment. Pro¬
reduce bank loans.
Underwriters
Dillon,
Read & Co. Inc. and
Halsey, Stuart & Co. Inc., both
of New York.
Offering—Temporarily
1977.

—

postponed.

Nebraska
6

stock
new

Consolidated Mills Co.
(letter of notification) 25,000 shares of

offered

stockholders

share for each

March

15,1958. Price—At

For

★ Prairie Fibreboard Ltd.
Feb. 28 filed 210,000 shares of common stock
(par $1.50)
to be offered for sale to residents of Canada in the Prov¬
inces of Manitoba, Saskatchewan and Alberta and to

Dakota."
struction

par

"only in the State of North
$2.50 per share. Proceeds — For con¬
Office — Saskatoon, Saskatchewan,
purpose.
Price

—

Canada. Underwriter—Allied Securities
Ltd., Saskatoon.

Canada.

held.

($10

the

common

rate

Rights will

per

Corp., Buffalo, N. Y.
preferred stock (par
stock (par $1) to be

Jan. 29 filed 100,000 shares of 6%

$10) and 100,000 shares of
offered

Price—$11

units

unit.

per

one

common

each

Proceeds—To build

class
or

lease

stock.

plant,

for new equipment and for working capital and other
corporate purposes. Underwriter—Girard Securities, Inc.,

Buffalo, N. Y.

;

Professional Life & Casualty Co., Champaign, III,
Dec. 16 filed 120,000 shares of common stock.
Price—
$15 per share. Proceeds—To increase capital and surplus.
Underwriter—None.
Public Savings Life Insurance Co.
29 filed 113,000 shares of common

stock (par 50
Price—To be supplied by amendment. Proceeds

Public

—To

Savings Insurance Co., the selling stock¬
Office—Charleston, S. C. Underwriter—None.

holder.

Reichhold
Oct.

Chemcials,

Inc.

filed 200,000 shares of common stock (par $1).
be supplied by amendment. Proceeds—For

Price—To

porarily.
Resolute Bay

one

evp;t*e

share). Proceeds

Trading Co., Ltd.

Oct. 29

(letter of notification) 30.000 shares of common
stock. Price—At par ($5 per share). Proceeds—For work¬
dities.

ceeds— To

Feb.

com¬

Price—At par

(five cents per share). Pro¬
geological studies, reserve for contingent
liability, for machinery and equipment and other re¬
serves.
Office — 616 Judge Bldg., Salt Lake City, Utah.
Underwriter—Steven Randall & Co., Inc., New York.
—

ing capital, etc.

Natural Gas Pipeline Co. of America
Nov. 19 filed $40,000,000 of first
due

stock.

ceeds

expansion program and working capital. Underwriter—
Blyth & Co., Inc., New York. Offering—Postponed tem¬

if National Beverages Inc.
Feb. 25 (letter of

mon

cents).

Feb. 7 filed 174,404 shares of
capital stock (par $5) being
offered for subscription
by stockholders of record Feb.

27, 1958 at rate of

President.

Valley Oil & Mining Corp.
Sept. 30 (letter of notification) 2,000,000 shares of

Nov.

National

Pleasant

Premier Pharmaceutical

400,000 shares of class A non-voting common stock (par
$1) to be offered in units of $250 of debentures and 400

None.

each

Office—5901 Imperial
Highway,
Underwriter—Dean Witter & Co

Los Angeles 14, Calif.

residents of the United States

Fund, Ltd., Vancouver, B. C.

Multnomah Kennel Club, Fairview, Ore.
Dec. 26 filed $250,000 of 10% unsecured debentures and

common

for

★ Los Angeles Airways, Inc.
(letter of notification) 1.923 shares of common
stock (par $10). Price—$52
per share.
Proceeds—To
selling stockholders.

1030

Feb. 20

Jan

common

25, 1958; rights to expire on
May 1, 1958. Price—$28 per share. Proceeds—For addi¬
tions and improvements.
Office
203 West 9th St.,
Lorain, Ohio. Underwriter—None.

Los Angeles 45, Calif.

Multnomah Canadian

working

of Feb.

Underwriter—None.

pire

cents).

•tockholders

land.

New York.

270,700

debentures due 1993

Patterson

•

Kaar

North 16th St.,

—

Motel Co. of

Nov. 18 (letter of notification) 60,000 shares of common

Janaf, Inc., Washington, D. C.
July 30 filed $10,000,000 of 5^-8% sinking fund deben¬
tures due Aug. 1, 1972 and 100,000 shares of common
stock (par 20 cents) to be offered in units of a
$1,000

■

1521

share.

per

Jan. 14 filed 20,000 shares of class A common stock and

Feb.12

—

Underwriter—None.

—

plan.
stock

(par 10
price. Pro¬
ceeds—For working capital and to enlarge research and
development department. Underwriter — S. D. Fuller &
Co., New York. Offering—Expected early in April.
common

cents). Price—To be related to the market

Investment.

Office

Thursday, March 6, 1958

Feb. 17 filed $2,000,000 of participating interests in 1958

$20,000,000 of first mortgage bonds, series
Proceeds—Together with other funds, to

C, due 1988.
redeem

Mineral

Horlac

Feb.

Feb.
,

10, Neb.

4 New Jersey Bell Telephone Co.
(3/25)
Feb. 28 filed $30,000,000 of 35-year debentures due
April
1, 1993. Proceeds—To redeem a like amount of 4%%

;

(3/10)

working capital.

Omaha

Probable

Home Owners Life Insurance Co.

of class

(par

Underwriter—Goldman,

selling stockholder.
Sachs & Co., New York.

Hofmann

offered to the

stock

Price—To be supplied by amendment. Pro¬

Merrimack-Essex Electric Co.

Industries, Inc., Sinking Spring, Pa. 1 )
Dec. 20 filed 227,500 shares of common stock (par 25
cents) to be offered in exchange for outstanding common
shares of Van Dorn Iron Works Co. Underwriter—None.
•

—For

Mangel Stores Corp. (3 12)
18 filed $3,000,000 of convertible subordinated de¬
bentures due 1973. To be offered for public sale. Price
—To be supplied by amendment. Proceeds—To be used
for enlargement of existing stores, opening of new stores,
and other corporate purposes.
Underwriter—Lee Higginson Corp., New York.
■■
Feb.

Business—Purchase and sale of

Office—St.

John, N. B., Canada.

commo¬

Underwriter—•

Irving Weis & Co., New York.
Resolite Corp.,

Zelienople,

Pa.

Dec. 6 filed 20,000 shares of common stock to be offered
for subscription by stockholders of record Dec.
1, 1957
in the ratio of 3H new shares for each 10 shares
held;
unsubscribed shares to be offered to public.

Price—$10
share. Proceeds—To pay $100,000 outstanding obli¬
gations and for improvement and rehabilitation of plant
and facilities. Business—Fiberglass
panels. Underwriter

per

—None.-

Volume 137

Number 5722

...

The Commercial and Financial Chronicle

Rqcky Mountain Quarter Racing Association

( (1081)

Oct. 31 (letter of notification) 300,000 shares of common
stock. Price—At par ($1 per share). Proceeds—To re¬

surviving corporation to be known as Symington Wayne
Corp., and (2) an option to purchase an additional share
at prices commencing at $10 per share.
Underwriter—

pay outstnding indebtedness.

None.

Office —Littleton* Colo.
Underwriter—R. B. Ford Co., Windover Road, Memphis.

Tax Exempt Bond Fund,

Tenn.

Saxon Paper Corp., New York (3/10-14)
Jan. 31 filed 112,500 shares of common stock

(par 25
cents). Price — $4 per share. Proceeds — Working cap¬
ital. Underwriter—Milton D. Blauner &
Co., Inc.. New
York.

stock

common

(par $1)

Equitable Securities Corp., Nashville, Tenn. OfferingHeld up pending passing of necessary legislation by

Price—$125 per unit. Proceeds—To finance^ the acquisi¬
tion of six new Fairchild F-27 "Friendship" aircraft on

Congress.

order for

(3/18)
Price—To

$30,000,000 of debentures due May 1, 1978.
be supplied by amendment.
Proceeds—To

to be issued in exchange for

repay

bank loans and for construction.

stock of White Laboratories, Inc. (which is to be
merged

Stone

and
■

common

stock for each

share held.

mon

White class A

class B

com¬

Scientific Industries, Inc.
(letter of notification)

Halsey, Stuart & Co., Inc., all of New York.

if Tennessee Gas Transmission Co., Houston, Texas
Feb.

$120,000 6% convertible
sinking fund debentures, due Feb. 1, 1968, convertible,
except as provided in case of redemption, into common
stock ( 5 cent par value) at a price of $1
per share. Price
—At par. Proceeds —For expansion of
plant in the
manufacture of laboratory and scientific instruments
arid to build up company's new electronics division. Of¬
fice
15 Park St., Springfield, Mass.
Underwriter —
^Willis E. Burnside & Co., Inc., New York City.
—

^ Selected American Shares,-Inc.
Feb. 27 filed (by amendment) 1,250,000 additional shares
of common capital stock (par $1.25).
Proceeds—For investment.

Price—At market.

writer—None.::

Office—Salt Lake City, Utah.
.

Under¬

shares, including stock represented by New York shares
of record Jan. 17, 1958, on a l-for-10 share
basis; rights
expire March 3.

This

represents

10%

the

total

Offering by the company, which 10% is being offered for
subscription by American residents. Price—5 pounds,
ten

shillings; $15.40 at current official exchange rate.
—

For exploration programs.

Underwriter —
Statement effective Jan. 20.

None in the United States.

Sheraton Properties, Inc., Boston, Mass.
Dec. 30 filed $990,000 of first mortgage sinking
bonds due

Dec.

1973.

indebtedness.
Corp., a subsidiary.

Price—At

Underwriter

repay

construction.

Underwriters—Stone & Webster Securities
Corp. and White, Weld & Co., both of New York.

if Texas Eastern Transmission Corp. (3/19)
Feb. filed $25,000,000 of first mortgage pipe line bonds
1978. Price—To be supplied by amendment. Office
—Shreveport, La. Proceeds—To repay short-term note

"due

indebtedness

—

fund

Proceeds—To
Sheraton Securities
par.

Simplicity Pattern Co. Inc.

Smith,

New

postponed.

York.

Offering
.;

—

Indefinitely

:•

^..

Seuth Carolina Electric :& Bas Co.

Feb. 4 filed 369,694 additional shares of

(par $4.50)

common

being offered for subscription. by

stockholders of record Feb. 26

for each 10 shares, held

(with

ilege); rights to expire

basis of

stock

common

one new

oversubscription priv¬

March 12.

Price—$21.50 per

share.

Proceeds—rTo repay bank loans and for new con¬
struction.
Underwriter—Kidder, Peabody & Co., New

York.
Southern Electric Steel Co.

Dec. 23

(letter of notification) $300,000 of 6% second
mortgage serial bonds (with: common stock purchase
warrants). * Price—At par (in denominations of $1,000
each),
Proceeds—For payment of demand notes pay¬
able and working capital. Office—2301 Huntsville
Road,
Birmingham, Ala. Underwriter—None.

Sovereign Resources, Inc.
1,500 shares of 7%

Nov. 19 (letter of notification)

cumu¬

lative preferred stock. Price—At par ($100 per share).
Proceeds—For construction, payment of promissory note
and

working capital. Office—3309 Winthrop St., Fort
Worth, Tex. Underwriter—Reiily, Hoffman & Sweeney,
Inc., New York, N. Y. Offering—Delayed.

★ Spokane Mountain Uranium Co.
Feb. 21 (letter of notification) 1,500,000 shares of
mon stock.

and

for

new

construction.

Underwriter—

Dillon, Read & Co. Inc., New York.

Wis.

(letter of notification >150,000 shares of common
Price—$2 per share.; Proceeds—
capital and general corporate purposes.
Office—207 East 43rd Street, New Yprk, "N. Y. Under¬
writer—J. A. Winston & Co., Inc., New York. ,X

Price—At par (10 cents per share).

com¬

Proceeds

—For expenses incidental to mining operations. Office—
401 Radio Central Bldg., Spokane, Wash. Underwriter—

(par $1).
Price—$4 per share. Proceeds—To purchase equipment
and supplies and for working capital and other corporate
purposes.
Office—Salt Lake City, Utah. UnderwriterAmos Treat & Co.,.Inc., of New York.
;
; ;

Universal-Cyclops Steel Corp*
10 filed 600,153 shares of common stock (par $1)1'
Price—To be supplied i by amendment.
Proceeds—To
selling stockholders who are to receive Said shares in
exchange for their holdings of Empire Steel Corp. and
Reeves Steel & Mfg. Co. common stock on the basis of
.

8.68

Universal

for

each

Empire

shares Universal for each Reeves share.

share and

None.

Uranium Corp. of America,

Portland, Ore.

April 30 filed 1,250,0.00 shares of common stock (par 1C
cents). Price—To be supplied by amendment (expected
to be $1 per share). Proceeds—For exploration purpose!
Underwriter—To be named by amendment. Graham A!*
bert Griswold of Portland, Ore., is President.

if Valley Farms, Inc., Denver, Colo.
Feb. 26 filed 32,000 shares each of class A,

New York.

basis.

Sylvania Electric Products, Inc. (3/11)
Feb. 18 filed $20,006,000 of sinking fund debentures due
1980 and $20,000,000 of convertible subordinated deben¬
tures due 1983. Price—To be supplied by amendment.
Proceeds—To repay bank loans and for working capital.
Underwriters— Paine, Webber, Jackson & Curtis and
Halsey, Stuart & Co.' Inc., both of New York.

Washington National Development Corp.
(letter of notification) 50,000 shares of common
stock (par $1) of which 34,280 shares are to be offered
publicly at $1.20 per share and 15,720 shares are to be
offered to certain individuals under options. Proceeds—
For general corporate purposes. Office — 3612 Quesads
St, N. W., Washington, D. C. Underwriter—Wagner A

^Symington-Gould Corp., Depew, N. Y.
Feb. 28 filed 593,939 shares of common stock and 263,973

Co.. New York City

warrants to be issued in exchange for the stock of the

Feb. 21

Wayne Pump Co. under

common

vides for conversion

$40 per share. Proceeds—To go
Underwriter—Non e.

Southern Pines, S. C.

Young (Donald W.) & Son, Inc. ,
14 (letter of notification) $75J)00 of 10-year 6%
1, 1967, with common stock war¬
rants to purchase 7,500 shares of 10-cent par common
atpek at $1 per share. Price—$100 per unit of a $108
debenture and one warrant. Proceeds—To repay short
term debt and for working capital. Office—Stockholm,
N. Y. Underwriter — Sherry, Maloney & Co., Inc., New
Nov.

deberitufes due Oct.

stock of the

York.

American Electronics,
Dec. 30 it was

Inc.

reported company plans to sell approxi¬

mately $3,500,000 convertible debentures. < Underwriters
be determined by competitive bidding. Probable
bidders: Van Afetyne, NOel & Co. and Crowell, Weedon
—To

& Co. (jointly).

Offering—Expected in March.

Appalachian Electric Power Co. (6/3)
Dec. 2, it was reported that this company, a subsidiary
of American Gas & Electric Co., plans to issue and sell
$25,600,000 of first mortgage bonds. Proceeds—To repay

Underwriter

by competitive bidding. Probablo
bidders: Halsey, Stuart & Co. Inc.; The First Boston
Corp.; Kuhn, Loeb & Co. and Eastman Dillon, Union
—To

be determined

(jointly); Harriman Ripley & Co. Inc.
Bids-^Tentatively expected to be received on June 3.
«

Securities & Co.

Associates

investment Co.

plans to issue and sell
some additional debentures (amount not yet determined).
Underwriters — Salomon Bros. & Hutzler and Lehman
Brothers, both of New York. Offering—Expected before
Jan. 23 it was reported company

July 1.
Atlantic City Electric

Co.

Jan. 20 it was reported company

plans to issue and sell

$10,000,000 of first mortgage bonds. Underwriter
by competitive bidding. Probablo
bidders: Halsey, Stuart & Co. Inc.; Eastman Dillon, Union
Securities & Co. and Smith, Barney & Co. (jointly);
in 1958

class B and
preferred stock (par $25), and 32;0Q0 shares of
stock (no par) to be offered in units of one
share each of class A, B and C preferred and one share
of common.
Pricer-$100 per unit. Proceeds—To repay
loan on real estate and for farm operating capital. Un¬
derwriter—Entro Corp., Denver, Colo., on a best-efforts

common

Price—

5.51

Underwriter—

class C

merger agreement which pro¬
of each share of capital stock of

stock.

$12.50 per share. Proceeds—For investment.
Under¬
writer—Cherokee Securities Corp., 118 N. W. Broad St.,

Feb.

^Stepan Chemical Co., Chicago, III. (3/25)
Feb. 27 filed 253,000 shares of common stock (par $1).
of which 203,000 shares
are
to be offered publicly i
Price—To be supplied by amendment.
Proceeds—To
selling stockholders. Underwriter—White, Weld & Co.,

Ronald Percy Getty, Lewiston, Idaho.

Wayne Pump into (1) 2(4 shares of

Feb.

bank loans and for construction program.

United States Tel email Service, I nc.
Feb. 17 filed 375,000 shares of common stock

•

(par 10 cents).

Worth Fund, Inc., New York
21 filed 400>000 shares of common

United States Sulphur Corp.
Oct. 8 filed 1,500,000 shares, of common stock (par om

Worldmark Press, Inc.

For working

Uirich Manufacturing Co.
Sept. 24 filed $600,000 of 6% sinking fund debentures
and 30,000 shares of class A common stock (par $1) to
be offered in units of $500 of debentures and 25 shares of
stock. Price—To be supplied by amendment. Proceeds—
To recfuce bank loans, to repay all or part of an out¬
standing 5% term loan and/or provide additional work¬
ing capital. Office—Roanoke, 111. Underwriter—Whit*
& Co., St. Louis, Mo., on a best-efforts basis.

None.

Co.

stock

Investments, Wilmington,

cent). Price—$1 per share. Proceeds—For plant rental
etc.; to retire corporate notes; for core drilling; foi
working capital; and for other exploration and develop¬
ment work
Office—Houston, Texas. Underwriter —

Underwriter—None.

Dec. 20

mill). Price—25 cents per share. Proceeds—For land
acquisition, exploratory work, working capital, reserves!,
and other corporate purposes. Underwriter—None. Al¬
fred E. Owens of Waterloo, la., is President.

Selected

Price—At par

Dillon/Union Securities & Co. and Harriman Ripley
Inc. (jointly); Merrill Lynch, Pierce, Fenner Ac
Equitable Securities Corp. (jointly); Lehman
Brothers and Salomon Bros. & Hutzler (jointly). BidsExpected to be received on March 31.

Trans-America Uranium Mining Corp.

—

delivery during 1958, and related costs. Under¬

Smith and

derwriter—None.

Underwriter

date.

man

real estate, also for loans to or invested in hotels, re¬
sorts or inland transport. Office—Jerusalem, Israel. Un¬

N. C.

record

bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Glore, Forgan & Co., East¬

>. Trask Manufacturing .Co.:
Dec. 5 (letter of notification) 15,000 shares of common
stock (par $5). Price — $4.50 per share. Proceeds—For
working capital and payment of current liabilities. Ad¬
dress—Wrightsboro section, 3 miles north of Wilmington,

the

tive

Proceeds—To acquire mortgages or other liens

Nov. 6 filed 3,000,000 shares of common stock (par one

if Wisconsin Electric Power Co., Milwaukee (3/31)!
March 3 filed $30,000,000 of first mortgage bonds, series
due 1988. Proceeds — For corporate purposes and con¬
struction. Underwriter—To be determined by competi¬

(4% fixed interest and 3% of earned), to be
in denominations of $1,000 and multiples

held

Hardware Co.
(letter of notification) 1,500 shares of common
($100 per share). Proceeds—For
working capital. Office — 15 S. Brearly St., Madison,,

par

stock.

Tourist Industry Development Corp. Ltd.
14 filed $2,250,000 7% perpetual subordinated de¬

thereof.

common

if Wisco

Feb.

Jan.

bentures

Western Copperada Mining Corp. (Canada)
Aug. 30 (letter of notification) 300,000 shares of common
stock. Price—At par ($1 per share). Proceeds—For de¬
velopment and exploratory work, drilling costs and sur¬
vey, and for working capital. Office — 1205 Phillips
Square, Montreal, Canada. Underwriter—Jean R. Veditei
Co., Inc., New York.
*

N. C.

Oct. 10 filed 155,000 shares of common stock (par $1),
Price—To be supplied by amendment. Proceeds—To two
selling stockholders. Underwriter—Merrill Lynch, Pierce.
Fenner

200,000 shares of cumulative convertible

each

writer—None.

,v-

"Shell" Transport & Trading Co., Ltd.
Dec. 20 filed a maximum of 817,720 of New York
Shares (representing a like amount of ordinary shares)
being offered for subscription by holders of ordinary

Proceeds

filed

second preferred stock (par $100). Price—To be supplied
by amendment. Proceeds—To repay bank loans and for

sold

Sentinel Security. Life Insurance Co.
Nov. 27 filed 5,1)00 shares of common stock (par
$10).
Price—To be supplied by amendment. Proceeds—For

working capital.

Underwriters—
Securities Corp., White, Weld & Co.

Webster

(3/18)

Underwriter—None.

Dec. 27

of debentures
for

Feb. 26 filed

.with Schering Corp, effective Sept. 19, 1957) on the
basis of one share of preferred stock and 1 Vz shares of

Seattle, Wash.
subordinated debentures,,
t®
of
1, 1958, in units of $100 principal amount,
and 25 common shares, at rate; of one unit

due 1970, and 150,000 shares of common stock (par $1)
be offered for subscription by common; stockholders

June 20 filed .40,000 shares of common stock. Price—$25
per share. Proceeds — For investment. Underwriter-

★ Tennessee Gas Transmission Co., Houston, Texas

Sobering Corp., Bloom field, N. i.
Sept. 10 filed 278,983 shares of 5% cumulative con¬
vertible preferred stock (par $30) and 418,475 shares of

West Coast Airlines, Inc.,
12 filed $600,000 of 6%

Feb.

record March

Inc., Washington, D. C.

common

Oct. 2

—To

be determined

Blyth & Co., Inc.; The First Boston Corp. and Drexel &
(jointly); White, Weld & Co. and Shields & Co.
(jointly).
Boston Edison Co.
Jan. 27 it was reported company may issue and sell in
the second or third quarter of this year some additional
first mortgage bonds and preferred stock. Proceeds—To
repay bank loans and for construction program. Under¬
writer—For bonds to be determined by company, with
Co.

prospective bidders including Halsey, Stuart & Co. Inc.;
First Boston Corp.; White, Weld & Co.; Lehman
Brothers and Harriman Ripley & Co. Inc. (jointly). For

The

preferred stock, The First Boston Corp., New

York.

Brooklyn Union Gas Co.
Nov. 25 it was announced that company expects to issue
and sell
or

May.

$22,000,000 of first mortgage bonds next April
Proceeds—To repay bank loans and for con¬

struction program.

Underwriter—To be determined by

competitive bidding. Probable bidders: Halsey, Stuari
Co. Inc.; Lehman Brothers; Blyth & Co., Inc., and
F. S. Moseley & Co. (jointly); Merrill Lynch, Pierce.
Fenner & Smith; Harriman Ripley & Co. Inc. and The
First Boston Corp. (jointly); White, Weld & Co.

ir Wellco Shoe Corp., Waynesville, N. C.

(letter of notification) 1,250 shares of class B
stock (no par) to be offered" to salesmen. Price

to selling stockholders.

Continued on page

(10(21

The Commercial and Financial Chronicle

Thursday, March 6, 1958

ar.

Gulf States

Continued from page 41
reported company plans to issue and sell
July 1958 $18,000,000 of first mortgage bonds.
be done privately.

Jan. 22 it was
in June or

mon

Central Illinois light CoJan. 22 it was announced stockholders will vote March
27 on increasing the authorized preferred stock (par
$100) from 250,000 shares to 500,000 shares. Underwriter
—Eastman

Dillon, Union Securities & Co., New York.

Chicago District Pipeline Co.
Nov.

12 it was announced company

Co.

Inc.

Chicago Rock Island & Pacific RR. (3/12)
28 it was announced company plans to issue and
sell $16,000,000 first mortgage bonds due 1983. Under¬
writer—To be determined by competitive bidding. Prob¬
able bidders: Halsey, Stuart & Co.; Eastman Dillon,
Union Securities & Co. and Blyth & Co. (jointly); First
Boston Corp.; Kuhn, Loeb & Co. Bids—To be received
up to noon (CST) on March 12.
Jan.

Cincinnati Gas A Electric Co.
Nov.

reported company plans in 1958 to sell
about $15,000,000 of first mortgage bonds.
Proceeds—
was

repay hank loans and for construction program.
Underwriter—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Morgan

Stanley Si Co. and W. E. Hutton & Co. (jqintly); Blyth
& Co. Inc. and The First Boston Corp. (jointly); Mer¬
rill Lynch, Pierce, Fenner & Smith and Lehman Bros,
(jointly), Eastman Dillon, Union Securities & Co. and
White, Weld & Co. (jointly).

Weld

pected March' 14.
■:

Bros. & Hutzler and Eastman

Co. .(jointly);

Blyth

Co. Inc.,

•

it New

'England PowOr Co.^(6 11)'

March

vC •':

this company a

announced

was

subsidiary

Dillon, Union Securi¬
ties & Co. (jointly); Lehman
Brothers; Stone & Web¬
ster Securities Corp.;
Kuhn, Loeb 8c Co.
Gulf States Utilities Co/;

England ^Elcetricr System, proposes to file
$10,000-,€00 priocipal-rameunt M,. first ^mortgage bonds,
series H, due ^3 988. Uiid? witer—To be .determine^ bjr
competitive -biddipg- h-Probable bidders; CHalsey,^Stuai:t

Jan. 29 it

iiic^ The First Boston Gorp.; Kuhn; Lpeb & Co.,
Dillon^ Union. Sjecprities & Co. and Salomon
BrOs. & Hutzier
(jqintly); Lehman Brothers; Merrill
Lynch; Piercbf Peitner :8cKidder Peabody & Co.
and White; Weld. &r Co.^ t jointly); Equitable -Securities
Corp. and Blair & Co., Inc, ( joiiTtly ). Bids—Tentatively
scheduled to)life ^eceived^' On June 11 at ^41 Stuart -St.,
Boston id,'Mass. 'Registration—Expected early in-May.

was reported company plans to issue and sell
200,000 shares of common stock. Underwriter — To be

Idaho Power Co.
(4/1) /•
■ ;/?';;:\7
-•
Feb. 14 company applied to the Federal Power Commis¬
sion for authority to issue and sell $10,000,800 of first

New

mortgage bonds due 1988 and $10,000,000 of sinking fund
Proceeds
To repay bank loans.
Underwriter—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Blyth & Co.,
Inc. and Lazard Freres & Co. (jointly); Kidder, Peabody
& Co, and White, Weld & Co. (jointly); Salomon Bros.
& Hutzler and Eastman Dillon, Union Securities & Co.
(jointly); Merrill Lynch, Pierce, Fenner & Smith; Equit¬
able Securities Corp. Bids—Expected to, be received on
April 1.
debentures due 1983.

Illinois

Power

Co.

Eastman

by competitive bidding. Probable bidders:
Merrill Lynch, Pierce, Fenner & Smith and Lehman
Brothers (jointly); Stone 8c Webster. Securities Corp.
Bids—Tentatively expected to be received in May.

■//!''/'.

New

determined

plans to sell about
$5,000,000 of first mortgage bonds sometime after the
turn of the year. Proceeded—-repay advances made by
Peoples Gas Light & Coke Co* the parent. Underwriters
—Probably Dillon, Read & Co. Inc. and Halsey, Stuart
&

White

and

rLehman Brothers, and Bear, Stearns& "Co. . (jointly).
Bids—Tentatively set. for Apri 1 A 5. * Registration— Ex¬

was reported company plans to issue and sell
May $20,000,000 of first mortgage bonds. Underwriter
—To be determined by competitive bidding. Probable
bidders; Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce,
Fenner & Smith and White, Weld & Co. (jointly); Salo¬

Central Hudson Gas A Electric Corp.

This may

Utilities Co., '

Jan. 29 ft*

England Telephone A T®kgrap/i Co.

(4/14)

—

Northern States -Power Co.

(Minn.)

•

13 it Was -reported that; the company may/ be con¬

Jan.

sidering the issue and sale this Summer of about $25,600;bonds. Underwriter—To J be deter¬

Co.:; (5/20)

Jan. 29 it was reported company plans to issue $25,000,000 of first mortgage bonds. Proceeds—For construction

000 of first mortgage

mined by • Cottipetitive bidding. Probable bidders: Halsey,
Underwriter—To* be determined by competi¬ .J Stuart 8$ Co. Ihc;; The First Boston Corp. and-Hlyth
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Co., Inc.' (jointly); Merrill Lynch, pierce, Fenner &
Eastman Dillon, Union Securities & Co.; White, Weld &
S-udthf Kidder, Peabody ;& Co. and White# Weld ,& .Co.
Co. and Merrill Lynch, Pierce, Fenner & Smith (jointly):
(jointly); Lehman Brothers and Riter & Co. Xjointly);
The First Boston Corp.; Harriman Ripley 8c Co. Inc.
Equitable Securities Corp. andj- Eastman7 Dillon; Union
Bids—To be received on May 20.
Securities & Co. (jointly).
:
V
;
" 't-V-i:;.-.-

/program.

tive

Citizens A Southern National Bank of

Kansas'" Power
Feb.

Savannah, Ga.
Jan. lb

it was reported Bank plans to offer to its stock¬
holders the privilege of subscribing for 100,000 additional

shares of capital stock in about 60 days.

Underwriter—

None.
Columbus & Southern Ohio Electric Co.
Dec. 9 it
In

was

reported company plans to issue and sell

1958 about 250,000

writers

shares of common stock. Under¬
Dillon, Read & Co. Inc. and The Ohio Co.

—

(jointly).
Commonwealth Edison Co.
Feb.
sell

was

announced

(4/15)

company

Light Co. /• ;•I

announced

Pro¬

construction

program.
Underwriter—To be
by competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Glore,
Forgan & Co. Bids—Expected to be received on April 15.
Registration—To be filed about the middle of March.

"determined

...

•

Consolidated Natural
25

was

announced

Gas

plans to issue and
sell $45,000,000 Of sinking fund debentures. Underwrit¬
ers—To be determined by competitive
bidding. Prob¬
able bidders:
Halsey, Stuart & Co.; White, Weld & Co.
and Paine, Webber, Jackson 8c Curtis
(jointly); Morgan
Stanley & Co. and First Boston Corp. (jointly). Offer¬
ing—Expected in second quarter of 1958.
Delaware Power A Light

Jan. 22 it

Co.

reported company plans to issue and sell
$10,000,000 of first mortgage bonds due 1988. Proceeds
—To

was

bank loans and for construction program.
Underwriter—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; White, Weld
repay

& Co. and Shields & Co.
(jointly); Eastman Dillon, Union
Securities & Co.; The First Boston Corp. and Blyth &

Co.,

Inc.

(jointly);

Merrill

Lynch,

Pierce,

Smith and Kidder, Peabody & Co. (pointly).
Expected iri June.

Fenner &
Offering—'

ex¬

Underwriter—To be determined by competi¬
tive bidding. Probable bidders:
Halsey, Stuart & Co.
Inc.; The First Boston Corp.; White, Weld & Co.; Glore,
Forgan & Co.; Kuhn, Loeb & Co.; Eastman Dillon, Union
Securities & Co., and A. C. Allyn & Co. Inc.

program.

Drexel & Co. and Equitable Securities
Corp.

Bids—Tentatively expected to be received
Power Corp.

(jointly);
(jointly).
April 9.

(7/1)

was reported corporation plans to issue and
$25,000,000 of first mortgage bonds due 1988. Under-

*0? l7lTQ- be determined by competitive bidding. Prob¬

able bidders: Halsey, Stuart & Co.
Inc.; Kidder, Peabody
& Co. and Merrill
Lynch, Pierce, Fenner & Smith (joint¬
ly); Lehman Brothers and Blyth & Co., Inc. (jointlv)*

Eastman Billon, Union Securities &
Co., and Harriman
Ripley & Co. Inc. (jointly); The First Boston Corp. Bids
-—Expected to be received on July 1,

★ Great Atlantic & Pacific Tea Co,
was reported a
secondary offering of

Feb. 19 it

common

voting stock is expected within a month. Underwriters—
May include: Blyth & Co., Inc.; Carl M.
Loeb, Rhoades
&
9°/l HemPbill» Noyes & Co.; Smith, Barney & Co.;
and Merrill
Lynch, Pierce, Fenner & Smith.

Gull Mobile A Ohio RR.

'£2*20 ICXJ granted
343,800 of 5%
m

company permission to issue $28,-

debentures to mature Dec. 1, 2056.
exchange for the 283,438 shares of outstanding $5
pre¬
income

ferred stock

(no par) on the basis of $100 of debentures
for each preferred share.
Offer expires Feb. 14, 1958
but may be extended.
Underwriter—None.

Northwest

Kentucky Utilities Co..-,
Jan.

for

also

purposes.

(jpintly); Hairrman Ripley & Co. Inc. and Eastman
; '. ;
1/ > * V
Pacific National Bank, San Francisco, Calif.
Y
Feb. l2!th¥ Bdhk 6ffei^d 44,708 additional shares of com¬
mon stock
(par>20) to stockholders at the rate of onq
new share for fohr shares held as of Feb. 11; rights to
i

reported

Price—$37.50 per share.Proceeds
capital' and surplus. Underwriters: — Elworthv & Cb;; Sbhwafe^ieher
Co.: Davis Skaggs & Co,;
Pfluger & Baervvald; and J.' Barth & Co.; all of San
Francisco, Calif.' •,
v.
; ' hv--v
."'v
■n' " "
X Paciifi^TafdttltiiHie A Telegraph Co.
.
;
Jan. 8cit was'rbqorted company plans >300,600,000 capi?
tal oUtlay-hi'oirath. Proceecfe^For construction .program
in 1958 anaxT059f ($137,000,000 in 1958). Underwriter—
To be determined by cOmpctitive bidding. Probable bid¬
ders— Halsey,Stuart & Co. Inc.; Morgan Stanley & Co.
expire'

—To

on.

March-' 4.

increasb

'A-Light

feimrted company .plans to issue and sell
May, subject .to market conditions, $40,000,000 of -first
bonds due 1988. Underwriter—To be deter¬
mined by competitive bidding. Probable bidders: Halsay, Stuart & Co.'Inc.; The First Boston Corp.; White,
Weld & Co.; Morgan Stanley & Co. and Drexel & Co.
(jointly). Bids—Expected to be received on April 29..,
Public Service Co. of Oklahoma
;
Jan. 20 it was reported company plans to issue and sell
in May $16,000,000 .of first mortgage bonds due 1988,
Proceeds—To repay bank loans and for construction pro*
gram.
Underwriter—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
White, Weld & Co.: aaid Shields 8c Co. (jointly); Blyth
& Co., Inc.; Salomon Bros. & Hutzler; Kuhn, Loeb 8s
Co. and Eastman Dillon, Union Securities & Co. (joint¬
ly); The First Boston'/ Corp.; Glore, Forgan & Co.;
Equitable Securities Co. ■ • ' ' / :
; .:
!
Jan. 27 it was
in

mortgage

this newly organized invest¬
plans to offer to bona fide residents of

announced

California 10,000 shares of capital stock (par $1). Price
—$10 per share, less an underwriting discount of 8 xk %.
Proceeds—For investment.

Missiles-Rockets-Jets & Automation Fund, Inc.
7 this new fund registered under the Invest¬
ment Company Act of 1940. Plans to issue
$15,000,000
On Jan.

on a

Underwriters—The First Boston Corp. and

Dilloh^Hnioh, ^Securities & Cq.^( jointly). ^

;

ing to the disposition of its gas properties to Louisiana
Gas Service Co., a new company.
;
'■
/

common

Proceeds—Approxir

held.

Corp.; The First Boston Corp.; Kuhn, Loeb & Co., Merrill
Lynch, Pierce; Fenner« & Smith and White; Weld &

Dec. 16, it was announced
company may borrow $11,500,000 from banks pending a final financing program relat¬

was

Co.

the creation of an issue
of 16,000 shares of $100 par preferred stock and an in¬
crease in the authorized common stock from
2,000,000 to

ment company

common

Feb. 3 it was reported company plans to issue and sell
$15^000,000 of bonds this year. Underwriter—To be determihed by ebmb^titive bidding. Probable bidders: (1) For
boAds—Halsey, Stuart & Co. Inc.; Equitable Securities

Litton Industries, Inc.
Dec. 14
stockholders approved

Louisiana Power

Bi^h™&. Cq., inc., .both' of New'.'York.
Qkiahoma Gas & Electric Co.

Underwriter—To

3,500,000 shares. UnderwritersLehman Brothers and
Clark, Dodge & Co. handled last equity financing which
was :done. privately.
V v/. •/•; -vv„
■■

each

mately $7,000,000 to be invested in three major affiliates
and the balance lor working capital and other corporate

that company may offer
approximately 165,000 additional shares of its common
stock to its common stockholders on a L-for-15 basis,
Underwriters—Blyth & "Co., Inc. and;J. J. B. Hilliard &
Son. "
'
h
//-<-V was

Rancorporation, Minneapolis, Minn. t,,:

(3/27A'.S'V'/ l
Feb. 25 it was announced company plans to offer 106,430
shares- of new. convertible preferred. stock (par $100/), Lb
its common. Stockholders at the rate of one new sharf

by competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.; Lee Higginson Corp.;
Equitable Securities Corp.; Eastman Dillon,
Union Securities & Co. and Merrill Lynch, Pierce, Fenner
& Smith (jointly); Kidder, Peabody & Co. and White,
Weld & Co. (jointly); Kiihn, Loeb &, Co. Offering—Ex¬
pected in September or October. /
;:
*
'
v ;

stock, of which $7,500,000 will be underwritten
by Ira Haupt & Co. Price—$10. Proceeds

firm basis

—For investment.

Technological Advisors—Include Dr.
Karman, Chairman of/the advisory group
for aeronautical research and development of NATO.
Theodore

Ja*}-29 it
sell

be determined

Jan. 27 it

plans to sell not

ceeding $15,000,000 of first mortgage bonds due 1988.
Proceeds — To repay bank loans and for construction

Florida

Master Fund, Inc., Fairfield, Calif. >

Duquesne Light Co. (4/9)
Jan. 29 it whs announced
company

Kentucky Utilities Co. ^
*
Jan. 21 it was reported company plans to issue and sell
$10,000,000 of first mortgage bonds, proceeds—To repay

Co.

company

■

company

Feb.

■

plans to issue and
sell $10,000,000 of first mortgage bonds due 1988. Pro¬
ceeds—For construction program.
Underwriter—To be
determined by competitive bidding. T Probable bidders;
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Glore,
Forgan & Co.; Harriman Ripley & Co. Inc.; White, Weld
& Co.; Blyth & Co., Inc.; Equitable Securities Corp. Reg¬
istration—Expected before Spring.
was

bank loans and for new construction.

plans to issue and

$50,000,000 to $60,000,000 of mortgage bonds.

ceeds—For

von

Mississippi Power A Light Co.

(4/16)
plans to issue and
sell $15,000,000 of first mortgage bonds due. 1988. Under¬
writer—to be determined by competitive bidding. Prob¬
able bidders: Halsey, Stuart & Co. Inc.;
Kuhn, Loeb 85
Co.; Equitable Securities Corp. and Shields & Co.
(jointly); Blyth & Co., Inc.; Merrill Lynch, Pierce,
Fenner & Smith, Eastman Dillon, Union Securities &
Co., White, Weld & Co. and Kidder, Peabody & Co.
(jointly); The First Boston Corp. Bids — Tentatively
expected to be received on April 16.

ly).

it New England Electric System (4/15)
March 3, it was announced that company is
planning to
offer 968,549 of common shares
(par $1) to stockholders

Richfield Oil Corp..
/-j.;:,
Jan. 6 it was ieported that'company may late-in January
announce its financing plans, which are not yet com¬

Jan.

was

(4 28)
announced com«jpany plans to issue/and sell $30,000,000 of first mortgage
bonds.. proceeds—'Td^^;redeem 320;000,000 of 6%% series
bonds 4ue^^tifhd;to finance n.ew construction. Under¬
writer—TjQ jbe j3ete^rtiihed by competitive bidding. Prob¬
able bidders:''';!HalSey, vStuart 8^ Go. Inc. and Lehman
Brothers (jointly).; Stone 8c Webster Securities Corp.,
The First Boston Corp. and Smith, Barney Ac Co. (joint¬
Puget Sound Power A Light Co.
Jan. 29,/ Frbnk .•McLaughlin, president,

announced company

pleted.

l-for-12

basis; unsubscribed shares will be made
subscription by employees under a 1958
employee share purchase plan.' Underwriter—To be
determined by competitive bidding. Probable bidders:
available

Carl M.

Fenner

for

Loeb, Rhoades & Co., Ladenburg, Thalmann &
Co., and Wertheim & Co... (jointly); Merrill Lynch,
Pierce, Fenner, & Smith. Kidder, Peabody & Co. Inc.,

Hids-^Eb$ectedT6 be received on April 28.

Underwriter-— May be Merrill Lynch, Pierce,
8c .Smith,/ New York.

Riddle Airlines, lnc. Y

^ r s'

Oct. 21 it was anhouriced company
•

;

the SEC ah tesue - bt new common

shares and:thev price ^at-whidi

;

plans to:register with
stock, the number oi

they will be offered not

yetr determined. The authorized common stock has

been

■

Volume 187

Number 5722

(1083)

The Commercial and Financial Chronicle

i :-U*' *"
increased from 7,500,000 to

derwriter —,.To; be

15,000,000 shares.: Proceeds

—TO finance route expansion and for

Underwriter—James H. Price & Co., Inc., Coral Gables,
anck New York, N. Y., handled previous public

offering of 500,000 shares of
share in July, 1956.
1

Royal Bank of Canada

Feb.-26
shares

stock at $3.25 per

common

Dec. 3 it

(3/19)

one new share for each five shares
held: rights will expire on June 10, 1953. Price—$37.50
per share tin, Canadian currency). Proceeds—To increase
capital and surplus. Underwriter—None. This issue will

SEC.

Sierra Pacific Power Co.

Jan, 27 it

plans to

company

with

oversubscription privilege).. Proceeds—For

Underwriter—Exemption from

con¬

basis.

:•

-..■■■

■Mass.

•>» •
v./;
Sierra Pacific Power Co. (4/23)
Jan*27 it was reported
company plans to,issue and sell
...

Southern Counties Gas Co. of California
in

about

Virginia & Southwestern Ry. (3/6)
Company plans to sell $5,000,000 bonds. Proceeds—To
April 1, 1958. Underwriters
—To be determined by competitive bidding. Probable

May of> this year,

bidders:

16 it,was reported company

bids and

even

the coupon
•'

for

example,

The

split in ideas

issuer

a'price

•a

•

Public

paid the
100.856 for a

Utility Securities

cf. At the present time,

The company

Oklahoma Natural Gas Company
Natural Gas, with a

4%'% coupon rate.

Midwest

Carbide,

operates four un¬

derground gas storages with a com¬
bined capacity of approximately
157 billion cubic feet of gas, and

was more

Oklahoma

approximately

of undeveloped oil
leases in the state.

acres

and gas

By OWEN ELY

above the run¬
other firms named

and New

■

174,000

group

4)4% interest rate. This

Two

113 billion

than $7 per bond
ner-up.-

•;

the company owns

rate.

successful

derwriter—Blyth & Co., Inc., San Francisco
York.

there

spreading

Washington Natural Gas Co.
Oct. 18 the directors authorized the sale of $5*000,000
in debentures. Proceeds—For expansion program. Un¬

Feb. 10, Leo L.

considerable

2018, 70 Pine St., New York 5, N.

y-;

bonds. ^Un¬

bonds,

year
was

Halsey, Stuart & Co.; Salomon Bros. & Hutzler;
Dillon, Union Securities & Co.; Kidder, Peabody & Co., and White Weld & Co. (jointly). Bids—
To be received up to noon (EST) on March 6 at Room

Eastman

Tuttle Engineering," Inc., Arcadia, Calif.
Strecker, President, announced corpora¬
tion plans issue and sale In near future of $1,00Q>000

•

plans to issue and sell

March,, 1958, $15,000,000 of first mortgage

plans to issue and sell

redeem similar amount due

$15,000,000 of first mortgage bonds in April or
Proceeds—^-To repay bank loans. Un¬
derwriter—If issue is not placed privately, underwriter
may be determined by competitive bidding. Probable
bidders: Halsey, Stuart & Co. Inc.; Equitable Securities
Corp.; Eastman Dillon, Union Securities & Co.; and Salo¬
mon Bros. & Hutzler (jointly); Carl M. Loeb, Rhoades
& Co.; The First Boston Corp.; White, Weld & Co.

Witter & Go. (jointly). Bids—Tentatively scheduled to
be" received on April 23.
Registration — Planned for:

;

tively expected to be received on June 10.

;

Toledo Edison Co.

Proceeds—
repay-bank loans and for construction program. Un¬
derwriter— To be determined by competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Kidder, Peabodv & Co.; Stone & Webster Securities
Corp. and Dean

April 11.

Virginia Electric & Power Co- (6/10);
Dec. 26 it was reported company plans to issue and sell
$25,000,000 bonds or debentures. Underwriter—To be
determined by competitive bidding. Probable bidders:
Halsey, Stuart & Co.; Salomon Bros. & Hutzler; White,
Weld & Co.; Eastman Dillon, Union Securities & Co.;
Stone & Webster Securities Corp.; Kuhn, Loeb & Co.
and American Securities Corp. (jointly). Bids—Tenta¬

AV.A.:--: 'A?/.-y;%//,.■"'A-

Jan. 20 it was reported company

$3,000,000 of first mortgage bonds due. 1988.

; Dec;

;■

Mdrch-25.

About

com¬

petitive bidding to be sought. Stone & Webster Securities
Corp: and Dean Witter & Co. (jointly) were only bid¬
ders for last, rights offer, which was on a
competitive
*

Only bidders in 1956 for $4,000,000 bonds were
Stuart & Co. Inc.; Hornblower & Weeks and
(jointly).

-fc TelA-Sign Inc., Chicago, III.
March 3, it was announced me" company will file on or
about March 10, 1958 a proposal to issue 180,000 shares
of common stock (par 20 cents) .
Price—To be deter¬
mined at time of offering. Proceeds—For working capital
aiid other corporate purposes.' Underwriters—Floyd D.
Cerf Jr. Co. Inc., Chicago, 111.; Charles Plohn & Co.,
New York, N. Y., and Clayton Securities Corp., Boston,

stockholders the lrigbt to subscribe
for. 57,36% additional shaves' of common stock (probably

Underwriter—

competitive bidding. Probable bid¬
ders: Halsey, Stuart & Co. Inc;;. Morgan Stanley & Co.;
The First Boston Corp.; Kidder, Peabody & Co.; White,
Weld & Co.; Merrill Lynch, Pierce, Fenner & Smith and
Eastman Dillon* Union Securities & Co. (jointly). Bids
—Expected to be received on May 13. Registration—
To be determined by

William R. Staats & Co.

offer to itsvcommon

struction program.

bank loans and for construction program.

Halsey,

(4/16)

also reported that the

was

sell
Proceeds—To repay

$15,000,000 of first mortgage bonds.

For bonds, to be determined by competitive bid¬

ly).
ding.

•

■

Improvement Co. (5/13)
reported company plans to issue and

United Gas
Jan. 28 it was

announced company plans to raise in mid-

$5,000,000 and $6,000,000 new capital, about
two-thirds of which wil) be through bond financing and
the balance through common, stock financing.
Under¬
writer—For stock, may be Hornblower & Weeks, Wil¬
liam R. Staats & Co. and The First California Co. (joint¬

announced it plans to offer 1,008,000
capital stock to stockholders of record March

be registered with

was

1958 between

5, 1958 at. the rate of

not

stock.

rate purposes.

Southern Nevada Power Co.

the Bank

Fenner & Smith.

the sale of about $5,000,000 of common
Proceed^—For working capital and other corpo¬

later in 1958 by

Blyth &
Co., Inc.; White* Weld & Co.; Merrill Lynch, Pierce,

Fla.

stock, to be followed

convertible debentures or preferred

determined by competitive bidding.

Probable bidders: -Halsey, Stuart & Co. Inc.;

working capital.

National Gyp¬

capable of delivering in excess of
500 million cubic feet of gas per

Certain-teed Products, Fan- day. Last year these storages sup¬
52-year history, serves about half
the population of Oklahoma di¬ steel Metallurgical, Sylvania,, and plied 53% of peak day require¬
rectly or indirectly. It is an inte¬ many of the major glass manufac¬ ments.
grated gas utility, producing gas turers;
The- company is planning for
The company is developing its continued
and transporting, storing and dis¬
rapid expansion and is
air
conditioning load since this projecting the expenditure of $52
tributing/it through some 7,300
miles of pipeline. It serves 355,800 will help to fill in the summer million during the next five years
customers in 142 communities with "valley."
At company rates gas for construction, or about the same
air conditioning operates for about annual1 rate as ill the past decade.
an estimated population of 1,133,000. It also serves some 42 com¬ 40% less than the operating cost The cash budget for this period
of
munities at wholesale.
competitive air conditioning. indicates the need for about $15
The company has a total of 37,000 million
of
permanent financing
The economy of Oklahoma is
tons of gas air conditioning on its which will
probably include $5
about
one
third oil,
one - third
lines and the tempo of sales will million
preferred stock and $10
farming and one-third industry.
increase as more manufacturers million 1st mortgage bonds.
The
It is the fourth, largest oil produc¬
sum,

•

Olin, Mathieson

Chemical

Market
observers
are
looking
backing, up of new for
a good speedy operation in con¬
issues threatening to immobilize...
nection with today's offering of $40
substantial blocks of underwriting
million Olin Mathieson Chemical
capital, investment bankers moved
Corp.
convertible
debentures."
this week to: do something about
Bearing 5)4% interest and priced
breaking up,the log-jam.
A.
y
at par, all indications were that
And 'the only" sensible thing the

With

the

issue

they

could do
of

some
,

the

was.

turn

recently

loose; to

purchased

the

veritable "strike"

issues.

A consequence
was
market drove ahead too

the

idly

and

having

that

presumably

counted what had

over-dis¬
happened.

have

syndicate

been

stantial

heavy

offerings

new

that

discloses

ju§t decided to sit back and wait
situation.

out the

That is

call.

exactly

;

what

they: have been doing and
evidently with considerable de¬
of success.

gree

;

there has been

price

adjustment

three

points,

fered.

This

much

the equivalent of

basis points
has

carried

been

ofA troubles

chance

try

total

The Calendar

around

$147

issues awaiting the

new

The biggest of these is Sylvania

Electric

keting

downward

have

Inc.'s

Products

$40

mil¬

lion of debentures slated for mar¬

On issues that have been turned
loose

Jones & Laughlin
'

regularly through the

million of

ahead,

are

yield of¬
the

Tuesday.

week

The

scheduled

trie

Co.

for

$20^ million

open^bids
bonds

oil

Monday.-

pro¬

Chicago,

Wednesday,

Rock

spective return comfortably above

Island

the

market

$16 million of bonds and

4%v. level

with

Pennsylvania

Electric Co. 4%s, recently brought

to. yield

3.95%,

backing off to 97%s bid to make
the indicated

Gas

will

Railroad

Pacific

Cincinnati
take

bids

ferred

yield around 4.15%.

for

will

Electric

million of pre¬

$13

stock.

General

Corp.

California offers $20 million bonds
for
„

were

evidently

bids,

dis¬
Fuel

posed-to
the

attempt

bit

new

ideas

Iijl the

the

market,

issues this week in search
that

would

jibe

through bankers, on the same day.
r

1
case

••

of Ohio Edison Co.'s

$40 million of first mortgage, 30-

•

with those of their potential cus¬
tomers.'

Corp.,

debentures

for

state has

Russ

A. McClure Russ
McClure
&

been

trying to de¬

velop and diversify its industrial
business and to capitalize on its

Co.,

Russ, President

Inc.,

San

Antonio,

Texas, passed away on Feb. 23.

enter

the

field

with

new

gas

equipment.
While the company

and

gas,

some

produces oil

of its gas produc¬
ad¬

tion is in fields which are not

company

sell

does not expect to

any common stock during the next
five years. The equity ratio as of

Aug. 31, 1957 was

32%.

filed an applica¬
jacent to the service areas. The tion for a rate increase of $6.5
company
obtains about three- million on Aug. 27, 1957, of which
quarters of its supply from 120 $4.3 million was received effective
separate oil and gas fields through¬ Jan. 1, 1958. .The company had
The

company

out the state, producing one-quar¬
requested a rate of return of 7.2%
large supplies of industrial water ter itself. About one-eighth of its and; received 6.25%,
and large deposits of salt, coal, requirements are obtained from
The stock has been selling re¬
dolamite and
glass sands, lead, Phillips Petroleum, and the list of
cently around 27)4 and; based on
zinc and related rate metals. As suppliers
includes a number of the
$1.50 dividend
rate yields
evidence of
the
success
of the other well-known oil companies. about
5.5%.
The share earnings
campaign Collery Chemical, a di¬ Gas produced with oil and proc¬ record has been somewhat irregu¬
vision of Mine Safety Appliances, essed in gasoline plants makes up lar but has shown improvement
is building a $38 million plant in about 85% of sales and is likely to in recent
years. $2.80 was earned
the principal
source of
our area to
make a new type of remain
in fiscal 1955 with a decline to
Boron fuel.
Western Electric has supply. The company's controlled
$1.86 in the year ended Aug. 31,
announced plans to build a large reserves are 11)4 times annual re¬

1957.

plant

new

Oklahoma City. quirements, compared with 6 times
Airlines is expanding annual requirements in 1948.. The
in

its Tulsa

operation by building a
$20 million jet maintenance and
overhaul base to be

ready in 1959.
In Tulsa, Douglas Aircraft is the
largest employer, and a new and
popular executive airplane, the
Aero Commander, is being built
in Oklahoma City.
company

growth with
customers
the

rate

has enjoyed good
more than

revenue

have

been

about

Total

revenues

future of the

New

acquired at

10,000

year.

of $44 million in¬

company's gas sup¬

ply is considered very good.
has been success¬

past

several years in

ful

the

contracting for new supplies in a
highly competitive market,

per

about

The company

the

rate

above

then applied

the

at about

and

increase

earnings for fiscal 1953 are

esti¬

$2.20 a share by

management,

including

eight months of the rate

only

increase.

and is

purchasing most of its
requirements at a price of He
mcf. Almost all the gas pur¬

Ohio Co. Adds

currently

(Special to The

Financial.Chronicle)

COLUMBUS, Ohio—William E.
under
is now affiliated with
contracts having a primary term Durrant
of 20 years or longer; they provide The
Ohio
Company,
51 North
escalation in price to 12c in De¬
High Street.
cember, 1962, and to 13c in De¬
cember, 1967. The company has
an
interest in 187 producing oil With McMaster Hutchinson
chased in the last year was

wells

with

proven

reserves

esti¬

million from oil mated at 2,206,000 barrels. Its net
sales, gasoline plant product sales, interest in proven gas reserves is
etc.
The company considers that about 69 billion cubic feet, in the
its low gas rates have helped to Panhandle and adjoining areas of
draw industrial customers to the northwestern Oklahoma, which
state.
Among its 2,300 industrial have undergone rapid develop¬
In
customers
are
such well-known ment in the past two years.
concerns
as
Deere
& Company, tne entire state they total about
clude

for

mated

The company

gas

Mississippi

and

of calculation in bidding

way

others have

Sales of natural gas are about 55%
River 'residential, 15% commercial, 27%
will put $30 million industrial and 3% miscellaneous.

Changing Pattern
Bankers

many

doubling in the past decade.

Telephone

* *'•*'

The

at '100.874

out

Rockwell,- and

Supply, Dresser,

established branches in Oklahoma.

Merrimac-Essex Elec-* American

starts with
~

large number of

companies located in
Tulsa.
To serve the oil industry,
such firms as Bethlehem Supply,

purchased merchan¬

approaching week.

sub¬

ing state, with

who

have

their hands

commitments
and

their

will

dise,

At any rate prospective buyers,

knowing

the buyer.

with recently

rap¬

they

Keep Pot Boiling

>■

Underwriters,

new

com¬

fair price to both the

and

the

what

well-known

considered
seller

out of the

was

and

negotiated

pany

Reserve

bidding their heads off for

bankers

and

way

part of major investment in¬

threw the switch in the money
market several months ago, bank¬
ers have been up to their old habit
of

•

'competitive bidding

terests against yields offered.
Ever since the Federal

attractive

prove

y Here, of course, the element of

issues 'that have been stumbling
along and piling up in inventories
because of

would

investors.

(Special to The Financial

MILWAUKEE;

Engel has become

connected with

McMaster Hutchinson

Wisconsin

& Co., First

National Bank Build¬

ing. He was
& Co.

Chronicle)

Wis.—Elmer H

formerly with Bache

The Commercial and Financial Chronicle

(1084)

C. Lane

Joins Geo.
-

(Special to The Financial Chronicle)

NEW

etaff

George

Mutual Funds

added to the
&

Lane

Co.,

Electronics Growth

Assets Now

To Continue for

$38 Million

By ROBERT E. RICH

Total

Lower Business Level

Joins Westheimer

Business

O.—Mrs.

Walnut

and

Allene

Street,

Cincinnati

You

Company,

members

Stock

can

322

lower

seven

Branch has joined the staff of

Westheimer

continue

may

This

the

estimate

was

made

the

analysts "by

Thurston

Exchange.

oicnyoitRsJiare
throiifjh

...

mutual fund

common

of 1929

stocks. For copy

Address..

AND COMPANY,

Elizabeth 3, N. J.

stock.

The

WASHINGTON 7, D. C.

ree
booklet-iwospcctus...

report of Boston
received
by shareholders
shares

that

profits

also

were

—

amounting

for

the

compared

with

year.

"For those shareholders who

cents

accepted
A mutual fund

capital

payment

gains

last

year's

distribution in

ad¬

longer-term

able

bonds

issues, which

and

Government

pre¬

avail¬

substantially lower prices

and better

taken

Banks, to

yields owing to action
the

Federal

curb

Reserve

prevailing

infla¬

tionary tendencies.
"In

the

last

explained, "interest rate poli¬

cies

which offers

increase in dividends received

the result that our bond and pre¬

the

growth

During

possibilities of
selected

noted,

common

stocks of the

Jones

the

Mr. Vance said.

same

common

general,

aviation industry.

period,

stock

prices

he
in

measured by the Dow

Industrial

Stock

Average,

declined from 479 to 450.

Mr. Vance attributes these gains

Name

to
Address_

in
State

CHy.

DISTRIBUTORS

than 14%,"

GROUP, INC.

63 Wall Street, New

York 5, N. Y.

were

sharply reversed

ferred stock

stantial
were

the

other

Vance

also

significant

gains

which:

assets increased to

reduced by some $24 million

during

two-year selling program

prior to last fall's market decline,

the

during

reported

fund

(1) Common stock holdings

fund

year."

Mr.

changes in the fund's portfolio

were

thus

and

important factor in

performance
the

with

holdings showed sub¬

price increases,

new

during the

year-end

standing

rose

year:

these

for
Total

the
net

$142,125,781*

high.

out¬

to 9,793,886, and the

number of shareholders to
29,238,
both representing new peaks.

1
«

addition, the need
rising labor-

material

costs
by in¬
creasing each worker's produc¬
tivity will further stimulate elec¬
raw

tronic

cost-cutting. The extensive

electrical
systems
for
guided missiles and other military
civilian purposes is still an¬
other growth area for automation:
use

and

techniques.
*A second source of potential
growth is in the development of nuclear power facilities for the"
peace-time use of the atom, the *•
full potential of which is yet un¬

charted.
"The

heavy emphasis placed

electronics
hances

research

the

likewise

outlook.

on
en¬

Research

this industry is believed to exceed
that in* any other sector of the

American economy, and has con¬

sistently obtained great rewards
through new products and im¬
proved techniques.
"A

fourth

of growth

source

vast

utility' systems for
generating and distributing equip¬
our

dential

meet

the

increasing

14%

of these views, to¬
specific investment
data, is available in new descrip¬

and short-term

bonds,

the

outlook

phase of the industry
excellent for many years

summary

with

gether

that on the
of its assets

fact

The

consumers.

this

come."

value of

tive

literature

Electronics

Electrical

Equipment Shares of
Group Securities, Inc. Copies of
the new folder may be obtained

the shares of Affiliated Fund, Inc.

from

advanced

porated, 63 Wall Street, New York
5, New York.

months

6V2%

ended

Jan.

the

31,

thrfee

1958,

Distributors

Group,

Incor-

advance

greater than that experi¬
by the stock market in
general,
as
measured
by
well
known

indices,

most of
to 3%.

which

Incorporated
Income Assets

advanced from 1%

At the end of January 1958, net
assets of the Affiliated Fund were

$369,464,195, equivalent to $5.65
This

share.

per

gether with

20c

value

to¬

gains

capital

At New

High

distribution paid in December,

Net
come

assets

Incorporated In¬
Fund, three and one-quarter

years since the
reached a new
905

start of the Fund,
height of $80,103,Jan. 31, the 13th quarterly

report reveals.

During the past 12 months end¬
ed

Jan.

31, 1958, the number of
President, informs stockholders, shares outstanding rose from 6,"coupled with the relatively small 641,742 to 10,727,590, an increase
decline of our shares in last year's of over 60%.
falling market, seems to demon¬
that

strate

interest

the

inves¬

tors has continued to shift toward

quarter, however,"

ditional shares, this represents an

and

for

Up 6%

held in cash

were

replaced

were

to offset the trend of

ment

Despite the
about

founded in 1933,

investment in

in
of

is
equivalent to $5.85 a share as com¬
pared with the Oct. 31, 1957 value
of $5.49.
"The good
result in a rising
market,"
II.
I.
Prankard
2nd,

receiving
such
distributions
cash, or in additional shares

average

(4) During the first three quar¬

ferred

our

fiscal year end, after adjusting for

were

»'

equipments

smaller than nor-*

working force relative to

appears

Over $6.5 million of addi¬

1957, these

increasing

derived from the expanding needs

Value

substantially higher price
levels than now prevail.

ters of

automation

next decade.

realized.

Affiliated Share

(2)

; -,r,

■>

demands from industrial and resi¬

year

to 52 cents per

SECURITIES, INC.

may

enced

year

of GROUP

which

stock.

and

of future

sources

The shareholder has the option of

tional equities were exchanged for
ended Jan. 31, others
"which
appeared
to
be
1958, while the stock market was more realistically priced in view
registering a sizable net decline.
of the unfolding business picture."
In
his
letter
to
shareholders,
(3)
For the
most
part, the
Henry T. Vance, President of the
money received from the net sale
20-year-old Boston mutual fund,
of
equities was first placed in
reports that the fund's net asset
short-term obligations or attrac¬
value per share
increased from
$15.25 a year ago to $15.40 at the tive convertible issues.

ing the fiscal

Total dividends per share from
net
investment
income for
the

industry

its shareholders annually any net

increased in value dur¬

capital gains distribution of 89
cents per share
paid from net
profits realized during the year.

Aviation

reveals

week

the fund

describes

Canadian

which pays quarterly dividends to
its shareholders and distributes to

annual

Fund

1033 THIRTIETH STREET, N. W.

experienced

several formed after World War II

Up In
Year
Despite Market Decline

objective of possible

Development Securities Co., Inc. Dept C

management,
but also, it is the only one of the

Boston Fluid's Share Value

this

f.fomic

of enabling U. S.
obtain a diversified

In Three Mouths

holdings of

growth in principal and income.

based

important
her
key

Fund, Inc., Mr. Bul¬
pointed out, was not only

under

free

companies active in the atomic

field with the

Blodgett

stocks selected from among those
of

countries,

and

resources

investment

discussed the heavy exercise of warrants and
sales\ of new common stock of Tri-Continental by arbitrageurs
during the past two years. He went on to point out that with the
number of outstanding warrants reduced substantially it seems
probable that, looking ahead, the warrants will have less influence
on the common stock than in the past.

Development Mutual Fund, Inc. This
than 75

States

longer term,

abundance

investors

prospectus describing Atomic
more

United

for the purpose

•

for

this view it cites-

"One stems from the

need

the first mutual fund to be formed

Blodgett

Mr.

fund has

stocks.

Canadian
lock

Tri-Continental management,

vestments."

you a

other

the

over

her

natural

that, at present, "there is no
leverage on the common stock" with the common stock equity
invested approximately 93% in common stocks, and "in its present
position Tri-Continental has considerable flexibility should cir¬
cumstances
arise, that justified increasing common stock in¬

glad to send

six

Free-World

other

but
on

that

and

The investment manager noted

We will be

Canadian economy, lie said,
undergoing readjustment simi¬

lar

went on to point out that "because senior
securities are a permanent element in the capital structure, it
does not necessarily follow that the common stock is in a con¬
tinuously leveraged position."

ATOMIC

Canada is bright.

Mr.

Interested

stocks

permanent part of its capital structure" and which can employ this

zation in the future."
27

were

role in the economy of the demo¬
cratic
nations, the outlook for

common

potential
growth. Y,

mal

The
is

benefit of the

In support of

four

Because of the

increased
in

invested

investments

he added, believes "there
is a real place among investment companies for one which, as a
matter of long-term policy, believes in the moderate use of senior
capital and it has every intention of maintaining a senior capitali¬

INC.

fund

corporations and the reduction of

Blodgett described to the analysts the individual nature

The

HUGH W. LONG

the

of Tri-Continental Corporation as "the only investment company
of size which has bonds and preferred stock outstanding as a
senior capital for the
n»CTwpft|3|oataml

including

made,

Mr.

since

investments

fund's

amounts

1937, much of the broad general decline in stock market

Name

income

incorporated in 1952.

the

"However," he added, "if business stabilizes at a lower level
considerable period, the impact on individual industries and
companies, particularly in relation to profits, will be most diverse.
There should be excellent opportunities for careful selection of
individual issues during the year ahead, as indeed there have been
in the jiast year."
i
for

prospectus-booklet-: of
facts about the Fund, mail
this coupon today.

report

During the three months ended
growing population, resulting from
31,1958, Hugh Bullock, Presi¬ the low birth rate in the
1930's,
dent of the fund, told shareholders
there should be an added impetus
in the report, substantial revisions
given to automation within the

prices pyobably already has taken place."

Canadian Government and corpo¬
rate bonds and cash, according to

indus¬

Jan.

Turning to the stock market, the Wall Street executive noted

investing

growth pattern

try will continue for several
decades at least," says Distribu-'
tors
Group,
Inc.,
management
firm for Group Securities, Inc.

was

that "if business is unlikely to experience.a decline on the order

INVESTORS

"The long term

of the dynamic electronics

vestment

probably can expect business activity to remain on a lower
level at least as long or probably longer after the current decline
terminates, which it has not yet clone."

FUNDAMENTAL

Canadian

is at the rate of 10 cents per share,
is the 22nd payment from net in¬

we
-

accompanying the first
dividend for the 1958
fiscal year. The dividend, which

Foreseeing the decline and recovery as being somewhat more
prolonged than the seemingly similar 1953-54 decline, Mr. Blodgett
said that "since business in the 1953-54 period required seven
months of stabilization after the sharp decline before it turned up,

of American business

Three Decades

assets

quarterly

Fund,

the

Blodgett, Vice-President of Tri-Continental Corporation,
nation's largest diversified closed-end investment company.

net

Inc. at Jan. 31, 1958 were
$37,909,026, consisting of stocks of
48
Canadian
corporations, plus

May Be Prolonged

plateau for more than
months after the current decline terminates, a New York
investment company
executive told the Cleveland Society of
Security Analysts on March 4.

(Special to Tiik Financial Chronicle)

CINCINNATI,

Thursday, March 6, 1958,

Canadian Fund

Inc., 70 College Street.

Conn.—Edward

HAVEN,

T. Mvborg has been

the

type of stocks

own."
Common stocks owned by Affili¬

ated

Fund

divided

Jan.

31,

1958

til

BALANCED FIIND

tries

30.48%, producers of non¬
durable goods 29.92%; producers
of fuel

and

16 CENTS A

cash

raw

and

Additions to the portfolio

during

the

three-month

Fibreboard

Corp.;

McGraw-Hill

Corp.,

Gas

Heinz

period

STOCK Fll\ll

and

were:

American

Co., General Foods
Marathon Corp. (merger.

American Can Co.), New England

Electric

EATON & HtlWAMI

Products
Co.

System, New York State
Electric & Gas Corp., and Westinghouse Electric Corp,
' ;Y

CONSECUTIVE

QUARTERLY DIVIDEND

Publishing Co., Inc.

Eliminations
Natural

Paper

bonds

Government

15.83%.

were

material

14.83%;
producers of durable goods 9.04%;
and

DIVIDEND

EATON & HOWARD

were

follows: service indus¬

CONSECUTIVE

104 QUARTERLY

CENTS A SHARE

Dividends payable March
ers

25 to sharehold¬
of record at 4:30 P.M., March
10, 1958.
24 Federal

Street, Boston, itass.

Volume 187

Number

5722

The Commercial and Financial Chronicle

(1085)

45
'**

Continued from page 8

suggests that the boom
end

and

The Business Downturn?
tions

profit.
maintain

the

desire to

spend

at a high level requires a
continually high rate of introduc¬

usually referred to

busi¬

booms and depressions. Many
characteristics of business booms
ness

and
depressions
are
opposites,
e. g.,
changes in the quantity of
products and new
bank credit, the state of consumer
types- of capital equipment.
In
and
business
expectations,
the
addition, the economy's produc¬
tive resources would have to be level of total spending and em¬

tion

new

fully- employed
order

times

all

maintain

in ployment,

high ability
.spend.
This
would
require
rapid transfer of resources from
a

one

held

another

that

Merely to describe these
conditions

sary

show

minimum.

bare

tem¬

would

unemployment

porary

;

use

necesr-

sufficient

the

impossibility of con¬
high-level
spending.
A
capitalist economic system cannot
be expected to operate continu¬
ally
at
overload
capacity.
It
probably is necessary that vary¬
ing amounts of resources be un¬
employed in an economic system
without
central
planning.
The
tinued

the
relationship
and costs.
This
fact suggests that booms and de¬
pressions not only are two mani¬
festations of the same basic phe¬
nomena
but. also that the same
remedy - would
be
effective
in
eliminating both.
Depressions
between

could

and
prices

avoided

credit

bank

become

if booms

were

not

allowed

duction
and

many

products

new

cost-reducing types of capi¬

tal

equipment

would

have

later

artificial

which

otherwise

goods

with

and

ideal

toward

regularity
number that activity in
businessmen
al¬ enterprise

great

and

stimulus

could
But

continue

consumers'

ment

is
^

easing of credit restraints would

excessive

been

restrained.

be expanded.
willingness
to

exhausted

soon

■A

considerable

cess

can

ease

this manner,

amount of

exaggerated

unplanned or freetype
of
economy
is

caused

around

sion.

economic

by the

excessive

present time because

of the basic tendency for our econ¬
omy

healthy and vigorous

of new types of consumer ary phase of the business cycle
capital
goods
rather than turns into boom and later ends
greater amounts of the old types in depression solely because of
of goods.
The consumer's desire excessive expansion of bank
to spend is definitely limited in credit.
But for purposes of pre¬
terms of old goods, and he may venting
booms and depressions,
show some reluctance to buy new bank credit expansion is the cru¬
and unfamiliar goods and services. cial factor; the boom could hardly
But if properly stimulated by ad¬ occur without it.
The character¬
vertising and selling efforts, the istic of both booms and depres¬
desire to acquire new types
of sions which can best be managed
goods and services is apparently or controlled is the expansion and
and

without limit.

tain

spending at

order

main¬

high
level, the economic system must
quickly and continually develop
new
goods,
change
consumer's
opinions and tastes, and reallo¬
cate resources from production of
old goods to new goods.
The introduction of new goods
consumer

contraction of bank credit.
It is well known that

increase in spending will cause
further increases in spending be¬
cause
of the new incomes
thus

The

belief

anyone
a

said that when

man

sirable

are

the

necessary

and de¬

steals

our money, we

serves

anyone

steals

our

their

that

sense

complete elimination would most

likely require a high degree of
government planning of produc¬
tion and regimentation of busi¬
ness.

However,
desirable

these

necessary

fluctuations

tend

and
be

aggravated and to become exces¬
sive

tive
and

through the familiar cumula¬
process involving expansion
contraction of bank credit,

changes in consumer and business

expectations, and changes in the
relationship between prices and
costs.
tions

These

are

fluctua¬

excessive

undesirable

and

could

eliminated

without also

desirable

or greatly reduced
eliminating the many

features

the

un¬

free-enterprise type of
provided the supply of
bank credit is managed intelli¬
gently.
planned,

economy,

The Role of Monetary Controls
The

effectiveness

when

the

increases

open-market

purchases

spending

not

encouraged by credit-ease.
But

the

rate

strained
credit

control

expansion,

purchasing of

economic

much

re¬

bank

over

consumer

that

the

reducing

the

and capi¬

necessary

and desir¬ still

possess

lending ability.

ernment's

slowdown

ability to speed-up or
its rate of spending

and to relocate

some of its spend¬
ing to depressed areas of the econ¬
omy without increasing the size
of its budget, the prospects for

minimizing economic fluctuations
without incurring huge govern¬
ment

deficits

This duced, old products

tangible" taxes, according to where
you live.
\
.

whether it

However,
this
will
Roger W. Babson

week

write

entirely

different
of

use

TIME

—

namely, in connection with in¬
creasing the value of our invest¬
ments. In fact, time and patience
have been the making of most
large
must

fortunes.
use

The

Fly in the

intelligence

course,

and

one

Federal and State

without borrowing

years

"profits"

may depend upon not too
brokers recommending the
same stock.
Also, there could be
difficulty. in either obtaining or
selling such a large number of

many

shares.

However,
above

remember

illustration

starting with only

that

based

the
upon

dollar.

one

a
practical matter,
most every
reader should be able to start the

fund with $5,000 dollars, and then
use
the latter amount as a Re¬
for

serve

tively

This

errors.

would be invested

accordance

Reserve

conserva¬

with

the

Babson Program supplemented by
the Dewey Law of Cycles.

diver¬

sification, but the truly important

intro¬

and methods

Ointment?

penny

are not caused by expan¬
Cheap non-dividend-paying stocks.
sion and contraction of bank credit
But this also means you will have
but are the process by which new
no income taxes to pay—only the

are

even

appointments,

tuations

and methods

appears

promising.:

The True Secret of Getting the
Million

requirement is TIME.

tal

products

ing yields, and the Federal Gov¬

be; it probably is that mak-;
ing these millions from one dollar

concerns

will

was

re¬

strikes, idle¬
ness, or not
working effi¬
ciently.

largely non-existent,

increased

taxes,
income

may

to be based

to spend had largely been dissi¬
pated by overexertion. In such
cases, profitable uses of borrowed

and

corporate

with their widely-fluctuat¬

fers

observations of previous busi¬
ness
downturns when the desire

were

benefits

and

sta¬

it. This is true

funds

taxes

such

unemployment

whether it

simply to
being late to

expan¬

that lower rates

seems

compensation

personal

You say that there must be some
trick in this story of mine. There!

replace

monetary fail to be fulfilled, and a depres¬
economic sion follows. Other writers have
fluctuations lies mainly in their observed that booms typically end
ability to restrain the economy and depressions begin while banks
controls

called

combined with

bilizing devices

but when
time, we can

never

created by Federal Reserve

merely lie idle

have

goods, businesses would be better
How to Become a Millionaire
spending are financed by expan¬ able to develop and introduce
If you substitute years lor days,
sion
of
bank
credit, there are new goods, resources could be re¬
start with one dollar instead of
fewer natural or physical limits allocated without undue stress on
a
penny, and double the amount
to
the
cumulative
upturn
in price and cost relationships and
of your investment only once each
spending.
Not only may
each with a minimum of temporary
year, you could have over $100,dollar of new money be
spent unemployment, and consumers
several times during a year, but would have sufficient time to ad¬ 000,000 at the end of 31 years—
after taxes, losses, trust and other
additional
expansion
of
bank just their habits and tastes for
fees.
Certainly, with proper ad¬
credit may be encouraged. When¬ the new goods. Thus a reasonably
vice you can select each yearever
a
strong desire to spend is high average level of employment
combined
with
relaxed
control could be maintained and fluctua¬ except in bear markets — some
tions could be greatly reduced by stock selling at one or two dollars
over the expansion of bank credit,
a
share which is almost certain
it is almost inevitable that the proper management of the supply
to double within one year. Please
resulting cumulative
upturn in of bank credit.
note carefully that I do not say
spending will become excessive
Conclusion
you can expect this same stock to
and end finally in a business de¬
double every following year.
This analysis of the effective¬
pression.
This means that when this cheap
Some writers have pictured the ness of monetary controls should
stock
doubles
in
value,
your
boom
ending in depression be¬ not be interpreted as implying
broker need only sell this stock
cause
bank
credit
eventually that all fluctuations in economic
and reinvest the money in some
reaches the limits of expansion; activity
could be or should be
other
cheap
stock
which will
eliminated. Some degree of eco¬
once the banks have reached their
probably double in one year. I
lending limits and the circulation nomic fluctuation is a normal part
am not counting dividends in the
of money has reached its practical of the process of growth and
maximum,
spending
levels off, change in an unplanned, free- above calculations because the
profits are reduced, expectations enterprise economy. These fluc¬ stocks which are selected will be
But

policy

chance to get it back;

goods and the introduction of
Most readers know that if
they
generated, and more important, new goods which otherwise would
have
occurred during a business should promise to pay some per¬
because of greater business profits
son
one
cent the first day, and
would
be
and improved expectations of fu¬ boom
postponed
or
two cents the second day, and four
ture sales and profits.
If these spread oved a longer period of
third
These postponed expendi¬ cents the
day, and eight
does not occur at a constant rate increases
in
spending were fi¬ time.
cents the fourth day, and so
on,
in an unplanned economic system nanced solely by a faster circula¬ tures could then be called forth
each day for a month,
nor
is
the
reallocation
of
re- tion of the existing money supply, by an easing of credit restraints. doubling
the
result
would
bg
fantastic.
For
sources
accomplished without it is unlikely that the upturn in In so far as the basically strong'
the 31st day of the month, they
more
than temporary unemploy¬ spending would become excessive desire to spend, is not dissipated
would
have to
pay
the person
ment. Thus some amount of fluc¬ and turn into a
business boom in an orgy of spending credit
tuation in total spending, produc¬ because
there
are
natural
or
expansion, consumers and busi¬ about $10,000,000! This is the way
most large family fortunes have
tion
and employment is normal physical limits
to the speed at nesses would be less likely to be¬
been created, by TIME.
come
overstocked
with
familiar
in an unplanned economy. These which money can circulate.
fluctuations

money

now

By ROGER VV. BABSON
Some wise

stimulus

credit

activity had previously been
initial

may

Starting with a Dollar and
Becoming a Millionaire

with

form

sick

and

from

activity

artificial

bank

suc¬

be expected from creditthe

feel inadequately
stocked
low full employment rather than of interest and easier bank lend¬
goods and equipment.
ing policies will not encourage
Large parts of a higher level stabilization at full employment.
of consumption and a greater ca¬
and
that
additional
It would be incorrect to claim borrowing
demand
deposits and bank re¬
pacity to produce must take the that the prosperity or expansion¬
ways

which

by be held in

which

level of be¬

and

ment

leash,

tired,

layed by the tight

reserve to be called
into action when needed. Then an

economy on a

old,

cific examples of the types of ex¬
penditures which have been de¬

economic

than

forth

economy

fluctuation

expansion.

rather

and because of the previous
policy
of credit restriction.
Some spe¬

overexertion.

that the normal state of economic

sufficient

such

consumers

down¬

business

cause

credit

activity adjust their habits of consumption
and the to buy these goods and services.
government But no matter how great the
turns is not an inadequate desire stabilization policy should strive ability, it can be dissipated by
But excessive activity.
to acquire more consumer goods in an unhealthy economy.
Easing of credit controls could
and capital goods but the inability the logic and potential effective¬
ness of monetary controls becomes hardly
of an unplanned
be expected to stimulate
economic sys¬
tem
to introduce new types
of apparent once it is recognized spending after a long period of
basic

bank

ing new products, and consumers
have shown great willingness to

healthy

and undesirable,
they could be eliminated or
greatly reduced by proper control
unnecessary

and

the trough of the business cycle
expansion, the rate
economic activity becomes coud be filled in with the ex¬
greatly accelerated. It might seem cessive economic activity which
would
have occurred
that such a high rate could be otherwise
maintained so long as bank credit during a business boom.
bank

to those people who regard boom
conditions as the normal and de¬

level

are

be effective in
stimulating a de¬
postponed to a
sire to spend which previously had
Acting
under
the

Our economy has a
tremendous capacity for
develop¬

are

been

time.

This solution would not appeal

sired

resources

However, excessive fluctuations,

easing of credit re¬
Exaggerated Swings
to speak, it can be
prevented from strictions are private housing, state
The
and
over-expanding
and
thus
local
tempo¬
exaggerated
expectations
government projects such
and excessive spending character¬ rarily exhausting itself.
Some of as schools, other public buildings,,
istic
of
a
business boom cause its capacity for introducing new highways, etc., and plant expan¬
the purchase of many consumer consumer goods and services and sion by small and new businessesand capital goods and the intro¬ new capital equipment can there¬
When wise monetary manage¬

acquire new goods and services
and producers' ability to
develop
be and introduce new
types of con¬
of sumer goods and
capital equip¬

excessive.

eliminated, and

reallocated.

over

were

and booms could
if the expansion

prevented,
prevented

non¬

are

keeping the

numerous new products able fluctuations in an unplanned
and new types of cost-reducing economy do not become the ex¬
capital equipment could be intro¬ cessive and undesirable fluctua¬
a

real

resulting from overexertion.

and-that

-Thus to

monetary causes, the most likely
of which is temporary exhaustion
of the ability to introduce new
goods and of the desire to spend

Will Credit-Ease Cushion

duced at

because

comes

"in¬

repeat,

fear about
one

there

should be no
being unable to select *

stock which should double the

first

year.

Moreover,

mathematical
ditions
every

can

case.

the

other

investment

probably
The real

con¬

in
why

met

reason

this almost unbelievable result has
not

been

obtained, except by a
investors, is because very,
few persons have the pa¬
tience and persistence to
carry
few

very

out

the

program

for

years.

Brokers, bankers

and all your
friends will advise quitting this
speculative program after the sum
reaches

$100,000, to diversify in
chips, and to get an in¬
come."
Ninety-five investors but
of 100 will fall by the wayside
and do it. This makes it possible
the "blue

for the

other 5% who realize the

value of TIME and stick to the 31

to reach the goal. (Go back
again my penny illustra¬
gain
comes in the last eight years.)

years

and read

This shows that the real

tion.

Two With Merrill

Lynch

(Special to The Financial Chronicle)

RALEIGH,

C. —James

Brown, Jr. and Donald E. Walston
have

joined the staff of Merrill
Lynch, Pierce, Fenner & Smith,
324 South Salisbury Street.

Rejoins Perry Blaine
(Special to The Financial Chronicle)

ASHTABULA, Ohio
Garlick

has

Blaine & Co.,
Mr.

Garlick

rejoined

Ezra H.
Perry T.

—

4519 Main Avenue.
recently been

has

with Ross, Borton

& Co., Inc.

The Commercial and Financial Chronicle
*6

Thursday, March 6, 1953

(1086)

latest week
week

Business Activity
Latest
Week

AMERICAN IRON AND STEEL INSTITUTE:
Indicated ste^l operations (per cent capacity)

Equivalent to—
castings (net tons)—

Steel Ingots and

INSTITUTE:
oil and condensate output—dally average

statistical tabulations

The following

Indications of Current

Mar. 9

552.6

-Mar. 9

§1,419,000

Previous
Week

that date,

94.2

Gasoline

output (bbls.)————.

Kerosene

output (bbls.)—

Distillate fuel ofll output
Residual fuel oil output

; ' ; ...y,

OUT-

RESERVE

BANK

STANDING—FEDERAL

*1,475,000

Imports

(bbls. of
6,851,985

6,923,185

Feb. 21

G,807,635
(17,506.000

7,520,000

7,639,000

(bbls.).

Feb. 21

25,937,000

26,559,000

26,449,000

Cbbls.)
(bbls.)

Feb. 21

2,366,000

2,619,000

Feb. 21

12,008,000

Feb. 21

7,769,000

11,961,000
1,615,000

fh transit, in pipe lines—
Feb.
gasoline (bbls.)

Domestic

7,567,315
7,795.000

Dollar

25,673,000

Based

2,318,000

2,397,000

; *;Y,'"*■

$278,410,000

$290,532,000

455,531,000

393.231,000

11,180,000

10:304,000

credits-————-——

374,940.000

J 285,772,000

1————2——:

65,040,000

45,674.000

237,280.000

231,688,000

.——-

—-—

13/701,000
483,431,000 ' ' '
3,349,000 •*"/<

shipped between

and

stored

goods

Ago

'It

•foreign, countries, -—-——-1—2——2

13,858.000

12,543,000"

Year

Month

460,866,000

—Z—:

exchange

$272,821,000

shipments

Domestic warehouse

;

——i———~—-—

Jan.

YORK—As

OF-NEW

2,411,000

1,457,000

of that date?

are as

.*■* \ Month

ACCEPTANCES

Exports

Feb. 21

42 gallons each)
Crude runs to stills—dally average

DOLLAR

either for the

are

' Latest

BANKERS'

of quotations,

cases
1

Aan

53.9

AMERICAN PETROLEUM.
Crude

or,

Year

Month
aa<

*54.6

Dates shown in first column

month available.

month ended

production and other figures for th«

cover

-153/257,000

7,424,000

8,651,000

Total

.—$1,422,127.000 $1,307,379,000 $1,011,501,000

—

>-t

;

Stocks at refineries, bulk terminals,

unfinished

Finished and

Kerosene '.(bbls.) at
Distillate fuel oil (bbls.) at—
fuel oH (bbls.)

Residual

at.

213,659.000

210.560,000

203.256,000

204,122,000

Feb.21

18,596,000

20,487,000

24,051,000

21,723,000

Feb.21

96,668,000.

108,417,000

128,181,000

87,738,000

Feb.21

55,435,000

57,134,000

57,810,000

35,772,000

ASSOCIATION OF AMERICAN RAILROADS:
Revenue freight loaded (number of cars)
—Feb. 22
Revenue freight received from connections (no. of cars)—Feb. 22

550,667

480,628

510,999

539,681

CONSTRUCTION

626,630

$3,285

613,589

„

$388,506,000

$389,731,000

$321,197,000

204,191,000

139,953,000

—Feb. 27

128,238,000
176,427,000

Feb. 27

132,177,000

134,315,000
96,966,000

—Feb. 27

44,250,000

37,349,000

249,778,000
215,818,000
33,960,000

198,027,000
123,170,000

State and municipal
Federal

—

i'ue

$£*'">-

A*"

];v

$3,198

•,

2.705

1,345

•v, 1,137

•;

'860

dwelling units————

■V:

Additions and alterations——,—

^2.324

;

i; ./ ;' 'Vfv 885 7.

Z 1.005

207

•

-290

Industrial

704

.—

.305
*

Office

Other nonresidential

/"'

161

buildings and warehouses-—

Stores, restaurants,

75,598,000
47,572,000

106

and garages—«.•
buildings-,
a-

248

267

v:i7;v"'•^■■■>38 V'..;

so
764

240

—

Commercial

49'

Nonhousekeepi'ng .i,_ZZ£Z—-——Z—;:*
Nonresidential buildings
—13.—'--1; •
—

$304,665,000

Feb. 27

•

Feb. 27

8. construction

Private construction
Puhlic construction

$3,667

2,361:;;/;

construction

New

NEWS-RECORD:
Total U.

ENGINEERING

—

——Z—
Residential buildings (nonfarm)2'2l~_—

•

construction-——

new

Private

ENGINEERING

CIVIL

533,237

••

millions);

(in

of .January

LABOR—Month

Total
-

492,389

CONSTRUCTION—U. S. DEPT. DF

BUILDING

133

-:/i97

172

269 *

V- 269

143

—.126

184 i

67*'

7 '

...74

,211

722 V

COAL OUTPUT (U. S. BUREAU OF MINES):
Bituminous-coal and lignite (tons)—

anthracite

Pennsylvania

STORE

DEPARTMENT

SYSTEM—1941M9

ELECTRIC

EDISON

Electric

Feb. 22
Feb. 22

(tons)

427,000

7,965,000
379,000

1,285,000

549,000

AVERAGE

—

Feb. 22

12,338,000

',238,000

/!yf;

AND

—

INC.

(E.

DUN

11,803,000

Farm

100

—

Feb. 27

331

317

326

Feb. 25

5.967c

Feb. 25

$66.49

$66.42

$66,42

Feb. 25

$37,33

$37.33

$35.00

5.663c

$62.90

Industrial
.

Export refinery at—

IZinc
Zinc

Louis)

—

Straits

24.575c

31.275c

—Feb. 26

19.725c

19.825c

20.400c

29.475c

Feb. 26

13.000c

16.000c

15.800c

—Feb. 26

12.800c

Feb. 26

10.500c

Fe b. 26

10.000c

13.500c

———-Feb. 26

26.000c

25.000c

Feb. 26

94.500c

94.375c

93.125c

98.250c

————

(primary pig. 89£>) at.
(New York) at

tin

24.450c

at——

(^ast St. Louis) at

Aluminum

24.375c

(delivered)

Administrative

Military facilities

■

—

Aa
A

—

Baa

Average

corporate

94.52

SewQr

33 *

100
483

857d

96.07

95.77

96.54

102.63

101.47

.Mar. 4

99.84

100.00

99.36

Mar. 4

94.86

95.92

96.23

96.38

-Mar. 4

86.78

86.24

89.37

-Mar. 4

91.77

91.62

95.47

-Mar. 4

97.00

98.09

97.94

96.69

Mar. 4

98.25

98.41

98.09

97.31

2.97

3.02

3.26

4.03

4.00

4.02

3.97

—Mar. 4

3.61

3.59

3.66

Mar. 4

3.76

3.75

3.79

—Mar. 4

2.98

—

other

BUILDING

-y/y

.//■>./,,

VALUATION

PERMIT

New

Central

105.917,664

—-y——

Central

——

—

40,515,318 '

59,189,999

101,237,748

U7,622,799 *

75,262,050

01,885,117

16.552.05G

20,322,459
•13,413,382
76,675,985

—

96,913,026

—i——■'

United

Total

•.

90,388,169

16,699,709;
13,-405,693'
'90,055,712*

■

•

$417,388,126

$391,981,064

$438,331,568

States

$17^)87,185
62,'213,541 '

71,245,427
^

17,963,027
Pacific

:/ //Vv

28,997,778

46,375,698

--y—

_L_——y-*-—'—x.-—y-y-'-.

Central

South

24
-

$18,203,168

$20,158,048

——/-

—

Atlantic'——

South
East

—

44, -

'
—-

—

__——

Atlantic

56 ; ■:

//.•-.• 7

■>,•

loo

DUN

—

225

25',.,:

•

CITIES—Month

INC.—SI 5

'/Viy

England

Middle

.':•:/.

;

public——

of January:.

»—-

X;
r

'•

36
;

development-.

:•.

/•;• 30
//./• 27

88 >:

214

.'29

275/:/.

3397
;

•

Mar. 4

4.08

4.01

3.99

3.98

New

Baa

—Mar. 4

4.65

4.69

4.46

Outside New

Railroad Group
Public Utilities

—Mar. 4

4.29

4.30

4.04

Industrials

MOODY'S

Group.

Group

Mar. 4

3.94

3.87

3.88

3.96

—Mar. 4

3.86

3.85

3.87

3.92

—

COMMODITY

Orders received

INDEX.

—

Mar. 4

39G.9

396.6

412.2

393.0

Manufacturing

(tons)

..Feb. 22

230,020

238,539

236,717

Rctail

245,909

AVERAGE

—Feb. 22

272.590

259,233

266,581

262,293

Feb. 22

330,479

373,522

348,266

370,885

Commercial

.Feb. 28

TRANSACTIONS

FOR

ACCOUNT

109.33

109.19

108.49

Short sales

110.99

1,327,890

1,457,630

1,357,660

324,310

268,750

338,500

206,230

1,227,380

1,058,890

1,478.550

1,551,690

1,327,640

1,817,050

1,170,130
1,376,360
I

—Feb.

380,420

346,640

324,G10

215,330

-Feb.

44,000

29,520

57,900

24,700
289.600

*"*

sales

Total sales

purchases

Short sales

—

sales

Other

Total sales

Other

the floor-

—

-Feb.

390,820

349,720

380.510

purchases

-Feb.

434,820

379,240

438,410

314,300

Feb.

541,977

435,037

524.969

425,185

Feb.

143,760

130,620

174,570

120,500

Feb.

632,872

637,415

528,602

461,781

Feb.

776,632

768,035

703,172

582,281

Short sales
Other

sales

Total sales

Total

purchases

Other

sales

Total sales

—

———

—

.Feb.

2,407,597

2,109,567

2,307,209

1,998,175

.Feb.

512,070

428,890

570.970

351.430

.Feb.

2,251,072

2,046,025

2,387,662

1,921,511

.Feb.

2,763,142

2,474,915

2,958,632

2,272,941

by dealers

(customers'

Customers'

short sales—.

Customers'

other

Dollar

value

Short sales

Other

$57,892,492
1,013,055

1,128,809

$49,083,683
879,804

1,485,834
$60,550,994
904,425

20,961

19,496

24,745

992,094

860.308

879,680

$45,785,039

$37,945,510

$38,727,811

$50,702,912

Feb.

233,770

250,160

201,690

255,880

234770

250T60

201,690

255680

582,190

504,600

723,910

All

552,240

774,230

945,650
10,738,300

;——

Feb.

12,826,260

11,458,310

11,683,950

.Feb. 25

andfbodsl

119.2
97.3

119.1

118.7

116.9

»•

——*

»•

Member firms

;

■:

hand

38.8

•-

—•

...

,"2-24

'$2.05
*

2.18'

1.84

/";*i i.8i.

$2,549,605

$2,'789.211'

$2,613,205
.

customers-——^——

126,095
328,325

of listed

shares———

204,969,173

value

of listed

bonds——iy_—

106,779,763

Govt, isstfes—
other collateral-—

936,509

value

28,560;

67,824

"342.019/

342,. 60

896,064

.235.171

865,837

"211,997,259-

195,570.176
105,071,743

270,630

4.60,950,985
-

-.-83,931'

1,665,781

1,949,844

%89l,882

$99,631,473

'$87;936,310.

U. S. CLASS I

(Interstate Commerce Commission)—
of

November:

$G4,243,355

V Net railway operating Income-.:—

20,788,586

48393,216

85,352,855

120,420,059

106,829,526

income—-—

4,799,460

charges—
charges-———_—

80,553,395

5,030,943
115,389,116

103,385,739

45,194,080

79,819,239

Depreciation (way & structure & equipment)

48,981,456

49,475,845

46.480,711

16,206,385

43,776,442

SI,436,533

68,957,240

21,032,027

■

income

Income

*96.9

94.3

88.3

109.7

109.5

108.8

102.6

Other

.Feb. 25

103.7

102.7

99.T

80.8

Net

.Feh. 25

125.8

125.9

125.4

'21,109,500
*-—

deductions

available

for

fixed

after

from

fixed

deductions
income

Federal
.

'•

*$2.10
'

Market

RYS.

; 4o.a

*39.6

Market

Month

40.2'
40.9

*39.7'

1.85

*72.73

*39.4

2.24

and in

Member borrowings on

89.16'

EXCHANGE— ' *

$82.41
;

/ 39.0

$2,10

banks in- U. S.——
Total of customers' free credit balances—

Cash

*74.88

carrying margin accountsnet debit balances-^—

extended

Credit

73.73

—

(000's omitted):

•

*88.93

38.7

goods ——1———

goods —:

As of Jan.

-A

*$82.74

•

87.36

*—

.Feb. 25

figure. ^Includes 844,000 barrels of foreign crude runs,
IBased on new annual capacity bf 140,742,570 tons
as of Jan.
1, 1958, as against Jan. I, 1957 basis of 133,459.150 tons. (Number of orders not reported since introduction of
Monthly Investme-^^lan. iPrime Western Zinc sold on delivered basis at centers where
freight from East St/Louis exceeds

$81.27

—-

—

t———

NEW YORK STOCK

536,500

4,311,910
4,848/410

$548,000

Nondurable goods—————————

10,684,080

$551,000

—_—~—

Member borrowings on U. S.

.Feb. 25

Meats

goods

Miscellaneous

products
Processed
foods.

Digitized forone-half
FRASER
cent
pound.

—

903,330

13,387;

•

Total

commodities

•Revised

DEPT.

DEPT. OF

Farm

farm

SELECTED INCOME ITEMS OF

' —

All commodities other
than

manufacturing

Durable

N. Y. STOCK

11,922,930

; .V

—

Commodtt;

—

Hourly earnings—
^
All manufacturing .—

Feb.

$654,000

'./

;•

10,575

of January:

Hours—

1.041,278

-Feb.

Feb.

•,i

goods

Nondurable

13,080

1,051,288
10,010

$54,060,000'

$45,325,000

<•

4,086,000

OF NEW YORK—

omitted)—-'-

ESTIMATE—U.

earnings—

Durable

1,375,914
$63,114,186

,40,672,000

3,072,000

OUTSTANDING—FED-

000's

All manufacturing

1,336,171

-Feb.

Feb.

Short sales

LABOR

LABOR—Month

FOR ACCOUNT OF
MEMBERS (SHARES):
Total round-lot sales-

PRICES, NEW SERIES
(1947-49=100):
Group—

Jan.

16,028,000
5,713,000

'■

January———;———

PAPER

.'AVERAGE

TRANSACTIONS

Total sales

(NEW) IN THE
BRADSTREET,

"5,335,000'
.17,662.000,

FACTORY EARNINGS AND nOURS—WEEKLY

—Feb.

rOT£tr^^Il~1^ STOCK
SALES ON THE
BOUOT>-LOT STOCK

WHOLESALE

$64,442,000

-Feb.

Round-lot purchases by dealers
Number of shares

sales

•

STB,105,000 *

5,527,000

3,364,000

Total customers'

■

sales

Other

STATES—DUN

Nondurable

-Feb.

Round-lot sales by dealersNumber of shares—Total sales

20,788,000
9,868,000

—

1,148

1,080
$14,985,000
'

——__.—'

Durable goods

F0h'

Odd-lot purchases by dealers (customers
<ales»N umber of orders—Customers' total
sales

All

p,.fr

——

5,505,000

—■

liabilities

ERAL RESERVE BANK

;

purchases)—♦

value

1771

174

$24,917*,000

—

TRANSACTIONS YOR ODD-LOT ACCOUNT OF ODDDEALERS AND SPECIALISTS ON N. Y.
STOCK
EXCHANGE — SECURITIES EXCHANGE
COMMISSION:

Dollar

91
612

1,279

•-.-•■

Z—.-.—___——.—

service

COMMERCIAL

LOT

Number

1971

.96
.514

"'di

liabilities

INC.-—Month of

STOCK

Odd-lot sales

■■

—-——

——

INCORPORATIONS

UNITED

Weekly

.,.

Short sales

./,/>'•'

208

676

VV/V/: '

liabilities

BUSINESS

round-Tot transactions for account of members—

Total

—-

"/J

•'

130
176

liabilities

Total liabilities

■

————

liabilities

Wholesale

transactions Initiated off the floor—

Total

number

Commercial

~Pph'

V,
,

number—.

service

Construction

1,485.200

—

transaction^ Initiated

number

Retail

-y-L—

*; 219

;

Total

MEM¬

BERS, EXCEPT ODD-LOT DEALERS AND SPECIALISTS:
of specialists in stocks in which
registered
Total purchases

Manufacturers'

100

50.783,539 '

'368,604,587:

—————

Transactions

Total

'■

BRADSTREET,

-—!__/—/-//;—1.—I-

number

Construction

OIL, PAINT AND DRUG REPORTER PRICE INDEX-

Other

!.———

City

47,061,897

344.919,167

)

370,747,717

Wholesale

(tons)
Percentage of activityUnfilled orders (tons) at end of period.

Other

67,583,851

—

York

BUSINESS FAILURES—DUN &
INC.—Month of January:

ASSOCIATION:

Production

ROUND-LOT

City

NATIONAL PAFERBOARD

1.949

York

taxes_——

income

Dividend

appropriations:

common

preferred

stock-

Ratio of income

Stock.
to fixed charges..

49,539,296
4.345,216

3,443,787'

*73,321,012
",4,777.410

84,192,019

4,372,780

68,543,602

4,899,731-*

82,381.570
'

.1,287,5^6

,4,-535573

3.70

2". 44

2.60
P

;
•'

-:,.a "44 ■/,

-V

———

enterprises—-———

BRADSTREET,

;

250

and

>':Y

:■

•

I/:. 7 29>
•

•..-. .--24 "...

■

342

••

'.75
250

.,»•

V" 226

buildings

—

„•

-V

228

...

962

■V
•

■

yf 341

•

32 -"

'. '

f 13
-

••

Public service

West
Mar. 4

•'

362 ':

■*-•

-'.v

-86

————.——

90.88

93.86

95.62
102.30

—

■

Aaa

94.40

.Mar. 4

Group

MOODY'S BOND YIELD DAILY AVERAGES:
U. 8 Government

Mar. 4

.Mar. 4

—

Railroad Group
Public Utilities Group.
Industrials

7'c 24 V

' • 35

1—•—

Sewer and water systems

14.000c

All

Government Bonds

/•••

.•

'Vv/•' Highways■---3—/

MOODY'S BOND TRICES DAILY AVERAGES:

Average corporate

•'■-'

> :

7718

•/ ••

service-

and

nonresidential

Other
,'

311

—

————'

Conservation
U. 8.

31-y
86/-(

-v

Educational
—,—c.—.1.
iJ—
Hospital and institutional—-——-—

...
•

(St.

101

-•

924

buildings

{•fi Nonresidential buildings.

$52.17

-Feb. 26

construction

Residential

(New York) at—

-'.Vf-428

—

————

Telephone and telegraphs——-—_—
Other public utilities-——————i
■"/C All oilier private—/.!
//
:——_—

284

I. QUOTATIONS)J

Domestic refinery at

Lead

7
:

48
.

—1

—

————-

Railroad

Public

Electrolytic copper—

Lead

construction' 2

r-y'Public utilities

-11,791,000

——————————
'•-•

INDUSTRIAL)

(per lb.)—

PRICES

Mar. l

„

Pig iron (per gross ton)
Scrap steel (per gross ton)
METAL

; Social and recreational——————

IRON AGE COMPOSITE PRICES:

Finished steel

Miscellaneous

100

———-———_

and institutional—

Hospital

537,t)00

INSTITUTE:

(COMMERCIAL

BRADSTREET,

6,790,000

SALES INDEX—FEDERAL RESERVE

(in 000 kwh.)

output

FAILURES

Educational

9,850,000

...

Volume

Number 5722

187

The Commercial and Financial Chronicle

0W7)

I
o

Two With

Weil, Roth

fSpeciailjaT^EE'FiNANCiAi Cg^'PNici-E)'

(■-

With Merrill Lynch

;

•

Joins

;

(Special to The Financial Chronicle)

Link, Gorman

Ohio—fld&ert

CINCINNAtl,

CHICAGO,:

-Fi

111. —Donald
W,
with ; Merrill
Lynch; - Pierce, Fenner & Smith,
Board, of Trade Building.

Herbert" and >!; Carl
Meyer -have
been added: to the' staff of The

Sampson^ is*

Weil,

Roth: & Irving Co., r Dixie
Terminal
Building, members- of
the Cincinnati Stock

Exchange.

now

CHICAGO,
Rosenthal

With Central States

Straus,

(Special to Test Financial Chronicle!-..

.•

CHICAGO, 111.— Genevieve E.
has jollied the staff of
Link', Gorman, Peck & Co., 208

Henkle

South

;

Salle

formerly

With Straus, Blosser

■

Street.

with

She

was

Blair & Co.,
Company.

Inc.

Wick

become

has

CentralStates

John C.

—

affiliated

with

[Co.

V'.-

CHARLOTTE, N. C.

Oiviwim notices

;

V'iv&r«

•;

«r.

I: DIVIDEND

7S<*

efidihjy; March 31;
dividend ot»30d,-; per share
quarter

Stock

mon

dividends
holders

stock
.

been

have

are

payable

the

1958 and -a
on the Com¬

declared.

Both__

1, .1958 to
10, 1958. .The'

April

record' March

vLICSARIJ

February 25, 1958

'SXT^I>BE1R.G

Secretary

;

31,

the; close
C.

business :

«7 a ;

.,.,

holders

New York 4, N. Y.

the close

t'\

■

of business

•

Mazv.lv .1....-1958,

the

* ■" ■ ^

a.Vice President

■

'..?*•

Mrec-*

7a/ quarterly

'.-''V'
at

the

per

for

the

payable

first quarter of 1958,

oh^March 31, 1958, to ehare-

.-til

«'•

recoi^l on March

-n: 1958. /•...

>■■•»

•

v-J

•••

Ctbse of business'Marfrh 12.1958. ''

Robert G. Burns, Treasurer

I
;;

Pasco

stockholders of record March 3,

meeting held

j iron corporation
Dividend Notice

The

Corporation

previously

has

paid

cash

view,

conditions.

who

entitled

are

1958.

pAUI> jg. Shroads

Senior Vice President

common

receive

N. Y.

INTERNATIONAL

electric

holder.'

115th CONSECUTIVE QUARTERLY CASH DIVIDEND
Directors has
*

'
on

declared

N'rw York,

\'MS"*

N. Y.

Dividend

Notice

CONSECUTIVE DIVIDEND

declared
of

quarterly dividend

thirty-five cents (35tf)

the

31,

1958, to

of record at the

business

per

Stock,

Common

March

payable

shareholders

March

1958.

10,

quarterly dividend of 6(ty

per

-share

Secretary and Treasurer

payable

April

1,1958 to stockholders of
ord

March

B. M. Bbtsch,

tSecretary

Common Stock

;

The Board of Directors has

the

14,1958,

was

rec¬

business

declared

by the Board of Directors.
ROBERT O. MONNIG

February 27, 1958.

Vlf-PresidenI end Treasurer

Common Stock

February 24,1958

payable March 31, 1958 to stockholders of record
business March

and

The

quarterly

•*

Sr. Leois

company

stockholders

for the account and risk of such
period' in which such sales or pur¬
chases
may
be made will expire on May 9.
1958. Any fractional shares remaining outstand¬
ing after May 9, 1958 will be sold and the
cash
proceeds
forwarded
to
the holders
of
fractional-share interests.
••■■''■D. C. McGREW
tions

Secretary

bond and share

fractional-share

terest sufficient to round out their stock divi¬
the nearest full, share.
The Marine
Trust Company of New York nas been
appointed agent for handling such purchases
and sales, which will be made at the instruc¬

ytfi

nation-wide eco¬

current

Those

Midland

at close of

1958, to stockhold¬
record on March—14,

regular

dend ' to

par

declared

Ircn

interests 'fls- a. result
of
the
common
stock
dividend -Will be given an Option to sell their
fractional
shares
or
to
buy a fractional
in¬

$.25

Board

and

nomic

per

payable

Corporation,

New York 22,

Directors
of
The
Colorado
Corporation
today deelured
a
2
percent
common
stock
dividend. - payable
April 7, 1958, to common stockholders ot rec¬
ord
March
7, 1!}58.
The Board of Directors
also declared .,the Tegular quarterly dividend of
02'i> cents .per share on the series A $50 par
value preferred stock and 6834 cent? per share
on the series
B $50 pkr value preferred stock.
These
dividends
are- payable
March 31,
1958
to stockholders of record at the close of busi¬
ness /on
March>7?</Z1958. 'The common stock
dividend is in lieu of a quarterly cash dividend.
Fuel

serve

dividend

March 4,

meeting

the Common Stock of

300 Park Avenue

dividends■ of 50 [cents per sharp
the dommon stock, j,The Corporation stated
that today's action was taken in order to con¬

•

•' .'^v, ,;.v

The Board

twenty-five cents (25^)

„

14v 1958.

TgcpLi

Wm. E.

March 3, 1958

Thompson

'vgnBtirigraMaauii'iUiUKw^MWf'^y "

LONG ISLAND LI6HTING COMPANY

Secretary
Over

THE

1,000 offices in U. S.

QUARTERLY

Electric
New York, March 5.

DIVIDEND

I9.58
PREFERRED

The Board of Directors has this
A

quarterly dividend of $0.60

per

share in cash has bee«i

declared
Stock

CjT

the

Common

Financial

payable April

Corporation,
I,

1958,

stockholders

record at the close of business

financial

books

CORPORATION

will be mailed.

will

not

transfer

close. Checks

dend
share

this

March 10, 1958. The

day declared

quarterly divi¬

Eighty (80) Cents per

the

Capital Stock of

Company for the quarter

April 15, 1958, to stockholders

of record at the close of business

February 27, 1958.

John Kuhn,

holders
at

Preferred

Series
Series

Stock

Per Share

$1.25

B, 5%

4.25%
4.35%

Series

F, 4.35%
Series G, 4.40%

Guaranty Trust Company
of New York

the close of business

March L4, 1958.

Series E,

STUART K. BARNES, Secretary

Treasurer

of record

Series D,

March 14, 1958.

following quarterly
payable April 1, 1958

Feb.26,1958

$1.0625

Quarterly Dividend

the

dividends

ending March 31, 1958, payable

clared

Company

(Incorporated)

STOCK

The Board of Directors has de¬

Penti

est

DIVIDEND

1 4 4 T H

1958, declared a cash dividend

at a

quarterly .cash

-f.
;

Dividend

Corporation

HERBERT M. KI5»GSLAND,"?. j I
•A-./af., ^Assistant
Assistant Secretary
-'?T

cash

Directors

!958.

dividend

declared

been

'holders

ta.stockholders' of refeoid
:-ST

;

the colorado fuel and

\%7lh Biridvnd

flse^CphiH'/?i
■

mth Consecuth,

Michael D. David

rpeytfele. Mareii,

>'i-.'"

steel

March 28,

METALS, INC.

mdjJ

February 24, 1958,
quarterly dividend of
seventy-five cents per share ou
the capital stock, which will be
payable March 13. 1958, to

ers

Corppra-.^vj

Pasco:

Board

Cerro

Secretary

The

MACHINE AND

The

"f't J

STEEL

The Board of Directors at
.-!

the

has

.;pfiny<

Secretary

Cash Dividend No. 151

AMERICAN

j'er Seventy cents
*ftlje."c'o'mir)Cfri-Atoek

G. PACE,

CORPORATION

.{?'

•v*

Cerro

March

Detroit, Alicbigan

-tors of:Aircraft Rudip

Chicago-February 25, 1958.

Jersey/.-V v Y'.S

Dividend No. 190

Vice President—Finance

holders of

the close of business

R. A. Yoder

;

transfer

March 5,1958.

February 25,1958,

.>>w

The

closed.

cash

and

March 20, 1958, to

record

NATIONAL

twenty-five cents
share has been declared
upon the stock of Burroughs
Corporation, payable April 21,
1958, to shareholders of record
($.25)

Boonton

the close of busi¬

1958/

11,

not

the

1958,

21,

A dividend of

will

declared,
1958, to the share*
was

"£.}*</} DIVIDEND

Sheldon F. IIall,

corporation:^

of record at

April

Corporation
dividend

quarterly

per

FRED

29, 1958.

Electronics

cents

February

Board of Directors voted

dividend of $.12V^ a share on
the Common Stock payable

233rd CONSECUTIVE CASH ~

1958,

and Treasurer

Secretary

.'L;.'!""".

today

payable April 25,

MORAN

EARLE

«.:f25 Broadway,

Amphenol

held

ness

record

"stockholders

meeting of the Board of Directors

Dated

-March' 10, 1958.

thirty

aircraft radio

declared a dividend
Cents ($.50) per
share on .its capital stock of
the par value of $50 per share,

February 26, 1958

common stock dividend no. 112

Amphenol Electronics Corp.

books

payahle-!r March

Lours T. Hindenlang :
'.
,v Secretary and Treasurer. 1

CORPORATION

At
;

has today
of Fifty

transferVbdoks. .wiIl^remgih;'operi.'

•'*" «*•

STEEL

five cents

:.-\c

the;Preferred Stock, for

Treasurer.

per

COMPANY

ANACONDA

THE

GREENBURGH

DETROIT

The Board of Directors of

share1

per

JOHN

135

dollar seventy

one

February 27, 1958

Common Dividend No. 198 rl

dividend Of

NO. 199

"T'J.

March 12, 1958.

Rome, N. YMarch 4, 1958

share oh the Preferred Stork
and of twenty five cents
per share on
the Common Stock of:: this Company have
been declared, payable April
1, 1958 to
holders of record at," the.close of business on
March 10, 1958. Transfer books will not be
(SI.75)

^nacondA

stock-

the close of bud-

1958.

199

Common* Dividend No.

closed.'"*

Note!
-

•' ' 'V
Preferred .Dividend. No. 208

quarterly

Treferri-d Dividend No.

Dividends

Liberty

incorporated

with

Dividend notices

i,'. Company
■'l.-

McKinnon,
Life Building.;

ness

declared,

was

1958,

26,

holders of record

twenty-five

per

Street, New York 0, N. Y.

30 Church

Marcus

—

affiliated

now

business

cents

Gerard A. Weiss, Secretary

;

American ;;

Bank

Thomson

ALCO

(Special to The Financial Chronicle)

R. .Malrtin
r

ALUO PRODUCTS

^ r

&-Co., Inc., of Cleveland.

the

dividend

payable'. March

Dividend No.

March 14,

quarterly

(25tf)

Rome

declared con¬
76 for 25
cents per share
on
the Common
Stock of the Corporation, payable
March 28. 1958, to holders of rec¬
ord

With Thompson, McKinnon

Mr. Wick has

Cable Corporation has

Investment; Co.,

Walpark Building.

recently been with H. L. Emerson

Directors

Board

The

Marshall

dividend notices

February 26, 19M

was

previously with A. G. Becker

61 Broadway, New York G, N. Y.

76th Consecutive Dividend

MANSFIELD, Ohio

Miami copper company

CORPORATION

McDowell,

Salle

DIVIDEND NOTICES

CABLE

ROME

secutive

with

affiilated

now

Blosser

South *La

and the

111.—W arner

dividend notices

'"(Special t6 The,Financial Chronicle)

tht

COMMON

37h!

PER

STOCK
SHARE

Payable March

31, .1958

Record Date Mar. 14,1958
Declared

March

1958

$1.0875
$1.0875

$1.10

WEST

PENN

ELECTRIC

system

Monongahela Power Company

VINCENT T. MILES

The Potomac Edison

Trtatur«r

West Venn Power

Company
Company

The Commercial and Financial Chronicle

<4s

Thursday, March 6, 1958

(10SSJ

BUSINESS BUZZ
on
/j

Behind-the-Scene Interpretations
from the Nation's

Capital

is little chance of a tax

things now stand. A poll
Congressional leaders re¬
veals that they privately dis¬
count as unlikely the possibility
that the growing wave of tax
cut proposals will jell into extra
money in either corporate or
consumer
pockets.
A tax cut
bottom drops
They don't

around

such disaster.
Republican and Democratic
spokesmen have been sparring
vigorously to see who will be
able to claim credit for a cut

circles

one

and

from

becomes necessary. Scores

Administration spokesmen
the President down have

at convincing constituents that their
representatives
are
fighting
recession and

home.

economic reasons

ting poses a real

problem this

There are strong

year.

"Dogma"

cut

tax

the

that

projects, and

Individuals (who also

Senator from

taxpayer.

tax,
$1.00
to $1.55 a week in extra income
for each family. This wouldn't
produce

would

scheme

only

Sen.

would

granting

pare

lump sum—hut
82 to 83 billion

around

elections

roll

November,

this

time

the

tiny token would be long for- ;

the voters, so the
effect would probably be nil.
To go further and produce a
tax cut with real impact would
by

gotten

of defense

impossible

almost

cut is

the tax

Congressional

view

tax

successful,

hold

again

keystone

candidate,
the

he
reigns of

politicians
is

cut

greater

decision

His

support¬

dently,

than

was

run,

believed

Economically,
a

tax

effects

the

cut might

dan¬

the

personally

precariously-balanced budget (a

surplui

he ran

beginning next July

already
about $2

Committee

source

the industry.
cedure
cations

billion in extra spend¬

for

I crease

they

face

it harder

for

cost

in-

tjbe

from

time to

time, and thus seriously reduce

ap¬

for

[This column is intended to re-

pretation from the nation's Capital

years.

had

threatened

and may or may not

Sen.

bleak

Robert

York 20,

Kerr,

Sen.

Byrd

will ' react

should

tax

cutting

legislation

tection

Studies

singel,

Foreign

Private
—

In¬

Hermann J. Abs

Institute

—

for

in Banking, 119 CoolRotterdam, Netherlands

(paper).

TRADING MARKETS
American Cement

A. S.

Botany Mills
Campbell Co. Com.
Fashion Park

Indian Head Mills

United States Envelope

Morgan Engineering
*

Carl Marks & Co. Inc.

National Co.

Flagg Utica
FOREIGN

SECURITIES SPECIALISTS

20 BROAD STREET

LERNER & GO.

NEW YORK 5, N. Y.

•

TEL: HANOVER 2-0050

TELETYPE NY

1-971

Investment

10 Post Office

Chairman.

How

N. Y.

Proposals for Improving the Pro¬

coincide with

the "Chronicle's" own views.]

state,

prospect

Names—American

Firms, and New York Stock
Exchange
(paper),
American
Society of Corporate Secretaries,
Inc., 10 Rockefeller Plaza, New

International

appli¬

increase

Commission

Shareholders With Stock

Brokers'

vestments

fleet the "behind the scene" inter¬

completely rebuilt by the

ceeded him

;

make
recoup

pipe-

It outlaw ed a pro¬

rate

the

Enter¬

Society of Corporate Secretaries,
Association of Stock Exchange

drawn

•

having the Senate' committee

liberal

aSi

being out of kilter by

say,

them

D., Okla., who would have suc¬

is considered by one Senate,

Finance

native

tives out of government, and on -

of $500 million for the

lines

decision caused chaos in

The

the pleas of many conserva¬

President Eisenhower's

fiscal year

were

when considering rate

organization

political
his

had

—

to Assure
Journal
of

Inc., 147 East 50th
New York 22, N. Y.

based on

cus¬

resort

increases, which will, the
./

all

Deductions

Tax

industry will

inci-

Budget Threat

heads

out steps

gas

earnings and expansion.

proved.

used

which could be afforded.)

tury-old

and the

FPC

appli¬

pipeline

higher rates if they

the

Travel

Expenses

Taxation,

From

pipelines for

unless

Handle

tainment

government. If not, the

and the

retirement

his

turmoil

gas

How

Decision

Street,
good they'll get the
(paper), $2.
hearing around the end of April, "
Local Government Structure in
most observers believe, and that
the United States—Superintend¬
a decision will be handed down
ent of Documents, Government
by the Court before the end of
Printing Office, Washington 25,
the spring term.
D. C., 55c.
It
may
not be
a
decision
Procedure for Soliciting Proxies
favorable to the gas pipelines

effect,

agreed in advance to submit to

Balanced Budget Advocate

con¬

from

Government

Chances are

FederaJ Power Com¬

increases

tomers

Committee.

Finance

would have caused in the cen¬

gerous.

rate

can

actually giving one of the size;

such

cations

weakened had he

by his decision to retire.
active, and undoubtedly

stuck

the

States

Printing Office, Washington,
D. C. (paper).

Department has asked for
special
hearing
April 28
before
the
Supreme
Court.

have

that

been seriously

ruled,

the Janu¬

1958,

United

appeals court. The

mission could not accept

doubtful.. (Many

tend that the value of

ing

re¬

speeded-up hear¬

court

appeals

invited,

by the gov¬

highly controversial

ruling of

His placid power

value of

the

ing

spending schemes.
in the increas¬
ingly liberal Senate (an increas¬
ingly liberal Finance Commit¬
tee membership)
would have
cial, tax,

spending needs, Con¬

politically,

ernment for a

Senate Finance
re-elected.
The
has

Court

Supreme

the

move,

and got, a request

this
•

unusual

ary,

the

Department says.

Justice

Economic Report of
the
President
With
Supple¬
mental and Dissenting Views—

The

gas

be resolved

may

the United States

position of some

Early Supreme Court

Wall

—Report of the Joint Economic
Committee of the Congress of

new

will be "ob¬
High Court
reviews the lower court ruling,

called

and

markets

Democrat,

apple-grower

Virginia

industry

gas

Street

peatedly in recent years quietly
blocked what his conservative
bent considers unsound finan¬

gressional thinking goes.
So,

the

securities

conservative.
a

esti¬

or more.

until

scured"

govern¬

Economic Report of the President

35 major pipelines

"Memphis decision" created in

sighs

the

havoc

amounting

linepipe

The financial

the

The

result

in orders for

drop

million tons

Appeal "Memphis" Decision

year.

tight control

Committee

lower

steel

ment expenditures.

al¬

his

powerful

the

federal revenues.

from

Byrd,

will retain

method is devised by

road

he's

brought

and

relief to many a

add much to purchasing power

—unless

taxes

lower

get—put the
a liberal tax

which

term

skids under many

withholding

the

Under

this

secondary

mated

strong advocate

stronger
advocate
of balanced
budgets
and
"fiscal
responsibility,"
which
he
defines
as
basing

The de¬

Virginia.

certain

...'"j

While he's

Byrd to
delay his retirement and seek
another

line

of lower taxes, he is a

cision of Sen. Harry F.

most

It stopped planned pipe¬
expansion cold—bringing

years.

and how big the tax cut

will be.

rates collected over the

higher

■(.. just how bad economic condi¬
tions will appear to be at mid¬
year,

Geiger—National Planning As¬
sociation, 1606 New Hampshire
Avenue, N. W., Washington 9,
D. C., $2.

pipelines with having to return
to utilities and industrial cus¬
tomers
some
$224,000,000
in

the House this year will
depend, it is believed by Fi¬
nance
Committee insiders, on

pass

economic or
political purposes again is a
small, soft-spoken powerhouse

flat 10 percent for each

the

People

—Progress, Problems, Prospects
Colin and Theodore

—Gerhard

either

for

gling

produce no more than $50 to $80
a year for each family, whether
accomplished by increasing per¬
sonal exemptions by S100
or

giving

kid—A real apple

boss'

of tax jug¬

wray

Task Force Re¬

—

Economy of the American

contracts,

least

the

in the

blocks

plans would

cut

tax

his—It's the

not

congressional sources say.

Not

after the voters
Rut boiled
<dowm. to essentials, most of the
to business only

the

prints of seven articles on met¬
ropolitan transportation
.—General
Electric
Company,
Schenectady 5, N.' Y.

polisher this guy!"

further in¬

Byrd to Fight "Liberals"

vote), and

have been satisfied.

pending

"No—It's

pending

some

defense

crease

these

The dogma in¬

This is why.

sists

particularly

grams,

get
deeper. Other weapons will be
stepped up public works pro-

political religion that tax cuts
in election years produce votes.
In
the
so-called "enlightened
scientific age," they are begin¬
ning to wonder it it's still true.

Branch

Transportation—Re-

Community

the

should

confidence

Organization

Executive

Government

economic slump continue to

almost dogma of

;

ports—Superintendent of Docu¬
ments, Government Printing Of¬
fice, Washington, D. C.—$18.15.

used

could

cuts

sumer

Political strategists have long
considered

the

psychological lift to con¬

(Hoover Commis¬
—
Complete set,

progress

Commission

unless coupled with
personal reductions.
1:1
Tax

of
the

Washington 25, D. C.—$8.00.

consumer;

year.

give

report and
Congress — Su¬
perintendent ; of
Documents,
Government Printing Office,

including

either party
k

The Tax Cut

million

4.4

Reports)

Branch

final report to

The only meaningful tax cut,
they argue, would be a cut in
corporate and business taxes to
spur investment, cut manufac¬
turing costs and thus prices (or
at least halt the upward drift),
and revive lagging capital in¬
vestment.
But politically, this
would amount to suicide for

purely political, aimed

political and
why tax-cut¬

while

January,

"Political Suicide"

talk has been

help the folks back

million

1.1

rose

emergency.

to cure the

sion

prices rose six tenths of 1 per¬
cent, the biggest rise in over

opened the door slightly to the
possibility of a reduction as an
anti-recession measure in an

hard

Government

Place,

Organization

Executive

the

University

Washington
3, N. Y.

Commission

Harold

and

York

New

—

New York

Unemployment

unemployment.

proposals have V
introduced in Congress,

But most of this

is
a
general
belief
government financial
that a tax cut, even if it

Clark

Press,

tax cut jj
further.

produced no real purchasing
power, would add fuel to the ;
inflation now occurring—price
inflation in the face of rising

tax-cutting

been

old

Sloan

There

out of the economy.

and

Washington,

Fund,
(cloth).

Classrooms in the Factories—Hal-

permit the government to meet

obligations,

Monetary

had to
ceiling

billion, to

would push the debt up

Yearbook,
54—International

Payments

8—1950

Vol.
D. C.

by 85 billion, to S280
Its

Balance

estimates. /

Congress has already
raise the Federal debt

expect any

A tax cut would push the

source

of top

Vy\| u
JUL (Lr U

f MX

government anywhere from $4
to
87 billion in the red, this

cut this

year as

could result if the

•

«ZJL

ing.

WASHINGTON. D. C.—There
>

•

.t.-

Securities

Square, Boston 9, Mass,
Teletype

Telephone
HUbbard 2-1990

BS 69