Full text of Commercial and Financial Chronicle : March 8, 1951, Vol. 173, No. 4992

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MAR
ESTABLISHED

9 1951

6mVS"ui»»

Reg. U. S. Pat. Office

Volume 173

New York, N. Y.,

Number 4992

EDITORIAL

Outlook for Investment

We See It

With considerable fanfare the

Professor of Economics, Graduate School of Business

announce

resolution of their

recently much publicized con¬
Some observers have interested them¬

selves,

is usual in such

cases, in the question
fight. Since "harmony" and
"unity" are now the keynotes, emphasis in the
public announcements, however, is upon "com¬
plete agreement" and the like. At the same time

who

the

won

the Administration and its followers in

Congress
quickly showed themselves not averse to hearty
self-gratulation. Some important parts of the
story have, meanwhile, been withheld from the
public, and will not be available to the outsider
prior to March 19 at the earliest. It may be taken

Administration, New York University

By MELCIIIOR PALYI

Dr.

Haney cautions currency inflation and "dis-chasing"
of dollar are increasingly driving people into dangerous
speculation. Maintains apparently high current yields are
really fictitious. States business is near cyclical top, and
"the good news is out" on earnings. Concludes people
must not jump out of the frying pan of inflation into the
Wall Street fire that
One of the good

fronted with

rather than decreased role of

investment

Remember
an

from

use

all this therefore must await full informa¬

note

that

Japs

It is,

however, obvious that the authorities

putting the emphasis

on gain in the
principal, which is essentially specu¬

are

merely trifling with the basic problems of debt
management and its relation to the money mar¬
ket, and hence to what is commonly termed infla¬
tion.
Moreover, the inference is plainly to be

drawn,

think, from the current

announcement

that

they have no intention of doing more than
trifling with these vital issues. The absurdity of
the notion that the financial sins of the
past can
be remedied or their
consequences

lative.
Inflation

be absurd

even

if these

ACTIVE

York

and

her

credit

still

was

in excellent shape.

Paris

Berlin

and

Fancy letting the outcome
of a
major war depend on such little
things as the maintenance of one's
gold standard or the worry about
what international bankers will think
of one's

credit,

invented!

paper money

Dr. Mclchior

Palyi

had

Folks grown up in the era of world

of Bolshevism, Nazism and Managed Economies,
scarcely imagine that less than 50 years ago a bit¬
terly nationalistic country like Japan would sacrifice
wars,
can

exist, two conditions are
Continued on page 34

the virtual certainty of additional
conquest for the bene¬

fit of financial

stability after the war.
philosophy—the philosophy of the

The survival of this

address

the

by Dr. Haney before the Fourth Annual Convention
Federation ojf Financial
Analysts' Societies, New
March 7, 1951.

National

City,

Continued

issue of the Analysts' Journal, at $1.25 per copy,
Room 900, 20 Broad

page

Annual Convention of the National

Federation of Financial Analysts' Societies will be available under one cover

BERKSHIRE FINE SPINNING
&

Investment

FULL TEXTS of the entire Proceedings of the Fourth

MARKETS

BATES MFG. CO.
DEWEY

for

In order that investment may

*An

willing to bargain. The chief
was—Japan's financial weak¬
In
spite of successful bond
issues on the London market, her
gold reserve was dwindling and her
ability
to
borrow strained, while
Russia still had a huge gold hoard

not been

Conditions

page

■

Remember what 1929 did to the "investment business"?

"nonmarketable,' bonds
on

be¬

palace.

idea would

Continued

Today there is the greatest need
educating, first the broker and then the public, con-,
cerning these facts.
As in 1928-29, Wall Street has
entered a period of great dangeFarising from a specula¬
tive spree that might be followed by a period that could
make the doghouse of the depressed Thirties seem like

substantially
replacing a
23A% "non-

Such

investors

ameliorated by so simple a device as
2V2 % "bank-restricted" bond with a
marketable" bond is obvious.

forces

speculators.

come

Lewis H. Haney

the

ness.,

against inflation. Such hedging means

tion.

were

unrest.

reason

hedging

not

damaged

domestic

and

should specially

investment

Portsmouth Treaty of 1905 which put
Russo-Japanese War? The Czar's negotia¬

rising
Yet, the
moderate in their demands

badly

wave

regard to productivity.

And right now, we

the

end to the

fight

of other people's money with¬

out much

Describes anti-inflation remedies

tor, Minister Witte, got away with comparatively favor¬
able terms, although the Russian army was thoroughly
beaten, in retreat, and its capacity to

merely taking chances;
from speculation, or assuming busi¬
ness
risks for a gain in "principal;
and from government spending, or
the

contradictory hodge-podge.

valuable.

differs

dollar's integrity.

safety and yield, "productive use"
meaning to make products that any
Thus

gold in international rela¬

gold outflow from U. S. adds little

nothing to equilibrium of recipients, while creating threat

speculation in that it concerns first the
safety of the principal and second the yield. By invest¬
ment, I will mean putting savings into productive use for

gambling,

Warns

tions.

problem of financial instability without

precedent. Contends end of gold standard has increased,

them.

typical individual regards

Palyi points out since 1930's international finance
been thoroughly revolutionized and we are con¬

has

ment differs from

that more will presently
general subject, since the
present announcement directly concerns only one
segment of the government bond market, and one
phase of the current difficulty. Judgment in detail
to

consumes

Dr.

old principles is to the effect that invest¬

for granted, of
course,
be heard on this same

Copy

World Financial Stability
And Military Preparedness

By LEWIS H. HANEY*

Secretary of the

Treasury and the Federal Reserve
troversy.

Price 35 Cents

Thursday, March 8, 1951

in the April

application at offices of the

Society,

State and

Street, New York 5, N. Y.

ALMY

DWIGHT MFG. CO.

HOLLINGSWORTH

WHITNEY

KEYES FIBRE CO. CI. A & Com.

LUDLOW MFG.
N. E. GAS

Franklin Custodian Funds,

SALES

A Mutual Fund

ELECTRIC CO.

across

REED-PRENTICE CORP.

Bonds

Canada
'

•

SACO

Municipal

jjft 600 Branches

inc.

LOWELL SHOPS

•'

"v-

■

Monthly Commercial Letter

WEST POINT MFG. CO.

upon request

duPont, Homsey & Co.
Members

New

York

Boston

Exchs.

MILK STREET, BOSTON 9, MASS.

Tel. HAncock 6-8200

120

Stock

Free

1rom

be obtained
investment dealer or

Prospectus
your

may

OF NEW YORK

Tele. BS 424

BROADWAY, NEW YORK 5, N. Y.

Tel. WOrth 2-0115

THE NATIONAL CITY BANK

Tele. NY 1-315

7,16

64 Wall Street, New York 5

Bond

Dept. Teletype: NY 1-708

I\etv York
Seattle

Department

Canadian Bank
THE CHASE
4 Comn NATIONAL BANK
Head

FRANKLIN DISTRIBUTORS, Inc.

Bond

Offiee:

Toronto

Agency: 20 Exchange PL

Portland, Ore. San Francisco

THE

NEW YORK

CITY OF

Los Angeles

We maintain active markets in
Dominion

Massachusetts

Bulolo

Investors

Underwriters and

Second Fund

Placer

Distributors of Municipal

Ill

New York

Angeles

Analysis

Co.

1899

MEMBERS

115 BROADWAY

New York

Chicago

Denver

Dallas

Cincinnati

Columbus

Toledo

Buffalo

NEW

Dominion Securities
Grporation

upon

request

„

YORK

105 W. ADAMS ST.

CHICAGO

IRA HAUPT&CO.
Members New York Stock Exchange
and

NEW YORK STOCK EXCH.

CLEVELAND
Chicago

Los

COMMON

ESTABLISHED 1891

BOSTON

Electric Co.
BONDS & STOCKS

CANADIAN DEPARTMENT

(Incorporated)'
Established

Dredging

Development

Goodbody

OTIS & CO.

Devonshire Street

Gold

Portland General

(all issues)

Prospectus from authorized dealers or
CO.

CANADIAN

Brown Company

and

Corporate Securities

VANCE, SANDERS

of Canada

Internal Bonds

40 Exchange Place,

New York 5, N.Y.

other

WOrth 4-6000

Teletype NY 1-702-3

WHitehall 4-8161

Principal Exchanges

111 Broadway,
Boston

N. Y. 6

Teletype NY 1-2708

Telephone:

Enterprise 1820

The Commercial and Financial Chronicle

(1014)

The

MARKET

TRADING

Security I Like Best
week, a different group of experts
and advisory field from all sections of the country

in the investment

Fresnillo Co.

participate and give their

reasons

for favoring

(The articles contained in this forum
request

they to be regarded,

are

intended

not

are

Detroit

particular security.

be,

Co.—Edwin

Alabama &

Navigation

Louisiana Securities

J.'

Pingree,
Co., Boston,

Moseley &
(Page 2)

nor

Thursday, March 8, 1951

and

F. S.
Mass.

offer to sell the securities discussed.)

as an

Selections

Cleveland

Week's

Participants

Their

A continuous forum in which, each

The

Report

This

Forum

Bought—Sold—Quoted

General Motors Corporation—Wil¬

■

New York Hanseatic

F. S. Moseley & Co., Boston,

Corporation
Broadway, New York 5

120

Teletype NY 1-583

BArclay 7-5660

to read an article
Fleet of the

were

you

probably would
buy the stock

Great Lakes" you

rush

and

out

ever,

could

discount

Rights & Scrip

such

Members
New

York

Stock

Exchange

New

York

Curb

Exchange

BROADWAY, NEW YORK 5
REctor

also

should

of interest.

Cleveland

Dan River Mills

of unprofitable ship¬

III

Their

fields.

stock

Mason, Inc.

each

iiillllllllllllllllllllllllllllllllllllllllllll

into

venture

common

price of less

share. This makes
largest stockholder

the

Optical

the

has had

Co.

than

$55,000,000 in

five years, with
earnings over the
five-year period 1946-50 equal to
$4.37.
Over the same five-year
of

the

last

average

period dividends paid have

MAINE CENTRAL

1950 A. O. paid $2 dividend.

year

The

NICKEL PLATE

book

consists of

value

proximately

aver¬

aged $2.12 per share. "During the

versus

$65

per

★

(1) based
O.

Teletype BS 250

N. Y, Telephone WOrth 4-5000

Puerto

Rico

Authority
Bonds

other

the

sures

Revenue

than
high

increase

D & C of

the

on
as¬

dividend income

available for divi¬

(about

2.80%),
No Fed¬
eral or local tax
(except estate
and inheritance).

there

460,000

are

stock

slightly

outstanding,

you

than one-fourth

70 Pine

The current

is about

42,

would be in terms of dollars about

means

10% discount.

shipping business, which

estimated
value.

from

These

then

branch
D

out

C's

Kolowich

Tel. & Tel.
Bds.

and

are

substantial

enable
into

President
who

has

be sold

may

cash.

other

This
to

fields.

George

had

very

Phone HA 2-26C0

—

Tel. NLY 1-1017

envisioned

have

will

great

benefit

in the administration of A. O.

af¬

The

stock

best

suited to speculative-minded indi¬

viduals

and

trades

both

Midwest and the Detroit stock

changes.

the

with

the

curtailment
tion

domestic

the smaller

business of
stituted.

Curb

because

probably not

produced

per

the
i

exist.

Furthermore, the
a

will
or

General

Motors

will

and

sharply

outlook

likely
$1.00

would

that
per

ment

has

the

Motors

de¬

ad¬

while the market

whole

as a

declining.
back

history

now

England devalued the
1931.
We should have

in
but

simultane¬

dollar

the

did

not/

all

what

know

American Marietta

de¬

Henry B. Warner & Co., Inc.
Members Phila.-Balto. Stock Exchange

123 South Broad St.,
Phila.

Telephone

Phila. 9, Pa.

Bell System Teletype

PEnnypacker 5-2857
New

PH 771

York City Tel.: BOwling Green

9-4818

Direct wire to Ames Emerich, Chicago

happened

to common stock

prices from 1929
The bottom dropped out,

1932.

and

many

its

1929

For

example,

Copper fell from 174 %
let's

But

BUY'

security lost 95% of

value.

Anaconda

stake

Mining

1932.

All

what

see

did

from

Home-

1929

area.

during 1929 Homestake
in roughly the 9 to 10
briefly got down around

the

autumn

1929

will

that

suppose

SAVINGS

BONDS

fluctuated

your

least
paid

the

which

collapse.

put

you

indicated

price
to
to

directors
to

of General

pay

$5.00

per

seem

en¬

1951, it would

of 67 to

yield

generous

7Vz%

corn-

In 1931, it started

advance, and by 1932 had risen
20!
The top was reached in

1936 at 68!

course,

very

Homestake

goal in
*

into Homestake at a
in 1929.
It did not

money

decline in 1930.

manage¬

sell in the neighborhood
a

best,

the

fit

the
may

resist

may

1934.

has

than the present
indicate,
it
is

come.

see

Central Electric & Gas

Central Public Utility 5M>s

Gaylord Wood

little

Light Common

Foote Mineral

layed, and devalued the dollar in

This
dividend would 'Thus dis¬
only about 70% or less of

years

Penna. Power &

se¬

and

ously,

$1.00

extra of at
share might be

policy

devalued

be well within the 80%-85% divi¬
dend

Pennsylvania Railroad

de¬

worst

pound

exemp¬

Street, Boston 9

Philadelphia Electric Common

which

the

toward the end of the year.

$5.00

31 Milk

Tel. HUbbard 2-6442 Teletype BS 328

must

necessary.

unless earnings are cut much

Ralph F. Carr & Co., Inc.:

A stock

vance

prob¬

pay

Bought—Sold—Quoted

substan¬

cline,

March

National Research Corp.

defla¬

may

lected
at

10, its first
quarterly dividend of 1951.
This
appears to place the stock upon a
$4.00 regular basis for this year,
per

should

$8.50.

company

right excellent E. P. T.

Mexican Li. & Fr. Co., lid.

considerations
the present time,

Thus the

cline

major

Earnings

o u

tially.

1951, even in the event
rigorous controls than

long-range

f 1 ation

that

industrial
corporation of the world, might
earn
at least $6.50 to $7.00
per
share

& Rubber Co,

many

avoid, stocks

course, is very loose figuring,
but it does give some indication

the

Keyes Fibre Co.

Atten¬

investor

this,

Boston Woven Hose

select¬

a severe

which
amount., was
the
profit on defense work exclu¬
sively during the last war after a
much more severe E. P. T.
This,

that

must be

tion.

defense business
another
$1.75
per

add

i'\

interrupted by

this

Suppose

this

Enterprise 6800

Mining

likelihood that

good.

Hartford, Conn.

Boston Wharf Co.

paid to the

will

cut below the
in 1948 when

not

Enterprise 2904

Open End Phone to New York Canal 6-1613

ing just one
tion

share, and the huge gov¬

Portland, Me.

Barometer,"
Lauderdale, Fla.

great

stock.

reported earnings of

business

9, Mass.
Tele. BS 142

Tel. HUbbard 2-5500

Publisher

security I like best for the

when

pro¬

vehicles

of domestic

duction

of Securities Dealers Inc.

Exchange.

and

Adviser

must be.made at

produc¬

profit margin

view,

Nat'l Assn.

31 Milk Street, Boston

future is Homestake Mining.

This however,

short-sighted

war

The

production is sub¬
is a very

war

J. B. Maguire & Co., Inc.
Members

pas¬

The stock is listed

Montreal

Homestake

investors
sharp

tirely expedient for this stock to
ex¬

the

Fort

very

anticipated earnings which would

fairs.

30 Broad St., New York, N. Y.

who

record.

fluence

qAllen & Company

been anathema to many

perse

Many believe that his in¬

request

of "The Dow Theory

has

energetic and successful business

Rts.

Bought—Sold—Quoted

assets

time to time for

would

Cv.

have

and

GAYLORD WOOD

ing World War II.

Besides the A. O. stock, D & C

appreciation
of time.

Investment

tion and appears to be much more
buy D & C for 9%', which adequately
protected
from
the
you are indirectly buying inroads of this tax now than dur¬
a

issue,

choosing this

available

Analysis

con¬

industry

Bought—Sold—Quoted

its sharp advance dur¬

seeks

brightly.

prices"

automobile

Common

adequate earnings and

can

A. O. at about

be somewhat

on
the.}: NYSE
and
other -ex¬
changes in the United States, also

$10.50 behind each share of D & C.
You

glamour

now

tinues to be General Motors.

that

1-2643

American

"bargain

relatively

might

Company, Inc.

imme¬

the

some

who

still available at

are

now

their

Street, New York 5

stocks which

ably be closer to $8.00

has other assets in connection with

WHitehall 4-1875

shines

each share of D & C.

Paul Frederick

& Company

element

share of American Optical behind
bid

branch offices

our

National

might

The investor, however,

come

Therefore, my selection from the
vast array of attractive common

results:

purchased,

which may be

have

Resources

greater yields
comparably

bring
bonds

rating

Water

Electric

still

$4.86

proximately 50%; (2) based
A. O. past dividend record, it

Since

ON TAX EXEMPTS

stock

per

dends to D & C shareholders. %

HIGHER YIELDS

this

the company

book value of D .& C stock of ap¬

St., Boston 9, Mass.

the

book value of the< would
there is share,

upon

stock

immediate

two

immediate

148 State

investment

but

though the profit margin

acquisition
has

NY 1-1557

Birmingham, Ala.
Mobile, Ala.

eye

appreciation
ago

sage

somewhat;

ernment contracts should add sub¬

stock

York 4, N. Y.

HAnover 2-0700

longer-

by-product will reap a very wel¬

future

near

dimmed

and

assets

the

over

have

might

stantially to these earnings even

Tel. CA. 7-0425

Witherspoon

ap¬

The

★

William

proximately $40 per share in net

Request

appreciation

after

ing 1950.

the
passage of time this issue has ad¬
vanced substantially so that the
speculative element for capital

number

current assets.

Analyses

Lauderdale,

dividends will be highly rewarded

in¬

ap¬

approximately $25

share in net fixed

VERNEY CORP.

specu¬

The

Exchange

New Orleans, La. -

toward the
stock of General Motors

dimmed by

con-

vestors.

American

latest

average

per

sales

out

Optical Co.

$36

of A.

Lynchburg, Va.
83

than

Scott, Horner &.

1950,

25,

branched

of American

—★—

June

the purchase of 120,000 shares

was

Curb

25 Broad St., New

Theory

appreciation

though

diate

During

has

other

Rich., Fred. & Pot. D. 0.

Pingree

which

Natural Gas Co.

Tele.

ping operations, plus the disaster
befell
the
SS.
City
of

Alabama-Tennessee

Edwin

Co.

After years

York

yield 10%. Hence,

seeker

objective

year

and

lative

capital

even

in¬

the

term

common

servative

and

uni¬

small

even

turn

appeal

vestors

vigation

Trading Markets

of around 50 to

to either large
or

Cleveland Na¬

jipiiiiimiimiiiiiiiimiiimiiiiiiiiiii1

its

versal

you who like
special situa¬
tions, the com¬

stock

"Dow

the

York Stock Exchange

pared with the current quotations

common

•

D et roi t

Members New
Members New

Direct wires to

stocks because

For those of

mon

2-7815

list

tive

mat¬

ter.

frfC PONNELL & fO.

Optical,
that might be
another

Investment

Barometer," Fort
Fla. (Page 2)

stock of

common

Gaylord
Adviser and
—

one

large

Amer¬

Wood,

Publisher

At that

December, 1949.

Mining

Steiner, Rouse & Co!

issue among a

ican

Since 1917

Tel.

Motors

stock

old-line

privilege
forum in

General

How¬
if
you
buy at

pany.

afforded the
of participating in this

previously

was

time I chose the

of such a com¬

Specialists in

(Page 2)

Stock

Ilomestake
I

Grand

"The

about

not

120

Motors Common

General
If

Witherspoon, Manager of
Statistical
Department,
Newhard, Cook & Co., St. Louis, Mo.

Newhard, Cook & Co., St. Louis, Mo.

Co.

liam

Manager, .Statistical Department,

Mass.

& Cleveland Navigation

Detroit

WITHERSPOON

WILLIAM

J. PINGREE

EDWIN

the

most

not have

Over-the-Counter

Quotation Services
for 38 Years

far to find out why
rose
in price during

violent

deflation

the

country

has

advance was

ever
a

flection of the

known.

The

direct forward

National Quotation Bureau

re¬

Incorporated

coming devaluation

Established 1913

of the dollar in 1934.

One of the safest forms of prop-

46 Front Street
CHICAGO

Continued

page

New York
SAN

4, N. Y.

FRANCISCO

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1015)

INDEX

NASD Edict Would Mean No

Capita! for Small Business
Through Sale of Securities
business

—Melchior Palyi

"A"
under, of small

National

Forecast From, the Technical Approach

Tabell—__

____________

What Protection Against Inflation—A. Wilfred May

Emergency Program's Impact
~

—Marcus Nadler

Dealers

✓

♦

had

dump them

tied

money

market

the

during

rise,

now!

on us

Obsolete Securities

99 WALL

___

Dept.

STREET, NEW YORK

Telephone:

WHilehall 4-6551

Continued High Earnings Portend Higher Stock Valuations
—Charles

again using the oppressive heel of excessive regulation to
further burden the securities business.

obsoletes

_________—

...

you've

Savings Banks

The 1951 Building Panorama—Thomas S. Holden__

Securities

Association

—Edmund

tunity for Congressional intervention.

The

BITTER
—Cover

Would in effect make him an invest¬
ment adviser. Suggests SEC make the pertinent rules imore
burdensome. Small business will suffer as a result. Oppor^

Cover

RISE

A Stock Market

customer's portfolio.

AMD COMPANY

____

Outlook for Investment—Lewis H. Haney_

or
Wants seller to determine suitability for

concerns.

Page

World Financial Stability and Military Preparedness

NASD attempting to exercise control over Regulation

offerings, constituting issues of $300,000

llCHTMEin

Articles and News

Roos

Pegged Treasury Bond Market—Primary Cause of Inflation
"

This

time

the form

which it has sent "to all members

"communication"

and to all

registered

Branch Offices of members."
.

This missive deals with the

offerings, i. e., offerings
recipients in substance:
(a)

That these

are

subject of Regulation A

to $300,000, and advises the

subject to Rules 1 and 2 of Ar¬

member is
any

required to file with the Association a copy of
information filed with the SEC.
These

ance

Fallacies of Price and Credit Controls—Ernst A. Dauer

Government Spending, Not

the

are

deals with

regulatory parts of the letter. The bal¬
suggestions to the SEC that it:

.."

;

"European Attitude
Editor

Supervise more closely offerings under the Regu¬
made by non-members of the Association;
Provide for the inclusion of additional data in the

(2)
Letter of

Notification; and

under

Regulation A shall not be available unless the offer¬
ing is made by means of an offering circular which shall
contain certain specific data.
;
We wonder who sits up
devilish chains. We don't for
of the NASD

ernors

are

nights to scheme up these
a moment suppose the Gov¬
fault. They come and go. V

Is the root of this evil in the permanent

staff of the
organization? Did Wallace H. Fulton, the Executive Di¬
rector, give birth to this new abomination? Will he give
us its complete history?
,

Let's take

closer look at this most recent brain storm.

■

Regulation A offerings, members are told, are subject
screening in the light of certain Rules. What are these?
We quote:
"Rules of Fair Practice"

(Letters to

article)

Serv.J
!

Our Foreign Situation"

(Letters to

Regarding Ernest T. Weir's article)

J.F.Reilly&Co.

Notes Smaller Gain in Savings Bank Deposits—.:

Opposes Use of Emergency Banking Act of 1933

New Officers Chosen by Analysts Societies

Incorporated
61

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AIB to Hear Debate on Marshall PlaiL

Regular Features
Great American
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and

Bank

Stocks

Insurance

Cover

——

Business Man's Bookshelf.—
Canadian Securities

—

Coming Events in the Investment Field

Continental

Copper & Steel

Expresso Aero

Freedom From Fear"

vs.

Harrisburg Steel

14
28

Dealer-Broker Investment Recommendations

Einzig—"Freedom From Want

Industries

——__——

Bowman Gum

From Washington

Ahead of the News—Carlisle Bargeron—

■

Singer, Bean
& MACKIE, Inc.

Mutual- Funds
NSTA Notes

A member, in the conduct of his business, shall

Indications of Business Activity.—

News About Banks and Bankers

HA-2-0270

observe

high standards of commercial honor and just and
equitable principles of trade.
"(2) In recommending to a customer the purchase,
sale

■

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;

Amend Rule 223 to provide that the exemption

■

Southwestern

—

Notes Declining Export Surplus Trend.

(3)

•

Puget Sound Power.
& Light

Capital for Small Business

Editor Regarding Melchior Palyi's

Interstate Power

•

"Are We Falling Into History's Greatest Trap?"

(1)
lation

Lilly—

Through Sale of Securities

Central 111. Pub.
14

NASD Edict Would Mean No

■

Economics—Roger W. Babson—

What Price Gold!—Frank

/:.■■■■

Credit Expansion, Is Chief Infla¬

Cause!—F. N. Belgrano, Jr.—

"Barn Yard"

TIME INC. :

__.

obligated to review Regulation A offerings.

In connection with such offerings each NASD

(b)

_____________i_______

tion

ticle III of the NASD's Rules of Fair Practice and that the
Association is

—Marriner S. Eccles_:

Recommendations for Inflation Control—Allan B. Kline

exchange of any security, a member shall have
reasonable grounds for believing that the recommendation
is suitable for such customer upon the basis of the facts,
if any,-disclosed by such customer as to his other security
holdings and as to his financial situation and needs."-

Observations—A. Wilfred May—
Our

—

Reporter's Report—

Exchange PL, N. Y. 5

Teletype NY 1-1825 & NY 1-1826

Our Reporter on Governments.

t,__

The first of these rules sounds innocuous

enough. In
be a good boy. Its danger lies in the gener¬
ality of the language used. It's amazing what a monopo¬
listic agency, membership in which is compulsory although

effect it says

designated

standards

"voluntary," considers
commercial

principles of trade."

honor

In this

and

violative of "high

just and equitable

Prospective
Public

it doesn't fol-

Continued

page

(Manufacturers audiodiscs,

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Analysis

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The Commercial and Financial Chronicle

(1016)

I wrote in September, now attained — and passed (but
prediction of a market not by more than 5%)—the objec¬
pattern for a ten-year period is tive of 250 for the third, or ad¬
a
rather hazardous and foolhardy vancing .phase of the long-term
occupation, but market sentiment cycle. The advance has totalled
at that time was at such a low ebb over 105 points, or about 66%, in
that I attempted what seemed a less than two years, and appears
rather
sensational
forecast,
al¬ to have reached a rather mature
which

ter

A Stock Maiket Forecast

From the Technical

1948.

Approach

By EDMUND W. TABELL*

Partner, Walston, Hoffman & Goodwin, Members N. Y.

S. E.

today, with the bullish
outlook for prices, the long-term
pattern would not arouse any un¬
due excitement. I quote it not to
though

of development. True, the
percentage advance has been rela¬
stage

Thursday, March 8, 1951

has been gradually tending down¬

ward, despite the fact that the
Dow-Jones industrial average has
advanced from 220 to 256.

Still

that

another

correction
rate

technical

ultimately
of

advance.

vance,

factor

result in a
importance is the
may

This rate of ad¬

decline, is not based

the gain or loss of the

daily aver¬
age, but rather on the gain or loss
of
a
twenty-eight day
moving

tively small compared to the 123%
rise from
1942 to 1946, and the
prove that, except for timing, it average bull market advance of average. For example, if the mov¬
ultimate major advance of the Dow Jones Average to 450 or
has worked out so far, but be¬ around 80%.
Also, from a time ing average advances or declines
the present advance is above a certain normal rate for a
cause, with a few minor changes, element,
higher. Asserts this view is supported also by non-technical
it continues to stand as my gen¬ below
average
when
compared period of three days, or more, the
considerations, such as unrealized two-way effect of institu¬
with the usual two-to-three-year rate of advance or decline is above
eral pattern for the future.
tional and pension fund participation in equities.
Offers
for a
Two
and
a - half - years ago I duration
major advancing normal, and the market becomes
specific forecasts of action of 32 individual industry groups.
wrote:—
phase.
However, the third and overbought or oversold.
The advance from June,
"The
stock
market
has
been fourth
phases of the long-term
1949
It is gratifying to see our finan¬ cannot be based on one single type
slowly building up a strong pat¬ cycle are usually comparatively to June 1950 was steady and cor¬
It must be checked
cial analysts adopting a more posi¬ of indicator.
rected itself by consolidation.
tern for a number of years.
With moderate.
At
tive attitude toward the market against
many
other
types
of the
many
uncertainties of the
There are several technical indi¬ no time, until just prior to Korea,
in the sense of advising a definite graphs before a conclusion can be
present day, it is a hazardous task cators that point to the probabil¬ did the rate of advance enter over¬
reached. The number of full-time
course
of ac¬
to attempt a long-range forecast.
The
advance
ity that the market has reached, bought territory.
technicians
with
graphs of the
tion, and recThe predictions of today may look or
is
approaching a top.
The from the July, 1950 lows has been
o m m ending
great majority of listed issues to¬
awfully bad two years from now. market, or individual stocks, sel¬ different. By October, when the
the
gether with various moving-aver¬
purchase
However, while this letter may dom advance or decline without industrial average reached a new
age studies and breadth-of-market
or sale of indi¬
have many faults,
it is always first forming accumulation or dis¬ high at 232, the rate of advance,
data
and other technical graphs
vidual securi¬
willing to state a definite opinion. tributional
areas.
This
usually based on an intermediate term
is relatively few.
ties. This may
Based
purely on the action of consists of a trading range in a moving average, had entered a
Actually,
most
financial
ana¬
require a bit
some
1,500 charts and graphs of relatively restricted price. If it is zone that normally results in an
more
lysts consider technical conditions,
courage,
the various market averages and
This was
accumulation,
the
area
formed overbought condition.
and most technicians should con¬
but it is much
individual
stocks, I submit the is called a base. If it is dis¬ corrected by a three-month trad¬
sider fundamental conditions.
In
more
con¬
following long-range prediction. tribution,
the
area
formed
is ing range with wide fluctuations
such
an
atmosphere, discussions
structive than
The price ranges are definite, but called
a
top.
Technically,
the in the 220-236 area. Late in De¬
about
whether the fundamental
-the old "if the
the
timing is only approximate length of time and width of these cember, the market broke out of
market doesn't
approach or the technical ap¬ and
largely guesswork.
base or top areas gives a fairly this area to reach a recent high of
proach is the better method would
go up, it will
"I believe that the stock market
Again, its rate of advance
accurate idea of how high or how 256.
be beside the point.
It would be
go
down"
in May, 1942, started a long up¬ low the stock
may move if
the has been above normal, and the
something like a group of carpen¬
opinion,
fol¬
ward war price cycle, similar to
trading range is broken. Thus, the market again reached an over¬
ters
lowed
Edmund W. Tabell
arguing about the relative
by
a
that
of
1914-1929. '* Such
long- stock has an upside objective or a bought territory. The market has
merits of a saw and a hammer.
list of a hun;
term price cycles usually have five downside
objective. For example, not even approached oversold ter¬
dred stocks from which the poten¬ Both are tools of the trade and
phases—three of Advance and two General Motors built up a base ritory since July, 1950. It is when
tial investor is supposed to select are used, along with other tools, in

predicts market has become overbought

Prominent technician
and

faces

25% reaction and lengthy consolidation before

the most attractive for his

building

partic¬

I suppose I am
a
market
analyst
or
technician,
rather than a security analyst. My
approach is mainly concerned with
the technical, or supply-and-demand
analysis of
the
general
market than its statistical pattern.

The financial analyst

studies

man¬

agement, earnings, balance sheets,
the

various

these

trend

The

nical

the

technician

studies

data

order

tech¬

evaluate

"relative strength of the buy¬

which
cause
the fluctuating willingness
to
buy or willingness to sell of
ing

and

countless
tors all

selling

pressures

investors

and

specula¬

the world.

Briefly, he
he at¬
tempts to study the psychological
over

studies supply and demand;

state

tech¬
funda¬

The

decline.

the

first

phase

93 in

advance from

was

of the investor

of mind

selective

and

financial

with

the

better-

analyst only in the
grade, well-managed
companies
approach. If I found, that
XYZ
has
a
'favorable technical leading the advance. The ultimate
objective, interrupted by interme¬
pattern—that is, that the buying
diate corrections, will be around
appears to be stronger than the
250 in the Dow-Jones industrials,
selling—I next check the funda¬
with 5% Jeeway on either side.
mental background.
If both ap¬
This objective should be reached
proaches agree, I feel certain of
in late 1949. The fourth or declin¬
my ground.
It is just as logical
for the financial analyst to check ing phase should culminate in the
early 1950s (i. e., 1950-1952) in
the technical background.
the
200-180 area.
The fifth, or
a

Technical

The

and

the speculator.

What,

then,

Outlook

is the outlook for

final

advancing phase will be an
carrying into the middle
(i. e., 1954-1957).' This will

upsurge

1950s

market from a technical view¬
the large
be
the
dynamic
upswing
with
security ana¬ point? A general prediction neces¬
over-speculation and heavy public
sitates
the
use
of
an
average,
lysts doing a full time job, and
The pattern is not
which unfortunately is usually a participation.
equipped with the proper working
rather unsatisfactory procedure— complete as regards the ultimate
tools, there
are
relatively few
price objective for this final ad¬
technicians.
A
convention
of no matter what average is used. It
vancing phase, but the Dow-Jones
technicians of equal calibre to the is particularly unsatisfactory to¬
industrials should sell above the
audience here today would require day, when the many diverse ele¬
A preliminary
ments
in
our
economic picture 1929 high of 386.
a much, much smaller room, even
calculated
from
the
make for diverse trends in indi¬ objective,
though all qualified were present.
vidual stocks rather than a general long-term base patterns, suggests
Certainly there are a multitude of
about
450
in
the
averages.
individuals who keep a few charts stock market. However, I will use
the Dow-Jones Averages for the
"The objectives of 250 for the
,that require a few minutes work
::»

comparison

number

the

with

trained

each day, but a technical forecast
""An

Fourth
tional

address

Annual

by Mr. Tabell
Convention

Federation

before the

Financial

the

Na¬

overall pattern, and then take up
the outlook for individual groups

present

later.

now,

•

this

point, I
quote in part from

Analysts

Societies, New York City, March 7, 1951.

going to
market let¬

am
a

phase,

ultimate

ent

(on an

the

for

fantastic

tives,

they

may take some further time. Dur¬
ing the early part of such a dis¬
tributive phase, some of the rela¬

eventually
be quite conservative."
may

the

main,

commentary

minor

Still

marketwise

subject

few

this continues to
be the market pattern for the fore¬
future.

The

the

market

in the process

of forming distribu¬

tional tops.

market

real

buying opportunities present

themselves.

It would

market

position to offer
appreciation possibilities to offset
the risk of

greater decline.

for

THE

LETTER

will

watch
tors

action

the

over

Motors

believe

advances- into

high territory,

new

since mid-December,

daily volume

age

with

contrast

COMPANY, INC.

COLORADO SPRINGS, COLO.

this

Profit
A must

MARK

80-page

from

book

pplthe
Short

TRADING

MARKETS

^Central Illinois
Electric

and Gas

eral

Motors

52x/4.

almost

months

before

For

the

general

example,

General

Motors reached its

high in 1929 in
March, and the averages reached
their high in September. The in¬
dustrial average reached its high
in March, 1937 and General Motors

Continued

page

Placer

Development,

4,500,000 Tons Lead-Zinc Ore

TUNGSTEN-OIL-GOLD
Trading market maintained

Analysis available

request

Company
Common Stock
*Prospectus

Available

John R. Lewis, Inc.
SECOND

1006

AVENUE

SEATTLE
Teletype SE

ELiot 3040

105

of Midwest Stock Exchange

209 S. La Salle Street, Chicago 4
Tel. DEarbom 2-5600

Tele CG 146-7
Established

MEMBERS

Stix & Co.
503 OLIVE

1856

H. Hentz & Co.
Members
New

York

Stock

.Exchange

New

York

Curb

Exchange

Cotton

Exchange

York

New

Inc.

Exchange,
Board

Orleans

Cotton

other

Trade

Exchange

Exchanges

STREET

DOWN.

Selling. $1.00.

WEAVER, Dept. D-1, Box 1130

SANTA

recent high
high in Gen¬

-..'

NOW.

way

five

every instance in the past, General
Motors has made
its high four

Chicago

Read
,

54 3A

the

of 256, and a recent

Commodity

THIRD. .PRINTING

than

Limited

declining

AND

high

The industrial aver¬
at that time was around 232

And
BARRET GRIFFITH

its

5th—more

Mo¬

General

months ago.

New

stock market"
8.

General

term.

the lowered volume as the market

in a

be Attractive

interesting

near

reached

October

also

the

Volume Tending Downward

"how to make money

Naming the Only Industry We

Bell Wethers

MIDWEST STOCK EXCHANGE

S10

that

has

INFLATION CREATES COLLAPSE

Send

appear

this must happen again before the

Another factor of importance is

Members

changes,

seeable

while

leaders churn about near the highs

W illiam A. Fuller & Co.

Ahead

the market becomes oversold that

tively backward, secondary issues
market.
may
become
more
prominent

My
turn

not yet formed
top patterns.
This

have

distributional

Per¬

state.

the past 60 years.

over

Bullish Pattern
business

seem

inception in June, 1949. The rails
more speculative groups came
into
prominence
after
Korea.
While
the
better
grade
issues
have reached their upside objec¬

centagewise,
the
advances
are
quite in line with the moves of the

out to

area

and

but only because of the pres¬

prediction

and

450

and

advance

depressed mental

market

investment

the 25-33

pattern in

the Dow-

industrials in

Jones

initial

items.
s

The

structure.

adjusted split basis) during the
May, 1942 to period
between
late
1946
and
mental factors is not doing a com¬
213 in May, 1946.
The second, or June, 1949. The width of the base
plete job. The security analyst
declining
phase,
was
the
drop
who recommends the purchase or
pattern indicated an upside ob¬
from 213 to 160 in May, 1947. This
sale of a security will render a
jective of about 50-55.
area
was
again
tested
in
Febru¬
In my opinion, the upside ob¬
more complete service by check¬
ary,
1948.
We are now in the jectives of the higher grade, divi¬
ing the technical pattern of the
third phase—a period of advance. dend
issue in question.
paying issues have, in most
This third, or advancing phase,
cases, been reached.
This type of
My recommendation for pur¬
will be
comparatively moderate issue has sparked the rise from its
chase or sale differs from that of

Actually,

and

nician who blindly ignores

ular purpose.

MONICA, CALIFORNIA

N. Y. Cotton

St. Louis l.Ho.

Exchange Bldg.

NEW YORK 4, N.
CHICAGO

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND

Volume 173

Number 4992

.The Commercial and Financial Chronicle

Arthur Alexander With
Steel

The

Raymond & Co., Boston

Carloadings

State of Trade
and

Retail

(Special

Trade

Commodity Price

Industry

What Protection

Production

Electric Output

Food

Price

Auto

Production

The

BOSTON,

Index

Financial

Mass.

has

Alexander

Index

Against Inflation

Chronicle)

Arthur

—

become

By A. WILFRED MAY*

associated

Executive Editor, "The Commercial and Financial Chronicle"

Business Failures

Terming general public's present attitude toward "inflation"
its "favorite indoor
sport," Mr. May weighs situation from
viewpoint of practicable self-protective possibilities of differ¬
ent community
groups. Points out the various factors making
all available media for
capital flight unsatisfactory as hedges,

J
Virtual

steadiness

characterized

eduction last week with
-above the level

for

total

the

(1017)

nation-wide

output showing

corresponding week

industrial

pro-

rise

pronounced

year ago, when a
general coal strike paralyzed business and
industry and seriously
tretarded steel output.
Employment for the country at
large
showed no material
change from the previous week with both in¬
itial and continued claims for
unemployment insurance continuing
at a low level.

and says only real protection lies
through membership in
politically-favored pressure group. Concludes while govern¬

•

Steelworks
last

week

100%

operations

the

moved

national

capacity.

the

nearer

ingot rate

rose

2,000,000 ton

fractionally to

Mill schedules called for output of

1,995,000 net tons.

The

mark

than

industry, however, has not yet fully

Pressure of defense demand

"Steel," the

says

;

week.

weekly magazine

Further sharp inroads

market loom

the

current

civilian

goods

immediately ahead.

Decided upswing in the volume
of emergency specifications soon
may lead to new government de; mands on producers for additional capacity to
expedite the han¬
dling of defense requirements. Mills now are scheduled
into

;

June,
little

some cases beyond, on DO-rated priority orders. Only a
tonnage can be accepted by producers on such account
May.
•
; *.
'1 -

additional
for

Automotive

turers

returned

normal

dropped the past week as manufac¬
schedules. Longer
working

assembly

hours and Saturday assemblies iri the
previous week,
turers sought to recoup rail-strike

losses,

manufac¬

were the reason for the

unusually high production.

•

According to "Ward's Automotive Reports" 575.000 cars will
be produced in March,
compared with 505,000 last month and
495,000 in January. March production this year will
surpass the
469,827 cars assembled in the like month last
year, when the
U. A. W.'s 99-day strike against
Chrysler Corp. was in progress.
The walkout, which began Jan.
25, 1950, and ended May 4, was
estimated to have reduced the nation's auto
and truck output
by
450,000 units, this agency noted.
Indications
at

past week
an

that

sharp rate

Street.

government

purchasing is being stepped

be adduced from the figures given
backlogs on Jan. 31 which rose to
may

out

Co.,

Alexander

Middlebrook,
ing

The

148

State
for¬

was

Inc.,

and
prior
the trad¬

manager of

was

department

Freeman

of Coburn

for

Co.

Boardman,

and

H. H. Johnson &

was

with

Co.

Terry Thompson Opens
Own Offices in Seattle
SEATTLE,
Wash. — Terry
Thompson is engaging in the se¬
curities
the

business

Dexter

from

offices

Horton

Building.
He
was formerly Seattle manager for
Fordyce & Co. and prior thereto
was

with

and

was

Grande

and

officer

Co.,
of

Inc.,

Harris,

Lamoreux & Norris, Inc.

R. S. Weeks, Jr. With

Whiting, Weeks Firm

$3,700,000,000 during that month, the Department of
Shipments during January spurted to
$22,800,000,000, from $21,800,000,000 in December. On a
seasonally
adjusted basis, January shipments were 8% above December and
around

buying
V

was

the

level

last

August

when

post-Korea

issued its

order

cutting back the

January liabilities rose 3% above the December level to $21,685,000.
■.
-v''".'■'' ■''' 7
77'

Retailing and construction failures made

increase.
New

all of the month's
'»

tively

area

•..

'':

England, the West South Central, and tl^ {Pacific regions

'(Special

The

community
groups'
pos-'

of curbs

liquidations in January than in the pre¬
month; compared with a year ago slight increases occurred
in the Middle Atlantic, West North
Central, East South Central,
and Mountain regions. 7
Steel

Output

To Surpass

Scheduled This

■

Financial'Chronicle)

Cushman

Weeks

Ariz.

has

schedules set up in Washington. A dry run will be made in
May.
This will be a closely-controlied materials

leaner

alloy steels.

number

steel

producers

Co-operation of the American
Society of Automotive Engineers
with industry has speeded development of the
emergency steels.
bracing themselves in anticipa¬
tion of an avalanche of orders
resulting from NPA Regulation 4.
This regulation permits non-defense industries and
businesses

gage

Mr.

the

Cushman

are

Continued

page

very

officer of Rowles,
Houston.

with

any

capital

not, is

that afforded to the individual en¬

May

joying the support of some po¬
litically-favored pressure group;

cally

whether

be done for their protec¬

can

tion, either by themselves
their

here

see

ized

today

coal

nation's stationers have joined the

bottom

economists, taxi drivers,

and

academic,

the

and

the

protection-ladder

dependents

along

with

Various Possible Protective

The

Media

Our

topic

with the

and

the

com¬

small,
ban

stocks.

♦An
35th
sale

address

Annual

Stationers'

modore,

New

May

Mr.

Convention

owner

and

today

means

rural

concerned

of protection open
of

medium.

before

real

capital—large,
Formerly
estate,

City,

Continued

and Telegraph

page

Company

Subscription Rights

•'

•

■''

3%% Convertible Debentures
Due 1963

Morgan

Prospectus

With Taussig, Day
to The Financial Chronicle')

upon request

(Special

Calvin and

McDonnell & T.o-

Lloyd Ainsworth have joined the
staff of Taussig, Day & Co., Inc.,
'316 North Eighth Street, members
of the Midwest Stock Exchange.

Kurt Kauffmann

Established
Members

535

Fifth

120

Opens

Kurt Kauffmann has opened

fices

Avenue,

New

York

1905

Stock

Exchange

OFFICES:

BRANCH
Buhl

City, to engage in the secur¬
He was formerly
associated with R. M. Smythe &

254

REctor 2-7800

Broadway, New York 5

of¬

New

York

ities

Building, Detroit, Mich.—1 Press Plaza, Asbury Park, N. J.

Park Ave., N.

Y. C.

Produce Exchange, N. Y. C.

business.

Co., Inc.

all

by the 20th century technique of

Hotel Com¬
March 2, 1951.

American Telephone

Winston & Co.
past he was

—

ur¬

has become basically undermined

the

Whole¬

the

Association,

York

the

LOUIS, Mo.

are

fixed

unorganized

workers—entailing the extinction

widespread

into

non-union¬

time of rising prices

numerous

fast-moving

media

cash

the

of the middle-class.

importantly stimulated
active and bullish stock
Bonds

of
a

income,

been

the

our

during

doubt

(cf. the agricultural gap
new controls setup), At the

academic

dull

mine

ized farm

the

that

that group delivers the
emanating from the union¬

votes

government.

Stanley & Co. and
W. E. Hutton & Co. in New York.

ST.

■

best protection

Allerton

offices

formerly

was

■;

all, whether the citizen is the

possessor
A. Wilfred

infla¬

Building to en¬
securities business.

the

Steel mills and warehouses

Surely the
of

arc

already melting the leaner grades.

Iron and Steel Institute and

•

for¬

was

—

opened

the Westward-Ho

switch

tionary period; and what realisti¬

Opens Own

The controlled materials plan now being readied in
Washing¬
ton will be applied to
alloy steel first, states "The Iron Age," na¬
tional metalworking weekly, in its current
summary of the steel
trade. Beginning in June all alloy steel will be produced on melt

getting what is left. First shipments under
the new CMP probably won't be made until
July when the pro¬
gram becomes fully operative.
Cuts in civilian alloy steel quotas may not be as
deep as ex¬
pected. Many consumers who have seen the handwriting on the
wall spelling out alloy shortages have shown an
eagerness to

clamping-on

the

its manifested effects,

with

threat);
how
they
fare during an
actually
ef¬

Office in Phoenix
PHOENIX,

non-essential customers

Himself?

the

merly in the municipal bond de¬
partment of Coffin & Burr, Inc.

Cushman

plan. It is designed
to match requirements against production, thus
spreading avail¬
able alloy steel equitably among consumers, says this trade author¬
ity. Defense and essential civilian users will be allotted first, with

through

of the New York and Boston Stock

Mr.

What Can the Individual Do for

Mass. —Robert
S.
has
become
asso¬
ciated
with
Whiting, Weeks &
Stubbs, 53 State Street, members
Exchanges.

;

Even rela¬

indicating overemphasis on countries, constituted good infla¬
tion
hedges,
for
anyone
with
inflation, I do not mean to belit¬
tle its importance.
On the con¬ -enough wherewithal to -acquire
them.
But city real estate's pro¬
trary, I beg you to realize that in¬
flation—which I would define as tection against a rising price level

BOSTON,
Weeks, Jr.,

Week

Theoretical Capacity

well

institutions.

sustained fewer business

vious

its destruction of

political

ianism

fective

defenseless hold¬

mild
doses of
inflation
socialism and authoritar¬

bring

of the various

dealing

Far more
than its well-pub¬

assets is

nation's

economic

the

well

being.

whS •'# iz(

decline, business failures increased 14%

1939.

prewar

cussion

sibilities

gov¬

of insurance and other fixed-

the

mon

in January to 775, but were 10% below the 864 casualties
recorded
a year ago.
One-half as many businesses failed in January as in

January of

compro¬

glamorous

Robert S. Weeks, Jr.

two-month

even

mise, by cen¬
tering our dis¬

other

•
a

important

licized effect

ticker—entailing
a
flight from Savings

into effect March
15. The National Production
Authority postponed this date from
March 1 to give manufacturers more time to revise
production
After

well

income

products in March
tons, from 35,000 tons monthly in January and
February.
But civilian goods will obtain 60,000 tons of
synthetic rubber in
March, against 53,500 tons in each of the first two months this
year.
Another section of this order, limiting or
banning the use

schedules.

economic

ers

specific

resulting from

expansion of the sup¬
money—is devastating to

rise

country's political

strike

to 30,000

40,000 civilian items, will

ply
the

discussing sin

Today I
try
to
a
hap¬

will

has

amount of natural rubber available for civilian

of natural rubber in

ernmental

merely with the
in

price

agin

scare

at the flood.

The'government formally

it."

words—as

—"I'm

can

length dealing with

completely,

three

inflation

barbers, and show girls, in that
most
popular of indoor sports,
worrying over "inflation."
This
currently increased interest in a
question that is usually disdained

Commerce disclosed.

were

topic

handled at
it

the

$41,700,000,000,

advance of

Mr.

in the trading department

thereto

production

Raymond

of the Boston office

steadily,

metalworking the

supplies for

with

merly

the steel mills mounts

Arthur C. Alexander

re¬

serious

effectively remove underlying inflationforces, pending problematical eventuality of such remedial
action, owner of capital must realistically keep constantly
diversified between equities and fixed-interest investments as
hedge against both down- and up-swings.
ary

within

covered from effects of the recent
switchmen's strike. Shipments
of finished steel continue to be
hampered at some points because
of the log-jam

arising from the rail strike, and also
shortage of freight cars.

ment could and should

SPECIALISTS

RIGHTS

FOR

YEARS

The

savings banks and on

Emergency Program's
Impact on Savings Banks

ties.

Banks

of added

governmental controls

credit policies

impact

the

has

running materially .ahead of last
Inventories in the hands of
manufacturers, retailers and dis¬
tributors are very large.
Prices
of farm land and of real estate in

pro¬

and

nounced
far

How

reaching.
impor¬

tant

this

general are steadily rising.
Most individuals in the country
Many people in the middle class,

pact has been
be

Can

those with more

particularly

seen

or
trapped by

less fixed incomes, are

fol-

the

from

frightened.

worried' and

are

im¬

the

lowing

mounting

rising taxes,

and

of living

cost

general rule, savings de¬

Since

the

even

Lost

living over 7%.
During
trie last few months, restrictions
t-ave been imposed on the exten¬
sion of credit and on construction;

considerable

keep

who

viduals

invested

institutions and naturally tend

gravitate

tion

the If,;

should continue at the pres¬

should

inflation

not

productive capacity
this- is not the
type of construction that leads to

time, it is evident that the
supply of goods, notably durable
consumers' goods, is bound to be
smaller than during 1950.
The real- question, however, is
how much will the people be able
same

in;

mortgage financing.

Bonds

has

nate.

that

the

often

individual

stated

been

money,

who invested

amounts

will receive
$100 in 1951, will actually receive
and willing to save.
It is quite
money
worth, only half.
Un¬
possible that taxes will reduce the fortunately, such remarks are also
disposable income, particularly if often heard in banking circles.
taxes

income

raised

are

$75 in 1941, while he

which

fear

prevents

tures

ings

are

mounting and the tax
rising. If present trends

continue,

the

changes

the lives of many of us are indeed
bound to be

tinued

far-reaching.

commodity

prices

will

and

restrictions

There is

almost

business

its

activity

inflation.
not

frozen

parity

levels,

whether
then.

until

and

prices

which

reach

doubtful

they will be frozen

Farmers

did

not

even

oppose

government expenditures of hun¬
dreds

millions

dollars

keep floors under farm products,
.but the imposition of ceilings is

generally opposed.

A continued
farm prices will be accom¬

rise of

panied by an increase in the cost
of living and this, in turn, will
make
it impossible to stabilize
-

There

wages.

real

effort

being made at present to institute
economy in government and there
is

tion

certainty that
will

program

There

sound taxa¬

enacted.

indication

controversy

between

that

the

Federal

Reserve and the Treasury will be
olved in the best interests of the

country; and in all likelihood, the
Reserve Banks will be obligated
continue

term

support the longbond market,

government

thereby
reserve

creating

additional, new
balances and feeding the

forces of inflation.

The country

inflation-

minded than perhaps ever before.
We

seem

*An
''le

to be

address

Annual

f-rence
D vision

ciation,

Dr.

Savings and
Savings

the

witnessing

the

New

American

York City,

Nadler

quidt
before

Mortgage Conand
Mortgage
Bankers

March

irrespective

To mention

likely

of the

example

strike home:

Asso¬

1951.

provided there is

the movement of
prices, notably the
living, and whether the

determined, by
of

cost

fear

the

then

continues,

and

people will decide that it is better
to spend now than to postpone
their

purchases.
several respects,

the present

differs from
those
in the past.
In previous
periods when a process of infla¬
tion set in, the people in general
inflationary

full

know

government

inflationary in character and
complicates credit controls.
Yet
a somewhat higher return on their
investments
apparently means
much

to them than the

cline in

the

purchasing

the

such sales have.

that

pected

this

felt

portion

only a temporary

that

was

not

portion

that

expected

monetized

this

through

Federal Reserve Banks.

large
be

the

The

con¬

quite evident. It is
strange that institutional
investors, who can suffer more

sequences

are

indeed

from

continued

prices

and

wages

spiral between
than perhaps

any other type of business, have
themselves contributed to the in¬

flationary forces.* Institutions
such

ance

under

savings banks and insur¬

companies,
the

while

obligation

they
of

moderate in character.
Moreover, at present nobody can
tell
how
long the rearmament
only

very

are

merely

Federal

last and hence how

expenditures
and

extensive

possible

which

analyze
the

the

S. Fes.

44.000.000

Statement of Condition,

December 31, 1950

ASSETS

supply

commodities available

Under
these
conditions,
many
people
have come to feel that even if
sooner or
later prices are stabil¬
consumption

ized,

they

level

than

will
at

Swiss Francs

higher

present and that a

likely to take place.

The volume of savings

im¬

rearmament

1,272,312

Other Assets

6,002,954

Bank Premises and other

Property...

Total S. Fes.

LIABILITIES

Swiss Francs

•

160,000,000

Capital

44,000,000

Reserves

Sight Deposits.
Time

1,879,699,859
269,758,944
202,995,100
54,808,668

Deposits
Deposits ("Obligations")

Fixed

13,000,000
2,670,682,131

Acceptances.

42,570,437

Other Liabilities

deposits

will accordingly,
to a large extent, depend upon the
efforts made to stem the tide of
during the

Syndicates...

limited.

material decline from that level
not

Bills Receivable

the

for

Cash....;......

are

bound

Profit

16,849,123

year

■

Total S. Fes. 2,670,682,131

inflation and to alleviate the fear
of

continued rise in commodity

prices.
In itself, increased sav¬
ings would be a potent factor in
the fight against inflation.
Since
deposits are the lifeblood of the
inflation, but also against the savings banks, it is up to them to
inflation
psychosis which is so take the initiative in this fight.
pronounced at present.
This can be done thr'ough exert¬
With this as a background, it is
ing pressure on the Congress that
now

RESERVES

CAPITAL

160,000.000 S. Fes.

World

after

has taught the

paying out dollars without con¬
sidering purchasing power, have
a
moral obligation to take the
lead in the fight not only against

pact

Bienne

377,876,831

sale

•

809,322,710

but

Lausanne • Neuchatel

Government and other Securities....

the

would

debt

•

Schaffhouse

•

Advances to Customers, etc

would
war,

Geneva

commodity prices in 1949 was

long

the

•

Short Advances

stitutional

investors

St. Gall

riod of deflation since the decline

however,

program may

after

•

La Chaux-de-Fonds

II,

War

government bonds acquired by in¬
liquidated

sooner

experience

The

Zurich

de¬

ex¬

situation,

SWITZERLAND

Head Office: BASLE,

328,834,862
355,374,410
772,456,740
6,541,312

which

to be

was

CORPORATION

Banks and Bankers

power

country

Continued

people that a period of inflation is
not inevitably followed by a per

the dollar or the ill effects on the
economy

new

all

necessary

tuted

and

economies be insti¬

that

prices

com¬

the decision as to
financing will
depend on
extent,

period

dollar would rise.

sale

some

inflation

the

than was the case a year ago.

SWISS BANK

inflation will continue un¬

obligations to the Reserve Banks

well that

securities may be somewhat larger

willingness

This willingness will be

later
commodity prices would go down
and the purchasing p'ower of the

investors

can¬

they

live

Every

the economy

Institutional

be at present

Most farm

life.

walks

interests

own

country.

real will to curb the forces of

•no

and

lack of leadership in

all

the effects

-in

There appears to

over

economic group looks out only for

Increasing

general and building activity
in
particular will develop and
this too, is likely to affect the
.savings banks.
'
.,
,.>•

and

decline,

find it necessary
accumulated capital.

that

necessities such as food,

save.

abated.

people

adversely affect the

savings of the people.

living of the people tends

tial

fear of

The

although there are esti¬
the volume of such

state,

of commodity

cost

anxiety

increases.

each year.

and clothing. - In spite of
this,{ however, the ability of-the
people to save should be substan¬

stand--

ard

undermine confidence in the dol¬
lar

the

day

their

rises,

future

further

will

Every

the

A con¬

movement

upward

or' tangible*

equities

into

living

will

that

small

from converting their sav¬

goods.

lake place in our economy and in

people

many

to them

shelter

widespread, and only the
of losing the little they have

means

burden is

against infla-r

but also the rather large
of
amortization 'funds

accrue

mates

Secretary of the Treasury. " It

the bare

prob¬

investors.

supply of new corporate
bonds will be is as yet impossible

the President

posed

investment

the

institutional

What the

pro-,

They will be confronted with the
task not only of investing new

unfortu¬

been -rather

has

evident

of the year

and

aggravate
lems

quite

end

of mortgages will be
this, in ,turn, will

supply

reduced

power

the

toward

that

the

therefore

portion of their savings
equities, notably mutual in¬

purchasing

country,

the

expand

the

particularly if

and

rate

ent

fear

More
older
and
people will be working.
the same time, more overtime

likely to decrease.
While
industrial construction w:\ll in¬
crease
materially
in order
to

the forces of infla¬

however,

tion

considerably
which prevailed in

also

least

price and wage controls have
been imposed.
Federal expendi¬

been

Commercial construction is

1950.

highest.

dividend

necessities of life.

bare

have

decline

from the level

banks

those

toward

the

where

bound

various savings

stopped, there is a possibility that
many
individuals will divert at

Older people on a

The desire to hedge

xid

commitments

these

younger

pension or those approaching the
pension age are greatly concerned

beginning

vne

previously.
fairly certain

ever,

Everybody realizes that the pur¬
and the chasing power of the dollar has
is
of
gone down considerably and that
1950,
the
Marcus Nadler
over
their
future
and
wonder also fairly certain that the cost of in actual purchasing power the
level
of
whether the amounts due them living will increase and that more dollars
they are receiving are
wholesale
:"-V, -v\
will be sufficient to give them money will have to1 be spent on worth less than half the amount
prices has risen over 23% and the
figures:

It is, how*that after

time

some

payments will be made. All these into
factors combined should have a: vestment funds.
In this connec¬
favorable effect on the disposabletion, it should be noted that the
income of the country.
At the discussion about the depreciation

year.

already

been

sums

employed.

Sales by department stores, chain
stores and mail order houses are

economy v of
the
country

this

They are primarily

large,

rolling,

starts

really

gram

the future.

into

postponed

positors,
with
certain
notable
exceptions, are not rate-conscious.

country will be operating at ca¬
pacity. More married women not
now
employed will be gainfully

that what they

were

and

with mortgage commitments made

perhaps larger than ever before
in
the
history of the .country.
Employment
will
be plentiful
since once the rearmament pro¬

people have come to assume
buy today will cost
them less than if their purchases

program

inflation;

banks will continue to be occupied

material increase.

The

the depositors.

is bound to be very

in 1951

is
bound to affect materially savings
banks and mortgage institutions.
Although the program has barely
started, its
; ,
rearmament

forces

interested in taken care of, the supply of mort¬
safety, availability and conven¬ gages
will
decrease.
Building
disposable income of the country ience. There are, of course, indi¬
activity, particularly of homes, is

will have

flight from the dollar; more and

Introduction

posits of the savings banks will
be influenced by (1) the size of

and
refunding plan fails.

new

program

disposable income and the supply
of commodities available for ci¬
vilian consumption, and (2) the
effect which the fear of inflation

government market

over

of institutions if

ment

functions?

right direction. Warns

nonmarketable Treasury bonds as step in

How will the rearma¬
affect these two
The volume of de¬

positors.

inflation minded than ever be¬
fore, Dr. Nadler holds this psychosis will adversely affect
public's willingness to save, unless all efforts to stop forces
of inflation are implemented.
Looks for reduced mortgage
financing, and greater difficulty in placing funds by institu¬
tional investors. Points out, if Federal budget is balanced, the
higher interest rate controversy will become academic, but an
unbalanced budget, which will entail more Treasury financing,
will mean continued support of government bond market by
Federal Reserve. Lauds recent decision to issue new 2%%

Asserting the country is

ings banks are to foster thrift and
to invest the savings of the de¬

York University

Professor of Finance, New

efforts

All

ago.

years

that is fight, increased savings on the
avail¬ part of individuals could play an
able for spending and the less will important role.
be the danger of inflation.
If this
Investment Problems
t
campaign succeeds, the result
This phase of the problem cen¬
might well be to channel a sig¬
ters around the supply of securi¬
nificant proportion of the large
ties that will be available and on
disposable income to the savings
the trend of interest rates.
In the
banks; and savings deposits dur¬
early part of the year, savings
ing the year would experience a

principal functions of sav¬

The

By MARCUS NADLER*

♦

ten

cating people that the more
saved the less will there be

Savings

Principal Functions of

•

Should be made today to stop the

these institutions
should also take the lead in edu¬
time,

same

their activi¬

Thursday, March 8, 1951

.
■

the

stabilized.

modities

will have specifically on

program

;

(1018)

The

Chronicle

Commercial and Financial

New York Agency:
15 Nassau Sireet, New

York 5, N. Y.

London Office:

S9, Gresham Sireet,

E. C. 2

page

Volume 173

The Commercial and Financial Chronicle

Number 4992

The 1951

Building Panorama

Prominent

high levels.

Predicts early 1950 housing boom will neverthe¬

less be tamed down to
The

morning

Friday,

for

Year

and Air Force

Big

f'R

Steel

Corpo¬

ration to Con¬
struct
ton

"Du'

Pont

Build

year;

and

Virginia Fac¬
Thomas S. Holden
tory"; "N e w
Jersey Utility
Plans Large Expansion"; "Texas
Eastern
to
Begin Building Gas
Pipe Line to Serve New England."
,

amendments.

current

revised

Expand
New
Jersey
Plant,
West

trends and
measures

estimates

lished

revisions

Jan.

expansion.

few

that

readers

newspaper

Defense

1953

aluminum,

than there

also

and

total

defense

produc-

and

severe

become

the

year

increasproceeds,

musing Marts
.
In mur
1951
estimates
we
figured an approximate 40% cutback in housing starts, to 850,000
new non-farm units; in this we
have been in. agreement with the
Housing
and
Home
Finance
Agency. Thus far housing starts
have been running ahead of the
corresponding months of last year,
and the expected decline is still
something for the future.
,

built,

duction of basic

the year's needs for new housing

prospect that the

raw

materials in

pub- 1953. This would seem to imply
principal'that the climax of the squeeze will

will

defense

mobilization

come some
•

even

time in 1952. It might
taken* as 'implying a

quite

much too early to draw any such
inference.
Continuing
demands
for military construction, defense
plant construction and defense
housing could be of such magnitude

to hold 1952 construction

volume up to quite high levels,
There is at this time no prospect
for a squeeze on construction at
all comparable to the one that
took place in 1943 and 1944.
authorities in the Department of Defense and in the pro-'
duction planning agencies of government have a clear determination to maintain a strong civilian
economy. They are also entirely
.Top

has

been

of the program and its material requirements; also in assuring increased suDDlies of some of
scope

materials

the

important
is, I believe, evident that the
as now conceived as an
insurance policy against the conit

program

mated

belief that the esti850,000 units, if actually
my

will

approximately

meet

required by basic demand fac-

tors.

on the 1950 housing
recently
released
by
HHFA, showed that there were
in April of last year a total of
39,390,000
non-farm
dwelling
units standing in the country, of
which 36,711,000 were occupied,
By April, 1952, there will have
been added, according to present
estimates, something like 2,200,000 units and perhaps some 80,000
to 90,000 will have been abandoned or demolished. This should
result a year hence in a non-farm
housing inventory of something
like
41,500,000
dwelling
units;
this would take care of next year's

Figures

census,'

of war can be carried
by the American economy concurrently with improvement in
our

living standards. Admittedly,

the

analysis j have sketched out

stresses

only

phase

one

dudes

meeting this phase of the problem
js

contingent in

course

retary

Services

Armed

Committee

fiation,

controls, and on willingness
modify or abandon controls
when they are no longer needed,
to

is also contingent on all-out
production
of
essentials
with
work-stoppages reduced to a minIt

imum.
Much of the current front-page
news

Washington

out

people there of high
and integrity who
are
working day and night to
shape things for constructive ends,
They are the ones to whom we
look for progress toward order
and reasonableness; I have faith
that in the long run their counsel
will prevail,

are'

some

competence

Three With Moseley
(Special

Chronicle)

Financial

The

BOSTON,

Mass.

—

now

This announcement is neither an
.
.

;

offer to sell nor a solicitation of an offer to buy any of these Debentures.
by the Prospectus.

The offer is made only

im¬

that,

aim at

should

and

$60,000,000

The Borden Company

mo¬

thereafter

off to a maintenance basis
of $35 billion a year. If this esti-'

taper

Thirty Year 2Vs% Debentures Due 1981

mate is realized it means that the
equeeze

beL of

will

the civilian economy
comparatively short

duration.
'

Due March

Dated March 1, 1991

1, 1981

support this conclusion, we
can-carry our researches among
the headlines still further back,
to
the issuance of the January

Interest

payable March 1 and September 1 in Xew York City.

report of the Council of Economic
Advisers

the

President.

That

report, after reviewing the record
of expanded production from 1940
to

1950, indicated
in

increase

that

national

Price 100% and Accrued Interest

further

output" of *

25% should be possible within the
next five years.
.
•
v
r
Since the gross national prod¬

uct,
all

statistical summation of
and services, was $280

goods

billion

1950,

lion by 1955.
be

possible

vided

top

the

and

national

offer

MORGAN STANLEY & CO.

af¬

minimum

KUHN, LOEB & CO.

THE FIRST BOSTON CORPORATION

WOOD, STRUTHERS & CO

Proportionate Military Cost to
Decline

;

Copies of the Prospectus may be obtained from only such of the undersigned as may legally
these Debentures in compliance with the securities laws of the respective States.

reasonably sound

reasonable

of work stoppages.
i

This objective should
of attainment,; pro¬

have

management

fairs

indicated in¬

would carry it to $350 bil¬

crease

this

increase

realized" and

shall's

estimate

BLYTH & CO., INC.

General

Mar¬

LEHMAN BROTHERS

*An address
tional

Annual

by Mr. Holden before the
Convention

Federation

SMITH, BARNEY & CO,

Financial

the

Societies, New York, March 7, 1951.

Na¬

Analysts

HARRIMAN RIPLEY & CO.
Incorporated

expenditures is also realized, the

Fourth

GOLDMAN, SACHS & CO.

productivity

future defense

March

7,1991.

Janet

population with a somewhat high- Mattson, Ralph.. B.
Story and
er vacancy
ratio than that re- James O. Thorner are now assoported for 1950. The expected re- ciated with F. S. Moseley & Co.,
suit of Regulation X is; therefore, 50 Congress Street, members of
that it will tame down the 1950 the New York and Boston Stock

ping the 3V2 million-man military
bilizing

these

days would be very discouraging
if we did not know that there

conscious of the need for ade-: housing boom to something ap- Exchanges.
Mr. Thorner was
quate housing
and ' community proximating normal.
previously with Arthur Perry &
facilities in defense areas and in
In certain aspects the outlines Co., Inc.
;

according to the present program,
defense expenditures should rise
to a peak in the process of equip¬
establishment

num-

avoidance of inreasonable application

berless ways on

statement. Defense Sec¬
Marshall told the House

portant

the

the phase of potential
production, which inconstruction.' Success in

problem,
physical

pro-

of confusion. Some progress
made in defining the

areas

use

another

was

that

been overtaken by increased pro-

little further, to

there

13,

steel

for civilian

yet begun to operate.
true

building

by: year previous, to 1950.
will

prevailing

conditions of material supply.

expected squeeze trend will have

large compared with that of any

Chief

before Korea.

was

(■■■ Going back
Feb.

told

were

anticipated

the

interpreting
this order as liberally tingency
as
permissible under

squeeze

were' lowered figures for esti-. smaller volume of construction in
mated commercial buildings; and 1952 than in 1951; it is, however,

and

that there

not

also

the

in terms

thanges from the 1951 estimates
chat we published last November

earljer

Mobilization

Charles E. Wilson

days

that

obvious

The over-all factors previously

impor-

radio-listeners

cities,

stores in- hundreds
residential
areas,
and

new

were

The

23.

cited indicate

engineering contracts for this

these

of these

tant

than

ingly

higher figures for manufacturing
buildings.
phases of the nation's 1951
The new overall estimates for
construction program.
They "in- 37-states contract volume in 1951
dicate the current importance of indicate a net decline of 3% from
military construction,. manufac1950
in
non-residential
floor
turing plant expansion, electric space, and a decline of 35% in
utility and natural gas expansion, residential
floor, space;
total
'i There is also an intimation here building floor space is expected to
that
construction
of
new
steel- decline
by 23%.
Coupled with
making capacity is playing a ma- these building declines a moderjor part. Another news item of ate 7% dollar volume increase
the
same
date
recorded
that .in public works and utilities connearly all the $1,800 million worth-tracts is anticipated.-Although the
of certificates of necessity granted total
dollar volume of building
by the Office of Defense Mobiliza- " and engineer contracts is expected
tioivthrough Jan. 30 were for steel to-register an 18% decline, this
These items typify very

rntrip

quarter

Limitation

various control

to'

various

number

Non-residential

Order M-4,
Limitation Order M-12, and their

lation

neighborhood

has

appraisal of. the

building prospect as are. the
and implications of Regu-

houses

tion under the enlarged program
scarcely begun to chew up

just

are

terms

these

Mill";

residential

Corporation has attempted to appraise the effects of

.Seamless

Tube

1950

43%.

has

F. W. Dodge

150,000-

over

ing,

building situation and of the

1951

Plant";
u b 1 i c

where large military estab-

there will be pressing needs will
be
office
buildings and ware-

that these mat-

increase

......

enumerated

essential to

future

have

for

metals and other raw materials;
defense production is at present
largely in the make-ready stage,
The expected squeeze on civilian
production and civilian construetion is due to be felt in the second

Today

Steel

The

recorded

responding period of

was

military burden will

our

seems

ters

Construction";
{■Work-to:
Start".

cost

period.

coi

Saiipp7f»

1, contained the
headlines: "$2,400,000,-

Provided

normal needs.

areas

build- hotels in some important spots,
building and- Although such projects are reheavy engineering construction all stricted under Limitation Order
participated in the rise.
M-4, there will be good reason for

taper from a peak of perhaps 18%
of total output, to something like
Army 10% of an enlarged total output,

March

following
000

newspapers

the

will not '

through increased production

economy

squeeze

1952, and construction will meanwhile remain at

en-

1through Feb. 21
by
far
the

$1 885,416,000,
largest figure ever

until

occur

decline is

year

was

Corporation

building economist asserts tapering off of

civilian

far, this

rpi_e V matter of anticipation, lishments are located. Among the gram are becoming clearer, al^e^37-states
facilities for which though there still remain large
the Period Jan contract total for community

By THOMAS S. HOLDEN*
President of F. W. Dodge

(1019)

The Commercial and Financial Chronicle

(1020)

Yet

Continued High Earnings Portend

Higher Stock Valuations
By CHARLES F. ROOS*

President, Econometric Institute, Inc.

Dr. Roos contends confidence in permanence

In such

valuation

tary goods the average individual

tionary trend.

with

this

I discussed

armaments

relation

the

group

various business

indexes to

stock

in Korea and then started

upward movement to

highs.

Stock

and

Cowles

Com¬

mission index¬
of

stock

prices to

earn¬

ings, dividends
interest

and

rates.

not

and interest rates if he lacks
fidence in the permanence

dence
one

showed then

answers

would

stock
were

with

able

what

low rela¬

and

tive

inherent

tions.

much

current

dends and forecast that both
and

dividends

I also

crease.

z e

divi¬

would

in¬

pointed out how in

many cases in the past the direc¬
tion of market
moves
had been
related to the short-term
trends of
orders

for

both

consumers'

nondurable and capital
goods.
I gave the
explanation that the

informed

long-term

investor

had

the

questions,

one

combine

them

last June
all the risk

.you

nearly

stock

market

opera¬

possible

this

measure

lack

naturally grows as
earnings recur or increase quarter
earnings

after

quarter
fact

lhis

for

few

that

suggests

years,

good

said,

Were

frequentely related
guesses

the

busi¬

ness

outlook,
as
he
expressed
these guesses in the
placement of
new

orders.

these guesses

emphasized

that

true

fair proportion of market

prospects
order

actual

developments.

said

business

that

series—consumers'

variables

ally

long

over

the past.

had

some

I have

and

pe¬

person¬

used

such

had been rising
fov over six weeks
and further rises were
indicated
1950 and

1951.

f Dow-Jones averages
which, as all of

If
oU(fo
of 252

know,

you

about where stock prices are.

both
non¬

durable goods and capital
goods—

for

these

riod

were

changes to bear little relation

new

earnings, dividends and interest
lates, and (2) aHveighted average

frequently bad measure of stock market values.
and, consequently, one should My index Today shows a market

expect

Because of the very high level
new orders
today and the as¬
that current earnings will

surance

about

maintained,

can

say

today with considerable certainty
that my measure

of valuation will

That

just

presentation
was
made
few weeks before our Pres¬
decided
to
intervene
in

ident

Korea and plunged us into
a po¬
licing action that has since turned
out

io^aS
the surrlmer of
This 260
suggests that the Dow1951.

Jones

averages

between

230

and

270

the

months.

;

The result of the
been that the

has

business, that
on

June

accelerated

war

in Korea

upward

trend

was

capital goods has
from 265% of the 1935-39
to

over

consumers'

orders

400%.

rose

The

unit

risen

average
volume

non-durable

from

goods

160% in June to

220% in September. It has since
dropped down to 160%. Total in¬
dustrial

production

reported

the

Federal Reserve Board at 196
June, T950, reached a new
peacetime l)igh in January,
1951,
in

219%

the

1935-39

Earnings and dividends have in¬
sharply. /.
prices

nosedived

Valuation Index

for

few days on the 6htbrea*k of

war

(3)

issue state

it would

to be

seem
a

rise is

sum¬

first

case,

tax

the

levies

non-gradu¬
wages did

and

change, the net money income
(disposable income) of the popu¬
would

decline

and

the

population would be able to buy
only the smaller amounts of civil¬

likely

likely. Why

can

probably

be best understood

b.y considering

what

finance

means

ment

production
production must

and

arma¬

how

such

inevitably

inflation, whether

meet

lead
attempt

expenditures out of

cur-

the

second

method

additional money )
were

chasing

(issuingused, and

were

not fixed, the civilian

of the
average
this redistribu¬

power

worker.

tion

During

buying
would

part

all of the impact to other

able

shift

weaker

groups.
For
example,
generally would rise partly
at the expense of holders of bonds,
pensions, etc.

prices jwere effectively fixed,
purchasing power would become
superfluous. This would tend to
drain

all

civilian

vices

off

the

goods

market

and

ser¬

create

situation

of chronic shortages.
socialistically created short¬
ages, of themselves, would seem
to require rationing. For this pur¬
pose the state would issue a ration

These

super-money,
which
have to be used with the
or

would

regular

that

money

had

become

lead

in
is

incomes

money

this

forced

savings.

example

the

and

ing

Because

way by inflating the
rather than by borrow¬

would

taxing, these forced savings
largely take the form of

cash.

The

remain

and
be

money

problem
would therefore

although
be

price

postponed.

enforcement

inflation

would

have

whole-hearted support

of the

public.

Otherwise there would be
evasions, civilian discontent, and
possibly even violence. If ration
cards

and

against

black

enforcement

sweeps

the

same

leaves must be
money

produces

? ?u-

food

the

and

clothing Yet the armaments, mil¬
itary drilling and leaf sweeping
Provide
he

economic

problem

rn^W

matter any

satisfaction,

financing

any

Program,
or for that
large government
ef-

fuildamentally that of get¬
ting somebody to work for noth-

' *

selling—$1.00

nancial Chronicle, June 22, 1950. '

usLhllvtrIth °fJthis st^ement is
the
me

tot^

total

^ *by the
that
of fact
civilian

production

fncrtnsaer'lf.ehViCer,haS
with military tended to
spending
increase

copy—Dept.

per

markets

were

not

If the third

course

were

through

were

issued

-i

American Barke Line

Weaver,

over an 11-year period—
46 Front Street, New York

South

105

Salle

Company—Analysis—Dayton & Gernon,
Street, Chicago 3, 111.

memorandum

National Pressure

the

would

make

whether

the

currency

money

American
407

Also

Airlines—Memorandum—Dempsey-Tegeler

North

Eighth

available

Street,

memoranda

are

Continental Air Lines,

lines.

St. Louis

Earnings

banks,

little

bonds.

-V;"''

money.
When a government issues long-

page

America,

Audio Devices, Inc.—Analysis—Peter Morgan &

Co., 31 Nassau

Street, New York 5, N. Y.
Beneficial
the

Industrial

Beneficial

Loan

Corporation—Annual report—from

Industrial

Loan

Corporation, Wilmington 99,

Delaware.

Burlington Mills—Brief data—Abraham & Co., 120 Broadway,
York

New

5, N. Y.

Also available

Walworth

Chicago,

Service

Franklin

135 South

Co.,

Electric

'
Railroad,
&
Gas,

Electric.
Coal

Co.—Memorandum—•

La Salle Street, Chicago d,

■

Continental

135

■

available

pany,

Public

Co., and Westinghouse

Henke

Illinois.

Eastern Gas & Fuel, Erie

Utilities,

Wilmington

Swift,

Also

briefs

are

Public

General

memorandum

Assurance

Clearing Machine

Co.—Analysis—William Blair

Corp.

Com¬

South La Salle Street, Chicago 3, 111.

Also available is

analysis of Continental Casualty Company.

Continental Copper & Steel Industries, Inc.—Analysis—Repub¬
lic

Investment

Inc.,

Company,

231

South

Chicago 4, 111.
Also

available

Industries

Dresser
61

bulletin
—

Bulletin

Salle

Street,

V'.'

■.

Delta Air Lines, Inc.

—

Smith

Zuckerman,

Co.,

Broadway, New York 5, N. Y.

Company—Analysis—Bulletin—New York Hanseatic

Fresnillo

Corporation,

120 Broadway, New York 5, N. Y.

Hytron Radio & Electronics Corp.—Analysis—Sills, Fairman &

Harris, Inc., 209 South La Salle Street, Chicago 4, 111.
an analysis of TELE-tone Radio Corporation.

Also available is

Cotton Oil Co.—Analysis—Smith, Burris & Com¬

Kingsburg '
pany,

120 South La Salle Street, Chicago 3, 111.

Lonergan
1

Manufacturing

Wall Street,
II. Macy

Company—Circular—Cohu

Co.,

New York 5, N. Y.

Inc.—Analysis—H. Hentz & Co., 60 Beaver

& Co.,

Street, New York 4, N. Yr.
Maine

Central

vs.

Nickel

Plate—Analysis—Raymond

Boston 9, Mass.
Also available is an anlysis of Verney Corp.
148 State Street,

page

HARRISBURG STEEL
(Specialty Steel Products)
$3.45 Earned
Current

in 1950

Sales

vs.

$2.28 in 1949

Backlog

50c

quarterly

vs.

30c

rising

previous.

Primary Market

Troster, Singer & Co.
74

Y. Security

Dealers Association

Trinity Place, New York 6, N. Y.

Telephone:

2-2400.

Teletype NY

Private

wires

1-376;

377;

Co.,

•

Continued

come

Company—Study—Elworthy & Co., Ill Sutter
Street, San Francisco 4, Calif.

bank-eligible notes
They would all be¬

Continued

Co.

issued

Co.,

American Trust

the

.difference

government

Mo.

Delta Air Lines, Mid Continent Air¬

short-term

supply.

Cooker

Company.

government would simply be in¬

flating

and

Mark

4, New York.

chosen,

that of borrowing, the state would
be issuing claims to goods valid
at a future date.
If the borrow¬
bonds

D-l,

yield and market performance

Members:

♦Address by Dr. Roos
before the New
York Society of
Security Analysts! New
York City, March 2, 1951. *'
*
1 C.
F. Roos,
"Business Indexes and
Stock Prices," The Commercial and Fi¬

Stock Market—A book

Santa Monica, Calif.

1130,

tion.

ing

commentary naming
attractive—$10.00—
Colorado Springs,

Inc.,

Company,

National Quotation Bureau, Inc.,

Rationing

tribution and to quality deteriora¬

gun

politically impartial and have

the

and

parison between* the 30 listed industrial stocks used in the

fundamental

surplus

would

Griffith

business

believes

Dow-Jones Averages and the 35 over-the-counter industrial
stocks used in the National Quotation Bureau Averages, both

government

paying its

currency

firm

New York.

•

The
ration
coupon
would thus immobilize part of the

effect, the price ceilings could
lead only to badly distorted dis¬

paid

Box

excessive.

regular

Barrett

short

coupon

industry

Colorado.

wages

only

IIovv to Make Money in a Declining

various

power

groups
or

Street, New York 5, N". Y.

Letter—Investment and

Also available is

le^nu
axes or ^ borrowing
The labor

that produces a tank

goods and services that would
produced.

reason¬

further rise in

the valuation index is
a

Likely

the

bonds

not

prices

William

Over-the-Counter Index—Booklet showing an up-to-date com-

in the form of

beyond

ably certain that

average.

creased

Stock

mer,

already so
such
2, was sharply

for

Looking out

in an orgy of business
and consumers'
speculation. Since
June the unit volume of
new or¬

ders

six

during

war.

Rise

obvious

might reasonably

sell

Korean War Effects

and

goods and services would be re¬
confidence.
There are, nonethedistributed by a rising price level.
less, some useful guides.
This would reduce the real pur¬
Confidence in the permanenceof

complete with dividend records for the
showing monthly highs, lows, earnings,
capitalizations, volume on virtually every active stock on the
New York Stock and Curb Exchanges—single
copy $10.00;
yearly (6 revised issues) $50.00—special offer of three edi¬
tions of Graphic Stocks, 1924 through 1935; 1936
through 1947
and up-to-date current edition, all for $25.00—F. W.
Stephens,
1950,

options—Thomas, Haab & Bolts, 50 Broadway, New York 4,

the

charts

tax; (2) issue additional

income

964

"Information Please!"—Brochure explaining about put-and-call

ated

lation

Co.,

follows: (1) levy

were

ian

things
and most of you
would then be looking
easy

would pay more attention
of
market
valuation
to the measure
trend of capital
goods orders than should also take into account the
would the short-term
operator or past trends of earnings and divi¬
theIn short, one should build
stock*buying
public.
The dends
short-term
a
market measure of (1) current
movements,
I

retailer's

money

year

Griffith

money; or
or notes.

too

,14 'f, Probably just as
therefore that it has not been

well

But that would make

analysts

earn¬

told

remove

earn¬

capital i
current

capitalized

it?
these

very

either

con¬

of earn¬

earnings and how should

measure

tions

full

could be done

But what constitutes confi¬

ings.

Charles F. Roos

new

Staats

Graphic Stocks—January issue contains large, clear reproduc¬

correspondingly

services.

now

pay the full price indicated
current
earnings,
dividends

that

prices

ings

have

pleased

following literature:

in
Defense—Analysis—William
R.
Spring Street, Los Angeles 14, Calif.

640 South

would have to

so
a

amount of civilian goods

less

primitive or non-monetary
In particular, I exhibited closed about half the gap relative state, the problem would be to
charts
show¬ to capitalized current earnings and
impress labor and take civilian
ing the rela¬ dividends, to which I called your goods from the producers of these
tionship of va¬ attention last June.
goods for redistribution to those
rious
Stand¬
1 also pointed out last June that
engaged in military activities. In
ard Statistics- the buyer of common stocks will a
monetary state, the financing

prices.1

ings

20-year

new

prices

strong

Electronics

other have to

be content with
In June of last year

send interested parties the

give 14% of his already fully oc¬
cupied time to the production of

result in defla¬

may

It is understood that the firms mentioned will be

To produce the mili¬

would somehow

inflationary, despite government efforts to avoid

peaceful turn in world situation

Recommendations and Literature

pro¬

about 14%.

it, but

ones

be necessary to cut the production
of civilian goods and services by

270, with likelihood of further rise in
Says financing of armament program is

index.

Dealer-Broker Investment

situation,

decided

then

were

reach between 230 and

bound to be

Dr.

com¬

armaments
amounting to,
14% of the gross product or
output of the economy, it would

might reasonably

averages

our

say,

will be maintained, predicts,

of 1951, Dow-Jones

summer

duce

earn¬

rising stock prices and, in view of

that current earnings

assurance

of corporate

builds up

services.

and

Thursday, March 8, 1951

validity becomes obvious

one

plicated economic situation from a
few simpler ones.
Suppose, first,
that everybody willing and able
to work is working at maximum
hours and at maximum efficiency
in the production of civilian goods
if

ings is strong factor in

its

when

378

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

•

Volume 173

Number 4992

The Commercial and Financial Chronicle

get out of hand.

permitting

tutional

System

munist

aggression calls for more
than powerful military forces and

strong allies. It also calls for sound
domestic

that

eco¬

the pres-

ervation

orderly,

great extent, this

expan¬

sion in bank credit was made pos¬

sible

Federal Reserve's
Government securi¬

the

purchase

ties in the market at fixed prices.

that formed the basis for

serves

multiple

free dem¬

deposits.

prevention

infla¬

further

which

tion

erodes

the

ties

fixed

prices

Such

action

serve

does

has been continued.
by the Federal Re¬

not

people, im¬

The

poverishes

all

determined

recipients

destroys incentives to productive

holders at

confidence

assure

credit of the Government.

the

the will of

savings of the

fixed incomes,

the

credit of

Government

by the willingness of

public to buy and hold Gov¬
securities. A policy that

ernment

results

continued

monetization

effort, corrupts the moral fibre of of the public debt in time of in¬
the nation, and in the end destroys flationary pressures leads to de¬
the very system which the defense

struction

effort is designed to protect. De¬
fense of the free nations of the

credit

defense

cannot

defended

long, if at all, with

harness

controls—we

during and

power

all

know

the

after

We should have

war.

last

illusions

about the effectiveness of such di¬
controls.

rect

They

the

attack

symptoms, not the basic causes, of
inflation.

the absence

ade¬

quate fiscal and monetary meas¬
to

ures

the

Continued

curtail

hands

buying power in
public, imposi¬

the

tion of direct controls for the pre¬

vention, of further price

increases

merely postpones and delays

in¬

Government's

support

securities

the value

Govern¬

fixed

prices,

above par, makes call money,
interest bearing currency, out

some
or

of the marketable

conditions

happened to its purchasing these

what

se¬

some¬

new

refunding

maintenance

with

contrasted

market

pegged,

result

may

increase in the interest cost

some

to the

Government, such increase
would be nominal as compared
with

the

effects

further de¬

preciation of the dollar.

Only that

portion of the debt which is
funded

converted

would

the

bear

each

higher

re¬

While

curb

other

there

public debt.
are

prevail,

justification

for

the

various issues of marketable Gov¬
ernment

securities, with their wide

marl^t

sales

view

that

which

portion of the public debt
be refunded or con¬

would

next few

years

be very small

indeed com¬
pared with the added cost of in¬

credit

based

expansion
upon

the

reserves

ob-

essential to

ernment securities to the Federal

brinks and

Reserve System because of its
support of the Treasury's cheap

holders,

the

debt

policy,

money

It is not the

responsibility of the

i^.ure may n°t

Prove to be a Federal Reserve System at a time
deterrent,- especially in like this to underwrite the public
the case of
banks, which largely debt at fixed prices, but rather to
hold short-term securities
yield- do everything in its power to curb

sufficient

from 1%% to 1%%. In that
event, Congress will have to authorize
to

supplementary

increase

reserve

requirements

to limit their sales of Govern¬

further

expansion

the

money

supply and further depreciation in
authority the purchasing power of the dol-

other form of controlling
of commercial banks so

some

reserves

ment securities to the Federal Re¬
for the purpose of expand¬
ing their loans and investments. <

serve

lar.

Therefore,

the Federal ReSystem should not continue

serve

support the market for
all
Government securities at present
prices. If the Congress does not

want the Federal Reserve System
to carry out its present statutory

responsibilities it should repeal

A Conflict of Responsibilities

interest

may

verted during the

banks,

tained through the sale of Gov¬

moderate changes in interest rates

permissible

have been due in large meas-

for Gov-

institutional

redefine

its

rates.

„

the disagreement be-

but what appears to be a conflict
of responsibilities. The Treasury's

time

with

powers.

its

responsibilities

them
them

the

Government,
if
monetization of the public debt is

primary

ferent types of Government obli¬
gations outstanding which are held

continuance

the

cheap
-

money
.

policy

of the

wartime

period

STAMFORD, Conn.

—

Mary E.

n„litL

financing, despite
a^iated with
Consequently, increases in yields the existence of budget surpluses Merrill Lynch, Pierce, Fenner &
on market bonds must not be per¬
and inflationary pressures since Beane, 80 West Park Place.
by

various

classes

investors. heavy

deficit

Why should

the Gov¬
against hold¬
savings bonds by paying
less interest if they cash

prior to

maturity, when

requires that the holders of mar¬
protected against

ketable bonds be
any

loss of principal or interest if

If they sell them

before maturity?
Why should they be called mar¬
viduals supported by money and ketable when their prices are not
credit had not exceeded the avail¬ permitted in any degree to reflect

flation, but does not prevent it.
and

indi¬

supplies of goods and

serv¬

demands

able

businesses

market demand?

prices

The
Federal
Reserve
could not have ad¬
System
vanced
so
rapidly since Korea. has been accused of seeking higher
You cannot divert labor and ma¬ interest rates, which primarily en¬

ices,

from

terial

civilian

defense rich the banks and other corporate

production and avoid inflatioh un¬ holders. The Federal Reserve is
less you divert a corresponding not interested in higher interest
amount of financial resources from rates as such, but only as
they
the civilian economy.
help in curbing the sales of Gov¬
■*

The only way that the

purchas¬

ing power of the dollar can be
preserved is through a tax pro¬
gram that will keep the Federal
cash budget in balance as long as
inflationary pressures exist, and

ernment

the

securities
and

reserves

banking system.
such

sales

necessary,

which

add

Due

deposits of the
In order to curb

become more self-support¬
ing and less dependent on Federal
agement policies that will effec¬ Reserve purchases. The incidental
tively regulate the expansions of result of such a development, un¬

bank credit

in relation to the to¬

output of goods and services.

them

der

current

conditions,

will

Price 97.75% and accrued interest

somewhat higher interest rates.

Adoption of such policies,
to¬
gether with the maintenance of
an adequate arnouht of savings by

An Orderly Market for
Government Bonds

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

This

does
not
mean,
as
has
will bring about the
balance between civil¬ sometimes been suggested, that the
Reserve favors a
com¬
ian demands for, and the available Federal
supply of, goods and services. A pletely free .market for Govern¬
ment securities. The responsibility
pay-as-you-go tax program by it¬
self is not enough to defend the for maintaining an orderly market

thw- pubfc,

writers

necessary

will

that

assure

the

continued

purchasing power of the dollar.
success of Treasury financing has
During 1950 the Government oper¬
ated on a cash budgetary surplus; long been recognized and publicly
despite this, wholesale prices ad¬
vanced roughly 16% during the

proclaimed
serve

System.

the
Let

Federal

Re¬

not confuse

issue—an

The inflation is due, there¬
fore, not to Government spending
more than its income, but to ex¬
cessive spending by the public, a
substantial part of which resulted

the

from new money

public market is, is not the same
thing as maintaining a fixed pat¬
tern of rates irrespective of in¬

year.

created by bank

credit.
♦An
eon

address

the

by Mr. Eccles at Lunch¬

Executives

Club

Chicago, 11!., March 2, 1951.

Chicago,

April 1,1971

of Governments, it is
that
the market for

through monetary and debt man¬

tal

orderly market, in
which the demand for and supply
of Government securities
mitted

some

are per¬

A. E. Ames & Co.

The First Boston Corporation
Harriman
.

•/'

Incorporated

Smith, Barney & Co.,

Ripley & Co.

Incorporated

Wood,Gundy&Co.,Inc.

The Dominion Securities Corporation

freedom of action in

order to determine what the real

flationary conditions.
If the

Federal Reserve became

the

public

as well as to the Treasury,
responsibility is that of To do otherwise, would be to fail
financing the operations of the in its public duty and would not
allowed to continue. As a matter
Government at the lowest possible be in the real interest of the
Gov-^
of fact, the increased interest cost cost at
which it can induce the ernment. A
greater degree of inon the marketable debt would be
public to buy and hold its securi- dependence on the
part of the
less than claimed, since the Gov¬
ties. The Federal Reserve System,
Federal Reserve System is long
ernment will collect in taxes more as an
independent agent respon- overdue,
than half of any additional inter¬
sible to Congress, is charged with
est which it pays to holders of its the
responsibility for regulating
securities.
John J. Mullen
money and credit in such a way as
We must, above all, be realistic to contribute to the maintenance
John J. Mullen, manager of the
in formulating and assessing the of economic stability.
Ordinarily
trading department of Garretteffectiveness of debt management there should be no conflict beBromfield & Co., Denver, Colo.,
policies at the present time. We tween the objectives of these two
passe(j away on Feb. 19.
are not starting with a clean slate.
agencies of the Federal Govern¬
We must recognize the size, struc¬ ment.
However, a conflict has
With Merrill Lynch
ture, and distribution of the public arisen during the postwar period,
debt. There are a great many dif¬ and particularly since Korea, over
(Special to The Financial Chronicle)

flation

ernment discriminate
ers

Until such
does, the System has no
tween the Treasury and the Fed- choice
under the present impact
eral Reserve System is concerned, of
inflationary pressures but to use
it is not a matter of personalities,
its powers in a manner consistent
_

So far

variation of maturities and inter¬
est

These inflationary pres-

war.

sures
Ure

establishment

securities

further

savings-

;

the

ernment

year

The additional interest cost

rate.

bond holders.

ment

the

by depreciating

of the dollar.

dollar

the

equally compelling.

direct

bore

number

ing

the

While

supply.

money

expansion of loans and
Despite the rapid in¬
ocratic insti¬ crease in bank loans since Korea,
tutions.
More and the inflationary impact of this
specifically, it credit on the economy, the policy
calls for the of purchasing Government securi¬
our

marketable

issues.

will

sure

for

the

need

I strongly be¬

investors

large

insti-' freer but
orderly

eligible for purchase by

willing to take

policies Such purchases provided the com¬
mercial banking system with re¬
as¬

nomic

dollar

large

securities they now own and more

Banks.

Adequate defense against Com¬

The

the

non-bank

and

that

sense

and credit to be created by sales Qf securi¬

prices, but rather to curb further expansion of

are

mainly

investors -who

curities

Says it is not responsibility
of Federal Reserve System to underwrite public debt at fixed

world

mitted to adversely influence the the
very

These securities

income from them.

lieve

Gov¬

pegging of government bond market, thereby

money

Marriner S. Eccles

what higher yield, such investors
would be less willing to sell the

ties to Federal Reserve
:

held

are

Long-time member of Federal Reserve Board lays inflation's
cause

buyer

securities, the market for

such securities would in

By MARRINER S. ECCLES*

chief

reluctant

ernment

Pegged Treasury Bond MarketPrimary Cause oi Inflation
Member, Board of Governors, Federal Reserve

(1021)

McLeod, Young, Weir,
Incorporated

The Commercial and Financial Chronicle

(1022)

is being destroyed, would

imum

strength by
reducing production. If the need

tional

money

Recommendations for

impair

national

our

Opposes taxation of cooperatives and

The

Federation

flation,

really want to control in¬
must do the following

things: (1) Meet increased demand
with

increased

production, wher¬
ever
possible.
(2)

Reduce

their effects

expenditures
neces¬

mum

for

sary

the

national inter¬

govern¬

money

The public debt

1950.

and

economic

ma¬

and

the

tax

credit.

This will be much easier

interest

minimum.

costs, at

The

real

cost

war

fense program occurs
and

materials
uses

are

military strength.
ment spends the

a
'

•

(7) Finally, we must pay
bill through higher taxes.

civilian

(4) Encourage increased private

diverted

the

de¬

when labor

As the govern¬
money,

the bill

as to

present sav¬

taxes, people will know that they

the

future

value

ings.

defense
for

Fur¬

need for

program

several

must

paying it, and we will have an
opportunity to distribute the bur¬

clearly shown
coperative

basic to

are

productive canacitv.
With these objectives in view,
have

developed

ommendations

specific

rec¬

Personal Income
We

personal

advantage

funds,

long-

policies which reads

follows:

the

for

the

major

source

Federal

I.s

should be kept as broad as
practicable through the retention
of low exemptions.
All self-sup¬
porting persons should make a di¬
base

rect

are

contribution

the

equal to

The

lower
we

10%
id

sou

their

princi¬

tax

com¬

people in the

many

income

indebtndess,

brackets; however,
person claiming

should

ner

"All

assets

must

from

reported

such

increase from
the

leng.h of
held before

their

sale

gain."
idea of giving "capital gains"
tax

can

"capital

favorable

use

time

treatment

The
more

than

or¬

sufficient

put

length of
transaction in the

a
long-term invest¬
longer holding require¬

"capital gains" treatment
appear to be particularly

would

desirable in
as

corporations should be

1951.

ceal the fact that the value of its

use

We also recommend

con¬

from

recommend
make

livestock

that Sec.

the

$1,000 to $500 in the

max-

that

steps

clear

held

for

that

dairy,

The

Eighth

have held

cases

Bureau

the

not followed

are

Internal

event

Revenue,

Cooperatives and Other

withholding tax system
cooperatives and other corpo¬

rations. In many instances patron¬

refunds

age

such

small

To be

mature

$437,000 annually March 15, 1952

the necessary

cooperatives

and

sired results because recipients of
refunds and dividends fall in all

yield 2.00%

to 2.75%,

according

tax

non-taxable

would

complicate

recognize that the govern¬

ment's present need for increased

are

Resolutions

follows:

"Agricultural

rec¬

set forth in

our

cooperatives

are

integral part of the 20th Cen¬

maturity

FREEMAN 8c COMPANY

A. G. BECKER 8c CO.

OTIS

8c CO.
(incorporated)

WM. E. POLLOCK 8c

incorporated

8c SON

incorporated

McMASTER

1, 1951

part

enterprise
aim

free

system.

enable

the

which

allow

him

a mass pro¬

portion
earnings that is distributed

stockholders

dividends.

clearly shown on the books of the
cooperative to be the property of
the

however, we believe
savings in the form of un-

patron;

that

assigned surpluses of cooperatives
should be taxed in the
ner

tions.
to

profits

We will

man¬

corpora¬

support legislation

this

farm

cooperatives

same

other

implement

principle
and

for

extend

equitable basis to other

cooperatively-owned businesses
such

mutual

con¬

loan

savings

banks,

associations, etc.

For

stated in the Reso¬

reasons

using the term
'cooperative' as a guise for selfish
motives.
We will defend, to the
fullest

CO., INC.

HUTCHINSON

8c CO.

are

extent

ability, the

our

right of farmers to form and

oper¬

ate cooperative associations.

"The

attacks
the

banner

cooperatives

are

owned

and

by the farmers who

services,

the

oper¬

use

cooperative

their

has

the

alternative of reflecting savings to
the patron either through patron¬

refunds

justments.
is

the

through price ad¬
are

best

convinced that

interests

our

entire economy for the savings of

cooperatives distributed
age

refunds

In the present

prepared
from
rate

taxed

55%

the

situation,

support
in

the

combined

we are

increase
effective

corporation

normal and surtax rate.

equality
deeply re¬

Since genuine farmer co¬
are

Corporation Tax Rates

of tax

groups

operatives

it
March

ex¬

Fed¬

lution just .quoted, we oppose the
application of a dividend with¬
through their cooperatives. Bona
fide agricultural cooperatives must holding tax system to cooperatives
and
other corporations.
•
be protected against certain vested

age

GREGORY

vital

basic

by certain

HORNBLOWER 8c WEEKS :

LYNCH, PIERCE, FENNER &. BEANE

from
the

plies, and acquire needed services

ated

MERRILL

the

taxes

end

taxation

We are unalterably and agressively opposed to any effort to tax
farmer
cooperatives on savings
and earnings returned as cash of

ommendations

sented.
8c CO.

double
dividends

corporations

income

rec¬

our

would

ditions permit.

Our

Agricultural producers must

HALSEY, STUART 8c CO. Inc.
PRESSPRICH

eral

immediate

part
which

corporate

empting

impractical for
take

presented to this Com¬

under

that

present

makes

Congress

long-range viewpoint and that it

compete effectively in

by the Interstate Commerce Commission.
Offering Circular may be obtained in any state in which this announcement is circulatedfrom only.
such of the undersigned and other dealers as may lawfully offer these securities in such state.

collection

procedures."

Feb. 23, 1950.

conditions

The
■

tax

items

should be adopted as soon as con¬

corpora¬

purchase his farm supplies under

Issuance and sale of these
Certificates are subject to authorization

„

refund

other

duction and distribution economy.

The withholding

tax brackets.

tions was

interests who

bookkeeping trans¬

the taxation of

farmer to sell his products and to

guaranteed unconditionally as to payment of par value and dividends by endorsement
by Chicago and North Western Railway Company

Priced

make

mittee

Their

1966, inclusive

are

we believe that this
recommendation is sound from a

tinue to have the right to market
their products, purchase farm sup¬

dividends

amounts

Nevertheless,

Corporations

position

They are a
competitive

(Philadelphia Plan)

encourage,

"We oppose the application of a

farming business and have
significantly aided the successful
operation of the farm economy.

Equipment Trust Certificates

any

taxed

dividend

of their

tury

2%%

compel, the distribution of
earnings.

livestock.

urge your committee to resolve

Chicago and North Western
Railway Company
Equipment Trust of 1951

in¬

but not

the

this question with legislation.

•

$6,555,000

first

personal in¬

should

sufficient

117(j) does apply to such

Our

the

balance

retained

rate

The

tax.

come

amount

used

rate

bracket of the

come

ommendation

these decision

reduction

the

reason¬

proportion
of
corpoiation
earnings retained should be taxed

Bennett and other

Kline before

able

action

the

taxed

are

hands of stockholders.

plan would not accomplish the de¬

breeding, or draft purposes are
eligible for treatment as "capital
gains" under Sec. 117 (j) of the In¬

dividends, where

dividends

the present to reduce the

taken

sales

ex¬

actions impractical. A withholding

also

sales

man¬

corpora¬

inflationary period

incentive lor speculation.
We

same

other

portion of their annual
earnings that is distributed to the

months

income

required to list the de¬

We recommend

time

un-

the

stockholders

empted from Federal income taxes

Capital Gains

form

tions.

the

tionary program must

the

$500

excess

ductible items.

the

profits

revenue

the House Ways and Means
Committee, Washington, D. C., Feb. 23,

should be taxed in the

Circuit Court in the Albright case

den

revolv¬

where

assigned surpluses of cooperatives,

and the Fifth Circuit Court in the

(5) Continue to stress the sale
government bonds to individ¬

re¬

cer¬

certain.

"Savings

It is generally agreed that per¬
equitably on the basis of abil¬
sonal income tax is more closely
uals and non-bank investors, and ity to pay.
Inflation, on the other
take steps to prevent a further hand, is an insidious and equi¬ related to "ability to pay" than
shift of non-bank-held negotiable table way of paying government any
other tax. Furthermore, a
increase
in
bonds to the banking system.
income
costs. It destroys savings, discour¬ substantial
taxes at this time would have an
(6) Recognize that the time has ages thrift and works an undue
hardship on the groups which anti-inflationar.y effect by bring¬
come for the Federal Reserve Sys¬
ing consumer purchasing power
tem
to
discharge its statutory have the least opportunity to ob¬
tain higher prices or wages. Po¬ more nearly into line with
the
responsibilities
by
relating
its
litical controls which, of course, a reduced supply of goods available
♦Part of a prepared statement by Mr.
for civilian consumption.
government following an infla¬
of

casn

stock,

certificates

fund

ing

feel that any

deductions

support ternal Revenue Code.

of government."

the form

tificates of

ional stand¬

since it facilitates

ple,

putations for

revenue

Government.

certificates

such

"The personal income tax should
be

taxpayers

refunded

ible items

gross income.
ard deduction

ment for

range tax

patronage earnings

obligation to the producer patron

category

Resolution

with

cooperatives

would ,be unable to report deduct¬

ment.

our

these

many

sec¬

taxpayers

income of $5,000 to $10,000,

gross

since

rec¬

This

imposing

income tax

000,000 in

patron.
for

the books of the

be property of the
There is no sound basis
to

allowable deductions
un¬
doubtedly carries a considerable

ficiently to raise at least $4,000,based

maximum

savings and investment; how¬
ever, 6 months does not appear to

income tax.rates be increased suf¬

new revenue.

for

Taxes

that

recommend

income

gross

deduction of $1,000 without item¬

dinary income is sound in princi¬
ple, since it provides an incentive

follows:

law

American

aggressively oppose
efforts to tax cooperatives on
savings returned as cash, or

any

such

permits

may

years,

ing the incentives that

to
control inflation
thereby reassure our people

and

the

will

of their

should

from

creation

paid, either by taxes or
by inflation. We prefer to pay it
by taxes. If the bill is paid by

gram

expanded

tion

pro¬

rev¬

to make

inflation.

since

the ommendation is

realistic

increases in

manner

control

continue

stability instead of

government's

and

the

greatest possible contribution

maximum contribution to price

for

la¬

the

in such

should be managed so as to make

with the objective of keeping the

scarce

econ¬

strive

should

obtain necessary
enue

circulation

ment demands

oppressive.'
(3) Continue to emphasize meas¬

adopt

bank.

This is the key to the fact that the

load from becoming unnecessarily

to do if

the

the end of

keep

saving.

hands

terials

restrain

the

serves

$7 billion from Korea to

re¬

bur¬

tax

attempt to develop a tax
money in the hands of the public program which can continue in ef¬
and more importantly, it puts re¬ fect indefinitely without destroy¬

bor

inflationary. It puts

volume

duce

ures

govern¬

went up

national de¬

Kline

the price of

est, essential

fense— to

pegging

world

aid, and
adequate

"tax

the national

that

thermore,

present government policy

ment bonds is

mini¬

that

believes

should be selected, not on¬

den, but also with due regard

rates.

the

Bureau

"We

which

mem¬

bers.

taxpayers to deduct 10%

of izing

omy." In the present instance, this

g o vernment

Allan

The

Farm

table distribution of the

purchases and sales of government
obligations, to the nation's need
for
money
and
credit — even
though this will result in higher
interest

system

ly to bring about fair and equi¬

means
we

other

every

American

sources

general

system

have thus far out¬

production and distribution.

Federal sales tax.
If

accom¬

free-choice

the

stripped

for agricultural interests lists seven steps to
control inflation, chief among which are balanced budget
through higher taxes and reduced government expenses. Contends present policy of pegging government bond prices is
inflationary and recommends $4 billion increase in personal
income taxes as v/ell as increased holding period for capital
gains levy.

the

and

Thursday, March 8, 1951

the hands of the individual

allowed

are

alternative to item¬

provision

inflation

with which

Spokesman

taxpayers
an

tion,

destroy

President, American Farm Bureau Federation

to take

op¬

which

izing their deductions. The present

panying controls could completely

By ALLAN B. KLINE*

individual

the

deduction

a
heavy
defense
program
should prove to be of long dura¬

for

Inflation Control

amount

standard

Federal

We
a

Sales Taxes

unalterably opposed to

are

Federal

sales

Such

tax.

drastic departure from the prin-*
ciple of basing Federal taxes on

"ability to pay." Furthermore, we
need to
recognize the need for
leaving

some

revenue

which
As

possible sources of
States—many of
have sales taxes.

the

already

alternative

Federal

patron¬

only in

tax

is undesirable because it would be

Continued

page

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1023)
(3) It will be necessary to re¬
lieve inequities due to the uneven
rate of change of prices of differ¬

Fallacies of Price and
Credit Controls
Household Finance

was
no
exception.
Also
sellers kept prices down in
response to the Administration re¬

Corporation, Chicago

quest

Dr. Dauer, characterizing price and credit controls

which attack symptoms rather than

gaps

contends such methods have

and creating inequities.

ing

defense

proper

program

Denies

operations.
individuals

cause

offering

money

for

which

pected

and

volume

crease

ments.
The

total

output

goods available for civil¬

ian consump¬
tion cannot be

increased

great

any

tent.

ex¬

There¬

fore,

the

Dr.

im¬

Ernst A.

Dauer

portant' thing
is to reduce the demand for goods,
as
a
means-of preventing infla¬

tion.

How

plished?
chief

accom¬

,/■

Demand

this

can

function of

factors:

(1)

the

two

desire

acquire goods; and, (2) the ability
purchasing power. The

to buy, or

converse

the

desire

acquire

the

price

con¬

cut-off

cause

inequities will

cause

general

ap¬

credit

controls, and then
bank, and of the system, is thereafter, consider the suitability
by

bank

the

that of the selective credit controls de¬

requirement

maintain

serve

made

minimum

takes the form of

a
deposit
by the commercial bank in

the Federal Reserve

new

In the

The Effectiveness of General
Credit Controls

bank.

From the end of June until the

20s, credit control by the

require new ex¬
central bank was the
generally
ceptions.
Every request for an
accepted method of attempting to
exception creates an opportunity
influence
business
volume
and
for corruption and political favor¬
prices. For example, by a combi¬
itism.
-

end

December, loans of

com¬

mercial banks increased $8 billion
from $44.8 to $52.8 billion.
The

must

course,

under

the

counter

(1) Rediscount Rate—By raising
prices also
relatively stabil¬ occur through deterioration in the the rate which it charged on loans,
ized, and may be reduced, that be¬ quality of products as producers the Federal Reserve bank could
lief will remove the incentive for
make it more expensive for mem¬
attempt to maintain profit mar¬
ber banks to borrow in order to
speculative buying, and for buy¬ gins in the face of
rising costs.
ing in advance of needs caused by In addition, when
replenish or augment their re¬
producers find
serves.
anticipated price
raises.
How-, that
Presumably, banks would
higher
costs
threaten
the
ever, price control would not re¬
prices of utility lines they discon¬ pass the increased cost on to their
move
the Incentive for forward tinue
customers
and
thus
discourage
producing those articles and,
buying based upon fear of short-, instead,
borrowing by customers.
produce
higher priced
ages, • or
quality
deterioration. lines of the same articles.*
(2) Open Market Operations—
Thus price control deals only to
Price control cannot be effec¬ By selling government securities,
this very limited degree with ex¬ tive
the Federal Reserve bank could
without popular support.
It
cess
demand, the cause of infla¬ cannot retain
popular support for decrease the balances in member
tion.
At best, it permits us to
reserve
accounts
so
that
long in the absence of actual war. bank
gain a little time in which to deal Economists who have studied the some fell below the required mini¬
with the basic causes.
record of price control in World mum.
Thus, when Federal Re¬
Yet, while price controls have War II are convinced of that.
serve
banks raised their
redis¬
'
little beneficial
effect, they do
count
rates
and also sold govern¬
If it does not have popular
sup¬
have harmful effects on defense
ment securities they could force
port, price control will be sub¬
production and on our entire eco¬ ject to
widespread evasion. The banks to borrow from them at the
nomic structure.
experience with meats in World. higher rate.
Price
controls
prevent prices War II is a vivid illustration of
(3) The Tradition Against Bor¬
Higher

to be.

are

from performing their b&sic, very

stances, even when the general
price level remains stable, prices
of individual goods and services
come or from the use of past of
are
changing. As a rule, it be¬
future income.
There are
only comes more profitable to supply

savings or
Purchasing
power is derived from current in¬
use

did

Stabilization

indi¬

such

signed to directly restrict the ex¬
percentage reserve against its de¬ pansion of credit in
particular
posits. For most banks, this re¬ areas of the
economy.

the

Price

how

transactions.

can

situation

provide

goods is the desire to save, to in¬ important, function in our way of
Under A ordinary
past savings, or to abstain .life.
circum¬

from

each

deposits

used.'* Let

effectiveness

the future. .If people believe that

such
can

crease

accumulated

limited

regardless

was

point.
people to review and
re-appraise their expectations of

prices

itary require¬

influence
the
total
volume
of
credit extended by member
banks,
and
its cost,

increase in that six-month period
nation of the traditional instru¬ was
larger than has occurred in
recognize that the
ments of control, the Federal Re¬ any preceding full
year period.
prices actually paid do not stay
serve could cause a contraction
of During the last six months of
1950,
down, even if* quoted prices do not
member bank credit, of
the money supply of the
deposits,
country
rise.
Higher prices are paid, of
and of the money supply:
increased
by
almost the
same

mil¬

vidual

inequities ' and

passed

were

relieve

through higher prices, thus caus¬
ing a spiral of price increases.
:
trol

de¬

material costs

"hold

Every exception granted by the

in government

economy

while their competitors

Office

handicap to achiev¬

voluntarily

not do so.

of inflation,

causes

credit is inflationary.

raw

goods,

ex¬

neces¬

sarily
result

businesses

and

consumer

The inflation problem exists be¬
are

line"

stop

as mere

danger of disrupting production

Sees in all this

pansion

some

Studies,

expansion

Deposits of commercial banks
ent kinds.
Retail prices usually
are today the most
important com¬ that credit
lag after wholesale and raw ma¬
ponent of our money supply. Ex¬ praise the
terial prices.
The period since
Korea

By ERNST A. DAUER*
Director of Consumer Credit

emergency to prevent
of the money supply?

past

assets.

such

evasion.

were;

Supplies

diverted

out

rowing

meat

—

Under

these

circum¬

regular stances, the reluctance of member

channels.

Thus, above-ceiling, or
black market, prices were secured

banks to

remain

indebted

the

Federal Reserve bank for any ex¬

amount

commercial bank loans

expanded; namely, from $170.0 to
$177.2 billion.
How

effectively has the Federal

Reserve
control

used

its* general

powers

credit

in preventing

the
expansion of credit during the in¬
flationary upsurge since Korea?
How

effectively

can

in the future?

Last

August,
banks

serve

discount rates

they be used

the

Federal

increased
on

their

Re¬
re¬

advances secured

by government obligations and by
eligible paper from 1 V2% to 1%%.
Since

member

have

been

crease

bank. borrowings

insignificant, the

in¬

in rediscount rates has had

only a psychological effect, by
indicating the Federal Reserve de¬
sire to discourage the expansion of
credit.
banks

Nevertheless,
member
generally raised their in¬
on loans to prime bor¬

terest rates
rowers

from

from 2V4% to

increase of

to 2y4 %

and then

V-k%.

However, an
this amount, with in¬

terest rates as low as they are, can
have very little effect upon bor¬
supply could not them to contract their loans to
rowers.
fill. Mr. DiSalle has already an¬ customers.
V During January of this year, re¬
nounced the regulation of slaugh¬
(4) Changing Member Bank Re¬
tering in an attempt to prevent serve Requirements—Since about serve requirements were increased
such diversion.
Thus, every at¬ the middle of the 1930s, the Fed¬ by two percentage points on net
tempt at detailed regulation cre¬ eral Reserve has had the power to demand deposits at all member
ates the need for further regula¬ vary legal reserve requirements banks and by one percentage point
tion.
r.
*
within certain limits, and thus also on time deposits. This raised re¬
f. . "r
make deposit balances of member serve requirements about. $2 bil¬
in response to the demand which

the

tended

period of time, would

cause

controlled

decreasing purchas¬ the goods which are in greater de¬
ing power: (1) by steps which re¬ mand. ' Thus, changes in prices
duce the proportion (amount) of stimulate
the
output
of
some
current income available for ex¬ articles, and discourage the output
of
penditure,
such
as
others; in this fashion, prices
appropriate
taxation or forced
savings; (2) redirect the use of productive re¬
General Credit Controls
sources.
At the
by credit control which prevents
•;'r':■' -<*A■. -1".
present time, the
banks fall below the legal reserve lion.
When prices are controlled, they
credit expansion, the use of fu¬
Federal Reserve power to further
Let us turn our attention now requirements.
ture income; (3) by steps which stimulate demand.
increase
They cannot to credit controls. How effective¬
reserve
These traditional instruments of
requirements is
discourage or prevent the use of perform the function of calling ly can they be used in the present credit control were thus used to
Continued on page 24
forth
additional
production
of
past savings or past income.
three ways of

those
Price

Controls

;

price controls reduce pur¬
chasing power b,y one of these
methods, or reduce the desire to
buy? If not, do other government

controls effectively do
is still no, then
price control can be merely an
attempt to suppress or to hold a
lid c,n the inflation which actually
policies

If the

so?

Price

exists.

hot

answer

reduced

that.

control
If

alone

demand

balance

supply,

can-

not

then

goods

which

are

short

supply, because profit margins
them
it

then

are

became

inadequate.

necessary,

Thus,

War II, to set up an elaborate sys¬
tem of subsidies in order to en¬

adequate

courage

thousands

1951,

production

items.

officials

the

Price Stabilization

were

Feb.

Office

down

and

What, then does price control
It is clear that price
control does not represent a basic
attack
upon
inflation.- It may,
however, be a temporary expedi¬
ent, and have a limited beneficial
accomplish?

sion.

can

curtailed

causes

tion, then price controls
necessary

Transcontinental Gas

come

inflation

per

Share)

are

Price

un¬

$52

per

Plus accrued dividends from March 12, 1951

not

review the happenings of

that

tion

would advance,
goods would be¬
and deteriorate in

prices

and that certain
come

scarce

cause

was

also realized that sooner

controls
would be imposed.
Unions and
employers
alike
attempted
to
"beat the gun." Higher wage and
later price and

wage

all articles and all services.

materials which must be imported

Annual

sponsored by Albion College, Albion,
Mich., March 3, 1951.

ence

White, Weld & Co.

Blyth & Co., Inc.

Stone & Webster Securities Corporation

Eastman, Dillon & Co.

Glore, Forgan 8C Co.

The First Boston Corporation

Goldman, Sachs Si Co.

Harriman Ripley & Co.
Incorporated

from

abroad;
(2) Developments have already

Kidder, Peabody & Co.

Lehman Brothers

Merrill Lynch, Pierce, Fenner & Beane

shown that wage controls are not

going to be rigid and will be sub¬
ject

by Dr. Dauer at the Third
Business and Economic Confer¬

*Ah address

is circulated

prices to continue to rise. '

supplies of raw materials.
Even
the government bought food and All farm prices which are below
supplies at a rate adequate' for- parity are exempt. It is impos¬
armed services of 10 million men. sible to regulate the prices of raw
cover

Copies of the Prospectus may be obtained in any State in which this announcement
from only such of the underwriters, including the undersigned, as may
legally offer these securities in compliance with the securities laws of such State,

Every exception granted to keep
production at a high level will

There are a number of reasons,
quality, stimulated demand. Con¬
sumers went on a buying spree/ today,
why the price level will
Merchants built up inventories, continue to rise:
and
manufacturers
overbought
(1) The price regulations do not

(Without Par Value—Stated Value $50

last

the

Cumulative Preferred Stock, $2.55 Series

dealt with adequately, then price
half-year, this will be¬ controls will not keep prices down
clear. The general recogni¬ without
disrupting
production.

Pipe Line Corporation

of infla¬

but they will work.

causes

of these security

time. The true

the subsidy.
reach one basic conclu¬

demand

any

550,000 Shares

cover

dealing with the

the

effect.
,

offer to sell nor a solicitation of an offer to buy
offering is made only by the Prospectus,

NEW ISSUE

price control requires rationing.*
Rationing attempts arbitrarily to price then becomes the announced
restrict the demand to the supply. price
plus the increased taxes
needed to

The

in¬

production

same

neither

quoted in

all basic metals if prices are to be
creased at the

announcement is

of
7,
of

the press as saying that it would
be necessary to subsidize almost
held

This

Worlds

to many exceptions.
Under
existing regulation, increased
wage costs can be passed on in

Smith, Barney 8C Co.

the

higher prices;

March 6,1951

Union Securities

Corporation

The Commercial and Financial Chronicle

(1024)

LETTERS TO THE EDITOR:

case

"Are We Falling Into
More letters given in this issue in connection with

embarked
retrieving our
postwar mistake of excessive de¬

made

publication

the

article

have

been

Palyi,

"Are
We Falling In¬
to
History's

the

select

have

permitting

"I
once

ments

States and

ness

appeared

the

cover

page

of the "Chron¬

icle"
11.

Dr.

Palyi

analyzed
viet

So¬

aggres¬

sion

tech¬

niques and

as¬

serted that the

United

States

must

either

Dr. Melchior

Palyi

(1) restrict its
defense

zone

sphere

to the Western

the

first

Hemi¬

requisite

without

let

Russia

freedom.

its

program

know

definitely

what

(2)

the

and

types

Stockholders for 1950,
to
comment in
general on the
question of our national interest.

Continuance of our pres¬

President's
to the
Stockholders, Bank of Amer¬
earlier
from

(Excerpt

Annual

1950

Report

ters, reference is made to the fact
that

others

Jan.

in
with that

appeared

beginning

18.

ica N. T. & S. A.)

"OUR NATIONAL INTEREST"
L.

"As

GIANNINI

year

of America
National Trust and Savings Assn.,
President,

Bank

Francisco

San

I think

favorable.

that he

analyzed the situation
cally.
It

firm

very

belief

"Recent

has

must not further appease or com¬

that in the past.

I feel that Russia
is not much interested in starting
third world war, and I certainly
fail to see how she could gain
a

through

been

able

a war

gain

practices.
Our

than she has

through

experience

typical of Russian tactics.

In this

make

efforts to

pressive,

mighty,

that

effective

prepared¬

sacrifice

of any essential

Once

about

against free people.
"Second sight reveals it

immediate

"The

easier, and
if

won,

our

labor

task

goal

will

far

Stalin's

from

assistants

the United States than about Rus¬
sian

bombs

falling on Pittsburgh.
helpers in this country
of two kinds: first, the out-

His eager
are

Communists

and-out

much

and

who, in

the

less

their

opinion,

my
to be

are

feared; sec¬
ond, the
stupid,
ignorant,
and
misguided little minds in Wash¬
ington and elsewhere who are

peoples for war, since
governments there

none

are

materials to the association of the

Atlantic Pact countries.
when

culated

it must

risk

However,

with

and

commitments

ing that they

may

recogniz¬
not be able to

ist. On the other

tion

The spend¬

"squandercrats," the
shackling of industry, the imposi¬
the

controls, and
long story with which you
unnecessary

all the

familiar

too

are

details

need

anything but an isolation¬
hand, there is no

question

in my mind but what
dangerous pitfalls lie ahead
and the prudent will do
every¬
thing possible to recognize them

many

and

attempt to avoid them.

doing Stalin's work for him in
"destroying the capitalistic de¬

cal¬

hand,

busy wrecking the very industrial
potential that is our major safe¬
by

definite

guard against attack.

ing

of the

strong and
really minority
governments functioning under a
coalition system. Realizing this I
am not saying that we should not
supply more men,
money
and
of them

most

deliver these commitments.

[Editor's Note: Owing to a me¬
chanical mishap, only a portion of

and

New York

be
I

quickly

management

was

our

the

able

would

state

effective

have to be used.
"In this world we can never
go
back to normal. We can only go
never

new

normal—in this

article.

tasks

without

further

necessary

The

nor a

personally

feel

inroads into

the

labor

you

comprehensively

would

employees

telligent article deserves.

which

into

must

and fields

line

prevail

and

with
in

stores

those

factories

and

offices

and homes."
*

and

initiated

and

President, Joy Manufacturing Co.,
Pittsburgh 22, Pa.

certainly

convinced

is deterred

from

that

overrun¬

ning Western Europe much less
by fear of the atom bomb than
by fear of the tremendous poten¬
tial

the

American

solicitation of

of these securities.

any

C.-.

there

industrial

the

accordance
and their

will

Rhinelander Paper Company

with

their

Common Stock
($5 Par Value)

article

esting and
I

all

viewpont with which

full

accord.

thinking

read it.

'
.

intensely inter¬
I

wish

Americans

that

could

out all

good

right and if

will

out all

come

example

way

Korea.

All

interests

is the
piled into

the

events

which

finally took place in Korea and
are

still

could

come

decision

to what

these

should
the

before

eventualities.

have

United

went

would do in each

gone

into

Nations

commitment

never

Korea

without

with

other

participating

nations

setting

our

how

was

purpose,

accomplished and who

con¬

The

fact

was

tribute what and when.

that 95% of the manpower, in ad¬
dition to
all
the
material
and
money

the

Price $29.50 per Share

in Korea

United

was

States

our

inter¬

negotiators. At this stage,

the least said about this the better.
any state from such

What

of the several Underwriters,

securities in such

state.

want

to be

Arthur C.

New

York

Exchange,
is

Tamlyn

City, members of the
as a

general partner, it

announced.

Mr.

been associated with

Tamlyn

has

Kidder, Pea¬

body & Co., since 1919, serving as
personnel director for the past five
years.

supplied by

national disgrace and in addition
evidence of the complete stupidity
of

lawfully offer the

The

If this is done

resources.

come

concrete

as may

Board,

Company,
Coatesville, Pa.
I

Tamlyn Admitted Into
Kidder, Peabody & Go.

amateurish

be obtained in

the

Steel

people. The first
rule we should adopt is to choose
good,
hard
headed,
American
traders with, of course, a substan¬
tial background in international
Arthur C. Tamlyn, a member of
affairs, to represent us at the bar¬
the New York Stock
Exchange,
gaining table. The next thing is
has been
admitted
into Kidder,
to be sure that everyone assumes
Peabody & Co., 17 Wall Street,
a
responsibility to cooperate, in

made

may

WOLCOTT

easily have been foreseen by a
sophisticate. They should
have
been weighed and we
stipuld have

150,000 Shares

including the undersigned,

Lukens

are

American

Chairman

in¬

sophisticate

affairs

ROBERT

the

many pitfalls to be avoided when
making any contracts committing

J, P. A. MORROW

Stalin

give you
Mr. Palyi's

However, I would agree, in gen¬
eral, with what he has to say. For

which

Copies of the Prospectus

President, The Chicago Corp.,
Chicago 3, 111.

which

response

the
*

international

an offer to buy
offering is made only by the Prospectus.
-

very

force, by bringing hours and other
working conditions of government

wrong.

offer to sell

RICHARD WAGNER
a

I do not have the time to write

un¬

it is not done

added

10, N. Y.

Palyi wrote

pre¬

that

Dr.

that

think

by our own acts we have
harmony, if political ex¬
I
find
myself in
substantial
pediency is retired to the side pretty well incurred responsibil¬ agreement with
Dr. Palyi as well
ity
greater
than
10
years
ago
for
lines, and if the Federal Govern¬
as
with Major de
Seversky.
It
ment
sets
the example for the Western Europe, and if there is
seems to me that
vastly superior
reasonable
possibility,
we
people to follow in matters of any
air power and naval
power are
make
a
economical operation and conser¬ should
joint
defense
what this nation should strive for.
vation
of
resources,,
including against an agresssive Communist This would
give us a striking
imperialism.
manpower resources.
force
at
any
\
*
point of trouble
"From now forward, business
without committing too
many of
and industry must make its man¬
our
young men
to
land move¬
H. H. SCIIELL
power more productive.
It is to
ments in which we are
seriously
President, Sidney Blumenthal &
be hoped the Federal Government
outnumbered.
Co. Inc., New York 16, N. Y.
■f
will do the same, shouldering its ;
#
sj:
work

From our own knowledge of the
to,have decimated
agree
military strength following international situation, I
armistice.
We should
have with much of what Dr. Palyi says.

mistake for

situation, Russia has forced upon
us
a
guerrilla war whereas we forward to

This advertisement is neither

the danger to us

national

our

dis¬

courages any acts of aggression, or
the inner ambition to march

paredness

Korea

our

even

past maintained it in

;,>■

events

live in peace will be successful
only provided they have the back¬
ing of defensive strength so im¬

promise with communism. There
has been altogether too much of

world

entirely clear that

logi¬

that

a nation, we enter the new
with the greatest need in all

history for inspired leader¬
ship, national teamwork, and ex¬
ercise of profound wisdom.

My reaction to Dr. Palyi's article
is

here

our

Calif.

20,

lished

Report to

In addition to the following let¬

issues,

the

state,

would be for the United States to

Thinking that you may be inter¬
ested, I am enclosing an excerpt
ent foreign policy, and a policy
from that report.
(Excerpt fol¬
of full and permanent mobiliza¬
lows—Editor.)
tion, Dr. Palyi warned, can only
lead to national bankruptcy.
.

has
require¬

economy

promulgate a new
Monroe Doctrine specifying the
areas
which we are prepared to
defend against the march of com¬

munism.

adjusted

we can—if we possess
the will—continue our way of life

seem

concerned

Thursday, March 8, 1951

having estab¬
mocracy of the United States."
impregnabil¬
Once it is a socialistic democ¬ Mr. Schell's remarks was given in
activities that it will not tolerate ity, we I can maintain it perma¬
our issue
of Feb. 22, page 3.
Mr.
racy, he need fear it no more.
and form of retaliation in which nently
in every essential aspect
If we want to save this country Schell is Chairman of the United
and at the same time produce the
we will indulge if the prescribed
for what we are pleased to call States Inter-American Council "of
rules are violated.
Of course, by goods
and provide the services
the "American way of life," our Commerce and Production, which
doing this we would have to be with which our living standard is
first job is right here at home, covers about 145 business organi¬
prepared to go all out in the event fashioned. It will be a case of ad¬
of
the
Latin
American
rather than in Korea or in West¬ zations
the rules are violated and this, to justment to a new tempo in all
Republics. He was in Europe re¬
ern Europe.
me, would mean the use of our things,
which, after all, has al¬
cently as a Delegate to the Inter¬
most modern weapons on the pro¬ ways been the basic pattern of our
national Labor
Organization.] '/
ductive capacity of the U. S. S. R. economy to a greater or lesser
NORMAN THOMAS
if
:'f
r-...
'
■
I had occasion, in my Annual degree.

Jan.

In his arti¬

cle,

that

national

our

direct conflict between the United

Russia, it would

convinced, however, that

become

Greatest

inconveniences.

Trap?", which
on

organization, and

associates

other

real desire to avoid

will

cost

prepared to pay

through
our
sons
and daughters in uni¬
form.
We will pay the price in
higher taxes.
We will - pay the
price in temporary shortages and

'
we

The

we are

"We will pay the price

battlefield

fare.

it.

Melchior

Russia
and, in
general, the instruments of warwe

Melchior

task

mobilization.

today's had been anticipating and prepar¬
some ing for an atomic war. Thus far,

of the letters received rela¬

tive

for

the

high, but

Palyi's article in the "Chronicle" of January 11.
Provision

defensive

"And so, we are now

upon

History's Greatest Trap?"
issue

normal

new

preparedness sufficient to win and
hold our goal of peace.

sure

is that

do not repeat such an error.

With Noble, Tulk
(Special

LOS

The

Financial Chronicle)

ANGELES, Calif.—Milton

R. Aronson is

now

affiliated with

Noble,

Tulk & Co., 618 South
Spring Street, members of the Los

Angeles Stock Exchange. He was
competent
doubt exists previously with Morgan & Co. and
as to whether the people of the
Floyd A. Allen & Co.
Western European countries will
stand up under a war in their
Harold B. Piatt
area, if war should come. There is
also grave doubt as to the ability
Harold B. Piatt, associated with
In

the

mind

the

internationalist grave

A. G. Becker & Co.
Incorporated
March 6,1951

the

present

governments

Western Europe" to

in. James M. Toolan

& Co., New York

"commit" their "City," passed away *on Feb." 28.

Volume 173

Number 4992

The Commercial and Financial Chronicle

LETTERS TO THE EDITOR:

available

to.th.

European Attitude on
Our Foreign Situation"
More letters

article

give in today's issue
of

the

letters

received

immediately favorable

the

Steel

CorP°;

Pittsburgh,
article

"Euro-

Our

i g n

Situasubse-

its

armies,

when

fact Russia has

With

matter

Mr- Weir's remarks that our policy
in building our military strength
should be not to prepare for war

such intention,

but to prevent war.

present

our

may

Ralph

„

President,
Mr.

Commonwealth
31, Michigan

Weir is

MJ wiir^artk^andTagre^with
o{ the things he
^
It
certainly would give anyone food
most

capable man;

glad to for a lot of thought.

bave his views which help keep

* f

I agree with much
that

_hnil|.

HELLING

The El Dorado Refinning Co.,
El Dorado, Kansas

Bank,

Detroit

r/"h °r™

President,

PARSHALL

bas proved that, and I
C.

Lester

Hunt; Walter F. George; Robert
C. Hendrickson; Lister Hill; Estes

experibe avoided

1 bope that all of our military
and government leaders will keep
comment in mind as we devel°P our defense program,

publishing it.

HAROLD

the

Senate

Flanders;

may

be commended in

Senate:

and

members

Members of

signed by the

was

I think it

ence,
~

n from CaUfomia
1 Particularly was impressed by

HARRY A. BULLIS

honest

peace

„.

OD.iainmS an nun.esi P^dce

the

For-

tion,"
quent

The letter

House

below—
"President. ' This

obtaining

A-

Attitude

Dean

opportunity

following

[see

opportimity

economy on the theory
that Russia intends to march with

HILLINGS

C#ng

Chairman of the Board,
Kefauver; A. S. Mike Monroney;
b°nt think that we should be
Willie RnhArtcmv tt
AlPvanHpr fighting
in Korea.
Neither do I
General Mills, Inc.,
only way ln whiCh peace A. Willis Robertson, H. Alexander hp]ipvpthat
ohnnM trv tn lpaH
Minneapolis, Minn.
can
be obtained with the Polit- Smith;
Margaret
Chase
Smith; relieve that we should try to lead
1
ooiainea wun me r-oiu
,
s .
> the world, or force our ideas on
Trf0' i
n
+
i
+
Charles' W
Tobev
and
Homer other
people.
Herbert Hoover,
There is little doubt that our
It also will move strongly to F
*
y'
*
perhaps, sums up my beliefs, "Let foreign affairs have been handled
prevent World War III.
It will
guso .
ug
prepare and be strong."
If it in such a way that we have been
J

ioi

his
nis

nreoared
preparea

HON. PATRICK J

domestic

„

Note:

Senators

and

letter

Editor] " to "the
gives Russia the

ration

enclosed

and

s^readin^ ^.all ^er- the v

We look forward to hea»nS from
you at your earliest convenience."

suggests that we

Representatives
the

that

people

Plan'is aaPP°rted by a number of

r,,

t\j

some
some

like to

would

ask

early

"meet di18.
rectly with Russia." An alternative

ChTfrman of

the

machine

Mr. Weir's article appears to
We contain much
good and important
have information—you are
certainly to

American

discuss
thls <luestlon wlth y°u 111 detail.

supplement his observations.

issue

Jan.

however
nowever,

response

the

ourselves
an

deal

eood

are
are,

which

points to

page

the

There
mere

cover

talks

Weir

Mr
sense
sense,

appeared

military

lose

that action of this sort would find
an

U. S. Senator from Vermont

the "Chronicle" in connection with
the article by Ernest T. Weir which

our

great

policy we are
nothing; but if fast drifting toward World War
they accept, the whole world wins. m. Such a war is not inevitable
"There
are
many
indications and if we profit by past

HON. RALPH E. FLANDERS

some

civil

"If the other nations refuse

proposal,

from

"We

nations

finally, that the proposal
permanently in effect and repeatedly offered until it is accepted.

foreign policies.

our

member

"And

Steel Corporation, giving his impressions of a European trip
of inquiry and in which he reported European attitudes adverse

the

maintenance

by Ernest T. Weir, Chairman of National'

(1025)

Ernest

Weir

trin

sponger frieruis^if°thr1<(^fferanis

ah„.aH

opportunity

public
in

nessmen

Mr.

Weir

and

various

countries,, publicity.
an
adMr. Weir

that

reported

attitude

prevails
toward
U. S. policy in the Far East. Our

verse

European

friends,

not hold Russia will

tate

stated,

says

"must

war,

Mr.

con¬

President,.
of IJtica, New York

Mr. Weir's article should be

page

Others

issue

the

tion. I hope
consider it.

March

herewith:

appear

his

and

Louisville Railway

*«■

their

Since

Co.,

have

outstanding

the

long admired

advisers

one

work
of

Mr.

America's

President

"The

White

«We

greatest

views

which
and

welcome
benefit

subject

every

he may express an

such

from

about

Both for this

the

and because

importance of the "Euro-

Attitude

pean

tions Council.
,

reason

Our

which

ways

avert

may

portant

and

timely
"the great debate."
My
me

own

statement

adverse effect

votes, in the next national elec¬
*

im-

addition

personal opinion leads

to believe that the policies be-

ing

suggested

Hoover

and

ex-President

Senator

Taft

offer

have

never

would have

less

enough

means

avoiding

catastrophe altogether

ning World War III with
insc
loss

mum
mum

nf
of

anri
and

life

such

of winmini-

troacro
treasure

Russia does later precipitate it

direct

lites

attack
to

burning
Durning

iron

along
aiong

if
if

goading its satel¬

start

brush

the

edge*

tne

edges

fires

the
tne

war

believed

that

intend

nn."j'~

It is

put

Mr.

Weir's
i

^ "

re_

the Congressional Record,
masterful statement.

want

the

simple to have

failure

people of this country

what the conditions actually are."

I believe the American people can

should

be dePended upon to act wisely

people
It

war.

mjstakes has been the
tell the

Continued

peace.

page

This is

not an

offering 'of these Shares for sale,

buy,

any

or an

offer to buy,

or a

solicitation of

offer

of such Shares. The offering is made"only by the Prospectus.

200,000 Shares

blundered into it, and Mr.

Kimberly-Clark Corporation
Common Stock

into a war and h0w we can keep
out of it. .Our President would do well to
be made by our counsel with Mr. Weir and others
the United Na- like him.
*
" <
<
on

Without Par Value

;

'/.'r*

* •;

HON. TOBY MORRIS

n.l

Price $45 per

Copies of the Prospectus may be obtained from the undersigned only by persons ts
whom the undersigned may legally offer these securities under applicable securities laws.

promises are not' In a speech on Feb. 20 on the
Disarmament must be Floor of the House, I made the
safeguards which will statement: "My general thought is
insure the compliance of all na- that by following the policy of
tions
sending a large land army to
"Supporting these principles, as Europe and Asia, we
will be

Blyth & Co., Inc.

spreading

do, we suggest:

That the first step proposed be

the

world

ourselves

out

all over

this

process,

and

lifting of the iron curtain and which will also entail almost unresumption of at least that de- bearable financial obligations, we

will so weaken ourselves as to enthe danger our very existence."

between

all

the

peoples

ear?h which existed between the
natl0ns
Western Europe and
American

continents

prior

the second World War;
"That the proposal be for

plete

disarmament of

all

in my judgment, the Russian
leadership has never contemplated
to a military conquest of the world,
nor do they now do so.
It is their

com-

nations

lance 0f the United

will

some

Nations;

day

because

that
die

capitalism
of its own

the

alleged

Stone & Webster Securities

White, Weld & Co.

Union Securities Corporation

A. G. Becker & Co.

Central Republic Company

Incorporated

(Incorporated)

Nations

way;
a

United

Nations

Lee

Drexel & Co.

Ilornblower & Weeks

Higginson Corporation

Paine, Webber, Jackson & Curtis

Corporation

Dean Witter & Co.

A. C. Allyn and

Company

Incorporated

Hemphill, Noyes, Graham, Parsons & Co.

Clark, Dodge & Co.
The Milwaukee

Company

Shields & Company

Harris, Hall & Company
(Incorporated)

McDonald & Company

Ilayden, Stone & Co.

McCormick & Co.

William R. Staats Co.

Whiting, Weeks & Stubbs

weakness existing in such a form

ot Government. In their fanatical
way, they believe that communism
orderly, complete and will finally be accepted, but by
force of necessity and not by

United

belief

fanatical

under the direction an<* surveil- weight

"That

Kidder, Peabody & Co.

Incorporated

Merrill Lynch, Pierce, Fenner & Beane

of freedom of communication

gree

the

Glore, Forgan & Co.

Harriman Ripley & Co.

ament in an

then be

convinced like Mr.

am
none

PaPer

based

rapid

U. S. Congressman from Michigan

world

war

eg^.

with Russia, un¬

Com-

mission be set up to effect disarm-

HOFFMAN

the

that

enough.

."That,

Weir

"Third, the plan must be fool- ationJ

CLARE

in Korea.

gai

U. S. Congressman from Oklahoma

curtain.

HON.

certainly fighting

are

BAKER

Proof-

the woild the best piesently available

We^r bas most certainly clearly
explained how we can blunder

that

urge

follows:

the

wars,

;-I ^ree entirely with Mr. Weir's

statement that "one ol the great-

fighting

t°rm policies.

:
/
'
with much interest and find that,
"SecoricJ, the plan must be based it expresses, in many instances,,
World on unanimous agreement . . .
my thinking on the foreign situ-

what do

Weir's

■Mr

have

kinds of

care-

War III.

|uropean

and

ful attention to his ideas respect-

ing

of Western

"First, the plan must include alL
I have read the article by Ernest
weapons.
Outlawing any'T. Weir, entitled "European Attiparticular kind of weapon is not' tude on Our Foreign Situation,

Foreign:

statement of it with keen interest

given particularly

people, but those opinions should
and settled be carefully considered when we

of the world

peace

President, National Airlines, Inc.,

"In your address you set forth
principles which we abbreviate
as

Situation" I have read Mr. Weir's

and have

now

proposals to
representative on

information

October 24
followed up by def-

|nite

opportunities

his

State

employment, and consequently

House

Assembly

last

opinion

and observations.

Nations

too

for peaCe through dismade before the United

armament

I have high respect for his

.zens,

nothing.

not agree with

Miami 42, Florida

undersigned

'jea

your

the

opinio'ns

allied

may

tion.

President'

«j)ear

industrialists and most useful citi-

keep

with

economy,

will so

"Washington, D. C.

Ernest

little

the

firmlv

Senator Flanders

"The

T. Weir and have recognized him

should

foreign policy
would read it, because the "outbreak of peace" would deflate the

"February 26, 1951

Chicago, 111.

»•

re¬

Con-

every

Senator.

Secretary

"Washington, D. C.
and

for

much to hope that the President

BARRINGER

President, Chicago, Indianapolis

and

gressman

Text of Letter Referred to

By
JOHN

also

you

reading

quired

according

appeared

First Bank & Trust Company

You will note that this

Niels Bohr.

becomes
necessary for our Ameri- losing the confidence of the Eurocan boys to sbed more of their pean
nations with whom we

shores and fought wars,

ROKAIIR

THEODORE

European
attitude."
The
setting up of the ideal of free
communication is the earnest sug-

soon

article

sider

weakness, not strength.

Weir's

Laurie

gaoiahan; Robert Hale; Brooks prefer to see it shed on American
Hays, Cihristian Herter, John W. soil Twice we have left our

to Mr. Weir, item is included in the letter to
desires direct negotiation between the President.
;
\
U. S. and Russia, as well as a betIt is true that an "emotional
ter understanding of the Chinese approach
bars clear thought." I
problem, to prevent World War believe I am right in feeling that
Ill.
this particular proposal is a mati
The
initial
commentaries
on
ter of thought rather than emo-

Europe,

T anrip

Anrhinpln<?<5*

Ancnincioss,

Battle; Frances P. Bolton; A. S. J. blood, which God forbid, I would

precipi- gestion made by a group of Euroand that the Iron Cur- peans under the leadership of Dr.

tain hides

dame^ L"

PK
C-y Russiarl peopl.f
themselves
if our
we
busi- are wise
and
effective
in

officials

Members of the House

Tamp-?

■

rejected and will weaken the internal
support of the Politburo
the in the statellites and among the

discuss

J °-r ?

with

•

trip
abroad
where he had

Police

Force be established in accordance

force of armies.
I truly believe that

Farwell, Chapman & Co.

The Illinois Company

Piper, Jaffray & Ilopwood
we

should

with the original intention of the re-examine our foreign policy. In
charter which shall be superior my judgment,"we are missing the
in size and armament to any forces boat entirely and are building up

J. M. Dain &

Company

Pacific Northwest

Company

Incorporated

March 7. 1951

Watling, Lerchen & Co.

(1026)

The Commercial and Financial Chronicle

spending should be done as
nomically as possible. A tax

Government Spending,Not Credit

revenue

Expansion, Is Chief Inflation Cause!

equal to
This country must
sound

of inflation, decries criticism of bank

Urges pay-as-you-go budget with
spending and with more econo¬
defense outlays. Expresses optimism regarding work¬
ing out of sound economic future.
unjust.

elimination of all non-essential
mies in

Unjustified blame for stimulat¬

ing inflation has sometimes been
placed

the banks.

been criticized for

They have
having lending

and

establish

sound

claimed to
too

currency

many

in¬

stances, banks

and in the

now

Are

the

financially

emergency—a

year

Those Com¬

demand

exceeding production.

munists who reside in this country
must be throttled.
We must pre¬

Please

deteriorating influences
of this country
from further weakening our eco¬
nomic system.
We must stop in¬

people of this country
able to pay enough

flation.

in mind

sound

monetary policies.

government

vent

agencies

continue

and

tax

the

fiscal

We must

establishment

had

increase

all

tories

and
pre¬

after

F. N. Belgrano, Jr.

gone

other

words,
i

loans
not

usually

the

cause

prices

had
In

of,

the

result

dollar

price

ad¬

recent years
because of exces¬

have

occurred

sive

government

the

great
This

war.

spending. The
peacetime deficit spend¬
ing and unbalanced Federal budg¬
evils of

1949

tax

burden

skyrocketed largely because of
spendthrift habits of our na¬
This nation

munist
world

aggression

and

but

these

cheer¬

ful

side,

9.0%

all

such taxes

are

dependent

profits

upon

Roger W. Babson
:g; ;>

a- -

taxes

its

—eit h

e r

business prof¬

AG,[;

personal income from divi¬
In other words, unless
the Government allows us profits,
the Government would go broke.

individual sacrifices, the
of this nation should not

people

taxes;

even

have

unsettled

conditions, and despite the

fact that there will be
and

about

Federal

regulations which cannot ul¬

dends, etc.

is headed for trouble unless it fol¬
a

sound Federal fiscal

—

now

maintained at

our people now realize that ex¬
cessive government spending and
unsound
fiscal
policies
lead
to

dangerous

inflation.,

Failure

for this nation.

I believe that the

gins to work.
If management is
decade, Federal expendi¬ international situation
ultimately not allowed to increase wages and
exceeded revenues by
will be settled favorably.
I hold prices to offset any further tax
over $200 billion.
Thus, four-fifths these optimistic views in
spite of increase,
of
then
production
falls
the
national
debt
has
been
the past

tures

have

the

unsettled

national

and world
monetary and created in this 10-year
period. affairs, because I am confident
give a great deal This
astounding
fact,
together
that the people of this Christian
of comfort to the Communists. Fi¬
with the prospect of huge defense
nation
will
solve
these matters
nancial chaos is one of Russia's
spending,
has caused even some
ciiies. Communists
through hard work, sacrifice and
recognize that of the "starry-eyed"
government
cue way to bring a nation to com¬
prayer.
I know that you stout¬
planners to now become alarmed

properly plan

our

off

f iscal affairs will

munism is to corrupt the
currency.
We must not allow that to
happen

over

further deficit spending.

The

costs

and

increase

under

ing the next ten years. One final
thought—although putting a ceil¬
ing on wages and prices tends to
keep them " down during a war J
yet when the'war is over this
-

dammed-up demand makes the,
post-war .price increase in real
estate, automobiles, and all house¬
hold
appliances go
sky
high-i.
much

than

have
down

prices

would

if not artificially held

gone

during the

war.

Then

which

must be raised

the

and

"kill

starts

ment

hearted citizens will expend your¬
-this
selves
unsparingly to
maintain

money

taxes

the

Government

Dwight

then

The

Financial

Leslie

Seventh

has

Street,

Chronicle)

Calif.

—

become

con¬

Bell, 210 West

members

the

Los Angeles Stock Exchange.

formerly
Wykoff & Co.

was

with

Edgerton,

: With E. F. Hutton Co.
(Special

geese

lay the golden eggs.1' When
taxes are raised no
The

ANGELES,

nected with Kerr &

Govern¬

occurs,

more.

(Special

'LOS

our

present "mass production" system.

be¬

philosophy of trying to spend our the
rights, the benefits and the
gins to print money and sell bonds.
way to prosperity has been prac¬
advantages which accrue to a na¬ This
ticed by the "ouija' board"
always increases the people's
opera¬ tion of
free people.
.A,
tors on the Potomac for
purchasing power faster than in¬
nearly
price advances and continued ex¬ two
decades;
creasing the supply of goods, and
pansion of the national debt. Fail¬
results in still higher prices.
To formulate and follow a fiscal
With Tucker & Co.
ure
to
balance
the
budget in¬ policy that will balance the
budget
creases the national debt
(Special to The Financial Chronicle)
and de¬ in the
}
Raising an Army
coming years will require
here.

Our

1940

easily double again dur-'

and land have doubled since
and could

policy.

Pay-As-You-Go
higher
percentage
of
profits?"
relatively high level.
The answer is that when taxes in¬
seriously affecting
The national debt is now
nearly
"I
'am
convinced
a
sound
eco¬
our economy—are
crease above
a
certain point, the
becoming more $260
billion, or $1,860 per person, nomic future can be worked out
widely understood. The majority
Law of Diminishing Returns be¬
compared with $460 in 1939.
In

ets

years.

be
discouraged % or become
No human plans can ever long
panicky.
Accomplishments
are
Hence, we can absolutely depend succeed in breaking either the
This entails—among other things greater
when
people
have a upon good
profits
during war Ten Commandments or the Law
—limiting the government spend¬ hopeful outlook and there is much
times.
of Supply and Demand.
ing, especially in peacetime, to the to be done.
Employment will be
Next you ask "But what will
tax-paying ability of the people of high, farming will be profitable,
the
Government
from
this nation.
and the velocity of manufacture prevent
With Kerr & Bell
raising these taxes to a much
and trade will be

of, lows

Inflation and the devalua¬

vances.

tion of the

before
has
the

the tional Administration.

creased

the

were

up.

times

III, our dollar,
to twenty-five

fall

less during the post-war.

war

plain

rules

the

three

War

easily
or

causes

average

ven

World

People then get scared.
Not
content to spend only their wages,
prices they draw out their savings and
to rise.
buy homes and productive land.
This is why the prices of houses
We
com¬
why

money so freely?
For
people in this nation, the timately be removed when the
annual tax burden per emergency is over. This country
loans to busi¬
maintain
person has jumped from $130 in must
its
defensive
nesses
solely 1939 to
$400, or nearly $1,600 per strength. We must be vigilant in
to repla ce
family, in 1949. In other words, our endeavor to prevent further
normal
inthe per capita burden of taxes was enslavement.
Despite the Com¬

have

into
could
cents

follow through

We must work toward the

adoption

keep

definition

this

vent other

taxes to balance the budget while

spend

year

inside the borders

Taxes

liberal.

ahead.

policies
which
are

can

of
wages and prices. Concludes, when these curbs are removed, a
dur¬
ing which every person must lend
dammed-up demand for things will make prices of real estate
a hand in
preserving our freedom.
and durable goods go sky-high, and thus inflation comes again.
We cannot hope to raise the stand¬
ards of living this year, but I am
We must start with the diction¬ "quack
cures" have been tried
positive that we can preserve our ary explanation of Inflation. It is and failed, the value of the dollar
way of life if we do the things the name for a rise in prices due begins to decline. If we are forced
national

that need to be done.

sound

monetary
policy which is needed to maintain
years

absolutely depend upon good profits during
times/' because profits furnish basis for 90% of Federal
taxes, Mr. Babson discusses effects of placing ceilings* on

briefly, I believe

that all of 1951 will be

cause,

Asserting "we
war

To summarize

West Coast banker, pointing out increase in bank loans is

result, and not
lending policies

By ROGER W. BABSON

financial

basis.

By F. N. BELGRANO, JR.*

President, First National Bank, Portland, Ore.

"Barn Yard" Economics

approximately

expenditures.
be placed on

Thursday, March 8, 1951

eco¬

pro¬

should be enacted to produce

gram

LOS
I.

The

Financial

ANGELES,

Morrison

Jr.

Chronicle)

Calif.—Willis

affiliated

now

with E. F. Hutton & Company, 628
South Spring Street.

money will become
irredeemable if we have continued
paper

valuates

ing
The

dollar—thus creat¬ extreme
courage on the part of the
prices and inflation. Administration.
However, I can see

your

higher
time

has

arrvied

when

Excerpt from

r-ano

before

the

address by Mr.

Chamber 'of

the

no alternative. The
Administration
Administration must face the facts
must come down to earth now and
*

LONG

face

Bel-

Commerce

Forum, Portland, Ore., Jan. 8, 1951.

the

facts.
All
unnecessary
government" [spending
must
be

eliminated

immediately.

Defense

BEACH,

Butzbach

Calif.—Harry
now

affiliated

with Tucker & Co., 132 Pine Ave¬
nue.

The next financial
from

comes

and

men

ducers

five
the

women

curse

pulling

war

million

best pro¬

from normal indus¬

away

was

'formerly with try — putting half in training
Mitchum, Tully & Co. and Pacific camps and half in factories mak¬
Company of California.

ing

supplies.

war

This

only

not

reduces the production of civilian

These Notes have been

placed privately. They
appears

offered for sale and this
of record only.

are not

as a matter

announcement

nomic

refer

now

definition of in¬

our

flation, you will see that this shift
of employment will further re¬

per—The

supply of consumer goods
reducing
purchasing
power.
This makes for still fur¬
ther price increases.
without

ISSUE

Then

$6,000,000

;

lid

ask: "Why not put a
wages and prices?" The an¬

you

swer

that

sults in

GEORGIA-PACIFIC

dollar

gained

thereby.

the

"black

PLYWOOD

& LUMBER CO.

lid

decreased

wages

Thus,

wages.

re¬

production per

lid

other

hand,
markets,"' with

little is
prices*

develops
resultant

graft, inefficiency, and dishonesty.
From these

ators,

the

"black market"

Government

oper¬

gets

taxes.

3!/2%—41/2% Fifteen-Year Promissory Notes

Although such "ceilings"
are
popular politically, they are
no
real solution tb the problem.
Higher prices are inevitable.

Tax

means a

Reynolds & Co.

Equitable Securities Corporation

tion

further decline in produc¬

per

crease

hour

and

purchasing

further
power.

—J..

Planning

in¬

This

is just the reverse of what honest
financing requires.
Those in the
war plants, although
making only
war goods,
must be paid market
Jwages.' At this point, after all the

Excess Profits

Lasser

and

William

Casey—Business
porated,

Reports,
West 34th

225

Incor¬

Street,
Bond in
loose-leaf leatherette binding to
permit addition of forthcoming
supplements—$20 to subscribers to
New

York

—

J. K. Lasser Reports; $24 to nonsubscribers.
Maximum

Company

Relations

„

Utilization

ployed Manpower—A

■■■

Em¬

Check List

Practice—Industrial

section,

Department "of

Economics and Social

Institutions,

Princeton

University,
N. J.—Paper—$1.

Princeton,

ADD Bpsiness Man's Bookshelf
to

clining

All these schemes lead finally to
deficit or phony financing which

Eco¬

for

New York—Paper—
charge for single copies; quan¬
tity prices on request.

How

Deficit Financing Coming

Foundation

Education, Inc., Irvington-

on-Hudson,

duce the

NEW

Search of Peace—F. A. Har¬

supplies, but these people must be
housed,
clothed,
and
fed,
by
being paid real money. If you will

short

D-l,
Santa

Make

Stock

Money

Market

—

Book

De¬
on

selling—$1 per copy—Dept.
Mark
Weaver,
Box
1130,

Monica, Calif.

.Griffith Letter—Investment and
business

commentary naming the
only industry the firm believes to
be
attractive
$10 — B.
Barrett
—

Griffith

and

Company,
orda Springs, Colo.

Inc., Col-

Volume 173

Number 4992

...

The Commercial and Financial Chronicle

(1027)

GREAT LAKES STEEL CORP.

Detroit, Michigan. The only integrated
steel mill in the Detroit area.
Produces
wide range of carbon steel
.

WEIRTON
Mills

the automotive

STEEL COMPANY

products
major supplier of all types of Steel for

industry.

•

STRAN-STEEL DIVISION

Weirton, West Virginia, and
Steubenville, Ohio. World's largest
independent manufacturer of tin plate.
Producer of a wide
steel

Unit of Great Lakes Steel
Plants at Ecorse,

Corporation.
Michigan, and Terre

Haute, Indiana. Exclusive manufacturer
world-famed Quonset
buildings and
framing.

rangeofother important

products.

Stran-Steel mailable

HANNA

IRON

ORE

•

?«r .<

.'AS

COMPANY
from

NATIONAL STEEL PRODUCTS
CO.

holdings in Great Lakes region.
National Steel is also participating in the
development of new Labrador-Quebec

Located in Houston, Texas.
Recently
erected warehouse covers
208,425 square
feet. Provides modern facilities
for

Cleveland, Ohio. Produces

ore

extensive

iron

ore

fields.

bution of National Steel
products
out

Southwest.

THE

HANNA

FURNACE

NATIONAL MINES CORPORATION

CORP.

Coal mines and

properties in Pennsylvania,•
Kentucky. Supplies high
grade metallurgical coal for the tremendous

Buffalo, New York. Blast furnace division.
leading producer of various grades of
merchant pig iron for
foundry use.

West Virginia and

needs of National Steel.

National Steel is

complete, self-contained steel

producer. Its production
Steel

in National

properties beneath the earth's surface. It

ends with finished steel and

that

starts

National

Steel

specialized products

furnishes

the

industries

of America.

furnaces, mills and machines, melt... roll... finish
..

distribute its steel.

And National Steel continues

every

its

structure,

resource

and

the transformation of

National

every
ore

Steel

possesses

facility required for

into steel.

National Steel mines and
quarries
materials. National Steel
boats,

yield its

raw

barges and trucks

transport its products. National Steel

NATIONAL

AMERICA

and

STEEL

GRANT

SERVING

men

BUILDING

expand, continues

implement its steel-making power. The com¬
pletion of a new blast furnace, open hearth furnaces
and other

Within

major facilities will increase its

capacity from 4,750,000

6,000,000

tons

annual

of ingots

by 1952. In addition, National recently purchased
site for a
completely new mill on the East Coast.

This is National Steel

completely integrated,
completely independent
one of America's
largest and fastest growing producers' of steel.
.

CORPORATION
PITTSBURGH,

SERVING

PA.

•

AM E R I C A N

M N D U ST R Y

distri¬

through¬

(1028)

The Commercial and Financial Chronicle

approximated $10 million and the current jumps in the rate from
42% to 47% would mean an increase of $1.2 million.
Assuming
that the

Public

Utility Securities

in pre-tax

Consolidated Subsidiaries—

other

systems.
in

The

company serves an area

Pennsylvania,

West

Virginia

Maryland,

Preferred Stock

Minority

Common Stock

Electric

extensive rural

Electric

about

92%

revenues are

Equity (3,520,000 shs.)_~

per

kwh.

the

are

omitted

from

the

with corresponding adjustment Of
would be reduced to about 18%.
West Penn Electric

Oct.

consolidated

balance

In 1949 the

indicated

by the following table (see page 7 of prospectus on
pending issue of common stock for explanation of adjustments):

common

Revenues

Income

Common

$92.2

$20.6

$10.8

85.9

19.5

10.6

31, 1950

stock is

sale

proposed

Washington Water Power to
municipalities was clarified in a statement made at a
hearing before the SEC (file No. 54-168), which may be

by
be

Bond and Share held that the "notice of sale" filed
by Amer¬
Thus there was no indica¬

ican did not disclose essential details.
tion

the

rumored

fees

commissions

to be paid, which it was
$5 million to underwriters and $1
alleged promoter.
Bond and Share also questioned

might be

high

14.3

5.5

also felt that the future earning power of
Washington has been underestimated by American.
Regarding
future earnings benefits which
might be derived from construction

when

of the proposed

200,000-kw. Cabinet Gorge Plant, Bond and Share
that the rather sqeptical attitude of
American regarding
possible issuance of debt securities was unwarranted. If the new

but

held

our

plant were entirely debt-financed, the equity ratio would still
approximate 38%, and with accelerated amortization
provisions
and a -3% return oh the new
plant, earnings on Washington com¬
mon stock might be
double the present amount, EBS estimated.
They also questioned the budgeted figures for 1951-52
earnings
(before completion of the Gorge Plant).

never

On Feb. 28 the
Pennslvania
a

Public

subsidiary, West Penn Power, filed with the
Utility Commission a riew tariff providing

general increase in electric rates.

It is estimated that, based
on 1950 consumption, the new rates would
(if approved), produce
additional annual revenue of

approximately

31,

1950,

subsidiaries

$4,500,000.

Since

have

granted wage increases which
may result in an aggregate annual increase in payroll costs of
approximately $933,000 (not including higher social security,
insurance and pension costs).
Deducting $1 million for estimated
higher labor costs from the rate increase would leave $3.5 million

Bond

and

take

"pro forma" gain, and after allowing for 47% taxes on this
the potential net gain for the common stock would
approximate $1.9 million.
In
1950, Federal taxes probably

individual

private

enterprise
destroyed by taxes, and we

are

required
will

program

convinced, how¬

pay-as-we-go

pro¬

people.

the

rect

controls

ago

nificant" in

"highly

connection

the

prices

over

Taxes

can

and

reduced

has passed,
destroy the value of
money and tie up our econ¬
with direct controls, we may
if

omy

emergency

able

"free-choice"

which

our

return

the

system

through

unparalleled

progress

has been made possible.

Bond and Share recited the
history of the sale of American's
in Pacific Power &
Light a year

interest

seemingly easy path of
financing, inflation and di¬

wages.

COMING

sig¬

with the present proposed sale of Wash¬
Opening up the sale of Pacific to competitive negotiations
resulted in an increase of about 61% in the
obtainable prices.
At
current prices, the entire stock of
Pacific is worth $25,000,000,
or 21/2
times the original proposed sale
price in January, 1950,
EBS stated.
V'" k1 w

EVENTS

ington.

Investment

March 9, 1951

net

amount

to
We

deficit

Washington's Idaho properties (about one-quarter
of the total) could be effected in view of
legislative difficulties in

64.1

is obtained.

that

take other steps necessary for the
real control of inflation than if we

that state.

plan of September, 1949, and also for the current increase in
shares).
If adjusted to a 47% tax rate, earnings would have
approximated $2.70.
However, continued gains in pre-tax earn¬
ings during 1951 should maintain earnings around or above the $3
level, in the opinion of the management, even if no rate increase

our

willing

how the sale of

8.6

vs.

infla¬

In the long
run, we will be far better off if
we pay the bill
through taxes and

7.4

(the latter figure being adjusted for consummation of the recap

and

fight, for it.

the American

17.6

$3.08 for
$3.02 for the calendar year 1949

pay-

is within the capabilities of

gram

16.0

were

pay-as-we-go

preserve

must

heavy. We
ever,
that a

83.1

the increased number of shares

know that the tax burden

recent

follows:

that

control

are

unaware

initiative

PUD's and

not

73.2

the 12 months ended Oct. 31

Oct.

the

over

the

freedom, we
pay, as well

1948

emer¬

tax policy is absolutely
to

1947

Earnings

new

want again to

conviction

our

as-we-go

can

million to

1946

for

conclusion,

stress

Referring to our recent review of American Power & Light in
this column, the position of Electric Bond and Share in the contro¬

summarized

Calendar Year—
1949_

surplus, the equity percentage

are

Millions of Dollars——

12 Months Ended Oct.

all

emphasize their
character.

gency

American Power & Light Company

versy

Bal. for

that

existing tax
definite termina¬

tion date to

sheet,

currently selling around
$2 to yield nearly 7%, which compares with an aver¬
yield of about 6% for stocks of other large electric holding
operating companies.
*

31,

Oper.

bound

are

taxes and increases in

tion.

net tangible property according to Stand¬

recommend

and

12 months ended

which

be unjustified.

age

The remarkable postwar growth of the company's operations
is

such allowances

revenues,

total

Com¬

pletion allowances and that it
provide for the elimination of any

anoroximately 34%

the

that

give careful study to the
possibility of a reduction in de¬

essential

& Poor's.

ard

recommend

mittee

29 and pays

3.10£, and average residential usage 1,733 kwh.

was

system earned 7.2%

Depletion Allowances

residential, 16% commercial, 46% industrial and 4% miscellaneous.
The average revenue

100%

$311

intangibles

other income.

area.

constitutes

revenue

transit 6%, and gas 2%.

basis

Termination Date
—

Total

small areas in Ohio and Virginia, the total population served
being 2,372,000. The area includes some 24 cities with a population
of 10,000, the largest being Cumberland with a population of 37,000.
The service area is highly industrialized,, bituminous coal mines,
steel, chemical and glass being the major industries, but Potomac
serves

local bonds taxable

and

rates be tied to

some

Edison

Interest

Company—
Long-term Debt

also

and

Percentage
47%

$145

of about 29,600 square

and

Millions

Debt

re¬

Thursday, March 8, 1951

same

earnings), assuming that the 47% rate holds.

Long-term

The company is an important holding company controlling
Monongahela Power, Potomac Edison, and West Penn Power. It
has now complied with the integration requirements of the Public
Utility Holding Company Act,, System companies have power inter¬
change arrangements among themselves, and also with certain

the

therefore, be a
(plus other anticipated gains

capitalization of the company and its subsidiaries
ported in the prospectus is approximately as follows:

Company

State

there might,

The

miles

allowed

were

small net gain for the common stock

By OWEN ELY

West Penn Electric

rate increase

Field

(Toronto, Ont.,

Canada)

Continued

from

page

Toronto

Bond Traders

Associa¬

tion Eighteenth Annual Dinner atr

the King Edward Hotel.

Recommendations for

March 14, 1951

(New York City)

Bond Club of New York Annual

Dinner at the

Inflation Control
sales tax, we would prefer to re¬
duce personal income tax
exemp¬
tions from $600 to $500.

As a long-time tax
policy, ex¬
cise taxes should be limited large¬

ly to levies on amusements and
luxury
goods; however, in the
present situation, a broader appli¬
tified
to

both

assist

raise

can

be jus¬

revenue

and

also opposed

are

to any in¬

in the Federal tax

This field of taxation should
left to the States for use as a
of

source

We
to

(3 V3 %

posed

tion

amendment

the

selling

electrical

luxury

which

are

goods
made

emergency)
and on goods

strategic importance
in

such

the

materials
or

which

of
are

short supply.
In the enactment of

new

in¬

price)

im¬
for

energy

creased

excise taxes, taxes which
will increase business costs should
be

avoided

insofar

may

practical, since the common busi¬
ness practice of
using percentage
mark-ups pyramids the effects of
such taxes.
We
on

are

opposed to excise taxes

replacement parts for automo¬

biles, trucks, farm machinery and
equipment.
If we are going to
have a period of short supply for
equipment of this type, we should
make

real effort to keep

consumption.

the

energy,

tric

its

the

are

luxuries.

•

elec¬

tion,
the
may

like
a

tax

of their

point

elec¬

undesirable
of

for

consumers

source

would

electric

basis

among

standpoint

long

from
-

time

tax of this type increases
cost
of doing
business and
a

therefore

tionate

cause

increase

dispropor¬
consumer

prices.
Gift Taxes

We recommend that there be

increase in

estate

and

Investment
tion

the

Convention

Jasper Park Lodge.
June

15,

(Philadelphia, Pa.)

1951

Investment Traders Association

Philadelphia

Summer

Outing

Dinner at the Manufacturers

and

Golf

and

Country Club, Oreland,

Pa.
:

June

22-24, 1951

(Minneapolis,

Minn.)
Twin City

Security Traders As¬

sociation Annual Outing

("Opera¬

tion Fishbite") at Gull Lake.

Sept. 30, 1951 (Coronado Beach,
Calif.)
National

Security

Traders

As¬

sociation Convention opens at Co¬
ronado Hotel.

umbus

(Dallas, Tex.)

Bond

Club

annual

Col¬

Day outing.

Nov. 25-30,

recommend

Dealers Associa¬

gift taxes.

Income From Bonds
We

annual

(Jasper Park,

Canada

Dallas
no

Club

Canada)

Oct. 12, 1951

Estate and

the

outing.

June 11-14, 1951

tax policy.
Electricity is a neces¬
sity rather than a luxury. In addi¬

This recommendation does not ap¬

ply to accessories, since such items

energy

is buying replacement parts to
keep an old machine in operation.
M,

sell

■?

see

out, however, that

units

I'.-i

can

the basis of the

supply.

Dinner

(Dallas, Tex.)

Bond

Memorial Day

commercial

ishitimately paid

consumers
we

discriminating
on

Since this tax

existing

in operation,
and it just
isn't sound to tax the fellow who

systems

tricity for domestic

Dallas

commercial consump¬
shall be collected from pub¬

duration

Annual

May 30, 1951

the fight against in¬
licly-owned electrical systems and
reducing the demand12 those
owned by cooperatives or
for scarce goods. We are
prepared
nonprofit corporations do the-ex¬
to suoport heavy excise taxes
(for tent that

flation

York

Waldorf-Astoria Hotel.

the Internal Rev¬

Code to provide that the tax

domestic

Security Traders Association of
New

highway funds.

recommend

Sec. 3411

enue

April 13, 1951 (New York City)

gaso¬

line.
be

Excise Taxes

cation of excise taxes

We
crease

Starlight Roof, Wal¬

dorf-Astoria.

enactment

legislation to make the income

from all future issues of Federal,

1951

(Hollywood

Beach, Fla.)
Investment Bankers Association
Annual Convention at the

Holly¬

wood Beach Hotel.

*3" 3ir«.

Number 4992

Volume 173

(1029)

The Commercial and Financial Chronicle

Allied Chemical & Dye
An

Stockholders:

the

consolidated
income account for the year are presented herewith, together with a ten
year comparison of financial and operating data.
J
EARNINGS AND DIVIDENDS—Net income for 1950, the highest in the
history of the Company, was $41,212,520 compared with $37,150,977 for 1949.
The Company's stock was split four shares for one on August 1, 1950.
On
basis of the present number of shares, net income was equal to $4.65 per
share for 1950 and $4.19 for 1949, after provisions for Federal taxes of $3.71
per share for 1950 and $2.58 for 1949; dividends paid were $3.00 per share
consolidated

The

and

1950

$2.50

sheet at December 31,

balance

1949.

1950 and the

Received

from

3,761,041

These receipts were distributed as
Goods and services bought from

follows:
others__ $220,606,321 $196,710,151
Wages and salaries
92,017,341
85,830,109
Depreciation, depletion and other charges
15,782,856
16,560,680
Taxes incurred
:
42,827,578
31,252,930
Dividends paid
26,569,188
22,140,990
Retained for needs of the business
14,643,332
15,009,987

and

Sales

Equipment

revenues

1950

were

Total

divisions and

the

the property

and

developed

the

with

research
and

the

contained

334,000

Book Value Market Value

61,426

Libbey-Owens-Ford Glass Co. common-

94,200

268,000

Items

Miscellaneous

—

and in order to supply

market

Since

865,250

1,934,919

1,454,865

3,595,271

1—J $30Jl8,436 $72,361,690

Total

expand

sulfur deposits.

43,502

4,800

;

because of the rapid depletion of known

Government se¬

United States Steel Corp. common
$ 9,033,258 $14,419,388
Owens-Illinois Glass Co. common—____
5,985,081
15,831,484
American Viscose Corp. common
4,464,000
21,042,000
American Viscose Corp. preferred-..
516,000
571,800
American Natural Gas Co. common
3,422,415
2,637,600
Air Reduction Co. common
3,222,532
7,370,000
Virginia-Carolina Chemical Corp. pfd.__
1,155,035
4,959,228

208,309

The

worse

monthly

value

securities

Government

owned

approximates

cost

other securities and investments is consider¬
at which carried, the balance of $10,000 000
in the Reserve for Investments and Securities was transferred to Surplus in
1950.
At the same time a corresponding amount was transferred from Surplus
to the Reserve for Increased Cost of Replacements,
since replacement costs
continue
to substantially
exceed original costs on which additions to the
regular depreciation reserve arc based in accordance with generally accepted
accounting principles.

and

aggregate market

value of

CURRENT ASSETS

$432,504,164

>■':.

■

1950

including total
primary
social
and proportionately less
had 15 years but less than
of service; for employees retired

$100,

security

benefit,

if employee has
25

years

under 65 minimum monthly pension is

mates market

49,804,626

—

Securities

(market

cost

if any, subject to increase when em¬
ployee reaches 65 to minimum for em¬
ployees retired at 65;
maximum pension
is $1250 per month.
The plans are nonefit,

contributory.
It

has

been

allowances

which

practice

reserves

after allowing for antici¬
pated tax credits when payments are made
1950,

in future years,
to

income

Reserve
This

reserve

accrued

been

taxes.
the

38,067,841

$273,388,575

etc

Replacements---;
——.

1,304,209

CAPITAL -STOCK

pensions

Patents, Processes, Trade Marks,

—

3,258,285

Goodwill, etc.——

—-

21,305,943

SPLIT-UP—During the year the

stock was split
four-for-one,
effected by issuing an additional
each share previously out¬

Company's
which

was

shares for

three

standing,
had

carried
the

year

last

annual

Year Ended

939.163

has

lost

Capital Surplus
Earned Surplus

$408,042,285

operating, selling and admin¬
including normal depre¬
depletion of $12,862,215
$334,524,249
Accelerateed depreciation
1,420,641
Reserve to cover increased costs incurred to re¬
—

applicable to the

year

966,563
1,500,000

Eugene Meyer and Mr. C. W. Nichols;

the

only

other

September

and

Mr.

From

miscellaneous—net

Income before provision for

reserve

$256,996,533

shares of common stock $33,211,485

24,901,356

stock

Charles

excess

profits taxes

(per share $4.65)

Special provisions for accelerated
$3,887,204 ana have not been included

—

Dividends paid

securities-- $10,000,000

New

York,

have

examined

Surplus at December 31, 1950

consolidated

our

general balance sheet

of the Allied

Vicecon¬

W. Clark,
appointed
E.

retired as President of

September

Division

Aniline

E. M. Maxwell was

and

President

Mr. F.

Division,

the

September

Division

Biddison

appointed

Rogers Executive

Mr.

Vice-President

of General
1950

and

and Mr. C. M. Brown

Executive Vice-President
respectively, of the Di¬

appointed

were

240,096,212
26,569,188

vision.

Mr. Hugo Riemer,

The Solvay Process

$213,527,024
enumerated In above income statement total
and excels profits taxes for tne year. The

the

Allied

December

31,

in conformity

consistent

and Contingencies.

accompanying consolidated general balance sheet and
and surplus present fairly the financial position
Chemical & Dye Corporation and its subsidiary companies at
1950, and the results of their operations for the calendar year,
with generally accepted accounting principles applied on a basis

with

of income

that

the

27,

1951.

1950.

The

Company

Government
the
do

cooperating with our
way practicable in

every

present emergency, and is prepared to
full share in supplying goods and

its

services

essential for national

defense and

civilian needs.

Respectfully submitted,

preceding year.
MCLAREN,

February

November

Vice-President of

Division, was appointed
of the Division

Vice-President

—

opinion, the

related statements

Y.
the

10,000,000

depreciation, Inventory reserve and other charges applicable to the year
in deductions for purpose of arriving at the amount of Federal income
charges applicable to the year was credited to the Reserve for Pensions

Corporation and its subsidiary companies as of December 31,
1950, and the statements of consolidated income and surplus for the calendar
year then ended.
Our examination was made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as we considered
necessary in the circumstances.

Chpmical & Dye

replacements

(per share $3.00)

special provision of $1,500,000 covering other
Allied Chemical & Dye Corporation,

also

was

B. A. Ludwig

National

Executive

32,822,643
$41,212,520

Mr.

Director.

1951

although

and Vice-President,

Surplus before dividends.

74,035,163
$30,162,935
2,659,708

retired

Weber

Treasurer,

Vice-President,

Chemical

4,404,331

Federal income and excess profits

taxes

Federal income taxes

was

February

Effective

and

of Re¬
appointed

Director

Silsby,

Development,

and

Vice-President.

Mr.

58,112,841

41,212,520

1950

for investments and

Miller,

Treasurer.

stock split, etc.:

for increased cost of

the elec¬

Mr.

1950

Nichols retired as Vice-President

reserve

ihe

filled at

Hazard.

.James

Forbes

Mr.

$3,895,510
508,821

was

vacancy

November 1950 Board meeting by

tinuing

Transfers:

69,630,832

operations—

Dividends

At the

vacancies

the election of

Mr.

1950

$659,223,091

198,883,692
Net Income year

since 1932,

the Board

the Board were filled by

1950 and Mr.

338,411,453

and had been

1916

68,761,695

SURPLUS ACCOUNT

Retirement of treasury

since

with

connected

been

Sheridan was ap¬
pointed Assistant Treasurer. In November

account

had

who

member of

dent,

_257,809,004

Deductions

member of long

and able

loyal

the

CHANGES—Since

report the Board of Directors

Comptroller, was also appointed Vice-Presi¬

144,765,329

Issuance of 6,642,297

and

place inventories

Federal

there

$ 44,281,980

TOTAL

expenses,

Net Income

1951

15,

ago,

organization

8,856,396

ciation and

and

February

tion of Mr. Thomas P.

Surplus at December 31, 1949

December 31, 1950

Sales and operating revenues

Interest

shares issued and

standing through the death of Mr. Wallace

basis $5. per Share

CONSOLIDATED INCOME ACCOUNT

income:

number

President

Other

retired.

24,363 registered holders of the Com¬

Mr.

from

stock for
The. split-up

treasury

were

which

187,189

the

and

been

Stock, without par value,

Common

$659,223,091

TOTAL

income

of
for

paid,

are

STOCK

annual meeting in April 1950 two

SURPLUS

AND

OTHER ASSETS

Gross

provide

27,656,777

—

Issued

Prepaid Taxes, Insurance, etc

Other charges

amount

40,000,000

343,770,879

200,850,490

Sundry Investments at cost

of sales

the

liability to date com¬
puted on an actuarial basis less related
tax credits anticipated in the years when

the

1,786,364

Insurance

Sundry

DEFERRED CHARGES

istrative

computing
that

sufficient

reserve

net in¬
income

charges

accumulated pension

Campbell,

41,111,880

INVESTMENTS

Cost

through

is estimated

designated Re¬
and has

Contingencies

deducted

not

come

Contingencies.vj-

and

formerly

was

General

for

serve

provided for in charge
and added to the

was

$1,500,000
Pensions

for

ORGANIZATION

1,800,286

Pensions and Contingencies

38,182,513
—

continued during 1950.
pension cost ap¬

was

estimated

plicable to

with

Wages Accrued

Increased Cost of

30,118,436
less

$4,265,570

$7,558,387

Company's procedure to

the

payments made currently for pen¬
against operating expense,

charge
sion

$17,775,081

——

Depreciation, Obsolescence,

value

Receivable,

Payable

RESERVES

Inventories at lower of cost or market, less reserves
Of

$50,

including total primary social security ben¬

10,000,000.

$ 57,643,208

Securities at cost, which approxi¬

Notes

each year under
for em¬

pension

pany's stock, an increase of 17% compared

LIABILITIES

Accounts

Taxes Accrued

$41,633,035

Cash

and

monthly

minimum

65;

Plants, Equipment, Mines, etc. at cost

$72,361,690)

of
ojjj

outstanding to 8,856,396, The total number
of
shares
authorized
was
increased
to

LIABILITIES
CURRENT

Accounts

average

ployees 65 or over with 25 years of service

were

Marketable

tne

duced by one-half year for

many " years

ASSETS

U. S. Government

at age 70; monthly

service, less one-half of primary social se¬
curity benefit, except that for. employees
retired before age 65, such years are re¬

ably more than double the value

CONSOLIDATED GENERAL BALANCE SHEET—DECEMBER 31,

Real Estate,

during the last 10 years
multiplied by
the years

employment

increased

PROPERTY ACCOUNT

been

and formalized

While some of the plans

equal

pay

Remainder

started up to produce urea, additional
high grade dyes and intermediates therefor, and sodium tripolyphosphate
which is used to increase effectiveness of synthetic detergents; also completed
was
a
new
coal-tar distillation plant utilizing an improved process which
results in higher yields of naphthalene, a material in short supply.

grow

in U.

$8,969,000 during the year. No material change
ether securities. In last year's report the letter to
list of principal marketable securities carried under

Marketable Securities

342,300

Company's basic products are essential to the national defense pro¬
them in needed quantities work is under way to
facilities for soda ash, caustic soda, chlorine, sulfuric acid, phenol,
phthalic anhydride and other chemicals.
Steps are being taken to equip the
Company's two synthetic nitrogen plants to use natural gas as a
raw
material instead of coke heretofore used; this will release large quantities
of coke to the steel and other industries which need it for defense purposes.
Facilities are being provided at some of the Company's sulfuric acid plants
to enable increased
use
of comparatively abundant pyrites ore in place of
sulfur of which there is a critical shortage, a condition which is expected to

SECURITIES—Investment

have

respects,

retirement is obligatory

pension

balance

During the year new facilities were

gram

benzol and

securities carried under Current Assets were shown in a footnote
sheet.
In order to simplify the report all items lusted on the
New
York
Stock
Exchange are now included in the balance sheet under
Current Assets—Marketable Securities.
The items carried in this account ana
market value thereof at end of 1950 v/ere as follows:
to

increase the efficiency of

;

with the defense pro¬

production.

AND

minor

periods of
changes

plans

Investments;

not heretofore made by the Company.
advantage was taken of improvements

equipment in order to

plants.

Company's

and

replacements

the

processes

commercial

stockholders

retirements were $7,797,023. As in the preceding year, about
expenditures during 1950 represented cost of replace¬
one-half represented cost of facilities for expansion and for new

connection

directly connected

new approach to the production of synthetic
critically short supply, are in various stages

INVESTMENTS

one-half of the property

products

developments

new

took place in investment in

$24,182,233 and
ments

the operating

Laboratory at Morristown, N. J., the Com¬

curities increased approximately

account amounted

organizations

with

pension

under formalized
with 15 or more years of
service may retire" on pension at age 65,.
or
earlier
if
permanently
disabled, and

of progress
Extensive research has been under way for
some
time in the fields of synthetic fibers and plastics, with the objective
of developing suitable products and economic processes for production of the
required intermediates from basic raw materials.

additions

including a
materials

toward

Company,

CONSTRUCTION—Gross

research

large

Central Research

the

number

gram,

Company's

industry

the

long

after

connection

plans employees

continues to carry out extensive research in developing new

other

although operations were adversely affected by strikes at
major alkali plants in the third quarter and in the coal
the first quarter of the year. The increase over 1949 approximat¬
ing 12% was due primarily to increases in volume for most of the Company's
products.
Increased production to meet the greater demand was obtained
from expansion in capacity and facilities for new products provided in 1949
and 1950 and from higher operating rate except during the strike periods.
the

differ

$432,504,164 $273,388,575

___

RESEARCH—Through

formation

largest since

the

employees retired

service.

at most locations.

14,514,426
52,660,915
202,360,316

20,570,781
79,052,570'
314,498,760

Buildings

$412,446,616 $367,504,847

operating

Company's

1920, have paid pension allowances

modified from time to time,

$3,852,918

$18,382,053

Brine Wells, etc.
1

Land; Mines, Quarries,
Plant Improvements

Total Receipts

Obsolescence, etc.

and related
products as well as in improving its present operations; expenditures for
research are steadily being increased, reflecting enlargement and improvement
In the research staff, laboratories and equipment.
New research laboratory
of The Solvay Process Division at Syracuse.
N. Y. was formally opened in
May
1950
and will
supply exceptional technical facilities for the Alkali
Section of Solvay and consumers of its products, particularly the glass industry.

1949

4,404,331

Interest, dividend and other receipts

Depreciation,

Account

tion in

the

prior to

ecessors

Property

and its pred¬
organiza¬

PENSIONS—The Company,

depreciation,

for

conditions,

pany

$408,042,285 $363,743,806

customers

reserve

set forth below:

1950

etc.

Reserve for

Company's total receipts in 1950 and 1949,

which these receipts were distributed, are

and the manner in

»-

■

SUMMARY OF RESULTS—The

the property account and the
at December 31, 1950 follows:

analysis

obsolescence,

Corporation

EMMERICH,
President

GOODE, WEST & CO.
February 27* 1951

■.

■

The Commercial and Financial Chronicle

(1030)

at that time would be proper

wore

What Price Gold!

collegiate of today.
Incidentally, try to get your wife
to wear today the styles of 1934—
just try it!
Junior
has
grown
up,
styles
have changed and the world of
today is as far removed from the
world of a decade ago as the iron
age was from the stone age. This

By FRANK LILLY*

Statistician, Mines Research Bureau

Contending U. S. has not enough gold to permit going back on
gold standard at $35 per ounce, Western mining expert holds
price of gold must be advanced
a

mends commission be

appointed to arrive at

The

"The

names

debt-based

proper

six honest

serving men" who, Rudyard Kip¬
ling says, "taught me all I knew,"
and

passed, in

propose

casion

oc¬

let

honest

the

private

citizen

gold.

States

world

the

entered

own

1933, the

May,

through

market

sidered

R.F.C.

the

Frank

price
This is not designed as

should be.

not the

and

the
$35
con¬

was

investigation

any

been made

Lilly

Finally,
set at

"lucky" number and not

because

What

ounce.

arbitrarily
that
figure

because

refer¬

ence

and

at $20.67
price was

what

gold with par¬
ticular

for

law nationaliz¬
making it a crime

debate,

bought back, on a rising scale,
some of the gold that we had lost

about

know

gold

group,
us

ing

single day and with¬

and

should

any

United

serv¬

ing men," in¬
dividually and
a

out

trade

"six

these

determine

figure of $35

had

whether

true

was a

price.

proper

Prima

argument in behalf of the gold

producer or of any monetary pol¬
icy except as the facts, "hewed to
the line," speak for themselves.

evidence

facie

ounce

not

was

that

$35

adequate

price is furnished by the fact that
the President

his advisors

and

Treasury Department - have
never subsequently made any at¬
tempt to restore the gold standard.

Seventeen

Years Ago

two days

was

and Seventeen

ago today that President
Roosevelt issued the proclamation
years

the

fixed

which

Treasury

price of gold at $35 an ounce. In
this single sentence we have the
Who, When, What, Where and
How—everything but the Why.

August,

The Why runs back to

when, at the outset of the
First World War, Great Britain
went off gold as a war measure.
To her everlasting credit, Great
Britain made an honest effort, in
1914,

1925, to restore the gold standard
she
had
maintained for

which

nearly 100 years; but, because the
made the mistake of pricing her
gold too low at $20.67 an ounce,
sbe was again forced to go- off

gold in September, 1931—not, be
it noted, because she wanted to
do

but

did

she

because

have enough gold to back her

cur¬

inconvertible paper currency

lvalue

very

good

price

rises' in

terms

nature of things,
gold, hence the
of gold always
such

devalued

Currency.

So the price of gold in
Great Britain rose from 85s 12d,
the equivalent of $20.67 an ounce,
to 92s 6d in the last quarter of

1931, to 118s in 1932, and in No¬
vember of

2d,

1933

high of 143s

the equivalent of $34.91

either

to
provide for currency
convertibility into gold at any
other price or to determine what

the U. S. price of gold

should now
be, although this country is strict¬
ly "isolationist" in adhering to a
$35 price.

Banks

Reserve

this

The United States, in the mean¬

time, had remained steadfastly on
Gold Standard, and, both be¬
fore and after his election, Presi¬

the

had

Roosevelt

insisted

that

the atomic age,

speed,

duction and

high scale of living,

all of which call for
and

reexamina¬

revaluation" of

former

standards.

Foreign

Currency Devaluations

The monetary systems of every
other country in the world have

turn

over

the

Federal

Re¬

Federal

that

Reserve

then

note

re¬
cur¬

used

by the
Treasury to pay for the gold. In¬
cidentally, the Federal Reserve
Banks, which are privately owned
banks,
operating
under
what
amounts

government

fran¬

chise, could, under the layy, issue
additional currency against^ gold
to

amount

ounce,

currency

equal to 3 times $35

the

$140 of
ounce./ Nice

each

business1 if

total

gold

producer

its

devalued

currency

equivalent
to
$1145
for gold
and France,

ounce

$486.50.

Russia

10 to 1

devalued

its

was

bloc.

citizen.

has

this:

Just

they

rency,

realizing

are

profits in their

mous

use

cur¬

- enor¬

of what

should really be the people's gold
your
money
by
inalienable
right. This is How it is being done,

September, 1949, have

given

gold

value

the

that

measure

same

country as if the
had been raised to

an ounce.

that,; necessary

have,

doubt,

total of

reports
have risked the

large

loss

sums

and other

facts

foreign countries. These

speak

for themselves

amount of money.

billions

one-quarter
since

Great

Britain's

No Proof

$70 Would Be Proper

Having decided how much
money
is necessary proceed to
make

ard

with

have

asked

large number of

for

men

ex¬

jority have replied, $70

than one-third of all the gold pro¬

but

duced

this country during the
last 150 years; or that the total
loss during the last 6 months is

tempted to justify that figure by
relating it to such factors as pur¬
chasing
power
in
commodities

nearly three times as much as this
country lost from 1931 to 1933, the

and/or

two

requirements.

preceding the raising
of the price of gold to $35. As a

been

much

in the U. S. in

now

produced

entire year.

has

case

U. S. monetary

interesting, and probably
significant, to note that if the';
price of gold were related to the
present
purchasing
power
and
wages, the price here would be

cur¬

enough

backing

do not

gold

now

provide

the basis of $35

ounce, or $70 an ounce, raise
the
price
of gold
to whatever
figure is needed to give the neces¬

gold

sary

to make

coverage

our

There Is Good in Gold

Failure to use the atom bomb in
the present world
emergency can;
be justified on the
grounds that

its tremendous power to
destroy is
a
two-edged sword. The power
in gold,
and

however, is constructive, /

failure
of

the

use

value

but

being wicked.
Gold.

larger]

inherent

healthy!

prerequisite to.!

peaceful world

excusable

not

only in-':
to^

comes

There

in!

Good

Why not make the greatest!

possible

of it?

use

;

Blyth Group Offers
j
Kimberly-Clark Stock f

at¬

devalua¬

ounce;

anyone

foreign

wages,
tions and world

years

fact, the average weekly

40%

convertibility

Then, finally, if

pression of opinion as to what the
price should be. The great ma¬

September, 1949. Few realize
that this is equivalent to more
in

minimum

.•

sound by back¬

money

with

rency to gold.

study of
of What Price Gold,

well-informed

devaluation

our

economy that is

course

the question

gold

its

the

value

(4)

to attain and maintain the
Price

and

be-;

production would not
without an adequate i

possible

measure

price of gold abroad.

given

two

over

such

cause

read
about

newspaper

who

the true

the Why this country

are

lost

money-

production,

money sound.

gold in their
efforts to smuggle gold out of this
country so as to dispose of it at a
large profit in Great Britain, India

devalua¬

have
measure of

higher

These

they

because

abroad,

Blyth & Co., Inc., heads a bank-:
ing group which on March 6 pub- i
licly
offered
200,000
shares
of!
stock of Kimberly-Clark
j
Corp., large manufacturers of eel- i
common

lulose

wadding

products

type

and

also

and

machine

converted!

publication!
book paper!!

coated

in the United States.

The stock is

*'>

'V !

;

back to

including bank deposits, but not
including many billions of gov¬
ernment bonds and other obliga¬

would

ounce

must

total
basis of

the

only

annuhl

before Congress.
not

hear

much

about

common

One

thing, therefore,

seems crys¬

tal clear: either

commodity .Rjrjjijes,
m6st be rolled back or

shares will be increased/

1,994,951.

Principal' mills of the corpora-j
are
located
in
the price
Kimberly,;
of gold must be in¬
Neenah and Appleton,!
creased
unless, of course, we Niagara,
continue on down the path of in¬ Wisconsin; Niagara Falls, N. Y.;.
and Memphis, Tenn. Mills of two
flation
via
a
debt-based
paper
and wages

tion

—

forget that world

trade operates exclusively on gold
in the
settlement of trade bal¬
ances.

proximately 62% of the corpora-!
tion's total volume in 1950. With,
the
issuance
of
the
additional

/ shares, the outstanding number of

•/_ Or Else
*

our

pay

aver¬

Gold Price Must Be Increased

tions that could be converted into

Incidentally,
of gold on the

1934-1944

ages.

the

to bankruptcy and

currency

diation. I believe all

repu¬

thinking

men

Canadian

subsidiaries

in the Province of

located

are

Ontario/

preeminence of the dollar but the

must

agree

Consolidated

this conclusion.

net

sales

thd

—

he had

intention

"tampering
with
the
currency";
which
I
firmly believe he meant. How¬
ever,
circumstances
alter
cases
knd wise
Since

off

change their minds.

men

Great

gold,

measure

Britain,

gave

gold

the

with the

our

result

United

States,

imports increased,
that

lost

gold

In settlement of trade balances to
the extent of

and

another

♦An address

$446,219,397 in 1932

$173,445,507
by Mr. Lilly at

of the Colorado Mining

meeting

Association, Den¬

Colo., Feb. 2, 1951.
In addition to
being
Statistician
of
Mines
Research
Bureau, Mr. Lilly is also President of
American "Hard Money" Association, and
Executive Secretary of Prospectors and

ver,

Mine

Owners Association.

the Why lies in the fact that

the

public does not realize What

has been done and is being done.
The
When

higher

exports to Great Britain de¬

clined and

but

going

of value in that country

than it had in
our

taken

of High Prices

gold
of

out

convertibility
monetary

the

prevented,
or
down, inflation

at
was

least

was

sys¬

removed. The

controlled,

debt-based,

un¬

printing-

press
currency that has in the
last 17 years reduced the
purchas¬

power

ounce

gold to

approximately one-third of $35.
Assuming, for the sake of ar¬
gument, that $35 may have been
fair

and

proper

price for

gold

in 1934, it does not
necessarily
follow that it is a
proper "fit" for
1951

fact

the

any

hat, shoes

than

the

that

world's

.over

population

gold

give

ruble
gold

of value

bloc,
a

both of
higher

much

their

econo¬

mies than the $35 an ounce price
we
use
in paying foreign trade

balances.

sizes

and clothes that Junior

United

States

currently
paying extraordinarily high prices
for

the

world's

commodities

and

paying for them in cheaply valued
gold. A year ago, an ounce of gold

would, for example, have bought
nearly 60 pounds of tin; today it
will buy only a little over 15
pounds. Just why we should cut
off

our

free

nose

arid

spite

our

face

by stubbornly refusing to utilize
the
purchasing power of
gold
demonstrated

other countries

market

probably

for

the

be,

but

way

price of gold
seem

have

waited too

long for that and must,
accordingly, resort to some plan
will

permit

the

months!
$131,-!

301,757, the largest

gold would

best

determine What the
should

for

ended Dec. 31, 1950, totaled

Determination
-

that

U. S. Pays in Cheaply Valued Gold

The

Times Call for Quick

now

operates within the sterling bloc
and nearly a billion, in the Rus¬
sian

corporation

billion

slowed

Why of today's high prices is

measure

tem, the brake which would have

ing

cold

which

Why

priced at $45 per share.
)
; |
^approximately the same as'.the
Proceeds from the sale will be;
Only About 10% Gold Backing
figure of $102.17 which is the
used in connection with the
of Total U. S. Money Supply i
com-j
London
equivalent,
on »a
legal
pany's new expansion program'
It is true
that, despite these parity basis, of the U. S. price;
which is expected to be
completed
losses, we still have nearly 69% for commodity prices and wages
in
1953 at an estimated cost of
of the world's monetary gold. This
have, on the average, trebled over
does
not,
however,
necessarily that of the period of 1934-1938. approximately $19,000,000. Upon
completion of the program the
mean
that~ we
have
enough'in Accordingly, to justify, on a com¬
company's daily production capac¬
relation to our monetary needs.
parative basis, a price of $70 an
ity of cellulose wadding will have
Actually, we have a gold backing ounce for gold, both commodity
been increased 34%. Sales of cel¬
equivalent to only a little over prices and wages would have to
lulose wadding accounted for
ap¬
10% of our total supply of money, ' be rolled
i »>

under

our

by the U. S.

So what? says the average U. S.

tions,
gold

charges.

is required to attain and maintain

other

people

"//yy//

now

when,

according to

ounce,

words,
Great
two
devaluations, the
September, 1931, and the

several

followed by 40 other
chiefly in the sterling

■

budget

over

You

cur¬

those fixed

gold and restoring the gold stand¬

one-third

monopoly

three.

the basis of legal parity,

$102.17

sterling to the equivalent of $2.80
September of 1949 and her ex¬

countries,

living

value,

price of gold

Great Britain devalued the pound

ample

required

ing

Mint.

of Jan. 1,1948 and
revalued in gold on March 2, 1950.
rency

about

their

all

for

same

second

far taken full

the

Hungary, for example, have been
forced into complete repudiation
of their
paper
currencies. Itaiy
has

amount

fixed charges and

(3) Determine how much

40%

figure

the

our

meet

have

supply
$35 an

value

Britain's

It is only fair to point out that
the Federal Reserve has not so

advantage of this in¬

meet

first in

currency.

figures furnished

changes.

tremendous

could get it!

need

words,

Some of them: China, Greece and

undergone

matter of

System, and receive in

(1) Determine just what this
country's overhead is or, in other

about $60 an ounce. The monetary

loss during the past 6 months has

serve

measure

and essentially a fic¬
tion, is maintained at approxi¬
mately $35. The commodity price
paid
by
processors,
jewelers,
dentists,
etc.,
is
equivalent
to

pro¬

U, ,S.

Treasury, is not paid for
directly by the Treasury. The pro¬
cedure is for the Treasury to is¬
sue
gold certificates which are

the

Great
Britain, however, the
exchange price, which is officially

combined

unprecedented

connection, it is of in¬
terest to note that the gold, which
by law must be turned in to the

turned'

States

than

Nice Business for Federal

not

dent

ever

flationary privilege, but they do

ounce.
j

fact, neither the
any Treasury offi¬
made an attempt

nor

has

rency

I NoGold Price Always Rises
as

President
cial

matter

not

rency.

cjan, in the

controlled

the
Two Days and

which

This

Thursday, March 8, 1951

are

given gold in a nation's monetary
system. The price in the United
In

with

actually several requirements.
prices for it; namely, (1) an ex¬
(2) Determine how much pro- !
change price, (2) a commodity, duction is needed to
provide the
price and (3) a monetary price, income and
profits necessary to

people'•—more

there

there have ever been before, de¬
spite the losses of World War II.

tion

the confusion
hysteria of the time, Congress

and

this

teach

"Lucky" Number Figure!

Meanwhile,

Who."

$35

that

world of approximately

2,500,000,000

April, 1933, when an embargo
placed on gold exports.

Why and

How

currency.

paper

now

was

"Where and What and When

were

Recom¬
reasonable con¬
price for gold.

path of inflation via
clusion

nations will continue down

cannot be answered
by any of
Kipling's "honest serving men."
A part of the confusion over
the price of gold, lies in the fact

for the young

quicker

action.

Under the circumstances, the sug¬

annual volume
in the
company's history. Net in-!
for the period amounted to'

come

$11,209,452, after preferred divi¬
requirements, equal to $6.24

dend
per

common

the

1,794,951 shares

stock then

In
August, 1950,
dividend of 60 cents

outstanding.
quarterly

per

common

Mining share, was declared and since that
two
Congress that the price should be time
additional
quarterly
determined by a monetary com¬ dividends of 60 cents
per share
mission,
should,
I
believe,
be have been declared.
carried out without further delay.
gestion

How

would,

Determined

seems

possible to arrive at
conclusion

gold

steps:

Joins Jones Staff

Proper Price Could

American

the

way

the

me,

reasonable

proper

(Special

price for

following

The

Financial

Chronicle)

ST. LOUIS, Mo.
William J.
Muckerman has been added to the
—

staff of Edward D. Jones &
Co.,
300 North Fourth
Street, members
of the New York
and Midwest

Stock

Exchanges.

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1031)

•

AVCO reports

for 1950

A
Family
of

Famous
•

CROSLEY
Year ended

HIGHLIGHTS

;

Nov. 30, 1950

Shelvador

Year ended

refrigerators, home and

farm freezers, electric ranges,

Nov. 30,1949

and

sinks

cabinets,

radio sets and other home

Consolidated

net

sales

Consolidated

net

income

$256,966,971

$137,398,554

$12,635,633

$4,150,466

Automatic

$2,400,000

Steel

kitchen

television

and

equipment.

BENDIX
HOME

APPLIANCES

washers, dryers, ironers.

Federal income and
^

excess

profits taxes

$16,100,000

cabinets,

base cabinets,

Net

working capital.

Net

tangible assets (net worth)

$71,617,941

$34,850,256

$81,273,695

$62,563,432

- *

HITCMEMS

wall

kitchen

waste

sinks,

disposers.

Crosley Broadcasting
Corporation
WLW,

Operates

"The

Nation's

Station," Cincinnati, and WINS, New

Per

common

.65

$7.63

$401.87

$259.01

York; and television stations WLW-T,
Cincinnati; WLW-D, Dayton, and

WLW-C, Columbus.

Per

preferred share.

Earnings per common share

$1.65

•»54

$0.50

>.30

NSH Idea
Spreaders,
and

corn

pickers, hay rakes

loaders, power take-off mowers,

gtain and baled-hay elevators and

Dividends per common share

other farm

Number of stockholders

56,345

57,119

equipment.

-LYCOMINGAircraft and 'industrial* engines, pre¬
cision machine parts,

SPENCER HEATER
BOARD

Heating boilers for comme/cial and

DIRECTORS

residential
Avco is

strong.

VICTOK EM AM EE, Chairman

for
GEORGE A. ELLIS

GEORGE E. A 1.1,EN

WILLIAM I. MYERS

use,

castings.

helping keep America

With substantial orders

military production, Avco's

plants and facilities also are
IRVING B.

NEAE DOW

BABCGCK
BECKER

JAMES BRUCE

JOSEPH It. IIALL

BENJAMIN If. NAMM

engaged in the manufacture of

CARLTON" M. IIIGBIE

THOMAS A. O'HARA

electronic

equipment, aircraft

components, auxiliary power

ROBERT L. JOHNSON

R. S. I'RXJITT

LEROY A. LINCOLN

JAMES D. SHOUSE

and

W. A. MOGENSEN

A. N. WILLIAMS

the nation's defense program.

units, military
MARTIN

W. CLEMENT

C. COB URN DARLING

AVCO

MANUFACTURING
420

LEXINGTON

AVENUE,

NEW

YORK

aircraft engines

other materiel

essential to

CORPORATION
17,

NEW

YORK

-so

;(io32)

The Commercial and Financial Chronicle

Continued

Notes Smaller Gain in
Our

Savings Bank Deposits

Reporter

A. Livingston Kelley, President of
National Association of Savings

Banks, reports gain in January
but $22 million, compared
with $141 million in Jan. 1950.

Deposits in the nation's 529 mu¬
tual savings banks increased

000,000
reach

during

$22,1951, to

January,

$20,047,000,000 at the close
of the month,
according
to
A.
Livingston
presi¬

Kelley,

the

National

As¬

dent

sociation
Mutual

ings

Sav¬

Banks

and

president,

Pro vidence

Inftitution

for

Savings,
Providence,
R.

The

crease
A.

Livingston Kelley

in¬

com¬

with

pares

December

Governments

The Treasury and the Federal Reserve Board, over the week¬
end, announced the settlement of their long-standing dispute over

whether the

debt management.

able

The issuance of

a new

series of non-marketable

long-term bonds bearing an interest rate of 2%% is the medium
through which the reported agreement between the monetary
authorities was reached. This agreement is designed to curb the
inflationary effect of the Treasury's bond-selling activities without
hurting the government's credit standing or unduly raising the
cost of financing the debt. The new bonds will be offered in ex¬
change for the June and December 2l/2s of 1967/72. The aim is to
reduce the sale of bonds by holders to the Federal Reserve Banks,
which have been buying them at prices which have tended to keep

the market for them orderly and stable.
Sales

by the country's banks and other financial institutions to
Federal of government securities provide them with cash reserves
on which to make loans.
This fans the flames of inflation. By offer¬
ing to exchange 2%% non-marketables for the 2y2s of June and
1967/72, the monetary authorities hope to encourage the
retention of the 2y2s by banks and other long-term investors in
Treasury obligations. It is hoped also to take the pressure off the
Central Banks in their buying of government bonds at "pegged
prices" because it is the purchase of Treasury obligations by these
institutions that makes them "engines of inflation."

Holders of the
2%s, incidentally, will be given an option of exchanging them
prior to maturity for marketable Treasury notes. Complete data
on the new 2%% non-marketable long-term
government obliga¬
tion and the convertible issue will not be available until March 19.

occurred

almost entirely in de¬
posits other than regular accounts,

inch

Christmas

clubs

and

school

savings. During January,
1951, amounts deposited in regular
accounts
were
at
record
high
levels, but they were nevertheless
exceeded by withdrawals, which
1 ad also been the

from July

case

through October, 1950.
The month witnessed
r'se of

further

$136,000,000 in holdings of

mortgage

loans

which

brought

Awaited

Despite reports of the agreement between the Treasury and
other monetary authorities over credit policy and interest
rates, more than a little attention will be given to the forthcoming

the

recommendations of the group appointed by President Truman, to

Plywood

privately

through
Reynolds ; &
Co.
and
Dquitable
Securities
Corp.
an
i/jue of $6,000,000 31/2%-4V2% 15j\ear promissory notes.
Of

the

total, $2,000,000 notes
3V4% interest and mature

tarry

1956.

{.roup

These

banks

were

sold

headed

Dank of America NTSA.
t

aining

$4,000,000

the

The

re-

were

pur¬

chased by an insurance company,
carry

4y2%

interest

that

institutional

again

mature

securities

market seek its

level.

own

To allow government securities

curbed

also

evident

the

extent

that
that

the
it

for the preparedness effort;

President

will

take

does

not

credit

want

needed borrowings
On the other hand the really infla¬
away

tionary borrowings, he indicates, must be limited in order to fight
the forces that are having such an adverse effect
upon the econ¬
omy.
Also the President believes there will be very substantial
borrowings by the Treasury later on in the year. This would be
in

addition

rather

envisages in 1951.
can

be carried out

sizable

refundings that the President also
These borrowings, according to the President,
successfully only if there is full confidence in

the public credit of the United States based
upon a stable securi¬
ties market. It is interesting to note the

borrowings by the Treas¬
ury that are expected by the Chief Executive are after higher
taxes, which have yet to be; voted by the Congress.
A

and

Dangerous Precedent

SECURITIES

government obligations. / There is
demptions of Series E bonds is getting
more

than

one

official spot.

doubt

the

NEW YORK 5

BOSTON 9

WHitphall 3-1200

HAncock 6-6463

controversy

Federal

the

trend

re¬

It is believed the

excess

of repay¬

ary

to what should be done to limit the inflation¬

borrowings, i consist of
same

measures

time, have

that could

curb

these

Treasury,

but

will

also

stem the tide of inflation.It may
be mentioned parenthetically that

the

conflict

and the

between

the

Federal

Treasury is not primarily

the rate of interest.

over

That is

only incidental to the controversy.
The basic question in the contro¬

is whether, the creation of
balances
through open

versy

reserve

should

the

Reserve

the initiative

authorities

holders of government bonds.

the

long as the Reserve authorities
obligated to maintain stability

are

the

government bond market,
initiative in the creation of

the

balances

reserve

the

government

Federal

these

vested

Reserve

circumstances

buy government
thus creating addi¬

obligations,
tional

The

under

forced

are

becomes

holders

securities.
Banks

balances when

reserve

nomic conditions indicate

eco¬

tight¬

depend to

the fiscal

controversy
'large extent on

position of the Treasury,

This also is bound to have
the

investment

ef¬

problems

savings banks and other insti¬

is,

investors.

balanced

the

budget

fiscal

1952, the
will be

briefly,

quences,
lows:

the

for

year

conse¬

fol¬

of life. These emergency measures, once in use, are
very hard
to get rid of, because there is
very often no desire to admit the
emergency has ended.
way

The President's

appear

the

Reserve

System. These
vested in the Secretary of the
Treasury subject to the

lending

and suggested as a method of limiting bor¬
However, not too much confidence, it seems, is held out

voluntary idea,

because

the President recommends for
committee similar to the Capital

the establishment of a
Issues Committee of World War
I* but operating in a broader area/
The object of such a
committee, through voluntary means at first,
but if not
successful, with real powers, would be to limit or stop
new

money lending by sayings
The President has

banks, insurance companies.
given bis selected group of advisors several
..

methods that could be used to curb
lending, and in that way stop
the
selling^ of government bonds by banks and insurance com¬
panies. This would take the
pressure off the market and the Cen¬
tral Banks.
Nevertheless, a stable and protected government secu¬
rity market under certain of these methods
would not be exactly
the best

thing that might happen to

our economy.

(2) A

borrower

rate

institutional

balanced

rigid economy
Federal

budget

in¬

would

the

and

tax

both

anti-inflationary
budget

are

attractive

institutional

The 2V2% rate

sat¬

was

much smaller than at present.

Treasury must recognize
money buys much
less today than was the case dur¬
ing the war.
the

fact

that

the budget is not balanced,
entirely different situation will

The Treasury will

prevail.
be

confronted

only

with

the

then

task

not

of refunding

huge amounts
short-term obligations, but also
raising new money in the open

market.

Moreover,

unbalanced

budget could easily aggravate the
fear of inflation and cause
creased

redemption

in¬

Bonds,
thus further aggravating the debtmanagement problem of the

■/

Treasury.

these circumstances, the
controversy between the Reserve
Under

authorities

the

arid

bound to become

Treasury

The

acute.

latter, in order to be able to meet
its

financial

insist
of

requirements,

will

the open market support

securities

government

by the
latter,
realizing that this contributes to

Federal Reserve, while the

the

inflationary forces, will

en¬

deavor to adopt policies to combat
the

forces

inflation.

such

the

present

particularly with the budget
it

unbalanced,,,
conceive

government
be

impossible

situation

bond

permitted

market

ket is bound to be

flexible than
ernment

own
mar¬

protected

though the support

may

at present

the

would

seek its
The government bond

level..

where

even

and gov¬
to

obligations permitted

fluctuate

than

during

the

conditions

should

de¬

such

velop, it is fairly certain that the
Board of Governors of the Federal

Reserve

System would

and

seek

obtain

from

powers

not only over the money

market

the

vestment

new

commercial

and

activities,

Congress

bank

but also over the in¬
policies of
the large

financial institutions of the

coun¬

The

try.

corpora¬

well

sought

powers

may

be:

powerful

measures, a

would

favorable .effect

in¬

burden

well

Since

anced

the part of the

Government
of

crease

securities with a
which would make

isfactory during the war when
commodity prices were substan¬
tially lower and when the cost of
operating
financial
institutions

new

only from the institution of

tions.

One of the measures that President Truman
suggested the
group give consideration to in the study is the
Emergency Banking
Act of 1933. Under this Act are
provided the powers to curtail

lending by member banks of the Federal

securities to

result

these

last few years.

individuals

Objectives

offer

ury

(1) The Treasury will not need
to

under

able to adopt a more flexible
open
market policy and for the Treas¬

and

The outcome of the

will

But even

circumstances, it might be advis¬

emergency

ening of credit.

loans,

unfavorable effect upon our

character.

between

authorities

Reserve

vestors.

study

45 Milk Street

rate

recommendations

rowings.

Street

the

money in the open market.
It
therefore will not offer any new

for

Broad

sales, in an inflation-minded economy, is also an im¬
portant force calling for stability in the government
security mar¬
ket. The suggestions that President Truman
has made to the four
important cogs in the defense program for study with eventual

is given some
credit,

the

end

the
and

than passing attention

The program could be extended to institu¬
tions other than member
banks, if so desired, by using the powers
provided by the Trading With the Enemy Act.
Consideration, the
President believes, should also be
given to the idea of providing
the Federal Reserve
System with additional authority over bank
reserve requirements.
The voluntary system of
controlling

INCORPORATED

increase

interest paid by the Treasury will
not only automatically bring to

con¬

Treasury will become academic in

Even the

Many believe

time

If the budget,
therefore, is bal¬
anced, the question of granting
a
higher rate of interest by the

was

commercial

same

ary measure.

prevails at present.
that

the

powerful anti-inflation¬

controversy as to whether or
the
Treasury should issue
long-term government obligations
with a higher coupon rate than

ending June 30,

powers are

& Co.

consider¬

not

the action of the government bond market. He
wants it protected
and stable so that the confidence of
investors will be

President's approval.

Atjbrey G. Lanston

present, there is

investors.

able

maintained

stitute

them
The Rate of Interest

tutional

MUNICIPAL x

principal type

exclusive

banks and at the

coupon

Because of these two factors, large
borrowing and refundings
by the Treasury in 1951, the President is not for taking chances'on

but could at the

STATE

government

of investment.

fect

ments over

their

will

investors

toward

Banks

reviewing the controversy, the President let it be
that he is not in favor of having the government bond

known

U. S. TREASURY]

look

market operations of the Reserve

addition

and

in 1966.

the

seeking an
end

study and report to him on the measures that could be taken to
curb inflationary borrowings.
At this recent meeting, the re¬
ported suggestions that President Truman made to the so-called
big four of Wilson, Snyder, McCabe and Keyserling seems to indi¬
cate there will be no fooling this time about action being taken
to clear up points of concern over debt
management, credit poli¬
cies, interest rates, and their influence upon the forces of inflation.

has placed

of their
provide

will

the

Toward

the

that

therefore, it is quite likely

Co.

find

also

year,

President Truman.

mber

Institutional

plants.

them with large funds
outlet.

raw

equipment to com¬

investments

bond

proportion since 1942.

Georgia-Pacific

necessary

sinking fund provisions

the

will

investors

(espe¬
cially the longer-term obligations) to find their own levels in an
unprotected market is definitely out of the question, according to

Cankers Place Plywood
Bonds Privately

their

plete

them to $8,175,000,000 or 36.3% of
total assets.
This is the highest
.

corporations will be

obtain

materials and

Truman Committee's Report

Thursday, March 8, 1951

page

December

new

Emergency Program's
Impact on Savings Banks

By JOHN T. CHIPPENDALE, JR.

1950

gain of $188,000,000 and an
increase of $141,000,000 in Janu¬
ary, 1950. The January, 1951 gain

from

(1) The

bal¬

exercise

tificate

imposition
in

reserve

cer¬

form

one

inflation

another whose purpose would be
to force the commercial banks to

(3) A probable result would be
increased savings on the part of

hold large amounts of short-term

individuals

certificate

the

psychosis of the country.

level

and

sales

excess

tions.

Bonds

redemp¬

(4) Under these circumstances,
the

Treasury would be in
tion to carry out refunding
tions

which

would

posi¬

lending and investing
the

reserve

Reserve

(2)
the

the

posi¬

offer

serve

This

would

meet

the

operations.

banks.

investment

demands of institutional investors

policies

institutions

commercial

policy.

outside

banks

may

by the

and

Since the sale of

securities

companies,
other

purchase

commercial

market

investment

government

long-term govern¬
ment obligations non-eligible for
by

managements, but rather by gov¬

ance

and

creation

to be determined not

the Treasury would

tion

open

financial

come

powers

banks

the

restrict

balances through Federal

The

ernment

be in

commercial

counteract

obligationsnow
largely held by commercial banks,

matured

Such

would

could

the

reducing the volume of bank de¬
posits.
In exchange for called
■

reserve

opera¬

reduce

holding of government securities
by the commercial banks, thus

and

securities.

government
the

this

insur¬

savings

banks

institutional

type

the

Federal

Banks leads not

creation

but

also

new
new

investors

Re¬

only to the

reserve

balances,

deposits, legisla-

Number 4992

173

Volume

tion may be enacted

The Commercial and Financial Chronicle

granting the

gations.

the Federal

Board of Governors of

If the refunding is not

successful then

some

of-the

meas-

cial institutions of the country,
Apparently a change in the open

other ures enumerated by the President market policies of the Reserve auin his statement on government thorities is taking place. While
institutional investments.
An un- securities and credit policies may the government bond market will
balanced budget, therefore, will be adopted. This certainly would continue to be protected the' aim
not only accentuate tne forces of not be to the interest of the finanwill be to keep the market orderly
inflation, but may also lead to
legislation which could have a*
far-reaching effect on the finan- v
Reserve

System

institutions

cial

some

the power to regulate such

agency

While

serve

credit much more risky and

difficult.

The statement of

intended
greater

to give
flexibility

agement.

also

more extensive
be expected in

the Treasury that the 2%% bonds sector of
will be convertible into notes is market.

the

country.

legislation ..will/ be

such-

considered

the

and not stable. An orderly market
greater fluctuations and
hence makes accessibility to Remeans

emergency meas.-;/

as an

yet, as is well known, once-'1-A I
legislation is on the statute books^ya |
it is not removed even after .th^-^">
ure,

has disappeared."'

emergency

Inflation

Halted

Can

savings banks

activities of

The

and other financial institutions of

country will to a large extent
whether the forces
are brought to a halt

the

depend upon

of inflation

whether

gather

they

inflation

are

encouraged;

the

savings

and

deposits,

the growth in disposand
the decline in

reflecting

•

income

able

the .volume

durable

;<•;

Since
is

mortgages

bound

institutional

consumer

Interest

V; /

Long-Term Debt

Amortization

increase substan-1
the supply* of

goods,;/.should
Gaily,,

■

the part of the

peopleTwill
wolume

•

the lorces r
controlled, in- ;<

are

savings

creased

permitted to
it

momentum,

Qf Debenture Expense

Other Interest

....

decrease,
will

investors

be/

to find an outlet for"
funds in government obli¬

compelled
their

gations.
A balanced budget

will make it

possible for the Treasury to adopt
a
debt
management
program
in

which

would

itself

anti-

inflationary, since it would make
possible the refunding of bankheld government obligations into
non-eligible

government

ties held primarily
investors.
The

forces

securi¬

by institutional

inflation

-•

can

halt by rigid economy on the part of government—
Federal, State and local; by broad¬
brought to

burden, thereby
purchasing;
power;
and ' by the exercise of
restraint by all economic groups
in
the
country.
Large institu¬
the

ening

tax

siphoning

tional

off

sale

securities to

425,947.34

government

Federal

the

6,993,209.17
,147,759.44

9,075,919.78

investors also must realize
their

that

excess

Reserve

Banks contributes to the forces of
inflation.
of

tion

debt and

causes

monetiza-

of the public
places funds at. the dis¬
portion

posal of industry and trade, thus

creating
raw

unbalanced

have
on

additional demand for

materials and labor.

budget

far-reaching

the economy

well

will

tions.

dissaving;

financial
lead

and,

these

under

of the country as

the

can

consequences

above

institu¬

increased

all,

since
the

circumstances

government bond market cannot
be left unprotected, it will lead
to the enactment of new legisla¬
tion
which
will
increase
the

the Federal Governonly over the commercial banks, but also over all
powers

ment

not

institutions.

financial

595,652.70

par¬

ticularly f. essential, if the forces
inflation are to be brought to

509,266.06

63,254.60

66,865.87

370,212.56

231,143.76

of
a

halt, that each economic group,

the large institutional
analyze carefully its
activities
and
inquire
to

including
investors,
own

what extent they

inflationary

1,029,119.86

$114,787,476.42

807,275.69

$100,634,227.71

contribute to the
If these are

trend.

stopped,
then
the
problem
of
halting the forces of inflation,
complicated though it may be, can
We'll be glad to send you a copy of our

be solved.

Annual Report
Terms

New

2%%

Issue

Step in Right Direction

and

AMERICA'S OLDEST TOBACCO MERCHANTS

ESTABLISHED 1760

The announcement of the Treasury

illustrated

for 1950. Write P. Lorillard Company,
18, N. Y.

119 West 40th Street, New York
!

that it will refund the June
December

2V2%.

bonds

67/72 into long-term 2%% obliga¬
tions is
tion.

step in the right direc¬

this

TOBACCOS-

refunding" operation

SODA
(WAS 4

is successful it will greatly allevi¬

'ASOUrtE. STATION

ate the debt management problem
and

the

will

reduce

Reserve

the

Banks

pressure

acquire

on
a

large amount of government obli-

Main Street, U.S.A.,

Where America Buys Lorillard Tobacco Products

the
in

Treasury
debt-man-

indicates

that

fluctuations
the

can
short-term

government
'

bond

(1034)

The Commercial and Financial Chronicle

Mutual Funds

NATIONAL
Speculative Series

v\i^ si

MUTUAL

and

Prospectus
your

upon

request

investment dealer,

est

from

industry is

SECURITIES

CORPORATION

RESEARCH

120 BROADWAY, NEW YORK 5. N. Y.

capital
ket

mar¬

known

Cusack
in

address

at the

Savings

Bank

Forum,
Chap¬

Essex

ter, in

Mass.,

DIVIDEND

Cusack,

who

the

Cusack

stressed

his

Why
any

speech, "Mutual Funds—
am For Them," that, "if
part of the financial family
I

becomes

ill

the

body itself

suf¬

fers."

Prospectus from
investment

your

dealer

have

marked,

Established 1894

20c

cumulated
5c

and

current

investment

income, and

profits. Payable March 31,

stock of record

March

could
the

14, 1951.

WALTER L. MORGAN, President

Philadelphia 2, Pa.

Custodian

Certificates of

education

funds
of

Participation in

investing their capital

IN
BONDS
(Series B1-B2-B3-B4)

the

audience

the

not

are

com¬

savings

(Series Kl-K.2)

COMMON STOCKS
(Series S1-S2-S3-S4)

Tke

may

be obtained from

Keystone Company
of Boston
50

Congress Street

Boston 9, Massachusetts

which

61.1%

in U. S. Govern¬

and

compared

20.55%,

tended market

foreign

and

ties, such

vestment
terest.

companies have
•

That

the

will thrive
made

was

■Y

financial
or

entity

by Mr.

Cusack's

statement that the growth of mu¬
tual funds to an all-time
high of

$2,530,000,000,
billion

increase of

ten

over

the

will

in¬

for

volume

the

uncertain¬

the

stocks

since

last

after

decade.

advanced
sales

selection

which

satisfy,

se¬

mutual

the

reduction

hazards

and

the

funds

which

excellent

wishing

they
me¬

which they provide to

cor¬

establish

the

Cusack

audience

funds

members

consider

the

of
ad¬

mu¬

industry, after retire¬

ment from their

bank,

as a way

retired officer of

after

mutual

them.

After
in

and,

interested

about

trained

funds

all,

savings

investments. I

some

investment

Boston
such

would
person

so,

selling

has

bank

sav¬

knowing

and

may

carry on

and the field is not too
from

purchasing

seem

wish

that

shrinkage in the
of

power

threat

until

unrealistically

goods

the
stock

high

far away

that

sure

companies

happy to have

come

in,

explain

to him the
operation of the

fund,

prices
in

"Seorye

PUTNAM

Accord¬

major problem faced by
government is that of curb¬

has

FUND
ttfjodfon

about

80 %

Putnam Fund Disthibutom, be
50 State

Street, Bostoft

its

EATON & HOW AO I)
HALANl'ED

re¬

EATON & HOWARD

FHNO

STOCK FUND

PROSPECTUSES OF THESE TWO INVESTMENT

stocks, which
On

Fund

se¬

realized

FUNDS MAY BE OBTAINED FROM YOUR

INVESTMENT DEALER OR

investments of $15,800,000.
The

called

report

attention

EATON & HOWARD

INCORPORATED

quality of the defensive
portion of the Wellington portfolio
reduce

important
market

buying

should

stocks

mon

BOSTON

"This should not only
risks but provide

market

quality

held

issues,

The

the

24 Federal Street

333

com¬

BOSTON

primarily

are

well

stocks

among

power

decline.

Montgomery Street

SAN FRANCISCO

diversified

which

should

years)

states:

stocks

ther,

Prospectus

for

many

investors

have

upon request

years

added

during recent years. Fur¬
the current rise in stock

prices
value

Fund, Inc.

"Many investors
large proportion of

stocks

other

Affiliated

has
of

increased

the

Lord, Abbett & Co.

dollar

stock

holdings and has
therefore increased the equity in¬

New York

—

Chicago

—

Atlanta

—

Los Angeles

vestment in relation to the entire
even

no new

"We do not know how long this
or how high

bull market will last
stock
not

prices may

and

are

suggesting that all stocks be

sold.

Common

measured

stock

the

prices

—

Dow-Jones

In¬

Average — are approach¬
ing the top of their normal his¬

torical

channel

fluctuation,

seem only
prudent at this time to review all

accounts for

the

purpose

con¬

sidering whether the present

pro¬

portion of common stocks held is
appropriate."

been

finance

dollar.

substantially

F7/ie

however, and it would

ings bank would like to
actively

that of continued

dustrial

example," he said, "it
a

risk

purchases have been made.

asked

vantages of positions in the

be that

the longer term the most
to
the
investor is

over

serious

substantially.

investment account

retirement trusts.

"For

that

curities profits of $2,560,000 which
an unrealized
appreciation of

common

tual

Stein Roe & Farnham
Fund, re¬
porting to
shareholders, states
that, "We remain of the opinion

left

and

his

possibilities

America

KEYSTONE HAS ASKED
many

a good
dealers in recent weeks to

estimate
mon

the

stocks

proportion
to

bonds

and

com-^

Diversified Investment Company

Prospectus
:
?

may

be obtained from

investment dealer
200

The Parker

your local
Corporation,

Berkeley St., Boston 16, Mass.

other

fixed investments held

at present
by their combined clienteles. The

estimated

percentage
of
stocks
repeatedly been between 80
and 90% of the total.Keystone
has

•FOUNDED

■

com¬

considerations,

summer.

volatile issues and in

armament benefited

had

curities, the variety of investment

Mr.

ADVERSE

important

ductions in the two-month period
which the report covered were in

objectives

dium

are

civilian

past

cash
obli¬

changing outlook

well in either

year

Fund

and

common

have carried

provide,

the

with

professional

could

WHILE

ment policies, restrictions, alloca¬
change in investor psychology.
"In spite of inflationary
factors," tions, taxes, on various industries
the report continued, "Wellington and
companies.
Fund believes it is sound policy
The
Investment
Company of

experienced

the

reserve

profits for individual

as war

controls

fundamental

panies.

purchase,
despite the large increase in the
productive capacity of our indus¬
try in
ingly,

are

earn¬

purchase of goods

the

exceed

debts,

consumers

a peace or semi-war
period,
the
highest de¬ economy."
posits in the history of the 500 odd
PROFESSIONAL INVESTMENT
mutual
savings
banks
in
the
Planning, a Keystone publication,
United
States,
now
over
$20
in noting that the Dow-Jones In¬
billion.
The Keystone Company repre¬ dustrial Average has crossed the
250 level in a broad rise from 92
sentative, in his public relations
in 1942 (representing, on a
price
address, listed ten reasons why he
basis, the
highest
level
in
20
was for mutual funds. He stressed

under

threats, wage and ing inflation, and one faced by
higher taxes, the manager of investment funds
of which could bring about a is to gauge the impact of govern¬

price

yV and added:

community

starve

clear

in^

for

available

rise, but because of

domestic

use

will

respec¬

Jan. 1, last.
"We believe," the Fund stated,
"that this conservative position is
sound not only because of the ex¬
on

the high

might
Protpectu*

reduction

come

1950—an investment in which in¬

avoiding "retirement shock."
PREFERRED STOCKS

some

and with 22.65%

these

porations

INVESTMENT FUNDS

executives,
Mr.
emphasized carefully that

investment

unds

public

represented."

coincided

eystone

58.8%

of its resources in common stocks

banks, since
their function is entirely differ¬
ent, He said that a large part of
savings banks' money is invested
in home mortgages—$8 billion in

have

ered

diminished,

with

gations to take advantage of op¬
portunities which may be uncov¬

moderately increased savings and

March

investing public and that savings Although the long-term trend
may
banks, commercial banks, Stock still be inflationary, this trend
Exchange firms, over-the-counter may have many setbacks if it fol¬
houses, life insurance companies, lows the course of inflation in
Federal Loan Associations, mutual other countries."
funds,
fiduciaries,
and
others
The principal common stock re¬

petitors

ac¬

finan¬

Even

and

substantial

think

short-term government

000 Fund

point market advance such

for

its

con¬

share from undistributed 1950

securities
to

from

community

mutual

Quarterly Dividend

that

even

in¬

reduce

Cusack

85th Consecutive

re¬

desirable

In addressing
savings
banks

jjfrFIlljg.

reserves

and

would

WELLINGTON

reduced

holdings

financial day where
the various forces in the financial
forum

New York

One Wall Street

have what is known

cial week

CALVIN BULLOCK

thought," he

would

and

stocks

common

Additionally,

Until

any

often

"it

had

two

re¬

seems

which

prospects
a

allowing for considerably
higher taxes, The Fund -comments,

tively,

William

ings

values.
has

ginning of the year."
These changes left the $167,000,-

with

Keystone

Funds in Bos¬

cash

first

ment bonds and cash as

with

C ustodian

ton,

1951

stock

the

Company of America

certain
to
attain
higher levels in 1951 than in 1950
because of our military prepared¬
ness program.
Consumer income,
which reached a new high level
of $222 billion in 1950, is also ex¬
pected to rise in 1951.

reported ports,

servative position than at the be¬

Feb.

Mr.

creased

20th,

Funds, 50 Congress Street,
9, Mass.

vestment

portfolio is "in

Salem,

Boston

INDUSTRIAL ACTIVITY, the In¬

FUND

that

common

stated

todian

of companies

for net

The Outlook

months

fairly priced in relation

continues, investors in such
position face the possibilities of

shrinkage in capital."
Copies of Professional Investment
Planning are available, without
obligation, from Keystone Cus¬

him with literature, as¬
sist him and place him with a re¬

Tuesday

today,

William

ket

substantial

provide

WELLINGTON

funds invested

sponsible firm."

necessary for the sur¬
the

vival

NATIONAL

UNDERSTANDING

recognition of common inter¬
by members of the financial

from

Thursday, March 8, 1951

comments
that, "If the historic
pattern of fluctuation in the mar¬

By ROBERT R. RICH

1925

re-

Number 4992

Volume 173

The Commercial and Financial Chronicle

(1035)
lation to earnings, yields and book

was

announced

values, we feel that the common
stock position of the Fund should

man

Meeting

be maintained.

"Favored

mounting corpo¬
growing infla¬
tionary sentiment, the stock mar¬
ket has had a large advance since
rate

profits

and

Tuesday by Nor¬
Waag, Vice-President and

Controller of the

Investors

group

Minneapolis.

The maturity payments will be
made to more than 16,000 individ¬
ual certificate holders.

THE

ANNUAL

Stockholders
In¬

Company,

the

ing

re-elected

Directors

were

Hugh

this

ensuing year:
Coleman, George E.
Crothers, Roy W. Cloud, Edward
S.

Parker, Robinson &

New York

for the

serve

Long, 48 Wall Street,
5, N. Y. The excellent
follow¬ typography and layout has made

Commonwealth

vestment

prospectus

humanly possible

Waldo

readable

the

under

Kristeller Being Formed

MAPLE WOOD,

cir¬

7 Highland

Place,

Kristeller,

heimer

Co.,

•>

that firm

April 1. Mr.

partner

in Oppenretire from

will

March 31.«

Durand
Frank

Admit

Piazza

will

acquire tha
Exchange mem¬

New York Stock

bership of Celestin A. Durand

—

March

firm

the

Son,

and

become

Wall

City.

fixed-income

securities."
NEARLY HALF OF the assets of

B eneficial

Fully Administered Fund now are
invested in cash, U. S. Govern¬
ment

bonds

electric

and

power

and

light bonds of the highest
quality. The balance is invested

in selected

dividend-paying com¬

stocks.

mon

This

current

defensive,
with

trasts

that

amount of

OUR BEST

low

point in July, 1949 when the
fund was invested 21% defensive,
79%

aggressive; with that just
the outbreak of war in
at

30%-70%

that

and

July, 1950 low point of the
post-Korea market decline when
the ratio
The

25%-75%.

was

fund

states

the

purpose

course,

sive

"It is, of

that,

business built

advantage of buying

been

48%

der

review,

American

the

rate

same

the

for

year."
INDUSTRIALS

BOTH

mediate

for

Fund

for 1950 reports

last

extent

ual

portfolio

owning

milestone

1.85

2.11

1.20

2,000,000

1946

180,882,354

104,894,284

5,563,343

2.25

1.50

2,383,100

1947

203,995,077

118,092,186

6,431,432

2.56

1.50

2,383,100

1948

229,041,935

134,503,123

8,012,503

3.14

1.65*

2,383,100

1949

261,077,869

151,189,179

8,264,030

2.76

1.50**

2,728,208

316,390,109

207,494,743

9,967,255

3.08

owned

policies.

traces
Trend

results

the

CONDENSED CONSOLIDATED BALANCE SHEET, DECEMBER

for

busi¬

number

utive

year.

Net

records

earnings

dividends

Stock

new

Other Assets and Deferred

funds

sales booklet, illustrates how good
literature can be.
It
is a

sales

tool

for

use

prospects

with

customers

little

knowledge of the securities
and

its

functions.

$3.08

per

present

are

available, without obligation, from
Axe
Securities Corporation,
730
Fifth Avenue, New York 19, N. Y.

TOTAL

oldest of these

year.

Beneficial's business, therefore,

tends back

DIVIDEND RECORD

UNBROKEN

than this current sat¬

important

performance,

isfactory
proven

vitality of the

period of
of

The

company.

2,728,208 shares for the previous

quarterly

Stock

The

cash

dividends on

continuously

74,638,143
$226,267,818

since

cash

May, 1929. In

remarkable

reflected in the table above.

There is
sound

one.

reason

for this

small

service

vitality and
The

American

year,

Family and regardless of conditions the

exceeded

business of the

dividends paid.

Family must

states

Personal Finance

located in

are

and in
use

27 cities

the

name

Company, which is well

known in the localities served.

SMALL SIZE
In

addition

go on.

diversification,

provided

Beneficial's subsidiaries render

loan

Canada, and generally

tically

organ¬

every

exception, earnings

cycle, it has shown

These offices

OF ACCOUNTS

pros¬

that included all phases of the

vitality,

common

its

depression and

peace,

loan offices.
404 cities in

era

paid

has

ization

and

ex¬

World War I—a period of

war

perity,

Company

unprofitable

economic

had

years—and through this checkered

however, is:'the
over

ever

business

and under all sorts

many years

conditions.

The

Copies

4,031,388

organizations began business in 1914 and

com¬

t «■*

these

sense.

3,386,529

Minority Interests

Capital Stock and Surplus

of them

without

good

6,342,554

69,438,000

Deferred Income, Etc.

$226,267,818

none

Townsend, author of the booklets
lists Four Vital Steps to becoming
a
Successful Investor, which, in
inflation-ridden days, made

5,794,019
$ 74,773,758

were

mar¬

Morris

Charges

TOTAL

mutual

2,697,580

Payable

Long Term Debt

$219,925,264

per

Calif.

"HOW TO BECOME A Successful

8,732,159

Accounts

Total Current Liabilities

1,376,704

Total Current Assets

for

$ 57,550,000

Employees' Thrift Accounts

Accounts Receivable

consec¬

Payable

$9,967,255, equal after Preferred

without obligation from Tech¬

News and Notes

3T, 1950

Federal Income Taxes

196,941,506

10,553,237

cus¬

served and

the sixth

$207,494,743

for Losses

profits earned set

155 San-

Loans

$ 21,607,054

Less—Reserve

transacted,

new

year.

Liabilities

Obligations

Receivable

pared with $8,264,030 and $2.76

St., San Francisco 4,

cent in Common Stock of Company.

per

Instalment

tomers

3,091,364

Inc., paid in 1949.

through 1948 include operations of motor carrier subsidiaries disposed of in latter

Cash and Gov't

ness

1.75

Motor Coach Lines,

Assets

Totals

performance

nical Fund Distributors,

l2'/2

in Common Stock of Continental

Instalment Notes

Technical

the

Plus dividend declared

im¬

common

permitted by individ¬

issue

candid

2.61

4,589,307

passed—

nical Record is available to deal¬

ket

6,431,382

69,244,134

Years 1945

3,091,364 shares of Common Stock,

and

2,31.4,989

77,730,631

141,839,884

♦♦Plus dividends of

back to 1919, with a record of buy
and sell dates. The monthly Tech¬

sales

2,173,394

141,488,729 7

Notes Outstanding.

for investment dealers, in its Feb¬

Investor"

2,014,300

1.50

year

year an

was

that of $200,000,000 in

nical Record, a monthly digest of
news
and information expressly

some

$ 1.50
1

Family

history. During the

portant

and

Fund, which publishes the Tech¬

ers

COMMON SHARES

1945

the best

longer term position,
that common

full

Technical

outstanding

CASH DIVIDENDS

1940

Beneficial Industrial Loan Corporation

reported

should

ruary

2.21

In its recommended inter¬

stocks.

stocks

$ 2.32

5,574,292

rails, Technical Fund reported on
Feb. 15, 1951 that the situation is

the

$ 5,331,294

52,952,489

1950

its

quarter last
IN

favorable

$ 38,706,865

78,948,881

over-all market

the

performance of the fund has been
satisfactory and the dividend is
at

$ 66,012,556

financing The

op¬

ranging between 40%
during the quarter un¬

and

EARNINGS

1935

of this defen¬
your Fund

portunities as they arise.
It is
significant that while the reserve
has

vitality of

per common share

NET INCOME

to enable

reserve

take

The

consolidated

NOTES OUTSTANDING

1930

the

year-end

LOANS MADE

YEAR

prior to
Korea

BENEFICIAL INDUSTRIAL LOAN CORPORATION AND SUBSIDIARIES

con¬

market's

the

1950

48%

position of
aggressive

52%

this

wide

geographical1

further diversification is

the customers represent

every

industry,

prac¬

and,

profession

occupation. Risk is further spread by the

relatively small size of the
Instalment Notes

accounts—

Receivable, which totaled

$207,494,743, at the 1950 year-end

were

due from 982,370 customers, an average
of $211.

Company

was

formed by

consolida¬

OFFICES IN 36 STATES AND CANADA
A

tion of the businesses and assets of four

systems
were

of small loan companies, which

under the

same

management as

the

copy

of the Company*s

com¬

Subsidiaries of Beneficial Industrial Loan

plete Annual Report for 1950

Corporation operate

will be

system

of 633 small

furnished

upon reepxest.

HOLDERS OF FACE amount in¬
stallment

payment

certificates

investment

Investors

Diversi¬

fied

Services, Inc., Investors Syn¬
dicate of America, Inc., and par¬
ticipation certificates of Invest¬
ors
Syndicate Title & Guaranty
Company of New York State will
receive

than $43

million

maturity payments due in 1951, it

Beneficial Industrial Loan Corporation
i

Wilmington
The

information contained

herein should

be read

99, Delaware

conjunction with the financial statements and notes appearing in the 1950 Annual Report to Stockholders
which contains the certificate of Messrs. Haskins & Sells, Certified Public Accountants. This advertisement is
published solely for the purpose of providing
information.
It is not intended for use in connection with any sale or purchase of, or any offer or solicitation of an offer to buy or sell,
any securities.

partner

New

is, however, an even
stronger reason for keeping sub¬
reserves

Durand

Street,

war

stantial

Adrian

Robinson will form Parker, Rob¬
inson & Kristeller with offices at

—

Kristeller, member of thst
New York Stock
Exchange, John
E.
Parker, Jr., and Samuel H.

During
1950
the
Investors L. Eyre. Alan Field.
Consolidated Investments
group's
face-amount
certificate
At the Board of Directors Meet¬
(Special to The Financial Chronicle)
ities was overcome. Recently the companies distributed more than ing held immediately after the
SAN FRANCISCO, Calif.—Con¬
volume of
trading on the New $29 million in maturity payments Stockholders
Meeting, the fol¬
to
more
than
11,500 certificate lowing officers were re-elected:
solidated
York Stock
Investments
Exchange has been
Incorpo¬
holders.
rated has been formed with offices
very heavy.
It would not be sur¬
S.
Waldo Coleman, President;
More than 55% of the men and
in the Russ Building to
prising
if
a
market
reaction
engage
in
George E. Crothers, Vice-Presi¬
the securities business.
should occur out of a background women who will receive certif¬
Officers
dent; Douglas R. Johnston, Viceare: Stuart D. Wattles,
of over-speculation or from pes¬ icate
President;
maturity payments in 1951 President; Robert L. Cody, ViceRobert J. Rankin,
simism generated by the imposi¬
Vice-President,
are over 50 years old.
Over 58% President, Secretary and Treas¬
and Kenneth R. Richardson, Sec¬
tion of new controls, restrictions
Lewis V. Coleman, Viceof those receiving 1950 payments urer;
and taxes.
We have no convic¬
retary-Treasurer. Mr. Wattles was
President; Alfred A. Hook, Chief
were
over 50.
tion as to the likelihood of such
Majority of current Accounting Officer.
formerly with Colvin-Mendenhall
a decline, and, in any event, feel
certificate
holders
numbering
& Co., Mr. Rankin with
Wilson,
NEW PROSPECTUS of Diversi¬
this risk is adequately provided
more
than 400,000—are between
fied Funds, formerly New York Johonson & Higgins.
Oscar Catfor by the government bond and
26 and 50, the company said.
Stocks, is now available from toire is associated with the firm.
preferred stock holdings of the
Fund.
The ever-present danger
full

Ralph

cumstances.

the initial shock of Korean hostil¬

York

The Commercial and Financial Chronicle

(1036)

Thursday, March 8, 1951

banking system with 14,000 banks
different kinds.

THEN and NOW...

of many

Effectiveness of Selective Credit
Controls

Guess Who?

If You Can't Turn to Page 29

Margin

1934,
has

Western Pacific
Speculative interest in Western

Pacific

heightened
late last week following reports in
the press that Alleghany Corpo¬
ration had been negotiating with
common

was

James

for

Foundation

pur¬

chase of the latter's interest in the

conversions

bond

come

weeks,

from

recent

active and moved
ahead sharply on Friday when the
broke.

news

The James

Founda¬

tion

owns

mon

stock and 55,727 shares of the

153,165 shares of

participating
Pacific.

ern

preferred

com¬

West¬

This holding last year

roundly

represented

29%

the

redemption

ings

the

new

1st

The

been

bonds, which have
for
redemption on

called

May 1, 1951,
the

are convertible into
stock on the basis of

common

any

since reorganization.

and

the

whole

remaining

converted

were

tion, this would result in
of

crease

amount

125,740

issue

this

be used

in¬

the

ticularly

out¬

standing, to 534,17-7 shares. With
this as the maximum, the James
Foundation holdings would still
represent close to 25% of the vot¬
ing control.

impressive

performance

matter of

but

which

found to have
is

re¬

has

value and which

eliminated under the terms of
C. C. proposed reorganiza¬

47.9%

climbed

revenues

and

net

income

from

page

Fallacies of Price and

Credit Controls

order

add

their

reserves.

increased

will

take

dim view

proposed change
Western Pacific.*

control

Even

though inclusion of West¬
Pacific in any. transcontinental
railroad transportation system is
still, at best,
to

long

way off, there
adequate justifica¬

tion for the obvious enthusiasm
for the common shares. The road
underwent

tion

drastic

few

The

latest

years

ago

reorganiza¬
and since

its

step

improve and
capital structure.
the sale late

was

last year of $22,000,000 of new 1st

ciates

sale

was pro¬
the proceeds from the
these bonds to retire the

use

March 1 made

asso¬

offer¬

ing of $6,555,000 2%% equipment
trust certificates
maturing annu¬
ally March 15, 1952 to 1966, inclu¬
sive, at prices to yield from 2%
to 2.75%, according to
maturity.
Issued

under

Interstate Commerce Commission.

The certificates will be secured

new
standard-gauge railroad
equipment, estimated to cost ap¬
proximately $8,197,000.

Other

members

of the

offering

group are R. W. Pressprich & Co.;
Hornblower
&
Weeks;
Merrill

SECURITIES

Co.; Wm. E. Pol¬
Co., Inc.; Gregory & Son,

Inc., and McMaster Hutchinson &
Co.

all

Timet

Samuel Englander in NY
in

%CrC7x A *1 *

25 Broad Street

New York 4, N. Y.

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

securities not sold

non-banking

have to be

would

investors

purchased by banks. To

Englander

securities

business

engaging
from

310

West

J. Steindler & Co.

conducted

his

business under the
lander & Co.

of Eng¬

primarily of
down

other

re¬

payments
on

automo¬

selected

durable

the

securities offered,

any
even

of par.

figure in excess

This removed the risk of

rates

completely;

serve

but

not

realistic to suppose that the Fed-'
eral

Board

Reserve

would

com¬

pletely withdraw support from the
bond

government

period

market

emergency.

Thus, whether at

par, or slightly
the Federal Reserve
still be supporting the mar¬

below

par,

would

ket.

Such

support—so long

continued in fact—causes the Fed¬
eral

lose

Reserve to

control

over

the creation of reserves by mem¬
ber. banks.

The

federal

debt

$250 billion, and the presence of

billion

commercial

bank

will

whether
the

remain

the

Federal

wins

Treasury

situation

regardless
Reserve

the

of
or

$134

with

which

for

banks

purchased government

current

eral

ever

since 1941, the Fed¬

eral Reserve
the

over

open

would

operations, has supported

would

Reserve,

market

through

its

j*:

The only way

se¬

curities at the time of issuance.

Thus,

argument.

iifwhich

months.

Advocates

point

the Fed¬

reserves

legislation

limit

which

seriously the ability-

U. S. Government security prices

of commercial banks to sell their

government

above par.

During the last

the

year

been

Federal

Reserve

has

increasingly reluctant to do
know

You

that

the

Board's

securities.

Federal

Reserve authorities have proposed
to

Congress

several occasions

since the end of the war, that, in

unwillingness to commit itself to

addition to the

continue

deposit reserve, b$nks be required

bond

prices

support
at

the

Government
low

interest

sary

to examine that argument in

detail.

factors:

revolves

(1)

the

about

several

Treasury's

long

hold

sisting
in

presently required

secondary reserves, con¬
of government securities,

amount

eqq^l to a certain

percentage of outstanding
its.

to
not

depos¬

Although such: a tool has been

used

Canada, 4here

believe

that

such

the

this

credit

doubt

has

such

con¬

There

credit

consumer

expanded

regulation.

considerably

The

eliminated
chasers

less

cash

meet

the

regulation

some

who

cient

did

marginal
have

not

has
pur¬

suffi¬

earning power to
higher
requirements.
However, it is unlikely that Reg¬
ulation
effect
for

has had

any material
the effective demand

upon

durable

riod

goods during the pe¬
question. That has been

determined almost entirely by the

degree

fear

shortages,
of

impending

higher

deterioration

prices,

and

quality. Those
fears have caused widespread use
of savings to obtain goods; the
very
large
volume
of
liquid
assets

has

effect

the

prevented

normal

higher requirements

demand.
One of the announced purposes
of Regulation W, when it was re-

imposed

facilitate

the

September,
transfer

raw

materials

and

from

peacetime

duction.

manpower

pro¬

credit

con¬

this.

critical

defense

Consumer

cannot

was

Experience

of the last few months, as well as

during

World

durable

goods

and

II,

War

manufacturers

that

sharp

will
long

indicates
consumer

produce

they can,
an eventual

reduction in output. Rapid

transfer

civilian

facilities

production can be accom¬
plished only through material al¬
war

locations

and

manpower

restric¬

tions.
The

put

purchase of continued out¬

through the use of available
deposits and liquid assets

bank

has activated deposits

lying

idle

which were

not being used.
This has exactly the same effect
and

inflationwise

amount of
have

effect

had.

equivalent

consumer

credit would

the

only

credit

con¬

Practically
consumer

trols has been to prevent the very

small,
crease

which
sumer

about.

The

reserve

Regulation

evidence

controls.

that

$2.5

nine

than would have occurred without

reason

administratively feasible in

compared

almost

preceding

effectiveness

sumer

consum¬

increased

since they anticipate

couTflLregain control

creation

million,

increase

billion

much

fluctuations

market

outstandings

only

trols

which

three months, from the
September until the end

the

ties the hands of the Federal Re¬

portfolios has creaited

In the past he

name

interest

the Federal Reserve banks agreed

of¬

investment

$62

72nd

own

pattern

present

induce commercial banks to do so,

rates desired by the Treasury has
Street,
made
headlines
New York City.
during
recent
Mr. Englander
was
formerly with Marx & Co., months.
Seligman, Lubetkin & Co. and P.
For our purpose it is not neces¬
fices

1 * c

so.

Samuel
Selected Situations

required, and that

G. Becker &

lock &

RAILROAD

all government

the

Lynch, Pierce, Fenner & Beane;
Otis & Co.; Freeman &
Company;

Specialists in

debt would

Philadelphia to buy
Plan, the certificates are being of¬
par or
fered subject to approval of the

3V8% mortgage bonds. It
posed to

very

Halsey, Stuart & Co. and

then has continued to

consolidate

ern

appears

$198,111

Halsey Stuart Group
Offers Equip Tr. Glfs.

this
of

from

road has

and

credit

fact,

some

consumers.

December, instalment

Federal Reserve banks, instead of
$707,968.
The
selling as one would expect, actu¬
high
excess
prof¬
tion plan. The Alleghany Corpo¬
ally purchased $2.4 billion of U. S.
ration also has a stock interest in, its tax exemption and the traffic Government securities.
Thus, the
outlook
is
highly
but by no means control
encouraging.
Federal Reserve banks provided
of, Ches¬
Thus results for the full year 1951
apeake & Ohio which, in turn,
the reserves which enabled com¬
should
show a substantial gain
owns
a
sizable interest in New
mercial
banks
to
expand loans
over the excellent 1950
York
showing.
Central.
Obviously,
the
and deposits.
possibilities in this situation are
To explain this apparent dis¬
intriguing if one lets the imagina¬
crepancy
requires a
digression.
tion run wild. However, there are
At the outbreak of World War II,
many railroad analysts who are
it was recognized that a substan¬
inclined to the opinion that the
tial increase in the government

the I.

higher

Continued

apace in the cur¬ commercial banks sold
support
government
bond
$3.4 billion to
For the month of Janu¬ of U. S. Government securities in prices at or above par with the

gross

ary

the form

quiring

continued

rent year.

it took

end

the transportation ratio—at 28.3%

has

fighting to

the

credit

goods.

compared
with
35.1%
a
year
Apparently this latest move^by
earlier—was among the lowest in almost completely exhausted, and pursued easy money policy is ob¬
Young interests caught the
the country. Common share earn¬ cannot be of
viously inflationary; but it is ques¬
any importance in
public imagination as a possible
preliminary to the establishment ings, before sinking and other re¬ the present inflationary situation. tionable whether moderately lower
serve funds but allowing
for the
of the first through
Thus, the only way the Federal bond prices and moderately higher
transconti¬
could
reduce
member interest rates, alone, would have an
nental railroad system of which participating feature of the pre¬ Reserve
amounted, to $11.64.
In bank reserves would be by selling important anti-inflationary effect;
Mr. Young has so often talked. ferred,
1949 -they had amounted to only
government securities.
However, (2) the Treasury's insistence that
Alleghany Corporation has a sub¬
stantial stock interest in Missouri $4.17. Moreover, the improvement in the last six months of 1950, the Federal Reserve commit itself
tain

security

credit expansion in

consumer

biles

the

Pacific which it is

the level of

and shorter maturities

Gross was up smartly
year.
and, much more important, oper¬
ating costs, particularly the trans¬
portation costs were held under
As

requirements

regulation
reimposed in September, 1950,

was

last

strict control.

only

extended

When

reduce

stock

common

were

made

cash, these

area.

credit

is considered likely, then, that at
the first feasible opportunity the

cash

Regulation
W.
Beginning in
1941, the Federal Reserve Board
placed limitations on the terms of

the issue in the process.
Western Pacific turned in a par¬

prior to redemp¬

purchases

being

are

almost

insignificant,

in the total money
unrestricted

relatively U

$698 million.

margin

prices and

$1,000 bond.

per

the

be construed

.soundness

As of company will make every effort to
the end of 1949 they were out¬ refund the preferred stock. Pre¬
standing in the amount of $6,287,- sumably this could be done if
000. If none were retired last year some of the company's adequate
20

market

as a psycho¬
logical gesture to discourage over
enthusiastic buying by the unin¬
formed. They are unlikely to have
any
important influence on the

against the payment of

year

securities

can

than $3.00 on the common in'

the

practically all

increased

bonds and
regular serial
equipments, capitalization consists
of 318,502 shares of $5 participat¬
ing preferred and a maximum po¬
tential of perhaps 534,177 shares of
common.
The preferred, has pref¬
erence as to $5.00 dividends in any
gage

militated

Income

the current market for

Mort¬

company.

control.

75%

amount of

Since

Pre¬ one year and then, after the com¬
sumably this ratio will be reduced mon receives $3.00 a share, par¬
by
conversion
of
the
Income ticipates equally, share for share,
bonds but, nevertheless, it would in any further distributions. It is
obviously still constitute effective this provision that has presumably
voting stock of the

amounted

•

modest

corporate purposes.
from

At the end of the
year, the
amount of ,stock market borrow^

funds, originally

Aside

specify the

value.

bonds will be converted into stock

turned

the power to

securities. On Jan. 17, 1951, these
margin requirements were raised

Unquestion¬
ably practically all of the Income
improvements.

before

had

Since

Federal Reserve Board

quired of the credit purchaser of

date.
Thus,
earmarked for
their
road. The stock, which had appar¬
payment will be released for
ently been under pressure of In¬ additional property needs or other
the

the

minimum proportion of equity re¬

$10,000,000 of old 1st 4s and the
41/2% Income bonds, and for prop¬
erty

Requirements.

use

credit would have

in¬

supply,
of

con¬

brought

inflationary effect of con-

Volume 173

Number 4992

...

The Commercial and Financial Chronicle

(1037)
credit is vastly overrated
by the average person.
In no
single year, from 1929 through

sumer

1950,

has

the

amounted

the

Even

than

1%%

income, that
annual
purchasing

total

consumers

that

increase

credit

con¬

personal

power

outstandings

disposable
is

increase

credit

sumer

not

did

taxes.

consumer

result

increase

mensurate

after
in

com¬

in the money

supply. For example, during 1950,
the outstanding loans of Housebold
Finance
Corporation
in¬
creased $30 million. Only $4,400,000 of that

15%,

increase, or less than
represented by an in¬

was

in bank loans. The balance

crease

sale

represented

securities

insurance,

companies and other
non-banking investors and re¬
tained"

earnings. Since that
in consumer credit

pansion
made

possible through the

savings,

ex¬

Rhinelander Paper
Common Stk. Offered

manuiacture ot

papers of the glasgreaseproof type, some
its output going to the

on the present stock, or to
With E. F. Hutton
$2.75 per share on the stock to be
(Special to The Financial Chronicle)
outstanding after the present fi¬
food industry.
The trend toward nancing. The latest quarterly di¬
LOS ANGELES, Calif.—Herschsale of food products in
packaged vidend declaration of 40 cents per el D. Newman is now with E. F.
An
underwriting group man¬
form has greatly stimulated the
Hutton
& Co., 623 South Spring
share indicates a $1.60 annual rate.
aged by A. G. Becker & Co. Incor¬
demand for papers of this
Street.
type
porated on March 6 offered 150,and the company has
repeatedly
000 shares of Rhinelander
Paper
With Samuel Franklin
increased its capacity in the last
Co. common stock at $29.50 per
Wagenseller-Durst Adds
10 years. The additions now under
(Special to The Financial Chronicle)
share. Proceeds are to be used to
(Special to The Financial Chronicle)
way include principally an eighth
LOS
complete a $3,000,000 improvement
ANGELES; Calif. —Wil¬
LOS ANGELES, Calif.—Sharon
paper machine, which is expected liam B. Hitchcock has
joined
the
program on which the company
C. Moody has been added to the
to be in operation this
Fall, and staff of Samuel B. Franklin & Co.*
has already spent some $1,300,000
new
staff of Wagenseller & Dyrst, Inc.,
facilities for the company's 215
of its own funds, to retire
West
Seventh
Street.
$2,150,626 South Spring Street, members
000 of long term debt and to in¬ power plant which supplies its en¬
tire
of the Los Angeles
power
requirements.
The
Stock Ex¬
crease
working funds. This financ¬
Joins Harris, Upham
plant is located at Rhinelander,
change.
ing will give the company 540,000
(Special to The Financial Chronicle)
Wis. ./
>
V.;/:'./ '
'jshares
of
outstanding
common
In the fiscal year ended Sept.
LOS ANGELES, Calif.—Albert
30,
With Thomson, McKinnon
stock, the only class of stock au¬ 1950, the company reported sales M. DeLaPlante has joined the
MIAMI BEACH, Fla.—Emmett
thorized.
of $14,752,000 and net income of staff of
Harris, Upham & Co., 523 G. Gibson is with Thomson &
The company specializes in the
$1,484,000, equivalent to $3.81 per West Sixth Street.
McKinnon, 927 Lincoln Road.

sine

90%

and

•

was

use

non-inflationary

was

in effect.
In
the
period
under review,
therefore, the regulation of con¬
sumer

credit has had

effect

upon

a negligible
expansion of

credit

the country,

in fighting infla¬

tion.
Regulation
Federal
ited

Reserve

the

October,

the

Board first

terms, of

loans

lim¬

pur¬

chase

homes, and for construction
So far as I can deter¬
mine, the demand for, and the
production of, homes in recent
purposes.

months

have

been

subject to in¬

fluences very similar to those we
have described for the consumer
credit

field.

Urban real estate credit has in¬
creased

in recent years than

credit.

consumer

Most

the

in¬

has been financed through
institutional sources based upon
crease

savings,
bank
the

than
through
expansion. However,
experience with Regulation
rather

credit

X has been much too short to de¬

effectiveness.

its

termine

Conclusion

conclusion?

What, then, is

our

General

controls

credit

traditional

the

pattern
the

face

Selective

debt.

the

powerless
huge federal

are

controls

are

but

straws with which to stem a tidal

wave.

Federal

the

Reserve

must grasp at straws, or be

Price

controls

defer"

and
tion.

the

doing

remiss.

"merely conceal
effects of infla¬

so,,

price

controls

disrupt production and create

may

inequities. In applying price con¬
trols the government adopted the
conception of the general public
as to the proper course of action.
lies

Therein

the

national

Focusing

great

danger.

attention

price control diverts efforts from
attack

the

causes

of infla¬

emphasis on Regula¬
tion W and Regulation X last fall
likewise diverted attention from
the real issues and postponed ac¬
tion.

(The

tion.) Thus, there is grave danger
that

necessary

in gov¬
achieved; ap¬

economy

ernment will not be

propriate taxes will not be adopt¬
ed promptly; no realistic govern¬
policy to encourage savings
will be established; and no prog¬
ress will be made toward over-all

Suppose the telephone had

ment

been invented

never

general credit controls.

Two With Allen & Co.
(Special
•

The

Financial

Have you ever

Chronicle)

ORLANDO, Fla. — David and
Julian Myrick have become affil¬
iated with Allen & Co., 19 South

thought what the

takes

only

few seconds

minutes

There

world and your
without the
If you

(Special

The

Lucas

Financial

Fla.

ORLANDO,
with

—

Chronicle)

life would be like

telephone?

wanted to talk to relatives

friends

from

Alexander
& Reed,

Waddell

moix„a

—

store

if you
—

doctor

Inc.

emergency

Joins
(Special

Financial

ST. P E T E R S B U R

Thomas
ciated
was

with

you

Goodbody

The

Gaither

are

twice

would often take hours and cost
you

phones

far

ago.

than

telephone call.

—

wanted to order

if you
or a

needed to

policeman in

there would be

could do it in

sum-

no way

hurry. What now

Each year
more

the telephone becomes

useful to the

vital to the

people and

prosperity and security

of the Nation.

Today's tremendous

job of production and defense could
not be carried

without it.

cause

there

G, Fla.

They

Goodbody & Co.

formerly with A. M. Kidder

Co.

Bell tele¬

the Bell

BELL

only ten

years

here and ready be¬

are

System kept right

building and improving to meet the
country's needs.
Never in the

history of the tele¬

phone has it been
many

people

—

asso¬

many

were

Chronicle)

now

Court Street.

With Waddell & Reed

TELEPHONE

SYSTEM

right

valuable to
now.

The Commercial and Financial Chronicle

(1038)

the cost of rearmament would not be wasted,

Freedom From Want

strong preference in both Europe and U.

S. for prosperity
Holds that, despite objections, the mate¬

instead of security.

rial, human labor and financial

are

about the

use

grumbled

nobody

Britain

necessary.

1945

of the national income for the requirements

of 52%

people are now grumbling about a
sacrifice of less than a quarter of what was willingly given six
years ago.
This is because the British public is now not suffi¬
ciently convinced about the vital necessity of making the sacrifices.
Nor is the French public or the American public. And any attempt
to weaken their belief in the need for a supreme effort simply

Commenting on correspondence in "Chronicle" regarding Dr.
Palyi's views on international situation, Dr. Einzig sees a
•

sacrifices

of national

By PAUL EINZIG

than is

any

insurance

premium we pay in order to safeguard ourselves
against various contingencies which, fortunately, seldom material¬
ize.
What matters is that the public should realize that the

Freedom From Fear

vs.
lif

the

defense, but

many

elected

tive

world

Senior Economist

Governor
Director
of

NEW

The

ducing the standard of living. In Britain, many
people are complaining because this year 12%

5; it is
the bank's fourth branch in Japan.

with 52%

of the

And it

war.

seems

Others

be spent on arms,

at the

been

that in the United

are

many

The arguments of those who feel that way
almost identical in France, in Britain and

States.

democratic

which

race

They

broadly

run

countries
to

leads

into

their

Dr.

Paul

Einzig

pointed
economic

strength

rearmament

our

sound economy."

We must not fall into this trap.

commitments

in order

[This argument is not altogether

maintain

A year

new.

or two before the war the late D. M. Mason, Chairman of the
.Sound Currency Association (the British equivalent of the Econ¬
Committee

Monetary Policy), argued in the
London "Economist" against unbalancing the British
Budget for
the sake of rearming.
Had his advice been followed Hitler would
have been able to take

over Britain in a
financially sound condi¬
German-occupied Britain had a balanced
initial budget under the new Nazi regime might have
given some

tion.

The

fact

that

handful of orthodox

queror would have soon unbalanced her

/ intend to make war. To believe this would save us from the un¬
pleasant necessity of paying higher taxes, working harder, obtain¬
ing- less goods and services for more money, etc. So it seems to be
our

while to deceive ourselves and

our politicians into
not really mean war, but merely

believing that the Kremlin does
to

rearmament could

have been avoided..

they would claim that it was the menace
implied by the growing armed strength of the Western powers
that induced Moscow to change its mind in favor of war.
In reality, there is a good chance that the
progress of our
rearmament would affect Moscow's attitude in

The

material, human labor

rearmament

nations could

would

the

and

best

exactly the opposite

financial

investment

resources

the

democratic

possibly make in existing circumstances.

cave them from

spent

It might

destructive war, or at any rate from defeat and
enslavement.
It seems probable
that, unless by the time Russia
has " accumulated a considerable
stockpile of atom bombs, the
democratic Allies are able to muster
up an army that stands a
chance of resisting the Red
Army successfully, they are doomed
to be conquered.
a

Dr. Palyi concedes the need

for

limited rearmament which

expects to suffice if confined to a limited zone of
defense.
What he appears to overlook is that if
the United States should
abandon Europe to its fate the whole
economic resources of the
Western world would come under Russian control. Although the
Satellite States of Eastern
Europe did not surrender their sov-

ereignty willingly, their economic resources
and-manpower are
now at the free
disposal of Russia. The same would
happen in
E.u,ro?e,if
were t0 come under Russian domination.
With the aid of the

raw

materials and

man

power of Asia and the

industrial power of Western Europe, Russia
more than a match for the United States.
Even

country with

much

would

soon

become

lower

standard of liying than
that of the United States could and should afford to make the
eacrifices required by national defense. The loss involved in a
defeat

by Russia would be

immense

that

even

reduction of the standard of living must be
regarded
.

the

been

Bank

1941.
on

was

since

appointed

1932,

under

Assistant

date

instance premium against it.

And if it should not

substantial

as a
come

moderate
to

war

National

of Babylon,

Co.

Per¬

its

capital

Slater

"
*

William
the

❖

Bank

Trust

Co.,

Egan continue as Vice-Presidents
Vincent

and

Nassau

Centre

Rockville

County,

Feb. 28.

Y„

died

William

viously
(in

with

noted

plans pre¬

these

columns

Dec. 21 issue, page 2458),

our

the Passaic-Clifton National Bank
Trust

Co.

Clifton, N. J., in¬

its capital,

creased

effective Feb¬
to $3,000,-

ruary 1, from $2,250,000

the result of

divi¬

stock

Cleve¬

Fletcher,

First Vice-President of that bank,
have

been

year

terms

reappointed for five-

beginning

March

Board of Directors of the Federal

Mr.

Bank.

Reserve

Gidney's af¬

filiation with the Federal Reserve

System

began with

when

1914

its inception
Secre¬

became

member of its Board of
Governors in Washington, D. C.

tary to

In 1917 he

joined the Federal Re¬

Bank of New York and was

from

when he

16, 1944,
appointed President
Reserve Bank,

was

Sept.

Cleveland

the

Mr.

institution

that

until

1936

Fletcher

joined the bank 33
after eight years as an

ago

years

Assistant and National Bank Ex¬

aminer.

Examiner

chief

was

Federal

Assistant

and

Reserve

previous to his promotion

Agent

to Vice-President in 1936.
#

1951, it is announced by George
C.
Brainard,
Chairman of the

serve

accordance

Bank

Reserve

and

Vice-President of

was

promoted to First Vice-President
First

The

National

Bank

Dec.

1945.

Toms River, at Toms River, N. J.,

000

stock dividend of $25,-

v':,:"-';

000.
''-l-:*

■■

■

tional

elected

Vice-President,

nounced

March

the
on

First

National

Bank

Erie

Jan. 31.

B. Einstein
it
was
an¬
William A. McDon¬

Merrill

Beane,

The
of

National

Alexandria

Alexandria,

Bank

which

Va.,

Piatt

on, He

bank

asso¬

firm

Lynch, Pierce, Fenner

and was formerly a
partner
of
Waldheim,

„

general

the

investment

the

with

begin

will

Einstein is

Mr.

15.

ciated

Na¬

Feb.

Mr. Major

nell, President.
(capital $300,000), has
his
duties
with
placed in voluntary liqui¬

been

First

the

St. Louis

Bank

/</,

The National Bank & Trust Co.

sfs

;Ji

directors

The

of Erie, Pa.

Centre,

77 years of age.

was

Murphy is Pres¬

ident."

dation, having been absorbed by
President

Rockville

Kniffin,

the

Trust

William

and

has increased its capital, effective
bl¬ Jan. 30, from $625,000 to $650,-

$25,000, raised
$125,000
to

from

$150,000. *

23,
&

N. Y„ through

dividend

stock

Jan.

Bank

month

last

handling Cashier duties
in place of E. Michael Donnelly,
who requested a leave of absence.

has

sonnel Director.

investment brokers.

Co.,

has

President

been

of.

the

in Jan. 9 increased its capital from Jewish Hospital board since 1947
Kinston, N. Y., had been in the $300,000 to $300,000 by a stock and is a member of the board of
banking business for 60 years, dividend of $100,000, further in¬ the
St;
Louis
Chapter of the
according to the Brooklyn "Eagle," creased the amount to $400,000, American-1 Red
Cross;
he was
which states that he began as a effective Feb. 5 by the sale of Chairman of the
Special Gifts Di¬
Mr.

Kniffin,

who

was

born

•

clerk

the

Bank

Kingston.

Savings $100,000 of

Rondout

From

the
i

"He

ville

also quote:

Centre

1917

The

joined the Bank of Rock¬

1941.

Vice-President

became

and

During

President

World

committee

War

000,000;

stock.

vision

Campaign.

National

Ohio, reports

was

the author of
as

The

First

National

Ind.,

and' the

under

the

ties.

tional

Bank

was

former President of

the Nassau

County Bankers Asso¬
ciation and an original sponsor of
the Nassau County Chapter, Amer¬
ican Institute of

the

Union

the

Bank of Newark, N. J., are termed

Wilfred

Executive

Vice-President,

The

Board

Presidents
of

Bank

Phillips were
positions of ViceThird National

the

Nashville, Tenn., by ac¬

Na¬

tion of the board of directors. The

The

promotions
Sam

three of the

the

President.

new

All

Vice-Presidents

joined the bank in June of 1937
upon graduation from Vanderbilt
University, and their careers have
followed

Directors

announced

were

Fleming

the

vancement

Wendell

and

same

course

through

the

ad¬

various

departments of the bank.
*

bank's Federal Reserve Bank of Chicago

Allan, the

Co.

capital of $100,000.
*

■

First

plus $350,000 and initial undivided

had

the

initial capital of the consolidated
bank is $250,000, the initial sur¬

National

Trust

and

The consolidating institutions each

improvements
of

quarters

8|:

title

profits of not less than $150,000.

Banking."

s|:

advanced to the

effective Dec. 30, under the char¬
ter of the Trust National Bank and

On Feb. 16 John W. Clay, Hayes
Noel

college textbooks.
At one time
taught banking practice at
Rutgers and New York Universi¬
he

a cap¬

$200,000 of new stock.

Crawfordsville Trust Co. of Craw¬

consolidated,

has

increased as of
from $800,000, by the sale

fordsville, Ind.,

were

of Clayton, Mo.,

of /."•

Bank

Cross

Red,

of $1,000,000,

Jan. 29

]:■:

$5,-

banking used

"■v\>

ital

1944

St. Louis County National

The
Bank

stock dividend

the

Lima,

(effective Jan. 16b increased from

Crawfordsville,

"Mr. Kniffin

Bank

capital of $500,000

$400,000 by
$100,000.

several books

sold

new

■.*

which

90,000 War Bonds valued

Recent

Allan

May R. Dunwoodie, who has been

headed

war

formally

dend of 33Vs%.

with

the

appointments were
announced today.
Mr.

United States Naval Reserve. Miss

Waste of

resources

started

their

and

000

"Eagle"

should be

September, but the

active duty as a Lieutenant in the

frighten us into rearming.
The worst of it is that, whatever
may happen, those who are
arguing against a supreme rearmament effort will claim to have
been right.
If there should be no war they will point out
triumphantly that, had only their advice been followed the gigantic

New

with the East River in

ated

During World War II he

Babylon

the acceptance of which means a more comfortable existence—for
the time being.
Nobody can possibly know what Stalin and his
associates have in mind.
To many people it
may appear, there¬
fore, much more convenient to believe that Russia does not really

cense.

York, Mr. Barton became associ¬

her by the con¬

budget.]

Although events have proved D. M. Mason wrong, his argu¬
ment lives in the minds of the French neutralists, the British
pacifists and the American isolationists.
The only difference is
that they no longer hold out the balanced
budget as the supreme
aim for the sake of which national defense
requirements must be
sacrificed; they now argue in favor of maintaining the standard
of living, an aim which has a much
stronger popular appeal than
the balanced budget. It is very tempting to
accept the arguments

there

Employee Re¬
Savings Bank As¬
State

and

the

Allan

others

A member of

purists, but not for long, for

the occupation costs and indemnities imposed

means

the

Mr.

ap¬

satisfaction to

Well worth

Committee

been

Director

Personnel

sociation

limit

has

Executive Assistant.
the

that

announces

Barton

Edwards, manager of a new pub¬
relations
department.
Mr.
Newhouse went to the bank with
lic

Edward

City

lations

omists' National

William

through Communist infiltration.
a

York

New

rearmament

deterioration

The East River Savings Bank of

Let

•

Na¬

to 53.

decline of their standard of living, resulting in widespread
trouble and discontent that would facilitate Russian
conquest
and

Manager

following lines: "The Kremlin is forcing

the

■

appointed

has

overseas

the

Hummer

eake of freedom from want.

there

too,

in the United

•

Osaka and

Tokyo,

goya, and this opening brings the
total of National
City branches

are

Yokohama.

concluding phase

March

people only too
ready to sacrifice freedom from fear for the

States,

(

opened

Japan

effective Dec.

capital,

its

Ray M. Gidney, President of the

branch of The National

new

stock dividend of

CAPITALIZATIONS

City Bank of New York at Nagoya,

compared

Bankers

and

OFFICERS, ETC.

REVISED

re¬

of the national income will

❖

$750,000 by

land,

at the cost of

State

will be in charge
Department.
*

Federal

rearm

of the

Finance

Research

the Continent the governments of Western Eu¬

real effort to

cabinet

Illinois,

the

rope, having reduced their defenses to a frac¬
tion of their prewar strength, are most reluctant
a

serving

Stevenson's

21, from $750,000 to $1,000,000 by
the sale of $250,000 of new stock.

NEW BRANCHES

bty a strong
preference for prosperity instead of security. On

to risk

leave of ab¬

Bank

the

from

sence

larged

CONSOLIDATIONS

characterized

The announcement

$250,000 (noted in these columns
Nov. 23, page 2000) further en¬

News About Banks

LONDON, Eng.—If the correspondence published recently by
"Commercial and Financial Chronicle," giving its readers'
reactions to Dr. Palyi's article, can be regarded as representative of
American opinion, then it seems that the attitude of the entire

the

Western

April

by C. S. Young, President, added
that Mr. Mitchell, presently

•

The Merchants National Bank of

them from defeat and enslavement.

save

Mitchell

George

Topeka, Kansas, which on Nov. 1
increased its capital from $500,000

ment would be best investment democratic nations could make
to

Thursday, March 8, 1951

Vice-President of the Bank, effec¬

psychological burden of the sacrifices.

increases the

spent on rearma¬

resources

the

result

the

sale

the announced on Feb. 28 the re¬
second
phase of
reorganization appointment of C. S. Young as
and modernization, started when President and of Ernest C. Harris

$500,000 of

Atlanta, Ga., was increased as of

joined

learned

the

from

bank.

the

This

Newark

"Eve¬

ning News" of Feb. 26, which in
part also said:
"The first phase was personnel
changes, in which four new offi¬
cers

besides

himself,

have

been

installed in executive posts. These
have
been August
A. Horwath,
Assistant
Dimon

Vice-President; Charles

and

Assistant

John

'First

Bank,

each

for

term

beginning March 1,
These
appointments have
years

approved

by the
the

ernors

Board

Federal

the

five

1951.
been
Gov¬

Reserve

the

Fulton

Jan. 2 from

National

State

National

stated

that

announcement

the
the

Reserve

Bank

directors

have

Paso,

stock dividend of $300,000

Board of the Bank.
further

Bank

Texas, from $1,200,000 to $1,500,000

became effective

it was stated by Frank¬
Lunding,i Chairman of the

An increase in the capital of the

System,
J.

Bank

$1,500,000 to $2,000,000.

lin

Newhouse, March

Cashiers, and Henry M.

Vice-President

stock, the capital

new

The
bock

Dec.

19.

$400,000 capital of the Lub¬
National

Texas,

was

Bank

Lubbock,

enlarged Jan. 4 to the

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1039)
extent of

increase
stock

$600,000; $500,000 of the
was

brought about by

dividend

while the

•' >■' *

stock

has

Houston,
to

effective

Bank

from

$2,000,000
capital be¬

new

Jan. 16.

$40,-

annual

dencies

five

are

were

New

David

Johannsen

Walter

mem¬

others

Johnson.

the

Vice-Presi¬

Cashiers.

Assistant

Vice-Presidents

Bank

three staff

elected

and

Abram,

partment

meeting

National

Ore.,

were

Fred

States

named

All

were

and
for¬

Assistant Vice-Presidents.
joined the bank in 1944.

merly

Mr. Abram
'

The

boards

Federal

directors

Reserve

Banks

the

of
of

named

was

President in 1949.

Mr. Johannsen

has been in the bank's foreign de¬

the

United

bers

National

Texas,

than

sji

Portland,

$1,000,000
capital of the

$3,000,000; the

came

stock.

new

the

Texas

500,000."

amount,
$100,000 re-r

dividend

enlarged

South

ital. funds

that

additional

suited from the sale of
<

Assistant Vice-

been

for.27

and

years

has

Bank and Insurance Stocks

acting head of that depart¬

ment since the retirement of L. E.

Williams last October.
son

Mr. John¬

By H.

started with the bank in 1930.
named

was

President

1936

and

partment in 1940.

New Assistant

Cashiers include Albert E.
John

Bontty,

Breiling, George
H. Labbe, and

Buch¬

The First of Michigan
Detroit Banks

. ******

las,

for

representative

Reserve

Federal

Open

the

Banks

Market

the

large exteilt> been restricted to the locality of the institutions'

Dr. Walter E.

in
IHdit*
lntm
in
their earnings have
been among the more significant develop- *
ments in this field in the past decade.

meetings.

succeeds

Chester C. Davis who resigned on
Feb.

1951,

President of the

Federal Reserve Bank of St. Louis
and

Open

member

Federal

the

Committee

Market

ac¬

Repeal of features of the Emer¬ put

Banking Act which were
supposed to apply to bank closings
and openings in 1933 in order to
prevent their
to

give
Treasury
use

National

Bank

$2,000,000.

the

Denver

Colo.

Denver,

its capital from $1,260,-

increased
000

Feb.

Part of the in¬

crease was brought about through
a stock
dividend of $252,000, and

additional

the

resulted

$488,000

from the sale of new stock.:
$

elected

Hart-

and

well, Jr., to the post of Assistant
Trust Officer of Union Bank &
of

Co.

Trust

Los

Cal.

Angeles,

Manager of the in-

vestment analysis
he

1939
;

was

Manager

in
Mr.
celebrated his

department,

investment

the

department.

named

which capacity he continues.

recently
anniversary with

Conley
15th

Hartwell

Mr.

served

the bank.

three

years

Navy in World War II
and; "became a Lieutenant in, the
with

the

His first assignment
with Union Bank & Trust Co. in
1946 was in the bond and invest¬
ments
the

later was named Trust
Administrator.
The

Anglo
of

Bank

■

•

San

its

increase

'r'.

National
plans to

California
Francisco

capital

stock

from

$15,000,000 to $20,000,000 and its
surplus from $12,000,000 to $14,500,000, it -was made known on

credit

the

Treasury was

unfortunate

making

member

the

seems

principally

Federal

According

13.

1951,

payable

Feb.

Federal

1," Dr. Spahr states,

Market Committee

Open

to the White House.

to'

an¬

question of the
of
the
member

independence

respectively. He also stated that
proposed plan, the ad¬
ditional capital would be derived
from the sale of 250,000 additional

the. par value of $20
each, at a price of $30 per share.
Shareholders of record at the close
of

of business on March 9

ceive

would re¬

to
purchase oneshare for each share of

rights

third of

the bank's stock held on

that date.

the issuance of the addi¬
tional shares, capital stock would
amount
to
$20,000,000,
surplus
Upon

would.be $14,500,000, and esti¬
undivided profits and un-

mated
'

allocated

reserves

would

exceed

$6,000,000, thus bringing total cap¬

shares—(000)

1,500

300

100

150

$10.00

$20.00

$50.00

$10.00

$44.27

$81.99

$197.67

$154.02

common

value

Par
Book

value,

Earnings

Dec.

per

1950

31,

'.' *

Ru
j

$9.71

$17.53

$16.25

$4.81

3.32

8.20

16.66

15.40

4.48

;

4.90

10.16

19.29

16.02

5.11

4.26

8.25

18.55

15.30

4.81 :

4 3 V4 -3 4 V26 9 '/2-63 %

168-149

142-130

Total

earnings,

Common

stock

1949

Price

range, 1950
Current annual dividend rate
%
of oper, earns, paid in divs.

$2.00

feasibility of using the Emergency
Banking Act of 1933
and the
Trading With The Enemy Act of
1917, as amended, to put all mem-,
ber banks of the Federal Reserve

System

proclamation,
declared
the
to be at an end.
"Unfortunately, the President

of
to

'•'Now

declared that emergency

kAvnH

the

that

the

members

exchange

would tender a
dinner in honor of Francis Adams

Truslow, retiring president of the
Curb, on March 13 in the Sert

suggests

that

the

teL
Mr.
office

Truslow will relinquish his
to

Mr.

Edward

mick, who will retire
of

Securities

the

Commission

president

McCor-

as a

member

and

April 1.

leave

will

America in the

near

future

Investments

Loans,

Dec.

$827,101
31,

Loans, Dec. 31,

administered

increase

Total

317,353

157,068

1949

253,247

121,724

loans

25.3%

resources

the President should declare

Mr.
man

Edward

of the dinner

nounced

that

O'Brien, chair¬
committee, an¬

assemblage of
guests, including government and
private leaders in finance and the
an

securities

Total deposits at Dec.
31,
Total deposits at Dec. 31,

'•

$37,784

99,435

47,055

74,447

36,059

1950— $1,487,070

$598,462 $515,710 $248,615

1949—

1,293,841

551,680

471,338

227,216

Deposits oth. than U.S., 12-31-50
Deposits oth. than U.S., 12-31-49

1,412,734
1,222,775

589,068

485,895

245,979

540,525

418,226

224,576

15.5%

9.0%

16.2%

9.5%

74.8%

71.6%

81.0%

81.8.%

Percent

increase

$99,895
94,097 '

97,616
91,667

Cash and govts, to total deposits
Capital funds to total deposits-

and

total

1-22

earnings

1-22

all

1-26

the

five

;6.5%
-

59.0%

1-18

above

•

Ratios—

Operating

;

48,282 ;■
47,704 ,

1-16

banks'

showed

a substantial increase last
year. Considering the increases
in operating costs and
taxes, the results are rather favorable.

The only capital change which occurred in 1950
of 50,000 shares of the Detroit Bank

was

the sale

through the issuance of rights'

stockholders.

have

1949

been

ad-:*

T*?e averaSe pay-out amounts to approximately 35%

of the oper-*'

ating earnings. This margin should permit the continuance
present rates with modest increases eventually being made.
The substantial increase

should enable them to offset

Detroit banks

and will

economy

of'

in loans made
to

by all the banks last'
large extent the increase in*

report a favorable level of earnings.'.
advantageous location in the present'
undoubtedly continue to show gains in opera-'
in

are

tions relative to the nation

whole.

Two With Waddell & Reed
(Special

The

Financial

Mabon Co. to Admit
On March

KANSAS

CITY,

Mo.—Anna

15, Peter F. Dunigap
will acquire the New York Stock

Exchange membership of the late
Francis B. Thorne, and will be¬
come
a
partner in the Exchange
firm of Mabon

Cohu & Co. Adds

way,

E. J. Stone
Cohu & Co., 1
York

Staff

Wall Street, New

City, members of the New

York

Stock Exchange, announce
that Edward J. Stone has become

Co., 115 Broadr

New York City.

With Waddell & Reed
,

(Special

The

Financial

LOUIS, Mo.

ST.
Smith

Waddell

associated with the firm in its in¬

Street.

stitutional department.

Barrett

now

—

Henry At.
with

Reed, Inc., 408 Olive
He
was
formerly with
Herrick & Co., Inc.
>

BANK

of INDIA. LIMITED

and

Bankers

to the

INSURANCE

Government in

Kenya Colony and Uganda
Head

Office:

26,

London,

E. D. Fox Co. Admits

STOCKS

Bishopsgate,
E. C.

Company, 61 Broad¬
way, New York City, members of
New

York

Stock

and Zanzibar

Subscribed Capital

E. D. Fox &

the

India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden

Exchange,
Fox, Jr.,

Paid-up
Reserve
The

Bank

Capital
Fund

£4,000,000
£2,000,000
£2,500,000

conducts every description of
exchange business

banking and

the

firm

Trusteeships and Executorships
also undertaken

Laird, Bissell & Meeds
Members New York Stock

Exchange

Members

Exchange

120

Chronicle)

associated

NATIONAL BANK

Colony,
-T

*
I

Chronicle)

Branches in

should act. The whole law announce that Elliott
of March 9, 1933, should be re¬ has been admitted to
pealed. It should not be used to a general partner.
gress

•

Truslow.

that

and Section 4 of that
law of March 9, 1933, at an end.
If he fails to do that, then Con¬

emergency/

$1.60

33.3%

29.0%
33.6 %
30.5%
1.2% '•
$628,640 $538,499 $264,687 $110,148

$1,567,944

Deposits (000)—

States

properly,

38-33 >/2

$341,712 $292,082 $166,010

1950___„_.

assignment from the United States
Department of State.

Treasury

"If the laws of the United

$5.00

30.8%

Principal assets and liabs. (000)—

Exchange Gibbons and Woodrow W. Hillare
The Curb now affiliated with Waddell &
for
South Reed, Inc., 1012 Baltimore Ave.

In addition to Mr. Mann, com¬
granted the Secretary of
under that Act — mittee members include Edward
powers which were designed for C. Werle, former board chairman,
very
different circumstances — James R. Dyer, Raymond A. Mcbe employed to put member banks Mann,
Charles Leichner, Jacob
and other institutions under the Feinstein, Alexander R. Piper, Jr.
control of the Secretary of the and Francis X Gaudino of the ex¬
change staff.
Treasury.

are

$7.00

39.9%

Room of the Waldorf-Astoria Ho-

powers

the

30.9%

percentage of earnings being paid out in dividends is'
conservative, retained income being used to augment capital funds."

industry would be pres¬
ent at the dinner to join the ex¬
1933, as referred to in that Act,
change members in honoring Mr.
be at an end.
never

$3.00

38.4%

costs expected this year and

data-

Reserve, Treasury, and other of¬

has announced

•-.'.

$4.43

earnings, 1950___
earnings, 1949
earnings, 1950______-____

year

ficials to consider -the necessity or

•;

The

Clirh ExchdllPfi
vh

•"

Operating

The per-share figures for
justed to the present capitalization.
:

Truslow to Be Feted

$40.60

share—

common

Operating

new

(both of the present and the new
as of the close of business
on
June 20 and Sept. 20, 1951,
"under the

$6,091

Number

John J. Mann, board chairman
importance. On that date,'
of the New York Curb Exchange,
the President asked some Federal
a

has

shares,

volved."

banks of the Federal Reserve Sys¬

emergency

shares)

Bank

$13,863

"On Feb. 26, the

quarterly by

two

recommendations

National

Bank

$19,767

System

•

cents per share
each to all shareholders of record
of

dividends

President's

wealth

Bank

$27,098

Total

the statement is much broader in

National

$66,408

Treasury domination of it,

versus

Bank

(000)

focused

Reserve

Manufrs. Common- Industr..

Detroit

Detroit
reserves

independence

the

The

Bank of

Capital, surplus and

Treasury.

policies,' and public discus¬

shown.

are

National

and

the Economic Report of the
President, Jan. 12, opens such a
wide variety of doors for govern¬
ment control of private enterprise
Federal
Reserve
System, from.
that there is urgent need for an
Treasury domination was brought
unusually
careful
scrutiny
by
more
sharply to public attention
of the proposals in¬
when
the
President
called
the Congress
"On

of Michigan Corporation review

something

"the question of the maintenance
of the proper independence of the

than APuember,

■i

sion

the

else.

and > 'institutions
other
.banks' under, the
nouncement by Allard A. Calkins,
dirqct
control
of
the
Treasury.
President, the directors on that day
'/The Emergency Banking. Act*
approved submission of the pro¬
of March 9, 1933, was supposedly
posal to the shareholders at a spe-.
cial meeting March 9. At the same applicable to the exigencies of the
closings and openings of
time, Mr. Calkins announced that bank
the directors have declared a divi¬ 1933, and at least the provisions
dend of 90 cents per share for the of Section 4, which the President;;
six-months
period
commencing is proposing to use, were to be
terminated when the
President,
April 1, 1951 and ending Sept. 30,
Feb.

The comparison presents statistics
covering the seven princi- '
pal banks operating in the Detroit area. In the following tabula- '
tion, we have summarized pertinent figures for the five largest
banks in the report. Selected data on capitalizations, earnings, '
price ranges, dividends, assets, and deposits taken from the First

of Feb. 26 ostensibly deals
'government securities and

with

he moved to tem and of 'institutions other than
in 1947, and member banks' was likewise given

department;

trust department

two years

ment
Walter E. Spahr

Policy. Resort to the
Trading With The Enemy Act to
bring "other institutions" under

supply ebrps.

;

"Although the President's state¬

Com¬

control

banking

to the United States

Monetary

the

control

banks
and 'other institutions' subservient

Econ¬

mittee

would

pose

Vice-

tional

the

under

investment analyst with another Los Angeles ground that trading with the scope than popular discussion of
it would appear to indicate. That
•bank, Mr. Conley became asso¬ enemy is one thing, and proper
ciated with Union Bank & Trust procedure in banking is something statement, when combined with
Co. in 1935

•

also opposed by Dr. Spahr on the

-After six years as
,

President

Trading With

regrettable
if
these
statutes,
which should have been repealed,
should be employed for the pur¬

omists' Na¬

Conley has been
the post of Assistant

Vice-President

"It

Spahr, Executive

the

they serve. The Detroit bank review '*
of these reports and as such provides useful infor- i

one

bank stocks in Detroit.

else.

Walter

Dr.

for 1950 is

mation

should

cedure

statement

the

Lauren

the

in the various sections which

the

The Enemy Act be employed for
the purpose of bringing 'other in¬

System,

March

the

Treasury.
"Nor

tv»

serve
local investors and provide information on invest¬
opportunities in various bank stocks, investment companies *
in the different areas have been issuing reports on
banking results -*

under

Secretary

Treasury.
Trading with the
enemy is one thing; proper pro¬

Re¬

urged

was

banks

the

«~x m am

ment

the

member
of

member

control

stitutions'

mination

over

serve

Effective

on
Monetary Policy, points out such a
destroy independence of individual hanks.

gency

Federal

would further

move

banks

cept another position.

Spahr, Executive Vice-President of Economists'

National Committee

beginning March 1.
Mr. Gilbert, who has been serv¬
ing as an alternate member of the

recent

areas removed

principal monetary centers and the improvement shown

year

during the past year,
has participated in its two most

opera¬

exception of New York City banks and several other
banking institutions, the market for bank shares has, to a

Osmoses Use Of kiii«ig«uv|
Emergency Banking
Act Of 1933 : ?|,era"ons.Th? increasing importance of banks in
iiniiniiig nut ui ivww
from the

Committee

•Committee

report on

•

/' large
f

of the

one

With the

Ridgway.
,

issued

covering the statistics and highlights of 1950

tions.

Franz

Corporation, Detroit, Mich.,

prominent midwest investment concerns, has

on mm etc*

Federal

JOHNSON

This Week—Bank Stocks

became

head of the bank's investment de¬

anan,

Assistant Vice-

At¬

lanta, Dallas, and St. Louis have
elected R. R. Gilbert, President of
the Federal Reserve Bank of Dal¬

New

York

Curb

BROADWAY, NEW YORK 5, N. Y.
Telephone:
Bell

BArclay 7-3500

Teletype—NY

(L. A. Gibbs, Manager

Specialists

1-1248-49

Trading Dept.)

in Banh Stocks

The Commercial and Financial Chronicle
23

Thursday, March 8, 1951

(1040)
of
competitive
yields,
find it desirable to keep
pretty close to a fully invested
position, but their portfolios are
usually concentrated in defensive
equities at such times when the
market appears high. The various
"formula plan" funds
will also
cause

New Officers Chosen by

Analysts Societies

may

Canadian Securities
By WILLIAM J. McKAY
The bitter fruits of
€0 many

confusion in

fields south of the border
sharper
complex Canadian

fail to bring into

cannot

the less

relief

situation with its relatively more

economic

promising
tential.

view

growth po¬
intimate

the

tntermeshing of the U.S.-Canadian
economies the Dominion perforce
entirely immune from
from the

cannot

influences

economic

beginning of the century
vast empty prairies at¬
tracted
a
wave
of immigrants
from this country when free lands
here were fast disappearing. Simi¬
At the

Canada's

tremendous undeveloped
items
Also with
insatiable demand for cheap

try, the

that

Canadian

the

be hoped

monetary

au¬

thorities will not follow too closely

recently adopted here
with regard to the management of
the public debt and the level of
the policies

Interest rates.

In this age of man¬

the absence of
automatic control of
a working gold standard, absolute
confidence in an accepted level of
aged money and in

the

sources

cannot

both essential and desir¬

such
indis¬

In times of emergency

able.

the more

confidence is all

pensable, and once destroyed can¬
not readily be restored.
Canadian

the

inflation

strained

unre¬

case

can

easily curbed than is possible in
the vastly more complicated U. S.
'

Moreover, in view of
banks and lend¬
institutions, the Canadian
monetary authorities can exercise
economy.

the relatively few

ing

will without

their

recourse

complicated system of regulations.
It is not necessary, therefore, for
Canada to have resort to drastic
manipulation of the delicate sys¬
tem of interest rates in order to
€*ombat inflationary pressures. The

surely come when both

time will

here and north of the border, con¬

fidence in an established pattern
of rates that was
much

care

created with so

during the war, will

©gain have to be fostered.
As in the field

nancial

policy

of fiscal and fi¬

the task

eco¬

nomic management in Canada to¬

day is distinctly less onerous than
In this country.

Indeed, the very

problems that now exercise her
great southern neighbor are fa¬
vorable

developments

Canada is concerned.

far

The record

©f Canadian

history demonstrates
clearly that the eras of great¬
Canadian development coin¬

very
est

cide

with

the

periods when

the

United States has reached the end
©f

self-sufficiency in certain items.

CANADIAN BONDS

that

industries

Provincial

Municipal

lem

availability
is

there
is

of the

north

border

little doubt that Canada
the

threshold

her

result in

Secretary-Treasurer.

elected

Let

jrom page 4

peak in November,
the market reached

its

form

continuous bull market.

return

Groups
the

outlook

for individual groups. Perhaps

From the Technical
In 1946,

1936.

this

for

The Individual

method

each group

A Stock Market Forecast

reached

market

equity, I do not believe it will

but

before

what

Approach

tive

the

be to

the

review

in alphabetical order,
we

outlook

the

during

would

let

so,

see

in
1948,
accumula¬

was

1946-1949

phase, and how it has changed
I already quoted my 1948

today.

which

the

technical

most

dynamic phase of the long-

forecast

term

cycle starts.

patterns suggested that the high-

its

in; May

high

made

Motors

while

its top

Franklin

Houston,

Dallas

the market reached over¬
The situation today is quite dif¬
territory late in 1950, it ap¬ ferent, of course, but in my opin¬
peared that the
broad 236-220 ion, it does not guarantee a one¬
as; Elmar A. Dittmar, Dittmar &
area might be a distributional top.
way market.
In the first place,
Co., San Antonio, Texas; Erwin H. This area
indicated
a
possible the demand from these sources
Eisen, Lucas, Eisen & Waeckerle, downside objective of 210-195, but will be concentrated on a rela¬

Inc., Kansas City, Missouri.

SECURITIES
SERVICE

oil

A. E. Ames & Co.

quotations
any industrial,' mining or
security, consult us.
We

can

help

you.

When

sold

the

of
the tively few issues, possibly 15% of
three month 236-220 range has de¬ listed stocks. I don't know of any
stroyed this objective, and the such funds for example, that will
236-220
area
is now a support buy Willys-Overland, or Missouri-

jMLilner,

New York 5,N.Y.

oss

&Co.

NY 1-1045

Exchange

The Investment Dealers' Association

the
an

330

Bay St. Toronto, Canada

Hamilton

Brantford

Sudbury

half

about

trace

the

from

the

advance

220 low of December to

recent

This would be

highs.

initial decline to about 240-236,

followed

the

attempt

new

If technical indications of
should prevail, this

moment

attempt will fail and the averages
retrace

longer

term

the

from

the

half

about

advance

This would

June 1949 low of 160.

bring the industrial average to a

of Canada

Windsor

Brampton

Aircraft

manufacturing

stocks

high enough, and are a sale.
The upside
objectives for most
individual
issues
have
been
seem

The

reached.

group

average

has

approximately the same
in 1940 and 1946.
is not much chance for

rallied to
level

reached

There

further

appreciation.

The

price

performance in World War II was
level.
Kaiisas-Texas common. This could
mediocre, and I would expect the
However, as a rough guide, and be used as an argument for the same pattern to follow today.
value
of
high
grade
subject to confirmation by the scarcity
The airlines were my favorite
distributional
pattern,
I
would stocks because of the concentrated group for price appreciation in
demand. However, that brings up
expect the first correction to re¬
1950, and I still continue to be¬

will

Members:
The Toronto Stock

penetration

upside

highs.

INCORPORATED

stabilized
of

—

Boston 9, Mass.

investment counsel firm of Dodge &

Francisco, was elected Executive Vice-President; and
Woodworth, Vice-President of Eaton & Howard, Boston,

grade issues showed the best ap¬
Obviously, as always, this gen¬
General
preciation possibilities. How about
January. eral pattern may not hold for all
groups
and
issues. groups? In earlier 1948, I said:
Thus, if General Motors fails to individual
in itself provides sufficient reason
"As for individual groups, I be¬
penetrate the high of 54% of more While many groups may follow
for attempting to fill U. S. de¬
than
five
months
ago,
it may the broad outline, others will act lieve that rails represent an out¬
mands from Canadian sources of
mean,
if past precedent is fol¬ better than the market, and still standing purchase. Their technical
supply that are as safe militarily
lowed, that the market is near an others, worse. Before attempting action has been excellent. As for
as those in the United States.
For
very roughly —
to evaluate group patterns, let us the industrials
important top.
A
this compelling reason opposition
diverge for a moment, and discuss I prefer the [durable goods or
American
Can
has
acted
simi¬
here to collaboration with the Do¬
a
related topic.
heavy industry shares above the
minion in the construction of the larly to General Motors in the
consumer
goods
or
soft
goods
This stock reached its high
St. Lawrence Seaway and the de¬ past.
The Institutional Investors
stocks.
I like steels, machinery
of 120 in June, 1950, when the
velopment of Canada's aluminum
equipment, automobiles, agricul¬
Does the increased demand for
tural implements, oils, household
industry can no longer be justi¬ averages were at 229. Despite the
fact that the averages have ad¬ common stocks by institutional in¬
fied.
appliances, chemicals, etc. This
vanced almost thirty points since vestors and pension funds inject
Thus
another difficult period
type of issue was relatively back¬
that time, American Can has been a new element into the technical
ward in the 1942-1946 advance.
for this country
is likely once unable to reach within ten points
pattern? Last July, administrators
again to turn to the advantage of of its former high. On the other of trust funds in New York State That advance was led by the lux¬
Canada.
ury type stocks, such as liquors,
side of the picture, the steel group were empowered to invest 35% of
moving
pictures,
department
During the week interest in the and National Lead are issues that such funds in common stocks in
stores. This type of company had
external section of the bond mar¬ are usually late in reaching their accordance
with
the
"prudent
little or no competition for the
ket was concentrated on the new highs. At times, they reach their man" concept. There is now a bill
consumer's dollar. No matter how
$50 million Quebec issue which peaks
simultaneously with the in the New York State Legislature
prosperous
things may be over
promised to go well despite cur¬ general market, and other times to allow New York insurance com¬
the next few years, their record
rent uncertainties in U. S. bond after the market has topped out. panies to invest 5% of their funds
sales of the war period will not
markets.
The internals were The steels and National Lead have in common stocks.
Undoubtedly,
be duplicated. They will undoubt¬
marked down in sympathy with been very strong recently.
there will be additional instances
edly move ahead too, but I be¬
the decline in Canada, but the
If
these
technical
indications, of relaxation of present laws to
lieve the heavy industry shares
short-term issues still met with and others which I have not time allow investment in better grade
will show greater price appreci¬
equities.
Will
this
result
in
a
de¬
steady investment demand. Stocks to
mention,
prove
substantially
ation."
after earlier attempts to rally fi¬ correct and the market is close creasing supply of
better grade
To proceed alphabetically, the
nally moved generally lower al¬ to at least an intermediate top, common equities? Does it mean
first group is agricultural mach¬
though a few Western oil and how far can it react? This is not that the market cannot suffer
base
metal
issues
resisted
the an easy question to answer at this any severe decline because of the inery. Until this year, the farm
downward trend.
time because distributional pat¬ huge potential demand? To reason implement group has been rela¬
and the group
terns haVe not yet been completed. this way is somewhat reminiscent tively backward
The distributional pattern—when, of 1929 when it was said that the average had been unable to pen¬
Midwest Exch. Members
etrate
the
1946
formation
of
the
high.
Recently, the
many
new
in¬
as and
if it is formed—may take
been stronger. The
CHICAGO, 111. — The Board of place around the recent highs, or vestment trusts would mean that group has
Governors of the Midwest Stock at lower levels. However, until the the huge buying power of these longer term objectives have not
Exchange elected to membership pattern
is formed, no definite newly formed trusts would hold yet been reached, but some prior
the following:
consolidation is needed.
>
downside objectives are available. up prices indefinitely.
now

greatest era of economic develop¬
ment. The international situation

For information

Fifty Cojagress Street

is disap¬

power

come.

best

pensable industrial requirements
in this country and their ready

CANADIAN STOCKS

4-2400

Kennard

of many indis¬

shortages

CANADA

WORTH

San

Cox,

increasing prob¬

Corporation

Two Wall Street

Lambourne, partner in the

competitively cheap
south of the border.

In view of the

important

former

will continue to be a
supply for some time to
Briefly, while I believe the
increased
potential demand for
high grade stocks will result in a

factor

longer obtain
power

this

of buying

however,

Woodwortb

can

Union Securities Co., Dallas, Tex¬

Government

Kennard

Lambourne

analyst, Baker, Weeks & Harden, was
elected President of The National Federation of Financial Analysts
Societies at the annual meeting of the Federation.
Richard W.
Bretey,

Pierre

Canada's almost limitless
of hydro-electric power
fail to attract to the Do¬ Continued,

minion

R. Bretey

Pierre

was

power,

the previous

rates is

again called upon.

are

declining

pearing, and is being replaced by
small investors and large insti¬
tutional
sources.
Large estates,

great lumber and paper industries
of the
Dominion.
Today, when

Canadian resources of these
For this reason it is to

ad¬

their func¬

buying

taxes,

source

«outh, but at its present stage

the world.

the market

addition

phase. Another source of supply
is, of course, large blocks of se¬
curities in large estates.
Because

of the

of U. S. domestic production of basemetals, and even iron and oil is
dynamic development it is far less
vulnerable to inflationary pres¬ proving insufficient to supply the
ever-mounting
demands of indus¬
sures than any other country in

stock
in

tion

larly when native forests became
inadequate to furnish growing do¬
mestic
demands,
impetus was

given to the establishment

supply
vances

low

somewhere

area.

the

210-220

This should be reached late

1951,

early

1952,

and

should be followed by a consolida¬
tion period
before the fifth or

the second
tors

point.

these

The administra¬
are sophisti¬

funds

lieve

they will work higher des¬

pite their recent rise. Strong base
cated, intelligent buyers — much
patterns were built up in the
more so than in 1929.
They have
1947-1950 period, and they have
the power to place certain speci¬
had only half of their potential
fied percentages of funds in com¬
advance. As an example, Eastern
mon
equities, but they are not Airlines has rallied
10 points
forced to do so. They will be buy¬
from 14 to 24. The pattern sug¬
ers when
conditions warrant, but
gests an ultimate 34, or a possible
conceivably will also be sellers
further ' 10 • point
appreciation.
under other conditions.
With the
Some consolidation may be re¬
possible
exception
of
pension
quired, t>ut the group appears
funds, many of which operate on
attractive on all minor price de¬
a type of "dollar averaging," these
clines.
various sources will not always be
The issues in the automobile
on the buying side of the market.
Open-end

investment

trusts,

be¬

groups—particularly

the

leaders

Volume 173

have

highs

Number 4992

probably

and

tended

will

period

The Commercial and Financial Chronicle

...

reached

their

require an exof accumulation,

General Motors has ranged in the
54-44 area for five months. A decline below this area would in¬
dicate

return

reaccumulation

followed

three-year

the

$0's—

mid

long period

similar

the

between 25 and

range

35 in 1946-1949.
The

auto

has

group

shown relatively poor action, and
is still below 1946 highs. I do not

expect

this

group

than

much

lower

consolidate

levels for the next year or so.
I like the building supply
group.
this group are forming

Issues in
a

strong base pattern. They

very

great many individual issues in about 25% and some further
this group that have attractive solidation appears needed,

technical

Metals
rather

1952-1957

rise.

The

chemicals

in most
cases, reached the upside objec¬
tive indicated by the wide base
formed

areas

have,

This

1946-1949.

and

natural

decline

some

has

100%

appreciated
almost
1949 lows, and a

from

the

long period of consolidation
reaccumulation

The

base

new

gas

reacted

group

port levels.

reaccumulation

forming

believe

this

will be formed

This

ness.

should

area.

relatively

office

rest

group.

eliminated

equipment

the

issues

base

from

group,

have

tie marketwise for

The coal group reached its high
1948 and declined sharply in

1949 and 1950. Most of its loss has

been regained since Korea. It ap-

high enough, and the group
offers little in further price ap¬
preciation.

have

been

Notes

and

cil

done

patterns

would

clines

have

oil

and

issues

petroleum

have been recent favorites. How¬

individual issues have

most

ever,

their

upside objectives
and further appreciation possibilities appear limited.
The sharp

.advance has placed this
a vulnerable position.
The

pears

paper

1949

and

formed

group

accumulation

group

wide

during 1946upside breakout of

areas

the

Secretary John W.
Chairman

motion

and

have

held

range near the lows for over three

long-term upside po¬
tentials are very large percent¬
agewise, and the group appears
oversold.

interesting

very

the

Tire

rubber

and

ap-

Some

issues

need

the

group

changes in the
balance

ing

payments

po¬

sition

the

market

periods

weakness.

Tobacco

issues

John W. Snyder

selling close
to five year lows and appear to
be in a good defensive position,

Appreciation

possibilities,

how-

ever> are limited.

of U.

S. exports of goods and ser¬

vices

Conclusion

over
imports amounted to
$36,800,000,000, with the largescale foreign aid programs of this
country
accounting
for
about
.

In conclusion, I believe the fol¬
lowing:—
In 1948, the prediction that the
averages would reach 450 — or

250—seemed

even

fantastic.

Now

three-fourths of this.

period.

needed first. The market is over-

placement

tion

and

should

weakness.

bought

Although they

Printing

appear

have

the glass division
moderately " higher

have

work

after

some

consolidation.

tractive

slow,

container

paper

high

enough

group

for

the

The

appears

moment.

would expect the container group
to be relatively stable over the

intermediate

term

moderately

lower levels.
The

siderably
and

below

the

1946

con¬

highs

is much less vulnerable than

other groups. It

many

may

long-term

accumulation

defensive

good

longer

term

be in

area.

>yith

group

has rallied back to approximately
the 1946 highs. The nearer term
objectives have been reached, but
the
longer term objectives still
indicate higher levels. The group

high enough at the

mo¬

ment, but should show above ac¬
tion average in any general mar¬
Finance

companies

have

re¬

The

has

this

offer

television

group

wild

gyra¬

some

ample.

can

rose

1949 to reach

has a relatively
mediocre and uninteresting pat¬
tern, both in the store field, and
the wholesale field.

There

are

few exceptions.
Household

The

appears

Investment

companies

will,

follow the pattern of

course,

general

market,

should

and

available at lower levels.

strength, but in the lower
part of the 15-19 area. The same
on

appjlies

issues

other

priced leverage issues might have
final

fling

before

the

machinery

reached
Some

their

upside

consolidation

mation

off

needed.

new

and

the

are

shifted

increased

the posi¬

producing
as

demand

Hammill

Co.,

exchanges,

ment, the production of strategic
and
critical
materials, and the

principal countries receiving
were Mexico,
Argentina,
Brazil, Peru, Saudi Arabia, Iran,
and Yugoslavia.

such aid

The

States for

the

re¬

stock-

war

and

periods

wartime

foreign aid amounted to

that

net

$41,000,000,000, whereas net for¬
eign aid extended in the postwar
period up to June 30, 1950, aggre-

ing

importance

the

Monetary Fund on exchange
rates, the role of Fund missions,

and the lending activities of the
International Bank which, during
the period, granted 10 loans ag¬

gregating $229,000,000 to eight of
its

member

countries.

these countries had not
borrowed

from

the

Five

12 additional countries took action

toward making available for lend¬

ing all

part of the 18% portion
capital subscriptions paid
local currencies.
Steps were
or

of their

taken

Mexico

and

France

broaden the market for the Bank's

securities'
in

past,

the

statistics

various

report

comprehensive
aspects

Government foreign assist^

ance

the

well

dollar

postwar

gold

resources

and

tries

gold

period,

and

short-term

of foreign

coun¬

transactions

tween the United

be-

States and for_

e^gn countries.

Did You GUESS?
Here's the

Mutual

Assistance

the

accompanied

of the two
on

1951

version*

angels appearing

24.

page

Mr.

ager

previously

Bank

(Aus¬
tralia, Uruguay, Turkey, Iraq, and
Ethiopia). The Council noted that

The report stresses the increas-

Defense

the

tional

the

postwar

shows

reviews

report

important actions of the Interna¬

14 gated $26,200,000,000.

announce

were

result
on

inventories,

extended

1946, the

These credits

principally for economic develop-

Northern Trust Adds

Byram in New York

has

risen

1949, to

from

90.

over

year or so.

Some

The

over

aver¬

June,

many

good

diverse

patterns.

issues

appear

for

the

obligated

1950, and $6,000,000,000

period

April,

1948-June,

Under the European Recov¬

ery

Program,

the report reviews

patterns

base

patterns

objectives

have

others.

and

the

not

yet

shipbuilding

group appears to be in

steel

P. C. Kullman, J»%

Joaquin Titolo

(A)
ham

NSTA

Notes

Joaquin Titolo, Harris, UpCo., 14 Wall Street, New
5, N. Y.

York

Kullman, Jr.,
& Co., 42

Philip* C.

(B)
J.

John

Jr.

O'Kane,

Broadway, New York 4, N. Y.

FIG Banks Place Debs.

Security Traders Association of New York (STANY)
ing League standings as of March 2, are as follows:
TEAM

declines, while there

slow up-

trend, and further moderate price
appreciation is indicated,

new

fiscal

SECURITY TRADERS ASSOCIATION OF NEW RORK
group

The retail trade group has built

The

$2,600,000,000, as

the next

equipment

individual

mediocre

upside

for

1949.

about

$3,600,000,000

Selection is important

railroad

attractive

against

Strong support

should be met at 70

The

Recovery Program for fiscal
were

than in the industrials.

shows

1951

pattern appears

However,
any
decline
less
percentagewise

should

pean

for¬

making
jow jn june, 1949, rallied
group,

after

have been reached. A reaction of

There

report states.

objectives.

diet

general pattern.

Shearson,

Wall Street, New York City, members of the principal stock and

?y.rai?,^aslkec0™e associated with
J"
Si
?Zeii
0
5 New York City, pff ce,
15 Broad Street.

large public following has
been acquired.
The advance has
been rapid and many issues have
a

sharply to move above the 1946
highs. In most cases, the upside
objectives of the 1946-1949 base

Admit H. C. Ballou

leaders—particularly since Korea

posed of many different types of
companies so it is difficult to pre-

com-

Shearson, Hammill

Chicago announced that John P.

group

has

material

part of the United

ance

The rails have been the market

market

turns down.

higher—is attained,

The Northern Trust Company of

of min°r price dips,
The shipping and

six months' period since

■'

the

group.

the

The low

the

raw

than in any corresponding

—more

buy

been reached. I would buy on all

needed.

the

Ballou was formerly man- made available by the Congress,
the institutional depart- is
provided under the Mutual De¬
15-19 range since then.
I expect ment for Hayden, Stone & Co. and
further time to be spent in that prior thereto was with Dominick fense Assistance Program. In con¬
area followed by an upside breaktrast,
new
funds available
for
& Dominick.
'
out and new highs.
I would not
obligation to continue the Euro¬

also

present an uninteresting and in¬
complete pattern, and more work

tion

been

since the
this con¬

Program in
be used as an ex- that H. Cushman Ballou has be- foreign aid. For
example, $5,400,from 10 in July, come associated with the firm in 000,000, or more than 60% of the
high of 23 before its main New York office.
total foreign aid for fiscal
1951

The July,
1950, low was
15, and the stock has held in the

are

furnishings

reached, there

less general feeling
advance will
continue

Radio commodity

trading range.

Corporation

The food group

The

issues

and

in this group.

steels.

The

the past two years.

extended

age

radio and

undergone

period, the finance
group advanced over 100%, and
greatly outperformed such war
groups
as
aircrafts, metals and

vulnerable

technical pattern suggests reaccumulation and higher levels after

—and

quite

During

group

appreciation possibilities
the longer term.

over

the

been

has

bought at the present time.
It piling, and increased raw material
base must again become oversold be- consumption.
appears at- fore the advance to 450 — or even
A comparison of foreign assist¬

declines.

has

they

moderate

sharply since Korea,
but at recent lows, they were at
strong support levels. Regardless
of popular
opinion, this group
appears
reasonably priced
and
should be bought on price dips.
It might be of interest to observe
the price pattern of this group
in the war period of 1942 to 1945.

acted

The

not

are

ket decline.
•

stocks

Korea.

possibilities.

The electrical equipment group

appears

patterns.

tions in

drug group is selling

publishing

backward, but
formed
fairly good

could

and

been

The Council

noted that the surplus
declining rather steadily
peak year of 1947. In
nection, it is noted that

be in

States

ending June 30, 1950, the surplus

countries

of reaccumula¬

in the postwar period since June
30, 1945. For the five-year period

indefinitely. Personally, I believe
that at least a 25%
correction,
and
a
lengthy consolidation is

process

United

are

extended

Bank during the
period totaled almost $400,000,000

The Council

reached and the group appears in
need
of a lengthy
consolidation

the

30,

reviews

ing considerably below both 1946
and 1950 highs. Stocks appear to

Sept.

consolidation.

during

credits

The

end¬

behind the market and offer buy-

opportunities

New

Export-Import

facilitation of United States trade.

six

the

1950.

appear

of local currency counter-

use

ing

sharply and would ap¬

pear

Council's

months

have

the

part funds.

activities dur¬

ing
stocks

Con¬

report of

the

longer term.

advanced

and

gress on March

The

years.

the

that

division

trans¬

President

Most upside objectives have been

metal

Ad-

Prob¬

mitted

picture
narrow

producing countries as
S. for inventory replace¬

stockpiling.

Theatre
stocks

sell¬

nents. The

Financial

lems,

250

compo¬

Snyder,

International

and

must

group

various

material

raw

National

the

Council

its

trade with

our

ments and

that

container

Chairman of the National Advisory Coun¬
Monetary and Financial Problems, reports

of increased demand by U.

this range resulted in almost 150%
advance
in
the
group
average,

The

divided-into

International

shift of
result

visory

price appreciation.
The

for

buying on de¬
anticipation of above
action
and
long-term

average

issues

lit-

suggest

appears

individual

this group should be watched
Monetary
closely during periods of market
weakness.
V; •'

long period.

Correction
but

preciation opportunity is possible

formed, and the group oc¬
cupies a good defensive position.
I

reached.

Declining Export Surplus Trend

Secretary Snyder,

patis important,
needed,

selection

the

been

reached

at lower levels.

terns

group

The action may be slow, but pur¬
chases should be made on weak¬

and

needed.

appears

area

stocks

needed

needed.

group

Sugar

the

Substantial

The

also

are

group.

quite sharply after Korea, but at
the July lows were at strong sup-

the

classi-

mining

consolidation

they indicate substantially higher
levels. They could be one of the
of

and

diverse

counter

and

stable

leaders

Some correction is
main I would say that the techDespite the very sharp rise, the
nical patterns suggest that these long-term objectives of some texissues are no longer on the bar- tile
issues have not yet been

may not do too much marketwise
over the near
term, but eventually

market

patterns,

con-

fying the group as one that should mild uptrend. However individube bought on minor price declines. al
companies show diverse

gain

accessory

(1041)

Bowl¬

successful

issue

Won Lost

offering

debentures

Donadio

made Feb. 15 by

Burian

4
5
5
6
6
6
7
7
7

New

(Capt.), Demaye, O'Connor, Whiting, Workmeister
8
(Capt.), Manson, King, Voccoli, G. Montanyne
8
Greenberg (Capt.), Sullivan, Stein, Wechsler, Siegel„____
7
Bean (Capt.), Kaiser, Growney, Gronick, Rappa
—7
Leone (Capt.), Krasowich, Nieman, Pollack, Gavin
6
Krisam (Capt.), Bradley, Montanyne, Weissman, Gannon...
6
Hunter (Capt.), Lytle, Reid, Kruge, Swenson
6
Mewing (Capt), Klein, Flanagan, Manney, Ghegan
5
Goodman (Capt.), Casper, Valentine, M. Meyer, H. Frankel
5
Serlen (Capt.), Gersten, Gold, Krumholz, Young_
5
Kumm (Capt.), Weseman, Tisch, Strauss, Jacobs,.
—
5
H. Meyer (Capt.), Smith, Farrell, A. Frankel, La Pato
4
Vin Lytle (Shields & Co.)
Co.) had high games of 208.
Tom

513.

Greenberg

and Bill O'Connor

7
8

Federal
was

M. G. Newcomb,
agent for the*
consisted of

fiscal

banks. The financing

$118,445,000
dated

and

issue

was

Of
was

debentures

1951

due

1.875%

consoli¬

dated

March 1,

Dec.

1951.

The

placed at par.

the

$70,205,000

proceeds,

used to retire

like amount

debentures maturing March 1,

1951,

and

$48,240,000

was

"new

money."

(Fitzgerald &

(C. E. Unterberg & Co.) had high series of

York

Banks

Credit

Intermediate

the

March 1, 1951, the total
debentures outstanding
to

$605,040,000.

business

amount of
amounted

(1042)

The Commercial and Financial Chronicle

this line appear in a booklet published by Dreyfus & Co., entitled
"Wall

Securities Salesman 9s Corner
By JOHN DUTTON

Street,

ARTICLE No. 5

talks

sible;

but

often

results of

range

this

and the old

pos¬

the

long-

1950

can only be meas¬
growth of your busi¬
ness—in the good will you have
established.
All the promises in

the

active

the

world

will

build

not

STEER A STRAIGHT COURSE

but honest advertising
performance
will
do
it.

These
not

the

are

things which
in

measured

cents—but

they

foundation

stones

cessful

takes

you?

the

every

enterprise
makes

success

and

sound

profit

from

the

believe

and

crowd?

language

readily understood?

that

principles,..in

It takes

may

TODAY'S

TO*

your spec¬

speculative

TODAY'S

•

T.l.phunt: WHITEHALL 3-4140

their

homes

and

otherwise, for

some

unknown

life

was

"insurance

such

low

time

rea¬

when

business

repute,, that

the

was

who

men

braved the ridicule and
antago¬
nism of the public and who went
out
and
sold
it, were actually

regarding their securl^

50,000,-

were

American

Business

would be

secure.

only

Tell

people how to invest
cessfully.
Tell them not to

investment

suc¬

Tell

program.

them

that

they must have reserves for a
rainy day. Tell them to investi¬
before

gate

they

them

that it takes

when

prices

What did it?

over

Education!

not

suggesting that you
crusade—that you appoint your¬
self number

educator in your
town—even
though your

home

long-run
the

fact

one

self
that

interest
the

rests

people

upon

this

country become economically lit¬
erate,

try

not

save

proposing that
America, but I

and

invest. *'Tell
courage

and

see

your

to sell

what hap¬

firm

doesn't

eventually
become
the
place
where people go, because
they be¬
lieve that they are

going to have

sound

investment

advice.

assistance

and

And live up to what you

preach!

nationwide

-/..A.

SPOKANE

Co.

est

The

yield

debentures

are

2.875%.

The

bonds

represent the largest publicly of¬
fered

industrial

First

bond

Boston

issue

for

Corporation;

Kuhn, Loeb & Co.; Blyth & Co.,
Inc.; Goldman, Sachs & Co.; Harriman, Ripley & Co. Inc.; Leh¬
man

Brothers;

Smith,

Barney

Co. and Wood Struthers & Co.

•

The

remainder

the

far

members.

their

The

much

102 V2%

and

re¬

par

1978.

and

sinking

commencing in 1953 provides

any sinking fund
date make additional

pay¬

term

the

There

are

also

outstanding 4,300,000 shares
of capital stock of $15
par value.
For
net

1950 the

income

provision
come

company reported

$20,147,073 after
$15,731,165 for in¬

and excess

profits taxes and

Canadian income taxes.
net

income

$12,870,762
The
700

1949

$21,890,479 after

was

provision

for

Company operates
properties

United

For

taxes.

than

throughout

the

o-nd

50
T.I.:

other

BROADWAY

WHitehall

3-6700

NEW

Stock

NEW

YORK

Teletype NY

1-1850

HAVEN, Conn.—John G.

Schryver is

now

Fahnestock

Street.

associated

Co.,

was

205

with

Church

formerly

Smith, Ramsay & Co., Inc.

the

securities

fraternity, the NASD
existing difficult lot. How

their

remove

as a

come

to place

with

Congressional limi¬
Maloney Act

parityi: 7"

AIB to Hear Debate

Vice-President of the

Chapter and

On Marshall Plan

York

New

Assistant Cashier

the Public National Bank,

will

preside.

"That the Marshall Plan Should
Be

Discontinued

will

the

between
York

the

debate

teams

and

F. J.

Immediately"

subject

representing New
Philadelphia chapters

American

Institute

Wlugfeldsr Co.

Fredrick
ber

the

Pflugfelder,

New

York

Banking

Gloria P. Dalton will be

ing.
New

will be

York

Joseph

Bank

and

represented

Kremar,

Broadway, effective March 16.

York

Company; Max
Manufacturers Trust

Bank.

The

and

Fifth

partner

Philadelphia

team
F.

Re-

Financial

The

Anderson

ciated
of

with

Avenue.-

Joseph

PASADENA,

Co.

Calif.

has

Pflug¬

Standard

was

asso¬

Investment

Wykoff

formerly

with

Co.

and

Edward

Floyd A. Allen & Co.

First

Clarence

California, 87 South Lake

Edgerton,

Dunckelmann,

Chronicle)
—

become

stifo, Philadelphia National Bank.
H.

limited

Standard Invest. Co.
(Special

ing

and

Mr.

Clarence Anderson With

Pennsylvania Company for Bank¬
Trusts,

firm.

felder has recently been active as
an
individual floor broker.

Avenue

consists of John Grant, First Na¬
tional
Bank;-- Ralph- Henry,

and

the

Chemical

Trust

Reutlinger,

Ex¬

will form Fredrick
J.
Pflugfelder & Co. with offices at

p.m., at

on Friday, March 9, 7:30
New York Chapter Head¬
quarters in the Woolworth Build¬

mem¬

Stock

change,

Co., and Charles Young, Bank of

States and Canada.

With Fahnestock Co.

Exchange
Principal Exchanges

harden

low.
Having already deprived
dealing on an equal footing with

regard the members of Congress owe the coun¬
try an obligation. We believe they are sincere in their
desire to help small business. Here is the
opportunity.

New

York

new

four square and American it would be for the
the restriction which
prevents non-

In this

pay¬

company's

debt.

Clearly the time has

$1,250,000.
$60,000,000 of new deben¬

constitute

tation upon such efforts and to
modify the
so that all-in the
security field shall be on a

ments up to

long

profiting share and share alike with mem¬
result of securities sales and underwritings.
To solidify its
monopoly the NASD does not hesitate

beginning

thereafter

decreasing" to
1,

are

if redeemed

months

1951

March

sole

New

After all.

members from

nee
maintenanc

debentures

new

tures

Members

further

NASD

business.

ment

1915

brethren

would

to enlist SEC aid.

positions" and

The

ESTABLISHED

That's

these non-members from

proceeds

ital
working, capita
expansion of its

There may

he is concerned.

purposes,
including
of inventory and

tion,

J. A. HOGLE & CO.

"suitable for the customer"?

Advising the SEC to watch the non-member more
closely, and to modify its rules so as to make Regulation A
offerings more burdensome, is the tops in NASD cheekBy this indirect method the NASD seeks to control non-

for annual payments of
$1,250,000
and the company
may, at its op¬

LAKE CITY

are

investment adviser.

bers,

fund

SALT

will be used for general
corporate

DENVER

common

(yesterday, March 7)
$60,000,000 30-year

priced at 100% and accrued inter¬

March

•

We think not.

The

Borden

do opinion "hit the bull's eye" along

Markets in

he is not

issue of

new

the

FOR BROKERS AND DEALERS

these securities

27/s% debentures due 1981 of the

deemable

Prompt Wire Service

•

Is this what Congress intended?

nearly a year.; 7.
Principal members of the group
include Dillon, Read & Co.
Inc.;

after

LOS ANGELES

can-

people

be a difference
of opinion on
suitability. Why should the NASD member
lay himself wide open?
Many customers are interested in pure speculations
from a possible capital gains
standpoint. '
:
Small business,
already sorely beset, has a potent
enemy in this latest NASD eruption. Certainly it is con¬
trary to all the expressed Congressional intention to help
the little fellow, and will serve to throttle venture
capital

during

Western

practieaihmatter they

speculation why should a member assume any
responsibility for any sale of the •>
instant type of securities in the
light of the rest of the cus- •»
tomer's portfolio? Why should he have to determine that '

comprising 130

group

public sale

Some advertisements that in
my

you

anything, what the

means

as a

knowledge that the offering is

investment firms who offered for

prices

the saleotseMriliessince
alone*

are

over

See

pens.

English language

appreciable

The company will apply
high but the re¬
$46,pitied by their friends. But today wards are great, because they can 404,000 of the proceeds from the
then
have
the picture is different.
buying
sale
power
when
to
the
retirement
of
the out¬
Success¬
ful life insurance salesmen stand prices are low. Tell them the tree standing
$30,800,000
of
1%%
never grows to the
at the very
sky.
Tell
them
promissory
notes
due
top of the ladder, and
serially
life insurance is now considered the truth about investing—tell it
March, 1951 to 1956 and the $15,to them in language which
a
most important asset in
they 000,000 3% promissory note, due
every
investment portfolio—as it should can understand. Tell it to them serially
September, 1958 to 1968.

be.

In fact, if the

and

Morgan Stanley & Co. heads
shareholders

put
son
or
other, has almost been all their eggs into one basket. Tell
them
not to try to get rich over
sacrilegious. We have been slaves
to custom.
I
night. Tell them to have a sound
There

simply

are

Offers Borden Debs.

offices, and

offices.

dare

Regulation A offerings

are
intended to start small business or to help finance
existing small business, we readily recognize how fraught
with danger the second of these "Fair Practice" rules is.

ex¬

Morgan Stanley Group

stating a fact—do your part unself¬
interviewed investors in ishly and see what happens.

when

story

your

that

Since the disclosure is made and it is also

Enterprise, > instead
of
example, we have been talking 10,000,000 or thereabouts, that the
future
would
be
a
great deal
statistics, averages, and technical¬
ities to people when we discussed brighter, and that freedom itself
our

to be—adver¬

answer seems

service

Teletype NY MMI

believe that if there

advertising, in

would normally

stand.

MARKETS

Broadway, New York 4, N. Y.

000

our

than

consider

N. Y. Curb Exchange

cour¬

When

almost always speculations, so designated, and that these

to buck the trend, but if you
that you are right the re¬
wards are great.
For years, for

done

year,

Language That

Corporate and Municipal Bonds
50

age

have

last

Leadrng Commodity Exchanges

know

securities—we

rate

METHODS

even

vnnr

Members: N. Y. Stack Exchange

be¬

can

reverse

such

,b^jfferr^.NASD is really saying via this second rule is that these
wfn
isf.wide °Pf:n ' *5 „ smali issues of $300,000 and under can henceforth only be
place where ypeoplerigo^for sound - sold to wealthy individuals. Should this rule be enforced
investment assistance, and the
l^st^lFWouId mean no capital foir small business at all through

Dreyfus & Co.

successful

Isn't it

Surely

year.

honestly—and

speculator to unwisely

ulative account to sound

cause
they are willing to tell
people the truth about their busi¬

ness

principles.

What makes any person
any business organization stand

out

initial

hand,

investment

policies?
or

speculation. On the

exchange volume in
greater than the

market

tise—tell

an investor. In
your
investment account stick to sound

Isn't it the continued advo¬

cation

investor toward

other

willing

this does indicate that the business
of the firm increased at a
greater

The

funds and steer a
Early, unexpected
wrongly sways an

consider himself

suc¬

people

your
course.

sometimes

influence

basic

the

—

of itself,

care

What

dollars

are

segregate

straight

can¬

were

can be a
divergence of
what constitutes being a good boy; but then,
can
produce, and has produced, some amazing
edicts, standards, rules and yardsticks. The juggling of
language is one of its specialties.

on
the NASD

pected.

Determine in advance whether you are
going to invest or speculate. If both,

business,
plus

who

ones

One wouldn't think that there

opinion

50%

was

ing campaign
ured

low, e. g., its refusal to share commissions and underwrit¬
ing earnings with non-members.

It is institutional

learn, Dreyfus & Co.'s share of

the total stock

sound advertis¬

without

sense

advertising that dares to be differ¬
ent.
Does it pay? I understand
that in educating new
investors,

tising pays.
Can you obtain a
profit on an ad, or a series of
ads, that you can measure in dol¬
Even

Capital for Small Business
Through Sale of Securities

Notice how

welching. It educates
sells—every ad is the same
layout, border, and attrac¬

NASD Edict Would Mean No

tive illustration.

expect to stay in business—if you
do, of course institutional adver¬

cents?

common

wincing
and it

Does it pay to do institutional
advertising? The answer is, do you

Continued from page 3

Reproduced here¬
smaller size, is one of

Thursday, March 8, 1951

Ap¬

request.

upon

the ads in this series.

Advertising in the Retail Securities Business

and

Human

proach to Successful Advertising."
Possibly they have some extra
copies and would send you one

with,

lars

the

;

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1043)

•

Continued from
page 2

Continued

,v,

Security

As We See It

I Like Best
can

inflation

best

stake

method

gold

gold stock.

Hills

gold

are

operations

largest
in

the

Black

Mining

started

In other
words, this is

pro¬

country.

Dakota.

were

1877.

fly-by-

night venture, but is a sound
business that has been in existence
for

three-quarters of a century.
An unusual fact is the
state of the
veins—the

lower

operations

go,

the

mining
greater
has

the

been the gold content.

capital

cipally of cash
There

are

ferred
;

Now,

I see

sound.

consists

and

There

common

what

prin¬

governments.

bonds, and

stock.

shares of

Company

considered

are

Working

are

pre¬

2,009,280

outstanding.

the

future?

it, the situation today closely

resembles

England

that

devalued

1929-1932.

the

devalued

pound

1949 from $4.03 to
$2.80.
devalue the dollar.

We did

not

devalued

England

pound

1931—we

1934.

does

not

necessarily follow, but neverthe¬
less, I predict that the United
States
the

will

dollar

obliged to devalue

1952

1953.

The

price of gold will be raised from
$35 per ounce to $50 per
ounce,
of perhaps even higher.
In view of the
probable

coming

devaluation of the dollar and the
rise in the price of
gold, it seems
to me quite
logical that Homestake Mining may resist

declining

prices

whole.

the

stock

There

the Pegs

market

even

These

long term "bank restricted" bonds are the bonds
on
during recent years have edged down to¬
and have, accordingly, been central figures, as

that

Homestake
will
advance
against a declining market, just as
it did from 1929 to 1932.

ward par,

it were, in debt
management controversies.
at

They may not
present be held by commercial banks and will not be

eligible for such ownership for

years

The Federal

come.

obliged

them,

them

than

occasion

one

take

insurance companies and other institutions placed
the

market.

current holders are
willing to
exchange them for the new 23As, this intermittent "battle
of the pegs"
may come to some sort of,an end. It may then
be possible for the
politically
leaders at Washing¬
ton to

lead the attention of

public
this phase of the debt
management problem.
But how

then

would

uneasy

away

from

"how"!

answers

that the Administration

ex¬

pect presently to come forward with

one scheme or an¬
other to prevent commercial bank sale of their
holdings
of government
obligations. That is to say that unless the

Treasury is

now

willing to go along with ideas of more
changes in the yield rates on shorter

than small fractional
term

obligations, the commercial banks of

saddled

with

the country are

large block of quite frozen assets
yielding substantially, less than could be obtained else■'

where.
For

;

nical

avoidance of greater

success—some

activity of funds

already in hand which, of itself, could support an enor¬
mous
inflationary price movement. But even on this, the
most favorable basis, the
gain would at most be but tem¬

K. I. M. Mar. 9th

porary. Holders of the bank-restricted 2M>s
to be eager to make the conversion without
a

reasonable

could put on

are

not

assets are government securities of one
He would be an
optimist who could be¬

the market.

"Harold B.

K. I. M. that date to
the jovial chairman

advertising

committee

Security

Traders

Association.

G. B. Whitaker Co.

Formed in New York
-

Clarence

formed

offices
York

C.
at

B.
B.
60

City, to

Whitaker
Whitaker

Broad

Co.

aftd

prior thereto

ahder

secu¬

Mr. Whitaker

formerly trader for Batkin
.

has
with

Street, New

engage in the

rities business.

Eisemann

was

(Special

The

was

Co.

with Alex-

Co.

Financial

country to accommodate their customers.
come sooner

from

the

any such

—

business

government

anti-inflationary

program as is now

When

debt

apparently

management is taken out

Fair

Deal

politics and placed in the hands of men who know
what
they are doing, we shall begin to make
progress. Until then
such compromises as that
now
being publicized will be of

little avail.

after

Transcontinental Gas

Pipe Line Pfd. Stk.

Corporation

and

other

year

555

prices

world's

longest

per

company

delivery

New
in

York

the

of
and

metro¬

area.

million

Federal

sion,

the

cubic

feet

was

being

authorized

Power

additional
serve

North and South

down to $52 per share if redeemed

The

the

gas

505

the

cipally

scaling

York.

began

January of this
an
increase in capacity to
million cubic feet per day

from

prior to May 1, 1956
at

constructed

Communities

politan

preferred stock is sub¬

thereafter

the

New

natural

general

and

recently

terim notes due
May 1, 1951. The
balance required for this
purpose
will be supplied from the

operates

ana

outstanding $26,500,000 of 6% in¬

financing

natural gas pipe
system, the main
line extending 1,840 miles from
the gas fields in Texas and Louisi¬

Proceeds of the sale will be
ap¬

.share

the

plied by the company to the re¬
demption at 106% of the presently

$53.50

Transcontinental

4.90%.

effect

short term notes.

share, to yield approximately

have

common
stock,
$175,000,000
of
long term debt and $10,000,000 of

Gas

ject to redemption

also

company will have outstand¬
ing, in addition to this issue of
preferred stock, 3,530,000 shares of

Pipe Line
Corp. cumulative preferred stock,
$2.55 series (stated value $50 per
share). The stock is priced at $52

new

will

sinking fund cal¬

the

offered for public sale on March 6
a
new issue
of 550,000 shares of

The

redemp¬

Giving

underwriting group headed
by White, Weld & Co. and Stone

per

issue

tion price is $52 per share.

Transcontinental

the

culated to retire all of the issue
by
1978.
The sinking fund

Offered by Bankers
& Webster Securities

May 1, 1966. Beginning Nov.

1955

the benefit of

Commis¬

million

required

prin¬

customers

Carolina, Georgia

and Alabama.

later,

came

The time

in 1946 and subse¬

Mail your Annual Report to the Investment

Temporary Gain

them

for

the

Country.

information

Investors
on

your

look to

company.

however, that not even this temporary
inflationary sorrow is likely to flow either
"agreement" now announced with a flare of

from

here.

A ddrcHHograph
We

ernment bonds.

graph

time be

The President has said that

incurring

in the end taxes

are

shall for

substantial Treasury deficit

collected to

cover

even

all rearmament out¬

lays. In other words, the Treasury will be in the market
for substantial amounts of new funds
during the twelve
months to come. Are these sums to be
sought in a market
which stands on its own
feet, or is the Treasury to seek
special favor in this case as it has consistently done in the
past? One would suppose that the authorities would have
considerable
more

been

difficulty in persuading banks to take on
relatively unprofitable investments, after having

obliged to hold governments when they believed it
advantage to sell them. Besides, purchase by
the banks of additional
bonds, the proceeds of which are
promptly to be spent by the Treasury, would be as infla¬
tionary as the very things the authorities are trying to end.
to be to their

have

Service

metal

stencil

Department

for

our

Addresso-

investment

every

banking and brokerage firm in the country,
arranged

alphabetically

States

and

Cities, and within the Cities by firm names.
This list is revised daily and offers you the
most

Our

up-to-the-minute

service

available.

charge for addressing envelopes for the

complete list

(United States

Canada) is

$5.00 per thousand.
All

addressing completed within 24 hours.

can

also supply the list on gummed

labels at

roll

small additional charge.

Two Other Factors

Terry

Carpenter, Inc. is engaging in
securities

these

contemplated.

trumpets, or from such further action as forcibly restrict¬
ing commercial banks in the sale of their holdings of gov¬

But

Chronicle)

SCOTTSBLUFF, Neb.

hold

obligations where they now are. In
any event, a more
existing cash could of itself overthrow

say nothing .of other aspects of
indefinitely impossible for the banks

of the

Terry Carpenter, Inc.
-

point in the interest rate—even

It is not probable that it would

would

surcease

Smith of
Pershing &
Co., 120 Broadway, New York
City, is celebrating his birthday

National

The fact is,
from

Harold B. Smith

the

hand

liquid assets.

politically feasible—to

Not Even

the

other

liquid

another.

Houses

already have

and

set of circumstances.

congratulate

cash

likely

assurances

quent years, when the accumulated inflationary forces will
break bounds, and we should
again be facing the same

March 9.

convertibility into something else that they

the case—to make it

business

amounts

funds of the company.

time, of course, this could result in avoidance
enlargement of the money supply, and—assuming,techr

well

active utilization of

the first

(and doubtless the Reserve)

borrowing would

cases—will

inflation

be less threatening?
place only about $19
billion of the national debt is in these bonds.
If they en¬
tirely disappeared from the market, there would still be
some $235 billion Federal
interest-bearing debt untouched
by all this. A very substantial part of this remainder is
owned by the Federal Reserve and commercial banks of
the country. One
may fairly assume, quite safely assume,

Echo

it would
appear that either activi-

idle (or

lieve that
one-quarter of
if it
applies in such

Reserve holds considerable amounts of them and has been

chance

country

extraordinary
sort

which off and
this

located

South

finances

Battle

good

this

bank

The "other"

A sound gold stock is

Mines

gaining

buy

Homestake Mining.
Homestake is the
ducer

an
early
It is absurd even if one assumes that holders
of the 2V£s will
quickly and eagerly exchange their hold¬
ings—an assumption one hesitates to make without fuller
knowledge about some of the terms.

maturity.

now

perhaps in government obliga¬
be necessary. In other
words the
campaign against the extension of private credit,
about which a
good deal is now heard, must wince and
relent and refrain at a
good many points in any event.
But fully as
important, is the fact that consumers in
tions)

not to be made convertible into notes with

were

hold during a longis gold.
But the
bulk of gold dust is
adverse, and
gold coins are forbidden.
So the
you

term

Treasury aid. To

page

zation of funds

The
erty

from first

offices

have

far not taken into consideration two
factors of importance in this matter. One of
them, perhaps
the one of lesser
importance, is that the
we

government itself

urging, almost demanding, that business expand its
capacity at its own expense, or at most with but partial

Herbert D. Seibert & Co., Inc.
Publishers

of "Security Dealers of North America"

25 Park Place

REctor 2-9570

New York 7

The Commercial and Financial Chronicle

(1044)

Continued from first
I#i»

I m

page

■

*ni

the

VIII.

SSf#)hlIlft7
iJIallllliy

withdrawn!
wealth

nf'

i lmSr

liauid
"4ust

generate a n*vr>hnW

fffc

Mr1!*!

i f

°n

fo economfcSnarpcc
Whof ?
iTlUlIdiy m lv£lcllvUIIvmS
+hi<! hnnrdinJ-8
*
detrimental tn
rSo ? *S
standard—as late as 1914 is tions of manipulated interest
. preparednessby thefact that, at the rates,
fictitious gold exchange
Attn
IaIIII Mllltarv

fold

illustrated

World

cutset

best

War I

ex-

standards and artificially boosted

exports, all of which
fcattleiront agreed on one thing: broke down in the 1930's, in the
that the war could not last long, Great Depression and its social-

fert opinion on both sides of the

capital

tis
?nger
thanthea few
months, istic
IPretty
soon,
belligerents
math. or pseudo-socialistic afterin

V/ould be stopped dead-by finan-

w±ba(nk^Pt?.yZtnd®Pd' the ?ar- Since the 1930's, international
t.cipants
bankrupted themselves finance has been thoroughly revoJ" ?° JVJ1®:
ut
did not af- lutionized. From temporary emer.

an a
gency measures dictated by demore years' They pression and World War II, a new
ic«ppP1i monfY; So and perplexing financial "climate"
«Jy'A
^aV" ev°lved. Confiscating and ham-

r.1

fwliv

,",'antaao

b j
se"J,t*nt,»international
«stock&' rprfnnff
\n
and tend* tn rZ ti
8UPP *
gold in terms n/ an
pnce.of

rlse of the French note circulation, come, the patient is dismissed from
the
so to hespeak,
and financial
is left to clinic,
drift. Drift
did,
but largely without the benefit of
the
cure that mechanism
nature—i. e.,of the
self-regulating
the
free markets—would provide,
Nay,
he scarcely could slip out of
the hands of one kind of economic

which now record.
has reached an unprecedented
ls gold and dollar redistribution without drawbacks. It
!? *ue baslcahy to the unpreceed upsurge of American demand for
foreign raw materials
skyrocket in price. The

scrap

to run the whole

erosion

basis

the

opposite school. (In Germany, as

in Italy, and more discreetly also
in Belgium, E. C. A. administra¬

aU°n t0 " g g

f°mmodity restriction
pound and against
of extremeAmerican
import The inflationary
VH virus in the
V
products—call in turn for higher life-blood of the western world is
Since the bona fir?*
wages, unleashing the well-known evident. It has been injected sysstream between country hnth nf price-wage-price spiral. Faster or tematically by policies, the prinshort-term and of lone-term nhar slower' the same vicious circle is ciples of which were embodied in
acter virtuallv bas
has drk>ri un fh* at
_work
France, Germany,
Woods
program,
or
Italy,
toe in
Scandinavian
and the the
moreBretton
precisely,
in Lord
Keynes1

mark^tf'

Nor k T/t

—£

rTVl

nrnurom

flight from under the dollar? Un- idea should be clear. It was a
der the by2°ne gold standard, it combination of ultimate objectives

mutually excluding
character.
the stability
in-

and international investment" has pure in-and-out speculation Each w°Vld. haYe brought about sky- of a
become every- been
penetratingly analyzed by time a currencv ic ,mHpr fir*
yLm
interestprices
rates until
and fallthe inonethehand,
Alexander Sachs.) The philosophy runs out from undpr- in
nfnf
J? focketmg
lng commodity
our On
herent
old-fashioned

"a
a«a.~ mm *. ™ .«■ -»«.,
dis * T^at ah°^ the prospect of a and what they stand for, were a
further continuation of this gold compromise, naturally, but the

produce'a

^,dShatC°w«rfnaLpnSlng

5where
v? ii,
the

doctor without falling prey to the

internal ductive of all economic

sterling area may profit in terms
of doubled g°ld and dollar reserves; but Britain's domestic
equilibrium is on the verge of

lurn> has repercussions on foreign top of the devaluation of the

Ludgndorff was the Soviet
experiment
along such equlibriating momentum
money and finance iines>
(The
"intellectual-moral follow the lead of thp lpn*t

altogether and

1951

fnclud^g^ thl Sniiii
collapse
due which
to the—rising
swung
from anti-deflation
advising anti-^
dollar. cuJ£e?cie.s'
That, in rial
prices
comingmateon tors
inflation
to urging

Esssjsssfcis
aaaawcrss
t±sus
Isold
1Q?7 Tni JpC5nn4e
been' inspired by the "success" of gold movements
a'

Thursday, March 8,

¥»«*'in a proportionate monetary inflammation is over-

F HIAflPial
[Manual

vWAYin
WVUllU

...

pattern of organization

gold

but

iHfwseS
Ful1 cynical
Employment
has found
fashion; strengthens
each t?m! ajmld
curfencv's
positiondeflahad standard
was gold
to bestandard.
restored This
times. and m S0Viet RU9Sia of
its most
formulation
in the position
n?«hp! balance-°/-Pa^ents
?-6en restored- Presently,
without the

^en,
mildEmPioyment—
sort is taboo- was
accomplishedAllbymember
several ■;
ldea ofof aFul1
sets toofbedirectives.
to
and what it implies under Power can manipulate money as devaluation- the rerpnt
a
point of view of military
it pleases.
The practical guid- of our balanre nf nsvmont nnd
bined with the necessities for pre- dollar base, and the exchange
paredness,
the pre-1914
set-up ance on the road of Full Employ- tion due to a new hnmn an/fi1P" paredness, and with the frozen rates fixed after a fashion. They
ehould be recalled. It operated
ment has been provided by the to the Korean "nniw omL » structure of our interest rates, were changeable
by collectiveprinciple that
effort policies
of- Germany's
equally drives it the other wav mu nf Pre1cludes tbe possibility of any consent only, not by the ar)bas
be made to maintain the cynical
Dr.
Hjalmar
Schacht. the dollar
We hwp
SUu nofmal corrective. That is bitrary decision of any single
gold at
rigidly fixed These two most influential econ- $2 billion of gold in hardv
where the outer world's fear government. Multiple currencies
par; that budgets have to be bal- omists of our life-time were in- than
vear most of it in «p1! comes in.
It anticipates one of and what they entail—exchange
paid in gold
its tellectual products of the wild months'time Sirrmltanpnnciv tho two courses to stop the gold out- restrictions, payment-, clearingeqmvaient; that
to defi- boom and depression era after dollar nrice of the vpIIow ipiai Bow'that the dollar will be either and barter-agreements and similar
financing for non-productive World War I, which exploded the in the free market* nf tho wnrid devalaed or. "frozen." In either discriminatory tricks a la Schacht
permissible only in economic and political ethics of is climbing- in Pari* nnd Tnn<nW case, the entire commercial system —were outlawed. The whole sysand then only of the 19th Century.
gold coins ^
?l the We^n World will be tem was to function with the aid
Jong-term loans should be issued;
By this time, the automatic gold equivalent of .«(> and hottm- nor
?^n out of ge?r' and the ex" of short-term credits from the
that thetax-bearing capacity of
delegated
the ash ounce
This
irrational
Pec*otjon may set into motion new Fund and reconstruction loans
should be
all
practical
flight has raised the III,£ap.ltaI flows.of huge dimensions, from the Bank, the assumption
fcigly,
and
that
international
itself from the
examnle frnm n K°-ieign fapital accumulated in being
that the credits serve
credit, private and public, should "golden cross"
which It used Parity of 3 pesos toThe dohar to
^'S
C0U?try
an<?,
ready
to
"jumP
mere'y
ignite the motor of inbe preserved by all
toB
"crucified™ We
high of 2d Havine aconfred .'in
^he gun"-so-called hot money- ternational capital flow.
the
financial manipulate monetary systems,
limited power over its foreign 'S estlmated at ?8 billion.
On the other hand, each indistability the pursuit of which had placing the self-adjustments, and exchange rates, and having broken
VI
vidual country was left to follow
regarded
axiomatic self-restraints which the autom- the "rigidity" of the gold stand- ■
^
•
.
domestic policies as it saw fit. It
and for good
atism of capital movements
ard, the Welfare State is inca- of the
°2 deno™natoJ was supposed to do so along the
the capitalistic
when der the gold standard provided pable of securing exchange *tahil
? worlds economic and nnes of the Full Employment
private property
sacrosanct with the "wisdom"—or arbitrary ity. All American aid could not i i}e+-0re Psychological troubles is ideal, propagated by such supercould
freely rules—of political managements, save a sophisticated and efficient ln^atlon' It is the prime reason planning bodies as the U. N. Ecoborders, financial Such is, at
rate, the trend of planner like Sir Stafford Grinn*
^ou?ltries lnability to nomic Commission. To permit intinkering" would have defeated public policy almost everywhere from
breaking his wL fnd wdhsta!ld strain, for being thrown fiating the currency atiiome and
Oppressive But the problems of iXna^ional scr^ping his plans
^
at.any^provocation If simultaneously stabilizing it
taxation, monetary depreciation,.finance
still with
Nay
Now ln*in«
K-ir
. ' .
Partial -mobilization puts the abroad, escape clauses were ininterference with
confronted with
problem
shoJ Si L ? fv, go1 ln European nations under such a serted into the Brettom Woods
capital, would drive capital, the of financial instability without est single gold
ly tbe.great~
economic test, as it does, program, .allowing for;. devaluaf1!
war'into kidinS or Precedent. It is among the most such nerinrf
f "y Pdeed~€^enJ>ef.or6 seriously tions and 'exchange controls. But
,hito^ flight. capital,
And without
com- significant issues of a non-mili- national ran?til
-e 1 V^u" i"fl.ah°nary pressures
1S beca"se
tbe the
Full Employment
policies
to
domestic and tary type burdening the prepared- murh aiivp Tnl^
18
under of.
which
be pursued
domestically^:
and the
foreign,
could be drafted,
of
the
Western
high fever
h)*3 perso" ,Vltb their economic bodies labor, pres- stabilization to be attained inter"L ^ty could n°t
be provided World.,
than pJ^pntiv
nn** wifh
alive f'18111
sures the
thatEuropean
go a longpublic^
way toreiucex- patible
nationally,
were not. Jlr:comwith; the
with which
/
IV
+£ m°re
f-temp^ra"
withsimply
one another:
t'ght,
ture. Piesently, the continued loss tance to being drawn into military.. The Bretton Woods institutions
Paradoxically, the death of the of gold which the U S Treasurv preparedness When almn*t all
; oreuon vvooas insuiuiipna
,hL
r
3 govern" gold standardgold
has vastly
increased countenances,
is being shrueeed
b dore the
turnedthatoutthey
to becould
a failure
in
in international off
hv
snrag&eci budgets
ugois are
are in
in the
ine red
req^petoie
the soon
the sense
not. pospaired could draw
this invisible relations. Having lost its
istrators and exnerto ^ u
neJ?n]o
armaments hits them, sibly fulfill the impossible: to recapital and turn it into purchasing tary throne the king of the metals sign of a better Hi*tHK ?.
y LL
? fure- over-taxed al- create the free ^capital markets
to
obtain
the
physical went uSground
to Toeak gold The tronhle i* tw n -n °!
^ lnvltabo" to pay and to normalize the balances of
As
king Twas
phla? ol£- beL b^te^
itrLr dffkits^68 Snd t0 mCUr pay™nts, L e., to play a game
cially important to European
bility: underground
it helns to eigner* mnvoWinJ
^ n
Tg f d
.
in which two sets of rules were
facing
sabotage all efforts' at stabilize
h<fldintf* intn olii
InHation, like the devil, appears applied, one annulling the other,
During the Crimean tion.
The greater
currency's littlo
nnthfnl JVk aldm.g in ??any sbapes .and forms- " is (That the same pernicious conWar,
example,
Russian "freedom" from gold the less
lihrium
f ih Rg
-°- +e
easily identified in its crude nak- tradiction has stymied our tradeXoan
fidencrit conTman^
creltZ l
7^16 edness. But in latent, controlled, liberalization policies repre,the Czars treasury could make thoroughly
the
international Rnt rnnfiH^nn
•
+i
^ d°Har. sidetracked and overhanging dis- sented by the abortive Havana
private arrangement, with the full banker, that symbolic arch-villain
mnriitin^ "ce m tbe d ar *s gu}ses it is obscured. In one dis- Charter, as has been forcefully
knowledge of the Prime Minister, of the neo-Marxian mythology -is nVnt 11;ylnt qUa
*1 PJ
guise or another» openly or sur- pointed out time and and again by
have been weeded out the
difficult it thtc
°^ilzai10n- ,At both .ends, reptitiously, it is omnipresent. It Philip Cortney.) The Fund and
exception; but it
induce'investors
1
W osters in.fla~ scarcely would be an exaggeration the Bank were left with the choice
that
obliga- ventures and the greater is the
"a^y , dltloia^or expectations to call this era one of world-wide between throwing their substan¬
dependence of exchange rates
^dai}gers the preparedness chronic, but repressed, inflation- tial but limited resources into a
apeak today of the Balkanization
vagaries of the trade balanoe Sho
in more than one way. pressures with recurrent out- bottomless barrel and going bankfinance, but slight and of foreign exchange specula
Sriftf1, 18
serious in breaks of the acute condition.
rupt, or else throwing in the
thereby
those
g ^nange specula- Europe than on this side.
During the reconstruction quin- sponge and leaving the solution
fhpnniQin'ce
P Balkan wars of
Briefly gold has turned frnm « • °r °Pf tlllng> not a11 nations Quennium just behind us, some of the insoluble problem to sometf great sacrifices serving as the monetarv bat ^ fa^ gold when we lose it; the progress in disinflating the world, one else.
•foreilh
An l%V1CfG*£" thek being a prime private
monetary nuisance Shfrh
gai.^er+s are often those Europe
in the
particular,
has been
The needless
someone to..say,;
else waswhoUncle
hoards abSSitaS
mada ,But
fight.against
the Sam,
Jias

famous words of its outstanding in.

:Before

trying

current

The weakness of thp nm.nH

nm^.t

the theorist, Lord Keynes, about the in 1949 induced ranibd in
Humbug of Finance, mearting that of England and forrpd hpr

appraise

international

scene

f)nance

the

meaning permanently stable or currencies were to be attached
r1.810^ prices and wages—com- one another by .being put on

pre-

the

every

currency on

snced and debts

recourse

o.t

purposes

extreme emergency,

standard

the

nation

used

spar-

for

can

purposes

Mankind has freed

currency

means.

sort

was

come

to be

even

eons.

are

free

re-

un-

rea-

war,

age,

was

and

money

its

move

national

over

own

any

purpose.

are

the free flow of

mand

we are

over

men

ness-economy

■

mav

means

ture

pQrQ^Avi/ion,r

.it,

whose

ment

„

credit

was

unim-

role

the

mone-

power

of warfare

means

This

was

espe-

na-

t/.ons

recurrent

armed

conflicts.
as

con

matured

London

and

to renew it.

That may

tias

war

have

rule

honored.

was

into foreign

is to

peace,

firm
a

the

of international

countries

which

tion.

The

fact that
"

This

morally
War I.

idyl was
undermined
In the

«£ored but

19201

the

mon
mon

nuutary

rffort
effort.

othm
Others

evil has not been perceived as an

been

the

promoter
*

Bretton

Volume 173

Number 4992

The Commercial and Financial Chronicle

E
mestic

price and wage level and

weakening his
tion

without

Europe
where

dicated.

that

restoring

Latin America to

in making Europe self-sup¬
porting? Nothing of the sort is in¬
ceed

financial posi¬

own

accomplished

any¬

genuinely self-sup¬
porting condition.
near

Whatever

productive

else

(such

has

expanding

facilities

and

superbly grandiose con¬
ception—to make the best of both

raising
living standards in the recipient
countries), it certainly has fallen
short of its main purpose.
Most
important, it contributed to weak¬
ening Europe's ability to prepare

worlds

for its self-defense.

vm
It

was a

finance, to merge the
stability of the gold

monetary

standard with the economic

ity of the managed
But it is
coct

unrealistic

paper money.

con¬

ing

socialistic

and

planning

its

rules

clearly

are

faced

three

and

not

and

once

and financial

in¬

safely in its golden slippers—with
the
possible
exception
of
the

gold-saturated Swiss franc.
The

most

spectacular aspect of

-this general unbalance is the fact

notwithstanding

that,

all European maneu¬

aid and

can

Ameri¬

all

vering, the dollar-shortage of the
"outer world grew into a perma¬
nent calamity—and turned almost

overnight

into
a
dollar-surplus
with
almost
equally calamitous
implications. Both stem from the
And

both

treated with the

inflation.

same

source:

same
were

or are

medicines:

domestic doses of

dollars.

CK:;v;-

that lives

the

same

•

time

inflation, but
its

suppresses

The

manifestations.

save

methods

repression include excessive tax¬
ation, domestic and foreign ex¬
change controls, import restric¬
tions, cartelizations, international
commodity agreements, Schuman
plans, etc.—futile if not-actually
inflation-fostering
devices.
The
two types of policies add up to
what has
been
aptly labeled a
Rigid Society. The term Rigid
Society was coined to describe the
absence of dynamic momentum,
the defensive attitude, the lack of
incentive and of adaptability, the
bureaucratism and passivity of the
"mature
economy—the
qualities
which are responsible for Europe's
impotence in matching the Amer¬
ican
industrial
progress.
Their
most tangible
expression is the
inability of her industries, by and
large, to compete with ours for
the export outlets.
Despite very
lower wages and with de¬

much

prices

products

of
the

union and other

the

European

substantially
country.

baffling

mys¬

efficiency

experts who
think in terms of the stop-watch
to

tery

than

rather
truth

the

initiatives.

matter

The

that

the

European type of controlled or
subdued inflation produces all the

long-run

war

different

reluctance

existence.

arm

and

few

that

progress—

and the

hope for

prevail

simultaneously
of diverting a

better life—to

with

into

large

the
pro¬

resources

Did

broadly

doubt that what

was

Marshall

Plan—which

but another attempt to

fulfill

"the Bretton-Woods promise—suc¬

When

notes

for

the

it need

government
to

Banks

base

times

bank

reserves,

other

Reserve

the

and

Fed¬

thereby

lending about

amount

securi¬

short, the bank credit
country will accommodate

the

whatever wage and price level is
determined by the play of eco¬
nomic forces and political
pres¬

the

public

personal

politicians
that

convince

it—not

corporations,

the

im¬

not

the

number

rich

people^

not

the unincorporated busi¬
nesses—has to produce armaments
and

support
large government
spending by the sweat of its brow;
and not by government
legerde¬
main, such expenditures can lead
only to long-term inflation.
Over

the

outlook

short-term

will

depend

the

price

upon

the

prospects

principally
for
world

peace

and

the

armament

degree

re¬

likely to be attempted.

If the Korean

war should be
con-r
eluded during the next few weeks
and the Communists choose
the
course
of peace—i.e., not attack

Yugoslavia, Indo-China
which

areas

other

would

defend—

segments of the price level

some

would experience considerable de¬
flation. Such deflation would oc¬

primarily

cur

sures.

from

Earnings Portend
Higher Stock Prices

country

have financed

Continued

Continued High

most

which

groups

the

have

successful

economic
far

beeit

throwing the

burden of rearmament to others.*

page

"European Attitude on
Our Foreign Situation"

term savings bonds to -the
public
as

from

means

nopoly interests, their prices and

reducing inflation¬ when
they know the facts. Con¬
it merely tempo¬
sidering the sacrifices which they
pressures
are
are
being called upon to make,
thereby reduced but new pres¬
they have the right to know them.
sures are built

incomes tend to freeze into solidi¬

These

of economic freezing.

process

Protected by bureaucratic set-ups,
unionized
and
cartelized
mo¬

fied aggregates.

The billions spent

Europe, whatever their value

from

the

humanitarian

point

view, have failed in preparing the
ground for the kind of mobility
and flexibility that grows out of
the free

ary

pressures,

rizes.

Immediate

for the future.

be lessened

can

only by in¬
in the productivity of the

creases

worker.

When the armaments

are

financed by 20-to-30-year
bonds,
the government shifts the burden
of

payment

father

from

their

mother

and

The

We have relieved Europe of the
implicit burden of capital accum¬

the

Current
United

situation

Situation

States

is,

economy,

course,

complex than that just discussed.
In general, not all the
potential
working force is employed at any

The

time

result

that

its

system

price

feeble

structure

sav¬

can

kept together only by extremely
careful

navigation

between

the

shaky

price-wage sys¬
conflicting vested inter¬
Monetary injections do not

ests.
work

longer

any

because

they

and

much

the

less

hours

than

are

usually

maximum.

Fur¬

thermore, it would be highly
realistic

nor

for

..cost,

assume

neither

output

fixed

the

un¬

wage

v/age

rate

man-hour is rigid.

per

Yet the modifications of the sim¬

ple

have gone so far that any greater

case

the

elected

responsibility

start

from

our

Con¬

to demand the facts before

gress

they appropriate the

money.

policies

China

are

actual

war

with

bringing

From

England and France
What

charge at Balaclava be¬
example of magnificent
bravery,
made
useless
because
"someone had blundered."

world

peace

been

really wish to
the

pursuing

course

preserve

have

not

may

aware

the

wisest.
*

Morier

JOHN

About

Salisbury

"England put her money
Sir Robert

called

useless."

the

John

war
"perfectly
Bright called it "a

crime."

1870,

tages

the supposed advan¬
England
faded
away

when

during the Franco-Prussian
War, Russia coolly denounced the
promises

which

she

forced

make

Black

Sea;

and

had

been

respecting
her

the

ambassador

said that the Czar would

"resume

sovereign rights" over that
England quietly acquiesced.

sea.

Lord

the wrong horse."

his

later

years

ple in Europe he makes

The

A famous

declared:

I believe that Mr. Weir's article

terrible.

was

cavalry

is timely. In bringing to us some
of the thinking of responsible peo¬

victors.

were

they really gain?

loss of life

than heed the advice and counsel
of our allies.

conditions

did

that nation, we
why it is necessary
those policies rather

military standpoint,

closer

with

that if

the fortress of Sebastopol,

which stood upon his own land.

respect

know

pursue

possess

came

With respect to the Chinese sit¬
uation also we need facts. If our

not difficult.

are

representatives

should

ing and investing under the guid¬
ance
of the cold profit motive.

ulation—from the burden of

present

offspring.

inter-play of competitive

incentives only.

are

likely

create run¬
Taxes cannot be

■

underscore

the

emptiness

the

working

population

would

allies

have in Asia to the Red

forces in China.

live.

to work
these
extra
hours for sucked in by the people that he
nothing. It is somewhat obscured contacted in Great Britain, to act
by an almost continuous shifting as a spokesman for them.
y

works

is—bigger

American subsidies, for civilian as
well as for military
purposes. But

undermine

they

bringing 'about
and

trade

since

the

dollar

(for

1893!), plus

the
a

prices

run-away

unfavorable

balance

first

time

flight out of

the dollar.
If

international

finance

the

picture, it is not because this
that

group

politicians
not

worth

its

(which may be the case, inci¬
dentally, too). It is because it

was

totally

misquided system
The problem of

from

the

our

international

outset.

preparedness
policy, its prime financial prob¬
lem, now is extremely difficult.
How to induce the Frenchman and

the

incidence

taxation

depressions? How to make
production apparatus convert

itself

hurry after its entre¬

looks

y..

WILLIAM A. ROBERTSON

East Orange, N. J.

of the

higher personal
Mr. Weir's views are so fine that
taxes and price rises, the worker
I can not assume to say more than
demands additional wages; that is,
that
they
express
my
own
he wants the same real income
thoughts far better than I could
per hour. The farmer, in turn, in¬
myself.
I wish the article might
sists that he must have a full
go
through
the
length
and
increase in his parity price. Cor¬
breadth of our country, and cause
porations treat taxes as cost and
a stoppage of this frightful draw¬
pass them on to
the consumer,
who is primarily the wage and ing of our soldiers and boys in

salary

earner

and

the

farmer.

Price rises decrease the real val¬
ues

of pensions and fixed income

obligations

and

cause

political

discontent. No group believes that
the government is really trying to

time.

any

segment

labor refuses to work for the
rent wage,

it gets

a wage

this terrible

people

them to

and

call their

sons

distant

eign land.

sia;

the

enemy

The

and hus¬

peninsula

enemy was

foreign

for¬
Rus¬

was

the

Crimea;

the

land

the

of alleged cause of the war was that

cur¬

the

Czar

increase. serious

Nicholas

danger

was

the

■.

D'EWARXV

U. S. Congressman from Montana
I found the article

enlightening;
constructive, but have to ad¬

and

mit that I could not

conclusions.

in a'JI

concur

One

particu¬
lar, I do not think this country
can gain
by recognizing Commu¬
nist governments, that is China, as
was suggested. In order for recog¬
nition of

a foreign government to
successful, we must have a

certain

amount

confidence

that government.
I
or

do not

believe that Congress,

those who conduct

affairs,

can

our

foreign-

have confidence in

government founded

France

which obliged

war

bands from home and business to
assail

the
'

the

ago

years

England
a

■■■■'■

losophy of Communism.

mess.

Very nearly 100

engaged in

HON. WESLEY A.

got

the

terest rates.
Because

by ?vy'v* vy

changes in wage rates, industrial
and agricultural prices and
in¬

"overwork" is unethical and

causes

necessarily decrease. The problem
is still that of getting
somebody

most

peace

.Av

....

monetary unit that is based on
promises by which people do not

^ What

GATY

In all this, is there no lesson
unemployment and short hours of Vice President-General
Must we Americans
Manager, for today?
away conditions.
work, as in 1940, total civilian
sacrifice thousands of AmericaA
Beech Aircraft Corporation,
raised because they have reached production and per capita civilian
soldiers in these distant quarrels
Wichita 1, Kansas
the limit; as a matter of fact,
may
increase.
But
they production
which make
so
very
slight ail
I see nothing new in Mr. Weir's
are
so
high that they must be both would increase only because
remarks. It all has been expressed appeal to the American people?
shifted on the consumer, i. e., on there would be more employed
"One cool judgment," said Woodbefore as British propaganda. He
the working masses whose real workers in the labor force and
row Wilson, "is worth a thousand
advocates that we recognize Red
income is deficient
accordingly. those previously employed would
hasty counsels."
** l
China,
with
whom
we
are
at
war,
Direct controls do not work be¬ work longer hours.
Even here
Is there not a possibility, once
and he apparently advocates the
cause people's patience
has been the production of civilian goods
again, that "someone has blun¬
exhausted, too, and they merely and services per hour worked by turning over of the only potential
dered"?
doses

such

the

Federal

out

Until

Continued from page 8

the

Reserve

obtain

military channels.

organs.

bonds

five

freedom

economic

that

reserves

only sell part of its

and

new

takes.

running

eral

the the Britisher to raise his unit- tax it. One after the other tem¬
(temporary) stimulating effects of productivity or to work longer porarily
shifts
the
burden
to
inflation. In short, the world that than six days a week and
eight others who later shift it back.
has beaten the "rigidity" of the .hours a.day unless at. substan¬
The political price controls only
gold standard, pays for the victory tially higher wages, and therefore determine which particular politi¬
by being compelled to "freeze" at run-away costs, after having cal pressure is to be relieved at
rigidly its own vital economic imbued him with the notion that the
disadvantages

action

Board

successfully only by a change in
"peace-time" policies: by a return

entrepreneurial

with respect to the

open

demands

what

be induced

can

ac¬

prep¬

feeling that
uprooting its

very

readily

are

story.

rooted in the public's
it means irrevocably

pay¬

Belgium!) But
speaking,
there
is
no

administrators

are

(See

salt

But

arations

any

credit

limited
and

arising from in¬
creased wages and prices can be
met by the
banks, regardless of

international

ican know-how and machines are

This

sacrifice.

wars

process

Our well-meant attempts

U. S. level—not even when Amer¬

utilized.

fight

portion of each nation's

mal

are

lower

average

willing

wide

creation

nations

the

post-war years, looking at it from
the preparedness
angle, is a dis¬

the

desperation,

valued currencies, no country can
manufactured

requests

However,

tems and

supposed to

are

the

(such

cliffs

Dollars
world

with

ments

inflation mixed with

purgatives to
repress inflation. The less chance
this hodge-podge of contradictory
policies has of curing the world's
illness, the more we rely on curing
it—by spending more billions of

meet

of the post-war

fer

all but

is standing

one

spending has financed.

luring of¬
fers) into greater flexibility and
self-reliance, have not been en¬
tirely futile, and the attitudes dif¬

several times,

single

policies.

four currencies have been

amputated

global

our

in¬

S3?

to persuade and cajole our friends

strangu¬

being stabilized,

latter

heritage of two
decades' tinkering with the dollar,

dying out, multiple currencies and

stead

and

the

psychological adapta¬
physical plant conver¬

situation.

nations;

exactly what

What

between

gets

commodated by our banking
sys¬
Our Banking Act of 1935 is

tivity

Occident.

sion

intercourse

tem.

the

new

late the commercial

That

diverted
into
tax
its chief preoccupation?

ties sold.

philosophy did not fulfill the first
criterion, which made it simple
for
the
players tto violate the
second.
In any event, the system
failed on every score: genuine in¬
ternational lending and investing
did not
materialize;
instead of
wires

and

evasion

would stimulate increased produc¬

needs

de¬

cratism

its back the financial structure of

tion

barbed

global finance.
dollar, threat¬

is supposed to carry

worse,

fined and if the players adhere to
the
rules.
The
Bretton
Woods

monetary

ened to be driven into devaluation

into a capitalistic
body of competitive markets.
A game can be played ration¬

ally

threshold

An inflation-ridden

control

over-all

the

departure in

new

economic system by infus¬

are

spirit has
congealed the current price,
monopolistic
security-seek¬ crease in price.
ing, emasculated by petty bureau¬
These pressures

into

Europe's

secur¬

preneurial

(1045)

H. J. BAUER

President, New York Steam Corp.,
New York 3, N. Y.
Mr. Weir's article is
most

one

of the

sensible

approaches to our
foreign situation that I have read
in a long time, and I believe he
has

expressed very clearly some
of the problems which face us to¬

day.

A less rigid attitude

the

part of ourselves and the Russians

of would

go a

long

way

towards

industry refuses to produce at the world because he wished to swering these problems.

an¬

The Commercial and Financial Chronicle

(1046)

know

in retro¬

Continued

Let

Whyte

if.

The

Outlook lot Investment

hasten to add that

don't

think

bear

market

all

the

(1) a sound and stable
money, and (2) freedom of choice

necessary:

in free markets.

which is the

right

now

previous week's col¬
suggested waiting for

Now,
where

how

about

stocks,

they be .expected
go? Well, here's a sam¬
decline. I'll now try to give pling. I've
purposely omitted
you more specific informa¬ the high price issues because
tion; information about stocks they c&n swing much wider
and at what prices I think than
the
market.
Interna¬
they should be bought. You tional Harvester can get down
won't
get them all, some to around 30; General Motors
you'll probably never be able in the low 40s; du Pont some¬
to
buy, or when you can where around 75; U. S. Steel
they'll no longer be attractive. under 40; U. S. Rubber in the
But in the main, I think the mid-40s, say about 44-45.
list you'll find below will be
*
'is
*
a
good one to follow as a ruleThe
lower priced
shares
of-thumb.
and their probable reaction
*
*
*
■'/..< ;.v-.
levels are: Paramount, 20-22;
Before going into the list
Loew's, 15-16; R. H. Macy
I'd like to disabuse you of any
around 30; 20th Century-Fox,
ideas you may have or I've
19-21; Gimbels, 18-19.
Inci¬
unintentionally given that I
dentally,
the
amusement
know what's going to happen.
shares
what I

would

believed

If I have any

Because I don't.

(movie stocks) and

stores,

re¬

department
system I doubt if I can put store
shares, in my opinion,
it down in any logical se¬
act better than many of the
quence or make anybody else
so-called war
I

understand it.

beneficiaries.

sis

tools, charts, other opinions
(so I can know what the

others

e.g•,

all sorts

use

Then
stocks

si:

there

that

are

flock of

prime war
thinking), the tape
and a knowledge of history.. babies: Consolidated Vultee,
If I can overcome my natural 15-17;
Eaton Axle,
31-32;
laziness I occasionally will try Briggs Mfg., 30-31; Burroughs,
to break down balance sheets Adding, 13-14; Anaconda, 36and earnings statements. Oh, 38;
Allis Chalmers, 39-40;
American
Car
&
Foundry,,
yes, I also listen to rumors.
*
*
*
31-33.
There are plenty of
are

From all the above you can others.

readily

see

described

can

that I'm not what

tific forecaster.
I

cause

any

it's

scien¬

Maybe it's be¬

But

stocks
watch
have all

you any more
watch.
If you'll

those

above

you'll

sis

art.

there's,.no point

giving

science involved. I think
more

are

there's you can manage.

think

don't

many

si:

quite

possible

that
see

about 10

points

reaction of

or so

able that if

in the

they do, the bear-

ishness will be thick enough
Dow averages. If I can digress
at this point, I'd like to add to cut. Anybody can be bear¬
that a bear market isn't sig¬ ish when they're down and
nalled
is

any

theory until it looking lower. 'It's then that
So a new the best buying comes in.

actually here.

high yesterday
the
a

well be

may

high for the market and

turning point for

market,

though

bear

you

won't

Pacific Coast

Securities
Executed

•

Pacific Coast Exchanges

CALLS

Per 100 Shares Plus Tax

Gen'I Motors. @50% 6 mos.
Int'l Tel & Tel
@17% 6 mos.
Radio Corp... @19
5 mos.

•

Members
New

New

York

Curb

Stock Exchange
Exchange .(Associate)
Stock Exchange
Chicago Board of Trade

San

Francisco

14 Wall Street

COrtlandt 7-4150,
Private

San

New York 5,

N. Y.

300.00
325.00

@971/2 5 mos.
425.00
Chrysler
@78% 4 mos.
550.00
Std. Oil N. J. @104% 5 mos.
750.00
Eastman Kod. @45y2 5 mos.
325.00
Studebaker
@33% May 10 300.00
U. S. Steel...
@45%May 25 275.00
Bait. & Ohio. @23%May 14 187.50

Francisco—Santa

Barbara

Subject to prior sale

Explanatory pamphlet

price change
on

request

THOMAS, HAAB & BOTTS
Members Put & Calls Brokers & Dealers

Monterey—Oakland—Sacramento
Fresno—Santa Rosa

from

(2)

the

confidence

place,

the

yields,

may/

say

bonds, are either artificial or ab¬
normal, or both. (Obviously the
bond yield is manipulated.)
Such
being the case, it seems safe to

free¬

our

growing

the

second

are

lack

dollar.

both

that

say

stocks

there

and

prima

facie

doubt that the

Probably the most important
single factor in the investment
outlook

the

ordinary or ortho¬
significance attaches to the

dox

relationship
(3)

between

But

speak

the

way'or

one

should be charged in part as blaick
interest payment on their

market

borrowings.
To

this higher-than-seems cost
"money," is to be added the fact
that stock yields
are
not what
they seem.
The purchasing power of the
$3
of

dividend

two.

posi¬
that the

tively,

not

that

$50

what

stock

pays,

when

was

the

yield existed back in 1941-2,
1932, 1919 or 1907. In these earlier
periods the dollar was worth far
same

Only two or three years ago,
when I would suggest in class dis¬

it seems to me
relatively high yield of
more
than it is today.
Can One
stocks is largely the re¬
deny, then, that a $3 dividend, is
sult of uncertainty as to the con¬
worth less than it was 10, 20, or
tinuation of such yields—uncer¬
30 years ago?
tainty as to the future of earnings;

cussions

and

entirely objective way, I can say
that the people of this country no
longer trust either their
their

that

might

bonds

not

with

current

common

currency

savings bonds.

the

maybe

insecure
good,

incredulity

perhaps doubt as to corpora¬
being able to pa,y on average
the traditional proportion of earn¬
ings as dividends.

dollar

would

meet

resentment.

Now I can say that I meet with
understanding and agreement. So
it is with my "fan mail." Only a
little while ago I got scurrilous

letters
and

(from insurance
savings

bank

in the past,
extraordinarily high yield on
any
stock has usually arousedf
questions concerning the security
of the yield, and has thus been a
danger signal? Are times differ¬

company

executives

attacking me for saying
savings bonds were unwise

investments.

ask:

Shall

Now

buy

the

stocks

ent?

letters
or

real

inflation
come

first

point

that

the

effective

earnings

have to make

(a)

(b)

allowance for:

some

"security"

power

ambition
and
of the labor bosses.

confidence in the dollar, and that
this is destroying saving and in¬

affecting both buyers and sellers,

vestment.

and

more,

investors.

and

savers

days of Paul Revere and Bunker
The Multiplier Inapplicable

point

note

this:

Hill, it was "The British are com¬
ing." Dont you know that in the
steel

the

multiplier principle does not
now apply.
The idea that spend¬
ing, private or public, stimulates
business and production, is valid
only when full employment does
not

exist, and when the spending
But now, we start
with practically full employment,
and the spending is for the great
is not wasted.

war.

Accordingly, the pump is not
going to be primed this time.
is

and

example,
can

fear.

(Or do they have pink eyes?)
My own thought is that, to a
extent, the existing
high stock yields are an expres¬
sion of a heavy discount on future
earnings and dividends for equi¬
ties.

'J-

the

mainly

Per Cent?"

cent?

per

With

purchasing power of
income is what counts.
of

stock

depends

dividend

prospects,
which, in turn, depend mainly
upon
earnings prospects.
If: a
corporation earns $10 a share and
pays $6 a share, its value at 5%
upon

the

question
about

rates
nary

our

fourth

that

place, I ask a
pf us ask

many

own

income:

the

stocks really as high as
*

should

remember

that

the

charged by banks on ordi¬
small business loans are up¬

wards of 4V2%.

We should

If, however, the purchas¬
of the $6 dividend falls
$3, the stock may be worth
only $60.
ing

power

There

other

are

cluding the rate

note

that these

and

other

rates are tending upwards.
(As this is written, the trend of

variables,

per cent

in¬

used to

capitalize, but this is sufficient to
make my

Now

point here.

consider

100,

say

yield is 2%%.
a

The

2%%,
dollar price at
that the dollar

the

pegs

and

bond.

the

government wishes to

pay

The bond is merely
a fixed number

promise to pay

of dollars

principal and

number of dollars

interest.

fixed
Fix¬

ing the coupon rate and pegging
the price is about all there is to it.
with

But

stocks

it's

We don't peg stock
tain their yields.

different!

prices to main¬

So while the
dollar-yields of stocks are high,
the
"real"
yields in purchasing
are lowl and why should
expect stock prices to ignore

power
one

this

fact* by

rising

higher

prices?
5. Finally, the bond yield is now
abnormally low, and therefore is
not effective

it seems?

Rising /prices, reflecting
the generally recognized depreci¬
ation of the dollar, are going to
cause—they are causing—a flight
from the dollar that springs from

gener¬

the whites

see

considerable

to generate

ulating.

business

our

almost

industries,}

the eyes of the British socialism?

yield

optimism and hopes of
It is not going to be stim¬

aluminum

als

going to happen is a
growing effective inflation.
Any rise in prices is not going
gain.

•

for

the money
The
value

(d) Discrimination in favor of
driving
people
into
hedging
against inflation.
And in seeking the important raw material pro¬
such hedges they are not "invest¬ duced on farms.
This is to say nothing of the
ing" as much as they are speculat¬
ing on higher stock prices.
" threat of state socialism. In the

Another

stocks,

"defense."

Growing

great

undermining

prospects,

Government controls in the

name

currency has be¬

our

What's

is $120.

estate?
So

it not true that,

down)
that

"What's in

tions

savings

and

element in de¬

termining investment tendencies,
it might otherwise be. This is

a
distinct reason why the large
spread between the nominal yields
of stocks and bonds is not likely to

stimulate

further

investment

stocks.

In other

words, the big price in¬

flation

has

bonds.

The government pegs the

price.

been

This gives

illusion

government

the people

fixed

the

purchasing

stock yields appears to be down¬

and

Association, Inc.

Broadway, N. Y.

Conclusions

bonds.

Typical
common
power When the principal is re¬
yield about 6%. High turned. Therefore, rising prices
grade bonds yield somewhat less inevitably tend to cause rising
than half that percentage.
Such "money rates."
a
difference, apparently in favor
What, then, happens when these
of stocks, is unusual except
in tendencies are not allowed to find
depressions, when stocks are rela¬ expression? One of two things, I
tively low in price.
think: Either (1) there is a deadly
But

this

difference

yield

Teletype NY 1-928

Wires to Principal Offices

you

people have been able
through the government to borrow

stocks still

$525.00

Std. Oil Calif.

Schwabacher & Co.

threat to

fact is that

another

price rise that is not seen
power,
which makes
the
bond
depreciation of the dollar is ward.)
yield seem higher than it is.
:
Above
You
all, however, we should
will
recall
vastly different. Then we "chase
that
a
little
Such
the dollar," and the more of them consider carefully the important while ago it was the low yield of
buying isn't always
we get, the merrier.
Now we are fact that existing money rates do the government bonds that was
right. But at least it doesn't fleeing from the dollar—a Key- not reflect the true condition of most
frequently objected to. But
go out on a limb very often. nesian might say that we are dis- demand for and supply of money at that time there was little ten¬
and
credit.
This
condition
is
best
chasjng dollars—and the fewer
dency for people to sell savings
I"The views expressed in this we hold the better.
seen
in the necessary results of bonds and go into stocks. Now the
article do not necessarily at any
In the one case, there is hope rising
commodity prices. These attention has shifted to the loss in
time coincide with those of the
of gain; in the other, only fear of necessary results are: Business¬ the purchasing power of the dol¬
Chronicle. They are presented as
men
and others tend to borrow lar principal.
loss.
r
those of the author only.]
more
in order to take advantage
So instead of seeking a better
The Significance of Yields
of the anticipated price rise, and yield, what most people are doing
Perhaps this is the point at thus bid up rates. Lenders tend is to buy stocks as a hedge
against
which to refer to the significance to ask more for
loans, since they depreciation in principal.
of the present yields
of stocks will receive a reduced purchasing

Orders

than

"managed currency".

our

What

of these stocks will

further

money

Today we have neither of the
requirements for investments.

waste

Okay, now that I got that their low prices within one
off, let's get down to cases: period. It is also very prob¬
I think there's

dom

important, but

are

main

can

tail

freedom.

that the

It is hard to say

having good
from

In the

securi¬

and buy all the stocks, real
estate,
sions, probably is to point to cars, and television sets they want.
It
has
something
that
is
unreal — a
been easy to get money; but
mirage.
This thought raises a they have not paid the debts (their
doubt.
public debt) and their high taxes

for

are

with

well.

By WALTER WHYTE=

non-government

carrying

page

trimmings we remember so
Naturally, that's only
an
opinion subject to change.

Says—

umn

from first

Thursday, March 8, 1951

ties.

•

Markets

until later

spect.

Tomorrow's

Walter

4, Tel. BO 9-8470

what it seems?

depends

Upon the

important

point

the investment outlook.--*

(1)
To
clearly nojt

answer,

begin
with,
this
is
depression. To point

out, after a long bull market and
in the midst of a boom, that nom¬

From

should
that

one

conclude?

stimulant.

fear,

not

the

Government

therefore

■*.

foregoing,

confidence

waning.
can

the

what
clear

dollar
-

spending

longer serve as a
Rising prices
cause
hope.
The spread be¬
no

forces of tween the dollar yields of stocks
in the money and bonds has lost its old sig¬
markets and elsewhere, to make nificance.
;
From these conditions, I think
them fit the Tow money rates. Or
restriction
demand

the

free

and supply

•

(2)
This

"black

markets"

for

money.

be illustrated by- the
use
of government securities as
reserves for real estate loans, con¬
may

that three different
developments
are possible in the next
year or so.
1. We may

have

a run-away

in¬

flation, with a few months of
inal stock yields are at high levels sumer loans, and to some extent soaring
markets, accelerated hy
such as are found only'in depres¬ for
loans
for
purchasing
and the rush to get rid of dollars, par-

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1047)

ticularly dollars in the form of
savings bonds. Turnover of bank

Wall

deposits,

though still low, has
gaining. Already a large

been

proportion of

piling

have been stock¬

our

This

own.

sort

flight from the dollar might spill
into the stock market where

over
we

already
see
Calahan
Zinc,
Spiegel, and Childs doing rather
well, and stocks being bought
merely

because

they

"back¬

are

importance
avoid

for

the

should

lean

crash

responsibility

the

discourage
become

not

the

1950s.

the

Washington

The people are

frying

pan

Street

not

of inflation.

Let Wall

become

fire

Assuming
do

not

the

that

them.

consumes

speculation

investment.

from

should

that

backward

over

assuming

distinct
for

however,

now,

Street

that

the

scapegoat

generation

spendthrifts.

again

jumping out of the

after

1933,

will
sound money and free¬

see

for investment.

dom

Continued

from

page

follies, and, with the government
controllers clamping on the brakes
in a panic, we may have recession
deflation

have

into

than most of

sooner

been

expecting.

controls

Drastic

could

deflation.

plunge us
people could

The

rush to the other side of the boat.

Having bought the
vision' set,
canned

ing.

and

and tele¬

car

stocked

goods, they

with

stop buy¬

may

complete

Grain

controls

government

production and consumption
that, with the aid of a war-emer¬
gency

psychology,

frozen

tivity not

•

great deal lower than

of economic

This

one.

probable

Who

wants

think

alternatives,
inflation

run-away

expected.

inflation?

such

de¬

one.

fact,

can

one

the most widely known and feared
conditions

that

inflation

after

growing

War

standing of osur own
wage-price inflation.
these

Under

German

considerable
amount of under¬

Moreover, there is
and

the

World

the

are

authorities

the

likely to be used rather

very

promptly and effectively, if any
signs of real run-away or gallop¬
ing inflation develop.
The

inflation has

current

been

for over a decade. As
a
result, the suspicions of the
American
people
have
been
aroused
concerning
their 1 cur¬
building

steel

production, this trade weekly points out. Some steel
excess
ingot capacity; others have excess rolling

have

capacity. The steel converter permits both to employ their facilities
more fully, thus
making more steel.
While conversion has

finally gained official status, it has also
control, the trade magazine notes. Some
might want to drop conversion tonnage because
they are now assured steel at regular mill prices under govern¬
ment-directed programs are being told
they must continue using
the same percentage of conversion steel.
under government

come

who

consumers

American Iron

The

that

the

operating

and the monetization of
public debt.
The game of
"sopping up" or "syphoning off"
excess
purchasing power by dis¬
criminatory
taxes
or
savings
bonds sales, is no longer played
the

with enthusiasm.

the opinion that
business is probably nearer the
top of a cycle than is generally
recognized. The long and large
expansion of bank loans, associ¬
ated with anticipatory buying and
will

age

ominous

stocks

goods,

The

look.

aver¬

raw-material commodity
is badly out of line with
average
price
of
finished

prices
the

goods.
hardly

Building
activity
can
be far from a boom top.

duction

yielded

possible

easily

follows

that

that,

"plateau" in such matters.
alternatives

the

reduce

war-frozen economy
or (2) a recession and liquidation
in the not very distant future —
(1)

(I well

say

within

ber

turning bearish late in
waiting till the fall of
the crisis.)

and

for

a year.

remem¬

In
can

conclusion,
see

American

may

say

recession;

year

ago

stood

73.5% of

that

the

were

The

amount

electrical

distributed by the electric
light and power industry for the week ended March 3, 1951, was
estimated
6,822,098,000 kwh.,-according to the Edison Electric

who

ones

10,902,000 kwh. lower than that of the
previous week, 943,310,000 kwh., or 16.0% above the total output
for the week ended March 4,
1950, and 1,270,487,000 kwh. in excess
was

of the output reported

for the corresponding period two years ago."

Carloadings Lower in Holiday Week
Loadings of

economy

revenue

included

The

Washington's

week's

total

represented

increase of

188,087

cars,

34.4% above the corresponding week in 1950 when loadings were
reduced by a general strike at bituminous coal mines, and an
increase of 46,666 cars, or 6.8% above the comparable period of
;

Auto

Output Declines With Return to

ones

consider it of great practical

better

with

irregular last week with prices moving

article.

daily

Normal

Assembly Schedules

week, according to "Ward's Automotive Reports,"
181,109 uniis, compared with the previous week's total of

199,247 (revised) units and 124,072 units
Total output for the current week
and

7,700

31,897 trucks built in

cars

was

the United

made

States and

and 2,861 trucks built in Canada.

last

year

116,869.

Canadian

year ago.

broad

demand

along with wheat and

the general

trend

and

scored

corn

for

of prices
the cash

while rye ran

moderate

bushels, as against 31,000,000 in the previous week
23,600,000 in the corresponding week a year ago.
flour bookings were small.
Moderate declines in
prices failed to stimulate any demand for bakery or other types of
Domestic

flour.

ing

Raw sugar prices moved

against

heavy

purchases

higher at the close, aided by
last

week

from

the

cover¬

Cuban

Sugar
fairly good but futures
slightly lower for the week.
Cattle prices were mostly steady
during the week but hogs and
lambs turned lower due largely to weakness in wholesale dressed
Institute.

Demand

under

meat

for

actual

and

pressure

lard

was

finished

markets.

Activity in spot cotton markets last week was again practi¬
cally nil, while trading in futures markets remained suspended for
the fourth successive week.
Primary cotton textile markets were
also

virtual

The

entire

standstill.

cotton

industry has been stalled

by the

delay in

government action that would clarify the price situation for cotton
and cotton textiles.
Mill stocks of cotton

tive month to

Feb. 1 increased for the fifth

consecu¬

total of 2,253,000

bales, the largest in three years.
Consumption of cotton during the five-week January period, as
reported by the Bureau of the Census, amounted to 1,041,000 or a
daily average of 42,500 bales for the period. The latter compared
with a daily rate of 41,300 bales for December, and 37,400 in Janu¬
ary a year ago. Mill consumption of the staple during the first six

There

except for

very little activity in the Boston wool market
fair volume of scoured woolen wools sold for use in

was

government contracts.

Futures markets in grease wools and wool

Foreign wool markets
reported brisk demand with prices inclined to be firmer.

Trade Volume Stimulated By Pre-Easter Buying
Shoppers throughout the country spent slightly more money
in the period ended on Wednesday of last week than during the

The total dollar volume of retail spending continued
noticeably above the level for the comparable week a year
Part of the buying influx was attributed to the increasing

to be
ago.

proximity of the Easter
There

sales

was

season-

moderate rise in apparel

increasing to

point

While

:/.e

volume of meal

and confectionery remained some¬
keeping with Lent, the over-all purchasing of
slightly in the week. Dollar sales were consider¬

what depressed, in
rose

very

condiments
The

the

total

There

Canned goods, frozen fruits,
demand by housewives.
sold during the week in
unchanged from that of the

virtually

dollar

volume

considerably

was

above

the

was

marked

and

was

and

response

many

vicinities to

promo¬

floor-coverings.

generally limited for some kinds of large appli¬
sets.
The purchasing of housewares rose

television

slightly in scattered communities.

week totaled

year ago.

enlarged

house-furnishings
was

Total

tions for furniture

ances

year ago.

Interest

week ago and 7,203 units

stores

before.

week

were

amount

nation's

of 138,651
a

buying with total dollar
appreciably ,;above the level for the

similar 1950 period.

output in the

10,561 units, compared with 10,590 units
a

rise for the
Sales of grain futures expanded
materially last week, The
average volume on the Chicago Board of Trade totalled

level of

a year ago.

For the United States alone, total
output was 170,548 units,
against last week's revised total of 188,657 units, and in the like

week

due

and

Combined motor vehicle production in the United States and

cars

wheat

about 43,000,000

and

Canada the past
totaled

Oats weakened

counter to
week.

closed slightly lower, the undertone

corn

than

ably above the level of

Total retail dollar volume in the period ended on
of last week

was

estimated to be from 13 to 17% above

Wednesday
a

year ago.

.Regional estimates varied from the levels of a year ago by these

Business
Commercial

and

ended March 1 from

Failures

Show

percentages:

Higher Trend

industrial failures

rose

170

the

week

127 in the

previous holiday-shortened week,
& Bradstreet, Inc., reports.
Despite this increase, casualties
slightly lower than in the comparable weeks of 1950 and 1949

Dun
were

when

179

prewar

and

185

occurred,

level, failures

Liabilities

were

respectively.

Continuing below the

down 33% ifrom the 1939 total of 254.

$5,000 or more were involved in 127 of the
week's casualties; failures in this size group increased from 98 in
the previous week but did not reach the 152 recorded in the similar
week a year ago. Small casualties, those
having liabilities under
$5,000, rose to 43 from 29 and from the 27 occurring last year.
All industry and trade groups had increases in
failures, with
the rise marked in retailing. Slight increases were noted in other
More businesses succumbed than a year ago in retail trade

lines.
and

construction, but failures continued below the 1950 level in

other industry and trade

ward

Oct.

movement

10, last.

the week

with

+10 to

+11; East and Midwest +12 to +16;
+11 to +15; Southwest +14 to

+14; Northwest

and Pacific Coast +15 to +19.

+ 18

Wholesale ordering continued to be

the week.

While

some

during the past 20 weeks, or since the week of
This brought the Feb. 27 index to $7.25, from $7.31
•

nearly unchanged during
increasingly re¬

lines of soft goods were

slight dip in the buyer demand for other
appliances. Total wholesale dollar volume
was
moderately above the level for the similar period in 1950.
There were slightly fewer buyers attending various markets than
in the prior week, and about the same number as a year earlier.
quested,

there

was

items, notably large

the

Department store sales on a country-wide basis, as taken from
Federal Reserve Board's index for the week ended Feb. 24,

1951, advanced 24% from the like period of

last year. This com¬

pared with an increase of 18% (revised) in the previous week and
15% for the four-weeks ended Feb. 24, 1951. For the year to date
Retail trade in

before, which was only slightly under the all-time peak
recorded on July 13, 1948. The current figure
compares
$5.85 at this time a year ago, or a rise of 23.9%. I
The index represents a sum total of the
price per pound of 31

of $7.36

England

New

South

department store sales registered

groups.

Wholesale Food Price Index Records

The wholesale food price index, compiled
by Dun & Bradstreet, Inc., dropped back six cents last week in the first down¬

will be the

Although
was

food

en¬

bear the blame.

and

week before.

freight for the week ended Feb. 24, 1951
Birthday holiday, totaled 734,794
cars, according to the Association of American Railroads, repre¬
senting a decrease of 5,763 cars, or 0.8% below the preceding week.
which

private

under¬

earlier,

tops remained closed for the fourth week.

The current total

First Decline in 20 Weeks

have

week

large part of the Southwest.

energy

Institute.

that I

opinion

327.96

of the current season totalled about 5,445.000
bales,
against 4,333,000 in the corresponding period of last year.

Output Continues To Decline

the

with

year ago.

months

Electric

taken to manage our currency and

destruction

system

1928
1929

terprise lying at the bottom of the

our

tons;

and amounted to 1,401,100 tons.

"the

if my thought
about run-away inflation is true,
then tendency will be toward de¬
flation. It seems quite clear to me
that if inflation be stopped, it will
inevitably
turn
into
deflation.
There "is
no
such
thing
as
a

either

1,933,100

the old capacity

good news is out" in the case of
corporation earnings.
It

week

operating rate is equivalent to 2,019,000 tons of
steel ingots and castings for the entire industry, compared to
1,995,000 a week ago.
A month ago the rate was 96.7% and pro¬

add

accumulation
has

this

93% of the
will be 101.0% of

This week's

think—par¬

is later than you

having

week ago, or a rise of 1.2 points.

announced

companies

capacity for the entire industry
capacity for the week beginning March 5, 1951, based on the in¬
dustry's increased capacity of Jan. 1, compared to a rate of 99.8%

ticularly you Keynesians.
;

Steel Institute

steel

steelmaking

1949.
It

and

rate

rency

markets

declined sharply as the result of
liquidation induced
by fears of export curbs, together with reports of good rains over

were

circumstances,

hands

Steel conversion has been the subject of considerable attention
Washington. Converters, who buy ingo4s or other semi-finished
steel in one place and
ship it to another point to be converted into
finished steel, have won official status
by proving that they add to
in

spiralling

think that the controls which are
in

Industry

priority in buying steel for maintenance, repair and operation.
They establish their own priority by applying the symbol DO-97.
Many believe it will be impossible for NPA, or any other
agency, to effectively police this order.
In the end, CMP may
come in time to rescue NPA from* a
hopeless situation.

that

three

that

ac¬

would

the degree of
might exist.

upon

these

doubt

greatly

level

enthusiasm

war

could

current

The State of Trade and

firms

subjected to such

over

pend

contrasted

the like date

Wheat

total

3. We could be

the

This

generally lower.

We may react rather quickly
to the realization of our financial

credit

27.

248.93

and

Mildly Lower Trend
Continuing the mild downward movement of the previous
week, the daily wholesale commodity price
index, compiled by
Dun &
Bradstreet, Inc., again fell slightly to close at 325.49 on
Feb.

ward."
>

Wholesale Commodity Price Level Shows

politicians

shifting the
blame, I believe that just about a

foods in general use and its chief
function is to show the general
trend of food prices at the
wholesale level.

succeed

advance of 23%.

New York last week

buying which sent estimated
above the like week of 1950.

was

spurred by Easter

sales volume for

the period

18%

According to the Federal Reserve Board's index, department
sales in New York City for the weekly period of Feb. 24,

store

1951, advanced 22% from the like period of last year. In the pre¬
ceding week an increase of 24% was registered above the sim¬
ilar week of 1950.
For the four weeks ended Feb. 24, 1951, an
increase of 17% was recorded over
year

last year.

date,

volume

advanced

that of a year ago, and for the

22%

from the like period of

The Commercial and Financial Chronicle

(1048)

The following statistical

Indications of Current

latest week

Business Activity

week
Week

AMERICAN IRON

Latest

STEEL INSTITUTE:

AND

Indicated steel operations

month ended

Week

Ago

Month

Year

96.7

99.8

73.5

1,401,100

1,933,100

1,995,000

2,019,000.

Mar. 11

(net tons)

that date,

oil

Crude

condensate

and

output

daily

(bbls.

average

State

Feb.
Gasoline output (bbls.)————Feb.
Kerosene output (bbls.)—.—.—
—Feb.
Gas, oil, and distillate fuel oil output (bbls.)
Feb.
Residual fuel oil output (bbls.)
Feb.
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
Finished and unfinished gasoline (bbls.) at
Feb.
Kerosene
(bbls.) at
Feb.
Gas, oil, and distillate fuel oil (bbls.) at
*
Feb.
Residual fuel oil (bbls.) at
Feb.
,

5,000.000

6,444,000

6,065,700
6,483,000

5.277,000

24
24
24

20,815,000
2,632,000

20,425,000

21,106,000

17,703,000

10,545,000

9,430,000

9,954,000

6,890,000

9,471,000

9,209,000

9,905,000

7,855,000

5,945,150

Feb. 24

(bbls.)

!!6,524,000

24
24
24
24

136,870,000

5,936,900
■i

2,904,000

2,484,000

2,873,000

133,888,000

126,261,000

134,598,000

12,527,000

13,314,000

16,446,000

16,227.000

48,764,000

49,420,000

58,997,000

56,050,000

38,995,000

39,874,000

40,378,000

48,663,000

CONSTRUCTION

NEWS-RECORD

and

—

PAPER

RESERVE

ERAL

of Jan.

BANK

LINTERS

AND

Lint—Consumed

Feb. 24
(number of cars) _— Feb. 24

loaded (number of cars),
Revenue freight received from connections

RECORD:

•

—

Total U.

—.

construction

—

municipal——

and

State

—

Federal

Pennsylvania

anthracite

Beehive coke

(tons)

729,311

717,538

725,547

508,151

public

3—

storage

Mar. l

$352,081,000

$223,777,000

$235,102,000

Mar. l

274.560,000

140,562,000

156,215,000

$133,448,000

77,521,000

83,215,000

78,887,000

45,870,000

Mar. 1

52,501,000

65,308,000

38,455.000

Mar. 1

25,020,000

61,169,000
22,046,000

13,579,000

7,415,000

10,050,000

►10,685,000

11.410,000

2,709,000

933,000

890,000

974.000

620,000

157,400

*155,600

159,600

2,900

SYSFeb. 24

274

6,822,098

Mar. 3

(in 000 kwh.)

Cotton

of Feb.

month

spindles active

COTTON SPINNING

300,704.000

77,753,000

283,595,000

$356,000

$333,000

$258,000

353.8

*315.1

276.8

63,688,000

784,057

729,738

2,253,240

1,998,850

5,63G,221

6,663,560

1,750,068
10,167,592

1,040,891

of Feb.

116,031

110,250

135,464

299,494

297,087

298,011

—

121,541

117,873

56,961

20,900,000

20,730,000

20,227,000

January

Feb.

of Feb.

(DEPT. OF COMMERCE):

Spinning spindles in place on Feb. 3
Spinning spindles active on Feb. 3—
spindle hours

ERAL

272

221

278

6,833,000

7,099,385

5,878,788

INDUSTRIAL)—DUN

127

159

179

23,201,000

23,149,000

23,286,000

20,900,000

20,730,000

20,217,000

13,273,000

9,376,000

9,091,000

541.8

523.2

496.0

FED¬

FEDERAL

Y. —1935-1939

N.
of

January:

Sales

(average monthly),

237

441

*181

Sales

(average

233
291
240

450

*185

266
239

*201

273

263

*228

321,092

unadjusted
daily), unadjusted
Sales (average daily), seasonally adjusted
Stocks, unadjusted
Slocks, seasonally adjusted
WASHERS

STANDARD

BRAD-

place Feb,

DISTRICT,
OF

100—Month

Feb

SALES—SECOND

RESERVE

BANK

—i-

omitted)

(000's

STORE

DEPARTMENT

HOUSEHOLD

AND

(COMMERCIAL

260,680,000

87,578,000

Mar. 1

EDISON ELECTRIC INSTITUTE:

FAILURES

682,593,000
584,299,000

COM¬

consuming establishments as of
public storage as of Feb. 3—

AVERAGE

RESERVE

TEM—1935-S9 AVERAGE—100

Electric output

686,215,000
411,984,000
274,231,000
210,443,000

932,612,000
338,433,000

January—

consuming establishments

Feb. 24
Feb. 24
Feb. 24

SALES INDEX- -FEDERAL

STORE

RESERVE

DEPARTMENT

Ago

BALES:

month

546,707

Active spindle hours per spindle in

(U. S. BUREAU OF MINES):
(tons)

coal and lignite

Bituminous

DEPT.

784,185

Active

COAL OUTPUT

Year

Month

construction--—.

Private construction
Public

(1935-1939

740,557

ENGINEERING NEWS-

>>..

■

—

YORK—

NEW

734,794

Linters—Consumed

ENGINEERING CONSTRUCTION

CIVIL

DUN & BRADSTREET, INC.
100)—Month of January

MERCE—RUNNING

AMERICAN RAILROADS:

Revenue freight

Latest
Month

OUTSTANDING—FED¬

(000's omitted)

of that date:

CONSUMER PURCHASES OF COMMODITIES-

COTTON

ASSOCIATION

—

municipal

COMMERCIAL

are as

$
1,271,045,000 1,266,892,000

—

construction
construction

either for the

are

Month

—

Federal

Thursday, March 8, 1953,

EN¬

—

construction

Public

—

gallons each)
rims to stills—daily average

Crude

of quotations,

cases

February:
Private

AMERICAN PETROLEUM INSTITUTE:

or,

CIVIL ENGINEERING

Total

production and other figures for the

cover

GINEERING

Equivalent to—
Bteel ingots and castings

Dates shown in first column

month available.

101

Mar. 11

(percent of capacity)

tabulations

SIZE

IRONERS

AND

(AMERICAN

—

*231

—

HOME

170

Mar. 1

STREET, INC.

LAUNDRY

MANUFACTURERS'

ASSOCIA¬

TION)—Month of January:
of washers (units)

Factory sales
IRON AGE COMPOSITE PRICES:
Finished steel

(per

Pig

gross

(per

iron

ton)

METAL PRICES

—Feb. 27
Feb. 27
Feb. 27

lb.)

(per gross ton)

Scrap steel

Factory sales of ironers

T-."t

:■

(New York)

Lead

(New Ycik)

Lead

(St.

Zinc

Feb.
Feb.
Feb.
Feb.
Feb.
—Feb.

Export refinery
tin

at
at

Louis)

4.131c

3.837c

$52.69

$46.38

$43.00

$47.75

$27.08

(East St. Louis) at

:—

Bonds

Government

24.200c

18.200c

—

A^IIIIIIIIIIII—II

—

Baa

24.425c

18.425c

182.000c

183.000c

182.000c

74.125c

17.000c

12.000c

DAILY

YIELD

Electrolytic domestic

16.800c

11.800c

Electrolytic

17.500c

9.750c

Mar. 6

100.79

101.14

101.39

Mar. 6

114.85

115.83

116.02

118.60

119.20

120.02

121.46

117.60

118.20

118.80

120.02

Mar. 6

114.27

115.04

Mar. 6

109.42

110.15

103.33

116.41

115.43

116.02

110.15

108.70

112.37

112.75

112.93 —

111.62

114.85

115.43V

115.82 >

117.40

Mar. 6

117.40

118.60

119.20-

120.22

Mar. 6

2.44

Mar. 6

2.91

Mar. 6

2.72

AVERAGES:

Bonds

Government

corporate

Average
Aaa
Aa

-1

—

Baa
Public

Utilities Group-

Industrials

2.4i

J\
2.87 '"T

■

2.39

2.25

2.85

2.83

2.691-

2.65

Mar. 6

2.77

2.74'

2.71

Mar. 6

2.94

2.90

2.88

2.58

■

Lead

(per

export

New

Common,

St.

127.1

117.3

Tin

3.16

3.24

3.02

3.01

3.08

2.88

2jxr~

2.78

Mar. 6

2.78

2.72

2.69

2.64

refinery
<■

;•

York—

Louis

$*New York,
Geld

99%

min._.

—

COMMODITY INDEX

Mar. 6

528.2

525.2

533.4

price)
flask of 76 pounds)

(per

(E. & M.

J.)

Antimony (per pound), bulk, Laredo,.
Antimony'(per pound), in cases, Laredo
Antimony (per pound), Chinese Spot
Platinum, refined (per ounce),:

Production

Feb. 24

201,026

215,033

204,050

172,503

Feb. 24

251,715

243,154

242,721

200,998

;

(tons)

Percentage of activity
Unfilled orders (tons) at

—

PAINT

DRUG

AND

REPORTER

PRICE

Feb. 24

105

104

Feb. 24

663,33$

718,490

659,349

314,640

Mar. 2

153.9

153.3

152.2

121.7

(per

pound)

(per

AND

SPECIALISTS

EXCHANGE—SECURITIES

Odd-lot sales by dealers
Number of orders
Number
Dollar

EXCHANGE

pound),

TIIE

COMMISSION:

Odd-lot purchases by dealers (customers' sales)—
Number of orders—Customers' total sales
Customers'

short

sales

other

sales

shares—Total sales

Number of

Customers'

short

sales,..

Customers'

other

sales

Dollar

88.709c
76.568d

73.250c
64.000d

$2.80000

$2.79972

$2.79750

17.500c

9.750c

182.716c

171.779c

74.352c

170.779c

73.352c

$35,000

$215,273

$195,000

45.280c

38.742c

$71,000
30.598c

27.318c

35.462c

42.500c

35.962c

27.818c

Nominal

"Nominal
$66,000

$90,000

$2.55000

$2.00000

$2.67500

$2.07500

$2.80000

$2.15000
$1.80000

19.000c

Magnesium,

24.500c

17.000c
20.500c

50.500c

50,500c

40.000c

6.53

6.58

plus, ingot (per pound)—
ingot (per pound)

WEIGHTED

Railroad

inutilities
Banks

AVERAGE

YIELD

STOCKS—Month

COMMON

Industrials

Feb.:

(125),

6.49

(25)

5.94

5.73

6.85

(24)

5.64

5.81

5.33

4.48

4.73

4.32

(15)

Insurance

(10)

yield

MOTOR

(200)

VEHICLE

Feb. 17

32,547
973,779

Feb. 17

$42,436,272

1,332,109
$57,290,522

$68,725,311

$29,843,368

Feb. 17

31,825

42,365

51,227

28,864

Number

44,487

50,996
1,547,897

813,684

3.28

3.52

6.27

6.32

6.24

569,460

560,063
475,495

109,262

*611,243
*507,120
*103,522

631

*601

194

$927,930,231

$862,200,971

645,421,522

618,610,515

$710,822,417
568,470,428

Feb. 17

240

280

471

245

31,585

42,085

50,756

28,619

Feb. 17

890,110

1,209,250

1,467,551

815,590

9,157

9,850

17,492

9,363

880,953
$37,516,646

1,199,400
$50,604,718

1,450,059

$58,418,339

806,227
$28,179,563

Feb
—Feb

value

Feb. 17

FACTORY
S.

SALES

(AUTOMOBILE

ASSOC.)—Month
of vehicles

FROM
MANU-

of Jan.:

passenger cars
motor trucks

459,567

coaches

motor

84,374

26,406
RAILROAD

EARNINGS

(ASSOCIATION
Month

Feb!
.

number

Number
Feb. 17

Customers'

11.800c

90.160c
78.500d

12.000c

$2.10000

Total

STOCK

16.800c

19.000c

—

FACTURERS

(customers' purchases)—

value

17.000c

16.800c

$2.80000

PLANTS

STOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDDEALERS

Total

—

CLASS

AMERICAN

ROADS

RRS.)

—>

of December:

operating

revenues

Total operating expenses
Operating ratio-per cent
Taxes
Net

railway operating income before charges
Net income after charges (est.).;
Number

motor

71.75%

69.55%

$154,803,205

$119,090,878

113,318,982
631

110.000,603
86,000.00Q
*601

$375,716

$406,464

121,000,000

coaches—

79.97%

$57,868,309
68.770.31Q

oi,tJ00,00(?
194

Round-lot sales by dealers—
Feb.17

257,770

347,300

475,230

288,140

257,770

347,300

4751230

288,140

Feb.17

purchases by dealers.Feb. 17

REAL

ESTATE

AREAS

Feb.17

Round-lot

331,300

AND

Savings

459,750

527,470

248,130

PRICES

NEW SERIES

—

DEPT.

Farm products

—

;

Meats

commodities

other

than farm

and

foods.

Fuel

Metals

and

Building
Chemicals

Feb.27

182.9

Feb. 27

201.6

Feb.27

Livestock

All

loan

and

—

metal

trust

IIIIII

and

•Revised figure,

allied

products

IHIIIIIIIIIII

flncludes 475,000 barrels

foreien

"*.

I
crude

*203.4

197.1

savings

159.6

associations

——'

189.6

162.9

270.9

257.0

200.7

*189.5

185.2

157.2

Feb. 27

273.2

274.3

265.5

219.2

Feb. 27

171.1

170.9

170.0

146.0

Shipments

Feb. 27

181.9

181.8

180.9

138.0

Stocks at end of month

Feb. 27

137.8

137.6

136.2

131.2

18R.7

188.7

168.5

226.7

225.4

193.6

148.5

147.7

144.9

115.2

III" .Feb.

ZINC
of

OXIDE

(BUREAU

152,586

172,066

277,178

297,274

92,715

Total

192.3

266.3

227.9

institutions

188.7

run;

lending

Feb.27

" Feb. 27

omitted):

153.0
.

SAVINGS

CORPORATION

(000's

companies—
banks

Feb. 27

products—

materials

189.3

180.9

NONFARM

companies

Miscellaneous

*183.3

FEDERAL

INSURANCE

of December

Individuals

All commodities

Foods

Insurance
Mutual

LABOR—

1926=100:

FINANCING

LOAN

—Month

Bank

WHOLESALE

INDEX —1926-36

AVERAGE—100

LOT

17.000c

42.000c

(per pound),,.

97%

Average

OIL,

$2.10000

Cobalt,

300

(tons)

24.425c

Aluminum, 99%

MOODY'S

received

24.200c

24.425c'
>

357.2

NATIONAL PAPERBOARD ASSOCIATION:
Orders

18.200c
18.425c

24.200c

181.716c

—_

(per ounce U. S.

Quicksilver

**Nickel

MOODY'S

'»
\

—

Straits—

York

New

SCadmium

3.20

2.91

>.;'•.
'•

refinery

(per pound)—

iCadmium

3.04

QUOTATIONS)—

Sterling Exchange—
Silver, New York (per ounce)
Silver, London (pence per ounce)—
Sterling Exchange (Check)—
Zinc (per pound)—-East St. Louis,

tCadmium

Mar. 6

Group

127.7

and

2.85

Mar. 6

———

19,495

COMMISSION—

pound)—,

Common,

>2.65

—Mar. 6

Railroad Group

20,300

41,418

Average for month of February:
Copper (per pound)—

liAntimony (per pound)
MOODY'S BOND

33,800

31,935

Mar. 6

Utilities Group—

Public

Industrials Group

(E.

Mar. 6

Railroad Group

275,576

24,600

(units)—.

COMMERCE

METAL PRICES

Silver

—

Average corporate

INTERSTATE

377,013

(units)

of Railway Employment at middle
January (1935-39 average = 100)—

MOODY'S BOND PRICES DAILY AVERAGES:
U.

sales of dryers

Factory

Index

•'

& M. J. QUOTATIONS):

(E.

Electrolytic copper—
Domestic refinery at
Straits

4.131c

188,234

201,834

171,359

234,466

267,373

199,858

$1,320,895

$1,457,073

$1,125,200

20,170

18,980

20,256

19,241

10,743
10.876

MINES)—Month

December:

Production

112,062

$337,474
103,397
*230,692
82,420

(short

tons)

(short tons)
(short tons)—

9,997

9,911

9,960

♦Revised figure,
tBased on the producers' quotation.
JBased on the average of
the producers' and platers'
quotations.
JjBased on platers' quotations.
five
tons or more but less than carload lot
packed in cases, f.o.b. New York
**F.O.B. Port

^Domestic,

Colburne,

S.,

American Tel. & Tel,

S.
*

duty
l.

included.
*

§§Tin

contained.
*

E-Not
.

including

stock

Volume 173

Number 4992

...

The Commercial and Financial Chronicle

(1049)

Continued from page 5

The

following figures evidence

the proportion

of the cost-of-liv¬

ing rise which

What Protection

offset

was

concurrent rise in

by the

common

stocks,

in each of the important countries

between 1938 and the end of 1950.

Against Inflation
rent control.
rents

held
a

have

99%

Only

In France apartment
for

many

depreciation in the

being

And

now

that

rent

type

franc.

permitted

this

country

see

tenants

impose—voting

in the steak price through house¬

Belgium

wife forebearance.

Argentina

Stocks Not Tied to the Commodity
Price Level

Even

far outnumbering the
So, city real estate may
merely an investor's ceme¬
so

assuming

doubts.

commodities

not

value,

well be

cally to prices.

real

estate

has

always

with rises in price lev¬

pace

els,

in this and other countries.
But here the mechanics are most

difficult, if not insuperable, for the
private

investor.

First

farmland must be

the

right

chosen, and then

there must be expert management
of the land.
For the average in¬

vestor,

unless

ex-farmer,
through

himself

the

only way
tenant farmer,

and

control

out

whose

offers

many

difficulties.
The

seem

obvious

commodities

another

present

hedge—since

highly impracticable for most pri¬
vate individuals.

There is the

me¬

chanical

difficulty of arranging
facilities; and the incur¬
of storage charges instead

storage

of gaining income from securities.

his

anticipation of the price
he'will be doubly

level is wrong,

punished with storage charges
well

shrinkage in his capital.

If he buys non-durable commodi¬

ties

the

individual wiil

licked

by physical depreciation; and
in the

case

now

The fact that so
of
well-managed

stocks

many

companies consistently sell below
their book and replacement values

throughout
inflationary
periods
proves that they are not tied to
the
general price level.
Stock
reflect

prices

than

rather

gain-able

World

earnings

equipment

plant and

reproduction
celebrated

Even

costs.

the

German inflation after

War

real rise in
stocks occurred only after

the drastic

the

collapse of the

mone¬

tary unit in 1921.

The

post-World
of

ence

France,

War

European

experi¬

countries,

Germany, Austria, and
Italy, constitutes a useful labora¬
tory for scrutinizing the process
of large-scale inflation. In France,
^

wholesale

commodity prices
climbed to eight times their 1913
level. In Italy, they rose six-fold,
while

Germany

1922

they

stood

147,500%

their

1913

figure,

and

the increase

1923

1.5 trillion to 1. The wealthier

was

of capital tried to pro¬

possessors

tect themselves

by buying securi¬

ties.
Not

the

only

holder of

bonds,

whom inflations have wrought
havoc in the form of both capital

shrinkage and loss of

this

country

correlation

and

the

consistent

evidenced

monetary

expansion

inflationary

price

increas¬

hand, and

one

price rises

common

the other.

fact, in the late 1920s the

converse

occurred; the wildest bull stock
market occurring in the face of
a declining commodity price level.

1938

has

the

tradi¬

been

con¬

1920, it took
dollar's

full 25

back

its

stationary

(and

fell by almost
Even

1920

level.

after

the

past

12-month

stock

rise,
stock prices have risen consider¬

confronting
owner

inflation.

relation

can

And

such

stocks

seven-month
also

broke

period.

halving

50%

pansion in the

supply was
accompanied by a 50% decline in
share prices. Post-OPA, when in¬
flation

really

economy,

money

hold

took

the

stock prices broke sharp¬

ly and remained depressed.

Be¬

tween June, 1946 and

1948, whole¬

sale prices rose 40%

and the cost

living 30%, but the stock

ages

purchasing

aver¬

really took hold
and
and

the

cost

tion

the

currency

Who

35%

of stocks.

The present

the

30%,

whether,

not

average

when,

remedial

action

nature

will

—

fortunately!

Instead,

rny

theme is determining the attitude
the individual shall follow in the
world

real

inflation-deflation

and

politically-dictated manhan¬
dling of the free enterprise system.
In

vein

this

Join

(1)

possible.

"net"

advice

pressure

group,

the individual

propulsion

The topic assigned to me
concerned with this ques¬

not

an¬

fundamental

tion

shadow-boxing with

the

and

knows

taken?

longer term, the 82% rise
prices since 1929
accompanied by a net

decline

price

by the public is

such constructive

been

stopped.

quite possible that

this

"Pending" Policy

commodity

has

pur¬

of the central

of inflation.

the stock price averages neverthe¬
less fell by 10% net.
Likewise,
over

"doormat"'

Prostitution

was

by 40%

made

the

System

other stimulant to its flight from

economy

living

Reserve

recurrently has been part
parcel of currency debauchery
throughout the world.
Recogni¬

market

rose

The

bank

Similarly

the

commodity prices

contracting

Treasury's financing

prices 'midst the 1937-1942 period

monetary expansion.

of open-market

use

and

the

There

stock

not

poses;

non-defense extravagance must be

fell by 10% net.

It is

must

interest rate must

for

base.

for the

in the post-OPA decontrolling pe¬
riod of 1946-1948, when inflation

divergence
occurred
during shorter periods. Between
1937 and 1942 an appreciable ex¬

credit

cor¬

Similar

operations

for

1917

of the

permitted to paralyze the

Federal in its

be taken

no means

not

ably less than the cost of living,
73%.

long

pronounce¬

Board. Suffice it to say that main-;
tenance

inflation-ducking

our

50%

versus

given

Treasury and the Federal Reserve

publicized

publicized "civil war" between the

generalinfla¬

rose

tire

stocks

common

granted. We must remember
that during the wartime inflation

Average,
only by 16%. Over the en¬
period to date, which takes

Washington officials'

string

one-half).

the Dow-Jones Industrial

living by 71%; yet stocks, via

via

Dur¬

omy's

wholesale

surely

power

bull

market)

level

statements about imminent short¬

for

years

purchasing

of the 50% advance of the current

by 100% and the cost

arti¬

price

statistically pin-pointed prediction
of a further 5-6% price rise
by
ing the monetary expansion from mid-year.
1937 through 1941, the cost-of-liv¬
We cannot here go into the im¬
ing index remained
practically portant issues manifested in the
sink

the winning of the bet on whether
the market will follow the econ¬

rose

gives

the

ages, the dire need for price ceil¬
ings, and statements such as Administrator DiSalle's current

1948

stock

100% push in
this direction—viz. the successive

1930s and 1940s, after the
post-World War I inflation peak

capital. This results from
the part of our "parlay" requiring

prices

lift

"borrowing from the future." And

out the

stant, during both short and long
periods.
Over the period 1939-

(terminating before the start

im¬

a pro¬

ments have

guessed, there still remains a sec¬
ond phase of the timing difficulty

But since

"Scare-buying"
ficial

Just

and stock market expansions took

divergence

not aiding

are

point out that, despite the
many and varied inflationary in¬
fluences in peace and war through¬

tionary trend has been correctly

tional

materials, the

duction upsurge.

exist¬

In the mid-1930s concurrent credit

place.

ports, surely

move¬

element whose

use

slaughtering of animals, and

the

commodity

stock

Experience

emanating from Washington

curbing the

let

been

has

between

The European Experience

of durable

commodities,
he will be estopped by the anlihoarding
laws
and
by
other
restrictions
bound
up
with the
government's armament economy

porate and individual income tax

rise in the

commodity price level is part and
parcel of the inflationary process.
But the holding of commodities is

1938-50

cor¬

—take-home pay.

common

purchase

would

rence

they
and the

are

The United States

inherent

shareholder's "net-net"—after

Farm

choice

with

they tied automati¬

Rather
with profits

correlated

kept

nor are

1938-49

now

Timing Difficulties

general economy's inflation.

U. S. A.—

Actually, equity shares are

landlords.

tery.

correctness

the

general inflation,
its translation into presumption of
a
stock
price rise raises basic

and excise taxes is unassailable.

is too often
completely un¬
realized, and importance practi¬
cally always not appreciated. First,
there is timing as applied to the

keep down the price
economic, even if not politi¬ level and preserve the dollar's
cal, need for a general sales tax value. But the multitude of orders

ence

Sweden

forecast of

Kingdom

of the basic effective

one

The

ments

United

ably is

weapons

The timing of

280

India

there.

ceilings constitute the
price control easiest and

popular

35%

France

temporary in¬

now are some

creases

most

been

years

their 1914 levels, despite

near

Italy

within the bounds of the available

supply.

is:

the

much

(2) With your capital, diversify
we are
matter of possible budgetary def¬
in the mere foot¬
among both common stocks and
icits; but the extra dollars pushed
savings
inflation,
with
the
real
media, including Series E
Hence, by a sort of process of superable. In the overall picture,
out in
the spending stream and
U. S. Savings Bonds.
heights still before us. But be¬
elimination,
the
capital-holding stocks
have
the undermining of the public's
given much, better
In this way you will be insu¬
ginning
one's
investment
journey
citizen is virtually forced to find
confidence in the currency through
protection than bonds or cash, but even at the
lated, emotionally as well as finan¬
top of a foothill, and
his anti-inflation refuge in secu¬ have
demonstrated mismanagement that
lagged far behind the con¬
becoming
hung-up
there
for
cially, from the drastic effects of
rities. So let us consider what he current rises in
are important.
commodity prices,
the recurrent but unpredictable
months, years, or decades, can en¬
can
gain here—the disadvantages or the
degrees of currency depre¬
Increase of production undeni¬ up-and-down
tail anguish if not disaster.
savings.
as well as the advantages.
ciation.
Thus, in France, at the
So—we must come to the con¬
time of the currency stabilization
The Economic Forecast the First
clusion that real inflation-protec¬
of 1926, stock prices had risen to
Continued from page 8
tion to the owner of money can¬
Difficulty
only 250% of their 1913 prewar not be
gained from any form of
Deciding the net effect of the level
against 800% for wholesale investment. The real
protection
economy's
opposing inflationary prices; in Germany, from 1913 to
for him—as well as for the nonand deflationary elements surely
1923 stock prices offset only onepressure group citizen—must come
is difficult enough.
On the one fifth of the
commodity price rise. from
government policy itself.
hand, we must remember that In other
words, in France the
along with expansion of the money stockholder's
position deteriorated
What the Government Can and
supply and facets of the world¬ by about
45%, and in Germany by
National Company, Inc.—Analysis—J. B. Maguire & Co., Inc.,
Must Do
controls

and

priorities.

the

shareholder

well has found the difficulties

but

in¬

power,

stationed

now

hills

Dealer-Broker Investment

Recommendations and Literature

wide

long-term

of politi¬

process

cally-promoted monetary debase¬

ment, there

are

also strongly coun¬

terbalancing offsets.

35%.

controls

the

2,355 times,

common

Europe's

inflation

stocks by 417.

Second World War

taxation;
the
nation's

One

underlying difficulty hind¬
remedial anti-in¬

ering

thorough

flation

measures

of the

Experience

and

German

and

war

semi-war times they include gov¬
ernment

between 1914-23 cost of living rose

into the inflation picture—that is,

A somewhat similar pattern of
permanently
plant capacity, potential inadequate inflation-protection by
industrial and agricultural over¬ European equities has existed dur¬
enormous

too

many people have a stake in
continuation, only give high-

its

sounding lip service toward "the

ing the period surrounding World

great war" on it,

tion.

War II.

it in the

Surely still existing are chroni¬
cally deflationary forces, such as

been

production, and ever-rising taxa¬

nation's

the

(overproductive

which

capacity,
be

productive
some
fields)

enormous

accentuated

would

during

course

possible

reduction of the armament, includ¬

ing stock-piling, activties.

In ad¬

price
with
of

In France the rentier has

ruined—a

decline

government bond

40%

living has in effect inflicted

him

capital levy of

The holder of

common

ing considerably
the

of rural

owners

has

nevertheless

supply of goods and services avail¬

able

current

dition to the

for

(probably

potentially

civilian

enormous

consumption

exceeding

any

period

retrieve

Great

factors include

living has

power

increasingly heavy

by the consumer, and

ventory surpluses.
not lose
ogy

purchasing

Also

in¬

must

sight of buyers' psychol¬

and buyers' resentment, whose

effectiveness

was

recently

mani¬

fested in the precipitate 25% drop

land

the

gold,
been
con¬

living costs.
Britain, between 1933
while the cost of

excepting 1948-1950), deflationary
decreased

stocks, far¬
poorly than

thereby

66%

90%.

rise in his

and the present,

taxation,

over

case

at best fight

of everyone except¬

ing themselves.
The

combined

17-fold increase in his cost

is that too much

community becomes frozen

price

public

realize

must

attack

controls

that

effects and

not causes, are

impracticable, and
a temporary lid
rising price level.

best

The
be

put only

weapon

used

of taxation

should

non-politically forthwith

to curtail the great

flooding of the

spending stream with armament
earnings leavened with the cur¬
rent buyer's scare psychology.
To
reduce spendable
income wher¬
ever it is, tax policy must he re¬

risen by 92% and the
wage-earner has gained
in real moved from the political sphere,
income, consols stand unchanged, raising the imposts on lower and
while stocks have risen 32%. Since
1945

and

of the

the

Labor

devaluation,

subsequent

advent

Government, plus
the

holder has suffered

equity
a

share¬

10% shrink¬

in his capital, while his cost
living has risen by 25%.

middle-income

relying

groups

in lieu

progressive

and

much

age

demand

used

broader

excise

taxes

imposed. Taxation must
effectively to keep ihe
for

goods

and

services

Street, Boston 9, Mass.

Street, New York 5, N. Y.
Oliver
265

Corp.—Memorandum—Walston,

Montgomery Street,

Also available is
a

Otis Elevator

Hoffman

Goodwin,

San Francisco 4, Calif.

memorandum

brief report on the Buda

Sears, Roebuck & Co. and

Company.

Co.—Memorandum—Auchincloss, Parker &

Red-""

path, 52 Wall Street, New York 5, N. Y.
Also available is
Placer

Second

1006

Portland
Ill-

memorandum

Standard Brands.

Ltd.—Analysis—John
Avenue, Seattle 4, Wash.

Development,

General

Electric

Lewis,

Co.—Analysis—Ira

Broadway, New York 6, N. Y.

Haupt

Inc.,
Co.,

;;

Potomac Electric Power vs. Long Island

Lighting Co.—Memo¬

randum—Josephthal & Co., 120 Broadway, New York 5, N. Y.

!Public

Service of New Mexico—Data—Floyd A. Allen & Com¬

pany,

650 South Frand Avenue, Los Angeles 14, Calif.
are data on Lindsay Light & Chemical Company

Also available
and

F. II. McGraw &

Company.

Remington Rand, Inc.—Analysis—Kean,

Taylor & Co., 14 Wall

Street, New York 5, N. Y.
Riverside

Cement Company

—

Card memorandum

—

Lerner &

Co., 10 Post Office Square, Boston 9, Mass.
Also available is a memorandum on Gear Grinding Machine Co.
and

"soaking-

of-the-rich"; and obviously higher
should be

Milk

Nopco Chemical Company—Analysis—Vilas & Hickey, 49 Wall

Sheraton

Seneca Falls Machine Co.

Corporation—Bulletin—Faroll & Company, 209 South

La Salle Street,

Also

available

Trailmobile

are

Chicago 4, 111.
data on United Air Lines Inc.

Co.—Analysis—Cruttenden

Street, Chicago 4,.111.<

& Co., 209 South La
...

and Financial Chronicle

The Commercial

(1050)

•

Hollywood, Calif.
stock. Price—At
par ($1 per share).
Underwriter—None. Proceeds—For
further development of mine and for working capital.
Gold

Alhambra

Nov.

Mines

Alliance Tire & Rubber Co.,

Ltd.

Offering—To be made

tires and other rubber products.

Feb.

channels.

private

Allied

Laboratories,

shares of common stock (no par).
related to the market price for the out¬

filed

Price—To

50,000

standing shares on the Midwest Stock Exchange. Under¬
writer—Goldman, Sachs & Co., New York. Proceeds—

expansion program and working capital. Meeting—
Stockholders will vote March 13 on authorizing 100,000
additional shares of common stock.
For

Dairy Products Corp., N. Y.
shares of preferred stock (par

American
Feb.

$4)
stock (par 10 cents) to be

16 filed 300,000

and 300,000

Corp., Tulsa, Okla.
and gas properties.

common

shares of common
one share of preferred and one share
stock.
Price—$5 per unit.
Underwriters—

Emanuel, Deetjen & Co. and Barrett Herrick & Co., Inc.,
both of New York. Proceeds—To acquire plant, to pay
indebtedness and for working

capital. Expected after the

Price—To

shares of common stock (par $10),
to be offered to common stockholders on or about March
Feb. 28 filed 339,832

the basis of one share for each 15 shares
held, together with an oversubscription privilege; rights
to expire April 17.
Price—To be supplied by amend¬
ment.
Underwriters—To be determined by competitive
bidding.
Probable bidders:
The First Boston Corp.;
Union Securities Corp.; Billon, Read & Co. Inc.; with
bidders
to
name
compensation following company's
naming of price.
Proceeds—To be invested in equity
securities of operating subsidiaries as part of the Sys¬
tem's plan for financing its large construction program.
Bids—Expected to be received on March 29.
1951,

30,

American

Feb.
of

Hospital

(3/20)

Supply Co.

(par $4).
to public

175,000 shares of common stock

28 filed

150,000 shares are to be offered
underwriters and 25,000 shards to employees.
be supplied by amendment.
Underwriters—

which

through

Price—To

Harris,

Hall

Inc., and Union

Co.,

Proceeds—For

expansion

and

Securities Corp.

general

corporate

pur¬

American

Research

Boston,

Development Corp.,

Mass.

(par $l)f
Price—$25 per share. Underwriters—None, but subscrip¬
tions may be obtained by Estabrook & Co. and Harriman
Ripley & Co., Inc., New York, and other members of the
Feb.

filed

106,420 shares of common stock

Proceeds—To make

NASD.

investments in

certain

en¬

American Telephone &
Jan.

filed

not

exceeding

Telegraph Co. «
$420,000,000 12-year 3%%

convertible debentures due March

19, 1963 (amount ex¬

pected to be in excess of $410,000,000) being offered to
stockholders of record Jan. 29, 1951 on basis of ,$100 of
debentures for each seven shares of stock held; rights
to
V

expire

by amendment.

March 19, 1951. The debentures will be con-

and

share, payable by surrender of $100 of debentures
payment of $38 in cash. Price—At 100% of principal
Underwriter—None.

amount.
to

Proceeds—For

Underwriters—
Co. Proceeds

■

Corp.

None.

Harriman Ripley & Co., Inc. and The First.
(jointly); White, Weld & Co. and Shields
& Co. (jointly); Morgan Stanley & Co.; W. C. Langley
& Co. and Glore, Forgan & Co. (jointly).
Proceeds—To
redeem $5,300,000 of first mortgage bonds, to repay $8,000.000 of bank loans and for 1951 construction program.
-Bids—Expected to be opened at 11 a.m. (EST) on March
27.

subsidiary and associated companies and for general
Statement effective Jan. 24.

Argo Oil Corp., Denver, Colo.
Dec. 18 (letter of notification) 5,750 shares of capital
stock (par $5).
Price—At the market (approximately
$17.37V2 per share). Underwriter—Carl H. Pfbrzheimer
& Co., New York
Proceeds—To A. E. Johnson, Presi¬
dent, the selling stockholder. Office—1100 First National
Bank Building, Denver, Colo.
Armco
Jan.

now

being

holders

for

Steel

filed

Corp.

819,737 shares of

offered

for subscription
Feb.

record

each

common

five

26,

1951,
held;

stock

(par $10)
common stock¬

the basis of
rights to expire

March

14, 1951.
Price—$41 per share.
Underwriters—
Smith, Barney & Co. and W. E. Hutton & Co.
Proceeds

—For

expansion program and additional working capital.

Statement effective Feb. 27.

Cosmopolitan Hotel Co. of Dallas, Tex.
$1,500,000 of 2% debentures due 1965. Price

Dec. 13 filed

preference stock (no par) and 144,151 shares of $3 cumu¬
lative second preference stock (no par), together with
voting trust certificates representing the same, to be of¬
fered

144,151 shares of $6 cumulative
stock on basis of one share of each
class of preference stock for each share of $6 preferred
stock.
Underwriter—None, but Georgeson & Co. will
solicit exchanges.
Statement effective Feb. 21.
exchange for

Co., Inc., which com¬
will construct Dallas hotel. Business—A non-profit
corporation under sponsorship of Dallas Chamber of
Commerce to secure construction of hotel./
'

pany

Cribben
Feb.

stock

filed

300,000 shares

Crossett Lumber

Price—$21.50 per share. Underwriter—Equit¬
of Nashville, Tenn. Proceeds—For
working capital.

$300,000.

of convertible preference

Securities Corp.

Culver

Expected at end of month.

stock

claims in the Hunter Mining

Breweries, Ltd.
8 filed 61,220 shares of common stock
(no par)
offered in exchange for Brewing Corp. of Amer¬
on

•

stock

basis of two shares for each Brew¬

Power &

Carolina

Price—To

Light Co.

(3/20)

Electric & Gas Co.

series

(3/21)

cumulative preferred stock,

Price—To be supplied by amend¬
ment.
Underwriter—Stone & Webster Securities Corp.,
New York. Proceeds—For construction program. Offer¬
(par $100).

ing—Tentatively
Central
Jan.

about the middle of

Louisiana Electric Co.,

filed

expected

March.

Inc.

250,297 shares of common stock

(par $10)

21,480 shares of 4.5% preferred stock (par $100), of

and

preferred stock and 214,800 shares are to be
offered in exchange for shares of common stock of Gulf
Public Service Co., Inc., on basis of 4/10ths of a share
of common and l/25th of a share of preferred for each
Gulf common
share.
The
remaining 35,497 common
which the

are

reserved for

possible future issuance and sale

Chanslor
6

(letter

Lyon-Palace Corp., San Francisco
notification) 11,111 shares of capital

stock

(par $5). Price—At market (estimated at $9 per
Underwriter—Hooker & Fay, San Francisco,
Calif.
Proceeds—To six selling stockholders.
Office—

share);

Philadelphia

Pittsburgh

San Francisco

Private Wires to all

offices

730

Polk

•

Columbine

Feb.

(letter of notification) 2,091 shares of common

(par $10). Price—$12.50 per share. Underwriter—

None.

Proceeds—For

working capital. Office—614 Rood

Ave., Grand Junction, Colo.

Brooklyn, N. Y.
90,000 shares of class B

Computer Corp.,

non-voting common stock (par $1). Price—$3 per
Underwriters—Pioneer. Enterprises,

First
Feb.

Inc.,

Securities

share.:

Bluefield,

Corp., Philadelphia,

W.r

Proceeds:

Pa.

(letter of notification) 200,000 shares

of capital'

(par 1 cent). Price—50 cents per share. Under¬
writer—Corporation itself. Proceeds—For working capi¬
tal and expansion program. Office—1520 Locust Street;
stock

Philadelphia, Pa.

Pa.
shares of common
stock (par 50 cents).
Price—At market (estimated at
$1.25 per share).
Underwriter—De Pasquale Co., New
York,;and J. Howard O'Connor, Pelham, N. Y. Proceeds
Fleetwood-Airflow, Inc., Wilkes-Barre,

Jan. 22

—To
•

(letter of notification) 28,000

selling stockholders.

Fosgate Citrus Concentrate

Cooperative, Forest

City, Fla.

of class A membership stock
of class B .preferred stock (pa*
$100); 8,000 shares of class C stock (par $100); 2,000
shares of class C stock (par $50); and 4,000 shares of
class C stock (par $25). Underwriter—None., Proceeds—
To
construct
and
equip plant. Business—To<'process
citrus fruit juices to a frozen concentrate form;
2

filed

400 jshares

(par $100); 5,000 shares

General
Feb.

stock

and for
/

IVa., and G. H. Hecht of Washington 5, D.
.?—To provide working capital.

Development Co., Grand Junction,

Colorado

Chicago

Cleveland

Street, San Francisco, Calif.

(letter of notification)

March

Feb.

purchase price for building ($20,000)

Electronic
Feb.

program.

Illinois

working capital.

Lynch, Pierce, Fenner & Beane, New York; and
R. S. Dickson & Co., Inc., Charlotte, N. C.—Proceeds—

Central

stockholders of record

;;V.

balance of

Merrill

Feb. 28 filed 25,000 shares of

850,000 shares of common

to common

Duggan's Distillers Products Corp.
1
Oct. 27 (letter of notification) 340,000 shares of com-,
mon stock (par 10c).
Price—75 cents per share. Under¬
writer—Olds & Co., Jersey City, N. J. Proceeds—To pay

200,000 shares of common stock (no par).
supplied by amendment. Onderwriters—

For construction

not exceeding

offered

District.

(3/30)

1951 on basis of one share

program.

Prospect, Ltd. (3/12-17)
Prospect Exploration Ltd. below.

Feb. 28 filed

Co.

for each 10 sharesPrice—At par ($20 per
Underwriters—None. Proceeds—For construction

share).

Canadian
See

to be

held; rights to expire April 26.

28.

Feb.

Edison

filed

March 30,

Underwriter—None, but GeorgeCo., New York, will solicit exchanges. .Statement

effective

Detroit

March

ing Corp. share held.
son

10 cents), of which 48,425 shares are

(par

publicly offered at $4 per share by the escrow agent,'
without underwriting, and the remaining 10,000 shares
are to
be issued in exchange for 10 patented mining

and sale of "Tintair."

stock

Inc., Wallace, Ida.
(letter of notification) 58,425 shares of common

Day Mines,
Feb. 21

Canadian

common

III.

shares of common stock (par $5),of which 4,818 shares are to be offered to stockholder!/
and 127,364 shares to public. Price — To stockholders at
$5 per share and to public at $6.25 per share. Under- '
writer—None. Proceeds—For investments.

Bymart, Inc., New York
Feb. 28 filed 5,000 shares of 5% cumulative preferred
stock
(par $100) and 50,000 shares of common i stock
(par $1) to be offered" "as a' speculation," in units of
one share of preferred and
10 shares of common stock.
Price—$200 per unit.
Underwriter—None. Proceeds—
to repay bank loans and purchase equipment. Business—

ica

Corp., Chicago,

Oct. 23 filed 132,182

Peabody
&
Co.,
New
York.
Proceeds—For additions and improvements to plant and

Co., Crossett, Ark.

(letter of notification) an unspecified number of
shares of common stock (par $5) to raise approximately

(par $100). Price—To be supplied by amendment.

Feb.

Price—$5.50 per share. UnderwritersN'oyes & Co. and Swift, Henke Co. of Chicago,
selling stockholder.
v

Proceeds—To

Feb. 16

Underwriter—Kidder,

III.
1,000 shares of common

Co., Chicago,

(par $5).

David
111.

Burlington Mills Corp., Greensboro, N. C.

March

Sexton

(letter of notification)

stock

able

•

by the company to holders of common stock then out¬
standing. Underwriter—None. Purpose—To acquire not
less than 429,600 shares (80%) of Gulf common stock.

Boston

Proceeds—To pur¬

chase debentures of Statler Dallas

convertible preferred

New York

Underwriter—None.

—At face value.

Co., Berlin, N. H.
Jan. 25 filed 144,151 shares of $5 cumulative convertible

one
on

Corp.

Brown

advances

corporate purposes.

(jointly);

Boston

vertible into capital stock beginning June 1, 1951, at $138
per

Unlerwriters—To be determined

1981.

earlier than

by competitive bidding. Probable bidders: Halsey, Stuart
& Co., Inc.; Kuhn, Loeb & Co. and Union Securities Corp.

Uxbridge Worsted Corp. (3/15)
shares of common stock (par $1).

supplied

(3/27)

first mortgage bonds, due 1
interest not exceeding 27/a% and maturing

with

1981,

Co.

Power

$40,000,000

filed

not

(par $13)
to be issued in exchange for 303,945 shares of AustinWestern Co. common stock on basis of 1% shares of
Baldwin for one Austin-Western share. Underwriter—

Production

terprises.

Underwriter—None.

Consumers

Feb.

486,312 shares of common stock

equipment.

Business—Hospital equipment.

poses.

Bates-'

Co.

Baldwin-Lima-Hamilton
filed

New York
shares of capital '

Inc.,

500,000

(par 10 cents), to be offered in exchange for an

amendment.

—To 11 selling stockholders.

Co.,

Kidder, Peabody & Co. and Bear Stearns &

Feb.

American Gas & Electric Co. (3/29)

(Consolidated now owns 51,400 ;
shares, or approximately 13% of the 391,500 outstanding
Bates
shares).
Exchange Rate —To be supplied by

300.000

maximum

Manufacturing

preferred and one common share. Price—$10.50 per unit
share for common stock. Underwriter—
Woolfolk & Shober, Inc., New Orleans, La. Proceeds—
Fbr working capital. Office—513 Carondelet Bldg., New
Orleans 12, La.

filed

unspecified number of shares of common stock of

and 50 cents per

shares of common

345

option agreement at 100/115th of $5 per share, or for
Proceeds—For working capital.

stock

Incorporated, New Orleans, La.
19,397 shares of 6% cumu¬
preferred stock (par $10) and 58,940 shares of
common stock
(par 50 cents) to be sold in units of one

Bachmann

(letter of notification)

Consolidated Textile

lative

Feb.

Pasadena,

(par $1), to be issued to H. W. Ruby pursuant to

Dec.

(letter of notification)

Jan. 8

Engineering Corp.,

total of $1,500.

Inc.

middle of the month.
^

Boiler Co.,

stock

(Del.)
Feb. 28 (letter of notification) 5,000 shares of capital
stock.
Price—At par ($10 per share).
Underwriter—
None.
Proceeds—To acquire capital stock of Atlantic
Steel Boiler Co. (Pa.), to purchase equipment and raw
materials and for working capital and general corporate
purposes.
Office—22nd Street and Washington Avenue,
Steel

Atlantic

offered in units of
of

Feb.

Proceeds—To purchase oil

tinental

•

Consolidated
California

(letter of notification) 48,046 shares of capital
stock. Price—At par ($5 per share). Underwriter—Con¬

Philadelphia, Pa.

(3/12-13)

Inc.

•

Okla.

ADDITIONS

SINCE PREVIOUS ISSUE

Nov.

of class A common stock (par
five Israeli pounds). Price—$50.40 per share (to be of¬
fered as a speculation). Underwriter—None. Proceeds—
To construct and equip a modern tire and rubber plant
in the State of Israel Business—Plans manufacture of
Feb. 1 filed 28,770 shares

through

Atlantic Oil Corp., Tulsa,

Corp.,

80,000 shares of common

filed

Thursday, March 8, 1951

INDICATES

Registration

Now in

Securities

Price

Telephone

Corp.

(3/14-15)

225,000 shares of common stock (par $20):.
To be supplied by amendment. Underwriter—

27 filed
_

Paine, Webber, Jackson & Curtis; Stone & Webster Se¬
curities Corp.; Mitchum, Tully & Co.; and others.
Pro¬
ceeds—To repay bank loans and for new construction.
-

Volume 173

Number 4992

Glenmore
Dec.

Distilleries

The Commercial and Financial Chronicle

Co.

•

159,142 shares of class B common stock
Price — To be filed by amendment. Under¬

NEW ISSUE CALENDAR

Co., New York. Proceeds—\.
working capital and general corporate purposes.
Offering—Deferred indefinitely.
For

March

Green

Bay Drop Forge Co., Green Bay, Wis.
(letter of notification) $200,000 of first mort¬

Northern Pacific

annually Feb. 1, 1952 to Feb. 1,
1961, inclusive. Priee—At par and accrued interest. Un¬
derwriter—None.
Proceeds—To
pay
debt
and
for
working capital.

Oct.

Fire

(letter

stock

March
Allied

Insurance

Co., Philadelphia
notification) 64,000 shares of capital
Price—$4.50 per share. Underwriter—

coverage.

and

$5,000

Prospect Exploration, Ltd

Common

volume

Bachmann

business.

•

stock.

Price—At

stock.

None.

Common

20,

cisco.

1951
Common
Common

21,

voting

River Brand Rice

pur¬

Metrick,

Jamaica

(steel) for resale. Office—Care of
320 Broadway, New York, N. Y.

Supply Co.
Feb. 7 (letter of notification) 4,545 shares of common
stock (no par).-Price—At market (estimated at $22
per
share. Underwriter—Blyth & Co., Inc., New
York, who
has agreed to purchase said shares for resale to public.
Proceeds—To selling stockholders.

$7 per share. Proceeds—To further develop com¬
pany's properties and for general working capital.

Common

Middle South

Feb. 21

Jerry Fairbanks, Inc., Hollywood; Calif.
Feb. 16 (letter of notification) 193,000 shares of common
Stock (par $1).
Price—$1.50 per share. Underwriter—
D. Gleich Co., New York.' Proceeds—For production of
motion pictures for theatrical and television purposes
and for

Common

(EST)_

(EST)

noon

March

29,

Bonds & Pfd.

—

1951

American Gas & Electric Co

—Common

195i^:;^'-*:'^:'^

,wMarch 30,
Detroit Edison

Common

Shields & Co.

and

(EST)

noon

March 27.

April 3, 1951
Potomac Edison Co

Southern

Bonds

———_

Co., 11:30

a.m.

(EST)

(3/27)

•:

-Bonds

April 24,

in connection

of March

in serial notes issued

with expansion program.

Feb.

26.

June

Georgia Power Co

1951
-Preferred

September
Alabama Power Co

•

11,

held; right to expire
to

Underwriter

equipment
Arch

offered

—

and

None.

for

March 31.

publicly.
Proceeds

share for each
Unsubscribed

Price—$45
—

per

convert

expansion program.

Office

share.

to
—

dial

208

Street, Kittanning, Pa.

Lake Superior District Power Co.
I
Feb. 5 filed 42,344 shares of common stock (par $20) now
offered to common stockholders of record Feb. 16 on a
one-for-five

basis; rights to expire March 12. Price—
share. Underwriters—Robert W, Baird & Co.,
Inc., Milwaukee, Wis. Proceeds—For new construction.

$22.75

per

Statement effective Feb. 23.
Lake

Superior District Power Co.

Co. Inc.; Otis &
received

Co.; Robert W. Baird & Co., Inc. Pro¬
expansion program. Bids—Only one bid was
March 5, which was rejected.

present intention to

pany's

;;

Feb.

stock

Halsey, Stuart

3V4S.

It is the

readvertise for bids

com¬

the

Corp. of America, Inc.
(letter of notification) 1,000 shares of common

(par $1). Price

Riter< &

Co.,

—

Chicago,

$6.75

111.

per

share. Underwriter —
Willis W. Os¬

Proceeds—To

Co.,

Inc.;

Merrill

Lynch,

exceeding $20 per share.
For working capital.
Hennepin Ave., Minneapolis, Minn.
—

Hampshire Electric Co.
of $4.50 cumulative preferred
and 140,000 shares of common stock
(no par). Of the latter, 130,281 shares are to be offered
for subscription by common stockholders of New Eng¬
land Gas & Electric Association (parent) at rate of one
stock

(par $100)

held.

each 12 New England common
be determined by com¬

Underwriter—To

Lehman Brothers; Harriman Ripley & Co.,
for preferred only).
Proceeds—To retire
$2,425,000 of 2%% bonds and the remainder to retire
41/2% preferred stock of New England.

•

Lithium

Feb. 28

Corp. of America, Inc.
(letter of notification) 12,500 shares of common

stock (par
per

$1). Price—At market (approximately $6.87y2

share). Underwriters—Peltason, Tenenbaum Co., St.

Louis

(latter

Hampshire Fire Insurance Co. (3/26)
shares of capital stock (par $10) to
be offered to stockholders of record March 26, 1951 at
rate of one share for each four shares held; rights will

•

New

March 5 filed 75,000

expire on April 10, 1951.
Price—To be supplied by
amendment. Underwriter—^The First Boston Corp., New
York. Proceeds—To increase capital and surplus.
Oil Co., Bakersfield, Calif.
(letter of notification) 1,000 shares of capital
stock (par $1). Price—500 shares at $3.50 each and 500
at $4 each. Underwriter—E. F. Hutton & Co., Los An¬
geles, Calif, as to 500 shares. Proceeds—To A. W. Scott,
a selling stockholder.
Norris

Feb.

v'/.-

borne, the selling stockholder.

Mo.; and Riter & Co., Chicago, 111. Proceeds—To
Minneapolis, Minn., the selling stock¬

•

Oklahoma Gas & Electric Co.

shares of common stock (par $10)
of record April 5,
share for each 10 shares held. Price-

Karl M. Leute of

March 5 filed 215,380

holder.

to be offered to common stockholders

1951 at rate of one
•

Lorillard

(P.)

Co., New York (3/21)
Feb. 28 filed 249,600 shares of common stock (par $10) to
be offered
at rate of

ment.

competitive bidding. Probable bidders: Halsey, Stuart &

loans.

one

to expire

Feb. 5 filed $2,000,000 first mortgage bonds series
D, due
March 1, 1981. Underwriters—To be determined through

Blyth

Jan. 25 filed 15,000 shares

Bonds

Lithium

record Feb. 24 at rate of 223/1000ths of

stock (par $7.25).

(jointly);

issue.

Kittanning Telephone Co., Kittanning, Pa.
15 (letter of notification) 6,021 shares of capital
stock (par $25) being offered, first to stockholders of

due

Finch Co., Minneapolis, Minn.
(letter of notification) 12,137 shares of common

Office—1750

Inc.

Underwriter—None.

.Feb.

bidders:

New Hampshire share for

1951

—

& Co. Inc. bid 100.20 for the bonds

construction.

bonds

petition biddnig. Probable bidders: The First Boston
Corp.; Kidder, Peabody & Co. and White, Weld & Co.

Offering has been deferred.
.

Bonds

July 17,

ceeds—For

new

mortgage

New

1951

Kingfisher Water Co., Kingfisher, Okla.
Dec. 27 (letter of notification) 250 shares of 5% cumumative preferred stock. Price—At par ($100 per share).
Proceeds—For

Co.

of first

(par $10). Price—At not
Underwriter—None.
Proceeds

Bonds

1, 1951,

Expected week

Power

$5,500,000

Pierce, Fenner & Beane. Proceeds—To repay bank loans
and for expansion program.

stock

1951

Monongahela Power Co

March

retire $40,000,000

filed

Mountain States Power Co.

Jan. 11

(3/26-31)

5 filed
1,000,000 shares of common stock (par
Price—To be supplied by amendment. Underwriter
.—The First Boston Corp., New York. Proceeds—From
sale of stock, together with other corporate funds, to

Nash

—Equip. Trust Ctfs.

Mississippi Power Co

$10).

States

Mountain

April 1, 1981. Underwriters—To be determined by com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; Kidder, Peabody & Co. Proceeds
—To repay bank loans and for new construction.

April 19, 1951
Illinois Central RR

March 27.

Jones & Laughlin Steel Corp.

•

Probable

Public Service Co. of Oklahoma

Bids—Tentatively scheduled to be received

(EST)

noon

March 20.

Underwriters—To be determined by competitive bidding.

(par. $100). Underwriters—To be determined by com¬
petitive bidding. Probable bidders include Glore, Forgan
& Co.; Kidder, Peabody & Co.; Merrill Lynch, Pierce,
Fenner & Beane and White, Weld & Co.
(jointly); The
First Boston Corp.; Union Securities Corp. and Salomon
Bros. & Hutzler (jointly). Proceeds—From sale of pre¬
ferred, together with proceeds to be received from the
sale of 350,000 additional common shares to General
Public Utilities Corp., the parent, will be used for new
construction.

Co., Casper, Wyo.
Feb. 21 (letter of notification) 100,000 shares of common
stock (par 10 cents). Price—60 cents per share. Under¬
writer—Lasser Bros., New York. Proceeds—To Gordon
R. Kay, the selling stockholder.

•

Feb. 21 filed 40,000 shares of cumulative preferred stock

(EST)

a.m.

March 7 filed 150,000 shares of common

Common

April 9, 1951

Jersey Central Power & Light Co.

to 11

March

bidding

(no par).

Morton Oil

—Bonds

Jersey Central Power & Light Co.,

working capital.

ceived at

1951

Consumers Power Co., 11 a.m.

White, Weld
(jointly); Equitable Securities
Corp.;, The First Boston Corp.; Otis & Co., Salomon
Bros. & Hutzler; Harriman Ripley & Co.,
Inc.; Kidder,
Peabody & Co.; Glore, Forgan & Co. Proceeds—For ex¬
pansion program. Bids—Tentatively scheduled to be re¬
& Co.

Common

New Hampshire Fire Insurance Co

27,

Utilities, Inc. (3/20)
450,000 shares of common stock

Securities Corp. (jointly); Blyth & Co., Inc.; Lehman
Brothers; Kidder, Peabody & Co. and Merrill Lynch,
Pierce, Fenner & Beane (jointly); The First Boston
Corp. Proceeds—To invest $8,000,000 in additional com¬
mon stock of Arkansas Power & Light Co., a subsidiary,
and for new construction. Bids—Expected to be received

1951

Jones & Laughlin Steel Corp.__

March

Jersey Central Power & Light Co. (3/27)"
Feb. 21 filed $1,500,000 first mortgage bonds due in 1981.
Underwriters—To be determined by competitive
Probable bidders: Halsey, Stuart & Co. Inc.;

1951

26,

filed

Underwriter—To be determined by competitive bidding.
Probable bidders: Union Securities Corp. and Equitable

Great Northern Ry., noon (EST)—Equip. Tr. Ctfs.
March

Gulf Sulphur Co.

(letter of notification) 42,800 shares of common
(par 10 cents). Price—At the market (estimated

Common

March 22,

„

Water

Co., Washington, D. C.

stock

Products Mfg. Co. Inc.
(letter of notification) 25,000 shares of class A
common
stock (par $1). Price—$5 per share.

Mexican

1951

Mills, Inc

San Fran¬
Office—333

Office—Wolfe and Jackson Sts., Fredericksburg, Va.

ital.
'

Central Illinois Electric & Gas Co.__—..Preferred

Proceeds—For

Proceeds—For organizational expenses and working cap¬

(EST)__Preferred

(P.) Co

Corp.

purposes.

Underwriter—James T. DeWitt &

chase of merchandise

Efrein

Feb.
March

Securities

corporate

Metal
Feb.

Oregon Washington Telephone Co.-___Pfd. & Com.
a.m.

Proceeds—For

Montgomery Street, San Francisco, Calif.

Debentures

Lorillard

the

of California
(letter of notification) 5,000 shares of first pre¬
ferred stock, 5% series.
Price—At par ($20 per share).

Dec. 4

Carolina Power & Light Co._____

(letter of notification) 15,000 shares of common
Price—At par ($10 per share).
Underwriter—
and

Mercantile Acceptance Corp.

1951

Pennsylvania Power Co., 11

Steel Corp.

purposes

Proceeds—To retire debt and for working capital.
Office—416 Grand Ave., Wausau, Wis.

Middle South Utilities, Inc., 11 a.m. (EST)-—Com.

par

corporate

(letter of notification) 7,000 shares of common
par
($10 per share).
Underwriter—

Price—At

None.

(EST)__Eqp. Tr. Ctfs.

19,

American Hospital Supply Co.__

Lorillard (P.)

Proceeds—For

Israel
Jan.

Common

Illinois Central RR., noon (CST)___Equip. Tr. Ctfs.

Office—601—39th

($100 per share). Underwriter—
working capital. Office—234 West
Terrace, Kansas City, Mo.
* v

53rd

Bldg., Easton, Md.

Brewing Co., -Wausau, Wis.

Underwriter—Guardian
March

Indemnity, Inc., Kansas City, Mo.
26 (letter of notification) 1,000 shares of common

None.

Mathie-Ruder

stock.

Pacific Gas & Electric Co

Income

Feb.

•

1951

15,

Uxbridge Worsted Corp

March

■/'.

Street, Brooklyn, N. Y.

tal. Office—National Bank

Common

Seaboard Air Line RR., noon

Proceeds—To expand and increase

production and

lative preferred stock (par $100). Price—$102.50
per
share. Underwriter—None. Proceeds—For
working capi¬

Feb.

March

Maryland Credit Finance Corp., Easton, Md.
Feb. 19 (letter of notification) 2,100 shares of 6% cumu¬

1951

General Telephone Corp

15, 1954 (in denominations of
Price—At par and interest.

each).

stockholder.

Common
Common

Honeybugs, Inc., Brooklyn, N. Y.
28 (letter of notification) $250,000 of
3-year 5%

$1,000

(letter of notification) 4,800 shares of common
(par $100). Price—At market. Underwriter—Stillman, Maynard & Co., New York. Proceeds—To selling

Common

14,

stock

Piedmont Natural Gas Co., Inc

Feb.

Underwriter—None.

Maine Central RR.

1951

Prospect, Ltd.

Financing indefinitely delayed.

unsecured bonds due Feb.

12,

March

Holeproof Hosiery Co., Milwaukee, Wis.
Dec. 7 (letter of notification) 20,000 shares of common
Btock (par $5). Price—$14 per share. Underwriter—None.
Proceeds—For working capital. Office—404 West Fowler
St., Milwaukee, Wis.
•

of 5% gold bonds and to reduce bank loans.

Laboratories, Inc

Canadian

(par $5).
Jenks, Kirkland & Co., Philadelphia, Pa. Proceeds—To*
increase capital and surplus in order to offer additional
lines of insurance, including automobile casualty and

liability

8, 1951

Ry., noon (EST)__Equip. Tr. Ctfs.

Feb.

gage 5% .serial bonds due

Hamilton

Lorillard

Feb. 28 filed

writer—Glore, Forgan &

Feb.

(P.) Co., New York (3/20)
$15,000,000 of 25-year debentures due March
1, 1976. Price—To be filed by amendment. Underwriters
—Lehman Brothers and
Smith, Barney & Co., New York.
Proceeds—To pay at maturity (Aug. 1,
1951) $6,195,450

filed

(par $1).

•

(1051)

common

stockholders of record March 21

share for each nine shares then held;

about April 4. Price—To

Underwriters—Lehman

Barney &

Co., New York.

rights

be filed by amend¬

Brothers

Proceeds—To

and

Smith,

reduce

bank

To be

supplied by amendment. Underwriter—None.

Pro¬

ceeds—For construction program.

Oregon-Washington Telephone Co. (3/20)
14
(letter of notification)
1,500 shares of 5%
cumulative preferred stock (par $100) and 5,000 shares of
common stock
(no par). Price—$100 per share for the
Feb.

Continued

page

(1052)

The Commercial and Financial Chronicle

Continued from page 39

•

struction work.

Pacific Gas & Electric Co. (3/19)
Feb. 21
filed
1,419,562 additional shares
stock

(par $25)
March
13, 1951

rights to expire

stockholders

common

the

shares held

seven

basis

one

for

each

expected

to open March 19.
Price—To be supplied
Underwriter—To be supplied by amendment. May

later.

be Blyth & Co., Inc., New York.

plied toward

>'/■:■/

Pact Gas

Co., Cushing,
(letter of notification)

serial

bonds

derwriter—R.

due

■^^;
Okla.
$50,000 of first mortgage

1961-1971.

Price—At

100%.

Un¬

Edwards,

Inc., Oklahoma City, Okla.
Proceeds—To retire certain capital stock and for con¬

struction.

Office—212

East

Palestine Economic
Feb.

Broadway, Cushing, Okla.

filed 200,000 shares of common stock

Price—$28

per

For further

development of Israel industry.

Pan

share.

Underwriter—None.

American Milling Co.,

Jan. 24 filed 200,000 shares of

(par $25).
Proceeds—

($1 per share). Underwriter—None. Proceeds—To
purchase machinery and equipment, to construct a mill
corporate purposes.

Co., Chicago, III.
Feb. 19 (letter of notification) 1,500 shares of
preferred
stock and 1,500 shares of common stock. Price—The
pre¬
ferred at $100 per share and the common at

per

share. Underwriter—None. Proceeds—For
working capi¬
tal. Office—333 No. Michigan
Ave.,

Chicago, 111.

Pennsylvania Power Co.
16

filed

40,000 shares
Underwriter—To be

(3/20)
of

stock

determined

of preferred

stock, together with proceeds from sale to

Ohio

Co.,
$30)

Edison

(par

parent, of 40,000 additional
for $1,200,000 cash, will be

common

used

finance in part the company's construction
program for
1951. Bids—Expected to be received
up to 11 a.m. (EST)
March 20.

Additional

additional $7,000,000 of
the end of 1952.

Pepsi-Cola

Financing—It is estimated

financing will be required before
D. C.,

Feb. 20

(letter of notification) 50,000 shares of common
(par 10 cents). Price—40 cents per share. Under¬

writer—Ferris

go to

& Co., Washington, D. C. Proceeds—To
Samuel Schwartzman, the selling stockholder.

Piasecki

Helicopter Corp., Morton, Pa.
Feb. 2 (letter of
notification) not to exceed 5,000 shares
•of capital stock. Price—At market
(approximately $35
per share). Underwriter—None. To be offered
through
regular brokers acting as agent for the seller. Proceeds—

Felix

consummated.

Pont, Jr., the selling stockholder. Not
Registration subsequently withdrawn.

•

Piedmont Mines, Inc.,
Hilltop,
Feb. 26 (letter of
notification) 1,698

shares of

common

and Victor L.
Gould, 446 shares to be issued to Dr. R. L.
Crudgington for a mill purchased and erected on
mining
property, 320 shares or less to be issued for services

rendered by individuals.
"

Piedmont

Natural

Gas

Feb.

Co.,

Inc.

(3/12-17)

20 filed 100,000 shares of
common stock
to be offered to common
stockholders at rate of
for each 2% shares held.

(par $1)
one

Price—$4.50 per share Under¬
& Co., New York. Proceeds — To
operate six lateral pipe lines.
Expected

writer—White, Weld
and

week of March 12 for

•

10-day standby.

Potomac Edison Co.
March 2 filed

by competitive bidding. Probable
bidders: Halsey,
tx,
Co. Inc.; W. C.
Langley & Co. and The First

Kidder, Peabody & Co. and Alex
(jointly); Glore, Forgan & Co.; Salomon
Bros. & Hutzler; Harriman
Ripley & Co., Inc., and Union
Securities Corp.
(jointly); Lehman Brothers; Equitable
Securities Corp.; Drexel & Co.
Proceeds—From sale of
bonds, together with proceeds from sale of
common

200,000 shares

stock to West Penn
Electric Co.

$4,000,000, will be used for expansion
—Expected on April 3.

Prospect Exploration,

$:i

per

York.

share.

Proceeds

general

(parent) for

program.

Offering

(3/12-17)

Underwriter—White,

working

Canadian

company

purposes.

Prospect, Ltd.

for

Name

Weld

Co., Newworking capital and
to

changed

•

River Brand Rice
Malls, Inc., N. Y. (3/21)
Feb, 28 filed 245,500 shares
of common stock
(par $3.50).
Price
To be supplied
by amendment (probably about
$15 per share).

York.

stock
to

stockholders of record Feb. 21, other than New Eng¬
System, owner of 93% of Salem stock, who
will subscribe for an additional 28,092% shares.
Rights
land Electric

expire

March

None.

16.

Price—$15

Proceeds—To total

per

share.

Underwriter—

$453,540, will be applied to the

payment of indebtedness and to addition to plant.
Saul

Feb.
to

(B. F.)

Co., Washington, D. C.
(letter of notification) $51,000 promissory notes

reimburse

company

for

loans

made

Seaboard

Underwriter—Lee Higginson Corp., New
Proceeds—To 16 selling
stockholders.

•

but

Bear,

for

Thursday, March 8, 1951

dent,

the

will offer

Stearns & Co., New York,

the

seller

the

New

counter market. Proceeds—To George

selling

stockholder.

York

over-the-

M. Bunker, Presi¬

offering

This

has

been

withdrawn.

r,
•

Trango Corp., New York
March 1 (letter of notification) $200,000 of 10-year 3%
secured

notes, to be negotiated with friends and business
acquaintences.
Price — At
par.
Underwriter — None,

Proceeds—For working

capital.

Office—270 Park Ave¬

New York, N. Y.

nue,
•

Ulrich

stock

Products Corp., Roanoke, III.
(letter of notification) 1,000 shares of common
(no par).
Price—$100 per share. Underwriter—«

None.

Proceeds—For working capital.

Feb.

•

Union

Feb.

Corp.

•

Universal

Feb.

stock.

(letter

President, who is the selling

Price—At

400

share).

Lerchen,

Executors

Co., Columbia, S. C.
(letter of notification) 5,000 shares of common
Price—$20 per share. Underwriter—None. Pro¬

ceeds—To nrovide additional capital and
surplus. Address
O. Box 1199,
Columbia, S. C.

—P.

Uranium

Mines Ltd.
(Canada)
Nov. 30 filed 560,000 shares of capital stock. Price—At
per

share). Underwriter-Optionee—Robert Irwin
Proceeds—For

commissions, explora¬

tion and development
expenses, and working capital.
•

Southern

California

Petroleum

•

Barth

Co.,

San

Francisco,

Calif.

Proceeds—For working capital.
Southern

Co.

per

Institute of Technology, Inc.
(letter of notification)-3,000 shares of class

common

stock

(par $5).

Underwriters—To be determined by competitive bidding.
Probable bidders: Morgan Stanley &

Co., Kidder, Pea¬
body & Co. and Merrill Lynch, Pierce, Fenner & Beane
(jointly); Union Securities Corp. and Equitable Securi¬
ties Corp. (jointly); Blyth &
Co., Inc.; Lehman Brothers;
Ripley

Co.,

Inc.

Proceeds—To

purchase

stock of the following subsidiaries—Alabama
Co., Georgia Power Co., Gulf Power Co. and
Mississippi Co.—who will use the funds for construction
common

Power

Bids—Expected to be opened at 11:30 a. m.
April 3 at company's office, 20 Pine St., New
York, N. Y.
,
expenses.

(EST)

Feb.

Industries

Corp., Mobile, Ala.
(letter of notification) 2,000 shares of common

particularly

Ewin

Engineering

Corp.

Waterman Bldg., Mobile, Ala.

Office

—

Standard Factors Corp., New York
Feb. 23 (letter of notification) $100,000 of 5% subordi¬
nated debentures due Dec. 31,
1956, and 15,000 shares
of

common stock
(par $1). Price—$950 per $1,000 de¬
benture, and cash purchaser thereof may purchase 150
shares
of
stock
at
$2.70
per
share.
Underwriter—
Crowell, Weedon & Co., Los Angeles 14, Calif. Proceeds
—For working capital.

Mortgage Co., New Ulm, Minn.
5 filed $1,500,000 of accumulative
savings certifi¬
cates, series 1207-A at $95.76 per $100 principal amount
and $15,000,000 of accumulative
savings certificates, se¬
ries 1217-A at $85.68 per $100

principal amount.

writer—None.

Business—Investment.

•

Stein

March

Roe

filed

Farnham

75,000 shares

Price—At market.

Fund, Inc.
of capital stock

Underwriter—None.

Proceeds—For

non-

($1 per share). Underwriter
None. Proceeds
For
working capital. Office—14256 Wyoming Ave., Detroit,
—

Mich.

Tennessee Gas Transmission

March

Co.

filed

100,000 shares of cumulative preferred
stock (par $100) and 400,000 shares of common stock
(par $5). Price—To be supplied by amendment. Under¬
writers—Stone
Weld &
and

Feb.
stock

for

Webster

Securities

Corp. and White,
Co., New York. Proceeds—To repay bank loans
expansion of pipeline.

Services, Inc.
9 (letter of notification) 2,000 shares of common
(no par). Price—$20.50 per share. Underwriters—•

Barron McCulloch and
Ft.

Worth, Texas.

(par $5).

Wm. N. Edwards & Co., both of
H. McLemore,

Proceeds—To Robert

Vice-President, the selling stockholder.
Box 11307, Ft. Worth, Texas.

Address—P. O.

Services, Inc., Fort Worth, Tex.
(letter of notification) 1,500 shares of common
(no par). Price—$20.50 per share. Underwriter—•
Barron McCulloch, Ft. Worth, Texas; and Wm. N. Ed¬
wards & Co., Ft. Worth, Tex.
Proceeds—To George A,
Jaggers, Vice-President, who is the selling stockholder.
13

stock

Jan.

stock

(no par) to be offered to its stockholders for sub¬

filed

scription

Price—At

the

Market.

320,000

additional

the basis of

one

additional

ten shares held about March

privilege;
shares

rights

8, with
expire March

be offered

common

share for each

oversubscription
26.
Unsubscribed

employees of companies in the
Price—$27 per share.
Un¬

West Penn Electric System.

derwriters—Harriman

Ripley & Co., Inc. and associates

March 7 awarded the underwriting of this issue.
Proceeds—To purchase additional equity securities of

were

two of its

Potomac
•

subsidiaries—Monongahela Power Co. and The
Co. Statement effective Feb. 21.

Edison

Westerly

Feb.

(R. I.) Automatic Telephone Co.
(letter of notification) 7,000 shares of common

stock

be offered to stockholders of record March T,
rights to expire on March 27. Of these shares,
4,435% are to be subscribed for by New England Tele¬
phone & Telegraph Co. Price—At par ($25 per share).
to

with

Underwriter

—

None. .Proceeds

—

loans and for plant improvements.

V,/ *

Westerly, R. I.
•

To repay

short term
Office—38 Main St.,

■/'.!,/.

Worcester County Electric Co.
5
filed
$12,000,000 of first

March

bonds,

mortgage

series B, due March 1, 1981. Underwriters—May be de¬
termined
by competitive bidding.
Probable bidders:

Halsey, Stuart & Co. Inc.; Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane; Kidder, Peabody & Co.;
The First Boston Corp.; Harriman Ripley & Co. Inc.
Proceeds—To repay bank loans and advances and for
new
construction. Bids—Expected early in April.

Alabama Power Co.
Feb.

(9/11)

6, it

was stated that company contemplates
sale of $10,000,000 first mortgage bonds.

& Co.;

Shields

issuance
Under¬

Blyth & Co., Inc.; Harriman Ripley & Co., Inc.;
& Co. and Salomon Bros. & Hutzler (jointly);

Drexel &

Co.; Union Securities Corp. and Equitable Se¬
Corp. (jointly); Kidder, Peabody & Co.; The
Corp.; Lehman Brothers. Proceeds—For ex¬
pansion program.
Bids—Tentatively expected to be
opened on Sept. 11. Registration—About Aug. 10.
curities

First Boston

Appalachian Electric Power Co.
Feb. 5 it

was

stated the company

about

$18,000,000

June.

Underwriters—To

Underwriter—

first

plans to issue and sell
bonds in May or

mortgage

determined

First

Probable bidders:
Boston

Proceeds—For
common

by competitive
Halsey, Stuart & Co. Inc.;
Kuhn, Loeb & Co. and Unicn Securities Corp. (jointly);
bidding.

The

Trailmobile Co., Cincinnati, Ohio
Feb. 15 (letter of i
notification) 3,000 shares of
stock

Jet

writers—To be determined by competitive bidding. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; Morgan Stanley

cumulative convertible preferred stock (convertible into
common stock
(par $1) share-for-share). Price—At oar

•

Welex

Underwriter—None. Pro¬
Office—4810 Calvert Road,

College Park, Md.

and

Corp., Detroit, Mich.
(letter of notification) 100,000 shares

share,

per

Prospective Offerings
(par $25).

Superdraulic

Feb.

Price—$100

Under¬

investment.
•

stock.

stock. Price—At par $100 per share. Underwriter—None.
Proceeds—For additional working capital for subsidi¬

aries,

West Penn Electric Co.

(4/3)

March 2 filed 1,000,000 shares of

Harriman

Washington

Feb.

(letter of notification) 15,750 shares of common
stock (par $2). Price—$19.25 per share for
13,250 shares
and $17 per share for 2,500 shares.
Underwriter—For

shares,

R.t Ed¬

Welex Jet

Corp.

Feb. 23

13,250

Christine

(par 50 cents).
Price — At market
share). Underwriter—Straus & Blosser,
Proceeds—To John A. Roberts, Chairman
the Board, who is the selling stockholder.
$3

ceeds—For working capital.

South Carolina Insurance

($1

share).
Mich,

stock

common

Martin of Toronto.

Estate

per

Detroit,

Works, Wilkes-Barre, Pa.
(letter of notification) not to exceed 30,000 shares

(about
of

Worth, Tex.

par

Co.,

Iron

Feb.

State

Vulcan

Proceeds—To drill well and for working capital.
Office—203 Majestic Bldg., Fort

South

wells.

(par $10). Price—At market (about $33

Underwriter—Watling,

common

Underwriter—

None.

stock.

test

Chicago, 111.

Co., Inc., Ft. Worth, Tex.

notification)
par
($50 per

and

Co., Inc., Dearborn, Mich.
(letter of notification) 9,000 shares of common

stock

drill

Products

wards.

Shore Line Oil

Feb.

Proceeds—To

—None.

•

in exchange for 2,320 acres of
Price—$100 per share.
Underwriter

oil and gas leases.

Jan. 30

Mann,

Oil Co., Inc., De Witt, Neb.
notification) 960 shares of common

to public and 240 shares

—To

stock, to be offered 10 shares to incorporators, 710 shares

(letter of notification) 12,000 shares of class A
common stock
(par $1). Price—$5.50 per share. Under¬
writer—Barrett Herrick & Co., New York.
Proceeds—
Frederic

Standard

(letter

Proceeds—To

Container

March 1

—

Ltd.

*70,000 shares of common stock (par $1),
75,000 will be sold for the account of
the com¬
95,000 shares for selling stockholders Price

of which
pany and

Gas Light Co., Salem, Mass.
(letter of notification) 2,143% shares of capital
(par $10), to be offered on a two-for-three basis

State Bond &

Boston Corp.
(jointly);
Brown & Sons

share for each

Feb.

(4/3)

$10,000,000 first mortgage and collateral
trust bonds due April
1, 1981. Underwriter—To be deter¬
Stuart

one

Salem

Feb.

Southern

(par $100), of which 933 shares are to be issued
in exchange for
promissory notes held by Ernest Watson

mined

Co.

held; rights expire March 19. Price—$37 per
Underwriter—W. E. Hutton & Co., Cincinnati, O.
Proceeds—For expansion program and working capital.

Ariz.

stock

construct

Steel

48,419 additional shares of common stock
offered for subscription by common stock¬

the

share.

•

Bottling Co. of Washington,

Inc.

stock

now

four shares

Feb. 28

preferred

(par
by competi¬
tive bidding. Probable bidders:
Kidder, Peabody & Co.
and White, Weld & Co,
(jointly); Glore, Forgan & Co.
and W. C. Langley & Co.
(jointly); First Boston Corp.;
and Blyth & Co., Inc.
(jointly); Lehman Brothers; Smith,
Barney & Co.; Harriman Ripley & Co., Inc.; Merrill
Lynch, Pierce, Fenner & Beane. Proceeds—From sale

$100).

filed

stockholder.

Park-Ad

Feb.

None,

holders of record March 5 at rate of

•

Price—At

stock.

par

in Mexico and for general

Co.

Corp., Washington, D. C.

Las Vegas, Nev.

common

(par $10)

•

Corp., New York

Haas

Rotary Electric
Feb.

be ap¬

construction, estimated to cost $130,-

new

000,000 in 1951. ■/;,
Jan.

Proceeds—To

(letter of notification) 900 shares of 4% pre¬
ferred stock (par $100).
Price—At market (about $106
per share).
Underwriter—None, but F. S. Moseley &
Co., Philadelphia, Pa., will handle sales.
Proceeds—To
Otto Haas, the selling stockholder.

common

record

(with an oversubscription privilege);
April 4, 1951. The subscription period

Rohm

March

preferred and $22 for the common. Underwriter—Con¬
rad, Bruce & Co., Portland, Ore. Proceeds—For con¬

Corp.;

property

Harriman
expansion

Ripley & Co., Inc.
and improvements,

which company may expend up to
the next three years.

$90,000,000 during

Volume 173

Number 4992

The Commercial and Financial Chronicle

(1053)
Arkansas
Feb.

sale of

Louisiana

$27,500,000

ceeds

Gas

announced

was

plans issuance and
first mortgage 3% bonds, the pro¬

new

used

Co.

company

bank

loans

($20,125,000 at
Nov. 30, 1949), to retire $3,500,000 funded debt incurred
repay

in 1950 and for construction program. The sale of these
bonds is contingent upon approval by SEC of Arkansas

Natural

Gas

companies.

Corp.'s

plan

split itself

into

two

Corp. and Lazard Freres & Co.

(jointly);

Union Securities Corp.; Smith, Barney & Co.; Equitable
'Securities Corp.
Arkansas

Feb
basis

tion

Power

000,000 in 1951.

City Electric Co.
Jan. 15 it was stated tentative plans call for the raising
of about $2,250,000 through an offer of additional com¬
stock

l-for-10 basis held around

May

Probable underwriter: Union Securities Corp.
will be used

June.

Proceeds

to pay,

in part, construction expenditures,
which, it is estimated, will total about $5,400,000 in 1951.
Atlantic City

Electric Co.

Jan. 29, it was announced that the stockholders will

April 10 vote
cumulative

proposal to increase the authorized

preferred

from

stock

100,000

150,000

shares.

Previous preferred stock financing was handled
private placement through Union Securities Corp.

30,

Edison

Florida

was

March 29

Toner, President, announced that com'pany plans to issue $32,000,000 of securities to aid in
financing its construction program, which, it estimated,
will cost $65,300,000 through 1954.
He added that no
common stock financing is planned until 1955.

Co.

Rains, President, revealed that the com¬
pany is considering a plan to refinance its 7% cumula¬
tive participating preferred
stock (par $100), about
50,000 shares outstanding. These shares are redeemable
at 110 and accrued dividends. Holders may be offered in
exchange
mon

new convertible preferred stock, plus com¬
Company being advised by Blyth & Co., Inc.,

stock.

and Fahnestock & Co.

Carolina Natural

Gas

Corp., Charlotte, N. C.
Feb. 20 a fourth amended application was filed with the
SEC for authority to build a natural gas pipeline system
.

serve

certain

in North and South Carolina. Esti¬

areas

mated cost of the proposed

i financed

by the sale

facilities is $3,595,295, to be
of first mortgage bonds and the

issuance of junior securities.

Underwriters
R. S. Dickson & Co., Charlotte, N. C.

may

by competitive bidding. Probable bid¬
include Kidder, Peabody & Co. and Merrill
Lynch, Pierce, Fenner & Beane (jointly); Salomon Bros.
& Hutzler; Harriman
Ripley & Co., Inc.; Equitable Secur¬
ities Corp.; Union Securities
Corp. Probable under¬

are

Co.

Inc.; Morgan, Stanley & Co.; Kuhn, Loeb & Co.;
Bros.
& Hutzler;
Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane and White, Weld & Co.
(jointly). Probable bidders for common stock, in event
of competitive bidding: Morgan Stanley & Co.; Goldman,
Sachs & Co. and Union Securities Corp. (jointly); Mer¬
rill Lynch, Pierce, Fenner & Beane; Lehman Brothers;
Shields & Co. and R. W. Pressprich & Co.
(jointly).
Salomon

Proceeds will be used for expansion program.
Southern

Ohio

Electric

Co.

Feb. 19, J. B. Postpn, Chairman and President, announced

contemplates issuance

company

stock

common

and

sale

during the first half of 1951.

additional
If compet¬

itive, probable bidders may include Dillon, Read & Co.,
Inc.; Lehman Brothers and Kidder, Peabody & Co.
(jointly); The First Boston Corp. Proceeds—For expan¬
Commonwealth
10

$181,000,000

Edison

additional

contemplates
through the sale of

debentures:

Proceeds

are

nor

determined.

the time of

Probable

the

bidders

new

to be used for construction program.

Consolidated Natural
Jan.
of

was

between

reported

$50,000,000

Gas

Co.

contemplates issuance
$60,000,000 of convertible

company

and

Underwriters—To be determined through
competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; White, Weld & Co. and Paine, Webber, Jack¬
son Curtis (jointly); Dillon, Read & Co. Inc.; The First
Boston Corp.; BlytH & Co., Inc.; Morgan Stanley & Co.
debentures.

Proceeds—To finance construction program.

Offering—

Expected late in April.
Denver

Rio

Grande

Western

RR.

Feb. 20 the company was reported to be

considering is¬
probably in May, of about $40,000,000
first mortgage bonds.
Underwriter—To be determined
suance

•.

Green

Mountain

Stuart & Co.

Power

and sale,

Estabrook &

Inc.;

Jan. 31, Edward F. Barrett, President, said an increase
in the number of common shares is in prospect to assist
in financing construction. These shares will be first
offered to stockholders.

shares.

Mississippi Power Co. (7/17)
Feb. 6, it was reported that this company contemplates
the issuance and sale of $4,000,000 of preferred stock
(par $100). Underwriters—To be determined by competi¬
tive bidding. Probable bidders: W. C. Langley & Co.,

Glore, Forgan & Co. and Sterne, Agee & Leach (jointly);

Feb. 6, it was reported that this company may sell se¬
curities "for new money" this year. In event of preferred

Blyth & Co., Inc.; The First Boston Corp.; Kidder, Pea¬
body & Co. and White, Weld & Co. (jointly); Lehman

Brothers; Union Securities Corp. and Equitable Securi¬
ties Corp. (jointly); Merrill Lynch, Pierce, Fenner &
Beane.
Proceeds—For
construction
program.
Bids—
Tentatively expected to be received on July 17. Regis¬
tration—Scheduled

for

June

15.

yet been formulated.

Harrison-Rye Realty Corp., N. Y.
are invited for purchase of 5,000 shares of class A
preferred stock (no par value) of the above company
from Commodore Hotel, Inc., 42nd St. and Lexington
Ave., New York 17, N. Y.
Bids

Power Co.

Feb. 6, it was reported that this company will raise $18,-

500,000 through sale of securities this year. It is believed
this financing will be through sale of mortgage

that

bonds and preferred stock. Bond financing may be pri¬

while preferred stock may be underwritten by
Wegener & Daly Corp., Boise, Idaho. Proceeds would go
toward expansion program,
which, it is estimated, will

vate,

cost

Smith, Barney & Co.

Corp., Montpelier, Vt.

new

How much stock will be issued

has not yet been determined. Probable bidders may in¬
clude W. C. Langley & Co.; Kidder, Peabody & Co.;

Salomon

104,094 shares of new common stock (par $10) through
underwriters, subject to the right of present preferred

Idaho

Underwriters—Probably Straus & Blosser;
Co., and Dallas Rupe & Son.
Proceeds—

Long Island Lighting Co.

March 22 for

Feb. 23 amendment to plan for reorganization was filed.
This plan, among other things, provides for sale of-

definite plans have not

For expansion program.

(EST)

ties Corp.; Union Securities Corp. and Salomon Bros. &
Hutzler
(jointly); Harriman Ripley & Co., Inc. But

been

stockholders.

Bros. & Hutzler; iWood, Struthers & Co.
•

16, E. B. Germany, President, announced that com¬
will raise $5,000,000 through a common stock offer¬
ing within the next 120 days to be first made to common

905, 2 Wall St.,
New York 5, N. Y., of $10,740,000 equipment trust cer¬
tificates to be dated April 1, 1951 and to mature semi¬
annually from Oct 1, 1951 to April 1, 1966, inclusive.
Halsey,

stock.

pany

the purchase from the company, at Room

bidders:

Shore

Jan.

and

(3/22)

Ry.

re¬

Lone Star Steel Co.

per

Halsey, Stuart & Co. Inc.; The
Corp.; Glore, Forgan & Co.; Morgan Stanley

bonds

program.

Pipe Line Co., Cleveland, Ohio
Feb. 15 FPC authorized this company to acquire, con¬
struct and operate pipeline facilities which will
carry
natural gas into northeastern Ohio for the first time.
Financing plan includes the issuance
and
sale
of
$1,075,000 in bonds to Stranahan, Harris & Co., Inc.,
Toledo, O., $225,000 in preferred stock and $150,000 in

stockholders follow¬

stock issue, probable bidders may be Kidder, Peabody &
Co. and White, Weld & Co. (jointly); Equitable Securi¬

has

& Co.

Great Northern

Lake

plans to offer

for

financing

First Boston

•

the company's
expansion

•

Regis¬

Gulf Power Co.

company

financing

Neither the nature

used for

was

$6,500,000 31/2% bonds due Dec. 1, 1965, through the is¬
suance of possibly
$28,000,000 of new bonds. Probable
bidders: Halsey, Stuart & Co. Inc.; Goldman, Sachs &
Co.; White, Weld & Co.; Lehman Brothers and Merrill
Lynch, Pierce, Fenner & Beane (jointly).,:

share to
be voted upon March 12. It is planned to raise
$6,000,000.
Traditional underwriter: Merrill Lynch, Pierce, Fenner
& Beane, New York. Proceeds will be used for expansion.

Bids will be received up to noon

Lehman

time this year to finance its 1951 construction

common

company

common

ing proposed 2-for-l split-up of' 497,201
change in par value from no par to $12.50

Co.:
the

announced

was

securities.

stock to

stock:

During the current fiscal year, he said,
about $10,000,000 may be spent for new
construction, of
which more than $4,000,000 had been
spent up to Dec.
31, 1950. It was also stated that the company is giving
serious consideration to early
refinancing of its out¬
standing $19,000,000 3V2% bonds, due Feb. 1, 1965, and

(6/5)

stockholders to subscribe for the

sion program.

Jan.

common

Beane

quirements.

& Co.; Lehman Brothers; Harriman
Ripley &
Co.-Inc.; Shields & Co. and Salomon Bros. & Hutzler
(jointly); Blyth & Co., Inc. and Kidder, Peabody & Co.
(jointly); The First Boston Corp.; Kuhn, Loeb & Co.;
Union Securities Corp. and Equitable Securities Corp.
(jointly). Proceeds—For construction program. Bids—

Probable
&

some

Drexel

additional

30, R. W. Otto, President, stated it appears likely
the company will sell additional
mortgage bonds

that

reported company may issue and sell
$20,000,000 of new first mortgage bonds. Underwriters—
To be determined by competitive bidding. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Morgan Stanley & .Co.;

June

to be

Jan.

was

Granite City Steel Co.
26 it was announced that

Fenner

and Stern Bros. & Co.

common

Laclede Gas Co.

Expected this Spring.

Pierce,

stockholders). The bond
placed privately through
(Inc.), Chicago, 111. The proceeds

year

Central Republic Co.

Mineral Co.

Tentatively expected to be opened
tration—Scheduled for April 4.

Lynch,

Probable bidders for

financing early last

and the directors later this year may seek some
new
capital." Traditional underwriter—Esta-

Merrill

current sale of 10,950 shares of
$5 cumulative preferred
stock (no par) at $105
per share plus accrued dividends
and 133,812 shares of common stock
(par $5) at $15 per
share (the. latter to common

include

Columbia Gas System, Inc.
Dec. 7 it was reported that corporation may issue and
Bell $35,000,000 of new securities in the Spring or early
Bummer.
Probable bidders for debentures: Halsey, Stuart

Columbus

expansion
$25,000,000,

outstanding shares, par $2.50. G. H. Chambers, VicePresident, stated that the company is committed to a
policy of expansion. "This," he said, "will require more

and

Kansas-Nebraska Natural Gas Co., Inc.
15, it was announced that company plans to raise
$4,200,000 through the sale of debentures or first mort¬
gage bonds in the spring of 1951 (this is in addition to

Feb. 15 stockholders approved an increase in authorized
common stock from 100,000 to 300,000 shares to
provide
for the payment of a 200% stock dividend on the
57,995

Jan.

stock, and the remainder common
Probable bidders for preferred stock:

Brothers; Glore, Forgan & Co.; Harriman Ripley & Co.,

$25,000,000 of
rights may be given to
stockholders to purchase additional common stock, pos¬
sibly by the end of 1952 or early 1953. Traditional under¬
writers: Kidder, Peabody & Co.;
Mitchum, Tully & Co.

Co., New York.

bonds.

Inc.

Later it is probable

Georgia Power Co.

and

(jointly).

program which will involve well in excess of
to be
financed, in part, by the issuance of

securities, including from $5,000,000 to $8,-

preferred

Feb.

Machinery & Chemical Corp.
Jan. 29, P. L. Davies, President, announced

to raise $6,-

Corp.

(jointly); Union Securities Corp.

common
stock. Kidder, Peabody & Co. and
Lynch, Pierce, Fenner & Beane.

Food

brook

new

Hutzler

writers for

debentures.

(4/19)

Glore, Forgan & Co. and W. C. Langley & Co.
(jointly):
Smith, Barney & Co.; The First Boston Corp.;
White,
Weld & Co., Shields & Co. and Central
Republic Co.
(jointly); Harriman Ripley & Co., Inc.; Salomon Bros. &

may

Jan.

stock

to be determined

Merrill

RR.

was reported company expected

com¬

(par $7.50) from 1,600,000 to 2,500,000 shares
preferred stock (par $100) from 120,250,000 shares. Underwriters for preferred stock

000 to

form

proposal to increase the authorized

000,000

and the authorized

money,

(A. M.)

Byers
Jan.

sale

Corp.

stock

mon

13, it

Kansas City Power & Light Co.
Feb. 7, Harry B. Munsell,
President, announced company
expects to raise $15,000,000 of new money
through the

announced common stockholders will vote

(3/20)
to

800,000 through the sale of equipment trust certificates.
Bids—Tentatively scheduled to be received on April 19
Probable bidders: Halsey, Stuart & Co.
Inc.; Harriman
Ripley & Co., Inc. and Lehman Brothers
(jointly); Har¬
ris, Hall & Co. (Inc.); Salomon Bros. & Hutzler; The

Inc.

Power

Feb. 13 it

Foote

Co.

Feb.

it was reported to be contemplating new financ¬
ing. Underwriter—Glore, Forgan & Co., Chicago, 111.

Smith, Barney & Co.
Boston

Illinois Central

new

Feb. 19,

ders

Atlantic

Jan.

one

First Boston

Englander,

Halsey,
Inc.; The First Boston Corp.; Salomon Bros.
Hutzler; Harriman Ripley & Co., Inc., and Lehman
Brothers (jointly).

program.

"The First Boston Corp.; White, Weld & Co. Proceeds—
For construction program, estimated to cost about $20,-

and

stockholders at rate of

common

RR.

received

$35,000,-

tive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; Morgan Stanley & Co.; Stone & Webster Securities
Corp.; The First Boston Corp. Proceeds—For construc¬

3%%

Light Co.
Feb. 6 it was reported that the company will sell $8,000,000 additional first mortgage bonds, probably in late
summer or early fall. Underwriters—To be determined
by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Lehman Brothers and Stone &
Webster
Securities Corp. (jointly); Equitable Securities Corp. and
Central Republic Co. (jointly); Union Securities Corp.;

stock to

Central

Stuart & Co.

mortgage 30-year bonds
exceeding 126,255 additional shares of common

and not

will

from the compamy

Power Co.

Feb. 27 directors approved issuance and sale of
000 of new first and refunding

(issuable in exchange for 6% preferred stock on
$10.60 of new preferred for each old share,
proposal to split company into two units) may

announced

Arkansas

Duke

Illinois

noon
(CST) on March 20
Huttig, Treasurer, for the purchase
of $3,600,000 equipment trust certifi¬
cates, series FF, to be dated April 1, 1951, and to mature
in 30 equal semi-annual instalments
from Oct. 1, 1951
to April 1,
1966, inclusive. Probable bidders:

funds, to redeem $35,0.00,000 of 3%-4% first mortgage
bonds, series A, due Jan. 1, 1993, and $8,666,900 of Den¬
ver
& Salt Lake income
mortgage 3%-470 bonds, due
Jan. 1, 1993.
/

preferred

Corp.
unexchanged new

be sold publicly.

mon

at the office of A. B.

•

for each 10 shares held.

Gas

under

Proceeds—From safe of new bonds, together with other

Price—For stock, $75 per share.
Underwriters—For bonds to be determined
by competi¬

stock
*

Natural

Bids

new

Probable bidders: Halsey, Stu&rt & Co. Inc.;

First Boston

by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Morgan
Stanley & Co.; Kuhn, Loeb & Co.

nearly $23,000,000 for 1951.

(4/24)
company plans issuance and
first mortgage bonds. Underwriters
by competitive bidding. Probable
bidders: Halsey, Stuart & Co. Inc.; Equitable Securities
Corp.; W. C. Langley & Co. and The First Boston Corp.
(jointly); Union Securities Corp. and Salomon Bros. &
Hutzler (jointly): Lehman Brothers; Kidder, Peabody &
Co. and White, Weld & Co. (jointly); Merrill Lynch,
Pierce, Fenner & Beane; Glore, Forgan & Co.; Harriman
Ripley & Co., Inc. Proceeds—For expansion program.
Offering—Tentatively expected on April 24, with SEC
registration on March 23.
•
Continued on page 42
Monongahela Power Co.

Dec.

was

announced

sale of $10,000,000 of
—To be determined

■.

The Commercial and Financial Chronicle

(1054)

Continued

from

page

applied to the FPC for authority to ac¬

operating
additional

quire natural gas facilities of three companies
Montana and Wyoming and to construct

England Power Co.

will

$12,000,000 of bonds filed with SEC). Between 70,000 to
80,000 shares of preferred stock may be initially offered.
Probable bidders: Harriman Ripley & Co. Inc.; Lehman

Kidder, Peabody & Co.; First Boston Corp.;
Pierce, Fenner & Beane; W. C. Langley
bank loans and for

Brothers;

Merrill Lynch,

19 it

Feb.

tentatively plans

reported that company

was

$2,500,000 of preferred stock to public

issue and sell

General Public Util¬
ities Corp., parent.
Underwriters—For preferred to be
determined by competitive bidding.
Probable bidders:
Drexel & Co., Kuhn, Loeb & Co., and Lehman Brothers
(jointly); W. C. Langley & Co.; Smith, Barney & Co.
and Union Securities Corp. (jointly); Kidder, Peabody
& Co. and White, Weld & Co. (jointly); Salomon Bros.
& Hutzler. Proceeds
For 1951 construction program.
Expected late Summer and early Fall.
$1,500,000 of common stock to

and

•

Northern

Pacific

for

holders.

and

White, Weld & Co. (jointly); The First Boston Corp.

and

theim & Co.
Weld

Lehman

stock:

common

Feb.

Beane and

Lynch,

Merrill

company

(par $100) with

But the

Our

Keen
not

for sale

the

move

compose

between

Federal

the

enmeshed

wake

the

too

Reserve

latest

the

and

interest

over

rates.
The

$20

proposal

billion

through
issue

to "freeze"

2%%

the

debt

nonmarketable

bonds

failed

clear the air immediately

number

some

Treasury

new

since

projected

new

rate.
observers

had

been

were

that

the

completed

bonds

re¬

signs

of
a

"glut"

new

week.

The corporate market appeared
have
developed
a
situation

where
but

the

bids had

where, at the

was no

been

same

apparent urge

pulled,

time, there
on the part

of portfolio managers to sell.
That section of the market,

effects.

company

Bros.

Salomon

1951.

Bankers
Co.'s

Gas

Co.

announced

stock filed with SEC

Jan. 8.—see preceding

Jan. 3 company asked FPC permission for approval of a

$42,300,000 construction program, which will include the
building of 580 miles of pipe line to supply natural gas
in its own mid-Western service area and in Appalachian
markets.
The program would increase the capacity of
the Texas-to-Ohio pipe line system to over 900,000,000
cubic feet per day. Tentative plans include the sale of
around $30,000,000 bonds (which may be placed pri¬
vately with insurance firms) and about $10,000,000 of
preferred stock (depending upon market conditions).

The

amount

Probable bid¬

new

bonds

are:

The balance of the funds needed will be obtained from

treasury

cash

underwriter is
•

(4/9)

temporary

bank

plans issuance

Hutzler;

Proceeds—For

construction.

Bids—Tenta¬

March

about

shares)

debentures
their

sponsoring

$60,000,000

The

Bor¬

30-year

were

newly

with

step

quick to readjust
to

bring it into
created condi¬

tions.

When

•

filed with the Securities

and

Exchange

Commission

re¬

that the
debentures would carry a 2%%
coupon rate.
And par had been
cently

indicated

specified

was

the offering price for

the

offering

out

yesterday, at par, carried a 27/8%
interest rate, bringing the yield to
the

to 2.875%.
This
quick reappraisal was viewed as
making quite certain a satisfac¬
tory investor reception.
buyer

Estate of

later.

announced company

may

satisfied

appeal

cash

that

the

portfolio

available.

they had origin¬

for it

in their

calcula¬
:

;

Jones

additional

reaches market

fortnight hence,
it will be handled by a group of
a

about 130 underwriters and deal¬
around the country.

of 20-year

financings

recent

years,

certainly the largest this

and

year

be offered directly to

the public, rather than on "rights"

today, were confident that this
encounter

any

serious resistance.
to

yield

better

can

the

$40,000,000

notes.

General

2V2%

of
\

■'

Mo¬

serial

•

Big Business Ahead
A number of sizable

new

issues

looming for the .near-term
future, among them $15,000,000 of
25-year debentures", and 249,600
are

stock

common

for

Lorillard & Co.
Meanwhile

Duke

Power

Co.

readying plans to float $35,000,000
of 30-year bonds, via the

competi¬

tive bid route, plus 126,255 shares
common

stock

"rights."

pre-emptive rights involved.

Together with $28,000,000 to be

utility deals

registration, one by
Co. in¬
volving $12,000,000 of first mort¬
gage bonds and the other by Caro¬
are

nearing

Worcester County Electric

lina
to current holders, since there are
no

slightly

tire

ket

Priced

from

capital.

Corp., this financing will
place J. & L. in funds to finance
its expansion program and to re¬

stock

common

date, it

not

the

tors

27/s% debentures, due on the mar¬

would

account

Price—To be supplied

borrowed

on a

Laughlin Steel
Corp.'s offering of a million shares

ers

the

for

Underwriter—F. Eberstadt & Co., Inc., New York.

market
current
lines, and therefore had made due

sold

Proceeds—To retire bank loans and for working

ally based their ideas

When

plans issuance and

Two other smaller

the Province

of Quebec's $50,000,000

Gustavus A. Pheiffer.

situation something along

tions.

An additional undetermined number of new

(par $1).

would

allowance

in Registration.")

One of the largest junior equity

Province of Quebec
Bankers handling

was

Jones & Laughlin Stock

brought

dividend preferred stock regis¬

public of 300,000 new shares of common stock

common

the fact that

2.75% yield basis.
But

Sponsors based their confidence
on

Un¬

Warner-Hudnut, Inc.

were

with

Price-

held.

Offering—Tenta¬

program.

tered with SEC under "Securities

3% to maturity the under¬

issue

registration covering the

was

shares of $4.20

100,000

writers

men

issue

than

stockholders

10 shares

(See also present offering of

tively planned for June.

Probable bidders: A. G. Becker

operation

plans for the sale

common

by market and other conditions.

construction

Proceeds—For

com¬

share for each

new

March 3 it

expected

was

one

stock

common

be determined

sale

(440,000

derwriter—Stone & Webster Securities Corp., New York.

Harriman

new

rate

and

/Traditional

loans.

Dillon, Read & Co. Inc., New York.

Virginia Electric & Power Co.

of additional

reported that the company's entire

issue

Quick Adjustment
den

that

Inc.

appeared, had already discounted
the current developments at least
to a degree, and therefore was in
a better
position to withstand the

details pertaining

mained to be unfolded.

higher

however,

sure,

for more than

this

the differences

Treasury

coupon

market

Union

was

Texas Gas Transmission Corp.

the

probably in March to the highest bidder by the

pointed
especially
to
the
municipal market which had been

readjustment

week

was

of Oklahoma

Office of Alien Property.

and

mar¬

Colorado

quarter

Co.

stated

issue

the Reserve's indicated

adjustment

investment

itself

was

market, from the gov¬
right
on
down

showing

phase

second

Service

Co.,

list

Treasury

Report
found

financing.
placed privately
new

registered with the SEC in the near future and offered

cumu¬

victory in the form of

Reporter's

new

through the corporate highgrades, eased perceptibly in def¬
erence

ket

available

to raise additional funds for construction
the

was

stock

mon

con¬

equal amount

ernment

seasoned

require

Sobering Corp.

of preferred stock with a lower dividend rate and may

The

Co.

Service

(jointly);

Feb. 2 it

said

columns).

tively expected to be received up to April 9.

May.

sidering refunding outstanding $6,500,000 5V4%
lative preferred stock

such

conditions

Registration—Expected

Oklahoma Gas & Electric Co.

Dec. 20 D. S. Kennedy, President,

its

company plans to issue and
approximately 27,000 shares of preferred stock (par
$100) and approximately $4,000,000 of first mortgage
bonds (in addition to the 150,799 additional shares of

April

Jersey Gas Co.

sell

Corp.

Stanley & Co. Proceeds—For expansion program. Bids—
or

common

reported issue of $15,000,000

Ripley

Pierce, Fenner

Kidder, Peabody & Co. (jointly); Morgan

Expected to be received in April

The additions and improvements
the next five years.

over

was

Southern

$10,000,000 of first mortgage bonds. Underwriters
determined by competitive bidding.
Probable
bidders: Halsey, Stuart & Co. Inc.; Glore, Forgan & Co.;
White, Weld & Co. and Shields & Co. (jointly); The First
Boston Corp.; Kuhn, Loeb & Co. and Union Securities

Co., Union Securities Corp. and Wer-

(jointly);

7 it

Jan.

sale of

(jointly); Glore, Forgan & Co. and White,

Co.

—To

Brothers

debt

increase

has 925,863 shares outstanding.

March 6 directors announced tentative

(jointly); First Boston Corp.,

Bear, Stearns & Co.

Lazard Freres

for

•

Underwriters—To be determined by competitive
Probable bidders may include Halsey/ Stuart
& Co. Inc. •
•
> .
"/

(See also registration of 100,000

have

future

Public

Stearns &

(jointly); W. C. Langley & Co., Glore, Forgan & Co.

the

bidding.

Halsey, Stuart & Co. Inc.; Blyth & Co., Inc. and Smith,
Barney & Co. (jointly); The First Boston Corp.; Lehman
Brothers; Kidder, Peabody & Co.; Harris, Hall & Co.
(Inc.); Glore, Forgan & Co.vand W. C. Langley & Co.
(jointly).

stock: Morgan

Co.

bidders

order

necessary

ders for

shortly to file

Stanley & Co.; Lehman Brothers and Bear,

Probable

that

purposes

bidders for preferred

and

bonds.

shares above.)

Public

Co.

Probable

finishing facilities.
to be completed

refinance

needed is estimated at about $7,000,000."

announced company plans

was

SEC

increase

reported that this company is planning to
outstanding $4,000,000 of 4%% bonds arid
$3,338,000 of short-term bank loans with a new issue of

Co., Inc.

Nov. 1, J. E. Loiseau, President, announced that "it will

registration statement covering 150,000
shares of preferred stock (par $100) to be sold at com¬
petitive bidding and 436,224 shares of common stock
(par $8) to be offered for subscription by common stock¬
with the

Gas

preferred stock financing
through The First Boston Corp.

Hutzler; Harris, Hall & Co. (Inc.); Kidder, Peabody & Co.

Feb. 28 it

Natural

announced company plans sale of $1,800,-

Latest

30, 1951 and to mature annually from
1952 to 1966, inclusive.
Probable bidders: Halsey, Stuart
& Co. Inc.; Lee Higginson Corp.; Harriman Ripley & Co.,
Inc. and Lehman Brothers (jointly); Salomon Bros. &

Edison

$30,000,000

plan to increase authorized preferred stock by 60,000

event

to be dated March

Ohio

was

construction.

new

the company of

•

company

are

South

Pitney-Bowes, Inc.

company's office in New York for the purchase from
$6,900,000 of equipment trust certificates

the

and

Proceeds—
in part, the company's expansion program.

Feb. 5 directors voted to submit to stockholders

March 8 at

meeting March
company

Co.; Harriman Ripley & Co., Inc.

common

(EST)

At present,

unspecified amount of common shares, to be sold in units
with notes.
Underwriter—May be White, Weld & Co.,
New York. Proceeds—For conversion to natural gas and

(3/8)

Ry.

40,000

000 of interim notes (dischargeable at maturity by de¬
livery of 36,000 shares of cumulative preferred stock at
rate of one share for each $50 principal amount) and an

Probable bid¬
Blyth & Co., Inc.; Smith, Barney & Co.

Bids will be received up to noon

Piedmont

present $36,056,700 of $6 preferred stock.
ders:

the

sharply increase ingot capacity, pig iron and coke output

Feb. 20 it

was

annual
of

authorized capital stock to 2,500,000 from 1,000,000 shares.

offering

Feb.

York, Chicago & St. Louis RR.

23,

the

shortly.
Underwriters—To be determined by competi¬
tive bidding.
Probable bidders: The First Boston Corp.
and Drexel & Co. (jointly); Blyth & Co., Inc.; White,
Weld

announced that stockholders will vote
March 29 an authorizing a new issue of cumulative pre¬
ferred stock which may be offered in exchange for the
Feb.

The company's expansion plan, recently announced, will

To finance,

—

New

that

announced

(3/15)

29 it was announced that as a preliminary to fi¬
nancing some phases of the corporation's $49,000,000
expansion program, stockholders will be asked to vote
at

was

RR.

preferred stock is expected to be announced

Jersey Power & Light Co.

Line

Sharon Steel Corp.

Pennsylvania Power & Light Co.
Jan.

Air

received

Jan.

ilmit

construction program.

bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros.
Hutler; Harris, Hall & Co. (Inc.).

early Fall.

& Co. Proceeds to be used to repay

New

by competitive

Ripley & Co., Inc. Probable bidders for preferred stock:
W. C. Langley & Co. and Glore, Forgan & Co. (jointly);
Kuhn, Loeb & Co.; Smith, Barney & Co.; Kidder, Pea¬
body & Co.; Harriman, Ripley & Co., Inc. Proceeds—
For 1951 construction program. Expected late Summer

1952 (including the

required prior to Dec. 31,

of new financing

estimated that $32,000,000

will

by the company at the office of
Willkie Owen Farr Gallagher & Walton, 15 Broad
Street,
New York 5, N. Y., up to noon (EST) on March 15 for
the purchase from it of $2,400,000 equipment trust cer¬
tificates, series J, to be dated April 1, 1951, and to
mature in 30 equal semi-annual instalments.
Probable

parent). Underwriter—To be de^bidding. Probable bidders for
bonds: Halsey, Stuart & Co. Inc.; Kidder, Peabody & Co.;
Merrill Lynch, Pierce, Fenner & Beane; Union Securities
Corp. and White, Weld & Co. (jointly); Equitable Secur¬
ities Corp.; The First Boston Corp.; Kuhn, Loeb & Co.,
Lehman Brothers and Drexel & Co. (jointly); Harriman
termined

ing expected before April 1, 1951.

was

Seaboard
Bids

Public .Utilities Corp.,

bonds for a total
$11,500,000. Traditional underwriters are Blyth & Co.,
Inc. and Merrill Lynch, Pierce, Fenner & Beane. Financ¬
stock, preferred stock and mortgage

Jan. 24 it

sell

reported company plans to issue and

was

$3,000,000 of first mortgage bonds, $2,500,000 of preferred
stock and $2,500,000 of common stock (latter to General

New

Beane; Kidder, Peabody & Co.; F. Eberstadt & Co-.;
& Co.; new company to be formed by United
States & International Securities Corp.; Dillon, Read &
Co.; F. S. Moseley & Co.; Riter & Co.

Pennsylvania Electric Co.
Feb. 16 it

facilities, estimated to cost $5,864,094. In connection
therewith, and the proposed funding of $5,800,000 shortterm bank loans, it is planed to issue and sell common

Securities Corp. and Ladenburg,
(jointly); Merrill Lynch, Pierce, Fenner

Union

Allen

Co. Inc.

Smith, Barney & Co.; Harriman Ripley &

Thursday, March 8, 1951

Probable underwriter?: Lehman Brothers;

tion program.

Co.

(Inc.),

Thalmann & Co.

ket conditions warrant such action, to

Utilities

Montana-Dakota
Feb. 16 company

Co.

(par $10) provided mar¬
finance construc¬

issue additional common stock

Power

Light Co., which
$6,000,000 by the
sale of 200,000 shares additional

plans

common

raise

stock.

Volume

Number 4992

173

The Commercial and Financial Chronicle

Joins

Quebec Debs. Offered
of underwriters, under
^ the management of The First Bos¬
Corp. and A. E. Ames & Co.,
Inc., today are offering $50,000,000
of 2%% debentures dated April 1,

1951
'

and

due

April 1, 1971
Quebec (Canada)

Province of

The

Chronicle)

Financial

ANGIJLH3,

THE

Calif.—Ken¬

Hardy has become asso¬
ciated with Shearson, Hammill &

ton

LOS
neth

DIVIDEND NOTICES

Shearson, Hammill

(Special

A group

(1055)

Co., 618 South Spring Street.

The

Board

DIVIDEND NOTICES

Directors

meeting

28, 1951, declared a dividend of 75
share' on the Class A Convertible
Preferred
Stock
payable March
19,
1951, to

cents

February

28,

record

March

12,
C. CAMERON,

Pierce,

Schwabacher & Co.

Fenner

Noma

1951.
Treasurer.

Corporation

13th St., New York

The

EATIIN

& HOWARD

Board

declared

11, N. Y.

debentures will be payable in U,
dollars.

Also

associated

BALANCED FUND

Leroy Taylor Opens

the

The

offeirng are Harriman Ripley &
SHAWNEE,
Okla. —Leroy T.
Co., Inc.; Smith, Barney & Co.;
.Wood, Gundy & Co., Inc.; The Taylor is engaging in the securi¬
Dominion

Securities

Corp.;

ties

and

McLeod, Young, Weir Inc.
The proceeds of the loan will be
applied by the Province to the re-

demp.ion

$7,500,000

4V2%

dollars

business

offices

from

American National Bank

the

dividend of

Building.

pay

ble

at maturity

DIVIDEND NOTICES

due Nov. 1.
•struction

roads

share,

The bal¬

1951,ord

bridges in

the

Faroll

New

the

business

and

March

been

„■

15,

1951.

METALS

7, 1951.

COMPANY

PACIFIC GAS AND ELECTRIC CO.
The

of record
March

Noble

and

22,

Brooklyn

New

Opens

The Beard of Directors of

20,

stockholders

of business

of record
March

13, 1951.
be closed.

Beckett,

Treasurer

stock

New Office in Missouri

the

March

28,

the close of business March 20,

members

J Co.,

Stock

the

Exchange,

office at 211

branch
Street.

New

has

the

San Francisco, California

RADIO

East

OF AMERICA

(Special

to .The

Financial

Chroniclf)

Fla. —Hubert

now

meeting

the

Penna.

associated

>AL

with

March

With

The

with

nich

McCASKEY,

Jr.

Secretary

American

Joins Greene & Ladd
(Special

The

now

Greene

Ladd,

quarterly

(1JA%)

ending

quarter

March

31,

Stock have been declared.

Walton is

25th
of

offices

Newton

Walton

day declared

held

Wednesday, April 18,
1951, at 11:00 o'clock a.m.
(Eastern Standard Time) at 43 Park
Avenue, Flemington, Hunterdon
County, New Jersey.

The

the

March
vote

ing

any

20,

business

record

Tuesday,
to

II
0

not

be closed.
The Borden Company

WAIBEL, Secretary,

Pacific

March 31,1951,

payable

16,

stockholders

1951,

record

$5.00

the

the close of business

the

holders of record

and is

1951.

COMMON

The
of

above

50 cents

the

31,

Stock

record

STOCK

per

Company

DIVIDEND

has

1951.

NO.

declared

regular quarterly dividend
$1.0625 per share on the
$4.25
Cumulative Preferred

Stock

was

declared,

payable

April 1, 1951, to stockholders
of record at the close of busi¬

k
1

NOTICE

March

15, 1951.

will

105

record

not

BONNYMAN,

the

closed.

"Call for

Treasurer.

of New York
New York, N. Y.

^nTctHaTunajf

February 28,

Philip Morris &Co.

INTERNATIONAL

Phosphate

•

Potash

Fertilizer

•

the

COMPANY

ness

March

15, 1951.

Transfer books will not be

($1.00)

CONSECUTIVE DIVIDEND

February 28, 1951,

Series, has been declared

I
quarterly dividend of 60tf
payable

per

April 1, 1951

of record at the

1951,

are

1951,

was

business

March

15,

declared by the Board

te.

Wm.

ness

payable March 30,

■

February 26, 1951

■'

business

1951

the Board

addition,

dividend

of Directors

April 30,

payable

Stock

Common

the

close of business March 16, 1951.
Checks will be mailed.
Robert P. Resch
Vice President and Treasurer

April 2,

Pursuant to

the

Com¬

1951.

resolution adopted at.

the par value of $10 each is recognized,
for any purpose, until surrendered, and

Certificate

each

shall

of the
been

have

Holders

Certificates

Stock

Common

Cert'ficates

for

new

value of $5

par

issued

therefor.
shares

for

Common Stock of the par value of $10
each

Vice-President and Treasurer
.

the

the Stockholders' Meet'ng held on July
10, 1945, no Certificate representing a
share or shares of Common Stock of

such

Vice-Pres. 6c Secy.

per

at the rate of one (1) share for
each twenty
(20) shares of Common
Stock outstanding to Common stock¬
holders of refcord at the close of busi¬

of Directors.

J. Williams,

the

April 2,

1951

new

ANDREW W. JOHNSON
-

Common

pany

closed. Checks will be mailed.

m
m

record

of
$0.75
Stock of

dividend

the

011

declared

Company ($5 Par), payable April 16,
1951 to holders of Common Stock of

share.

stockholders of record

the

1951.

quarterly

$5.00 Par Value Common Stock

Both dividends

per

1,
1951
to holders
close of
business

May
at

16,

There has also been declared a regu¬

lar

follows:

Regular Quarterly Dividend of
Forty Cents (400) per share.

Common Stock

to stockholders

36th Consecutive Regular
Quarterly Dividend of One Dollar

160™

April

4% Cumulative Preferred Stock

St. Louis

p
m

quarterly dividend of $0.20
share on the Common
Stock was declared, payable

record

declared by the
Board of Directors on
were

Ltd.. inc.

dividend

the Cumulative Pre¬
Series, and the regu¬

dividend of $0,975 per
Cumulative
Preferred

quarterly

1951.

ferred Stock, 4fk

lar

Dividends

quarterly

regular

$1.00 per share

Chemicals

INTERNATIONAL MINERALS
& CHEMICAL CORPORATION
General Office«:20 North Wacker
Diive, Chicago 6

milton l. selby, Secretary.

February 28, 1951.

dividend

Mining and Manufacturing

per

April 1, 1951, to stockholders
busi¬

PHILIP MORRIS*

Stock

of record at the close of

share
stock¬

Guaranty Trust Company

A
Common

the

business March 21, 1951.

The

Preferred Stock

of $1.00 per

1951, payable March

15,

books

stock¬

the Common Stock of

to stockholders

Transfer

the 4% Preferred

rate

payable April 1, 1951

the

15,

Company

the

1951, payable March
Transfer books will not be closed.

31, 1951.

the close of

holders of record

107

dividend

Preferred
of

Common

of 60c per

payable April 1, 1951

Stock is

Co.

NO.

declared

stockholders

close of business March

April
of

per

Company

DIVIDEND

has

the

rate

business March 21,1951.

February 23,

STOCK

Company

STUART K. BARNES, Secretary

Secretary

DIVIDEND

ness

subsequent transfers of stock.

THEODORE D.

per

above

Both dividends

CANADA DRY

meeting, notwithstand'

The stock transfer books will

the

payable

1951, will be entitled

said

($3.)

Capital Stock of this

SHOE

dividend

Stock, 3.90%

meeting of
will

Mountain

Mexico,

PREFERRED

quarterly divi¬

dend of Three Dollars

1951, and a
the Common

February 28,1951

V/jfi

the

Rocky

Raton, New

The Board of Directors has this

W. F. Colclough, Jr.

Annual Meeting

Only stockholders

Louis,

value Com¬

par

stock and 4% Preferred Stock.

The

The Dividend
St.

books will remain open.

The annual

quarterly dividends

Company's $5.00

and is

GORIN, Treasurer

New York, March 7, 1951

Investment

The.■ *73o?den
stockholders

12, 1951.

name

NOTICE

1951, declared
the

New York, N. Y., March 2, 1951

Securities.

MEETING

1951. to holders of
record March 12, 1951. The stock transfer

2626

Street, under the firm

the

payable April 2,

are

engaging in the securi¬

business from

ties
+

Texas—Newton

record

ERNEST B.

March 15, 1951.

dividend of 75^ per share
the Preferred Stock for the

dividend of 25tf per share on

business March

Preferred Dividend No. 180

] Bank Building.

LUBBOCK,

Stock, payable April 2,1951,

holders

Opens

de¬

was

Safeway

Stores, Incorporated, on February 28,

Common Dividend No. 170

associated with
First National

Newton S. Walton

1951,

$3.50 Cumulative First

close of business March

Company

MIDDLETOWN, Ohio—John M.
Rutledge

the

Chronicle)

Financial

dividend of 87 x/%

The Board of Directors of

Stock is

Company for the quarter ending

Slay ton & Co., Inc.,

Bank Note

;

today,

share, for the period January

Preferred
to

1126 Oakwood Avenue.

held

cents per

1951

Chronicle)

Financial

meeting of the Board of Direc¬

1951.

16,

Slay ton & Co.

Preferred and Common

Common

31,

STORES

Stock Dividends
At the

Corporation,

stockholders
of
the close of busi¬

DILLARD, Secretary

incorporated

First Preferred Stock

DAYTON, Ohio—Omer M. Min-

the

March

payable
record

the

Stock

Common

ness

LOUIS KURZ, Secretary

of the Board of Directors
Ludlum Steel Corporation
held
today, - February
22,
1951,
a
dividend of
fifty
cents
(50c)
per
share was

(Special

business, March 15.

Dividend

the close

Allegheny

•

Goodbody & Co.

mon

declared

Houston

Stockholders of record

Allegheny Ludlum Steel Corporation

Goodbody Staff V;

SARASOTA,

tors

Pittsburgh,

1951,

Bank

Company.

SAFEWAY

payable April 2,

Malone

;

Manhattan

CORPORATION

X, 1951 to March 31,

clared

i charge of the new branch.

Joins

Dividend

Harris N. Draughon is in

mailed

STOCK

York

opened

will

Checks

Per Share

MOISE, Treasurer.

COLUMBUS

been

ALLYN

1951.

SIKESTON, Mo.—Orvis Bros. &

the

has

Dated, March 5, 1951

purpose of
transfer of Common Stock at
close
of
business
March
15,
1951
until

the

twenty-five cents (25d)
outstanding common
declared
payable
April 1, 1951, to holders of record at
share

York

Each

1951,

A dividend of

the

not

April
1951.

The transfer books will not be closed.

20c Per Share

the American Man¬

pre¬

1951, pay¬
holders of

record at the close of business March

The Transfer Books will

COMMON STOCK

COMPANY

ufacturing Company
has declared the regular
quarterly dividend of 25c per share on the Com¬
mon Stock, payable April
1, 1951 to Stockholders
of Record at the close of
business March 15.
1951.
The stock record books will be closed for

convertible

able

4% CONVERTIBLE

Streets

West

cumulative

ferred stock has been declared for the

1951, declared

6% PREFERRED STOCK
75c Per

dollar

one

first quarter
share upon

following quarterly dividends:

ALLAN,

MANUFACTURING

AMERICAN

The Board of Directors

common

Jacksonville, Fla., have declared the

50c

busi-

dividend

thirty-seven and one-half cents
($1,375) a share on the outstanding

NOTICE

on February 21,
a cash dividend for the
of the year of 50 cents per
the Company's Common
Capital Stock. This dividend will he
paid by check on April 12, 1951, to

The Directors of Foremost Dairies,lnc.,

15.

be mailed

regular

Virginia

DIVIDEND

COMMON

Street, Boston

PREFERRED

in Chicago for many years.

Orvis Bros.

O'BRIEN, Secretary

REYNOLDS

REYnOLDJ

ness

the close

1951.

Richmond 19,

Jacksonville, Florida

Midwest

the investment

PREFERRED

F0REIMST OBIRIES.Inc.

from the

Philadelphia 32, March 2, 2951

Exchanges and other lead¬
exchanges.
Mr.
Cummings

ing

20,1951.

24,

Stock

has

stock

quarter ending March 31,

Secretary and Treasurer

Co., 209
members

Street,

York

JOHN

51/2%

1951, to stockholders

30,

BOSTON,
Mass. — Peter
H.
Cummings, Jr., has become assoSalle

March

1951

Common Stock Dividend No. 141

the Common Stock, payable March

1951. Checks will

with

payable

to shareholders of rec¬
the close of business

24 Federal

dividend of fifty cents ($.50) per share

Gummings, Jr.

busi¬

Reynolds Metals Building

Quarterly Dividend

Is With Faroll & Co.

South

common

202nd Consecutive

Accumulated Surplus of the Company a

ciated

March

DIVIDEND

The Directors have declared

15,

such

stockholders of record at the

company

con-

the Province.

March

The Electric Storage Battery

Peter

business

dividend of fifteen cents ($.15)

(less applica¬

and

the

dividend to be
1951, to the holders of

President

Trustees have declared

The

due

1951 and for the

30,

close of business March

Street, Boston

STOCIt FUND

sinking fund), an internal is¬
of $15,000 000 3% debentures

sue

March

By order of the Board of Directors.

Stock of this Corpora¬

payable

EATON & HOWARD

of the proceeds will be used

ance

1951.

all

shares of said

record

Company

1951,

9,
March

payable

the

per

outstanding

this

authorized the pay¬
Twenty-five (25<J)

1951,

March

ness

Twenty-

Cents

has

28,

dividend

Henri Sadacca

July 1, 1956 and $10,000,000 3!4-%

'to

15,

(25(Q

cents

Capital

record at the close of business

July 15, 1953.

tion,

24 Federal

bonds due

declared

of twenty-five cents
($.25) a share, payable March
24, 1951, to shareholders of
March

debentures

Trustees have

five

dividend

of Directors

February

stock

Directors

ment

COMPANY

RAILWAY
The Board

Electric

1951

and

Beane

& ST. LOUIS

THE MINNEAPOLIS

per

stockholders

NOTICE

DIVIDEND

held

formerly with Merrill Lynch,

was

DIVIDEND NOTICES

STATES LEATHER CO.

February

and' accrued interest. The

-97.75%

UNITED

are,

therefore, urged to exchange

for

Certificates,

Certificates

for

Common Stock of the par value of

$5 per share on the basis of two shares
of

new

Stock

Common

for

each

the

par

value
L.

value,
Stock of

par

Common

$10.

HANSON,

Treasurer.

^777777///;////;;/////////////^^

The Commercial and Financial Chronicle

(1056)

General

BUSINESS BUZZ

able

from the Nation's

WASHINGTON,

last week-end to OK the escalator

front.

contracts.

purchase.

purchase last week-end's action
represents only the down pay¬
ment, and the total cost of this
temporary solution of labor's at¬
tacks
upon
the
Administration
will come high.
At the same time, Mr. Johnston,

the

has

con¬

the
for

and

its ranks

reform

one

way

another, come back to achieve
its
objective,
which
is funda¬
mentally to put itself in a posi¬
tion to veto any actions of De¬
or

which la¬

fense Mobilizer

Wilson

bor believes

detrimental to its

are

interests.

summary, is the way
the situation is appraised by some
of this Capital's
most seasoned

This,

astute

and

labor

observers

politics.

Johnston's order
escalator

was

cost of

existed

which

of Jan. 25, 1951.

comes

contracts

the

CIO

He has the first and

biggest of the escalator contracts.
His

contract

lowed
not

Few

those

and

that

fol¬

assuming the order is
rescinded, now in the clear.
are,

the

American

Federation

however,
There

have

Labor,
clauses.

escalator
in

none

the

contract

Phil Murray's steel workers.

Murray

the

contracts

is president of the

Phil
CIO.

Administration.

the

of the A.

anxious

sidered
the

extremely

Economic

ministrator

ing

that
Ad¬

stop with

can

break

doubtful

Stabilization

the

auto

union

workers

situated.

hades

Sooner

the

others

would

break

all

loose.

later, Mr. Johnston will

be confronted

making

and

Otherwise

new

formula

with

the

need

and large breaks
to

permit

the

for

steel

workers, the A. F. of L., and other
labor groups, unprotected by cost
of
living clauses, to get their
share of the wage raises.
When

provisions

have

been

adopted in due course permitting
reopening of wage contracts, cost
of

living adjustments,

these

are

where
not provided for in con¬

tracts, and
that

ent

the

solution

appar¬
recom¬

mended

by Mr. Johnston just a
week ago tonight is but the down
payment, and the total cost is high

much

screams,
it would appear that Mr. Johnston
achieved a sort of peace if

has
not

quiet

one, for
broken
the

effect

united .labor

front.

am
"Frankly,

mobiliza¬

the

man

has

supposedly

Mr.

Reuther

has

got his, and so have all the
boys who followed. Whatever Mr.

Mr.

Pittle, it's not the principle
thing—it's the money!"

fense housing Title IX, or by VA,

The

Green, who refused, thinking
that
perhaps once he was offi¬
cially out as the craft union presi¬

should not exceed $3 billion.

dent, he might

sibly

get Meaney

never

thus would
gram to

hostile faction seeking

to replace him, and he feared

the

minute he

for

any

tion,"

took

kind

responsibility

watery, the opposition would
that

that

"wage stabiliza¬
how milk and

matter

use

argument to oust him.

And Phil Murray has no remote

intention of
to

taking time out

ever

the

assume

chores

great

public official, for then the field
would

clear

for

now,

Johnston's

Walter
a

result of

leads

order,

the

parade of "forward-looking labor
leaders" with a record for getting

something for their voting union
constituents.
There

proposal

Wage

also

belief

Stabilization

such
the

Board

bare-faced

President

that

even

friendly

the

Board,

pos¬

three

that

times

the
that

merely
that not
could

President

accept it and maintain any public
pose
of self-respect.
There are
some who say the President
prob¬
ably realizes some of this union

expenditures for community

facilities, such

police

streets,

sewers,

stations, schools, day

care

about it for

while.

sj:

appears

try

to look

labor

now,

a little sick right
be counted upon,

can

asserted, to make another
check-mate Wilson when

occasipn

President

excuse

for

nounce

the nomination.

make

that

spirit

billion

total outside

included within the

fense housing.

however,

limit

$3
de¬

which

would

spent

for direct Federal construction
for community
to

the

facilities,

Appropriations

left

was

committee

to decide.

This is not far from the form in
which

reasonable

the Senate Banking

expect

committee to

the bill.

approve

An unknown factor in the pos¬

made

defense

housing

still

condition

committee.

its

the

cut

the Rules

cost

being cleared by

constitutional

amendment

have

effect

not

important
question
of

any

the

upon

candidate of the Democratic party

opinion of the
fessional politicos.
idea
in

Mr.

Truman

that

1952,

came

House

should

wouldn't

if the party

that

persuaded
present

across

as a

not

the

choose

whole

and

White
to

him, and Johnston

taken

by the
committee this

week in the Administration's

fense

Housing
permitting the

the

committee

the

have

though

net

Bay.

A. M. I., Inc.

was

importance

other

chance

who

hand,
that

for

We Invite

Inquiries

will

nomina¬

tion

something much too far
away
to settle today.
If Gen.
Dwight D. Eisenhower should de¬
cide to be persuaded to accept the
Democratic
nomination,
all • the

Blair F.

Claybaugh & Co.

Members Philadelphia-Baltimore
Stock

Exchange

Security Dealers

Association

Tel.! HAnover 2-7064 Teles NY 1-2177

king's patronage and all the king's
bureaucracies could not

organization

move

pick

the

52 Wall

Street, New York 5, N. Y.

him

and shove Gen Eisenhower to the

Republicans.
the

Republicans

should

get the General, it is entirely pos¬
that

sible

the

Democrats

would

have to force Mr. Truman to
the

theory that
a

loser.

For

Large Appreciation Potential
WE

run

SUGGEST

else

one

There is Still another of several

hypothetical possibilities. The Re¬
publicans itiight become so badly
split
between
the
Lodges
and
other

internationalists, and the
wing, that even though of¬
fered at a heavy political discount
Taft

run.

thing by default, and
there was no flaming

sure

provided

warrior to take the
of

its

opposition out

political box.

Not the least of the

RIVERSIDE CEMENT CO.
CLASS B (common) STOCK
A

leading

producer

fast-growing

cement

Southern

California.

Analysis of this Company
a

and

review of the Cement Indus¬

try

available

request.

Selling about

$12.25

LERNER & CO.
Investment

hypothetical

possibilities, it is observed, is that
something might happen to the

HAnover 2-0050

Teletype—NY 1-971

Firm Trading Markets

Securities

10 Post Office Square, Boston 9, Mass.
Tel. HUbbard 2-1990

Allied Electric Products*
Air Products
Baker

FOREIGN SECURITIES

De¬

bill.
Instead of
Federal Housing

proposed

insurance

that

All Issues

defense

by the

new

de¬

New York 4, N„Y.

request

Hill, Thompson & Co., Inc.
Trading

50 Broad Street

Raulang

W. L Maxson
*Prospectus

SPECIALISTS

all

housing whether under older FHA
insurance titles,

se¬

offices

were

Banking

Emerald

from

today, Harry Truman might look
the

Truman, then the

incumbent
would

pro¬

get

conclusion

Mr.

even

would want to be

third term

engaging in the

business

amendment.

;j:

Adoption of the
expected

seen

party

sibilities for this legislation is the
House Rules committee.
A move
will

the

The actual amount,

House

constitutional

would provide a graceful out. This

would then go out with him.
*

the

directly with Federal funds, also
should

curities

appropriate.

seems

Chronicle)

re¬

abiding

was

the

Wilson, it is predicted, would
resign the minute the President

Some tucks

Financial

He could

renunciation

the

grounds
the

the

forms

amend¬

new

expressly exempt from it, and this

although the
united labor front, so advertised,

the

case

FOREIGN SECURITIES

of the Bubonic plague.

Calif.—

ment would provide a convenient

amendment

Nevertheless,

that

run.

housing mortgage insurance alone,

a case

engage

HILLS,

to The

lian B. Holt is

125

constructed

housing

in 1952, in the

holler

for

the

and

not to

reasons

himself, as
personal

might

decide

centers, etc., plus expen¬

whether Mr. Truman becomes the

scream

President

hinted,

widely believed to love Mr.
just as much as he would

William Holt Opens

ditures

politics, knows that for the time
being labor can't do much about
it, and has just gone fishing toolet
unions

the

nursery

the

was

demand

appoint

stooges
a

that

"reconstitute"

$3 billion, instead of

two

The committee further proposed

Emil Rieve of the textile work¬

faces

to limit the pro¬

seem

much.

off the presidential seat.

ers

This

the other boys theirs, Reuther has
scored a victory, and Mr. Murray

Reuther

Street

LAGUNA BEACH, Calif.—Wil-

f-ABl MA8BS & P.O. ft'C.

inevitably does to give

views.)

own

the staff of Waddell & Reed, Inc.,
8943 Wilshire Boulevard.

Meaney

Mr.

Administration to obligate $3 bil¬
lion for a new form of defense

Johnston

Culver

(Special

Mr.

make

failed to back

labor

re¬

Harold F. Ellis has been added

acting
president of the A. F. of L. This
was
not
a
prospect pleasing to

ably

Mr.

stabilization program.

1952,

Waddell & Reed Add

most
cheftain,

set-up, for this would prob¬

the

to industry which will pay
higher labor bill, and to the

(Special to The Financial Chronicle)

was

his

which

the securities business.

united

tion

both

de¬

labor

the

However

East

even

it will be

so on,

decision,

president William Green, become

formula

wage

PHOENIX, Ariz. — Adelia G,
Taylor has opened offices at 1614

approv¬

which is tailored just to the needs

similarly

was

so-called

have

Opens Office in Phoenix

demand

Its

The

Mr.

con¬

boner
with

F. of L.,

that

hints

1952, unless categor¬

BEVERLY

Walter Reuther is

politics aside, it is

one

George Meaney, secretary-treas¬

for the

Union

before

granted

President

the "Chronicle's"

front.

urer

for

the

pretation from the nation's Capital,
and may or may not coincide with

Charley Wilson called their hands,
within

taken

binding significance until the

because of the rivalry and dissen¬

Reuther, who

his great rival
presidency of the CIO.

labor

for labor

stronger place

sion

(This column is intended to

astut-

affair

little

flect the <cbehind the scene" inter¬

pro¬

that

the mobilization set-up

This then be¬

Reuther

auto workers.

than

current

President's

rolls around.

mand that it could not meet when

clear and shining victory

Walter

for

to approve

living clauses

union

pulled
the

saying

are

Those

more.

know the

play for

mobilization

defense

friends

into

ranks

labor's

Wage Stabili¬

Some of organized labor's

fusion, making almost inescapable
a
temporary retirement of labor
from the big battle.
Ultimately, however, labor will

thrown

the

gram.

time

in the form of the pulling
of labor men from any part

est

once

position

for re-

demand

labor's

sophisti¬

ical, unequivocal, and positive, has

power

has

hand in

zation Board, and its big

Senator

the
so-called
united
He simply went off fishing,

constitution

unwittingly,

wittingly

also had

Mr. Truman

nobody

case,

whatever

checking

off

any

says

ignoring

This achievement, however, has

taken the form of

avail¬

would not seek another term.

Lewis, hav¬

less

mind inspired the stories printed
from Mr. Truman's train after the
1948 campaign, that Mr. Trumait

already been taken care of,
already outside the united labor

front.

clauses of union

John

then

And

JL C/

ing

Stabilization
achieved
a
temporary and uneasy peace be¬
tween big labor and the Truman
Administration, by his decision
Johnston, Economic
Administrator,
has

jT2L I l/M

Capital

C.—Eric

P<rae Hffc Go.

make him

cated is getting very excited about
Mr. Truman's coy hints that he
would like nothing but to be a

Washington...
A

politically.

BeTund-the-Scene Interpretations

Thursday, March 8, 1951

Department

70 WALL STREET, N. Y. 5
TeL

WHitehall 4-4540

Full text of Commercial and Financial Chronicle : March 8, 1951, Vol. 173, No. 4992

FRASER