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>
MAY 14 1948
ESTABLISHED 1S39
Reg. U. S. Pat. Office
Volume
Number
167
4698
Our Dismal
<
•
•
.
•
*
■
New
Bank
-
York, N. Y., Thursday, May 13, 1948
Price 30 Cents
Copy
a
Management in Increased Spending Can Hastes |
Outlook
Was With Russia
By VIRGIL JORDAN*
By CLAUDE L. BENNER*
■■■;} President, National Industrial
f
By HARLEY L. LUTZ
Vice-President, Continental American Life Insurance Co..
""f
;•
Professor Emeritus of Public Finance, Princeton
University
Conference Board
Insurance executive believes
inflationary factors are being exagger¬
by forecasters, and production increases and running-out of
capital expenditures will cause major recession after 1949.
To
bank managers he recommends: (1) bond accounts confined to
short-term governments; (2) great conservatism in
inventory and
other commercial lending; and (3) regarding real estate loans:
Business Economist asserts both
American
have
mind
been
and
ruined
mentalization and
zation.
to
Regrets
bomb.
use
flation is
economy
by
govern-
,
international-;
lost chance
we
-•
,
Says present in¬
-
: >
political instrument
of, by, and for government.
insistence
that
irony in the title of these
is
com¬
that
the
danger
inflation.
facing
The
other
this
of
freedom,
boom.
we
and
are
Dr.-Virgil
Jordan
us
vided
save
the
world
something
derstand.
we
••
Fifteen
hear
a
•
t
from
ago
;•
used
we
to
good deal, and much that
One
the dangers of
inflation
the
the
crying
group
Claude L. Benner
*
un¬
/'•>•''',A.
years
several
y e a r s.
for
clearly
don't
and
for
last
engaged
to
they
have been di¬
colossal
years,
today
about
'
for the past
30
r
"v•:
-
and
other, the evils of deflation.
It is interesting to note in this
connection that the government's
ecbnomists
are
now
the
on
wasn't true, about "the forgotten
man." He was the fellow the gov¬
of those who fear inflation.
ernment
(Continued
fore
Association
of
Surety
Companies,
City, May 11, 1948.
Casualty and
- New
York
'
of
spending estimated for fiscal
year
side
You
——ward.trend
would be
men
unemployed six months after the
•
:.} i
(Continued
*An address
livered
the
set
tune.
Confusion Steadily Worse
It
was
circumstances
be unavoidable.
•
;
.
t
,
of individuals,
in
the
'It'
''
1949
may
close
to
billion,
that
there
to
reason
is
fear';4
of /
in
budget
a
•••
$50 billion
Dr. Harley LLuti
a,r":•'
the
y e
1950.
Obviously,
levels, it will be
at
any
necessary
•
.
.
such
to in¬
crease
taxes somewhere and some¬
how.
The
tax
reduction
pro¬
are
to be
seen on
all sides.
neighborhood of $43 billion, even
under the most optimistic esti¬
mates of tax
yield. The continued
siphoning off, through taxation, of
The
f resulting confusion is so dense that difficulty is found 'y
(Continued
on page
30)
■
\
V
in
on page
26)
s
by Mr. Benner de¬
before the Indiana Bank¬
sufficiently "unscrambling" the melange to render
inherent absurdities easily discernible. Take that "burn- y
ing issue" of
a
few short months
;
(Continued
/
ago
—
inflation. It is
'
.
•
A-
....
28 )
on page
and
.
■
•
Municipal
MUNICIPAL
Bonds
R. H. Johnson & Co.
Established.
;
State and
-■/••
STATE
'<
be
$45
and'
Act of 1948
will shrink Federal receipts to the
•**''
Lithographing Go.
are v
total
expendi-;
lures ...in
the ^
Association, Indianapolis, Ind.,
May 12, 1948.
Havana
■*
the
fiscal year.
ers
»
in¬
vided by the Revenue
Inconsistencies, self-contradictions, and wholly in¬
compatible proposals, iiot infrequently originating with
one and the same individual, or with one and the same
group
'
:
have
We
told
Confounded
perhaps inevitable that an election year in the
now
existing should be crowded with confu¬
sion which appears to be
growing more confounded as the
days go by. At any rate, this seems to be what is happening
on almbst all sides.
Apparently about the best that can be
hoped for is that not too much will be done on any of the
programs of action being brought forward until after the
pressure for popular issues and popular favor is less acutely
felt by the politicians, and, of course, that public opinion,
so-called, will not so defnitely crystallize in unhappy lines
that post-election action of a harmful nature turns out to
•
■
pitch,
and all of the
joined
confidently predict¬
ing that 8 million
This reversal of the downi
1948.
—
terests
will recall they were the ones at
close of the war who were
deflation and
*An address by Mr. Jordan be¬
further
danger
spending
viewing with alarm the perils of
42)
on page
little
EDITORIAL
the
going to remember
was
is
V'V',..' V .'."'v. V
them
where
carry¬
crusade which
has
prices .and
there
words,
find
just
ing forward
the
rising
The outlook for further relief from destructive taxation and in¬
flation is not good.
The President's budget for the fiscal year 1949,
issued last January, called for an increase of $2.5 billion over the
In
divided
safety for the
future, while
we
the
that
other
'
welfare
that
higher
a
chances
own
carry
country is
slowly
run¬
ning
out
of
coun-
try, to our
i
is
insist
going $>, JV"';
and
.happening
in
country
would
much
to
consider what
is
the
prices
I feel it
time
else
or;
•';•.;,•••
r
If one were to take a poll of the economic forecasters today he
would find them divided into two groups.
One group would insist
-
cause
discounted
0
ments it is be;
be
government guaranty.
touch of pathos or
a
valuations
current
a
If there is
Asserting outlook for further relief from taxation and inflation is
not good and a tidal wave of spending is
impending, Dr. Lutz sees
no
ground for heavy war preparations and holds Russian time
schedule does not call for impending war.
Urges reducing exist- <
ing tax load as means of developing our industrial strength and j,
I power and points to need of large capital investment over next few ;~
)y\ years.
Contends there are many points in Federal Budget in which
spending can be reduced.
ated
BONDS
1927
INVESTMENT SECURITIES
Bond Department
Hirsch & Co.
Membert New
York
Stock
64 Wall Street, New York 5
Exchange
and other Exchangee
BOSTON
25 Broad St., New York 4, N. Y.
HAnorer 2-0600
Teletype NY 1-210
Troy
HART SMITH & CO.
THE NATIONAL CITY BANK
""
PHILADELPHIA
Albany
;
Harrisburg
■
-
Buffalo
OF NEW YORK
Scranton
-
York
New
52
Cleveland
Geneva
y' Wilkes-Bar re
London
(Representative)
•
•
,
Woonsocket
^
_
;
Springfield
Washington, D. C.
•
y
Bond Dept. Teletype:
For
Banks,
NY 1*708
:
4s
*
Analyzed and Appraised
Underwriters and
Distributors of Municipal
„
Information
on
Gordon Graves & Co.
30 Broad
Street, New York 4, N. Y.
Tel. WHiteball 3-2840
Established* 1899
CLEVELAND
New York
Cincinnati
1960-90
;
y-.V-
t
I
CITY OF NEW YORK
New
England
Public Service Co.
BONDS & STOCKS
;
'
Bought—-Sold—-Quoted
v
Analysis
'*
Dominion Securities
SUTRO BROS. & CO.
upon
request
-Chicago
Denver
Columbus
Toledo Buffalo
.
Members New York Stock
120
Exchange
ira haupt&co.
Grporation
Est. 1896
(Incorporated)
^
Tele. NT 1-809
THE
OF
Toronto
CANADIAN
r
OTIS & CO.
INSTITUTIONAL INVESTMENTS
Montreal ;
and
Corporate Securities
request
of
(Fundings)
>
NATIONAL BANK
HAnorer t-8980
NY 1-395
Brokers and Dealers
UNITED KINGDOM
;'v
Bell Teletype
New York
BANK
PORTFOLIOS
Security Dealers Assn.
WILLIAM ST., N. V.
y
Chicago
THE CHASE
"
Members
Syracuse
40 Exchange
and other
111
Place, New York 5, N.Y.
\
f
Broadway, N. Yi *•;
WOrth 4-6000
Broadway, New York
Telephone BKctor 2-7340
Stock Exchangei i
Principal Exchange* ¥( •]
Members New York
Bell System Teletype NY
1-702-3
"
'
Boston
|;
Teletype NY14W8>«
Telephone: Enterprise 1828
2
THE
(2082)
Texas Eastern
Equip. Mfg.
By
Transmission,
Corporation
Broadway, New York 5
Teletype NT 1-583
Allegheny Ludlum Steel
$4.50 Conv. Pfd.
The
need
for
i
flow
removed
the
120
'-.V
<
,
'
Tel. REctor 2-7815
Drilling
Tudor City Units
in
Schram
I
the
conduct
refer
;
I
the
to
of
double
;
.
(
,
j
:
:
:
<
shall
making
are
loans
NEW YORK 5
HAnover 2-9470
are
funds
and
Allen B. DuMont
Laboratories
/
the
Rev¬
Troster, Currie & Summers
Members
New
York
Security
Dealers
Ass'n
today
cause
buyers
for
accounted
only
in
17.1%
This is
1947.
be
obtained
gerous
because
our
continuance
to
Broadway, N. Y. 6
Teletype NY 1-1943
,
tax
laws
en¬
raise
of
this
grave
trend
is
questions
of
October carried the address of the
former Chairman "Postwar Bank
Credit Problems," from which I
qubte:
(1) "Maintenance of a high de¬
of liquidity should be en¬
gree
couraged;
banks
should
be
dis¬
couraged
from
reducing their
large holdings of Government se¬
curities
to
.
and
acquire
cash
less
in
order
and
more
assets
liquid
*An address by Mr. Schram be¬
fore Economics Club of
Chicago,
of
a
I
have
number
dealt-elsewhere
of
occasions
on
at
a
some
length with the broad question of
the
mounting tendency to which
already referred.
It re¬
quires a little explanation to make
I
have
it clear how the reduction of
gin
mar¬
requirements would not
ag¬
gravate inflationary pressures..
'■/'
Incidence
of
Margin
surance
mercial
basis.
company or
bank on a
Although
expect to have
tween
the
cost
from
a
term
com¬
credit
would always
differential be¬
we
a
of
raising senior
capital and equity funds, the dif¬
ference is
extraordinarily ;; wide
today because of the reduced in¬
attitude
ticularly to
should
based
loans
to
goods.
apply
consumer
loans
values,
of
par¬
gives
need
promise
billion
and
for
in
ment
their
present
and
are
of capital to risk
should
build
up
with
for
coming fiscal
an
the
$40
Govern¬
year,
additional $11
support
of
our
subdivisions—wei
build
up the private
debt of the country
unnecessarily^
the
a
temporary
accommo-*
There is
an exception irt
railroads and the
of the
case
(Continued
!
37)
on page
Alabama &
of
low
ratios
Louisiana Securities
assets, however,
their capital. *If
B
banks persist in increasing their
ought-~-Sold-~-Quoted
y
risk
assets, they should be re¬
quired to enlarge their capital ac¬
cordingly by retention of earn¬
ings. /If retained earnings are not
sufficient, then
should be sold."
additional
stock
It is all very well to talk about
adding to the capital of our banks.
I agree that the private commer¬
cial
Steiner,Rouse&Co.
Members New York Stock Exchange
25 Broad
banking system is under-cap¬
This is especially true if
St., New York 4, N. Y.
HAnover 2-0700
New
NY 1-1557
Orleans, La.-Birmingham, Ala.
Direct wires to
our
branch offices
italized.
we
regard the present level of
prices as a rather permanent fix¬
ture within our economic struc¬
ture for many years to come.
The
fact is that there is
scarcely a
Curb and Unlisted
> V'<
1
*
if!'
fy»
\/ii
«
'v.
•
>
\
1
commercial bank stock that is not
selling in the
for
less
a
decided
Securities
market today
open
than
value of the
the
known
stock.
book
This presents
difficulty
on
the
part
of the banks in raising new
cap¬
ital through their existing stock¬
holders, and I might add- that
without prohibitive dilution of the
participate in indus¬
trial ownership. / However, even
present stock, it is impossible to
attract new owbersv into the in¬
the reduction of margin require¬
to 50% would .be helpful
dustry.
to
no
securities,
adequately cap¬
Banks
for
exceeding
Federal
States and their
inflated
holdings
government
most of them
italized.
tremendous
excessive
carry
large
of
of
the
the
upwards of
inventories, arid any loans for
speculative purposes,
(3) >"As long as banks maintain
cash
in
thoroughly
cities, towns and counties all over
land) totalling approximately
$14 billion, with a tax load that
credit, real
on
am
corporate struc¬
the
estate
'
movement
any
an
With our Federal debt in excess
of $250 billion and the additional
public debt (made up of states,
as
and
toward
I
our
equity capital if
dation.
attitude
being in
other purpose than to
pay off pri¬
vate debt..
x
*'
billion
take
in
•
duction
ments
llj 1948.
is
This
of the
lion.
ture
sums
except
among as
Life insurance
companies
purchased $3 billion of these securities, or approximately 73% of
the total. In
1946, when new se¬
curity issues aggregated $2.3 bil-
May
Bulletin
pansion of loans, unless they con¬
tribute directly to increased
pro¬
centives
Established 1856
Reserve
not
contrast,
Requirements ™
ownership of
large a body of :
Let us take as an example a
individuals as is possible promotes
company
with 500 stockholders
flexibility for management and which requires $5 million in new
the spread of direct interest in funds.
Right now it is attractive
and knowledge of the
workings of to borrow the money from an in¬
DIgby 4-2370
in¬
should
dividends, the
cern.
They are matters which
need for stimulating the flow of
should-engage the study of our
officials, the Congress, and the savings that properly find their
way into ownership securities and
leaders of industry and finance.
their
activation
in
the
capital
market. Important benefits would
Dangerous Tendency
^
be derived from changes in capital
The dependence of business en¬
gains taxes in the direction of a
terprise on insurance companies,
liquid, orderly' and
continuous
particularly life insurance com¬ stock market. This leads
m^ to
panies, for new money is a dan¬ margin requirements because a
gerous tendency. It is more dan¬ 75%
margin effectively adds to
business. In 1947, net new secur¬
ity issues, i.e., new issues less retirements, amounted to $4.1 bil¬
89
risk
ex¬
double taxation of
industry
SIEGEL & CO.
Federal
of
banking system.
period.
a
structure.
this condition and the trend which
it has set in motion of vital con¬
the diffusion
Soya Corp.
the
though at
largest
the Govern-;
the
only
such
confident that
ginning in correcting some of the
injustices of our wartime tax
a
business conditions are not
as favorable as
they have been in
the past two years.
In
Great Am. Indus.
!
I pause here to pay my respects
to the leadership in the Congress
that made possible a splendid be¬
in
when
So. Production
The
question
in
headed
acute emergency, and which in
my
belief should
function
critical
.
should
position to provide
necessary funds.
I consider
likely
this
on
vestment
all the force
even
agency of
ment which came into
Risk
on
The Federal Reserve authorities
various intervals have spoken
out
command,
time ;. I
riskless investments."
advancing credit where
been in
The
ACTIVE MARKETS
at
my
lending
Investment
insurance
still another indication that those
I
courage the tendency of business
to finance through debt securities.
Teletype—NY 1-376-377-378
Federal Reserve
-V
.
-
Trading Market
//■
pire. that is capable of producing
a vast amount of
goods, an econ^
one
my
these lending agencies be¬
.the capital markets have
upon
the
1948:
of the net purchases in 1946
none
equity
markets—and
both
these conditions have been forced
not
of
enactment
dividual
to
com¬
banks,
think,
the
endeavor
the
Members New York Curb Exchange
would
at
judgment, belong buying securities today are for risky assets.. ■
commercial banking system,
the most part seeking relatively
(2) "Supervisors should
the commercial
while
1923
then
The life insurance
in
the
capital, are buying a rel¬
atively small proportion. The life
insurance companies and banks,
which must place their funds in
securities with a low degree of
risk, accounted for 83% of the
net purchases in 1947, and were
the only net purchasers, in 1946.
On the other hand, domestic in¬
of
of 400%.
in the
Frank C. Masterson & Co.
stock
the shareholders reside.
of risk
dividends; the treat-!
ment of capital gains, and the dis-;
criminatory margin requirements
panies
which,
•
Teletype NY J.-1140^
Emil
-
in¬
support.
64 WALL ST.
are
ernmentai
which
Citizens Utilities
of
sibly two institutions to the banks
a
companies are
taking a very large proportion of
the new securities, while individ¬
uals, who must be the chief source
I wish to open my brief remarks
with a blunt
statement of fact
Tide Water Power
.Vy/'
\
sale
in the different localities in which
recent report of
State Senate Finance
Act of
"Life
gov-
business.
Established
with
to;
we
taxation
Mackinnie Oil &
;■
the
because
Committee, released fti connection
enue
terference
BROADWAY, NEW YORK S
United
the
if, in
years
avoid
to
According to
be
must
come,
York Curb Exchange
Advocates reduction of margin requirements, and of
statement with
n
of
Members
York Stock Exchange
billion : or
87%* were
by life insurance com¬
panies. When to this is added an¬
capital
that
New
lion,
$2
acquired
and
function
risk
New
of
of
path
the
frfc pONNELL & CO.
banks, and latter are usurping proper func¬
raising proportion of debt to industrial ownership.
shift the operation so that the
capital in the coming several
debt created would be half of the
years- goes undisputed.
Business
omy capable not only of supply¬
management faces one of its most other large source - of corporate $5 million, assuming the stockhold¬
ing the wants and needs of 140importan. t-wr.".
funds, bank loans, which amounted ers used their own funds to the odd millions of its own
citizens,*
problems
ift*
to.$3.7 billion yin 1947 and $1.4 extent of $2.5 million and bor¬ but
capable as well of shipping
billion in 1946, it is readily seen rowed
soundly
f ithe
same
amount
from
abroad, on balance, surplus pro-,
that after having painfully starred banks. In addition to
nancing " its **
stimulating duction.
This empire has been
new
to pare down the public debt and ownership
money
capital
and
cutting built by private funds; that is the
balance the budget, we now seem down the amount of
requirements.
credit, the only way we want it and the
only
There are un¬
to be engaged in rapidly swelling process would diffuse the owner¬
way we should have it.
I make
the debt of business/
necessary ob¬
ship of the debt from one or pos-^ that
; v
the
Request
abundance
an
risk
structions
Bought——Sold—Quoted
on
Capital Market
SCHRAM*
EMIL
all-important confinement of nation's financing to private channels.
'■
:•"} /..
'■capital gains tax.
as
I
New York Hanseatic
Prospectus
Thursday, May 13, 1948
President, New York Stock Exchange
Stresses
7-5CG0
CHRONICLE
Mr. Schram maintains life insurance companies are making loans belonging in commercial
tions of equity market.
Calls this unhealthy in curtailing needed risk-taking and
;
Pacific Gas & Elec. Co.
120
FINANCIAL
-
Texas Gas Transmission
BArclay
&
How to Revive Our Ailing
Trading Markets in
Standard Railway
COMMERCIAL
Ours
"
is
Joseph McManus & Co.
Members
New
York
■
great industrial
Exchange
New York 6
Teletype NY 1-1610
Digby 4-3122
a
Curb
Chicago Stock Exchange
39 Broadway
em-
H. Hentz & Co.
;
We Maintain Active Markets in U. S. FUNDS for
Members
New
York
New
York
New
York
Curb
Cotton
Commodity
Chicago
Stock
Exchange
Powell River Co., Ltd.
Exchange
Exchange
Exchange,
Board
of
Minn. &
;
Inc.
United Kingdom 4 % '90
;
And other Exchanges
I
DETROIT '
f GENEVA,
I (i'f -/i
,<&
*%*».•
s
115 BROADWAY
.
Telephone BArctay 7-0100
.
u
■■
V-r
^
Noranda Mines
/
Utah Southern Oil
H0DS0N &
South African Mining Shares
James M. Toolan & Co.
Exchange and Other Principal Exchanges
.
NEW YORK 6,
165
N.Y.
Broadway, New York
v,.
•
s
;
67 Wall
'.V
Teletype NY 1-672
Street, New York 5, N.Y.
Tel. HAnover 2-9335
2)
-.rrv
•t
I J Equity Oil
COMPANY,
Inc.
Goodbody & Co.
Members N. Y. Stock
PITTSBURGH
SWITZERLAND
-t
Brown Co.
;
British Securities Department
N. Y. Cotton Exchange
Bldg.
NEW YORK 4, N. Y.
'
Ont. Paper
Canadian Securities Department
Trade
New Orleans Cotton Exchange
CHICAGO
Empire State Oil
■,
i:
(
jJfcYSr* .Tiri
iU
C
Bell Tela NY 1-2680
t
Volume
167
Number 4698
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2083)
3
INDEX
s;v':J!^
"/»
,
Artid«» and News
_y "r/i
'
'
'•
\
'
1
"
-
Increased Spending Can Hasten War With
♦.
—Harley L. Lutz___
„
_
p«e
■■
Cgnent Status and Outlook
i
—C o ver
-
|| Our Dismal
Outlook—Virgil Jordan_
_>.r _1_.. .
How to Revive Our Ailing Capital Market—Emil
United States Exports—Their Current Status and
.
—Stuart Daniels
What Kind of Money?—James D.
Mooney
The Stockholders' High: Cost of
.
Mr. Daniels reports that
i _-Cover;
.
■
Work—Raymond Rodgers-1———
7
/
8
Grounds for
The Banks and the
a
Economy—Joseph M. Dodge A.
-
-
-1—-H--
-!
Stable Economy—Dexter M. Keezer__
Can We Win the Peace With
40-Hour Week—C.
a
,
-
13 v
-f
.
-With
n
i\ —Albert G. Flume...
o
n
e
1
a
v
-
BOnds-^ohn
A Look at World Bank
I f i
averaver
lion
►
Vprewar
amount, [ ex-
>
4ports have
H; Rumbaugh. .lil
•five
In
1937,
>
was
and CreditDe velopments-—J. Brooke Willis.. 22
income
;at
Stuart L. Daniels
computed
$71.5
bil-
Planning Would Give Business
billion.
investment AssoeiatioU
shipped,
12
of New Fork Is New Name.....
.
14
„*.i_
New Oil Strike in Central Oklahoma.....
Announces Payments
Mexican Bonds...i.
on
^1||
Bank and
insurance
Canadian'
_
Dealer-Broker—Investment
;
——"12
Jix
,.
Recommendations..8
Einzig—Nationalization In Britain.
Bargerori.i— ' H' '
From Washington Ahead of the News^-Carlisle
;
:
Indications of Business Activity
"
Mutual
>
Funds
.NSTA
2.:.—
—
41
|
16
and contributed
; Our
Reporter
Public
•
-
Utility
Securities—
—
.....——
Securities Salesman's Corner..-1
'U
:
"The State of Trade and Industryl-...L..
1; Washington and
Tou-.i-,———■-j
Published Twice Weekly :
The
COMMERCIAL
Dominion
Other
and
of
Canada,
Countries,
■H.
Bank
$25.00
Reg. U. S. Patent Office
WILLIAM
DANA
B.
COMPANY,
::*::;vg5'.5ParkPlace, New: Vork S, ar..,y.
-
$25.00
,
$38.00
RIGGS, Business
i-'iC" f-.
' .■*»
Thursday
(general
vertising issue) and
plete -statistical issue
be
records,; corporation
ftate
and
UOther
city
S.
ad¬
bank
.
Salle
.St.,
Copyright 1948 by William B. Dana
-y
'
Company >
25, 1942,
York, N; Y.,
ary
at
the-post -office
under
the
Act
^
Subscriptioils
Possessions,
; ;
'
Rates,,
;
v*
r.
J
;-y
j'
|
-
-
• :
per
/;
•
channels,
but
trade
effect
ah
and
value
total
shipped
In
was
Tele. NY 1-2425
NATIONAL BANK
of
of INDIA, LIMITED
The
and
Bankers
to the Government in
Kenya Colony and Uganda-
raw
Head
exceptions, such as
appliances,
products remain in high
Yet;
exporters
have
felt
orders
fewer
of
and
Banks which last
:
double
.
shifts
Colony,
Subscribed
1
slow
handle
payments have found the regular
The
'.
.
•.
Fund
£2,000,000
£2,500,000
:
Bank
conducts
every
description
banking and exchange business
of
'^"Trusteeships and Executorships
faAukalso undertaken
•
still running at a higher peak than
the 1946 level and far exceed any
prewar
with
in
but;in comparison
year,
the
1947
they
average
are
LAMBORN&CO.,IDC.
definite sharp decline,
a
This
gories
99
in all cate¬
commodities. I Certain
is
of
i
June,
$1,320
not
WALL
true
STREET
NEW YORK 5, N. Y.
V
classifications have been continu¬
ing at a high rate; even increas¬
in value and volume.
Par¬
ticularly is this true in the prin¬
manufactured materials, ship¬
ing
the first
SUGAR
many
Raw—Refined—Liquid
ments of which have been stead¬
ily
increasing
even,
$1,086 million in February.
Last
published official figures for Feb¬
pace.
foodstuffs
million
showed exports at $1,086
in
Zanzibar
Capital____£4,000,000
Paid-Up Capital
Reserve
(
"
business day sufficient to manage
the current situation. Exports are
million; and then from
point
26, Bishopsgate',
London, E. C.
India, Burma, Ceylon. Kenya
Kerfcho, Kenya, and Aden
and
the
season
to
In
/
the huge volume of foreign credit
of the year a continued decrease
from $1,091 million in January to
lowest
Office:
".
-
Branches
1
.
cipal crude "foodstuffs and
the
'
New York 5, N. Y.
Tel. HA 2-8080
from; satisfied
'
worked
peak
downward.
QUOTED
CORPORATION
coal
gust, $1,265 million; September,
$1,183 million; October, up quite
a bit to $1,303 million; November.
$1,195 million; December, $1,199
ruary {
SOLD
52 Wall St.
household
and
buying,
from
the
value
—
FIRST COLONY
few
a
effect
in
over¬
give the export
increased importance.
until
far
demand.
•
Taken month fey month; "peace¬
shipments (not war material) continued to mount in voland
District Theatres
;/ BOUGHT
be¬
material
capital, goods
consumer
the
was
general
for
With
to
was
Broadway
Teletype N. Y. 1-714
Corporation
starved
are
morel'American
materials /is
which circumvented normal
trade
markets
oversea
radios
grams
1908
2-4500—120
Bell System
>
careful
more
every nature and description;
man¬
was
We'are interested in
a
•
were
in
-valued
May,
$103
at
DIgby 4-2727
$121
million in
(Continued on page 31) /•/;
,
Exports—Imports—Futures
maintaining an
Exports of crude
or
7.
-
ill
| N. Y. Title & Mtge. Co;
'
Prudence Co.
year;
in
,,
Newburger, Loeb & Co.
IMevtberr Nets York Stock Exchange.
St., MY. 5
Bell
Teletype
WHiloboU 4-6330
NY 1-2033
.
>
The
;
-»
,
Public
PREFERRED STOCKS
of
Winters
" '
" /
*
-''.I..
.
Members
,
;
.*
■
New
25 Broad
.
n
....
i.V..n
Members
York Stoclc Exchange
i
,
..
Albany
t
♦
»
Tel.: HAnover 2-4300^
*•:Teletype—NY 1-5
-
Boston
-
New
Glens Falls
...
-•
Tel.:
FINancial
C. E.
Schenectady
^Members
Chicago 3
2330
*
J "
Worcester
Bank
Company
New
York
Crampton Corp.
Analyses available
Ft/
Yofk Curb Exchange
135 S. La Salle St.,
Street, New York 4
&
National
Common
Spencer Trask & Co
t.
IS Bro«4
of
High Grade Public Utility and Industrial
Mtge. Gnar. Co. ^
v
.
offerings
& Trust
.
$35.00
All
we
billion ;for
shipped under govern¬
ment relief and foreign aid pro¬
.
iir United
States,- ^tJ.v S.
Territories and Members
of
Union,
REctor
* >/
New
'
Pan-American
.
March
"
•
Subscription
•
Lawyers Title & Guar. Co.
Febru¬
at
of
8, I879i.X."
,
^
Lawyers Mortgage Co.
'
•
second-class matter
as
V
Bond &.
clearings,
* e.'.r' -
■
-La-
r
the- fluctuations in
CERTIFICATES
r
...
Reentered
of
Established
Members N. Y. Security Dealers Assn.
•
and
Chicago 3, HI.
(Telephone: State 0613);
1 Drapers' Gardens, London, E.
C., Eng¬
land, c/o Edwards & Smith.
'
year.
J.K.Rlce,Jr.&Co.
TITLE COMPANY $
*:■-*'
pews
etc.).- '
1948^
$28
over
terial
million,
* ^
Monday (com¬
market, quotation
news,
news,
Offices:- 135
Record' — Monthly,
(Foreign postage extra.)
Earnings
niade .fti New, Yjork funds.
every
—
.
Record—Monthly,
(Foreign postage extra.)
Manager
Thursday, May 13, 1948
4-
Every
year.
rate qf exchange, remittances for for¬
eign subscriptions and advertisements must
SEIBEjfcT, Editor & Publisher
-^WILLIAM DANA SEIBERf/ President
f
per
Quotation
year.
per
iFa r
million; July, $1,265 million; Au¬
the
-
-WILLIAM D.
per
^
$42.00 per year.
Note—On. account
V 4; 4'RE.ctor 2-9510 *0 9576,.
HERBERT D.
and
Monthly
Publishers
'
—48
Other Publications
FINANCIAL CHRONICLE
38
1
V
since that time the trend has been
5';
_..—.
Finishing Com. & Pfd.
balances
the \ threatened
of
was
generally
Tomorrow's; Markets (Walter Whyte Says)
dollar
coal exports became effective
September,
figure of
$1,503 million shipped was re¬
corded in May, 1947.
However,
.4—:r— 44
:
March
■
undergone i
need
1945,
—.——-.^4.^ 20».
1
Now in Registration.—..
On
scrutiny-abroad than ever.
On
March 21, a six-week ban on soft
ufactured goods, $2 billion more
than in the 10-year period, 193140. ' A sizable portion of this ma¬
ume
<4 Securities
have
it
time"
^
14
:.J:
small
of
.
cause
worth of raw' materials and
all
46
| Railroad Securities
but
trend/
tlje war
When
private
5
G<nre^mehts.L-w----'-.^-^^-w-l--'-i:^—i-L;-28:.;
on
ex¬
heavily to the in-
over^^hiingsTiP^jority
and Bankers.. —^'1.--i'.
prospective Security Offerings...
Kingan Com. & Pfd.
U. S.
previous
shipments
Applications for import licenses
flationary'spiral.
'
.
exports.
;
ments V for
shortages
trad©
.
commercial
.
Corp.
Federal Water & Gas
Corp.
/ Dorset Fabrics
mil-
tightened their already
import
regulations.
For
example, on Feb. 25, a Brazilian
law placed practically all exports
under a priority license
system.
This, too, in the fact of a large
backlog of overdue dollar pay¬
traditional
i exporting manufacturer,
also extended domestic
private
Observations—A. Wilfred May..,
~
.
Notes
About Banks
News"
—
and
1945,: to' Fe hr
shipped abroad
1.4-''
,
4-6551
Texas Gas Trans.
ended the'United strike.
\
"i)
'*
■
the only nation capable ; • Reports
from
foreign buyers
of producing in
quantity for the and export merchants /-indicate
world markets.
In the two and
that the demand for goods con¬
one-half years from September, tinues to be as
strong as ever.
-—83
Securities.^.^i^
STREET, NEW YORK
great deal of confusion which
a
further
johnny-come-
the old-line
merchant
States
...Cover
.1
^
Coming • Events In' the Investment' Field.
j
■
as
well
as
port
2,5
....
-
into
Tennessee Gas Trans. Co.
stern>
boon to the small
a
and
.
Stocks.—.,
Business Man's Bookshelf....
-i
:
proved
lately
Regular Features
As We See It (Editorial)
:
crease
JrJ 4T %
Source-———i—47,
(Boxed)--i---—-—
Sees Life Insurance Funds Huge Capital
them
transform
Telephone: WHitehall
government
pinch
other
manufacturer
22
:
the
.
20
George Krieger Discusses Future of Farm Market
on
Total estimated for 1947 was
$14.5
billion.
This
tremendous
in¬
Jf v Amending "Waitm^ T^ribd'^:Restrfctions-^._LX--Lv-i-vJr- 18
Return to Gold Standard Urged by 'NAM--.——^-...-.-.1— 20
True Objectives
gold,
not
yet completely settled.
Foreign governments feeling the
hand, was
$3.3 billion in 1937, $3.1 billion in
1938
and
$3.2
billioh in 1939.
Clark Byse and Raymond J. Btadley Appraise Proposals for
i
your
into
has
>,
$71
By 1947, it was estimated
at $202 billion,Value of exports
"Breathing Spell"
New Type bf Airline Financing Announced
*
in
■' lion,
in 1938
at $64.2 billion and
in 1939 at
a
turn
bills.
99 WALL
imposed more
stringent export controls on ship¬
ments to Europe.
New methods
oi issuing export licenses resulted
.
*
:
our
na¬
How'to Keep Taixes WHjWn Reaisonr^ItiimLi^.^----^-—4 :'
%
were
downward
fold.
-
tional
21
ex¬
panded almost
.
,
■
can-
bonds
.
its
* ■;.
t' 18
:
.
1848 Monetary
we
and
Obsolete Securities
Dept,
February was a short month with
two holidays, March a
long month
with no holidays.
£
"
\ 'Although there are no figures
available for April as yet, all in¬
dications point to a'
continuing
times
quarter
McConnaughey...li:'-l Id
Capitalization Problems in Real Estate Appraisals
—Leon W, EllwoodLi....:
r.-..—...........
.
CAN
:
statistics show total
exports up to
-
jj$l,141 million-but only 952
two and three-
17
.....
:
The Revised Proxy RttleS-^-Robert K.
dollar
claim
stocks
we
practically steady deRecently released March
| crease;
t h
t i
a
income
income
'14
J t15
Foreign Investments and: Fluctuating Currencies •'" • t V i::
*
but
in »:v interna-nine-month
tional affairs.
-
1J-113■"£;
E.rWilson.
The Keynesfan Miracle—Ludwig von Mises
How to Eight the Reds—John Foster Dulles.....
'
obsolete
position in the nation's economy than ever before.
Ibis fact is well in
keeping with the new leadership role this country
y y
; assumed^
———y^t; ' ■ 1 ——
aging > about
[
don't
vital
-/
Toward
;
THE ALCHEMIST
We
m a
year
•
more
Babson.^..„_u_L^'——Ill i.
Optimism—Roger W.
exports have been
1947 ende^ with the United States
having exported the
greatest quantity of goods in its enitre
history and found exporting
in a
•
What About Money and Credit?—M. S. Szymczak_i_L»_l-—
-
New York State Chamber of Commerce
onr
.
Living—What to Do Ahout lt yS1"/-
6-
National Planning Won't
AMD COMPAKY
.
generally downy ward trend since the
high point reached last May.
States this
Schram_r^
V; downward trend was somewhat reversed in
March, particularly, in
Outlook
V
V commodities needed for Europe.
Predicts ERP will have favory able effect m increasing foreign trade
particularly if government
4,i|
keeps its promise to use private channels. V
py:':; —Robert A. Gilbert..^
?
vForeign Trade Consultant,
___Cover?;
:___
y/
By STUART L. DANIELS
,
.
—Claude L. Benner
licmsTfin
B. S.
v'. V*
:
Russia
<
61
on
request
Unterberg & Co.
N.
Y. Security Dealers Ass'n
Broadway, New York 6, N. Y.
Telephone BOwling Green 9-3565
Teletype NY 1-1606
COMMERCIAL
THE
(2084)
4
JAMES D. MOONEY*
By
:
President
of the Board,
Chairman
and
;V
^ \
Willys-Overland Motors, Inc.
boom in costs and prices is result of
Mr. Mooney, pointing oul present
How to
Money?
What Kind of
enlarged
Mr. RumI calls for greater efforts to
supply, advo¬
money
curb
as
inflation
on
lYii
expenditures, he advocates appointment of continuing civil
mission to scrutinize
efficiency in carrying out defense
com-
program.
Speaking at the Third National Textile Seminar Monday, Maj
Chairman of
stated that he expected a It
defense program indefinitely, and therefore high taxes i
great center of industry and commerce, Chicago is a natural place
and price problems of business and of our country. Here in Chicago
great grain and produce-markets, livestock markets, the* distinguished merchants,
Because it is the
the
make all public expenditures
and efficiency,
urgency,
For mitigation of inflation from federal armament
and taxation.
"Public Aspects of Taxation," Beardsley Ruml,
on
discuss the money
are
of necessity,
meet tests
Urges free markets with more and harder work, and
greater efficiency as means of combating inflation. Decries price fixing, regimentation and govern¬
ment controls. Blames paper money as contributing to present world economic ills and calls for a
return of gold standard and sound fiscal policy.
to
Keep Taxes §1
Within Reason—Ruml
r
taking steps to avoid further inflation.
cates
Thursday, May 13, 1948
FINANCIAL CHRONICLE
&
Board of R. H. Macy & Co., Inc.,
'
mail-or-*>
and
However
economists—so-called economists
with their beautiful theories, spun
m a nagers,
whose
plans in isolation from the real world,
and
financial don't study prices at these foun¬
policies must tain-heads of prices in the real
der-house
take into coh-
for
sound¬
The
stability,
and
good
management
of the
great
ness,
:
trade
and
business
Mooney
D.
or¬
tabulated,
Necessity is going to force us to
get realistic about prices. There
has been an awful lot of silly
twaddle talked in the last few
about prices by people who
pose as authorities. Their pose is
untenable simply
because their
years
ganizations pronouncements are based upon
that distin¬ t h e o r i e s untempered by the
guished institution which is now searching fire of experience. Un¬
preparing to celebrate its first fortunately, these fallacious theo¬
hundred years this summer—the rieshave influenced toomany, of
Chicago Board of Trade. Many, our government's fiscal policies.
many times this necessary organ¬ We businessmen, however, must
ization for a free market in grains face the realities of prices for the
has
been
investigated, criticized American people and deal with
and condemned by those who do these price problems and factors
not understand free markets and in the real work-a-day world in
the working of the law of supply which we live. Inasmuch as prices
and
demand in price making. determine every one's cost of liv¬
These hostile authorities, and these ing, real wages, and real income,
organized public pressure groups vy*e must understand the causes
have no conception of the func¬ and Consequences of rising costs
tion of free markets, nor of the and prices.
Prices are in terms
quiet, inexorable working.of eco¬ of money, and prices rise and fall
nomic laws:
yet they have fre¬ as the supply of money is inflated
quently assailed this essential in¬ and deflated.
by
illustrated
are
Never¬
strument of open trading.
theless, the Board of Trade has
survived for 100 years, and has
added world' fame to this city's
Every day the Board
of Trade continues its useful ser¬
commerce.
vice
for
agricul¬
and
trade
the
tural interests of the whole world.
institution
growth in an
place
and
survival
Such
market
the
of
Just
it is of prime impor¬
understand these
Whether we are to have
now
tance for us to
matters.
not—World
III—is anybody's guess. But
another worldj war or
War
there is
have
a
no
doubt that
we
are
rearmament program.
is going to place
we
should
to
This
heavy strairt
a
I am not sure
upon our economy.
which
time.
I
be
more
afraid
can
only be due to the. necessity
of the useful service performed
of—another war, or the inflation
—further inflation—that will arise
by it.
from
the
and
rearmament
mili¬
World
III
War
must
we
do have
with
another World
"Since
Deal
not
it is going to be "too bad" for this
I
country.
sink
values
as
low
able
money
those of
our
see
can
as
We
to
France, where today it takes 305
will
much
great
end
the
of
increase in prices
place since the
is
a
that
the
prices are made in terms of money.
a truism recognized through¬
the history that an increase
increase
to
in
the
a
of
tests
is directly in proportion to the in¬
in the supply of money.
this
scribe
best
way
to
inflation
that
is
dis¬
our
preparedness
program
at
Well, just what does the Board tary
impos¬ present costs art# prices.. An, ad¬ the, drawing of checks. These two
sible for its enemies - to destroy ditional extreme inflation would^ items constitute the readily avail¬
it?
It provides a free market not be necessary if we could have able money supply." But let me
hasten to say that these two items
place for grain, where the law of the patriotic cooperation of every
But we can count on more are not the whole potential money
supply and demand adjusts prices one.
;
No man, or group of
is strong enough to stand up
j modities.
i
men,
against these economic forces and
turn back the tides.
The
ful trader is the
who has the
of
keenness
'v the
one
intellect
to
success¬
perceive
trends and go in the
price
of
direction
instead of
the
economic
tides
against them,"
i The Successful merchants who
built the great wholesale and re-
itail enterprises of Chicago made
J this city the world's leading mer¬
chandising center.
A successful
merchant has to be a price expert.
It
is
too
bad
that
of our
many
t * An address by Mr. Mooney be¬
fore
the
house
American
Steel
Association,
May 12,
1948.
;
.
Ware¬
Chicago,
.
,
,
111.,
|
,/
than
it
be
forced
to
meet
severe
of
counting Office^ nor any of the
Under our Federal Re¬ several committees of Congress,
inflation we now have from the serve system the banks can in¬ nor even the Cabinet is well or¬
last war was unnecessary.
It is flate this money supply through ganized or situated to meet this
the purchase of the government special need.
a result of expedient and imprac¬
ticable policies. Anyhow, we have debts; at the present time this
"(2) Expenditures for produc¬
means could be used to expand the
a vast inflation from World War
tive plant, equipment and inven¬
II, an inflation which has not yet money and bank deposit purchas¬ tories,
especially for programs
ing power more than $450 billion
run its ravaging course, and there
outside the United States, should
in addition to that already avail¬
can
hardly be any doubt that
be
represented by loans and
preparation for the possibilities of able to buyers. But let us omit should be financed by the sale of
World War III will increase this this potential supply of money in
savings bonds to the public. Such
inflation in our monetary system. the hands of money managers and
a
program of sales of savings
We must seriously start consider¬ take the actual supply of money
bonds picks up purchasing power
now available in comparison with
ing all of these problems now
that would otherwise have to be
before they overtake us. Then it that of prewar and pre-New Deal.
withdrawn by taxation.
It has a
To be simple and brief, I shall
would be too late.
great advantage over taxation in
omit fractions and give you round
When World War II was about
that it is selective, and that it
percentages. The available supply
to break out, it was quite obvious
therefore does not impose on those
of money<today is 450 % of the
that World War II would be doub¬
who cannot afford it, as taxation
supply of money in 1920;; 400%
ly disastrous in its potential con¬
would, the direct costs of con¬
of 1929; and 250% of 1941.
struction
of
sequences to our economy in the
productive plants.
The causes of the present boom In
United States.
We would have
principle, we shall be on
to sit up with the costs and eco¬
sounder ground if our interna(Continued on page 35)
•
Much of the supply.
inflation, I think.
in
international
our
properly and wisely, under con¬
ditions that assure goodwill and
dignity
receive
payment from abroad in
goods and services,
We
expand our imports of raw
materials and manufactured goods;
we
must
reduce
barriers, and
both
must
to
other
Central III. Pub. Serv *
Tenn. Gas & Trans.
Cleveland-Cliffs Iron Co.
Texas Eastern Trans.*
Firemen's Ins. Co. of Newark*
Texas Gas & Trans.*
Bought
■
i
.
I
UJ
1
Dj
::
:
-
Sold
•
Bought—Sold—Quoted at Net Prices
when
and
these
—
are
matters
business
for
enterprise and
policy; but the more
legislative
viously,
the Reciprocal
Trade
Agreements Act should be ex¬
tended for its importance in pro¬
moting international trade, and
thereby among other things, as I
have explained, making it possible
for us to have lower taxes than
otherwise would be required.
addition to the s e threes
of action, we should gear
our tax program to
the consoli¬
dated
cash
budget, as recom¬
mended by the Committee for
Economic Development, and for
"Jn
courses
the reasons stated in the
Commit¬
and
tee's recent report on Taxes
We should also set
the
Budget.
our
tax rates to balance the
•
Goodbody & Co.
,
lorig-coritinuing defense progrant
makes
special and specific de¬
mands
nation's
the
on
resources
and production.
Inflation control
under these circumstances must
:
and
special
appropriate
utilize
specific measures and should ex¬
pect from taxation no more than
its < proper
contribution to> the
over-all
If
program.
too heavy or of
the
taxes
wrong
are
kind,
obstruct rather than*, assist
they
efforts to get our
highest pos¬
rates
are
If; our
set to balance the
budget at high levels of produc¬
New York, New Haven
& Hartford
tive
;
Railroad
.
employment, they are high
If more inflation control
enough.
Company 4s of 2007
is needed,
it should be fblind in
other than taxation."
'f"
1
Members N. Y, Stock Exchange and Other Principal Exchanges
.115 Broadway, diew York
Telephone BArclay
00 -
bud¬
get at normal high levels of pro¬
ductive employment and should
not expect taxation to carry art
unworkable part of the burden of
inflation control.
A large and
measures
r
Ob¬
the sooner, the better.
and
tax
Quoted
*Prospectus on Request
As
of the world.
parts
just what manufactured goods,
raw
materials, and services we
shall
import, and how much,
to
sible level of productivity.
Oxford Paper Com.
and
borrower
both
for
lender, we. must be prepared to
our
Art. Metal Construction
pro¬
with grants for
relief, the lower our tax burden
will be, now and in the years to
come.
But to make loans abroad,
gram, as compared
impediments to trade,, we tnust
facilitate American tourist travel
charged with the responsi¬
bility of scrutinizing and com¬
menting upon general matters of
defense policy and upon the effi¬
ciency of the- carrying on of the
program.
Neither the Bureau of
the Budget, nor the General Ac¬
,
to every influence
brought to bear upon these com-
lighter
keep
to be
money in circulation and the de¬
mand deposits in banks subject to
of Trade do that makes it
quickly
things
that will
respect of both Congress and the
military might well be established,
costs and prices is to
use some simple figures, and state
the percentage of the increase in
torting
are some
as
representative civilian commis¬
sion having the confidence and
de¬
the
bad
necessity, urgency and
efficiency.
Since defense expen¬
ditures are likely to be more than
half the budget, it is reasonable
that they also must meet these
tests.
A continuing and highly
competent non-political and non-
goods
purchased will eventually
result in an increase in price
Moreover, the increase in prices
Perhaps
done
be
burden
tax
should
be
crease
can
as
"(1) All' public expenditure
made
proportionate
supply
a year.
Rigid Tests Should Be Applied
out
quantitiy of money
now,
would otherwise be.
It is
the
and $60 billion
it looks and there
consequence
boom dur¬
ing the war and under the New
Deal before the war.
Now, all
in
from
years
but the situation is not
of the inflated money
available without
three
or
"Expenditures of $50 to $60 bil¬
lion a year mean heavy taxation;
taken
war
"(3) The larger the proportion
loans that can be properly
made
tween $50
The Causes of Inflation
has
,
would not be surprising; and such
a
defense budget
would mean
total Federal expenditures of be¬
buy ten years; ago, and is still
shrinking in purchasing power.
The
de-
Imports Must Be
Expanded
;
Beardsley Ruml
of
two
buy less than half as
material and labor as it would
which
likely
a v e
.
Loans and
fense programs indefinitely. A de¬
59-cent dollars, which in turn
now
h
ditions.
fense budget of $30 billion a year,
francs to buy one of our American
needed
the pub¬
under 'no-war, no-peace' con¬
lic
to
future,
are
effort
and
sales of savings bonds to
are
likely
savings
promote successfully adequate
to
have peace in
the
foresee¬
fiscal and administration policies,
Security
of
under way will give
idea as to the amount of
organization
part:
we
sale
now
some
us
Ruml
Mr.
stated in.
War
continuation of New
a
bonds
be.
abandon
the
for
would
wise
bonds to the public rather
by taxation. The campaign
ings
tnan
than it other¬
silly New Deal ideas; because, if
we
the tax
lighter
keep
burden
not greater than
were
ing up of world productivity, as
distinguished from emergency re¬
lief, are covered by sales of sav¬
might be
done that will
not sure that
am
tional expenditures for the build¬
that
the directs costs of World War IK
If we are now to prepare for
The Price Outlook
trends.
price
James
the
and
tions
same
<$-
"
three things
laboratories the ;; consequences of the New
study of prices are right Deal, if all the costs could be
here in Chicago.
condi¬
world
the
vS:
he
mention
did
All the great
world.
si deration
nomic consequences—direct con¬
sequences—of
World
War
II,
while we were suffering from the
consequences of the New Deal at
*
a 105 West Adams St., Chicago
Teletype NY 1-672
-Central National
1
:
.
•••;:
(Special
\
22 East 40th Street, New York
Telephone: LExington 2-7300
With First Securities Corp.
Corporation
ESTABLISHED 1927
16, N. Y.
'
Teletype: NY 1-2948'
•
The
Sloan has been
of First
coran
x
to
Financial
DURHAM,| N.
Chronicle)
C. —Perry
A.
#5ded to. the staff
Securities Corp!, Ill Cor¬
Street.
>
Volume
167
4'.-
Number 4698
V ;
Steel
The
(2085)
Output
Harriman
Carloadings
Retail
.'
State of Trade
Trade
(Special
:
,
Industry
A slight increase
That
occurred in industrial output
modestly higher than for the like period of 1947.
close to peak peacetime levels.
for the country
It
was
The utterances of Leon H.
and
ILL.—Edward
Keyserling deserve all the
A.
J
notice
press
Ripley & Co.,
Incorporated,
And because of his intellectual brilliance,
forthrightness, honesty, and lack of motivation by
personal political considerations, his is the fairest
representation of the "economic management"
5: For certain types of durable goods, order backlogs continued to
heavy, but for many items the supply was considerably larger
thesis which
is
red-hotter
now
i
respect to manufacturers' sales for the month of March,;
Commerce Department estimates show, they rose to $18,200,000,000;
$2,200,000,000 above the February total. This increase, the Depart-;
notes, was largely due to the longer March work-month and
"was "sustained by the continuance of strong underlying demand."
than
worldwide issue.
ever
as
;135
year ago.
V
:
•
.
Mr.
He*
a
the
Month-end book value of manufacturers' inventories, at $28,900,
4; 44-44
\
*
*
*
those
over
7
..
•
*
(
*
,
'44 -:-v
'•
fact
both
at the close ;of
*
"pro-control"
latest
in
that
his
his
remarks
direct
talk
Stifel,
seasonal
layoffs
reported during the week, but
In most areas employment held at a very high level.
\ According to the Bureau of the Census, civilian employment rose
1,000,000 workers between the months of March and April.
'*■. The total
which 'this
kind
of
1,630,000
A
the
58,330,000 during the week of April 4 to 10, pr
than a year ago,
more
large part of the rise Was Seasonal arid occurred in agriculture,
Bureau
It
reveals.
estimated
the
number
of
workers
this
in
category at 7,500,000 in April, or some 600,000 above March. How¬
ever, it noted that due to delays in planting operations this year,
farm employment was below the April, 1947 level.
In
non-agricultural
by 400,000 to
rose
a
industries, states the Bureau, employment
total of about 51,000,000 in April, or close to the
high recorded last December. Accompanying this was a reduction in
unemployment to a total of 2,250,000 in April, or about 250,000 lower
than in March.
The net effect of these
expansion of about 750,000
April, reflecting for
the most part the entry of seasonal workers.,
In the civilian
changes
was an
labor force between March and
A deadlock the past week-end in negotiations over wages and
working conditions between the rail carriers and the unions prompted
President Truman on Monday of this week, to seize the roads by
executive order and direct the
In the
name
In
were
Secretary of the Army to operate them
the
essay
value
actual
status
of
business
and
the
economy is definitely
trying to balance, and in
what direction we are now moving, before we make plans for "level¬
ing off" or* "leveling up," or for altering the relationship between,
prices, wages, profits, and employment. The key fact is that despite
the great mass of statistical data that are available, we still are
incapable of even making appraisals about the relative effects of
existing discernible factors. In other words, we really do not know
recognizable.. We must know what
where
we
4;
are!
we
are
>
This
hiatus, and the accompanying inability ;to forecast, have
been demonstrated time and again in the past.
474^4'v..
anticipation of the strike taking place as scheduled, steps
First chronologically, we have seen the "management" exercised
on Friday last by many of the roads, to avoid needless
b,y the Federal Reserve System ever since 1913. Despite the genera
taken
"^announcement of the President's order.
"
Commenting
on
the White House directive, Alvanley Johnston,
head of the railroad engineers' union, stated that the railroad workers
would obey a court order against a strike, if the government gets one.
By Monday evening the government obtained
from
temporary restraining
a
the
Goldsborough.
Federal District Court signed
by Justice T. Alan
This action canceled the nation-wide railroad strike,
set for Tuesday at 6 a.m., Eastern Standard Time.
The unions' strike
committees abiding by the court's order rescinded their strike order
Ihe same evening;
.
The strike at Chrysler Corporation got under way at 10 a,m. yes¬
terday, May 12, following a unanimous vote on Monday evening of
t
the National Council of the Chrysler Department of the United Auto¬
mobile Workers, CIO to back the stand of its
The strike
negotiating committee.
Chrysler workers in Michigan and
order affects 65,000
10,000 in Indiana and California.
"v
444
-v"'
~
.
Net railway operating income of Class I railroads in March, 1948,
totaled $60,724,331 compared with $73,924,144 for the same month in
1947, according to the Bureau of Railway Economics of the Associatioii of American Railroads, For the month of March, 1948, the
carriers had an estimated net income, after interest and rentals, of
$35,200,000 compared with $46,200,000 in the same month in 1947.
For the first three months of 1948, net income before interest and
rentals, totaled $142,646,580 compared with $176,243,935 in the same
period a year ago. Net income after interest and rentals in the first
three months of 1948 is estimated at $72,400,000 compared with
$94,-
400,000 in the corresponding period of 1947.
/.'
Total operating revenues in the first three months of 1948
amounted to $2,243,241,538 compared with $2,040,521,145 in the like
period a year ago; or an increase of 9.9%, while operating expenses
in. the first three months of 1948 added up to $1,820,970,544 compared
with $1,598,151,546 in the corresponding period of 1947, or an increase
of 13.9 % *
I,
.
.
■
1
Mild weather in many sections of the country spurred consumer
buying during the week and resulted in total retail volume rising
moderately above that of the previous week. It continued to compare
and
expertness
freedom
landed
establishment of
it
and
the
past week.
The
demand
for
Summer
merchandise
the
country's
in
economy
At
messes.
..
Infraction,
of
o£
these
World
sound
War;
principles
One J in
first
1
war
,
Planning in the'Twenties
open-market operations
After allowance
is
made
for
the first four months
the usual
of the
seasonal
1935-39
changes.
were
increased ninefold.
their firm.;
viously reported in the "Financial
Chronicle" of May
to
stimulate
our
domestic
trade
situation, the
cheap
money
policy
and credit expansion was reinstated on a grand scale in the autumn
(Continued
-
on page
W. E. Hutton Co. Wire
To Q'Brian Mitchell
W. E. Hutton & Co., 14 Wall
Street, New York City, members
of the New York Stock Exchange,
the
announce
of
installation
a
direct private wire to their corre¬
spondent, O'Brian, Mitchell & Co.,
Liberty
N.
Bank
Y,^r.-:..
.
■
-
Buffalo,
; >4 ;
Building,
-
•
:■
^
'•
New De Haven Phone
De Haven &
&
Bodine, 30 Broad Street, New
City, members of the New
York Stock Exchange, announce
that the telephone number of the
has been
firm's New York office
changed to DIgby 4-0200,
Canadian Pacific
i
:r
Railway
Imperial Oil, Ltd.
v
r
International Petroleum
HART SMITH & GO.
52 WILLIAM ST., N. Y. 5
HAnover 2-0980
Bell Teletype NY 1-395
;
New York
Montreal
Toronto
Royal .Bank of Scotland
Incorporated by Royal Charter 1727
17)
throughout Scotland
LONDON OFFICES:
Dravo Corp.
3
Universal Match
Bishopsgate, E. C. 2
8 Wtsl
49
McGraw (F. H.) & Co.
Smithfield, E. C. /
Charing Cross, S. W. I
Burlington Gardens, W. /
64 Neu) Bond Street, W. I
Sought—Sold—•Quoted
average,
■'
TOTAL ASSETS
£141,823,667
FREDERIC H. HATCH A CO., IHC.
^MEMBERS N.
!
Townsend, Crouter
York
Branches
Established
-
'
1
4 HEAD OFFICE—Edinburgh
63 Wall
-
6.
While
,
1888
l
'4
.(Continued prrpage-33)
4
McCrary's association with
Bateman, Eichler & Co. was pre¬
Value of
Loadings for the,week ended May 1, 1948,Hotaled 891,638 cars
according to'the Association of American Railroads. This was an
-
.
Mr.
of this year, the Board
CAR LOADINGS ADVANCE FURTHER IN THE WEEK
Eichler & Co., 453 South
SpringStreet, members of the
Los Angeles Stock Exchange, an¬
nounce
that Robert H. McCrary,
formerly Vice-President of Mc¬
Crary, Dearth & Co., Des Moines.
Iowa, has become associated with
open-market policy was rela¬
tively inactive in 1925 and 1926, in the desirp to ease the strain on
the London gold reserves and other foreign centers, and in order
in¬
reveals, was
about 6% larger than in the corresponding period of 1947.
.
LOS ANGELES, CALIF.—Bate¬
man,
were
Department store sales, according to the Federal Reserve Board's
sales in
Bateman, Eichler
time "emer¬
pursued in vigorous fashion.
From Nov. 21, 1923 to Sept. 17, 1924, holdings of government securi¬
ties
HcCrar, WHh
.
The money managers initiated a mild open-market policy when
rediscounts went below a billion dollars in the 1920 depression.
noticeably and re-orders of Spring items were heavy. Total
.dolla? volume, as a consequence, was moderately above that of the
corresponding week a year ago;
index, increased sharply in April to 299%
Robert H.
occurred
economists, had been further reduced by
gency" amendments to the Federal Reserve Act.
1923
with Eari
facilitating7 the
of many
In
the
forcet
I. Custin& Co.
with the
government's
huge financing requirements of that period. " While this initial ex¬
pansion was justified by the exigencies of war, the credit inflation of
the 1920s, supported by our central banking system, was not so neces¬
sitated, and was not usable industrially.
Ending in an expansion
doubled to $14^ billion in loans and investments, and $13^ billion
in deposits, arising from a $600 million increase in member bank
reserves, the inflation was unwittingly stimulated by the well-meant
management efforts of the Reserve authorities.
The Reserve Banks
kept their rediscount rates artificially low arid periodically engaged
in heavy open-market purchases of government securities; while re¬
serve requirements of member
banks, already too low in the opinion
outbreak'
was
serv-
in
g
^
creased
,
the
central
banking controls, the System's founders
and proponents professed that its functions were merely to maintain
the liquidity of the credit structure; to protect money rates; to elimi¬
nate or smooth out business cycles; and to furnish credit through the
rediscounting of paper growing out of commercial, industrial and
agricultural activities; •,"
•/ *'
:
- *4
-5-:
;w ■;
;
our
favorably with that of a year ago. Seasonal items attracted consider¬
able attention with shoppers continuing to shun high-priced and poor
quality goods. '
7
:
7*4
A slight increase in new order volume occurred in most wholesale
centers
from
political motives Of such of fcits
guardians as Parker Willis, Carter Glass and Benjamin Strong, our
central banking system not only was prostituted for uses which
had never been intended, but the management which it legitimately
exercised
n
armed
Edward A. Leinss
of
Past'Management" Results
perishable freight by placing embargoes on livestock, poultry
and perishable goods.
These embargoes were lifted following the
"
about the
planning or to chal; lenging the wider implications of Mr.
Keyserling's
philosophy, this columnist merely wishes to report the characteristic
basic fallacy which emasculates our planners' entire argument. 74:747
Mr. Keyserling emphasizes the important need of
getting "bal¬
ance" into our business structure, of equalizing production and con¬
sumption goals, of "integrating" controls into the economy—all serv¬
ing to provide business with a "breathing spell" to'forestall a col¬
lapse.
But such aims (no matter how obscured by terminology),
as well as the protestation that the Government's intervention shall
only be temporary, surely are grounded squarely on the premise
that
i
"
A. Wilfred May
of the United States Government.
waste of
order
reason¬
"middle-ground"
\ presentation manages to create.
Rather than devote this space to a dialectical
were
was
»prior to
during an extended
This widespread attention seem-
question period.
ingly stems from the impression of sweet
ableness
Nico-
and
'
Scattered
plea,
extemporaneous
were
with
laus & Co. and
;
Chapter of the American Statistical Asso¬
ciation, has aroused particular interest, despite
ment
000,000, reflected only a fractional rise
February, valued at $28,800,000,000.
Keyserling's
La
for¬
was
merly
advanced in New York last week before the New
or
?
*
,
South
Salle Street.
York
one
With
with
Harriman
the
also at or
has
asso¬
ciated
are receiving.
If he is not the "spokes¬
President's Council of Economic Advisers, he is func¬
tioning as at least its speaking member as well as its Vice-President,
of
Leinss
become
public attention they
man"
run
than at this time
Chronicle)
CHICAGO,
Appealing Appeal for Controls
whole in the previous week with total production in most lines
a
Financial
'
Business Failures
J
as
Ripley & Co.
The
By A. WILFRED MAY
i-
Auto Production
and
to
Commodity Price Index
Food Price Index
*
5
Edward A. Leinss With
Production
Electric
-
>
THE COMMERCIAL & FINANCIAL CHRONICLE
Y. SECURITY DEALERS
Street, New York 5, N. Y.
77444
ASSOCIATION
4
Bell Teletype NY 1-897
/'
^
y
/
AMoclated
1
v
ft
Banks; -v-
GJ^h Mills)&<Cdi
Williams Deacon**
oil
Bank,- Ltd.
f
€
(2086)
THE
COMMERCIAL
FINANCIAL
CHRONICLE
Saul R. Miller Is ig.;
Planning Would Give Business a
"Breathing Spell": Keyserling
>
(Special to
To*
financial' chron(clx)
j
Living—What to do About It
:
CHICAGO,' ILL.—Saul -ft. Mil¬
ler is forming S. It. Miller & Co.
*
♦
•••
planning,
York
New
Statistical
can
A
s s o c
i ation
planning
be integrated,
Much
v
Bond &
tific data at its
initiation,
P
r e s
(Special
the
idential
-
The
Financial
than
Leon H.
Such
'*!?■■!
-
associated
now
,
to
"real
Mr.
with
associated
are
for
Miller
Straus
&
number of years....
a
>,
&
has
been
factor
for
'
Reimposition. of
overall
-
•'
"
mmrnrnttsmrn^-
rationing and
policy to be removed when
•» "emergency"
v elements
<iisappear, Dr. Keyserling insisted.
the
control
reduction
in
the
'
'
•
Another
''
(Special
to
The
Financial
from
as
and
much
•
pow-
er,
j
ChiIonjcie)
t;
pur-
com¬
as
;■
w
a
to
is
that
'noting
dividends
correlation
a
to follow the cost of living
the
important reason
relatively low
one
present
price-earnings ratios.
holder's
of
cost
The stocks-
living is ^unfor¬
tunately
The
v. -
worth
is
showed
probably
for
pre-
shrinkage- i
1
point
table
wages
years
has in
pared
the
within 20 points or less until 1940.
The failure of dividends in recent
chasing
j
wages
and while investors
in their present
plight. -
are
income"
now
in-
<§>-
•
more often correlated to
sales volume of the
company
the
n
in -which
the
he
has
investment
an
stockCHICAGO, ILL.—Harry B. La
than to its net profits. Prices
go
pur¬
investment business in Port¬ Rocca has become associated with holder's
Robert A. Gilbert
up,
the company's sales volume
land.
Mr. Foster was
Sills, Minton & Co., Incorporated* chasing power
goes up, but then, in the present
previously
has been truly
209 South La Salle
enormous, particu¬
Street, mem¬
with R.; H. Johnson & Co., and
economic; climate,wages
are
bers" of the 'Chicago Stock Ex¬ larly :aar "fcpmpared io labor^ net raised1 as
much
or
more
than
Townsendj Anthony & Tyson.
change, in charge of private place¬ gains. Stockholders seem to have prices, high and inequitable taxes
porary
of
the
.
own
present
details
.
pressure groups.
about
war
real
today's
.
With SiHs, Minton
'
how
er
,
,
H. B. La Rocca Now
Co.; in the past he conducted his
'
other controls need only be a tem¬
The
■
the stockhold¬
Blosser
s
.
constructive
made
business.
concerning the balance of the
Goodwin,
120
Inc.,
Exchange
economy might lead the planners
StreeL
Mr. podge was .formerly
to
the
conclusion
that
sharply
falling or rising prices in certaiit with 3. Arthur; Warner&Co, and
sectors of the economy are really "prior thereto; with W. H;
Beit &
a
" f
very
less
-<
w ages
few
cal¬
been
•data
stabilization.
said since the
of the income of
-
and
Saul R. Miller
Street, to engage in the securities
Bond
been
power
culations have
Chronicle)
with
1
with offices at 231 South La Salle
Dodge and Merton E. Foster
Keyserlinf
■'»
\
/
ME. —Rex / W.
-
!
have
creased
Now With
Goodwin, Inc.
to
PORTLAND,
adviser main¬
tained.
W." Dodge
Rex
ade-
on
'i
.
"
such groups as
labor, office white
workers, sehool teachers, etc., but
practically no publicity
has .been given to the fact
that stockholders' dividends
but it must be
quate scien¬
'
collar
Vv:
.
has
purchasing
much
ing it.
;
position by organizing to combat, with the help
proper
Vi
various ways while openly decry¬
the
Investors Management Co.
;• " \
^e,r "I^uagements, other existing
'Z :Yt
ing for government, direction -in
Not only must
based
regain their
v
considerations of politics.
He also
accused them of unwittingly call¬
Thursday eve¬
ning
May 6.
By ROBERT A. GILBERT
•
•
-
shrinkage in stockholder's pur- )
chasing power relative to other community groups.
Maintains /
degradation of his living standard has accentuated
high cost of '
living generally. Urges that the nation's 15 million stockholders
t
free
of the Ameri¬
•
j Mr. Gilbert demonstrates secular
Lashing out at defenders of the
market, Dr. Keyserling as¬
serted
that
they,
rather than
bureaucrats,
are
motivated
by
chapter
4
'v.'-:;!*
•
-
.
^
.
the
j
L
,
thoroughly integrated into the economic
system, would give business a needed breathing spell to adjust itself
to the present
extraordinary elements of inflation," said Leon H.
Keyserling, Vice-Chairman of the President's Council of Economic
Advisers, be,<?>fore
Thursday,, May 13, 1948
He Stockholder's High Cost oi
Forming Own Firm ; j
Selective controls should be imposed until
economy is stabilized,
and subsequently abandoned, declares President's adviser.
/ !.
"Full-scale
&
ment of term loans.
been
He was pre¬
With Hill Richards & Co.
pro¬
content
to
submit
to
treat¬
are
viously with Brailsford & Co. and ment which can only be charaegram should take the form of the
(Special to Thb Financial Chronicle) prior thereto was manager of the "jferized 'as attempted ^ Confiscation
anti-inflation
proposals•' vainly
of the value toi their
LOS ANGELES, CALIF.—James municipal 'department for ".First
property..
broached
to
the
Congress
by
Securities Co. of Chicago. In the More than this, few people in re¬
President Truman, and embodied M. Gray is affiliated with Hill
sponsible, positions in government
past he conducted his jowii invest4
in the recent
report from the Richards & Co., 621 South Spring ment
pr eveh in industry have warned
business-*
;
V,
;\
Council
of
Economic
Advisers.
the general public about the ulr
■*—pNpw
Street, members of the Los An¬
He emphasized balance between
timate economic and social consegeles .Stopk, Exchange.
He was
•wages and prices, and production
;S|
rTudter Staff
i^uence of allowmg;'^aryation pf
(Special to The Financial Chronicle)
and
/'r.
consumption as the proper formerly with" Baternahy Eiehler
capital to continue.' * ;
.
/
LONG BEACH, ■ CALIF. — Ru¬
'goals of planning.
4
'
' r:
'.-I & co.
;
'
; This articie 'wishes* to
point ou,t
dolph J; JSeger has joined the'
exactly how poorly stockholders
staff of Tucker -&
Company, 132 have
PHILADELPHIA
BOSTON
fared in this respect, to warn
Pine Avenue. He
was-previously
of the consequences of
with First California
allowing
Company. 4
.
.
,
.
•
•
•
Joins
maintained,
fail
to
follow
and
sales
net
(or
profits
prices).
Furthermore, under present stock
maricet Coridttiobs, a large part of<
earnings
for
often
must
be
retained
plant
improvements
which
cannot be financed on-the
long-f
term basis previously available
;
,
when
our
was growing
along free lines of development.
Equity
financing
has
become
economy
.
economic
B
Boston
r
&
&
<•*
Buffalo Bolt Co. |pC >:
With
.
.
Portsmoutb Steel Corporation
BJark SivaIIs&
Brysoo
Prior
RR.
Preferred
-'.J''■'»
•
"-'-v
'
4-.-1
i.'
•'
■
Request.
.
'J;
•
Walter J. Connolly & Co., Inc.
24 Federal
Philadelphia 2 ;
PEnnypacker 5-5976
Street, Boston 10
TeL HPbbard 2-3790
v'
j,
(Special
44 Wall Street
'
.
Philadelphia,
The
to
Financial
Chronicle)
RALEIGH, N. C.—Duncan
Hughes has joined the staff
New York 5
Kirchofer
Private Wire System between
Tele. BS 128
•
.
.
-
•
in
G.
1947
more.
ofj
Arnold ^Associates.
&
Ine^Insurance> Buildings .£*;
New York and Los Angeles
1947 dividends were only
12 % over 1928, while wages were
132%. While dividends advanced
With Kirchofer * & Arnold
WHitehall 3-7253
;v,
arej happened[;■-.fp
Herrick, Waddell & ship—dividends—compared to the
Inc.,: 332 South' Michigani wage? -of labor (corporation sal¬
Avenue.
;
■
aries and wages). It will be noted
that in
f
CORPORATION
'
-
j
Reed,
....
1420 Walnut St.
cminnai)
while
)
.
-
-
*
1946, labor gained
Wages; gained about 20%
•
over
dividends gained
'i\
Index Dorp. Jlndex Corp^ Index
Salaries &
Cash
Cost of
Year
ST. LOUIS
'Wages
Dividends
1947—- 232-
Trading Markets
Bates
Boston & Maine Prior Pfd.
Boston Railroad
Holding Pfd.
Boston Edison
.
Empire So;
Warner
189
Gas
84
■I
K
t.
Cotnpaiiy
INVESTMENT
SECURITIES K
&09 OLIVC
Byllesby & Company
PHILADELPHIA
75 Federal
Street, Boston
.
Telephone
RIttenhouse 6-3717
"1.
'
• '
o:
»
....' *•
r\
:'r*
Stock Exchange
Bldg; Phila. Z
^
St.LouisLMo.:
I .'v-' i"
-i
OFFICE
Private New York
Telephone—
WOrth 4-2463
I
*
-a
-t
-
'.\r, \ '
■"}v
<;..v
Members St. Louis Stock
Exchange
Teletype
American Air Filter
Trading Department
•
V
American Turf Ass'n
'"'V;
-V /
f-'" 1
T
i'* •i!'*
/.'"V'
Consider H. Willett
For
or
Issues
of
Direct Wire to New York
City
Co.
Immediate Execution
of
Orders
Quotes call TWX Sp-43 on Floor
Exchange from 10:45 to 11:30
A.M.,
Pac.
other
'
hours.
would
81
to
83
Std.
V
<
Time:
-
Sp-82
at
-
CHAPLIN
BANKERS BOND
Incorporated
l»t
Floor, Kentucky Home Life
Bldg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
Bell Tele. LS
186
and
COMPANY
Members-
standard securities
corporation
Pitts. Stock Exch.
New York Curb Exch.
(Assoc.) ,
10th
'
Floor, People* Bk. Bldg.
PITTSBURGH 22, PA.
Grant 3900
Bell
Members
Standard Stock
of
.
61 Broadway
Brokers
NEW
YORK, N. T.
Bowling Green 9-3987
System Teletype-^-PG 473
lt
•
-
Exchange
Spokane
Dealers
-
Underwriters
Peyton Building, Spokane
Branches
Kellogg, Idaho
and
at
Yakima, Wn.
recent
fcurvdys
investment
in
or
has
so
been
subnor¬
may
87
,
^
95
,
1938^^.^-77,;
61:
91
.
,
,79.
1932__—-
•
>90-
.
1935rU; :. 70; :
m4^—V 60 1
i933;;r;; ; 52 !
v8Q
55
79-
; 51
40
59 ;V
50
,
'
80
107
98
1001
100
100
the
table
fact
stricted
then,
is
that
if
private
so
re¬
plant capacity
have continued
our
probably
at its normal rate.
One
view the cost of living prob¬
lem also from the angle of the re¬
quirements of the present situa¬
grow
tion.
It seems true that unless
75 ? equity "markets ate revived,; the
large
scale
financing -now re¬
79
quired for such plant expansion
88'
113
While
The
ers.
investment had not been
77
94
■100
programs,
industries
and
shows " the
as the utility and oil
have, will be difficult
*
costly.
'
It is the costliness of
program
which the ^public
should keep in mind. ; If com- j
magnitude of the actual discrep¬ panies find
financing costly, then
ancy
between corporation divi¬ reductions in
product prices are
dends and wages, it also indicates
going to be difficult.
Of course,
-
that
the
differential
constant ; dollars is
The column showing
living in 1928
86
N. Y. Stock Exch.
years
80
94
as
as
in
terms
even
of
compared with
sup¬
today worth ply and demand in balance, with
100 in 1928,
while the wage index in 1928 dol¬
lars is a net gain, being at 178, It
would
labor
seem
has
questionable whether
the
right to seek
con¬
tinuous cost of living adjustments
in
its wages, when it has
achieved such
a
the necessity to build added
capa¬
more.
cities is very
important, and if fii
the cost of nancing is difficult, delays
may
100 indicates that be experienced in
bringing
the dividend index is
.
15
the
NORTHWEST MINING
SECURITIES
Active in
f
Western Pennsylvania
Murphy Chair Company
Varnish
'
of
that
capital equipment during the past
73
1939.:^
;
.
shown
; si
1928—U-
SPOKANE, WASH.
number
a
79
;
-
1930—
PITTSBURGH
that
86
82
1929_—-. 105
LOUISVILLE
Reliance
84
1931^-: ^76'
PH 73
their
own throats in ig¬
noring investors' rights.
In this
connection, one has to ^consider
86
,
1937—'87>
STREET
groups have really been
pressure
cutting
1942——V4 452
1941™ ,120:
J.936—,..:
H. M.
Living
1940.r^-
Stix & Co.
'3%«f 1947
DAYTON HA1GNEY & CO., Inc.
96
1943—'182
im¬
mal, and that consequently Ipro^
130
ducti ve. capacity
today * cannot
113
mept jdemand
in
many
items.
104: Many of these 15 years of subnor¬
mal plant investment were ones
102
of .discouragement to stockhold¬
too
87
193
•
Stromberg-Carlson
"
New England Lime Common
Boston Terminal Co.
1945-:.
1944-—-.
1M[fg. Co,
193
the
Livieg
•
;ii2-
1946.—-
of
Xhe fact that the stockholder's
standard
of
living — his income
and the market for his securities—
has ;been degraded is probably a
major cause of the high cost of ;
living for all of us." If this is truej
then of* course labor and other
have
16%,
More
oft'|l0^;!situatioh:*"latef.s
Stockholder's Degradation Ha$\
Raised Community's Cost of *
con-
tinue,
and vto
suggest' Several
jhings. "Stockholders Should dp to
Cb.|
Finanoal
how- with
BUCKLEY SECURITIES
Traded in Round Lots
the
Broehl and Thomas F. Mangan
V-'.'./.;
0»
;-7
Vv
A},
i
}*'."•
lyA
to
to
rectify ; their situation.
The acCHICAGO, ^ ILL.—Edward ^ ci ^Qhipanvini^rshows what has
,
Seminole Oil & Gat
Maine
Herrick,
CSpeclal
malnutrition
difficult.
very
plications
the
obvious
effect
of
prolonging
scarcity prices.
Since
the
degradation of the
stockholder is often
a
taxation
stantial
for
(Continued
believing
reform, and sub¬
governmental
already etc., it is not difficult
large net gain in
part of the
mental complex of those
in
on
spending,
to find
page
40)
an-
.
Volume 167 "Number 4698
THE
From
COMMERCIAL
FINANCIAL
of the News
Professor Rodgers insists that economic
dictatorship is only good for the planners, and that attempt
national control of wages, prices, and
profits overlooks economic "facts of life." Declares
at continued
Republican convention now less than six weeks off,
the Washington political dopesters are talking mostly of Vandenberg
and Speaker Joe Martin, respectively, as the
Republican nominee.
There is quite an organized movement, not apparent,; on for Van■
denber gA
Martin
is deed.
looked
the
as
choice
the
of
ti
con ven
leaders in
event
o
n
the
the
Michigan
.Senator
strikes a snag
which he may
;
do.
HeV
...
.
AP'-
Privately Vandenberg feels
about
is
not
as
toward
the
as do Dewey
7
.
and
Taft.
Understandably,
the
Michigander's feeling might be
tempered if at a certain time dur¬
ing the convention, Stassen should
come
to
him and
ing
to
200
delegates.
he is will¬
around 150 or
say
throw him
But it would have
to be tempered
factor of political expediency gives planning "kiss of death."
considerably*
.
the
Bargeron
:.l
-
_1 _•
opposition, of a large group
perhaps 50%,. to his
joining the internationalist group
direct
and
prices.
With
a
didn't
want
that. his
Eastern
financial
„
.
tion"
poor though it
may be, to the finest plan that
6ould possibly be devised by say,
my mother-in-law, my boss, my
representative or senator, or any
every
four years, the
members
the
of
National
bureaucrat
Administra¬
tion
have
yond
thinking
a
I
met.
ever
.
planning
on
In
litical
pot be denied
global minders shouldn't embrace jment in
the^ driver's seat.
him with enthusiasm.
It was he
who
sent the* Herter committee |Can be raised to match the
Funds
expen¬
limitations
work.
You cannot
have
economic dictatorship with¬
political dictatorship.
Planning has worked very well
in Russia—especially for the plan¬
ners! Liquidation of entire classes
out
my
others
far away
the
of
population, a capital levy
liquid capital of the
country, movement of whole pop¬
of 9/10 of the
Wil¬
ulations
from
one
of
area
the
this country,
the problem.
country to another, and other ex¬
pedients which are truly repug¬
Dr. Sumner said "The vice of all
of these schemes is that A and B
nant to
the conscience of. civi¬
lized man, have made the Russian
put their heads together to decide
what C shall be made to do for
plans work to the extent to which
they have worked. Yet, in spite
economy
made
D.
in
su-
a bureaucrat, then
must have dictatorial powers
you
liam Graham Sumner, who I think
Should be called the father of po¬
can-
a
in, the corporeal
encased
to make them
by
for me, I cannot get very
from the classic statement
be¬
measure
Also, it
habiliment of
perman
long
I
ago
on
the forgotten man."
call D
of their drastic
I just don't-like the idea of being
such a forgotten man.
standard
I
enforcement, their
living is still among
of
the lowest in the world.
,
;
7
Hitler's
j Economic Dictatorship Requires
Political Dictatorship ;
If
plans could bo devised of
outstanding brilliance and
ditures—gone are the
sup¬
practicality that people would
abroad to make a study arid condi¬
porters Insisted upon it.
jimposed by the necessity • of Willingly follow; them, then most
tion
Congress for the Marshall
These supportersare ultra in¬
matching expenditures with rev¬ of the objections to planning from
Plan.
He had, In fact, about as
ternationalist or
enues.
But
into Ohio against Taft but
go
*n-
b£ imposed from above by
plan,; for myself,
national "auc¬
-
to
1
structed rebel" to prefer my own
A1that in recent
| more.
so; wholeheartedly.: Should; they
Raymond Rodgers
'' though he is
register enough: opposition, Joe years national
not doing anything to
get it; he Martin is looked upon as almost policy, has had almost a control¬
is in a decidedly
receptive move. the certain choice. He is not iden¬ ling effect on wages, prices,: and
The impression is
growing that tified with either side. He is not profits.' But to assume that- this
Stassen is a
stalking horse for controversial. In fact, he is un¬ can be continued indefinitely in
him, that the Minnesotan; now
doubtedly the most popular leader jthe future, overlooks the economic
rather ruefully realizes it himself.
f'facts of life." Obviously, deficit
in the party. -,
v
There
is; #
seemingly reliable
through our modern
There is no reason why ? the financing,
story going the rounds here in
hanking system, puts the governhe
ct> A n
.1
namely, by the consumer? I am
just '/enough
of
an
"unrecon¬
pressing
interest in
J
Washington that
:
j
,
of the party,
any-
wages,
for wages.
away
nom¬
■
prices, profits,, and national policy cannot be separated. With a
public debt of more than $250 billion, the national government has a
lively interest in
nrnfUn
\XTi4-U
profits. With annual budget expenditures of more than $40 billion, the national
govern¬
ment
h as7a
777 ■'•7;'f \
' //V''
/'
■ ; V/
/•;'•7;;• 7
\
7
———
'
solicitude
running
ination
.Clearly,,
; /
shag which Vandenberg* on
the other hand, may encounter is
J! The
from the
Carlisle
I
'■
strongly
likel.y young Minnesotan
upon
7
By RAYMOND RODGERS*
the
f ■■■■■,:
(2087)
Professor of Banking, New York University
By CARLISLE BARGERON
With
CHRONICLE
National Planning Won't Work
Washington
Ahead
&
such
plans worked pretty
"good" for a while, too. His firing
squads, gas chambers, and total
abrogation of human liberty—in
fact, his complete disregard of the
most elemental concepts of human
.
"
"global minded/'
They are afraid of Taft's realism.
The fact that he wanted: to reduce
ERP by# bilJUondbllafs convinced
thenithat he isentirely tooprac¬
tical for their plans. They had
set a figure forwhich "Commu¬
nism in Europe can be
stopped,"
worked it right down to dollars
much to do with its acceptance as
Vandenberg;;
1
It.is evidence of Joe!s ability to
get things done without arousing
tempers or stepping on toes, that
jhe/accomplished this ; without his
'being tagged as
a
like Vandenberg,
deficit financing
once
jits • income
and: national7 policy
loses its controlling role.
A lot of
people have forgotten that, under
normal
conditions,
government
global minder policy reflects, rather than domi-
pates.
and
jibo ve
could' be removed; But J
ended, by decision or necessity, know, and you know* that cannot
jtho government has to live, withiii be done# NRA, the QPA, in fact
is
nearly
jconfcol'from the top on ;£iich vital
rope can't be. stopped, it; seems, Alger. success; stories ITiave ever economic matters as wages, prices,
for 75'pents less.
known,
Work, work, all of his and profits /through the medium
■'
has
done,
gov¬
that
proves
for
dents
Chiselers
V
and crooks
f
:
But
the
thousand-
plan that he proclaimed for
greater Reich fell before the
the
overwhelming assault of the eco¬
nomic might of a nation which
has always stood for.planning at
the bottom—not at the top.
7/
<Great "Britain is another object
sooner
crooks sooner,
-
while.
a
year
there will be malcontents, dissi-
i,,5son 0f ^ futility of planning
later ifl «very; sueb program, from above. A Labor
member
0n the other hand; if plans are to ^
(Continued on page 35)
or
cents in one of the greatest I; T have been visiting his home I
/Even if it could be: dpne; to as?mathematical feats the world has town, North Attleboro, IVJass. His
?ume that it is desirable to have
ever;known, j.£onprnunisni; in Eu- career is one of the. best. Horatio
everything that the
ernment
decency—and his planning worked
.
.
These
people
barrass Taft.
in
doing
what
vvas
to em- life; the son of a blacksmith, now
All they succeeded next to.' the President In impor¬
to reveal generally tance in his country's government.
wanted
everybody with a
of Ohio politics,
edge
knew—that there
are
already
few dis¬
a
tricts in Ohio that Taft has never
Jbeeh able to carry, that anybody
could
have
them.
But in
financial
gone
in
and
taken
revealing this, these
wiseacres
—
knowl¬
jeopardized
\mmem~——■.
/
of national
planning is, to my way
thinking, a contradiction of the
very 'things
which have made
America great.
Any Time Gross,
Rogers Time
Who
Will
Do
the
Planning?
This is not to say that we
Gross, Rogers & Co., 458 South
<
We
are
pleased to
not have
be
should
can
fornia, members of the Los An¬
to our
question
no
as
the
BUFFALO 2, A'. Y.
sky
is to
be
the
limit.
The
selves
it
be
is
only
two
o'clock
"Gross,
the
Pacific
Rogers'
between individual firms
Coast, ;;and asking; "Why wait for
the
European
or
government
purchaser, between that
ment
the
and
where
is
the
govern¬
American
firm.
Time"
'manana'?
We
on
on
^expert planners,
planning at the
or
W.
roots,
E.HUTTON & CO.
ESTABLISHED 1886
Members New York Stock
shall it
grass
Exchange
leading exchanges
and other
UNDERWRITERS
*An address by Dr. Rodger's be¬
BROKERS
*
NEW YORK
Philadelphia, Pa.
Dayton, Ohio
>
•
DEALERS
•
CINCINNATI
Baltimore, Md^
Lexington, Ky.
Boston, Mass.
Easton, Pa.
Portland, Me.
Hoffman's agency is just to see
that the price is all right and pay
the
bills.
why
a
There
seems
no
had by everybody with
to
reason
anything
appear
dential
-
7
A'i, '-iri
to
be
out
of
:>7;:
are
he
running and
Washing-
no
observer
.
whom. I
should
stage
a
un¬
WiUkie
staippede.
This doesn't seem to
be;in the cards, first because not¬
withstanding his press build up,
he hasn't shown any unusual
pop¬
ular strength. In none of the
pri¬
maries
which his friends
have
ball.vhooed has he gotten a ma¬
jority of the vote. Secondly,, the
people who paid for- the Willkie
stampede are believed to want
Vandenberg first.
That Stassen realizes this is the
set-up is evidenced by the way he
is
always blowing kisses at the
Senator. He, of course, hopes to
land second place;
His kisses
by
pleased to
are
Mr. Robert H.
announce;
'
«
-
are
We
pleased to
McCrary
7
•
announce
that
the presi¬
know gives Stassen "a chance
less
•vil.
$77777
We
-
top; political
j
'■
sell.
Anyway both Taft and Dewey
v
■
grand time should not be
not reciprocated
in the slightest.
Vandenberg
a very strange
situation, in-
It is
formerly vice president of
MR." H. B. LAROCCA
k'xMt-
('J
McCrary, Dearth & Co.
Des
■*?«■ -"'A*
.
:i' 7
-
-a,
■'.g&ijr-t-
V
sir
'v or r~ 7
;
Moines, la.
"r
7
in
Bateman, Eichler &Co.
*
LOS ANGELES 13
'
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1
7.7
t: ;
v;
":'77
-
%
**
<
'
'
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.
7 7
•;•
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,7
'
charge of private placement of term loans
Sills, Minton & Company
Incorporated
TRINITY 2291
Members
Chicago Stock Exchange
'
r
PASADENA: 28 NORTH GARFIELD AVENUE
HOLLYWOOP: 215 EQUITABLE BUILDING
California'
'
•
M
'
A
SYCAMORE 3-1145.
HOLLYWOOD 3971
A direct private wire to
REYNOLDS & CO.
y
MEMBERS LOS ANGELES STOCK EXCHANGE
.
V-.
•
77
has joined pur. organization
has become associated with this
451 SOUTH SPRING ST.
'.
'
:;-f>
7
company
7
"
New York Curb and other
-
"l
'
77*
*
V
209 South La Salle Street
'
Members New York Stock
;
•" '■ .''
„
Exchange
Chicago 4, Illinois
%
7.
;7
Leading Exchangee
~
•
I
J
I
who is to do
fore H. Y. Chapter of American
here; work¬ Statistical
Ass'n. New York City,
May 6, 1943j
are -
ing!"
"
r
#
argument comes
time, three o'clock Mountain time,
set-up is that the trading is to be
,
LIBERTY BANK BVILD1NG
to the ne¬
the planning. Shall it be profes¬
Apparently they will do any¬ ing that when it is five o'clock sional planners, or shall it be
thing for the international ^spend¬ Eastern time, four o'clock Central bureaucrats who consider them¬
ing spree upon which we have
definitely embarked. Seemingly
correspondent
O'BRIAN, MITCHELL & CO.
cessity of economic planning. The
Taft-Hartley Act which they geles Stock Exchange, is distrib¬
certainly want.
uting a very clever blotter .show¬
the installation of a
DIRECT PRIVATE WIRE
planning. In fact, there
Spring Street, Los Angeles; Cali¬
the
announce
of
V.'■
iv ■
«
What About
&
COMMERCIAL
THE
(2088)
8
FINANCIAL
Money and Credit?
Dealer-Broker Investment
By M. S. SZYMCZAK*
.
Thursday, May 13, 1948
CHRONICLE
'
'
Member, Board of Governors of the Federal Reserve System
Board member states inflationary pressures, based
Reserve
V
.
Recommendations and Literature
tax cuts and renewed military prepa¬
which
The economic situation in
find ourselves today is indeed difficult. Instead
we
happy security we hoped to enjoy after the war, we are beset with fears, confusions,
discouragement. We are dangerously close to a process of turning around and headin^
mg
back
the
direction
which
from
early in January; and, third, the
moderate increase in reserve re¬
quirements for banks in New
York and Chicago in February.
Despite a large inflow of gold,
a
heavy seasonal return of cur¬
just came.
we
During* the
winter
past
mak¬
we were
from circulation and large
ing noticeable
headway
in
rency
the
non-bank investors to the Federal
fight
against
inflation;
Al¬
though
the
1
ying
economic
sit¬
u n
d
e r
uation
"con¬
to
tinued
M. S.
there
Szymczak
be
basically
infla tionary,
signs that the1 pres¬
under-supply of goods
an
over-supply of money
undergoing gradual, cumu¬
were
sures of an
and
were
lative abatement. '
'
V
i On the side of
production, the
output of goods was not only
holding up at maximum levels,
but in some areas was catching
up with demand.
Crop prospects
in the world at large were encour¬
aging and the fall in the prices of
foods and other agricultural prod¬
ucts was a desirable, corrective
readjustment.
The program of
world-aid recovery, then under
consideration,
seemed
to
hold
promise of providing an effec¬
securities by
sales of government
which to reestablish
on
lasting peace.
surplus of
penditures
the
from
revenue
of
the
government and adding this sum
to the annual purchasing power of
the
tion
receipts over ex¬ world aid, the international situ¬
by
accelerated ation commence d to display
retirement of public debt held by alarming portents—especially in
the Federal Reserve Banks and Czechoslovakia
arid in Berlin J
and
been
some
There
rise
in
interest
had
rates
These
new
portents
face
on
during the fall and early winter
in response to tightening credit
conditions.
At that juncture, the
government bank supervisory au¬
prospect of imminent
eral budget.
dis¬
to
further
expansion
of
credit, and-'these
efforts
courage
bank
were
strongly
reinforced by a
nationwide program of voluntary
restraint
by the
banking fra¬
ternity. Finally, the credit situ¬
ation was effected restrictively by
successive
tions:
Federal
Reserve
ac¬
first, the lowering of
sup¬
port levels for government secur¬
ity prices at the end of December;
second, the rise in discount rates
fight against postwar
an
entirely
international po¬
our
has
ciation,
Birmingham,
May
7,
-1948.
acted
program of world aid for
coming year is only a part of
larger program covering several
years.
It is, so to speak, a first
the
a
score
wish
I
this fact.
It
to
means
for
accounting
newed
and
used
>
and
for
Records—List
Dividend
with
issues
investment
of
25
Wall
Inc., 63
York 5, N. Y.
win,
Fire
and
50-year
New
Street,
Kellogg
Casualty
Insurance
Stocks—Comparison of earnings
of principal issues for 1947—Laird,
Bissell & Meeds, 120 Broadway,
New York 5, N. Y.
;
request
■
1
"
accentuating
The—A
First Seventeen Years,
pressures.
The
commercial
banks
could
E; Nelson
Northwest~-R.
the
any amount
expansion.
In all likelihood, bank
will be increased some¬
reserves
what
by an inflow of gold from
foreign
sources, and
also by such
725 West Sprague
Spokane, Wash.
Co.,
the
Federal
Reserve
for the purpose
may make
of maintaining an
banks
of
as reserves
of
t,;.:;
tZO
Broadway, New York
"Railroad
tions"—B.
Broad
W.
5
T
in
into
Pizzini
f Lima Hamilton
&
Quota¬
Co., 25
..
Corporation—
Okonite
Company—Data
&
> •
.
.,
orandum
current
on
Co., 120 Broadway, New York 5,
Public National
Bank
Faced with these prospects, fur¬
&
Trust
Co.—Analysis—c. e. Unterberg &
Co., 61 Broadway, New York 6,
Avenue, N.Y.
Also available is an analysis of
Winters & Crampton Corp.
investment status in
issue of
"Fortnightly In¬
Paul D.
vestment Letter"—H. Hentz & Co.,
Street, New York* 4,
Also in the same issue are data
A. G.
Spear Now Wiffi
Aliyn in Chicago
(Special to The Financial .Chronicle)
v-.
Allis Chalmers Manufacturing
on
Railroad
Developments
Machinery
American
4
for
N.Y.
CHICAGO, ILL.—Paul D. Speer
has Ijecom
—
Circulars—Gordon
;
J
lyn & Co., 100
West
/
Monroe
Street. He was'
formerly with:
•First
Cur¬
^ nia
Califor-;
Co.
a n d
Conducted his
'
%9 w m; in vest-'
xRent;. business"
in,. Los IAth"
vgeles. :In -die
;
Corp.—
Graves & .Co.;
;.past>r bewas.
,fan ; officer 1 of I
30Broad Street,
y Buffalo Bolt
e
associated
a with A. C. Al-
sources
.
,
broker-dealers only—J. W. Gould
&
Reserves.
from these vari¬
H. C. Speer &
Co.—Data—Buck¬
.Paul D. Speer
Sons
Co.
in
-
ley -Securities Corp., 1420-Walnut
Chicago, r r
check.
We must probably resign Street, Philadelphia 2, Pa.
f ;
ourselves to some credit .expan¬ '% Also available are data on^Ports-.
sion ;
we should certainly take mouth: Steel Corporation, Black J;A. M. Kidder Co^ Adds;
(Soecial to The Financial Chronicle) » « *
every
precaution; however,
to Si vails & Bryson, and Seminole
TAMPA, FLA.—Karl Kreher Is
keep it within the bounds of the Oil& Gas. v
with A. M. Kidder & Co^ ;506
essential.
I suggest as a criterion
Florida Avenue.
"
of what is essential the expansion S Coca-Cola
Company — Data on
of bank credit ' required by our
first quarterly report for- 1948^—
current program. of national pre-,
With John L. Ahbe Go. {%
Clement A. Evans & Company;
(Special to The Financml Chronicle)
"
paredness and world aid.
This Inc., First National Bank Build¬
means, of course, priority for the
PALM BEACH, FLA.—Lee C.
ing; Atlanta 3, Ga. .t-;. ;.
financing of production
re¬
for the financing of any govern¬
ment deficits that may result.
V*
issue
current
Other
and
Street, New York 4, N. Y..
expand, they make rent developments in-the industry
possible, for the banking system —Vilas & Hickey, 49 Wall Street,
New York 5, N. Y.
as a whole, a six-to-one inflation¬
ary expansion of bank credit arid
ous
bank
J.W.Gould &> Co.
i
Public Utility Securities—Mem¬
purchases of government securi¬ 60 Beaver
ties from non-bank investors as N. Y.
lated to these programs and also
■
Memoran¬
History of the Investment Men of Analysis
and
opinion — Harris,
Texas .1930-1947—Issued
by the Upham & Co., '■ 14. Wall
Street,
Texas Group of the Investment New York
5, N. Y.
//
;
Bankers Association—^Copies may
t Also available is an analysis of,
be
obtained
through James & U. S. Pipe & Foundry
Company.; ? £
Stayart, Inc., First National Bank
Building, Dallas, Tex. ,
■\ New England Public Service Cos.
Mining Highlights— Leaflet on
inflationary several mining issues traded in
o ur
money and liquid assets,
will be very difficult to: keep in
*
—
Lehigh Valley Railway of N. Y.
—Memorandum
: -
on
Company
dum—Moreland & Co., Penobscot
Building, Detroit 26, Mich.
fluity of
inventory.
Corpora¬
and
appraisal—
Kalb, Voorhis & Co., 25 Broadl
Street, New York 5, N. Y.
dividend records—Bond & Good¬
ther bank credit expansion, which
will add to our existing super¬
others contingen¬
part- of
V
Memoran¬
—
Detrola
International
tion—Review
N. Y.
expansion of bank credit
could only result in
money
cretion
*
,
portfolio—G.
*
And
Available at less than three times
earnings
Data
Company
we
deficits; in fact, we may
budget deficit as early
as this coming fiscal
year.
And
this is only the beginning of de¬
velopments for which no terminal
,
;
Co., 1 Wall
Street, New York 5, N. Y.
Co., 1 Wall Street,
savings. xThis possibilityrimplies York 5, N. Y.
a
large ^demand fqr financing \
Market—Memorandum on situa¬
through the banks, repeating the
type of bank credit development tion—Stanley Heller & Co., 30
which occurred last year.
Re¬ Pine Street, New York 5, N. Y.
have some
inventories
basis
4, N. Y.
under¬
that
1947 earning* approximate $53.11
per sbare before $9.26
reserve
Glidden
orderly market. Finally, commer¬ Co. and Delaware, Lackawanna &
cial banks, though obliged to sell Western Obligations. In the firm's
"Fortnightly
Financial & Eco¬
are
adding
expanded
military some government securities in re¬
nomic Review" there is a study of
preparedness on top of an already cent months, still hold about $66
Tide Water Associated Oil Com<?
heavy budgetary load.
We may billion of such investments which
shortly be confronted • by bud¬ are readily convertible at the dis¬
instalment
The Okonite Company
Lifo
Suggested
—
H. Walker &
New York 5,
of demand for further bank credit
In undertaking such
a preparedness program, we must
remember that our recently en¬
New York
-
|
share
Common Stock Program for In¬
vestors
won
that
FOR; BROKER-DEALERS ONLY.
cies.
decisively
readily accommodate
-
Laboratories,,
—Analysis—Ira Haupt & Co., Ill
Insurance and Bank Stock EvalBroadway, New York 6, N. Y.
uator—Comparative analysis of 70
Also available is an analysis of
insurance companies and 38 banks
Prospective Bank Credit
Wisconsin Power & Light Com—Dempsey-Tegeler & Co., 210
Expansion
pany^D':::#^
These conditions present a pic¬ West Seventh Street, Los Angeles
ture
of
continuing inflationary 14, Calif.
Northwest Airlines, Inc.—Spe¬
Also available is a summary on
pressures.
They also add up to a
cial review—John H. Lewis &
Co.,
strong possibility that the financ¬ Firemen's Insurance Company of 63 Wall Street, New York
5, N. Y.
ing needs of the Federal Govern¬ Newark,
ment, together with those of busi¬
Oil Exploration Co.-—Data—
Stock
Analyzer-—
ness, State and local governments, I Insurance
Comstock & Co., 231 South La
home owners, and consumers, w*h Comparative tabulation—Geyer &
Salle Street, Chicago 4,11L
exceed
the supply of available Co., Inc., 67 Wall Street, New
deposits.
per
been
infla¬
They produced a program
of renewed military preparation
promises before it is com¬
pleted to add billions to the Fed¬
DuMont
—
dum—A. M. Kidder &
Prices of many products are still
getary
*An address by Gov. Szymczak
before Alabama Bankers' Asso¬
budgetary
deficits strike the economy before
tion
B.
Analytical circular—Haybrochure is¬ Inc.
the 100th anni¬ den, Stone & Co., 25 Broad Street,
The elimination of the govern¬
sition.
thorities launched efforts
put
sued in tribute on
ment's budgetary surplus and the
,
'
banks.
can now
the
Allen
Graham Bell—Illus¬
biographical
versary
of his birth—American
matter of stark realism,
Telephone & Telegraph Co., 195
be set.
Broadway, New York 7, N. Y.
and"
annum
Alexander
trated
as a
during, winter months, very high in comparison with pre¬
monetary operations war and wartime levels, and many
kept bank reserves under un- commodity service prices, includ¬
slackened restraint. * Federal Re¬ ing wages, are still advancing. The
serve
holdings
of
government total money supply, while reduced
securities fell
by $1 xh billion. from last fall, continues redund¬
The combined effect of fiscal and ant in relation to the output of
monetary operations, too, was to goods, and the public's $250 bil¬
reduce the total money supply by lion stock of available purchasing
nearly $4 billion. Considering all power—currency, bank deposits,
of the circumstances, this was a and
government \ securities—re¬
notable anti-inflationfry accom¬
mains
excessively: large.
Sus¬
plishment;
'
tained high levels of production
and employment, which are likely,
Government Budget Outlook
will generate high levels of con¬
;
In view of these salutary de¬ sumer income, but supplies of
velopments, it came to be widely goods for final consumption must
hoped that inflationary pressures be diminished by amounts re¬
were
finally under control and quired for foreign aid, for mili¬
that taxes could be safely reduced. tary preparedness, and for domes¬
The response of Congress to this tic capital maintenance and ex¬
belief was a general reduction, pansion.
taking away about $5 billion per
fiscal
tax
commercial
point,
Reserve
public. The effect of this ac¬
was to eliminate any further
budgetary surplus and any antiinflationary restraint the surplus
Recent Monetary Developments
might have had on bank credit
On
the monetary \ side, fiscal expansion, while at the same time
and monetary policies were hav¬ unleashing new inflationary pres¬
ing significant restrictive effects. sures through larger purchasing
The money supply, though still power.
Wnile Congress was acting upon
excessive, was being sharply re¬
duced by the Treasury'? seasonal a tax program and a program of
tive basis
interested parties the following
send
to
to increase bank reserve requirements.
■
of the
and
mentioned will be pleased
literature: Gp.y-.V
It is understood thai the firms
nonessential bank credit should be restrained. Asserts need for authority
rations, continue strong; and
/
on
means,
too,
a
It
rigorous avoidance
of bank credit expansion for non-
continued
on page
28)
-
Delhi
Oil
Corporation—Memo¬
-
,
Shepard, Jr. is with John L. Ahbe
& Company, 251-A Worth Ave.
randum—John B. Dunbar & Co.,
King Merritt Co. Adds
Spring Street, Los An¬
geles 14, Calif.
^
634 South
Also available is a memorandum
On
Berkshire
sociates.
Fine
Spinning As¬
..
(Special
^
to
The
CHICAGO,
Lewis is
now
& Co., Inc.
Financial
ill;
Chronicle)
;
.
i
Oscar r L.
with King Merritt
—
Volume 167
Number 4698
THE COMMERCIAL & FINANCIAL CHRONICLE
SOS NEW YORK—ITS: *^*81.
^ BROWING ALLTHE TIME. T2> KEEP
W
r
WHAT
m
GOES ON?,
mrwHowouLPNT—
r>8
Wi9N NEWYORK ? WE SPENT
UP WITH ITS
P
<<
f 76 MILLION LAST YEAR
NEEDS, WE ADDED
NEW TURBINES/ NEW GAS WORKS, NEW
STEAM PLANTS AND MILES OF NEW
W^WE HAD TO RAISE^
THE ROOF
AND WILLSPENP $280MILLION
L IN THE NEXT FOUR YEARS
MAINS AND CABLES IN 1947
Op THIS PLANT
TO PUT IN TWO NEW BOILERS
—0 STORIES HIGH
[
^
MmflUU
'SO CON EDISON ?
^
you SURE HAVE
FAITH IN THE
■r
future! ^3
tit
M, rf1 15,
VA\m
CUSTOMERS WILL-
!«:
K (c,.
L
ALWAYS
&
ur
DEPENDABLE !
■
HAVE^
'Slservicel u
NO WONDER
*
you're busy!
ITS OUR JOB TO
^
SEE THAT EVERYONE
7
HAS ENOUGH ELECTRICITY
GAS AND STEAM SO FAR
S
CON
EDISON
iTO YOU
RE PORTS
All
production records
customers* needs.
wore
AS WERE ABLE
broken for electricity arid
to meet our
gas
During one hour—from 4:30 to 5:30. P. M. on Decem¬
Statistically, here's where each dollar we took in
went to:
;
\
-
-
ber 23—the amount of current generated in our plants was within 5%
of
our
We took in
capacity.
This
To meet
increasing demands of the future,
we
stepped up the big¬
expenditures of
For
gest construction program in our history, calling for
up
7%. But our payroll
of fuel and materials, increased our costs by 17%—or more
gain. There
was a
than double
you
paid
us
Our
—to
your
—to
IP
fJ
on
.
•
...
*.
on
.*........'.
32,199,000
long term
•
•
•
32,804 stockholders
•
•
13,442,000
,
.
124,038 stockholders.
.
For surplus—for investments in
new
assets
complete Annual Report for 1947 is available
.
,
For dividends—Common Stock
greater share—nearly $34,000,000 (up more than $2,300,000 oyer the
including N. Y. C. Sales Tax).
•
For dividends—Preferred Stock
for service. The
before)—went to New York City and Westchester localities (not
•
depreciation of plant and
For interest
applicable to this Company took
dollar
.
•
debt and other costs
A total of 23 different kinds of taxes
year
Services
equipment
net loss on gas operations for the System
than 20 cents out of every
-
For
amounting to $3,500,000.
more
wages
For materials and outside
>r
topped $100,000,000 for the first time. This, together with rising prices
the income
operating
For fuel—coal and oil
'
Revenues reflected the record output:
.
used:
For taxes
$280,000,000 within the next four years.
some
was
request. For
construction and other
...»
.
.
*Does not include wages paid to Con
free copy, write Consolidated Edison, 4 Irving Place, N,Y.3,N.Y.
Edison
employees engaged in new construction.
m&tz
'
\
.
.
4,0%
[
wrtM
Thursday, May 13, 1948
•'THE COMMERCIAL & FINANCIAL CHRONICLE
(2090)
10
offering
of
$66,500,000 City of Chicago 1%% and 2%%
purpose bonds was publicly
of underwriters, headed by
cluding, among
Nicolaus & Co., Inc., A. G.
&
Becker^
—
Co>> Inc. and Sills, Minton & Co., Inc
all of Chicago.
The bonds were
Martin,
Inc., William Blair &
Co.
Co.,
&
Whipple
Bacon,
Corbett, Inc., Kebbon,
McCormick & Co., Detmer & Co.,
Cruttenden & Co., John W. Clark,
&
Burns
293,077 shares of M and M Wood
1948 were $9,676,342, com¬
with $15,800,762 for the
corresponding period in the pre-;
various
offered on May 6 by a nationwide group
Bankers Trust Co., of New York and in¬
others: A. C. Allyn & Co., Inc., The Illinois Co., Stifel,
An issue of
public
pared
Illinois Brevities
$233,188 ;and
$98,340. after taxes,
against $2,453,801 and $1,499,047,
respectively, for the nine months
ended March 31, 1947. Net earn¬
ings
per
common
share are
equivalent to 3 cents, compared
[
before.
bonds
Oil Exploration Company
have
wells
oil
successful
4
those
been
1958 ma¬
$3,500,000
of
lVz% bonds are priced from a
yield of 1.15% to the optional
price of 96 for
turity;
another
completed In Tatums Field, Carter
County, Oklahoma, and 1 discovery
well in Clay County, Texas, by Wich¬
ita River Oil Corporation within the
last
days.
90
Oil
date
of
1950
Exploration Company owns 51.25%
the outstanding capital stock of
Wiehita River Oil Corporation.
further
produce
activity
drilling
Continued
and
locations
properties.
from
yield of 0.90% for those
a
1949 to
due in
yield
a
of
to
....
1
•
'
,,
.
The
CHICAGO 4, ILL.
>,:;V .'V
?/•'
.
sale
Salle St.
214%
000,000
rehousing
1 Vz %
Central Public Utility
'
Corp.
bonds,
airport
police and fire department building
bonds, $1,500,000 1%% street and
alley reconstruction and improve¬
5%—1952
Chicago, North Shore &
ment bonds, $1,500,000 iy2% elec¬
Milwaukee Railway
tric
street
S. La Salle Street
Sp
CHICAGO 4
CG 95
Tel. State 9868
—
Central Illinois
Common
V
Wisconsin Power
Light Co.
Common
WilliamA.Fuller&Co.
Members of Chicago Stock Exchange
209 S. La Salle Street'Chicago 4
I, 1983 was oversubscribed. The
offering price was 102 y2 and in¬
Approximately $95,000,000
proceeds will be used to
repay
advances from American
Telephone & Telegraph Co. and
the balance toward the require¬
ments of Southwestem's construc¬
terest.
of the net
J
tion program.
V
.
Hutzler,
&
Bros.
Salomon
members of the New
York Stock
Exchange, on April 28
publicly
offered and sold at 100 and
in¬
$35,000,000 of debentures
of Swift & Co., viz: $25,000,000
terest
Tele. CG 146
Alfred
Co.,
O'Gara
& Blosser. The net
Serving Investment Dealers
exclusively
&
Co.,
in
,
proceeds will
be added to the general funds of
tractive issues for their clients.
retail
no
1.45%
for the
dealers,
in
but
serve
no
of
way
them
of
26.4%'
shares
350,000
Current assets
milk condenseries.
amounted
at the close of the year
to
$55,869,546, while current lia¬
were $15,095,157.
bilities
y Cruttenden & Co., Straus &
for the nine months ended March
our
with
Blosser, Holley, Dayton & Ger¬
on
non
and F. S. Yantis & Co. Inc.,
April 27
participated in the
exclusively.
share
the
on
PUBLIC UTILITY COMMON STOCKS
Black Hills Power & Light Company
also
were
offered
$10)
vv:
;'v'f4
Central Paper
Common
,
J
.
.
J
*
Missouri Utilities Company
■
■l>T(
22,
others, publicly offered $30,000,000
Consolidated
*
v
investment
open-end
ping Co., Chicago, in 1947 were at
$930,771, 41%
more than in 1946, and more than
company.
e
*
*
Another hation-wide
underwriters
of
group
April 13 publicly
on
offered 200,000 shares of 4%
mulative preferred stock of
cu^
The
Solva.y American Corp. at par
($100 per share) and dividends.
The following Chicago houses par¬
ticipated: A. G. Becker & Co. Inc^,
William Blair & Co., Julien Col¬
lins & Co. and Harris, Hall & Co.
(Inc.).
$
'
..
■
#
♦
-
■
Wells & Co. on
April 8 also participated in an
offering to the public of 65,000
shares
of
Oklahoma
Gas &
Electric Co. 5% % cumulative
preferred stock (par $100) at
$104 per share and dividends.
Mullaney,
,
The following Chicago hankers
the best prewar
and operating rev-v¬ also participated in the public of¬
$13,345,113, 36% more fering on April' 22 of 450,000 addi¬
and more than three tional shares of Detroit Edison Co.
twice
those
Sales
enues
than
times
were
1946
those
of
of
any
Earnings for 1947
share,
1946.
capital stock (par $20) at $20.50
year.
equivalent per share (which was: oversub¬
against $1.43 scribed): Harris, Hall & Co. (Inc.),
William Blair & Co., The Illinois
*
prewar
were
as
.
Co., Mason, Moran & Co., and F.
S. Yantis & Co., Inc.; They were
for the
account of the
ment bankers headed by Halsey,... offered
*
1
v.
v-;:-
of invest¬
including,
among
others, William Blair &
and
American
which
on
Light and Tractioh Co.,
Feb. 9, 1948 owned 934,-
971 shares
istock;
of Detroit' Edison Co.
"
f
/
....
X'
If
;
i*''i
;
Foreign Securities
•
<
Bought
.
; —:.
Sold
—
lyXyy'Xv-
Quoted
ZIPPIN
Prospectus Available
AC.AIXYN*®COMEANY
York Curb
'
Incorporated
.
Tele. CO 650-651
&
COMPANY
Specialists in Foreign Securities
135 South La Salle St., Chicago 3, m.
TeV ANDover 5700
on
diversified
.
the record figure of
Stock
Member New
chusetts
Gas
2%% debentures due April
51, 1968 at 100% and interest*
$1, at prices ranging
to $20.83 per share.
organized in Massa¬
March: 13, 1948, is a
Tucson Gas Electric Light and Power Company
Exchange
Members Chicago Stock Exchange
Associate
Natural
Co.
par
$20.41
Trust,
Sioux City Gas & Electric Company
STRAUS & BLOSSER
York
This
;
Southwestern Public Service Company \
Disintegrating
New
from
with
together
'
Texas Public Service Company
Tide Water Power Company
Common
Members
^
.
Public Service Company of Indiana, Inc.
-
Common
Metals
Boston,
A. G, Becker & Co. Inc. also
April
& Co. also par¬
Mason, Moran
ticipated in the - offering to the
public on April 13 of 500,000
shares of Shareholders' Trust of
per
.
♦Minnesota Power & Light Company
.
Portsmouth Steel
1
$23.75
at
Michigan Gas & Electric Company.. r'-'y
Michigan Public Service Company r" *' ? * ?
?
Detroit Harvester;
v
interest.
share.
on
bonds,
at 100% and
an
Co. of New Hampshire common
(par
Light Co. first mort¬
&
3% bonds, due April 1,
1978, at 101% and interest, and
on May 5 an issue of $5,500,000
New York State Electric & Gas
gage
which
issue of
139,739 shares of Public Service
stock
April 13 $2,000,000 Texas'
those
among
April 14
on
on
Power
Corp. first mortgage 3%
Co., Mullaney, Wells & Co.
Lake Superior District Power Company
:
including,
and
due April 1, 1978,
Co., Dempsey & Co., The Illinois
Iowa Public Service Company-:.
Inc.
(Inc.)
Indiana Gas,& Water Company
/ v
Bowser
Common
^
Co.
&
Stuart
Co.
Gulf Public Service Company
.
\
J T
•
■
ed
Co. Inc; and
Stuart & Co. Inc.; and
;:
.
Central Illinois Electric & Gas Company
;
- ■•;••••
mortgage 3% bonds due June 1,
the
for
On April 28 a group
7
•
Central Arizona Light & Power Company
•V,Chicago
by
first
$4,833,000
offered
licly
the
over
basis
Republic
*
120 South La Salle Street
headed
group
Halsey, Stuart & Co. Inc., pub-'
Current assets at
A. G. Becker &
Central
to $2.18 per
FLOYD D. CERF CO.
another
in
same
preceding year.
in
Common-
underwriting
f
:
■
date,
same
March of among others, A. G. Becker & Co.
the
previous year. Consolidated Inc., Julien Collins & Co. and
net profit after taxes for the year Dempsey & Co., publicly offered
Gulf States Utilities
1947 applicable to the stock of the $12,000,000
Co. first mortgage 3% bonds, due
corporation was $17,243,563, com¬
pared with $19,934,933 for the .year April 1, 1978, at 101% and inters
The net proceeds are to be
1946. Such net income is equiva¬ est.
used to pay $4,500,000 short-term
lent,
after deducting
preferred
notes and the balance to finance
dividend r: requirements,
to $1.82
a portion of the utility company's
a share on 9,330,090 shares of com¬
1948 construction requirements.
mon stock outstanding at the end
of 1947 after giving effect to the
three-for-one stock split in June,
Halsey, Stuart & Co. Inc., as
1947. This compared with $2.11 a
sole underwriter, publicly offer¬
stockholders
19,991
tation, replacements and addi¬
tions, as well as for additions to
Correspondence invited.
-
pro¬
1949 maturity to
Net sales of United Wallpaper,
Inc. and domestic subsidiaries
Main¬
department
compete
we
increase
an
year.
the corporation.
under¬
providing investmfent dealers with at¬
taining
net
ceeds, together with the proceeds
from the private sale of an issue
of $10,000,000 of first mortgage
bonds, are to be used to pay for
2.55% for the 1958 maturity. The
net proceeds will be used to fi¬
nance necessary plant rehabili¬
writing and distribution of securities,
own,
The
the
On
2%% debentures due
the close of 1947 totaled $62,535,May 1, 1973 and $10,000,000 of
763, as against current liabilities
serial
debentures bearing in¬
Of $38,756,665.
terest
at
rates
ranging from )
of 25-year
yrK y,yy'<-yyjyy fered
Rogers & Tracy, Inc. and Straus
specialize
Co.
&
funds of the company.
Kebbon,
and
•'
Public Service Co.
We
the balance added to the general
of MooreOn May 5, the following Chi- f Handley Hardware Co., Inc. (Bir¬
* /y. * y-* yyyy
Ala.) r5 common stock yyyyy
cago investment houses partici-. mingham,
Sills, Minton & Co. Inc. also
(par $1T at $9 per share, for ac¬
pated in the public offering of!
count of selling stockholders.
participated on April 22 in the
800,000 shares of
Sunray Oil
public offering of the following
Corp.
414%
cumulative
con¬
*
♦
♦
securities of Georgia-Pacific Ply¬
vertible preferred stock, series
Libbyy McNeill & Libby, Chi¬ wood & Lumber Co. (formerly
B, at par ($25 per share): A. C.
cago, for the year ended Feb. 28, Georgia Hardwood Lumber Co.)
Allyn & Co., Inc., Ames, Eme1948 reported sales of $145,370,616, for the account of
Equitable Secu¬
rich & Co., Inc., Bacon, Whipple
as against $127,110,575 in the pre¬
rities Corp., A. C. Allyn & Co.,
& Co., A. G. Becker & Co., Inc.,
vious fiscal year.
Earnings from Inc. and Clement A. Evans & Co.,
H. M. Byllesby & Co.
(Inc.),
the past year's operations amount¬
Inc.; 69,500 shares of $1 converti¬
Julien Collins & Co., Crutten- ,
ed to $5,366,394, or $1.48 per share, ble cumulative
preferred stock of
den & Co., Paul H. Davis & Co.,
compared with $4,935,083, or $1.36 no par value at $23 per share and
Dempsey & Co., Detmer & Co.,
per share, for the year ended Feb. dividends
and
10,425 shares of
Farwell, Chapman & Co., Har¬
2.8, 1947. In addition, there were common stock (par $1) at $23 per
ris, Hall & Co. (Inc.), Holley,
in the year ended Feb. 28, 1948 share.
Dayton & Gernon, Kebbon, Mc¬
non-recurring profits of $1,132,939,
Cormick & Co., Mullaney, Wells
principally from the sale of three
Earnings of Signode Steel Strap¬
&
v': ■v o
TRADING MARKETS
(par
.
lighting system bonds,
working capital. ^
iy2% fire department
••;
equipment bonds, $1,050,000 lx/2%
waste disposal equipment bonds,
On April 27, another group of
$700,000 iy2% playground bonds, underwriters, & including,
among
$500,000 iy2% police department others, Paul H. Davis & Co., H. M.
equipment bonds
and
$200,000 Byllesby & Co., Inc., Dempsey &
iy2% city garage and repair shops Co., Enyart, Van Camp & Co., Inc.
bonds.
and Straus & Blosser, publicly of¬
Brailsford & Go.
(Inc.)
Co,
mortgage
1961 at 102%1
or about June 1, 1948, to re¬
pay $200,000 of bank loans, and
3-%% bonds due
at $31.50 per share were A.
G. Becker & Co. Inc., Central Re¬
public
first
of
on
Idaho
of
stock
common
be used to redeem
to
are
$12,500,000
$20)
$1,500,000
Stock
Tel. Dearborn 5600
V /"
bonds,
$7,500,000 1 Yz% sewer bonds, $3,500,000
iy2%
slum
clearance
$3,000,000" 1 Vz % - super¬
bonds,
highway bonds, $1,800,000 114%
$12,750,000
&
•
$15,000,000
214% slum clearance bonds, $15,-
Dearborn 1501
Teletype CG 955
—
'
v
.
included
ceeds
■
redeemable-in
price of 9814 for the
a
100% and interest. The net pro-;
„
:'
shares
150,000
Co/
Power
Michigan Power Co. first
mortgage 3% bonds due 1978 at
Including among the investment
bankers which on May 6 publicly
offered
Co., Inc., pub¬
&
participated on May 4 in what
1978 of The Union Terminal Co.,1
was the
largest financing opera¬
construction, etc.
Dallas, Texas, at 100 and in¬
tion by a member of the Bell Tel¬
terest.
; ;• ;■>yy : y.yr'y;yi^r:/~y
y
y..
* y* e
,yy'
ephone System so far this year
%
y.. *
❖ \
:y y y
'.
The Greyhound Corp., Chicago,
when
an
issue; of
$100,000,000
On April 22, an underwriting
Southwestern Bell Telephone Co. announces that it had 25,264 stock¬
syndicate - headed
by
Halsey*
35-year 3%% debentures due May holders of record in March, 1948,
also
optional
1968 maturity.
Comstock & Co.
V
to the
1%
those
for
date
1949
208
1966; and
bonds priced from
prises 2%%
Approximate Market $6
Common
yield of 2.35% 1
the remaining $30,000,000 com¬
Exploration " Company common
stock
is
traded
in
the over-thecounter market.
Income
a
for those maturing in
Oil
231 So. La
in
price of 98 % for the
maturity; a third group
a
consisting of $31,000,000 of 1M>%
non-callable bonds are priced
;
v
the
redeemable
those
for
to
1956
should
successes in these
also
in ihe Doyle,
Cruce, and Sholcm Alechem Fields, in
Stephens County, Oklahoma, where
Wichita River Oil Corporation owns
producing
are
1% to the optional date for
redeemable in 1949 to a
of
Harris, Hall & Co. (Inc.), Julien
Collins & Co. and The Illinois Co.
>:,
■
*\
*
Yantis
consin
capital
'
;;.
.-".v
S.
licly offered $14,000,000 of Wis-
$17.37^ per
at
share.
McCormick
•,,
of ty2%
priced from a yield
total of $2,000,000
A
(par $5)
profits before taxes were
year
an
(Ore.),
Co.
Working
stock
ceding fiscal year, according to
William H. Yates, President. Net
following a
competitive sale on May 5 on a
with $1.21 the
bid that resulted in a net interest
■-.W'' ■>'■<
-'£
cost of 2.2i5%.
:
awarded to the group
F.
issue of
31,
i-
,.."Q>'caa°
New York
Boston
Milwaukee
;
:
208 S. La Salle St., Chicago 4,
Telephone Randolph 4696
^
Minneapolis
^
Omaha
'
J
v
♦
t
Illinois
Teletype CG 451
M
i
J 4
fi
.
'
i
tetyn
utffaftftwWfttaiWiVEy ***^1 >HvM<,
Volume
167
tirttttt«jfflLtefeWulaiflifiHihtttfftiAftiA
Number 4698
THE
MhKbMiafiWSSthXW'li
COMMERCIAL
retailer^fr.om Maine to: California;
from
Moscow
U.S.S R.: to
ington,,D. C.V;
.
:
.
..
of
Who Among Us Are "Producers"?
thing: We must accept
the; economic; truth
that
in
a
j
period of prosperity people Will
"
mood and
hopeful for continued
,T heavy production.
Sees need for
'
capital and
more
J prosperity is
price of
says
savings and,
productivity.
.r ,
I
more
more
.
I
have
today returned from a
trip throughout the great Central
; West—the "Magic
Circle" 0f Amer-?
ica.
{I
During the winter in Florida,
rather blue due to the waste
was
and indifference that I saw there,
On
St. Patrick's Day, however,, I
a message of courage and
heard
V
:
-
the
.the
soils
grown..
nutritional
values
of
the
soils,
Price of
of
material and spiritual.
faith
important
then
things
shall
day
is
duce
inventions /ready
It
(Special
bold Tetters for all "to
We all must pra^
when
and
more
is
take
we
"producers"
.(apeci^l to The
LOS
Work and
and
final
ter
se¬
the.
the
am
save
Here,
more.
-neighborly
noi
tot The
E.
advice
T6wer.r;
myself.
| He
exchanges.
as
Do
not
;
Ohio
the
Took
-
backward
State
Division
broadcast
.
F.
Burns,
Upham & Co., is
.
world
our
committee
soliciting
Greater
New
York
campaign.
by
and
Commander¬
s-in-Chief of
ou.c armed
„
If this
forces.
With the approval of its stockholders, the
'has aroused
of
name
the U. S. A. to
;n e w
purpose
Columbia-Gas & Electric Corporation has been
and
produc7
tivity as it
aroiised
me,
■J% good times for
'
the
.
few
next
'
Roger
.'
Babson
'* '* r
• -
'
Provided: We
found
faith
"possibLe'V-
,
match
can
with
' ar e
y e a r s
.
•:
*
.
our new¬
proportionate
a
butput of goodwill—and goods!
Good Times; "Possible"
>
Readers bf this column will
call
re-
that
repeatedly l have
stressed, if production fails to
keep pace with demand, all of us
could fee caught up in a tornado of
,
y
inflation—the
bust"
f
vicious
"boom and
spiral.": Furthermore,
the
threat of communism and other
.storm-clouds
bur
outlook
had
also
darkened
Since the Corporation divested itself of its V
for the
nearby nineteen-fifties. Therefore, I had been
distressed
for
sometime
by
•?take4t-easy"
attitude,
people ^
Y:;-: 'tX''
r* ;My frip bf
has "changed
electrical
the
of ' our
of
f
strengthened
my
my
speech—pepped
I
found
the entire
up
v,.
,
j
£'
-\
ill
,
^
new name
becomes
«
#
*
I
'
•
tiye of the System's functions in public
C^potationr and
The
are
more
Yv
/'
l\
1 —Need of More Capital"
'
with the formal
r
I am heartily in accord with the
growing conviction that a great
even the im¬
penetrable Iron Curtain can con¬
ceal the fact that Russians, Amer¬
icans
and
all
other
divisions
April 29th
VWlmingtoh, Delaware^ the
peed for capital. Not
new
title becomes fofpciaL
-ton,
-'Yv*:
at
hog,
little in
-
die."
or
what
part
of
It
7
4
"•
•
*
customers
as
to
Wash¬
Ohio. Last year the System de*-'y
.-
-i
•
■>
'
'..
ji
•
.
some
-
.
;
r.
$
'
•?"
>
j*
31,000 miles of
trans¬
j
[System is
liver
even now
by 1950 in
preparing
excess
to
de-
of 300 billion
cubic feet of natural gas
annually.
COLUMBIA
GAS
matters
the
"*'-T
through
on
"Root,
,
;
'■
mission, and distribution lines. The
of
forever, consuming
and/or exporting more than they
produce. It is the old axiom of
"
livered 231 billion cubic feet of gas
the globe are subject to the same
Iron Law! Namely:- People cannot
keep
r
800,000
corporate"
v.^.iV
;v:
i\
approval at the Annual
Stockholders Meeting on
derhand of the period next ahead
will be a universal desire and
'.t
ington, D. C., Cincinnati and Day-
the COLUMBIA GAS SYSTEM. Now,
as
X-XX:.'
Y
distribution lines,
own
**
other utilities in cities siich
sidiaries have long been known, unofficially*
yearsi.TT rr\':-':'Tv-
;\r''
another
through wholesale deliveries
its operating sub¬
better mood.
They—like myself—
hopeful than for two
*• :CT
.r-
and
farmers, ranchers,
,
^
dustries with natural gas directly
through its
service.
merchants, manfacturers and even
hard-boiled bankers in a new and
serves
l,000j000 homes, businesses and in-
descrip-11 ! ''
•'*
more
•
.
COLUMBIA GAS SYSTEM
>
,
v
na¬
:
,11
Utilities-Holding Company
~j
'tT
Public
Act, the
attitude
and
faiths I found
that President Truman—with that
tion.
the
^
h
'the past few weeks
,
properties under the provisions
SYSTEM
world
{you set the pig trough. Yet capital
cannot
local
by
be
manufactured by your
banker,
it
must be
saved
pnd me. ,»', J
v; Pence, in this old-new world
yoy
of
ours'*tod ay,;
we have the ironic
situation that the UNITED
States,
j the
UNITED Kingdom and the
| U.S.S.R., tomorrow will be
united
in their common need for
capital,
pow on earth is humanity: «—
i whether East
or
V...'. f.
>
us
consume, and
more
than
mess
boat,
these
days. Js
<
in. the
eager to get more
| one form
common
or
■■
■
-
■
'
...
; •
•.
'
'•••.•.
^
-
.
"
Atlantic Seqboard Corporation
4
■
.
..'
Tb« Manufacturers Light and Heat Company
.
.
i
.•
■
••• '•».
•
■
•
■
' •"
.-
*
The Ohio Fuel Gas Company
Eastern Pipe line Company
Virginia Gas Transmission Corporation
* Central Kentucky
-
v
.
•
:
United Fuel Gas Company
Virginia Gas Distribution Corporation
Natural Gos Company
Big Marsh Oil Company
Natural Gas Company of West Virginia
"
we
>
allowing the surplus
accumulate. ^Everyone in bugi—
:
•
■
West—to get this
producing
THE COLUMBIA GAS SYSTEM, IHC.
'
-■
[capital, this
lifeblood„ of - the
[world's economic future?
Only by
Ull of
<•.
Cumberland and Allegheny Gas Company
Home Gas Company
.
r
r
^i
Amere Qas Utilities Company
The keystone Gas Company, Inc.
'
Union Gasoline & Qil
Corporation
j
}
Binghamton Gas Works
Gettysburg Gas Corporation
,
-
The Preston Oil Company
Virginian Gasoline & Oil Company
j
same
capital;, in
another.
It
is
the
story, from wholesaler to
Jr.,
Harris,
Chairman of the
Chief Ex¬
ecutive
was
Con¬
Wall
Street
firms and employee groups in the
Se¬
of
James
-
to
,
the
of
Burns Aids Fund Drive
Chronicle)
curities.
upon
asso¬
Mr. Devlin
*
classify
become
| rad, Bruce & Co., in charge of tlie
Los Angeles office,
previously with
was
has
Dempsey-Tegeler
formerly Vice-President
for
nected with Otis & Co., Terminal
giving—and trying to
Devlin
with
210
stock
can
W. Cunningham-has become con¬
:
Chronicle)
&
West Seventh : Street,
members of the principal national
Co.;
nineteen-fifties
Financial
Financial
ANGELES, CALIF.—Wal¬
ciated
put; thosefirst
CINCINNATI,- OHIO—Spencer
says:
which I
i\
dawning
first
we
first,
1
The
the
are
curities. : If
*
Prosperity? Productivity J
marked in
combine
the market.
*
new highs in
living stand¬
including standards both
now, feel that more good
|can be good to us all and we
are
possible, but like-, so
forget
"boom
and
bust"
other good things, they are
awhile at least.
to be had only if we are
;<
v
" \
willing
to pay. the price.
Looking forward
to the potential
prosperity of the
Joins Otis Co, Staff
nineteen-fifties, the price-tag- is
read.
on
r'"'
."
DempsepTegeler Co.
ards;
the
Yes, I
pie agriculture of the "fif¬
come
with
Waller Devlin Joins
create
are
produce sii-?
services at
They,
U
-
years
engineering and organic chem¬
istry. Then there are hundreds of
to
they - were,
however
the„ nvemories, nor
straggle to keep, things-as-theyareX Rather,let*s "all "Unite * to
as
-
many
ot
new
u
: .V
"fifties" .will
a
to'
and /or
(2091)
precious
,
become "students pf the principle
that good, foods originate "in good
ties" will tend toward
unite
goods
•
CHRONICLE
help of the teachers and preachers
are the hope of America.
where their goods, are
Hence,
I
predict
that
housewives
"Producers''
Vv&j WW^&fc&i trh'a'J ■mWi I-
decision
:
*
about
!
who
;
.efficient, coats,
-
;
FINANCIAL
country.
perior
Reporting on result r of" trip
not
be' content
with
a
mere
through mid-West, Mr. Babson ! "something to eat." Alert and in¬
formed
families will
ask
more
finds all groups in new and better ]
'
the
those
Another
By ROGER W. BABSON
&
WHMWWBgWPftl W!HWW "■&}}& flilWtHHM fritfc APitlMftP# ffliY WltUlrhJj*S,>'#iTftWWv
1W. HIMBffl
only farmers, manufacturers, and
miners—but all .who. apply integ¬
rity and ability to the betterment
Wash-*:
...
Wlf1 tijfSjf.\!fi\in.
J,
'
MflJ
"
•
"
' i I
Fund's
1943
of additional interest,
As
the market action of bank stocks in
cities other than New York is also
shown, as follows:
I
Bank and Insurance Stocks
Boston—
By E. A. VAN DEUSEN
This Week
executive council
generally favorable, according to members of the
)t the American Bankers Association in session
April
during
at
in the press. The basis for this
to 1%% for Treasury Certificates
reported, furthermore, that many
should, over a period of months,
Lick
Springs, as reported
jpinion lies in the anticipated rise
n June or July of this year.
It is
bankers believe that the Treasury
prime paper in New York City possibly advancfrom the prevailing 1%% to 2.0%.
on
hand, operating expenses are still rising, and
security profits will not improve, in fact may deteriorate. On bal¬
ance, however, it appears that net operating earnings will in many
On
other
the
show
instances
betterment
The
market
stock
bank
will not conform to the pattern.
the American Banker Index,
against
since the first of the year
7.4%
have advanced
opinion,' for New
share this
to
seems
York City bank stocks, as measured by
Pennsylvania Co. for Banking
Jones Industrial
Average,
follows:
as
Dow Jones
Banker
Industrials
Date—
6, 1948-..
^
- ,
1A%
stocks
,
,
„
...
Jgf
0.3%
comparative movements of individual New York City bank
1
;
Dec. 31, 1947
25%
Bank of Manhattan
Harris Trust
208
&
...
4-1.8
4- 4.8
— 2.9
335
345
Savings
600
Trust
.
83
218
81*4
.
—
'+ 1*2%
•
585
j
r
2.5
—
-
i
Average
—L—-
i
4-0.3%
-
160
Manufacturers National
National Bank of Detroit
,155
i
-
34
;
,
32%
l(,'
Robert W. Baird
r—3.1
Change
May 6, 1948
'
25%
•
<
«—
3.4%
—
—
The
39
Trust
Bankers
343
355
*
42%
104
Brooklyn Trust
+ 8.3
V-
47*4
'
—
43*4
8.4%
Reverting to New York City banks, total demand deposits of the
Clearing House banks are running approximately 2%^ below the
totals of a year ago, being reported at $20,660,693,000 for May 6, 1948,
compared with $21,240,549,000 for May 8, 1947.
,
c
However, total leans and investments of New York City Federal
Member banks are 3.8% higher than a year ago, and are
Reserve
at
(In millions of dollars)
Chemical Bank & Trust
Commercial National
4i
16*/s
—
—
Continental Bank & Trust
Brokers
2.2
Ludlow
Exchanges.
Stock
North,
F,
Lee
+
4.5
Clyde L. Reed, Newman L. Dunne,
Garrett Kamerling and Frieda
Mueller.
Mr. North, who
is a
member of the Chicago Exchange,
J.
will also hold the firm's member¬
ship
the New York Stock Ex¬
on
change, acquiring the membership
held by the late Neville G. Higham.
'
/ (
.
+
4.2
Banks
Guaranty Trust
Irving Trust
Kings County Trust-.
Manufacturers Trust
264
1,480
U.
S.
+
7.6
+ 4.7
41
42%+
91%
39%
AVERAGE OF 19
action
7.4%, but this
'
:
of
Continental's
41*%
+
•
4.93.8
';'v
the
4-
response
When
average.
3.0%
to the planned
excluded,
compared with
the
average
the index rise of
moderate rise is still approximately ten times
more
prepared
554
8,358
9,549
Total U. S. Governments..
Other Securities
...
NEW JERSEY
N./v
'
'
i
principal
T
•*'
j,
;St
•'
,,
—
—-
"■ '+
:V
1
SECURITIES
-VV;;';
-IT/'.;-~ y;!.:;.."-.i
-.'i.
Insurance Stocks for 1947
-
^'.Vy
"t
.
New York
Stock
Exchange
:
120 BROADWAY, NEW YORK 5, N. Y.
BArclay
—
-
,
Established
••
1891
-u
'■
'-V+
18 Clinton St., Newark 2, N. J.
7-3500
MArket 3-3430
Teletype—NY 1-1248-49
N.
Manager Trading Dept.)
It will be observed that
598
41
—
557
—
—
4.8%
Y. Phone—REctor 2-4383 :
12,050
Type of Airline Financing Announced
by
a
the
achievements
of
the
%
transport companies, i j;'
Specifically, Trans Caribbean is
offering an issue of $150,000 7%
Equipment Trust Certificates due
in three years. • The issue will be
secured by a Douglas D.C.-4 plane
recently purchased for $225,000.
Title to the plane will rest with
GEYER & CD.
INCORPORATED
NEW YORK 5:
67
WHITEHALL 3*0782
Wall Street
the
York
BOSTONS
CHICAGO 4
L0SANGaES14
231 S. LaSalle Street
210 West Seventh Street
Russ Building
HUbbard 2-0650
FRAnklin 7535
Michigan 2837
YUkon 6-2332
BS-297
CG-105
LA-1086
SF-573
PRIVATE WIRE SYSTEM CONNECTING: NEW
YORK, BOSTON, CHICAGO,
CLEVELAND, PHILADELPHIA, ST. LOUIS, LOS ANGELES, SAN FRANCISCO
Portland, Enterprise 7008
Providence, Enterprise 7008
*
Detroit, Enterprise 6066
rin n
as
Trust
Co.
of
New
trustee, under the "Phila¬
delphia Plan." The trust property
would be fully insured to the ex-,
SAN FRANCISCO 4
10 Post Office Square
TELEPHONES TO: Hartford, Enterprise 6011
Colonial
■
NY 1-2879
tent of
:
ing the merger in 1919 of the old
Banks
considerable
thus
monthly
effect
saving
a
for
The company,
$250,000 as well as covered
by other risks., Trans Caribbean
would agree to pay the trustee
$5,250 per month until maturity.
This cost of $5,250 per month is
said to compare
leasing rates
with the present
for, similar
equip¬
sues
in that the certificates would
also
be
into
stock at $2 per share.
common
for
fore
net
depreciation, of $216,343; and
after all charges and taxes of
$61,060.
Gross
revenues
$1,756,625
were
as
Wis¬
was
handling such
volume
a
of business that it was decided to
set
separate
corporation.
government in
a
up
When the Federal
required banks to relinquish
their securities affiliates, the com¬
1934
to make its separation from
changed its name
Securities Company of Mil¬
pany
the bank clear,
to
waukee, which subsequently was
changed to the Wisconsin Com¬
:
Jos. McManus & Co. to
Be Members of NYSE
Joseph McManus & Co., 39
Broadway, New York City, mem¬
bers of the New York Curb Ex¬
will
also
bers of
change
on
become mem¬
York Stock Ex¬
the New
May
18, when Joseph
V. McManus will acquire the Ex¬
change membership of the late
Paul Pryibil.
Other partners fin
the firm are Michael J. Heaney,
Matthew A. McManus and Frarik
+
L: Walin,
-!
-:t:/J;r
■'
The company's annual statement
1947 showed net income, be¬
>
which
change,
the company.
convertible
First
the
into
mmmarnrnm
in addition to un¬
which the railroads have used so conditionally
guaranteeing >; the
successfully over a long period of certificates, is also considering the
years in financing the purchase adoption of a unique feature which
of their equipment.: Mr. O. Roy differs in one respect from the
Chalk, President of the company, customary railroad equipment is¬
railroads could be equalled by air
>
and INSURANCE STOCKS
and (would
figure
was
pany.
A new type of airline financing is currently being undertaken
by Trans Caribbean Air Cargo Lines and their underwriters, Gearhart & Co., Inc. of New York. ? This type of financing was suggested
in principle by the Congressional Air Policy Committee.
The. company is. offering todays
(May 13) an Equipment Trust is¬ ment of more than double that
secured
Company
consin,National. The union of the
banks created a bond department
—
4.8%; it is also interesting to note that Treasury Bills are higher by
over $1 billion, whereas U. S. bonds are lower by approximately the
same
amount. The significant increase in earning assets has been
in the category of commercial loans which are up by $1,043,000,000
or 26.0%, despite a slow decline during the past
few^hionthsj' a+rend
which is likely to be reversed ere long under the influence of the
Marshall Plan requirements and the military procurement program.
stride
WHOLESALE MARKETS IN
Wisconsin
originally formed on Jan. 1, 1920
as a separate corporation follow¬
First National and Wisconsin Na¬
—
18,331
19,033
+ 702
+ 3.8%
holdings of* Governments have dropped
expressed the opinion that with
the growth of aviation now in full
BANK
+
10,953
1,097
.
12,607
four-engine
Douglas D.C.-4 (45 passenger) air¬
craft.
This financing is of a type
similar in most respects to that
J. S. Rippel & Co.
Laird, Bissell & Meeds
Telephone:
11,551
1,056
Total Loans & Investments
sue
Copy on Request
Mr.
purpose
The
—
—?
;
•
Baird stated 'that
back of the changes
is "the desire to give better and
more
complete * service to Wis¬
consin investors."
-
the
tional
Investments
New
a
Fire zni Casualty
Bell
736 '
+1,063
288
—
182
—1,191
—
Wisconsin
the
firm, will be changed to
W. Baird & Co., Incor¬
change
Robert
8.7;
1
gain of the Dow Jones industrials. '
(L. A. Glbbs,
861
—
4.3
+
575
630
:
stock, in
Comparisono? Earnings
Members
1,180
1,149
of
name
Company, which will be an af¬
filiate corporation of the new Ex¬
M-f 5.7%
index and
of
—117
U. S. Bonds
-■f
(exclusive of Continental)
appreciation of 19 stocks is 3.0%
We have
—
Treasury Notes
purchase by Chemical at book-value plus one dollar, is abnormal and
the percent
+22.0%
Treasury Certificates—
0.9
AVERAGE OF 20—
the
+1,259
The
—
Investments-—
Treasury Bills
6.8
;
87%
Trust
Trust—-
distorts
6,983
4+
—
'
National
The
5,724
:
—....
4.7
Total
i
+26.0%
4—
porated.
Total Loans
+
232
+1,043
+ 190,
—----
+
52%
234
1.9
+
:
1,550
49%
-
5,047
764
and Agricultural
Other Loans
all formerly of the Wisconsin Co.
4,004
574
———————
Commercial
60
29
48
77
664
230
124
154
0.9
—
:•
16%
16% '
;
Morgan, J. P.
National City
Public
+ 56.6
284
;;
___
_____
_
6.1 K
and
Members of the new firm were
259
76
77
Real Estate
:>+
1,320
Pfau,
Rasey,
C.
A.
Bickel, Richard J.
Alan
C.
Hackworthy,
White,
Change
May 5, *48
Dealers604
Securities
54%
1,295
First National
York
'
55%
Corn Exchange
New
•
i
<
May 7, '47
6.7
25%
Chase National
"
-
+
93%
37%
43%
43%
Hanover
Loans—
§ +
>111
91%
36%
41%
Central
3.4
—
*•
firm
Partners will be Robert W. Baird,
.
Fifth Ave.
of New York &
Bank
•
new
William H. Brand, G. Harold
Bank. of America
0.5%
+
Chicago
and
Average
Ludlow F. North
will be members of the New York
3.7
—
s
Wisconsin Avenue.
$19,033,000,000 for the week of May 5, 1948 against
$18,331,000,000 for the week of May 7, 1947. Itemized, the changes are
as follows:
Asked Prices
'
,
First National
-
'•
■
Continental Illinois Bank & Trust
Northern
''
'
:'V
Chicago—
reported
follows:
the period have been as
over
Average
•
Clarence
37.9%-v 181.16%
40.7
181.65
31, 1947
Gain
The
1-4 J
No Chge.
-f 3.0
42*4
34*4
,
San Francisco—
. -
'
1
American
May
+ 7.1
—
fractional
a
by the Dow
gain of only 0.3% b^ the general market as measured
Dec.
...
—2.6
45
35*,.' : •'
35*6
42*4
' 33*4
tf
of May 18 with offices at 110 East
-
+ 4.2%
,
37
,
WIS. —Robert
experiences of
the
though
1947,
over
individual banks will vary, and many
-
;
'
■■
MILWAUKEE,,
W. Baird & Co. will be formed as
on
upward, the rate
,ng
38
42
First National
Girard Trust ^.1—J.1
»■
J*
—
—
Philadelphia—
Central Pennsylvania National—i
Corn Exchange
its 12-month certificates to go to 1 %%♦ Opinion
also leans to the belief that returns on loans are likely to continue
permit the rate
130
M;*1-' "-'■'*(['
vV'.V
N
V' "•
'
Average
■■
128
\
operating earnings in 1948 is considered
The outlook for bank
24%
Robert W. Baird & Co.
To Be Formed in Milw.
-f 0.5%
4- 6.5
3.1
+ 1.6
5014
330
26%
:+
;
Second National
Bank Stocks
—
50
310
♦
Shawmut
National
Change
r
••
National
Merchants
-
May 6,1948
Dec. 31,1947
First National
•Yench
Thursday, May 13, 1948
THE COMMERCIAL & FINANCIAL CHRONICLE
(2092)
12
for 1947
compared with
McMullen, Park & Hard
To Be Formed in
at 120
$791,434 for 1946,
NVc|
McMullen, Park & Hard wjll.be
formed
as
of June
1
with offices
Broadway, New York; City*
business^
the firm, which wii}
to conduct an investment
Partners of
Paine, i Webber Co. Adds
:'/•
Paine, Webber, Jackson & Cur¬
tis
announce
V that
Arthur
M
become
associated
registered repre¬
sentative in its uptown office. 745
Moody
has
with the firm
Avenue, New York City.
Mr. Moody was formerly with the
investment counsel firm of Doug¬
las
T.
Johnston
was
the New York
Exchange, will.be Joseph
McMullen, Joseph ,. F+Park,
Stock
H.
Frederick
Hard, the Ex¬
Bourne
as
Fifth
which he
hold membership in
&
Co.,
before
trust officer of the
Union Trust Co., Providence, R. I.
change
member;
Paul Immo
and
James
Mullen,
were
K.
Henry J.
Laut,
Gulden, John C. Litt
H.
Curtin.
Mr. Hard
Mr. Mc¬
and Mr. Laut
formerly partners in W. R.
Taylor & Co.
;_.j
Volume 167
Number 4698
THE
COMMERCIAL
&
The Banks and the Economy
FINANCIAL CHRONICLE
Toward
Stable Economy
a
By JOSEPH M. DODGE*
•
'
,
/'
;
President, American Bankers Association
'f
■
By
;
,
.
profit philosophy of other private enterprises and its
meat
-
eBusiness economist maintains both
purchasing power for consumers and sufficient funds for capital
for balanced economy.- Looks for trouble in sustaining employment in
capital goods industries, alleviated somewhat by recent tax redaction. Predicts lower food and cloth:
ing prices in face of stable or rising industrial prices;v
v
manage-
goods industries
^
must
recognize obligations to balance of economy. Hails
Bankers Association's
anti-inflation, or credit control program, as;
v
successful
attempt to solve economic issue without law
govern-
n-
it is not my intention today to
go into detail on the American
Bankers Association credit control
program.
You have had a great
deal of information about it
through your meetings, through the
mail,
in the newspapers, and in other
publications.
;
aspects^
some
-
of it—in terms
general
i
p r
ciples—
n
which
we
I will only emphasize
—
the Central Reserve
Cities, could
be used to raise the cash
reserve re¬
quirements of the banks
billion.
$12
some
This is in addition to the
should all
un¬
so-called
derstand
and
which would apply to all commer-,
cial banks and require another
k
e e
p
before
■
"special
of
reserve
do-
.
t h
a
I
t
cash
Governments
25%
to
ex¬
On
press
my
ap¬
effectively
make
Danks
50%,
the
dividually for
prompt
M. Dodge
the
maximum
a
Banks
55%
of demand
Ceun-
i 1
c
will
is;
that
the
of
test
of
It
the
country
Reserve
City
the Central Re¬
and
City Banks 60 % liquid in
terms of cash and short Govern¬
ments related to demand deposits.
in
i
e
nomic
At
focus-
of
g
Dexter
eco-
; r,
activated
levels.
at
the
The
State
State
and
officers
and
The
arguments for' and
the
arguments against
much
better
secretaries, without excep¬
tion, have given a magnificent ex¬
these proposals have already been
ample of cooperation.
discuss
With
members, they proved
once
the
again
why the American Bankers Asso¬
ciation is without
effective
tion.
equal
an
national
trade
as
an
Associa¬
The
reception of the pro¬
gram by the bankers themselves,
by the Government, and by the
public generally has been much
favorable than
more
had
we
ever
expected.
What you have done
has already greatly added to the
National prestige of your business
and your
I
Association.,
H
V
V
thinking and analysis.
rate, it brings me to
I
think
them
here.
emphasize
I
that
principal
of
accom¬
anti-inflation
our
has been to bring to a
focus
and
general attention a
problem which was giving in¬
the
der
tional
as
was
the, borrowers
should
of
The free
ductive
the
resisted
be
by the borrowers
support,
and
individuals.
know
the
not
flow of
country
You
the banks.
as
results
have
been extremely satisfactory as the
large increase in bank loans, pre¬
sound
and
uities
lending, less than two months
it looked as though the infla¬
tionary situation was pretty much
under
control
and
begun to stabilize.
time
there
has
had
at
least
But, since that
been
a
series
of
new
factors introduced. Now there
are
freely expressed
fears: of
a
continued and mounting inflation
and some Government authorities
v
claim
that
the
prospect
for
fur¬
ther
•I
inflation is greater than ever.
fh Washington the Joint Com¬
mitter (of
the
Congress
the
on
Ecdrmjfiicj Report has been hold¬
ing hearings on a proposal for
additional ^ controls
over
bank
lending and investment. The pro¬
posals recently made go beyond
thos6;; 6f
last
November.
Some
thing hew has been added, in the
form
cash
and
;of
a
required
reserve
an
on
extra 10%
demand deposits
extra 4%
cash
time deposits for all
the Federal Reserve System.
estimated
serves
that
^which
this, with the
can
on
It is
re¬
be increased in
♦An address
by Mr. Dodge be¬
fore Missouri Bankers' Ass'n, St.
Louis, May 4, 1948/ ^
f*
r
as
B.
that
defined by
Fisher
in
of
the
factory, no matter how rewarding
his
it might be in
Im¬
Employment."
less than com¬
material terms.
observation that when
It is my
•
Full
something
never
been
suspicion by
have
starvation, but I suspect that I
personally
value
the
right to
squawk quite as much as the right
to eat, at least to eat too much.
Any employment won by sacrifice
of that right would not be satis¬
to
with
"International
STATEMENT
>s
in
»'.J
r"\
i.
(Continued
34)
on page
could not be
or
Other
about $5
revenues
the
on
it
*7-
*
1
creditors
'
Fr,
Acceptances
,—2——
other
Balance with
»V
V-
•.
r
-
*
.
16.766.816,73
Bankers—i—--L-.
Branches
and
713.839.644,76
.
„
Affiliations
10.766.816,73
(1)
189.985.131,37
outstanding
1.530.708.51 1,53
Other short '.term
Creditors for
402.247.052,03
Bills
in
of
course
collection
Deposits and current accounts:
,
1
-
435.092.231,57
,
~i
.
-
a)
demand deposits and up to a month's notice
16.622.799.898,33
to)
time deposits at 1 month's notice or more..
1,466.105.816,11
Amounts callable
on
subscribed
Sundry liabilities
and
shares
—
' v
18.088.905 .714,44
366.202 .057,50
224.298 .211,63
pat ticipalions
————-
-
Special Liabilities (2);
Account* temporarily blocked:
a) demand depositsand up to a month's notice
2.784.133.963,53
b)
time deposits at 1 month's notice or more—
37.758.209,20
regu¬
inflation
)
'
.
J*
21.968.045 .371,61
will
2.821.852.172,73
Capital Accounts:
——
—.
—
Available Reserve Fund————-.~
179.502. 993,76
rcevaluation of Securities Portfolio
Provision for War Damages-—
by
Balance
Balance brought forward from
of
.
spending power; the passage of
the
Economic
Cooperation Act
**•*'/•
-
J
"V''
jv
,i
X'
and
Profit
26-045, 325,—
.
3.450
288 20
144.353
"
t
'
f
v
r
V
r
f
_
Affiliated Banks,
'
(2)
Blocked balances originp.ted from th» Monetary Reform of October
43,8275 Belgian francs equal $ U. S. 1.—
(1)
providing for the spending of $5,300,000,000 in grants and credits
for European aid; an additional ap¬
propriation for military prepared¬
ness 0* $3 billion; an increase in
the armed forces which will draw
■*
'
,
ASSETS
Call- Money
lease.
1.126.045.
f
■
":V
t 7^
147.803.963,62
26.064 3°6 832,96
''
1944.
■
Cash, Balance with the National Bank and Post Office (a/c department)
potential labor supply
and
possible
military
aid
to
Europe in the form of a new lend
r
Available Assets:
,
,
"
;
675,42
1—
—————
-
/ T- O'.'
:
Loss Account:
1946
Year's 1947 profit---———
;;
:
370.497. 006,24
Reserve constituted
take
billion from Government
and thereby add it to
2.821.892.172,73
Share capital
500.000. 000,rLegal • Reserve Fund—t 50.000, 000,— '
■
reduction
tax
v
,,
,
Arguments
that
estimated
is
(• I"
'
creditors:
Balance with
lease on life and more
Government controls are needed
based
f
j
National 'Bank..V:':^v"
a new
which
•«,-
Exigible:
Preferential
limitations.
contention
*
,
CONDITION
which
Government
The Pro-Inflation
The
needs
V'
c'/
places
properly served un¬
der inflexible
lations
and
m*
OF
31st December 1947 I
LIABILITIES
they will restrain
situations
'-V Vi
1.032.389.570,06 f
418.000.000,— :
__L.—
Billa in Portfolio:
from
the
Balance
Balance
*
——;
■———w——
with
with
Other-short
other
Branches
term
644.239.748,94
Bankers
Affiliations
and
i
'
have
such
Government
effect
adverse
an
(If—
—
\T 443.150.732,31
assets.^—:———
and
revenues
Commercial bills*
b)
Treasury Bills rediscountable with the Na?
tional
on
•
■
■
penditures that there will not be
expected surplus of Govern¬
ment Revenues to keep pressure
:.——.—
Loans
Bank up to 85%
,„~
the banks
by
a
y
debt.
used
to
•„
A
Legal
b)
of market¬
surplus could be
economy
money
out
of
the
-v
s
8.721.000.000,-—, 15.652.050.329,63.
..
203.241.930,97
1.530.708.511 53
.
'
'
50.000.000,—
Belgian
d)
e)
pull
*
3.481.563.fcl8,65
debtors. —
1
"
t
a)
c)
able
t
4.275JiOO.OOG,-^—
against securities
;—
acceptances liabilities
Sundry
continuous and
substantial retirement
;
——.
Customers'
Securities:
on
-
2.655.250.329,63
———
—.—-w.—
W, Treasury -Bills negotiable with the National
ex¬
the
Bank
reserve
——
1.300.960.291,97
Government securities
Foreign Government securities—
Bank shares—-—-—————
Other securities ^
—
—
Sundry, assets
-
136.623.0C0,—
535.897.971,—
230.132.036,—
52.596.522,54
and these programs will
more
money
into it,
per¬
haps leaving availableTess goods
for
consumption
(Continued
in
an
on page
economy
39) ^
2.253.613.298,97
Fixed
Assets:
.
Shares^in
Loans
25.984.686.830,96
—
directly contribute to inflation by
putting
273.132.567,36 ?
-
A)
It is said that these factors will
*
reserve
members of
With
or
restraint in
local
is
ago
plications
G.
I
test
to
3, Montague du Pare, Brussels, Belgium.
.
surplus,
in
the
on
I technically term
squawk."
Societe Anonyme
appropriate caution
meeting varying
exercise
has
the break in the com¬
modity market and the slow down
A.
book
ineq¬
many
difficulties
and
be available as
matter of fact, with the
forecastof a large budget cash
a
Professor
common
Luckily,
.
forced
"satis¬
assume
what
of
the "right to
pro¬
where credit is needed and should
dicted for the first quarter of 1948,
has not occurred.
As
something in
employment,"
credit for necessary pur¬
Government interference
and
undoubtedly
statistical
ment
BANQUE DE LA S0C1ETE GENERALE DE BELGIQUE
vigorously
as
is essential to the effective
functioning of the economy on its
present level of activity.
The
easiest way to stifle or cripple our
present tremendous production is
to
merely
constitutes
Employment
poses
un¬
with
what
Full
proposal
to put a straitjacket of Govern¬
ment regulation on the banks and
Na¬
necessary
circumstances
to
factory employment," I
it has
♦An address by Mr. Keezer be¬
fore. N. Y. Chapter of American
Statistical Ass'n, New York City,
May 6, 1948.
a
any possible improper or extravagent use elsewhere and any gen¬
creasing concern to every banker eral freezing of credit availability
; who was thinking about his busi¬
mightj have unwanted adverse re¬
ness
and his country. ? It gave
sults/ T am ,sure. the bankers of
them, reason to act along the lines the country can be depended upon
they realized
As
assignment
Discuss Fully
"full
I
program
the power
as
the electorate."
My concept of "satisfactory em¬
ployment" involves another nonstatistical element.
It is employ¬
ment which involves no impair¬
finance new plant and equipment.
our
"To
well
as
of
inconvenient
an
any
inevitably create as
the
only want
evening,
controls. Blanket restrictions will
Advanced
1
to
with
Credit-Restraining Aims
plishment
published and I do not intend to
power,
any
what I take to be
this
;
,
"provoke
Definitions
pulsion to share the opportunity,
some picking and choosing
among the manifold aspects of the
subject. Hence I shall concentrate
on a few parts of the
problem of
stabilizing consumer purchasing
Keezer
M.
<
f
Straitjacket Opposed
an
this, and
unobstructed field,
and do
change
the
n
not
restlessness among
do
subject with
complete finality.. Not being here
alone, however, I feel under com¬
"Is
righteous?"
major
how to
I would polish off the
question,
79.700.000.•:«» ,i,v
real-estate subsidiary companies
to real-estate subsidiary
but
a gratifying sense
political and social realism, he
defined full employment as the
level of employment which will
of
Depression."
or
know
I
that, given
tion,/ "Will it
precision,
statistical
plete
Maintain
without saying, I trust,
goes
that
work?" rather
it
Will
Inflation
of
ques¬
than 51 h
Be¬
Satisfactory
Employment and Avoid the Evils
answer
to. the
Balance
a
Wages, Prices and Profits with what I find
That
economic pol¬
icy the
Essentials for
tween
making the
basic
Act of 1946 and its creation of the President's
<$>-
be
to mark
seen
;
seen as a
major turning point* in American
The historical turning point which I think the creation
e?°^lonijc an<^ P°litical history.
of the
basis that would
serve
and effective
which the program has
in
necessary
I believe
V
deposits and 10% of time deposits.
want
preciation
to
you
c o 11 e ctively and in¬
short-term
or;
of
plan"
'reserve
are
that passage of the
Employment
Council of Economic Advisers will come to be
;
or
rnent regulations.
if'vj
KEEZER*
Director, Department of Economics, McGraw-Hill Publishing Co., Inc.
;
President, The Detroit Bank
ABA President states banking business cannot be
operated in terms
>)
DEXTER M.
i:;
companies
jbaiiTIQ'i
8O0T
11<>)
$&Txrt9ial5, yJioi
H'
,tj(—•v. -i
i v.,:.
^
■
\
••
,3',^:.JiQA79.700.002.—
4i if
4$'. V
<
•
•
FTo'tJ261064^86.83^96 V.
oafrqr^TTTrF
THE
(2094)
14
COMMERCIAL
&
FINANCIAL
Thursday> May 13,
CHRONICLE
Week?
Can We. Win the Peace With a 40-Hour
Kg,;
By c. e. wilson*
President
^
of General Motors
■•••
;>
Pointing to necessity :of full;production for our living standards, national delfense, and European
prominent industrialist declares We cannot afford ever-slioitened workweek. Declares worki men^ must be enlightened about scarcity fallacies.
'
.recovery,
> As had been apparent to those close to the situation for some
time, opposing interests in the New York, Chicago & St. Louis nego¬
tiations were unable to arrive at any mutually satisfactory stock re¬
capitalization plan.
This, failure, along with the decision to abandon
1948
•
'
-
It is taken for
.
granted in time of war that everyone, without exception, must
devote
the controlled^
.v:/'V his time, his energy and his best talents to the task in hand. During the second World
Wheeling & Lake Erie, was an- in the first two months weather War this
country demonstrated a unity of purpose and a willingness to work that connounced last week.
It is obvious conditions were unusually severe.
founded
th efv.
:
—
s
*
"
"
;
"
~~
'
that no merger could be consum¬ This
not
only
imposed
heavy
it would have a good effect on
*
enemy and 'these hi^ 'gqvjertbhchf> expendi-,
mated unless a stock recapitaliza¬ operating costs, but, also, in many
the workmen and peoples of otherT
brought about itures^ agair. arm our country with
tion Eliminating dividend arrears areas it resulted in the. closing
nations where the need for pro¬
victory. It was superior .weapons and undertake
on.
the
Nickel
Plate
preferred down of industrial plants with e
obvious that our European Recovery Program duction is even greater than it isV;
could be\worked out.
It is now consequent loss of potential traf;
in our country* In some countries
the work nec¬ is for all of us to work somewhat
proposed that instead of merging fie..
Later, conditions were ag¬
essary* to
be longer. Only in this way will we ihe people are working longer"
the two roads Nickel Plate will gravated by the strike in the soft
done could not have enough for ourselves, espe¬ than they did prewar; in others •
In the face of such
operate the subsidiary under a coal fields.
be
a c c o mcially for the 'men and women they are not but have shortened j
long term lease.
handicaps Nickel Plate was one oi
V "
their working hours, thereby re- *
plished with a who, on the farms, in the mines,
Both the preferred and common the few major Class I carriers
short work¬ mills and factories of the nation, tarding the progress of their na-^
stocks of New York, Chicago & that was able to cut its transpor¬
In most other countries v
week.
There ;are -producing MIL these necessary tions.St. Louis were under considerable tation ratio in the opening quar¬
w
a
s vn
0 \ ^things. /
/ /;---::k7Vx workmen, cannot hope for much *
pressure following announcement ter. Apparently results irt April
Our standard of living is meas- more than a bare subsistence living {
enough man¬
of the change in plans. In the case were also satisfactory.
7/
even if they work long hours be¬
power,
not ,used by- the piodaction and con¬
of the common stock this was not
Earnings 'on the preferred in
cause
they lack the high produc- *
enough equip- sumption of goods and services
surprising.
Over the long term recent years have run consistently
tive tools and the effective orrr> e n t,
not and not by the price levels at
the developments should be fav¬ above $20.00 a share, one excep¬
C. E. Wilson
of
production
that
enough of; which this exchange is made. Pro¬ ganization
orable to the junior equity.
Pay¬ tion having been the readjustment
exists in our country.
v
g
w
,/
ment of the dividend arrears in year 1946. Last year $22.-68 a share
anything, td duction WW pot-be increased by !
-Since-1 first made the sugges- ;
cash from current earnings rather was reported. For-the. first quar¬ manufacture all of -the . materials, paving more money for the same
work;, Money is basically a me¬ iioh tin October,
1945, that the;
than
through
an
exchange of ter of the current year, there was necessary with less than a 48-hour
.
stocks will prevent dilution of the an increase, compared with a year wleek. Men worked on tooling up dium of exchange, a measuring country, should temporarily adopt
stick by which accounts are kept. a longer /Workweelc, th'e- siiggesbottleneck
present
common, / Nevertheless, earlier, of $2.43 to $8.70 a share. machines' and., other
tioh has been. approved by some
Ilf
in^ortant ipart ,of. our, pro¬
payment of the preferred divi¬ It now seems likely that results jobs much longer hours, //With
but violently, opposed by others/
dend accruals will. be a formid¬ for the full year 1948 may run as these longer working hours and duction is to be siphoned off. for
violent
opposition
(Other purposes/ unless .we produce Thig
mostly;
able job.
Even with a continua¬ high as $35.00 a share without ad¬ witn full employment, our. nation
from •; professional
labor'
tion of present high traffic and justing for the projected lease of put millions of weil-equipped men more there will be a shortage in cOmes
leaders atld some politicians who
earnings levels it Will take quite a Wheeling & Lake Erie or, any in the field, became the "Arsenal rail lines of the things we need in
few'years, during which period equity in the undistributed earn¬ of Democracy," and accomplished our daily lives. This shortage can apparently wish to stand in ihe
the common will obviously be un¬ ings Jof that company.
*.'1 ■ > all this without importantly re¬ be reduced or eliminated only by good graces of professional labor// .:
I h^Ve been accused of being a reable to get any dividends. In their
ducing the standard' of living 'of ^greater physical production 1 of
goods and services. There .is no actiohars/ and - thinking 4ATerm$r
present mood investors are not in¬
citizens gexierally, '
•
clined to place their trust too far
other way j and unless more goods Of * the 1899's. ' Some xhave-r gohe>
Today we are faced with a task
and services are produced to satis¬ even farther back than the; 1890'S;
Into the future. /
somewhat comparable to that of
■1 Selling of the preferred stock is
fy the demand, prices Will rise and termed my Suggestion "cave-'
Winning the war, a task vital to
V
until some will have to go with¬ man economies."
liot so easy to justify.
To a con¬
NASHVILLE, TENN.—On May the future of our country. We
out.
'
These reactions have all been;
siderable extent it appears to cen¬ 18 Einer
Nielsen will be admitted must win the peace if our nation
emotional mid political and not at^
y; Americans are impatient toconter
around
tax
considerations.
is to continue strong and pros¬
tinue the progress? bf this mechan¬ all realistic, for what I am really
Holders had been looking forward
perous.* At the same time we must
ical age which has been inter- ttylng to do is 10^improVe/thO; I
to a tax-free exchange of secur¬
be ever ready to protect our free¬
standard ' of; living
of American;
ities for their back dividends of
jruptod
dom.4 This task requires jtist £s
have accoln plished - sb much as a workmen.! know that the 40-hour
$84.00 a share. Instead, they will
much unity of purpose, jusf as
ireceive
taxable
cash
dividends.
people that we have learned to Week; is held out to theaverage;
much energy and just asfmuch
Two dividends of $3.00 each have
iunion member as - one. of . lapor's
talent as*we required in winning expect much. We are hardly satis¬
been declared payable July 1 and
fied with our day-to-day or year* j great gains bblaihed after years, of
the war. It is doubtful if the job ih
(battle with recalcitrant employers.
Oct. 1, 1948. When liquidation by
progress Oven
though
which we are now engaged can be by-year
holders not interestedi in large
cumulatively it is enormous. As Actually, the* 40-hour week was_
accomplished with a short workp
tfixable cash dividends has been
a people it will be hard for Us to
only practical in the immediate
week. This is a fact to which we
ebsorbed, and it should not be tooreconcile ourselves to any reduc¬ prewarperiod
because
these*
should all give serioUs considera¬
substantial, rail analysts generally
tion by approaching the study cif tion in our standard 6f living or same/employ ers" % had developed ; : •
look for a resumption of the inter¬
What^^ may i^ebh'to b^
processes 'and better "
step backv improved
it irt a
realistic, practical.- unjrupted price recovery. Just prior
Warcfs' in'peei^iihe^^^eveh though methods of WOrking'dhd had,sup-/ :
emot tonal maimer. *The/huertioht
tb the announcement the stock
is—can we win the pea'ce with ^ \ye recognize the necessity of These plied/^e/employ^
had hit the highest level reached
plates Jfn.
programs. This dissatisfaction has proved':iooi|/Bh<I^
40-hotir week?
*
i
since 1945 when it sold at 148.
Einer* Nielsen
already- led - to a v series of big which to wdfk. Otherwise, the.40-V
This country and the world are
Under the recently announced
strikes Ortd threats of strikes since hour week would have amounted
to partnership in J. C. Bradford & badly in need of great' quantities,
to $ job rationing/scheme; which;
the war. /
plan the company will, when it is
Co., 418 Union Street, members of of material and bf* manufactured!
justified by earnings and finances,
This bickering and shotgun bar¬ would4 have : r^ddeed / the - ■ real;
the New York Stock Exchange. products, necessary
to. maintain
continue paying the regular $6.00
living
/wbrtanen.; ;|
gaining overt
receive Standard
Mr.-Nielsen was .formerly Vice- and improve living standards and
dividend rate and will set aside at
:iOr ptoducing ; ;Whpn i first proposed A 45-hour;
least 20% of available net income President of: the-American7 Na¬ to prevent actual.want. On top of a
shortage is likely-to tkilffthe Week/ part of my .plan., was -to iri-*
tional Bank of Nashville in
charge this, it is becoming more and.morje
each year for cash payments to¬
goose. tliatvlays^ thef golden eggs; crease the hourly rate about 6%"
of the Bond Department.
obvious that great quantities of
ward
reduction >of the
arrears.
Since war clotids iatiUvhAn'g OVer so that the meri^who worked 45
materials and manufactured prod¬
This available net income will
the world; and We are* far?from hours Would make as mdch mphey^
ucts will be needed to strengthen
Represent • the balance remaining
having achieved world peacte,-it4s at straight time for 45 hours Work
OUr national defense and tok imp
after payment of the regular $6.00
time for Americans to reaffirm as tlley would haVe On .thfe basis or
Pud after sinking fund
plement. the European; Recovery
appropria¬
their • confidence'in oUr free com¬ 40 hours, nlus time and* One-half*
:
tions.
Even allowing for the fact
Program. /
petitive system/ quit quarreling for the additional five hours. / 3£n
that direct earnings will be inAll this means-an-added load on
The Junior Investment Bankers
stop Wasting -preci'otis productive particular/it would: help the un-f:
xjreased materially through lease and -Brokers Association of New the .farms..- mines, mills and fac¬
skilled and those who, due to their;
fcjf the Wheeling & Lake Erie, it is York has changed its name to The tories of the nation-and this load
productioit^byi the
khowd inexperience "or lack of ability,/
obvious that complete liquidation
is over ancl above the production methdd;
Investment Association of New
by which It Cari be in¬ have difficulty in making, the kind
of the back dividends
by this York. The change was made after we are normally consuming our¬ creased
quickly; namely, by every¬ of living they expect from our
tnethod will take a long time.
selves to maintain and improve
In a recent vote of the
membership
body Working somewhat longer modern society by only working
the interim, however, the income which
indicated
a
two-to-one our American standard of living. hbttrs.^ This ideg that We can haVC 40:TU)Ui$ a/week//it/Wduld; also *
1
Return on the preferred at current
preference for the new name.
It The situation is basically
inflaT more; only if we produce more help those who did nOt obtain the;
is hoped that the*
prices will be very high. • v
tionary in that there is. an, int seems so clear to me that 1 caii't full: 45 hoiirs/; L still/think tthisT /
change will help
11 Earningswise Nickel'Plate is to distinguish the association as creased demand for goods and
siee why more people do hot un¬ would be a practical thihg to do. *
doing very well so far this year. an unaffiliated organization of in¬ services of all kinds.
:
derstand it. I questioned a friend
$1 a i 1 r o a d operations generally dividuals independent from the
:
If we do not increase oui^ pro¬ of mine on. this : point. - He said, ./Laobr'sJSached 'Cow7-'-.--:nave
been adversely affected by
IBA and that it will indicate the
duction of such goods and serv¬
\ Wliep ^e/lorniat proposal*was
a
number of outside influences.
broadened scope of the association
If the 40-hour workweek was made to the union in 1945 - the
ices, we will have to curtail our
which how plans to include or
standard of living or at teast give sound ^ prewar* and
the "48-hour union leaders let out a terrible
continue as members those with
up
some
of the things we had Week during the war, a 44- or 45- blast, as it seems the 40-hour week
more
than five years of invest¬
hoped to have postwar or we will hour week would seem to be rea- is a "sacred cow" of labor. HenryGuaranteed Stocks
ment banking or
brokerage expe¬ fail to make good on-a second N
under
the
present -cir¬ Wallace at this time was forecast*
rience. This is an enlargement Of
tional Defense Program and
cumstances. r Such
o
Workweek ing: 8,000,000 to 10,1)00*000;,
unem-f / /
Bonds /;
the intent of the original associa¬
could be either 9 hours a day for
our European Recovery
ployment and was in a way jus¬
tion which was formed a year ago
We cannot accomplish these pieces 5 days a week or 8 hours a "day
tifying the spreading of the work
to : provide .a. common
Special Securities
meeting of national
policy by simply ap¬ with a half-day on Saturday or a on the New Deal theory of pro¬
ground for younger people in the
full day every other Saturday. The
propriating the money.
;/
moting scarcity.
' '
/
investment banking and-broker¬
Government spending for other simple fact is that we still have a
Union
leaders still refuse
tor
age field.
big job ahead of Us. We cahnot take an honest look at the pro¬
purposes still continues, at a very
high level. It seems to me that get it done on a prewar basis of posal as indicated by recent edi¬
efforts
to
merge
-
.
.
.
(
'
Einer Nielsen to Be
J. C. Bradford Partner
,
.
Investment Ass'n of
f|
N. Y. Is New Name
-
-
•
-
.
-
•
Edward Duffy Cto to Admit
CCAKAHTEEP IAU.R0AP STOCKS-BONDS
25 Broad Street
New York 4, -N, Y,
Telephone BOwling Green 9-6400
,
Teletype NY
1-1062
Edward
J.
the
only
way
we
.can
maintain
& Co., Ill
Broadway, New York City, mem¬
*
Abstracted from
an
address by
bers of the New York Stock and
Mr.
Curb Exchanges,/will, admitJJayid
Chamber of Commerce, April 20,
1948.
I/V/.
P.
Reilly to partnership
on
May 20.
work.
We must find ways of pro-
during iar
Duffy
Wilson,
before
-Cleveland
war.
if
more
than
we
did
pre¬
:'.£
we
torials in union papers which have
been
distributed
at some of our
would be willing to tem¬
porarily' extend our workweek
during this critical postwar period
ups
of
to
the workmen
plants.
hi these paper's
are
The write-*
distortions
but of course such
(Continued on page 36)
the
truth,
THE
June 29, 1948
COMMERCIAL &
(New York City)
FINANCIAL CHRONICLE
•
"
NeW York Stock
COMING
nament at the Winged Foot Golf
Club, Mamaroneck, N. Y.
;
EVENTS
In
Investment
Exchange Golf
Association 49th annual golf tour¬
Field
/,/
Characterizing John Maynard Keynes
Securities
Traders
Club
St.
of
Louis old-fashioned beer party at
Hyde Park Rathskeller,'
as
guests
Philadelphia Annual Summer
Outing at the Tavistock Country
Club, Haddonfield, N. J.
July 16, 1948 (Toledo, Ohio)
Bond
of Hyde Park Breweries.-
t
Club
outing at
the
of
Toledo
Club.
York
Fuly 19-22, 1948 (Portland, Oreg.)
luncheon
meeting at the
George in Brooklyn.
Hotel St.
May
,'v,
13-14,
1948
Montreal)
(Toronto
and
Bankers
(May 13 in
Montreal).
Association
Toronto;
May
♦
(Boston, Mass.)
of Investment Bankers Association
of America.
Vov. 15-18, 1948
(hey
of
spring
National Security Traders Asso
,,
|s
dation Convention.
E, G. Baldwin Wiih
-<§>
to
Exchange
meeting
at
the
The
Financial
that
C.
associated
Baldwin
with
Cohu
phenomenon
man
South Spring Street.
&
He
Co.,
was
634
for¬
&
nun
Association
annual outing
at
Northwood Lodge, on Russian
River.
■...
-
.
May 25,194$ (White Sulphur
Springs, W, Va,)
^" Spring meeting of the Gover^
Piicrs of the Investment Bankers
-
■
Association of America/
1
'
May 28, 194$V(Fitisburgtii F9.i
1; Pittsburgh Securities Traders
with Crutteftderi & Co.; Butfo
Co., and the California Bank. /,
Ludwig
thous-
ionist
of
course,
Keynes.
this
document
was, of
Great Britain has
long way to this
a
statement from Hume's and Mill's
a
Mises
von
coun¬
tries embarked upon inflation and
«
on
the
demanded
sums
tions
far
were
in
for
excess
repara¬
of
>
doetrines
ip every country, was, busily rep¬
resenting Keynes as the world's
most eminent economist and Great
•
,
Municipal
York, to be held at the Hotel
St/George,' Brooklyn, at 12:15 pin;
Sers of "restrictionsismv*to create
todays MayI3/, His, subject will
] ^Reprinted from the March isr
ree
"The
Future
of
money
■
Atomic
:
'
j Yet it would be a'mistake to
for the suicidal for¬
blame Keynes
eign policy that Great Britain fol¬
lowed
in
the
interwar * period.
Lord Keynes adopted also the pe¬ Other forces, especially the adop¬
culiar messianic jargon of infla¬ tion of the Marxian doctrine of
(Freigeld, in the tertionist literature and introduced it imperialism and "capitalist war¬
jVt;.V"YVC*':'v
into
official - documents, ; Credit mongering," were of incompar¬
Bond: Clufr; pf
Hew
Britain's wisest statesman,
;...*-•
Sue of "Plain
'
Talk," 240 Madison
Ayepuq, New York 16; N. Y.
,
expansion,
says
the "Paper of the
in the
importance
greater
ably
(Continued from page 39)
British Experts" of April 8, 1943,
^ \
'I v Bond Club- of Chicago field day
:
at Knollwood.
-
.*■
;
■
This
•
r
June
4,
1948
(Cincinnati, Ohio)
Municipal Bond Dealers jGroui
is neither
announcement
* The
*
*
of Cincinnati Annual Spring Part}
at the Kenwood Country Club.
offer to sell;
an
an
offar fa buy
any
of this Stock*
theil*^p1
\
„•
422,467 Shores
,
annuaLfield- day-at: the^Bel*Air
Country dub.
r*,
NATIONAL GYPSUM COMPANY
June 4,194$ (New York City) /
J&ondfClubof Hew York, Annual
Field Day at the
Sleepy Hollow
Country: Club; Scarborough, N. Y-
COMMOlt STOCK
June 11, 1948 (Atlanta, Ga.)
-Georgia Security Dealers Asso¬
ciation annual outing and dinner
.
,,,..
;
at the Druid Hills Golf Club.
($1 par Value) ^
,
-
^
-
.....
-
;,i ''
Jlights,'evidenced hy Subscription Warrants; to* subscribe for these shares have been issued
by the
tympany
*
June 11, 1948 (Baltimore, Md.)
Bond Club of Baltimore annual
pitting-at the Elkridge Kennels.
a^iolicitation of
NEW issus1
Angeles; Calif, >;
Bond Club of Los Angeles first
{
nor
offering is made only l>y
June 4, 1948 (Los
5
to its Common stockholders,
on May 24, 1948, as
Saving Time,
which tights expire at 3:00 P.M., Eastern Daylight
more
fully set forth in the Prospectus.
.
.
*
SUBSCRIPTION PRICE TO WARRANT HOLDERS
June 11, 1942 (New York City)
.Corporation; Bond Traders Glut
of
New
York
Spring Outing and
$13.50 PER SHARE
Dinner at the Wingfoot Golf Club
Mamaroneck, N. Y.
June 11, 1948 (Pittsburgh, Pa.)
s Bond Club of Pittsburgh An¬
nual Spring Outing at the Char?
tiers Country Club.
The several Underwriters named in the Prospectus,
i
-
1948
12,
Bond
the exercise
(Chicago, HI.)
Traders
Club
of
including those named below, may offer
by them pursuant to the Underwriting "Agreement or through
of .Subscription Warrants
above and not above
June
I"
\\
a
at
prices hot less than the subscription, price, set. forth
price equal to the current offering prioe
on
Exchange, plus an amount eqwl tq ^tpck exchange commissions, "
Chicago
•
,<
the New York Stoch
t!
•
:
,
*
'
?
*
Annual Golf Party at the Acacia
Country Club.
'
"
.
June 18,
i
1948
Copies of-the Prospectus niay bo obtained, from any of the several Underwriters,
.including the undersigned, only in Slates in ukich such Underwriters are qualified to,
(Boston. Mass.)
Municipal Bond Club of Boston
annual
outing at the
Country
Club, Concord, Mass. To be pre¬
ceded hy parties at the Hotel
Statler on the evenings of June
pet as
dealer* in
securities gnd
,
<
,
;
>
•
•.
in which ihei Prospectus may legally be distributed,
,
16
arid
Itf.frony 9:30.
midnight.
June
•
p.ro. until
INC&MXM
r. E. BUTTON & CO.
■
'"'v"
''
■
-
•
/■'..'■■■■
-' "
•
:
18/1948 (Philadelphia, Pa.)
:
f
'
■■
CORPORATION
THE FIRST BOSTON
"■•.|: ■•.'•/;■
:•
.
*
,■'
GLORE, EORGAN & CO.
3
*
;
^
GOLDMAN, SACHS & CO.
.'Philadelphia Securities Associ*
ation annual outing at Llanerch
Country Club, Llanerch, pa.
June 22, 1948 (Boston, Mass.)
Boston
ciation
Annual
..'
CO.
HARRIMANRIPLEY &
INCORPORATED
.
/
.
'
;
S&OCO.HP-MEH V KIDDER, PEABODY & CO.:
EY N,LLI
*
,
"
.
Security Traders Asso¬
29th
Outing
MERRILL LYNCH, PIERCE, FENNER & BEANE
LEE HIGGINSON CORPORATION
at
Woodland Golf Club.
:
June
25, 1948 (Cleveland, Ohio)
Bond Club of Cleveland spring
outing at Country Club.
'
what
a
"
Energy."
June 4, 1948 (Chicag:o; III.) s
...
author
with
to
John / Maynard - Keynes,
eco¬
are sound.
All
vils, they repeat again and again, nomic adviser, to the British Gov¬
ernment, is the new prophet of
J.iR. Ditnning, Professor of are caused by the erroneous teach¬
inflationism.,
The
<'Keynesian
Physics, - Scientific Director, Col¬ ings^ of the "dismal, science'* , of Revolution" consisted in the fact
economies and the "credit monopthat he openly espoused the doc¬
umbia r tlptversity, will be guest
speaker* at the luncheon meeting |>Iy'/ of the bankersand usurers, trines of Silvio Gesell. 5 As the
To. unchain money from the fet? foremost of the British Gesellians,
of the
be
,
indeed traveled
inflationist and expan-
Municipal Bond Club
Ja Hwr Pr/Dunning
Association Annual Outing at the
:
every¬
reform
policy of easy money, the lit¬ Germany could afford to pay and
} erary champions of inflationism to "transfer." The success of the
ends, Of books and pamphlets they
book 'was
were still spurned as "monetary
overwhelming.
The
passionately blame the'"orthodox1' cranks." Their doctrines
were not
propaganda machine of the Ger¬
conohnists for their reluctance to
man nationalists, well-entrenched
taught at the universities. ; / :
dmitLthat
was
Sjtjaiuippin J^untry
,
a
performs the "miracle
of turn¬
ing a stone into bread."
The
the inflationists. While most
I
n
a Ye d s,:
even
N. Y.
Traders
of
means
payment."
(San Fran¬
Bon d
made
*
scarcity of the
■
±
'
governments com¬ views on miracles.
policy of increasing
j
Keynes and the Treaty of
the quantity both of money in
{/
Versailles
circulation and of deposits subject
to check; However, the inflation¬
l Keynes entered the political
ist governments and parties have scene in 1920 with his book, "The
not been ready to admit opeply Economic
Consequences
of the
He tried to prove that
their' endorsement of the tenets of Peace."
artificially-
become
bring about this paradise by
1
:
mitted
a
created by tne
has
want to
.
popular
rate,
Chrowxclh;)
merly Vice-President of John B.
Dunbar & Co. Prior thereto he
cisco, Calif.)
San Francisco
the
,,
Such ideas appeal to the unin¬
formed masses. And they are very
more monOy
CALIF, /-
ANGELES,
Eugcne
plenty
minology of Silvio Gesell) and to
grant cheap or even gratuitous
credit, is the main plank in their
political platform.
As
see
pf interest is
Gohu in Los Angeles
LOS
Stock
May 22 and 23, 1947
•
>
...
,
it, ail
(hat is lacking
field day at Dedham Country and
Polo Club.
'
it system.
<
May 21,1948 (Boston, Mass.)
Bond
Club of Boston annual
.
w
tary and cred¬
(Detroit, Mich.)
Book-Cadillae Hotel
v
moner
of Securities Admin¬
istrators at the Multnomah Hotel.
(Special
Association
according to his needs." Other authors
the
fnd credit.
'hey consider
Meeting of New England Group
Firms
of
Association
14,
<
as
J
body-
Annual Convention of National
>
May 17, 1948
May 20-22
U
-
Meeting of Canadian Group ol
Investment
'' ■>
(Dallas, Tex.)
,
|5'(- :/;//■ Keynes theories in practice have failed and that his followers are led on by fanaticism.
ba
^ock~-*n"^r&de of all Socialist authors is the idea that there is potential
t uat
substitution of Socialism for capitalism would make it possible to give to
annual
Inverness Country
May 13, 1948 (New York City)
Municipal Bond Club of New
/
vou MISES*
"new prophet of inflationism," and as a neo-mercantilist,
Aus?
hian economist
criticizes„theory that credit expansion performs miracle of turning stone into bread.
Denies opposition to
Keynes, comes only from "vested interests of scholars in the older theory," and
accuses Keynes and his followers of
using rhetoric technique in pronouncing their theories. Concludes *
of
May 13, 1948 (St. Louis, Mo.)
By LVD WIG
;•
Visiting Professor at New York University
July 9,1948 (Philadelphia, Pa.)
Investment Traders Association
May 11, 1948
;•/1\ JOHNSON,
<
'
-
LANE, SPACE AND CO., INC.
•
{•
n,')f
v
• • *
t
-
*'
yfi) h
>
THE
(2096)
16
&
COMMERCIAL
FINANCIAL
CHRONICLE
by
Lafferty Admits Denman
Co., 19 Rector
R. F. Lafferty &
industrial
been
has
and
a
industries is
Business
"living annuity."
a
and
who offer
investment program to
as an
enables the
Such
build up an estate and to provide
sales approach results in repeat business,
a
salesman
obtain with
to
income from his established clients.
little
It also
effort
continuous
a
gives the salesman
more
time to develop new accounts.
request from
investment dealer,
from
or
of Herrick, Waddell
Reed, tells
&
older shareholders of United Income Fund have made
&
SECURITIES
RESEARCH
Doug Porteous,
■ ■
CORPORATION
a
even
Apr.
Apr.
Apr.
June
June
WELLINGTON
July
higher than
a
^^e*fab//s/?ecf 1928
Mar.
9,
28,
7,
5,
9,
Dec.
June
A MUTUAL INVESTMENT FUNO
June
Nov.
■,.1
prospectus from
investment dealer
your
5
$45,111.69
33
56,054.83
22
93.00
20
28,849.96
6,804.54
Company
3,004.26
1,993.05
14
17,606.35
and Minnesota
31
28
23
18,078.81
14,049.93
24,312.68
42,414.21
2,994.72
21
237,820.81
121.50
Svf 36
2,461.98 C;
1,344.00
^•>".•9
13,472.14
92,393.94
194.00
12
-
"V-
4,994.10
Totals
to find it
ia
an
r;
iu
uic
During
Bullock
'hy
uuiucia
in
first
America,
Also
elected
President
$15,000
a
the first
show
executives
year or
time,
how
>
fect the
Here, for
solid facts that
reduction will
ef¬
supply of risk capital and
business
incentives.
the results:
These
your
"(2), How much of your tax
savings will you ' invest in
"(3)
stocks?
switch
in
of
bonds
NfW YORK
STREET,
5
N Y.
taxes
did
not
justify
more
on
a
"(6) Have
the
er
eystone
offered?
Custodian
big-
Funds
down
work
more
"y
taxes?
bigger
jobs
:
INVESTMENT FUNDS
bigger;
-
work??
investing their capital
■
;;"
o
BONDS ''s
IN
•
or
pected.
in
p
were
or
inventories
f f
' ' '
in the soft
even
was
While there
most
was
ex¬
over
a
''
"
'
or
\
private investment
in
capital
goods increased only from 24.6%
,
to
product.
'*1
'
.
!
ih
Investment Counsel
75 Federal
*.
•
9rif
i
'
underwriter
Russell, Berg & Company'
■
V
Ofi'
■
'
:
director of
as
was
.
Associate
of
the
He
Practice" and "Market¬
vestment
££ i i
ing."
SffiS:
With the
November,
of
assurance
your
a
most colorful convention in Dallas next
National Advertising Committee will soon announce
convention Year Book.
^
Your Chairman is most
of
our
-
for our 1948 post-
complete Committee that will cover all affiliates
a
pleased by the acceptances of the variousIri view of-
affiliates to act on this Committee.
analysts'-reports- anticipating a
big market toward the end of this year, we are looking forward to t
a
most successful Year Book.
-
? ;
i
v
:-y;
We
are
*
jc.v5 * tV *
V-
•
SPONSORS
and
Could
you
in
use
your
a
fresh
sales
sign
Financial Chronicle'•
>
ap¬
litera¬
-
-
with:the
representatives hi 'building
8* |
-I U
-
J>
•
./•
*
v<:.;
>•-•
:
v
y :
v
■
1
-
Keep in t mind
Texas bathing beach—"A-Coat>of Tan Is Yours fon
on a
♦
^
'
*
'i': -> .i*?.
/•; '•v?:'-
requesting our entire;membership to cooperate:
"Commercial
a
s
^ ^
.
'
r
the '
HAROLD B. Smith, Chairman :';
Year Book
Committee, NSTA
'I '
Collin, Norton & Co.
120 Broadway V
~
Request
investment manager.and
Congress Street
•
later
and
.up-advertising--for our Convention Issued^*
The
cially
undersigned
designed
funds.
■
,i
on
connec¬
is author of "Determinants of In¬
and
national
spent represented
write folders that
Boston 9, Massachusetts
'V**
Brown's
"AD LIBBING"
The perfceirt of gross na¬
tional product
ture?
*
of Boston
'
Mr.
to
NSTA Notes
••
27.8% r of /the ngross
proach
K;}'-*- Capital Stock
Keystone Company
50
:
>:
'
Prospectus
Tke
Chairman of
Marketing at
University of North Carolina.
the various economists' and market
1946, the total amount
over
RUSSELL BERG FUND
; ;■
investment dealer
School
more
assets
of
George'
of the corporation.
Professor
than
$40,000,000 in
approximately 11,000
stockholders throughout the counhave
Prior
firm
and
Roosevelt is
To those who will attend the convention, we say>
Prospectus from
your local
lio
the
1947
?
'■
'
,
o
of
investment companies which
two
in
TO MUTUAL FUND
(Series S1-S2-S3-S4)
'»
t f
Sons
and
years
increase
no
.
(Series K1-K2)
,
o r
organization*
with * the
A graduate of Amherst College
(A.B.) and Columbia University
(Ph.D.), Mr. Brown founded the
University of Richmond Business
t ive
directly
charge of
tion
research
and had also served
administra¬
Edmund Brown, Jr.
yCSeriei B1-B2-B3-B4)
^ *
c u
The
affiliated
research with Clark, Dodge & Co.
Presidents
of
-
job . t or more
ri.._..i...Yes 59%
inc.
and
;
*Quoted ■;? from
Distributors
Group's "Investment News."
\v
COMMON STOCKS
Fund
President of Lehman Corporation
their
spent for industrial equipment in
of
PREFERRED STOCJCS
,
x e
and
$5 billion expansion in the amount
you
a
Management
difficulties
1947
year
little
goods lines where it
^
v
"(8) Will lower taxes make
more inclined to take on
Certificates of Participation in
the
physical volume,
...Yes 38%
__
61
activity
justifies the
present level of stock prices. Dur¬
showed
.Yes 13%
because
2.2%;
and profits more than
ing
years
of executives who have
turned
\
a
"(7) Do you know of actual
cases
12 British'
French
because it remains convinced that
the outlook for business
turned down
a
the
4
tion with the above companies, he 8
had for some years been Vice-
Di¬
management of Incorpo¬
Investors
continues
to
maintain a fully invested position
because taxes would take too
much of the additional
in¬
come
•l
you
/
as
Presi-r
rated
business?—Yes 80%
opportunity to take
job in the last five
of
2.1%;
"The
the
inclined to take
new
most
stocks
have not materialized.
"(5) Will lower taxes make
risk
war
experienced in the postwar
_Yes 40%
you
the
the New York Stock Exchange's
"Magazine," as follows: "Average'
yields among 22 foreign equities,
using year-end prices and divi¬
that many people feared would be
up an
risk?
during
of
quence,
because the return after
chicago
adaptability
and
an
armed
struggle
These qualities had
deeper foundations. As a conse¬
to
and
e
the
war,
vitality,
resourcefulness
its
the first quarter.
the board
chief research
American economy has continued
to offer proof that the
comitant
to invest in- a
business in the last five
years
anc.uu
passed
you
In¬
follows:
as
for victory.
Yes 28%
"(4) Have
48 WAU
-
1947,
-
dent
to
conditioned primarily on the
high emotion that is a normal con¬
opportunity
new
report
Incorporated
writes
increased
of common stocks and
other equity type securities from
53% of resources to 62% during
Emlen
compa¬
been
vestors,
Fund
holdings
Roosevelt
in, Jan¬
nies
not
your
stocks?
HUGH W. LONG & CO.
these
President
of
the
4.9%.
Wellington
try.
rector, he has
exhibited
___52%
some
investment
ioi
i
Will lower taxes lead
to
quarter
declined
is
with
iation
are
tax
^
Mr.
Vice
"Since the end of the
"(1) How much of
vou
first
of
1948, net asset value increased
31.8%, including security profits
distributed. During this same pe¬
riod the general level of common
stock prices as measured by the
Dow-Jones Industrial stock index
Investment
shareholders, William A. Parker,
;
reduction will you save_-.„_74%
common
the
one
com-^-——
Since
uary,
In
Investors,
group, reports that for
the eleven years ended March
31,
Swiss 3.2%."
Brown's affil¬
A Bostonian's Comment
more.
are
tax
earning
of
three
ojiucu
carefully selected sampled
a
business
National
Seligman
The election of Edmund
Brown, Jr., as President of Fundamental
Investors, Inc., and Investment Management Fund, Inc.—investment
companies—and of Investors Management Company, Inc.—research
organization—has been announced by the Boards of Directors of the
"What will upper bracket taxpayers do with their tax
savings?
"What can business expect as a result?
*
"To answer these questions, McGraw-Hill field editors inter¬
of
their
Investors Managers Co.
panies.
,
exceeding
$635,000.
dends paid in '47 were:
n'vV--,
>
viewed
DuMont,
Mining and Manu¬
appealing dish. |
What the Tax Cut Will Do?*
the
stock: Aluminum
new
of
quarter,
"growth" fund,
a
owned
cost by
Brown Named Head of Fundamental Investors
$753,734.60
v-ouiig,
the
Fund,
added three
24,013.35
4,144.70
128,606.66
f
'
359
$24,561.18
pUGumg
-In
23
;;8 17
.inn 3!
321.50 1
;
1945
seem
'
'
1945
Income Shares
Amount
curities
"These Things Seemed Impor¬
tant," published by Selected In¬
vestments Company, quotes from
facturing.
2,168 32
If the proof of the
PHILADELPHIA 2, VK
Invested
39
991.44
be
can
Notes
2,493.92
...
forces
Total
Orders
1942
1944
1945
Few, if
ago.
year
deflationary
any,
Repeat
?:
boom
a
first two months of this year were
39240
Sept. 4, 1941
Sept. 27, 1941_____
Sept. 14, 1942
<$► FUND
at
that
example,
$992.99
1941
1941
1941
1941—«.
1941
1941
1941
fact, production in
rather
For
Amount
•
26,
26,
26,
5,
13,
16,
11,
well advanced.
textiles
Invested
Date
Feb.
heavy
production
and shoes is only a
rate one-sixth higher than pre¬
war, although there are now 20%
more
wage earners in the coun¬
try.
Personal incomes for the
of
As of March 31, Keystone's B-4
reported net assets of nearly $20,000,000, with market value of se¬
evi¬
no
in the
discerned."
No. of
Original
separate
few of the
seven
purchases on the average. The following tabulation lists
more prolific buyers of this fund:
l
120 BROADWAY, NEW YORK 5, N. Y.
that the
us
level.
consumer
goods appears to be at
normal
a
The most successful mutual fund salesmen are those
them
in
boom
matter of
a
consumer
have had
there is
that
that
may
largely
that
As
NATIONAL
been
dence
A Repeat
has
indicates
we
goods
By HENRY HUNT
upon
evidence
whatever boom
partnership on May 1.
Prospectus
construction
abnormally low.
"The
Street, New York City, members
of the New York Curb Exchange,
admitted Stephen W. Denman to
your
Thursday, May 13, 1948
i
p ' ir,>»
Street, Boston :iv
^if^q^LiBERTv[2-95oo;^^.:;
sell,
for
espe¬
your
Rates and samples of
previous
work
supplied
cial and Financial Chronicle,
25 Park
'
Place, New York 7,
"V
.
••
V
GEORGIA
The
^
" ^
SECURITY DEALERS ASSOCIATION
Georgia Security Dealers Association will hold its annual
outing and dinner at the Druid Hills Golf Club on June 11.
,
..
on
request. Box A 513, Commer¬
N. Y.
New.York 5, N. Y.
can
McDaniel Lewis Co. Adds
(Special
to
The
Financial
GREENSBORO,
N.
Chronicle)
-
C. —Mar¬
Lincoln E.
(Special
to
The
McRae Adds
Financial
ROCKLAND, ' ME.
been
Eastman
has
to the staff of McDaniel Lewis &
staff
Lincoln
Co., Jefferson Building.
Maine Street.
shall H. Johnson has
been added
of
—
added
E.
^
Chronicle)
Therald
to
the
-
McRae,
449
1
'
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How to
Observations
M
(2097)
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
Number 4698
167
Volume
Fight the Reds
(Continued from page 5)
By JOHN FOSTER DULLES*
landed both the country in the
most violent speculative orgy in its history, and, characteristically,
the planning authorities themselves in an inescapable dilemma.
For during 1928 and 1929 they found themselves torn between the
following three conflicting motives:
(1) The need to restrain the
use of credit for speculative purposes; (2) the desire not to tighten
money in foreign countries and not to divest them of their gold;
and (3) the desire to keep money available domestically at cheap
U. S. Delegate to United Nations
of 1927.
The resulting cheap money
for legitimate
rates
But
r
done the
had
they
once
Republican foreign policy spokesman calls for Federal organization with Cabinet status to combat %
Communist subversive warfare.
Maintains for our defense we must stop Communist encirclement Cit¬
ing proverb "you cannot bit two birds with
I shall
damage, the managers found
Communist
mainly because it was unforeseeably
impossible to keep different uses for credit segregated
in water-tight compartments.
In any event, the net result of
the management
efforts was indisputably that they brought
about a holocaustic depression far worse than could otherwise
difference
not
Party I
But
So
;
have
we
how major attempts at central
seen
government the Soviet branch of
the Communist Party has gained
Party.
the
dif¬
direction, how¬
if
such
ig¬
we
only
good
it,
nore
great
The
would
not
the
hit
Communist
Party where it is vulnerable.
In¬
and prestige that it deed, in the long run, the Party
is accepted as the "vanguard" of would probably be strengthened,
the proletariat everywhere.
But, for communism thrives on war.
as
Stalin has repeatedly empha¬ Its first great opportunity came
ference is real
and
free insti¬
about 5% of the to, hit Russia as a State. We do
population. But "not a sin¬ not want to do that, for we ha,ve
gle important political question is no quarrel with the Russian na¬
decided without guiding direction tion or its people. But if we did
to hit Russia,
from the party" (Stalin). Through want
the stone
that
dominance of the Russian would be a military one.
That
act
expansion of bank deposits at second hand, coupled with
official pressure to reduce interest rates, created an over-supply of
investment and speculative funds that resulted in another violent
stock market inflation, finally culminating in the 1937 bust.
large
our
When I speak of the
consists of only
for both State
a
to be called for.
adult
same
people
and
seem
>
'
*
speaking of something that is not the Russian State or nation.
ob-
Again in 1936 dire results from government fiscal manipulations
were
seen.
Federal policies of borrowing and spending, creating
:
am
of defense which
for
often the
must fight the Communist Party
we
l s
to
serve
have happened.
measures
always
easy
stone," asserts
speak of the Soviet Communist Party; of the danger it carries to
tutions and of the
found
one
Favors exposing, not legally outlawing, the Party here.
rather than the Russian State.
business purposes.
it impossible to right it,
7
\
power
luck
will
sized,
"the
Soviets
and
the out of World War I. Its second
results.
Party are not one and the same great opportunity: came out of
bring
us
to
Similarly, impossibility of forecasting has been demonstrated in the our
desired
If
there
were
thing."
"The Party is not and World War II.
highest places. Forgetting that Herbert Hoover now epitomizes a
cannot
be
identified
with
the World War III, it could readily
goal. ';7+
legendary tradition, of failure, and without hindsight, let us realize
John F. Dulles
There is no
state power." In fact, the Party's gain world-wide supremacy.
V
that from the office of the Presidency he had unequalled facilities to
ambitions run far beyond those
necessary con¬
We ought, therefore, to design
appraise contemporary economic conditions.
Yet from 1929 on, nection between the Communist of the" Russian State.
Already it our Russian policies with regard
throughout the next three years, all his policies based on the "prosParty
and
Russia.
Communist has moved on to take control of to whether they are to protect
perity-around-the-corner" : predictions were rendered completely leaders had
expected that their several other governments, such against the Russian State or the
abortive by the incorrectness of his forecasting premise.
:
-v'
first conquest would be the gov¬ as Poland,: Bulgaria, Yugoslavia,
Communist Party.
/
well-meaning, have had the most unfortunate practical
ever
■
of
ernment
'
'?
7
'
The Goats Are Still Parading
;
President Hoover the last "goat"
interpretation and prediction. For example let us skip to the end
But only as a Republican was
in
of World War Two to look at thoroughly
logical analyses of the eco¬
completely wrong; then we can ponder whether
the complex elements confronting us now are solvable any more
easily.
nomic picture gone
V-E
economists and
major Depression.
Demobili¬
V-J Days were for many government
and
other experts the signal portending a
zation of 10 million men was viewed
as
a
specter leading to wide¬
unemployment continuing that "chronic" condition of the
1930s.
The previous wartime over-building of plant, over-consump¬
tion, and expansion of inventories, were widely regarded as the
precursor of trouble ahead. - For planners intending to take action
on these logical presumptions there certainly could be no quarrel—
but,
unexpectedly,
the
Truman-ish "depression-around-the-corner" didn't materialize any more than had the Hoover-ish "prosper¬
spread
;
ity-around-the-corner." The Roosevelt-ish system of "planning it
that way" ex post facto, as he announced in the midst of the 19361937 boom, is apparently the only reliable planning method.;
+
"Around-the-Corner"
What's
indus¬
highly
government and the
weakness of the Kerensky govern¬
of the Czarist
group
in
which
they, have
; ■:^
ploited.
4
boldly
they
which
ruthlessly ex¬
77 '?
,...
.:7.'; ■<''
Even today, the Party in Russia
fore
New York
,
of
the
at
is
Cominform
birds
two
with
one
The Russian State and the
stone.
address by
Communist Party are two differ¬
ent birds.
City, May 6, 1948.
sume
that
comes
ace
a
be
our
Possible Menace
a
mistake
We could, if we
need
we
But
to
organize
available
that the Communist
(Continued
wanted
to meet it.
evidence
on page
buy,
indicates
Party would
36)
as a
May 12, 1948
NEW ISSUE
800,000 Shares
expenditures, with none of the prewar slack available
satisfy the additional demand; and an early unbalanced budget
with likely Treasury borrowing from the banking
Preference Stock,
Underlying all the other imponderables is the question of the
of capital expansion,
of
price
capacity.
unrealizedly
her
tremendous
,
-
"The
Small
'■
such
that
authoritative
an
City
"Letter"
Bank
cannot make
4.56% Convertible Series, is cumulative and
7 The Preference Stock,
' ~
777' is convertible into Common Stock
observer
the
as
of the Company at $28.50+ per
$26.25 per share. The conver¬
subject to adjustment as described in the Prospectus.
share, taking the Preference Stock at
its mind, candidly
stating that the forces are pulling both ways, that the "visibility
is low," and that "the conclusion may reasonably be drawn that
deflationary and inflationary forces are temporarily in balance."
Quite similarly, even the President's (and Mr. Keyserling's) Council
of Economic Advisers in its last report hedged about the predomi¬
nance of inflationary or deflationary forces; and the Administration's
National
value)
productive
Visibility Is Low," Indeed
then
wonder
par
and this country's traditional counterbalancing
through
rises
4.56% Convertible Series
($25
7:
consumption rate of imminent slowing-down
7 effect on our present
up
sion ratio is
Price $26.25 per
share
present monetary planners are in complete confusion whether credit
should
the
a
be
expanded
public
our
same
sees
contracted.
or
Reflecting the latter quandary,
that Mr. Eccles wants to increase bank reserves at
time that his Board colleague, Mr.
Copies of the Prospectus may be obtained from any of the several under¬
writers only in States in which such underwriters are qualified to act as
Prospectus may legally be distributed.
Szymczak, is advocating
compromise; that the White House disapproves the former while
dealers in securities and in which such
approving the latter; and that the Treasury Department's "spokes¬
man" maintains that far from calling for restriction of bank
credit,
The First Boston
additional bank loans and credit will be needed.
It
it
is
is, it is hoped, not
not
his
intention
but merely to
one,
in
prove
and hence general
necessary
any
in
way
even
to belittle
the abilities
of
7/.%7.
To
those
words
justify the shortcomings of planning
of caution from
fessor D. H. Robertson last
summer.
Britain
spoken
by
After doubting whether
demo¬
cratic and totalitarian planning really differ in the quality of their
ends,
for
or
merely in the effectiveness of the
means
at their disposal
Stone & Webster Securities
W. C. Langley
..
.be
is there not
living
on
its head in
a
a
danger that the 'controlled economy' will always
the edge of a precipice—walking on
cloud
of make-believe?"
a
tight-rope1 with
-
14
& Co.
Kidder, Peabody & Co.
Merrill Lynch, Pierce, Fenner & Beane
7' 77%*
achieving those ends, he asked: "And if that is the only differ-
ence,
Incorporated
Lehman Brothers
we
Pro¬
Glore, Forgan & Co.
Harriman Ripley & Co.
77..%.■
.■7' 7 ■'
*
who seek to
strongly commend
(Incorporated)
*
Goldman, Sachs & Co.
"unplan-ability."
7-7
Harris, Hall & Company
7
Blyth & Co., Inc.
Dean Witter & Co.
any
•
•
Corporation
for the writer to reiterate that
the highest places, unforecastability
as¬
from the Russian State
*
system. As counter^ating deflationary forces, there are the antidotes of the relative
smpllness of the tax cut plus the defense outlay, their total repre¬
senting only 3% of the nation's production of goods and services;
and that an unbalanced budget, if calculated on a cash basis, may
not result in an inflationary deficit of receipts below expenditures.
to
most serious men¬
v7 This is under no circumstances to be construed as" an offering of these shares for sale, or as an offer to
or
7 < 7.
solicitation of an offer to buy, any of suth sharks. The offer is made only by means of the Prospectus.
armament
to
hit
cannot
Mr. Dulles be¬
the Bond Club of New York,
*An
capital
would
It
Belgrade, not Moscow.
Russia and its army and that military
could be pulverized as completely
preparedness is therefore enough.
as was Germany without dealing
It is, of course, possible that mil¬
a
fatal blow to the Communist
itary attack may be launched
Party. ' ^77/ 777';'
7*7'''7' from Russia against us or our
A wise proverb says that you friends.
Because that is possible
and
seized
The
newly-formed
the small communist
Russia an opportunity
Russia Only
the necks of several other gov¬
ernments.
ment, gave
now
Its breath is hot
Czechoslovakia.
on
and
Hungary
Rumania,
But the advent
of the World War I, the collapse
Now?
Surely the future before us now, far from being simpler, is at
an
all-time high of imponderability.
On the side of the proinflation elements we have such factors as tax reduction, ERP and re¬
'V
•
some
trialized country.
"
■
.7-
7:
':
i
7
Corporation
E.
E. H. Rollins & Sons
H. Rollins & Sons
7
William R. Staats Co.
Incorporated
'
'
'■
.'
Union Securities Corporation
Salomon Bros. & Hutzler
Weeden & Co.
Incorporated
77
CHRONICLE
FINANCIAL
&
COMMERCIAL
THE
(2098)
18
Thursday, May 03,..1948r
Foreign Investments and Fluctuating Currencies
Canadian Securities
By ALBERT G. FLUME, C.P.A.*
ft;'ftftyftft Member, COmmittee
■
-V--
.
ft N. Y, State Society of Certified Public Accountants
ft ft ft- .« ••
•
'ft/ft;
ft;
•
Foreign Trade Accounting,:
on
ft ft"'"•
*••»
:V
:
By WILLIAM J. McKAY
Mr. Flume reviews present status
of foreign investments by United States companies and points out ft
making capital holdings abroad unprofitable and difficult. Says
currency devaluations and fluctuating exchange rates are hampering both foreign trade and foreign
investments and discouraging introduction of American private capital which could help European
ft
ft
recovery.
Stresses distrust of "managed currencies." - ft
*
Despite previous gloomy prognostications emanating from north
of the border, the optimism of close observers here of the Canadian
economic situation is now proving to be strongly founded. Notwith¬
exchange and other restrictions
position and its vul¬
standing the complexity of Canada's exchange
to the impact of ex-^
nerability
ternal
is
ion
that
such
fundamental
the
factors,
economic strength
can
commencement
of
.
tion of the U. S. dollar conserva¬
tion
measures
-greater era of Canadian progress.
'On this score there would
appear
the char¬
acter of the Canadian people and
to
the
to
little
be
fear,
as
capability of Domin¬
proven
leadership are unquestioned.
Not only are the tremendous nat¬
ural resources of Canada continu¬
ion
"
ing to play their inevitable part,
but the recent economic crisis, in¬
retarding
of
stead
is
progress,
commencing to exert a beneficial
influence on the Dominion econ¬
direct result of the
breakdown of the time-honored
U. S./British/Canadian exchange
triangle Canada has been forced
As a
omy.
to
stand
her
on
feet.
own
Con¬
sequently new economic and fi¬
nancial policies
are now
being
the
U.
migration to
brought about
industrial
S.
U. ft S./Canadian
-
trade.
' '
While
at
ft'1
i.
y '
ftv'
' -ft.'
ft
'■
-fti
'''• ft/ft ft"
ft-ft 'ftv
'*>
The British Government has re¬ high taxes and a generally hostile
cently requested companies not to attitude toward American business
and industry cause this reluctant
increase their dividends this
year
in view of their demand "to the decision to withdraw temporarily
turers among
others who are now
exploring the possibilities of es¬
tablishment in Canada
have in
only production for Ca¬
Empire markets but
also for U. S. and other world
markets, ft Thus
this
significant
mind not
nadian
and
trend of U. S./Canadian
relations
promises
of
to
a
industrial
the
mark
new
and
entire Canadian economy.
the extent per¬
still
was
a
trade
tax
new
.
steady improvement in
funds.
The stock markets
likewise firm led by West¬
At
There
ment of domestic resources.
along
these
lines have already been achieved.
Following the introduction of the
"austerity program"" the Canadian
balance of payments to this country has slowly but steadily im¬
proved. Canada has also recently
made Jher intentions
clear con¬
cerning future extensions of credit
to Europe which will be basically
and
was
industrial
little
interest
issues.
in
the
golds despite expectations that the
Gold Bonus Bill will imminently
become law.
Minister
of
Howe is
exploring
Trade
now
and
achieve this obj ective.
•
ways
and
.
the
be
ited tdf
i2%ftof "the bri|#nal
and
the
nationals.
international
currency.
that'time,Tt Was Uncontrolled
and
may be approved,. the
dealer
will mark the
is taking place
cap*
provided
will
was acceptable as a medium
retain more or less complete own¬
exchaftge by all countries, by
ership of their foreign invest¬
of the fa6t that England
ments in South American coun¬
and her possessions could supply
country
any
their
ing
with
almost
all
import requirements.
after the
facilities
and
were
war,
tries
branch
is
that
and
Dur¬
her
with
broken
by
means
of
rather than
operation
is necessary to certify to
ister
than sufficient to stopinternal needs-was the
This country, being
self-contained,
not
only
could
supply the import needs of other
nations but freely gave of her
substance .to her .allies in the late
and
war
were
granted loans
whose
unbalanced
to
other
fiscal ft affairs
as a
result of the
Canadian
bank's
an
ft Since the
these
United States could
dp
things, other nations sought
its products and its loans, which
made it
ports
Boylan
excess
lars.
fv's-rV ••••:."'ft V;V.v-ft.ftft;'-
Chairman of the Board of Gov¬
ernors
Robert
4
(for the term of
P. Boylan,
ton & Co. 4
GOVERNMENT
PROVINCIAL
one
year)
:
at E. F. Hut-
Seven Members of
the Board of
years): John A. Coleman, Adler,
Coleman & Co.; Harold C. Mayer,
Bear, Stearns & Co.; Robert L.
Stott, Wagner, Stott & Co!; T. Jer-
CORPORATION
creditor nation with
Let
31,
a
in the world.
Investments by United
States Companies
There
1946.
I
] ;
:
;
.
,
to
an
currency as
to: deal
debits.
or
un¬
ing things in the United Kingdom:
(a) Make any payment to or for
in
the
credit
outside
of itself,
the
of
a
person
(b) Make any payment to
or
on
behalf of
a
person
'
„
territories;
ftftftft' ft:; - ''y '
or ft :: "' ftftft
countries
hold
(c) Place any sum to the credit
glowing promises of busi¬
tions because it has allotted to the of any person resident outside the
ness opportunities if only Ameri¬
scheduled territories."
ft ft v.
rold Bryce, Clark, Dodge & Co.; can capital will assist in the de¬ mother country, England, its com¬
ft At the
present time, treasiiry
Lyon Carter, Estabrook & Co. velopment of industry in their plete output of gold, receiving
therefore sterling .which has but permission is granted to transmit
(Boston); John Clifford Folger, nation. We are further expected
small value outside of the British
dollars to American shareholders
Folger, Nolan & Co. (Washington, to provide the machinery and the
in British companies in
D. C.) i-Charles" S." Garland, Alex. technical "skill.- As a result of out Empire/and since it cannot furnish
payment
Brown & Sons (Baltimore), ftft'ftft national policy of supplying funds this Dominion with all its require¬ of dividends which are received
without deduction for
withholding
Two Members of the Gratuity at low interest rates and basy re¬ ments/it must of necessity buy
from
its
neighbor, the United tax. However, as stated earlier in
Fiind "(for
the
term ft of
three payment terms, they are reluctant
this article, the British Govern¬
to
give private capital its fair States; consequently, Canada has
years); John Rutherfurd, at Jo¬
an unfavorable
trade balance. _It ment has requested companies not
seph Walker & Sons; John K. share of the 'profits, ft ft
must do everything it can to re¬
to increase dividends in'View of
A recent issue of the New York
Starkweather, Starkweather & Co.
strict imports and "obtain dollar their Agreement with the trade
•Herald-Tribune,", in an article
credits.
unions to stabilize Wages at their
'/Fijve Members of the Nominat¬
;
ft .ftftft ft
•' .V-ft
Hoadley,
ing Committee (for the term of by Mr." Raymond L.
ft Therefore, while it is a country present level.
one
year)> I. :W.-Burnham,- II, states in part, "The mounting tiifWhere the export of capital is per¬
While
the
Foreign Exchange
Burnham & Co.; Basil B. Elmer,
Control Board, will supply funds
*An address by Mr. Flume de¬ mitted, nevertheless, this permisr
Eastman, Dillon & Co*.; Augustus
livered at technical meeting of the sion is hedged* about with the fol¬ to pay dollar dividends to Ameri¬
B. Field, Jr., Joseph Walker &'
can shareholders in
lowing conditions: /
ft. * v
English com¬
Sons; F. Dewey Everett, Horn- New York State Society of Cerblower & Weeks; Francis Kernan-. l tified Public Accountants, - New ftft(I) No Canadian, company may panies, it will make no commiiYork City/ May^3548^
paySidividends on the stock of its ftft-,, (Continued on page 25) ft ;
White, Weld & Co.'
Most ; foreign
forth
,
.
•
TWO WALL STREET
NlW YORK 5, N. Y.
WORTH 4-;
NY-1-1045
resident
outside the scheduled
.
.ft
for
a person resident in
the scheduled territories by order
.
INCORPORATED
or
the credit of
.
A. E. AMES & CO.
resident
scheduled territories;
or
„
CANADIAN STOCKS
are
the permission of the Treasury, no
shall do any of the follow¬
should be in
the most
favorable ' position, to
have its currency accepted in the
world market, at face value, since
it is a gold producing country and
normally is well able to redeem
its obligations in that metal. How¬
ever,
it ft becomes necessary for
Canada to have exchange regula¬
Canada
company,
office, with a viOw
effecting inter-company settle¬
person
foreign
provided therein,
ft
-
affiliated
branch
If 1947. Amorig its exclusions
apply
authorized dealer
Act
p a n y;,
the following^
ft Part II, Section 5. "Except with
bank in Canada to which the pro¬
Act
c o m
England—The current act gov¬
erning exchange control in thfe
United Kingdom is dated March
Control Board which is
the provisions of this
Act, and under the control and di¬
rection of the Minister.ft EVfir^
Bank
or
ments of net credits
established
to
the
official
or
non-resident
head
board known as the Foreign Ex¬
of
the'
the
the
firm may dpply to the
Board for a permit to Operate ah
inter-company
aecount
withJ h
change
visions
at
resident commercial
few of them.'
was
of
through
facilities
branch,
Control Act was assented to Aug.
shall be
-trade, being the only uncontrolled
Present Status of Foreign
a
equivalent
dollar
ficial rate of exchange for the full
amount of the dividend, this is
further restricted by. a .withhold¬
ing tax of 5% oh the amount, ft
(5) The Foreign Exchange Con¬
trol regulations
provide that a
Canada—The Foreign Exchange
exceeding imports—which
der this
must be liquidated in dol¬
free currency
examine
payee may
States dollar
American shareholders at the of¬
country
respective- nations.
us
he
indicate
(4) Whereas Canada formerly
permitted dividends to be paid to
branches is sub¬
ex¬
Thus the dollar became the
Governors (for the term of three
MUNICIPAL
a
standard monetary unit in foreign
or
of their
to
rate.
ject to the Exchange Control Acts
subject
war.
P.
to
exchange,
check
United
sterling
or
of
subsidiaries and
the
the
a
tbe Min¬
the.
of- Firiance. of
the amount
foreign
mark
obtain
.
United States.
Robert
check
negotiable in the
theft non-resident. If,
the underlying trans-4
that the non-resident
incorporated company. Where this
pro¬
method 6f operation is seleCtM/lf
together
were
of
more
her
ply
CANADIAN BONDS
of
.
There'seems to be only one way
that an American company may
.
since the introduc-
authorized
indicate that it is
reason
.
developmentftthat
G to
dispatched to the payee.
When the application is one that
of
countries
promising
relaft
which it is drawn be¬
on
fore it is
NYSE Governors
f Perhaps the most remarkable
a
the bank
capital to be em¬
she could no longer supply her
ployed in the operation and taxes
export markets while maintaining
are • accordingly
levied on that
necessary imports..
ft . ft
amount.
ft ft'.ft ■
'
The only country whose econ¬
At the annual election of the
From all of the foregoing, it
New York Stock Exchange the omy was not as badly impaired
may berightly ■ inferred that the
but
whose
production
facilities transfer of profits from foreign
following-officers were elected:
to
means
presented together with
tive application called Form
that capital withdrawals are lim-
downftas":sr:result" of the "war And
Com¬
shareholders
some
countries may receive
a
Canadian dollar check issued
by a resident company in favor
of a non-resident which should
hands
those of her colonies
systematically
in
is
company
bank indebted¬
no
nies who have
.
dependent on Canadian success in
increasing exports to this country.
As far as the plan for greater
Canadian
independence ; in the
field bf industry is Concerned," a
special branch of the administra¬
tion under the energetic guidance
only if the
*-
duction
Boylan Chairman of
a
been"
italization.~ in 'fact,- most Latin*of; the -Unitecf States <
however,
?ln: Fdrelgrii Trade/-ft :ftft l> American countries require fiscal
ContfMk td reside in their oWn action is one in respect of which
Prior to the later war; sterling
the authorized dealer could ha'Ye
'
with
(3) Less dependence on foreign free
of supply of manufac¬ were
oils
tured goods and greater develop¬ ern
is
capital levy.:
on
has
in foreign
Hole
The
was
sources
a
this
ness.^^ft/;ft;ft;ft
(3) However, Canadian compa-f
regulations whilst Z
.In many .; South American coun¬
tries, no. .ioteigh company; is al¬
lowed' a greater share of owner¬
unearned income i( or'
equivalent of;
also in demand in sympathy
the
then
ship therein than a minority in¬
income)
when
this;
terest, 49%.
Among guch; are
reaches $1,000 or above, and if
Mexico, Brazil, Colombia,. Peru,
one's total income is over $8,000,
Panama, % Argentina;
the
latter
it is subject to a special contri¬
having the further qualification
bution which for
were
ft
on
dividends
operations,
funds and has
General Motors. /
Motor Co. and
"
possible to
was
subsequently disallowed and
it
can only pay dividends on the re¬
sults of a year's operations and
investment
supply.
merce
"...
ft
interim
declare
year's
plant operations.''
the public responds with evasion.
Added to their difficulties is a
*
Whereas it
(2)
,
000 government
notable lack of
internal Dominions
least from
at
should
wages
bank.
,
ion's actual exchange
provision for a minimum reserve,
that
of
terms
ft; The article lists the following
pegged.
*
ft" • ' ft ./;
companies who expect to close.
Meanwhile, the economy of the
Johns-Manville Corporation, .^In¬
country, is throttled by 2 million
ternational/Harvester Co., Ford
public servants who toil over 25,-
mitted by the state of the
The
unions
in
be
-
Domin¬
surplus aftet
level
present
England
there
of
f
wholly
owned
American
com¬
panies while it is indebted to the
business in Ar¬
ficulties of doing
trying to maintain sterling
the
expansion
include
RemingtonRand,
National
Cash Register,
Bendix
Home
Appliances,
and
R. C. A. Victor. These manufac¬
■
-
-
utilize
decided
recently
countries only to
results
•
further
have
which
manufacturers
S.
U.
(2)- Granting of credit facilities
to
Britain and
other European
j
Valuable
ftV. ftftft\ ft
The events of the past
to
result of Imperial Preference.
The
During the week there was per¬
sistent strength in the
external
section of the bond market but
-
'ft ftV-
■
:
...
the Dominion as a base for
as a
put into effect which are devised
to
achieve
the
following
obr greater era of Canadian indus¬
trial development which will have
jectivesft^J
:
(1) Correction of the chronic a far-reaching influence on the
of
ft:;.. /.
gentina has caused several of the
U. S. currency, greater austerity largest United States corporations
of living is imposed on the Brit¬ to
close
down
their Argentine
ish peoples and the further tight¬ plants. Drastic import restrictions,
controls
on
removal of capital,
ening of their exchange controls.
Canada which was
commencement
imbalance
•ft
of
into
is the new wave
few months have accentuated the financial difficulties in for¬
U. S. industrial movement
eign trade. 'The devaluation I of the French franc on Jan. 25, 1948, has intensified interest
prevent the Canada. This movement has be¬ in the
prospect of a rise in the price of%gold and heightened the expectation that sterling
a
new
and come so'' pronounced in recent
must
be
devalued
ultimately.^
months, that it promises to rival
of the Domin¬
only the worst
mismanagement
are
Volume 167
•
Number 4698
THE COMMERCIAL & FINANCIAL CHRONICLE
Appraises Prcpcssis for Amending
"Wailing Period" Restrictions
.
\
In
statutory prospectus*
By ROBERT K. McCONMAUGHEY*
'
'■
""4 -^
'
vl
Commissioner, Securities and Exchange Commission
•
■
Commissioner McCoim aug hey reviews the important reason* for SEC proxy rules and covers such
points as exemptions and liabilities of bankers and brokers holding securities for account of cus¬
tomers^ the, clarification and publication of agendas at stockholders' meetings; solicitation of proxies
both by (he. corporation and
others ^ and extent of informatiott required' rat the proxy statements, in?
-;";v
Amend the Registration and
Prospectus Requirements of the Securities; Act of 1933/' appearing
an
V
:
Byse, formerly of SEC staff, and Rayme#cFJ. Ridley, would
have a minimum 24 hero? period during which it wauld be unlawful
to sell a new security unless the purchaser bad been furnished a
.
I#
Proxy Rules
:
^
Clark
:■
(2099)
,
article entitled "Proposals to
eluding publicity ot remuneration given officers and directors
in "the
May issue of the; "University of Pennsylvania Law Review,"
The recent revision of thle
proxy rules was intended to reflect our accumulated exClark Byse, a former member of the legal staff of the Securities, and
j periehce over a period of about five years since the adoption of the last previous revision.
Exchange Commission, ,now on<$~^'" „,f
-4~«
1
the faculty of the University of onstrated.
Undesirable, because [During that period certain minor defects ID the rules, had became apparent.
In additkmv
Pennsylvania Law School, and (i) such a prohibition would act a number of
3*as a deterrent to*- dissemination- of
Raymond J. Bradley, a graduate
administrative
dividuals, rendered to the Com¬ vised rules is the same as that
Of; the same school, af teranalyz- information, again, as experience i n-te rpretamission in connection, with the re¬ contained in the old rules.
This
ing, the various proposals with under the present Act has shown, tions had' been,
vision!.
The comments and sug¬ definition is not entirely satisfac¬
reference to relaxing the restrict and (id): governmental legislation ma d e
and
gestions' received Were
excep¬ tory because it does not include
tions on the offering and, sale of interfering' with individual free¬ were
widely
tionally well thought out
and all persons who should be treated
securities during the waiting pe¬ dom of action should extend as followed
as
associates.
The draft circu¬
by
were a great help to the Commis¬
riod
following registration* ap-> far as> but no farther than, is the great ma¬
sion hi formulating the final draft lated for comment contained an.
praises the proposals, and makes necessary to- achieve the objective jority of Com¬
amendment
of the revised rules.' Eveii those
of
this
definition,
suggestions for resolving their of the legislation—and in this in¬ panies subject^
Suggestions which the Commission which would have extended it to
differences.
According
to
the stance the objective can be ac¬ to the rules.
concluded it could not adopt for all persons having, a close family
writers:—
■
complished
seemed
by
less * restrictive It
one reason Or another, served to. relationship.
That
amendment
means.
highly- desir-*
: The attitude of the Commission
Sharpen our thinking and to, facil¬ was criticized as being too indef¬
T For these reasons it seems ad¬
and of the industry concerning the
inite for effective administration.
able, there¬
itate Our decisions*
We were not able to work out a
problems disclosed by experience visable to accept the industry's fore, to revisej You will note that the revised
^
,
.
under
■
.
•
the,Act—the oral loophole,
the dissemination-solicitation dis¬
tinction
and
beating—-may
gun
1941 proposal to separate "offers"
fiord "sales*" and to permit of¬
the
-*
rules
tu-
the
cure
and
K. McConnaughey
R.
fers during the waiting period. fect s-7 which
' ;
Although there is- obvious merit, had appeared
mental concern of the Commission in the* industry's recommendation and to incorporate into the rules
and its staff was to plug the oral that orai offers be
prohibited un¬ themselves, insofar as practicable,
loophole and to make the statu¬ less accompaned or preceded7 by a those administrative interpreta¬
tory prospectus the main selling limited or general prospectus, we tions which had become common¬
document. The industry, on the are inclined to believe that, the place- in their administration by
readily be discerned. The funda¬
other
hand, while not unwilling
that
the
«statutory
v
prospectus
should play a more important role
than theretofore, - was primarily
interested in eliminating the dis¬
semination-solicitation distinction
and in being: able to continue to
business
do
on
an
oral
basis.
the Commission.
staff's
1947 proposal uncondition¬
•T shall review briefly the more,
ally to permit oral offers, in the
waiting period should be adonted.' important changes involved in the
In
the first place, it is doubtful
a prohibition of oral of-
whether
fers could effectively be
The
enforced.
pressures responsible
for gun beating under the present
same
revision and indicate the reasons
which prompted us to make them.
I
shall
also
briefly
the
satisfactory substitute without de¬
laying the adoption of the revised.rules. Consequently the definition
Changes made in their .presentar
tion.
This was done for two prin^ contained in the previous rules,
was reinstated.
cipal reasons.
First tor put the.
tules were completely rearranged
de¬
endeavor; to
reasons
why
state
certain
changes suggested by various in¬
number
a
of
mechanical
rules in form to make then®
inake it easier to
incorporate
amendments
in
the
that, while the rules can by no carried in his name
regarded as,perfect, they name of his nominee,
means be
have reached
a
where
similar violations of the prohibi¬
However, before turning to these
t|o, make desirable, amendments
5rom time to time as the need foi-
panying legalization of gUn beat¬
ing was acceptable to the Com¬
mission and its staff provided the
industry would agree to adoption
of additional safeguards designed
to make the statutory prospectus
the main selling document. The
industry
and
the
Commission
tion
specific matters, I want to take
this opportunity to express the
hem becomes apparent." With, the
rules' rearranged as they no w are
Commission's appreciation for the
lit will be
were
unable to reconcile their dif¬
ferences in
so
1941; nor did they do
in 1947. Our resolution of those
differences follows.
',
,
:
r
1(1) : Offers:. The objective of the
Act
that'
a
major portion of the se¬
conducted over
curities business is
the
telephone, it seems unwise to
attempt to limit the traditional
procedure for doing business un¬
less
the
tion
can
objective of the limita¬
of best be achieved
)y such a limitation; and), as: will
be pointed out' below," the safe¬
guards- proposed to govern sales
orny
tire post-effective period should
provide
adequate
protection.
Finally, we believe that the in¬
dustry proposal for making oral
offers during the waiting period
would tend to- make the "limited"
;m
»A* During the Waiting Period
Securities
tince
Second,
oral offers.
information
concerning the security should re¬
ceive.
widespread - dissemination
during the waiting period seems
unassailable; But the desirability
of the accompanying proscription
of all efforts to dispose of the
security during the waiting period
is not equally apparent. The es¬
tablished
procedure
of % under¬
writing in the United States gen¬
erally involves a commitment by
the investment banker or syndi¬
cate to purchase the issue at a
price slightly less than the public
offering price. If the banker is to
gauge the market, accurately, he
should be permitted" to secure
from the dealers, who will sell (be
security-to the Public, information,
concerning the tikely reception of
rather
than
on
the
Society
document
general
assistance
along
which
with
1948.
*
*
'
'
'
-
of.
upon
to
consult
their customers in order to
acquire
the desired data. Reasonably ac¬
curate information concerning the
"
-
construed
-
-
buy
as an
any
j^aterial
information
con-,
Information concerning, its likely
reception is to be relayed back to
tl^e, banker^ it would be* imprac¬
undesirable to
prohibit all efforts, to- dispose, of
J
prohibition: would not be obeyed,
experience under the present
Act has rather conclusively dem-
soliciting material of
3
Id, paragraph
(!>)„
page
■■■■■-•
■
.<•:
i.
.
V,'
'
•
•
.:
.
^
1'
\
*;
' "
•
24)
:
,;
•
'
*
-
•♦..*
' '
'
.
*
■
.
Cementing Company
Common Stock
'
^5.00-Par Value
;
'
>
-
.
the
con
concerning
Price
or,not to purchase a
security should be based on the
complete document,. rather than
on a necessarily inadequate sum¬
„
.
$25
per
Share
State from such of the several Underwriters,
lawfully offer the securities in-swch£ State.
.Copies of the Prospectus may be obtained in any
:>
■
including the undersigned, as ptay
-•
^ Blyth & Co., Inc.
X;
Lehman Brothers
there
are
A. G. Becker 6/ Co.
differences which may
Eastman, Dillon
The First Boston Corporation'
Co.
'
warrant different treatment of the
two classes of offers;
ence
The exist¬
•
.
*'.
Incorporated"'"".
Glore, Forgan £3" Co.
and character of written of¬
fers may
be proved with greater
facility than in' the case of oral
offers; and it is a much less bur¬
densome
case
'
Goldman, Sachs & Co.
interference
with
norv
Lazard Freres & Co.
of
written
*,
offers
than
it
would be to impose it in the ease
(Continued oti- page
i
Stone & Webster Securities Corporation
Wertheim & Co,
May 12,1948,
Lee
Kidder, Peabody £/ Co.
Higginson Corporation
Union Securities
White, Weld & Co.
Corporation
He
anyone
2 Rule X-r4"4-2;
(Continued on
Halliburton Oil Well
security-during, the waiting "mal business practices to impose
period. Impracticable, because the the following requirement: in* the
as
'
..
the
/
the
be extended to written offers. But
cerning the security is to "be dis¬
seminated to the public, and if
a&. well- as
the management of the issuer.
680,000 Shares
!
:c
lnyestors' fragments
the
of whether
-
ticable.
whose behalf
made, usually
of such securities. The offering is made only by the Prospectus.
'
.
information
on
the solicitation Was
tains in condensed1 form all* of the
likely' public reception of the ismary of it. If present prospectuses
;Stie assists the banker to reach an are too bulky, and complex, the
intelligent and informed decision answer is to
improve, their qual¬
concerning the price to be padd to
ity, not .to create, an. inadequate
the issuer.
The information se¬ substitute.cured from the investing.' public
It may plausibly be urged that
thus performs a useful economic
if oral offers are not to be regu¬
function in that it helps the bank; ver
to make an informed price lated, "a - similar freedom should
If
of all so¬
of record only and is under no circumstances to be
offering of these securities for sale, or as a solicitation of an offer to
V'.;*i,.'.,.*:;l-,7.l-'-
f
judgment.
a copy
This advertisement appear? as a matter
"
shoJjd^'e3 pe^itted
solicited
by the persons
X Rule X-I4A-1.
abbreviated
prospectus, which
person
address
*An
,
instead
other
organizations, companies and in-
"
that
en¬
did not, however, have to furnish,
valuable
your
purchase the secu ity
basis of
in order to be
dew set of rules,
by Commissioner
JTtirnipg ^iu)w. to- specific^ pro¬
McCOnnaughey before the* Ameri¬
visions, the definition of the term
can Society of Corporate Secre¬
"associate-"1 contained m~the"retaries, Inc.', Chicago, III., Feb. 25,
very
the, limited
rather than the general prospectus'
prior
to or * contemporaneously
with the making of the' oral offer.
Investors thus would be deciding
whether to
old rul'es,
titled to the exemption the banker
or broker had
to furnish to the
liciting material furnished: to him
the
distribute
the
possible to- adopt desir¬
able
changes raore promptly
Moreover* it will be unnecessary
;or
the industry periodically to
familiarize itself with a complete
"general'" or
"statutory" prospectus the: impor¬
tant selling document.
Because
the limited prospectus Would be
cheaper to prepare and dissemi¬
nate than the general prospectus,
underwriters and dealers desiring
to
make
Oral
offers
naturally
would
the
or
state of develop¬
complete revisions plies chiefly to bankers and brok¬
every few years are not likely to- ers holding securities for tlie ac¬
be necessary. It is our intention count of their customers.
Under
ment
solicitation distinction, and the ac-
against
in
or
held in
This exemption ap¬
his custody.3
terested persons were not adopted.
lead
minor
spe¬
to
would
de
future
Act
likely
m a
Regulation X-14.2 The principal
change was made in the exemp¬
Without the necessity of a general tion provided for solicitations b;y<|
revision of the rules* I believe a person in respect of securities
cific
Elimination of the dissemination-
very
revision
The
more
Easily understood and second to changes, in the exemptions from -
!
20
THE
(2100)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Gold Slaadard Return
Business
By JOHN DUTTON
point
In the securities
products do not loom up so large,
but there are some salesmen who do worry too much about their
competitors.
Actually, no salesman should worry at all about his
competitors.
The only way to handle competition is to IGNORE IT.
handicaps to
that salesmen must face.
success
business, competitors' services
Tf you are a constructive salesman you are going to be too busy
securities and your service to even remind your
buyer that you have competition.
Certainly, the only way to handle
any reference to a competitor's abilities, securities or serVices, is to
be complimentary and then go on with your own job of selling your
firm.
No one ever gained a friend by knocking a competitor.
your
own
'^*1 There are salesmen who leave one firm and go to another. They
fret and stew over the possibility that they will lose some accounts
by making a change. Maybe they will—but if a salesman has sold
well, he will take most of his accounts along with him.
If you have
done a good job you don't have to worry about your customers.
No
6ne can take satisfied customers away from a> salesman who is on
the job.
There are securities firms who make the mistake of be¬
lieving that they control their customers. They do not. A good
Security salesman carries his accounts along with him wherever he
play go.
Much wasted energy could be saved by investment firms
who
believe
they
other firm.
keep customers that belonged to a salesman
to go into business for himself, or with an¬
They may save some of this business by putting other
able
work
after he
can
has left them
men
to
these
on
accounts
but
as
general rule
a
good
a
salesman carries his business along with him.
In this case too, it is
unwise to worry about competition. ; Go out and do a constructive
job of selling.
Ignore competition.
When you sell your products
that is one thing.
But when you go out and sell against your com¬
petitor's products that makes the job twice as difficult.
The other evening I was reading one of those books that are
published every once in a while about Selling.
To read it the way
some of these theorists write it, you would think that most
buyers
are a pretty stupid lot.
Quite frankly, if some salesman came in
maintains fourstabilizing world
group
program,
to full
,
or
To
production.
the
abroad,
recovery
spur
Association
of Manufacturers has
recommended
that
the
States put its currency system on
gold basis without delay, it was
announced May 9.
Such a move,
the NAM emphasized, would set a
in
countries
where
in
people
see
me
started off his sales talk with
and
of
one
those fancy at¬
tention-getters that the book fellow said should be used when a call
is made on a new prospect for the first time, I would have a hard
job keeping
straight face.
a
Tricks, fancy talk, questions, stories
and what have you, are just as unnecessary when you meet a man
for the* first time as they are if you have known him a lifetime.
There is only one way to go in and meet a new prospect.
Walk
to
or
win
point.
a
When this happens
As
No
soon
as
ACT
you
ing the right of private ownership
country.
subsequent time
should be given to
some
consideration
restoring
our
free
convertibility
of
into gold coin.
paper currency
Removing the export license re-r
quirement for gold would, in ef¬
fect, be tantamount to an an¬
nouncement
by the United States
that
any
sociation said it is "inconceivable
ship becomes weak instead of strong.
Confidence is built by plain
ttien who speak with SINCERITY.
Talk less, and make it simple.
Your prospect knows that you are there for business and he doesn't
mind it one bit.
As soon as you start to give him a fancy, dolled
up attention-arresting sales talk he will know it/ If we ever wrote
anything in this column about selling that was worth much in the
way of advice we've said it now.
Throw away the books—just be
YOURSELF.
v./
/
■
i
*
.
'
■
Terming
the
requirement
'nothing but a formality," the
that
this
Tourney of
Y Exchange Ass'n
The
•
Forty-Ninth
Tournament
of
Annual
the
is
York
tock Exchange Golf Association
ill be held on Tuesday, June
29,
t
was
announced
by James Mc-
enna, Chairman of the Associa-
ion, for the third successive year
t the Winged Foot Golf Club in
amaroneck.
ers
of the
nd
another
the
n
outing
lose.
he
About
will
after
Claude
recent
200
mem-
Exchange will tee-off
100
participate
the
of
Master's
•
.
■
Tournament,
V/
As in previous
irizes
will
be
awarded
umber of strokes
for
on
a
low
hole to be
lected by the committee.
lfers.
a
special event for
There
non-
At stake will be the
Governor's
up^donated
&
Co.f,
■;
of Harris.
For
permanent
possession the
cup must be won
three times by the same member.
Low gross last year was a 74,
.
turned in by William M.
of M. J. Meehan & Co.
Meehan,
Chairman
the
of
Board
of
Gov¬
will be guests of honor,
ernors,
by the Board
of
people
creased
of
As
ship
120
June
will
be
W.
of
1
a
R.
partner¬
new
formed
under
members of the New York
Stock
Exchange, the present partnership
being dissolved.
William
hold
R.
the
B.
K.-
firm's
bership;
Frank
Partners will be
Taylor,
who
Exchange
H.
v
,
a
demand
*
production
volume
of
United
on
and
in¬
decreased
exports
the
to
Securities
Act
of
the
1933,
Securities
Exchange Act
of
1934
and
Section
5136
world
back
to
sound
a
currency
basis," the NAM stated,
"This country must set an ex¬
ample by adopting a sound mone¬
I
tary
base,
other
nation
which
to
one
its
relate
can
every
21,
Treasury Sec¬
retary Snyder,
John
H.
Rumbaugh
Chairman
as
the
of
NAC,
transmitted to House and Senate
with NAC endorsement two let¬
ters
U.
from
S.
Mr.
Eugene
Executive
R.
Black
Director
of
the
Bank, setting forth arguments for
exempting the Bank from the pro¬
visions
of
named.
Also
the text of
the
a
of Columbia
three
Acts' just
Mr. Black
proposed
bill to permit District
insurance companies
to invest in World Bank securities.
If the sought-for
exemptions are
enacted, member banks will be
permitted to deal in World Bank
securities, thereby facilitating the
Bank's
flotations
and
"orderly
markets."
own
.Before
such
changes are made
hearings will have to
the
Senate
Banking
and
Currency and the House In¬
terstate and Foreign Commerce
committees.
Congress will have
to
decide
whether
it
wishes
to
continue
as foremost objective the
protection of the investor or sub¬
wants, World Bank securities will
no
longer have to be registered
with the SEC.
-
.
\
Mr. Black wrote the NAC that,
although
the
of
the
initial
Bank's
distribution
bonds
"suc¬
was
cessful,"
the
has been
"narrow"; and that "as
"There
will be world
never
re¬
covery until all countries increase
their production.
In country after
no
medium
exchange acceptable to buyers
and
sellers
alike.
Starvation
is
have
place
because
those
who
food, which they would be
willing to sell for sound currency,
are not willing to sell because of
lack
of
faith
in
the
rency.".
present
;
.
\
cur¬
,
Return
to a gold standard, the
predicted,
will
be
the
"greatest stabilizing influence" on
NAM
world currencies.
Oklahoma
v
Old Producers,
Inc.,
producing w e 11
in
County in Oklahoma.
issues.
that
It is important, therefore,
the
bonds
Bank's
distributed
to
shall
be
widening
circle
of investors
(and that)
legal restrictions which hamper
the Bank in its borrowing opera¬
tions should be removed."
Black
a
.
.
that the Bank, like private
issuers,
could
offer
its
bonds
through underwriters without vio¬
lating the present law, but such
course
is neither practical
nor
economical.
Another
objective:
The Bank wants to be free, while
states
Oksfuskee
The
new
situated in
120-acre
a
one
lease, with
well to each
10
to
Visit NYC
are
not
taken
such publicity devices as
Hollywood-like ceremony in¬
troducing Stock Exchange trad¬
ing in the Bank's bonds at a
pre¬
arranged premium,
Bank
press
the recent
of
release,
operations
are
announcingin the black,
transparent euphemism.
The World Bank's
recent state¬
shows that
during the nine
months ended March 31 the
World
ment
Bank, with its topheavy and costly
overhead, had "gross income" of
$12,800,000.
Of? this,
$2,500,000
interest paid by the U. S.
was
the
Bank's
just
on
investments, which
another
of saying
way
is
that1
the Bank lent to the U. S.
dollars'
which
it obtained from the U. S.
in the first place.
The $10,200,000
which
the
Bank
recorded
"in¬
as
terest,
commitment charges
commissions"
on
the
and
long-term
loans the Bank has been
making
in
effect
are
taken right out of
loans, or, in any case, made;
possible only by other aid which
the
the
U.
has
S.
Bank's
been
borrowers.
staff
are
by
cluding
tions
Bank's
as
in¬
and
public
now
rela¬
what it
on
"tour"
a
moving
A Bank party,
McCloy
director, is
describes
the;
directors
constantly
Mr.
the
giving
The
around the world.
headed
of /Latin
America.
Comparison
of
the
Bank's overhead with the
World
much
smaller cost of the ExportImport Bank is worth while. ; \
World
Bank
"good"
as
Bonds
long
so
classed
are
the
as
total
outstanding does not exceed the
$3,175 million limit of our com¬
mitment to the Bank's capital, v Is
it practical to
from
ations
restrictions
remove
the Bank's borrowing oper¬
while it is reaching that
$3,175 million limit, then reapply
restrictions and possibly outlaw
the securities when
of
cess
issued
in
ex¬
liability?
For ex¬
total of $6,350 million
our
ample, if a
bonds (double the amount of our
liability) were issued they might
be
rated
as
50%
sound,
50%
speculative and the market quoted
accordingly.
It may sound ri¬
diculous, but at present the ap¬
praisal of the debentures must be
based
upon
the liability of the
only solvent nation in the com¬
bine. //./.V
://;■•//■,
..
Briggs, Sch*edle Co.
Official Promotions /;//.
J.
L.
has
MacFarland
to float an issue, to
buy and sell its own securities; or
at
other times
to stabilize
the
&
been
and Secretary
from present
prohibit bro¬
exemption
regulations which
kers
and
Bank
extending
credit on World
dealers from
than
more
Bank
the
Moreover,
wants
announce a
well is currently producing at the
rate of 16 barrels per hour.
It is
E. J. Roe
San Francisco
the aggregate amount of its bonds
outstanding increases, the Bank
undoubtedly will encounter in¬
creasing difficulty in placing new
news
by
market.
New Oil Strike in Central
A second well is already
underway.
R1 V. Klein & Co., of
New York, are the underwriters
for Oil Producers, Inc.
-
market
bor¬
the
preparing
provision for
BUREAU, Inc.
subsequent
.
taking
in
disastrously
firming
the
Treasury
Careful readers of
the financial
and
in the law,
be held by
•
short-term
rowing rates.
that
currency.
This would encourage
return to production.
of
up
a
On
is concerned
.
debentures
bumped smack into
Statutes.
April
■.
—
the
of the Revised
>// stitute the political objectives of
"The United States is the only
spreading dollars abroad.
If the
country in position to lead the Bank secures the amendments it
acres. 1
a
the
by
United States, it was explained.
lim¬
v;v'/
Street, New York 4, N. Y.
the
has
and
Lewis, general partners;
ited partner.
Established 1913
.Chicago
wili
mem¬
Mifflen
Katherine P. Wear will be
NATIONAL QUOTATION
46 Front
the
K. Taylor & Co.
New York City,
Broadway,
For 35 Years
.
;
confidence
country, production is being hin¬
Taylor Partnership
A
,
lack
dered because there is
New
from
/ .Low production prevailing in
countries with currencies in which
of
Over-the-Counter Quotation Services
*
gold
itself
a
Emil Schram, President of the
Exchange, and Robert P. Boylan,
John
y*,V\
■
Middlebrook,
Upham
name
tournaments,
Qt, low gross, runners-up, holes-one. most birdies
and, also, to
e
player taking the greatest
ill be
O.
last year by
won
market's
give an exhibishort and fancy
long,
OtS.
John
the
score
Harman, winner of
nd club pro, will
?on
annually
to
in low net
.
turning
and which was
Golf
New
presented
player
for
country to deny its export."
States
Governors of the Exchange, which
demand
abroad will be sufficient to cause
the
[h Golf
the
as
as¬
and
hampered
with
of gold in this
its deben-
feels
The Bank
nar-«!»
market
tures
now resting
the Secretary of the Treas¬
with the consent of the Presi¬
dent, to buy gold at other than a
statutory price.
(2) Immediately eliminate the
requirement for a license to ex¬
port gold.
gain in order
become artificial.
business relation¬
you
entire approach to
your
to
for
its securities.
the
over
ury,
(4) At
outstanding
Bank's caoital.
year ago
row
with
adequate
supporting legislation, free con¬
vertibility of United States dollars
into gold bullion, thereby return¬
a
the Bank to sell
the
remove
henceforth
its
currency
is
•irmly tied to gold, the NAM held.
needs to act
man
it easier for
The following four-point
plan was recommended.
(3) Establish,
as amount
to
McCloy administration took over
that institution has sought the
help
(National Advisory Council) in getting
Congress to make
rency.
(1) Immediately
discretionary power
long
as
time since the
second
of the NAC
cur¬
up
to him and be YOURSELF.
For the
the World Bank about
lack
present
the
only
does not exceed U. S. commitment
needed example to the rest of the
world and encourage production
„
to
bonds will be considered good
>
*
United
a
confidence
_
Noting proposals to broaden market of World Bank debentures by
permitting sale without SEC registration and by enabling purchase
by savings institutions and banks, Mr. Rumbaugh contends initial
financing of debentures was "a deliberate joy ride." Holds these
board of directors of the National
v"
selling
By JOHN H. RUMBAUGH
President, John H. Rumbaugh, Inc^.New York City
V.
currencies, will stimulate return
Jn many lines of business fear of competition is one of the great¬
est
A Look at World Bank Bonds
Urged by NAM
Securities Salesman's Corner
•u
Thursday, May 13, 1948
25%
bonds.
Finally,
Bank
the
York
mitted
act
as
to
banks
to
be
for
World
or
Bank
market."
The
present market, the Bank admits,
is narrow, with "wide and erratic
active
fluctuations."
Observers
feel
Vice-President;
Suttmeier, Treasurer;
Robert D. ? Allen, Assistant
and
E.
Treasurer.
i
■
.
"
•
-
'I
m
* t
\ '*
Bappert With Merrill Lynch
ST.
LOUTS/ MO.—Walter Banis
pert
associated
Lynch,
Pierce,
Ambassador
Cashier.
with
Fenner
Building,
Mr.
as
Bappert
Merrill
&
Beane,
Assistant
was
for¬
merly an officer of Hanser & Co.,
last
July
openly
and
Inc.,
the
Mr. Hanser has also become
that
*
(
/
_
securities, thus contributing to "a
sustained,
Assistant
Walter
per¬
underwrite, deal in.
brokers
of Briggs, Schaedle
Street, New
La Rov Roome was
City.
made
Vice-President
Inc., 44 Wall
Co.,
,
national
wants
Assistant
elected
which
has
been
dissolved.
E. Jedd Roe, of Roe & Co., San
Antonio, Texas, will be a visitor
knowingly
in New York City about May 31
biggest joy rides speculators ever
ciated
with
had;,anii when joy riders cashed
firm
reported in the "Financial
will
be;.staying
t-'1
^
^
ft,»
^J % N^mp-
•? i V/
Z'3' f
h~4hulao'..,
ifHjo'l-i
■
the
their
World
Bank
promoted
one
of
as
the
Merrill
profits the redistribution of' Chronicle" of April 15.
ucvVs'tmuaa-r'
-i
"t."./
/;
•.
■
:•
;
■/•
asso¬
Lynch
• *,
■.
'
mtiSV MVIWW IMtW* ,f
Volume 167
r,'VS^V'T*'/>'*>'• 4i
Hffld^t^S^fftW IftV.^tfni rftfWW^JMiW i^Kfi^^CW j '^wty0M«0|rtt«||M*ir »W»d*
UWWM rfJ W«
-v
n i» i)h fUMfry W*rw
%^*r<*AW'WRW^ Sii-JKf/Qb'ft «f•'ft'*"® *
-
■
Number 4698
THE
COMMERCIAL
&
FINANCIAL
./
rj
be
must
„✓•
CHRONICLE
assigned the position
o,
,vc
paramount • importance f because
success
of the mortgage invest¬
ment
depends primarily upon -an
equitable relationship between the
obligations imposed by the mort¬
Real Estate
gage and the
By LEON W. ELL WOOD*
Chief Appraiser, New York Life Insurance
i
erty.
Co.
be preconceived without
i
•
sults.
losses
severe
demic
of the
the
an
The
real estate market and the
cost of construction
ject
to
wide
both sub¬
are
fluctuations
over
comparatively short periods. These
fluctuations
due
are
much
more
to speculative features inherent in
the momentary condition of sup¬
ply and demand than to any sub¬
stantial
change in the long-range
prospect
property
such
to the potential use of
and the benefits from
as
use.
be demonstrated by the valuation
<©f actual earnings in retrospect.
An example
a
has
been
selected—
typical
apartment house built
to house families of medium in¬
come.
dent
Good management is evi¬
in its present condition and
particularly in the fact that accu¬
rate operating records have been
kept since the building was
erected.
The
complete
tions for present worth
from
year
included
per room
allowance
1921
but
not
are
earnings
for each year from 1920
to 1947,
in rents is
It is all
and demand.
constant
And
when
tom
same
process
for
used
was
In
1924,
this
$590
was
per
property
had
This
room.
The
market
The
a
is not
during the
'30s was so glutted with
distressed properties that many of
them were sold at less than a
third of their prices in the middle
twenties.
As of 1924 the present
worth
of
ing 24
years was
The
earnings produced dur¬
difference
$1,017 per room.
between
this
and
market value is $783.
To justify
this difference. $783 has to repre-
;
the
./ sent
property
residual
value
1947
of
as
of
the
.
discounted
back to 1924.
•V
The
24
present worth
$0.1763.
it
is
Dividing $783
found
'/ would have
room
,
of
at
removed
years
that
the
to be
a
dollar
7J/2% : is
bv
1947
.1763
value
$4,400
over
per
to justify
the 1924 market
In 1934, the present worth
value.
was
year
6I/2
had
all
so
rate
far
as
or
of
used
to
the
about
the
a
as
stabilization factors.
Selection of
tion
or
makes
gage
money,
weight.
be
erties,
by
residual discounted 14 years
H is onlv $36. The present worth of
one
"dollar
14
removed at
Dividing $36 bv
years
7.%% is $0.3-333.
.3633
value
it
of
is
found
the
that
property
the
1947
must
be
The 1947 appraisal of the prop¬
rience
to
erty is about $930 per
cold stove.
would
cause
pessimist
the
see
dian
late autumn
transport
All
followed
these
ercise
these
between
,
extremer
: Experience Tables
;
The
experience
insurance
•
tabulated
factors
aeainst
duce
business
thousands
from
ment
concerned, through the Na¬
The
Britain
cannot
iron
and
from
"The
April, 1948.
the
at
on
British.
econ¬
Nevertheless, political con¬
siderations are likely to prevail,
and the Government prefers to
omy.:
economic
face
rather
than
a
of
..
•;
tables of the
are
compiled
case
historier
and reduced to
that
can
known
be
precise
employed
conditions
ment Js to acquire all the stock
in
to pro¬
forecast devoid of guesses
hunches; and
wishful; thinking
The outstanding success of this
business in calculating risks which
are no more predictable than the
earnings of ordinary rental pron
ert.y inspires the conviction that
appraisers and mortgage investors
could materially reduce errors by
adopting similar procedure. There
is ample proof in the records tc
in the
production of iron and steel.
It
corporations
ap¬
praisal, the amount to he capital¬
ized.
This void in /the appraiser's
,
working equipment is the reason
that so many appraisals for mort¬
that
if
this had
been done
at the
of
inception of the last neriod
intense
real
estate activity,
most of the
improvident loans on
property would have been
hotels. As
changes take place in supply /anc
engaged
will henceforth be the sole stock¬
holder of these corporations. And
instead of
unified
tional
role
placing them under the
management of a Na¬
Board, it will confine its
that
to
of
a
exercising
holder,
leaving
private stock¬
control
but
management in the
executives. The
the
hands of existing
individual character of each cor¬
poration will be retained.
The
reason
method
for the choice of this
does not
desire to avoid
a
The
future
income
iloiq lisfU
assumption
properties will continue' to
(Continued on page 38)
National
decision
to
industries
present
would
in
be
reduction of the
a sudden and un¬
reorganization.
It is due
partly to the fact that many cor¬
porations engaged in the produc¬
would
entail
not
tion of iron and steel also control
variety of subsidiary in¬
Control of the parent
control
of indus¬
tries. It would be extremely diffi¬
cult for a single National Board
this
would
wide
mean
range
with them.
hitherto
the
of
the I
.
latter!
Goy-I
The
interfet-l
more
sulb-l
bl|
ject to at present on the part
the principal stockholders.
There
is
further
iron
likelihood
no
of
nationalizations
and
steel
an]
beyondl
before
«ext|
the
general election in 1950. But plans
are prepared for the second "fivel
year plan" of Socialism in Britain!
It is probable that the next elec¬
tion program will include the
na-|
tionalization of engineering, auto¬
mobile, shipbuilding and chemical
industries.
The workmen in soihc
a
these
of
industries
alread]
are
very imPatent and are Pressi«
Qovernment
to
nationalization
proceed wit]
To restrain thei
SS
lmPatlence. Possibly the Govern
ment may take stePs to achlev
lh„e„ ™^?„ry
would
secure an influence on, the
management of industrial under*
takings.
There
is
much
possibility
land
of
and
talk
the
of
too
ever,
about th«
nationalizatjk
houses.
It is, howr
possibly
,
difficult
Socialist
the
five
of
much
and
leaders
will
pre|ej
it for the third t«
v*
The industries
nationalized
were
com¬
-controlling
corporations,
'Ol
they could be carried on by the
Likewise theriTij
years.
hesitation
the
about
^
tionalization of commercial baiil
Until
this
recently
the short list of
alizations
item
headc
projected nation^
after
1950.
But
th«
strong reaction of public opinioi
in Australia to the nationalizatior
of commercial banks has made
th^
Government think again.
Shipping is also among the
terests
which
intended
are
nationalized, though not
before
under
1955.
Chain
im]
to
necessan
stores
consideration, but
ar<
bail
ance it seems probable that the]
will be left in private ownershij
for the present.
"
moderate
Some
on
Socialists
ar<
beginning to feel that nationaliza)
tion
has already gone too fai
They fear that if it sho.uld gj
much further the taxation of th|
profits of privately owned indus
tries will no longer
suffice fc
covering the losses of nationalize^
industries.
Name Now
Republic;
Research Corporation
W.
R.
Bull
Incorporated,
York
corporate
all
subsidiary
hands
than the management is
ence
New
of
the
controlled by the
timely
wide
Hence ' the I
-
the
management.
output through
a
Board,
leave
ernment, it is true, but, to begin!
with
at/any rate, this control
lie solely in the
demand andt in general, economic paratively §imple, their subsidiary
gage1 investment' have-' failfed^td cCiVditions," the earnings of such industries1 could be divorced from
stand the test of time.,
manage
them centrally I
be beyond the power oi
would
the
disadvantages
expose itself to the /
opposition of Left-wing Socialists
by postponing iron and steel na¬
to cope
with
permission
Appraisal Journal,"
afford
that
disorganization of
steel industry.
A
crippling effect
office space, lofts and
♦Reprinted
realizes
fall in steel output would have a
companies
•
a
to
And
.
Government
present stage
irpnl
subsidiary]
would in many cases
irreparable heavy losses
cause
to postpone
ization.,,;.; ;;■/.
Appraisers can be provided with
experience
tables covering the
last 25 to 30 years with regard tc
the several classes of apartments,
property
thrniiffh
tional Board, controlled the indus-
dustries.
income
control
with
so
the
sever
A
of ' regional
government depart¬
The
avoided.
property—but there
conspicuous absence of statis¬
tical information for guidance in
selecting the most important fac¬
the
pattern.
set up to ex-
intermediary
the
boards.
income
the
a
in
was
sunreme
is
tor
nationalizations
identical
an
rious types of
$1,410
per room
in 1925, exclusive of
.land.
In 1932, it was $940 per
room.
Here, too, is a fluctuation
considerably larger than ;will be
found in. present worth in any
early win¬
or
coal electric power, transport and
coal, e ectric Dower
ana
market values is still apparent.
was
ex¬
It pursues a different course
from the legislation nationalizing
show
cost
draft, and is
ter.
appraiser in
determining capitalization rates,
and there is a wealth of reference
material on the useful life of va¬
Reproduction
na¬
can
only be achieve^ tionalization.
A formula had to
through the development of be found, however, to reduce to a
means
for
bringing exoerience minimum the disorganization
into sharp focus so that implica¬ through nationalization.
tions can be truly reflected.
Under this formula the Govern¬
/Reams of advice have been pub¬
aid
the
and steel to
which
thirds mortgage is
lished"; to
and
sum¬
before Parliament
come
room, which
to be a plausible figure.
Time alone can confirm, it,,but
allow a 50% margin of error in
either direction in this appraisal
and the absurdity of the spread in
appears
remains
of iron
derstood to be in
the
nothing but a dark future
for every parcel of real
estate
Competent appraising for mort¬
gage investment requires a me¬
two-
plus one-third of 10%, or 8%%.;
a
difficulty at one time or an¬
other.
Hence, a complete expe¬
the 1934 market value.
1947
on
All types of property have beer
realistic rate is two-thirds of 8%
ference which must represent the
reasons
in
less than $100 per room to justify
earnings throueh 1947 was $554
room.
In this case, the dif¬
per
the
of
thereafter be induced
never
to sit
available with
a
required constant payment of
6%, including interest and prin¬
cipal, and purchase can only be
induced by the prospect of 9% on
the down payment, the minimum
capitalization rate should be twothirds of 6% plus one-third of
9%, or 7%.
If the mortgage re¬
quirement is 8% and the equity
requirement 10%, the minimum
of
regardless
could
on
a
whicb
the
affected
for the difficulty. He is like thr
that sat on a hot stove and
which such
if
conditions
wh<~
cat
capitaliza¬
instance,
the
ootimist
before this
To
industries
be
available mort¬
must be given full
For
that
the
way,
on
National Board
types
its
National Boaids. Not
and steel.
in¬
try.
The adjustment of its man¬
ignored.
The other is that of agement to, «" the new system of
the pessimist who, having expe¬ control /required very," extensive
rienced some difficulty with cer¬ reorganization.
And reorganiza¬
tain types of property, is undulv tion at short notice brought with
nrfhidiced against all such prop¬ it a certain
degree of disorgan¬
thi^
properties are usually purchased.
In the'vast majority of cases, pur¬
chase can only be induced by the
prospect of attractive immediate
return on the necessary cash pay¬
ment
down
to
the -mortgage.
Therefore, the required over-all
payment, including both interes'
principal
of
two
gas
five-year program.
providing for the nation¬
alization of iron and steel is un¬
gas.
in rea1
of
A bill
in the
ex¬
ization
complete the
pected to
--
that
There
mer.
perform¬
properties in the past will
never be permitted to occur agair
and experience should, therefore
in¬
vestments, but full acceptance of
and
under
be
tionalization
into
for
Einzig
is well
passed
dustry
will
of
ance
with those of other non-liquid
under
is
adversely
/V/?//?/ /JfC-
sound
have
hunch which is said tc
fall
bill
national¬
the
on
often
feels
the rela¬
property involves not
conditions
based
One
only
comparison
of /the
risks,
earnings and management burden
the
operating
planation.
//■///
indicated
Dr. Paul
property
arrived at is too nebulous for
discount rate for valuation
income
of
a
shows to
similar
The
providing
the
experience, but the
reasoning process by which it ir
Nevertheless, the
same
ized.
car
conditions.
guess or
be
example and there would be
substantial differences in the
no
when
previously
estate
to that of another would
year
he
The result is, more often than not
retrospective .appraisals
different.
n<
he
rely on .impressions anr"
prejudices gained from a limited
amount
of
personal exoerience
the values, of course, would have
been
which
to
and steel, has
/ been national¬
nef
is
In the absence of such data,
around
produce
general
election, all
this, except
gas
and iron
must
to year is concerned.
81/2% instead of 7V2%
been
there
Reactions to experience
capitalization
next
definite figure for
a
experience
similar
be
tive movement of "present worth"
from
data
get
followed
"
little difference
to
which
a
are
f
causf
the
more
/ to go until the
employment against current earn¬
ings to allow for the fluctuation
make the
Capitalization Rate
middle
•
in
stream—but
in
iron
steel.
than two years
thj
which
and
and
With
occupancy
fluctuations
prepared
refer
so,
the corner.
under
expenses A and
income
ratio of "present worth" as of one
market value of $1,800 per room.
-Ten years later its market value
unusual.
never
Solomon
never
increases
when
ascertain
can
transport,
gas
problen
appraisal, and he- knows thai
ing wide
decline in rents is
about to take place and at its bot¬
peak
his
will vary from time to time,
there
is
the
absurdity of market value at its
ance.
If
each of the other years.
-1
building industry sufficiently
flexible to keep rental space sup¬
ply and demand in perfect bal¬
series
The
because
to
conditions
rents,:
matter of supply
They will
his wisdom could
discounted to determine pres¬
ent worth as of 1920 are shown.
•
of
1947
the
'///' ;//''///
a
appraiser
exact
to follow the peak
sure
pertinent
property is operating at the time
period, and an increase in rents
is sure to follow the trough pe¬
inclusive, and the method
.by which this stream of income
.was
The
Despite the certainty that rents
expenses and
earnings will
fluctuate from time to time, the
market operates largely under a
status-quo philosophy. A declirn
of each
as
net
-
er,
has not been reduced to indexes
reasonable
a
electric .pow¬
The appraiser's
—
made -for
LONDON, ENGLAND—When the British Labor Party embarkedI
1945, it published its program inl
a much-quoted pamphlet
entitled, "Let's Face the Future!" In this]
document, it declared its intention of nationalizing the Bank of Eng-|
land,
c o a 1, <S>its electioneering campaign in
on
application of experience to
analysis of conditions at the
rience
and
calcula¬
1935
to
here,
is
residual, //,/';,\
riod.
The relative stability of present
as
compared to market
value and cost of reproduction can
worth
period if
seven-year
V
difficulty lies in the fact that a
comprehensive quantity of expe¬
,
—
earn¬
',
'
All
time of forecast.
resulting from the foreclosure and liquidation epi¬
Heavy losses will occur if loans are based on
liquidated when the market is at or
1930's.
the market at its peak and are
near its bottom.
-
of
V"-V, •/:
consistently successful
forecasting systems are based oh
The practice of appraising at market price was the major cause
<
of
a reason¬
forecast
Experience
teaches
that
like
conditions will produce like re¬
.
.
accurate
/
Remarking that British Labor Government has practically com¬
pleted its nationalization program, except in case of iron and steel
industry, Dr. Einzig points out if nationalization of steel industry J
is to be pressed, the set-up of organization will not be disturbed !
and government will be merely a stockholder and not
manager. >
earnings of the prop¬
relationship canno;
Such
ably
ings.
Appraisal expert analyzes factors to be taken into consideration
in fixing value of investment
property. Points out value is capitalization of future net income expected from
property, and selection of sound capitalization or discount rate involves not
only
comparison of risks, earnings, and management burden with those
of other non-liquid investments, but full
acceptances of conditions
under with properties are purchased. Cites methods of
analyzing
real estate operating records.
By PAUL EINZIG
Management
15
William
Cc
Streel
City, has changed il
name
Republic Rc
to
search Corporation.
wi|
The firm
continue to act as investment ac
viser and principal
Republic
and
their
underwriter
Investors
Inc
Fund,
subsidiary,
Sovereif
Corporation, will continue to
investment
as
cipal
underwriter
Investors,
will
•of
•
adviser
Inc.
continue
the"
of
and
Sovereii
William R,,
actively :in" cl
company's'*affall's
President.
a^
prii
af
<2102)
22
THE
& .FINANCIAL
COMMERCIAL
CHRONICLE
If the yields selected for
too low Itne Reserve
Banks will pcriorce ab:orb secur¬
ities and thereby enlarge member
bank reserves.
Consequently,
System.
pegging
1948 Monetary and Credit Developments
By J. BROOKE WILLIS*
Assistant Professor of Banking,
Columbia University
short-term
market and banks of Treasury's policy of using surplus cask to |
reduce banks' government bond holdings. Says if It were not for; repeated War Loan calls, money j
obligations
on
,
money
market conditions could be eased.
Sees rise in government short-term rates, but points out rise will be
moderate, in order to avoid switch of investors from long-term issues.
vestors.
their
on
member banks
forced to li¬
were
quidate securities.
sion
Loan
curtailed
was
positions *>—•,■•■■■»
reserve
and
expan¬
deposits
($1,223 million) remained on de¬
with the Federal Reserve
Banks and
the
forces
the
which
reserves
set forth in the
are
this
caused
decline
accompanying
chart.
The
primary force
reduce bank
inflow
of
tending
reserves
cash
was
receipts
to
the net
to
the
Treasury's accounts with Federal
Reserve Banks, amounting to $6,183 million.
small part of
receipts were returned
to. the money market. $717 million
were
returned through redemp¬
these
Only
a
net
of
tions
'obligations
government
held outside
the Federal Reserve
(included in
Chart in
"All Other Factors").
Also $284
million of Treasury receipts were
used to purchase government se¬
curities for the Treasury's trust
and agency accounts
(combined
System
in
with
Chart
Federal
Reserve
time
market.
The
thus withheld for
was
from
being
the money
;
!
.
potentially drastic effect of
drain
tax
considerable
neutralized
was
by
measure
in
variety
a
of offsetting forces.
(See Chart.)
Gold imports added $382 million
to bank reserves and return flow
of
of the contrac¬
Because
liabilities, member
reserves were re¬
duced by $361 million, despite ap
advance on Feb. 27 of 2 percent*
points in the required' re¬
serves of New York City and Chi¬
cago banks.
'
• *
■ * >
\j
age
most
eral
permanently
held outside the Federal Reserve
by the Fed¬
strictive
serves./
the
not
re-
bank
prepared
by
Dr.
Department'of Finan¬
Willis for
The amount
may
market
ment
purchases
securities
Reserve
by
of
governs
Federal
the
Substantial
calls must
less
of
ment
held
government
are
March 22
of
the
Loan accounts to
expenditures
securities
reductions
in
personal
taxes
under the Revenue. Act of 1948
ther
in*
cover
Treasury
exr
Consequently, if furr
redemptions of maturing se¬
curities
held
by I the b Reserve
March 31, 1948
December. 31, 1947
well
as
operating
cover
redemp¬
as
paid, from the Treas¬
Working balance with the
ury's
Federal
in
calls
reach
Reserve
;
the
; Banks. :
ury's
now
tial to facilitate short-term Treas¬
George Kriegir
net
quarter ma^
million and will be
all
$3,500
If it
not for the
were
other
reduction
in
the
the
influence
the
be
'•/'? .2,308
1,150
money
oirculation
rise itn
.ip83
cold 'stock
decrease,
It
required
in
5 ' '
reserves
in
eased,
disappearance o
surplus,... together
Treasury
with
evident commitment
to
maintain
cif ic
from
-ensue
market
tion
to
;
or
Reserve
borrowing
unless the
and
of
require
commercial
the
bonds
by Fed¬
will
Banks
from
banks
sale
other
of
savings
to
securities
investors
be
can
in¬
-
likely to
prove
market
—is
ti
con-
a
tioii «of
n u a
the
trend, tp-
wardi fewer
but
.larger
'farm
s
M
d
^
duction
marketable
of
this
figure.-
Detailed
361
debt
-Voluntary
may ,-«x*
,
'.
V
Analysis
Or edit
of Monetary!
jj
'..7,4;** i
'Developments in
First Quarter
principal sources and uses
Treasury cash funds during the
quarter
March
\
31,
<Dec.
1948)
31,. 1947 to
summarized
are
below:
/ '
>::7777
:■;?& v.77. Sources of Funds
'(in millions) -
\
*
<
.
George
expenditures
because
the!
Of
number ;
contribution
':1.~.
i
a
^
i
Wvl "
the
of
and
.x,
_
^
reliance
savings bonds__-
-
684
' 55
-
31
Total .I
...$6,953
r-";V
v
points
"Cf'
r
■
....
,
hoped-for
of
-
Gash redemption of marketable Government secur-
'
•.
more
purchases
of
able securities
that
field
Krieger;
trust and agency
counts
ac¬
284
___•
-
larger
small amount of pro¬
a
goods. and
' of
somewhat
a
evaluate.
1
MARCH
i't
'
■
■
supplies
'
'
*
1
-
Total
and
and
struc-t
relatively
r•
a
power
sharp impact
and
commercial
farm
^
ex¬
pany. are
in
study, to follow closely,
general
'
w
.
than
hav6
a
—...$6,953
Insure
a
economic
ever
stable
before,
farm
as
division
a
For
we
must
stable general
to
economy."
r.
v
- i>
31,
.
and tools
^
t
j
/
j
^
^
^
/
"• * i;
- -. *
^
■■■■■..•"
'*
- •>
-
u
...
*
*
the fiscal year ended Dec.
1947, the- company's consoli-
$40,862,690, ;and net income
.
was
$4,801,687. In addition to 1,312,000
stock, the
com¬
has outstanding $3,000,000 of
2%% serial notes,
;
due 1949-1953.
It is :expected that application
will, be
macte to
ccmmon
Stock
stock
list the company's
on
Excnange"."
the New York
,
.
•.
corrt-''
operates -ixi several
common
V1
pil.; f
conducted in "19, states
■
-
* j'*^'"
.
.
/;■'/
.
"
dated gross revenues amounted to
clue
economy
by, it
1
eign. countries.
to
health.
*
t'ce. United States ende foreign
shares of
also .something
-
industry.-.
pany
"It Js
. v
the A/;._
for
The field operations of "the
econ¬
for
woo
•, /1,, 'A*.*
i
.and gas
market, then, is not
something merely to
facilities
and equipment for sale tp the
the
on
well
The company also, owns
production of both the specialized
.
are
electrical
"and
manufacturing
-P .V: I '
More
.
5
omy.'"
2,256
.
si
,
well, cementing
gas
bailer
services.
equipment"),
curtailment of buying
Fund
balance
i"***
84
and
equipment used
see
smaller buyers ef consumer goods,
,
General
in Duncan, Oklaf-
loriginally -engaged in
'acidizing,'
dump
the
on
-that- they
Now
chemical,, petroleum
"The
oil
the
consumption
(machinery ■: and
1
-was
...
principal
retrievable cemeiater, oil well for-
amount
«
has
business. In addition,-it npw pffers
economy ;w^s ^ficUR,-to ,
to
in
Increase
it
"
r>i-i
whose
:,-*"Wben farmers rgwkre:
buyers of
duction
office is located
homay
..........
wrtinco
.
company
cluded.
*
.A
1
,
that it ha's
..
rn'mnanv
before
was
whom
history," continued Mr.
in
■
10
,
'
'
/seven
of
for .that matter, ever
the war, or,
before
it
than
each
the corqpany
pected profits," Mr. Krieger con¬
market¬
by Treas-
'■
1
^
■y{,yf
^
rvnrvr*
Present. izitehtion o'f 'dispbsing
Pf any oflhe Shares so owned,
vast-j
importance do any seller
industrial
,
.
-ury
}
,,
: J; r/'r-
i
the farm market becomes of
iy
net
in
HsQliburtons
beneficially
stockholders,
farm-caused depression,
a
must have
r
ities held by: : '
.1.
Federal Reserve Banks_$3,696
;
'Others l__:
.717
oecrease
b wn e d
profits * and
..v.,
o
fear of
any
(in millions)
'
.
-
After the stock
nwn
,
.....
'.t
•
Uses of'Funds
Net
i
advised
.1.
,
tural
6,183
at
company,
'employees,: the
farm /spend
on
large - buyers of heavy industrial
of
Miscellaneous
receipts
the
Share,
per
stock to
common
of
/
-wi\* eachRofin ino xxrill shares:an<l
-own ?4»9p0
A'tlanliC
j
of thd
because
economy
greater
goods, their total impact
-S
f
Net .sale 'of savings notes.
•cash
-
sale, including the shares ^offered
greater cash f
business
to
"$22.50
but
farmers;
'
employees
of
Net sale
\ treasury's
.50,000 shared of
pro¬
•
the > diminishing
a? net' ^otai overall
iT.
for
expendii
consumption f goods
of
-
™
and its principal;
company
Krieger
to
s-
,ij
by The Atlantic Refining
Mr. Halliburton is Chairman
of the
Net cash operating receipts_$6,183
8
Blyth &
^
goods;- smaller
for
b.
June 4-5,v but
j.&o
"turn-ins"
ceed
and
a
executive officer. In addition, Mr.
"greater .farm,#?,£•/.:<;. A 9.
capitalization; larger capital and and Mrs. Halliburton vara off erbig
in
382
Co,
r.
K. fie g e r
Brothers
80,000
units,''
...
i
a
.
,1 Net sales af savings bonds* may tur1
nish $500 million
depending on the sue
cess
of -the Security Loan "Drive
from
April
15
first
TEBRUARY
.
nation-wide group : /
that offered publicly May 12 680,■
000 shares of -common slock, $o
;
par value; of Halliburton -Gil Well
Cementing Co., at .$25 per share. 1
Of
the
680,000 shares
offered,'
fQO.000 are being sold by Mr; and
Mrs.
Erie ' P.
Halliburton
and r
long as the .yield Ing
"Clearly then, both from stand- rno
is pegged by the Reserve
as
:
v
JANUARY
agricultural
Unlike taxation the bor¬
Banks is. not
.curve
of
1
nation's [
on
Being Offered
Co., Inc. head
sub¬
urban
tures
The
1
777'-!
r'f''.*
Lehman
the
operating
periods of Treasury deficits, th^
The
ii
accounts
agency
curtailment .of
Slock
in
—•
contradistinc¬
'In
and
1
and
spe¬
farm
the.
long-term
rate,
greatly diminishes the power of
the authorities tp
control'credit,;
restrictive
factors
of
v.- >
of repeated War Loan calls, monej
market conditions during the next
treasury
support
"
4
trust
power.
'
rowing of funds from commercial
hanks for the purpose of retiring
securities held by the Federal Re¬
.•
/purchases
21
million.
'mounted to $284 million.
drastic repercussions
aga.nst
warns
which would
economy,
rural
Tota
second
particularly heavy in June.
creased.
I
r
J'
<
<
f. r. ano
.1.
$717
be mad 4
tions of debt
serve
i,;...
only
was
Market support purchases of
gov¬
ernment securities by the Treas¬
.
event,
oollars
m
mem¬
redemption
securities held by
current
any
EXCESS RESERVES OF MEMBER BANKS
7
was
force affect¬
being deposited
non-bank
•
Reserve
-
receipts
"The cash
marketable
others
increased proportion
an
'V^Vyvj■
CUMULATIVE CHANGES IN FACTORS AFFECTING
\
of
for
hole
to
part nf their required reserve;
advocated as being essen¬
as
is
because since
necessary
eral
of
compel banks
short-term government
securities
penditures.
/-•'/.V..;
recommendations
to
power
of
positions of
reserve
ber banks.
His
than passing interest.
Federal
use
chief restrictive
ing the
the Economic Report k
on
more
renewed
by the Reserve Banks. Thes<£
calls
approximately
'
the
the
-
This
War Loan accounts
regard-)
of the possible further retire*
lished
April 27, 1948, issued by the De¬
partment.
*
r
mittee
by
upon
redemption of securities
Highlights,"
-on
April 13. before -the Joint Com¬
of
principal
,
dicate that Treasury receipts may
"Financial
held
Banks.
testimony-
The
the redemption
of
maturing
million
Banks, gold imports, ^etci
cial and Business Research of the
Chase National Bank and pub¬
in
the
the extent to which reserves
be increased by such factors
upon
months would
The Treasury will probably not
In addition,, a'
experience a cash operating surr
Treasury receipts plus in the second quarter.** Rough
review
use
redemptions will depend
few
on
estimates which take into account
*A
such
as
excess
deposit in
on
re-
pressure
market.
smaller part of
already
War Loan accounts.1
of
in
Eccles'
$3,696
—
was
marketable government securities
to shorter-term se¬
In view of this dilemma
Governor
of funds
of
longer-term
curities.'
:
.
from the
rise
the authorities must
reserves,
funds
undue
en
use
•■
Banks and thereby
withdrew the funds
Reserve
prevent
Uses of Funds
the
important
deliberately
applied the major Banks,
But
in .that event
portion of receipts ($3,696 mil¬ Treasury's
surplus - would
lion) to the payment of govern¬ have exercised the desired
ment securities held
are
otherwise
as
yield curve may Jhe unsettled by
the .switching -of investors from
Treasury receipts is
A sharp warning against
curtailing farmers' buying power be¬
initially in War cause of the
unprecedented importance of today's farm market, was
offset tp Loan accounts instead of with the sounded
by George Krieger, agricultural engineer o£ Ethyl Corpora¬
the .tax drain was the "aggressive" Federal Reserve Banks.In the
tion, speaking before the American Marketing Association in New
market purchases of government second quarter about $2,000 mil-York City on
securities b,y the Reserve System lion of withheld taxes will be so
May.. 7,-1948.
and
by the Treasury trust and diverted.
Consequently, Targe
"The future
agency accounts. These purchases, amounts must be called from Waf
of- the
;The
totaling $2,308 million,, supported
System support purchases). Thus the yield curve as revised on Dec.
less than 20% of net Treasury
24, 1947.Purchases would prob¬
receipts
were
restored
to
the
ably have been less than they
money market. •
•
were
if relatively more of the
In order to prevent Treasury Treasury's surplus had been used
to redeem government securities
receipts from being returned to
the money market the authorities
Banks
$1,083
contributed
currency
million.
tion in deposit
bank required
i
to be made in order td
—
—
posit
of the
member banks fell by 899 million
dollars. Weekly variations in the
Contracted. Excess
*-*-»
necessity be of mod¬
proportions
est
of 1948 furnished an impressive demonstration of the restrictive in-)
fluence of applying surplus receipts of the Treasury to the redemption of government
obligations held by the Federal Reserve Banks. In response to fairly continuous pres^
short'-terrr.
in
Increases
-
addition
savings bonds and notes. The lat¬
ter figure was about $211 million
less than in the first three months
of 1947.
their relative attractiveness to in¬
rates will of
In
million, the
Treasury
obtained
$739 million from the net sale of
lowed to rise in order to enhance
j
—
to net operating receipts of $6,183
government
on
commer¬
^
Sources of Funds
will" probably be al¬
.
*
The first quarter
sure
rates
borrowing from the
ury
cial banks.
are
;/.«
Dr. Willis reviews effect
Thursday, May 13, 1948
/
'
•
V
.
^
»•»
It mi
.
*
>.#wwir\wv.*w% i
"MJMWffPhMfiLttW WW,^-M
r *
Volume
THE
Number 4698
167
23 ;i:
(2103)
FINANCIAL CHRONICLE
&
COMMERCIAL
Controlling interest in the First
Rational Bank of Hopkins, Minn,
.
purchased by the First
has. been
Bank Stock
"Star"
CONSOLIDATIONS
AND
ETC.
REVISED
Banking Department of approval
April 30 of a certificate of in¬
crease of capital stock of the Bank
on
$6,000,000,
con¬
New
York
Fifth
and
Avenue
Bank., The most recent item in
these columns relative to the mer¬
appeared in our issue of May
ger
6, page 2000.
/. \*
;
;
•//>
?f
G.
has been elected President
of the Savannah Bank & Trust
Company of Savannah, Ga., it was
advices also said:
press
As¬
Clark
"Mr.
elected an
Company of New York
? •', v x'"'>
►•
of
ber
ciates,
was
Morris
of the corporate
staff
and
Asso¬
organization.
credit
bank
Mr. Hendrick has been
a
member
trust department
19 years.
Trust Company for
'•/'
&
He
Co.
lived in Savannah."
m
President
New
1.
W.
and
Britain
New
Macomber, ViceTreasurer
Trust
of
on
of
May
The Hartford "Courant" reports
that he had been associated with
the
trust
for
company
k *■;/;;*
about
/
'
:/ '
40
;
/v
'
T
_
*
•
'
#
,
election
The
the
Richard, now
time Harold
director of Manufacturers Trust
S.
Guernsey
*/// *
V'.v'k',
*
/»
*
*
-
*
«
E. Chester Gersten,
The election of Gary. M. Underlilj as Executive Vice-President
with its predeces¬
Charter Bank,
President of
Trust
announced
The Public National Bank &
The
sor
Morris
has
York
of New
r
the following
•
,»-'-iVii'*.*;4l
■.„
// •••; 'r't.S\
'kik^ki
the first musical
extravaganza in
the
called "Bank
More than 350
history
bank's
Notes
of
trustees,
1948."
officers,
friends of. the
the cast were 17 of
,".
,
:V '■'•i-:'r>
and
employees
bank attended.
the bank's
In
em¬
ployees, who wrote the show and
built the scenery. The production
Prior
the
in
He
to
the
war,
Mr.
Underhill
of
Assistant s Vice-President
.was
state-wide Bank of Virginia,:
the main office at Richmond.
served
as
~
director
Commerce,
ginia
President- of
' Junior
Richmond
State
the
Los
Chamber
of;
the
the
-
of
2.0%,
directed
by
a 5
professional
Vir¬
Junior- Chamber, of
Port
dotte,
at
r
Wyandotte,
was
charges
:kkk*;)
off
:
-j,
■
$39.0
.pi.
amortization, etc.—-
Lower
inflation stocks, but the' 1
growth
by
Of Phila. Elects
1.7
-
1.1
PHILADELPHIA,
to
gains
PA.—At the
Meet¬
Seventh Annual Luncheon
of the Municipal Bond
ing
Total
Club
$41.$
— -~
k) Losses—
re¬
Fuel
_rJ_———
Wages—.
$18.3
8.1
—.
8.6
Miscel. expenses
Mr.
2.1
Depreciation
-
'Taxes
Interest
...-C___;v
3.3
0.8
$41.2
Total losses
a
off
was
was
Miscellaneous income-^-v-ii
series .of changes on April
by/ directors
the Seattleof Seattle,
Wash./" Charles D,; Saunders was
Gain in net income_/__ 1._$
elected Vice-President of the bank
spite a decline in residential rates,
partially offset by higher indus¬
trial rates as the result of fuel
27
and
five
of
.
These results were obtained de¬
memjbejrs of the bank's
received
promotions.' As to
changes, the Seattle "Times"
April 28 stated:"k ,.:/ ;
staff
these
of
"Lawrence M. Arnold and
F. Gleed,
Thos.
Chairman and President,
respectively,
ad¬
the
announced
Richard C. MacDonald and Joseph E. Muckley
from Assistant Vice-Presidents to
vancement
of
Vice-Presidents;, y/. Gleen Jack¬
Manager ; of
the ; Dayton
branch, ..to Assistant Vice-Presi¬
dent; Gus Asplund, Jr., to Assist¬
ant Cashier, and Harrison .C. Ellsbury, from the main-office credit
department tp Assistant Manager
of the Georgetown branch in Seat¬
son,
tle."
„
..
.
-
adjustment clauses. On an over¬ / Freeman G. Grant
basis, average revenues per
of Philadelphia, the following
kwh.' were slightly higher in Feb¬
Mich.,
As
Chairman
of
the
:
;>
all
ruary
year
this year compared with a
ago.////.*;/ /r':-t:• kj;f:kf%kkk
regards fuel costs, drought
have ; now
eased; in
California, and to some extent
elsewhere. Fuel consumption for
all electric utilities in March ws*
&s
conditions
11% under that of January,
Pro¬
duction of power by hydro gen¬
erators increased about.2%%. over
year/ whereas the increase
was negligible, and
in January there was a substan¬
tial decrease.
' //' / "
•' i
last
in
•
Omaha.'
.6
Bank
National
approved by the New 2J., from $200,000 to $260,000 by Omaha Power District's finance
York State Banking Department the sale of new stock, it was an¬
committee, be arranged that dis¬
on April 30.
At the same time the nounced by the Office of. tjhe
trict's $42,000,009 financing proDepartment made knoym the fil¬ Comptroller of the Currency op
ing of an agreement of merger of April26.;;
$500,000
after
Revenues
Commerce,
creased its capital, effective April
February
as
suffer
Municipal Bond Club
.
at
and
compared with 1947. N.ej
Gains—
Beasley's son; Robert S. Beasley,
who had been Vice-President, has
succeeded him in the Presidency.
In
,
of business limited only
available capacity,- and with*
fixeql charges showing little in¬
crease/ investors may again be
tempted to purchase electric util¬
ity equfti.es fqr their generous
yields, which currently average
around 6.7% and range as high as
crease of 43.6% in fuel costs (now
almost equal to tRe amount of 8-9% for many stocks.
net
income
itself).
Gains and
losses (in millions) were as fol¬
lows:
/■'" ''
.
Jefferson,
1948, however, the
utilitycompanies have
10.?% in January but gained .9%
in February. It may be of interest
tqTtake a look at the February
figures and see how the compa¬
nies were abfe to balance their
income
account ' despite an
in¬
ing the employees in demonstrat¬ American Institute - of Banking expected tb assume his new post
ing their resourcefulness in pro¬ and the Committee on Banking here about June 1. He was Presi¬
ducing the show which he de¬ Education and Public Relations dent of the Omaha Chamber of
scribed as equalfng those of pro¬ for the Virginia Bankers Associa¬ Commerce in 1945; formerly was
fessionals.
: /':• ■>;
tion. y;k:k..:
..
Ih- ....
prominent in banking in Iowa,
V
///'.f
* r; S»
* /, 1 ■ ■;/. ' ■ /..
and later was Treasurer of the
The National Bank of Wyan¬
"An increase in the capital of the
Bankers Bond
& Share Co.. of
Bank of Port
in¬
Jefferson, N.' Y., from $100,000 to
as
income
and has been identi¬ / From the same paper we also
.
^
coach, who provided the orchestra fied with various other civic com¬ quote: .K;
for dancing after the performance
("Mr. Saunders, who has been a
mittees.
Mr. Underhill has also
Adam Schneider, Jr., President of been a member of the National Vice-President and director of the
the bank, spoke briefly commend¬ Public Relations Committee of the First National Bank of Omaha, is
was
-
is showing steady though
spectacular improvement in
earnings.
r
" '•*
Electric
utilities can
not
be
not
down 4.6%
ception in his honor was tendered
Mr. Beasley on the occasion by
!
-
from
inflationary
price
trends have now been somewhat :
dissipated.
WithJ the
present !
board of the in¬
directors.8
11
stocks have con¬
tinued to reflect the special inter-,
classed
stitution, celebrated on May 5 the
60th anniversary of his entry into
field, according
Angeles "Times."; A
securities.
Natural' gas
fears, that they must necessarily
of
banking
.v-
-
a* fairly good showing. Jan¬
net from operations for all
class A and B electric utilities was
j Oscaf N. Beasley, wRo recently
the
company
uary
relinquished his duties as Presi¬
dent of the Beverley Hills (Cal.)
Rational ' Bank & Trust Co., to
continue
in "active "service
as
Chairman bf .the
Corp., in general the recent tempo
has been slow, and there have
been few special moves in holding
made
i
-
c
.
1 Thus far in
First
capital
a
v
electric
3.
City wus $1,000,0.00. - The consol¬
idation, was made effective as of
the close ,o£ business April 30;*
vf/
Flan Company, First
35th anniver¬
the
celebrate
will
sary of its founding on June 9.
President Pitman is' well knOwri
appointments at the
both as a banker and as Treas¬
main office:
Joseph M. Barnes,
Assistant Cashier, was appointed urer of the City of Philadelphia.
C Mr. Underbill has been execu¬
an
Assistant Vice-President; Ed¬
tive: director
of the - Consumer
ward D. Tisch, was appointed an
Bankers Association, with national
Assistant Cashier
.
-v
headquarters in Washington, D. C.
*
*
»
for the past three years.
During
Friday evening May 7, at the the war, he was a Lieutenant in
Arion Club in Brooklyn, the em¬ the Naval Reserve, assigned to the
ployees of the Roosevelt Savin?" Executive Offices of the Secretary,
Bank of Brooklyn, N. Y„ produced Navy : Department,
Washington.
Co.
;/"5.
had
Bank
in
field.
pany
est in this branch of the industry,
$1,200,000, while the capital of the
First National Bank of Salt Lake
///•/;//'*/;•// the officers ; and
Presi¬
dent.
Upon his retirement Mr. of The Charter Bank of Philadel¬
Smith was Vice-President at the phia was announced on May 10 by
bank's head office.
President Ralph W. Pitman. The
Company, was promoted to
v^>
Security
the holding com- ;
While some progress !
has
been
made,
notably
with
Electric Power & Light, Public Service of New Jersey, and United >
velopments
which
hydro conditions in
sections, plus heavy opera¬
tions..
effected
The
$3,000,000.
traceable to lack of important de¬
many
000, divided into 120,000 shares of
the par value of $25 each, and a
of
through v
unfavorable
Security Bank of Utah, N. A., with
common capital
stock of $3,000,-
surplus
of
of inefficient steam plants due tc
*
of
tional Newark & Essex Banking
-Harvey D. Gibspji, President of
Co.. of Newark, N.
a director
Manufacturers Trust Company of
of Dime Savings Institution was
New York, announced the retire¬
announced on May 7 by Alvah S.
ment of Charles A. Smith, Vi.c.eAmerman, President of Dime Sav
Presidept, at an officers' dinner at
Institution of Newark, . ac¬
the Hotel New Yorker on May 5. ipgs
cording to the Newark "Evening
Mr. Smith started with the bank
News," which
states
that
Mr
on
May 1, 1899, then known as
Jones is Vice-President' of New
The State Bank, when he was em¬
Jersey Association of Credit Exec¬
ployed as a messenger. Advancing
utives and-Chairman of the For¬
through the bank's many depart¬
eign Trade Council of the Newark
ments, he was promoted to Exec¬
Chamber of Commerce.
r
utive Vice-President and director
a
'
was-)
rate
upward, due to (1) higher pricer
for coal and oil;
(2) ' increased
rail rates; and (3) continued use
Under the charter and title of First
the
Company
Britain, Conn., died
years.
consolidation
The
'-if
Frederick
weeks the
fuel costs have continued to rocket
the
by
May
on
rising
absorb
comes
Some of the
apathy toward the
utility stocks may also have been
gain for kwh. output has receded
slightly to around 8-9%, while
of Salt Lake City,
known
irregular earnings
the first quarter,
to
equipment
promptly.
through larger gross reven¬
In recent
ues.
Approval by the Comptroller of
the Currency of the consolidation
made
utility stocks may be
for
unable
be
costs
.
at
-
last
■
was
ac¬
and fears that the utilities will at
1
r(,
1
in part to
statements
k't kky.kky
/'• Comptroller's office,
disappointing
slightly
of the
new
'
•
The
tion
.
Jpnes, the Vice-President of Na¬
.
'
: • >
Utah
:
,
M#:
■Jm.k
.
Albany
native of Rome, Ga., apd for
a
with Bankers
has been
•//''/•
'
to
came
has
Jones utility average
Dow
rails
ing.
V,
;
The
(the year's low) to 34.55 (May 7 close),
only from 31.65
due
•'' '•
;
National Bank
/-r/rtA-fe
an
Robert
the
First
tal structure totaling $214,476 and
iers."
market."
have
jumped from<§>
—
—
•
nearly 59, and industrials to a third round of wage increases.
from 165 to 182.
Of course the Even if prices advance, the utili¬
rise in the industrial group has ties may be able to absorb this
been
highly selective, with oils punishment if they are favored
with
good
rainfall
and
their
probably making the best show¬
them First
among
"bull
48.13 to
Minneapolis.
is
officer in the
banking department. He is a mem¬
and
years
other
almost
participated only modestly*
growth prospects they have
recent
while
"The Hopkins bank has a capi¬
years ago as a represen¬
many years
with The Continental Bank for 17
v:^1
Montana,
elected Vice-President in 1936. He
and Martin N. Hendrick has been
-kkkik
74
the
advanced
oined the State bank in 1929. Aft¬ of the First Security Bank of Utah,
er
serving as Cashier, he was National Association, and the First
Assistant Vice-President at Bank¬
promoted to the position of Assist¬
ant Secretary, it was announced
oh May 8 by S. Sloan Colt, Presi¬
dent. Mr. Babcock was associated
in
deposits of $3,874,090. In addition
to Messrs. Kriz and Zastrow, other
officers are O. G. Cermark, Vicestated
in
the
Albany
"TimesUnion" of May 5, which reports President;.S. H. Severson, Cashier,
that he will take over his new and Mrs. D. M. Bergmann and
William L. Moran, Assistant Cash¬
duties about June 1. The Albany
tative of Dillon Reed
■0S$
unlimited
A.
group banks operating 79 banking
offices in Minnesota, the Dakotas
N. Y.,
tinental Bank and Trust Company
Trust
with*
affiliated
VicerPresi-
Clark,
W.
Stock, the Hopkins bank becomes
dent of the State Bank of Albany,
nearly 20
ers
joint state¬
and
Market
Despite the fact that the utilities enjoy continued and
Kennedy, President of
National of
Reuben
sale
4he corporation. Through purcnase
of -this
interest
by First Bank
and
sistant Vice-President of The Con¬
of New York, has been
H.
and A.
*
%
the
Zastrow, Chairman and President,
respectively, of the Hopkins bank,
that title.
under
*
r-
formerly
Talbot- Babcock,
Port
the
effected
incident to the mer¬
York, under the title of the Bank
of
of
Bank
Banking Department on
April 30, and the*merger is to be
into the Bank of New
York
National
Brookbaven was also approved
3rn
by
of the Fifth Avenue Bank of
New
First
Jefferson into the Bank of Port
Jefferson. The change of the nam*
of the latter to the Bank of North--
sisting of 60,000 shares (par $100
each), to $8,000,000, consisting of
80,000 shares, par $100. The in¬
ger
of
made today in a
ment by F. H. Kriz
//Announcement was made on
May 7 by the New York State
of New York from
Utilities Lag in Bull
"Announcement
the
Utility Securities
29, which in part
was
CAPITALIZATIONS
crease occurs
of April
Minneapolis
said:
NEW BRANCHES
•
NEW OFFICERS,
Public
Corp. of Minneapolis,
it is learned from the
February
"New
now
generating; stations
are
beginning to replace obsolete
ficers and governors were
President,
Dqlphin
&
William
Freeman
F.
Co.;
G.
of-j
elected^
Grant,
Vice-President,;
Mills,
Philadelphia)
National Bank; Secretary/George >
Hanley, Walter Stokes &
Treasurer, Willimn Battin,
J.
nail & Co.,
Governors:
Co.;'
Yar-j
.
Robert
V.
Wehr-
heim, Philadelphia National Hank;!
Fussell M/Ergopd, Jr., Stroud &
Co.; John H.
Derickson, Jr., E. H. ¬
Rollins & Sons, Inc.
E. E. Parsons, Jr.,
E.
E.
Parsons,
Dir.
of Wm. J.I
Cleveland, and
Jr.,
equipment, the net -gain in ca? Mericka & Co.,
pacity in March being 293,000 Robert W. Kerr have been elected:
kw.; in February, 465,000 kw., and Directors of Billings & Spencer
in January, 108,000 kw., making Co., Hartford, Conn., manufactur¬
the amount for the quarter 866,- ers of forged hand tools.
:
v;
000 kw. and bringing the total up
Mr. Parsons is a. Director of the
53,077,000. If this rate of growth Bingham-Herbrand Corporation.; „
1948 gain would be
Mr. Kerr is a
Vice-PresidentT
million kw., or about
and Director of the Bingham-Her¬
a -3.6% increase.
With further im¬
brand Corporation and formerly
provement in the hydro-electric
Executive
Vice-President
and
situation
this
should
relieve
Sales Manager of the Plomb Tool
mounting fuel costs.
Of course,
Co.
He is a member of the ExMr. Lewis will doubtless seek an¬
ecutive Committee of the Ameri-.
other wage hike in June, result¬
can Hardware Manufacturers As¬
ing in another increase in coal
sociation and a Director of the Na¬
prices, but the present industrial
to
continues the
nearly 3J/2
•
trend indicates
general- opposition
tional Standard Parts
Association.
n
THE
(2104)
COMMERCIAL
FINANCIAL CHRONICLE
&
Thursday, May 13, 1948
less
The Revised
with
ance
from compli¬
regulation on the
the
ested
rate.
intermediary,
fair
only
where
than
one
solicitation
being made with respect to the
same meeting
or subject matter
should
forward
the
to
that
Commission's experience has
been
privilege accorded by the
that the
by stockholders rule has not been abused to any
of corporate affairs.
That phe¬ great extent. Accordingly, most of
nomenon
is merely
one
conse¬ the
suggestions
were
rejected
quence of the historical develop¬ However,
certain changes were
ment of corporations.
What the made in the rule which we believe
Commission is attempting to do are likely to make it operate more
is
he
fact
to limit discussion
it
seemed
appropriate that
and
more
the
overlooks
It
the Commission has done nothing
disinter¬
a
varied suggestions were made for
changing this rule. Most of the
through discussion but by ab¬ suggestions would have resulted
sentee ballot. It seems to me that in severely limiting or restricting
that analysis is not wholly accu¬ the usefulness of the rule.
The
broker is exempted
assumption that he is
Proxy Rules
which the stockholders participate
in the corporation's affairs, not
(Continued from page 19)
who
might
be
soliciting
proxies for the same meeting or
subject matter. As the banker or
elfce
person
solicited copies of all material fur¬
nished to him by either the man¬
and facilitate stockholder
agement or the opposition. How¬
ever,
the
revision
entitles
the
face
banker
have evolved in corporate affairs.
curred in
Under the present
holder's
broker
or
to
efficiently.
preserve
partici¬
pation in corporate affairs in the
reimburse¬
to
is
this rule
through
ment for his reasonable expenses.
circumstances
the
of
revision
In the first place the
makes
management
that
bursement
it
clear
that
is entitled
for
any
the
reim¬
to
in¬
expenses
complying with
a stock¬
information
conditions it is
Although he is expected to act impossible for any considerable
only
as
an
intermediary
for portion of a large corporation's
others, the exemption permits him whole body of stockholders to
to give the person solicited ap¬ journey to its principal offices and
propriate instructions as to the participate in stockholders' meet¬
execution and forwarding of the ings. The proxy rules attempt to
prt>X.y or to request instructions provide
a
workable
substitute,
from the person solicited as to the whereby the stockholder is given
manner in which the proxy should
full information as to the proposed
be executed.
agenda in the proxy statement and
Hie
previous
rules
required m the proxy form is given an op¬
than an annual report should be portunity to express his wishes as
sent to security holders prior to nearly as practicable in the same
any
solicitation
involving
the manner as he would express them
election of directors.
That pro¬ by voting In person at the meet¬
required to mail material to bene-
vision
ficial
operated
sending
of
require
to
annual
the
ing.
where
only
were to be
one
report
directors
two
or
j
elected to fill unusual
In order to avoid this,
revised rules require an an¬
»■j,"
,
Your
society
also
that
the
comments
auditors
be
vacancies.
manner as
the
treated
selection
in
the
of
same
or
the election of directors
officers; that is, that stockhold¬
imal report to be sent to security ers be
permitted to vote for, but
holders only in connection with not
against, particular auditors.
annual
meetings at which di¬ While it may be true that a large
rectors are to be elected.4
number of widely scattered stock¬
The old rules also required the holders can not select
auditors,
annual report to be sent to the they can register their disapproval
Commission at the time it was of a selection tentatively made by
Sent to security holders.
Under the management. Because of the
the revised rules, where the an¬ important position which auditors
nual report goes out to security occupy, it seemed to the Commis¬
holders in advance of filing the sion important not only that they
preliminary proxy material with should be approved by a majority
the Commission the report need of the stockholders but also that
not be forwarded to the Commis¬
sion
until
the
rules require that the
whether proposed by
the management or by
security
holders.6 That requirement is not
upon
intehded to prevent the manage¬
ment from identifying its
propo¬
sals as such, but is intended to
prohibit any presentation which
Will
de-emphasize or obscure in
the
proxy
form proposals put
forward by security holders. The
statement
is
the
proper
forum for argumentation and
per¬
suasion
and
the
proxy
form
should
not
The
pose.
be
used
for
inclusion
this pur¬
the form
in
of proxy of recommendations
Other devices designed to
or
empha¬
sise the management's
proposals
at the expense of those
put for¬
ward by security holders is like
electioneering
the
at
polls
and
ahbhld be avoided.
the-old
rules
provide
holder shall
and
the
the
revised
security
afforded
an
op¬
portunity in the proxy form to
approve or disapprove each mat¬
ter %r group of related matters to
be
beted
pursuant
upon
follow-up solicit¬
ing material was not required to
to
proky, other than elections
out the Commission
having
discretion
bankers, brokers
Commission.
ficial
owners.
a new
provision that in lieu of furnishing
a
stockholder
the
information
of
cost
mailing his soliciting
material, or of mailing the ma¬
terial for him, the management
supply the stockholder with
reasonably current list of secur¬
may
a
security
the
holder
choice, but the
a
indicate
of
the
the
proxy
to the manner in which
Uhlft&rked proxies will be voted
comments
of
your
Society
oh Ifiis particular rule stated that
the Commission is
apparently at
ting to change the basic con
"
corporate
law
to
one
in
frfcule
X-14A-3
5Rule
X-14A-3
(c).
(a).
rule
however,
is
en¬
requiring the manage¬
a security holder's
in
and
its
to
own
proxy
include also
ma¬
extending
and
or
also
on
the proposed
were
there
the
for
of
scope
from
limiting it
stockholders.
that
the
by
proxies.8
structions
it
comment
the
revised
regulation
ues
in
the
management
mail
effect
the
rule
of
an
interest
that
for
him.16
unduly,
X-14A-6
(b).
9
X-14A-6
<d).
Rule
10 Rule
X-14A-7.
amend¬
al¬
what experience.
Required in Proxy
Statement
I will not
all
to* stockholders
the ;one-hundred
word
made
in
Schedule
14A,
specifies the information
required to be included in the
were
which
statement,
proxy
suggestedthat
was
the
proposal might
a
not
a
certain
percentage of
if the security holder did
or
own
' certain- minimum
a
that
it
has
provided
a
contin¬
stockholders and has tended to in¬
the
crease
requiring
responsiveness of
agements to
stockholders
to
the
as
wishes
a
man¬
of
whole.
the
but
Our
will
this
the
schedule
the requirements
plicit
less
and
administrative
only
more
was
more
to
ex¬
dependent upon
interpretation. To
this end certain items have been
broken up into several items in
order
to
deal
adequately
more
with specific situations.
In
certain
curity
states
holders
follow
dissenting
se¬
required
to
are
specified statutory pro¬
order to perfect their
right of appraisal. In order that
security holders may be advised
a
in
cedure
to
such
procedure the revised
schedule calls for
the
procedure
where
is
one
lowed.12
description of
a
in
those
cases
required to be fol¬
^^5;;
Schedule 14A, prior to the revi¬
sion, called for information as to
remuneration
only; where
the
election of directors was a matter
to bb acted upon at the
meeting.
The
rules
new
call
for
in¬
such
formation also where a remuner¬
ation or pension plan in which
directors or officers will partici¬
pate is to be acted upon or where
the stockholders are to be asked
to
authorize options for directors
officers.14 The Commission felt
or
already receiving before
the granting of addi¬
was
upon
tional benefits.
v
••
,•
OV:®-
-
Remuneration
The
question
of the extent to
which the individual remuneration
of directors, officers and nominees
should
been
be
rules
disclosed
difficult
a
have
has
proved
always
The
one.
proxy
exception.
no
preliminary draft which
out
for
individual
tion
as
for
remuneration
or
of
nominee for elec¬
director
a
was
called
comment
who
received
than $20,000 a year and each
the five highest-paid officers
more
of
receiving
As
more
than that amount.
was
tially
increased,
number
of
the
j
it
After
suggestions
mission
called
cut-off
that
it
made,
the
for
be
the
that
should
would
reduce
re¬
be
considering all of
concluded
000
the
that
whose
or
officers
r
Com¬
the
remain
$20,but
appropriate
number
of
security
fact
(Vr
,
11 Rule
v
'
■
X-14A-7
"U;irfi0wl2 Rule X-14A-8:
'to
pVA'iUi
:
(c)#f
i
TUJ-JlTii:.
My'-
J Oil (
;
/
k
to
as
matters
the
submission
under the catch¬
item
to
calling
the
mitted, the
it
to
the
of
the
information
of
the
matter
as
sub¬
for submitting
security holders
reasons
vote
a
and
for
nature
of
effect
rules
of
such
submis¬
preliminary draft
circulated
was
for
criticized
was
on
the
are
not interested in the informa¬
ground
tion. It
that
stockholders
also said that the item
was
would
discourage the practice of
submitting such matters to stock¬
matter
as being of sufficient im¬
portance to submit it to security
holders
to
whose individual remuneration is
from
the
five
their
well defined
it
the
(7.
be
that these
conveyed
to
security holders. Furthermore,
since the management must fore¬
see
the possibility of a negative
vote in such cases, it would seem
reasonable
to
suppose
that the
action to be taken by the
manage¬
ment in the event of such a vote
must have been considered in ad¬
Where security holders are
being asked to vote upon a matter
vance.
which is
normally within the dis¬
cretion
of
the
management,
only fair to inform them
seems
to the consequence of their
one
way
the
or
other
it
as
voting
the
on
question.
Several
ule
of the
14A,
with
items of Sched¬
those
as
dealing
authorization
of securities
ance
and
such
the
or
issu¬
or
with mergers
consolidations, call for infor¬
mation
the
to
as
for the
reasons
proposed action, the general effect
thereof upon the rights of existing
security
holders,
and
the
vote
needed for approval. It frequently
happens that the statement of a
proposal, especially one dealing
with a change in the issuer's capi¬
tal structure
or organization, does
sufficiently inform the se¬
curity holder as to the real nature
and effect
been
of the
proposal. It has
experience that these
become fully apparent only when
our
there is
disclosure of the under¬
a
lying reasons for the proposed ac¬
tion together with a statement as
the
to
in
manner
holders
will
be
which
security
affected
by
it.
While certain persons commenting
on
these requirements felt that
they
somewhat
indefinite,
they are fairly well
by most persons and
were
believe
we
understood
that
the
cient
information
importance
is
to
of
suffi¬
warrant
the
necessity of interpretation in ap¬
propriate cases.'
v;
;
;
.
The argument that the vote re¬
quired
with
to
respect
action should not be
cause
is
it
not
proposed
required be¬
always easily
as¬
certained, is not persuasive. The
holders
security
are
entitled
know whether the action
asked
to
vote
percentage. In most
formation
can
be
they
to
are
requires
upon
simple majority vote
comparative
it
that
ease
is
or
cases
a
higher
a
the in¬
furnished
with
and to the
difficult
highestit
should
who
are
be
obtained
to
ex¬
obtain,
by
those
in the best position to do
2.
14 Item
that
fairly
for doing so
proper
should
so.
13Item
approval
reasons
seemed
reasons
tent
required
for
the management must have
officers
paid officers.15 The remuneration
in
are
not
Publicity of Official's
paid officers to the three highest-
;
which
all item in the previous rules. The
revised rules contain a separate
and
been.. abused;
and
matters
by statute, charter,
by-laws, or other controlling in¬
struments, to be so submitted. It
has been our practice to
require
mission felt, however, that where
the
management - regarded
the
make
of
records show that the rule has not
ma¬
required
the management's intention in the
case of a negative vote. The Com¬
of
muneration
in
approval
not
revision
reduced.
convenient medium
for
holders and that the item goes too
far in asking for a statement of
few
a
amount of securities. We feel that
salutary effect
increasing frequency,
submitted to their security holders
im¬
mention
the rule has had
a
managements
years
have, with
portant changes. The general pur¬
pose sought to be achieved in the
gested
that
no
individual
re¬
muneration be called for, or that
the $20,000 cut-off be substan¬
it
its management.16
or
recent
comment, this item
attempt to touch upon
of substance which
changes
proposals
of
of
r'".,
can
appropriate
on
In
sion.^ When the
holders have resorted to it much
8 Rule
.
Commission
the
adopt
Information
sent
through which
a
stockholder may place worth¬
while proposals before his fellow
Numerous
should
to be used to harass issuers
ments based
a
the issuer
information
Of course,
rule
year
have
of such
expected, quite a variety
of comments and suggestions were
made in regard to this require¬
ment. For example,* it was sug¬
votes
review,
stockholder's soliciting
a
future "the
a
received
It
the rule at this
upon
other than directors,
employees or nominees,
more
than $20,000
is not required unless they
material relationship with
persons,
who
of
placing
receive
solicit¬
issuer
the
to
issuers.
unnecessary.
the
ways
The
also
be limited or
that the proposal need not be in¬
cluded if it had already failed to
matters to be acted upon.
The
in
related
of
be repeated should
new
merits
was
come
was
effect
upon
if
directly
affairs
that
limitations
extension
during the period it has been in
or
felt
time
It
required to be filed
are
also
one
However, such in¬
only where they discuss
or
in
business
eaeh director
number of times
to personal
use
the
the
and
the
solicitors for their
ing
questions not
of
way
category
general
require the advance f filing
Commission of: written
with
meetings
cussion of economic and political
holders by the management should
be enlarged to include matters of
V:
the
requested
would tend
forum for the endless dis¬
a
which must be submitted to stock¬
follow-up
material
fairly promptly.
reasons
into
this
another. For example,
suggested
will be "cleared"
similar;,
the
to convert stockholders'
suggestions
suggested that managements
should be required to give 60 to 90
days' notice of intention to solicit
proxies and to invite proposals
sent
Proxy Solicitations
that
extension of the rule
Com¬
voting
hand
.
felt
The
of
officers,
in
ment
it.12
period and it is expected that in
For
material.
proxy
mission
statements
security holders were entitled to
know what rewards the manage¬
limit in support of such proposals
should be increased. On the other
cases
their
word
that in all of these situations the
a
statement
was
security holders.8 Provision is
for shortening the
two-day
most
one-hundred
one-
word
way
(b).
(b).
may-:
them.11
to
made
terial
6 Rule X-14A-4
7Rule X-14A-4
provision,
rule
(exclusive
of
Saturdays,
Sundays or holidays) prior to the
to
material
tirely optional with the issuer.
for
require that fol¬
is
his
In the comments
Accordingly,
material
transmit
revision
days
such
to
as
in¬
cluded stockholder's proposals and
as
The revised rules contain
have
tends to oppose
low-up material must
be
filed
with the Commission at least two
when
or
other persons as will enable them
to supply copies to all such bene¬
an op¬
statement at the insistence
the revised rules
1
those
form
must
b&ri& fide intention
of
through bank¬
other persons, it
rules
proxy
by the
security holder in support of the
proposal if the management in¬
which had been deleted from the
the
in
prb&y
Hie
solicit
owners
hands of such
hundred
portunity to review the material
and point out its inaccurate or
misleading
character.
Further¬
more, a number of cases occurred
in which follow-up material was
used to convey to security holders
false
or
misleading
statements
proxy
of the
the
copies of the stockholder's solicit¬
ing material are placed in the
terial
quently happened that inaccurate
misleading follow-up material
was sent to security holders with¬
instructions furnished
as
The
if
ers, brokers or
shall also see to it that sufficient
proposal
and
reasonable
holder
beneficial
was
of securities.
owners
rules
provide that
management
intends
to
the
filed concurrently with such
transmission. As a result it fre¬
rules
where
management
ment to include
be
The revised rules permit the
holder of the proxy to exercise
dbfes not indicate
the
regulation also con¬
tinues without substantial change
being sent to security hold¬
although it was required to
ers,
to of¬
fice.
cases
which
der
un¬
The revised
be filed with the Commission be¬
fore
date
that
be
the circumstances
to
as
This
i
Up until the latest revision of
form shall identify clearly
and impartially each matter or
group of related matters to be
proxy
clear
the
the
proposed revision expressed a lin¬
gering fear of liability for mailing
libelous material. As a practicable
matter this has not proved to be
a substantial problem.
•'■r1
The
previous rules were not
ity holders in order that he
the proxy rules,
proxy
acted
with
should be given an
opportunity to register their dis¬
proxy
Clarification of Agenda
new
connection
approval.
perliminary
material is filed.5
The
stockholders
in
incurred
mailing of such material. Certain
persons,
of which your Society
was
one, in
commenting on the
new
in its
urged
with
preparatory to the mailing of so¬
liciting material and for expenses
,
Selection of Auditors
in
connection with special meetings
an
for
request
frequently than it was origi¬
nally expected they would. Dur¬
ing the past five years less than
2% of the companies complying
16 Item
7
17 Item
19.
(f).
AVrf .Vlmt*
n
Volume
THE
Number 4698
167
COMMERCIAL
&
FINANCIAL
*:'■
(Continued from page 18)
on
repatriating American
dollars
as
have
that
American-owned
to
loan
a
advanced
been
aid from the United States, since
it would be against our interests
in the
sterling price of, of those goods which could have
gold, but such devaluation would increased the country's produc¬
not increase the purchasing power
tivity and so, its wealth.
of
this
metal
in
non-sterling
Unlike
many
of
the
South
Britain's tinances at the present
general
would
and
increase
lead
in
to
a
South
the
American
stability
republics,
African cost structure which their
clined
the excess value of
imports was 2.7 billion over ex¬
ports. Sir Stafford Cripps said
principal industry, mining, could
not
escape.
Generally speaking,
the South African pound is not
consciousness
are
Last
chaotic
year,
in
a
Britain
that
does
of
currencies and probably in a free
market its value would rise. As
the pound
fighting
her " economic
crisis.
hope of liquidating her
as
a
way
adverse trade balance and
the drain
to
sell
cutting
her gold reserves is
on
abroad. He said that
more
Britain would lose far
than
more
would
she
gain by devaluing or
cheapening
the
pound
since
her
raise the
would
devaluation
of
cost
there¬
fore further widening the adverse
imports in dollars,
balance. The income from her
other
over-valued
cheapen
Britain's
in
to
intend
not
ex¬
ports, on the contrary, would be
reduced in terms of dollars by
of
result
a
of
terms
this
South
situation,
African
commerce
between
a
choose
must
temporary stoppage of
the importation of non-essential
goods outside the sterling area, or
the
collapse
of
stability of the country.
The following is a very interest¬
ing quotation from a recent South
African
Mr.
The
paper.
Grant
confronted with
there be
speaker was
MacKenzie.
no
"We
are
'showdown/ let
mistake about it, be¬
a
cheapening the pound.
\
; "
'/ tween the non-dollar areas and the
It would appear that England's unreasonable
(and
impossible)
hope of overcoming her dollar American insistence on payment
in dollars, and nothing but dol¬
crisis and the drain on her gold
reserves would be to improve her
lars, for supplies which every
economic position in the following country
needs, but'which few
nations can pay for other than in
ways:
"VV
V
"vr.1/
■ V/
Reduce
(a)
expenses.
(b)
government
>
: '
'
-
•
her
Increase
\<
coal
v
r-
exports
to the maximum possible.
many
countries
tion
but
?
*
Not to try to compete in
articles with mass produc¬
(c)
rather
materials
such
to
as
fabricated
as
import
America,
only such
for
needed
are
articles
such
fine
as
ma¬
chinery, clothing, or any similar
goods on which special skills are
required, thereby increasing many
fold their export value over the
import cost of material used in
producing the article.
(d) Reduce manufacturing and
•
overhead
the
at
costs.
businesses
Most
time
present
grossly
of the
are
overstaffed, but because
high taxation against which this
additional cost is deductible, they
look upon this with a tolerant eye.
Nevertheless, it contributes in a
large measure to the reduction of
profits that Britain might obtain
on
her export shipments if her
costs
jin line with efficient
were
operation.
r
•
Union of South Africa
Africa
is
should
also
South
—
another
country which
a
very strong
position to buy all of her require¬
ments
in
be
the
in
market.
world
pound would be
acceptable
where at its present
she
is
Its
any¬
parity, since
gold producing country.
But, she too, like her sister na*
tion, Canada, has for several years
allocated her entire gold- pro¬
end to
an
at the
same
impossible
time, making it quite
for
customer
nations
to pay for those goods, no matter
how willing they be to do so."
Commonwealth
Australia
of
foreign exchange control legisla¬
tion.
The proclamation is dated
Dec.
18, 1946, when Part 4 of the
Banking Act came into operation
foreign exchange
control regulations came into op¬
eration on Jan. 1, 1947.
These regulations are about the
same
those
as
of
the
only
that
currency
and
in
the
social
social
matter
of
security for
its
of the mother and
payment
and
dividends
of
vided therefor.
'
•
.
Australia, however, has a large
withholding tax amounting to six
shillings in the pound
This is
a
very
American
severe
companies
(or 30%).
burden for
who have
ownership of stock of Australian
acceptable
an
medium
of
the
will
It has
dollars,
trol
in
which
form
be
flight of capital from the British
Empire to South Africa, in the
expectation that if the British
of
divi¬
exchange
no
exports
are
chief
wool,
meat,
hides,
and
cereal
grains. The unfavorable balance
of
for
trade
million
189
1947
exports of
versus
million.
125
Uruguay is proud of its record
of stability and emulates Switzer¬
land
on
small
a
for'
haven
scale
capital
as
it
from
is
a
many
South American
countries, princi¬
pally Argentina. There is no per¬
sonal
or
income
corporate
however, there is
an
tax;
prof¬
excess
pound were devalued,
the
South
African; pound would not suffer
to such a large extent. Therefore,
the
Union * of
stricted
funds
that
there
ment
omy
Africa
re¬
the r importation of such
it could be shown
unless
they
were
the
for
and
to
be
purpose
building
up
deposited
of invest¬
the
econ¬
of that country.
There
tion
South
in
has
been
South
much
Africa
specula¬
on
what
might happen to its pound in the
light of the weakened British cur¬
rency position. It was said that if
Britain were to devalue, that re¬
duction in the par value of ster¬
ling and the South African pound
together would bring about
an
in¬
try
are
is
insufficient,
declared amount.
U.
that
coun¬
received at 70%
of' their
See Form 1118,
S.
Treasury Department,
("Form of Taxes Paid or Accrued
to
a
sion
Foreign Country or a Posses¬
of the United-States."),
Uruguay—Like most of her sis¬
ter nations of South
America, this
country,
which
is
called
the
"Switzerland of South America,"
is confronted with
age
of foreign
an
acute short¬
exchange, princi¬
pally dollars.
reaching 75% at the 20% level.
is stated
It
that in view of the gov¬
ernment's generous attitude on so¬
cial legislation, it would appear
that tax
increases may be ex¬
pected.
.
„
Mexico—Since
fiscal
the
so
due to our large capital
there, and the fact
that approximately 80% of Mex¬
ico's exports are to the United
our
own,
investments
States, let
briefly examine her
us
condition.
The weak
omy
spot in Mexico's econ¬
today is her shrinking dollar
had
reserves
to
gold
and
high point ol
a
about $450 million, but today it is
believed that these reserves are
to
return
sound
a
There
States
dollar
Consequences
of
is
at
At
this
to
was
great
a
of
we
find
now
If
deal
world
more
at
metal
the
in
settled
backed
on
the basis of the parity
preceding franc.
This devaluation, which the In¬
of the
by
,
on
gold,
ternational
enough of the
country to provide
any
sinews
of
for
war
pleaded
any
how
to
monetize
turn
we
money).
It
follows:
The
bonds
this
government
which
it
did
not
f but that once having sold
European currency for future
delivery, if devaluation of that
currency takes place, it might be
subject to the same manipulation;
i.e., the creation of a new mone¬
tary unit. Hence, there can be no
hedge in selling expected remit¬
any
as
di¬
rectly to the
people but to the
banks, and then at the same time
creates and provides the
money
bond
the
calls
necessary
printing
The
sary
for
by increasing
currency
via
tances from abroad in order to fix
the exchange return at which the
dollars may ultimately
be re¬
the
press.
next
was
step that
was
neces¬
ceived. Obviously this
uncertainty
about the
future value of cur¬
rencies acts as a strong deterrent
to get possession of all
the gold in the
country, and make
it criminal for any one to hold
to private investment of American
that
metal. Thus the money
is
only indirectly tied to gold. The
bond< then
only
represents
do
that
sure
into
issued
sell
Fund
to
not
feared
stoppage of forward selling of
foreign exchange from European
countries, since no one can be
the
accomplished
was
France
was
distrust of all managed currencies.
means
debt
it
It has caused the almost
complete
the
long continued
struggle of World War II.
We
learned
Monetary
with
it
would wreck the artificial
parities
of .monies, brings in its wake this
long
Therefore, the following
finance
<
because
period.
steps were learned in World War
I to provide the necessary funds
to
a
prior to the devaluation must be
we
depended
war
money
the
of
condition that commitments made
how
see
devaluation
new
monetary unit which,
by the same name (i.e., the
franc) and imposed the further
ourselves.
nations
sound
the
condition and
to be in the situation
came
latest
went
point, it might not be
inquire into
monetary
the
capital to
assist
in
European
re¬
covery.
the
The result of this moral down¬
fall is such that in order to
pro¬
tect themselves, citizens of coun¬
.
promise of the government to pay
in money which it issued to se¬
cure that bond. After World War
tries
I, nearly all countries went back
to the gold standard. Even Ger¬
many
was
provided with gold
that
still
hoards
for
to
exchange their
kind
any
money—not
permitted
are
hold gold will not
of
paper
dollars./.»
even paper
approximately $137 million
(Bankers Trust Co., March 1948).
This
ico's
downward
trade
in
trend
Announces Payments on Mexican Bonds
Mex¬
and
balance
foreign
exchange position is caused by its
for all kinds of
products which she normally im¬
ported from the United States and
demand
large
which became
war.
available
after the
AG"///'
•
.
At the
present time, there is no
as such in Mex¬
ico, but the restrictive credit pol¬
icy of the Bank of Mexico, to¬
gether with the present restriction
of imports of luxury items by the
exchange control
Mexican
Government
much to
done
has
stop the outflow of dol¬
now, any one having
Even
lars.
in
since
balance
trade
the
position to acquire dollars.
a
"The
following,are the invisible
sources
of income to
estimated
Mqxico., She
income,, from
tourists trade of about $80 million
has
an
.
r
It is also expected, that
Export-Import
and, World
Bank will provide a loan, of ,$25
a
year.
the
million for electric power expan¬
sion.
■
'-v
f
'•*
Among the intangible items that
are
favorable to her is the possible
benefit
if
from
she
the
Marshall
would
allow
Plan,
would probably be at an end;.
excessive
purchases
following the end of the
to
standard.
money
Devaluation
the
abroad
arisen
Some
econ¬
of our southern negihbor is
closely connected with that of
omy
and
has,
United
that
through
situation
sufficiently- to
to
permit
wealth
new
countries
only dividends but capital at
will. In fact, at the present time,
public debt (which simply
on profits in excess of 12%
capital which rises
steeply,
foreign
capital to aid her in oil produc¬
tion,
her
exchange
difficulties
This
before production will
increased
create
by
their interest there and withdraw
its tax
greater share Of her exports go to
the United States and thus'sfie is
and so dividends from
favorable
a
represented
of
orable
withholding .tax
have
there would not be
.vp;
re¬
deduction
long time
econ¬
black gold (oil). American firms
can
have complete ownership of
imports of
was
for
that
balance
export
amiss
legislation.
Uruguay's
vision in the U. S. Federal tax
offset
Venezuela has
omy.
con¬
turn
to
"free-wheeling"
a
provided in
ex¬
foe devalued and hence, there was
is
Monetary
funds
draw
dends
change throughout the world; i.e.,
United States dollars. Therefore,
she has been compelled to restrict
the importations of goods and the
exportations of money.
a
few countries in the world where
there
In World War II,
this process of inflation has gon§
so far that it will doubtless be a
the
its present currency
to a still
lower value in terms of our dol¬
lar but rather, it was the creation
companies.
Although
earnings pesos can go to any bank and
from foreign subsidiaries may be buy any quantity of dollars for a
received ,/by
way
of
dividends remittance abroad. Likewise, one
nearly free of U. S. Federal in¬ can buy any quantity of gold or
come
tax, the tax on the total silver for safe-keeping in Mexico.
amount of corporate income, in¬ This is probably one of the few
South Africa has a withholding cluding
dividends from foreign countries in th^ world where this
situation
tax of 7% on dividends payable subsidiaries, is offset by a credit free
exists/, ) Further¬
to foreign shareholders of its com¬ allowed for foreign income taxes more, Mexico's borders •' are
too
paid at the source. It happens that large to police to have them prop¬
panies. : ; ;
where withholding tax is deducted erly enforce exchange control. ' >
When the French franc was de¬
from dividends as in the instance
It is felt that Mexico has a good
valued,? it was feared that the
of Australian companies, the pro¬ chance of overcoming her unfav¬
British pound sterling must also
is
of
one
a
accumulated
the
is
on
currency.
the
During the War years,
United States dollars will be pro¬
Venezuela—This
gold
new
discount in Venezuela!!
ownership of the stock
foreign corporation may be
It is also possible to with¬
a
had.
silver
Foreign Exchange Control Board.
However, like most, nations, Au¬
is very hard-pressed for
dollar credits to pay for such im¬
ports from the United States as
is needful to
her economy and
which she cannot get from the
mother country against whom she
has a very large favorable trade
balance.
Monies may be with¬
drawn by American companies for
'
in
countries in South America where
she
stralia
' '
repudiated her
that she would
which to base her
so
complete
few
pire.^ No
unless with the permission of the
have
permit financial chaos in that
country.
had
•
French franc than meets the
eye.
It was not the mere abasement of
the
sister countries in the British Em¬
be taken out
she
money,
to
of
one
reserves.
money can
after
paper
not
This is
—
nations in the British Empire, has
and the effective
extreme
more
providing
Australia, like most of her sister
a
duction to the mother country and
finds herself in a position of being
short
exports. We must have
America doing all in her power to
sell her products abroad and yet,
to
workers.
economic
the
order
exist, although it is in¬
condition.
time
(2105) .25
to
crease
countries
British companies.
<«Mf \nafcWSAw
,wovW^HHii»Uh^^i
CHRONICLE
Foreign Investments and Fluctuating Currencies
ment
r
wifre-jim<"W'^
fltVurwmmtnH
.
It
war
and it has been stated that .is:thought that if Mexico should
much of this purchase was of a
ejtHnto a very difficult exchange
non-essential nature rather than Situation, she might get financial
The International
on
May 6, by
a
Committee of
published notice,
a
Bankers
Mexico
on
announced
distribution to holders of bonds
of the Mexican Government and of the National
Railways of Mexico,deposited under the Agreement dated June 16, 1922, amended in
1925*
of a substantial part of the funds <$>
——.
———
remaining
in
the
Committee's
hands.
The amount of the distri¬
concluded
bution is $4,702,028.35 and it is al¬
sible until
mittee)
located pursuant to the directions
issues
dated
deposited
under
mentioned
June
Mexican
16, 1922 between the
Mexican Government and the In¬
/
;
The
present distribution is a
step in the conclusion of the Com¬
mittee's work begun over 25 years
ago, at which time the Interna¬
tional Committee, under the ac¬
tive leadership of the late Thomas
W. Lamont,
cure
a
ments
initiated steps to Se¬
resumption of interest pay¬
on
the debt of the Mexican
Government
of
Railways
and
the
National
Mexico, which
had
been in default since the 1914 rev^
olution
in
Mexico.
During
the
was
pos¬
present time.
Agreements, two further agree¬
ments relating to the payment of
the
Agreement
ternational Committee.
distribution
the
by
rants attached to each of 36 separ¬
above
no
After the cessation of payments
Mexico under the 1922-1925
of the Court to specific cash war¬
ate
favorably to the Com¬
,
debt
have
made
been
under which payments on a modi¬
fied scale are to be made by the
Mexican
agent.
Government's
lates to the
Direct
such
fiscal
One, executed in 1942,
Mexican
Debt and
debt
made
to
accepted
payments
agreement
terms.
under
being
are
bondholders
its
re¬
Government
who
The
have
other,
with respect to the National Rail¬
ways
of Mexico
Debt,
cuted in 1946 and this
was
exe¬
Agreement
has
recently
been
the
Mexican
Government
submitted
by
the
to
bondholders for
Under 1 both
their acceptance.
such
Agreements
five years in which payments un¬
der such Agreement were to have
those bondholders who accept the
been
provisions of the agreement as¬
sign to the Mexican Government
made, the Mexican Govern¬
remitted some $43,000,000
which sum was increased, by in¬
ment
terest
earnings and miscellaneous
receipts,
to
about
$45,000,000.
During such years about $33,000,000 was turned over to paying
their interest in the funds held by
the 1922 Committee and the share
the
of
which
for distribution to ! bond¬
holders.
The sum remaining was
insufficient to pay a full year's
interest on all the deposited bonds
to
be
distributed
bonds assenting
under the
.
agents
funds
relates to
will be
two recent agreements
paid to the Mexican Gov¬
ernment.
:
The
•
-
.
Guaranty
Trust
■
Company
of New York has been named by
Committee
prescribed rates and, after
payments ceased at the close of
1927, and after various unsuccess¬
the
ful
with
at the
tion
attempts to secure a resump¬
of
payments, the Committee
sought judicial instructions as to
the distribution of the remaining
fundsT* This action was begun by
the Committee in 1932 but be¬
cause
of
protracted litigation (all
as
its distributing
agent in New York and London.
Arrangements have - been made
the Banque de Paris et des
Pay-Bas in France, Holland and
Belgium
and
with
the
Credit
Suisse in Switzerland to accept
for
collection, for the account of
holders, cash warrants on which
distribution is being made.
:
■
-WHWW Iiwrr
-V fi*.. mi« > •►
"}*1 - ,m»hh •ifVf Jr.
>
U'Wf ,|4«fXk,flMi
ty* u
Bank
Our
Reporter
By JOHN T.
Governments
on
government securities markets which have been saying yes
rate of IV*% do pot seem to be quite sor sure now
that the rate will be upped in the very near future. . , . There has
been a difference of opinion between the money markets and the
certmcate
a
the certificate rate, with the
the taking of a higher rate
(for one year maturities) for granted could be indulging in specu¬
lation.
The less positive position of the money markets on a
higher certificate rate has been expressed by a growing interest in
the intermediate and longer maturities of the bank eligibles. , . .
Treasury over what would happen to
Government inclined to indicate that
be
to
will
it
Wnether
to
have
higher prices.
.^Finally, the
they will be any more right this
time than they were then remains
CHIPPENDALE, JR.
The
to
hostilities.
of
*
in
Management in the Coming Depression
(Continued from first page;
cessation
J
Thursday, May 13, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2106)
26
"Urt
*
M*-»r W 1
1
vanced
seen.
perhaps, after all, it isn't
quite fair to piace ail tne govern¬
an
ad¬
reason
rearmament
pro¬
which already is calling
gram
But
third
the
is
through
come
additional
coming
billion
$3
and
year
for
well
may
Tne reason why under present
accounting practices the Treasury :
show
can
a
net
deficit and still have
a
cash
in
101
found
the
transactions
cah
be¬ for more later on. One must noi
judging from recent utter-, minimize the inflationary effect
of a large scale expansion in ex¬
ances, it seems difLcuit to know
just what our government does penditures for national defense
Such expenditures so far as the
fear in this connection. The Pres¬
and
its
from
ment economists in one group
counts,
cause
eral old
such
the
surplus
transfers
as
security
Fed- 1
non-cash :
and
age, and to tne
of
interest
1
10
ae-4
trust
various
social
payment
t
is,
mtra-governmental 1
operating
savings 1
on
bonds and Treasury bills.
For
example, interest
the
on
>
...
"
BACKTRACKING
had
stances
the
June
to
taken
financing
and
many
there
and
here
made
remarks
government securities in many in¬
the sidelines to await the announcement on
in
dealers
and
Investors
of them are still there.
However,
certain of the money managers
by
along with rumors that have been appearing in the market, have
some of the stalwarts from their sideline positions back into
the bond market, with purchases being made in the 1952 maturities,
as well
as the
1956 and 1967 bank-eligibles. ... Volume has not
shaken
been
show a pick-up
heavy, but it has been sizable enough to
activity. ...
too
Council
from the recent level of
interest in the
more distant maturities of eligibles is that if the certificate rate
is to remain at 1
the higher income bank obligations will
move up in
price so let's make some commitments before we
have to pay more for these securities. ... On the other hand, it
is being pointed out that the rise that might take place in Treas¬
uries if the certificate rate should continue at V/h% is not
main
given
reason
for
increased
the
expected to be very sizable or too sharp.
LOAN TREND
>
creased
will
that
''
.
J
there are very good chances that the 1 Vs % rate
be kept by the Treasury. ... It is being noted nevertheless
the Central Banks are leaning more and more towards slightly
turn
not
up,
the
and it could be that the Federal authorities
higher money rates as an inflation control than are certain of
the goods which are produced b}
such
cash,
called
other money managers
will win out in this one.
markets by the
instance it has
bringing some buying into government securities in¬
stead of lessening the demand as has been the usual procedure in
the past.
Sellers of the 1949, 1950 and 1951's, who had gone
largely into Treasury bills are now taking on some of the June and
December 2s of 1952/54, the 2%s of 1956/59 and the 2%g due Sept.
15, 1967/72.
These purchases do represent a'certain amount of
boldness since the trend of commitments had been principally into
into the
Greater uncertainty has been put
money
in
.
dent stand-by authority for price,
and direct
wage
the
,
.
shortest
Treasury
nouncement was made
orities and
obligations,
there to remain until the an¬
the certificate rate.s
:
on
Although the money markets are far from being in agree¬
ment now on what will happen to the certificate, the question
is being brought
to
as
have
whether
an
up
in
some
continuation
later
the
quarters of the
of
the
Economic
with the
llA% rate.
a
maintenance of the present certificate rate
as
well
as
Report
on
asked
and
re¬
Policy
provided the
¬
certaT
be
President
and
Congress, President Truman in
conference
said
that
the
Treasury
connection.
it
total value
produced
bank credit.
was
than
year.
that
!-
'
/
many
<
sizable
a
amount
of
the
June
t
maturities
presented for redemption because the rate of the issue offered in
place of them was not high enough.
Likewise, the funds that
would be obtained from the cash repayment of these June matur¬
ities would no doubt go largely into outstanding higher income
.
government obligations.
Au increase
obtained
,
,
.
.
"
.
*
1
,
slide
such
action
than
compensates for
However, it could be at this time that a
more
v
this development.
slightly higher certificate rate, which would bring about a more
complete exchange of maturing obligations would be more ad¬
vantageous than keeping a rate that might cause a heavy turnin of the due or callable issues.
.
.
.
NOTES
rea^
we
are
the
top of
on
2
we may
off from
start
the
first
set
Insurance companies have liquidated a few more of the tap
issues, with the proceeds evidently going into corporates and mort¬
gages.
Savings banks have made some purchases of both the elig¬
ibles and the 2V4S due 1959/62, as well as recent new offerings of
corporate bonds.
Although the money markets are deeply engrossed
in arguing over what is going to
happen to the certificate rate, some
hold that an "odd maturity" of certificates might be offered
by the
Treasury.- They contend it could be done without upsetting the
with
us.
The
discussion, let
Noma
Electric
President
base
us
duction
gument for fearing further infla¬
tion is that the Federal budget
their
predic¬
three things
tions primarily upon
First, the recent Federal tax
in the fiscal year
will
cause
a
very
the
as
to
such
but
with
With Newburger, Loeb
large
reduction
tax
that.the
most
there
be
to
it
of
consumers
as
portion
,0*
saved
will fx
goods.
Now
second
mem¬
ERP.
Plan.
the
This
are
no
reason
for
so-called
Registered
ment
partner of the invest¬
banking
firm
of
Baker,
Weeks & Harden, members of the
New York Stock Exchange.
joined
main
New
their
office
organization
at
York City.
15
at
Broad
has
the
Street,
-jVj.,'
But
surplus
fearing
is
there
much
likelihood,
that the Treasury
will be compelled to borrow from
barring
the
a
banks
sizable
war,
even
if
it
It
deficit?
does
is
run
s
frequently
overlooked that under-present ac¬
counting
Marshall
procedure
the
Federal
going
our
such
Representative,
enough to compe"
to resort to borrow¬
to call for Treasury can show a rather large
products during deficit and at the same time the
year in
an
amount actual cash which it receives can
approximately equal to $5.5 bil¬ be in excess of the cash which it
is
living awav
the coming
state
a
-
-
;
; i
f
This difference between cash*'
arid budget figures is shown in
when a budget %([';•
deficit of $20,676,000,000 was re- V' •
ported as compared with a net -• s
cash operating outgo of only $17,- /
899,000,000.
In tne fiscal year "■•,?/;
,
.
,
the fiscal year 1946
1947
difference
the
other
side
the
of
the ;
on
was
with
ledger
y
a
budget surplus of only $754,000,-
had
but the Treasury
000,
a
net :
cash
operating income of $6,658;- *
000,000.
/. '
of cash oper-
It is the amount
ating income and cash borrowing
against cash operating outgo and
cash
repayment of debt that is
;
;
,
•
;
-
wben considering 'the
;i;
inflationary aspects of Treasury
financing and not the intra-gov- ;.Z /
ernmental bookkeeping entries. It ! ,
seems, therefore, that barring a
war
and
with any appreciable j'l
important
sales
of
E, F and
Q bonds
over
J /
/
redemptions that it is hardly like-
:
Treasury's cash expendiwill equal its cash income.
;
ly
the
tures
'
•
lion,
The
that
inflationists
we
do
not
further disburses.
have
any
surplus of goods to give away
without restricting our own con¬
sumption and. as it is not likeh
tbat
v
.- ..
•_*
' J.'.
.
And
so
far
as
infla¬
tionary results of Treasury opera¬
,
tions
concerned, it is the dif¬
ference between net cash operat¬
ing income and net cash operating
outgo of the Treasury which is
are
rationing} and controls wiP.
be established to bring this about;/ important.
■
next few
months
sound the
measures
matter how ;
no
might be from *:
a long-term -policy. : It is for thisI
reason
that I personally expect, /
-
j
goods at the momenl
it is argued that this spending
will tend to push prices higher
bers of the New York Stock Ex¬
Kaelin is
■
may
ing from the backing system ape
thereby increase our money sup¬
ply, the forces making for infla¬
tion would
again be with? us
About this there cap be no doubt
This, too, must be re^emjbere^.
consumers
change and other Exchanges, an¬
nounce
that Joseph LaBarbera,
Corporation,
William
r'i
*
■
*
{
the Treasury
part of it goes to
Small incomes.
They
any
spent for
inasmuch
an¬
that
ditures.
agrees
expenditures for relie'
.*armament. \If
this defich
should be large
larger
expect
R. Kaelin
has been elected to the corpora¬
tion's
board
of
directors.
Mr.
nounces
only $3,270,000,000 was cash. In- \
vestments are counted as expen-
and
large
increase in retail buying inasmuch
The
Newburger, Loeb & Co.,
•
-
increased
of
approximately
$4.5
They state that this re¬
duction
beginning June.
1948, will become unbalanced be¬
cause of the tax reduction and the
re¬
billion.
"
of
.
^
,
inflationary school
forecasters
of
Sadacca.
;
>
placed on top of such an economic the first Tuesday following th?
|
situation without disturbing the first Monday of November, for it ■,
can be taken for granted that no ;
:
price level, and let us not forget
party wants to take the responsi-1:
The Most Compelling Force
bility for anything which might 1
bad
business
during the *
To me, the most compelling ar¬ cause
further inflation is the enactment
Henri
"
•
*
.
the reasons why
some people fear that
prices are
likely to go still higher and that
the danger of inflation is still
..
W* R. Kaelin, Director
>
.
it
forth
.,
'
>
.
hold
farther insist that it is too much
market.
.
re- •
the pemon? Therefore, the operations of
^
Our economic background Treasury even* though -no debt
v.
does not have any slack to be tak-: retired are not likely, to be in-^.ep up to meet much additional de¬ flationary during the coming year.; • .
mand as it did in 1940-41 wher
Without denying that there are • ,
pearly 7 million,men were out.o/ still plenty of inflationary forces
Work; and there was also a large working in our economic system, ;lv
amount of unused plant capacity
if" one looks closely he can also
Today we have full employment find powerful offsetting forces ■Iand there are shortages of numer¬
working in the direction of staous
strategic materials such as bility or even lower prices and <
sfeei, oil, metals and transporta¬ deflation.
But it probably would tion equipment of most kinds. No be a mistake to
expect these forces
overall increased demand can
to; show their full effect before 1
Pro-Boom Reasoning"
n
To
those
.
as
,
of
in debt service should not be made unless the
from
purposes
year.
not begir
right away
there is not too much danger that
the boom will go higher.
.
have
other
appreciabiY during
the
on
In view of thh
should
one
boom and while
to
Treasury has ample working balances but evidently they
aside from/debt
retirement.
Therefore, it might not be to the liking of the mone¬
to
subject;
my
for
,
,
The
.
Boom."
a
why
sons
will be needed for other government expenditures,
tary authorities
taken for
Banking Problems
opinion that
\
f
,
election.
management to set forth the
,
V/s%
.
rent .year.,
\ /'
r
ftqt J wish to repeat ^gain tha'
ther danger of inflation is
no'
lightly to be pushed aside if one
admits that the total demand for
ourtprodqetg 'AS' to Fe wrtegsec
might cpnceivably stop busir
expansion, at least before
have
they were during the pas.
The difference between ex-,
imports last yeer waf
approximately $9 billion. Thjs dif¬
ference might well be reduced by
as much as $2 billion for the cur¬
ernment, no matter how much
they fear inflation, do not wan >
to put any restrictions into feffec'
ness
Moreover,
year.
European Ajd Re¬
ports and
gov¬
our
the
Program there is good rea¬
son for thinking that the total
volume of our exports for the
next 12 months will be smaller
It would appear that
those in top control of
of goods and services
covery
expansion o'
some
importance in this
An additional defense
last
with
even
altogether likely that the defense
program would call for additional
bank loans and
mentionec
outlay of $3 billion, a tax cut oi
l»4.D oiliion, after all represents
onlv a little more than 3% of the
a
Mr.
Depart¬
credit
bank
their
estimate
of the year calling fox
of
sums now
are not materially
increased, it is very easy to over¬
Eccles
spoke only for himself.
Then, to confuse the matter still
further, there was an item in the
press
last week quoting a high
of
do transfers to trust ac-
nor
counts
only "
was
monej,
for these items
the
Treasury Department do stand on
this question of inflation. In com¬
menting on Mr. Eccles' request to
news
the
up
their inflationary possibilities, my
position at the moment is that
Confusion
cannot
one
the
use
Recovery Program all have
pean
serves.
boom, it becopxes necessary before
discussing tjie problems of bank
of the
owners
obligation that would be offered in exchange for them.
CAUSE AND EFFECT
results
went
difference of opinion as to whethe:
or
not we are on the top of a
It is being pointed out
...
15 1%% might be inclined to take cash instead of a
.
Eccles
Committee
to
item
quired by law.
Iney are merely
bookkeeping items but both are
considered
budget expenditures.
tures increase purchasing powei
Of total receipts by trust accounts
but
do
not
increase / consumer amounting to $6,244,000,000 in the
goods,
>'•
r:; ' i' ;'. same fiscal year, only $3,712,000,;
Without at all
attempting tc 000 involved cash; while out of
deny that tax reduction, increased total disbursements by trust acarmament outlays and the Euro¬ counts reported as $7,347,000,000,
A few days
right to increase bank
Crest of
financial district
1*4% certificate might not
holders of maturing June 1 certificates
June
Joint
later
this
on
put out for their production, lr.
other words, armament expendi¬
con¬
he might
as
Marriner
Mr.
"Some
inflationary effect, after all the preparations the money
markets have made for
that
rationing
later deem necessary.
I
,
manpower
trols and for such allocations, pri¬
.
.
expenditures are war goods
are
not available for pur¬
they
restriction
old method of "Open Mouth Operations" but in this
.
anc
disbursed
chase
the need
resulted
saving,
ment to the effect that instead of
...
MARKET OPERATIONS
!
increased
for
$4,958 000,000,
our
asked Congress to give the Presi¬
official
t
.
They als*.
dations,
in the
}
repre- ;
expenditure of
but
actual
cash,
budget
a
and credit restrictions.
where
is being watched very closely by those
sented
$3,820,000,000.
Interest received .V
by
trust
accounts
involves no
But in spite of these recommen
n ^
public debt in fiscal ly47
taxes
Credit
f;;
'
In the first place
new
for the
markets who feel that the certificate rate may not be in¬
in the June financing.
It is believed that if the loan curve
money
does
.
-
trend
loan
The
,
have *€
concerned
ommended enactment of
the
J
is
two-fold effect.
they add to the income stream oi
people just the same as othei
expenditures, f But inasmuch as
before
The
level
price
Ad¬
Economic
of
visers in their report for the first
quarter of the year seemed to feai
inflation so much that they rec¬
'
,
ident's
jf> f
I
and
the
stock
market. apparently
-with -me, that the boom
go a little higher before it
'
•
peak.r ""
.? "
' y. /
•
/ However, the underlying forces r.f"
workfng to stop inflation are in-
reaches its
herent
in
situation
looks
the
and
present
be
economic
if
one
*
enough. ^ First and
-
can
closely
seen
;
foremost of these forces is the in- *
crease
ing
in production which is
place.
is'
There
no
tak- /
antidote
to inflation like increased produc-
tion.;
-: t
this
And
country has aot ?
in increased produc- '
begun to
see
tion
full effects
the
-
of
the
plant [:
expansion which has taken place
war.
*
i$ still in such
supply that :
.
*
since the close of the
scarce
.
there
is
danger
a
that
it
Steel
is
ob¬
structing our view of what is tak¬
ing place in other lines of pro-"*'
duction.
One
steel
'
of
is
■
the
in
basic
such
reasons
short
also the basic reason for
why .;
supply
our
is
-
high
"
level of business activity; namely,
the huge capital expansion program
which
has taken
place.
It
*
r
.
Volume 167 '! Number 4698
is this postwar expansion
«mu
equipment
mand
pipelinesmat
■winch
we
demand for
lu tne
tne
is
downs
ups and
consumer
goods
principal cause for the
business activ¬
in
Rather, it is the wide fluctu¬
ity.
ation
the
in
spent in
amount
of
money
capital expansion.
tne
Capita]
Expansion
If capital expansion
is
sucn
dominant
a
termining 'the
tne
of
state
-expansion
its
a.id
is
-it
its
will get some
long the
present
we
"how
will
progress
and how far it
continue
and
will go any higher.
A short time ago the
whether
McGraw¬
-Hill Publishing Company made a
•lather
extensive
survey
of this
whole question of postwar expan¬
sion in the field of
plant construc¬
tion
found
American
manufacturing compa¬
nies had completed on the whole
64 % of their estimated postwar ex¬
pansion programs.- By the'end of
'1948, however, these companies
^expect
to
have
of this program.
completed 85%
There is no doubt,
therefore, that for the rest of this
year
business spending on new
plant and equipment will continue
at
level and there
high
a
little
xd all to
reason
recession
of
seems
expect
magnitude
any
the rest of this year.
Now with 85% of the
xl
for
;
postwar
^expansion program completed by
1948, is it likely that capital ex¬
penditures will continue to be
High in 1949 and 1950
an
1947
does
1948?
and
not
they
as
It
the
on
were
certainly
reasonable
seem
'expect.
In fact,
% he McGraw-Hill
as
so
to
basis of
survey, it wa s
found that the largest single group
manufacturing compa¬
nies, 36% -of them, had made no
plans as yet regarding capital ex¬
among our
penditures
largest
lor
1949.
28 %>
group,
less in
tspend
Nineteen
The
than
1949
next
expected
in
to
1948
cent expected to
Spend about the" same -amount
and only 17% expected to spend
more.
The findings of this sur¬
of
per
must not be in
fcerpreted to" mean that new ex¬
penditures for plant and capital
vey,
wlll
course,
to
come
There is always year-byreplacement of equipment
1949.
-v
-year
which is
lete
end after 1948 and
an
by
results
worn
of
the
only
.vey
out
or
made obso¬
discovery.
new
But the
McGraw-Hill
prove
what
sur-
common
indicates—that it is not pos¬
sible for this nation or any nation
sense
to .continue
for long the
building
of plant .and equipment
at the
same rate which it has during the
past three years.
>
us
turn
our
attention to
of what is
an
likely to
happen to the output of consumers
goods when this new plant and
•equipment are Once in full pro¬
duction.
It
is estimated
productive capacity of
that
our
the
Ameri¬
manufacturing ;
can
jwhen
this
postwar
completed, will be
about
52%
industries,
expansion is
on the whole
than
greater
it
was
the beginning of the war
Almost a third of our manufactur¬
before
companies will have doubled or
more
than
doubled
their
prewar
productive output.
Another 17%
will have a capacity from 50 to
*99%
greater.
Another 29%
wiT
'have added from 5 to 49% to their
"capacity, while only 23% of al
"the manufacturing companies of
,
the country are found not to have
added to their plant and .equip¬
ment
are
since
the
close
of the
war
alter
in¬
'business
in
boom.
great
tate
tne
satisfaction commercial banks go¬
One
does
are
ing into tne
closely to find
a good
dence
sines
prices
oi
We
able
it
for
to
two.
or
and
abor
me,
this
tne
lies
problem
price
year
in
consumers,
seems
tne
business.
for
the
ox
I have spent so
cussing
new
creases,
for
goods
and
increased
ipayrolls and incomes before ad¬
views
wno
witn
so-called
loai.
term
The life insurance
completed in¬
have
two
forces
It
it
t»u%
over
at
.1-gner prices?
that
the
-esponsible
single
time
it
present
absorbing'
It may
factor
which
much
as
well turn
as
into
was
in
causing the
high prices of the past few
and
one
years will itself
feel
produce the
creased
he
well
may
cause
output,
lie
ahead,
I
may
in¬
repeat, is
for
high
greatest
remedy
prices and inflation. From present
indications it
seems
certain
as
light follows day that we
mg to get this increased
.n
know
output
'
that
Jiat
is
it
to
ever
high
for .prices
are so
impossible
down.
come
of you
some
sqying labor costs
are
as
are go-
the years ahead.
But I
what
ket
to
manage
that
me
prices*; in
divided
.
them
handling your bond <accouni
have two choices; shall you
rates?
In
or
corpo-
opinion, and I arr
quite dogmatic about this, the
differential in yields between high
grade corporate bonds and gov¬
my
ernment bonds of
the
same
ma¬
Moreover it
turity is not sufficient to justify
the purchase of anything but gov-,
nave
a
third
ernments.. There may be an ex*
creases now in the
making.
But ception from time to time but the
even
if we do,
third round of exceptions .are not many.
begins to look
might
round of wage in¬
increases
wage
able
of
magnitude
run
though
as
we
-consider¬
in the long
any
may
deflationary
inflationary. Here is
prove
chan
rather
a
factor
that ds almost always overlooked.
Increased wages are not
always
inflationary although they almost
always increase costs.
And 1 do
not forget that costs are the floor
of prices.
:
*
' V
\ /
■
The
you
next
question with which
is
faced
are
turities,; 'Shall
shorts.
the
I realize
of
one
ma¬
buy longs
yau
therb
are
..or
What
we
have
market
have forgotten is that
been
so
living in a seller's
long where it has been
levels and, therefore, the present
prices of bonds are safe. These
possible to pass on
almost
to
consumers
-conceivable
any
increase
in costs that in a buyer's market
it may be impossible to do. so. In
a
buyer's
in
are'
wage
market,
ample
where
.goods
increased
supply,
costs usually have to
out v of
profits.
If
there
profit margins for.them to
out
of
-marked
and
thep
if
come
are
no
come
prices
are
the net result is to
reduce sales, increase, unemploy¬
up
need
the
o
bond
would ?suoport
then
prices
handed
that the Fed¬
year ago
a
Reserve
existing
Christmas Eve
^on
the
werr
of las'
year a .present that materially re¬
duced the earnings of a good marn
banks if they -wrote their govern¬
ment bonds
'end.
year
down ;fm (markhf
Perhaps
Reserve will
to
the
Fed era"
he able to continue
suonort government
bonds
.a 1
businessman
ending,battle
to reduce costs -and,it Is a. vicious
oversimplification of the effects
of wage increases merely to state
that they are inflationary and can
be passed along to consumers
at,
'higher prices.
'*
Already in certain lines of goods
evidences that supj
one
can
seen
ply
has
caught
in such
a
up
in
demand
to produce price
way as
weaknesses
with
commodities rang¬
*>*4ces:
buying
them
thev
have
been
continuously
November
of
ever
last year for
billion. At the moment if T
were compelled to guess, I would
statethat there is every indication
that they will be able to do so in
$6
the discernible future. I want ;alsc
state
to
do
this-connection that T
in
think
not
banks
should
guesswork
and that it is dubious 'bank
managed
on
be
basis
a
man¬
time to invest any
considerable portion of demand
deposits in long-term bonds, ever
agement at
any
Certainlv at
ing from nylon stockings to auto¬
governments.
mobile tires
time
like this, -it is
and
from
radios to
agricultural products. Inventories
even allowing for price increase?
in most lines, are now higher than
they were in prewar, days.. Given
normal harvests, keep the rearma¬
ment program within reason and
the
European relief
program
nc
higher
than originally contem¬
when the Marshall Plan
enacted, and it seems to me
plated
was
that
are
all
the
signs point that we
practically over the hump of
high prices and that the boom wilT
be
running out in 1949.
Food
a
downright specula¬
tion, and to make it worse, it is
speculating
For
political
action
myself, I would have no pari
it. I
in
;
on
Let
to
•'•
As
now
us
.turn
commercial
our
our
know, it has had one
you
o'
the most
rapid increases in bank
experience, although during the
last
several
begun
who
months
to decline.
views
this
alarm
of the
have
I am not one
increase
with
do I think
nor
loans
it has hem-
the
cause
we
have experienced.
cline during the coming year, bar¬
the
other way around. It has been as
a result of .high nrces that busi¬
a
world
crop
failure.
The
While I do not wan4
to be understood
drastic
vere
asforecastingany
decline or any se¬
-business recession. I do want
price
strongly to urge
you
not to con-
effect
and
nessmen
larger
the
have
The cause
been
had
to
just
borrow
of money to conduct
physical volume of bus'
sums
same
ness.
price rise which
have
Probably it
expert
is too
much
bank loa^s tblexoand
environmen
the
on
I .urge
increase.
also
you
to
lending
that
are
show¬
willingness to over-?mortgage both the dwelling and the
buyer. Never was mortgage money
so plentiful nor was tne competi¬
a
lenders to
of
loans
keen
so
get mortgage
it has been dur¬
as
the present prices of agricul¬
tural products or any prices above
on
those
guaranteed by the govern¬
should be scrutinized mos'
ment
carefully.
loans to
Construction mortgage
speculative -builders, the
type of loan in the East which if
growing too rapidly, contains dan¬
too obvious, to need mention¬
gers
But
the
on
whole I
timistic
bank
state
to
think
be over-op¬
does not need to
that
commercia"
loans, 'by and large, are ir
condition today as they
as sound a
have been after
ever
an
element
weakness
of
extended
found
ir
stock market spec¬
bond?
probably as low as it has evei
been in our country's history.
second grade
is
You must also remember in pass¬
ing
on your
commercial loans thai
the present artificial low interesl
rates at which we are lending our
have left little margin for
risk-taking. In view of this fact,
it is .doubtful if one is justified
money
under
conditions in in¬
vesting any of his funds whether
in loans, bonds or mortgages un¬
less
present
they
With interest
secured.
and the
low
bank
exceptionally well
are
costs of
rates
operating
so
a
only a few loans
go
bad before the year's
dividends are destroyed.
At the
high
so
need
present time, in
my
opinion, there
is not sufficient difference in the
interest rate between
vestments
and
gilt edge in¬
second
class risks
in investing any of
our funds in anything but assets
of the highest quality.
If this
means that the marginal borrow¬
er
is short off from bank credit,
to
justify
us
it
is a penalty that is paid
artificially cheap interest
rates now prevailing and one that
then
for the
be
asked
to
bankers
should
remedy.
We cannot afford to take
The premium that we
the
risk.
not
get for it is too low.
Probably the greatest danger in
credit structure today is to be
field
of
real estate
mortgage loans.
I have made no
study of farm mortgage loans and
so
am
not going to talk about
them. I understand, however, that
the
price of agricultural real es¬
through its
tate has at last broken
top of 1919-1920 and if loans are
being based
one
if
on
such prices, then
should not be surprised later
some
losses result.
agricultural
real estate has increased in price
over its 1919-1920 high, the price
of our urban real estate has in¬
I think it no
creased
ae
exaggeration at all to state that
all the old evils, and some new
more.
secure conventional mort¬
loans bearing an interest
r3teof4y2%.
t
gage
Moreover, in all too many cases
mortgage loans were made in
amounts
selling
66
to
up
of
2/3%
the
of the properties
them and in some in¬
stances up fo 75 and even 80%
prices
securing
of
market prices.
I am not re¬
ferring to VA or FHA loans, but
to
uninsured
loans.
Certainly
one
should
not be surprised if
serious trouble later
some
ensues
in this field of lending.
Realty Going Into Weaker Hands
March
debtedness
Federal
Reserve
by
residences
on
creased during
the past two
amount greater than
an
•
in¬
years
total
construction expenditures on
new
such housing.
The ownership of
is apparently
getting into weaker hands and the
owner's equity is getting smaller
and
smaller
as
the
properties
change hands.
I know I need
not point out to you what has
happened to the price of real es¬
tate.
In my own loaning experi¬
ence, I have .seen houses .that were
real
urban
built
estate
30's
the
in
and
sold
for
$6,000 now sell for as high as
$13,000 and even $14,000.
Only
recently I had a loan paid off on
a
house that sold new in 1939 for
$11,500, and on whichlhad placed a
$7,000 mortgage, resell for $25,000
and on which a $15,000 mortgage
was
placed. The mortgage lend¬
ing field today certainly is fraught
with danger and it is one that
bids fair, yes almost certain, to
cause the government a good deal
of trouble
account of its guar¬
on
As bankers
antees.
would do
we
well to insist that full loans based
present day values either
or else guaranteed by
government agency.
V
In conclusion, I must warn you
that forecasting business condi¬
upon
be declined
some
tions today
is subject to the same
as
forecasting
the
limitations
As someone said about
weather.
decisions
the
Court
of
the
.'Supreme
few years ago, "They are
a
good for this day and train only.''
affairs of the world are in
such a state of flux that it may
well be that before I get back
The
to
will
Wilmington I
feel com¬
pelled to rewrite this speech and
to arrive at totally different con¬
clusions.
All I have tried to do is.
base
to
arrive
and
reasoning on the
they exist today;
my
facts
known
as
conclusions
at
from
Of course, should the
such facts.
embark
government
upon
a
re-t
an
that calls for*
annual expenditure of from $10
billion more than it is now
spending, then all the inflationaryof war financing will be
with us. But even if you knew
that this was to take place, you
would be unwise, in my opinion,
to operate your institutions much
differently than I have suggested
to $20
effects
because
we
it
would
idle
is
have
to
a
expect that
free
economy
with such expenditures for arma¬
ments.
But however much
even
paid to
armament program
our
found in the
mortgage
Bulletin stated that mortgage in-
tr
rapidly as they have during the
4%
guaranteed
were
The
watc
inventory loans. Loans based
your
attention
loan portfolio
prices are almost certain to de¬
ring
are
Mav
on
that purpose and to date have ac¬
cumulated an amount in excess of
never
ures
on
since
a
business
existing during the pas
ten years. Already Dun & Bradstreet .reports that business fail¬
loans based
While,
existence is
good
different
ulation and
thought
others replace
(executives ;ar<
than that
longed
so
*mes«nt
knows that his very
new
period of business prosperity. The
ment, and the end result is defla-n«r.ory -instead
of
inflationary
of course, in the long run
prices have to cover costs, every
and
government bonds which are avail¬
able.
I would state that those who
eral
badly,
die
to be compelled to make
in the decade ahead in
ing.
the government will always con¬
trol interest rates at about present
good many -'business ex¬
a
These
going
one
you
fi¬
untriec
living in ;
rising prices and rela¬
profits. Almost am
of
ecutives
them.
who would have you believe thai
of income, which I know most
now
and
new
easy
decade
some
.
we
are
you
in
management can succeed in sucl
an
environment.
But
during ;
you
governments
that
is
We have been
decade
A discussion of each one of these
of
ing
very
deal of evi¬
loans that
by the Federal
ing your commercial loans tha
Housing Administration, and pre¬
the management of many of the1 miums
up to 2 and even 3% were
tively
mortgage
each
management—
ability to judge
connection, I want to cau¬
hands.
problems would be .sufficient foi
a
lecture.
I can only touch or
the -high lights of
look
to
secure
of
majority of cases tha
what earning power depend,
upon—further ahead than I think
nancing
mar
;.
all
ing the past three years.
I am
glad to state that during the last
several months the competition
has let up a little.
Hard as it
seems to
believe, premiums of 4
and 5% were paid last year to
businesses
(1)> how to
making
have
not
on
institutions of all-kinds
tion
earning powei
ahead calk
ten years
even
tion you also to remember in mak¬
manage-
be
or
World
In this
bank
a
our
trust present
can
purchase
maj
ones,
any of us has the
m tm
practical banker,
good deal of m>
a
a
loans.
In
we
dearly.
is
that
our bond account; (2) whai
policy we should pursue in making commercial loans; and (3) how
the decline in the prices which
.or
understand
problems can
three headings:
we
which
on
valuation
spend
much
suci.
in the
to
seems
loan
a
for
helping to
ment
making
rather
and
j handle
other
boom
any
I
for
pay
five
vitally important, therefore,
and
increased output at even
an
a
you
to
base
your
days ahead. As
continue
output of
not to speaxuf
nuis,
oui
Ahead
can
increased
an
of
400QS
juch
Output
iixeiy that we
aosorb
>o
manage
environment is l.keiy/to be
Increased
Is
is
for
have
business
been
vacuum; you manage
business environment.
a
them in
working toward lower prices.
don't
have
com¬
during the last few years
think it altogether likely tha
we will learn something from this,
experience
much time dis¬
outlook for
you
banks in
been
we
the
because
equipment
declines
output from the plants
have
Bank Management
on
next
If the demand for
materials to build
the
as
order.
Impact
and
which
whether your brakes
see
in
are
fact,
crux
price level.
,
one
panies
avail¬
at ^ least' temporarily,
"makes for higher prices.
It is in¬
flationary because it makes a deon,
not
loans
becomes
and
27
which existed after the first
War in financing real es¬
are
present witn us today.
tnem
am
time to
plants
an
drop in food prices alwavs exert?
a downward pressure on the whole
'mand
increases
long continuation
a
present
It is frequently overlooked that
"capital "expansion' when it is go¬
;
ing
material
for
or
(2107)
two years without some o.
later going sour. Moreover, ^
past
expectation of fur¬
an
^
Let
examination
ing
not
ther
creased tiow of goous comes out ui
and
equipment purchase, ft
that by the end of 1947,
abeaa with
goods to eat
completed,
are
duct your institutions in the days
are
these
business
capital
they
CHRONICLE
FINANCIAL
&
approaching, the ;end of that road,
in my opinion, and now is the
examine
present
prospects
of
boom
de¬
of
progi am,
-
in
we
if
our
completed,
idea
-
level
perhaps
•activity>
by business
factor
men
But eventually,
plants
plants
Program
the
consumer
wear.
and
The
.
While
factories
and
it is not tne fluctuation
ognized,
ouilding
producing
undergoing.
not generally rec¬
Aiuiougn it is
market.
the
boom
now
COMMERCIAL
ditional consumer goods come or
goods
consumer
are
the
up
responsible tor the
is
Hiat
tilling
by
with
in plant
than the de¬
more
caused
THE
All
the
controls
in
ex¬
would
operation, and
istence during the past war
again
even
be
away
sea.
you
put
in
some Jiew ones
vised.
This
the
is
no
compass
.might be de-r
time
to throw
and sail out to
Caution rather dictates that
keep close to shore.
StfWlMilMNV
P * A «* KWr
H Vtw» H' (WN
W"
Wti)ii*miaiWi
I
THE
(21 OS)
28
41 fXKUNIMltuM «MlM»ltWJ
A
u
As We See It
agement of these programs
(Continued from first page)
V
not unlikely that many have more or less forgotten the
emphasis the President placed upon it in addressing
not
\
if
one
that inflationary influences
rates
more
are
largely determined by liquidifr
preferences
and
other
more
transient money market factors.
To
the extent possible without
raising
long-term
rates,, shortterm rates may be permitted more
flexibility than they have had in
recent years.
In particular, short,
1'■''
Fuel in Prospect
But this is not the full story.
interest
term
is to judge from experience,
great.
very
More
Congress only a relatively short time ago. His remarks
formed the basis for demands for legislation which*;
would vest in him vast powers to fix prices and control
much else in the economy — as if such steps as these,
even if they were to succeed in attaining their objectives,
-;
[
would be avoided is,
j
in the capital market—the
supply of savings relative to the
demand for investment:
Shorttions
"disposable" income available
purchase of such goods. The likelihood of such man¬
for
1948
Thursday, May 13,
COMMERCIAL .& .FINANCIAL CHRONICLE
market without curtailing
Ij
.
Programs here at home
being sponsored which would tend very strongly in the
same
general direction. There is the so-called Taft-EllenderWagner bill recently approved by the Senate and more
recently described by the President as "wonderful." It
are
term and discount rates somewhat
higher than those now prevailing
may help to encourage investment
in short-term government securi¬
ties by banks, and other holders
of liquid fppds and reduce the
amounts that need to be bought
case do more at most than
!
would "let down the bars" to over-extension of credit to
possibly eliminate, some of the symptoms of
all sorts of home builders, and even go into the field of
the disease complained of! But the point here is that a
tragic finger was pointed at the spectre of inflation,*- "yield insurance"—all for the avowed purpose of encourag¬
v
which at that time appeared to be occupying much of \ ing expenditures in the home construction field despite by the Federal Reserve. Such a
outrageous costs, doubtful ability of many would-be buyers to policy may be helpful in avoiding
r;
the President's attention.
;
creation of additional bank re¬
meet such obligations in the future and all the rest of which
serves.
;j
All Want More Power
previous periods of a similar sort give us ample warning.
Proposal for Higher Required
The Federal Reserve authorities rushed to the scene It
may be taken for granted that private investors—certainly
:v.':
Reserves
;
with suggestions of power, which they thought they ought those who have cut their eye-teeth — are not going to pro¬
In the light of these considera¬
to have in order to do their part in stemming this tide. The vide vast quantities of capital for such purposes without gov¬
tions, I think you will agree that
Treasury with its debt retirement program assured the pub¬ ernment guarantees of one sort or another. But, however there are fairly clear practical
lic it would do its part in checking the progress of this it
may be done or whosoever is to do it, the banks would be limitations on the use of interest
rate
disease.
The Treasury, the Reserve and State banking
policy to restrain further
very likely at one stage or another to be called on to provide
growth in bank reserves and ac¬
'authorities joined in a statement designed apparently to the funds.
companying bank credit expan¬
discourage further expansion in bank loans. Owing its
And so the story might be drawn out almost indef¬
sion.
This leads me to the second
existence, doubtless, to all this the American Bankers Asso¬
alternative, namely, an increase in
initely. Small wonder there are those in Washington
could in the nature of the
temper,
.
or
,
.
,
•
.
-
,
ciation put
into motion a campaign to persuade their mem¬
voluntarily to restrain themselves in the future in
extending credit to the general public. Apparently more or
less independent of all this noise, there was a fairly sharp
break in the prices of a number of markets where specula¬
tion had without doubt run riot for a good while. ■ Such
who wonder whether the banks should be
bers
:
recessions have resulted in
average
from further
from
comes
now
that
anti-inflation
so
talk
—
and
these wiseacres,
say
whatever
has not been overdone!
—
action
Plans
(Continued from page 8)
some
poses.
Vv
,•
!
There is
simple or single way
accomplishing this task. It will
have to be accomplished in a com¬
bination
of
ways—by
general
credit controls and in particular
areas by selective controls.
More¬
parently the trend in such loans at the moment at least
in
downward
a
about in official
is
we
have
suspicion
:
j
no
that
direction.
How general this turn¬
thinking cn the subject of bank credit
way of knowing, but we confess to a
it is not confined, to^a few doubting
Thomases in the Administration. At
change, in the current circumstances,
enough if, indeed, not inevitable.
I
-
!
any rate,
appears
More
*
Armament
such
credit
over,
controls
alone
can
do the entire job.
»Banking
monetary policies will need to
supplement fiscal and other na¬
tional policies—including, if nec¬
essary, direct economic controls;
a ;
natural
or
Expenditures
add
But
and
credit;
they are not
the most potent, but they are es¬
sential.
eral
tion
to
in the interest of
resources
longer-run
stabilityV of
Its capacity to fulfill
responsibility is necessarily
circumscribed, in part as a resuP
of statutory authority, and in part
this
as
result
a
the
of
much larger military
banking system.
expenditures than the President has as yet ventured to
Applicability of
request. He could, of course, veto added appropriations—
assures
budgetary expectations.
Just when all this will translate itself into actual
Federal expenditures is a question, the answer to which
j
{
certain
public expenditures,
and critically add to the burden of industry now chiefly
concerned with its normal function of
supplying the
public with what it wants in its every day civil life.
Not so certain, but apparently growing in probability
with each passing day, is the outlook for
larger outlays
for aid, civil and quite
possibly military, to a very considerable assortment of foreign peoples.
This, too, '
obviously would add to the tasks of an already over¬
is that
j
;
■
<i
sooner or
Unless all such expenditures
<
!;'•/,
ar/t
-
Y
it would
in the absence of
corresponding taction —
reduce the volume of consumers goods coming oil J
—
to
would not discourage gov¬
borrowing, for the gov¬
borrows
ernment
rates
not
Still
further aspects of
policy
a
higher interest rate levels are
the primary effects of such a pol¬
thority which would apply, as a
matter of equity as well as eco-,
nomics, to all commercial banks.
To this end, the Federal Reserve,
Board has recently recommended
to the Congress
a
that authority of
two-fold character be provided.,,
the authority,
possible for the
In the first place,
should
it
make
System to impose on all commer¬
banks a primary reserve re¬
cial
quirement up to 10% of aggregate
and 4% of aggre¬
demand deposits
gate time deposits,
in addition to
present requirements. If desired,
the authority could be graduated
bank. This measure
the Reserve System
class of
give
by
would:
authority to increase total reserve
financial
institutions.
It
is
one
thing to contemplate higher inter¬
est
rates
public debt of $25
billion, such as we had at the end
of World War I; it is another
on
a
contemplate higher in¬
-rates
when
public debt
thing
to
terest
amounts
to
$253
billion
and
ex¬
sioned
inflows and by
purchases of gov¬
securities from nonbank
gold
by
Federal Reserve
ernment
investors.
h
/
l
-
In the second place, the recom¬
mended
legislation would enable
impose on all com¬
the System to
ceeds
Interest Rate
the total of all private and
guards, a special reserve
two
also
have
into
lines
of
credit policy open to the
System.
The first of these alter¬
general
safe¬
mercial banks, under proper
debt by
to
marketable
limitations
are
the
that
'problem
icy upon the market prices of
requirements by a maximum of
government bonds and the second¬
about $12 billion. It would enable
ary effects of lower price levels
the System, over the next few
for government bonds upon the
years, to absorb and sterilize the
soundness and the functioning of
credit expansion potential occa¬
amounts
nearly
keep
in
public
to
$162
50%.
mind
alone
debt
billion,
We
that
or
an-
than the
value of all lasted stocks and non¬
proximatelv
75%
more
government bonds,
.
-
require¬
to' 25% of aggregate de¬
deposits and 10% of time
ment up
mand
deposits.
This may be preferably
described
as
an
optional reserve
because the special
reserve could be held, at the op¬
tion of the individual bank, in
requirement,
natives, which is entirely within
the
System's existing statutory
authority, is to permit a general
program
of a higher interest rate
is another matter requir¬
specified cash assets or in certain
marketable Y short-term f" govern-'
ing thoughtful consideration, since
ment securities. !■ »f\. <•
a
program
interest rates.
would
have
a
The
additional cost to the gov¬
ernment
a
maturing debt of $50 billion this
year
financing needs; and, third, to dis¬
interest
non-essential
borrowing
is a program that would con¬
form in major respects to the tra¬
ditional
finance.
precepts
-
•
Yet it is
not
be
a
of
"orthodox"
'
..
program that should
accepted
without
careful
and $100 billion in five years
have
to be
refunded, at
would
higher rates.
rate
This aspect
pation in Wbrld War
initial
is
at
effect
another.
Thus
the
of
rising rates may
be to encourage economic activity
<
>
the
fur¬
holders of government securities.
The program of financing partici¬
trast to that of World
it
a
ther implication.
The Treasury
might become a borrower at the
higher interest levels. This would
raisethe
knotty'' question
of
equity- with regard
to
present
ing interest rates varies and may
be the opposite at one time of
what
of
problem has
consideration; for the effect of ris¬
*
because
low, but because appro¬
priations and tax legislation make
borrowing necessary.
are
the
other
It
the upward pressure
:
these
there
courage
were
"purchasing power" of consumers and thus to
on prices — since the income derived from the production of these goods would not have
any counterpart in goods available for purchase.* If their
production merely replaced the output of civilian-goods,
they
ernment
purpose:
first,
to
strengthen the incentive for sav¬
ings;; second, to meet increased
current
.
our
three-fold
taken from the people in
taxes, they would add to the
•
Taking
account,
Such
later it will add to
burdened industry.
lation
rise in the level of
!
virtually all industry wishes it knew. What is
!
of
Policy
the
political risk involved therein—but no action
of this sort is
likely from all present appearances to keep
military outlays even nearly within the limits of previous
nature
;1 -
.
:
our
pansion.
war
assume
nation's
be obliged to use its influence torestrain
unnecessary
credit ex¬
and the likelihood of its outbreak at almost
any
moment, has created a state of mind among the people of
and
the
conserve
democratic capitalism.. In view of
this responsibility, the System will
or
which apparently
is
credit
the
he
this country
responsibility of the Fed¬
Reserve System in this situa¬
in
or
of
The
hoped ultimately to get than
thought it expedient to ask for at the moment.
At any rate, the
campaign of terror, if it may be so termed,
which has been under
way for a long while past about the
next
would hardly
deterrent until they had
become
extremely high.
They
would impel consumers to avoid
higher prices in the future by
making credit purchases in the
present.
They would draw out
savings now held in bank depos¬
savings bonds and
money
suggestions which would add quite
appreciably to public expenditures, and it is all but uni¬
versally believed that these suggestions represented less
what
still
went
costs
they
its
speak, however, only of the
factors
lying
in
the
field
of
two
what the President wanted
and
and
become
them to the volume of credit.
I
quite impossible to say with any great degree of
precisely what the Administration, wants from
Congress as regards rearmament and related i matters. It
one
rates
programs
not
It is
made
expansion
and
assurance
has
but
the leverage to be
through
this authority
be relatively minor in re¬
banking system confronts.
Whatis needed is a more general au¬
higher;
no
of
further increase in the volume of bank loans, and apis
would
cago,
exerted
before
Restraint
foot,
l
Measures for Monetary
:.Y
well require considerable
may
specula¬
consumption pur¬
for
and
inflationary conditions, especially,
rising rates would put businesses
under
a
strong inducement to
undertake
tion,
there may
now on
require
legislation
additional authority ;to
the Reserve System.
The System
still has unused power to increase
the reserve requirements of mem¬
ber banks in New York and Chi¬
What About Money and Credit?
of the powers that be are wondering whether all this
have been
would
tive
essential production, for
Washington
all
of
This alterna¬
granting
of wholesale prices.
But word
requirement
reserve
commercial banks.
lending.
minor decline in the over-all
a
the
discouraged
geared
II,
in
War
I,
con¬
was
to avoidance of this prob¬
lem by adherence to a stable pat¬
tern and level of interest rates.
These
considerations
re¬
;theyYmay not become, -re¬ spect" to the general level
of
strictive 'dill an-alarmingly high
interest rates do not mean that
level Mstbe&n'reached:
ODh^yiab© the. existing structure of interest
first takert dsnbarhingfirs of rising! rates should remain rivid.
Long.
Under
seems
the
term interest rates reflect condi¬
to
me
at this time that
reserve
and1;for
an
primary
reserves
as
optional
increase
in
proposed, with the general
limita¬
tion that the total increase in
re¬
quired reserves that might be ap¬
plied 'by the two types of Author¬
ity taken together could not
ceed
25%
deposits
with
and-
prices and active business.
It
perhaps the most; desp;aj?le ar¬
rangement would' be to' package
together the optional reserve plan
and the proposal for authority to*
increase primary reserves 'made
by the Board to Congress I'd April.;
Provision might be made both for
of
and
10%
of
time deposits.
At
ex¬
demand
aggregate
aggregate
:
;
the
special session of Con¬
gress last fall when the Board wasasked-to say what, might be
in
the monetary and
done!
credit field
Volume
Number 4698
167
to deal with
THE
inflationary forces, its
small
and
banks
COMMERCIAL
recognize
this
&
mortgage insurance program
der Title VI of the National Hous¬
the
curities by adjusting their reserve
would
plan. The proposal attracted con¬
positions continually through pur¬
longer-term
siderable attention, much of which
chases and sales.
reserves.
sideration
cf
adverse.
was
It
special
reserve
objected that
was
that
and
the
timing,
the
for instant
Board
rather act
than
their
on
wait for
them
what
\vait till
of
bly at
total
volume
bank
of
on
and
As
a
to
measure
reduce
the vol¬
initiative
Moreover,
situation
a
an
of
to
desperate
is
before recommending appropriate
ume
as
to
meet
primary
In
fact,
device for
meeting the very
cial
of
kind
situation
in
a
spe¬
that
now
what oye confronts us, the special or op¬
would call statesmanship. As for tional reserve plan has certain im¬
the adequacy of Board powers, I portant advantages both to banks
legislation
think
the
present
scarcely
point
is whether the
applicable. The
example—which
could
do—is
when
the
require¬
Chicago,
not
Board
the
helpful
lies
elsewhere. Moreover, it is imprac¬
ticable
very
problem
exhaust
to
largely
before
powers
the moment of their greatest ef¬
fectiveness
unfortunate
and
have
to
some
power
exhaust
the Board
them
to
without
ip
was
reserve. Finally,
not seeking power
but was
responding to a request for
suggestions at a time which was
not of
its
Some
making
own
bankers
special
choice.
or
have
liked
plan
reserve
have not.
and
the
some
I have had doubts about
it myself, and can sympathize with
the doubts of others.
Yet I know
of
nothing better, and the plan has
advantages. I think, which have
been
not
ciated.
and to the public
understood
i;
.
or
appre¬
special
Generally speaking, the optional
special reserve requirement
would be capable of accomplish¬
ing the same restraints on bank
credit expansion as a straight in¬
crease in primary reserve require¬
ments, but at would be consider¬
or
optional
requirement,
reserve-
or
if
imposed, would leave the banks
with rheir holdings of government
securities intact.
It would make
possible
quired
increase
an
in
bank
and
at
the
reserves
time avoid
re¬
same
considerable amount
a
of
banking readjustment, as well
as any serious adverse effect
upon
bank earnings.
It would simply
immobilize a portion of commer¬
cial bank portfolios of government
securities
and
discontinue
the
treatment of these holdings as ex¬
cess
lent
i.e., as assets equiva¬
reserves,
cash and available for
to
version into actual
bank's
con¬
at the
reserves
discretion through sale to
the Federal Reserve.
V:i
;
which
by
in
the
securities
need to sell
higher-yielding bonds
to obtain sufficient shoit-term se¬
curities to meet requirements. The
thus
of
rela¬
bank
credit
and
the condition of
impairment
banks.
our
of
I be¬
lieve this criticism
does less than
justice to the good
common
of the average
to
banker
effectiveness of
the
supervisory agencies.
not
take
into
vate
credit,
and
sense
well
as
as
bank
our
It also does
account
higher interest rates
possible
sound pri¬
increase in
on
the
bank earnings from this source.
It is worth mention that
Cial
spe-*
a
reserve
requirement, like an
increase in primary requirements,
would reduce the ratio of multiple
deposit
built
expansion that
on
might
new
from
could
be
that banks
reserves
acquire
source.
/
whatever
v/A-.r;,7'
v
Credit
Restraint
My remarks thus far have been
concerned
with the
major means
restraining redundant credit
expansion.
But
there are also
on gov¬
and
areas
short-term and medium-term bor¬
their
misgivings Bankers naturally
being blamed for every¬
thing. They did not bring on the
resent
inflation and they do not like to
feel
that all the pressure to stop
it is being put on them.
In real¬
ity, of
course, restraint on the ex¬
tension of credit happens to be
one of
the effective ways of re¬
sisting inflation, and we must not
forget that we are speaking about
it because
our
banking is the field of
responsibility and not because
We expect
everything that .is done
credit.
therefore y helpful
tion
the lender to
credit
and
to
among
reduce
bank
scarce
customers
volun¬
in
the
bank
business
credit
would make it
possible to tie the
deposits created in deficit financ¬
ing to the securiiies sold to the
commercial
assets
banks
and
held
against the deposits.
as
Con¬
unusable
measures.
nance
By way,of preface it should be
emphasize^,
I noted
as
earlier,
that banks how hold $66 billion of
government securities.
From the
standpoint of aq individual bank
and from the standpoint of the
banking system as a whole, these
securities are virtually excess re¬
serves. yThat
is, banks may sell
government securities in the
ket to obtain
reserves
and
mar¬
unless
other
buyers appear, the Federal
Reserve System must buy them in
support of orderly and stable
mar¬
ket conditions.
In the process new
bank
are
reserves
matter
of
and
fact,
cieated.
nearly
many
all
because
of
As
a
large
medium-sized
stocks
of
domi¬
the
.
'iV:
plan that it would
be too restrivtive and again that
it would not be restrictive enough.
Yet as a device for meeting the
serious
expenditures
of
,
down
to
and
payments
reduce
the
competition for available supplies
of basic materials and manpower,
on which the national defense and
world
aid
heavily.
this
programs
restraint would
crease
of
must
auxiliary
An
draw
effect
be
some
of
in¬
savings, encouragement
of which may be put dov/n as an
essential element of any program
to
fight
The
in
inflation
the
period
'•
"\y;
.
third
object
of
selective
credit control that I mentioned is
mortgage credit for housing, which
for
of
some
the
time
most
now
has been
inflationary
one
factors
of
excessive in the current situation.
Since
the special re¬ early last winter, there have been
serve could
be used with greater mounting complaints — mainly
precision and with less danger of from the building t industry and
adverse reaction
than' could an veterans organizations—that resi¬
increase in primary requiiements, dential mortgage credit is becom¬
credit
problems
expansion
since the special reserve, as
I said
before, would involve fewer bank¬
ing adjustments. Moreover, safe¬
guards against too rapid applica¬
tion
of the requirements
integral part of the plan.
It has been said that the
reserve
would
not
be
are
an
..
special
appraisal
placed by
We
has been
"value" formula.
a
not at all
are
credit is
gage
sure
getting
fered
by
lenders
re¬
tighter
lower
such
If
loans.
in
of over-all credit
avoids
restrictive
areas
our
taxes.
by
our
recent
own
action
to
heavy burden of Fed¬
There is
financial
no
national program and Still
avoid further serious inflation. We
our
or
raise
muse
from
the
that has to
money
there must be
domestic
public
be
demand
the
spent and
restriction
some
for
on
fi¬
goods
nanced through bank credit.
These matters I have put before
that it is the duty
of the Board to bring not
only to
you are matters
the attention of Congress but also
to the attention of bankers and the
public
is
our
time
at
large.
Furthermore, it
duty to do
so
in sufficient
allow
to
Congressional and
public discussion and debate. And
furthermore the powers the Board
requires in the discharge of its re¬
sponsibilities must first be granted
in
by Congress in sufficient time for
which have large
as
of
and
resources,,
deferred
and
demand
sleight-of-hand by which we canv
carry the unavoidable burden of
restraint
importance, such
and
manpower
reduce
re¬
effects
heavy, current
eral
anti-inflationary
monetary
and fiscal policies have been tight¬
ening residential mortgage credit
somewhat, that seems to me all
to the good, and, considering the
inflationary conditions that pre¬
vail in the housing market, en¬
tirely consistent with the objec¬
tives of those policies.
There is
no such thing as an effective pro¬
that
econ-
commitments
our
people,
cent
gram
These
peacetime
disappeared, but loans are
being placed. Borrowers are hav¬
ing a harder time getting 100% or
90% loans, but there is no sound
economic reason why they should
have had
fi¬
sound
entire
time of full utilization,
a
of
have
ever
an
of
that mort¬
are
at
come
their
resi¬
exercise
to
be
effective.
Powers granted too late
credit.
Even without a strongly infla¬
tionary outlook for domestic eco¬
serve
no-
particular good.
I hope the suggestions we are
developments, there would offering Will not be greeted with,
be very good reason for recon¬ the hackneyed comment that the
Federal
Reserve
merely
wants,
sidering and moderating any new
more power.
To make that com¬
program
for the encouragement
ment is to beg the question. The
of mortgage lending* With such
Federal Reserve System was set
as
outlook, the need for recon¬
sideration is urgent. It would be up nearly 35 years ago to exercise
nomic
if
better
abandoned
we
the pro-
certain authorized functions in the
altogether/ but at the least .public good. The world has not
stood still since then, and pre¬
any further special encouragement
of mortgage credit should be lim¬ sumably it will not stand still in
the near future. We have had two
ited to rental housing.
We shall
not
succeed in overcoming the great wars in that time, the mag¬
grain
competitive
supplies of
nitude of business operations has
on
materials
and
struction labor.
grown, and new forces have arisen.
These developments make it nec¬
scarce
pressures
con¬
adapt and enlarge the
changed conditionsinadequate. I leave
to your consideration the question
to
essary
What is needed is
that
powers
continuing effort to keep the
volume of' mortgage credit from
have rendered
pressing too powerfully against
these important supplies.:;
what should be done about it.
a
„
The sale of saving's
bonds offers
positive check on inflation that
the problem from a
and maturities in the field of con¬ different
angle.
It
withdraws
sumer
instalment credit is also money from the spending stream,
needed, in my opinion. Reestab- thus reducing
the pressure of
lishment of this control would help buyers
on
a
scanty supply of
to
dampen
consumer
demand, goods, and it substitutes private
especially for durable goods, fi¬ investment in government secu¬
nanced
on
time-payment plans. rities for bank investment, thus
This would help to curb further reducing
the volume
of bank
inflationary growth in consumer credit and of bank deposits.
ahead.
reserve
for
ticipated.
a
Criticism has been made of the
special
the pernicious
necessary current cost" cost for¬
mula
prudent,
a
recovery and peace that no one"
till very recently would have an¬
and
has housing shortage by increasing the
restrained up to the present
Regulation
public debt in the credit
situation.
Optional Reserve Plan
banks
reserve
higher,
as
time.
One of its aims is the
the Proposed
listed
of
purchase
con¬
authority would restore
flexibility and effectiveness to the
customary instruments of Federal
protection
of ' banking
through
Reserve policy, i.e., open market
banking itself. It is in this spirit
that I should like to clarify the operations and discount rates. In
the traditional sense of their use
•optional reserve plan, for perhaps
for credit control purposes, these
our explanations
have not suffi¬
instruments have become largely
ciently
described
the
relative
merits of
carrying
or
been
the
available
expansion and
sequently, it would be much more
no¬
adaptable
in
coping with
the
certainly do not wish
to give the impression that I have problems of credit control incident
to
government deficit financing
■any patience with the tendency to
than an increase in primary re¬
take everything out on the bank¬
serve requirements would be.
ers.
I have a public duty to per¬
form, but that duty is certainly y' Lastly, the optional or spe&ial
against the long-run interests
■.
,
by tne Federal Reserve Board's
regulation
of
margin
require¬
sumer financing.
'•.••■■■■" ments; and in view of the dan¬
Furthermore, if government def¬ gerous inflationary possibilities of
icit financing again becomes nec¬ the immediate future, it would be
essary
at some not too distant a grave mistake, in my judgment,
to ease those requirements at this
stage, the optional requirement
tarily
for
to be done in that field and
not
■.
Credit to finance
ra¬
where else. I
of bankers.
y;
importantly, the plan would
pressure on
guar¬
mortgages
one-half per
placed
thing
omy.
We are compelled by cir¬
cumstances beyond our control to
undertake commitments for world
faced;
on
dential mortgage
securities, would, on the
other measures supplementary to
other hand, make possible some
general credit policy which should
increase in interest rates on pri¬
be restrictive in particular credit
vate
borrowing, particularly on
More
been
a
nancial couise for
insured
and
financial
controlling the aggregate volume
rowing. Any such rise would have
of t>ank credit. I refer to the areas
the same restraining effects on in¬
ably less onerous to the banks. As
of stock market credit, consumer
I have just said, I sympathize with flationary borrowing as higher in¬
and
housing
mortgage
terest rates in general might have. credit,
bankers who have
questioned the
have
been
particular
Supplementary Measures of
ernment
desirability of the special reserve
put
plan' and I think I understand
have
facts
,
stress
Housing Act. However, 1
am glad to
say that, in this pro¬
posed legislation, some revelant
economic
,
Before closing, I should like to
the fact that there is such,
of the Na¬
resulting loss in earnings, it has any real sense. Financial institu¬
been said, might cause banks to tions, including commercial banks,
reach out for more risky, high-in¬ are still making mortgage loans
substantial
rate. • Mortgage
terest loans and investments, with at a
consequent expansion in private premiums, bonuses, and fees of¬
of
tively stable interest rates
and
/
;
,
Financial Strength Essential
,
tional
cent
plan because banks might
rererve
f;
and
maintenance
through Re¬
Some have criticized the
special
strengthen the de¬
banks for short-term
government
reserves
Bank purchases.
would
mand
bank
new
The optional or special reserve,
aid
?;..y;.-'
generally.
In the first place the
powers are
to raise reserve
in New York and
power
ments
for
is
II
anteed
of
as
government;
and
issues, thus avoiding the creation
serve
to
increase
an
reserves.
Buyers other
under Titles I
permissive interest rates
of
sell them to the Reserve Banks in
book loss.
a
the
by
credit expansion.
third, to relax lending conditions
than the Reserve Banks
might be
attracted by these higher-yielding
of
effective to
order
higher-yielding security, possi¬
gov¬
a
secondary mar¬
mortgages already under¬
written
a
the
restraint
to place
ing Act; second, to create
29
pansion on a national basis—•
especially' with the basic factors
present that are now stimulating
un¬
ernment financed
ket for
ture of the government securities
such
own
do.
obtain
held by banks, or for that matter,
of those held by other investors.
regulation to tell
a
to
sell
to
to
As to
already
be authorized when necessary.
existence
banks
securities
proposal
Board
application but that its
mere
permit
It is of course true that
deterred from doing this,
however,
because they would be
sacrificing
Any plan
potential reserves, it is
immobilize a part
authority would have some effect, these securities in the portfolios
of course, for most bankers had banks as it is to require banks
use
The
securities
government
still
credit
not that the power be granted
was
se¬
the money supply must rec¬
ognize the potential reserve fea¬
had enough power anyway.
the
government
the plan would leave banks large¬
ly free to do this. Banks would be
the situation was not yet serious
enough to warrant such a meas¬
ure,
of
(2109)
enough because immobilization of
characteristic
was
CHRONICLE
short-term
to recommend con¬
response
FINANCIAL
New York Stock Exchange
approaches
Weekly Firm Changes
The New York Stock Exchange
has annouced the following firm
changes:
The
We
The
that
On
sideratioii.
timie
-
on
They; are, .first,- to conam-unsodrafc basis the
iw.'
.//Bb# f-."
•
1 •'
was
ot
transferred
May 6,
on
membership
of
transferred
Jr.,
on
May 6.
May 18 the Exchange will
consider the transfer of the mem¬
bership
James
of
Thomas Campbell.
is
it
understood,
individual
vigorously maintain the soundness
of credit extension by individual
F.
to
Shea
Mr. Campbell,
will act as an
floor broker.
:
Frank J. Hardiman retired from
partnership in • Aronson,
on April 30.
banks, and we have actively co¬
&
Hall
Co.
operated with the American Bank¬
Association in its nation-wide
ers
program
restraint.
Joseph
Zawadzski
withdrew
from limited partnership in Benof fostering banker-self- dix, Luitweiler & Co. on April 30.
But the banks may ex¬
'
Interest
pect continuing strong credit de¬
mands from businesses and indi¬
Wieand
on
viduals, and they are not in a po¬
to refuse the sound credit
demands of individual customers
in
of
late
the
Bioren
&
D.
Henry
Co.
ceased
May 1.
sition
in
good
credit standing.
that banks can
New Vose
I think
Effective
fairly be asked to
conservative
ing tighter. Partly in response to lending standards, and I believe
these complaints, consideration is that banks
universally will re¬
being given by Congress to legis¬ spond to such requests. But I do
lation designed
to reverse this not believe that they can extend
situation. You are perhaps familiar credit competitively, as they must,
with, the proposals under con- in the infcjjr.qst of their local com-
restrictive
Exchange
to Harold C. Mayer,
should
bankers.
was
Mellick, Jr.,
Robinson Simonds
believe
supervisory.^ policy
individual
membership
Harold O* Barker
to R. Drew
Lastly, an over-all restrictive
credit policy will need to be sup¬
plemented by vigilant watchful¬
ness
on
the part of the super¬
visory authorities and by volun¬
tary self-restraint on the part of
..
.
Exchange
strictly
adhere
munities'-and
to
at
the
same
.
(
■
fl<»
'iP.V.r
-
'
Partnership
18, the partners
Co., 60 Beaver Street,
New York City,
will be Alden H.
Vose, Jr., member of the New
York Stock Exchange, and B. Otto
Jacobsen.
Mr. Vose is acquiring"
the Exchange membership of the
late • Daniel - F.
McCarthy who
formerly held the firm's member¬
time
ship.
refrain 'from redundant credit ex,.f
in Vose &
May
•
..
.<
to
www /
:
if wt' "r utoy
%b 1
-
i \m *".•« i,wv v ,t
FINANCIAL CHRONICLE
THE- COMMERCIAL, &
(2110)
30
closed,
wan
Increased Spending Can Hasten Wat With Russia
Eisenhower)
(Continued from first page)
;
picked 60
days
the probable duration of the nex,
War. If the* enemy is prepared foi
spending and
decisive action in this atomic age;
high taxation policy to be a defi¬
and if he understands die prin¬
nitely
inflationary
force;
The
ciple of concentration of strength;
stability and; continued progress
and if at the same time' we1 are in vommitment to military spending
of the whole economy are* seri¬
of a magnitude that will swamp
a more or less similar state to* the
ously threatened.
the budget and the taxpayers un¬
one We are in- today, then-1 can*
~Ih Washington the men and the
less strong measures are taken to
see* why he should take 60 days
groups that have fought so val¬
"The period; I think, willbe om
jhange- the present course.
iantly for economy admit that
The first and1 most important
night, because that would be- the
there is a tidal wave of spending
proper
application of material point upon which the* people need
which cannot be resisted
The
forces against a nation not pre¬ information, and with regard to
country, they say, is on a" spend¬ pared to counter."
Which all of the* available evi¬
ing spree.
Everybody is on the
There are numerous
"its" in dence should be set out publicly,
bandwagon, and the taxpayers are this statement, but the impression .s the imminence of war. A war
blowing the horns as loudly as the likely to* be retained is that Russia ;an get started from an; incident
spenders.
hat gets out of hand; or it can
can destroy us in
a single night
,
a
curious and alarming
manifestation of mass psychology.
It is
tude
quite contrary to the atti¬
normally to be expected, af¬
ter the close of
a
long, exhaust¬
ing war. Even though this country was not invaded, nor were its
cities bombed; there were serious
war losses of a material sort. The,
normal provision for renewal and
extension of capital plant was not
confronts
that
Instead, they have become
wrought up to a state of mind
immense
tolerates-
which:
new
1948
,
the.increase in product and pros! perity. It-led to' an "average rate
Everything in the available evi- i
points in this direction. The
Magidoff who was recently
expelled from KUssia stated to,
Mr. *
Russian
economy.
The
people
just been "invited" to sub¬
scribe heavily to. a new loan; for
this purpose.
It is a, command
invitation; and a month's wages
have
worker
responsible officials are in
possession of such evidence, it
should be made* public.
j
our
of
intentional
provo¬
for peace now, keeping it open
For reasons given below;,
will
be
the
best assurance of
cation.
t does not appear
purpose* is
iental war
likely that the
to bring, on an accinow
or
in
the
peace
in the future,
near
All of the advantage of a
uture;
services that put
us immeasurably
ahead of every other nation: that
ever
lived on this planet.
Deficient
Capital
\
Formation
-
*
is
between Russian economic
erous at various times and places;
capacity and our own will not be
fhe behavior of Russian troops
closed, or even narrowed signifi¬
and officials is open to; an inter¬
cantly.
If this gap is the reason
pretation
^
There was a bad slippage in the
specified as
rate of capital formation in relaabout
the
proper
contribution.
There is nothing in the available i tiorr to
gross national product
evidence that points to an inten- during the 1930's. To what extent
ttoir to make war now or soon. If the depression was prolonged and
each
for
gap
,
construction
,
planned;
immense shortage of
group- of reserve officers in New
exists:
Many kinds of York, as reported by Kusseil rorn e ces s a r y durable- consumers
jtter of the New York "Times." If
goods are still in short supply. Im¬ substance, the following points
portant natural resources were were made by Commander Greenheavily drained. The entire logic halgh; Russian economic- poten¬
of the postwar situation points to tial is less than 25% of
ours, and
the obvious conclusion that theonly seven percentage points were
attitudO of the people should be added
from
satellite
countries.
one of settling down to work, to
The
weaknesses
outweigh
the
saving and investment, to the* strengths.
Russia has a large
great task of reconditioning and military machine but is unable to
new
to
so
jcgin.
The basic* assump¬
tion made1 by General Anderson,
which- is that such a catastrophe
housing
them.
enough
nearly
ant a test of the issue
by
being
deliberately
Assuming that the real danger
in
A nation that plans war period lies some HistancP in +hp
distance
tne
at a* time* of its own choosing
future, and Secretary of Defense
xs likely to be; disposed to' prevent
hue
ir\r\in**ic>ri
hixi
would be possible if we stood still
Fbrrestal has indicated his belief
while; Russia forged' ahead: in¬ premature incidents, if possible, that such is the
case, what should
it om leading to war because of the
volves
aa
important matter to
our own national policy be- at this
effect on the main time table;
which attention will be directed
time?
The answer is clear.
We
later,
Many people have been disturbed should adopt a course that will
over the "you never can tell what
Another example is provided by
best assure the further growth of
The Russians our own industrial power so that
me
remarks
of
Commander .nay happen" view;
nave been* impudent and obstrep¬
Greenhalgh in a lecture before- a
the
of bombing.
An
made.
or
Thursday, May 13
°f growth, from 1869 to 1928; of
compounded annually. It
provided* jobs for the increasing
ord
is
labor force, permitted higher
strongly
indicative
of
bureaucratic politics,, and of just press interviewers that most of Images, raised real incomes; adstraight garden variety of politics; the current production there con- j Yanced living standards, and crefhe outcome, however, will' be a sists of materials to build up the ated' a vast flow of goods and
saved causes the big;
This is
^
dence
veals rfvalfy and' dissentlon where
there should be unity;.
The rec¬
at
would otherwise be
that
income
t
iira^hh■»w4*hftouju«uk*w.*mtfewv.tu.timwu> 4w* ia vf) alwlwk'w
wiwuw lm. m>> !»mjiiuhwk«« a
^
mwj'wirwfb
,
Develop
Should
v
_
Our
;
-
-
<
.
,
_
,
Industrial
Fower'
intensified by this decline in capital formation we may never
know, but we db* know that there
Was n<y Prosperity during that,
dacadb; Secretary of Commerce
A
u*rv\m*ri
,,
^
i
statPH
Qis
fiv
tW
in
Ki r
nCariD^S Oil tllG 1948 tSX bill^thalJ
there is now a serious deficiency
of
capital, and this is. borne out
independent estimates. * TheResearch Department of the* Na¬
tional Association of Manufactiirby
ers
ah annual de¬
has estimated
ficiency in capital formation be¬
low what is required to* maintain!
the- historic rate- of growth in the*
magnitude of $7-$8' billion annu¬
ally.1 This estimate had been"
confirmed: earlier and indepen¬
dently by the President, who said:
in his- State* of the Union mes-*.
that industry would need to*
j$rOvide ^0 billion* of new capital
sage*
railway system1 and lack of trucks*
surprise attack in force would be
over the next few* years in order
How do we develop our in- to; supply the wants of consumers,
ost by letting a war get started
that way.
and
power? | « Here is: the core nf the nation^
The Japs did not waste dustrial:.. strengthtime
or
motion oh provocative Again the answer is clear. It can fiscal, problem and- also of its.
be done only by devoting more problems of long-range
incidents
before
the
attack
on
national:
The* Russian^ aircraft
Pearl Harbor.
geared
view
it
move
because
of
a
.
damaged
.
industry it
making small planes
to
A
more*
reasonable
the Russian bluster
of
and
of
our.
economic resources to the
task. Here is where the spending
security.
The
formation;
tends
capital
growth.*
for
national
and
drains, and which likewise toler- and lacks the production know- shoving is that it is designed to spree on which we are now em- cannot, be* provided without tax:;
ates the prospect of: indefinite how to turn out
heavy bombers, get such concessions as we may barking can be of irreparable, reduction; and; we dare.not redufce:
neglect of the civilian production Russia, will have trouble in mak- yield in a game of bluff. Anything tragic: damage. If we let ourselves taxes until the Federal spending)
job that clearly lies ahead.
j ing. an atom, bomb because of gained by such means is at a much be committed to Federal budgets corner down.. Instead of lower
technical production difficulties.
cheaper price than fighting, and of $45-$50 billions, for military spending,, the Federal budget has*
Fear of War
we
must
admit that they have and
nonmilitary
purposes,
we already gone through tiie ceiling,
Mr. Stuart Symington said re¬
The key to this abnormal state
taken some good* pots on nothing shall absorb, in the carrying of a and is on ,its way through the roofw
cently, as reported in the Newof mind appears to be the fear of
huge load of governmental un¬
York "Times,"
that Russia has getter than a pair of deuces,
Politics and Spending Spree
war.
That any nation can con¬
So far as Russia's long-range in- ' productiveness, so much of the
more B-29S than we have, which
template: the prospect of another does
nation's capacity to grow as to
Can tha spending spree be stoptentions are concerned, Vwe are
not square with Commander
war, or can so quickly be pre¬
slow down tremendously the rate ped? Probably not, as a matter of •
Greenhalgh'y, statement regarding not warranted now in any other
pared to. engage in war after the
of growth.
It will be the case politics, unless the people quickly;
the RUssia- aircraft industry;
Mr. view than that, war is. definitely
-
economic and spiritual exhaustion
Symington also said; in the same
II, is contrary to all
statement, that Russia could bomb
and.
experience;
This
any part of this country from- Si¬
country is certainly not ready for berian
in
of World War
history
another war, either materially or
spiritually.
If this- be true- of us,
what about Russia, the
sible
home
antagonist?
The
land was deeply
only pos¬
Russian
invaded.
Her most fertile lands; were laid
waste.
Her orincipal cities were
bases with her B-29s.
the
Finletter
Commission
But
stated
that the effective radius of a B-29
with full load is about 1,600 miles;
which would
mean
that the only
partr of this- country
tack from
Siberian
be Alaska.
open
bases
to; at¬
would
:
destroyed. Her railway system
These conflicting statements; db
was
badly damaged.
Factories
not parse;.
Because they do not
and power plants were* wrecked.'
Her losses of men ran into the add up to a* consistent description
of the situation,^ they are all
millions.
open;
She never had; a mod¬
ern
to substantial
discount
The most
highway system. Remember
was said during the German- convincing report, convincing be¬
what
advance into Russia. "As
soon
as
cause
it squares with the
reason¬
able* evidence;, is that Russia can¬
General
Mud will be fighting on our side." not move her war machine for
The fear of
The* rains were late that year;, die- lack of transport.
spite our prayers for rain, or the many people has been that Rus¬
sia could, af will,
sweep westward:
Germans; would not have1 reached
the
autumn
rains
come,
*
Stalingrad.
that* the
This* goes; to
Lord,
show
knows
best, for
Stalingrad: was-destroyed,, but not
captured;
before
King
Winter
broke the German attack,
There has been, no full public
discussion of the situation and the
probabilities;
Hanson W. Bald¬
win,, writing in- the New York
"Times" of March, 29j 1948; re¬
ferred to the mounting emphasis
by military leaders upon our de¬
fense weaknesses.
As.
matter of
a
fact,
the stories told, by these
leaders and by high administra¬
tive
officials
are
not
one-
of
underplaying
defensive assets
while
those of Russia.
some examples:
ing
resistance that
we
against
any
could, offer..
It
appears reasonable to believe that
the practical fact of
immobility
father
than
any
concern,
over
treaties
or
agreements
has
held
the Russians, back.
Concern Regarding Atomic: Bomb
Another understandable
source
of popular concern has been
atomic bomb. There is
the
every rea¬
to believe that Russian scien¬
tists understand the
principles o>
son
physics and' mathematics involved
irt nuclear fission..
Every phvsicr
Consistent;, teacher in our
own universities
although the general' impression
that they appear to have* created
is
to the Atlantic ocean
our
own
overplay¬
Here
are
knows the theory and can write
the formulas on a blackboard. BUt
there is a whole world of differ¬
ence
between
ory and the
trial
a grasp, of the the¬
technical and indus¬
resources
•
her
whenever
program
the
of the hare and the tortoise over
leadership
can see a rea-;
e r a
1
Commandant
Grviile
oft
the
Anderson,
Ait
Force
duce* the* end
requited to pro¬
product and lay iJ
Congress
why he (General
over,
rational view of the war;
.
air force* when it
ter Cbmmission and the Brewster.
Secretary
Forrestal
has pointed, out the unwisdom of
building. too- many
planes of
present design, now, because they
will be- obsolete in the danger
period that lies ahead., The present
and. proposed taxing and spends
ing programs will slow; us down
toward, a standstill: ; They, will
ftoflfrtro-ho
therefore be the tv,nct important
most imnnrtanf
Contribution that we can, now
make to causing the next: war^
and to assuring the prospect that
Commission emphasized" the targe; '
savings-attainable under the Uhi-
create such
The Russian, Time Schedule
The
principal
lieving
that
schedule
reason
the*
does
not
for
Russian;
call
for
is
be*
time
war.
until after the lapse of some- years
is the great disparity of industrial
resources' as
compared*, with this
country.
Success in* modem; to¬
tal war is* not determined by the
number of men in uniform, or by
the quantity of war material on
hand;
It is' determined in. the end
an
needed.
by- industrial capacity.
However
provincial, the Russian: polit-buro we shall not win it.
may be, and whatever the kind i.t The; basis< of this predictions is
of nonsense about Russia's great¬ that tee can be no* adequate
ness' that may have been ted* to provision for the. amount of new
the Russian policy makers* by the capital needed* for sound national
"yes men," they are not so simple growth under the existing tax
as to suppose that they can
today loadi, Every business. man» knows
match
usin
industrial power. that the growth of his own busi¬
Moreover, they are shrewd enough ness depends upon getting more
to realize the significance of in¬ capital for it. - What Is? true 'for
dustrial power as the basis of mil¬ each separate business is also: true
itary might In view Of* Russia's for all business^ and for* the nations
immense capital losses in the last The great expansion of output
war;, and of the great economic which occurred in. this country
disparity that now exists, it is. over the last century was caused*
reasonable to believe that, Russia, primarily by the* additions to cap¬
is
not
war.
•
now
ready for
a
planned
Her major effort now and
for the future will be* to build
up
ital
Data that have been
productive
power
and'
thus
to
ffcatron Act* of: 19.47,
piled back to, 1869, indicate that
plan, war,
decide
cpme* whe%.
tha|. ^| industrial
^ey
gap^
These sav-,
should be saughf withoutfurther delay. Even on> the basis*
0f the suggestions made hy sub>-.
committees of the House Anpro- priations Cbmmitee in their re-.
ports on the 1948 Army and. Navy'
blllSJ the total, that CQU te Saved.,
ings
would be at least $ I billion.
Secondc If Mr. Forrestal's: sug-:
gestion that there should not be*.
overbuilding now?* of planee al-*
ready obsolete were, to, be taken"
seriously, - then * the
immediate ;
problem^ so far as aircraft is con- ,
cerned, is: to, promote - research,,
and
development and: toJ establish'
the aircraft? Mdttstry
from which it
ly when, and
can
as
on
a;, basis*;
expand prompt¬
needed.- Tbe^Fiir-
Hetter^ Commission
con^eied the ^
qiieriibnl of a-:; soundly organized:
•
healthy aircrajR industry and. pre- *
sentedi the
the
follbwihg estimate of
annual business
com¬
•„
requirei to ;
maintain it in-that "condition:
"This Commissioir believes, that:
there wasback," on the military requirements for 2O,O0(Hr ;
ftom that year to 1928
a
.
average,,
various
proposed. enlarge¬
ment of the defense
program re¬
a
,
00(1 to>
on
details of the
"I donrt see
to
again.
regular "plow
of 20% of the gross- na¬
the shelf till needed.
In other words,,
close,, if possible, the gap, that, tional product.
College, speaking to; the Confer¬
one-fifth, of each; year's crop was
The
jockeying, that has. gone on exists between her industrial ca¬
ence. of Mhvors irt New York on
put aside as the seed, corn for
within the branches, of the. armed
Fe&;, IP, 1848, said - "the
pacity and bur own*
H, after a making a- bigger crop the next
following, .services and between the
Adminis¬
as
reported: in the New York
lapse-of time, they still Want and year.
tration and
•
Gen
come*
Russia can close the eco- situation - and: prospects;
Were,
sonable prospect of success; Time nomic gap if we stand still long such, rationality possible; then the enough.
General Anderson was problem of building for defense may work for peace- here; for the
war-mihdfed1 group now in con¬ right in a way that he did not would: be -expressible ih termstrol of Russian policy will even¬ intend; when he said that if we very different than; those current-',
remained
as
we
now
are;
the ly discussed and considered, latually pass away and it may be
succeeded by new leaders of a enemy could some day overwhelm t^e light of reason the followingus;
: His
emphasis
was
upon points could be* noted;.
:' '
more
reasonable
and
rational,,
frame of mind.
First; there are substantial posThis, however, building up now a super air force. |
The correct emphasis should be sibilities of economy within, theshould not be counted upon in
advance. *•■;■■■■:
T
'M'
^ upon the industrial capacity to armed' services.. Both the Finlet-,
Russian
...
This,,
seed
regular
corn
addition
to- the
of capital is, what led to
40,OOO;OOft airframe pounds
•
annually, in addition to demand's,
for commercial and
private planes,
.
would provide a sound basis for ;
f
^
......
1 Hear in pa
before
the
t
Committee
W/hanee.
Revenue- Bill, of 1948y pp. 219,
"n
220.
-
on
the
THE
Volume .167
Number 4698
expansion in
an
emergency." (Re¬
port, p; 46.)
"
COMMERCIAL & FINANCIAL CHRONICLE
■MiiSiiffijfiiiNir
that
industries
our
thanr the: similar figure
re-tool for
can
in,
Say,
recruited for the an¬
of 40,000,000 air¬
be approxi¬
mately $1,750 million. The Pres¬
ident's budget for the fiscal year
design more rapidly than 1938."
Although Mr. Marshall did not
industry." Certainly,
mention communism in his Har¬
we are under no handicap in this
vard address, the ERP has become
respect.
an
important part of the fight
Aircraft Sufficient
against communism,
It must be
very puzzling to a European to
The' calm, Objective conclusion
learn that we so strongly disap¬
1949 contained the
there
*
On
ttSed
the
t /'■' ■ •
1
the basis of cost
by the
Commission,
Above
amount
nual production
frame pounds would
with
ommendations
funds for
following
rec¬
to
respect
airplane procurement in
that year.
*
Air
,
Pofce—
Amount
Plane
procurement
__w
Contract. authorization-
new
a
v
estimates
$767,000,000
550,000,000
;hat
Total Air Force—l
Naval
.
Aviation— '.
$1,317,000,000
"' *;
Appropriation for planes.
To
$255,600,000
liquidate prior contract
authorization
(deduct)—
150,060,000
New contract authorization-
$105,000,000
373,000,000
Total lor Naval Aviation-
$478,000,000
Net appropriation—:
f.
Grand
total
,
lor
plane
r
$1,795,000,006
procurement
C
these fig¬
that the provisions for plane
procurement recommended in the
original 1949 budget, including
both appropriations and contract
authorizations, were sufficient to
qmeet the maximum standard for
the adequate organization of the
It would appear; from
ures,
^aircraft industry set
mission of
up
by
a com¬
shotdd
be
should
be
that
is
reached
needed and are authorized by
already
legislation
testing,
and
other
the Italian election had been used
in plane and engine design, new
fuels, and so on, should be pro¬
vided. The military should not be
permitted to become the sole, un¬
questioned arbiter of the amount
needed.
Armed
Forrestal
Mr.
Services
told
Committee
experts
Norte of the groups
craft by
types
functional pur¬
poses, such as fighters, bombers,
transports, and so on. It is evi¬
dent, however, that an annual
volume
of
or
production
sufficient
the
$3 billion increase which he
recommending had begun as
a $9 billion total of requests from
the, chiefs of staff and the special
services. His citation of the Eng¬
lish statesman's comment that the
military would fortify the moon
given their way, was strictly in
if
keep the total spend¬
through adequate capital forma
tion, it is necessary to restrain,
not only the military spending,
but also the nonmilitary
costs.
The spending spree has extended
rehabilitate the industry to the
degree- contemplated by the Pinletter Commission, and involving
an expenditure of a billion and
three-quarters of dollars, will rep¬
resent a substantial outflow of
planes.
It is by no means a
penny-pinching policy, and it will
add materially. to the stock of
planes on hand.
*
into
the latter to
threatens
aircraft in active Status and
some
12,$00
in reserve.
The number
required for a 70 group air force
Is put at 12,400 active planes and
•8,100 ih reserve.The total now
available is therefore ample, al¬
though the distribution of the ex¬
isting planes by types may not be
ran
little
over
determine,
share
•
of
by
national
decree, the
product that
out
$200 million from
harbors, as the pro¬
testing Senators demanded. There
must be substantial cuts up and
In the statement
issued by
,
-
,
•the size of the necessary reserve
are based on wreckage or attri¬
pouring out our bounty to help
peoples less fortunate than our¬
tion rates greatly in excess of the selves struck a responsive note
because of the innate generosity
experience rates., - - . The ambition of both the Air of most Americans. Passing over
Force and the Bureau of Aero¬ here the question of the propriety
nautics is to have, now or as of putting this kind of relief on a
'quickly as possible, a completely governmental, tax-supported basis
(new equipment of planes. Hence —as against its logical basis of
-they are pressing for much larger private support—it is clear that
totals of funds than the budget the innocent proposal originally
originally proposed, r The argu¬ made by Mr, Marshall soon got
For one
ment based on obsolescence can entirely out of hand.
be pushed too far, and it has been thing, it was left to foreign pol¬
in this case. Every plane on the iticians to say what was needed.
,
*
shall go into new capital.
One
estimate puts it As high As 39-40%
in Russia.
We cannot expand our
cline
capital plant by decree.
We are
dependent upon the economic mo¬
Economic Recovery Program haS
injected an added stimulus which
is obsolete by compari- A new York "Times" correspon¬
son with designs still on the draw- dent, Michael L. Hoffman, wrote
,lqg. boards; And when these lat¬ from Geneva on Feb. 1, 1948, as
runways
Resigns are carried through
into productidh, those planes wil
obsolete by comparison
'also- b£
with -the next set of designs tha
follows:
.;:j-
"Incomplete but concrete evi¬
industrial re¬
dence that European
farther along than
,'are $till on. paper. The mistake is
think and Most
.Ojf^ep made of comparing pur op¬ European politicians say is Accu¬
erating plafies with Russian de- mulating in Geneva.
»
:
sighs hot* yet in production, and
"It has been known for 'a lohg
covery is a lot
most
persons
the inference
is
that
drawn
we
'
are
far
use, and our designs are
advanced as theirs.
The
fully
as
design-
*ltonu£actartn^ .•xfvCle.Ms- fully as
long, perhaps
Jty
that
time
several, some think
countries in Europe now
have a greater total of goods and
behind.; The fact is that most,
planes in operation are as
modern as the Russian planes in
our
,as
-
.
it is here
even
With
in tool-making,
longer, there
our '
it
superior?
is likely
services
available
for
consump¬
tion than before the war.
if one takes5 domestic
adds
That is,
production,
imports and subtracts' ex¬
ports, all valued according to pre
war
prices, the net figure is
exports
the
as
rise
in
Into this picture, however, the
to
be
all
and
seen
are
that it
are
is the de*
traders into the program aS
possible.
*
many
(Continued from page 3)
Export trade with all Latin Amer¬
ican republics totaled $369 mil¬
lion
in
May; $303 million in
ih January to $99 million and July; $288 million ih September;
then up to $118 million in Feb¬ went up to $342 million in Oc¬
ruary,
Finished manufactures at tober; $345 million in December,
$873 million in May held steady but showed a sharp decline in
at first, then declined and Were January to $280'miHion and fended
The
up to $626 million in February, February with $270 million.
monthly average for 1947 was
up from $320 million in January.
Manufactured foods have dropped $321 million.
Exports to Europe Which regis¬
steadily along with cotton fabrics
and semi-manufactured materials. tered $565 million in May and
Manufactured foodstuffs at $175 $470 million in July, slumped to
million in May and $179 million $403 million by December, but
in July were at $112 million in have held steadily around that
December and down to $101 mil¬ figure with $401 million in Jan¬
lion by February.
Semi-manu¬ uary and $399 million in February;
factured articles at $174 million a
completely different pattern
in May and $156 million in July than the Latin American.
July and
held
steadily
through
the year; showing an upsurge in
December to $124 million, a slump
slowly slumped to $137 million in
December and were at $120 mil¬
lion in February.
Generally speaking, the trend
is downward with those commodi¬
The
"'';>yy
$33 million in January and $36
There has
Geographically speaking, where million in February.
overseas.
,
y
has the greatest loss been? South
America and those Latin Amer¬
great stimulus in U. S.
exports to Japan, valued at $30
million in January and $37 mil¬
lion in February, aS against a
monthly average of $5 million in
1947,
Business with the Philip¬
also been
a
the Northern
hemisphere have Shown the sharp¬
est declines this year while Euro¬
pean countries (especially those
expecting aid under ERP), al¬ pines has beeri generally good,
though they declined greatly last with $42 Million ih January and
year have reversed the trend and $43 million in February, as op¬
have been holding up and have posed to a 1947 average of $36
China has
generally showed an increase ih million per Month.
January over December in violent fallen off its 1947 average.
contrast with the Latin American
What are the prospects for the
market which has slumped con¬ private trader in view of the re¬
In the light of de¬
sistently since the first of the cent trend?
year.
There were declines ,111 clining dollar balances and dea*nd
February in the European trade, pleted
gold reserves and the
hut that may, be explained by tendency of • South American
'fne
countries
in
'iftortii^1 oif^hS
bigger &ay
A
month And
This feeling has altered re*
cently because of the remarks of
ECA
spokesman
who
reiterate
that private exporters will benefit.
It
cbqftfrt^s'to
carefuHy^gtiArd What
i&ttistical decline?1 ih$yliave oh hand, the day oi the
is
generally felt that the
will
have
secondary
repercussions Which will manifest
program
themselves
in
private
export.
today are being
closely held for bare necessities
by foreign currency controls will
be spread into other commodity
channels.
imports, based upon
the increased productivity of fac¬
which
Funds
tories in other nations and spurred
by shortages in domestic lines
may result, will continue
the upward grade and make
on
which
on
additional dollars available.
again,
funds
Then
goodly portion of the
are
expected to be spent
a
purchases in South American
on
United
Kingdom showed
the sharpest decline in Europe,
having received $94 million in
May and $58 million in Decem¬
ber; but following the trend of
ties being shipped under the va¬ the rest of Europe picked up to
rious foreign trade programs $72 million in January and $61
(Army Civilian Supply, Interim million in February.
Italy de¬
Aid, U. S. Foreign Relief, Greek- clined from $48 million in May to
Turkish Aid), increasing in vol¬ $27 million in July, but started on
ume lately or holding their own.
the upward march to $33 million
This has resulted in a statistical in December, $35 million in Jan¬
upsurge for March shipments. >
uary and $40 million in February.
Also, in those cases where se* France imported $70 million worth
vere
shortages have hampered from us in January over $59 mil¬
shipments up until now and there lion in December, but slumped to
is a loosening-up at the present $57 million in February.
Such countries as the Union of
time, no decline is apparent. For
South Africa, which averaged a
many firms which specialize in
certain metal products there has monthly value of $34 million im¬
been a continuity in the flow ported from the U. S. in 1947, did
ican
.
in
imports.
sire of the government to bring as
•
est
they were closer to One-half
the value of exports, but that is
accounted for as much by the de¬
year
indications
and
down the line.
to
$5,739 million, or A
one-third of the export
In the first Months of this
total;
extent that
an
Senator Bridges and his
dissenting colleagues it was point¬
-Ideal. To the extent that deficien¬
ed out that $7 billions of appro¬
cies of certain types are serious,
priations had been considered by
•they can be corrected by proper one House or the
other, with re¬
•channeling ' of new production ductions
totalling only $300 mil¬
-The Navy is Said to have some 10,lion.
•
193 planes, active and in reserve,
Foreign Aid
■
which is stated to be enough to
equip the active carriers and sup
The
foreign aid program which
porting air operations. The esti¬ now bulks so large in our budget
mates of both the Air Force and should be subject to constant re¬
thfe Bureau of Aeronautics as to view and reappraisal. The idea of
.
1947
the
strike
rivers
pectiliar importance
free economy.
In the race
industrial supremacy we Are
pitted against an opponent who
a
for
can
approaches a normal bal¬
with exports.
Imports in
ance
mains
But much more must be done than
to
in
even
burden of gov¬
anxiously watching to see the pro*
gram
shape up.
Most recent
integrity of the
legislative budget ceiling already
approved by the Congress.
Sen¬
ators Bridges, Ferguson and Reed,
of the Senate Appropriations Com¬
mittee, have recently filed a pro¬
test against the size of the Rivers
and Harbors Bill reported to the
Senate. A full generation ago this
bill had already become known as
the "pork barrel."
That dubious
«•
The Finletter report states that
reputation has evidently remained
the Air Force ha$ on hand 10,800
untarnished
through the years.
to
ernment is of
sense,
a very satisfactory fate, it
long, long way to go before
,
the
that
that
cuch figures into number of air¬
In the Overall
reduction of the
a
Missouri, it wduld be open to tives and incentives of free men, may result in keeping the year
the Charge of having been bought. both fdr the total to be produced 1948 in the same statistical cate¬
The whole matter is puzzling to and fpr the share of the product gory with 1947,
although the em*
many Americans who see, ;in the that will be put aside as national phasis will be on commodities
communist appeal to the guar¬ seed corn for making a bigger outlined as vital under the orig¬
antees of a constitution they de¬ crop.
These incentives are pow¬ inal Marshall Plan requirements;
spise, the
supreme
communist erful, but their power cannot be While the actual method of ad¬
hypocrisy.
Treason
has
many exerted in the shackles of exces¬ ministering the Aid program has
Our gravest na¬ not crystallized, feelers put but
forms., What did Benedict Ar¬ sive taxation.
nold plot And plan to do that the tional danger for the future is have indicated that, wherever pos¬
Communists in our midst are not right here.
It is that we shall sible, private channels Will be
The sentiment among
plotting and planning to do now? Continue to tax and spend lav¬ used.
Democracy's soft under-belly has ishly, thereby keeping a ball and traders is that not too much of
never been more
completely ex¬ chain hitched to the economy and ERP money will find its way into
posed than it has been in the cur¬ holding it back until the enemy the jniddlemarts' haftds; that g6vrent debate over the legal rights finds himself ; strong Chough to ernment agencies will
deal di*
of those whose clear purpose is to make the attack.
His slave econ¬ rectly with the producers.
Espe¬
rip it Apart.
The battle of ideas omy Can never overtake 6ur free cially does this affect the coastal
and ideologies Cannot be won with economy. if we
keep ourselves exporter such as one finds in New
dollars.
There
is
a
far
better stripped for the race.
The spend¬ York, since in large oVer-all pro*
chance of winning it by demon¬ ers must be stopped and thrown grams
their services are often
dispensed with.
strating the advantage of the free for a heavy loss.
However, it re¬
was
In order to
ing at
in
have expressed ing, and thereby the total 'taxing;
aircraft production in terms of down to a level at which provision
can be made for national growth
^airframe pounds have translated
i>f
and his
operate as a party on their
avowed platform to overthrow the
existing government* by force if
necessary.
If the techniques of
improvements
should be reduced. Space
it
ize and
introduced.
Whatever amount that can be jus¬
tified for research, development,
a tre¬
spurt.
Although the
yolume
of
imports Into this
country has been steadily increas¬
mendous
them here.
Original budget recommendations,
fellows to vote otherwise; while
if approved, would be adequate.
here we can't decide whether or
Changes of procurement policy
not to let the communists organ¬
experts appointed by
the President.
to persuade him
into, the United States take
has
of. his being a communist,
voting as one, that we are
willing to spend large sums of
money
$14 billion export Market would
appear to be over, unless imports
limits forbid further discussion of
and
provided
procurement.
The
aircraft
:!or
cAn and
prove
immense in¬
no
crease in the funds to' be
are
•
*
Russian
can;
enterprise system; hut that dem¬
onstration
is
impossible ; while
government exacts and spends sd
much as to hamstring this system.
There are many points in the
Federal budget at which spending
countries such
as
Brazil and Ar¬
gentine, increasing further those
countries'
dollar
holdings
and
encouraging renewed buying from
private sources here in the United
States.
There is
a
feeling of confidence
among most
export merchants to¬
day that ERP will generally have
a
favorable effect on their trade,
and
felt
some
it.
they have already
say
Increased
orders
have
been received for shipment later
in the year and
of credits,
of
subject to release
Others have
optimism based
on
a
feeling
the psycho¬
logical impression ERP has made
on
their
there
is
customers.
waiting with
a
vigor
newed
Altogether,
attitude of watchful
an
faith in the
export market.
The
"
published statistics for
March have shown
crease
re¬
American
the
of
in
surprising in¬
shipments
commodities
since
determined effort
certain
of
there
on
was
a
the part of
the government to funnel aS much
relief
as
fore the
possible into Italy be¬
flections,
ERP
be moving along even
administrative
pleted and the
fit
may
be
anticipated.
set-up
seems
to
before the
is
com¬
cumulative .bene¬
experienced
before
J
THE
(2112)
32
COMMERCIAL
vestors from
Appraises Proposals for Amending
"Waiting Period" Restrictions
(Continued from
Accordingly,
offers.
oral
of
we
with the staff's 1947 re¬
quirement that if a seller wishes
agreed
with
communicate
to
prospec¬
a
purchaser in writing, the
must be either (i) an
tive,
writing
identifying statement or (ii) any
writing provided it is ac¬
other
companied
preceded by a
or was
statutory prospectus (which could
omit price and related data
if
un¬
stated
As
time).
the
at
known
ip the staff's memorandum, "The
'identifying statement' would be
limited to content so that it would
not
serve
but
as
purely
as
screening device
a
what
ascertain
to
document
selling
a
were
persons
sufficiently interested to warrant
tion
and
not
to
pro¬
"condition subsequent"
For purposes of
a
"sale."
(2) Sales:
The prohibition of
present Act against sales dur¬
the
ing the waiting period should, of
course, be retained in the amend¬
ed version of the Act.
B. After the Effective
Date
staff's
out
clause.
version
other
is
The
defective
of
industry's
still
for
an¬
under the industry's
reason:
clause
out
versions
1947
purchasers
procedure
who had acquired securities after
the first seven days of the offer¬
off."
I want to call the deal
l£
convinced
are
fimly convinced,
are
we
as
the out clause is fatally de¬
in that it would permit
securities salesmen to induce in¬
ner,
fective
of
quacy
based
gram
of
inade¬
the
amendment pro¬
an out clause pro¬
any
on
cedure.
Fortunately, the 24-hour
requirement offers greater prom¬
ise of providing reasonable in¬
purchase on the basis vestor protection without impos¬
of inadequate information orally ing undue burdens on the process
conveyed. After the investor had of
distributing
new
issues of
made
up
his mind to buy, he securities.
' ^V.
would then be given information
Under the 24-hour requirement
vestors
to
...
Offers: The procedure to
oral and written offers
after the effective date should,
we
believe, be the same as that
which
we
have
recommended
above
concerning offers during
(1)
govern
period, and for essen¬
the waiting
tially
the
reasons:
same
it rep¬
possible inter¬
normal
business
the. least
resents
with
ference
basis
the
on
make
his mind to cancel his
up
Ganson
the
fore
Purcell stated be¬
ment
in
fundamental dif¬
Committee
House
1941: "There is a
ference
Commis¬
SEC
As
commitment.
sioner
could
he
which
of
between forming a judg¬
the
on
and
information
of
basis
complete
upsetting
a
practices, does not involve vir¬
tually
insuperable
enforcement
difficulties, and is supplemented
judgment once formed. The sug¬
by the safeguards imposed on the
procedure for making sales in the
his commitment,
post-effective period.
commitment has been based in the
limita¬
activities dur¬
existing
of
abandonment
tions
recommended
The
Sales:
(2)
offering
on
the waiting period, and the
proposal to permit oral offers
ing
the
underscore
effectiveness,
after
necessity oT evolving an ap¬
effective
the
after
sales
to
procedure
propriate
That
protect
should
procedure
govern
date.
public investors through practic¬
which
controls
able
a
business
normal
will
involve
with
of interference
minimum
The
practices.
devices for
have
gestion is to let the investor com¬
mit himself and then get out of
that
most
figured
if time and cir¬
permit,
when
that
cumstances
on
admittedly in¬
information.
As a
fact, I suppose it is an
instance
first
complete
...
of
matter
attribute
once
has
to
common
on
one
matter
a
made
he
that
man
his mind
up
takes
certain
a
pride in his decision and hesitates
to
himself.
reverse
indeed
of
be
an
There
inertia
on
would
the part
investor who had decided he
an
wanted
to
buy a security which
would militate against his study¬
the matter further after
had given his word to buy."
he
ing
related weakness of the
procedure it would be unlawful to
sell
the
chaser
statutory
statutory prospectus
the
the main selling document, rather
than an "unselling" document as
the
under
clause
out
procedure,
adequate protection for
public investor. It is difficult
to see how the requirement would
provides
the
impracticable
impose
budens
the
on
buting
the
of
process
issues of securities.
hearings the in¬
new
in
But
undue
distri¬
or
1941
furnished
been
a
least
24
prospectus
at
to
repeat his offer to buy after
a
lapse of twenty-four hours. If the
buyer did this or the dealer
able
re-establish
to
was
contact
with
if
before
sale.
the
broad
In
phone to communicate with deal¬
securities
the
were
still
avail¬
able.
There is
implicit in this objec¬
the idea
tion
that
securities in
a
sell themselves.
But the industry's efforts to secure
great
measure
latitude in the activity
permitted during the waiting pe¬
greater
riod indicates that this notion is in
large
contrary
measure
facts.
the
to
the
In
find that all of the securities had
sold
public. Dealers in turn
would distribute identifying state¬
been
ments to their customers and dis¬
afforded
ers
and the
the
cuss
offering
face-to-face
with
and
versations.
The
telephone
and
would
evoke
con¬
identifying state¬
oral
ments
in
them
communications
expressions
of
in¬
terest from investors and dealers,
thus enabling dealers and under¬
offer to
he
when
to
to
the
gauge
mand for the issue.
would
general
procedure arises from the
requirement that in order to take
dealers
be
able
decision
who
likely
de¬
Underwriters
to
reach
concerning
would
be
a
the
available
for inclusion in the
his
the
investors
as
a
group
24-hour
well worth the price of these
The
industry's second objection
that
was
in
even
the
most
care¬
to enable them to get the prospec¬
tuses
the "out clause")
the
discussions
to
their
customers
twenty-
four hours in advance of the ef¬
and (ii) requir¬
absence from
ing the seller to deliver a statu¬
tory prospectus to the purchaser a
would
stated
within
period—say 24 hours—be¬
fore the sale takes place (herein¬
after
referred
sometimes
the "24-hour
of
actment
to
requirement").
either
posals would be
a
of
these
as
En¬
pro¬
long stride to¬
ward correction of existing abuses
and realization of the
original ob¬
jective of the Securities Act that
public investors should be en¬
abled to reach informed judg¬
ments concerning security offer¬
ings.
As between the two, how¬
ever,
the
24-hour
requirement
embodies
the
preferable
pro¬
cedure.
Under the out clause procedure
by the industry in 1941
the staff committee in
investor who had "pur¬
by
dealers, and by them to investors
who had expressed interest in the
purchase
will
"welsher"
and
branded
stated period after being
a
prospectus, notify the
seller of his election not to
with
the
con¬
purchase.
It
a
from
offerings.
is, of course, hazardous to pre¬
dict the action of the industry or
of
substantial
a
event
tinue
be
blacklisted
It
the
a
of
percentage of
the
industry in
purchasers did utilize
clause.
out
highly
probable
chaser
who
But
that
took
it
seems
the
pur¬
advantage
of
the out clause would find that he
was
not
invited to participate
in
might be interesting, but not par¬
ticularly relevant or helpful, to
speculate whether delivery of a
prospectus
and
the
purchaser's
future
failure to notify of his election
pot to proceed with the purchase
event, it cannot be doubted that
.is
a
"condition precedent" to the
existence
whether
,
of
a
legal
"sale,"
non-delivery of the
or
pros-
effect.
the
vanced
1941
by
the
hearings
industry in
demonstrates
the
the
In
opinion
objec¬
our
industry's
Although, for the reasons out¬
above, the 24-hour require¬
lined
is to be preferred over the
ment
out
clause, adoption of either pro¬
posal would be a significant ad¬
vance. In either case, underwriters
would
dealers
and
disseminate
pectus"
endeavor
to
the
"priceless pros¬
investors during the
to
waiting period. They would then
be in a position to make the sale
on
the day of, or shortly after,
effectiveness
by
supplying
the
omitted
price data immediately
prior to the time of sale. To the
extent that sales
this
and
were
effected in
manner,
investors would be
furnished the necessary informa¬
would
distribution
the
period
be
not
delayed. In the
ordinary case, then, of a distribu¬
tion by an
underwriting group
which
had
the
secured
issue
individual negotiations
the issuer, either proposal
through
with
would
be
practicable. But when
issuer-underwriter
the
ments
from
result
arrange¬
competitive
bidding for the issue, difficulties
would
be
encountered
under
either
proposal. In this situation
issuer files the registration
the
statement before bids
underwriter
Various
invited.
are
then
groups
submit sealed bids, and the award
is
made
to
the
highest bidder.
time, the waiting
period is expiring. On the day
the successful bidder is selected,
or the day such selection, the reg¬
istration
statement
usually be¬
comes
effective
and the public
During
this
offering begins. It would be un¬
each group of bid¬
economic for
underwriters to distribute
identifying statements and "price¬
less prospectuses" to dealers and
ding
for
in
dealers
the
those
since
customers:
to
turn
documents
only
dis¬
their
to
one
group
underwriters will be
successful,
the
documents dis¬
tributed by the unsuccessful bid¬
ders
would
largely be wasted.
bidding
Also, the exceedingly short period
between the date the successful
bidder is determined and the
pub¬
lic
offering begins does not pro¬
vide adequate time for distribu¬
tion of identifying statements and
prospectuses. Therefore, in a com¬
petitive bidding situation, under¬
dealers could not, as
writers and
practical matter, disseminate
"priceless
prospectuses"
during
waiting perid. Distribution of
the issue thus would be delayed,
a
the
.
the
within
this
therefore,
tions do not go to the heart of the
24-hour requirement.
,
chased'
furnished
have
the
not
if he failed to act security. Perhaps two or three days
impossibility of making adequate
specified time, which before the effective date, price and
and
underwriters
and
dealers
dissemination of prospectuses dur¬
in the case of the industry's 1941 related data would be filed with
would
themselves
be
"on
the
ing the waiting period.
proposal might be a very short the Commission in the form of an
hook" for a longer period than
Perhaps the underlying basis of- otherwise.
to
the
period.
If it is desired that pur¬ amendment
registration
:
this
industry objection is that
chasers reach informed judgments statement, and also communicated
Reference
has
already
been
rather than being impossible to
concerning securities, a procedure by the underwriters to the dealers
made to the fact that the Ameri¬
circulate prospectuses adequately,
permitting, perhaps encouraging, and by them to their customers.
can
underwriting
business
is
(i) it would increase costs and (ii)
inaction seems an inappropriate On
the
effective
date,
dealers
might delay the distribution pro¬ geared to speedy distribution, to
would effect telegraphic purchases
means for realizing the objective.
minimization of risk, to being "on
cedure to some extent. There was
An
additional
defect
in
the of their allotment from the under¬
the hook" for no longer than is
considerable testimony by indus¬
writers and would
immediately
out
clause
procedure
is
the
absolutely necessary. The admin¬
telephone or personally visit cus¬ try representatives in the 1941 istration of the Securities Act has
danger
that
a
purchaser
who
hearings concerning the extent to
tomers who had already received
elects
not to
proceed with the
which distribution costs had been neither sought nor achieved sub¬
ing
'a security before receiv¬
statutory prospectus could,
previously stated,
requirement should
as
24-hour
the
members
an
a
or
purchase
the
1947,
home
participating in future
advanced
and
to
office—he
nevertheless be committed
be demon¬
to burden the distribution process.
And,
of
in the hands of all dealers in time
can
strated that the delay would reach
such proportions as substantially
supply of prospectuses" would be
,
delay distribution
given serious con¬
not be
tribute
selling group. fective
date, and that this in turn
between the Commission and the advantage of the out clause the Then, after the Commission's staff
would create a tendency to dis¬
examined
the
registration
industry are (i) conferring upon purchaser must give notice, Al¬ had
pose of new securities, especially
the purchaser a power not to con-, though
the purchaser's inaction statement and had informed the those of
high quality, only in large
tinue with the purchase in the might be due to other reasons— registrant concerning any defici¬
financial centers where it would
event a statutory prospectus had e.g., lack of time to examine the encies in the statement, copies of
be
comparatively easy to dis¬
riot been delivered a stated period prospectus because of pressure of the prospectus (complete except
tribute
prospectuses during the
before the sale took place- (here¬ other business, or failure to re¬ for unknown price and related
waiting period. However, we do
inafter sometimes referred to as ceive the prospectus because of data) would be sent to interested
not believe that the evidence ad¬
in
prominently
would
should
sideration unless it
fully managed distributions "it is
improbable that
;
a sufficient
.
writers
renewed
But the protection
buy.
requirement is
few
individual disappointments,
i
by
posal
tion
him, then the sale could be made
relatively few in¬
outline the proposal would op¬ stances in which the prospective
erate
purchaser would take the initia¬
approximately as follows:
Immediately r after
a
registra¬ tive no great burden would be
tion
statement
had
been
filed imposed upon the dealer since it
with the Commission, the under¬ is
unlikely that the purchaser
writers
would
circulate
copies would be discouraged unless what
of
the
identifying
statement he read in the prospectus influ¬
among dealers and public invest¬ enced him to change his mind.
ors.
The underwriters also would There is, of course, the possibility
make extensive use of the tele¬ that an individual investor might
hours
also
clause
security unless the pur¬
had
out
A
achieving this objec¬
tive
making
Thursday, May 13, 1948
appraising the out clause, analy¬
sis of the legal relations existing ing would not be covered by the dustry advanced two principal ob¬
between
purchaser
and
seller out clause. Successful issues are jections to the 24-hour require¬
must
give way to the average often marketed within a very few ment.
The industry first pointed out
purchaser's reaction; and it seems days.
Distributions
extending
clear that under either the indus¬ beyond a week would surely call that
a
somewhat
inconvenient
for increased sales effort.
situation would arise in the case
Pre¬
try's or the staff's version of
the out clause, the average pur¬ cisely
of an unsolicited offer to buy re¬
at that point purchasers
chaser's reaction would be, "Yes, should be afforded the maximum ceived by a dealer after the effec¬
I have made a deal with the sell¬ protection.
In such a case, the
Yet, it would be pre¬ tive date.
er.
I have bought the security. cisely at that point that the in¬ dealer
could
not
conclude
the
But I can get out, if within a dustry would withdraw the pro¬ transaction but would have to fur¬
certain period after I receive the tection of the out clause.
nish
the
prospective
purchaser
prospectus, I notify the seller that
It is for these reasons that we with a prospectus and advise him
investors would react in this man¬
'
the
the
election
an
the
delivery to them of the statutory
pospectus."
of
ceed) is
to
The foregoing observations ap¬
ply equally to the industry's 1941
(or delivery and notifica¬
pectus
taking advantage of
the out clause.
19)
page
FINANCIAL CHRONICLE
&
at
desirable
least,
was
Commission
apprehension
branded
excluded
a
offerings.
the
opinion
in
1941.
that
he
welsher and
from
This,
of the
In
would
any
be
therefore
future edesirable
'offerings, would deter
many
in-
the
prospectus and the omitted
price data at least 24 hours before.
Sales
could
then
be
the time schedule
made,
were
or
if
such that
the
omitted price data could not
be furnished to dealers or invest¬
ors
at least 24 hours before effec¬
tiveness, the proposal would
mit
a
sale
to
purchaser who
be
made
had
per¬
to
any
received
the
"priceless prospectus" at least 24
hours
before, - provided
omitted data
was
same
the
furnished imme¬
diately prior to the
sale. The
that
time
of
the
general procedure
would be followed in the post-ef¬
fective period except that then
the prospectus
price
would
data,
be
would contain the
and
no.
therefore
omitted
tion to be furnished
informa¬
ipimedi^tely
prior to the time of the
The
there
sale.^^-
increased
by the existing statu¬
tory requirements, ^nd the tend¬
increase to divert
offerings from public
to
institutional
purchasers. The
Commission, on the other hand,
took the position that any increase
ency
of
such
desirable
in costs had been
set
more
than off¬
by reduction in underwriters'
fees
brought about by the full
provisions of the Act;
disclosure
the
Commission
attributed
the
growth in institutional purchases
to
other
factors.
As
a
whole,
therefore, the testimony
point of increased costs
was
conclusive.
a
more
Evidence
of
on
this
in¬
much
compelling character should
of
reform
stantial
the underwriting
this
phase
of
business. Under¬
writers still make their final com¬
mitments
to
issuers
only
a
few
days before the security is offered
to the
public. They still endeavor
the risk for the least pos¬
sible
time.
Accordingly,
any
amendment su ggestion which
to carry
would
increase the underwriters'
period of risk by as much as 24
hours—as would be the case under
either the 24-hour requirement or
the out clause proposal
in
petitive bidding situation
a com¬
—
un¬
doubtedly will be resisted by the
industry.
the short answer to
objection is that the pub¬
being informed out¬
Perhaps
be adduced before it is concluded
such
that
lic interest in
the
24-hour
requirement
would entail such additional costs
<as
to
make it
24-hoitib-requirement, nin Objection
impracticable. The
that the 24-hour pro¬
an
weighs underwriters' private in¬
minimizing risks. At the
terest in
other extreme,
it might be urged
Volume
Number 4698
167
COMMERCIAL
THE
&
FINANCIAL
CHRONICLE
that securities required to be sold
through
competitive
the
and
subject
such
to
by
governmental
public
investors
supervision
agencies
being
of the
intermediate
out clause.
Or
represented
an
procedure might be
The
In any event, the fact
exception
or
modification
might be necessary in the case of
issues subject to competitive bid¬
ding requirements does not, in our
tial soundness of the 24-hour
.
LAST WEEK'S CAPACITY
unsystematic pricing
industry, it has it this week in the multiple
or not it will stand when demand drops
below supply remains to be seen, states "The Iron Age," national
metalworking weekly, in its current review of the steel trade.
Most large steel firms have met the U. S. Steel Corp.'s pricecutting move—on a total basis. But the cuts have not been the same
on all products.
Some firms made no reductions on some items the
practice in the
The New York
members'
held
Curb
Exchange
five and Twenty Club
beef and
corned
a
dinner at
cabbage
Club, Wednesday evening, May 12.
Mortimer Landsberg, President
of the club, presided at the
affair,
and
William
eral
T
The steel
v* The
dinner
stein
Governors,
Vice-Chairraan,
time.
Lockwood, Gen¬
the - Exchange,
guests of honor. 333'./
committee V arranging the
Chairman
Sentenced
:;
L.
There is
of
East
N, J., according to the :
Securities arid Exchange Commis- ■j;
;f;
Orange
the
anti-fraud section
of the
Se¬
connection
with purchase and sale of securi¬
ties for and from customers.
Bauer
Mr
sentenced to imprison¬
was
ment of one year and one
Raise
3 Would
day.
|
SEC Pay
members
the
of
sion
from
$10,000
■:
•
this week.
3 adds.
f,3
They
-
'./33'/: 33-':
v
The coal strike of
,;3/' »3vV'
-
day
Steel Institute
of capacity for the week
33.3 points,
beginning May 10, 1948,
a
•.'';33 ■3V33333/
1,285,000 tons
pacity
one
an
ago
,
period/ended on Wednesday of last week was moderately
previous week with over-all retail activity slightly
corresponding period in 1947, states Dun & Brad¬
street, Inc., in its review of trade for the past week.
Consumers tended to be selective in their buying, and attention
was directed toward medium-priced articles in almost all lines. Clear¬
the
for
above that of the
above that of the
increase of
ances
Women's linen dresses, sun-back frocks, blouses and lingerieaccepted.
.3 <•"
'
well
The demand for men's suits rose
,
of the previous
SLIGHT RISE
distributed by the electric light
power industry for the week ended May 8, was 5,087,264,000
kwh., according to the Edison Electric Institute. This was an increase
of 44,912,000 kwh. over the preceding week and was the highest pro¬
duction since the week ended March 20, 1948. It also exceeded the
Costs and
Lewis H. Kimmel
—
—
Tax
the
The
1948 week when
Hamilton Manufacturing Com¬
— memorandum -— John
B.
Dunbar & Co., 634 South Spring
Street, Los Angeles 14, Calif."
'
>
T
(
As
a
result
.
Automotive
■
History
Petroleum Ad¬
of the
ministration'
for ^War,-'; A; (1941-
of
curtailed
passenger
car
assemblies by General
i
it
Output
a year ago was
132,380 units.
was
3>3 This week's total is made up of 51,454 cars apd .29,146 trucks
itor ihe
and 2,750 pars/and4,995;tirucks;for;Canad$.:r
BUSINESS
r
i
n
t i
n
g' Office,
Washington 25, D." C.—cloth—$3.
and curtains
3
93,369 units and, in the like week of 1941,
-'vv 3" ;
Frey and H. Chandler Ide—Super¬
intendent idf Documents, U.' S.
FAILURES CONTINUE SLIGHT UPWARD
The-4 An
ment
Analysis
National
-
and : Com¬
Grain.
Trade
Public
Regulation
in
Action:
13
While still about five times as heavy as in 1946, casualties
a third as many as in pre-war 1939 when
3 this week claimed only
over
300 failed in the
same
The increase last week
week of that year..
was
z
*,
;
FOOD PRICE INDEX RISES TO HIGHEST LEVEL
!
These Rights Are Ours to Keep
—Jerome
Ellison—Public Affairs
Committee,,. Inc.,
22 East 38th
Street, New York 16, N. Y.—-paper
—20c.
-
:
-
Retail volume for the country
in the period ended on Wed-
6 to 10,
South 7 to 11, East and Southwest 8 to
12, Northwest ft
*>'■■ 3.' h v ■•"?333■' r-;\3', •' 3..33: 3 \ * -' V-1
order-volume last week increased slightly and was mode-,
V
.
a' year ago.
.
3
iricreased by
with
A
(
.
.
1948, sales increased
■
•
,
carried
price index for May 4 to $6.88.
This represents a weekly gain of 12 cents, .or 1.8% over the previous
figure of $6.76, and it is the highest level for this index since Feb¬
ruary 3 when it stood at $7.14.
On the corresponding date a year
ago it registered $6.00.
'
:
3
8% from the like period of last year. This compared
in the preceding week. For the four week®
increase of 11%
by 10% and for the year to date
", 3
3 .•
Here in New York retail trade suffered from the inclement
weather the past week and percentage-wise, reflected a reduction:
in the gain over the like period of 1947.
■'■1
According to the Federal Reserve Board's indexf department
store sales in New York Qity for the weekly period to May 1, 1948*
increased 8% above the same period |last year. This compared witlx,
an
increase of 10% in thri'Receding week. For the four weeks'endea
May) L 1948, sales increased by 8%, and for
ar ta date by 5%.
by 6%.
general upward movement in food prices last week
the Dun & Bradstreet wholesale food
an
ended May 1,
-/Y
'■
Department store sales on a countrywide basis, as taken front
Board's index for the week ended May 1, 1948*
the Federal Reserve
•33" 3 IN THREE MONTHS
;
the
to 13 and Pacific Coast 5 to • 9.■
333 ■'*'
Larger failures in¬
volving losses of $5,000 or more continued to predominate despite a
decline from 96 to 89; they remained above the 81 reported in the
of Michigan, Ann
3
slightly with garages and service stations reporting
sale of oils, grease and fuel. Slip covers, drape®
moved well and most major household appliances con¬
in heavy demand. : 3
3
- ,/.3
up
to avoid
for Sum3:
While collections remained slightty slower than during 1947*
jthey were considerably more prdmpi than in many pre-war years. 3
concentrated in small failures With
corresponding week
Arbor, Mich.—
in
Again rising slightly, commercial and industrial failures in the
•/, New
ending May 6 numbered 108, the highest level since the first rately above that of a year ago. Many buyers continued
March, reports Dun & Bradstreet, Inc. This compared with commitments for long-term deliveries arid numerous orders
106 in the preceding week and 98 in the comparable week of 1947.
3- 3 mer merchandise were placed.
' {3 5 :
* 3v
'
Company—Floyd A. Bond — Bu¬
reau
of Government, University
paper—$1.35.
^
1
TREND'3
liabilities under $5,000 which rose from 10 to 19..
4
were
nesday of last week was estimated to be from 7 to 11% above that
3;of a year ago. Regional estimates exceeded those of a'year ago
V by the following percentages: New England and the Middle West
week
Council,, 607 H i b b s
Building,
Washington; D. C.—paper.
;
The Experience of a Michigan Gas
which
«
week in
international Wheat Agreement,
in
tinued to be
,;33,;ti,< 3:3
Reports." !i>
demand for fresh fruits and vegetables,
were
increases
Canada
1945) —Prepared under the direc¬
tion and editorship of John W.
Governments P
sories
Chrysler, production of cars and trucks in the United
dropped last week to an estimated 85,345 units
from 102,967 (revised) units the previous week, accqrding to "Ward's
and
The
week.
plentiful supply, showed a moderate increase for the week. Meat
supplies were also adequate in most areas despite the continuanceof the partial walkout in the meat packing industry.
Poultry and
dairy products, too, sold well.
3^
Spring items such as garden tools, lawn and flower seeds and
lawn furniture were frequently requested., The demand for paint®
and hardware increased perceptibly. Retail sales of automobile acces-v
Motors and
States
:33>33/ 3>. ,■...
v ■
at the high level of the previous
Retail food volume continued
Brookings Institution, Washington
AUTO OUTPUT ADVERSELYAFFECTED BY GENRALMOTORS
6, D. C.—paper. 3;'3/33333r'.3i-3
1 AND CHRYSLER CAR ASSEMBLY CUTS
3
pany
considerable attention.
received
5,000,000,000 kwh. mark. ~ The peak was reached in the Jan. 24,
5,436,430,000 kwh, were turned out
ago.
Lightweight suits of gabardine and tropical worsted were most
frequently requested. Men's sport jackets, slacks and Summer hats
output for the corresponding week last year by 434,127,000 kwh., or
9.3%, and was the 18th consecutive week that production exceeded
Governmental
considerably from the level
week and in most areas was reported to be well
that of a year
above
The amount of electrical energy
and
Levels
promotions were not as numerous as in recent weeks.
and
Showings of Spring and Summer apparel attracted many shop¬
,
,
PERIOD OF 1947
Generally milder weather in most sections of the country helped
boost retail trade during the past week. Total retail dollar volume
:
On Mon¬
,
FURTHER
,
TRADE MODERATELY ABOVE
PREVIOUS WEEK AND LIKE
were
SHOWS
condition®
increasing tendency to seek undercuts in mill prices.
an
RETAIL AND WHOLESALE
compares
prewar year.
planting
strong with active bidding reported from United States buyers.
pers.
PRODUCTION
cancellations of recent
good
being purchased as rapidly as shorn.1 Foreign wool markets continued
1,648,400 tons, or 94.2% of the old ca¬
ago,
of
growing States, reports indicated that the finer wools were
Western
and 1,281,210 tons for the average week in
month
a
year
1940, the highest
ELECTRIC
This
reports
/Trading in the Boston raw wool market continued quiet mainly
a lack of offerings of fine and half-blood staple wools.
There
little interest shown in medium and lower grade wools. In the
with 91.0% last week.? A
month ago the indicated rate was 71.3%. 3!This week's operating rate is equivalent to 1,699,700 tons of
steel ingots and castings as against 1,640,300 tons last week,
3.6%.
or
and
was
of the steel-making capacity of the industry will be 94.3%
94%
China
due to
< \ /■■/.<
announced
to
Activity in cotton textiles was only fair last week as buyers
Showed
/
operating'rate of steel companies having
of this week the
cotton
ECA buying resulted hot
Other influences in the-
some
registrations for the season to date to 827,910 bales.
net
a
American Iron and
in
figure of 28.40 cents for mid-April last year. Registrations under
the sales for export program during the week ended April 30 fell
to 8,576 bales, compared with 43,500 the week before. This brought
,
The
of
of
week, showed a rise of 25 points over that for mid-March. At 30.8ft
cents a pound, it compared with 30.63 a month previous, and a revised
not be made, if at all until the threat of
can
delays
rumors
throughout most of the belt. The mid-April parity price for cottony
issued by the Department of Agriculture on Friday of the previou®
month ago cost the industry more thdn
1,500,000 tons of ingots. Another coal strike of similar length will
cost more than that. No steel company has any coal to spare at the
moment—nor will they have by the end of June.
If the industry
gets by without another coal stoppage there is a chance that more
than 85,000,000 tons of steel will be made this year, but it is a
shaky "if," "The Iron Age'' concludes.
''
'
the
$15,000
to
sales
another coal strike in July has been estimated, the trade paper
(
continued
movement were
downward
for the consumer 3
one
However,
program.
heavy selling and prices declined sharply.
get
Happy predictions that the industry will better last
year's performance of 85,000,000 tons of ingots can not be made
,
Securities and Exchange Commis¬
year.
happy
K
upward trend in the fore part of the week reflected good mQl
demand and the expectation of increased buying under the foreign aid
.
a
irregular with prices moving
were
An
consumers
many
further sharp decline in hog values. Steers were firmer
steady. Raw sugar prices fell 15 cents a hundred
Domestic cotton markets
"
never
planting is expected
was only fair with prices irregularly lower.
Lard
substantially during April. Livestock markets were
sharply lower at the close.
this week.
E. Busby (Republican), of Illinois,
introduced a bill to increase the
of
steel
on
The steel supply outlook is not
Last week Representative Fred
salaries
that the railroads will
new
end of this week providing weather
pounds during the week but displayed a firmer tone at the close.
study ways and means to sidetrack the
shipments.
3
3
Steel making costs are high and the Federal Trade Commission
is trying to force the industry on an f.o.b. mill basis even before the
present steel pricing case is settled. Because of this, there is little
chance that steel firms will go far out of their way to sell steel—
at least under present market conditions.
333/3-■ ''
•;
curities Act of 1933 in
and
railroads
Bauer,
and the Department of Jus¬
tice, pleaded guilty to a 15-count
indictment charging violations of
chance
a
active and
was
favorable.
and lambs remained
of the freight increase
firms
Guilty;
ision
featured by a
price picture is the railroad freight rate
any advantage steel users may gain by
might offset
factor.
Lard demand
will not
he gets his steel.
are
stocks increased
long run if the reductions
It depends, the paper adds, on where
a
corn
general by the
conditions
in steel products, states this
trade authority, since trucking firms and barge lines are already pre¬
paring to do a land office business on steel shipments when steel
.
-
Kenneth
to become
V
~
points out, but he
Age"
the full benefit
Henry L. Goldberg and James J.
Hopkins.
\
,"
Bauer Pleads
will benefit in the
the reductions.
Charles Halden, Walter E. Kimm,
,
user
effect, "The Iron
increase which
included
and
in
On top of the new steel
of
headed by Jack Fein-
was
Plowing for
always be able to tell what his total steel costs will be ahead of
as
as
remain
;
A.
Counsel
present
■
Baird,
of
exception, accqrding to the magazine.
an
with Edward C. Werle, Chairman
of the Curb Board
demand from the East
Whether
Corporation reduced, others slashed their prices by a lesser amount,
while one company made, deeper cuts on a few items, the latter being
the Downtown Athletic
Andrew
steel
pricing "system."
Curb 5 & 20 Club Dinner
up.
Early advances in wheat also reflected increases in parity price®
April 15 and light country offerings. In the closing sessions*
prices were irregular and easier as-the result of forecasts for rata'
in the southwestern Winter wheat areas. The government continued
to purchase wheat and flour in substantial amounts. Domestic flour
buying showed some improvement but purchases were mostly c£
small lots.
Corn showed considerable strength at times with good
If the Federal Trade Commission wanted an
re¬
the threat
as
of
as
,
STEEL OPERATIONS SCHEDULED AT 3.6% ABOVE
quirement.
generally firmer last week
grains to the markets aided in holding prices
Association
week ended
essen¬
were
railroad strike which would tend to restrict the movement
a
of cash
also noted, that railroad coal loadings for the
May 1 this year were the highest since February, 1930,
with the exception of the second week in December, 1946.
evolved.
the
Grain markets
of
troubles.
that
opinion, detract from
holding steady during most of the week, the Dun & Brad¬
street daily wholesale commodity price index moved irregularly to
close at 283.00 on May 4.
This compared with 281.01 a week pre¬
vious, and with 253.39 on the like date a year ago.
They also
an increase of 9,064 cars, or 1.0% above the correspond¬
ing week in 1947, and an increase of 220,327 cars, or 32.8%, above
the same week in 1946 when coal loadings were reduced by labor
offered
WEB*
After
increase of 39,329 cars, or 4.6%, above the preceding week.
protection of the 24-hour require¬
or
Industry
(Continued from page 5)
that
those securities do not require the
ment
COMMODITY PRICE INDEX MAKES MILD ADVANCE FOR
The State oi Trade and
bidding
procedure are of such a character
'
THE
(2114)
34
Toward
have
in
mind
state
they make little
mind
the
on
figures
share
of
the
capital goods must
and
obvious
This conclusion is
that I
might blush to
economic
our
operations
have
sumer
ing
McGjraw-Hill
trying to work
which
the
and
state
If
power.
both
of
am
a
might be done to keep it
atively even keel.
falls."
In the aggregate they may
currently constitute as much as
$12 to $15 billions annually. In the
recent past they have been run¬
what
a rel¬
on
the
course
of
summarizes what
done.
have
we
I have
copies with me which I am
offering as a free premium with
this talk.
We are trying to sup¬
plement, not compete with, the
economic affairs, one of the first
to
arrange a sharp, brief shakeout
which would
reduce, the crop of
fine work
being done by the De-
nartment
prtroor*
of
tions and put our very large cotti?
plement of freeriders back
to
work.
chasing
Commerce
in
this
field.
However,
posed
no one
being in a position to be
perfectionist, I would be quite
|
power, we have charted
in the best way we
to
sary
that:
have things
To do
neces¬
arranged
so
/" First;
Consumers
would
have
enough purchasing power to take
off the products offered to them
in the requisite volume to sustain
employment, and the will to
pend this purchasing power.
ex¬
Second: Proprietors would have
the
requisite funds to keep the
capital goods industries fully oc¬
cupied and a disposition to spend
these funds.
■
Emphasis
on
;;;
....
Consumer
started
statisticians' and econo¬
a
I think it correct to say that in
recent years the preponderance of
economic
should
thought,
perhaps
or
political
say
-
I
economic
thought, has been focused
the
on
problem of maintaining adequate
consumer
purchasing
power,
as
opposed to the problem of main¬
taining purchasing power for
plant and equipment.
;
new
This is understandable enough,
particularly
against
the
back¬
ground of
mass
the thirties.
more
unemployment of
Also, there are many
consumers
proprietors.
ishment in
sumer
The
than
business
political
concern
purchasing
nour¬
about
power
is
con¬
en¬
hanced accordingly.
there is
some
In addition,
economic plausibil¬
ity in the proposition that if
sumer purchasing poWer is
around
in
a
circle
because
is produced is itself the true
of
ure
great
what
meas¬
purchasing
consumer
We have also received
deal
of
criticism of
keen
and
helpful
efforts which
our
a
we
published in "Business Week" for
Jan.
31
of
this
We
year.
shall
bring our calculations up to date
shortly. In doing so, I am not be¬
ing put off by those statistical
owls who
warn
hope to do
is
that
a
that
we can
never
perfect job. My view
where
there
something a little
nothing may not be
/Trouble
Purchasing Power
in
profits
be offset by funds
can
from the security markets.
Some
of
you
in
is
nothing,
better
so
;
bad.
Capital
than
v;
,:
Goods
/.Until recently perhaps
vivid
impression was that we
would run into serious trouble in
sustaining employment in the
ital
goods
industries
before
cap¬
some
which
of the capital
have
of the
some
which
has
would
inflationary
pressure
have
anchor
afflicted
as
well
as
nation, the business
a
flow
the
out
that
com¬
far better job
than ever has been done
ing
storm.
that in
sure
munity should do
also
heavier
a
am
interest
own
the
It
us.
given us a
windward in
to
Consequently, I
its
beer
That would have relieved
made.
in iron¬
of
capital ex¬
penditures.
However, until very
recently, "our problem was not
only that of an uneven flow of
capital funds; it was also that of
a
prospect of an acute shortage.
of
compromise
a
extreme
two
extreme
betweer
positions.
were
At
one
those who thought
that if any reduction was made it
should go exclusively to those a1
the bottom of the taxpaying heap
(I
not concerned right here
that considerable company
am
with
who
thought ..any tax reduction
be dangerously inflation¬
ary.)
At the other extreme were
those who thought the cut should
would
be
in
concentrated
brackets
for
the
the
sake
of
upper
provid¬
private investment
funds, as well as. providing greater
incentive to acquire them. 77'
ing
some
On the
question of incentives; I
have no very firm convictions
I suspect that a way to get some
people to work harder is to keep
raising the tax take, while others
may get discouraged and go fisht
.
I find it
ize here
as
as hard to general¬
I do about what makes
people happy and contented. The
Kinsey Report hasn't simplified
that problem for me.
we
Benefits of Tax Cut
into trouble in sustaining ade¬
quate consumer purchasing power. V.I submit, however, that the tax
cut which was made in the uppei
This impression was based
largely
three
things:
First: Our
v
>
1.
capital goods
y
which indicated that the tremen¬
dous
postwar expansion plans of
American industry—an expansion
involving expenditures of about
$76.2 billion—would be 85% com¬
pleted by the end of this
year.
Second: The clear prospect that
increasingly
would, in
intense
many
brackets was essential to the
ation
survey,
competition
make the
cases,
present high profits of industry a
con¬
thing of happy memory, Our in¬
quiries Jiave indicated thai; manu¬
ade
facturing
^ companies wohld get
of
cre¬
reasonably good pros¬
pect of maintaining a satisfactory
level of employment in the capita'
goods industries and hence in the
a
economy
submit
as
that
a
.whole.
if
„
I
further
going to
make this capitalistic system work
we must make it possible for indi¬
viduals
to
acquire a lot more
we
are
capital than they have been able
to acquire in recent years, along
with
a
risky
the
disposition to devote it tc
enterprises.
same
effect
Something ^of
can
perhaps
be
are
vvc
the
in
dealing with
in
domestic issue
central
Hub
the miserable
of
our
time, and, no doubt, that of our
grandchildren—the proper distri-*
oution of the
The
national
Council
visers
is
income.
Economic
of
Ad¬
doing
useful work in
providing better information.
So
is the Federal Reserve Board with'
its surveys
of liquid assets.
More
But the fact re¬
to them!
power
that
mains
don't
as
know
meet
we
with
here,
we
degree
any
,
_
>
*
proprietor. As I stated at the out¬
set, I regard even full employ¬
ment on that basis as unsatisfac¬
tory.
Perhaps my concentration or
only a few phases of the almos
cosmic array of problems before
us will give you the feeling that
I am ducking some of the mair.
issues.
So let me make a few
haymaking
as
a
generalizations abou;
basis for discussion.
Conclusions
Profits—They
and
expenditures
wouldn't be in
we
of
precision how the national income
is being divided.
We don't know
who is getting paid how much fori
doing (or not doing) what. -So
Government Investment As
we operate much in
the dark in,
Substitute '>:7:
71
trying "to discuss fully the essen¬
Of course, if things are not sc
tials for a balance between wages,
arrangecf I do not expect the
prices and profits that will main¬
world to come to an end imme¬
tain satisfactory employment."
diately.
I anticipate that there
As I have intimated, this situ-'
will merely be more government
ation is not without some advan¬
investment in default of adequate
tage to one on the spot I occupy
private investment, with the
at the
moment.
It provides a.
process accelerated by depression.
broad license for loose generaliza-That, however, has as its end the
I would really be much,
dominance of the government as tion.
sonally think it would have been
ran
on
of such
some
ing.
my most
they can afford to lose most of it
risky ventures. To the stability
a system it is equally im¬
portant, of course, to see to it that
there is an impressively good op¬
portunity for newcomers to get
into this group by hard and com¬
petent work.
■;
'/■■■• V",
on
should
of
capitalism will still be
of
object that
may
spending too much
capital
expansion;
that "H
be slowed down.
I per¬
for
common
lodged in the possibility of hav¬
ing enougn individuals aole to ac¬
quire enough money and able to
hold on to enough of it so that
have been
we
in
invest
to
However, as I see it, the
stocks.
them
thing
power.
-.r.v
-
lot
criticisms
By inviting technical
of our labors we have
mists' field day.
7-7v 7
if, within limits of 10% i
We have been clubbed with the
hp or down (now it could only!
old and rather musty wheeze that
be down), we could stabilize
the
we are
present volume of
simply chasing ourselves
employment,1
with all its imperfections.
that, I take it, it would be
a
know how.
course
satisfied
_
get
can
In the sort of cuts to be made,
the tax bill was, as usual, some¬
its
me
Not
a
In dealing with consumer pur¬
has pro*
for that post, and I am
really not a candidate.
their bond holdings to stock hold¬
ings in considerable volume, the
wiser to defer
,
,
expenditures
for new plant and equipment we
have made a good start and will
be able to do an increasingly ef¬
fective job.
Our survey of ''Cap¬
ital Expansion for 1948 and '49"
producing a
crop of windfalls in anything like
this volume obviously isn't work¬
ing too well.
If I were Goq of
reaspr^thle
this
where
about
is bound and
economy
ting
higher rate.
to
known
now
do
It is my impression that in plot¬
An economy that is
windfalls
con¬
convinced that
great deal more
tions in the form of windfalls, or
what might be termed "inflation
the
disclose
could
we
would know
we
would
we
out
capital goods purchas¬
satisfactorily I
in¬
be
If, as our inquiries indi¬
they might, they also shift
more
statistical
and
at
been
currently
things I would do would
stocks.
cate
spritely.
If they do, the
possibility of sustaining employ¬
ment in the capital goods indus¬
tries, and hence in the economy
as
a
whole, will be much im¬
proved.
The prospective decline
frequently overlooked.
In
than is
a
tend to do with their tax savings.
They tell us they intend to invest
them in large part in common
investment markets
come which in these
ways is now
going to individuals and institu¬
ning at
bit.
a
is so
'
national
r.
markets
mention it but for the fact that it
who,
available
are
has helped to perk
people^ in the upper brackets in¬
>,
be maintained.
so
then the Federal tax cut
fc>ince
i
deficiency of con¬
purchasing power will cut
consumer
As is usually the case with the
most important and interesting
no
for
up the stock
My expectation is
that it will go further along that
line.
The expectation is
based
upon a considerable amount of in¬
quiry we have made about what
measures
statistics,
their
before
long
Hence, if employment is to be
kept relatively stable a healthy
flow of power to purchase both
perceiving the terrible hunger for
goods, made me and my fellow
citizens jump through the hoop
and back again.
>7777':
"Inflation-Falls"
have
be communicated to
before long.
Mindful of* the
labor leaders
increasingly
upon
the capital goods industries
down
somewhat different dimension I
have in
not
sustained
a
many years when it did not, that
has not bothered me so much.
In
a
wili
sumer
salesmen
have watched the money roll in in
waves.
very
troubles
will
the economy as a whole, and the
trouble will be general. Likewise,
I also have in mind farmers who
fabulous
They
starved
sales effort.
or no
relied
be
and apathetic
marxet, which must
soggy
,
starve.
to
continue to get paid though
who
adequate flow of con¬
an
A
investors
essence
from internal sources.
Third:
purchasing power and that funds for capital expansion as the
maintaining adequate power to postwar bonanza petered out.
purchase new plant and equip¬
ment may be and usually are quite I • 7-77 ■; Trouble Ahead
7/77
These three things seemed to
different.
At a given moment,
consumers
may
be thriving in me to add up rather definitely
terms of their ability to purchase, to trouble ahead for the capital
and capital goods industries may goods industries and hence for all
be starving, or at any rate starting of us.
7
employment in
the
United
States right now as satisfactory,
even
though we have very high
employment. Far too many people
with
fixed
incomes
(including
me) are getting squeezed. Also I
do not like to see so many people
and organizations receiving re¬
wards (on the high side) all out
of proportion to their perform¬
I
main¬
in
expansion this
sumer
of
ance.
investment
involved
processes
are
conflicts of interest to settle.
savings of small
and disperse the
they
of
principal employer as provid¬
ing "satisfactory employment."
regard-the
year
taining
the
I
capital
for
and
community in which the state is
do
using
'
Thursday, May 13, 194®
secured in part by making it eas¬
ier for institutions which collect
of the money
The fact is,
however, at- any
given point in time tne problems
employer the "right to squawk" is
enaangered.
hence, wmie X do
not beiieve that private employ¬
ment always guarantees personal
freedom, I would not regard a
Neither
about 84%
will almost inevitaoly tnrive.
dominant
the
becomes
state
FINANCIAL CHfiONICLE
&
Stable Economy
a
quate, the capital goods industries
(Continued from page 13)
the
COMMERCIAL
cases
high
in
and too low in other*,
large part of the complain
about high profits is misdirected
a
to industries where they are low
Steel is a case in point.
Barring
and
war
a
tions, for
new
flood of prepara¬
competition
war,
will
take care of most of the
problem of excessive profits. In¬
telligent anti-trust law enforce¬
soon
ment would take care of
much ot
the rest.;. •-/,,,
-
/
77.
Wages—In
the
- •
.
nature
which includes
\case,
■:
•
-
-
of
^
*
the
deplorable
state
of labor productivity
(foi
which* labor is only* partly; to
blame), a third round of wage in¬
would*
creases
say
will)
industrial
another round of
price increases
employment. -: y.,
That
a
(perhaps I should
mean
'
un¬
or
-y77
wouldn't
help ..anyone
Better productivity—a great dea^
better
productivity—is
a
pre
a
;
requisite
of
desirable
wage.
productivity in
a
facts.
which you
tempted
on*
a
statisticians must play,
I hope that I have
it
play
to
you
a
little;
strenuously.
more
National
\
of
job
is
That
leading part.
a
authority
by
Gypsum
Offered
Gypsum Co. is1
stockholders
National
The
'>
offering
to
common
May 10 the right to sub-*'
scribe at $13.50 a share to 422,467/
additional common shares, in ratio;
of record
share for each four
Rights will expire on May'
24. W. E, Hutton & Co. and Blyth
of
one
new
,
owned.
&
which
Co., Inc.,! head a group
^ill: underwrite; the; off
I
the"
Gypsum will use
National
money to increase working capi¬
tal to meet the requirements pf
,f:
increasing volume of business,.
company, a leading unit in
thebuilding materials industry,had $15,388,013 net sales in the;
an
The
first quarter,
compared with $11,-;
619,895 a year ago. Net income
was
$1,521,933, equal after pre-*
f erred
dividends to 84 cents acommon
compared
share,
withi
$1,314,617 and 72 cents a share au
year
ago.
-
-
>
,
.
-
T>.
|j
in¬
How to get higher labo'
creases.
more,
Stock
-
too
are
revoked,
the license,
if
however,
happier,
were
full-employmen^
which still has the obso¬
lete institutional arrangements of
economy
under-employment economy
(union
opposition 7 to incentive
wage
systems, for example)
fr
First Boston
Corp., 7
Harris Hall Group
!
an
one
of the $64,
or now
it
probaV»H
should be $2,064 questions.
In the
meantime, there is
to
that
oect
the
reason
cost
,
living
of
fob'*
narticularly .in
squeeze,
ex
line, will be eased.
Prices—Many of them are too
high, particularly those of some
key
cost
of
living items.
The\
are torturing a lot of people witi
fixed incomes.
But they do not
seem
too high with reference tc
the total amount of money avail¬
able to pay them.
In any event
they are not going down mucl"
soon.'
Food Drices should go down
Offers Utility
A
nation-wide
Stock
;!
underwriting-
headed jointly by The First
Corp. and Harris, Hall &
publicly offered Mfey 12
800,000 shares of preference stock/
4.56% convertible series, $25 par
value, of Southern California Edi¬
group
Boston
Co. (Inc.)
son
i
Co.
■
The stock
share,
4.34%.
/to:;
>
is priced at $26.25 a:
yield
approximately
It is convertible into com-
<
share,,
taking the; preference stock at.
$26.25.
The. conversion •, rate;; is;
subject to adjustment under cer¬
mon
stock
at $28,504-
tain conditions.
per
7:777 VT 7*7 7
clothing prices may, bu1
The net proceeds will be used,
industrial
prices won't, and
if to reirpburse the company for cer¬
wage costs go upv many indus¬ tain expenditures heretofore mhde
trial prices will rise, too.
There for the acquisition of' property
is nothing in the price outlook
and for construction, extension/
however, that is a fatal bar tr improvement of company's facil-;
maintaining "satisfactory employ¬
ment" if, as always seems rathei
Gross additions to plant for the
unlikely, we use our heads well.
calendar years 1948 and 1949 are
Now to return to my main line fcuiimated at
approximately $11$,of discussion—if, as you well may
000,000.7
: :
.
7'.-7V .i. > v*
you think I have indulged in some
some
and
factually fragile observations, T
hope
you
won't
merely
br
prompted to try to match me ir
that line.
I hope that you will
throw your energies and influence
on the side of enlarging the range
of fact.
Even
there
if
we
would,
had
of
all
the
course,
facts;
still
be
With
Randall
Harris, Upham
i^rwjoj
to
The
•i7
/
Financial
Chronicle)
CHARLOTTE, N. C.—Ralph E.
Randall
has
become
affiliated,
with Harris, Upham & Co., Johns-,
ton
Building.
-
He
was
formerly
with Thomson & McKinnon.
Volume 167
COMMERCIAL
THE
Number 4698
FINANCIAL CHRONICLE
&
production and distribution of the
Of
'
;
v:
'
(Continued from page 4)
in costs and prices are to be found «from
principally in these figures of the
money supply,
iFnis maladjusted
cost-price boom is the result of
a
scarcity of goods caused by war
destruction, and an inflated sup¬
ply of paper money. But in spite
of
the
increase
in
duction—more
the
than
total
100%
pro¬
above
production, and prices
prewar
the average
1C0%
above
prices—there is still
on
prewar
vast unused
a
supply of money power available
to
push costs and prices very
much
higher.
Time and again I have pointed
that we cannot have prewar
out
prices with postwar dollars.
Our
dollars of today are just not worth
much as they were before the
as
and
war
Are
before
the
New
going to get back to those
old days when you bought
glass of beer for 5
a
Deal.
we
good
and
10
or
cents
dollar?
a
We
are
tainly not going to get back to
halcyon days again during
you^ time and mine."
.
ciency necessary to carry out con¬
currently a military preparedness
program
and
meet
our
large
peacetime needs for production,
and our foreign commitments,
i
Some people will tell you-r-who
things,
cording to them—that
the money
ac¬
can
tax
power
of existence, or that we can de¬
flate in the same way that we in¬
flated
the
kets if
This Is
power/;
sheer
nonsense.
Tnis multiplication of money pur¬
chasing power in the form of cur¬
rency v in
Circulation; and bank
deposits ready for quick spending
y
.
ift the accounts of ihdividuals has
become
now
daily
entwiried
prices,
we
will cooperate and
With
hold
down
prices and costs. Let us be
thrifty, and apply the lessons we
have learned, that materials anc
work, together with the maximum
6f efficient effort, will provide u:
with the products we need, and
leave
free
us
live
to
democratic lives.
If
our
own
.
business¬
our
men, bankers, labor organizations,
and the government are not will¬
ing
cooperate to accomplish
patriotic ends for the good
to
these
of
country and to prove
the merits of our own democratic
our
way
for
to
a
own
of life, then we are headed
bad end.
I for one refuse
that.
believe
purpose,
American
occasion
,
With
unified
a
and
leadership,
the
people will rise to the
and
double
,
present
our
{The
necessary.
/,
;
.
/ '
Necessity of Free Markets
better
place
to begin
ex¬
the
We'are to rearhi and. be pre¬
pared fori World War III, if and
When it Comes, we need man¬
raw
materials/ increased
production—to / supply; our own
domestic needs, the needs of our
allies; and the armament program.
This is a challenge to all of us
to return to work and cooperate
power,
as
we
:In
did
my
win
to
opinion,
the
the
last'
war.
unnecessary
inflation and spending spree Were
handicaps in the
last
'
progress of the
Did We not learn/that
war.
preparation for
war
and the pros-
/ecuting of' a? war take Work, ma¬
terials, and cooperative efforts to
get the job done, and done well?
;
The printing of paper money dis
torts costs and prices and disturbs
"the orderly operations of produc¬
tion during war as well as during
peace. s, Paper money is neither
I wealth or war materials for a
nation;
we
have
now
too
paper money. The way
for the next war is to
to
much
prepare
return
to
work-7-full-time work, with effi¬
cient management and
;
One to hold
—produce
>
effort.
Will take the cooperation of
supplies
develop
It
every
down prices and costs
the
and
our
needed
the
at
peacetime
same
time
needed military pre¬
It is just as
paredness program.
essential
that
cally strong
we
as
it
keep economi¬
is that we be
of
ex¬
so
quickly under¬
mine our military strength as the
economic
disturbances
resulting
to con¬
inform' ourselvfes better
the factors in price; and
under
discussion
at
the
To
put
it
another
The
way:
markets
coun¬
any
country
ai
and
able.
The
available
skill
management
is
for
planning and put¬
ting into operation the production
and
distribution schemes needed
America
markets for the conversion of pa¬
duction
into gold at prices for
paper money vis-a-vis gold ar¬
rived at in open auction markets.
honest
per money
1
To
est
Conclusion
■
sum
■
•
remarks on hon¬
I want to make this
up my
money,
statement
with
It is futile for
rising
the
all
at my command:
discuss
r
emphasis
//.
us
to continue to
prices
bnly in terms of the law of sup¬
ply and demand for the commodi¬
ties themselves.
for
to
It is about time
stop making the asser¬
high prices are caused
Only
high
us
by
profits
is
to examine
about
the
convinced
more
policy
a
and high
time for us
fiscal
policies of
because
government
that
I
am
price
our
result of
and
our
loose
devalued
money than it is of the factors of
profits and
and the
and
the
needed
to
feed
of Europe
people
rest of the world
are
we
determined to help.
But we need
honest mortey to finance the pro¬
the
facilities
to
money
field
and
need
we
again
serve
distribution
of
in
as
j
for
facilitating
the ex¬
change of goods. We need honest
means
to
money
save
heed
we
us
honest
from
us
the
from inflation;
to save
money
tragic
consequence
of inflation.
After
inflated
or
clothe
all, the American nation
is an entity, and it lives but one
life, has but one future." We are
all too prone to consider "eco¬
nomic
necessity"" and "political
expediency" as entities in them¬
They;
tribute
to
of
the
to
"sweet
convince
will
political and economic liberty.
within
the
the
was
national
With food prices driving wages
higher, and with wages driving
prices
of
manufactured
goods
•
higher, and ever higher,
the
on
inflation spiral, did the represen¬
tatives of all the people have a
heart-to-heart
small
talk
segment
with
that
of the
population
known as organized labor and ask
them to support the nationl
pol-;
icy
of combating inflation by
foregoing further wage increases?
No!
By
statistics,
statements,
speeches, and every method pos¬
sible, they assisted union labor in
their battle for
higher wages!
With the Federal Reserve Board
requesting legislation to prevent
dangerous
ment
expansion
selling,
of
a
install¬
expansion which
an
against inflation, or did it reduce
foxes, thereby further increasing
purchasing power?
The less said'
about that, the better.
With rearmament promising on-
Won't Woik
individualistic in
wards
the inflation Cork¬
this
new danger?
Do you think
anything will be done?
77
attitude to¬
our
on
screw, has anything been done by
the national leadership to offset
(Continued from page 7)
me
return
con¬
fulfillment of the
the
destiny of America—the destiny
National Planning
that farmers are hot pro¬
was
a
prices
policy to combat inflation?
Not
They got in and helped them put
prices up!
Other turn
told
it
as
that
normal
more
desirable
reasonableness"
them
are
solution that
Of
:
Did
products.
not; they can is highly inflationary in times of
only be considered as phases of commodity shortages, did the Con¬
our common experience.
No!
In our gress cooperate?
With; the inflationary threat
plea for honest money, for free
markets, for realistic prices then, getting greater day by day, did
we
must strive always for the the Congress reduce the public
debt and thereby take a position'
economic
selves.
our
wages.
their
on
people talk to the farmers in
teims
ready to go to
Labor and tools are avail¬
provide plenty for, everybody
■:'
the
world is eager and
and
\
ceiling
the national representatives of all
authority
(other than our
statutes) that we are like
.
The
former
Chairman
Federal Reserve
ducing food as the^ should in
England, that the output is falling
criminal
the Irishman of whom it was said
unanimous
far below plans and that there is
that
the
nothing that the Labor government
planners can do about it. He said
boat
in
"What
that
A
Board,
of
our
the
chief
went before the
under
the
impetus of war¬
patriotism, food production
time
was -thousands
of
ton/s greater
than it is today, despite Britain's
extremity.
He admitted that if
farmers continue to sit, that
the Labor government is bound to
the
fall
and,
he
moment ^he
this
is
friend
country
the
got off the
he asked,
said,
"What
difference
does
it
make?"
He
answered,
"iVe got to know, 1 want to be
ag'in' it."
■//..././77 ■
.
Then, too, there is an occupational
hazard which gradually overpow¬
the
all
ers
bureaucrats
I
have
there's not a ever known or read about; I re¬
thing we can do about it fer to the fact that the so-called
because the English will not stand "public servant" is,
under our
for force." Mind you, this was a governmental
budgeting setup,
,
said,
.
veteran Labor member of Parlia¬
judged
unfortunately,
monetary
eral
authority,
with
the
backing of the Board,
Congress on sev¬
occasions and asked for
new
here?" legislation to control the forces
government
by
inflation
of
now
being generated,
and what happened?
The Con-;
gress ignored
the recommenda¬
tions, the Secretary of the Treasury announced that he has not
heard of the plans, and the Presi¬
dent
publicly
repudiated
the
ecommendations and demoted the
author to
a promised
vice-chair¬
manship of the Board—and now it
looks ris if the vice-chairmanship
his
causes
ment
speaking!
*
rou call it unconscious humor if
-
'
of
heritage—let us claim it be¬
fore we forget what we have lost.
our
During the past 20 years, the
governments throughout
the world, including our own, have
various
broken all
gold
other force will
If we ate
Our
polity
present time.
may not be forthcoming!; Would
spending and not by his saving. It
price fluctuations.
On paper, planning is a wonder¬ is amazing how they can rational¬
inquired as to what "national
<5r, to put it another way: We ful thing. A great case can be ize and justify what they want to policy" is being followed here?
have got to abandon statism and made out for it. But, the records do.
One day I said to brie of our
7 You know what "national pol¬
'the
presumption that fixed or show that in human affairs incli¬ professors, one Of the most famous
icy'' is being follpwed in all these
pegged prices make any kind of nation is the controlling force. As experts on public finance in the cases—and I damn the Republi¬
a
contribution to the economic individuals we do not do the couritry—and this actually hap¬
cans
and Democrats with equal
scheme. /;
-v.//:;%/'/ "//"////' '• things that are best for us. Some pened—"Can't you ever conceive fervor—the "national policy" of
the
of us eat too much, although all of
possibility
that
public
Likewise, we must shun shortgetting reelected is the control¬
term readjustments in Our econ¬ doctors guarantee that overweight finrittee should also concern itself
ling one and it is the only one
willk kill > you.
Most everyone with controlling expenditures? My that will interest our politicians
omy, which serve only to render
smdkes, although responsible sci¬ God, don't you ever think of any¬ until November, and we might aS
our course erratic. The basic prin¬
ciples Of "freedom, ' rather than entists have never claimed that thing other than how to devise a well recognize the fact.
Until
new tax?"
some * temporary
and arbitrary smoking is beneficial. Still others
that millenium arrives when all
Let trie give you just one sample politicians will be statesmen, and
control, should govern ouf eco¬ imbibe too much of the product
nomic as well
as
our
political which has made my home state of of the willingness of bureaucracy all Statesmen will be economic
of worship; Kentucky> famous, even though to spends Here in this city/with¬ statesmen, we can expect no ©thef"
thinking; - Freedom
freedom of > speech,
freedom ti to they know better. To assume that in the month, an official speak- result/'
' 7
we do the things that are best for
come and go as we please—by all
irig at an industrial mobilization
I submit, that if the opponents
us is truly Unrealistic.
We do the meeting blandly announced that
means;
But also freedom to grow
Of planning had been given the
what we will, manufacture what things that we want to do and 54% of the machine tools of the
powers of Deity to stage a dem¬
often OUr reasons are twisted and
we
United States were obsolete and
will, trade as we please—
onstration of the impossibility of
should be replaced.
these,, too, are - vital - to our na¬ of little real significance.
Consider for
planning at the national level in
The assumption that hoftlo eco~ a moment, if you will* the eco¬
tional; health. - Free ■' markets,
Our
free-wheeling
democracy,
where/ gold is simply another nomicus is rational is the greatest nomic consequence of such a pol¬
they could not have devised a
commodity to be bought and sold, canard ever perpetrated in the icy. Doubtless, in most instances
more
convincing object lesson
can do more to stabilize our econ¬
name of a so-called science.
The we could get more modern ma¬
than has been given us since V-J
omy and halt inflation than all
Americans,
particularly,
depart chines; but to say that 54% of our
Day, shall I say, unconsciously?
the bureaucratic meddling in the far from
that basic precept of machine tools should be replaced
This brings me to my final con¬
world!, That freedom is part of economics.
The American saves is a negation
the waste-not,
about
what
jectives.
any
with
got: to
for
In fact, I doubt if
scheme.
American Capi¬
talistic scheme of things, we have
tinue
in
in
month
currency
eco¬
With
farm
country as ex¬
prices more than
production and dis¬ 200% higher than before the war,
tribution, than any of the slick farmers have continued to demand
adjustments in our national fiscal subsidies, and price floors, and no
pressed
open
fluctuating values in the
medium
the
on
tional policy in meeting this ter¬
rible danger confronting bur eco¬
nomic, yes, political, safety?
nomic life of Our
Further, as the
step in the process ol
stabilizing paper money in terms
of gold and returning to the
gold
standard, we must set up free
practical experts on
entire
effect
more
opening
Parliament
able to carry out our military ob¬
u
of
other
any
price, the experts on the law of
supply and demand and the fluc¬
tuations in price that arise from
and/ the
honest'monetary
auction markets.
merchandising stores, and in the
mail-order houses; great practical
laboratories where there are as
sembled
to
to
fiscal
omic
And - Without Dictatorship
If
of
level is
,
*
free
up
exchange rates arrived at in
-than in Chicago,
because
I again repeat, you have the
practical example in the wheat
pit, the meat markets, in the great
becdme / ingrown into
our
change.
;•/ ■:/;//
/' *;/-'/// 7.;
fiber. To try. to remove it J If we are
really going to settle
by some crude, over-simple eco¬ down and do
anything about in*
nomic surgical operation would
flation, it is high time for our
bring / on an economic /collapse {government officials, our econo¬
and chaos/ in industry,
finance, mists, our businessmen, financiers,
and government monetary poli¬
industrialists, farmers and pub¬
cies./It will take a long time to
licists to study, the price system.
Undo what has already been done
They will then/realize what a
tb inflate/our.; costs and prices.
tremendous
contribution
a
free
But we should take warning right
price system and free markets can
now, stop here, and prevent, any make to the success Of an econ¬
i;
currencies
paper money into the paper
money
hem
very
/Without/ Inflation
try^
set
conversion
lere,
our
y
of
return
halting inflation,
on
work.
must
the
quite
now
-
We
for
exchange
gold.
our'
income ijr 1933/ This inflation has
;
and
ploring these realities and facing
And government's tax take today
is more than the whole national
•
national
of
no
A
practices would have
and dishonest rates for the inter¬
wages, v It
costs,. Wages, and
t&kes. As I mentioned before, this
inflated money purchasing power
is
the
principal force
causing
these high prices, Costs and taxes.
Rearmament
that We must abandon the
Keyriesian theories, the so-called
managed currencies, and pegged
t Surely, then, we can also face
the realties of prices, and I know
,
further inflation.
talking
use
no
tions .that
production if
purchasing
money
be
can
out
we
purchasing
program
carried out best under free mar¬
(
know just how to fix
this
believe
do
is
seriously about economic Recovery
and halting inflation uttless we
ate ready to step up to a return
Of honest money.
Honest money
means
fixing,
government
in the effi¬
result
will
controls
cer¬
those
and
regimentation,
a
dinner for
could bring
that
inflation
upon us financial chaos.
I do not believe price
free lunch thrown in;
when you got a first-class steak
or
got
world/ There
38
(2115)
the
the
rules of the game
he
knows better. He spends when he
should save; and he knows better.
He is a law unto himself, utterly
individualistic and hating the very
idea of even the simplest regi¬
when
he
should
spend;
and
want-not
this
philosophy which gave
country those selfsame ma¬
chine
in
tools
than in
any
greater
measure
other country in the
Inflation
if
planning might work in another
country, it would not work in
greatest
threat to this country arid its dem¬
these United States because of our
tion.
with
fierce
which
to
reconstruct
the
So
I
say
to you, that
individualism.
We
even
are
so
Since
V-J
Day
the
ocratic, institutions has been infla¬
as
could
•
.
if
Even
be
successful
done
at
the
planning
national
level, which I deny; even if plan¬
ning from above were desirable,
which I dispute; we still have the
world!
mentation.
of paper money and
media of exchange. We
find ourselves, therefore, here and
throughout the international field,
without these useful instruments
use
as
clusion:
What
to the
does the
assistance
record show
given by na¬
that there is no way
planning could be di¬
vorced from political expediency.
This last factor alone, I submit,
is the "kiss bf death."
Need more
problem
whereby
be
said?
.
THE
(2116)
36
COMMERCIAL
With
40-Week?
a
facts.
used this phoney forecast to justify an' immediate change in the
am
in
pay
many
building
the
trades.
In
of our plant cities our con¬
tractors could not hire construc¬
them more than 40 hours
work,
or the equivalent pay if they were
not given the extra work.
There has been a very interest¬
ing development going on in the
city of Saginaw, Michigan, where
workmen have banded together
and are building their own homes
in extra hours beyond the eight
hours per day
plants.
our
which they work in
This indicates very
clearly that the average American
philosophy that
prolonged the depression; namely,
prosperity through scarcity.
This
promised
tion workers unless they
the false
follow
was
a
fantastic and neu¬
rotic appraisal of the
a
realistic one.
situation and
labor
Such
not
politicians refuse to recognize the
fact that the war could not mean
immediate prosperity even for the
victors that war damage and de¬
layed maintenance would have to
be made up; that we can only
consume
more
if
we
produce
and that increased produc¬
more,
if
they excess purchasing power and un¬ sian army, so long as the United
would balanced supply and demand at Nations is without military power,
ndt actually have more purchasing the'present time; There should be for so long the free societies ought
fear
of
over-production of to have a coordinated military po¬
power. When a farmer plants 45 no
that
worked longer hours they
acres
personally sure that, if the work week from the 48 hours
workmen of our country were allj worked during the war emergency
persuaded that if they worked the to the 40 hours worked before the
longer hours they would actually war. They even stated that the
have more, they would be for it. real problem of Americans was to
.Ever since the war there has been immediately learn to live 50% bet¬
ter while working less. They still
pressure for more than 40 hours
I
tion
through technological im¬
provement takes time—years, not
goods and services in
ket but only of a boom financed
to
by Unsound credit;
have
in crops in place of 40 acres
confidently expec ts to harvest
more grain.
If workmen could be
equally confident of the fact that
if they worked longer they would
not only receive more money but
that their money would buy them
more goods and services, in most
cases
they would be willing to
work thd longer workweek.
There is another fallacy pre¬
valent in some circles which per¬
haps accounts for some of the
opposition
to
longer
working
hours.
The people who follow
such unsound thinking represent
that they fear over-production.
They talk about the depression of
the early 30's. They say .that the
lack
of
consumer
purchasing
PQwer and the excess profits of
industry in the late 20'g were re¬
sponsible for the depression of the
30's.
I remember the period too
well. My observation and belief
is that the depression of the early
30's was due to debt and specula¬
tion and to an unsound foreign
policy. In the .late 20% millions
of people speculated in the stock
market on very small margins.
They speculated in Florida real
estate, in iarm lands and in all
kinds, of. ways.-7,%/, ■
like
to
have more; It would be
at the same time demand that the
just
as
the
mar¬
accounted cost for such
hours
is
that
so
extra
excessive
that
inany employers do not believe
that it is profitable to work such
<?xtra hours at such a cost, This
country was built up by men and
back¬
advocating otherwise the Party will use the plan which would increase the Russian army against them. ,The '
standard of -living of workmen United - States - will have to as- ^
generally.
;/77;;' 77:7. sume the major burden; of allay¬
I am not advocating a plan that ing that fear.
But we must be
would reduce the compensation careful not to think of military
workmen are now receiving for defense as complete defense. There
45 hours. I am advocating a plan is danger of that, because that is
that would effectively
increase the conventional way to think
their take-home pay and their pur¬ and because our existing military
chasing power since the plan set-up is a powerful vested inter¬
should not cause higher prices.
est.
Against the new form of
I am not advocating more' work subversive -'.warfare, armament [is v
for the same pay. I am advocating as obsolete; as was the ■ Maginot
i'
am
I
am
,
Line.,
pay for more work.
am
not advocating a plan that
would
promote inflation. I am
advocating a plan that would stop
inflation since increased produc¬
tion would be available to match
the increased purchasing power.
I
am
would
not
advocating
underwrite
pression.
I
plan that
a
future
a
advocating
am
de¬
plan
a
tion
and
thus
avoid
pression. N
/;
I
am
later de¬
a
'
.
a
our
plan that
country's
fundamental
about
any
fixed
-i—40, 30, or 60. The real question
Is: Does the average American
citizen need
«und spend
more
time to
enjoy
the fruits of his labor
cr does he need more goods and
cervices to enjoy the leisure time
he now has?
That, is the real
measure of the problem.
t
While taxes
such
a
must
come
are so
excessive and
big part of the national in¬
budget,
into
while
go
and
the
Federal
threatening
still hang over the
clouds
unit
which
result
in; self-
Only
In
way
to restore
the
balance
purchasing
power between ur¬
ban workmen and farmers with¬
out reducing the prices of farm
products and jeopardizing the high
level of food production when food
is
so
badly needed not
country but all
our cwn
only
over
in
the
■
world.
7
Phoney Forecast
I
am
advocating
war.
4
ihin&ef<fiately
Russian
where
were near
but where those armies
far away.
were
J
7
The Need for Economic Aid'
7
We
are
•
armies
7
acting to end in west-;
Europe the economic misery
upon which communism thrives.;
The European Recovery Program
We must win the
/7;:
^
peace.
freedom
so
long as it offers hope.,.
Under that impulse the people
of;
western
Europe, with their Af-,
rican dependencies, are " moving
toward
unity.
If unity comes,
strength and vigor will replace
feebleness
and
the
Communist
Party will face a task far more
difficult than that of discrediting,,
by one, 16 separate and weak
governments.,.,. 77:''', "7777.7/7: 7/
It is worth our while to make
one
big effort to create in western
Europe a united and vigorous
economy.
But we cannot place
our whole reliance on that for¬
a
The
Program, standing alone, may not
succeed because communist tac¬
production,
the
strike.
It is
a
n o
thing
current
and work
have
been
keep
a
men
coal
reasonable forecast
that, if there had been
no
strikes
stoppages, there would
sufficient material
to
normal number of work¬
employed in industry
on
a
45-hour week, if a normal number
of
people had also continued at
their jobs in other occupations.
what ominous that the Communist
Party is doing all it
our
in
atomic
bombs,
now
to portray
relation
to
bases
would
no
and
as
ive campaign for the
con¬
Monopoly Strikes Disastrous
quest of Europe. There is, per¬
course it is useless to plan
haps, slightly greater risk in the
for a 45-hour week or even a 40Near East which is the only area
hour week if monopoly strikes in where Russia's
traditional ambi¬
basic
industries
like
time of such extended workweek
to the
ropean
5-year period of the Eu¬
Recovery Program and at
the end of that time return to the
40-hour week. Perhaps if union
leaders could be persuaded
it
The Communist Party an
Actual Menace
As against that
have
possibility,
<
pull down faster than we
up.
Monkey wrenches
build
can
which
little
cost
wreck
can
ex-
machines.
Wh en
in
France last winter I saw the com-;
munist-called general strike set¬
ting back French recovery to the
pensive
tune
of
dollars.
hundreds of
millions
of
Communist Party pene¬
far that, if it
unchecked, it can perhaps, by
tration has gone so
is
not
But
prove
those
that
was never an
unlimited.
all-out bid for power,
offens¬
military
do
strike of last winter
doubt hesitate to launch
an
tics may
Recovery
European
spending one dollar to ou r thou¬
the sand dollars, nullify our economic
communist
tide
is permanently aid.
Any such ratio is hard to
receding.
The
French
general bear, and our resources are not
Russia.
the Russian nation into
communists and
not win the re¬
election.
Italian
events /
portending at¬
But, as matters
stand, the Communist Party
on
did
allies
cent
military preparation, partic¬
ularly
tack
can
their
Of
•
but rather
an harassing
and probing opera¬
tion. The same is probably true of
the communist election campaign
in Italy. Stalin has often said that
the Party will never come into
power through majority vote un¬
der so-called
bourgeois institu¬
tions.
It is first necessary, he
says, to smash these institutions
and demonstrate their
In the
case
many,
areas
stop
all
because
it
would merely keep people alive
on
a
pitiful dole. That may be
humanitarian, but to keep people
alive, without hope or self-re¬
spect, is merely to provide re¬
cruits for communism. So, while
communism
foreign
,
at
economic aid is an im¬
minor¬ is
our
defense, it
no more
communist strategy is still The Need to Combat the Partly?®
only in the phase of seeking to -7--".'■
7: ': Warfare >
-k<
discredit the existing free institu¬
We need an organization to Con¬
rope;
•
tions.
Their hour to strike for test with the Communist
Pafrty at
is not yet arrived, accord¬ the level where that Party
ing to their own time table.
working and winning its victories;
power
The communist
we
a
there7 are
all-sufficient than is a
f '
of western Eu¬ military establishment. / 7 7
and then seize power as a
ity.
Also,
where economic aid will not
bankruptcy portant element in
serious
and
menace
calls
for
remains
the
best
reality. The Communist
counter-measures that can be de¬
Party has already declared us its
vised..
/"
'
' '
'
would work out this way they enemy and is waging against us
What should those measures be?
would look at the matter more a; campaign in which it has won
We
are
doing some of the
great victories.
For
the first
realistically.
time since the threat of Islam a things that ought to be done, but
Workmen Must Be Enlightened
some of them are left undone..
thousand years ago, western civ¬
The corollary to the false phi¬ ilization is on the defensive.
Our Need for Military Strength
The
losophy
of
prosperity through Communist Party controls govern¬
We
are
developing military
scarcity was that workmen could ments that, in turn, control about strength to offset that of Russia.
folAt thaPtiitie they -higK m
only
mula.
-
tunem playmenit
not
a
There
is
Lenin: and Stalin have em¬ States.
already here
taxes are collected that
phasized that the dictatorship of considerable infiltration into labor
possible these
enormous
the proletariat must "seek to ex¬ unions
and
the political
party
government expenditures.
7
Some people argue that since press what the people are con¬ fronted by Wallace could mark
scious of." Dread of war is at the the beginning here of communist
the production of pig iron and
steel is the limiting factor in much top of the consciousness of the political harassment which is one
Russian people.
They suffered of the means whereby the Party
industrial
blocked by the sarrje false proph■Cfjs who were predicting' serious
lowlng the
have
communism growing power,
won
how the
._
Any real consideration at the
end of the war of this solution? for be
paid more money for producing
the inflation problem has. been
-
which
methods
the
Offset
is the product of fine statesman-v
plan ship. Already it has revived hope
that will avoid the danger of "Too in people who know
apd love,
little, too late,"
freedom and who want to keep
■
costs
But armament will not
victories.
make
world,
defeating price increases. It is the
»
the
defense and world reconstruction
policies.
the recent tions are not
by now fully real¬
I am sure that working coal strike are tolerated. As a na¬ ized.
:7;77.7.7"
./-■ ,
tion we can no longer afford the
more than 40 hours per week is
We cannot exclude the possibil¬
the only real solution to the prob¬ extravagance of such monopoly
ity that Russia might become a
:■/.'/.■ ;■ /.,■/
lem of wages and inflation, It is strikes.';,
military enemy. But that is as
the only way to increase the. real ■f, I am not advocating a longer
yet only a possibility, and by care¬
purchasing power of take-home workweek for an indefinite pe¬ ful conduct we can do much to
riods of, time.
Perhaps it would
pay of workmen. Raising wage
prevent that possibility from be¬
rates per hour causes increases in clarify the problem to limit the
coming an actuality.
7;1(.7:77:7
war
{,
miUtary power may pre-*
Communist Party from'
using
the
specter
of Russian •
might to bluff its way to cheap
ern
not advocating
would interfere with
/■...
lOur
vent
that should prevent serious infla¬
would be gained by working fac¬ Horribly from the last war and discredits free governments.
There have been some good de¬
tories more than 40 hours. How¬ those who survived want no repe¬
Women who believed in work and
tition.
Undoubtedly the Russian velopments. The! general strike
ever, the pipelines were about
were
willing to work for the
filled up and the .steel production people could be brought to fight in France did not cause a col¬
things they would like to have. As
had been increasing month by again if it seemed that the provo¬ lapse there of democratic govern¬
a matter of fact there is
nothing month
cation were great and it is some¬ ment and the
until
JMimber of hours of work per week
of their own comparable
of Russia.
Unless they
a
to
an
that
the
cost of government be kept at a
They try to make the point that
level many times higher than the
there is nothing in the present law
prewar
level
and ap¬
to keep employers from supplying highest
one-half of war-time
more than 40 hours work, to their proaching
a
lower
employees, but they insist that the costs, are promoting
(Continued from page 17)
standard of living and more infla¬
base of 40 hours must not be
not try to make the Russian nation ments of France and Italy. It has
changed. Actually the implication tion; whether they realize it or
fight in Europe unless its lead¬ well-organized parties throughout
of a 40-hour Federal law is that not.. When total taxes in all forms
ers
genuinely thought that we South America. It foments revo¬
40 hours is all that anyone should exceed 25% of the national in¬
were
planning to attack Russia lution in all the Colonial areas.
Work.
This is quite important come it means that the average
from Western Europe as a base. In every country in the world the
American working
40 hours a
psychologically and is gradually
week is Working more than 10 War is not the Party's preferred Party can exert a seriously dis¬
having its effect not only on in¬
method, ancj even if it were it turbing
influence
whenever 7 it
dustrial workers but on farm labor hours for the government and less
could not wholly disregard the judges
the moment opportune,
and other occupations not covered than 30 hours for himself and his
sentiment of the Russian people. That applies even to the United
family. And this i3 true no matter
by the 40-hour law.
Both
Furthermore, putting a
50%
penalty on the extra hours carries
tential
that, some peoples will let
(Communist Party take over
mefely because they fear- that
,
up:.
'
not advocating a step
ward for labor;
I
debt has created
war
I
free
sum
more
?
40-hour week were fundamental.
To
a
.
;
work months.
During this immediate postwar
period with its world problems,
«50 much easier to schedule five
government itself should not pro¬
more hours of work at his regular
mote an artificially short work
Job than to force him to scurry
around and find a second job that week, and at the same time press
They contracted debts, and the
will allow him
to
earn
extra for Continuing high costs of gov¬
ernment, including expensive for¬ high rate of industrial activity in
money.
7/';7;' 7' 7-7; 777
eign relief. Political leaders who the late 20's was overstimulated
Psychological Factor
argue for the maintenance of an by the excess purchasing power
/ Many labor leaders and labor
caused by speculation add debt,
politicians act and, talk as if the artificially low wotking week and
Would
workman
more and
Thursday, May 13, 1948
he
(Continued from page 14)
misstatements do not change the
fearful
now
are
Can We Win the Peace
CHRONICLE
& FINANCIAL
.
If
a
house
inroad of
burn
it
is
menacpd .;by5 the
mice,? wise then do not
down
to
get
rid
of the
mice; or go on expending,big;sums
to keep in repair what' is:)beihg
gnawed away. They 1 get a{cat.
We can learn from that example?.
It is not necessary to bUrn'up'the
World with atomic war;1 it 4s 'hot
keep pouring out
repair the damage of
five hundred million people of 15 If we have to use that strength, sabotage; it is necessary to catch,
different nations;, It inflicts upon it will be a sad day for freedom, by exposure, those who' are'gnaw¬
the four hundred million of China which Jhas barely survived the ing away the foundations cf the
v 7
:
.
civil war which1 makes orderly first two World Wars.. But so long free" societies; .
necessary
to
billions to
.
government' impossible;
mumtftyhsii wSfl&nen gravely, embarrassfed the
If
has
govern¬
as
the
reserve
Communist
The
Communist"
Party has in
Party xsea
the potential of the Rus-: three main techniques; v
;
7
•
tSKsttMMW?).* W
Volume 167
W^*^0*WiMJhWUUVMa ,i
THE
Number 4698
•
By secretly introducing trained
agents into key positions in labor
to
political parties, it gets
vantage points from which to dis¬
COMMERCIAL & FINANCIAL CHRONICLE
whose
unions
or
credit free institutions by strikes,
parliamentary in¬
and
sabotage
terference.
intensive radio and press
coverage, it whips up discontent
with what is, and pictures its own
system as the one that will give
By
governmental department,
a
"Voice of. America';
short-wave
lispings are
scarcely heard above the flood of
communist propaganda, It is hard
to find anyone on the Continent
of Europe who does not accept
one
there
the
is
version
communist
United
States
as
,
of
the
aggressive,
an
imperialistic
power;
seeking
political
domination
of
other
all the dissatisfied all that they peoples in an effort to get new
markets to bolster up a capitalistic
want. In aid of its propaganda it
makes effective use of paper sup¬ economy that has outlived its use¬
plies it controls.
By ruthlessly suppressing op¬
ponents who
come
within its
power, it terrorizes many oppon¬
ents elsewhere so that they be¬
come
mute lest they hereafter
incur
a
like fate.
Party has schools which
teach these techniques to recruits
from all over the world. These
schools rank in quality with our
The
West Point and
Annapolis.
paign. But because it is that of a
Party, not a State, because the
are
too ready
quit, Czechoslovakia and Italy
make
crease
cieties.
-
In
Germany* Japan rand. Italy Were needed tool to work with, for
utterly destroyed and France and is in the interest of every labor-*
Britain were gravely weakened,
jing man in this country that we
Throughout the world, economic save and that we put our savings*
Czechoslovakia there
Russian troops, no Rus¬
sian economic gifts and the com¬
munists
were
a
minority.
In
were
.
no
processes
there
.
Italy,
had
the British and ourselves
troops at Trieste. We had
made
impressive
demonstrations.
naval
We
and
in
in
not battleships and
dislocated
were
and
widespread loss of faith
existing institutions.
In each
of' these areas, Russia or the So¬
viet Communist Party has moved.
air
wanted in relation to
Trieste, the
Italian
United Na¬
vacuum
As an adjunct to another de¬
partment there is the F.B.I. which,
among
other tasks, checks
on
tions
to
do
were
much
colonies
that
and
a
po¬
Italians
membership; and we had
given nearly two billion dollars
of relief to prevent mass starva¬
tion.
Yet in Italy communism
disloyalties.
adjunct is an intelli¬ made a strong fight, whereas in
gence
unit,
designed to serve Czechoslovakia the free societies
several departments, which is in quit cold.
I
am
not
blaming
the
throes of
postwar experi¬ those in Czechoslovakia. I am
mentation.
'
mourning the fact that, as at the
The sum total of these three time of Munich,
they were left
unrelated and subordinated ef¬ alone.
"V. v ■
■"/: -•
In such ways as I suggest the
forts contrasts pitfully with what
is marshalled against us.
United States, working in concert
Another
Today, nothing is more impor¬ with
check
for
our; defense
and for
others
of
like
communist
tant
mind,
can
encirclement
and do so without either
invoking
peace than to
demon¬
the desperate expedient of war or
capacity, alone or with
other free societies, to stop the engaging in economic transfusions
so weakening to us that
they will
processes of communist encircle¬
ment. Unless we can do that, there of themselves bring about the col¬
will be an ever-tightening noose lapse of our free society.
around
a
neck and in the end
our
shall have to
we
fight for living
breath, although that would be a
desperate expedient, for free in¬
stitutions seldom get respiration
.
out of
war.
•>:
We ought to have an organiza¬
tion dedicated to the task of non-
Once
have
we
demonstrated
capacity to win the kind of
fare
that
the
Communist
a
not
prospect.
much that
discouraged
We can now
has happened
at
was
struck.
There
Then
balance
will
can
still
be
strains and distresses, but within
normal limits; and the balance
the
Will be sufficiently tolerable to all
that
see
international
new
be
Party
ripe for peace.
am
confident we shall do it.
am
a
war¬
is waging, then conditions will be
I
so
in¬
that
to
Also we can now see
military defense, just as the pres¬ evitable.
ent Secretary of Defense heads how peace can come. The war left
up the organization of military a great vacuum of political, eco¬
sault.
defense. That new department of
The United Nations and
non-military defense should have
///.///'■./,; ' Human Rights
; (-//v
adequate personnel and
ample
Individuals are entitled to look funds. When I say "ample funds"
to the Wnited Nations for protec¬ I am not thinking in terms of such
tion. It was created not merely to sums as the $15 billion per annum
protect State against State, but being spent for military defense
will feel it necessary
fight to redress it.
genuine*
last,
,
none
sight.
peace
protect individuals.
amble of the
determination
reaffirm
The Pre¬
Charter recites the
of the peoples "to
in
faith
fundamental
•human rights, in the dignity and
worth of the human person and
„
to practice
..
tolerance." Article
of
or
the
$6
being spent
billion
per
annum
be
',v
in
r/
the task
in
effort could
to
use
some ex¬
for "uni¬ tent the currencies which will
versal respect for, and observance some to us abroad in exchange
for goods sent under the Euro¬
of, human rights and funda¬
mental freedoms," and Article 56 pean Recovery Program and to
that extent additional cost to the
pledges all members "to take
United States would be entirely
joint and separate action in coavoided.
•
'
operation with the Organization
for the achievement of the pur¬
>
55."
by since
Those three
been marked by the
organized and wide¬
spread campaign against human
rights and fundamental freedoms
that pledge was made.
years have
most highly
Last
winter a committee; of the Eco¬
nomic and Social Council drew up
« draft Declaration and Conven¬
the world has
tion
as
on
ever
known.
Human Rights, but
action
called for by Article 56, is not
yet in sight. •
■
Many have now lost interest in
the United Nations because, they
say,
it is made impotent by the
veto power in the Security Coun¬
cil. But the Charter not only au¬
thorizes, it requires* action in de¬
fense of human rights and funda¬
mental > t freedoms. ; Furthermore,
since such action would not be
junder' the Security Council/ there
could
be no veto. Here is an
;
opportunity; to see what a veto
less;world organization can do to
]stoi>»faggression against human
:^p'Wr-':r
yigbts^ivVb/".
'
J A U. S. Organization to Defend
;:T
.Freedom
;Oh;^e^gii^|
'Turning
task would be the
exposure of what
is going on.
Truth
and
light are the best
weapons of freedom. Communist
Party success depends primarily
upon concealment. It conceals its
connection
with
foreign agents
who are planted throughout the
world. It conceals from one people
the inconsistent things it says to
others, It conceals by its iron
curtain the difference between its
professions and its accomplish¬
ments. The detailed exposure of
Soviet activities in Canada* made
two years ago, had a tremendous
influence within the circle where
the findings were known. But the
complete record
was
difficult to
obtain; it had only limited circu¬
lation and
The
that exposure was an
occurrence,
;■'•./>/'<
suggested | department,
radio and press, would
through
adequately the story of what
tell
is
happening.
It should do this,
not merely by short-wave radio,
which very few pick up, but by
establishing long-range radio fa¬
cilities
at
suitable
points.
It
should protect the free press by
.^ending effective action by the
assuring them the opportunity to
people ought get print, paper. Paper can be a
to ,act for themselves. We are the weapon
for; freedom
and not
United
Nations,
our
main target of the subversive war
merely
nqw, being waged
munist Party. Mr.
Another task might be to pro¬
vide asylum for those menaced by
by the Com¬
a weapon
against it.
Molotov and
have
proclaimed communist terrorism and to give
Party strategy seeks, as a future to leaders from countries
its climax, the encirclement of the
now
over-run
by communism.
United States and the dispatch of Great leaders like
Mikolajczyk of
our free institutions.;'
Poland—to mention only one of
To that formidable effort, we many—ought to., have a; chance to
are reacting only feebly, and in a
go on working for freedom in
haphazard manner. As an adjunct their countries. So far the, forces
•Mr.
Zhdanov
that. The
as
bill, front;
25% to;
margin
re-*
the privilege of ad
or
investor to borrow
on
the
common,
stocks representing his ownership
in
American
industry, reduced
from
75
to
50%, provided ther
lending agency will
give him the 50%, The 75% mar-,
gin requirement, is really 400%,;
banker
or
'
for
today you can only borrow
$2,500 on $10,000 of collateral—*
and it is thoroughly" unsound.
!
For the life of
derstand
why
borrow.
me
jt
In one
distributed
I cannot ui>».
isn't
a
better,
case
we
have
a
risk, while the other-
is bound to be more concentrated.
In
breath, our Federal Re¬
authorities state that the
one
serve
market
stock
common
is
the
healthiest spot in the country, in¬
are
our
common
stocks*
worth what they are sellings
for, and yet with no rhyme or.
they stipulate that yout
/
of
the
preferably the latter.
collateral at a time wheat
to speak of is being bor¬
common stocks.
!
50% Margin Adequate
V
should lend the main support to
people should increase their
borrowing rapidly, and if in the
opinion of our private bankers*
this
and
Our
life
continue
the
It. is not only for the sake of
financial
structure, public
our
insurance
companies
to
filter
medium and
their
funds
long-term
to
and private,
that I make this
point; it is because I am a firm
believer in the rights and ad¬
vantages of ownership on the part
of all of Ouf citizens, whether they
reflecting
position.
means.
imply
certain something by
I
Way of better citizenship, that ac¬
to the nation from the privi¬
am
course
crues
rising and failing market.
not here to predict
the
a
of values.
The stock
mar¬
ownership. That is why ket is the best confidence barom¬
responsibility of eter we have in this country. On
the New York Stock Exchange,
every public official and of the
Congress to safeguard and pro¬ the largest open free capital mar¬
tect the property rights and rights ket in the world, we have listed
of ownership if enterprise as we today almost 2 billion shares of
know it is to endure.
The payoff the preferred and common stocks
is in the pleasure of living in of 1,133 of our large, mediumsized and relatively small busi¬
freedom and liberty.
lege of
it is the duty and
Reserve
authorities*
make" the '.margin
sive, we can
100% again.1
gov¬
our preeminent world
This statement does not
Federal
such borrowing is deemed exces¬
-
ernment indebtedness. Our com¬
mercial banking system is ihe log¬
ical chief buyer of short-term,
government obligations.
I want
to see a broad active stock-market
our
a
quirements,
of
see
If in relaxing the rule to 50%;,
task* especially in the case
should gradually evolve of the long-term government debt.
into preferred and common stock* The savings banks likewise should
There is
rate
I want to
money
rowed on
the
interests
maximum
12i/2%;
no
for
be well off or of "moderate
jA primary
isolated
business
other
but
the
cannot borrow more than 25% om
this capital
55 of the Charter calls
poses set forth in Article
Three years have gone
utilities,
by this Congress in the coming
several weeks, should the Con-*f
gress enact a second tax
your
ranks with these others, country, almost without exception,
importance. Incidentally,
new
public
productively. I want to
reduced
the capital gains tax
reason,
(Continued from page 2)
foreign economic
on
programs. I am thinking of Only
a fraction of such sums, although
work
see
Then, at dicating that
will
to
to
to
practice to have several thousands;,
in fact, maybe several hundred
thousands, owing the banks a bil-r
lion dollars, if you please, secured
mercy.
by. $2 billion of common stock or
First we must develop the ca¬
ownership in American industry
pacity to check the communist than to drive the
companies whp
methods of deceitful penetration,
are
ultimately the beneficiaries!
fraudulent propaganda and ter¬
of the billion dollars into the in-*"
rorism. That can be done, and I
surance companies or the banks to
ultimate
an
international band of
fanatics, possessed of ample re¬
sources, ably directed* accepting
iron discipline, exalted by great
successes,
and
using
methods
which
diabolically,? outrage the
tiuman personality.
:•
•
It is not right that individuals
should be left without protection
devised to meet that type of as¬
is being filled. We are es¬
tablishing an equilibrium of mili¬
tary power. We are helping West¬
ern Europe to establish apolitical
and economic equilbrium with the
east.* The glaring lack is am or¬
ganization for stopping the sub¬
versive war that is being waged.
If, today, we we're to ask com¬
munist leaders for peace,
that
would be like asking victorious
generals to halt their offensive
where it seemed unstopable and
when final victory seemed within
their grasp.
It would be to ask
mercy
of those who have
no
domestic
strate
can,
was
fulness.
sition
3T
nomic and moral power.
Of the'cipal; during the lifetime of tl»
seven
so-called ; Great
Powers, individual. Give him that much*!
contrast that does not in¬
the prestige of the free so¬
a
They alone yvere dynamic and
prepared. They alone knew what
they wanted.
But gradually the
bombers, and because it operates
against
individuals, not states,
there is no organization to meet
it. Individuals who want free¬
dom are left to resist, as best they
"
to
.
/ Seldom, if ever, has the world
witnessed a more formidable cam¬
weapons
of freedom have been
(2117)
These
which I
lend
recommendations*
two
so
heartily endorse will
liquidity, continuity and or¬
to our markets.
Thejf
derliness
lend support in periods of
weakness arid I am confident will
Will
invite the sale of securities when
they are in short supply of ar#
being bid up in price in, .a mi)/
ment of over-enthusiasm.
''
The capital gains taxes of the*
Internal Revenue Code are not
regarded, as revenue-producing;
features, of the tax structure.. Air
though capital gains taxes pro¬
duced various amounts of income*
ranging from $2 million sin 1941
$300-odd million in an active;
year such as 1945,1 do not believe'
they produced ^any revenue to
ness establishments.
These busi¬ speak of in 1947.- If the Congress
Federal Debt Should Be Privately
nesses employ millions of people
will adopt the 12JA% rate instead
:
Owned
*.
at an investment of from $3,000 of 25%, I think the lower rates
We have government agencies to
$39,000 per employee.
\ ■ ■'/■ will actually increase revenues in
---the Interstate Commerce Com¬
the coming fiscal year; Certainly
Opposes Capital Gains. Tax as
mission, the Federal Power Com¬
we, should get behind a proposal
Capital Levy
mission, the Securities and Ex¬
that is thoroughly sound in the
I am unalterably opposed to a
change Commission,
and other
first' place and that in the second
capital levy in the form of the
agencies of regulation such as the
capital gains tax.
If is a defi¬ place will gain us some revenues
Federal Reserve Board — all of
at a time when the Federal budget
nite barrier to the fludity of
Which I think go far enough in
is threatened With being unbal¬
funds; To press the point, income
certain forms of regulation in the
anced.
is one thing—it is the earning
public interest.
We are in an
capacity or power of every indi¬ ; I am enough ot an optimist and
enormously expansionary period.,
vidual
to
make money, »either enough of a believer in the fun¬
We are dealing in astronomical
damentals of democracy to hold
sums.
We have no past yardsticks through his personal efforts, by
his .mind* his hands or his accu¬ that lack of understanding of and
with which to measure the future
mulated
resources; arid beyond sympathy with the capital. mar-;
growth of this country.
That is
that income he must rightfully kets and their problems are not
particularly true as, we strive to
pay his just taxes to support his on the main road of American
improve the standard of living of
government. Once the citizen has thinking but a detour. I am con¬
our people.
We must not harass
vinced that if our Course is just-fr
the investor and place unneces¬ paid his just taxes on his current
annual income and is able, after and this I believe fully and pro¬
sary obstacles in the path of the
paying his honest debts, to lay foundly—we can carry bur mes¬
free flow of
investment funds
aside a nickel, that nickel should sage successfully to the public and
from one market to another. Our
representatives in govern¬
not be taxed during his lifetime our
primary interest is the private
if he is prudent and fortunate ment. We can be strong in our
placement of the Federal debt at
enough to double or treble it,
cause .and vigorous in our efforts*
a rate of return which the Con¬
! We must jollow/a policy, pf en¬ because we are in the fortunate*
gress thinks is sound and within
to
,
the
this
of the budget. Once couraging, the broadening pf?,the
is accomplished other parts base of^ealtkof^^poyptiy from
bounds
of the
capital and
will fall in line..'. 1
money
*
markets wfy?h/(jmcom.£
v
-
■
■
7
.«
prip-
position '/ of b£iftg able to/
ourselvea;1]^! pur
sametimtetr
?
T'
servd
country at th»
'
' "rv
7"r
THE
(2118)
38
Avco
Whyle
a
Bethlehem
bought
isn't
too badly.
Stop half
buy it back at 31 or
Says—
sBy WALTER WHYTEss
at 31,
acting
about 3414,
now
FINANCIAL CHRONICLE
&
at 32,
better.
Capitalization Problems in Real Estate Appraisals
the future
they have
as
Experience tables would show
by what percentage current earn¬
ings of the average property of
each type would have to be dis¬
counted or increased when oper¬
ating under stipulated conditions
for fluctuations that ex¬
anow
nullified
Last week it looked like a
Douglas bought at 52, now
about 65, still holds up okay.
sharp break before the week
Stop half at 61, buy it back
was over, or
at least before
at 59 or better.
the next column
That
written.
was
Now it's
last week.
was
Dresser bought at 22, now
about 28, acts as well as the
'
*
The down signs of
market.
last week have been replaced
different.
signs of this week.
nothing I can attrib¬
by
up
There's
to
manner
*
*
stabilized
at a
for
capitalization.
They
would provide the mortgage in¬
vestor with a guide for negotiat-
the
range
o,
to bottom
the timing and the duration o
these major movements that have
anything radically different in the
the
greatest
effect on
presen
worth.
The records indicate tha
the
there
inevitable
top
Stop
Lockheed
winter
much
(3) The proportionate spread ir
earnings from prosperous to ad
verse operating conditions is mucl
greater in properties of the lux
ury type than in those providing
rental space for the daily needs oi
people in moderate circumstances
of
The
New
York Life
Insurance
for
number of retrospective ap-?
a
Many
• ■
„
.
1
.
,k ;
United Aircraft bought at
deciding which way it
will go. As I said above, last 15, now-2914, has a stop at
week I was practically certain 21V2. If it breaks that price
the direction would be down. sell half. Buy it back at 25
show
doesn't
Now, it
thing.
•
-
There
^
Thursday.
—Walter
[The
market
the
•,
views
Whyte
in
eocpressed
this
of those times.
one
\
New
Chicago Ex. Members
CHICAGO,
Of
there is the rail¬ tive
course
labor
road
sider.
situation
to
con¬
But by the time you
read this
you'll know more
about it. Apparently the mar¬
ket
doesn't
too
seem
con¬
cerned about the Government
taking
over
the
industry.
Nevertheless I don't like the
Federal Government stepping
ILL. —The
Committee
of
Execu¬
the
Chicago
Stock Exchange today elected to
membership H. Samuel Greena-
walt, McNaughtop, Greenawalt &
Co.,
Grand
Rapids,
Michigan;
Harry J. Rodger, H. L. Rodger &
Bro.. Joliet. Illinois; and Leonard
J. Paidar, Goodbody & Co., Chi¬
cago,.,
election
of
Greenawalt and
H.
Samuel
Harry J. Rodger
will add two member firms to the
taking over the rails, Exchange, making a total of 163,
Leonard J. Paidar's membership
despite the optimism this was a transfer from another
part¬
move has generated.
ner
in the firm of Goodbody &
in and
',
.
*
*
*
Co.
v.'y
pay¬
supply and de¬
people saved
periods
tutions.
the
holders
not
tion
is
the
of
divulge
to
Each
ures.
appraiser's
in
asked
records
total
fig¬
coopera¬
locating
and
When
obtaining
such
figures.
enough of them are assembled, a
compilation of experience tables
will
undertaken
be
that
will
genuinely helpful.
•.
pe¬
riods of feast and famine follow¬
ing each other
Los
Gibson
2y2% Equipment Trust.
Street,
Due each October 1, and April I.
October
is
Harker &
Certifieates
1948-April
Financial
Angeles,
(8)
now
Co,.
connected
210, West
members
of
the
with
Seventh
Los
An-r
geles Stock Exchange.
1956
Joins Schwahacher Staff
1.35%-2.65%
(Special
SAN
to
The
Financial
Chronicle)
FRANCISCO,
CALIF.—
Mauritz has joined the staff
of Schwabacher & Co., 60.Q Mar¬
ket Street, members of the New
Jan
Schwabacher & Cc.
„
,
Dfembprs
.
earnings
as are
must
far back, but such
very
available indicate that they
have
followed the major
peaks and
troughs of commercial
since
negotiated
the
first
first
the
landlord
lease.
The
trend of residential rents in mod¬
lfew York Stock Exchange
York Curb Exchange (Associate)
San Francisco Stock Exchange.
low
and
Here
points
in
the hieh
are
rental*
such
during the past few decades.
,
,
.
Residential Rents
Low
i
High
Point
1861
?
;
1872
•
1883
I
*
'
Chicago Board of Trade
14 Wall Street
OOrSlMdt
7-4150
New York 5, N. Y.
>;. Ffctoate Wires to, principal Offices
jLa.
ftsiptea ~~!r. S*nU
NmmUatj
Oakland
Saeramen te'
an-.,;
LOS ANGELES, CALIF.—WilR. Munroe has; been added
liam
fca
V.
Merrill Lynch Co. Adds
Teletype m 1-028
.;
to
the staff of Merrill Lynch,
Pieree;1'Fenner $ Beane, 523 Wesf
U'i'4
hWim'frtiV
■
<>«
IS:
cluded
im¬
so
evaluation
factor in
as a
mubh
how
should
of
ah
determining
discount
be
increase
or
applied
to
earnings
under any given set of
operating
conditions. ^ In other words, it is
not
practical to stabilize earnings
by simply taking the average in¬
come for a period of several
years.
approximate time of the
1908
.
8
.
1924
'j-
v*
-
10
.
peak
the
in
actual
peak
in
value
earnings,
ings by three to four
years
in most
This is because the present
worth of each dollar tq be earned,
cases.
in the early future is a great deal
more than that of each dollar to
be earned
The trend
be
top and '■!. bottom performance.
Fortunately, the records indicate
factors
the
applicable
the different types.
(5) Anyone
other
was
shortage of housing.
about
concern' about
the
was
"
provide
edly
reached
in
the
remote
future
of
portant in the estimate of value,
current
earnings
can
not be
rightly capitalized in perpetuity
because of the inevitable changes
,
ditions and tq
-
properties
of
general type in widely
interesting.;: This undoubt¬
arises from the fact that
major changes in. business condi¬
are
national in scope and
tions
all-tim(
the
high, the greatest building boorr
in history ; was predicted, and i'
their
well under way.
Office anr'
store
rentals
had
doubled
anr'
felt throughout the country.
a
the
in
years.
concerns were
their
for
two
of
space
to
use
that C many; types
would
of
Prices
occupancy, '
for
the! demand
with stabilization factors covering
un¬
assure
on
types of rental space is
This
leads to the opinion that perhaps
half dozen experience
tables
or
Some qf the large'
buying office spac?
own
effect
popular
was
cover
of ;. property
the bulk of the averr
appraiser's forecasting prob¬
The
big * job
is to v get
age
many of the necessities of lif<*
had risen at an alarming rate.
Ir
lems.
average
the
same
as
>
-
(6) Conditions
*
that
-
enough
wa?
25
only the names
now,
different.
were
news
>:
or
records
have
follower7
types. ; The tables would
include enough descrip¬
make proper
for
could
type so the appraiser
each
adjustments to allow
special features found. ip the
individual'
estate earnings during this peWor
generally good: Constructior
and
industrial production even¬
tually caught up with demand
and their full-speed momentum
carried them
somewhat bevopd
explanatory matter copraverage property in
the
cerning
employment and hieh wages. Real
Were
tq
tive and
1920 were perfectly natural
Shortages in buildings an<J other
durable goods resulted in severs1
years
of high
production, high
determ'ne
to
earnings eack year for
30 years for each of the
major
the saturation
take
a.
which
Real
low
point.
rest for
there
few
York
property,The- N^v
staff is set
Life's research
and
to make the calculations
up
prepare
the tables.
Once they
•
prepared, it Will be comparatively
during
earnings dropped
and
easy
They had
years
unemployment
was
estate
levels,
a
the
market
was
glutted with distressed properties
Durihg this period buildings and
conditions pertinent
machinery
and
equipment wore
out or were destroyed or became
obsolete.
Population changed
number aqd
eventually caught,
up
employment and
Production,
wages
pieked
were
as
up.
re¬
each
What
time marches on.
records.,].•
Coburn
(Special
Chronicle)
to Tuf Financial
Ralph E.
Middlebrook, 465 Congress Street.
PORTLAND,
ME-
—
Wilson is with Coburn &
in
with supply,.
real estate
to bring them up to date
is needed now is more
.
location. ; Demands
Shortage# developed.
Vacancies in
year
¥
.
individual; property, but
sustained upward and downward
trends and the majpr peaks and
trough? occur quite concurrently
throughput the country and m re¬
sponse to major changes in em'
tq
The
scattered parts of the country has
veterans:
an
valuations
same
beep
Despite the fact that constructior
had
seriously..
The similarity of stabiliza*factors resulting from retror-
of the
costs
and
peak
(9)
tion
higher and higher wage?
for
doing less and less work
Pressures were boiling applied tc
for
answer
the
does not of+en
anpra'sal tmist be. reasonably
anticipated.
spective
of
labor for
housing
occur
well
mucK
demands
vary
their timing in relation to the <J°.fe
of-
acuh
There was
ap
There
not
main point is that both peak and
trough must be considered and
should read the real estate item?
in the newsnapers and
magazine?
There
when
to
as
affect the
regar
performance of real estat(
1920.
intervals do
trough will
doubts -tha'
history repeats itself with
to the
t'
:
who
these
too greatly to make their antici¬
,
earnings in imme¬
diate prospect is. therefore, im¬
but
pros«-
oerous
short, the form of the
9
-
(2) Minor fluctuations in earn¬
ings occur according, to, local con¬
.
the
in
income stream that it must be in¬
will be considerable varia^
in
molested
U
.
1892
1900
Interval
Years
v,
K
Point
changes.
.
bp
pation impractical. An error of a
couple of years one way or the
tion
three
to. follow.
1111
not
simply
tripled
history would surely lead to
ern
this conclusion.
York and San Francisco Stock Ex¬
New
is
can
there
it.
an.d the low point in actual value
precedes the low point in earn¬
E.
It
by
The time element is
portant
anc} all kinds of argu^
rental property
of
>
Chronicle)
.
that
ment
precedes
Calif.—James
regard.
improved
cation; of
performance f record?
according to types of property anr
rent control
The records do not show
the movement
1934
The
this
assuming that the pattern of fu¬
ture earnings
will not be sub¬
stantially-different than that of
the past.;.'v ■ v * y:y;,r.; '>■;
manner
same
cattle,
ever
a
to
the
much
of
1914
Illinois Central R. R.
To yield
in
greatly
per
since Joseph
interpreted Pharoah's dream
about seven fat and seven lean
(1). The
from
investment business
good
bilization of earnings to amount?
bv which present worth can bi
estimated
through
straight-linr
canitalization will entail classifi¬
be
.
history .'shows
Economic
tion will visit Philadelphia Elec¬
With Harker & Co.
The record of the mort¬
gage
and adverse periods, must
included. in the calculation as
well as the difference between
,
(Special
oveV
them
lost
The
,
.
thrifty
money
tide
was
yearly earning figures can be on
a
per unit basis (per room, per
square foot or any other unit) in
properties.
stop at tric Company's new Southwark
The individual operating rec¬
35 for a half lot. If broken, Station today, May 13. Edward ords
analyzed to date lead tq the
Porter,
Vice-President
of
the
following general observations: buy it back at 3214 or better. company, will be their host. about 37, has
will
basis
to
re¬
that
tion of conversion factors for sta¬
the
of
Associa¬
now
percentage
the
by reason
of the "prosperity is here to stay''
psychology among savings insti¬
tion is that retail property leaser
a
of
such
to
on
much
so
Thus it is clear that the calcula¬
—
bought at 3214,
before
mortgage
pro¬
The
leaving all this aside Phila. Securities
Ass'n To
and concentrating on the is¬
Be Guests of Electric Co.
sues you have, I now
suggest
PHILADELPHIA,
PA.
The
the following:
Philadelphia Securities
Anaconda
and
can
The worst
ments with brief physical descrio-
? But
•
against them.
tions
activity
The
income; figures
One cannot pre¬
form in
prefer
article do not necessarily at any
doesn't say anything and little time coincide with
ttyose of the
that can be interpreted one Chronicle. They are presented as
those of the author only.]
way or another. This is ap¬
parently
net
pas'5
More next
times, days and
are
when
weeks
~
better.,
or
*
*
*
.
any¬
nual
depreciation
If
fixed
be another
never
depressions, but he
.
in
suddenly
sult of depressions has been
_
is
became
to
how
would- be
vide
«
,
Think
winter
to
as
summer
summer.
and winter food.
bought at 15, bilization factors involving enough erty decline from top to botton
over a
long period, but stage
write about the stock market, now about 2314, acts with experience to warrant reliance in
relatively quick comeback.
Tht
the group, which itself is do-j themthe more I know I don't know.
In every large city there intervals from
'•
top to bottom anc1
'.{/
ing little at present- Stop |are comPetent real estate man- back to the top are comparative!}
^
v;
agers
who
have
kept
records
half at 21.
Buy it again at showing year-bv-year earnings of even in regard to earnings of me
As this is being pounded
18 or better.
typical properties as far back as dium rental apartments. ' Earn¬
out on the Underwood, I can
1920 or earlier.
ings of transient hotel proper tic
The company is
G. L. Martin bought at 15,
not interested in the
see the market working itself
identity of respond almost immediately tc
now 20, has a
stop for half at the properties or the owners, but changes in general business con¬
into a corner where a violent
it is very anxious to get the an¬ ditions, and the natural assump¬
18 !4. Buy it back at 16.
>:
move can occur.
The trouble
In fact the more I
ute it to.
of
vent
other classes of commercial prop¬
records which have been the basis
to
that there v/ould
is in turn affected greatly
by employment and general busi¬
ness activity,
but the manner ii
more records are
performance
to expect
winter, and everyone discarded all
heating facilities. warm clothing,
which property earnings respom
changes in these condition
varies according to the type o
property.
In general, the earn¬
ings from office space and som<
Company s appraisal research staff
has assembled some
that
as
worse
the idea
(4) Earnings
depend
on
thr
condition of supply and demand
The condition
no reason
The records indicate that
prosperity to depression
prosperity sequence is about
signs by which these
major changes can be anticipated
mand
ules.
praisals.
ter.
---(7) There is
future.
are
needed for the production of sta¬
half at 2414
buy it back at 22 or bet¬
and
amount
arrive
is
It
from
placed by waiting lists and earn¬
ings started their upward swing. >
business
general
and
conditions.
fluctuations
in the past.
to
down
ployment
(Continued from page 21)
tuate in
signals
Caterpillar bought at 55, perience shows to have followed
by action of market now about 64, shows a nice such conditions in the
past.
In
in past few days.
But don't orofit. Sell half if it breaks! other words, they would provide
expect anything but irreg¬ 61, and buy it back at 58 or the appraiser with a means o£ employing experience in a definite
ularity.
better.
Last
Thursday, May 13, 1948
now
5.
stock
at that price has many dis¬
advantages. So disregard the
stop. Just hold the stock.
Setting in and out of
Markets
week's
bought at 4H,
it 614, has an old stop at
Tomorrow's
Walter
COMMERCIAL
:
-—
* ■.
mmm n
.
.
.—-—
McCarley Adds Hendrix
-
^
(Special
to The
Financial
C^rlonicle)
CHA^LOT^E, N. ferr-Jgck NL
HenebriX is now hssqei^ted witb
McCarley & Co. of AsRevIlle.
.
-
Volume 167
THE COMMERCIAL
Number 4698
-
& FINANCIAL
CHRONICLE
eration of
(2119)
private enterprise.
our
Elihu Boot
trol
;
-
'
(Continued from page 13)
already producing at
capacity.
is1
trying
to
against them.
'
theoretical
a
While
.
*
•
receiving strong
continued infla¬
prices
nearly
everything done by the Govern¬
ment is of a nature to put prices
higher. Inflation forces are gain¬
ing new strength again by Gov¬
ernment
action.
hear
We
of
no
effective
plans to reduce other
Government spending, sponsored
Inflation action of the banks must
actively continued.
-
from Government sources,
new spending pro¬
and
possibilities
bear
.within themselves the elements of
Additional
inflationary dangers.
The fact that they appear on the
Scene is ample evidence that the
danger is not over and the anti-
grams
Jbe
about
himself
tion and the need for lower
apparent
ly
;
are
we
warnings
Whether we accept these con¬
clusions or hot, it should be clear¬
.
protect
credit
;
subsidies.
or
Government
acts have
contributed and are con¬
complication.
(The alarmist propaganda, which tributing, more to the inflationary
situation than any possible acts
features our press and Govern-,
There
t
another
is
ment Statements tends to acceler¬
of
ate
purchases by consumers, and
encourage
the buying of items
creased
which
factor
in
tion.
High
either
possibly
serves
ing
now
in
be
serves
inventory
age
those
It
to
are
lower
In¬
not
been
the
important
an
inflationary situa¬
prices
need
to
the
and
consequence of
in¬
credit
bank
use
inflation and
a cause
of it.
Ob¬
viously. high ' prices
combined
with large volume require more
business borrowing. Among other
by
have
who
combined.
of bank Credit is not
use
has
a
banks
have not been
encour¬
accumulation
the
creased
was a grow¬
to wait for
It also
prices.
and
may
supply.
short
to reverse What
tendency
later
or
all
progressively
conservative buy¬
ing. And, it has its effect in stall¬
ing constructive effort because of
moved to more
things,
alarms, uncertainties and
tax drains have substantially
liquidated the traditional sources
the added confusions and uncer¬
tainties." '',,V .r' 7:Vy ' and availability of equity funds
and risk capital, forcing business
i Thus, the dangerous possibilities
to have an undesired dependence
.arising from more government
on
bank credit.
Certainly, more
spending and another arms pro¬
Government regulations is not the
gram being piled on the effects
carried
over
;
difference From 1941'.
...
J, This danger
a
basic
!
t
;
partly arises from
difference
between
employed and a capacity,
persons
or
near-capacity
production.
Whatever is taken out of what
we
produce today for increased military use or foreign aid may have
'
to
be
cut; out
the
of
consumers'
interest in present production and
consequently reduce the stabiliz*
ing or deflationary effect of prorduction increases and a growing
being
soundly made, it is paid off over
a reasonably short period of time.
the
more
credit has to
self-limiting in that properly and
Banks Don't Create Credit
,
million
have $12
now
bank
be used it has the virtue of
-present situation and that of 1941 j
rWe
And if
cure.
from the costs of the
War, are being well advertised.
!
the
It is
•
misconception
common
a
that banks create credit.
Actually
they do not.
The borrower ex¬
changes his own credit for the
more'
tisable
and
more
liquid
The bank cer¬
credit of the bank.
tifies the borrower's credit
by ac¬
cepting his promise to pay, credit¬
his
ing
him to
cash
use
permitting
and
account,
or
checks drawn
against his account. By substitut¬
ing the credit of the bank for the
"tree supply,
*
J
credit of the borrower, the bor¬
;, As
a
matter of fact, I] think
rower acquires a
commonly ac¬
there are
substantial offsets to
cepted means of payment. This
this,
well-advertised
series
of
exchange of credit is based on the
possibilities. The Actualities ma# value of the borrower's assets and
'not turn out to
•
be
as
serious
We can take comfort
from the exaggerations and mis-:
first
In the
substantial
difference 'i between T appropria*
there is
place
a
!
rower.
tions and actual spending.
It will
spend wisely and
carefully, and with full recogni¬
tion of the'interests of the people
of the United States
as
well
as
the
European Nations, the tremendous
Amounts appropriated for1 Eurd-*
'
ations
■
The military appropri-*
not be spent immedi¬
aid.
pean
ately.
can
;
'
amounts
time to
takes
It
of
this
spend
size
tremendous
materials
and
I products represented by the
ap*
•
obtain
to
and
propriatioris.
reduction has
duced
the
in
Government
originally * estimated.
Thus, the effect on the Goyern*
i inent cash, budget' may not be as
completely ^unfavorable as the
•
,
•
forecast.
-
,
*
;~■."
"•
r
'
(
Also, certain deflationary efalready are evident in the
fects
'i economy,There has been an in*
resistance to
high
prices.
The
accumulated
increases in production in certain
lines of goods and products have
added & marked availability and
in some cases have already led to
a leveling, off of some prices and
creasing
'
consumer
price
reductions.. We do not know
now
the extent to which this may
•
-
much it will tend to
of these inflaticmary
t forces;
.But, more important than
*, any of these is the fact that there
go,? or how
offset some
'
■Is
norte:of
the
universal
mism which has been
one
opti¬
of the
■
.
The -banks have a very
We live in a debt economy.
ness
the creation and
ducted mostly by
acceptance of debt in some form
promise to pay.
There is a
fundamental relationship between
of
a
the creation of debt and the
debts
cepted, the nature of the debt
created, and its volume generally
are related to the stage of our
business activity.
;
The banks play two parts in this
relationship.
In the first place
they contribute to the creation 6f
the debt by the freedom with
which they extend credit. In ex¬
tending
credit, they can con¬
tribute
to
excessive
an
and
.
about
the
inflation
problems
! or
of
deflation.
Everyone realizes the dangers and
un¬
of debt
(which
is
actually
purchasing
power)
based On promises to pay which
cannot ; be
satisfied except by
forced liquidation.
Also, they can
permit the spending of borrowed
money in large amounts for in¬
ventory, real estate, or-security
speculation, with all their wellknown
dangers.The
mistakes
balanced
volume
go beyond those having to do
with the individual loan to a gen¬
can
eral
misuse
nances
of
speculation.
which fi¬
credit
inflation
an
This
or
economy.
Added
a
mass
where the
is
effect of the loan and
combined
investment performance
either^
with
created and ac¬
are
have their
.thinking
busi¬
The- freedom
cycle.
ness
Cycles.
•
Busi¬
individual life are con¬
and
most important factors in the de¬
velopment' of past inflationary
Everyone is worried and
impor¬
part in the creation, control
and final satisfaction of all debt.
tant
which
Historically a tax
rarely, if ever, pro-*-
reduction
revenues
ability to repay
Thus, credit
given
by banks is
extended
against values already created
and in the possession of jthe ; bor¬
be difficult to
'
established
his
his debt to the bank.
,
takes of past predictions.;
•
as
pictured.1
of banks
greatest impact on the
v
to this
/
is
-
the
'
.
.:
fact that
nearly all debts finally are settled
by actual money payment with¬
drawn from a bank Or
by a check
drawn
on
lows
a
then
bank
account.
that
the
quality between
the
hands than most persons arfc
inclined to believe. We Oahtiot if*own
once said: "Self-con¬
the primary discipline on
which
pend."
ford to
self-government must de¬
Our fate is more in our
is
3t
them.
way
use
as
our
to
liberties in such A
destroy
any
of
part
■
■
It fol¬
balance
of
promises to
pay the bank in the form of loans
and investments and the
promises
The Keynesian Miracle
(Continued from page 15)
bank depositors measures
man could disagree with Keynes.
ability of other debtors to dis* rise of appeasement. With the ex
Charge (with bank deposits) the ception of a small number of As he sees it, opposition to Keynes
debts they have incurred.
keen-sighted men, all Britons sup¬ comes from "the vested interests
Thus,
in principle, the payment of bank ported the
policy which finally Of scholars in the older theory"
assets always must be as sure and made it possible for the Nazis to and "the preponderant influence
of press, radio, finance, and sub¬
prompt as the payment the de¬ start the second World War.
A highlv gifted French econo¬ sidized
positor expects from his account.
Research."
In his eyes,
The
banker's relation to the mist, Etienne Mantoux, has ana¬ non-KCynesians are just a bunch
to
pay
the
debt Creation cycle is such that he
only accept promises to pay
Which, under adverse conditions,
can be liquidated without resist¬
ance; and in accepting promises
to pay, he cannot
contribute to
can
the creation, of purchasing power
that implements the development
lyzed Keynes' famous book point
for point. The result of his very
of bribed
sycophants, unworthy of
attention.
Professor
Harris
thus
careful and conscientious study is
adopts the methods Of the Marx¬
devastating for Keynes the
ians and the
econ¬
Nazis, who preferred
to smear their
critics And to ques¬
well as
Keynes
the
statesman.
The tion their motives instead of re¬
friends of Keynes are at a loss to futing their theses.
;
omist
find
and
statistician,
as
substantial rejoinder.
that his friend
any
A few of the contributions are
written in
dignified language and
biographer, Professor E. A. are reserved, even critical, in their
of
Keynes'
achieve*
G.
Robinson, could advance is appraisal
Others are simply dithythat this powerful indictment ol ments.
Keynes' position came "as might rambic outbursts. Thus Professor
of fictitious values in which are
The only argument
the seeds of future losses.
and
The
nature
of
credit
extended
the
and
quality of the assets of
banks always bear a close rela¬
tionship to the stability of the
economy
because
it
is
only
through
the
permanence
of
r
banks
and
their
ability
the cash demands
are
on
them
made, and under
meet
to
as
they
condi¬
tions, that other economic changes
can
proceed - without
complete
have
been
Frenchman.".
expected
from
a
("Economic
Jour¬
nal," Vol. LVII,
p. 23.)
As if the
disastrous effects of appeasement
and
defeatism
had
Great Britain also!
not
affected
.
Paul
E.
Samuelson
have been born
before 1936
not
to
as
was a
have
been
tells us:
"TO
economist
an
boon—yes.
born
too
But
long
before!" And he proceeds to quote
Wordsworth:
any
"Bliss was it in that dawn to be
Mantoux, son of the fa¬
alive,
historian, Paul Mantoux, ;
But
to
be
young
was
very
disaster.;' was the most distinguished of the
heaven!"
;
younger French economists.
He
■;
Conclusions
had already made valuable con¬ Descending from the lofty heights
The
conclusion
to
be
drawn tributions to economic theory— of
Parnassus
into
the
prosaic
from what I have said is that the among them a keen critique of valleys
of quantitative science,
Etienne
mous
.
••
banking business is not
can
be operated
the
one
which
in the terms of
commercial
and
.
financial
Keynes'
lished
"General
in
profit philosophy of other private
began
enterprises.
Peace
ards
It
cannot
functions
economic
if
fulfill
its
its
stand¬
of
1937
Economie
lished.
As
different
obligation to
creditors, to the public, or to the
forces
he
Nation.
war.
form
It is
a
of
business in which
live
an
see
provides
us
susceptibility of economists to the
1946).
his
Conse¬
(Oxford
He did
pub¬
book
officer in the French
was
Samuelson
with exact information about the
Economic
Press,
to
Professor
d'
"Revue
of- Mr. Keynes"
University
not
pub¬
he
Carthaginian
"The
the
operation are set by or
against those of other
businesses which have an entirely
measured
the
Politique"—before
his
or
quences
Theory,"
in
killed
on
service during the last days
active
of the
His premature death was a
Keynesian gospel of 1936.
Those
under the age of 35 fully grasped
its meaning after some time; those
beyond 50 turned out to be quite
immune, while economists in-be¬
tween
serving
of
were
us a
divided.
Mussolini's
he offers
After
thus
warmed-over version
more
giovanezzd theme,
of the outWorh slo¬
must
know
the heavy blow to}1 France* Which is gans of fascism, e. g., the "wave
working rules of its relationships today badly fu nd6d of sound and of the future." However, on this
with the economy, recognize the courageous economists.
point
another
contributor,
Mr.
Paul M. Sweezy, disagrees. In his
problems which are peculiar to it
The "New Economics"
and work toward objectives which
eyes
Keynes,
tainted
by
"the
It would be a mistake, also, to shortcomings
accept a broader responsibility
of bourgeois
than the mere operation of a pri¬ blame Keynes for the faults and thought" as he was, is not the sa¬
vate business enterprise for profit. failures of contemporary British vior of mankind, but only the
I want to remind you that the economic \and financial policies. forerunner whose historical mis¬
issue of credit control, either in When he began to write, Britain sion it is to prepare the British
long since abandoned the mind for the acceptance of pure
time of peace or in time of war, had
of laissez-faire.
That Marxism and to make Great Britis
related
to
the
functions
of principle
banks and their
effect on the was the achievement of such men ian ideologically ripe for full So¬
as Thomas Carlyle and John Ruscialism.
economy as a whole. The antikin and, especially, of the Fa¬
inflation, or credit control pro*
Keynes' Rhetorical Methods
bians.
Those born in the eighties
gram, of the ABA is an example
In resorting to the method of
the
nineteenth
century
and
of an attempt to meet a peace* of
later were merely epigones of the innuendo and trying to make their
time
economic
issue
by other
adversaries suspect by referring
means
than by law or Govern* university and parlor Socialists of.
to them in ambiguous terms allow¬
ment regulations. It would be a the late Victorian period. - They
mistake for bankers to assume were no critics of the ruling sys¬ ing of various interpretations, the
as
their predecessors had camp-followers of Lord Keynes
that this credit contfbl program tem,
are imitating their idol's own pro¬
was
put into effect merely be¬ been, but apologists of govern¬
cedures. For what many people
cause there was
the threat of a ment and pressure group policies
inadequacy, futility
and have admiringly called Keynes'
law to
curtail the; activities of whose
"brilliance of style" and "mastery
banks and that the need for this perniciousness became more and
of language" were, in fact, cheap
^
action had no foundation other more evident.
managements
than to oppose such a law. There
sound reasons for the pro¬
Professor
Seymour
E.
Harris
rhetorical tricks.
Ricardo,
says
Keynes,
"con¬
various quered England as completely as
the
Holy Inquisition conquered
academic ' and
bureaucratic / au¬
Spain." This is as vicious as any
Today the major problem of the thors dealing with Keynes' doc¬
comparison could be.
The In¬
American economy is to avoid trines as developed in his "Gen¬
eral Theory of Employment, In¬ quisition, aided by armed con¬
any of the extremes of inflation
stables and executioners, beat the
terest and Money," published in
or deflation which have plagued
Spanish people into submission'.
its
past
history.
These
have 1936. The titie of the volume is Ricardo's theories were accepted
New
Economics,
Keynes'
brought about easily remembered "The
as
correct by British
intellect¬
problems of great seriousness to Influence on Theory and Public uals without
any pressure or com¬
(Alfred A. Knopf, New
the public and to the Govern¬ Policy"
pulsion being exercised in their
ment.
If we are to do this, every¬ York, 1947). Whether Keynesianfavor. But in comparing the two
ism has a fair claim to the appel¬
one of us, whether in banking or
"n e w
economics"
or entirely different things, Keynes
•any other form of business, must lation
obliquely hints that there was
act with more foresight and in¬ whether it is not, rather, a rehash
something shameful in the success
telligence than we have some¬ of often-refuted Mercantilist fal¬ of Ricardo's
teachings and that
times in the past.
We must be lacies, and of the syllogisms of the those who
disapprove of thetfi are
willing to give more consideration innumerable authors who wanted
as
heroic,
noble and fearless
to the economic net product of to make everybody prosperous by
champions of freedom as were
fiat money, is unimportant. What
what we do.
those who fought the horrors of
I strongly believe that we will matters is not whether a doctrine the
Inquisition.
<>
is new, but whether it is sound.
,
retain our present scope of free¬
The most famous of Keynes*
The remarkable thing about this
dom of action only so long as we
apercus is "Two pyramids, two
recognize and meet our individual symposium is that it does not even masses for the dead, are twice as
and business responsibilities to attempt to refute the substantiated
good as one; but not so two taiU
objections raised against Keynes
the Country as a whole while, at
ways from' London to York.?' It
by ^serious economists; nThe ^editor
Is obvious that this sally, worthy
the same time, we meet our indi¬ seems to be unable .^iCOhCeive
were
gram without considering
fect of any proposed law.
the ef¬
vidual responsibilities in the op¬
has just published a
of
collected
essays
that any
stout volume
by
honest and uncorrupted
(ConfmuecTdh fcAge 40) " ^
COMMERCIAL
THE
(2120)
10
The
of unemployment was
cause
Thursday, May 13, 1948
FINANCIAL CHRONICLE
&
Demagogues specified the
power.
inappropriate labor poli¬ level to which they wanted to
cies, but the shortcomings of the bring the national (dollar) in¬
monetary and credit system. No come. ; Today this form of rea¬
(Continued from page 39)
need to worry any longer about soning is no longer popular.
At
their master's technique.
Their the
of a character in a play by Oscar
"common
man"
has
insufficiency of savings and last .the
Wilde or Bernard Shaw, does not critique aims at a body of doc¬
capital accumulation and about learned that increasing the quan-J
In any way prove the thesis that trine created by their own illu¬ deficits in the
public,, household. tity of dollars does not make
digging holes in the ground and sions, which has no resemblance On the contrary. The only method America richer. Professor Harris
paying for them out of savings to the theories expounded by seri¬ to do away with unemployment still praises the Roosevelt Admin¬
They pass over was to increase "effective de¬ istration for having raised dollar
"will increase the real national ous economists.
dividend of useful goods and serv¬ in silence all that economists have mand"
such
Keynesian
through public spending incomes.But
ices."
But it puts the adversary said about the inevitable outcome financed
by credit expansion and consistency is found today only in
In the awkward position of either of credit expansion. It seems as if inflation.
classrooms. ?
;
•
:V-'' r: V; ■,
y. ■■
leaving ah apparent argument un¬ they have never heard anything
The policies which the "General
There are still teachers who tell
about the monetary theory of the
answered or, of employing the
Theory" recommended were prer their students that "an economy
tools of logic and discursive rea¬ trade cycle.
!■ cisely those which the "monetary can lift itself
by its own boot¬
soning against sparkling wit.
cranks" had advanced long before
The Triumph of Keynesianism
straps" and that "we can spend
Another
instance
of' Keynes'
and which most governments had
our way into prosperity."
(Com¬
For a correct appraisal of the
technique is provided by his ma¬
espoused in the depression of 1929
pare Lorie Tarshis, The Elements
licious description of the Paris success which Keynes' "General and the following years.
Some of Economics, page 565.) But the
Beace
Conference.
Keynes dis¬ Theory" found in academic circles, people believe that Keynes', ear¬
Keynesian miracle fails to mate¬
agreed with Clemenceau's ideas. one must consider the conditions lier writings played an important
rialize; the stones do not turn into
Thus, he tried to ridicule his ad¬ prevailing in university economics part in the process which con¬ bread.
The
panegyrics
of
the
versary
by broadly expatiating during the period between the two verted the world's most powerful
learned authors ' who, cooperated
*
■
'
iipon his clothing and appearance world wars.
governments to>the doctrines of in the
production of the, "New
Among fhe men who occupied reckless
which, it seems,did not meet with
spending, credit expan¬ Economics" merely confirm the
the standard set by London out¬ chairs of economics in the last sion and inflation. We may leave
fitters. It is hard to discover any few decades, there have been only this minor issue! undecided. At
connection with the German repa¬ a few genuine economists, i.e., any rate it cannot be denied that
rations problem in the fact that men fully conversant with the the
governments and peoples did
developed
by modern not wait for the "General
Clemenceau's boots "were of thick theories
Theory"
black leather, very good, but of subjective economics. The ideas of to embark
The
Keynesian Miracle
not the
editor's
introductory
disciples
his
almost religious fervor
an
for his
economics, which could be
effectively harnessed for the dis¬
semination of the
And
goes on to
"Keynes indeed had the Rev¬
(page 5)", / 1
f
say,
elation."
There is
no
people who
most
,t
in
use
arguing with
driven by "an al¬
are
religious fervor" and believe
that their master "had the Revela¬
tion."
is
It
of the tasks pf
analyze
carefully
inflationist
plans,
one
.
,
economics.'f
new
Harris
Professor
.
,
statement
that "Keynes could awaken in
economics
to
each
of
the
those
of
Keynes
and
Gesell
no
those of their innumer¬
less than
able
,
predecessors from John Law
down
one
to Major Douglas.
Yet, no
should expect that any logical
argument
or any
shake
ever;
fervor
salvation
credit
expansion.
in
and
spending
through
■
religious
believe
who
those
of
experience could
almost
the
V
>
'
;
.
>
The Sfcckholdei's
country, style,
a
sometimes
and
the
fastened in front, curiously, by a
well
buckle instead of laces." After
economists,
million
in
ished
the
had per¬
the foremost
beings
human
war,
world
of the
statesmen
15
were
as¬
the
economists, as
the' modern
classical
old
of
those
as
caricatured
were
in
and
textbooks
■
in
names
give mankind a new
international
order
and
lasting
peace
and the British Em¬
pire's financial expert was amused
by the rustic style of the French
prided themselves on having re¬
futed
for* all time the abstract
to
.
.
Minister's footwear!
Prime
Fourteen
international
snother
was
conference.
This time Keynes was not a sub¬
ordinate adviser, as in 1919, but
of the main figures. Concern¬
one
ing this London World Economic
Conference
of
1933,
Professor
Uobinson observes: "Many econo¬
mists the world
ber
remem¬
the performance in 1933
...
Covent
at
will
over
in
Garden
honor
of
the Delegates of
the World Eco¬
nomic Conference, which owed its
conception and organization very
-
much to
Maynard Keynes."
Those economists who
in
the
service
mentably
of
inept
one
v
.
not
were
of
la¬
the
governments
1933 and therefore
were
of
not Dele¬
ballet
member
the
evening,
London
will
re¬
of
schools
two
and
the
between
thought
had
its
nomenon.
all
Almost
professors
universities
fashionable
of
the
sharply
Conference attacked this theory. As these self-
styled "unorthodox" doctrinaires
most
spectacular failure in the interpreted the economic history
of the last two hundred years, the
history of international affairs of
those policies of neo-Mercantilism unprecedented rise in real wage
which Keynes backed. Compared rates and standards of living was
for other
reasons.
with this fiasco of
It
the
marked
1933, the Paris
Conference of 1919 appears to have
been a highly successful affair.
But
Keynes did not publish
sarcastic
comments
on the
coats,
gloves of the Delegates
boots and
of 1933.
any
caused
unionism
labor
by
and
government pro-labor legislation.
unionism
Labor
was,
in their
beneficial to ,the
opinion, highly
true
interests
and
of
of
all
whole
the
wageearners
nation.
-
Only
dishonest
:
Keynes and Silvio Gesell
Although
Keynes looked upon
strange, unduly neglected
prophet Silvio Gesell" as a fore¬
"the
apologists of the mani¬
festly unfair interests of callous
exploiters could find fault with
the violent acts of the unions they
maintained. The foremost concern
of popular
government, they said,
runner, his own teachings differ should be to encourage the unions
as
much as possible and to give
considerably from those of Gesell.
What
Keynes
borrowed
from them all the assistance they need¬
Gesell as well as from the host of ed to combat the intrigues of the
other pro-inflation propagandists employers and to fix .wage rates
was not the content of their doc¬
higher and higher.
■ •' ■ i!
But as soon as the governments
trine, but their practical conclu¬
sions and the tactics they applied and legislatures had vested the
to
undermine
their
opponents' unions with all the powers they
..
needed to enforce their minimum
prestige. These stratagems are: 1
(1) All adversaries, that is, all
wage
those who do not consider credit
peared
expansion
economists had
as
the
panacea,
are
lumped together and called ortho¬
dox. It is implied that there are
no
differences between them.
(2) It is assumed that the
evo¬
rates, the consequences
"unorthodox"
•
the "orthodox"
now
events developed
the
"abstract
changes in the quantity of money
money-substitutes is simply
Ignored. Keynes never embarked
among the
the hopeless task of refuting
these teachings by ratiocination, i
In
all
these
respects, the
con¬
tributors to the symposium adopt
would be
their continuation
impossible.
Even the
most fanatical Keynesians do not
apparent
would
and
be
dare to say that present-day Eng¬
land's distress is an effect of too
were
peal
perplexed. The only argu¬
they had advanced against
to
their
terpretation
dicted.
It
doctrinaires
was
theory
own
of
the
ap¬
fallacious
in¬
was
But
precisely as
experience.
school"
There
was *
had
pre¬
confusion
"unorthodox."
at
this
moment. that
published his "General
Theory." i i What a comfort for the
embarrassed ^progressives'T *Here,
at last, Uhey had
something to
oppose to the "orthodox'\: view.
Keynes
other
high
the
In
the
of the "unorthodox,"
of policy, however
eyes
kind
manifest its inadequacy may have
been, was-justified as a
bringing
about
more
Now
end.
and
of
equality;
has reached its
means
this process
With the present tax rates
the methods applied in the
control
terest
of
prices, profits and in¬
rates, the system has liqui¬
dated itself. Even the confiscation
the
all
of entering into
level, and a govern¬
of swollen propor¬
tions, of course, makes it difficuL
to reduce taxes or to keep gov¬
ernmental agencies from interfer¬
ing with the smooth operation oi
business.
Perhaps a good exam¬
ple of the latter is the manner ir
which
the
present
Council of
price
-
Economic
Advisers
the
to
dent has issued repeated
but
every
plight and
? for
us
way
mental budget
policies of the last decades was to
expropriate ever-increasing parts
higher incomes and to em¬
ploy the funds thus raised for
financing public waste and for
subsidizing the members of the
most
powerful pressure groups.
a
between
living
of
cost
Taxes have
to
of the
connection
direct
stockholder's
the
much j saving
and
insufficient
spending. The essence of the much
glorified "progressive" economic
the
in
business
Most
two.
quently found
effect
their
Wall Street
probably
fered
to
was
be
or
subse¬
Council
causes
inflated
wage
other ultimate
such as an effect on
here, or the set¬
ting of a bad example for foreign
nations, etc., but it is not the pur¬
pose of this brief article to dis¬
has
realize
that
public
spending
henceforth funds
for
must
be taken
from the same people who are
supposed to profit from it. Great
Britain has reached the limit both
of
monetary expansionism and of
spending.
.
'
>
Conditions
in
this
country are
not
essentially different.
The
Keynesian recipe to make wage
rates soar no longer works. Credit
expansion, on an unprecedented
scale engineered by the New Deal,
for a short time delayed the con¬
sequences of inappropriate labor
policies.
During this interval the
Administration
and
boast
"common man."
evitable
cuss
many
of
the
union
the
"social
But
for the
now
the in¬
these.
Can
Be
Done
stockholders
can
to
attempt
do
to
rightful
Organi¬
regain their
position in the economy?
zation
seems a necessary step, and
quite, feasible as stockholders
sufficiently numerous, num¬
are
bering according to some estimates
million.
15
around
holder has for years
of other pressure
ganization
seems
as
a
necessary
The
stock¬
been the butt
groups,
and or¬
pressure
in
group
self-defense.
An established" investor organiza¬
tion (and to become established
it
would
require only a fraction
of the total number of investors—
perhaps only 1 million)
firstly
things,
and most
have
a
of the in¬
quantity of money
deposits have become visible;
prices are rising higher and high¬
many
spokesman who could refute the
claims of other groups. The latter
What is going on today in the
United States is the final failure
are
consequences
in
the
er.
There
is
ho
importantly,
doubt
that
the
American
would
it
constantly gaining the public
with
ear
in
of Keynesianism.
the
while
their
press,
side
on
of
the
story,
the radio, etc..
investors have been almost
completely silent, with the result
public is moving away
that the public may have- been
from the Keynesian notions .and
.ingrained with the wrong point
slogans. Their prestige is dwind¬
of view on the value of securities
ling.
Only a few years ago poli¬ in
our American system.
Among
ticians
were
naively discussing
other things a powerful stockhold¬
the
extent
dollars
of
national income
without
taking
into
in
ac¬
count the changes which govern¬
ment-made inflation had brought
about
in
the
dollar's
purchasing
ers'
these \
do
enough to
soon
let, them remember Ben¬
Emerson
At
v
a
Director.
a
Board of
meeting of the
Directors of the Norfolk & South¬
after
immediately
held
Railway,
ern
Annual
Stockholders'
yesterday
(Wednesday),
the
Meeting
'
Willard I. Emerson, of New York,
and
Southport, Conn.,
son
was
elected
Since 1936, Mr. Emer¬
director.
a
partner of
has been a general
Noyes & Co., Invest¬
ment Bankers and Members of the
New York Stock Exchange.
He
Hemphill,
is
a
trustee of America's Future,
Fairfield Country
member of the
Cor¬
nell
University > Alumni
Fund
Council.
He is a
graduate of
Inc.,
the
School,
and
a
University
Cornell
attended
and
Cambridge University in England
and Columbia University.
•>."
During World War I he was a
78th
Division,
received
and
for
Service .-Cross
Distinguished
bravery in action.
In World War
II, Mr. Emerson was a
Lieutenant
Air Corps, served over¬
Colonel.
seas
Infantry,
the
311th
the
in
Captain
two
for
years
the New York
received
and
State Conspicuous
Service Cross.
could do
and
crease
If
in any way possible..
is
row
Day
What
What
is
ments to assist stockholder organ¬
izations
Executive Committee of the
'
;
managements of the com¬
panies in which they have invest¬
jamin Franklin's saying "If we do
not all
hang together,-then we
shall all hang separately!":
'.
de¬
mands from, labor nor the inequi¬
ties of the tax structure.
v
Malnutrition of capital prob¬
ably
the
now
is
individual liberty
year
should urge
Stockholders
others.
things,
consequences,
above 1,000
will not provide
any perceptible increase to Great
Britain's public revenue. The most
bigoted Fabians cannot fail to
a
do not like these, they
speedily attempt to form
suf¬
of po¬
tential inflation has it stressed the
pounds
they
attitude that the day after tomor¬
preparation to reimpose price control, excess profits
taxes, etc., the necessity for which
is very much in doubt. The Coun¬
cil has apparently never consid¬
ered
the stockholder's plight as
worth
mentioning,
nor
in
its
of
if
should
in
business
said to favor
influence
sented), retention of expert legal
and other advice1 for specific ac¬
tions—in "other words, see to it
that investors' rights are properly
considered in all public problems.
Stockholders should join organic
zations which now exist, such as
the Investors League or the Com¬
mittee of Investors of America, or
stockholders continue to take the
businesses
classification, of the
/
farmers, etc.,' are now well repre¬
groundless,
unfavorable, and
This
also.
year
were
on
other
,
Presi¬
warnings
past
these
of
of every penny earned
they had secured
The findings of
subjective economics are
disregarded.
(3) All that economists from
upon
when their in¬
time
consequences
gains"
David Hume on down to our time
have done to clarify the results of
i.:
the
evitable
predicted; unem¬
ployment of a considerable part
of the potential labor force was
prolonged year after year.
ment
and
,
to
could
The
fft
^
"General Theory" of
1936 did not inaugurate a new age
of
economic
policies; rather it
marked the end of a period. The
policies
which - Keynes
recom¬
mended were already then very
bosses
the
ended with him.
.
ap¬
"Revelation"
c.
,
Keynes'
"orthodox"
which
lution of economic science culmi¬
nated
in
Alfred
Marshall
and
modern
(Continued from page 6)
close
practical focus in the treatment of
the labor union problem. Those
economists disparaged as ortho¬
dox taught that a permanent rise
in wage rates for all people eager
to earn wages is possible only to
the
extent that the; per capita
quota of capital invested and the
productivity of labor increases. If
—whether by government decree
or by labor union pressure—min¬
imum wage rates are fixed at a
higher level than that at which
the
unhampered market would
have fixed them, unemployment
results as a permanent mass phe¬
gates and did not attend the de¬
lightful
Manchesterism
of
laissez-faire.
yThe
antagonism
.
later there
years
doctrines
Gesell- i,
correctly,
more
The Failure of the Keynesian
they were
called such "v.
as old-fashioned, orthodox,
rooms;'
reactionary,< bourgeois■; or. Wall
Street economics.
The teachers
sembled
ian"—or
High.Cost oi ;
Living--What to do About It
"Keynes¬
ian, policies.
class¬
the
these
upon
Lynch
Jennings at Merrill
to
(Soecial
Financial
CHICAGO,
Jennings
ner
&
Robert
—
V.
affiliated
become
has
with Merrill
Chronicle)
ILL.
The
Lynch, Pierce, Fen-
Beane,
Board
of
Building.
He was formerly
Clarence
G.
Troup
and
& I Co.
Lamborn, Troup & Co.
With Hickory
Trade
with
;
-
»
:
i /;
Securities
organization1 could do, are
/serial tp The Financial Chronicle)
the issuance' of pamphlets, adver¬
.HICKORY,
N..: C.—James
B.
tising in newspapers and on the.
radio,
lobbying
in
legislatures Lucas is with Hickory Securities
(where other blocs, such as the Corporation, 1357 Union Squares
,
.Volume 167
Number 4698
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
(2121)
41
Indications of Current Business Activity
The following statistical tabulations cover
production and other figures for the latest week or month available (dates
shown in first column are either for the week or month ended on that
date, or, in cases of quotations, are as of that date) :
Latest
Indicated steel
operations
Equivalent to—
(percent of capacity)
''
Month
Year
Week
Ago
Ago
May 16
•••*"'
Steel ingots and
castings produced
Previous
Week
AMERICAN IRON AND STEEL INSTITUTE:
94.3
91.0
7.1.3
Latest
:__i—May 16
.
1,699,700
1,640,300
1,285,200
domestic
production
(bbls.
of 42
lons each)
Domestic
oil
output—daily average (bbls. of
runs to
stills—daily average (bbls.)
Crude
42
gallons each)
..May ^1
5,413,450
5,415,400
5,388,700
5,570,000
5,517,000
5,475,000
4,803,000
1
16,681,000
16,515,000
15,735,000
14,526,000
1
2,236,000
2,452,000
2,484,000
1,952,000
1
May
(bbls.)_
:
——May
Gas oil and distillate
fuel oil output (bbls.)
.—1—
May
Residual fuel oil output (bbls.)
1.
May
Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished and unfinished
gasoline (bbls.) at
May
,Kerosine (bbls.) at
May
Gas oil and distillate fuel oil
(bbls.) at
—-—May
Residual fuel oil (bbls.) at
—May
Gasoline
output
Kerosine
(bbls.)
Crude
oil
Refined
imports
products
6,932,000
6,831,000
7,586,000
5,285,000
8,877,000
9,084,000
7,784,000
Decrease—all
111,632,000
111,128,000
113,261,000
101,674,000
13,394,000
12.481,000
10,930,000
35,224,000
34,237,000
32,180,000
BUILDING
9,604,000
1
30,132,000
1
50,829,000
49,572,000
47,959,000
42,539,000
______
1
891,638
852,309
661,807
882,574
1
722,781
697,419
593,504
6,288,000
5,479,000
718,657
ENGINEERING
RECORD:'
Total
U.
S.
'
Private
Public
CONSTRUCTION,
construction
169,257,000
10,029,000
10,579,000
$1,097
•$1,220
♦1,065
796
•863
@4
400
•475
OCA
273
•274
260
125
DEPT.
S.
199,763,000
130
89
*87
59
57
14
♦14
OF
(in millions):
—
—
building
Industrial
(nonfarm)
(nonfarm)
.—————:
;■
construction
;
Farm construction
Public
—__—-May
1
6
$113,317,000
$183,253,000
$93,800,000
$95,160,000
May
6
48,691,000
68,849,000
24,951,000
_
i
May
municipal—
"
114,404,000
68,849,000
66,553,000
64,626,000
41,353,000
54,965,000
36,279,000
23,273,000
6;
Public
41,724,000
53,436,000
47,851,000
13,884,000
> ■
utilities
tary
17,157,000
Bituminous coal and
lignite
(tons)__
—
building
(except
(tons).
May
1
1
May
1
DEPARTMENT STORE SALES INDEX—FEDERAL
RESERVE SYSj TEM—1935-30
AVERAGE=1O0—__
13,800,000
►11,558,000
2,090,000
1,162,000
"
*63,700
856,000
1,128,000
90,800
V,
-
i
Minor
.
May
ju
1
'''
■
296
301
i:i:
280
.
,
.May
8
STREET,
&
5,087,264
5,042,352
■
5,032,879
4,653,137
,
CIVIL
INC.
!
.___
May
108
6
79'
106
*
'f
':i
IRON AGE COMPOSITE
PRICES:
Finished
steel
PRICES
'
(E.
May
-..-—.May
May
—
tin
$40.11 %
$40.33
fj
(New
York) at
Lead'(New York)
at——.—
21 200c
5
2.86354c
$40.11
138
•:V>-
$40.25
21.200c
21.425c
94.000c
94.000c
17.500C
17.500c
,
:V
;;v
17.300c
17.300C
17.300c
„•;>
12.000c
12.000C
12.000c
10.500c
5
U.
S.
■/
_'
Govt. Bonds
■
f,
'u
,__May li
100.88
100.84 V Vs
May 11
112.56
112.37
.—.May 11
:
May 11
117.80
115.82
115.43
—May 11
118.81
111.81
May 11
105.69
A
L__—V_
Baa___
;
———
—
Railroad
Group.—
BOND
YIELD
DAILY
Railroad
Public
.2.44
.2.44
3.03
:?2.86
Group.
i
COMMODITY INDEX_
ITY
INDEX
BY
Fats
Farm
•,
and
_May
_____—_.—
oils—
'.c——_L.i———_.L—L-_V
'
Fertilizer
Average=100)
v
t
299
;
& M,
(E.
for month
J.
; '/•V
2.96
2.81
3.34'
'
2.97
2.84
-
:
3.15
L
3.04
;
■
■
2£0
.
21.200c
21.200c
21.225®
21.534c
21.531c
23.315®
.,7
.
17.212c
15.000c
17.012C
14.800c
74.625C
74.625c
York
York
York,
Chinese
45.000
45.000
45,825
$4.02500
$4.0250$
94.000c
99%——
or
94.000c
80.000c
93.500c
93.500c
$35,000
—
Gold
$35,000
$35,000
$76,000
$85,769
(peir ounce U. S. price)
'
Quicksilver (per flask of 76 pounds)——
$75,462
401.4
11 Antimony
36.120C
231.a
214.6
Antimony
Antimony
Antimony
Platinum,
269.8
227.9
V4.''->
14.800c
75.653c
$4.02614
Stralts__—.—i———
New
^.59
15.000c
,
,
New
2.71
,
.2.85
277
285
QUOTATIONS)—
April:
of
,
2.63
:•
X L' 3.47 v.X
*284
284
adjustments————
-.—i-:'*-4::i
New
2.53
:
3.09'>
;
8,517,201
7/7st.' Louis, -liss.—-—'—_7__—_r_7——.- .■
Silver and Sterling Exchange—
■
7.
•Silver, New York (per ouhce)____.———_
7 Silver, London (pence per ounce)
Sterling Exchange, (Checks)—————^
■/'Tin (per pound)—
7 / .v.;
. • 7.
2.78
'
seasonal
417.1
4187
'
235.4
(per pound)
(E. & M. J.)
—
(per pound) bulk, Laredo(per pound), in cases, Lareod—
(per pound), Chinese, Spot——-
refined,
tCadmium
,
:
78.900c
290.7
269.7
254.9
254.4
254.5
246.5
••■tCadmium
(per
pound)
pound)
8
349.4
358.9
348.9
344.9
SCadmium
(per
3
266.6
264.4 i
271.8
250.2
240.4
237.9
238.5
232.5
materials
8
.
8
:
„May
drugs
8
8
223.6
8/:#
228.6
228.6
175.2
214.6
163.5
164.9
163.5
147.9
232.2
227.3
r>: 230.4
8
155.6
155.8
156.7
8
212.6
groups -combined—i..;———.
157.5
<
136.3
136.3
137.2
143.7
143.7
143.7
/ $1,775
$1,800
$1.80$
15.000c
15.000c
20.500c
20.500C
12.000c
12.000C
$27,780,951
$28,018,806
15.000c
20.500c
.
L
10.500c
139.2
138.8
CIRCULATION
IN
DEPT.—As of
MOODY'S
125.5
TREASURY
—
(000's omitted)-,
March 31
AVERAGE
WEIGHTED
YIELD
$28,229,01$
OF
134.6
139.2
MONEY
127.5
8
8
..May
200
*
219.3
219.9
8
218.2
196.8
.
STOCKS—Month
COMMON
Industrials
Railroads
Utilities
NATIONAL PAPERBOARD ASSOCIATION:
$1,750
$1,775
157.9
216.4
;
*
m
$1,750
33.000b
203.3
173.8
;
..May
1
$60,885
<
;
175.2
213.5
,
..May
..May
machinery^—
$72,926
$1,775
99% plus, ingot (per pound)——
Magnesium, ingot (per pound)——
r
Zinc (per pound)—East St. Louis——
170.4
Nomiaal
$1,750
—__
^——
33.500&
Nominal
$92,923
—.
33.500c
Nominal
Aluminum,
8
May
35.940c,
.
33.000c
33.500c
pound)
(per
36.120c
33.000c
$1,800
ounce———
per
8
—May
Fertilizers.
Ail
11,551,738
RE¬
,
;/L;L/L:2.20
;
2.88
;
'
236.4
;
..May
"
Farm
8
..May
Metals-._______.Li_—————
,1'; Building materials.^
and
2.44
--V'2.78
3.31
3.29
416.0
..May
..May
commoditiesu-
Textiles————
*"
'Chemicals
(FEDERAL
•
8
_
——
Miscellaneous
437,700
COMMERCE)
variation-I—„——_
seasonal
-May
Fuels
4,279,000
*320,500
linters)———
1935-39
—
..May
Livestock
tzy
121.25
-
of
SALES
..May
..May
products—
vvv 'Grains
41,225,000
4,928,000
OF
(exclusive
ofjAprlU^r
for
Average
COMMOD¬
;'V;. Cotton
v
34,016,000
197,700
•
.--May 11
-
ASSOCIATION—WHOLESALE
—_____
34,631,000
7 4,436,000
—-
Copper (per pound)—
■ v' ■)
7
i.7; Electrolytic, domestic refinery
——
7, Electrolytic, export refinery—————
Lead (per pound)—
'.7;3&'; J'.s'•
GROUPS— 1935-39=100:
Foods——
tons)—.—
tons)——-
(net
(net
(DEPT.
STORE
METAL PRICES
112,37
>
3.43
2.96
•
-May 11
FERTILIZER
110.34
118.80
3.07
X
3.41
2.83
-May 11
lignite
116.80
■■!■
i(
113.70
:
,
2.88
3.07
LV
11
65,983,000
.-
,'(•'{
NATIONAL
:
3.06
2.77
,
11
—May 11
Industrials
MOODY'S
Without
116.02 t: ;:x*
3.04
!
11
11
174,821,900
99,093,000
tons)—
SYSTEM
— Month
120.43
106.92
'
116.22
■f'2.76
_May 11
Group.—
Utilities
116.41
,_May 11
_May
-.May
..May
_.May
188,288,000
Report For Crop Year Issued May 5:
Adjusted
104.66
.
"■X'1'?-
■
7-*,
AVERAGES:
_
$454,471,00$
213,667vOO0
240,804,000
•,
and
(net
Running bales
.•
W'';;
111.44
107.44
corporate-—-—
220,715,000
287,381,000
v.:
authracite
GINNING
122.50
i
>?' vlv 115.43
.
,wl04.50
117.40
117-40
it
"113.89
<
.4
112.00
105.34
107.80
113.89
May 11
XT. S. Govt. Bonds-
Average
' v
coal
coke
SERVE
100.88
V
V
117.60
,_May 11
Utilities Group
.Industrials Group—_____—____
MOODY'S
X
—May 11
Public
$508,096,000
391,268,000
385,891,000
271,005,000
i
———_——
(BUREAU OF MINES)—Month
April:
; —Final
•
i
Aa
$777,159,000
—-
Municipal
DEPARTMENT
Average corporate—v,
of
_____—-----
————_I_——
construction
COTTON
14.800c
May
___
Month
—
114,886,000
construction
Beehive
lb.OUOc
5$
3$
80.000c
17.500c
'
...
construction
S.
Pennsylvania
MOODY'S BOND PRICES DAILY AVERAGES:
5
U.
23.675c
21.425c
21.425c
13
11$
CONSTRUCTION—EN¬
■
COAL OUTPUT
21.225c
21.200c
5
May'5
Lead (St. Louis) at—
''•A- Zinc (East St.
Louis) at
155
•
50
Federal
$29.75
»
-
55
$33.15
.
94.000C
5
5
15
50
Bituminous
May
May
May
May
13
—
——____—_—:—
State and
3.23940C
3.23940c
:•
$40.11
$40.42
4
34
45
Public
J
fi.
Export refinery at—__—_______——Straits
3.18422c
:
4
55
♦27
30
Farm
Private
M.
Domestic refinery at—
■
:
4;
•
45
25
.•
repairs
ENGINEERING
of
&
copper—
Electrolytic
1«'
Total
'
—
steel
METAL
'
98
VL
"►
(per lb.)
(per gross ton)_____——
(per gross ton)
r_Pig iron
v-Scrap
34
%
—.—
development
public
building
April:
7
BRAD-
13
50
.
•''
INDUSTRIAL)—DUN
*13
...
and
GINEERING NEWS RECORD
AND
•54
9
43
279
.
Electric output (in 000
kwh.)_.
(COMMERCIAL
"50
building (nonfarm)
Nonresidential building (nonfarm)
EDISON ELECTRIC INSTITUTE:
FAILURES
'33
Residential
■
—
other
33
*54
—
water
Conservation
All
00
161
4
50
——_
1.
Sewer and
.:
128,600
100
_____
:
:
Highways
V '
1,094,000
-
'
*202
■;
Industrial
12,516,000
9,900
i
mili¬
Military and naval facilities
——May
—
A
63
>.46
■
<
2
'
V
*53
'
98
—
facilities)—-
naval
$913
174
—^—
——_
building
Nonresidential
i
————.——
construction
Residential
Alh other
(U. S. BUREAU OF MINES):
Pennsylvania anthracite (tons)
Beehive coke
6
.——May
.
COAL OUTPUT
6
May
.
Federal
.
——
—
'
1
*——
construction
and
'..-/V;
.
other
All
NEWS-
..
construction
-State
ENGINEERING
)■'
181,813,000
575,000
—
Commercial
CIVIL
5,597,080
export
:
Nonresidential building
-
9,864,880
i
construction
Residential
May
8,444,080
—
CONSTRUCTION—U.
Private
—May
8,427,000
785
(bbls.)
construction
New
_________
80,000
8,354,000
959
stock
LABOR—Month of February
Total
ASSOCIATION OF AMERICAN RAILROADS:
Revenue freight loaded (number of
cars)
Revenue freight rec'd from
connections (number of cars)
50,000
—
9,343,000
1
134,693,000
11,997,000
28,000
(bbls.)
Indicated consumption—domestic and
(bbls.)
1
144,637,86$
163,781,000
11,344,000
imports
4
——
175,828,000
155,224,000
(bbls.)
1
_
166,596,000
oil
1
output
■
gal¬
_____
crude
output (bbls.)
Natural gasoline output
(bbls.)—
Benzol output
(bbls.)
4,950,700
May
—
Ago
February:
Total
1,648,400
AMERICAN PETROLEUM INSTITUTE:
Crude
Year
Month
AMERICAN PETROLEUM INSTITUTE—Month
of
(net tons)
Previous
Month
94.2
Banks
April:
of
.
5.5
(125)
(25)7, :—
(25)
5.$
6.3
—r_—
S3
7.3
5.4
—.————.l^.—■
5.5
4.$
4.0
4.6
4.5
(15) 'v—_i__ /
(10)
.77
received
^Production
: t
(tons)
-May 1
-May 1
—May' 1
—
Percentage of activity—
Unfilled orders (tons) at—_
/
—May
201,340
192,731
.
ill
V
-■(
;
7;
102
'
98
v
464,683
393,044
I
.
232,682
181,063
186,484
190,294
102
397,4071
233,919
181,068
•
-
Average yield
102
RR.
PAINT
AND7 DRUG
C AVERAGE=100
V
(WHOLESALE
——
Farm
PRICES—U.
PRICE
—
INDEX—1026-36-
S.
DEPT.
OF
—__————__
products-——v—
and lighting materials
Metal and metal products
Building materials—
.
Chemicals
^
and
Miscellaneous
'163.6
186.9
,
May
177.5
188.0
—May
•
"*
146.2
V V
188.9
/LV,;..'
143.1
.
L
180.4
•
160.1
183.9
174.6
;
,
172.4
Net
L
187.1
186.0
148.2
145.1
138.0
.
L
132.6
132.6
131.7
:
Raw
groups—
157.2
156.6
(000's
General
.
140.7
195.2
195.3
193.2
133.7
136.5
135.5
Manufactured
144.4
144.3
128.6
121.3
122.2
121.0
Net
115.4
v
.
..
•
/':
.
'
178.5
v
articles—
—
1
All commodities other than farm
products
All commodities other than farm
products «nd foods
•Revised
figure.
.
.
.
7
'
'•>* i
•.
—;
of
60,724,331
$81,991,463
73,924,14*
35,200,000
17,500,000
46,200,000
$257,879,614
549,498,64$
April
30—
"
•
•
balance
debt
Computed
WINTER
——
,
<
4,612,423
5,352,930
4,311,655
$247,702,908
—
_
—-
annual
RYE
PORTING
1
176.8
177.8
174.8
159.4
May
May
1
153.7
153.7
152.9
$247,715,139
2.168%
$253,567,960
PRODUCTION
BOARD U.
157.9
158.9
154.9
142.2
May
1
157.2
158.0
154.8
140.6
May
1
148.7
149.0
147.7
131.8
'
WHEAT
CULTURE—As
S.
May
—
CROP
RE¬
v
25,988,000
DEPT. OF AGRI-
1 .(bushels)
*■-
.
-
'
i
.
the
five
May
1
(bushels)
.
.
25,977,(K)$
"v
;
^
PRODUCTION
of
2.089%
^ >
845,484,000" *860,521,000 1,067,970,000
....
figure.
tBased on the producers' quotation.
JBased on the
producers' and platers' quotations.
SSBased on platers1 quotations,
or
more
but less than carload lot, packed ItSTSSUs,' Y.' o.' b
•Revised
of
of
2.173%
rate___—
CROP REPORTING BOARD—U. S. DEPT. OF AGRI-
WINTER
142.2
1
interest
•
.
products
76.48
$77,254,849
39,425,295
$252,315,331 $253,068,069
GROSS DEBT DIRECT AND
omitted)
fund
.
Semi-manufactured
$718,650,958
81.91
128.6
144.4
May
materials
$715,890,641
586,355,682
79.67
cent——/——
railway operating "income before charges
income after charges
(est.)
CULTURE—As
Special
$776,616,109
618,759,345
March:
——
104.0
157.2
May
commodities
of
——
expenses
GUARANTEED—As
166.7
May
_
—
Month
revenues
ratio—per
UNITED STATES
162.7
■
May
—
operating
operating
(ASSOC.
ROADS
I
—
146.7
May
products
goods
AMER. iRRS.)
Operating
146.9
—May
———;—
allied
.' Housefurnishings
145.8
162.6
—iMay
—_—
Fuel
r.
'
/
•
Net
_
.
146.7
May
May
—
Hides'and leather products——
Textile
►
6
LABOR—1926=100;
—.—...
products———;__~—
Foods
t.-'-i
i
—May
——
Total
-
AIL commodities—.;
'i
'
REPORTER
3LO
5.1
(200)
EARNINGS—CLASS
7;/OF
582,603
Total
OIL,
3.3
5.5
Insurance
;y:;
(tons)————.———
3.2
5.5
$82,163,688
Orders
tons
average*
New^Yor^
(2122)
42
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
the future
(Continued from first page)
take
and
of henceforth,
out to be merely
turned
he
but
the
care
as
thought
they
him.
of
Today
we
much
so
or
as
much
endorse
anything
cover
I
doubt that the
other country can show a record
of such incompetence, confusion,
ternational
1
The
of
in the
ure
military,
and
especially
make
a
of
any
office,
perspiring in one, who
for it in the current
political compaign; but they seem
has
or
any use
much concerned with the gov¬
so
of
ernments
other
little with
so
our
of them would find it
more
war
the
closing
effort of the American people
be
to
as
appro¬
in
made
of
the war at Teheran,
Yalta, and Potsdam, our govern¬
ment not only caused the colossal
most
that
own
completely
the purposes
concerned,
wasted,
tar
so
of that effort were
it gambled away
for
the
future.
but
priate to speak of America as "the
promised land," since they have
promised so much of it to the rest
their
security
There
was
of the world.
than
mere
stupidity and
blundering;
there
was
almost
criminal betrayal or disregard of
some
of the fundamental prin¬
ciples and standards of liberty and
justice upon which American life
this
on
question is closed for the present
and I do not intend to reopen it
here on its merits. It will probably
reopen itself as some of the im¬
plications and consequences of the
European Recovery Program ap¬
pear with the passage of time, and
'it is with these, as they affect
the' outlook for Americans, that
I am concerned. It is barely a year
since the Marshall Plan
but
its
was
from
transformation
through
the
stages
of
a
of
kind
a
had
in these decisions and
something
sanitaire against Commu¬
been
which
impor¬
more
based
profess
in
the'
past, and
then professed and still
we
to
be
defending
in
the
rest of the world.
Our
Past Follies
one
swift
so
time
that
to
have
we
throw
away
the newspapers of
yesterday con¬
taining the last speech assuring
us that it was a plan to
prevent
war
and that this stage would
the
can
foreign policy
four years. No
past
undo
now
the
economic
spare us "the
next,
or
our
Eastern
the
Europe;
agreed to let
our
of
having
Allies keep mil¬
lions of prisoners of war as slave
laborers
and
handed
our
own
prisoners
j
Allies,
Czechs,
Poles and Russians, to drive mil¬
lions of people from their homes
in
to
over
the
French
to
kill
Our
Varied
Commitments
Political
and
Arithmetic
So we find ourselves
today com¬
mitted not only to a vast program
of economic subsidy to European
governments but to military al¬
liance against Russia and
to a
vast
by overwork and starvation;
and
having
applied
and
strenghened the totalitarian prin¬
ciple of collective guilt and pun¬
ishment in
and
the.Nuremburg trials,
sanctioned
slavery under the
tions.
We
looting
name
cannot
and
of repara¬
the fact
that, while in 1945 we had won a
victory that destroyed the power
escape
program of rearmament at
home and abroad, for which it was
supposed to be a substitute. The
calculations that entered into the
"calculated
lasting
risk,"
Plan
to
ponents
of
the
called
it,
seem
the
Marshall
been
as
pro¬
have
peace, we
of Europe
Russia
in
so
hadn't
believed
in
much
so
the magic of government money,
in the delusion that dollars would
buy anything, including freedom,
•;
gram
never
a
military profrom the beginning. It was
justifiable on any rational
economic
grounds and
chance of success
any
never
as
a
had
pro¬
of economic reconstruction.
gram
It
is
help
may
to; fortify
Western
Europe
t,
temporarily as a better
basis for military operations than
would be possible
otherwise, if we
have time and
can
keep it
up
long
make
Eu¬
enough; but it
cannot
rope
solvent
arid
under the socialist
economically
self-supporting
political and economic system that
exists
-in
every
country
There has
there.
never been a
self-sup¬
porting socialism anywhere in the
world, and* it would be too much
to expect that
Paul Hoffman
even
could make
one in
Europe with a
billions of American
money,
though it is very significant that
few
think he
we
by
the
the com¬
totalitarian
gave
to
concessions
we
can.
Moreover, Com¬
ica. This indifference is not mere
fatalistic acceptance
of
misfor¬
for
our own
Marshall
The
most
important fact about
an attempt to
apply
it is that it is
on
permanent
a
international
and
basis
systematic
the
economic
ployees
abroad
supporting
we
are
in fact
Communism.
so
Socialism
nourishing
,
ideas about the duty and Capacity
of government to underwrite and
postwar
deflation
maintain
and
for everyone at any
an important symptom
prevailing public attitude
toward
Socialism,
in
government
in
this
and
its
country
em¬
which shows itself in
many other
aspects of public affairs. It re¬
es¬
pecially for political incumbents
in
today,
time, and
an
election
year.
But
what
began in the past year as a tempo¬
anti-deflation measure has
rary
been
ERP Continues Past Errors
The important
thing about ERP
is
that it is a product and a
logical extension of American for¬
eign
policy
years,
come
.
during
which
of
in
the
turn
ideas
and
past 15
is the out-
and
that have underlain
economic
the
attitude
our
domestic
policies
during this period. It is these ideas
and
attitudes,
pressed
?
in
our
as
swiftly transformed and ex¬
flects, too, the fact that the public
by
circumstances
and
probably still accepts the funda¬ panded
events, or by design, into a per¬
mental ideas that determined our
manent
foreign policies
they
foreign
are
ex¬
relations
ioday, that shape the'-putlook fpr
and
comprehensive
eco¬
during these 15
nomic
and
military ' program
years, and forgives the blunders
and incompetence of. those who which involves the restoration of
a
war
tried to execute
economy and probably its
them, because it
extension
on
a
considerably
still believes in these ideas. In the
broader
political
coming .elections
whether, in the
date who held
that
'
Economy
we
case
of
shall
one
see
candi¬
scale
what
is
the
for
means
our
Program
domestic economic
In effect it internation¬
outlook.
alizes
Marshall
the
economy,
it to practically unlimited
opens
in
this
the
were
more
and
our
people
last
drive
for
more
or
important
development is
social
of
saw
circumstances
and; unimportant.
many
ernments to
underwrite
trol their markets,
our
economy
government
the
recent
overt
war
be
course
and
and
The
doubtful
appetite
power
is al¬
she
In
war.
we
the event
control
such
in
saw
of
of
will
and complete,
prompt
sumer
with
market at home and abroad
public money. Naturally the
gest the
intended, or dis¬
claim responsibility for them, or
deplore them as a necessary evil
temporarily to be endured for the
defense of democracy or free en¬
were
quences
terprise abroad; but these pious
protestations and regrets do .not
retard their relentless realization,
does
anything in the public
attitude toward them so far.
nor
I
have
taken
of
talk
much
so
these
things
time
to
because
everything about the current eco¬
nomic and political situation in
this country, as well as its free¬
dom
and
safety for the future,
revolves around this cruel dilem¬
ma
or
trap in which we have let
ourselves be
caught; yet it is im¬
possible to foresee or even im¬
agine the outcome.
So far as fu¬
ture
Russia
conflict with
is
con¬
have always believed
that her opposition to the Mar¬
shall Plan, as well as all of her
policies in the United." Nations
since the war have been designed
to incite and ensure its adoption,
for if she had to devise a strategic
plan
calculated
to
harass and
cerned,
I
weaken the United States it would
be impossible to invent
advantageous than the
one more
Marshall
forerunner, the Tru¬
man Dogtrine.
By them we have
been maneuvered into a position
Plan and its
that
commits
us
to*
an
unlimited
economic and military war expen¬
diture on innumerable, constantly
for
an
which
away
over
indefinite
Russia
our
can
the world
time,
through
slowly
resources,
bleed
country to death, and impose
us a
drain
form of totalitarian collectiv¬
of
of
»
this
:
that
two years ago to
drift
matters
sug¬
with the
our power
till
ended
we
with
the rearmament program we now
*
face, and the prospect of exhaus¬
tion,
inflation and regimentation^
.
which it implies; but all I accom¬
plished
to win second place
Vishinsky's honor list of
was
Mr.
on
war
lic
mongers.
not
was
mat
Aixe
The American pub¬
ready for anything
and
tnen,
As
now
it is
too
stand
matters
we
are
irrevocably
and
mitted to
settle
our
Russia in the most
com¬
conflict with
expensive,
pro¬
longed and difficult fashion, and
though it will probably finally
defeat her and
undoubtedly create
enormous-amount of "purchas¬
power"
ing
here
and
it
abroad,
.
will leave America as well as Eu¬
with less freedom and less
prosperity and less security than
before.;
%
:i rope
Socialist
Grafting
:
Government
Will Waste Our Wealth
r
-
♦;
Most of our
surplus purchasing
which the Recovery Plan ;V
supplies to Europe will be ab¬
sorbed by the burdens of arm¬
ament, conscription and bureauc-.
power
and the waste, extravagance
racy,
and
graft of the socialist govern¬
ments that dominate all of Europe
today, and which
office
remain
can
if they
only
in
avoid
or
can
defer
deflation ^by
maintaining
complete economic control and
underwriting
their : consumer
market
with
Success
in
American
money.
attaining any of the
economic goals of the " plan in
terms of production was always
unlikely or impossible because
there is not enough power, man¬
power and materials available for
economic balance be¬
it since the
Eastern
tween
rope
Western
Europe
as
certain.
rearm¬
remobilization
and
failure
economic
an
building
devised
,of
its
makes
now
program
Of all the forms
ramid
Eu-f
policy
our
Germany; but the
Western
have
and
destroyed by
was
of
py¬
that; politicians
underwrite
to
con¬
purchasing power, arra-r
conscription put the
sumer
ament
and
severest
strain
economic
on
re¬
and involve the most com¬
sources
prehensive controls of the econ¬
omy because they make such ex¬
tensive
demands
materials,
on
equipment and manpower.
;
.
Inflating Politics
Whatever
happen in
may
Eu-
the rest of the world as a
result, the incurable disposition
of politicians everywhere to gov¬
ern
by putting public money in
the pockets of their people, and
then
protecting them from the
consequences by taking control of.
their economic affairs thereafter
or
rope
well
—as
abet
and
wants
to
as our tendency to aid
everybody abroad who
continue
governing
on
that
principle—has left Americans
facing some painful problems in
our
economic
affairs, herev, a%
home, beneath the pleasant sur¬
face which the situation presents
to
these days.
these :the
us
Of
formidable
we
of the
cies
most
and
how
of the chronic
inflation
caught
and
whether
is
consequences
acute
.
_
first
control and overcome the
can
as a
in
which
result of the
and
we
are
war
and
foreign and domestic poli¬
have pursued since.
We
we
should
make
this. We
this | erful,
upon
come.
Bomb
rope
ament
conse¬
and
impose disarmament upon Eu¬
and Russia rather than let
or
toward
these
time to
some
the Atomic
use
can
kill
atomic bomb to persuade, compel
statesmen who determine our des¬
that
for
me
tinies
deny
iron
wants, which
no
power to
has
realization
was
moved
con¬
makes
so
inevitably subject to
control much more
comprehensive: than
It
an
American
shifting fronts all
Whether
those whose general economic and
ideas
we
time.
'*
high office during the design
period, this tolerance toward
than
what she
over
knows
she
for the
compelled
Whatever its military justifica¬
tion or significance may be, this
power,
-
take
in
move
late.
.
tory, fed the political appetite for
and were founded on the
fallacy of supporting the con¬
of
of
that.,
Internationalization of Our
,
her
ened and demoralized that she
safely
commodi¬
which sacrificed the fruits of vic¬
Outgrowth
Keynes And.New Dealism
V
:
economy.
Plan
tune; it is
the
for
we
prices, wages and employment in
this country—all popular purposes
munism is merely the last
stage or
the final form of
market
and
20 billions
traying our weak Allies and de¬ maintain the
purchasing power of
livering them with the defeated the market which have
guided
small nations to communist
power. our domestic policies during the
We have done, or let our
govern¬ past fifteen years, and which we
ment do these and other
things tried out in our foreign policies
as wrong and harmful in the
past since
the
war
in
a
somewhat
fopr years, and what we face to¬ piecemeal and uncertain fashion.
day in the Marshall Plan and the These
ideas, which the New Deal
rearmament program
is mainly medicine men
invented, developed
the cost and consequences of the
and implemented with the inspir¬
error, folly or weakness of those
ation and aid of John Maynard
responsible for our foreign poli¬
Keynes are generally: accepted
cies during this period. Most of
and supported by all groups of
these men are still alive and
many the
American public
today, as
of them still in public
office, yet they are abroad in the socialist
hardly anyone thinks of holding
countries
whose economies
are
them
to' any kind
of account¬
based on them.
So there has been
ability, of condemning or even
practically no opposition to the
criticizing them-for this record
Marshall Plan as a public spending
of failure
and folly which has
program
to
prevent the
usual
meant such
catastrophe for Amer¬
was
fact
the
still does. All the and, starting from where we left
spent in aid abroad off three years ago, the conse¬
in the period since the war was quences
will
almost
certainly
suspended, most of which ended make it permanent. But whether
up in his hands or strengthened or not conflict becomes active, it
them, is part of the testimony to it clear that this country is al¬
the truth of this, and there is
ready returning fairly rapidly to
much more to come as we begin the
compulsory collectivism and
to realize some of the implications controls of a war
economy, from
and complications of the European which it will not soon
escape, in
Recovery or Rearmament Program consequence of foreign policies
vantage,
that the Plan
the
when
behind
of her cave, until
have been so weak¬
out
we
Use of
the
we
from
or
do now, or
more
much
great illusion of govern¬
ment—Pig government at home,
and world government abroad; if
emerging
curtain
she feels
com¬
more
in¬
of
made to Stalin's ruthless ambition
and greed without
excuse, by be¬
but
and
ism sufficient for her purpose al¬
most
without
firing, a shot or
prehensive control of the econ¬
omy.
These policies won't work
in
wrong, as often happens in politi¬
cal
arithemetic;
is
outcome
in
of the painful
face—those
we
conse¬
factor
outlook
hadn't believed
our
mand
its
business and labor by public
spending policies, the inescapable
for
that
ties, labor and money is left in
flation, higher taxation, war con¬ any measure free.
They always
trols, rearmament and mobiliza¬ break down through uncontrol¬
tion, and perhaps war, are the lable inflation and collapse
of
offspring of that record and the production, and so every country
iueas
mat
were
behind it; not
that has based its policies upon
merely the result of our bad luck the
principle of supporting the
in those we employed to carry
market by government spending
them out. It may be too much to
has become sooner or later a com¬
say that if we had not had the
pletely
controlled
or
planned
New Deal we would not have the
economy,
with the State ulti¬
second World War; but it is true
mately operating or owning most
in a deep sense that without the
of
the
business
and employing
New Deal we wouldn't have lost
most of the labor,
it. If we
enemies and had the power
and resources to make a just and
of
key
and
market
supporting the capacity or de¬
fending the power of foreign gov¬
or
our
allowed
been
and
the
the
fought it, we wouldn't today be
facing a Marshall Plan and all
the other problems I mentioned
that it implies. It is convenient
and easy to blame these problems
on
Communism, but our most
dangerous enemy has been our
own errors, delusions and stupidi¬
ties, of which we should not com¬
plain that Uncle Joe took full ad¬
of
ament and
has
causes
is
it
situation
underwrite
to
the crimes in
record
during
takes
is
record
two.
But experi¬
theory has proven
as
drain upon its manpower and ma¬
terial resources for purposes of
little
tainly no
either the follies
this
this
during the
country
or
well
as
hadn't been defeated, as we were,
in
the
purpose
for which we
is
to
hardly had
past decade
that whenever government under¬
peace, prosperity and security for
the rest of the world, we wouldn't
have
lost
the war;
and if we
moral damage of the Morgenthauization of Germany; of having
nism, to military alliance, rearm¬
lend-lease, and finally
conscription and mobilization,
to
this
in
point, and cer¬
pleasure, in reviewing
There
born,
scheme of general European eco¬
nomic cooperation and aid,
cordon
policies
tant
I know that the debate
'
enough
for reminding
reason
of
its
problems
been
ence
America today. All
has
as
months
and
countries
relations
by our government
during and since the war. By the
decisions
the
diplomatic
been exhibited
statesmen. I gladly
free gift of the phrase to
them aspiring to public
our
economic
both
quences
management of its in¬
the world, including ourselves and
only
ourselves
in
waste, futility and disastrous fail¬
most
to
far
treason.
any
America
become
extends
even
New Deal Lost the War
history of
of "the forgotten man" as of "the
forgotten land," which is what
has
has
lated
that Russia may do.
American Taxpayer, and is sorry
need to be reminded not
of Americans
any events abroad
present in government, and
richly fed and stimu¬
ways
Our Dismal Outlook
Thursday, May 13, 1943
no
are now
mistake
about
in the most pow-
pervasive and comprehen¬
sive
inflation
has
probably
process
ever
the
world
experienced,
♦
Volume
167
Number 4698
,
THE
and the fundamental fact about it
is
that
it
of
public
believe,
money
is
political
an
govern¬
by the national income
figures that:it can't stimulate the
for gov¬
economy
primarily a
inflation of
ment, by government and
ernment, a product of
inflation,
consumption
COMMERCIAL &
measured
political
ideas and purposes, Sn instrument
of the foreign and domestic poli¬
that
much.
very
when
an
We
of
little
deficit financing and
monetizing
public debt i during
and since the war, and distributed
abundantly here and abroad- to
support or force consumption, and
maintain
that
itself
power
has
lines
many
dose will
medicine
value
every¬
is
of
not
be
able
V; :
W.;,/ We Are Really Poorer
So
we
J."
market
/ ;r
result of the
war
the inflation that followed
7pause
so
it, be-
Since
and
di¬
its
not
eco¬
or
things,
during
policy
more
con¬
than
it seems. After all,
prevalent idea that this
the
richest
and
most
now
country,
_
the
as a
these
shrinking value of the dol-
or
or
are
shall
things
level."
be
left
we
off
will
ternational
Taxes
last
will
time
on
take
on
allocation
direction
realize
that
collectivizing
our
people
among all
groups to think in terms of State
bonds—much
more than they lost
closings of the Great
Depression, which you remember
in the bank
:
labor
These
are
tions and tendencies that lie be¬
neath the problems of public and
industrial
relations
occupy
many
which
pre¬
has been ascribed to government's
; failure to underwrite the consum¬
also in the cards in
are
/must
pay
Not
-
the piper.
much
-r%•
.*
more
we
be
can
said
about
the
business situation
with them
only
medicine
in
tomac
would
"additional
have
dose
the
Po¬
that
the
on
us,
administered
the foreign recovery and
ment program
parison
with
is
so
the
rearma¬
small in
current
by
com¬
annual
controls
seems
and
most
subsidies,
convenient
fortable
or
moment.
By
a
or
perversion
which
or
fashionable
at
thought,
adequate. If it
mainly a question of
or
are
were
more
the
individual plant or com¬
they would not be so baffling.
are fairly well known and
successful techniques of personnel
There
administration
which
have
been
developed and could be more
widely
applied by
business
leadership,; and they doubtless
would-be helpful - in promoting
harmonious
more
management-
labor relations; but X believe the
problem; involved
is
broader,
deeper and more difficult than
that.7y//
7y;///77'■.
Psychological Elements in Labor
•
'
•1
V:. For
one
cates
that
Trouble//;/y:1
thing, research indi¬
a
large part of the
friction
in labor
relations, and
possibly much of the public atti¬
tude toward industry, has its roots
in frustrations, conflicts, malad¬
justments and other psychological
factors
tions
which
outside
arise
the
social environment
employer
control
or
or
which the
over
industry itself has
must
monly
many
assume, ' but
masses,
begin
as
we
at
not
com¬
the
top,
small
the comparatively
in the community, includ¬
ing business leaders, whose atti¬
among
group
tudes and ideas and actions final¬
lie
those
ly shape the form and pattern of
opinion and feeling and provide
funda¬
the inspiration and example for
the many among the public.
It is
conditions and tendencies
of
government
and
victories
the
of
public,
its
strongest allies;
there that the
cause of
individualism and patriotism, the
coming struggle against the Su¬
public
money
move¬
its most important
and
it is
and
collectivist
has had
ment
officials, in their intrinsic altru
ism, and in the potency and vir¬
tue
these that the domestic and
among
international
State, both national and in¬
ternational,
will
ultimately be
won or lost.. We must not
expect
or depend
upon the man in the
preme
which
they dispense, like holy water, at
and abroad, to which no
street to win it for
us.
"
-
taint of self-interest attaches and
all ills and evils.
cures
It
is not merely that the capacity of
business to satisfy their needs and
G. Brashears Adds
(Special
LOS
State
the
has
become
more
or
added
unconsciously the great dis¬
interested/idealistic and benevo¬
that
somehow,
espe¬
This
and
ernment
of
(Special
for
their
to
and
now
the
world,
of what
of
to
the
me
of
Chronicle)
CONN.
—
George
is with Coburn &
Lewis
the New
Street,
York' Curb
With C. E. Abbett & Co.
(Special
to
The
Financial
Chronicle)
LOS ANGELES, CALIF. —Lon
;
Amick
with
C.
3277
Wilshire
vard.
tions problem of business, and its
effects can be overcome only by
is
Company,
root
the public rela¬
call
their
Exchange.
community life,
seems
to
.
Financial
F. Johnson III
in relation to the rest of
we
The
Middlebrook, ,37,
gov¬
subordination
Raines
HARTFORD,
their business system in the mind
of the American
people, both in
relation
to
members
their
H.
Middlebrook
"7
•
deification
Afred
'
the welfare of the public—and of
the world, too, where America is
concerned.
Chronicle)
With Coburn &
,
industry and technology
Financial
staff.
by the
spell of public
money, commends and directs the
magical productive power of mod¬
ern
The
Brashears &
less
force
to
ANGELES, CALIF.
— G.
Company, 510 South
Spring Street, members of the
Los Angeles Stock Exchange, have
desires, automatically, without ef¬
fort, sacrifice or risk, is taken for
granted, but that government, or
/,
/•••■.,
V/'
.
;
.
•;
•
&
Boule-
influence—Or
now aware
none
of. There is
Oscar A. Schwabe, an associate
of
Kuhn, Loeb & Co. for 38 years
his retirement in 1942, died
a
brief illness, within two
until
after
days of his 70th birthday.
which has subjected the minds of
millions to its spell.
is
rThis
whether
and
help.
how
or
to
consider
can
how that
business
be done,
leadership
Painful experience
timately
do
With Frank D. Newman Co
.
time
no
of
most
7
MIAMI, FLA.—Mrs. Marion H.
Taylor has joined the staff of
can
ul¬
job
may
the
/ (Special to The Financial Chronicle)
Frank
ham
Newman &
D.
Building.
Co., Ingra-
,
When you want to
CIRCULARIZE the Investment
that
some
understanding of what these fac¬
tors that affect the
behavior and
ideas of great masses of employees
toward employers, and how they
have developed
of
our
industrial
with the
growth
civilization
and
the disintegration of the influence
of such powerful social institu¬
tions
and
as
the
obvious
the
family, the church,
community. It is
local
that
business
alone
can¬
not deal with them, and it doesn't
know what it could
do
about
them beyond. the effect that the
policies of individual companies
may have on their own employees,
or
We
have a
for
every
and
metal atencll
Cities,
This
is
list
in
our
mailing department
firm and bank listed in "Security Dealers
America"
of North
arranged alphabetically by States
within
and
revised
the. Cities by firm
daily
and
offers
names.
the most
you
up-to-the-minute service available.
Our
charge
States
or
SPECIAL
selected
addressing
for
Canada)
N.
A.
States
All
addressing
We
can
also
or
complete
is $5.00 per
S.
D.
LIST
Cities $6.00
completed
supply
the
per
within
list
on
list
thousand.
(main
(United
:
offices
1.
only)
or
thousand.
24
hours.
gummed
roll labels
at a small additional charge.
their relation to the communi¬
ties in which they operate.
The methods and devices
that
have been developed and tried in
attempts to shape general public
opinion and policies toward busi¬
probably not harmful in
most cases, but it seems to me
ness
are
.
•
Oscar A. Schwabe Dead
;
attacking it at the root, by expos¬
ing the clay feet of the modernday god of government, by de¬
stroying the new delusion or su¬
perstition
of
the
omnipotent,
omniscient
providential
State
7
'
V
Abbett
E.
no
the
liber¬
alism, in which all the best people
r effort
an
work-place or
family and com¬
of the individual
it is
individualism
relations and other ele¬
in
ments
condi¬
vast and
a
the
the company, in
munity
from
com¬
strange inversion
of
whether
or
pany
and
government
men
met
handling of the human
aspects of employment, relations
and some degree, by
demanding or depending upon the
apparent or immediate benefits or
r
be
effective
some' way
-
nomic
lence
lent
outlook in this
'-"3
there
cially
could
of the current efforts to deal
of
the
sponsibility, wisdom and benevo¬
they
some
faith
among
faith in the unlimited
power, re¬
under the auspices of a Re¬
even
,
.
and
Such
called the governmental¬
izing and internationalizing of the
American
economy
and
the
American
mind,
the
spreading
culties. It is beyond the scope of
this discussion to consider how
advantages of some aspect of pub¬
lic expenditure or control. Since
country today. In
one,, cannot:; expect- public
em¬
;; jalmost every respect it is shaped
by persistent and pervasive infla¬ ployees or officials to oppose such
tionary forces which are domi¬ expansion of power and activity
as this process
involves; the com¬
nated
by - government spending
bined pressure of this universal
and- controls,- which in turn are
dependency / upon
government
determined by international con¬
ditions and our policies toward spending or of public indifference
to
and
ignorance of its conse¬
them.
Nothing in the picture in¬
dicates the prospect of any im¬ quences has been too much for
any free market economy to stand
portant change in these factors or
—even
one
as
vigorous as ours.
their effects upon wages,' prices,
It is a kind of natural law that
employment, / labor
conditions, when
government begins to han¬
consumption or investment in the
dle more
than a
quarter of a
near future. > At the
beginning of
country's income it inevitably be¬
last year there were signs that
comes the controlling or dominant
the gas in the postwar 1inflation
factor in the whole economy, and
; boom, was; giving out, until the
it is impossible for anything like
j proposal, of the Truman' Doctrine
a free competitive market in com¬
and the Marshall Plan put forth
modities, labor or capital to sur¬
; tee promise of another/spell*' of
vive, except at the fringes or on
government spending and forced the
surface. The idea of free en*
consumption, and delay in placing
terprise has survived as a sub¬
the orders and getting; out. the
ject for sentimental speeches and
checks has caused some slacken¬
advertising slogans; and educa¬
ing of activity in certain lines in tional
campaigns; but the fact is
recent months; but these fluctu¬
that real and effective economic
ations only emphasize the extent
freedom has largely disappeared
to which our economy has become
in the United States, as it has else¬
Y governmentalized
as well as in¬ where in the
world, and it will
ternationalized
during the past require a drastic revolution of
/fifteen years by prolonged addic¬
thought and action to restore it.
tion to the dope of public spend¬
To many ardent devotees and
ing. ;;// ;
/
crusaders for democracy and free¬
dom abroad it has become mainly
> Shots in
the Arm Must Be
or
merely a matter of electoral
Increased y- 7
machinery, of freedom to choose
It is misleading to
suppose, as
the particular form of slavery, the
the official soothsayers and eco¬
special mixture of
•
business
among
.
publican Congress, and before an
election in which it is expected
>and maintain wages
that the relics of the New Deal
"and prices.
One can -see no, end
to this process if current policies will be relieveil pf office, Vt V ,•
1
All these things are in the cards
and plans of public spending and
because they are a logical and in¬
; the prevailing public attitudes fo¬
rward it continue,, and the Euro¬ evitable sequence of governmentpean
recovery
and rearmament izing and internationalizing our
economy which has been proceed¬
program alone means its indefi¬
nite prolongation and expansion, ing steadily during the past 15
for there is no possible way 01 years or more. All political parties
putting limits to it, when foreign and all groups in the country have
events control, and Russia calls all participated
in that process in
dance, and
so
the
which
the patriotism which is its coun¬
terpart in international relations.
have
management
in
these? days of
labor disorder and political diffi¬
game
market
the
mental
of government
planning which is being resumed,
this?: great
To avoid
overcome
government
*
which
/ ;'. I/;
some
of the condi
and
in the economic and political life
American community, and
why business has failed
the public love it for
but we don't know much
and abroad,
y
long time.
of
busi¬
Itself,
of the
home
and government
vestment
force
and
make
power, responsibility - and action
in connection with all important
problems of life that arise at home
more
capital
of
of
more
employ¬
develop into
will
and
all
new
or
mentT controls
,
a
must
of our
economy has gone a correspond¬
ing governmentalizing and inter¬
nationalizing v of the American
mind, which has moved more and
starting about
be
We
free
a
rebuild
powerful effort to revitalize the
reasons
I
along with the domestic and in¬
could
a
leads to it will require
device and under the direction of
believe,
ernment.
restored. Ai~
outcome
Deep
beneath
the
prevalent
public attitude toward business I
merely an
generally ac¬
the
which
system
over
drug-habit
operations favorably to the
public by every known publicity
the most skilled agencies.
There
are
probably
likely to leave little
that
their
support and control by their gov¬
another
way
themselves
present
is
upon
save
about them yet.
of
-
in
to
cepted assumption that the pros¬
perity and security of the Ameri¬
can
people now depends upon
fixing of wages.
ready lost pearly a third of all
Rationing of consumption, com¬
their savings, in bank deposits,
pulsory saving and direction of in^
life ~ insurance
and/government
the turns
tried
that
ness
the rest of the world is
compre¬
-
but
we
among
behind
extension
time, until
one
business
that
deal of
concerned, though during this
period business and industry have
this,
,
and more the character of
result
lar since 1939 Americans have al-
dose
rather
great
are
even
cannot get along or
survive without supporting
is
a
as
place
ground
during the past two decades so
far as their interest, esteem and
sympathy, and any broader un¬
derstanding of the meaning and
importance of a free competitive
capitalistic
enterprise
economy
to
fluctuations ; as
in
the
entailed, but levies, and production
in this country alone,
er
lost
productive,
any more.
intervenes
~
in
we
where
production
and
productive
power less than they would have
been, hecause of the destruction
of the
simple
institutions,
is much
years
sistent
ter* election/ too, we shall prob¬
ably begin to run Federal deficits
again and taxes will be raised.
and
much./ Not only is
of wealth and life it
limit
hensive controls
prices, wages and incomes
have risen
its
and
and
international
15
the
expect prices and
continue rising, with
from time to
a
a
excessively
system,
the
may
to
wages
delusion to suppose that
the world or the United States is
i
to
deny him the bottle
variations
as
its
ideas
our
the
been
and
have seen taking
the governments of
Europe (and which we are trying
to postpone by our aid
programs) ;
vency
employers and business enter¬
prise
among
the mass of the
American
people.
In
fact
the
.
government
richer
dollar has
Communism
attitude toward the economic
freedom of the individual.
>
When we consider these
effect
because
Euro¬
our
its
additional
an
of
against
nomic
luted,
and
since
the
patient's
safety is at stake, the doctor will
retarded the
or
flict./,
/ It is
the
weaker
the
otherwise have been'possible; and
fostered class and industrial con¬
■J?-.
that
probably have
allies
most
voting
nominal
of proportion to its size.' Be¬
sides, we are only at the begin¬
ning of this spending spree; the
growth of productivity, discour¬
aged or ended savings and invest¬
ment, reduced
the rise in the
standard of living Which would
.
least
at
has
cials
out
expand the power
of government to plan and man¬
age" the economy. ' The exercise
of
in
upon
evidence
and
through such a process of finan¬
cial, economic and moral insol¬
very
any
43
(2123)
doubtful that they have had
large or lasting effect
attitudes and ideas toward
very
we
really object to in it is mainly its
bad manners, disagreeable cus¬
toms, its unpleasant public offi¬
employment and machine time in
and
where diminished
slack
policy
any
larger spending
and more State
pean
•
amount of fake money was manu¬
become
money
what
this kind of drug
usually have
to be ever larger and more fre¬
quent; but in the present.situation
business management has much
the patient's system is so saturated
control.
V,
/"
with it, we are so clo.se to the
It is not merely, as we some¬
ceilings of production capacity
times assume, that an immense and
manpower, and there is so
arm
cies I have described, rather than
of economic factors over which
factured by
has
promotes
public
CHRONICLE
control of individual initiative,
effort, enterprise, income, savings,
investment and consumption. It
sometimes seems these days as if
know
becomes
economy
dependent upon
the shots in the
which
FINANCIAL
Herbert D. Seibert & Co., Inc*
25 Part Place
,
REctor 2-9570
New York 7. N. Y.
Securities
Air
(letter of
stock.
•#
be
sold
at
$12
each
to
finance
small
loan
•
Public
Service
bonds
.
v
.
h"{ '■
.
•
Chicago Fruit Auction Co.
//*
:
May 6 (letter of notification) $300,000 of common stock
($8 par).; Price—$10 each.
For working capital.
No
underwriting.
.
■
'
Clinton
(Iowa)
//.q'■r.S.v;.
Industries, Inc.
March 26 filed $7,000,000 15-year debentures, due 1963.
Underwriters — Smith, Barney & Co., New York and
Newhard, Cook & Co., St. Louis, Mo.
Proceeds—To re¬
pay a $1,500,000 bank loan to J. P. Morgan & Co., Incor¬
porated and purchase outstanding stock of American
Partition Corp. and its sales affiliate.
Indefinite.
Angus Mines, Ltd., Montreal, Canada
Feb, 12 filed 600,000 shares of common capital stock ($1
par).
Underwriter—James A. Robb, 70 Pine St., New
Fork.
Proceeds—To develop gold prospects.
■
Clinton
(Mich.)
to
Birmingham, Ala.
April 27 (letter of notification) 25,845 shares of common
Price—$8.
To be sold to existing stockholders
only. To increase capital and surplus.1 No underwrit¬
ing. ;■■■ /.v.
v .;
Underwriter—Charles
Consolidated
atock.
E.
Edison Co.
Bailey & Co., Detroit.
of
N.
Y., Inc.
(5/18)
March 1 filed $57,382,600 of 3% convertible debentures,
due 1963.
Convertible into common stock at $25.
Offer¬
ing—Common
{.'^4'^
$7 each.
Shares
are
Co.
§tock.
& Co., Chicago. Price
owned by the
Phillips Petroleum
vvy
'.'vV
•#
Bayshore Industries, Inc., Elkton, Md.
Hay 3 (letter of notification) 1,000 shares ($100 par)
preferred stock.
Price, par.
For working capital and
plant expansion.
No underwriting.
Bristol-Myers Co., New York
y
amendment.
an
Proceeds—To pay off
bank loans and
improve working capital position.
California
Electric
Power
Co., Riverside, Calif.
May 3 filed $2,500,000 first mortgage
bonds/ due 1978.
Underwriters—Names to be determined by
competitive
Lqbidding.
Probable bidders include: Blyth & Co:
Inc.;
Halsey, Stuart & Co. Inc.;' Kidder, Peabody &
Co.; Har¬
riman, Ripley & Co.
Proceeds—To retire bank notes
jand for
construction.
M":c ;
;/•
"
Casablanca (H.), Inc., New York
May 7 (letter of notification), 25,000 shares of common
■stock (par $6.50).
Price—$9 per share. Underwriting—
none.
Expansion, etc.---V.v,
Central
Maine
Power
Nov. 10 filed 160,000 shares
writing—Company called
common.
Under¬
for
competitive bids Dec. 8,
|947 and only one bid, that of
Blyth & Co., Inc. and
Kidder, Peabody & Co. was submitted and was
rejected
by the company.
They bid $13.75,, less $1.75 under¬
writing commission. Now expected on negotiated basis
through Blyth & Co., Inc. Offering—To be offered to
6%
.preferred and common stockholders for
the basis of one-half share of
subscription
new
Underwriting—Unsubscribed debentures will be
Stanley &
Boston Corp.
outstanding $5
burse treasury
gan
common
on
for each pre¬
Corp. of America, Baltimore, Md.
(letter of notification) 23,000 shares (50£ par)
stock.
Price—$3.75 each.
Underwriter—Mit¬
Bids
for
the
(EDT), May 18, at office of
Irying Place, New York City.
Consolidated
.
Vultee
Aircraft
com¬
Corp.' 'V*
one new
share for each
one held.
Atlas Corp., holder
consolidated stock, will exer¬
cise its subscription rights to purchase
enough stock to
11.4%
assure
of outstanding
Consolidated
offering.
a
return of
$7,000,000 from the stock
Underwriting—None.
Proceeds—Added
to
general
Price
by
funds for
amendment.
manufacture
commercial transport planes.
of
.
filed $1,000,000 4%
non-cumulative common
($25 par); $4,000,000 of 3V2% certificates of in¬
debtedness cumulative; and $1,000,000 of iy2% loan
underwriting.
Offering—To
the public. Common may be
bought only by patrons and
members. Price—At face amount. Proceeds—For
acqui¬
sition of additional office and plant facilities.'
Crampton Manufacturing Co.
/
Feb. 5 filed $600,000 first mortgage 5Y2%
sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
common
New
Finance Corp., Chicago, III.
>
15,000 shares ($100 par) preferred stock.
Offering—To be sold to employees and officers of the
company and its parent, Curtiss Candy Co.
Price—$100
per share. Proceeds—To be used for trucks in connec¬
26
filed
tion with the
Curtiss'
franchise
method of distribution,
•
Equitable Gas Co., Pittsburgh, Pa.
May 6 filed $14,000,000 first mortgage bonds, due 1973.
Underwriters—Names to be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co., Inc.jj
The First Boston Corp.; Kuhn, Loeb & Co. and
Smith;
Barney & Co. (jointly); W. C. Langley & Co. and Glore,
Forgan & Co. (jointly); Harriman Ripley & Co.; White,
Weld
&
Co.
Proceeds—$14,000,000
of proceeds, plus
stock, will be delivered
exchange for natural gas
under lease, outstanding capital stock oi;
563,000 shares of
to
the
new
Philadelphia
properties
now
common
Co.
in
Equitable, notes and other claims owed to the Phila¬
delphia Co. and to the Pittsburgh and West Virginia
•
•*
Federal
-v>
Industries, Inc., Detroit
May 6 (letter of notification) 10,000 shares ($1 par) com¬
mon
stock.
Price—$1 each.
To be sold by Drew C»
Haneline, President of the company. "Underwriter—C.
G. McDonald & Co., Detroit.
;
Fission Mines Ltd.,
Toronto, Canada
April 16 filed 200,000 shares of treasury stock.
Under¬
writer—Mark Daniels & Co., Toronto.
Price—$1 a share.
Proceeds—For mining and business costs.
Fitzsimmons Stores, Ltd., Los
Angeles, Calif.
2 filed 10,000 shares of 6% cumulative first
pre¬
Feb.
ferred stock
($100 par). Underwriting—Officers, direc¬
tors and employees of the company will offer the stock
to friends and associates.
Price—$100 per share.
Pro¬
ceeds—To retire 7% preferred stock. Business:
"Super
Markets" in Los Angeles,
Riverside, Colton and San Ber¬
County.
Florida Power & Light Co. (6/8)
~
May 6 filed $11,000,000 first mortgage bonds, due 1978.
Underwriters—Name to be determined by competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.;
The
First
Boston Corp.; Harriman Ripley &
Co.; Leh¬
Brothers; Drexel & Co.
Proceeds—To pay off
$4,000,000 in indebtedness owing to the Central Hanover
Bank & Trust Co., New
York, and to meet construction
costs.
Expected about June 8.
.
> :
/
man
Flotill
16
($1 par)
Co., Inc.,
Equipment
Feb.
stock. Underwriter—P. W. Brooks &
Proceeds—To retire secured in¬
York.
debtedness, finance inventories
and
Products, Inc., Stockton, Calif.
March 6 filed 385,000 shares of 60 cent convertible
pre¬
ferred stock (par $5) and 325,000 shares of common stock
Kansas City,
stock
No
Dulany (John H.) A Son, Inc.
May 4 (letter of noitification 3,000 shares of Class A 6%
cumulative preferred stock ($100
par). Price, par. For
working capital. No underwriting.
:
'
' >
•
Consumers Cooperative
Assoc.,
Missouri
Oct.
For working cap¬
•
($1 par) common stock.
Offering—To be offered present stockholders at the rate
of
Co., Inc., Baltimore.
•
nardino
May 5 filed 1,159,849 shares
of
4
•
Probable bidders: Mor¬
Co.; Halsey, Stuart & Co. Inc.; The First
Proceeds—To redeem 273,566 shares of
cumulative preferred stock and to reim¬
for expansion expenditures, &c.
Bids—
underwriting of the debentures will be
certificates cumulative.
Co.
($10 par)
June 8.
offered at competitive bidding.
pany, 4
April 23 filed $10,000,000 20-year debentures.
Under¬
writer—Wertheim & Co., New York. Price and interest
rate to be filed in
;
stockholders of record May 20 will be
given right to subscribe for debentures in ratio of $5 of
debentures for each share held.
Rights will expire
received up to 11 a.m.
(5/14)
Dryomatic
common
.
(letter of notification) 10,000 shares of stock
be sold at $5V8 each (market price), for selling stock¬
holder.
Underwriter—Kebbon, McCormick
•
May
Gas Co.
Machine Co.
April 15
Bankers Fire & Marine Insurance Co.,
supplement working
capital.
(par $1).
Underwriter — Floyd D. Cerf Co., Chicago.
Price—preferred $10; common $6.
Proceeds —- Stock¬
holders will sell 260,000 preferred shares and 250,000
common
shares and company 125,000 preferred shares
and 75,000 common shares.
Company's proceeds will be
used for general corporate purposes.
•
;
vr<.
Foote Mineral
Co., Philadelphia (5/17)
V
May 10 (letter of notification) $3,000 shares of common
stock (par $2.50). Price—$40 per share.
Underwriter—
Estabrook & Co., New York. General corporate purposes.
•
Foote Mineral Co., Philadelphia
*
a v
May 10 (letter of notification (1,500 shares of common
stock (par $2.50)
To be offered direct to employees at
$37 per share. General corporate purposes.
•: / *'?•
•
PACIFIC COAST
:
;
and
HAWAIIAN SECURITIES
Direct
Private
Wires
Dean Witter
a
Co.
BROKER!]
MEMBERS
New York Stock Exchange
Honolulu Stock Exchange
Pittsburgh
^
Private
Chicago
Wiresiob^ces in other Principal Cities
San Francisco Stock Exchange
Los Angeles Stock Exchange
DEALERS
-
14
WALL
STREET, NEW YORK
Telephone BArclay 7-4300
SAN FRANCISCO
•
B
stock (no par) of which 45,000 will be offered
public at $1 each. For additional working capital,
machinery and equipment.
common
to the
.
Challenger Airlines Co., Salt Lake City, Utah
March 1 filed 600,000 shares ($1 par) common stock, of
which 400,000 are being sold for the company and 200,000 for the account of Claude Neon, Inc. Underwriting
—None.
Price—$2 a share. Proceeds—For equipment
purchase and general funds.
•
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1
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'Anchor Steel & Conveyor Co., Detroit
•April 19 (letter of notification) 100,000 shares ($1 par)
•common stock for
company and 20,000 shares for Frank
i. Shude, President.
Price—$2.50 each. Underwriters—
C. G. McDonald & Co., Detroit and Investment Securities
Co., Jackson, Mich. For working capital.
•;
;
Bareco Oil Co., Tulsa, Okla. (5/18)
April 26 filed 162,435 shares ($1 par) common
Fasteners, Inc., Chattanooga, Tenn.
April 14 (letter of notification) 75,000 shares of class
chell-Hoffman &
and repair of flood damages.
'
Ampal-American Palestine Trading Corp., N. Y.
April 7 filed $10,000,000 10-year 3% sinking fund deben¬
tures.
Underwriter—Name to be filed by amendment,
If any is used.
Proceeds — $5,000,000 in mortgage loans
for construction of housing in Palestine, $2,500,000 in
loans to transportation and industrial cooperatives, and
$2,200,000 in loan to Solel Boneh, Ltd., for public works.
—
Corp.
Century Steel Corp., Hollydale, Calif.
10 filed 4,000 shares ($100 par) common. Under¬
writing—None. Shares will be sold at par by directors.
Proceeds—To purchase rolling mill, equipment and for
working capital. •
V
'•
bread plant.
ital.-
discount
and
Vermont
Nov.
Co., Hamilton, Ohio
Hay 3 (letter of notification) 1,944 shares of 6% non(par $100) and $100,000 of
To
Central
:
cumulative preferred stock
notes.
new
tion program
American Loan & Insurance
debenture
a
Dixie
360,000 shares (no par) common stock. Underwriters
of common by amendment (probably Coffin & Burr).
Bonds to be placed privately.
Proceeds—For a construc¬
Robert
business.
30 (letter of notification) 14,750 shares of 6%
cumulative preferred stock ($20 par). Price—Par. Un¬
To construct
and
Body Co., Cleveland
notification) 10,112 shares ($5
To
Baking Co., Savannah, Ga.
April
derwriter—Johnson, Lane, Space & Co., Inc., Savannah.
Light Co.
Co., Dewar,
'
par)
W.
Hadley, President of the company, and Harold F. Smith,
No underwriting.
Treasurer, for working capital.
7
&
March 30 filed $1,500,000 Series E first mortgage
American Coach &
Hay
Power
Robertson & Pancoast.. Proceeds—For
property additions and expenses. On April 15, SEC de¬
nied effectiveness of registration statement.
&
,
Derst
one-tenth share of new common for
shares ($100 par) cumulative pre¬
Underwriters—Lehman Brothers; Glore, Forgan
ferred.
Broadcasting Co. (5/17)
May 6 (by amendment) filed 500,000 shares ($1 par)
common stock.
Underwriter—Dillon, Head & Co., New
york. Price by amendment. Proceeds—To pay off in¬
debtedness and expand television services. BusinessBroadcasting network.
-common
ISSUE
PREVIOUS
filed 40,000
Nov. 21
C. Adams & Co., Boston.
v#
SINCE
common
Central
Thursday, May 13, 1948'
Registration
v
per share and common 1 cent.
For plant and equip¬
ment-costs and working capital. Underwriter—Frederick
$10
American
CHRONICLE
share held.
Price by amendment.
Pro¬
ceeds—For construction and repayment of bank loans.
each
April 26 (letter of notification) 10,000 shares of preferred
etock and 10,000 shares of common.
Price—Preferred,
•
in
ADDITIONS
ferred share and
Lanes, Inc., Portland, Me.
FINANCIAL
Now
INDICATES
•
&
COMMERCIAL
THE
(2124)
44
LOS ANGELES
•
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I
UNDERWRITERS
,
,
HONOLULU
iSfiOi-T-.
:
f!
Volume 167
THE
Number 4698
COMMERCIAL
&
FINANCIAL
CHRONICLE
•
Kloman Corp., Washington, D. C. y •
May 5 (letter of notification) 2,700 shares
($100 par)
preferred stock and 20,000 shares ($1 pan) common stock.
.Price, par*. Taretire $100,000 of first mortgage indebted¬
NEW ISSUE CAIENDAI
ness, pay
May 14, 1948
Bristol-Myers
-Debentures
Co.J-*.*.-i—
.
*
Sheboygan/
March 22 filed 1,500,000 shares ($1 par) common stock.
Common
Underwriter—Heronymus & Co., Sheboygan, Wis. Pro¬
ceeds—To open and equip bottling plants in California
cities.
Price—$1 per share.
....Common
.>.1
Common
Playboy Motor Car Corp..
May 18, 1948
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Bareco Oil Co.-^
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Lakeside Laboratories, Inc., Milwaukee,'Wis.
May 7 (letter of notification) 1,000 shares ($1 par) com¬
mon stock.
Price—$6.50 each,
Underwriter—Loewi &
Common
Consolidated Edison Co. of N. Y. Inc;
11:00 a.m.
Bottling Co., Inc. of Calif.,
.
Wisconsin
May 17, 1948
American Broadcasting Co
Foote Mineral Co._
alterations, and for working capital,
Kool-Aid
^Debentures
(EDT).
Co., Milwaukee.
For working capital.
Legend Gold Mines, Ltd., Toronto, Canada
(Alexander) & Sons Carpet Co. —Preferred
.
May 21, 1948
Reading Co.,
Equip. Trust Ctfs.
(EDT)..
noon
N
June 27 filed 300,000 shares ($1 par) common
treasury
stock.
Underwriting — To be supplied by amendment
Price—50 cents a share. Proceeds—To develop
mining
•
properties.
May 24, 1948
Sierra Pacific Power Co.——
May 25, 1948
Co., Milwaukee
April 19 (letter of notification) 30,000 shares ($2.50 par)
:
•
,
common
—
stock.
Pricer-$4.875.
No underwriting.
—Preferred
Gamble-Skogmo, Inc.
National Gypsum Co..-—
Union Electric Co. of
Le Roi
„__>Bonds
To reduce bank loans.
•
Link-Belt Co.,
.{Debentures
Chicago
filed 11,845 shares (no par) value common
stock.
Offering—T6 be sold to certain officers and key
employees of the company and its subsidiaries. Under¬
writing, none.
Price—$46 each.
Proceeds — Working
capital. .y
1948
'
i, 1948
common
will
be
build, furnish and tool
to
000
.working
Tampons.
Ocean
sold
for
$100.
Proceeds—Tor
factory and apply close to $500,-"
capital. Business — Manufacturer, «-<&
-•
^.
a
Downs Racing
Berlin, Md.
.
P
Association, Inc.,
•
.
.
Nov. 28 filed 55,900 shares
($10 par) common. No un«'
derwriting. Price — $10 a share.
Proceeds—To buiiS
trotting and pacing race track hear Ocean City, MdL
(Joseph J.) O'Donohue, IV, New York (6/7)
(letter of notification) $160,000 5.5%, sinking
fund bonds, series 1948-1973,
Price—Par. Underwriter-^
Bioren & Co., Philadelphia.
quirements.
•
Personal and business
re¬
y
Old North State Insurance Co., Greenville,
March 15 filed 100,000 shares of capital stock ($5
N.
par)*
Price—$15 each.
Underwriter—First Securities Corp*
Durham, N. C.
Proceeds—-General business purposes,
•*
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.
April 21
South Carolina Electric & Gas Co.—Pref. & Com.
of
two
....Common
Mo',_—-1—
June
Nuera Products Co.,
Denver, Colo.
f
May JO filed 100,000 shares ($10 par) preferred stock/
.and. 20,000 shares ($1 par) Common stock.
Underwrit¬
ing—None named. »Price—10 shares of preferred an&
April 30
May 19, 1948
Smith
IS
(2125)
•
Pennsylvania Manufacturers' Association
Casualty Insurance Co., Philadelphia
yyf.
May 7 (letter of notification 3,000 shares of capital stocks
(par $100). Price—$100 per share. Underwriting—Nonel
To be offered stockholders for subscription,
General
funds.
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•
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1
y.
•,
.,
Playboy Motor Car Corp.
(5/17-21)
J
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.
•
New York State Electric & Gas Co.—
Preferred
Segal Lock & Hardware Co., Inc._—...Debentures
June 2, 1948
/'
>;
Illinois Bell Telephone Co.———.
'.{June
{vv
.^;„Bonds
i948;^;{{:{
Bonds
Joseph J. O'Donohue IV—;
:
June 8,
V-■"
j
1948
Florida Power & Light Co
June 14,
I
Kansas City
Feb. 13 filed 20.000,000 shares common (lc
.
^-Bonds
1948
Lonsdale Co., Providence, R. I.
April 26 filed 1,192,631 shares ($1 par) common stock.
Offering—To be offered to holders of common stock of
Textron, Inc., at rate of one new share for each one held.
An additional 60,000 shares will be issued to officers, di¬
rectors and some employees of the newly organized com¬
pany.
Underwriters—For unsubscribed shares Blair &
Co., Inc., and Maxwell, Marshall & Co., New York, Price
by amendment.
Proceeds—To be applied to the pur¬
chase price for an existing textile firm known as Lons¬
dale Co., a Textron subsidiary.
\
,
;:5'{
,
Power & Light Co.—Bonds and Pref.
April 19
Fraser Products Co.,
Detroit, Mich.
100,000 shares ($1 par) common. Under¬
writers
Campbell, McCarty & Co., and Keane & Co.,
both Detroit.
Price—$5.25 per share.
Proceeds—The
shares are being sold by 14 stockholders who will re¬
ceive proceeds. Registration statement effective Jan. 16.
---
Fremont Oil Syndicate,
Hay 7 (letter of notification) 25,000 shares ($1 par) com¬
stock.
Price—$1.25 each.
For drilling a well in
Boulder City, Colo.
No underwriting.
Inc., Minneapolis
(5/25)
March 30 filed 120,000 shares ($50 par) cumulative pre¬
ferred stock, convertible prior to July 31, 1958.
Under¬
Sachs & Co. and Merrill Lynch,
Pierce. Fenner & Beane, New York, and Piper, Jaffray
& Hopwood, Minneapolis. Price by amendment.
Pro¬
writers—Goldman,
ceeds—To
reduce short-term
$50,000.
#
bank
'
loans
Washington Memorial
George
Park,
indebtedness and for deferred maintenance,
Nalley's Inc., Tacoma,
Jan. 15 filed 119,152 shares of common stock (par $1.25).
Underwriters—Walston, Hoffman'& Goodwin and Hart¬
ley, Rogers & Co. Offerings—63,785 shares are to be
publicly offered (25,000 on behalf of company and 38,785
for account to Marcus Nalley, Chairman); 20,000 shares
will be offered to employees, executives and directors
and 35,367 shares are to be issued in acquisition of all
publicly held stock or partnership interests in certain
subsidiary and affiliated companies. Indefinite.
;
bidding. Probable bidders include: Halsey,
Stuart & Co; Inc.; The First Boston Corp.; Kidder, Peabody & Co. and Stone & Webster Securities Corp. (joint¬
ly); White, Weld & Co.; Lehman Brothers and Goldman
Sachs & Co. (jointly),
Proceeds—To reduce short-term
petitive
"
Bell Telephone Co.
(6/2)
April 30 filed $60,000,000 series B first mortgage bonds,
1978.
Underwriters^-Names determined by com¬
due
petitive bidding. Probable bidders; Halsey, Stuart &
Co. Inc.; Morgan Stanley & Co.; Glore, Forgan & Co.
Proceeds—To be applied toward repayment of advances
{from A. T & T. for general corporate
Jan.
purposes.
2..'4^^.
Asbestos
30 filed
Expect¬
\ V7:'7
?
Ltd., Sherbrooke,
{■;{.- yy-
Co.,
.7'
.Quebec
-1,500,000 shares ($1 par) common stock.
Frechette, Hartford, Conn., is the
Underwriter—Paul E.
U.
S.; authorized agent and principal underwriter. Price
—$!! each.
Proceeds—To
construct milling
purchase equipment.
|
{ island
plant
and
:
Air Ferries, Inc., Bohemia, N. Y.
Mgy 4 (letter of notification) 40,000 shares of common
stock (par $1). Price—$2.50 per share. Underwriter—
E.I P. Frazee & Co., Inc. Funds for purchase of equip¬
ment and facilities and working capital.
•
;
Jackson & Church Co.,
Saginaw, Mich.
May 4 (letter of notification) 2,000 shares of Class A
preferred stock. Price—$100. .To expand manufacturing lines. No underwriting.
Kansas Soya Products Co., Inc., Emporia, Kans.
Dec. 3 (letter Nonnotification) 3,157 shares ($95 par)
share. Undewriter—Kenneth Van
Sickle, Inc., Emporia. For additional working capital.
preferred. Price—$95
a
continue
and
a
construction program.
this month.
May 3 (letter of notification) 2,980 shares of 1948 series
prior preferred stock ($100 par).
Price, par. Under¬
writers
George K. Baum & Co. and Prescott-WrightSnider Co., Kansas City. For general funds and working
capital.
International
Finance
Service,
Inc*
{
V
Philadelphia'»
May 6 (letter of notification) $50,000 6% cumulative de¬
bentures. This is an offer of recission to the purchasers
of the debentures (which were sold privately in De¬
cember 1947), due to a technical violation of section 5»
of the Securities Act.
>
,
n
New York
Jan, 16 (letter of notification) 180,000 shares (50c par)
common
stock.
Price—80 cents.
Underwriter—FraiaM
•
Rulane
For working capital.
Gas Co.,
Charlotte, N. C.
;
May 7 filed 15,000. shares ($50 par) 5%% cumulative
convertible preferred stock. Underwriter—R. S. Dick¬
son & Co.,
Charlotte, N. C. Price—$50 a share. Pro¬
ceeds —, Repay note, purchase of additional equipment;
erect bulk storage plant near Wilson, N. C., and office'
buildings and display, rooms at Portsmouth, Va., and
Business—Distribution of lique¬
Winston-Salem, N. C.
fied petroleum gas.
•
N. Y.
Ryniker Hat Corp., Elmira,
^
May 7 (letter of notification) 100,000 shares of class Jk
stock (par $50 cents) and 25,000 shares of 4%% pre¬
ferred stock (par $3). Price—$5 per unit, consisting of
4 shares of class A at 50 cents per share and one share
,era);corporate;affairs.
share. Underwriting, none.
;
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i■■
K
Geni•: i
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{{Sandy Hill Iron & Brass Works, Hudson Falis;
/ New York
;.■?#April 12 (letter of notification) 59,000 shares class tA
participating preferred stock (par $4). Price-—$5 p^V
f
Harzfeld's, Inc.,' Kansas City, Mo.
:
Public
of preferred at $3 per
loans
ed June
No under¬
yy' yy .H;■\7l'-y'yy
;■
March 30 filed $10,000,000 Series B first mortgage bonds,
due 1978,
Underwriter—To be determined under com¬
Whitemarsh, Pa.
Illinois
;
Narragansett Electric Co.
Inc.,
•
W. Bennett & Co.
Myopia Hunt Club, South Hamilton, Mass.
:
May 4 (letter of notification) $60,000 of improvement
and refunding 3% mortgage bonds.
To refund mortgage
-
April 28 (letter of notification) 2,500 shares of 5% noncumulative preferred stock (par $100). To be substituted
for 2,000 shares cumulative preferred stock outstanding,
on basis of 5 new for each old 4 shares outstanding.
♦
For
totaling $13,;
^
($5 par)
Proceeds—^Fcr
York.
capital equipment and working funds.
*•
writing.
Inc., Denver
mon
Gamble-Skogmo,
Underwriter—Tellier & Co., New
Reiter-Foster Oil Corp.,
stock, to be sold at par to stockholders.
working capital. No underwriting.
common
Oct. 21 filed
#
$1 per share. Not more than 100,000 shares will be ofi
feired to employees and officers at 87% cents per sbareL
Merrimac
Mills Co., Methuen, Mass.
(letter of notification) 50,000 shares
par). Price-^
•
o:yyy
y
Dairy Products Corp.
May 12 filed $30,000,000 of debentures, due 1970. Under¬
writers—Goldman, Sachs & Co. and Lehman Brothers,
New York. Price and interest rate to be filed by amend¬
ment. Proceeds—To be added to general funds for a plant
and equipment replacement program for the company
and subsidiaries. Business—Dairy products holding com¬
pany.
:
('
yy/{i'V V
.7;': v
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National Gypsum Co., Buffalo, N. Y<
(5/25)
April 20 filed 422,467 shares ($1 par) common stock.
Underwriters—W. E. Hutton & Co. and Blyth & Co.. Inc.,
New York. Price—$13.50.
Offering—Offered stockhold¬
ers of record May 10 at the rate of one new share for
lights expire May 2,4.
Proceeds—For
*v\
working capital.
^
New York State Electric & Gas Corp. (6/1)
April 30 filed 35,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriters
Names by competitive
bidding.
Probable bidders^ include; Harriman Ripley &
Co.; Hemphill, Noyes & Co. and Drexel & Co. (jointly);
Kidder, Peabody & Co.; W. C. Langley & Co.; Lehman
Brothers and Glore, Forgan & Co. (jointly).
Proceeds
—To be applied toward a construction program.
Ex¬
pected June 1,
..
_
North
Canadian
Oils
Underwriter—John L. Nolan, Inc., Glens Falla^,
share.
N. Y.
Working capital.
:
i
"
Expected
National
each four held,
^
Limited, Calgary, Alberta
March 11 filed 903,572 shares (no par) common stock.
Price—70 cents each.
Underwriter—F. H. Winter & Co.,
^
(6/1)
Segal Lock & Hardware Co., Inc.
sink¬
ing fund debentures, due 1963. Underwriter—Floyd IX
Cerf Co., Inc.
Price—95 (flat).
Offering—Offered to
March 24 filed $2,000,000 15-year 6% convertible
stockholders of record May 4 on basis of one $100 deben¬
ture for each 100 shares held.
Rights expire May ,26.
Proceeds—For repayment
of two notes and general cor¬
porate purposes.
•
Sierra Pacific Power Co.
r
(5/24)
$3,500,000 first mortgage bonds, due 1976.
Underwriters—To be determined by competitive bid¬
March 26 filed
ding.
Probable bidders include:
Halsey, Stuart & Co*
Inc.; Blyth & Co., Inc.; Stone & Webster
Securities Corp.
Proceeds—Construction costs and the payment of $650,000 to National Shawmut Bank of Bostoii
Smith
for construc¬
Expected about May 24.
tion notes.
^ v
(Alexander) & Sons Carpet Co.
(5/lS>l
April 29 filed 50,000 shares ($100 par) cumulative pre¬
Underwriters—Morgan Stanley & Co. and
Dominick & Dominick, New York.
Interest rate and
ferred stock.
price to be filed by amendment.
Proceeds — General
corporate purposes. Business — Manufacturers of wool
rug yarn.
South Carolina
Electric & Gas Co.
(5/26)'
80,858 shares (50 par) 5%% cumulative con¬
vertible preferred and 404,293 shares ($4.50 par) common;
Underwriter—Kidder, Peabody & Co., New York. . Offer¬
Dec. 2 filed
subscription by company's eommoit
preferred at $50 pef
l-for-10 basis and the common at $6.50 pef
l-for-2 basis.
Unsubscribed shares will b#
ing—Offered
for
Proceeds—875,000 shares being sold by
company and 28,572 by stockholders. Proceeds for pur¬
stockholders of record May 11, the
chase of
share on a
New
York.
property and drilling.
North
Inca Gold Mines,
March 10 filed 666,667
on
offered
a
publicly.
Proceeds—Proceeds
other funds will be used to
Ltd.
shares of common
Underwriter—Transamerica Mining Co.,
Proceeds for
share
stock (par $1),
Ltd., Toronto.
exploration and development.^
ing common
together ,witli
purchase all of the outstand*:
of South Carolina PowervjCO| from tlMk
Commonwealth & Southern Corp.
(Continued
.
,
-
L
(Continued from page 45)
May 5 (letter of notification) 1,500 scares ($10 par) com¬
stock.
Price, par.
To erect cabins, lodges, and
St.
No underwriting.
Western States Oil
May 3 (letter of notification) $300,000 35-year 6% de¬
bentures.
PHce, par.
To construct a garage under St.
•
Standard Oil Co.
(New Jersey)
.
•
May 11 filed 1,265,255 shares ($25 par) capital stock.
Offering—To be offered holders of no par value com¬
mon stock of International Petroleum Co., Ltd., at the
fate of three Standard shares for 20 International shares.
national,
preferred
•
($1 par) and 160,000
stock, of which 40,000 win be
stock,
shares (50c par) common
Under¬
1
■
Telephone Co., Winter Park,
pansion
Fla.
Yeakley Oil Co., Alamosa, Colo.
April 30 filed 10,000 shares of
stock
common
(par $10).
Underwriting—None.
Price—$10 per share, .Proceeds—
mainly for development. Business—Exploration and de¬
velopment of oil and gas wells.
•
'
< :
] chain,
C.)
Hardware,
To
26
retire
loans
of
$65,000
and
for
working
general
purposes.
•
Allegheny Ludkim Stool Corp.
•
Stokely-Van
Camp,
Ashland
May 4 (letter of notification) 26 shares of 5% cumulative
prior preferred stock ($20 par) and 37 shares ($1 par)
common
stock.
Price—pref., $18.50; common $14,625.
Underwriter — Reynolds & Co., New York.
To fur¬
nish funds to redeem scrip issued in lieu of fractional
shares of stock in exchange for stock in Columbus Foods
Corp. and The Hoopeston Canning Co., recently merged
into Stokely-Van Camp.
:
Stone
(L. R.)
& Co.,
Tabor Lake Gold
April 2 filed 300,000
Inc.,
Underwriter—Mark
Price—60 cents
ments.
a
share.
Proceeds—For mine
Carolina
Mining Co.,
Reno,
Nev.
19
(letter of notification)
assessable
common
capital stock
87,500 shares of non¬
($1 par).
Price, par.
Thunder
May
7
of
•
common
(W.
•
•'-'May
5
Minerals
(letter
of
•
11
notification)
50,000 shares of non¬
stock (par 100) half at 25 cents and
Union Electric Co. of Missouri
(5/25)
April 19 filed $25,000,000 of debentures, due 1968. Un¬
derwriters—To be determined through competitive bid¬
ding. Probable bidders: White, Weld & Co. and Shields
& Co. (jointly); The First Boston
Corp.; Halsey, Stuart
& Co. Inc.; Dillon, Read & Co.
Inc.; Lehman Brothers.
first
offered
to
present
7VSS'* :K
■
&
be
Electric
*
Co.
contemplates
company
issuance
of
,
,
..
United Rayon Corp.,
v
29
filed
9,950
(no par)
"production
common
stock.
Each share Is to be
accompanied by
warrant" permitting the holder to
buy
a
proportionate share of the company's
output.
Under¬
writing—None.
Proceeds—To provide capital for the
purchase and operation of a plant with an annual
staple fiber.
be
Chimney Co., Inc., Salt Lake City
May 5 (letter of notification) 10,460 shares of
stock.
Price—$10. To develop furnace, water
and stokers.
No
Power
determined
Co., Jackson, Mich.;
Vfrgrma
by
competitive
Shields
&
Co.
.
«
struction work.
•
bidding..
Probable
(jointly).
*
V
•
Proceeds1—For
"
*
<■
"
1
/
con¬
' i
Fleet Oil Corp.
pected shortly.
common
stock
($100 par) and 964 shares of $4 cumulative
preferred.
To be sold in units of one preferred
underwriting,
share for $200.
.
be used to
buy
Hydro-Electric Corp., a
Connecticut River Powef
Falls
Hutzler
and
Union
Securities
Corp.
(jointly); Kidder,
•
New
'
Jersey Power & Light Co.
f
77fvr"7 777x7/
May 1 reported company preparing to sell
competitively
$6,000,000 of new first mortgage bonds. Opening of bids
June 1
to June
15.
As part of the
company's financing program, General Public Utilities
\.
Corp. (parent) will make an additional investment of*
$1,750,000 in company's common stock.
Proceeds* from
the
sale
of the bonds and stock will
provide funds to
for all of the operating company's 1948 construction
requirements, and part of the' 1949 prospective outlay.
Probable bidders: Halsey, Stuart & Co.
Inc.; The First
pay
Boston
Corp. and Kidder, Peabody & Co.;(jointly); Leh¬
Brothers; Harriman Ripley & Co.; W. C. Langley
Co. and Glore, Forgan & Co.
(jointly).
1
se.
man
&
New
March
York
11
Telephone
Co. '7.
./'.xW1 7;7v
announced its plan to apply to the
New York P. S. Commission for
authority to issue $90,000,000 of refunding mortgage 33-year bonds and offer
them at competitive sale in
July.
Proceeds of the issue
company
will be used to reimburse the
treasury for capital ex¬
penditures already made, to retire bank loans incurred
in plant expansion and to
finance future construction*.
Probable bidders: Morgan Stanley &
& Co. Inc.
Co.; Halsey, Stuart.
Expected early in July.
v
s
^
Northern States Power Co. ot Minn.
To construct hotel. No
-
'*
sibilities
for
*
\
7
securities
v
of further
is
ex¬
development of oil producing properties and
exploration
of
wild-cat
Underwriter
acreage.
will
be
Aetna Securities Corp.
Harrisburg Gas Co.
May 4 the
SEC
additional
Shares
granted
be
stockholders in ratio of
held.
May
Warrants
20.
United
will
be
(no par) at $90
shares
mailed
Co.
subscription
for each
to
stockholders
will
be
.
by
about
purchased
(parent).
Power & Light Co.
•
two shares
by
7777 7Xv7
(6/14)
|
.
,
May
5
company
asked
SEC
cumulative
for
and
construct
preferred
Bids
are
1%%
permission
stocks
additional
expected
about
notes
to be
June
issued
to
and
retire
interim financing.
Probable
14
and
bidders;
public
Halsey,
(bonds only); The Firsts Boston Corp.;
Kuhn, Loeb & Co.; Salomon Bros. & Hutzler and Union.
Securities
Corp.
(jointly);
Lehman .Brothers;
Glore,
Forgan & Co. and W. C. Langley & Co. (jointly); Shields
&
Co.,
White, Weld & Co. and Central Republic. Co.
(jointly).
in
the
pos¬
amount
ot
will
be
funds
designed by the utility primarily td
required by its, construction program.
bidders:'Halsey,
Stuart
&"Co.
Inc.
(bonds
Pacific Telephone & Telegraph Co.
expenditures for construction* and extension of its facili¬
ties occasioned by the
heavy public demand for tele*
phone service.
•
~
.
-
V.
Reading Company
(5/21) X
7
7 7
' 7
77 7"
Company requests bids for the purchase of the entire
$4,800,000 equipment trust certificates,.. series .O, .dated
June 1, 1948, to mature serially in 20
semi-annually Xin^
stalments of $240,000 each on Dee. 1, 1948-1950.
; Bids
will be received at office Of R. W.
Brown, President;
Room 423, Reading-Terminal,1 Philadelphia,
Pa., at ot
Xt
before 12 o'clock
noon
(EDT) May 21.
issue
Proceeds—To
property
for
opened June
17.
securities
April 29 directors voted to sell 601,262 common* shared
of stock to shareholders at
$100 a share. -Subscription
rights probably will be given to common and preferred
shareholders of record on June 15, 1948, one right
being
issued for each six common or preferred shares.
Fundi
will be used by
company to repay advances covering
San
$12,000,000 of first mortgage bonds and 80,000 shares
par)
new
per
for
share
shares
Gas Improvement
Kansas City
sell
offered
one
Unsubscribed
to
company
common
would
permission
of
$30,000,000. Investment banking firms already ar6
forming into groups to compete at the sale.
The new
s
stock
common
sale
only); Smith, Barney & Co. and The First Boston Corp;
(jointly); Lehman Brothers and Riter & Co. (jointly^
~
Proceeds will be used for the purpose
Stuart & Co. Inc.
§~*tocfc t$10O par)'.
otte common
and the SEC- for
$11,000,000 30-year
Will
Peabody & Co. and White, Weld & Co. (jointly),,-
Probable
and
$3,860,000 of
Hotel Co.
May 7 (letter of notification) 964 shares of
and
than
more
Proceeds
Probable bidders: Halsey,
Stuart & Co. Inc.; The First Boston Corp.;
Kidder, Pea»fbody & Co.; Lehman Brothers; Merrill Lynch, Pierce,
IFenner & Beane; Kuhn, Loeb & Co.; Salomon Bros. &
Co.
acquire
heaters,
j
y:'. 7-
All three companies are
wholly owned subsidiaries of New England Electric Sys¬
tem.
Following sale of its properties, Bellows Falls
company plans to redeem its first mortgage 5% bonds
provide
common
underwriting.
(Minn.)
not
[transmission line owned by
[Co., and to retire bank loans.
«
•
Harriman Ripley & Co. and The First Boston
offering
f
State utility commissions
mortgage bonds.
.properties of Bellows
Corp, (jointly); Morgan Stanley & Co.; White, Weld &
($100
Utah
■
-
"
some
pro¬
ductive capacity of
4,000,000 pounds of viscose filament
rayon and 8,000,000 pounds of viscose
•
-..
England Power Co.
April 30 reported officials of company are
discussing
share.
Price—$1,000 each.
a
New
April 30 company asked SEC permission to issue
200,000
shares (no par) preferred stock.
Underwriters—Names
13,811
New York City
shares
•
,
Proceeds—To pay construction loans and
March
7
.Goldman, Sachs & Co. and Lehman Brothers (jointly).
Expected .in July.-...
....1
X rr- .7 ..
X
}
vote May
An offering of 296,000 shares of
provide con¬
struction funds for a subsidiary, Union Elec. Power Co.
Expected about May 25. -
-
Gas
reported
bidders:
Corp., Denver
■'
j
to
assessable common
half at 40 cents.
Underwriter—Forbes and Co., Denver.
To drill mining claims.
*
'
*
J.
<
-
,
Va.)
Expansion and working capital.
Uintah
must
stockholders.
Consumers
May 7 (letter of notification) 13,993 shares of common
stock (par $5). Price—$10 per share.
Underwriting—
None.
will
$15,000,000 of bonds early in June.
Probable bidders':
Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.; W. C.,
Langley & Co.; Blyth & Co., Inc. and The First Boston
Corp. (jointly).
r
'
stock.
Tygart Valley Glass Co.
stock
Cincinnati
May
notification)
25,000 shares of non¬
Price—$1 each. For working
capital, machinery and equipment. No
underwriting.;;
assessable
•
Mines, Inc., Anchorage, Alaska
(letter
Light Co. ,7
Stockholders
common
common
For obligations from operation of Gaston mine and mill.
No underwriting.
•
Power &
19 on elim¬
inating from company's charter the provision that any
new
April
*
the SEC granted the company, a
subsidiary
of Electric Bond & Share
Co., permission to amend its
charter to permit the public
offering of additional com¬
mon stock without first
offering the stock prp rata to
develop¬
*
,w
•;
.able bidders: Halsey, Stuart & Co.
Inc.;; The First Boston
Corp.; Harriman Ripley & Co. ?md Glore, Forgan &
Co7
is expected between
Loan
21
stockholders.
Divide
Industrial
X
company contemplates early registra¬
SEC of 100,000
shares of convertible pre¬
stock, with Eastman, Dillon & Co. as underwriter.
April
'
Tonopah
X,
;
with
ferred
(par $1) preferred stock.
&
Co., Toronto, Canada.
V<
ion the next redemption date.
J.'
'y *
May 11 reported
tion
Mines, Ltd., Toronto, Canada
Daniels
Refining Co.
be underwriter.
may
Beneficial
Inc., Los Angeles
shares
&
additional preferred stock for its own account to
provide additional capital funds. A. G. Becker & Co:,
May 4 (letter of notification) 300,000 shares ($1 par)
capital stock. Price—$1 each. To increase capacity, and
for working capital. No underwriting.
7
.
Brown, President, states that during the next six
months company expects to sell
$13,500,000 new debenr'
tures.
Of the proceeds $5,000,000 would be used
to
iretire, bank loans and $7,000,000 for construction.
Probi-.
sell
•
•
Oil
May 6 company disclosed that stockholders will shortly
have presented for their consideration a proposal for
merging another independent oil company into Ashland.
The identity of the company to be
merged with Ashland
is not presently disclosed. The merger is to
pe effected
by exchange of stock, and Ashland plans to issue and
Inc., Indianapolis
of financing is for exU
(50. and 100) store
variety
•*•'"'•* 7 ?•■*■• 7-
;first
April 30 stockholders authorized company to incur in¬
debtedness of up to $20,000,000.- Company currently has
no funded debt.
Proceeds would be used in company's
improvement program. Probable underwriter if securi¬
ties issued: The.. First Boston Corp.
7 *
(letter of notification) 2,000 shares of 6%
cumulative preferred stock ($100 par). Price—Par. Un¬
derwriter—Southern Securities Corp., Little Rock, Ark.
March
1
authority to issue
Hot Springs,
Inc.,
Purpose
.
York
-•/
National Fuel Gas Co.
}eral and
•
(F.
:
.April 29 reported company will ask permission of Fed*
preferred stock and $2.50 for the common. This stock
offered by stockholders who are members of
the Belt family.
is being
Arkansas
•
L. A.
,
Stearns
Corp.
of this New
'
•-
•:
Price—$8 for the
writer—White & Co., St. Louis, Mo.
j
,
pected to be made by Childs, Jeffries & Thorndike and
Aetna Securities
j
.
—
Inc., Bloomington, III.
sold and the remainder reserved for conversion.
Park
■
(M. H.), Inc.
Stockholders have approved increase in
authorized ($2$
par) preferred stock. An offering of 7,060 shares exr-
i
Feb. 2 filed 40,000 shares of 50c cumulative convertible
participating
Winter
'
May 6 (letter of notification) 1,600 shares of 5% cumu¬
preferred stock ($100 par).
Price, par.
Under¬
writers
Leedy, Wheeler, and Alleman, Orlando, Fla.
To retire outstanding preferred stock and to complete a
new office building.
Canadian corporation.
a
Steak 'it Shake,
a like amount of
promissory notes of Louisiana
Arkansas Ry.
Probable bidders:
Halsey, Stuart &
Co. Inc.; The First Boston
Corp.; White, Weld & Co.
,&
lative
Purpose—To gain control of Inter¬
Underwriting—None.
•'
.
,
Southern Ry.
; to refund
7 #7 Lamston
Co., Phoenix, Ariz.
April 8 (letter of notification) 300,000 shares of common
stock (par $1). Price—$1 per share. Underwriter—Ari¬
zona Securities Co., Phoenix, Ariz.
To buy oil leases and
equipment for drilling.
No underwriting.
Mary's Park.
Kansas City
(May 6 reported company expects soon to offer, at com; petitive bidding, $14,000,000 of pew first mortgage bondfe
Not underwritten.
Mary's Park Garage, San Francisco
Thursday, May 13, 1948
•
New York
April 8 (letter of notification) 44,443 shares of common
stock (par $5).* Offering—Offered for subscription by
stockholders at par in ratio of one new for each two
shares held.
Rights expire May 18. Working capital.
mon
improve property.
FINANCIAL CHRONICLE
&
Webrib Steel Corp.,
,
Sportsmen's Retreat, Inc., Calico Rock, Ark.
•
COMMERCIAL
THE
(2126)
46
-
.
;
-
:
Diego Gas & Electric Co.r 7 * X
*
April 27 stockholders approved an increase in authorized
common stock from 2,000,000 to*
6,000,000 shares, and the
preferred from 750,000 to 2,000 000 shares. 7 There is no
immediate
clared.
plan to issue additional stock,'officers dheTraditional underwriter, JBlyth & Co^ Inc.
^
-
•
,Westinghouse Electric Corp.
Jqly 12. stockholders will vote
debt from
ori
r.,':
"
* X
increasing authorized
$50,000,OOQ to $150,000,000, It is planned to
issue $70,000,000 to
$80,000,000 of debentures to. .refund
o# retire a
portion of $100,000,000 obligations
maturing
in 1951; These obligations cwmsfet of
$2O[060,090 of deben¬
tures and $80,000,000 of bank loans.
Traditional under¬
writer, Kuhn, Loeb & Co,
Volume 167
Number 4698
THE COMMERCIAL
&
FINANCIAL CHRONICLE
(2127)
has registered with the
ties and
to
"Some time ago I stated that it was the proud
mission of the victor nations to take the Germans
.
i
shares
orter
by the hand and lead them back into the European
family. And I rejoice that some of the most eminent
and powerful Frenchmen have
spoken in this sense.
"To rebuild Europe from its
ruins, to make its light ! shine
i,
forth
again upbn the world
must'first
selves.
of
all
conquer
It is in this way
*
we
dertone
only that
from
the German
midst.
-"For
delegation whom
debt
of
much
Of
insurance, funds, accumulated by the country's 75,000,000
policyholders, have become an increasingly important source of capi¬
nation's
holdings of corporate bonds arid
the
past
the war's end, the increase in
stocks by the life companies during
since
economy
years) having been^
two
the equivalent of more than half
the value of all new issues of
In the
these
cellaneous
Year
two types during the twoperiod, the Institute of Life
Insurance reports,
utility issues in those two
j "U. S; Life Insurance
compa¬
bonds,
the ratio
of
life insurance holdings
increased
to
issues
new
Even
the
in
years.
is
of
stocks, the ratio is approximately
40%.
Life insurance funds have,
business
percentage of the new issues of
common stocks, as a great part of
the life insurance business is not
industry at the end
of 1947 than they had at the end
of
1945," the Institute reports.
"This
life
Increase
in
investment
insurance
not,
was
of
all
course,
of
existing
state
laws, to invest in such securities.
Wide
Up Since Year-End
companies of the capital needs of
the country's
business and indus¬
on an
expanding
scale since the war's end brought
a decline in government financing
requirements.- This trend has con¬
has
tinued
the
been
into
1948
investment
evidenced by
as
Financing Aid
In
.
purchases of
the
first twb months of the year.
aggregate investment, the
insurance funds meeting the
capital needs of public utilities
through bond issues increased by
$1,65-3,000,000
in
the
past
two
years, to a total of $6,726,000,000
at the end of 1947; holdings of
industrial
bonds
increased
by
life
$3,002,000,000
years
to
in
the
same
two
of
total
year-end
a
ones are on
and
deals,
in¬
one
shares
Edison,
of
was
Na¬
report¬
comprised
;
a
the
.')■•
"-v: v
'
,
'r
•
....
stock
which
near
are
Insurance
in
meet¬
owned
coun¬
to
try has developed hr recent years.
In
1919
and
the
1920,
first
two
^ears after World War,I,'when
bewi-capital issues of the two
years
exceeded five
billions,
the
|ife!'ipsurance funds invested in
securities
corporate
creases
representing
2% of the
new
funds
in
corporate
the end of 1920
The aggre¬
its issue of
a
day
$5,000,000 of
back.
mented.
Analysis
of
Investments
the
by
of
industry
shows that the two-year increase
iri
public
utility
bond
holdings,
1946-47, is thp equivalent of about
two-thirds
total
"They
are
carrying
and
providing
aiding
light
the
new
public
bonds
regular dividend of one dollar
thirty-seven
and
one-half
cerits
($1,375) a share on the outstanding
5Va% cumulative convertible pre¬
new
found
company
had
quarter ending June 30, 1948, pay¬
able July 1, 1948, to holders of rec¬
it
and
issue, four of them bidding for
3%
of
offer
'
(Special
a
100.19
down
to the
low
"
of 100.047.
Seven
The
other bids werq
specifying
down
to
coupon.
high
a
of
minimum
a
The issue
as
3 Vs%
a
from
ranged
entered
naturally
The
Financial
Chronicle')
Cooke, Jr.. has joined the staff of
Bond &
Street.
Goodwin, Inc., 30 Federal
He
was
formerly head of
the United Securities Corporation
of
was
Baltimore " and
prior
thereto
with K. H. Johnson & Co.
f
Sole unlisted prop,
reoffering
at
100.70
NOTICE-TO
No.
69
given
share has been declared
that
a
on
the Com¬
Stock of Atlas Corporation, pay¬
able
June 21,
1948,
to
holders of
such stock of record at the close of
Walter A.
salesman.
Right
man
may
keep
Box W 510, Com¬
Financial
&
Chronicle,
25 Park Place, New York 8, N. Y.
Peterson, Treasurer
convenience
without
Bank
charge
of
The
payment
The
16th,
THE ATLANTIC REFINING CO.
*
,
will
be
days
of
Warrants
denominations
closed
on
the
1948,
May,
and
will be converted
of
share
warrants
Income
■
of
that 'a
Dominion
the
tax
Act
Tax
provides
of
of
shall
be
15%
and deducted at
the source on all
dividends payable by Canadian debtors to non¬
residents of Canada. The tax will be deducted
from
all
dividend
cheques
mailed
to non¬
resident shareholders and the Company's Bank¬
ers
will deduct the tax when paying coupons
to
DIVIDEND
accounts of
for
or
Ownership
accompany
meeting of the Board of Directors
held May 3, 1948, a
dividend of
thirty-seven and one-half cents (37%c)
per share was declared on the Common
Stock of the Company, payable June
15, 1948, to stockholders of record
at the close of business May 21, 1948.
a
Checks will be mailed.
Secretary
AILIS-CHiLMERS
by
DIVIDEND
A regular quarterly
NO. 96
of
residents
Canada.
Shareholders resident in the United States
advised that a credit for the Canadian tax
withheld at source is allowable against the tax
are
shown
Tax
the
their
on
return.
United
In
States
order
to
Federal
claim
Income
credit
such
States tax authorities require evi¬
the deduction of said tax, for which
United
dence
of
will receive
of Tax De¬
of Share Warrants must
Certificates
(Form No.
purpose
Registered
Shareholders
with dividend cheques a Certificate
duction, and bearers
complete
Ownership
601) in duplicate and the Bank cashing the
coupons
will endorse both copies with a Cer¬
tificate relative to the deduction and payment
of the tax and return one Certificate to the
Shareholder. If forms No. 601 are not available
at
local
United
States
banks,
they can be
secured
from
the
Company's
office or The
Royal Bank of Canada, Toronto.
regulations affecting
non-residents of Canada may
Canadian
dollar
dividend Into
or such other foreign
permitted by the general
this
Canadian
States
United
.
currency
currencies
as
are
regulations of the Canadian Foreign Exchange
Control Board at the official Canadian Foreigri
MFG. CO.
COMMON
non-resident shareholders.
Certificates
(Form No. 600) must
all dividend coupons presented for
Subject
to
aliens,
^
dividend of forty cents
($.40) per share on the issued and out¬
standing common stock, without par value
of this company, has been declared, pay¬
able June 30,
1948, to stockholders of
record at the close of business June 7,1948.
Exchange control rates prevailing on the date
of presentation.
Such conversion can be ef¬
fected
only
through
an
Authorized^ Dealer,
a
Canadian
branch
of any_Canadian
•chartered
bank.
The Agency of The Royal
Bank of Canada, 68 William Street, New York
City, is prepared to accept dividend cheques
or coupons for collection through an Authorized
i.e.,
Dealer
eign
and
conversion
into any
permitted for¬
currency.
Secretary Will
on
request and when
available forward to the holder of any Bearer
Share Warrant of the Company a copy Of the
The
Company
PREFERRED
A
DIVIDEND NO. 7
dividend of eighty-one and
($.81^4) PC share on
the 3%%
Cumulative Convertible Pre¬
ferred Stock, $100 par value of this com¬
pany has been declared, payable June 5,
1948, to stockholders of record at the close
quarterly
one-quarter
cents
Of business May
21, 1948.
Company's
annual
HAVE
56
CHURCH
TALON
,
COLIN D.
w. e. hawkinson
Secretary
Treasurer
STREET.
ATTACHED
WARRANTS.
.;
May 6, 1948
the fiscal year,
YET
AVAILABI^ IN 1943
OO^IA'mjY inf
Checks will be mailed.
'
report for
WARRANT HOLJOTRS WTIO
OBTAINED COUPONS NUMBERS
61-80
WHICH
WERE
ARE URGED TO DO SO
SENDING
TO THE
SECRETARY'S
BEARER
NOT
THE
Transfer books will not be closed.
meeting.
JOSEPH M. O'MAHONEY, Secretary.
Royal
of
imposed
Albany, N. Y., April 17, 1948.
I
negotiable
The
14th
the
on
17th
Share
other
Canada
man
.
of
shareholders
books
and
Bearer
The
stenography,
1948, at 12 o'clock Noon,
Stockholders of record at 3 o'clock P. M., on
April 23, 1948, will be entitled to vote at the
to
business
transfer
15th,
convert
meeting, will be held at the principal office of
the Company, Room 20, Union Depot, in the
City of Albany, N. Y., on Wednesday, May 26,
also
are
branch
Canada.)
any
in
;
Branch,
Canada.
record at
day of May,
1948,
and
whose shares
are
represented
by
Registered Certificates of the 1929 issue, will
be made by cheque mailed from the offices of
the Company on the 31st day
of May, 1948.,
of
enemy
The Annual Meeting of the Stockholders of
The New York Central Railroad
Company, for
the election of Directors and of three
Inspectors
of Election and the transaction of such other
business as may be lawfully brought before the
OF CANADA
Streets
1,
coupons
at
Canada
the close
TVVVVVVfVVVVVI
Railroad
BANK
Church
Toronto
into
AVAILABLE
Central
ROYAL
and
during that period.
RICHARD ROLLINS
MEETING NOTICE
THE
at:
King
no
May 3,1948.
experienced bookkeeping,
presently employed in¬
vestment securities house, seeks new
connection.
Box K 56, Commercial &
Financial Chronicle, 25 Park Place,
New York 8, N. Y.
AND
hereby
Common Stock
regular quarterly dividend of 40per
mon
is
THE
Atlas Corporation
herebv
1, Ontario
SHAREHOLDERS
given that a dividend of
25 cents per snare in Canadian Currency has
been declared and that the same will be pay¬
able on or after the 1st day of June,
1948,
in respect of the shares specified in any Bearer
Share Warrants of the Company of the 1929
issue upon presentation and delivery of ..coupons
r
is
by
Company.
HOLDERS OF SHARE WARRANTS
NOTICE
Notice
be
not
mailed
Imperial Oil Limited
to
yield about 2.965%.
on
will
be
DILLARD, Secretary
Toronto
planned
At
needs trader-
will
Manhattan
102.019.
awarded
Co.
WANTED
the
ALLYN
3% and the successful group
a
of
Dated, May 6,1948.
102.3699
of
was
Checks
Bank
These
books
transfer
closed.
payment
The New York
to
twenty-five cent# (25tf)
a
share on the outstanding common
stock has been declared payable July
1, 1948, to holders of record at the
close of business June 21, 1948.
ranging from the top
coupon
COMMON
HELP
June 21,
1948.
.
Broadcasting
,
With Bond & Goodwin, Inc.
ord at the close of business
a dividend of
Co., will be brought to the public
on Friday.
v
funds for industry throughout the
country,"
ferred stock has beep declared for the
eleven prospective buyers for the
Smith
expansion
BOSTON, MASS.—C. Berkeley
life insurance
type
-
The
or so
The
19, Virginia
preferred dividend
common Dividend
Co.
general
Young
every section of the
country," the Institute com¬
COMPANY
keen
Utilities
May 12,1948.
into
practically
it exceeds $16 billion."
really
was
Texas
West
Sale of this issue would provide
the company with funds needed
at
only slightly
inore than $2 billion, while today
I
dollars
METALS
of
some
(For
SITUATION WANTED
life insurance
power
securities
was
of the
railroads,
issues.
task
business May 28, 1948.
securities carry the financing aid
showed- in¬
gate investment of life insurance
their
"These investments in corporate
.
REYNOLDS
as¬
Reynolds Metals Building
Competition
when
Sons Carpet Co., is regarded
definitely on schedule for next
week, probably Wednesday.
$1,371,000,000.
only 1%
or
new
:
increased by $538 million
participation
ing the capital needs of the
been
Richmond
&
all his profits.
at the end of 1947; stocks
in
Dividend
corporate purposes.
Meanwhile it is expected that an
offering of $10,000,000 of new 20year debentures of Bristol-Myers
treasurer,
H. E. DODGE,
contrary the lull
as
American
May 14, 1948.
on
.
A Seller's Market
future.
Alexander
of
mercial
f "The greater part " of the' life 000,000
the
recent issues.
Week's Prospects
ings increased slightly to $2,787,-
;
not
DIVIDEND NOTICES
issues
other
$4,860,000,000; railroad bond hold¬
'
:
Development
has
.
,
■
Recent
shareholders of record at the close of
business
the
working off the reipnants of
offering of 50,000 shares of
par value cumulative pre¬
ferred
and
were
confi¬
ready reception for these
Next
$100
lot
distributors
sist
^
observers
slated to follow in the
An
Quite to
the cal¬
ployees.
for
"Financing by the life insurance
try
much smaller
permitted,, under
/
1
a
issues.
new
j
taken
course,
several
a big
sec¬
730,000 shares
of common stock $5 par, of Halli¬
burton Oil Well Cementing Co.,
being sold by certain large stock¬
holders, of which 50,000 shares are
being offered
directly to em¬
greater.
preferred
nies, investing their policy reserve
funds, had $5 billion more in the
corporate, bonds and stocks of
and
third
even
case
to
came
ed to have been oversubscribed.
dent of
yield
per
the
on
rendered any easier by the ap¬
un¬
fra¬
and
422,467
Market
of industrial and mis¬
case
the
Their
are
ondary, involving
porate securities exceeds half of total new capital issues.
the
they
000 shares of $25 par preferred,
convertible series, of Southern
Life
for
car¬
to
prior
subscription
rights of stockholders. The 800,-
A
one dollar
($1.00)
share has been de¬
Capital Stock of this
Company, payable June 14,. 1948, to
mind to venture forth
a
when
Dividend of
clared
But these cagey operators are
still of
Smelting Co., Limited
A
(Canadian)
in that direction has served to
subject
cor-
and
they develop.
as
senior securities,
issues
week
current
volving
Huge Capital Source
Hudson Bay Mining
have their eyes open for op¬
ers
portunities
fore
tentatively for next week.
the
California
tal
high-grades,
suggesting that institutional buy¬
the
tional Gypsum Co. common, was
-always had this clear idea of the real needs of
Europe and the world.
of
to
distributing
such
this
large
endar
DIVIDEND NO. 34
in
rounded up the bids tendered for
Three
with this
mar¬
generally firmer
parent let-up in the flow of
bond offerings.
and
a
prevalent
now
ternities.
"Con¬
Institute of Life Insurance reports 1947 increased holdings
tone
NOTICES
DIVIDEND
are
palatable with the
more
derwriting
more
agree
been
industrial operations and
market
ourselves unable to
new
He was formerly with Rus¬
sell, Berg & Co.
Spots
spots.
again,
definitely
ciated with Colvin, Mendenhall &
Co.
*
have
several times only
aside
BEVERLY HILLS, CALIF.
Harry K. Rutherford is how asso¬
maturity fit into their portfolio
it will be understood that
eminent Britisher at various points, but we can only
wish more men and women in many more lands had
'
into
ried out via the negotiated
route,
instead of by competitive bidding,
•
Sees Life Insurance Funds
and
Since, in most instances, these
of
find
We
on
*
and currently, at any rate, out¬
have invited into
bear the scars."—Winston Churchill to the
and
hiberna¬
projects,
which
over
number
the German
of Europe."
sharply,
temporarily, away
swung
financing
coming
Winston Churchill
problem is to restore the
Germany and revive the ancient
fame of the German race without thereby exposing
their neighbors and ourselves to any rebuilding or
reassertion of that military power of which we still
gress
market
issue business
securities
to be set
we
of
shortened, it Is
likely candidate
Monday.
a
only
warmed
are
life
have
only
Stock
;
us
economic
seasoned
new
un¬
equities.
"Europe requires all that
Frenchmen, all that Germans
-
if
even
some
give.
the
to
appears
life.;
our
in
the tide in the
of us can
I therefore welcome here
be
ket have noted
our¬
and all that everyone
period
here
Filling in the
Spurred by the encouraging
With Colvin,
Mendenhall Co.
500,000
stock,
common
considered
;
of
Those who follow the listed
things
brought into our daily
be
can
s
ort
the sublime with its marvelous
f
the
for market
transmutation of material
,
of
tion
issue
an
should
.
Securi¬
Exchange Commission
cover
47
56
By Order
TO THEIR SHARE.
,
..
_
of tie Board, .1
CRICHTON, General
Church : Street!,M
Toronto
May
6,
I,
")
Ontario,:
1948.
y
,«■
<
Vv
Secretary,
&
'/a J.
COMMERCIAL
THE
(2128)
48
FINANCIAL CHRONICLE
&
Thursday, May 13, 1948
the armed services
BUSINESS BUZZ
them to stockpile tin, copper, zinc,
lead or any other material that
II. V.
might be in short supply for the
domestic economy.
The services
"V^hf
A
BeK!i)^-the*Scm Interpretations
„
are directed to
try to avoid
buying items short, in supply in
domesticeconomy, but'may
buy them even so. They want
Congress to take the onus for or¬
dering therp to stockpile, should
stockpiling aggravate
shortages
now
f
xjLIvU ,A "lw
fromthe Nation'sCapitol
trying to
are
sell the Congress on enacting af¬
firmative
legislation v directing
the
if
If, you can spare a little of your attention from strikes or rumors
strikes in - railroads, automobiles, coal, and such like, the ball on
which to keep your eye is none other than one Senator Joseph H.
For Senator, Ball's Joint Committee on Labor-
■
>'■
,r"
and create the
y;
and means of amending
the Taft-
#
stage for mature consideration in
It is
now
1949 of amendments to the Taft-
the
Hartley act.
«
*
..
being predicted that
ment will be
'■
International
Wheat Agree¬
approved by the Sen¬
provides that
Canada, the U. S., and Australia
shall agree over a 5-year period
to
sell a specified number of
Hartley labor act so that it will
accomplish some of the objectives
Congress set out to achieve. This
jrroup is commonly known as the
"watchdog committee"
for the
Taft-Hartley act, and the Minne¬
the Taft-Hartley act, or of the
bushels of wheat within
sacred right of organized
of
sota Senator Is its chairman.
either to break its
particular Hie committee
no sounding board for
In
will
ate. This agreement
be
orations In favor of
of
demnation
or
union
in
con¬
labor,
own
or
labor
neck
and
that
Is
nothing
that
than a national
count
or
country's backbone. Testi¬
will be limited to tech¬
nical
application
to specific
problems of amendment. In par¬
ticular testimony must bear on
amendments relating to more
mony
on,
less
catastrophe will
Bring forth from this session of
Congress a program of legisla¬
tion designed to force labor to
keep from running wild with
the nation's economy. The Con- ;
labor act
bor
action..
agreement.
subject
stood.
From the time he
was
.
Harold Stassen
on
almost
violent
deal, there is
rectify errors in the act or its in¬
terpretation,. they would have
t>een
confronted with a demand
to extend its scope and operation.
So the tentative plan was to just
boost the minimum and let it go
at that.
Now
that,
too,
has
been
dropped, and it is improbable
there
will
be
minimum
being
a
-
cautious
a
New Dealer,
one. From being
he has developed
ize
"He
wants
newspaper
.Cynics, who
merous
are
the most
legislation before adjournment.
Shortness of time has killed this
proposal. The result, however*
population, seldom admit that
changing events and sincere,
deep study can change men's
may be of some significance. It
views,
the
Congress
a
may
be able to write
pretty fair wage-hour law.
•
dealing
with
the
Important.
There is no notion
Whatever of doing anything in the
way of getting a bill passed this
,
year, barring contingencies. They
are
designed specifically to set the
But those who know
him Well, and who have heard
him discuss myriads of tech¬
de¬
veloping menace of big strikes,
the Ball committee hearings are
represented by Mr, Ball.
Is just about the No. 1
delegates.
nical details about labor legisla-
^ tion, will
that he is
swear,
no,
tool of employers and would not'
back legislation designed to put
the unions out of business. They
say
he just wants to make them
like
behave,
the
rest
of
are
talking
a
grain
year
of 300 million bushels of all
grains.
This compares with the
operation
on a
state-wide
tion
so
year's
scale,
or
on
even
amendment.
a
there
as
were
its
to
on.
Senate; wrote
the
"70
.own
-v;;,
contracts
temporary
of
$100,000
be renegotiated, but
may
Texas
in¬
no
U. S.
subcon¬
tion
contracts renegotiated. Thus the
is
anticipated without
a
\ $
There
subject
of
contractor
business
or
can
have
his
effect is to lower the limit
may
in his discretion
exempt, under the Seriate amend¬
ment, any particular Contract or
tration is
class
-
of
tiation;
contracts
_V:;V1
from
renego¬
M. S WlEN & Co.
^w
ESTABLISHED 1919
The
Senate, however, did revide the fairly well accepted pro¬
cedures and standards of the war¬
Member$ N.
40
/
7. Security Dealer $ Asfn
Exchange PL, N. Y. 5
HA. 2-8780
Teletype N. Y. 1-1397
time act, as they were evolved,
erate
them, the government ab¬
sorbing a large part of the costs in
Apparently the pitch oil rene¬
gotiation is that its provisions will
whereby
be revived severally on new arm¬
these' tankers could be swiped by
aments procurement legislation,
the Navy; the minute there was
as in the instant case of the air¬
an
emergency.
Congress
will
craft procurement bill.
There is
howl
"
contract
a
Soya Corp.
Defense
The Truman Adminis¬
for *
Tucker Corp.
Furthermore, the Secretary of
the curtain goes down on the 80th
return
Tidelands Oil
on
renegotiation from the War¬
time $500,000 to $100,000.
\V\
probably will be another
to scream about before
Congress.
war
*
Dorset Fabrics
tractor with
laws,
hitch.
Gas Transmission
less than $100,000
dividual
anti-trust
:
.
Finishing
torney General of this stand¬
by plan, and hence its exemp¬
the
577
Memphis Natural Gas
more
or
shortages. Approval by the At¬
from
of
million bushels.
different
a
,
Under the Senate amendment
Community basis in such locali¬
ties
volume
group" aircraft authorization, but
can be put into
national scale, a
geared that it
revival
or
pective shortage of gasoline
fuel oil. The plan will be
Trading Markets;
.
villain to the full-time walking
Even though shortness of time
precludes
though that usually
with the studious, serious
type
Ball
mean
off
even
goes
that next year, then
election
griddle, the
can
some
current
cost, and-oil companies Would op¬
a
debentures
stop up and see his
evening!",.
inhabitants of the local
of
lation.
wage
to
nu¬
chapter
a
me
getting ready to recom¬
mend to Congress the approval of
a program for construction of 100
new, big, fast oil tankers.
They
would cost $8 million each. The
government would subsidize the
union; Now he is the outstanding
advocate Of reform in labor legis¬
the
Ralston Steel Car
,
over this because it has been
critical
of
surplus
built tankers at
a
sale; of Warfire sale price.
..(
,
little
disposition to tackle the
writing of a general new law ap¬
plicable to all "war" contracts
.from here on.v
Take
a
look at the Senate
ver¬
renegotiation; act
larly tacked
gotiation amendment will
big Air Armada bill.
pre¬
> ;
,
LERNER & CO.
Investment Securities
10 Post Office
The Senate simi¬
reported
on
,
Square, Boston 9, Mass.
Telephone Hubbard 1990
It is
contract renegotia¬
a
Spokane Portland Cement
vail oyer, the House amendment z
in the final enactment ;of the <
as
it existed in 1945, and tacked it on
to the "70 group" aircraft au¬
thorization bill.
Riverside Cement A & B
Belief is that the Seriate rene¬
sion of the contract-renegotiation
act.
The House simply revived
the contract
Oregon Portknd Cement
/
Teletype BS 69
the Hill that
population. And he is one GOP
Senator
BAR TELEVISION
who
*
from
those, old standbys
on
"He's
will go
out
the
to
a
new
dustry.
lunch"
dustry will
etc.,
by the hoard!
Herbert H. Blizzard & Co.
ilBSouthBrWdSt, Philadelphia 9, Pa.
,y^6$mt-'Mri^'iifoatgomery^ Scott & Co.
of
notion
*
*
.
.
.
■
HAnover 2-0050
"
-
matter
of days with a program of volun¬
tary allocations of supplies under
the • "Industry Cooperation Act"
administered by the Department
up
in
Under
,
tors
can
gate
so
v„
.
pool, supplies to miti¬
fair as possible any pros- '
r
V-
All Issues
C-ARL MARKS &
:
-
/
Empire Steel Corp*
Susquehanna Mills
.
HO: INC.
ill, Thompson & Con ine.
FOREIGN SECURITIES
SPECIALISTS
this
voluntary pro¬
gram, producers and distribu¬
;
'
a
of Commerce,
Firm Trading Markets
FOREIGN SECURITIES
A committee of that in¬
come
Teletype—NY 1-971
.;
..
recruit, the petroleum in¬
other wire,"
PhHaAeiphi*
no
Senator Taft's voluntary mate¬
rials allocation law will soon have
TRADING ROOMS!
"He's
has
getting nominated President.
,,
export goal for the coming crop
in
into something of a more moder¬
ate liberal. He once helped organ¬
to force
v
ECA officials
direction.
From being an ardent
internationalist, he has turned to
no power
nations to buy as they agreed,
14,
changes
Flaw in the agreement is that
Britain, France and the other 28
1940, until the present, he has had
some
con¬
tina start chipping away at the
.
have run into a dilemma. That di¬
lemma was that for every plan to
device for
side. Should Russia and Argen¬
ap¬
Oct.
a
two big producers are still out¬
pointed a Senator by former Gov¬
ernor
grain
knows that it Is
the wheat business,
of industry-wide
to union welfare
i
Lad tried to fix up some of the
nonsensical interpretations of the
law, particularly its operation to
protect in some cases wages of
snore than $2 per hour, they would
opposition
private
tinued government control over
There is
Now
which
likely to be
actually no need for
; there is not time.
Some of the ■ orations against union labor. John
Lewis has proved that the Tafti hoys on vthe Hill may scream.
; But a few days after the worst
Hartley act has not manacled
atrike is over, there will be
unions for the: mere sake, of the
every inclination to forget about
public interest. Each new strike
it and get on with this business
or threat of strike, even when fi¬
of getting elected.
nally they are avoided, is proving,
so they believe on Capitol Hill,
that the Taft-Hartley act has hot
So short is the time that the
achieved its goal of protecting the
leaders have pretty well agreed
public against strikes which offer
now to junk for 1948 their idea
the prospect of near, national dis¬
of boosting minimum wages to
aster.
:
•
60 or 65 cents per hour,
They
had recognized for some time, the
Joe Ball, who is running this
practical difficulty of doing a good
job on the wage-hour law. If they show, is a character little under¬
legislative
some
the
from
trade,
the
funds, and finally to the subject
of agreements forced by unions
upon employers either to vio¬
late or evade the Taft-Hartley
law's objectives.
:
Only
comes
by the National La¬
Board, to the
agreements,
•
.
Relations
the
;
range
Farm organizations favor the
question of the union shop, to
grressional majority is naturally
hesitant to plough new ground
in the way of anti-labor legis¬
lation in this, an election year.
.Nevertheless, if the threatened
; -strike wave had developed ear1 lier, there was always the possi¬
bility that it would have led to
administration of
effective
a
prices.
The 30 importing na¬
tions/led by England, will agree
to
buy this wheat within this
range of prices,
the
One thing you can
■
con-
trols.
Management Relations will begin fMay 24 to hold some down-to¬
-earth technical hearings on ways
possibility of
,
Ball of Minnesota.
50 Broad Street
.
Markets and Situations for Dealers
-
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. inc. CHICAGO
^
120 Broadway,
Tet REctor 2-2020
N<bw .York 5..
rf Tele. NY i-2660
@FedFRASER