The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MAY 2 1
my
■M
bus. adm.
'
LIBRARY
ESTABLISHED 1S39
"ft e
Financial
Re*. U. S. Pat. Office
Volume
167
The
Number 4700
New
The Post-War War
Foreign
SI
'
v
Chairman, Board of Directors,
National Bank
Prominent banker
^ #
Recovery Act and
ropean
for its
chances
says
depend
success
|
;
Cornell Professor
Italy and contends financial aid
cannot restore-
distressed economies.; Predicts bigger inflation and more taxation
with Russia's opposition growing stronger. ; "
Says we are still
I
adoption of monetary and
upon
communists in
over
.
appeasing Russia.
■
President, Economists' National
,
4
;v;
Passed by overwhelming major¬
ities in both Houses of Congress
and
;
.
editorial clarity of that dignified newspaper-in
formulating the pre¬
signed by President Truman
the
on
r
,
3rd
Vv
of
:
siorf
Assistance Act
' 1
authorizes
foreign
(and its
is most
own)
a
a
aid
The
confusion
ing 12 months.
recovery
this
signed
control
te
the
covery v-
a
horse.
Pro-
gram;i
has been
before.
$2 7 5
In
reality,
there
cannot
n
the
inary
ndencies,
throwing
the
Where Are We Headed?
/Jn
thoughtful analysis of the current situation under
heading "Are We Becoming a 'Laboristic' State?" Pro¬
in
a
fessor Slichter of
of last
2®
•
•
.
.
say
J
with this
man¬
The
two
problem s,
debt
para-
manage¬
ment
'
■
,
crises
debt
agement.
Harvard, writing in the New York "Times"
Sunday, begins what he has to
§raPh:
upon
Treasury
sudden
can
put
re¬
r
of
without
is:
ever
the
with
spect | to
the
No bigger cart
European Re¬
be handled
can
f1atio
,\
as¬
to
interwoven that neither
$>and
precede peace.
amount, $5,300
is
of
sence
ensu¬
million
public debt and our bank credit
right. We must divorce
them to such an extent that we can guide our money market policy
with respect to the needs of commerce, industry and agriculture,
are so
EDITORIAL
to assume that
Of
At the present time our Federal
quintes¬
for
the
Policy
est
d mir able,
: of
$6,098 million
program
:
Monetary
on
rates and a refunding of public debt at rates attractive to
investors. Says banks could be protected from loss on bond-,
holdings by an exchange proposition and increased cost on public
)
•;
vailing confu-<£
April, the Foreign
:
Committee
Asserting we must divorce Federal public debt from bank credit,
Dr. Anderson proposes abandonment of Treasury controls on inter-
f.
-
Instead of pursuing peace before recovery, American for¬
eign policy has been compelled to reverse the order and seek recov¬
ery before peace," quoting the New York "Times" of Dec. 22.
The
.
J/r'1
uj,
of California, Los Angeles
debt could be offset by less government spending.
reforms, also economic re¬
vival of Western Germany.
~\r'v*
of Banking, University
Consulting Economist, Capital Research Company, Los Angeles
;
fiscal
J.
Copy
By BENJAMIN M. ANDERSON*
Professor, University of Wisconsin
analyzes Eu¬
a
i: A Manageable Public Debt
Asserting there can be no recovery in Europe or Far East unless
peace is absolute, Dr. Palyi points to flight of capital and currency
depreciation as evidence of war scare. Decries importance of victory
By WINTHROP W. ALDRICH*
Chase
Price 30 Cents
• •
By MELCHIOR PALYI
Assistance Act
*
York, N. Y., Thursday, May 20, 1948
and
the
regulation
of
money
and
-Tew
major transformations in the American com¬
munity have occurred more rapidly than the rise of trade credit, are in¬
Ben]. M. Anderson
unions'
j s h ; military
t
during^ the last 15 years. The growth of unions timately tied
.'••Y-ViV the Far East
W. W. Aldrich
aid; $338 mil¬
together as a result of the incred¬
means far more than the substitution of. collective
until and unless peace is absolute.
bargain¬
lion
to
eco¬
ibly bad borrowing policy of the
For one thing, Marshall Plans and
ing for individual bargaining. It means that the United Treasury and the incredibly bad
nomic
aid for
China
and
$125
similar spending are doomed to be
States is gradually shifting from a capitalistic community money
million to military aid; and $60
market
policy
of
the
sheer waste because of the capi¬
to a laboristic one
that is, to a community in which em¬ Federal Reserve System in sup¬
tal: flight,
and
1 Section 111
capital
hiding
(c) (2) and Section 114
port 1 of
the
Treasury's policy.
<c). As yet funds have not been appro¬
caused in the recipient countries ployees rather than business men are the strongest single
Conspicuous in financing World
priated by Congress to implement Sec¬
by the overhanging threat of for¬ influence. A community in which employees are the prin¬
tion
114
(c).
eign invasion, bombing, revolu¬ cipal influence will have its own
y
(Continued on page 35)
ways of looking at things,
(Continued on page 54)
tion, confiscatory taxation, expro¬ its own scale of
values, its own ideas on public policies, and,
priation, regimentation, and what
"Reprinted
with
permission
to some extent, its own jurisprudence.
'j *An address by Mr. Aldrich be¬
It will also have
fore a luncheon meeting of the have you. The Number One force
from
"The Tax Review," ' May,
that drives money into voluntary new and distinctive problems and its own ways of dealing
Cleveland Chamber of Commerce
1948, published by the Tax Foun¬
and Cleveland World Trade As¬ exile is the fear of war arid/or with them.
Hence, the rise of trade unions means that the dation, New York City.
million
Greek
to
Turk-
-
be recovery
Dr.
Melchior
Palyi
Europe
in
in
or
—
j,
i
:
sociation,
19, 1948.
Cleveland,
Ohio,
1
May
social upheaval, both scares ema¬
nating from the same source. Of
course, there are more factors at
play;
the
but
pending
United States stands
its economic and
These
conflict
with Russia alone would suffice.
-
(Continued
on page
Havana
on
the threshold of
strong assertions.
are
major changes in
political institutions."
•"
(Continued
They
on page
are
thought-pro-
42)
State and
38)
'
FRANKLIN CUSTODIAN
Lithographing Co.
STATE
and
Municipal
MUNICIPAL
Bonds
FUNDS,INC.
-i* —
{■ y® v®"
BONDS
A Mutual Fund
**
\
•
•a*"*'' /W—w -**. ® :<r-:
■
COMMON STOCK SERIES
PREFERRED STOCK SERIES
Hirsch & Co.
Membert New
•
.
York
Stock
25 Broad
.
; •
f
.
St„ New York 4, N. Y.
BAnorer 2-0000
UTILITIES SERIES
Exchange
and other Exchangee
.
Bond Department
BOND SERIES
THE NATIONAL CITY BANK HART SMITH
t
w
INCOME (BALANCE FUND) SERIES
Prospectus
Teletype NY 1-210
on
''
OF NEW YORK
request *
52
New
WILLIAM ST., N. Y. ®
::
Chicago
Cleveland
;l.... v Genovn
J•
-
London
</
(Representatire)
:/; SHEPARD NILES
.
FRANKLIN
164
DISTRIBUTORS, InC.
Wall Street, New York 5
Bond
:
AMERICAN
J^-V- i
.
memorandum
Underwriters and
Distributors of
v'*X.'7;
S&V.:
Gordon Graves & Co.
INSTITUTIONAL
30 Broad
Tel.
OF
Toronto
Copy
'
'
Cincinnati
upon
NEW YORK
®' & Light Co.
BONDS & STOCKS
Analysis upon request
request
-)
J
Dohwiox Securities
SUTR0 BROS. & CO.
.
\
Est.
,
1899
CLEVELAND
New York
THE CITY OF
Wisconsin Power
CANADIAN
the
Municipal
(Incorporated)
Established
Street, New York 4, N. Y.
Tele. NY 1-809
Slid
OTIS & CO.
!
INVESTMENTS
WHitebaU 3-2840
: Montreal
rj®
LIMITED
Corporate Securities
TRADING MARKETS
.
on
IMPERIAL OIL
If ||
it*'.
••
New York
NATIONAL BANK
BAnorer 2-MBO
Bell Teletype NY 1-395
We have prepared a
.
BROADCASTING CO.
'
THE CHASE
g
CRANE & HOIST
-
Dept.Teletype: NY 1*708
& CO.
.Members
.•'"
York Security Dealers Assn.
Chicago •
Denver
Columbus Toledo Buffalo
1696
Members New York Stock Exchange
120
ira haupt&co.
Grporatioti
v.
40
and
III
Exchange Place, New York 5,N.Y.
Broadway, New York
,
Telephone REctor 2-7340
other Principal
Broadway,
WOrth 4-6000
Bell System
Teletype NY 1-702-3
Exchange
Exchanges
Members New York Stock
-
Boston
''
»
"NrY.r'i%*
Teletype NY 1-2766 ^
Telephone: Enterprise
1820®.
2
COMMERCIAL
THE
(2186)
&
FINANCIAL
CHRONICLE
•
Thursday, May 20, 1948
.
gwu
What to Do About
Marion Power Shovel
and
issue
supply and demand prices are available only when a commodity functions as
-
New York 5
Broadway,
—■,.
it
for
South Carolina
goods and
problem of
financing
Electric & Gas
ryover
from the previous year, is
coming to, market.
A million
Prospectus
farmers have wheat
under consideration
1
e v e
^cpOKNEtL&ro.
Members
New York Stock Exchange
;
,
.
New York Curb Exchange
NEW YORK 5
2-781S
REctor
Mackinnie Oil & Drilling
Tide Water Power
Citizens Utilities
NEW YORK 5
HAnover 2-9470
best
Prospectus
i
building
could with what
we
.»
the
our
cept
ACTIVE MARKETS
first
goals
we
as
Reserve
Act
assumption
Creator
never
will
have out¬
lined/with currency anchored to
as
of
metal
so
to
as
the
represent
as
definitely
do warehouse certificates—the
supply of a commodity—the pur¬
chasing power of money is no less
definitely revised and reappraised
be
endowed
transaction
from
or
transaction
to
than is the
price of what is bought
with or sold for money.
Since
the money unit functions in many
rectly appraise the supply and de¬
mand relationship between two
more transactions than any com¬
commodities, much less that rela¬
modity, not functioning as money,
tionship between all commodities.
the value of money will tend to
Nevertheless, we know that sup¬
be more stable than the value of
ply and demand have been the
other commodities.
Except for
major factor in the control of in¬
dustry for a long time. If super¬ added stability and uses thus ac¬
men did not do the
job, how was quired money's purchasing power,
it done?
The answer is, it was
and rental value, were no' less
the system. The following illus¬
tration will show, crudely to be supply and demand generated in
free markets, than were the prices
sure, but correctly, the setup that
i
===
.
So. Production
Great Am. Indu$,
effected
Soya Corp.
the
result,
attained.
within a little
was
tury,
made
insofar
Such
more
over
a
as
of
it
operations,
than
few
a
cen¬
the
because
of
and
DIgby 4-2370
purchasing
Generation, in Terms of
a
is
each
The Parker
will
of
power
exchanged
mand
the
two commodities, gold and wheat.
and
for,
were
transaction;
move
up
or
supply and de¬
were
generated and
Like
take, for illustration,
same
being free to
consistent
Commodity
We
Members New York Stock
25 Broad
Exchange
St., New York 4, N. Y.
HAnover 2-0700
NY i-1557
Direct wires to
our
branch offices
Joseph McManus & Co.
pointed
we; have
able
were
equally
dependable.
whatever
mankind
For
New York Curb
out
Exchange
Chicago Stock Exchange
if
?
•
.(
;
prices generated in free markets
V A':
~V.' •' •A
•
/
V-
-•*;
:
\
-
V
' '
Tele. NY 1-1610
DIgby 4-3122
who
the
—
unable
are
to
point, and those who want
Empire State Oil
further proof, we will review op¬
erations prior to 1914 when we
abandoned 100% gold coverage in
favor of
currency
Utah Southern Oil
that could be
the' discretion of a
central
brain;
Our
Building
Trades Wage Rate Chart shows
that; during 50 years
(1867 to
1917), union labor wage rates ad¬
expanded at
Equity Oil
,
vanced about 50% on the 1907 in¬
dex; nearly all of which advance
occurred
the period..
1930,
On the other hand, it
.
that,
shows
wage
between
rates
1917
about 130% to 330% of the
index
in
this,
we
plain
13
will
problem back
Civil
War
the
Cannon Mills Co.
ex¬
into
go
the
far
as
1907
on
"B" Stock
the
as
period.
the
We Maintain Active Markets in U. S. FUNDS for
pre¬
/'Analysis
Civil
War
on
request yi-;
(1860-
J865), -
our., paper
fct
time, to ,40c, in gold. After
one
dollar: declined
Bought—Sold—Quoted'
gold
value.
The
Congress
finally concluded that the
specie
resume
payments
way
to
was
H. Hentz & Co.
to
Members
years
so
it set
ahead,
would
a
after
be
date,
.
a
few
which
redeemable
N. Y.
all
in
gold. - Long before the redemp¬
tion date, all of our money was as
.
,fl
.
New Yoris Stock Exchange
and other leading
/:
resume;
Company
in
is
importantly
program.
position
from
to
expanded
benefit
aircraft
Abitibi
Pow.
i'',
•
&
Paper
Cotton
NEW
CHICAGO
"M
-
exchanges
YORK
DETROIT
4,
Book
value
(6-3-47)
N.
Current
market
du Pont,
31 Milk
t
GENEVA, SWITZERLAND
,
Noranda
*
N. Y. Telephone
*■■««.>»iw.w»w''fi—w
<
*
:
CAnal .6-8100
.
•
tunm
' •:
...
-i
**
«-
Members N. Y, Stock Exchange and Other Principal
115 BROADWAY
Teletype BS 424
,
*
South African Mining Shares
British Securities Department
Goodbody & Co.
Homsey Co.
St., Boston 9, MasS..
HAncock 6-8200
|
United Kingdom 4 % '90
7% @8%
Telephone BArclay 7-0100
Exchanges f \
NEW YORK 6, N.Y.
Teletype NY 1-672
;
Y.
$19,44
(6-30-47) $9.60
<■
PITTSBURGH
Canadian Securities Department
Net current assets
f <'
Exchange Bldg.
Brown Co.
^
;
Established- 1856
couplings, fittings and valves,
Powell River Co., Ltd.
Y.
Bell Tele. NY 1-2830 #
and
To
years.
wage
During
67 Wall Street, New York 5, N.
Tel. HAnover 2-9335
advanced from
index—an advance of 200%
1907
James M. Toolan & Co.
during the last half of
Common Stock
cision
]'■'
V' £f:
•:'V
39 Broadway, New York 6
"
,
those
money
does,
i'
Exchange
by^a too paternalistic; gov¬
ernment.
see
Members
'
New York Slock
Appliance Company
Manufacturing complete line of
X
■
New Orleans, La.-Birmingham, Ala.
'
100c
it
down, both
Price
to
34)
Steiner, Rouse & Co.
the war, it was slow to recover its
the world.
-
It followed that since
generated in the
aggressive industrial nation in
page
B ought—S old—Q uoted
—
the
Standard"
what
farmers, into the most energetic
SIEGEL & CO.
Teletype NY 1-1942
un¬
monetary unit, and the price of
immigrants, mostly laborers and
89 Broadway, N. Y. 6
What
I
goods ^and services exchanged
for money.
million
on
a gov¬
agency,
or
both sides
on
Gold,
So-Called "Gold Coin
are
have been re¬
by the year's
may
modified
or
operations such
group, or nation of
with what it takes to cor¬
man,
men,
Ass'n
Teletype—NY 1 -376-377-378
as
vised
free markets prior
Federal
the
any
Members
Dealers
generated
supply of such metal,
Our
Troster,Curries Summers
Security
thus
of
that
York
Prices
a
gold, in
de¬
world—
Louisiana Securities
action,
had.
we
the
„
revised from transaction to trans¬
December, 1913.
New
-
those
.
explain the price building process,
as prices were generated, in terms
to
Bought—Sold—Quoted
trade.
traders
ward.
doubt that the show¬
no
most
Alabama &
tomers'
trades
in
century
a
the
authority,
(Continued
satisfy his prospective cus¬ ^operations. >
/'
needs, he will raise the
Fractional Gold Coverage
ante.
The price trend will be up¬
that objective,
tail later. In the meantime, we will
request
on
of
' f i v e
y
a
ing reflects real conditions. We
will go into the implications of developments.
the data and chart in greater de¬ X Now note this: In free market
Broadcasting Co.
'
in the
on
We have
;
the
of
of
from hour to hour, and should convince those who appre¬
to day, throughout the ciate what it is all' about thai; a£
year until at the end of the year, supply and demand, price struc¬
data of the tabulation are from
the prices, as well as the carry¬ ture for goods and services, can
the Bureau of Labor Statistics.
over for
seed and contingencies, never be erected by pitching it up
However, prior to 1907, the data land at the exact
spot they were to the public to lift prices out of
were incomplete and we did the
aiming at from the beginning, ex¬ a plethora of funds, made avail¬
1923
American
are anx¬
verdict
since 1867, these being typical of'
from day
union labor trades in general. The
Members New York Curb Exchange
64 WALL ST.
they
ious to turn into cash. Thousands
back of it to show what has been
Frank C. Masterson & Co.
Teletype NY 1-1140
unanimous
,
y,
we
we have prepared the accompany¬
ing chart and arranged the data
|
going
Established
wheat
bushel
a
to
In pursuance of
.
Tudor City Units
:f
ing
be
been
the
most, highly
in, and ■ processors of, having
times as much wheat, are anxious to make ; ar¬ prized metal in the world for at
goods and rangements for the operation of least 6,000 years, as well as on
vices, it their plants, and to acquire what¬ account of its characteristics, is
E. S. Pillsbury
kes five ever it takes to take care of the of
exceptionally
stable
value.
times as much wants of their clientele. As trade Opinions to the contrary are in¬
gets under way, if there is a variably based on irrelevant in¬
capital to finance a'proj ect.
cidents.
A
bag of gold is, of
A 38% corporation income tax farmer, or agent, who is unable to
is certainly a factor, but a 500% dispose of the wheat he is trying course, worthless ; to a drowning
to market, at the prevailing price, ^manU Allegedfailure of gold to
payroll is a much larger factor
its value under certain
in financing, most any project one the price trend is downward. If retain
conditions are invariably based on
can think of.
It is therefore, to there is a mill owner, operator
some
such consideration, having
or agent, who is unable to con¬
sharply advancing payrolls that
tract for the wheat he must have no real
bearing on free market
we are directing this study.
p
Tel.
o p
if
since
120 BROADWAY,
our
o n o m
Request
on
-
dertaking to provide the particu¬
lar
kinds of
goods or services
Bought—Sold—Quoted
the
On
unit will
the
in
factors
5)4% Pfd.
,
half
was
....
ciently interested to back their
judgment with their money. They
are no
one's estimates, but are a
gold).
are
major
also
for
It
money
ernment
is worth in terms of the other.
side, the
(60 pounds
of wheat).
We will assume that
a wheat crop inclusive of the car¬
services
pasfceu
;
"Act," which contemplated
Our
one
ueue
passed the Federal Reserve
gress
unit of value. 'M\
a
uie
until, in December, 1913, the Con¬
T
"■
•'!-v
—■,., '
.■.
problem is to determine what are not perfect. However, being
brought up-to-date from transac¬
The trading unit on the gold side tion to transaction, they reflect
will be the dollar (13.7 grs. of fine the verdict of all parties suffi¬
merit in such
Teletype NY 1-683
7-56GO
of value,
Federal Reserve System in 1914. Advocates currency with 100% gold coverage
of government bonds with sufficient "sweetness" to reduce volume of currency. Con-
Many complaints are being registered against our system of imposing taxes, on the
theory that such taxes cause a shortage of risk capital which, in turn, is considered to be
a menace to the perpetuation of free enterprise, and our way of life. " Regardless of the
Corporation
120
new
a
tends
New York Hanseatic
pendable
which began with the
BOUGHT—SOLD—QUOTED
cuiu
gold
as
thereafter.
'
manufacturer lays rising prices to abandonment of use of gold as measure
Mid-Western
Mountain States Power
guiu,
Our currency continued to be as
good
,
President, Century Electric Co;, St. Louis, Mo.
Federal Water & Gas
BArclay
Advancing Prices!
By E. S. PILLSBURY
7% Preferred
<*o
without "incident. >
WHITEHALL 3-9015
Volume
167
Number 4700
THE
COMMERCIAL
I N D E X
Articles, and
News
p.v
,
Page
Manageable Public Debt^-Benjamin M* Anderson
-Cover•
The Post-War War—Melchior
Palyi__
.Cover
The Foreign Assistance
Act—Winthrop W. Aldrich______Cover
...
Are Stocks
Wasserman__^,;.___
*
Undervalued?—-Franklin Escherl
Economic Stabilization in
—Edwin Gil N'durse;J-
6
,
and Accomplishments, of
Republican Party
—Rep. Joseph W. Martin, Jr.,
tag exempt non-negotiable bonds.
11
12
13
a Time of
Crisis—George L. Bell__^
The Outlook for Business and Government
Bonds
—Marcus Nadler
vvfcs.
unions and
ly
/
of
iracie
ox
and
they are
determinant
the
last
earnings
more
workers
Congress Should Reject ITO Charter—Elvin H. Killheffer___ 19
What's Ahead for Business?—Dexter M. Keezer____'
L
20.
Profits Have a Purpose—Rufus S. Tucker21
A Business Man's Platform—Thomas J.
Bannan___
26
a
vear,
Current
on
17
^____
of
prices
rather
t h,a
being
Investment
Policy—Raymond Rodgers
27
High Cost of Government Produces the High Cost of
Living <
: —dEarl O.
Shreve___-__-____i^____^-----^__-_'-^_™» 28
i
n
18
n
d
re¬
marks :£
.
twp and
Panama Bonds
on
We
See
It
Bank and; Insurance
Investment
20
24
__
Bargeron
7
Indications of Business Activity
Mutual Funds
18
News About Banks and Bankers
Observations—A; Wilfred
Our Reporter's
Report.
Our Reporter on
Prospective Security Offerings.—
Public Utility Securities
Railroad
be in the
may
59
.
their
demand
times
the
58
—
opposite
rise in
16
Securities Now in Registration...
The State ofTrade and Industry-.
56
Whyte Says)
Washington and You...
a
;
traction
same
selves
of
At
-
.4...;
Published
The
Twice
Dominion
Weekly
as
when
Canada,
$38.00
per
Other Countries, $42.00 per year, '
and
COMMERCIAL
the
fact
that
when
years
of wages
or
I
,«
Reg; U. S. Patent
.
pfficp
WILLIAM B. DANA COMPANY, Publishers
:
Park
25
.
:
Place,
REctor
New
2-9570
York 8,
to
.
X
WILLIAM
DANA
D.
SEIBERT,
President
shifts
in
in
curve
a
would
in
cause
a_
re¬
move
the
labor
to
response
shift
soon
every
—
Monday
market
causes
the
to
was
prices was above
preceding year, 48 when it
below, and 2 in which it
the
same.
There
were
(com¬
records, corporation news, bank clearings,
and city news, etc.).
Other
Offices.:
135
S.
La. Salle
St.-,
Chicago 3, 111.
(Telephone: State 0613);
1 Drapers' Gardens, London, E.
C., Eng-Iand, c/o Edwards & Smith.
Copyright
jby William B. Dana
Company
1948
ary
25,
York,
8,
■
•
N.
1879.
as
1942,
Y„
second-class matter
at the
under
York
funds.
-J-XJXak:
CERTIFICATES P.
Bond &
Mtge. Guar. Co,
Prudence Co.
72 out
The
Bishopsgate,
Zanzibar
Bank
£4,000,000
£2,000,000
£2,500,000
Capital™
Fund
conducts
every
description
of
banking and exchange business
Trusteeships and Executorships
also undertaken
LAMBORN & CO., Inc.
99
supply price of
responsive than ever
in
the
demand
WALL
During,
for
SUGAR
a
period
supply prices
of expansion,
of labor
demand
for
(Continued
may
Exports—Imports—Futures
rises and
rate as
same
labor
on
Raw—Refined—Liquid
tardily after
or
tjie demand for labor
■
STREET
NEW YORK 5, N. Y.
the
change promptly
Science, Columbia Uni¬
versity, New York City.
page
or
at
DIgby 4-2727
a
32) k
We-are interested in offerings of
The
Members
U.
year;
S.
of
in
15 Broad
New, York Stock
St, N.Y. 5
Bell
:
Exchange
WHitehall 4-6330
Teletype NY
1-2033
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&
High Grade Public Utility and Industrial
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Trust
of
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Miles
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Company
York
Shoes,
Analyses available
Members
Newburger, Loeb & Co.
Members
per
more
advances
the
Lawyer* Title & Guar, Co*
Febru¬
V
^..,.,.■ Subscription: 'Rates IX
Possessions, Territories and
Pan-American Union, $35.00
Reserve
labor.
:-Reprinted from "The Proceed¬
Lawyers Mortgage Co.
N. Y. Title & Mtge. Co*
v
States,
in
India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden
Paid-Up
v
post office, at New
the
Act
of
March
Subscriptions...in..United
makes
quotation
6tate
Reentered
New
Colony,
in
labor
edly
the
in
In
Subscribed Capital
curve
it may »rise at the
made
26,
London, E. C.
Branches
of labor to shift. The
spread of trade unionism undoubt¬
supply
Political
fluctuations in
Office:
and
shifts
On the other hand, during
periods of expansion a rise in the
in opposite
be
the
Head
helps keep
wages
during depressions at a
level where supply exceeds de¬
rate of exchange, remittances for for¬
eign subscriptions and advertisements must
of
to the
Government
Kenya Colony and Uganda
annual
are
leftward
ings;" "vol. 23, No. 1, May, 1948.
"Prices,
Wages
and
Inflation,"
published- by the Academy of
account
Bankers
half
the labor supply curve
extra.)
—~
NATIONAL BANK
TITLE COMPANY
(general news and ad¬
vertising issue) ar.d
plete statistical issue
V.
postage
RIGGS, Business Manager
Every Thursday
•
(Foreign
Tele. NY 1-2425
of INDIA, LIMITED
changes in the demand for labor.
Knowledge that cuts in wage rates
Record—Monthly,
the
& Publisher
Thursday, May 20, 1948
;
Quotation
year.
New York 5, N. Y
Tel HA 2-8080
*/'*''
rose.
demand for labor
was
Monthly Earnings Record
Monthly,
$25,00. per year,
(Foreign postage extra.)
Note—On
9576
REkBERT JK SEIBERT, Editor
WILLIAM
N. Y.
and
per
*
wages
the
importance
expected
supply
.
$25.00
QUOTED
mand.
year.
Other Publications
Bank
FINANCIAL CHRONICLE
j
r
"
—
CORPORATION
52 Wall St.
Particularly
wages.
is
Of crucial
diminishes the size
wages
to
the
age
be in
—
when
the
of
SOLD
the
dropped (name¬
ly, 24 out of 48) the annual aver¬
other
may
As
average of prices
as
effect.
times
are
striking
Sometimes
direction
demand.
During the 107 years
between 1840 and 1947, there were
57 years when the annual aver¬
25)
appear on page
—
FIRST COLONY
pe¬
prices are more or less inde¬
pendent of each other; and early
phases of expansion; are periods
when prices are
adjusting them¬
directions.
of winning bowlers of the Bond Club of Denver
-
BOUGHT
and
of
source
for
expanding demand, will
necessarily hold for periods
age of wholesale
(PICTURES
Corporation
re¬
of
which the two
60
—
fall¬
rule, early in
a
District Theatres
sj
wages
were
figures indicate, the middle
and later phases of
expansion are
times when wages
adjust therrvselves to prices; periods of con¬
large
a
Despite the closeness of the
50
________
as
lationship
between
wages
and
prices, - there are many years in
5:
—__________
change but
of
prices
above
of payrolls.
Securities Salesman's Corner
(Walter
as
cost.
directions
12
Markets
also
effects
two
24
...—
Securities
Tomorrow's
more
as a
38
v
Governments.
not
average
ofcontracting
the cost effect of wages on prices
5
—
production, and
affect prices
demand than
22
May
were,
not
of demand; under other
conditions, changes in wages may
14
__
did
rising and prices
riods
source
53
NSTA Notes
average
Generalizationsabout wage-price
prices is bound to: be close. It is
obviously a two-fold relationship
—a cost-price and a
demand-price
relationship. Under some condi-•
tions, changes in wages may affect
prices more as a cost than as a
45
8
Einzig—"Cripps' Currency Scheme—A Study in Futility".
V
annual
relationships, which hold
con¬
stituted 55.5% of all costs of pro¬
ducing the private net national
product.
They
also
constituted
10
From Washington Ahead of the News—Carlisle
ing
II
14
Recommendations
wages
annual
were
part of personal incomes;: the re¬
lationship
between
wages
and
—
were
when
5214 % of all personal incomes. Since
wages are a large part of^ the cost
.
Broadway:
System Teletype N. Y. 1-714
phases of revival.
Wages and salaries in 1947
;
39
Coming Events in the Investment Field.
Dealer-Broker
prices
<
23
-
% Bell
.
52
-
1908
change but when
going up, and 11. years
dropped.' The times when
.—Cover
Business Man's Bookshelf..
Canadian Securities
,
few theoretical observations.
•
Stocks.
the
Established
Members N. Y. Security Dealers
Assn.
REctor 2-4500—120
of wages did not
the
of
(Editorial)
-
J.K.Rice, Jr.&Co.
cessions, and the times when wages
by it. It is desirable, however, to were declining and prices were
preface these discussions with a, advancing
were
in
the
early
Nebular Features
As
when
years
outlook-for wages and prices and
of the problems suggested
23
Wilbert Ward Sees* "Off-Shore" Purchases by EC A
Oppoprtunity for Demanding Payments Due on U. S. Exports
Pasadena Bond Club Sponsors Investment Course.
Fund Transactions Exceed $600 Million.
rising when prices
dropping, and in 4 years
were dropping when prices
advancing.
There were 7
were
look
half years since V-J
21
Loan Applications
on
Finishing Com. & Pfd.
year-to-year
some
22
World Bank Reports
the
diate future of wages and
prices;
^nd third, to examine the
long-run
_
for Interest Payment
a
U. S.
of
were
wages
First, I
to
Kingan Com. & Pfd.
There
same.
during the last 107
Pay; second, to .look at the imme¬
Hirsch.________r__" 17
Funds Available
into
;. '
briefly; a i
what has been going on during the
Dean Madden Sees Inflation
Increasing Reserve Bondholdirigs 17
Finance and Politics to Be Satirized in "Bawl Street
Journal" 18
What??? (Boxed)
were
wish
National Advisory Council Reports on World Fund and
Bank 16
Security Analysts Choose New Officers
16
Food Surpluses Ahead, Says Mrs. Edith
Congressional Committee, Headed by Senator Taft,
Reports
on High Prices of Consumer
Goods
19
Boylait Opposes Reducing NYSE Membership.-...
19
Canova with U. S. Security Loan Drive
20
wages
parts.
Prof. S. H. Slichter
the
was
Corp.
Dorset Fabrics
below, and
was
wholesale
prices
the hourly
earnings- of nonagricultural workers were in op¬
posite
directions—in • 24
years
three main
Definitive Australian Bonds Now Available.
12
Blyth & Co. Trading Department Now Handling Listed Shares 14
San Francisco Stock
Exchange Sponsors Trip to Pacific
Northwest Industries.w--15
Federal Water & Gas
and
o n<
divided
Shishkin, AFL Economist, Says Increased Wages Are
Not the Sole Cause of High Prices.
11
1
11
Texas Gas Trans.
Corp.
Tennessee Gas Trans. Co.s
non-agricultural
it
when
.
prices will be
Boris
it
movements
and
wages
of,
28 times
years,
by
My
them.
when
however,
years,
us—
securities!
above the preceding
was
17 when
were
detere
107
to
Telephone: WHitehall 4-6551
when the annual
average of hour¬
more
_-li.
Trade in
ramshackle,
bonds
Obsolete Securities
Dept.
99 WALL
STREET, NEW YORK
the wage poli-<$>
15
16
Avoidance—Harry J. Rudick
his
and
to
buy good
great spread of collective
bargaining is- daily making the
between wages and prices of more and
more
im¬
portance.
No longer are wage movements
explained in the main
by the demand for labor.
Morp and
more, wages are the result of
all
stocks
cash
HIS
PORTFOLIO
of
obsolete
gets
The
ui
The After Effects of the Marshall
Plan—J. Anton deHaas
Trust
-disposes
relationships
8
_
Prices and Profits—Howard R. Bowen
Inflation Is a State of Mind—Emil Schram___
World
DREAM
disorderly price rise,
increases be curbed and Savings
7
—.
Aims
Tax
high-yielding
BLANDINGS
BUILDS
;V
Troubled World
a
______
AND COMPANY
Is
and
acute
3
tansTfin
"
MR.
;
Professor Slichter
urges wage
Bond sales be stepped
up.
Advocates forced savings levy in form
of,
4
6
,
(2187)
University Professor, Harvard University
Predicting possible dangerous
4
The Profits of the Oil
Industry—Robert E. Wilson
.A. Privates Marshall.Plan for American Investments Abroad
Lamont
4
•
.
CHRONICLE
By SUMNER H. SLIGHTER*
2
;3
__
~Max J.
FINANCIAL
Wages, Prices and the
People's Savings
,
A
What to Do About
Advancing Prices!—E. S. Pillsbury—
i
Wages, Prices and the People's Savings—Sumner H. Slichter
The Government's
Handling of the Current Credit Situation
—Allan Sproul
&
on
Inc.
request
Unterberg & Co.
Members N.
Y.
Security Dealers Ass'n
61 Broadway, New York 6, N. Y.
Telephone BOwling Green 9-3565
Teletype NY 1-1666
COMMERCIAL
THE
(2188)
4
Thursday, May 20, 1948
CHRONICLE
FINANCIAL
&
The Profits of She Oil
The Government's Handling of
Industry
By ROBERT E. WILSON*
I The Current Credit Situation
?
petroleum situation, Mr. Wilson blames shortages,,
on prices and on construction and partly
political disturbances in Near East.
Says steel shortages and high 7
construction costs, together with dwindling capita! market has re- ;
tarded production increase.
Contends higher earnings needed for
By ALLAN SPROUL*
President, Federal Reserve Bank of New
j Reserve Bank official strongly
[increased
<
ceiling
/
requirements. Prefers increasing short-term interest rates, with possibly a ^modified
plan/' without regard to geography. Cautions against magnifying the dangers we face
or minimizing the effectiveness of our presently available weapons.
reserve
reserve
1
;
partly
York
clomsy, ineffective and confusing, Mr. Eccles' advocacy of
opposes, as
to
agencies
prevent
undue-;
pansion
bank
of
increas ng
those powers,
been
recom¬
mended
in
Economic
the
Report of the
President.
J-
in
(2) Extent
to which ex¬
isting
is
Allan Sproul
such
powers
taken
be related to
(3) The necessity or desirabil¬
of continuing support of the
government
bond
market
and
ways in which this might be done
with
before
complaints
that the gross national
are
investment.
into
^
with
self
these
questions,
or
prod¬
necessarily in the order given
as direct answers,
since they
all relate to the general problem
inflation
of
credit..
bank
and
able
although
not
views, in a
propositions or para¬
graphs, with a minimum of argu¬
ment, leaving to subsequent dis¬
cussion
the
elaboration
of
that
those
on
any
The Problem in
has
It
commonplace to
ficulty lies
in
that our
say
bust
dif-|
the existence of an,
incidence
^
^
%
-Statement of Mr. Sproul before
Joint Committee on the Economic
tio"al inc°me frinR
Report, May 12, 1948.
From
^ terms
century
of
been
has
1899
na-
phenomen
FOR BROKER-DEALERS ONLY
.
CAPITAL
.•/;
V
y.
1
"
••
*:-;V
:
on
serves,
this equity
seems
of crude oil reto be undervalued.'
of
BOUGHT—SOLD—QUOTED
IT-.
■
,
;
''
.
v
on
Request.
we
it
not
tight
120
BroadLway9 New York 5
or
as
their
to
to
miss should
bad
a
hon¬
question,
and
if the
early Bureau of Mines estimates
a 4,3 % increase in demand had.
of
been
anywhere
correct, there
near
would have been
American demand very
which
I
however,
am
batting
rather
one
cooperation
proud
of
my
prophet.
That is this Division of Refining,
before which I came to bat only
average
before,
as
a
namely,
midyear meeting.
at
last
our
I should like to
quote from the introduction to
June 2,
on
feel
say
of
that
government-owned
my
duty
into
tankers
service, plus an unusually severe
winter, created a rather serious
in
situation
only
forts
on
real
a
tude
localities, and
many
almost superhuman ef¬
the part of the industry
by
averted.
emergency
believe that
to the public that, in spite
[
j
difficulties encountered in getting
was
almost
small part to
the industry
local officials ipt
no
of
In the East, however, the many
my
1947:
it is
and
state
many' areas.
league in
below
the actual
incurred in
were
surpris¬
West
Middle
ingly few, due in
and
There is,
far
hardships
consumer
the
Danger of Oil Shortage
were
areas
levels
operations,
delivery
far ahead.
■
many
to
down
the minimum needed for efficient
the
the
in
stocks
and
drawn
who at¬
dynamic
anyone
predict
a
I
less optimistic atti¬
the
on
part of East Coast
last
summer
would
companies
the
a
program
banks
has
end.
same
dented growth in demand, coupled
with a shortage of transportation
facilities.
The
latter
stems
back
to wartime and
tc
on
delivery of
steel
pipe
for
many
main
have held back the
is
credit.
of
the
worked
*An address
by Mr. Wilson at
is
concerned, we need
for nothing. We,fur¬
apologize
nished
far
fuel .oil
more
did
We
it in
;
construction/ //materials.
Certainly an industry which sup¬
plied over 20% more distillatefuels and kerosene in 1947 than in
1946
for / falling
cannot
be
fairly
1 or 2%
stitute, Philadelphia, Pa., May 12,
almost unbelievable
1948.
us
[There is
spite Of the
handicap of not being able to get
needed
Refining/American Petroleum In¬
•
made
very
either
costly,;
see
what
you
would
least
have
in
in
1947
liked
to
which
we
prevent,
a1
part, since it is difficult
(Continued
on
page
29)
>
criticized
short of *an
demand.
Let
happened.
Table I
Estimated Growth of Petroleum Consuming Units"5"'
:n"
1947
Consumption Units in Use—
Passenger Cars
% Increase Over
:
1941
very
As
in' the
just, closed: than ever be¬
season
fore.
the oil industry per¬
as
formance
the Annual Dinner of Division of
obvious that credit
been
credit
bank
f ^
Such
pause
tempts
1947
als, and particularly delays in the
know, there was an expansion of
/. W.Gould&>Co.
Such
were
has been cumulative in effect, even
has
,
give
and
civilian,
11% in excess of that
on
relying
for
move
the
though
Up-to-date Memorandum
1945.
to believe that this program
reason
,
plus
was
the mainte¬
on
uncertainty
some
voluntary
toward
/
than
the road
on
postwar limitations
construction,
together
with
shortages of construction materi¬
policy,. both
commercial
'
demand
of
cars
Actually 1946 civilian de¬
eo,ualed the 1945
to
debt management and
policy and
next
The
ii
the importance
In view
5,000,-
nearly
I
national
-further expansion of bank
-['-v
fewer
remarks
By means of a coordinated
strength,
-s.i.v.
Based
the
near
management of the
the
STOCK
of opinion
close
a
So far
the
nance
Company
indirectly by the managing interest of the SUN OIL COMPANY
;.'*•<
*.,»■:*
somewhere
ited by considerations involved in
fiscal
,
genera]
approxi¬
an
responsibility of trying to pre¬
credit
Genera] Crude Oil
post¬
military
is
1947 there was a
to
such prospect.
any
superhuman efforts on have reduced the unprecedented
part of the oil industry, there number of oil burner and space
real danger of some shortage
heater installations and possibly
vent a
further increase in the
of petroleum products,
particu¬ speeded up the getting of tankers
money supply while inflationary
larly in the Middle West/ during into service, though the delays in
pressures are still strong in our the next 10 months. This shortage
that were largely due to differ/*
economy, and that is what we appears probable in spite of the ences of
opinion between various
fact that the general level of the
have been doing.
It is not true
branches of the government.
country's crude production, refin¬
that we have had no effective pol¬
Increase in Petroleum
ery
runs,
and imports are alt
icy and could have none because
Consumption
making new high records.
The
our existing
powers were inhib¬ causes are primarily an unprece¬
the
program of
*
the
and
achieve
Efforts to Ward Off Inflation
of war.
in
was
Dr. Robt. E. Wilson
petroleum products.
000
Our
gradual adjustments
supply
level
debt.
•*•••
bust later.
present relationship.
^ress increase the
of the Unite* States
The
for
fore¬
of the fact that there were
better than more
more
(3) This does not relieve us of
PoweTwhichhMnf
power vvnicn nas meant an
Controlled
international
other words, our
and
is
now
mate balance
(2) This is not a surprising de¬
velopment. It is really a contin-
a
by
est and understandable because it
demand
war
once
price
Economic Progress
The Nation's
we
become
domesUc
money
perspective.
proper
try to put the problem in proper
perspective.
no
I
Perspective
(1) First, it is essential that
gone
to
the
cast
scouted
con¬
staggered in incidence, while the
argued
most of the
gument too far, but it does help
think, to put our problem in
wish to have covered more
fully in the record.
tried
in various parts of the economy,
in closing the gap—that the
price level has come near adjust¬
ment to the money
supply.
I
would not want to press this ar¬
you
believe,
hope lies in
before the Second
have
challenged
was
both inside and outside the
differences
which
cians
mand
and
boom and
way
points which
less
or
try economists
and statisti¬
peak!
a
more
years
we
more
a
.
War), it might be
World
points in which you are particu¬
larly interested. Or, if you prefer,
I
could
submit
more
detailed
memoranda
100
the
have had
the
to
of
to
or
contemplate now in the light of
(the velocity of money is believed
have dropped substantially in
I can best present my
series
receive
a' positior
employment which
one would wish tr
I
than passing
reduction in the velocity of money
Perhaps
it
industry, and particularly on the
East Coast, where the majority
in
In
to our situation.
supply and ad¬ main hope is not in a get-tough
general price level to monetary policy on the theory thai
there has been a sub¬
and
stantial
neglecting
immediate situation.
our
And if
it.
problem in¬
the longer-range
on
volved,
West,
leading indus¬
organized
owners,
itself
money
justing our
shall also want to lay some stress
a
While
was
group or another—farmers
in growing up
way
increased
I
so
it
I
many,
duction
existing volume of money
We have already gone a consider¬
nor
dle
concurrent serious decline in pro¬
the
not
f
1945
no shortage.
Fortunately the early and re¬
prewar
and
that
government
economists
were
all
predicting peated warnings to Middle West
widespread
postwar
unemploy¬ consumers arid suppliers bore good
time wastes of resources and ex¬
fruit.
Not only was there wide¬
pansion of money supply.
The ment, this committee predicted
that
1946
consumption
would spread adoption of conservation,
record, however, is one of grow¬
measures by consumers, but sup¬
ing up to the increased money average only slightly above the
pliers adopted many costly and
supply (plus declining velocity ol prewar peak, and about 1,000,000
It unprecedented measures to bring
money) with intervening shake- barrels per day below 1945.
also predicted that it would take crude and products into this area.
outs as in 1920-21 and 1930-32
We have never substantially re¬
eight or 10 years for total domes¬ As a result, while the prediction
of shortages was amply borne out,
ducedthe money supply withou' tic demand to surpass the wartime
only increased from
during that period.
least with the first three, although
prophet, and
committee of
tinually inflationary economy, in¬
terrupted
by
depressions,
bu
accentuated periodically by war¬
37.4 to 47.2%
That puts a
very different light on the infla¬
at
tionary potential still resident in
«
^
warn¬
impending
an
the
we
about
V; My statement will concern it¬
recall that this
shortage,
documented with detailed figures,
of
view
declining
prices
commen¬
surate with declining real costs
and a lesser need for growth ir
the money supply.
In that sense
of cur r e nt
uct is estimated to have increased
difficulty
in
from $90 billion in 1939 to an an¬
securing adequate funds for mod¬
nual rate of $241 bilLon in De¬
ernizing and expanding business
facilities,
especially
for
small cember, 1947,: and that the ratic
of our money supply to the gross
business; effectiveness of current
national product has, therefore,
methods
of
channeling savings
(4) Justification
You may
ing
of
son
would
ation."
do
I
which
alleviated the situ¬
have
shared
unemployment, and if it were
for the inequitable distribu¬
had
The facts
do.
largely
claim to
the
be
a
grab a bigge1
hunk of the pie, we should hav(
a vacuum
to
prophet,
not
projects
important
"ph"
supported by most of those
close to the situation in the Mid¬
to
going.
be
exist in
the
first
<£-
-
created considerable furor.
management,
labor—found
other
production)
may
we
Money doesn't
has work
—it
of credit.
due expansion
where
and
minimum stimulus to un¬
a
American.
Considering
age
that in
as one
where we are
see
can
we
be said about the role of the profit,
tion of the gains of productivity
changes in the gross
over-all
of
measure
ity
lesf
in
can
of
national product (or to some
by
times
thing that
one
I must confess
not
illuminating
themselves; they must
should be utilized in dealing with
even
There is
than 50 years.
If it were not foi
the waste of wars and of period
very
current credit situation.
about
capital for additional oil producing
as
regardless of the spelling, namely, that it seems doomed to be mis¬
understood, especially when it is left to the hazards of the headline
writers who do so much to determine the impressions of the aver-
taken of the in¬
in
creased
is
These figures, how¬
emphasized.
ever,
are not
and
be used
*
facilities.
population, and the de¬
cline in purchasing power of the
dollar, the average real income
per capita
appears to have
in¬
tremendous increase
a
account
crease
problem and many are led to
the conclusion that only by mone¬
tary action can we really cope
with it. The figures most usually
quoted are the increase in the
money supply (adjusted demand
deposits plus
currency
outside
banks) from $33.8 billion in 1939
to
$113.7 billion in December,
1947, and the inflation potential
proposals
has
expansion,
when
our
for
as
the five-fold,
of
the monetary aspect of
focused on
credit,
f current
and
excess
existing supply of goods and serv¬
ices—and that this
is inflation.
Stated thus
baldly, attention is
and
contraction
in
demand
live
iiA.V
ex¬
restrictions
on
oil companies to
In your invitation to me to appear before this committee you posed four questions
which, among others, you hoped might be discussed.
They were:
(1)
Adequacy of present powers of the Federal Reserve System and other Federal
-"
(Indiana)1
Chairman of the Board, Standard Oil ComlJan^
In reviewing
;
1946
1947
;
;
1946
6.4
5.6
28.2
28,416
6,600
1,783
2,844
6.4
Space Reaters (thous.)-i-/r 2.000^'
3,035
40.0"
Oil Burners (thous.)
2,269
2 673
Diesel Locomotives
l.C32;4,196
4,250
3,206
5,281
Trucks and Buses
Tractors
,
:
V
(thous.)
(thous.)
.
.
(units)
4,682
'
(Continued on page 48)
1941
5.6
26,901
5.680
2,672
(thous.)— 26,713
59.5
112.5
19.7
41.0
25.9
411.7
Volume 167, Number 4700
Steel
j|||iThe
Carloadings
Retail
*
♦
.
and
0'' V ' •''* C•*> -'4.
•
fj'
* >.
V '»•
E. M. Hanrahan Named
Observations
i; 1
Trade *
Food
Business Failures
0000 ■:'00y (And.'Land
w
This space is not
*
ket's
Total industrial production the
past week held close to the very
levels that prevailed in previous weeks.
In fact output
values
to
or
the
on
Front
prediction
of
its
future
Page)
academic interest in the current sensational
appreciable increase above the
year ago."
an
cor¬
community'sattitude
employment and payrolls, they were maintained at a
steady and high rate for the week with a considerable demand for
-
.
3
•
>tical
amounted
reached
was
3,836,500 shares.
on
ago.
-
">
ft
-
'
0
i
0 '0000
On
:
000^00 00'
market's performance.
May 28
ago
a
until May 29.
At the
same
time he also deferred until
hearing which had been scheduled for Tuesday last
on the
injunction to replace the order.
The action
taken by the Court was requested
by the Department of Justice be¬
cause
the three railroad unions comprising the
engineers, firemen
and switchmen had on that day reopened
negotiations with the rail¬
roads in another attempt to effect a settlement of their
dispute over
wages and working conditions, r
government's plea for
an
In the automotive
industry the United Automobile Workers, CIO,
on Tuesday of the current week filed a formal
10-day notice with
the Michigan Labor Mediation Board that a strike "is
pending" for
225,000 General Motors Corp. employees.
Negotiations are at present
continuing in an attempt to avert a second major walkout in the
auto industry.
On Wednesday of last week the Michigan, Indiana
and California plants of the
Chrysler Corporation were closed as the
result of a similar dispute over
wages and other working benefits.
-
■
A. Wilfred
current release of the American Zinc Insti¬
a
reaction we may recall the public's
mass-jumping
the "bear market"
band-wagon on Sept. 3, 1946. As related in the
SEC's subsequent
study (summarized in this writer's article "Jet
Propulsion in the Stock Market" in the "Chronicle" of Oct.
30, 1947),
the news ticker's announcement of
tbe market's downward break
on
Clearance sales of
some
While there
little
was
wholesale dollar volume
week
a
year
change in retail buying during the week,
moderately above the level of the like
retailers continued to avoid long-term
was
Many
ago.
Commitments, and re-orders of seasonal merchandise
steel
operations
wmfor week
indicate
further
were
frequent.
of
C
mem¬
1946.
e
July,
He
d
e
the,
.,
ission
o m m
since
c
r.
has"
suc-
s,
as
Chairman,
J. Caffrey,
J.
was
partner in the law firr
a
of
Sullivan, Donovan
han, New York."
&
Heene-
Max C. Ibers, Jr. Is H
With Gross, Rogers Co
(Special
LOS
to
The
Financial
ANGELES,
Chronicle)
v
CALIF.—Max
C.
with
immediate avalanche of the public's liquidation. In other
words "investment
policy" means mechanistic "recognition" of a
bear market. By interviewing the actual
participants in that day's
market the Commission found that while many
people themselves
did not believe in the Dow or
any other resistance-point theory,
they nevertheless liquidated simply because they realized the
an
impor¬
others' belief in
tant potential impact on the
market ensuing from
such reasoning.
■
'''
0'
0':\
*
00 :';00. '0
'
■'
■
on
0*000P0
Ibers, Jr. has become associated
Gross, Rogers & Co., 458
South Spring Street, members of
the Los
Angeles Stock Exchange
has recently been with
Feibleman; & Co. in New
Mr. Ibers
T.
J.
Orleans in
and was
the Upside
this past week we have witnessed such chain-reacting behavior in reverse. During the third hour of trading last
the day before that.
Saturday, the day following the "crucial" pene¬
tration, saw further extension of the trading excitement measured
by a 2J/2-million-share volume, the largest half-day session in 15
The stock.market made the front page Friday afternoon/and
by Monday the Exchange gallery was mobbed by a record crowa
straining to watch the new bull market at first hand.
years.
,
{
The Revelation by Definition
/
charge of their trading
department.
Prior thereto he
with Weil &
00t\.
:
Now during
progress
-
a
ber
entailed
4
luxury items attracted little attention.
M
been
through the previously publicized resistance point of 186 in 1946
tute, Inc. that stocks of slab zinc at United States smelters totaled
42,910 tons at the close of April, a new low in several years and a
Friday, after months of price movement within the limits of the
drop of 2,310 tons from the March stock of 45,229 tons.
Dow chartists' 163-187-no-man's-land of neither bull nor
bear (and
Output of slab zinc in April totaled 70,330 tons* compared with hence
"non-existent" and incomeless) market, the Dow Jones
average
73,209 tons in March or a decline of 2,879. The daily average rate of
industrial stocks as well as rails (of all
things now to be crucial)
df production for April was 2,344 tons as against 2,362 tons in March.
broke through their ^widely-heralded
resistance points.
Then; so
.'00 ' 0000-%/
*
* ^"•
great Jiad been the publicization of /these resistance points that a
The total dollar volume of retail trade rose moderately duririg Hood of
buying orders quickly engulfed the market, galvanizing
the past week and somewhat exceeded that of the corresponding the ticker to a volume of
810,000 shares in the third hour, 590 000 in
Week a year ago. The advent of Mother's Day stimulated the demand the
fourth, and 1,350,000 -in the day's final period. This closing
for merchandise suitable as gifts and consumer response to promotions hour's trading doubled that of the
previous day and almost tripled
of seasonal goods continued to be favorable.
vote.
Hanrahan
han
'*
•
and terminology, again caused absurd
price dis¬
tortion, For a previous example of such cham
May
Chain-Reaction
It is learned from
the
basing of investment as well as specu¬
lative policy on already-transpired market action
coupled with over-emphasis on esoteric definition
Tuesday of this week Federal Judge Goldsborough extended
week
prac-
on
The
the restraining order which prevented the threatened railroad strike
a
a
bear
.
The high point of
when turnover totaled
Friday last,
ission
whose
The stock market community's gyrations dur¬
resig¬
ing the past week has merely represented an ex¬ nation became
tension of the existing psychological trend.
To effective on...
an
ever-increasing degree evidently, businesslike Dec,* 31, 1947. >
E. M. Hanrahan
to
his
appraisal of security issues is being supplanted in Prior
bp.i ns
ap¬
the prevalent investment
concept' by the chasing
of price trend coupled with
pictorialization of the pointed to the SEC, Mr. Hanra
activity daily trading
.
which
,
advance of 1,953,780 shares;
or an
past week
Exchange
o m m
:
Saturday of the previous week (May 8),
638,660 shares and compared with 2,592,440 shares on
to
Saturday last,
the
years
warranted
are
problem attending the Stock Exchange's
functions in fulfilling the nation's crucial capital
requirements. *
;
Performance in the stock market last week was characterized
by heavy trading with share values soaring to new high levels alter
To illustrate the full scope of the market's
volume on the big board on
nature
broad
evident, particularly in the building and allied trades.
breaking through their high peaks reached two
performance by market
followers, certain valuable conclusions of
v>
mar¬
dictu), but to
Apart from keen
thereto.
'
for
"
"
(rriirabile
the; investment
in many industries reflected
Skilled labor
C
by unanimous
being devoted to discussion of the stock
substantial
one
and
The Market Jockeys Clear the
Big
m
As
Edmond M. Hanrahan has been
elected Chairman of the Securities
By A. WILFRED MAY
Price Index
Auto Production
Industry
responding levels of
Chairman of SEC
> |
Commodity Price Index
V'' f": " l
*•
■
5
(2189)
IS
Production
Electric Output
State of Trade
-h''"'
THE: COMMERCIAL &-FINANCIAL CHRONICLE
r,-
i
car
Co.
was
in New Orleans
Jtrading manager for Os¬
F. Kraff & Co. in Los
Angeles.
Joseph McManus & Co.
Members of NYSE
0 Joseph
McManus
Broadway,
York
they have
nounce
bers
New
the New
of
change
8c
become
York
the New
in
39
City,
an¬
mem¬
Stock
The firm also holds
bership
f
Co.,
Ex¬
mem¬
York
Curb
Exchange and the Chicago Stock
Exchange.
<,
r*r
f
Close scrutiny of the press accounts of our "investment" market's
doings, extending from our breezy tabloids to the most technical
periodicals, together with verbal polling of our academic economists
as well as
barbers, reveals most remarkable unanimity of explanation
.v,
Higher
>
freight
rates
and
agitation
by
governmental
agencies
against the
basing point system are driving • some steel users to
seriously consider moving their plants. So far some of the plants
planning to move to steel centers are small ones. But this may
presage a wholesale trend later. Thus when the safety of the country
demands a general move towards dispersion of industry, government
aims and stiff freight rate changes are causing
"or
likely to cause
just the reverse—concentration near large steel areas, according to
"The Iron Age," national metalworking weekly.
??
The seizure of the railroads by the government has caused some
steel people to fear another freight hike later. This is on the assump¬
tion that the government may be forced
are
to settle the wage contro¬
which would likely be followed by approval of higher
support the increased cost to the roads.
based
to
Such
a
move
could only aggravate
a
situation which Is al¬
ready acute, states this trade authority, adding that it is forcing
mills to (I) use water or trucks to move steel wherever possible,
(2) phop off customers who are too far from the mill when the
sale means meeting competition by freight absorption, and (3)
pdy more' for
■
raw
0More oihthous
by "The
materials used in steelmaking.
to the steel industry is the information obtained
the
Commission
on
a
for approval.
cease
and
desist order to
If present intentions
are
or
political factors,
community has now arrived at the revelation by definition.
1 he Dow Theorists have after these
many months finally recognized
the bull market; with various chartists
severally
recognition much
as
to bull
Perusal
of the
news
accounts
discloses that
are
to
now
a
degree
wisely disregarding
external motivations—both the real and
imagined ones. Never before
has there been so little attempt made to "hang" the market's behavior
the
news.
(4)
One exception to this monopoly of technical explanation is the
one leading commission firm which,
in accounting for the long-existing external factors of a
highly favor¬
able nature, maintains that now at last it is "the crystalization of
factors in the popular mind which found
(Continued
on page
52)
reflection in yester-
cease
-
;
marketing practices are steel consumers. Those near steel centers
appear to be well off—but this is poor comfort if they cannot get
the kind of steel they want in their own area.;
Users far from any
pay
With
respect
heavily with high freight
rates
to
the
^
Toronto
Incorporated by Royal Charter 1727
/,
.400
Dravo Corp.,
).
,
QFlFlCEi-iJinburgb
LONDOty OFflCESr
3 Bishopsgatc, E. C. 2
49
C. I
Charing Cross, S. W. /
Burlington Gardens, W, I
McGraw (F. H.) & Co.
plants
throughout Scotland
8 West Smilhfield, £.
.
Universal Match
64 New Bond Street.
IV, I
system, the magazine points out.
to
current
output
of
Bought—Sold-—Quoted
steel, the magazine says,
that the. momentum of recovering from the coal strike has run out
and it will be hard to get the rate
up to 97% of capacity before
another week.
for^being perennially vulnerably ,tq, John
FREDERIC H. NATCH & CO., INC.
MEMBERS
qn page
.41)
L.
N.
Y.
SECURITY
PM
,
Established
1888
DEALERS
ASSOCIATION
H
(3
-te
^
Hi
xi i-
i
Wall
Street, New York 5, NY.
.
£
_
'
.
.B$J1 Teletype NY 1-897
ASSETS
£141,823,667
.
i •
-i.
'"Associated
.^.>,
> •
Banks:
rGIyn Mills & Co.
Williams
63
-(Continued
! -TOTAL
;
It concludes by saying that it now appears the full loss of, steel
due to the coal strike will run about 1,650,000
tons—quite a price
for the industry tp pay
.
Montreal
-
|^|g|§§|| Time Inc.
*
center will
HAnover 2-0980
-Teletype NY 1-395
Royal Bank of Scotland
HEAD
practices attacked in the ^Federal Trade Commission case
against the steel industry is' likely.
"
Certain to be hit, and confused by the present"trbnd in steel
under an f.o.b. mill
Bell
.
Branches
other
steel
52 WILLIAM ST., N. Y. 5
characteristic expression from
present to
carried out
Supreme Court decision in the Cement Case, and
HART SMITH & CO.
New York
op steel firms to fl) establish an f.o.b. mill price policy,
(2) abandon the, basing points system of gelling steel, (3) conform
the
International Petroleum
respectability.
unprecedented in history market interpreters
on
Railway
Imperial Oil, Ltd.
of the
cases
ia/jpfdpr
to
Canadian Pacific
withholding such
individual nations have done in the
Soviet Union, Spain and Israel.
At any rate, practically all the
chartists have finally changed their minds and reinstated the market
Iron Age" that the chief legal aid for the Federal Trade these
Commission! is working
In lieu of bothering
with
the entire
versy—an act
rates
"the market's making of new highs."
the complex financial, economic
on
further
Deacon's
Bank, Ltd.
si
Iflii
i
Are Stocks Undervalued?
Marshall Plan :ior;||i3
American Investments Abroad
A Private
'.V-
Thursday, May 20, 1948
FINANCIAL CHRONICLE
COMMERCIAL &
THE
(2190)
6
n
*
.
-
■
By MAX J.
1
*t
n
"
■
'
-
,
\
:
;j
Ry FRANKLIN ESCHER
-
^
r
,
i.
-
^Partner, Dresser & Escher
.;
Investment Dealer holds outlook for earnings and dividends is such
•
-
■-
.
"■
WASSERMAN*
:to
sts
:
wan£nt-confidence In 'future of
common,
,
stocks. $
Take two Stocks df two admittedly good companies: One is sell-;
neglect of role of U. S pri /ate investments abroad, sees in Marshall Plan op¬
f^tg^ay at 60, the other at $0. Why? Because earnings per ;share in 1
portunity for further expansion of American capital with improved setting. Reviews nature and extent ? ;the case' of the stock that sells at 60 regularly run perhaps three
times those of the stock that sells around 20.
/
of American foreign investments fand predicts, in co ning years, American finance will be called to play
uoodstocks,Q>———*—■ ■'
1 ■■
'■ ■1
:
a larger role in world affairs.
Urges adoption of an integrated private program similar to that jproposed
under normal the issue of $250 billion of gov¬
:
for European Recovery Trogram
ernment bonds.
How
;
Miv Wassenrian, noting
f
,
private^
with
for
private finance. With¬
American
out such a Program, the field of
bankers
would
of private
investment in i Europe"
would be greatly restricted.
course, be
i
tment.
n v e s
Development
Europe more attractive
make
to
unwilling
undertake
a
'.
Marshall Pro¬
will do,
Other
things,
is to
improve
the
setting for
private in¬
gram
among
vestment.
It
this
do
by providing for the
rehabilitation and development of
can
nations which
the
sent
best
tunities.
eign
the
The
today do not
investment
stabilization
of for¬
currencies, as provided by
Program, will also serve to
*The author is
the
pre¬
oppor¬
Staff
of
an
the
economist
Office
of
on
Inter¬
national Trade, U. S. Department
of Commerce, and Visiting Pro¬
Program
'
Although there
the
What
Private
abroad
A very large amount of
study and planning went into the
formulation of the European Re¬
Program.
certain
areas
in the world,
similar to the Euro¬
pean
Recovery Program is pos¬
sible.
There is nothing, however,
program
prevent American financial in¬
stitutions, as a group, from, plan¬
to
University. The opinions expressed
ning their own investment and
lending program just as the Gov¬
ernment has planned its own.
A
in .this
program
of
much
overcome
fessor
of
Economics
article
are
at
Howard
those
the'
of
author and do not necessarily re¬
flect those of any Federal agency.
to
this
type
would
of
many
do
the
disadvantages which our foreign
investment has experienced dur¬
ing the past. :t
v
\
.
BOSTON
Financial
planned by
groups of bankers, or by bankers
and industrial groups, can be de¬
veloped
the
be
to
Maine
areas
where
aid
of
important complement
day public financial
programs.
In the past, as this
article will show, much private
can
&
for
European Recovery type is
contemplated. Private finance
not
Boston
programs
RR.
Prior Preferred
financial
assistance has been
ex¬
tended abroad
by American banks
and industry. Much more remains
Traded in Round Lots
to be done, however.
Walter J. Connolly & Co., Inc.
24
Federal Street, Boston
Tel. HUbbard 2-3790
;>
10
Tele. BS 128
amounted
and
located
and
principally of the
were
direct investment type.
By the end of 1919 the foreign
investments of U. S. citizen^ and
corporations had grown to almost
$7
billion.
The increase since
1914 reflects the change in the
position of the United States in
the world economy when we be¬
came
of
instead
creditor
a
a
debtor nation.
The
prosperity of the twenties
the expansion of Ameri¬
fostered
At
investments abroad.
end
of
1930, American
private
can
the
If past ex¬
perience is any, guide, future pri¬
vate financing will need the most
careful study and, if properly in¬
tegrated, will return both imme¬
diate and long range returns.
Franklin
Consider H. Willett
Reliance
Varnish
V. Seminole
.
Co.
for
one
1st
Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
.
That
is that many peo¬
reason
ple who buy stocks do not expect
current earnings to continue at
anywhere near their present ratio.
Tt isn't that they expect earnings
to fall off moderately
(because
in that case, at
even
their present
orices, stocks would still be sell¬
ing. far below their traditiona
"ten-to-fifteen times").
It's be¬
investments
term
Thus,
11%.
between 1914 and
1930, the foreign
assets ownrid in this country ex¬
panded at a rate df $700 million a
year/The depression of the thir¬
ties marked
a
decline in the U. S.
holdings abroad and in 1939 they
were estimated at $11.4 billion.
In May,
partment
U.
the
S.
1943, the Treasury De¬
undertook a census oi
holdings abroad. This
taken on Treasury Form?
"TFR-500," was an actual count
of bur assets abroad. Although
the census was taken with great
census,
it probably. underestimates
foreign investments* because
it is obviously impossible to force
all ^holders of foreign assets to
care,
our
(Continued on. page 30)
Bell Tele. LS 186
Philadelphia, Hew York and Los Angeles
that
real
the
orders
new
on
In
1951.
within
car
new
year!
automo^
In
raw
six
months
or
materials such
lead or lumber, in tex¬
household appliances, in
tiles, in
materials
the
built?
are
in
other
few
a
from
which
houses
In radios, perhaps and
lines
there
has
so
to
remain
good long time to come.
SECOND, as to this question of
a
particularly
labor: Money
it is true, will be slow to
down, but, there's more to it
next
be
corporations during
two
able
or
three
the
going to
years
fair earnings or
to show
aren't they?
costs will
tries ard largely "labor, arqiriflexibid.
When as and if volume
down,'costs will not come
correspondingly.
Summed, up,,
the claim seems to
this: Volume is
to
lip, profits
/What's
are
bound to
'
with
wrong
things.
the above?
First the idea that,
future, a big
the foreseeable
happens,
; Teletype SPBG 17
as the volume
the efficiency
turn out
limiting what a man can.
in a day; but when that
costs
can't
/
as
be
brought
J
-
man
and
come
down.
-
.
,
.
(3) Costs, which in most indus¬
down.
L. D. 51
Always,
slackens,
completely.
shrinkage in volume is bound to
take place.
Second, that if that
SPARTANBURG, S. C.
work
sees orders begin to slacken
begins to wonder about his
job, it's only human nature for
be able-to continue to show them
These are the claims generally him to start working harder arid
better, and that's exactly what he
made:
(1) Present volume df businesr will do. Cynicism and scepticism
about it to
the contrary, that's
is abnormally high and can't rea¬
what has always happened in the
sonably be expected to continue.
past and that's what will happen
(2) As a result of the increase
gain. The same amount expended
in costs, "break-even" point har
been pushed so high that even i} for labor will produce more goods
slight recession in volume will re¬ —which, of course, is only an¬
other way of saying that labor
sult in profits being washed oul
Two
1892)
of
of labor begins to increase.
The
unions can make all the rules they
want to
in
(Established
than that.
Well,
they're
showing them
and so the burden of proof,
it seems to us, rests distinctly on
those who claim that they won't
now,
•
A. M. IAW & COMPANY
come
better C controlled;
Efficiency
hour had increased evert faster., i
The
prospect for
earnings and
years ahead
dividends for several
hess—why is it that it is as high being what it is, the conclusion is
as it is?
Mainly, of course, be¬ inescapable, it seems to us, that
cause Qf the. increase in the sup¬ common stocks—shares in Ameri¬
ply: of money (bank deposits as can industry—can be bought with
well
as
currency)
resulting from
complete confidence*
CA.
ATLANTA,
American
Trading Markets
Boxboard
NORTHWEST
Bates Mfg. Co.
American Furniture Co.
Botany Mills Com. & Pfds.
Empire So. Gas.
Bassett Furniture Ind.
Dan River Mills
For
or
of
Gisholt Machine
STATE AND MUNICIPAL BONDS
Immediate Execution of Orders
Quotes call TWX Sp-43
Exchange
A.M.,
.
MINJNG
SECURITIES
Hydraulic Press Mfg.
from
Pac.: Std.
10:45
Time;
on
to
CORPORATE
Floor
BONDS
11:30
Sp-82
'at.
LOCAL STOCKS
;
other hours.
Stromberg-Carison
Warner
Scott, Horner &.
Mason, Inc.
Lynchburg, Va.
Tele. LY 83
LD 33
ftiiiiiiiiiimiiiimiiiiiiimiiiiiiiimiiii
Company
STANDARD SECURITIES
CORPORATION
H. M.
Byllesby & Company
Members
Standard
of
PHILADELPHIA OFFICE
Brokers
Stock Exchange Bldg. Phila. 2
Telephone
RIttenhouse 6-3717
Teletype
PH 73
-
...
Stock Exchange
Spokane
Dealers
-
Underwriters
Established
1894
-
'V
Peyton Building, Spokane
Branches
at
■
Kellogg, Idaho and Yakima, Wn.
.*
.;..
of
operation under war-productioii
conditions; or, indeed, duririg the
period of transfer' to; peace pror
ductiori; ^Was
Great improvement; as business
settles^/down to3more iiormal;coh-^
ditions, is sure to be seen; is, in
fact,
becoming already- visible.
Just recently, for example, a Jarge
manufacturing company reported
that, fwhile wages per * man-houK
had increased, output per man-
,
to the volume of busi-
:v, \
Other costs, too, as the pressure
on business is lessened, can be far
SPOKANE, WASH.
jWllllllllllllllllllllllllllllllllllllllMi'
a
as
copper or
question-
industry
sia,
tb: stay;
AND
LYNCHBURC
V-
or
biles?1—try and get delivery ori a
for
So
^
Southern
New York S
WHitehall 3-7253
1950
exceedingly tion, and is bound
look
would
stick,
high.
FIRST
Private Wire System between
until
they expect earnings to bd been a certain amount of overr
cut away down—to a point, per¬ production; but in the things that
haps, where the current price of count, in practically all the dur¬
the stock, measured by the "ten- able goods industries, under-pro¬
to-fifteen-times
earnings" yard¬ duction is the prevailing condi¬
comes
Properties
Philadelphia 2
deliveries
make
Are the
Textile Securities
PEnnypacker 5-5976
example,
beyond their
miles
up
cause
disappear.
44 Wall Street
booked
direct investments repre¬
sented approximately 47%; port¬
folio investments 42%; and shorttotal,
Oil & Gas :
St.
the
could
wages,
Corporation
CORPORATION
1420 Walnut
-
where
just
—
capacity to produce and unable to
reason.
costs,
BUCKLEY SECURITIES
Incorporated
ap¬
—with the steel mills for
be
controls, the elec¬
tion and all the rest of it—is this:
Data xm Request
IE BANKERS BOND "I
any
t
Next
stripped of all the talk about Rus¬
SPARTANBURC
'Maryland Dry Dock
Gruen Watch Co/
;
Murphy Chair Company
Steel
outstanding forces
fhrinkage in volume take place?.
In the durable goods industries?
current
can
bound to fall off, costs are bound
Portsmouth
reduction
government,
ture."
times
only
Escher
amount-about
American Air Filter
of
preciable reduction in the coun-'
try's money supply?
Years and
years, in all probability. Certain¬
ly not in the "foreseeable fu¬
foreign holdings, exclusive of in¬
ter-governmental debts, were es¬
timated at $17.2 billion. Of this
PHILADELPHIA
American Turf Ass'n
bonds
expected in
be
amount
it
down
LOUISVILLE
at
the
in
earnings
principally in
Canada and the American Repub¬
as
you
them
10
to
their
By 1914, they
to' about $3V2
billion
lics
earn¬
selling atfrom
5
In¬
an
present
find
in
1897.'
were
condition—before
When,
located
at $685
estimated
were
in
reasonably
that
present,
"Amer¬
assets
may
current
International
long will it.
material change
any
and
times their
15
Cleona
her
before
be
10
tween
ings.
As
in
our
million
grants and credits but it is also
an
integral phase of our foreign
In
in
dif¬
many
ing is planned. It not only consti¬
tutes a part of our program of
no
shown
has
some-
be¬
<C
assets
some
countries.
Government
public lending program and our
covery
had
have
Stake
ica's
private lending program, one very
important distinction has seldom
been stressed. Government lend¬
policy.
icans
foreign
at
where
Ever since Colonial days, Amer¬
vestments,"
are
ferences between our
or
•
Lewis
Investment
Planned
A
program of
of
this type.
Max Wasserman
sell
Private
of
Investment Abroad
American
d i tions,
n
c o
recently upon the European Recovery Program
«md the newly created Economic Cooperation Administration, that the role of \J. S. private
investments abroad is likely to be overlooked.
The Marshall Program will not compete
has been focused
So much attention
RHODES-HAVERTY
Teletype
" ATLANTA
BLDG.
AT 288
f
1,
GEORGIA
Long Distance 108
Volume
167
Number 4700
THE
COMMERCIAL
Washington
Ahead of the News
stereotyped written speech.
1
rather than to reveal them.
the
question
answer
and
My,
,
can
campaigning
Bargeron
the
that
the-record speech to
ago. First, he read from
prepared speech and the editors
informally and lifted
their
seats.;
For
them
will
a
rather general comment of the
observers around town had been
The radio
ten Out before him.
that
become
he
was
really
Our
impressive
when he talked
informally.
Now, the story is that when he
■
goes
he is
a-barnstorming this
going to rely
formal device.
summei
the
upon
Ought to
in¬
go over
big, it is said.
I
have
formal
heard
him
these
in¬
Unmistakably
talks.
appears
he
-best
he
heard
ture
or
who
But
can.
that
one
in
human,
more
hearted fellow
-
demand
always
people insist, upon you preparing
speech in advance. Even the
fellow who says. "It is now ex¬
actly 9:30 o'clock, we pause for
station identificat.on," has it writ¬
from
sometime,
I
warm¬
a
is
doing
have
added
gave me any
to
.Usually
sist
him lying awake at
If he
on
are
even
publiclife
telling
ghost
peace,
These
found any
never
interesting.
fun.
some
matters
we
All you have
in which he
Senator
Y
■
Taft.
has
who
Y
outstanding
ever
I
exception
know
written
of
a
is
one
no
speech
or
may
thing.
If
loosely
there
he
to
starts
is
expect.
do
to
any¬
talking
telling what
no
will happen.
The stories going
.
around in of¬
ficial circles about the
manner
in
speech, revealing in either in¬
ten
stance,
a
wealth of information
the affairs
all
on
of humankind.
When he must prepare
longer
tual
talk
I
.
not
am
tion of
arguing for the reten-
the written
speech, how-
rising
costs
annual
price
Rent,
demand
Nourse
Anyone who followed
current
and
large In
time
amount
the
and
financial'
part of the legislative
history of the Employment Act
will be aware that
a
sense
of
felt
was
the
a
speech
dictate it
than
its
ac¬
Seldom when the
all.
He makes
until
he
his subject.
has
no
attempt to
fully mastered
notwithstanding
^kbari^onment
ciably
/
at
nothing
to one,
.which
would strike
income.
my
more
that
I
boring than to listen
is
usually
Most^of these
way in
delivered.
speeches
used
are
others who
eased
end
we
of
the
incomes
consumer
prices
so
year,
or
lower
be
would
to
were
that,
higher
markets,
consumer
the
by
required
achieve
economic balance
on
|
prospects had worsened and
We
are
serious
ment
are
,
'j
of the
purposes
Act
,<
'ft
to
CO.,
general
FIRM
on page
Y
INC.
*
49) f. Y
Y
Y
f \
partnership
"\;:YYr
-Y Y
'
•
Y
-
Y-
duction
*An
to industrial pro¬
by Dr. Nourse
Manager of
&
associated with
Co., Inc.)
us as
Co.
&
Members New York Stock Exchange
.
,
Members New
15 Broad
■
Industrial Department
our
Schafer, Miller
at
the Annual Reunion Dinner of the
that
K0LLER, JR.
.:^4formerly':Pre8identiOf':Fi'"H'<'''Koller-
had appeared.
address
New York 5. N. Y.
anounce
York
Curb
Exchange
V,
(Associate)
Street, New York 5, N. Y.
Teletype
WHitehall 3-0910
Oil Exploration
NY
1-1721
Company
completed In Ta turns Field, Carter
County, Oklahoma, and 1 discovery
one reason
for
so
much confusion
successful
in
our
public affairs.
well
in
oil
hive
wells
been
Clay County, Texas, by Wich¬
Oil Corporation within the
days.
River
last
90
*
Wichita
River
Continued
v..
.
.
.
Oil
locations
and
Stock
activity
should
Wichita
River
Oil
also
in
in
the
I
Exchange
0933
-
.
(2)
1 Teletype Ml
these
Doyle,
Oil
Corporation
properties.
Exploration
is
Company
traded
Hi
488
that Y
announce
in
the
common
'
.
ill.
Dearborn
1501
Y-Y YY' V
-Y.
v
' Y
':$£§*■
.Y.'-VY
- *
;,
'
"
,.
1
■
&
Y'lYY';^
Co.
Members
New York Stock
■
/
39
Exchange — New York Curb Exchange
Chicago Stock Exchange
BROADWAY,
,
.-'/X
,
NEW YORK 6, N. Y.
Michael J. Heaney
Matthew A. McManus
Comstock & Co.
Teletype CG 955
Y
Joseph McManus
I
chicago 4,
.Yf
\Y
;c-.
"A Y Y '. "Y Y. ;Y'Y
over-the-
$6
./•■',:YY Y.
•
"
owns
market.
231 So. La Salle St.
j
pleased to
are
have become members of the
NEW YORK STOCK EXCHANGE
'
successes
Cruce, and Sholcm Alechem Fields, in
Stephens County, Oklahoma,' where
Quoted
MILWAUKEE
we
Corporation.
drilling
further
produce
We
*
*
Telephone
Dlgby 4-3122
,•
Employ¬
beginning to meet
(Continued
pleased to
now
a
profoundly dis¬
setback.Ylt,
"The
v.
MR. FRANK H,
is
in
not
if
cer¬
4
ST.
PHONES—Daly 5392 Chicago: State
was
It
1948
which to go
for them without having any un¬
Sold
Chicago
another
one
workable
a
Y Approximate Market
Mevibers:
j
MEMBER NEW YORK STOCK
EXCHANGE
MAY 15,
wages
only produced
great inequities among our people,
but also created the :■ danger of a
40 Wall Street
altered casesf On the supply side,
stock
MASON
prices,
Gammack & Company
By midyear, circumstances had
counter
EAST
tionary trend
OUR
forward.
producing
225
of
building
.
mar¬
derstanding of their content. That's
Institutional Securities
.
upon
vY'■ Y'Y-Y
and industrial
me¬
chanically read speeches- written
Catholic
.
and
..
Telephone
1
.
fed
'
Oil Exploration Company owns 51.25%
of
the outstanding capital stock of
Bought
.
were
12%", fuel
tion record of the year, this infla¬
eco¬
admitted
at
At
developing process of inflation.
In spite of the
heartening produc¬
iY
price, and income rela¬
tionships.
Projecting the thenapparent returns of agriculture
ita
are
13%.
Mr. Philip L. Carret
been
.
of
rising
of
36%,
record
FORMERLY or qARRET£ GAfcMdNS
has
.
level, textiles dur¬
we are-pleased to announce thay
:
.
of
ail
profits during 1947 shows how
they
in
In
Vandenburg not only Illinois Tech Alumni Association,
own
speeches but Chicago, 111., May 19, 1948.
But there
12%.
been
annual
an
turbing.
-I
at
modification
end
types them out.
appre¬
know of
particularly in the
it
its
prices
rate
prices
about
has
lighting
"The
Inflationary Dangers
his
prepares
annual
money,
is handed back tain limitations
copy
of
the
wholesale
and
en¬
as
until
utterance
rate
materials 18%.
any con¬
siderable
wholesale
an
control,
and
which
would be given toward the
nomic rebuilding of
Europe.
at
consumer
rising at
ex¬
extend
aid
Report said:
June,
since
Re¬
become
ing the second half of 1947
prospec¬
should have to
we
had
annual rate of about
the
substantially en¬
larged through 'acceptance of the
view that
cycle.
maiden
rent
an
rather
•
ever,
side,
Economic
threats
The
and
industrial
the
annual
risen
20%
been
These in¬
a word.
The explanation is that cluded shortage of cars, of steel
he always knows what he is talk¬ scrap, and of several basic materi¬
als, and also delay in providing
ing about when he says anything
at
scream.
to
delivery.
transcribed
Jewish State
a
G.
ble, remedial when necessary—to
combat the century-old disease of
modern capital, the so-called busi¬
ket
to him does he change so much as
which he decided to
recognize the
are
Edwin
had
production, we for¬
a
magazine article for him.
He mulated our1 problem iri terms of
can talk with or without the writ¬
progressively filled pipelines and
usually takes him just 10 minutes
we
tive
a problem of making
catching-up adjustments in their
because of the press and radio, it
Frankly, he is liable
penditures
so
that
material wants of
these
have
in¬
drawn upon, and government
utterly finance with
be
has
understand what
of
had
second
"Since
coal
vigorously
through wage advances, savings
and
credit Y had
been
largely
possi¬
urgency
the
realities.
of income had been
up
thgir business, labor,^ agriculture, and
handled the Palestine problem to
way
On
areas
pushed
settled
lever
whole
structure/
fash ion
ness
been
a
our
certain
the
which
on
bituminous
own
writer ; would
An
to do is to consider the off and
on,
impetuous
that the of¬
his
w^io without
speechless.
nights.
under
level.
as,
had
troduced
m e a s ures—
far
of
strike
miners
the
preventive
The terms
the
speech. of 1946, and by that time this fear
It is simply that he doesn't have had, been
dissipated by actual
events.
In broadest terms, how¬
the time. On the other hand, there
ever, we envisaged the possibility
are
unquestionably many men in that
1947,would present Aipe^icari
to
important
in for
few members of Con¬
are
follow in every case
They
begins talking off the cuff
really
upon
ficial can't prepare
sta-
talks tend to create
sympathy for
to
of
port,
the result of strikes at
were
recognition of these changed
conditions, the Midyear Economic
to its
Report of the President dwelt at
gress or of the Cabinet who do passage reflected widespread fear
some length on revived inflation¬
not have ghost 'writers. In the case: of an early postwar recession and
ary dangers. And by the time of
of the Congressman or Senator it period of substantial unemploy¬
ment.
Fortunately, the Council
may be the Secretary.
It doesn't
was not called upon to make its
how the burdens of his office keep
of them
too, have
exacting that they in¬
prepared speeches well
wants
.
him, but I have
so
There
information
confined
Kpw seriously- he
in
capital in the satisfaction
key points.
encoun¬
tered
newspapermen,
in advance of delivery.
never
his
that I did not
already have.
•are
the
been
ages
have
as
median
your
their hands. Then he spoke
on
butcherea
so
written speeches.
some
Weeks
sat
was
merely
smoothing out
such highs and
lows
we
certain specialized types of
heavy
equipment. Some of these short¬
mean
informal speech, I, am afraid bilize our eco¬
the
mechanization
of
our
nomic brains
civilization
a convention
of newspaper editors here several
a
in
1
<$>-
Regardless of how much prog-i It meant that
ress
we
make, however, towards we should mo¬
off-
an
was
if I do say so.
and
made
Carlisle
came
•
not
in delivery that I almost cried., past and sta¬
beautifully written thing it was, bilizing their
up
A
Dewey out in
Oregon.
Mr. Truman
<
is
v,Y-Yv:.;;Y.Y:
•
ever
to America". It
b y
through
of them
one
masterpiece entitled ''Challengei
a
being
Stassen
slipping
The nearest I
understand
is
in
thought in
genius.
;Y/;:,y
a
Ohio.
i t
The ghost writer who:
succeed
real
•
devise suitable business and
gov¬
might have better sustained use
was to
procedures to the end that
resources, manpower, and
did
a
recent
followed
of natural
nation.-
of Stassen and
u
naturally ;f has;
the
in
I
association
objective of .the Employment Act
ernmental structures and
This
high plateau
in
speaker's thoughts
politicians.
It got up on a
Taft
the
conceal
been mostly wAh the speeches oi
craze.
the
The .great
<
to
started
Y
Dr. Nourse, in
pointing out purpose of Employment Act of 1946 is to combat the
business cycle, sees
.inflationary danger in present situation. Says, however, there is
ground for optimism and cites lowerY
prices by several corporations, more moderate attitude of some labor
organizations and anticredit expansion
policy of ABA as checks in inflationary spiral. Holds
European Program and rearmJ ament must be offset by deferring other government outlays and by foregoing
raising of living standards
;Y Y YY Y'
of private consumers.
Y/;yYv
Roose-<S>
Mrs.
velt, I suspect,
;
1
Troubled World
a
By edwin g. nourse*
,
honorable profession of ghost writing is being:
threatened these days as there becomes an
increasing demand for off-;
the-cuff talks and the question and answer
procedure instead of the
'
(2191)
Chairman, Council of Economic Advisers
.
By CARLISLE BARGERON
/
CHRONICLE
...
ancient and
•
FINANCIAL
Economic Stabilization in
From
The
&
Joseph McManus
Frank L. Walin
8
Accomplishments of Republican Party
Aims and
By HON. JOSEPH W. MARTIN, JR.*
v
Dealer-Broker Investment
>
Recommendations and Literature
Speaker of the House of Representatives
Speaker Martin extols accomplishments of Republican Congress and lists its aims. Attacks^ record
of New Deal and points to reduced and balanced budget, tax reductions and ousting of Red and "Parlor
Pinks'* from government as work of Republican Party.
Says Republicans are working to prevent fur¬
ther currency depreciation and foresees improvement in European conditions.
Predicts Republican
victory in November.
It is understood that the
Anthracite Industry
well feel great pride in the accomplishments of the Republican Eightieth
The change in the trend of our government is the biggest single accomplish¬
have achieved thus far.
The drift to centralization of power is stopped.
The
ment we
'
trend
from
higher
higher
and
taxes,
and
more
by a class. As part of
their technique, they faked emer¬
the masses
gencies
brought
and
than
faster
crises
phony
out
the
Bureau
of
Printing and Engraving could turn
It is out depreciated dollars to meet
effi¬ their spend-and-spend program.
Federal
more
control.
toward
ciency,
econ¬
and
omy
is
now
away
sol¬
in gov¬
vency
ernment.
elections, the New Dealers
chanted, "Don't change horses in
the middle of the stream." Let me
At
The Republican Party welcomes
the help of millions of patriotic
who
Democrats
any
had
have
never
sympathy for much of
more
the New Deal than
we
have
had.
Their first concern,
citizens,
good
like that of all
has been for the
welfare of the Nation.
The American
to
people have come
full realization of
a
New Deal
really was
firms mentioned will he pleased
send interested parties
to
We may
Congress.
Thursday, May 20, 1948
CHRONICLE
COMMERCIAL & FINANCIAL
THE
(2192)
—
detailed
report — Burton, Cluett & Dana,
120 Broadway, New York 5, N. Y.
scribing the tested methods used
know
stockholders?"
your
and
"Do
your
stockholders
know
you?" with a "yes"—copies avail¬
able on request written on your
for
letterhead—ask
Booklet
centralized government with regi¬
of
mentation and controls over busi¬
The New Deal's 16-year record
Federal control will make one
of
ness and
;iIt led
the people.
to
us
the
blackest
history.
concentration of
a
bamboozle
can
highly
chapters
in
our
go down as an
of
un-American
It will
Administration
Walker—drygoods
us no more.
The proponents of spending our¬
rich have at last given
selves
Political
adventurers
and
crack-
brained theorists, who had banded
will still
be
paying for the blun¬
period — they and
this
of
ders
tional salvation;
Balanced Budget Achieved
The
the line for
pocket edition
of
State
The
So¬
New
has
Deal
a
Its
essence
rule
was
of
propriations.
One
to
was
cut
The Administration, you
recall, viciously resisted every
single cut, no matter how fantastic
the original budget request.
The
taxes.
will
questions for
•
you
knoiv
Do your
Stockholders?
it
wanted
ment!
Stockholders know you?
should read
seem
to
dend
ods used
can
by
many
Write
us
on
your
to
ONE
Loeb
York
5, N. Y.
'
^
pruning
expenditures.
even
laid
Boston
*
Philadelphia
*
Chicago
*
Los Angeles
- •
*
threatened
Company—
Co.,
only—J.
&
Gould
W.
120 Broadway, New York 5,
Glidden Company — Memoran¬
dum—A.M.Kidder& Co., 1 Wall
Street, New York 5, N. Y.
Gulf Public Service Co.—mem¬
orandum in current issue of "Pub¬
lic Utility Stock
excesi-
The Adminis
,
off
to-r'cut
Guide" — G. A.
Inc., 70 Pine Street,
Imperial Oil Limited
randum
memo¬
—
Sutro Bros & Co., 120
Broadway, New York 5, N. Y.
anal¬
Company—New
Kellogg
Insurance
earnings
principal issues for 1947—Laird,
Bissell & Meeds, 120 Broadway,
New York 5, N. Y.
of
Fire
—
McAleer
pany
Company,
Detroit
Underwriting—
Insurance
White
&
Company,
Com¬
Manufacturing
memorandum
—
—
Penobscot
Keane &
Building,
26, Mich.
New York, Chicago &
Railroad Co.
St. Louis
analysis—Vilas &
Mississippi Valley Trust Building, Hickey, 49 Wall Street, New York
St. Louis 1, Mo.
5, N. Y.
—
Also available is
Insurance
a
tabulation of
Bank
and
Stocks.
available
Also
dum
—
is
Denver
on
memoran¬
a
Grande
Rio
&
Western Railroad Co.
and
Road
Florida
Bridge Debt
-booklet—B. J. Van Ingen & Co.,
Oil
Exploration
Inc., 57 William Street, New York
Comstock
5, N. Y.
Salle Street,
'
^
Insurance
Stocks
—
brochure of
comparative data on Fire-Marine,
Casualty-Surety,
and
Multiple
Line—Blyth & Co., Inc., 14 Wall
Street, New York 5, N. Y.
&
Parker
circular
31
Opinion
—
discussion—
—
Data —
La
Company
Appliance
—
du Pont, Homsey
Co.,
Milk Street, Boston 9, Mass.
—
Portsmouth Steel Corporationmemorandum
Market
Co.
Co., 231 South
Chicago 4, 111.
ities
—
Secur¬
Buckley
Corporation,
Walnut
1420
Co., 30 Pine
Street, New York 5, N. Y. Also
available is a list of interesting
Street, Philadelphia 2, Pa.
low-priced stocks.
Co., and
Heller
Stanley
&
Railroad Income Bonds—tabu¬
ton & Sellger, 61
York 6,
data
are
on
Seminole Oil & Gas.
Public National Bank
& Trust
Co.—Analysis—C. E. Unterberg &
Co., 61 Broadway, New York 6,
N. Y.
Broadway, New
N. Y.
available
Also
Maryland Dry Dock, Gruen Watch
Also available is
an
analysis of
Miles Shoes, Inc.
Security
f
Company—
Banknote
situation
of
study
/
with
growth
Pierce, Fenner & Beane, 70 Pine
prospects — Heimerdinger &
Straus,
50
Broad
Street, New
Street;- New York 5, N.-Y.
York
4, N. Y.
border
off
rural
Under
Valuation., of, Capital—
review—Wood, Walker & Co., 63
;
Sharp & I) oh me, Incorporated—
review
and
Voorhis
&
appraisal — K#lb,
Co., 25 Broad Street,
New York 4, N. Y.
.
-
the
We did it because
people of America
were
hind us,
f
{~
San Francisco
er-dealers
of
Wall Street, New York 5,-. N.-Y.
ecutive Branch.
Street, New York 5, N. Y.
Telephone IIAnovcr 2-1470
Casualty
carriers, in their no-holdsbarred camplaign.
This they did
American Optical Company —
to stop our drive for practical
analysis — Estabrook & Co., 15
economy in government.- *
But we did cut the budget last State Street, Boston, Mass.
year. And we are going to cut it
as much as possible this year. We
Appleton Co. — statistical de¬
did pass a tax bill, and we made scription — A. G. Woglom & Co.,
it stick in the face of the greatest Inc., 49 Federal Street, Boston 10,
possible opposition from the Ex¬ Mass.
&
Co.
k
and
Fire
Stocks—Comparison
quarterly issue of analytical guide
for
investors — Merrill
Lynch,
the
mail
questions.
Specialists in Stockholder Relations
52 Wall
and
letterhead jor Booklet C
Georgeson
Oil
ysis—Moreland & Co., Penobscot
Building, Detroit 26, Mich.
We were; of course, sincere
who wanted to do a sensible,
tration
the testedjnetfi*
these
,
Crude
up-to-date memorandum for brok¬
Security and Industry Survey-
wreck
businesslike job of
v
leading companies who
"Yes"
answer
are
,
General
paying stocks — Newburger,
& Co., 15 Broad Street, New
guards along the Canadian border
Here, briefly described,
&
Co., 25 Broad Street, New York 4,
com¬
Govern¬
to
ment.
sive
ASSET NUMBER
the
Republicans
cripple the Govern¬
They howled that we were
fighting
men
It you are in doubt, you
of
stocks with outstanding rec¬
ords and also of low-priced divi¬
pulled out all the stops in their lation of statistical data and es¬
propaganda campaign to discredit timated 1948 coverage iOf 20 in¬
Congress. They actually tried to come bonds•■ McGinnis, Bamp-
EXECUTIVES
your
Dividend Records—list
mon
officials of the Executive Branch
make
Do
•
Southern
&
memorandum—Hirsch
—
Saxton & Co.,
split
Democratic Party wide open.
CORPORATION
6, N. Y.
Commonwealth
Corp.
—
New York 5, N. Y.
St. Louis 2, Mo.
reduction of taxa¬
the tion, and three times the New Deal
The President vetoed our efforts. Fi¬
patriotic, Jeffersonian Democrats nally, through the help of patriotic
*An address b.y Speaker Martin have found themselves involved
Democrats, we were able to make
before the Republican Convention in their party with a group whose
tax reduction stick.
of the District of Columbia, Wash¬ announced aims contradict sharply
We had to fight two long, hard
Jeffersonian tactics and methods. battles. One battle was to cut
ington, D. C., May 13, 1948.
ap¬
cialism.
New York
Scherck, Richter Company, Land-
discussion
Republican
Congress
has kept faith with the American
new
together to give the country what their "children after them. It is a
they called a New Deal.
That story of utter failure at the peace people.. We. promised we would
It is a story of inability
strange New Deal crew had con¬ table.
restore solvency to the Govern¬
to
deal
constructively with our ment. We of the 80th
ceptions of governing, and of the
Congress
many domestic problems.
It is a achieved the first balanced
government, which were radically
budget
different
from
our
traditional story of higher and higher prices,
this country has had in 16 years.
ideas of representative, republican of a political machine which like
We promised we would reduce
government/ The type of govern¬ the noted "one-hoss shay," fell taxes. Three times we went down
ment they used was nothing but a apart all at one time.
vest
Hutton &
reth Building,
place, in part, to those of us who
believe saving is necessary for na¬
little
a
manufacturers
and converters and distributors—
while, policies; as an era of fan-dancers,
Those who have for 16 years in¬
Would have ruined our American political come-on artists; and spe¬
sisted on wastefully ravelling out
system
of
free,
representative cialists in the old con game tech¬ the fabric of national
solvency
government.
niques/Posterity will study the have had to make
way for those
You District residents, like the New Deal days as a time of bu¬ of us who believe a stitch in time
people of the various States, have reaucracy on a bust; of Commu¬ saves the country. We hope and
Viewed the events of the past 16 nists on the loose, and of diplo¬ believe we can take those stitches
mats doing strange and secret in¬
years with a justified and increas¬
in time when we get a Republican
ing uneasiness. I've been among juries to our future. The story President in the White House to
later generations will learn of this
you and I know. You saw, in 1932,
cooperate with a Republican Con¬
the National Administration taken era will be a tragic one. They will
gress.
j
want to know the story, for they
over by a crowd of opportunists.
.£-vi" vi
; V:
which, in
power,
Ameri¬
E. F.
Company, 61 Broadway,
and opinion
—
.
a
Celanese Corporation of
Duties
-
Deal traveled led toward
Stock-
Co. "B"
H. Hentz & Co., 60
Street, New York 4, N. Y.
—
N. Y.
Succession
Canadian
Seminole
Bryson, and
ca—summary
of what
Eight¬
Congress
•
Beaver
C—
Georgeson & Co., 52 Wall Street,
New York 5, N. Y.
what the
—
&
Gas.
&
analysis
by many leading companies who
can answer the questions "Do you
The
-
Sivails
Oil
Cannon Mills
Asset Number One—booklet de¬
you of this: next November
(Inheritance Taxes) legal opinion
the New Dealers had in mind for
on duties levied by the Dominion
second, the American people are
America. No longer are the people
ieth
Government and two provinces
going to change both the horse
has broken the and the rider. They are going to fooled by politicians who talk out
against
Canadian
Securities
of both sides of their mouths at
s t r a nglehold
owned by.residents of the United
get rid of the bewildered donkey,
the same time. No more can the
in which a po¬ and substitute for it the good old
States—Dominion Securities Cor¬
trick slogans of political oppor¬
litical monop- reliable
Hon. J. W. Martin, Jr.
Republican elephant to
poration, 40 Exchange Place, New
tunities
lead
both
the
States'
oiy held both take us to the solid ground of
York 5, N. Y.
Rights advocates of the South and
Washington and the Nation for 16 sound government — to a strong,
the Left-wingers of the North up
Clotheslines of America
de¬
long years. We at last have begun safe and solvent America.
the same political blind alley. The
to walk again in the ways of free¬
scription and analysis of Ely &
New Deal is on its last legs.
It
dom. The road on which the New
New Deal's Record
assure
the following liieraturei
v
be
helping us to push. They
are no longer misled by the fan¬
tastic promises and false propa¬
ganda of the New Deal.
The
quack - economists
who
either are, or were, on the payroll
(Continued
on page
46)
Also available
are
statistical de¬
y
available
Also
are s reviews?
Corporation
Ferro-Enamel
Corn Products Refining
of
and
Company.
Wisconsin Power SuLight Com¬
pany—analysis—Ira Haupt & Co.,
Ill Broadway, New York 6, N. Y.
available
Also
is
a'list of -Se¬
lected Low Priced Shares.
<}
scriptions of Maine Central Rail¬
road and Bates
Buffalo
Bolt
Manufacturing.
Co.—Data—Buck¬
ley Securities Corp., 1420 Walnut
Also available are data on Ports¬
Steel
Corporation.
ELMIRA,
Gould
Street, Philadelphia 2, Pa.
mouth
Rockwell-Gould Co., Inc.
Black
N.
Y.
—
Rockwell-
£o., Inc. is, engaging in a
securities business from offices at
159-1R7
Lake
Street.
Volume 167
THE
Number 4700
COMMERCIAL
&
FINANCIAL
CHRONICLE
more
more
liiiiw
mm
oil and gas this year because someone
This is the rule of American business under the free
of
did
a
mmmfMm
lot of thinking, getting ready and intelligent risk-taking in past years.
enterprise system. Imagination first creates
imagination accepts the risk of loss for probable profit, and a program is put under way.>
The
Gas
more
tew««£
You receive
(2193)
a
business undertaking. Courage
•
^
,
a
1
<
.
•
*
.
.
.
judgment of management is that there will be a public need for oil and gas, that is to say, a market, and that these products
fair and reasonable profit. Management thus risks its reputation; and the stockholders, their money.-
,can
be sold at
a
;The
company
leases land, sends out prospectors and drillers, makes provision |for the acquisition, of .tank cars, tankers and pipe- :
demand. Then, if all goes well, and its judgment was
*
lines, and builds refineries and obtains outlets, to provide for the anticipated
sound, the products will be there to meet the public need.
attributed
by critics of our American system to "luck."
anticipated
Because Cities Service
able last year to break several
was
This result of careful planning and calculated risk-taking is sometimes;^
:—in the production
our
current petroleum power
of its all-time records —
and fuel needs some years a^^and prepared to
-
:
of crude oil; by refining 64 million barrels of crude of which
ering in all, 320 billion cubic feet of natural gas;
*
30 millions were gasoline; by producing and deliv¬
;;;
and by transporting 172 million barrels of petroleum..
.
.
\
As
result, you, the
a
public* were able to buy $486,000,000 worth of-Gities Service produrts
»•
v
"....
^
» *• r
-js
...
-
> ."rr
*
.''V,*
\
J
;
•«.<»
f
'*
last year) 40% more; than in the preX ]. ; !
yious year.
*
4
J
And the end is not
J-'i'wf.
,
j
*
^
yet!
'
1
•> s itf
■
<
*
^
u
\
M
o/i
i
i
'
V V
y~
^
r
I
L ^
}
v
,
* 1
t
*
r
*^e.
"* 7 \
'>
f
'
1
j
^
r
i
1 1
I
J
1
~
L
ill.^Reconversion)
-
rYou
see, we
do not agree with the defeatists who tell us
capitalism is through. Cities Service believes that this
less, in the coming years.
^/Ve
propose to
V.'.-'.i
I
V',
$96^000,000 in-new facilities in 1947, ($555 million during the years of depression, war, and,
this figure-again based on the judgment of management-has been stepped-up to $145,000,000 for 1948|;r^i£^i^ii.;.-;;
Although Cities Service invested
1
v "
r*"'*
that America has reached maturity, that its economy is a static thing, that!
nation will need more oil, more gas, more petroleum products, rather than!
.
do our part.
•
-
A--^Y
j.•
ervice
W. ALTON
JONES, President
tteMMMMMtiM
•
10
(2194)
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, May 20, 1948
June 4, 1948 (Chicago, 111.)
Connecticut Brevities
Bond Club of
f
Michigan
Chicago field day
at Knollwood.
For the quarter
ended April 3, 1948, Bigelow-Sanford Carpet Co.
reported net sales of $20,702,854—a new record for the company—
compared with $13,188,734 for the corresponding quarter of 1947.
Earnings for the first three months were $902,406 against $505,610
a
year ago. Earnings per shared
———on the 6% preferred for the quar¬
April, 1948 totalled 8,170 against
ter
were
$34.18 compared with
9,411 a year ago.
June 4, 1948
A second
public offering of 450,000 shares of Detroit Edison Co.
capital stock (par $20) at $20.50 per share was made on April 22
by a group Of underwriters which included the following Michigan
(Cincinnati, Ohio)
Municipal Bond Dealers Group
of Cincinnati Annual Spring Party
at the Kenwood Country Club.
I
First of Michigan Corp.:
bankers:
Watling, Lerchen & Co.; Charles
Co.; Wm. C. Roney^
.;A v 'v
Co.; Baker, Simonds & Co.;
ing
stockholders)
of
680,000
Bond Club of Los Angeles first
shares- of common stock
Smith, Hague & Co.; Campbell,
(par
annual field day at the Bel-Air
S5)
of
McCarty & Co., Inc.; M. A. Manley
Halliburton
Oil
Well
$19.15 a share for the first three
it
it
it
Country Club.
A,
L'
.a
& Co.; McDonald-Moore & Co.;
Cementing Co. at $25 per share.
months
of
last
year.
Common
Peter Paul, Inc. showed net in¬
George A. McDowell & Co.; Ben¬ YYyY:?;, i'. : ■:
share earnings for these periods
June 4, 1948 (New York City)
V/;;-^/,///;/• V ; .;
come
of $2,682,155 for the year
Bond Club of New York Annual nett, Smith & Co.; Crouse & Co.;
were $1.40 and 75c respectively.
Michigan- Bumper Co. reports
ended Dec. 31,
1947,.; compared Field
An initial quarterly dividend of
Day at the Sleepy Hollow S. R. Livingstone & Co.; Andrew for the three months ended March
with $1,952,020 in
1946 after a
50c a share will be paid on the
Country Club, Scarborough, N. Y. C. Reid & Co.; H. V. Sattley & Co., 31, 1948 sales of $1,044,681, and
$39,195 write-down of investment
Inc.; MacNaughton-Greenawalt & net profits after charges and taxes
new
common on June 1 to stock
in and
advances
to
subsidiary. June 4, 1948 (Philadelphia, Pa.)
Co. and John R. Schermer & Co. of
of record May 17.
$98,568, equal to 51 cents per
Earnings per share were equiva¬
Bond Club of Philadelphia An¬ This
issue, which was part of share on the common stock. This
Equity per common share as of lent to $3.94 based on 681,352 nual Field
total
of
Day at the Philadel¬ a
934,971 outstanding compares with sales of $926,676
April 3, 1948, was $43.95 against shares in 1947 compared to $2.92
phia Country Club. >
shares of such capital stock owned and net
profits of $104,483 or 54
$39.34 as of March 29, 1947..
*
on 669,448 shares in 1946.
by the American Light & Traction cents per common share, in the
#
*
it
June 11, 1948 (Atlanta, Ga.)
The balance sheet as of the year
Co. as of Feb. 29, 1948, was over¬
corresponding quarter, last year.
Georgia Security Dealers Asso¬ subscribed.
Norma-Hoffman Bearings
ended Dec. 31, 1947 showed net
At the end of April, 1948 unfilled
ciation annual outing and dinner
Corp. showed operating income
working
capital
of
$4,727,672
The first offering made on Jan. orders were
reported to amount to
at. the Druid Hills Golf Club.
of $532,314 for the year ended
against $3,818,415 a year ago.
7, 1948, of a similar amount of -approximately
$2,500,000,
com¬
Dec. 31,-1947 against a deficit"
Detroit Edison Co. capital stoek,
■*A
";
June 11, 1948 (Baltimore, Md.) A
pared with approximately, $2,250,of
$58,602 for
the
preceding
On
Bond Club of Baltimore annual at $20.50 per share, for account 000 at the close of 1947. Sales for
May
13, the
Town
of
year. Net income for 1947 was
of the American Light & Traction
the full year of 1947 totaled
Trumbull sold to Putnam & Co.,
outing at the Elkridge Kennels.
$3,209,028 or 83c a common share
Co., was also oversubscribed.
$225,000i School
bonds dated
694,619, against $2,607,349 in 1946,
against a loss of $178,120 or a
Jrune 11-12-13,1948 (Los.Angeles)
while net amounted to
May 1, 1948 and due annually s
$392,964, or
> deficit of $1.32
a share in 1946. ■
Security Traders Association of
The Detroit JStock Exchange
$23,000 each year May 1, 1949
$2.02 per' common share, in 1947,
Los Angeles Annual Spring party
.*•; }■!■■:■ ,A
reports that trading volume in
through May 1, 1953 and $22,000
compared with $239,566, or $1.23
at Arrowhead Lodge.
each year May 1,1954 to May 1,
The
Silex Company- reported
April totaled 369,567 shares, the
pei* common share, in 1946.
v
1958 inclusive. The winning bid )
sales* of $1,269,000 for-the first
best in six months. They had a
June 11, 1948 (New York City)
was 100.025
dollar
volume
for bonds carrying
three months of 1948 compared to
of
$4,710,410.
Corporation Bond Traders Club
; Watling, Lerchen & Co. partcia coupon rate of 1.40 %.
This
compares
with
240,847
$2,897,000 in the first quarter of
; pated in the public offering on
of New York Spring Outing and
shares valued at $2,956,906 iny
1947.
J/W Dinner at the Wingfoot Golf Club,
Ma^y 12/ of; 800,006/ shares:, of,
A'A- * .7;'AAA;: *. 'A*"'- '1#-WA\A^7AAA/
March, and with 221,398 shares
Southern California Edison Co.
For the month of April, Hart¬ Mamaroneck, N. Y.
Scoville Manufacturing Com¬
valued at $3,062,473 in Fehru4.56% cumulative convertible
ford Electric Light reported power
pany reported sales of $19,871,ary..
—,
June 11, 1948 (Pittsburgh, Pa.)
preference; stock; (par $25) ' at
000 for the first quarter of this
sales: of!45,448,000 kilowatt hourjs
Bond Club of Pittsburgh .An¬
The 10 most active stocks dur¬
$26125 per share.:
* •
\.l ,\
year compared with $22,237,000
nual Spring Outing at the Char- ing April were:
A
it,
it
it; "■
~ '
compared
Gerity-Michigam
with.
42,231,000
for
the
corresponding
period
in
tiers Country Club.
Corp., Detroit Edison Co., McThe directors of Kihg
April of 1947.
Seeley
1947.
Clanahan Oil Co., Gar Wood In¬
Corp. on May 12 declared a cash
:AW: *
*
*
June 12, 1948 (Chicago, 111.)
v
dustries, Inc., Detroit
Cleveland ^dividend of 36 cents per share,
International Silver Co. showed
Bond Traders Club of Chicago
In April of 1948, United 11Navigation Co., Avco Manufactur¬ payable June 15 to
stockholders of
sales of. $16,510,000 for the first
Annual Golf Party at the Acacia
luminating reported total power
ing Corp., Curtiss-Wright Corp., record -May 31,1948. This com¬
quarter of 1948 compared with
Country Club.
sales
of
65,624,596
kilowatt
Electromaster, Inc., Packard Mo¬ pares: with distributions, of 25
$13,674,000 for the same quarter
hours against 61,115,319 in April,
tor Car Co. and National
Stamping cents each made? on Jan.* 2 and
June' 19, 1948" (Boston,' Mass.)
last
A
'
June 4, 1948
A. Parcells &
(Los Angeles, Calif.)
...
&
,
■
.
,
,
.
v,
.
.
,
■
•
,
.
-
.
year.
^
'
.
::/.■/A"; 7
V
*
&
Co.
quarter of 1948,
Towne
showed
38,259,820
A
$13,-
41
it
v
■
months
compared with
share for the
:
a
or
corresponding
710,381 and surplus
$6,198,638.
Investment
Field
j
The
total
May 20-22
A,A
(Detroit, Mich.)
Association
Firms
of" Stock
Exchange
meeting
at
the
spring
Book-Cadillac Hotel
sales
power
Connecticut
Light
Power
&
Company for the month of April
was
94,762,000 kilowatt hours
compared
with
89,822,000 kilo-'
watt hours for April of
1947, or
increase of
an
'
5.5%.
it
'
Billings
&
it
Bond- Club
of
:
Spencer^ Company
Boston
field day at Dedham
; ?
annual
Francisco
Northwood
River.
Bond
annual
new
directors—Edwards
E.
Par¬
Outing
'
and
Lodge,
Traders
at
on Russian
"
'
,
.
;
•
,
May 25; 1948 (White Sulphur
Springs, W. Va,;)Af Ii WAW
Spring meeting of the Gover¬
outing atyCQiintry:CIub.
$uiie 29;
* ?
a ;;
Carloadings at 14 Connecticut
points
Haven
on
&
the
New
Hartford
York, New
Railroad
in
Pittsburgh Securities Traders
Association Annual Outing at the
Shannopin Country Club
May 31, 1948 (New Orleans, La.)
Bond Club of New Orleans An¬
,
April
wer^ 13.2%: less than
a!
year ago. Actual cars loaded for
Smith, Hague ,& Co.
fering^ of 293,077
New York
/
•
<"■*/.'<
nual
Field i: Day
Country Club,
at
the
•
Metarie
received
W.
.
Connecticut Secu rities
-
t
,
,
• •
i
I
•
-v: •sv./vt
Inc.,
July 9,1948 (Philadelphia, Pa.)
were
and
Investment Traders Association
of
Philadelphia Annual Summer
Outing at the Tavistock Country
Club, Haddonfield, N. J.
per,
stoek^^6perishare;The
First
Ohio);
of
of
group
writers which
licly
vestor of
<Sj
$5,000,000 4% promissory
notes due May 1, 1960 at 100 and
interest,. are- to be used (l\ to
Co.,
.
Corp.
Watling, Lerchen & Co.
also included. amohg^ the
nation-wide
,
it
Michigan
offered
on
prepay
shares
company's
general funds to- be
available for capital expenditures,
working capital and other corpo¬
of
4% cumulative preferred stock
the Solvay American Corp.
per
«
rate
Annual Convention of National
Securities Admin¬
The
Steel
it
National Security Trader* Aaao-:*
-
n
r
of
on
April
22
.
;
it
Michigan. Corp*- und
Watling, Lerchen & Co.
on
sale
12 also participated in the pub-
<
Members
/..••'
New- York
anci
Boston
Exchanges
:
■.
Members
Stock
.;::;;--./-
New
''
(New
-
KGO
New York Canal 6-3662
Hartford 7-2669
Teletype NH
194
-A
Established 1919.
V A
<
York),
KECA
(San
,
and '
Francisco). A subif-"•' Y A
*:
•'iy-'■
'
-
Hartford
t
"
•*.
,
.
■
i
New
•
t,
...:
.
H
,,...
7-3542
Upon Request
Michigan Markets
/
-
i
A
-
'
639 Penobscot Building
'> DETROIT 26, MICH.
Vt
Moreland & Co.
Member Detroit Stock Exchange
1051
/
Telephone
Bell
.
\
York:
BArclay
Waterbury 3-3166 '
7-3191
A -A "Hi-Grade"
■'/. v:v- a- •••■■'}
*'*■*New Analysis Available
,
.
and;
System Teletype: HF 365
Teletype
Randolph 5625
DE 206
•
(Los An¬
WENR .(Chicago)
KELLOGG CO.
A'
-
W
Danbury 5600
also
;
(ContinuedCon page 52)-
.'A-
Members Detroit Stock Exchange
Connecticut Securities
CO.
^EXCHANGE
New Haven 6-0171./
WOOD
are
broadcasting company's history
that it has offered-any of its
securities
to
the
public.
It =
licenses
and
operates! WJZ*
.Charles A. Parcells & Co.
AA
York Curb
Exchange
Hartford
:p\
t
station
Mich.)
Tifft Brothers
-.
Statistical Information
5
of
..This Is the first. tim$ 4n the;
geles),
May
lie. offering (for account of sell¬
^
recent
available for such purposes.
Detroit
approved "the merger, with and
into this company of the Johnson
Metal Products Co. of Erie, Pa.
First
^
of
.
istrators at the Multnomah Hotel.
Nov. 15-18, 1948 (Dallas, Tex.*
Co..
the
(Grand" Rapids,
stockholders
Products
purposes; The net proceeds
approximately $807,500 from
of
.;
*
-
share).
$4,000,000 bank loans, and
(2) .the balance to be added to the
under-
April 13 pulw
200,000
afpar ($100
July 19-22; 1948 (Portland, Oreg.)
of
it
McCarty
-
New London 2-4301
under¬
500,0.06. shares of7 American
Broadcasting Co., Inc., cOmmoh
of
July 16, 1948 (Toledo,
A//.;
&
included,
an
March
it
gofi
Primary Markets in
YORK STOCK
Mc¬
Co.,
were
-i
PRIMARY MARKETS
MEMBERS NEW
&
'«'
'
.
of ;
This was' at
share, and
i
Campbell,
Associate
CHAS. W. SCR ANTON
:
*
writing syndicate headed by Dil¬
lon, Reed; & Co.*. Inc.!; wlrich qri
May 17; publicly; offered, an issue
k«7'"'A
V4 w
M
Donald-Moore & Co; and Wm.'.C,
Roney & Co.; also
,
-quarterly, rate of. 8%. cents
of
"A
7
*
Watling,; Lerchen
initial dividend of
an
Y4 cents per share.
tour¬
elation Convention.
..
;
*
-V
the_Winged Foot Golf
Club, Mamaroneck, N. Y.'/;
t-
shares!
together with others in
nament a.t
Association
,tjv
*
-
Holders of the capital stock of
6
1
per-
share,
'
1
and Wm. C. Roney & Co., all of
'
% '
•
April
on
and M Wood Working Co, capi¬
tal stocjk (par; $5> at $17%
COA
&
,
-.•v-
covers the period from
net proceedB^^ froni;fbis issue^^
12; 1948 to May 15,. 1948, gether with the net proceeds from
Stock Exchange Golf inclusive.
the sale to an ihstitutiohal inr
1948aNe^Xorkaty)
:
A
it
Mc Don a Id -Moore
.
I-
27 participated in the public of¬
par ($25 per share) were;
the following! S, R. Livingstone
Co.,
^
^
'y-1-. V*
May 5
on
iB, at
•
a
(Pittsburgh, Pa.)
$
1, last, and in each ^quarter
during 1947. - -V '
/
"
f
ing of 800,000 shares of Sunray
011 Corp. 4^% cumulative con-
15
Robert W.
it
,-A:' April
Invest¬
participated in the public offer¬
Company of Cleveland, Ohio,
pany, also of- Cleveland.
which
*
spring
nors: of the
Bond, Clubv of Toledo annual
Investment Bankers
Association of America..
outing at the Inverness Country
Kerr, Vice-Presi¬
A;.,--;/
■
'AWAWA Club.
dent of Bingham, Herbrand Com¬
May 28, 1948
and
bankers
the
at Rarkvie.w.
Drugs, .of -Kansas City,
IncA Of record May 5, 1948 on May
June 25, 1948 (Cleveland, Ohio)
outing
has announced the election of two
sons!Jr., of William J. Marseicka
Annual
Association 49th annual
May/22. and 23, 1947 (San Fran¬
cisco, Calif.)
; v
San
29th
Woodland^ Golf: Clu&
Country and
Polo Club.
Association
-y
of
ciation
Bond Club of Cleveland
May 21; 1948. (Boston," Mass.)
of
among,
/Detroit.
'
•
ment
annual-outing at Llanerch
Country Club, Llanerch, Pa.
June 22, 1948 (Boston, Mass.)
Boston Security Traders Asso¬
working capi¬
was
Included
ation
a
quar¬
Z&MM*
.
A /
1948 {Philadelphia, Pa.)
18,
Philadelphia Securities ?Associ«*
EVENTS
share
74c
June
COMING
ended
of March 31, 1948 was $5,-
as
hours,
Co.:
Municipal Bond Club of Boston
outing at the Country
Club, Concord, Mass. To be pre¬
ceded by
parties at the Hotel
Statler on the evenings of June
16 and 17 "frgm 9:30 p.m, until
midnight.
{
annual
avertible preferred stock, series;
In
80c
$197,935
ter of last year. Net
tal
kilowatt
total
27,364,776 kilowatt hours.
Hartford-Empire
nearly
or
a
division wereyp 4.5%, totalling
Company reported net income of
$203,650
Bridgeport
;
three
March 31, 1948,
the
9.7% with
corresponding!
it
it
to
of
were
while those of the New Haven
of
revenue
gross
quarter of 1947.
the
of
Manufacturing
$17,049,000. compared
978,000 for the
For
Sales
*
division
For the first
Yale
1947.
,
**
/
AAA
Penobscot Building
\
DETROIT 26, MICH.
Bay City
j—
Lansing
At: Muskegon
'> •'
Volume
167
Number
4700
THE
COMMERCIAL
&
FINANCIAL
l| Prices and Profits
"
By HOWARD R. BOWEN*
■■yy,:y^yy'y.;
'
.'••V'K
•'
'
■■
-'Hv"
H
::1§|;§
■
-v'S| University of Illinois'
•;
A-
;'v
Painting' bright picture of economic conditions, Dtv Boweri
tures-opinion-we have reached end of inflation; unless
g
:vi
we
have
prices will again rise,
,
,
_
Nevertheless,#—:—
Simon
period
is
guns, and our
labor force,
for
'
v\
V '
ail
,
sf;:.:
The
are
,V
<
is sometimes represented to
the' viewpoint' of'
R.
of current
prec
Bowea T-
..
gg:.-.
nesr as
:f*r
tfidt
■
v
whole is
a<
returns.
some
we
in
are
a
bobm|
dering about is, "Where do
•
5
at par
houses*
Los
,
&
on
McCourtney.-Breckenridge
Co.,.Inc."
Net
'
;
profit
of
Angeles—continuously
share is; payable
oper¬
today (May. 20)
January 15; The stock
SI':''
■•/m v.
late-
of'
Hugo
Fi
Urbauer;
Walter
~
value
$^35p;(JQO#; Thepetrprpc^jds^
usedr^di; expansion, elc,
■fy%^y
j1'
.'-
*
'
:~fy?
Gas* &
shard
?>>*!
Barret; Fitch* &i Co., Dempsey\!.xegeler-&j Ctf&Ai. Cki Edwards? &&■
Sons; Reinholdt & Gardner andf
.
vl-
t
;
Shishkin, AFL economist, lays prime source o^inflahoir tbv
circulation; Urges increasing productivity per
man-hour, with reduction oF hdurs' off labor and higher workers'
income.,
holders)'^ off 680;000
; Addressing; the: Midwestern
Spring' Conference of the Con¬
trollers Institute! of America' at St:
F&ul; Minhi, ofE May 17,"Boris
Shishkin, Economist ofrthe American Federation' of Labor, denies
that higher- wage9# constitute vthet
prime
cause. of; > inflation,
warned-
per share.
been,
the
inability
management
Agreement
able
to
labor
and
on
facts.
facts is: indispens¬
sound
a
agreement
of
to: agree
on
holdt
on
and
genuine
issues.
:
increase
mum
in
the
labor
cost
the? same
period the5
price per ton of coal
wholesale
rose
$1.18 while the
average
re¬
"In wage negotiations, labor has^
been giving too exclusive atten¬ tail price in 34? cities rose $2.40
tion to wages as income, while per' ton.r Here'is a perfect illtistration of how a 24-cent increase
management has been looking on
in the labor cost? per ton was uni¬
wages as costs, v Labor should talk
\
about
more
wages
as
costs
and
management more about wages as
income.
That is the only way for
both
to
reach
a
common,
totaled $3,805,588, or
share on 4,256,453
shares
outstanding, as
year
cents
per
common
against
share
$4,944,502,
about their respective
obligation
to
the* enterprise
Gardner; Stern Brothers
cially#
while
consumer
the
creasingly
durable
buying1;
diverted
power
goods,
is im
to food, rent
indispensable necessi¬
ties: But the prime source of< this
ancL other
inflation
is the excessive
volume
of
;
duce
v
>"'•
'»••*
tfs
Stern Brothers &
long
a-
term
real! income while
;v :v„.,
'■*
! 000 shares of Oklahoma Gas &!Electric Co. 5H% cumulative?
preferred
$104
'
and'
stock
on
(par
share
per
and
April' 22
&
Power,
&
who* publicly offered; on
May 12
of-., 800,000; shares,: of'
Californiai Edison Co:
issue
the
companyat
the
Congressional hearing
Washington;.!
headquarters*
local
plant
or
at
where
collective bargainihg is initiated!"
-
'-*1
■
| J Interstate Bakeries- Corp.*' Kan¬
sas! City, for the 16 weeks ended
April! 1.7, 1948, showed-a net profit
10
weeks- ended
April
19,
1947.
For the year ended Dec.
27; 1947
net1' amounted
to
$1,529,278; or
$3.73-
per
common.,
pared' with
share,
$l!310,860,
or
com¬
$3.02 per
common:
share in: the previous fis¬
cal: year.
Sales for-the 1947 year
were*
$52';772,555*
$1 LI 02,638
over
ail
increase: of
1946!
"
.
Brown Jbins Bacon
p#
#
(Special to The Financial Chronicle);,
'
#
SAN, FRANCISCO* CALIF. —
Hbrace;J. Brown has become con¬
nected
with
&
Bacon
Co.,. 256
Stock Exchanges.
Hfe was previ¬
ously with H. R. Baker & Co. ;
,
I Irving Lundborg Adds
(Special
V
SAN;
,
to
The
Financial
Chronicle)
FRANCISCO.
CALIF.
—
convertible; Henry Av McMicking is with Irv¬
preference stock-j par $25* at $26.25. ing Lundborg & Co., 486 Califor¬
nia: Street, members of the New
per sharO:,andfdwidend^# *: # v# T;
.
stock
Moore-Handley
(par
$1)
Hardware
debentures
1983,
of
per
of
Co.,
share.
The
-
selling
May
stockholders);
and
ST.
LOUIS
on
$100,000,000'35>year
4' of
V
due-May- T;
Southwestern
Bell
Peltason Jenenbaum Co.
Berkshire Finrf Spinning -
#
!
Delhi Oil
LANDRETH
BUILDING
ST. LOUIS 2,
Long Bell llumher
Teletype—SL 486
M0.
L.D.240
Rockwell Mfg.
Southern Production
II ! I
Southwest Gas
Southwestern
#
u-
y-,\
#• _*
Southern Union Gas
Producing
Publi^, Service
common
Universal Match Company
Stix & Co.
r>-
„
i
Bought ^ Solids-—Quoted
\
; ir*
-
SCIIEfCIV RICHTEF COMPANY
the
but rrghf
level-,
first
3% bonds, due April
IV 1970; at' 101%, and interest
]4:56^& I' cumulative;
3Vh%
$20.83
#
in
$12,000,000
Gulf. States* Utilities. Co;
CO# alSri word,included
$20.41 to
distri¬
r"TO- translate this policy* into
genuine
union-manage¬
ment
cooperation, should, begin,
at
Montgomery Street, members of
the San. Francisco and Los
Angeles
list! of; investment: bankers
offering of 500,000 shares of
Shareholders Trust of Boston,
par $1,; at? prices;
ranging; from#
increasing- the
reality,
$100)
dividends; #
of
mortgage
Lie. Birmingham, Ala., at $9 per
share
(net proceeds going to
pated'on April! 13 in the public
proposition,
volume of production and'
bution;" I'*'#■>; : #•
*
Co. partici¬
pated in two additional public
offerings, viz: On April 8 of 65,-
■
hours of labor and' increase
room
*
In addition Stix & Co.-partici^
labor and management; must agree
that expanding
money in-circulation ih .rela4tidii' td? prices!
Wages are; not a not ih
direct or sole force responsible for'
high prices. - In fact;- quite often,
even* generally,
prices far out¬
stripped wage costs. Consider the
fact, for example, that im May,
the
Common
.-yyy'-yyM'-'yyy ■■*
versally represented as* the- direct
for the pricedncrease which
reality was tern timesi as^ great#
"As
per
.
productivity is; a
which both are a part; as well- as national necessity;
It is in the
to; the: community^#,'
r, long-term interest* of all to pay
labor progressively higher wages
;
"Continuing rise in price infla#
in relation to prices; to-do this
by
tion is* presenting; an increasing,
progressively increasing produc¬
threat^ of choking off the market
tivity per man-hour; and to re¬
for5 manufactured products, espe¬
of
Rein#
$1.19
or
.
on
3,961,693 common shares
outstanding.
;.v
■■■'/..it
cause
lasting
agreement
Cb.,
per
Brothers
Garjdflerian'd*Stem
,
OL coal was; 2^ cents.# Yet
during?
Coolr &
pe¬
6%.
&. Co., and* H'. O. Peef &•
Co. on
May 17 participated, together with
York, and
San .Francisco Stock
'[My !;!;#*, Myy^
*
*i '! !.:*/ '! -#!#* ###!
others, in the first' public offering
Exchanges.
He
was
previously
for r 1he; accouht*!'
qf-American. ; - Other offerihgs? inr which*
with Dean Witter & Co!
\.
!
Reinholdt1 & Gardner < partici>Broadcasting Coi, Inc. of 500,000
pated,. were
as, foliowsL- On^
shares' of common1 stdck.
(par $1)
April 27 of 350,000 shares of
at? $9 per? share#
' j ;
fifndp added? since May, the maxi¬
per torti
in
Southern
Newhard;
pnd.
Reinholdt.
an.
*#.•:
Co.. at? $26
Stern
American
Brothers
*
of
earnings for the first quarter
of Kansas
Light Co.
;
shares* of
Co. $5: par common stock at
$25*
that continuing
rise in^
prices is threatening to choke off 1947, the labor cost
^>er. ton of coal
themarket
for
manufactured was $1.65? ahd in
November, 1947,
goods.
Said Mr. Shishkin:;
$1.84, a rise of. 19 cents »'a tbn: ! Al¬
"One great obstacle in the
path lowing an addition for a five cents
toward
economic # stability
has a ton payment for the^;welfare;
'
?
Halliburton Gib Well; Cementing
,
Electric
were:
owned* by.
Simon? & Go; participated'
on*
May 12: in the publio offerirtg
(for account ' of: sellings; stock¬
excessive: money in*
•"
!!!
stock
Co# Newhard, Cook &. Co. andi Barret; Fitch & Co., Tnc; These !
shares, are part of the shares
I» M.
Boris
same
.
common
.
!
'
compared
gain
a
Wayne, am attorney of St.,
after taxes of
$536,225, or $1.36 per
.Louis; succeed^ Mri Ui^auer as# common
share, as against $642,935,
director:
or $T.7Tper common
share, in? the
Edison
before in trie
Saws Warrp ItirroAcoc ArA Nnt
•
or
'
■'
■r-
I
85
year,
President,
has also! been! elfectedt Chairman*
of
the
hoard* to succeed; the
.
M!
last
of this
.
| R.
sumption of goods and the stand#
ard
wonr
we
Net
$38,473,744,
$36,216,506 in the
riod
##
A% G,. Stoughtoh;
;
*
Missouri'
for! the
three months ended March
31,1945
ceives' regular quarterly
payments?
of 15-cents per-share.
Richter. Co., Is M. Simon &
C01,.
Stix. &; Co. and, A. E. Weltner
&
is
to stockholders- of' record!
May 10i
This is the second extra this
year,
One of 40; cents
having been paid
Co!, Newhard, Cook & Co.,
Reinholdt & Gardner,
Scherck;
|
it
per.
&'
t
.Co.: and*
ated! to capacity on a, single-shift
;
basis. An extra dividend of $1
of* art! issue
Dempsey-Tegeler
or
reported;, each, of! the
company's four plants — in!. Sti
Louis,-Boston,; Passaic, Ni J!, and
stook, series B;
(S25 per share) were the
following:
! Co.,.
$1,895,966,
share, against
$1.30 per share, in the
was
per
;C6. for 1947 totaled $104,103, ? aftfer
living is higher than ever charges and? Federal!
income taxes;
go
history of this or any or $1.04 per share on ;
100,000 outh
from here?"
Oi Hi Wibbihg &: Co:, St.
other country.
The international standing shares of common
Louis,
stock. oh*
This a< period when the visibilh prestige of! this cuonfry is greater This
Abril. 27J partifcipatedf in# the
Compares! with a? net of $96*public ! offering*- off 293;077 shares
ity ahead is unusually low. Every, than ever before in its history. # 4'34; or 96! cents per
share?; tot the
pi Mo ahdi !M# Wood; Working i Co.
These are not the conditions of previous year.
The report reveals
(Ore.)/ capital# stock* (par: $5) * at
*Excerpts from an address- by wild inflation and of national; de¬ thaLoiv Seph
20, 1947;' the
$173# per share;
Dr.
Bowen
at
the
Midwestern? bility.
These are the conditions pany issued! and sold to an-; insur¬
f
Springy Conference- orithe Comp>- of strength, ; stability and
ance company
;-vf
pros$200,000 additional
trollers Institute of
Included, among: those: making:
America; St. perity. So fan as- i know, there is first mortgage bonds, series- Ai
3 #2 %,, due
Paul,. Minn., May 17, 1948.
public offering, on May 12 of an:
(Continued on page 55.)
July 1, 1975; bringing
the- total! amount,
issue o£150l,000 shares of no par
outstanding; td
and the question, we are all
7.-
May
011*
and'amount¬
the
age,
-6-v.''
,;
investment
ible! preferred
and
The population^ at work- and*
rta£f
tional morale is high. • The con#
fact, is
fif&tr^lhj^
Missouri
merely doubled here; j.The vproi^
yielding: hand#!
The- plain
in¬
of
failure to •ductive plant is intact and
being
provide sufficient^reserves for, in-? rapidly
enlarged and improved,
ventory losses,, dnd .the vulnex.-> The governmental
budgets are
ability tb: future* losses because, ofe balanced. Confidence in the: dolt
nigh break-even points* Yet1 few: lar and in the
integrity and credit?
would! deny that American? busis of the government? is unimpaired.
MM
■My
the
''.p..:,--
and
800,000 shares ot Sunray Gil#
Corp. 4%% cumulative convert^-
•
seems a- Gibraltar of; stasecurity.: Prices have
bility
"
charges,
;gf
de*-1 States
ia t i.on
,
100
'h.
'0
.-!(
:Sc
' ,
Net sales of Monsanto
Chemical
its subsidiaries
-
ended Feb. 28, 1947: In spite
year's critical' steel short¬
year
of
profit
to $4.91
$503,450,
*
-offering-
inadequacy of most foreign countries, the United
if
:-
,
at
Net
equal
of
#Y '
ended
to
year,
shares
stock
at
$13.50? per
(the rights will expire on.
May 24, 1948).
with
war years
National
common
«■ }-
year
of
additional
share
on
*
the
stockholders
uiir-
com¬
Gypsum Co. of record May 10 of
422,467
or¬
$19,169,660, compared with
$9,197,837 in the preceding fiscal
which participated in.the
public:
,
the-1 tion,. yet. from
of-
!
Although
we
complain ; a
great deal about prices and1 infla-
j;
toward
Equitable
for
list of 46 in¬
a
offering to
an
amounted to
ed
purchased
was
mon
other than
last, $2,500,000 of first
3y4%v bonds, series C,
June-1, 1971,
present
be.
V.,.,,P.
cause <;
it
as
They mhy; be
"
'
«
g
economic- position
by the
the
United
States is- by no. terest;
means
as
distended and unstable
overstated? be~ r—
- -
"■'-if'"® %*
due
-
derwritten
*v'-:..VA..
* f"!#
sales
hankers
same
vestment firms which have
29,: 1948 were the* largest in
the history of the Midwest
Piping
& Supply Co.* Inc., St.
Louis, in
used to pay for additions
and im¬
provements
to-j
property.
On
March
was
oversub¬
was
The
were included in
!
Feb.
$400,000 3#4% sinking
fund debentures due 1963r
with
the Equitable Life
Assurance So¬
ciety of the United .States will be
some
company,
13, 1948.
'■
Net
..—
,'
open-end
in!. Massachusetts
#!':'
proceeds from this
the private- place¬
from
2,
mortgage
,
March
of
tors at work.
hi gh'.
so
and
of
Profits
l
are
Co# The net
ment
when.you
that there
in
investment
(which
scribed).
diversified
a-
ganized!
&
large and clearly identifiable fac¬
prac¬
ployed.
a
most,
terest,
■%
Ed-#—-————'"
Inc.,
sale
are
man
tical purposes,
is f u 1.1 y. em¬
•'(: '«
&
in it. And, in fact, the present
situation may be somewhat clearer
going great;
that way
seems
bankers:
Cor, Metropoli- i| Trust,.,
Co., Stifel, Nicolaus &
Stix & Co., Taussig,
Lay & Co., Inc.; and G. H. Walker
Co;,
v;.'
—
production
&
St. Louis
Co., Newhard, Cook
Co., Reinholdt. & Gardner, I. M.
&
Prices, most people think, are outrageously
high.
Production
-is also high,
although it is not as high as it might be if we had been
■Mm-MC: •able to
achieve, the level of efficiency to assimilate new
technologi¬
cal developments as
rapidly as we had hoped at the end of the war.
!
Jones
tan
*
'
j
.
ward- D.'
>
large scale rearmament Cites eight reasons for concliisibn, But'
says if; relations'- with. Russia necessitate
large scale reanhamettty
"
of- St."Louis
group
ven-
11
Telephone Co, at 102 J4 and m#
p-
; The common stockholders of! record April 6, 1948, of Missouri
Utilities Co. were recently offered: the
right to subscribe on or before
April 23 for 22,'75'0 shares of additional'common-stock
(par $1) at
$12.50 per share. .The-offering was-underwritten,
by the following
.
r•
y
'■ ■ ■< •"£■'• '
"■'•
' *•- v'--''-v-;
Dean, College of Commerce and Business Administration,
'y
(2195)
MissouriBrevities
{ "I
1
CHRONICLE
Landreth Building
Bell
Teletype r
SE 456
St.
Louis 2,
Mo.
.
::
:
-
>!
INVESTMENT
«
f
509-olive:
--
i •
SECURITIES
street
St. Louis l.Mo#
\
Garfield 0225
L. D. 123
Members St.
Louis Stock Exchange
12
(2196)
II Inflation Is
State of Mind
a
By EMIL SCHRAM*
President,'New York Stock Exehange
^
,
'
*
v
,
Mr. Scbram believes
period of shortages is ended and, barring unbalancing of budget, we have already *
entered postwar period of stabilization.
Maintains we are obsessed with monetary side of price equa- V
tion with underemphasis on supply of goods and commodities.
Decries iron curtain around separate
*
in the forefront in recent sharply
Railroad stocks have continued
advancing markets, and there are valid reasons why they should con¬
tinue to do so.
First quarter earnings were quite spotty and the
:parts of capital and
as a whole did not show as high a net income as in the
period a year ago. Declines^well for the ability of the indus¬
were not universal but they were
.widespread. For one thing, weather try to keep pace with spiralmg
conditions were particularly se¬ costs in an, Inflationary era. Ap¬
prehension caused by the appar¬
vere throughout most of the coun¬
try. This resulted in inflated oper¬ ently dilatory attitude of the In¬
Commerce
Commission
ating costs and also cut somewhat terstate
money
market*.
,4
I/*'
^industry
Inflation, to put it bluntly, is a state of ir. ind../ It cannot be understood solely in mone¬
tary or fiscal terms or if attention is paid only to interest rates or commodity prices.
I
like to think in terms of the future and base
my opinions largely on an analysis of pres-
like
had
which
tonnage.
■
past
-
April " results are pub¬ structure to the railroads to assure
lished they will also show the in¬ the country of an efficient trans¬
This is doubly
fluence of the coal stoppage—the portation system.
strike extended into the middle of important under present unsettled
the month.
Subsequent earnings, international conditions. Last
however, are expected to make year's wage increases were not re¬
troactive. The raise awarded the
highly favorable year-to-year
Traffic volume
comparisons.
begin
influence of
reflect the
to
,the most recent emergency freight
rate increase. Passage of the Eu¬
ing
The opera-
rate increase.
brotherhoods were given a
increase effective Nov. 1,
Recovery Program and our
promise main¬
tenance of the heavy traffic move¬
wage
ment.
another temporary emergency rate
ropean
rearmament
own
The
recession, or depres¬
sion, which so many investors and
speculators have been looking for
for the past year or more now ap¬
Under
conditions
have
and prospective
present
railroads
the
other major
industries.
to material allocations
increase
granted.
was
controls
the
based
the adverse influence on
on
earnings
carriers.
This
was
value
hardly harm the railroads. over, the rate case is still open,
The
action
such
facts
truth:
they may lead
u s.*I n
t h e
early
mid
Emil
Scbram
banks
and
made
were
that
would
the
add
and investments.
by the
ment
tral
was
large.
bank
,
Commission,
therefore,
can
their
to
Excess
Finally the
authorities 'were
think
number
realize
very
thoughtful
survey
ness
Review, it is pointed out that
since early 1947 the rate of
family
formation appears to have declined
in
recent .years
dwelling units
ceeded
the
the
increase
have
appears to
increase
in
in
ex¬
family
formation.
The survey concludes
that while demand for the
present
is: still
in
of
construction
the
produce,
that
of
excess
there
is
the ability*
industry to
evidence!
some
the intensity of the demand,1
housing will gradually taper
for
off.
To quote:
,\v
;> "The gradual prospective reduc¬
tion in the housing
deficit, coupled
with increasing pressure of those
costs
on
find
tribute to progressive
lessening of
the intensity of demand."
it
hard
to
make
both
ends
prices are high.
By my own definition, in the
two years after V-J Day and until
recently, we
ary
period
were
money
a
absence of inflation, yet in
people
low, but cannot
a
income, and coupled with
- of
tightening of the
mortgage market, should all con¬
meet because
com¬
that periods of
of
prices are;
even these
cen¬
horse
a
the way for more sta¬
that we do not always
to be in a period where a
In
published by the Federal Reserve
Bank of Cleveland as a
supple¬
ment to the April
Monthly Busi¬
pay
low prices for
goods and services because of
lack of income; or, having income-
loans
reserves
balanced budget necessarily coin¬
cide with sound credit conditions
an
running
The great problem,
is to find a way of
tate.
so
large
that
be led to water, it cannot tie
to drink.
We are accus¬
and
by a homelyinflation when
is running after goods and
appear
commercial
pelled to admit that while
to
"Of
pave
bility
but business neverthe¬
languished
and unemploy¬
less
would
^nr ki-ei cm
avoiding both of these conditions
the forces of recovery by pushing
funds out and creating excess re¬
so
4he-
have
after money.
I might add,
thirties,
you
will re¬
call, hercu¬
serves
that
way
deflation when goods are
-
efforts
We
money
and
■
a
absence
or
ence
where
ter
in
try to define
monetary experts, but I think that
we
can
best recognize its exist¬
the
mat- :
no
tomed
coal
matter
fact
to. follow
can
As
of
inflation
stand up ^.against
forced
severe
<
ac¬
economic
Definition
I would not like to
ing buFmmcnr"
due to
the
-
some
the
Technical
Not
ex¬
condition¬
in
winter
of
weather and the fact that,
could
a
to
piled up
In April of the current year an¬
other modest rate increase was
the
A return
or
Before the end of the year
with
me
with
facts of life.
has
mainly
strike, traffic had not
reached anticipated levels. More¬
to
seem
number of advantages over
a
1947.
allowed
indefinitely postponed.
pears
of '
monetary authorities to > generate
porary
credit
past. Ref¬
non-operating employees went in¬
to effect on Sept. 1, 1948. Early
the following month the Commis¬ lean
sion allowed a compensatory tem¬
con¬
tinues high and May reports will
will
quaintance
perience
has given evidence that it
recognizes its mandate from Con¬
gress to provide an adequate rate
When
.4s
"1-<
the
erence
the
in
year
serious impact on freight
very
a
strike
coal
the
came
Commission
The
those
like
<S>-
are
exactly
never
periences of 1947 and 1948.
parts of the country had
be shut down. Then in March
some
to
which
by the ex¬
has since been allayed
plants
into the traffic potential as
in
ent conditions
running
done
inflation¬
an
certainly
after goods
A public which had
was
and services.
had
in
because
without
things
many
ample funds
and
determined
was
evidences
In
the
field
find
we
where
must
an
it
seems
continue
hand.
The
mindful
the
of
small
in
area
to
its
economy
Government
lend
Congress
of
housing,
the
the
helping
a
has
been
responsibilities to
country in this regard in its
and careful study of the
constant
to do without no longer.
There | is
More problem.
pending
a
period ending in the 1929
act quickly to give further aid if the
stabilizing,
recently,
despite*
developments long-term housing measure known
reducing, costs. the earnings picture should start crash, the budget was balanced such as the coal
as
the Taft-Ellender-Wagner Act!
strike, which has
At the same time, if any type of to deteriorate or if costs should and, more than that, a large surtended to accentuate shortages in which is concrete evidence of fur¬
again go up. This recent enlight- plus-^that is, for those daysexcess profits tax should be rether consciousness of the
made
it possible to reduce the certain fields, the area of short¬
housing
imposed the railroads, because of ene<d attitude of the ICC is highly
problem on the part of Congress.
ages has shrunk. It is my convic¬
Government's
debt
by
their large invested capital basis, encouraging.
Given a sustained Federal
The FHA mortgage
tion that it will shrink further in
guaranty au¬
should again be in a relatively level of traffic and an adequate roughly $8 billion between 1921
thority
(Title 6)
lapsed as of
and 1930. Again, the deficits in the Coming months as the remaining
sheltered position. If gasoline ra¬ rate structure the railroads col¬
April 30, and I understand that
fiscal years 1934,1935 and 1936 did pipelines are filled and production
and
individually
can
tioning should return it would lectively
Congress is presently reviewing
not make for anything approach¬ and consumption come into great¬
presumably have a favorable im¬ hardly avoid showing high earn¬
er balance.
According to the lat¬ the advisability of extending this
ings.
This prospect, moreover, ing full employment, let alone in¬
pact on railroad passenger busi¬
est figures, the monthly produc¬ authority for one year.
In other
brings with it the hopes of more flation. Interest rates in 1926 and
ness which is now generally being
of
washing machines has words, small and mass housing
1927 which now seem high, were tion
conducted
at
substantial .losses liberal dividend policies.
reached 400,000 against approxi¬ continues to require a form of
being condemned as representing
contrasted with large profits dur¬
mately 290,000 a year ago and the subsidy from the Federal Govern¬
the consequences of easy
money
ing the war.
'
ment.
policies of an unsound nature. We adequacy of the supply of such
should be beneficial in
and
perhaps
even
...
The rate situation also appears
to be more favorable than it has-
to
a
crease
The
was
modest temporary rate in¬
in the middle of the year.
final
until the
business
previous
periods
of
expansion, that business
The National
City Bank of New men will borrow in one period at
York, as Countersigning Agent for relatively high rates and look with
increase retroactive Commonwealth of Australia Fif¬ a cold
eye on financing plans at
the first of the year there
only
from
know,
Bonds Now Available
been for many years. In 1946 when
railroad labor was given a sub¬
stantial wage
.
Definitive Australian
decision
did
not
come
teen-Year
1,
1962,
3%%
has
and after
Bonds
due
Feb.
that
announced
on
May 14 Definitive Bonds
of this issue will be available for
beginning of the follow- delivery in exchange for TempoThis lag did not augur rary Bonds at its Head Office.
other
matter of
a
and
refrigerators is common
knowledge to everyone who reads
the
newspapers
walks into
or
an
electrical appliance store.
fact,
our
year.
Goods
Now
Get
building
booms always seem to harmonize
with
For
able
a
number, of
Easier
to
;
us
f|:f
ji
commodity
'
would
r
V'
F '
view
'
••
"F
••
U
V
H<
■
'
I;
v ''-*f
.
■■
:
;
,/
-
r
a
most
of
years
distorted
larger business pic¬
This is simply by way of
and
I
think
illustrates
psychological, or a state
hoping that you gentlemen
of mind,
Coverage
goods
•
*
United
of
Mr.
States
Schram be¬
the
best
will
get,
Senate
Joint
i
h
ii
!
v
*
*•
i
%
'
.
Guaranteed Stocks
>
F'F^BondsFFl'
■
r
!!'
;
1' :v "r; F"•
:
?/';rr iV F,;.!
Jw:
f: AA;
MEMBERS
NEW YORK STOCK
EXCHANGE
I
-
mobile
the
,
industry
few
-A
the
catch
some
fact is that
at
the
have
v;
for
to
it
does
autoA
up
on
time.
months
as
a
lowest
It
however,
YA-'v'l Vi H
and
recently hogs in
result of heavy re¬
ceipts, slumped to $21.75 against
$23.50 only a month ago and were
V V'V---
I
is
prices
common
that
suffered
since
OPA
knowledge,
luxury
businesses
sharp curtailment.
CBAIAHTEEP lAlLIOAP ST8CIS-BONDS
'
TELEPHONE
DIGBY
4-4933
TELETYPE NY
25 Broad Street
1-310
New York 4, N. Y.
'
Telephone BOwling Green 9-6400
r
■
*
_
h*"*
■#«."»
^
j
t
4r*
V*
,
«t
■i-•
''* /
:
Teletype. NY,
-F
i '■
who
i One
.as
the
I
field
Housing
that
is
the
of your
case
have
given real
question, as in the
distinguished Chair¬
Senator Taft.
do
'
•
point to the fact that the
former
Chairman
of
the
Federal
Reserve
System, Marriner Eccles,
disputed the soundness of provi¬
sions of the Housing Act which
made
credit
sively
were
available
terms in
easy
encouraged
into
debt,
on
exces¬
that buyers
to
-
deeply
r
adding to inflationary
;
go
pressures.■
fruits,
hard to
heard
Chicago,
BROADWAY
New York 6, N.
were
exist
demand for
days.
61
many
shortages in the heavy goods
seem
The
Special Securities
McGINNIS, BAMPTON & SELLCER
wives,
Only
ago, this Commit¬
testimony on the al¬
leged shortage of meat.
If there
was one subject on which
every¬
one
agreed, it was that in April
and May meat prices would soar.
written request
leave that decision to those in the
citrus
as
ago
possible
li
on
dis-
objective of such
I concur; as to the
assistance, I prefer to
methods of
Financing of
are
tee
:
such
year
your
fact that
still
a
The Economic Re¬
port, May 13, 1948.
*
a
the
not
*
on
have
in ample supply, and in
several cases, prices have tumbled
severely. I realize, of course, that
It
Copies available
items
food
■
>
ago
authority,
confirm
which
'!•
n.i
Shortages that vexed
months
is no longer any
shortage of men's white shirts and
A
Committee
diffi¬
so
There
peared.
If
ft
few
a
were
industries
Statement
fore
which
wage costs.
some
P
of 20 Income Bonds
history
flation is
"-•
r;
one
not
why I have stated boldly that in¬
.
v
Statistical Data and Estimated 1948
r
'
*
••
could
the
of
comment
i8
1929
The
prices in those
give
ture.
RAILROAD INCOME BONDS
to
occurred.
broad
legislation,
dur¬
consumer
cult to get a year ago prices have
been reduced—this despite higher
have
the
man,
a
period of increasing and
high costs. - If commodity prices
a perfect mirror of
inflation,
a slightly downward
slump in the
were
In
study to
Consumer
mid-twenties
ing
:
Congress
times
although the cost of
borrowed money is relatively low.
As
durable goods as radios
consumer
A
so
,V\
important
to deserve special comment, is
housing shortage and real
es-
I
understand
carrying charge
under the
G.
Small Homes
the
on
a
I. Bill
approximate
small home
'
of Rights to
I
be about 1 % of the purchase
per
month.
me
the
the
outlying
A
other
price
builder informed M
other
areas
day that in
of New York
$19,500 home
may be mortgaged
$14,500 through private chan¬
nels; that the G.I. can obtain an
a
for
.
additional loan of $3,000 for a to¬
tal
of
$3,000
$17,500 and the additional
is guaranteed as to pay-j
ment
The
by the Federal Governmentu
carrying charge in this par¬
ticular
case
exclusive
of
main-.'
tenance is about $150 a month, or
$1,800
a
year.
In the bracket of
$10,000
home,^ the
carrying
charge is approximately $80 per
a
month.
It
seems
to
me
that
at
•
this
rate of monthly outlay jwe
must expect that some purchasers
will find it difficult to maintain,
their payments.
This will be espeeially true should we find em-*
(Continued
on page
44)
n
'
Volume 167
Number 4700
&
COMMERCIAL
THE
'f
FINANCIAL CHRONICLE
j
-
|
.....
_____
—
—.
.—
view
The After Effects of the Marshall Plan
_
-r.
*_
'
'
-
recovery,
currents
-
^
,
Professor, Claremont College, Claremont, Cal.
Marshall Plan
as
aiding
As
...
.
well
our own economy as
V'.'i
" ■** C.
T
•
European
as
our
Medical science in recent
'
acle drugs
came
be¬
more
general, it
dis
red
cove
that
in
was
many
■£ these
drugs, if not
cases
with
usea
ex¬
treme
care,
have toxic ef¬
fects
and
not
infrequently
I
Haas
de
do
that
parallel between medi¬
and finance—and yet
impossible that unless our
a
present financial assistance to the
world is handled with skill and
wisdom that unexpected and dis¬
turbing after effects may develop.
I
not enter
need
sion
of, why
was
the
I
necessary.
all of
stated
Marshall
of
We have
Plan
certain
am
assistance
countries
matter
discus¬
a
that
will agree that further-
you
financial
into
the
to
abroad
inescapable
deva¬
was
a
necessity.
begun to realize in this
country that peace is indivisible—
we cannot hope to
enjoy a lasting
there
is
no
But
is
so
"all in the
world
a
war.
indivisible,
are
in
except
peace
boat.
same
hope to enjoy
perity except in a
is
We need
is
We
In
trade.
son
world
to believe that another five
loans.
not
ficient
all-volume
the
above
well
production
of
level.
1938
Although
neither
war
production, the general
picture of reconstruction was en¬
couraging indeed.
tinued
The
aid
further
reason
was
needed is that recovery; was spotty.
industries
Some
others
were
way
below the
way
above,
1938 level.
Our modern industrial and com¬
mercial
is
life
so
delicately
ad¬
justed that it cannot function at
maximum
elements
It is
no
efficiency
are
working smoothly
great help to have
tory
rebuilt
coal
unless
the
and
unless
create
to
fac¬
a
equipped
machinery
ample
all
unless
with
poor
followed
crops.
Nazis
by long
destroyed
on
con¬
it
a
some
its
dollars
people
force
we
would
tion 1
portion
a
The
to
we
disastrous
to
securing dollar balances. Had
not decided
to give further
have been unloaded on the
American market. Since they rep¬
ably
resent
tant
a
of our more impor¬
few
this concentrated
industries,
liquidation might well have had
com¬
effect
disastrous
a
So far
We
good.
so
others
drop in exports might easily have
helping ourselves.
A Sound Business Proposition
resulted in serious unemployment
lems
From
and price
commercial.
purely
a
economic
and
financial poiiit 6f .Jview, our
planned
thu$'far arijj
are
a
proposition.
uje
sound
Some indus¬
tries have been exporting as
as¬
as
now
40%
of
industry
business
point
the
Fr«m
aid
declines;
can stand a
not
are
so
generation
present
This announcement is neither
The
for
and
generations yet unborn. A world
where there is economic distress
and
there is
where
world
hope
no
is
as
an
offer to sell
nor a
when
the
spoken of
sudden drop
/
strictly
as
(Continued
a
solicitation of an offer to buy any of these Shares*
legally offer these Shares in compliance with the securities laws of the respective States.
a
that
becomes a
breeding
for social upheaval. The
Marshall Plan is the answer.
ground
We
not
do
yet
the assistance
and
know
50,000 Shares
whether
giving
going to give to the world
accomplish the results we
we
are
now
'
are
will
hope for.
not to
which
V
-
our
in
::
Carpet Company
Alexander Smith & Sons
The
disease may be cured as the result
of
■
:
But we could not afford
give the help needed.
'
:
remedy. But, as in medi¬
cine, much depends upon the way
tered
the
and
4.20% Cumulative Preferred Stock
c
remedy is adminis¬
the bedside man¬
Psychology is
important in medicine—it is also
important in diplomacy. Even the
upon
(par value $100 a share)
the doctor.
of
ner
careful
most
management
may
unsuspected problems for
create
the future.
V
Will Marshall Plan Accomplish
H
•
Price
Results?
'•
liitthe first place,
v*
must ask
ourselves, will the aid given under
the Marshall Plan accomplish the
results we hope for? There is no
simple
answer
two-fold
a
shall,
we
were
was'
to
for this.
aim.
Plan
we
told that
our
help create
the
•
Mar¬
speaking
University
posed
his
on
he was definite
in
general
his
;•
'ir 4
Calif.,
I
"v
,
,
j-V
>» ">■ *
'
i
>V:;
•
-
5
'.
>
.
■
r
.
pro¬
MORGAN STANLEY & CO.
announce-
California 'Bankers
tion, ^Coronado,
.•
terms,
fore'the
the
*
.
*An address by Dr. de Haas be¬
57th Annual Meeting of
<
V
Harvard
at
June 5, 1947,
plan in
'>*"
Copies of the Prospectus may be' obtained from only such of the undersigned as
may legally offer these Shares in compliance with the
securities laws of the respective States.
;
\
'
announced,
only object
wo^ld. When Secretary of State
Marshall,
a
rr
"TIT
prosperous
a
.
We have
When
first
was
$102.50
and accrued dividends c
Associa¬
17,
May
i$ir* :%
*
♦.'
May
JO.'/S.
10,
and
Marshall
commercial
on page
offer is made only by the Prospectus. This Upublished on behalf of only such of the undersigned
may
are
element was
and
the
we
financial
new
is peace—in. which there are jobs
for people willing to work, food
clothing for all and, above
everything else, where there is
hope, hope for better things for
helping
But the prob¬
only
A
are
doing
,
Plan, which at the beginning was
I^o
in sales of nearly 40%.
of
in
and
introduced
much
their total output.
'
Economic Warfare
The
and
se¬
our
^
comparatively few industries,' the
war.
upon
curity market.
with the effect concentrated upon
the
primarily as a protec¬
inflation'at home
governments are interested
against
con¬
business
were
to these dollar
loans, these securities would prob¬
of
range
investors
on
in these securities only as a means
suddenly
affected
narrow
who
securities
in¬
A sudden change is al¬
dustries.
ways
have
come
These private
anxious to hold
sup¬
we
buy
to
investors
private
holders of American securi¬
were
ties.
effort
desperate
a
the
out
may
when
have
would
paratively
surprised that agriculture is still
large
the
with
loses
but
of
dairy cattle, then we need not be
local needs as before
made
sider that the drop in exports not
takes time to build up a herd
the
almost noth¬
ing, the governments abroad have
country reduced to
the other nations
claim
that this was a good thing. Prices
are too high and a decline in for¬
eign demand would certainly help
to bring them down. But what¬
ever the virtue of this argument,
only
of
further assistance
protected ourselves against an¬
other
economic
danger.
Face*,
with
the
possibility of finding
their
purchasing power; in . this
country became ex¬
exports declined, and
our
plied. Now
tion of the cattle herd and that it
not able to meet as
this
granting
we
America, where the debtor
been making pur¬
chases
good por¬
a
Securities
In
countries had
weather. This meant
If we remember that
dry
sistance
system
South
cold
Thus
goods.
Europe's Liquidation of American
we
,
rapidly.
billioh
$12
some
American
ually to a somewhat lower level
of foreign sales.
■'
.
<
.
only our exports to the Euro¬
pean countries to whom we had
given assistance, but also our ex¬
ports to Canada, Australia and
the
a
had
for
pay
of
can
industry and agriculture l
chance to adjust themselves grad¬
pay
not
available in suf¬
deteriorated
the funds
in
hausted,
needs
soil
During
1946-47—the coldest
—
or
power
transportation
lecord
is
there
were
soil
winter in
the
the
labor.
top of that there was
France, Bel gium and Great Brit¬
ain were still somewhat below
prewar
As
quantities and the fertility
the
of
On
that
and
that
pay
continued to
had
>
agricul¬
ture, badly in need of revival, and
that takes time.
Agriculture in
Europe is all intensive agriculture.
means
means
so
aid program will give Ameri¬
our
give aid to for¬
eign countries, our exports would
have declined rapidly as soon as
the funds we had supplied in the
past were exhausted. We had an
opportunity to discover this,
i
ca¬
,
This
to
worth
currently little more than
$6 billion. More than $10 billion
of our exports were then financed
by us. This represented gifts and
the
normal
to
could
world
abroad
countries
sufficiently
recover
able
we
thatthe
fori
.
18
back
Then of course there is
the Netherlands reported an over¬
new
where
restored
fertilizer
can¬
distress.
that
so
side aid is still needed.
That
1913.
some
imported a little
than $6 billion worth, it is
clear
station and the transmission lines
of aid would do the trick.
Sweden, Norway, Denmark and
years
world in which there
a
right thinking per¬
No
could find fault with this, and
exported
we
in
as
our
they will be able to
almost
was
much
as
year
more
coal
can
be brought from the mines
to the factory.
If the plant uses
electric power, the electric power
be
1947,
same
functioning
must
times
wisely
that
for th^ir
purchases in this country out of
their earnings., Perhaps their pur¬
chasing power for many years to
come may not enable them to
buy
$18 billion worth but we have
reason to expect that
they will be
may
billion dollars worth. Since in that
;
pros¬
We
lasting
economic
no
where
peace
prosperity.
not
there
if
of
reason
not
is
have
exports
That
products.
can
four
;>J>- _'o-Mt :;'j; pacity before the rebuilt factory
can operate.
It is largely because
We were quite frank about the
faci-that we ourselves hoped to recovery must be accomplished all
the way along the line that out¬
benefit from the general revival
Russian,.
by the end of 1947, there w&s good
science
it is not
country or doctrine, but against
hunger, poverty, desperation and
chaos."_ It was definitely not anti-r
judging by the results our finan¬
cial assistance had accomplished
claim
there is
cal
directed
was
dan¬
the disease.
Anton
plan
against no one. He said, "Our pol¬
icy is directed, not against any
than
are more
gerous
J.
his
that
our
planned
each" year' the
high, higher than at
in
our
nistory.
We
we were the cat's whisk¬
when, in 1921, we exported
about $8 billion worth of Ameri¬
years
of
given
war,
ers
capacity for leadership and honesty of purpose.
But as the use<^
these mir¬ ment
/
>
the loans
the
thought
has received the assistance of certain miracle drugs—
drugs that enable the surgeon to perform operations at one time considered too risky—
and enable the physician to control diseases which in the past were beyond medical control.
"
If
aid may taper off gradually. WJ
the amount of the aid decreases
v •
very
anytime
for renewed aggression atnd says there is definite fear that U. S. cap¬
lead to American control of European domestic industries. . Urges impressing
world with
j
.
result of
a
iti is
life
„•; v
,
been
but points out financial transactions of magnitude contemplated will inevitably create underof fear, resentment and misunderstanding.
Expresses view aid to Germany maty again be
ital invested abroad may
domestic
our
since
of preparing that country
means
;
By J. ANTON de HAAS*
;■
Prominent foreign trade expert extols
-
;
;
of
business.
good
DOMINICK & DOMINICK
•/
42)
.
14
(2198)
THE
COMMERCIAL
&
FINANCIAL CHRONICLE
Thursday,. May 20, 1948
V. E. Ireeta With
Bank and Insurance Stocks
Hamaferd I Talbot
(Special
SAN
The
to
t
•)
»
Chronicle)
Financial
FRANCISCO,
CALIF.
NSTA Notes
By E. A. VAN DEUSEN
-
V. E. Breeden-has become associ-
®
This Week—Insurance Stocks
An -interesting record of Hartford (Conn.) -insurance companies'
figures for the ten^year period, 1038-1947, has recently been compiled
by Conning & 'Co. and Ballard ;of Hartford, Conn. Complimentary
AD LIBBING
(copies
are available from A. M. Kidder &'Co.,-New York.
at we were living in the real atomic age, the Dallas convention
The casualty, fire and life companies included in the study are:
would be 4n progress at this present/time. With such a market not
Aetna Casualty & Surety,<Aetna (Fire), Aetna Life, Automobile
only would this convention be terrifically successful but our "Chron¬
Insurance, Connecticut General Life, Hartford Fire, Hartford Steam
icle" NSTA Year Book would have to be delivered by the expressBoiler, National Fire,'Phoenix, and Travelers Insurance. '
•lTian^as^>it'would4obk' more,Iike^^?a manual dtie^to such
The comparative record of growth during the ten
years of the
•advertising.
•
j
^
five /fire insurance companies is most
interesting, and the wide .dif¬
"""Keep' the above in mind when your 'local chairman or one of
ferences may.prove somewhat startling to those who have not closely
the '^Commercial and Financial Chronicle" representatives calls for
watched relative trends. Significant figures of each fire insurance
"
■/,
*
,
"""
company for 1947 compared with
'
"
'
1938
are
AETNA
INSURANCE
Vic
;
E. "Breeden
j
.
1%
v
'
7Capital
'
<
with
Hannaford
&
Talbot,
1938
519 California Street. MrJBreeden
R.
Co. 'and
Staats
was
an
/officer
of
prior
R.
& 'C6.
H.
■"
'
:
7,500
Growth
'
.10.000
-25,475
2,500
Value
33.3
49; 16
47,890
64v63
>42
23,26p
5^7
22.2.
144.0
11.1
18.4
AUTOMOBILE
'■
.
the fellows
'/g
49 Vi
t
'
7
INSURANCE
Capital
Gammack & Go. Admits
in
-L.;.:
1947
Garret to
Partnership k
York
'2,454
o
f
'17.3
16,278
178.9
<t h
a
1938
•12,000
1947
69,819
'32,936
84,619
.96,619
22,703
'26,800
26,800
49,772
151.1
Growth
f
(dollars),.
•
! (percent)
'
r
NATIONAL
has
46.4.
.
38.4
INSURANCE
'• '
"
'
Capital
-Surplus
a
103
108.09..
-1938-
i
1947
5.QOO
:■
49.3
5,000
,,
Unearned
Prem. Res.
Growth
admission to
( dollars
Growth
Gammack
19,609
Company was
previously re-
PHOENIX
77.25
'
138/2
'
1.947 L--
Blyfh's Trading Dept.1
Handling Listed Shares
Unearned
Surplus
Prem. Res.
.6,000.
Growth
Liquid.
Value
f
|
-tMean
Market
j
(t)
89.75
104,91
21,027
751/3:
84 i/j
: r-
i.in
9.3
"Capital and surplus.
8,569
54,535
v
4,111
J 2,458
8.2
between high and
9
15.16,,.
,
145.5
<16.9
;
11.9
low.
non-member
Altogether
only
23
stocks
are
traded,
comprising
Bethlehem
U. S. Steel, General
Motors, N. Y*-- Central, Northern
Pacific, General Electric, Amer¬
ican
Telephone, Westinghouse
Steel
1933
basis.
said
made
are
on.
a
40%
not
York Stock
?
of
With Sutton &
to
The
v
29,021
unssmed.premium reserve-Li
"Net Gain
36,871
liquidating ' value—
,
>>19,166
54,631
s
'•
■
, |
35,475
7^850
HL
-
■
4-3.4%
of
in
56.3 fa
,pi'emiuP
CHICAGO, ILL.—Otto J. Hruby
Sutton & Co., 120 South
^
-1
net gain
La Salle Street.
growth in
surplus, and
reserves
are
178.9%
capital and surplus, while
45-1.1%. Liquidating value is
Fire and
Casiatty
Copy
on
Request
premium
Phoenix Insurance shows
are -on
a
.
'
<
Laird, Bissell & Meeds
Members New York
; 120
:
1fL.
Stock
Exchange
Bell
this respect.
Teletype—NY 1-1248-49
2.59, respectively.
funds
are
seem to
.,s
In the
Phoenix
cases
of
;/
;
..
premium volume, based
premium
and
,*
both HartfQrd and ^'Phoenix have capi¬
tal funds sufficient for
further expansion of
on the ratios of
capital funds to unearned
BROADWAY, NEW YORK 5, N. Y.
Telephone: BArclay 7-3500
A. Gibbs, Manager Trading
Dept.)
•J,R4S pertinent to note that
appears
reserves
of
1.17
to be ultra-conservative in
Aetna, Automobile
and
National, capital
lower than unearned premium
reserves, which fact would
preclude
any
Don
Miller's
(E.
H.
Board..
It is planned
to rotate
teami
are:
Elmer
Smith",
Erzburger,
Burris
&
Charles
Bechtel
,C.Qmh9P.v;.^o^ev^.LSachnoffva4Straps:':^.:IBltpsse^;,.
Arthui^accc^Ddtippr ^^Cqrppsiny; -Star ;Koerner,:Mitgl^
Co.; Larry Marr, E. H. Rollins & Sons, Inc.
'
200.
and
other
v
1 "'
awards
were
ipresented
to
Detroit
members,
qualified to receive the Michigan Investor Trophy. Third and fourth
were Wm. C. Roney & Co. and Paine, Webber, Jackson
& Curtis, respectively.
High individual average was won by Fred
Huber with 184.
Second place Went to Bob Wallace with <177.
The
place winners
^Huniphries trophy for most impfoYed howler was
Clayton Call of Crouse & Co. with 21.5 pins over average:
All other trophies were donated by the Securities Traders' Association
M
Michigan, sponsors of ;the league.
Officers elected-for the year 11948-49 are: President, Charles
substantial expansion of pfemium volume.
: -
%
,
Bechtel, Watling, .Lerchen &)Co.; Vice-P,resident, Ross Sutherland,
Cray McFawn 8c Co.; Secretary, 3ayden Brown, Wm. *Cr. -Roney
& Co., and Treasurer, RichardfCarman, M. A. Manley & Co. Clarence
A. Horn j First of Michigan1 Corporation is,the retiring President.
-
:;-
ASSoSciATION OF LOS ANGELES
J
Spring Partyjitjf the Security Traders Association of
SECURITY TRADERS
The Annual
.
Insurance Stocks for 1947
of the
in
parent company basis,:and
are as reported to the
Connecticut Insurance Commission.
^Indicative of the great
expansion in underwritings'that'has taken
place during the -past .few
years, each company reports ^'.substantially
higher volume of unearned premium reserves in 1947
over 1938, vary¬
ing from 138.2% for National to
178.9% for Automobile. It is also
of interest that the market
prices of the stock are selling
today at a
wider discount from
liquidating values than.in 1938.
:
of principal
Chairman
market level of its shares is
up 49.3%.
the/figures -tabulated
was
of Detroit and
reserves, ;howeveiv are, 138.2% higher, yet the
by liquidating value is less than % of
1%, and the market
dowrv43^l%Jw_
AH of.
Comparison of Farnings'
Cayne's
this^trophy annually, possession being retained
by *fhe winning team. Members df the first place
(higher ahd
a moderate
gain of 9.3 % in surplus
capital funds;-unearned premium reserves are
up 145 4%
liquidating value 16.9% and the market level, 11.9%.
,
position
A.
,
and 8.2% in
a
last
M.
to
Cleveland-five with 2,522
awarded
level of the shares is
We have prepared
In
7,760=21.0%
shows;a very different picture,.surplus
being 29.2%
clevel, while capital and surplus ^ere down 24.8%.
Unearned
is with
Third iplace went
Rollins & Sons) Detroit No. 2 team totaling 2,339
f
Unearned premium
reserves .are .up
higher, while the
National Fire
below the 1938
Chronicle)-.:
pins.
2,528
Norman
,3 ^26.5%
surplus and 38.4%
-
by a buffet dinner. First place in the team event went «to
the First of Michigan Corporation, who npsed .out Andrew
-Reid
& Co. in af whirlwind finish', 'decided on the final might and: thus
1
i-
liquidating value is up 50.2% and the market level, 11.9%.
Outstanding growth has been achieved by Hartford Fire with a
■
>
followed
/'
^ : y
,4,
,
17,760
16.5%.
Automobile Insurance'6^0^8
New
Company
Financial
i, Gross Gain
($000)
■
^h-a;per share bas^i cljquidating rvalue is
^
gain
—
'
17.3% in capital and sufplus.
above 1938,
Exchange.
■——MM——mm
(8pecial
the
'•
■
..
^
"Deducting $10,000,000 "new money."
mo
large investment
members
^
,
surplus
net Ithe market devel H)f its shares
undertaking
house,
of
Total
The experiment of
Blyth is
to be the first
of the kind by a
'
,
Capital and
Electric and several utilities. Pur¬
chases and sales by the
Trading T
Department
1947
*
and
?
;
.
.
Cash
growth in unearned premium reserves. If
adjustment is made
for the stockholders'
equity of 40% <in the premium reserves, as well
as the "new
money*; subscribed >in 1947, the -record of net gain over
the ten years is as follows:
The general
public, it is said, will
not be involved in the
business.
-
hundred members of i'the ^Detroit Brokers'
one
^Cunningham & Co.)
lein
the
dealers.
<
/
L.7
High individual, honors went to Star Koerner of Chicago with
571 pins. -In second place was Fred
Alliston, Wm. C. Roney & Co.,
Detroit :witb 559; followed by 'Ed Ehrhardt of First Cleveland Cor¬
poration,,- Cleveland with 542^ / Scores of 4200 and, over were -posted
as -follows:Chicago—Sachnoff 210, Koerner 205; Cleveland—Ehr¬
hardt, 210; Detroit—Huber 22b, Alliston 215, Binkley 214 and Kuhn-
Only one of the fire companies increased its capitalization
during
the period, viz: Aetna Insurance.
Shares were increased from 750,000
partment, operated in conjunction to 1,000,000 in 1947 through the sale of 250,000 additional
;$10 per
with their branch
offices, has in- shares at $40; $2,500,000 went to capital and $7,500,000 to surplus, 4ess
itated trading-in stocks
It is apparent, therefore, that Aetna has had no net
listed on .expenses.
growth
in
the New York Stock
policyholders' surplus over the period but, on the
Exchange, a
contrary a
mpve
designed especially for shrinkage. However, the surplus account has been called
upon to
tanks, large investment institu¬ support a very heavy expansion in premium
volume, as indicated by
and
.
(E. H. Rollins & Sons) 'Chicago-live witn a total
2;655 pins. In second position, and bowling
from scratch, was Detroit's No. 1 team captained
by 'Fred Huber, (Andrew 'C. Reid & Co.) with
&
It has been announced
by Blyth
& Co., Inc., that their
Trading De¬
tions
^
pins.
The
winners < received
an
appropriate
trophy, donated by The (First of Michigan Cor¬
poration and presented by <E. F. "Spike" Connely,
($)
50.424
48,535
(percent)
—13.5i
•
'
44,424
(dollars)—
IV2
.21
r
CO.
holders'
—-—_>
Growth
'•
"Policy-
Surplus
6,000
— -
43
.16
-
,
-($000)-
1938
5
551/2
"
77.41*
20,450
24.8
INSURANCE
,
i
Bowling League closed their 1947-48 season with a banquet held
May 5 at the Savoyard Club. A feature of the occasion was the
inauguration of an annual inter-city bowling tournament between
teams representing Chicago, Cleveland and De¬
pins.
-8,097
&
Capital
35,245 1
Market
('$>«' /!':•( t:)
f
14,795
—
^
^
ported in the
"Financial Chronicle"-pf May»bin.
Value"'
•
24,609
29.2
—
Liquid;
:
32.706-
-2-8.097
..
(percent*)—
_
of
/
Surplus
27,706.
Broadway L
York 5, N. Yr
? '
-V
.>"?
Bowling on neutral alleys, on a handicap
basis, first place was captured by Larry Marr's
34,
56.3
CO.
'Policy-
-
-($000)—^
't,
120
-
Committee, NSTA
New
troit..
38.93
'
•
holders'
general
'Mr, Carret's
Philip L. Carret
FIRE
Market
69/16- >7,69 7
'
Tv7>
partnership in
their <firin.
Value''
*"($J
757,819
12,000
-
Growth
been admitted
to
iy.''../
3i/2
Liquid.:
-($000)-
i"
Yearbook
/
.Approximately
holders' ' .Unearned.
Surplus. Prem. Res.
;
Surplus
S'
11.9
FIRE .INSURANCE
•
.
Capital
iii
^
DETROIT BROKERS BOWLERS LEAGUE
Gammons
Co., 4Inc.,
17.93
appear
HAROLD B. SMITH, Chairman
' t.) i
29'4
:;i'v33''/v
50.2
name
*
i
truly,
"
k
c
53.66
,
Si
their firm's
,
rfPolicy-
formerly
C a r-ret.
;
2,454
26.5
(percent).
HARTFORD
Philip L. Carret,
25,379
.
.
,v'/-'? f
Growth
'Exchange, an¬
nounce
16,620
35.73
^
see
7'
"Why not let 'us 'have. suggestions from pther members?
You
seen yourselves in pictures; how why not see yourself in print?
Speaking of markets let us remember, "There is never a shortage
the alibi market." • <
•
>.
(
^
^
Market
*
9,101'-
11.680
New
S'to
Value
-V
'
14.226
'
^
Liquid.
Prem. Res.
"
Growth .(dollars)-.
Street, New York City, -members
sthe
Surplus
<
9,226
5,000
—
r::jj 'V.;.:
Gammack & ;Company. 40 Wall
of
Surplus
5,000
anxious to
are
Yours
Unearned
-($000)-
'1938
the. desk
have
"Policy-,
/holders'
on
"Chronicle" Year Book.
our
16.5"
'•
Moulton
„
£
Wagenseller & Durst, Los Angeles a ViceChairman of the NSTA Advertising Committee has suggested that
all our members endeavor to assist the advertising committee by sug¬
gesting the direction of letters and calls for ads as he feels most of
,
; 6,454
'
(t )t
"
19,625
.35,475
,
Market
"<•$>
29,021
•-
3,954
(percent)---
Liquid.
Surplus -Prem. Res.
21.521
<dollars)^!-!"' '
Growth
thereto
Vf: ' I.7/
$000)
s
1947-77-7--^-
recently associated with Wm.
was
Surplus
post-convention book next November!
our
Don E. Summerell Of
'Policy- •"
-holders'
Unearned
-
-—
v
ated
*
'
.
•'
ad to appear in
your
follows:
COMPANY
■
'
as
''
Los Angeles will be held at Art^head Lndge,'Jurie'Tl', 12 and #3.
There will be cocktail parties on (both June 11 and June 12 from 5
to 6. The village and /other Ispots/at -Arrowhead will be open tfor
entertainment
and amusement., Cost to members—^$40 for Friday,
Saturday and Sunday, or $20 i>er day; cost to guests—$50 'for Friday,
Saturday, and Sunday, or $25! per; day.':
<" * ", '
- ■
..1,1
•
i Reservations/ should
be ^ent -to <Gotdon '-B. Tuttle, Edgertoh,;
Wykoff & Co.f/ not later than June I (preference* for room-rate
should'^lso be indicated).
j
* ,
^
<
,
.
BOND CLUB OF DENVER
The
Bowling teams of the Bond Club of Denver held their final
and banquet on May 7. After the finals, the "Shorts,'2
captained by Bill Steck, J. A: Hogle & Co.l won firstLplabe with ?a
total of 34 games won and 26 lost. The "Traders," captained
by Bus
Huber, Hamilton -Management 'Corp., was second with 33 won and
27 ilosU There were four ties for-third with 32 won and 28 lost, which
tournament
ended
very close and interesting season of bowling.
*
y
Snowden, Brereton, Rice & Co., was the big winner, ^scoring '
a new
high series with his handicap of 102, a 739 winner. He had a i
high game without -handicap of 243 which was second high for the
a
Bill
year.
175
Earl Mayer, J. A. Hogle & Co., with a 245 and an average of L.
in-first place, followed by Johnnie Alff, Amos C.
was
Sudley & f.
Volume 167
with
was"
12
166
a
found
Number .4700
average., An
that the
positions.
anchor
■<T
unusual
man
each team
on
■'
.
situation
THE
COMMERCIAL
and
CHRONICLE
(2199)
15
L
v
players
FINANCIAL
developed when it
finished in the first
.
,
forty
&
1
alternates
attended
the
banquet and were
by some special recordings furnished by Bob Mittons
Robert L. Mitton;
Investments, who acted as Master of Ceremonies.
A total of
$175 was distributed to the winners in prizes and a
new
Bowling Committee for 1948 was appointed, consisting Of Alex
Forsyth, Calvin Bullock; Jerry Bachar, J. A.
Hogle & Co.; and
Rich Richardson.
entertained
'
v
^
.
Corporation rTax. authority traces difference between
.
that
some
contests
with
other
1
,
and evasion, and the attitudes
-
..
telegraphic
acts of avoidance
courts, anct the Congress, thereto.4 Criticizes Congress for failing to
plug folio wing two alleged tax avoidance loopholes: tax exempt income from state and municipal
bonds; and
>
V
v';V
looking forward to next'
The Bond Club is
>
Member of Lord, Day & Lord,-; vV
York University
[;:• i: :,;V
■
^r;i'Professor of Law, New
•'
when it is hoped
year
r
NSTA
Bowling teams
throughout the country may be
arranged, with the hope that the
National Association may put
up a prize for (the best team rolling
tinder handicap.' 1
i
-..
.•
Pictures taken at the banquet, taken by Earl Scanlan of Earl M
oil and gas
industry allowances for depletion.
•
•
Scanlan & Co., appear elsewhere in
todays issue .of the "Chronicle.7
NSTA TETrnrONS TOR ECONOMY
AND TAX RELIEF
The National Security Traders Association
is
members
'
.
have.learned,
copy of a
major political parties for economy in
government, tax equality,
In doing so the
organization is joining with over 150
trade, civic and profesionql associations throughout the nation who
are also circulating this petition. The
purpose of the appeal is wholly
non-partisan and its purpose is to give an
expression from the tax¬
payers and voters of this
country on three matters* of major im¬
portance to the economy and social welfare of
ther nation.
The
Association points out that
investors, particularly, are vitally affected
by high taxes, which Cannot be lowered until
government expendi¬
tures are reduced and waste
eleminated; it is. urging all its members
;to obtain as many signatures as possible on the
petition."
two
■long
•
,
.
should have
or
run
does:is
pay
looking
new
The
tax
Although
talk "Tax
he
is
he
told,
as
no
be
to
tax
BAN FRANCISCO, CALIF.—rRonald
$2, Kaehler, President, San
Francisco Stock Exchange, announced that
plans had been.completed
for a visit to the plants of
companies whose securities are listed on
the San Francisco Stock
Exchange and other companies locatedlih
the Pacific Northwest, June 2 to<$wi »
^:-.'r ....j
t1 -
✓/,
use
i
x
a more
are
v
It
is
ways \
irig;iric6irie tax, dud it is
so
hard, to javoid
of
Disregarded
marks
are
addressed
to
the
of
some
the
sub¬
ject of income taxes
corporate
and individual, -The subject of the
of
—
traditionally
to
i
further
one
introductory point. You will note
during, .the evening. that my re¬
a
are
two
reasons
all, the
prevalent
term
tax,
for this.
"tax
There
First of
avoidance"
associated
with
is
the
minimizing or escap¬ income fax. Secondly, the income
but very "likely all oi tax is always with us; the estate
these methods hre krfOwii to rbome
tax affects
of you
only,
and some of them to all of
you. / During the discussion period
which is to follow, I shall be glad
to give you an off-the-cuff .opin¬
ion on any pet scemes which you
have thought of or heard about.
Perhaps I "dan* learn5 something
sav-
for
as
it
tax
methods of
not quite
tax
find
Tax
also make
estate tax is not considered.
ing;
avoiding; or to
t
euphemistic term,
I should
my
refer
true that there
Harry J. Rudick
Estate
m,y
or
not
in
narrow.
with
you
involved
it is much safer to buy it at retail
than wholesale. I shall, to be
sure,
in the course of the
discussion,
avoids
ance.
present
1—
questions
avoidance.
great
In shopping for tax advice
value.
is
path
easy
list
would
you
told,
there
quite
the
have /entitled
I
icy
catalog of methods
Of reducing tax liability. If I did
generally
must
San Francisco
check
that
Avoidance," it is not
to
purpose
it
to
seen
of escape are
means
avoidance
that
Exchange Sponsors Trip
To pacific Northwest Industries, f
for
angles.
*
is usually sur¬
prised w hen
■
vigilance decreasing in the order
named—have
novice in
f
*
a
back
come
.
learned; from bitter experience, that tax avoidance in the
often
not
and tax relief.
:
who
.
mailing to all its
petition appealing to the policymakers of the
a
Introductory Remarks
f
"
'
The tax practitioner has been for
many years hnd aohtihues to be tLe target of ques¬
tions by his clients as to what
they, can do to cut down their taxes. ; Even those
a!
cause
it
but
us
once
and
then
in absentia.
Be¬
the impact of the estate tax
as
were
occursonly i
sider
it
once, we vneed ^con¬
only at those infrequent
intervals when
we draw our
wills
cameLto jpas? through the eye of
or otherwise
-£,1948/ inclusive.; The trip, will :bacher & Co.; Albert!A; de Mararrange for the fu¬
a; neodle;
brit the Treasury and;
cover visits; to,
ture disposition of our property.
Portland^ Seattlej tini, Shuman, Agnew & Co.; Rich¬
the courts and the Congress—with
-jEveretf and. Bellingham, and will ard: P.
from them, iri any case,
Gross, StoriC: & Yoiingberg
my. pur¬ Thd problem of tax /avoidance is
be made via-regular flights of
Kenneth
La. Boube,
Henry, / F;
pose tonight is not |to .cover the there too, however. The emphasis
-t tJnited
-*'*Ah address'by Mri Rridick be-;
Swift; &.. .Co.; Hubert J. Sober
technical and legal aspects .of tax in recent years on "estate
plan¬
;
This trip is a Continuation of the fChairman,^ Listing Committee)y fore' the Third National; Textile
Seminar,
policy
Shawnee-on-Delaware, ivoidahce; but • to" reaclt ^toward a ning" is evidence of the fact, and
Walriorir^^^ri^nv;^vi^CbodWin;
broader horizon, mainly the pol¬ / V
early Ia^^ea^|yheih^tliey visR
Douglas C. : Atkihson < Chairman, pavMay 10, 1948.
(Continued on page 36)'
r
.
.
,
.
.
.
Board of
^e hil: fie^
„
Governors), Dean Witter
the Los
'Ahgel^ Basih-by charter &4Co^EariejRichardsyDeaAWii-
plane..
Subsequent
visits
-
ter & Co. v
were
"
v.
•
*'
jhr^kde tbthe* Rhetein
All
"'Banksv..
;
Company plant at Richmond and
Erarik S. "Litchfield,
Ajhericaii
'the Marchant Calculating Machine Trust
Company; Paul B. 'Kelly,
•Company plant in Emeryville; Anglo California National Bank
of
thtse debentures having
"
been
sold, this advertisement appears
as
matter
a
of record
only
and
is
'
JS uiider no. circumstances1 to. Be
•'
f':r
'
for MIC,
or nu a solicitation of
iCohsidttei^ti.fail*offering 0}-these debentures
(di'bffCr to bu'tt tony tj such debentures:',
'
„
,
'
.
N
,
"Kaehler
said
that
'. the previous of S. F,; Taylor H, Perry, Bank of
enthusiastically America, 'N. Tv & S. -A.;;ArihuL W.
Schiefer, Bank of California, N.
A.; Arthur Mefkt, Crocker'First
lic Relations and Listing Commit- National Bank
of S; F;; George L
stees have outlined ,a schedule; of Long,
jr., Wells. Fargo Bank.
Union Trust Company; J. R. Mc]|Jant visits! for; ;the balance of
"the year.
"trips had been
so
New Issue
received
by members of the Exvchange and bankers that the Pub¬
.
$10,000,000
^
I
The trip to* the Pacific North*
'West should prove- one of the most
Bristol-Myers Company
Newspapers
interesting as the members of the
Exchange and bankers will have
an
opportunity to see first-hand
the vast development in the Pulp
Lindsay Arthur, San Francisco
"Call-Bulletin"; Sidney Allen, San
Francisco.
"Chronicle";
Charles
and
St.
paper industry as
well as
furniture manufacturing.
Mr. J.
D. Zeilerbach,
,/
to make the trip north With the
group and Will be the principal
speaker at a dinner to be held
Francisco
Arlington Club in Portland
Thursday evening, June 3.
—
r
,
'l'
h.'i
.
!
\
Stock
Ronald
E.
>~«i *'
v
J'
r
*■
'
Frank
S.
Beiiriett
•F^'S. Bennett
is
at
1
Wall
Ne
w
City, in
partnership
Kaehler, President,
with David R.
Brown, to
Relatibhs arid Statistical Depart¬
en¬
curities
ness.
(Chairman, Public Re¬
lations Committee), Merrill Lynch.
Pierce, Fenner & Beane; Geo. F.
■Carson,? Raggio, Reed & Co.; Al;
bert E. Schwabacher, Jr., Schwa-
was a
ner
MM*
and
Frank
S.
.-
;\
&
^bhnsohiV ML
Bennett
*f*:->•
jcV,
Brown was
bf 1 'the; *Muriicipal Departmentfor, Erigle,Ab-
formerly
bot &
•
-
Manager
ColN
Wertheim & Co.
part¬
in Brown,
Bennett
Williams, Lawson. Levy
"& 'Wiltiams; Andrew- H.
McCampbell/. Mason Brothers; Ferdinand i
Smith
re¬
prior '■ thereto
he
R. Dickover Mark C. Elworthy
Harold B.
are obtainable from only such of the
fe&isteted dealer^ iti tecwitiea in this State,
been
Buckley
Brothers
Stan¬
Pflueger, Max J. Koshland & Co.;
has;
with
Waiter Warren, America ri
.Brokerage Company;- Berwin E.
iSt^wa'• Barth &Co;; Brooks
ate
Mr. Ben¬
cently
,1
undersigned a's
busi¬
nett
Firms
,& :Co;; Floyd; W.; Mosiman, Mark
C. Elworthy .& Co.; David ,Monasch/?Jr.; Hooker & Fay; Harry
-Meyerson, Kaiser & Co.; Paul A.
Cbpiei^ xi^h&Troipecius
gage in the se¬
Exchange.
,C.
lQOWoand accrued interest
York
ment^ of the $ari Francisco Stock
ley
Price
formirig
Street,
"/
Jnd Oari; Schick, Hanager, Public
l5v^eberilDavieisjN&.Mejia;
April 1,1968
Co. with offices
Exchange
Member
Due
T94S
■
pers. Those par ticipatirig; wil^be:
t
Dated Aprill ,
Form Own Firm in NYC
The group will be accompanied
by financial; editors of the San
Francisco arid Oakland daily pa¬
&
Twenty-Year 3% Debentures
"Exam¬
Frank S. Bennett fo
at the
on
San
iner"; John S. Piper, San Fran¬
cisco "News"; C, N. Alexander,
Oakland "Post-Enquirer".
President, Crown
Corporation, expects
Zellerbach
Peter.
K
'
.*•
•
■
\
-
to
Tire
^ DENVER,
Financial
Chronicle) *
COLO. —Ralph
,
Building.,
.
-
'
,
i
-
"
a
■
.A/
Clifton is engaging in a securities
business from offices in 'the Coloratio National Bank
,
Kidder p'^eabody
Ralph A. Clifton Opens
(Special
The First Boston (Corporation
Blyth & Co., he.
,
>
May 14, 1948
'
'
-
4 Co.
v
'
*■'
V
•
i'
'
}
:#-?'*
'
I
./
r_
Goldman, Sachs & Co.
-'i.T/■■ J
i
*'i
/
-
.
/'
-
LazardFreres & Co.
Union Securities
Corporation
:
Lehman Brothers
16
(2200)
COMMERCIAL
THE
& FINANCIAL
CHRONICLE
Nat'l
Advisory Council World Trade in a Time of Crisis
By GEORGE L.
Reports on World Fund
Securities Salesman's Corner
BELL*
By JOHN DUTTON
The
'■
.■
who
man
start them.
or
how
knows
But there is
to
sell
Secretary of Treasury Snyder,
right doesn't win arguments,
a
"The
stock
market
is
at
ident
on
and
to
for
Gross National
:
Product--.—___$240,900,000,000-
Personal Income
-Population
*
U
4
Dow Jones Industrial
.
Average.
(5/14/48) 188.60
♦December, 1947
'
\ ;
page
,
market
efallyr
report
V-,
Weekly—April
John W.Snyder
'■;'' -'
.
ments
baby in the neighborhood
means
business for the local retail
grocery.
Who says there is
no future for even the most
stable business in a
growing, thriving
nation such as this?
These facts can be applied to
practically every
line of industry from electric
power and transportation, to consumer
the
new
in
answer
More people
means
business—that is
more
dynamic expanding economy,
a
a
interna¬
In
n
huge international car¬
agreed to divide up the
clusive marketing rights for each
other's
Then
L.
George
d
Bell
products in certain
as
which he
surveys.:
He
made his
knew
gen-*
/made
there
now
tive tariffs and
areas.
protec¬
were
export duties.
some
particularly the pioneering
of/the: compete
in
against his prod¬
full of
exporter
had
often
to
world -thai" >\ya'S:
.
aggressive/trading-nations
with' centuries of experience be¬
life :t>fJ the
hind -them;/But" the
l •:
which
.
Act
^Derations
FACTS: Construction activity in March, 1948 was over $11
billion;.construction contractors added 94,000
employees during the
?^3™bringing March employment on construction projects to
1,660,000.
Compared with March, 1947 expenditures were UP
$262
of
.created
their
progress
effective
most
will have
the
Department
also somewhat
was
simpler.
His duty was to promote
(Continued on page 50)
> -
achieved
in carrying out
trade dislocations
Council
in
of Commerce
Commerce, May 18, 1948.
Security Analysts Choose New Officers
Glenelg P, Caterer of
operation.
of
The New
/
G. P. Caterer
that the Bank
states
Davis tells
G. P. Caterer elected President by New York Society.
annual meeting of group's great progress.
and
monetary and financial conditions
which have not been conducive to
their
official
ment
y*Ah address by George & Bell
before' Los Angeles Chamber of
a post¬
characterized by eco¬
nomic and
The
francs, kroner, cruzeiros or yen.
objectives, despite
oeriod
war
have
foreign customer paid tradeit in/those; day s /whs /alinbst
pastoral inr its simplicity com¬
All currencies could be converted
pared' td c the' life of. the trader in
into dollars at relatively
stable 1948. And the life of the govern¬
in
:the
/the. Bank and the
institutions
bo>h
notable
whether his
was called for
fry the Brettort
Woods Agrees
Fund, the Council concludes that
York
Lionel D. Edie & Co.
was
elected President
Society of Security Analysts at its
11th annual
increasingly impor¬
tant role in ther future develop*
menc
PROSPECT: "I've been hearing about the
coming boom in buildstocks for many years but it's all talk.
Prices are too high
people are not building."
V'
~
t
in g
,
not quite
the
'
,
capital goods, etc.
was
for
world markets and guarantee ex¬
American
- a
about
countries
fi spring of1-946,
A
MILLIONS. (Source U. S. Dept. of
Commerce.):, More babies means
more business for the food
distributors and processors.
American
industry is said to derive an income of $2,000,000,000 from
serving
the American baby.
Every new
and
tels had
as
for:;i^rkets^hedidn't//inquire
r Such
J
FACTS: In 1929 the birth rate was 18.8
per 1,000 of population.
In 1947 it moved up to 25.9 per 1,000.
From April 1, 1940 to Jan. 1,
1948 the POPULATION INCREASED BY
APPROXIMATELY 13.7
.
things
More
incep-j
the
because member corporations
mits,
Council.
PROSPECT: "The' food and grocery stocks may be
alright but
they are too stable for me, not enough ^growth'possibilities.?
>;In its first report evaluating the
'
;
$200 in
uct
import /pe r m i t s,
export
licenses, /ex¬
change per¬
in/the
of
v
of certain
about
quota restrictions. When he looked
a
life
Eden
the
countries he found the door
Fund,
since
of
in
on
centers
6hut and locked
such
and
result
a
tional trader two decades ago.
some
Monetary
their
'194.40'-
**1937 Rate
(Source; Barron's National Business & Financial
2.)
/ : ^ '
.
12,
to
Swe¬
or
national
'U; ion
128,500,000 >
179.48 ).
^
_
—
sold
of
iu
,:120**.
$90,200,000,000'; I
$74,900,000,000 y* j
$207,100,000,0001
'. 146,000,000
Of course,
Garden
••••'•
March 1937
193*
Bank
and the Inter*
;
April 1948
1 y
Whether
as
went
■;;
worries
/Development
'
was
ve
as
buying and selling
that
money
the ex¬
porter had no
Recon-
/ struction
of
den,
Interna-
tional
be pertinent to note the disparity between the
market, business activity now and at the market
Federal Reserve Board Index-_
la ti
re
almost
was
exchange
the continuous
world.
Siam
•
his
great ) banking
he
; results of the
operations - of
high levels, too risky to
of
rates
and
rest
the
on
It
<£-
the
easy.
may
-
found
May 17 to the Pres¬
Congress a special
report
when most American businessmen thought of
other countries as a hunt for markets.
that.
got his order,
Secretary Snyder, as Chairman
National Advisory Council,
FACTS: With prosperity virtually underwritten by the $6 billion
program and the pledged support of the %lk% Federal
peak in 1937.
as
Once the trad¬
of the
transmitted
us
many years ago,
market
foreign aid
stock
simple
er
"J t h e
levels of the
so
trade with
European Recovery Program
in now."
financing rate, it
not
with
FACTS: Annual rate of spending for fourth quarter of 1947 $240,U. S. News and World Report estimates for year start¬
PROSPECT:
not¬
change betterment in conjunction
900,000,000.
go
who have spent the greater part of our adult lives
in the field of international trade can remember clearly the time,
but time is not ripe
for full adjustment of foreign
exchange rates..; Looks for ex.
ing July 1, 1948 $253,000,000,000, out of which consumer spending is
estimated at $185,000,000,000; by investors
$28,000,000,000; by foreign¬
ers $8,000,000,000; by government for
goods and services $32,000,000,000.
Nearly all analysts agree that a setback is very improbable this
year and unlikely in early 1949.
??"''
achieved
trade conditions.
Those of
able progress,
PROSPECT: "Business is slowing down and spending is drying
t
have
institutions
these:
as
as
Secretary of Com-;
merce Sawyer, Secretary of State i
Marshall, and other members of/
the Council say Bretton Woods
position to give his clients facts that are
true and correct.
Following are a few examples of facts which are
taken from reliable sources that you may find will come in handy
if some of your better prospects or clients come, out with some
garbled ideas such
*
Program is based partly oo
belief that use of private trade channels for purchase of recovery
goods is important for rebuilding world trade. Urges greater alert¬
ness and
shifting of policies in accordance with changes in world
Chairm an,
ple are constantly bringing forward especially in these complicated
days and times.
No one can be a walking encylopedia, but the sales¬
man who is doing a good job for his customers is
accomplishing these
results because he is in
;'
Mr. Bell maintains European Recovery
great deal of misinformation that peo¬
a
r
Associate Director, OIT, Department of Commerce
And Bank
and
an
expansion
of
interna¬
tional
capital markets, while the
be expected to make
important
contributions
toward
Fund
may
maintaining conditions of interna¬
.
million,
32% and there
or
were
000
126,000
workers employed.
more
new permanent
nonfarm
almost all of which were
dwelling units
privately financed.
were
started
in
(U. S. Dept
release April 17.)
67,-
March
of Labor
to get the facts.
pays
But it does require effort
to
do
the
necessary reading and organizing
of the material needed to
give
II
salesmen
Suggestions For
must
Retail Investment Dealers
and
of
APPLETON CO.
dividends
equal
present stock—»Cash
lion
—
million
(over
Inventories
Net
—
$5
to
$4.33
to
$1
over
less
on
mil¬
than
$1
profit $l>/2 million
share)-—Net prop¬
only $1 % millions
per
erties carried at
—•Available
less
at
than
$27
per
share.
•"*
vs/v:,::..
*■ ■
MAINE CENTRAL
RAILROAD
The
$32
5%
a
preferred
share in
accrued
—
and
arrears
under $56
ation
worthy
of
♦
earned
carries
is
share. A
a
economic stability
which
vital to the well-being of the
United
States.
The report
discusses the prin¬
cipal problems which have faced
the two
international
institutions
order
RIGHT.
to
sell
they
well
This is the job
alert statistical
organization.
salesman
should
be
expected
dig out such material.
His job
Shelby Cullom Davis
meeting at Schwartz Restaurant, succeeding Shelby Cullom Davis
of Shelby Cullom Davis & Co.
Joseph M. Galanis of Shields & Co.
was
chosen Vice-President, Ed-<S>riod. Before action was taken by
win L. Thompson of Tucker, An¬
have gained an insight into this
the Fund the Council gave careful
thony & Co., Secretary, and Mar¬ nation's
capital markets
which
consideration to the problem of
vin Chandler of Reis and Chan¬ will stand
them
in good stead
the initial par values of curren¬
dler. Treasurer. Eugene J. Habas during the active period of financ¬
cies.
It was in agreement with
of Manhattan Research Associates, ing which lies ahead."
r
the decision of the Fund in ac¬
them.
shoot the
bullets, not make
The next time you have a
Arthur R. Jansen of E. W. Clucas
cepting tne par values proposed
the majority of the countries,
since
it
recognized ? that action
&
by
•
.
$82
priced
at
industry outlook.
-
*
(Continued
J
»
52)
Exchange firm of Shelby Cullom
Davis & Co., pointed out that the
membership of the Society was at
1850
well
entrenched
textile
industry.
equaled $14.39
a
—enjoys
;
position
1947
sharei
in
the
CRESSON CONS. GOLD M. & M. CO.
earnings
38
:
\
:
Statistical
descriptions
on
KINNEY-COASTAL OIL COMPANY
|
KUTZ CANON OIL & GAS CO.
MACKINNIE
OIL
&
DRILLING
Incorporated
49 Federal St., Boston 10, Mass.
Tel. BS
189
t
.
V '
B. E.
.
>
/
than
'
Theories
i//
Simpson £r Company
Bell Teletype DN 157
as
and
group
move¬
ments, the ingredients of success¬
investing still rest upon the
same
two V hoary,
old-fashioned
virtues:/hard
hard
common
sense
and
work, the report concluded.
of
providing
a
common
"Proceedings" Available
It
was
been
an
enormous
for
the
mand
Society has
gained much through this inter¬
change of views with corporate
officials, I venture to suggest that
industrial,
railroad ; and
utility
executives throughout the country
the National
"Although
the
ering
,a
,
announced that there has
meeting ground for industry and
capital, he explained.
California Building, Denver 2, Colorado
Telephone KEystone 3101
more
Dow
corporation executives during
function
COMPANY
Established 1929
by
the year. The Society more than
evsi
before has fulfilled its basic
request
A.G.WOGLOM&CO"
HUbbard 2-0773
.
135
Dividends
yz.
had been addressed
)
formula plans,
ful
that
paid $4.00—strong working capital
position. Recent price of common
stock
PRIMARY TRADING MARKETS
a
devices
modern
new peak of nearly 1,400 ana¬
lysts throughout the country and
its luncheon forum meetings
on page
a
in
Chandler
Marvin
rates
Security analysts are far more
Co., Theron W. Locke of Good- than the old time customers' meri
body & Co., Ralph D. Kellogg of With a "new look," Mr, Davis sug¬
selling job to do why not make
W. R. K. Taylor & Co., Ralph A.
gested.
Crystal ball gazing, in¬
taken in December 1946 could at
Rotnem of Harris, Upham & Co.
certain that your salesmen have
vesting only in corporations whose/
best be tentative. <
j *
and John W. Spurdle of Dominick presidents weJr beards, or. only
information that will, help them
The • Council believed that the
and Dominick were elected to the
planning' market maneuvers /in
convince your investor clients that time was not ripe for bringing
Executive Committee. / / 1; :/•'V;; mo
ving taxicabs are as out of date
about some of the adjustments in
your offering is timed
right and
In his report for the year, Mr. as King Tutv Although these have exchange rates which would ul¬
attractive from the standpoint of
timately be required if the mem- Davis, who is head of the Stock been supplanted by such sounder
is to
BATES MANUFACTURING
Established
Galanis
J. M.
for the immediate
postwar period and the use of the
Fund's resources during this pe¬
change
special situ¬
investigation.
*
sell
information
in
your
policy of the United States
with regard to these issues. In the
case
of the Fund, the two basic
problems were the pattern of ex¬
-
stock
1947
the
have
an
No
1947
arc
and the
NOTE FOR THE BOSS
'It
tional
the
nationwide de¬
"Proceedings"
annual
cov¬
convention
Federation
of
of Secu¬
rity Analysts last March.
A few
still available
(at the
copies
are
office
of
John
Kalb,
25
Broad
Street, New York City—r$1.10);
Volume 167
Food
Number 4700
THE
COMMERCIAL
states in lieu of concern
FINANCIAL
Malthusian
over
that
Malthusian Law
the
is
Predicting
within
modities
by the facts, Mrs. Edith J. Hirsch, well known food
two
we
likely
educational
be
to
facilities.
research
complaining
about
which
level
-forces
their
ii
But
the
well
(1) opposition to high prices; (2) large inventories; (3) increasing production; and (4)
markets. Looks for no drastic credit restriction measures, or change in 2%% rate on
money
government bonds.
same
rate of increase could be reached
food
no
as
are:
tighter
fanners do not possess and ample
are
j;':
,V*
-No topic is of greater importance to the banks of the country at the
present time than
money market conditions and the outlook for business in general.
Although two topics
Hirsch
period> of years
the aid of this
country's research facilities is at
whose predic¬
the disposal of all countries wish¬
to
tions of world
ing to make
important
bearing on the
made
money market
of
and
bad
corn
and
the acceleration in the spiral
over
surpluses.
Mrs.
longer
a
especially
since
of it.
use
are
apparently involved here, actually there is only
.*
food needs and
od
pr
1*946-47
who
and
last
Mrs. Edith J. Hirsch
New
School
Social
for
"World Grain
on
Re¬
Produc¬
tion and Price Spirals."
^
"I feel that
safely forget
about the Malthusian Law," Mrs.
Hirsch asserted, "it is one of the
theories
of
g o v e r nment
Agreement negotiated by the gov¬
foy the pu^ose of giving
and
year
we
which
can
is
share
of
With
both
an
other
high
exports.
,
grade
revived
T)ur War Performance
after
Scuttled
Malthus
.
The strongest argument against
the validity of the Malthusian
could
know
said.
agreement,
whether
not
work,
will
it
do
she
we
If it should work the Amer¬
ican farmer would have
of
billion
1.1
an
Dr.
Marcus
Nadler
bushels of wheat
a
.
:
com¬
the
prices
the claims that the diets of people
in the underdeveloped
countries
can be quickly improved. This is
task
a
which' cannot
plished
from
the
be
they
employ¬
agriculture which in¬
their own food production through
during the war
rapid increase is better seeds and better farm tech¬
possible in most countries, she
ful
niques.
therefore
Dean
Madden, of N. Y., University Institute of International
-
Inflation.
of
ment
in
The
be
United
of
the
Government
to inter¬
commodity market and
thiis hel£> prevent a readjustment
in food and farm prices.
In fact,
one
almost gets the impression—
justifiable or not — that neither
Administration
gress
in
is eager to
the
the
nor
see
purchasing
an
greater
all
the
us
that
because
past has taught
of
unforeseen
events almost any, prediction may
The predictions freely
present
sion
mediate future with
These
serious
recession.
i
credit.
May 14,1948.
considerations:
■
■
*
v;
United
what
up
a
States
as
to
the
rest
of
smaller
than
in
decline
1947, yet a
is
not
likely
effect.
(5) The Congress is at present
considering a rearmament pro¬
:.
gram estimated to cost $3 to $4
billion during the next fiscal year.
great pent-
(Continued
demand for housing, and legis¬
on page
46)
According to a bulletin entitled "The Money Market in- the
Period
of Inflation,issued on
May 17 by Dean John T. Madden,
Director of the Institute of International
Finance of New York Uni¬
versity, there is practically
securities that
the
Federal
'
limit to the amount of government
no
♦
,
Bank
51.3%.
buy
in
the
i
could support
$44,864,834,000 of
circulation and de¬
of the Federal
Since a further material
increase in the volume of cur¬
Reserve
to buy
;;
posits.
rency
the
government
obligations,
ernment
states, "is lim¬
ited by their
holdings of
create
Dean
J.
T.
Madden
cates
i
the
and
that
ratio
of
gold cer-
tificates to their deposit and note
liabilities. Under the law the Fed¬
eral Reserve Banks must maintain
a
reserve
of 25%
in gold
certifi-
% cates against their demand obligaV tions. On April 21, 1948. the gold
certificate
reserves
held
by
the
Federal Reserve Banks amounted
to
$21,892,698,000 while their de¬
posits and Federal Reserve notes
,
aggregated
Federal
<$42,705,958,000.
The
a
It
the Reserve
called
is not
Common Stock
Par Value $1 per
to
of
gold certificate
deposits and
note
liabilities
Federal
vr:
.
r
will
•••
? r
Price $9 per
are
Banks
sales,
new
created.
were
If
through
share
Copies oj the prosprclus
may
be obtained Jrom the undersigned (one oj the underwriters
named therein) only by persons to whom the undersigned may
Vy
these securities under applicable securities laws.
legally ojjer
.
;
?
market purchases, to create
additional $4 to $5 billion of
balances, this would auto¬
matically
cause a
ernment
securities
demand for gov¬
Reserve
their
•
banks
excess
as.
by
an
the
com¬
outlet
reserves.
(Continued
on page
It
47)
for
may
.
•
•
open
reserve
•
i.
'xt:-
that purchases
securities by the
balances
—
•
extent
the Reserve
mercial
was
*.1
peacetime to
huge amount of gov¬
a
government
reserves
combined
Share
!V
Dillon, Read & Co. Inc.
*
-
•
.
ratio
:
;
likely
authorities
Reserve Banks exceed
an
-
i
securities.
the
reserve
are
■■
in
upon
buy such
"To
Banks
;«v >
securities, which would
corresponding amount of
ernment
of
Reserve
baiances.
reserve
be
r
■
^American Broadcasting Company, Inc.
capable, at least theoretically, of
buying almost $45 billion of gov¬
the bulletin
i
May 17, 1948
in circulation is not likely,
Banks
i
500,000 Shares
which
in
currency*
ability
-
was
additional
an
market,
The
required
reserve
certificates
government
bond
the
gold
only $10,676,489,500, the Reserve Banks
had $11,216,208,500 of "free" gold
order
to support
Since
certificate
c a n
s
This announcement is not an ojjerojsecuritiesjor sale orasolicitalionojaiiojfentabuy securities,
vUih
Reserve
■
'
i
.
i
.
1
■
i
.
•
the
during 1948 may be some¬
while the ERP is in
'
(1) There is still
embrace
well
material
This
]" ; '.
will
as
world
forecast is based on the following
by Dr. Nadler be¬
fore the New Jersey Bankers As¬
sociation, Atlantic City, N. J.,
high prices for basic
farm prod¬
machinery and
equipment, and while it is quite
possible that shipments from the
ucts
depression
a
pay
(4) The ERP assures the coun¬
try of substantial exports abroad.
uncertainties which
the world, it is
over
will not be confronted in the im¬
even
the
necessities of life.
business is that the United States
or
that there cannot be any
people to
time.
The first conclu¬
regards the outlook for
as
will
period
This in turn gives as¬
being used in order to force the
^
conclusions by appraising the eco¬
nomic ;> forces
at
work
at
the
Moreover, experience
floors
another
decline from taking place.
Hence
we find ourselves
today in a situ¬
ation where taxpayers' money Is
In spite of the great uncertain¬
ties prevailing at home and the
even
for
poultry began to
government, under
present legislation, was forced to
step in and prevent a material
•;
v
prevail
years.
decrease,
Con¬
of
present
eggs, potatoes or
increase
power
v
sharp break in prices of farm
products.
In the past, whenever
prices of farm products such as
fere in the
the
the
continued
surance
complicated by
the fact that past legislation has
forced
that
are
influ¬
the
other in¬
(3) There are price floors under
products, and the chances
further
is
all
on
farm
possible to reach certain definite
*An address
a
on
situation
States
effect
increased competition,
present
go wrong.
on course of money market in
period of
Treasury deficit will lead either to abandon*
support of government bond prices or to additional curbs
Predicts
psychological
business sentiment.
on
dollar,-
Finance, issues bulletin
*
beneficial
dustries, even on those which are
beginning to feel the- effects of
inflationary and defla¬
tionary forces are at work in our
economy.
Increasing Reserve Bondholdings
the
at
economy,
counteracted
economic
carer
time both
of the immediate
Sees Inflation
ence
It is not easy to make any pre¬
dictions about the future business
because
were
These in¬
dustries, along with housing, are
the
principal industries of the
country, and if they remain ac¬
tive, as in all probability they
will, they will generate purchas¬
ing power which will have a
begin to be felt in
considerable
essential
give the most
study to these matters.
outlook
passenger automobiles.
added additional aid to Greece,
Turkey and China, and later on
the
increased rearmament pro¬
gram, which already has had a
The Outlook for Business
she
increase
is
It
for bankers to
accom¬
outside^
must
banks.
really
country's
easy for individuals to
the purchase of homes.
demand for such commodities
up
however,
by such
ment will ex¬ measures as the reduction in taxes,
ercise a con- the passage of the European Re¬
siderable
in¬ covery Program, to which was
and
outlet
con¬
which
as
steel and iron, coal and oil,
railway and farm equipment, and
the
modity
the
exporter,
creased production
not
be
—
passed
Many real estate mortgages rest
Government, guarantees.
(2) There is still a great pen-
Commod¬
ditions and the
wheat
prewar
who
a
of readjustment.
—
been
on
Early this
J
would
■■■."
.
it
finance
number of in¬
a
1948
trend of
largest
Law, Mrs. Hirsch contended, is
stated, but only by the countries
astonishing war performance
themselves,
Such
wages.
were
that
and Russia and her orbit excluded
the
by 33%.
and
there
'
has
because, makes
in Europe, the
in the United States
ity prices began to decrease and a
widespread buyers' resistance set
in.; Before the forces of deflation
Moreover,
economic
Argentina, the second
on the movement of de¬
year.
Unfortunately,
however,
war when
the birthrate is
Mrs. Hirsch pointed out, the agree¬ posits as well as on the demand
temporarily high and when food
for loans from commercial banks
ment may
actually restrict the
shortages in the wake of war are
world's food production, since ex¬ and the attitude of bankers to¬
acute." Already, Mrs. Hirsch
said,
ward commercial loans and mort¬
We
can
see
improvement—the porting countries will mould pro¬
duction policy to their export gages.
Business activity and the
European crop was good arid re¬
quotas and may leave insufficient movement of commodity prices
construction
of
agriculture has
will also have an important effect
made progress everywhere. Even margins for crop failures. Short¬
on the credit policies of the mone¬
this year the shortages of wheat, ages and high prices of wheat are
thu.5 much more likely than if the tary authorities, and they may also
sugar,
and possibly feed grains
world's farmers were allowed to influence the type of legislation
may be over but there will remain
make
decisions
for
themselves. that the Congress may pass to in¬
a
temporary shortage of oil seeds
"We may very well be inviting crease the powers of the Reserve
and "we would be
doing a fine
food shortages by a world-wide authorities over the money mar¬
job if we were to increase our
ket and hence over the lending
grain cartel policy," she added.
exports of oilcakes to Europe."
Mrs. Hirsch was also critical of and
investing activities of the
own
materialize
*
lation
readjustment in
a
crops
crop
prices
year
fluence
our
not
poor
dications
b 1 i g ations.
o
adequate
wheat
world
each
of
did
the
of
ernment
regarding
from
livestock prices which
place in February, spoke at
search
.TV."'-"
1947
therefore
prices
on
skep¬
expressed
the American farmer
in
grain and
Hirsch
because business activity is bound
one,
an<S>
have
ticism of the International Wheat
forecast
break
took
Mrs.
in
late
fall
the
Questioned
proved
were
correct
the
International Wheat Agreement
ction
u
V:''"T
■
immediate serious recession, Dr. Nadler points to pent-up demand for housing and com¬
as substantial exports arising from
European Recovery Program as maintaining high
level of business.
Lists as inflationary forces: (1) increased military
expenditures; (2) reduction in
taxes; (3) large government buying; and (4) constant rise in prices.
Counteracting deflationary
i
proving valid after all
authority and agricultural economist, declared on May 14,
On the
contrary, she
<^predicted,
admitted, since it pre-supposes an
years
17
Professor of Finance, New York University
The wide-spread public fear that world food shortages will be
-
(2201)
By MARCUS NADLER*
Law, public will shortly be complaining about food surpluses.
permanent and
is not justified
CHRONICLE
The Outlook for Business and Government Bonds
Surpluses Ahead: Mrs.Hirsch
Agricultural economist
&
'
t
>
'
}:■.
•:
.
fc
W
' mM'
THE
COMMERCIAL ,&
Thursday, May 20, 1948
FINANCIAL CHRONICLE
Copies
each.
services already on
'
"The tax reductions in the 1948
74th Consecutive Dividend
about $5 bil¬
Act leave
Revenue
The^ Directors ;have
lion of additional income with the
Prospectus upon request from
your investment dealer, or from
RESEARCH
120
per
goods and -services.
share (10 cents from ordinary
and 10 cents from net
net income
"Thus, the European Recovery realized securities profits), is pay¬
Program, the minimum proposed able June 30, 1948 to stockholders
additional armament expenditures
of record June 16, 1948.
and tax reductions should create
All shares purchased up to 4:0(1
about
$13 billion of additional p.m., (EDT) Wednesday, June 16,
buying power »during the next 1948, will receive this dividend. £
year but these new dollars will
not be accompanied by their nor¬
&
SECURITIES
NATIONAL
declared,
quarterly
dividend
on
Wellington
Fundshares. This dividend of 20 cents
consecutive
74th
the
Again this means more
money- to be spent with rtd con¬
current increase in the supply ol
public.
By HENRY HUNT
business, will
the
of
for delivery late in Juneu
will be available at $15
be ready
for goods and
the market.;
.dollars,
idinary!
"Bible"
the
buy locally; these dollars too will
:6e spent in competitiorvwith 'of^
CORPORATION
BROADWAY, NEW YORK 5. N. Y.
mal
Finance and Politics
counterpart—more goods and
which
services—for
they
with
Together
spent.
To Be Satirized
pros¬
pects of maintained high employ¬
ment,
additional
this
*
all
It's
buying
of
readers
fun—but
in
Street Journal"
this Year's "Bawl
practically assures a strong
demand for goods and continued
power
will be startled to read that Henry
II
Ford
active business/'
|
be
can
the
is
engines for
swapping
,
and will, go. back" to
driving power in the
1949 model.
equities
Net
Hit
INC
.
Affiliated
Assets of
Net
$$0
Million
,
of
assets
horses
new
Fund,
Affiliated
A preview of the'
sponsored by Lord, Abbett & Co.,
now exceed
$50 million as com¬
Prospectus
■
If
from authorized dealers, or
assets
CHICAGO 3, ILLINOIS
;
Affiliated
of
politics will be the subject of
sharply barbed but good natured
satire.
For example:
and
exceed
now
June 4 as a feature of the
of the /Bond Club - of
Field Day
$65 million.v
135 South La Salle Street
*
pear on
New York indicates that finance
the
SELECTED INVESTMENTS COMPANY
annual bur-?
lesque publication which will ap¬
pared with less than $33 million at
beginning of the year. Includ¬
ing bank loans of $15 million, tot?l
*
may be obtained
\
as
Schram, President of the
York Stock Exchange, has
Impor¬ discovered the secret of a per¬
tant," published by Selected In¬ petual bull market; surplus securi¬
vestments
Co.
quotes , Dupont's ties will be removed from the Big
President Ore
as follows:; Board and sent to the
European
\ /,
Emil
DupontExpands
"These
New
Things Seemed
plans biggest single
project in its history,
million, take 2Vz years
"Dupont
needy by ERP, thus raising the
prices of stocks remaining here.
laboratory
cost
$30
Henry Wallace had abandoned
build, make, DD^s Wilmington his third party for a fourth—the
experimental station one of the fourths-for-bridge who are "dum¬
world's largest, increase
chem¬ mies
anyway and will vote for
ists and technologists from 500 to
anything."
900.We confidently expect to
Universal financial training will
create many new jobs
.
20,000
replace UMT; every boy reaching
Dupont employees; tioday ;.are en¬ the
age of 18 will be forced to
gaged in manufacture and sale of
spend'two years selling securities,
products which either didn't exist
thus building up Wall Street's re¬
or weren't produced commercially
serve-of sales power. ;
¥it
to
.
.
John W. Valentine, Harris, Hall
&C Co, Is chairman ofthe publi¬
cation committee of the "Bawl
Noted:■
Commonwealth Investment Co.,
Street Journal"
which has ah unusually fine man¬
record,' had
agement
f ro»p«ctu» from your Investment
on
as
„
31, 1948:
U.
HUGHW. LONG & CO.
48
WALL
STREET, NEW YORK 5, N;Y
tOVAN&fUS
CHICAGO
8.6%
19.8%
at the office of
Pierce, Fenner &
Beane, 70 Pine Street.
placed
now
Merrill Lynch;
3.7%
Cashf and Receivables.:—
American Business
be
Stojtiks60.0%
Common
mM
\
-
~
Norman
editor,
cepted from all parts of the coutittry for delivery ton June/ 4/; the
date of publication.
Orders may
7.9%
S. /Govefnmentsr—— i
Corporate Bonds
Preferred .Stocks
INC0»»0»A1J9
and John Straley
Smith, cir¬
assets culation
manager, announces that
March advance subscriptions will be ac¬
its
follows
diversified
Dealer or
Is
100.07,
Total
Arthur Wiesenberger's 1948 edi
Shares, Inc.
Prospectus upon request
tion
of;"Investment Companies,'
CHICAGO,
>.
r
has
Schmidt
with
New
WELLINGTON
«$► FUND
ustodian
the
York
ILL.
Stock
Carl L.
associated
office
Chicago
the
of
Exchange
of H. Hentz & Co.;
Salle
—
become
firm
120 South La
Street, according to an an¬
from Robert Pollak,
nouncement
74th Consecutive
Chicago
INCORPORATED
Chicago
—•
Los Angeles
New Orleans
Quarterly Dividend
ties business since. 1.915, when
came
Certiiicates ol
Participation-
This dividend
in
of 20c per
(10c from ordinary
investment funds
in
SHARES OF CAPITAL STOCK OF
via®
ties
of
profits) is payable June 30,
Philadelphia
the
for
as
a
Chicago office
Department of the National
Republic. In 1922 he
organized the investment business
of C. L. Schmidt & Co.* which
retired from the investment; se¬
President
curities field
April 30, 1948.
on
preferred stocks
(Series K1-K2)
common stocks
Wholesale Man Wanted
-
.
,
(Series S1-S2-S3-S4)
v
"
;
To sell shares of
Prospectus from
• -V
investment dealer or
,
'
grour local
te
Boston 9,
Prospectus
"y$--
your
;
Massachusetts ■']
!
' 'l
\
new
M
V"
1
i
mutual trust
a/
V1'
.
(
'
recently
THE
may
be obtained from
local investment dealer,
PARKER
territories
are
organ-
;
,»
We expect to cover entire country
many
of Boston
Congress Street
■>
ized.
JVeystone v^ompany
50
a
;
I
so
1«.
that
We have
available.
attractive offer to present to
dealers.
Commercial
Chronicle,
an
Box G 517,
or
CORPORATION
&
he
bond
Bank of the
16, 1948. f
WAITER L MORGAN
(Series B1-B2-B3-B4)
"Street"
the
Spencer Trask & Co., In 1920
became Sales Manager of the
Bond
1948, te stockholders of record,
June
to
salesman
net income
he
bonds
r
share
and 10c from net realized securi¬
investing their capital
Schmidt
Mr.
manager.
has been in the investment securi¬
Financial
Place, New York 8, N. Y.
;r ONE COURT STREET. BOSTON 8, MASS.
v'
25
Park
COMMERCIAL
THE
&
FINANCIAL CHRONICLE
19
(2203)
Congressional Committee Reports Congress Should Reject ITO Charter
77:
On High Prices of Consumer Goods
^7i'ty\^-77[7^7'77['7-.\
Dy Dr. RLVIN H. KILLHEFFER*
•
Vice-President, E. I. duPont de Nemours & Co. '■•"7
V
Member U. S. Delegation to Havana Conference
Committee
Joint
Reptftf, bf which Senator Taft
Charles 0. Hardy is Staff £)irector, -urges,
oii
Chairman and Dr.
Economic
:
Delegation Member declares
as *.
of Tedufcing prices, use
of taVlhgfc bonds to tfff settax reduc¬
tions/removal ofcertain excises and export controls, and dsferrmK- ^
-of public works.
Would study further probiemof credit controls
and recommends efforts to increase food production. :
;
means
-
7 Senator Robert A. Taft has submitted to
Congress a report of "the
JToint Congressional Committee on the
Economic Report on prices of
goods, prepared under the direction of Dr. 'Charles O.
Hardy,- Staff Director,,
This report contains the recommendations
of
the Joint Committee and is<S>
—
The
Western
based
on
the
investigations of Tax Reductions:
Subcommittee recommended that
three separate subcommittees of
consumers'
members
of
Congress, known
''personal
as
income
;
American free enterprise
.
better, and under it foreign investments will V
related to
proposal has a two-fold origin. It ls a natural and perhaps
outgrowth of :the trade agreement policy followed since 1934, and is also
the creation, of the International Bank-and the Monetary Fund. At the time
j'7
of
B
r e
was
said that Bank
a n
Fund
d
;—:
tton
Woods, it
——
—
negotiated and signed.' Participa¬
tion in the latter was under the
authority
Trade
the
of
Agree¬
same
7777
also.
mentioned
S This brief outline brings us to
the United Nations Conference'on
Committee,
us¬
ex-
Trade and
My
cation
ing
justifi¬
for
the
p r e s s
i
"natural
o n,
and
authority
gan
in
last
and
claimed the
the fifst
covered
Employment ^which be¬
Havana
November
on
concluded
21
on March
24,
signed ad ref¬
suggestion, if in-
i hey ft able
1948
< trends
are
resumed;
Therefore, the Committee recomAmends thatsuch ia kayiftg plain be
outgrowth," is
erendum by almost all the riartions
attending the Conference.;:
tflat ionary
gressional Committees.-
: v '
*
the
::
Mid-Continent and
Eastern,
We
The
Subcommittees.
tern
s
Charles O. Hardy
ernmental bu■
Dr. E.H. Killheffer
reaus
grow in
exactly this
way. The first
mistake
usually leads to others.
when the political trick of
transferring tariff policy from the
So,
(2) "Excise Taxes: We recom¬
mend the removal of those excise
Robert A. Taft
that most gov¬
and .that a
plication, be worked out for con¬
sideration 'Wy appropriate Con¬
legislative to the executive branch
taxciSvVdiidh (diirectly increase the of government was pulled off, the
prices of essential co^t-of-living stage was set for the growth of a
i .ems, 'particularly for Ibw-iftcofrie typical- bureau.
That the bureau
wanted
groups.
to
make
the
.
.
transfer a
the United Nations, then not
legislation as
(1) Export Controls: We rec¬
phly; wbuld the bureau retain its
ommend strict application■■ of ex¬
it may deem desirable."
powers but it would actually ex¬
v
The recommendations of the port controls for those commodi¬ tend its philosophy and field of
Committee are as follows:
ties and products for which doOperation to take in the whole
(Continued on page 48)
•
(1) Savings Bonds for Income
world
and
under international
allspices. So* with the enthusiastic
help of a handful of extreme in¬
to
Exchange! Membership
ternationalists, the Department of
State issued its first pamphlet on
"World Trade and Employment"
at the, conclusion of the negotia¬
mm s.
tion of the British Loan.
of special dofflnnftee
•
proposition, Chairmati of Board of Governors of -Hew York Stock
Exchange, voicing seritTment ofthe Uoafd, presents ;arguihent«*
In -submitting report
copy
the
or
the
Senate Finance
also ques¬
tioning the authority of the De¬
partment of State to agree to some
of them.:
At
latter
/;*
\•.
Havana '
made.
were
exceptions
more
A
good illustration is
provision for the creation of
the
preferential,
new
arrangements.
Nations
such
Conference
for
and
Some of
a
for
open
the
first
ears were
enlightenment.
Either
they would be influenced toward
greater
acceptance
tices of Statism and
controlled
of the
toward
or
the opposite concept of private en¬
terprise.
them,
from
Many,
if not
most of
help
were either getting
the United States or
were
expecting !tb get it.
'Certainly,
they know that something ac¬
helped
the
any
United
there
by the proposal by
States
shall
be
that
in
ITO
for each
vote
one
country.
You will ask why the Charter
not improved at Havana. The
prac¬
planned and
economies
not
was
direct answer is that what
industry wanted
as
we
ill
improvements
would
have meant rejection
or
drastically altering provisions by
the men who were the original
authors.
That was a good deal to
expect.
y.::
counts ;for
1
economic
dur /hbility 'to' extend
help such us has heVer
Improvement
been known before in the history
of the WOrld. Surely it is diffi¬ '7
cult
to
imagine any more favor¬
able
auspices to impress them
with a concept which has meant
so much to the material prosperity
of the United States,
what they
And
Could
Have
•/Made:....
;
the
on
Been
v
next ^question
pf
whether substantial improvements
could have been made, I can only
say that it is my conviction that
they could, if we had had aggres¬
negotiators who themselves
believed in the ideas.
The new
sive
got was a thorough Indoctrination
will recall how it was Said at in the ideas of preferences, special
handling of foreign investment is
that time that a pgrt of the quid discriminations, planned and con¬ a -case iri
point.
The handling of
pro quo was the agreement of the trolled economies.
it was such that Australia^ a coun¬
British to go along with idegs put
in the Department
of
publication
including,
The .Geneva. Draft
im¬
It is true thOt -the Geneva draft,
Boylan, Chairman of the Board of Governors of the
Exchange, on May 13, in submitting to members
try with little, if any intention of
making such investments itself,
wrote the provisions, Obviously,
portantly, thef^ elirniriation iof Im» which was the basis of discussion they are written from the view¬
periai preference. The British in¬ at Havana, Contained much to point of the receiving country.
of the report of the Special Committee, appointed by him terpretation as to what was agreed which •objection chad < been voiced Yet, if such investments are made
on
Jan.
9,<6>did hot check with what the by sueb
rprganizations
the" Na¬ the United States must make most
1948, to con¬ mittee was unanimously of the
Stock
New- York
a
the
you
State
Robert P.
Member of the
a
by
were
States
forward
against it.
as
time and their eyes
.
as
was
these
listening to the debates
Delegation in the pro and con on preferences de¬
capacity^of an . advisor :ahd 'it is cided that these were just what
to tell you of my impressions that they wanted.
Pointing to the con¬
I am here.
Perhaps the greatest tinued existence >of British pref¬
is one of keen disappointment that erences they used that as a lever
so great an opportunity for leader¬
to gaiin the privilege for them¬
ship was not employed to better selves. • And the United States'
purpose.
Two-thirds' of the {na¬ situation, on all the matters to
tions at Havana were attending Which objection has been made is
United
-
ommendations
when it
I attended
^hc^e .was ^eb uptI Beftania Uon;i^We^ iecoiri^ permanent' one. de«oite +***
during the. last session of Congress
mfend the x^pid completion of re¬ trary provisions 'of the U. S. Con*
"(1) to make a full and complete
clamationfaiid drkiiiage^programs stitution, seems sen-feviUfci^.
study pf the present high prices
Bretton
Woods
enlarged the
now
under construction arid 'de¬
of .consumer goods, and (2) to revelopment 'with a view 'to increasr concept, for if a trade organization
*p6rt to The Congress . , * the
parallel'to the Bank and Fund
result of the study and* investiga¬ ing the food supply 'in line With
could be created and made a part
tion
together with such rec¬ current and prospective needs.
of
jpprifmRtefeas
complete list, all of
pointed out in reports
Associations
previously
a
coun¬
was
States has al¬
opposed.
ways
While not
trade
ments Act and it
'
iprogram, including paethods of ap¬
United
have
a
| The whole Committee recognizes
further study
the
terpart.
.be
_s
——
which
should
recipients until such time
as1 Congress
shall determine that
inflationary dangers ha vepassed."
given
on
assumes
Theidea-behindthis
inevitable
nelci by
the merit of this
based
one
Says present charter
be discouraged.
!
•
savings
in U. S. Government bonds, to
Havana draft and instead offer
^crap
government planning and bureaucracy call do everything
tax^ reductions
take the form of required
should
we
principles, clearly stated and uniformly applied.
the
opinion that seats Should not be
retired
with
present Exchange
ad¬
visability
and
sider
practicability funds,
c
of
adopting
the
a
conclusion
a
Board
with
which
is in complete accord.
all
considerable
plan to reduce
member-
Therefore,
the
portion of the cost would be
ship
of
the
Exchange,
;
posed, directly or indirectly,
the remaining members.
expressed
American public was told.
tional :Assodationcef
Manufac¬
of them.
Then followed the Department
turers, - the
National
Foreign
of State's more specific proposals Trade Council, the American Tar¬
for an International Trade Organ¬ iff League, the Chamber of Com¬
ization nnd the call, through the merce of the United States, and
Another question will be as to
the
amount
earlier
of
change
Geneva
not lend itself to
from
the
That 'does
draft.
mathematical
a
would be those held by estates or
or
a
im¬
United N^tioris, for the first con¬
others, in addition to the search¬
ing criticisms and suggestions of
"that
answer
anything. Gen¬
articles, whereas Ha¬
means
eva had 100
ference
at London,
and, subse¬
And the greater
quently, a second at Geneva. Dur¬ the Senate Finance Committee. vana has 106.
ing preparation for Geneva, the And it was expected that consid¬ part of Havana Charter is either
"Any seat retirement program
pointed
out
erable
Improvement would
be identically the same or the same
Finance Comrnittee Of the "Senate
mi the difficult could not be selective and,, un¬
The more meaning¬
held hearings in which the au- made, at Havana. Actually, on bal¬ in substance.
; problems
in- questionably, ,a great number of
thohrof the draft charter were in¬ ance, the Charter suffered de¬ ful comparison is one which atH
| v.~volved
and seats which would *'be retired
terioration instead. Moreover^ -the tempts an evaluation which shows:
terrogated at considerable length
•
on
•
:
ap¬
Almost main criticisms of the earlier
(a) number of instances of imr
Department draft have not been corrected.
provement;"
'
/
These briefly were:,
(b) number of instances of re¬
ad¬ of State held hearings in seven
Robert P. Boylan
Governors and
Good principles are stated only
cities to give the public an op¬
tention of matter criticized
v..;;.
>! the Special versely affected at the outset.
to be
followed by multitudin¬
in the earlier draft;
portunity to give their views on
J
"In addition ^there is the ques-^
'Committee's
unanimous opinion
ous
a document of which most of them
exceptions permitting con¬
(c) number of instances of detion of a radical departure from
that membership seats should not
tinuance bf "almost 'every prac¬
had never heard and few had seen.
i
terioration from Geneva. *
fce retired with The Exchange's a very fundamental principle of
tice the good principles were to
Parenthetically, you can. expect
Obviously, the points selected, as
'funds.,777^7:71777'777771m Exchange policy. The Exchange
do away with;
V"the same sort of maneuver* in re¬
well as their classification, would
-The text of the letter Pf Mr. has always staunchly advocated
inactive
proval of his,
the
Board
members.
Thus,
one
primary objectives of a
retirement
plan Would be
the
of
of
seat
about many
points in it.
at the same time the
,
,
*
.
,
'
markets with sup¬ spect to the Havana Chatter.
Boylan to members follows:
The document drafted at 'Lohfc
ply
and
demand
determining
j "To the Members of the Exchange:
price. The Board of Governors is don was redrafted' at 'Lake Success
;r t 'At its -meeting on Thursday,
strongly of the opinion that any -rthe so-called New York draft—
May 6, 1948, the Board of Gov¬ seat retirement
plan would be a and .this became the basis of disernors carefully considered the "re¬
contradiction of this polity and fcusSion at Grcmeva, April to Sepport of the Special Committee therefore it would be a most un¬
tember^ 1947, - where • two things
which Was appointed to explore
sound step to take.
The Board were, done. ? First the, Charter for
the -advisability and practicability
feels that the efforts of the Ex¬ ITO was negotiated and adopted
of adopting a plan for the retirechange Should be toward expand¬ for submission to a world confer¬
ifient sof memberships. For your
ing the value of the services ren¬ ence already arranged for Havana;
-information, a copy of the Com¬ dered
by the Exchange to the and, second, the General Agree¬
mittee's report is -attached.
public, which should tend to in¬ ment on Tariffs and Trade was
T "You will note on reading the crease volume of transactions.
Report that seat -retirement pre¬
An-address" by Dr. Killheffer
"The Board of Governors deeply
sents a number of difficult probbefore Third National Textile In¬
appreciates the 'effofts 'of the
; lems not the least of which is one
stitute
Seminar.
Shawnee-onfree
and
open
.
•
,
T
of
-v-
financing.
-
.
-
-
,
^
;
'The ^Special i Com-H
Special ; Committee
Com poising
.:iv;( Continued on>pegeH5if Delaware, Pa., May 12, 1948. T -f~:\
bf exceptions left
termination
in
rules
nations' thfough
thorizations; s
-
examinations
earlier drafts
of
criticisms have not differed
materially from those of any of
the groups previously mentioned.
my
'exceptional au¬
*-
| I ,.f i n d
six
improvements,
thirty-four retentions of undesir¬
able
matter
formerly
criticized
and fifty-seven further deteriora¬
tions from Geneva. In addition,
which is necessarily
also unnecessarily
ambiguous, spelling later trouble
When the bureaucracy Interprets
language
complex, is
It?
there
"
good ^Chapter
regulating
monopolies and cartels in private
hands,
followed by
a
longer
a. •
that
are
are
of
number
a
questionable.
matters
'
I In the time at my disposal it
impossible
Chapter for their creation under
intergovernmental auspices;
to
give
■
you
L. ;
planned economies but
(Continued
'si;-..
>jf>i:%.
•
4-.
some
v
is
all of thesb
I will 'try' tb
cover
fully.' f Therefore,
Obligations peibaps bnore nor¬
mal Tor
with the analyst. However,
vary
" m
applicable
tor United
States will be admitted by other
vagUe in "many instances;
.
V-'
of the importarft
on page
'Z'..
W
•
T
40)
20
By DEXTER M. KEEZER*
<
By WILLIAM J. McKAY
One
denials
given to the British economic
sition
alone,
made for
sible
po¬
clear case can be
maintenance of the
a
the
there
is
inexorable
feudalism
wherever
As
far
the
recent
reorientation
financial
mercial
Canadian
one
of
abroad, this country has both the
for
adjustment
establish
and
to
re¬
in the
of the
area
event
democracies.
be
the
is
as
the
positively not
currencies
by
of
considered
the
Interna¬
sterling devaluation.
and internal bonds
position is fully and sympatheti¬
cally recognized, ways and means
will
Moreover
dollar
view
in
of
the
clash
issue.
ments
official
state¬
of
sterling
devaluation
fears.
subject.
However Canadian stocks were buoyant and
representatives of the Western oils index was at its
the International Monetary Fund
highest peak for eight years. Base
and the report to Congress of the metal and
paper issues were also
National Advisory Council make
strong but the main feature of the
it abundantly evident that the in¬ market was
again provided by
ternational currency situation is Canadian Pacifies. The basic val¬
the testimony of
approaching
steadily
now
cli¬
a
ue
max.
of this stock is at last
ing
The
liquidation of the Sterling
area
to
becom¬
eries in Alberta which have high¬
level are not
lighted the large CPE holdings of
necessarily to be
construed as
tragic events from the
British potential oil-bearing properties in
point of view. In the first place this province.
When it is also
realistic
a
U. S. capital can
in
permitting
a
be instrumental
considered that this company has
fuller development
a
of the British Dominions and Em¬
majority interest in the highly
pire territories, which would be flourishing Consolidated Mining
by no means detrimental to the and Smeltng Co., the recent specinterests of the United
Kingdom.
Similarly the international pres¬
tige of sterling is likely to be
enhanced
rather
than
impaired
where
inter¬
with the pound at a level
it could once more inspire
national
confidence.
When
con¬
sideration is also given to the fact
that the operation
of the ECA
will
offset
the
higher
costs of essential British imports
in the
event of devaluation,
it
program
would
not
British
be
surprising
to
see
initiative rather than
ex¬
ultimately
respon¬
acular advance of this stock re¬
to
appointed
Bond
the
Division
U.
of
S.
the
in
the
promotion
of.
the
Security
Drive.
Canova,
in the
ties
G.
rose
Co.
.
\
•
«
:
,
WORTH 4-2400
' J'-"r
•
»♦
Y.;
* "*♦<>•• *•
NY-1-1045
J
higher
production is about
than
it
the
in
was
1935-39.
years,
other-
In
words,
the
country
has about
doubled in size industrially in a
decade—a
fabulous
performance.
There is very little avoidable un¬
employment. Thus, unless every¬
one
were
to go to work really
hard—an unlikely prospect—there
greatly in the short
operating
We
run.
somewhere
are
the
near
ceiling.
that
that
ber of
are
Thos. A. D. Canova
Co.,
members
of
Stock. Exchange,
will be in charge
Building.
merly for
his
own
many
name
be
government,
to
give
our
another big lift.
One of these developments was
reduction in Federal income tax
which otherwise they would have
turned over to the Federal Treas¬
Another
(on
was
the
April
of $6.2
final
ap¬
3)
of
billion
an
,,
these three actions
Federal Government are
either
$15 billion
be spent
future
That,
not
the
the
to
in
to
a
such
available
or
you
to
may
is
say,
staggering amount
consider that our na¬
tional income is currently running
at a* rate of about $215 billion per
when
you
There
something
in
lot
of
that
would
idea
slack in
be
if there
our
were
economy
a
in the form
on
go
account of the tax cut.
much
on
and
usual
as
will
become
clearer
withholding taxes
when
One of the types of expenditure
which the tax cut is particularly
likely to stimulate is that for
com¬
to
lake
risks
such
before
the tax
collector took most of the money
they devoted to it.
this
On
conducted
of Buck & Co.
V-
is
large
slack
military
was
possible to lap
orders
used
before
up; *
Now,
Department
of Economics recently made an
inquiry through the McGraw-Hill
But
they won't be.
There
clearly
general decline In prices, <
Well, what about the outlook
the
urers Association, Atlantic
J., . May 5, 1948.---
City,
next
My
substantial
a
cross
We asked
section
-
of
people with incomes of more than
$15,QpO annually what they pro¬
posed to do withthe money if
they received a tax cut of ap¬
proximately the proportions which
It developed that as
we
period with
of
they planned to
group
74%
save
of the tax cut, as opposed to
out and buying goods with
going
it.
It
developed that of this
amount saved they proposed to
invest
about
52 %
in
common
further
The
share of the tax cut
going to people with annual in¬
above
of
comes
amount
to
about
will
$15,000
If,
inquiry
would suggest, half of that is de¬
the
as
billion.
$1
to
answers
our
purchasing common
stocks, it; is enough to give the
stock market quite a bit of in¬
spiration;- Indeed, some of the
voted
to
recent
vitality of the stock
ket may
fall
•I
Stock Market Lift Beneficial
recognize,
below
however, that
in
am
a
la
decided
very
I find
jority
both businessmen and
proceeding on the as¬
that in the relatively
of
economists
sumption
future
serious
a
Russians
substantial
a
shall
we
on
nant.
when
But
ourselves
informal
of
we
from
polls
I've
the subject, most of us
ing
the;
counting:
get indig¬
talk .among
a number
we
find
I
into
When
are
say
ma¬
slide
depression.
they
that happening
taken
are
on
expect¬
big bust.
a
The Longer Range
I could
Outlook
list «at least
for
a
score
of
optimism about
the longer range business outlook,
which I would expect you to for¬
get about as fast as I listed them.
One would be that it would take
reasons
positive
sort
of
my
genius to get into the
jams with bank credit
which have generally touched off
and
contributed
largely to big
busts in the
ing
past. Our basic bank¬
are still fabulously
reserves
Another would be that we
security arrangements
which provide cushions for a let¬
down which were not present in
the 30's. However, my controlling
large.
have social
ing in
be that
would
a
world,
liv¬
are
we
part of
or
a
world,
which for many years is going to
offer an almost unlimited outlet
for
because of the: tax cut or
otherwise, the stock market con¬
than 15%
more
minority.
reason
ulus.
all it
generally high level
activity — one that
a
business
mar¬
well be due to that stim¬
beyond
years
and that's
the present leveh
eventuated.
a
few
guess,
be this far in advance, is that
will carry on
through that
can
goods.
our
Well,
If,
what
say,
may
you
are
tinues to perk up it will be a very
they going to use for money? I'm
not altogether sure, but I gather
good, in fact a very essential thing
for the country.
Since the war
munist,
we've been able to get
along with
stock market because
money to finance new plant and
equipment was piled up in very
a
droopy
that
a
promise not to turn Com¬
or even a possible dispo¬
sition not to turn
a
Communist, has*
high negotiable value; In this
large volume by corporations dur¬
of the great
period that the
Russians, basing their foreign pol¬
But those reserves
icy^ in large part on the. prospect
ing, the war.
running
out.
So
if
are
we
going to keep capital expansion
going at the rate required to sus¬
tain a high volume of employ¬
ment it must be possible to get
a
lot of new capital, and capital
willing to take a chance, from the
possibility, the tax reduction
also
increases
sustaining
long
run.
the
possibility
the prosperity
That's true
even
in
of
the
though
connection
it
ironies
this
of
our
complicates
by
run
life
adding
to
in
the
the
short
already
ample inflationary pressures cre¬
ated by ERP and more armaments.
t
of
is
one
a bust, are building
which could scarcely
things
high clip here.
,
having
up a program
be better calculated to keep
moving at a
Don't
,
misunderstand
me. ;
I'm
not
basing my expectation of gen¬
erally good business for several
years on the expectation that we
shall be able to give away enough
abroad
to
keep ^prosperous.
I
share
don't
nance
view
the
Minister
of
of
New
the
Fi¬
Zealand
who remarked the other day that
our
N.
believe
level into next year, and without
our.
terest and importance.
it
*An address by Mr. Keezer ber
fore Water and Sewage Manufact¬
involved
volume of expenditure
a
near
point
Then it
Mr., Buck for-r
years
industries
that view I
1949.
the
the
that things generally are not sag¬
won't
and
was
been
tirely most anytime. As they do,
prices reflect that fact, it's
going to be hard to make those in
in the hands of people
who can afford to take the risks
involved in common stock invest¬
ment, and who were accustomed
money
investment markets. By increasing
was
have
-
and
stocks.
That is because f
leaves a considerable amount of
mon
that
there
Others
thin and may disappear en¬
that?
reduced.
are
capacity,
up
example.
worn
for
trial
as
backlogs have been
off—those for small radios,
worn
for
any
-
Controlling
with great backlogs of orders.
Some of these
the funds left in the hands of in¬
dividuals by the tax cut may and
much of it will be added to them.
are
;
In¬
out of the
came
in
sight to keep our economy
moving at or close to its present
They
stocks.
rates (approved on April 2) which
saved taxpayers about $4.8 billion
individual industries.
on
not cut
the
of their newly
erate
dustry generally
ging.
of unemployment and idle indus¬
investment business under
the firm
to
a num¬
Absence of Slack
opened Houston office in the Esperson
by
the
destined
be spent.
Buck has become associated with
&
were
developments, all of them
economy
James R. Buck Joins
York
we
might
have turned
out
right but for the impact of
year.
Shields
where
was
pres¬
duction from government expen¬
ditures.
These expenditures are
field staff which I think is of in¬
Possibility of Downturn
There is always the chance of
going down, of course. - When
farm
prices
broke
sharply
a
couple of months ago, a lot of
people jumped to the conclusion
immediate
and
previously in
charge of the
New
NEW YORK 5, N.
90%
prewar
funds
; 'HOUSTON, TEXAS—James R
<
industrial
the
adding about
Shields & Go. in Texas
TWO WALL STREET
present, the general volume
by
with
Ring-
Schroder Rockefeller & Co., Inc.
p"
At
Combined,
Government Bond Department for
INCORPORATED
day.
;
s,' was
E.
A. E. AMES & CO.
to¬
are
,
past 16
recently
CANADIAN STOCKS
next
already set at the rather stagger¬
ing total of $10.7 billion..
; ,
business
year
to
expenditures for national defense,
securi¬
for the
'i:M
higher
expenditure
for
foreign aid. A third was an addi¬
tion of $3.2 billion (now in the
process
of being approved)
of
who has been
CORPORATION
slightly
higher, than they
proval
cur¬
billion
inflationary
are
more
That
5%
ury.
Bonds
G
Loan
|
Dexter M. Keezer
volume,
thatprices
in general will continue under an
inflationary
pressure
that
will
a
$4.8
spend it.
The point is
that this $4.8 billion is not a de¬
and
of
have
ernment
ent
them
will
spend rather than having the gov¬
ere
its pres¬
near
Savings
Treasury
Department, 253 Broadway, New
York City, to
Mr.
MUNICIPAL
h
s o m e w
viduals
at
on
which
Thomas A. D. Canova has been
rent
PROVINCIAL
will
general
carry
expenditures.
They reason that
the only difference is that indi¬
in
initiated
Security Loan Drive
for
/
that the tax cut makes much
difference in terms of increasing
I
run
business
people can't
many
see
We did not jump in that
direction,
but those
who
did
Tom Canova With U. S.
F &
GOVERNMENT
the
good
these
at work, a lot of even
powerful pressures toward
lower prices will continue to op¬
sures
war
I find a
anticipate that
as
the Federal Government
economy a terrific im¬
pulse.
that.
headed.
quires little explanation.
sales of series
CANADIAN BONDS
gives the
'
assist
ternal pressure
going to happ en !
after
short
an
of
made by
largely following is no chance of increasing the
important oil discov¬ volume of industrial production
devaluation of ster¬
and the
ling
recent
ditures
worry
about what is
For
addition to expen¬
the
magnitude just
cumstances
recognized
the
the econom y is going
virtually full blast.
In such cir¬
make
of
this
on
to
While
however,
rel¬
atively boot¬
less operation
New Year's Day, perhaps as much
neg¬
to
recent
of
nature
sus¬
a
was
dearth
avoid a hasty supply. Free funds after reaching
on
the delicate points at a recent new
high level of 7%
This explains the guarded were inclined to react in the face
sought
I
pect it is
in steady
were
demand but the turnover
ligible
world
com¬
During the week both external
difficulty of the British
As the
policies.
the
of
and
tional Monetary Fund, its position
should
not
be
changed in the
freer system of finance
a
commerce
western
intention
dollar
concerned all that need be said
is that its historic relationship to
the pound is rapidly undergoing a
fundamental change as a result of
stage, whereas Britain
powerless to restore normal
economic procedures at home or
the
r
<
is
Dominion's
dealing with the business outlook 1 shall first concern myself with the outlook for
until the early months of next year, 1949. Then I shall make some ob¬
servations about the outlook for a longer period, say the next few years.
In this kind of
the short run, say
is
be
may
Canadian
the
as
is
and
it
,,
'
4
present boom levels, with
near
step ht with subsidies and controls*
modern
of
the short term business in general will continue
Jn
In the final an¬
little doubt that
march
found.
the present
means
than
action
progress will ultimately obliter¬
ate the last vestiges of economic
On the other hand at
war.
earlier
anticipated.
alysis
the
rigid controls and systems which
came into being as a result of war
exigencies. The U. S. enactment
of the
ECA
program, however,
completely changes the aspect of
the economic problem of Western
Europe and Britain in particular.
It is unquestioned that British fi¬
nancial management of the Ster¬
ling area played an invaluable
role in the successful prosecution
of the
for
now
:
Director, Department of Economics, McGraw-Hill Publishing Co.
prices slightly higher next year. ; For long term Mr. Keezer predicts high industrial activity will con¬
tinue with 15% as maximum decline. Believes in event of depression Federal Government will promptly
clear
and
-
Economist expects over
point is beginning to emerge amid the fog of state¬
concerning international currency policies; and
this is in effect the impediment to the smooth operation of the ECA
program, constituted by the sterling area and the current level of
sterling.
When consideration is^
.
Thursday, May 20, 1948
What's Ahead for Business?
Canadian Securities
ments
FINANCIAL CHRONICLE
THE : COMMERCIAL
(2204)
economy
and I "there
would
would
disintegrate
be
unprecer
dented unemployment" unless we
could
a
,
J
figure
out
(Continued
a
way
on page
to
42)
send
-
••••-
Jm
Volume 167V
Number 4700
'
•
THE
-
.
••.
COMMERCIAL &
individuals
Profits Have atPurpose
S. TUCKER* '
RUFUS
DR-
with
any
;My best
government, whether it calls it¬
; communist,
socialist or1 fasc-*
ist. The type of mind or charac¬
ter naturally developed under the
system of private profits is that
which is independent, progressive,
for
money
investment.
guess as
to the number
of .stockholders at the present
time
is between 10,000,000 and 17,000,000. About half the dividend re¬
,
Economist, General 31otprs;.Corporatfo^
revealed by a - study
for the year :1936, had total- in¬
comes from all sources amounting
Dr. Tucker asserts
ceivers,
profits are needed to motivate productive effortmodern, fiee- society and to \ facilitate * corporate - financing;
Maintains totalitarianism is alternative.
1
*
In
*
ihe quest for-profits is the4 chief,
-Profits5;are necessary because"
to. less
»
-
with
changed
flow
other families.
When
simple
be¬
barter
tween families
is
longer
no
adequate,
be¬
dis¬
of
cause
the
tance and
with
incomes
income and
of
women were
to
receive
goods
cause
over
$16,000.
much
dividends
more
likely
than
were
unsold, with resulting single men, and families were less
unemployment and its intensive likely. These: figures reflect the
coiisequences.
If there has been presence ' of a large number of
any
connection between saving widows, orphans; invalids, and
aged persons whose income copies
and -depressions, it has been a case
of insufficient saving and exces¬ wholly or in large part from in¬
sive current consumption, or of vestments.; They are in the lowinsufficient saving and excessive income brackets because they are
remain
to
and
number
sons
In the classes under, $15,000, sin¬
gle
ex-<§>-
be
must
<
re¬
About half were received by per¬
is based on the
it is no longer
possible for each family to produce all it needs, goods and1 services
.
$2,030, and they
ceived about 10% of the dividends.
motivation of productive effort in a free society that
division of labor, as all modern societies are.
When
■
as
than
investments, or
government
ex¬
unable
,to earnmuch for; them¬
variety of ob¬ penditures financed by bank loans selves, ^Appairently over -B4%^ of
the single female stockholders had
jects involved, or by printing-press money. The
incomes from all sources of less
production for figures to which the theorists
than $2,500, and the single women
the market sometimes appealed for support of
brackets
received
their theory have since been re¬ in these low
becomes
nec¬
essary.
And pudiated by the Department of 25% of all dividends received by
Rufus S. Tucker
production for Commerce, which originally got single women, which, of course,
includes widows.
the market them out.
There can be no doubt that the
It is necessary to have profits
can take place only as a result of
motivation
some
incentive or
or
tried, but the possibility of
making a profit has been the most
been
effective in increasing output, re¬
ducing cost and
consumers*
wants.
the
satisfying
also
been the motivation most consis¬
has
It
tent with the dignity and
and
workers
individual
of
liberty
con¬
and the finest develop¬
sumers,
of their characters and ca¬
ment
pacities.
society based on
economic
Ail
profits is based *on free choice and
At the
self-respecting and therefore
easily taught to respect the rights
of others; even of minorities; The
type" of mind or character devel¬
oped under the other system in
Germany and Russia is servile to¬
ward authority, aggressive toward
weaker persons, and prone to be¬
lieve that anyone who will not
conform to the majority will has
no rights.
Which is the more ad¬
mirable? ' .' * ' >;•* k" * ;" *
*
These
good
usually been less efficient in the
to the national
production of goods for peaceful
of
and have usually crashed as
uses
result of internal strains or ex¬
a
income,
tention of all who have
an
...
Funds Available For
*
Interest Payment on
|
ficers
The National City Bank
of New
York, as Fiscal Agent, is notify¬
ing holders of Republic of Panama
35-year 5% external secured sink¬
ing fund gold bonds, series A, due
May 15,1963, that funds have been
received
and
are
now
sales,
are
of profits for purpose of
antagonisms
created
by
their
own
rigidities, stupidities
and cruelties.
Experiments have
comparison over the years. Abso¬
lute dollar figures mean nothing,
since - the dollar has fluctuated
been made with societies based on
widely in purch a si n g power.
Ratios to invested capital as stated
on the books
does not represent
either the present value of the
ternal
but have rarely
altruism,
mor£
lasted
than one generation.
Pecuniary Reward Least Harmful
Paradoxically,
the
pecuniary
form of reward, which is regarded
as, the lowest
by fastidious ob¬
servers, is the least likely to harm
other persons. Profits can be made
only by persuading customers to
buy your wares. Military glory is
won by compelling others to bow
to your will.
Political glory is
likewise won by compulsion of
the minority, or, in totalitarian
states, frequently by compulsion
investment
t;?, '' y ^\.V ''
L.
v
'
' '
'
'
' ' /v;
t,<"
'Bawt Street
It takes
ment to
of
cannot
war
this
<*dried
society^ but is using
up ma¬
labor to create some¬
thing1' worth less than could have
Secretary:
Berkley F. Stocker, Abbott Proc¬
tor
Paine;:j Asst.-Secretary:
&
Eastman Dillon
John Hugelheim,
& Co.
William P. Miles
Opens
Offices in New Orleans
NEW ORLEANS,
has
Miles
P.
the
Whitney
LA.—William
opened
Building
offices
to
and apparently
enough
In addition to the
of
which
tax
O
past he
with Waters &
was
'
<
•' ' ^V,'
'
I"
.
'"'VSv4
"
V'1*
'
'-
Woy th*Y
PnIK$K
incomes,
the
amounts
down
cut
in
are
stocks.
Of
course;
widely held, but
to#
%*
»«»#2
1933, has discriminated against in¬
stocks
J°urnal>eco
"WW LOOK"
.
vestment
'
0 °nd
! 8°*' S/re 6'
'«k behind .lii
"*
per¬
yrith smaller incomes do not
sons
been created out of the same ma¬
as a rule buy new Issues, except
wasting in times of speculative mania,
the nation's substance, not adding and when
they do to any extent
to ifc 1 ' ,:*v;v
%
they necessarily
Use
borrowed
terials
labor;
and
is
It
Savings Fictions
great'deal
A
.
money,
has been said ahout
the .danger ofexcessive saving. A
schemes were
a
Profits Facilitate Financing
The
in
excess
of
supposed
investment,
to
which
down
cut
the
Higher profits woiild enable the
corporations to finance themselves
without
building
top-heavy
„
*|2xcerpis from, an; address by
Dr.,: Tucker
Spring
before
Conference
trollers. Institute
-\-l'
the Con¬
America, St.
of
of
Pauh Minm, May
■''
Midwestern
• ••
,ij94& * \ i
.-t».,
for
1929.
proposed
was
way
stock market crash like 1937 or
few years ago, many
for preventing saving.
theory was that business de¬
pressions were caused by saviftg
thus 'paving the
up a
to
financial
structure.
«•»*<
individuals,
the, extent that reductions in
individual
..
t'-
-.V,: S>
income
provide
taxes
■"
bring
now
you a copy
to ensure
of that hardy perennial/ The Bawl
delivery
dangerously
They would also make it easier to
sell stocks to private
W9I
Order
»*'.
»
i
as
you
want and send
on
June 4, Multiply $1
by
Street Journal
qs many
copies
checks to Norman Smith, Circulation Manager,
c/o Merrill Lynch, Pierce, Fenner & Beane,
as
the
Alcus.
extremely high
large
on
„
in
ties
'
'
•?ii0
act
in general market securi¬
and mutual fund shares. In
dealer
^'hebuHs "pZ-;;
n
available for investment, the dou¬
ble taxation of. dividends since
terials and
;
;?,
w,
have been unable—
country
producer habitually
failing to make profits is not con¬
tributing to the material welfare
of-5
Kossmann,
P.
Co.;
lot of capital invest¬
a
rates
or
&
make up for four years
and twelve years of de¬
make profits unless the public is
willing to buy their products. Any
industry
Hutton
E.
the cost of replac¬
or
pression, during which expansion
of plant for civilian purposes of
negligible and normal replace¬
ment was neglected; Unfortunate¬
ly, even with a conservative divi¬
dend policy the corporations of
obtain
monopolies
Even
Gerald
Treasurer:
W.
ing it.
;
rupt.
4
s,<
•;
dur¬
Co.; Vice-President: Guy
Hornblower & Weeks;
Pepper,
Journal"Day
will be unable—to
capital to permit
In the absence of fraud or vio¬
our national income to grow as it
lence, profits can only be made has in the past, except by relying
by producing what the public to a dangerous extent upon bor¬
wants to buy. Fraud and violence rowings
from
institutions
and
can only be successful when the
banks. Private investors are un¬
government is inefficient or cor-* willing or unable to buy stocks.
of the majority.
serve
W
President: G. Arthur Behrmann,
Hirsch &
available
,
i'
elected to
were
ing the coming year:
4tH is
jm
profits to company
the only significant
G. Arthur'Behrmann
Exchange Firms, the following of¬
Panama Bonds
company
measures
Stock
interest
in human welfare.
the ratio
or
of
worthy of the at¬
are
persuasion.
Societies
in addition to the prices they pay
might be, and have been, based
for such government products and
on compulsion—the compulsion of
services as they voluntarily buy.
custom, or of a military ruling
The ratio of aggregate profits
group, or a theocracy. They have
peaceful
Association
the
of
tion
in
and
years
regular election meeting
of the Senior Margin Clerks' Sec¬
not sordid considera¬
are
tions; they
Margin Gierke
Elect New Officers
well-rtm number of stockholders has in¬ for distribution as a final payment
creased since 1936.
Stockholders on account of the interest repre¬
concerns to offset losses in bad
with incomes over $15,000 or so sented
years and in badly managed con¬
by the Nov. 15, 1942, cou¬
cerns.
In 1921, and in every year have not only been unable to buy pons in the amount of $2.56 for
from 1930 and 1940, inclusive, the new stocks at the rate customary each $25 coupon and $1.28 for
majority of corporations submit¬ in the 20's, but have even been each $12.50 coupon and as a par¬
ting tax returns reported losses, compelled to sell their old hold¬
tial payment on account of the
not profits. If this were the uni¬ ings. Whereas before 1929 threeversal rule, and if losses in one fifths of the dividend-paying stock interest represented by the May
not owned
by corporations was 15, 1943 coupons in the amount
year were not offset by profits in
another, there would soon be no owned by 100,000 persons, in 1941 of $17.82 for each $25 coupon and
the 100,000 biggest stockholders
investment and no private enter¬
$8.91 for each $12.50 coupon. Such
prise.
Only government enter¬ owned less than one-third.
distribution will be made at the
prises can be run continually at
The
alternative
to
a
society
office of the Fiscal Agent, 22 Wil¬
a loss—and then only because the
based on private profits is a so¬
citizens are compelled to pay taxes ciety controlled by a totalitarian liam Street, New York City.
in
Other methods have
compulsion.
Senior
self
;:/y v.
21
(2205)
' '
FINANCIAL CHRONICLE
70 Pine Street, New York, N.Y.
:& ;:FINA^
THE COMMERCIAL
(2206)
22-
m
■)/ -;. ."*/
•
r:
„3-
;,,
The Bank for Savings in
York, announces
of New
Goodhue
Abbot
"Communism has never made substantiajtheadway in any nation where there has- been a real,
eflort to raise the living standard;, !■
"In Czechoslovakia) for example, the postwar
V!
;;
York and
"The
"If
•
Charles
are
make
must
23
whose
noted in
was
29;
death
Kings
April
on
issue of
our
Mr.
1894.
page
the
of
April
Behrensy a
Timm
a guide for us in America.
capitalism in, America, we,
that thd mass of' the American-
the
the
fi¬
institution's
Brooklyn "Eagle" of May 14.
H
*
■
*
A "Library of Homes**
featured
atthe
New
Exhibition"
Buyers
will be
"Home
will
which
today, May 20, at The Dime
Savings Bank of Brooklyn, N. Y.
open
About
The
of
member-builders
100
Pulaski,
Island Home Builders
Institute, active in building in
Brooklyn,
Queens,
Nassau: and
Suffolk Counties will display their
Long
latest
increased
has
Va„
of balder¬
BRANCHES
NEW
REVISED
$160,500
sale of
while
$192,600,
to
stock to the
new
the
amount
of $7,400 served to/enlarge the
capital from $192,600 to $200,000.
7
George
the
C. Johnson is President
bank, which was founded
ill 1859,'
7■
John C. Read, New York repre¬
of
Limited
of
Midland
the
Bank,
been
has
London
Marking the fourteenth national
Week,
observance of World Trade
Colonial Trust Company
of New
display on May 17
a new appointment. He was suc¬ jlij its windows,
at the Avenue of
ceeded on May 1
by W. B. J. the Americas and 48th Street,
Partridge, formerly a Deputy As¬ world trade exhibits prepared by
sistant
Manager of the Bank's the Import Department of. WestOverseas Branch in London. Mr.
inghouse
Electric
International
Partridge, who first visited New Co., one of the bank's clients. The
York in 1933 as an official in the
displays, is designed to illustrate
Midland
Bank's
branches
on
graphically that world trade is a
Cunard liners, brings to his new
two-way street, and have as their
position a wide experience on the theme a statement, by W. Averell
domestic as well as the foreign Rarriman,
former Secretary of
side of the Bank's activities.
Commerce, "We must buy more
London to take up
transferred to
'
'
■
■■W--'
■'!
*!'•;" *:
* 777../;/»//7v
*
N. Baxter
Jackson, Chairman of
the Chemical Bank & Trust Com¬
of New York
pany
at
-
announces
that
meeting of the Board of Di¬
rectors. held on May 13 the following were elected to the Board
a
of the
Frederick E. Hasler
Bank:
former Chairman of the Board of
the
Continental
Bank
Trust
&
Company; Rafael Carrion, Execu¬
tive
Vice-President, Banco Popu¬
lar de Puerto Rico; and Joseph T.
Lykes, President, Lykes Brothers
Company, Inc., steamship opera¬
of
tors
three
the
world-wide
formerly directors of
Company.
the
placed
on
Turnpike office in Jamaica Estates
North,
Bank
&
Trust
...
meeting,
Ad¬
visory Board was organized and
established
for
the
30
Broad
same
Mr.
Dayton announced that Carl A. R.
Landau, Chief Clerk, will be As¬
sistant Manager. Mr. Fehn joined
attended
a
conference on consumer
credit delinquency held May 13 in
Richmond, sponsored by The Bank
of Virginia of Richmond,
brief"welcome
After a
Thomas
/ from
C.
Bo'ushall, President of the bank,
the session was devoted to a series
of round table discussions. Robert
M.
Vice-President
Berkeley,
of
led the discussion on
the bank,
taries to Assistant Vice-Presidents
while Jacob
how
these
imports.'
American, standard
helping
of
raise
living
the
by
to turn, the wheels of
American commerce and industry.
Cusimano
Assistant
has
showing
•7■
...V-*
■
-*•'
'
>•
board/ of
Secretary
Mr.
trustees.
with
been
the
bank
1939; Mr. Schubert since
Woods since. 1925
mano since 1925,
since
1944, Mr.
and- Mr. Cusi^.
:r
/.y/yy/y ■:
-
■'
Dr. Alfred C. Neal, Director of
vf'.ly'V-
Research for the Federal Reserve
Bank of Boston, has been
pro¬
dorn
Bank of New York to
change the
location- of: its principal place of
announced
business from 249 West 34th Street
bank. Before
Ody Hi Lamborn, President, Lamborn
&
Co.,
Inc.; William N.
Westerljund, President, Marine
Transport Lines, Inc. and Henry
to 855 Avenue of the Americas.
with
M.
;
The
Co.;
Frost Haveland of
T. L. Watson & Co.; Carl O. Hoff¬
man, of Kadel, Hoffman & Gillis;
Wise
of
Holtzmann,
Wise,
Shepard, Houghton & Kelley. In
addition,. Alfred E. Svenson was
appointed* Assistant Manager of
the
Foreign
Department.
changes follow the taking
"The
assets
and
These
over
business
of
of
the
^Continental by the Chemical Bank
& Trust
on
May 3, referred to in
these columns May 6, page 2001.
at
100
Broadway, New York, has
the
appointment
of
William R. Cross, Jr. as an As¬
sistant Treasurer in the Banking
announced
Division
of
the
company.
Mr.
Cross,
after- three years of war
service with, the
United States
Navy,* joined the
company
in
August, 1946 and was associated
with the Credit and
Research: Division.
Investment
de la
reports the *
Belgium
of- Brussels,
profits; for P94X of francs!"'
144.353,675; to> this was added .the : 7
balance of francs 3.459;288 brought^
forward from» the 1946 profit and./'; "
loss;. account -making- -the ; rtotaljk-;,
credited to the profit and loss;
account,Dec;. 31, 194.7 of. francS; rJ ;
years
,
,
banks
The
147.803.963.
at
assets
totaled
francs 26.064.386.833. Deposits and
current acounts; are/ feported-^at -:
the? end-bf 1947: as franck 18.0881^,;
905.714;
The
share
capital is.
shown^ in, the: Dec. 31 statement as...
francs 500,000,000; legal, reserve /
fund
as
francs
50.000.000 and
the end of the late
year
.
available
fund
reserve
370.497.006.
*1
Through
Bank
of
creased
to
5.
a
the
$150,P00,
stock dividend of
Citizens National
y
francs
" ;
as
.
capital from
$600,000
of May
to
$750,000,
_
effective
This
made known by the
was
as
at
Dean
versity's School of Business and '
the
appointment
of
Professor;
David hi Dodd
Evansville, Ind., has in¬
its
post of As¬
Columbia Uni¬
The creation of the
sociate
the
were
post
disclosed
at
of
last Friday
office
of the Comptroller of the
Currency May^ 10. - ;
meeting
a
school's
the
three
it
v
was
businessmen
of
that
city,
stated in advices from Wis-
consiri
Rapids to- the Milwaukee
alumni
ciati
F
asso-
at
on
1' t y
House, 4 00
a
c. u
West 7 117th
The
Street.
a
ointment/:
p p
wilL/ ; become
ef f
tiv
e c
C-'Befriardj CA'Brazeau!; aw
r
moted
F.
to
Vice-President,
it
was.
May 12 by Laurence
on
cran¬
berry grower; iGeorge: B. Mead,
President
of
the
Consolidated
gaffer !;Poweiy;^r:papebn; Co.; r and
e
Reserve
Philip
Dean
made
Young
the announce-.r
whichr-fellowed recent
the
Consolidated,
liam J. Taylor,; the bank's Presir
dent- arid the Witter family.;
"The bank was founded in
Bank
actiqn by>
.-7
„
heavier ^^ admimstrstiye^ dutie^;4t^yyy: •
said. the new-
!'
position 'isl '^part of-; :
7
dbyeloi>m^ ;prd^
;for'lhe school".
1
\
,
7/
7
ProfessoF «>D6dd: has-been;
,
I ty!
for; more than two
>
asso*!
oiated; with!the t$dhool: of Busi-.
.J
x
decade^
^
1945:.
charge of all University
Extension
ip: business and economics,.
courses
1872 Be.
by J., D. Witter. His son, Isaac,
merged: the institution with »the
/
change-qyor.pf the school to. gr^id-'
uate status next ,y.ear..wili,involve^,g 4
FrOnC 1926^^
of
v,o.-.
,
trustees!Pointing, out that the"
Vice-President,
purchased the interest from Wil¬
-
m^nLof the^ adniiiustr.ative change, y,
ness
President, of the
becoming associated
Federal
7
.
Mr. Mead's, son, Stanton W. Mead,
Whittemore,
the
July L.
the; whole?,
^hevfollowing is also: takep:;J
graduated frorh theJJni-
was
of Pennsylvania in
versity
with the Bachelor. of:
-
1920
Sciencet'de-
./
First. National Bank here in 1921,
in
John E. Bierwirth, President of
New York Trust Company,
condition, asy ;
1947 the Banque •
Societe Generale de Belgique,r /
In its -statement of
;
of December 31,
Associate Dean
by ; the
Emerson
The New York State Banking
Department approved on May 11
the plans of the Peoples Industrial,
&
Vice-
as
David L. Dodd Now
,
-•
position
at luncheon at which The
Bank of Virginia was host.
elect¬
was
Carrion, Joseph T. Lykes,
Siegfried Gabel, President,. Hage-
Rafael
Director,, and has i-
a
his
Trusts, 4 Company
'
following were elected thereto;
Frederick. E. Hasler, Chairman;
his duties as
-
ed
products,
ex¬
an
■
lars through normal trade chan¬
nels. With this display are exhibits
imported
for
affairs
period,, has been granted '
12 months' leave of absence from *
Stagg Lawrence, noted economist
and Vice-President of the Empire
^
assisting customers in other coun¬
tries to obtain United States dol¬
'
tended
the
'
^
that
business
all
* "
i
Sir Clarence '
acting on- medical advice
requires detachment from '
Which
Representatives from 70 banks
throughout the State of Virginia-
Bayside National Bank in
The stockholders of the ComOctober, 1945, after more than 16:
years
with; the Fidelity Union merciaf National Bank of Chicago?
have
Trust Company of Newark, N. J.
approved an increase in
Mr. Landau, entered the service
capitals Stock from * $200,000 to
from abroad to enable the world
of the Bayside bank in 1933. Re
$300,000, it was. made knowp 'on
to
continue
to
buy from
us." served as. a Qaptain in the Army May 12 by Harry R. Spellbrink,
Arthur S. Kleeman, President of
Airb Corps during the war, re¬ President,; according to the Chi¬
Colonial Trust Company, said that
turning to the bank last October. cago "Tribune," which added;
the displays were arranged as a
'
:/
>#
*
fit
'
present stock consists of; io,000
tribute to Westinghouse's Import
shares- of' $20. par value. Stock¬
The
Department. The major* display
Community Savings Bank holders of record April 30 will be
of
Rochester, N. Y. reports the
shows against a background of a
offered? one new share at $30 for
following promotions, it was in¬
map of the United States, the bal¬
each twor shares held■;
ance
between
exports and im¬ dicated in the Rochester "Timesports, demonstrating how the Im¬ Union" of May 13.
PauLE. Ejnerson, John E,Schitr
ControlHng |^ei^0h the First
port Department of Westinghouse
bert and Thomas E. Woods were .'National''/,■\ Bankoi.
Wisconsin,
aids in bridging the gap between
advanced from Assistant Secre-; .Rapids,. Wis., has been acquired by
American exports and imports by
an
Street office of the Bank and the
announced on May 12
was
by J. Wilson Dayton, President of
the bank. At the same time,
of
were
Continental
At
All
scope.
York
Appointment of Alvan B. Fehn,
Comptroller of The Bayside Na¬
tional Bank of Bayside, N. -Y. as
Manager
of the
bank's Union
,
9
Chairman.
'
speak
sentative
The
resigned
*
*
Bernard W1£ LaPrade, Afice-Presir
of
CAPITALIZATIONS
*
*
Sadd,
a
be
service, which, will
bank- ♦
County,; ^
V
Lemberfc served as
Treasurer for 12; years.
Mr>
stock
through
about
brought
divioend,1 raising the capital from
dent, "Delinquency in Amortized
will, be a complete Mortgage Loans"; and Aubrey V.
home center, offering in exhibits,
Kidd,. Cashier, "Delinquency
the latest in, available houses, as Forms and Procedures." In addi¬
well as the latest in materials and
tion to the bankers present at the
ideas. No, selling or. solicitations conference, Richmond civic and
will be- done at :■ the exhibition. business leaders heard Dr. Joseph
Bankers
and
ETC
has been assigned? to the new
business department of the
regret
maintained at the Exhibitions The
NEW OFFICERS,
;; -;
;'' f*7
with
"Delinquency in Consumer Instal¬
ment Loans"; John S. McClure,
Assistant' Cashier, "Delinquency
in Automobile Collateral Loans",*
pamphlet
News About Banks
thafivir. Lambert; whose resignation as Treasurer of Multnomah
County was announced a month
■%
Bank
Exhibition
CONSOLIDATIONS
*
of
of
1
from
Jr., President. It.is learned
the Portland "Oregonian" of
the Currency indicated that partthe
increases
($32,10U)
was
Comptroller
the
of-
offerings. Prospective home
buyers,
builders
and
planners,
will be able to get. the latest inn
formation, from a, catalogue and
dash?
of Portland,
Chairman of the Midland
Ltd. of London announces
Office
stated in
was
I
nations rank?
not have an end to this sort
of
commitee, it
nance
the globe?
we
/The .Pulaski National- Bank of
the
President
McLaren,
V
And where do the Communist
.
N. Y. to succeed the late James R.
^Why must "we/V indeed; canj^we^ achieve Sfoii
them"? And, who, by the way, is; "we??
ppd;^theij# not enjoy now a standard of living,
far above that achieved for or by any other people
Can
been
member
sure
sociation.
its
capital-'• from $160*500 to $2U0,00o
effective May 5. In reporting tnis
elected
people have a stake in c4pitalisnx and: we can do
this only if we achieve for them a standard of living
higher than they have known in the past."—Emil
Rieve, President, Textile Workers Union.
on
Behrena has
Dj
provide
j
denjt of Essex County Bankers As¬
-
to- save
'
Oregon, it hay been Kf>/
announced by Frank N. Belgrano, ?
County Savings Bank of Brooklyn,
result has been seen in other na-.
same
we
*
Bank.^yV'/^"
4;
National
First
the
dent
of
the, Newark .Clearing, npuse Asso-,
;
failed in many ways
of
National Bank of Newarkr~N. X,
has,' been ■;[ elected ..Chairman
ago;
*
partner in the real estate firm of
& Behrens, was elected to
a Vice-Presidency of the bank in
1946
after having
served as a
It should
tions.
of New
State
of, the
u
good, and this was enough, to cause an
anti-Communist vote.
■f# FrancisLambertr/ has *; been;^:^77 "i;y |
elected,^ ah'- Assistant Vice-Ptesi^.7^7'>*^^|
York.
force..
to|
go far enough toward meeting the needs of the.
people. Yet it has gone a little way, and its inten¬
tions seemed
member of the Bank¬
a
Board
ing
polls when they took over the country by
The Italian Government has
was
Cashier /of the Lincoln
deijt ;apd
meeting of the Board. Mr. Good¬ ciation \ it. is learned from the
hue is President of the Bank of Newark "Evening News"- of May.
the Manhattan Company of New. 12. Mr. Kean is First Vice-Presir
prestige of Russia, and therefore of Communism,!
was extremely high for many reasons.; Yet the Com¬
munists were on the verge of a crushing defeat at
the
thevCity.
that, F.
elected, a
Trustee of the Bank at the May
flbf a i w.-^.*3(ifT«i.1;
*«
Arthur E, Kean, Jr.^.Vice-Presi-t
President: of
DeCoursey JFales,
K.v
V.j
January, 1946, Dr. Neal held
giee^'receivinghiS. Master's- degree .7
;with^Isaac;;;WltlCff^PrC^sidentK
positions as economist with war¬
Columbia
in y 1921 y and
his
Mr. 7 Taylor ' succeeded
to
the at
time
agencies
in
Washington.
,)t\
Presidency when Isaac Witter died Ph.D. in 1930.;
*
Prior to government service, he
i in 1942! Mr.;Brazeau will;, become
was
Assistant Professor of Eco¬
7 Professor
Dodd's special fields,
nomics at
Neal
who
Brown
in
Brown
University. Dr."
received
is
1941
his
the
Ph.D.
?.at
'
v"'.7'7s!I
7-7-
f
7.
^
•
•*
•
a
7V:"-
7• <7 .V,.; V'/ ■4.;..
of
The American National Bank, of.
his
Idaho Falls, has changed its name
being "Modern Economics,",
new text book
of which he<:is
to the* American National Bank of
several
books "on
author
economics,
latest
a
the new President,
'•
co-author. He is
American
the
a
member of the
Economics
American
Association,
Asso-?
Statisticians
ciation and Phi Beta Kappa. *3^
of study are
business finance and/ 7 :;
investment management.
author
of
He. is. the/;
"Stock- Watering"
;.
and'/ ;
■
co-author with Benjamin Graham' ->y
Idaho, at. Idaho. Falls, Idaho, ac¬
of
cording to the weekly Bulletin is¬
sued May 10 by the office of the
d i
"Security
r e c
t
o
Analysis."^ He^-is
r" of
a-7
Graham-Newman
Comptroller, of the Currency. The Corp, and a consulting expert
change ^became effective May ,6*-y. valuation of securities.. >;
'^
:
on.,,/
I
'Volume 167
'
Number 4700
,-
World Bank
Reports
Sixteen member nations/scattered
r;
-,]
,
•THE
COMMERCIAL
Loan Applications
on
the globe, haye approached ]
the Bank and have loans under consideration.
: j
*
over
The International Bank for Reconstruction and Development on
May 18, 1948 reviewed the status of pending loan applications being
considered by the Bank, and discussions which have been conducted
by the Bank with various member countries relative to possible loan
tc-
■applications.
]]
Belgium
]■.;>,]■ v,:-
discussions
—
are
V]'/::]]]]/]■
in<£
;
&
FINANCIAL CHRONICLE
Norway—There
have
been
in¬
formal conversations of a general
exploratory nature with the Nor¬
wegian Government, but
as
yet
For
no
additional dollar exchange arising from purchases in Latin America
should be used to settle arrearages on remittances due on
goods
received
from Peru, but in
1947,
the
Peruvian
Government requested that a mis¬
December,
sion be sent to
Lima in order to
Finland
After a preliminary
approach through the Finnish Le¬
gation in Washington, the Min¬
study the Peruvian financial situ¬
recently returned from Belgium
where they completed a prelim¬
inary study of the country's econ¬
omy, and a Belgian delegation has
ister
Peru.
now arrived in
Washington. The
discussions, however, have not yet
structiori of her agriculture, elec¬
trical power facilities, export in¬
progressed
point where de¬
tails of the projects to be included
dustries and transportation.
Fin¬
nish representatives subsequently
visited
visited
already shipped.
Speaking at a luncheon of the Overseas Automotive Club in New
York City on May 13, Wilbert Ward, Vice-President of the National
City Bank of New York stated that purchases by the Economic Co¬
Washington in November, 1947,
in an invitation to the
the Philippines to send a
fact-finding mission. The mission
in the application can be disclosed.
between
progress
the
Bank
and
prospective
Belgian
borrowers.
Representatives of the Bank have
to
a
Bolivia—Following
behalf of
on
the
an
inquiry
Bolivian Devel¬
—
of
Finland
informed
February, 1948, that Fin¬
was contemplating
applying
land
for
loan
a
finance
to
the
the
Bank, when
procedure covering loan ap¬
plications was explained and Fin¬
mill,
the Bank,
at the invitation
Government, sent
the Bolivian
mission
La
to
in
Paz
order
to
study the general situation in Bo¬
gen¬
eral
nomic position of Finland.
of
reconr
the
nish
a
the
Bank in
opment Corporation in respect of
a proposed
loan of U. S. $3 mil¬
lion for the erection of a sugar
representatives
ation
ited
nished with copies of a question¬
naire covering the general eco¬
', /
.
Iran-r-The Iranian Government,
in 1946, appointed a firm of U. S.
>
general, and the possi¬
foreign investment in
of
The Bank mission has vis¬
Peru and is preparing its
operation
A
report.
to
Government
1946.
Sep¬
Mr.
pur¬
stated:
oni
,
tion
loan
showed that considerable further
tion prepared by the Polish Gov¬
ernment for the four years 19461949. After a preliminary analysis
investigation
of
("Statements
nomic
the Plan of Economic Reconstruc¬
to
r a z
4
i 1 i
finance
*'
a n
of
part
of additional facilities to
pleted
in
the
be
cost
com¬
program
the
report] was- submitted - to
in
September, '1947!
of the engineers' report
Bank
Study
was
and
required.
necessary
additional
information
After further study and after en¬
Following
a
gineering
ment in Iran, the
had
1947,
1948
and ]1949.
economic
and
surveys
been
change
in
govern¬
Bank! in : Feb?"
made, the company, in
December, 1947, submitted a re¬
vised program which contemplated
a loan of U. S. $75
million, to be
guaranteed by the Government of
.1948, was shown a sum¬
mary of a new seven-year devel?
opment program which had been
Brazil.
Board.
In
the
new
program,
the
period of construction was ex¬
tended through 1951, and the loan
applied for was to cover the for¬
eign
currency
requirements
of
electric and telephone plant addi¬
tions. Representatives of the com¬
pany
and of the government have
been
discussing
with
Bank
cials the terms of such
a
offi¬
loan and
the
ruary,
chase
this application the
Bank in¬
Planning
date that maximum
of
execution
of
the
in the
program.
programs
to
amount
rehabilitation
be
used
of
the
industry.
As
for
Polish
the
coal
ernment
to
a
result,
a
which
procurement
for
the
Overseas
who
gram,
the Bank advised the Czechrepresentatives to sub¬
oslovakian
mit
more
a
•stressing those
iTurkey^fPr^liminaryr inquiries
timber
October, 1947, to familiarize him¬
self
with Mexican economic
ditions
and
appropriate
lines
in the
to
advise
Mexican
additional
in terms of
-goods
marketable against * convertible currencies. In response to
ticipated that this
this
qiuck
returns
suggestion,
the ]Czecho-
slovakian Government submitted,
5
early
in
projects
v
1948,
a
list
of
specific
totaling IL S. $106.0 mil-
lion. ]
with
information.
new
It
the
Bank
and
the
i&fpianned;
is
an¬
data will
shortly
represen¬
to
the
can
Automotive
Club,
the
at the
commit¬
tees
look forward, as can ex¬
for
the
—
where
and
The Bank is
now- exploring
this matter with
a
view to ascertaining what,"if
any; action it can take to assist
in financing the purchase of the
and The Netherlands) in 1948
subsequent
necessary
years.
equipment and supplies.
Netherlands—In
addition, to the
Harry-V; Van Auken Dies
.' Harry
Vermilye
loan already granted tp the j^etherlands; eorisideraiior]]!xs!]ibeirig, who J headed
the
vessels,
^
out'
one
yprk]'Stock
jcargo
f&SL rVan
Van
Auken,
former
Exchange
New
firm
of
Auken & Co., died at
his-home at the age of sixty-nine,,
But
their
'that's
-
my
likely
no
one
has
held
and cried our
baby J / Nor ; is - any¬
arms,
to,
until
the
baby
tangible/than
gleam in the exporter's^ye!
something
-! "So
my
more
merce,]
Je ti
a
suggestion^ you of the
Lob,
G. Price Cran©
Ente rtain-
ment.
The
-
■■,,/]/:/>/
:.■///]!■ /^/!\:
■
nominating committee has
presented the following slate for
officers, which will be voted
new
upon on
May 31:
-
President: G. Price Crane.
Vice-President:
gan,
John
E.
Kerri¬
Newman, Brown & Co.
}
Treasurer:Arthur
Keenan, St. Denis J. Villere & Co.
Secretary
Board
of
-
Directors:
Joseph
Steiner, Rouse & Co.;
Fowler, Jr., Weil & Co.;
John J. Zollinger, Jr., Scharff &
Jones, Inc.; and W. C. Hildebrand,,
White, Hattier & Sanford.
w
Minetree,
H.
W.
John E. Winder
Wilhj
Twner-Poinhxtsr SCo.
LOS
E.
ANGELES,
Wheeler,
CALIF7--Joiui,
member of the
Los
Angeles and Chicago Stock Ex¬
changes,
has
rejoined Turpe^r
Poindexter & Co., 629 So. Spring
members of the Los An-?
geles Exchange. Mr. Wheeler has
recently been doing business as an
Street,
individual dealer.
Name Is
Changed
To Frank & Company
The firm name, of Goldwater
&
Broadway, New York
City, has been changed to Frank
&. Company, with the retirement
of Leo J. Goldwater from the firm.
Frank,
port trade groups/ is that you be¬
come
both vocal and specific as
39
Simon Liverant Forms Co.
what
you 'want our govern¬
to do with the bargaining
Ath-
sand
c
Charles
is
Automotive trade, and to all ex¬
to
]. s' ;t •
done.'
be
porting countries (mainly United
Kingdom, France, Italy, Beligum
tatives of Mexico will then renew
discussions.'
This] ^wse^j program- is given to ' a /requosji]#^^^
under study
Jsm on-the-spot finance the purchasev of
investigatioB
the
authorities
be submitted to the Bank
and
con¬
preparation of the required
-the rehabilitation of which would
yield
will
its annual field day
hold
-
limited * program,
of industry,
The
LA.
mining equip¬ porters in other lines, to dealing field
program is still under review] by
day are
the
Iranian
Government.1-" The ment] required for the mainte¬ with tf the
participant countries Charles ManBank has offered to send a fact¬ nance and expansion
of Polish through their own agents and
ion, Merrill
finding mission to Iran, should the .coal production. A fact-finding distributors, % in supplying goods
Lynch, Pierce,
Iranian (^vejmmenf sb /desire/]"] mission visited Poland during the sought in the United States.
Fenner
&
summer, after which negotiations
"However, it is estimated that
Beane,Golf;B.
/^•liaty^Ini :]A6'gust>pf>f1947,-7|he bave beea
They have around $2 billion of procurement Frank Wil¬
Italian Government
requested the
for the first year's program will
^ ]
International Bank: to extendi to not;yet] led to;a cqnclusion.,
liam, National
be 'off-shore'
purchased else¬ Bank of Com¬
Italy an interim line of credit of
raw ma¬
,
r~
New Orleans
of
cover
.
pro¬
ORLEANS,
Club
may
be arranged try Club on
through usual trade sources. This
May 31st. The
is gratifying to the members of
chairmen
of
v
of this
NEW
Bond
specific Metarie Coun¬
-
study
Day;
Gels Slate
The
than in the United 'States
$250 million. A fact-finding mis¬ jhqve].been' made] by • represents
its ■; territorial
possessions.
sion/ of % the Bank ' which visited •tives of the Turkish Government and
The bill to authorize the guaran¬
Much of this flood of dollars will
Italy during the autumn of 1947 as to the possibility of obtaining
tee has been favorably reported
flow to Latin America. Perhaps
reported that there were in the assistance from the Bank for the
upon by the Finance Committee
Italian Government's program for financing of certain development $800 million or more will toe spent
in
the
of the Chamber of Deputies and
Argentine; ; $250/ million
reconstruction and development a projects which the Turkish Gov¬
in Brazil. ] It is important to our
will be taken up again when the
dumber
of .individual, projects ernment has under consideration.
.Brazilian Congress reconvenes.
meriting further consideration as Informal' conversations with re¬ foreign traders that the bargain¬
implicit in such a
Colombia—Through the Gover¬ a possible basis for a loan, from gard to this matter between the ing power
shower of dollars should be util¬
nor of the Bank for Colombia, the
the bank, contingent. ]Upon the Bank and representatives] of the
ized to the full. What are your
government requested the Bank, outcome of the European Recov¬ Turkish Government arenow un¬
special
interests
in
the; Latin
at the end of January, 1948, to ery Program.. The Bank so/in? der way,
American markets/to which this
lend its advice and assistance in
formed
the Italian
Government
Yugoslavia—In December, 1947,
-the selection of competent advi¬
and, after indicating the general the Yugoslav Government submit¬ bargaining power might be ap¬
plied?
In the Argentine, . some
sory and engineering services in
types of projects falling within ted a formal application to the
millions of pesos accumulated as
the United States and, if possible,
the Italian Government's program Bank for a loan of $500 million
in making contact with investors,
which appeared most interesting fox? the /reconstruction and im¬ earnings in enterprises set up with
dollars and managed by United
in
connection
with
a
proposed to, the Bank, suggested;. that the provement of mines and for the
States investors, await remittance
steel mill in the northwestern part
Italian Government select a group development > of
electrification
to this country.
In Brazil, many
of Colombia.. The possibility of of individual projects falling with¬
projects. No detailed information
millions of
dollars of accepted
an
application for a loan from in designated categories and as¬ regarding the Yugoslav economy
drafts, drawn to secure payment
the Bank is envisaged. The Bank
semble the detailed information and the various projects for "'hioh
of goods, which have long since
has stated its readiness to give necessary for the appraisal of the
financing is sought by the Yugo¬
been delivered to the drawees and
the assistance asked for and has projects by the Bank. A mission slav- - Government/ has*
yet been
passed into trade channels to sup¬
requested certain data. A survey is now in Italy for further inves¬ received." 7 ."
\
'
port the Brazilian economy, are
previously made of the projected tigation.
] Proposed,] European Tjjm b e r long! overdue for remittance of
plant is to be furnished to the
Bank
has
received
Rfexico — TheGovernment of Loan—The
the dollars to the United: States
Bank for study and consideration
Mexico submitted an: application from the Executive Secretary of
exporters.
• ,]'/,
when representatives of the gov¬ for a
loan of U. S. $208,875,000.in the
Economic
Commission
for
/■■■■ "In discussing the relation be¬
ernment, who are now inspecting April, 1947. The
application cov¬ Europe , reports of the . Timber
tween these overdue remittances
steel plants in the United States,
ered
a
series of hydro-electric, Sub-Committee of that organiza¬
and the flow of dollars to these
reach Washington.
v '
irrigation, oil pipeline, railway, tion which state that if the Euro¬
countries from the Economic Co¬
f Czechoslovakia — The Czecho¬ port and highway projects./The pean timber exporting countries
operation
Administration, -with
slovaks
Government, in July, Bank ; indicated to the Mexican (Finland, Poland, Czechoslovakia,
various government agencies, the
1946, submitted an application for representatives that / much more Yugoslavia and Austria) could ob¬
Administrator, the State Depart¬
a' loan
of U. S. $350,000,000
on
the
in information
particular tain equipment and other goods
ment. the
Export-Impoft Bank,
connection with a program of re¬ projects and their relation to the valued at approximately $17 mil¬
construction and rehabilitation of general Mexican economic situ¬ lion, they would be able to in¬ and the Department of Commerce,
I found ready acceptance of the
industry, agriculture and trans¬ ation was required. A Bank rep¬ crease substantially their exports
suggestion that 'something should
resentative was sent to Mexico in of
port, and of restocking of
European im¬
After
To Hold Field
be made
use
private trade channels
ited
legislation necessary to im¬
plement the proposed guarantee.
terials.
New Orleans Bond Club
Cooperation Administra¬
emphasize the intention to
carry out the Congressional man¬
and the Department of Commerce
of May 6 details the procedure by
mining
Supreme
to
ting
April, 1-947, that it would at that
time be able to give active con¬
sideration only to a loan of lim¬
revised application for such a loan
was submitted by the Polish Gov¬
the
em a n a
joint release of the Administrator
ment
This revised development
our
from the Eco¬
formed the Polish Government in
submitted to the Iranian Govern¬
by
for
organizations
.
Wilbert Ward
pany's
Brazil—B
construction engineers to prepare
a
States,
"con¬
foreign
explore
with the interested departments,
agencies of our government, and
with the Administrator, the use,
to its interest, of the bargaining
power
created by the off-shore
purchases of the ECA?"
Ward
Y
Bank
not think that it might
worthwhile
trade
for the pur¬
was
Traction,
Light & Power Co., Limited, ap¬
proached the Bank in 1947 for a
The mission's report is now
being prepared. 'T
•
"Do you
be
topic,
in
United
payment of imports.
his
remarks
the
arrangement with the
restore Brazil to prompt
age and
due
In
from
an
Brazilian Government which en¬
it to clean up this arrear¬
American
this
Latin
abled
remit
them.
particularly
Export-Import
cluded
coun¬
general
The
of the loan
pose
;■-*
on
reconstruction loan of $600 mil¬
was
made to the Bank by
the" Polish
the
of
goods already
exported
to
for
request
imports
use
dollars
lion
tember,
these
the
Philippines
during
January and, February, 1948, and
a
report is now in preparation.
a
put
a means
tries to
.
countries,
e a
compelling
resulted
Bank by*
formal
foreign
i
be
good
as
in
Poland—A
in
m e r
could
of
capital goods, mainly
machinery .and equipment, re¬
quired for the! implementation of
4
,
Administration
] The Philippines—Informal talks
fur¬
were
in
bilities
for the development of
the country's resources. The com¬
livia.
-
Demanding Payments Due on U. S. Exports
Wilbert Ward, Vice-President of National City Bank, points out
Peru—No loan application has
been
23
Sees "Off-Shore" Purchases by ECA Opportunity
definite request has been formu¬
lated. ■' /.•>•...]
;■■■■;
(2307)
-
YORK, PA. — Simon; Liverant
inherent in this outpour¬ has formed Liverant & Co. with
offices at 20 South Duke .Street,*
ing of/dollars in off-shore pur¬
chased I remind you that on two to engage in the securities busi¬
occasions
in the 'thirties, when ness. * In the past he was con-*
ment
power
Brazil
tance
was'in
of
default in
dollars
to
pay
remit¬ nected-with J. Arthur Warner &
for her Co. in their Philadelphia office.
THE
(2208)
24
COMMERCIAL
Frank H. Killer, Jr.
Cripps' Cunency Scheme—
A Study in Futility
With Sekafer,
Miller
Koller, Jr., formerly
President and Treasurer of F. H.
H.
Frank
Koller
By PAUL EINZIG
Dr.
Einzig maintains Brussels agreement is complete failure in pro¬
viding solution for. stimulating trade between Western European
countries.
Declares if some countries are compelled to use up g
dollars for financing imports from each other, their dollar deficiency
will increase further.
Scores European statesmen for thus block-
*
-
'I—r
talnly made a
false start
cur
five
the
It
the
at
isters
April.
of
end
a ;i~
Min¬
n a n ce
compieux/
fails
in
objectof stim¬
ulating
trade,,
between
the
Paul Einzig
Dr.
tHes
solves none of the
problems it is
supposed to solve.
-
u
•
.
lt was the-original intention of
Sir Stafford Cripps to propose*to
the meeting the revival of the
Keynes''.Plan for the creation of a
hew inter-European currency for
the purpose of settling adverse
trade balances between the West¬
ern
This
countries.
European
scheme was not even submitted at
which the adverse balances are to
be financed
aid of the
with the
national currencies to be set aside
on
special
under the
equiva¬
accounts
Marshall Plan, being the
the Marshal aid's deliv¬
lents to
verse
with
of
balance
trade
amounts
account
to
York
New
ler
asso¬
was
with
ciated
&
Co., Inc., from
1927
1946
Frank H. Roller, Jr.
when he
formed
his
own company.
He is a director of
The Vulcan Mold and Iron Co. •:
Phila. Bond Club to
Hold Annual Field
Day
Lloyd,
useful.
of
the
surplus
formula
coun¬
would
be
But the problem is to en¬
able the deficit countries to make
payment in a form which benefits
the surplus countries. - And from
this " point of view the arranger
ment is wcrse than useless.
For
Britain will be unable to increase
her imports
with the aid of
sterling to be received out
own
Marshall
transactions
to
aid
will
the
of her
The
account.
merely amount
putting sterling from
into the other.
one pocket
Indeed, from the
point of view of Britain's foreign
trade and foreign exchange posi¬
tion
the
"
arrangement
shall
a
aid
dollar pool out of Mar¬
dollars, for the
purpose
Paul & Co.
disadvantageous.
while France might? make
fort
to!
& Co.
Golf: — Walter A. Schmidt,
Schmidt, Poole & Co., Chairman;
Ergood, Jr., Stroud &
Co., Inc., and Wallace M. McCurdy, Thayer, Baker & Co.
increase
Bogan, Jr., Sheridan, Bogan Co.;
American
Voorhis
Belgium
luxuries
while
it
will
an
her
the ability of other Eu¬
ropean countries to import neces¬
sities, If French textile workers
remain ; unemployed because the
dollars needed for the import of
cotton
are used for the
import of
nylon stockings to Belgium it will
not help in the task of reconstruc¬
Cripps Plan Will Not Encourage
Multilateral Trade'
7T7;7"
teral trade withinWestern Europe.
ef¬ Had the Keynes Plan been adopted
it would have been possible to use
the
international: currency
re¬
over
ling loan, she would certainly not
ceived in payment over and
again, and trade viould be revived.
flte Marshall
As
account..
And
it
isA
once,
concerning
the
Belgian
shall
aid
sterling;
francs obtained from Marshall aid
could
account, in practice in all proba¬
Western European
bility Britain will receive
whole scheme is
ment while
no pay¬
she will do her
to repay her liabilities.
-
best
evident if
becomes
we
even
more
examine how it af¬
be
and
Exchange:
R.
—
Victor
Mosley, Stroud & Co., Inc., Chair¬
man;
William 2. Supiee, Guplee,
Yeatman
&
Co.,
Inc.;
Harry- B.
Snyder, Yarnall & Co.; Samuel N.
Kirkland, Jenks, Kirkland & Co.;
Jordan, Hiscox, Van
Meter & Co.,
Inc.
Tennis:
—
;
Norbert 'W.- Markup
Smith, Barney & Co., Chairman;
Paul
Uenckla, Stone & Webster
Securities Corp.; and/ S. Howard
Rippey, Jr., Reynolds &
Transportation:
-
—
out
that
re-spent
of
Mar¬
sterling
in
other
iqountries. The
utterly unimagi¬
unhelpful.
•" If' the
Co^':p;i
Walter W.
Buckley, Buckley Brothers, Chairs *
man;
Daniel R. Goodwin, W. H.
Newbold's Son & Co.
major experimental facilities
coaxial cable developed by
bring
—the
into
the
Bell
which television broadcasters can
two
and the micro¬
beam
system, cur¬
system,
radio
wave
developed
being
rently
Union
Western
American
both
by
this
can
wave
coaxial
Telephone's
it
area,
and
at
cost
a
Union believes
best be done by micro¬
Western
afford.
Bell.
and
a
every
radio relay.
In this respect
enjoys the unique opportunity
between
New
York
and to share its present and proposed
radio
relay
facilities
Philadelphia, and the other cables telegram
broadcasters
of television
being built to other sections, are with
designed primarily to handle tele¬ programs. The same maintenance
phone messages, though they can personnel can be utilized for both
also be used for television.
How¬ telegraph and video services, thus
ever,
in
some
quarters
it
is reducing the cost of supplying
claimed that pictures thus trans¬ service and permitting rates which
cable
mitted
the
are
video
apt to be "fuzzy," since
signals
"squeezed"
are
will be attractive
and
to broadcasters
expansion of the
encourage
Eight
Nominating Comm.
man,
Miller &
cure
Miller,
E.
W.
&
R.
C.
Co.; Carl Necker, Mon-
Biddle & Co.; W. S. Boothby,
Sons, Inc.
Attendance:—R.
Conover
1
Mill¬
er,
do
is very little
Chairman;
collaboration
Dolphin & Co., and John H. Blye,
no
better there
hope for
effective
between them.
,
-
must be used to redirect them at
intervals
E. W. & R. C, -Miller & Co.,
Freeman
G.
Jr., Wurts, Dulles & Co.
Grant,
to
compensate
curvature of the
ers
of
are
their
earth.
location
is
for
the
The tow¬
height
varying
high land costs
a voided'(hilltops
flexible,
and
that
so
Nilssen
Matthew
N.
of
Laird
&
Co.; Robert A. Kugler of Shearson, Hammill & Co.; and William
N.
Moxley were the successful
candidates.
ible
for
They
are
now
elig-/
election
final
the
on
usually be
Tuesday, June 8, 1948.
are particularly
Also eligible, as Class B can¬
desirable where such locations can
didates, for the final election are
be found near principal roads and
O. Viking Hedberg of Auerbach,
good power lines).
Pollack
&
Richardson;
Henry
By utilizing the same towers,
Parish,
II,
of
Carl
M. Loeb,
buildings, and other physical fa¬
Rhoades & Co., and Charles J.
cilities used in its radio beam
Williams of Edward J. Duffy &
telegraph system, and adding tele¬
Co;T,^
vision equipment, Western Union
The exchange nominating com¬
can furnish both types of service
mittee is composed of four Class
at lower costs than under separate
A members, who are regular ex¬
operation.
The telegraph-com¬
change members and at least one
pany is rushing the installation of
of whom must be engaged solely
the first two television relay cir¬
in the commission business, and
cuits and expects to have them
three Class B members, who are
ready in June to "pipe in" the
associate
member
partners
or
Philadelphia Convention proceed¬
non-member partners of regular
ings to New York video stations
or associate member firms doing
(for local rebroadcasting). Being
business for the public,
reversible systems, the Joe Louis
f David D. Greenspan of Kimm &
fight could also be piped from
Co.; Frederick B. Spencer, and
New York to Philadelphia for the
Philip G. Volple of Bendix, Luitamusement of the politicians.
/
weiler & Co. were tellers dor the
f Western Union is using Philco
primary election. p;v;\V;'Tr
television' relay equipment
and
engineering facilities, with Sperry
heterodyne klystron tubes. ' - The;
new;* video) system
is free from:
the effects of sun-spots and other
electrical disturbances. «
can
Mallory, Adee & Co. to
Admit Three Partners
Bell has installed
between
Boston and
can
vision channels.
microwave-
a
New
use
it
York
for
and
tele¬
Bell will utilize
both coaxial- cables and the micro¬
Mallory,
Adee
&
Co„ ''■* 120
Broadway, New York City, .mem¬
bers of the Nqw York Stock Ex¬
change,; will
admit
William
S.
Sagar, member of the Stock Ex¬
change, Alfred V. Smith, member
mission until the relative advan¬ of the New York Curb Exchange,
tages of cable vs. microwave have and George E. Hite, III to partner¬
wave
E. H. Rollins &
-
East¬
Dillion & Co.; Chairman; R.
Conover
system has been constructed
Class A membership on the ex¬
link New York, Philadelphia,
change nominating committee in
Washington and Pittsburgh and
a letter addressed
to Curb mem¬
an experimental system has been
bers.
The primary election was
in .operation between New York
held on the trading floor Monday./
and Philadelphia since 1945.
Garry Onderdonk of L. A. MaWestern
Union's
radio
beam
they & Co.; Joseph J. Harris; John
system utilizes relay towers 30 to
K. Harden of Brown, Kiernan &
50 miles apart to relay the micro¬
Co.; Arthur C. Brett of Goodwave
signals.
Since microwaves
body & Co.; James F. Byrne, Jr.;
travel in a straight line, towers
system
Dam,
statesmen of Western Eurbpe can
-
The futility of the proposed ar¬
rangement
native
not
&#Co.
Stock
France has made T Publicity:—Loring
while in theory Britain might act payment ta Britain
likewise
George J. Ourbacker, Kalb,
and Alvin W.
tion of Europe.
try to repay sterling obtained from
aid
and
reduce
As for the Cripps plan, it will
certainly not encourage multila¬
exports to
Britain in order to repay a- ster¬
•
basis, network
provided to
great variety of programs
be
to
Registration:—Gordon
.
operate it will simply en¬
and other surplus
countries
in ; Europe to
import
able
For,
actually
nationwide
a
■
Crouter;
of financing the deficits on their
DeHaven & Townsend, Crouter &
trade with each other. In practice
Bodine,
Chairman;
Harley ,L.
this will mean that the financially
Rankin, First Boston.Corp.; and
strongest 'among them will secure Howard E.
Duryea, Starkweather
be
will
on
facilities- must
of
Russell M.
currencies
are
PHIL A DELPHI* A,
Gates
.
the
long
There
To
on
tries then
methods for
transmission.
"
of
out
or
special
use
distance
until
the sterling accu¬ cient for the balancing of the def¬
the special Marshall icits of European countries in re¬
aid account; the British import lation to the Western
Hemisphere.
surplus from Belgium is to be fi¬ If some of the countries have to
Entertainment:—Samuel Evans,
nanced out of the Belgian franc use up
part of these dollars for Jr., C. C. Collings & Co., Inc.,
balance accumulating on the sim¬ the
financing of their imports
Chairman; John E. Fricke, Thayer,
ilar Belgian account, and so forth. from
other
Western
European
Baker & Co.; R. Conover Miller,
countries then their dollar de¬
•••/" What Advantages?
E. W. & R. C. Miller & Co.; O.
ficiency will increase further.
It" is"v difficult to imagine what
It is not yet known to what ex¬ Howie Young, W. L. Morgan &
advantages Sir Stafford Cripps tent
the formula proposed by the Co.; Walter D. Larzere, Bioren &
hopes to gain by such an arrange¬
Belgian Government has been ac¬ Co.; Edmund J. Davis, Rambo,
ment/ If the problem to be solved
cepted. But to the extent to which
were the provision of funds
Close, & Kerner, Inc.; John C.
in it will
nanced
mulating
bands. required,
the^
"video" industry has the television industry to flourish
frequency
Curb Elects
Fiance
Britain
St.,
recent article in "Fortune" on television devoted only a
inter-city transmission methods. Because of the broad
a
few lines to
,
the
dollars
of
the
financially
Thus, the ad¬ weakest among them. In any case
on her the amounts allocated under the
is to be fi¬ Marshall Plan are far from suffi¬
eries to be received.
example,
PA.—H. by putting- /them through the industry."
''7V77;7* 77 7".; .The electric companies may
Drbxel. & Co., cable.
substantially
President of the Bond Club of 7 Western Union's* radio ; relay eventually ' benefit
will amount to
£200,000,000 on Philadelphia, has announced com¬ system for television provides a from "television because of die
balance. Under the new formula mittees for the annual Field Day 4% mc band width which assures large amount of current used for
£ $100,000,000 would be diverted of the club on
Friday, June 4, at high picture quality. The Western operating receivers, X Profits will
be greater from - home sets than
from debt-redemption to the fi¬ the
Philadelphia Country Club. Union system also has the ad¬
nancing of French, imports, so They include:r
vantage of being reversible. The those-in taverns and Theaters,
'
*
•'v
that £ 200,000,000 will be available
tejmjinals -' are : located on v 'the where lower rates apply. It is too
General
for- debt reduction—exactly
broadcasters' premises, thus elim¬ early, however; to appraise" the
the J.
Kerner, Rambo, Close & Ker¬
same as the net result of debt re¬
inating the need for local loops. ; ' posribilities with any accuracy. ~
ner, Inc., Chairman; Gordon Crouduction and new loan to France
Pioneering in the development
ter, DeHaven & Townsend, Crouof a radio beam system,
would have been in the absence
which
ter & Bodine, Assistant to Chairwill replace the familiar polesof the new arrangement.
and-wires used for carrying tele¬
The Cripps plan was f not ac¬
Arrangements: — Samuel
K.
cepted without- modification.
It Phillips, Samuel K. Phillips & grams, ■-} Western /Union was the
first communications company to
was
completed with the ; Belgian Co., Chairman; Chauncey P. CollThe New York Curb Exchange
establish a super-high-frequency
plan under which the Western well, Merrill Lynch,
has
announced
the election by
Pierce, Fen- radio
relay system. A triangular
European
governments n\are
to ner & Beane, and Clyde L. Paul,
ballot
of
eight candidates for
beam
Instead, Sir Stafford
Cripps came forward with a to¬
tally
different
scheme,
under establish
the meeting.
Co.,
City. Mr. Kol¬
£300,000,000 and the British loan
coun-*
a n d : "-'vy
ropean
the
to
&
Broad
15
to France £100,000,000 the net re¬
duction of the British floating debt
Eu¬
Western-
much has been written in the popular magazines about
technical business of transmitting
television programs.
For
very
television
Schluter
shal} .aid
the
7; 7 Not
change firm
Schafer,
internal finances of the
the
Television and the Utilities
■
Miller
surplus countries. In the absence
of any such arrangement the ster¬
ling accumulating on Marshall aid
account would be used for the re¬
duction of the floating debt.
On
the other hand, a government loan
to France for the financing of her
import surplus from Britain would
increase the floating debt.
Thus,
if the debt repaid out of the Mar¬
re n c y
Ex¬
of
a
fects
agreement
negotiated at;
the meeting of
York
Stock
<8>-
their
With
the
with
New
a
inaugurated
be¬
associ¬
ated
well-known story about the
newly-built telephone ex¬
change by connecting the first wrong number. The governments of
the five countries participating in the Brussels Alliance have cerPostmaster-General who
Co.,
come
effective collaboration.;?:
LONDON, ENGLAND-There is
-
&
has
Inc.,
-
Thursday, May 20, 1948
FINANCIAL CHRONICLE
&
towers for television trans¬
been fully determined, or at least
a network of towers is con¬
until
Bell recently announced
heavy program for expanding
structed.
a
both systems territorially.
Vice
-
Western
President
Union
•
*
d'Hu my
has
stated:
ship
on
May 29. Mr. Sager in the
past was a partner in Sagar, Seeholzer & Co. and W. S. Sager. &
Co.
Mr. Smith did business as an
Curb floor broker and
*.
individual
of
was
"For
a
partner
in
May,
Borg
&
Cq. and Frank C. Masterson & Co.
Volume 167
Number 4700.
The winning team "Shorts" (won
&
^
THE COMMERCIAL & FINANCIAL, CHRONICLE
f—*
34, lost 36): Harry E. Buchenau, Bosworth, Sullivan
Second
place winner "Traders": George B. Fisher, Bosworth, Sullivan & Co.;
Neiswanger, Garrett-Bromfield & Co.; Harold Huber, Hamilton Management Corp,
Co.; John J. Mullen, Jr., Garrett-Bromfield & Co.; William Steck, J. A. Hogle & Co,
"Locals" tied for
William Snowden,
Don Patterson,
3rd
winner high
series:
Ray Robinson, Sidlo, Simons, Roberts & Co.;, Donald L. Patterson, Boettcher and Cq.;
Alexander Forsyth, Calvin Bullock
Ernest E. Stone, Stone, Moore & Co.;
Brereton, Rice & Co.; Phillip J. Clark, Amos C. Sudler & Co.
Boettcher & Co., Captain of "Value Lines"
(2209) : If
;
Karl Mayer, J. .A. Hogle & Co., high individual season
average,
175
,
.
-
■
■.
Tom Wallace, Central Republic
low average (128 for year)
Co.,-
■
lilii
>
1
V
*
^
fell 0
f
Malcolm Roberts. Sidlo, Simons, Roberts & Co.
John Alff,Amos C. Sudleir & Co., second high
individual
Ernie Stone, Ston$ Mqgre <& Co.* third higb individual
26
COMMERCIAL
THE
(2210)
2
&
FINANCIAL
4
CHRONICLE
fbr piutbhium pmtrafrhbt sa«= west, but If hot hampered by 7,
dreamers'
restrictions
and
if *
by every real estate office,
hi; The West was founded by pio¬ given the cooperation of labor
and the body political believe in¬
neers, advocates of Individual En¬
A Business Man's Platform
died
"
,,
7/'
■
■■
.
By THOMAS J. B ANN AN*
,
"7:'/.V;iV/y:^;.^
President, Western tiear Works, Seattle,
Wash.
Thursday,, May 20, 1948.
Ja.
—
terprise
if there ever were any.
One '49er slogan Was "Cowards
doh't start; the
die 6n thb
way." The West is still being built
'; '-'.7;'•'.ZV'"-?""C.-
.
Western manufacturer tells California Bankers
center/plank of business man's platform is td combat
of free enterprise. Deplores growth of bureaucracy and sees strain
economy in carrying heavier load of production for military and civilian goods.
Wants spread by
7,7. 7
7 7 bankers of information of benefits of free enterprise. « «
•
.
.
^
attacks
on
7
.
on
throughout the day studying subjects related to banking,
finance, inflation and money.
It is not my intention to try to add to your technical con¬
cept.
If I were a politician, I know just how I would please you and gain your attention.
it's not
man,
But
easy.
politician
I could obtain:
If you are not
latter program,
of
and
review
salary
$25,000
year
logical
that
into
national
a
Bannan
':\.'77/;
A government subsidy that
all
and
underwrite1., any
and, of course, an
institution
increase in in-
(3) An increase in deposits and
better opportunity for investment.
(4) And, finally, 'two vacations
year and an ; increase' lh:^ the
number of bank holidays. >
7
a
attitude
practical
wrong?
Ameri¬
Or were
we
■
led
busihess
should
business
be
our
are
been interested in
never
political office and this is not
Intended to be a treatise Oh party
a
perfect machine has not yet been
built.
He
knows
that
he
can stand firmly and beat
unwarranted and unscrupu¬
could be
ous occasion When sb
many
best
machine
built
or
that
has
yet
There is need of much bducatibit
have
people
':/?7'
v
In
area
so
short
been
to abandon principles that
been proven successful. We
should ask ourselves if our politi¬
can
systemof
liOt fashionable
all
of
to
us
be
today it is
Ameri¬
an
can
remember
and
politics the foreign ideologies of
extreme
regard the
Socialism
and
—
New, Dealism
even
in
United
nental
with
shocked and
disturbed to read the results of a
a
States
forms—simply dis¬
facts.^
,1./
when it
of
"smart" to'criticize
bpd be¬
known.
the
living
but
even
United
has
world
States
on
inside the door.
The forces of de¬
in
industrial
the
output.
see
a
"new
look"
in
party politics
and / people are' becoming
con¬
cerned with the poltical
integrity
of their candidate.
It
is
encour¬
of the motor
cars,
roads and that we
the world's oil, 60% of the wheat
and
combined.
are
..
California
'
than
in
Britain,
410
France and Italy
In our country there
feet of living ac¬
United
new program of the
States Chamber of Com¬
merce
"The
fortunate
fshi.7 The
American
!
Oppor¬
we
peat
Manufacturers, which hds been
lasting
•
a
bulwark
against the attacks bn
Competitive Enterprise Sys¬
tem, has been receiving more uni¬
versal acceptance in all strata Of
Mir
are
these. facts
tunity Program" is one example.
-. National
Association ' of
The
again.
so we
over
It should be
xo
should
and
our
to
orvJ?ittsbtirghs
Angeles situated
Richland, which had
of
a
247
in
1940
a
It
freedom
the
&nd
ever¬
the
,
and government
er*
Association,
17,
Los
Angeles,
^
without.
because
regulation—
participation. It hame
say
we
recognize God and
re¬
;•
//'7.iiVs-t.
m
-
r*
V*
that
there
can
bfe
a
"freedom
or
want."77;-'- ''/7"./, v:/■v;■
good jobs by international
Standards;
Abbdl 13 Billibn of
j
free U
a
|
•
hunger.
7
three
or
to
profits which, to
the least, are sobering.
- ; :
;
f ;
,
1930 this nation
had
the
for 60
-
plowed
back each year into the formaf
tion of new job-creating, prog- \
ress-making capital 20% of our >
years
on
national
gross
average
product.
,
It
took 7
20% of all the wealth the country J
created to provide the new build- 7
ings,
machines,
new
new
methods
»
that meant better jobs and lowet;
gut in 1929 we had ah
«■£.u
accident and in 1932
deal.
Between
we
1930
had
a new
and
1945,
judged by the traditional formula,
capital tailed or was unable to
provide funds for replacement and
expansion to the extent of $144_
billion. When we recall that it;
lakes $$,000 or More to crbate one'
hlyrTjob, the SeHbushb§6 Of / the{
poor, every American's future
pbnds
ae*i
the rebuilding of our
upon
national
plant by making up this
economy. Congress lift
providing a reduction in personal
taxes for tfre first time in hearlyf
20 y'ears indicated d keen realiza-.
tioh of the problem;r A major
re^7
loss to
our
yisidii;;bf/oursystem Is]/
advoTcated by many honest Amer/.
lcahs who hdVe studied thb prOb-lem.
!
-
Mere
are.
Other figured'
some
cost at date of completion,, to
place that Same plant and eqiiip|
mbnt ; in peceMbef, 1946, 'Wbulq
cost $169,289;
billion,, more than the Original
The total profit. bf thosl
bbst;
of companies in the
period was $5.1,765 millioh
billion short. Extending b^
Estimate
these
figures thrbugft
same
groups
same
br $9
1947, we find this:
.
TheIteblace?
due to further inflatibm
ment cost
increased aribthef $2^ pillioii dnd
the total net profit ;bf these same
pbmpanies during 1947 was bnly
$8.0 billion. In other words, Since
1929
manufacturing
corporations^
thby,Mlaihba^all^^eM^^ingl
an
impossible
assumption
—•
ivbull he about /$i5"billion/ahbrt
keep their plant up
employed in industry.
to standard or to replace their
employee in industry it
is estimated that $6,600 is invested job-making machines. The effect
in plant inventory and other as¬ of inflation is just as real to a cor¬
sets.
To create a new job costs porate body as to the individual.
Many .overlook ^thiS;^ and. some >
$8,000 or more.
-choose to forget it.,
Industry, with its 13 million
7;»y/'v|7
people, is! about lb he asked to V One more set of facts. Much
carry a tremendous load in bur has been said about the profits iri
these
of
are
funds
to
For each
„
<
permanence
•
the
incentive
In
present-two
me
related
Prior to
—
attractiveness to future
doesn't have to be an Einstein to
compute that something big goes
on there or to
suspect that sites
an
drivfe.
Profit Misconceptions
Let
ideas
them
population
-
that the
related/to
without
little
is gunpowder or
About 60 million people, havQ
if
jobs in the United States. Most of
new
harnessing of atomic , power—
Unbiased research polls while
concurrently
furnishing able amount.
Some have indi¬
prove this. One of the most corti- most of the materials for ourselves
cated that the raise was
unimpor¬
'
ptehensive and well developed and allies.
i
•
tant, but one degree Fahrenheit
program that I have yet. had
All this came because bi our has
been mentioned.
Since the
the pleasure of reviewing is being
can system of
economics; a flood rate of the Columbia River
currently released by a joint com¬ System built On the
in the late Spring reaches
recognition of
1,000,Private property, free markets, 000 cu. ft./sec. with a
mean tem¬
i *An address by Mr. Bannah beprofit, wage incentives, competi¬ perature of 50.5
degrees F., one
ter the Southern California Bank¬ tion
and
"freedom from fear"
from
country,
greater /than anything
;dreamed of before. For the
few years it is expected that
eVer
next
ohr
Manufacturers friU:'
Supply the military goods
for our defense;"
,//7
(2)
Supply the
industry and in corporations duri
1947.; A Study has been1; rbl
leased of 3,102 leading cbrpofaf
civilian
goods
-
ing
lions
(1)
.
fedCtety.
Stages of a police state
us. It is an illusion and
political snare for anyone to be¬
an easy road to se¬
curity
the Co¬
generated raised the temperature
of the Columbia River a measur¬
security,
guarantee; by legislative decree of
mention
was
apparent
lieve there is
sq.
industry is this: When the plant
running at the then capacity
in the Spring of 1945 with three
piles operating, the atomic heat
jglory that | after being
forced into a terrible
,waf, We won
it—and in doing So, hlso won the
grbatest gamble of all times—the
upon
a
will
site, its probable
for
first
are
shortly have
population of 65,000. ..-r, ;f*/r
the
can
only be rekindled by facts
and knowledge. Once the majority
Of people WUiingly7trade/-'''-th%ir.
One interesting and well found¬
rumor related to the choice of
re¬
self-confidence, the in¬
dependence and ambition of otir
ed
over
estimate in yotir
an
forefathers rhu'st be resuscitated.
much
or a
on
The
ous.
lumbia River. It is significant that
square
commodations for each person,.in
England 105 "and in Russia 40.
Some people choose to forget how
hesitates
so
don't
you
stifling atmosphere of a goverrtjob. Thb implicatioh is obvi¬
above, a whisper .what one sees.
But it 4s basy 40 Ytr0aM7bi^ nbtv
Los
individual businesses and business
valuate and reawaken American-
one
Detroits
in
organizations
re-
that
so
1000
project at Hanford,
mobiles
Great
expending to
.the
mile
cotton,; 50% of the cbppbr unci
pig iron. There are more auto¬
aging to observe the efforts that
are
of
If
lor
or
ment
make the
35% of the rail¬
produce 70 % of
be
men
fa inly Worry about if they
,ap^
many-of you here would prefer
to work for the Government? Mr. piled percentagewise to any one
Gaiihp Tbuhd "that Ml % of the company to which -you Were lend-i
ing money. From Department of
people Interviewed preferred gov¬
"Commerce data, from 1939 to 1946,;
ernment employment,
40% said
there was invested by the manu¬
they would rather work for a pri¬
vate firm and 19% had no opin¬ facturing industry throughout the
nation in new plant and equipion. Think of it. Over half of those
jqnent: 4^07,376 million.
Relating
who/expressed a choice preferred
the Department's index of conf
the
security^ > the ■ serenity, the Striictibn costs as of,that date to
16
telephones^ 80%
thousands have lined up to
the Freedom Train. .There is
tes
incentive
and
economy individual profit is the
driving force; in a police state it
mind of what you think the
results of this survey Were. How
request.
The construc¬
tive, forces are being developed
there anyone who questions our for America's friends
by American
supremacy today?
We all know ingenuity and know-how.
The
of our business men's platform to that with
only 6% of the world's potentials are so vast that they
give impetus to that change,
area and 7% of its
people, we have exceed the imagination. Much is
in every locality of the United 60% ; of the
confidential
about
world
must
is
me to
for the need
Bankers know better
business
hazard—and
own
the threshold hi thb
age—in the West in the
State of Washington at the Hanford Engineering Works we are
thb
fifth in
rated
We arb
firm?"
know, make
atomic
struction lh cosmic energy we will
deliver to the Russians when they
ever
private,
a
.
A hundred years ago
was
for the U. S.. Government
our
clear;, there is need of and an op¬
portunity for more manufactur¬
ing in the West. *
> •
\
its
a
Wb enjoy—aiid this pdint is not
debatable—the highest; standard
in the last several years
little the things that made this
country great. We can be thank¬
ful that that trend has changed
and it should be the tenter plank
economics
I
ago
period Of timb."
!
77:7717 poll made by Gedrge Gallop late
in 1947. The Question was askbd,
In the seveii Far Western States
—those West taf the' Rbckies^Wb "Assuming, that the .pay is the
have'23,7% of the drea of conti¬ same, would you prefer to wbrk
have
more
In some circles even
Was
/Not long
Voluntarily migrated to orid
circumscribed;
cbrftblefpd. But he knows
Communism of
v/vCenter
and
Business
history does not record any previ¬
never
even
yes,
can
the
tionai election In ft few months.
in
lous ; attacks.
thing—only
same
Self-evident.
becomes
.
'
very
influences
am
,
the^
a
The
tradition—our
upsurge only 11% of the
But if politics is an in¬
the
mahagement and cal leaders Were endeavoring to population. - We enjoy 13% of the
rbpair our hiachihe when; they national income and 14% of the
welfare; Of our coiintry and if
politics is going to influence the placed impbrted nUts with crack¬ retail sales. But with ll % 'of the
of' business in the future, pot r, ideas iii high places. NUtS pbpulation'arid 14%' of the retail
then all Of us in business should have
their proper place - in- a* sales -we-have only 7.4% of-the
be ~ p'oliticiahs.
Politics, • national mechanical fcoritrivance but not manufacturing employment. In a
governnientai
machine. steel age we produce, even after
and international, has becoriie s fe on - a
challenge
to
every
American Those .who are always preaching the addition of huge plants at
business man in the conduct of his unrest, dissatisfaction, misunder¬ Geneva, Utah and Fontana, Cali¬
affairs. Business men must have standing and discord and who al¬ fornia, only 3V2 % of the nation's
a platform from which
they can legedly, to improve our standards, total steel. tonnage. vWe.use .twice.
build confidently and upon which would substitute for the Ameri¬ that amouhti; The implication is
politics.
off
out alone
new, territory—America.
What is the West's greatest asset?
men's
reaffirma¬
a
Strike
and
are less remote. In this
system.
We should have faith in
The habits of
ourselves, in: our jobs, in our we are fortunate.
work, of enthusiasm and, of in¬
country and lri bur God. •
Thus
7>7'. P
777 // 7 dependence are still alive.
Western Progrbss ?
the third, plank of our platform
<
I
better that the way to make
progress is hot to throw away the
terest
into
home
,
ridiculous,
statements
man,
reward
case
profit
for
room,
a Westerner.
My mother
scheming group of po¬
and father.w?rc born in Califor¬ men in the West must fight, to
opportunists whose
one
nia.
The West is a big country retain a Western atmosphere that
objective was personal aggrand¬
is truly pioneer, which connotes
izement? Certainly, our economic and-most,*Westerners- think therb
The West truly American.
machine had one of its break¬ is a big future ahead.Since 1932 nearly 4,0 million
downs In 1929, but was that an has had a spectacular growth. The
in
the
seven
Far people have become of age in the
excuse to import foreign statism population
States.
Western States has increased five United
Forty
million
or
preach a doctrine bottomed
times since 1900.
The national people, and only about 48 million
on class distinction, distrust and
voted in the last Presidential elec¬
jealousies? There is no such thing population has only doubled in
tion.
Is "there any wonder that
the same period.
as perfection this side
.Referring to
of Utopia
California's three million popula¬ hiany think that a long cigarette
—or, if you prefer, Shangri-la.
holder and a radio speaker's voibe
tion jump in the last /eight yeats,
Invasion of Foreign Ideologies $ Dr. Robert
Sproul,j.President Of are the primary requirements Of
the University of California, re¬ the Chief Executive of the United
Every engineer knows that the
cently stated,! "As far as I know, States? And wb face another na-
'though they are not to6 remote
from sbme we have heard made
for the benefit of certain groups.
I have
in
most
.
was
was
designed a machine that he could
not improve
Upbri before building
;
our
man
a
.
J.
Thomas
losses suffered by your
fetich
The second plank then
American
our
tion of faith iin
there by a
titles. •'•'4777777?'7vy
a
not
leave
platform
to
would
we
is
litical
officers'
As
able
development of
There
than
unless he be fullblooded Indian, whose forebears,
if we go back far enough, did not
in
//•:•/
it
everything that
can
mensurate
■>
be
will
drift
priate
up¬
grades com¬
(2)
You
where
i n g
business
with appro¬
would
a
it.
Was
the * bank-
With
familiar with this
I recommend that
particular effort to
it.
use
a
for each
every ju¬
nior executive
in
make
you
(1) A minim u m
dominant influ¬
a
freedom.
sociation of National Advertisers.
I
would suggest
the
nation.
this
The spirit of the pio¬
had
has
in
ence
men
ligion and have a system Which
permits
political, {■ intellectual,
spiritual
as I well
as
economic
mittee of the American Society of
Advertising Agencies and the As¬
so
as a
there
neers
business
a
personal
business.
vironment.
:
You have been in session
As
of
in
by pioneers,
need
no
argue here the
7 77 7
the load.
carry
and sons of men
who have the energy and the will
power to leave the haunts of their
youth and strike out in new en¬
economic system
our
dustry will
^ There- is;
about
(45% of all corporations)^
half of which are manu¬
facturers.- Total profits after taxes,for the calendar or fiscal year o|m
$9,228 million. Based //
is far from * I
pockets are bulging with the "real" or replacement value
money, arid |'•' 7 -•■/• "■
as we have just seen, $9^4 billion ,
(3) Supply the Military and ci¬ is 12.2% return on the capital irif ;
vilian gobds—in part, at least— vested.
The manufacturing
.
for
145
million
fellow
.citizens
whose
to stem Communism and feed and
Clothe
our
800 million people, outside
country,
Our
j,
economy
and. there
will
,
-
:
.*v,
,
will be strained
be
conflict of in-
1947
on
were
book value, which
cor|
porations
appear
better,
to
have, done
but the Presi4 i
dent in his earlier economic re¬
somewhat
port used
indicated
corporations and Z
profit of 9.5% on net'7;
more
a
Volume 167- Number 4700
book
worth.
9.5%
Whether
12.2% when
or^
the
normal
the
impact
of
hazards
business,
inflation
of
use
we
consider
we
sat down and did what
should
I
was
effect of Section 102 with double
ments
taxation, it
over
honest
to
unless
critic
that no
me
he
seems
be
avowed
Socialist,
should
that
return
an
investors
the
excessive
in
to
boom
a
claim
was
year—espe¬
do.
of
more
She wrote
:
COMMERCIAL
us
amazed
as
his
at
com¬
apparently his wife
as
the
information
for
every stockholder had rec¬
ognized the burden and inequity
More
people
increase in in¬
not -bankable.
certainly
need to
Rodgers declares necessity of distinguishing between short-term and long-term outlook.
( States demonstrated "hybrid vigor" of American people should encourage confident investment in long/term trend. Over short-term he expects underlying .business conditions will worsen sufficiently to absorb new inflationary pressures.
For balance of year he advocates trust.officers;should follow, adage
77"
"cash is the best policy."
honest employees, while present¬
profit before
taxes represents an
able,, is
that
consider
we
of the
ing his
the
for
case
more
fot
money
work, told our Person¬
The economist is interested in
Manager
that
corporations
the percentage of net corporate nel
could juggle profits to suit them¬
profits to the gross national prod¬
selves since dividends to stock¬
uct, the executive in a manufac¬
holders were considered Van ex¬
turing concern thinks in terms of
Think of that
the percent of profit to sales. All pense of operation.
Education
small
percentage) of the gross na¬
correct
tional product Figures prepared
fot
show
We
must
that
base
needed.
:the
notions
the lead- wages, regardless of the contribu¬
.i companies tions, must increase at each con¬
tract
profit of 7.1 cents per sales
is
dollar in 1947.
In 1946 this fig¬
a
6.0, 6.5 in 1941, 7.5 in
1937 and 7.6 in 1936.
It would take very little drop in
volume or a very small increase
ure
is
fair sampling of
a
in- gmanufacturing.
was
1940, 7.4 in
in unit labor costs to wipe out a
*
v;
anniversary and that there
relationship between wages
no
and costs.
Employee income
stitutes 85%
any
manufactured
one
can't
con¬
cost of
of the final
product. The
majority must be convinced that
have
milk
steak
and
dollar. To get
per
from the
That
expert and unbiased opinion of
what corporate profits should be,
you might ask the paper boy on
the corner if he would be happy
same
is.almost
long-term outlook.
This is much easier said than done. In fact, it
psychological impossibility.; It is the very nature of man that when he be-
comes
a
<$>-
pessi-
i
mistic about
he is prone to
take
.■■<<
else.
Y<>:••//,w
mistic, he
believe
to
that
4
"Heaven
earth"
entitled
to
seat
head
the
on
financial
will
be
any
isn't any more
have in the
free land.
77
-
cause
vigor of the American people and
our
free institutions which gave
versity cannot
Rodgers
plank
in
may
we
future which will
important
very,
that
note
element
new
a
near
"something
:
of
well-
now
are
financing that
new
On the other hand, if you agree
with me that it was the hybrid
«>
ad¬
The economic
please
but
nessmen,.
there
the mourner's bench because there
Raymond
;
.
known to bankers and most busi-
(
possibly in¬
'
and de¬
consequences
deficit' financing
are
is per¬
normal
that
and
arid
r
on
fectly
.YY'^Y'.- "Possible ; :
increased expenditures
deficit financing.
continuous ex¬
that kept the economic
system healthy and operating at
high levels. If you think ,that explains our economic might,, you
•:
professes
,
"
pansion
.7
7
Deficit Financing
?»: Renewed
-1-.
w:-*?
which permitted a
Or, when
is
opti-
he
too; distant
not
Y
boundless west with its free land,, creased taxes may result in an un¬
no
debt
burden, and no taxes balanced budget and the return of
t h ing
y
..
Still others hold that it was our
.7
view of nearly
e v e r
the
future.-
"dim"• v
a
in
haustion
things ((
some
trude.
cow.
another
is
....
Trust officers must always be extremely careful to distinguish between the short-
£§(7;
us our wealth and bur might; then
Let us now focus our mental
you can have no rservations on
in our
lens on first one, and then, the the future of America.
You can
platform. Bankers and business
other, of these problems taking invest with every confidence in
men
are
not
being sufficiently
the easy one first—the long-term the
long-time trend.
Believe me,
vocal—dynamic enough—in their
outlook.
Most people seem opti¬ it is
just as true today, as it was
if he had to sell over 700 five-cent advocation of I the American InV
mistic about the immediate future more than
fifty years ago when
dividual
Enterprise
System.
papers to make himself $2,50.
and pessimistic
about the more J. " P. Morgan, Senior, said that
Bankers particularly have an op¬
By way of driving home my
distant times.
I can't agree with any
man
who is a bear on
point, let me quote a statement portunity it is criminal to neglect. them. If I dared really to "break
America is bound to go broke.
issued by the Department of Com*
Any discussion today that re¬ down" and
give you my inner¬
inerce which, since the abdication fers to economics or the future
Short-Term Outlook '
most convictions as to the future
of-Mr. Wallace, is presumed to be certainly must make reference to of this
country and its institutions,
Appraisal of the short-term out¬
reasonably impartial. It is as fol¬ the international difficulties of
you would either think, as you look is much more difficult. Never
Whether we like it
lows;
"The total value of pro¬ the moment.
say in New England, that I was have trust officers had to face so
duction in 1947 was higher than or not, we are in a state of prepa¬
"teched in the head" or that u many baffling uncertainties. Suc¬
ever before and
corporate prof¬ ration for war. Whether war will was a professional patriot. Believe
cessful
trust
investment
under
come
soon,
or later, or
can
be
its shared in the general advance.
me, it is not flag-waving when I normal;
conditions is a
highly
As a percentage of total income averted no one seems to know.
say, with the poet, "the best is complex
and difficult problem;
originating in the private sphere, The situation is tense, tomorrow
under present conditions, it al¬
yet to come!"
corporate profits before taxes cor¬ may be D-Day, but I have yet to
We have problems, of course, most defies solution.
rected for inventory profits were find anyone who believes that the
which must, and; will, be solved.
On the international side, both
not higher than in prewar years Russians haye the secret and the
But by practically any economic Central and South America have
to
produce the atom
of prosperity although of course facilities
or
political standard, we' are so economic
and
political
unrest,
Two billion dollars was
they were much higher than in bomb.
far ahead of any other country England continues to sink farther
in the finest industrial
depression years. Corporate prof¬ spent
that it is
almost impossible to and farther into the economic mo¬
its after taxes were lower than plants of the world before the
make
comparisons • which
are rass 7 of
state planning ( without
at Los Alamos.
in years of prewar prosperity be¬ first explosion
meaningful.
Will
we
continue authoritarian enforcement, Europe
cause of the heavier incidence of One kilogram—about 2.2 pounds
ahead?
Can our nation, in this continues to plead poverty, in the
—of that atomic stuff is the equiv¬
profit of 7 cents
an
-
term outlook and the
same
—dividends an expense of opera¬
corporate profits after: inventory
tion!
It might not be a bad idea
adjustment and Federal taxes in
for tax purposes, but it isn't so.
1947 amounted to 5.2% (a mighty
"
V
•Professor
and
this double tax.
University
Professor of Finance, New York
had
assumed that wives of executives
of
RODGERS*
By RAYMOND
V
was
I
ventory value which, though tax¬
l/6th
27
-(2211)
"
protest¬
a
be made cognizant of the
high cost of being governed.
Only the other day one of our
when
cially
about
FINANCIAL CHRONICLE
&
ing letter to her Congressman.
the
and
THE
-
repercus¬
sions—as the advertising boys say
has been added."
new
Obviously, if the Federal budget
surplus is eliminated, the mone¬
tary ' authorities
will
have; - to
abandon their present credit re¬
striction policy or permit govern¬
securities to seek their
ment
own
unthinkable
that
level.
is
it
As
they would, or could, permit gov¬
bonds
ernment
break
to
as
par
imminent pos¬
sibility of new borrowing, their
decision can easily be foretold. In
long
there is
as
an
plain English, this means that if
government fiscal policies de¬
velop as now indicated, the Fed¬
eral * Reserve
System
may
be
the
its
abandon
to
forced
battle
against inflation unless, of course,
new
legislation
is forthcoming
from the Congress. The possibility
of
legislation seems remote,
from the hostile recep¬
new
judging
tion
recommenda¬
such
accorded
.
tions
taxation."
alent of 40,000 tons of T.N.T. One
Necessarily these observations
billion dollars has been spent im¬
are only a small portion of all
the pertinent factors and consid¬ proving our technique and prod¬
uct
since
V-J
Day.
We have
erations that relate to an impor¬
tant subject.
But, nevertheless, plenty of bombs. If the Russians
they
loans
you
or
confident that you have
that they justify your
ar©
we
conclusions.
justify
cannot
You
your faith in the American sys¬
tem without following the same
not
it is important that we do
adopt governmental controls
and programs
that further violate
to freedom.
There
Thus we state another our heritage
plank in Our platform. Make it has been too much concentration
in the state and too
your business to know the truth of power
and the whole truth.
Keep in¬ much encroachment on the rights
individual in the last fif¬
of the
An emergency is just
teen years.
Applying Education
well-informed indus¬
very
trialist
the
statement
this
made
the
other day. Hesaid,"Manyof ushave
become so absorbed in handling
cur
personal jobs efficiently that
the game itself
continue very long if the
have forgotten
we
cannot
fields
locally and
which
it must be
nationally on
played are not
kept in good order." 'Gentlemen,
we can put our fields in
I believe
good order if, being informed our¬
selves,
we
formed
and
unin¬
the
educate
the
correct
misin¬
formed.
the
Within
few
last
months
I
having luncheon with a friend
an important executive
in one of our large manufacturing
was
of
mine,
companies,
stockholder
Co.
He
fact
that
the
a
holders
commented
company
a
Elec¬
on
had
the
re¬
memorandum to its stock¬
along
check which
with
a
dividend
displayed the end
sult of double taxation
rate
earnings.
that
his
very
energetic
set in
was
in the General
tric
leased
wife
whose
wife,
My
an
on
re¬
corpo¬
friend" stated
intelligent and
woman, was so up¬
learning these facts that she
bureau¬
are
harbingers
domination.
such
can
be
tial
control.
no
Partial
power.
more
grasp
controls
mate
the
looking for to centralize
are
and
of
some
excuse
crats
It
is
of
In time
things
par¬
essential
that
and programs made for
safekeeping and the defeat
for
our
of
Communism
framework
be
of
American
our
fight totalitarian op¬
pressors with "FREEDOM" as our
battlecry and, after winning, end
up with a police state.
And so to
complete our platform, we must
folly to
exercise
*
constant
that
care
emergencies do not supplant nor¬
mality. And we must be vigilant
that
we
do
not
sacrifice
fundamental
principles
mentary expediency.
>
old and
for
mo¬
ly a discouraging
picture.
•
international
in
But if
is logic
Dynamics always
Frankly, there is little
and
strength.
have
been
a
.
Americans.
treat.
of
our
out
On the domestic
Economic
Our
For
Reasons
tug-of-war
Success
new
characteristic
This is
no
time to
of
re¬
We must meet the enemies
proven
from
a
continue
i
in
class
a
by ourselves
depend on what you think
our unparalleled economic
will
caused
success.
If you think, as many
do, that our national well-being
from
came
natural resources,
our
belong on the mourner's
many of our na¬
resources
are
reaching the
then you
bench
tural
because
point where conservation is im¬
perative, and some may even
reach the point of practical ex*
talk
A
Professor Rodgers
by
before Annual Trust Conference,
Bankers
Connecticut
New
Association,
May
Tuesday,
Haven,
11,
1948.
system by striking
platform which is
ness men
We must have
soundly erected.
faith,
confidence
and
We must supply lead¬
ership and we must be vigilant.
The challenge of the American
business man today is to prove
that he and America are not acci¬
action,
busi¬
prefer to incorrectly state
it, the forces of deflation. (Actu¬
ally, you know, we shouldn't use
the world deflation to describe an
after
economic readjustment until
cannot, industry as
it
know
will ' disappear and
banking will become a clerk's j ob
supervised by
tapo.
bureaucratic ges-
a
Intelligent action and ar¬
expression
now
duce the members of a
can
in¬
democratic
state to do that which is best for
themselves,
their
their country.
-
children
(•'
7
and
ty
Gentlemen, what are you doing
and
what
1
are
you
about this grave
going
challenge?
to 'do
is
forced
change sides in this
to
it will
himself'
economic tug-of-war, then
indeed be "every man for
unless
business
underlying
con¬
ditions shall have worsened suffi¬
absorb the new infla¬
I hasten to say
the latter is what I anticipate.
ciently
to
tionary pressures.
opinion, tax reduction, re¬
In my
armament, and the European Re¬
Program will be a cushion
business
readjustment
covery
to
our
the
than
rather
another turn
inflation.
the
on
this
base
I
that
fact
springboard
for
the corkscrew of
on
our
conclusion
economy
is
running on a $230 billion
the normal level on the basis
which, by comparison, makes
way
down.)
What the
near- the new expenditures seem rela¬
future outcome will be, is any¬
tively insignificant. Even with the
body's
"You pays your
guess.
European Recovery Program ex¬
money and takes your choice!"
penditures of $6 or $7 billions, ex¬
it
now
passes
^
As you
will recall, an economic ports will undoubtedly drop below
the record $19.6 billions of 1947,
readjustment got under way late
last spring but the crop failure in
in the
decision of
Europe, the short corn crop
United States, and the
to
Administration
the
feed
the
friendly nations of Europe, despite
adverse
effects
on
our
econ¬
the prices of food
and caused a major reversal of
the downward trend.
In the early
put up
part of this year, the long overdue
business readjustment again got
trend.
but since then govern¬
have been taken
could J again ( reverse the
7
V
-
Tax
we
he
If
dents.
Please
the
inflationary conditions are aggra¬
vated, a change may take place.
If the Federal Reserve System
that
a mighty
between the
side,
on
of economic correction, or as
omy,
knowledge.
is
forces of inflation and the forces
the
ticulate
the platform just evolved.
there is not novelty there
continues
ting worse, and Russia
living which is so far out of line
with all other nations?
*>
within
made
It would be the height
ideology.
of
maintain a
nowadays,
Orient conditions are; steadily get¬
around. Sure¬
ulti¬
there
a
as
the plans
the
much
Your answer to whether we can
processes.
formed.
so
to throw her weight
guess.
ency
is
level of wealth and a standard of
in greater despair than
are
But during the present emerg¬
facts and
A
discussed
want to attack our kind of power
facts. You don't make
formulate policies unless they
are
which
World"
"One
last two years.
note, however, that if the
during
.
reduction of $4,800,000,000
under way
ment
which
,
way that it will be strongly
tionary. ( The
rearmament
infla¬
pro¬
gram, even if we spend only a
part of the billions which are be¬
ing bandied about in
bound to
create
tionary pressures.
Washington,
sfcrious infla¬
(V-
;
•
Inven¬
ah astronomi¬
cal
level of
some
$42 billions
which
certainly ought to mean
the
that
end
of
demand
the
for
goods for inventory accumulation
has been reached.
Bargain sales,
closing-out sales, aggressive mer¬
and price reductions
lines indicate .that the
pipelines are beginning
chandising,
in
many
consumer
to overflow.
7(7
•
actions
is, as a practical matter, although
it may be argued in theory, infla¬
tionary.
The European Recovery
Program can be handled, although
I certainly hope not, in such a
is
that is the acid test.
and
tories have reached
77
:
Price Break Overdue
"(
basis of our past
postwar price break is
overdue, in fact, it appears to be
eighteen months overdue. This is
an
element of weakness in the
( Clearly, on the
our
wars,
present situation which must
not
be underestimated.
It is
basic
against this background of
economic developments, in¬
ternational
:
political
psychological
debt
tides,
pressures,
government
and
credit
monetary authori-
management,
control by the
(Continued
on
page
28)
28
THE
(2212)
COMMERCIAL
Current Trust Investment
ties
the
that
trust
medium-grade bonds, especially
those unduly subject to credit fac¬
tors. ' The break-even points in
must
officer
soul that I
I shall
pol¬
icy I would follow under; the
present conditions and outlook if
Hardy
I
am,
were
trust officer.
a
Basically
the
'
;j
price
effect
;•
-r
bonds,
depends on
influences
government
restriction
the real
are
A
insist
reduce
in
the
volume
demand
for
credit
happen, which would warrant
in
anticipating
rates if it
easier
restriction policies.
indicated
of the Federal
ance
now
seems
the
credit
surplus, which
tax
changes
and.it,
with
rearmament
penditures
type of credit restriction
efforts.
will
it will take time
as
for these influences to
expect
develop, I
consequential
any
changes in the long-term rates for
More,
to
be
managers
governments
par,
the
the
other
rate
matter,
will
to
drop
cannot
hand,
go
as
regardless
of
Banks
of the
will
men are
On
up.
the
basic
the
market
shows
were
mo¬
rising
a
If,
on
sold
on
1933!
chance,"
can't support the
at- par,
consider
think
you
they
a
from the
certainly a far cry
present levels, but it does
show what can'happen.
and
the
of
a
bread
in;
of
chain
econ
6
pi i
trends.
Earl O. Shreve
high
1 i~v i
•
As for
ahead.
preferred stocks, where
The break-even points are
in. industry.
The
prices
of
preferred stocks are; out of
many-
line.
Personally, I would take it
until the outlook clarifies
easy
somewhat.
n
g
is
For
Me."
millions of
has
its
taxpayers
credit
base
of
the
country
operate at
(bank reserves, if
of
you please) was
$1,512,000,000 by these
operations during the period. True,
gations
has
made
the
member
rise. There
the
in.
ties
makes
as
long
as
they desire to do
they
so.
long
as you
bankers
outswapped!,
This
all
bonds
.
reducing exercises. A lot of
bulges can be taken out of the
budget without impairing essen¬
tial
government
services
or
na¬
tional
security.
I shall cite some
figures to back up this
argument.
and
First, let me, reiterate one point,
As long as government pours bil¬
lions of borrowed dollars into the
streams
of
maintain
the
2l/z%
rate
see
nothing
would
have learned
if
.■>
%ber®
Reasonable
Advocated
..
them
-
.
to
want
should
little
AAA
to
,
,'V
;;7V
sell
more
on
corporate
the
boom
than 3%>
effect
on
J
on
will
have
government
•
a
Please note,
end of
favorable
a
bonds and
AAA corporate issues,
have
issues
a.yield basis of
however, that although the
it will
'
serious
adverse
big how¬
costs!
prices
and
eat,
we
wear
ride, including the subways. The
high cost of government is ab¬
sorbing more than 25% of the
national
income through taxes,
Federal, state and local.
Some
people shrug off the high cost of
government as an unavoidable
sult of
re¬
war.
In his
January budget message,
President
noted
that
79%
of
and efforts to
of
the
war,
effects
prevent
of
spending which began
New Deal efforts to prime
the; pump with borrowed millions.
with
Non-War
war.
Spending
-; But
this is not the whole story
of the budget. All along the line
find increased spending in
items remote from defense or for¬
you
Many items of war and
Remember. the
sugar-coated eign aid.
spending
by
prewar
phrase which was applied to these defense
standards would have been con¬
earlymaneuvers
,in
planned
aefidit spending?
It was called sidered grossly excessive in the
"reflation." .Well, we've been re¬ burdens they place on taxpayers.
The pressure of organized
flated .7 *; plus. \WeVe beeri re¬
flated to the peaks of 1920. : In groups lias resulted in unneces¬
food prices,: we've been reflated sary bulges all over the budget.
pressure
groups
include
above the 1920 peaks. Now the These
problem is how to get down from government bureaus and agencies.
those peaks without hurting our¬ It is time for the taxpayer to
selves, how to get the bulges out work up some real resistance to
this pressure,
ofthe budget. 4
Otherwise the tax¬
/ • /." I am not implying that World payer may find himself squeezed
further between high taxes on one
War II budgets cbuld have been
side
and
rising living costs on
financed/without deficits.; I rec¬
the other. You know how painful
ognize that inflation is a heritage
this squeeze'tari become;
of war. /And -1 am
fully aware
that the Federal budget now shows
~
in
recent
ment. confidence
has
-
cham¬
have
special regions
the^population;
national
or
inter¬
significance. The total of
these projects, on top of war and
defense
costs, and indispensable
government services, makes an in¬
tolerable load for taxpayers.;.
bol?
J. The
"
detracting from
programs
national
deficit
been
segments; bf
Others
months/ Invest¬
.;;// ;
Rather than
from
away
speriding
Some may benefit
ojpv
The effects of this shift in Fed¬
finance
i .The
pioned, by various groups for the
most part are worthy activities.
a
new j#x law has reduced
individual .in.come
taxes
moder¬
my
effect
ernment
spending
of all gov¬
the
over
ahead and the
are
I
In
at
a
probability that
turn in" business
would not
we
activity,
keep fully invested.
general, I would. stay,
reason¬
ably. liquid for the balance of the
year;* and,
if not liquid, at least
high-grade. It probably is
carry¬
ing "coals to Newcastle'1 to
gest that trust
men
-sug¬
should be
con¬
on
servative,
¥ UV4
but
VUI
there.
C
when cash is the best
h
are
CliC
policy!
times
two
decades between World War I and
World
War
II
much
was
below
this
$8.3 billion, which is but 21%
the /proposed budget. In the
of
twenties
was
total in most years
the
only
little above $3 biRionJ. <
a
■
National
Threatened
Solvency
In
calling attention to categories
of- increased spending, I do not
to express
lack of sympathy
Rather,
I
cite; these
to
■
show how the overall effect is td
the
swell
budget to the point
where / the nation's * solvency is
threatened.
* r
Moreover,- inflationary
fiscal
policy raises living costs/Thus the
individual beneficiaries of Federal
spending may lose more in the
end from rising living costs than
they gain directly from the na¬
tional
Treasury.
Certainly that
lesson has emerged from the In¬
flation trend of the last few year^.
Outstanding among Federal ex¬
penditures which have increased
under
organized
pressure
are
those for veterans, social welfare,
agriculture and public works. Milf
lions of individuals benefit from
these
expenditures. And these
millions
same
are
losers
by the
rise in living costs,
Most public spending involves
politics and votes. It is partic¬
ularly opportune to point this out
in an election year. We need the
courage to face these facts now,
when the nation must build and
maintain
its
strength. National
a foundation oi
security rests
on
economic strength. And the
of
our
core
economic strength is sound
Federal fiscal policy.
Everyone wants generous treat-*
war veterans, especially
Still, many veterans
themselves now' see the gravity
of-fiscal -problems raised by vet¬
erans' benefits. As late as 1945,
ment for
the disabled.
some
authoritative
.students "of
estimated
government
probable
costs of
postwar veterans' benefits
$2.8 billion. Instead, in the
fiscal year 1947, it was $7.4 Jail-at
lion; The estimate for, 1949 is $6.1
billion.
?.
K-'
»
Y7
,
-
'•*'
'
-
'U
\
■'
.
' 'V ,'*'•* *■ i ">
}
| The present level of veterans'
expenditures is about the .same as
all government costs in the middle
thirties. rThis is something .every 4^
body should ponder, in consider
ing revision of Federal laws to
avoid another plunge: into deficit
spending,
'7
Who has
more
guarding ithe
than
and
who
those
other
who
fixed
receive
interest in-safe¬
nation's
live
-finances
off pensions
incomes?
Those
veterans'
benefits,
those who count on social security
for old age pensions apd unem¬
ployment
benefits,
should
be
among the staunchest advocates of
ately, : but not the high cost of
main thesis that the cost of gov¬
a balanced Federal budget. : 7 r /
ernment is too high, the Treasury: living. The high cost of living can
be brought down only by rigid
7 The 1949 budget estimate for
surplus points up my argument.
economy
in the Federal ; budget social welfare, health and security
Government should work to main¬
is about $2 billion. That is double
as well as in the household budget.
tain a surplus over spending and
All of uSj as groups and as in¬
the figure for fiscal year 1944.'
■'
to
retire
bank
credit from the
dividuals, must plan and work for / Moreover, $1.7 billion in payroll!
swollen money supply. To do this
economy.
And that includes the tax revenues are being diverted to
government will have to econo¬
economy of abstaining from de¬
the old age and survivors insur¬
mize
to
the; utmost and stop mands
-upon /government
for ance trust fund without appearing
spending for anything not vital.
spending which cannot be justi¬ as a budget expenditure.
; 7
;
fied ip the light of national need.
•"An address by Mr. Shreve be¬
The President has proposed the
Self-restraint in the smaller items
fore the New York Rotary Club,
of the
budget will/add up" to broadening of this program to pll
New York City, May 13/ 1948.
/
gainful workers. This shows howr
I
*7 solvency ip the total.
.
•
•
a
a
in view of the uncertainties
high
everything
war
spend¬
be
average
.
With the 2V2% rate setting the
pattern,
However, and. this is
away
ten-cent
stered.
ever,
we are
of
costs
what
Liquidity
limb
the
government
brought
"
that
on
this truth of economics during the
be
•
may
immediate prewar
These costs enter into the
of
spending have been salutary. In¬
flation pressure has eased some¬
readjustment
the
No wonder
astronomical
a
can
the horizon which
on
cause
change.,
And, I
so.
out
budget is ten times
of the late twenties,
proposed expenditures for the
fiscal year 1949 directly reflected
we
to
all
the
Well
eral
business
times
budgets.
rise.
/•
-
they desire to do
five
consumer
in
beyond
The
budget
the
Too
used
spending. The
1949
billion.
considered big
$8.3
to
ditures.
spending,
prides will be under/pressure; to
■
That
amount
mean
the
the
industries which will hold up well
1
question the monetary authorities
can
inevit¬
fairly certqin
national
budget
*
items in the
non-war
eral
record-smashing /cash surplus';
ing to deficit financing/; Weigh¬
that the Treasury is retiring, more
ing everything,' it "-would-"seem,
money from the market than it is
therqfore;;that carefully selected putting in."
«*•*
common, 'stocks of
companies in
willing
are
that
means
1948-9
seems
make every effort to'balance
the budget by taxes before resort¬
have $15 billion of bills and cer¬
tificates which they can-use to
as
If
to
they still
to be
raised.
Considering v the; heavy national
debt we now have, it Would seem
reasonable to expect the Congress
selling shorts and buying longs
until they run out of shorts! This
will take a long time as
swap for your government
be
that corporate taxes, and possibly
personal taxes, will be increased.
continue
can
deficit in
a
able, then it
securities
It follows that
the dan¬
course,
Congressional, appropriations
continue
during
the
next
few
months at
a
high level which
they hold
or short-term as they are
position to hold their securi¬
a
Profits
the
long
m:e
is, of
that taxes will
ger
is of little importance to the Fed¬
eral
Reserve
Banks.
It
really
makes
no
difference
to
them
the
materialize.-
large in most industries and
increase in unemployment will
cause the
productivity of labor to
Federal
Reserve
Banks less liquid.
But, as a prac¬
tical matter, liquidity in this sense
whether
high level regardless
business
readjustment
an
liquid and their sale
more
decreased
are
the acquisition of short-time obli¬
has'.made
the
a
any
which > may
decreased
banks
offset
the
^—'—
The
-
with the purposes of these expen--
some
ernment'
the
including / /
pressure groups,
peaks; instead, the trend in Fed¬
eating
out of
purchasing power of the dollar.
Many industries will continue to
to
ap¬
dollar
ward.
been
enough
the
a
It
get
own; pur¬
Government should be tapering
spending now from the war
'
Government
chasing some $5,872,000,000 of the
long-term issues, which means that
supporting
in line
are more
to
spending -is rising again. To¬
unwelcome offspring of the high
day, nearly three years after the
cost4 Of government* Both the off¬ end of World War
II, a national
spring and the parent of this fiscal budget of nearly $40 billion has
lineage could be the subject of been proposed for fiscal
year 1949.
that popular song, "You're Too Fat Defense
spending is projected up¬
government bond market by pur¬
were
on
r
.
,
squeeze on consumer.
off
an
with realities than the preferred.
Common stocks have not yet risen
they
and
of
ing Of the
Common stocks
efforts
adds up to forty
peacetime budgets
painfully high cost of living.
billion
c
past fifteen years.. The
subway ride and the sixteen-cent loaf bf bread are prod¬
ucts of that upward trend in
gov¬
redemption or have sold $7,384,r
000,000 of short-term obligations
while
welfare.
The
cost
their
regardless of
poses,
linked
the
ink
propriations for their
jernment
{ budget are di¬
rectly
may
red
continue
gov-
,
facts
permitted, I am not too enthusias¬
tic^ ; Economic affairs are at a
turn.
Many
uncertainties
lie
long-term issues
that since last
November they have lost
through
Buyer's'* index
5.52% basis on Dec,;!,
This a
high
by
an
bonds in the -"Bond
tendency.
t
of
house and home-4iterally. It is
prone to overrate municipals, may
time for government to undergo
I r remind you ■ that * the:: twenty '
selling
ing the last eight months, the
ment
it
advantage.' As most bond
billions of long-term
bonds acquired dur¬
government
that
tax
below
start
investment
the
rates, the 2%'%
rate will not be permitted to
drop
materially because the Federal
some
municipals
long time since they
those. who did not need
practical
a
plunge into a morass
again,
More billions
are being
demanded for national
defense, in addition to the billions
for the European Recovery Pro¬
gram. Meanwhile, pressure groups
of
dollar
o n
loaf
■
strong.
has been a
on
trend of interest
Reserve
be
As
not
ment
bil-
] budget.
j ; Tne cost
ex-
per¬
debt
bread
40
a
for
long-term governments.
the
r
;—
;;7;/7
Morass of Red Ink
Otherwise, the Federal Govern¬
peacetime
;
municipals
basis
maintained
the
mit
other
and
mounting,
important .in
specifically, I expect the
rate
1 i
;
be
This will be es¬
pecially true if the excess profits
tax is returned to anything like
its wartime status, in the tax
Structure,; The; tax feature is so
the next six months.
2M>%
of
and
than basic
more
that"tthey.'will
seems
present
not
loaf
-
of
sixteen-cent
a
interest rates.; If taxes are put up,
the
do
/
for
any
the
inevitable, will force
abandonment
Nonetheless,
7-7
->
;
ride, :7?7\
subway
A$ tor municipals,r £hey follow
But, as I also
the disappear¬
earlier,
foreign aid. Calls
or
a-ten -cenV*>
.
money
not for the
were
to
bond
when the Federal \ Reserve will
act, but it seems inevitable that
hriother Vs of 1.% ,will be per¬
mitted in the near future.
;
supply, and thus affect the price.
earlier, I expect this
As indicated
us
;7
time
your
This is
as
will
without appreciably affecting the
to
J
pressure and
business interests, tp refrain from self-interested appropriation demands.
probably as good a time
me to point out that
the short-term rate is going a lit¬
tle higher.1
We can't be certain
either commodity
business
or
Scores extravagance in items remote from defense
of price
busi¬
a
the
is
quality; in
on
purchases!
controlling factors.'
decline
widen. : Now
will
which
;
prices
have
mam cause
The high cost of living is on everybody's mind and in the headlines of
every news¬
-readjustment, the spread ih
the return on medium-grade is¬ paper.
Your five-cent subway ride has gone with the inflation wind! So has the fivesues and those of AAA quality cent loaf of bread, the five-cent
cigar and the $5 billion Federal budget. You now have
of
policies
/
Business leader states government spending Is
because of the
In short, to
drop
extent that we
the
the
public debt and Federal Reserve
credit
medium-
;
'
r
ness
have
we
management
will
V
By EARL O. SIIREVE *
-
,
increased credit risk.
like
anything else,
supply and demand factors; but,
nowadays, superimposed on these
fundamental
earnings that
on
grades
of
Thursday, May 20, 1948
President, U. S. Chamber of Commerce
-
industry are so high today that
even
a
slight decline in business
activity will have such an adverse
tell you the investment
now
CHRONICLE
High Cost of Government Produces
The High Cost of Living
(Continued from page 27)
make his investment decisions.
FINANCIAL
&
.
*167
V Volume
.<
•?
>v .
.
1 Af'A-
yUH
,,
)
Number 4700
Ui AVVvi.'&'AW* ifWIP
n*
M
1THE COMMERCIAL & FINANCIAL CHRONICLE
"
(2213>
J
the budget grows
29
gwr**
of
and bulges, with,
budget items! It all adds, up tp or taken together h$ve inflationary I mands
for
bank
credit,
even Prior to 1930 short-term interest'
7 no end in sight:.
: a $40 billion pudget/and the high implications. -It qqnnot be too though they are primarily due to rates were more
commonly above
cost
of
government. And that easily assumed, however, that we non-monetary causes. Fiscal pol¬
long-term rates than the reverse.
Playing ^eap Frog With
means
the high cost of living, a are definitely headed into another
icy, "debt management and credit And even if we admit that other
Living Costs
10-cent subway fare and a 16-cent inflationary upsurge,.
nor, -if we control should then be ready to
things are no longer equal, we
Like the wage-price spiral, this loaf of bread.
""/' -7"/r
r ./
:j are, that it will be of the kind to make their contribution to the re-r
need not be too Concerned about
is another game of leap frog with
Business groups have the re¬ -demand drastic over-all
monetary newecl struggle against inflation.
the long-term market. In theory
rising living costs in which every¬ sponsibility to refrain from press¬ measures. Let me quote from the The choices
before us have been at least, so long as we are firm,
body stands to lose unless gov- ing Congress for more spending. official prpss 'release
concerning classified (assuming for the pres¬ in our
support of the 2 Vz % rate
/ ernment spending is kept within So
have
veterans'
groups ^ and the memorandum to the President ent that' we shall not
quickly re¬ fpr long government
bonds, we
Aarm
groups and ~cmc: g'rqups. by the Council of Economic Ad¬ verse
0'i.jreaspnable. bounds.' *.*;*.;/■£. •,
ourselves
and ' increase
have made that a demand rate
V., Another bulging item of ex- However worthy their causes, visers, dated April 9, 1948:
taxes) as trying to cut down: (a) and there is no reason
why rates
pense is education and research.
however, ! urgent their projects,
v ' Appraisal
of the combined military expenditures;
(b), other oh shorter-term obligations could
The 1949
,
budget has $387 million
compared with $77
this
for
item
million
this
The
year.
~
increase
to
grants
elementary
and secondary education.
Then
there
is
The
ilational interest now de¬
mands^ the utmost economy in
for
states
$905 million
7
.
Congress
7 shown
for
many
States ;•
Chamber
farmers. in spending, pressed by
farm organizations and frequently
by business groups. This spending
The
continues at
ptherk,
of
authorities,- against
Theplea hi
.
</
,
the
inflation,' is $2.8 billipp
in proposed public works. That
figure is $800 million more thau
the total this year and double the
4W figure. The; item fop flood
control
r
and
rivers
and
harborsj,
instance, has heen' raised lp
for
.
a
'
.urges,
their influence with
r.r
this
type
'
of
SS
,
"sap
pur
we
the
have the will
game
thd
adopted,
1948
at
.
least $2
billion below
The level tHatrthe" Qctober
,
rql
considerable
expenditures may be curtailed,
state and municipal expendi¬
tures
fellow," Mr
The Current Credit Situation
tp^ see how the xyhole of the ex®
pansion could have contributed td
increased production, but during
is-
the first three months of 1948
-
invigorated campaign to sell sav¬
ings bonds can help sop up -loose
additional ' budget dollars.
And, finally, by means of
request, there i was pwtlined a
action ip the monetary and credit
program
involving
additional field we can
attempt to prevent
;s expenditures
for& the: armed or restrain a further expansion of
^services of only $1.7 billipn
ir^ consumer and business purchasing
; fiscaf 1949.- Of this amount,
nof power based on bank credit, but
% more than half will represent
we
par^V d;h mv.dv If' anything,
actual payments' to the* pixblic
about purchasing ppjypr already in
in 1948, and only a part of
this{ existence, unless we want to take
basis of the increments in redemp¬
tion values, rather
of interest payable
an
-
•
-
$109.4 billion at the end of March,
1948, compared with $113.7 billion
in December, 1947, and $110.0 bil-
*
;
ditipnal
'
its
lion
in
December., 1946.
That is
advantage
of
the
very
during the first quarter of 1948,
in which most of the
Treasury's
surplus for! the fiscal year 1948
was
concentrated, in which q
sharp break in agricultural prices
shook the easy optimism of busi¬
ness and
ment.
(5>
whether
there
will
be
a
¥' 7.
"V
• «..
-
„
>> i.
*2, c i4' J\
Our Changed
-(4) It
is
is
clear,
not
an
,
...
revival
ordi¬
'*'
*.
Situation
conseq^hce of approaching
com-;
pletion of postwar plants for plant
construction, expansion, and im¬
provement in a number of indus-:
think, that
-proposed increases in our military
expenditures and tax reduction tries, that there would be a falling
.(plus continued foreign aid) pff in business capital expendi¬
I
jfakep; together have
. created
a
situation with respect to the
*
new
coordinated
7 policy and
of credit
Et- managejment
program
de
Which we have been pursuing to
restrain
the
credit.
A
expansion
main
.
Never¬
case.
bank
of
reliance
of
that
tures during the latter- half of;
or the first "half of 1949.7 Ifj
government
expenditures ;(and'
deficits), do not. pick up rapidly,!
it ig conceivable that the
infla-j
tiopary. effects of renewed spend-j
ing may be offset by this decline!
1948
increasing appreciation
facts, the tendenecy for
as
offset to, softening tendencies
TjyhfCh might be .developing dur-
(
of strong
inflationary pressures
during the second half of .this
calendar year, or later, and it is
theless. I should say that we could
Still
debatable what and how
take considerable satisfaction in
rpuch shpuld b® 4pne toi try tp
pur performance with our exist¬
cu,rb. su^b Rr^sayes by over-all
ing powers; if it were not for re¬
monetary action if they still percent
events which
have aggra¬
sis$. It 'foas seqipjed likely, : as a
vated the problem ahead.
business borrowing
narily large in any
plarj
tJpre7has-;l?eeh^dh iapreasipg!
and in which
consumers
the f defehse
.disposition to gssess the plan
.
of course;
drastic^
so
to
as
risk
serious -over-all (decline in
and employment.^Our Present Ppwers
!*
A
J..'.-
(7)
.n1;!-.-
.
/
{.
: fr
7.
r
Does this leave
a
pro-
helpless with
I think not.
our
/
•
>
7
•'}/.
•
•,
duced
in
present powers?
With fiscal policy in¬
scope,! monetary
lier years
at
the
a
decrease
in
of the life of the bonds,
of substantial in¬
in
the
later years.
But,
increase in actual
cash outlays is involved until the
of
course,
bonds
no
are
Once
redeemed.
are
the
under¬
stood, the argument that we'can¬
follow an appropriate mone¬
because of its effects
not
tary policy,
on
the
public
burden
debt,
.
force.
servicing
of
the
of
its
loses
some
■;
Support of Government Security
:
is
interest
for
expense
creases
(8)
there
provision
budgetary
payments on the debt in the ear¬
when it has been lean¬
ing heavily on Treasury surpluses.
recent past
If
practice
reducing the
This
has had the effect of
in the
more
from issue date
date.
policy
to, play. ra rOlatlvPly
important role than
;
entirely
us
to: maturity
than at the rate
-facts of this situation
hibited and debt management re¬
program in terms of an incip-,
Tent new boom ha's abatpd, and! may be able
adjust-?
'- V77;|
\• '7v
is uncertain,
It
measures
auction
busjiness to react to the defense
won't be iri working order
much longer without somO
.
of these
of small
control
"With
-
idistribuj
amounts for shorf
periods during the latter part of
the calendar year 1948—that is,
during the firsVhalf of fiscal 1949;
Our
existing program of credit
goods. Thus, in terms! of
would'seem to be something the
country could readily take in
its Stride. " 7 '; : '
7: : ■"
.
rower
demand for ad-
general
^economy;
penditures^ tbg gqveynqjient rpigh|
Conceivably be a- temporary borj
deposits
a
'
tion of Treasury receipts and ex¬
demand
favorable situation which existed
.
of
plus
taking
.
no more'
care
in circulation totaled about
Adjusted
money
-
take
will represent
securities, leaving nothing foE re¬
demption of securities-;, held. bjf
Federal Reserve Banks.
In fact:
because of the uneven^!
we
regained much of the ground we
lost during the preceding twelve.
*
probably
too
positive effect on the bud¬
get during the next few years.
The major factor, in the rise in
mi.tting
7
than enough
voluntary .public
redemptions of maturing Treasury
to
without
dent's letter of April: 1,-
•
(Continued; from page 4), /
short-term
in
occur
much
expanding rapidly.) As I
have suggested, a gradual decline
in
private capital expenditures
are
.
pie Government's Handling of
rise
.
could
rates
but
the budgetary. item
of interest
seems, likely,; unless the
contem- payable on the public debt that
be safe." This lescves: rqpm for
plated /effects of increased mili¬ has already occurred is not the
the safe absorption of % defense
tary spending are exaggerated or small advance in short-term in¬
program of considerable
magni-| actual expenditures prove tp be terest rates to date, but rather the
; tucle,
Tbe defense, program,: aS
greater than presently estimated,
increasing rate of interest accruals
'! now forrqulated,: implies a $3
and pressure for private capital
on savings bonds, due to the prac¬
tp $4 bbUon commitment for the
expenditures again increases.. An tice of accruing interest on the
r fiscal year 1949.
In the Presi-
port contemplated and found to
John Q. Citizen. He is the iellichy
who ishowysqiieezedby the high
$620 million from $445 million in cost of living arid ' whose' clamo?
494$ and $266 million in 1947.
for relief makes the high cost of
$0 it goes through a long list government a prime national issue.
finally
j^cqo very-Plan * will
involye an. expprt' surplus in
In everyday language, The. high
cost of government is the higlji
cost of living. The cost of both is
borne .by
A.s
European"
n^iqhal strpngdi alt
unless
core
impact of these two plans [for-- government expenditures; (c). pri¬
not approach this figure. The facts,
eign
and; preparedness
or
proT vate
public investment; (d) as distinguished from the theory,
grams] • may be undertaken by personal consumption; ;.[
pf course, might suggest or require
an
examination,: first of their
Here I express rough opinions. that we stop at a lower figure.
general impact uppn the econ-Although there should be room
One fact that must be taken
omy,
and,; second, ' of1 their for some
paring of previously into account, but must not be al¬
impact
upon
specific
situ¬
planned
military
expenditures lowed to outwoigh more important
ations of sh o r t a g e 7
Viewing now having a lower order of
iirst
considerations, is the cost of serv¬
the' general
impact, 'we
priority, and every effort should icing the public debt. It is easy,
concluded' in our October for¬
be made to this end, it is unlikely
if cne does not stop to make an
eign aid report that the export
that much will be accomplished.
actual
calculation, to exaggerate
surplus in'1948 tinder an : aid
Similarly, in the field of other the effects of a rise in short-term
program of the: size then con^
Federal Government expenditures,
rates on the positive and immedi¬
teniplated 'would not inject a
every effort should be made to ate cost to the
new
taxpayer of interest
inflationary influence be- hold
them to a minimum; but the
payments on the public debt. The
causq ' it: wpui4"no( exceed tliq
prospect for substantial economies fact of the matter is that a rather
export' surplus already felt in
is
doubtful.
Federal investment
1947.
high cost of- government
and the foresight to exercise self7
rcsiraint .and/to demapd economy
in- public spending* - 7 ?, ;t > j
Likewise startling in the 194£
against
•
•
inclpdin^ ?state'* and lppal
The,
will
.budget, ;in midst p? the struggle
?
Chamber
.spending.7!.'•*
77';'
emergency.
-
groups to use
the
pji
» as
"•
organizations refrain from pressr
ing Congress for appropriations
for area, state and local projects.
favor
a
high level in face
extraordinary prosperity
enjoyed by farmers. It illustrates
how spending becomes imbedded
In the budget after $ has
-bqgqp
-
policy
fiscal
sound
urges
of
keystone of national security and
has recommended
that business
has
years
disposition /to
a
United
Commerce
government spending. The
for
in
fiscal
1949,
not
spending
by
Federal
corporations on behalf of farmers.
counting
v
-
/agriculture
"
1
-7
natiop.
mainly from $.300 million in
pomes
r
there is none so worthy, nor so
urgent, as the cause pf thc^ whqlp
the de¬
mand for private capital funds the
V'";
'
Market
; •' /-
•
discussion may
subsidiary
question
This latter
suggest
which
a
I know is in
some
of your
ing 1|?48 rather than, as a fur¬
minds.
Why should we support
pressure on long-term fates which
ther
stimulus
to
an
already
the government security market,
asserted itself last fall will be re¬
strongly inflationary situation;
and to that extent circumscribe
lieved. Maintenance of the V-k%
v
"But while a $3 "to $4 billion'
our
powers
and our actions to
long-term rate pn" goyermfieht Se¬
program. may not seem, disturbcontrol the volume of credit? Ob¬
curities should not then require us
ing to a $240 billion economy!
conflict be¬
to put large sums into the market, viously," there is a
when
viewed generally,
tween our desire to restrain credit
the if in
faqt support by us is neces¬
conclusion is different when we
expansion and our acceptance of
turn to its. specific, impact upon sary': M^awliile, we;could-prothe obligation to maintain stabil¬
particular production and mar-: icep^ further* with; increases j in ity in the government security
short-term rates, so as to maintain
ket situations. Just as; in; the
market, although this conflict ha^
a healthy degree of uncertainty as
case of the European Recovery
been exaggerated in some current
ta.fyture action;.so" as^tq keep the
Program, to which it is now
discussion. The facts are that Jtfc?
bank^ liquidity; conscigius," and so
added,, the real issues as to
System's purchases of government
as to encourage them
whether
additional
tp use what¬
economic
securities have been exceeded, by
reserve.,funds /come' into
the System's sales and redemp¬
possession
(through gold
of The Concentration
of
tions, by more than $l1/2 billion
imports, return flow of currency,
; programs on certain classes of
since/market support' purchases
Treasury expenditures, or other¬
goods and areas Of production
were
begun last November,. t£>e
wise) to purchase short govern¬
wiiere shortages have been most
total amount of Federal Reservp
ments
from us.
While I do
Severe
arid
persistent; These! not believe that a
^public credit- outstanding has been re¬
areas include products of farm
duced by approximately $3 billion
hearing Of' this' sort is the place
origin,
particularly
livestock
since the end of 1946 and by. about
to
try
to 7 give"' details of the
products and textiles, steel and immediate moves which the Treas¬ $4 billion since the end of 1945.
controls
are
needed
-
ever
grows
out
their
both!
'
7bthd'r metalsj and "the
-power
source^ of
and heat, including coal,
ury
the
and the appropriate groups in
Reserve System may
Federal
We liave moved to offset the effect
of gold
inflows and other factors
petroleum, ga^ prid electricity," be considering; I can. say that I tending to expand commercial
in "private
capital expenditures.,
;'a whacking surplus!: in
bank credit, despite our concern
yTbis; ipaiy; be
|he! cash* budget," has been taken There are other! eleinehtsr; in ourj for allocation of argument, say, do not agree that we have neces¬ about the government security
certain materials sarily
approached the limit of in¬
econQpEiy^|.e4y$upp^
aw§ty frpm lis!/ There are Various
where
specific bottlenecks 7 de¬ crease in rates on short-term gov¬ market.; Our policy- has been ac¬
estimates of! what" the fiscal re-, gopds overtaking demand and thei
suits of the year 1948-49 will now prospect of better world crops this velop or- shortages appear, or for ernment securities which might tively. anti-inflationary, if it has
-
program,
.
foe,'-but\with the possible 4^Vep-
tion of
Congressional com¬
mittee estimates, they don't leave
some
^is much ,.fiscar ammu>iti6h! ^ A
-
.
deal. "depends, * of
grept
7 onhow
rapidly
% propriations "7 i or
are
t
r a n s
lated
course,
increased
ap-
preparedness
into
actual
ex¬
penditures. "Our figures indipate thqt, b a r r i n g a possible
< business; recession
which
would
vf qut. down Treasury receipts, there
-wilhbe
$1
and
a
cash surplus
$3
of between
billion. V This amount
year than
yearrr-which wouidi
also mean a relaxation of infla-j
tionary pressures or even the in-!
troduction
of
deflationary forces.)
These can be set off -against tax!
reduction, a sustaining influence!
on
Ihe demand .side,- increased'
military expenditures,,'whieh will'
give a fillip' (q dorpestfe produc-i
tion, European and other foreign
aid expenditures which will help
maintain a high level of foreign
demand, and a third - round of
wage increases, all of which singly
some
other kind of direct controls,
j ^cpi^inly;da. not think> it kis
an
argument for, drastic pver-all
monetary, controls.',;
be permitted without endangering
the/ long-term market; The pat¬
tern of interest
rates follow
a
rates,'in*.which
smooth 'downward
curve toward the short-term end
possibility that we of the rate structure, has now pre¬
may be -faced' with the necessity vailed for so long that we tend
of v resisting'*-strong - inflationary to "regard it as normal.
In fact,
pressures dutmg the Second half however, the present rate pattern
of this yefir,- or the first half of was :£n outgrowth of quite ab¬
next year or later, we must olso normal circumstances ~ namely,
(6) Nevertheless, if We take ac¬
count' of
the
this had
would h$ve
been no need for us to support
the government security market.
Banks would have been swimming
in reserve funds, and government
securities (and probably other se-r
curities) would have had a more
or less
cootinuonus bull market.
not been deflationary.- If
not
been
so,
:
there
I spggest, Therefore, that -it has
been/possible, to support the goyr
take account of the possibility that the accumulation, before the War, ernment security .market, as we
have been supporting it, without
these* pressures ^will give- rise to of a huge volume of excess re¬
increased
and
system.
(Continued on page 30)
inflationary
de¬ serves in our banking
•
SO
THE
(2214)
COMMERCIAL
&
FINANCIAL
CHRONICLE
The Government's Handling of
Governors
banks
stimulating
an
bank credit.
undue expansion of
I justify the policy
the basis
low interest
we
have followed, not on
of
cheap
money
or
far as the government
concerned, altnough that
has its important aspects, but be¬
cause I question what good could
have
been
accomplished
by
a
vigorous
aggressive
policy
of
rates
so
debt is
overall
contraction
credit
of
sales
such
—
and,
further
that if still
needed the
second,
powers
are
System be granted supplementary
authority to impose a special re¬
serve
requirement permit¬
ting banks to hold, at their option,
an additional reserve in specified
cash assets
or
in short-term gov¬
ernment securities.
either
that
I do not think
these
proposals
particularly effective in
checking the kind of inflation we
are supposed to be worrying about
of
would be
economically defensible, admin¬
istratively feasible, equitable as
between banks, and adapted to
system
banking
our
it
as
has
evolved through the years.
Second, there is the question of
the leverage factor in our present
system of proportionate reserves.
There
well be reasons, tak¬
ing the long view, for an increase
in the reserve requirements of the
may
commercial banks of the country,
the
of
and
within
limits
which
securities —tnat
is, a real runaway inflation those requirements can be varied
from our portfolio as might have
with a monetary
background- by the Federal Reserve System.
broken the market. As I said, in
while constantly seeking their im¬ I am inclined to believe that this
my testimony before the Banking
position does run a considerable could be a progressive step in our
and Currency Committee of the
risk of seriously interfering with monetary - banking organization,
Senate last December, in view of
our
present program, and their especially if there should conthe
large
involvement of our actual
application could not help t.nue to be a persistent and sub¬
whole economy with a Federal but be
upsetting to the securities stantial inflow of gold.
With a
Government debt of over $250
market
as
deficient banks ad¬ modern central banking system
billion, in view of the continuing justed their positions to meet the
operating in a highly developed
nefed for refinancing parts of that
new requirements.
It is true, of deposit banking system, and with
debt, and in the face of an im¬ course, that an increase in re¬ a
decreasing reliance upon gold,
perative demand for maximum serve requirements, either pri¬ much of the need for low reserve
production, if we are to solve our mary or special, or both, would requirements
and
consequent
domestic problems and meet our
put pressure on the banks and economizing in the provision of
commitments abroad, it seems to
would reduce the ratio of possible money by commercial banks has
me that those who suggest raising
expansion of bank loans and in¬ disappeared.
In these circum¬
the discount rate sharply and sell¬ vestments based on a given vol¬
stances there may well be a bal¬
ing government securities out of ume of reserves.7 But so long as ance of advantage in higher re¬
System account without regard to we maintain our present policy of serve
requirements, as a means
the effect on the price and yield support of the government securi¬ of
reducing the dangerous expan¬
Of such securities, are talking in ties market, banks would still be
sibility and, at times, constructive
government
terms of
situation which
a
does
able to obtain additional reserves
rnft
(and
•WOuld
contractability of
supply
a money
credit would still
presently exist.
Such action
probably be effective in
'Checking the further expansion of
bank credit, but at a cost in fiscal
and financial
disorder, and in
some
alternative
the,
employment which
cial
one
would
deny
to accommodate, or to pass up an
attractive
no
to
were
funds to a borrower they wished
tOrms of reduced production and
want to contemplate now. A gen¬
eral monetary
control, if used
multiple expansion ol based on low reserve- ratios of
be possible), if commercial banks. There may be
bank
investment.
Commer¬
individual cus¬
incidence
possible capital losses, and rela¬
policy,
tomer relationships, the
of
drastically enough works through tive interest rates, Would still be
a Restriction of
production. The the sanctions in such cases, and
steps in the process are restriction our influence could be brought to
of money supply, rise of interest bear just about as effectively by
short-term
interest
rates, contraction of employment increasing
and production, contraction of in¬ rates, ■ as
by the .more 7 clumsy
come. I know of no monetary de¬
method of increasing reserve re¬
vice which would enable us to quirements.
As an instrument of
avoid these consequences and I short-run credit policy, increases
think it is
illusion to think that
an
some
painless way of avoiding
the consequences of making credit
really tight, can be found. To use
our existing powers without re¬
gard to interest rates and the gov¬
ernment
security market, in order
to get the effect our critics
sug¬
gest, would mean that our action
would have to be drastic
eriough
to lower the money income of a
large segment of the consuming
public.
To accomplish
this by
over-all monetary or credit action
Would mean a serious decline in
production and employment. Such
action eould only be justified if
WC
faced
were
inflation
with
due solely
a
or
to monetary causes.
runaway
primarily
That
is
not
bur
present situation and that
cannot be the right policy now.
.
(9) To
sum
this section of
up
my testimony, we are in difficult
but not impossible circumstances.
-We
be
may
upsurge of
faced
with
inflationary
existing reserve requirements
which must be applied in jerks
and in chunks to large groups oi
in
regardless of their individ¬
ual policies and positions, are not
very useful.
And if we should
in the future, get into a situatior
in which it is
imperative that
banks
we face nor minimize
tbfe effectiveness of the weapons
We have to combat those1 dangers
'
•
t
•
•
+
-
^
...
•
•
■
....
Regarding the* Proposal to
:
Increase Bank Reserves
tlO)
has
It
bbWever, that
been
suggested,
situation may
fcfecome much more critical, that
We may be faced at some future
ttftie with an accelerating price
tie, that
ftam out
our
our
present powers may
or prove
ineffective, and
thfet we should arm ourselves with
^additional powers as a necessary
precaution. It has been proposed,
xlfcst, that the Federal Reserve
regardless of the risks of
such
action, the powers would
have to be stronger than any yet
tion,
proposed. It would not be enough
merely to reduce
the possible
ratio of expansion of bank credit:
we should probably need powers
that would enable us to stop the
further expansion of bank credit
in its tracks.
I would rather try
to meet that situation whdn and
if we come closer to it, than try
to
anticipate
its
now,
requirements
.
.
1
Too Much Geography
.
porary
the
quirements
primary
of
all
reserve
re¬
fixing
reserve
requirements.
1
think the present method is based
too much on geography and too
little on -existing banking - facts
It is time to give serious consid¬
eration to a system of reserves
related to the character of depos¬
its rather than to their location.
I think we shall find
that, in the
study, we are
now at a point where we could
devise a uniform system of re¬
serve requirements, uniform as to
words
of
a
recent
banks wherever located, and dis¬
posits, demand deposits, and
commercial ings
is
the
Perhaps
now.
answer
could be found in a modified ceil¬
ing
authorize
an
increase
in
Not
an
which,
ever
the
on
than
or
I
reserve
now
exist.
taking
Reserve study
of Con¬
consideration
the
committees
should
be
us.
deposits
which
would
sav¬
be
the value
priety
of
great
I
deny the
or
pro¬
private participa¬
any
the affairs of the System.
tion in
these tendencies.
I think we shall do well to re¬
tain
the regional characteristics
of the System, both in the matter
of
decentralized operation
and.
more important, in the matter of
System national policy.
No one
would deny the need for coordi¬
nation of general credit policy,
oppose
but we now have, in the
Federal
Integration
(12) There are other things to
be considered if we are going to
take the long view rather than
There is the inte¬
gration of monetary and credit
policy and powers which have
been given to the Federal Re¬
serve System, with related pow¬
ers exercised by the Treasury and
other agencies of the government.
effective
public-spirited
ling to
serve
Federal
the
Banks.
It
has
Reserve
been argued that the only way to
insure the place of the Federal
Reserve System in our financial
affairs is to deprive it of all taint
of private
participation.
ernment,
so
the
Board
the
of
the
of
Governors
of
and
presidents of the
Here
Reserve Banks.
five
Federal
brought
together,
under
statutory aus¬
pices and with statutory responsi¬
bilities, men who are devoting
their full time to the problems of
the Federal Reserve System and
are
.
who
in
are
with
touch
govern¬
powers,
to
or
powers,
vestiges
of
give it additional
only
if
the remaining
private participation
are
removed.
be
a
This
misreading
future
term
of the
seems to me
and
a
policy which will
Rather
now.
over-all economic, policy. - Ac¬
taken in -one -place 1 iiaay
accentuate inflationary or defla¬
tion
serve
than
by trying to make our¬
just another government
selves
powers be¬
successful
a
working
example of government function¬
ing in the economic field, with the
aid
and
of private busi¬
experience in govern¬
support
Our
ness.
ment-business
cooperation—gov¬
having
the
dominant
it should have in the
ernment
voice,
as
field of monetary and credit pol¬
icy—might
be
sign-post alohg
a
the way to solution of one of the
major
postwar years: the relation be¬
tween: governments ^nd^ business*
in our whole, economy.
It may be that these are not
matters
within
the
immediate
policies and private views
opinions, in Washington and
throughout
the
country.
The
Federal Open Market Committee
now controls the principal weapon
credit
of
policy—open
market
operations in government securi¬
ties.
It is time, I think, for the
to
Congress
consider
would not be
whether
forward and
a
it
con¬
structive step to charge the Fed¬
economic problems of the
committee. They
however, which af¬
fect anv long-range consideration
of credit powers ^and credit pol¬
purview of
your
matters,
are
committee
There has been no general
our whole monetary and
credit organization and its work¬
ings since the studies of the Na¬
tional
Monetary Commission:
which preceded the establishment
any
of the Federal Reserve System* in
eral
Open
the
with
Committee
Market
related
credit
powers
exercised solely by the Board
now
of Governors and td consider this
as the body to which
additional powers should be
granted.
7 I also think we shall do well to
retain the modest measure of pri¬
vate participation in the affairs of
the System which we now have.'
icy.
review of
It is time, I
1913.
submit, to re¬
legislative author¬
ities in the light of our experience
and our existing economic en¬
view all of
our
vironment.
A Private Marshall Plan for
American Investments Abroad
shows
that, as of
May 31, 1943, U. S. holdings of
foreign assets amounted to $13.5
census
billion. "
for
investments
Direct
counted
securities
or
54%
of
this
ac¬
total,
portfolio investments
of
those
are
of 1943. The
census
the Treasury
publication "Census
short-term as¬
sets 6% and other types 13%.
Although no census of private
U. S. owned assets abroad has.
Foreign Countries."
been taken since 1943, the Treas¬
foundland
on
Europe
the other.
deposits
or
Department and the Depart¬
ury
ment of Commerce have estimated
private
holdings,
At
end
the
vestments
of
were
1943 in¬
May,
distributed almost
evenly between Canada and New¬
areas
65%
on
hand
one
the
of
value
of
all
owned
with Americanproperties totaling $3.5
billion.
Our
importance
to
amounted
were
as
times
four
United Kingdom.
of
assets
*
most'im¬
our
located f;- in Uthfe
I<7^
TABLE
^E^mated^ltteofAmencan-Oioned: Asset*
End of
•
-
Private
1946
' « -
(In millions of dollars)
United States Investments
"
'
-
•: 15,605
United States Investments—
——
Short-term
.
.
in
Washington
branches
or
Federal
Reserve
head
with
12
subsidiaries in the 12
Districts,
and
.
*
"
of
Based
Commerce
on
Treasury Department,
and
Treasury
securities,
7
;
—
investments, book value; private
ernment loans and short-term assets, stated value.
?
■
1,225
77,.'7 440
—
.
Short-term
Source:
1,235
V
NOTE—Direct
ment
>
—
—
—
Long-term
7:
' 2,900 ; *. "
210
^
1-. "
—
Deposits
Other
United States Government Investments
to have become the habit
^ '
5,880
.
'.77 ■:
7:7'
8,500
—
'
time since the Congress
us
! *
:14,380
Long-term
'
'
•
^
Abrbadx^4r-^-^'^r---^" ^2®»®85
.
~*
office
as
those in either Ger¬
many or the
1 The
value
portant
holdings in Canada
$4:40 billion and
than
more
valuable
■
to think of the System as a
foreign
owned
in the United
Latin America was next
States.
believed
sterns
and
These two
accounted for approximately
holdings
in
the
and:»still believe
Direct Investments:
Federal Re¬ ,-1'i7777 Portfolio Investments
serve
System a wise blend of 77i77777;^°HarVBonds;.7...7777.7:777^
national authority and regional V:
7
Foreign Currency Securities
responsibility, of government con¬
:4
Estates and Trusts;
trol and private participation. But
" 5
Other
it
in
Assets
American-owned
of
that we have in the
its mandate and various
interpretations of its intent have
gained currency.
More and more,
as¬
the
Treasury
analysis pre¬
sented in this article, therefore,
deals principally with our assets
abroad
in 1943 as presented in
sets
curacy.
This
of the Federal Re¬
System itself.
I have al¬ 7'A7'
some
us
seek
and
functioning
gave
to
the longermiscalculation
of
mental
an>
it is
re¬
existing
cause we are
know,
runs,
would be willing to place full
liance
on
the System's
agency, we can claim
the
The gov¬
argument
committee
composed, as you
seven members of
wil¬
of
powers
is
of those
are
directors
as
means
of achieving this
whiie retaining some regional par¬
ticipation and responsibility. This
utory
years—frequently with a view to in 1946. Table I shows these as¬
strengthening some weak spot in> sets by principal category.
The. latest
data presenting t a
our economy—without much
re¬
gard for their accommodation' to: geographic breakdown and fig-
ways
use
who
men
best
at the end of
1946, to stand at $15.6 billion, an
increase of $2 billion in three and
one-half years. If the U. S. Gov¬
ernment investments of $5.3 bil¬
These
diverse authorities " Wield lion are added, our total invest¬
overlapping powers which have ment abroad, both public and pri¬
been granted over a period - of vate, is estimated at $20.9 billion
serve
and to make
Open Market Committee, the stat¬
27%,
the short view.
a
(Continued from page 6)
would
requirements declare their holdings with ac¬ ures for the various types of
determined to be
Federal
bel;eve
gressional
deputies,
of
average,
ratios which
the
mize
any¬
to the desired ratio, what¬
it might be
not
though the powers of the Chair¬
man may be.
More and more, it
has become the habit to mini¬
it, but to some figure
total
bring
nearer
100%
increase to
near
and
reserve
requirements — whether primary
or special—on any increase in de¬
posits after the effective date.
where
a
would
which
;plan
reserve
board
with
problem of reserves would seem, tionary tendencies while we are
to be to attack the problem at its
fighting thern in another. * "Then
base.- First, there is the method
there
is
the ; organization
and
"System be given authority toin- tinguishing only sinter-bank de¬
■crease
given base would be less than it
and
of
.7,
requirements so
that the ratio of expansion on a
reserve
crease
gressive monetary action must be
taken to check a runaway infla¬
(11)) Going beyond such tem¬
emergency action which
iii monetary action—and in most might be considered, in the future
Circumstances it will be supple¬ as a way, of meeting an urgent
mentary: at best—we still have a and critical (but* still hypothet¬
iteW shots in our locker. In other ical) situation, a ; more -fruitful
^rbrds, we should neither magnify long-term approach to the whole
ige dangers
an
present
our
These are the directions in which
pressures,
but that is not certain, and in so
as the remedy is to be found
element of leverage
system to be left
at the disposal of 14,000 banks.
We should try to discover whether
there is some practical way, as a
long-term improvement and not
as
an
emergency device, to in¬
in
additional emergency powers be
available and used, in which ag¬
another
la*
{00 great
is
chairman
The Current Credit Situation
(Continued from page 29)
forget that the Board
to
even
Thursday, May 20, 1948
7
785
5,280
4,715
7
77'.
565
market value;
.
7
gov¬
7
the Depart¬
.
'
TFR-50G data, adjusted by
on
the basis of current information.
Department
Volume 167
Number 4700
American
Republics were Cuba
$590 million, Argentine $497 mil¬
lion, Mexico $422 million, Vene¬
zuela $399 million, Chile $388 mil¬
lion and Brazil $335 million. In
the American Republics, the larg¬
est holdings consisted of interests
in
controlled
enterprise.
These
varied from 66 to 90% of the total
for
each
owned
As
next
Owners
The
■
country.
were
of
in
THE
of
385
70%
U.
S.
enterprises
Foreign Assets
foreign assets. Seven¬
ty percent of these owned prop¬
erty valued at less than $10,000
and
having an average value of
$2,300.
Most of these small own¬
individuals, estates and
Even among corporations,
or
owned
about 26%
$3.6 billion
of the total foreign
assets, while estates and trusts
and non-profit organizations re¬
ported $727 million and $380 mil¬
lion,: 5
and
3%
respectively.
generally based
majority
on a
ganization abroad.
-
,
.
Number of
Foreign Enterprises and the Value
of American Interests by Type of
Organizaticyi Abroad
v
of
as
-1,944
1,670
168
___
Non-Profit
Or¬
ganization
Total
15,210
NOTE—For
statistical
determined
ship by
one
sons
25%
of
157
' 552
person
or
$7,365
by
or
of
more
the
a group of per¬
the voting stock
of
corporations and similar interests
partnerships and other prganizations.
in
i In the XT. S.
government
S.
were
primarily interested in stocks
bonds.
One hundred
and
and
sixty-
eight/ thousand
individuals
re¬
ported ownership of foreign assets
having an average value of $21,000. Estates, trusts and non-profit
organizations owned stocks and
bonds
to
much
a
greater extent
than any other class of property.
American Interests in Controlled
Enterprises Abroad
and
nificant
owned
the
were
category
of
most
sig¬
American-
abroad.
property
By the
l end of 1946, it was estimated that
these
investments
totaled
$8.5
billion.
/
In
:
1943,
more
Government and
guaranteed obliga¬
tions /comprised one-half of th0
total and amounted to $1.5 billion
and
$378
million, respectively.
Stocks and
porations
the
-
bonds of private cor¬
accounted
other
for
than 6,000 indi¬
rants and rights,
unimportant and
in
$7.4 billion,
that time, and constituted ap¬
proximately 54% of the total U. S.
privately-owned
investments in
foreign countries.
at
of
foreign stocks and
of
all
other
net in value
were
and amounted to
22%, while those
formed
areas
Those
two
bonds
denominated
in
foreign
Other
these
the
days of dollar short¬
distinction
between
two
is
types
far
from
foreign
on
dollar bonds must be paid in dol¬
lars while the service on foreign
denominated securities
paid in local currency. The
dollar
bond,
therefore,
currency
be
can
carries
an
additional
element
of
the
difficulties associated
with obtaining dollars by foreign
governments and foreign enter¬
prises to service the debt.
The
total value of
Central
foreign
our
well
bonds
and
South
the West
as
America
as
to
in
87%
branch.
the
of
Approximately
value
controlled
of
enterprises abroad was held by
2,608r U. S. corporations; the re/maining
13%
was
owned /by
American
individuals,
estates,
;
lar,
bonds
larger
and
at
$1.2
close
to
areas
par
while
those
of
averaged about 95%
..
Value
$2,153
625
Mining and Smelting.
L
Transportation.
Agriculture ;
V 8.5
1,393
1,227
18.9
654
-
Finance
374
Miscellaneous
Non-Profit
/
-503
Trade
.
29.2
-'.J.
;
"
7 157
$7,365
NOTE—For
statistical
purposes
ownership by one person
or
corporations
interests
and
similar
by
a
A
goods and merchandise
sisted of furniture, jewelry
other
in
•
99.9
,
American
years,
called
be
larger and
a
large*^
If out
loans*-'
0$
to prove
are
efficiency—that is, if
they are not only to promise im¬
mediately satisfactory returns, but
pave the way for future oppor-/
tunities—much
thought and
more
planning — more group actions
will be required.
; ; '
7 ;
U.
S.
Income
income
owned
from
not
the
increase
always
in
themselves.
<
1
our
the in¬
million.
when our assets were
estimated at.$17.2 billion, the re¬
In
turn
amounted to
in 1943.
;
..
,
same
Country '
British
look
debtor nations than to im¬
mediate
long
in
7.8
114.5
Kingdom
405
121
208
1922—
544
676
154
351
457,
922.
.
r 347
.982
1930— /
876
77.9
4.6
2,290.0
4.8
180.9
2,728.0
6.6
<
393.3
4.1
:
1931—
674
,
409
446
23.5
460
417
7
Honduras
37.0
16.9
286.2
.
—
,4
—
.
584
561
;
368
767 V
191
exclude
'
y.
Investment in
May
of
as
insurance
v
;
9.2
Average Yield
-
.j
4
/
418
:r;4
V
5
-5
Public
mx9.5':m
4.3'
"4-T.O
5.6
Utilities
--j.™
.
g
%
,y
2.3< ^
;: / 4.7
6.5
-77-
i;
other
%'
1.0
0.9
:
-
4.9
11.9
-.
1.2
9.0
3.8
4.8
6.7
f
6.6
%
7
0.3
'
3.1.;;/; 7
4
-
Republics
4
3.0
.
7,: 7.4 4:7;
4/' 5^8."-;
'
y.
,
8.4
'
'4 5.4 -4;:
3.1
"
Miscellaneous
Total
6.4/
-
American
•/••■/
;
/
■fr.
capital of U. S. citizen*
a geographic distribution
Figures also
s* Canda
Area
8.7
Petroleum
0.9
in this table.
'
4.6
Agriculture
^
Mining and Smelting
'
-/ -
Sterling
yy 4.5 47
Distribution
:
,43.6
1,630.9
VI >7
-
Manufacturing
0.6y
3.0
.3.0
American Direct Investments Abroad
//■/Areas 7/
:
;
%
6
V74
on
"All
8
.5
;
million, for which
companies.
7
32.8
•
«
include
and
1943.
fp 'TABLE
"
571
0.5
rounding./// (/
this investment is not included
!;;
9
392
^ 142 7
539
1946—
are
Income on
9
77 358
125
.7: 134 V ">
31,
figures
12
400
-
1.3-
"Value
not available.
13
134
1945—
777'
is
21;
497
;
1.0
123.5
1.0
to totals because of
residing abroad amounting to roughly $50
320
413 :
1 42
0.7
Detail will not necessarily add
111
7: 410 7:
440 7
400 7
158
;
14.8
380
.; V
♦
2.8
14.1
.444
200
.
10.3
1,885.0
V 40.0
:
/
_
64
496
556
19.3
.-■!
Spain
45
1942—
1944—
*
<0.2
«
'
4
:
10.9
v
198.7 /.
5.6
-
*
•
5.374
11.3
V- 370.5
1.3
74
,
85
133
7
Countries.
China
106
105
135
541
180
4:5.9
:
>7V -5.5'
38.1
:—
4.9
70.3
-:
Uruguay
All Other
Other
:;>• 5.1
/
112.9
6.0
8.0
/'•
8.1
m 86.9
1.8
>
3.8
-
70.5
5.7/
74,
373
311
267
577
;
10.3
527.8
>
10.3
4.4
68
,467
383
;
232.0
336.2
19,9
'
i
59
429,
474
.
/
34 6
_
...
44
7, 429
•
6.1
15.8
Chile
43
/ 454
374,
10.3
'
254
j793 7/ 288
53.4
;>"■
526.3;
3.6
38
212
7
15.9
2.1
/
109.5
..
Argentina
39
181
6027 I
1925— 7 752
41.0
5.5
_
76,
1924—
11.4
32.1
.
..
40
V
16.7
6.5
■
——---
All Other Countries
Term
6.8
33.0
1.9
*
Short-
1921—
6.7%
0.7/ V
Indies
V 24
452
i
Yield
$863.0
y/4
Mexico
S3
,
,7
•
-
$58.1
—
Panama
588
:.
•
"Value
Income
Guatemala
433
477.//v.')
4
2?;
87
,
welfare
will yield the best and
of dollars >47/47/
://>
South Africa
income
Direct
the
profit and which in the
run,
V;/77
'
West
United
1919-1939
j
to
more
most permanent returns.
industry in the
India
from
folio
private *
of the
■
-
Egypt
(In millions;of dollars)
s
believe.;
be
'
American Investments Abroad
v,
us
well
very
planning*
no
would have
which
4" 7 Sterling Area
;
Australia
was
TABLE IV
Total
in
program
The alternative to public
planning—private financial plans*
Cuba
»
piecemeal loans, at*
.private
could
MBSM(In millions
'
received.
Income
muc!*
need
47 ' 4'
,
of
many
TABLE
a
declining rate of in¬
the reduced earnings of
certain investments; declines in
primary prices; arid to the fact
that new enterprises abroad add
considerably to the amount of in¬
vested capital but do not con¬
to
be
can
Received from American Direct Investments by Areas and
Selected Countries, Value of Investments and Yield, 1943
J>ut $541 mil¬
immediately
as
wide variation
a
will
planning need not be
was
work. '
future
the
Income
to
i
4
.
was
yield in the
terest;
Year.
Republics
average yield of American invest¬
ments
abroad, by industry and
There
-
It
American
VI, prepared by the De¬
partment of Commerce, shows the
5
tribute
in
,
Instead
importarii
an
past: .in /this
but
thought.'
Africa, Brazil and
played
role
extended
Table
$544
This relative fall in income
due
but V2 of 1% in that year.
in Egypt earned
substantial.
billion,
1939,
lion.
have
in7 the
Their
Sterling Area countries and
the American Republics, al¬
investment
total
to
part
investments
the
$7
was
amounted
loans
The
with
pace
Thus, for instance, in
when
abroad
come
India, for
rate of return
though the variations between the
American-
kept
in
a
16%.
South
several
reason
no
among
needed.
in
private investments abroad
has
is
the
by
;
There
■
on
integrated
area,
The
va-
return
investment
11.4%,
and
Private
From
of
Chile 10.3% each.
In general, the
rate of return was above 6% in
con¬
left in Europe
repatriates and refugees.
19414)77 535 77 130
,
of them
why eco¬
nomic development should be thethe several exclusive
purview of governments
1943, American di¬ and international bodies. Private
rate
In
almost
Our
re¬
objects
1940—
2.1V
proved
not
many
doubtless
investments
and
7>7:4;
extremely large
an
the
investments
ever was
considerable part of
1939—
5.1
especially
maximum
yield on
Chinese direct investments, how¬
largely owed to
U. S. corporations
by debtors lo¬
cated
/in
Canada
and
Latin
1938—
control was determined on 'the basis of the
holding 25% or more of the voting stock of
partnerships and other organizations. -V /
> -*
group
of
were
1913—
Total
in
Miscellaneous
1937
8.9
3.7
279
: .4^.4.4*..,.;
—
and
in
instance, earned
1934..; 436 7. 215
521 J
188
568
V176
16.7
There is
.
Europe.
1935—,
1930—
6.8
::
invest¬
poor
role in world affairs.
selected
7;
coming
will
to play
upon
de¬
American
in
countries, 1943.
countries.
1932—
Percentage
from
the
In
finance
1945, income
direct 7 investments
rect
1933—
'
(In millions of dollars)
Utilities and
estates
located principally
were
1929—V
1
.
received
ae
All of the direct
have
profitable, although
V, prepared by the De¬
income
trusts abroad totaled $210 million
1928..
American-Owned Controlling Interests in Enterprises in Foreign
Countries (Type of Business as of May 31, 1943)
;
Public
in
1927^/821 7V: 324
TABLE II
.
Table
that
its
far
as
have.
partment of Commerce, shows the
at
and
1926..
These foreign dollar bonds
investments
in¬
investments
overseas
Some
spotty.
in dollar bonds.
de¬
of the
to
fulfilling
nation
ments have been made,
In 1946, however, this in¬
increased, principally for
direct and portfolio investments.
largest
1923—
The Canadian issues; were sold
our
investments
lion.
v
rather
come
located
Interest
Africa $1 billion, Asia
$23 million and Oceania $34 mil¬
at
Between 1940 and
million.
million,
: •
started
show
,
been
•
1920—
'
years
has
creditor
of
private investment is concerned.
The results, however, have been
clined.
valued
Port-
considerably
.were
depres¬
investment
figures
America
role
in 1934, largely as a result
improved economic conditions.
on
.
The Future
These
crease
of
S.
The
estate
The
early
they
ratiori
Our holdings, of
stood
degression,
$735 mil¬
U.
the
rathe*
a
invest¬
the
direct
on
in
currency were very small in value
and amounted in 1943 to but
$364
while those of Europe totaled $79
of par.
Petroleum
the
and
544
dred/corporate groups, composed
Manufacturing
million
1919—
other
■
in
real
was
billion
trusts and partnerships. One hun¬
t
million.
princi¬
pally in Europe. Bullion holdings
in foreign countries and
foreign
Canadian arid Newfoundland dol¬
$184 million..
clined
areas."
years
abroad.
of
in
on the hand, made
showing.
1
poor
of the
growing pros¬
types of U. S. in¬
all
years
returns
Foreign Assets
Owned
Indies, amounted
enterprises, both in number and
the
$142
were
in
Republics,
smallest
tries,
thirties are
likewise reflected in these figures,
especially in portfolio and shortterm investments.
Although the
All of the other foreign assets
owned in the U. S. amounted to
1919,
"foreign dollar bonds."
In
sion
West In¬
Investments Abroad
currency; second, bonds payable
in U. S. dollars, generally called
1943.
was
Europe
11.9%, and
public utilities*
Mining
and smelting was a good income
producer in all areas as was alsfr
petroleum.
Miscellaneous indus¬
the
located in "other
excluded
direct
on
boom
areas.
The highest
mining and smelting in th&
American
show the
vestments
was
secur¬
generally divided -into
main classes; first, stocks and
amounted
to $1.6
controlling interests in
enterprises in foreign countries by billion in1943. Those of the
type of business, as of May 31, American
Republics,
including
cipal form of organization utilized
of
The
perity
lion, Africa $32 million, Asia $74
million, Oceania $8.4 million.
are
dollar
as
accounted for
return
twenties
American
South America and the
rela¬
a
American-owned foreign
ities
Table II shows the Ameri¬
value, were organized abroad
corporations.
The other prin¬
Other
the
in
was
busi¬
the
depression of 1921-22 is re¬
principally in the decline
ments.
Republics, including Central and
tively small part of the total.
can-owned
two-thirds of these
billion.
ceivable
types
volume in
large
securities
pean
in
$2.1 billion.
claims. The accounts and notes
at
risk;
More than
to
the
American Republics. In May, 1943
lion.
$1.1
total
foreign
holding in Europe totaled
$2 billion, Canada $1.7 billion and
the American Republics $1.6 bil¬
amounted
America.
Most of these investments were
located in Europe, Canada and the
our
1943
1943 and accounted for 64% of the
value
The
their obligations.
holdings of securities
denominated in foreign currency
in
of
been
has
debt
flected
on
relatively
but $14 million.
Canadian securities of all
held
owned
Our total
valued
academic. The interest
of
defaulted
various
quite sensi¬
from these figures.
satisfactory
,
after
were
million, respectively. Other
types of holdings, such as war¬
were
invest¬
were
$432
had
value
of
half—$1.4 billion and
ages,
these
book
with
is
movements
to
in¬
American
on
abroad
ness cycle as Table IV, prepared
by the Department of Commerce,
shows. Income from government-
assets, account¬
ing for $1.1 billion in 1943, were
composed
primarily ; of goods,
merchandise, notes and accounts
receivable, together with other
viduals, corporations and other
organizations in the U. S. had
controlling interests in 15,210 for¬
eign enterprises. These holdings
a
most
bonds owned in the U. S. Euro¬
Investments in American con¬
trolled foreign enterprises abroad
are
often called
"direct invest¬
ments"
$3.7 billion.
out¬
bonds,
countries1 which bor¬
World War I later
many
$846
foreign assets or about two-thirds
ol the total owned-in this coun¬
to
the
were owned in the U. S.
experience
type
icans owned securities amounting
U.
of
dollar
$2.5 billion in 1943.
Foreign Securities Owned
in the U. S. owned $8.9 billion of
the
Our
owner¬
By the end of May, 1943 Amer¬
in
40%
foreign
tive
Be¬
years.
'
control
purposes
basis of
the
on
and
25
31
(2215)'
return
vestments
ments in foreign dollar bonds has
not
been i entirely
dies,
profit-making organizations
; Individuals
35
standing
however,
at
$5,096
2,452
Partnership
was
".Value
.
10,536
Branch
Twelve thousand corporations and
try;/ The average value of prop¬
erty owned by corporations was
$740,000. - : .
-v
tween
last
The
issue,
abroad,
represented /by /Canadian
and
Newfoundland securities valued
(Values in millions of dollars)
Corporation -JS
the
CHRONICLE
an
The largest share of this total
May 31, 1943
Number
FINANCIAL
generally part of
rowed
American Controlled
&
sold both in the U. S. and
since
TABLE III
.
other
were
during
interest in the voting stock.
Table
III shows the ownership of these
direct investments by type of or¬
however, approximately 30% re¬
ported less than $10,000 worth of
foreign property. ^
/
" "1.
Individuals"
abroad.
Our control of these enterprises
was
tions owned
trusts.
owned
Securities
of
were
enterprises,
of all interests in controlled
importance.
May 31, 1943 more than
215,000
American
individuals,
corporations and other organiza¬
ers
COMMERCIAL
>
<
2.8
-
0.2,
0.7
-
12.9
1.4
4.8
6.6
1.0
that.
present ' conditions
policies have helped
to push up profits. Likewise, busi¬
nessmen criticize union wage pol¬
icies without realizing that these
wage policies under present con¬
ditions ; have
helped
industry
i
(Continued from page 3)
under
union
Wages, Prices and Savings
wage
breaks up the period into parts,
between wages
effect of changes in the supply the relationship
price of labor upon commodity and prices is not uniform—part of make more money,
prices must not be expected to be the time wages were rising more
(4) Another feature of the last
the same in these three cases. One than prices and part of the time two and a half
years has been the
were
rising faster than contrast between the real and the
possibility is that wages do not prices
increase at all in .response to a wages.3
V
apparent
bargaining power of
There are four principal obser¬
rise
in the
demand for labor.
trade 'unions, The period has been
Whether the resulting change in vations to be made about wages
one of full employment and acute
the wage-price relationship pro¬ and prices during the last two and
labor
shortages;
hence,
trade
duces a further rise in expendi¬ a half years.
unions have apparently been in
tures and in prices depends upon
(1) The wage increases of the a strong bargaining position. They
whether the original rise in prices period have affected prices mainly could tie
up plants effectively and
relative to wages increases the as a source of demand rather than
they could win strikes. And yet
investment
opportunities associ¬ as costs. This is true despite the wages have failed to keep pace
ated with different levels of na¬ fact that the break-even point in with
prices. The fact that em¬
faster rate or a slower rate.t
The
.
tional
income
it
than
more
in¬
the
propensity to save—
in other words, whether it pro¬
duces a greater shift in the in¬
creases
function
vestment
than
the
in
function.
If it increases
opportunities
more
than the propensity to save, the
rise in expenditures and prices
will continue. Eventually the rise
saving
investment
profits per dollar of sales, and
hence total profits, will cause in¬
vestment-seeking
funds
to
in¬
crease
as fast as investment op¬
in
At that point the rise
in prices relative to wages will
cease to generate further increases
portunities.
in prices.
Another
industries is far higher than
many
the
before
increases
wage
prices
is
costs
a
close
wage
tries
as
more
that
Evidence
war.
affected
demand than as
have
found in the absence of
relationship between the
increases in different indus¬
and the advances in the
prices of their products. For ex¬
ample, the prices of agricultural
products,
which
represent less
wage cost than most other prices,
rose quite as much as other prices.
(2)
than half of the in¬
Less
crease
in the demand for consumer
during the last two years
higher wages
in private industry. For example,
between 1945 and 1947, wage and
goods
has been caused by
that
wages may rise instantly and at
salary payments in private indus¬
the
same
rate
as
prices.
This
try (less contributions for social
would prevent a rise in employ¬
security) rose by about $14.8 bil¬
ment
but
would
preserve
the
lion, and personal consumption
relationships
which
wage-price
expenditures increased by $20.7
permitted the
original rise in billion. Abput $5.3 billipn of the
prices;
hence
the
advance
in increase in payrolls in private in¬
spending, prices and wages will dustries was the result of the
continue until halted by the lim¬
growth of the labor force, leaving
ited supply of money and the rise
about $9.5 billion, or 45%, attrib¬
in interest rates or by extraneous utable to
higher wages. The fact
events.
that higher wages account for less
possibility ,'v is
Between these two extremes are
various other
possibilities—wages
advancing (1) with a lag of vary¬
ing amounts and (2) at various
rates.
If wages rise only slightly
less rapidly than prices, the ad¬
vance
in prices may have to go
quite far
before the
widening
margin between costs and prices
eventually checks the
rise by
causing investment-seeking funds
to grow as fast as investment op¬
portunities. A lag of wages ber
hind prices may be expected to
produce an expansion of credit—
to follow each round
ers
with
increases
a
new
of
than they seemed to possess.
The
large
increase
in
profits
during the last year is being used
by unions as a basis for demand¬
of wage in¬
that em¬
ployers can afford to raise wages
without raising prices. The union
demand and supporting argument
raise several important questions
such as: (1) are profits excessive;
(2) would basing wage increases
ing
third round
a
Unions
creases.
argue
in different industries upon prof¬
its be in the public interest; and
(3)
unions under present con¬
raise
the
general wage
level without producing offsetting
can
ditions
increases in prices?
to
prices and expen¬
ditures.
^Remarkable feature of
(3)
cent wage movements is that
have
indirectly
about
they
to
bring
in the profits
rise
helped
re¬
a
interested
known about these
economics
to offer
about
wage
will
be
able
in
what
rates
the
inflationary
changes, r
<„
>
effects
-
of
'
III
What
about
be related to the fact that
between 1940 and 1945 wages rose
may
more
rapidly than prices. At any
between 1945 and 1947, for
example,
hourlyf earnings
in
manufacturing increased by less
than 19%, whereas the consumer
price index increased by over 23%
rate,
and the wholesale
price level of
finished goods by almost 43 %. Per¬
haps I should add that, if one
,11
omit
fourth
a
case-r-the
supply
of labor falling while the demand
is
rising. As I have indicated
above, this relationship seems to
prevail
price
only
Of
labor
for
a
brief
recovery
2 A
faster
period in the beginning
from depression.
rise
of
wages
would
dis¬
the expansion of credit by im¬
the credit standing of enter¬
prises;
a
slower rise ip : wages would
discourage credit expansipn by making
enterprises better able to plow back
earnings or to obtain funds by the sale
courage
pairing
of securities
to
by
the
amount
of
the
have
of
to
net
reduce
individuals.
the
present
than
10%
of
or
methods of
industries, however,
is
the
important
for
Since- the
the
consumer
(3) Can
conditions
and to what extent
lower prices.
I
of
unions under present
raise wages without
goods
than
more
'
What about the immediate out¬
danger
prices
of a disorderly rise in
is likely to become quite
The reason
acute.
is three-fold.
first
place, bad relations
with Russia and the demands of
In
the
,
prpduce a drop in in vestment ex¬ is already producing at capacity
penditures; Consequently, a gen¬ arid when the backlog of demand
eral advance in wages Is almost
which accumulated' during ;the
certain to increase the profits of war has been far from satisfied.
the
consumer goods
industries. In the third place, the country <la
Expenditures on consumer' goods tired of direct controls of ma¬
will rise by the total amount of
terials, wages, and prices and is
wage increases less the increased
not prepared to support them. The
tax payments and the increased
possible indirect controls are weak
savings of wage-earners, but the
net
in
most
rise
by
more
than
the
public is not even pre¬
the
and
billion
capital goods.
tions.
difficulty arises from
So long as this
a
on
armaments is to ask
what;*
Fortunately, there are sev¬
important favorable factors.
is that the capacity of the
situation economy
than a
tendency for each
So long as this is
will
Eventually, of course, prices
become so high relative to
to
year
business
expenditures
output per manhour. Unfortunately, only limited
progress has been made in reduc¬
ing some of the most serious bot¬
tlenecks, such as steel capacity. It
looks, however, as if the country
were able to produce about 4%
These
ards.
large
should help raise
more steel ingots than a year ago.
holdings of cash and bank de¬
A second favorable factor is the
posits that individuals will be
unwilling to make each round of rise in productive capacity abroad.
Each month sees imports into the
expenditures a little higher than
their previous incomes When this United States larger than imports
occurs/ trade unions will be able of the same month last year. Un¬
to put
faster than the
may do
so, of course, at the cost of pro¬
ducing some unemployment.
cost of
national
industries
up -wages
living—but they
V
enterprises to maintain their
expenditures
contemplated
less
Marshall Plan are raised,
excess
of exports over im¬
under the
this
ports will be $2 billion or $3 bil¬
lion less than last year.
A third
favorable factor is that some prog¬
has been made
Some time within the next few
ress
there may bje a sharp rise
in the propensity to save. This in¬
crease would be a natural result of
tor is
during the last
two
catching up on the needs for con¬
sumer
goods which accumulated
during the war and early postWar years. After people haye neg¬
ital.
years
years in meeting- the huge
demand that accumulated during
favorable fac¬
rate: of saving,
though apparently still declining,
has become so low- that much ad¬
ditional drop is unlikely. A fifth
lected for several years to pro¬ favorable factor is that the third
vide for their future security, they round of wage increases of; this
may suddenly become quite in¬
year seems to be running slightly
terested in increasing their sav¬ .smaller than the second round ot
last yeaiv This, however, may not
ings. About the same time that
to offset wage increases
particularly important in the
in their wage bills. steel
industry, which needs to
The greater profits of
agriculture make large new capital invest¬
and the consumer goods industries ments and which has
only limited
have
increased
the
demand
of ability to attract capital from
the individuals raise. their
disposition
these industries for equipment
and outside. ;
to save, the demand by business
plant.. In this way wage advances
(2) Basing wage Increases in for
investment-seeking funds may
have indirectly raised the demand different industries
upon the in¬
drop, because enterprises will have
for capital goods and the profits crease in
profits in those indus¬
industries advanced by
more
producing offsetting increases in the nations of western Europe
prices?
Probably not.
If wage for military assurances are about
increases occurred only more or
to
compel tne
United States to
less at the expense of other in¬ increase
substantially its expendi¬
comes,
unions could, of course, tures on armaments;It is impos¬
raise
wages
more
than prices. sible to forecast the size of the
Present conditions, however, are
increase, but it is likely: to be as
ynusuab Industry has huge ac¬ much as $$ billion, a year and
cumulated needs for plant and
possibly much larger. In the sec¬
equipment. Hence a rise in wages ond
place, the increase in expen¬
under present conditions will not*
ditures comes when the economy
es.^
As a result,
two-thirds of
of payrolls in
industry to ex¬
the capital goods industries ex¬ pand
its capital in 1947 came
ceeded the higher taxes and sav¬ from
plowed-back earnings. Addiings associated with the wage ad¬ ability to plow back earnings by
vances
in all industries, the de-. raising prices
(if demand permits)
mand for the products of
agricul¬ to offset wage increases. Price ad¬
ture- and
form
the
their incomes.
the funds used by
the
shifts
saving function.
gains of technological progress are look for wages and prices? Some
distributed in the form of higher time within the next year the
true, employees cannot expect to
catch up with the rising cost of
living by obtaining wage increas¬
resort to inflationary
financing it. Hence it
by only
the amount of the wage increases
given to their • own employees.
growth
the
VI
the
probably accentuate the tendency
for individuals to spend more than
rate
product),
rose
extent
function
vestment
than
produce >i& greater
ago.
During 1947
spent $15.7: billion on
round of expenditures to be higher
new plant arid equipment-^ fair¬
than the previous one.
Under
present conditions wage increases ly large amount by prewar stand¬
domestic capital
formation, which is not high (less
The
what
to
exists there is
private
payrolls in all industries
(including-the capital goods in4
dustries) less the additional taxes
savings of the workers.
determines
cash.
of in¬
in
product high and limit sales. The
response of wages to increases in
profits in expanding industries
eral
wishes to know what return pres¬
ent prices and costs make possible
wage costs of the consumer goods
wage-price rela¬
tionships during the last two and
a half years since V-J
Day?- Dur¬
ing most of this period, prices
Were rising moderately faster than
wages.
The lag of wages behind
prices between 1945
and - 1947
to*
rise
earnings
Another
-
advanced
back tive tO'prices extinguishes all in-:;
would be limited and vestment opportunities before it
partly, because the advance in stops all saving. Hence, as costs
costs would keepnhe price of the approach, close to prices, the in¬
outside capital and to p|ow
the fact that prices are still low
One
in relation to bank deposits and]
present
and
limited information
very
were
dustries
profits yield on plant and equip¬
ment bought at prewar prices. He
•
matters,
expanding industry. If wages contraction (as they did in the
raised to absorb the entire building industry and the print¬
increase in profits, however, ex¬ ing .industry for a year or two
pansion of the industry would be after the .break in 1929), the
checked, partly because the abil¬ downward spiral would be made
ity of the industry botjv to attract more severe. A rise in wages rela¬
the
would■ have happened in 19.47 -if-?
increased taxesand
Increased' the: Federal \ Government- had
sjavlngs of all wage-earners, the
stepped up its expenditures by $5
profits of the consumer ^ods in¬
billion. The problem of preventing
dustries will rise:' The advance
a
disorderly rise in wages and
in the
profits of the consumer
prices, however, must- be consid¬
goods industries will stimulate the
ered in terms Ofi present eondidemand for
on new end uprto-date plant conr
dustry. They have done this by structed at present prices. Meas¬
bpportunities to grow faster than
causing the volume of spending ured by this test present profits
savings and because it improves
to
increase more than payrolls. in most industries are too small—
the credit standing of enterprises.
The
growth in the volume of they do not permit enterprises to
Some particular lag of wages ber
venture
capital.
As.
a
hind prices will be most inflation¬ spending is a result of the fact attract
that
under
present
conditions result, two-thirds of the funds
ary of all because it will produce
used by industry to expand its
the most rapid expansion of credit wage advances have not dimin¬
ished employment in the capital capital
in
1947.
came
from
hnd hence the most rapid rise in
goods industries. Hence they have plowed-back earnings. Additional
prices.2
The rate of credit in¬
increased the profits of agricul¬ money was obtained by borrow¬
crease
which produces the most
ture and of the consumer goods ing from commercial banks.
If
rapid rise in prices will not nec¬
industries.
The demand for the the wage increases of 1948 en¬
essarily produce the greatest rise,
croach upon profits,
products of these industries is
industry will
Until more is
both because it causes investment
pro¬
(1) Profits in a few industries costs,,of. the consumer:goods in¬ pared ito give strong support to
dustries will adyance only J?y
have been very large but profits
in indostr^,,as a whole fl^ye not tbeir re wh Sshafe~bf4the^ general
^ay^of„visctalizing the $fbeen excessive. The test of the wage increase. Sq long &s wage fect of an
'additional_ putlay of $5
payments in the capital goods in¬
adequacy of profits must always
be the practical test of the mar¬
tween 1945 and 1947 indicates the ket: are profits large enough to
importance of other inflationary permit industry to attract ade¬
influences. One of these other in¬ quate amounts of equity capital?
fluences was the tendency of peo¬ In attracting equity capital, in¬
ple to save only a declining pro¬ ventory profits do not count—the
portion of their rising incomes; prospective investor wishes to
another was that holdings of cash
know what operating profits the
and demand deposits were high enterprise can earn.
Nor is he
relation
corporations could
industry
shall not discuss this issue here.
price increases; hence, union real¬
ly had much less bargaining power
funds by
and need to expand duce a substantial contraction in
the capacity of the industry. Some output and employment. If trade
increase in wages may be required unions were to push up wage rates
of the
to attract additional workers into during the early period
the
in
of wage
round
for the product of
high demand
money wages
ployment was full and that there
was a hugh backlog of unsatisfied
demand made it easy for employ¬
than half of the rise in prices be¬
in
Thursday, May 20, 1948
COMMERCIAL & FINANCIAL CHRONICLE
THE
(2216)
32
vances
are
increase
the war.
A fourth
that i the
continue to be. true. ".
,
of the
Some
which
I
have
-
.
.
fayorable factors
mentioned
are
of
importance. For example,
met a good part of their accumu¬
although backlogs of demand have
of the
capital goods industries. tries would not necessarily be in
lated needs. The increased pro¬ been
reduced, the accumulated
Trade unions criticize the recent the
public interest. A large rise
pensity of individuals to save will needs of individuals and business
rise in profits without
realizing in profits ordinarily Indicates a be offset in large part by a drop concerns are enormous. Likewise,
3 By six months'
periods the percentage rise in hourly earnings of factory in corporate saving which is now there is little comfort in the fact
workers and prices was as follows:
very large, but the offset may not that the third round of wage in¬
Hourly earn- ";
\ :
All-non-farm and
All
s.
be complete.
"
creases
may be slightly smaller
Consumer
ings of fac
Retail
.
Jan.-June
June-Dec.
...
.
tory workers
1946:
8.0
1946__11I2
5.9
Dec.
1946-June
1947_
6.8
June
1947-Dec.
1947..
4.2
prices
prices
npn-food whole-'' wholesale
sale
prices"-;.;;-i:>..Sficicei
-
2.6
32
4.8
15.0
-
limited
16.9
*2.5
3.5
6.3
5.4
-*•
i8.i
r,
V ;
*
5.4 •*
10.1
•
10.3
:
;V;A
substantial rise in the pro¬
pensity of individuals to save co¬
inciding with a drop in the de¬
mand
for i; investment-seeking
than the
factors
second. The unfavorable
are
formidable. To
begin
with, the economy is already pro-
.
Volume 167
Number 4700
parity " can
be "enlarged
only
slowly. For example, the civilian
labor force in
February 1948 was
about 1.6 million
larger than a
year
ago.
This
,
that
means
prospect of enlarging
the
production
by inducing
more people to enter
the labor force is much less
favor¬
able than a year
ago.
In the sec¬
ond place, the
economy has lost a
control which
may be much need¬
ed
this
year—namely,
•
the
over
of
use
control
consumer
credit.
Credit usrif to "financh
consurpption is extremely
inflationary. "As
the
output
other
of
automobiles
durable
consumer
and
goods
rises, this use of credit is
likely to
increase. In the third place/the
cash budget
surplus, on the basis
of
y the President's
budget pro¬
posals, would be somewhat small¬
than
er
last year—perhaps about
$6 billion in comparison with
$7.8
billion last year. This estimate as¬
that
sumes
cash
receipts are $3
billion above the President's
esti¬
mates and it takes account of
the;
recent tax reduction and
of the
proposed
Federal
expenditures
Marshall Plan. It does
under the
not/
however, allow
in
crease
military
for
in¬
any
expenditures
beyond those recommended
by the
President. Hence
rise of $5 bil-
a
Iioti
military
expenditures
would almost
wipe out tho-cash
sufplus.
* \
'
What should
be, frank.
be
A
started
program,
ployment,
done?
large
from
really
Let
us
rearmament
full
em¬
requires
many
Can the automo¬
direct .controls.bile
industry, for example, "expect
,make cars without limit when
country is acutely short of
steel and gasoline?.
Honesty, howto
the
ever
the
compels
people
to concede that
one
of
the
United States
not prepared for the
reimpo-
are
sition
of
country
ment
direct
controls.
pursues,
large
a
for
program
If
the
rearma¬
period
any
of
time, direct controls will undoubt¬
edly be necessary. It would be a
mistake, however, to impose them
before the need has become
clear.
For the time
being, therefore, the
country must do the
with
indirect controls and let
perience
slowly
necessity/ foi*
ex¬
demonstrate
additional
-
What indirect
■
best it can
controls
the
steps*
are
avail-
able?
(1) Increase production as rap¬
as possible; The steel indus-?
idly
try/added nearly 3
million tons
of,ingot capacity during 1948.
also
reduced
adding
1.7
furnace
tons
two
bottlenecks
million
tons
of
capacity and 2.2
It
by
blast
million
of
coke
capacity.
Even
larger increases in blast furnace
and
coke "
capacity
oven,
are
planned for 1948, but additions to
ingot capacity will be only about
million
one
tons.
Industrial
pro¬
duction as a whole may average
between 7% and 8% above 1947.
(2) Arrange to obtain consider¬
ably more steel output from the
Ruhr.
Present plans contemplate
restoring production to only about
two-thirds of prewar levels.
Out¬
put should be restored to prewar
levels and ' Ruhr steel should be
used
to
meet
help
the
needs
of
the United States.
Not only could
products from the
Ruhr help rearm the United States
steel
but
and
they
trade
and
steel
would
deficit
reduce
with
Europe's
this
country
help to cut ther cost of the
Marshall Plan. Immediate restor¬
ation of Ruhr output to prewar
levels is not practicable but with¬
in' two
years/Ruhr production
would make
bution
to
a
substantial contri¬
meeting
the
needs
of
the United States.
^<3): Restrict the
use
of infla*
tionary methods of financing
duction
and
consumption.
output does not
it
cure
pro¬
More
inflation
if
is' financed
by
inflationary
methods. Particularly inflationary,
of course, is the use of credit' in
fihancihg consumption. One
of the
immediate steps called for is
toration. of
the
control
Federal Reserve Banks
of
over
credit.
res¬
:
the
con¬
Important also is
control of lending for
housing construction. Finally, the
expansion hf private bank credit
sumer
tighter
THE
needs to
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2217)
33
'
be
vigorously combatted
by Federal Reserve and Treasury
policies so long as industry is op¬
erating at capacity. Every specific
/ The second part of the savings / The difference between the rise' free trade unionism.
In France,
permission for in money
wages
and the
rise the government is weak and fails
a substantial
in output per man-hour will have to command
the support of a large
rebate (say one-third) in the in¬ to be
compensated by an advance part of labor.
Hence the trade
suggestion meets vigorous objec¬ come tax on that part of their in¬ in prices.) For
example, if output unions have been unwilling to ac¬
tion from within the Reserve Sys¬ comes which
they save. Such an rises by 3% a year and money cept, the policies of the govern¬
tem. Consequently, I think that arrangement is
particularly im¬ wages by 5% a year, prices will ment and have thus far been fairly
the time has come for the public portant because of the
adverse need to rise by about 2% a year. successful in
imposing their will
simply to
make
plain
that • it effect of the stiff progressive in¬ Otherwise, there will be a creep¬ on the
government.
; i
come
tax upon savings and
expects private bank credit to be
increase
in
upon ing
unemployment
The United States is not yet
prevented from expanding faster the willingness of investors
to until the
unions are no longer
prepared to recognize that there
than production and to let the Re-r take chances. Under
present con¬ able to raise wages faster than the
may
be important conflicts be¬
serve
authorities decide how
/to ditions, however, an/unqualified engineers and managers can raise tween national
/ policy
making
carry out this mandate. The pub¬ reduction in the income tax would output.
Perhaps the necessary rise and
free
collective
bargaining.
lic should make plain also that it be inflationary because the ac¬ in
prices will occur without stim¬ And
yet the United States is grad¬
expects other kinds of inflationary cumulated demand for consumer ulation by public
policy,; If it ually going through
experiences
operations, such as sales of gov goods is still enormous,
does not, the government will be
which raise again and again the
ernment bonds by insurance com¬
(6) Adopt a moderate forced compelled either to check the rise
same question/to what extent can
panies and others to the Reserve saving levy./ This may not be in
money wages or to encourage a
the country permit the structure
Banks, to be offset.'
necessary', until
next
fall—the rise in prices. The first
policy of of wages and the movement of
(4) Make every effort to keep time will be determined by the the
government, one may safely wages to be set by the method
rate
at which armament orders
wage increases down to moderate
assert, would be to encourage an of thousands of
bargains between
amounts.
Many
union
leaders are placed (not the rate at which advance in
prices.
unions and employers?
Does this
privately admit / that 1 wage in¬ the goods are paid for). A forced
;A rise in prices of 2% a year method of wage-fixing take suf¬
creases
under present conditions saving levy is preferable to in¬
seems small, but it, would make a
ficient account of national inter¬
taxes
on
merely help to maintain inflation¬ creased
corporations.
profund difference in the course ests so that the community can
Since
ary pressures. Since Congress has
corporations
are
heavily of a
generation.
Pensions or life tolerate it only within the frame¬
just made an inflationary reduc¬ dependent upon plowed-back
insurance, which men started to work of a national policy?
tion in taxes, it will not be easy to earnings for financing the
pur¬
buy on entering the labor force at
Recent experience with the ef¬
insist that unions act in a far- chase of capital goods,
heavier about
the
age
of
twenty
or
fect of union wage policies on
sighted and statesmanlike manner. corporation taxes would aggravate
twenty-five would have lost more prices illustrates the issue.
If unions push up
the difficulties of
The
wages, is it prac¬
controlling the than half
of
their
purchasing matter will be even plainer after
ticable to insist that private bank expansion of bank credit.
Since
15 or 20 years of collective bar¬
credit shall not be expanded faster income taxes, even after the re¬ power by the time the workers
had reached the age of sixty-five
than production? The answer to cent reduction, are still
gaining/Tens of millions of peo¬
high, a or
seventy. And with prices ris¬ ple are likely then to see rising
this question depends upon what forced saving levy is preferable
is done to encourage personal and to higher income tax rates. The ing 2% or 3% a year, who would prices slowly reducing the value
wish to own government bonds of their
forced saving levy should take the
savings, pensions, bonds,
corporate saving, - — '
' •_, / /
yielding 2*/2%? All fixed income life
insurance,
and
mortgages.
(5) Develop a well-planned pro¬ form of non-negotiable savings
securities would have to sell at
Hence, the community may en¬
gram to increase the volume of bonds running for
three years.
yields which discounted; the ex¬ deavor to make wages the subject
Since the levy is a forced
savings in the community.
The
one, the
pected drop in the purchasing of a national policy. The stronger
need for more saving has /been interest yield should be
high, say
power
of
the
principal.
What unions will resist this develop^
6 % and tax* exempt.
obvious for some time.
Industry
would happen to life insurance or ment and
is grievously short of plant and
they will be aided by
; (7)
Adopt the policy that gov¬
pensions is difficult to say. Cer¬ the tradition of the labor move¬
equipment. Nevertheless, the ernment- deficits which may re¬
ment which has always strongly
large increase in incomes which sult from rearmament and aid to tainly it is doubtful whether pri¬
vate companies could offer the
opposed government interference
occurred during the last year has Europe shall be financed
by sales
kind of life insurance and pen¬ with union activities. The
been
strong¬
accompanied
by
a
drop of government securities to nonsions which would be attractive er unions will
rather than a rise in saving. The bank
probably be as¬
buyers.
This policy also
in an economy of steadily rising
sisted in
their
opposition by a
stiff progressive income tax has requires that the government give
prices. Since the demand for life considerable part of the business
gradually reduced the willingness relief in the form of a tax rebate
insurance and pensions is strong, community which would prefer to
and ability Of individuals to save on part of incomes which are saved,
perhaps the government would make concessions to unions rather
especially the individuals who
VII
have to assume the responsibility
than be regulated by the govern¬
can best afford
to take chances;
What about the long-run move¬ of
providing life insurance and ment.
As a result of the low rate of sav¬
ments of wages and prices and the
pensions.
Two /conditions
will
increase
ing about two-thirds of the new
relationship between them?
The
VIII
the
probability that a national
money which went into corporate rise of
collective bargaining and
i n d u s t r y in 1947 came from
When I say that prices would wage policy will be developed to
of powerful trade unions
may be
need to rise fast enough to offset guide the operation of collective
plowed-back earnings. Additional
expected to produce/a' slow- up¬ the
amounts were obtained by bor¬
tendency for money wages, to bargaining. One is the possibility
ward
movement
of prices.*'The
rise faster than output per man- that a national wage policy will
rowing from the banks. Effective
consequences
of this have been
checks on the expansion of pri¬
hour, I am asserting that the be
supported
by
the
wehker
quite generally overlooked but unions are
vate bank credit can hardly be
likely to become the unions. When collective bargain¬
they will be tremendous.
real makers of credit policy and
maintained unless there is a sub¬
ing is more or less universal, the
During the last hundred years
stantial rise in savings.
possibly, in large part, of fiscal real bargains are not between
the movement of prices has been
The' government
policy as well.
No government unions on the one hand and em¬
might well more or less horizontal.
The index
will assume the responsibility of ployers on the other, but between
adopt as a. target raising personal
of wholesale prices rose
slightly, creating unemployment in order unions in the various industries
savings to 10% of disposable in¬ but the
real price level undoubt¬
io limit the bargaining power of and/occupations. Naturally, the
come.
This was the rate which
edly fell by a moderate amount.4 unions.
That
raises
this
basic stronger unions are able to raise
prevailed in the second quarter
The
long-run movement of the question: will the
of 1946;
In the year 1941,. per¬
community per¬ their standard of living at the
price of labor, as measured by mit the movement of
sonal savings were lO.7% of dis¬
wages and expense of the weaker unions/ A
hourly earnings, has been sharply
prices to be determined by tens national wage policy would tend
posable income. In Jhe last quar¬
upward, In 1940, the hourly earn-? of thousands of bargains between to protect the weaker unions from
ter
of
1947, however, personal
ings of non-agricultural workers unions and
employers or will it the stronger. The second condi¬
savings were only 6% of dispos¬
in the United States were about
able income. A rise to 10 % wpuld
adopt a national wage policy and tion that will increase the prob¬
eight times as large as in ,1840. require that collective
bargains ability of a national wage policy
increase the annual rate of saving
This rapid rise in hourly earnings
is the fact that over three out o£
conform to it?
by about $7 billion. '
occurred during a period when
four
workers
are
Efforts to in c r ease savings
employees.
This question is faced today in
unions, on the whole, were small
should take two principal forms.
one
form
or
other
by Britain, Hence, the government will be
and weak.
Today, two-thirds of
One is larger sales of government
Sweden,
Norway,
France,
and increasingly sympathetic to labor,
the/workers
in
manufacturing, other countries where collective and the influence of labor in poli¬
savings bonds. The record of sav¬
four-fifths in transporation, fourtics will steadily increase. Expe¬
ings bond sales during the past
bargaining has become fairly uni¬
fifths in. construction, and fourrience
shows
that
two years has been surprisingly
governments
versal and where the wage pol¬
fifths in mining
are
organized.
which command the confidence of
good, / Nevertheless,
a
difficult
icies
of
unions
threaten
to
The rise of unions has created a
labor are most effective in regu¬
problem confronts the Treasury
defeat the efforts of the
gov¬
new
type of economy—an econ¬
because persons who bought gov¬
lating
the
activities
of
trade
ernment
to
control
prices.
In
ernment bonds during the war, omy in which the supply price of these
unions.'/;//// //;//:■
//■// /. ■
four
countries
the
con¬
labor responds far more rapidly
and even as late as the early part
Great changes in the distribu¬
flict between free trade unionism
than ever before to increases in
of 1946, have suffered a heavy loss
and national planning has become tion of power cannot occur with¬
the
demand for
labor
and
in
in the purchasing power of their
plain.
In
Norway
free
trade out changing people's ideas about
principal.
People may properly which, indeed, the supply price of unionism, has been rather easily rights, duties and public policies.
labor may rise quite independent¬
be asked to buy government sav¬
reconciled with national policy¬ Certainly the spread of collective
ings bonds as a patriotic duty— ly of the demand for labor.
making.
Two
conditions
have bargaining and the shift of power
Experience indicates that the
on the ground that
they are mak¬
helped bring about this result: between ; employers and unions
engineers and managers are not
ing a much smaller sacrifice than
(1) the Labor Party is in power will bring about changes in the
likely to raise) output per manthe
thousands
of
young
men
and (2) the trade union move¬ ideas of the community about the
who are required in a period of hour faster: than 3 or 4% a year. ment has a
strong tradition of rights and duties of employers and
unions and the way in which col¬
emergency to serve in the armed People who do not expect the centralization. For these reasons
forces.
After
the
government's long-term movement of prices to the unions do not feel that they lective bargaining should be con¬
demonstrated incapacity to control be upward aire compelled to argue
ducted/ Hence, the very spread
were giving up much when they
that unions will be content not to
collective
prices,
however,
the
Treasury
bargaining means
subordinated their wage policies of
increase
wages
faster; than the to a national
cannot
properly
represent
the
plan.5/, In England, that the, country stands on.the
engineers and managers advance
present type of government sav¬
threshold of major developments
the problem has been more diffi¬
ings bonds as a suitable invest¬ output per man-hour. That, in my cult. Although the Labor Party is in its economic/ institutions and
is an unrealistic as¬ in
ment
for persons who need to judgment,
public policies. One cannot pre^power, the trade union move¬
sumption.
Unions are far more
conserve the purchasing power of
precision what these
ment
has
strong
traditions of diet with
likely to force up wages faster
their
principal.
The
time
has
autonomy for the individual changes will be, but one is safe in
probably come for the Treasury than the engineers and managers unions.
Nevertheless, the neces¬ asserting that thinking about in/
raise output per man-hour—per¬
to offer a savings bond which is
sities of the country are so com¬ dustrial relations will place less
payable in a fixed amount of pur¬ haps 2% or 3% a year faster, per¬ pelling
that) national
planning and less emphasis on the rights of
small groups of employers and
chasing power.
In order to pro¬ haps even more.
seems slowly to be winning over
tect the savings banks, the indi¬
4 The Index has an upward
workers and more and more emr
bias be¬
5 The
cause
it does not promptly give repre¬
experience of
Norway is dis¬
vidual purchases of the new type
phasis on the problem of protect¬
program should be
individuals to claim
.
"
f
•
of
bond
ited,,
should
say, to
probably be lim¬
$2,000 a year.
sentation
take
full
quality.-
to
new
account
...
articles
of
•;
and
does
not
improvements .-in
-v.
cussed
on
at
length
industrial
Walter
in
a
forthcoming
relations
Galenson
of
in
Harvard
book
by
University.
Norway
ing the interests of the community
as a whole.
.*..</
34
THE
(2218)
COMMERCIAL; &
Thursday, May 20, 1948
FINANCIAL:: CHRONICLE
would be poor
Prices!
What to Do About Advancing
to
( Continued from page 2) v
:
""expand the
manded
and
eral Reserve Board.
contract it when
to
longer needed."'
no
Some of our
correspondents are asking for a
more specific proposition, consid¬
'/ r
.
accomplish this except a direc¬
the Fed¬
tive from the Congress to
trade de¬
currency as
Nothing seemed to happen im¬
mediately but as our aforemen¬
tioned data and chart show; while
•
for
50
after that date
advanced 200%.
Further¬
the tempo was, and still is,
they
more,
years
increasing.
plan
promptly or we will be in the fix
in, before we realize it.
France is
One
buying
but
after time
time
franc
with success;
however, she
did not try tying
it up to an
honest commodity, like gold.
never
As
why we give our
reason
and exchange value
power
the
of
have already mentioned,
we
she has
opened up a market
now
products to foreign governments
in lieu of selling them to their
where
subjects is that world trade has'
with paper
any
rency
than 50% with¬
no more
about 13
judgment, since under this
the currency can be ex¬
panded onl£ as gold is coined, or
100% impounded for redeeming
its
doing with the
franc// Never¬
theless, something must be done
unstable. France tried to peg the
be lawfully bought
francs. This may be a
step
toward
returning to gold /
measurements, but just what it
gold
can
current additions to the cur¬ gone dead.v Partly on account of
war but
largely because of too
supply.
much paper
money.
After the will do to the paper currency
The Remedy
A setup of the sort outlined will
Napoleonic wars, similar condi¬ remains to be seen. In any event,
Here is what seems to us the compel the realignment of prices
tions
existed.
At - that
time, when a currency has lost 90%,:
minimum - necessary. to bring our for goods and services to what¬
Britain with her gold coin, and to say nothing about 99l/z% of its
country back to measurements in ever standard of value (number,
dependable exchange came to the original value, the damage has al¬
of grains of gold in the dollar)
terms of gold:
rescue.
The
result was to put ready been done, and it is of no
may be agreed upon.
This can
1. Discontinue the current issu¬
Britain where she led in the fi¬ great concern whether , it is rebut hit a good many a hard blow
ance
of;additional
currency
habilitated
or
abandoned for a
prior to 1917 wage
in the building trades had
rates
.
matter, Dr. Smith has left it, top
much up in the air.
years
advanced
in
ering that in thus dismissing the
relegate to a minor role an or¬
ganization empowered to expand
the currency in accordance with
policy to abandon
as
France ,is
the, wolves
to
it
.
,
in
Wages
of
fiort
barometer
a
what
of
trades
building
is
are
forerun¬
or
.
against debt, or promises or any¬
thing except 100%.^ of its face
value of impounded gold, for re¬
deeming any additions to the cur¬
in all
of which
Building trades
workers set the pattern.
Wage
rates in the building trades have
ner
going
on
anion labor trades, some
slower to act.
ace
,
119923020
1945
with
rival
all
increases
1946
are
of
benefit
.
wage
to
merely reflect the under¬
mining of the unit in which they
are paid. If carried to their legiti¬
to
who
he
at all, of what¬
accumulated, except
invest¬
ed
in real estate or equivalent
equities. It is not an accident that
housing is scarcer than anything
Bradford
for
•Corporation,
B.
State
recently
Steel
article,
entitled, "Roots and
Boom," of which we dis¬
2,000 copies. In this
Dr.
Smith advocates
a
return
some
"honest"
to
•considers
that
little
money, but
is necessary
Index of Union Wage Rates in All
Building
Source:
Trades
1907-1946
of Labor
Bureau
Statistics—Dept., of Labor
!
•
Index—1907=100 %
'
/
1907
Percent
\
Percent
of Advance
of Yearly
Over 1907
Rate;?
Change
%
I909__.,__iii
6
sort
11
^ /
.118
,5
;
'
1915.___.127
26
1916-^.131
31
1917
39
••
-8
54
v,,*-
15
139
1918.....154'
1919—..177'
r:
;
•
.252
128
V
172
.
283
1933.-
10
217
;
2
f
'
>;
The theory was that
francs.
this
give the franc stability. So
far it seems to be working in re¬
verse.
The 20-franc gold coin
that at first sold for 3,400 francs
would
recently sold for 4,400.
It
would seem that paper currency
where there is no other monetary
has
unit
available, .gets
value from
available
as an alternative, it would look as
though the paper might lose what
value it has.
The above price is
1/220th of the original value of
that fact.
When gold is
little, if anything,
the
vides
world.
only
Gold
pro¬
unit
trading
ca¬
of Serving as a common
denominator of value, for all na¬
pable
need
We
tions.
to
get
back
to
measurements in terms of gold to
people putting their savings into
bag with holes in it.
That is
just what U. S. A. is supplying for
its citizens when it provides un¬
stable currency.
If we are to
a
straighten out our own finances,
but no less urgently to help other
avoid
nations
high
to
into
get; back
shape
where they can
take
buy and sell and
advantage of the advance¬
ment
being made in the standard
of living.
It is evident that
nominator
upon
that
a
can
common
be
is
a
necessity
business between nations.
unit
value
of
necessary
is
within
a
Such
a
less
if business is to be con¬
general satisfaction,
with
ducted
doing
scarcely
nation.
Where
Weriheim & Go. Offers
Bristol-Myers Debs.
A
of Bristol-Myers. Co.
was
offered May 14 to the public
by
group
a
of underwriters headed
by Wertheim; & Co. The debentures, due April 1, 1968, and priced
wage
we
operated
un¬
themselves.
while
our
stantial
It
would
money
seem
that
still has sub¬
purchasing
power,
it
rates, for example, are expressed
in
terms
of
of the prewar
in. the
time,
case
of
value. Likewise, as
our dollar at this
the purchasing power was
the company has followed
of expansion and de¬
velopment in new fields of oper¬
ation, and from 1945 through 1947
expended approximately $6,269,000 for construction and purchase
years
a
program
additional buildings and manu¬
300%
ethical
Bristol
principal business of Bris¬
tol-Myers is the manufacture and
sale of such leading
and well
products
Ipana,
as
Sal
Hepatica, Vitalis, Mum, Trushay,
Minit-Rub,
Rubberset
Brushes,
others.
and
Net sales of the
its subsidiaries irj
to $44,654,979. /
■
Upon completion of the
outstanding
the
new
issues
debentures,
3%
present
capitaliza¬
c'onsis|
of $10,000,000
70,500
shares of
33/4%Tcumulative preferred' stock
—7
"
of
10
1937—311
211
20 r
1938.
339
239
1939
341
241
O
1
v
:
"
246
259
282
2
287
;
of
23
284
3
296
341
-
•
5
100%
value, and 1,381,182
company
•
common
its
stock.
has
a
record
of
of
the
dividend
1867
in
August
prior to the organiza¬
1933, and
tion
stock since the date
incorporation
present* company
predecessors had
9^
45
its
on
13
?
par
of common
uninterrupted dividend payments
2
346'
The
200%
-
28
'
$100
shares
;;/-.'/'.'--4 /
1941—359
441
issue of $10,000,000 3%
new
debentures
'
191
396
real
back to
get
de¬
depended
for
to
time
theirs, it is
money.
to build supply and demand
prices
nation as
prostrating our
the French have done
of
ir
1936—291
-
early in February where
lawfully buy gold with
do
the
14
181
387
can
of
—49
183
1
market
one
gold
tries
tion of Bristol-Myers will
4
'
281
382
ments, she opened up a free
could
financing
177
1943—384
going through an ex¬
It
1947 amounted
-
176
1942
France is
perience with depreciated money
similar to ours, but further along.
In lieu of resuming specie pay¬
limits.
narrow
for most of the 87 trading coun¬
willing to take the sort of
punishment our forebears went
through after the Civil War. The
boy said, "A lie is an abomination
unto the Lord, but an ever present
help in time of trouble." That is
the way it is with fiat currency.
The
Hebrew prophet finds the
400%
276
1940.
is necessary.
are
currency
already pointed out, it is not
too late to save the dollar if we
company
1934—277
1935
push prices around more than
it can but arrive,; in due
where France is. However,
as
is backed by gold or by
government promises. We ques¬
tion that, but even if true, paper
money could only function within
with its
promise cur¬
goes; on
of
supply
among
■
i
-232
-
to
/
country
our
course,
given monetary setup will
build the same prices whether the
a
18
231
r
1931—..332
1932
500%
11 .V
213
317
ing power current at the time of
the changeover; in lieu of trying
If
20
V.
211
1
nearly as possible its purchas¬
rency,
There are those who
to U. S. A,
think
open
24
183
1927—J.311
331
—15
201
:
;
1926. ....301
1928-.__.313
4
^
as
the
if
dollar, is selected to give it,
limitless
decades of the last century
(if
of doubtful
money
Britain did for it during the early
known
i
62
152
1924.__._272
1925.....283
'
-
143
new
it for
The
600%
23
139
243
1922.....228
1923
4
•
77
,.
1920.....239
1921
•-
This will be especially
gold content of the
currency.
true
ill
any) value.
is
on
grain and
to raise
afford
can
opportunity to do for the
world, on a broader plane, what
An
been
has
rations because its farmers
short
sell
world had not before known.
France
issue.
new
drug operations, known as
Laboratories Inc.
1
'
$1,000
(more or less) for that
machine and we still owe half the
the
facturing equipment in its
3
•
Well
paid
operations of
of
3
:27
"
setup
"
-
23
1914.__._126
a
2
20
1913.^.123
of
5
'18'.V
-
IM
.120
6
16
:
116
capacity * of , the
der, prior to 1914. ? Such a setup
builds prices in terms of the gold
in the monetary unit, and can but
u-100
1908-^106
the
tors, such as the dependability of
the price structure, and the con¬
fidence
thereby inspired.
What
.Fruits of
tributed
_
"We
hearing,
world
for a century.
Out of indescrib¬
able poverty, she brought pros¬
perity and wealth such as the
nancial
at 100Vz were oversubscribed.
A
sinking fund is provided sufficient
gold, confidence is
to retire 70% of the issue prior
inspired, and a degree of stability
the franc.
to maturity.
attained that is a source of good
Conclusion
The offering represents newwill and satisfaction, unattainable
must be avoided, at any cost, is
Note that we have pointed at with fiat currency, no matter how money financing by the company.
the dilution of the monetary and
two
ways
of getting back to honestly managed.
The proceeds will be applied to
credit
setup
with
government
measurements in terms of gold.
This
funds or credit while in operation;
study is a contribution the extent of $2,500,000 to pay off
The first is, by simply reinstat¬ toward an effort to save our coun¬ in
full
outstanding short-tepn
thereby disrupting the generation
of supply and demand prices in ing a definite weight of fine gold try/from
the experience that bank loans; the balance will be
back of the currency and making
used to improve the working cap¬
France is going through. Finan¬
terms of the monetary unit; ow¬
it good.
The second is by estab¬ cial conditions here are similar to ital position of the company and
ing to government interference.
lishing a free gold market and those that existed in France, after its subsidiaries and to provide
The above paragraphs outline
encouraging the people to go to World War I. At that time the funds for future development and
what it will take to reinstate the
it, and work out the problem for franc was worth from
to Vz growth of the business. In recent
delivered
address
an
bank
monetary setup
by
about 10;
which figure may, however, be 8
or 12, depending upon many fac¬
Smith, Econo¬
United
the
to be ex¬
par,
deposits at any given
time are not of prime importance,
since
private credit
ordinarily
and
multiplies
Dr.
exchanged,
exact amount of currency
The
auch savings as have been
mist
as¬
for the new
long-time bonds on any interestpayment date, the old bonds be¬
ing cancelled as received.
saves
has
intangible
will also have
run
changeable, at
mate goal, they can but rob every¬
one,
and
standing is just
sufficient for
pocket and till with a margin for
contingencies.
All
outstanding
bonds having three or more years
they
ever
currency
continue
until
bank
deposits are nearly
normal
and the
currency
out¬
since
no
bonds will en¬
said refunding process to
rates
one,
in
new
sets to be cancelled as
nation and poverty..
rSuch
the
enough hoarded money, idle
bank deposits and other savings to
refund our national debt, whether
monetized or otherwise financed;
list
breeder of stag¬
a
as
presently outstanding issues
where
to
jjrfces up the first 500% are fully
♦capable of booming them on to
the bursting point with a quick¬
ening tempo and decreasing sta¬
bility, as cheapening of the mone¬
tary unit destroys confidence in
it Money unworthy of confidence
no
recall
I
do
price. We can buy a new one for
ahead
less than we owe on the old one."
and after which all currency
However, with our greater wealth,
will be exchangeable for gold at
I believe this movement toward
an
agreed-upon weight of fine
sound money would inspire con¬
gold' to the dollar.
fidence enough to go a long way
3. Authorize
and proceed ♦to toward
offsetting the price read¬
market, an
issue
of
long-time
justment losses that inevitably ac¬
bonds, sweetened in comparison
company
manipulation of the
level, and they never
were going up faster than recent¬
ly, nor than prospectively during
the coming year. The question we
must soon face is, are we going to
let wages go on up to 1000%, then
2000%, and so on? Of course such
advances merely spell a depreci¬
ating monetary unit. Further¬
more,.
the
forces
that
pushed
has
>
ments after the Civil War.
pay¬
upon
1907
the
,
to specie
2. Set a date a few years
of
to 400 to 500%
advanced
cow
supply.'
rency
the return
did
as
record
shares for
over
an
on
its
uninterrupted
their
25 years.
capital
Volume 167
■
W
Number 4700
THE
COMMERCIAL &
1
■»
FINANCIAL
CHRONICLE
(2219)
considerable
in
part, offset by
tremendous and Unparalleled
r
^Continued from first bage)
the
creation Of debt. Individual
Wafll, thete bad policies go much thrift may do so. But when bank
crbdit is employed as q source of
■Jfurther back in origin. // - /
!•' During iVorld War II, when capital, there is a parallel, dollar
virtually
& Wbrld
all
were
the
nations
burning
up
of
and
for
the
wear¬
often
form
of
stocks
of
equipment, reserves of
oil and of metals, soil fertility and
so on, we had in the United States
the incredible phenomenon of the
credit
plained
by
interest,
the
as
for
taxes
the
otherwise
exist, is
thing,
one
classical
expanding bank credit for the
production of things that are to
be destroyed in war is another.
ex¬
econ¬
The
validity of such
viously depends, not
tive wealth
a
currently created, but
growth of bank credit from the
growth of the physical Wbalth of
the country.
The
nance
bank
credit
a
4y4%
loan, the last three Liberty
Loans being partially tax exempt.
These
rates which investors
were
could trust for the
long
pull,
even
best
ate
methods
wait1
of
taxation
and
fi¬
many
recognized
that
there ; might be an intermediate
period when their bonds would go
.
par... But they were good
bonds, and an organized com¬
munity sentiment in almost every
community in the United States
supporting the sale of these bonds,
compelled even reluctant indi¬
viduals to
buy them. They wete
plAced with the people,
When
the
World
War
I
was
and the post war boom
came;
over
the Federal Reserve
System, after
Victory Loan had been placed,
was
no longer tied
down by the
necessity of protecting the Treas¬
ury. The Treasury had protected
itself by placing long-term bonds
with the people. And, as the
post
war boom
grew to dangerous pro¬
portions late in 1919, the Federal
Reserve authorities could move
the
with
decision
in
raising" their
business
by Its owhefs And }paH is left fbfc
with the governmeht.
classical
war
cdSe
of/ tepitAl* ^fb^iiig in this
Way is the /great Ford Automobile
industry, where it once was es¬
policy would
end Of the
war
high. Interest rates at which bank
credit is being supplied remain
fantastically low. We have been
caught in a great postwar boom.
This
boom, like the boom of
1919-20, has been based first of all
en
imports
which
markets
of
to
replenish
ever,
ment of
df
'
raw
iremendbusly
iteportaht in
ynited States down to 1931,
governmental thrift;
.
credit.
in
BAhk
1920
Credit
We
and
handled
the
crisis
in
Financing
firiariclhg
Our Federal
GdyArnmeht did" not; borrpwr fbr
jjlost offices fir post roAds. It built
diem out of fiscal surpluses. Its
river And hAjrbor improvements
werp similarly jpaid ifoi*. pAll its
public buildings Were thus pAid
for.
vfe
the
■
We
borrowed
for
public.debt
OVfcr. '.
World
War
II,
/. A fourth iAipbrtAnt source of
Capital, particularly. impbrtant fri
aj^rlcuiture,, is direct capitaliza¬
tion.
The Jarmfer OSes his spate
.
Financing
borrowed first
the
on
b&nks^foen/foOr times aurfng
After the .War
the " War And orite,
Was over, it, placed great funding
loans with the people—the four
Liberty
Loans
the
and
Victory
Loan—with the proceeds of which
it
paid back the banks, reducing
the
volume
of
bank Axpansten;
WdodrOw Wilson kUeW
the
very
Weli
dahgers of An Axcfessive ex¬
pansion
nanced
bank
of
World
credit.
War
I
We
fi¬
primarily
out of taxes and the savings of the
in-building fenteA and barnS
people.
v.
; :
v<putting in subSoil drainage, Or
fhh jfAririer ^et^ hiAvftec'kis /And ^/ThA ^Federal Rteerve BanfeA jn
World War I played a passive but
herds increase instead of selling
Off the Whole of th|. Ahiii^i/irtr A very impressive role. They did
hot buy governmeht securities ex¬
cteASe.
These .fdut
SwrceA^ibf /capital cept four times.Just before A great
are all hbrmalAhd
"Whbiesome; and public loan Was to be, placed.; They
fib country has ever gdrie astray then.bought And held government
securities, chiefly short paper, for
ihEmploying thlem.;
a
few
TherAis,
^
however, A fifth credit to days, giving additional
the money market while
AoUrc'e of capital, which employed
irt moderation is Very helpful, the loan was being plated, and
ana ihaif ls neW bank credit for basing the tension. When the loan
c.Ajpltal /lairposeSr, A„^JbusinAss WAA plated, / ttey promptly Aold
gives its note to the bank atid the their government securities again.
and
.
,
.
,
*
with
this
bank
new
ijrt, AxArmed
credit
the
business buys new machinery and
equipment. ;iy this comes at, a
tinfe-'when there is full employ¬
ment "and no industrial slack, it
The
amounts
of
these
purchases
companies and
rhutual
SAvingS banks. Investors did hot
them
and
Would
knew how to consult a bond
table, and who could, looking at
back
records, see - the yield of
government
bonds, running
as
high
5Vfe% in 1920 and remain¬
ing above 5% through much of
1921; No matter how. patriotic be
as
nominal
or
tal.
If it
comes
At
a
time
When
gpyernment debt in, the? $brhi
either of direct
ownership of
,
industry is slack it may lead to
the increase of productive equip¬
ment
without
a
diminution
of
consumers'goods.
-
It is
to
be
? :
noted that business
ernment
against
THe^^
securities
Bank credit filled thh gap, the
of
bank
credit
being
growth
outright.
loans
securities,
% St -
'-j:
The Government of the United
States in World. War I paid ade¬
.
quate interest
creation
First
/ of
on
iti bonds. The
Liberty Loan
Was
a
3^%
Policy and
'
<
-
Treasury pol¬
icy
and Federal Reserve policy.
How is this to be done? We must
fund the public
debt, And
/
must
we
get it out of the banks and the
Federal Reserve banks on a big
enough scale to make it possible \
for the Federal Reserve banks to
in
move
keeping rates of interest
low. .:///
very
Federal.Reserve Nibbling At
'Credit Control
The
•
Federal
Reserve
authori¬
ties, however, have been alarmed
and
they have nibbled at the
market
regulating
without
the
'
money
for tlte
concern
In this proc-.
/
'
we
shall shrink the present
inflated volume of money in cir-
culation,' which has risen from :
$7,000,000,000 in 1939 to $28,000,-* //
000,000 in 1948, and we' shall
shrink
bank
the
swollen
deposits.
volume
/;-;/'•'/:
of
!
'./ :/*'••; '
have
of
interest
abandoned
rates.
the
They
war
time
policy
of making discounts se¬
by short government paper
at V2 of 1% instead of the
regular
1 % discount
rate, arid in January
cured
1948,
rate
they raised
to
1 V\%.~
abandoned the
government 3
Funding the debt is to be done '
by offering to the people long|
term
government bonds
1%
rate
on
rates
really attract
Precisely what those rates
regular
haVA should be will depend
They
at
of interest that will
them.
the
% of
At What Rates of Interest Can We
Fund the Debt?
" W
deal
of
consultation
on a
of
Central
Reserve
City banks from 20% td 22%
against demand deposits (effective
Feb. 27, 1948); The open markel
prime
commercial,;
which
\
great
between
./
the
.
bills, which Treasury, and the financial insti-,
month
stood at .75%
rate,
paper
in 1945 tete
to
1.38% in February, 1948. The
discount rate on prime bankers'
of
the
country.
I
bonds and
government
think
the
be-f;
long >
*
^
rates'
'
that
the government paid on its
Z
long-term bonds in World War L /"
This view rests
that
the
rates, both
ities
on
effort
and
raise
interest
government secur/
on
in
the conviction
to
the
general
"<;■
-
•
money
in 1945* stood at
ary
hold rates of interest down. These
stood at
counterforces
-
market, would set into operation
powerful counterforces tending to
acceptances which Stood
at .44%
1.06% in Febru¬
1948. Municipal bonds, which
1.64% in 1946. stood at
2.55% in February of 1948. Cor¬
are:
u
•-//•
/
(1) An adequate rate of interest
on savings deposits would
bring
striking
these rates
ot 1947.
low
do
Cbhtr&dictorjr Policies
*% The existing
savings deposits are sd
that, to many people, they
on
not ,;1 make
savings deposits
This cash, deposited
by the savings banks in commercial banks, and by them deposited
Reserve authorities are
apprehen¬
sive of rising rates of
interest, lest
in
the
Federal
Reserve
Banks;
eral
government deposits in the
sfeem
interest
a
;
.
'-//^
higher rates of interest, and with
bank reserves going down as the
com-
meiical banks of the United States
stood
at $28,695,000,000
in 1939
aiid at
$106,000,000,000
1945, after the last
tween the
same
meht
security
on
war
Dec. 31,
loan. Be¬
:
the
war
on
Dec. 31, 1945,
loan.
'
commercial
borrowed
from
banks out of
its
the
de¬
posits with them; Bank deposits
and
bank
security
holdings dropped rapidly together.
Subsequently the government has
repaid still more of its debt to the
government
.
0h0,000,; as of December, 1947,
while the part held by the com¬
mercial banks dropped from $90,-
(b) to keep
The most recent
nibbling at
rate structure, began
interest
ttie
ap¬
//'fb.'Twd PoAtWar Booms
f /.But the decline in government
replenish commercial bank
and tend to hold down
rates.
and
paper
With
*/
«.
commercial
customers'
loans
at
?
;
i
Federal Reserve Banks sold government
securities,
the
cial banks would have
centive
commer-
/;•
real in- Z;
a
for
making small check¬
ing accounts welcome, by reduc- rt
ing or eliminating service charges. ' j
They would need their cash. This
»
would
the reserves of
large part of
early November, 1947.. Governthe $28 billion of money in circuMem^ securities in, Federal Reserve
banks stood at
$22,119,000,000 on lation, thus tending to hold interNov. 5,
1947 and hAve dropped est rates down.
pulL into
banks
^ 1
another
,
V
-
since
on
that time
to
$20,447,000,000
April 7, 1948.
riod
reserve
York
During this pe¬
requirements in New
and
Chicago were raised
from 20% to 22%. This
definitely
tightened mbne# fates, As We have
Ominous Shifting of Long-Term
Bonds to Federal Reserve Banks
But the
pegging of the price of
long-term
2.50%
government bonds At
which ^accompanied
this
.
tightening of the money market
has led
Jo heavy unloading of
long-term government bonds by
the commercial
securities in the banks since the
transfer
Federal
(2) As the government sells
/
long-term bonds to the people and
/
the people pay for them with /
checks drawn on the commercial •//
banks, and the government uses "/■"
the funds thus obtained in buying
.
back
seen, n
ehd of the
in 1945 has been,
would
reserves,
the
„
war
boom and
a
parently at the end of October and
war loan the govern¬
greatly over-borrowed
had
policy based on the desire (a)
to tighten credit in the effort to
interest rates low in the effort to
protect 'the government bond mar¬
ket represents- A cohtradittibn;
of
In the last
it
particularly determined to
peg long-term gqvebnmeht bonds
at 21/2%. It should be obvious that
holdings
$90,800,000,000
what
Fed¬
They
restrain
something
over
$15,000,000,000
When the war broke out in .1939
after the last
bonds.
dates the govern¬
commercial banks had risen from
to
Government
in
banks, and their
large
degree
'
/
,
worth while.
The Treasury Ariel the Federal
they disturb the market for
/
in from the people a great deaj. of
paralleled by the growth of the
public debt. Demand deposits plus
pebple held thb test/ bwhed 800,000,000 to $68,600,000,000.'
thrift, direct
governmental
capitalization and
thrift lead to the
of new capital without
or
government
gov¬
outside
of the
Federal Reserve Policy
We must divorce
rates
growing out of; the,.,first World
banks out of fiscal surpluses. The
WAr, in August^/1919^: whep fhe
public debt was $26,500,000,000, public debt dropped from its apr
proximate peak at the end of 1945
the banks held only
$6,500,000,000
of $276,000,000,000
to $254,000,of
fiubliev /Sut it ArAAtes/ hew capi¬
Divorcing Treasury
b'egiririihi Mth frov'ember
or to buy the United
savings bonds—unfunded
debt, which became, in effect, de¬
mand deposits after the passage of
a short time.
hatA And. Shoes And lce; Cream tb
pidductibfi of ihachinery and
epuiprilent. It forces an involun¬
tary thrift upon the consuming
^^AiRie peak bi the public fept
the
drastic
>
riiove has come in all
on
the loan Was over.
^
business situation.
States
to lend fiis"
government
fiitens A AAifting of labor and reAdtirces/ froni the ; prodUctibn of
tlte,
to
requires
tightening iri-the interests
shbrt-term
the
to
money
and, it, began repaying. part^of
j
loans
market
money
their hoarded cash.
Was;fie" preferred
ment very
//';
other paper,
ought to
have short maturities.
They ought
to be
able to
dispose of them
freely when they judge that the
porate bonds and high grade pre¬
ferred stocks have had
sharp rises
in their yields. A rather
small, tisuAlly $100,000,000
5
excess of ex¬
ports has gone out largely on the
basis of U. S. Government
gifts
Their
securities,
quirements
few days, though With the
Liberty Loan of $7,000,000,000 / the purchases ipse /,b$
sbmethihgi p .V. p t / $200,000,000;
promptly dropping off again when
paying
great city
our
country.
that they can be intermediate
tweeri the Existing rates on
as
for
Fourth
to
the
government
all
tutions
Reserve
Were
a
8%
of
in February, 1948 to .996%.
They have raised the reserve re¬
.
.
as
liquid
in
holdings of
capital
were
most
ought to
financial in¬
*ose
tiihe
bank 'gives / the /bhsuiess
change a deposit credit.
Federal
bond and 2 Y2 % on a 20-year bond
had po attraction for an investor
short-term from
customers
the
stitutions
The
banks
Banks, the commercial banks, and
/.;■^.r^n^iofid■.War■..l ite govetenient wpo
Wars, but
,
in
and
problem
hot, take
them, Jtates of 2% on-a lOryAar
World War I
ptemptly begAh 'to
pay down
when the War wAs
' * "■•
*
Credit
be
Reserve
Other financial institutions Such
want
Bank
This movement is ominous.
Federal
.
World Wifrtt
trt
time bank ctedit is desirable.
the
working
Of 1920-21 from the. standpoint of
insurance
was
their
down, from
$13,504,000,000 on Nov. 5, 1947 to
$8,472,000,000 on April 7, 1948.
'
ess
institutions. But here again priva¬
tion of a certain measure of short
wAys inciifdihg 'cAsh )rese^e fdr
emergencies;
*
;V "
thirci source of capital,
businesses had, how¬
to the banks to
banks. This time the
securities to the
invested in enlarge¬ most'desiraPle form of borrowing
plant, incVeasing supplies is long-term,. bonds placed With
mkterialS And in other the people and With investment
had femained
high
very
interest rates mounted
steadily
7%
of
tetessAiy: The
to
come
until good
bank credit for taxes and for the
time Activities
js
goods and has forced
strictly to the gold standard, and
our
savings of the people oji an in¬
credible scale; At rates of interest
fantastically low. We could do
this only by selling government
transition front peace time tb War
our
ernment paper to run
tied up in these advances. We held
tries into bankruptcy.
wages and other expenses of pro¬
drained
Federal Reserve banks hav6 al¬
lowed their holdings of short
gov¬
Treasury's position.
would tie
duction^ ^but^whefq $1,000;000,000
The
nesses.
too many of
rowing
over
granted to Europe by both Amer¬
ican banks and American busi¬
Of the
igoite but in payhiient 'Of
exports
has
commodity/prices
the
000 had
of
levels. The boom of
1919-20, how¬
ever, was financed, after the mid¬
dle of
1919, by private credits
Selling
the peacetime indus¬
Some,bor¬
to ease thb Strain Of the
vast Excess
a
$5,747,000,000. Siiriultaneously the
toward
of bank
boom
paid for. Such a policy Would be however, with the greatest de¬
roughly $15,000,000,- mote stringent than would be struction of capital that the world
had pasted teinugn the hands Efficient, because; It Would forte has levfer teen, Wb 1 Substituted
company as receipts from
sales of its cars. $14,000,000,-
of
ominously
sion
the
timated that
000
agricul¬
volume
remains
banks
Reserve
$791,000,000 of bonds, but by
April 7 of .19.48 this had risen to
world, and Treasury and Federal
policy has been directed
that at the
war
The
li), 1947 the Federal
held
Reserve
An all-tax
mean
the
and
industrial
a
ex¬
cOm-
rates, tightening the money mar-*
holding down the expan¬
ket And
MOhey imarkbt policy, Uncompli¬
long-term bonds to the people. cated by the Necessity of protect¬
TaXatiori testrfcts me Ability of ing the price of
government bonds.
the
people to buy in 'cOmpetitioii
thrift, where only pArt of the net
from
produc¬
on
desirable forms of financing War
expenditure.
It
divorces
the
tefirete Zbf Capital £hbuld hie
taken
ob¬
the futurb taxing power of the
government. It is one of the least
This conception of
business
credit
on
fiteadfeiied. to ihclude first, conSuftifef thrift, and second, bqsiheSS
i^Hftf;hhd; 'tepteiall# tetterAte
is
substitute
a
substitute for the savings
out
Capital grew out of the ex¬
cess of jproductidii oVte immediate
cdnsumptidii." Tli® individual could
spend his income on hats and ice
cream, 6r he could use part of it
for tools AAdteacfiiriery, factories
income
as
not
■
ings.
the
Finance
War
people is obviously great.
Expanding bank credit, matched
by
the
production of
physical
plant and equipment that would
omists, was primarily a matter of
supply of ^pd demand for sav¬
Arid railroads.
a
of
absurdly low.
of
rate
as
and
interest rates in history.
today, in a world which is
still trying to consume more than
it produces, we continue to have
The
Credit in
mounting.
are
When the problem of war fi¬
nancing comes, the danger of bank
lowest
*■"' The Sources of Capital
purposes.
was
below
prices and costs
Bank
And
;
tural
4% loan; The fourth
though
tories and
rates
mferfcial,
was a
and
goods,
foiling stock and road beds of
railways, shipping, highways* fac¬
interest
loan, fully tax exempt, the second
is, wise policy, but it surely
suggests caution, particularly
when enthusiasm is widespread
ing out their accumulated capital
in. the
dollar, increase of capital and
NoW this may be; and
debt.
of
of bank loans for
pansion
35
to the
Reserve banks. On Nov.
its
securities
now
held
by /•<■
the commercial banks, we should
see; bank, deposits
going down
rapidly.; This
would
mean
that
the legal reserve requirements of
the commercial banks would be
reduced, and this would tend to
f
•
•
»
~
hold interest rates down.
There is
so
much
sldck
in
the
existing volume of bank deposits '*
and of money in circulation that a
1
refunding operation, in the course ' 1
(Continued
on
page
36)
:f
Thursday, May 20, 1948
& FINANCIAL CHRONICLE
COMMERCIAL
THE
(2220)
36
amount of money to do so, so
RR
(Continued from page 35)
of which the Treasury and the
R Federal Reserve System carefully
,
respect
cooperate, could go far without
raising interest rates high.
It is
still
possible to fund the vast
floating debt of the government cated.
f If, however, we wait for
moderate rates of interest.
wild inflation with distrust of the
Protecting the Banks When
>
*
There
two main objections
are
policy which I propose: (1)
involve dangers to
to the
that it would
the
structures
capital
off those
banks which are now too
tnent
govern-
securities; (2) that it would
the debt
meet
service on the
government's enormous debt.
*
with respect to both
points that the problems
progressively worse the
Let
*
me say
these
grow
longer
refrain
we
facing
from
them.
To
protect the banks in this
change of policy, I have proposed
that the banks holding long-term
<
government bonds be allowed to
exchange them for new issues at
the higher rates of interest, at a
•discount of, say 2% as compared
with
cash subscribers, leaving
them with some loss but not with
losses that would ruin their de¬
The
Federal: Deposit
Corporation, whose sol¬
positors.
Insurance
vency and
|
liquidity are. of high¬
!
tion.
1
R
,
,
,
government
in
Economy
<
>T
is
surely needed when men fear the
interest burden of the public debt!
gently level off a dangerous
boom
into
tranquil
prosperity.
Reaction we shall have in any
can
The degree; of its violence
depends on how long we defer it,
and on how flexible our price and
case.
R.
v.^j'ear
There is
/
of
a
third fear on the part
losophy, that a policy of this kind
might lead to business reaction
it is sometimes added, that
and,
would
jeopardize our effi¬
It must be ob¬
served first that interest rates far
this
war.
higher than those now prevailing
entirely consistent with- busi¬
ness prosperity. Interest rates are
only one part of the cost of doing
business and a very minor part.
are
Wages- are vastly more important,
and
aire
there
man^ other "ele¬
ments of business costs. Prosper¬
ity is
fits,
question of business pro¬
a
business
and
to
tremendous
a
Allies
our
in
part of the world.
It may
the great slack
every
be said that
even
profits depend
efforts.
We
made
by higher rates or in
way and it will be
up
could
have
not
this,
done
disorders and if there had
been distrust of the Treasury.
To
be strong
"''"
,
the deficit will be
than his share,
reprehensible if Congress encour¬
spread lightly among the rest of ages it? The law permits the use
the taxpaying population. Right or of pension trusts as a means of
wrong, it seems to me to be true shifting income of employees from
that the average individual tax¬ years of high income to years of
low income pay, thus transferring
payer, large or small, would pre¬
fer to pay higher tax rates and pre¬ it from high to low brackets. Is
it wrong to take advantage of such
serve his right to escape from tax
Suppose it will be;
if the law contains - a loophole a provision?
permitting him to do so.
The advantageous to adopt a fiscal
other
some
,
out to taxpayers
year, rather than a calendar year*
Is it morally wrong to do so? SupR
the methods,; real or
pose
of literature that goes
advising them of
spurious, of
reducing tax liability,
and the
avidity with which such literature
is
gobbled
up,
are
convincing
quantity
.•
the
that
evidence
does not have any sancti¬
payer
attitude
monious
avoidance.
toward
R
'
tax
,.
,
.
.
Moral Issue
The
charitable
is
man
morally entitled
his income
cut down
to go
tax
has
de!
contribution to
a
a
institution makes it in
which has enhanced in
rather than in cash, and
thus escapes tax on the enhance¬
ment.
Is he to be censured? Sup-r
pose an executor or a trustee who
property
is to
I
have
been troubled / many
times by the question of how far
to
to make
has discretion
'it-Xn
a
individual who
an
cided
value,
tax¬
average
,
however, in anything like so ef¬
fective a way if we had had cur¬
rency
particular act of avoid¬
If one taxpayer pays less
industrial
our
war
with the
importance of interest rates in
making prosperity and under the
influence of the Keynesian phi¬
ciency for
aid
of
any
ance.
capacity in the
depression of 1939 facilitated our
of Depression
overimpressed
men
poured out
we
volume
in
•
same
expected to take shorter matur¬
ities in making these exchanges.
recognize j that
which
' must
we
there is no financial device
and
est
importance, should have the
^protection as ' the banks.
Both banks rand Federal Deposit
Insurance Corporation should; be
But
R
.*•/,,
rise rapidly
the tax money required
increase
to
long-term
with
loaded
heavily
ceipts and total costs.
interest rates will
and the Secretary of wage system is when it comes. :■
the Treasury will sweat blood as
Depressions we wish to avoid,
Treasury bills and certificates fall but a depression is not necessarily
due, as people cash in their war a source of weakness if a war
savings bonds, and as he has to comes. We were in deep depres¬
borrow money on a rapidly rising sion in 1939, with over nine mil¬
money
market — or else print, lion workers unemployed, yet we
which would not help the infla¬
fought a great war successfully
dollar to come,
!••>
Yields Else
Government Boiid
'
of the total re¬
the relation
on
to task
;?■' / '•
• RR.
--',
Suppose a man by a bona fide
gift transfers a portion of his
property to his son, his motive be¬
ing to save income taxes.
Is this
for it?
aggregate tax is not cut down
by
Public Debt
to the interest
burden on the government debt,
let me say that this problem be¬
comes progressively worse if we
delay it.
We can now fund the
government debt
at moderate
rates of interest, as above indi¬
With
Should they be taken
for.
that
the
lia¬
bility, but I have finally reached
the conclusion that when Congress
consciously condones, nay encour¬
as
toVwhen income
distributed
be
to the
bene¬
ficiaries makes the distribution iii.
such
way as to achieve the mini¬
aggregate tax.
Is he to be
subjected to censure? The answers
to some, but not all, of these ques¬
tions
seem
reasonably clear. In
general, it seems to me that there
is
nothing ethically wrong
in
avoiding tax when the legislature
with its eyes open has offered the
a
mum
abroad we must be fi¬
nancially strong at home.
Our ages, tax avoidance, the taxpayer
dollar
was
a
very
effective has every right, moral as well as
weapon in both World Wars.
The legal, to avail himself of the Con¬
English pound sterling, tremen¬ gressional bounty.; Tdo not say he means of such; avoidance!' But
dously useful in World War I, was is a fool, if he does not take ad¬ where the offer is unintentional,,
a
very
ineffective
weapon
in vantage 6f the opportunity,/ but I the j ustification/for avoidance i&
World War II. / The growing con¬ do say that he is not to be cen¬ not so easily found, nor is the at-r
cern
The burden tempt often successful. .Where/the!
regarding the maintenance sured if he does so.
of. peace makes it-all the more of criticism must be left at the avoidance is occasioned by an
en|
imperative that we move with doorstep of the legislature. Where deavor to overcome an inequit*
promptness and decision in get¬ Congress does not knowingly con¬ able statute; one which is undulj^
ting our currency and banking done avoidance, the problem be¬ harsh/ the avoidance is easily vinV
figures
under
funding
our-
in
and
control,
public debt.
comes more
cult.
subtle and
diffir
more
Suppose a taxpayer believes
that the fiscal and economic poli¬
dicated, but where there are np»
such extenuating .circumstances,,
exculpation becomes.difficult.
cies of the present Administration
Tax Avoidance
vR (Continued from page 15)
there
in
are
the
!;r
probably few law offices
country
that
are
not
re¬
writing- or considering the re¬
writing of their clients' wills in
order to take advantage of the
""marital deduction" afforded
by
the Revenue Act of 1948.
country, but the
Federal
pose
§§
It
seems
advisable Jat-the outset
to attempt a
definition of the sub¬
ject we are talking about.; Just
what do we mean by tax avoid¬
ance? In arriving at a definition,
I do not propose to enter into the
subtleties involved in distinguish¬
ing between!tax avoidance: and
evasion.
tax
This distinction has
t>een
income
tax
on
the
com¬
Re is,
pensation for his services.
save
is
what
succeeds,> and
as
pur¬
disincorporating was to
of
taxes-
that is avoidance.
within my
definition, an avoider.
I am' not saying that any of
hand, if he were re¬ these people have done anything
quired to go to Nassau, say for reprehensible or even that in the
his health, and the move were
long run they will have saved
motivated
by
tax
tions, he would not be
;
considera¬
an
avoider.
and
Suppose a man" or woman, mar¬
ries,' not for love, but /solely in
obtain
to
order
an
income
tax
saving by taking advantage of the
income: splitting allowed to mar¬
ried couples throughout the na¬
tion by the 1948 Revenue Act. He
would be
it. is
an
conceivable
who
* Marry and "Avoid? ;?
For instance, it is quite
money.
that
dissolved
the
stockholders
their
corporation
became ! partners may ulti¬
mately find that; they would have
been better; off-r-even taxwisei—if
they
had
remained incorporated.
So much for this
let
definition. Now
to the policy questions
Implicit in tax avoidance.
avoider. Incidentally,
to believe that
will; increase ^ the
marriage rate among the wealthier
classes, although like so many
us
pass
Ill
reasonable
cynically,' but realistically, the ! new! law
expressed in the statement that
avoidance
co-partnership and that the
On the other
Definition
!
t
holders thereafter do business
a
not
V.'
to Nassau
move
is motivated by a desire to avoid
The Ethics of Tax Avoidance
:
going to use
am
inition which I formulated
a
!
,
def¬
Let
many
....
give you
me
r
.
R
further
some
examples: Suppose a corporation
in an article I wrote on
has
preferred ,■ stock outstanding
the legal aspects of income tax
avoidance,, I there defined. - avoid-, and, that.-it calls^ its preferred fop
redemption and issues instead de¬
ance as every/conscious attempt,
successful or unsuccessful, to pre¬ bentures."!' If its reason for this
years ago
vent
or
reduce income tax liabil¬
ity by taking advantage of:some
provision or lack of provision in
the law.
This definition, which
excludesfraud j or
presupposes
concealment,
the existence of al4
ternatives, one of which will re^
suit in lesser tax than the other,
or
at least
so
it
is
hoped.! The
definition which I have just given
is both subjective and ob¬
jective. Its dual character may be
brought out by a;few examples.
Suppose . a .writer,
who ;is • a
Bnited States citizen, and who re¬
ceives, 'let us say,- so much per
Word j for his, writing,- moves j. to.
FJassaudn the Bahama Islands and
does his writing there.- He could
do his writing just as well in this
you
'
transaction
interest
be
on
is
to
the
save
taxes—the
debentures
will
deductible, whereas the divi¬
on the preferred stock are
dends
not—it. has avoided tax.
On the
other
the
hand, if it would have made
change regardless of tax con¬
it is not an avoider.
an individual
has pur¬
ethics of tax avoidance.
Ma-
The government needs money and
I
want! the government to get
dollar I
every
it, but at the
owe
time I have to look out for
same
myself, .and if,there?is .any legal
way in which I" can cut down my
tax bill, I want to take advantage
of it."
When he
duction! side
he is like
to the de¬
comes
of
his
tax
"striptease artist"; he
everything. / He
patriot, but a canny one. A
a
is
a
Chairman
former
of
the
Suppose
tion
A
and
$150
cate B.
delivers
taining
per
share for certifi¬
If he sells 100 shares and
certificate
a
B, thus ob¬
higher, cost basis and a
lower profit or. a. greater, loss, he
has avoided tax.
Suppose
a cor¬
poration dissolves and the stock¬
House
Ways and Means Committee has
observed that "Americans
Telephone Company, represented
by two certificates, A and B. He
paid $100 per share for certificate
return,
wants to take off
sequences,
chased 200 shares of stock of the
on
are
as a na¬
always inclined to insist
all the technicalities of the law
if
anything can possibly be gained
thereby," and he observes further
that "when it
ance
.
the
~
comes
to tax avoid¬
American ! under
the
guidance of, skillful lawyers is
past master."
\
1 ^
/
wishes to
real
■The
loss.:of
'avoidance
revenue
loss
have
to
exist) and
raise
a
sale
■//;
will
the
it
certain
result
taxpayer,
the statute will bar the loss
in
but
IV
The Attitude of the Treasury
Toward Avoidance
The attitude of the Treasury: tor
varied, of*
ward tax avoidance has
course,
but
with each Administration,
in general it may be stated
that the
Treasury has been apa¬
thetic when
the
and
rates have been low
Treasury's pockets have-
been
bulging, but when, as today,
are high and especially
when there is a prospect of pi
the
rates
even
budgetary deficit, the Treasury's;
transaction is free back stiffens.
In fact, it ofteii
any tax avoidance taint.
Is goes to theotherextreme; that/is*
he not "justified: in making the it not merely! acts to
prevent
§ale to his brother's wife? In such avoidance, but goes beyond the in¬
ituations the problem becomes al¬ tention of Congress and asserts the
most entirely subjective, and in letter of the
law, even when that:
seeking for an answer it. is fairer produces injustice and- hardship;
to ask "What would you do if
This, to my mind, is a mistake,.
you were in his shoes?" rather The
taxpayer often rationalizes^
than "What, should he do?"
his circumvention of the law bj?
though, the
.
from
the
argument that the Treasury
nearly always interprets the law
Tax Exempt Bonds
If the
.Congress chooses, specifi¬
cally to exempt from tax the in¬
terest
on
state
and
municpal
so
as
to produce tax, even
equity
if in^
The Treasury's;
results.1
-
answer, that it /does not make, thebonds, an immunity for which I law but merely administers it, iscan see
very - little justification, a rather lame excuse.
If the gov-*^
at least as. to bonds issued after
:emment,$;iiscalipfficers; may^d*??
a change in the layipthe rich man
pand the/ ietter: of 5the laW io/se^
does not play the rogue by invest¬ Cure their
just due, there is' no*
ing in such bonds.
Rather, it is reason why they should blindly
the legislature which plays the
follow that letter if to do so would
fool.
Despite the fact that
nicipal
bond
may
now
a mu¬
injustice. I think thecan
contribute to the
elimination of questionable avoid¬
ance by adopting a more equitableand
reasonable attitude toward
produce
produce
Treasury
for the taxpayer an
effective yield
rate which he an¬
ticipated when he purchased the
bond, I see no reason why he is
under lany / moral; compulsion to
rid himself of the exempt bonds
far beyond any
and
invest in
a
corporation,/owning
for which it paid an
sells the
a
If
a
warehouse
inflated price,
a bona fide
; R
noq-ayoiding taxpayers.
bond the interest
from which will be taxable.
/
i
! ;The Attitude of the
Cpurts ! /
/. Whenever ; the ! Congress/ ha^
made an /effort - toward //blocking!
avoidance, it has found a
faithful
property in
ally .in the Supreme Court., // This
sale at a loss and then leases it
is shown by the fact, that no pro-*
back under a bona fide lease, the
vision designed to block incomes
primary purpose of the transac¬ tax avoidance has evCr been de¬
tion being to cut down the income
clared unconstitutional, unless yoii
; tax /which! the corporation must
count as an income tax avoidance
currently pay, are the directors of case Eisner v. Macomber, in which
the corporation to be adversely
by a majority of-five to four the
criticized?. They
their
duty to
namely
they
are
their
performing
stockholders,
producing "/for
are
the
maximum
Court held
that
of
on
common
stitutionally
:
legally;-permissible. on, the
Investment
of
the
stockholders.
That is what they are
\
.
being paid
RVR
■
a
stock dividend
common
was
con¬
immune!'!/
When * Congress enacted a pro*
requiring the: donee /of a
use the donor's cost basis
computing gain on sale of the
gift property, even Justice Mcvision
return
/•/■///; PR ■!/!'!
-
business to his
his
to
their stockholders
ffpm tax
ls'bhiy superfiClai. The
government has to
will,
a
sell
The
brother.
a
First, let us* consider the morals
or
caulay said of Byron's poetry that
evasion is what fails. ; In other
other actions which are motivated
it embodied a system of ethics in
words, if your attempt; to escape
solely by tax avoidance-the ul¬ which the first two command¬
tax proves successful, you have
timate! cost of the plunge " into
ments were "Hate your neighbor
been clever enough to avoid tax.
matrimony may far exceed the tax and love
your neighbor's
wife."
If your attempt results in failure,
saving. Returning to our defini¬ The
average tax avoider or wouldyou have been foolish enough to
tion, if this individual had no tax be avoider has a somewhat an-;
evade It.: Put evasion through a
saving in mind when he (or she)
alogous philosophy. He loves his
.sterilizer, and it becomes avoid¬
married, if wedlock was desir¬
country but he dislikes its tax
ance.
Dip avoidance in the tar able to
him, let the chips fall collectors.
He comes to you and
barrel and it becomes evasion.
where they may, he would not be
For the purpose of tonight's dis¬
says, "I want to pay my just tax.
an avoider.
cussion, I
are bringing the country to ruin.
Suppose he thinks the government
will unwisely spend, say in "boon¬
doggling,? the tax which he would
otherwise pay.
Suppose he feels
that the government has treated
him unfairly or that the law is
unjust.
Do any of these factors
justify his avoidance of tax? For
example,
suppose
a
taxpayer
„
gift- to
for
: '/RR.
Rsfif Illlll al/ii-il§ili I®/ §fi!ii llilliilliisil I®;.
lltPiti! PR R1 !l!!RiS!::,-
Volume 167
Number 4700
Reynolds, who wrote the opinion,
upheld it
and
provision necessary
as a
appropriate to prevent avoid¬
When
ance.
income
of
Congress
revocable
a
Court
intimated, and a • lower
held, that the grantor
Court later
would
able
have
in
the
made
gress
used
was
been
properly tax¬
without a specific pro¬
even
vision
; law.
trust
When
Con¬
income
illegal.
He
has
the
legal
right to split up his evidences of
payment, and thus to avoid the
tax¬
able to the grantor, it took little
more
than a page for the Court
to declare it valid.
In fact, the
which
to
COMMERCIAL
not
the .tax.'!
made
trust
THE
'S/J.5V'/V■''
Today, of course, this is
philosophy so far
an
moded
Treasury and the Courts
as
are
out¬
the
con¬
lidity of the legislation. And it
the constitutionality of
what
is
now
Section
102
of
the
Internal Revenue Code which im¬
poses a
.penalty surtax
on corpora¬
tions which
purposely and need¬
accumulated their surplus
lessly
earnings to
save
their sharehold¬
from surtax.
ers
The Court has
staunch
as
been
almost
as
ally to the Treasury
it has to Congress. Except for
the
an:
fact
that
the
Court
refused
the
Treasury the right to tax the
husband in the community prop¬
erty states
on
his entire earnings
r-the Court having ruled that half
must be taxed to the wife—(in¬
cidentally, that is the reason why
we now
have nation-wide optional
splitting of income between hus¬
band and
guage
where
of
follow
the
the
literal
statute
in
1924
enacted
Congress
provision mak¬
a
ing the. grantor; of
on
at
general
time during the taxable
year had power to revest in him¬
any
than
year's
a
revocation.
It
advance
notice
therefore
was
is
to
such other minerals is not of such
a trust taxable
the trust income if the grantor
importance. / Under the
depletion
allowance
percentage
contained
in
statute
the
cipient of income from
well
gas
271/2%
of
certain
is
allowed
the
the
an
to
re¬
oil
deduct
income—subject to
limitations which
are
even
him
ar¬
not
after he has had allowed to
by
way
of
such
deductions
the
benefit' of the grantor or used to
pay life insurance premiums -on
government's endeavor to keep
pace with the fertility of inven¬
tion whereby taxpayers had con¬
tinued to keep the larger benefits
of ownership and be relieved of
policies
•
attendant
general
burdens."
provisions,
.
such
the
was
insuring
,the
tax
exempt
Isham
prob¬
the
to
two. major
securities
was
reforms, strange
losses,
of
number
revenue-T-there
of
are
a
commonly - availed-of
methods of minimizing taxes,,none
of which by itself results in
any
of revenue.
a consequentive ; loss
time when the Secretary of the Among these may be mentioned
the practice of converting what is
Treasury (Mellon) had, reported
a
Treasury surplus and in a bill really a short-term capital gain
which reduced rates substantially (sub j ect to tax at ordinary rates
of tax) into a long-term capital
not only for future
years, but for
gain (entitled to a preferential
the past year; as well.
rate) by the device known as sell¬
It took 10 years more for Con¬
ing short against the box. Thus,
as
it may seem,, were made at
gress
Sometimes Congress found that
These
addition
life, was mentioned—major in' the'/ sense
that
.they, involve ..substantial
grantor; and
that the deduction for interest on
loans incurred to 'purchase
or
carry
In
avoidance methods, which I have
his
made taxable to the
Today eliminated.
as
.
attack
to
make another
on
avoidance.
In
broadside
the
1934
assume
his
the taxpayer is
account
holding in-
with
broker A 1000
stopping up one avenue of Act provisions were
enacted
shares of Burlington Mills com¬
escape, it had unwittingly opened which for the first, time were
mon'which
he
lan¬ up another.
purchasedIon
For example, prior aimed at personal holding com¬
in
.
cases
Jan.
to 1921 the revenue acts contained
2,
profits
fewer
1948 at $15 per share and
the
over
and
producing
valleys and
years
shallower
peaks than does the first-in-first*
out
or
generally applicable; and he is al¬
lowed to do this year after year
of
"One can read in the revisions of
the Revenue Act the record of the
was
to
also allowed with re¬ increase tax
liability when price#1
other minerals, but thev and tax rates move in the
oppo*
rate
of
depletion
allowed
is site direction.
The/'lifo" method
smaller, and the question as to tends to iron out the curve oi
spect
tion of revocable trusts.
.
wholly owned corporation; with the doctrine of
it upheld the.Treasury in taxing case particularization
the assignor of income where the ably necessary.
fused
pletion
(2221)
gued, and with success, that there the entire cost of the property. It
was no powers to revest
during the is one thing to allow a taxpayer
taxable year. Congress was there¬ to recoup his capital, but to allow
upon forced' jto delete the words him to escape tax on millions of
dollars in excess of his capital is
cons'tructions which will prevent "during the taxable year."
or discourage circumvention.
If you invest in
ParThe Congress, despite constant something else.
any other kind of property and
ticularization, on the other hand, prodding by the
Treasury, has not
narrows the space for construction
you receive for it more than you
acted with too much
alacrity in
and
thus
encourages
avoidance. closing up loopholes. Thus it was have paid, you are taxed on the
excess.
The Revenye Act of 1913 consisted not until
Why
a
different
rule
1924, 11 years after the
of only
afc(out two dozen pages, first income tax' act of the mod* should apply to oil and gas in¬
whereas today's income tax pro¬ ern
terests, I do not know, except that
era, that the unlimited re¬
the Senators and Representatives
visions consume at least 10 times duction of tax on account of
cap¬
from the oil-producing states have
as much
space, and at least half ital
losses was eliminated and
by political sagacity—to use a po¬
of the substantive provisions con¬ that the income
from revocable
lite term—been completely suc¬
tained in the statute were en¬ trusts was made
taxable to the
cessful in preventing elimination
acted to prevent avoidance. Mr.
grantor; or that trust income,
of this loophole.
Justice♦Cardozo once remarked: which was accumulated for
to his
used to discharge the
assignor's obligations or even the
satisfaction of his desires; it re¬
be
can
history of the taxa¬
•
volving attempted avoidance. Thiis elastic definition of gross income
the Court, even in the absence *bf in Section 22 (a) of the Internal
a
statutory provision forbidding Revenue Code, would be suffici¬
it, refused to allow a loss on the ent to deter avoidance, but in a
sale of stock from an individual judicial
atmosphere
surcharged
income
CHRONICLE
cerned, but it probably still pre¬
trust
vails, to some extent at least, in self title to the
corpus.
Congress. $ Had the current ju¬ Taxpayers ; immediately
seized
dicial philosophy prevailed in the upon the phrase "during the tax¬
early days of our modern income able year" and set up trusts which
tax, tax* avoidance would prob? could be revoked by the grantor
ably not have become as rife as only by the grantor's giving more
wife)—the Treasury,has the
been quite successful in cases in¬
FINANCIAL
avoidance
more
found in the
■ in
pay insurance pre-. it did. The provisions of the
early
Emiums on the life of the grantor laws were
vague and general .The
taxable
to
the
grantor,
even vagueness of a statute
probably
though he had completely parted acts as a brake On.avoidance
since
with all ownership in the
policies, general terms give the Treasury
the Court again sustained the va¬
and the Courts ample room for
sustained
breeds
&
(fifo) method.
Another
tax
avoidance
cedure—one
which
growing
pro¬
favor—results
in
to
seems
b©
from
the fact that the American income
tax law does not tax the income of
a
foreign corporation from
outside
the
sources
United
States, even
though the foreign corporation is
completely owned by American
individuals
example,
or
subsidiaries
oil
large
corporations.
For
have read that
you may
of
several
companies
of
have
the
accu¬
mulated tens of millions of dollars
of
profits from oil operations out¬
side
the
United
States; and until
subsidiaries declare
these foreign
their
profits
out
in
dividends t<*
the American
parent company no
U. S. tax is payable with respect
to
such
profits.
(Usually
the
profits are realized in a country
which imposes little or no tax.) I
have read that
and
a
textile company
candy manufacturing com*
pany contemplate the erection by
foreign subsidiaries of manufac¬
turing plants in Puerto Rico, the
products of which will /be. ex¬
ported to countries other than the
a
United
these
States.
The profits from
operations will not be sub*
ject
to
•
United
States
income
taxes, and under special arrange*
ments with Puerto Rico, they will
not be
subject to income taxes la'
the latter country for many years*.
I have also heard that a perfume
contemplates establish*
production plant in Vene¬
company
ing
a
zuela with the
same
end in view.
I could go on
for a while men¬
tioning other features of the fax
law which can be employed to
lower tax liability but, as I stated
earlier, it is not my purpose to
offer you such a list but simply to
emphasize the point that tax lia¬
bility is, within limits, flexible
panies—"incorporated
pocket- which is
now selling $20 per share.
a
literal
interpretation no specific provision with respect books"
asthey, yyere., called! the He desires to take
would have resulted in tax avoid¬ to the basis
his profi^ nbWJ
(for computing gain interest portion of annuities be¬
and that the area of maneuver¬
but does not wish to pay more
ance; it expanded the concept of or loss or sale) of
property ac¬ came taxable for the first time;
than the long-term capital gains ability, while circumscribed, is ra
ownership beyond the point of quired by gift. The Treasury De¬ losses on
some cases fairly broad.
infra-family- sales or tax rate of 25% on that
profit. He
legal measurement to the specu¬ partment ruled that the proper sales to controlled
corporations can
From the viewpoint of taxes the
accomplish his aim by selling
lative limits of economic advan¬ basis
for property
so
acquired were disallowed for the first time;
business community may be di¬
tage. In these cases there may be was its fair market value at the income accrued to the date of short, preferably through broker
B, 1000 shares of Burlington Mills vided into three categories: (1>
discovered a tendency to follow time of acquisition.
As a conse¬ death of the decedent, which in¬
Those who pay no attention to
common.
On July 2, 1948, if Bur¬
the policy of the law rather than
quence, the door to the avoidance come had previously escaped tax,
lington Mills has gone up in the taxes at all—this class is fast dis¬
its letter; the Court usually stat¬ of
tax
on
capital
gains
was became taxable, and a number of
meantime, he covers his short sale appearing; (2) those who spend
ing that tax consequences flow opened wide. Suppose a taxpayer other reforms were
accomplished. with broker B and sells the stock too much time worrying about
from the substance rather than had an asset worth
$100,000 which
In 1937, the entire Revenue Act in his
long account with broker A. taxes; and (3) those who know
the form of a transaction. In cases cost him $10,000. If he sold it for
was devoted to prevention of tax
about taxes and take them into
If the stock has gone down in the
involving avoidance, the letter of the former amount, he would in¬
avoidance. In fact, thfe 1937 Act
meantime, he simply has broker account in determining their busi¬
the law is no longer a reliable cur
liability for tax on the gain was
familiarly known
as
the A deliver his long stock to broker ness policies but do not lose their
guide.
Certainly, it cannot be of $90,000, but if he gave it to his
"Loophole Law."
Among other B thus closing out his short sale. sense of perspective.
'
said that the Court during the last wife or someone else near to
him, reforms, it tightened
up the per¬ In either case, the gain is taxed
The first group, those who say
15 years has been a barrier against the donee could sell it without
sonal holding company provisions at long-term
capital gain rates. "damn the
tax
torpedoes,
full
the elimination of tax avoidance. paying any tax. The
gain of $90,- and prevented the use of incor¬
Incidentally, if you plan to take steam ahead," are likely, unles#
000 escaped tax completely.
To porated yachts, incorporated tal¬
VI
advantage of this loophole you they are very lucky, to be hit by
block this method of avoidance,
ents
and
incorporated
country had better do it fairly quickly be¬ one of the heavier torpedoes and
1
The Attitude of the Congress
Congress in the 1921, Act provided estates as devices for
reducing cause I think this is the last year suffer severe damage thereby.
The posture of Congress toward that the basis of
property acquired tax,
It
also
prevented escape in which it will remain available. Those in the second group spend
tax avoidance has been a laggard
by gift should be the same as it from tax
through the use of for¬
so much time dodging the torpe¬
one. Perhaps this is a reflection of
would
be
The
in the hands of the
privilege of choosing a
eign personal holding companies
does that they forget about their
the mores of the legislators' con¬ donor. It then took the
legislators and prevented the use of multiple fiscal year for a new enterprise
sometimes offers an opportunity primary object of conducting busi¬
stituents, as I indicated earlier this 13 years to discover that in suc¬ trusts as a tax
avoiding device
ness
successively, j Those in the
for cutting down tax liability, as
evening. The courts for a long cessfully blocking this loophole to
shift income from higher to
third group, which includes most
time also shared the view that tax they had
does also the privilege of filing
unintentionally opened lower brackets, etc.
successful businessmen, do not try
avoidance is a legitimate sport. another. The 1921 amendment re¬
consolidated returns.
But the ju¬
to squeeze the last dollar out ot
dicious exercise of options such as
|Way back in 1873• the. Supreme quired Ihat the basis to the donee
vn
tax avoidance; their first concern
Court decided a stamp tax * case. for computing gain or loss should
these requires careful considera^
Some Remaining Loopholes
is over-all business judgment and
Isham v.. United States^ in which be the same as it would be in the
tion, not only of immediate tax
Despite these efforts of Con¬ consequences but of possible fu¬ business policy, and while taxe®
the question of liability was held hands
of the
donor.
This per¬
there
still
remain some ture
are, of course, taken into account,
to turn on the form of the instru¬ mitted the transfer of losses from gress
consequences. This; of course,
methods of avoiding tax which
they are considered as only one
involves
ment, ratherv than/, its, ■substance* one person with a small income
prognostication.
Inci¬
are openly encouraged.
factor—not
the
controlling " one.
The two dentally, if you are one of
In this case, the Court condoned to another with a
those,
large income. most
glaring are: (1) Failure to and the number is growing, who Furthermore this last group take#
thq following practice: The Stamp For example, suppose a taxpayer
tax
the long view. The attraction of
the income from state and
believe that taxes are going to be
Act of 1862 imposed a duty of two had
property
costing
$100,000
municipal bonds; and (2) 'the al-: higher next year, your policy the short view frequently turn#
cents. upon a bank check when which
was
worth
only' $5,000. lowance of
out to be-only temporary
and
percentage depletion. should, of
drawn for; an amount ?Of $20 or
course, be to accelerate
Suppose, further, that: he hiad no As to the
first, whatever, reasons income and get it into the; year worsens as the horizon recedes. •
more.; "A careful (these {are
.the income against which to offset
originally existed for granting im¬ 1948 and
"Court/is words) U individ ual*' hav* the loss on the sale of this
; Jo conclude, it seems Jo me that
postpone deductions un¬
prop¬
munity to interest on state and til 1949.
As a practical matter,, the judicious course to be pur¬
ing. the . amount of $20 to pay, erty. In such a case he could give
municipal bonds, these reasons, in there' are, 6f
course, iimits to sued in connection with tax avoid*
pays: the*same by handhig to hM the property to a relative Or ;a
the face of a. huge jfederal tax what can be done
creditor* twof cbeckk
aldng' these; ance is a middle-of-the-road one-.
close friend with a large income.
qL^
structure, the impact of which is lines, but within .these limits a Taxpayers f whov are
completely
IHe thus draws checks in payment The latter would sell
the"T>rop- felt
by virtually the entire popu¬ certain amount of
manipulation is blind to the possibilities of avoid*
^©f his debt to the amount of $20, erty, and using as his basis the
lation, no longer prevail and the usually possible.
ance—even those
who are astig*
and yet pays no stamp duty. This cost to the donor, could offset the
;
r
,
*
continuance of the exemption, at
practice and this system he pur¬ loss against his income. The 1934
The election to use the last-in- matic Jtowards it — do themselves
least as to future issues of such
sues
habitually and persistently. Act effectively stopped this prac¬
little service.
Those who make
(known
as; • "lifo")
bonds is,* in my opinion, inex¬ first-out
While his operations deprive the
tice, by providing that for deter¬ cusable.
As to the second major method
of. pricing .inventories, a fetish of avoidance do their felgovernment of the duties it might mining loss the basis to the donee
them¬
reasonably expect to receive, it is should be either the donor's basis loophole, i.e., percentage deple¬ that is, of considering for inventory lowmen, and frequently
not perceived that the practice is or the value at the time of the tion, some of you perhaps do not purposes that the goods last .sold
selves, a disservice. In this field
©pen to the charge of fraud.'
He gift, whichever is lower, •« 4
even know what it
means, but it came out of the latest purchases, as in so many other endeavors of
-,
.
.
.
j
*
resorts
to
devices
payment of duties,
to
avoid
but they
the
are
-j.
Another
avoidance
example
provision
of
•
how
*. an
is of vital
importance in the oil-
sometimes producing states.
Percentage de¬
saves
tax
tax money
rates
are
when prices and
rising and tends to
life, the axiom about "everything
in moderation" is
very apt.
.
THE
(2222)
38
Thursday, May 20,
CHRONICLE
& FINANCIAL
COMMERCIAL
1948
The Post-War War
Our
Reporter on Governments
(Continued from first page)
It alone forces every nation with¬
in her potential radius behind for¬
By JOHN T. CHIPPENDALE, JR.
eign exchange barbed wires with
Maintenance of the
certificate rate had the expected effect which neighbors help mutually to
destroy the credit of each other's
upon the government securities markets. . . . Demand increased and
currencies.
That everything else
prices rose sharply especially in the longer end of the list, as investors
is overshadowed by the fear of
either put idle funds to work or shifted from shorts to longs in
order to improve income. . .
Continuation of the 1V»% rate for one Russia, is indicated by the devel¬
opments since the Bolsheviks took
year maturities caught the market pretty much off guard, although
over Prague: currencies deterior¬
sizable buying b,y the large banks of intermediate and long eligibles
.
was
made last ating^and international restric¬
the announcement was
in evidence a few days before
tightening—in the face of
Marshall bonanza and the
tions
Snyder,,,.
Thursday by Secretary of the Treasury
the
TREASURY THE VICTOR
.
Evidently the Treasury is going to see what can be done
other than through the raising
interest rates.
one-sided.
.
,
.
are
also at work
to
of
so
levels.
in the decision to hold rates at present
has
to four annual in¬
elsewhere, all pour¬
as
truth
by the Russian threat. The
that the Communists
did not lose a single vote. Per¬
is moreover,
they polled more
they ever did anywhere in
election. That they could
centagewise,
than
free
a
grab the power should not be
not
which it was supposed to
year-end, to 150% to
reached next December, and
level,
. . .
reach at last
be
MARKET REACTION
the
so,
Bolsheviks
drew
more
postwar
in the first
when Washington
than
votes
election
still
the
parliament, are a far cry from our
ideals. They believe in managed
economies
surrounded by
ex¬
proceeds to strait-jacket the pur¬ change restrictions, with price
chase
by
Britishers of South
fixing and profit limitations, con¬
African gold stocks, thereby clos¬
trolled
business,
etc.
In
other
ing a most popular avenue for words, the best we might expect
pensate for the depressing of prices of these issues, by those who
flight out of the pound. Simul¬ is the British type of nationalsold them because the.y believed a 1^4% rate was inevitable. . . .
taneously, in Paris the price of socialism which in Italy may be
The intermediate maturities have gone ahead between % and % of
dollars and of gold coins spiraled
run not so much for the benefit
a point with the
longer maturities up close to a point. . . . Selling
to
newv heights, which is the of the labor unions as rather for
by Central Banks has been reported in the eligible issues and there
Frenchman's way of saying that the small farmers and the middle
is no reason to believe this will not continue because the market
he wants to get rid of his francs
classes.. It will
be poles apart
must be kept orderly on the up side as well as on the down side... .
in spite of all its buttressing at from anything we stand for, ex¬
Government bond market management Is just as important on
our
cost.
All hopes to dislodge cept that it is anti-Russian. And
the way up as on the way down. . . . Therefore it is not believed
the gold hoards by devaluing the even that, perhaps, for national
that the market will be allowed to get out of hand on the up
franc and legalizing the "parallel"
rather
than ideological
reasons
side.
Federal has the securities to supply the market with
market are shattered. Incidentally, the conflict over Trieste may have
and indications are they have been doing some selling and will
both Britain and. France have brought many wavering Italians
no doubt continue to do so, probably on a larger scale as prices
reached
postwar record export on our side.
advance.
It is not conceivable that the authorities would
levels in the first quarter of this
Not did we wi$Jit> a military
allow quotations to run up sharply and at some future date
year-—and
record import
sur¬ fashion. Italy haisS few, resources,
raise interest rates and then have to support the market in order
pluses as well.
and that handful may be blocked
to prevent it from falling out of bed because of a too sharp price
Or take the case of Greece: the
by communist Fifth Columns. In¬
advance now.
There is a ceiling to the government market
stead, we have incurred by our
obstacle to her recovery is not so
as well as a floor.
,
;
at the Italian
Pyrrhic victory
much guerillas and political cor¬
ruption as rather the fact that the polls an unprecedented obligation.
HOW FAR UP?
From here on, we have to support
citizenry uses every means avail¬
How far are buyers of government bonds going to chase prices
Italy, and not just for humani¬
able to secure for itself a gold or
...
•
,
.
,
,
up,
.
and is there the likelihood of selling by those that bought before
cushion; preferably abroad.
this last rise?
Investors that have been acquiring needed Treasury All over Europe, new tricks of
flight emerge, and ex¬
bonds at quotations that were recently prevailing are not too con¬ capital
cerned yet with the price advance since most of their buying was porters develop new techniques
to hide overseas part of their for¬
done at levels that give them a good cushion. .
.
However, they
eign exchange proceeds, Withhold¬
could be tempted to take profits on further strength.
ing them from utilization by the
.
.
dollar
.
.
...
respective national economies.
fast moving brigade,
The
that is the traders and dealers,
are
not in a position to supply the market with very many
securities because they were caught largely on the sidelines.
.
What purchases that were made by this group were at advancing
prices and these will be dropped like "hot potatoes" if the
.
-
market shows signs of a reaction.
.
,
.
Some
funds
new
.
.
Selling
.
by
the money
bills and
force that could keep the market from getting out of hand.
..
the
is,
.
although the supposedly "shrewd traders'- are inclined to be¬
lieve that another M to % of a
point up depending
upon
,
,
In other words between 103 and 103 %
.
for the longest
bank-eligible is about the best that is expected by most informed
followers of the money markets.
to make
Owners of Treasuries that want
...
adjustments in their portfolio positions
do it with continued
strength in the list.
.
.
being advised to
what?
future
not will
depend
and real estate.
.
.
.
Also the level of
commodity prices must
given full consideration..;. If loans level off
modity prices
On
and
are
the
real
or
decline and com¬
stable, then the V/s% rate will be continued.
other
hand,
if
loans
estate, and commodity
Treasury will beyond doubt
inflationary forces.
advance
prices
in
up,
go
an
especially
Chicago would also be raised.
Likewise, the chances for
Reserve Board greater power
banks would
hand.
..
.
be
attempt to combat the
voting is
are
an
inflation
:
ened with
Fear.
a
over.
•
a
se¬
real Free¬
In lands threat¬
devastating
collectivist
its
have to pay
war
and
implications—and
market capitalism
kind that lives on
extravagant profit margins from
in
and - out
operations.
Sound
business and long-range enter¬
prise are unattractive under such
black
prospers,
the
-
conditions which call for subsidies
instead,
turn
•
■
"moderate"
the
compels
to concessions along col¬
lectivist lines. The result will be
groups
in
Italy,
it is in England,
Scandinavia, that the
as
and
France
of bolshevism them¬
the water into thp
mills.
They bid for
labor support in competition with
Moscow's radical propaganda, and
opponents
force
selves
bolshevik
do
.
undermining the sys¬
against radicalism.
by
so
tem's resistance
HI.
dollars
per
annum
for
a
un¬
an
limited number of years.
in
Italy is
Per
catastrophic. condition.
capita, she has been just about
the poorest nation in Europe, a
country famous for great monu¬
ments and
an
inordinate number
for the import surplus only
by attracting tourists and by ex¬
porting emigrants. On these two
"invisable" industries, Italy's very
what
we
elections
dent
as a
political
sickle, lavish
the
may.
her
The outcome of her
was
hailed in the Occi¬
on
4major part of her coal and
It; Will take
many years* and rriany billions of
dollars, to make one-half; of
arid a
potash ' resources.
integrated industrial system oper¬
ate
after ; separation from ; the
other halt to say nothing; ^
storing the appalling war damages
to physical plant and population.
But even the nations of Western
and those throughout
depend on Europe
their markets —• will remain
Europe
—
the world that
for
wards.
>
"
-
fundamental
A
f
of
fallacy
i
our
international policy is the assump¬
restore
notwith¬
economies,
distressed
standing the external drain under
they labor—thanks to Rus¬
which
internally. To maintain
Security Utopias and arti¬
operate
ficial
Full Employments
is possi¬
only by way of piling infla¬
tions, confiscatory taxations, and
bureaucratic controls on top of
each other. The sum total of this
mixture of Marxian anti-capital¬
ble
Keynesian money-tinker¬
ism and
ing,
with
hopelessly
confused
attempts
at adjustment
(called
"planning"), is the elimination of
well
incentives for the worker as
for the
as
saver
incentive
to
replacing the
for export
—
produce
by that to hoard, to gamble, and
to play politics, the latter being
the main source of jobs and of
subventions. The outcome is more
of the
balances <Jf
European visitors if all were sail¬
ing to Italy. And, needless to say,
the door virtually is shut to Italian
world
emigration
on
any
major
scale.
Exchange restrictions and barriers
to
finish Italy's re¬
immigration
covery
chances, with or without
Marshall Plan.
Had
the
.
Russians
gained
the
would have ex¬
ploited Italy as they exploit the
satellites, - while
relieving
her
population problem by dumping
Italy is a conspicuous illustra¬
of Europe's inability to re¬
of
of Russia, including her
agricultural surplus areas,
national finance is the assumption,
■
shadow
hands
main
going to the continent this sum¬
mer
could not substitute for the
they
millions of Italians in
tion
the
Germany
could
recover
while
half of her territory is in
the
deterioration
Tourists
elections,
under
Premier has announced
Both are bank¬
cannot come in
numbers from hardly any Euro¬
pean
country; the some 70,000
Americans who
supposedly are
rest.
IL
permanent ward
States,
as
her
already in
almost as many words. So will
Austria,
China,
Korea,
Japan,
and of course, Germany. It is
plainly naive to assume that with
a few billion dollars speht on he*,
Italy will be a
of
the
United
Social
The bill will be around a billion
Soviet spiritual influence—do the
spiral should get out of
until after the fall
will
and
accordingly.
more,
any
rupt.
cover
••
communist dema¬
Moreover, the
gogy
bring
sia—and the waste by which they
down
existence depends.
hammer and
rates
what com¬
agitation is able to
about and not only in Italy.
munist
behalf of America. We cannot let
the Old World feels threatened in
requirements of member
election year, so little, if any, changes
looked for in money
labor
tion that financial aid can
made promises
pay
only under legal
armistice, but
from
market
call
rational capitalism—r
prosper
dom
we
depleting what is left of
entrepreneurial vitality. The pre¬
dominating
"cold"
bolshevistic
practices—a direct consequence of
legislation to give the Federal
reserve
productivity is
disproportionately rising
costs or by reduced labor
in technical
ment
implicity or
worse; and we have to prove that
prosperity is around the corner
for the good peoples who voted on
have
.
.
over
enhanced if the
However, 1948 is
importance
.
new
an
formal
—
City and
.
important item in our
international security picture; we
to
her
curity that presupposes not merely
can
in
it is be¬
.
We have promoted
of beggars. Now, it is overpopulated, with little or no birth con¬
trol interfering with the increase
of numbers. It has to import most
of the essentials of life and can
What
smarts.
.
consumers
lieved that reserve requirements of banks in New York
of
.
marching ahead, the
This would not be all, because
.
World
Old
and bureaucratic controls
.
along with Federal and push the
go
certificate and discount rates
-
September but after that,
the volume of loans, commercial, con¬
upon
the
a
upping of the certificate rate in the
an
to
The foremost reason
the perilous peace
which
—only
Whether there is
.
or
sumers
be
,
.
public.
sale
reasons.
tangible fashion which remote
Americans scarcely can visualize
are
.
AFTER SEPTEMBER?
The iyg% certificate rate is here until
its
suspending
to repeat,
under
economy
the maturity
>of the issue will find selling by investors as well as dealers and
traders.
into
land
As to how far the market will advance from here on is anyone's
guess,
like a
is
payments or stopping the decay of
the respective currencies. The run
for gold has forced even Switzer¬
would be the
managers
Europe
tarian
them
sieve through which dollars flow
without improving the balances of
are com¬
by switching operations from
longs is being supplied
Financially,
v
.
ing into the market, but most of the money that is going into
certificates.
equilibrium if the improve¬
nomic
.
.
.
materials do not restore eco¬
raw
efforts. That is exactly
the government market with the con¬
.... Buying has come into the
entire list with the short bonds showing minor advances to com¬
.
own
threatened
to
withdraw that vital support. Even
have
and
What has taken place in
.
do so by
home-brewed anthcapitalism. Maintaining the con¬
stant terror of war or revolution
will help. In addition, every op¬
portunity will be used to incite
industrial
strife.
Machines and
Italians will not
the
if
their
offset by
tinuance of the I Vs% certificate rate?
.
lowing its order Moscow can, and
undoubtedly will, aqnul all our
efforts toward reconstruction even
surprising in view of the fact that
we
keep the "marginal" Italians
honeymooning
with
each, an ob¬ was
Kremlin. Presently, all our
vious answer to the large number
bribery and propaganda, political
of capitalists who try to escape
and economic/ produced no more
legally. The pound sterling has
than an irrelevant group to rep¬
been falling to new lows on the
resent free enterprise. The prin¬
free markets of the world, while
ciples of the Christian Democrats
the Labor Government reduced its
and moderate Socialists, who be¬
export goal from 160% of the 1938
tween
them
rule
the
Italian
...
for defense
There,
ing in of dollars is useless from
the long-term point of view, be¬
cause of the capital flight caused
stallments of $4,000
defla¬
Likewise, it is being pointed out that
his country
from
reduced
been
that the pictftre is not all
Financing of working capital needs of corporations
purposes could have been an important consideration
forces
tionary
can
migrating
.
contain the forces of inflation
v;
Britisher
gained in material
nothing.
we
terms is less than
alive
April, the amount a
take with him when
Since early
authorities as well as the market itself had been
in disagreement over what was going to happen to the certificate
rate.;
However, as has been the case in the past the Treasury won
out, and this branch of the government had been maintaining all
along that the 1 Ve % rate would be kept, although other money
managers and the market refused to go along with the idea. . . .
The monetary
■
armaments.
onset of American
what
But
lands of Siberia.
•
the waste¬
>
U-
But the Soviets win in any case.
They need not resort to force, but
merely to change their tactics, as
they often did before. With a sub¬
great victory. Moral and
victory it was; indeed. stantial minority of Italians fol¬
payments, further weakening of
national currencies, and more ap¬
peal fordollaraid."
Another
fallacy
of
our
the Marshall Plan, that
basic for
market prices will
constant
inter¬
or
remain
actually will fall. But
with
with rearmament under way,
the American
tus
production appara¬
full capacity, and
strained to
inflation
rampant
world-wide,
definitely
upward
bound. Our national expenditure,
already around $22 billion a year
prices
are
for armament and
foreign spend¬
ing, is due to approach $30 billion
in 1949, with more to come at
higher prices. Given our program
as
announced
by
Marshall on
March 11, that this country should
be "for at least the next five or
ten years
position appropriate
given' iorthr]
coming appropriations for a seJeCr
tive service-draft combination. for.
to
its
in
a
leadership^
:
'
&
''*:/iht^n^
^'j'lend-leas^withiftl^yearsit'wiil
/ exist us more tnair $300 billions to^"contain'';. Russia, about as much
•
it- ha£: cost
asv
defeat
the-
Axis: If so# the national debt must
; -
ri$e
lion,
•
•
religiously/
surplus
re-
to
"
newed
shots
in
-
-
the
-
nuately
endangering
foreign aid program.
.
doddering
diplomacy) >
would /rlose
even
the
*
But
faster,
materials, and
raw
buy them with
the
arc# may
der the same-fire.
Nt
desertion as they,
dissolve themselves unr
have
aid:
our
puncturedv by.
Europe's
Eastern
Thus,
wolves
while
^indefensible,"
as
inspired column of: the
ration¬
an;
"Herald; Tribune"
Y.
39
probability,.
and;
push
a>
forthright
diplomacy
could
forceful,
back the Soviets step by
step, de¬
prestige, undermine
aggressive!" power, and elimi¬
stroys their
their
nate; the
altogether,/
danger
war
all; that without bloodshed.
that,
After
could; proceed to a real¬
we
istic reconstruction
of the world,
hopeless relief and;
wasteful experimentations.
not
just
to
alized lately that our "settlement";
we still may main¬
technological lead: But; of; a, "natural" division) of the i
" '•''
' V•;■/ ;•
'
r
"■
American zone, and American oil the domestic Situaiionwill be very world: amounts to maintaining the
status
different once
quo,
and praised; in. this
run-away prices
equipment,- absolutely- vital to
herald the end; of free markets context; what it called the Vanden>Russia's: armaments, may jhavey to
and of high living standards. What berg
policy of, "restoration of
pay for Polish coal to, Sweden qy
is more, Russia's ability to re¬ health and strength in the remain^
France, or for Hungarian grain to
taliate would then, make a war so ing area of freedom."
PASADENA,
CALIF.—rAt the
Austria.
The American machin¬
The trouble, apparently not ap¬
expensive to us as to be prohibit
beginning of the year, the Pasa¬
ery, the export of which to Yugo¬
tive./ -./ /,'/;/; /.:/'-//// / /■ •//;> ? ,;// preciated either by the Adminisr dena Board of Education decided
slavia is embargoed,
is sold" to
Fascinated by the Hitler prec¬ tration or, by Congress, is that the to give a course in the "Principles
Tito by the Swiss and the Italians.
of
Invest¬
edent, we are acting as in deadly Remaining Area of Freedom can¬
For a while, the Cominform may
restored
ment" at Pa¬
to
fear that Russia might start shoot¬ not. be
health, and
lie low
so
as
to
get American
sadena
City;ing any minute. (That is the latest strength—on its freedom, mainr
wares
even
for
Russia
direct.
of
College
for
nonsensical, scares:
that
she tained—by
stepping; Russia; at
ulti- the Czech Skoda works
arm,
the
may % not
be- needed/ Runaway,
unavoidable decline of the dollar's
purchasing powef will call for
/
v
Keynesians
(2223)
she th* Bedell Smith, note; What, else
since; falls beyond the "boundaries esr
inflation in j peoples in, the rear of her armies, sential- to American security," us¬
America-, may v accomplish-/: their Russians as- ( wellj as / satellites, ing State Department; semantics,
dream: to- get uh out of Eurasia*
would rise as soon: as her, com¬ is,; anyone's guess. According to
munication system;ceased to func¬ the wellrinformed "Wall Street
H The Marshall Plan serves Rus¬
sia's interests directly, too, by way tion under devastating aerial afr Journal," / Finland,
and /e ven
of "East-West trading." The ERP tacks. Even her* armies, constantly Sweden" (?) are to. be thrown to,
/count-
by at least another $H)0 bit-.perilously • enhancing•' the
unwieldy money potential; The countries, need
•
.
to
us
Marxists/// and*.
the
FINANCIAL, CHRONICLE
-
entire
Tomorrow,
still
are
tain
fed with; German scrap from: the
the
..
,
Pasadena Bond Club
IV.
,
*-
^Qthihg. could 'bbmore effective
in weakening these United States;
^
■
than
unleashing
flation
and
forces it
what
Sponsors Inv. Course
run-away in¬
the
destructive
a
all
*
irhplies, which is-exactly
the., program, of
spending i at
home
wholesale
and
abroad
promises to bring about.
/,,/
dn
few years, of "Mobilization
a
**
for Peace,-' we will, have armed
ourselves and our allies <# to the
teeth, kept
an uneasy peace, and
Russia within her Sphere.
held
Soviet
poliey can use every trick
might "act" before we are ready.)
In reality, Hitler could get away
dictionary//
//The- cryptorpeace permit? the
are'
murder, or thought he could
in 1939, while Stalin could not; in
1948. Germany then had a formid¬
rebuilding of Russia's industries,
extending her influence "peace¬
We will have raised living stand^
afd^ abroad ffor* a while) airid
provided equipment of one kind fully"/ (such; as by civil warn in able aerial lead, in addition to
the Orient and in Latin America); the
/
o^ another^at the price of ijivigor-'
military; America was a,negli¬
and consolidating collectivism in
atedi scnrciti^^
bottlenecks^ taxes,; thd satellite countri es, which are gible quantity;: Italy, Japan# and
even, the- Soviets
were
on
her
Y;<: /controls, and tensions, at home.
being rapidly, integrated into, the side.
; '/ ;We may
Russia, today, is totally, isol¬
underwrite, nioiiey pools;
Soviet system.
While we spend ated; limping*
; ;
alliances,;" and Chimeric;,unions in
technically, and in
ourselves dry, Russia presses goods a most
vulnerable position. That
0* H^rope^ tiying tp: Qbscure the fact
.
that
//■
her
she
has
reached
"clearing"
the
end
and
of
suggest a Pan American Union to
solve Canada's and Brazil's dollar
Blocs,
We may complete; the
of the globe into two
make
ments
and
break
The
plete
will
we
productive
a
literally de¬
slice
in
over-inflated
(
r
Bigger
inflation
satellites
combined, not counting
our actual or
potential allies. In
manpower, too, the Western Bloc
(even
excluding
Germany and
most of the colored races) is far
superior to the Eastern, and even
domestic
and
"better"
taxation will be rampant long be¬
a decade is over.
That im¬
fore
more so
plies the
ultimate lowering
of
living standards: fewer homes and
other good
and
abroad.
trial
It
available
vastly
and';
softening
fibre.
moral
increased
then
In
of
spite
at
are
today's
In
the meantime,
tion
will-.,
grow
stronger.
tary i prowess
*
since
will
which they strain all
get as much.advantage out
the "peace" as possible, con¬
of
she
has
be
matter
a
no
navy
of
to
by
hamstrung
a
preparing the* defense against
Russian aggression that is not in
the
air forces
and
little—
which
ing anaggressor.TheJtaliancase
Atlantic
(2)rTherAare hd;i)l^ea'as ;ydt
// Notwithstanding all:
and/appearances* tothe/
contrary,
can' cross the
the Pacific and: return iwe?iAaije&atm/ appeasing/ Russia,
effectively
or
assurances
agreeing
after
At
peace.
having avoided
10
or,
to
years,
which
to
war
anyway,
under
hazardous
more
philosophy,
we
and
be
recklessly
smaller
dragged from
Have
we
the
Maginot Line
plied; hundredfold.
the
("Chron-
32)—that the Soviets avoid
all means.
war
i
(except'perhaps by suicide planes)
while from Leningrad to Vladivo¬
stok every significant; production
by
and communication center would' !U. N.), of Russia's role in, that
vicious coup d'etat We still operbe open to the most vicious bombr
They create crisis after
-crisis; and each lime calf the bluff
opt the
brink /of 1 the ; breaking
ate/onF the
ing, originating from our carriers
and preferably from solid bases—
armed intervention- in.
or;
Finland/
-' the
-
or
ties,
*
The method
before
to
-v
mune,"
Week for- week/4 the
uproots mormal- 'economic
slows down and unbalances
the capitalistic
r;
respect,
next/
scare
centers
^peace
Russia
again, we still are "im¬
while all major Russian
are
S.,
American-Yvdiplomacy
is- still
anchored
the unclean waters
ot the^ Roosevelt-Churchill appeasementdeals which ^av,e Stalin
virtual free hand in his* Security
at
Sphere. The exact limits of,"per-
y
accessible targets.
reach
while
the
the
continental
Soviet
lands
U.
were
.
from
time
our
does not undertake
mercy. No such supremacy of
one power over
to
the rest has
ever
for long.- ;
1
.
:
■ -
,
.
Tomorrow, guided missiles and
bombers may reach
/physical agression.—not* yeV—if it
long-range
threatens
to
embroil
her/in/
r
missable"
;
are
a
Soviet
still secret.
existed; before. But it cannot last >real
time, and to postpone the show¬
down.
vital
this
.
is .akin tp Hitler's
late, 1938.. So is the trick
propose
In
oceans.
Today, Soviet explosives could
not
process.
the
across
Trieste one day,
^;r/Greeeef;*T!urkby*;Iran/ br-TCdrea
<
resistance
respected
Russian
by
aggrandizement
The
lines of
our
(each4 time fully
Moscow)
against
incursion
into
Germany,
Austria,
Italy, Greece, Turkey,
Iran, etc., indicate where the new
*
ly
-
resort
or
to
a
war
an¬
to head into financial
ism.
y
The
western
the
civilization
Vice
ruthless, rule of
facto,
but
also
are
versa,
Russia
by
over
by such lefthanded appeasement gestures as
ness
the standpoint of1 the
investor. As is indicated
following
outline
the
of
placed on the
of
the
busi¬
it
is
not
too
late
to
Various types of investment-
tors.
Changs,
Within
months* ifc not at
5.
matter
3.
The
we
to* fight
war—in which
fight
it.
The
case
will
need
we
not
thing
have
to
accept
tem within
beginning
we
sia
Step by step,
minor questions,
could.1 turn the tables
and
with
give her the
the
aid
of
writer,
on
war
Rus¬
jitters
ultimatums
de¬
7.
which
we
have
liberated; and to compel and
supervise
disarmament
of
the
Soviets
which
on
the
same
terms
on
willing to accept
disarmament and;its supervision.
But
should Russia prefer to
we
are
fight* contrary to all rational, ex¬
pectations, with the virtual cer¬
tainty of being vanquished mili¬
tarily and the prospect of suffer¬
ing the extermination of Bolshe¬
effective weapon
would
be
the threat: of laying
waste to much of. Europe.. That
vism,
her
only
is the chance we have to
extremely
sibly
the
short
long
the
America
one,
chance
take,
of' losing
Soviets, and
as
an
compared
well.
In
pos¬
all
railroadi/
Investment trusts.
10,
Impact of, business cycles
on
securities.,
11.
Small
vs.
vs.
big business—New
seasoned
industry.
12.
Function of
13.
Wartime and postwar changes—their effects on securities/
Sources
14.
how
to
stock
a
of
read
exchange.
information
financial
and;
publi¬
cations*
15.
Markets—listed, unlisted. '//
16.
What the investor should look
since 1939, just as we re-establish
areas
under^/
investment counselor,
securities.
9.
minor concession each
time* bufc ad&ng up toi the major
democracy in the
fi-/
speculation
3, / Industrial, utility and
a
results: to re-establish democracy
in the areas Russia has conquered
and
investment dealer, broker de-v
fined,
Insurance stocks.
Aviation stocks.
6.
the
Russia.
with
its
The* function^^ of /the
preventative
Russia
tolerate is war,
one
presently cannot
and< she
able
are
a
and
defined.
and
willing
•
Investment
un¬
derstand, that
/
'
corporation
napcial,; structure.
of
be able to make the Kremlin
,
and
course
bonds, preferred stocks, com¬
mon
stocks; rights of inves¬
4.
a
to
history of investment. ////:";/y
2.
change our
international; policy right now# or
after.- a; short preparation for the
once* we should:
opposed to discussing' the
or
demerits of particular
Introduction
1.
In reality,
economy?
as
or in any way attempt¬
ing to prophesy market action.
chaos and
collectivist
with
of
be established.
securi¬
from
average
,
Europe to
Day of capital¬ /(which is one reason for our EuGreat Bust,' on which r op e - mi n d e d ;■* Administration's
limes
to
ment
to
the
of
proach to the problems of invest¬
course, emphasis is
basic fundamentals
nihilation?
Must, we accept the
otherwise
clear-sighted
Virgil
Jordan's pessimism: that there is
nothing we can do any more but
de
.
fundamentals
ties and to provide a practical ap-
merits
closer the Doom's
or
is designed to pre¬
course
the
instructor from its
securities
the satellites, their absorption by
the Soviets is conceded not only
She cannot and need
The
sent
lationist shell
failing to offer resistance against
war.
gestion and recommendation, the
Bond Club (an organi¬
zation founded in 1920) has agreed
to sponsor the course, publicize it,
by/ the
which then may mean mutual
practical perfection. Also, sooner
later, Russia is bound to master
the atom.
'
/ Time works for her. The
longer •/ 'Today, war would spell suicide
the twilight of war-threat: lasts,
to Russia, the end of her/ Noble
and the further the Occident's in¬
Experiment. She might destroy
flationary boom is boosted,/the much of Europe and of Japan
major
riot/undertake Mich risk/;/;
every
Pasadena
present course of being worn down
until; we either, revert to our iso¬
totally/ naive#, and manding
equally unethical, assumption that
one
can
reform; a professional
arsonist by-letting him put the
torch- to his- nearest neighbors'
houses "only." ;
point; It served their objective to
frighten the West- with rumors of irom Iceland to Japan.
(3) JiTo guided- missiles; existt as
Italy; as-it
did to tum the heat om Sweden yet which could reach effectively
-
recognition of the new gangster
government, and side-stepping the
issue (brought up by Chile in the
course
Mr. Hurry's sug¬
multi¬
alternative
has
illustrated^ once more
imposed
as
alterna¬
the on their* own power, Whab that /Prague* was, a classical sample:
■/pointy /as/do* the * clashes im Berlin spells should be obvious: the^ Rus¬ iiace-saving protestation^ of moral tives, conditions which need not
interfere with the Bolshevik sys¬
■f- and Vienna, which' this"Writer sians couldhoi attack >our/citie$; indignation combined with prompt
previously
six months. / At
;
Stalin—with
no
Education de¬
sires to continue the
in¬
to
the
that
Board; of*
and select the
pattern of the American at¬
cost- of
the
W.. Hurry
members for each semester,
and permitted Hitler to
grow strong. That is almost the
toward
Harry
on
one
conference
enthusias¬
tically
let
allies,
other,
titude
15th;
and has
received
so
than
hold-the-line
on a
its
week
may
face
or
conditions
spent
ternational
exact
in
infinitely
that brought*disaster upon France.
She, too, relied
is now
course
been
Russia
appease
y,/
The
course.
during
nomically and socially*
have
r
r
n
to give the
ry,
grow much weaker eco¬
we
u
g h a mv
Walter & Hur¬
for five
longer,
or
war
H
i
B
the/end,
conditions
.emphasized
W..
nature). The
that-, spend; as,
may, she will get what) she
wants without war, just) by not
for
.
economic
mean
But
within
would
using it; aggressively, and she will avoid becom¬
are
show¬
offing (not- until and unless
Russia is militarily superior to us.
In the meantime, we proceed to
bankrupt, ourselves through overgether.
r-Y
■
■
'•■■■ > Be that as it
inflated
military
expenditures,
may, the decisive
facts are:
;plus an utterly inadequate and
(1) The A-bomb, of; course, andt; mismanaged glob a 1 spending,
while- trying
to- avoid the un¬
other "gadgets," not to mention
avoidable conflict: by—continued
Russia's- shortcomings in heavy/
appeasements.
.>
bombers.
not
we
Russians
the
solidate their conquests and posi¬
be larger than
West could put; on
Swedish, plus Ameri¬
on hand. They are
sufficiently strong to delay
a
"Blitzkreig," if not to stop it alto¬
blood-letting of tiie West strength¬
ens her
hand, raising her prestige
and influence*: Our growing mili¬
-
the
nerves,
the British,
can,
"unpre¬
stronger
All
postpone
in
footing
months.
Russia's posi¬
Continued
to
armies
pared" state*
.
down
ground' forces;
near-mobilized
a
powers.
is
speak of, and the advance of her,
of
we
.
we
great
want
tion, in the meantime keeping the
ether side in; jitters and letting it
spend itself into bankruptcy. Our
policy on the other hand, consists
war
may
be
less capable . or
willing to resist Soviet expansion
than
again, if it; needed, confirmation,
the respective policies of the two
may
anything the
the
armaments
in
which
status
friends
our
recurrent indus¬
means
strife
nation's
for
by
means
re¬
quested Harry
earth
on
we
herself
The comic opera note-exchange
incident (Who was trying to fool
Whom?) between Messrs. Bedell
Smith and Molotov has confirmed
in terms of technical skill
True, i Russiahas
tilings for the average
American
i
to oe lour times that of Russia and
consumption.
quo
defenses
VI.
few
essentials. Our industrial
capacity is estimated competently
and another large
use,
financially. In: effect;
it offers us a long rope—and we
grab it with .enthusiasm.
position of
power
Bolshevik
status
adults and
is
never
people
no
Instead of
U. S. vs. Russia is determined by
our own resources, burn up
of the annual output in un¬
15%
relative
(which
"natural" since
at present* Such is the gamble on
ruining itself by war, which wa: are: embarking/ tails#
the Soviet is willing to* permit we
lose; heads, Russia wins. It is
America and: its friends to ruin the
same
defensive-mindedness
time/and
V.
Russia, chase Comaround the lamp posts,
and, subsidize bigger and better,
But
explains her strategy of; endless
themselves
with
booms.
subdued
in. terms* of power-balance,
eyen
agree¬
munists
:
her
Worst,; oi -it/is. that,
"peacey work fdr/
shortage?)
division
of
out
neighbors, to the tune of an/ah/ bluffing but anxious sidestepping
nual
$3 billion, at least/;The of a serious conflict.
( Who would
ropes.
services
border
some
with
jinvthe Machiavellian
for—favorable
signs,
danger
;;/// signals.
17.:
General review.
As
a
text for the course, Mr.
Hurry has used, for the most part,
"The
ment
Fundamentals
Education
vestment
Committee
Bankers
sponsoring
Pasadena
not only
an
Invest¬
Bond
of
the
In¬
of
Association
America in 1947.
In
of
Banking," published by the
*y/:y/
the
Club
course,
felt
the
that
it
offering the public
opportunity to understand the
was
investment
also
had
business
the
but that we
opportunity of pre¬
senting the investment industry
and its functions to the public. In
other words, here was a fine op¬
portunity for the investment busi¬
ness to do
a
good job of public
relations.
'
;*V.
40
THE
(2224).
*
COMMERCIAL
Thursday,'May 20, 1948
CHRONICLE
FINANCIAL
&
granting ope vote, to each Menv->
ber.' /*» '
%.
\
Contributions are to be appor¬
to
wish to ask.
For those of
who wish to pursue the mat¬
ter further, and I hope that in¬
cludes all of you, I shall be glad to
make available copies of my com¬
may
includes
This
detail.
in
drafts
Geneva
and
Havana
comments, as well as a ref¬
to guide you to the par¬
ticular points criticized. And you
should have a copy of the Havana
Charter, which can be obtained
from
the United Nations head¬
many
cause
private
erence
not be
might
forthcoming.
might be easier and the re¬
quirements for servicing and re¬
payment less burdensome. More¬
over, lending of what are called
public funds can quickly become
political lending.J In essence, it is
foreign investments or loans forced
on our own citizens through the
government's power to tax.
money
nine
of
consists
Charter
The
-
Outlined
Chapters and a number
of An¬
nexes.
CHAPTER I
*
Purposes and Objectives
criticism from
of the objectives of
international organiza¬
When
ainy quarter
Such
an
of
sions
a
study,
organization, which is an¬
other way of saying that the pres¬
ent attempt may be premature.
Certainly, that is one of the con¬
clusions to be drawn when one
exceptions to the rules
thought necessary.
Thus, I think the last objective
stated should really be the first.
This reads: "To facilitate through
of
ber
which
are
the promotion of mutual under¬
standing, consultation and cooper¬
ation the solution of problems re¬
we
of
the
In
while
fact,
be
reduction
of
high
a
CHAPTER V
This
is
for
regulation of private
or
Unfortunately,
State
and
monopo¬
find the
we
provisions
Trading
excepting
Intergovern¬
and
the
And in case someone thinks
ject.
But there, is
specifically included.
CHAPTER VIII
States
>
As
CHAPTER IX
ditions
provision is made tor si
general review of the Charter in
five years.
This is an improve¬
Here
ten
the
over
rid
Chapter, Article 15
increase in pref¬
erential
tariff systems.
British
preferential tariffs provided an
object lesson for other countries
seeking
new
and
permissible
same
an
methods of discrimination.
demands
v
par¬
vote and that
one
nopolies are looked
favor
with
on
other countries
in
mo¬
more
than
in
the United States.
is
Charter
The
to
into
come
has
the
has
it
benefit
without
ratification of
with
the
creation
of
surplus,
some
foundation
this
for
is
Charter
the
extension
a
definite date of termination.
of
New Negotiators Needed
It is my
belief that an entirely
of negotiators would
be necessary, for there is presently
I far too much acceptance of the
new
the
bilateralism is bad.
countries, on
equal terms, of access to the mar¬
kets, products and productive fa¬
cilities which
are
heeded for their
■economic prosperity and develop¬
ment."
may
literally
it
things to which we in
Interpreted
mean
the United States do hot agree at
all.
'
CHAPTER II
•
Activity
In
this
made by
chapter an effort was
the Advisor furnished by
American
the
Federation
bor, to include
di¬
of
many
concluded
Trade
ana
at
proclaimed by the President as in
effect as of January 1 last, and
II,
You have listened to
an able
therefore, I
discussion
of tariff,
only make one observation.
will
restore
balance
a
between
States
of
La¬
principle declar¬
ing against directed or forced la¬
a
bor of any kind. This was success¬
fully opposed by the United King¬
dom, who themselves use such
measures.
value of exports. > But apparently
two important points were over¬
looked.
First, the fact that ex¬
ports only have value to the
duce
States
and
value
could
export
than
a
easily
much
it could
pro¬
greater
possibly im¬
port.
<;.'V V '.V'
ties
work.
lead
can
only import commodi¬
services.
or
to
This is expanded tremendously
.
what it was and my guess is
that it will be productive of head¬
over
aches in the future.
arrange for surveys of natural re¬
sources
and
the economic
poten¬
Curiously,
it is the purveyors of services that
seem to shout the loudest for low
or
tariffs
no
on
The ITO is to
But
in
States
the
commodities.
main,
export
the
United
manufactures
and
Obvious¬
tialities of members and assist in imports raw materials.
ly, the values do not balance. So
plans for their development. More¬
we find a curious function added
over,
there are obligations that
^
members
in
shall
viding such
limit oj their
cooperate in pro¬
facilities within the
power.
And the
so-
called undeveloped countries think
the power of the United States is
limitless, v
"
'
■'
;■
?
..
I
ft*
■■
■■■•
,'s
5-
vln this chapter there is a pro¬
vision that ITO may make recom¬
mendations
ments
to
and -promote agree¬
facilitate equitable dis¬
tribution v of ^ skills, - arts,. < tech¬
nology, materials and equipment
with
due
regard to
members.
Members
ments.
What is
tribution?
an
the needs
of
A
appropriate to undertake
on
previously.
:i
can
studies
the
relationship between world
prices
of
primary commodities
and
manufactured
consider
products,
to
and, where appropriate,
to recommend international agree¬
ment on, measures designed
to
equitable dis¬
investment^ provisions
referred to,
You
tions and with other intergovern¬
mental organizations as may be
ranted
vote against the field.
Charter.
laboration with the Economic and
Social Council of the United Na¬
reduce
ITO
ITO
speculate for yourselves what this
may mean.
It reads: "in such col¬
govern¬
are
apparently will
d&ride and the United States has
one
-
the
product like cot¬
progressively an unwar¬
disparity in those prices."
on
can
other
fibers
in
do
in private hands
inevitably be worse in the
hands
of
government bureaus.
And, in the hands of an interna¬
tional bureaucracy, worse still; I
not accept the
chosen few
in
endowed
wisdom of
been
a
idea that
such
a
some
will
group
of Part III tie in very
integrity and
superior order. It has
that absence of
selfish profit urge would en¬
the agency to plan and ad¬
minister with even-handed
justice.
being selfish, is necessarily on a
Very impor¬
someone
lower moral plane.
industry in
be in¬
vited to help write a preliminary
draft before it is submitted to
is
It
that
situation
a
bears
ture
largely ignored
were
forestall misunderstanding or
outweighed the few improve¬
to this that he
was
would
accept.
Intelligently handled, this could
,
be premature
ership
act of constructive lead¬
by the United States in
which
other
be
practices were not
eliminated but are preserved by
well
Hence,
bad
binding on the
United States are not applicable
practical experience. Yet included
for
in
countries.
the
idea
one
of
another where the
be; employed
production
resources
could
would
In the limited number of cases
where international agreements of
some
sort are really required, it
would
seem that,
besides using
effort to limit their number,
only the government concerned
should negotiate a treaty. Setting
permanent
a
means
expansion
bureaucracy
in
•
-4"
Charter
United
is
should
be
,
if
;
made
we
an
aggressive
are:
(a) that the
whole
field of planned economy.
could
the
to
be
brought to¬
(4)
gether again;
CHAPTER VII
The
International
(b) that
Trade
failure
stated,f v^|thout ex¬
ceptions.
of countries
group
not
,
*
.
iu':d>id
goals not
future- desirable
to
agree
would result in chaotic
immediately
now
a
11
could be stated
con¬
■
by: all; as
regarded
Rules
apply^
would be
uniformly
all
clearly
:■
would
which
Rules
(3)
When that proposal is made,
objections
nations.
.; '
:V:*
■
apply in international trade, regardless
of
the particular
internal;
^systems used by individual1
would
These
firmly believe that a greatly
superior Charter could be nego¬
tiated
States wants to create
stated.
(2)
Moreover,
I
efforts
concerned,?
is
relations
organization ia whicjx:^ , . , r
I (11 Sound prtncipies;(would be'
clearly and unequivocally
.
negotiation demanded.
to
an
to
and
trying
mean
system on them.
It
would mean that, in so far as the
conduct of international trade and
our
V;;j
unacceptable
States
not
would
It
force
rejected. J>y Congress and, a re¬
1
the
cooperate with them, as
the direction in which it
financial
'**•■••''uV
•
My conclusion is that the Ha¬
vana
every
up
other
many
as
would be less interested.
the United
the
v
to
present
Charter Should Be Rejected
to
efficiently.
more
the
i
of
line
Principles
pose.
shifting resources,
both of materials and manpower,
from
be
could
nations
clearly informed as to the direc¬
tion in which the United States
the
exceptions designed for that pur¬
is
an
despite the many exceptions
Geneva draft, delegates at
Havana were seeking new ones.
in
These planners and administra¬
tors could be men of little or no
provisions of the Charter
Havana
Charter, would at the same time
declare the pattern of what it.
for,
I wonder.
the
the
rejecting
in
gress,
ning to understand that the refer¬
ences
to full employment prob¬
The Charter may
na¬
the
by
tions, it would be well if the Con¬
begin¬
ably meant full employment for
lawyers.
other
interest of amity and
interpretation
susceptible
of several interpretations is con¬
tinued.
One delegate said in ref¬
ments made. Language
erence
to
mis¬
In the
Further deterioration
at Havana.
empty ges¬
after the
Congress Should Offer
Alternative Pattern
sugges¬
tions made in connection with the
Geneva draft
an
them
fact.
and
criticisms
consult
to
should
It is
other nations.
Conclusions
and
States
United
the
watching.
Major
business
tantly,
closely with
ITO also.
with
suggested
challenged,
interpret it as not being in
conflict.
Some of the provisions
far
monopolies
the
that until
means
may
would
will
do
That
pri¬
enterprise but rather a belief
government bureaucracy can
everything better, with even
idea that private enterprise,
that
with
inconsistent
not
appre¬
of government versus
vate
the extent its provi¬
to
are
laws.
successfully
soon
Whatever may be objectionable
able
accounts.
controls
not
of the cartel.
any
the
will
equal to that of producers in es¬
tablishing prices and other terms
Increasing im¬
ports of the latter would help to
Development and
Reconstruction
one
other
upset the
cotton controls.
Moreover, it in¬
troduces a socialistic concept that
consumers
shall
have
a
voice
balance
Eonomic
And,
the
which, if free,
be
We
CHAPTER III
for
including
primary commodities.
international controls
than
without
one
ex¬
tent they pay for imports and that
exports beyond the value of im¬
ports are gifts instead of trade;
and, second, the fact that the
United
other
made
ton, under such control
One of the great purposes of the
Trade Agreement obsession was
to
our
is
Obviously,
will require domestic controls, for
for the world's ills,
panacea
sions
Provision
noticeable
no
ciation of the fundamental weak¬
nesses
Part
is
There
Geneva.
III of this have been
Parts I and
government planning and control.
was
imports and the
constantly increasing volume and
Employment and Economic
'
a
j
United
.
:
reducing United States tariffs
all
by
enjoyment
stems
rectly from Mr. Hull's belief that
It reads: "To further the
abounds.
It
group
must be remem¬
philosophy of government planned
of the Charter
economy
and
controls by
the
provisions are reproduced in the
State.
General
Agreement
on
Tariffs
that
.
ambiguities in which the Charter
In that
attempt.
exceptions, they could be limited
in number and provided with a
it
Moreover,
complete cartels controlling pro¬
duction, price, markets, etc., on
primary commodities in burden¬
be
Confer¬
new
a
Wherever there had to be
cation.
legislative approval. This interim
body has been given certain du¬
ties to perform during the period
formal
na¬
take
to
They would
new
a
other
ones
perhaps, a good Charter, but
certainly a better one, could be
written, with rules in it that
would have more general appli¬
other means.
created
the
be
to ask for
and
States would
already
way,
Otherwise there are pro¬
visions to bring it into force by
been
con¬
have
I
think the
I
thought.
ones
ence
into force, then
been accepted by
come
so
action
would
second
Final Act of Havana it
the
not
bered
Agreements
Starting
what
The mul¬
supposed to
was
United
the
the
tions
majority of
the signers at Havana have ac¬
cepted it or, if at.the end of a year
after
ITO
the
indicated.
Charter.
CHAPTER VI
is
it
and
us.
take
force 60 days after a
before
Inter-Governmental Commodity
IV
Commercial
.
States has
Their
met, at least
tially, in Article 15.
were
CHAPTER
many will
be so adjudged-—re¬
membering again that the United
to
That
I think the effect would be salu¬
Meantime, by Resolution, an In¬
terim
Commission
of
ITO
has
In the
have
we
tary if
pre¬
years
teresting
provides for
chaos.
nonsense,
indefinite continuance of the
;
tion of the purposes.
whether
is
>
tiplicity of exceptions provide for
-
General Provisions
when
speculation
it
(b),
such
exhibit
Charter;
the Charter recognizes.
now
an
not
a.
would have
,
what
is
Court of Justice.
to
we
say
the International
to
reference
should
provisions for anxiety, to get
arbitration,-' review
consultation,
If
United
case.
I
Settlement of Differences
This contains the
more
actly the opposite is the
am
correct, then the
g'|
essential condition for the realiza¬
said that reconstruction is
important
functions is
a
more im¬
portant to the United States than
twenty.
for
,
44
'
to the other: nations?*I think ex¬
requirements of the
judging whether a
monopoly is harmful, it is an in¬
Under the
nations
most
point involved.. Is ITO
mental Cartels.
Charter
time
development provisions of Article
10 are simply entertaining words,
the function of
carrying those
ITO
originally contemplated es¬
tablishing fair rules of trade, it is
first
had studied and debated the sub-
budget was defeated.
a
control
the
;
same *
fi Moreover,;;Havana
ended;
the
was
scribed in the Geneva draft.
condemnation
a
of Articles
for
the
on
was?
the ' principles
applied in
Nations;
An attempt to
the
contribution
of the
United States to one-third of the
ing
ment
Practices
«
series
Business
Geneva
summer
United
or
Still another provides that in
negotiations a Member may, in
granting concessions;
undertake
not to raise a tariff above a speci¬
fied higher level.
in-
,
limit
the
to
again
months last
subject.:;: These same nations, plus
much larger, number, met againn Havana only a couple of months ■
after the Conference at Geneva',
considered
equivalent
.
inevitable
also.
Policy
employment, economic
The longest Chapter, sometimes
development, commercial policy,
business practices and commodity called the heart of the Charter.
It is based on the idea that multi¬
policy."
The third objective is one of the lateralism in trade is all good and
of
.
lies.
lating to international trade in the
fields
substantial
tariff.
it must be
Charter,
shall
concession
consider these provi¬
construction
formal
examines the extraordinary num¬
tariff
low
a
six
a
they make. >
provides that binding
Another
a
concessions
new
tioned from time to time, follow¬
for any
Havana extended this to cover re¬
much
consultation and advice
precede the sotting up of a
In fact, it seems that
should
return
originally
written to provide such invest¬
ments for economic development,
closely to the original idea
consultative and advisory
body.
will then look for
in
Restrictive
remembered that while
adheres
it
if
particularly
tion,
more
years
Reconstruction Covered
little
is
There
investment
They did not
need to mention that perhaps the
obtaining
of
so-called
public
quarters.
The Charter
Parties, within " two
from the coming into force
investment." of ITO, Member shall cease to
When it was suggested that most enjoy the tariff concessions made
Geneva
investment will come (from pri¬ at
by • the
23
nations
as
vate sources and that "public and known
Contracting Parties.
But if they enjoy them for two
private" might be deleted, speak¬
ing only of investment, there was years, it will be exceedingly dif¬
great protest that the word "pub¬ ficult and perhaps politically im¬
lic" certainly must be retained be¬ possible to withdraw them. They
you
of
Charter
Contracting
"public and private
answer
parison
The
it.
age
and will,, in addition, try
such questions as you
points
discour¬
speaks of
not encourage but rather
(Continued from page 19)
and
a
i
n a
and
a
b 1
e
date
~
I
Organization
shall
other
merely mention several
provisions of this Chapter
which should interest you.
'
.
have been
One provides that if a Member
They will fails to join the Group, known as
This
functions,
powers
Here
ditions
-
in
set
international
up
the structure and
voting
procedure
and
and duties.
are
found
trade
As to (a),
its:
denies
the provisions
group
and
finance.
-
J ;*'
experience of the past
validity^ i A smaller
of countries met ,in London
<
(5)
agree
;
Recognizing
could
■
would
to comply with them,
period,
r;
nations
when
'
sets
a
set
-
a
transition
separate
out
the
section
steps to*,
•tSWiH /
Volume 167
ward
;
J
Number 4700
achievement
THE
goal, again including date of termination of
measures.
With
no
assertion of complete-?
ness, this listing is an attempt to
indicate a constructive
rather than write
a
(Continued from
Lewis' periodic mine shutdowns.
approach
complete pro¬
This week's operating rate is
equivalent to 1,719,600 tons of
ingots and castings as against 1,699,700 tons last
week,
1,442,000 tons a month ago, 1,681,700 tons, or
93.1% of the old ca¬
pacity
ther, it remains
can
be brought about. It will
be done if the weight of informed
opinion in the United ; States is
clearly and firmly put before the
Congress by the appropriate Or-,
of
industry, agricul¬
ture, business and finance and by
interested individual citizens, not
neglecting
maximum
publicity
through all available channels.
It is* extremely
dangerous and
most unlikely to increase interna¬
tional amity, for the United States
to1
accept
the
Charter
as
it
emerged from Havana, on the
fuzzy notion that the mere fact of
having an Organization will pro¬
gressively lead to better relations
with our neighbors.
terms
of
for
altering the
important contract
an
best before you sign it.
The Economic Cooperation Ad¬
ministration will have a dominant
influence in world economic rela¬
tions for the next several
years.
Through its aid it may be possible
to develop more
universally ac¬
ceptable standards with fewer
ceptions.
A
present
propaganda
ex¬
CAR
LOADINGS
line1 is
Agreements Act will be inter¬
preted abroad as a renewed inten¬
tion of the United States to re¬
turn to isolationism. Perhaps the
answer
to this
is
and 1,281,210 tons for the average week in
prewar
SHOW
to
quote
from the London "Economist" of
^pril 10, 1948,
as follows:
"Search back as one may . .
there is no record of a compar¬
It will be difficult,
...
after this demonstration of inter¬
national
peating
solidarity, to
the
American
old
go
on re¬
gibes
isolationism,
about
the
"
MODEST DECLINE
FOR
WEEK
Loadings for the week ended May 8, 1948, totaled
880,617 cars,
according to the Association of American Railroads. This
was
a
decrease of 11,021
cars, or 1.2% below the preceding week. They
also
represented
decrease of 3,625 cars, or
above the
labor
0.4%
1947,
a
sponding week in
195,675 cars, or 28.6%,
week
same
but
an
increase of
in 1946 when coal loadings
troubles.
below the
were
corre¬
reduced
by
ELECTRIC PRODUCTION CONTINUES TO INCREASE
The amount of electrical
energy distributed by the electric
light
power^mdustry for the week ended May 15 was 5,108,673,000
kwh., a^ccording to the Edison Electric Institute.
This was the third
and
consecutive week that
increase
shown over the previous
week,
a
gain of 21,409,000 kwh. over the week ended
1948, and exceeded the 4,615,983,000 kwh. produced in the
week ended May 17, 1947
by 492,690,000 kwh.
The production for
the May 15 week was also the
highest for any week since the week
of March 20, 1948 and was the 19th
consecutive week that over 5,000,000,000 kwh. were turned out. The peak was reached in week of
and
an
was
represented
old
complacent references to Ameri¬
political immaturity. In re¬
months,
the
American
public
is rapidly qualifying
can
Jan.
24, 1948 when 5,436,430,000 kwh.
AUTO
OUTPUT
SLIGHTLY
produced.
were
LOWER
IN
WEEK
Production of
and trucks
cars
dropped last week to
it
,
This
week's
total
is
for the U. S. and 2 795
made
and
1,000, respectively,
of 51,630 cars and 26,825 trucks
1,925 trucks for Canada.
up
and
cars
6,000
The fact that the plants of the Chrysler
Corp. are out of oper¬
ation due to the auto strike will not mean more steel for other auto
makers, "The Iron Age," national metalworking weekly, notes this
week, since steel is moving for Chrysler-Jo warehouses where it
will
be
trade
and
stored
paper
states,
used
when, the
used
was
their plants were struck
strike
ends.
This
policy, the
by General Mot<?rs Corporation when
few years ago.
a
sale
of
a
regular
mem¬
week previous.
at 109,405 bales.
week
of
1939.
••:.)
Casualties
from 89 to
81
5,000 remained at 19.
more
ftft^-;
involving liabilities of $5,000
last week, while
numerous
than
or more declined
small failures with losses under
In both size groups, concerns failing
were
last year with the larger failures up from
and
Jan. 29,
1947 when
sold for $25,000.
The market for
membership
a
the
Curb
Ex¬
change memberships is currently
at
$12,000
bid, $24,500
asked. U: :'/7/t
•quoted
in
same
wholesale trade
10
lines.
level
and
as
in
1947.
The only increases appeared
construction where
respectively, twice
as
casualties numbered
many as a year ago in
■
•
One-third of the week's failures
either of these
ftftft.ft:.ft
were
16
"■
ft
•*
concentrated in the Middle
with 32, increasing from 28 the previous week. In
the Pacific States casualties dropped from 25 to 19. The East North
Central States with 18 and the New
England with 11 were the only
other areas with more than 10 failures.
FOOD PRICE INDEX UP MODERATELY IN LATEST WEEK
•
A
James M. Leopold to Admit
»:/..>•»
•ftft
■V;1
v
•'
James, M. Leopold & Co., 527
Fifth
Avenue,
New
York
City,
imembers of the New York
Stock
TExbfeanjge^ yyili
admit Edward L.
•Irving to, general partnership and
Frederick
A.
Flatto
<
limited
to
partnership on June 1.
:U'!i
ft.
further
general uptrend in food prices boosted the Dun &
Bradstreet wholesale food price index 5 cents to $6.93 for May 11.
While this increase was less than 1%, it raised the index to the
highest level
since February 3, when
15.5% above the $6.00 a year ago.
it registered
$7.14.
It was
COMMODITY PRICE INDEX EDGES HIGHER IN LATEST WEEK
a narrow
Merrill & Co. to Admit
wegk. Wheat and
from
>
HARTFORD, CONN.—Merrill &
Co., 36 Pearl Street, members of
the
New
York
Stock
Exchange,
Will admit,, Charles WVr Redlund
and
John
nership
on
W.
Hamilton
to
part¬
June 1. Both have been
associated with the firm for
some
time.:i
a
week
ago
firm and finished about unchanged
while oats displayed a mildly upward trend.
corn
the result
as
were
of
reported
dull.
was
the
Some
building
remained at a low
level as broad demand for
fine and half-blood staple wools continued
to meet with few
offerings. Imports of foreign apparel wools
received
at Boston, New
York, and Philadelphia during the week
ending April
30 represented
3,409,400 clean pounds, as compared with
4,376,800 in
the week previous. Bulk of
wools again originated in South
America#
RETAIL
AND WHOLESALE TRADE
MODESTLY HIGHER
LATEST WEEK AND LIKE PERIOD
OF 1947
on
with
&
FOR
Consumer buying increased
moderately during the period ended
Wednesday of last week and continued to
compare
that of the
corresponding week
Bradstreet, Inc., in
consumer
a
year
its current report
favorably
according to Dun
trade.
on
seasonal
ago,
promotions
and
the factors reported
demand.
generally
to have stimu¬
I
Medium-priced merchandise of good quality continued to be
SOUght. 7
ftft 7 ift/77;. ,77ft'
Among the more popular gifts of apparel for Mothers' Day were
lingerie, hosiery and inexpensive handbags and gloves.
Moderately
priced cotton, linen and silk print dresses were
sought with clearance
sales of jewelry and furs
attracting little attention. Purchases by
home sewers of substantial
yardages of piece goods and trimmings
continued without abatement.
There
a moderate increase in th©
worsted and garbardine
Seersucker suits and slacks sold well.
Pre-Mother's Day buying of confectionery was
substantial. Pork
was
among the more frequently requested meats with meat and
butter substitutes continuing to be
heavily purchased. Fresh fruits
and vegetables were
plentiful and moderately priced and canned and
frozen foods were in large demand. The
buying of fresh fish and
poultry was steady at a high level.
Many florists reported a considerable increase in the demand for
cut flowers and plants for
delivery on Mother's Day.
demand
for
men's
light-weight
was
tropical
suits.
,
and
tools
plant bulbs.
with
and equipment were
requested along with seeds
Fishing tackle and other sporting goods sold well
hardware and automobile accessories
continuing in large
de¬
mand.
Retail volume for the country in the period ended on
Wed¬
nesday of the past week was estimated to be from 6 to
10% above
that of the corresponding week a
year ago.
Regional estimates
ftexceeded those of a year ago by the
following percentages: New
England 4 to 8, East and Middle West 6 to 10, South 5 to
9,
Northwest 8 to 12, Southwest 10 to 14 and Pacific Coast 3
to 7.
'
7
While buyer attendance at the wholesale
markets decreased
slightly during the week, total wholesale volume was sustained at
high level. Although some retailers were heavily stock in
som©
lines, inventories were not excessive. Buyers continued to concen¬
trate
on
current needs and total dollar
were
Flour buying continued in-a cautious way aside from sub¬
was
mod¬
the Federal Reserve Board's index for the week
ended May 8,
1948,
increased by 6% from the like
period of last year. This compared
with an increase of 7% (revised) in the
preceding week. For the
four weeks ended
May 8, 1948, sales increased by 8% and for the
year to date by 6%.
Here
whims
in
New
of the
York
weather
last
week,
suffered
notwithstanding this, continued
ing
retail
trade
subject to
unfavorable
some
to show
a
gain
the
reaction, but
over
;
the preced¬
year.
According to the Federal Reserve Board's
index, department
store sales in New York
City for the weekly period to May 8,
1948,
increased 4% above the
an
period last
same
year.
increase of 7%
This compared with
(revised) in the preceding week. For the
weeks ended May 8, 1948, sales increased
by 7%, and for the
to. date' by 5%.
/,„7
*
■.
7777ftj7:l7':; //.ft
'
..
New York Stock
bership
of
the
Exchange Neuberger &
late
H.
Herbert
Oltman to/William
Welsh will
be considered on May 27. It is
Co.,
member
died
on
of
May 12.
four
year
.
,
stantial purchases by a large chain baker for June shipment.
volume of orders
erately above the level of the corresponding week a year ago.
Department store sales on a countrywide basis, as taken from
Government buying of cash wheat and flour continued in, sub¬ understood that Mr. Welsh will act
stantial volume with purchases for the week estimated to equal as an individual floor broker.
around 10,000,000 bushels of wheat,
Otto Abraham, Abraham & Co.,
including flour, which composed
a
large percentage of the total. Trading in grain futures declined member of the
Exchange, died on
rather sharply last week as the result of uncertainty over the threat¬
May 8.
;
: V.V''
ened railroad strike. Corn planting was becoming more active and
Arthur F.
Broderick, Bache &
operations thus far are said to be well ahead of the same period a
year ago.
goods
large stocks of spot goods at the mill level/
Transactions in the Boston raw wool market
range,
Fluctuations in leading grains were narrow during the past
1
weaker
were
Weekly Firm Changes
the daily wholesale com¬
The New York Stock
modity price index, compiled by Dun and Bradstreet, Inc., continued
Exchange
to edge higher the past week. The index figure closed at 283.33 has announced the
following firm,
on May 11, as against 283.00 a week earlier.
On the corresponding changes:
' •" V
date of last year the index registered 252.86.
Transfer of the Exchange mem¬
Although moving in
gray cotton
up of
Atlantic States
continued at the
Trading in carded
a
Manufacturing and construction failures increased contrary to
a general downtrend in other industry and trade
groups. Manufac¬
turers failing rose from 30 to 37,
outnumbering retail failures which
fell off from 46 to 32.
Mortality in both manufacturing and retailing
bership on the New York Curb
Exchange at a price of $23,000, up
$3,000 from the last previous sale
on May 17, 1948.
This represents the highest price
paid for a Curb membership since
Net stocks still in the hands
of the CCC
print cloth construction
Garden
two-week
increase, commercial and industrial failures
fell to 100 in the week ending May 13, from 108 in the preceding
week, but exceeded the 88 which occurred in the comparable week
of 1947, Dun & Bradstreet, Inc., reports. More businesses succumbed
than in the corresponding week of any of the last five years, but
they were still far below the prewar level of 289 in the comparable
a
73 and the small up from 15.
the
decline,
totaling only 41,200 bales for the week, compared with
64,500 the
previous week and 77,400 in the same week a
year ago.
Weather
conditions were reported generally favorable for soil
preparation
and planting. Final returns
for the 1947
crop showed total ginnings
were 11,551,738
running bales, or about 36% larger than for
1946.
Repossessions of 1947 loan cotton continued in
good volume, amount¬
ing to 17,070 bales in the week ended
April 30, as against 17,155 a
BUSINESS FAILURES TURN DOWNWARD
After
cents
were
very irregular during the week
as
r'
traders continued to await the start of
export buying both from 'i
the Orient and from the nations involved in
ECA.
In the closing sessions,
prices spurted sharply upward under th©
influence of speculative buying and
professional covering.:. Inquiries
in spot markets were fair
but mill buying continued slow.
>
Reported sales in lhe ten spot markets showed a further
Canada
Output a year ago was 82,881 units and, in the like week of 1941,
127,255 units.
.
drop of approximately 9,000 units by Chrysler because of its
was
nearly offset by gains .of
by General Motors and Ford.
markets
among
in the United States and
strike
...
Arrangements have been made
Cotton
an
was
about
rose
pound during the past month.
per
lated
estimated 83,175 units from 84 684 (revised)
units the previous week, according to "Ward's Automotive
Reports."
for the title of the least isolation¬
ist and self-absorbed of peoples."
for
.
Mother's Day gift
buying,
favorable weather were
DESPITE
STRIKE AT CHRYSLER
cent
Curb Seat Sells for $23,000
Lambs
$2 per hundredweight' and hogs closed
$1
higher after touching new low levels since OPA
days in 1946.
.ft,ft Lard prices averaged somewhat higher in
sympathy with th©
marked strength in cottonseed oil which
has advanced over 10
May 8,
.
able act of inspired and generous
diplomacy
year.
A
to the effect that
rejection of ITO
or
failure to renew
the
Trade
Lest,
one year ago
1940, the highest
it
are
41
part of the week with
..
steel
sible device for
avoiding the rules.
Without laboring this point fur¬
to say that if this
is thought to be a better
approach,
there is a possible way in which
.'ft/
More than 20,000,000 tons of
ingots
war due to coal
strikes, a steel
94% of the steel-making capacity of the industry will be
95.4%
cf capacity for the week
beginning May 17, 1948, an increase of
1.1 point, or
1.2%. This compares with 94.3% last week.' A
month ago the indicated rate was
80%.
'
negative approach in which the
chief anxiety is to provide for in¬
definite continuance of
every pos¬
chances
(2225)
Livestock markets showed considerable
strength in the latter
cattle prices reaching the
highest levels
since last February.
Industry
page 5)
The American Iron and Steel
Institute announced on Mon¬
of this week the operating rate of steel
companies having
day
aiming always at gradual
reaching of a declared goal, con¬
trasted with the* present
more
Your
CHRONICLE
have been lost since the end of the
strike, and bad weather.
gram,
ganizations
FINANCIAL
The State oi Trade and
transitional
necessary
i*
&
offtthe
desired
any
COMMERCIAL
the
Exchange,
.
,
«
.
Berman Partners
ft
Neuberger & Berman, 160 Broad¬
City, members of
way, New York
the
New
York
Stock
Exchange,
Johnson,
will admit Wentworth P.
H. Ralph Levy,
and
Philip
Straus
Mr.
ner
to
partnership
Levy in the past
in Long & Co.
on
was
A.
June 1.
a
part¬
'f
Newhard, Cook
to Admit
ST,
LOUIS, MO. — Newhard,
&
Co.,
Fourth
&
Olive
Streets, members of the New York
Cook
and
St.
will
admit
Louis
partnership
Ira
on
Stock 1
E.
Exchanges,
Wight, Jr., to
June
1,
'
Thursday;. May 20, 1948
FINANCIAL CHRONICLE
&
THE COMMERCIAL
(2226)
42
has ever set foot upon American M
before. Whether all this, >or any of it, is really dis- i
tinguishable from a mere determination to get what can
be got — the public be damned — and a willingness toi
employ the organized political manpower of their memIbCrship in whatever way seems at the moment likely to r
bring success, it would be hard to say. Without doubt, :
union membership has responded to the reiterated teach¬
ing of professional labor leaders, reformers and crack- '
pots that this' is "labor's century," and that they would
different from any that
What's Ahead
«
As We See It
-i'.:* T''
soil
(Continued from first page)
Foi Business?
(Continued from page
.p;:-
away
of
*
20)
give away a large share
production. I am relying
or
our
primarily on the purchases of the
60 million people (more or less)
gainfully employed here at home
as the backbone and most of the
Substance of continued prosperity.
But I think that the meeting of
needs elsewhere will be so man¬
aged as to take up slack if and
when it is needed to keep the
at a fairly even keel.
I could be entirely
economy
this
About
in extremely
One reason is that
We live
mistaken.
volatile times.
people are continuously be¬
more
ing brought within the range of
mass
communication and hence
hysteria. I. still
the range of mass
demonstra¬
of the popu¬
be driven nuts by a
Welles'
Orson
count
tion that a large part
lation
can
broadcast
radio
dramatic
single
from Mars one
the most significant events of
about an invasion
of
this century.
Psychological Factor
The
significance of this emo¬
tional instability is increased, of
The
will have good cause for regretting
conditions which give justification for
the feet of others who did. These influences are obviously
centers appear to have come at the present moment being greatly enhanced by the influx
to such a conclusion, since theytook the law into their own of refugees from Europe,
His
without question
hands and did open and defiant violence to individuals who find the mark of this migration upon American thought and
chose to work despite the strike and to the private property policy plainly to be seen.
law. Certainly union members
quite obviously contrary to
themselves in some important
of the
\
employers.
This is not to say that nothing has been or will be
everlasting credit of the Governor of Minne¬
To the
gained from the influence *of these newcomers. This ;
influence at many points is, however, unfortunate and J
sota, troops 1vere< called out to keep the peace, enforce
in some degree at least the laws of the land, and protect
and the property of those who had offended
the unions. The patience and forbearance of the soldiers
on duty appear to have reached a point where it ceased
to be a virtue before they were obliged to go to work, as
they should have done at once, and clear the neighbor¬
hood of all "pickets- illegally theref But, p^rhafrs; most
significant of all these strange goings-on are what some
of these pickets are said to have demanded of the Gov¬
ernor
demanded, apparently, with the full backing
of their companions.
will in time lead to
not checked
the persons
postponable part runs as high
Whether or not it is post¬
40%.
poned, and thus wrecks the econ¬
omy, depends in large part on the
degree of confidence, jitters or
—
the moment.
matter of eco¬
general confusion at
partly is a
it also is a matter of
psychology, on which I make
1*0 pretense of being an authority.
However,
insofar
as
I can
take
a
look at the record
between
reported in the ' daily
these lawbreakers and
glimpse it in terms bf the eco¬
Job had explained that
nomic elements involved, it is my
expectation that we shall, have a he had no intention-oL-using troops or of permitting the
high level of business activity in use of troops to "break" the strike or to crush the union —
In that expec¬
the months ahead.
of con¬
fidence.
In my expectations for
the longer pull I neither have nor
press.
The Governor had received
with patience far exceeding that of
found
everything
will
be
hat.
I
war
a
in the next dec¬
ade, but I'm no authority on that
either. What I've said could also
modified by the
weather and the consequent ef¬
fect on crops.
And I'm not a
drastically
be
lorig-distahce weather forecaster.
Government Will Limit
Depression
There is
longer range fore¬
one
cast, however, about which I feel
very certain.
That is that if we
get well headed into a deep de¬
pression the Federal Government
won't stand by long and watch
developments. It will move in and
apply a large variety of controls
to stop the slide.
I wouldn't ex¬
pect them to work very well, but
one thing they certainly will
do
is to transfer
large share of the
a
-management of industry from its
-present management to the gov¬
ernment. I personally would hate
to see that
is
in
in
business
if
the "Cards
to sag
;
hanpen. but it clearly
V Last week I had
eminent
told
interested
that
in
that
who
economic
the
that
feel
an
not much
are
general
and
thev
talk with
consultant
bus!ne«s
conditions,
is
a
his clients
me
starts
big way.
a
reason
they
can't
do much of anything about them,
one
Way
Or thn
to Understand
but it is
bird.
as
other.
It is easy
that point of view,
obsolete
as
the dodo
You've not
interested
in
you've got to
well
or
will
move
only got to be
general economics,
soe
that things
go
the Federal Government
With you.
It Won't
right
in on your job
And. in ^v judgment,
difference who
is In the White House.
\
visiting delegation is said to have
,
imagine that
to
time
as
the
f pickets
to stop
the spread of Communism,
probably even the only way,
is to give people jobs, food, and
the hope for a brighter future.
Our material aid may then prove
a
very efficient way to prevent
social upheaval in the countries
and
side
they Would go into the4
good American familiar with the history and
of his country, and just returning Trom a
20-year visit to Mars, all this might appear merely an ex¬
ceptional episode, which however unfortunate could scarcely
have -any national significance as to the trend of popular
thiiiking. To those of us, however, who have ^remained 'Ori
the surface Of this planet, and Who have willingly 'or-otherWise been obliged to read and-see and hear about the .goings-'
oh-in what is euphoniously termed: "the labor ,hib3vemeht,,j
during the past decade or two, this episode which we have
just described in some detail appears out of the ordinary
in "these days and times'Chiefly-, if hOt solCty, by reason yo'f
a
the traditions
relatively greater courage shown by the pubHc -author¬
per¬
was
suaded to approve of our
foreign
aid: plan largely because it was
announced that through the Mar¬
shall Plan, the foundations would
laid
be
•;
Congress
manner. -
for
Western
Typical
ities In the State of Minnesota.
our
is
the
of
formation
European
bloc
a
to * stop
Communism.
the
United
plan
as
a
with
war
Russia
undercurrent
an
has
of
stirred
up
misgivings
the peoples abroad and
given a nice bit of ammuni¬
among
tion
make
propa¬
The governments abroad
no
but
it
Communist
the
to
official statements about
large
peoples
-
are
groups
paying,
among
the
"We-:want
peace, we. want work, we do not
want weir, why get us involved
in
a
struggle between the United
States*
fight the fightinv
will be done not in the United
States' b\it in bur «owii already
it, comes to
a
war-damaged country."
-
And What an
opportunity for
the Communist propaganda! This
is the way it funs now: ''Don't you
^
see
plan
a
this
to
Marshall
aid
plan to
States,
quarrel
a
in
the solution of which
they cannot
play a part—is clearly illustrated
by the wave of joy. almost hys¬
teria, that swept over Western
Europe when the premature news
came
out last Tuesday that the
United
States- and
Russia
were
attempting to find- a way of
posing their differences.
.
....
com¬
■'. X;
.
Getting Middle-of-Road
Conference
There is
If
more.
,
our
.
*
J
aid is 'to
prevent the spread of Communist
propaganda among the peoples'of
Western Europe,
tial that
then it is essen¬
only gain the
do not
we
support of the conservatives.
We
have
the
that already.. We need
support
^confidence
that
large group of middle-of-the-road
people,
the
liberals
who
may
swing either to the right or to the
left. Now
we
are
not
gaining
Their support; toe are, in Tact, los¬
and
of
ing it.
,
emphasis upon the
part of our economic
Plan
is
not
a
Europe but
Western Europe to
Western
get
.
fight for the United States?
It is
enough that labor leaders and many® a plan to make the countries Of
Western Europe -the "beach head
of the rank and file union membership have a point 4ofiS
"for an American armed invasion.'*
view of their own, that they have a set Of values all -theirs
kNo#)We knOW'that this as hpt 'tlie
own, that they in their own rather crude way have
^plani we have 4in -inihei, ^ulJ^hiS
conception of an acceptable jurisprudence'radically ^ fear is destroying a ^good portion
It is obvious
psychological effect we had
hoped the plan would have upoh
the common people, the little men
of Europe. It is not making friends
lor us.
How deeply the common
people long for peace — how
greatly they fear being involved
in the quarrel between Russia and
The
This undue
ganda.
the
major purpose
assistance is to fight
giving
has
Now to
all in agree¬
we are
ment that the most effective way
quite another matter.
This is not the right kind of bed¬
plant and wreck what they left the last <timek#
All too
Asia could be halted.
that
am sure
Russia
fell to fighting among themselves, Or possibly:
decided that in their freedom
advantage
our
advantage of all the
rope and in
I
In
pressinre" upon 4he^^?
employers to have all court orders and the like lifted.
The unions and the pickets must be "free" and protected
in their "freedom." Tn the event that the Govewior
acceded to the demands made upon him, -there would?
be no more violence — as if there could he unless the
the
all agreed
we are
world if the slow and steady ad¬
vance of Russian influence in Eu¬
the world that
union agreed to permit?^
them to Open, and, second, to vfbring
and
>■
hope for this desirable re¬
sult is one thing; to announce to
close^ down the plants and keep thenr '
closed -until such
States
To
the plant and upon the plant itself. No, fhey Wanted
only "two things" of dhe: Governor; First; ^hati he ruse
these troops to
United
13)
page
of the
abroad.
pickets demanded. They were not satisfied to request
That- the troops be Withdrawn to permit these law¬
breakers to do their Will upon any and all who entered
knnck^H
will have
all this the
listened in stony silence, and- when the Governor Wis
through he was informed, amid applause, of what the
I've anticipated
into a cocked
personally don't think we
war,
a
To
you to have any very pro¬
confidence.
If we have a
expect
only to enforce the
court order which had been issued in due course.
that his intentions for the future were
terms of
the
Russia.
that it would be to
as
.
element in the economic warfare
.
and
us
abandonment of Americanism if
(Continued from
The Record
Let
an
restrained.
plan, began to change color and
was presented to the world as an
I
nomics but
or
After Effect sol the Marshall flan
mass
tation I have a great deal
Ideology
good many weeks past the unions
gained very considerable strength in this field
have been on strike. We can not pretend to be familiar with a lush growth in the "labor movement" in this country. In
all the ins and outs of the issues involved in this dispute. many of the industrial unions, many of the most influential
We have no doubt that they boil down, as virtually all of leaders have European backgrounds, and usually back¬
these situations do nowadays, to demands for higher wages grounds in countries whose ideas are at the greatest variance
for less work, but however that may be, it has become to traditional American thought. Many, if not most of those
who have been most active in promoting all these "reforms"
apparent that the strike could be maintained, even in this
time of labor scarcity, only by brute force and violence have either come into this country from abroad or sat at
ing house situation. For a
above
That
Continental
Nor is there any reason to doubt that what may be
called European, or better still, Continental ideology has had
which have
consumption at
any given time can be postponed
without any dire effects on the
•people
postponing it.
Herbert
Hoover recently
estimated ■ that
as
getting is good.
Certainly Professor Slichter can cite much in the cur¬
support his allegations. Take the pack¬
large part of the
the
than foolish not to get what they can while *
worse
the
rent flow bf news to
the subsistence
level in the United States that a
far
the existence iof
such conclusions.
be
and further away from a bare
subsistence level of operation. We
so
*
Evidence Plentiful
the country gets further
course, as
are
voking words. They are startling ideas. We are much
afraid that they are well warranted toy the facts, and
that the American people, unless they somehow arouse
themselves from their day-dreaming or their lethargy,
ill-considered
proposal
o'f
Congress to include Spain in the
group of "nations
fee benefited
by the Marshall Plan has had a
very bad effect upon public opin¬
ion abroad.
To be sure, it was
voted dowp in The rend; but 'th(e
harm had been done.
The im¬
pression
created
was
that
the
United
States, the champion of
Democracy, a country that had
repeatedly officially condemned
the Franeo regime and was largely
responsible for Spain being ex¬
cluded
from
United
Nations,
to
to
come
membership
was
now
in
the
willing
the assistance of'that
country, the last important strong¬
hold i©T Fascism Tu dShird^e:1L";M
The^e&ion Washed: ?TsTfe
United
States
on
reactionaries?"
the side
of the
Now that is
very
important, for in Western Europe,
people
have not
forgotten ..what
the Nazis and the Italian Fascists
did to
them
They have not for¬
gotten that Spain, Throughout the
was
sympathetic with the
war.
Axis
nor
that Francorsent a? cable
of
congratulations to the Emperor
of
Japan after the treacherous at¬
tack
on
Pearl Harbor,
They fedr
Volume|l67 j Number 4700
the
reactionaries.
friends
We
through this
Congress.
•
have-lost
ill-advised
people
abroad
•
also
are
Not that
they do not want
revive. They more
Germany to
than ever realize that a Germany
In economic chaos does not con¬
tribute
revival
fear
economic
of Europe; but they also
general
revived Germany, and they
reason for that fear.
a
have
the
to
good
Again and again Germany has at¬
tacked its neighbors.
In the last
70 years that country attacked its
weaker European neighbors/three
times: in 1870, 1914 and 1939.
-
Question of Aid to Germany
*
The
fact
that
Germany
is
to
receive very substantial support
from the United States in the form
of
outright gifts is causing
siderable
con¬
in Western Eu¬
concern
It is remembered there, how,
after the first World War, millions
of dollars flowed into Germany
rope.
and contributed to the moderniza¬
tion
of
German
industry and to
enable that country to prepare for
the
World
second
that
the
level
The
War.
fact
industrial
of
ac¬
tivity
in
Germany
announced
shortly after the end of the war
has now been raised, adds to these
understandable fears.
i. Here in the United States the
rapid revival of Germany was at
first spoken of as a necessary step
in the direction of
a
general Eu¬
revival.
More
recently
Germany's revival is spoken of as
# necessary step in the direction
of building a powerful Western
European bloc as a defense against
ropean
Russia.
Our entire foreign policy today
-
THE COMMERCIAL & FINANCIAL CHRONICLE
crease
are
cargo
are many in
Germany who
reasoning along this line.:
this
No wonder the peoples in West¬
watching what is being done in
Germany. They see how we are
planning to make large gifts to
that country14% ofour 1948
dollars will go to aid that country
•while 14 other countries, most of
them our former allies, ate to di¬
vide only- 30% among themselves,
and
this
information
disturbs
them.
'
•
There
action of
The
•
is dominated by the fear of Rus¬
sia. Now Western Europe shares
this fear, although to a lesser de¬
gree. There is a general convic¬
tion that Russia, for some time to
will be in no position to
.wage a major war, for physical
and strategic reasons as well as
for reasons of domestic politics.
But .although
Western
Europe
shares our fears, it is not gener¬
ally believed that a strong Ger¬
many will prove an asset in any
future military emergency. Those
ern
Europe look with apprehen¬
sion
the
upon
determination
the United States to
shall Plan funds to build
strong,
industrial Germany. Past experi¬
ence
has demonstrated that no
a
outside supervision or control can
size,,
competition
grow
will
keener and into
raw
materials,
injected the ad¬
nies
in Africa and
situation
is
ditional
problem of
increased ' American
of
the Mar¬
use
in
the
themselves
for
of
the
Our
But
In ;1946 this had increased to 60%
be
created,
well
build a Trojan horse within the
western defense line.
we
may
The fears that are being stirred
that
in Western Europe would be
greatly lessened if there were an
unmistakable faith in the capacity
the United States for leader¬
had followed
a
prewar
All
sistent
policy and( could be ex¬
a consistent pol¬
icy in the future. This faith has
been seriously Undermined by re¬
cent happenings.
The most dis¬
turbing of theseJs the reversal of
our position with
respect to the
settlement of the Palestine tangle.
For months we had been
advising
Great Britain what should be done
in Palestine, without,
however,
the
Nations only to reverse
tion a few weeks later.
United
posi¬
our
Now
expect the
nations
to make
we
about face and to
cept
trol.
an
plan for
a
France,
others
world
trusteeship
a
Great
with
the
of
Britain
experience
ac¬
con¬
and
in
the
upon
this
means
;
that
after
to
our
or
new position.
Does anyone
out of the State Department
know what solution we will next
attempt to railroad through the
United Nations? In other parts of
the world
have shown similar
we
indecision and inconsistency. With
this experience in mind, there are
not
Problem of Balanced Trade
But
they
are not
only concerned
about the changes in our diplo¬
matic policies. They are also wor¬
ried
in
about
the
possible changes
economic policy.
If the
our
to
whom
we
are
giving
definite
them
up like
They will
dam.
upon
If
the
that
abroad
funds
these
will carry with
control over the
American
abroad.
heard
I
that
when I travelled
in Western Europe two years ago,
expressed
and
are
that at
not far distant date
some
may
stage
their
realize
comeback and
a
ambition
for
Euro¬
and world domination.
Put
yourselves in their place. Sup¬
pose you were' Germans, would
you take the crushing defeat ly¬
ing down, would you accept it as
final?
Would you consider it to
the advantage of your country to
"place yourselves at the side of
•the weakened Western powers, of
pean
»a
Britain
Great
that
has
slipped
the position of a first rate
•world power to that of a second
'rate European, country?
Would
>from
willingly make your country
^ bulwark against Russia to pro¬
ject your traditional enemies, to
protect France, Great Britain, or
{he United States, the one country
you
hold primarily responsible
for your defeat? Would vou not
jtake the position many Germans
are. taking, that instead of making
you
fore the
They must produce
war.
balances
adequate for their cur¬
import >; requirements,
and
these will be -larger than before
rent
the
war
since
jheir
increased
have
They
years.
in
must
populations
the last ten
also
produce
the necessary balances in addition
to enable themfto make payments
on
the
loans.0.
Their means,pf establishing for¬
eign balances 'have shrunk. The
liquidation of; their foreign hold¬
ings has reduced to almost noth¬
ing that income in foreign ex¬
change that in the oast paid
for
substantial part of their neces¬
a
sary
They are rapidly
their merchant ma¬
rines.
The
Netherlands, started
'
common cause
future would
jnon cause
,
with the west, your
lie in making com-
with the largest e&in-
try of the world, with Russia?
might well
fi> Germany, so you
reason,
has the brains, the organ¬
izing ability and the military
ius.
Russia
sources
has
and
the
the
natural
common
Germany
•blow
to
cause
could
her
gen¬
re¬
manpower—an
unbeatable combination.
ing
•
By mak¬
with
deal
a
western
Russia.
crushing
enemies.
after
the
fleet
less
prewar
85%
with
war
than
fleet.
a
merchant
one-half
of
the
Today the Nether¬
merchant
marine
is
to
of that of 1938 and within
up
the next year it is expected that
the fleet will be larger than that
1938.
Great Britain, France,
Norway, all the important ship¬
ping nations of Europe, are stag¬
ing similar comebacks.
of
But
the
earnings of the mer¬
depend upon the
volume of cargo space world trade
requires. World trade is as yet
at a low level and this jsmaller
chant
marine
volume must
a
sult
of
now
be divided over
larger number of vessels, As the
'European merchant Marines
raw
the
materials.
war.
we
As a re¬
have
disturbing discovery that
as
raw
materials
are
materials
raw
modern
are
without
which
either not found at all in this
country or were never available
in adequate quantities.
•
Tlra Bottom of the Barrel For
Raw Materials
f
,
But recently we have
also be¬
gun to see the bottom of the bar¬
rel with respect to raw materials
of which we thought at one time
that
we" had
supply.
and
even
running
an
inexhaustible
Copper, lead, petroleum
high-grade iron ore are
low.
Our large steel
Elants dependedofthus far uoon the
igh-grade ore
the Great Lakes
region.
It is estimated
now
that
in another 25 years they may have
to
begin to use low-grade ore
or move to the Gulf States where
they
can
be supplied with highfrom South America.
grade ore
This increased need for
raw ma¬
terial
imports will* enable the
debtor nations to pay us in goods
we need desperately.
To be sure,
the
European
countries
do
not
they
less
former
are
more
exacting with '
enemies
than
with
■
friends; but it also means
countries that have sat back
—have failed to take the neces¬
your
that
domestic
sary
up
to
measures
speed
have, in fact, been
recovery,
sitting, waiting for hand-outs—
are going to
get gifts, while coun¬
tries that have used drastic
of
ures
made
self-discipline
paid.
by
their
meas¬
and
great sacrifices to
comeback
have
stage
a
efforts,
gifts, but
own
practically no
receiving loans to be
These
countries do
re¬
not
ask
for gifts,
but they ask, neverthe¬
less, whether this system does not
penalize the countries that prac¬
ticed self-help and are
themselves
their
out
of
pulling
by
the
mire
bootstraps.
own
This
feeling of resentment
against what appears to them un¬
fair discrimination is found
also
in Latin America. When
Marshall,
the
announcement
voiced
not
penetration
Communists
by
but by bankers and business lead¬
friends of the United States.
It js not
World
into
a new
felt
were
Similar fears
fear.
when,
the
after
first
War,
huge sums flowed
Western Europe.
The Ger¬
was
received
without enthusiasm. Unofficially,
the
question was asked: "Why
expect
are
to pay back when Ger¬
us
other
and
many
the
former
enemies
securing outright gifts?"
Financial
evitably
financial
transactions
Plan
create
currents
of
contemplated
Marshall
of
thus
certain
fear,
in¬
under¬
resentment
misunderstanding.
the
under
will
and
is no
help for it. Our policy is politic
cally and financially wise.
The
administration is in the hands of
of
one
the
There
.ablest
most
and
straight-shooting businessmen this
mans had nhame for it, ?They
country has produced. Economi¬
called in
"das
Ueberfremdungs cally, there is
every reason to be¬
gefahr."
But
in
Beliguim,
in lieve that the plan will have the
France, and even in Great Britain, desired results.
If successful,
this same
concern was
felt.
Now it is easy to dismiss this
by saying:
"They have
for such fears."
that
the
exists
of
losing
that
obstacles in the
excessive
than merely giving aid to those
that need it.
It is to be hoped
of transfers-
of funds to the United States will
these
make
fears
political stability of the world.
But it is well for us to realize
that the way toward success will
not be easy.
More is involved
any
way
a
constructive contribution
will
have been made to the social and
control
enterprises
national
and
basis
The fact remains
fear
their
over
•'
no
Thus
we
more
general.
may
find
that grateful
change into
friends may gradually
suspicious near-enemies, and the
after
may
Marshall Plan
effect of the
that
be
friends
have not made
we
as we are
Gifts
or
hoping to make.
Loans?
There is another feature to the
con¬
industry cannot produce
so
not only
magnitude
as
cerned, the United States is rap¬
idly becoming a poor nation. Like
all industrial nations, we have
begun to depend more and more
upon
the importation of scarce
raw materials.
Tin, nickel, man¬
ganese, tungsten and many other
means,
and
few months earlier when I
a
made
the
dis¬
This
:
you
American
agreements
far
imports.
rebuilding
lands
form of
in
that
your
some
raised
generous
say,
supply
But
being
agreement.
that those who will direct the flow
of
aid will bear in mind the
our
,
they
fair
You would say: "That
visited Latin American countries.
This fear for what they called
Agreement Act, the
made
back
public utilities.
fear
industries
fear
authority of the Hull Recip¬
States
will
a
and
American
problems.
countries, have
of
behind
serious
more
Funds that cannot
go
the
suggestion of our government and in the recent Bogota
conference,
pour additional private funds into
made what seemed to us a
very
Europe, the funds so invested will .generous offer to lend
large sums
be greatly increased.
There is a to the Latin American
republics,
financial
15
even
private investors act
our
portant obstacle in the way of a
revival of world trade.
The con¬
ference was a success because we
set the example.
Acting under
United
development would
a
other
terprises
conference in Ge¬
has made an important con¬
tribution to the solution of the
basis
,
find their way into industrial en¬
international
with
f
V
water
to
foreign Countries on the
which they, as well as
assistance are to be able to pay
us back
the funds we supply on we, reduced substantially the im¬
credit and for the goods we make port duties on a long list of items.
who
know
Germany
and
are
Thus we have cleared the way,
available on a lend-lease basis,
aware of the present attitude of
enabling the debtor nations to
the" people know that the Ger- they must have the opportunity
make larger transfers to this and
to create adequate
mans aire fully Conscious of hav¬
foreign bal¬
to other countries.
Transfers to
ing lost the war, but they have ances. That means that they must this
country in the future will
be able to
exporjr far greater quan¬
by no means abandoned the hope
tities of their products than be¬ probably be increasingly in the
nations
im¬
exports will de¬
our
consequences.
be transferred
neva
Trade
Should
voices
be
ers,
rocal
Republican Ad¬
should
take
over
a
will
loans
sound .reasoning."
will
paid and
tries ate now protected against
foreign competition.
The recent
the
no
The
that have made
a;' reasonably
of dollars.
get
have
wondering what changes in policy As a result, many
with respect to Germany the fu¬ reduced, to some
extent, the im¬
ture may bring.
'■
''.*t port restrictions that were an im¬
come,
efforts
will
was
international
is,
American Foreign Investment
these
afford
it
once
But such
By means of high import duties
and import controls, these indus¬
in Western Europe who are
manv
can
if
even
cline.
import.
in
now
countries
be
the debtor
knowledge with the result that
today many of the goods formerly
imported by Latin America can
be produced 1 ocally. As the
prices of the products
Latin
America exports have declined,
and will continue to decline, more
emphasis will be placed upon lo¬
countries
products.
have
what will be the fate
if
to
again
be made
difficult, it will mean, of
course,
that payments will not
flow into this country in the re¬
quired amounts. Debts will not
,
goods
the
more
cal
of
in
be
to
elections.
the
portation
a
will
production
and
consideration.
43
most progress in recovery and are
now able to secure by their own
is
up.
ministration
industries that had never existed
there. Refugees from Europe sup¬
plied much of the needed techni¬
cal
is
agreements
of this Act
gave financial and tech¬
nical assistance to the Latin Amer¬
ican republics in the building of
are
world
the
One knows
war we
convinced the plan
will not work and hesitate to come
Near East
trade
extended
defi¬
depend far more
than ever before upon exports in
order to build foreign trade bal¬
ances.
But, as the need for ex¬
ports has increased, the opportu¬
nities have decreased. During the
assuming any responsibility.
Finally, we forced our solution of
through
embarked
proportions.
countries
our
partitioning
have
we
the
gates, ' but the Trade
Agreement Act expires next June.
one knows whether it will be
rine will be allowed to decline to
con¬
pected to have
will
of
can
resources
No
gigantic armament program, it is
unlikely that our merchant ma¬
of
we
nations
they
them, and
manufactured
of
Our
opened
nitely be determined by the mer¬
chant
marine
policy finally
adopted by the United States. Now
up
ship; if
the debtor
of
of
imports will have
ing up Germany in the belief that .of the world tonnage. The earn¬
a
strong ally against Russia may ing capacity of the merchant fleets
thus
Asia
substantial portion of the
a
form
chant marine tonnage represented
about 15% of the world tonnage.
build military strength. By build¬
sections
being speeded
our
-effectively prevent such industrial
strength being used once again to
but in their colo¬
development of the
those
of
prewar merchant
Before the war our mer¬
marine.
most of these
possess
produce almost all
greatly
fleet.
shipyards at present have a build¬
ing capacity large enough to turn
out every year a
tonnage equal
to that
(2227)
have disturbing
after effects if not carefully han¬
dled.
Of the $5,300,000,000 au¬
thorized by Congress for the first
12 months. 20%, or at least $1
billion, must be granted on credit
terms.
The remainder may be in
plan
that
may
the form of grants,
to be paid, if
kind of lend-lease
basis.
The gifts will largely go
to Italy, Greece. Austria and Ger¬
many,
while
Sweden,
Norway
Denmark, Belgium and Holland
are among the nations which will
get the major portion of the loan
all,
at
on
a
psychological
effects
upon
the
people abroad of the way
in which the help is administered.
We cannot impose democracy on
any nation, nor would it be wise
to do so if it were possible.
We
can hope to strengthen the forces
common
of democracy only by
impressing
the world with confidence
in pur
capacity for leadership and in the
honesty of our
purpose.
We
should at all cost avoid supplving
the Communists with ammunition
to be
against us; In
used
a
real
and in the
psychological war.
clearly realize the pos¬
sible after-effects of our Marshall
war
We should
Plan in
a
world where misinter¬
pretation of
of the most
our
motives ^ one
powerful
weapons
of
the propaganda of our opponents.
Northwestern Finance Co.
money.
Now
seen
reasonable
from
and
here,
sound
that is
financial
(Snerlftl
to
The
Financial
Chronicl*)
NORTH WELKSBORO, N. O—
There is no use fooling Northwestern Finance- Co.
has
and
to give loans to been formed to
engage in the se¬
policy.
ourselves
countries obviously unable to re¬
within
pay
a
reasonable
time
curities
A.
C.
business.
Lowe,
Officers
president;
lare
Kyle
well face the facts and Hayes, Vice-President and Edwin
cali them gifts from the very be¬
Duncan, Secretary.
;
f
We may as
ginning.
But, seen from abroad,
this policy assumes a somewhat
different
the
gifts
aspect.
go
Not
largely to
only
our
will
enemies, while those who fought
on
our
tance
side will be getting '.assis¬
on
the basis of loans, but a
certain amount of
Raym'd P. Sherwood Dead
Raymond
former
hard, feejirig is
"clearly being created by ariother
Sherwood,
Phillips
retired, formely a Yonkers bank
official
and
Westchester
&
district
manager' in
County for Redmond
Co.„ died at the age of sixty-
two.
--
dw
J
Inflation Is
the
(Continued from page 12)
same
as
in 1941 prior to our
fol¬
ment contribution to income
lowing upon the collection of new
Social Security taxes.
It cannot
lower
at
prices
crop
failures
costs
of
largely in debt- securi¬
ties, would continue to contribute
to the national savings, undis¬
solely
or
entry into the war.
In my judg¬
ment, this is strong proof of in¬
turbed by the ups and downs in
I am
telligence on the part of the pub¬ be questioned that the Federal Re¬ risk investment. I
might add that
st firm believer in the rights and
lic in refusing to become panicky serve was aware of this fact and
I would prefer to have it this way,
advantages of ownership on the
would not have taken its series of
or to be stampeded into a rash,
and would advocate a policy en¬
part of all of our citizens, whether indiscriminate
preferenee for steps to cut excess reserves by
they be well off or of moderate
raising reserve requirements had couraging our life insurance com¬
goods over money.
,
t
"
means.
There is a certain some¬
panies to provide, risk capital
The timely price reduction re¬ the subsequent decline in business
thing
by
way
of better citi¬
through the purchase of common
cently
announced
by
United been envisaged; Even after the
stocks only after careful study.
zenship, that accrues to the nation
States Steel Corp., General Elec¬ three increases between August,
from the privilege of ownership.
When the economic historian
1936 and May, 1937 had doubled
tric Co. and Westinghouse Electric
That is why it is the duty and
Corp. signal wise business states¬ reserve requirements to 26% for sets forth the financial develop¬
responsibility of every public of¬
manship.
Undoubtedly the $21 central reserve city banks, 20% ment since V-J Day, he will have
ficial and of the Congress to safe¬
billion
which
will
have
been for reserve city banks and; 14% to explain how it was that interest
guard and protect property rights
spent in the years 1946 through for country banks, excess reserves rates were kept at unprecedentedand the rights of ownership if en¬
1948
by manufacturing compa¬ amounted to some $770 million. ly low levels while the national
terprise as we know it is to en¬ nies on new
plant and equipment As I see it, this case illustrates the debt and deficit were soaring and
dure.
The reward is in the pleas¬
how it came about that almost
are also beginning to show up in danger of a restrictive policy and
ure of living in freedom and lib¬
of
cost sheets, and if a third round the rapidity with which psychol¬ simultaneously with the end
erty.
I heartily endorse Govern¬ of
wage increases is of minor pro¬ ogy can change, for business ex¬ defict financing and the beginning
ment planning and assistance in
portions, additional price cuts will penditures dwindled and in retro¬ of debt retirement, substantial
the field of small and mass hous¬
herald the return of a competitive spect
psychology probably had changes took place in the bond
ing throughout the nation.
market; * It would seem that as
more to do with the
and
pioyment
prices, but that rise was induced
primarily by other factors, such as
tions, principally life insurance
companies, savings banks, building
and loan associations, who invest
State of Mind
a
Thursday, May 20, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2228)
44
era.
cessive
ployees were regarded by govern¬
ment economists as a goal to be
reached in the fifties and by many
business economists as
an
ex¬
ample of wishful thinking, to the
discredit of neither view.
The
fact remains that practically 60
million have been employed and
production has been rolling for
months.
According to the most
widely used index of production,
that published by the Federal Re¬
serve
Board, industrial produc¬
tion in January and February of
this year was at the rate of 192
194%
and
Charm of Credit
The
healthy sign for a na¬
tion to be critical of itself, but I
sometimes think that we have
overdone criticism of our per¬
formance since the end of the war.
On the one hand, 60 million em¬
a
of the 1935-39 average
Credit
charm. I
of
controls,
can
Control
System, were much younger
business
I
an
cycle in the same way
engineer regulates the
speed of a train.
No one would
happier than I if the matter
be
were
that simple.
study
a
by
Dr.
of the Federal Reserve
cies
Sys¬
tem," the author set forth the
theory of central bank control of
the business cycle.
Abbreviating
this lucid description somewhat,
the
of the coal strike.
month
September has this in¬
dex been' under 190.
This is a
record of which both labor and
business management should be
proud; The consuming public, too,
Tias exercised discrimination.
I
am told that merchandise which
moves today has to have appeal
both with reference to quality and
price. The large volume of liquid
savings accumulated mainly dur¬
ing the war period seems to be
either dedicated to specific purr
poses such as the purchase of a
a
since last
home *
automobile
or
or
to
some
face
all
sorts
scares,
I
it
future
as
Two
a
am
of
inclined
source
inflationary
to
of
dismiss
concern.
important bits of economic
(1), The continued decline in
; money in; circulation which now
inseparably interwoven.
are
The April 15 issue of the Cleveland
Trust
Company's economic bulle¬
contains
tin
stock
chart
a
yields
and
bonds which is
have
attached
marks.
of
the
on
striking that I
so
a
common
return
to
copy
my
re¬
1
The
one
so
stimulates business revival.
He stated:
difficulty with this pro¬
gram is in the assumption that
the
response
of the banks and
that of the public to easy money
in times of depression will be the
same as it would be in times of
pressed in cash terms, over com¬
modities
and
securities.
To
in¬
the
supply does no good
unless the preference decreases."
More
recently, the experience
illuminating.
Fed¬
1936-37 is
eral
present
As
mony
Committee
is
a
Reserve
authorities
disclaim
stated
I
in
testi¬
before the Senate Finance
Street
that
and
reaches
my
few months ago, this
a
matter
transcends
Salle
La
into
placed in the hands of the public
during the war could have been
substantially reduced); except by
Wall
Street.
It
town, mining
every
production
market would also
bonds.
convinced
am
dynamic
stock
help the bond
especially
government
This may seem contradic¬
tory.
Yet, it follows that
siderable
of
part
a
con¬
the
financing
through
bank loans, term loans and long
consummated
last
year
term debt issues went to the in¬
surance
companies and banks be¬
the
cause
companies
issuing
se¬
curities could not finance through
the sale of equity securities. The
eign demands/'
to
brought peg¬
thej forefront
the
expansion of
operations
with
the corporate investments of these
institutions.
market
as
An
a
improved stock
result of
reduction
a
in
margin requirements and capi¬
tal gains taxes would have a two¬
we
again
are
production,
sup¬
ply, and costs rather than in
clusively
monetary
ex¬
fiscal
and
terms.
In
.
conclusion, I believe that if
our eye on the big funda¬
have
we
mentals, like the football player
society.
icy that has turned out to be mis¬
taken to place us in an economic
strait-jacket determined by the
past. Even a 2 %% long-term rate
may be subject to change without
the catastrophic effects feared by
some.
The
country's
economic
and financial system has adapted
itself in the last twenty years to
more
fundamental changes.
To
insist on a 2V2% rate and at the
time
same
deep concern
express
least,
say
sistent.
the
Leaving
field of
narrower
the
government bond market for
the broader concepts of central
what is the object of
bank policy,
the renewed efforts of credit con¬
If
Federal
the
it
prices
has
down any
commodity
turned
it
in
use
the guide for its policies.
as
in
this
did
itself
Board
that
past
hold
to
effect
I point out that the
Reserve
mandate
It
in
is
twenties
the
and
again in the prewar period. With
a
billion budget and a $250
debt, it is folly to expect
return to the prewar price level.
$40
billion
a
As
Federal Reserve or
official has expressed
his opinion on where the price
level should be —~we may ask
yet
no
Treasury
is
what
the
is answered, I
giving the
about
Federal Reserve Board additional
means of bringing
natural answer is to
The
powers.
the
about-
permit the forces of supply and
demand
to
themselves
work
out
through budgetary controls so as
to
avoid
renewal
a
of
deficit fi¬
making saving
by
and
nancing,
f$:-:
ing
appraisal
and
forces
in
rather
the
of
the
basic
than
economic
process
snap judgment.
My
thinking is along lines of stability.
Provided we keep our heads, I do
not fear runaway inflation nor do
for
look
I
the
great depression
to appear has so
chagrined the Marxian economists
failure
whose
statesmen.
and
attain
to
not
We
cannot hope*
stibility—it is
absolute
part of a
if
However,
such
the American Bankers As¬
as
sociation
has advocated, I see no
why
reason
and
goods
to
tinue
we
a
large volume of
services cannot con¬
be
produced
off the market.
term,
of
a
taker*
and
Over the longer
return of the upward trend!
productivity
greater
hour will enable
us
to
mant
per
resume
the
improvement in
living standards
that is the most noteworthy fea¬
of the
ture
economic
have
We
of American
romance
history.
the
from
emerged
period of shortages and unless the
Congress permits the budget to
become unbalanced again, I firmly
believe we have already entered
the
postwar period of stabilization.
price level?
happy
hesitate
f"
The times call for acute think¬
dynamic economy.
do not depress
is mcon~ business
psychology unnecessarily^
and
adept
voluntary
restraints
alleged inflationary tenden-
over
to approximately $27.7
responsibility for the precipitate
more attractive.
An economy op¬
reduction of $400 million decline in business—the decline in fold result:
erating at almost 200% of the pre¬
since the comparable date a year industrial production between Sep¬
(1) Financial institutions could war level cannot exist on a pre¬
ago.H The total is now about the tember, 1937 and June, 1938 was
replace with government bonds war credit diet. Practically every
smallest since August, 19145.,
one-third
and
(employment
in the loans
severe period of business depres¬
paid off through stock
(2) The annual rate of turnover manufacturing industries fell al¬
sion and unemployment has been
financing; V
v
most 25%—and are inclined to
,-of demand desposits outside of
preceded by a contraction of the
(2) And stocks which are not
.New York City is almost exactly point to the drop in. net govern¬
monetary supply.
Consequently,
sold because of
amounts
billion,
about
goal of continued high employ¬
ment, the great challenge to our
that
market
bond
would
ging
glad that
am
probably must continue so, but we
should not permit monetary pol¬
now
Until that question
coincided
I.
thinking
dominates the interest
government
fact that weakness in government
bonds and the sales by financial
which
with
urgently
shall
economic bulletins have noted the
institutions
production
needed to meet domestic and for¬
who
down prices,
I
healthy,
a
—
would
as
seriously
pattern of the country has
become a managed market, and
which
trol?
ating activities.
measures
interfered
have
rate
America is engaged in wealth cre¬
that
drastic
such
explanation is
district and rural area—wherever
market,
"The
crease
expansion could have been pre¬
(it is . even more
doubtful that purchasing power
vented entirely
their value also de¬
The
market that is non-in¬
and
of
markets, all of
money
flated.
Dr.
Hardy then wrote this commen¬
tary on the various methods of
pursuing a liberal central bank
policy which, according to theory,
willy-nilly translates itself into
increased willingness and ability
to buy on the part of the public,
•evidence are:
separate parts of the
capital and
margin require¬
clearly discriminatory
special need.
of
iron curtain
an
are
I do hot be¬ prosperity. Depression physchollieve there is any evidence to ogy is ignored.
But this i is to
support the idea that a large per¬ ignore the central element in the
centage of the accumulations will problem.
A
depression
exists
suddenly appear as a broad-scale precisely because there is a gen¬
demand for commodities.
If this eral preference for cash, and for
has not already happened in the safe short time investments ex¬
other
the continued
ments
plus cash and bank balances.
192
the
around
point,
vantage
attempt to draw
mar¬
in the
because
back to
and
capital
cannot afford to hold sur¬
matter of fact, in no
was
this
astonished at
am
feel
expert
the
to
From
pose
basic idea is that commercial
banks
As
March
closer
which
Charles O.
Hardy, economic adviser to your
Committee, entitled "Credit Poli¬
In
only
in
much
kets.
plus or excess reserves, and the
public capnot afford to hold sur¬
and
monetary
a
whether,in the cir-;
credit
always follows the ball, we
be doing our best job.
I
keep my eye on employment, and
underlying all my views is the
the
Frankly, I do not want to
as
a heritage
financing. It
its
and
war
doubtful
is
of government securi¬
the supply
ties declined
Abolish Iron Curtain
authorities
that
money
admit, have
I
well recall when all
thought the Federal Reserve
could
regulate
the
and
the
in
clined.
including the Federal Re¬
us,
serve
stringency
market.
in
cumstances of the year 1947,
change than
;>
rising
production
supply,
money
the
of
.
actual
Self-Criticism Overdone
It is
v.
Europe,
this country, and the existing ex-,
levels in the coming years.
,
in
industrial
Daniel J. Shaper
With
Morgan & Go.
Peter
Peter Morgan & Co., 31 Nassau
Street, New York City, announce
that Daniel J. Shaper, formerly
with
Jackson &
the
/.;>/
Paine, Webber,
is now Manager of
firm's trading department.
Curtis,
a
J. Earle Jardine, Jr.
Trip
on
Jr., Vice-Presi¬
dent of William R. Staats Co., 640
J. Earl Jardine,
.
.
the
would
burden
liquidated
into
in
and
the
government
sisting
in
the
tax
onerous
many
cases
be
proceeds
put
obligations,
as¬
private
placement
of the government debt.
Acts
of
1945
and
1948
been steps in the right di¬
rection, renewing the flow of risk
savings, made impossible under
have
the
burden
The
return
of
wartime
flow
of
taxation.
risk
savings
by incen¬
putting capital to work, as
an integral part of our production
and employment mechanism.
The
must
be
accompanied
tives
relief
able
I
)
groups
have
called
for
will
en¬
the
capital
accumulating
whose function it is to take
the risks of
ownership to perform
office. The larger
body of small savers whose sav¬
their
40
The Cleveland Trust
45
Company
ings
proper
are
channeled
into
institu¬
reasonable
seems
other
the
be
methods
need
be
be
to
that
and
action
drastic
beyond
a
must
I
doubt.
ask
first
to
used
such
for
established
able
seem
Since the end of the war, the
Revenue
it
that we
with the
obsessed
monetary side of the price equa¬
tion and seem to have forgotten
that there is another side—the
supply of goods and commodities.
For this reason, I find the obser¬
vations
of
the
Federal
Bank of New York
annual
credit
stated:
Reserve
in its current
report of special interest.
In the section
and
v
on
Federal Reserve
credit
left
it
policy,
is
City for
to
in the
posits
and
form
of
amounted
during 1947 to about 3%.was, no
.
This
doubt, a contributing in¬
fluence in
the rise of commodity
desk
his
June h
in
held at White
He will return
Sulphur Springs.
Los
•
Angeles on
■
i-K!
«
C. Newton Kidd, Director
C. Newton Kidd,
partner in the
investment banking firm ;of
Bros.
&
Boyce,
Steizi
Baltimore, Md.,
elected Chairman of the exec¬
utive
demand de¬
currency
attend
Investment Bankers Associa¬
tion meeting to be
to
York
week from May 16
one
May 23, and will then
the
was
ply
TWA plane for Chicago
Chicago he will visit in New
.„„
"The growth in the money sup¬
a
on
May 12; following his stay in
on
reason¬
say
Street, Los Angeles,
South Spring
committee, of Norfolk South¬
ern
Railway Company.
was
elected
a
He also
director of Norfolk
Southern Bus Corporation, a
sidiary of the railway.
sub¬
(2229)
500,000 to be raised
Boylan Opposes Reducing NYSE Membership
J
to
(Continued from page 19)
get new blood into the business
markets in the
year
nual
7
by
born, Vice-Chairman; Bacon,
Bohen, Harris, Irle and Marks, all
of whom devoted a great deal of
member firms in the acquisition of
greatest demand is for
membership,
time
this
to
problem.
*
Letters
ROBERT P. BOYLAN."
:
from 38
New York members and 20 out of
town
Text of Report
in
received
were
,
(Signed)
members of
whom
50
were
in favor and eight opposed to any
seat retirement plan. Their com¬
The
following i$ the full text of
af the Report of the Special Com¬ ments ran along the same; lines as
mittee dated April 28, to the Board outlined in the appearances men¬
of • Governors of the New York tioned above.
Stock. Exchange:
In addition the Committee re¬
The
Special
Committee
ap¬
pointed by the President on Jan.
ceived
a
number
of
petitions fa¬
.
9, 1948, to explore the advisabil¬
ity and practicability of adopting
voring
plan
being formulated
and submitted to the
membership.
These petitions were signed by
a
plan for the retirement of mem¬ 250 members of the Exchange ot
berships has held meetings regu¬ whom 173 were partners in firms
larly since Jan. 23, 1948, and re¬ and 77 were individual members,
ft/:;///'77ft 77 ///-;•I ://7 ft/ft'/ftiift■■■'';
ports as follows:- /
ft
\ ' .'
ft ft'ftft 7:./ft: /Summary. 7,' ft/ ft 7
ft:/ *
a
■:
-
-
Resume
of
The
Appearances
There appeared before the Com¬
mittee 93 members and two allied
members
of ' the
-
Exchange
whom
ot
dition
to
increased
volume,
based
the
blood
new
the
Committee
has
had
a
re¬
tend
by
individuals
who
to
the
A
feel
the
necessary
the
vide:
(a)
members of
that if
an
that
the
a
the
maximum
op
was
be
in
book
tional
pro¬
price
close
value
or
definite
amount
fo
reach
100
plan, 19
were
possibility that
nite interest
able
the part of a siz¬
on
portion
membership
for the submission by the Boaru
sale, if necessary; that there be no
increase in dues; that
an.y plan
be financed by the
outright allo¬
cation of a portion of the
surplus
of Governors of
or reserve
is
although in
of
use
number of instances
a
initiation
forms
of
transaction
taxes, the
memberships
creation of associate
etc., were suggested as
financing a plan; and
means
of
that
no
assessment be levied on the
bership to defray the
mem¬
cost of any
(2)
That
been
five
a
mittee
retirement
plan, if adopted, fnay never be¬
a
of
fund.
no
offered
unable
members
Memberships; would
at
$25,000.
of
type of seat
definite proof has
and
the
Committee
determine
to
that
any
the
business
of
all
remaining
members, the maintaining of high¬
er prices lor
memberships and the
stabilization of membership prices.
That
under
circum¬
no
stances should any
portion of the
existing reserve funds of the Ex¬
memberships was change be allocated to a seat re¬
that the number of
memberships tirement fund.
should not have been increased in
1929; that as a result of the im¬
provements made in the mechan¬
ical and physical
setup on the
Floor of the
Exchange there are
too
many
present
memberships
foreseeable
or
for
the
volume
of
business; that a lesser number of
memberships would bring to each
individual member
larger
a
pro¬
portion of the available
business;
that the operation of a seat
(This decision has already been
given to the members of the Ex¬
change who signed the petition to
the
Board
ing
the
of
Governors
appointment
plan would maintain
membership prices at higher lev¬
els
well
as
clines in
as
prevent
severe
membership prices.
"ft In general those who
in
favor
plan
based
a
seat
any
that
primarily
brought
and
of
feel
i
de¬
the
retirement
problem
was
any
seat retirement program
mit
them
the
to
which
-would
be
may
proposed
not
accomplish the pur¬
by the proponents;
that*, any plan in one
way or anposes* desired
5>then would result in
cost bf. maintaining
that
even
if
275
a
increased
an
membership;
seats
were
re¬
tired the business of each remain¬
ing
member
would
proportionately
present
business
of the
is
not
increase
because
channels
Committee
ing any plan should provide for
equal participation of all mem¬
the
Exchange regardless of
nature
should
their
of
not
be
business and
restricted
to
any
particular group.
of
the
directed
to
the Floor
presented for the
con¬
sideration of the Board:
down
to
average
fund of $2,-
a
number
transfers
of
of
memberships.
$137,500
from
—
Contributions
funds
reserve
of
either
the
Ex¬
of
sum
to
continue
$687,500
tributed.
been
an
assessment
of
see
some
type
plan presented the Committee
approximate average of
retired
membership,
it
per
being optional with the members
as
to
this
whether
they wish to
assessment
annually
pay
or
as
(In this connection
bers
of
the
indications
lar/ amount
point to
that
broader
contributed
membership,
sell at
below the set maximum
or
price.
(Some
members
of
necessity
membership
at
time
a
when the volume of business
was
low
and the prices of member¬
ships were declining to the point
of making the plan operative).
Plan B
75
;
con¬
by the
assessed /; pro-rata
.
v
The fund of
-
V
of
Railway Operation*
Association
of
American ft Rail-
rbads/,Wjashingt6n, D. C.-r-paper.
Chicago Stock Exch.
/
Gets Nominations
ft
CHICAGO,
ILL.
—/Homer
P,
Hargraveft1 partner ft 'of; v Merrill
Lynch/ Pierce, Fenner & Bean&,
has been renominated to
second
Board
cago
term
of
serve
Chairman of
as
Governors
of
the
his
the
Chi¬
Stock Exchange, it was an¬
by the Nominating Com¬
nounced
the
over
seat
any
.
operation of
plan
and
retirement
said
escrow
-
;
7
ft
- .
&
Andrew M. Baird, A. G. Becker
Co.; John R. Burdick, Robert A.
\ j.
4H
-• 7 .ft
Gardner, Mitchell, Hutchins & Co.;
memberships retired Chapin S.
Newhard,
Newhard,
be purchased at the most Cook &
Co., St. Loui s, Missouri;
favorable
price possible in the George F. Noyes, the Illinois Co.;
best interest of the members of Sampson
Rogers, Jr., McMaster,
the Exchange, with a maximum Hutchinson
&
Co.; William H.
price being set at $30,000.
Sills, Sills, Minton & Co., Inc.;
,
Any
should
Respectfully submitted,
RAYMOND
ARTHUR H.
Reuben
SPRAGUE, <
Chairman,
LAMBORN,
Vice-Chairmah,
W. T.
BACON, t
BOHEN, ft
HENRY UPHAM HARRIS,
..■.it
ft;-.;.-
The
to
K. 7
.
•
ft;
the
one
Board
of
nominated
were
year
members of
as
Governors:
Chanft
Co,
7
-
'ft;:;;
■
was
elected Vice-Chairman at
the
Board of Governors, four were re¬
nominated:
Robert
A.
Gardner,
George F. Noyes, Reuben Thorson
ft
and John Griffin.
v;."/ft
■
Beckers
following
serve
Of the eleven nominees for the
M. MARKS.
•,
Webber,
Dougall, John J. Griffin,
Leonard J, Paidar, Goodbody &
Re-elecis Wm. Beckers
7- v.-
Paine,
cellor
NYSE Board of Govs.
■%
Thorson,
Jackson & Curtis.
WILLARD S. IRLE,
LAURENCE
re¬
or¬
The
Nominating
Committee
presented today's report
consists of Arthur M. Betts, Betts,
.
which
Borland
H.
& Co., Chairman; Clyde
Bidgood; Julien H. Collins,
Julien H. Collins &
Fischer; Fahnestock
Jablonski.
*
»
Co.; Robert J.
& Co.; A. L
*
.•
ft/ "ft*
May 10.
Mr.
Beckers
is
partner
a
of
Spencer Trask & Co. and has been
a
member of the Exchange since
1927.. He has twice
July,
been
a
Governor of the
Exchange, serv¬
ing from 1938 to 1942, and since
May, 1944.
He was elected ViceChairman in
The
Board
re-elected
as
Gov¬
ernors of the Exchange represent¬
ing the public, John Q. Adams and
a
of
Mr. Adams is
Director of the Continental Illi¬
nois
National
Chicago,
PresHent
approximately $2,- 1 Co*> Inc».
of
Bank
and
&
Mr.
Cluett,
-
1;
B. Higbie, Jr. Willi
C. G. McDonald & Co.
DETROIT, MICH. — Bradley
Higbie, Jr. has become associated
with C. G. McDonald &
1947.
C. Robert Palmer.
memberships,
by the Exchange for resale, when
necessary.
Review
in 1947, A—Julius H. Parmelee—
the "five- year period, esti¬
mittee which posted its nominees
at $165 annually,
payable for offices to be filled
at the an¬
quarterly.
nual election of the
Exchange, to
The
fund should be managed
he hold June 7 next.
by either the Trustees of the
Thd following were
Gratuity Fund or by a Trustee¬
nominate^
to serve three years, as members
ship
constituted
along
similar
lines which would have complete of the Board of Governors:
.'ft
the
that any seat re¬
tirement plan should, of
the
,
over
William
memberships to be held in
mem-
feel
through the
ganization meeting of the Board
bership to handle the fund under of Governors of the New "York
some
specific formula governing Stock Exchange, following the an¬
its operation when memberships nual
election held on Monday,
Retire
some
Committee
obtained
,
7.77,
V A • Committee
or
group
of
Trustees be elected by the mem¬
feeling
conclusion.
a
.
$100 annually for 5 years or at the
$6
Corporation Com¬
Broadway, New York
7, N. Y.—paper—$2.50. :
ft7
t&:«h\ ft' >'• ft,
\
100 memberships.
fund of $2,500,000
rate of an
believes that it is desirable for the
Board
to
follow
this
a
to
Exchange of all
initiation fees received
during
such five year
period, estimated
at $225,000 annually,
plus a simi¬
of
on
seat retirement plan
because of the large
number of members who have ex¬
•}i,
.
States
160
pany,
by the
tribution by the
;
of
-
(revised ft to
1948)—29th Edition-
13,
United
retired
so
escrow
WILLIAM B.
basis
/ft
ft/ft; ft/ft
.
five year period, the fund
a
be
con¬
sirability of
pressed a desire to
over
$137,500—From the membership
the
April
Vz
be
the
until
has
mendation with regard to the de¬
a
Establish
change or from current income
during any year in which the
Exchange operated at a profit of
an
equivalent amount, said con¬
tributions
to
Retire 75
fund,
follows:
$225,000—Initiation fees based
upon
the
approximate
annual
average
in
r /ft'-Vx
annual basis
as
held
resales
discretion
require payment in advance and
not place an additional assessment
nevertheless
memberships
500,000 over a period of five years,
said fund to be created on an
Committee feel
(1) That while thfe Committee is
unwilling to make any recom¬
of retiring seats efforts be made< sill
the
are
scaled
.
mated
price of $28,000 to $25,000.
Establishment of
Press,
Washington
Corporations
ness
of
Plan D
;
,
opinion of the
following recom¬
although not unani¬
agreed upon in all in¬
through which through to
Exchange; and that instead;
/ft
mendations,
mously
stances,
-
each
price
transaction
membership,
be
vrtftvft-
seats are retired,
I Recommendations
In the considered
Committee
$36,000
a
on
(4) That the method of financ¬
ft
"ft \1' " Plan A
Affairs
Florida Avenue,
New York Laws Affecting Busi¬
puift
be
applied to the
fund fpr • future operations.
^
to
Cook—Public
8, D. C.—paper—$3,25.
Exchange for resale should condi¬
tions
require. The proceeds of
are
100 memberships, to be retired
permanently over a period of
years,
at a maximum price of
for
consideration.)
by taxes, margin
regulations; that with
reduction in taxes and the low¬
*
and sub¬
lack of volume
on
ering of margin requirements the
Exchange may have use for all of
the; 1,3755
'memberships; that any
plan
Com¬
a
study the matter of Re¬
Memberships, so that
petitioners could formulate
other plans for financing a
about
other
of
tirement of
the
bers of the
were not
request¬
mittee to
and
retirement
the matter:
On
Any
should
submitted for the information of
the Board in its further study of
,
memberships
would
accom¬
plish the desired results, i.e., an
equal proportionate increase in
by the membership and
lan
2153
the
any
War,
—
policies and programs—James Al¬
the
maximum
a
ration the
t
Surplus
Comprehensive/
study of Government Liquidation
purchase price ; would be
from the fund
an4
the remaining half assessed
pro¬
suggested plans seem to cover the
suggestions and recommendations
made
of
of
Property/The
contributed
Govenors to submit any defi¬
nite plan or plans for seat retire¬
ment. Nevertheless, the following
,
(3)
general the basic philosophy
of the proponents of
plans for the
retirement of
Marketing
the
initiation fees
period. A Com¬
year
five
*
ft///ftftft;ft/7ftft 7;ft
chased
of
proposed plan for the retirement
plan.
In
some
retirement plan.
various J of
fees,
the
of
-ft
ft.
be raised, by
accumulation; of
mem¬
th^
Exchange,
the
cover
Long And Like It—Dr. C.
Crampton — Public Affairs
Committee,
Inc.,
22
East
38th
Street, New York 16, N. Y.—paper
memberships to be retired,
ft Funds would
a
.
funds of the
Live
Exchange be elected by the mem¬
bership for a term of three years
to supervise the seat retirement
the
Building, New York
Ward
Gratuity Fund.
of
seat retirement
Government, Inc.,
17, N. Y.—cloth—$4.00.
addi¬
some
over
a
King—Committee for Con¬
Bartholomew
—20c.
favored a plan for re¬ opposed, and three expressed no
come, effective the accumulation
tirement of memberships, 11 were definite opinion,:.
opposed to any plan and three ex¬
The Committee
has carefully Of funds which could not be used
for any purpose other than the
pressed: no opinion. In this group considered "all
suggestions
and
of members there were
-36 part¬ recommendations presented by the retirement of memberships; would
ners
of * Commission
Houses, 31 membership. It has also, with the be; undesirable.)
•ft (3) That any .plaft" which tfia#
Specialists, *22 $2 Brokers, two assistance of the Treasurer: of
be proposed / providefor1 the'
Associate Odd Lot
Brokers, one Exchange, examined the present
re-j
tirement of - at least 75
partner of an Odd Lot
member-;
Firm; and finances of the Exchange to asf
one inactive member.
certain the availability as well aS ships, but' npt more than 100 mem
:/ The
opinion of a ver^ large ma- the advisability of using any por¬ berships.
v(4) That any seat retirement
jority of lhe~appearances was that tion of such funds for financing a
plan which may be proposed pro¬
the problem concerned
seat retirement plan.
only active
vide
for
a
maximum
price at
memberships on the Floor of the
which memberships should be re¬
Conclusions
Exchange; that between 100 and
tired.
As a
result of its study the
: 2,75 seats should
be; retired at a
Suggested Plans J
Committee has reached the fol¬
maximum price of $40,000 to
7
1
$50,The Committee does not feel
f
000; that. any plan provide for lowing conclusions:
that it is required by the Board
the
permanent' retirement
(1) That there is a very defi¬
of
'
$30,000
price of
relationship to
plus
C
fixed
some
(b) b,y payment of
of
consideration to
benefits of the
membership
annual basis of
an
Keys to Prosperity, The—Willford I.
T
would
the
a choice
by ballot between
optional payment arrangement
amount,
Ex¬
stitutional
make
an
the
Exchange
profit of an equiv¬
sponse/ from ^403
members
of bership retired at the time of-re4
whom 381 favored the submission lirement.
Also, that because of
81
memberships although some fa¬
vored having the
Exchange hold
the memberships in escrow for
re¬
of
the
$25,000-$22,000 for retirement of
memberships
under
this
plan
assess¬
membership
plan should
income
scaled down to average a
seat retirement program
provide
that the funds be accumulated in
on
7?ft
777
alent amount.
a
ment
■
provided
operated at
■
(Some
current
change
in¬
actively engage in the
business.)
(2) That any plan for financing
Committee
•;• >V
$137,500—Based upon an annual
assessment of $100, payable quar¬
terly, by the membership.
$137,500 — Contributions from
securities
advance.
an¬
the " average
annual
transfers of member¬
of
ships. j.■7ft
controls or restrictions should in¬
terfere with the purchase of mem¬
berships
five
a
.ft
From initiation fees
—
on
number
ket in
Letters and Petitions
important
very
non-
over
the following
on
.7
$225,000
business; that a free mar¬
memberships subject to the
law of supply and demand is de¬
sirable at all times; and that no
interesting ft reputable
basis:
future; that in ad¬
Messrs. Sprague, Chairman; Lam-
a
period
4S
Trust
Co.
Palmer
is
Peabody
&
.....
..
.^,r.
Company,
Guardian
Building, members of
the Detroit Stock Exchange.
Mr.
Higbie was formerly President of
Alison & Co.,
solved,;-
7;
ft
;;
which is being dis¬
/ft:
It is understood that
a
new
firm
Higbie, McDonald & Company ds
to^ be formed in Detroit' about
July l.
'
^ftft
/ft
-.ft
46
THE
(2230)
COMMERCIAL
FINANCIAL
&
CHRONICLE
The Outlook for business and Government Bonds
The
(Continued from page 17)
actual
cost- may
be much
is
than
larger
envisaged.
now
will undoubtedly
accentuate the shortages in many
lines and, if carried to an extent
larger than now expected, could
easily lead to a curtailmentjn the
output of some commodities still
in short supply.
(6) Employment is satisfactory,
modest increases in wages have
Such
program
a
.
been
others in all
likelihood will be granted in the
and
granted
When in addition to these fac¬
tors it is noted that industry, for
example petroleum and utilities,
is still spending
large sums to
enlarge and modernize its plants
and
equipment, one can easily
reach the conclusion that the year
1948 will be marked
'dustrial
by high in-
and national in¬
and that no sharp break in
come
output
commodity prices will-take place.
Inflation
purchase
other commodities.
(3) Pipelines have to a con¬
siderable extent- been billed and
i
t
n v e n
i
o r
e s
on
the current de¬
mand
but also to fill pipelines
and
inventories, at present the
output of industry goes directly
merely
meet
to
into consumption.
Readjustment
Versus
The most important question at
the moment is whether the next
Finally,
than they
several months ago and it is
were
not
as
obtain
to
easy
credit
months will witness
eration of
forces
the
accel¬
an
inflation
of
piodest readjustment in busi¬
activity -and
commodity
or a
ness
prices. As stated before, forces of
both inflation and deflation
at
are
work in the economy
try
and
of the coun¬
analysis of these
an
forces should enable
draw
to
us
certain conclusions.
The factors which tend to In¬
at
it was a year ago. This
applies not only to short-term but
to long-term credit as well, par¬
ticularly mortgages.
These
factors
combined
are
def i nitel y anti-inflationary in
character. If the forces of inflation
present
as
deflation
and
weighed,
are
and
particularly if it is assumed that
the Congress will not permit the
Federal
Government
to
again
show
a
large deficit and that new
military expenditures during the
fiscal year 1948-49
within/the limit Jbf
will be kept
the proposed
$3-$4 billion, it may be concluded
that
the / inflationary ^pressures
merely counteract some of
the deflationary forces and that
on the whole business activity and
will
position.
conservative
there
that
present
be
to
seems
the
long-terms in order to create
balances
reserve
of
making
the
ing
piece
of
tions.
work
the
about $14
which the inflationary forces
a
$15 billion. There is
or
possibility, however, that this
cost may
(2)
;
be further increased.
The'; reduction
which
will
billion
place
at
the
people. When
in
taxes
added
an
disposal
$4.8
of
the
reduction of taxes
is accompanied by a decrease in
expenditures by the government,
such
a
a measure
Since
taxes
is not
were
inflationary;
reduced,
how¬
ever, at a time when government
expenditures
bound
are
in¬
to
crease, the reduction in taxes may
definitely be considered inflation¬
ary in character,
V
(3)
The
large
government
for
which prevents
w/
buying by the
foreign account,
material de¬
cline in prices of food and farm
products.
:*
any
(4) The constant rise in wages,
which
cost
leads
of
to
increases
production
modity
prices.
further
and
aggravated
in
in
the
com¬
This/situation
by labor
is
un¬
rest, which has curtailed produc¬
tion of certain commodities. This
has been true of the coal indus¬
try, for example, where the strike
affected
tries
as
These
■a
number of other indus¬
a
well,
factors
particularly
program
and
combined,
if
the
should
cost
more
and
rearmament
be
than
accelerated
is
at
present
deficit could create
a
situation in
will
more than outweigh the deflation¬
ary factors. To a considerable ex¬
tent, therefore, the outlook for
maintain
increased
the
order to
in
Government Bond Prices
draw
tentative
certain
conclu¬
sions: No drastic credit restrictive
measures
to be expected, and
repetition of what
are
certainly
a
happened in the money market
during 1920 is out of the question.
At present the "monetary authori¬
ties cannot adopt drastic credit
restrictive
because such
measures
policy would greatly interfere
the huge refunding opera¬
a
with
tions of the Treasury and further
increase the public debt' service.
Moreover, there is
a
wide realiza¬
tion
that the government
bond
market, is; the cornerstone' of the
bond market in
a
ary situation.
<
*
general and that
sharp increase in interest rates,
accompanied, as it would be, by a
corresponding decline in prices of
high-grade bonds, could have a
pronounced effect
The
Deflationary Forces
tivity. It
/To
a considerable extent, how¬
ever, the forces of inflation are
being counteracted by a number
of
be
{
delationary forces which may
briefly summarized as follows:
(1) Commodity prices
and
people
many
meet their
needs.
are
are
high
unable
to
In
spite of the
high wages and high level of em¬
ployment,
many
people
have
to
incur debts in order to
make ends
meet.
N
.of
■'.
(2) The cost of living, notably
food, is
very
high. Since
a
con¬
siderable proportion of the aver¬
age American family's income has
to
be
spent
on
creasing amount
may
granted
mainder
2i/2%
ment
of
business
ac¬
also be almost taken
that during the re¬
the
present
year
the
rate
on long-term govern¬
obligations will be main¬
tained. If
this
is so,
then the
pattern for all other rates is more
or
less set.
The
only change that
may take
place in the money
market picture is a moderate in¬
crease
in short-term rates
panied by
an
increase in the dis¬
a
moderate
of the over-the-counter
firming
rate.
prime question confronting
the money market and the banks
care
and
their
control
policy
lending and investing
the
the part of
on
is indicated.
„
.
-
banks
/
..
to have
action, for they were bear-,
ing the most painful brunt of the
high prices. They were feeling
most of the 23 cents of hidden
in
taxes
law
every
and
food
dollar spent for
The new tax
clothing.
•
relieves
T,400,000
people,
super-New Dealers who rule Rus¬
control
striving mightily to, gain
goals. But until we get
of the Executive Branch,
sia have
investment
all
it: will
be
had-control
for decades.
And with what result?
Reserve authorities will be main¬
of
tained
indefinitely. Should the
surplus/beconvertedinto';;a-^ sub¬
stantial deficit, however, then the
following situation may arise:
Russia has
times higher, in terms
purchasing power of labor than
prices
many
has the United States.
Russia's in¬
flation drove
prices for its help¬
less populace constantly upward.
We
are
our
for
difficult
ing to help us
A
The.-
us.
They
remedy it.
people understand.
are go¬
joint Congressional Commis¬
sion already is at work to deter¬
mine how and where we can fur¬
ther cut back the powers the Fed¬
The Masters of the Kremlin fi¬
eral Government has usurped. We
legisla¬ nally resorted to a capital levy of intend to return those
powers to
tion increasing
taxes, thereby pre¬ 90% to pay for their own ineffi¬ their
proper levels — to the State
venting a deficit from developing. ciency and corruption. Out of
and local governments. That Com¬
Even if the budget of the Federal
every ten dollars a citizen had, the
mission will report to the Con¬
Government
is
only
balanced, Rulers took nine dollars. But did
gress next year. Several Repub-'
without any surplus, the Treasury that stop inflation? Not by a long
lican
Congressional
Committees
will have $3 or $4 billion from shot.
Nogovernment can stop are hard at work
right now —
the agency accounts with which to
runaway
inflation
by runaway
studying ways and means of over¬
redeem maturing obligations held rule.j A stable
currency is based
by the Reserve Banks, to which on a stable government. And you hauling the whole New Deal tax¬
ing and spending structure so that
should be added any excess of can't have a stable
government
next year we can do a major ren¬
sales over redemptions of Series run
by unstable people. The Rus¬
ovation job on the monstrosity we
E, F and G bonds.
sians CUtild n6t stop inflation by
have
inherited.
The
very
first
If the Congress should refuse iron-clad controls and we shall
to impose new tax burdens on the never be able to do it. A Repub¬ rtfecessity/qf/gOQ4?g<>vernmeht/4s
an intelligent, comprehensive, con¬
country, then it will either pass lican Administration will meet in¬
structive ; application of, econopay
legislation giving the government flation by encouraging coopera¬
The
Congress
may pass
—
increased
powers
and
wages
over
rationing
or
tion/production, work, thrift,
ing, economy and efficiency.
prices,
it
will
reserve
requirements of the
ber banks.
country-, ever
acter
to
Eccles,
the
into
mem¬
that
similar
Board
of
of
:~
.
taxes
a
are
know—that high
terrific
drag
on
pro¬
posi¬ duction.
They; are a ■ millstone
tion to buy large amounts of
the necks of consumers.
gov¬ about
ernment
same
securities
and
a
^
at
They cause the worker to demand
the
time counteract the increase
reserve
higher
the newly created excess reserves
into required reserves.' After tak¬
wages,
higher
balances by converting
the
thus driving still
prices his own wife
Housewives now have
dollar for 77 cents worth
must pay.
to pay a
ing into account all the factorsdn-1 q£*/fOod and clothing.
yolved
one
elusion
that before
may
reach
the
.cof*-4
the monetary,
"goes
for
authorities give up the power.;fo>
keep the government bond mar¬ keptfat/the lowest
ket
orderly,
they
will
first
eh-!
The other
taxes.
,•
.<
.
■
Insofar
t
A.
*
•
,.
main¬
as we can, we are
value of the American dollar. We
intend to work always to prevent
more:
depreciation
of
practical/point.
our
rehcy. We have:; begun. to makjs
regular payments on the national
debt. But we won't try to pay off
the debt
so
fast
as
to
wreck op¬
portunity/ thrift <«nd progress of
our younger citizens.
Our
veterans* and other
Taxes people, to whomt we
^Hkfe/fevfery^where. /They .must be
**■
••
..
We Republicans know—as most taining our * pledge to retain the
Americans n6,w
the
System, then the
Reserve Banks will be in
economized
Burdensome Taxes
by Mr.
Chairman of
Governors
Federal Reserve
sense
bankruptcy
advocated
the former
in both taxing and spending. i-Sq'
Of billions blunts our
much talk
•...
char¬
in
No
.....
If the Congress should
legislation
pass
sav¬
oihumble dollars.1 But save
itself
enough of the dollars and they
and no people
will amount to billions.
••
•' ••
*.»<,
•
*
fever were led to prosperity along
l'
t
the road of extravagance.
Struggle Against Depreciation
grant the Federal Reserve Board
the power to further increase the
at the present time is whether the
its
over
Reserve authorities will maintain
an
cautious
a
they stay here. In no nation the budget. /We havfe madeZgOdd
the government have more on our promise to reduce taxes.,
in¬
and
great
uncertainties at home and abroad,
their lives and their activities. The
in the extension of
in
New
despotic
policies, the present policies of the
in
count rate and
The
accom¬
credit
does
utiliz¬
are
short-
lower income citizens from
but
So
banks
the
of-relief to those in the. lower in'-*
come brackets. We knew they had
the
rent, less and
food
on
for
on
commercial
ing great
Although it is fairly certain that
the policies Of the monetary au¬
thorities will to a large extent
be determined by business activity
and the movement of commodity
prices, and even though the out¬
look is highly uncertain, one may
acceleration of the spiral
between wages-and prices and
lead to a rather serious
inflation¬
an
untenable.
the
anticipated, could definitely bring
about
^eM"1>y ^e Reserve
the present policy of
Reserve authorities may be¬
come
in
Because of the
of fthfe$e
paying
There is, iri fact, ample. cvit any. taxes at all ontheirrinebmes.
dence artd art A-numberpne ext. This, my fellow Republicans, is-a
hibit irk the world3 to disprove prime"fexampljfe^
these; phorty Economists. It is * Sof pleitt TO yeatS ^-/of a political;
viet Russia, the economic 'heaven party keeping faith with its peo¬
so many of our New Dealers seem
ple on its promises. We have made
to yeani- for; They^ yearn 'for it, good on our promise to balance
and
The Outlook for Money Rates and
the
seri¬
primarily
:
present /surplus of the government
is converted into a/deficit, how-
nation.
of
or a
be
record.
obligations* of
long as the
Treasury is operating with a sur¬
plus, and particularly so long as
security
government obligations may
in the imme¬
diate future.
Any change in in¬
terest rates that may take place
be taken for granted
(Continued from page 8)
*
the
authori¬
Deal, told us high
taxes
would
stop
inflationary
trends. They were the same econ¬
omists who preached the doctrine
Of stifling production by killing
little pigs, plowing under cotton,
and keeping our economy under
air-tight controls. They have been
discredited *>ii; all counts by the
of
hold¬
with which -to redeem government
have to be
Reserve
Accomplishments of
Republican Paity
prevent an increase in the volume
Reserve Bank eredit. If -the
Banks
the
be
Aims and
Banks, there¬
by reducing the reserve.balanee*
of the member banks,, the Reserve
authorities are in/ apposition to
keep the government bond mar¬
ket orderly and at the samq time
obligations
that
will
depression
ever, thenthe Treasury will not
have atits/disposal more "funds
depends on the wisdom
legislators and upon the
extent to which the government
feels military expenditures will
our
in
mortgage
new
surplus and it is utilized for
of
chance
ties will
term sector.
monetary authorities^will depend
on the fiscal position qf the^gov^
ernment. So long as the Treasury
business
,
is
it
While
(3) Finally, the policies of the
of
larger than are now en¬
visaged, the inflationary forces
should.be balanced by the defla¬
tionary factors and the economy
of the country for the rest of the
year should remain on an even
keel.
The policies of the mone¬
tary authorities will depend on
the trend of business, commodity
prices, the volume of bank loans,
and particularly the fiscal posi¬
tion of the Treasury. If the present
surplus of the Treasury should be*
converted into a large deficit arid'
if the Congress should refuse to*
impose new taxes, there is ?a:
Conclusion
sified, obviously the present pol¬
icy of the Reserve authorities may
be jeopardized.
minded, however, and always bear
in mind that a change in policies
regards rearmament or the con¬
surplus of
the Treasury into a substantial
of
indicated
loans.
and the forces of inflation inten¬
(1) Increased military expendi¬
version of the present
granting
is
care
extremely difficult
to predict what business condi¬
(2) The movement of commod¬ tions
may be during the remain¬
ity prices: If the spiral of wages der of the
year, it is already fairly
and prices should be accelerated
certain that a
a
much
term
activity. (4) And finally,
utmost
Bankers
the purpose of reducing the
expenditures should become
business
the
the banks in this respect.
has
Unless the rearma¬
economy.
dium quality which fluctuate with
educating
in
inflationary and
deflationary forces in operation in
granted the power to
further increase reserve require¬
ments.
The 2%% rate on long-
the time to buy obligations of me¬
new
outstand¬
an
and for the
marketability as com¬
with government obliga¬
(3) Now definitely is not
pared
purpose
American
Association has done
greater risk
decreased
the Federal Reserve
as
a
sug¬
that it is compensated
sure
the
as
loans and invest¬
new
The
ments.
for
ings of. government
tary expenditures are maintained
at $3 to $4 billion, the cost of
security to the United States dur¬
ing the next fiscal year will be
v
attitude
danger at
banks will sell
keel. One should be open-
tures: Even if the increased mili¬
r
make
for
no
commodity prices will remain on
v
,
rather
a
However, the
adopted a
tensify the forces of inflation may
briefly be summarized as follows:
an even
should
following
gestions may be of some help:
(1) Each bank should ascertain
the
need
for its liquidity and
make the proper provisions.
(2)
created reserve balances for the
At present only high-grade bonds
purpose of creating new loans and
should be bought.
Where a bank
making new investments, thereby
finds- it advisable to buy high-¬
creating new deposits, obviously
grade
corporate obligations or
the Federal Reserve authorities
tax-exempt securities, it should
markets regards loans and investments and
money
tighter
policy
long-term government ob¬
ligations to the Federal Reserve
Banks
and
utilize
the
newly
rather
become
"What
question
to sell
equipment.
(5)
final
a
bank follow?" The
banks themselves have
have
exist,
that
arises:
difficult
There are/both
ment
In view Of the great uncertain¬
ties
If the banks were
would find themselves in
recession is not in the making.
ous
our
(1) The. attitude of the com¬
mercial banks.
/;
necessary.
Investment Policies
/
,
The productive capacity Of
increased because
1946
and
1947
large
amounts of capital were spent to
install
modern
machinery and
(4)
the country has
<
12
come
in¬
definitely. The -answer to this
question depends on the following
factors:
controls
new
the market, if this should be¬
over
the peg on government bonds
the whole are
large. Hence, whereas during 1946
and
1947 industry produced not
during
future.
near
less becomes available to
obtain
to
deavor
Thursday, Msy 20, 1948
we
can
never
repay,
every encouragement.
owe
young
a
must
debt
have
They must
ahead-
have every chance to get
:Wevdid-rtot give empty promises to establish homes, to raise happy
•
'v-
!
-:'
../. V; /A •/:?
//v'/////i1/OH': ,'/.'
•
Volume 167
^Number'4700
^
_".
families, to-save against The *cori*
/ tingencies of the future. -We .must
|by The tax-gatherer.
Now, let me 'look
♦Cdlumri
(danger
at
this
in
X^QNTCLE tM
the
world.
peace.
We Republicans
-y- once* we have
White 'House—will
drive toward America's
goal of :a
just 'and lasting peace. 'The New
control of
Fifth
the
Dealers can't do it.
They just don't
know how.
The
secrets
of 'the
-We
moment.
a
;T^
want {peace
AIL, the world must ihave
protect themTrom repressive
gov¬
policies — from having
Their pockets picked at
every turn
ernmental
:
We
_
profound (devotion to the
spiritual
values—To The
(principles of hon¬
esty *and
justice-^upon
forefathers
founded
will enable
must
of all commercial
Nation, quirements
stand
to
the
principle, and addi-i
-qualitative credit control
powers.
It is also possible That
tional
a
people conference tables of the past
iteppublicans came Still there To *haunt-Them.
power,
would
we
ICommunists
out
of
drive
the
government
and
replace them with ;men <and
Iwomen who believe iin .our Amer¬
ican < system. We have carried :otf€
ithat-pledge, .insofar;as
do
we
in/Con-
egress
can
♦show
clearly that /the (New Deal
Let
so.
the
record
.imaginable.
They have thrown
.every roadblock they could. They
can
Dealers have done
have
exploded
every
tkind
of
'hand-mine they could heave from
The bushes.
They Rave tried; 'to
•plant every v kind pf i booby trap
.they think might work,
With the New .Deal, there came
so
long. We
are*
following rprinciples because .we
still {abide by principles
in^prac*
tice.
'
As
to
r
"
wer arm
"Strong the spiritual
of
with
hope
for
be filled
the -future.
After
Government.
our
in-|
(posts
our
of
varitage*
they Tiave
unceasingly ito .undermine therefore be
representative
They
have
on
a
practically
deter¬
mined, clever, devilish campaign
destroy the Congress b,y de¬
stroy ing the faith of our people
'to
'in
their
lWe
can
representatives.
thank Providence tonight
'still
stand
Next
succeeded.
The
also
ment
mies out of the government.
-We
'intend
to
replace
them
with
-Americans who are imbued with
Events in Europe
I am vastly
encouraged by the
trend of recent events in Europe.
.
The elections in
Italy gave us all
amounts
of
govern¬
munism
with
we can
moral
lowing
ment
will depend
be
end
factors:
of
"(1)
commoditv
increase
might convert
cently
their
some
acquired
of -their
short-term
volume of
out
re-;
gov-;
soil
and
as
you.know, has
mines
cre¬
factories
and
reserve
ioying
helping the ^liberty-
...
..
.
,
Tf Congress hadvnot insisted
-
aid for
would
have
Far
idft, the
overlooked
the
need
East, and would have
Chinese for the Commu-
"
FThe
government'bond market has been
based ^primarily on the
Treasury
activity,
a
a
able
to
face
facts
as a
able 4° reduce ^ese^Ve'bal^
foundation
.
at 'least
poses.
due
to
to
a
To
In -short, ^we must *h&ve
that end,
,we
-have,
government
the
Banks; and partly To inCreaseTheir
i liquidity.
Institutional .investors
and
Group Air Force.•! The Adminis¬
individuals have been selling
long-term 'government^obligations
tration
in
tried
tojoppose
had the people on
could not be beaten,
we
Tor ,-a- 70-
our
us.
But
side. We
v
order
to
invest in other
secu¬
rities,and in mortgages
offering
higher return.
market
secu¬
rities held by/the Federal
Reserve
political objections of the Admin¬
istration, woted funds
redemption of
air .age.
over
pur¬
considerable extent
"
The
the
oversupply of credit
;and that curbing the forces
of in¬
flation ;was more
important than
preventing prices of government
tive
Company
}
»
now has a
tenta¬
capital expenditure program
contemplates expenditures
which
of
approximately
$5,325,000 Tor
facilities
initially required Tor
television operations in-New
cannot -be denied that the
York,
huge Los
Angeles, Chicago, San Fran¬
increase in the volume of deposits
cisco and Detroit. The
and of
company
currency in circulation has
holds
construction .permits
for
'played an important role in the
television stations -in these citie^
inflationary process that started and
expects all five television sta¬
after 'the abandonment of
price tions to be
on the air
controls. The volume of
by the end
currency of the
year.' K
outside the banks and of demand
After The financing, the com¬
deposits adjusted of all banks rose
pany's outstanding capitalization
from *$78,231 million at the
bonds
from
going below
par.
It
„
will .consist
1946 and 1947
lion.
rose
by $12,628 mil
Clearly, only through
a dras¬
tic reduction in the
means of pay¬
ment .and the
of
$5,000 000
in
4%
promissory notes, due May 1, 1960
and 1,689,017
shares. of common
stock.
nary figure)
on
Feb. 25, 1948.
The volume of bank loans
during
*
■
•
a
A decline in busi-
.
i
The
company, incorporated in
Delaware in March, 1943 under
the
name
of American Broadcast*
ihg System, Inc., changed its name
to
American
Broadcasting Co.,
adoption of credit
Inc., its present title, in
October,
1944.
It operates one of the
Tour
restrictive measures could a ma¬
terial decrease Tn the
supply of
^purchasing
about.
; power
be"
nationwide networks of affiliated
standard radio broadcast
stations,
brought
/:
that
primary
reason for the
Broadcasting
licenses Tor
standard
sharp in¬
tion
and
and
Co.
operates
frequency .modula¬
stations
WJZ .New
York,
They asserted that ;the policy of WENR Chicago, KECA Los An¬
the government toward mortgage
geles,M^XYZ Detroit and KGO
loans was an important contribuSan Francisco.
;in addition, The
Tory factor in the inflationary
network -included ?as of ^DOc.
-31,
process since the GI Bill of Rights
in
crease
-the
volume
crease
of
loans.
in wages, nor would credit
restrictive
measures
have relieved
or-endeavoring
to obtain
additional powers over th6 money
market.
housing
"The-chances, are that^before the
ment bond market is
given
Reserve
will .request
authorities
up
the
country
that
or
deterred
in
as well
change, will also become members
ipart of The ^accumulated large of the New York Stock
Exchange,
savings. Despite these ■circum¬ on May 27th when John O. Stubbs
as
stances, It tmay be expected that,
as ;the monetary Authorities
just
criticized in 1920 for having
acquires
Emanuel
the
Tirm
the
H.
are
;
membership
Loeb.
Max
Partners
O.
of
in
Whiting,
taken the measures which broke
the
Robert S. Weeks, Mr. Stubbs, -who
inflationary spiral, they will also holds the firm's membership
be criticized in the future for not
on
the Boston Exchange, Warren.
having
D.
Arnold, W. Ellery Bright, Jr.,,
instituted
inflalionary
controls, such
of World War II."
the power to in¬
BOSTON,
MASS.-— Whiting,
The Weeks &
Stubbs, 53 TState Street,
spending of members of the Boston Stock Ex¬
prevailed
Congress To 'give Them additional
as
Stubbs to Join NYSE
the high current income
were
policy,of supporting The .govern¬
Whiting, Weeks 4
the actite shortages of goods ;and
t
power for an
be
general
available .for
4
-for new loans and
We face the fact today
•;ancea"- through
in vestments.: The com mere
redemption
of
ia 1
that we must be ready for the
banks are currently
selling These maturing [government obligations.
Worst, > while we ihope, and pray, securities to the
Reserve Bariks Under such conditions the author¬
forThe best. We mustbe
capable partly to Vneet their reserve -re¬ ities may *be cohfronted with The
cf ipeeting any (potential aggressor quirements,
depieted^y The utili- choice .of ;either discontinuing the
with a swift defense and a sure zation of the budgetary
surplus«for support of the government bond
adequate air
will
capital
expenditures,
.working
capital and other corporate
be
of
in order to acquire
^addi¬ ing. The monetary authorities will
tional reserve balances to
bemused*
with
courage.
dffense.
Mich
company!s
will
decline in busi¬
reversal
Republican Party .always Banks
been
the
.
iiist wolves to devour.
has
to
and
station
.
on
China, the Administration
in
the
ness
peoples^ihroad get back on
their feet.
;
Moreover, with
be spent with /the
possible efficiency
and
econoftivin
"WOOD,
of
Rapids,
added
funds
$807,500
sale
ment, and the European Recovery and the FHA
insured mortgages 1947 -a total of <252 affiliated sta-5
Program may easily convert the made
impossible for individuals tions.
the Treasury surplus into a deficit in
to
buy houses with mortgage
For the year ended
present credit restrictive policies; the fiscal
Pec. 31,
year 1948-1949. Should
money and with a small invest¬
of The Federal Reserve
authorities this {happen The monetary author¬
1947, the .company's ^consolidated
ment or even without
equity capi¬
might also be expected.
ities ^win ^ind themselves an a
tal. The increase in the volume net sales, after > discounts and .'re-'
"Even if business should con¬ difficult position. Ji
They should of commercial loans,
they con¬ bates were $35,955,004 compared
tinue on the current high
continue the present policy of sup¬
level,
tended, was not the cause 5 but with $32;828,575 in
1946, while met
there is no reason Why The 'Re¬ porting the government bond marrather the result of the sharp in¬
income Totaled r$1^20,»756 againstserve
authorities should change
{kdt;41ie!;mejuber;tbahks {will fbe in crease in prices of commodities
their present
policy soj&ng as the a position to
$1^242,17-7 -inThe sprevious year.
/
^creUle mew "reserve and'df-the Cost of
doing "business,
commercial
banks do mot sell
balances and ^increase their de¬ High
medium and -long-term
money .rates, They -stated,
govern¬
ment obligations to
the Reserve posits Through, lending and invest¬ would not have prevented an in¬
America, Jhall
greatest
Grand
net pro¬
approximately
balances with¬
would sell above The
pegged price. :
of
of
the
necessity Tor -supportirig 'govern¬ holds
abandoning the support of the ment
^obligations,? was not the
^obligations Tnto medium surplus. The reduction of income
ated a joint Commission to watch and long-term obligations. In tliati taxes
by <$4,800 million, The re-ar¬
case the demand
the Administration of
for such secu-- mament
foreign aid.
program, which may add
We intend to see that the vast ritics might exceed
offerings, and) an .additional 4$3 to '$4 billion To
prices of government obligations the
sums, which must come out of the
(expenditures of the govern¬
Congress,
ceeds
from
di¬
having acquired in October, 1943,
"It has been pointed i out, also, all of
the outstanding
capital stock
the low money rate
of Blue
policy
latter, in order to:
Network Co., Inc. The
followed by the monetary author¬ Blue
prevent the
Network was org^oized
inflationary forces:
orig¬
ities throughout 1946 and 1947
rrom assuming dangerous
inally by National Broadcasting
propor¬
led to a
considerable expansion Co., Inc., in
tions, would be forced to change
1927, but Radio Corp.
of
capital
their policies."
expenditures, which of America had to
dispose of -it
were stimulated
by the ease with because
of / regulations
Tn analyzing the fiscal
later
position which
long-term funds could ~be adopted by the Federal
of the Treasury as a factor in the
Commu¬
borrowed at low rates. The mone¬ nications
Commission in ; effect
government bond market, the bul¬
tary authorities took The view,
prohibiting ownership by one per¬
letin states: "The ability of the
however, That the low money rate son of more.than one
network.
Reserve ^authorities to reduce The
policy, adopted in part by the
American
earnings,
ernment
$4,000,000
approximately $4,-
901,000 together with the
discussing the criticism
their
(2) the volume of lead to an increased demand for
commercial loans and the
policies credit and .capital* iUnder these
adopted by the commercial banks;' circumstances not
only would the
(3) the attitude of institutional sale of government
obligations to
investors and individuals holding the Federal Reserve
(Banks
in¬
large amounts of long-term gov- crease but The
to
been
end of
they also might have to
1941 to«a
monthly peak of $177,300
present policy and,
million in
February 1946, declin¬
become buyers of govern¬
ing to $168,900 million (prelimi¬
but
employment;
order
continued to every country in
of
accelerated,
ital and bank credit would
tend
Teally lives, and what representa¬
tive government <really means for to decrease. Under these circum¬
all the people. Those letters have stances, the commercial banks, in
ithe world.
sales
the fol-j with prices and the cost of
living
the move-: continuing their upward move¬
prices and ment. Such a development would
stop Com¬
They must
Their
on
weapons.
borne wonderful fruit.
their-funds.
the
eminent obligations;
(4) the fiscal
status of the Treasury.
1
"If (business
ffeel particular pride in the Italian
activity should turn
accompanied
.victory. I helped launch the cam¬ downward,
by
a
moderate decline in prices of com¬
paign to get our foreign-born
modities and an increase in un¬
.groups to write to their friends in
•Europe, to tell of how America employment, the demand for cap¬
hope that
anew
for
reverse
discussing
that this
of
liberty, who have faith
tin government of the
people, by
the people, and Tor the people.
addition,;
government 'long-term government obligations
position to absorb thus not ;only might come to an
question again
whether the Federal Reserve
ment ^obligations.
auJ;
thorities -will continue to main¬
"An entirely different situation
tain the present
support price in¬ would prevail if the spiral of in¬
definitely, the bulletin (remarks flation were to be
Republican
a
In
of The
a
securities."
In
with
in
considerable
in the White
House, we intend to
clean every last one of these Com¬
love
agencies
are
firmly.
year,
market.
the-
Government
our
no
bond
merit
elected
they have not
•foundations of
that
there is ness activity, .however, would au¬
limit to the amount
tomatically reduce (the demand for
of government securities that the
capital and thus make it difficult
Federal Reserve Banks can
'buyj for institutional investors and in¬
in order to support the
govern-j dividuals to find suitable outlets
government.
carried
'(Continued from page T7)
|
stated
of
notes, due Oct. 14, 1949.
The balance of
authorities has been criticized on
the ground that 'it refused
to
recognize that the -inflation was
In-;
fiondholdings
pany to prepayment
of 2y2%
states*/"The policy of The Reserve
our
Sees Inflation
Increasing Reserve
'and "fellow-travelers. Trom these
Tn
.Broadcasting
the Common
Stock, together with
funds to be received
from the si¬
multaneous sale of
$5,000,000 in
4% promissory notes due
May 1,
1960, will be applied by the com¬
policies of the
monetary authorities, the bulletin
forwardness in
assignments outside the
^Federal establishment Tor friends
first
American
Co., Inc., Common Stock, at
$9 per
share. Proceeds from the sale
of
rected at the credit
tered; they ;have-never failed. We
jpoCtant
worked
:
the
on
Hhave
measures
May 17, 500,000
shares of
tried."
every war,
shall.not fail. Our
victory at the
words, and straight-? :polls next November is
sure, if we
our
dealings with fight the good fight, if we
keep
the people will be the
keystones the faith. -God give us
strength to
of our Administration.
;Orily .s^ do The right as we see it.
tegrity in
ble
the people .have called
Republicans to lead them
into paths of peace.
Our fathers
for peace, we intend and
.forefathers have never fal¬
•
make
fluence
ito ".Washington a
strange assort¬
ment of outright Reds and Parlor
IRiiiks. They inflitratedintoJmjpotfant government, .posts. / They
.used 'their influence to obtain irh-
■
Dillon, 'Read & Co. Inc. headed
group of investment (bankers That
offered
publicly,
are
*
^Executive >Branch 'has jplaced iiri
iour {path
every type of obstruction1
Broadcasting
Stock Offered by
Dillon, Read Group
geographical
-
Ito
•a
a
profound faith 4'n 'God.
"Standing should the inflationary forces be¬
so, * we : -shall be able ito
^carry come more pronounced and the
j through The tremendous job <of
surplus of the vgovernmenV be
By .moving .to^ncrease ^produc-t
rescuing The 'world Trom The converted
into a deficit, Congress
tion through reducing
taxes, to wreckage ol its own
follies, and will not only increase tax rates
lower prices by
inpreasing product tqLbindr-up«our Nation's
wounds, but also enact direct
measures
tion, apd to build an adequate "de¬
'Thepeople afe calling for a Re* to icontrdl
'the forced of 'inflation.
fense 'by
concentrating on Air publican : Administration.
The Since the ^stability1 ipf
Power, we Republicans are 'fol¬ times cry,'oiit for it.
The igoveLni
America and ineiit
;bond market Is considered
lowing a considered integrated 'the wprld will benefit
by it.
siii important
cornerstone of the
policy. We are not following a
I can say with -confidence
That
country's economy, it is not likely
haphazard, eatch-as-cateh-can po-. our Grand Old
Party once more that the
litical game of
support policy will be
trying To be all is on the victory march.
Once abandoned
before all other possi¬
things to all men, as The New more, we Americans
.American
-that when ' the
American
banks, to.change
pf reserve re¬
from
47
.requirements,
to some other
upon
foundation, sustained by
(22a1)
^reserve
the present system
our
to prosper and
us
-We
progress.
such a
which
this
ithe
crease
.
^promised
;:■:
iA:
effective
measures
at
anti-
the -end
Henry B. Rising, Howard M. Biscoe,
Jr. and Chester C. Spring.
;
THE
Profits of the Oil
Congressional Committee Reports on High Prices
Of Consumer Goods
ft.*-.r'.-;.-'.
ft.
'i
■
i'! .>;
5
ft?.'"
>'ft
*' '
may
following:
have
supply quite all the heating
major portion of the gasoline mar¬
ket.
There
the increases were
production
of
tjilment
'
oils
actual
The
winter.
last
wanted
feasible unless they are pro¬
laooi
other com¬
(b)
and
of food
ductive
modities in short supply.
this
of
favor
to
should
be
made
as overtime work. In the absence of
promptly as possible in order that such voluntary
agreement,
no
'appiopriate action may be taken suggestion is made in this rec¬
'in lime to avoid further serious ommendation to modify the timeproblem
v
expansion of credit.
(7) We recommend further study
of the need for compulsory controls
pending
provision
strictions
Anti- they exist.
Inflation Act, Public Law 395, en¬
(14) The Congress provide ade¬
acted by the 80th Congress.
By quate means and support to the
"this Act the President is author¬ Bureau of Internal Revenue for
so-called
the
under
taken
negotiate with industrial
managements for the establish¬
ment of voluntary cooperative al¬
ized
to
of
location
to
mize
negotiations for the establishment of heeded controls have
been unsuccessful.
Pending the
purchase
the
will
should
in
Anti-Inflation Act.
the
bonds
increase
that funds
so
the
when
sup¬
(16) In connection with any
proposals for government action,
change the allocation policy em¬
bodied
available
be
the
ply of goods becomes greater and
prices stabilized.
materials,
scarce
do not believe Congress
government
insurance, and
savings accounts
of
been initiated to secure voluntary
agreements for
we
of
and
the importance of labor and busi¬
(S/ Increased Fertilizer Produc¬
tion: Every effort should be bent ness policies needs strong
em¬
to increase the-, total production of phasis. If the
private decisions as
fertilizer
of
that the
so
present rate
application, already high,
Most of the added output
may
should
food-deficit countries,
to
sent
because the increased production
of
food
mands
will
abroad
lessen
on
the
production
ing
economy:
own
restoration
(9)
of
should
and
self-support¬
a
and
abroad.
profits
adopt
Aid to Foreign Food Pro¬
•The Anti-Inflation Act
authorizes the Department of Ag¬
not made
and cost-of-
wage,
spiral,
business *
policies,
and
labor
and
wage
pro¬
duction
of food
countries.
the
encourage
in
pro¬
The subcommittee
the wartime peak and
The
•
.
(11)
i
to
tion and
The
-
the
promote
conserva¬
Service
have
and
efficient feeding of grain.
Extension
revoked
securities
of
more i
educating
farmers
efficient production
belonging to
cus¬
LOS
consumer
tion and assistance are
(a)
More
shopping,
of
Wft
ures. '
.<■ft.
:
'
to
.*.!?
■<>'■
<■ "
h:
imore
to
•
con¬
assistance
promote
(c)
Encouragement of farmers'
methods
arid
other
which
marketing
(13)
order
products.
Increased
to
promote
or
Financial
Production:
In
of
consumer,
gpods
which have been and continue't6
no
serious strikes in
basic
of
Capital
Broadway. ,-.i
serious
we
to
The
Europq,
will
oil
reduce
Chronicle)
Recent sup¬
oil to
leaving
Western
Hemi¬
its
our
to
serve
up
its oil
even
we
oil
and
their book
issues, but with
below
values, and far below
to
seems
costs,
action
such
be
to
many
stockholders.
unfair
to
On account of pres¬
stockholders
many
position to exercise
a
to subscribe to addi¬
and
stock,
marketing
the
of additional stock
simply dilutes
their equity.
Higher
Profits Needed
This leaves the
need
in
of good
finance
to
industry sorely
current earnings
extensions and
both
improvements of facilities and
re*
placements of crude reserves. The
profit
dollar
when
it
is
a
to
comes
rent
furnish cash, but also expand bor¬
rowing power and make a market
for possible new
stock issues if
the
is to
supply
money
double
Ihe
taxation
tion dividends is
of
corpora¬
another way in
which the equity market
improved.
needed
Such
that
so
obligations
could be
is
improvement
issuance
be
can
reasonable
ade¬
be
Elimination of
quate for the task.
fixed
of
within
held
limits.
inflation, nobody
prices going up. How¬
prices of petroleum;
Nobody likes
likes to
see
the
ever,
products,
all increases,
after
re¬
main below the average for com-;
in
modifies
So
prophet this
ficult
Purcell is
r
our
but
i;pride
over
of
year
Europe
carried
out
by
American
general.
At
present
will be solved
High Construction Costs
The
the
ing
second
the
solve
the
rate
our
oil
shortage
*
as
part/of the prog-
continually
a
American economy,
Anderson With
Y
(Special
to
ence
with
the
& Levitt, 411 West
He
flyrin-Leyitt
.
..ft
CAXIF.—CJeuv;
become- as-v.
staff of
JFlynn*
Seventh;Street;;
formerly with
was
;
^
F. Anderson has
sociated
,,
expanding
Financial. Chronicle)
The
LOS ANGELES,
v.*;-
at which we will
supply problem is
particularly
of
materials,
and
.
'
jCarterr.H*
" ■- '"ft1*
11
E. F. Hutton Co. Adds 3
factor in determin¬
steel.i Industry esti¬
industry's mates of its requirements of. tubu¬
'
of
ress
Corbrey & Co. and Fewel & Co.-i*:
"
is not only dif¬
vi'V;
supplying
half its needs. Further,
companies and American capital.
hazardous. ^ Whatever
i.m; the ; oil
still
con¬
than that of
role
enormously
great bulk of the discovery
and development of the oil re¬
serves
of
the
Middle-East has
been
the
although
and
the
and step
burner installations to
year.
is
with
approach those of last year,
would
undoubtedly have a
last
over
and
gosoline,
worse
are
80% cf the world's oil
ing
predictions,
efforts
Western,
wells
in productivity than the
average in the country, the West¬
ern
Hemisphere is still produce
('■
PASADENA, CALIF.—Hugh D.
now with Blyth & Co.,
Inc., i234. East Colorado Street.
supplied.
which
of
higher
industries,
we
get by without
such
the
their
"if's." On the other
should prophesy that
get by, and the public,
should
Securities; Co.,
•'
"
or
j
Financial
our
meet
industry has
"plenty
on three things: First, how
rapidly can the Middle-East take
up the main burden of supplying
difficulty—but don't for¬
relying
Chronicle)
V With Blyth & Co., Inc.-.
(Special
of
mainly
get "those
hand, if I
•
shortage much
increase in the
r^lafive
are
other
should be able to
v\3y'
production
be in short supply
The
steel
rapidly these supply dif¬
ficulties
are
overcome
depends
gasoline and oil, and if we
a
moderate winter, and if
there
OAKLAND, CALIF.—George J.
Schwab, Jr. has been added to the
staff
the
to
stock
stocks still selling
replacement
short, will-
How
■
2038
food
both
With Capital Securities Co.
(Special
most oil
supply needed
ply
difficulties were
the out¬
growth of wartime restrictions on
construction, plus price control
which held oil prices down and
let coal prices rise, thus stimulat¬
ing the demand for heating oils to
an unprecedented
extent.
situation.
have
Chronicle)
W.
West Seventh Street.
cost
able
Financial
ANGELES, CALIF.—Ma¬
Giddings, formerly with
Fairman & Co., is now affiliated
with Witherspoon & Co., Inc., 215
distribution, especially perish¬
reduce
of the
in
far
,
LOS
rion
.
markets
CALIF.—Ed¬
educa¬
nutrition, meal planning,
substitution, etc.
more
care
be
Some companies have?
new
tional
increase
cut
habitually
of
•
on
food
of
make
5%
take
floated
their rights
bunker fuel and
and
1947,
will
sphere
oil
to
supply Western levels they are the public's best
A 5% increase on top of last year
Hemisphere needs? It is an in¬ assurance that supply problems1
is' a big step ahead, but I doubt
teresting commentary on the vig¬
will be met in the shortest pos-;'*
if it will prove to be quite enough.
or of our; industry and our free
If new oil burner installations re¬
sible time.
:
tVrivit
enterprise • system that although
turn to the; relatively low prewar
the known reserves of oil in the
Roth prophets and profits assurar
level, and if consumers continue
Eastern Hemisphere exceed those us that these problems must* and;
to
cooperate in conservation of
formerly with Slayton &
(Special 'to The
r. •'
ft
information and
available and
tion
<
was
that
a
definitely.
Another coal strike
rail strike, even if
demand"
might as¬
products
would
With Witherspoon Co.
cor
,
sumer
He
meas¬
(»>) Greater funds for Bureau
of Human Nutrition and Home
Economics
ANGELES,
a
ation
the
seen
sume
Chronicle)
consumer
substitutes,
-"'iif''
..
Financial
Co., Inc.
operation, in .food-saving
.)
ac¬
not
we
took place in 1947, we
win P. Melrose has become affili¬
absolutely
intelligent
use
The
more
uses.
1946,
of total earnings, and such
situation can.iot continue in¬
be
will be able to return to the situ¬
staggering increase in demand for
ated with King Merritt & Co., Inc.,
Chamber of Commerce Building.
including—
necessary,
to
of much
other
investment by
new
in
earn¬
borrowed
excess
by
requires the
also
has been and
can
tor
kerosene and distillate fuels which
(Special
substantial
a
briefly, profit is the primary fac¬
in determining how soon we
an
more
shortages due to fluctuations in
weather conditions and allow for
Joins King Merritt Staff
in
meth¬
ods.;; • J;
VvWtf
(12)
Consumer
Actions:
To
mitigate the effect of high prices,
the committee feels
44% above
increase- stocks
Had
Total
industry
1948
and plowed
50-cent dollar
financing cur*
expansion of properties, the
responsibility
that their
great construction of equipment, or the
power imposes on them
power discovery of new oil reserves.
which today surpasses that of in¬
Fundamentally, higher profits
dustry, and often appears to sur¬ in 1948 and 1949 than in 1947 are
pass that of government.
the only means by which the in¬
So much for the "ph" prophet.
dustry can hope to continue a rate
What is the role of profit with an of
expansion that will satisfy de¬
"f" in this picture? To state it mand. Such
profits must not only
increase in consump¬
than 5%, as we need
on
hand by
about 2% of our annual produc¬
tion
if
we
are
to
avoid local
push vigorously its regular pro¬
gram
in
expansion program.
mand?
tomers.
should
to
again
ing achievement in view of the
shortages of steel and other ma¬
to.
the
extent
line shutdown
pipe
and
terials which have held back our
tion of
heavily.
have
rates
or
1941, the prewar peak—an amaz¬
fortably
but
in
ror
business,
sion of customers' securities and
other
factors
affecting demand
cash. The firm, a partnership of
and transportation.
James E. Scott and his wife, Helen
A. Scott, had sought withdrawal
Will Supply Be Sufficient
of its registration, but this was
Will this 5% increase in sup¬
denied by the Commission.
It is
plies available for domestic con¬
alleged that from Jan. 6, 1948, the
sumption satisfy the probable de¬
firm appropriated $32,000 in cash
of Grain:
The Department of. Agriculture
.should continue'and intensify its
efforts
19,
Co., New York City,
already discontinued
for fraudulent conver¬
who
V
.
Conservation
May
Scott &
E.
Gardens: There
revival of emphasis on
victory gardens and on the pre¬
serving of food grown in them to
relieve pressure on market sup¬
plies.
on
the broker-dealer license of James
Victory
a
SEC
ings,
reserves
70% of their total
or
tax
leaders should realize the terrific
increase of 17%
an
back 60
not
above
and 8%
7
depreciation
are
our
of/those in 1947. This rep¬
between
be
to
construction, etc. Most companies,
in an effort to keep up with de¬
mand, have not only used their
ent
use
However, this 7 or 8% increase
1947 will not handle com¬
Revokes Broker's License
that the Department of
Agriculture will efficiently pro¬
mote its' activities in this field,
should be
pos¬
European
and will
increases
expansion
the line—exploration,
pipeline,
and
refinery
along
drilling,
im¬
cuts into the tanker
over
en¬
dorses this program and expresses
(10)
wherever
non-European
the hope
v
reductions
of
oil consumption
production, which
will further delay the completion
of many wells, pipelines, and re¬
fineries.
Just
about
everything
that can happen is bad. Labor
resents
sible.
to
loss
The
tanker hauls, but this
serious
1948
Mediterranean
the
down.
new^ con¬
require
runs
The
in
and other agencies
close agreement. Bar¬
in very
ling
all
of
costs
ports and increase needed exports.
industry
are
to
shut
crude
a
doubtless tend to reduce
prospective supplies,
As to
look?
the
which have
products for the
market
is irreparable
out¬
future
the
keep in mind some
these
offset
of
what
us
East
also
are
but
demand,
of
short
accomplishments, in
"Let's not
substantially reduced the
and
Near
either category.
Now
in
ft;
7 or 8% in¬
crease in supply. The refinery at
Haifa, running about 88,090 bar¬
rels per day, has been shut down
by the Arab-Jewish difficulties,
and the two pipelines from the
supplied
has
power
industry does not fall
oil
the
eliminated, and further
31.4
rely to make even
justly
be
leveled
against industries that have held
back on expansion, or that have
far
35.2
7.1
output of steel on which we must
might
excess
can
adopt moderate price
reasonable
price
riculture
,
are
ductivity attitudes, thus achieving
duction:
r>:
prices
cost-of-living,
de¬
supplies, and
shipping facilities, and hasten
our
on
oil
this 29year period coal production has
shown no gain, whereas oil pro¬
duction
has
increased five-fold
and natural gas even more! Criti¬
fallen
8.0
of the adverse things
of .the increase. Over
cism
precedented heights. Our bottle¬
necks have
practically all been
happened or can happen, just re¬
view the past month. The coal
strike increased the demand for
strikes or
catas¬
assuming that the
in the public interest, actions by trophes, and
governmental estimates of imports
government alone will be largely and
exports are correct, we can
nullified* Therefore, to end the anticipate domestic crude runs in
to wages and
be further increased.
be
Water
put!
72.7
To help
in oil and natural gas out¬
creases
to
47.9
cheer too soon."
over
refer
15.2
The
money.
the words of Max Ball,
80%
of our total
energy
requirements.
Of
the
amazing growth in our nation's
energy
consumption since then,
95%
has been supplied by in¬
plied
I
22.9
prospective
in the United States
coal sup¬
quirements
expansion.
1,420
*
of our energy re¬
sources
retard
to
5,075
1,315
since 1918. At that time
5%
effort should
be
encourage thrift and the
made to
which may have
status of efforts
evasion
or
(15) Every
which
receipt of information as to
fraud
to mini¬
of .indi¬
programs
vidual income tax liabilities.
in
report to the Congress cases
collection
tax
materials,, and
scarce
of income
thorough enforcement
the
ft
817
;
;
4.740
in the fuel field over a
period, consider the shift
place
longer
-
-
281
244
665
been taking
To show what has
t
struction have skyrocketed to un¬
2,178
1,050
3,861
available,
and hun¬
19.1
1,829
Residual Fuel.
be drilled,
8.1
2,015
>
wells would
But there is another scarcity of
material which has been tending
%■ Increase Over
1947
190
no ques-
1941
1946
473
high side, there is
1946
1941
Crude Runs to Stills
in
(d) Removal of monopolistic re¬
on production wherever
of actions
outcome
the
overtime
and-one-half
of the basic 40-hour week.
1941-1946rI947
1947
—
the
on
were
Thousands of Barrels per Day
;
Granting
be a bit
that these estimates may
dreds of miles of pipe line would
be built this year if enough steel
V, S. Consumption,
goods demands.
Products—
(c) Extension of the working
week, wherever feasible, by col¬
Gasoline
lective bargaining agreement be¬
Kerosene
tween management and v/orkers
Distillate.
as
to
terms and
conditions, for
We recommend
exploration
further
that
scarce raw
most urgent
manufacturing capacity.
shown in the following table.
Table II
«
of
consumer
hearings of the Joint Eco¬
vious
•
Allocation
materials
(6) Credit Controls: The prob¬
lem of credit controls has been
reviewed to some extent in pre¬
nomic Committee.
disputes.'
for the next 15 months
than double the present
more
tion but that many thousand more
did
we
'
ever
lar goods
are
supply of the
principal petroleum products are
quantities
quite moderate* The second three
types of consumption units show
through what really hit us in the '"middle
(a) Mutual efforts by manage¬
ment and labor to avoid any cur-
'stale, and local public works in
general should be deferred wher-
apparent, now that we
the figures, why we couldn't
readily
.
„
Industry
I believe it is
distillate" market.
(Continued from page 4)
The first,/three types of con¬
sumption
units
represent the
mand, the subcommittee urges the
be unduly increased by demand from abroad.
L
(5) Public Works: Federal,
mestic prices
'V
c
(Continued from page 19)
* ' *
;
.
;
■
Thursday, May 20, 1943
COMMERCIAL & FINANCIAL CHRONICLE
(Special
% LOS
wood
to
The
623 South
- J
Chronicle) i ft
B. White has been added t6*
the staff' of E.
.'
Financial
ANGELES, <CALIF,^E!~
F. Hutton
&
Spring Street.^
11, nsor*?-*'m
;
-
Cpf
3
Volume
167
Number 4700
THE
Economic Stabilization in
(Continued from page 7)
their first real test. Unless we as
a nation show an ability to impose
restraints
ourselves
upon
utilize the machinery of
and
resentative government to devise
well-considered regulatory meas¬
ures,
great danger
prices, overextended
that runaway
credit,
in
stand
we
and
unbalanced
ments will lead to
recession."
As
h ;
c,
.
,
ble
the
trend
of
economic
enterprise
government.
state
£t
of
labor
acquired
unions.
We
tremendous
a
permitted
our
by
a
of all
people will not be served
further lowering in the
of the
power
pur¬
dollar."
traced.
And
we
have created for
ourselves "big government'' which,
if you will examine the figures,
is
predominantly military. It
therefore becomes a fascinating
question whether we have enough
economic "savvy" and powers of
discipline
forebearance
or
by
to make it possible
power groups
to curb
orgies of heedless specu¬
or
to
rally from sinking
of paralyzing disillusion¬
lation
spells
and
ment
can
fear.In
free
our
other
society
healthy social adjustment,
a
a
will
or
manic-depressive psychosis be¬
chronic
come
as
adolescence to
we
pass
from
and
in
a
by disappoint¬
discontent rum¬
with
labor leader
a
contract
year
with
non-strike
a
clause would be honored in letter
and
spirit. In other key industries,
the majority of labor leaders and
rank and file complied in
orderly
If
look calmly at the rather
developments of this first
we
hectic
quarter
of 1948 and take, some
backward glances at 1947, there is
which could give
ground for optimism.
Industrial
managements,
labor
leadership,
banking (organizations, and the
government have ail expressed
a sen£e of responsibility for doing
something
in
their
respective
spheres to check the process of
good
a
de&l
inflation
in
a
which could involve
us
disaster if everyone
common
simply decided to "get while the
getting is good" and no one was
willing ; to
sacrifice
immediate
gain or convenience for longerrun security.
The head of
large corporation
declared last January:
a
"It is obvious that
painful
it
inflationary
is also
obvious
we
in
are
spiral.
a
And
that every in¬
dustry, every company, every in¬
dividual, must do. all in their
power not only to stop this spiral,
but to
it.
reverse
For this reason,
reducing the prices on a
wide range of products. We esti¬
mate that these reductions will
we
are
make
possible
a
saving to the pub¬
lic of close to $50 million during
the coming year. The reductions
from 3% to 10%.
We
earnestly hope that others will
join with us in this effort. If they
do, materials and components pur¬
chased by us will also be reduced
In price, and then even further
reductions in the prices of our
products may be made possible."
Later, the President of the ac¬
range
.
knowledged leader in
a
.
..
foreign
European'(Recovery
does
not
call
Pro¬
upon
to
us
supply an excess of exports over
imports in 1948 any greater than
that
1947
of
peak
or
reached
even
in
to
up
that year.
we
the
Fur¬
forego by way
capi¬
of domestic
consumption or
formation in this connection
will, I believe, be diverted with
by
practical
business
wisdom
its
four top administrators,
Hoffman, Averill Harriman,
Howard Bruce, and William Fos¬
Paul
ter, that it is properly to be classed
investment in future trade
well as security. It is even
as
an
as
pos¬
sible
that,
in the
absence of
this
Or
one
tional
we.
standards
able
in
prices
to
make
adjust¬
equitable and
ments
ment.
enough to sustain full volume of
employment and plant operation.
In that event, we
might have had
capable of fulfill¬
Where the intransigence of
leaders
some
resulted
in
differ¬
a
ent course, the Executive Branch
of the government and the
vigor¬
action of Federal
ous
vented
courts
pre¬
terminated work stop¬
pages and protected the orderly
process
of negotiating economic
or
settlements
the
on
basis
facts
of
rather than force.
characteristic
feature
of
a
In
January of this
the
year,
American Bankers Association put
a
purpose
not
was
to
impose
any
rigid clamping down on credit
through a scheme of remote con¬
trol
but
teria
to
of
enunciate
credit
reexamine
vidual
sound
extension
the
cri¬
to
and
proposals of indi¬
borrowers
the
desk
banker,
sumably the best informed
local conditions but having a
pre¬
with
the
than
view
local
economic
I
the
of
financial
and
not
am
across
individual
to
as
more
general
situation.
trying to paint
fancy
a
picture of economic bliss in the
midst of
period when
a
harassed in
and
we
all
are
current operations
our
apprehensive as to the future
I submit, however, that
have done a, tremendous job
outlook.
we
of
vecqn^ersiom
w
amount,, of
internal
econom ic
great
any
strife
than
more
or
ithqut
sabo¬
minor
We have maintained a high
tage.
level
of national production, si¬
multaneously rais'ng the standard
of living of the working popula¬
tion and investing tens of billions
of dollars in the plant which will
make
their labor
future.
All this
efficient in
done,
was
the
more¬
over, while we were sending un¬
precedented exports abroad to re¬
lieve
devastated
countries
and
reconstruct the world economy.
That
us
achievement
which
the
for
courage
still
lie
should give
undertakings
ahead.
of
technical
on
the fact that
such
And
courage is based not
the demonstration of
merely
our
on
power
production,
we
but also
could get this
high rate and efficient plane of
national effort under
relaxed
a
process of
government, controls.
Problem of
Troubled World
a
equivalent to
tradi¬
with population
It
is
scale
well
have
and
defer
further advances in' living
(.our) ^.corporation wi 11
announce
decreases, efTecttiv'e'May l1, 1948, in their prices
Tor a wide variety of products of
their; manufacture.
These price
Changes are estimated to add up
to a total1 price reduction of about
ijng
But, at the
same
time that we
<costs,.
take courage, we must recognize
that we had not yet come to the
^shortly
time when the
shown that
we
fronts
with
us
affected.
So far as possible,
the price reductions will be made
prospect
,
-
the conviction, that American in¬
re¬
spent and we had
could maintain sta¬
bilized
prosperity in
peacetime world. Now
how much
applicable to products which have
less direct bearing upon
the cost of livings i ,> We believe
that, costs and. prices in general
are too high today for the good
of the nation. We are firmly of
of
was
$25'million a year based on last
year's' shipments of the products
a more or
momentum
conversion
tion
new
normal
1948
con¬
problem
of
economic stabiliza¬
disturbed by the
of having to live in a
world—even though its
may
troubled
our
a
a
be
all of
us
must face
burden
of
raises
program
different
issues.
Mili¬
tary outlays as such, are essen¬
tially unproductive and poten¬
tially destructive.,- Nevertheless,
billions
some
civilian
uses
years
to
show
of
withdrawn
ex¬
during the
next few
produce
a
convincing
strength may
prevent actual destruction of our
wealth
at
these
garded as
case,
least
as
outlay
later
a
a
time.
too
sums
will
that
be
can
re¬
at
or
protective
necessary
which
In
investment
an
contribute
to
the
maximizing of consumer real
income in the long run. This we
may assume to be the case so
long
keep to a moderate defense
program, such as the President
as
we
has been advocating. If this pro¬
gram is rejected by ihe Congress
and if military plans are
expanded
into the
war
machine proposed in
quarters,
some
then
thoughtful
persons see inflationary pressures
developing in 1949 and thereafter,
selling wool pile
which
and
rugs and carpets,
of Axminster and plain
are
printed velvet weaves,
manu¬
factured in standard widths
rang¬
ing from 27 inches up to 18 feet.
Wnile the
company's rugs and
is how
carpets
wide price range,,
it manufactures
primarily for the
medium price field.
It also acts
be distributed most
as
cover
a
selling agent for wool pile
rugs
and
carpets in Wilton and plain
printed velvet weaves, cotton
rugs
and wool
face
felt
rugs*
manufactured by
duction.
and
In the
closing paragraphs of the
first quarter memorandum
of the
grim possibilities of deficit
financing, mounting taxation, and
extensive
economic controls.
Even short of these most dire
-.
itably
involves
sacrifice
some
of
products and asphalt tile.
These
civilian types of consumption. It products are sold
independently of
isour particular application of the
company through distributors.
the
old
alternative
of
or
A brbad coverage of the floor cov¬
be¬
ering field is thus obtained tq am
extent unique in this
industry.
lieve quite properly—looked for¬
During 1947 sales of soft surface
butter.'
'guns
0 0'Wk
"Our
people had—and
we
postwar period in which floor coverings by
larger numbers of people would including those sold
achieve higher standards of living agent, exceeded the
than had ever been realized be¬ lar products by any
ward to
fore.
a
they
must
in
be
some
company,
by it
sales?
as
sales of simi¬
with
But
measure
coverings, ex-'
postponed or for the present re¬
vised
the
other domes¬
tic company. Such sales, together
sales by Sloane-Blabon of ^
hard surface floor
Those hopes are not nulli¬
fied by the defense program.
ceeded
the sales of floor covering
downward. During this pe¬ products of
riod if any group insists that its
the
any
other company iir
United States.
income shall be advanced in pro¬
portion to every advance in prices
that it shall be in a position to
Jos. F. Donatio With
or
pay up
bid
to
goods
is
in
to whatever level is needed
its .accustomed
away
from
amount of
Greenfield, Lax Co.
other users, it
that it be
effect demanding
(
Joseph Donadio has become
as¬
sharing in the sociated with Greenfield, Lax &
protecting our
W •!*!?$!?
country. These economic facts of
life should be proclaimed along
?'fewith every step in working out
X
the practical details of the defense
program."
f
from
exempted
common
burden of
h
with
'
consequences, we -cannot assume
that the more moderate defense
program could be carried through
without significant modification of
the program of production and
purchasing
hope
t eat
$5,
$10,
power
achieve
to
can
our
that
we
would
otherwise.
We
cake and have it too.
$15 billions' worth of
goods and services a year cannot
be
or
withdrawn from
during
our
economy
the
next few years
still leave the real income of
and
con¬
high as it would other¬
wise be during this period.
sumers as
We
are
and
find many people today who
quite cavalier about raising
again raising the authoriza¬
tions
for
air
force, for navy, for
stockpiling,
and for
shipbuilding as though there were
for
army,
inexhaustible
some
or
costless
Smith Carpet Preferred
Placed on Market
Morgan Stanley & Co.. and Dominick & Dominick jointly headed
an
underwriting group that of¬
fered
publicly
May
19
50,000
shares of Alexander Smith & Sons
from
which
Co., Inc., 40 Exchange Place, New
a share and accrued dividends.
York City, in the firm's
trading
Net proceeds will lie. used by department.
the company for general corpo¬
He was formerly with Gilbert
rate
purposes
including further J. Postley & Co. and Strauss'
expansion
and
betterment
of Bros., Inc.
plants and facilities. Its subsidi¬
-
Sloane-Blabon Corp., expects
complete in 1948 the major
ary,
to
portion of
such
Joseph F. Donadio
Carpet Co. 4.20% cumulative pre¬
ferred stock (par $100) at $102.50
expansion program
outlays
flow. At the same time, they have which will result in greatly in¬
argued
that cutting tax rates creasing its production capacity
of
hard
surface
floor
covering
would, even in a fully employed
The company has al¬
economy, enlarge government rev¬ products.
enues.
Or in a logical corner, in¬ ready loaned $2,000,000 to Sloanestead of crying "Uncle," they as¬ Blabon against demand notes and
source
an
Wenman With
Merrill Lynch
'
Byrd W. Wenman, Jr. is asso¬
ciated with Merrill Lynch, Pierce,
Fenner
&
Beane, 70 Pine Street,
City, members of the
New York Stock Exchange and
other exchanges.1 Mr. Wenman in
the past was a partner in Parrish
New
York
that budgetary balance can intends to advance approximately
achieved by cutting out ex¬ $4,000,000 additional to the sub-' & Co. and did business as an in¬
travagant expenditures for public sidiary during 1948 and 1949 to¬ dividual floor broker on the New
wards completing its present con¬ York Stock
works.:
:
I
Exchange.
As to the arithmetic of the mat¬ struction program.
sert
be
ter, the total expenditures in the
budget for the fiscal year 1949 are
$2.6
$4.8
billion
in
billion
comparison
as
•
the
with
estimated
amount of the recent tax cut and
between
dollars
as
the rate at which
broad issue which seems to me to
Yonkers;
principally in
manufacturing and
It is engaged
the business of
defense
The new preferred stock will be
redeemable at $107 a share-if re-t
deemed
1953
on
and
share.
oif before
thereafter
It
is
also
March
1,
at
$104.50 a
' redeemable
and $15 through operaiion of the sinking
probable fund at $104.50 a share.!
The
size of the military budget. As to
company's
capitalization
the* rosy dreams of the postwar the dispensability of public works following ihe financing will com¬
world can be realized.. In a word, expenditures, we may query how prise 47,620 shares of 3*A% cu¬
this
brings us to consider 'the we are to provide adeouate trans¬ mulative preferred stock; the 50,-
the
executive offices in
N. Y.
equitably
and with least danger of inter¬
ference with the efficiency of pro¬
from
military
billion
measure
maintains its principal plant
■
defense
somewhere
to
or
pre¬
t
time has
come
no
now
disturbance is "short of war." The
tent to which
now
raising the produc¬
convenience, health, (and
beauty of their communities, just
as the private consumer will have
to forego the raising of his real
purchasing power or standard of
living which we had all been
looking forward to.v The problem
(enlarged,
stock,
value, of Sloane-Blabon Corp.
Sloane-Blabon.
and
tivity,
the
pre¬
company
the
expenditures
otherwise would be
they
making for
A
Successor to a business founded
by Alexander Smith in 1845 in
West Farms, N. Y., the
or
down
which
class
value $100, and
par
oh common
shares*
Federal
as
to
stock,
19,256 shares of 6% class A
ferred and 274,931 common
of
Estates
that
as
shares of 6%
shares
held by others than the
company;
On that
date, the company owned
growth.
evident
municipalities
agencies will
;
par
education? il
H
ati^efndeavor to aid in'halt-'
913
or a
somewhat
runaway boom is the over-exten¬
sion of credit on over-valued as¬
sets.
resources
fast
4,952
ferred
our work¬
our
937,925 shares of common
stock, $20 par value.
;
y
r: As of March 31, 1948 there
were
C. H. Masland
large part of what we are Council of Economic Advisers to &
Sons. Iii addition, it
buys and
giving in foreign aid. To that the President, it was said:
sell.' related
products manufac¬
extent, our investment is liqui¬
"Every citizen must recognize tured by others.
dated without waiting for future
that further diversions of produc¬
Sioane-Blabon manufactures iii
trade or security dividends.
tive effort to military uses inev¬ its own plants
linoleum, felt-bases
all
The
Over-Extension of Credit
A
waste of
costs
and
of
.
to
are
do not soon make up the un-
can
been
we
4&
and
dermaintenance
of
our
public
school plant and expand it in step
have
as
how
ask
may
keep up the quality of
ing force and keep up
which
they regarded
furnish
to make
airplanes, to show the
basic importance of these outlays.
demands which
basic iri-
dusiiy imnounced:
superimposing
on
(2233)
military
finding boards that severely sliced
systematic campaign of edu¬
cation, nationwide and reaching
the smallest country banker. Its
Ground for Optimism
the
%
try, or' waterpower to
electricity for aluminum
subsidized market, supplies
might
have caught up with demand
so
fast this year that we would not
on
maturity?
The
gram
such
words,
manifest
CHRONICLE
tal
fashion with the awards of fact*
through
by
defense program
thermore. what
na¬
debt
raised
our
Nor has management been alone
in
this
desire
to
discover
its
steps which
were. probably
unavoidable and
which
certainly cannot be re¬
tional
FINANCIAL
aid commitments
already made.
to
promptly asserted that their two-
democratic
We have evolved to
gigantic corporations
jand. massive
have
and
of
bling in his ranks,
be¬
havior in this great land of pri¬
vate
if
Certainly the best interests
ment
possi¬
as
which,
increases
be
of
proper role of responsibility
free society. Faced
economist, 1
interested
in
profoundly
watching as objectively
costs,
further
.
analytical
an
am
avoid
occur, must result in higher prices
for almost everything we buy.
chasing
develop¬
economic
an
to
power
&
Troubled World
a
dustry and labor should coopera¬
tively
do
everything
in
their
in
to
our rep¬
COMMERCIAL
$14
the
.
portation
even for
defense Indus¬ 000 shares of
new
preferred stock;
Malmin and McLellan Are
?With Buckley Brothers
(Special
to
The
.Financial
>
Chronicle)
LOS
ANGELES, CALIF.—>
Philip L. Malmin and Donald L.
McLellan have become associated
with
Sixth
Buckley Brothers, 530 West
,
Street.
formerly
with
Mr.
Malmin
Paine,',
was
Webber,
Jackson & Curtis and E. F, Huttoa
chreftilly* file Tn the
waste paper
Tomorrow's
basket
has
bull market ant
a
everybody is sure that "God's
in his heaven; all's well with
the world," (I* probably mis¬
quoted' this)— ho-hum) IT
=By WALTER WHYTE=
have to point out that profits
J Record trading, tape behind are made by selling when
market, makes bulls of every everybody wants them, as¬
body. Don't- let profits dull suming of course you bought
them when nobody wanted
your caution. Money is made
them. This leads me into one
through selling on strength.
of these I-told-you-so things.
'■J'y
if V
ifi
it
For way back in March when
You hardly had a chance to
read last week's column when things looked plenty blue you
were
given a list of stocks to
the market went into one of
-Says~~^i^^j:J.
here-we-go-again things; buy.
Today it is still
of
a.d
the
our
con¬
duty in the
Department of Commerce to pro¬
But
mote trade.
have another
we
complicates our lives
us less time than we
need to foster and promote the
foreign commerce of the United
that
and gives
duty
I
States.
speaking, of course,
am
the
In
done
six months I have
last
of talking, in
great deal
a
public about export controls. And
get back to selling when controls. It is not
time it was accompanied by
& particularly
everybody wants them. For entertaining subject, either for me
volume, late tape, and; hun¬
the last few weeks you were or the exporter, and when? I say
dreds of wires (maybe thou1
advised
to
stop half your goodbye to an exporter I findmysands) from advisory services
self shaking my head in sympathy
stocks at certain prices. Now
subscribers
telling: their
buy;
It
was
'With the -
heels
suggest
Anaconda, bought at 32V2y
understanding fellow, offers his
condolence.
Today I do. not in¬
tend to spend all: my, time in talk¬
ing about export controls.
But I
believe there jarr a? few things I
*
%
it
get in
to
with him, while he shakes my
hand and,, when, he is really, an
using the reverse
method. Sell half on strength
at still'other prices.
has a stop at 35 for half. On
strength dispose of half (if it
fey. Qddfy* enoughs it wasn't
hasn't broken its stop in; the
the
cats, and
dbgs
that
whooped it up as much as it meantime) at 42 or better.,
Was- the oldi line blue chip
Avco, bought at 4V&, is too
fssues it- takes real'money to low priced to permit trading
for
points.
Percentagewise,
buy.
#
*.
•*
however, it is doing alright.
now
about
v
That a violent move- was It's
7, \ which
rise.
in the' cards- was indicated: as amounts: to. about a
before the
«
air very exciting,
public stepping. on
others'
each
to
.
.
parade passed them
•
c
Mond%, May ,10;
The
only thing to; do with, ity
when
the previous column is either resign: yourself to a
Waswritteni I commented on pull position; or take* pari;'
it by writing, ^ . . . I can- see profits at IV2 or better.
the market working itself
Bethlehem, bought 4 at "31,
into ai corner where a violent has an old stop' at 32" for half
move can occur
" That, your lot. On strength, sell
early as last
...
ought to- say to those of you in
this area who are exporters. You
shown
-lave
in
and' action
word
that you are more than, mildly in¬
terested- in the. subject; arid; 1 don'4
want
to'disappoint you1 by* avoid¬
ing the topic entirely;
In my
wo or
talks
export controls
on
three months ago, my main
purpose was
to make clear the dif¬
between
ference
the two
censing policies that
new
were
effect after the first of
li¬
put into
the year.
Many people were confusing the
different
entirely
wo
which
of
both
within
policies,
announced
were
period of a little over
By now I believe the
differences are clearly understood
by everyone interested in, export
controls, but I am going to. follow
a
two weeks..
toy- practice; of discussingrth^ two>
policies separately. fwanttojtalk
the controls on ship¬
Caterpillar, bought at 55,
ments to Europe, known generally
column .should make me out
now about 68, has ah old stop
as the "R1' procedure, or as Cur¬
some kind of a genius.
for half at 61* On; further rent Export Bulletin/434;?
.
*
*
#
jplus
the
couple of sentences; at
beginning of last week's
a.
half
across
42
or
better.
first about
strength take half profits at
only trouble is that in
The
the
same
column I- threw my
hands up and
said "
doesn't
market)
(the
.
it
show
.
.
anything." Those few words
make
me
out
a
bum; You see,
72
When
that
better.
don't
Dresser, bought at 22, now
how
boasting
around
go
good I
Of
am.
readers insist
on
course
if
writing and
(I get a postcard every now
and then)
congratulating,
me,
I
missed
ters I
Any let¬
air¬
the
to have
passed; them by
entirely. Nomparticipation in
a
new
get telling me to. get a
crystal ball, I promise to
new
on
enough but- held them too
long. The current strength
accept;: their praise with
restrained modesty.
out
planes; W& bought them low
seems
I'll
rally isn't too much to
about.
worry
tion in
a
It is participa¬
decline that has to
be watched.
On the- next
Certificates';
.
\
.
Due each October l; and April 11
from
October 1948^-April
To
action the
re¬
1950
Schwabacher & Go.
y
■
Neio- York Stock Exchange
New
v ? */
York Curb Exchange- (Associate) f
Son
Francisco Stock Exchange
Chicago Board of
14 W*H Street:
OOrttaodt
Ban Francisco
drastic
—
V
Santa Barbara
Oakland
—
Sacramento
Fresno
will
Meanwhile hold thenr
remember, the
stops
Douglas 61; Lockheed;' 211;, G%
L.
Martin -18$6 § and
Aircraft at 271A
—•
United
still-apply.
"
1
[The views
article do not necessarily at. any
time
coincide with
we
control.
We
knew
had to have a, jpeans
criticized
of
ship¬
severely
because- this
control was considered too sweep¬
ing
or even unnecessary.
ing the past two months
criticized'
severity
with
because
Yet, dur¬
we
have
even, more
some
commodi¬
ties that were on their way to
port or in warehouses/awaitihg
shipment on March 1 were al¬
lowed
to
proceed
to destinations
in Eastern Europe after that date.
Before we put the control into
effect many people said we would
not be able to handle in
anything
approaching
a reasonable time the
volume of license applications that
would' be sent to us.
I am glad,
to be able to. say
that
yfery little, criticism
we now
on
hear
thir scone::
Licenses; coverlhg;; shipments / to?
of, the
is
now
what I
Committee
to
ing
committee
There
make
is
of
required
destination.
time
In
a
further
nounce
policy
tory
regardless
shon
These
helpful in
Besides
providing
decisions,
cialized
information
in
a
useful
their
a
are
proving
with
of<
awareness
culties under which
with
spe¬
trade
on
They, return; to
offices
own
creased
with
us
are
ways.
link with the busi*-
community.
ness
we
in*-
an
the
diffi;
work, and
understanding that we are
trying to administer the- export
controls in a way- that;will intent
fere as little as possible with, the
with the countries
Europe. We know that
trade
have
many
commodity, they
a
to be
have stated, it is not our govern¬
ment's policy to shut the door
countries
advisory committees
proving
Europe will know how to lay
their plans. As both the Secre¬
taries
of
State
and
Commerce
those
as satisfac¬
could be achieved.
>
<
as
an¬
ern
of Eastern
geo¬
able,- and admittedly
exporters and/ manufac¬
turers who do business with East¬
against
spread
days, we came up with a solution
that appeared at least to be work¬
that
so
exporters,
graphically from coast to coast.
After working with them for two
very
expect to be able to
we
everybody happy. However,
merchant
list of: goods an¬
April 30 for which no
are
variation
called in a Flour Advisory
Committee representing large and
small mills and large and small
the
nounced on
little
very
we
State, Interior, Agri¬
culture, the National Military Es¬
tablishment, the Atomic Energy
Commission, and the National Se¬
curity Resources Board. The first
mittee
was
in the prices quoted on
the'appli¬
cations.
Obviously, we couldn't
Commerce,
licenses
license applications? for/
shipment of 41 million sacks!
the
the Departments of
are
difficult licens¬
a
problem.
received
the Second Decon¬
on
by
mean
Our export quotas
for flour to Brazil for the month
of March was 240,000 sacks.
We
trol Act. Represented on this sub¬
products
needed by us and by the countries
an
natural
of export
flow
trade.
of Western
are
Europe with which we
cooperating: We desire trade
witn
pro
ReaSons fOr
Eastern
quid
Europe based: on a
exchange. At the
we
cannot afford to
time,
same
port
throughout
ship those things that might en¬
danger the peace of the world.
I want to turn
major change in
ing
our
policy—the
criteria"
export licens¬
so-called
behind
reasons
trols
than*
and
there
for
was
a.
more
of
the
even
the
con¬
sik
months ago.. More and'more busi¬
"price
nessmen
"non-historical basis"
or
the country
understanding
complete
to the other
now
Export^jControIsv i
Finally;: oft? thisi subject; of/ex^.;
controls;, 1^ fihd^ jg^neraily
quo
are
we
accept the fact that
now
living in
a.
time of: world¬
wide economic and political crisis.
policy, as first announced in Cur¬
rent Export Bulletin 431. For two
or three months
after this policy
was announced, exporters believed
are
necessary in? a world: that is
faced with universal shortages of
that
certain* critical materials*
we were going? to
install a
highly precise calculator of some
kind in the Office of International
Trade
by
which
of?
means
we
would sort license applications ac¬
cording to the prices stated by the
applicants. We would then grant
licenses first to
the applicants
the
showing
continue
until
on
up
lowest prices and
the scale of prices
were used/ up.
justification for
placing this interpretation on the
policy as it was stated in the Bul¬
letin. Actually, we never intended:
the
There
quotas
some
was
arid we believe the Congress never
discriminate
so
among applications
the basis of the prices stated.
on
intended
to
us
precisely
In
practice we have ruled out those
applications that carried exorbi¬
tant price quotations.
And after
such.,
rejecting
applications,.
we
have„
foreign countries
the goods, are consigned
They realize that/ export? controls
and' a
nearly universal shortage of dolf^
lar exchange. Certainly the Con¬
gress has recognized the need for
export controls, to proteot? the
U. S. economy! and has, fortu*
nately, given us more money- to
do a better and? faster job./ Even
since the end
control
of: the war,
has had:
istence.
a
export}
precarious ex^
We never knew how long:
the export control function would*
last,
how
or
much?
money
would have to do the job.
II
we;
was
difficult to keep our experienced-
help, and even more difficult to:
hire new people. - Now we are
settling down.* We sincerely- hope,
that export controls are not here
to
indefinitely,- but we do.
experienced exporters,
know—that they will stay as long;
as
the present troubled interna-,
tior.al conditions exist.
'
/
stay
know—as
!
One of
just
now
nomic
Cooperation
Administra¬
the economic
toward
tion
most- irfiportant jobs*
our
is to work with the Eco¬
recov<—
of Europe, because we know
ery
-
that European recovery and gen¬
world
eral
the
end
recovery
export
of
will hasten
controls.
Ai>
great deal has been said and writ-,
ten about the European Recovery
Program.
But with- all the pub- i
the importers in
licity that has been given to the
to whom
prograip, there
Still; one? quesn;
tion that is asked again; and again;..-
T hope- that,
ture
gtate
in; the very? near fu¬
publish a- revised:
shall
we
version of
our
this bulletin' that will
That,-question,- is, /'How, does; the-*
private! exporter^ do< business.; iin?-"
.
Differing Problems/for Eachr
1
.
policy more clearly and: der theiERP?', : The answer^ ielhiat /
:• r/'<:/
::
exporters :wtli,^ntneue< Xp*
accurately.
Commodity.
~
iriess ii^/the. same /wriy. ss i ^h/the
,pa$l. The
npt/ another -.
witli / the ' T'ederal' \
ERP, is
/
I In? working4 linden this mew poL
the gopds '
icy we have discovered different and shipping them to Europe. The
problems m^tfte licensing of each ECA hiak stated' that/ only/a; few :
commodity/ Those problems arcr commodjtiesM such, as. bulk .fo|pdS>
extremely complex and; demand and/medical1 stipPliieS;.wjlj bpL
RUT-?/
an intimate knowledge of the nar
chased by the Department of AsstUre of : the commodities and! oJ
riculture and the Bureau; of Fedtrade- customs and; practices.
As eral Supply and/sent by those ;
ia^ means1 of obtaining; this highly
agencies direqt/to/ Europe; , The ;
specialized' trade information? we rest wilt -he ordered. by the? im^ /
have set up 11 panels of consult¬
porter, in Europe and supplied; bv
ants; from which we draw differ¬ the exporter in. this countryt All ;
ent advisory committees from.timr
arrangements for the soliciting; of /
to time as we encounter special
orders;, the requesting of export
Government buying all
.
.
,
4
.
ten? days- off the; time we?receiver /licensing; nroblfems.
the
applications*
and: many in* a
They are presented as
much shorter time:
the author only.]
Chronicle.
those of
those
procedure
used: other criteria for der
termining which exporters should
screening, and controlling
get licenses when the applications
ments of goods that might con¬
far exceed the. allocations. Among
tribute to the war potential of
these criteria are such things as
the; U.S.S.RT.
arid: Its/ satellites;
the relative importance of endAnd we had to be prepared to
use to which the commodity will
back up the European Coopera¬
be put when it reaches its desti¬
tion Administration in? controlling
nation. We also take into consid¬
the; flow of/ goods of all kinds-to
eration, to a limited extent, the
the countries of Western Europe.
historical position of the exporter
Three months ago we were being,
in his- trade, and in some cases
that
destinations/ in* Western - EdropC
—Walter Whyte
are? now* being; mailed1 oiiti of the
expressed in1 this Department within, not/to. exceed
Teletype NY-
—
we
have ten reconsider the whole
New York 5, N. Y.
7-4150-
or
More next Thursday./
Trade
Pritate- Wires. to Principal Officei<
Miaterey
If they don't
ages*
but
■]
market,
eVen advance across: the aver-
group.
yield: 1.35%-2.65%
Members*
airplanes should go
off less than the*
2Y2% Equipment Trust
be
mercial
been
Illinois Centra! R. R.
announced-on Jan; 15
individual
would,
this
I
we
export licenses
required for all com¬
shipments
to
Europe,
about 29; has an old stop at there was naturally a great deal
24V2. There doesn't seem to: of concern, if not consternation,
Events, since
be muck stock ahead lean see; among.: exporters.
tliat; time-have: shown that there
so just hold the full position.
were goocT reasons* f6r >
imposingor
"R"
the
on
result of the work of this subcom¬
of export controls.
my office it is, I am sorry, to §ay,
too often exclusively about export
To
Time of Crisis
a
concern
establish a
clear policy with regard to what
sulates and: trade commissioners
kinds of goods may in the interest
abroad, he sought out markets for
of security be licensed for ship¬
U. S. businessmen in all parts of
ment to the USSR and it satellites.
the world.
Partly as a result oi
As a means of establishing this
his efforts, our export trade grew
fast and-reached a volume un¬ policy; we have set up a special
subcommittee
of
the
Advisory
dreamed of before the twenties.
Witn
trade.
when I talk with businessmen-in
that this
was
main
•Our
(Continued from page 16)
Now that every average
confirmed*
Thursday, May 20; 1948-
World Trade in
-
Walter
The difference
CHRONICLE
it
it
Markets
those
FINANCIAL
COMMERCIAL, &
THE
(2234)
50
Many
more
and
import licenses apd* exchange
panels are now being drawn, up.
permits, the shipping and storing
Let?
of goods, andf
me
give-
you an*
example, of.
the payment for in*-
.
,
^Volume 167
Number 4700
THE
dividual shipments will be initi¬
ated and carried through in pri¬
with
export:: controls
and
COMMERCIAL &
Euro¬
FINANCIAL CHRONICLE
lowering of the general level
of
pean, recovery
occupy so much of production and
employment in the
attention these days, that we United
States, to?,say; nothing of
have far too little time; to think the
serious delay it would cause
porter may be a government pur¬ about the
promotion of exports in world
recovery.
Few Ameri¬
chasing, mission rather than a and imports. Yet this is the basic
cans would
deliberately make a
private firm, but the amount of statutory Junction of
the Office choice that meant
less, production
guying done - by such missions is of International Trade, and a
and fewer jobs.
It is our policy
expected to be relatively small.
function that in normal times takes
in
the Office of International
most of" our attention.
We con¬
Trade to encourage imports; we
Exporters Should Continue id !
tinue ta publish
4
"Foreign Com* believe
Solicit Business
that, this is the'only sound
'
merce Weekly," which is devoted
Exporters,.whqt have been doing largely to trade leads and infor¬ way ta cope with the world-wide
dollar shortage.
business, with Europe in, the
-past mation on changes in government
should continue to solicit
We are trying in many
business regulations—at home and abroad
ways to
increase the volume of imports in¬
through their regular agents and
^affecting
the
international
distributors abroad. The
to the United States. For the
first
European trader. Our other published serv¬
time in history, the
importer will consult with his ices include the
import trade
"International
government regarding the need Reference
Service," "World Trade opportunities listed in "Foreign
for a particular product as
part of Directory Reports," "World Trade Commerce Weekly" are regularly
the
recovery program. Then the in Commodities," and a series of taking more space than the ex¬
European government will consult reference handbooks. Our com¬ port opportunities. Early in 1947
vate channels of. trade.
pases, of course,
In
some>
our
the European im¬
,
Government and de¬
cide
commodities
which
paid for with
able by
funds
made
can
be
avail¬
the United States for the
recovery of Europe. The European
importer will obtain permission
from his government to
his
francs,
own
or
exchange
kroner, or lira national traders,
diplomatic missions and consulates
for U. S. dollars that have been
to foresee changes in world trade to intensify the promotion of im¬
furnished by ECA to his" govern¬ conditions and to
from
shift our ap¬ ports
European countries
ment for buying goods from the proach and
into the United States. These men
our emphasis accord¬
United States under the
recovery ingly. The upheaval in world eco¬ found that European businessmen
program. The important thing to nomic
conditions during the past are hesitant, and almost afraid, to
remember is that whatever system
few years has caused us to make attempt selling their goods in the
of
accounting and disbursement a basic change in the
pattern of U. S. market.
They lack knowl¬
of funds is worked out, the Euro¬
our trade
of
American
tastes
and
promotion activities. We edge
pean importer—not the U. S. ex¬
no longer place
American methods of
our-strongest em¬
distribution,
porter—will initiate the first ac¬
and they have a
phasis on exports and export op¬
tendency to con¬
tion in requesting permission to
portunities.
When we talk about tinue selling only in those sections
use recovery dollars to
pay for a
trade promotion today we must of ttber IL S. market with which
shipment. ..
perforce talk chiefly about im¬ they are well acquainted.
They
we must
be alert
.
:
Surely, in the present state frequently make the mistake of
of the world, it would be naive signing exclusive
marketing con¬
The European Recovery Pro¬
for us to c^rry on a "bally-hoo" tracts for the entire U. S. with
gram is more* than a >
plan for
promotional campaign exhorting American business
houses
that
building up the factories and
our
foreign traders to export. The have limited distribution outlets,
farms and transportation systems
is
hungry for American when they could easily make lim¬
of Europe., It aims also to reha¬ world
bilitate the distribution and mer¬ food. It needs American textiles. ited area contracts with many
And it must have American ma¬ firms so as to give their
goods a
chandising network, of
EBP to
ports.
Help; Private Importers
,
private
dealers and distribu¬
tors that largely disappeared after
1939. The necessity of
rebuilding
this intricate and in some
ways in¬
tangible system is too often lost
sight of because so much attention
has* been concentrated.on
thq, re-
importers,
;
buildinjg of the; physical facilities
fdrainereasing* production; Inter*
national trade
if
can be rebuilt only
businessmen in each
private
country
learn
businesswith
once
again
to
do
one
another
and
with their conterparts abroad. The
one sure
to delay the rebuild¬
way
ing of the structure of
trade would
be to place all the ERP business
in Ibe. hands of the participating
governments.
Fortunately, the
Congress carefully avoided mak¬
ing this mistake, and the legisla¬
,
tion
clearly calls for the use of
"private channels .of trade" to the
greatest extent possible.' I can
assure you, we in OIT
"vyill con¬
stantly push for carrying out this
provision and
trend
curement.
ment;
we
toward
will combat any
government
Government
sometimes/.appears to he the
efficient way to carry on
a grant-in-aid or a loan
program,
and for that reason it is insidi¬
tempting.
We
will
knowledge
of
have
markets
a
better
and
necessary trade contacts to
the policy into effect, :.
£ We need to know
the
raw* materials
more
and
the
avoid
the mistake if Ave remember the
.
central objective of the program
—economic recovery, not only for
Europe but for the rest of the
world. And we cannot have world¬
wide economic recovery without a
rebuilt
ahd
revitalized
world
trade.
make
about
their
certain.
a
.
great extent .- for
eventually
nations
for
to
pay
way.
And they will
better chance to
pay their
if we can allow them to
sell their goods in the
U. S.
a
own
way
mar¬
ket
without having to
pay exces¬
I should mention that
whenever these
reciprocal tariff
sive tariff.
exotic- hard
woods in the manufacture of fur¬
niture and the finishing of home
exteriors. - U. S. imports of ma¬
and other
reductions are negotiated, busi¬
the United States who
believe they would be hurt
by the
reductions are given a chance to
been
present
nessmen in
hogany, rosewood,; teak, satinwood
foreign hardwoods have
increasing steadily, v and
would undoubtedly increase faster
with
more
need
more
fective.
vigorous promotion. We
imports of the basic in¬
I
dustrial
other
countries
our
exports.
litical
at
home
and
economic and po¬
new
developments
countries.
in
Europe
World-wide
shortages
brought about a
new emphasis on the need for an
increased volume of imports; and
dollars
of
for the
The
have
lowering of trade barriers.
wholesale
destruction
of
the
physical , facilities of production
in. Europe:: during the; war and
the near destruction of the
netf
work
international trade have
of
made necessary the European Re¬
1937,
1940, 1943 and 1945* This law was
this program
covery Program; and
is based in part on the belief that
the
use
of private channels of
the idea that we. might
be able to persuade other
coun¬
on
trade for the purchase of recovery
tries to lower their tariff barriers
if we offered to lower
ours.
In
law
Continued short¬
to insure an, equitable distribution
of
scarce
commodities Jo/ other
American
this
Govern¬
required the extension and
modification of export controls to
protect the domestic economy and
ments Act. It was renewed in
since
about the
have
business against coriipetition(from
abroad.
On
June
12, 1934, the
Congress passed the Trade Agree¬
years
the
*1 *
Federal
materials
abroad and
long
14
the
of
of
ages
series of protective tariff laws had
been enacted for the
announced
the
been1, talking
national Trade.
Our Protective Tariff Laws
based
"■.
generally, and specifically
the policies of the Office of Inter¬
d
protecting
have
.'
,
ment
Until 1934 the United States
did
very little to encourage imports
from the rest of the world. A
purpose of
"
policies
ship to us.
they pay for
can
way can
before
case
various ways in which the world
crisis has affected the economic
goods
Only in this
their
change in the tariff becomes ef¬
goods is important in the rebuild¬
ing of world trade generally. All
these policies are indications
has
of
been in effect, 42 separate trade
The only apparent limit much wider market. Foreign gov¬
agreements have been
negotiated,
what other countries will buy ernments are being urged to con¬
and. tariffs have been reduced on
from us is the number of dollars duct surveys of the U. S. market
thousands of commodities.
Despite
in their pockets or in their banks. for the products of their
countries, warnings that the lowering of bar¬
Available dollar exchange is a and to* educate their own busi¬ riers
would injure our own indus¬
ceiling that automatically limits nessmen. in/ American marketing
tries, only two claims: have been
Just
before
I
our exports.
left
Last year we sold techniques.
presented to the government
by
$10.6 billions worth of goods and Washington^ I-learned that one of
industries who said they were hurt
services to other countries.
We the governments of Europe has
by the agreement In both cases,
bought $8.3 billions worth from appropriated money for such a the
government reversed its ac¬
them. This means that our foreign survey.
tion by use of the clause in
the
One of the most effective
customers had tovdip into their
law that permits an
ways
agreement to
reserves 1: of
dollars in 1947 for to increase imports of the
products be revoked if it can be shown to
$11.3 billions to pay for what they of other cpuntries is to
encourage hgveAbjured one of our own in¬
bought from
us.
All
over
the the exhibition of goods at inter¬ dustries.
In" the years since the
world, with the exception of only national trade fairs," OIT has an Trade
Agreements Program was
two or three countries, dollar bal¬
expert on international fairs: and
started, our foreign trade has in¬
ances have been shrinking stead¬
exhibits who is working with the creased
steadily.
I do not claim
ily for several years. Even Canada representatives of other countries that this
increase was a direct re¬
has had to prevent its people from to use this medium of
trade pro¬ sult of the Trade
Agreements Pro¬
buying many American products, motion effectively.
gram. I mention it merely to show
ranging from lettuce to automo¬
Another effective way to cor¬ that the Program has at least not.
biles, in order to slow down the rect the
foreign dollar shortage is hurt our foreign trade.
rapid decline in her dollar re¬ to
encourage Americans to travel
On June
12, 1948, the Trade
serves.
The British Loan of 1946
abroad.
Dollars spent by Ameri¬ Agreements
Act
expires.
The
and the European Recovery Pro¬
cans
in another country become
Congress must extend its life be¬
gram are, in essence, measures to
part of that country's dollar bal¬ fore that time if the
reciprocal
cope with the world-wide dollar
ance, and give it additional dollar
trade agreements
program is* to
shortage.
funds with which to buy our ex¬ continue. I
believe the great ma¬
Naturally, we continue to fur¬ ports. In cooperation with other
jority of businessmen feel that
nish information on market condi¬
countries we are doing everything the Act has
proved-its usefulness,
tions abroad. By reading our pubr
possible to make travel abroad and that it should be renewed for
lications and by inquiring at our
easier and more convenient.
another
three
years
without
field offices, the exporter can be¬
One of the most encouraging amendment. We have become the
come
informed on trade restric¬
signs of an awakened interest leading nation: of the world in
tions in various countries and on
among American businessmen in the, development of liberal poli¬
various commodities. We are par¬
imports is the Increasing use that cies of .international tr.ade; Our
ticularly interested in letting our
is being made by private export¬ leadership in the formation of the
businessmen,; know about espe¬
International Bank, the Interna¬
ers of their agencies and dealers
cially good export and foreign in¬
abroad for the promotion of im¬ tional Monetary Fund, the Inter¬
vestment
opportunities. On the
national Trade Organization, and
ports.
Since the end of the war
whqle, our export promotion is several
the European Recovery Program
that
to
to
United
the
its
is
States
international
awake
responsibili¬
ties.
In this time of crisis, the world
;Vill gain to the extent that we
continue
to
economic
our
use
■-
leadership
wisely. We have the
greatest productive power in the
world; and we have the greatest
market for the goods of other na¬
tions.
Both
be used
can
build
to
confidence, well-being, and a real
lasting peace. We as citizens
and
must be vigilant to see that our
leadership is used to advance. the
world toward those ends.
Norman F. Dacey Joins
Staff
Of Edward E.. Mathews Go%
(Special
Chronicle)
to The Financial
BOSTON,- MASS.—Norman
F.
Dacey has become associated with
Edward E. Mathews Co., 53 State
Street. Mr. Dacey in the past was
an officer of Trust Funds, Inc.
j
i
'
w.,f
*;
.
i <sV
.
1
X,
*
y
>
Three With Craig
v
•
safeguarding; the, interests of, the
possible
to be
must
we
own
have
proc¬
,
of
success,
the/participating
essed goods that- are available for
our use in other countries.
We
have already discovered the use¬
fulness
it
:
51
Recovery Program is
permanent
chines.
■i While we are cooperating in the
selective rather, than general; we
econornid. recovery of Western Eu¬ are
using a rifle rather than a
rope, 1 !we cannot afford to forget shotgun.
the ndeds of" the other areas of
We face a simple choice in de¬
the worlds. We in the Office of
International Trade will be re- veloping a policy for the promo¬
sponsible to
a
carry
!
tion of world trade.
on
We
can
large manufacturing firms
developed distributing
agencies abroad have begun to
realize that they can use their
with
well
selling channels in reverse by get¬
ting their agents interested in
go, finding
markets
in the
United
indefinitely extending grants States for
the goods produced by
loans^ to nther? countries to their
foreign customers. The im¬
countries :that; are not "participat¬
ing in the1 recovery program. When make up.' the difference between mediate result of this relatively
what we sell to them and what we
export quotas are set up for the
new. and still somewhat
experi¬
export. of critically scarce com¬ buy from them; or we can take mental method of import promo¬
the necessary steps to make it
modities,.we shall- be claimants
pos¬ tion is goodwill for the American
and
has
of
given
us
influence
.
.
of the world.
a
ert
the
barriers
trade
of
To
forfeit
with
Hallum,
Craig*
*
-;
;!yX y
(Special
'<*-
to The Financial Chronicle)
'% CHICAGO,
ILL. — Walter
S.
Rosenbaum and George Schweitzer
have become associated with Her-?,
ricki
Waddell
&
Reed,, Inc.,
South Michigan Avenue.
•y,11
$ ■>',%y
332
.//
1
\
y':
*
•
,r
•;*,
*,
.
0'
/ '* *''*.-
'
•,
% E. Weltner & Co. Adds
be¬
(Special
our
leadership in the program at this
time would be to jeopardize se¬
riously the progress we have made
Rob¬
become
Twa With Herrick, Waddell;
preeminent place
nations.
—
Hanson, Richard C. Lucas
Jean Simonetti have
associated
,
tween
E.
Inc., Baker Building.
attempt in recent history to break
down
(Special to The Financial Chronicle)
and
among the nations
The reciprocal trade
agreements program was also our
idea, and it was the first major
Hallum, Inc.
MINNEAPOLIS, MINN,
.
.
ropean
the
-
pro¬
procure¬
easy and
ously
(2235)
businessmen
minerals, such as tin, cop¬
per, lead, and zinc; and we need
we sent general
instructions to the more of certain
modity specialists continue to fol¬
alloying minerals,
low world markets closely and to U. S. Foreign Service Officers that such as
vanadium, antimony, choprovide information on request to they give as much attention to mium,
manganese,
nickel,
and
businessmen who write to us or imports as to exports.
Late in tungsten.
If we are to continue
visit our field offices throughout 1947 we sent two of our men on
selling to the rest of the world we
an extended
the country.
trip through 11 coun¬ must
J search with energy ' and
However, if we are to be of real tries of Western Europe for the
imagination for new markets in
service to the community of inter¬ principal purpose of assisting the
the United States for the
with the EC A and other
agencies
of the U. S.
but
to The
KANSAS
Weltner
Tenth
&
Financial
CITY,
Co.,
Chronicle),
MO.—A./
Inc.;
21
E.
West
Street, have added William
.
for
the- needs of all these other sible for them'to sell us
as much exporting firms.
The long range
The, choice is clear. result is. more dollars in the bank
countries. And in preparing and
We must.make* it easier*for other for
presenting these claims, we shall
the foreign customers, and
countries-' to sell to us.
There is more sales for the American firms.
keep in'* mind. the importance of
onlVione; possible, alternative,.and We need more
balanced recovery throughout .the
statesmanship like
that is to cut our
exports down to this among our exporters.
The
world.
the level of our imports. To take
government can
point, the way
The urgent problems connected this way out would result in the and assist
in promoting
a$
they buy.
imports,
and
to
place in great danger the
success
of
our
E. Cloonan to their staff.
efforts to establish
International Trade Organiza¬
tion.
Moreover, the program is
y
an
highly important to the recovery
The more Europe can
of Europe.
export to
will
earn
us,
earn.1
its
the
We
more
want
dollars, not
borrow them from
us.
dollars it
Europe
continue
to
to
If the Eu¬
•
Herrick Waddell Adds
(Special
to The
Financial
Chronicle),
|
I*
f GRAND
F.
ISLAND, NEB.—Yale.
LaMoore is with Herrick, Wad-!
dell. &- Reed,"
Inc.,
55 : Liberty-
structive
Observations
I
•'
day's market." But bearing in mind that the Webster definitionj>f
"crystalize" is "to become settled and definite in form," even this
compromise is stretching the true account of events. What really
has happened is that the market's performance has "crystalized" the
public's speculative appetite. - Such orthodox matters as earnings,
industrial activity, war or peace threats, inflation or deflation, etc.,
completely irrelevant.
etc., are apparently
y-y/y yv
other penetration-point theory
accounts lor only one of many channels which the rapidly rising
tide of market-pictorializing has taken. A few of the many popular
images to which the investment community is now likening the
c
It should be realized that Dow and
.
market are:
"
'
-
„
v
.
'1
.
.
„
.
..
.
with successive waves of deteriorating
and reviving health (ex;,, "the bear market is dying," "the bull
market was made healthy by yesterday's reaction").
(1) A medical patient
'•
'
theater with military advances, retreats, and
bloody skirmishes between bulls and bears, dramatic Battles of
the Bulge, etc. i
;
,
A
(2)
V
pi
risk-bearers!
of the confidence, em¬
whose prompt readability provides the key
(4) A thermometer (not barometer)
braced
by others,
transactions of the Fund for the
Total
where the horses after scaling one barrier can be safely
running forward at least until they reach the next
chase run,
assumed
between the barriers!
•
'
'
-A'- ////■'
refusals the jockey should allow the horse before dis¬
mounting and abandoning him, and what actually is the decisive
is, how
many
cite
To
similar
;a
in
appropriate
analogy,
this
spring
fine
^
'
Chasing
the Magic Trend
t)r
,
trend, while: it still has some distance to go, and knowledge
to abandon it. The great difficulty facing all attempts to
in the necessity of anticipating instead of fol¬
lowing the behavior of the community of individuals composing
that crowd, in estimating its size and degree of its gregariousness,
long to remain with it.
callous writer on the charts confidently
and hence in knowing how
writing
this
one
U.
Currency
Equivalent
000,000.000.00
600.000,000.00
Pounds
1,500,000.00
6.045,000.00
surpassed."
readers
which
But
that "Whether this is the third
in
started
1942
whether
or
this
of his more timid confreres have disturbing
some
rent
606,045,000.00
5.900,000.00
Currency Bought:
Chilean
Pesos
33,000 000.00
1.446,303.913.00
■Belgian Francs
272,800,000.00
8,800 000.00
43,949,799.97
10,200 000.00
14.888 375,000.00
Kroner
*125,000 000.00
______
3,400,000.00
16,316,599.99
Francs
Rupees
them
as
Theory
suckers. \ This phase of
the market process denotes investment as a game of musical chairs
with the unfortunate left-over player penalized with a big bag
to be held
•
as
the mark of his dunce-ship.
This
booby prize of holding-the-bag is not
first appear!
,
may at
as easy
-
to avoid
as
/
place such pauses-never \stoodpnP'as-thei proper explanation^
place this has been made clear to the public now
and in the second
seen
that
the. factors 'of
inflation, government spending,
business activityv profits,
polities, etc^, ,were not appreciably different
last week than they were in mid-March before the stock
price aver
,
age
advanced by 15 %Vy: \r '/yio
^
■
to
provide
the
and
W.345 ,000.00
and general corporate purposes,:
131,839,626.94
"
'24.813.900.00
5,000. 000.00
14,000,000.00
300,000 000.00
74,441,687-7-1
„
balance for working capital
5,000 000.00
*
Sterling
5.900.000.00
606,045,000.00
Following the expiration of the
on May 3 to the common
of record April 17,
1948, of Lake Superior District
rights
stockholders
value
figure
force
in
EDITOR'S
For
1948.
against
the
the
represents
the
at
time
NOTE—No
gold
months
14
(690.415
U.
the
gold
dollar
S.
transactions
transactions
ended
April
$35
at
ounces!
30.
equivalent calculated
effected
agreed
par
Power Co. to subscribe for
by the Fund during April
the Fund sold U. S. dollars
1948,
however,
fine ounce, the
per
the
at
effected.
were
were
dollar
equivalent
being
shares
of
vertible
52,800
cumulative
5%
second
preferred
con¬
stock,
$20.75 per share, an
banking
syndicate
headed by the Wisconsin Co., Mil¬
at
$20,
par
$24,164.52.
Nal'l Advisory Council Reports on Fund and Bank
ber
countries
their
to
were
international
carry
trade
considerable: external
It considers that
on
without
opment
some
ticularly
in
American
conjunction
assistance
previously,
its
the
pro¬
the
use
United
States
the
United
in
the field
finance.
It
gether with the proceeds of $1,-
of
the Fund and the Bank of the
on
policies
of
this
coordinates
and
government
their
tensions and improvements.
The
advises
States representatives
activities
those of all agencies
of the Fund's
has
It
approved
Fund's efforts to strike
a
ernment
re¬
with
of the gov¬
balance
and
ing its resources entirely for the
post-transitional period and the
its
of
deal
resources
with
the
at
this
vo
regard
to
the
Bank
other aid programs.
fered th$
of the Treasury as Chair¬
retary
man,
ex¬
the
Secretary of State and
the
Secretary
Chairman
the
ernors
of
ond
of
preferred for each lxk shares
held.
in¬
The
quarterly dividend of 25 cents
the second preferred will be
paid
on
June 1 to holders of rec¬
May 20, 1948.
.
of
the list of 46 invest¬
which
firms
written
an
have
Co.
422,467
under- 1
offering to the
of
stockholders
mon
of
Michigan Corp,, also
among
ment
f.t
$
*
-
First
Reserve
Federal
stock
common
common
the
of
second preferred stock
itial
Gypsum
com¬
National
10
of record May
additional shares of
at
$13.50
per
stock
Council reports that it has made
share. The rights
a.
May 24.
System,•• the - Chairman
of
the
significant. contribution toward, Board of Directors of the ExportWorld; recovery through, the ex-« Import Bank of Washington, and
tension of loans aggregating more
the' Administrator Y for Economic
had been of¬
the, basi$ ot one' share of sec¬
op
of Commerce, the
Board of Gov¬
the
of
stockholders
common
the utility company
was
The Council consists of the Sec¬
time
pressing
engaged in international
charged with important re¬
sponsibilities in connection -with
the European Recovery Program
the
between the extreme of conserv¬
use
proceeds
issue, to¬
200,000 serial notes proposed to be
international
posal for dealing with it.
sources.
net
this
of
issued in June, 1948 and a portion
principal function of the
of the cash on hand will be ap¬
Advisory Council is to
plied to the cost of additions, ex¬
formulate the general policies of
Fund
Congress,
coun¬
sale
The
European Recovery Program. The
to
lion-European
The
price.
the
from
National
with
under
the devel¬
tries.
adjustments
future, par¬
of
waukee, Wis., publicly offered the
unsubscribed 32,834 shares at the
same
loans for
to
resources
assistance.
must be made in the
With
honest disillusionment arising from previous attempts at interpreting
mafket action based Ton seeminglyi relevant External factprs. In the
it is
used
be
the
2,500.000.00
12,403,850.00
Liras
Pounds
will
28,000 000.00
'
Kroner
Norwegian
Turkish
change needs of the members.
Let us reflect on the reasons for Wall Street's evident un45cientific and illogical behavior. Pursuance of these above-described
foibles by the otherwise intelligent community seems to follow from
since
■
Ohio,
22,500 300.00
Netherlands Guilders—
to
Reasons for Popularity of the "Technical* Approach
firet
Co. of Cincinnati,
109,237,500.00
ord
on
y
92.638.544-4-0
;
Pesos
also
addicts, and ruthlessly unload
as
■
*
#
operations
of
pharmaceutical
division;
right to the
begun to breathe, other Street chartists are beginning to wonder
whether the non-Dow sophisticates should perhaps shrewdly take
advantage of the Johnny-come-lately behavior of the Dow
$1,658,766,
the
for
on
has
supposedly
of
assets,
ceeds
monetary
or
foreign ex¬
change operations. The Council is
market
i?
mately $150,000 of the net pro¬
loan,
<
„
Sperti Foods, Inc., cumulative
converiible 5% preferred stock
ly opposed the view that the mem¬
ber countries have an automatic
bull
Dow-defined
y
,
at par ($10 per share). Approxi¬
only
the
-
recently offered 30,000 shares of
The Council has also consistent¬
where
■■■■
r *
* • ■-
White, Noble & Co. of Grand
qualms. Already after the relatively tiny rise above the 187 resistance
point
-
Muskegon Piston Ring Co., Mus¬
kegon, at Dec. 31, 1947 had cur¬
Hall &
Sterling
lem and the Council has outlined
bull
market
.
Rapids and Detroit, and Clair S.
Equivalent
5.900.000.00
regarded as the initial leg of a new bull market, in my opinion, makes
very little difference. I think that the 1946 highs will be substantially
bull
'-:r
.
y .y
^
U. S. Dollar
Currency
Dollars
S.
provides a most satisfactory
means of dealing with this prob¬
the
in 1945.
:
y-"':yyy *
Amount in
U. S. Dollar
phase of
is to be
his
reassures
to¬
1947
$1,520,756, compared with
1947.
«
(Continued from page 16)
of when
At
\
-
5,900,000.00
Transactions
V
,
Underlying practically all "technical" endeavor is the discovery
follow-the-crowd lies
31,
Dec.
ended
investment
weather, the chart is being put before the .horse.
*>t the
'-
'
the animal to clear the barrier when he does so.
force enabling
■
$1,242,177 In 1946 and $213,439
Currency Sold:
This
dis¬
com-
and its subsidiaries for the
pany
14 Months Ended Apr. 30. 1948
April, 1948—
Amount in
Exchange
TRANSACTIONS-'"
OP
SUMMARY
—Month of
.
MONETARY FU.YD /
INTERNATIONAL
:'
*£
:;
;
' The realistic objection against which this concept becomes
illusioned, is the difficulty of knowing how far ahead the next jump
after
of the
taxes
$606,045 000.
J : against current liabilities of $422,Net profit after charges and
The details of the transactions are shown in the accompanying 827,
table:,*: •;.•
V:C'.' y Ay
r;y A.''yA;Y;A'-'A" taxes amounted; to; $846,325 in
what happens to the horses
whatever about
concern
charges and
WXYZ
income
taled
to keep
No
jump.
of prices as a steeple¬
station
\
Net
have amounted to the equivalent of
Mexican
the market community really
be doing is considering the course
to
operates
(Detroit).
;
licenses
.
,
'
,l!";u
14 months of operation
million respectively.
million and $5
Indian
Steeple-Chase Run
In».lieu of these fantasies, what
.seems
,
reports that during April, it
sold $3.4 million to Denmark and $2.5 million to Norway.
This brings
total sales-of exchange to these two members of the Fund to $10.2
French
The Market As a
„
,
VVXYZ,1 Inc.,
year
Danish
to success.
f
and
community of individual
•
i
\
our
'
■
(Continued from page 10) '
sidiary,
Fund Transactions Exceed; $600 Million
war
(3) A mathematical entity with multitudinous variations,
knowledge of higher calculus
even the Theory of Relativity.' [.[*][
and
by
evidenced
increasingly
behavior
wliose understanding presupposes
*
Michigan Brevities
"grow up" considerably before
it can fulfill that function.
However great the faults of the banks and
and insurance companies in the furnishing of capita), their behavior is
almost statesmanlike compared to the ali-or-none manic-depressive
The International Monetary Fund
^ Market Imagery*
►
community
hindrances removed, it must
outside
.(Continued from page 5)
But
.
our above-cited behavior of that
forces the conclusion that, even with those
by industry.
use
investment
Thursday, May 20y 1948
FINANCIAL CHRONICLE
COMMERCIAL; &
THE
(2236)
52
V'vy.
;.y:
*
—
y
will expire
on
/y7
*
Sales; of International; DetTola
than
a
half
billion
dollars
to
Cooperfitibtt i6r tho^ term' of that Corp., Detroit, and its J subside
member countries.
The Council
program* The Council has given aries for the year; ended Oct. 31,
has approved the use of the United continual
study to the financial 1947 rose to $71,682,180, compared
States subscription to the Bank
program of the government, meet¬ to $4O,810,Q28 iitthp previous year.
for makings lpans^ but to enable
ing weekly, and more often when Net profit/, after. tax6s on income^,
the Bank to carry on its opera¬
necessaty/ to deal with problems was $1,379,139, equal to $1.13 per
tions; - additional funds must be of immediate urgency.
share on
1,221,881.55 shares of
raised
in the
American
capital
common stock outstanding on Oct.
market, since the United States is
:31,^^1947, as.against -$l^)12,124, OT
practically the only country now
84 cents per share on 1,200,010.45
in a position to provide substan¬
shares at Oct. 31, 1946.; Sales and
tial amounts of finance for foreign
profits for the 1947 year include
investment.
The
Council
has,
nine' months sales* and profits of
7
(Special bb'.Tac 'Financial Chxonicls)*
therefore, approved the issue of
CHICAGO, ILL. — William F. Universal Cooler Cov ,of Canada.
securities
by the Bank in the
has
become
associated Ltd.,^1vhicfr"werer:in^
American market. It has assisted Phipps
with Shields & Co., 135 South La
the Bank in securing rulings un¬
the^fi|urest^r:ihe^pjteyftmsryeaiy
Salle Street, members of the lead¬
der
existing law which would
and sales and profits of
J the New-r
facilitate its financing operations. ing stock exchanges. Mr. Phipps
was
formerly an officer of port Rolling Mill Division, which
-
More
important than such honest abandonment of the former
after-the-event rationalization is the motive' of
psychological escap¬
ism
which
the
prevalent
mental
pictorialization in general provide
rebuffs
suffered
fantasy, which
near
the
same
from
abortive
gymnastics
a
provide.
Charts
and
welcome relief from the repeated
reasoning
about
facts.
can be altered* at will, does not harbor
danger to one's professional record. -*
Subjective
anywhere
:
Another advantage of the technical approach is that it permits
the widest latitude in subjective definitions of events that are essen¬
.
tially so difficult to define.
What an advantage, having/a mar-:
ket, whatever you choose to call it! -. The ordinary r difficulties
reaching such conclusions are exemplified by a current editorial
appearing iir this week's; issue of the London "Economist," asking
in
the question "Still
a
Bear Market?"
The London market's
advance
of 16%
in the face of adverse external factors during the past eight
months has left the author in a complete
quandary, which he feels
it necessary to solve by tacking on a
completely superfluous and
irrelevant conclusion that the "bear market" has not ended.
How
William F.
Phipps With
Shields in Chicago
In this connection the Council has
recommended
to
the
Congress
legislation which it believes will
be
conducive
flotation
to
the
additional
of
successful
(Special
;A During the first two years of
its operations, the Bank's loans
were- made
principally to Eu¬
ropean countries to enable them
What Role in Capital Financing?A
,
^:
to carry out part of their recon¬
The breaking-down of the American
equity market as the struction programs. The Council
means
of financing the
country's urgent capital requirements is anticipates that in the future the
,
,
recognized
that
Stock
.
as a
Davis & Phipps, Inc.
;M
NEW
Weif&
to The
Co. Inc.
Financial
matter of the greatest concern.
There is little doubt
policies, as: in the tax field, are hindering the
from conveying the savings oL investors to con-
Bank
to
will make additional
European
also devote
a
loans
but will
larger portion of its
countries
was
acquired by the company
Aug. 10,
Chronicle)
ORLEANS, LA.—Paul C.
Jr. has joined the
staff of Weil & Co., Inc., 830 Union
Boudousquie,
Street.
President,
mann,
tional's
(Special
)
<
L.
&
to
The
Financial Chronicle)
MINNEAPOLIS, MINN.
Hanson
is
with
—
Olaf
King Merritt
Co., Pence Building. A
that
interna¬
steel-making capacity in¬
outlays of $6LOOOiQOflL
(Special
With King Merritt Co.
disclosed,
additions being made ;to
volve
on
C. Russell Feldr
1946.
) Keenan &
,
government
Exchange
With
securities
by the Bank.
much more
satisfying to that author would be our technique of
setting our definition of the market's past, present and future by
precise mathematical rules!
-yy;
'"'T:
-
Thompson,
in Chicago.
to
The
;
Clarey Adds
Financial
Chronicle)
MINNEAPOLIS, MINN.—Rich¬
ard
E.
Mertz
has
ated with Keenan
become
&
National Building./
affili¬
Clarey, Inc.>
Volume
■
Number 4700
167
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
(2237)
Indications of Current Business
The
following statistical tabulations
shown in first column
are
cover
IRON
Indicated steel
STEEL
AND
INSTITUTE:
week
operations (percent of capacity).
Equivalent to—
...
.':f
on
that date,
Previous
Month
Ago
Ago
;
95.4
:
94.3
;
80.0
Latest
ALUMINUM
OF
May 23
1,719,600
1,699,700
''"•'fv' '''
•
PETROLEUM
INSTITUTE:
Kerosine
'■
1,442,000
1,681,700
"
output
5,377,400
5,568,000
4,843,000
16,681,000
16,569,000
14,579,000
.May
8
.May
Residual fuel oil
—
8
2,144,000
8
.May
output (bbls.)
Stocks at refineries, at bulk terminals, in transit and in
pipe lines-
2,236,000
"
2.472,000
6,932,000
7,419,000
9,168,000
8,226,000
Residual fuel oil
(bbls.)
109,313,000
111,632,000
111,589.000
Volume
99,593,000
8
13,572,000
13,394,000
11.438,000
10,292,000
.May
(bbls.)
8
8
35,117,000
35,224,000
May
fuel oil
OF
8
51,868,000
50,829,000
at
AMERICAN
of
33,121,000
Slab
31,523,000
49,228,000
■
A.--;:.
RAILROADS:
42,676,000
'
'
zincs
of
880,617
891,638
683,852
884,242
.May
8
726,056
722,781
586,289
at
ENGINEERING
CONSTRUCTION,
ENGINEERING
BANK
701,781
NEWS-
for
castings
April
Total
U.
S.
Private
construction..
..May 13
Public
OF
output,
and
Federal
$113,317,000
$114,579,000
48,691,000
89,036,000
68,169,000
64,626,000
55,493,000
39,087,000
May 13
56,640,000
41,353,000
42,944,000
32,662,000
May 13
municipal
—
11,529,000
23,273,000
12,549,000
<
OUTPUT
(U.
S.
BUREAU
OF
6,425,000
.
MINES):
Bituminous coal and lignite (tons)
Pennsylvania anthracite (tons)
Beehive coke (tons)
'
end
at
284
•284
2,709,473
*2,415,743
_
—
»■
■■
284
2,343,357
grades
(tons
April
>72,243
45,229
163,697
71,691
61,610
53,184
$102,354,000
$107,621,000
$87,771,800
$456,000,000
$595,500,000
$398,800,000
131,111
116,678
115,466
641,110
630,860
717,428
period
OF
SYSTEM—
thousands)
PUBLICLY
U.
COMMERCE—Month
S.
(tons)
GOVERNORS
RESERVE
(in
—
73,891
76.241
42,910
of
FEDERAL
of
73,209
72,649
BOARD
—
DIVIDENDS
REPORTED
CORPORATIONS—U.
COMMERCIAL
of
S.
DEPT.
April
STEEL FORGINGS
(DEPT.
May
8
12,684,000
*13,870,000
2,435,000
13.060,000
May
8
1,132,000
1,128,000
850,000
1,057,000
May
8
124,300
*91,300
11,800
OF
COMMERCE)—Month of March:
'Shipments
COPPER
I
7,042,097
lbs.)
(short
.
tons)
-
—
Unfilled orders at end of month
COAL
•7,608,135
92,226,000
May 13
6,229,762
(tons)—.;
period
orders
THE
2,000
OF
$131,313,000
81,067,000
produced
INC.—Month of
all
*
construction
State
$149,236,000
May 13
construction.
116,454
>
ASSOCIATION—
BY
4
vV-vV'
70,330
of
DEBITS
CASH
RECORD:
*135,955
'.
-
of
(tons
end
Month
CIVIL
159,109
lbs.)
2,000
Unfilled
8
pounds)—_
INSTITUTE:
reporting——
transported (tons)—
smelter
Shipments
■
.May
Ago
March:
carriers
freight
Year
Month
(DEPT.
April:
.
Stock
ASSOCIATION
March:
of
AMERICAN ZINC INSTITUTE,
.May
and distillate
of
of
STEEL
steel
Number of motor
5,553,000
9,343,000
AND
TRUCKING
.Month
2,002,000
7,126,000
9,242,000
,
.May
Gas oil
AMERICAN
.
Month
—
tons)—Month of
5,004,600
5,570,000
16,963,000
8
5,413,450
PRODUCTS
(thousands
IRON
ingots and
(net
''
5,412,750
5,602,000
8
.May
(bbls.)
shipments
AMERICAN
pV'-.c'
.May
output
; •' '
COMMERCE)
Total
Steel
.May
Gasoline
f
WROUGHT
Previous
Month
93.1
"
AMERICAN
month available (dates
are as of that date) :
or
of quotations,
cases
Year
Week
in
or,
'
•
,
■May 23
month ended
or
Latest
AMERICAN
Activity
production and other figures for the latest week
either for the week
53
137,200
INSTITUTE—For
'
—
(short tons)
Month
of
April:
Copper production in U, S. A.~Crude
(tons
Refined
of
2,000 lbs.)
88,235
"83,909
39,098
—i—w—
104,044
*110,886
104,596
(tons of 2,000 lbs.)—
U
stocks at end of period (tons
116,475
122,988
117,557
67,257
68,582
86,496
19,903,528
20,267,417
17,783,262
(tons
of
2,000
Deliveries to customers—
DEPARTMENT
STORE
TEM— 1935-31)
EDISON ELECTRIC
Electric
output
INDEX—FEDERAL
RESERVE
In
SYS¬
U.
S.
Refined
May
*300
330
8
298
311
of
STREET,
AGE
Kilowatt-hour
(in 000 kwh.)
May 15
AND
INDUSTRIAL)—DUN
&
5,108,673
5,087,264
5,086,826
4,615,983
month
:
BRAD-
INC.
100
May 13
COMPOSITE
108
101
88
of
Index
steel
Pig iron
(per gross ton)
(per lb.)
Scrap steel (per
May 11
gross ton)
3.20798c
•3.20798c
3.23940c
2.85664c
May 11
May 11
*
$40.24
$40.11
$40.11
$40.42
$40.33
$29.58
PRICES
(E.
&
of
J.
,
QUOTATIONS):
Lead
Zinc
(St.
Louis)
(East St.
U.
S.
BOND
U.
(in
21.200c
22.475c
Gold
(in
fine
21.425c
21.525c
23.675c
Lead
(in
short
94.000c
94.000c
80.000c
Silver
17.500c
17.500c
17.500c
15.000c
Zinc
May 12
17.300c
17.300c
17.300c
12.000c
12.000c
12.000c
10.500c
Govt.
DAILY
AVERAGES:
Bonds
100.G8
101.29
_May 18
100.89
,vf
112.56
112.19
(in
117.80
117.60
..May 18
116.02
115.82
115.63
120.43
112.19
111.81
111.81
May 18
106.56
105.69
104.66
109.97
G
-May 18
108.34
107.80
106.92
114.08
113.89
113.89
-May 18
116.80
116.41
116.22
DAILY
Other
2.44
2.44
2.20
Federal
3.03
3.05
2.79
2.76
2.76
2.77
2.53
Public
2.86
2.87
3.07
3.07
3.41
3.47
3.26
3.29
3.34
3.06
-May 18
2.95
2.96
2.96
2.71
May 18
2.81
2.83
2.84
2.60
INDEX
ITY
FERTILIZER
INDEX
BY
.
ASSOCIATION—WHOLESALE
May 18
420.9
416.0
income
238.$
420.7
236.4
299.4
290.7
May 15
(M
400.6
236.6
Stocks
225.0
276.3
(M
185,716
•156,660.
139,670
184,443
*155 878
140^53
39,879
(M
*39 323
ft.,
sq.
equivalent)
log scale)
ft.,
STEEL
CASTINGS
at end
32,146
77,543
*69,597
62,174
150,190
end of month—
at
(DEPT.
Month
342.1
Shipments
(short
sale
(short
269.8
266.6
275.7
253.4
For
240.4
241.8
230.4
For
Unfilled
May 15
228.6
228.6
228.6
170.4
May 15
17G.6
175.2
174.8
160.5
May 15
May 15
215.0
213.5
214.1
*171,906
119,468
134,909
99,701
163.5
232.2
232.2
May 15
155.6
May 15
May 15
OF COMMERCE)—
March:
of
162,891
producers' own use
orders
for
107,762
37,341
34,672
35,208
508,822
tons)
142.434
125,550
tons)
497,097
434,865
(short tons)
sale
end
at
month
of
215.8
164.2
May 15
Farm
0 y
commodities
and
drugs
materials
—'*.'1—.—.
All
machinery..
groups
NATIONAL
Percentage
(tons)..
(DEPT. OF COMMERCE)—Month of
Production
136.1
136.3
137.2
127.5
Shipments
143.8
143.7
143.7
134.6
Shipments
(value
of
139.2
139.2
138.8
220.5
196.6
Unfilled orders (tons) at.
V;
PAINT
May
..-May
—!
•
DRUG
AND
REPORTER
AVERAGE=100
PRICE
8
213,822
201.340
163.880
159.888
8
191,787
192,731
193,572
U.
8
101
102
103
101
8
418,994
397,407
434,430
560,526
'■/t.Mji r i
WHOLESALE PRICES—U.
!'■">All
S.
DEPT.
OF
sales
Net
commodities
Farm
%
5
■'
Hidas and leather products—^—.—;
Textile
!
products
:V:H'
'•
Chemicals
and
allied
Miscellaneous
8
161.9
162.6
160.6
146.7
8
184.0
186.9
183.1
176.3
8
174.8.
177.5
174.5
161.1
8
188.2
,>186.2
166.7
"
188.0 '
..May
;
and
Housefurnishings
145.8
..May
..May
;._L—
lighting materials—^_._L—
Metal and metal products
;
j
Building materials...,.—
;
Fuel
1146.6
146.7
146.6
...May
May
—_—:—;
...
3
143.2
8
133.0
'
148.1
May
,
.
132.6
.
■
131.8
:•'
157.2
Raw
4
T
.
S.
Govt,
140.7
178.6
136.8
128.6
8
133.4
133.7
—May
8
144.6
144.4
May
8
121.3
121.3
120.7
■
U.
S.
<»
STATUTORY
GOVT.
at
face
of
any
April
amount
Outstanding—
omitted):
——
-
,
materials
May
articles
-
h
?
*
i
kj
8
114.9
157.6
8
156.9
May
3
148.9
174.1
153.7 ;•
153.3
8
May
foods
-176.3
175.1
May
—
All commodities other than farm products
All commodities other than farm products and
•Revised figure.
8
..May
1
products
189,000
159,000
666,200
582,000
-,
,
•
>+--
,
$275,000,000
-
-
$275,000,000
"
,
.
public debt-L—
gross
927,400
952,000
LIMITA¬
DEBT
(000's
not
*
-
owned by
the
■
.Treasury
Total
gross
.
„
157.9
;
153.6
148.7
142.0
156.0
y
257,701,800
public
debt
and
s
78.154
179,800
$253,06S,069
$257,880,800
837,250
898,000
$252,230,819
$256,982,000
-
guar¬
anteed
obligations
$252,315,331
outstanding public debt obli-
832,390
.
160.1
140.2
Grand
total
outstanding———
$251,4.82,940
141.9
155.6
'
'157.25 s'-'
$275,600,800
„
252,989,915
252,239,912
»
-j ,
*
75,418
~—
gations not subject to debt,limitation-.—
Semi-manufactured
i.
that may be outstanding
time
one
30
$1,088,400
$1,141,000
& relief shipments
——1—-—
-—4--—— ;
TION—As
Total
^—4,
March:
c
'
commodities.
4,319
127.2
144.7
195.9
195.2*
of
T»>
foreign aid
Guaranteed, obligations
157.1
156.8
8
■
1
—
Total
groups-
Manufactured
CENSUS—Month
OF
omitted).
Deduct—Other
Special
-
EXPORTS AND IMPORTS—
104.0
,
-193.4
8
May
...May
products..
goods
i.
138.0
145.5
!,
...May
—
$106,764,000
STATES
Imports
■„
$61,285,006
$12,100,000
—
Commercial: i-LLL—la———~ 1—-———
U.
1
——
'
DI¬
IN
—
BUREAU
>■
products...
$7,664,97fr
purchases
UNITED
LABOR—1926=100:
Foods.
.—^
3,963
$6,851,148
of April:
Exports
...May 14
—
A.—Month
S.
4,903
4,858
),471,691
SECURITIES
GUARANTEED
AND
'
*4,164
4,925
'.
—
179.059
INDEX—192(1 -36
'
of)
units)
TREASURY MARKET TRANSACTIONS
(000's
OIL,
(number of
125.5
219.9
Net
activity——
Mar.:.
(number of units)—
221.4
May
May
...^—
(tons)...
TYPES ONLY
TRAILER COACHES—HOUSING
198.3
157.4
ASSOCIATION:
PAPERBOARD
received
vProduction
.———
15C.7
OF
/•'•^•orders
—:
155.6
May 15
——
.
tons)
227.3
,
May 15
:
combined
149.3
164.9
(short
RECT
W-
1.55>
COM¬
OF
.
245.4
242.7
Fertilizers—
'
%-in.
ft.,
(M'Sq.
May 15
Fertilizer
'
2,764,928
1.65
March:
consumption
equivalent)
258.5
349.4
Chemicals
**,
19.401,273
2,325,748
1.61
—.
3/s-in. equivalent)
month
May 15
'
(DEPT.
of
ft.
sq.
357.4
254.9
258.5
360.2
Building materials
\
20,737,063
3,158,609
213.8
Metals
,
1,368,598
23,863,324
4,2.68,196
charges-!
and
May 15
Textiles
<
2,833,365
17,226,476?
28,822,533
1,354,363
1,685,277
.„
Consumption of logs (M ft., log scale)
May 15
products
Miscellaneous
•
3,584,665
18,707,461
30.111,771
:,
26.081,447
fixed
to
MERCE)—Month
Livestock
'»- J"i
56,812,922
•20.059,841
22,323,963
PLYWOOD
Production
Grains
^
3,310,744
16,036,514
59,857,444
3,044,522
56,541.190
stock
Cotton
Fuels
;
22.292 126
17,797,632
30,178,996
equip.)
taxes
preferred
Stocks
oils
and
55,722,516
—
stock
SOFTWOOD
COMMOD¬
May 15
Fats
———.
projects
3.845,208
21,108,376
•
$43,820,938
19,089,249
60,386.398
appropriations:
Ratio of
GROUPS—1935-39=100:
Foods
Farm
$41,297,149
59,164,295
3,441,779
charges
structures &
common
of
NATIONAL
$39,425,294
,•
income—.
fixed
defense
of
income
3/8-in.
COMMODITY
£9,758,009
:
—
(way &
Shipments
.
MOODY'S
£11,200,000
3.17
-May 18
from
charges
On
2.83
3.36
for
fixed
On
2.63
3.05
..May 18
Utilities
2.85
■?,
,
w—^
available
Dividend
..May 18
Group
£2,544,000
CLASS I
Commerce "Commission)
deductions
Amortization
2.41
3.01
..May 18
S.
deductions
..May 18
Railroad
55,295
April
U.
OF
income
May 18
—
2,771,80S
*47,612
19,739,001
after
.May 18
Aaa.
Month of
income
Income
AVERAGES:
Ltd.
February:
Depreciation
YIELD
32,134
*2,971,193
53,824
„
income
Net
Baa
of
Income
121.04
BOND
tons)
INCOME ITEMS
Miscellaneous
118.8f
MOODY'S
74,570
142,730
*32,337
—
ounces)
(Interstate
Total
112.0C
_May 18
Industrials
*68,876
*146,259
35,534
3,372,949
.
railway operating income—————...—
Other
-■
116.41
TJtilj
Public
Net
■
..May 18
Railroad
RYS.
122.5C
'
fine
Bank,
Month
117.2C
117.80
_May 18
.
73,509
149,909
tons)
NEW CAPITAL ISSUES IN GREAT BRITAIN—
104.49
112.93
..May 18
Baa
in
.
ounces)
.(in short
SELECTED
Aaa_
134.9
14.800c
May 12
metals
1132.3
—
recoverable
of
21.200c
94.000c
MINES)
short tons)
21.675c
May 12
1125.4
—
OF
S.
21.200c
May 12
PRICES
?
of
middle
at
Average=100)
May 12
at
$362,162,700 $320.173^80»*
38,747,519,
38,599,687.
30,424^65
COMMISSION—
Employment
(BUREAU
.May 12
at
$357,697,800
March:
of
,
Midland
MOODY'S
COMMERCE
production
Copper
Louis)
ultimate customers': at Feb* 29
Railway
the
at
consumers—
omitted)—
customers—month of
^
April; 11935-39
Electrolytic copper—
Domestic reiinery at
Export refinery at
Straits tin (New York)
Lead (New York) at
(000's
ultimate
METAL OUTPUT
Mine
M.
February
of
Month
METAL
ultimate
$33.15
$40.66
to
February
Number
■
sales
from
INTERSTATE
PRICES:
Finished
lbs.)
EDISON ELECTRIC INSTITUTE:
INSTITUTE:
(COMMERCIAL
A.
copper
2,000
Revenue
FAILURES
IRON
SALES
AVERAGE==I00—
147.9
V--
131.7
Balance face amount Qf obligations fssuable
under
•Revised figure*
above
authority—
fPrellminary figure.
^
$23,517,059
$22,769,180
$18,018,000
tfJ.UaW'WAyJJ ■WMwftJWiiftfiUu'.
:
V,
I'",.-
fe'W
Thursday, May 20, 1948
vious methods of
(Continued ffom first page)
million to the International Chil¬
the
of
Fund
Emergency
United Nations.
While
expenditures
au-
are
for only one year, the
envisages the recovery pro¬
gram as continuing until June 30,
1952. Funds are to be appropri¬
ated annually in order that subse¬
quent sessions of Congress may
thorized
,
,,'v Act
the
review
the
of
success
pro¬
According to estimates of
Department, the cost of
European Recovery Program
gram.
the State
the
Government
to the United States
aggregate about $17 billion
between April 1, 1948 and June
may
The exact amount will,
depend on many con¬
tingencies which cannot now be
30, 1952.
of
course,
foreseen
appraised.
or
is to be
Aid to Western Europe
granted to the nations participat¬
ing
in
the
recovery
program.
the 16 nations, to-
These include
gether
v
areas,
with
their
dependent
which signed the report of
Committee of European Eco¬
the
Cooperation
nomic
Paris
at
on
22, 1947 and, in addition,
any
other
country, wholly
or
partly in Europe (including the
zones
of occupation in Germany
and the Free Territory of Trieste),
which chooses to adhere to a joint
Sept.
-
European recovery.
for
program
Congress not only held extensive
hearings but sought first-hand in¬
formation in Europe itself. The
report of the Committee of Eu
ropean
Economic
Cooperation
was subjected to searching analy¬
sis by the State Department. The
impact of a foreign aid program
part of the aid to be extended by
the United States must be in the
grants rather than dollar
form of
loans, and that to burden the na¬
tions
of
Western
Europe with
loans which
they cannot repay
promotes neither the cause of re¬
covery nor good international re¬
lations.
Whether assistance will
the war the United
States has extended about $12 bil¬
the
of
end
billion in
the
form
loans
of
and
property credits and $4 billion in
The assistance
has extended
been
supplemented by aid
Canada and from some South
the form of
has
from
grants.
this country
which
the
the
takes the form of dollar loans,
loans
be extended
to
are
by
Export-Import Bank with funds
provided by the Administrator.
The Act apparently envisages that
during the first year of the recovefy program dollar loans will
total about $1 billion and grants
and other forms of aid, about $4.3
lion in aid to Western Europe, $8
To
the
fullest
extent
by loans billion.
Monetary practicable, loans probably will be
Fund and the International Bank used to finance imports of capital
for Reconstruction and Develop¬ equipment and grants will be used
to finance imports of food, fuel,
ment.
American countries and
International
the
from
fertilizer
given Western Europe
prevented mass starvation,
social and economic chaos, and
The help
for
used
has
this
and
materials
raw
not
capital development.
Western
Europe
of
goods and services in the Western
Hemisphere. Such purchases will,
of
course,
greatly
exceed
the
amount of aid provided by the
United States,
and the balance
will be financed from exports of
chases
b,y
services by Western
aid extended by
and
goods
Europe, from
other
nations
the
in
Western
Hemisphere and from the use by
Western European nations of their
nationals' holdings of dollar assets
and of their own gold reserves.3,
The
dent
and
authorizes
Act
to
of
the
facilities
the
Presi¬
United
Nations, its
specialized agencies.
the
of
and
organs
The
Presi¬
dent is to transmit to the Secre¬
tary General Of the United Na¬
tions copies of reports to Congress
on the operations of the Act and,
-subject to certain qualifications,
copies of agreements concluded
the
between
United
States
participating countries
or
and
groups
of such countries.
Background of Legislation
"
The Act is full recognition by
the rpeople of the United States
of their
position of world leader¬
ship and responsibility and was
foreshadowed in Secretary Mar¬
shall's address at Harvard Univer¬
sity
June 5, 1947. On that
Secretary Marshall in¬
dited J all of Europe to join in
on
occasion
working out
a
recovery program.
His proposal for united action was
rejected by Russia. The world be¬
divided; Eastern Europe fell
under totalitarian darkness, and
Western Europe joined in a co¬
operative effort to improve its
came
economic
position and to defend
heritage of freedom, tolerance
and respect for the rights of man.
its
Few pieces of legislation in this
country have had the background
of analysis and study comparable
to that given to the Foreign As¬
sistance Act. Committees of the
v
,
2 The
the
State Department
participating
nations
estimates
will
that
purchase
billion dollars of goods and services in
the Western Hemisphere from
13
April
1948
6.8
the
by
to
July
billion
1949.
dollars
is
Of
to
1,
this
amount,
financed by
be
Recovery
exports
the
Program, 5 billion dollars
from Western Europe, and
balance,
miscellaneous
of
1,
1.2
billion
sources.
dollars,
Under
the
from
terms
the Foreign Assistance Act, the Pres¬
is
directed
to
take
appropriate
ident
steps
to
Western
program.
induce other nations
Hemisphere
to
share
;
in
the
in
the
;■V,':'*
Assistance Act di¬
the Administrator
rects
nomic
of
channels
vate
for
Eco¬
Cooperation to utilize pri¬
maximum
trade
to
consistent
extent
the
with
the
economic
recovery.
en¬
from
lumber
Eastern Europe.
If, as a result of
^operations, trade de¬
such credit
velops between Western and East¬
ern
Europe, the Bank will have
performed a constructive service.
Western
obtain
Europe will be able to
lumber and coal
grains,
from Eastern Europe and to that
extent
will
be
less
dependent
the Western Hemisphere. V
upon
Prerequisites for Success
The
chances
for the
the
European
depend
upon
of
success
Recovery Program
several
important
contingencies. These include the
adoption of necessary monetary
A
Western
of
use
the
recovery,
vide for the efficient execution of
such
rope
to be self-supporting. In part,
eral
concerted program
for European
recovery—aid has been geared to
the requirements of particular na¬
rather
and to terminate
provision of assistance. The Ad¬
ministrator is to consult on gen¬
this situation is due to the lack of
a
programs
a
basic policy matters with
or
Public
Advisory
twelve
than
more
Board of not
members, ap¬
pointed by the President with the
Western
advice and consent of the Senate.
whole.
One of the great advantages of
the present program, therefore, is
The Administrator is to be repre¬
the
that
than
to
as a
Europe
of
needs
are
coordinated.
to
be
work of the economic missions to
and
the advantages
been
has
of economic union
clear, and never before
so
the
able
situation
been
favor¬
so
for
joint action. A united
Western
Europe,
including its
dependent areas, could provide a
huge market, develop a powerful
industrial system, produce effi¬
ciently and at low cost. The salva¬
tion of Western Europe lies in
cooperative action.
Economic
fragmentation must give way to
authorized to conclude
agreements in furtherance of the
purposes of the Act with individ¬
ual
participating
countries,
or
with any number of such coun¬
tries or with an organization rep¬
resenting all participating coun¬
is
tor,
Europeans themselves are fully
aware of the interrelationships of
their economic systems and the
These
tries.
will
agreements
for close economic coopera¬
To this end the 16 nations
pledge the participating countries
joined in the establishment
of an Organization for European
Economic Cooperation. The con¬
joint action in achieving economic
recovery.
The Administrator is
tion.
make
the .most
dent
territories, to cooperate in
developing the maximum possible
interchange of goods and services,
and
to
take
such steps as lie
within their power to achieve or
to maintain currency stability and
sound
rates
of
exchange. The
function of the Organization for
European Economic Cooperation
is to implement the program for
joint recovery, to insure its ex¬
appro¬
priate agreements with the United
States
Government.
It
is
assistance
a
partici¬
pating country is not adhering to
its agreement or that assistance is
no longer consistent with the na¬
countries and depen¬
ecution, and to enter into
terminate
whenever he finds that
.
aid, to promote yvith
vigor the expansion of production
own
to
directed
have agreed to
effective use of
American
in their
country.
Third,
the
issue a "Letter
Commitment"
directly to a
in
bank
the
United
on which the commercial
bank will issue commercial letters
States,
credit to
of
the
supplier
sup¬
or
the
The
success
tional
interests
States.
In
of
the
United
'
large
vention
establishing
ization
the Organ¬
European Economic
for
Cooperation,
pledged
that
the
nations
16
they would take
steps to achieve or maintain cur¬
stability, sound rates of
exchange and confidence in their
monetary systems. Open and sup¬
pressed
inflation,
unbalanced
rency
interest
artificially low
budgets,
rates and
unrealistic rates of
ex¬
change have, to a considerable ex¬
tent, been responsible for the ab¬
sence
of
production
incentives
and
for
dollar
shortages.
Cur¬
rencies must be made convertible
so
directed not only
must be
the
budgets
balancing of govern¬
toward
also
but
actual reduction in the volume
an
rather
that
relief
than
from
respect
the
differs
and
in
must
rates
allowed
be
reflect
to
interim relief shortages in capital.
early stages of
measures.
In
the
relief aid will, of
eign Assistance Act provides, sub¬
exceed recovery aid.
ject to certain qualifications, that
It will be recalled that the For¬
program,
necessity,
Thus
the
mates
State
that
Department esti¬
the first 15
during
each
nation
receiving
aid
a
on
may
fol¬
low the execution of the program,
Committee
Joint
on
Foreign
Cooperation has been
established,
consisting
of
five
Senators and five Representatives.
In addition, the President is to
transmit to Congress at least once
a quarter a report of all opera¬
a
Economic
tions under the Act.
In
all
Quite
recently
Directors
of
Monetary Fund
the
the
Executive
International
ipating in the Recovery Program
are only to request dollars in ex¬
ceptional and unforeseen circum¬
stances.
The
will thus
<
'
debt, to stimulate
activity and, in par¬
ticular, to encourage the produc¬
of
resources
be
tion
of
short
in
materials
raw
States, etc.
The amount of such deposits in
the
terms of the total money supply
supply in the United
maintained at
will vary
greatly from nation to
the particular uses
made of such deposits will show
Recovery Program, in order that
correspondingly wide variations.
these resources will be available
If used wisely, these special de¬
for constructive use at the end
posits can be of great value in re¬
of the period. This decision is in
storing health to the currencies of
full recognition of the fact that
a
safe
reasonable level
and
dur¬
the Fund cannot function
success¬
and
Europe.
'
■a
fully in the transition period be¬
tween
the
end
of hostilities
Recovery of Germany
<r'-i
t
;-v
and
As the Committee on Foreign
resumption of normal ex¬
Relations
of the United States
change and trading relationships
Senate pointed out in its report
among
nations.
Although
its
on
the
Recovery Program, Eu¬
credit operations will be held in
rope
cannot
be
vigorous
arid
abeyance, the Fund, along with
healthy as long as Germany re¬
the Bank for International Settle¬
Western
Europe, dn
mains
frankly
aid
must take the form of.
and
to
in providing what is
be adequate super¬
machinery,
th# Marshall
program, as translated into law,
has decided advantages over pre¬
an
economic slum. -Produc¬
ments, will be able to render con¬ tion in the Western zones of Ger¬
structive aid in helping to formu¬
many is about 40%
of the 1938
late plans for monetary reform
level, lagging far behirid that of
throughout Western Europe.
the rest of Europe. This situation
The International Bank for Re¬
being geared to the needs of
visory
national
retire
decided that the
productive
partic¬
nations of Western Europe
Fund
They can be used in such a way
as to immobilize local currency, to
the
'order that Congress
thought
frankly
a
and
the
again in all of the reports on
Recovery Program. In the con¬
mental
of the European Re¬
construction and Development, on
the other hand, can
play
an
active
of
that 'a
again
Program will be measured of liquid assets swollen by war
by Europe's ability to become and
postwar deficits.
Exchange
self-supporting by June 30, 1952. rates must be adjusted to reflect
In aiming at this goal, the pro¬
differences
in
the
purchasing
gram lays emphasis on recovery
power of currencies, and interest
grants,
program
is
Europe
covery
ministration of the United States
fact
Western
toward
Program
Recovery
financial role in the reconstruction
present
encountered
reform
A
of .the
recognizes the
in
ized.
country
facing the obvious truth that much
The
reform
theme
that the surplus goods of the
participating
nations
may
be
readily
exchanged.3
Monetary
participating
Western European counterpart of
Economic
Cooperation Ad¬
Largely in Form of Grants
Reform
urgent need for monetary
for
whom the procurement is author¬
the
the
Aid
Need for Monetary
The
individual and ing the existence of the European nation,
fullest possible
to
have
tacting parties
par¬
ticipating
consultation with the Administra¬
economic union.
need
reforms, the economic
Germany, the
Western
of
grant basis must place in a spe¬
months, $4.5 billion of aid prob¬
be
sent
to
each
cial account a commensurate de¬
participating
ably will take the form of reliefcountry, and who will be the chief
posit in local currency to be used
type goods and $2.3 billion, of
under such terms and conditions
representative
of
the
United
recovery-type goods. As the pro¬
States Government to any organ¬
as
may be agreed upon between
gram gets under way, the amount
ization of participating countries
that
country
and
the
United
of relief-type goods will decline
which may be established by such
States.
These local currency de¬
and the amount of recovery-type
countries to further a joint pro¬
posits can be a weapon of great
goods will increase.
gram for European recovery.
importance in checking inflation
and in bringing about deflation.
The
Relation to Fund and Bank
Secretary of State, after
have
before
special repre¬
sentative who will coordinate the
Western
all
appraised
Never
sented abroad by a
the
to
ing country or by the person, cor¬
poration or other organization in
of
levels which enable Western Eu¬
delivered
been
have
This
viewed
against conditions at the
the war, has been sub¬
stantial, it has not yet reached
the supplier for the
pay
procured goods when these goods
formulate programs for
United States assistance, to pro¬
end
to
agree
will
pliers selected by the participat¬
funds.
revival
pro¬
Administrator
the
which
to
tries,
procurement
provided for in the Act.
First, the participating country
may expend its own dollars and
then apply to the Administrator
for
subsequent
reimbursement.
Second, the Administrator may is¬
sue to
the American supplier or
seller of goods a "Letter of Com¬
mitment," under the terms of
exercised
supervision will take many forms.
The Administrator, himself, is to
review and appraise the require¬
ments of the participating coun¬
Program
European
economic
While
the
over
be
the
for
fiscal
and
relaxation of European trade bar¬
riers and
the
growth of trade
with the Western Hemisphere.
grams are
commercial
advantage of the
will
which
vision
totals.
pre-war
another
Still
Only in Italy, Austria and Ger¬
many is production still far be¬
low
Three methods of handling pay¬
ments
of
Supervision Over Aid
eco¬
Western European current program over previous
the whole, made methods of assistance is the super¬
the
substantial
Europe
cooperation
the
request
use
aid,
indispensable
of
been
tions
Relation to United Nations
Enterprise
Administrator may
nations have, on
help
The Foreign
Whenever assistance
Since repayment.
vided by the United States.
gram.
will
The Role of Private
,
.
European nation, not now partici¬
pating, to cooperate in the pro¬
States
•
European nations to
'
nomic assistance. On the basis of
the United
finance
pur¬
advantages will contribute greatly
to its probable success.
Western
able them to obtain
reviewed
has
The aid extended by
granting assist¬
Europe. il: These
accomplishment of its pur¬
the American economy was
That this be done is ex¬
by the Harriman and be given through grants, upon poses.
Krug
Committees
and
by the payment of cash, upon credit tremely vital not only as a stimu¬
terms or other methods of pay¬ lant to private enterprise but also
President's Council of Economic
Advisers. The Act is the result ment is to be decided by the Ad¬ as a means of maintaining and en¬
of a vast amount of preliminary ministrator for Economic Cooper¬ couraging private institutions and
ation, in consultation with the organizations which will have the
study and documentation.
National Advisory Council. The responsibility of financing foreign
Previous Aid
decision in each case will be based trade at the conclusion of the
The aid authorized by the For¬ upon the character and purpose European Recovery Program. Pri¬
vate enterprise in foreign trade
eign Assistance Act is of course of the assistance and the capacity
in addition to that already pro¬ of the recipient nations to make must not be permitted to atrophy.
upon
Thus the door is left open for any
:
Western
to
ance
{■:< >rr I* y-:*'»■
dren's
:fr^, 0, Ji
COMMERCIAL & FINANCIAL CHRONICLE
THE
(2238)^®i|ii''
54
:aSs::;4sSvS>s:;
i-r'v /
■
Western
loans
ment
Europe.
Long-term
Bank can supple¬
advances by the Economic
by
results in part
tion of the
tive
the
Administration.
At
the present time the Bank is con¬
sidering a jointiloan to several
Cooperation
3
of
from the devasta¬
and in part from
war
delay in evolving a construc¬
our
Our de-
policy for Germany.
Quite recently
the Finance
the
Pact
Brussels
Ministers
Powers
(Great
France,
Belgium,
Netherlands
and Luxembourg) agreed, in principle, on
Britain,
a
method
mutual
for
the
settlement
indebtedness. J
■
of
their
Volume 167
Number 4700
THE' COMMERCIAL & FINANCIAL CHRONICLE
lay in this respect is due to our petitive
prices
the. vgoods the To this end we must be preparec
rr original punitive attitude and also
Americas desire, and if the West-/ to advocate -and
support the' eco¬
to our
inability to reach agreement ern Hemisphere nations them-* nomic measures necessary for iU
;-wlth the Soviet Uniom In retard¬ selves are ready -to relax trade success. We must be
prepared to
ing general recovery, the economic Restrictions. i
>
**".<■
lend every assistance we can to
creased
of
Germany
in¬
has
the
dependence of West¬
Europe
upon
the
United
ern
States.
Among
nations
.aken
Western
the
United
>
the lead
in
the
"Hemisphere
States
Administrator
Cooperation
has
and
to
(conceivable
every
sponsoring the
for
good-of
,r
lighten in
fashion
his
heavy burdens. Tt is he who
principles
structive
spirit of
must
of multilateral trade.
CJnder the reciprocal trade
agree¬
ments
program, - trade
accord^
itiu£t; be
with 23 nations were reached in
who
October, 1947.
program and who must determine
stimulated,
many's
revived
with
Ger¬
prewar
important
and
trade
Scandinavia,
lux and Switzerland.
Bene¬
This
be
can
accomplished only if the
hand
of
bureaucracy is
heavy
lifted
Included
These agreements
tariff
reductions
About 50% of total world
and
about 55% of
on
imports.
This
In
Order to free Germany from de¬
bilitating controls, the price sys¬
abled
United
tem in
wards
from
the
deed
German
Western
economy.
Germany,
throughout
all
of
in¬
as
Western
the
ment to
dutiable
our
has
program
States
reversing
economic
the
trend
pires
ing
Joint Resolutions has been intro¬
duced into the Congress
providing
necessary
basis for
free
a
system of prices, wages, rent and
interest in order to restore incen¬
tive to the economy and to pro¬
mote
industry
thrift.
Only
Germany make
a significant contribution to Euro¬
pean recovery.
In the promotion
of Germany's industrial recovery
it is assumed, of course, that safe¬
guards will be taken to prevent
Germany from again embarking
On a war of aggression.
then
*
and
Western
can
*
•
v " :-
..
.
*
Relaxation of Trade Barriers
From
the
time
that
Secretary
Marshall, in his now famous ad¬
dress, gave initial inspiration to
a new
approach to Europe's econ¬
problems, the urgent need of
omic
a
freer
of
movement
and
goods
services between the participating
nations has received constant em¬
phasis.
In fact,
the
Recovery
Program will have little chance
for
unless
success
quantitative
J
trade restrictions and foreign ex¬
change
controls
account
are
ated,
unless
and
current
on
ac-
progressively elimin¬
tariffs
are
made
reduced
negotiated
ex¬
trust
that this Resolution will be
adopt¬
ed, in order that this country may
Prices
try
essential
record
on
to dismiss the
where
a
•om
multilateral
some
in danger
of financial
in
are
or
and
the
economic
transfer into United States dollars
of the foreign currency income
quate
from the approved investment or
the
foreign
currency
received
in
from
This
sale
of
guarantee
the
does
guarantee
risks
the investment.
of
involved in
not
the
include
business
the investment,
analysis
superficial.
fact
and
is
that
this
the
The
of
$30 billion's worth of new
capital equipment has been set in
place in the past two years. The
recent
plain
prices
depends
much
future
country
unions and eventually of a West¬
ern European customs union.
Act
Each
of the participating na¬
pledges its cooperation in
facilitating and stimulating an in¬
tions
creasing interchange of goods and
services, in reducing barriers to
trade
with
achieving
other
as
nations
soon
as
and
in
possible
a
dollars
in¬
vested., The Act further provides
that the aggregate amount of the
of
which
be
may
issued
by
the
dition,
the
funds
for
available
multilateral system of payments.4
In entering into these commit¬
loans by the Export-Import Bank
on the authority of the Adminis¬
ments, the nations of Western Eu¬
rope have shown great courage.
tent that such guarantees are out¬
The road back to economic liber¬
standing.
alism
will
not
trator
The
relaxation of controls over import
and export trade will necessitate
internal
and
prove
industrial
force
the
adjustments
elimination
of in¬
Yet the
relaxation, of such controls
is
es¬
'if the consuming market
is to be enlarged, if economic re¬
sources,
including the labor
sup¬
ply, are to be used most effective¬
ly and if uneconomic enterprises
are to
ex¬
easy.
ternal economic controls.
sential
to be reduced to the
are
be eliminated.
1
It is to be hoped that a customs
of
sources
Western Europe
dollars
tourism and
The Administrator is
private aid.
are
directed to facilitate and
foreign
age
for
travel
by
encour¬
American
citizens tb the
participating conn*
He is also instructed to use,
tries.
insofar as
practicable, funds made
I
use
of the depos¬
its of local currency to pay for¬
union, including all of the West¬
European nations and their eign transportation costs.
colonial dependencies, may event¬
Evaluation of Present Program '
ually be organized. Good progress
The goal of the present program
has been made towards the estab¬
is to assist in making Europe selflishment
of
regional
customs
This
unions.
The accomplishments of supporting by June 30, 1952.
Belgium, the Netherlands and goal can be realized if "Europe's
ern
(8)
Turkey and between Den¬
mark, Norway, Sweden and Ice¬
land.
Perhaps,
eventually,
the
Hemisphere stands ready
United
States
and
Canada
may
add
their strength to a Western
European customs union.
Need
for Greater Trade
Western
with
receive
to
the
among themselves, the na¬
tions of Western Europe must sell
and
to
an
increase
trade
a
'larger volume of their products
td the Western Hemisphere.
This
redirection of Europe's trade will
occur
if
Europe produces at
4 Resolutions
ropean
com¬
and
To list the pre¬
success is to state
These difficulties are
With courage
determination, with wisdom
statesmanship, they can be
overcome
and the economic life of
Europe given
Each
aware
one
new
of
us
vitality.
must
be
«
*
fully
of the nature of the prob¬
lem and be ready to cooperate to
the fullest extent in its solution.
pf the Committee of Eu¬
Economic Cooperation.
tourism
encouraged.
not insurmountable.
and
addition
of
requisites for
the problem and to emphasize its
in
In
investment
difficulties.
Hemisphere
manufacturers
participating nations, and if
private
are
the
5 H.
J. Res. 335.:.*''u*--'
,
be
52%
This
in¬
The largest single factor in
the current
This
represents
the
to about 3%
product
of
total national
our
and
hardly seems large
enough, taking other bearish fac¬
tors
into consideration, to
pre¬
cipitate a new major wave of in¬
flation.
1
i
,
,
It
seems
obvious, then, that the
future of prices and production in
this country will depend largely
upon
the character of
and
military
foreign
our
policies.
Current
of
continued high ac¬
tivity and of further inflation are
clearly based upon the assumption
future foreign policy
require increasing expendi¬
ture^ for armaments.\ Many able
our own
will
observers take the view that there!
is no way to stop Russia except
by overwhelming military power.
view clearly suggests that
This
all-out
rearmament
essary.
On
the
thoughtful
will
other
persons
be
some
arguing
are
an
element of
hysteria and unreasonable
in
recent
our
appre¬
attitudes
They
say that in the war of nerves,
Russia has found there are defi¬
nite
limits to the
extent
she
can
advance without
reprisals, or even
They argue, that it is most
improbable
that
Russia
would
war.
deliberately seek
a war now or
in
inflation—namely, the
If
new
relations
four
deteriorate
are
tending to
Department of
The
Commerce
opinion:
nec¬
hand,
that there has been
level
out.
ag¬
gregate
inflationary
influence
during the next year of recent
political developments. It amounts
capital equipment—is
reports "There is
.
.
.
definite indication of the
called
with
further,
upon
Russia
that
we
all-out
re¬
so
for
armament, then prices will almost
surely rise and government con¬
(1) Prices have not been rising
for
significantly
nearly
six
some important price
levelling
out of
capital outlays, which
contrasts with the rapid upward
surge of expenditures since the
trol:. will be necessary. If we fol¬
low that road, the problems of
reductions
end of the
more
.
months, and
have
occurred.
example, several of
For
largest in¬
dustrial companies have been re¬
ducing prices and at the same
time resisting further wage in¬
our
.
.
In
war.
fact, the vol¬
of capital expansion
ume
by business for 1948
planned
in physi¬
may
cal terms be somewhat below the
rate in the
closing months of last
year."
In
the
same
vein,
the
McGraw-Hill Survey shows that
(2) The stage of building up in¬
filling pipelines is "American manufacturing com¬
apparently about completed.
In panies
had
completed, on
the
fact, much of the inventory in¬ whole 64% of their postwar ex¬
crease during the past year
was pansion programs at the end of
due to rising prices rather than 1947.
By the end of 1948, they
to an increasing physical volume
expect to have 85% complete."
ventories and
of goods.
These
end
1945 and bank
deposits
are
same
thht
as
beginning of the recent war.
Today we have no slack in the
form
of unemployed people, sur¬
plus plant capacity and supplies of
raw
materials, so every dollar's
worth of wartime production will
be at the expense of peacetime
production.
SoImssenRetires From SEC
Kurt
A.
to become
French
the
Inflationary
Hump?
On the basis of these considera¬
adjustment between the
supply and the price level
tions, it
seems
that
pose
we
reasonable to
would
be
sup¬
over
the
new
in¬
President
(Del.)
been
a
with
the
may
this
of
and
year..
Eastern
In
these
to the domestic econ¬
thetic
resins.
Since
1943
he
has
foreign investment expert
SEC
and
a
member
of
the executive staff.
omy.
First, the Marshall Plan. Even
with
our
the
total
enactment
net
of
exports
the ECA,
will prob¬
ably not be greater than those of
last year. Last year's exports were
financed from the British loan,
from credits of the Export-Import
seven
cities
mean
what
of
Synvar Corp. of
Wilmington, manufacturer of syn¬
inflationary hump if the
see
SEC he was
the
Wilmington
President of the
occurred.
us
the
Chemical Corp. and Vice-
ternational developments had not
Let
Smith, Kline
Corp.
Inter-American
joining
(4) The money market is per¬
ceptibly tighter.
It is harder to
get loans, (and interest rates are
March
analyst for
Executive Assistant to
the President of the
has been attained.
Northern
Solmssen,
&
Over
at the end of
an
money
inestimably
the
Before
Also, there is good evidence
level
be
in the American economy today.
of
1946.
will
difficult than they were at
the Securities and Exchange Com¬
mission is leaving the Commission
about
at the
conversion
indications
are
of
great
significance because the capital
expenditures of business are per¬
haps the major inflationary force
Luxembourg in this respect pro¬ monetary and. fiscal problems are higher. For example, the average
vide real inspiration.
Conversa¬ resolved, if German production rate charged customers
by New
tions : are
proceeding
between revives, if trade barriers in West¬ York banks has increased from
France and Italy, between Greece ern Europe are
relaxed, if the
1.17% in,Sept., 1947, to 2.09% in
Western
and
industries will
than in 1939.
expenditures of business for
(3) The money supply has not
available to him to pay ocean
been increasing for some time.
freight charges on relief packages
Money in circulation has remained
and to arrange with foreign gov¬
about constant since the
ernments for the
may
toward the Russian problem.
creasing flow of goods will un¬
doubtedly have a decisive influ¬
ence on prices.
creases.
Tourism and Private Aid
Other
reduction
hension
greater
may
this
Expansion
turing
we are not called upon to under¬
guarantees shall not exceed $300,- take a large-scale rearmament. I
000,000, not more than $15,000,000 can cite at least eight reasons for
Administrator in the first year of
the operation of the Act.
In ad¬
tax
than $5 billion per year
funds of the
expendable
is complete, the productive
capacity of American manufac¬
venture the opinion that we
have reached the end of in¬
flation irr this""Cduntry, provided
of
Survey of
indicates that
gram
domestic demand and supply.
ability of funds is limited by the
the amount
certain
on
when the postwar expansion pro¬
on
and the guarantee of the transfer¬
McGraw-Hill
Capital
the course of political
Moscow, Paris, London,
Manchuria,
Buenos
Aires
and
Washington than it does upon
mere
changes in the relation of
more
is too early to be
crops, though
the
Over
inade¬
are
the
to
the
more
the
that
course, it
of good
goods has increased tremendously.
events in
the
Third,
add
pressure
materials.
forecasts
are
sonably good estimates.
(7) The capacity of American
industry
to
produce
consumer
our
of
prices
winter wheat crop in this country
is far enough along to make rea¬
invest directly in projects in a
are
so
inextricably interwoven
participating
country approved
by the Administrator as- further¬ with political affairs, and, in fact,
ing the purposes of the Act. Un-: so dominated by them, that the
der the terms of the
Act, he is usual calculations and techniques
guarantee
outlook, both here
crop
sure
whole
present disturbed apd dis¬
traught world, economic affairs
-
additional
scarce
Of
intimately con¬
complex
fabric of economic and political
affairs, both at home and abroad.
The Foreign Assistance Act rec¬
ognizes the desirability of encour¬
aging United States investors to In
to
could hardly have a
major
inflationary impact upon the total
economy, though it might place
expected both by
the
Department of Agriculture
and private experts in this field.
Prices
the
operations will be de¬
abroad, is excellent and lower
food
The question of prices, produc¬
nected with
•■/'C-'-s '-^v/YY
'•
so-called general and
expenditures, and the net ef¬
(6) The
tion and profits, is
^
the
as
flationary.
Situation and
Future
11)
page
fect of its
This is not to say, how¬
that further price increases
out of the question.
International
transactions.
-
itself
American people. Rearmament and
tax
reduction together total
special accounts, are included. In
other words, the Treasury is and
will be taking more from the
American people than it pays out
collapse.
private enterprise in international
Private Investment
expenditures during the next fis¬
cal year ending June 30, 1949. An
expenditure of this magnitude by
to
Profits
well
coun¬
view, held by
alarmists, that we
of hyper-inflation
freer trade, which are
for the maintenance of
empowered
na¬
officially proposed, including
the 70-group air force, would add
about $3 billion
to government
liberty
independence in the free
ar id
experienced wild infla¬
tion so long as those conditions
have prevailed.
So I should like
are
promote
essen¬
tions of .the world.
em-
has
desire
to
of the
provide
healthy economic basis
and
ever,
and
will
tial to the maintenance of
(Continued i
again give tangible evidence of its
trade
success
now
$8
no. case
three-year extension. I
a
have
establishment of regional customs
progress
towards
for
States
The
program
nar¬
imme¬
own
55
second factor. This
program, as
a
billion.
agree¬
the 12th of June, and a
on
United
under
must be directecL towards provid¬
been
diate interests.
the
his
of
the
As
ments
a
the
and
rises above the
man
Marshall
whole
whether it should be terminated.
The nations of Western
Europe
to¬
nationalism.
the authority
reciprocal trade
have
the
and if
en¬
Europe, must become functional
in. ; character. Monetary reform
which
supervise
ad¬
Govern¬
know,
you
must
the
above
placed
nationalism,
confines
row
allocate the funds, who must de¬
cide between loans and
grants,
exert considerable influ¬
in
ence
on
imports
,
is
all
if
vantage to the few, if constructive
internationalism
supersedes
de¬
Economic
In. particular, the coal, iron and
steel,
and
chemical
industries
.
It will succeed
endeavor.
.
paraiysis
(2239)
barked together on a great experi¬
ment in international cooperative
sur¬
veyed by ^the Federal Reserve
Board,
the
increase was
from
R. H. Johnson & Co. Adds
Five
to
Sales Staff
R. H. Johnson & Co.
that
five
new
men
added to its sales staff.
announces
have
been
John Han-
Monetary Fund, and by drawing
down large dollar balances that
had been accumulated by various
foreign countries. The ECA will
be a replacement program to pre¬
vent what would otherwise inevit¬
way,
John J. Daly and George
Goodwyn have joined the New
York office, 64 Wall Street, Guy
H. Campbell the Washington of¬
fice, Shoreham Building, and Edmond Kearsley Hartley the Phila¬
delphia office, 1528 Walnut Street.
ably v-hav^ -been a sharp curtail¬
few billions, and ment of exports. The net effect of
even
this may disappear as ex¬ the ECA can hardly be regarded
a
new
penditures mount, the actual cash as
inflationary factor.
surplus of income over outgo will Rather, it is a counter-deflationary
N. Y—John
A. Carroll is engaging in a securi¬
2.25
in
March
Sept.,
1947, to
2.52%
Bank
in
of this year.
You are, of
course, familiar with the increased
yields on the various classes of
Federal securities.
(5) The
tains
a
though
Federal
substantial
the
formal
surplus is only
nevertheless
budget
surplus.
con¬
Al¬
and
of
the
International
bookkeeping
a
be
factor.
substantial if the
trust accounts of the Treasury, as
-
The
new
•
;
rearmament program is
Carroll
in
Schenectady
SCHENECTADY,
ties business from offices at; 1055
Wendell Avenue.
•
6»jr'; f-^l 'A; VA<; <¥-
*to*r^«: ^^ZbWlVRpyMTA1**
56
in
Securities'Now
Air Lanes,
.$10 per share and common 1 cent. For plant and equip¬
working capital. Underwriter—Frederick
ment costs and
•
Alaskan
May
Southern
,
Airlines,
stock.
No underwriting.
for operating costs,
7
(letter
Inc. and
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 subscription on
for each pre¬
of new common for
each common share held.
Price by amendment.
Pro¬
ceeds—For construction and repayment of bank loans-
To
sold
be
each
$12
at
par)
Robert W.
to
Hadley, President of the company, and Harold F. Smith,
Treasurer, for working capital.
No underwriting.
>
'
Y.
AmpaI - American Palestine Trading Corp., N.
.April 7 filed $10,000,000 10-year 3% sinking fund deben¬
tures.
Underwriter—Name to be filed by amendment,
It any is used.
Proceeds — $5,000,000 in mortgage loans
for construction of housing in Palestine, $2,500,000 in
Scans to transportation and industrial cooperatives, and
$2,200,000 in loan to Solel Boneh, Ltd., for public works.
Anchor
Steel
&
Detroit
April 19 (letter of notification) 100,000 shares ($1 par)
•common stock for company and 20,000 shares for Frank
J.. Shude, President.
Price—$2.50 each. Underwriters—
H. G. McDonald & Co., Detroit and Investment Securities
Co., Jackson, Mich. For working capital.
.
•
AndaJe
Co.,
Conveyor Co.,
Philadelphia
May 17 (letter of notification)
ferred
stock
1,500 shares of 5%
pre¬
Underwriting,
Company also proposes to offer to holders of
7% first preferred stock (par $100) the opportunity to
exchange their shares for new 5% preferred on the basis
ot 1.07 shares of 5% preferred for each share of 7% pre¬
ferred.
This will require 802% shares of new preferred.
$100).
(par
Price,
par.
tione.
Proceeds—For corporate purposes.
Angus Mines, Ltd., Montreal, Canada
Feb. 12 filed 600,000 shares of common capital stock
jpar).
Underwriter—James A.
York.
•
($1
Metals, Inc., Seattle, Wash.
Price—50 cents.
mining
Cal.
property
No
in
To explore, develop and
Amador
County
and
equip
Downieville,
underwriting.
•
August Oil Co., Los Angeles
May 12 (letter of notification) 50,000 shares of common
stock, to be offered by O. L. Johnson, President of the
company, to
security brokers Greenfield Lax & Co., New
yoTk, and Robert Cass/ Los Angeles.;,
•
Bankers Fire & Marine Insurance Co.,
ing.
•
Bettinger Enamel Corp., Waltham, Mass.
May 12 (letter of notification) $47,600 of 7% cumulative
preferred stock ($100 par).
Price, par.
For working
capital and equipment.
No underwriting.
•
Big Horn-Powder River Corp., Denver
May 14 (letter of notification) 100,000 shares ($1 par)
common
stock.
Price—Par.
To explore, develop and
produce from oil properties. No underwriting.
•
Botany Mills, Inc., Passaic, N. J.
May 10 (letter of notification) 2,000'shares of
stock.
Price—$16
common
360,000 shares (no par) common stock.-Underwriters
of common by amendment (probably Coffin & Burr).
Bonds to be placed privately.
Proceeds—For a construc¬
tion program and
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
Challenger Airlines
at $27 per share.
Common is to be offered
only to present stockholders. To increase working capi¬
No
underwriting.
California
Electric
Power
Co.
(6/1-4)
May 3 filed $2,500,000 first mortgage bonds, due 1978.
Underwriters—Names to be determined by competitive
Probable bidders include: Blyth & Co. Inc.:
Lidding.
Halsey, Stuart & Co. Inc.; Kidder, Peabody & Co.: Har?:
riman, Ripley & Co.
^nd for construction.
;!
t >
Central
Salt
Co.,
purchase and general funds.
Maine
Proceeds—To retire
bank notes
Expected first week in June. !
Power
Channel
Wing Aircraft Corp., Wisconsin
Rapids, Wis.
May 12 (letter of notification) 30,000 shares ($10 par)
common stock.
Price, par.
To develop patents and get
into production.
No underwriting.
Clinton
(Iowa)
Industries,
Under-
.writing—-Company called ,for .competitive bids Dec. 8,
make contingent subscriptions for any shares not sub¬
scribed
for
by exercise of firm subscription, subject to
Atlas
consolidated
Corp., holder of 11.4%
of outstanding
will exercise its subscription rights
to purchase enough stock to assure Consolidated a return
of
stock,
from
$7,000,000
Price
None.
eral
funds
the
stock
by amendment.
for
offering. Underwriting—
Proceeds—Added to gen¬
manufacture
Consumers
commercial
of
transport*
Cooperative Assoc., -Kansas City,
Missouri
Oct.
-
,
.
•
$1,000,000 4% non-cumulative common
stock ($25 par); $4,000,000 of 3%% certificates of in¬
debtedness cumulative; and $1,000,000 of lVz% loan
certificates cumulative. No underwriting. Offering—To
16
filed
the public.
Common may be bought only by patrons and
Price—At face amount. Proceeds—For acqui¬
members.
sition of additionai office and
plant facilities.
Jackson,
Consumers
Power
Co.,
Mich.
May 18 filed 200,000 shares of cumulative (no par) .pre¬
ferred stock.
Underwriters — To be determined under
competitive bidding.
Probable bidders: Harriman Rip¬
ley & Co. and The First Boston Corp. (jointly); Morgan
Stanley & Co.; White, Weld & Co. and Shields & Co:
(jointly).
Proceeds—To acquire property, construct and
expand facilities.
>•
,
Clinton
(Mich.)
(letter of notification) 10,000 shares of stock
to be sold at $5^*each (market price), for selling stock¬
holder. Underwriter^—Charles E* Bailey & Co., Detroit.
Coastal
Plywood
&
Timber
Cloverdale,
Co.,
California
(letter of notification) 50 shares of class A
($2,500 par). Price—$3,500.f For timber contracts
general corporate purposes.
No underwriting.
14
stock
and
•
Coca-Cola Bottling Co. of St. Louis, Mo.
May 14 (letter of notification) 1,365 shares ($1 par) com¬
mon stock.
Tq be offered to employees at $32.50. For
corporate funds. 'f
•
Stamm
Inc.
shares of pre¬
ferred stock and 100,000 shares of common stock.
Price
—$3 per unit of one share of each.
Underwriter—H. B.
Burr & Co. is exclusive selling agent. The selling agree¬
ment requires Burr to sell 40,000 units within 90 days,
an additional 30,000 units 180 days thereafter and a fur¬
ther 30,000 units within 210 days thereafter.
Proceeds—
Will be used to manufacture television sets, purchase
test and production equipment for plant.
Edison
Co.
100,000
of
N.
Y., Inc.
March 1 filed $57,382,600 of 3% convertible debentures,
due 1963.
Convertible into common stock at $25.
Offer¬
ing—Common stockholders of record May 20 are given
right to subscribe for debentures in ratio of $5 of deben¬
tures
for each
—
held.
share
awarded
May
underwriting
Co.
(5/24-28)
5%% sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
($1 par) common stock, t^jnderwriter—P. W. Brooks &
Co., Inc., New York. Proceeds—To retire secured in¬
debtedness, finance inventories and supplement working
Price,
capital.
Denver
•
par.
Icedrome, Inc., Denver
of common
stock, to be offered at $1, and $11,250 5% 15-year de¬
benture notes to be issued at $10. To promote and build
an ice rink.
No underwriting.
Dixie Fasteners,
Inc., Chattanooga, Tenn.
April 14 (letter of notification) 75,000 shares of class B
common stock (no par) of which 45,000 will be offered
to the public at $1 each.
For additional working capital,
machinery and equipment.
Equipment
Feb. 26 filed
Offering—To
Finance
III.
Chicago,
Corp.,
Rights expire June 8.
Un¬
Unsubscribed debentures underwritten by
The issue
was
18, the underwriters paying $1,000 the
privilege.
Proceeds—To redeem 273,566
Equitable Gas Co.,
Pittsburgh, Pa.
(6/8)
May 6 filed $14,000,000 first mortgage bonds, due 1973.
Underwriters—Names to be determined by competitive
First
Probable bidders: Halsey, Stuart & Co., Inc.;
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
563,000 shares of new common stock, will be
delivered
Philadelphia Co. in exchange for natural gas
properties now under lease, outstanding capital stock of
Equitable, notes and other claims owed to the Phila¬
delphia Co. and to the Pittsburgh and West Virginia
Gas Co. Expected about June 8.to
the
Fairview Lead Silver
•
Mining Co., San Francisco
May 14 (letter of notification) $100,000 non-interest
bearing 10-year notes and 50,000 shares ($1 par) non¬
assessable common stock.
Price, to be offered in units
of
op
$2 note and one share of stock for $2.
one
and equip mining property.
To devel¬
No underwriting.
and
Creek
Falls
Mining
working capital.
Co.,
No underwriting.
,)C'zi,
and
V
HAWAIIAN SECURITIES
Direct
Private
llililili
Wires
.
Dean Witter
&
Co.
.
MEMBERS
New York Stock
San Francisco Stock Exchange
Exchange
Honolulu Stock Exchange
y°RK
Bosto*.\,
Private Wires
to
Pittsburgh
Offices in other Principal
';
Chicago
Cities''''- f
14
WALL
:V" "V '* "r* >*?>
'
\
i'l
j>.
y-t'i
J SAN FRANCISCO
>
•
Los Angeles Stock Exchange
STREET, NEW YORK
■vrJKC.
r
BROKERS
DSALERS
UNDERWRITERS
'''
Telephone BArclay 7-4300
i# V/ LOS ANGELES
:
^
'i
*•?; -i
HONOLULU
I
Seward, Alaska
May 13 (letter of notification) 500,000 shares (10c par)
common
stock.
Price—Par.
For machinery, equipment
•
PACIFIC COAST
■
;
15,000 shares ($100 par) preferred stock.
to employees and officers of the
be sold
and its parent, Curtiss Candy Co.
Price—$100
share. Proceeds—To be used for trucks in connec¬
tion with the Curtiss' franchise method of distribution.
The
Consolidated
Manufacturing
Crampton
bidding.
York.
(letter of notification)
'}
Feb. 5 filed $600,000 first mortgage
New
18
D. C.
Inc., Washington,
.
& Co., E. F. Hutton & Co., Ungerleider & Co.,
Hamerschlag, Borg & Co.; Thomson & McKinnon, all of
Columbia Television,
Co.,
May 14 (letter of notification) 60 shares (no par) stock.
Price—$10
To buy inventory of pharmaceutical sup¬
plies and for general corporate purposes.
No under¬
writing.
i
Price—Market
New
a
&
per
Fuel & Iron., Corp.
(letter of notification) 6,000 shares of common
(about $15.37).
To be sold for
York brokerage
firm.
Underwriters — A. L.
stock.
K.)
(E.
company
No underwriting.
Colorado
May 13
Cook
May 14 (letter of notification) 112,500 shares
Machine Co.
April 15
May
•
•
bank loans.
Halsey, Stuart & Co. Inc. and associates.
common.
In addition the stockholders will be given the right to
Inc.
due 1963.
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.
Statement may
be withdrawn as company has obtained funds through
derwriters
Co.
Nov. 10 filed 160,000 shares ($10 par)
the right under a firm subscription to subscribe for the
stock at the rate of one new share for each share held.
.
•
•
common
Corp.
common stock.
Offering—Stockholders of record May 28 will be given
rolling mill, equipment and for
working capital.
May
•
Aireraft
e
Proceeds—To purchase
share. To be sold through Greene,
Ellis & Anderson, New
York, for the account of Louis H.
tal.
repair of flood damages.
Century Steel Corp., Hollydale, Calif.
Nov. 10 filed 4,000 shares ($100 par) common. Under¬
writing—None. Shares will be sold at par by directors.
per
Brass & Copper Sales Co., St.
Louis, Mo.
May 11 (letter of notification) 4,621 shares of 5% cumu¬
lative preferred stock ($20 par) and 541 shares of
($10
par) common stock. Preferred will be sold at par and
Consolidated Vultee
May 5 fited 1,159,849: shares ($1 par)
E first mortgage bonds
March 30 filed $1,500,000 Series
Hall.
*
reimburse
and
•
Birmingham, Ala.
April 27 (letter of notification) 25,845 shares of common
atock.
Price—$8.
To be sold to existing stockholders
only.
To increase capital and surplus.
No underwrit¬
to
planes.
Corp.
Service
Public
Vermont
March 26 filed $7,000,000 15-year debentures,
Underwriters — Smith, Barney & Co., New
May 5 (letter of notification) 200,000 shares of common
stock.
($100 par) cumulative pre¬
ferred. Underwriters—Lehman Brothers; Glore, Forgan
$c Co., Deyvar, Robertson & Paricoast.
Proceeds—For
property additions and expenses. On April 15, SEC de¬
nied effectiveness of registration statement.
?
Central
outstanding $5 cumulative preferred stock and
treasury for expansion expenditures, &c.
shares of
allotment.
Nov. 21 filed 40,000 shares
Robb, 70 Pine St., New
Proceeds—To develop gold prospects.
Associated
share and one-tenth share
ferred
■*;
ISSUE
Central Power &. Light Co.
Body Co., Cleveland
of notification) 10,112 shares ($5
stock.
common
PREVIOUS
and only one bid, that of Blyth & Co.,
Kidder, Peabody & Co. was submitted and was
American Coach &
May
SINCE
the basis of one-half share of new common
Inc., Seattle
(letter of notification) 5,000 shares ($10 par)
Price—$10. To buy and rent planes and
12
common
Registration
1947
Inc., Portland, Me.
April 26 (letter of notification) 10,000 shares of preferred
atock and 10,000 shares of common.
Price—Preferred,
C. Adams & Co., Boston.
ADDITIONS
INDICATES
•
Thursday, May 20, 194&
CHRONICLE
FINANCIAL
&
COMMERCIAL
THE
(2240)
*,
*
i
.
'
'
'*
*
'J.
£1-9.
"Volume 167J Number 4700
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2241)
the
right to subscribe, at $4 per share, prior to 3 p.m.
(EDT) on June 10, on an unlimited basis for shares of
NEW ISSUE CALENDAR
preferred
(EOT)
noon
_Equip. Trust Ctfs.
May 24, 1948
Crampton Manufacturing
„
M. H. Lamston, Inc._
i
_____-.-__-;-;_Preferred
General
N.
Union
Gypsum
Electric
Noon
Common
,
of
Mo.
(EDT)
of
Debentures
each.
Underwriting—None.
expenses,
•
May 28, 1948
May 27,
ir
i
i
»j
t
California
Electric
1,
.Debentures
•*"
,
,
-J"
4
Power Co
Bonds
Common
Segal Lock & Hardware Co
Debentures
2, 1948
Bonds
8, 1948
ing capital.
Equitable Gas Light Co
Bonds
Bonds
June
Kansas
14, 1946
City Power & Light Co
Federal
mon
stock.
Price—$1
each.
To
be
com¬
sold
by Drew C.
Underwriter—C.
Haneline, President of the company.
G. McDonald & Co., Detroit.
Mines
Ltd., Toronto, Canada
.April 16 filed 200,000 shares of treasury stock.
writer—Mark Daniels & Co., Toronto. Price—$1
^Proceeds—For mining and business costs.
Under¬
a
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
Angeles, Riverside, Colton and San Ber¬
nardino 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¬
man
Brothers; Drexel & Co.
Proceeds—To pay off
.'$4,000,000 in indebtedness owing to the Central Hanover
Bank & Trust Co., New-Yoik, and to meet construction
•costs.
Expected about June 8.
Flotill
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
<par $1).
Underwriter — Floyd D. Cerf Co., Chicago.
^IPrice—preferred $10: common $6.
Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
•common
shares and
company
125,000
preferred • shares
'5ind 75,000 common shares.
Company's oroceeds will be
•used for general corporate purposes. Effective
May 5.
Fraser Products Co.,
Detroit, Mich.
*Oct. 21 filed 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.
Gamble-Skogmo, Inc.,
Minneapolis
%(5/25)
writers—Goldman, Sachs & Co. and Merrill Lynch,
"Pierce. Fenner & Beane, New York, and Piper, Jaffray
Hopwood,
ceeds—To
Minneapolis.
reduce
Price by amendment.
short-term
bank
Pro¬
loans totaling
$13,-
850,000.
#
Jan.
Products, Inc., Oxford,
Pa.
(EDT)
for
stock
on
shares
the
right to
June 3 shares of
of
preferred
preferred for four
exchange
common
now
common
offered
prior
stock
on
to
3
p.m.
of company
basis of one
(or less than four shares of
mnmon plus cash at rate of $1
per share of common);
to holders of prefererd stock
(including holders of
preferred how offered in exchange for common) and to
Ub)
employees of company, and its subsidiaries and of ap¬
proximately 20 affiliated companies, owned, managed or
controlled by John H.
Ware, 3rd, President of company,
Co.',
Ltd.,
Island
-
N.^Y.
Kansas
bidding.
Probable
New York.
and
subsidiaries.
ers
of
Inc.,
Price—$13.50.
record
each four
Offering—Offered stockhold¬
May 10 at the rate of one new share for
held.
Rights expire May 24.
working capital,
,
.
«
ferred
stock.
Underwriters
bidding; Probable bidders
Co.; Hemphill, Noyes & Co.
Kidder, Peabody & Co.; W.
Brothers and Glore, Forgan
—To be applied toward a
pected June 1.
•
North American
North
March
New
11
'
May
filed
North
Ex¬
V
Oils
Limited, Calgary, Alberta
903.572
shares (no par) common stock.
Underwriter—F. H. Winter & Co.,
Proceeds—875,000 shares being sold by
28,572 by stockholders. Proceeds for pur¬
Inca
Gold
drilling.
Mines, Ltd.
March 10 filed 666,667 shares of common stock
(par $1).
Underwriter—Transamerica Mining Co., Ltd., Toronto*
Proceeds for exploration and development.
Nuera Products Co., Denver, Colo.
May 10 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 and
of
two
will
common
build, furnish and tool
000 to
Sheboygan,
"'i'-v
be
a
sold for $100.
Proceeds—To
factory and apply close to $500,-
working capital.
Ocean Downs Racing
Association, Inc.,
Berlin, Md.
Nov.
28 filed
derwriting.
trotting and
Inc., Toledo
•
(letter of notification) 1,600 shares of class A
stock.
Price—$100. For working capital. No
55,900 shares ($10 par) common. No un¬
Price — $10 a share.
Proceeds—To build
pacing
race
track
near
Old Colony Finance Corp.,
May 17
Ocean
City, Md.
Mt. Rainier, Md.
*
(letter of notification) $75,000 6% 10-year de¬
Price, par. For working capital.
No under¬
bentures.
underwriting.
writing.
Lakeside Laboratories,
Inc., Milwaukee, Wis.
Old North State Insurance Co., Greenville, N. C«
15 filed 100,000 shares of capital stock ($5 par).
May 7 (letter of notification) 1,000 shares ($1 par) com¬
mon
stock.
Price—$6.50 each.
Underwriter—Loewi &
March
Price—$15 each. v. Underwriter—First Securities Corp.,
Durham, N. C.
Proceeds—General business purposes.
For working capital.
York (5/24-28)
shares of 6% cumu¬
lative preferred stock (par $25) and 7,060 common stock
purchase warrants. Price—$25 per unit of one preferred
share and one warrant.
Underwriters—Childs, Jeffries
& Thorndike, Inc., Aetna Securities Corp. and Syie &
Co., New York. Business expansion.
Lamston
York.
company and
Price—$1 per share.
14
program.
r'
Canadian
chase of property and
March 22 filed 1,500,000 shares ($1 par) common stock.
Underwriter—Heronymus & Co., Sheboygan, Wis. Pro¬
ceeds—To open and equip bottling plants in California
common
C. Langley & Co.; Lehman
(jointly).
Proceeds
& Co.
construction
Aviation, Inc., Los Angeles
Price—70 cents each.
Underwriters—Buckley Brothers, Los Angeles. The de¬
bentures were sold for working capital.
The two men
have already sold the 30,000 shares to Buckley Brothers,
who in turn has offered them at market prices of from
1% to 2.
The 30,000 shares were attained through con¬
version of $45,000 of the debentures.
Foods,
by'competitive
ceeds—Proceeds will go to General Motors
Corp., owner
of the shares.
($1 par) common stock, sold to H. Barkley Johnson and
James J. McQuaid.
Also, 30,000 shares ($1 par) com¬
mon stock to be sold for Messrs. Johnson and McQuaid.
Kuehmann
Names
—
include: Harriman Ripley &
and Drexel & Co. (jointly);
May 14 filed 1,000,061 shares of capital stock (par $1>*
Underwriter—Morgan Stanley & Co., New York.
Pro¬
May 10 (letter of notification) $100,000 5% convertible
debentures, due 1953, convertible into 66,666 shares of
Wisconsin
.
New York State Electric & Gas
Corp. (6/1)
April 30 filed 35,000 shares ($100 par) cumulative pre¬
Lansing, Mich.
Kool-Aid Bottling Co., Inc. of Calif.,
Proceeds—For
.
—
Manufacturing Co.,
Halsey,
Price and interest rate to be filed
by amend¬
New York.
City
Kold-Hold
include:
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..
(Mo.) Power & Light Co. (6/14)
May 14 filed $12,000,000 first mortgage bonds due 1978
and 80,000 shares of cumulative preferred stock (par
$100).
Underwriters — Names will be determined by
competitive bidding.
Probable bidders: Halsey, Stuart
& Co. Inc. (bonds only); The First Boston Corp.; Kuhn,
Loeb & Co.; Salomon Bros.'& Hutzler and Union Secur¬
ities Corp. (jointly); Lehman Brothers; Glore, Forgan &
Co. and W. C. Langley & Co. (jointly); Shields & Co.,
White, Weld & Co. and Central Republic Co. (jointly).
Proceeds
To acquire and construct additional prop¬
erty and retire $3,860,000 of 1%% notes issued for in¬
terim financing. Bids are expected to be opened June 14.
•
bidders
ment, Proceeds—To be added to general funds for a plant
and equipment replacement program for the
company;
May 4 (letter of notification) 40,000 shares of common
stock (par $1). Price—$2.50 per share. Underwriter—
E. P. Frazee & Co., Inc. Funds for purchase of equip¬
ment and facilities and working capital.
•
and gas utility
National Dairy Prod
(5/27)
May 12 filed $30,000,000 of debentures, due 1970. Under¬
writers—Goldman, Sachs & Co. and Lehman Brothers;
Sherbrooke,
Ferries,^Inc^ Bohemia,
in expanding electric
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
loans and continue a construction
program,
\,
>
Air
r>
Business—Utility.
Stuart & Co.
1,500,000 shares ($1 par) common stock.
Underwriter—Paul E. Frechette, Hartford, Conn., is the
U. S. authorized agent and principal underwriter. Price
—$1 each.
Proceeds—To construct milling plant and
purchase equipment.
•
May 13 (letter of notification) 36,574 shares of preferred
stock (par $1). Company is
offering (a) to holders of its
common
petitive
filed
30
Co., Milwaukee.
Gas-Oil
Asbestos
Co., Minneapolis,
Narragansett Electric Co.
(6/2)
Quebec
Utilities
March 30 filed $10,000,000 Series B first
mortgage bonds^
1978.
Underwriter—To be determined under com¬
Tom G. Taylor & Co., Missoula,
Telephone Co.
International
•
March 30 filed 120,000 shares ($50 par) cumulative
pre¬
ferred stock, convertible prior to July 31, 1958.
Under¬
«&
Bell
company.
Blair & Co.„
shares
due
April 30 filed $60,000,000 series B first mortgage bonds,
due 1978.
Underwriters—Names determined by com¬
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 purposes.
Expect¬
cities.
h
ceeds—To be used
Mont.
Price—$300 per unit, consisting of two shares of
preferred and 10 shares of common stock. Proceeds—rTo
erect and operate a bleached sulphate pulp mill with a
200-ton per day capacity.
Business—Pulp and paper.
Illinois
Montana-Dakota
property.
Idaho-Montana
—
addi¬
directors
May 18 filed 150,000 shares ($5 par) common stock. Un¬
derwriters—Blyth & Co., Inc., and Merrill Lynch, Pierce,
Fenner & Beane, New York.
Price, by amendment. Pro¬
Pulp & Paper Co., Poison, Mont.
May 17 filed 100,000 shares of 4% cumulative preferred
stock ($100 par) and 500,000 shares ($10 par) common
share.
Fitzsimmons Stores, Ltd., Los Angeles, Calif.
Feb. 2 filed 10,000 shares of 6% cumulative first pre¬
ferred stock ($100 par).
Underwriting—Officers, direc¬
^
Work¬
Huston, Inc., Coral Gables, Fla.
(letter of notification) 500 shares of 5V2% ($25
par) cumulative preferred stock and 18,000 shares ($5
par) common stock.
Price, par. For expansion and
inventory purposes. No underwriting.
Underwriter
unsubscribed
An
Minnesota
ed June 2.
Films for the Family, Inc., New York
May 14 (letter of notification) 3,000 profit participat¬
ing certificates.
Price—Per unit, $25.
Underwriting,
none.
Corporate purposes.
Markets" in Los
•
May 11
«•
Fission
the New York Curb Exchange.
on
For
—
stock.
share for
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.
of
House
Bonds and Pfd.
Industries, Inc., Detroit
May 6 (letter of notification) 10,000 shares ($1 par)
Underwriters
^
•
stock.
Florida Power & Light Co...
development
for $39,375, in accordance with stock op¬
provisions of an employment agreement with the
company.
Mr. Ditmars will sell the stock through reg¬
•
Illinois Bell Telephone Co
June
(
Preferred
Playboy Motor Car Corp.
defray
common
stock of record
common
Inc., at rate of one new
each one held.
Rights expire about June 6.
tional 60,000 shares will be issued to
officers,
and some employees of the newly organized
company
istered brokers
N. Y. State Electric & Gas Corp
June
U
For work¬
May 21 of Textron,
tion
1948 iv
holders at $3.
warrant
No underwriting.
Offering—Offered to holders of
13 (letter of notification) 4,500 shares of capital
(par $5).
Price—$12V2 (approximately).
Walter
Ditmars, President, will purchase the stock from
E.
Working
—
Lonsdale Co., Providence, R. I.
April 26 filed 1,192,631 shares ($1 par)
1
,
To be offered
ing capital.
Gray Manufacturing Co.
the
•.
stock.
stock
1948
...
June
&c.
Proceeds
East Orange,
2,500
To
Price—$46 each.
none.
•
Linthium Corp. of America, Inc.,
Minneapolis
May 17 (letter of notification) 100,000 shares of common
May
South Carolina Electric & Gas Corp.—Pref. & Com.
National Dairy Products Corp.-—..
writing,
capital.
shares (par $10)
5% non-cumulative preferred stock and 2,500 shares of
common stock (par $1), the latter shares
being donated
by two stockholders.
Price—$10 per unit of one share
Preferred
Co
Co.
stock.
J.
May 12 (letter of notification)
Gamble-Skogmo, Inc.
National
Cap & Container Corp.,
Chicago
21 filed 11,845 shares (no par) value common
Offering—To be sold to certain officers and key
employees of the company and its subsidiaries. Under¬
offered.
of Delaware, Florida, Maryland, New
Jersey and Penn¬
sylvania. Underwriter—All shares of preferred not issued
in exchange or subscribed for prior to 3
p.m.
(EDT)
June 10, will be offered to the public in the State of Flo¬
rida at $4.15 per share through Gordon, Graves & Co.;
Miami, Fla. Proceeds will be used to reduce bank loans.
•
May 25, 1948
now
Co.,
April
The foregoing offers are limited
to stockholders and eligible employees who are residents
May 21, 1948'
Reading Co.,
Link-Belt
57
(M.
ID,
Inc.,
New
Playboy Motor Car Corp.
Legend Gold Mines, Ltd., Toronto, Canada
'June 27 filed 300,000 shares ($1 par) common treasury
j «tock.
Underwriting — To be supplied by amendment
Price—50 cents a share. Proceeds—To develop mining
(6/1-4) V
;
Feb. 13 filed 20 000,000 shares common (lc par).
May 17 (letter of notification) 7,060
Price—
than 100,000 shares will be of¬
officers at 87^ cents per share.
Underwriter—Tellier & Co., New York. Proceeds—For
capital equipment and working funds.
$1 per share. Not more
fered to employees and
Reiter-Foster
Jan. 16
'common
.
Oil Corp.,
(letter of notification)
stock.
Price—80
•W. Bennett & Co.
New York
180,000 shares (50c par)
cents.
Underwriter—Frank
For working capital.
(Continued
on page
58)
•J
»»MriwmM9MW*W
"r- *>
(Continued from page 57)
Powder River Oil Co., Denver,
•
May 11
common
'
Rulane
par)
New
Under¬
price of from 10% to 11.
Co.,
Gas
•
Jacinto
San
14
common
•
Insurance
Houston
Co.,
Fruit, Houston.
Iron & Brass Works, Hudson
Sandy Hill
Falls,
York
New
12 (letter of notification) 59,000 shares class A
participating preferred stock (par $4). Price—$5 per
share.
Underwriter—John L. Nolan, Inc., Glens Falls,
April
Working capital.
N. Y.
due 1963. Underwriter—Floyd D.
Co., Inc.
Price—95 (flat).
Offering—Offered to
stockholders of record May 4 on basis of one $100 deben¬
ture for each 100 shares held.
Rights expire May 28.
Proceeds—For repayment of two notes and general cor¬
ing fund debentures,
Cerf
porate purposes.
(letter of notification) 87,500 shares of non¬
common capital stock ($1 par).
Price, par.
Minerals
assessable
mining claims.
To drill
Union Electric Co. of Missouri
first mortgage bonds, due 1978
be determined by competitive bid¬
Probable bidders: White, Weld & Co. and Shields
(jointly); The First Boston Corp.; Halsey, Stuart
& Co. Inc.; Dillon, Read & Co. Inc.; Lehman Brothers.
Proceeds—To pay construction loans and provide con¬
struction funds for a subsidiary, Union Elec. Power Co.
Bids—Bids for the purchase of the debentures will be
received at Room 2004, 60 Broadway, New York up to
noon (EDT)
May 25.
United
construe-
Expected early in June.
filed
Electric
& Gas Co.
(5/26)
shares (50 par) 5V2% cumulative con¬
vertible preferred and 404,293 shares ($4.50 par) common.
Underwriter—Kidder, Peabody & Co., New York. Offer¬
ing—Offered for subscription- by company's common
stockholders of record May 11, the preferred at $50 per
share on a l-for-10 basis and the common at $6.50 per
Dec. 2 filed 80,858
share
on
offered
a
l-for-2
basis.
Unsubscribed shares will be
Proceeds—Proceeds together with
other funds will be used to purchase all of the outstand¬
ing
publicly.
South
of
common
Carolina
Power
Co.
from
th«
Commonwealth & Southern Corp.
Price—$1,000 each.
Western
Southern Frigid-Dough, Inc., Birmingham, Ala.
.May l4 (letter of notification) 50,000 shares of common
stock. Price—$3.50. Underwriter—Marx & Co., Birming¬
ham.
To construct test kitchen, for inventory loans,
equipment and working capital.
Southern
Natural
Gas
Co., Birmingham, Ala.
May 19 filed $28,000,000 first mortgage pipe line sinking
fund bonds.
Due 1968.
Underwriting—Names to be de¬
termined by competitive
;
elude:
Blyth
bidding.
notification)
Price,
par.
50,000 shares ($1 par)
Underwriter—Grande & Co.,
For working capital.
Securities Co.,
11 filed 1,265,255 shares ($25
Offering—To be offered holders of
par)
capital stock.
no par value com¬
stock of International Petroleum Co., Ltd., at the
rate of three Standard shares for 20 International shares.
•
White
Rock Bottling Co. of San
Francisco, Inc.
May 14 (letter of notification) 3,290 shares of preferred
stock to be offered at $25 and 10,250 shares of common
stock to be offered at $1.
For equipment, supplies and
capital to
•
bottling plant.
open
Willcox &
Gibbs
No
Sewing Machine Co., N» Y.
lative
Standard Tube Co., Detroit
May 14 filed 136,667 shares of Class B common stock
(par $1).
Underwriting—None.
Offering — To be of¬
common
shareholders of record June 10,
share of new stock for each three
shares held.
Price—$3 per share.
Fort
of 122,757 shares of Standard Tube
Industry Co.,
stock, expects
to buy $250,000 of the new stock, with the purchase
price
to be credited against the $250,000 loan
previously made
by Fort Industry to Standard.
participating preferred stock, ($fc par) and 160,000
shares, (50c par) common stock, of which 40,000 will be k
sold and the remainder reserved for conversion.
preferred stock,
Underwriting—None.
Winter
Park
series A (par $50).
Price,
par.
Finance factory expansion.
Telephone Co., Winter Park,
Fla.
May 6 (letter of notification) 1,60Q shares of 5% cumu¬
lative 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.
Chicago manufacturer. Mr. Merkes recently purchased
old Duesenberg plant at Indianapolis.
Mr. Merkes said the projected automobile, a custombuilt vehicle, would cost more than $30,000.
He asserted
the
writer—White & Co., St. Louis, Mo. Price—$8 for the
preferred stock and $2.50 for the common. This stock
by stockholders who are members of
the Belt, family.
Hardware,
eight-cylinder engine and that
designed.
The stock offering consists of 2,499 shares of
preferred
($100 par). The stock will be sold at $100 a share and
March
26 (letter of notification) 2,000 shares of 6%
cumulative preferred stock ($100. par). Prioe—Par. Un¬
derwriter—Southern Securities
Corp., Little Rock, ArkTo retire* $65,000 of loans and for
general
working
purposes.
be
an
custom
be confined to not less than
10 shares
a
pur¬
chaser.
Fleet
Oil
Corp.
,
An
offering of 296,000 shares of common stock is exr
pected shortly.
Proceeds will be used for the purpose
of further development of oil producing properties and
exploration
wild-cat
of
Aetna Securities
•
Indiana &
acreage.
Underwriter
will
be
Corp.
Michigan Electric Co.
company plans the sale of $25,000,000
shortly after Labor Day.
Proceeds will pro¬
bonds
vide the company with funds for new construction and
other purposes.
Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Lehman Brothers; Dillon,
Read & Co. Inc.; Harriman Ripley & Co,
I
\
New
Jersey Power & Light Co.
May 1 reported company preparing to sell competitively
$6,000,000 of new first mortgage bonds. Opening of bids
is expected between 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
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
Boston Corp. and Kidder, Peabody & Co. (jointly); Leh¬
sale
man
Brothers; Harriman Ripley & Co.; W. C. Langley
Glore, Forgan & Co. (jointly).
,*
York
New
March
11
Telephone
Co.
■>
announced its plan to apply to the
New York P. S. Commission for authority to issue $90,company
000,000 of refunding mortgage 33-year bonds and offer
July.
Proceeds of the issue
them at competitive sale in
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.; Halsey, Stuart
& Co. Inc. Expected early in July.
will be
Northern
States
Power Co. of Minn.
for
of
sale
new
securities
in
the
amount
of
$30,000,000. Investment banking firms already are
forming into groups to compete at the sale.
The new
securities will be designed by the utility primarily to
some
required by its construction program.
Halsey, Stuart & Co. Inc.
(bonds
funds
provide
Probable
bidders:
on)y); Smith, Barney & Co. and The First Boston Corp.
(jointly); Lehman Brothers and Riter & Co.
April 30 filed 10.000 shares of
common
Underwriting—None.
Price—$10
Mainly for development.
per
Pacific
•
The
Gas
company
Electric
&
filed
Utilities
Public
Yeakfey Oil Co., Alamosa, Colo.
(jointly).
an
Co.
application with the California
to issue and
Commission for authority
1,000,000 shares of first preferred stock, with an
aggregate par value of $25,000,000.
The proceeds will
part the company's large construc¬
sell
stock
share.
(par $10).
Proceeds—
be used to finance in
tion program,
which has been under
way
for two and
one-half years.
Pacific Telephone
Prospective Offerings
•
Chicago Milwaukee St. Paul & Pacific RR. (6/1)
mature
$356,000 semi-annually Dec. 1, 1948June 1, 1958.
Probable bidders: Halsey, Stuart & Co.
Inc.; Salomon Bros. & Hutzler; Harris, Hall & Co. (Inc.);
Harriman Ripley
& Co., Inc. and Lehman Brothers
(jointly); L. F. Rothschild & Co. and Gregory & Son,
(jointly); Phelps, Fenn & Co.; Kidder, Peabody &
Inc.
Co. and Dick & Merle-Smith
•
(jointly).
Chicago Rock Island & Pacific RR.
May 11 company asked ICC authority to issue $4,590,000
equipment trust certificates.
Proceeds will bemused in
connection
with
the purchase of
equipment to cost $5,733,220.
Probable bidders: Halsey, Stuart & Co Ittc •
Salomon Bros. & Hutzler;
Harris, Hall & Co. (Inc.)
•
Columbus & Southern Ohio Electric Co.
w
May 13
for
company asked the Ohio Utilities Commission
permission to issue $10,000,000 3%; first mortgage
bonds to
be
sold
privately.
The Commission informed
Otis & Co., Cleveland, of the application.
Should Otis
&
Inc., Hot Springs,
Arkansas-
would have
car
bodies would
—
Under¬
is being, offered
C.)
be
er
Co.
want
the
bonds
sold
at
competitive
hearing will be held by the Commission.
•
Consolidated
.,
bidding,
l
rights probably will be given to common and preferred
shareholders of record on June 15, 1948, one right being
Funds
issued for each six common or preferred shares.
will
Edison Co. of New York,
Inc.
April 17 in discussing company's financing' at the annual
meeting Ralph H. Tapscott told stockholders that "it is
not; unlikely that later this year we shall;! undertake the
sale of another issue of
our
mortgage bonds.of: atv least
be
used- by
company
covering
to repay advances
expenditures for construction and extension of its facili¬
ties occasioned by the heavy public demand for tele¬
phone service.
Reading Company
(5/21)
Comoany requests bids for the purchase
of the entire
$4,800,000 equipment trust certificates, series O, dated
June 1, 19-ft, to mature serially in 20 semi-anntially in¬
stalments of $240,000 each on Dec. 1, 1948-1958.
Bids
will be received at office of R. W. Brown, President,
Room
423, Reading
Terminal, Philadelphia, Pa., at or
before 12 o'clock noon (EDT) May 21.
San
;
J!
;
,'
Diego Gas & Electric Co.
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. There is no
immediate plan to issue additional stock, officers de¬
clared. Traditional underwriter, Blyth & Co:, Inc.
Wesiinghouse Electric. Corp*.
a
.
& Telegraph Co.
April 29 directors voted to sell 601,262 common shares
of stock to .shareholders at $100 a share.
Subscription
-
Steak 'n Shake, Inc., Bfoomington, III.
Feb. 2 filed 40,000 shares of: 50c cumulative convertible
(F.
,t
Inc., Indianapolis, Ind.
projected
will
sibilities
cumu¬
cates will
Stearns
outstanding."
Inc.; Morgan
April 30 reported officials of company are discussing pos¬
•
owner
Co.
new
Duesenberg automobile.
The
participating preferred and will be sold
by Duesenberg, Inc., headed by Marshall Merkes, form¬
underwriting.
Underwriting—None. Purpose—To gain control of Inter¬
a Canadian corporation.
; /
one
the
on
stock
Industries, Inc., Salt Lake City
notification) 35,000 shares of non¬
assessable common stock (20c par) of which 25,000 shares
will be offered at 50c each and 10,000 shares at $1 each
to make a loan to Compagnia Exploradora De Minas
Dos Cabezas, S. A. For working capital, machinery and
salaries.
No underwriting.
(letter of
13
national,
of
&
& Co. and
Company will receive bids up to noon (CDT) June 1,
at office of J. W. Severs,
Vice-President, Room 744,
Union Station Bldg., Chicago, for the
purchase of $7,120,000 equipment trust certificates, series "DD."
Certifi¬
mon
in the ratio
Duesenberg,
the
Phoenix, Ariz. To buy oil leases and
Western World
•
May
(New Jersey)
fered to Class B
Stuart
pay
Co., Phoenix, Ariz.
April 8 (letter of notification) 300,000 shares of common
stock (par $1). Price—$1 per share. Underwriter—Ari¬
Probable bidders in-
Co., Inc. and Kidder, Peabody & Co.
(jointly); Halsey, Stuart & Co. Inc.; The First Boston
Corp.
Proceeds—$14,000,000 will be applied to the
payment (exclusive of accrued interest) of 1%% notes
due 1956; balance for construction purposes. Business—
Natural gas pipe line system.
May
stock.
Western States Oil
&
Standard Oil Co.
Metalcraft, Inc., Olympia, Wash.
(letter of
10
May 14 (letter of notification) 6,000 shares of 5%
•
•
9,950
equipment for drilling.
Underwriter—Ames, Emerich & Co., Inc., Chicago.
Carolina
•
of
shares
(no par) common stock.
Each share is to be accompanied by
"production 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 pro¬
ductive capacity of 4,000,000 pounds of viscose filament
rayon and 8,000,000 pounds of viscose staple fiber.
29
a
zona
Detroit
May 12 (letter of notification) 8,432 shares ($1 par) com¬
mon stock, to be sold by Henry Soss and his wife, Ethel,
South
bank loans then
May 19 reported
Corp., New York City
Rayon
Inc., Seattle.
at $8.
our
Halsey,
\ Stanley & Co.; The First Boston Corp.
sales will
& Co.
Underwriters—To
ding. Probable bidders include: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; Stone & Webster Securities Corp.
Proceeds—Construction costs and the payment of $650,-
/ Soss Manufacturing Co.,
(5/25)
April 19 filed $25,000,000 of debentures, due 1968. Un¬
derwriters—To be determined through competitive bid¬
common
•
shares of non¬
50,000
stock (par 100) half at 25 cents and
Underwriter—Forbes and Co., Denver.
common
half at 40 cents.
May
000 to National Shawmut Bank of Boston for
Denver
Corp.,
notification)
(letter of
5
May
March 26 filed $3,500,000
tion notes.
bidders:
May 14 the Indiana Securities Commission approved the
sale of $249,900 in stock to finance development Work
Nev.
from operation of Gaston mine and mill.
underwriting.
•
Co.
Power
Pacific
Reno,
For obligations
No
March
Segal Lock & Hardware Co., Inc. (6/1)
March 24 filed $2,000,000 15-year 6% convertible sink¬
Sierra
Canada.
Toronto,
sufficient size to fund
Probable
ding.
500 shares ($100 par)
Price—$200. ^Underwriter—Julian E.
To provide surplus.
stock.
assessable
Uintah
of notification)
(letter
April 19
Charlotte, N. C.
—
•
Co.,
i
the
7
May
&
Proceeds—For mine develop¬
share.
a
Divide Mining Co.,
Tonopah
filed 15,000 snares ($50 par) 5Vz% 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
Winston-Salem, N. C.
May
cents
preferred stock.
(par $1)
Thursday, May 20* 1948
ments.
Mass.
writer—Tucker, Anthony & Co.
;
Price—60
Canada
Mines, Ltd., Toronto,
shares
Daniels
Underwriter—Mark
May 13 (letter of notification). 6,000 shares ($2.50
common stock, to be sold by Charles S. Payson of
at the market
Gold
Lake
Tabor
1
,
CHRONICLE
FINANCIAL
For working capital.
Reed-Prentice- Corp., Worcester,
York
&
COMMERCIAL
April 2 filed 300,000
Colo.
(letter of notification) 400,000 shares (100 par)
stock.
Price—25 cents.
Underwriter — R. L.
Hughes and Co., Denver.
t
;
'w W
uurtjBKM
THE
(2242)
58
I
July 12 stockholders will vote on increasing authorized
debt from $50,000,000 to $150,000,000.
It is planned- to
issue $70,000,000 to
$80,000,000 of debentures to refund
portion of $100,000*000 obligations maturing
ip 1951. These obligations consist of $20,000,000 qf debentures and $80,000,000 of bank loans. Traditional underor
retire
a
Volume
Number 4700
167
THE
houses
are
COMMERCIAL
said to be seek¬
now
ing business in securities listed;
the
on
Curb
New
York
Stock
and-
Exchanges.
Such
business, of course, is
chiefly of substantial proportions
and
done for
investing
institutions such
companies
and
&
FINANCIAL
CHRONICLE
Frank
Ginberg Forms Russell Dean Assoc'ted
Own Company in N. Y. With O'Gonnell & Co.
Frank
Ginberg
has
formed
Ginberg & Co. with offices
Frank
as
Stock
evidently feel that
offer such traders rela¬
can
Conditions set up by the Public
Service Commission of New York
in
this week/.,
three
had
been
banking
organized
dertakings
the
the
of
conditions
of
National
to
the
by
of the issue which is to be offered
of
record
today with subscription
"rights" expiring June 8.
sufficient
a
number
project profitable.
ket observers
bankers
who
head
The
on
the
debentures
new
will
handled
by
bankers
market
be
used
as
Inc., with which he had been
CHARLOTTE, N. C.—Edward H,
a
against the offering
Co., Inc., Wilder
being
bright & Co., Powers Building.
ALABAMA
New
A
dividend
ferred
Stock
Railroad
Russell
of
Dean
of
investment
the
the
June
10,
a
House
available to them, by de¬
fault of holders' rights, to more
Main
&
than cover cost. And such prof¬
its must be shared with the is¬
Customers
two
Office.
Box
N
been
has
on
Great
the
Pre¬
Southern
declared payable
record at the
York
New
N.
6,
stockholders
May
for
26.
1948.
^
*
ket
Newmont Mining
May 18, 1948,
dividend of SEVENTY-
a
.
May 28,1948.
-
WILLIAM T. SMITH, Ass't Treasurer.
TRADER
trader available.
in
Servicing
1948,
of
Wires.
Box W
in
as
issues.
"
•
the
the
25-year
Southern
California
concerned,
1
.--v
.*•
brought out
dealers
report
still
are
Co.
fortnight
a
that
around
in
the
ested
of the South African non-resident sharehold¬
and
references.
results
bonds
Place,
who have been holding
-
Time was when listed securities
as
pretty much the
of member firms
issue
were
ed
and
New
York
j
p-;
The Annual
;
account
basis.
Highest
GREATEST NAME
IN WOOLENS"
profitable
PEQUOT
Nation
SHEETS
PILLOW
&
Sleeps
on
A dividend of
and one-half
per
Commercial
519.
Chronicle,
_
York 8, N. Y.
the meeting
An
Directors
Park
25
of
of the Board of
American
dividends
were
declared:
regular quarterly dividend of ..
$1 .00 per share on the $4 Cumula¬
tive Convertible Prior Preference
Stock payable June
IS, 1948 to
stockholders of record June 1, 1948.
Railroad
an
extra dividend
of 25c
share have been declared, pay¬
able
-
July 1,1948, to stockholders of
record at the close of business June
3, 1948. The transfer books of the
SHEETS*
share
Slock
of
was
Company will not be closed.
REEVES, Treasurer
/
1
-
this
to
Albany, N. Y., April 17, 1948.
•'
i
i-
TT,
„
i
June 15, 1948 to stockholders of
record June 1, 1948.
Transfer books will not be closed.
Dividend checks will he mailed by
the
Guaranty
§
p
stockholders of
g
New York.
F. S. CONNETT,
•<;
'
V
May 19, 1948
Vrt-
-
Treasurer.
WARD BAKING COMPANY
Preferred Dividend ^
record June 1, 1948.
The Board of Directors has declared
Checks will, be mailed.
«
J'
j|
) "i Y'r * -§=
v
H
the
quarterly dividend of $1.37)4 •
share on the Preferred Stock payable
July 1,- 1948 to holders of record
June 16, 1948.
S'v * •* •• ; '
'
Common Dividend
treasurer
Philadelphia, Pa.
May 14,1918
PHILLIES
The Board of Directors has declared
dividend of 15
cents
a
share
on
a
the
Common Stock payable July 1, 1948
to holders of record June 16, 1948.
L. T. MELLY, Treasurer
"A-
Company of
Trust
jg
payable June
„
A quarterly dividend of $1.50 per
share on the Common Stock payable
§
1
Corporation
'■>
July 1, 1948.
M
(37Hc)
the Common
on
declared
16,1948,
thirty-seven
regular quarterly dividend of
$1.75 per share on the 7% Cumula¬
tive Preferred Stock payable July
15, 1948 to stockholders of record
Company
Meeting of the Stockholders of
* !-'■
CASES
PEQUOT
cents
Woolen
Company, held today, the following
' :
The New York Central Railroad Company, for
the election of Directors and of three Inspectors
meeting,!:.'
quarterly dividend of 25c per
share and
President and Treasurer
securities
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
well-found¬
non-member
A
RUDOLPH C. DICK
inc.
NOTICE
professional,
drawing
Central
DIVIDEND
business
with
1 JOSEPH M. O'MAHONEY, Secretary.
some
of
inter¬
as may be lawfully brought before the
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,
reports; there is a; growihg
dition
New
C
REEVES BROTHERS,
1948 to holders
close
the
J. M.
business
concerned.
tendency to break with this tra-
May 29,
at
May 17, 1948
of Election and the transaction of such other
buying and selling orders
1 But according to
on
record
A
Going After Business
such
payable
"The
MEETING NOTICE
The
far
of Directors of Naumkeag
Company at a meeting
April 28, 1948 declared a divi¬
of Fifty Cents (50c)
a
share,
Cotton
per
A
doggedly to their 3% minimum
as
Box
Financial
May 19, 1948.
on
dend
of
-
guaranteed.
Write
apparently
a
H. E. DODGE, Secretary.
;
using
and
Unusually
ago,
of about
sacred preserve
on
cents per share.
connections,
handle
to
percentage
.
2.97% afforded
at the price of 104.92 has been a
trifle too "rich" for portfolio
in
will amount to 46%
tax
By order of the Board of Directors. IB
operator,
person
employing
time,'
yield
considered
contact
operations
are
and
angles,
tax
to
in
full
&
were
Shares issued under the
terms of the Deposit Agreement dated June
24, 1946. The net distribution after deduction
Board
held
bond
and
Wall-. Street
wishes
good supply suggesting that the
buyers
1948.
The
Steam
daily dividends of luxurious and
restful sleep. -
analyst,
securities
good
first
bonds of
Gas
Directors authorized the distribution of
dividend on the same date to the
said
220
May 21, 1948.
stock
a
April 48, 1948
pay
trader
active
expert
offered $15,000,000 of 3%%
mortgage,
DIVIDEND No.
STURTEVANT,
P.
or
man,
new
recently
the
the close of business June 4,
Large Private Investor
Experienced
:
v
(faftftAHy
May
payable July i; 1948, to the
holders of such stock of record at
important
as
"t
on
Independent Dealer
•
insofar
case
DIVIDEND
Company
pany,
(
At; any rate that appears tcf be
I
Secretary,
MASSACHUSETTS
Secretary
to what constitutes
satisfactory yield basis for
a
Cyanamid
W.
institutional buyers
mood to capitulate on
no
Stea+H
SALEM#
1948,
declared
a
quarterly
dividend of twenty-flve cents ($.25)
per share on the outstanding shares
To A
Hewing to the Line
are
stock
of business
18,
p»04MM>«afr<!
Evidently
their ideas
close
the
at
of the Common Stock of the Com¬
i
-
divi¬
dend of two shillings six pence per share on
the Ordinary Shares of the Company payable
on June
10, 1948 to the holders of record of
Ordinary Shares of the Company at the close
of "business May 28, 1948.-
t
The Board of Directors of Ameri¬
can
showing consid¬
interest in high grades,
"catch," and it's a big
is that dealers find it increas¬
June
-
Limited
New York, N. Y.,
1948.
COMMON
518,
Chronicle,
are
ingly difficult to get the type of
material which potential buyers
are seeking.
1
4,
Also experienced
Park Place, New York 8, N. Y.
The only
.
-
of
shares
the holders of such
to
record
June
Securities
Commercial & Financial
25
and orders are substantial.
one,
-
the Com¬
pany's 3Vi% Cumulative Preferred
Stock, Series A, payable July 1,
street" demand is good, that is
erable
'
O'okiep Copper Company
!•;;
half cents ($.875) per share on the
mar¬
Experienced, unlisted
Thes
Wilmington, Delaware
holders of American
Cyanamid Company on May
1948,
declared
a
quarterly
dividend of eighty-seven and oneoutstanding
But they report that "off-the-
institutions
»
The
•
SITUATIONS WANTED
a
Stock
of
THOMAS II. STACY,
CORPORATION, payable June 15, 1948,
18,
are
finding
bit slow for the moment
with
trading
emphasis
having
shifted for the time being to the
equity field.
i
Directors
V
.
FIVE CENTS (75$) per share was declared
on the Capital Stock of NEWMONT MINING
can
their. business
things
Corporation
Preference
The Board of Directors today declared
PREFERRED DIVIDEND
the agreement.
Bond Business Slow
15,
1948.
Treasurer.
regular quarterly dividend of 75<f
per share upon the outstanding $3
Cumulative Preference Stock, pay¬
able July 1, 1948 to the holders of
ers
Those who make the bond
SCHALL,
The Board of Directors of Ameri¬
according to terms set in
I
COMPANY
Dividend No. 6
to
stockholders of record at the close of business
company.....
Place,
'
this
June
on
M.
of
Board
H. Ev DODGrE, Treasurer.
1948.
American Cyanamid
520, Commercial
Y.
SUGAR
has
May 19, 1948
May 12, 1948, a dividend of Twenty-five
(25c) per share was declared on the
Capital Stock of MAGMA COPPER COM¬
PANY, payable June 15, 1948, to stockholders
of record at the close of business
May 28,
$4.00 per share on the Ordinary
payable June 20, 1948,
of record at the close of busi¬
Exchange
Financial Chronicle, 25 Park
Treasurer.
Cents
J. J. MAHER. Secretary.
Brokers
1948.
United Corporation has declared the
Dividend No* 103
1948.
Dividend No. 79
Stock
RICO
Directors
business
of
The
the Common Stock pay¬
1948, to holders of record
on
June 1,1948.
been declared
has
WANTED
Established
of
Cumulative
$3
dividend
Corporation
Old
31,
BUCKSTAFF,
The United
DIVIDEND
of 35|f per share
On
come
suer,
close
On
18,
share
per
Alabama
The
by
NOTICES
The Board of Directors declared
WANTED
By
PORTO
Magma Copper Company
COMPANY
$4.00
of
price
only hope of the group
profit on the deal is that
sufficient debentures will be¬
payable
18, 1948.
day declared
a
quarterly dividend of 50c per share on the
$25.00 par value 8% Preferred Stock outstand¬
ing; and a dividend of Two Dollars per share
on
the outstanding Common Stock; all payable
on
July 1, 1948 to stockholders of record at
Corporation
V
SOUTHERN
GREAT
York, N. Y., May
Company
A dividend of
ness
a
May
H.
22, 1948.
June 26,y 1948, to stockholders of
close of business May 26, 1948.
to
HELP
Company,
May
Johns-Manville
m
NOTICES
RAILROAD
Stock
The
for
SOUTH
ROGER HACKNEY, Treasurer
DIVIDEND
THE
ROCHESTER, N. Y.—Robert A.
ending
The Board
DIVIDEND
of par to common holders.
•
quarter
the
to stockholders of record
business Mav 20, 1948, for
of
record at the close of business
securities business from offices
Wirth is with George D. B. Bon¬
of
1948,
N.
he
war
Building.
With Geo. D. B. Bonbright
group
1,
close
F.
at 65 Central Park West.
the
Stock
the
E.
firm of Russell Dean & Co., Inc.
Kennedy has joined the staff of
R. S. Dickson &
POWER
Co.
.Prior
p—ooWt.
finance
the
STATES
(WISCONSIN)
10, 1948, declared a dividend of
one-quarter per cent (1Vi%) on the
June
of
as
President
was
NORTHERN
oi
JOHNS-MANVH.lt
With R. S. I Dickson Co.
27.
and
Exchanges.
as¬
sociated for many years.
mar¬
are
Co.
merly an officer of Strauss Bros.,
and
May
to
a
check
t
30 Broad Street, New York
City, to engage in the securities
business.
Mr. Ginberg was for¬
Stock
Street,
York
May
on
and
Preferred
Putnam
to the
Dairy
held
one
with
was
L.
&
Ginberg
at
con¬
facilities and equipment. '
quoted currently on a "when-is¬
sued" basis at 106% bid and 106%.
offered
be
deal
reach
Funds
F.
Frank
New
Directors c£
Northern
States
Company
(Wisconsin),
at
a
meeting
Solomon Korner is engaging in
while back.
a
National
will
negotiated
should
somewhat
a
which
new
Edward
OF
Board
Power
recently
Mathews
for
registration $30,000,000 of 22-year debentures, due
recalled that the
made out well
similar deal
Some
called
Products has in
of
make
of
$25,000,000 of
debentures to provide
S. Korner in New York City
stockholders will fore¬
their "rights" to
go
has
The
been Manager
on
Sansome
the
COMPANY
as
presenta-
able
|n short, the banking group
which was awarded the under¬
writing privilege is gambling
that
25
struction purposes.
1970
firm
has
Co.)
Chronicle)
DIVIDEND NOTICES
tive. Mr. Dean
Products
of funds needed for
part
surviving
stockholders
American
Dairy
former
May
30-year
The latter paid the company
$1,000 for the privilege of under¬
writing any unsubscribed portion
common
North
Meanwhile
common
are
155
of
Francisco
OFFICE
registered
and
The
syndicate.
to
of
bids
State agency two of these
and disbanded leav¬
ing the field
un¬
those
Corp.
withdrew
first
ahead
now
sidiary
to
set
financing
Financial
asso¬
a
of Union Electric Co. of Mo. (sub¬
bid for the debentures. But be¬
cause
their
new
and
.
Originally
groups
major
Co.,
members
with
r e
Two
&
new
Dean
now
ciated
Two Big Issues
The
to
FRANCISCO, CALIF.—
James L. Osborne, Jr., has been
added to the staff of Shuman, Ag¬
that
is
firms'
Shuman, Agnew Co.
(Special
San
nounce
59
SAN
an¬
Russell
commission rates.
authorizing
Consolidated Edi¬
son Co. of New York, Inc. to sell
$57,382,000 new debentures, made
the bidding for that issue the high
spot
in
underwriting activities
member
under
With
Ex¬
change,;;
tively attractive terms on a "net
price" basis compared with costs
accruing
BOSTON, MASS.—O'Cofinell &
Co., 50 State Street, members of
the New York
trusts.
Non-members
they
(2243)
America's
475 Fifth Ave.,
New York
N. Y.
17,
WARDS
7|
Uiw'
kwOUMWe^eJ^titikVinki
/
■
•*>'
Thursday, May 20, 1948
& FINANCIAL CHRONICLE
COMMERCIAL
THE
(2244)
€0
is bound to
BUSINESS BUZZ
out
Behind-the-Scene Interpretations
from the Nation's
politics
•
•
•
straight
a
perhaps with
extension,;
little modification,
a
of the present supports.
And You
Capital
quite
is
•
and';
which doesn't
right. The- best
commodity;
come
Washington
displease hundreds of
thousands of growers of this
that
One thing which seems prob¬
able:
will
Congress
ignore
in
whatever bill it passes this year,
|
the inferential suggestion of the
President
point from the President's
WASHINGTON, D. C.—Scratch one
That leaves nine points.
program.
for
,
The three-time
Truman, in
another notch.
up
three
President
of
different press conferences,
he would designate
to state that
Marriner S. Eccles as
Vice-Chair¬
Board,
was almost
equally potent testi¬
mony to the end of credit control.
man
of the Federal Reserve
The raising of
tificate
the Treasury cer¬
1*4%
to
rate
the
from
of the last stepis
to be taken to limit bank credit
or discourage bank credit, under
available powers. It was expected
to be accompanied by a further
1%%
was
one
Despite
is not
1948.
Raising of the certificate rate
"notches"
and also the other two
of
2% each to required reserves
in New York and Chicago were
strategically important to legis¬
lation to further dampen hank
tance
was
officials
real
impor¬
that Congress would
until
the
monetary
man¬
and
a
€ocif>
credit
especial impor¬
tance to the decision to sit tight
on
was
an
1% rate, at least until the
the
It testifies
September maturities.
loudly
as
as any
be
of
outlook
with
situation.
is
mixed
for
Plans do not yet
tall for it being sent but to the
himself
to
Mr.
not been
til
prospects,
Eccles,
that year.
of
naming
Chairman
a
Vice-Chairman
President alone from among the
tion, it would have been likely to
have
the
boosted
certificate
rate
almost every one,
including the
Federal Reserve, anticipated.
as
is
made
membership of the Board.
mature"
The
passing by of Mr. Eccles does
not shorten his tenure.
It is
seen
as
This is
;
Truman's
nomic
only
Advisers,
more
than
who
month
a
a
ago,
called for legislation to restrict {
the volume of commercial bank
If this
Board.
a
that Mr. Eccles will
being reported that
with each; fresh indication that
is
doesn't want him
Mr. Truman
only the Treasury's
Vice-Chairman,
doing, it might not be conclusive.
At
this
were
point Mr. Truman's slap
at Mr. Eccles has
a
most relevent
in
Federal
marble
the
Eccles
Mr.
as
be¬
determined to remain
comes more
Reserve
palace.
Unless he changes his
bearing.
Even though he was
avowedly speaking on behalf of rnind, Mr. Eccles has no immedi¬
ate plans for leaving.
- ,:,4
,
the entire Federal Reserve Board
Eccles is probably angry,
and
(before Mr. McCabe was seated
as Chairman) when last month he
at
called
Chairman packs a clear major¬
for
legislation to increase
authorized
legal
special
secondary
or
reserves
ity
and the
former
Their
Board.
the
of
the
juncture
sym¬
pathy with M. Eccles has been
for
reserve
this
heightened by the slap the lat¬
ter has got from the
Herbert H. Blizzard & Co.
SPECIALISTS
Whitehall Cement
:
(
:
This
McCabe
is
;
likely
is
there
be
to
prospective
as
Hill's
the
While
pets
farm
If
fear
Whitehall Cement
the
bites dog news.
The
President
recommendation of last
that
it
this
enact
year
a
...
.From
i
123 South Broad
Clear
St., Philadelphia 9, Pa.
thra-—Montgomery,
Scott & Co
he
can
New York &
Philadelphia
\
•
long time.
forward
staffs
Banks.
a
year
Gas Transmission
U. S.
Finishing
Dorset Fabrics
Tidelands Oil
the
and some more private ad¬
vice of farm organization leaders
that they had better
wanted
enact
to
a
laws this year.
They wanted to
do it this year for fear
They waited until
that.if.
depression J
a
antee of farm prosperity might
be greater than now.
The basic
pbjective.of almost all hi revi¬
sion (though they differ in de-t
tails and in degree)
is
flexible
a
skip it until
hoys
ESTABLISHED
Members N.
40
1919
Y. Security Dealers
Ass'n
H.A. 2-878®
Exchange PI., N. Y. 5
Teletype N. Y. 1-1397
who
doubted the feasibility of
revi¬
Now
the
what
now
going to do is to
are
The thing
if the
Senate eager-heavers
can
get
their bill passed in the Senate.
Then
a
Trading Marke ts:
whirl
a
they will give the House
crack at it, and see
what
goes
Ralston Steel Car
Oregon Portland Cement
Riverside Cement A & b
over.
appeared, the total commitment
of the government for the guar¬
M.S.W1EN&C0.
next year.
give
long-range revision of the farm
permanent
a
open
sion
have
of
Soya Corp.
revision, even in the face of some
the
gress
beginning
reporting out
upon
Tucker Corp.
Aiken of Ver¬
Aiken's group has insisted
Thero is
come.
predicting the out¬
general
no
agreement among the subscribing
as to what they want
farm lobbies
in
the
of
way
a
permanent
re¬
T
vision.
What is
man's
Spokane Portland Cement
There is far from
mystery is Mr. Tru¬
a
politics.
LERNER & CO.
Investment Securities
10 Post Office
Square, Boston 9, Mass.
Telephone Hubbard
1990
Teletype BS 69
Any revision now
Teletype—NY 1-971
HAnover 2-0050
Firm
Empire Steel Corp.
Trading Markets
Susquehanna Mills
uniform
for
All Issues
bank
re¬
r.arl marks & ro. inc.
forget about it for
Hill, Thompson & Co., Inci
~
a
was
Memphis Natural Gas
question the feasibility of revi¬
this year in advance of a
national and presidential election.
session the farm leaders of Con¬
dissension
stitution to put up additional
serves,
it
plan will require his in¬
reserve
Manufacturing Common
Texas
sion
altogether
serious
proposed
as
Mr.
banker ■ is worried
any
maintains RFC prac¬
intact
ago.
to
FOREIGN SECURITIES
Manufacturing Preferred
of
four-to-six-year
sur¬
within the Federal Reserve Board.
1
were
powers
the approval
President.
unless
saleman and
super
a
diplomat,
...
that
means
new
wanted to revise now, they began
mont.
laws, particularly the farm price
supports.
however^
It
supports
headed by Senator
if
"permanent" revision of the farm
modicum of harmony
expected within the
There are as yet no signs,
ably, then
might be
leave.
lending.
week
If Mr. Eccles would leave peace¬
of Eco¬
lime.
#
attention. to
serious
vetoed both the Federal Reserve
little
man
j
Congress actually is giving some
an
So the Treasury in effect has
Board and the Council
presidents in their
this
at
0
inferential in¬
vitation to get out.
only
The
sufficiently to They figured they would have
comment, then less chance of reasoned action this
refurbished, then approved by the year than next.
Reserve
Board, and
finally, it
They all figured that way, how¬
would have to be approved by
ever,
except a subcommittee of
Congress.
Any
percentage
re¬
Republican "liberals" within the
serve
figures "are highly pre¬ Senate Committee on Agriculture,
and a
by the
Treasury had foreseen the pros¬
pect of a continuation of infla¬
these
be sent around tor
The
tionary
RFC.
has to be approved
le¬
a
unseated before
deflationary as well as infla¬
forces at work.
If the
is
program
of
meeting in Washington. The plan
however,
with
pluses of farm crops increased.
given even informal ap¬
bank
Reserve
support
price
for
It
time.
proval by the Board, and it was
not discussed this week by the
member of the Board un¬
1958.
Hence he cannot be
gally
That
of
off
which would diminish the level
has
comment
for
considerable
some
the
leave
to
banks
Reserve
Federal Reserve Board..
direct statement
economic
the
Board program.
could
Eccles
over
tically
farm
powers
Executive or¬
the years since 1932. T
extension
expected to take this breaking
the Truman promise as an in¬
vitation
could, to the new official outlook
on
Mr.
control.
did you know that?"
Mr.
lending.
There
der
place as he
the throwing down of
than
by law or
shorn
interpreted by Mr. Eccles as
more
of miscellaneous
given
Many
promised, the President has taken
an
attitude which no doubt will
be
Last year the Congress
dreds
ip*
.
its
beyond
off, like dead tissue, hun¬
cut
"Why, yes, the boss IS out of town—how
all available
powers. The Administration is
at present foregoing the balance
of its authority to discourage
used
had
agers
year.
much
RFC
crimped
they have existed for
powers as
specifi¬
designate
to
agency
the
not
has
Congress
that
it
kept
has
Congress
Chairman.
the second
national*
a
1912-14.
i
^
feature) before Congress.
refusing
on
have reached their peak.
March they hit the previous
In
invited Mr. Eccles to take
place for the explicit pur¬
pose of championing the Board's
legislative
program
(of which
credit control was the outstanding
By
values,
peak of 170% of
cally
Eccles to
not hopeful that farm
are
estate
average,
second
for any further legisla¬
not go
tion
That
extension.
credit
year,
billion, versus $18 billion in 1947.
Notwithstanding this small drop,
*
incoming
the
farm prosperity
expected to slide much in
Gross income of farmers is
versus $30 billion
according to the latest
estimates. Farmers' net probably
will run to something over $16
significance to
Truman furthermore
Mr.
for pretty
outlook
the
this
lion
the
Cabe,
^
«
v.
last year,
President demoted Mr.
Eccles from the chairmanship of
the Reserve Board, by refusing
him the designation
of another
rise
in
commercial
loan rates.
four-year term as Chairman. At
This was intended to have a fur¬ the time Mr. Truman asked Eccles
ther slight dampening influence to
stay on and serve as Viceon the extension of bank credit; Chairman under Thomas B. Mc¬
1
foods.
of
expected to hit around $28.5 bil¬
from
ary
it
of grains,
sitions
slap at Mr. Eccles, and it is
incidental.
Last Janu¬
the
far
government-
away
surpluses
good grain crops this year and a
cut in foreign acqui¬
control leg¬
*
There is another
some
substantial
islation this year.
*
&
giving
acquired
it
with the Treasury in its
opposition to credit
revive
perhaps.
giving no consideration to the
designation of Mr. Eccles as
Vice-Chairman of
the Board,
Mr. Truman has served practical
if ^inferential
notice that he
agrees
it
That will be one for next year,
junked credit control. That^
lias been made abundantly clear use in contingencies, Mr. Eccles
in the
last
several days.
The personally has become identified
as
the top front man for bank
most eloquent evidence was Mr.
credit restriction.
Snyder's refusal to put the gov¬
ernment short-term interest rate
By thrice indicating he was
have
refusal
that
variation of the food stamp plan
Point No. 1, the
proposed control over bank credit, is now in the ash can.
Between them, Treasury Secretary Snyder and President Truman
anti-inflation
by
of
It
This plan
a
put
of
the
committee
the
is
was
Federal
hence
study], and v not
yet
only
a
Reserve
a
staff
Reserve
M
FOREIGN SECURITIES
•\t
£'•*.r
50 Broad Sire©! '
-
;
V
QPFPTATTSTS
-
-
•
;
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO;
iMarkets and Situations
for Dealers
1120 Broadway, ^.ew
Tel. REctor 2-2020
York 5
Tele. NY 1-2660
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