The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reg. U. S. Pat. Office
.Volume
165
Number 4596
New
What Do the
The Cost of
York, N. Y., Thursday,
May 22, 1947
Cheap Money
What Is the
By CLAUDE L. BENNER*
;
analyzes
definitions
of
American Life Insurance
Co.,
Wilmington, Del. v
strike and contends it
is type of
came
sheer
to
the
is
nonsense
us
Irintorically
think
about right to
concern
f
this matter is
the welfare of
In the realm
Of
Science
Harold
the
secrets
of
who
the
investigated
unknown
being in league with the
:
'
V
Gluck
how to think clearly. The
time has long since
past when we
those
.
the
have
men
:
as
devil and
Kindred spirits of the underworld.
Whether or not we like a particu¬
lar
scientific
material.
scare
is
fact
The
is
totally im¬
smallpox
recent
perfect example of this
People from all classes
regardless of their out¬
a
situation.
of
>r;By
;
life,
looks, rushed to be vaccinated. We
even
accept as a fact that the
world will be different in
years to
come
because of the discoveries
poor
tected
(Continued
on page
all
against
J-
the rich bond-
holder
V:'~
sented.
and
cheap
There
was
money"
"cult
a
well
of
developed
both here and in
England during
the early '30S when
government
debts were relatively low. The cult
was
based upon the three tenets:
(1) That low interest rates would
encourage borrowing, induce busi-
(Continued
on
page
28)
40)
*An address by Mr. Benner be¬
fore the Annual Convention of
the Maryland Bankers Associa¬
Leland Electric
E. S. FERGUSON
:'V
T
Practi¬
"
all
a
11
a
prospective early liquidation being also
necessary.
as
tion, Atlantic City, N. J., May 16,
securities
people of the
United
in
assets
the
and
from
intangibles.
availability of
a
good
An
from
example
of
the
E.
Spahr
deplored by these modernists
multitude of ways.
The reasons for this modernistic
a
(Continued
*An
E.
S.
Ferguson
fixed
distributing organization
Walter
monetary art of the last 15
figures, and hence of the in¬
capital figure, such shrinkage
more than offset
by the "wind¬
values
s
*
;
accounts receivable
dicated working
some
a
—
derided
and
of
w
money. The well-tested principles
of monetary science were
working capital may be looked on as
rep¬
resenting the minimum liquidating value of a
company.
For, although actual liquidation
might
entail ashrinkage of the indicated inventory and
realization
States
something
e
modern, pro,'.y
gressive, enlightened principles of
particularly during periods of
usually should be
sciepce
dug up,
dusted off, and
offered to the
n
Net
fall"
s
to
were
or
Common stocks
selling near or below their
respective
companies' net working
capital
should
always interest those seeking under¬
valued
e
modern mone¬
tary
falling markets.
the
i
c
known
a
power
:
Claude L. Benner
the avaricious banker.
The argument for low interest
rates was not always thus
pre¬
„
in the field of atomic research.But the moment we get into so-
pro¬
at
-
.
bu i 11
along striking
growing trend toward appraising stocks on earn¬
ings and ignoring asset position. Holds this is unsound in
implying
ability to forecast cycles.^ Mere discount from
liquidating value is no guarantee of bargain, accom¬
paniment -of either sustained earning
He
costs
product
f
Senior Analyst, E. F. Hutton & Co.
,
Mr. Ferguson notes
tax¬
payer.
must be
.*%.•
largely the
indeed, a
r
was
cally
in
in¬
savers,
at chwork.
lines.
that
a
This
,
their main
strike.
v
Working Capital's Importance In
1
1 i
e c u
p
rates
campaign against
is,
3>p
lower
would have
a
The monetary picture in the
United States today is
result of a modernistic art of the
last 15 years.
It
beneficial
and
interest
try to talk
has been
in
effects of low¬
er
latter
would
which had
be
fore
on
page
years
20)
address by Dr. Spahr be¬
Connecticut Chamber of
the
Commerce, Hartford, Conn., May
22,
1947.
been
handicapped through inefficient
production, but could constitute a
valuable asset to a mere
producing concern.
Hence the net work(Continued
1947.
on
37)
page
Aerovox Corp.
Havana Litho. Co.*
*Prospectus
Municipal
R. H. Johnson & Co.
Established
on request
1927
INVESTMENT SECURITIES
Hirsch & Co.
64 Wall
Streat, New York 5
Members New York Stock Exchange
and other Exchanges
BOSTON
05 Broad St., New York
4, N. Y.
Troy
HAnover 2-0600
PHILADELPHIA
Baltimore
Chicago
Teletype NT 1-210
Cleveland
London
Geneva (Representative)
Buffalo
Syracuse
Dallas
Sranton
Pittsburgh
of INDIA, LIMITED
Bankers to the Government in
Kenya Colony and Uganda
Head Office: 26,
52
Bond
Dept. Teletype: NY 1-708
Conv.
NEW YORK 5, N. Y.
Solar Aircraft
....
Bishopsgate,
90c
in India, Burma,
Ceylon, Kenya
Colony and Aden and Zanzibar
Subscribed Capital
Paid-Up Capital
Reserve
The
Fund_—
*
*
Conv.
Trusteeships and Executorships
also undertaken
Bell
HAnover
2-0960
Teletype NY 1-395
New York
Montreal
NATIONAL BANK
OF
THE
Toronto
on
CITY OF
NEW YORK
J.":
;
Bell
Gas
Service
Corp.
Common
and Dealers
Hardy & Co.
Broadway, New York 5, N. Y.
'jf Telephone:
Federal Water &
request
Reynolds & Co.
,
Brokerage
for Banks, Brokers
-
Members New York Stock
Exchange
120
Bond
,
Exports—Imports—Futures
of
DIgby 4-2727
WILLIAM ST., N. Y.
Preferred
*Prospectus
£2,000,000
£2,300,000
conducts
every
description
banking and exchange business
Company
Conv. Preferred
*Twin Coach Company
SUGAR
-£4,000,000
Bank
Security Dealers Assn.
Preferred
Detroit Harvester Co. Com.
London, E. C.
Branches
York
Acme Aluminum
Alloys, Inc.
WALL STREET
\
New
Department
THE CHASE
Members
Willkes-Barre
LAMBORN & CO.
99
HART SMITH & CO.
OF NEW YORK
Harrisburg
Williamsport Springfield Woonsocket
.......
NATIONAL BANE
.
Albany
Bond
THE NATIONAL CITY BANK
REctor
Teletype: NY
2-8600
1-635
■
.£
:
-
Contends monetary situation
requires careful watching and advocates return to
gold standard.
<S>-
legal.
Maintains it
rates
and capital accumulation.
vestors
a
The
believers
*
taxation, and artifi-
cially low interest
Says
warns
{■
Monetary Policy
Spahr traces developments and manipulations
leading to present
Criticizes Federal Reserve
policies and points
out inflationary
dangers. Holds monetary program, along with
heavy Federal spending, borrowing, destructive
arguments advanced
today for cheap money are
mainly
based upon the
necessity to keep the interest costs of the
Federal
Debt low. The
legal pro¬
vided the ends
as
are
control inflation and distortion of
price structure.
large part of savings and liquid assets is
"phony," and
high price in rising prices will be
paid for cheap money.
Concludes
regarded
can
/rk.
Dr.
of "cheap
money
inflationary trend." Sees danger in excess
supply and bank deposits, and expresses doubt Federal
Re¬
money
serve
Money Picture?
monetary situation.
in peacetime increases
in early 19th
century strikes were
regarded as unlawful conspiracies.
to be
on
financing.
even
Copy
Professor of Economics, New York
University : >
Executive Vice-President, Economists'
National Committee
Holds larger part of
Treasury deficit could have been financed by
public instead of the banks, and continuation
warfare. Traces
legal history of
labor regulations and
strikes from
medieval times and shows that
Strikes
'
Mr. Benner refutes
arguments presented by
"cheap money" ad¬
vocates and criticizes low
interest rate pattern in war
a
a
By WALTER E. SPAHR*
Vice-President, Continental
By HAROLD
GLUCK, Ph.D.
Writer
Price 30 Cents
Members
New
York
Stock
Members
New
York
Curb
30 Broad St
Tel. DIgby 4-7800
Exchange
Exchange
New York 4
ira haupt &co.
Members New York Stock
and
111
other
REctor 2-3100
Tele. NY 1-733
Exchange
Principal Exchanges
Broadway, N. Y. 6
Teletype NY 1-2708
Boston Telephone:
Enterprise 1*20
:
2
:Trading Markets in:
Companies Liquidated in First Quarter
Investment
Standard G & E, Com.
Alabama &
ANSBACHER LONG
By HENRY
Lines
Reorg. Rails
Thursday, May 22, 1947,
& FINANCIAL CHRONICLE
THE COMMERCIAL
(2726)
Amer. Barge
Old
&
Commons
40
N. Y.
Ass'n of
Security Dealers Assn.
Securities Dealers, Inc.
Exchange PI., N.
Y. 5 HA 2-2772
BELL TELETYPE
great consoling pastime of picking out for tax losses his securities whose prices have
been the most severely slaughtered in the current bear market. Scarcely yet awakened
to the simple
<*>.... ...
State Street Investment,
ter period, portfolio activity gen¬ quarter.
fact of life
|
cash and
erally increased over, the preced¬ Corporation increased
that all warf
governments by $8% million tc
ing
1946 quarter and sales of
inflated spec¬
NY 1-423
a
Tube Reducing Corp.
unhap¬
ending, he
very
py
will
(New $1.00 par)
whom
do you know
that got out?"
"Well,
can
120
Broadway, N. Y. 5
Bell Teletype
investment company man¬
several
WOrth 2-4230
-
Henry A. Long
after placing their port¬
defensive positions dur¬
agers,
NY 1-1227
folios in
ing the third quarter of 1946 and
maintaining a cautious attitude in
quarter, liquidated addi¬
tional security holdings and in¬
creased cash and governments ex¬
Savoy Plaza
the last
3/6s, 1956
first
tensively in the -subsequent
three months of 1947.
Savoy Plaza
Class "A"
the case
19%
Worumba
this article
Mfg. Co.
Tide Water Power Com.
Tobin Packing Common
development reversing a previous
trend favoring these companies.
An
outstanding
exception was
which was
purchased heavily. Concentration
of buyers was focused on the oil
while electrical equipment
met with the
manufacturers also
approval of purchasers.
It is doubtful whether for years
only
Activity Increased past investment companies in¬
conclusion of creased their liquidity to the ex¬
tent that they did in the recent
shows that in this lat-
preferred stocks
of its funds was in¬
securities subject ;tc
volatile price fluctuations.
Frank C. Masierson & Co.
in
Established
Members
Large Cash Increases
64
Wellington, there were
companies which,
on March 31, had less than 65% of
net assets in equities, or preferreds
and bonds with similar character¬
Besides
several
New
,.
1-1140
Teletype NY
New
York
Telephone COrtlandt
Bell System
Curb and Unlisted
instability., General
had only 55%%
assets thus invested.
Nation-
Securities
(Continued on page 24)
KANE, Asst. Mgm
CHARLES J.
7-4070
President, Investment
1
.
Teletype NY 1-1548
Wharton Iron & Steel
Electric System WI
U. S. Finishing com. & pfd.
Gen'l Aniline & Film "A"
Northern New England
United Piece Dye Wks.
theories
to
as
their
when a person is on
Lawyers say that
markets-
stock
should
know
Boston & Maine R.R.
Aetna Standard Eng.
am
be
must
up
going
start
Steel
to
this dis¬
with
cussion
Punta Alegre Sugar
Letters, Inc., Detroit
Warner & Swasey
Newmarket Mfg*
question.
It
national
the
wealth
Foundation Co.
history of the United
1775 to date will be
business
from
States
fact above all
is the regularity
with which, decade after decade,
by
struck
line
the
riods
one
This
others.
rises and falls over pe¬
running from one to
three
progres s
cou
'*
n
such
Time, Inc.
Charles
ada
Collins
J.
t
years
down
a
over
somewhat
similar
period, and so the story goes in
of good weather and bad, in war and
income
Int'l Detrola
r
as
i v e
i e s,
Can¬
and
the
United States,
in
peace,
under
Democrats and
Republicans.
The excep¬
tions to this rule are so few as
to be counted on the fingers of
under
one
hand.
All economists
recognize this
to larger
proportions as undulation in the economic curve.
the years unfold, rather than be¬ They term it the "business cycle."
ing subjected to alternate periods Unanimity does not exist, how¬
of expansion and contraction?
ever, as to what is the motivat¬
Anyone who will examine the ing force behind this repetition of
so-called good and bad times. The
uninterruptedly
grow
and more bountiful
(WeneTOiComptmn
Members N.
Bell
Y. Security
Dealers Assn.
Hanover 2-4S50
Teletypes—NY 1-1126 &-1127
St., N. Y. 5
37 Wall
by Mr. Collins be¬
Association
of
Cus¬
*An address
fore
Trading Markets in
the
tomers'
American-La France
Members New York
*
the defensive it is always good strategy to
Since any one who presumes to discuss
and
Moxie Common
Argo Oil
-
Detroit
in length. That is, business
is
this:
Just activity will move up from one to
why does-not three years, then it will move
a
Detroit Int'l Bridge
Pick
them.
questions rather than to answer
all the time I
Albert
Brokers, New York City,
May 19, 1947.
v
psychological
weather,'
the
the
conduct,
uncertainty that beclouds
plans that
all
stretch into the future,
aberrations
to
emotional
Markets in U. S»
Abitibi Pow. & Paper
^National Alfalfa Dehydrating
Brown
Co.
& Milling
Bulolo
Gold
Mfg.
Standard Stoker
Minn.
ject,
istic
of
character¬
innovations
the
modern
society,
Prospectus available to
115
110 PINE ST.,N. Y. S WHitehall 4-4070
Teletype NY 1-609
'90
too
industrial equipment,
of banks, special¬
overproduction, the flow of
much
the, operations
ized
incomes, the conduct of
business for profit: each, accord¬
money
§
British
Securities
been assigned
inquirers within
recent years. The two most sat¬
isfactory remarks on the subject,
to my mind, was that of Morton,
who said that business fcycles rep¬
resent a series of compensating
errors;
and- that attributed to
Andrew Mellon to the effect that
a
depression is a period when
property returns to its rightful
by
Securities
I.
;,4,
N. Y. 6
HA 2-2400
1-376-377
Teletype NY
Private
Detroit
-
Wires to
Cleveland
- St. Louis
Pittsburgh
RIGHTS &
SCRIP
McDonnell &fo.
New
New
120
PRIVATE WIRE
'
Common &
Preferred
Raytheon Manufacturing Co.
$2.40 Conv.
NEW YORK 5
Tele. NY 1-1815
Preferred
*ProspectU8 on request
t
ESTABLISHED 1890
Tel. HAnover 2-9300
Inc. Com. & "Aw
*Emery Air Freight Corp.
Reynolds & Co.
Members
»•
:
BROADWAY, NEW YORK 8 «
Tel. REctor 2-7815
uJiit
Common
SONS
INCORPORATED
STREET
Curb Exchange
York
^Georgia Hardwood Lumber Co.
offices of
j-g -White & Company
37 WALL
\»;
York stock Exchange
*Air Products,
BALTIMORE
.«>•'*i v
Security Dealers Ass'n
Trinity Place,
Members
opin¬
busi¬
nessmen, bankers, and investors,
(Continued on page 26)
Despite the diversity of
ion as to the cycle's cause
ROBERT GARRETT &
Teletype NY 1-672
.5 5'
Members N. Y.
74
...
Co.
staro
February 28, I Ml'
Troster.Currie&Summers
owners.
to
and Other Principal Exchanges
NEW YORK 6, N. Y.
Telephone BArclay 7-0100
$4.42 Net Profit per
Year ending
competent
I
BROADWAY
Duparquet, Inc.
business cycles has
Department
Y. Stock Exchange
Nathan Straus *
ing to Professor Wesley C, Mit¬
chell, is among those factors to
which a leading role in causing
DIRECT
Gaumont-British
Scophony, Ltd.
Goodbody <Sl
Members N.
|
New York $
Teletype NY 1-15X0
techno¬
logical advances, the magnitude
of savings, the construction of
FUNDS for
United Kingdom 4 %
Rhodesian Selection
Department
dealers and banks only
G.A.Saxton & Co., Inc.
>
& Ont. Paper
Canadian
*Tennessee Gas & Transmission
*
.
'•
Digby 4-3122
decisions are sub¬
which business
ANNOUNCING
We Maintain Active
Giddings & Lewis
^Standard Ry. Equipment
-1
Curb Excha^m*
Chicago Stock Exchange /
39 Broadway
ask
the
Dictaphone
General Portland Cement
Grinnell
.
causes
that his guard
Sterling
-- ■
Joseph McManus & la;
,
analyst calls attention to
reviews
Title Guaranty & Trust
United Artists Theatre
Firth
f
pejjodicity of booms and depressions during last two centuries and
and remedies. Holds two influences emanate from time cycles, one
positive or expansive, the other negative or contractive, and illustrates by a diagram. Notes certain
special factors may lessen effects of major influences and concludes time cycles favorable to stock
market rise or to decline may be modified though not completely altered by major economic forces.
Market
New Eng.
COLLINS*
Investment Counsel, Inc.,
Chairman,
i
Taylor
■
'1:'
5
dctuai maxkeU Qu
'''
i
'
,
Exchange
NEW YORK 5
HAnover 2-9470
MICHAEL HEANEY, Mgr.
Curb* Exchange
Street, New York
1923
Curb
Trust
Investors
Vanderhoef & Robinson
Members
York
WALL ST.
other
istics of price
of
Units
*Prospectus on request
'
;'
52%
vested
more
Tudor City
higher
in
WALTER
SI Nassau
branch offices
Citizens Utilities Common
million.
holdings
its
of
grade bonds and
at the
table
our
holdings. Blue
million—29% of to¬
assets. With an additional
tal net
Dispersion and
The
gross
mately $11%
•
BID W ANTED
21% of
or
Business Shares, $2
textile, and tobacco com¬
panies.
A tendency to lighten
coiyimitments in the building and
construction industry was a new
group,
La.-Birmingham, Ala.
Direct wires to
Ridge added $4 million,
noticeable in the stocks
United States Gypsum
NY 1-1557
HAnover 2-0700
New Orleans,
Exchange
York 4, N. Y.
$5.% million of cash equivalents
bringing this item to $19-% mill¬
of paper,
readily be
given, for it is
a
fact that
Stock Exchange
Members Baltimore
'
also
was
answer
was
as
Stock
York
New
25 Broad St., New
million, cr 15% of
Lehman Corporation addec
as?ets.
characteristic of both pur¬
chased and sales
and ask
challengingly,
The
Members
American
The
in the previous period., Selling Wellington Fund of Philadelphia
also increased its holdings of cash
was most pronounced in the mer¬
and governments by over $2 mil¬
chandising, amusement, railroad,
and
rubber shares.
Liquidation lion, making this item approxi¬
eyes
at you
Quoted
Steiner,Rouse & Co.
total of $10
dispersion
among
individual securities was ion,
many
more
bleary
25%
were
transactions,
his
cast
a
greater. While there was evidence
of
a
certain
concentration in
to
come
holdings
individual
ulative booms
must
Bought, Sold,
Bought—Sold—Quoted
the disheartened investor in stocks will engage in
at the end of a year,
Once again,
manufacturers.
that
SECURITIES CORP.
Established 1920
Nat'l
Bought oils and electrical
shares.
.
KING & KING
Members
Louisiana Securities
provided investment companies with their largest cash reserves in several years.
Predominant sales occurred in merchandising, amusement, railroad and rubber
Drug Products
Lear, Inc.
authority shows substantial selling by Trust managers
Analysis compiled by
Preferreds
120
New
York Stock Exchange
Broadway, New
York 5, N. Y.
Telephone: REctor 2-8600
Bell Teletype: NY 1-635
'
[Volume
165
Number 4596
THE COMMERCIAL &
FINANCIAL CHRONICLE
(2727)
INDEX
Articles and
What Is the
The Cost of
News
_____lCover
___Cover
Working Capital's Importance in
Common Stock
Valuation—E. S. Ferguson
What Do the Facts
Show?—Harold
Investment Companies
Guaranteed Wage: Mirage
Reasonable Goal?
Paee
Money Picture?—Walter E. Spahr
Cheap Money—Claude E. Benner
Guaranteed Wage:
(
—Emerson
P.
Mirage
J. Collins
2
Schmidt
—-
3
—.
r-Salvation in Repeal of New
Deal Policies'—William S. Baren
„
—Edwin G. Nourse
5
Menace of Expanding
Government—Nathan L. Miller—
U. S. Responsibilities in
Foreign Reconstruction
—Dean Acheson
Speculative Interest in Bonds of
Enemy Countries Noted
5
Szymczak
own
WALL
STREET, NEW YORK
Telephone:
it is
WHitehall 4-6551
drive
for
front
the
desire
Dr.
E.
P.
old
as
as
We
fishing
the Business Outlook
armed
6
.
the
fathers
plied
wilderness with hunting and
the
equipment;
to
meet
they
hostile
only
a
8
——
Farm Values and Farm
Mortgages—C. W. Bailey
Real Estate Prices Not
9
America,
Excessive—Morgan L. Fitch—9
Chicago Exchange Will Aid Mid-Wfest Financing
—James E. Day
not
and
be*
the
search
of
the
we
exclusive
May
19,
FARR
Members
New
for
New
York
120
WALL
a
St
CO.
Stock
Sugar
Exchange
Exchang
ST., NEW YORK
change,
nostalgia for
thinking and
examine
knowing that
American Overseas Airlines
new
rest
at
ease
Republic Natural Gas
if
Haile Mines
security becomes
goal
(Continued
&
York
Coffee
TEL. HANOVER 2-9612
of
a
people.
If such be the case, we
may lose
I
*
Quotations Upon Request
adequate
must
we
should
Schmidt
Pittsburgh,
Vicana Sugar 6's—1955
na¬
resist
new,
few of the
Institute
1947.
be
Alegre Sugar
on
page
U. S.
Finishing Com. & Pfd.
34)
10
World Bank Becoming
by Dr.
Controllers'
fore
a
proposals
have genuine survival value.
Nor
*Address
become
earlier ways of
doing.
Yet,
critically the
were
beast
should
merely because of
self. Our fore¬
4
have
an
earlier age will
for modern times.
civilization it¬
Schmidt
Earners
We should not expect that the in¬
struments of security adapted to
for security is
legitimate and
is
Wage
tion of
employees, whose survival,
well-being and contentment rest
on
a
steady flow of pay checks.
Ameri¬
The
We
earners.
business.
can
of
Today, four out of five gain¬
fully occupied persons are wage
wage would
not now con¬
9
UFE Wins Election at Drysdale & Co.
But Loses Labor Board
Decision in Harris, Upham Case
Common
Punta
A Nation
guaranteed
-
EasternSugar Associates
They sought security in their
ways.
programs, had
brought about
security, this
8
—_
man.
security
7
*
___
or
7
—
More Answers to the
Question: "Is the Money Supply Too
Inflationary Spiral and
—Alan Temple
99
warns
mean
.
social
—
Large?"
not
per-^>
7
Armstrong
The
industry does
one
security,
as
sonal thrift
World Bank—A Conservative
Pioneer—E, Fleetwood Dunstan 11
The International
Bank—Chester A. McLain—
11
How Can U. S. Contribute to
Better World?—Marcus Nadler 13
The National Debt—Bank
Problem No. 1
:
Morris M. Townsend
14
A Sound Tax
System—John W. Snyder--;
15
Britain Moving Toward Fascism—G.
J. Harris
17
*
is
payments
motto.
our
search for security takes
many forms, of which the demand
guaranteed wages is only one.
If the other routes to
for
6
—
-
Which Version of UK's
Finances Is Correct?
—Herbert M. Bratter
The Problem of Real
Estate Forecasting
—Robert H.
*
arise under guaranteed
employment, and
such
Wall
Revision of SEC Proxy
Rules—Harry A. McDonald
The German
Situation—M. S.
Accurate
course.
quick
The
——-
Street—Edmour Germain
The Stock
Exchange—A People's Market—Emil Schram^
and
adaptable to all.
6
w
on
may
of guaranteed
wage in
success
.
of
money
appraisals
employment. Says guaranteed wage is libaralunemployment compensation. Lists several unsettled
questions that
4
—<
Organized Labor and Economic
Stabilization
■———
remedies of unstable
ized version of
4
,
Price Outlook and
Consiimer Purchasing Power
—Julius Hirsch
—The
causing belief employers are negligent of
duty to workers; and (2) diverting attention from real
causes and
3
—
Unregistered Securities—James
Cortney___
AND COMPANY
"come and get it"
Dr. Schmidt points out drive for
guaranteed wage may have unfor¬
tunate effects by:
(1)
Reasonable Goal?
or
Department,
Commerce, U. S. A.
Chamber of
.
2
—L
»LiCHitnsTtin
Director, Economic Research
—Cover
Liquidated in First Quarter
—Henry A. Long
Master Market
Cycles—Charles
n
By EMERSON P. SCHMIDT*
Cover
Gluck__
or
12
Activated—Eugene R. Black
Distribution of World Bank Bonds Important Job
Ahead
Edward E. Hopkinson, Jr
13
—
R. G. Munro New World Bank Director—
Secretary Snyder's
J.K.Rice,Jr.&Co
'Established 1008
i..
Press Conference
SEC
—14
Australia's Election to Fund
Imminent-——————-
Congress Must Economize—Rep. Frank L. Sundstrom
15
Russians Believed to Have Issued 12 Billion
Military Marks- 16
U. S. Must Join Sterling Area—W.
Craven-Ellis
,17
W. Randolph Burgess Favors Direct
L
•
[
.
_
•
Congress by the Securities and
heading "A Proposal to
Safeguard Investors in Unregistered
Securities,'' the bill
introduced in the
closing weeks of the last Congress as
HR 7151To
:
.
Regular Features
Bank
Page
and
Business
Insurance
Man's
Stocks
14
Bookshelf.
Canadian^ Securities
33
.:.
18
Coming Events in Investment Field
Dealer-Broker Investment
7
"
10
Einzig—The Battle of Sterling
Balances
Mutual
NSTA
52
Funds
Notes
12
10
.
Observations—A
Our
Reporter
on
Wilfred
May—
Governments...
S.
Patent
22
Whyte Says)
Washington and
*See
-
„
D.
RIGGS, Business Manager
1947
Every Thursday (general news and ad¬
vertising issue) and every Monday (com¬
plete Statistical issue — market quotation
records, corporation news, bank
state and city news, etc.).
Other; Offices:
135
S.
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clearings,
3.
St.,
Chicago 3,
HI. * (Telephone:
State 0613);
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Bond & Mtge. Guar. Co.
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WHitehall 4-6330
1-2033
Y.,
Act
of
March
•
and
per
Monthly
per
us
to the
and observations:
second-class matter Februthe post office at New
the
Interstate and For-:
Sugar
Susquehanna Mills
DUNNE & CO.
Members New York
Security Dealers
Assn.
{25 Broad St., New York 4, N. Y.
WHitehall
3-0272—Teletype NY
1-956
following analysis
Dana
at
under
on
1947, dealing with the same
the current
activity of the
and
SEC in furtherance of them lead
9.
page
the
Quotation
Record—Monthly*
(Foreign postage extra.)
Earnings
Record — Monthly;
year.
(Foreign postage extra.)
Note—On account of the fluctuations in
the rate of
exchange, remittances for fori
eign subscriptions and advertisements must
protective
schemes provided
for by the
evils to flourish with
Act, which gaps permit
unregistered (unlisted) securities.
The SEC tells
of
year.
be made in New York funds.
The SEC report takes the
position that there
in
S.
Other Publications
Bank
$25.00
at
least
was
bad
as
as
us
are
*Hungerford Plastics
gaps
Securities
respect to
that in some
respects these evils
Metal
*
any
the conclusion that the
extension of the
protective provi¬
12-13-14 and 16 to
unregistered securities
is necessary and desirable in the
public interest and in the
interest of investors, and the
Commission so recommends."
To this
report in Appendix A is attached a
proposed
sions of Section
(Continued
on
page
Forming Corp.
^District Theatres
*Dumont Electric
are
of the other things which the Act
designated to eliminate,- ergo "They point
forcibly to
1
*
Prospectus Available
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•
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York,
HERBERT D. SEIBERT, Editor & Publisher
WILLIAM
articles
Reentered
»ry
IHLLIAM B. DANA COMPANY, Publishers
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WILLIAM DANA
J.
17
U. S.
undefthe
implement that report, the comments of James
Caffrey, Chairman of the Securities and
Exchange Com¬
mission
16
16
You...
Copyright 1947 by William B.
Company
Office
REctor 2-9570 to 9576
T
v.
Securities Salesman's Corner
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Tomorrow's Markets (Walter ;
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5
FINANCIAL CHRONICLE
Reg.
•
Railroad
Published Twice Weekly
The
5
Page
Our Reporter's
Report..
i3
Prospective Security Offerings/..: 51
Public Utility Securitiesr;.-8
Real
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•
Lea Fabrics
The 1946 report to the
•
Broadway
Teletype N. Y. 1-714
Punta Alegre Sugar
j
urged.
52
f
Security Dealers Assn.
Haytian Corporation
'
pur¬
poses
Investments Broad_2l~l 52
Fund Jottings
advocacy of legislation further controlling the over-the-counter
should remain undisturbed.
Individual volition controlling
factor. Curtailment of SEC
powers
Y.
2-4500—120
Bell System
market held unwarranted.: Auction
and over-the-counter markets
contrasted—latter the product of trade custom.
Attempt to increase
scope of registration and proxy
practices respecting unregistered
securities disapproved.
Parallel markets both
serving useful
14
14
N.
REctor
13
World Bank Research Director in
Europe
World
Members
By JAMES CORTNEY
Telephone BOwling Green 9-356S
-
Worcester
3'
Teletype NY 1-1666
.6
li
.mi I|||<»>* on
>
Thursday, May 22, 1547
CHRONICLE
COMMERCIAL & FINANCIAL
THE
A
.11
(2728)
1X1
the Question;
£™m™ is the Money Supply Too Large?!
More Answers to
New Deal Policies
EST. 1926
By WILLIAM S. BAREN
"Chronicle" of May 15, starting on page 3, we published
commenting on Howard R. Bowen's address, "Is
the Money Supply Too Large?" which appeared in our issue of May 1
(cover page).
Mr. Bo wen,' it will be recalled, expressed the opinion
number of letters
present money supply is not too large
for his stand. Because of the
that the
ber .of reasons
which
paralyze business; to fiat, money; and to labor monopolies created
and supported by. law.
Says New Deal has fostered class hatreds
Writer lays economic and social difficulties to New Deal taxes
,
and set forth a numr
broad interest in the
"Chronicle" invited comments on the article in question
already stated, some of the responses already received ap¬
in last week's issue. We are able to accommodate in this
and
subject, the
and, as
Abitibi Power
peared
American Hardware,
u
'"
■
the
In
a
V-
letters as follows:
edition additional
_
;
--
r"
|
bureaucracies; and unless "the
depression will
come.
is cut otit,"
cancer
business
a
j
.
.............
....
^
On the-s-treet--corners throughout the land, in the marts of trade,
in the public forums,- wherever men gather today, one question is
asked, "Will
~
■
,■ v. - ■■
;;
-
Amer. Overseas
Airlines
WILLFORD I. KING
1880-1915, the money sup¬
between
pr
Mfg.
..
Chicago R. L &
Old, Pfd.
.
fers' that this
shows* something.wrong
;
v..
*
:
*,
Brockway Motors
Cinecolor
^
"
;
-
;
multiplied by eight, the
rr le?el did hot "change: 'He in-
ply was
Barcalo Mfg.*
Bates
l
'
i
with the quan-
I
Pas.;!
.
icy theory of
.
honey. He ig-j
Qores the fact
that, .in that
theory, the
'.
.
,
.
.J - '•
iGeneral Machinery
Gt. Amer. Industries
Higgins Inc.
r.
'
.
:.
.
•.•
as
as
;
.
litv of money.
He also lays
■
.
Lanova*
Michigan Chemical
Minn. & Ontario Paper
Missouri Pac.
Pfd.
Moxie
Nicholson File
Pathe Industries
Purolator Prod.*
Stand. Ry. Equip.
Taca
Com.
Taylor-Wharton*
Textron
Wt«. & Pfd.
Upson Corp.*
U. S. Air Conditioning
United Artists*
-
supply
-To- chart figures on money sup
ply for the 19th: Century - from 5
"base" year in the 29th, is to' plac<
in the same category with icurren1
,
and
the
national income
j United Drill & Tool "B"
Vacuum Concrete*
ta ry
mo ne
>
con c
able
able
were
hold
that
there
is
on
no
relationship between the quantity
of money in circulation and the
interest rate. Dr. Bowen states the
reverse.
Economists,
generally,
hold that interest rates may be
kept down^by
Apparently
continuing inflation.
Bowen confuses
Dr.
and the radio has become a
forum
of
conflicting
opinion regarding what lies ahead
for these United States.
ple
income
h a
n ges
remote
Alden A.
changes at
detect¬
Potter
are
able
in
that
and
cur¬
Amer. Gas & Power
Cent. States Elec. Com.
Derby Gas & Elec.
Federal Water & Gas
<
i
$
Puget S'nd P. & L. Com.
Southwest Natural Gas
Standard Gas Elec.
tProspectus
•
Bulletin
or
Upon Request
Circular
upon
high
high commodity prices, shortages
of materials, labor unrest, penal¬
izing taxation, unbalanced inven¬
tories, declining purchasing power
Under
90%
of
the
the door for new
answer
trying
been
to
as
as
of our most
earnings
to
supply on
industrious
citizens, cancel out the
incentive that is necessary to open
able
and
for the
job opportunities
great masses oG our people.
Roosevelt we also initiated
and lack of
Price Outlook and Consumer
Purchasing Power
By DR. JULIUS
Economist forecasts increasing
purchasing until Labor Day and
gradual decline thereafter, with spotty, but increasing unem¬
ployment. Asserts, with a decline of 10% in food prices, mass
purchasing power will increase about $V-/% billions. Says we will
have a number of price increases, which together with lower ex¬
reduced output of investment goods, and lower corporate
profits, will reduce purchasing power by about $4 billions; bat
this may be offset by tax reductions.
Holds textile prices have
ports,
reduced sales of department stores.
will ultimately prevail.
passed peak, and predicts
Concludes decreasing price tendency
The
which now disturbs our business life is
contradictory elements in our economy affecting
great uneasiness
prices and the<$
price outlook. had
Bought—Sold—Quoted at Net Prices
EASTERN CORPORATION
sum¬
we
mer
the
will
Corporation
Teletype: NY 1-2948
Telephone: LExington 2-7300
request
Fashion Park, Inc.
earnings)
(Stock selling about twice
Tennessee Products
during
as
reached
a
an
whole we
all-time
peak of production—now even,
exceeding the wartime peak—not
p
only in dollars but also in physi¬
cal volume. The volume of our
gross
As
seems
predicted
by the United
States Em¬
Street, New York 16, N. Y.
economy
now
have ever had.
ESTABLISHED 1927
the past year and
our
have
y e a r's
loyment
figure, the
highest we
e m
in
war.
In
reach
again
last
Central National
HIRSCH*
a
caused by sharply
Tide V/ater Pwr. Com.
penalized in order
50%
have
who
the
the
22 East 49th
are
to
the* problem
have been dealing with EFFECTS
rather than causes. It is true that
those
This
t
us
mollify and support the envious
and the inefficient.
Taxes upon
individual incomes that now take
to
of
most
that
tax
among
confusion there are
indications
Under a socialistic
law
the
efficient
that!
as
what is erroneously termed the
public confidence are "capital gains tax." But it is really
all straws in the wind which show a tax UPON CAPITAL NOW IN
the direction we may be taking in EXISTENCE. Even socialist Eng¬
in order to reduce recent, signif¬ the future.
But these things are land does not have such an un¬
icant
and reliable figures to
£ not basic CAUSES of a depression just tax but here in Roosevelt's
"secular trend" which conceals the in themselves. They are only evi¬ postwar, socialist America, riskfacts regarding the influence oi dence of deeper and more serious taking has become a "heads I win,
(Continued on page 37) *
>
the money supply in the boom- maladjustments in our way of life.
bust cycle of business activity and
depression with its concomitant
the effect of money
Warner & Swasey
I
strong
find
"deposits
the
this
all
In
chart
Bowen
no
the
In
base.
not initiate taxes
the earnings of business, PROG¬
RESS IS STIFLED.
It is as sim¬
Baren
Wm. S.
press
price variations. Thus Bowen says
present that "the money supply has in¬
money supply was created almost creased steadily," which begs the
entirely in response to the desires whole issue involved by deliber¬
of the public to hold money." Ob¬ ately ignoring variations. All this
viously, "desires" had nothing to statistical "smoothing" eliminates
do with the matter.
Willingness the significant correlations, i. e.,
actual fact of
thepositive
to buy bonds was present—other¬ the
wise the Government could not correlation between money supply
and price level — which is not
have sold its bonds.
quite concealed? however, even in
Wise people knew during the
the Bowen chart with its arbitrary
inflation period that money was
coincidence of money supply and
depreciating in commodity value.
price lines in 1926 (the "base"
They also knew that government
chosen).
bonds were likewise depreciating.
Whether they kept their money or
The Bowen chart puts that bur¬
bought bonds, they got the worst
den of ridiculous argument on the
of the bargain.
This is another
(Continued on page 38)
point which Dr. Bowen forgets.
states
nomists.
daily
churning
price level is absurd and leads to
glaring inconsistencies in argu¬
necessary ments It seems to have been done
the subject
and
ditors
we
the earnings of corporations .
Whenever the -v
Federal Government takes 40% of
percent¬
a
Under
at the rate of 40% ?
tical
to
authorities
confidence in the future?;
chart
c
/
upon
e c o
stable, but he ignores
rency" line until their is an ap¬
equally important fact that,
proach to the "base" in the 20th
things being equal, when
century.
To try to draw valid
the money supply doubles, the na¬
tional
income
doubles
because ^conclusions from such an index as
Most
erning
The
from
>
present day/
paralysis^of venture capital, why
statis¬
error
to
age
-
is there^ such a dearth of investor-
l.orious
other
have doubled.
Take the-case of. the
Roosevelt did
e
not ano-
Capital
"
academecians,
the
prices
-of
government,
available
and even if it
were
j
~
Taxes and Venture
this suhject by
officials
of
if reli¬
statistics
even
eans:iA ^
it
All
opinion- are
put forward
which
be
oompar
will
.
last?"
shades
not
would
that find
evidence'supplied- bv contemporary history, that V
Is familiar to most adult. Ameri-;
and-how
be
long
The following observations are
fheir- genesis in the
how
so
serious-will it
practices con¬
ditions
-:
based upon convictions
'depression-,
and if
tends to be
He
Polaroid
j
money
the two idehs.
Philip Carey
\
the
a
Befhesda, Md,
.
v
all
Long Bell Lumber
Majestic Radio & TeL
Mexican Gulf Sulphur
j
the
the
between
ratio
•
-
Old
fact
^
Willford I. King
on
that
stress
Jack & Heinz
-
is the quan-
is
trade
Hydraulic Press
£
of
just
important
volume
•
Hoover Co.
.
although,
states that
.Dr. Bowen
America have
ALDEN A, POTTER
N. Y.
New York,
national production jnow
to be running about 56%
above 1939.
r ;
TJ
Nevertheless, important sections
business life are
complain¬
S e r v i c e, 58 ing about the drop in unit salds:
million per¬ department stores 8 to 10%, shoes
sons
will be considerably more, women's ap¬
Julius Hirsch
employed i n parel, it seems, 15 to 20%, abotit
July.
That the* same in jewelry stores, and
will be nine million more than we considerably sharper for enter¬
ever
reached in pre-war times, tainment enterprises and liquoir,
rL
even
in the glorious prosperity for example.
We have the highest payrolls
year of 1929, and about four mil¬
of
ployment
our
•
.fAmUrs N.Y. Security Dealers Assn.
120 BROADWAY, N.Y. 5
lion more than at
Consolidated Dearborn
wartime
Analysis
We
upon request
REctor 2-8700
shall
activity.
have
unemployment
the peak of our
ever
Nevertheless,
somewhat higher
figures
than
we
N. Y. 1-1286-1287-1288
Direct Wires To
\
Pnlla., Chicago & Los Angeles
Seligman, Lubetkin & Co.
Incorporated
ENTERPRISE PHONES
DurtTd 6111
Buff. 6024
Bob. 2100
Members New
41 Broad Street, New
.
York Security Dealers Association
York 4
HAnovejr, $r$100
*
*s.
.
*
-w.
W- a#1
W
*An* address by Dr.
fore the
Hirsch be¬
Women's Apparel Chains
Association, Inc.* New York City,
May 13, 1947,
in real wages, measured in
purchasing power, which may be
almost
one-third
higher
than
also
1939..
And these payrolls, the greatest
of all production-costs,
element
>
,
reached in any nation at any
time, not only in dollars, where
they have almost doubled, but
(Continued on page 40)
:V3
Volume 165
Number
4596
THE COMMERCIAL & FINANCIAL
CHRONICLE
on.
(2729)
5,
Observations
•.
*'
Behind-the-Scene Interpretations
A
from the Nation's
Capital
X~M.ll/U/
For its annual Field Day to be
held June 6 at the Sleepy HolloW
By A. WILFRED MAY
gJ *\7"f
JL 1/11/
THE
WORLD
BANK
BOND— WHAT
KIND
OF
Country Club, Scarborough,.N. %f
SECURITY?
the Bond
Prospective Buyers Must Be Educated
■
Fear
.
of
the
is
rising in Congress that President
Truman's globalizing
Doctrine may let the tail
wag the dog—that U. S.
obligations may become so manifold as to
dictate U.* S.
domestic economy.
There'll be a
Congressional effort to stop that,
perhaps feeble this session, much more
for
White
to
House
(1) how
tends to
far
nations,
these
(2)
the
in
go
President
law- <0
from
aiding
how
to
proposes
in¬
Federal
in
defending—those
Keep Out"1 plac¬
foreign ramparts. The
won't, can't answer
Next session he'll have to.
Most
immediate
against
this
serve
and
now
effective
about
President
will
get
money
to
The
fi¬
lending,
any more installments
international collectivism.
Reserve
as
and
Bank
loar
substitute for RFC
a
(3)
decide
not
The
there
are
a
This v/ill be di¬
variety of
'
Committee,
Institution's
official
spokesmen have on
occasions colorfully compared the func¬
of
its
prospective
investors with those
tl)e
diamond
A. Wilfred
May
says
tion
-
punctuated by
far-sighted "pioneers" who in the last century
employed their capital to develop this greal
country and at the
same time profit themselves.
But this somewhat
overlooks the controlling difference that the
pioneering function of
yore consisted of devoting risk capital to the
purpose of amassing
vast profits—as with the
building of our railroad
(if less worthy)
cry
return of
3%!
from
now
empire. A far
reconstructing Europe at the rentier
.
Stock
to
Committee will temper with
regu(Continued on page 19)
on
all-day golf tournament open
all members.
vided into three
several
*
legislate regulation W into statu¬
tory permanence.
Whether
the
before
voting
our
Federal
pose
guarantee
foreign policy
terms
loans
right now. The Committee will
(1) favor RFC extension, (2) op¬
sion Republicans will extract from
the White House a
dollar
*
The program will be topped by
an
to
j accommodate .the large number of
Basically there seems to be obfuscation whether!
golfers who will compete. >
the investing motivation is, on a statesmanlike
Wendell R. Erickson, Stone &
plane, to follow the very crucial need for world
Webster Securities Corp., Chair¬
rehabilitation or, on the other hand, self-interest,
j man of the Soft Ball
perpetuation of
Committee conclusions on the
first three may be
safely projectec
his overseas commitments.
But you can wager that next ses¬
in
guarantee
York has
-
income elements.
75% margin requirement
*
nance
pattern
The
under regulation T.
between
July adjournment.
to
(3)
New
handicap classes
confusions and and William H.
Morton,, W. H.
outright affirmative doubts—some justified and Morton &
Co, Chairman of the
some
groundless—which are arising to trouble Golf
Committee, announces that
the prospective investor
weighing the risk and' ;wo courses will be available to
instalment buying regulation W,
(4) what to do, if anything,
piece-meal
very
Board.
of
this
to
seems
to
For
and
manifestation
reluctance to lend and give
away
chunks of American wealth. This
be
banks
to 90%;
up
foreign
policy will be larger Congressional
can't
Reserve
it
bring the "hard-boiled" individual in¬
vestor voluntarily within the fold.
four specifications: (1) con¬
tinuation of RFC after June 30;
(2) authorization of Federal Re¬
President
now.
order
on
"Communism
on
i
long-promised probe got going
May 19, will concentrate mainly
planting—and
ards
•
creatures is to be painful for the
the
spend
t
Banking Committee's
vivisection
of ~ Federal
credit
foreign
much
■
House
projections:
President
■:
—
the
But
offerings can
buyers, the excellent current educational cam¬
paign wiR-have to be even further widened, in
resolute next year.
important
demand
Club
arranged an elaborate program of
sports for everybody—golf, ten¬
nis, soft ball and horseshoe pitch¬
ing, it was announced by Williafh
initial, and probably subsequent,! G. Laemmel, Chairman of the
be readily disposed of to institutional Committee in charge of the event.
in July) will be
successfully consummated.
columnist that while the Institution's
foreign
Watch
be taken for
granted that the prospective public offering
World Bank's debentures in the
American market (probably
can
of the
Monroe
makers
It
Market
likely
security buying.
Some specu¬
lators, having become "burned" by the recent market conflagrations,
will feel that
a steady income return of
around 3% provides
welcome haven of refuge.
On the other hand,
(Continued
on
lines
Schacht,
prince"
coaching
the
on.
the
some
of
manner
A1
;he famous former "clown
of
the American League.
Tennis
will
be
a
big attraction
the younger and thinner
for
a
con-
"ca¬
pitalists," according to Sumner B.
& Co.,
Emerson, Morgan Stanley
Repercussion
A concurrent continuation of the bear
stock market would
have a dual influence on World Bank
trastingly
foonery
after
will be
artistfc buf¬
play
Chairman of the Tennis
It
tee.
will
tournament
be
on
Commit¬
doubles
one-day
an
automatic han*
dicap basis.
many
Alfred
page 42)
J.
Ross, Dick & Merle-
Smith, Chairman of the horseshoe
pitching committee, has arranged
two
competitions
for
two-men
teams.
By NATHAN L. MILLER*
By EDWIN G. NOURSE*
Former
Chairman, Council of Economic Advisers, Executive Office
General
of the President
Presidential adviser declares organized labor
settlements must be
the parent, not the child, of
stabilization; restriction of production
must be affirmatively
opposed by organized labor; and scientific col¬
lective bargaining is indispensable to avoid
authoritarian controls.
When Mr. Harrison invited
of your
Brotherhood, I
"This
him:
accepted with
"
the
is
from
an
inter¬
■
That act proposed that the Fed¬
national union
that
has
eral Government shall "Coordinate
and utilize all its
been
extended
to
and
any member
of the Council
of
I
the
tenance of sustained
prosperity is
be carried out "in a manner
calculated to promote and foster
free competitive enterprise and
meeting
as an
occasion for a
major
ment
to
state¬
on
half
of
Council"
be¬
the
as
the purpose oi
production and purchasing power."
This positive program for eco¬
nomic stabilization and the main
shall therefore
regard
for
resources
creating and maintaining condi¬
tions [of] maximum
employment,
Economic
Ad visers.
plans, functions,
Dr. Edwin G.
Nourse
to
how the policies and actions of
organized labor fit into the objec¬
tives
and
means
for
obtaining
*An address by Dr. Nourse be¬
fore the International Union Con¬
vention, Brotherhood
of
Railway
the general
welfare," thus recog¬
nizing our established system of
corporate
and
union
organization
bargaining
between them.
Furthermore, the
Congress clearly states that this
policy and program are to be car¬
and
of
free
collective
ried out "with the assistance and
cooperation of industry, agricul¬
ture,
labor,
and
State
and
too, for the Bond Club members
Counsel, U. S. Steel Corp.
who
Steamship Clerks, Cincinnati,
Ohio, May 14, 1947.
governments."
our
taxing methods
is
one
of
must await
the
more
impairment and
to
on
page
22)
It is the
com¬
Metal & Thermit
General
Side
Show
George
Committee,
K.
of
Coggeshall,
Schoellkopf, Hutton & Pomeroy,
is Chairman.
propitous times.
expenditures
propriations.
budget.
When I
State
jwas
a
ago,
was
tax
a
spent
also
he
penditures
should
lection
as
the
of
public
enues.
He
on
the
which I fear
was
affairs that
An
an
Nathan
the
was
allowed
Aluminium Ltd.
than
to
poking his
did
not
L.
Miller
thus unable to
con¬
thought and atten¬
function
was
little
of
audit,
more
than
Bell
them
an
see
by
nose
concern
Consolidated Mining & Smelting
Co. of Canada
Distillers
auditor must not only have
understanding of his functions,
should have
dental
to
Gooderham & Worts Ltd.
\
Shawinigan Water & Power
function not inci¬
no
that of
audit
and
I
air
glad to know that the department
of which Comptroller Moore
is
the head
Corp.-Seagram, Ltd.
Hiram Walker-
but must possess perseverance and
intestinal fortitude as well.
Ht
now
Telephone of Canada
Canadian Pacific Railway
ex¬
him.
rev-1
centrate all his
tion
Into
col¬
expen¬
diture
was
further
apororiations
well
as
all that
whether they were authorized
although
audit the
That suited the spending agen¬
which, in my time, made ex¬
They were apt to think that
auditor who looked into their
collec¬
tor,
by apj
cessive estimates and then usually
century
that of¬
ficer
were covered
cies
Comp¬
troller, almost
half
check to ascertain whether the
a
plement of'the
E xecutlve
is
truly
a
Depart¬
address by former Gover¬
at the dinner to cele¬
brate the 150th
ment
Anniversary of the
establishment of the office of State
Its
importance
increases
ir
arithmetical progression with the
increase in the cost of government
BART SMITH & CO.
52 WILLIAM ST., N. Y. 5
HAnover 2-0980
The Legislature that established it
nor
Miller
14. 1947.
Hoving Corporation
|
and
important functions of government.
It is indispensible to the executive
of any important
business, pub¬
lic or private.
<♦>--
*An
(Continued
athletically inclined,
most
local
It suggests further
not
are
which
development has led
Comptroller, Albany, N. Y., May
and
of
Bell
Audit and Control.
(Continued
on page
44)
Teletype NY
New York
and
Municipal
Railroad, Industrial
Public
Boss
Toronto
United States Government
American Maize Products
Machinery Corporation
1-395
Montreal
State
Corporation
American Overseas
Airlines, Inc.
Manufacturing Co.
Utility
BONDS
Electric Bond & Share "Stubs"
International Cellucotton Products
Co.
Investment Stocks
Tide Water Power
BOUGHT
—
SOLD
QUOTED
—
Bought—Sold—Quoted
New York Hanseatic
120
v
-
Corporation
BROADWAY, NEW YORK 5, N
Telephones BArclay 7-5660
-t;
-
FREDERIC H. HATCH & C0.r INC.
Y
Teletype: NY
Established
1-583
<
.
entertainment,
deterioration of State and local governments and unsound methods
of taxation.
Pleads for retention and strengthening of State and
local taxing powers and
functions, but admits drastic reform of
•
Audit
them outlined in the
Employment
Act of 1946.
first invitation
York
be
provided in part by the Carnival
genuine pleasure.
<$-
New
will
Prominent attorney traces growth of Federal
power and expansion
of public services.
Holds
to attend this Grand
Lodge Con¬
me
vention
wrote
Governor of
V
'
There
,
_
William St.
New York 5
Knowledge
•
,
New York 5, N. Y.
Bell Teletype NY 1-897
k
201 Devonshire St.
Boston 10
1888
MEMBERS N. Y. SECURITY DEALERS ASSOCIATION
8TWafi%treet,
Members New York Stock Exchange
68
,
Experience •
for Investors
7'
%
Facilities;,
" /
6
John J. O'Brien & Co. Adds
Frank J. Cook to Staff
Co., 209 South La Salle
Street, members of the New
that
Sincere
Cook, for¬
Frank J.
with
merly
York
Stock Exchanges, an¬
and Chicago
nounce
J.
ILL.—John
CHICAGO,
O'Brien &
&
has
Co.
joined their organization as a reg¬
takes optimistic
Speaking in Pittsburgh before the Midwestern Spring Confer¬
of the Controllers Institute of America on May 20, Alan H.
Temple, Vice- $>
the
on
for
1947 and 1948,
saying that the
Bayway Terminal
inflationary
Coke
the cost of
than 50%.
spiral, which
has been in
Members New York &
Baltimore Stock
exchanges
Exchanges and other leading
CALVERT ST., BALTIMORE 2
Bell Teletype BA 893
f
New York Telephone BEctor
2-3327
It
1940, has been
STEIN BROS. & BOYCE
appears
existence since
other spiral
halted, and
although re¬
adjustments
are in order,
they will be accom¬
plished "without real depression."
According to Mr. Temple, "all
Alan
H.
Temple
in
end
wars
inflation and
all in¬
flations end in reaction. For
BOSTON
seven
to have reached its end.
ending v because, like every
in history, it has cre¬
ated within itself the maladjust¬
ALABAMA
all-issues
Inquiries Invited
Walter J. Connolly & Co.,
24 Federal
,
Tel. Hubbard 3790
Tele. BS 128
.
„
Montgomery, Alabama
Telephone
3-6696
Teletype
L. D. 53
&
MG 84
DES MOINES
PHILADELPHIA*
WHEELOCK & CUMMINS
INCORPORATED
Southwestern Public Service Co.
Continuing Interest in
Iowa Power &
Preferred
3.30%
Memos
Light Co.
on
Request
Stock
BUCKLEY BROTHERS
Meredith
Publishing Co.
Common
Members
Los Angeles
Stock
New
1420
DES
BUILDING
MOINES 9, IOWA
Phone 4-7159
and
Stock Exchanges
Member
Also
EQUITABLE
Philadelphia
York,
New
'
of
York Curb Exchange
Walnut Street, Philadelphia 2
New York
Bell Tele. DM 184
Los Angeles'
Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253
Private
Wire System
between
Philadelphia, New York and Los Angeles
LOUISVILLE
American Box
American Air Filter
Botany
Mills
American Turf Ass'n
Empire
Consider H. Willett
Empire
Girdler Corporation
Varnish
Co.
ahead.
the inexperienced to
start more than they can finish.
When nearly everything is in de¬
mand
and
hardly anything ' in
oversupply, the invaluable close
touch between the producer and
petent and
Incorporated
1st
and 1948 will be
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
•*
Bell Tele. LS186
RIttenhouse
"I take
PH 73
The environment in which
NORTHWEST MINING
For manufacturers of auto¬
For Immediate
or
Bassett Furniture Ind.
of
Exchange
Pac.
from
Std.
10:45
Time:
on
to
Floor
11:30
Sp-82
Lynchburg, Va.
LD 11
miiiiiiiiiiiiiiiiiiiiii!iiiiiiiiiiiiiiiiiiUii
A continuing large ex¬
The money
retrace
1939.
Standard
of
Peyton
un¬
substantial
any
no
strain
on
Stock Exchange
Spokane
Dealers
-
our
steps to the prices of
we
have
Building, Spokane
Kellogg, Idaho and Yakima, Wn.
has
been
as
moved to
always
irregular, moving
incomes
far
a
is
a
balance
prices and costs on a
on
which business
safely.".
prices
leaving
The problem
restore
to
uneven
some
ahead,
others far behind.
now
Underwriters
Branches at
connections
Dean G. Acheson
Another
o n
disrupted.
grim fact
of interna¬
of the
two
that
is
life
tional
to
greatest workshops of Europe andi
Asia—Germany and Japan—upon
production
Europe
and
brought us back to elementals, to whose
the point where we see clearly Asia were to an important degree
how short is the distance
from dependent before the war, have
food and fuel either to peace or hardly been able even to begin
the process of reconstruction be¬
to anarchy.
Here are some of the basic facts cause of the lack of a peace set¬
of life with which we are pri¬ tlement. As we have seen, recent
the peace
of the world.
of
devastation
The
marily
conduct
war
has
concerned today in the
of foreign relations:
efforts at Moscow to
ress
towards
Address
by Under Secretary
Acheson before the Delta Council
at
a
make prog¬
settlement for Ger¬
and Austria have ended
accomplishment. Mean-»
many
*
with little
while, political instability in. some
(Continued
Cleveland, Miss., May 8, 1947,
on page
36)
■i
"51
Speculative Interest in Bonds of Enemy
Countries Noted
,
]
'
)
By
Wall Street
on
k
EDMOUR GERMAIN
Many dealers and investors would like to see
immediate resumption
Some bondholders, however, believe various countries
and the corporations of those countries should start servicing those
bonds before trading is permitted.
SEC insisting on "full" dis¬
of trading.
closure of pertinent
Italian bonds back
financial data by Italy before permitting old
on
the market.
Speculative interest is high, though somewhat spotty, on Wall
Street in the bonds of enemy countries despite the fact that tradnig
in these securities has been sus-f
pended for the last five years, enemy bonds now would be a
speculative one since all agree
ever since the outbreak of the last
Cooperating with the Se¬
and Exchange Commis¬
war.
curities
dealers—here
sion, exchanges and
and
elsewhere—have
voluntarily
agreed not to create or maintain
markets in these bonds practically
since Pearl Harbor.
A kind of
black market is sus¬
clandestine
the
until
that
countries and
various
enemy
the corporations of
those countries can start
servicing
those bonds it is difficult to
definite
value
upon
them.
place,
It is
pointed out all around, however,
that it is Americans and not ene¬
my
nationals who are suffering or
inconvenienced
today—wherever
of having been in exist¬
such suffering
or inconvenience
ence right along but for all intents
exists—from the lack of a market
and purposes, it is the general
in these securities.
Enemy dollar
concensus
of opinion, there has
been no trading in these securi¬ bonds, for the most part, it is
pointed out, are held by Ameri¬
ties.
pected
The
interest in the bonds is
Originally, one of the intents of
probably keenest among some of
the request for the voluntary sus¬
the dealers who specialize in for¬
eign
securities.
Holding large pension of trading was to prevent
the accumulation of dollar bal-,
quantities
of
these
securities
themselves
.
in
undoubtedly
Most of our problems come
not because
and
-
1947 is as¬
supply is
higher price level, but because the
CORPORATION
Brokers
long
a
bank reserves.
and
Members
capital
and
still
is
port surplus through
rise
.
and the
cans.
off.
way
STANDARD SECURITIES
Tele. LY 83
durables
recession
and
other
many
at
other hours.
Scott, Homer &
Mason, Inc.
of
"We need not feel that we must
Execution of Orders
Quotes call TWX Sp-43
A.M.,
Dan River Mills
railway
utility,
of
equipment,
consumers'
SECURITIES
Co.
corrections will be car¬
extent and there is
liHiiiiiiiiiiiiiiiiiiitiiiiiiiiiimiiiiiitii
American Furniture
to
reductions
price
balancing,
likely to shrink to
SPOKANE, WASH.
Trading Markets
as
gains in efficiency, are being
sured.
LYNCHBURG
optimistic view
an
the ability of the economy to make
these corrections without real de¬
Teletype
6-3717
rope,
oragnizat i
of Europe
of depres¬
year
V
goods,
Stock Exchange Bldff. Phila, 2
Telephone
a
sion.
mobiles,
PHILADELPHIA OFFICE
Floor, Kentucky Home Life Bldg.
Mistakes
lost.
productivity and of realignment
of production to meet consumers'
preferences and of prices to meet
consumers' pocketbooks.
Unless:
1947 is a year of correction it will
be a year of spreading recession
able.
H. M. Byllesby & Company
populations scattered and on the
borderline of starvation, and long-i
established business and trading
miscalculations thrive."
farm
BANKERS BOND ^
it
waste, inefficiency and low pro¬
ductivity. • It invites the incom¬
is
of
relation of the
now.
the \ consumer
ery
Eu¬
tion
war
to get them back in shape,
transportation systems wrecked,
industrial
f
production to
the
organiza¬
ried out is in many respects favor¬
Warner Company
m
o
has left factories
fields
impoverished
and without fertilizer or machine
relation
the
people who have to buy the prod¬
uct, or they are too high in rela¬
tion to their cost of production.
For both reasons they may be too
necessary
Nazareth Cemeht
re-*
destroyed,
made.
Sterling Motor Truck
enemy's
out by both sides
carried
during the
and
Southern Gas
sources
pro¬
tory
Co.
Pittsburgh Rys. Qo.
Murphy Chair Company
Reliance
Steel
in¬
scientific de¬
the
of
struction
and
pression.
We have not marched
heedlessly up to this precipice.
Beneficial adjustments, in inven¬
Board
re¬
to
most
economic dislocation,
Planned,
duction,
are
Continuing, Mr. Temple, stated,
that "1947 must be a year of cor¬
rections
of
maladjustments,
of
cost reduction through increasing
Eastern Corporation
both.
or
dustrial
and
Bird & Son, Inc.
or
their
lation
"Third, inflation diminishes the
THORNTON, MOHR & CO.
a
struction
and
rigors of competition and by the
same
token it is the father of
Inc.
Street, Boston 10
today in
prices are too high.
some
They
is
He
fuel
and
that
is
about
mies.
too high in relation to
purchasing power of too many
First,
the
of the
Asia are
state of physical de¬
first
The
countries of Europe and
ar-
food
halt.
a
correction becomes necessary as
Traded in Round Lots
us
or
talked
liquid savings and consumer bor¬
rowing. But they are an obstacle
to
price correction when price
Municipal Bonds
Preferred
to
it
bring
which
ments
to
ogies
"Second, production costs are
too high.
They can be borne as
long as demand is swollen by de¬
ferred
needs,
expenditure
of
&
Prior
now
is
in the year
Boston & Maine RR.
spiral
high to equate supply and demand
MONTGOMERY, ALA.
B
talk
about ideol¬
inflationary
"This
V
Secretary of State Marshall returned from the recent
meeting of the Council of Foreign Ministers in Moscow he did not
When
living has been some¬
what
;
transportation priorities.
figure, and counting in rents and
services of all kinds the rise in
more
bring about international political and economic stability. . Coneludes our relief measures and emergency foreign financing are
in national interest and advocates extension of export controls and
<
the prewar
risen to almost double
:
imports, and for rapid reconstruction in Germany and Japan to
has
level
price
commodity
sale
Sees need for increased
relief and financial assistance abroad.
fense
view
Preferred
&
.
years
optimistic
Manufacturing
Coal
,
counting from the first deprogram after the fall of
City Bank of France in 1940, our economy has
New York, been dominated by inflationary
The average whole¬
expressed an influences.
of
J
.
State Department spokesman points out effect on our foreign trade
j
of disparities in U. S. and European production. Says our $16
'
billion of exports are double imports and requires $6 billions in /
———■—
National
outlook
Davis
;
ence
BALTIMORE
&
Under Secretary of State
level.
the
Common
Sees
view of readjustments without depressions,
permanent higher price
f
By HON. DEAN ACHESON*
Temple, Vice-President of National City Bank of New York
Alan H.
President
Artkraft
the United States Responsibilities In
Foreign Reconstruction
The Inflationary Spiral and
Business Outlook
istered representative.
« S.
Thursday, May 22, 1947,
THE COMMERCIAL & FINANCIAL CHRONICLE
(2730)
new
can
go
of
level,
ahead
H
•
-
tjO lot-
:•
some
would
cases,
like
to
they
see
ances
in
nationals.
this
country
It* was
b,y enemy '
feared
among
that enemy nationals
would try to convert looted se¬
est is
The
it is understood, however.
The curities into dollars here.
method chosen to prevent enemy
dealers say that their customers
nationals from disposing of their
keep asking them when trading is
bonds—looted or otherwise—was
to be resumed.
Holders of the
one the least likely to succeed in
securities 'and
investors who
achieving its purpose, some think,
would like to purchase some of
however.
Though the Treasury
them read reports of trading in
Department, interested in the gen¬
the enemy Sterling bonds in Lon¬
eral
question of the claims of
don and wonder why trading in
revived in them.
Inter¬
not confined to the dealers,
trading
the
dollar
hibited
should be pro¬
bonds
American citizens on enemy prop-*
erty, did at the
here.
Everyone
other things
who
„
the
market in
mentions
subject admits that any
war
ask
the
beginning of the
to list
bondholders
(Continued on page 50)
;
Volume 165
Number 4596
THE COMMERCIAL & FINANCIAL CHRONICLE
The Stock Exchange-A
EMIL
President, New York
and extols Stock Exchange
Exchange is
Stock Exchange
*
as
I
-
going to talk to
am
Exchange and
some
and
ened
sweat
un¬
dier,
new
Sweat
issued
stateme
that
some
It needs
In
the
future, is
continually diminishing .
while
that part which, directly or indi¬
and
,
Let
get
can
us
be
not
us
make and
can
over¬
free
our
mak4
are
May 30, 1947 (Dallas, Tex.)
Dallas Bond Club Field
the Dallas
If money is viewed in its
light as a convenient means
proper
A
The German economy was
walls.
good
Day at
expanded only by increase
interzonal trade or by im¬
porting the essential raw mate¬
rials. Unless there is this free ex¬
ing
nished by the
electric power
manufactured
dustry. Power
zones,
ines
were
Germany
nual- field
which
6, 1947
Metairie
Bond Club of Baltimore Annual
Field Day and
Outing at the Elk-
ridge Club.
June 6, 1947 (New York)
Bond Club of New York Field
Day outing at the Sleepy Hollow
Country Club, Scarborough, N. Y.
W
The formal economic merger
M,
em-
S.
Szymczak
place
was
Governors
Stock
the
of
Exchange
Association
most
Zone,
from
that has occurred since the occu¬
lines which traverse
pation began. Trade between the
Zone.
two zones is pow
Austria
the
-
depend
now
over
French
these
comes
Branches
of
lines
same
Firms
Wash¬
at
pro¬
of
ington, D. C., May 15, 1947.
ductive
capacity
(Continued
;
from
June
that
13, 1947 (Philadelphia, Pa.
Philadelphia Securities Associ¬
segI
35)/ 1 •
on page
ation Annual Field Day at Llanerch Country
Revision oi SEC
t
:
Club, Llanerch, Pa
June 14, 1947
(Chicago, 111.)
Bond Traders
Proxy Rules
Field
annual
of Cincinnati
regulations and
June
solicitations. "Says basic requirement is that
of facts
necessary
for prudent judgment.
Spring Party.
20*1.947 (Milwaukee, Wis.)
picnic
Criticizes
Bond
Merrill
at
the
annual
Club
Country
Hills
tablishments
there
ac¬
should like to talk to you, in the
countants, have most to do with
hope that through an understand¬
ing of existing difficulties, cor¬
the
company's
lawyers
and
the preparation of your company's
proxy materials. It is a subject
Which
I have
Interest, both
various
Officer
long had
as
personal
a
stockholder in
a
director.
and
In
as
these
rious capacities I have had
sonal experience with the
ation
of
rules.
the
sion
in
may
assist the Commis¬
eliminating
of
them as is possible in connection
with our planned proxy revision
Commission's
an
1
va¬
per¬
oper¬
proxy
While I have been with the
Exchange
on
in
to
be
an
and interpretation of the
Rules, I
speak from practical experi¬
with their operation.
'
I
have
sources
gathered
from
several of the
various
more
sig¬
nificant problems which
currently
' ' ' *
r
*An
address
McDonald
ciety
by
before
.
Commissioner
American
of
So¬
Corporate Secretaries,
Inc., New York City, May 20, 1947.
national securities
contravention
prescribed by the Commis¬
sion.
It is important to note that
the
do
Commission's
not
extend
proxy
to
rities. However, by other
they
now
registered
all
cover
public
powers
unlisted
,
secu¬
statutes,
securities
utility
of
holding
companies and .their subsidiaries,
and securities of
ment
Day at
Club,
Hudson, New
are
so
scattered that
if any,
few.
are
companies.
About
June
cause
for basic
of
this
the
raw
major es¬
U.
S.
materials.
economic
Be¬
interde¬
pendence of plants in the differ¬
ent zones,
decided stimulus to pro¬
a
products obtained from the British Zone are steel, basic chemi¬
and
are
semi-finished
to
essential
(Continued
on
a
year
page
44)
goods.
industrial
in industrial and
as
machinery
and
parts,
automobile
spare
electrical
products,
ball
bearings, iron ore, pit props, pre¬
instruments, and textiles
cision
from the U. S. Zone.
The
goods
consumer
commodities
machine
important
secures
such
Germany's export trade
immediate
(Continued
of
effect
on page
31)
(Toledo, Ohio)
of
Toledo
13th An¬
THE
20-22,
1947
MAHER
t.
FIRM
OF
8c HULSEBOSCH
HAVING
DISSOLVED
Angeles,
(Los
Calif.)
WE ARE PLEASED TO ANNOUNCE
Security Traders Asociation of
Angeles annual spring party
THE FORMATION
OF
Los
at the
North
Shore Tavern, Lake
Arrowhead.
June 27, 1947
Bond
G. F. HULSEBOSCH & CO.
.
62 William
(Westfield, N. J.)
Club
Field
of
at
Club,
St., New York 5, N. Y.
Tel. WHitehall 4-4845
Teletype NY 1-2613
Jersey
the Echo
Westfield,
Day
Country
New
Gerard F. Hulsebosch
Gerard
Branch Office
New Jersey.
land Golf
*
Hudson
113
St.
F.
Hulsebosch,
Jersey City,
N. J.
Phone—Bergen 4-0718
Club, Newton,' Mass.
UPON THE DISSOLUTION OF
July 22, 1947 (Detroit, Mich.)
Security Traders Association of
MAHER
Detroit & Michigan Annual Sum
mer
Golf Party,
Orchard Lake
Country Club.
Also a
party and buffet dinner
21
at the
MAY 17.
1947
ANNOUNCE
THE FORMATION OF
(Boston, Mass.)
ciation annual convention.-
;
HULSEBOSCH
WE ARE PLEASED TO
MAHER & CO.
National Security Traders Asso¬
30-Dec. 6,
8c
AS OF
cocktail
on July
Savoyard Club, Detroit,
Aug. 10-14, 1947
Nov.
study,' the
eco¬
zones
comprising them. As mentioned
earlier, all industries in the U. S.
Zone are dependent upon coal,
the major part of which must he
secured from the Ruhr mines in
the British Zone. Other important
parts,
riot
are
■
J. W. MAHER
registered invest¬
ago, after an extensive
two
duction and trade within the area
of
rules
expert in the detailed application
will be
the
July 10, 1947 (Boston, Mass.)
prohibits the solicitation of
Boston Securities Traders Asso¬
proxies in connection with secu¬ ciation annual
outing at the Wood¬
exchanges
hope
of
of
fusion
nomic
the
that
are
and
rities listed
cannot
Act
-
New
Outing at Inverness
Country Club (note change of date
from June 6 )
Lake
Securities
'
•
Indications
Golf
nual
the
1934, which authorizes the Com¬
mission to promulgate
proxy rules
Field
Country
on
-
of
Club
Annual
Club
Bond
Spring
therefore
ence
many
Bond
June 20, 1947
1
lines.
-
The Commission's proxy powers
are
derived from Section 14 of
Commission only a short time and
can
as
program.
corporations
or
in
,
porations
(New York)
Hollow
York.
travel without obtaining
freely across the zonal boundary,
dependent on other
York
Scarborough
can
spare
of misstatement.
Secretary has suggested that I talk to you this afternoon
about the proxy rules administered
by the Securities and Exchange
Commission. The entire subject of
proxies is one in which I am sure confront the Commission, and you
as
you have a keen interest. As cor¬
well, under the proxy rules,
porate secretaries, you, along with It is of these problems that I
commodities
Business¬
consumer
interzonal passes and goods move
Zone
soliciting proxies frequently
Your
men
in
i
1947
14th
ammonia,
on
repre-*
the combined zones.
in
tablishments
I
Sleepy
and
equally
plate and fine machinery and establishments in the U. S. Zone,
optics from the French-Zone.
In and the export program cannot be
fact, the German economy is so carried out as planned, unless they:
specialized and its industrial es¬ are obtained. The British Zone
that'
comment into realm
essential
cals,
Zone;
zones
sented, are now responsible for
the equitable distribution of all
These
zones
beyond partisan
both
with
British
raw
and
free from Mili-£
tary Government operational con-»
trols. German economic agencies;
materials, machine
semi-fabricated items.
For example, the U. S. Zone de¬
pends on coal and steel from the
Club, Waukesha County, Wis.
go
in
British, French and U. S.
were mutually interdepend-
.ent-for
June
Municipal
located
Zones
devices used to obtain stockholder's proxies, and recommends im¬
mediate publicity of applications for proxy solicitation.
Asserts
20,
now
developments
constructive
tin
Milwaukee
solicitation be accompanied by statement designed to inform
stockolder
Acacia
Day Party,
(Cincinnati, Ohio)
Municipal Bond Dealers' Group
SEC spokesman analyzes purposes and accomplishments of proxy
proxy
Chicago
June 16-17,1947
Commissioner, Securities and Exchange Commission
i
of
Industries
zones.
parts,
Country Club.
by harry a. Mcdonald*
proxy
Club
on Jan. 1 of this year. This
unquestionably one of the
the two western states in the U. S.
serve parts of the
exchanging work for, goods,
British Zone.
then our capital markets are sim-i June
12, 1947 (Minneapolis- St.
Power lines to the Frankfurtrectly, lives on the State, is con¬ ply facilities for stepping up the
Paul)
Hoechst industrial area from the
efficiency of this process of ex¬
Twin City Bond Club 26th An¬
stantly growing."
British Zone also go through the
change on a mass scale, just as the nual Picnic at the White Bear
v
There stood the
French Zone. In general, prior to
epitaph of a machine enhances man's
produc¬ Yacht
Club,
to
be
preceded the
nation!
war,
industrial
products
Unknowing, unthinking, tive capacity when properly used. Wednesday
night, June 11, with moved from the west to the east
unaware, Jean Q. Frenchman for¬
a
cocktail party at the Nicollet
Function of Stock Exchange
of Germany, and food products,
sook his nation's traditional pre¬
Hotel, Minneapolis.
At the risk of being
particularly grain, were shipped
elementary, June
13, 1947 (Boston, Mass.)
from the rich agricultural sections
cepts of hard work and thrift—, I would like to summarize
briefly
Municipal Bond Club of Boston of the east to the west. This free
followed,
instead,
the
alluring the function of the New York
Annual Outing.
exchange made possible intensi¬
Will-o'-the-wisp that insisted it Stock
Exchange in this process, .i
June 13, 1947 (Cleveland, Ohio)
fied food production in the area
Was possible, by Some mysteribus
s
now occupied by the Soviets and
Cleveland Bond Club's annua
Industry, the country's prime
work-maker and goods-producer, spring party and silver anniver¬ the concentration of manufactur¬
*A talk by Mr. Schram before
sary celebration.
ing enterprises in the western
draws sinews for still greater
w f
of
of
.the British and U. S. Zones took
Baden,
-
t
British-U. S. Merger Constructive
and
11
u e r
berg
will he
gregtly retarded.
indus¬
Hesse
er
the taxpayers
on
try agreed upon by them
.
(Baltimore, Md.)
continue
on
tries in Great¬
,
,
burden
a
the
among
will
occupying powers and the
attainment of the level of Indus¬
was
power
be
to
goods
Germany
bf Hie
economic
the
and
change of services, resources
producing in¬
a n
the
not built to function
be
can
ex¬
ample is fur¬
May 30,1947 (New Orleans, La.)
Bond Club of New Orleans, an¬
at
i
t i-
juiltwhen
Country Club.
day,
Country Club.
j
Germany have suffered because trade between them
small.
so
a r
unit. Much of
June
exploding.
look the contribution that
markets
has
more
extent, exploded;
more
•
Outing at Brookhaven Country Club,
Atlanta, Ga.
in America still
doing—let
so
population which creates wealth, ing.
for
■
ciation Annual
theory
been, to
part
of
French
the
Day and
Country
(Atlanta, Ga.)
Georgia Security Dealers Asso¬
choice between the two.
less
"Actually,
Emil Schram
"
out following immediate steps necessary to recon(1) economic unification conforming to Potsdam; (2)
reform; (3) decentralization; (4) equilibrium in inter-
All zones in
has been
ficial
May 30, 1947
personal
that.
as
we
produce
which said:
•
"Topper's". Field
at
Westchester
Club, Rye N. Y. .
that there is some
magical formula whereby men can
t
n
by
tragedy.
stark
as
our
The
joint
a
just
have
Premier,
Reynaud,
Paul
The
by
more
tears! The choice
or
thankful that
the
and
(New York)
outing
He eschewed the
shortly
very
and national
be
to get
man
j
j
Annual
within
May 29, 1947
of work—only to be over¬
taken
Dala-
ouard
creates
peace.
producing less.
weak¬
and
Club
Points
currency
(Houston, Tex.)
Bond
Outing, 2:00 p.m„ Earle North's
Ranch, Westheimer Road.
-
alchemy, for
happy French
nation, the
o utgoin g
Premier, Ed-
\vhich
Houston
pro-
econ-
national payments.
Field
■
shortly
the
struction:
May 24, 1947
war*^
before the fall
of
omy.
Day at the Philmont
Country Club, Philmont, Pa.
you
last
,
*
trade, particularly because of specialization of
nual
briefly, about the New York Stock
of the problems with which it
is related. During
the
i
assure
of inter-zonal
May 23, 1947 (Philadelphia, Pa.)
Bond Club of Philadelphia An¬
a
duction to make nation
strong and thus
1
Field
:
road to riches, and calls for work and
an easy
Director, Economics Division, OMGUS
Director Szymczak asserts all Germany is suffering from smallnes*
national econ¬
people's market. Says it is
indispensable instrument for broad marketability of securities, and
defends speculation as essential to
progress.
Refutes idea Stock
*
Investment
SCHRAM*
Mr. Schram stresses value of free markets in
strong
omy
By M. S. SZYMCZAK
EVENTS
In
%
The German Situation
COMING
People's Market
By
(2731)
1947
Fla.)
Investment Bankers Association
Annual Convention.
■
"=
K. M.
MAHER
62 William Street, New York 5, N. Y.
(Hollywood
-
•
Telephone
Branch Office—113
WHitehall 4-2422
Hudson St.,
Jersey
City, N. J.
Jr,
the
*
0«'t.
*
(2732)
Thursday, May 22,1947
COMMERCIAL' * FINANCIAE CHRONICLE
{THE
question of call premiums is not
yet
active issue.
an-
Version of UK's Finances
<
•
Cities Service
'
finally agreed to
pay its call premiums but since
the whole amount is being paid
in Debenture 3s, which may cur¬
rently be worth less than par,
Preferred Stockholders' Claims to Redemption
Premiums
to how much the senior security holders of util¬
ity holding companies are entitled to receive in dissolution has been
© perennial problem of the SEC and the courts.
In the early days
of "death sentences" and preliminary plans, market conditions were
bad and the dissolution formula usually provided for a division of
preferred
giving
The question as
assets
senior and junior- claimants,
simple ratio basis between
a
on
particularly where there were$
heavy preferred dividend arrears, a notable exception. He held that,
based on the company's charter
fn one of the early cases, that of
United Light & Power, preferred and the historic record of the pre¬
Stockholders received 94.52% and ferred stocks (which sold below
par throughout the period 1931common stockholders 5.48% of the
remaining asset (common stock of 43) they are not entitled to the
United
Light & Railways), the
SEC-approved plan being con¬
firmed by the Supreme Court.
Later, as stock market conditions
became more favorable, the SEC
modified its views and accorded
holders
security
senior
of
more
priority rights to which they
would normally be entitled, since
in most cases this would still leave
a reasonable equity for the junior
the
interests.
*
In the later case of the
ard
Gas
Electric
&
Stand¬
Debenture
call
The
premiums.
The decision proved a surprise
Will
interests and
current
stiffen
doubtless
paying preferred
Electric
Bond
and
Share had already announced its
decision to fight against payment
of premiums on its two preferred
issues, now represented by "stubs"
fights
sale of the
was
stocks
"reverse
a
this
bundle
bonds
fight.
a
up
Ultimately
paid
off
in
through proceeds
cash
bank loan. In this
case
of
there
the
Light
a
was
particular issue over call pre¬
miums, which were small. no
In
was
In
the
were
largely
regularly
made
been
liquidating value some time
estimated around $200 a
share.
.A
ago
in¬
creased in value and stockholders
put
its
&
dissolution
the
Traction
Federal
of
company
only a few days ago amended its
plan so as to pay the preferred
premiums, but as a result of the
Engineers decision public holders
of
the
stock
common
changing philosophy re¬
garding call premius, the SEC in
the past two or three years has
haps raise
tended
may
per¬
Public
to
depart from adherence
tb utility charters, many of which
provide for omission of call pre¬
miums
in
the event of
"involun¬
tary" dissolution. The question of
whether
the
application
"death sentence"
ity
Act
has
a
Util¬
the
under
constitutes
dissolution
of
involuntary
remained
In
"investment
studying "investment value,"
the Commission
or
its utility staff
has been inclined to stress present
investment conditions rather than
the past record
over
period of
a
it
the
case
New
of
England
Service, the company has
substantial cash and its three sub¬
sidiaries
have
minority public
holders so that the value of assets
easily be estimated. There is
fight against paying premiums
on the prior lien preferreds, com'
can
a
plicated by
a
tax problem.
preferred premiums after
the big issue of Water
have
years, In general the courts have
followed the lead of the Commis¬
has
proposed to pay off
preferred stockholders of the subholding company in shares of new
common stock, but representatives
of RIPS preferred claim the stock
will
have
insufficient value
to
their
cover
premium.
Commonwealth
sion. However, the recent decision
of Federal Judge Leahy in the
trying to retire
through various
the current plan
Engineers Public Service
not
case was
proved very
loan to the0-
of
premium
d
to
the
-
SOLD
-
Public
ferred
into
issues
which
would
give
management
itself
indica¬
Power &
North
case
QUOTED
Federal Water & Gas
^Indiana Gas & Water
Prospectus
on
Request
of American Power
Light, Electric Power & Light,
Standard Gas & Electric, Niagara
Power and
International
issue
Jacques Coe Nominated
By Produce Exchange
Jacques Coe, of Jacques Coe &
Co.,
York, has been nom¬
the Presidency of the
York Produce Exchange, it
New
inated
New
for
was
n
a
will
ing after serv¬
ing six terms.
scheduled
Other
c
C
is,
t i nental
Jacques Coe
Co.,
Vice- Presi-
Co.,
Inc.,
and
Gilbert J. Postley & Co.
29 BROADWAY, NEW YORK 6, N. Y.
Direct
Wire to
Chicago
approximately $4.8 billions of
sterling it holds in London, and
this month is expected to sit down
—
Joseph
Reynolds, Benj. D. Bartlett &
D.
Don
Kuemmerling,
elected for three-year terms
the
off^that part of the
balances' not immediately
clear
To
sterling
converted
hard
into
or
currency
in London as
trading
reserves
not needed to be left
or
currency
£125,000,000 ($500,000,000) yearly
should
be
ample.
To increase
Britain's exports by 75 or 80%*
be expected to point to the fact above
prewar levels is no mean
that
they
have
drawn
more task, but;— the Indians will con¬
heavily on the American loan tend—it can be done. And, in case
and try
to arrive at a settlement.
At that meeting the British may
-was
Indians
half-way
on
the
Trustees
of
Board
as
Mrl
Dalton
appears
be
to
"stumped," they will suggest how.
:
(Continued.on page 39) .V
collectvie bargaining agent for em¬
collective bargaining agent
The United
an
election,
21-18, certifying it as collective bargaining agent for
of Drysdale & Co.,<*>bond brokers, at 71 has found every one of the charges
the employees
stock
and
Broadway.
ducted
on
the
for employees of that firm.
Financial Employees, AFL, yesterday afternoon won
~
Balloting
was
*1
con¬
Labor Board
premises of the firm. The
by the State
election
was
the second to be won
by the union among the employees
of brokerage houses in the Wall
The UFE won its
first election last fall at A. M.
Kidder & Co. of 1 Wall Street.
Reynolds, Kuemmerling
Elected by Cinti. Exch.
to
the level
exports, as it has started to
with the British Treasury experts
Street
Usiskin.
and
on
the
4
Isbrandtsen
were
heavily
counts
Union obtains certification
Grain
of
alone
India
must raise
this Britain
ployees of Drysdale & Co. by 21-18 vote. In two-to-one decision,
with Rev. William J. Kelley, Chairman, dissenting, State Labor
Board overrules union's objections to election at Harris, Upham &
Co. last summer and dismisses union's petition for certification as
C.
ceeds L. J. Nussloch of J.
6s, 1950
comfortably be paid off in 25
instalments or so.
To do
can
do.
,
nom->
h i 11 h u
o n
be an¬
Drysdale & Go. But Loses
Labor Board Decision in Harris, Upham Case
inations
S
may
UFE Wins Election At
of
the
re-elected; Mr. Kuemmerling suc¬
Portland Electric Power
espe¬
countries
other
of its
for.
W.
Britain
annual
June 2.
were:
that
ticipated to run as follows: Ad¬
mittedly, the British cannot pay
off at once in cash, but if the
bulk of the balances is funded, it
counting on spending a good part
of the sterling they now own in
The election is
Cincinnati Stock Exchange at the
3-5s & 3.6s, 1953
and
of
cially with India and Egypt. The
latter two countries are firmly
the
Co.,"
retij-/
annual election. Mr. Reynolds was
American Gas & Power
UK
expected as evidence
Britain 'is not making the
comeback needed if it is to meet
&
is.
who
argument
readily afford to pay off their
wartime "indebtedness" to India
ining
balances,
sterling
that
that
of
Crofton
Leval
Co.,
r
"old"
India's
with
the owners
than
sue-,
Charles
ceed
B.
-
Mr.
nounced.
.
1879
the
ment
makes
M. Bratter
Herbert
contention
Indian
can pay.
can
the form of dollars in the United
over
premiums is not yet clear-cut.
B.
Established
settle¬
States.
the
Hydro-Electric
CINCINNATI, OHIO
Paine, Webber, Jackson & Curtis
upon
r ema
Public Service of Indiana
Southwestern Public Service
Britain
what
American
&
Hudson
general
holdings, qnd to bring
support the
in British witnesses to
de-
facts
pend
Light.
In the
and dollar
the
has proposed to pay the pre¬
mium on public holdings of pre¬
of
is
portant extent
of
including
Puget Sound Power & Light
*
opinion
held there,
too. To an im¬
However, North American Com¬
stock
ing down American money inter¬
est-free it is building up its gold
tions that this
pany
ferred
argue
that Britain
pacity to make a settlement such
as the Indians want, to point out
that even while Britain is draw¬
King-
come
United
Corporation is hopeful of retiring
the preferred stock at par ($50).
The
the
United
(though indefinite) pre¬
siderable
dians in turn may be
from
con¬
In¬
expected to
has the ca¬
And
pre¬
holders
balances." And the
"blocked
King-
m.
stock,
new
a
o
dom
miums.
Isadore
Southwestern Electric Service
United
(if any) to be paid
former's preferred stock.
Service recently filed a
managing
director,
New
York
Produce Exchange; Axel Hansen
BOUGHT
Some writers in this country are getting quite worked up about
of the United States soon having to make another
.
the "inevitability"
non-callable preferreds. There has
been a long fight over the amount
the dent; and J. A. MacNair, nf H. J.
Greenbank Co., for re-election as
Treasurer.
Nominated
to
the
& Southern is
board of managers to serve for
preferred stock two years were Charles J. S. Allan
exchanges, but of Smith, Murphy Co., Inc.; John
has apparently H. Blake, Moses Cohen of Atlantic
successful. The Grain Co., Inc.; Laurel Duval,
claim,
creditors, and also early securing of dollars
with India and other
from the United States.
American Light & Traction and
Public Service of New Jersey
I
Concurrently with the growing sense of "inevitability" of another
Britain, Mr. Bratter cites the various arguments
which will make difficult a settlement of the "blocked sterling"
Works stock.
The New England Power Asso¬
ciation
•w
American loan to
isj expected to issue "stubs"
its
sells
Coe
In
cult legal problem. The Commis¬
sion has set up such bases as "the
bundle of rights" and
value."•
objection.
some
diffi¬
a
tric
for
and
the bonds. Due to the rising mar¬
ket,, however,
had
ments
and redeeming
up some
American Water Works & Elec¬
against
premiums.
4the par value having been paid
angle." The SEC-approved plan off). The company stressed the
provided for paying off bond¬ fact that earnings in several re¬
holders with a bundle of stocks, cent years had been less than div¬
instead of raising cash through idend requirements, although pay¬
there
bonds
be
of their claims.
may
dissolution plan for exchanges of its four
allowed to proceed by
setting up an escrow fund for call
premiums, in the event of a Su¬
preme Court reversal.
plan was
to holding company
stockholders
Is Coiiect?
By HERBERT M. BRATTER
E. Madi-
The
district.
same
denied
union, however, was
certification
as
collective
to be without
sustained
connection
the
foundation and has
firm's conduct in
with
the
in
election
respect. The Board's deci¬
sion upholds the will of our em¬
every
ployees
as
expressed in the elec¬
tion."
In view of the
position taken by
matter, the
by Maurice
Mound of Rein, Mound & Cotton,
attorneys for Harris, Upham &
Father
Kelly in
following
the
comment
the em¬
Co., is of interest:
A
of Harris, Upham & Co.,
"Because there are no decisions
in a two-to-one decision handed
of the New York courts on the
down by the State Labor Board
question
presented,
there was
last Friday. The dissenting opin¬
some
doubt as to whether the
ion was given by Father .William
State Board would follow the de¬
bargaining
agent
for
.
ployees
J. Kelly,
O.M.I.; Chairman of the
Board, who would have called an¬
other election in view of circum¬
stances surrounding the election.
The
following statement was
Harris, Upham
concerning the decision:
issued
by
& Co.
cisions' of the Federal
courts and
recently liberalized attitude
of the National Board, or would
the
restrictive view 6f
right of free speech
which the National Board adopted
take the more
the employer's
in its early decisions. The Board's
Labor decision recognizes that if an elec¬
Relations Board has dismissed the tion is to reflect the free choice
petition of the United Financial of employees, they should be per¬
Bernerd
Employees
for certification
as mitted to hear both sides of .the
bargaining
agent of our em¬ issue."
ployees. In an election conducted
Regarding a letter distributed
by the Board last September a by the
firm to its employees
LYNCHBURG, VA. —. Bernerd large majority of our employees
around which the issue of the em¬
Tallman has
become
associated voted to reject the union.
The ployer's right of free speech re¬
union filed objections to the elec¬
with Scott, Horner & Mason, Inc.,
volved, the majority opinion of
tion making many charges of co¬ the Board was as follows:
Law Building. Mr. Tallman for
ercion, threats, promises and in¬
"The
employer, by means > of
many years was with
the New terference. We are pleased that
this letter, expressed its opinioix
York office of John Nuveen &
after hearing the evidence pre¬
(Continued on page 50)
<
sented by the union, the Board
Co.
a .1'
gan
"The
& Co.
New
York
State
Tallman With
<
Scott, Horner & Mason
.
.
.
"Volume
FINANCIAL CHRONICLE
THE COMMERCIAL &
165* 'Number 4596
Bond Club
|
Kans.,
Asso¬
mortgage
debt.
billion
First
the
of
Na¬
Clarksville,
Tenn., urged
his
audience
work?
to
to¬
ward a reduc¬
tion
farm
of
"Here
held at the Sleepy Hollow
ilar
price
C.
upward to 76 in 1939, and then to
120 in 1946.
Presently the figure
years ahead, there will not
debt worries.
The farmer
a
billion
wise
a
that
the farmers
reduced
unpaid
be any
is
are
years
more
Dollars
in
the farm real estate mortgage in¬
debtedness during the past year is
attributable to the purchase of
farm lands on long-term by serv¬
icemen
under the so-called GI
"Some of the small increase
buyer's
a house
portant than are the processes by
which value is derived/Unless we
point
in
eral
years
seem
to
an
ill
of economic
now
difficult of set¬
ing
the prices of
a
from
direction
vis, First Boston
Corp.; Grant
Reehn, First National Bank of
New York; Robert J. Lewis, Estabrook & Co.; William R. Rovensky, Hornblower & Weeks; and
John M. Young, Morgan Stanley
is
mediate
means
of
face any
uct
New
unfavorable farm prod¬
price trends with a feeling bf
full security."
York
and
,
relationships.
come
Excessive
a
the
Asso¬
tional
ciation
of
Estate
Real
Boards,
told
for
now
at
a
1933
has
Street.
to
1943
Mr.
was
and
to
get in a movie
that
used to be 40 cents?
"We find
Real
Board
ment
same
places talking of the dangers
and yet at the
of increased prices,
time
we
in
engaged
are
$80,000,000 a year to
a
surplus potato crop
potatoes sell in the market
60 cents a peck. We find the
Co.,
are
75
Sec¬
of
the
Exchange.
May 12
was
director of Doak Aircraft Co.
Peterson is
Dealers"
"Wants
&
for
a
Mr.
Offer¬
a
that
Fund
will
Slichter
tional
to
at
figures,
wages
have
i|n creased
Morgan L. Fitch
108%
the
average,
cost of
a
above
1935-39
while the increase in the
completed house is 68%.
who
talk so glibly
high real estate prices do
so without regard to other prices,
without recognizing that the value
©f i our dollar has shrunk to 52
cents: since 1939, without consider¬
"People
about
ing the effect of increases in in¬
dividual wages or in the national
income," he said.
is to
say
1926/ sold for $5,000 in 1939, and
sells again for $10,000 in 1947 is
priced too high, when we find the
wholesale price index now fixed
at 148% of the 1926 level, and
when the index of price has ad¬
vanced 37% within the last year?
"Who is to say that the price
©f real estate is too high when we
find that shoes that once cost $6
now sell for $12,: that an
auto¬
mobile
that
could. ■- have ~ been
Jjought in 1939 for
price
market
maintain the
cents a
70
at
oranges
on
dozen.
to come. If
grain of truth—but
years
—
in the predic¬
as
(Continued
supply
comes
on page
39)
REAL ESTATE
SECURITIES
★
the
greatly
from
★
★
■
SHASKAN & CO.
Mcmbcrt New York Stock Exchange
Members New York Curb Exchange
40 EXCHANGE PL., N .Y.
Century
national income
Boll Tolotypo
Dlgby 4-4950
NY 1-95$
its
of Harvard
that the na¬
product may be as
With Harris, Upham & Co. high as $275 billion by 1960, then,
(Special to The Financial Chronicle)
gentlemen, the (price level for
INDIANAPOLIS, IND.—Richard homes erected prior to 1944 is
S. Freeman of Chesterton, Ind. not only about correct, but it may
has become associated with Harris, even be too low! In making this
Firm Trading
Markets:
gross
statement,
Upham & Co.
continue to fan
bil¬
lion tax bills, billion dollar for¬
eign loans, and a million surplus
payrollers, the price of improved
But
,
I am not
California & New York
Real Estate Issues
considering
"As long as we
the fire of inflation with $35
real estate
as
it levels out in 1947
is not too high."
With Cannell, French,
*Part
of
address
of Mr.
Arm¬
Copp
strong at the graduation exercises
of the Real Estate Appraisal Class
BOSTON, MASS.—Walter F. of Philadelphia Chapter of Ameri¬
Zandi is now connected with Can¬ can Institute of Real Estate
Ap¬
nell, French & Copp, 49 Federal praisers, Philadelphia, Pa., May
Special
to
The
Financial
Chronicle
Street.
19, 1947.
(Special to The Financial
ated with
was
become
ACTIVE MARKETS
A
Special Study!
Capital Stock \
formerly with Wagenseller &
Durst for
a
ALL
61 BROADWAY CORPORATION
Mr. Weber
Street.
EXbrook 8515
associ¬
Livingstone & Co., 639
South Spring
St., San Francisco 4
Tele. SF 61 & 62
Chronicle)
ANGELES, CALIF.—Har¬
I. Weber has
old
J. S. Strauss & Co.
155 Montgomery
.
H. Weber With Livingstone
Write
number of years.
or
phone for
analysis of
an
your
of this illuminating
copy
REAL ESTATE
STOCKS & BONDS
unusually attractive real estate equity.
Bought—S old—Quoted
With E. F. Hutton & Co.
(Special
LOS
to The Financial
ANGELES,
thur Balzerini has
the
$700 now sells 62$'
to
order
in
LOS
that the kind
of house that sold for $10,000 in
"Who
government buying oranges and
grapefruit to rot on the ground
types.
present level by 1960, and if the
recent statement by Dr. Sumner
while
added,
all
Twentieth
increase
destroy
ings."
a
the
of
spending
he
many
grain of truth
tions
April 26.
According
ment
all
efforts
—
buyer's consideration at any
But I have pondered long
and deeply if it may not be pos¬
sible and even entirely probable
that old homes will retain their
meeting on
govern¬
war,
its
of the new homes that have
throughout the East
there is but
publisher of "Between
and
the
directed
into closer balance with demand,
not only are manufacturers going
monstrosities, and not worth
ture
elected
of
end
has
toward satisfying the pent-up de¬
mand for goods and services of
price.
ANGELES, CALIF.—A. M.
on
business
any
from
A. M. Peterson Director
Peterson
the
been erected
Executive
manager
Stock
of
present level in our price struc¬
LOS
high in govern¬
men
&
Parker
lives.
now
Since
price of homes — that
in today's market
line. Without question,
out
many
associated
become
Brainard-Judd
retary
is
CONN. —George
$1,200, that nickel magazines
sell for a dime, that it takes
cents
75
dinner
Estate
Parker
Pearl
Honolulu
the San Fran¬
cisco
Brainard-Judd & Go.
with
President
that
•
evening
fact that no one can say
is old homes
E.
market in comparison with
Morgan L. Fitch, Chicago,
Geo. E. Parker With
HARTFORD,
nation
prices, what we will require is a
balance in the cost-price and in¬
He will handle
this
far
business, and retail centers of our
urban communities in which more
than 60% of the population of this
the price of all types of
goods and commodities' will no ;
fall
indiscriminately. But what
we
need
is
not
simply lower
C6V, 30 Pine Street,
City.
public is looking for a drop,
a crash, in the price level.
pens,
associated with L. D.
underwritings and mergers.
Na-^>-
the
segment of the Ameri¬
Estate
Real
I have
devoted myself to a discussion of
one side of the real estate problem
•that of housing. Another ele¬
ment of deep concern to each bne
of us relates to the industrial,
So
saying that no matter what hap¬
partner in the New York Stock
Exchange firm of Duryea & Co.,
to Wall Street
Industrial
Our im¬
problem is one of price v.
Possibly that decrease may come
—and then again, maybe it will
not. But I feel absolutely safe in
a
&
thoughtless
carelessly sow.
if not
George F. Rothschild, formerly
returned
H. Armstrong
Robt.
buy?"
can
With L. D. Sherman
Sherman
a
statesmanship, I fear
reap many of the
seeds
that
we
so
shall
we
un¬
expressed another
"am I getting my
money's worth for the article that
George F. Rothschild
has become
that
which,
value,
way,
I
has
our
that
yet
as
are
dermined and unknown.
& Co.
challenge to those who manage
country banks; and if through the
influence of bankers their farm
customers
should so thoroughly
balance
their budgets and pay
their debts, they will be able to
good value on today's
other commodities,
sev¬
blow¬
wind
Guaranty Trust Co.; W. H. R. Jar-
President of National Association
Estate Boards says a house today is good
comparison with other prices.
i
is
are
augur
Morgan L. Fitch,
value in
that
profound and more im¬
more
are
lowest
A large
Real Estate Prices Not
questions
are
market
the
It is
of Real
the
of
stock
to
There
confronting appraisers today that
would
this highly
desirable objective of farm land
debt reduction, there is an open
most cur¬
panorama
Harry C. Clifford, Kidder, Peabody &
Co.; Robert H. Craft,
"In the attainment of
1
ing
The de¬
cline
or
Dasis, but rather am I endeavor¬
to look upon the economic
with a broader vision.
of
resistance.
then.
War I.
month-to-month
operation of the Exchange will be:
en¬
that lie ahead.
not be so plentiful
may
hear
exist on a
year-to-year
that may
fluctuations
consumer's
and
bank¬
most
prepared to look farther than
own
backyards and attempt
to serve our clients on the level
remain
easily be¬
could very
now,
much
of
order
Assisting Mr. Hazelwood in the
tlement in the years
to
"After World War I,
pre-war
made in
be
em¬
made now, or that
are
come
challenge that every ounce
Act.
be
being paid with cheap dollars,
perhaps 50-cent dollars.
Debts
been
used
in
made
high of $11 billion to $5x/4
Jan. 1.
There is like¬
be
not
will
shares
scriptions close May 29 at noon.
joying the independence of being
out of debt. The debts that were
on
influence
will
We
-
<S>-
eco¬
nomic field.
for
Subscriptions
in
excess
of
10
shares may be accepted at the dis¬
cretion of the committee. The sub¬
Then if there are lean
barrassing.
prevent
an
increase in this indebtedness
such as that which followed World
of
maturities
ture
"However, there are certain im¬
portant differences in our present
situation and the condition we
found ourselves in at the end of
the first World War. The real es¬
from
have
or
is 140.
has
entire
receipt after orders of the one-
of
get this debt paid in full,
the amortizement pay¬
ments made so far ahead that fu¬
did
nation
10
subscribe
entitled to
16
forecasting—and that is what all mortgage
investors and appraisers must do—is today one of the
difficult in the
share and subscriptions up to
one
to
to
that prevailing
in
other States. With 1912-14
as normal, or 100%, prices of farm
lands advanced
to 151 in 1920,
then declined to 70 in 1933, turned
respects
tate mortgage debt of
The problem of
ers,
share subscribers have been filled.
many
the
"red herring," which
is
distributed to Bond Club
members, invites "underwriting"
participations for prizes on the
basis of shares at $10, with each
share also carrying a sweepstakes
coupon. Each member of the Bond
The
being
"Now
many
of
"prospectus."
Club
Bailey
W.
sim¬
in
charge of this event, in a special
$55
much for
so
for balance in cost-price and income relationships.;
Sees no indication of general fall in value of existing homes but
warns dynamic character of real estate values may lead to price
changes on individual or regional basis.
Forecasts changes in
retail areas arising from parking difficulties and concludes real
estate suffers from a "cultural lag" more than other lines.
wood, E. H. Rollins & Sons, Inc.,
Chairman
of the
committee in
the farmers
lands appraised
contends need is not
lower prices as
while earnings are good,
and there is a surplus, how splen¬
Bailey stated,
*'you have a
problem
New York real estate expert
billion.
Then they have
other property which brings the
total of real and personal property
holdings to $100 billion.
at
Kansas," Mr.
land
Coun¬
try
Club on June 6, are
an¬
nounced by Charles F.
Hazel-
was
indebtedness,
of the nation own
in
Editor, "Appraisal Journal"
the Bond Club of New York to be
converted
into long-term real estate mort¬
gages. There was no large volume,
of this temporary credit outstand¬
ing after World War II.
That is
reassuring.
But there is an ele¬
ment of danger in the purchase
of lands on credit, or the pledging
of lands now paid for to buy other
lands nearby.
Against this $5V4
indebtedness
rent
tional Bank of
By ROBERT H. ARMSTRONG*
portant feature of the field day of
Addressing the Kansas Banking Association at Wichita,
©n May 16, C. W. Bailey, President of the American Bankers
ciation, and
<§>President
Stock
Club
The Problem of Real
trading on the Bond
Exchange,
an
im¬
Plans for
desirable objective would
is better than after World War I, a
now
be further reduction of farm land debt.
'!
credit situation
Kansas bankers though farm
C. W. Bailey tells
Exchange
Issues Red Herring
staff
Chronicle)
AMOTT.-Baker &\CO.
CALIF.—Ar¬
been added to
of E. F. Hutton & Cp.,
South Spring Street
j
i
.i '{
Incorporated
New York 7, N. Y.
150 Broadway
SIEGEL & CO.
80 Broadway, N.
.
Tel. BArclay 7-4880 '
'
Teletype NY 1-588
•
,
.
Y. 6
Dlgby 4-2870
Teletype NY 1-191?
Thursday, May 22, 1947
FINANCIAL CHRONICLE
THE COMMERCIAL &
10
(2734)
Telecommunications
Finch
*'
*
' '
'
'
•
Dealer-Broker Investment
Literature
Recommendations and
understood that the firms
It is
to
send interested parties
N. Y.
6
position,
tonio 5,
Insurance
Inc.
Co., 61 Broadway, New
6, N'. Y.
—
Circular
—
Cotton Mills
"We
Street, Utica 2, N. Y.
•'
Texas.
Believe
the
V 1
Turn
at
Is
Hand"—Analysis outlining factors
which the firm believes make for
Mohawk Val¬
Co., Inc/ 238 Gen
ley Investing
esee
and
F.
opinion—E.
and
Utica & Mohawk
earnings comparison for
1946—Laird, Bissell & Meeds, 120
Broadway, New York 5, N. Y.
mentioned will be pleased
on
Hutton &
Stocks
the following literature:
Corp.—Memorandum
Carbon Corp.
York
Casualty
and
&
outlook—Pitman & Co., Inc.,
Alamo National Building, San Aht-<
—Summary
'
'
Fire
Union Carbide
r-
Analysis—Troster, Currie & Bum¬
mers, 74 Trinity Place, New York
a
>
major
recovery at
this time—
30 Broad Street,
York 4. N. Y.
Herzfeld & Stern,
America's Needs and Resources
and As¬
Century
Frederick Dewhurst
sociates—a Twentieth
Fund
survey
of our
all its fields—The
West 42nd Street,
tury Fund, 330
$5.00.
18, N. Y.—Price,
New York
in
economy
Twentieth Cen¬
Canada';? Budget and Interna¬
Position—Brochure cover¬
tional
ing
and
revenues
expenditures,
guaranteed debt, inter¬
direct and
accounts
1935-1946,
United
States
Dollars
Position,
Canadian Exchange rate, and dis¬
cussion of business conditions in
Canada—Wood,
Gundy
&
Co.,
national
Inc., 14 Wall
Street, New York 5,
N. Y.
Code Book—1947
Edition—Code
for
teletypewriter
in
use
Wall Street,
&
Rogers
munication— Hartley
Fleetwood-Airflow, Inc.—Mem¬
Treat & Co., 40
N. Y.
Fort
Co.
Casualty Insurance
Stocks Manual — 1947
Editioh —
With Bank Stocks section—White
&
and
Mississippi
Co.,
v
analysis
surance
Hydraulic
Developments of the
Week—Memorandum of comment
—Vilas & Hickey, 49 Wall Street,
Railroad
Artkraft
Manufacturing Corp.
New York:
Lima, Ohio
Manufacturer of Deep Freeze
Food
Outdoor Ad1-
Beverage
and
Coolers,
and
vertising Signs of all types.
MARKET:
1%
available
Full information
to dealers
13/4
-
request
on
only.
74
the
industry
groups
CHICAGO 4
Teletype CG 955
-
-
*
•
■
Aspinook
.
—Ward
Also
tists;
>
.
jt-.
York
Direct Private Wire to New
Concrete; Barcalo
City
—
CO 537
Central Public Utility
your
the
financial noteworthy that
occupy a
By
program.
markets'
'financial
we
in securities
top spot
the
most
term
e'er-^
more
today
we
active member firms
the
public than
our
at
have
serving,
time in
history.
any
—
Corp.
Broadway
61
La Salle Street,
Co., 185 South
Chicago 3, 111.
Co.
Electric Co. — Inc.
Bear, Stearns &
<*.
ST.
CHICAGO 4, ILLINOIS
„
memoranda
»
Memorandum
Telephone Randolph 4068
are
Corp.
Vacuum
Atlantic
.
208 SOUTH LA SALLE
System
Y.
available
Mfg.
5^'s of >52
Roll
corporation—Circular
Co.* 120 Broadway,
LanoVa
on
Central Public
Recent Review on Request
'?
and Taylor
Wharton Iron & Steel; Purolator
Products; Upson Corp.; United Ar¬
F«it.nr. FiumutNCa.
Utility
&
N. Y."
*
*
i
.
New York 5, N.
SINCE 1908
Net
Quick Asset Value—Tabulation—
Wineman, Weiss & Co., 40 Wall
Street, New YOrk 5,
Dearborn 1501
231 So. La Salle St.
compare
to
on
This past year resulted
transactions in excess
of 12 million shares, totaling more
than 336 millions of dollars. It is
this trend.
.
years
Close
markets should
brochure
stock—Descriptive
MacWhyte
with the mar¬
ket as a whole, represented by a
composite of 540 stocks—Write to
Department T-92, Merrill Lynch,
Pierce, Fenner & Beane, 70 Pine
Street, New York 5, N. Y.
recent
over
listings to aid in this
In this connection, Mr.
"Think what it would mean tc>
tainly mean commercial banking,
Analysis i n investment banking and market all of Us if the Midwest could ex-*
"Business and Financial Digest"— places for the buying and selling pand its Midwest exchange to the
Loewi
&
Co., 225 East Mason of securities;.
point where it would be the natu¬
"Commercial
banking, invest¬ ral market place for the listing
Street, Milwaukee 2, Wis.
.
ment banking and securities mar¬ of all qualified securities in this
Minneapolis
Gas Co. — Which kets are the Siamese triplets oi great industrial area. This would
MidWdst
prosperity.
These mean added deposits, added de*
will emerge as the surviving op¬ the
erating company out of the reor¬ triplets are bound together by in¬ mands for bank loans, added trans-*ganization of American Gas and terdependent financial ties. If any fer and registration fees, added
Power Co. — Comprehensive sur¬ of this trio is undernourished, the underwriting profits, added clear¬
vey—Model, Roland & Stone, 76 evil effects are felt by the remain¬ ings, added brokerage and added
Beaver Street, New York 5, N. Y. ing
members.
Conversely, it k commissions. This prospect is '&
equally true that the vigor of any very real and tangible goal, but
National
Supply
Co.—Memo¬ one member has beneficial effects it requires the combined efforts
of all concerned.
randum—A. M. Kidder & Co., 1 on the remaining member's.
"The
trend
toward
a
more
Wall Street, New York 5, N. Y.
"The Chicago'Stock Exchange
equitable distribution of finance has started a drive for new list^
New
England Gas & Electric throughout our country is self- ings.
You bankers here in the
Association—Analysis—New York evident. In many instances in the' Midwest can play a very impor¬
Hanseatic Corp.,} 120 Broadway, past, the New York financial mar¬ tant pai-t by suggesting to Midwest
ket has been able to offer greater
New York 5, N. Y.
corporations that The
Chicago
financial and technical services.; Stock Exchange offers the best
Public National Bank & Trust In our. commercial banking field market plaCe for their securities.
Co.—First quarter analysis—C. E
today, this is no longer true. Our In doing this, you Will be making
Unterberg & Co., 61 Broadway, commercial banks throughout the a' real contribution to your ownMidwest can offer every service
New York 6, N. Y,
business and the over-all financial
Also available is
an
offering New York can offer and,; in my
market of the Middle West,".
circular on Stern & Stern Textiles. opinion,, present material advan-
Survey-
the stocks of
quick picture of how
more
development of Midwest
Sons Co.—Com¬
Lees &
new
a
Day stated:
"Your active participation in
—Graham, Parsons & Co., 14 Wall
Street, New York 5, N. Y..
"\
Analyzing each of the 74 industry
groups and
providing facts and
opinions on over 300 individual
securities; includes charts giving
Stocks i Selling
COMSTOCK & CO.
mon
„.
Security and Industry
Common Stock
Units,
5, N..Y.
James
toward
movement.
Salle Street.
Co., 231 South La
Chicago 4, 111.
&
York
for
Co.—Analysis—Adams
R. Hoe &
Street, New
Co., Inc., 67 Wall
5, N. Y.
,
&
to ths^i——:
—
;
equitable tages to the direct, needs of our
own
Midwest corporations.
distribution of financial markets
"The Chicago Stock Exchange
and
reported
that the Chicago
Stock Exchange has started a drive is making every effort to support
poration.
in the current issue
\\
Bankers Asso¬
Chicago Stock.
Exchange, called attention
trend
Old Ben Coal Cor¬
turing Co., and
prospects for higher earnings
of "Bank and
Insurance
Stock Digest"—Geyer
of
Co., Lung
Miller Manufac¬
Bell Lumber Co.,
Earnings—Discussion
Exchange,
and urges
Speaking at the 56th Convention of the Illinois
ciation on May 21, James E. Day, President of the
•"
analyses oi
are
Mfg.
drive has started for new listings
Mid-West Bankers cooperate.
Salle Street
,
Press
says
&
Comstock
—
La
South
231
Chicago 4, 111.
Also available
casualty in¬
of fire and
analysis
Detailed
Corp.—
Coal
County
Franklin
Co.,
Day, President of Chicago Stock
Jamss
Valley Trust
stocks as of Dec. 31, 1946.
Insurance
Street, Chicagc
4, 111.
stocks
comparison and
tabulated
Stock Exchange
Aiding Mid-West Financing
stock
208 South La Salle
table of insurance and bank
a
New
Chemical
Sees Chicago
Corrugated Papei
— Descriptive
Wayne
• common
brochure—David A. Noyes & Co.
Building, St. Louis 1, Mo.
Also
available is a reference
and
Carolina
-
Y.
New York 5, N.
New York 5,
Co., 120 Broadway,
Fire
Virginia
orandum—Amos
com¬
—
Special
capital stock—Amott,
Baker & Co., Inc., 150 Broadway,
Corp.— New "York 7, N. Y."
of
study
NSTANotes
estimate of future
Southern
Natural
Gas
Co.—
earnings—Brailsford, & Co., 208
Memorandum—H. Hentz & Co., 60
South La Salle Street, Chicago .4,
Beaver Street, New York 4, N, Y.
111.
Engineer's
„
Southwestern Public Service Co.
Central Public Utility—Recent
review—Fred W. Fairm&n & Co.,; —Memorandum—Buckley Broth¬
208
cago
South
La
Salle
Street, Chi¬
ers,
1420 Walnut Street,
phia 2, Pa.
Also available
4, 111..
Philadel¬
~
memoranda
Dumont Electric Corp.—Bulle¬ on Bird & Son, Inc. and Eastern
...
tin—Aetna Securities Corp., Ill Corporation.
Broadway, New1 York 6, N. Y.
Also available is a bulletin on
York Corrugating
Southwestern Public
—Memorandum in
Co.
lic
ADVERTISING
SERVICE
Fashion
are
Bark, Inc.—Analysis-^-
Seligman, Lubetkin & Co., Inc., 41
Broad Street, New York 4, N. Y. >
Also available are analyses of
Tennessee Products and Consoli¬
date Dearborn.
Utility
Stock
Service.Coi
current "Pub¬
Guide"—G. A.
Street,
Co.* Inc., 70 Pine
New York 5, N. Y.
Saxton &
Terra-Life
—
••
••
Circular—Caswell
&
Co., 120 South La Salle
Chicago 3, 111.
Street
.
1872
OF LOS ANGELES
Angeles held a special
luncheon on May 20 at which R. Victor Mosley; Stroud & Co;, Inc.*
Philadelphia* President of the National Security Traders Association^
Edward H. Welch, Sincere & Co., Chicago, Secretary of the Asso¬
ciation, and Edward E. Parsons, Wm. J. Mericka & Co., Cleveland*,
member of the Executive Council and past President, were guests..
The ClUb will hold its annual spring party at the North Shore*
Tavern,- Lake Arrowhead, June 2Q->22 inclusive.
Cost to members;
will be $40,
Since accommodations at the North Shore are limited:
to .70 persons, preference will be ^ given-as follows:
(1) members^;
(21 out-of-town NSTA members; i (8> local guests. Guest rates will
be $50 American- plan.
Arrangerhents Will be made at the Lodge
in the Village for those who cahhot be taken care of at the Norths
Shore Tavern.
<
*
. .
:
/
Reservations with payment must be received not later than
June 5, so that the Committee may be able to handle guest, acconwmodations properly. • •' •
'
" '
/Members of the Entertainment Committee are: Robert D. Diehl,.
Wm. R. Staats Co
Chairman; Roy Warnes, Hill, Richards & Co.; and!
Joseph Gallegos, Pacific Co. of California,.
•
• . ,
SECURITY TRADERS ASSOCIATION
The Security
.
,
Hamilton Manufacturing Co.
\'/
COMMON STOCK
Bought
Albert
A
Frank
.
.
.
Sold
.
.
.
Prospectus Furnished On
Dallas
Request!
BOND
Incorporated
-
Members:
Chicago Stock
Exchange
-
'
BOSTON
SAN FRANCISCO
225 EAST MASON
PHONES—Daly S392
MILWAUKEE (2)
ST.
Chicago:
State 0933
hold a field day on May 30 at the*
Reservations should be made with William.
Bank Building^
Walker, Austin & Waggener, Republic
CLUB OF HOUSTON
'
Teletype MI 488
.
will hold its annual outing on May 24
Ranch/Westheimer Road, at 2:00 p.m.
The Bond Club-of Houston
at Earle North's
<
PHILADELPHIA
Country Club.
Waggener,
•
CHICAGO
Bond Club will
Dallas.
Guenther Law
'
! '"
DALLAS BOND CLUB
The Dallas
Quoted
★
NBW YORK
Traders Association of Los
BOSTON SECURITIES
TRADERS ASSOCIATION
"
Twenty-Eighth Annual Outing of the Boston Securities
Traders Association, will ,be held Thursday/ July 10, 1947, at the
Woodland Golf Club, Newton, Mass.
• *
The
.
.
[Volume 165
Number
4596
THE COMMERCIAL &
FINANCIAL CHRONICLE
(2735)
Cleveland Bond Glub
CLEVELAND,
By
E.
DUN STAN*
a
Director of Marketing, International Bank
for
Reconstruction and Development
Spokesman
was
actually
world
50%
has
econo¬
.with
my
ing
ris¬
living
standards
for
all.
servative
States,
describ¬
ing
the
mate
tive
ulti¬
to
I
use
words
able
to
bleak
de-
them,
world in
been the
Since
of
eco¬
effort;
man-
ownership—is required
As
has
per-
have
used
member
their
up
Wm.
J.
Mericka
&
why the Bank is
the answer lies all
*
neces-
around
,
with
An
address
32)
page
Mr.
by
.
>
Dunstan
sociation,
Swampscott,
'
Special
* Event
—
com¬
his
Stock
10
shares.
buyers
Vice-Presidents: < C.
four
Evans,
Henry
Gray,
ber
the
-Marvin
to
advertising
Kahn.
This
the
on
will
*
Reconstruction and Development
.
}■
Official traces history of
origin and organization of International
Bank for'Reconstruction and
-
and
ment
i
will
only lendLwhen private
Holds lending abroad is essential
sources
to maintain
our
Introductory
-
the
productive capacity in the world
or-
£
,r
iind
and which is
producing in record
,
igani zation
breaking
operation
the
from
ymyself
few
to
as
which
to
lack
some
■
%
are
those
eign
•c,
w
Of
Ving4
or
jnisu
r
s
n
w
e
plant
the
The
,
\
Chester A. McLain
<;
Reason
for
the
The first question which is fre¬
history of the Bank is "Why ari
International Bank?" ..That ques-
:
tion
gbes to the
very
heart of the
subject.
'
Today we find
nation
.which
-
has
ourselves
the
by
bombs
and
shells
and
sabotage,-but also by
rear
the
deterioration
economies
because
of
their
of
lack; of
proper up-keep and maintenance
during the-war years and the ex¬
haustion of theirrworking stocks
resulting from - the
quently asked by those who are
not thoroughly familiar with the
-
suffering not only front
in
a
greatest
; Peace
is
more
aftermath of
of
war.
if
peace,
it
-
war.
.
-
than" the
•
mere
The restoration
means
anything,
must.mean the restoration .of free
international
intercourse, the free
exchange of goods.. and services
between those who need
them
and
those who
can
-
.satisfy
need.
free
In
order
to
restore
intercourse it is first
the
that
neces¬
to create in the countries
which need such
goods and serv¬
sary
* An
address by Mr. McLain at
Connecticut Trust
Confer¬
ices,
of! the
Connecticut*Bankers
which
Association,
New Haven,. Conn.,
may'restore the normal funetion-
..
the
ence
„
May 13, 1947.
the
Thirteenth -—John
Hartley Rogers & Co., 120 Broad¬
New' York City, specialists
School
Cleveland,
1947
a
Code' Book
edi¬
to
District
boost'
on
page
32)
dicate
CleveT
and
to
ers
other
Canada.
This
Otis
Ball,
in
&
the
Co.,
Burge
&
Co
of
syn¬
Field,
&
-
Cleveland.
and
National
J.
communicate
through
with
each
simplified
a
code
for the words most
frequently
em¬
*
City Bank
*
Clarence D. Murray, assistant
clerk of the Village of Brook
Park,
Cleveland
suburb,
an¬
The
for
and
dealers in
obtaining
executing orders by
t
1 e t y p e writer
communication.
About half of the symbols are for
e
words selected
the basis of the
on
frequency with which they are
used in ordinary
English. r About
12 of these words have been found
to
constitute
approximately. 25%
of
all
used
words
general
in
samples of
reasonable
English
of
The ^trading-terms and
phrases for which code symbols
are
given
have ' been
selected
,
length.
-
through surveys- made -oven many
years with-securities trading com¬
of
two
-
previous
-
seyeral years ago,,
editions
,
,
,
issued
.
iF-
Hodous
of
Central
National
and
Cleveland
Franklin
W.
'Trust
Co.,
Secretary-Treasurer.
*
*
Aust ip£
renamed
*
Other New Faces in High Places
-r-Edward S. Reddig, elected
yice-
President of White Motor
Co.j and
remaining in his former post cf
controller.
-Alfredt D.
-
Edgerton^
Secretary of the engineering de¬
partment/now Assistant Secretary
the
company.
..
.
.
Edward
L.
Carpenter,
former
commercial
loan- departmentofficer, • chosen,
Vice-President
tional Bank.
now
.
.
of
Central
manager of market
ment
and
Heater
'Na¬
-Robert T. Killiant
develop¬
research \for
Co., Cleveland:,
Bryant
W. R.
Elliot promoted to;
general super¬
intendent of Otis Worlis of Jones&
.
.
.
Laughlin Steel Corp.
Cudahy issue with Hal¬
Ball, Burge & Kraus,
&
Co.
and
First
k
Cleve¬
Corp. while Otis, McDon¬
&
Co.
and
were
%%''
bonds of Cudahy while the Bos¬
ton's were various purpose is¬
sues
with
iy2
and
1%%
cou¬
Underwriters and
Distributors ©f Municipal
and
Corporate Securities
OTIS & CO.
(Incorporated)
pons.
❖
Robert W.
of
ijs
Established
sfs
Purcell, another
1899
CLEVELAND
one
Robert
R.
Young's "young"
stepped into the newlycreated post of Viee-Chairman of
Chesapeake & Ohio Railway.
New
York
Cincinnati
Chicago
Columbus
Denver
Toledo
Buffalo
men, has
Purcell, (who is 35, will
tinue
worked
con¬
Vice-President.
as
closely
with
in
C»*"& O.-Pere Marquette system.
two years ago, Purcell
About
became
a
youngest
Vice-President,
man
Vice-Presidency
*
to
ever
*
on
lies
either road.
*
Mentor, O., is the
new
largest: producer oL alka¬
and
allied
Richardson
a
President of Diamond Alkali
Co.,
second
Harshaw Chemical
the
hold
Thirty-eight-year-old Raymond
F. Evans of
Drackett
He
Young
the latter's efforts to extend the
.
t'v.
Carl
the Federhl
were
Fahey, Clark &
in the City o£ Boston's.
The bid was 98.521 for 2
ployed in the securities:business.
objective is to save time and
expense
Club.
-
The
markets
Country
dent,
'*
of
*
code
designed-to'permit deal¬
to¬
tax
Kraus,
Wm. J. Mericka & Co.,
Hayden,
Miller & Co., Hawley, Shepard
Co.
is
installed
& Controllers, at the. annual
golf party and banquet at Ridge-
wood
unlimited
firms
were
Corp.,
dealers .and. brokers in the United
States
be
tors
:
*
Richards & Co., First Cleveland
.
ald
with munications.
•*;
;;
them, so that they r This edition is a revised version
(Continued,
Cleveland
all
book
will
(Friday) as President of
Cleveland
Conference, Na¬
tional Association of Bank Audi¬
Viee-Presi-
land
mailing
Seaman, Secretary
Savings Bank of.
Bank, first Vice-President; Richbuilding 1%% bonds at prices tb ;ar.d:W; Baird,. auditor of
Society
yield 0.65 to 1.75% according to ;for Savings,- second
markets,
are
W.
American
morrow
houses, which reoffered $2,^of
Warren, Ohio,
City
Otis
their
two
next
Bank, is,the outgoing President.
Other new oficers are
Sylvester
in over-the-counter securities
of
the
group, including several
sey
tion
within
the
750,000
way,
tfye purchasing; power
to buy
K.
the,' split -would* become
Edward
of
M.
Hay,
Merrill,
Turben
&
Co.,
nounced the village was
asking
Chairman; C. M. Colyer, Central
for tenders for the
National
redemption of
Bank; Peter ■ Hallaran,
$30,000 refunding bonds.
Merrill, Turben & Co.; Galen Mil¬
Halsey, Stuart & Co. was high
ler, Hayden, Miller & Co.; William
bidder
for
$15,000,000
H. Watterson, Fahey, Clark & Co.
Cudahy
Packing Co. first mortgage sink¬
ing fund, series C, bonds and
$11,090,000 Boston serial and sink¬
Dealer-Broker Code Book
ing fund bonds.
,
International Bank
.,,
are
enemy
son
of
Ibanking community and the public generally.
•
to
the destruction of their industrial
r-
t anding
qamohg
for
^exchange
They,
-even
id
starving
goods, but without the for¬
which
be
nations
resources
with
purchase them.
.They
find themselves in that condition
because of the ; ravages of war.
to
nd-
a
food
to, steel and automo¬
Across the oceans east and
•
uriderst;
everything
biles.
there
appears
;
f: & ->
a
-
.
west
•,salient
points
quantities
■-y
Bank.
i.3 shall confine
>
—
discuss in de-
vtail
—
Friday
My subject this morning is the International Bank for
Recon¬
struction and Development.
I shall not in the time at
my disposal
rattempt to
«>
Rudford
Wilson,
Curtiss, House & Co.; Burton T.
Reid, Ball Burge & Kraus.
unavailable,
are
Prizes
:
front
300,OOtt
Ehninger, auditor* of
land
„
trori, Gottron/Russell & Co.; Herf
J. Sheedy, McDonald & Co.-
man
export trade.
.
.
Co.; Harry Gawne, Merrill,
Turben .& Co.; Richard A. Got-
Development. Says actual available
capital is approximately $l1/£ billions, of which more than half
is not
presently available for lending.
Contends, in carrying out
Its purposes, Bank seeks to
promote private international invest¬
•
f
ard &
to
par
Stranahan, Harris & Co. headed
a
H.
-Anniversary — Orin
E.
Koeser,•< Blyth & Co., Chairman;
David- J., Barhyte,
Hawley, Shep¬
*
weeks.
W.
board.
$1
of
effective
manager,f
Cleveland
*
Silver
Counsel, International Bank for
[
*
authorized-shares
added
142,000, the number of shares
listed
pf
shares of 50-cent par,- President
C.
J. cRodman announced. He
Neubauer and Mortimer
Jacobs,
and
of
150,000
are
M.
Co.
Shareholders cf AllianceW^re
Alliance
Ohio, voted to
split the common shares twofor-one and increase the num¬
Ex¬
The
the
Melloiv
Trust
Inc.,
to pay
years
the
and
Richards, .spent mublx
although!
always has been im
home
an
Merrill, Turben & Co., maturities ranging from 1948 to
Chairman;
"Corwin "L. JListon, 1971. The group was awarded the
Prescott & Co.; Wallis W. Wood, issue on a high • bid 1 of
101.63,
naming the 1%% coupon.
Wood, Gillis & Co. :
By CHESTER A. McLAIN*
Alkali
of his time in Cleveland
Clark,
General
national \expansion.
is
a
director
pE
Pittsburgh.'
Cleveland
for
May¬
William
He
Pittsburgh.
*
chasers having
& Co.,
16,
May
1947.
huge
Bank
The
Golf—Jay L. Quigley, Quigley
Chairman; Herbert H. Cov¬
ington, Harriman Ripley ;& Co.;
John A. Kruse, Otis & Co*
^
before Massachusetts Bankers As¬
the
re¬
•
Diamond
shares were recently au¬
thorized for sale to five officers
at $19 a share with the
pur¬
Co.;
Reid,
is
.was
Presidency .;aiMafter 30 years p£
National
additional 3,500
shares of its common stock.
nard H; Murch. & Co.*
Chairman;
Norman V. Cole; Ledogar-Horner
These qualities
on
B.
*
change to list
Co.; M. J. M. Cox/ Curtiss, House
&
Co.;. Harry G. Kraus, Ball,
Burge & Kraus.
Dinner—Frank
pany's
Gray Drug Stores, Inc., opera¬
a large chain of
stores in
Pennsylvania
and
New
York, has filed an application
Field, Richards & Co.;: Robert O.
Shepard, Hawley, Shepard & Co.
:
expansion
*
he
the
-
pfogram.
Chi¬
Ohio,
Merrill, Merrill, Turr
ben & Co.; A. M.
Newton, Hayden,
Miller & Co.; Russell J-.
Olderman,
foreign ex¬
by the
the
John -T.- Rich¬
Evans had been Executive VicePresident and directed thb com¬
and
of
at
-
;
tors of
Fahey,
Charles' B,
nations
or were so denuded
(Continued
Not only was our productive
capacity unscathed, by war, but it
iis.
icka,
service.
First
Cleveland,
McMahon
from
Chairmanship
di¬
They
of
y-
mainplant
announced
*
Cleveland Corp.; William J. Mer-
the great immediate
the
of
Clark,
I.
•
Fulton, Maynard H. Murch & Co.;
John Johnston; McDonald &
Co.;
Herman B. Joseph,
Skall, Joseph
& Miller;- Emile
A.-Legros, First
are
the hope of the
supplying the plowshares
Many
-
John *S.
and will to work.
staying
it
once
to
rsary,
,-
.
we
peace—so
Why Is the Bank Necessary?
-
-
D.
Legros
of
who
tiring
pleted.
&
and occupation
forces that
they came out of it with no for¬
eign exchange and with no abil¬
ity to acquire any except by the
most rigid •
selfr-discipline, denial
formed this function.
i
their outlook is
They can produce
war
yestment and, second, because the
.-Bank has no intention of
scene
avail¬
demand is for dollars to buy them.
change
-to lead the
way for our accepted
and proved system of
private in-
the
made
are
They can contribute less to
healthy world bconomy.
j
so
great have
when
Hayden, Mil¬
R.-Mitchell, C.
Co., co-Chairmen;
Burge, Ball, Burge &
Childs
Kraus;
.
—
:«n
tools
indeed.
a
nomic dislocations
caused by war
that
some
institution
interna¬
l-national in concept,
„
restore
little.
*
.
F.
Clark & Co.; Paul J.
Eakin, Hornblower & Weeks; Harold L. Emer¬
son, H. L.. Emerson & Co.; W. Yost
vital
erately —
first, because
and
to
ma¬
ards
no
cago: It is reported
brewery ca¬
pacity may be boosted from
35,000 to 40,000 barrels a year
ment—E. S. Warner,
ler & Co., and B.
must
also
Marshall
Entertain¬
John
and
1 i b
ment
world
necessary
and
added.
the
Evans. succeeds
Gen¬
are
Cleveland Corp. and R. B. Den¬
nis,
mem¬
productive - capacities and
develop their resources.
Until
precursor
:/
the
Arrangement
been
Emile
are:
bers follow:
their
necessary
E. Fleetwood Dunstan
the
of
find
Committee heads and
up.
There
with
Painesville, east of Cleveland.
execu-
and
new
rectors have
one
these
objec¬
the
-the
United
the
►
chinery and materials
of
Bank,
a. con¬
great
to which the freedom-lov¬
nations
turn
is
as
Manager.
~—;
field
other management
changes with
the exception that three
as
switches to the Country Club for
golf, tennis and swimming. Din¬
ner in
the evening will wind it
increased.
The
estimate.
today,
source
ing
In
greatly
been given
invited
The full day
begins with break¬
fast at the Mid-Day Club and then
to a?>-
dynamic
have- been
Vice-President
eral
guests.
If, after careful study, you are convinced the Bank merits your
confidence, then I think you will see it as we do—as a necessary
precursor
Harold B. Frierott is the
\tive
security
who
^
present
owner,
having
bought the brewery last August.
already been
firms
78-year history.
Ulreh Vogt, Jr. ef
Chicago* is
;the
received from syndicate
managers
of
the
large -national
paid off in:production within {
State Bank essentially combines rNew
England
pioneering spirit with conservative safety.
t
will be used for
recapitalization and expansion
pro¬
The 30,000 shares
being offered at $10 a share are the first
to be sold to the
public in the brewer's
the organization. • - A
large number
of acceptances have
reasonable time.
'
Proceeds
grams.
13,
Borrowers' willingness to make ;
full productive use of their
credits, the crux of its lending policy. ;
Declares new French Loan will be
5
—
Club
record
according to Walter B. Carleton,
Fahey, Clark & Co., President of
Institution i is required ta promote traditional
asserts
of private investment.
system
Ohio Brevities
First Cleveland
Corp. is underwriting a $300,000 stock issue
for
sale to the general
public by Wooden Shoe
Brewing Co. of.Minster,
Ohio, near Lima.
OHIO.
T h e
of Cleveland
expects
attendance at its annual
spring party and silver, anniver¬
sary to be held
Friday, June
Bond
FLEETWOOD
11
chemicals -in' its
field, Rickarcls ,8c Co.
-
Union Com.
Bldg.
CLEVELAND
Tele. CV 174
Union Cent.
Bldg.
CINCINNATI
.
.
Tele. CI 150
•
THE
12
(2736)
American
The
An
Egg
America's
sound and that
Way—
appetite
to
to
appears
by
grown
meat
with
The Cost
piece of writing in
desk. This month's
will try to select the best
sales literature that reaches our
Each month we
the mutual fund
award goes to
the Keystone Company
71
of
cost of
which is more often
buried in the prospectus.
difficult subject, the
mutual funds,
left
between
sales
liquidation value in a
fund, unlike that which
"The
PETROLEUM
exists in all
taxes.
individual securities,
costs
and
that in
commission
includes
is
It
wider
than
active listed securities, but
more and frequently is
less than that in other listed and
many
OF
it
Group Securities, inc.
is
no
unlisted issues.
In many
the 'cost' of buying
and selling a mutual fund is., less
than the cost of buying and sell¬
many
instances,
ing
individual securities of the
class,
particularly where
lot purchase is contemplated.
same
odd
"But there is a much more
A PROSPECTUS
ON REQUEST
investment dealer or
from your
Distributors Group, Incorporated
supervision and
multiple-source return, is logi¬
cally a more conservative invest¬
ment than is any individual se¬
curity in its portfolio. To match
the quality characteristics of any
mutual fund with an individual
security, we must select this se¬
curity from a higher class, and
even then we cannot match all of
the
characteristics.And, when
we
have selected this individual
security, we find that its cost is
materially higher, the return is
lower, and the possibility of ap¬
preciation in rising markets is
Prospectus upon request from
your investment dealer. or from
&
SECURITIES
NATIONAL
70%
less.
;
foods
.
that the
gains are in
120 broadway, new
york 5, n. y.
definition
investor whichf fol¬
average
an
lows:
31, 1947, the assets
Securities were
follows: Cash 9%;
As of March
Nation-Wide
of
as
27%;.
,
Stocks
Preferred
20%;. Common Stocks 44%.
Fidelity Fund of Boston
re¬
year-end
$12,325,000 divided as follows:
ported total assets at the
of
/
.
.
,
Seemed Important."
"The
Generally Bearish /
Investors
Letter"
deep feeling of . concern ex¬
"A
security markets; most
ists in the
people
who
have
least
emotional urge to
However, this alone
an
be cautious.
is
bearish at
not
are
guide for investment policy.
points in the market ordi¬
no
Low
monstrosity
mathematical
Long's current "New
comments on the
market outlook as follows:
Hugh W.
York
of
sands
a
pects" by F. D. Newbury of Westthe inghouse Electric Corporation.
thou¬ 6 Hare's Ltd. have a-new folder
—
of
average
very
is
investor
average
non-existent
Bottom
At the
real individuals,
Activated
World Bank Becoming
tions, and
plans for early marketing of Institution's own
International Bank for Reconstruction
The
applica¬
processing of additional loan
Mr. Black reveals current
1
Institutional Shares Ltd.,
on
securities.
and Development is
the largest getting into full swing in both its lending and borrowing operations,
it
was
reproportion of individual invest¬
$250 million.
There may, how¬
by
ors
are
bearish.
It is probably vealed
ever, be some further delay be¬
accurate to state that never be¬ American ex¬
narily are made when
fore
has
.
a
depression developed
such wide advance
in the face of
only
advertising.
It would be
natural to believe that, the
.
largely
or
to
registration statements will be re¬
quired, beyond a mere recital of
the
loan
agreements specifying
the borrowing countries, and the
inclusion of copies of the articles
New
ence
in
downside
Meanwhile
risk.
stock
on
:
.
"
-V
;
tion
of
applica¬
their
actual
paid da
securities is still
the
Bank's
not
a pre¬
liminary "no¬
tice of intent"
or
agreement.
The interest rate to be
either
through
extraordinary
that
May
the unfavorable pos¬
19.
sibilities so generally predicted
Ten nations
and fearfully expected.
We be¬
lieve that
these factors Reduce have indicated
justed
expect
voluminous
The Bank does not
SEC.
confer¬
details to be
registration with the
technical
met in their
Eugene R.
Black in a
tor
press
of
cause
direc¬
ecutive
York
is
market
stock
fully ad¬
high."
security
& Elec.-—common.
Gas
shown
have
which
prices are ,abnormally low
relative to earnings, and the yiel£
on selected securities is unusually
own
Elec.
distributed
in 1948."
Investor Defined
Keystone's
like
We
of
portfolio; Kingdom
3y2s; New England
4V2%; Commercial
Norway
Bonds
13.4%; Preferred Stocks
"If you
are
the average in¬
24.7%;
Common Stocks 61.9%.
the
vestor, you are the proud owner More than two-thirds of the com¬
smallest advance in price. -The
of a little more than ohe house
mon stocks were in industrial is¬
above is based on an article in
and you drive a little more than
sues.' :
the "Wall Street Journal" quoted
one
car.
You have a fractional
Distributors
Group has avail¬
by
Selected Investments Com¬
wife, and part of one of your able for distribution reprints of
pany of Chicago in "These Things
children is missing..
"A
Forecast
of Business Pros¬
percentage
biggest
items
the
your
tions to its
Bonds
appraisal of
the quality characteristics, of any
mutual fund. Select an individual
"Make
everyone
The Average
that
in
your
opinion
matches this quality. Then com¬
CORPORATION
RESEARCH
recover
soon
It is also prob¬
able that the situation will look
interesting to note
It is
would
better to
Fund of Bos¬
following new addi¬
ton made the
their confidence.
271 % \
Fruit Juice:-
Canned
im¬
portant consideration in connec¬
tion with 'cost.'
A mutual fund,
with the advantages of selection,
diversification,
Street, New York 5, N. Y.
63 Wall
Turkeys
vegetables
Breakfast
spread
mutual
SHARES
Chickens
Milk and cream.
Canned
is
out
of 1947,
During the first quarter
the George Putnam
of
Gas
Sol¬
the early part of 1939.
the way the situation vents Corp.—common; Homestake
Mining—common; New England
one would think that
investors
25% 1
25%
46%
35 %
26% ;,
Cheese
and
price
this
works
Notes
&
that in
If
stuffs advanced as follows:
of Boston for its able handling
a
or
food
other
of
consumption
ita
and prob¬
1947
during
occur
time, running a few months, but
nothing more important than the
decline in the Summer of 1925
298), while 150 pounds of
are
consumed as compared
126 before the war. Per cap¬
average
HFNKY HUNT
dividual
ably not during 1948. We believe
there might be a temporary re¬
cession in business activity at any
with its income dur¬
ing the past seven years with per
capita
consumption
of
eggs
amounting to 400 a year (prewar
have
problems and in¬
objectives."
with individual
important gen¬
not likely
an
eral business decline is
Day
a
1947
Thursday, May 22,
COMMERCIAL & FINANCIAL CHRONICLE
determined, but will be set in
own
market
accordance with both the
ap¬
Black
R.
Eugene
conditions at the time of their of¬
fering. This rate will strongly in¬
Incorporated Investors Optimistic1, plication, for
The Parker Corporation, sponsor loans, Mr. Blackjrevealed. Amoiig fluence the interest charged to the
The marketing will
these are Mexicoy.which has asked borrowers;
(3) appreciation possibilities."
of Incorporated Investors, in its
Investment » Survey!' for $208 million. ; The three coun¬ be done on a commission agency
It is up to the investor to de¬ "General
tries
whose
loan
processing is basis and not \ by underwriting,
concludes as follows:
cide whether or not the many ad¬
nearest
completion, are Holland with the cost to be under % of
"It is our belief, then, that the
vantages of mutual funds out¬
for $535 million; Denmark for $50 1%. V? ■ •
'
' '/
general
business
situation
is million, and Luxembourg, for $20
weigh their cost.
Permissive Situation Satisfactory
million. • The Dutch credit would
Mr. Black revealed that while
be for a three-year economic re¬
construction program, with the the number of States whose banks,
companies and other
money advanced in annual install¬ insurance
institutional investors may pur¬
ments over that; period.
chase the Bank's forthcoming se¬
It is impossible to predict defi¬
nitely when the processing of any curities is not unanimous/the sit¬
Massa¬
particular loan, will be finally uation is "satisfactory."
completed, because of the various chusetts is the main State which
pare
■first
the two on the basis of (1)
(2) rate of return and
cost,
.
Fundamental:
Investors Inc.
steps, including a searching eco¬
nomic survey, which must be un¬
Prospectus from your Investment Deoter or
Lord, Abbett & Co.
INCORPORATED
lNtO#»0«ATHJ
48 WAU
lOt
STREET. NEW YORK S,
N;Y.
New
York
—
Chicago
—
Los
Angeles
the
CHICAGO
ANGIUS
public here.
Black indi¬
probably occur
and the total would be
uncertain, .Mr.
cated
this would
in
July
of the
ers
McCloy
i
to
COMMONWEALTH
„
INVESTMENT
banks,
A
Prospectus
your
may
he obtained
local investment dealer
obtained from
local investment dealer, or
Prospectus may be
or
your
The
.•
Keystone Company
of Boston
50 Coagre««
THE
Street, Boston 9, Mass.
■
■:
Diversified Investment Fund
with Redeemable Shares •
,
PARKER
CORPORATION
ONE COURT STREET.
BOSTON 8, MASS.
■
Prospectus on
to "sell" the Bank
companies,
insurance
and Milwaukee.
v u r
(Special to The Financial Chronicle)
»y
CALLBV-Jo-
ANGELES,
seph A. Erickson, Jr. has ;become
affiliated with
Mitchum, Tully &
Co., 650 South Spring Street.
'
-
President
With Mitchum, Tully Co.
COMPANY
★
job to
dealers, in French Lick, Chi¬
.LOS
.'
from
New-
departed May 20 on an
extended trip
cago,
Funds
among
Institution's securities;
and to this end he and
and
.
officials.
the potential buy¬
be done among
July
exact timing of such
offering is still some¬
debenture
what
:
concern
nizance of the educational
•
While the
STOCK OF
ustodian
creating
Institution's
takes at
Flotation Likely in
SHARES OF CAPITAL
now
the
least one Jersey is expected to fall in line
The situation in.
month to process; a loan applica¬ momentarily.
tion.
Mr. Black expressed him¬ some other States is "fluid," Mr.
self as being extremely desirous Black explained, the bills being in
of making a few additional "likely various stages of completion, right
looking" loans before marketing up to the Governor's desk.
the Institution's;own securities to
Mr. Black emphasized his cog¬
It
dertaken.
HUGHW. LONG & CO.
is
Request
'
•"
V
GENERAL
With Capital
DISTRIBUTORS
NORTH AMERICAM
2500 Rv««
Son Froncl*eo
SECURITIES CO.
Building]
4,
j
California
'*.■
Securities
(.Special to The Financial. Chronicle)
OAKLAND,
Baker
is with
*
CALIF. —Fred A.
Securities
Capital
.Co.,.2038.Broadway.
.
'
.
"Volume
Number
165
4596
THK
LUMMLKCIAL & FINANCIAL CHRONICLE
could
Distribution of World Bank Bonds
only
ing it
be viewed
Making
■
Important Job
burden and
tax
budget surplus for Federal debt reduction.
capital gains levies.
of
use
.
for
bankers
reduction in the longcapital gains tax from 25%
12y2% which he said would
to
fig
produce
more
Jr., Presi¬
lead
and
to
tax
double
idends
America,
the
of
tion
received, at least equal to
Hopkinson,
Jr.
Exchange
He
indicated
if
that
the
IBA
Firms' Board of Governors at the
Wardman Park Hotel at Washing¬
other sections of the financial and
ton
business
May
on
He
15.
revision of
the
sold
but
deferred
maintenance
and
The
i
groundwork
along
on
comes
that
exist, and that under its pres¬
ent leadership the Bank is be¬
ginning
to
make
encouraging
progress in its dual role of fender
borrower.
said
He
understood the World Bank, which
he termed "potentially the largest
single
borrower
than
other
the
U. S. Treasury ever to enter U. S.
capital markets,'' presently plans
to place, full reliance on invest¬
ment bankers and dealers to. dis¬
tribute its securities, that .he is
convinced Bank officials
are
'!
is
A
in
pretty much to
Several
operation of the
Federal
the
tax
burden
is
Public Utility
schedule, but market conditions
dictated
postponement of the
larger of these
i
In
new
of
common
the
where
[South Carolina
tionary.
Power Co. common stock at
lieves
share, when barikers failed to put
On the contrary, he be¬
a
substantial part of
budgetary surplus should be
immediately used for Federal tax
reduction as contemplated by the
that
bills
tax
recently passed
reduction
in
should also be made
now
bid for the
.
a
.
of
bonds,
the
together with $1,mortgage
issue
was
veloped that bankers
stated,
however,
obligations.
that if tax
and
individuals, directly or indi¬
rectly, will actually be increased
because
the states
and
communi¬
ties, faced with present high costs
of goods and services, must raise
more money to operate their
gov¬
ernments and pay decent wages to
their1 civil servants, not to men¬
tion the funds needed for delayed
improvements,
veterans' benefits,
etc*.,.
He said that investment bankers
looking
forward with great
hearings before the
House; Ways and Means Commit¬
are
interest to the
tee
vfjiich will begin May 19
the
;
and
that
developing
a
the
IBA
has
Governors
when
it
convenes
for
128th meeting at French Lick
Springs, Indiana, next *;week. Key
points in the program would be:
•<1) A 50% limit
as-
well
as
on
surtax rates,
substantial earned iir-
these share under-
was
no
more
expla¬
to be found in the
sea¬
share market.. Efforts at rally
after
last
week's
rather severe
son
decline
were
of
not
prompt bankers
to
a
nature
become
to
ven¬
turesome.
Internationalr Bank
Not
a large deal,
involving only
$5,150,000 gross at the fixed
price of $25.75 a Share, this offer¬
ing nevertheless attracted consid¬
dealers
out;; on
reported
the
dis¬
playing decidedly strong inter¬
est with■- every' indication that
the Entire offering would be
in: % manner which
on
the
one
the
favor
system of private enterprise, free
institutions and free men.
The
other
stands
the
for
complete
ownership by the government of
the means of production and for
an all-powerful state in which the
individual is
an
insignificant cog
in the wheel.
economies
of
neighboring
Many
world
suffering
are
..
parts
the
of
from
want
World
world
Looks
U.
to
S.
The struggle so far has been in
favor of statism.
that
the
Despite the fact
economy has
American
contributed
so
much to relieve hu¬
suffering during the last two
years
and has demonstrated its
merits, statism is / growing.
In
many parts of the world the prin¬
cipal means of production are be¬
ing taken over by the government
man
is suffer-
*An address by Dr.
Nadler before
the Maryland Bankers Association
Atlantic City, N. J.,. May 15, 1947
while in others the system which
(Continued
on page
•a
18)
;..;, ..i
Recon¬
for
cellor, 'of the. Exchequer, has ap¬
pointed Mr. • R., Gordon Munro tc
be the UK Executive Director anc
alternate Governor of the Interna¬
tional ' Bank'
and
19th.
for: ^Reconstruction
Development as from May
At the request of the Chan¬
Mr. Munro
cellor,
has
tc
Majesty's
representative..
in
the
to
agreed
act. as
His
States" and
His
.
Majesty's
Minister "Finance""at the British
Embassy in Washington.
Mr.
Gordon
R.
.
Munro,
C. M.
G., M. C. is at present U. K.
Representative in the
United States, and H: M. Ministei
(Finance) at the British Embassy
in Washington. He was born in
London, England, June 20, 1895,
and educated at Wellington Col¬
How have airlines been
Treasury
lege, 1909-1912, and Royal Mili¬
tary College, Sandhurst, 1913. He
commissioned
was
in
the
4th
Dragoon Guards, 1914. He served
in France and Belgium iri World
War I (1914-18) as Captain and
Adjutant, Staff Officer in 2nc
War. Department
Red
Cross and
of
the
British
St. John's Ambu¬
War Organization at
St. James* Palace in 1940. He was
lance
Joint
Financial
Adviser
to
the
,U.
K.
Ottawa, 1941-46. He was appointed
as
U.
K. Treasury
Representative
in the United States; and Minister
(Finance) ht the British Embassy,
Washington; May 9, 1946."
hand
totali¬
government on the
The former stands for the
Development, it wa.'
here today. The Chan¬
High Commissioner for Canada at
Wednesday
investors
who
struction and
He
about
j; < Brought
restore
practical purposes, ceased
to exist as an economic unit, her
foreign trade has disappeared and
this has an important bearing on
Economically, the
eplaces Grigg for - United
Kingdom, r
:
C.
joined
Helbert
Wagg
and
Quite in contrast with the gen¬ Company,
Threadneedle
Street,
eral situation were the circum¬ London, Investment Banker 1923,
stances
the public was Managing Director from 1934surrounding
offering, of a block of 200,000 46, and resigned from the com¬
shares.of. new common stock for pany
in" 1946. He was Deputy
Director
of
Koppers Co.
the
Prisoners
of
; /
Koppers Stock in Demand
erable attention' considering
prevailing conditions.
increase
exports
and from lack of basic necessities
Director
Cavalry Brigade. Received M.
-
■
its
on
disappointing behavior of the
been
will be submitted to its Board of
to take
nation than
on
tax program which
not
Reluctance of investment bank¬
writings needed
subject of over-all tax -revi¬
sion
were
disposed to seek the stock.
ers
*
democracy
for all
countries.
United
shelved temporarily when it de¬
reduction does not take place now,
the total tax burden on business
r
R. G. Munro New World
British
30-year
equity
other.
ple to the prewar level. The Con¬
tinent of Europe is to a consider¬
able extent in ruin. Germany has,
the
Coast
the substantial debt reduction that
short-term bank-held
facilities,
continue
has already taken place was sound
in that it reduced the amount of
He
own
planned
$10
East
Corp., *which
300,000
and that
$12
sale of 60,000 shares of
par common,
debt
'Ifcsue.
case.1}of
the
Electric
the
by
the
a
In
the
He agrees that
Senate and House;
further
ih
companies funds needed for
improvements and additions to
existing plants as well as to its
strained.
are
great ideological con¬
tarian form of
eco¬
and
a
those
and
the standard of living of her peo¬
for bids.
Proceeds will permit American
announced
projects,
instance,
one
Holding .Company Act was hot in¬
volved/the parent company step¬
ped in to take Up!200,000 shares of
infla¬
the
up
litical
posi¬
her
is
flict between the adherents of po¬
rebuild
interna-
tion,
,
I WASHINGTON, > May
19—Sir
James Grigg; has vacated the ap¬
pointment of the ; United King¬
dom's Executive Director of the
Holding CompOiky Act, were on
all
present reduction in
any
stock, offer¬
proceedings by public utility.
holding. companies underthe
!
.
that
Sizable
ings, growing out of divestment
In stating his views on taxation,
he said that he does not agree with
or
A smat¬
1
effort, consistent with their indi¬
vidual appraisals of the. Bank's
securities, to distribute them/
for reduction of the Federal debt
walk.
a
of small new obligations
came up for. bids with the largest
of these comprising $8,700,000 of
equipment
trust
certificates V of
Missouri Pacific Railroad Co.
*
There
tional
issue
the
slowing dowh
tering
and that he thinks that investment
budgetary sur¬
plus for this year should be used
situation prevailed
investment
market
this
the
a
view that
confused
week with business
making every effort to
security -that will be ac¬
ceptable to American investors,
the
groups
ated
real¬
bankers likewise will, make every
Britain
nomic
Dr. Marcus Nadler
,
Political conditions
is
the
see
banking
nations.
of
catastrophe.
her
———-
■
from
prices, and maladjustments of the
balance of payments of a number
pi'oV
O-f
Great
in two com¬
Telegraph to make
available to subsidiary and affili¬
istically
issue
a
pretty
Telephone &
he
that
tion
this undertaking
which
now
and
new
pre¬
repeti¬
a
impoverishea
and
impor¬
easing
tensions
to
vent
must
when
international
ana
war
*
inadequate production,
lack of raw materials, disruption
of
international trade, currency
inflation, accompanied by high
ing
setting up
organiza¬
tions
piled up during the
years, American Telephone &
Telegraph Co. is preparing to seek
peting
the
G>-
new
construction
up
in
oe-
stroyed during
war
industry lined
factor
It is confronted with the task of rebuilding
was
wudt
...
Driving steadily ahead to catch
on the enormous backlog of
probably will
country's
investment
long-term
in history.
xne
the World Bank to be
tant
wars
.
out
moving
talk, Mr.
Hopkinson said that he considered
an
„
Amer. Tel. & Tel. Pushes On
his
of
course
The world at large is suffering from the aftermath of one of the
greatest
of
i
well
the
deflation, booms and depressions, over-employment and
large scale unemployment. Urges speeding up Bretton Woods
institutions and legislation establishing sound human relations.
Concludes our success in maintaining economic stability will make
whole world better place to live in.
steadily.
perative.
In
tion and
another $200,000,000 of new capi¬
im¬
are
Asserting U. S. is only great nation adhering to private enterprise
and political democracy, Dr. Nadler says we can aid world condi¬
tions: (1) by alleviating foreign suffering and aiding devastated
nations; and (2) by adopting internal measures to prevent infla¬
tal in the near-term future,
community.
over-all
an
laws
tax
stated
also
By MARCUS NADLER*
Professor of Finance, New York University
up
adopts this program it will seek
support for its objectives from
that tax-reduction and
$22,500,000 San Francisco Ter¬
mortgage bonds is about
two-thirds
sur¬
tax' combined.
E.
Stock
of
on
the initial rate of normal and
told
Associa¬
To Better World?
minal
ciation
stment
How Can U.S. Contribute
Southern Pacific's recent offering
of
Bankers Asso-
n v e
Meanwhile reports indicate that
the
corporate income by allow¬
ing the individual a credit on div¬
I
dig around to
redemption.
and
the
of
that
large-scale in¬
for
active securities markets.
(3) Elimination
the
on
days
freer
dollars
more
Treasury
these
burden
the
fill the void caused by this huge
(2) A
the
of
market
makes
vestors who must
unincorporated business.
term
ward Hopkin¬
dent
only
much heavier
B
,
coming
months,
Ed¬
son,
of
purpose
and to
and
in
Taking $100,000,000 of highly
bonds out of the in¬
regarded
restoring incentive to individuals
security dealers
credits* for the
come
in-
stment
v.e
ess
drew anything but plaudits
from institutional investors.
vestment
t ant-job
ahead
Things Tougher
widely anticipated because of the
road's strong cash position, doubt-
Wants reduction in
The distribution of the first issue of about
$250,000,000 of World
Bank debentures, which is slated for sometime in June or
July, is
the most im<§>
——
—
po r
mak¬
Union Pacific Railroad's decision
to redeem its July 1
maturity for
cash, even though it had been
*
President of IBA also favors reduction in
as
"out-the-window" deal.
an
doing?
What about steel shares?
Or railroads
..
or motors
..
or
public utilities?
CHARTS,Ratios, as thegive
such
Merrill Lynch Stock Price
Index
quick picture of
can
you
a
how the stocks of 74
recent
by
years
industry groups compare over
with the market as a whole, represented
composite of 540 stocks.
But the quick picture isn't always the complete
picture. That's why Merrill Lynch presents its new
charts only as part of its regular Security and Indus¬
try Survey, which analyzes each of the 74 industry
groups and provides facts and opinions on over 300
a
individual securities.
The
new
these charts, is
you a copy
>
edition of the S & I
just off the
press.
Survey, introducing
We'll be glad to send
for the asking. Address your request to:
Department T-92
Merrill Lynch, Pierce, Fenner & Beane
Underwriters and Distributors
of Investment Securities
Brokers in Securities and Commodities
70 PINE STREET
v
NEW YORK 5, N. Y.
Uptown Office: 730 fifth avenue
-
,
14
Bank and Insurance
Aetna Insurance directorsr to increase
$10,000,000 created a mild flurry of ex¬
stock market;
It naturally' raised the
question,'in view of the large increase in underwriting-volume dur¬
ing Ithe past few years, of whether other companies might not fol¬
low suit.
' 1
;
Aetna's capital has not been in-<^
decision of
recent
The
since
creased
1928, at
raised from $5,-
December
which time it was
000,000 to-$7,500,000 by the issu¬
ance
of
$2,500,000
new
stock.
Since then the company's annual
premium volume has expanded
from $26,842,000' in 1928 to' $46,369,000 in 1946.
In 1927 Aetna's
capital and- surplus - totaled- $22,188,000 against a premium volume
of $26,204,000; in 1928,- after; the
• increase,
capital, funds
$28,942,000" and
premium
volume was $26,842,000." In 1946
total capital funds amounted to
which those may be,'
hinted.
*
volume of
premium
$46,369*000.
questions of adequate
The twin
.
a
surplus and adequate capital have
bpen interestingly
discussed4 by
the editors
of Best's / Insurance
less- than
premium reserve."
to
L
end
.
have
Spectator, it is now" of in¬
the 1946 year-
debt
to examine
position of a group,of 30 rep¬
stock 'fire* companies;
following table:
is
b,illio
'—per $
of
n
times
Reserves
12-31-46
Net
Unearned
Prems.
Prem. Res.
*-
of
editorial
Bankers &
Shippers.
Boston Insurahce
may need
tal
the
($000)
39,687
.76 *
.84
e n
Series E
12,808
.62
.73
ings
13,305
10,803
13,621
.48
.47
program
3,561
19,751
Continental
_
4,557
4,458
.78
.80
inaugura t e d
the
8,915
2.01
2.22
in
__
34,168
3.03
3.30
1941..
26,775
3.101
3.50
changed
14.796
.83
28,353
1.05
prices; employment*
wages
and salaries, how much
people can buy and what their
earnings
and
savings will be
worth.
It will directly
affect
26,875
.67
11,015
1.02
9,837
37,22b
112,596
93,694
Ins._____
Fire Association-.—___
_
"*
.
_
'
phoenix
Prov.
2,702-v
11,666
41,316
.
—
30,251
16,451
41,314
28,446
12,75718,815
29,204 13,871
81,13595,039 .
49,708 28,831
11,679
3,190:
10,793
5,543...
: 11,632
1,911
19,108' *
13,835
27,714
10,3 13
15.797
.92
1.75
;88
1.07
1.241'
.78
!
.95
40,245
2.67 :
3.30
28,746
1.04
1.04
10,595
,
7,777/
thd
1.50
67,172
77,236
1.17
1.29
.88
1.00
2,847
.
:
fect
1.41
1.59
16,858 *
3.14
20,638
28,502
25,254
19,777
of
i *An address by Mr. Townsend
before
1.15
sociation
1.49 -
2.06
.72
1.60-
1.28
1.47
as
Reports
unfortunately,
to
BANK
and
INSURANCE
Equitable
only 470-of capital funds.
[Laird, Bissell & Meeds
■if-
Members
New
York-Stock
120 BROADWAY,- NEW
:r
Bell Teletype—NY 1-1248-49
-
(LJ A.
Gibbs, Manager'Tradlag -Dept.)
i
desirable "ratio
most
is
are:
candidates
for
capital"increases; and by the same
token, a number of companies are
in position to write a substantial-
companies*
Telephone: BArclay 7-3500
I
the
If
$1.00 for $ 1.00, - then half of * the
YQRK 5, »N. ■ Y,
!
y
Hart¬
ford, again, is nearest to average
with $1.50.
* -
Exchange -
<
has
115
,
,
level off the peaks and
in
valleys
1
-
the national economy
(Continued on page 38)
•
/
conference with savings bankers;
"Chronicle")—Secretary
stated that the Treasury , De¬
——*
WASHINGTON, May 31 (Special to the
the
[ Mr. Snyder refused to elaborate
on Monday's statement
regarding
•
Australia's Election
To Fund Imminent
Autralia's election to the Inter- iT
Monetary Fund is ex- -
.
national
pected to be completed this week.
It appears
formal
no
taxes.-
Regarding the conference
savings bankers
with
he said, "It was
of meetings.
them our
just one of our series
As you know, we gave
in the
money
comments on their
supply and costs of opera¬
tion/and the general
City.
was
before the Lon-
*
next September. The *
World Bank-is still split regarding
the election of its 13th Executive s
don meeting
1
Director.
:
'
r-
.
World Bank Research
Government, and then lis¬
tened to their
New,
that Australia will have *
representation on the »
Board of Directors
I
presentation of the present con¬
dition of the fiscal situation here
Broad¬
way,York
of
management of the debt
will help
.
offices located .•?'
at
people.
our
Wide
Department's
review
of'
World conditions: "The National
Advisory Council will work right
along with them on that," he said,
Other governments naturally wil;
be consulted in that review.
Joseph B. Ryan Pres.
Of Knies & Co., Inc.
American
of
State
r.
while
on
partment will nave a hand in
opposite extreme of
Equitable's 480. Near¬
est to the average of $1.28 is Hart¬
ford with $1.24.
Aetna, it will be
I Joseph B. Ryan has resigned as
noted had 760 of capital funds per
Vice-President of the Chase Na¬
dollar of premium volume.
tional Bank to
With regard to unearned pre¬
become Presi¬
mium
reserves,
the average
dent of Knies
amount of capital and surplus per
&
Co.,
Inc.,
dollar for the
30
companies is
private in¬
$1.47.
Here again, Phoenix is
vestors, with
ultra
conservative
with
$3.56,
the
to
American
without danger¬
inflation, wide distribution
goods and services to consumers*,
fair profits and fair rewards for
the creative and inventive talents
Snyder at his press conference today
to no definite conclusion.
as
However, it does serve to point
of the industry.
For1 ex¬ out which companies follow an
ample, the average amount of ultra-conservative policy, which
capital and surplus per dollar of are middle - of - the - road, and
net premiums Written by the 30 which
go to the other extreme.
companies in 1946 is $1.28.
But
the range is all the way from the
ultra-conservative $3.14 of Phoe¬
nix
ous
particpation in world; study,
Reveals;• Treasury's
i
discussion,
us
income
national
Secretary Snyder's Press Conference '
f
average
industry
indication
No
This
stable prices*
production and high
business,
high-level
.82
1.51,1
*-■
they already do.
;
-j
banker, ev e r y
American wants is not
of boom and bust, but
every
cycles
steady
City, N. J., May 17, 1947.
ly larger volume of business than
leads
Jersey Bankers As¬
Convention,
Atlantic
New
depositors
.85
-75
—_
useless
how
upon
3.56
'
companies and
a guide is an
'
.84 ■"
18,685
economic
an
your
bank's earnings.
thinking
1.98
1.75
-
it
What
.
of
welfare
the
It
American.
every
affect
-
and your
the
entire- national
And I might add, upon
economy.
20,105
9,188.
Townsend
he-said, but neither can we un¬
derestimate r its far i reaching ef¬
.92
1,699
Average
makes
debt
Sb
10,282
•
Morris M.
n
problem of prime: importance to
every
citizen.
We need" not be
overwhelmed by its magnitude,
.62-
29,859'
which exist among
i
of
life
will
has'
ways
.91:
10,151
of
y *
It
5,675
U. S. Fire
glance at this table speedily
confirms the accuracy of Best's
comment on the wide variations
was
10,707
Security Insurance
Springfield F. & M.__
A
a
j As Secretary Snyder recently
.88
1.48
M
pointed out, the Federal debt to¬
day is gfeater than the combined
amount of all other indebtedness
in J the United States. > The size of
1.18
.74-
,
.
know, for years to come the man¬
agement of this debt will affect
thkn in size.
.71
24,709
11,416
Sav¬
Bonds
more""
1.53
-
'
60,027
Washington—_
St. Paul F* & M.
to seek additional capi¬
funds.
the
($000)
7,878
6,386
Fidelity-Phenix
that
concludes
within
^7
'
very easy
43,369
Agricultural Ins._____
Ameri. Equitable-
of the company. Thus,
policyholder's surplus, capital and
surplus, and capital funds are
generally synonymous terms.
units
size
a
($000)
and surplus
Best's
>
thing for bank¬
ers and others to say that the na¬
tional debt is not their problem,
but ignoring a problem does not
remove
it.
As you bankers welfi
It is
33,160
Aetna Insurance
policyholders."
some
cannot escape
responsibility.
that
debt
jw h
of the nations
of most
world. We
of the
or
the
economy
economy
$258
the
That which af¬
of this Na¬
heavily on the
economy.
tion will also bear
five
day
many
so
the
fects
pre¬
terms.
war;
Cap. & Surp.
Unearned Prem.
-It
might be well at this poinhto
remind ourselves that policyhold¬
ers, on an experience basis, are
fully protected by the unearned
premium reserves, v and that after
these there remains a policyhold¬
er's
margin of
safety, usually
termed
"policyholders' surplus,"
which is composed of the capital
in
about,
Net Prems.
12-31-46
been
jThe debt1, to*"
set forth in the
One Problem."
people are still
My subject is "The National Debt, Your Number
surprised to find that ever
<♦>think i n g
of
world
our
postwar-
resentative
as
>
bonds purchases as being in their own interest.
!
I
capital and
the unearned
Written '46
Cap. & Surp,
,
at; three or four times the annual
writings to some which write an¬
nual premiums of as .much
as
three or four times their surplus
and The
terest
of Federal debt
lies in its ownership and distribution; reports net gain
30 Fire Insurance Companies
_
funds
Treasury spokesman, asserting key to management
|
| Bearing/iri mind these comjjnents on the "situation by Best
;
U. S. Savings Bonds Division, U. S. Treasury
in Savings
Bonds sales. Holds through proper management of debt, economic
an ' equitablebasis
insurance'company;
.] stabilization can be aided and urges banks to encourage savings
surplus
-
ultraconseyvative prac¬
stronger po¬
a
than a'company with a
,
tice of maintaining surplus
onM
.
larger volume
a
Investments
Director, Banking and
I
premiums, or to reinsure
with another
'•
13,580
Hews: Fire & Casualty Edition, in
Fireman's Fund—
43,360
the issues of October, 1946 -and
Firemen's Insurance- : 18,989 April 1947.
From the latter the
13,008
Franklin Fire_following paragraph-is quoted:
Glens Falls
13,852
"The - proper relationship; be¬ Great American43,234
tween capital funds'and premium
Hanover Fire—
12,268 f
volume has become of paramount
Hartford Fire_—.
100,896
interest to
managements: facing Home Insurances
73,690the squeeze on surplus and much"
Ins. Co. of N. Am,..:.
132,906thought has been given* to just' National Fire_________
29,868
liow much-farther potential * lia¬
National Liberty—
13,681 "
bility may. be safely ..increased. New: Brunswick/ _i
2,820 *
Averages of the business are "not New
9,827 *
Hampshire--—_
a satisfactory giiide' because varia3,442 '•
New Ybrki-^—i__—
tions among even large units, in
North ; River—.
20,405"
the industry, range all "the way
Paul Revere
from the
secure
j|ts"o risks
Spectator Financial arid
Underwriting Analysis of Fire In¬
surance
Companies" makes the
following comments on the" ques¬
tion in general:: "The writing of a
net premium volume out of pro-,
portion to a company's surplus to
"The
were:
against
of new"
however, is
'capital
$33,160,000
to
is in
reserve
sition
insurance
the
in
TOWNSEND*
By MORRIS M.
„
.
greater than the unearned pre¬
mium
capital from $7,500,000 to
citement
|
; "A company* with a combined
capital and surplus equivalent to
or
1
Bank Problem No.
lows:
Insurance Stocks
—
22, 1947-
The National Debt-
premium reserves and policyhold¬
er's surplus, it comments as fol¬
DEUSEN
By E. A. VAN
This Week
policyholders may be prejudicial
to the best interest of policyhold¬
ers."
With - regard - to • unearned
Stocks
Thursday, May
FINANCIAL CHRONICLE
THE COMMERCIAL &
(2738)
Director in
WASHINGTON,' May
outlook. That
about the extent
of it.
Europe
(Special to The Financial Chronicle)
;
They World
J
,
21—This
_
..
Bank announces that Leon¬
Rist, Research Director, is
visiting "various European coun- »
Tjvho has beento make at this time. That com¬ tries, ; including
associated
Switzerland/ te.
discuss
research problems, / with" ...
with the Chase
pletes the series of meetings and
bankers and Government officials. ;
bank for over
the Treasury will probably start
It will be recalled that Bank for-,
20 years, is a
over again,"
Mr. Snyder said/ "It International Settlements' Presi- I
director of
is very helpful to me to get the dent Frere and General Manager :
Joseph B. Ryan
Grayson-Robinson
views of all these different groups Auboin recently visited the World ~
Stores,
Inc., Merchants & Manufacturers because they are rather frank in Bank and that the latter already*
has made some use of the facili¬
Fire Insurance Co. and of C. W:
telling me about their conditions," ties of the Basel Institution. Pos- :
H. Carter, manufacturers of litho¬
lie continued, "and them it is in¬ sibly the latter's information- graphic varnish.
teresting to'them to be brought up gathering facilities will assist the *
Mr
.'Ryan,
had
no
specific* recommendations
ard
,
,
We offer
-
Comprehensive Dealer Service
BANK
STOCKS
INSURANCE STOCKS
BDIlta-HUffS CO.
to
Stewart Lee Admits
«
| j
i ■
WE^i^P^TCsiiieet
2ifl
■
iosmiiiiu.mmm
PUmary Trading
-
•
.
Markets—
2>lttel *hJ
Analytical and
Sales Service
IV. LA 2M
i
.
,
~
*
IOSTON
•
CtHMtrftHf IVlut
NEW TOPIC
CHICAGO
CALLAS
•
•
PHILADELPHIA
•
»
It
DETROIT
it. LOUIS
SAN FRANCISCO
•' SEATTLE
*
fiscal condition of
Government."
whether
Asked
Lewis P. Stillman has been ad¬
"
TELEPHONE MIKITY 7171
TELETYPE:
;f
-
date on the
the
a
the
bankers
'
|
long-term issue,
Charles
Hughes
&
Co,
and
-
just discussion; there was np
nifir* rpoommendation."
J.
-
spe-
WEE''
elsewhere.
'
"
■
"
William J. Davis Dead
j
William J.
.
Arthur Warner & Co..
watching develop¬
ments in France and
Snyder
mitted to partnership in the firm
of Stewart *J.. Lee & Company, said: "They made no recommenda¬
Under-Secretary Wiggins
60 Wall Street, New York. City., tion."
Mr. Stillman in the past was with .tlti&reupon- chimed in:; "There was
wanted
World Bank in
ner
Davis, retired part¬
in< Speyer
Cilyj
until, its
vears
ago.
died
&• Co., New; York
dissolution seven
at
the
age
of 73^
[Volume
Number
165
4596
THE COMMERCIAL & FINANCIAL'
In
,
Secretary of thp Treasury
Secretary Snyder proposes
(1) production of adequate
as
(2) equitable treatment of
with incentives So
different groups; (3) absence of
interference
work and to invest; (4)
maintenance of
•
solving,
most
y
tax
and
jt h
and to call attention to
the
recom¬
mendation for
comprehen¬
sive
study
which I made
in
recent
my
appearance
before
this
Committee
and again be¬
fore
John W
i\'
the
ate
Snyder
Finance
Sen¬
Committee.
Qply by looking at the tax system
as a whole is it
possible to lay a
sound
foundation for future
islative
action.
The
leg¬
task
con¬
fronting us is one of the greatest
Importance, because a soundly
conceived
system
and
well-balanced
make
can
contribution
to
tax
significant
a
the
maintenance
of prosperity.
I The first requisite
of such a
tax system is that it should pro¬
duce
adequate revenue to balance
the budget and to provide a subs¬
tantial payment on. the public
debt, in order to sustain the con¬
fidence
of
am
responsible for
the
manage¬
ment of the
public debt and I am
keenly aware that ! the Federal
Government's securities 1 are an.
important
part, of the assets pf
insurance companies, and
banks,
(Other
financial
institutions
that
the public as the repositories
serve
of its
savings.
millions
Moreover, tens of
persons
direct
are
of Federal securities.
owners
have
of
We
great responsibility to
build a tax system which will
preserve the fundamental sound
pess
As
a
.
of
a
our
financial system.
velopment of
tem,
facts
a
postwar tax sys¬
and
evidence
should
be assembled for the consideration
of both the executive and legisla¬
tive branches of the government.
This information
will,
come
from
the hearings that are being initi
ated today and also from the con¬
tinuing technical research work of
the tax staffs of the
Treasury De¬
partment and the Joint Committee
Internal
on
Revenue
Taxation.
Later, when this
necessary
mation is at hand
a
infor¬
sound tax pro
gram can be developed.
it easier for business and govern-;
ment to plan for the future;'
have
we
unique opportunity to
a
modernize the Federal
are
period
proaching.
to
available margins
ly
between
When the time copies
to draft leg
already agreed
upon can be taken up in the order
Of their priority.
It is highly un¬
likely that the fiscal and economic
situation will warrant enactment
;of all the ultimately desirable re¬
islation,
measures
visions at the same time.
But ad-
planning and study will
possible to proceed in an
orderly fashion without prejudic¬
ing any necessary part of the program and without the danger of
reducing the revenues too rapidly.
vance
Our tax
collecting revenues.,
ductivity; the bes.t weapon against
inflation is production, and the?
many measures and ideas learned
as
a
result of the
crease
our
war
should in¬
production potential to '
peak never known before, pro¬
vided equity is written into our
tax laws in an effort to arouse and
a
release these powers.
The Ways../
and
Means
Committee
of
the
House have already reported on*
bill giving tax reductions of 30%„
no
time within the
next week or ten.
of
offer
an
to
buy,
any
"When
reduce
we
individual,;
income taxes by
%0% it does not
necessarily follow we are reducing
our receipts by 20%,
In the first
place, individual income taxes are
not the only taxes collected," .and"
secondly, our experience follow-,
ing the last war, during the time
Andrew Mellon was Secretary of
Treasury, taxes were reduced sev¬
eral
times,
were
and
reduced
each
our
time
they
revenues
creased,
time
a
for his hard work, pro¬
ingenuity
ductivity,
or
creative
ability, 1 The only solution is to
see
into
that
sojne
our
tax relief is written,
laws."
May 21,1947
200,000 Shares
The
number;
structural
of
Ihe development of a
system .that
of
(#1.0
par
value)
rate reductions and a large
among
best
Common
careful!y
will
revisions.
modern tax
serve
America
Price
require the cooperation
will
$25.75
share
per
the
legislative and executive
branches of the government and
of
the taxpayers 'and the public
generally/ We need also to enlist,
and
I
am
sure
wholehearted
Copies of the Prospectus may be obtained from any of the several under¬
only in States, in which such underwriters are qualified to act as
Prospectus may legally be distributed.
get, the
shall
we
cooperation
of
writers
the
dealers in securities and in which such
States and localities.
In my appearances
Committee
and
the
tion
before your
Senate
Fi¬
Committee, I indicated that
nance
technical
in
some
the
Co,
Corporation
Blyth & Co., Inc.
,
Incorporated
Stone & Webster Securities Corporation
Lazard Freres &.Co.
*
Union Securities Corporation
tax
submit these studies to it
as
Department in connection with
the
Ijgtaptant task of developing
s^fund tax system that will' make
(Continued
on
page
42)
A. C. Allyn and Company
Hemphill, Noyes & Co.
Hallgarten & Co.
Coffin & Burr
Incorporated
W. C. Langley & Co.
Incorporated
Chaplin & Company
Singer;, Deane & Scriboer
Moore, Leopard & Lynch
Bosworth, Sullivan & Company
>
Alex. Brown & Sons
Stifel, NicoIau3 & Company
The Oh o Company
The MJwaukee Company
they
completed,
I again offer your
Committee the cooperation pf the
entire tax staff of the Treasury
a
Harriman Ripley &
require
system.
These
include studies pn business taxes,
individual income taxes, excise
taxes,, estate and gift taxes, and
social security taxes. If the Com¬
mittee
should • so
desire, I will
are
The First Boston
Treas¬
has under way
twenty major
atten¬
comprehensive re¬
will
any
of
of' the
staff
Department
Pacific Company of
J. M- Dain &
California
CHas. W. Scranton & Co.
First of Michigan Corporation
Company
Brush, Slocumb & Co.
Inc.
Butcher & Sherrerd
Hayden, Miller & Co.
A. E. Masten & Company
Stein Bros. & Boyce
S. K. Cunningham & Co., Inc.
C. C. Collings and Company, Inc.
'
Glover and MacGregor,
Baker, Watts & Co.
Whiting, Weeks & Stubbs
Janney & Co.
Wurts, Dulles & Co.
Kay, Richards & Co.
Grubhs, Scott & Company
*
McJunkin, Patfon & Co.
Phillips, Schmertz & Robinson
*Statement by Secretary Snyder
before the Ways and Means Com¬
mittee of the Rpiise of Represen¬
tatives,
19, 1947.:
Washington, D.
Geo. G. Applegate
•
Fauset, Steele & Co.
May
Reinholdt & Gardner
v
*
willing to reward
were
we
person
as an offering of these shares for sale, or as an offer to buy, or as a
of such shares. The offer is made only by means of the Prospectus.
The tax reductions
.
"During the war, I believe we
reached a point of diminishing re¬
turns in our tax structure.
It is
system we
of the
of surplus.
in¬
'"
"
; NEW ISSUE
4
days. There has been considerable
discussion as to just when the tax:
relief should take effect.
circumstances *to he construed
solicitation
^
20% and 10%. The Senate should ;
take action on their tax bill some- *'
use
allocated
be
make it
With. your permission, I should
This is under
retirement and
debt
reduction.
should
vision
as the budgetary and
situation grows clearer.
of
surplus must be divided judicious¬
out
economic
tax
careful
make
that
Worked out
the
modernize
must
matters
details
goods and materials and
reduction
tax
on
can
sort -of
is ap¬
But in order to take
of
studies
broad terms and the final
emergency
fort to restore incentive and pro¬
full advantage of our opportunity
ury
program
.
Wartime
tspc system.
nearing lower peacetime
levels pf government expenditures
and continuing high levels of na¬
tional income and production.
A
We
thoroughgoing study of
the present tax system, and to
consider carefully a large number
of possible revisions, and to work
A
be outlined first in
find itself fac¬
distributing the wealth.
taxes should be reduced in an ef¬
Sfii
study, I should like to repeat my
firm conviction that at this time
make
well-balanced program.
may
national
stead have become methods of re¬
the
special
that I believe peed
areas
the
a
another
.
laws at the present are no longer
revenue-raising measures, but in¬
Before going on to meption
By beginning early, as the Com
mittee has, we shall have time to
a
ing
problem,
Frank L. Sundstrom
pf tax problems that need careful
and we must at that time be in a
consideration.
It is not, my in¬ in my opinion,
sound financial position.
Balanc¬
tention today to make recommen¬ facing the Congress of the United ing the budget, reducing debt and
dations on any specific tax ques¬ States," Representative Sunstrpm putting ourselves in a strong eco¬
said, "is to see that we have a nomic position is as important to
tion.
stable economy and this involves
our national defense as our armed
I believe that a sound tax sys¬
our future treatment of. our debt;
forces. By reducing debt, we also
tem
should
meet the
following
balancing the budget and our en¬ are putting the brakes upon infla¬
essential tests.
The tax system
tire tax structure. As I have pre¬ tion.
At the same time, I would
should produce adequate revenue.
viously stated, all efforts must be jike to see a greater proportion of
It
should
be
equitable
in its
ade to economize. ■ We must take
our
Government bonds in the
•treatment of different groups. It
the Tne' out of economy. Too often hands of individuals instead of in
should, interefere as little as pos¬
J have seep legislators economy- the portfolios of the banks of our
sible with incentives to work and
minded until it came to their own Country, . As bankers, you know
to invest.
It should help main-'
larticular pet project or district, the
danger
of
increasing
our
tain the broad consumer markets
n order to cut down our expendi¬
paoney supplies,
adding to the
that are essential for high-level
tures substantially every member spiral or inflation if large amounts
production and employment.
pf Congress must, and I'm sure pf these bonds are held by bank¬
Taxes should be as simple to ad¬
will in most cases, vote for these ing institutions.
In addition the
minister and .as easy to comply
economies which will be for the greater
number
of
individuals
with as possible.
While the tax bestf interest of our
country, re¬ holding Government bonds will
system
should
be flexible and
gardless of their own interests. If mean the more people will be in¬
change with changing economic
terested to see that reckless spend¬
conditions, it should be possible to this is accomplished, we will be
ing is curbed to protect their, in¬
achieve
this flexibility
without well on the road to balancing the vestments.
Individual holders of
frequent revisions of the basic tax budget/ With better relations be¬
Government bonds suddenly be¬
structure.
A stable tax structure,
come budget minded,
tween* management
and
labor;
with
necessary
flexibility
copi "Just as important as cutting
fined largely to changes in tax ■with high production figures; with
rates and exemptions, will make
a
large deferred demand for all our expenditures is the problem
cax
first step towards the de
pnited States
impor¬
most
number
a
"It is important that we do this
for it is possible that some
time within the next decade, the
.!
now
"By far the
tant
the
public ; in the in¬
tegrity of the government's obli¬
gations and its financial; strength.
As Secretary of the Treasury,; I
,
by the Administration.
we can reduce our previous ex¬
penditures it will mean just that
much more that can be applied
toward debt reduction at this time.
re¬
as
for
Iif
duce taxes.
like to restate the
to
tax
vided
down
national
e
war,
much greater than has been pro¬
econ¬
cut
well
of
it
the dif¬
ferential between our total income
and total expenditures should be
expenditures
as
accumulation
huge
a
money as a result of the
becomes imperative that
omy-minded
principles that
J believe should guide our studies
the
with
the
must be econ¬
This approach
problem is in
accord
with
IS
Association at<&-
Jersey Bankers
—
Congress
omy,
wholt <£•
system.
New
problem
securing a
of
glad to have this opportunity to appear before the Ways
in connection with its proposed examination
the
the
impor¬
Stable'
and Means Committee
of
before
May 17, Congressman Frank L. Sundstrom (R.-N. J.)
tant
high-level of production
employment; (5) simplicity of administration and compliance;
and (6) flexibility without destruction of basic
stability.
Urges
joint thorough study by Congress and Treasury of tax revision
"with an open mind."
am
on
expressed the
view that in
and
I
address
an
Atlantic City
essentials of sound fax systems;
revenue;
(2739)'
Congress Must Economize: Snndstrom
By HON. JQIJN W. SNYDER*
1
CHRONICLE1
Thorn** & Company
22, 194T
Thursday* May
16
.THE
(2740)
CHRONICLE
COMMERCIAL & FINANCIAL
about a rally based
nothing more than an un¬
balance.
But as soon as this
will bring
Exchange
New Curb
on
Tomorrow's
lA Century Club
Supple, in charge of
the
central
comparison depart¬
ment of the New York Curb Ex¬
Bernard T.
Cbrp.,
Walter
May 15 joined the Curb Ex¬
change
Quarter Century Club.
Presentation of a pin signifying
perennial bears on railroads and railroad securities
confounded-by the recent market action of this group.
Except for a few short periods there has not been any notably heavy
selling.
On the other hand, to say that there has been little buying
the
Even
been
have
membership
percentage declines
between sales.
Bonds of the up¬
per middle -grade have done little
better than the purely speculative
issues in recent weeks.
sulted in large
serr.or
rail men as can¬
didates for refunding, broke six
to ten points on small volume last
week. The junior bends of South¬
eight
advan¬
tageous refunding operation early
in the week.
Southern Railway
issues were just about as bad and
sank seven
Pacific
or
points in the face of an
three to six
a
grade
financial community has
a performance similar
that of the recent rail market.
since the
witnessed
improvement. Obviously
bearishness towards
recent
in
ness
the
.
.
is
It
Interest
and earnings
second half.
of their holdings in funda¬
mentally
unsound
situations a
short year ago. With a market so
railroad traffic
Present railroad traf¬
fic is not sufficiently high to han¬
dominated by psychological con¬
dle the present level of industrial
siderations rather than by reason,
shortage of freight
prices are not a factor.
By the production. The widely publicized.
cars
has been
■
stampeded into
psychological market
of this short have rarely, if ever,
been proven correct over any rea¬
sonable period. With earnings im-proving sharply month by month
same
token those
following
a
a
mean
inescapable conclusion is that
considerable extent the high
.inventories that worry many econ¬
omists are plant inventories.
,11
a
and
a
for freight
mand
3%s,
Alberta
an
industrial recession
consequent decline in de¬
is
there
be
Province of
collapse in
The
to
freight to be moved
by these
there will
backlog of
cars
considerable
a
represented
present industrial inven¬
tories.
1961-1980
factor is the prospect
particularly heavy move¬
ment* of farm and food products
Another
for
Arden Farms
Common
Preferred
&
Anlieuser-Buscli, Inc.
Common
R. Hoe & Co.,
Inc.
Old Class "A"
New Class
"B"
Plomb Tool
late
John
-
;and -other
Commodity Exchs.
•■•../■.--.MEMBERS
3ading Security and
20 Broadway,
31 -So.
New York5, N. Y.
LaSalle St., Chicago 4,.
HI.
Lamont, New
Feb. 22nd, on
which date the
was
admitted
Robert
Harriman
estate of Mr. Hance
as a
limited partner.
Lovett retired from
A.
in
partnership
&
Brown
Brothers
Co., New York City
May 15th.
of
Josephine Brinton
Grimm, lim¬
York
City, died on May
ficial
in
estimate
New
9th.
tected
'
thereof to appear
print is reported in
the April
Times,"
this year. Recent estimates place London.
The figures, labelled as
the winter wheat crop at the high¬
guesswork, are in the story at¬
est level in history.
Other crop tributed to the Financial Depart¬
reports are also fairly generally ment of OMGUS (Germany) in
favorable.
With most of Europe February. The estimates are that
and Asia starving it is natural to
approximately 12 billion Allied
expect that-the movement of farm military marks had been issued
crops by railroads this year will
by the Russians, compared witn
be limited only by the supoly of
two
billion by Britain and less
cars.
It is felt by most rail men than one billion by the United
that eventually the highly satis-, States and France combined, i
factory earnings so far in 1947 and
the favorable second half traffic
New Cgo. Exch. Member
prospects must necessarily be re¬
flected in a change for the better
CHICAGO, ILL.—Albert E. Sur¬
in
sentiment
towards j railroad
prise, Secretary of King, Olson,
stocks. ....v. ;• ......
Surprise & Co., of Rockiord, Illi¬
nois, has been elected to member¬
ship in the Chicago Stock .Ex¬
change by the Executive Com¬
29 issue of
has become
New York
office of John Nuveen & Co., 4(1
WairStreet. In the past Mr. Asher
Milton
*
with
G. Asher
the
the
Municipal
Bond
Corp. of Chicago, Lansford & Co.
and in the past with the Central
Guaranteed Stocks
Bonds:
Republic Company.
-
Special Securities
/
I
New York 4, N. Y.
Telephone BOwllng Green 9-6400
Teletype NY
1-1063
and a couple
like that is enough
of
to
J. G. White &
all
over
will
have
we
market
there
;
V
Co., Inc.v 37 Wall
Robert Gar¬
rett & Sons in Baltimore.
wire to the offices of
is
some
to
go
conclusions
back to the
Every time
decline the blue
itself.
a
feelings turn indigo. 'r That is
normal. - It is what happens
when this sentiment becomes
so
deeply bearish that
What I have s^en
counts;
during these
periods in the past few days
shows a large volume of short
sellTng::prdinarily short sell¬
ing is good for the market: u It
maintains a balance that helps
keep a stable position.
But
the kind of selling that has
come in recently doesn't make
for any stability. It makes for
the
Incorporated
Rosalie Nave in Syracuse
N.
Y. — Rosalie
engaging in the securities
business from offices at 404 North
A.
Paul
Gammons,
ViceBradley,
President; Philip L. Carret,
opposite.
the partial answer to
N.
Vice-President;
President;
Clifton
Treasurer
and
Nave is
and Luke L. Benz,
and
Secretary.
Vice-President
--••••
"will
start down
all over
again?"
quick answer would be
yes/ But this has to be quali¬
fied by the preceding answer.
..
Orders Executed on
Pacific Coast Exchanges
So
.
Securities
again?
find
To
Street, New York City, announce
the installation of a direet private
Now
Pacific Coast
question upper¬
most traders' and
happen from here on.
Will
they stop here? Will they get
dull, or will they start down
To Garrett in Baltimore M >
Chirurg Co. in Boston
State Street.
I
averages,
moves
they stop here?" is that
BOSTON, MASS.—John Thomas
Carret, Gammons & Co., 120 they will, and they will go up.
Chirurg Co. is engaging in the
securities business from offices in Broad way,'New York City, is now This in turn brings up the
the Park Square Building. Presdoing business as a corporation. other
question, "Will they
cott Winkley is with the firm.
SYRACUSE,
basically the same.
.
investors' minds, is what
J. G. White Installs Wire?-
Officers'are
25 Broad Street
sentence
The major
most now in
;
r
6PAEA.HTEED RAILROAD STOCKS-tOHDS
mained
was over,
by stop points.
stocks.
the "Financial
mittee.
John Nneen in N. Y.
associated., with
days may give a different hue
to day to day market pictures.
The frame work, however, re¬
points are likely to be, I can't
determine
at
this writing.
Well, you know what hap¬ Meanwhile hold your money
Russians Believed to Have pened. The stocks under dis¬ until the clouds clear a little
cussion got low enough to buy more.
Issued 12 Billion
but in the succeeding daysMore next Thursday.
Military Marks
violated their critical levels.
—Walter Whyte
One subject hidden behind the Sum total of the maneuver,
iron curtain has been the amount
[The views expressed in this
therefore, was a loss. So you
article do not necessarily at any
of Allied military marks issued
can readily see there is little
•m Germany by the Russians, who
time coincide with those of the
printed them from plates supplied to point to with pride. It was Chronicle. They are presented as
those of the aiithnr only.1
by the United btaies.
a case where I was right on
What is probably the first of¬
the
market but wrong on
in Grimm & Co.,
ited partner
a
was
t !
of two
patronizing and boast¬ cover the possible dividends a
ful. I assure you it isn't meant
stock pays for the entire year.
to be. For if there is anything
Summing it up, what is po¬
so humbling as the stock mar¬
tentially ahead looks some¬
ket, I don't know it.
A case thing like this: A rally to start
in point is the fact that last
from around present levels,
week, even though I was
leveling off into dullness fol¬
walking on eggs, I repeated lowed by another decline.
my recommendations to buy How long this process will
certain ! stocks,
though
I
take, and what the stopping
warned they should be pro¬
Milton C. Asker With
<*«*York Stock/Exchange
signalled.
Nothing has
happened to change it since
then.
Strong days and weak
sounds
A.
in Jesup &
earnings.
or
the
of
York, ceased as of
Hance
evident
pose
market has
I realize that last
ited
There is considerable talk of an
Industrial recession in the last half
that speculators
of the year.
It is difficult to see
and many investors are just as
just how this is to eventuate. How¬
disinclined to retain their holdings
ever, even granting that the long
of fundamentally sound rail seheralded recession is just arounc
curities today as they were to dis¬
the corner it certainly does not
to
admitted to the firm as a lim¬
partner as of June 1st.
o.e
traffic
outlook for the
ages
ago
the tape
might point out in passing,
still showed signs of latent
New York Stock Exchange
that
these intra-day move¬
strength.
Underneath this ments are
Weekly Firm Changes
quite profitable for
The New York Stock Exchange strength, however, there were
the agile trader.
The man
has
announced
the following disturbing influences which
who can catch these four to
weekly firm changes:
pointed to a reversal in trend.
Frederick R. Tuerk, John B. True, these signs weren't glar¬ eight point swings can fre¬
quently make more than the
Dunbar, and James H. Murphy
ing. Had they been, it would amount of the swings. Stocks
will retire from partnership
in
n't have required any bril¬
Cruttenden &
Co., Chicago, on
frequently move wider than
May 31st. Fay T. Cruttenden will liance to point them out.
the
Year-to-year
earlier.
year
the
the
to its promise
rally
nor
comparisons for April and Maj
will certainly show even more
dynamic
lived up
the Curb
months
180
that
Now
discussions.
Some
when the aver¬
refused to go through
the directional change
academic
was
*
*
weeks ago it has everybody
in a leave status
on
Two weeks
duty with the U. S. Navy as doing back-flips.
chief Petty officer during the war. ago when I indicated the mi¬
bonds of roads
railroad securities can not then be
recently reorganized such as Den¬
based
on
recent and early 'pro¬
ver
& Rio Grande Western and
spective earnings. There seems tc
St. Louis-San Francisco gave up
be just as little cause for bearish¬
five or six points. It is some years
1st Mortgage
new
lower
staff were spent
exceptions the
rails had earnings
last year sufficient to justify con¬
tinuation of the going dividend
distributions. These dividends af¬
ford income returns running to
and above, 10%. Earnings reports
for the first quarter of 1947 were
generally well above the results
of
by
prices again.
*
argument
some
basic trend. I'm not
concerned with arguments or
WHYTE ==
indicated
Supple
is
There
oversold position.
temporary
supervision.
Three of his 25 years on
With few if any
Pacific liens were off
points. Some of the
Northern
Mr.
take over.
about the
By WALTER
rally
will again
changes,
day
to
Whyte
When corrected expect
becomes the fif¬
teenth member of the club, which
will be one year old on June 27.
of ,194C
securities.
better
==
Market
department
Curb
of the
of outside
deteriorating sharp¬
ly it was just as odd to -find so
much resistance to liquidating rail
sidered by many
ern
director
with earnings
mort¬
gage bonds, which
even as re¬
cently as early 1947 were con¬
Baltimore & Ohio
spring
the
In
curities.
made by Fred C.
was
Moffatt,
President of the Ex¬
change Clearing Corp., and he was
welcomed as a member by club
President Henry H. Badenberger,
the side of understatement. On the buy
side of the market conditions have been little short of chaotic.
Modest offerings of speculative is-^
and the traffic outlook highly fa¬
sues have found no bidders and if
vorable it is odd that there is so
actively pressed for sale have re¬
much resistance to buying rail se¬
interest would be to err on
interrupted by the day
ment,
Says—
change Securities Clearing
on
corrected the basic move¬
is
Markets
A
A temporary
oversold position
Schwabacher & Co.
Members
York Stock Exchange
New
York Curb Exchange (Associate)
San Francisco, Stock Exchange
.
Chicago Board of Trade
New
V
14 Wall Street •- ^
COrtland t 7-4150
/
Francisco
Menterej
—
New York 5, N, Y.
Teletype NY 1-928
■■
to.Principal Offices;;.-
Private Wfret
Slut
>-
~
Santa Barbara
Oakland
—.
*
Sacramento
Fresno'■;*• •>>'
*'
-
-;; -
Established 1858
H. Hentz & Co*
Members
■■■■'*
Exchange
Curb
Exchange
Cotton
Exchange
York
New
York
New
Board
of
Trade
Cotton Exchange
New Orleans
I.
And other Exchanges
N. Y. Cotton
Exchange Bldg.
NEW YORK
CHICAGO
DETROIT
GENEVA,
•»*»'
Inc.
Exchange,
Commodity
Chicago
-"••••>
*
Stock
York
New
4, N
Y.
PITTSBURGH
SWITZERLAND
\
Volume 165
Number
Letter
4596
THE COMMERCIAL
We
First Boston Group
An
a
The
Navy having been the bulwark of
only effective way of
removing the present, and as we
the U.S.A. from time immemorial.
now
see it the
future, scarcity of
dollars is for the U. S. A. to be¬
of
come
into
a
willing
buyer
markets. This becomes
important
very
in
street"
world peace has
accepted a broad¬
er
basis for her
foreign
U.
The important
thing to bear in
mind is that there will be no
pe¬
riod of indefinite world
peace un¬
Commonwealth
keep
absolutely
completely in step.
I know
country
cause,
in
this
I
rea¬
have
come
across
anybody
by stressing the ad¬
visability of the U.
the
up
anti-
Bretton
S. A.
winding
Woods
joining the sterling
of sterling
financing
British. This is quite
contrary to
the conditions
prevailing in this
country. I can honestly say that I
never
the
is
I conclude
been
never
are very
in
two countries.
our
per¬
understand,
"man
plan and
area. In view
increasing
an
volume of international commerce
the urgency of this
step becomes
in
more
this country who is
anti-American.
We have no such
things as chauvenistic newspapers and if
apparent
and
would
result
in
consolidating the economy of
the U. S. A. and the British Com¬
of
our
leading daily papers adopted
an
anti-American policy public
opinion would very quickly mark
any
it out for destruction. The
people
of this
monwealth, bringing it more into
line with the
principle involved
in the new
foreign policy of the
U. S. A., and
creating a strength
of unity and
power which would
very high regard for the people
of the U. S. A. Even the
"man in
the street" is aware that the vast
factor for assured
peace that there
has ever been in world
country have always had
system
of
defence
which
a
inevitably establish
the
strongest
history.
this
W.
country has maintained for gen¬
CRAVEN-ELLIS
Estate House,
erations has enabled the U. S. A.
to spend the minimum amount
upon
its
defences, the British
Moving Towaid Fascism
By G. J. HARRIS*
!
(Jo. Ltd.
English industrialist leader charges government's nationalization
policies are worsening postwar economic conditions and
leading to
Corporate State.
Declares people's
savings aye being rapidly
drained away, ruining individual incentive
and nation's democratic
strength.
country in this century. Even so,<$>there
are
trends
in -policy
in basis that at least retained
tackling post-war problems that manufacturers
would appear to some of
to
worsen
rather
economic
in
likely
improve
us
than
condition.
While
shortages and consequent controls
last, it is an administrative neces¬
sity of the Government to deal
with
industrial
problems at in¬
dustry level rather than company
level, but there are signs, such as
the powers taken in the
Industrial
Organization Bill, of
perpetuating
controls
over
a
wide field
which
(whether intended to do so or
not) lead in the direction of the
Corporate State.
Trade associa¬
tions, either as such or
wartime
extended
acting
as
associations, have greatly
their
membership dur¬
ing the war, because Government
departments have settled policy at
industry
level;
and
therefore
membership of the employers'
negotisrtirig body was practically a
necessity, if only to keep informed
matters of supply and
price of
the industries' products. The
basic
on
principle of operation
locate
usage
ingredients
during the
was
to
al¬
according
year
to
preceding
the outbreak of war, and
equity
between manufacturers was
thus
maintained in
way.
a
were
on
a
*From the Chairman's statement
the 40th
annual J meeting of
Bowntree & Co?,
at
1*4;, York,
land, May 2, 1947.
■£?:
purification of coke
and
for
oven
gas, the
hydrogen sulfide and
hydrogen cyanide and the produc¬
of
sulfuric acid at Kearny,
Jersey, at a cost of approxi¬
mately $1,000,000.
,
prices far below
Changes
be
may
if
the
made
in
this
of
the
business
company and prevailing economic
conditions indicate such changes
are
advisable,
states.
the
The amounts
estimated
cost
of
various
projects
to change.
prospectus
stated
the
as
completing the
also subject
are
The company is
studying the
advisability of expanding its fa¬
cilities
beyond
the
of
scope
the
program
(outlined above and may
substantial sums in the
future for such additional expan¬
sion, it is stated.
expend
After completion of the present
financing,
capitalization of
the
company will consist of 1,115,550
shares of common stock (par $10)
and 150,000 shares of cumulative
stock
($100
Funded
par),
4%
debt- cohsists
isfactory to
all
trade
association
members, and margins satisfactory
to
all
distributors, without the
grave risk of arriving at a
quality
and
price
for
products
unaccep¬
table to the mass of consumers.
This 'condition can be masked for
time by overall
shortages mak¬
ing a sellers' market, by Govern¬
a
ment subsidies
to
on
food
amounting
£364,000,000,
and by living on
United States-Canadian loan,
but these devices
only defer a set¬
problem.
them
The reason these
I was
unpleasant facts are being related here is that
returning to my office about 4:30 in the
evening of
day, I met another security salesman.
We spoke for a
and I
asked, "What do you think of the market?"
"What
while
this
same
moment
market?"
said he.,
"Haven't you heard about the market
today, it
bed," said I. "Is that so, you know I was so
busy I didn't
notice what happened.
I was out
making calls and didn't phone
office until after one
fell out of
even
the
o'clock—everything was quiet then.
I
picked up a couple of orders from old
customers I hadn't seen in
a
long while.
They think yields are pretty good now and are
buying on a scale.
You know, I've found out
the less I watch the
ticker the better it is.
Here
People
And I'm doing some business."
fellow that
was a
was too
busy to worry about the market.
sitting around watching stock prices go down and some
are
of the watchers don't
even
own
securities, but if you listen to their
conversation you'd think that
apple selling was here again.
If it is,
there is one sure
way that you and your customers can
get to a
choice corner first.
Walk around with a
gloomy face. Don't work
and don't think
constructively.
think
can
refuse
of.
to
Tell
Spread all the pessimism that you
they are right when they
customers that
your
consider
buying some of the best corporate securities in
world at prices to
yield over 5%, compared with government
bonds that average only around
2%.
Agree that this is a propitious
time to sell good securities
instead of holding them.
Commiserate
the
with
lot
a
in
around
of
other
their
disconsolate
offices
security salesmen who
thinking
of
are
No
luck.
one
can
buy
at the
Anybody that tries
have
absolute
to
do
learned
before
them.
opportunities
in any
market.
a
complete
the
war
reversal
of
the
it
bottom
will
That
is
The
Competition and
place of ,an artificial
except through sheer
discover
a
sure
United
unsound,
years.
taking the
ways
are
way
abnormal
boom.
is
going through
seller's
solid business
war
what many others
to miss the best
States
markets
effort is
once
The
TEXAS
—
Allerton
gan
to
Stanley & Co., New York City
become
partner in Rowles &
a
Bankers
Mortgage
Building.
Mr. Cushman began his business
career with
Field, Glore & Co. in
1930.
Subsequently, he
ciated
with
where he
W.
was
E.
was
asso¬
Ilqtton & Co.,
From
wants to help its clients
and hold its
knows that this is no time to sell
good stocks, but
good time to dispose of securities that
haven't yet become
entirely worthless (providing their outlook
today indicates that such
may be their fate).
Take tax losses.
REMEMBER, YOU CAN ES¬
TABLISH $5,000 OF LOSSES AND
CARRY FORWARD DEDUC¬
TIONS OF A THOUSAND
DOLLARS A YEAR FOR THE
NEXT
FIVE YEARS BY SELLING THE
MORE DUBIOUS
STOCKS NOW.
The best time to switch from
weak situations into
stronger ones is
in a declining market.
Most amateurs don't know
business
it
a
is
this.
The best
stocks always rally first and reach
the highest levels in a
recovery.
The "dogs" sometimes
1946, he
commanding a
in the
was
Army,
tank de¬
stroyer battalion and attaining the
rank of Colonel.
&
never
recover.
head of the Statis¬
1940 to
Rowles
securities firm that
own
Co.
Cruttenden & Co.
Gardner Chiles Visits N. Y.
CHICAGO,
ILL. — Cruttenden
& Co., 209 South La Salle
Street,
members of the New York Stock
Exchange and other
exchanges,
was
formed
in
announce
that
of
as
May 31 the
1946, and is engaged in the gen¬
following
eral securities business in Houston.
retiring from the firm: Frederick
R. Tuerk, John B.
Dunbar, and
Mr. Cushman will specialize in the
underwriting activities of the firm.
Opens in Maplewood
MAPLEWOOD, N. J.—Harry E.
150
partners
are
James H. Murphy.
Walter
Conrad
Carver
general
W.
Cruttenden
Gardner
dealers
on
and
Brennan in Brooklyn
and
curities
and
Chicago,
111.
is
N
Y. —Hubert
engaging
business
from
in the
offices
102 Chestnut Street.
Wy¬
Gish & Co. in Passaic
Retail Distribution of Securities
It is aspects of Government
tackling
our
policy
problems that
seem
to require closer analysis
by the
public and to which I will refer.
(1) In respecLof industries
tionalized
or
to
be
user interest
(Continued
Gish
on page
conducting
a
Avenue
under
Gish
in the
securities
Northern California Market
Co.
&
the
firm
name
of
na¬
(in terms
35)
is
business from offices at 663 Main
nationalized,
Government policy appears to be
concentrated on industrial rela¬
tions first, management
problems
$
PASSAIC, N. J.—John Naylor
Joseph Infeld Opens
Joseph Infeld is engaging in the
securities business from offices at
157
West
City.
79th
Street, New York
•
-
-
'cr
DlNAIILT & CORuss Building, San Francisco 4
Telephone EXbrook
7484
&
New York
his return to San Fran¬
BROOKLYN,
Brennan
Neb.
Denault
cisco.
den & Co. with offices in
Omaha
Lincoln,
of
City at the Commodore Hotel for
two weeks' stay.
He will be call¬
ing on the bankers and dealers
and will visit Detroit and St. Louis
Tuerk,
general partners,
will continue the firm of
Crutten¬
Chiles
Co., San Francisco, is in
to
in
of
again
During this present
STRUCTURES WILL GO INTO THE ASH
HEAP.
Cushman has resigned from Mor¬
has outlined
the national
problem in its White
Paper and elsewhere and it is not
repeat what has already been
said that I make these remarks.
sitting
of getting into another
fewer headaches and greater
rewards.
Do these things and
both you and your
customers will
be headed
straight for only one reward—you can't
miss—you're
going to be deep in "the red ink," and no foolin'.
business where they
imagine there
oming Avenue.
Government
last
The
period the get-rich-quick
boys are being cut down to their
normal
size; inefficient management is losing
out, weak companies are pass¬
ing on, and the hue and cry of "those
who never had it in the
000 serial bank notes, dated June
first
place" is mistaken
by some to mean that another serious
economic
11, 1946, $10,000,000 of notes under collapse is
upon us.
The pessimism of the
public always runs to
bank credit agreement dated June
an extreme.
STOCK PRICES MAY GO
MUCH LOWER, BUT
11, 1946, and a $950,000 purchase THING IS
ONE
CERTAIN: SOUND STOCKS
WILL COME
money mortgage bond dated April
BACK, WILL
PAY GOOD DIVIDENDS IN
THE
FUTURE, AND THE U. S. A.
1, 1947.
WILL BE DOING BUSINESS
JUST AS IT HAS IN
THE PAST,
BUT
UNSOUND
MANAGEMENTS
AND
WEAK
FINANCIAL
business from offices at
Government Plans
The
the
Dow-Jones industrial averages closed this
compared with their high of 212.50 reached
May 29
as
of last year.
of
Carver is conducting a securities
The National Problem and
on
1,430,000 shares
$23,000,000 first* mortgage bonds
3% series due Oct. 1, 1964, $7,500,-
the
tlement and do not
provide a solu¬
tion of our
Friday*
and speculators rushed to offer their
stocks
what they could have received for
time.
day at 164.96
New
program
this
at
year
ap¬
recovery of
tion
HOUSTON,
all the
at
over
discouraged investors
satisfactory to the unions tical Department.
Ip
1937, he
with, at the same time, profits sat¬ joined
Morgan
Stanley
&
Co.
Eng¬ second, and
;-v*«•
$1,250,000;
of
In Retries Go., Houston
As regards consumer
goods, I
confess an ignorance of how it is
possible to secure full employment
at rates
rough and ready
Similarly, prices
cost
a
the completion of facilities for the
Co.,
membership.
at
A. Cushman Partner
No government in
power after the war could
escape being faced
with the gravest
political and economic problems that have
faced this
our
plant
proximately
series.
London, W. 1., April 30, 1947
&
chemical
preferred
Dover St.,
Chairman, Rowntree
approximately $4,750,000; for the
of a refinery at Oil
City, Pa., into a synthetic organic
Exchange increased sharply to
as
funds if necessary, to defray
expenditures aggregating approxi¬
mately $7,000,000 for the construc¬
tion of ethylene and
polystyrene
plants at Kobuta, Pa., at a cost of
conversion
conscious that the
now
complementary to it: This,
I believe, is the
right understand¬
ing that there should be between
be¬
vast
a
A.
the
Common¬
is to be
your
people, for
your
which
able to
in
connection
unfortunately,
centage of
sons
difficult
And
is
system of de¬
British
broader basis of your foreign pol¬
icy is not to supersede the policy
of the British
Commonwealth, but
less the U. S. A. and the British
is
S.
the
the
moving in this direc¬
tion, which is all to the good. The
general feeling here is that the
policy.
position
with
of
wealth.
A.
properly in the interests of
the
expect, in view
re-shaping itself,
now
world
line
fence
more
and
the
company contemplates the
use of the proceeds from the sale
of the stock,
together with treas¬
ury
that America should bring herself
world
even
that the U. S.
now
But he does
,
This column is
being written after the close of the market
May 16.
This has been a
day when the volume of trading
New York Stock
stock (par $10) of
Kop¬
Co., Inc. at $25.75 per share.
pers
a
form. The
By JOHN DUTTON
public offering of
200,000 shares of
a
of
common
If the U. S.
A., influenced by pride, will not voluntarily join
sterling area, President Truman's policy will eventually result
repetition of the world crisis
of 1931, but in a more intensified
issue
new
group headed
Boston Corp.
on
First
May 21 made
Financial Chronicle
Securities Salesman's Corner
underwriting
The
oy
spondent declares.
and
3S
j
Offers Koppers Common
Staling Aiea
also scrap Bretton
Woods, British corre¬
must
Editor, "Commercial
in.
(2741); 17
to the
U. S. Mast loin the
the
FINANCIAL CHRONICLE
&
Bell System Teletype SF 272
se¬
at
Thursday, May 22,V1947
£
COMMERCIAL & FINANCIAL CHRONICLE
THE
18
(2742)
How Can V. S. Contribute to Better World?
Canadian Securities
(Continued from page 13)
WILLIAM J. McKAY
By
since
general state of world commerce and finance, at no time
,the cessation of hostilities, offered an adequately firm foundation
ifor the erection of the grandiose structure constituted by the Bretton
Woods currency scheme.
It has long been apparent that instead of
link the "Key
Currency" plan is still the only
connecting
angle frojn which the
problem can be
approached.
There are already indications of
practical
world's currency
a
growing realization of this fact.
the achievement
Little is heard of
real
of
at the interna¬
at Geneva
discussion is
directed to
progress
tional trade conference
More
bilaterhl
subsequent
possible
meetings between this
Britain and Canada.
It
establishment of
is
also
that
appreciated
generall.y
country
the
fixed parties for
currencies represented in
the International Monetary Fund
have no practical meaning until
arrangements are made to sta¬
bilize the U. S. dollar, the pound
and the Canadian
dollar on £
all
the
working basis.
the
in
Even
of
absence
any
United
•
■
is
the
many
lands
cruits
to
middle
class
times assured
the Tripartite
all
at
be
on
credit
44
in
has added new re¬
ideology.
Totali¬
this
rag-
irig at the present time.
A
Sound
Policy
importance
that the United States adopt a
foreign trade policy which favors
both imports and exports. A for¬
policy
trade
eign
favors
exports
and
restricts
time
institution.
which merely
at the same
imports
through
for
higa tariffs, is obviously unsound.
to
world?
better
a
senting
a 26% increase over the
period in 1946, is indica¬
can
the United States take now to
alleviate
the
suffering
that pre¬
of
materials
raw
than
before.
ever
tion of
our
the
in
much-needed American goods
also to increase their
This
Sacrifice
the
of
principal
and
causes
ot
unrest?
political
(2) What internal measures should
vital commodities
rous
at
of
Expense
Taxpayers
The above
suggestions will un¬
doubtedly entail sacrifices on the
part of the people of the United
States.
The taxpayers will have
to bear the cost of the grants
oil, non-fer¬
metals, lumber, etc. Foreign
as
subsidies is obvi¬
nations.
foreign
made. to
This
country will have to share with
other nations commodities which
are still scarce at home.
Large ex¬
ports
economic
was
in the relations between
the United States and Canada.
proven
foods
some
international
conclusively
stimulates
This
trade.
war
desirable
industri¬
In the long run
alization
a
highly
as
niques.
in many parts of
vails
but
exports.
should endeavor
possible to make food
available to starving nations and
to alleviate their sufferings. The
United States should render tech¬
nical assistance to foreign nations
to widen their skills and tech¬
to
be
would
own
country
far
as
the world rely more on imported raw mate¬
and to help in the restoration of rials in the future than on domes¬
their economies, thereby removing tic output.
This applies to such
it
to obtain
not merely
position
a
future
During the
in that its decisions can be
expedited and through its action
foreign nations can be placed in
considerable por¬
natural resources and
exhausted
we
Develop¬
and
Reconstruction
ment
to
contribute
I
the resources of the
Export-Import Bank shotrld be in¬
creased in order to facilitate the
interchange of commodities be¬
tween the United States and the
rest of the world. While the func¬
tions of the Export-Import Bank
are limited yet it has the advan¬
tage over the International Bank
Loans and gifts, however
large
willing to sell their birthright for are cnly a temporary palliative.
a mere promise.
In the long run foreign trade must
A great many
people abroad, be based on an interchange of
International Monetary Fund to
operate in a practical fashion, the particularly in the Western world, commodities. During the last two
look to the United States for guid¬
U. S. A., Britain and Canada will
years
exports from the United
They hope States have increased
take early steps to strengthen the ance and assistance.
materially
that the United States will demon¬
but imports have lagged behind
tripartite financial and economic
strate by practical results the su¬
and the excess of exports was fi¬
cooperation. As far as Canada is
concerned it is likely that a long periority of free institutions, that nanced through substantial loans
it
can
operate effectively,
can
term arrangement will be formu¬
and grants made by the United
eliminate periods
of boom and
lated along the lines of the warStates Government. To be sure, a
time
Hyde
Park
Agreement bust, and afford its people the lowering of tariffs in order to make
highest degree of economic secur¬
possible imports from abroad is
whereby the Dominion's normal
U. S.
dollar
deficit would be ity and at the same time preserve bound to hurt some industries
the liberties of the individual. A
eliminated.
which will suffer from foreign
By thus
increasing
demonstration by the United States
competition in the future. How¬
imports from Canada, this couiithat free men can manage their
ever,
what we must consider is
try would enable the Dominion
affairs
much
better
than those
not so much the welfare of an
avoid the re-imposition of waxwhose every movement is dictated
individual industry but rather that
time import controls.
As a fur¬
ther
result
impetus
would be by government is the greatest aid of the country as a whole. A souna
that the United States can render
foreign
trade
policy
can
be
given to the expansion instead of
to a confused and impoverished
adopted without damage to Amer¬
contraction of world trade, and
world.
ican industry.
The United States
Canada's overall favorable for¬
What can the United States do will be a much larger importer
eign trade balance could be em¬
ployed to assist in the rehabilita¬
This question may be divided into
tion of the economies of Britain
two
parts:
(1) What measures
and the world at large.
securities of suchi
•
If need be,
Foreign Trade
It is of the utmost
world, however, many people are
to
of
an
.
would
considerable
the good faith and
nations.
It Ms un¬
thinkable that debt service should
Bank and
be suspended on
governments have nothingto offer but promises which have
not been fulfilled. In an uprcoted
currencies
three
very
a
immediate
in the next few
ideological struggle which is
tarian
operations in these
Canada's external trade figures
account for the
bulk
of
the
foreign exchange for the first quarter of 1947 alone
transacted at the present time. provide sufficient evidence of the
What is now necessary is to de¬ growing stature of the Dominion
vise means
whereby the inter- in the world economy. The over¬
convertibility of these currencies all total of $1,164,000,000 repre¬
universal plan,
the
in
as
extent depend the outcome of the
ganda agents for that form of gov¬
ernment.
The
inflation
which
out
will to
years
and want are the greatest propa¬
wiped
States
future as well
being adopted by gradual stages.
The Soviet ideology is gaining
ground and making new converts
primarily because the economic
ground is fertile for it.
Hunger
proceeding on the basis of an overall universal plan it was neces¬
sary at first to build gradually on a practical foundation.
Without the assistance of the^
not beyond the capacity of this
theoretical global planners prac¬
country and
Canada to sustain
tical business and finance would
this
essential"' working
partner
have evolved a scheme based on
during the difficult initial stage
the existing working systems rep¬
of operations.
resented by the U. S. dollar and
It is to be anticipated there¬
sterling
currency areas.
More¬
fore that in order to enable the
over with the Canadian dollar as
the
Union
Soviet
.
The
•
the
in
prevails
f
and of
of these
therefore,
of farm products
will keep prices
commodities
prevent
a
high and,
downward readjustment
Some direct
in the cost of living.
by the United States
made
loans
probability will
ously unsound. Hence, if we wish not be repaid. The people of the
arrangement, despite its tive of the part played by the booms and depressions, inflations to maintain foreign markets for United States must bear in mind,
Dominion
in
world
commerce,
and deflations, over-employment our agricultural products we must
imperfections, did much to main¬
however, that leadership is always
and further demonstrates the im¬
tain universal currency stability.
and large-scale unemployment?
give careful thought to this prob¬ costly and the United States must
portance of the Canadian link in
Formidable as are Britain's eco¬
lem now, while the demand for assume
it because
nobody else
Now is the time to give careful
nomic problems it is nevertheless the "Key Currency" approach to
throughout the can.
products
thought to these problems. Eco¬ these
f
the solution of the world's cur¬
nomic and political conditions are world is very ereat.
Should these sacrifices be made
rency problem.
•'
still in a state of flux in many
The establishment of a sound indiscriminately?
The answer is
During the week the external countries.
No definite economic foreign trade policy by the United defintely in the negative but this
section of the market continued
pattern has been adopted and
the
Before
war
similar
the United. States take to
trade
based
on
Government in all
"prevent
currency
There
inactive.
and
dull
was
States will indicate to the rest of
it
therefore
still, be molded.
can
steady demand for Dominion in¬
ternals and prices again advanced
that
world
the
this
country
is
Furthermore, in many countries willing to cooperate with likethe people have not yet been de¬ minded nations In order to re¬
Since, the change in the prived of their liberties.
They store sound international trade
F. E. C. B. regulations which di¬
still have the power to forge their throughout the world.
vorced the market for these bonds own destinies and future.
If we
from the influence of the stock are to
render assistance to the
Speeding Up the Operation of
CANADIAN BONDS
slightly.
GOVERNMENT
does not mean that we
should not.
apply charity where human suf¬
fering can be alleviated. There is
no reason why the United States
should render assistance to na¬
tions which sneer at our institu¬
tions and which secretly hope for
*
PROVINCIAL
been a notice¬
markets there has
stand¬
ing. On the other hand the re¬
sultant
weakness of the stock
arbitrage rate places
Canadian
improvement in their
able
MUNICIPAL
CORPORATION
at
stocks
an
Free
level,
attractive purchase
funds
continued
steady at 8% discount and as the
tourist season advances further
CANADIAN STOCKS
for
the
be
should
support
forthcojning
lar.
A. E. AMES & CO.
New
New
N. Y.
New
nounce
pal
NY-l-1045
&
under
.Co.,
munici¬
department
the opening of a
bond
brokerage
direction
the
Clifford
of
Drake.
was
formerly in the
municipal department of Blair &
TAYLOR, DEALE
&
64 Wall
the
COMPANY
Inc. and prior thereto with
New
York
office
of
H.
M.
Byllesby and Co., Inc.
Street, New York 5
WHitehall 3-1874
G. F. Hulsebosch Go.
Formed in New York
Formation
CANADIAN
&
SECURITIES
Government
Municipal
Provincial
Corporate
of G.
F. Hulsebosch
Co., with offices at 62 William
Street,
This
was
was
announced
effected
solution of the
y
H ■/
i -1 (*■> I If'?■.
-!• b J-.
u l i b
i
May
19.
following dis¬
brokerage firm of
Maher & Hulsebosch.
.
collapse of our economy, thus
demonstrating the weakness of
a
Institutions
fortunately there is no
facilitating the reconstruction and
hasty ill-advised meas¬
Economic conditions in the
development of the world. While
these institutions must of neces¬
sity adopt sound business prac¬
tices, yet their standards need not
be as rigid as those adopted by
at
home,
for
need
plans and make our decisions.
the
business
pattern
is
broad
cline
and
by
in
revival.
the
loans.
A
de¬
operative
notably of food,
cost
of
will set in motion
ness
clear.
are
prices,
the
yet
uncertainty,
outlines
in
a
institutions
private
are
The
owned
construction,
ernments
strong busi¬
servicing
A decline in the cost
of construction will make
the fulfillment of many
possible
accumu¬
in
institutions
ventures,
by
and
gtanting
are
their
co¬
shares
the member gov¬
this assures the
sibility to maintain free institu¬
tions and to protect the rights of
individuals. If the United Statesis to carry
the principal burden of
the burdens;
reconstruction—and
are
great—it should be done for
nations which will utilizeassistance for the greatest:
those
this
good of the greatest
for
the
economic
purpose
distress
number and:
of
removing
which breeds •
discontentthe United
tional
Bank.
Furthermore, one States to many countries at the*
present time will strengthen the*
may take it for granted that the
will
be
of the obligations that
offered by the Interna¬
and
social
Prompt assistance by
political
lated
Mr. Drake
Co.,
International Financial
our system and the merits of their
too late. Meas¬
The International Bank for Re¬ own. There is no reason to shipures may have been taken by then
construction and Development and large quantities of goods and serv¬
by some nations which would set the International Monetary Fund ices to nations which endeavor to*
a
definite pattern of their eco¬ are
cooperative ventures of a undermine our institutions.. Tljenomic and political structure and
great many countries. They were principal task of the United States;
which could not be changed.
established for the purpose of re¬ should be to help those nationsAs regards measures to be taken storing
international trade and which have the will and the pos¬
marked
115 Broadway,
York City, members of the
York Stock Exchange, an¬
Mabon
the
from today may be
our
Dept. for Mabon Go.
TWO WALL STREET
RECTOR 2-7231
of the
While
INCORPORATED
NEW YORK 5,
time is
Next year or two years
essence.
ures.
Drake to Manage
the world,
of
United States at present are such
that we have time to formulate
Canadian dol
unofficial
rest
democratic
mand for durable
countries
and
a
rapid
- these
economic;
recovery
will
remove,
economic:
housing demands. The de¬ weaker countries are even more
nterested in the success of the
goods, machin¬
ery and equipment, home furnish¬ Bretton Woods institutions than
ings and public works, is very the stronger ones since the insti¬
great.
The accumulated savings tutions were established primarily
in the hands of the people, while for the benefit of the former. Sev¬
unevenly
distributed, are very eral applications for loans have
large. The productive capacity of been received by the International
the country is great and
produc¬ Bank. The sooner they are granted,
tivity of labor and machinery is the sooner will the applicants ob¬
increasing. After the present bus¬ tain the necessary dollar exchange
iness readjustment is over, there¬ and be in a position to rehabili¬
The Inter¬
fore, the United States will jn all tate their countries.
probability enjoy a prolonged pe¬ national Bank will soon offer se¬
riod of good business. Then will curities in the American market.
be the time to lay plans for the These will be sound obligations
future to prevent a sharp decline
for their security will rest on in¬
in business activity accompanied
dividual
economic projects, the
by large - scale
unemployment.
Upon, the > measures taken by the paid-in capital resources of i the
elements : in
and social unrest.
Measures to Be
'!
Taken at Home*
Leadership must inspire • confi¬
dence if it is to succeed. Hence' it;
is the duty of the people-of the*
United States to demonstrate tQ>
the rest of the world that our eco¬
nomic system can work satisfac¬
torily and that we can eliminate
periods of serious depression and
large-scale unemployment Dur¬
ing the last few months the opin¬
ion has been expressed in some
democratic
that it is
jc^ptries of Europe
not-advisable that their
Volume 165
Number 4596
economies be
United
tied
States
that
to
because
THE COMMERCIAL & FINANCIAL CHRONICLE
the
the
of
of
in¬
In this respect it may be said that
or actions of pressure
It must be based entirely the United States Government and
of the country as a people have already done a great
whole irrespective of its effects deal and that everything possible
on individuals.
The United States \kill be- done to strengthen the re¬
by desires
pression.
Instead
advocate
close
a
leaders
economic relations
therefore, in
prevent depressions.
were
economists
recently, at the Geneva
more
Conference.
Business
United
in
the
on the whole,
evident, however, that
is gradually de¬
veloping.
This, however, could
readily
be
checked
by
lower
prices, particularly of foods, and
It is
mild
a
toy
recession
decrease in the cost of con¬
struction.
However, it may be
stated that the peak of
commodity
prices has already been reached
a
and
that the recession will
it¬
in
self
correct
some
of
the
evils
which have arisen
during the last
.few years. As soon as prices have
receded
and
productivity
is
in¬
creased, based on the accumulated
demand for housing, all kinds of
durable
goods,
machinery
and
•equipment, home furnishings and
on the demand for our
products
from abroad, this country is as¬
sured of a prolonged period of
good business with satisfactory
.
employment and a high national
income. This is the period during
Which
careful
study
should
be
given
to the prevention of the
wide swings in the business cycle
and
;
large-scale unemployment.
The
*
relearn
that
measures
the
the maining democratic
teach
but
must
we
principles
on
should
be
of
fact
that
the United
the
forces abroad.
foreign
policy
States has the full
the
The Unied States is the' last of
,
The
backing of both leading political
parties has not only strengthened
Conclusion
position of our State Depart¬
ment but has also enhanced the
get
the
and
ment.
(2)
presage
rails
about the
business.
(3) Sound public works
'planning, adapted to the swings of
the business cycle.
(4)
available
tics.
information
and
statis¬
(5) Careful monetary and
policies which would be
credit
guided primarily by the economic
needs of the country and are not
subordinated
to
Treasury.
?
'
The
the needs
main
of
the
'
.
problem
that
the
country must solve during the
coming years of good business ac¬
tivity is to prevent large-scale
?unemployment in the future when
of
means
already
production
been
nationalized
not
distant future.
The
whether
ability
of the United
demonstrate that the
to
system which has made this
coun¬
try the foremost industrial nation
in
the
world
work
can
satisfac¬
to
economy can remain
whether the pressure of
eliminate the peaks and valleys of
the business
cycle, establish har¬
question
mixed
the
upon
States
ability of
torily, that it can offer to those
willing and able to work a high
degree of economic security, can
The
of planned economies is
has
idea
widening.
arisen
as
an
or
government
enterprise
privately-owned
on
will
be
between employees and em¬
ployers based on a sound founda¬
mony
competition
If this
is
achieved
the
the United States will
•enjoy a high degree of economic
security unrivalled and unmatched
in the world. While it may be im¬
possible in the foreseeable future
to remove entirely the operation
•of the business cycle, the peaks
and
valleys must be
removed.
This country simply cannot afford
another serious and prolonged de¬
pression with consequent largescale unemployment.
Should one
arise again it could endanger the
free
institutions of the
United
people in
States.
eral
lending
loan
Establishment
The
.
;
<;,■
Sound
of
ready to
The
other
arisen
is
question
which
has
whether
prise in
private enter¬
country can co-exist
one
with planned economies in others.
These are vital questions which
being
carefully
considered all
answers
studied
not easy
are
and
the world. The
over
but they de¬
pend to a considerable degree on
the extent to which this
country
will be willing to render assis¬
tance
to
other
nations
to maintain at least
economic
and
struggling
modicum of
a
political
freedom.
law, and that it adheres
principle enunciated in our
that all people are
equal in the eyes of the law.
If
during the next few years we
strengthen that democratic forces
in the rest of the world, and
par¬
ticularly
those
if
demonstrate
we
doubt
who
but
willing
our
system
sis
'
i
tablish
a
but
tion
sound economic founda¬
also
the
United
fending human rights and human
dignity,
it is a sad commentary
when the United States insists on
political equality in foreign coun¬
tries yet does not practice it in
many parts of this country. Racial
and religious intolerance have no
place in. our system and those who
to
the forces which
undermine
Above
our
endeavor
institutions.
all, we must learn to live
together and realize that basically
there is
no
conflict between: capi¬
that the welfare of
intertwined.
Economic
wouldn't-"toprise
by the Census Bureau on canned
fruits, vegetables, juices and baby
food shipments by packers, whole¬
and
warehouses
has been
Says
»
Committee
Wolcott
"I
...
Mainly, the
needs
retail
The
study has been ended because of
appropriation slashes.
Hereafter,
and
such statistics will be available to
lenders only through trade groups*
Ji<
*
*
Clayton Act amendment prohib¬
iting one company from acquiring
the assets of another has traveled
its
may
systems
feel sure
contributed
to
anything that the
have to offer, we
that we will have
than
more
this
make
world
share
our
better
a
one
the first
and easiest — leg of
trip through Congress: It has
OK'd by a House Judiciary
—
been
subcommittee.
You
A Twentieth Century.
'
still
can
rely
earlier forecasts the bill won't
on
be enacted this session.
in which to live.
;
Chairman
haven't
heard
is for
urge
Fund
❖
"■!•
Office machine purchases by the
Government are to shrink tempo¬
*
Reserve Board
Governor
Survey
by
*
*
unless
*
There's
*
i'l*
why Wash¬
reasons
to
are
be
pre¬
scribed for the air industry: (1)
no
other industrial group has
been hit by such a sharp post¬
peak;
chance
a
the
may OK Reserve Bank
guarantee.
The
bill
the calendar with
on
Senate
90% loan
is
a
Senate
already
favorable
Banking Committee
re¬
port. But it can't be maneuvered
through
the
House
before
national
tft
Bank
Means
to
You?"
1818 H St., N. W., Wash¬
same
of
copy
output
is
—
sell
to
tax-paying
buying
to
the
less
was
and
—
the
bank
security
public.
*
*
Top-drawer
investment
*
Government
people
word
from
ward
Hopkinson,
IBA
International
and
have
President
the
Ed¬
Jr., that the
"plans
to
Bank
place full reliance
on
investment
bankers and dealers to distribute
its securities." That doesn't sur¬
170,000
cur¬
absolute
than
one-half
minimum held
es¬
international
air
lines
are
expected to register
in passenger traffic
a
*
in
are
Congress wants to toss
of
a
life
dustry
make
and
to
can
the
be
preliminary
session.
sage
raft
of
some
sort
aviation
in¬
expected
gestures
to
this
First
a
National
step may be pas¬
bill by Maine's Senator
creating a temporary
Air
Board would
Policy Board.
The
be directed to fash-
Commission
but the going
looks slow.
James
House
M.
to
primary election held
on
the trading floor of the New York
Curb Exchange, Walter E. Kimm,
Sr.
of
Kimm
&
Co.; James A.
McDermott; Charles M. Finn of
Adriance
&
Finn;
Joseph
f.
Reilly; Sterling Nordhouse; Mark
J. Stuart of Cowen & Co.; William
J. Halpern of Diamond, Turk &
Co.;
and
A.
Philip Megna
of
Francis
Chairman
the
Landis
tells
Commerce Committee.
comprehensive
our
a
I.
dates for
on
the
duPont
&
Fund
have gone
been selected to be Class A candi¬
Civil Aeronautics Board
Century
has
made
of
survey
a
cur
economy in all its fields. They
Slate for Nominating
Committee for Curb
At
a
research staff of the Twentieth
con¬
next
the
two years,
Co.
have
election to
membership
exchange nominating com¬
mittee.
back for
many
years:'
analyze,
and
chart
study,
growing productive
our
steadily
power,,
developing
con-
sumption and capital require¬
ments, our costs of government.
From
been
our
these
able
facts
they
what
demand would be for
and services and what
outlays
have
estimate
to
will
be
goods
capital,
required
at
Marshall S. Foster of Gammack
And concerning the domestic air
at
large, Chair¬
man Landis adds
"Any attempt
to paint a picture of
industrywide
..
financial
&
Co.; Conrad H. Liebenfrost of
Stern, Lauer & Co.; and Albert
high
G.
years
debilitation
must
fail
since, with few exceptions, the air
transportation industry is in sound
Parker
condition and, where it
suffering setbacks, is experi¬
encing them only to the same ex¬
tent
as
ican
industry which
segments
of Amer¬
being af¬
fected by, among other things, in¬
are
creased labor and material costs."
*
*
*
tered
with
Congress
&
of
The final election will
Class
members
A
are
committee to
mean
sugar
users
Tt's unlikely the U. S.
for
industrial
held
Class
B
operation
in
the
ahead. Their book will
be
invaluable
interested
in
economy,
not
to
only
sound estimate of
ensu¬
-
members
of
the
board
of
the
Of
the
needs
its
for
full
the
and
j.
pn
immensely
our prog¬
in the past.
At all bookstores
•
$5.00
exchange
tellers for the primary elec.
ress
but
gov¬
Coleman, Donald Cald¬
..
tion.
its
demand
future
informing studies of
board,
well Portser and Alexander Reich
were
for
our
*
and
for
for the
serve
everyone
American
our
to be elected to the
nominating committee re¬
ports to the exchange at least five
weeks prior to the annual elec¬
tion
in
February nominees for
John F.
additional
soon.
level
The
*
Bulging warehouses don't
the
on
be
three
and
ing year.
penses.
*
been
Tuesday, June 10, at which time
four
Bowman
*
have
candidates for membership
committee.
as
lobbyist
ernors,
Chairman
Gum, Inc., bubble
and
trustees
of
gum makers. His salary — $18,000
annually plus $200 monthly ex¬ gratuity fund.
for
Auchincloss,
Redpath
nominated by petition as Class B
financial
is
other
Redpath
-
.
What price bubble gum! C. Ray
Smith of Philadelphia has regis¬
*
legislation curbing
natural gas
gain
135%
prise anybody much.
*
for
Power
over
RESOURCES
-
effort
sential for national security.
a
color, the pamphlet's ob¬
In AMERICA'S NEEDS
yl
AND
*
has become
misty. Industry lobbyists still pre¬
dict passage before adjournment,
employment declined
million
Handsomely illustrated in transport industry
mission
war
rently, and (4) last year's plane
booklet blaring that title in large
white letters on a navy blue back¬
the
the
in fine financial condition and
s|e
ington, D. C., for free
the
at
ad¬
Write the Bank's Public Relations
Office,
2
Our
sfs
feet
(3)
from
journment.
Want to know "What the Inter¬
trols
:Jf
-
war
square
Sit
-
Federal
are
Congress endowed it
with legislative legitimacy.
would
all appear infested
impulse to requisition
and - span
equipment
for
Outlook
-
*
who
*
power.
recession;
(2)
plane and
engine
factories
now
operate
Presidential
and Associates
,
the
spic
around 60 million square feet of
floor space as against 175 million
he
J. FREDERIC DEWHURST
themselves and staff.
machinery for main¬
taining the U. S. as the prime air
scuttling
recommend
of W
that
servants
with
permanent
ington vitamins
T
Committee decision to haul reg¬
ulation W aloft for review recalls
Federal
(1)
propose
emergency
and (2) later engineer
lower
a
$
Eccles'.• promise
be-H members,
measures,
Here
*
'"would
gressmen
margin."
is
us.<t
from anybody who wants regu¬
lation T completely abolished.
Brewster
legislation must not be motivated
of
distributed.
other
would
tal and labor,,
each
America's
rarily. Bureau buying agents have
been told tersely by the House
(Continued from page 5)
Appropriations Committee to draw
lation T can't be foreseen, but an ion a
plan for averting gradual fully on surplus appliances before
informal recommendation that the
disintegration of plane and engine paying out cash forr-new ones
margin
to
whittled
to
l>p% plants. Cabinet officers ahd Con¬ That irks newly-appointed public
practice it not only violate the
spirit of our Constitution but also
serve
monthly report
of government and business is by
far superior to
Washington and You
States
must stand in the forefront in de¬
FUTURE
'
to
Not only is it important to es¬
COUNTRY'S
their
sis
Last issue of the
to
are
be convinced, that
to
sell
step with Dirksen
goose
sis
stores
of
agencies
yet, maybe next session.
salers
tion
OUR
to banks and other
lenders.
Congress
isn't
private
Bill of Rights
vious
Human Relations
1
f
•
IN
boxcars
papers
to the
so
for
Dirksen's proposal that Fed¬
man
ernment.
ground.
v *
INTERESTED
A noble gesture but a futile one!
That's the way Shakespeare might
have eulogized Illinois Congress¬
great that
even the latter segment will
give
way and be absorbed by the gov¬
the pent-up demand has been met
and we have to live on the current
demand.
the
later.
As far as
possible, the prevention of overexpansion
by private industry,
through the better utilization of
hit
crops
same time.
Agri¬
Department hopes by re¬
laxing inventory controls to en¬
courage wider
distribution now.
s»
-
EVERYONE
culture
system to survive in a world
where most countries are
adopting
planned economies will depend
foreign policy.
our
The question of the
taken may briefly be summarized
as follows:
f~ (1) The adoption of a sound
System of taxation and debt man¬
agement,
(2) Sound labor legis¬
lation which would impose on la¬
bor the same responsibilities as on
.For
agree¬
backlog
transportation
a
farm
19
mm
when heavy sugar demand
bumper
political democracy still pre-*
Some countries of Europe
other industries may become
property of the government in
are
6,800,000
warehouse
and
avoid
have
the
The
squeeze
our
principal
and
the
does (1) reflect reduced industrial
and home consumer buying, and
prestige of
have: adopted State capitalism or
State
socialism.
In
others the
the
than
more
Emergency Food Committee
line of great nations where
systems of private enterprise
the
vail.
conditions
States are,
sound.
lot4 to
a
world
which this country was founded.
leaders
in Sweden, by a number of mem¬
bers of Great Britain's Parliament
and,
first
prominent
business
and
the
of
These views
by
expressed
rest
position to
a
needs
certainly has
with the Soviet Union and others
which
have
planned economies
and are,
tons allocated under International
the
on
serious de¬
many
will
groups.
stability of the American economy
which is headed for
(2743)
t
i
-■
i
The TWENTIETH CENTURY FUND
330 West
★
42nd^treet, New York 13
★★★★★★
-V
THE
Thursday, May 22, 1947
CHRONICLE
COMMERCIAL & FINANCIAL
(2744),
20.
banks.
What Is the
'4}<~
page)
the notion that
(Continued from first
rested chiefly on
by monetary
manipulation
Federal government could
our
raise
was
Money
confusion by the
money
manipulators
of effect
with cause, the naivete of their
of the
government's willingness to make
concessions to the silver subsidy
bloc, the Administration and Con¬
gress by proclamations and
by
statutes began to provide subsidy
prices for silver and to expand the
of, the busi¬
certificates
this country out of tne
depression
place it on a road to prosperity,
and thereafter keep it on that
course.
The
notions as to
causes,
and partly because
issuance
silver
of
recession and depression'of
the 1930's, and what should have
been adequate evidence as to the
fallacies and dangers in this pro¬
against an over-valued silver. .
(6)
Beginning in December,
1942, the Treasury and the Fed¬
of monetary manipulation
were all pointed out by those in a
position to speak with some scien¬
ing together in
monetary laws,
ness
that
the
was
Reserve
our
It
;
desired and asked for by
authorities in 1942.
power
barbarism.
(5) Partly as another means of
increasing the volume of our cur¬
rency
Nevertheless
value, and was a
losing its
relic of
The
answer
if money issued
under authority
only
was
after
strenuous
a
that a
limitation was
fight, led by Senator Taft,
5,000,000,000
placed
upon
such a procedure.
expired
on
and,
unfor¬
authority
That
March
1947,
31,
tunately for this country, our
has
gress
this
Con¬
just recently renewed
for
anoiner
tnree
power
Taft
years.
In this case, Senator
was
the only Senator on record
against the renewal of
that power.
gress
to that is that
by the Treasury
of laws of Con¬
is not good enough to serve
as reserves
banks
in the Federal Reserve
against their deposits it
seem
difficult to demon¬
gency provisions of the
Reserve Act, of Federal
bank notes.
In
Federal
Reserve
other words, Con¬
locked the door on June 12,
1945, after the horse, in the form
of
Federal Reserve bank notes
gress
(that
is,
"National
Currency"
legitimate grounds on notes), had been stolen on Dec. 12,
money could never¬ 1942.
theless properly be issued by the
(v) On May 7, 1947, the gold
ex¬
Treasury to the people of this stock of this country had
would
strate
which
any
such
country.
This
was
not
the liabilities
banks
with
a case
of confusing
of Federal Reserve
their assets as was
done when, by
the "National Cur¬
rency" manipulation of 1942, the
permitted to
convert what should have been a
Reserve
banks were
panded to $20,811,000,000. In May,
1920, when our price level was at
the highest point in our history—
167% of the 1926 level—our gold
was only $2,865,000,000.
(8) On May 7, 1947, we had
$28,197,000,000 of money in cir¬
culation. This compares with $5,-
supply
only two
or liability into a reserve asset.
451,646,000 in circulation in May,
registered their
1920. Of this $28,197,000,000 now
Results of Monetary Manipulation
in circulation, the chief item is
of
this
old and
began to pump disapproval
Stated
briefly, these various Federal Reserve notes, which on
$660,000,000 of so-called "National dangerous device for monetizing
tific authority.
.
Currency" notes into circulation. the national debt. But what is a acts—that is, laws, proclamations, that date amounted to $24,071,and manipulations—have given us 000,000. Next in importance came
mere
$5,000,000,000 among gov¬
a
fiat money arid
But the program was pursued These were
ernment officials, many of whom a suspension of gold,payments, a silver certificates which on that
despite these protests and evi¬ were issued outside any authority
apparently still believe that eco¬ devaluation of our standard gold date probably amounted to ap¬
dence, and today we have part of in law—that is, they were not
nomic ills can be counteracted or unit, some fiat money, artificially proximately
$2,228,000,000
(the
the product of those 15 years of issued under the particular au¬
cured by manipulation of a na¬ high prices for silver and an ex¬ amount outstanding as liabilities
playing with practically every thority granted by the Thomas
cessive expansion of silver cer¬ of the Treasury).
Inflation Act of May 12, 1933, but tion's money?
monetary fallacy known to the
tificates against a huge hoard of
This $5,000,000,000
(9) As of Dec. 31, 1946, the
is not all
scientists in the field of monetary by a manipulation, involving a
is
involved.
Under
the over-valued silver, monetization total deposits of all banks in the
sleight-of-hand performance, en¬ that
economics.
;
of a large portion of our Federal United States amounted to $155,gineered jointly by certain Treas¬ Thomas Amendment of May 12,
debt through a great expansion ot
Constructing the Monetary
150,000,000. In June, 1920, total
1933,
another
$3,000,000,000 of
ury and the Federal Reserve offi¬
Picture
Federal Reserve notes and depos¬
deposits amounted to only $37,cials. By this manipulation, the government securities can be pur¬
its, a government sleight-of-hand 721,000,000.
This program involved the fol¬ Treasury obtained $660,000,000 of chased directly from the Treasury
manipulation in the issuance of
(10) As of May 10, 1947, the
lowing principal features, most of deposits on the books of the Fed¬ by the Federal Reserve banks.
what were supposed to be Federal wholesale
price
level
in
the
yvhich in some degree constitute eral Reserve banks to which it
(8) When the Spring months of Reserve bank notes, a reduction
United States stood at 146.7% of
was not entitled, and the Federal
1945 were reached, deposits and
parts of the monetary picture
in, and sterilization of, the re¬ the 1926 base of 100%.
Reserve
banks converted what Federal
today:
Reserve
notes
in our
serves
of
our
Federal Reserve
should have been a liability—
(11) The annual rate of turn¬
banking structure had expanded banks—all a part of so-called cur¬
(1) In March, 1933, our Federal
over or velocity of total bank de¬
that is, what should have been to such an extent that on June 12,
government cut the people of this
rency management by a politi¬
country
loose
from
the gold properly issued Federal Reserve 1945, Congress found it necessary cally-operated government that posits (except interbank) in 333
bank notes, and a liability—into
reporting centers
outside New
to
lower the
Reserve require¬
standard. As a consequence, our
promised in 1932 to give this York City, as of February, 1947,
a reserve asset. In those days, all
government was freed from the Treasury currency could be ments for our Federal Reserve country a sound currency if was only 11.5 times per year. That
banks from 35% against deposits elected to office.
Restraining influences, in its man¬
counted as part of the reserves and
is, a billion dollars was doing less
40% against Federal Reserve
As a consequence of these laws
agement of our monetary and
than
twelve
billion dollars of
of
the
Federal Reserve banks notes to 25% against each of these
fiscal affairs, which a gold stand¬
and other devices, the picture to¬
business per year at that rate of
against their deposits; and, as is¬ liabilities. This enabled a dollar
ard exercises. At the same time,
day is, somewhat more specifi¬ turnover. This rate was below
sued, these Federal Reserve bank of reserves in the Federal Reserve
the people of this country were
cally, as follows:
that reached in July, 1932, at the
notes,
or
"National Currency" banks to support as much as $40.
deprived of the direct control over
(1) We have, in our interna¬
lowest point of the depression. At
notes, as they were then known, of
deposits in the banking system, tional relations, a restricted inter¬
the public purse which a goldthat time the rate of turnover of
became
Treasury currency
be¬ as compared with the previous national
coin standard provides.
gold bullion monetary
net demand plus time deposits of
cause
they were issued by the
$28.50, if we use a 10% minimum standard, with the price of gold
L,i This suspension of; gold re¬ Treasury rather than by the Fed¬ ratio
reporting member banks in 141
against demand deposits for fixed at $35. per fine ounce.
demption was a fundamental step eral Reserve banks.
leading cities was 16 times per
the member* banks of the Federal
(2) Domestically,, we have a
in the direction of a so-called
This sorry episode provides an Reserve
system.
Still
further, system of indirect conversion of year. In 1929, the annual rate was
"managed" currency; and such a excellent example of what mone¬
45 times per year. Although these
from April 13, 1943, to June 30, our domestic currency into gold.
currency is an integral part of a
tary
management can be like 1947, no reserves t have been re¬ Only silver certificates are di¬ figures are not strictly compar¬
system of governmentally-man- when the controls exercised by a
able—a
good continuous series
quired against War loan deposit rectly convertible into a metallic
aged economy. Every government
gold standard have been removed accounts in the member banks of money, and that is an over-valued since 1919 is not available—they
tfciat wishes to embark upon a
probably give us a reasonably ac¬
and when the management of a this
country.
silver.
Although this system of
governmentally - managed
econ¬ currency rests in the hands of
curate picture of the behavior of
indirect conversion of our do¬
omy, with freedom to spend the
(9) When the minimum reserve
bank depoists. The lowest point
men who are willing to manipu¬
mestic
currency
into gold has
people's Hgoney as the managers late it as they see fit.
on
record (for the 333 reporting
requirements of the Federal Re¬
maintained the parity of our cur¬
see fit, must free itself from this
serve banks against Federal Re¬
centers);was the annual rate of
One of the disconcerting things
automatic brake on the misuse of
serve
notes
and deposits. . were rency with gold since the devalua¬ 8.2 of August, 1945.'
.. :•
■ jr.fi .
tion of March 13, 1934,. such a sys¬
the public .purse wlpcfr the gold gbout this surreptitious injection reduced to 25% on June 12, 1945,
The
velocity
of
deposits is
tem deprives the people of the
of $660,000,000 of fiat money into
standard places in the hands of
the Reserve authorities persuaded1
the best single item
our currency striicture is the fact
United States of the direct control probably
every individual. Practically every
Congress to count gold certificates
that after the nature of the trans¬
over
the public purse that they available in revealing the prac¬
alone as lawful money in reserves
government dictator initiates his
action became known to Congress
would have if this nation were on tices of the people in their use of
coup or proposed managed econ¬
against deposits. All other money
their deposit currency. In peace
and to people who are supposed to
a
gold-coin standard.
was made non-lawful for reserves.
omy by suspending gold or other
understand something about our
(3) We have on our statute times, velocity of deposits is prob¬
The net result of this law is that
specie payments.
monetary affairs there was no
books, for another three years, ably the best single bit of evi¬
the reserves in the Federal Re¬
mi Every
adult person
knows
great adverse reaction. This was
provisions under which the Fed¬ dence we have as to the psychol¬
something of what the spending the situation despite the fact that serve banks against their deposits eral Reserve authorities can dump ogy of the people regarding the
is composed of a money that can
orgy in this country has been like this one issuance of fiat money
$5,000,000,000 of Federal securi¬ spending of their funds. A rising
not be paid out or used domestic¬
since the gold standard was re¬
was
50% greater than the total
ties into Federal Reserve banks velocity .may reveal optimism as
ally. And none of the other money
placed by a so-called govern- issuance of
greenbacks during
and
to that extent immediately to future business prospects, or it
of this nation that can be paid out
i mentally-managed
currency. The the
monetize the Federal deficit. This may reveal a fear of the futqre
period of the Civil War. In
by Federal Reserve banks, aside
helplessness of each - individual, short, our standards of ethics, or
is in addition to the $3,000,000,000 value of money in respect to par¬
deprived of his power to exercise our understanding, or our apathy, from Federal Reserve notes which of
government securities that can ticular things or things in general.
are
Reserve bank liabilities, can
any direct control over the man¬
as
the case may have been, re¬
be purchased directly from the
During most of the 1930's, the
agement
of
the public purse, garding our government's man¬ be counted as reserves against de¬ Treasury by the Federal Reserve
velocity of deposits remained very
posits.
In other words, this law banks
should be obvious.
under authority of
the low, rarely rising above the level
agement of the people's currency
made the reserves of the Federal
(2) In the Thomas Inflation Act had reached such a level that an
Thomas Inflation Act of May 12,
of
July, 1932, revealing wide¬
Reserve banks nothing more than
1933.
of| May 12, 1933, provisions were illegal injection of $660,000,000 of a
spread economic stagnation and a
bookkeeping item in so far as
made for greenbackism or fiat fiat paper money into the re¬
(4). The reserves in our Federal general spirit of discouragement
domestic use of these reserves is
Reserve banks cannot be used do¬ despite
money—that is, for the issuance serves of our Federal Reserve
the
great
volume of
concerned.
mestically; they ban only be uti¬ money and deposits being pumped
,of unsecured, inconvertible paper banks with a power to support
lized to obtain gold for purposes into circulation.
money. The authors of that law
- • •' i*
; i
$9,900,000,000 of additional de¬
Reserve Board Confusion
went back to the fiat money prac¬ posits in our banking system, at
of export, with minor exceptions.
The unusually low velocities of
tices of our Civil War days for the reserve ratios then prevailing
(5) Our basic reserve require¬ the war period may be ascribed to
Congress was thoroughly con¬
their principles according to which was in general treated as a matter fused on this matter and its mem¬ ments in the Federal Reserve sys¬
the nature of a war econbmy—•
at least part of our money should of no particular importance.
bers received no help from the tem will now permit each dollar
to the fact that the goyernment
be managed.
11
.
Reserve authorities who are sup¬ of reserve in the Federal Reserve
short-circuited a large proportion
(7) In March, 1942, the Reserve
banks to support a much greater
(3) In May and June, 1933, authorities were able to drive posed to have a staff competent
of the usual channels of trade by
in matters of this sort.
It would expansion of deposit credit in our
Congress made all our money full through Congress a bill which
purchasing
directly
from the
appear, therefore, that the Reserve banking structure than was pos¬
legal tender. This is a device re¬ authorized them to dump $5,000,original
or
near-original' pro¬
authorities
either
intended
to sible prior to the reduction of
sorted* to by'governments when 000,000 of government securities
ducers.
V 15 j
reserve
requirements of Federal
they have some doubts about the into the Federal Reserve banks. sterilize the reserves of the Fed¬
Reserve banks on June 12, 1945.
Inflationary Danger '
public's reception of some of the The Reserve authorities at that eral Reserve system or they did
not understand what they were
(6) We have, as a diluting fac¬
money which the government is
But the important point today
time asked for authority to dump
recommending to Congress. The tor in our monetary structure, is that the velocity of deposit cur¬
issuing or is proposing to issue.
an
unlimited amount of govern¬
latter seems to have been the case, $435,000,000
of "National Cur¬
rency is still relatively low and
(4) During the year 1933, steps ment. securities into these banks.
since the Reserve authorities were rency"—fiat money—out of the
were taken to depreciate our -dol¬
that this fact of lowness points to
Next to the direct issuance of fiat
interested in more, not less, sur¬ $660,000,000
issued, beginning a great potential danger for this
lar in
terms
of* gold, and, on money, that would have been the
Dec. 12, 1942.
On June 12; 1945, nation. Considering the huge vol¬
Jan. 31, 1941, our gold dollar was easiest way to monetize the Fed¬ plus reserves in the Federal Re¬
gram
eral
Reserve
authorities, operat¬
violation of our
in
And
three
the
House
members
s
1
-
^
.
-
•
,
devalued
41%.
In
other
words,
the price of an ounce of fine
gold
eral
deficit.
That
was
followed by Germany,
the road
for exam¬
ple, during and after the first
done, voices* in* this- World War. It is, next to the issu¬
country, and abroad* were saying ance of. fiat money, the most dan¬
that paper money was superior to gerous course known to monetary
gold, that gold ; was outmoded, science.
was
written up 69%. At the time
that this
was
serve
Congress very
banks.
The Board's
recommendation to
that such
silver, silver
Congress in effect was
Treasury currency as
certificates,
and
United States
notes are not good money for re¬
serves
in
the Federal
Reserve
_
wisely repealed
the
authority of the Administration to
issue fiat money under the terms
of
the
Thomas
Inflation Act of
1933. - At the same time,
Congress wisely prohibited any
further issuance, under the emer¬
May 12,
ume
able
of money and deposits avail¬
in this country, it does not
require much thinking
what
either
the
to imagine
situation might; be
because#
confidence or
if,
restoration of
because of the de-.
a
Volume 165
Number
THE COMMERCIAL & FINANCIAL
4596
*
velopment
of a widespread feat
regarding the 'future value" of our
*
'
•
exchange, and
and after the last World time we find a currency abroad
not too great because; ithat is more depreciated than our
the national income figures also dollar then we have indeed foprid
in terms of money kept close com-i a new principle in money. IL is
pany with this great expansion of that the proper currency is the
War
was
we
capital
accumulation has meant to tne
people of this nation during the
ger lies not in
discouragement of
last 158 years.
the
confidence," which
doing other fool¬ watching. Thus far tne new Con¬
ish things where money and .our
gress has been so busy, with other
economic well-being are involved. matters that it has not given, any
to
rise from the present
12
~
spirit
*
of
would tend to increase the veloc-
ity of our currency, but in the enr
couragement of a great expansion
of
productive
activity ' and
a
squeezing out of our money and
deposits, to the best of our ability,
'
'
,
the
currency
resting upon the
; monetization of the Federal debt.
'
Perhaps a few additional words
should be said about the relation¬
ship, or rather lack of relation¬
ship, of our huge supply of money
and deposits to prices in general
these
as
revealed
are
dexes of prices
People
our
in¬
prone
to relate the
we
to
seem
to forget, or
understand, what
the
in
one
depreciating currency!
Today the monetary, situation
this country requires carerui
Today, we are
We
have
practice
nomic
been
indulging, m tne
of measuring our ecowell-being in terms ol
has been
that of our government. It is com¬
mon today to measure our wellbeing in terms of national income,
although these income figures are
nothing but some manifestations
spending, much of which
of
some
of
our
expenditures. In
short, we have been confusing
monetary measures of some of our
activities with the situation that
would be revealed if our measure¬
ments were in terms of commodi¬
particular attention to a re-vamping of our monetary structure and
to a thorough overnauling of our
monetary structure
ana
proce¬
dures.
Just
what
Congress
this
do is presumably a matter of
guessing. There are, however, in
tnis Congress many men who are
determined to do all they can to
may
most depreciated, and
that all
should
And World
pursue
better
currencies
THOMAS BASYN
in its downward
currency be¬
the best, and the. best the
the cheapest one
course.
comes
Alternate Executive
worst
The
worst!
*
•**
-
confused
and
Mr. Thomas Basyn, a Belgian, is
director of the
opinion is rather good evidence oi
high degree of economic il¬ Mr,
literacy in this country regarding
monetary matters. For this reason,
the
our
can
Franz
the selection of
>v
problems
di-
executive
•
rector
:
repre¬
sents not only
Thai
will be
but
Belgium,
.
handled in an intelligent and com¬
also
L
petent manner, or that intelligent
the right leadership will get adequate *popular support. It is therefore very
path.
In February of this year, a rela¬ important that experienced mone¬
tively large group oi monetary tary scientists be constantly^ on
economists
presented "Two Pro¬ guard in this country m behall
grams For Monetary Reform" for of the general welfare to am ana
u
Norway,
xemburg
and
put this country back on
.
who/as*
Voghel,
de
find little assurance
monetary
"
.,T:v
alternate executive
conflicting
World Bank, being
we
■
•
The Bank
i
This
,
pirector of
Iceland
that insti¬
tution.
Sinc$
on
1
his
appointment
1941, until
i
the World
money
and deposits
Bank
directly to the price level. They ties and services produced, saved, tne consideration oi Congress auu to warn in every manner possible.
post,
seem to forget about, or perhaps
Mr.
Basyn
and consumed.
•
And these scientists neect aii tne
tne President of the United btates,
had been act¬
not to understand, the importance
We look at our spending and tne purpose being to provide aii helo they can get.
•
"
•
of velocity which at times is a
ing secretary
It seems reasonably clear that
national income figures and for¬ possioie aid to tneui. Anotner pur¬
much more important factor, than
general of the
get our huge mortgage, in the pose was to help to change tne the great mass of people have nc
is
a
change in the volume of form of our Federal debt, on our xrend from one moving toward clear perceptions of the relation¬
Banque
Na¬
Thomas Basyn
tion a 1 e de
money and deposits, in affecting
future incomes.
We also forget the type of controls anu manage¬ ship between the gold standarc
prices. And then there are all the
what we have been doing with, ment which cnaracterize totali¬ and their ability to exercise ef¬ Belgique,
the central bank of
other forces affecting prices of
and to, our real wealth. We look tarian governments to one moving fective control over the govern¬ Belgium.
•. ,
which the volume of goods and
Born in Bruges in
1898, Mr.
at
our
currently large national in tne direction of an objective ment's management of the people s
services
sold
is, of course, of income
figures, which are in large monetary standard witn tne type monetary and fiscal affairs. The Basyn graduated in law at
major importance.
degree, the result of profligate of management associated witn a mass of people seem to contuse Louvain University in 1922 and
In May of 1920, our price level
government the convenience of paper money from that time until 1929 was
waste and spending on the part of republican form of
stood at 167% of the 1926 base of
an
economic and political with the vitally important'func¬ barrister in the Brussels Court of
the government, and we regard and
100. Deposits (as of June 30) and
tions performed by gold in tne Appeals. During 1926 he was
these as proof of our prosperity democracy.
the money
in circulation com- and economic well-being.
The confusion in current discus¬ settlement of adverse balances^ of the United States, studying eco¬
bined amounted to $43,173,000,000.
sion in this country regarding tne trade, in the maintenance of a nomic and financial matters
Beneath these monetary figures
In
nature
and
virtues
of a gold monetary standard in which the
From 1930 to 1936 Mr. Basyn
June, 1939, the index of lie some
very important facts: We
standard is a remarkable thing to. people can have confidence, and was on the staff of the Brussels
wholesale prices stood at 76% of
have
been destroying' goods at
! the 100 of 1926. The total amount
contemplate.. We read articles by in providing a storehouse for the branch of the National City Bank
an appalling rate. We have been
of money in circulation. ($7,047,people who insist that gold is use" accumulation and perpetuation of of New York.* Later .he -served as
restricting and impairing produc¬
values. —• * • *
■■■■ •'
less and is. a relic of the past, and
000,000)
and
deposits adjusted tion.
assistant manager of the govern¬
We
have
been
creating"
It is probably accurate, to say.
($54^38,000,000) at that time was scarcities in both commodities and that it is absurd for us to buy.it
ment agency set up. in Belgium
gold standard does
and to hoard it, as they describe that the
approximately. $62,000,000,000. In personal services. We have even'
^ as for the liquidation of state-guar¬
it. at Fort Knox, Kentucky.
much as, if not more than,, any anteed credits granted during the
short, while the index of whole- destroyed goods' to raise or -to
It is unfortunate that such peo¬ economic, institution
knowm.
sale prices in June, 1939, was only
1935
crisis" to private concerns
maintain prices. We have boon¬
ple cannot stop ito/iook at a tew man to maintain high standards and banks. This post Mr,.Basyn
about 45% of that of May-June,
doggled away our money ; and
1920, the volume of money and wealth and much of our valuable very important facts*, one is .that of integrity in business and perr occupied from 1936 to41940, dur¬
which ing' which period he also "was
deposits > in circulation was ap- time. We have been exporting gold is not useless; it has a vaiue sonal: relationships m
of ^35 per fine ounce. In fact our
money and contracts are involved. correspondent of the Journal de
proximately 43%. greater than in national wealth at a frightful rate
government attached more impor¬
Contracts payable in paper are Geneve, Switzerland. For about a
; 1920.
v.: ■ -• <- ■<-.
•
and creating domestic debt ip re
tance to it in 1933-1934 apd up tp
no .better than the promise lying
decade-he was professor, of money
; *
As of May 7, 1947, the money turn; We have been destroying by
date than; had aiiy Federal Ad¬ behind : it. The
record of such and rcredit at' a Brussels high
in
circulation \ ($28,197,000,000) taxation; We have been wasting
ministration over a period of -Ml
promises has been notoriously bad- school.' ~
- - '
and
the
bank
deposits
as
of our tax receipts. In short, we have
years (that is, from 1792 to 1933). Gold, on the other hand, supplies
t'-' .•
Feb. 26,
1947
($139,100,000,000) been frittering away our national It attached so much importance
a
complete and final answer in
amounted to $167,297,000,000.1
patrimony in a manner probably to .it that it., wrote-.up the dollar
itself. The weakness of human
In other words, although today never before equalled in the his¬ value of an ounce of gold 69%
promises is not involved when
the volume'of money in circula- tory of the world.
that is, from $2d.t)7 to $35.
gol.d passes in the fulfillment of
tion is over five times that of
AIT these and, similar .things,
Another/ important
fact
for contracts. Gold is an - exacting
May, 1920, and deposits approxi- such- as our monetary program, these deplorers of gold to con¬
master. Its standard of integrity
NEW
ORLEANS,
LA. —The
mately four times those of June, have been part of our notions as sider is tnat of the $z0,811,000,0611
Bond Club of New Orleans an¬
is .10Q;%,
V <*1920, the wholesale price level is to what is proper 'in monetary of gold held by our Treasury, $19,nounce^ that it will -hold its an¬
not quite 90%-of that Of May- "management" and in & goverhi-i lob,0UUj000 are covered by gold o> It is<, for this reas,onMiamong
nual fiejd day on Friday, May:30
certificates held I by the • Feaeraii others,- that advocates of, a man¬
June, 1920.
t
mentally-managed economy.
.
at
the Metairie
Country Club.
aged economy and a
It should be clear from these
Our*
artificially
low interest Reserve banks. And it snould not
"managed" currency wish to rid Reservations are $3.00 and checks
figures that there is no direct rates have had devastating effects be forgotten that these gold cer¬
themselves of such .a master as a should be sent to John Kerrigan,
relationship between the volume on individual savers and on our tificates are reserves against the
gold-coin standard. These man¬ Newman, Brown & Co.
of money and deposits on the one greatest and finest savings and Feaerai Reserve notes and deposits
Ford T. Hardy, Merrill Lynch,
in
our
Federal Reserve banks. agers have their own opinions as
hand and the price level on the investing institutions. These low
to the standards of morals and Pierce, Fenner & Beane, chairman
other — a fact that seems to run rates have also had the bad effect There are still other claims tnat
ethics that they wish to employ. of the Field Day, ■ announces the
counter to popular notions regard¬ of making it easier than otherwise can be exercised against much of
following events, and the commit¬
the remainder of the Treasury- In general, they wish to neplac
would have been the case for our
ing this matter.
tee chairman in charge:
...
'
the objective standards of the free
held gold, with the result that tne
government to pursue its course
Golf—Joseph Mine^ree, SteinWhat Money Program Has Done
Treasury has a negligible amount competitive markets and of gold
in profligate waste. And now we
by their own (subjective) stand¬ er, Rouse & Co., chairman; as in
Much of our monetary program, see the evils of this low-interest of gold against whicn there are
ards.
When this
subsitution is the past the club is- paying all
not claims outstanding.
along with those involving heavy rate
policy
magnified by the
charges except green fees.
:
The Treasury gold, held chiefly made, as it has been rather gen¬
Federal spending, borrowing, de¬ relatively rapid rise in wholesale
Horse Shoe Pitching—John Zol¬
structive taxation, and artificially prices and in the cost of living in trust for tnose having claims erally throughout the world, and,
linger, chairman.
low interest
rates, has been a since 1939, with the reciprocal against it, is properly put in great to a large degree, in this coun¬
Swimming — Alvin Howard,
safe-deposit vaults for safekeep¬
campaign against the savers, in¬ depreciation
of
our
dollar, in
try, objective standards are re¬
Howard, Labouisse, Friedrichs &
vestors, and capital accumulators terms of goods and services, for ing. It is a valuable commodity
worth $35. per fine ounce, it be¬ placed by caprice, slogans, dema¬ Co., chairman.
in this country.
the people as a whole.
'■*,
Luncheon—Claude Derbes, Cou¬
longs chiefly to others, and it per¬ goguery, waste, social degenera¬
The dangers in this situation
forms various vital functions un¬ tion, and the impairment of the turier & Derbes, chairman.
Is Money Supply Excessive?
have been and are very great. Es¬
The thinking on these matters fortunately not widely understood freedom and importance of the
Liquid Entertainment—Jackson
sentially, this movement has been
Our country's gold stock
A. Hawley, Equitable Securities
'one of political demagoguery; it today, particularly the confusion today.
individual.
is not being hoarded by-the gov¬
^
of monetary measurements with
Corp.," Chairman.
has not rested upon good
ecoThe 158 years of our history
ernment in the sense commonly
economic
h*as
well-being,
nomis principles nor upon the real
Dinner will be served at 6:30
alleged.
teach us lessons that are very dif¬
lessons of economic history. This reached into circles from which
p.
m., followed
by the annual
At the same time that we read
one would seem to have the right
ferent from those that the ad¬ business meeting and. election,of
countryj
in
the
face
of
this
to expect something better. As an or hear discourses on the uselessvocates
of managed currencies officers for the coming year.
demagogic onslaught, has strug¬
ness
and undesirability of gold,
example, and many more might
gled hard against its devastating be cited, the economist from a we can read articles to the effect and managed economics have pre¬
'effects. The fact that our coun¬ trust company of New York City, that the price of gold, as specified tended in recent years are the
<
try has stood up as well as it has in a recent article said that he in our international gold bullion principles to be followed. Our
questioned whether the present
in the face of this abuse, would
standard, is not high enough. Be¬ people need to study history more
money supply is excessive.
His
seem ,to .demonstrate rather well
closely. We need to fight harder
cause
some of these writers see
reason for this remarkable
con¬
E. H. Rollins & Sons Inc.,
^he,; strength and health, inherent clusion was, he said, that "The gold quoted at $60. or $70. per for the restoration of the stand¬
Wall Street, New York City, an¬
ards of integrity which are neces¬
jn a system based largely upon the present supply of money bears ounce in various foreign countries
nounce that Arthur
C. Lewis:is
about a normal relation to na¬
institutions of private property,
in terms of their depreciated cur¬ sary it a nation is to progress.
tional
income when long
now associated with them,
term
And as this battle is renewed and
freedom of contract,' freedom of
trends are considered." One would rencies, they think it is good rea¬
Mr,-Lewis was formerly munici¬
carried forward it should not be
suppose that all that need be said son why our government should
ijhe pepk amount of our bank about relating the supply of a
forgotten that one of the greatest pal trader for Lehenthal & £o.
change, the weight in, our gold
Prior thereto he was manager ;o£
deposits':was $148,911,000,000 in nation's money to the national
symbols of social integrity that
dollar."
December, 1945; that of money in income figures, also expressed in
the
municipal
department; for
the world has ever produced is
The answer to that is that if we
circulation
wdsj $28,997,000,000, terms of money, is that the huge
L. D. Sherman & Co.
'
' I
must depreciate our dollar every the gold standard,
reached in
1946,. .
f expansion of money in Germany
volume
.
are
in
at wholesale.
But
fail
21
freedom of enter- during
times per year to the 45 of 1929.
The antidote for this great dan-
currency, the velocity of deposits
were
'
(2745)
CHRONICLE
of
to
in
.
,
.
.
•
.
.
•
*
.
.
.
,
TL
—
•
Bond
Club of
^
•
Orl'ns
•
Annual Field Bay
_
•
'
:
i
.
..
.
.
'
'
;
.
.
,
x
*
t
With
E. H. Rollins & Sons 1
A. C. Lewis Is
^0
Dec^gcig|)*,
•
•
'
.
.
•
•
ood v
,,
22
Thursday, May 22, 1947,
THE COMMERCIAL & FINANCIAL CHRONICLE
(2746)
have
a
Our
Reporter
excess
of 3% and will appeal to in¬
companies and savings banks.
,
favorable
.
,
By JOHN T. CHIPPENDALE, JK.
.
.
.
.
.
.
The government securities markets are still under
the influence
price fluctuations
quotations of cer¬
tain issues are marked up, the authorities for their own account or
that of government trust funds and agencies,- are sellers, of the
obligations that appear to be headed for higher levels because of
the improved demand.
So far the powers that be have been able
to keep the market on an even keel, by a combination of direct
and indirect action.
The limiting of the credit base, through the
weekly retirement of Treasury bills, plus open market sales of securi¬
ties, have prevented the market from getting too enthusiastic on
of action by the money managers, which has kept
within narrow limits on light volume. . ,When
The
redemption of
the pattern
one
the up side.
.■
••
some
on
that
year.
Whether the changed conditions brought about by the return
new meas-
■/.; ures being adopted will depend to a considerable extent upon
the trend of business, which/to say the least, appears to be very
much confused at this time.
(Continued from page 5)
that the Council of. Economic Ad¬
system works and
visers to the President shall con¬
work more efficiently and steadily
with
such
well
are
that business
aware
be made to
representatives of
top
three members
matters
to
representatives
of
principal labor organizations,
quarterly, for a frank ex¬
strength to force an economic ad¬
justment merely to our arbitrary
and
staff who
down
those
with
of
our
particularly
were
with
concerned
sit
the
Council
labor
change of views.
We
have, also
will
or
to
our
short-run
or
appar¬
v
quarters that the redemption of only, before we made our first report like to refer to as the engineering
$100,000,000 of Treasury bills instead of $200,000,000 is the result of to the President, was with Mr. approach to problems of economic
"the declining trends in the- economic
They also hold Harrison, Mr. Lyon, and five other adjustment under free enterprise
picture.
to the opinion that as business conditions continue to deteriorate
representatives designated by the and collective
bargaining.
We
the redemption of bills will be eliminated
Rialway Labor Executives Asso¬ cannot be content merely to be
entirely.
some
-
.
.
.
...
that changes in
whether
transition will be mild,
orderly and of short duration.
threatened there would have to -be
were
reversal in the credit program.
powers
recent
that be, to keep
trading ranges.
divided opinion
.
of
.
.
If
there Is
still
very
a
much
to defrosting of short-rtefrm rates, the feeling,
is that it may have to take place to keep gov¬
which have turned down.
.
.
clever
win financial
can
to the processes
of business intel¬
ligently and conscientiously play
their part also.
I am not here to
talk about management's respond
si'bilities or the means by which
they
am
been
is
be most fully met. Nor
they'have
can
I here to claim that
or
are
necessary
the
strate
:
.
.
.
cause-and-
involved
business actions. Both the
the
and
union
in
cor¬
must
Employment
be
v
in working out these re¬
lations when they set wage rates
Declares
Act
tod
solving
and the President are putting
poration
•
..
and long-run
of
the Council of Economic Advisers
our
much
heat
on
for
them
economic
present
problems
business
and
diffi-f
that we are putting
responsibility on agri¬
culture and labor, where they say
it belongs.
Personally, I see no
reason
for
stopping, or indeed
culties
little
and
or
no
moderating, our statements as tq
and working rules. Manufacturers the responsibility of management
point about and merchants must deal skillfully at this juncture' in the return to
the ..policy set forth in the Em¬ with these relationships when they
postwar private business.
ployment Act of 1946 and the mark price tickets and set service
I said to the NAM audience::
/
working relations and program of charges. Both individuals and cor¬
"It is up to you to show your
the Council of Economic Advisers porate managers must deal, intel¬
capacity to do business in a buy¬
whieli I think it is most important ligently with these relationships ers' market.
Unless you can al¬
that
when they determine on their sav¬ low the full volume of
everybody have clearly in
productiv¬
mind at all times.. The Employ¬ ings
accumulations . and
then- ity of our capable labor force, our
ment Act recognizes and under¬ spending behavior. Public officials
ample plant, and our marvelous
as
well
scores the responsibility of exist¬
as
citizens must show
technology to continue unabated
ing and long-established organi¬ themselves economically literate and absorb within your long-time
zations in the field of private busi¬ when they decide on tax levies
accounting, financing and mana¬
ness; but, at the same time, it ac¬
and-public works expenditures. ;
gerial system such price declines
cepts and clarifies a reciprocal or
Economics is really a particular as result, you will not have shown
complementary responsibility of species
of engineering — wealth a capacity of the competitive free
the Federal Government for pro¬
engineering. Your union officials enterprise system adequately to
moting high and continuous use of and likewise corporation officials serve the Nation's needs.
)
our country's productive resources.
and Government officials must, if
"You
can't pass the
buck to
I undertook to drive this point they are to be successful in the labor
any more
than labor can
home in the first formal address long
run, bring scientific analysis pass "the buck to you.
They also
that I made as Chairman of the to bear upon the study of business
regard themselves as part of the
Council
of
Economic
Advisers. forces, market values, and high
system of competitive free enter •«
This was on -Dec; 6 last, when I real incomes, much as the me¬
prise, and you must both of you
was
invited to address the Na¬ chanical, electrical, or chemical find a
way of getting together to
tional
Association
of
Manufac¬ engineer brings scientific meth¬ hammer out a mutually sound ad¬
turers
assembled
in
their
51st ods to bear in dealing with the
justment. | I hope some day I'll
Congress of American Industry. A forces and materials of nature. have
the
chance
to
say
these
single paragraph wall give you the Like these other engineers, they things to a labor audience."
point of view from which I urged seek to find what is wrong with
Unionism and Economic
them, and I now urge you> to ap¬ the
mechanisms
and
practices
Stabilization
proach this great new develop¬ through which we are currently
Responsibility
u
,
superior efficiency
private
enterprise
systenu
Among businessmen there is right
now
considerable complaint that
result
relationships
being met as fully as
if we are to demon¬
the
relieving
cussions
management
do all these things.
For my7
self, I think they cannot really be
accomplished unless other parties
understanding of the broad
reper¬
saying
Businessmen are fond of
that it is the task of
current
Now
ping the upward trend of loans and commodity prices, both of
and
special skills or extra effort
recognition and
that
negotiators
or
ruthless
fighters., We must acquire a basic
The
ernment security prices in line, and not for the purpose of stop¬
*
I am
skillful
as
how among some
correspond rea-*
sonably to actual productivity
country. VV
immediate
an
isfied that wages
both must work in promoting the
economic welfare of our
great
a
Treasury obligations within
While
.
.
efficient
for
needed
rate
equipping of labor and for neces¬
sary growth.
Labor has to be sat¬
glad now to broaden
my -acquaintance with your mem¬
bership and to consider with you
the
principles, under which, we
Upon the ability of the
<b)
...
prices
.
ciation.
credit
policy will be depen¬
not the authorities believe that the
or
keeps
the
to
for
ing with a very delicate and com¬
plicated piece of machinery and
that we cannot safely operate as
special interest groups or fighting
our
sheer
weight
or
fighting
the
activity is declining, business loans are. decreasing because of in¬ met with management,,, agricul¬ ent advantage. Instead of such a
ventory liquidation and more cautious buying policies, while com¬ ture, and consumers. As a matter militant or brute-force means of
modity prices have passed their high points.
In other words, the of record, the first such consulta¬ settling ^ economic problems, we
inflationary trend appears to have been reversed, and this would* tive conference that we held, soon must, with the responsibilities that
ordinarily call for a change in tactics on the part of the monetary after our work got under way and lie in our hands, turn to what I
It is believed in
that he
investment flowing in at
so
lead to advancement.
at least
The authorities as well as investors
can
safety for principal
oij
enough
certainly
and
has
he
interest
of
prospect
through the guidance of intelli¬
industry, labor, agriculture,and gent men who occupy official or
consumers as it deems advisable.' administrativepositions in eco¬
nomic
organizations, private or
Consultative Conferences Held
public. - It reflects the view that
We promptly,decided that it was- in- these relationships we are deal¬
the
BILL REDUMPTIONS
depression
that
satisfied
be
to
dividends
sult
he
be satisfied that
proper value for his
The capitalist or saver-
enough
,
...
(a)
attained.^ The con¬
getting
has
of
dent upon:
has to
dollar.
.
Nevertheless, it is reported that important consideration is being
given to means and methods of handling the gold inflow without
influencing too greatly the trend of economic conditions.
argue
jointly
advisable
...
of the yellow metal to the United States will result in
Others
be
is
INFLOW
approach record levels before the end of the
powers.
relations
sumer
Economic Stabilization
...
Although the redemption pf bills is the most important credit
factor at the moment, it has hot been as satisfactory as had been
.hoped for, because of the tremendous inflow of gold, which may
,
to
normal bargain¬
to which we have
returned,-several goals have
ing
.
-
v
of the
.
.
IMPACT OF GOLD
consumption is the
now
of debt reduction although it had been expected in
quarters that a somewhat larger amount would be paid off
date.
u:'. - :; y
; - "'. '
v
'
' -* '
•" '
.
.
high-level production arid
basic purpose
Employment Act of 1946.
ize such
In the world of
billion of the June certificates continues
to>
but convert it
orderly market transactions on a
self-sustaining basis.
To stabil¬
PAYMENT
CERTIFICATE
activity
nomic
keep the mo¬
high-level eco¬
this
of
mentum
to
is
reconversion
...
The government is very anxious to have the bonds meet with a
reception, so it is indicated that, they will be priced to
go well.
It is assumed that the.money markets will be kept in
good condition to insure the quick disposal of the- World Bank
-obligations.
.
»
„•
!
Governments
on
rate not in
coupon
surance
thfere, is
one.
,
INVESTORS CAUTIOUS
-
,
Investors have definitey turned
cautious, and are interested now
in only the most riskless
demand
much
and
more
trend
of
obligations, which accounts in part for the
government
pronounced
securities.
Prices
.
.
.
would be
the up side if it were not for interference
by the money, managers to keep them down.
This is in sharp
contrast to -the equity
markets, which have been moving • into new
on
.
low ground.
.
.
.
.
.
■
However, the importance of the down-trend in stock prices
r
cannot be ignored by the authorities, as an indicator of economic
conditions because of the effects that periods of uncertainty have
upon government fiscal policy and finances. . . .
The movement of funds into the
highest grade obligations, be¬
of the lack of other suitable
investments, particularly in the
cause
building industry, is creating
a
demand for government securities
that may not be so
easy to control.
...
.
.
-
.
SALES BY RESERVE BANKS
.y
For the first time since the
*
Victory Loan, back
the end of
near
1945, the Federal Reserve banks last week were sellers of long-term
Treasury bonds.
For the week ended May 14, the Central banks
.
sold
-
.
.
$14,000,000 of bonds due in
more
than five years.
.
.
.
Although there have been changes in bond holdings of the
Federal Reserve banks since the- last
public loan
have been the results principally of
redemptions.
drive,
.
.
these
.
It is indicated that the Central banks are determined to keep
prices in line, even if they have to sell their own obligations as well
as those of the agencies and trust funds.
.-
.
.
ment
"It
INTERMEDIATES FAVORED
While there is
it seems as
favor
the
on
fair demand for the
a
intermediate-term
longest eligible obligations,
now looking with greater
are
issues, especially the 1952 maturi¬
ties.
Although these bonds have shown no important price
changes, there has been and still is quiet accumulation of these
.
.
.
securities.
.
.
.
The fact that many
of the restricted bonds become
eligible for purchase by the commercial banks in 1952 has been
sponsible in
of the
bank
WORLD
The
no
small
way
obligations.
re¬
for the purchase of the 1952 maturities
...
educational
as
[
well
as
the
publicity
campaign
.
"to be made soon,
The
t.
of
free
utilizing these forces and materi¬
als:
And they should contribute
effective utilization.
•
devolves upon each of
now
to their more
This ; engineering
whether in the executive on
approach to
legislative branch of the Govern-- your business and the Nation's
ment to see that, in carrying out business comes to a sharp focus
the purposes of this law, we study today.
We stand at the end of a
wisely and with due counsel as war of unprecedented magnitude
well
as
acting
decisively and
promptly when occasion demands.
To this end, we of the Council sin¬
cerely hope that
of Business
no
you
of the House
less than those of
which swift, skill
massive industrial pro¬
duction has been a decisive fac¬
tor.
It was a great engineering or
and severity, in
ful,
and
technological
the House of Labor and the House
,
BANK BONDS
recently made its first loan
carry
institutions
I said:
is
to
on,
a
.
.
($250,000,000) and with others
there will be need to replenish loanable funds.
short-term
coupon
bonds is large.
to France
,
obligations
of
.
.
or
due
;2L>%.
in
...
10
years
The
will
demand
.
.
nomic
Agriculture
will join actively
and
sincerely in our studies of
causes that impede the attainment
of maximum production, employi-
ment, and purchasing power and
making of recommendations
in the
which
would
toward the
pediments."
probably
for
these
The longer-term bonds due in 25 years will
.
it
of
.
familiarize investors with the World Bank
bonds, which should be
reaching the market in the next month or six weeks.
The Bank
;
our
us,
.
though the deposit banks
in
government.
.
*
All this
operate
removal
of
effectively
these im¬
.
}
simply reflects
my gen¬
stration
of
our
ability to run
there
are
have my chance to
an
audience, and
just three points I want
to make.' The first is that organ¬
ized labor settlements must be th&
parent
and not the
child of
nomic
stabilization,
r
The
ec-
great
of the Employment Act
of 1946 is to promote economic
stability or high continuous util¬
purpose
ization
and
of
the
power
for
natural
our
maximum
whole
the
resources
purchasing
an
population
such high
that
consuming
would
go
with
It is a mis¬
production.
at high effi¬ take to think that the Act pro-"
peacetime.
It was a vides any trick device for guar¬
highly artificial episode of indus¬
anteeing business stability or full
trial production, in which motives
of patriotism or even feat largely employment. It commits the Gov¬
industrial* system
in
ciency
supplanted
and in
were
ordinary
motivation
which Government
financed
out
deficit and we
rolled
tic
The
basic
debt.
up a
ernment
to
provide
favorable
orders conditions, but within these
pf a national
derstanding of how
and un¬
economic
now
such
to
not
was
eral economic 'philosophy
an
But
achievement.
a great business or eco¬
achievement or a demon¬
Well, I
talk
gigan¬
of
problem
ditions
labors
and
con¬
management
must, wnrlr nut ttip aftiial flrranfiG*
Volume 165
ments
tion
THE COMMERCIAL & FINANCIAL CHRONICLE
ynder which high produc-,
make
be attained.
can
A
Number 4596
leader
once
strong
for
said to
the
labor
"We
me:
must
ours."
business,
I have
and
Act
we'll
doubt
no
that it
supposes
well
an
in
with' this
whole scheme of
to
to
things sometimes
society.
He must
as
be
of
as
management
fighting, they adopt in good faith
be¬
the
He
as
an ex¬
must
to
of
if
our
That does
should
we
in
revert
position of spineworking practices, labor must put, lessness.
It means that we must
'•as much into the
creation of prodbegin to mix a higher percentage
ucts as it arranges to take out in
of intelligence and moral
courage
the way of consumer
goods.
In into the batch than we used to do.
be
words, the settlement
must
that creates both the op¬
portunity and the inducement for
one
business—jobs—to
go on.
'
It is sometimes
pointed out that
the
maintaining of full employ¬
ment
is
the
same
as
making
a
perpetual
sellers' market for
You may reply:
"Well, is
that bad?
Isn't it just what the
whole labor movement is for?"
labor.
My
would be:
answer
Whether it
is good or bad remains to be
It will depend
members
cials
can
theirs in
and
the
use
a
union
power
to
say
offi¬
that
sellers' market.
least, I would have
seen.
how wisely
upon
union
is
We have just seen
tion of the dangers
has
for
of
a
you
as
the
country
inflation.
I
am
sellers'
which
consumers
with
a
spiraling
somewhat
reas¬
sured that that
danger is now be¬
averted, in part through the
ing
self-control of
and in part
business
some
men
through the corrective
effect of increasing production. It
is hardly to be supposed that a
{sellers' market for labor would be
jprotected
against
Stimulative effect
have
the
on
laborers.
abuse
that
by " the
it
production
Hence all the
would
will ; give you a
fills 'your needs and
proud to be a mem¬
that
makes
you
And
two
earlier, the In¬
ternational Brotherhood of
Paper
Makers, after an elaborate special
years
the organized industries.
believe
all
other
Although
Many
in these
even
..
fit
from
the
fight,; and often is
worried lest any increase will be
passed
to them in the form of
on
increased prices.
-
i
'
does
their
not
enter
directly into
budget or which
insignificant item in it.
consumer
is only an
benefit
livT
public as
the
Should
unions put up a ' deter¬
fight to get the cost of liv¬
down, they would have the
them
in'their
If
on.
It
corner,'cheering
win, the
the unions
not
was
workers like themselves, Qr
<on
farmers—who, in the last anal¬
ysis, are no less wage earners.
This seems to me to call for a
greater
the
integration
whole
that
labor
particular
will' not
of
policy
in
movement,
so
crafts
or
groups
be
seeking to promote
advantage at the ex¬
pense of other workers. This idea
their
own
to
-
when
correct
the
abuses of early industrialism
through union organization^ it re¬
exclusively
trying
ods—on
strength
on
militant meth¬
to get as much
the employer, or even
as
more
strength.
tool
at
That
hand—and
proper
wage
1
that
strange
undertook
institution
the losses that they are putting on
the rest of the community,
mostly
■
mined
gain
in wages than they lose
in prices and are ready to ignore
/
the members of the union.
as
Thus they feel that they stand to
more
;
"A reduction in the cost of
-
lied
uct
is
definitely opposed
silently condoned
and
that
must
not
be
even
by
organized
labor if the great objectives of the
Employment Act of 1946 are to
be achieved.
We could have all
those
able
and
willing to work
the pay roll and even
actually on
employed 40
hours
week
a
and
day,
if
the
painters
brushes
narrow
and if
guns,
and
had
we
on
no
spray
march a
to
stand by every time a
juke box played
orchestra tuned
ding
insisted
and
high-school
or a
Featherbed-
up.
make-work
every
perhaps of 15
Secondarily you
union
producing for
thus
living on the highest
possible standard.
In terms of opportunity," then,
I do not see how any one of us
a
work-spreading policy
of
on
unions
fear that there won't
a
level of prices or the cost
living is headed up or is likely can leel that the economic pros¬
remain stationary.
As a third pects of this country are other,
issue you are probably wondering than bright.
The real question is:..
whether there is going to be a re¬ Are we bright? Are we smart and.
cession of enough magnitude to tolerant
and
well
disciplined
affect railway business seriously
enough to work together in a
and, if so, "how long it will last. democratically organized program."
And then what?
to realize those productive possi¬
Well, I
am not going to indulge
specific forecasts or record
detailed prophecies.
I don't
in any
any
know
whether
going to
are
you
get to ride in the 12y2-cent surrey
with the 2^-cent fringe on top.
But in
your
bedded
in
own
the
interest
economic
as
em¬
interest
of the country as a
hope that
you
whole, I shall
will seek and win
the settlement which
sumers'
As
cost of
gineer—I
in
way
living.
economist—a wealth
an
en¬
cannot but deplore the
which
we
have
allowed
ments.
full
number
not
merely be a
jobs but that
of
point is reached where
than
more
leisure
peo¬
rather
to
is
the
secure
additional
ices—for all the
willing,
"able,
and women, i
men
seeking
and
nearly
to-:
their
have
.
said
before,
verdict of the most,
of measuring pro¬
ductivity that can be devised, and
to foreswear the struggle to force
the
accept
scientific
means
settlement in its
favor
own
re-,
a
gardless of the consequences to
the delicately ' adjusted machine
of which it is
This
part.
a
If I understand the
1946
of
Act
Council which is devoted
our
true
several
I
as
to be^as.
are
possible in proportion,
productive value of
contributions.
But
as
the
to
to
as
creases.
The rewards
Employment
correctly, it declares
specifically than this Gov¬
more
to the attainment of true economic
ernment has ever before
The only
goods.
stability in the Nation's economic
its
declared
,
tool
was
the only
perfectly
a
for 'establishing
of
collective
the
bargain¬
boiind to
ing.
But the time was
arriye when ; unionism,
through
organizing ability supplement¬
ed by the political resort to Gov¬
its
ernment
aid, should catch up with
might perhaps even pass capi¬
talistic organization in the race
and
for power.
I
an
.
there
absolute
that if
be
there won't
we
could
equilibrium
of
get
size,
strength, and skill between the
two parties, that condition; might
need
only
sound
to
be
loosened.
question
is:
The
Why
action which
is
enough
work
own
to
fear that
tain
are
to sus¬
necessary
round.
be enough market to
This
leads
mand available when
to
curtail¬
employment
believe that
work with hand and brain in the
mines, forests,' fields, workshops,
the
ground for relief in
in which union negotia¬
and offices of the Nation.
to
run
tors
But I
either.
way
and
and
that
efficient
we
shall
see
a
flood
of
engendering
competition that "makes
Now in fact there
is enoughmore
goods available' to more
work
to
go
round and enough
market to take the full product if people at distinctly lower prices.
And so to the third question:
only we poor ever^-struggling and
is sustained.
a
there is solid
employers have been
to
ment of output in order to sup¬ able
get
contracts .without
strikes and in the present pros¬
port price instead of simply guid¬
ing full productive effort into pect that ;the dreaded wage-price
those channels which .reflect con¬ spiral will not get out of hand in
sumers' relative preferences and a process; of runaway inflation.
then accepting the .'price that bal¬ Frankly, I see real hope that the
ances
that-supply, with the de¬ .tide of inflation is being, stopped
go
production
Stock
Exchange
t
Honors Coleman
The members of the New York
Stock,
Exchange
monial
dinner
gave
testi¬
a
.Monday,
May,
19, in honor of John A. Coleman,
on
market
Are
ofteh stupid
process
agents; of the business
would just: relax and
woo
rather.than
coerce the price-mak¬
ing and wage-setting process.
So
you see I get back again to ray
basin proposition *that
economic;
adjustment via collective bargain¬
ing has to become'an engineering'
matter
strictly on the scientific
up-ahd-up if we are not to get;
ourselves
rian
suppose
won't
go round with their
again
into"
a
and force the -resort to
*
may
high level of national pro¬
the present adjustment wrong and duction and.
employment oppor¬
what will happen if we put on tunity. ; In so far as that dual sys¬
more pressure or less?
tem of economic life succeeds, we
;
to the objectives of high produc¬
As to the cost of living, I don't shall attain the goal of maximum,
tion and purchasing power.
Pro¬
ducers match workers' fear that know just how that line is going purchasing power for those who
settlements.
stalemate
authorita¬
This may
quite
headed for
we
a
recession
or
depression that would cut railway
traffic
seriously, and hence em¬
ployment?
Well, that is the kind
;of thing the Employment. Act. of
1946
it
is designed to prevent.
will
achieve
ndt
that
end
But
ex¬
through the intelligent and
participation of or¬
ganized labor, of corporate man¬
cept
determined,
agement, and of farmers and their
associations.
Why should
we
possibly be the last r chance for
voluntary bargaining in the pri¬
tained prosperity?
vate market.
imposed
makin's."
natural
members'
...
.
.
To
some
be
not, have
the
and
our
some
im¬
who
war
upon
sure,
drain
resources
P.
Robert
sus¬
Boylar
John A.
Coleman
We have "the
retired
Chairman
as
of
the
Board of Governors
after serving
four
capacity
in
years
that
five years as a Governor.
Among
the
and
.
speakers were
His
Eminence, Francis Cardinal Spellman;
man's
the
Robert P. Boylan, Mr. Cole¬
successor
as
Chairman of
of
Board
Governors;
Mayor
William
New
O'Dwyer of the City of
York;, Chairman James A.
Caffrey of the Securities and Ex¬
change Commission; Emil Schram,
President of the New York Stock
Exchange and Mr. Coleman. The
Rev.
Dr.
Frederic
S.
Fleming,
Rector of Trinity Church, said a
benediction. Sylvester P. Larkin,
presided.
...
-
The
dinner
held
was
in
the
.
.
highest real wages—that is, the
largest package of goods and serv¬
"pattern" wage in¬
kind of thing is
definitely alarming to an agency
like
a
ple ; prefer
And
much
til
work
is
arid
pattern settle¬
applies to 10%
price cuts "across the board" just
as
shall
Advisers
Economic
directed
be
this
formulas
all
at high effi¬
ciency so that real wages or purChasing power shall be raised un¬
workers
of
Council
to
that end.
cannot
be
accomplished unless;
every individual and every organ-1
ization within this complex and
interrelated system is willing to
prices
and
transportation
charges as a factor in manufactur¬
ing costs, market prices, and con¬
that
shall
■
with
ourselves in the last few years to
drift into the acceptance of over¬
there
The prime purpose of the Em¬
ployment Act of 1946 and the olb- »
jective to which the work of the
work."
enough work to go around.. On
hand, the whole philos¬
ophy of the Employment Act is
be
bilities?
adjusts your
wage rate most equitably within
the total price structure and your
wage
level in best equilibrium
assure
that wage contracts from
Is the Outlook Bright or Dim?
pairment of our manpower—be¬
responsibility then on would reflect a true eco¬
has been powerfully stated by two
yond the losses we regularly sus¬
nomic equilibrium. *Bqt i the at¬
Probably some of you are be¬ tain even
union groups, and I believe their
during four years of
taining and ."maintaining of any ginning by now to feel a little im¬
peacetime operation. On the other
Words will carry more weight such
precise equality of bargain¬ patient with me. You may accuse
with you i than anything V that I
hand,
it, stimulated , industrial
ing power is the purest figment me • of being a bureaucrat who
training and important additions
might say; ■
•
of a theorist's
imagination. What lives in an ivory tower or a pro¬ to our industrial
plant even after
I tIn the "United Rubber Worker" actually takes place is .an endless fessor content "to lecture on navi¬
allowing for those types of build¬
for j May, 1946, -President ,L. + S. and destructive struggle of each gation v while the ; ship is going
ing
and
equipment that were
Buckmaster said:
party to get a little bigger than down."; "To this ; latter jibe,' I
adapted only, to military uses.
V
'
the other—or a little
stronger— rhighjt reply (1) that the good ship There can be little doubt that the
•') "Industrial '' labor in •'America or a little more deeply entrenched America is not going down, and
has emerged from a state of help¬
productive potential of the United
in Government
protection.In all (2) that sound practical knowl¬ States today is higher per capita
less,
spineless
submission
and
probability, the end of that strug¬ edge of the principles of naviga¬ than it has ever been before. We
from the status of second or third
gle would be marked by. the trad¬ tion will do a lot to bring her to still have intact our
system of
rate' citizenship to a position' of
ing of independence and private the ports we seek as our journey
democratic government and free
power and influence in this coun¬
i
enterprise for complete paternal¬ continues.
try. r.
Now that Joe Worker has ism and
.bureaucratic-, control.:-,
Even so, I dare say you are pri¬ competitive enterprise which we
become a first rate citizen and a
j This would mean the end of marily interested in the wage de¬ believe provide an independent,
power in the community, he must
unionism and, I fear, the
begin¬ mands you are about to present ambitious, and intelligent people
of
themselves
doubt interested in wheth¬
no
opportunity for put¬
into productive
powers
effort and
to
or
a blare of trumV edge that there is also a restric¬
pets, they are fighting, for some¬ tionism* on the part of employers
thing for themselves only.
The It is no less prevalent than that
public doubts it is going to bene¬ of labor and no less threatening
to
substantial wage in¬
industry whose prod¬
proposition
increases, with
labor
a
second
.
study of wage-price stabiliza¬
tion is that particular groups of
workers will feel strong enough
an
hour.
"a
the
wage
its
in
pro¬
times,
war
public wins also."
secure
are
the North
on
continent.;
that the greatest danger that
the Council will have to face in
crease
My
.
public
me
or
of
policy for the continuance of
The mechanics ad¬ a
limitation that would be accept¬ mechanism.
are
not
system of free competitive en¬
providing
comparable
It
likewise
declares
earnings.
There are today many able would be in adjusting the justing a machine don't say that, terprise.
millions of employees of other in¬ length of the" work week to the just because one hut needs to be more specifically than ever be¬
level
of1 high
tightened by IV2- turns, all the fore the intention on the part of
dustries earning 40 cents, an hour
productivity—not
other nuts must or can be tight¬ the
Government
to take
these
Ipw consumption.
and less. ..."
,
•
*
ened by the same amount.
Some complementary lines of policy and
i" "When
unions fight for
It is a matter of common knowl¬
fessions,
ing
to
rates
wage
industries
American
the
seems
our
as
high as they should be to¬
day, the paper industry is still a
high wage industry. Average an¬
nual earnings rank high among
well
it
Outlaws
the other
ing (should
connection
Production
restriction of production
whole have been comparatively
high since it first became one of
a
to keep from engendering
inflationary spiral- of annual
wage
increases
followed
b y
annual
price increases which
promptly extinguish the gains for
this
adjust¬
in
both partners.
process
Restrictionism
is based
an
In
Maximum
study of union problems, reported:
"Wages in the paper industry as
you are
consumer.
are
band in to
ber of that union."
re¬
on labor pol¬
adjustment practices if
and
union
of "new
more
sponsibility devolves
icy
It
say.
not
good deal of anguish and threat¬
ened
would
that it
commodities,
caused
they
collective
economic
still not attain "maximum produc¬
mix-:
and
maximum
ture will be a product of finer tion
purchasing
quality.
It will look better and power" if the bricklayers were
wear
longer, as the advertiser only laying 300 or 400 bricks per
many
demonstra¬
a
of
the
The end result of this sort of
At the
is dangerous.
market
of
which
use
ours
manner
survive.
their collective
bargaining settle-i not mean that
ments.
Under wage
rates and back to our old
other
method
play
must
we
power
clean and ^decent
are
day"
the greatest
end get ting their
23>
of
ment
greed.
new-found
in; unions
are
un¬
words,
a
for
race
he
lest
life's game accordihg to the rules'
lest he be banned as a menace to
this
the
He must be
selfish lest he be classed
ponent
abandon
er
tolerant
tyrant.
a
agement
man¬
the likeli¬
on
hood that you can in the
the
"pattern settlement"
cents
fit
to
stabilize the1 the other players.
point the way in:
"In other
ex-
to the railroads and
a
referred
But
stabilized
im¬
seem
buck
come
cept through the sound action of
as
disaster, it would
a
can
economy or even
which it could be
labor
ning of totalitarianism.,. To avoid
each to get strong enough to beat
the other and
that, instead of gang
himself
learn
seeking to de¬
ceive you if I left the
impression
that the Council for a
moment
a
He-' such
>
perative that both'labor and
get
second of these
propositions.
I would
simply be
as
behave.
this
accept
to the
as
behaves
just
are
Employment
he
should
thing that we
call responsibility.
He must lad-
and the Council of
Economic Ad¬
visers.
You just go ahead and
stabilize
that
sure
first-rater
distinguished
very
(2747)
Grand
Ball
Room
Commodore and
1,200 guests.
of
was
the
Hotel
attended by
24
mb
liquidated in Fourth Quarter
^HUAftVA
Ie°lcVlPPr°^-mate prices of
~ 1
"T*s!™ent f
vin
Bullock,
,
,
George
57.1%;
had
Putnam
Fund of Boston, 63.2%;
Republic Investors, and Sovereign
Investors, both smaller trusts, held
55.6% and 54 8%, respectively, in
more volatile securities.
a
managed
ana managed
counsel
is the desideratim in
management
and
size,
expense,
connection
facto, which matters were
so
com¬
consideration
much
de
given
when
the
Investment Company Act of 1940
was
before the Senate Banking
about-face
and
increased
cash and governments from $100,000 to $1,706,000—36.2% of total
net assets.
It has been reported
that there was a relatively recent
plete
Committee.
The
.
be
to
from
gained
for ex¬
banking affiliates,
ample, might be questioned when
these
sponsors fail
to liquidate
groups of securities, particularly
An Outstanding Performer
vulnerable at this stage of a post¬
The
outstanding
performer, war business cycle, although such
however, among those managers, sponsors-might, through speciali¬
have knowledge of in¬
who gathered in their sails to zation,
herent weakness. The merchandis¬
four lightened commitments in
Warner
Brothers also
automatic toasters, Loew's.
$7.50 as1 against $2.65; radios, $50 found disfavor with two funds.
as
against $18.50; refrigerators, Rubber stocks, as in the latter part
$220 as ag.ainst $150; non-auto¬ of 1946, were unpopular with in¬
vestment managers. Goodrich and
matic irons, $6 as against $2.25.
The rise in clothing prices is an United States Rubber were each
Fire¬
every-day topic in all households. sold by seven companies.
Already the physical vol¬
be
.
of retail trade appears to
running under the same period of
1946, and when income payments
are adjusted for the cost-of-living,
actual purchasing power in terms
of goods and services is heading
downward.
We are bound to
conclude
from
analysis that in
.
.
advantage
reshuffling in its portfolio man¬
agement set-up.
weather the present deterioration
".
ume
many cases
of
earnings
of business hesitancy, it is
Selling spread into the paper
easily discernible why the retail group. Eight trusts lightened their
stocks should be among the first holdings of International Paper.
to feel the brunt of investment Three months ago three manage¬
company liquidation.
Among the ments had made entirely new
department stores, Allied Stores commitments in Union Bag and
was most heavily sold.
Associated Paper; in the present period five
Dry Goods, Marshall Field, and trusts sold this stock.
However,
May also were disposed of by sev¬ two managements added to hold¬
eral managements.
The two big ings of St. Regis Paper.
mail order and retail chains, how¬
on the continuation of
character of commodity
which
developed
with
the end of OPA and was bolstered
by an initial spurt of buying
emanating from pent-up demands
and
the urge to avoid
further
prices, was the Russell ing shares are a case in point.-One price rises. There is always dan¬
Berg Fund of Boston. On March large bank-sponsored trust held ger in comparing one post-war
ever, came in for the greater share
31, 38.6% of its net assets were $7*4 million of such shares, its experience with another and such
analogies cap. hide real differ¬ of liquidation among the mer¬
in cash and equivalents, 22.9% in third largest group, constituting
ences in each period.
We believe, chandising shares. Ten trusts dis¬
bbnds
and
preferred stocks
of over 10% of total portfolio value.
first investment grade, and only Two more trusts, connected with nevertheless, that with respect to posed of 17,475 shares of Ward,
another banking firm, held, re¬ the recent action of the commodity while seven sold 19,000 shares of
38.5% in equities and prior securi¬
Sears.
The United Cigar-Whelan
ties of the more speculative type. spectively, $5V3 and $5 million of price structure there are striking
in
retail
enterprises. similarities with the 1920-1921 pe¬ chain was also lightened in severa
This Fund was likewise in an ex¬ securities
riod.
I ."
The letter also calls portfolios.
cellent defensive position at the This group .made up for 16% of
attention to the adverse effect on
time of the break in the stock the portfolio of one trust, 14% of
The Moving Picture Industry
Liquidation over the the Federal budget of implemen¬
market early last fall.
Increasing the ' other.
tation of the "Truman Doctrine"
Continuing a - well-pronounced
its position in equities slightly last year was insignificant in these
and "the fundamental tension in trend established in the previous
during the final quarter of the store stocks, although other trusts
our relations with Russia."
quarter, nine managements sold
sold their holdings.
year, t it still maintained what it
Casual cost comparison would 28,000 shares of Paramount Pic¬
termed
"a
cautious
investment
Reasons for Liquidation
Witness to the falling off
indicate that it is by no means tures.
policy," resulting in a final deci¬
It is always of interest to in¬ farm products or non-manufac¬ in theatre attendance was the re¬
sion to get more liquid in the
present quarter.
This is a rela¬ quire as to the cause advanced by tured articles alone which -have cent move to stimulate patronage
in security
.
are
its size, not
at
uidation
minimum, and
a
the
yet being large,, makes
for flexible operation.
Sponsored
j
as
place during
has taken
quarter
under review.
Russell Berg
Fund in
The
letter to
a
by a reduction in
spiraled in price. E. F. Jeffe, VicePresident
the
in
charge
general over a
representative list of
railroad
equities. Volume selling was not
concentrated
on any
individual is¬
Northern pre¬
ferred
was
disposed of by five
managers. Largest single block to
be eliminated was 30,000 shares of
Pennsylvania by one of the old¬
est mutual funds in the country.
In the recent brief report to stock¬
holders, accompanying its divi¬
although Great
sue,
,
tively new Fund, its management- trust managements for such liq¬
Liquidation
Railroad
Liquidation was
„
expenses
of
the list
to
added
was
those
causes
is
inflation
predicated
stone
unpopular in the previous
of living item at over 180.
From period, but opinion was fairly well
this discussion of high prices and divided on Goodyear.
the current high rate
the spiral
as
The Federal Reserve Index, using
1935-39 as a base, places this cost
.
is temporary and
Twentieth-Century-Fox, where¬
of
A
succinctly
determine?® laSalnst'^1
against 1941;
r
^
the entire question of what
open
The First
Mutual Trust Fund made
by an investment
by an investment f stockholders nreroHinc
firm, divorced from in¬ terly report explains OULL11IV, K,iy
vestment banking connections, its the factors that determined their
unusual performance should throw drastic course of action;
and
(Continued from page 2)
^
Wide Securities, managed by Cal¬
„„ <A4-
j ^ ' ; * Thursday, May 22,1947
'
,;!?.*?
' '
~—
~
7^"
,
„
.
■
THE COMMERCIAL ft FINANCIAL CHRONICLE
(2748)
v
payment, the railroad com¬
points to the enormous in¬
in costs of fuel, material
and supplies during and since the
war.: In common with the other
dend
pany
daytime admis¬
crease
roads, it hopes authority will be
granted to increase charges for
pany's largest metropolitan show passenger, mail and express serv¬
houses.
Six- trusts also disposed ices in addition to the recent hike
of sales for' sion priees at certain of the com¬
Consolidated Edison Co.,1 re¬
cently pointed out the following
rates. Southern, South¬
Pacific, Coast Line, and Atchi¬
son* were also sold.
Even such a
in freight
ern
Companies
Balance Between Gash and Investments of 49 Investment
!
End of Quarterly Periods December, 1946 and March, 1947
•
.
was
Tnous. of Dollars
Percent.
\
March
Dec.
March
Dec.
4,927
9.5
15.6
836
6.8
11.2
95
162
9.5
15.7
Dec.
March
72.3
2.4
89.7
86.4
10.5
3.5
12.2
..Dec,
84.7
78.3
73.8
72.3
68.3
62.2
55.5
March
5.8
404
-End of
End of
—
.
'
American Business Shares——__—
.
Axe-Houghton Fund
:
3,037
;
Axe-Houghton "B"__
Commonwealth Investment.—
Eaton
490
<
Fully Administered Shares.
...
482
14.8
23.3
3,568
12.9
13.4
Russell Berg
Scudder Stevens & Clark-—.—_A_
.
■
'
2,827
1,270
3,878
196
:
1,101
8,876
'7**11/425
490
561
82.1
3.5
.
13.6
21.5
38.6
■
34.3
17.9
18.9
•
18.9
64.3
•
22.9
U#
17.5
•■••'"r'
22.9
8.1
■
'■& 58.2
*
;>.*• f
19.0
9.3
1
73.0
58.2
64.8
five
Textiles
stocks
were
among
in disfavor. Celanese
completely eliminated by five
companies; American
Industrial Rayon also
were
sold.
Five trusts disposed
57.1
of holdings of American Tobacco
"63.2
'•'B"; - two? gleaning, out completely
38.5 this old-time r.favorite,
Among
other tobaccos .hot liked too well
51.9
were Philip Morris and Reynolds.
68.3
investment
Viscose and
72.6
58.6
28.9
-'v
29.1
24.3
27.1
1
1
22.2
4.8 \
"
.Wisconsin Investment Co
23.9
68.4
69.7
14.0
*
another.
of
those groups
was
:
71.9
7.1
22.9
*
21.2
•
6.8
4.3
373
17.1
f.
18.2
14.2
<
*:
-
5.4
24.9
24.9
339
.
597
Furid.k.iii'_^r^^2.^L_
:Wellington Fund
1,321
1,346
392
___
f
15.2
.
George Putnam Fupd—_.a..
•
23.0
3,316
Securities-Income
Nation-Wide Securities
12.1
15.3
14.6
12.4
310
& Howard Balanced.—_
National
-
397
General Investors Trust
'
-
company
It also is to be
managements dis¬
posed of 73,000 shares of Grey¬
hound, three eliminating this is¬
sue completely * from
their holdings.
<
' '
that
noted that
-End of-
-End of-
0|»en-End Balanced Funds
plus Lower
Grade Bonds & Pfds.
Preferred Stocks
Net Cash & Govts.
Pacific
portfolio
and lightened in
favorite as Union
eliminated from the
of one
Com Stks.
Invest Bonds &
Net Cash & Govts.
blue chip
:
;
M
i
"
"-'75
.
67.8
Selling also
crept into the issues
pharmaceutical and drug com¬
panies.
Pronounced liquidation
appeared in American Home Prod¬
ucts, although much of this was
to dispose of shares received as a
stock dividend during the previ¬
ous
three-months' period.
Colgate-Palmolive-Peet and UnitedRexall Drug were also in disfavor.
of
Open-End Stock Funds:
' Affiliated
;
Broad
-
1,428
7.8
5.3
None
None
92.4
94.7
185
543
2.3
6.7
None
None
97.7
93.3
580
611
10.8
11A
None
None
89.2
88.6
——
249
10.8
24.2
2.6
2.6
86.6
73.
6,157
10.3
10.9
None
None
89.7
89.
91.
———
Investing
Bullock Fund
Delaware
2,047
~
Fund
Street
—
Fund
Dividend Shares
112
5,884
...
'
127
First Mutual Trust Fund._^^—,
Fundamental Investors
:
Incorporated
;
Investment Co. of America.—.___
i
Investors Management Fund——
i
Knickerbocker Fund
i
Mass.
Investors....
National Investors
...—
Republic ; Investors.
Selected American
——_—
Shares.—
Sovereign Investors
State St. Investment
2.3
92.4
1,5
None
92.5
89
2.0
!36.2
None
None
98.0
63.
,
22.8
20.6
1.7
None
75.5
79.4
Attitude Toward
414
971
3.6
8.8
2.2
1.9
94.2
89.
i
1,948
2.9
2.9
None
None:
97.1.
97,
567
4.1
10.5
None
None
"95.9
89.
82.
•
^appeared to be shifting on build¬
ing stocks as rising costs placed
,|new construction beyond the reach
hof ever-increasing segments of the
population. In the third quarter
—.—
Corp.__.__
1,713
1,770
17.0
18.0
V 3.2
None
79.8
205
162
2.7
2.1
None
None
97.3
97.9
7,882
3.3
4.1
;None
96.7
95
70
15.8
9.1
None
None
84.2
90
of
965
3.1
5.6
None
None
96.9
94
was
0.1"
Building Houses
Attitude of the trust managers
128
—
Mutual Investment Fund
'
None
6,461
—
Investors Trust
6.2
11.0
100
_—
General Capital Corp.—„„—____
7.6
1,467
1,706
4,516
231
—
6.0
4,930
—
Fidelity Fund
102
786
2,016
\ Eaton & Howard Stock
.
.
1946 this group
of companies
117
440
9.7
39.3
4.9
5.1
85.4
55
2,606
1,690
16.7
11.1
None
0.7
83.3
88
79
102
14.5
19.4
15.5
25.8
70.0
54
1,415
9,739
2.3
15.0
4.5
None
93.2
85
popularity among
those shares purchased by invest¬
ment managers. In the final quar¬
ter of the year there were',still
scattered favorites, but now, in the
90.6
72
American Radiator were .sold,
-
561
second
in
review, such popular
Cork and
each
by four trusts. Lone Star Cement
and Manville were also lightened
in portfolios.
The one outstand¬
ing exception was United States
Gypsum.
No less thani 12 funds
purchased a total of 37,000 shares
of this issue, and seven«of these
were
entirely new commitments.
period under
Closed-End Companies:
issues
American European Securites
ft American General Corp
2.1
26.6
7.3
1.1
3.089
610
31.7
10.6
0.1
0.2
68.2
89
Blue
2,320
6,423
5.5
15.7
2.2
0.6
92.0
83
423
349
$5.0
$7.5
6.4
5.5
88.6
87
1,472
5,505
3,224
14.9
33.7
0.5
0.8
84.6
65
6,640
14.8
17.8
None
None
85.2
82
416
691
8.0
14.2
None
None
92.0
85
$4.4
$15.1
$13.8
$3.9
89
Ridge Corp.
Capital Administration
ttFirst York Corp
General American
—
Investors
General Public Service
General
Shareholders.
Lehman
Corporation
!
278
3,525
•
671
830
14,269
19,650
1,368
2,000
798
1,024
5.9
5.8
89.7
3.3
3.1
81.6
76
11.1
9.5
75.1
71
9.6
9.6
86.5
85
88
97
Corp
tfU. S. & Foreign Securities
540
989
$3.5
$5.2
$20.9
$19.4
$4.5
$4.2
6.7
7.5
89.8
500
701
1.5
2.1
None
None
1.5
U. S.'& International Securities
774
,,-x
709
2.2
2.1
None
None
None
97.8
—
National Bond & Share
Selected Industries
Tri-Continental
.
^.Portfolio
97.8
97
97.9
b0nd? and f)refe,rred stocks: Moody's Aaa through Ba for bonds; Fitch's AAA through BB and approximate equivalents for
? ercent gross cash and governments as reported by company.
**No interim reports issued to stockholders on this date.
exclusive of securities in
subsidiary and associated companies.
Armstrong
as
Oils Favored
The
period were the oil stocks.
sey, Gulf and Philips each
favor
with
five
managers.
well liked were Socony,
and
this
Jer¬
found
great favorites during
Standards-'of
Also
Ohio Oil,
California and
Volume
Indiana.
165
Number
4596
THE COMMERCIAL &
FINANCIAL CHRONICLE
Texas and Superior were
Federal
new
well bought.
One cannot help but
observe
in this outstanding ex-
regulatory measure finding six buyers at the same
motor
stocks, Chrysler, time as s.even managers disposed
Among
General
Motors
Studebaker
and
as
"the
Truman
Doctrine."
In
also
were
its
|
•leading article of the issue of Jan.
>4, this year, on "Oil Politics," the
opinion
•"London Economist" puts the situ¬
ation very
'of
Russia
right
Eastern
Oil1
territories.,!'
Russia has about 9% of the world's
*
proven
oil' reserves/ and someThing like the same proportion: of
♦present output. - But there have
Transactions in which
sold
,
rich
3(1)
2(2)
5(3)
>.
.
3(3)
3(2)
1
2
;
'
12(7)
2(2)
1
'
s,
y'
r
' #
2(1)
2
2(1)
3(1)
i
*'■
day effective June 1,
1947, according to the Association
American
of
The
car
Railroads.
.
5,000
4,510
None
;
1
1,700
6,400
1,250
1,200
2
None
None
1
!;
of
' '
the
:,The
rental
the
for
which at
time
any one
owning lines and
other railroads.
on
.
are
20,500.
None
None
cars
None
None
None
off the
the tracks of
The rental-charge
is based on costs of car
ownership,
taking into consideration repairs,
taxes, interest onJnvestment, de¬
other costs inci¬
dental to the own'efehip.and main¬
tenance
and
of cars.
.
■
None
5(1)
4(2)
♦
12,000
9,000
None
200
\
'
'
-
\<ASr
L
•
Engineers Public
General
V
5(4)
None
KD
KD
.900
None
None
None
1
500
Twentieth-Century-Fox
None
None
6(3)
2(2)
900
300
2(1)
2(1)
2(2)
5(3)
3(1)
2(1)
2(2)
3(1)
2(1)
Erie Railroad
None
None
KD
2(2)
None
None
Pennsylvania Railroad .:
Southern Railway
Union Pacific .2...1.1
i,;.
100
None
3(1)
3(1)
3(2).
2(1)
2,900
1,000
1,000
33,000
2,300
300
2(1)
None
A
_
None
-
•
,
■
None
None
jpie
Westinghouse Air Brak0—
'■
1
"v "• ■"
:
None
None
>■";
,
Retail Trade and Chain Stores:
None
3,000
■
;
American Brake Shoe
General American Transportation
1(1)
1(1)
1,500
None
,
None
2(1)
None
None
2
2(1)
None
None
1
2,000
None
,
None
Allied Stores
Associated Dry Goods..
Marshall Field ..I....
10,700
7,000
6,500
2,200
17,475
19,000
7,000
1,500
May Dept. Stores....
Montgomery Ward-I.2....
600
,
Sears
Roebuck 2-United Cigar-Whelan
Western Auto
None
2.
Supply
7(3)
2
'
2(1)
2(2)
10(2)
7(1)
2(1)
3
Rubber and Tires:
Dresser Industries
Minnesota Mining & Mfg
International Harvester
None
—
____
________
National Supply
Fairbanks Morse
None
200
800
1
None
1
4 .K
-
,',
None
None
6,500
2(1)
Aluminium, Ltd.
None
Consolidated Min. & Sm. (Can.).
Lehigh Coal and Navigation....
St. Joseph Lead
United States Rubber...
3,700
United States Steel
100
"
15,500
4,275
15,200
9,700
800
,
Bethlehem Steel
i
•
'
3(2)
1(1)
1(1)
2(2)
4(3)
10,000
5,100
600
1
4(2)
5,900
31,690
4,100
5(2)
6(5)
4(2)
7,300
14,300
3(1)
2,600
3(1)
3,000
Celanese Corp.
Industrial Rayon .2
500
3d)
3(3)
5(3)
Tobaccos:
3
'
x
4,100
American Tobacco
None
None
7(3)
1,700
....
American Viscose
2(1)
2
;
2(2)
7(2)
Textiles:
None
1
7,600
15,600
23,700
Steels:
3(1)
300
International Nickel 2________^_
Cerro De Pasco Copper—
Firestone Tire & Rubber
B. F. Goodrich
Company
3,700
v
4(2)
None,
3,500
Aluminum Co. of America
Mueller Brassf
1,000
Railroad Equipment:
3(1)
1,300
900
New York Central....
None
None
•'
5,500
12,100
Great Northern, Pfd.2
Louisville & Nashville.2.1
None
1
2 '
2(1)
4(1)
9(3)
22,500
28,200
;_
Atlantic CoastKLine
None
None
71,600
Santa Fe
Atchison, Topeka &
None
None
National pairy Products
South Porto Rico SugarJ........
None
None
None
1None
/
N
'
.
*
Philip Morris
"B"
_____:
R. J. Reynolds Tobacco.2..
5(2)
Miscellaneous:
National Cash Register
4,800
3(1)
None
Union Bag find
Paper .i.....
Gulf Oil
Ohio Oil
20,000
Gilette Safety Razor...
None
Greyhound C..........
American Bank Note
6,400
None
None
None
International Silver
1,000
19,250
2(1)
8(1)
None
None
16,700
5(1)
73,200
7,900
*Stock dividend of 12%%.
fStock received in 2-for-l split.
^Received in part from exercise
American.
•
♦
—
None
Co.__„
2(1)
.3(1)
3,000
Southern Natural Gas
7,500
600
Standard Oil of Indiana
Phillips Petroleum
Socony Vacuum
None
16,000
None
-v
•
1(1)
None
2
None
None
None
8,650
Standard Oil of New Jersey__:__
1,600
2
1,700
Superior Oil
None
None
—
*•
None
ffReceived
$ ^Received
as
dividend
as
dividends
on
on
3(2)
;
of
rights
issued
'
•
Corp.__
2
15,300
Newport News Shipbuilding....
None
Dixie Cup Company
International Paper
None
KD
None
St. Regis Paper
,
5(5).
3,500
5(2)
800
3
Railroads:
None
\
2(1)
15,800
Warner Brothers
8,600
None
_______
r
15,760
Columbia Broadcasting "B"
Loew's
__4^4 *i_i_™_
Paramount Pictures -2
!___»
None
None
General Electric
8,500
5,500
So. Carolina Gas & Electric
None
r
' CorneU-Dubilier Electric
:
3(2)
.
Radio and Amusement:
None
1
.........
1
3,200
12,400
None
21,750
1,200
8,500
None
Servwe.47,400
None
600
Ndne
None
Telephone Co.--.——
North American Co.U4___;
None
Company.___.
Non©
None
3(3).
None
1,000
11,300
.3 :
15,Q0Q
None
__
:w)
2,
Corp.'____l/l____i__r.
&
jEIectricti-—4--—
None
Colgate-PalmoUve-Peet
United-Rexall Drug
,
1::
Ml)
$Mq
4,100
r
None
Westinghouse Electric
2,600
(Kansas).
Pennsylvania Pwr. & Light^_'il_
Peoples Gas, Light & Coke_i-I__
Public Service of P'rtln-rorlrt
l3iil^lir>-Qo'Y,\rir»ia ir.-P Colorado____^_
*•
Commonwealth Edison' 1..J__L__
Dayton Power and Light.J—2—~
500
None
/
Trust*
;
-
Pacific Gas
None
-
12,600
13,500
2(1)
',r' *<'
Middlewest
None
W)
-
and
No. of
Shares
v
Illuminating$
None
None
2(1):
4(1)
4(3)
2(1)
-•■>
:
Company
None
5(1)
4(2)
♦5
-
Indiarta Gas & Water
Co.tf--—-
300
-
None
Petroleum and Natural Gas:
:
preciation,
8,200
.
Paper and Printing:
of
use
1 million
7,700
.,
v
American Gas and Electric_____Cleveland Electric
None
*
2
''
th'O approximately
'h
Office Equipment:
not
is
paid by shippers, but is a cha
railroads
8,300
1(1)
"
among
1,000
5
K
1,480
7,100
1,000
2,700
■
None
per
committee is available,
freight-car
None
None
Metal Fabricators:
diem car rental when the jeport
-
4(2)
3(1)
3(1)
2
None
special committee of the Asso-
-
■4(2)
Metals and Mining:
These costs for the year 1946
will be given to the level of
2.
Machinery and Industrial Equipment:
3,500
! ciation, and further consideration
13(2):
:
921% Guaranty Trust Co. (N. Y.)*
3(1)
3(1)
*
'
12,900
1,475
45,000
•3(2)
Financial and Banking:
2(1)
under detailed study by
/.»■
•
l;'v
Mission Oil Co:
30,950
-
Newport Industries
Union Carbide _rT_n___w,
15,200
10,400
None
noyr
6,500
American Cyanamid
Commercial Solvents
Hooker Electrochemical
None
2(2)
r
None
-
Reduction
Electrical Equipment;
2
'
•
.
4(4)
1
-Nope
None
^
500
None
a
*1
3(1)
None
'1,400
29,700
6,700
3,000
American Horrie Prodycts.J.....
None
♦
None
Merck
2(2)
5(2)
4(1)„■
♦
_
7,900
The increase just, approved is
based on known increases in car
ownership costs, the Association
.
Air
■
Panhandle Eastern Pipe Line—*
Tidewater Associated Oil.l_____
/None
Lone Star Cement___;
.
,
None
3,600
Armstrong Cork
.
heavily
completekf
;
No. of;
\
None
None
None
None
Shares
Texas
None
3(1)
10,200
4,300
16,900
are
2(1)
-' r
.
■
Sold-
\Np. of
Trusts-
None
'
None
4(2)
3(2)
5(1)
said.
No/of
1(1)
rNone
•United States Gypsum
American Radiator
Drug Products:
None
•,
No. of
Trusts
1,650
None
Container Corporation
rental charge has been
$1.15 per day since Feb. 1, 1945;
prior to that date it was $1.00 a
day.
'
'1
'
•
more
Bought
1
None
Continental Can
ership of freight
per car per
*
and Equipment:
Food Products:
railroads will be increased to $1.25
"
■
7,800
5
cars, the daily
paid by railroads for use
freight cars owned by other
•.
or
n
7(5)
5(2)
_________
None
rental
of
-
1
10(2)
.
5(4)
-
By vote of the majority of the
railroads, based upon their own¬
'
i
'
None
____________
None
'
Freight-Gar Rental
Charge Increased
r
■:'■/••
Containers and Glass:
1
*
13,200
11,100
27,200
Pepsi. Cola1
Schenley Distillers 4-V-V.-V-4----
1,000
2,900
31,300
1,789
4,300
/ 2,900
4
Pan
-
"
;
None
Coca Cola
None
2(2)
tion of extension of the morato¬
rium on the application of the
-
•
or
♦
,
Airways!United-Aircraft ' * 'rV...
;
Chemicals:.
light, volume, transactions on the
buy side only topping sellers by
a\ margin
of
four
.individual
changes.
Cyanamid, Commercial
Solvents, Hooker Electrochemical,
and
Newport 'Industries
were
among the best-liked issues. Un¬
ion Carbide, however, " was sold
by five managements. Insurance
stocks were
purchased by 'one
cQippany, apparently in anticipa¬
,
pf
300
Pan American
;
,700
None
favored by several funds.
trusts likewise purchased a
„
American Airlines
36,900
14,000
The chemicals were favored in
_
year.
'None
_________
Eastern Airlines' '---4—--—
Northwest Airlines AA———
None
<
Airlines
of
a»
registered
!
Public Utilities:-
Building Construction
larity of the rail transport indusr |
was
the favorable light in
which air transport issues
)vere
apparently regarded.
American,
of
19,700 shares
American Airways.
....
-.1,700
1,300
None
try,
total
General Motors
Studebaker
800
2(1)
unponu-
Northwest
tables,
are
Petroleum and Natural Gas:
——
Beverages:
|
,Air Brake were among issues pur¬
chased by two or more trusts. Also
and
buyers—by two
Sold
Bprg Warner
White Motor Company
Chrysler Corp.
.
3,700
2,300
19,700
-2(1)
JBtake ' Shoe, General American
|
Transportation, and' Westinghopse 1
/
has
prices"
throughout the remainder of the
-
No.
.8,000
.2(2)
purchases of Westinghouse., Cpr;neli-Dubilier Electric was a new¬
comer in the
portfolios. Contrasted
to be contrasted with the
time, the stock
entered another leg
,
Aviation:
other
with the justified'
distinct bear;ishness on rail transportation issues, shares in the equipment fi,eld
found several buyers.
American
accompanying
security
present
-
Shares
1,800
7,000
2,200
1,000
.
|
manu-
favored as * a group.
trusts bought 15,opo shares of
companies
sellers exceed
'
6,100
•
1
'General Electric and four made
-
market
"Auto and Auto Parts:
Equipment Bought
The electrical equipment
facturers • were
the
only
were
either
the
more
management groups. Issues
(4) indicate number of managements
making entirely new purchases of an
1
1
'
'
issue,
'
'
Shares
1
Electrical
'
buyers exceed sellers—or
Numerals ( 1) (2), (3)
No. of
Trusts
1
Eastern
in italics.
No. of
their
.
are
-Bought————,
signs that the Rus¬
sians are thirsty for oil and
they
may well think that they have as
much right as the Americans and
/British *to be interested in
.Supplies so much closer to
,pwn borders."
...
V
,
The
correctness of decisions
reflected
in the
-
At
v
31, 1947)
plim.inati.na
eliminating the st.rfck from their portfolios.
the stoick from their vortfolios.
.been several
Two
acquired
declining direction.
25)
interesting to observe the
preceding quarter as a dividend
on *
holdings of General Public
Utilities Corp.
•
1
.
'Middle
[Five
were
the
:
the
across
issue companies
in
Changes in Common Stock Holdings of 35 Investment Management
^
Groups
(December 31, 1946-March
bluntly:,"The..shadow
falls
the
divided,
divi¬
or
Chief sales were in En¬ distinct
bearishness of the invest¬
gineers Public Service and South,
ment
company managers in gen¬
Carolina Gas & Electric, the latter eral
appears to be justified,
it
issue having been acquired in the will be
sold.
was
exchanges
dends.
of it.
Opinion was also divided on
Metals appeared Phelps Dodge, but Cerro de Pasco
wards liquidation in other
groups to be waning in present activity, was cleaned out of two
trust port¬
evidenced during the' period, that .although Nickel and Aluminum of folios.
American Gas & Electric
^oil investors have been heartened America as
well
as
Aluminum, -and Pennsylvania Power &
Light
by the challenging attitude of our Ltd., found favor
the
among buyers.' were
two' issues
favored
'foreign policy .as evidenced by .In the copper group, Kennecott among the, utilities. Several
other
Ceptiqn to the general trend to-
(2749J
result of
a
.
by
North
/
holdings of Public Service of Indiana,
holdings of North American.
NOTE—This survey covers 50 trusts but
purchases or sales of
sponsored by one management
group are treated as a unit
For example, (he six trusts
sponsored by J. & W. Seligman are con¬
sidered as having the
weight of one manager. Overseas
trusts
Securities
included in addition to
companies listed in companion tables.
26
Master
wiser, not better;
for they have suffered perse¬
cution, but not learned mercy.
The
multitude
are
fleeced
nevertheless, have been shocked
time and again within a single
generation at the sudden collapse
in production and prices during
a period
when economic factors,
©n the
surface, pointed to only
the most rosy future. That these
Ups and downs are not something
•peculiar to the present century,
•moreover,
may be -easily deter¬
mined from a study of the com¬
mercial history of other and old•er nations.
In this connection, the
quotation
from the
opening paragraphs of an article
appearing on page 8 of the Lon¬
following
j
don "Times" of May
14, 1866, may
prove of interest:
About once in
10
British
millions
less
several
than
it
the
years
suddenly
public
worth
itself
finds
hundred
has
are
course,
(Continued from page 2)
sup¬
plucked as they were 10
years ago,
and 20 years ago,
and 30 years ago, and 40 years
ago.
We may even go on and
say 50 years, and, as it happens,
and
-
>
150 years ago, minus a year or
two, when the South Sea Bub¬
ble burst. How is it, then, that
don't
people
learn by
experi¬
the
words
"fleeced
and plucked" in the above quota¬
tion might be
changed to read
"deluded and fooled" since there
Perhaps
yet exists no proof that the ex¬
cuses
a
periods are due
general mistake
every
element of the
these boom
than
to
other
in
which
community
participates
equally.
This, however, is aside from the
main point, which is that Britain,
another great commercial coun¬
try, has for hundreds of years ex¬
long, and then toppled over. At
hibited,
like
Canada and the
every such disappointment peo¬
United States, in their shorter life
ple make the reflection that
span, a recurrence of these swings
they are at least the wiser for
from times of expansion and great
it, that they will not be taken
in a second time, or, perhaps, prosperity to times of contraction
and
depression, and then back
that they will avail themselves
of the next general infatuation again to a new era of general
activity.
and back out in time.
posed. Its estimate of its wealth
had gradually risen to a cli¬
max
too
extravagant to last
on
they
not
foresee
the
around
and price reces¬ the dynamics of the stock market
not have assurance itself, the future direction of
that
revived
activity, like the stock movements. It has attracted
Phoenix rising from the ashes, is many followers. There is a third
a
certainty? As the writer re¬ and equally different approach
marks, each experience is a dis¬ that attributes these upward and
movements
to
some
tinct pathological cycle, seemingly downward
divorced from all that has pre¬ natural force operating independ¬
times of business
sion,
do we
ceded
or
ently of economic
all that is to come.
event, we do know that
question as to what causes
these cyclical fluctuations in the
price and production field is moot.
In any
This has been
trated
dramatically illus¬
diametric
recently by the
opinions being expressed by re¬
sponsible economists and analysts
as to the current outlook. In this
search for
millions
an answer
of
dollars
to the cycle
have
been
or
technical in¬
fluences.
This
viewpoint
has noted a certain regularity in
nature such as the earth's swing
around the sun, with
tation of the seasons;
ensuing ro¬
predictable
comets at
tides; the periodic and
appearance of various
intervals of decades to
centuries; the outbreak, increase,
and disappearance of spots on the
been burnt by securities, business sun over approximate 11-year in¬
and economic research organiza¬
tervals; the long swings of tem¬
tions of the country, and by in¬ perature from extremes of cold to
dividual investors. Development extremes of heat, and back again;
the years of increasing moisture
of some dependable key to one
phase of the cycle, that of the and then the years of increasing
broad swings in stock prices, has drought.
received particular attention.
On the basis of this periodicity
in natural
mentioned. Another approach, the
economic
most
their
the
"Times" editor asks,
1897 1898189919001901
the stock market
prominent
and
important
190219031904190519061907190819091910
activities.
To
illustrate
contention, adherents to this
1911
the 11-year cycle, the 9cycle, and the 40-month
philosophy
certainly
has been best stated, in Ecclesiastes, of which the following is but
So far
was
,
nomic sequences, has already been
What
cycle,
year
flow of the
them
fit
on
activity, as reflected, among
in business, in con¬
struction, in commodity prices,
and
in
speculation. These are,
among others, the 84-year cycle,
the
54-year cycle, the 18-year
other things,
a
go
next
effects
observable
had
mass
the moon's
swing around the earth, and its
continuing effect on the ebb and
spent over the years and innum¬
erable hours of midnight oil have
One approach to the solution of
has
cycle.
last mentioned
problem, that of
gauging the broad swings by way
of an analysis of one or more eco¬
the
like the rest, however, is, some 80 years later,
through all the still pertinent, namely, why is it
stages of the disease with path¬ that people have not learned from
ological
accuracy.
Some, of experience? Stated otherwise, why,
and
Cycles
prosperity, do we by-product of which is the Dow viewpoint have isolated a number
a
depression
just Theory, is technical. The technical of periods of fixed and constant
corner and why, in method attempts to find, within time length, the progress of which
phenomena, the ques¬
tion is raised as to why man, who
in many respects is subject to
natural law, should not reflect a
certain natural periodicity in his
Nevertheless,"
comes
Market
during times of
the
ence?
Thursday, May 22, 1947
FINANCIAL CHRONICLE
THE COMMERCIAL &
(2750)
as
I know, the
first enunciated, and
brief quotation:
"One generation
passeth away,
generation qometh:
vbut the earth abideth for ever.
The sun also ariseth, and the
and another
sun
goeth down, and hasteth to
his place where he arose.
The
wind goeth toward the south,
and
turneth
unto
about
the
north; it whirleth about con¬
tinually,
and
the
wind re¬
turned! again according to his
circuits. All the rivers run into
the sea is not full;
place from whence the
the sea; yet
unto the
rivers come,
thither they return
things are full of
labour; man cannot utter it: the
eye is not satisfied with seeing,
nor the ear filled with hearing.
again.
All
The
thing that hath been, it is
that
which
which
is
shall
done
and that
that which
be;
is
1912 1913 1914 1915 1916 1917 1918 1919
1920192
MASTE
Copyright 194;
Vertical bars; sbow the
on
a
m
logarithmic scale
change in the ijridex bee
Volume
165
shall be done:
and
there
thing under the
new
THE COMMERCIAL & FINANCIAL CHRONICLE
Number 4596
is
sun.
no
Is
there any thing whereof it may
be said, See, this is new? it hath
been already of old time, which
before us."
was
Among recent "writers
subject, working largely
field
of
price action of the Dow-Jones in¬
dustrial average over
Lastly, the book is
entirely to the one sub¬
ject "cycles" and has succeeded in
taking the matter from the realm
of pure theory to one of practical
application for the present year
on
the
in
the
Since the stock market reflects
phenomena,
British, German, South
changes in public viewpoint more
immediately and more intensely
than, perhaps, any other economic
series, it would seem that if time
economic;
have been
under review.
devoted
American,
and
American
*
ob¬
including
H.
Stanley
Jevons, Senator Theodore K. Bur¬
servers,
and day.
other
ford I. King, Ellsworth
in
economic
the important
themselves.
mise
have
Simeon
of
and
To those whose time
ation does not admit of
I
time
search
or
inclin¬
protracted
have
has
then
they
the
pre¬
number
a
indications of
as
cations
are
to
tinkering with the time phenom¬
re¬
stock
on
to fit the market facts.
ena
was
man
One
is
Century
by Senator Burton—"A
of
Prices"
published
around 1917. The other is
—The
Science of
This
press.
"Cycles
Prediction"
Messrs. Dewey and
the
interest.
by
Dakin, just off
last
mentioned
book is one of the most
satisfying
of the works on the
subject. This
is because of several
considera¬
tions. Being
current, it has the ad¬
to. measure*
.necessary
the layman. It is
profusely illus¬
trated
ther
with
charts, thereby fur¬
facilitating
a
ready under¬
standing of the fascinating subject
MARKET
determination
discussion.
to what
as
could
be
that is,
be
said
later
in
this
the predomi¬
nant influence at work.
Naturally,
emanate from time cycles. One is
during such intervals
positive
as
each
of
the several time cycles
pointed in
the
was
same
direction, the reading
obvious.
can arrive at the
sults as shown here.
can
same re¬
Possibly, the
be materially im¬
proved. and may be. In any case,
in the chart accomping this dis¬
cussion
are
tions
worked out. On this chart
given the determina¬
has first been plotted the
+t
+
.
influences, and only two,
of
the
expansive, the other,
or
negative
or
contractive. When all
time
cycles
are
concur¬
rently
No doubt other students of the
as
Two
was
'
—
judgment. On this subject,
the elimination of judg¬
precise
CYCLES
++•
hu¬
made
LETTERS, INC., Detroit, Michigan
—
of
will
19241925
I INVESTMENT
element
however, something addi¬
approach
clarity that
makes the text simple
reading for
the
tional
subject
and
to, eliminate
This
purposely designed
ment
vantage of encompassing all pre¬
vious observations. It is written
ease
em¬
was
pirically, the influence of each so
that, when the cycles were not all
in
agreement, or concurrent, a
with
an
time cycle indi¬
mathematical
or,
otherwise stated, are based upon
a fixed formula that admits of
no
of
seem
each
influence
Please bear in
mind that these
understanding of the matter, two
of
particular day of
a
itself, the closing month of one
period has been used as the open¬
ing month of another period for
the reason that, within the month
in question, both pediods were in
operation—one terminating, an¬
approach
prove
on
the month rather than the month
prices. Each time cycle or inter¬
val being of different
length it
should
the various time cycles
as
terminate
delving into this approach but
who, nevertheless, wish ^ better
books
superimposed the
the time cycles. In¬
having
years
subject
indicated
particular
this
classified
cycles that
on
On
cen¬
been
swings of stock other beginning.
prices
Kuznets,
bear up on
should be particularly observable
Hunting¬
ton, Harlan T. Stetson, C. B. Ab¬
bott, Garcia-Mata and Shaffner,
Hutner, Simon
Edward R. Dewey.
or
activities
half
— —
monthly
dition
positive or concurrently
negative,, the influence in the
given
direction
will
be
much
stronger, of
cycles
are
course,
opposed in their indi¬
cation, with only
tive of
or
than when the
a
a
balance posi¬
balance negative. Put
another way, the addition
and
more
+5, which equals
of
+3
+8, is
a
positive figure than the ad¬
of
—3
and
which
+5,
equals +2; just as the addition'of
—3 and —5, or —8, is more
nega¬
tury—from January, 1897 through
October, 1946. On this price range tive
asmuch
intervals bear down
ton, Ernst Wageman, Sir James
Jeans, Warren and Pearson," Will-
a
(2751)'
than
and
—5,
the
addition
of
+3
age
for each
riods.
This
whether
from
of the
check
21
cyclical pe¬
indicates*
measurement
malt
be
the
price extremes or the*
prices of the opening and
—2.
Accordingly, mean
while, as previously stated, there closing months of each period^.
are
but two influences—positive that the stock market has
coin¬
and negative—deriving from the
sistently advanced in each of the*
time cycles, the degree of influ¬
unanimously expansive or double*
ence will
vary in accordance with plus (•+■ -f) areas; consistently de¬
whether all the cycles are in har¬ clined in each of the
unanimous^r
or
mony, or are diverse.
To clearly illustrate
contractive
-
the
above
considerations, that is, the degree
of
the
force,
expensive or contractive
the chart a * plus * (-f)
on
symbol has been used to indicate
time periods of positive or expen¬
sive
tenor;
minus
(—)
symbols
have
been used to indicate time
periods of negative or contractive
tenor. To show the degree of the
expansive influence or of the con¬
tractive
influence,
however,
a
double symbol (-f or — —) has
been used to designate all the
time
cycles
double
or
-minim
(——) areas. In the single |>Ii»
(+-), or less definitely expansive,
advance
areas
has.
occurred
in
eight of the ten instances (seven,
if mean rather
than price ex¬
tremes are used). In the single
minus (—), or less definitely con¬
tractive, areas decline has oc¬
curred,
on
both
extreme
and
mean
prices,
in
cases.
Of the
six
four of the ten
instances, how¬
ever, where the market moved up,
four of such advances were each
less than 10%.
These expensive and contract¬
being concurrent,
or
areas
jointly pointing in one direc¬ ive
represent
interval*
tion; a single symbol (+ or —) when the line of least resistance
to indicate
diversity of influence, for the market is in the direction
even
though the balance fell in indicated by the time cycles and,
as
one
direction or the other.
It
would be expected that the stock
market would be more
in most instances, as
has been
shown, the market has moved an
responsive to the double plus or
double minus areas, and such was
what may have been the tenor of
economic
or
political
found to be the case.
In supplement to the
ments
intensely
illustration, wherein
ally
observed
the
diagramed
can
be visu¬
action
of
the
stock
market during
the varying
time
periods,
follows
there
the
price and percentage performance
of the Dow-Jones industrial
aver¬
it
would
be
expected
to, despite
develop¬
during
the
period.
Than
does not mean,
however, that the
market is
necessarily imperviou*
to
concrete economic and
politi¬
cal events that are
strongly con¬
trary to the influence of the time
cycle.
From April 1943 to De¬
cember
1944, for instance,
(Continued
on page
28)
when
<
f*
28
THE COMMERCIAL &
(2752)
The Cost of
Master
negative
moderately
period
share
prices
time
1931. The following
Britain
devalued
the
month
or
(—)
in operation,
advanced.
If the
reader will study that interval
for a moment,, however, he will
note the relatively backward ac¬
tion of the stock market while the
'period lasted. This is disclosed by
an analysis of the entire war ad¬
vance
running ,from early 1942
until the first half of 1946.
This
war advance, on the basis of the
time cycle grid, was divided into
a
area
until August
(Continued from page 27)
will
has
run
into
come
some
operation.
while.
ness
1933, but the new Roosevelt Ad¬ time cycles were opposed in their
ministration,
inaugurated
i n indications, with only a balance
March of 1933, cut the dollar loose iri the expansive or contractive
three phrases. • From March 1942
from its fixed gold base and both direction.
We have a healthy re¬
to April 1943 the time influences
stock and commodity prices im¬ spect however, for the remark of
;ikianimously favored expansion; mediately advanced to eqilibrate one of our associates to the effect
1
from April 1943 to December 1944
for this revaluation.
Gold is the that the Lord did not give man
'they moderately favored contrac¬ standard
by
which prices are brains and then expect that we
tion; from December
1944 to measured and any action making would not have to use them. Life
August 1946 they unanimously fa- for change in the value of gold would become too simple and,
vored expansion. Note, now,, that
sooner or later, the
or in the amount of gold behind a
human race,,
ior the two time periods calling
currency unit, will have an effect its mind no longei: sharpened by
for; market
advance,' stocks on
the exegencies - Of an uncharted
prices.
' ' "
-
'
upward by 38% and 39%,
'Respectively, while, for the ,time
period of moderate contraction,
stocks advanced by only 8%. In
*6ther words, despite the strong
'pull of favorable war earnings
land developments toward higher
prices throughout, the entire four
years, the market almost stood
'Still, as even a visual examination
of the chart will disclose, during
that period when the time grid
was moderately on the contrac¬
'moved
Coming to the recent past
the
to
advanced 38%. There
December 1944, an
both expansive
and contractive time factors were
'
.
the several variations of in; operation but where the bal¬
stock prices from the time cycle ance fell jnoderately on the con¬
tractive side.
Over this period,
Indications, only three were seri¬
When economic influences were
ous in terms jof percentage move¬
ment of stock prices. In each such broadly similar to the period pre¬
industrial average
instance, monetary factors were a ceding,* the
dominant influence. The first was moved up by 8%. Another inter¬
val followed to August 1946 when
the mildly contractive time pe¬
the factors again unanimously fa¬
riod April 1926 to December 1927,
Over this pe¬
when the roaring credit inflation, vored expansion.
or bank
loan speculation occur¬ riod the market advance was 39%.
For the three months succeeding,
red, first in Florida, North Caro¬
that is to October 1946—you can
tive side.
not, in our opinion, be
! Of
.
interest
rates,
it
It began about 14 years
In England it had its incep¬
tion in the fall of 1931 when that
ago.
embark
borrow
and to
expensive schemes of
on
to
so-called, social welfare.
It must
be
forgotten that
cheap money came in
simultaneously with the period
never
the era of
country abandoned the gold stand¬
ard.
In Germany it started in
with the rise of Hitler and the
rearmament of the Third Reich.
In this country it came in with
of government and
Even the financ¬
logical consequence of defi¬ the New Deal.
of the huge
expenditures
cit spending *, and high budgets. ing
caused by the World War has not
Beginning with the early 30's so¬
cial experiments were carried on brought this era of cheap money
in many of the principal countries to an end.. Interest rates ,are lower
of high costs
was a
appraised
forces, if such forces were favor¬
able on balance;
would lessen,
of the
world which added to the
adequate
for the expenditures.
Borrowing had to be resorted to.
Low interest rates on
made
it easy
;
United States.
Money
Not
today than < they were when the
war began—and this,
in spite of
the fact that our Treasury bor¬
rowed
Conse¬
Borrowed
.
.
.
Because
v
Which
cheap money is based are
sound.
Suffice it to say, how¬
that
I
obvious that
think
no
it
should
war
our
huge stocks of
gold.
day, when making a
survey of interest, rates in the
principal countries of the world,
I found much to my surprise that
interest rates were low in coun¬
tries like Germany and Japan.that
had small gold holdings, exactly
the same as they" were in the
And
yet,'
one
States and
France where
holdings were relatively
high. In England interest rates
had
been
declining
since that
the gold
discuss
ever,
to
United
obviously impossible for me
at
all
adequately
whether
or
not
the tenets
on
anomaly?
.'
explanation
to say that low
a. common
was
interest rates in this country were
it is
on
the stock
economic forces, on
It
due
Now, in the time at my (disposal,
prevent, a
What is the explana¬
tion of this strange
of Cheapness
to
fi¬
billions to
$200
over
it.
nance
public debt .before the
to borrow.
quently, the governments devel¬
effect
market if the
.
.
money.
governments
time cycle favorable to
stock market advance should in¬
crease
the upward intensity, on
the stock market, of the economic
downward
ful, if
est rates would make it easier for
a
though not necessarily
at the same
harmed
interest
15 years, while
time it is very doubt¬
last
.
independently of major economic
forces at work during the period.
Thus,
rates of the
was
.
*
/•'
,
of learning have all been
by the abnormally low.
one can show that the rich
asked, reduce "the income of have been similarly affected from
the wealthy creditor class and re¬ this cause.
;
lieve .the
burden of the hard
As.I have already indicated,the
pressed debtors?. (3) Low inter¬ world is in an era. of cheap
low
not
Would
oped the deliberate policy of mak¬
cycles, is used as a tool rather ing money cheap and of keeping
than as a mechinatio totus, we it cheap.
The policy was carried
think it can be helpfjil. Effects of on in England, France, Germany,
even
time cycles on stock prices can¬
Japan, as well as in the
where
interval
and insure pros-
perity; (2) that they were a good
device for redistributing income
in
the
interest of the
masses.
approach, as herein de¬
veloped, entered, in March 1942,
fully, is such an attempt at over¬
an area when the factors unani¬
mously iavored expansion.
This simplification. N e v e rt he 1 e s s,.
where some mechanical approach,,
period ran to April 1943. From
such as price/earnings ratios, his-,
the opening month of the period
torical price levels, oversaturation
to its closing month the indus¬
of new security offerings, or time,
trial average, as shown in the
followed,
expansion
high costs of armaments after the
life, would become extinct. Any rise of Hitler forced the - Treas¬
mechanical
approach
to
stock uries into tjie task of raising huge
market forecasting, jf relied upon sums of money.
Taxes were in¬
time cycle
Table above,
Cheap Money
(Continued from first page)
It
In no instance, to date, has the
pound thereby setting off a world
decline
in
the
commodities, market failed to advance over
stocks and other equities of those that complete interval when the
trading
nations,
such as
the time .cycles unanimously favored
United States, whose currencies expansion and in no instaripe, to
remained on a fixed gold base. date, has it failed to decline over
Conversely,' in the mildly con¬ that cpmplete interval when the
tractive time area running from time cycles unanimously favored
The / failures
have
January 1933
to October 1934, contraction.
stocks
declined
into
February come during the periods when the
was
Thursday, May 22, 1947
FINANCIAL CHRONICLE
country left the gold standard in
.1931, with little change in
be
businessman bor¬
reserves.
be
must
way
of
its gold '
Clearly, I thought, there;
something more in the
explanation of the low
an
interest .rates
than
merely-
the
unfavorable. Con¬ rows money just because it is amount of gold reserves held in
lina and nationwide suburban
versely, a, time; cycle of contract¬ cl^ap. Be borrows it only when the banking system.
real
estate;
second, in stocks. perhaps recall those months—the
ive or bearish tenor should in¬ he>, thinks he can put it to work
In an attempt to get some help
Next, was the .mildly expansive time factors were again diverse
tensify the downward effects of and get a return from it that will on the
problem, I wrote a letter,
„area from May. 1931 to January with the balance falling moder¬ an adverse economic situation,
be something more than what it the
on
the contractive
side,
pertinent part of which is
1933. During this interval stocks ately
If condi¬
Since October 1946 a new time should modify, though not neces¬ costs him to borrow it.
given below, to a rather large,
were
ill an advancing direction
sarily offset, the upward- effects tions are not favorable to earn a number of the outstanding stu¬
of an expansive general economic good return on his money, he will
Price and Percentage Performance of Dow-Jones Industrial
dents of banking in this country.
not take the risk of borrowing it,
background.
{
»
Average for Cyclical Periods '•
"For some time now, I have
On
a
retrospective basis the no matter how low the interest been wondering about the ade¬
+ + Areas When
Time Cycles Under Analysis Unanimously Favored Expansion
Low of
High of
time cycle approach, as applied to rate may be.
quacy of the explanation that our
Closing
Opening
Consider the building industry huge gold supply is mainly re¬
the stock market, would seem to
Change
Month
;Month
Period—
merit attention.
Walt Whitman' today.
for our 1 low interest
+ 68
With
mortgage
money sponsible
65.02
38.67
balance, were
,
May 1897 to January 1899
;May 1905 to November 1905_i__'i_^____L^—_
"July 1907 t£ April 1909
19H to January 1916——
^August
—
June
+ 38
204.52
+ 39
Contraction
High of
Analysis Unanimously Favored
.
Low of
March
to
1910
Closing
1929
to
May
August
1937
to
March
When Time
+ Areas
'
V
380.33
190.02
128.46
98.95
152.64
'
1941
to July
1939
—
1938——
99.53
Change
—30
•—19
—14
—33
—14
122.85
—66
—48
—20
.107.55
—
1931
August
November
•
1923—
October
to
1922
—
——
1Q21___
March
to
1919
November
1910—
1914
May
to
1912
-
Cycles Were Diverse In Their
Balance
Favoring
Influence, With
Expansion
High of
Closing
Low of
Opening
1928
June
Jday
August
to
to January
1931
July
+
.3
107.55
+
28
72.25
99.53
.201,96
380.33
+ 88
128.46
1933—
(64.35
—50
98.95
1939—
—
122,85
to March 1942——
1941
+ 16
81.79
+ 38
—
1929—.
March 1938 to November
+ 68
92.06
-
1922
November
to
1921
March
—i
46.41
84.04
1914——
+ 22
78.05
79.16
1912
66.26
79.68
1905—————————
to June 1919-
1919
March
%
Change
54.52
—;
1902—
August
to
to August
1914
May
May
to
1910
December
June
to
1900
1904
March
..Month
Month
Period—
October
%
Month
46.41
79.68
79.16
72.25
85.76
-.Month
66.26
98.34
92.06
1904
December
to
.
,152,64
+ 54
106.97
—13
7
1
Balance
Low of
January
to
April 1909
'January
October
1923
to
July
,89.89
1927—
^January 1933 to October 1934
'June
April
-
1936
1943
August
to
August
78.87
4 *3
'74.50
—25
,'98.8190.45
1937
1
96.38
144.83
193.58
+ 34
+ 40
7
64.35
90.41
160.66
175.91
+
9
+
8
to December
1944
136.93
to October
1946
204.52
163.12
+
—
147.30
1946
our1,
abundant and the interest rate at
an
rates.
In the first place, in mak¬
all time low, yet
;
"Gentlemen,
Likewise, the case for low in¬
something like
strides, terest rates falls down if one tries
years, in the science to maintain it on the theory that
it's
this.
We have made great
over
recent
—20
the
war.
"Interest rates
bank
"because
are
low,? he said,
reserves
are
re+
They are redundant, in
benefits the poor at
of the rich.
The the United States on &! gold' basis,
hospitals,
improved
techniques, weaithy, by .and large, do not have They are also kept redundant iiv
.miracles of anaesthesia, and every their fortunes invested in bonds. countries like Germany Without
a gold basis.
It doesn't make any
up-to-date method that can be ,The principal owners of bonds in
of
obstetrics.
We
modern .cheap money
.the
expense
have
dundant.
institutions such difference at all," he went on tp
savings state, "about the amotpit of gold
physicians and surgeons to facil¬
banks, colleges, universities, hos¬ reserves, so long as cohfidence in
currency
is not impa'iredl
itate birth.
Yet, gentlemen, de¬ pitals, .churches, and other en¬ the
organizations.
By
no Money is cheap in thiscountry
spite all this, it still takes nine dowed
because bank reserves are redun¬
stretch of the imagination can one
months."
by
our
eminent
most
—12
90.66
%
—
u—
1924
to December
—16
,—
—
—
1917
October
Change
54.52
88.29
1907
to January 1910
1916-to
19(26
April
July
Month
65.02
1900—,
October
to
1899
High of
Closing
Month
November .1905
betWeefi
this
as
Opening
Period—
contained
•
devised
*
Diverse In Their Influence, With
Favoring Contraction
"
'
When Time Cycles Were
—Areas
'
to us
construction ing a recent survey of bond prices,
hat and our shoes.
Man, because lags.
Other conditions to build¬ I find that they seem to be going
of his intimate relationship to the ing are not favorable to expansion up and reaching all-time highs in
countries that have been denuded
brain, has come to regard .- this in that industry.
of their
gold supply quite the
Organ as a sort of deus to which
If you add up the new issues
all external phenomena are ra¬ of securities floated in this coun¬ same as they have been in this
tionally subordinate. But it is not try, you will find that in periods country where we have an excess
yet proved that nature is obedi¬ of relatively high interest rates supply of gold. For instance, gov¬
ernment bond prices in Germany
ent to this order.
there is always much more bor¬
and Japan are at practically allOne is reminded, in this con¬ rowing than there is in periods of
time highs. Likewise, government
low interest rates.
The borrow¬
nection, of the testimony of Gen¬
bonds in England have moved up
ing is not done, of course, because
eral
Knudsen,
war
production
sharply during the last two years.
interest rates are high, but be¬
mobilizer, in the early days fol¬ cause in those periods the chances And, while they are not at alltime highs, it is interesting to note
lowing the entrance of the United of making profits on money bor¬
that they are higher today than
States into World War II. Called rowed are higher than they are when that country was on the
during periods of low interest
gold standard."
upon by a Committee of the Con¬
rates.
There is absolutely no di¬
In rereading the replies to this
gress to tell why, following all- rect connection at all between the
out conversion of American in¬ amount of money borrowed for letter, I was amazed at the lack
of
unanimity in their answers.
dustry to war purposes, military business purposes and low inter¬
But one writer, it now seems to
est, fates.;
,
production was so slow in getting
me, saw the problem clearly and
,V
+
rv * 7 '
V
'H *. "
'
■ •
'
started,
the
General ' replied, Cheap Money No Benefit to Poor fully understood it even' before
is
,
—
Opening
1902
August
+ 78
136.93
147.30
Period—
January
+ 14
99.21
observed that there is more
than
+ 50
160.66
.
+ 20
74.50
'*
June
89.05
144.83
220.96
90.41
Time Cycles Under
—Areas When
+ 86
96.38
to June 1936
Jdarch 1942 to April 1943_
.December 1944 to August 1946__—
'
+ 12
98.81
193.58
_
1934
,
+ 26
88.29
53.17
Sjuly 1924 to April 1926—
December 1927 to June 1928——
Qctober
89.89
78.87
1919————
March
to
1917
^October
•71.37
———--
,
General
Knudsen, who in 50 or
country are
insurance
companies,
show ..that .the
owners
of these
those, that benefit
more years on America's greatest
from their operations are the rich
production
lines
had
learned and not those in more humble
circumstances.
The thrifty saver
some
fundamental
lessons, was
or
the prudent holder of a life
trying to point out that man pro¬ insurance policy or the recipient
poses but, in .some .things, mature of hospital care or the student ' <?r
teacher in an endowed institution
still disposes.
.
institutions
or
dant
gold basis, and business
expand sufficiently to
use them up.
Money is cheap in
Germany because ] bank reserves
are
kept ample, although on a
paper basis.
Germany's currency
is divorced frpm the international
does
on
a
not
mqn.ey'roarket'through export &nd
import controls and through re-
Volume 165' Number '4596 1
^
•'
"
-
•'
■■
[THE COMMERCIAL & FINANCIAL' CHRONICLE
,
~"
(2753)
-
*
1
.
,
strictions on the purchase of for¬
eign exchange. Prices and wages
are
kept
under
control
stood
ties
by law,
strictly enforced, and inflation is>
kept down, while no one is per¬
mitted to raise capital
through the
sale
of
securities without consent
©f the government."
He
-
closed
that
his
interest
letter
rates
in
be kept low, with
can
gold, if
by saying
a
country
without
or
country is prepared to
pay the price in the way of arbi¬
trary controls over its life. This
Sbrief explanation of the
way Ger¬
many kept money cheap when she
was
rearming before the war is
Important to keep in mind when
we review the
steps used in this
country to keep money cheap
during the war. There are some
Striking points of similarity.
\
a
The
But
War
before
this
going any further
discussion, I want to
state
that
it
find
not
my
purpose
fault
with the way the
financed. In any discus¬
sion of ideal methods of
financing
the war, the magnitude of the
task that confronted the
Treasury
war
was
must
not
faced
with
be
which
War
forgotten.
financing
one
no
It
was
all-out
an
knew how long
Would last nor how
many untold
millions of dollars it would cost.
No
nation
has
been
ever
levy sufficient taxes
to
able to
the
pay
entire cost
of a war.
Some part
has always been paid
through in¬
flation.
,
;
,
...
.
,
But it must be remembered that
special requirements imposed by
War demands
may make necessary
hanking policies that would be
dangerous and wholly unnecessary
in times of peace. Jt is
important,
and
very .important
indeed, that
just' exactly how
understand
We
the
government
to
able
was
fi¬
large part .of the
cost of the war through' borrowIng without increasing interest
'•
.
rates.
It
q
.
this
is
>
lack
of
under¬
standing that is responsible in. no
small degree for the belief that
the government can indefinitely
in
the future
rates
that
control
so
interest
they:will always be
low, and do
without paying in
the end what has always been the
cost
of
Reserve
so
artificially cheap
inflationary
and, in the
money;
namely,
an
rising prices
bust and depression.
boom,
end, a
*
In the time alloted to me, it will
be my purpose to show (1) just
insured
member
the
banks adequate reserves for such
loan and deposit expansion as was
the
it
possible to ^finance
v declining
interest
was
with
war
*
rates, <2) what the,effects of that
-financing have been upon
present price situation, .and
whether
in
the
interest
of
our
(3)
con¬
tinuing the present low structure
<6f interest rates in the days im¬
mediately ahead it is safe for the
Federal: Reserve Banks to con¬
tinue the same credit policies that
they pursued during the war and
thus far have been continuing to
follow exactly the same as though
the
war were
in progress.
With the beginning of
*,
armament
and,
various
Tracing
the
drives.
bond
war
growth
Federal
of
Reserve Bank holdings of govern¬
ment
securities
through the war,
they did not begin to
expand rapidly until the latter
part of 1942, and then the expan¬
sion continued rapidly throughout
the war until such holdings were
find
we
about $22 billions.
This was the
expansion called for primarily to
the
Treasury
drives
able during
its huge bond
without
raising
interest
rates primarily because the Fed¬
eral Reserve banks furnished
the
member banks with sufficient re¬
serves
the
that the member banks
so
could
buy
the
amount
of
bonds
Treasury allotted them.
And
result
a
these
tions.:-The-other 40%
bought
by our banking system. This huge
expansion-.of bank credit, resulting
/
,
was
from.this.purchase of government
securities;-in a short time used
up•»the"excess reserves of the
member: banks
which
had
been
built up- by the huge gold imports
of: the 30?S;
The very rapid in¬
crease
also
in; currency
augmented
in circulation
the
problem,
that by the end of 1942 the
ber banks; had to begin to
so
mem¬
build
their
reserves with the Federal
Reserve banks. To insure that the
member banks would be able to
up
do this and without
did
not
total
outset of the
war
pegged the short
term interest rate at %
Bills and % % for
of 1% for
Certificates, and
did
not
legitimate business
cash
to carry over $25 billions
in its pockets or in its
registers during the war. And,
certainly, there was no need dur¬
ing the war, for individuals to
carry
$42
over
billions
checking accounts.
dant
liquid assets
We
that
securities
summarize
may
cheap
offered
by
by
the
saying
money was maintained
during the war by three methods.
First, Federal Reserve Bank ac¬
tion
in
want
to
that
invest
and
taken place.
The interest rate situation dur¬
ing the
war
follows:
interest
may be summarized
The Treasury set the
at.
%% for ,90-day
for long-term
hand, there
were very few new offerings of
corporate bonds or stocks, or of
real estate mortgages, to compete
with government bonds for in¬
Bills
curve
to
On the
up
bonds.
one
vestors' funds, and on the other
hand, when investors showed an
unwillingness to buy the requisite
amount
the
of
interest
were
government bonds at
rates at which they
offered, the Federal Reserve
banks provided the member banks
with the reserves essential for them
to
buy the bonds in such amounts
were
necessary to put the drives
as
they
government control of in¬
dustrial
activity and O.P.A.
trol
prices.
And,
without
price inflation.
a
start
must
to
get
be
out
Should
of
hand,
arbitrarily
con¬
third,
con¬
per¬
The British recognize this
The situation
a
pronounced
break
inflationary
which
might
out¬
encourage
holders to off-load their securities.
The second is the slackening of
war-time
controls,
physical.
These
financial
must
and
main¬
be
tained."
rates
low
it
and
that
it
is
prepared
openly
to pay
price necessary to bring this
about. In fact, the Chancellor of
the
been
Exchequer, Mr. Dalton, has
trying to drive them lower
wanted, and on its own terms as
to interest rates. It might have to
borrow for short periods of time
from
banks
Notes,
Bills,
on
or
Certificates, rather than from in¬
vestors
long-term
tem,
forthright
as
always in his
Currency
about
on
Banking
two
years
when the question of reducing
the minimum reserves required of
the Federal .Reserve
banks was
before Congress for consideration.
He said at that time in
substance,
ago
bonds,
Was it not inevitable that with
the
banking
system
manipu¬
so
industrial
activity
demands,
war
controlled
that
money
cheap?
It could
would- remain
so
Implications
of
War-Time
Cheap Money
There is
real
implications
the
of
way
money was kept cheap during the
war will be overlooked. The
proc¬
ess
of
more
less
or
creation
money
by
automatic
the
Federal
in prin¬
Reserve authorities was,
ciple, dictated not because it was
essential to finance the war in
this
manner,
but
because
it
was
absolutely essential to have these
excess
was
reserves created
if the war
to be financed without aban¬
doning
cheao money.
A larger
part of the Treasury deficit could
have been financed by the
public
of by the banks if
only
instead
interest
rise,
rates
had
because
been
allowed
rising
interest
rates would have made the public
more willing to buy government
bonds and less desirous of
holding
such a
large proportion of its
of
required
reserves
at
all.
What
then
should be the limit
to the possible expansion of Fed¬
Reserve Bank
eral
credit, if it is
not to
be gold reserves? Can the
banks constantly expand
their credit base by buying gov¬
securities with the aim
ernment
of
danger that the
grave
amounts
central
hardly have done otherwise.
for
dearer
bank
more
by the Fed¬
banks, with the result
that an ever and ever larger in-'
crease takes place in bank depos¬
its and currency, that the liquid
reserves
eral Reserve
individuals
of
resources
ever and ever
that
become
Reserve
becomes
larger, and with the
dangers of infla¬
greater and greater.;
the
which the FederasL
banks
can
therefore,
go,
in maintaining the present struc¬
ture of low interest fates will, i»
final
the
how long
analysis,
depend
upon
they want to continue to
put their credit into the money,
market by buying short-term gov¬
ernment securities at prevailing
1
Eccles,
Chairman of the Board of Gover¬
nors of the Federal Reserve
Sys¬
this
as
making
v
during the past year in spite of fixed
prices and thereby increase
a
scarcity of capital and rising currency and bank deposits with-,
This has so frightened the out
bringing on an inflationary majority of really competent stu¬ price rise.
dents of banking that the "London
A year
ago I called attention'
Economist" in its issue of Feb. 28,
The question the
Treasury and
to the danger of this excess money
the Federal Reserve were faced 1947 states that credit is being
supply in the following words:1
with once the war was over was: created at present at a rate far in
"Without any further increase
Can money be kept
cheap in the excess of that experienced during the amount of bank
deposits, we
future' by
these same methods wartime, and boldly announces are
today faced with the serious
without
endangering the price that the time has come for a little problem
of how long such huge
level?
There is no
doubt that deflation.
liquid resources as are now held"
banking authorities have learned
Moreover, the British see clearly by individuals can remain idte.>
how to regulate the volume of the
difference
between
cheap According to the Securities and
bank reserves so that our com¬
money
and cheap capital.
Her
Exchange Commission there was
mercial banks can always absorb financial
experts realize, and have an increase of
$37 billion in these
the amount of government securi¬
openly stated;: that Britain has a
liquid resources of individuals in
ties which investors themselves
shortage of capital. One of the 1945.: The total Increase in these
may not be disposed to hold in well-known
British
writers
on
resources since
the begininng of
the days ahead at the
prevailing banking and finance, F. Bradshaw the war
production program in
rate of interest. For all
practical Makin, in an article in
^"Barron's the middle of 1940 is $157 billion.
purposes, any mathematical cal¬ National Business and Financial
For a government to gamble .that
culation about the limits to which
Weekly" of June 18, 1945, stated these resources
will be held off
our
banking system can go to sup¬ that Great Britain's chief problem
the market until there is a suffi¬
port the government bond market in the postwar period would be
cient supply of goods to match. >
is futile and fails to
comprehend how to finance reconversion and them without
a
price increase is,
the real inwardness of the
prob¬ rehabilitation with her great de¬
playing with fire, indeed.
\
lem.
ficiency of physical capital, that
"In an economic situation such
The Hon. Marriner S.
is, plant
and at the
but that it was foolish for Congress to
gave - the
Treasury
its pass any law requiring the Re¬
money at the lowest possible cost, serve banks to maintain minimum
probably it did not worry too reserves against their deposits, and
much
about
this
phase of the that the Reserve banks should not
be
matter.
compelled to keep definite
on
if
are
prices.
and
materials,
time keep cheap money. The
"London Economist" has run a
same
series
articles
of
this
on
subject
that
it
be
The extent to
policy and keep
interest
and
money
government
money. The technique is nothing
but an ever-creation of more and
tion
Great Britain's Policy
Great Britain intends to
pursue
its cheap money
gressional Committee
getting all the
the
of
result
tain
of
limits
Nation
are
capable of
inducing a change in the interest
rate, though it is not certain that
they will. The first is the risk of
Makings* discussion
tied
so
that there
nothing mysterious about the
technique of cheap money and it
also should be apparent what the
is
states: "Two factors
statements, let the cat out of the
bag ;in testifying before a Con¬
was
Inflation
It should be apparent
it attempts to make money cheap
should the economic forces of the
that the Treasury had nothing
to wqrry about.
It could be cer¬
across.
up
Cheap Money Technique and
The "London Economist,"
in its Oct. 6, 1945
issue, page 493,
supplying member banks
they needed.
of
banks
the
save
have
prices
with all the reserves
Second,
central
causing
states
this desire to spend during the
past year that has been the bot¬
tom cause for the rapid price in¬
creases
the
trolled.
tained because the public did not
think it worthwhile to
buy more
be asked later.
The other assumption
that such action can be taken
by
W ;
to
stop an
inflationary
boom.
Probably they would be but the
beginning of further controls to
would sell.
is,
-
would in themselves be sufficient
all maturi¬
clearly.
part of
individuals
were
the
potential
threat to our price
structure cre¬
ated by the war and were main¬
the
bonds of
ties. This, of course, would fix the
price at which government bonds
their
the
on
government
redun¬
in
These
put it another way, the central
must always stand
ready
buy and sell at stated prices
banks
to
banks
but to spend was a mighty force
to drive prices
up.
It has been
rediscounting, to
the Federal Reserve banks at the
any
public
to
bank
the
of
bonds,
put.on about
bought by
savings institu¬
reason.
the
buying suasion and propaganda campaigns
deposits which were successful to a re¬
and
currency in circulation in¬ markable degree
(but have not
creased about 300%, from roughly
been so successful since the war
$60 billions in 1940 to $170 bil¬ was over) in getting people to
lions in 1946. The pressure to in¬ save a large portion of their cash
vest this
not
ever-increasing supply of resources and
attempt
to
money inevitably drove interest spend them for consumer goods.
rates down. At the same
time, the
Can Money Be Kept
desire on the part of some who
Cheap?
as
were
and
of
was
float
to
war
issues
every- three
months. ; Roughly,
about 60 % of the bonds purchased
ins, these
income
no
Treasury.
reserves.
by
individuals
for
sary
rowing huge
few years ago were
need
of
lated during the war and with our
a
contrary to
insure member banks with neces¬
particular after Pearl Harbor,
cur
Government was soon bor¬
have -been considered fantastic
received
cash
the
in
sums of money. War
bond drives in amounts that would
it
Certainly,
in
re¬
our
in -1940
program
and
purposes
•
jhow
which
whatsoever. To deny this, as some
writers apparently
do, seems silly
necessary to buy the government
bonds that were allotted to them
as
such
nance
offer
to
By doing this, the Federal
The
With
to
them.
wanted
banks
savings in cash and bank deposits
on
at these rates, whenever the
member
Financing
is
ready to buy these securi¬
securing ever-and-ever cheaper
money until the rate
has been
completely
of
interest
abolished,
as
Lord
Keynes mainatined that it
could be.
In brief, what is thisso-called
"technique
money" that
can
of
cheap
be used to keep
interest rates
permanently low if
the
government wants to
keep
them so?
1
Lord
Keynes
in
his
epochmaking book, "The General The¬
ory of Employment, Interest and
Money," published in 1935, first
out this technique in de¬
worked
tail.
It
In essence, it is very simple.
rests upon two main assump¬
tions.
First, that the central banks
will always stand ready to furnish
the member banks all the reserves
that
the
matter
member
banks
need
no
how
high their deposits
rise, and irrespective of how much
cash the people want to keep.
Or,
during the past two
years. In Mr.
he recognized
there would not be enough
capital to meet all the legitimate-
as this,
would it be a policy of
wisdom for our banking authori¬
ties
to
attempt to maintain a
structure of interest
as
they
rates
so
low
at present by putting !
are
out more money and bank credit
in. the country when the country*s
monetary supply is already redun¬
demands in England. He posed the
dant? Our bank deposits are more
question how to apportion this
than twice what they were a dec¬
available supply.
Should it be
ade ago; our currency supply over
through the price system? To do
four times what it was, Has there
this, he argued, would mean a free
interest rate and the end of cheap
advocated,
He
money.
and
of
the
been
increase in production,
sales, or factory payrolls
any
retail
that necessitate such
increase?
an
present British Gov¬
Is there any serious student of
policy of
finance who denies the inflation
having a Capital Issues Commit¬
potential of this huge monetary
tee, and before any business can
raise capital through an issue of supply? To augment it in the in¬
terest of cheaper money at the
securities in the money market,
it must get the approval of this present time is assuming a grave
risk for a small gain."
Committee,
This
is
"selectiveLet us see what has taken place
type" credit control to a very high
degree, probably more than our during the past 12 months. With
advocates of cheap money would full employment, a rising price
want, and -certainly more than level and a scarcity of consumers"
Coneress is likely to give them.
goods, one would naturally sup¬
Is it not a fair question to ask pose that our Treasury and the
course
ernment is following, the
the
advocates
money
in the
pay
necessary
money?
of controls
what
life
to
over
will
be
to insure this cheap
And, in the interest of
frankness
and
they
not
what
these
be,
ever-cheaper
are -prepared
way
economic
our
of
they
if
honesty,
openly
even as
the
tell
controls
are
should
people
likely to
do our British cousins?
Sometimes
it
would
seem
It
must
Reserve
the
be
admitted
Board
in
its
the
Federal
annual
to
that
policies
pursue
debt
solely
maintaining
in the interest of
artificially low in¬
terest rates.
Caution calls for the
exercise
some
of
restraint
the expansion of bank
time like this.
Implications
of
Bank
over
credit at
a
Deposits
as
benefits
of
cheap
money
are
held before us as
though they could be had without
any cost, and that through some
mysterious legerdemain our bank¬
ing authorities have worked' out
a
technique to bring this about.
though
Federal Reserve would have been
reluctant
led to further monetization of the
re¬
port for 1945 made a start in this
direction. It is. doubtful, however,
if the controls advocated therein
much
So
the
has
been
said
about
decline in bank deposits that
people, if not the majority
them, suppose that the public
deposits declined last year. True,
total bank deposits did decline,
many
of
but the decline
duction
1 See
of
the
Claude
L.
was
due to
a
re¬
working balances
Benner
"What
Price
Cheap Money" in Commercial and Finan¬
cial
Chronicle
of
May
(Continued
16, 1946.
on
page
30)
30
The Cost of
the
of
Treasury.
ministration
this
While the Ad¬
praise for
Treasury obli¬
have been some
deserves
retirement
gations,
of
there
other and
important changes
banking system which have
Tn our
-been
almost
completely
working balances
of the Treasury which have been
retired during the past year were
bank deposits that had been cre¬
ated from the last war loan drive
1945
and, in effect, were not
working balances of the Treasury
at all.
They were primarily idle
deposits; bookkeeping entries, if
please,
banks
the
on
books
the
of
of
the
count
of
the
never
exercised any effect what¬
country for the ac¬
Treasury, and had
anything other than the
soever on
books of the banks and the
,
the
count
of
these
deposits
used.
Treasury
had
ac¬
because
been
never
Tfye government obligations
which
paid
were
deposits
off when the
retired were mainly
were
bookkeeping
transactions
that
canceled
each
out.
The
Treasury
simply borrowed
more
other
money than it
needed, never used
it, and later paid it back. If one
examines
the
vital effect
on
bank
expansion
•Which took place during the year
1946, and which expansion had a
system,
an
he
whole economic
our
finds
that
there
was
increase for that year of some
$13 billions in the effective
mone¬
tary supply of the country.
The
Bulletin,"
243, states that "The year's
total expansion of deposits and
currency
held
by
the
public
page
amounted to
nearly $13 billion, or
nearly two-thirds of the average
increase
annual
during
the
war
About one-half of this
pansion
funds
represented
ex¬
shift
a
of
from
Treasury balances to
private accounts. • The remaining
half
reflected
was
in
net
expan¬
sion of the loan portfolios of our
banking system."
,
The figures broken down are
quite remarkable and show a rate
of
expansion
that
has
seldom, if
been equaled in times of
in this country.' Preston
ever,
peace
Delano, Comptroller
the
of
Cur¬
rency, recently announced that at
the close of 1946 commercial and
industrial bank loans totaled $14,-
237,000,000; consumers, $4,109,000,000 and real estate
loans, $11,675,-
000,000.
This
during the
loans
to
was
year
an
expansion
of 48%
of
bank
business,
70% in loans
consumers, and 30% in loans
to
based
real estate.
on
On the other
side of the banking system's bal¬
sheet
ance
we
that business
find
and
personal deposits increased
by $12,392,000,000, or more than
10%, during the 12 months, while
state, county and city deposits
rose by over $1 billion.
With such
an
expansion in
our
money supply, and with consum¬
ers
showing
desire to bid for
and manufacturers
often being willing to bid
scarce
a
goods,
all too
against each other for the materi¬
als necessary for production, and
with labor asking for increased
wages, how could one reasonably
expect that a rapid price increase
not
would
fires
fed
ensue?
The monetary
inflation
of
were
abundantly, at
prudence would
fed, and
time when
a
dictate
and
care
restraint in this connection.
result
has
been
a
price
The
rise
of
such alarming proportions that it
i$ extremely doubtful whether or
not the rise has not already set
up so many
economic
not
be
are
maladjustments in
a
such
a
credit
past
price
much
to
it
correct
our
may
them
business recession. There
competent
banking
that
structure
possible
without
students
of
-
our
system who insist that
rapid expansion in bank
as
we
year,
rise,
less
bringing
last
at the close of the war?
have had
coupled
cannot
over
this expansion?
that
Reserve
Why
banks
it
ready
was
stood
tax each and every year.
to buy it. In
in
the
shape
of
paid out
wages
long as they live unless
as
their incomes
amount
the
curities
that
the
member
for whatever the reason,
dispose of them? I think
banks,
wanted to
one
does
not
suspicious
primary
need
to
be
state
to
reason
over-
that
the
that the Reserve
authorities pursued this course
action was because they felt
of
it
necessary to do so in order to keep
interest rates low and protect the
Treasury's position.
I think it not
there
some
are
unlikely also that
who feel that for
the Federal Reserve
reassert
its
once
authority
more
over
to
the
market by making vigor¬
ous effort to put the country back
in a sound money supply situation
would run the danger of bringing
money
on
all-around
retrenchment
in
as
the short-term
it pegs
there
crease
such
was
no
a
doubt,
in¬
large
rates immediately
in wage
after the close of hostilities. It is
not
fair, however, to put the main
responsibility for the price in¬
upon labor. No doubt labor
crease
increased
costs
made for rising
and
movement
ward
such
costs
prices, but the
in
prices
up¬
was
originally instigated by inflation¬
methods of financing the gov¬
the war,
plus the failure to exercise some
ary
ernment's deficit during
credit
over.
ing
control
since
Back of it all
power was
war
since
and
consumer
the
more
war
was
purchas¬
created during the
than
there
goods to absorb the
interest
chasing power created thereby.
Although our people showed ad¬
prices have
at present
Why, then, does not the Federal
short-term in¬
Reserve defrost the
the
Federal
Treasury
with
sessed
money
costs.
and
apparently ob¬
are
the
in
Reserve
idqa that
cheap
us
think
the
afraid
find
free
that
terest rate
No
the
keep the cost of carrying the Na¬
burdensome. But in
totals
tion of two
lion
on
a
way
or
to
too
budget that
three hundred mil¬
pay
indeed
pay.
manage
a
higher interest
the debt is a small price
more
costs
to
becoming
$35 billion, the addi¬
over
for
helping
to
the Public Debt in such
as
to
reduce
its inflation
potential.
It
should
be
clear
that
artifi¬
understand
of
of
the
the
is
in-,
this,
than does,
better
Marriner
Hon.
ernors
it
so
could
Chairman
from
because
be
by
-
situation
that this is necessary in order to
Debt
money
price
market? The
proper
doing the
might rise. '
one
whole
their
must
answer
must be maintained at all
They would have
tional
Cer¬
terest rate and let Bills and
Summary
the
Reserve
Federal
the
of
bers
Bulletin.
tificates
were
pur¬
the
gone up.
Both
unfortunate,
was
rate
be increased by
can
that
before the finished goods came on
It
Individ¬
they will bear this sales tax
and
just
fact, with the scarcity
that existed in 1946, the
expansion in production in itself
increased the purchasing power
the market.
whenever
monetization'of the debt, with'
effects, so long
all its inflationary
levels and stands
because he seems to forget that uals who haye not been able to ready to furnish member banks
with all the reserves they need
in the absence of hoarding money, get their incomes increased since
the war began are
suffering a for expansion. This is admitted in
production creates the very pur¬
both the March and April num¬
sales tax of approximately 50%
chasing power that is necessary
to purchase
at prevailing fixed
rates, short term government se¬
S.
Board
Eccles,
of Gov¬
Reserve.
Federal
System. He analyzed it perfectly
in his
testimony before the House
Banking and Currency Committee
and his testimony is reprinted in
part in the April Federal Reserve.
Bulletin,
pages
402-4,
under
"Methods of Restricting Monetiza¬
tion of the Public Debt by Banks."
In spite of his analysis, however,.
Mr. Eccles
cially low interest rates can only
be
maintained
by the Federal
to
Reserve, under a free economy and
under our free banking system, at
still appears
the
process;
meet
initial step
issue
by
necessary
namely,
to
unwilling
taking the
to stop this
unpeg
the
short-term interest rate. He gen¬
spending this
purchasing power, enough of it the risk of bringing on an in¬ erally asks for greater selectivewas
spent to start the price in¬ flationary price rise. Likewise, it type credit controls which Con¬
crease ball rolling upward.
And is impossible for the Federal Re¬ gress is not likely to give him
know
not, but the simple fact
year
the ball got rolling serve to fix the short-term in¬ because to do so puts too much
remains
that
to
continue
such last
terest rate as low as it is at present actual bank management into the
pretty fast.
bank expansion as took place dur¬
without
encouraging
banks
to hands of supervising authorities.
Inflation during the war was
ing the past year for another 12
months would certainly at the end much less than during the first buy longer term bonds and fur¬
Present Situation Critical
ther monetizing the Federal Debt.
of that time, if restrictions were
World War because the technical
The present situation is more
One of the greatest peacetime ex¬
put into force, bring about a de¬ defenses against it were erected
pansions in bank credit that this critical than the public realizes.
pression much more severe than at a much earlier stage. These
country has ever seen, certainly Already bank credit expansion,
would be brought about if the re¬
major defenses were more com¬
necessarily caused by financing
strictions had been put on sooner. prehensive than in 1918 and they encouraged by the present ab¬
normally low interest rates, to¬ the, war plus, until very recently,
perfected
more
rapidly^
Hon. Marriner S. Eccles, Chair¬ were
gether with, the huge increase in a continuance of the same type of
They comprised high taxes (but
man
of the Board of Governors,
financing and debt management
money supply created by the war,
probably not on a broad enough
in his testimony to the Banking
must be held primarily responsi¬ since the close of the war, has
base), physical controls, rationing
and Currency Committee of the
ble for the rapid rise in prices helped foment such a price in-;
and price control.
As a purely
House, in discussing the problem
crease that it is very doubtful that
that took place during 1946.
of monetization of the public debt theoretical proposition, let us ad¬
the present situation can be cor¬
mit
tliat
jThe Federal Reserve authorities rected
comparable
defenses
by banks, met the problem frankly
without
bringing on a
might possibly have held infla¬ in their management of the Fed¬ recession.
when he stated that with thet Debt
But
the
longer 1 the
eral
Debt, until very recently,
Retirement Program approaching tion in check in times of peace.
present trend continues, the more
But to suppose that they would when some attempts seem to have
an end, there may be in the future
severe the correction will be when
taken
toward
curtailing
be effective
in practice, should been
a resumption of the tendency on
it inevitably does come. And come'
bank credit continue to expand credit expansion, have continued
the part of banks to sell shortit eventually will, no matter what
in order to support a cheap money to pursue with only minor changes
term securities to the Federal Re¬
inflationary credit policy is pur¬
inflationary
practices
fol¬
policy, is naive. Such controls de¬ the
serve in order to buy longer term
sued, because the stresses in the
pend absolutely upon the sanc¬ lowed during the war. Moreover,
securities, and he frankly stated
present price situation are rapidly •
the Federal
Reserve banks, by
that under the present powers and tion of public opinion, and public
becoming intolerable. The stock,
opinion in this country will not standing ready to buy from the market
policies the Federal Reserve could
apparently is not willing
support them in times of peace. jgnember banks ^®t fixed prices to
not prevent such a development.
gamble on the present situation
short-term governments, have in¬
He also stated that a decline in Whatever its merits or faults, OPA
lasting much longer.
How else
sured the member banks all the
long-term interest rates resulting is out. If the upward movement
account for its disregard of pres¬
of prices was to be controlled last reserves they masy need and have
from such an action would be un¬
ent high earnings?
desirable. In spite of this state¬ year and is to be controlled now, encouraged the phenomenal ex¬
In bank theory there used to be.
it must be through the control of pansion in bank: credit that has
ment, and with what I feel is a
an old
axiom that went unques¬
our
monetary and credit supply taken place during the past year.
thorough knowledge of the dan¬
tioned
for
years.
It ran some¬
and through preventing costs from Because of the^decline in total
gers inherent in such a situation,
further increase, particularly wage bank
deposits Resulting
solely thing like this. If central banks
the Board of Governors of the
are manipulated primarily to se¬
from a reduction,in the Treasury
Federal
Reserve
System
still costs.
cure
low
interest
rates,
such
maintain ridiculously low rates on
One does not have to believe in balances, the year's expansion in
bank deposits and currency held manipulation can only be carried
short-term
government
obliga¬ the so-called quantity theory of
on at the danger of
bringing about
by
the
public & goes
scarcely
tions and still stand ready to buy
money or in any arbitrary ratio
an
inflationary price rise. In es¬
noticed at all.
Bills
and Certificates from the of exchange between
Wh|le the Treasury sence, the only way the Federal
money and
was
simply payihg back during
member banks at rates so low as trade
to
see
the
dangers that
Reserve banks can keep money
1946 a lot of money .it borrowed
to encourage further debt mone¬
existed in our price structure after
in 1945 and that it did not need cheap is by increasing the money'
tization.
the war was over. Those who felt
and never used, Jbahk credit for supply of the country.
that there was little or no danger
Effect On Price Structure
the public exparicled at a rapid
Moreover, all the talk about the
in
the
excess
*money
supply
rate. The expansigomamounted to huge savings that took place dur¬
There can be little doubt but
gambled on the assumption that
ing the war shows a failure to
that the increased amount of pur¬
its owners would le;t it stay idle nearly $13 billion^ o£ nearly twounderstand the real nature of sav-:
chasing power put in the hands and that its velocity Would be low thirds of the avetage annual in¬
ings. In a very real sense, the
crease during the war years. (See
of the people, resulting from the even as it was in the
depression
March Federal Reserve Bulletin, savings that resulted dur.ng the
war financing and the continued
of the 30's. It seemed to me over
war were "phony" savings. They
.
rapid bank expansion since the a year ago that that gamble was page 243.)
were not savings in any real
sense,
war was over, has been taking its
This rapid expansion in bank
excessively dangerous. With the
if savings are defined as additions:
revenge upon our price structure.
scarce supply of consumer
goods credit, by, increasing purchasing to the
physical wealth of a coun-*
How
much
damage later it is in existence and with the in¬ power at a time when the liquid
try. They were merely "monetary"',
going to bring to our whole eco¬ creased demands for high
wages, assets of the country vwere already
savings. The physical goods that!
nomic
structure
remains to be
the price situation certainly was high and when consumer goods
should have been back of them,
seen.
There
are
already some filled with explosive elements. and raw materials were in short
to give them substance and real *
ominous sounds that all is not The
only credit policy that could supply, ' was one Of ' the*: major worth were war
goods—goods that
well.
have been followed with safety forces making for the drastic price
were
destroyed and wasted in
Mr. Bowles continues to tell us was to take such steps as were increase during the yearf There
battle. And, when the destruction ;
that if OPA had been continued, necessary to draw off some of the was an expansion of 48% iri bank
was over, all that remained with;
the upward movement in prices excess money supply in some form loans to business, 70% to consum¬
us
were the "monetary" savings,
could have been stopped. This is where it would do the least harm ers and 30% in loans based on real
In fact,
no place, nor do I have the time,
to our economic structure. Cer¬ estate.
consumer loans in the shape of increase in
cur-j
to discuss the pros and cons of tainly this supply should not have stand at an all-time high, while
rency in circulation or in bank
the
increase 4 in
total mortgage
his contention. Suffice it to say been increased.
deposits. There were no new pub¬
loans
for the
that something might have been
year
1946 alone
licutilities built, nor railroads
What Price Cheap Money?
was more than for the whole pre¬
said for it (but not much) if one
spending and perhaps cause a
severe
depression.
Whether or
not this would be the result, I
mirable restraint in
during the
with
such
a
.
be
stopped,
had
contracted,
without
tinuance
on a severe
it that no attempt was
exercise some restraint
was
to
made
in prices is
increase
exactly the same as a 10% sales
of goods
excess
10%
come,
Moreover, there was a very large
fallacy in Mr. Bowles' argument
expansion and fur-,
credit
bank
ther
*
March "Federal Reserve
years.
supply take place as
year right on top
supply that existed
money
of the
Why
The so-called
you
our
occurred
over¬
looked.
of
even
futile, to speak about controlling
an
inflationary price movement
when such underlying changes in
more
level, the price is far too much.
To a man living on a fixed in¬
Cheap Money
somewhat naive,
Is it not
(Continued from page 29)
22,1947
Thursday. May
&
FINANCIAL CHRONICLE
ETHE COMMERCIAL'
(2754),
business de¬
cline.
been
stricted
certain
of
the
tion which
OPA
that
had
increase
was
so
in
the
not
con¬
re¬
produc¬
vitally needed.
What
price cheap money? If the
price of the artificially low inter¬
est rates is increasing the mone¬
supply so that there is a
danger of a rapid rise in the price
tary
vious decade.
--
V
\
Federal Reserve Policy
The Federal Reserve
.ntni-4
+VllC
authorities
improved,
back
up
nor
factories erected to *
and give real
value to
these savings. Our physical
remained quite the same
plant
with thei
.Volume 165
exception of
Number
some
war
4596
THE COMMERCIAL & FINANCIAL CHRONICLE
industries,
This
while our inventories of
consumer
goods were
drastically reduced.
All that was
increased was our
money
supply.
competent
students
of
banking dispute the fact that the
primary cause of the price rise
,
Few
since
war
began has been the in¬
in
crease
the money
supply. The
National City Bank of New
York,
in
its monthly
letter for May,
spates
the
situation
tersely:
"The primary cause of the
price
rise has been the
tripling of the
money supply, as a result of the
wartime
expansion
of
bank
de¬
posits and currency in circulation.
money
created mainly
was
total volume of trade
by
plus
largely destroyed, but after the
borrowing ceased the money re¬
mained, while the supply of goods
nearly in balance; shipments
were
slightly larger than receipts,
available
buyers'
money
insufficient
was
The
wants.
The
interest
is
rates
as
tomer
of
cost
which
German
establishment
"Executive
of
a
Committee
for
Economics," made up of the
Ministers of Economics from the
.eight states in the combined area
and
a
Acting
through
the
German
"Office of Economic
Administration," this committee controls the
:
economic
development of the two
It is guided in
policy matters by U. S. and British
Military
zones.
•
Government
experts
what is
•
members
of
"Bipartite
;•
are
to
areas
Control
ef
'
the Committee and
which
•
of
them
Government
determining
Military
require
as
approval.
It
also
a
vernments.
It
should
'
however,
for the
•
responsibility
Trade
-
Reichsmark.
Hence,
if the
in
quarter
of
trade
for Economics in the joint
plan¬
ning of trade programs with the
Soviet
and
French
Zones.
On
Jan. 17 and
18, 1947, a meeting
; was held in Minden
between Ger¬
grams.
The
the
man
representatives
from
the
combined U. S.-British Zones and
from the Soviet
prehens.ve
:
a
com-
trade
interzonal
which
gram
.
Zone, and
pro-
included
vital
raw
materials and manufactured
goods
was arranged. This
program cov; ers the entire calendar
year
of
:
1947. The total value of the
com-
modifies
which the U. S. and
British Zones agreed to
deliver to
the Soviet Zone
during the first
,
.
.
quarter
of
1947
in
goods of equal value
.
imately
.
The
14
total
'
return
was
million
value
for
approx-
Reichsmark.
oh goods
to
be
delivered
during the last three
quarters of the year by the com¬
zones in return for
goods
Vfrom the Soviet Zone was
.
bined
.
.
than
more
mark.
eries
88
Hence
to
contract
was
Reichsmark.
;
.
million
the
deliv¬
100,000,000
overt
Although
the
pro¬
was
planned in its broader
outline. at
the
initial
meeting,
various technical
committees will
meet from time to time to
arrange
the details of deliveries
and
i
iron
out
any,
difficulties
arjse. One of the most
'
Reichs-
value of
be made under the 1947
by each party to the
agreement
gram
slightly
that
may
interesting
side lights on the first interzonal
trade meeting was that the
com¬
i
measured
Value of
•
1
.
'
•
*
been
Total-2nd Quarter
Total-3rd
secured
Quarter
9 Months Total
by Zones
%
by Zones
the
9
British
coal,
and
electrical
products have been obtained from
$142,300,000
and
incoming
re¬
ceipts for $141,500,000. Although
this volume of trade will not ap¬
large to
pear
ended in
war
was
Trade
has
a
Soviet Zone; and ammonia for fer¬
tilizer, light sheet steel, refractory
products,
precision
machinery,
and
optics from the French Zone.
It is estimated that it would have
been
necessary to
import 15 to 25
million dollars worth of
food, if
factories in the U. S. Zone had
been
not
facture
in
cans
a
position to
manu¬
in which foods could
be preserved. To make these
cans,
the British shipped steel billets to
French Zone, manufacturers
the
French
steel
into
turn,
were
Zone
sheets
sold
rolled
and
to
the
these,
German
in
can
manufacturers in the U. S. Zone.
In order to get the essential
goods
mentioned
above
from
other
zones, it was necessary to ship out
Commodities made or produced in
the U. S. Zone, such as
tires, dyestuffs, medicines, machinery, ball
bearings, electrical equipment
and
live-stock.
The volume of interzonal
trade
between the U. S. Zone and the
other three zones for
the second,
third an fourth
quarters of 1946
follows: It will be noted that the
of
Receipts fr.
S3,568,460
39,358,323
33
49
in
the
July, 1946, trade between the U. S.
Zone
and
other zones began to
irregular upward trend.
During the fourth quarter, mer¬
show
an
chandise to the value of approxi¬
128 million Reichsmark
mately
trasted
to
of
135,529,4E3
110,126,594
19
17
receipts
British,
as
from
197 million
con¬
these
Reichsmark
of goods.
Shipments for the fourth
quarter were only 1 % larger than
for
the
third
quarter, but were
61 % larger than for the sec¬
quarter. Receipts
for
the
some
ond
fourth quarter, on the other hand,
showed an increase of 19% over
receipts for the third quarter and
were nearly 80%
larger than re¬
ceipts for the second quarter.
Soviet Zone Had Widest Variation
A study
of monthly trade fig¬
indicates that trade with the
Soviet Zone showed the widest
ures
variation from
This
resulted
month
from
the
to
month.
fact
that
heavy deliveries on trade agree¬
ments between the U. S. and So¬
viet
Zones
took
place in the
months
that
are
not
out
of
line
For
example, the striking decline
shipments to the Soviet Zone
in
the
in:
not
as
pear.
fourth
quarter (105%) is
significant as it would ap¬
Large
shipments
stock from the U.
of
live¬
S. Zone in ful¬
filment of the third
quarter 1946
agreement were made in
July and
in
Soviet Zone
Receipts fr.
11,954,286
8,111,530
Shipm. to
5,188,520
30,884,707
Receipts
109,792,380
Shipments
164,431,594
180,112,614
112,783,351
40
47
45,351,492
496
49
56,587.362
60
16,323,679
15
14,980,997
2
197,204,634
181,694,953
36
105
19
1
(Decrease)
April-Dec
323,996,897
(Receipts
plus
Months—,:
;—____
271,498,954
111,042,216
57
23
69
152,037,740
36 389,495
51,054,224
8
32
11
•
471,428,608
474,590,918
100
100
"595,495,851
63
263,079,956
28
was
on
16
by
Sumner
B.
Emerson of
Morgan, Sta iley
a
&
New
Co.,
York
the
of
man
New
York
Group
re¬
of
the
Sumner B. Emerson
Invest ment
maintained
Association of America.
All ex¬
reduction in the
a
volume of currency will be
the
reform
fate
also depends upon
unification.
If com¬
of
action of all
is
four-'occupying
forthcoming, the
not
action
separate
in
the
American and British
of
merged
must
zones
weighed.
Other problems arise in connec¬
tion with the political aims of oc¬
cupation.
the
This follows the recent
The decentralization of
economy
must
be
achieved in order to make it im¬
possible for the country to reor¬
in
the
American
drastic
a
continued
was
Details
of
9
100
Savings
Treasury Department
when
decartelization
the
128th
on
May 19,
meeting
of
the
statute, which is aimed at destroy¬
IBA Board of Governors convenes
ing the concentration of economic
at French Lick
power in German
industry.
and
being destroyed, and other
been and are being
are
plants
have
removed
over-all
for
reparations.
The'
problem of reparations,
however,
still
remains
Springs, Indiana, i
Serving
on
the
New
York
Group Savings Bonds Committee
Prop¬
erty of allied nations looted dur¬
ing the war has been and is being
restituted.
War plants have been
to
be
solved.
Mr.
de
Chapelle, Shields &
vice-chairman
for
la
Emerson
Richard
under
|
are:
Com-f
New
York; Wilbur G. Hoye, Chas. W*
pany,
Scranton & Co., New Haven, vicechairman for Connecticut; Arthur
R. Robinson,
Fidelity Union Trust
Newark, vice-chairman for
New
Jersey; Walter F. Blaine,
Goldman, Sachs & Co.: and Rob¬
Co.,
The lack of unified action of the
four occupying
powers, moreover,
creates uncertainties that are det¬
rimental
to
economic
progress.
ert H.
Craft, Guaranty Trust Com¬
pany.
As long as the
management of an
enterprise does not know whether
or
not
plant will be subject to
or to destruction, or to
removal
under
the
reparations
program, it -cannot make definite
plans for reconstruction or start
,
a
Charles Cutter With
restitution,
Moseley in Chicago
CHICAGO, ILL.—Charles F.
an
investment
program
which
might be interrupted at any mo¬
Cutter has become associated with
the Chicago office of F. S. Mose¬
ment.
ley
Finally,
has
to
deal
military
with
the
government
problem
question
of. economic
unification
again becomes decisive.
As
international rather than domestic
controlling
resulting need
interzonal
For
pay¬
ments.
18 years he was
problem
of equilibrium
interesting
to
is
the
Salle
with Hal-
Stuart & Company with the
exception of one year spent in
assisting in the re-organization of
the Illinois Department of Finance
as
chief
years
investigator
department
J from
and
four
spent in the Air Operations
which
of
the
he
U.
was
1946 with the rank
S.
Navy,
released
in
of Lieutenant
Commander.
Mr. Cutter
particularly
La
sey,
long
unification is not achieved, in¬
terzonal trade must be treated as
as
for
& Co., 125 South
Street, it is announced.
of
bal¬
of international payments of
The
946,019,526
IBA
the
\
was
"
87,443,719-
the long term,
over
said.
Bonds Program are to be worked
out
with representatives of the
has
zone
Committee, of which Mr.
a member, and marks
the
resumption
by
investment
bankers of an activity to whichi
they devoted a great part of their
efforts during the war. The IBA
program is being timed to supple-f
ment
the
Treasury's
mid-year
campaign in June and July to
promote (1) individual sales, (2)
the Bond-a-Month Plan, and (3)
the Payroll Savings Plan, but will
Emerson is
it
ganize for aggressive purposes. In
this connection, military govern¬
enacted
Savings
a
Bonds
be
German
ment
appoint¬
national IBA
of
ment
neces¬
Obviously, the execution of
a
powers
be
Bankers
indefinitely.
perts agree that
commerce, with the
'
May
The disproportion between
currency
the merged American and British
zones.
In
this
connection, the
Totals
area
the supply of money and of* goods
at
prevailing prices
cannot
be
ance
RM.
Sav¬
City, Chair¬
is
reaching equilibrium in the
Zone
this
attention
August,
thus greatly increasing
the third quarter totals.
Likewise,
of
announced
form.
stand¬
Beginning in
year.
sale
Another problem that urgently
advantages and 1 disadvantages
Shipm. to
•
as
of in-
bankers in
promoting the
in separate self-sufficient
later
39,790,931
55,659,447
26,332,401
redeveloped
to direct the activities
ings Bonds in
needs
with the Soviet Zone. How¬
and "Shipments to"
Other Zones
2nd, 3rd and 4th Quarters 1946
Shipm. to
67,803,900
be
to
of
rest
to cooperate with the U. Sr
Treasury Savings Bonds Division
and
developments
mon
the U. S.
French Zone
upon
stability
the
vestment
will
zone
deliveries under this pro¬
gram
did hot take place until
the
in
is
or
negotiated in February, 1946;
zones
materials from the
each
in
tee
parts.
From
ever/
seeds,, brown
coal
briquettes,
buna, glass and ceramics, and
raw
omy
such
was
in
ad¬
IBA Group to Aid
Savs. Bond Sales
year
a
view particularly to pre¬
venting the resurgence of German
war potential.
Most experts agree
sary.
it
one
with
The first interzonal trade program
was
powers
re¬
The appointment of a commit¬
ago, maximum levels were estab¬
lished for most German industries
unit
been
was
shipped out to the
French and Soviet Zones
chemical
occupying
in
our
economic
Germany and
Europe.
Level-of-Industry Plan to
changed conditions.
Under that
plan, which was approved by all
four
have
in
uni¬
in other zones and upon the
ques¬
tion of whether the German econ¬
of course, no
practically at
called
of '
repayment
must
we
handicap in many
fields, notably in adjusting the so-
largely depend
May,
1945, a complete break-down had
taken place in the German econ¬
zones.
economic
ia
however,
interest
our
prob-
vances.
We want peace, and we
know that in order to have peace,
of
a
amendments
prior to the spring of
1946. When the
to
as
is
<
.,.
Germany,
ceiving
calls
that this plan needs substantial
corrections,
but
the
necessary
American busi¬
an
nessman, it must be remembered
that there was very little inter¬
the British
Zone; various kinds of
£0
;—
Trade
Shipments.)
'
products,
chemicals,
75,348,449
__
% Increase Over 3rd Quarter
Total
from
113,118,985
April-June__
July-Sept
ex¬
Zones; iron and steel
machinery spare parts,
months
be
approximately $284,000,000. Of this amount, outgoing
shipments
would
account
for
"Receipts From"
Receicts fr.
% Increase Over 2nd
Quarter
Total-4th Quarter Oct.-Dec.
con¬
Fof
nine
would
Soviet
British Zone
*
pro¬
been, chnnot^be
statistically;'
the
gradually
expanding since the spring of
1946, the greatest increase occuring in the last quarter of the year.
ample, considerable quantities of
potatoes for seed and food have
and
for
zones
still.
tributed to meeting the immediate
needs of the German
population
in the U. S. Zone. How
much the
Summary Table—Interzonal Trade
r. i
•
■
has
zones
has
other
trade
are
interchange of goods with
three
Uncertainty
May, 1945 to the early part of
1946, except for small deals trans¬
acted largely on a barter basis,
This
.
other
which
unification
economic
fication
be worth 30 cents, the total value
of the trade of the U. S. Zone
omy and there was,
between
the
,
•
•
'•
1947.
in
;•
Encouraging progress has been
made by the Executive
Committee
•
of
commodities that
included in the formal
not
economic
of
greater than
problems of Ger¬
many, but it will ensure the de¬
velopment of the whole German
zone.
trade
will, of course, be con¬
siderably increased by the volume
contribution
'
programs
out, the value of the
goods shipped to the French and
first
declaration
the
the
Zone
If the Reichsmark is assumed to
zonal trade
agreed
carried
are
of
Planning Progress
approximately 39 mil¬
amount
be
all
interzonal
trade
programs
rests with the German
Executive
'.Committee for Economics.
.
lion
the
that
planning and execution
be delivered by the respective
roughly 53,000,000 Reichsmark for
empha¬
subject to
the advice and
supervision of the
Control Group, full
sized,
economic
the programmed
commodities alone will amount to
channel of communication between the
German com¬
mittee and the two
Military Gov-
•
German
an
Soviet Zones
•
serves
22,
was
lems
far.
so
*
current
an
Our stake in the economic
Germany must be carried out.
Unification in itself will not solve
incoming goods
our
("receipts" and "shipments") with
interzonal trade pro¬
gram, covering the first quarter
of 1947.: The value of the
goods
the
of
for
basic necessities.
are
which
any
economy on a more rational basis.
tatives from the French Zone and
arranged
have encountered
as
the
as
entirely to payimports.
Only
export surplus is reached,
will it be possible for our merged
zones
to start repaying the ad^
vances
made
by the occupying
powers
for the importation of
First of all, the provision of the
U. S. Zone's Trade
officials from the U. S. and British
Zones met with German represen¬
who4
Economic
Jan.
the Soviet
to
from this
came
Interzonal Trade Program
called
Group." This Control Group is responsible for reviewing decisions
•
while 8%
mittee members present from the
three zones represented 93% of
the population of Germany.
On
we
"ship¬
ments" and for ,23% of our "re¬
ceipts." Only 11% of our "ship¬
went
overcome
great
as
As long
be devoted
must
ing
doubt
in¬
outgoing
our
sugar) under
as
no
Potsdam
of
(such
agreement.
that still have to be
for
32%
American public.
31
proceeds from exports do not ex¬
ceed
import requirements, they
is merely the first step on the road
to
rehabilitation.
The
obstacles
Zone,
57%
of the goods
shipped out, and from
our
the
What has been already achieved
British
received 69% of
we
from
Problems and Prospects
con¬
for
inflation, in the
end money purchased at that price
is not cheap but dear, indeed.
Chairman elected by them.
the
same
coming goods. Our next best cus¬
tomer, .the French Zone accounted
(Continued from page 7)
the
million
receipts
when
receipts. Our best cus¬
far during the nine
was
we
whom
low
the
took
which
The German Situation
was
471%
by
months
the
food items
Reichs¬
to
October
Soviet Zone resulted from heavy
deliveries during this month of
nine
trasted
mark for
of-artificially main¬
cheap money is rising
All of us will admit, I
prices.
the
474% million Reichsmark
for
pressure
cost
think that when
was
was
of
and wants forced prices to
taining
for
in
the neighborhood
of 946 million* Reichsmark. Trade
high level."
a- new
"shipments")
months
ments"
union
large
("receipts"
government borrowing from
banks. The goods for whicn it was
spent in the first instance were
(2755)
graduated from
the Universit yof Chicago in 1929*
His home town is
Elgin, 111.
,
BBBM
32
COkMERCIAL
THE
(27S6)
,
■'i'
It would
-A
ter—and.
they
nations
pos¬
of
sessed
their,
and
their
ambition
tion.
,
to
their
posi¬
utilization
wants
improve
domestic
(total
and
McCloy,
the President of
the International Bank, tells a re¬
vealing story of the urge to get
things into operation which he ob¬
served when, as Assistant Secre¬
tary of War, he was a part of
General Patton's advance.
Surg¬
achievement
Law
for
of
bundles cf
with
floors
brush,
and
steel
Men moved stones
of wall to provide
along the way.
sections
and
shelter against the
heap of rubbish lay a
and on the other side
giving birth to a baby.
Life
going on in the midst of
death; and the inevitable desire
for shelter, food, order, cleanli¬
and the implements to make
plainly evident. "If
have
onJ.y ! I
could
women
brooms-
and
given
those
men
would have had that mass of ruins
in within a day."
This is what the International
in shape to live
equipment necessary for economic
life, into the hands of people whose
every
instinct impells them to
better their own positions.
'V
t
7
-
•
'•
:
for
it
is
something
new
cooperatively
carry
private
sun—a
to
under
erected
tism of investment in that its de¬
be soundly backed
will
bentures
by the assets I enumerated
Bank
International
the
of
We
earlier.
support and ask
that you examine , the Bank and
its operations with the eyes of
for
hope
your
a
;
the capital
who
investors
conservative
1
will be clear to you that it is nec¬
this point, it
is important to essary for the Bank to go into the
the Bank's private investment market for the
be considered great bulk of its loanable funds.
adequate in themselves to produce This is not only a necessity, it is a
emphasize
again that
loans
r.ot
the
are
results I
to
We
have outlined.
and
mortar
fice.
These
labor
self-sacri¬
and
must
vate
funds to
the
The
This
loans.
situation
in
which applies for
sthe
re¬
country
from the
each
money
International Bank must be
in
the
United
the
will
bentures
New
These
States.
be
any
general obliga¬
to
'•
satisfaction.
our
1-."'
'
•
of
the
first
in
press
the
last
week, the loan of $250,000,000 at
3%% annually to the Credit Na¬
tional, a semi-publ:c 'corporation
i
economic
gram
reconstruction
pro-
adopted by the French Gov¬
A fact
which must not
gotten is the
between
the
can
be for¬
unique relationship
borrower
In
and
the
effect, the
make loans only to the
member countries.
Should
rowing nation default
a
bor
its obli¬
gations to the Bank—in spirit or
on
tee of that government.
There is no better evidence that
ing only to the nation in whose
currency it borrowed the funds,
but actually it would be default¬
ing to all its sister member na¬
economic
provisions
struction
of
the
of
morass
their
than
own
the
recon¬
On the basis
program.
French
calculations, this
envisages the investment
of the equivalent of some $18,900
program
.million
.
during
the
four
years
i947-50.t As much as 84% of this
proposed investment expenditure
i£ expected to come from domes¬
tic
resources—the
savings of the
fact—it would not be default¬
tions.
R.
Committee
Mr.
Emerson
are:
Robinson,
Fidelity
Co., Newark, Vice-
Trust Company.
The
appointment
Committee
cent
Savings
the
follows
appointment
IBA
of
of
a
Bond
and
the
marks
the
to
which
mem¬
a
resumption
by investment bankers of
tivity
re¬
national
Committee,
of which Mr. Emerson is
ber,
New
they
an
ac¬
devoted
a
great part of their efforts during
Such
a
default
would
cause
each of the other 43 member
tions' loss either through the
t
also
and
rary
Bank
ance
of international payments.
meeting
The
is
Fund
its
assist
intended
thus
in
members"
j
i
is used.
of the
the export of capital, it
expected that few, if any,
than the United !
be
can
in position to
not now
are
permit
conditions of tempos
disequilibrium in their bal¬
in
of the particular
currency
Since most of the members
interna¬
an
whose
member
to assist its members
fund
tional
provide
to
with the consent
members mother
would
meeting
consent to the lending «*
now
of their capital
the' 18%
of
temporary deficits in their", bal¬
ance
of international * payments.
paid
Accord¬
currencies.
their
in
in
sub¬
been
has
which
scriptions
Canada,
perhaps
and
States,
to
ingly,. for the time being, at least,
the only part of such 18% which
nancial assistance to its members will be available to the Bank for
for the purpose of reconstructing use in ;its. lending, operations -is '4
the $571,500,000 "which* will have or developing their productive far
cilitiesvand resources.
1
been paid in by the United .States.
the other hand," is
The Bank,, on
intended to
render long term fi¬
.
(3) The remaining 80%;: of; the
subscription of "each member is
subject' to call only when. re¬
quired to' meet the obligations of
the Bank.: It is in the nature of
lembership in the International
Bank
:
The Bank now has 44 members,
not including
Australia whose
ap¬
plication for membership is now a guaranty fund, which is not
pending. Of those 44 members, available for use in the lending
39 were represented at the Bretoperations of the Bank, but can.
ton Woods conference, one—Den¬
only be called and used to meet
mark
was admitted to member¬
the Bank's obligations.
Bank at Savannah,
four —Italy,
1946, vand
Syria
and
Lebanon
—
were
action
ernors
the
by
Board
for
Of
the
44
lending
will be
apparent from what
as
May
after
26,
follows:
1947,
>
in in
dollars
(1) 2% of its capital paid
nations
gold
represented at the
Bretton
Woods conference only
five are not now members of the
Bank.
They are Australia, New
which
As is
already said, the capital of
the Bank wihch will be available
of the Bank at its first an¬
September.
billion institution.
bnly in a very broad
$8
I have
to
meeting in Washington last
nual
an
sense.
ad¬
Gov¬
of
as
That iktrue
Turkey,
mitted to membership pursuant
Bank is frequently spoken
The
of
Ga., in March,
were
or
States
United
which is free for use in its opera¬
tions
(after
deducting
an
oper¬
ating deficit as of March 31, 1947,
the
war.
IBA
The
program
is
dis¬
being
timed
to
supplement
the
of which
June
nation
is
naturally entitled to its propor¬
tionate share, or, under more seri¬
conditions,
As I have said,
proportionate
share of the 80% capital subscrip¬
tion guarantee.
a
,
total—$1,599,179,665.
The authorized capital
the
Bank
is
$10
and
vidual
plan,
July to promote
sales,
and
the
the
bond-a-month
payroll
.^savings
plan, but will be continued
the
long-term, it
indi¬
was
over
said*
Organization
The
organization
The
consists of:
' rVr
^ri:
-.n.ii1
j
Vm.<. vdr 1;
t ,.k x 34
'x i Y.t
of
the
Bank
.
(1) A Board of Governors cdmposed of one governor appointed
by each member and -'an alternate
bers were fixed at Bretton Woods
for each governor;
'7ji [<'" "<i
and are set forth in Schedule A
to the Articles of Agreement of
(2) A Board of Executive'Di¬
the
Bank.
The subscription of rectors composed of 12 members
Denmark was fixed by the Board of which five are appointed 'by
of Governors at its meeting
at the five largest stockholders' (the
Savannah,. Ga., in March 1946. United States, the United 'King¬
The subscriptions of mew mem¬ dom, France, China
and India)
and
seven
directors ' who n are
bers are fixed in agreement with
such
members at
their admission to
the time when 'elected
membership is
approved.
For the purposes
be
The
(3)
President,
elected by the
to
is
United States
(1) 2% of .the subscriptions
capital stock of the Bank
the
by
Each
bers.
also has an alternate;
of analysis the
capital stock of the Bank may
divided into three parts:
payable in gold or
dollars, Original members of the
,
xt.i;
of the Bank
500,000. The amounts of the sub¬
scriptions of the original mem¬
:
Treasury's mid-year campaign in
each member
Russia,
Zealand,
beria.
of
the
and
1
China,
Greece,
staff
cq r.i s J M -v
1 vu;
=
(«
-
who
is
Executive Directors,
appointed by the
..jCi^choslovakia,
Denmark,
Poland'and Yugoslavia,
~s
.•
..
aggregate to the equivalent
$1,444,410,000. That part of the
Bank's capital can only be loaned
through consultation and collab¬
oration among its members on in¬
ternational
monetary
problems
na¬
sipation of accumulated earnings,
ous
,
of
stock of
billions divided
Chairman for New Jersey; Walter
into
100,000 shares of the par
F. Blaine, Goldman, Sachs & Co. value of $100,000 each. The total
and
Robert H. Craft,
Guaranty amount of the caiptal stock which
has
been
subscribed is $8,024,Trust
York
in
their
tions.
Chapelle, Shields &
Company, Vice-Chairman for New
ernment and has the full guaran¬
the people of France are deterhmined to help themselves out of
000.
Richard de la
Union
lender which exists.
French
ap¬
the
of
serving under
Arthur
Bank
the
•
Members
or
created to assist in the reconstruc¬
development of the
economy.
It will aid in
ex¬
dollars
$805,335)—$154,769,665;
(2>
Haiti and Li¬
Australia's 18% of the United States sub¬
application
for membership
is scription paid in United States
dollars—$571,500,000: Total $726,now pending before the Board of
269,665; (3) 18% paid in other
secured by the Bank's York; Wilbur G. Hoye, Chas. W. Governors.
&
curencies not presently available
Co.,
New
Haven,
to call on its members Scranton
for
The Capital of the Bank
for lending—$872,910,000:
Grandl
Connecticut;
additional 80% of their Vice-Chairman
tion
and
of
the
promoting the sale of
Savings Bonds in this area.
the currency necessary to
meet its obligations.
lars
loan
Association
-
announced
bankers in
capital subscriptions in gold, dol¬
Bank's
published
was
the
for
.
The Loan to France
News
be
mandate
-
h
■„
also
Bankers
direct the activities of investment
of their willing¬ Bank's loan portfolio, by cash and
forth the effort reserves such as the special re
needed to make full and produc¬ serve to be built from commis¬
tive use of the money they seek sions of from 1 to 1 %% on all
from us?.
That is the primary loans and guarantees.
They will
..question, which must be answered
& Co., Chairman of the
Group of the Invest¬
pointment of
a
committee
to
cooperate with the U. S. Treasury
Savings Bonds Division and to
de¬
specific loan or loans.
They
backed, in short, by the
given evidence
ness
to
bring
Morgan
Emerson,
America, has
will be
people of th~t country
B.
York
ment
tions of the Bank and not tied to
care¬
fully and thoroughly scrutinized.
Have
Stanley
those who need it.
the Bank will get this
additional loanable money is by
the sale of its debentures, initially
that
means
paid
States
ship at the inaugural meeting of
the; Board
of Governors of the
Group of IBA
Sumnef
way
from
come
people of the countries which
ceive the
For NY
of the Bank which
bridge of guarantees
safeguards to help cai^ry pri¬
is actually a
and
in in gold or United
is thus $155,575,That amount is freely avail¬
for use in the Bank's opera¬
been
and
promote freedom
in ' international
—
stated purpose
exporting, at the moment, dol¬
lar
exchange—hot bricks and
are
postponed is $4,915,000.1 The to¬
tal amount of the 2% which has
designed to promote internai o n a 1
monetary
cooperation
still
pioneers.
functioning of
the
and
Bank
between
ilege and the total amount pay¬
ment
of
which has been thus
is
are
The
successful
the Bank is im¬
present pressing need throughout portant to New England, to the
the member nations for United United States and to the entire
States foreign dollar exchange, it
freedom-loving world.
the
of
intended
were
to
stability
It offers conserva¬
of the world.
Private
Entering
If you are aware of
structure
Bank's Loans Not Enough
V At
Thus
Investment Market
which
funds
good,
where they will create jobs and
goods and purchasing power to
create more and more jobs and
goods both here and in the rest
is
Necessity
to issue a
where they will do the most
amortized by its due date.
broad economic terms,
was set up to do,
It will get the
tools of production, the. goods and
in
a
bridge
scheduled..
Thereafter
amortization begins at a modest
rate and increases
gradually so
that the, loan will be completely
cipal
shovels;'! Mr. McCloy stated, "they
Bank,
the
during the early years of the life
of the loan no repayment of prin¬
those
Bank
that picture?
that
pay
by
with the rest of the world.
home were
a
Woods, New Hampshire,
July, 1944, conceived the idea
establishing two great inter¬
national cooperative
institutions
.,
in the
1950 they will be
able to restore equilibrium in the
transactions :.of
the
franc
area
that
lieve
years
therefore, merely mention that it
The French be¬
period of time.
was
is
of
Agreement
of
Simply put, it
offers the advantages of pioneer¬
ing and the safety associated with
conservatism.
It is a pioneer in
production in a reasonable
off in
under
entitled
How does this Bank fit
into
plus
sort,
during the war
the Articles
invaded
were
in
outstanding debentures
point where it equals
pioneers.
expect
to
purchases of this
was
ness,
much
too
not
-
(2) 18% of the subscriptions to
alone, the Bank will have a record ternational Monetary Fund and the capital stock of the Bank was
of
performance inviting careful th3 International Bank for Re¬ subject to call for use in the
construction and Development.
analysis.
Bank's operations and is payable
in the currencies of the respective
The International Monetary Fund
Following the "New England
members.
All of that 18% has
Spirit"
We
are
not
here
concerned now been called, the last call of
Let's get back to New England with the operations of the Inter¬ 5% being payable on or. before
and the conservative investors and national Monetary Fund. I shall,
May 26, 1947. That 18% amounts
raw
the French will to work will
woman
a
is
It
that
•
the call against the United States
non-ferrous
and
194o.
date
when
they become members by signing
the Articles
of Agreement.
An
original member whose territories
able
including semi-finished
products
it necessary
is
them
reaches
metals.
Behind
dead man
wind.
a
industrial
of
numbers
j
required; to pay such 2 %
are
changes and to restore the flow of
international tcapital investment.
Those two institutions are the In¬
Transportation is to be im¬
materials
find
the
Bretton
part
or any
should
no
Long before the amount of the
were,
lighting fires to warm what little
food they might have picked up
to make all
available
t
that
4/v
•
to postpone for five
payment of xk°Iol 1% out of
2%.
Six
members have
bridge that gap, the representa¬ such
by Public tives of 44 nations who met at availed themselves of that priv¬
Congress, and
Congressional action
Bank's
proved by the acquisition of loco¬
the women of the
motives, and freight cars, cargo
group
began putting things in
ships and canal barges, and com¬
shape, clearing away masses of mercial
airplanes.
In addition,
debris, sweeping what remained the French will
buy coal and oil
they
-
At the moment the needs of the
call.
are
a
mill.
it
ever
purchasing equipment
modern
continuous
strip
French
bivouac: behind "a
great
rubble-heap which had been a
German cavalry stable.
Weary as
which they can produce.
7 '
:
_
United
the
authorized
was
necessary
of
of
171—79th
further
that the proceeds of
poses—to finance the import of
specific goods and equipment nec¬
essary to economic rehabilitation.
The French steel industry will be
modernized.
For
example,
the
hasty
purchasing
own
through the production of
exportable
surpluses
of
goods
:
contribution
States
people;
* ■
agreement as¬
the loan
will be used for productive pur¬
lowed them off the road into their
their
create
power
darkest
I'
-
vy vf vBank were * V" r*1. to pay
required
2% on or before August 24,
Members admitted after that
juiciHiv
-
tal
The French loan
hurrying to find shelter be¬
night-fall.
Mr. McCloy fol¬
gees
pro¬
of the French
sures
thus
moment
a
the
economies and
own
respective countries are so great
80% of its subscription, which Is and political and economic con¬
subject to call for the. protection ditions are so uncertain that pri¬
of the Bank's debentures, amounts vate
investors hesitate to take the
to $2,540,000,000., The entire capi¬
risks
involved.
In ^ order
to
and self-discipline
efforts
the
on
take
(Continued from page i 11)
;
of their
ing
contributed
40%
will depend mainly
this program
ing clown the road in the onposite
direction pushed a crowd of refu¬
fore
successful
propo¬
The United States
approximately
of the Bank's capital.
The
has
expenditures).
of
maintenance
The
The Tools Needed
V; Mr.
for
assume
should
one
possible view,
duction, plus imports, less exports
7,
...
that
people and of corporate
enterprises.
This is estimated to
equal about one-fifth of the net
resources
available for domestic
are
strict business
a
let's
But
still
exhibit, but they
enough.
The people of
practical mat-,
a
borrowing nation
would make every effort to make
good on a liability common to so
many friendly nations.
" ■
:
French
wjllingly
not
are
seem
sition—that any
(Continued from page 11)
war-torn
1947
Thursday, May 22,
& FINANCIAL CHRONICLE
Volume
Number
165
President
the
under
4596
THE COMMERCIAL & FINANCIAL
CHRONICLE
di¬
general
rection of the Executive Directors.
Under its Articles of Agreement
all the powers of the Bank are
.
vested in the Board of Governors,
are
reasonable terms.
on
purposes of the
such
rectors.
the
the
(with certain
powers
to the Executive Di¬
The
exceptions
admission
increase
of
new
include
members,
decrease
or
the
of
capital stock of the Bank, the sus¬
pension of a member, decisions on
appeals from interpretations made
by the Executive Directors, ap¬
proval of agreements with other
international
decisions with
organizations
and
regard to the dis¬
tribution of the net income of the
Bank and the liquidation of the
Bank.
In the Board of Governors each
member nation has 250 votes
plus
vote
one
for
each
share
of
stock
subscribed by it. In the Executive
Directors each appointed director
has the
the
number of votes
same
velopment of
cilities and
the loan
as
The
Board of
Governors meets
annually but may be called for
special meetings when required.
A vote of the Board of Governors
may also be taken without
ing by cable, wireless
The
Executive
a
meet¬
loan
is
Directors
meet
regularly once a week and are
continuously
available
at
the
headquarters of the Bank for spe¬
cial meetings at other times. The
function of the Executive Direc¬
tors corresponds generally to that
of a board of directors of a
private
corporation.
:
The
President
chairman of the
rectors
without
of
case
the
tie.
a
is
officio
ex
Executive
vote
He
except
in
chief of
the
is
Di¬
operating
and is
staff of the Bank
responsible under the gen¬
direction
eral
Directors
Executive
conduct
the
of
Bank's operations.
*•"'
In
practice there is close and
constant cooperation between the
President
his
and
a
be
as
made
and
committee
Bank
and
special
a
consisting of
members
more
the
of the
one
staff of
expert selected
by the governor of the member in
an
whose territories the loan is to be
made makes a
study of the project
for which the proceeds of the loan
are to be used and submits a writ¬
ten report of its recommendations
on the merits of such
project.
In
practice each loan application
and the data submitted in
support
analyzed and studied by
a
working group of members of
the staffs of the Loan Department
and the Research Department as¬
sisted by members of the Treas¬
of it
are
urer's staff and the legal staff of
the Bank.
This group is in con¬
stant consultation with represen¬
tatives of the prospective borrower
in
order
to
planations
mation
obtain
necessary
additional
and
whenever
staff
Executive Directors.
ex¬
infor¬
required.
The
results of the studies of the work¬
ing group are from time to time
the
and
At the regu¬
and
informal discussions at
such meetings the Executive Di¬
rectors
are
kept constantly- in¬
formed of the progress.' of the
Bank's affairs and exchange views
informally with the President and
his operating chiefs on matters
pending before the Bank. In that
way the Executive Directors are
placed in position to act promptly
all recommendations presented
to them by the President.
on
form
President
The Lending Operations of The
'
Bank
assist
of the Bank
purpose
in
the
reconstruction
development of
the
produc¬
tive facilities and resources of its
members
by making direct loans,
participating in loans made by
others or guaranteeing loans made
by others.
It may make loans,
participate in loans or guarantee
loans to
member
any
litical subdivision of
a
or
any
po¬
member
or
Zto any business, industrial or ag¬
ricultural enterprise in the terri¬
tories ,of
member.
any
■j>v If the member government in
; whose iterritories the loan is made
,
is
not
itself
the
borrower,
and,
therefore, the principal obligor on
th$ loan,,then the loah must be
guarapte^d by that member or by
f£ts,ceptra( bank
acceptable,, to
the
basis
or
the
«
other agency
International
meantime the Executive Directors
of
kept apprised of the progress
the studies through informal
at
their
meetings and
through memoranda summarizing
the factual data
Bank.
presented to the
The procedure is
guarantee a loan
unless it is satisfied that the bor¬
would be unable otherwise
loan
under
condi¬
tions which, in the opinion of the
vBank, are reasonable for the bor¬
rower.
"
\ Tt is thus
Bank
shall
not spe¬
it
the
obtains
member
ap¬
whose
be
bor¬
It is obvious that in pres¬
ent conditions the Bank must
rely
for some time to come on its abiL
of
it
the investment
United States, if
come
is
to
the
anywhere near to
the
applications
for
satisfying
loans which have
made to
been
it.
will be
or
•
The form and
se¬
curities which the Bank will issue
for that purpose and the methods
distribute
those
securities
are
still being studied
by the management of the Bank.
To a large extent the determina¬
tion of tnose matters will depend
on
market conditions when
the
offering is made.
Considering the
which
amounts
the
Bank
will
to borrow, it seems clear
that it will have to look chiefly to
need
large institutional investors, such
as
insurance companies and sav¬
ings banks, and others who cus¬
tomarily
invest in
prime
ties.
the
time, from
At
long-range
same
point
of
securi¬
view,
Bank should seek to have
distribution
a
a
the
wide
as
possible
as
its
of
engineering
and
eco¬
nomic matters the Bank avails it¬
of
the
services of
outside
self
experts
consultative
a
on
basis.
of
is
required by its
Agreement to make
arrangements
to
ensure
that
the
proceeds of the loan are used only
for the purposes for which the
loan was granted. When the Bank
makes
a contract to grant a loan
it sets up on its books an account
in the name of the borrower to
which the amount of the loan is
credited.
mitted
upon
The
to
borrower
draw
on
is per¬
account
that
submitting proof satisfactory
to the Bank that the amount to be
withdrawn will be applied
only to
the
purposes
was
for which
the
loan
Furthermore, having regard for
the general purposes of the Bank
and its international
cooperative
character, it intends to include in
contracts
provisions
the life of the
furnished
cur¬
concern¬
ing the application of the proceeds
of
the
project
loan; the
for
progress
which
the
of
loan
on-
guarantee
loans only where private investors
the Bank.
For
that
granted and general economic and
Provision
-will
also
whereby the Bank will
be
made
which
those
who
inter¬
be
may
Everyone
in
the
-*«
i
is, of course, inter¬
security behind any
obligations which the
Bank shall
From time to time various
Generally speaking the security'
What
Dehind the Bank's obligations will
Means
First: Its portfolio of loans;
Second: Its liquid assets in cash
in the special
reserve; and
Third: The 80% of its subscribed
and
capital
which^ is subject to call
only to meet its obligations.
The loap applications now
pend¬
ing in the Bank aggregate about
$2.3 billions.
Those applications
the
to
International
You
Bank
Booklet
telling
what the bank is for, how it was
organized, who its members are,
—
what kind of loans and
guarantees
it can make, how it will
supple¬
ment its present loanable
funds,
etc.—International Bank, Office of
Public Relations, 1818 H.
Street,
N. W.,
Washington, 6, D. C. —
paper—copies
requirements of the appli¬
which will be spread over
from one to three
years. Any cal¬
culations based on the assumption
Department
that
Stores
on
request.
cover
cants
the
Bank
will
have
made
.
Departmental Merchandising
Operating Results for 1946 of
and
—
Stores and
the
Association, 100
the
two
next
years
are
entirely hypothetical. As a matter
of fact, by the time the loans made
by the Bank pass the amount ot
the
United
the
Bank's capital,
have had
States
subscription to
investors will
adequate opportunity
judge of the soundness and
prospective success of the Bank's
lending operations.
an
Specialty
Congress of
Dry Goods
Controllers'
loans up to its limit of $8 billions
National
Retail
West 31st Street,
New York J., N.
(to members of
Y.—paper—$7.50
the
Controllers'
Congress and the National Retail
Dry
Goods
Association,
price
$3.00; 10 or more copies at
$2.50
each).
to
The
immediate consideration is
that the Bank can be of real as¬
Management
lations
in
Labor
and
Human
Re¬
Industry—Volume
&
1—
Industrial
velopment of international trade.
Relations
Yearbook and
Directory for 1947
—Industrial Relations
Publishing
Corp., 1165 Broadway, New York
Whatever may be the attitude of
the American investor toward his
nue,
duty
$2.00.
sistance in the restoration and de¬
as
citizen of the world to
a
contribute toward
of
sound
a
1946
the United
States sup¬
plied goods and services to foreign
in
countries
the
$15 billions.
and
1010 Vermont Ave¬
Washington, D. C.—paper—
amount
Private
New York Laws
Affecting Busi¬
world
economy, he owes it to himself
to support the efforts of the Bank.
In
1, N. Y.
the restoration
healthful
and
'
States.
of
over
or-commer¬
Of the remaining $8.2 bil¬
lions,
$3.2
billions
government
consisted
grants
of
private
and
contributions.
The remaining $5
billions was financed by loans and
credits of $3.5 billions and by use
Of; gold and dollar resources of
the
purchasing
balance.
For
people have prepared hypothetical
tabulations on the subject.
All
that
such tabulations have the inherent
countries
1947
for
the
it is estimated
$15.2 billions
weaknesses
of pro jorma balance
They present a static pic¬
ture
and
not
no
operations
reflect
over
course
a
period
a
of
time.
The
the
Articles
Bank
of
Agreement of
that the total
provide
amount of loans made
or
guaran¬
teed
by the Bank cannot exceed
its unimpaired subscribed
capital,
reserves and surplus. That would
that at the present time its
total loans and guarantees would
mean
be
limited
round
to
$8,000,000,000
in
figures.
Frequently
based
loans
made
tions
by
the
disregard
would
be
made
that
Bank
fact
time
have
that
before
the
by
are
that the
Those calcula¬
the
some
loans
Bank
amount.
it
the
could
During
that
time
some of the currencies other
than dollars may become available
lending,
total
thus
amount
the
more
its
the
borrow.
Bank
to
power
reducing
which
would have to
of
the
Bank
Further¬
avail itself
guarantee loans
may
which would also reduce the total
amount which
the Bank would
have
to
borrow
directly.
Moreover, during the first ten
years
and our imports of
goods and services approximately
$9 billions, leaving an excess ol
about $7.2
$5.4
billions, of which about
billions
will
have
to
be
fi¬
of
its operations the
is required to
charge
on
by loans and credits or
foreign gold and dollar resources
Unless this country is to face a
serious decline in its export trade
a
substantial
its
of
the
Bank
all loans
guaranteed by it and on all loans
part
of
over
its imports in
exports
next
nanced
that,
few
years
the
excess
must
be
fi¬
by loans.
rather
Some may say
than
make
loans
abroad, we should forego a part of
our export trade.
Aside from its
effect
calculations
the hypothesis
on
reached that limit.
for
total exports of goods and
will
be
approximately
our
services
nanced
need
other
on
our
their
countries
ness
Corporations
Annotated
April 18, 1947 con¬
and revised to
taining
the
—
amendments
of
the
Legislative
Session
which
ad¬
journed March 18, 1947—United
States Corporation
Company, 160
Broadway, New York 7, N. Y.
240
State Street,
and
Albany 6, N. Y.
;
mean
economies, that must
drastic curtailment in our
a
volume of production,
own
national
our
income,
corresponding
the
amount
of
the
loan
in
nomic
way,
Research, Inc., 1819 Broad¬
New York 23, N. Y.—cloth—
$1.50.
FIC Banks PlaceDebs.
(- A
successful offering of
issues of debentures for the
eral
Intermediate
Credit
two
Fed¬
Banks
was made
May 19 by Charles R.
Dunn, New York, fiscal agent for
the
banks.
sisted of
idated
1947
The financing con¬
$19,580,000 1.05% consol¬
debentures, dated
and
due
Dec.
1,
June
1947
2,
and
$28,510,000 1.10% consolidated
de¬
bentures, dated June 2, 1947 and
March 1, 1948.
Both issues
due
were
placed at
Of the
par.
ceeds
a
tures
outstanding
pro¬
$32,920,000 will
retire
be used to
like amount of
debentures
due June 2 and
$15,170,000 will be
used for new
money.
As of June
2, 1947 the total amount of deben¬
will
be
$355,-
750,000.
Dawson Director of
R.
W,
Dawson,
vice-president
decline
standard of living.
Ultimately, of
course, we must expect to receive
payment of our loans abroad in
imports of goods and services
branch managers, has been
elected
from
a
can
abroad.
and
crease
in
But
those
imports
should represent an in¬
our
standard of living.
The
plain fact is that, unless the
American investor is willing to
invest some of his savings in for¬
eign lending, he must expect tc
face
a
decline
in
the
income
his domestic investments. That is
the selfish motive which should
investors
me
that the American
should
not
appreciate that very
be
slow
in
the
Chicago
to
simple fact.
office
Frank-Guenther Law,
Salle
Street,
director of
to
mett
the
of
Mr.
associated
in
dean
made
today
by
first
office
Russell
with
Law,
La
the
Albert
Em-
of
manager
Rudolph
Inc.
Dawson was elected
in
a
the
became
Frank
Chicago in 1914, and
1921. Upon the merger
Frank
1
of
firm, according
Dawson
with
Albert
Inc.,
Corrigan, chairman
board.
Co.
and
announcement
or
It seems to
on
Interactions
—
Frederick C.
Bureau of Eco¬
espe¬
with a
in
our
impel the American investor to
support the International Bank.
num
Cycles
cially of agricultural products, and
in
a
it out of borrowed funds
commission of not less than 1 %
and not more than 1 Vz %
Price-Quantity
Business
which
goods in order to restore
own
made by
per an¬
be in. po¬
lating in the special reserve dur¬
ing the period in which the Bank
is making its loans.
rea¬
that, you will find them in a re¬
ceptive mood toward any ques¬
tions,
comments
or
suggestions
the
was
of
or out of borrowed funds.
That commission will be
accumu¬
Mills—National
tions of
reach
granted.
on
son
of
Bank
out
—paper—$2.00.
nity of
banking commu¬
the purposes and opera¬
specially retained by it to the
borrowing country in order to
study the project on the ground.
The
charge
made
foreign countries by the United
they welcomq any opportunity States only $7.1 billions were
paid
such as this to explain the func¬
for by imports and services
pur¬
tioning of the Bank. More than chased from abroad
by the United
the
and
sheets.
Articles
whether
cial exports amounted to
nearly
$8 billions. Of the $15 billions of
goods and services supplied to
public
necessary the Bank sends
members of its staff or experts
financial
_■
.adequate
issue.
technical
loans,
capital
securities.
ested
on
all
within
*
terms of the
by which it will
to
commission of 1 % per annum
a
of
rowed.
markets
policy of the Bank is
bal¬
the
in
to
are
the
depending
conditions in the coun¬
: v."
"
contemplated that the try where the project is located.
■"
make
that
of
applications
rently with information
or
the
provided
markets the funds
33
outstanding. That commission is
required to be kept in liquid form
in a special reserve to meet the
Bank's i' obligations.
The present
Bank
character and scope of the project
for which the loan is desired. On
"not
obtain
the
ested5 shall have-to off er;;^.
whereby, during
loan, it will be
to
Borrowing by
proval
(2757)
be:
cifically formalized and necessar¬
ily Varies as among different loan
In carrying out its purposes the
-seeks to promote private
.international investment. It canr
.Bank
rower
international
The Bank is- empowered to bor¬
row funds for use in its
operations
the** ultimate
of
recommendations of the President
to the Executive Directors. In the
its" loan
make
maintenance
in
of payments.
ances
and
When
to
of international
the
and
toward
long-range
the
understanding by the investment
the
to
reports
present
are
through
Briefly the
trade
of
growth
equilibrium
operating departments aqd
departments
is
effectively
promotion
balanced
the Vice-President and the heads
are
and
the
The ofticers of the Bank realize
that there is not now
presented
lar meetings of the Executive Di¬
rectors the heads of the operating
'
such
ity to borrow in
In respect of each loan
or
of
whole.
a
that
of the
the
of
the
for
to
members
letter.
or
is
the interests both of the particular
member in whose territories the
the
votes
that there
such
are
believed
most
sources
coun¬
prospect that the loan
The Bank is spe¬
cifically enjoined by its Articles
of Agreement to act prudently in
the
him.
of the
will be repaid.
loan
aggregate number of
the nations which elected
productive fa¬
resources
reasonable
as
same
de¬
try in which the loan is to be
made; that the project to which
the proceeds of the loan are to be
applied is technically and eco¬
nomically sound; and that the
amount, terms and conditions of
appointed
him and each elected director has
which
government
the
or
concerning all such
is
economic and financial conditions
and trends throughout the world
and to direct its efforts and re¬
Bank, that is, that
the proceeds of the loan will be
used for the reconstruction
It
provisions will be of increasing
importance in enabling the Bank
to keep informed with
regard to
used and satisfy itself that the
is within the scope of the
ie
loan
exceptions)
J
matters.
the Bank must weigh the
purposes for which the loan is to
gated
.
the borrower
On the otner
land,
Which may delegate and has dele¬
'
sition at all times to consult with
unwilling to make such loans
there
&
was
in
of Albert
Guenther-
1932,
Mr.
vice-presi¬
dent of the combined companies.
34
THE COMMERCIAL & FINANCIAL CHRONICLE
'(2758)
continue.
payments
Guaranteed Wage: Mirage or
(Continued from page 3)
both security and liberty, as well
not
one
confronted
for
guaranteed wages, to explain the
underlying factors which make
sustained wage-paying capacity so
Power
'
The
drive
current
for
guaran¬
teed wages may
.
have two unfor¬
tunate effects: (1) It implies that
employers are negligent in their
duties to their workers; that they
are failing through cussedness or
lack of humanity, to do something
which they could easily do if only
they had the right attitude.
(2)
real
It diverts attention from the
of
discontinuity of wage
well as $rom workable
remedies.
In fact, Jay C. Hormel,
one of the leading practical pro¬
ponents of steady jobs, has re¬
peatedly expressed regret that the
causes
payments
as
term "Guaranteed
Wage"
ever
Management's
sustained
to
vulnerable
control
the
demands
is
to
in
appear
unconcerned
be
with
the
of
living,
whether
payroll
the
which
workman
a
em¬
go
is
on
the
on
Does Labor Want the
be¬
unions
Labor
wage-
demanding
The
con¬
ultimately determines the
of production, but his
behavior is, in turn, partially con¬
ditioned by what happens to him
sumer
direction
as
producer.
a
From 1929 to 1933 the consump¬
of
from
greater stability of
employers, many of whom fade
after
a
few
months' operation.
creating
They ask what good is a contract
when
the employer goes bank¬
rupt?
The AFL unions, while
concerned with security, have not
was
difficult it would be for
more
an
automobile manufacturer to guar¬
antee wages than it would be for
oil company.
In response to
an
prospective
con¬
demand, investment funds
flow into new enterprise. A flexi¬
ble price system is the vehicle
sumer
through which
mands
supplies and de¬
themselves.
The
express
designers, the inventors, and the
innovators
alert
ever
are
and
is
some
The
our
entire economic system.
enterprise
wages?
go
Would
Pioneers in this difficult field
deserve
omy
Ex¬
perience to date raises doubt as
to whether annual wage plans
pected from their efforts.
and
ally,
cause
to
what
extent
is
manage¬
ment in control of the destinies of
its own enterprise?
If manage¬
ment is pushed into guaranteeing
wages will
management be driven
to try to control collectively new
competition, new investment, new
products, production and prices,
with the hope that it can make
good on the guarantee?
economic
if
this
sensitive
is
subjected
every generation to the tensions
system
and stresses of war, is it reason¬
able to expect it to operate on a
keel sufficiently even to permit
majority of employers to
antee wages by the year?
a
stimulate and retard.
guar¬
Wars
Wars make
subsequent periods of jerky catching-up inevitable. Wars upset the
normal
money
relations
between
the
supply and the price level,
further
instability.
stimulating
The
wave-like economic
ments set in motion
by
move¬
wars con¬
tinue for many years.
Is it possible for
promise security
and
business
their
to
stabilization
of
over
wide
a
activity,
for
is
the
success
operations.!
This company-by-company ap¬
proach has now been replaced by
the
CIO
with
a
"purchasing
power"
view,
lack
approach.
Under
this
depressions are due to a
earners' purchasing
of wage
guarantee of wages, it
is argued, will maintain income
and will maintain a willingness to
spend income as it is earned and
power;
a
thereby
perity.
maintain
eternal
pros¬
It would be difficult to find
to
who
devotes
his
an
time
impartial analysis of our
economy, who would agree that
depressions are due to shortages
of purchasing power.
Production always finances con¬
an
sumption, providing no one is
hoarding income. It is the failure
to
use
break
flow
The
income which may cause a
in
of
the
necessary
production
and
circuit
income.
guarantee
of wages
would not prevent the accumula¬
tion
and
obviate
of
come
those
when
purchasing
power
is
guarantee
what
it
is
important
will,
depressions
the
what
and
economics
(and
of the
busi¬
will
proceed to false conclusions
from erroneous premises.2
•
cycle, in order that
we
Guaranteed Wage as Liberalized
cases.
Unemployment
generally
compensation
run
for not
than half a year, whereas
the guaranteed wage they
more
under
for
run
52
weeks
depending
104
or
length
guarantee and its renewal
provisions.
the
on
of the
Under
unemployment compen¬
sation, the law requires the bene¬
ficiary to expose himself to job
referrals
through
the
United
States Employment Service to any
and all employers who may have
suitable employment.
Under the
guaranteed wage, job offers would
have to come only from the guar¬
anteeing employer.
To
repeat, is the guaranteed
wage
not
largely a liberalized
version
of
unemployment com¬
pensation with experience rating,
without
utilize
incentives
the
effectively that portion of
Unemployment Compensation
the
For
work, which the guaranteeing
ployer cannot use?
nearly a decade organized
'labor has opposed experience rat¬
ing in unemployment compensa¬
tion, under which the employer is
given an incentive to stabilize em¬
ployment through the payroll tax
savings. Yet, would not the guar¬
to
labor
Five
in
supply
productive
em¬
the foregoing
between
unemploy¬
ago
years
comparison
ment compensation and the guar
anteed wage would not have been
made.
The reason is simple. Then
constitute. 100% un¬ a few employers were engaging in
employment
compensation with a conscientious experimental
100% experience rating?
If the search to provide a guarantee to
their
employees.
These efforts
employer succeeded in providing
were rightfully applauded. Today
year-round employment he would
the
guaranteed
wage,
unfortu¬
not be called upon to pay'any unworked
for
wages
under
the nately, has become a political or
Government
gflarantee.
The same is true of semi-political issue.
Labor
benefits under experience rating is building up pressure.
unions are "demanding" the guar¬
in
unemployment compensation.
Some view the demand for the anteed wage/ Some of them are
guaranteed wage as an attempt to likely to make this demand upon
anteed
wage
-
-
take-it-or-leave-it
liberalize
unemployment compen¬
calling it by another
Labor's
principle
argu¬
sation
by
name.
ments
rating
experience
against
Management
actually
cannot
prevent unemployment because
the forces causing it are beyond
control.
its
It is unsound
2.
the
in
level
of
unem¬
ployment benefits.
3. It is unsound public policy to
have benefit costs vary from
ing-upon the amount* of unem¬
to
attributable
ployment
each
:
establishment.
4.
the
Since
•
community
as
a
whole is financially interested
in payments during unemploy¬
ment, all employers should pay
the
same
rate
regardless of
whose
are
unem¬
ployed.
carried
to
the
full?
The latter may be viewed as unem¬
ployment
benefit
compensation
rate
and
with
of the
100%
benefits
the
weekly
financed
by
charges only against the individual
employer,
depending upon
his
employment experience.
wage
When
posed
President
Truman
pro¬
Federal Treasury supple¬
to unemployment compen¬
a
ment
sation
immediately after V-J Day
($25 for 26 weeks proposal) there
considerable public hostility
was
toward this idea.
Since
then, the
abuses under the Veteran's Read¬
Allowances
and
the
abuses of unemployment compen¬
sation within the states during the
labor
shortages in the postwar
have caused further public criti¬
cism
of
these
programs.
Yet,
justment
not
would
guaranteed wage
the
abuses,
reduce
mobility and reduce the in¬
centive
to
with
be
no
work,
a
so
brief
incentive
treatment
FOR
MENT.
Chamber
pages,
to
find
long as the wage
see:
SUSTAINING
GRAM
U£A, 32
other' work?
guaranteed
wage
wage payment, there
100%
would
other
find
the
Under
be
forced.
apt to
be
At
the
"collective' demanding"
least
case
if
continues
genuine voluntary col¬
of
1945.
A
PRO¬
EMPLOY¬
Commerce
of
the
it
enterprise?
the
management has made
unduly onerous commitment
what will happen to industrial re-;
lations if a smaller commitment is
offered
the
the
second
additional
under
Would
year?
risks
substantial
of
business*
in'
industry in general, so deter the
pioneering enterpriser that prog¬
ress would give way to stagnation.
If
a
whole
a
guarantee
industry, say the;
industry, es¬
full-fashioned
hose
tablished
guaranteed
would
a
not
the
wage,
production
for
stock during dull years create the
risk
of
intensifying
the
very,
breakdown which it postpones? Is
this not likely to happen since
under the guaranteed wage,
have been converted
labor'
costs
variable
these
into
labor
whether
fixed
costs
there
the
costs,
from
that
so
be
must
is
not? If this is
or
met
work
any
done
likelihood, wilL
a time, ask to
a
industry after
be relieved from antitrust action
that
so
it
"regulate"
can
in
investment
and
because
the
output
industry,,
its benevolence in
of
tablishing
es-*
guaranteed wage.3 If
this anti-trust exemption is grant¬
ed how
the
a
long would it take before
workers
would
and
management
in
conspiracy
against the consumer, in the guise
of
engage
a
"stabilization" program?
a
These and many other questions
should be asked again and again
in
the
these
not the
questions.
and
Perhaps
important'
of
some
them
But it is better to ask
right
than to
most
Some of them may be
irrelevant
irreverent.
the
ahead.
months
are
questions
assume
that
now,
rather
glib and easy
this
high
devote
a
Questions
fied
glori¬
for the established sys¬
name
tem of layoffs by seniority? Even
if so, does the formalization of the
seniority system into
have
guarantee
a
If
52
some
the
value?
guarantee plan calls for
weeks
of
employee
40
hours,
does
the
guarantee
to stay on
job for 52 weeks?
Must he
give 52 weeks' notice if he desires
the
quit?
Is the hourly wage rate
fixed for 52 weeks?
Does the
em¬
to strike for
higher wages in the 52 weeks? If
the employee becomes ill or asks
for a leave, must the employer
still agree to pay him a full 52
weeks?
If a department is abol¬
ished, can the employee demand 52
weeks of income, or does he agree
to shift to some other department?
ployee
agree
at
least
for
reasons
We
much
as
150
should
time
as
to
do
we
This is the scien¬
successes.
spirit; this is the honest way,
long run, the only safe
and in the
If a guaranteed wage plan ex¬
tends only to the older employees
whom the
employer expects to
retain even during a major de¬
a
are
mortality.
Some
study of the failures
tific
Some More
at hand.
are
abandoned—there
to the
lective bargaining?
not
way.
"
.
Some years ago a
$25,000
on
for
search
The
scientist spent,
industrial re-r
chemical
a
search
scientist
some
to
hesitated
company.
failure.
a
was
The
the
report
failure to the management.
When
he finally mustered enough cour¬
age to inform management of the
failure, to his surprise the presi¬
dent said, "well too bad; but it's
worth $25,000 to find out that the
idea won't work."
In
assuming anything so formi¬
as a guaranteed wage, man¬
agement should not hesitate to
devote adequate resources to find¬
ing out what will work and what
dable
will
not
Then
work.
it
has
responsibility to the public to
port the findings.
a
re¬
A Negative Approach Not Enough
Nor is
this all.
The desire for
security and economic stability is
a legitimate goal.
No one can ob¬
ject to the interest of the Ameri¬
can
workmen in 52 regular pay
other, as part of the bargain, does checks per year, and year after
The literature op employ¬
the
old
or
the new wage rate year.
apply?
If the employer goes out ment stabilization is packed with
many useful ideas on how to elim¬
of business,
does his obligation
cease?
If
the
employee
works inate or reduce seasonal fluctua^
tions of wage income if not of
more than 40 hours in one week,
can
this overtime be credited at production itself.4
;,t ■;
If
the
from
a
employee agrees to shift
slack department to an¬
Eastman
guaranteed an an¬
nual income accept a lower hourly
Kodak, Armstrong
General
Foods,
G^ief^l
Mills and many other, companies,
have pioneered in the adoption of
employment
stabilization
tech-;
niques. Hormel & Company, Proc--
rate?
ter
straight-time to
some
week when
he works under 40 hours?
In sea¬
sonal industries will peak workers
also
come
Will
under
the
guarantee?
workers
Would
the
accentuate
labor
to
not
to replace
to
rating
ence
likely
isl this
.
If these arguments are
valid
against experience rating in un¬
employment
compensation,
are
they not equally valid against the
guaranteed wage, which is experi¬
be
to
where
guaranteed wage plans have been
plant or
strike, the issue
-
employees
point
the threat of the
pression, is it not merely
employer to employer, depend-
and
of
function
a
the
solutions
public policy for
employers to have a financial
interest
basis
through the collective with¬
If
an
to
drawal of labor from the
is
have been:
1.
then
become
avoided
tion
.
benefits
but
2 For
Labor and Production,"
by M. L. Cooke and Philip Murray, New
York: Harper & Brothers, 1940, p. 121-2.
"Organized
guaranteed wage will
indeed
such guarantees may make de
pressions deeper and prolong re¬
covery by delaying adjustments)
business management should be
prepared to analyze and under¬
mere
maladjustments
which precede depression.
Even
Karl Marx noted that depressions
1
employers to
j
basic
economist
War and Instability
Furthermore,
extended
of
area
in
guaranteeing
system of wage
it to slow down? Actu¬
be
can
a
econ¬
commendation,
but not too much should be ex¬
This
paralyze this dynamic system
great
ahead
Since there is grave doubt that
the
guaranteeing of wages will
pur¬
power
theory of pros¬
although as recently as
1940 Philip Murray said:
the individual
guarantees throughout the
naive
chasing
is its lifeblood.
If so, how far can
the
will
will not, prevent them.
what is
perity,
continuous
destruction"
pervades
"creative
called
sometimes
of
process
a
subscribes to
CIO
months
the
depression;
sions
to believe that for
emphasis may not be
primarily on further wage in¬
creases but rather upon the guar¬
antee of the wages which they
already get.
active. Through new competition,
substitutes and shifts in consumer
tastes,
reason
we
that management be properly in¬
formed
on
what causes depres¬
the
1948
pur¬
lowest,
its
Yet
guaran¬
fully main¬ been deeply enamoured of the
tained but the purchase of new guaranteed wage route.
motor cars declined by about 75%
A number of CIO unions are
-—some
simple
statistics
which preparing to make the guaranteed
show two things:
(1) How thh wage demand a major issue. For
consumer is
the ultimate arbiter many of them wages have risen
of
production,
(2)
How much 30% the past 18 months, and there
tion of gasoline
when
at
not
far
are
is
1921.
in
of how the
ness
Guaranteed Wage?
paying capacity depends upon the
customers and the solvency of the teed wages. Some unions, like the
enterprise and not upon the size National Maritime Union, admit
of the boss's pocketbook. Yet man¬ that the guaranteed wage is pos¬
agement can do something to keep sible only under a socialized econ¬
the customers buying.
While we omy; and we might add, then
speak of management's preroga¬ only if labor itself submits to de¬
tives and the range of choices open tailed state control.
History has
to management, every business is already indicated that if private
highly dependent upon the econ¬ enterprise is socialized, this re¬
quires the socialization
of the
omy as a whole.
John L.
In our society, economic activ¬ labor movement as well.
ity depends primarily upon vol¬ Lewis in 1937 demanded a guar¬
antee of 200 days work per year,
untary
cooperation
of
many
but has not pressed the issue. The
groups and sectors of the econ¬
omy.
The citizen is free, within International Ladies Garment
his means and ability, to become Workers Union claims that it is
job-seeker, job-maker or to be¬ more concerned with the problem
self-employed.
much
stand
unanimous in
come
hear
place
power
late in
as
incentive to
some
in most
might
not.
or
such
teed wage so raise the risks of
business, that private job-making:
paved the way for the socializa¬
providing
work
weeks,
ployees' problem of the overhead
cost
takes
chasing
the
would
vent
position of favoring insecurity and
to
pression
un¬
thus
If
management?
apt
all-time peak.
It might also
noted that recovery from de¬
an
be
Under
compensation
benefit scale usually ranges from
55 to 70% of the previous wage,
sustain purchasing power and pre¬
merely resists the
demands
for
guaranteed wages
without
explaining fully, care¬
fully,
and
sympathetically
the
reasons
for the instability, man¬
agement
at
employment
of
outside
forces
of
,
management
popular.
came
when
unrealistic
with
Business Ma*"*cement's Limited
Reasonable Goal?
world of wars?
Is it
of the responsibilities of
a
management,
economic progress.
as
in
wages
Thursday, May 22, 1947
the
guarantee tend to cause
to
hire
retard
of a
employers
requirement
fewer
workers?
business
Will
expansion?
it
affect
cause
enterprises?
small
the
How
business?
economy
to
will
it
Will
it
stagnate,
especially those parts of it which
are most susceptible to enormous
shifts
in
consumer
demand
upon
and
Gamble, and Nunn-Bush
adopted guaranteed plans
only after long study/much ex¬
perimentation and the developShoe
What
will it do to the incentive to open
new
Cork,
3 One
"The
be
labor
others."
a
has
leader
of
limitations
merely
reason
Personnel
the
Journal, April,
Would the. guaran¬
1946,
369ff.
4 For
see;
some
useful
GUARANTEED
ANALYSIS
ideas
guides
WAGES, AN ECO¬
by
NOMIC
and
Emerson
P.
Schmidt, The , Controller, January 1946,"
p.
23. and
the bibliography cited on
page.27.' :
."'0 M ■
.
short notice?
already stated:
single firm must
for cooperation with
.
;
Volume
165
THE COMMERCIAL & FINANCIAL CHRONICLE
Number 4596
jment of ways and means to make
>the guarantee practical. - Yet, we
should not
assume
:
^/responsibility kN.;
that what these
'
'
employ¬
company
ment regularization techniques
^may -bring much security to the
tion
an
indica¬
failure
the
of
be
to
follow
may
this principle.
a
changing consumer demand
may help greatly to prevent the
shrinkage of markets and em¬
much short-run unemploy¬
ment.
our
greatest
task
is
the
If this one policy
widely practiced, it
ployment.
avoidance of periodic mass unem-
alone
ployment.
would
were
'
To prevent this the in-
go
a
'
dividual
eral
1.
enterprise
crucial
take
can
mitigating
sev¬
steps:
as one
think
We
what must
know
we
be done to achieve reasonable se¬
monetary
stabilization for which business
curity, but have
what
assume
by
must be eliminated.
im¬
firms themselves
can
steps
moderate
labor and
contra-cyclical policies of govern¬
ment.
War as an upsetting factor,
term credit for what should be
a
is
the wit to do
we
which
on
whose
securities
the very
required?
The Stock
Exchange-A
People's Market
(Continued from page 7)
known
•
;
»
4
change policy.
acquaint investors with the
availability of facts
the investment
banker.
point
out
make
a
as
facilities for still
still
more
from
available
goods
to be exchanged for dollars.
The investment
features
to
form
one
to
will
that
property
readily
able.
With any purchase
portance, marketability —
reconversion of stored-up
work, and
more
the
fails
never
man
resale¬
of im¬
prompt
wealth
another—is
a
matter of legitimate and vital con¬
banker, in turn,
cern.
raises the needed funds by selling
these securities to a limited num¬
Thus, while the Stock Exchange
is properly identified as a second¬
ber
ary market, it is significant that
the primary market for securities
of
who
original
investors—people
saved
have
and thus stored
money,
their work.
•
modern
up
bears
a vital relationship to what
happening on the floor of the
Exchange. Only when transactions
there indicate a stable, sustained
part of
is
j
But the monetary
of
their
of
part
industry
requirements
are far too
interest
great to be assumed by a limited
There has to be the ele¬
group.
ment
of
marketability, so
this ownership of the facili¬
that
ties for work
distributed
volume
nancing
which
It
The New York Stock Exchange
is
the
social
We
secondary market,
wide and
prompt
as a
have
we
for
conducted
the
last
of
to risk his
industry
own
Nobody, outside of a
wants
to
Yet,
own
without
be
would
a
are
world
—-
We
are
They are members of all
political parties; they
and women, employes
employers, of moderate cir¬
with
are
many
securities
often
more
listed
well
Yet, the
average number of
in other public statements,
cautioned against the
as
fallibility
tips and rumors as
guides, contrasted with
solidly factual information
the
of
and
payment for their labor.
as
faith and
ings represent the stored-up work
ambition.
A
term
that has for
some
tinction
is
activity
we
speculation.
nology, it is
most
rea-
In
so
the
nation
of his
into
stock
idea that he
can
the
erroneous
million¬
emerge a
flier in the market" doesn't suf¬
a
fer such
physical violence, but the
fatality in his pocketbook: region
can be just as disastrous.
No!—in this market, as in any
phase of our nation's eco¬
nomic life, there is no alternative
other
to
sweat,
that
save x>rte.
And
alternative
tears—an
none
in
is
his
right mind would willingly choose.
Neither
the floor
on
American
is
there
riches
business
nor
and
out in
industry,
road
royal
any
the New
of
Exchange,
to
easy
for anyone.
These
times
troubled
are
world affairs. To each of
in
us comes
the frustrating thought that there
is little or nothing that we, per¬
sonally, can do to aid in the shap¬
ing of events to the ends that we
so earnestly desire.
We look to
the
of
men
Government with
our
the hope and
belief in
our
hearts
that they are doing all possible to
safeguard the common weal. Yet
there
is
always
the
nagging
thought, "If only I could do some¬
thing, too."
Must Have
To
a
Strong Nation
Each
answer.
automobile
far
of
us
matter
no
—
this
from
removed
seat
of
Government, no matter what
our role as private citizen—can do
something, something very tan¬
In
certainties
a.
one
world of
fact is
one
many un¬
ever
certain
safe
a
goes out of
na¬
his way
pick a scrap with Joe Louis.
The surest way for you or me to
the value of his
make irresistible
ments for
firms' financial affairs.
the
Few out¬
Exchange know
fraction of these
measures
even a
of self-
regulation.
•
J
Thei Exchange pioneered in
of
the standards of
best operators,
in many cases
indications
many
to
be
acceptable to
trade
competitive
all
association
inflation
members
will
and
result
unacceptable to the
as
munity standards
To
com¬
prices accep¬
table to the majority in number
of members of
an
or
association will
(3)
gold
a
sovereign is 40s 3d, so that
note
we
have today is
£1
worth 9s lid.
£1
Even after the last
notes
technically
were
redeemable in gold, so that in lit¬
tle more than 25 years the
pound
has lost 10s of its value.
I
old-fashioned
am
depends to
enough to
healthy democracy
large extent on the
a
a
self-reliance of individuals at all
income levels.
Part of that selfreliance should properly be based
on
thrift, which must have incen¬
tive based on real foundations if
people
to
the
self-
discipline of saving and to
long views in the economic
man¬
are
continue
take
agement of their affairs.
It is difficult to
incentive
quate
how the
see
coming generation
have
can
to
save
on¬
ade¬
when,
apart from low interest rates, cap¬
ital itself can be cut in half in 25
The
years.
are
truth
that savings
is
being drained
from in¬
away
dividuals and families and
concen¬
trated in the hands of institutions
and
corporate
the
economists
to
pears
bodies.
be
this
say,
may
to
me
Whatever
net
a
ap¬
loss
of
democratic strength.
man for a' that," but
can
if all his powers are
delegated in
"A man's
he be
a
so
advance to officials?
stronger.
There
are
signs that the
legislation fs proceed¬
ing at a greater pace than the
Civil Service and statutory bodies
can administer and apply it. Apart
volume
or
war
further
a
fall in the standard of living.
reject
£ 1
efficiency of their believe
that
are unlikely
these
(with corresponding
quality and price) modest enougn
of
from the reasonable doubts
on
the
We
have
to learn yet in
living together, both
nationally and internationally, but
the
art
does
that
much
of
not
common
minimum
a
must rest
on
a
sense
tell
dignity of
us
man
minimum personal
responsibility for the conduct of
practical limitations of "legislating
prosperity," an overloaded admin¬
his
istration
nation has gone through since the
could
dangerous
create
crises
than
cause
the
a
from
delay
series
of
other
no
in making
decisions.
affairs?
encourage a merger between the
FBI and the BEC so as to have
"opposite number" to the TUC
on the employers' side.
In the In¬
dustrial Organization Bill, though
an
the present
the work of
Governments.
many
The Ministry of Food has
insisted on wartime associations
continuing in 1947; the previous
Government did all they could to
We know what the
previous war, and
value of the pound is
(4)
Need for Objective Analysis
(7) I do not believe that any
single political party has the moral
right, whatever its political rights,
to offer
a
solution to
a
grave na¬
tional problem
requiring crisis co¬
operation from all sections of the
community unless the problem has
Sir Stafford Cripps has assured been analyzed objectively by a
the House (and his good faith can¬ group
fairly representing all
not be doubted) that the powers shades
of political opinion,
and
will be reasonably interpreted, the whose judgments- are based most
actual powers listed in the Sched¬ on objective impartial study and
ules are capable of being used to least pn party political bias.
the great detriment of efficiency
The foreign affairs of both the
and enterprise; and we must be U. K. and the U. S. A. have had
Ministers
individual
of
actual
Thus
permanent
powers
officers
senior
but
of
the
with
taken.
to
conducted
be
broadly
on
this
Who will deny that our
most serious home economic prob¬
concept.
com¬
pany are concerned nowadays not
only
every aspect
grace, we may contribute tomor¬
industry can be further investi¬
row in wisdom £nd tolerance, as
gated and policy promoted at De¬
velopment Council level.
Indus¬ much as our forbears did in eco¬
of
try is simply not staffed to formu¬
nomics
late
being of the world.
front of
ing
at
In
mighty outflow¬
of productive work we can
all
us.
the
a
a
America's argu¬
just and lasting peace
council
policy at
there is
a
will
tables
of
be
so many
grave
Secretary
to
points; and
efficiency
in
to stifle that true enter¬
ness, and
prise
on
which
our
national wel¬
National
us
have faith, hope and—
charity—but work.
Let us
—never
the tears of vain regret.
Of Maher & Co. in N.Y.C.
J. W. Maher and K. M.
Real Manager
both
of
(5)
that
I
have
progress
formerly
consistently urged
tion of Maher & Co., with
in
at
a
company,
industry; must' be based
on
Maher,
Maher
with
&
Hulsebosch, announce the forma¬
Economy
Let
not
politics, to the well-
Announce Formation
fare depends.
The
and
risk that the effect
reduce
operation of the individual busi¬
the
have the sweat of honest endeavor
the
are
effect
world.
side
car,
hands
practice, and to the con¬
stant, close supervision of member
ease
With which it can be resold, The
the
up
business
salesman
There
policy.
lems equally require the impartial
national approach, divorced from
with formulating policy at party passion, if we are to survive
company level, which is what we the
turbulent aftermath of this
are staffed to do, but also with the
last war?
gible in the service of our nation. formulation of
policy at industry
And that is work at the limit of
Only thus, as we necessarily
level, through the wartime asso¬
our
abate our position as a leading
productive ability while we
ciations, whilst at the same time
world power, can we do so with
are working.
watching important developments the
dignity of an immortal tradi¬
Our
national security
lies in at FBI-BEC level; and now we
tion, to a new level, where, given
strength.
And
work
makes have the threat that
how
explicit rules — important
though these are in a market as
free as possible from artificial in¬
fluence—but to a rigorous code of
are canny.
(2)
entitled to first considera¬
economic
(6) The current value of
the
concerned not with the intentions
thought, there is
positive, contructive, affirmative
every such
Marshall today is to put our own
hands to the tasks immediately in
better
in
through exercise of hunch, bring home the difficulty of carry¬
grapevine information, and that ing out promises of avoiding un¬
instinct
which
the
early barn¬ employment and the difficulty of
storming aviators called "flying working through trade associa¬
by the seats of their pants." Most tions of universal membership.
fliers of that type were embalmed The
outcry against a return of
in the cold type of casualty lists
competition may well be as strong
long ago. Fortunately, the heed¬ from trade association interests as
less person who decides to "take from
trade unions;
or,
indeed,
hold
a
are
tion
aire
change.
selling jibirits is the
on
who comes
market with the
strong nation is
many
that
that supervision of industries not
to be nationalized will be guided
more
No
only to the
more
service than before.
a
to
refer not
or
and
in
tion.
I
better
of
person
17)
page
research, and on a policy that
places the consumer interest in
price and quality of its products
above and before the interests of
private enterprise, but
not consumers get a
cheaper product or
less than
whether
demands
pay
strength.
market
or
for 40 hours' work,
with
some
"featherbedding" on
the side for good measure—and
of the labor leader who
48 hours'
—the
a
aware
agement like nationalization
be
element in the conduct of the Ex¬
who
any sort unless he can
his way clear to future realization of his profit.
expounds
of their
practice, is well
r*
necessity of good industrial
relations, and, I hope, also of ef¬ either management or labor. The
ficient management; but the com¬ ultimate
beneficiary of such a pol¬
munity must assert that the acid icy is the
housewife, who is the
test of Tightness in
changing the real manager of the national econ¬
form
of
administration
is
not omy, for it is families
and
not
whether the unions and the man¬ trade
associations or trade unions
to
founded
see
one
use
unsoundness
to Amer¬
women
property of
r
economic
was
Yet Americans
an
productive
...
dition and
of the
standards
new
It is not easy to sell an American
When
the
tween
■
essential difference be¬
no
responsibility is implicit.
Self-regulation is an integral
the expectation of
future.
I see
of
not afraid to stake the pres¬
on
entitled to fair
This company, by tra¬
third.
poor
a
theory of expecting more with
comparable United
States
money for less production — the
standards, where division of labor,
fallacy that there must be some H. P.
per worker, and availability
magical new way in this country of
plant are greater than in this
to get rich quick without work,
country. But to adopt efficiency
effort or
fraught with so
many implications related to the
national well-being,: a high degree
"calculated risk."
built by men and
were
ent
Our
are
People's Market
seek
savings.
important—the
Risk-taking .is not
icans.
who
speak of is informed
In military termi¬
a
they
believe, in all honesty, that
the
Exchange can properly be
called a people's market. It serves
all our citizens, without partiality,
; sort fallen into disrepute.
It is
••speculation."
But—and the dis¬
and
that
We
can
legitimately be applied to the pro¬
viding of venture capital, and it
a
great many men and women,
What Is Speculation?
There is another term which
is
a
quality, service, and price)
Even if British industries accepted
doing, we have been com¬
batting the same fallacy implicit
in
(Continued from
of
though maybe not in
intention) en corporate state lines.
Combatting Fallacies
In
35
Moving Toward Fascism
(in
that is available.
shares
is usually far less than 100,
Let us not forget that these hold¬
of
years
a
have
we
held
their
*
*
Ex¬
count their stock¬
holders in hundreds of thousands.
well
.*
the
change which
sometimes inclined
genesis in ideas—and
they would be little more than
ideas today had they not had the
backing of those with savings as
1
than
corporations
on
two
campaign of informa¬
advertising
in
newspapers
across the country, and in national
magazines. In this advertising, as
of the
crust.
all
There
a
units,
to forget that the great production
units to which we owe so much
had
they have
economic aspects.
mass
keeper, and
a
white elephant. cumstances far
risk-taking
ours ,the wealthy.
•
different
to
that
men
zoo
long hours and lower living stand¬
ards.
the
serve
faiths,
work.
world of hand power, small
.
well as
as
and
markets
the land.
supply of capital,
stock of stored-up
own
fact
people,
The Ameri¬
cans
who share in ownership of
industry today are numbered in
millions; scattered broadside across
at known
prices, there would be little in¬
ducement for the original investor
his
fi¬
new
essential to
so
basis
decisions,
tive
York Stock
our
not the upper
for the redistribution of the
securities
is
sig¬
to over-simplify the
of
overlook
its services
means
easy
functions
is the indispensable instrument of
that broad marketability. Without
a
of" the
a
business growth.
;•1.
affording
of
nificant
resold, and
broadly over the na¬
tion.
part of the rank
investors across the
nation, do we generally find
be
can
file
and
wider
the
on
the
as
for seasoned investment
the
estate
real
Through the underwriting of industry's securities, he makes available money for the creation of
•makes
■
financial mechanism
our
are
of Ex¬
essence
judgment.
ment of
sound
be based. It also has
hand in hand with the
can
companies
To
(2759)
the
to
Securities and Exchange Commis¬
sion in this essential function. Dis¬
closure of all essential facts
by
organized
of
available
investment
strongly.
most
supported
policies
expansion of short-
long-term financing,
portant
phase
of
be
must
-
the
way
But to be successful these
tories, an important factor in
making for subsequent contrac¬
tion.
toward
depressions.
It is
long
commended
Avoid the speculation in inven¬
2. Avoid
This anticipation
of
may
•
But
facts
judgment
listed is
workers, within the framework of
; avoid
investor
worked
inventories
*
genuinely free society. This'
making
type, quality and price of products.
The
slowing
down. of
sales or the accumulation
of
.
Prevent Depression?
Company by
of
tributor, as an aid to prevent
depression;; should be ever alert
constantly £to adapt production
and
distribution to changing
tastes and demand as to the
companies have done is transfer¬
able to every company.
Nor dare
overlook the difference in the
we
Can We
"■
the dis¬
3. The manufacturer and
problems faced by the durable
; and non-durable goods industries.
task
considerable measure of direct
or
sound
62
Git.w
:
offices
Street, New York
William
'
v
"
::
r ui .J JLii.
■fj
36
THE COMMERCIAL
(2760)
Thursday, May 22, 194%
& FINANCIAL CHRONICLE
This
is
ern
and face the
of con¬
clothe
themselves
future
(Continued from page 6)
the
in
international relations today.
degree retards revival in nearly fidence.
every
country of Europe
and
The contribution of the United
towards world livelihood
and reconstruction is best meas¬
States
Of
important
most
to the real¬
international
life.
The
of
year's difference be¬
tween imports and exports, more
than $5 billions is being financed
by loans and grants-in-aid from
the
United
States
Government,
up
coordinated
remains
of
The International Trade Organiza¬
tion must be established.
The
European
economy
fundamental
a
objective
foreign policy.
our
in order to carry out
economical and effective policy
Finally,
an
must
Conference
Geneva
And the achievement of a
whole.
Conference must succeed.
Geneva
this
trade.
attempting to face
questions ities
of
with some degree
Asia.
of the ways in which we are
Reconstruction
iii Foreign
V. s.
international
one
reconstruction along;
of relief and
the foregoing lines, your Govern¬
ment is going to need the exten¬
succeed not only because of the
factor is that unfore¬
emergency
supply and financial sion by Congress of certain execu¬
disasters—what the lawyers ured today not in terms of money
powers
over
the domestic
call "acts of God"—have occurred but in terms of the commodities through such instruments as di¬ situation that exists today, but also tive
because our position as the world's sale, transportation, and exporta¬
io the crops of Europe. For two which we ship abroad. It is com¬ rect
relief,
the
Export-Import
greatest producer and creditor na¬ tion of a limited list ot commodi¬
successive years unusually severe modities— food,
clothing,
coal, Bank, the International Bank, the
Such controls have been in
tion demands that for a long pe¬ ties.
droughts have cut down food pro¬ steel, machinery—that the world International Fund, and the loan
duction.
And
during the past needs, and it is commodities that to Great Britain. Funds for this riod to come we accept an ever effect during the war and are still
When in effect under the President's
Winter storms and floods and ex¬ we must concentrate our attention purpose have
already been au¬ larger volume of imports.
War Powers, but are due to expire
cessive
cold
unprecedented in upon.
thorized
by Congress.
The re¬ the process of reconversion at
home is completed, we are going June 30th of this year.
recent years have swept northern
mainder of this year's deficit will
third
A
seen
England with enor¬
and
Europe
agricultural and
luel production.
These disasters
have
slowed down the already
slow pace of reconstruction, have
impeded recovery of exports, and
have obliged many countries to
damage to
mous
irreplaceable reserves
draw down
of Our Exports
Extent
ing the current year, 1947, are es¬
timated to total $16 billions, an
peacetime high.
Before
exports of goods and
services
fluctuated
around
$4
all-time
the
war
our
gold and foreign exchange, billions annually.
which had been earmarked for
It is difficult to
imagine $16
ihe importation of reconstruction
billions
worth
of
commodities.
materials, for the purchase of food
This represents one month's work
and fuel for subsistence.
for each man and woman in the
of
Disparity
Staggering
in
United
Production
developments has produced a
parity between
States
United
of
rest
the
dis¬
production in the
and production
the world that
in
is
.staggering in its proportions. The
United States has been
spared
during the
destruction
physical
one
the
God"
are
when we were transport¬
our
econ¬
greater degree than had been an¬
ticipated.
The extreme need of
foreign countries for American
therefore,
likely,
to
countries
the
life
States
United
to
need
life
and
at
the
time
same
these exports
are
Requests for further United States
aid may reach us through the In¬
ternational
rapidly during the latter part
of 1948. The need, however, will
decline very little if at all.
off
activity.
And World War
II was many times more destruc¬
tive than World War I.
In the
nomic
production in the rest of the
probably the minimum that we
world, the United States Govern¬
should
make
available
to the
ment has already authorized and
late war nations planned on a vast
world.
•
is carrying out an extensive pro¬
scale and executed with new and
It is extremely difficult! under
gram
of relief and reconstruc¬
tremendously improved weapons
tion.
We have contributed nearly present circumstances to increase the destruction of the enemy's
$3 billions to foreign relief.
We the volume of our exports fur¬ economic resources, with enor¬
For in this country too, mous
have taken the lead in the organ¬ ther.
success.
Recovery
will
ization of the International Bank there is a great demand for com¬ therefore
be
correspondingly
for Reconstruction and Develop¬ modities, and foreign customers slow.
ment and the International Mone¬ must compete with American cus¬
One more thing to be consid¬
tary Fund, and have subscribed tomers. The character and com¬ ered is that as
great as is our
to these two institutions to the position of our exports will prob¬
supply of commodities and serv¬
extent of almost $6 billions.
We ably change, with lesser quanti¬
ices to the world during the cur¬
have
increased the capacity of ties of food, fuel and raw mate¬
rent year, it is still far short of
the Export-Import Bank to make rials being exported and increased
what
the
people of the world
loans abroad by almost $3
bil¬ amounts of steel, machinery and need if
they are to eat enough
lions. We have made a direct loan other manufactured products go¬
to
maintain
their
physical
of $3% billions to Great Britain. ing abroad. But the total volume
strength and at the same time
of exports is not likely to in¬
We are proposing this
year to
carry on essential measures of re¬
substantially
until
the
contribute a half billion dollars crease
.
reconstruction in
and a billion dol¬
lars to relief in occupied areas.
The President's recommendations
for aid to Greece and Turkey to
the extent of $400 millions and
for post-UNRRA relief to the ex¬
tent of $350 millions are still un¬
der
consideration by Congress.
And there are a few other smaller
relief, and
for
the Philippines,
items
a
Matter of National
Interest
measures
suggested by humanitarianYour Congress has author¬
ism.
ized and your
government is car¬
rying out a policy of relief and
reconstruction today chiefly as a
matter
of national self-interest.
it
For
generally
is
agreed
until the various countries
world
get
on
that
of the
their feet and
be¬
self-supporting there can
be no political or economic sta¬
bility in the world, and no last¬
ing peace or prosperity for ahy
of us.
Without outside aid, the
come
process of recovery in many coun¬
tries would take so long as to
In
and
its feet and
return
for
the
commodities
and services which we
furnish
the
world
this
democracy and the
in¬
dependence of nations could not
supporting.
til the other
Must Take More
Imports
What do these facts of interna¬
life
billions.
States
and for U.
is
back in full
we
year,
tional
as
are
production.
expect to
the value of about $8
self-
This will be true un¬
workshops and gran¬
aries of the world
estimate that we will receive com¬
to
become
and
modities and services from abroad
just about half as much
exporting. This volume
we are
of imports is equal to about two
work of all the factories,
tional
tions
and
for
mean
S.
United
the
foreign pol¬
icy?
a
mean
Volume
of
first that
imports
we
as
to
directly
the
survive,
world
for
can
hopeless
again
feed
rfnd
to
firms will be necessary
to
of
the
assign
producing
for a still
At
continuation of
export
controls is required in
order to direct exports where we
want them to go and to cut down
unnecessary and undesirable for¬
eign buying in the domestic mar¬
the
list of items.
restricted
more
same
time,
a
ket.
;
Needed Legislation
Power
to
assign
priorities
on
transportation are also
needed,.
This power is needed in order toinsure the efficient use of trans¬
portation
facilities, particularly
freight cars. Without such author¬
assistance in areas where it will be ity it will be difficult to move
most effective. in building world bulky export commodities such as:
political and economic stability, coal and grain in the require^
in promoting human freedom and quantities.
democratic institutions, in foster¬
Finally, certain legislation which.
ing liberal trading policies, and in would enable the Maritime Com—
strengthening the authority of the mission to insure maximum avail—
ability to supply, we are going to
have to concentrate our emergency
United
Nations^
ability
is
This
ping is required in order to insure the success of our export programs,
merely common sense
and sound practice. It is in keep¬
ing with the policy
President
message
on
Truman
announced by
his
in
to Congress on
special
Free
peoples who are seeking to pre¬
serve
their
independence
and
democratic institutions and human
freedoms against totalitarian pres¬
either internal or external,
will receive top priority for Amer¬
ican reconstruction aid. This is no
more
than frank recognition, as
President Truman said, "that to*talitarian regimes imposed on free
sures,
peoples, by direct or
gression, undermine
indirect ag¬
the founda¬
international peace and
the security of the United
of
tions
States."
ship¬
coal and
as
Legislative proposals of this na¬
presented to Con¬
ture have been
gress, or
will be presented in the It is of the greatest,
future.
near
importance to the foreign eco¬
nomic policy of this country, and:
thus to the security and wellbeing;
of
that these powers-
nation,
granted.
the
be
going the
who after
listening to an extended lecture
on
the grave financial and eco¬
nomic difficulties of nothern Eu¬
is
There
rope
"And
was
man,
a
and Great Britain, remarked.
just think, all the troublecaused by a blizzard."
think
I
story
a
about
rounds
Reconstruction of Germany
possible
and efficient use of
respect to bulky items such^
grain.
with
March 12
aid to Greece and Turkey.
of the
and Japan
from abroad in order that the fi¬
we
something
will all agree that
more
United States, and
to
this
us
year
amount to the
will
therefore
huge sum of about
can
to
$8 billions.
Problem of Dollar Shortage
the
U.
are
S.
necessary
for
what
they
port and to finance
foreigners going to get
dollars
be any stability or se¬
in commodities and serv¬
pay
ices
How
never
curity in the world for any of us
until foreign countries are able
to
ment
needs
sources
from
need
to
im¬
their equip¬
more
of investment.
normal
recovery
mise
that
is
can
not await "compro¬
through
we
possible
without
exhaustion," and
whatever action
must take
full
immediately,
Four
Power
even
agree¬
ment, to effect a larger measure
Today in Geneva our negotia¬ of European, including German,
tors are meeting with representa¬ recovery. European recovery can¬
hungry people often resort to des¬ how are they going to get the
tives of 17 other countries in an not be
complete until the various
perate measures.
The war will U. S. dollars to cover a likely dif¬ effort to negotiate a mutual re¬
parts of Europe's economy are
not be over until the people of ference
of
nearly
the
same duction in trade barriers and an
long
directly
priorities
third
a
Powers
States.
United
imperative for our foreign policy.
Since world demand exceeds our
hence
in the
United States must take as large
They
leads
policy
economic
foreign
equipped to handle
therefore may be made di¬
This
respect
retary of State and the Secretary
of Commerce
as
critical to the
not
are
powers
to a limited list of
commodities certified by the Sec¬
with
institu¬
international
and the ex¬
requires the
than a blizzard
has caused Europe's current diffi¬
consists large¬ nancial gap between what 'Lhe
The fourth thing we must do in
ly of things which are not pro¬ world needs and what it can pay the present situation is to push culties. But last winter's blizzard
did show up the extremely narrow
duced in this country in suffi¬ for can be narrowed. There is no
ahead with the reconstruction of
cient quantity. We wish that the charity involved in this.'
margins of human and national
It is
those
two
great workshops of subsistence which prevail in the?imports were larger, but the war- simply common sense and good
devastated world is just not able business.
We are today obliged Europe and Asia —Germany and world today, margins so narrow
to supply more.
that a blizzard can threaten pop¬
from considerations of self-inter¬
Japan — upon which the ultimate
ulations with starvation and na¬
The
difference
between
the est and humanitarianism to fi¬
recovery of the two continents so
nance
a
tions with bankruptcy and loss of.
huge
deficit
in
the
value of the goods and services
The dnly sound largely depends. This is what Sec¬ independence.
which foreign countries must buy world's budget.
Not only do human beings andl
from the United States this year way to end this deficit financing retary Marshall meant when he
and the value of the goods and is by accepting increased quan¬ reported to the nation on April 28 nations exist in narrow .economic;'
tities of goods from abroad. There
services they are able to supply
that action on behalf of European margins, but also human dignity*,
farms, mines, and laborers
give rise to hopelessness and de¬
spair.
In these conditions free¬
dom
on
weeks'
of relief and
reconstruction have been only in
These
soundly
genuine world prosperity may
carry a healthy multilateral trade
to higher levels.
a
This
Relief
part
world gets
construction
there¬
equitable
allocation
of
extension
the
time rebuild their economies.
same
will
sustain
to
This
demand.
port
with
vored
must
insure
to
the domestic economy
Bank, or through the
be available to offset next year's Export-Import Bank, or they may
deficit. But these funds will taper be of a type which existing na¬
sums
able
be
distribution of supplies as between
probably be only slightly in¬
creased.
Under existing author¬
considerable
Government
Your
going to have to undertake fur¬
emergency financing of for¬
eign purchases if foreign countries
are to continue to buy in 1948 and
1949 the commodities which they
will
izations,
urgently required to stave off
collapse, not just dollar
fore
have been fa¬
and
unusually bountiful ing and supplying not only our
This is not a bright picture. But rectly through diplomatic chan¬
own
huge armies abroad but a
nels. But we know now that fur¬
agricultural crops in recent years.
tremendous volume of lend-lease we must face up to the facts on
Production in this country is to¬
ther
financing, beyond existing
the rate of world recovery. It has
supplies.
day running at the annual rate of
is
going
to
be
been widely overlooked that af¬ authorizations,
Our exports this year are per¬
needed. No other country is able
$210 Ibillions.
ter the First World War it was
in quantity,
to bridge the gap in commodities
Responding to this highly ab¬ haps the maximum
only in 1925 that the world ar¬
that
is
likely to
be exported
or
dollars.
normal relationship between pro¬
rived at the 1914 level of eco¬
abroad in the next few years. At
duction .in the United States and
Moreover, we
war.
wheat
ther
1948,
in
that
mean
abroad, not just money. It
and coal and steel that
areas
is
capacity
of foreign
pay in commodities
the
while
also
com¬
credits.
international
of
facts
is
needed in critical
are
economic
Financing
The
that these
It
renewed.
be
modities that
is
Foreign
More Emergency
retarding recovery to a
me
war
which
to
has become accustomed.
It is vitally important
controls
are
undiminished
ports of the United States is twice
as great as the peak volume which
moved out of those ports during
activity
ness
omy
and the
year after that?
Continued po¬
litical
instability
and
"acts of
is
and gulf
de¬
more
to maintain levels of busi¬
war
But what of next year,
continue
moving out of east coast
foreign
the
exchange.
products
give you another indica¬
tion of the extent of our exports.
The volume of commodities now
far
pendent upon exports than before
*
factory and
mine.
Let
eign reserves of gold and
ourselves
find
to
invest¬
private
by
remittances of American
citizens abroad, and by drawing
down the extremely limited for¬
ments,
month's out¬
put from every farm,
accumulation of these grim
The
States,
covered
be
exports of goods and serv¬
ices to the rest of the world dur¬
Our
cover
this huge difference?
And
and amount next year? These are some agreement
upon
fair rules to gov» working together itua* harmonious J
human
freedom
and
democratic-
institutions.
It
is
one
of the
principal aims
foreign policy today to useour
economic and financial re¬
sources
to* widen these margins*.
of
our
It is necessary
if we are to pre¬
own
freedoms and our
serve
own
our
It is
national secur¬
And ft is our duty and our
democratic institutions.
necessary JEor
ity.
privilege , ^
our
^ »««
flTolume 165
Number 4596
iTHE COMMERCIAL' & FINANCIAL CHRONICLE
_
(
(2761) ,,3?
an
Stock
'A
({Continued from first page)
Eng capital, after further deducting
any long-term liabilities, can be
neglect
looked
of time
under
realize
tions.
mate
on
as
causes
of issues undervalued
relation
at least approxi¬
the real liqui¬
an
is
assets
to
amount
the
dating value.
discount from net working capi-
in
required in most cases to
potential values, as against
the quick changes in market value
of
measure
which
factor
Another
industry has flush years
output followed by lean years
nf
01
n
highly competitive condi¬
Large capital accumulations
essential
are
to weather
the
low
'
There
two
broadly
are,
different
of
speaking,
methods
neglect of securities
valued on an asset basis.
trend analysis.
There
almost unlimited number of
an
ijqractice only a few dominant
application, the more impor¬
being: (1) technical, which
the chart
analysts; (2)
eecUlar, with emphasis upon
growth; (3) cyclical, where eco¬
Includes
then
a
becomes
one
the discount is
of the pre¬
ceding three methods with various
other devices, such as
"contacts"
"formulas"
to whether
as
justifiable.
Often Justifiable
Discounts
(Vassar) and "major¬
It is taken
securities
Those who utilize the method
of
granted that the
tor
of
industries
some
should sell at
major fraction of
a
their
and
peculiar to itself, which could be
important to find
total
traded
the
Exchange for
264,935,000
.Volume
of
the
Stock
1901
year
shares.
the
largest
traded
that
in
time.
however,
number
the
459.7
the
aircraft
exists
how
to
as
manu¬
considerable
industry
long
a
for the in¬
to
relatively
the
and
the
models
reach
is
that
a
required
deliveries
of
new
profitable level
cash positions at
a
eat into large
can
fact
time
long
before
1925 to over a billion
1929., The great public
interest in the operations of in¬
dustry and the tremendous em¬
potential
In
models
new
million
in
upon
large
stabilize on a sound
postwar basis. Very heavy ex¬
penses
incurred
in
developing
shares in
phasis
a
rapid rate. This situation, to¬
gether with competition in the in¬
earning
dustry,
greatly
$till dominates the attitude of the
wartime
general public in
security evalu¬
ation.
Because of this
vesting
exnans:on, causes the in¬
public to place a large
power created
viewpoint which
a
highs
asset
re¬
turing companies.
But
position of many
companies
is ignored
and, consequently, op¬
portunities for
acquiring under¬
value securities exist.
to
The
wide
riods
swings
in
A
as
fact, it
BELOW
-Earned per ShareQtr.
1947
1946
1945
Columbia
Pictures
-o
-
Motors
t4.64
tl2.85
.
6.00
tBefore
.
4
a
March
31,
Months
3
months
c
f
Sept.
g Fiscal
h
n22.28
m2.44
,3.96
dl.27
1*3.66
-
>40%124%
52%-19%
*
.
16 %'
54.00
n3l,25.
j 3.00
14.80
60% -30
qlO.OO
15.40
,
q25.60
5.19
38%-16%
43 %
28.73
r2.93
43.30
I
-12%
51%-30(o)
19 %
30
"18.41 •
9.50
2.28
•4:66
•33
24%
■
-23%
36%-14%
30
37^21
•T5.45
-
N.A.
48
'
<12 %►•
37.30
n
1.59
4.65
m2.37
,
38%-21
'
.; 3.01
m5.41
N.A.
34.00
"
*11.48
NA
76%-38%
24%.:
46%-24%
26 %
47
15
■
-26%
39
-14%
33%
67%-31%
N.A.
d0.06
1.85
1.30
15.31
N.A,"
11%
26%-11%
g2.04
gl.63
hl0.70
h25.13
19%
36
2.12
3.30
5.60
38.20
35%
31,
61%-33
1946 balance
sheet
unless
long-term debt, preferred
otherwise
-18 y8
indicated.
k June
ends
m
30.
p 12
31.
.
June .30.
r
■
i
s
30,
for
31,
Nov.
2-for-l
30.
to
stock
split,
3/31/47.
1947.
ended
year
calendar
Fiscal
ends
1946.
months
Fiscal
lowing
1946.
year
Adjusted
q Jan.
Oct.
Oct.,31, .1946.
weeks 12/28/46.
ends
minority interest.
30,
Fiscal
Nov.
o
Sept.
ends
and
n
1946.
year
a
number of
of
the
of the foregoing in¬
change in the attitude
investor
is
not
to
be
ex¬
unless the
conditions pe¬
change
In
other words, the stocks of truck
manufacturing companies may be
expected to continue selling at a
low price in relation to net work¬
ing capital until, such time as
sufficient reason appears to sig¬
nify a change in the basic cyclical
character of the industry. At the
present time there is no .such in¬
dication either for truck manu¬
or shipbuilding. Uncer¬
prevailing in the outlook
manufacturing are
facturing
It is also important to note the
of
current
assets
composition
where
there
working
cash
exists
capital.
items
large
a
In
some
net
cases,
represent
may
the
largest component as is the case
currently with most aircraft man¬
ufacturers. In other instances, re¬
ceivables may bulk lafge in cur¬
rent assets. This
and
turers. It means, generally, that
management has followed
servative dividend policy
year
UtMarch. 31,
January of the
year.
ends. March
1946.
31.
fol-
in
the
past and retained in the business
substantial portion of earnings,
thus avoiding the need of bank
a
loans
in
periods of high business
Again, the securities of
this type of high net working cap¬
ital per share market price are
activity.
assets due to the company's likely to parallel
general market
policy of financing sales, as is to performances. The earnings out¬
be .found for some
agricultural look will be the decisive factor as
implement
companies.
And,
in with the general market.
still, others, inventories are the
; It is clear, therefore, that most
predominent factor in current as¬ securities selling at a substantial
sets.
The
latter
more
general
there
is
tween two
situation
one.
is
the
discount in relation to net work¬
evaluated
Occasionally
ing
balance
be¬
all three of the
ma¬
primarily upon their earnings out¬
look and not alone upon their as¬
relative
a
or
capital
are
be
to
jor components of current assets.
set
Companies with a large propor¬
tion of current assets made up of
good earning prospects and
accounts
less
.receivable
interesting
reflect
may
normal
quirements. Also,
normally
are
may
this
as
prove
condition
business
many
re¬
concerns
inventpries which
carry
large relative to total net
cur¬
value, which, in fact, is what
the market does. A combination of
a mar¬
ket price low in relation to net
working capital, however, offers
ideal
an
situation.
The
accom¬
panying tabulation presents 24
companies which are considered
within such
to fall
a
group.
Salvation in Repeal of
New Deal Policies
(Continued from
prolonged for some
time with the competitive factor
tails
being greatly heightened. As an
industry, therefore, it may be ex¬
pected that a low valuation of se¬
to the Government.
be
to
con¬
a
rent
aircraft
likely
is true for such
enterprises as retailers
heavy equipment manufac¬
diverse
lose"
you
game, with
the
lion's share of the winnings
going
And why cannot
or
dig
a
4)
page
CRUELLY DIVIDED BY CLASS
HATREDS!
And how about
men
lift
a
pick
shovel full of coal unless
form
of
been
changed
our
established
Government—hasn't that
bureaucrat
too?
Has
not
the
taken
over the
fiiaqWhy
capital
will
exist. Under such do we have powerful monopolies tions of the Leg:suture time and
circumstances it is
possible, of in the field of labor making rates again? Did not a New Deal Con¬
course, to find an individual situ¬ of pay for an entire industry? gress write laws that are so loosely
the widest
sort
of
ation whose eompeUive position Why are there threats of nation¬ drawn * that
is materially better than for the wide tieups in essential fields of powers have been given to the
majority of concerns within the activity which periodically crip¬ executive bureaus of the Govern¬
ment?
-And piled upon this con¬
industry. Recent technical devel¬ ple the business life of the entire
opments in the coal industry re¬ country?
Why do men cry for glomeration of contradictions we
relative
curities
to
working
net
garding the possibilities of coal
gasification and coal burning tur¬
bine warrant
a
reconsideration of
one man says
more
work?
he may do so?
money while they do less
Where did we get the 40-
hour week?
This too we inherited
determine to what from Roosevelt—but you simply
competi¬ cannot have a prosperous country
tive position of the industry may where people work less and the
only thing that is in constantly
be^ altered. Such a possibility increasing production is more and
this industry to
the
extent
unfavorable
holds^ considerable promise where
securities
selling
are
near
net
working capital.
It
is
therefore, that be¬
cause
a
security is priced below
what may be considered its liqui¬
dating value, this is not a suffi¬
cient reason in itself for believing
the
seen,
issue
bargain. On the con¬
a condition points to
the fact that some difficulty pre¬
a
trary, such
vails. But, the difficulty may be
that is being overcome and
one
which
cases
can
be eliminated. In some
it may be
a near
term possi¬
bility and where the market price
of the issue is being held down
because of difficulties existing for
factors
a
whole. In other
long range
technical
be involved or con¬
required to
may
siderable time may be
realize
the
dervalued
true value
of
situation.
The
an
un¬
fact,
more
Yes, here in our postwar, New
Deal America, disillusionment is
rapidly
overtaking
the
hollow
promises of those with the gifted
tongue and the ready alibi. But
we
are
still trying to solve the
worlds problems by printing more
paper
money
and issuing more
bonds
while we dole out our
dwindling natural resources to ar
envious
Asiatic
This too
Roosevelt
and
we
such
European
learned from
"shell
game"
only buy us hatred and in¬
trigue, but the lessons of the past
—
a
will
are
slow to take root in the
sciousness
of
con¬
people.
Fiat
money never solved our domestic
problems
and
will
never
cure
our
world-wide-problems but this fal¬
lacy remains with
war
world
us
of fantasy
in
our post¬
and human
blundering.
J
an issue is selling J
its net working capital
New Deal Class Hatreds
does not mean that it is cheap. On
And then there are the class
the contrary, it may! be indica¬
hatreds
how sharp and cleai
.
therefore, that
close| to
—
tive, of
some
fundamental
diffi¬
they
a
Roosevelt packed Supreme
Court
ideas
composed
of men whose
American justice have
of
condoned sit-down strikes in Illi¬
nois,
Klux:sm
and
the
in
South,
while they reverse themselves ad
nauseam
and able citizens walk
in fear of the future and know not
what the law is from day to day.
paper money.
world.
have
There
is
cancer
a
only
and
one
that
way
is
to
tf>
cure
CUT
IT
OUT!
Possibly the time for per¬
forming such a major operation is
long pas.t due.
However, if this
is not done it is only a question,
of time until
will
a
business depression
land. It can¬
people do
evils
from our political and economic
system.
What this country needs
come
upon
our
not be forestalled if the
not
eradicate
is honest
void
of
the foregoing
political leadership, de¬
palliatives, and
economic
return to Constitutional Govern¬
a
ment and sound fiscal
other
course
policy.
will solve
our
No
prob¬
lems.
Govs. Nominated for
Cleveland Bond Club
CLEVELAND, OHIO—The fol¬
lowing slate has been presented
for governors of the Bond Club of
Cleveland, four of whom will be
Where did the peoplf
culty. . Nor, does a large-asset of
chosen at the election
1
'
our
land learn to hate each
backing per share provide a de¬ other?
Clarence F. Davis, First Cleve¬
Did they not .hear hatred
fense against general market de¬
preached from on high for ovei land
Corporation;,. Stanley ,M.
clines. As a group, therefore, there
12 years of Roosevelt's stay in the
Eilers,
Hornblower
& > Weeks;
is iio reason to expect much vari¬
White House?
Why do young Harold L. Emerson, H. L. Emer¬
ation from the general market. A
Americans .n o w * associate
the son & Co., Inc.; Richard A. Getbroad list of stocks (Standard &
words "big business," "capitalism,'
Poor s)'priced near net working
tron, Gottron, Russell & Co.; John
"Wall Street," "National Associa¬
capital declined more than the tion of
Manufacturers," etc., etc.. Johnston, McDonald & Co.; Rus¬
general market during the break with
something that is evil in our sell J. Olderman, Field Richards
in the market last year.
way of life?
Is it not the Roose¬ & Co.; and Burton T. Reid, Ball,
velt disciples, the CIO's, the radi¬
Prerequisites to a Bargain
Burge & Kraus.
cal pinks, reds, and fellow travel¬
For an issue which is selling
Members
of
the
nominating
ers that are still carrying on their
near its net working capital to be
dishonest campaign of vilification committee were: Rudford K. Wil¬
considered under-valued, it must
against American business and son, Curtiss, House & Co., Chair¬
meet one of two conditions. Either business
men?
PROPERTY
there is a prospect of sustained RIGHTS TO THESE PEOPLE are man; John D. Burge, Ball, Burge
& Kraus; William H. Clark, Mer¬
earning power or that the time re¬ not deserving of the protection of
quired to realize the true value Government. All this is the legacy rill, Turben & Co.; Galen Miller,
of the company (through sale or
Mr. Roosevelt has left to us but
Hayden, Miller & Co.; and Robert
liquidation)
is relatively short.
YOU CAN'T HAVE A PROSPER¬ O. Shepard, Ilawley, Shepard & C
The latter possibility-is, of course,
are..
.
•
.
stock
.•
"
year
nl5.12
38.35,
nl7.78
-39%-11%
28
15
-28%
-45%-28%
•
*22%
39.41
-40.00
m4.63
%
12
k21.85
-
n20;43
,
1947.
year
30,
31.78
5 1S3
! 11-24
126
j Fiscal
kl5.80
• V.
'
d Deficit.
Fiscal
32.96
J»4.03
*■» <>**
!d3;83
12/31/46.
12/31/46.
"
e
30.70
0.66
Available.
b 9
.19.62
.
-36
58
"
deductions.
any
Not
4.72
25.42
v
63
29
28
-30%
29%-12%
V*.
38%
f28.90
h29.65.
j 2.76
! 2.70
;
m9.44
1.14
}After deducting
NJL
I 1:36
-
"V
Yfale & Towne^..
Dec;
-
•12
•46.29
fl9.80
hl6.55
N.A.
pl.67
Uiles-BementrPond
Oliver
Corp!
dp
21.79
e7.31
"
"Hat'lrDept.' • Stores
28atf l.Enamel'g &
Stamp'g
Price Range
61.64
i .•.-2.76«
N.A.-
,
1946-1947
Price
46
012:57'
-
!ViatkviTrucks,^-i.-:__v—N.A.
^Manhattan Shirt
Mid'vale Co..'! _dL~ri——
Recent
33%-15%
N.A:
Schaffner, & JMarx
■"Based
Capital
157/$
dl.27>
for
one
a
instances,
tWork.
Equiv.
30%
2.94
0.76
a
—'■Per Share
tCash &
$33.91
i2.-25.r. :d5.22
power
the industry as
a22.38
e0.37
d0.67 f.
ri
.
at
1.96
b0.79
.
N.A
sells
VALUE
$15.39
drill
,
which
CAPITAL
11.70
"J 2:32
,^2^2
c~
group
$2.02
0.35
"Crumman Aircraft
i
the
,g3.21
•
"Hercules
tremendous
$1.84
UM.57.
Continental ^Foundry
"Endicott Johnson
prevails in
-.0.55
izz~r4-i-£rb
.•Ctolt'srManufadttfrlhg
are/Obtainable at
war
WORKING
lst
'
that
similar condition
into
Mach J-"
confident
extremely remote and a
heavy drain upon working capital
is anticipated. The truck manu¬
facturing
industry,
due
to
its
highly
cyclical
character,
falls
successfully.
Butler. Br6s.„
tCincinneiti'Mill:1
into
appears
questionable whether more than
very few professionals can do
American Laundry. Mach.
N.A,
American Seating
$0.22
A. ■" T,
F.hlnc._n„^: J_-_ N.A. !
/Babcock"& WHcoxclLiiv Nf.A.
3Bendix .Aviai-ion
-1c0.65
the
delve
expansion dur¬
periods and lapses into a
very depressed state
in postwar
years. Worthwhile earning power
gen¬
SELLING
will
real values
goes
;to gauge the
of these
cycles
STOCKS
dis¬
shipbuilding. This industry under¬
ing
exceedingly doubtful.
24
lack
to
bargain prices.
as
so
situation
a
some
have become the
basis for deter¬
mining security values in the ma¬
jority of instances. That the
a
and
Consequently,
analyst
earning
In
exaggerate
such
relatively short pe¬
during the past two decades
timing and extent
Ul
general attitude tends
careful
over
eral investor is able
this
crimination.
Implies Success in
Forecasting
power
by
the
lows of the
market, the
or
accentuated
discount upon the large quick as¬
set values of aircraft manufac¬
over-em¬
phasis upon earnings, with its
sultant extremes, either at
In each
dustries
tainties
dustry
late
from
consuming
capital and thus dis¬
time will be required
to
up
to
reflecting tfie competition
fuels, principally oil.
for
doubt
was
shares
year
for
of
facturing
twenties,
the volume of
trading
skyrocketed
shares
of
single
any
In
This
relation
other
positions.
was
In
increase of about 25%.
earning
sipating existing strong financial
1919, the
318,273,000 shares, an
was
basis
amounts
shares
York
New
ship¬
notably
assets,
manufacturing. Each of these in¬
dustries has long range problems
the
volume
the
on
quick
building, coal, truck and aircraft
basis for the change.
The
in
culiar to the industry
seeking
undervalued
securities
primarily on the basis of -under¬
lying asset values are in the mi¬
This was not alwavs so
nority.
is
in
years,
pected
*
ity opinion."
it
discount
a
working capital is the coal in¬
dustry. Here we have an industry
which has been steadily declining
Discounts Will Continue Pending
Basic Change
discount does point
to some inherent problem.
But
having granted this, the question
eclectic, which
more
at
sell
net
from
ing at such
nomic and political factors
domi¬
and (4) the
one or
profits of lean
years. An example of a different
type of industry whose securities
culty. It is true that an issue sell¬
onet
tant
combines
non-existent
or
investment oppor¬
tunity is the general belief that a
stock selling low in relation to
asset value indicates some diffi¬
in this type of
find
nate
interest
to
deterrent
further
A
be used but in
can
under¬
eral
vestors is
is
of
public interest. It is probably this
element of time more than any
other which accounts for the gen¬
followed
by those seeking capital apprecia¬
tion. The method utilized
by the
great majority of traders and in¬
trends which
forefront
the
in
securities
opportunity
for
substantial
capital •, appreciation. The more
general case is an improvement in
earning power,
:
infrequent but one which affords
OUS
COUNTRY
WHEN
IT
IS
Co.
38
Thursday, May 22,
FINANCIAL' CHRONICLE
&
,THE COMMERCIAL1
(2762)
V
1947
v
-i
More Answers to; %Isthe Money
wartime deficits;
of
Supply Too large?'
(at
the
by
Treasury deficits financed by the
banks in a way to displace use of
their reserves in privately negoti¬
ated credit expansion,
This has
tended to deter business activity
relative to money supply and give
a semblance of increasing "liquid¬
the relative enormity of the
predilected theme of those econ¬
first deliberate)
increase in
omists who bar the rationale of
money supply as
determined
mathematical
homogeneity from
value
"form
theory by calling money a
of
wealth."
The
chart
shows, not the per capita
but
tne
total
change,
in money
change,
supply; and it is argued that "the
relation between the quantity of
and prices is not a
singu¬
a
spending
necessary
at
new
a
(Continued from page 14)
closely and will expect his elected
that have made rough going for
representatives to manage govern-^
us all in the past.
ment finances and -the debt prob¬
As the national debt has in¬
lem properly. Widespread owner¬
creased
the
importance of its
ship of the debt is the best insur¬
proper management and
proper
ance
we
can
set up against its
placement has increased. Chang¬
management. .;
*
ing economic conditions will force
changes in debt management from Importance of Debt Management
level, thus following the
pattern
of historical
fact in every inflation on record.
In the chart attached it is to be
price
consistent
especially noted that any correla¬
tion between the supply of our
staple grain crops and their price
is lacking. (Seasonal changes, not
in
shown
adequately
this
of the timing of
because
chart
time to time.
the an¬
employed, would in¬
dicate
some
short-time relation
larly
close
one" because "the
Whether or not the procedure
money supply increased by eight
between supply and price.)
The
which produced these results re¬
times yet the price level at the
periods of high farm prices and
mained
an
"arbitrary"
policy
end of the period (1880-1915) was
general prosperity have coincided,
throughout, is irrelevant to the
the same as at the beginning!"
as have low farm prices and gen¬
effects
on
money
supply, price
These "facts" prove too much,
eral
depression and unemploy¬
to wit, that there is no relation level, and "velocity." Freeing the
ment; and there is an unexcep¬
at all!
Why, then, are they pre¬ economy from restraints and war¬ tional
correlation
between
the
sented only to be forthwith ig¬ time, uneconomic objectives com¬
price level and the money supply.
parable with the boondoggling of
nored by explaining (?) that "the
They virtually always move up
New Deal "recovery," will cer¬
money supply of the country was
and down together, though clearly
tainly restore the
"velocity of
increasing
without exerting
not in a one-to-one correlation.
money" and alter the price level
an upward pressure on prices" be¬
In view of these facts it is a
This
cause
of fortuitous "demands of as it is doing right now.
money
.
the
.
preference."
ity
nual
average
.
money" and "a
economy" which, if
public to hold
pressure was
concealed in its ef¬ wjipliy untenable contention that
production can ever be made to
.
No. 1
Bank Problem
but the idea liquidity" that is "saved" into a
"propensity to consume," i. e., into
(Continued from page 4)
that this is a whimsical "secular
"quantity theory of money" which
trend" is unwarranted because of
has
become
a
tradition in the
key to
The
Federal
debt lies
National debt is a grim reality*.
Its management is a vital matter
and affects all of us.
The whole
future of the banking system is;
in the owner¬
ship and distribution of its se¬
curities. Today this ownership is
hound up in its successful man^
agement. Commercial banks with
2/3's of their earning assets in¬
vested in Government securities,
split three ways: about one-fourth
is owned by individuals,, threeeighths
vestors,
by other non-bank in¬
such as insurance com¬
have
panies, non-financial corporations
and associations, and about three-
eighths
Bank.
Federal
the
that if
Reserve
in the,
inception of the war
finance
program,
the Treasury
began to lay plans for postwar
debt
management.
Securities
were designed to fit the needs of
various groups.
Series E bonds
were
designed primarily for in¬
dividuals, for those not experi¬
enced in investments.
This bond
eliminates all
market risk and
two-thirds of his eggs are
basket, keeping that bas¬
good shape is his number
problem.
In seeking your
cooperation in the sale of more
in
\
From the
much at stake
very
management of the debt."
.
It should be obvious to any man
banking system,
the
by
including
Snyder recently
face the facts. Th&
Secretary
As
said: "We must
Management
management of the
Key to Debt
one
in
ket
fect by inflationary subsidies dur¬
depress prices in the food sector,
during the period cov¬ ing the reign of OPAr Plainly wherein the heaviest items in the
savings bonds through the new
ered
by the
charts, invalidates prices are the chief worry of the cost-of-living are deyeloped, so as
Bond-a-Month Plan we are asking:
them as a basis for conclusions as Government as it is compelled to to relieve the "inflationary spiral"
you to
do that which will pay
to money-price
relations today? abandon the attempt to induce of wage demands and consequent
high dividends for the time and
If "the quantity theory of money taxpayers and non-bank investors
price increases in the sector of
effort put into it.
is of dubious validity" for these to cover its costs at low interest "administered" prices.
An exces¬
To be sure, we are asking you
rates in the face of rising prices.
(or any) reasons, then so are any
sive money supply causes farmers
to give up deposits today, but the
The Bowen statement that "the to decrease their production and
and all considerations of money
benefits your bank will reap will
quantity, including those of the effect of the quantity of money on marketing and stimulate rising gives to the individual a sense of
far outweigh this.
Bowen charts relating it to "na¬ spending is cancelled in part by
prices by scarcity (witness the security in his investment not
The strength of your bank and
tional income"; for what
these the fact that the interest rate situation in the Anglo-American found in any other form.
The %% Treasury bills and the of the whole banking system de¬
demonstrate (if anything; it would tends to be low when the quantity sector of Germany now) because
pends in the end upon the strength
be well to note the indictment of of money is large as at present"
they can do little with their sav¬ Vs% certificates of indebtedness
statistical aggregates, specifically ignores not only his own contrary
as
well as Treasury notes, were of the National economy and the
ings but. to bid up land prices as
economic health 6f
your com¬
"national income," in a recent ar¬ conclusion that the money supply
long as industry is caught between designed for banks and for large
Every time you sell a
ticle in "The Harvard Business Re¬ is not at present large, but also the demands for reducing prices and corporations that require a short- munity.
savings bond .you are taking a
view") is simply that V is relative¬ fact that interest rates are arbi¬ increasing
wages, to
"preserve t e r m investment. . Long - term
ly a constant while M is the signif¬ trarily set by the Treasury which, purchasing power" allegedly to Treasurys were designed to fit positive step to strengthen both.
icant variable in MV=PT; which by keeping them low causes the stave off the ever-imminent col¬ the
requirements ' of
insurance You are helping to keep prices
down
and to build up
buying
is just about what he sets out to allegedly fortuitous "demand" for
lapse which has been so persis¬ companies, savings banks, trust
power against the day when
disprove!
money, that is, the pyramiding of tently and erroneously predicted funds, and a few other specific
may be needed t<? keep your fac^
A
similar confusion
of cause "savings" by forcing Treasury se¬
by the Bowlesian theorists who types of investors,.
and effect is involved in the claim curities
Economists generally agree that tory chimneys smoking, your bus¬
into bank portfolios to think that prices follow the law of
that "current income" determines keep their price from collapsing.
wise
management of the debt iness establishments thriving and
gravity rather than the money
people employed produc¬
"spending." Unless it be admitted Interest rates, in other words, are supply!
must include widespread distribu¬ your
You are building good
I
that they are simply two names not caused by, but are a cause of,
».
tion of ownership of its securities. tively.
will for your bank by; doing afor the same thing, it would be the quantity of,money under ex¬
The Savings Bonds program helps
DAN W. HOGAN
more reasonable to say that spend¬
accomplish
this objective. service to the depositor that he
isting circumstances in the status
President, City National Bank &
ing- determines
current income. of banking procedure, This is an
Through the time-tried Payroll may thank you for all the days
Trust Co., Oklahoma City
The assertion that the wildest in¬ inherent dilemma in the system
Savings Plan and through the of his life. And the new Bond-a*
I have just read the address by
flation does exhibit a relation be¬ of expanding money supply with
sale of bonds by banks and post Month Plan enables you to do that
Dr. Howard R. Bowen and I copmore
people, more
tween money supply and prices is lending.
offices we have been successful to service for
cur almost wholly in the conclu¬
*
•
a concession which only serves to
a degree that
one would have easily.
If Mr. Bowen thinks that the
*
*
*
sions set out in his very able dared predict at the war's end.
point up the falsity of the infer¬ war could have
been financed
address. It oc¬
In another address on May 16,
ence
that there is no correlation without increasing the money sup¬
When we realize that scores of
curs
to
me,
in the facts that are charted, for
millions
of Americans directly before the Massachusetts Bankers
ply, by the same token it could
however, that
it is well known that the velocity have been financed exclusively by
own
$65 billions of government Association at Swampscott, Mass..
the
financial
Mr. Townsend stressed the need
of the actual supply of money is
bonds, we realize what a job has
taxes stepping in by law to pre¬
s t r u c ture of
for a wider distribution of the Na¬
a dominant factor in uncontrolled
vent the so-called "demand" for
the
United already been done. But we must
frontier-barter
it did exist
one
,
.
,
inflation.
"save" rather than to
plainly points up
ing the facts, corrected for popula¬ the absurdity of his basic Keynes¬
tion and eliminating the arbitrary
ian premise that the money supply
placing of the indexes at 100 for is of no significance as long as
a given year (1926 on the Bowen
"liquidity preference" keeps pace
chart) by using the average for with it. Of course, billions of war¬
the whole time covered as 100.
time "liquidity" was "preferred"
Until
the
deficit financing
of by the Treasury itself and has
Keynesian policy was instituted, since been written off the total of
with its depressing socialistic im¬
"savings." For the rest, the reason
to
funds
I attach
herewith
a
chart show¬
plications, movements in money
supply and money income prac¬
tically coincided. The New Deal
separation has, indeed, continued
during the pyramiding inflation
"invest."
for its
fact
This
creation is irrelevant to the
its creation and the fact
of
that prices
are
continually rising
and transforming
the "demand for
GRAINS; PER CAPITA PRODUCTION OF GRAINS,
SUPPLY, AND MONEY INCOME, UNITED STATES, 1910*38
FARM PRICE OF
MONEY
INDEX NUMBERS
would
benefited
States
be
„
greatly by a
rapid re¬
more
congratulate ourselves.
not stop to
tional debt to
.
prevent it from be¬
Bond program is coming "a political football." In
making progress. In the first four this connection he said:
In distributing the debt among
months of 1947 we show a net
duction of our
Savings
The
gain in the E bond account over
redemptions of over $320 million
individuals we
are
also insuring
people share in the in¬
compared to a net loss of $362 terest they and all of us will be
g o v e r nment
million in
that account in the taxed to pay. That way we pre¬
bond s. This
same
period of last year.
We vent the debt from becoming a
o u
t
s
t
should
a
nding
be
at¬
a
Dan
Hogan, Sr.
W.
eco¬
more
nomical
a
million
gov¬
and
ernment
political football. If tens of mil¬
lions of Americans directly own
U. S. securities they are not going
the first four months of this year,
to let the debt be tampered with
against a net gain of $1 billion
I don't have to
400 million for the entire year of by demagogues.
I'm going
1946. The Savings Bond program spell that out for you.
to talk now about that good old
is very much a going concern.
have
tained through
of taxes at a level
to bring it about. I base this con¬
clusion on the theory that the vol¬
ume
of money increased as the
the maintenance
that more
This
net gain of $1 billion 100
of E, F and G bonds in
record
proves
that
the
people recognize Sav¬
American
;
underlies the
virtue—thrift.
Yankee
Thrift
education
for the sale of
ings Bonds as the soundest of all United States Savings Bonds. Selfinvestments. Proper placement of
would eventually
interest
considerations are the
government securities contributes buying motives: the education of
basis.
to a sound government and tQ a
After the holders of money sat¬
children, liquid reserves for fam¬
isfied £heir requirements in pur¬ healthy economical and financial ily
emergencies, and funds for
structure. The more citizens that
chasing
such
commodities and
other financial goals common to
participate in debt ownership, the most of us, and retirement in¬
equipment as they needed, there
would naturally be borrowing by easier it will be to maintain our come.
individuals
which would, in
a democratic form of government.
government debt
by reversing the
(1910*37»100 )
PERCENT
increased, and
operation we
get to a normal
supplement the decline
government's outstanding
measure,
in
the
indebtedness.
H.
MALKIN
country an
F, H. Winter Admits
allowed to vote
Ivan Israel has been admitted
unless he is a
to partnership in F. H. Winter &
property owner, the belief which
In some
parts of this
colonial days,
from
down
cannot vote
properly unless he has a personal
being
that
a
man
"non-professional" econ¬
stake in what he is voting for or
omist, but one who reads numer¬
against.
That is not a modern
ous articles on money, finance and
conception of democratic suffrage,
Federal economy, etc., I am im¬
but we do know that when it
pressed with the soundness of Dr.
comes to national issues,
a man
Bowen's conclusions. Your pub¬
who has a financial stake in his
lication has rendered a seryipe to
government will be likely to
our people in presenting his ar¬
watch
its
fiscal policies more
As
a
program
Israel
individual is not
in local elections
comes
Brooklyn, N. Y.
entire
Broadway, New York
past Mr. Israel was
Lisman Corp. as Sales Man¬
1U
Co.,
Citv.
with
In the
ager.
.
1910
1915
1920
1925
1935
J930
Hit Mitt
%i MAMrrwtMT or
MHiCuttuac
Of
I9U0
LCQtfQpCS
,
ticle.
■.
,
■-
.....
F. G. Lesh Opens in N, Y.
Frank G. Lesh is engaging in an
investment business from offices
at
2540
Valentine
York City.
Avenue, New
Volume 165- Number 4596
THE
COMMERCIAL & FINANCIAL CHRONICLE
Needed
Which Version of UK's Finances
and
verted after
.
the
sterling arise out of a trans¬
action which the Bank of
England
define as "current
This
Britain to be
richer
a
very rich
all
than
country,
others; but the
this will involve
S.
A.
All
work and
planning, of
these
both
the
are
United
living
standards of the Bank of
England.
Offsetting some of the above
.
requirements during 1947 will be
an
estimated' gold-or-dollar in¬
/
the
the
that
could,
view
Indians
state,,,
;
standard of
,
that
i
j
abroad,
the
hard
or
and
considerably
Indians
soft
income
consider it
is
than
neces¬
qf present
stringency,
*
At London the Indians will
cite
the report of the British
organiza¬
titude
Group.'
They will cite its
fqrecasts of a couple of years ago
that, on certain described assump¬
effected
will
by
increase
an
1949
of
at
least
a
contention
national
PEP
that
the
increase
product; anticipated
in
,
by
will
be«t.the equivalent of
$15,200,000,000, or quite ample to
take
the
of the
care
ment
funding
they suggest
arrange¬
solution of
as a
sterling-balances problem.7
Indians"
to
the
afford
can
in
official/ Washington'
drawings.
\ According to
•
some
time to come, certainly un¬
well into 1949. At the begin¬
til
ning of 1946 Britain's actual gold
holdings, American and
may/
to and
does
not
include
and
ceiving from investments abroad.
against the two loans but simul¬
Their view
taneously gained $250,000,000 in
gold and dollars. At the beginning
"just
seems
a
debts"
,
to be that it is
country to ignore its
the
while
it
is
re¬
ceiving/foreign incomet sufficient
to
service- those
debts.
This
is
equivalent to arguing that Britain
during the war should have liqui¬
dated more of its overseas invest¬
ments and
thereby paid its
would
constitute
burden
an
,
tional
income
fact,
even
of
during
will
the
$2
balances
a
r'rr"i"'
hard-currency bal¬
billions,
with
gap
would
it
about
Hence
there
of $1%
still
be
or
enter
$4.5 'billions
will
of
that
real
no
foreseeable
until
drawings
against
the
anc|:JjCanadian
loans in
sdre estimated at $1.5
convertibility of
new
"current
ac¬
count"
a
haps
decrease, but
sterling; on July 15.': Per¬
the policy has other pur¬
poses as well,7
few percent in
.
The above estimate of a
$1%
billion gap in hard currencies in
1947 includes
$1.3 billions to meet
.
: i'" "
ington has reason to believe. Per¬
haps this is ip "anticipation of the
.
its
and,
billions, but simultaneously Brit¬
ain has been^
building up its re¬
serves of gold and
dollars, Wash¬
period
India's extreme
poverty,
wartime privations and its
.
meet
1947 to date
the standard of' living in
Britain,
quoting in support of this thesis
the PEP report, which states:
".
$6,450,-
cash /drawer
of payments
Britain's
American
the
a quarter
Century there
would still be hot a
a
had
During
billions
1949 at the earliest.
period of
net increase of
thus
pressure* now
almost
over
Britain
$1.1
spending money, hard cash,
is.
be
sterling
drew
No Pressure Until 1949
Assuming that this year Britain
1948
necessary.
In
some
Indians contend that
with this gradual liquidation
the
1947
ance
British people;
representing only
between 1% and 2% of the na¬
payments
investments.
Britain
must
way in
on
other
000,000 in; its
checkbook.
i
ceiving from abroad in the Indian
imperceptible
of
|
India currently in hard
currency,
rather than to have paid the In¬
dians in sterling which could not
be spent and cannot
yet be spent.
For Britain now to
apply to "debt
payment" the income it is re¬
view
.«•
1946
securities
1
had
people
the
benefits
thinking
during the
without recourse
years
gains, income to
some
v
7 ;•
looking at this picture from
national viewpoint
and the
In
a
soon.
walk
to
a
his
shop¬
ping destination from his parking
space. Perhaps this is silly, but
it is a fact, and to change habits
of people is one of the most dif¬
ficult things to attempt. But all
and relax in his
her
or
shopping,
she wants to take
or
something out of a store, there is
no
reason
why his conveyance:
should
;o
9) /
page
,
of the 1940 average.
When people
hgve high incomes, they have a
tendency rio-.spend their money,
and when automobiles and wash¬
ing
machines
and
house
and
refrigerators
furnishings could not
be purchased,, the
jewelry trade
benefited.
So
it
unreasonable
does
to
not
look
seem
forward
to
something of a slump in the
jewelry and luxury trade stores
in the not-too-distant
resultant
a
not
farmer's
be
as
cart
to him
near
buggy
or
as
to
was
future, and
recession
of
realty
(things
—
Like
appraisers
(of
course, excluding all present com¬
pany). whom both you and
some
know!
All
market
social
moment to consider
and
figures with
tional
income.
$70.8
w a
s:ove
roughly^
two.
and
it
it
last
$165
r
the
And
for
to
1939,
1942,
By
na¬
was
was
year,
billions.
national
it
So
income
one-quarter
times
is
its
1939 level.
sales in
this
country
including durable goods
billions in
1929.
It
—
fell
was
to
a
of
ow
$24 billions in 1933, but
in 1940, it picked
up to $46 bil¬
ls. Tn
subsequent years, this
figure rose to $64 billions in 1943,
$69 billions in 1944,. $76 billions
in
1945, and $96 billions in 1946.
So retail sales have doubled over
the last six or seven
But
years.
it is
interesting to note that
1935-39
ment
as
Of
with
base of 100, depart¬
sales' soared from an
a
store
index
106
in
1939
to
1946, which is just about
264
in
2.6 times
their former level. It
may further
interest you to know that it' is
anticipated that department store
sales will increase further in 1947
—6%
ably
over
reach
they
1946—and
the
$10
will
prob¬
billion
for the first time.
peak
7"'
the
economic
which
anc.
determine
Population'centers
that
the
handicap of
locations
types
will
of
deficiencies,
merchan¬
the
overcome
locations, while
poor
good
other
offset
many
merchandising
of which may
some
be serious.
even
best
seldom
can
;
<;
Importance of Parking Areas
To mention specific
areas, I do
not think we can neglect at this
time the
the
looming shadow
tremendous
effect
—
and
which
—
transit, automobile and parking
facilities will have in the future
on
all
shopping
cen¬
Despite the continued
rush
ters.
of
retail
our
people
to
the
the fact that the
facilities
cities
is
ficials
in
in
center
minimized
seriousness
parking
of
many
by urban of¬
nevertheless,
—
all
the
stores—despite
lack of
I
predict
with cer¬
and
tainty that unless parking facili¬
ties for automobiles
the
bounds
are
provided
of
many old
retail areas, new areas will
spring
main
among the better-informed indus¬
trialists that the nation has been
rents
ahead
at
hell-bent-for-
a
,
today, and
any
retail
store
can
sell
goods, and any (and when
I say any, I mean
any) retail area
can
thrive!
I But
in any analysis
of
a
retail
area, we must differentiate be¬
tween the types of businesses that
are located there. For
instance, in
to compete with the older
tions.
The
main
streets
or
sec¬
the
thoroughfares in many local
areas
have
changed
and
will
change more, because the lack of
parking facilities—and taxes and
to
a
lesser
extent
have
—
forced grocery and variety stores
and Sears Roebuck and
others
to
seek: quarters
100%
in other than the
locations that they have
been
000.
hard-currency requirements.
lions.
Last
year,
That
is
it
$1.24 bil¬
about 400%
was
just
Stable
and that reasoning has i
applied for almost 400 years since '
that " time.
'
:
—
.
Yes, gentlemen, there are going J
to be losses, plenty of losses, be¬
of
cause
changing'shopping de-7
shopping habits. But,
question,1 for each loss \
that is incurred, there is
coming I
a greater
opportunity for greaterand
,
profits than ever before. When >
land values fall in one
locality *
because retail shops are on the f
move, they will, just as
rise in another section.-
certainly,
Real
Estate
Values
Real
estate
values
Dynamic
'
have long
been dynamiq, and
they will con¬
tinue to be so in the future.- But
in approaching our
problem to4
day, I would say that a broad
.
particular methods
We have not
of
valuation!*
yet outgrown the
traditions and cultures of a small
town and rural economy as we
live
in
the
as
midst
of
complicated
urban, organisms. The problems
o^
real estate today relate themselves
to
the
entire
with
a
world,
and to deal
them
have
successfully, we must
knowledge of world geo¬
graphy,
world
economics,
and
religion and morals. As this
even
nation
has
among
the
a
new
other
responsibility
nations
of
this
earth, we must acquire a social
maturity, if you will, which will
enable us to understand the waves
of the future as
they roll up upon
Real estate
probably suffers
us.
from
"cultural
a
lag"
deavor,
And
than
more
any other line of business
or
en¬
the
persistence of
customs and habits and ideas and
attitudes as related to the 19th
century will Inot enable
to
understand
effect
of
forces
the
which
of each
one
or
to
social
and
govern
of
us
either
measure
the
political
the
actions
today. All real
estate values, past, present and
future,- are related to people and
their actions, and unless we have
us
an
understanding of their
thoughts and desires, we cannot
hope to understand the present,
much
less
the
future.
A street, a
nation lives by
its deeds and aims, and as apprais-
city,
a
state,
or
a
occupying. Moreover, don't
ers, you must do likewise. Growth,
forget that our present new and
happiness, and economic health
future areas are going to invite
come not as a gift, but as a reward
parking rather than discourage for
work well done.
parking. As Mr. Marcel VillaIn closing, I am reminded of
nueva has said in a recent report
part of a poem- which I heard
for
the
National
Comimttee
oik
some
Housing:
"The
1940,' the volume of home fur¬
areas
with
no
parking
nishings business totaled $2.0 bil¬ facilities will simply vanish. Just
lions. In 1946, it was $4.7 billions. as the motor age has
changed the
In 1940, the' retail jewelry trade
patterns for residential communi¬
did a volume of about $325,000,- ties, so must new
patterns evolve
payments in the U. S. A. and Canada and
$450,000,000 to meet other
then the Picadilly Circus of
London. In his decision, the Lord
Justice remarked that the main
street was not to be used as a
was
,
member
Perhaps all of our
economic ; thinking
must
be
Charted along different
lines, but
there is,
nevertheless, a feeling
going
fewu
a
.
era—perhaps!
election speed — that will
not
last!- So, anyone can make
money
fined
was
,
up
"
Lord
shillings for leaving his carriage f
too long before a
shop on what
constant, and site
values fluctuate, and therefore a
good
location
today
may
not knowledge of the social and polity
conditions
necessarily be a good location ical
underlying ouf
economic system are as
tomorrow. And at this
great in
point, it
importance as a knowledge of
certainly would be well to re¬
A" New Era?
Now what does all of this mean?
Perhaps we have reached a new
!
famous
always
problem, and '
century, a
a
sixteenth
are
dynamic
constantly adjusting
to
their patterns.
do not remain
within
...
are
areas
forces
disers
All retail
48
and
few facts
a
relation
In
billions:
$117.3 billions.
well
the
Without
an
prospects—it
be
in
than not
themselves
might
something of
that
mands
—
a,
know that parking has
Deen
prices and values and' rentals in
luxury trade areas! Strange to re¬
late, the retailer is more often
future of all retail
shops is in¬
timately connected with. national
work
source, Britain's gold and dollar
outlook is - fairly comfortable-for
one
another,
only
capital
calculation,
one
would
of this probably means that the
country shopper wants to be lazy, that the
shopper wants to take life easy
ent.
,
whicln is admittedly rough
pencil
but work by an informed
traveled from
to
degree..
only this month professed to be
by the rate of British
loan
thousand feet is the maximum
obtaining
optimist, who, when
arebad, capitalizes the
future
and when they are good
or better, he capitalizes the
pres¬
to
unalarmed
should pay "off
India and its other creditors
out of
the income
Britain still
is
re¬
unfair for
in
this
past five
the
even" s u g ges t' Canadian, counting the then exBritish: Treasury in the
Pected American and Canadian
conversations that Britain •
JP1p.ns' totaled about $7.3 billions
This
coming
also
sible for them to finance the
pur¬
chase of jewelry, etc.
an¬
and dollar
Another Suggestion
The
cles
increase in
of, say, half again
level, it will be India's
bad that
so
the
it would have been impos¬
earn,
feeling clearly is that the answer
is no. Secretary of the
Treasury
John
W.
Snyder, for instance
abroad, as com¬
Taking into
permanent
outlook
will
in
future.
have
level
not
cities
our
changes
all capital gains have been
retained in capital accounts. With
the
incomes that many people
will be necessary be¬
fore long? No one can predict the
future, of course, but in some cir¬
prewar.
the price level
the prewar
its
of
terrific
cen¬
that
other Joan
is
know
Moreover, it
to delude ourselves into
:
one-fifth above 1938 levels in
the
account
the
After the large American and
Canadian loans, is Britain "broke"
or
again
they have
also, without question, had capi¬
tal gains to spend. It is needless
and
can
problems,
of income to spend, but
financial
"You
most
we
price
have
pay."
have
national
product; that is, in
the physical volume of
goods and
services produced. This
takes ac¬
count of Britain's loss of income
from investments
with,1
to be:
of
As
even
seems
you must
net
pared
coming
or
real
will
not-too-distant
though fortified
by larg* loan drawings, fall on
deaf cars in
India, -where the at¬
tion known by its
initials, "PEP,
the Political and
Economic Plan¬
a
ters
undergo
the peo¬
that
with
likely that the retail
seems
now raising the issue
"counter claims," evidence the
realization that they cannot ef¬
fectively combat the Indian posi¬
tion with statistics/ British claims
to-expand exports for finan¬
cing the country's import needs.
tions, Britain
consider
faced
what competition is.
living and production
Indians
be
but: retailers
of
sary
ning
anytime
(Continued from
to
British,- in
from
more
The
a
only in obtaining a settlement of
the "blocked sterling" with India
and perhaps some of the other
from
parking, and they have found
in a main shopping district,
person
ties which will face the British not
but
to know
you
hat
this reporter suggest the difficul¬
dollars
might interest
hitching post outside of the
village store. It may interest you
war.
as compared with
1938.
is true, Britian could add
o
into Britain's possession.
creditors,
central
a
number of surveys with respect
a
The above figures and interpre¬
tations gathered in Washington by
more
or
he
actual
.
It
balance of payments. Such dollars
come
suburbs
hat the Eno Foundation has made
a
getting "as much food and
clothing as before"; whereas the
standard of living in India is> now
definitely worse than before the
If this
in
Empire regions
Malaya having with the
Kingdom an unfavorable
as
United
em¬
ple
of
exports,
to: its
other products by
such
expendi¬
the
gone down since the war,
observers, lead to an actual
doubling of the value of Britain's
currencies
"rubber, tin, and
The Problem of Real
in
in Britain of non-luxuries has not
some
$2,160,000,000
of
in the
39
district which must be preserved
or reconstructed."
and that if he
sterling, "war debt" is invalid, the
increased
in, the
States
pay¬
expected $60,000,000 gold
hood
ac¬
result of sale in the
tures."
war were
claim
Indeed,
creating
-
United
France, and dollar
as a
of
In further support of their in¬
sistence that the British argument
for substantial cancellation of the
put to work on
exports,
they would increase the number
of workers in the export trades
by about 80% and so add
$1,760,000,000 to Britain's exports.- The
efficiency
an
fail to achieve
we
would contribute valuable
ployment
Indians are
saying.
Indians point out. that-, if the
average
number of persons in
Britain
unemployed before
Indians
if
quisitions
(2763)
national
standard
employment,:
ment from
gold,
exces¬
an
our
the
and
even
put
come of not less than
$300,000,000
in the form of South African
such conditions debt repayment
official slogans in
today,
on
full
course, but
Kingdom
not
strain
economy;
,
U.
would
sive
consider
account,"
but the purpose to which the de¬
sired dollars will be
applied also
must meet the "current account"
1
Indians
July 14 not only must
will
,
the
after
an
estimated $1 billion in 1947.
Experts point out that to be con¬
(Continued from page 8)
.Assuming a world of increased
peculiar political circumstances
trade and lowered trade
barriers
would seem to give it a claim
sucll as
the Geneva
conference
to particularly favorable, terms,
toddy seeks, the full exploitation
the more so if it were to use
of British
industrial inventiveness,
the balances as part of a na¬
and hard
work,, it is believed in
tional plan for industrial and
India that Britain
not/only can ! agricultural
development v
clean up these old
obligations but
An annual payment of £100,expand its exports to1
the'point
000,000 [$400,000,000] would
where it may again build
up its
represent little more than 1%
investments abroad,
of the nation's present income
particularly
in "backward countries
such as
For
converting
current
sterling into hard
July 14 will be
old
some
currencies
Is Coiiect?
India."
for
for
the
commercial
applies either to
centers.
a new
This
neighbor¬
time ago:
Real towns
By
men
Lest
are
not made
afraid
someone
else gets
When everybody works
And nobody shirks
You
can
dead!
raise
a
ahead;
.
7
*
town from the
t
*
40:
THE
(2764)
problems,
emo¬
an
that dis¬
regards facts completely.
An il¬
tional. complex develops
lustration
that
difficulties
present
the
is
this
of
of
taking
because
exist
the strikes that have been
Section 3,
stated: "That every
journeyman or workman, or other
person, who shall at any time after
the passing of this act enter into
industrial warfare!
For our first look at labor legis¬ any combination to obtain an ad¬
vance of
wages, or to lessen or
lation we can go back to the 14th
alter the hours or duration of the
Century when as a result of the
time of working, or to decrease
Here the
inconsistency of labor is evident
when it clamors for its "right" to
down
(Continued from first page)
cial-economic
Piice Outlook and Consumer
Show?
Do the Facts
•
wars
any
place.
pestilence,
great
many
in
Purchasing Power
(Continued from page 4)
right of labor.
unhired or unem¬
ployed journeyman or workman,
or other person, in any manufac¬
ture, trade or business, or any
other person wanting employment
take it away are even
in
happens? A terrible cry goes
The
strike is said to be a fundamental
out from the ranks of labor.
any reaper, mower, or
other work¬
servant, of what estate or
condition that he be, retained in
or
man
Those who would any man's service, do depart from
the said service without reason¬
accused of
able cause or license, before the
"being petty dictators or fascists
of one kind or another.
Though term agreed, he shall have pain
And that none
there is a deadly silence about the of imprisonment.
fact that in Soviet Russia you just under the same pain presume to
receive or to retain any such in
don't find the working men going
out
strike.
on
the re¬
Whether
cently passed Condon-Wadlin Bill
(Chapter 391, Laws of 1947, also
Section 22-A of the Civil Service
Law)
is
be
to
forerunner of
probably
a
future similar legislation
And the wages
his service."
paid
regulated, for in Chapter V,
find: "Item, that sadlers, skin¬
any
trade
manufacture,
such
white-tawers, cordwainers,
tailors, smiths, carpenters, masons,
statutes
tilers, shipwrights, carters, and all
other
artificers
and
workmen,
the
strike
to
see
existed,
same
that
we
■
or
upon
was
regarded
as
a con¬
spiracy punishable at law.
picture of what a strike is
must be in our minds at all time.
The
Economically, for the employee the
is a collective withdrawal
strike
of labor
by
a group
who intend to
return to their jobs after
the em¬
ployer consents to certain demands
which have been made upon him.
Broad
The
workers
the
same
intend
to
return to
employment but under
better conditions than
are
offered
special com^
modity, namely labor?
The an¬
swer
that
is
we
have
created a
v.
Quite especially we have to ex¬
pect declining prices in one sector
of business and at the same time:
of
a
not in
of
reduc¬
(1) The wage increases already
and likely to be ob¬
tained will, as
abroad.
Marshal
for a sharp price
so
say
hopes
Mass
obtained
harmony.
Stalin
other
most
seem
even
of
Melvin in which the de¬
fendants were indicted for a con¬
and
Bowles
others,
in
a
the
is
strange
purchasing
consumers
"vigil" for
performance.
"I
want
to "be
present," he said, "when the lion
eats his tamer."
On the other hand those who
were
confident of at least five
of uninterrupted prosperity
Day apparently believe
years
after V-J
that
sign
they have only to put up a
saying "depression forbid¬
ber,
price
mass:
shoes,
may,
$11A
amount to
Some expansion of instal¬
will occur, be¬
(3)
yond the rate realized in the first
This will in¬
four months of 1947.
purchasing power
perhaps $1V2 billion on
crease consumer
further by
an
annual
basis.
*
■
.
'
,
If tax reductions were to
become
effective
July
1,
this
(4)
would
the
structure " is the available
purchasing power, and the
this purchasing power will
be employed.
It is much less risky to make
way
improve
consumer
pur¬
chasing power at a rate amount¬
Hbwof tax reduction is
ing to $3 Mr billion a year.
ever, a veto
still possible.
let
Now
ments
for
price re¬
Other
ment sales volume
1947?
element
billion on
say
basis.
to 2 billion.
Purchasing Power and Prices
decisive
by,
ductions, including clothing, lum¬
What Is Ahead Generally for
The
annual
an
den," that we will have no de¬
pression if we only say so. v '
in
of the farmers
but it will in¬
purchasing power of
power
mass
crease
attended every
Europe. He
peaksomewhat the
decrease
and food processors,
American
over
go
decreased
already
have
will
it
depression. Its per¬
sistence reminds me of the Eng¬
lishman who followed a circus all
an
should
the consumer level
at
about 5% from the March
United States.
the
This
10%
down
are
drastic break in
prices and economic deterioration
looking for
higher.
food prices
in¬
billion,
even
If
(2)
in
Chester
some
will reach $4 to 5
creases
—they
now
stopped, and there
been
nual basis the amount of wage
expected a runaway infla¬
this country after having
listened
to
the
prophecies
of
tion
increases
the
areas
have
to
indidivual
adjustments
downward
in the
higher salary brackets. On an an¬
have
may go
year
I said, affect mainly
labor; in
the unionized segment of
drop and ensuing economic catas¬
trophe in the United States, and
almost all foreign nations that last
even
in the cases at common
Toward Increases
Purchasing Power
Forces Working
price level, and they
expect it because, they say—and
probably
justifiably— for
large
parts of the population income
and the general price level are
at the
an¬
other sector of the economy.
in
consumers
in
higher " prices
somewhat
the
of
tion
City in 1810 we had the case
People
masses
the United States call for
historically control of labor itself. the Case of the Philadelphia Cord¬
Almost some 200 years later we wainers decided at Philadelphia
in 1806. The defendants, who were
find the Act of 2 and 3 Edward
VI, c. 15 (1548) which also con¬ journeymen cordwainers of the
trolled prices of labor as well as City of Philadelphia, were indicted
commodities. Look at logic again: for a conspiracy to raise wages.
And the court found the defend¬
why should a conspiracy to raise
ants guilty of a combination to
the price of a commodity be any
In New York
different
than
a
conspiracy to raise their wages.
raise the price of one
that prices should
decline
of industry,
by "moral restraint" so to say.
.
unionize
chasing power.
voluntary action
by
the actions of or¬
law. Thus in Rex v. Journeymenshall not take for their labour and
ganized labor in accepting its re¬
Tailors
of
Cambridge, Kings
workmanship above the same that
sponsibilities.
But one thing is
Bench, 1721, we have a case in
was wont to be paid to such per¬
certain, we can accomplish very
which one Wise and several other
little as long as we talk about the sons the said 20th year, and other
common
years
next before, as journeymen-tailors of Cambridge
.strike being a fundamental right
were
indicted for
a
conspiracy
afore is said, in the place where
of the worker.
I disclaim here
amongst themselves to raise their
-any interest in
whether or not they happen to work. And if any wages and were found guilty. The
man take more, he shall be com¬
•workers should have the right to
mitted to the next gaol, in manner sentence was upheld on the ground
strike. My attitude is simply that
as aforesaid."
In order to be able it was a conspiracy and that was
of the scientist in the economic
an
offense at common law.
In
field of human behavior and his¬ to think clear, let it be said that
Rex v. Hammond, 1799, decided
the bill also contained a forerun¬
tory, looking for facts to enable
at the Westminster Sittings, there
ner of our OPA in regard to price
us to think clearly.
And the rec¬
was an indictment against the de¬
ords which are available and will control, for Chapter VI provided
that victuals be sold at reasonable fendants who were journeymen
be herein quoted show definitely
Now this is most impor¬ shoemakers, for a conspiracy to
that labor was regulated for cen¬ prices.
raise their wages.
The men were
turies by law and that any at¬ tant, for while labor demands con¬
trol of the price of commodities, it found guilty.
tempt to get higher wages or
In the United States, we have
forgets that the other attribute is
-depends
President,
the
Nevertheless,
insists
right of
find
no
can
some
strongly backed by his economic
advisers led by Professor Nourse,
More
not look only
and
sector
others.'
gaol."
One need
this
in
elements
appeared that tend to in¬
crease
purchasing
power,
and
others that tend to decrease pur¬
have
become
have
will
more
general
.
ners,
hour
an
business, from hiring himself to
any manufacturer, or tradesman,
or person conducting any manu¬
facture, trade or business
.
.
shall
by order of such justices be com¬
mitted to and be confined in the
common
labor
our
1947, which means 12 to 15 cents
were
we
of
the
that time some
Since
every¬
in
so
market, until the new pattern of
caused
what
decidedly
sector
unionized
money,
prevent
increasing—not
but
where,
people
to
still
are
Neither
the
goods, the
the quantity of work, or for any
died. Labor made its demands for
nor " the
inconveniences
other purpose contrary to this act,
higher wages and the Ordinance
by a strike can be made
or who shall, by giving money, or
of Labourers, 23 Edward III (1939)
up.
Hence there is a natural re¬
by persuasion, solicitation, or in¬
was passed.
Chapter II practically
action on "the part of an outraged
timidation, or. any other means,
prevented a worker from leaving
public for a demand to place some
wilfully and maliciously endeavor
his job, for it provided: "Item, if
curb on the use of the strike. And
place.
Thursday, May 22, 1947
COMMERCIAL & FINANCIAL CHRONICLE
me
the-ele¬
mention
of
tending toward decreases
purchasing power:
' '
,,f '!'
(1) We will have a number of
price increases. They have been
announced already for electrical
by which we utter spiracy. These men too were cord¬
appliances and sheet iron castings,
and say that the wainers and wanted higher wages.
but they will also be made in
labor of man is not to be consid¬ They were all fined.
long-term forecasts than short- many so-called: cost-plus indus¬
strike has been held to be in vari¬
It is a fact that there was a
ered
a
: commodity,
though any
term ones. A long-term forecast tries like public utilities, railroads
ous courts of law show it defined
person knows it is something to be change in the attitude of society
is easy. Either you are right, and and other services, and I expect
-as "a combination to quit work,"
in regard to the desirability of
sold.
then you can tell people; or you also in coal.' I risk the estimate
*'a simultaneous cessation of work
permitting workingmen to unite are wrong and people will have that" these price increases will
In regard to the workingmen
•on
the part of the workmen,"
and strike.
Generally speaking,
the law provided, "(4) or if any
forgotten your forecast when the amount to a billion dollars on an
"cessation of work by employees
the strike came to be regarded as
time comes. Short-term forecasts annual basis.
in an effort to get for the em¬ artificers, workmen or labourers
do conspire, covenant, promise to¬ legal provided the ends were legal
(2)
Exports,
even
including
are
much more easily checked
ployees more desirable terms,"
and also subject to the condition
and I think they are much more those to Greece and Turkey, will
-and "a concerted, refusal to serve gether or make any oaths, that that the strike was not carried on
useful. Let us try to discuss the stay; somewhat lower than last
in an industry, either to assert a they shall not make or do their in an
illegal manner.
It is sheer
works but at a certain price or
probable development of mass year, according to a semi-official
supposed right or obtain an eco¬
nonsense upon the facts presented
nomic
during this estimate, say by a billion dollars.
advantage."
The
point rate, or shall not enterprise or historically to try to talk about a purchasing power
take upon them to finish that an¬
(3) Producers' investment goods
never to be overlooked is that a
year of 1947.
The aim of our
other hath begun, or shall do but "right to strike."
strike is essentially a type of war¬
(1) I see a tendency towards will be scaled down $1 to 2 bil¬
economic society is to produce a
a
certain work in a day, or shall
somewhat
increased
purchasing lion; let's say $1V2 billion.
fare, the workers fighting against
free flow of goods and services
not work but at certain hours and
(4)
Corporation and private
Hie employer. In the famous case
that are sold to the consumer. Un¬ power for the bro^d masses of
time," and a set of penalties were
profits cannot stay as high as they
consumers until Labor Day and
of Farmers' Loan and T. Co. v.
der our economic setup we have
set forth in the law.
In 1720 we
have been. I estimate the decrease
-Northern P. R. Co.
(1894), 25
perhaps for some weeks after¬
find the Act of 7 George -I, stat. produced in this country the high¬
from now on at an annual rate of
ward.
L. R. A. 414, Circuit Court, Judge
est standard of living ever present
1, c. 13, in which all contracts be¬
Jenkins said: "No strike can be ef¬
(2) From mid-September on. $1 to 2 billion at least.
in any part of the world.
Good
tween journeymen tailors, in Lon¬
Without tax reduction the mar¬
fective without compulsion and
employment will probably shrink
by the employer at the time of
the strike. * A survey of what a
legal
fiction
words
several
J
*
force.
That compulsion
can
come
only through intimidation. A strike
without violence would
equal the
of the tragedy of
Hamlet with the part of Hamlet
omitted." And in Picket v. Walsh,
representation
1906, 192 Mass. 572, Judge Loring
Hi a similar tone said: "Speaking
strike to be successful
means not only coercion and com¬
pulsion but coercion and compul¬
sion which, for practical purposes,
generally
are
a
irresistible. A successful strike
by laborers means, in many if not
most cases, that for practical pur¬
poses
the strikers have such a
control of the labor which the
em¬
ployer must have that he has to
yield to their demands."
Now upon pure
logic alone, how
anyone say that this medium
industrial warfare is a "right,"
can
of
-especially when
fhis country
we
find labor in
demanding
end to
nations,
insisting that the UN get
with equipment to put
an
all kinds of war between
and
an
even
army
don and
Westminster, for advanc¬
ing their wages or
of
hours
work
lessening their
were
declared
illegal and void. The statute read
as follows:
"Whereas great num¬
bers of
journeymen tailors, in and
cities of London and
the
about
Westminster, and others who have
apprenticeships, or been
brought up in the art or mystery
of a tailor, have lately departed
served
from
cause,
their
services
without just
and have entered
into com¬
binations to advance their wages
industrial relations between capi¬
and labor
tal
can
continue to not
only keep our past high level of
productivity but also to increase
it. It is up to labor to think wisely
about the uses to which it has put
privilege of the strike. If re¬
it is only labor's
fault for the misuse of this privi¬
the
strictions come,
national income will
longer
progress.
(Special to The Financial Chronicle)
MASS.
WALPOLE,
—
Therefore I expect
afterwards.
in
break
encouragement
of idleness,
afid to the great increase of the
the next six
With Macart, Jones
(Special to The Financial
consumer
purchasing
power.
In other
tamer
& Co.
Why
Chronicle)
words, I think the
lionfor
doesn't need to worry
-
months.
Do I Expect These
Developments?
Joseph B.
On April 15, our national in¬
the staff
come was running at a yearly rate
of Macart, Jones & Co., Thatcher
of $175 to 180 billion, Consumer
find any such concept in law as "a Building.. He was formerly with
spending at that moment waa. at
right to strike."
The Combina¬ the Investment Service Corp. of
a yearly rate of $135-138 billion.
'
tion Act, 40 George III, c. 106,1800, Denver.
Even down to the
opening years
of the 19th Century, you just can't
PUEBLO,
COLO.
—
Bishop has been added to
purchasing
consumer
will increase $5 to 7 bil¬
on an annual basis above the
slowly sinking tend¬ lion
Employment may recover April 15 level. If taxes should be
somewhat toward the end of the reduced, that would mean a fur¬
year
with the general trend of ther increase of $3J/2 billion at an
,7
.
Christmas
business and .decline annual rate.
lessen
Wesley G. Ahlgren is engaging in
their usual hours of work, which
a
securities business from offices
is of evil example, and manifestly
at 163 Washington Street.
tends to the prejudice pf trade, to
the
for
power
ency.
serious re¬
about this
year, almost certainly it will not
be before October, and probably
not in the form of a very sharp
Wesley Ahlgren Opeijs
gin
will show a
(3)
to unreasonable prices, and
poor"; and all such contracts were
declared illegal and void.
then no
Over-all prices
If the expected
cession should come
lege.
EAST
and
"
that the gen¬
power
of the
increase until Labor
purchasing
eral
will
masses
perhaps 4 to 5 cepts jar
dollar spent in April. j.No
further increases can be expected
for the rest of the year unless; tax
reductions should take place,, in
Day by
every
which
power
case
consumer
purchasing
would be increased
another
21/2 to 3%,
If this reduction should not
place, our national debt
cut down by about %\Vz
now
take
would be
billion, as
scheduled by President Tru¬
billion now
man, plus
earmarked
the $3Y2
reductions.
If that should
for tax
happen,
this relatively large amount will
by
Congress
[Volume
THE COMMERCIAL & FINANCIAL CHRONICLE
Number 4596
165
only not increase mass pur¬
chasing power but will rather in
the
unit
mestic wool is
we
should
itself be
Congress
is expected to provide
legislation to help move the crop.
Rayon, as you know, has been
the most stable commodity price-
year's
not
Trend
The Price
i,
1
deflationary element.
a
How
will
whole
this
develop¬
below parity, little do¬
getting to the mills.
holdings
farm
but
a
manufactured
prices and price tendencies, and product
especially on those prices in which product, the supply can be much
the women's apparel chains are more easily adjusted to the de¬
ment, if it materializes, work
on
much
have been hearing
we
about
As
the
"distortion"
of
price level. That refers to
changes in the interrelationship of
individual
prices and of price
groups, such as the prices of food
our
and
are
price for 150 denier yarn is now
67
pound, as against 55
the war and until the
OPA. The industry might
cents
a
cents during
end of
mave
as
it has to
old
interrelationship will be
Cotton
way.
on
for in¬
than the
goods,
stance, had risen more
general price level; so had vege¬
table oils and tallow.' But recently
the prices of these three com¬
modity groups have gone down,
relatively slowly in the case of
cotton goods, erratically for tal¬
low, extremely sharp also for lard.
Prices Down and Up at the Same
Time—Two Price Sectors in
Our
Prices
down
Economy
almost
bound
to
come
especially those which
in what I call the market
price sector of the economy. This
group comprises most raw ma¬
terials
quoted
are
exchanges
goods
commodity
on
traded under simi¬
or
lar
conditions, like cotton, copper,
grains, metals, lumber and yarns.
Prices will still
„
go
up
in the
;cost-plus sector of the economy,
where prices are set in close con¬
nection with real costs, as in rail¬
roads, for instance, and other pub¬
lic utilities, in electrical appliances
and
set
to
allowed
fall
to
That
in
1947
ities
and
92^%
at
for
Nevertheless, I expect
reduction
of
cotton.
the long run we can anticipate
only sinking prices and reduced
importance for this fiber, which
was a real luxury in ancient times
and
by the end of the
down
textile
Y
mothers'
our
material
raw
times.
happen
may
the
this
to
prices,
must be taken for granted:
Retail
for
prices for textiles have
peak, except possibly
Don't forget that
Let
take
us
the
predicted that within three
months
or
so
would
price. This
since price
by 20% in
prediction was easy,
reductions
For
already under
are
way.
contracts for the
third and fourth quarters for class
example,
nrint
cloth
already
are
Mill Margin
The
The first sufferer from the
in¬
;
un¬
doubtedly be the mill margin. It
has climbed, since the end of the
materials
The
small.
The
limit,
ished
the
price
support
cloth
pound,
on
in
was,
cents
Price Margin
1926
"
13.59
1932
9.43
today, the CCC must
1939
10.44
support cotton at 27% cents, basis
1 QdR
90 09
If in July it should be the
cotton.
same
it
as
:s
,
1946
Memphis. Since we do not expect
a
great decrease in parity, this
would
be
8
cents
than
less
the
present price.
Formerly
•when
not
a
there
8
cents.
fully 8 cents
a
less
Now
a
more
drop of
than
cotton price and
the finished mer¬
raw
in
I
I
The wool
price in this country
is dependent on the world market
price,
especially
the price for
Australian fine wools, and on the
thrift Interested parties demand
a special fee on imported wool—
actually a tariff increase—while
seems
to
it
make
almost
ments that our raw wool tariffs
should
thriff will
and'
no
down.
I
expect the
stay where it is now
come
special fee will be intro¬
duced. Wool prices are still rising
in the world market, although the
carryover
nearly one
of wool amounts to
and a half years' con¬
spite of the high
price we are now paying in this
country for imported 'wool, it is
lower than the parity price for
i domestic* wool; and since the CCC
which bought last year's domestic
crop, is not allowed to sell its
sumption.
In
.
do
not
The
elements
terminant
these.
think
in effect and
about
to
amount
60%) of
years
penditures.
that
the
New-
are
55%
(in
some
mass consumer ex¬
Rents
will
probably
tially; food and clothing will drop
in price, and so will lumber. This
trend will probably be more im¬
portant than such increases as in
railway fares, which have just
been agreed on at the rate of 10
to
15%
the
in
and
west,
come
as
and
soon
others
as
...
some
Purchasing
May
Expect
dollar volume,
which means per¬
haps 8 to 10% below the unit vol¬
of 1946.
They hope to maintain the dol¬
volume
of
1046
in
the
third
quarter of 1947.
they are prepared to fall
very
considerably
below
last
year's huge dollar volume in the
fourth quarter of 1947.
I think
they might be lucky if
during the last
theyv,maintain,
quarter of this
Increases
Will Be
the
If
year,-
85-87%
of
masses
prob¬
to-mouth
of
J that
the
those
industries
the great beneficiaries
were
first
two
post-war
weeks after Labor Day.
the face of a decrease
In
each
buying,
element
in.
scrutinize
to
of
costs,
by day.
month but day
years
and
now
not every
the advantage any
Agriculture, for instance,
having its best year now. In
longer.
is
times
as
large
as it was before the
this increase cannot last.
whole
will
be
increased
be
that
think
there
with fewer
Estimates
show
ratio of
savings to income, and there is no
pre-war
for this rate to
reason
move
be, but unfortunately if will not,
because by an unusual degree of
mismanagement on the part of
housing expediters and other plan¬
business has failed to get
on a higher level than last
this market which is so
important for all employment.
ners,
started
in
Perhaps
in
I
have
this
that, of
means
o'
year
course,
high sales in pre-war
Similar figures have been
very
terms.
mentioned
to
for
me
other
parts
of the textile industry.
discuss
and
the
degree
in which the changes of purchas¬
ing power may affect the most
important categories of merchan¬
within
line.
the
individual
busi¬
department stores, the great¬
est- losses in volume during the
last four to six months, besides
read-to-wear, seem to have been
lingerie (very sharp reduction),
higher-priced fabrics, in staple
carpets, then shoes and
furniture.
is
There
factor,
one
seldom
more
and better food?
rather
is
unlikely, because
capita food consumption
is already very high. One of the
most remarkable recent develop¬
has
ments
sumption
been
level
on
food.
per
maments will go on undiminished,
to say the least.
This, however, will not be strong
enough to prevent the unemploy¬
ment
two
are
Before the
war
the
capita meat consump¬
more
than
150
the
Vacation and Travel?
Here
ex¬
penditure will be high but is not
likely to go beyond the very high
of
People will
travel abroad, however, to the full
capacity of every means of trans¬
portation.
last
year.
The
com¬
consumer
dur¬
Consumer Durables?
petition
between
on
the
figure, which is
and
rising
a
after
now
around
quarter million, from
Labor Day to four
million at least and
Such
while
perhaps more
unemployment figure
an
our
would
productivity is rising
not
much
mean
Therefore, if
one
side
and
soft
months
and
from
here
continue durinq the
this
as
and
mar
a
when
had
we
glorious
a
time
prices slowly de¬
modestly rising
output
our
natioiia7
labor hour rose more
2%
a
year;
i
The consumer
ner
usual
the
hired
2.200
more
employees
through the employment services.
However, automobile manufactur¬
ers are
already selling all they can
Some other consumer dur¬
ables like radios may
did
capital
anc
labor.
The
increase
of
productivity har
become the subiect of
In
interest.
tivity
per
may
labor
unionized
profit.
price
1946-47
a
dangerou*-
our
have increased 3 to 5%
hour; the. wages for
labor, however, have
and broader day by
of
goods
now
available
which
whole
a
wage
of
a
us
good policv for every¬
is to make the be*'
purchasing power may stir
rise, and to be aware of a reces¬
sion which I expect, will not begm
sharp break in consume*purchasing
power
but
which
a
begun,
duration
than
H.
Steel
of
Co., the 1946 President,
will officiate.
aid
To
drive
those
who
Field
the
to
intend
to
Day activities
June
20, the committee is sup¬
club members a map
showing the routes which may be
taken to reach the country club.
on
plying
The
to
was
prepared by the
service of Shell Oil Co.,
map
touring
Inc.
Members of the Field Day
include:
mittee
Leonard
Com¬
R.
Sul¬
Phelps, Fenn & Co.; and
James D. Topping, Braun,
Boslivan,
worth
&
Co., sub-Chairmen; P.
Bogardus, Barr Bros. &
Co.; Frank J. Brophy, R. S. Dick¬
son & Co.; Thomas C. Cafone, W.
E. Hutton
& Co.; Marquette de
Hurley
Bary, Harris, Hall & Co.; Gene L.
DeStaebler/ F. S. Moselgy & Co.;
Gordon B.
Duval, Guaranty Trust
Co.; George B. Gibbons, Jr., Geo.
&
Gibbons
B.
William
Co.;
T.
Hall,
Jr., Edward H. Hills, Eldredge & Co.; Harold E. Leaf, R.
White & Co.;
D.
Albert J. Milloy;
Corp.; Richard N.
Boston
First
0
Wilson, Stone & Webster Se¬
Corp.
curities
Officers of the club for 1947-43
are:
G.
James
Van
Ingen
will
be
most
of
Couffer
&
of
J.
B.
President;
Co.,
David B, Scudder of the National
Bank,
Dity
Vice-President; Don-
Patterson
Co.
Inc.,
of
Halsey, Stu¬
Secretary, and
Frank L. Lucke of Laidlaw &
Leonard
of
R.
Co.,
Sullivam
Phelps, Fenn & Co.,, has beer*
to serve on the board
nominated
of
governors
until 1950.
With Livingstone in S.
to
(Special
SAN
F.
Chronicle)
The Financial
CALIF.—
FRANCISCO,
moves
possible, use of the period durio'
once
new
as
When thr
which
be spent is becoming broader
day. The area
may
a
level
I think
one
with
There is
&
produc¬
discussions will agair
become much mow serious. Therr
will be a competitive struggle as
sharp as ever before.
then
Walter
installed.
Drexel
Treasurer.
This has changed fundamentally
competitor that
is not much observed. The .front
on
which the consumer's dollar
.
The annual meeting of the Mu¬
nicipal Bond Club will be held
during dinner in the evening at
which officers for the year will
&
so
k
activities.
art
downward, and purchasing powe*
as a whole should remain stable
the automobile industry, em¬
ployment rose in Detroit.
Sur¬
prisingly, retail stores in that city
will be in operation during1
Final distribution of
will climax the day's
O,
and
fea¬
a
of the yearly out¬
assets
Yld
increase,
Exchange,"
ing,
its
automaticallv got his share of thb
ately after the wage
in
"Stock
attraction
reached 2V2 to 3%.
been raised 10 to 12%.
settlements
The
ture
ley, Joseph F. Vandernoot, R. W.
Pressprich & Co.; and Raymond
Then
1922-1929.
than
arranged, including golf and
tournaments, softball and
swimming for member and guest,
participation.
tennis
Rand, Rand & Co.; William J. Ri¬
clining and wages
in
T.„
been
R.
had
once
Fr?r,v
Co., Chair¬
not con¬
renewal of the
us
boom.
We
by
&
and
summer
perhaps early fall, let
sider
21
Laidlaw
f
better weekr
some
are
Mav
of
An elaborate program of sports:
and
entertainment
has:
ar¬
effect.
con¬
it has stayed there
highest price levels.
1 do not expect a great change
there in the near future, neither
up nor down.
level
of
at
meat
and
at
manufacture
the
go
not
considerably
as
months:
and
purely economic viewpoint, but it
might have a strong psychological
that
down even
their peak.
Once people have become used to
better food, they apparently would
rather spend less on night clubs
and entertainment and on apparel
did
the price
it did during the last 20
employment
eral
20 dt
events
be
In
domestic
June
on
the evening.
It will be very important to in¬
vestigate
held
of the committee.
man
received
Even
nounced
time.
a
be
Sleep,y Hollow Country Club-,,
Scarborough, N. Y.v it was an¬
Lucke
women's
volume
about 15%.
per
is
the
will
the
mentioned, which will/back gen¬
Will it be construction? It should
year
that
crease
up¬
ward.
York
Women bought
things for
new
which
14th annual Field Day of
Municipal Bond Club of New
the
apparel
industry—while recovering at this
very moment—expects a total de¬
in
the
to
re¬
and better garments
during
the war, and consequently can do
change in savings. *We have
a
returned
our
apparel industry.
Municipal Club Plans
Elaborate Program
The
are
of
more
in
not
affected
kind
some
plenishment took place during the
war.
Among them is the women's
will
do
industries
where
ness
there
purchasing
power for the next four to five
months, who will benefit?
I
Other
dize
Beneficiary?
the
on
make.
And
the
phasize
goods and perishables on the other
is already under way.
Immedi¬
Department stores are still run¬
ning 5 to 12% above last year's
ume
Power
Somewhat—Who
ables
What Department Stores
be
prices and possibly in sales vol¬
ume,- the rignt policy will be to*
renew all experience about hand-
new
demands are settled in coal
public utilities.
wage
a
of the year.
-
de¬
seem
forecast
be allowed to go up substan¬
not
may
deeper one seems
in the offing during the last part
lar
which
this
in
Food, clothing and housing
pounds,
board. But in the women's apparel
trade I think this cut is already
a
prerequisite of world trade agree¬
fore this year is over.
51.60
52.16
buryport 10% price cut plan will
be
really
effective
across
the
;the International Trade Organiza¬ I"
tion
decreasing
prices wil\ ultimately prevail be¬
have to take.
chandise.
of
power
time to come will
some
some
those
towards
it
think, by the markdowns he
will
ably be reached between
tendencies
47.72
be depressed too much, but
his net profit will be determined,
it
Many smaller gadgets
crowding again, almost
unobserved, into shop windows
and making demands on the con¬
sumer's pocket.
Therefore it is suitable to em¬
tion amounted to 125 pounds; now
not
one-
decisively
yearly
may
Therefore
purchasing
for
air-conditioning
now
which
situation in
40.78
The distributor's mark-up
anticipate.
wise to adapt all your
operations
to the fact that the maximum of
apparatus.
war, but
than
22 to31
-
be bought. There
can
television and
prevail. It is my estimate that in
spite of still rising wages, the
even
pound would only
somewhat
fifth of the
much
periods
whole pound of cotton did
cost
mean
were
("before"Nov.)
Nov., 1946
Dec., 1946__
Jan., 1947
Feb., 1947
abundance. Washing machines and
the crop year 1946-47 agricultural'
net income will
probably be three
though prices
16.03
.1929
of
per
the average as follows:
Year
however,
aver¬
of 17 constructions of unfin¬
age
which the price can fall, is as
mentioned,
for the
in
portant sector for any rather long
period. After some transition, one
This
mill margin
is
ago
are
41
will not have
dreamed of
never
before.
Cotton, which last year experi¬
its greatest price increase
since 1919, will go down rather
than up after the new crop is in,
unless the new crop should be
This is of
Business cycle.
never seen a
year
which declining prices in one part
of the economy went side by side
with rising prices in another im¬
to
15
24% cheaper than spot pricesAfbr
wide print cloth 22%, for others
less.
OPA, to heights
very
I have
a
Chocolates
are
Go
decisive for the real trend
of the whole
goods
gray
decrease
enced
to
the over-all trend be?
course
somewhat
first.
Will
have declining prices in
some markets and rising prices in
others at the same time, what will
pression on the audience of a tex¬
tile association when some con¬
A
It
we
If
for Textiles?
raw
Where
quality improvements, as they are
happening at this moment, are
also a form of price decline. The
other day it made an evident im¬
creasing buyers' market will
What Is the Picture
and
If
available
not
expanding.
is
worsteds.
verters
were
refrigerators
The Pattern of Purchasing Power
which may
their
seen
an
year.
to
Whatever
overall
in food prices
10%
rayon
out; for lingerie I doubt whether
it will ever regain its position. In
and
"support price
level," which is at 90% of parity
for most important farm commod¬
silk will never rise
ievel; nylon and
its old
pushed it out of important
lines. For hosiery it is definitely
the
is
initial
The
war.
have
probably also in coal.
.1948.
the
of
sumption of
limit
.be
silk has been
government since
our own
end
tional.
of the two trends must
price was set much too high and
has since been lowered. The con¬
Farm products, however, have a
below which they will not
r
by
the
semi-finished
and
which
keep in mind the com¬
The price of raw
are
move
but
to meet wage increases,
petition with cotton.
re¬
established, but it is definitely
the
the case of cotton,
last year.
But
forget that last
were
quite excep¬
not
sales
a
price increases and decreases
therefore less violent.
The
and industrial
goods, for instance,
compared with pre-war times.
It is difficult to say how far the
not
is
rayon
mand than in
most, interested?
Recently
wise.
of
sales
(2765)
longer
businessmen
Joseph C. Kessler has become, as¬
sociated
Livingstone &
with
317 Montgomery
ler
was
Co.,
Street. Mr. Kess¬
formerly
in
the trading;
,
department of the First California
Company.
Two With
(Special
1
.
to
The
White, Weld
Financial
Chronicle)
BOSTON, MASS.—Goodwin W.
Harding
are.
now
Weld
&
and
John A.
connected
Co.,
Ill
Paine,- Jr.
with
White,
Devonshire St.
fa
42
THE COMMERCIAL & FINANCIAL CHRONICLE
(2766)
Thursday, May 22, 1947
Observations
(Continued from page 15)
'
major contribution to the future
progress of this country.
(Continued from page 5)
a
that the reduction of the speculative segment,
and the increased values, represented in the lowered stock market
investors
may
,,feel
I wish
.
now
to comment briefly
value in stocks. They may on each of the
major tax items
political and economic risks
under study in the
Treasury De¬
and the apparent complexities inherent in the Bank Issues, from
partment.
self-interest they may be better off in seeking safety and appreciation
through the purchase of the best American common stocks at prices
Business Taxes
which yield between 5 and 6%, which capitalize average earnings
Revision in
the
business tax
at reasonable ratios, and which embody safety because of their back¬
field should be designed to achieve
ing by high working capital and general financial strength.
Com¬ the greatest feasible
uniformity of
parative appraisal between the Bank's securities and United States treatment of different forms of
Government Bonds also will have to be met.
Assuming that the
business, to promote a sound com¬
former are offered, at least initially, on a long-term 3% basis; the
petitive system, and to eliminate
current 2.30 yield available on outstanding U. S. Treasuries may
any barriers to a high level of in¬
create strong competition.
Nor can the income tax factor be dis¬ vestment.
Among the important
regarded here; for instance, for an investor in the 50% bracket the business tax matters
being studied
net "penalty" paid for the greater safety of our government obli¬
are the following:
gations would be only % of 1%.
level, offer the opportunity for greater
the potential
well feel that in view of
(1.)
Both the
Corporate rates.
prises make it essential to
sider, carefully the impact bf
ent taxes
con¬
particular asset.
Some advocate a change in the
to
order
provide
vantages for
capital
assets
Protection
sets.
Again the private investor seems to be somewhat confused con¬
cerning the backing which will protect the safety of the securities.
spokesmen frequently state as fundamental the credit-worthi¬
ness of the borrowing countries.
Typically, the current issue of the
National City Bank's "Letter" asserts "the first line of protection
for the investor in Bank obligations is the reasonable expectation
Bank
that the
to
borrower wil
lbe
able. to fulfill his contractual
the^Bank." On the other hand,
some
obligation
Bank optimists—comprising
his
suggestions for tax
rate revisions, tax exemption for
new enterprises, tax exemption or
are
,
liberal treat¬
both officials and the public—are reassuring doubting Thomases by
that the United States (in the amount of $3,175
Canadian backing,, will furnish airtight protection to
the extent of $4 billions;, and either imply or actually state that
obligations beyond that amount would be shaky. The impression is
even being gathered that it may be sound procedure for the buyer
them
reminding
million)
and
to
purchase and hold them without worry—perhaps even at a pre¬
mium—until this $4 billion lending ceiling is reached, and then
dispose of his holdings in the open market.
But this overlooks
the fact that a statutory lending limit of that amount would be in¬
dispensable for such protection, and that liquidation by others sim¬
ilarly minded may make such technique difficult if not impossible.
And whatever doubts do thus exist may be considered out of pro¬
portion to the above-demonstrated advantage over U. S. Treasuries
of only % of 1% in yield.
Doubt regarding
the repayment of borrowings over the discern¬
ined.
Under present law the cor¬
porate income tax begins at a rate
benefit of both incorporated and
unincorporated business firms
of 21% on net incomes of less than
raise
$5,000 and is graduated to a rate
on the entire income if in
merit extensive
of 38%
$50,000.
i.
r
difficult
•
countries are normally subject not
only to American taxes but also
to
which
of the
continued growth
ties
to
there is need for reexamination of
tax
the tax
from
action taken
with
in
requirements/and
due
the
on
other major taxes/
regard to
structure
any
revisions
the
of
corpora¬
of
tax
tions.
in
exempt organizations,
status
It
of these
has
been
The present method of
graduation imposes a high rate of
53% on income in the so-called
tion
the
that
tion tax.
present
between
and
$50,000, to bring the effective rate
on
the whole income up to 38%
at
$50,000.
One
question
that
area
merits
consideration
this method
of
continued
be
$25,000
whether
is
graduation should
whether the
or
so-
called notch rate should be elim¬
ing business.
In
signed
lems
corporations
all make
can
nificant contribution
It
progress.
to
a
economic
important
is
and
sig¬
that
ferent
time, there are significant differ¬
Vigain confusion has to be met concerning the public's concept
about the basic structure of the Bank. For example, in some public
utterances the institution's officials ar6 wont to compare it to "an
ordinary industrial corporation whose stockholders are, in effect,, the
Board of Governors of the Bank." Actually the ordinary definition
of the corporate stockholder is of an absentee owner of a business,
who puts up the equity capital which receives the profits on the
enterprise.
In the case of the World Bank a great segment of the
public—wrongly
no
doubt—believes
that
setup will in short
being stockhold¬
the
taxed
stockholders
and
their
on
regular income tax rates.
of taxing corporate
profits has been.widely criticized
involving double taxation,
as
is
contended
equitable and damaging, to invest¬
ment incentives.
This
members
with
well interfere
businesslike debtor-creditor relationship.
•
may
Some doubts have also been raised by
sound
and
the prescribed prerequisite
loan that the bank must be satisfied that the borrower would
for
a
be
unable
other
a
to
sources.
obtain
the
credit; under
reasonable
conditions
from
It is feared that this policy will cause the individual
investor to think that he will be called
on
to shoulder only the unde¬
sirable risks.
There has been
misunderstanding regarding the extra an¬
the special reserve fund
in effect an adjustable
interest charge. Although this is, as was explained by Mr. Black
at a press conference this week, it constitutes a payment for the
benefit of the entire assets' safety.
Nevertheless, as some comment
has been made that this extra adjustable interest charge on bor¬
rowers should be taken into account in fixing, the rate paid by the
institution on its own debentures, the correct explanation should
some
nual payments of 1-1%% by borrowers, for
called for by Article 4, section ?4, it being
•be widely disseminated.
to
the
Various conflicting versions have been given out about the actual
pilation is attributed to the institution itself, that an SEC study is
"the Bible"; and again, conclusions tabulated by the Department
i
of Commerce.
$
*
$
$
a
obfuscation, considerable
ques¬
so-called
(Special
to
The
Financial
Chronicle)
BATTLE CREEK, MICH.—Law¬
Gordon, Jr. has become
affiliated with Smith, Hague
&
rence
E.
(Special to
The
Financial
distributed
MICH.—William
DETROIT,
F.
of Chapin & Co., Penobscot
Build¬
Co., Security National Bank Build¬ ing, members of the Detroit Stock
Exchange.
ing.
(Special to
The Financial
Joins R. H. Johnson Staff
Chronicle)
(Special to
LINCOLN, NEB. —William W.
Hadcliffe
has
become
associated
with E. E. Henkle Investment
Federal Securities
Building.
Co.,
The
BOSTON,
Financial
Chronicle)
MASS. —Robert
W.
McCabe has become affiliated with
R. H. Johnson & Co., 30
State St.
ences
situations.
At
arising
and
areas.
-
For
exam¬
corporations quali¬
fying
as
Western
.Hemisphere
Corporations have since 1942 been
exempt from corporation surtax.
the
the present
in taxes on incorporated and
Possessions
„
States
have
Federal
cial
exempted from
income taxes
type
of
United
Ihe
of
been
and
a
is
exemption
spe¬
* pro¬
vided for China Trade Act Corpo¬
rations.
Individuals ^resident
: businesses,
de¬
pending on the size of the busi¬
ness income, the other income of
the business owners, and the por¬
wages
and
salaries earned abroad and a par¬
tion of the profits retained in the
is derived from
While
business.
complete
uni¬
abroad
are
.•
exemption
corporations is impracticable, the
"present tax system needs careful
double
allowed
-complete
a
their
on
tial exemption where
ness.
formity of tax treatment of pro¬
prietorships, f partnerships, ; and
not
absorbed
of three basic types. One approach
ance
would be to eliminate the corpo¬
ried forward
rate income tax and to tax stock¬
holders, like partners, on their
full
portion
of
both
corporate
profits. A second^ approach would
ately
be
income of the two years
be
to
continue
tax
tions
but
the
to
tax credit
a
corporate
grant
or
in-r
corpora¬
deduction for
dividends paid.
A third approach
would be to continue the corpo¬
rate
income
tax
on
distrib¬
both
uted and undistributed profits but
to grant stockholders an
allow¬
credit with respect
idends
received.
has
The
to div¬
Treasury
completed
come
taxation
raises
of
corporate
and
important
and
in¬
ex¬
ceedingly complex problems. The
existing arrangements and alter¬
native
approaches
need
to
be
carefully analyzed to determine
their advantages and
disadvan¬
equity,
administra¬
tages with respect to tax
With E. E. Henkle Inv. Co.
particular prob¬
in various foreign
their income
operating a busi¬
..:
■
••••*
,
,
American
corporations and. in¬
dividuals doing business abroad
should not. be placed at a disad¬
vantage in their competition with
foreign firms. At the same time,
so long as they are American citi¬
zens, and businesses,
they should
.
"The
Davis has been added to the staff
de¬
meet
corporate
a
technical study of a
number of such plans for the tax¬
ation of corporate profits.
Chronicle)
been
time
,
Department
With Chapin & Co.
have
(6.) Business loss offsets.
Op¬ bear their fair share of domestic
portunities for offsetting business tax
burdens.
It
is,
therefore,
profits and the question of the losses against taxable income are
highly important that we analyze
desirability of reducing or elimr a significant factor in determining the combined effect of United
mating any existing double tax¬ the attractiveness of risky invest¬ States and
foreign taxes with a
ation.
ment and in arriving at an equita¬ view both to
minimizing any ex¬
ble basis of taxing fluctuating in¬ isting discrimination and
On the assumption that the cor¬
inequi¬
comes.
Under ^present law, net ties and to ascertain whether such
poration income tax rests at least
in part on stockholders, a number operating losses sustained in any taxpayers are bearing their-Lair
of plans have been, advanced .for one year may be carried back and share of taxes.
*•
the, reduction or elimination of applied against the income of the
(9.) Intercorporate - problems.
double taxation. -These plans are two preceding years and any bal¬ Attention should
be given to the
of
released
Joins Smith, Hague Staff
obsta¬
no
ance or
To clarify these and other elements of
further education should be devoted.
unnecessary
An important Is¬
of
extent
taxation
come
past results of our international between-war lending. Bank spokes¬
men have at different times respectively cited a record whose com¬
no
cles to the carying on of business
gen-' examination to determine whether
existing differences in treatment
in postwar tax policy relates are justified.
sue
own
is
tion about which there is
ers—being borrowers excepting the United States and Canada. ' Fur¬
thermore it is feared that the technique of the Institution's making
its
it
that this is both in¬
eral agreement.
to
income
dividend
system
order take the form of all the members—far from
loans
are
the
at
This
taxes create
income tax on its entire unincorporated
income
; <
spe¬
Also, taxpayers doing business in
(2.) Taxation of dividends. Un¬
der
present law
a
corporation
net
"
-
ple, domestic
pro¬
stituted.
k
to
countries
variety of forms. Sole
prietorships,
partnerships,
a
in the forms best adapted to dif¬
pays .an
provisions
ed in
for the individual income tax sub¬
a
system of bracket
similar to .that used
taxes
number of
a
from ; time; to
tive economy business is conduct¬
worldwide
and
the
-•
relief
enacted
free competi¬
a
abroad
they have paid to foreign
addition,
cial
various forms of do¬
paid
American
- allowed
been
against their American
business
In
Elimination of discrimina¬
among
past,
have
countries.
discriminates unfairly
against taxable enterprises.
(5.)
taxes
liabilifies; on income derived
which
treatment
notch
organiza¬
charged
instances
some
credit
for
the
corporations
overall
some
made in the Ameri¬
laws
i In
abroad,
graduation
will be made impossible by irremediably
tax
of the scope and volume of activi¬
revenue
enterprises,
become subject to
may
tax rates
must be considered in the- light of
The level of corporate
inated
sary transfers of dollars
adverse trade balances.
therefore,
can
ible future surely is going to be difficult to eradicate from the mind
the investor who is daily faced with an unending barrage of
best, that national governments are going to change their form—
perhaps next week, perhaps next decade. Or, fiscally, that the neces¬
the foreign countries.
allowance is
of
political news indicating that the Eastern Hemisphere
at least is sitting on a keg of explosives (atomic).
Or perhaps at
those of
Such individuals and
excessive tax burdens unless
investigation.
(4.) Tax exempt organizations.
Because
;
problems
a
capital
(8.) American business abroad.
American corporations, and indi¬
viduals doing business in foreign
deduction for investment in small
and extent of gradu¬
ation need to be carefully exam¬
of
during peri¬
taxpayer is increasing
investment, it would
result in postponement of tax.
business
preciation allowances.
These and
other
proposals for the special
excess
To the extent, however, that
ods when
more
a
They assert
depreciation
accelerated
vanced for the tax relief of small
business, and
over;
than' their
it understates income
ment for operating losses and de¬
method
depreciable
,
less
reduce the risks of large
capital expenditures in fixed as¬
level of corporation tax rates and
'
is
would
ad¬
the
Actual
The
in
recovered
which
that
Among the proposals ad¬
prises.
be
probable useful life.
tax system
special
invested
will
period
and small enter¬
new
a
law that would arbitrarily shorten
the-write-off period, so that the
lieve that the present tax system
discriminates against smaller en¬
terprises and imposes unnecessary
impediments to their establish¬
ment and growth. Others take the
position that an attempt should be
in
of
span
spokesmen for small business be¬
made to liberalize the
life
administrator to estimate the
pres¬
small business. Some
on
economic effects, and
tive considerations.
In
as
a
may
car¬
deduction from
immedi¬
following the year of loss.
connection
with
postwar
tax
revisions, it is important to con¬
whether the
present loss
sider
offset period
is long enough. An¬
other important problem is to de-f
termine
whether
the
present
...
system of carrybacks and carry¬
forwards is preferable to a sys¬
tem which relies solely on carry¬
forwards.
'
<
(7.) Depreciation.
The speed
and certainty of recovery of capi+
tal ^invested in depreciable - assets
important bearing on the
risks of investment. Consequently,
have
an
it is necessary
to give attention tQ
present depreciation practices and
to
various - proposals
for their
modification.
taxpayers
Some
complain that the present system
of depreciation allowances is too
rigid and urge that they should.be
given more leeway in estimating
the useful lives, of their depreci¬
able
assets
and more
desirability
corporate
credit
dends
on
method of
(3.) Small business.
The vital
taking depreciation. They contend
importance to the economic sys¬
tem
of a vigorous and* healthy that the individual taxpayer -is in
better position than the tax
group
of small business- enter¬
the
on
returns
for
-
present ;2%
consolidated
85%
the
and
intercorporate
received.
as
returns
offset
an
- divi¬
special tax
The
consolidated
tended
was
in¬
the
tax
to
advantages accruing from the -off¬
setting of losses of one corpora¬
tion, against the gains, of .another
and
the. avoidance of .the
tax:
on
intercorporate
dividends
which
would otherwise, have been paid
on
dividends
member
of
received .by
an.;
from another.
affiliated
The tax
one
groilp
inter¬
on
corporate dividends, was intended
to
prevent
the evasion:.of the
graduated corporate income 'Jax
by setting up a series of sjriali
corporations in order to obtain the
lower rates
applicable to small
corporations.
It is necessary to
determine.. whether these taxes
have achieved the purposes they
-
-
intended
were
to
serve
arid
whether they should be retained
in the postwar tax structure.
.
freedom of
choice in selecting the
of
tax
additional
Individual
The
and
of
Income
individual
Taxes
tax is,
incorpe
remain, the mainstay
Federal: revenue system.
it is most important to
should
the
Hence,
.
Volume
achieve
Number
165
fair and equitable
a
THE COMMERCIAL & FINANCIAL CHRONICLE
4556
dis¬
tribution
of the taxes while main¬
taining broad consumer markets
incentives
and
work
to
and
in¬
Among the major tax prob¬
vest.
lems
in
field
this
under
now
study in the Treasury Department
are the following:
(10.) Individual rates.
.
The fi¬
nancial demands of the war forced
raise individual income tax
to
us
rates in all brackets to very high
levels.
The entire rate schedule
should
view
be
to
reconstructed
achieving
distribution
of
time
conditions.
peace¬
must
rates
be reexamined to determine their
effects
on
invest
and
incentives to work
and
standards
effects
their
on
and
living
purchasing power.
Revision of the individual income
tax
should
rates
be
coordinated
(16.) Allowances for life insur¬
A more com-r
control.
and
prehensive approach to the prob¬
lem,
which 7; has also
received
Congressional attention in the past,
would be to
Require joint tax re¬
husbands and wives, Still
turns by
another approach,
which has only
premiums and other savings.
ance
There have been proposals to al¬
low
a
limited
deduction
uhder
the' individual income tax for life
insurance
have
premiums.
also
been
recently been given widespread
attention, would be to eliminate
tax differences resulting from in¬
deduction for
splitting" between husbands
and wives by granting couples in
all
States the
option to divide
were
come
their
combined
for
incomes
tax
purposes.
The
maxi¬
and
under
The
a
equitable
an
taxes
production
mum
with
ment
inequalities
existing
in
sig¬
earned
be
other forms of
tions
and
their
effect
and
call
careful
for
con¬
problem. It must
recognized that the .various so¬
that have been suggested
would have different but impor¬
lutions
tant
effects
the
on
yield
revenue
Of the income tax and
the dis¬
on
economic
on
of
taxes
income
family
and
problem
in
comprehen¬
income
connection
with
differ¬
among
groups
any
sive revision of the individual tax.
(13.)
Pensions
There
are
annuities.
million
several
now
who receive various forms
persons
of
and
pensions and
annuities.
With
the wartime reduction in personal
exemptions
in
Thus, a single person now has an
exemption of $500; in 1939 his ex¬
emption was $1,000.
A married
couple without children now has
an exemption of
$1,000 as com¬
creases
pared with $2,500 in 1939.
While
exemptions for single persons and
married couples have been re¬
railroad
tax
the
and
the
of
cost
treatment
of
in¬
recent
living, the
pensions
annuities has become
and
increas¬
an
ingly important problem.
Under
existing law, social security and
retirement
certain
and
other
benefits
kinds
annuities
of
and
pensions
excluded
are
from
depend¬
1939
in
to
the
War and postwar increases
in the cost of living have further
sharply reduced the real purchas¬
ing power represented by the per¬
$500.
taxable income.
to
taxed
at
ceed
six months
over
rates
which
maximum
a
such
assets
do
of
25%.
to the extent of capital
cept
in
the
of
case
not
ex¬
Losses
allowed
are
are
only
gains,
ex¬
individuals
such losses may be offset
against
ordinary income to the extent of
$1,000 each year. A 5-year carry¬
of unabsorbed capital
over
losses
is allowed.
The
tax
treatment
of
capital
gains and losses, it has been con¬
tended, has a considerable effect
the
on
securities market
the
and
allowing the tax-free
The
taxation
bility of capital losses should
be
Excises
con¬
of
(18.)
pen¬
Revision
of
excise
taxes.
level
of
important way the role
revenue system
whole.
Consideration needs
fects in
an
the individual income tax.
df the tax in the
as
a
to
the
question
whether an adjustment should be
made to take account of higher
be
to
given
living costs.
It is also necessary
to reexamine the
alignment of
exemptions as between single per¬
married
pendents.
sons,
couples,
and
de¬
munity property States are per¬
mitted to divide their community
earned and invesment income for
tax
income
purposes,
thereby reducing their taxes un¬
progressive rate schedule.
There are also inequalities arising
out of the fact that in all States
der the
recipients of investment income
have
opportunities for splitting
that income among members of
the family,
whereas in non-com^
munity property States earned in¬
come is taxed to the earner.
The
tax value
ated
Averaging.
tax
of income splitting va¬
Couples
with not more than $2,000 of net
income after exemptions can real¬
ize no tax benefit from income
ries with size of income.
splitting, whereas under the grad-f
with large in¬
comes
may
realize
substantial
benefits, These tax savings have
created
difficult
administrative
juated rates couples
of
Under gradu¬
rates,
taxpayers with
fluctuating incomes are
widely
required
to
pay
substantially
larger amounts of tax than those
with
stable
same
years.
lose
incomes
amount";
totaling the
period
a
of
many taxpayers
benefit of their in¬
full
income
because in
have
over
Moreover,
the
dividual
(12.)- Family
income.
Under
present law there are inequalities
in taxation of families arising out
of the fact that couples in com¬
Federal
(14.)
some
tax
exemptions
they do not
years
income equal
to the
allow¬
able exemptions.
Such taxpayers
are also taxed more
heavily over
a
period of
stable
of
poses
ty and
have
may
to
invest
ventures.
averaging
the
income
sig¬
a
on tax equi¬
the effects of taxation
substantial
of
efects of such
enue; must
effects of
in
The
would
Joss
risky
adoption
result
in
a
revenue,
and
loss in
rev¬
a
hp Compared with the
ot|i|pjjtax
Credit for earned income.
The Federal: income tax has
pro¬
a
closely
lated to such matters
and
types of property
r»
Over a period
of
now
these excises with
view
a
the Con¬
time
requirements.
credit for earned income
imposed
which
which
which
enter
Each
administer.
lar taxes
gress and the Treasury have both
considered means of eliminating
reducing the resulting tax in¬
equalities among similarly situ¬
ated families, but no
adequate
^Oltition of the problem has been
adopted, One limited approach
that has been considered in the
fit
past would be to eliminate the tax
advantages
of
the
community
it
complica¬
introduced
into the
tax system.
been
a
There have, however',
number of proposals for
reinstituting
income
come
an
a
under
tax.
earned
credit
the
Some
earned
individual
proponents
in¬
as a means
taxes
wage
of
reducing
earners,
whereas
other advocates of
an
earned in¬
of
In
structure.
business
costs,
on
in detail
Will
so
that any
changes made
be
appropriate in light of
the competitive conditions in the
various industries.
(19.)
Discrimination
domestic
and
year
making
goods.
Committee
your
consideration
between
imported
to
the
gave
problem
of
certain
imported
mer¬
chandise subject to the same in¬
,
and
taxes
revenue
of
referred
similar
as
domestic
it
consisting
for
study
of
the
Internal
State
origin
to a
Joint
Revenue
Department
and
the
of
this
problem has involved an analysis
of the treatment of such imported
products
and
as
beer., lubricating oil,
numerous
products containing
alcohol including medicinal prepa¬
ing
extracts,
fruits
and
colorings. Determining what
stitutes
discrimination
is
solution
involve
magnitude and their
will
technical
considerable
matters
of
the
basic
structure,
par¬
ticularly
with
respect
to
the
relationship
between
taxes
and
ship to
past
their
the
income
three
of
comprehensive
report
for
by the Congress.
con¬
such
are
treatment
during the
(b) cancellation of indebted¬
which is a matter requiring
ness,
prominent tax attorneys, has been
exploring the problems in this
field, with a view to preparing a
impor¬
more
items
the
eries of properties lost
Treasury
Department, with the assistance
of
an
Advisory Committee of
these
as
of
com¬
of (a)
losses,
which
involves
primarily the treatment of recov¬
war;
For
difficulty and
war
the
tax.
the
years
the
two
relation¬
mutual
tant
frequently
problems
sion
general reconsideration and
hauling;
(c) certain
capitalizations
and
over¬
types of re¬
reorganiza¬
tions, to which there appears to
be increasing resort as a method
of attempting to avoid tax on cor¬
This
important task is nearing com¬
pletion and the report is in the
final stages of preparation. It will
contain a detailed analysis of the
problems involved
and
recom¬
porate
mendations
(e)
occupational
expenses,
a
problem which involves primarily
sideration
for
revision
a
of
the
distributions
where there
tion of hostilities and of the
war;
factory
and
difficulty
of
lines
deductible
and
problems
consideration
which
in
need
will
connection
with
development of the postwar
tax system. As a result of a re¬
quest of July 27, 1946, from Mr.
Doughtort, then Chairman of this
Committee, the Treasury Depart¬
ment has been carrying on a
study
the
problems
with
that
the
would
extension
be
of
coverage for
old-age and sur¬
vivors'
insurance.. Attention has
been
directed
difficult
primarily
technical
to
the
adminis¬
and
trative problems involved in de¬
veloping
feasible
methods
for
covering
self-employed persons
agricultural and
domestic
and
workers.
The problems raised in connec¬
tion with the coverage of both of
these
differ
substantially
from those involved in the cover¬
age
groups
of
workers
curity
in
industry and
present social se¬
At
commerce.
taxes
are
imposed
on
the employer withholding
the employee tax and remitting it
together with the employer tax.
wages,
In
the
case
of the
self-employed,
this system is not applicable be¬
cause
there is no employer-em¬
ployee relationship giving rise to
wages, and it is necessary to es¬
tablish
the
base
self-employed
how
and
which
on
should
the
tax
be
should
non-
of
deductible
(f) research and
development
(21.) Extension of coverage. The
of social security and
its coverage raise certain impor¬
tant
satis¬
the
expenses
their
business outlays;
Social Security Taxes
drawing
between
personal
individuals
taxes.
cor¬
tax
the
believed, would
the uniformity,
equity of these
situations
(d) provisions of
law
the
operation
of
which is affected by the terminal
the
greatly
increase
in
accumulated
are
porate earnings;
estate and gift taxes, the adoption
of which,
it is
the
taxed
be
re¬
ported to the Bureau of Internal
expenses, involving
the question of permitting greater
flexibility in the determination of
whether
such
capitalized
or
expenses;
costs
(g)
should
deducted
capital
be
current
as
gains
and
losses, in which the problem re¬
lates
primarily to
use
of
the
present provisions, such as sec¬
tion 117(j), in certain instances
for
tax avoidance purposes; and
(h) a number of administrative
provisions which require amend¬
in
ment
to
order
administrative
Bureau
assist
of
facilitate
operations
the
the
Revenue
Internal
of
and
taxpayers, such as elimina¬
requirements on cer¬
return forms,
correction of
tion of oath
tain
certain
statute
visions,
small
of
limitation pro¬
elimination
and
some
of
burden¬
unnecessary reports of
refunds, elimination
of ir¬
revocability of the election of the
taxpayer
•
with
deduction,
ment
the
of
to
respect
standard
the
improve¬
enforcement
of
reporting
and
paying by em¬
ployers of tax collected from their
employees under the withholding
system, and similar matters.
These above items
tive of
illustra¬
are
number of
a
pressing tech¬
nical and administrative problems
Which the Treasury and the tax¬
have encountered
operation of the Code.
payers
in
the
In conclusion I believe that we
should
approach
the
importance
task of postwar tax revision With
an
open mind.
We need to study
analyze all the major matters
and
that I
have mentioned and many
these problems
questions, par¬ more that will arise tipon further
exploration, We should scrutinize
ticularly With respect to the selfemployed having very low in¬ carefully all the present sources
comes
who
are
not
subject to of revenue to ascertain whether
income tax. While the employer- they are in proper balance. We
employee relationship generally should also explore all possible
exists in the case of agricultural sources of new taxes which upotf
and domestic Workers, the ma¬
investigation may prove meritor¬
jority of the employers either are ious.. and Which may relieve pres¬
not accustomed to filing tax re¬ sure in other areas.
turns of are not engaged in busi¬
The
development of a sound
ness. Moreover,, employment gen¬
postwar tax system constitutes
erally is highly irregular, pre¬
one of the most important
steps
vailing Wages are much lower
than in industry and may be paid towards the assurance of continu¬
partly in kind. As a result, pro¬ ing prosperity in this country. If
vision may need to be made for
production is to continume to in¬
different techniques in order to
crease. if the American
Revenue.
raise
Both
of
numerous
standard
achieve
adequate
these groups.
has
been
these
of
Substantial progress
made
mendations
coverage
for
towards
the
recom¬
solution
of
problems.
Technical Matters
food
In
con¬
addition
and
to
of
living
future
the
tax matters
general importance
com¬
of
broad
plicated by the nature of the tariff
to
which I have briefly
referred,
as
is
it
improve
to
has
in
the
in
the
past, the
tax system must yield the needed
revenue
ness
property system by taxing earned come credit are concerned
prima¬ schedules which in some cases there are a substantial number of
to the earner and other
community property income to rily with its effects on the incen¬ provide specific rates that may needed technical adjustments of
have been intended to compensate considerable
jthe spouse who exercises manage¬ tives of business executives.
significance
that
income
some
proper
Taxes
plexity. Among the
of rations, toilet preparations, flavor¬
income credit view it
primarily
on
for
care¬
Revisions of particu¬
to be studied
group
justify the
be
will have
come
credit, however, was com-
should
into
merchandise
that
the
profits of particular industries, or
which are unusually difficult to
ternal
tions
of
unduly burdensome
are
sive and again in the years 19341943 inclusive.
The earned in¬
to
fit¬
extremely regressive,
are
during the years 1924-1931 inclu¬
enough
to
ting them together int<5 a coherent
system adaptable to our peace¬
various other •eliminated, mainly on the grounds the Tariff Commission,
that
the* Credit : was' not
assignments.
large Treasury. Consideration
years
the level
exemptions.
It is
appropriate
to
reexamine
problems and endless litigation in partively small in amount, and in Committee on
the field of family trust, family the Revenue Act of 1943 it "Was Taxation, the
partnerships
as
re¬
of income tax
Last
revisions.
(15,)
vided
should be raised from excise
This question is
enue
taxes.
excises
individual
incentives
revision of the excise taxes raises
the important
policy issue of how
large a portion of the total rev¬
fully considered with a view to
reducing, or
eliminating
those
bearing both
on
business
of
.
Averaging
nificant
on
the
substantially in¬
newly imposed to help
in the financing of the war.
The
than those with
inequali¬
ties in taxation raise the
question
whether it is desirable to adopt
some method of
averaging income
over
a
period of years for pur¬
tax.
were
or
These
years
incomes.
which
creased
was
the'estate and gift tax field there
has long been a need for an in¬
tensive study and legislative revi¬
associated
personal exemp¬ sions and annuities is closely re¬ The Federal Government now im¬
to
proposals
for* special poses excise taxes on more than
tions determines the coverage of lated
the individual income tax and af¬ treatment for aged persons under 50 commodities or services, most
The
Gift
Revision
(20.)
of
recov¬
capital
and
the
reexamined.
ery of the annuitant's
raise
to
years.
tions of
Estate
entitled
examination of the present meth¬
od of
dertook to go into such
problems
to
any great extent. Many of
these matters pose
policy ques¬
tends
financing
The basis for taxing capital gains
at lower rates than other income
and the limitation on the deducti¬
These exclusions
important problems of tax
equity.
With respect to ta-iable
annuities, there should be a re¬
ques¬
thus
involving
this
policies with respect
supply of capital.
A great many
problems have arisen as the result
of taxpayers' efforts to convert
ordinary income into capital gains
to the lower tax rates.
war
country's
to inter¬
national trade agreements.
tariffs
tions
simplicity,
raise
tribution.
sonal exemptions.
as
invest¬
(17.) Capital gains and losses.
Under present law gains on
capi¬
tal assets held by individuals and
^
from $400
present level of
issues
savings,
ment and consumption.
taxes.
duced, the allowance for
savings, in order to
be
nificant
are
on
ents has been increased
cor¬
sideration of this
family incomes
on
the
sharply
reduced.
At the present time a
taxpayer is allowed an exemption
of $500 for himself, for his wife,
and for each of his dependents,
a
savings in different ways.
These
proposals for special allowances
for saving raise basis
equity ques¬
taxes
corporations
Come tax were
consider
prevent unfair discrimination, be¬
tween individuals
investing their
between
married and single persons.
It is,
therefore, desirable to consider
♦
probably
responding general allowance for
ent
dividual f
would
to
necessary
tribution
(11.) Personal exemptions.
As
fcart of the war finance program,
personal exemptions under the in¬
it
during the
have accumulated
43
The Revenue Act of 1942
the last piece of
major legis¬
lation in which the
Congress un¬
limited amount of
a
granted
changes in the income
personal exemptions
and the treatment of family in¬
comes and with changes in other
*
a
on
imported products. The inter-re¬
lationship between excises and
invested in Fed¬
eral securities. If such allowances
with other
as
allow
for the absence of excise taxes
income
tax
such
Proposals
to
made
(2767)
without
and work
impeding
busi¬
incentives, without
restricting investment and with¬
out
Weakening consumer markets.
I wish
ure
again to
in
Committee
initiated
as
on
a
pleas¬
express my
appearing
before
the work is
this
being
fundamental revi¬
sion of the American tax
systemj
THE
COMMERCIAL & FINANCIAL
Tfiursday- May
CHRONICLE
1947
44
a proxy pursuant to Rule Xr14A-6; what
inform the constitutes new as contrasted to
stockholder of the material facts follow-up material, the meaning
necessary
for
the exercise of of "interest in any matter to be
making
available facilities for
acted upon" as used in Item 4 (b)„
prudent judgment. The proxy it¬
fying revisions were made in 1940. mailing,
stockholders
soliciting self is viewed by us as a sort of what constitutes an arrangement
(Continued from page 7)
At that time the 10-day rule was
material. It is my view that.the
•Commission made certain recom¬
or understanding for the election*
adopted, requiring the advance 100 word statement requirement ballot. As a result of the Rules,
mendations to Congress, which if
of any person as a director, the
the stockholder is given a place to
filing with the Commission of the
is proper, for it- does no
more vote for or against each proposal. definition of a material transac¬
adopted, would extend the proxy soliciting materials.
than add a privilege of explaining
rules to companies whose size and
A forward
step has thus been tion by a director under Item 5.
The last major changes in Rule
the stockholder's position if the
dispersion of ownership, in the
X-14 were adopted in 1942.
In management proposes to vote taken in the direction of giving (H), what constitute "related!
Commission's opinion, make the
matters"
not requiring separate
that
version,
many
important against it. It was widely charged reality in the field of corporate boxes in the
application of the proxy rules
proxy
form, and
affairs to the fundamental demo¬
changes were made, including the when this new requirement was
other items of less general in¬
highly desirable in the interest of
cratic principle of the right to
adoption of the specific require¬
adopted that it would provide a vote. The proxy is no longer a terest.
Vie security holders of those com¬
ment that stockholders' proposals "field
day for crackpots."
Ex¬ one
I have tried to give you some
panies. No action has been taken
way ballot, where the only
be set forth in the management's
on this recommended
legislation.
perience has proved that these choice is between voting "yes" or of the highlights of the problems
soliciting material. We have now claims were entirely unfounded.
which arise under the proxy rulesnot voting at all. But in some in¬
had several years' experience with
Reasons for Proxy Regulations
We have found that for the most
As I am not an expert in the ap¬
stances, we find the proxy has
The
reasons
which prompted the present rules. In the main, part stockholder proposals are
plication of the Rules, I hesitate
come to resemble a sample ballot
this experience has been satisfac¬
the decision of Congress in 1934
thoroughly pertinent to corporate
to answer any specific questions
of a political party, rather than
to
give the Commission proxy tory. Much of the criticism that activities and proper steps for a
them.
However,
I
straight ballot. Various devices concerning
was heard when the rules were
stockholder action. In many cases
powers are fairly obvious.
The
are
used
to attract the stock¬ would be interested in hearing
stockholder is the owner of the being considered has proven un¬ they have been proposals already
holder's "X" into the desired box your views on the subject, and I
enterprise—his
money
has fi¬ founded. On the other hand some adopted by other companies. They —oversized boxes, colored type, have here with me Mr. Edward Tproblems have come up ' which have related to such matters as
nanced it and his investment is at
arrows and explanatory material.
McCormick, of the Commission's,
risk.
The large corporation has suggest the desirability of revising the place of holding meetings, the
These methods seem highly ob¬
staff, who will endeavor to an¬
oome to be an
important charac¬ the present rules. Your sugges¬ institution of bonus plans, the ex¬
I
jectionable. The arguing should swer some of your questions.
teristic of American economic life. tions in this connection will not pansion of informational reports
have
been
done in the proxy want to caution you, though, that
It represents a huge aggregation only be appreciated, but are so¬ to stockholders, and the election
statement. The proxy itself should neither of us is prepared to giveof independent auditors.
of capital, derived for the most licited.
In the
simply register the stockholder's any interpretative opinions "off:
four
years
of operation of the
-part from the individual invest¬
Compensation Disclosure
vote, it should not contain argu¬ the cuff."
ments of many thousands of se¬
proxy rules from 1943 to the close mentative
In closing I want to say that
material.
„A source of great discontent of the year 1946, managements
curity holders. It is impossible, as
In our review of the proxy rules we of the Commission believe that,
with the proxy rules is in the re¬
have filed 6,204 proxy statements
a practical matter, for stockhold¬
the staff and the Commission it¬
we will also give consideration to
ers because of
their number and quirements for disclosure of com¬ and during that period there were
such matters as the solicitation of self should do all in its power tapensation. Prior to the 1942 revi¬ only 153 one hundred word state¬
wide dispersion over the country
proxies for stock held in street simplify and accelerate all cor¬
sions if a nominee for director ments
to direct the operation of the cor¬
permitted by the Rule, or
names,
the activities of profes¬ porate clearances with the Com¬
received one of the three highest
slightly more than 2%.
poration. Accordingly, the stock¬
sional solicitors, problems arising mission. You may be sure that I
Another difficulty noted in our
holders have delegated to the di¬ aggregate remunerations paid by
in proxy contests, duties of issuers shall have that in mind at all.
the company or any subsidiary to
rectors and to the officers the task
present rules rqlates to follow-up to send out
„
opposition material times.
of management,
which includes any officer, director or employee, materials. Such
shall be
SEC Proxy Rules
Revision of
accompanied by
statement designed to
'
k
.
"
of policy and the
direction of operations of the bus¬
the formulation
iness, but have retained the au¬
thority to make many important
that
compensation
stated in the proxy
addition
of
the
a
had to be
statement. In
statement was required
aggregate
remuneration
the election of paid during the year to directors,
officers and others in a manage¬
directors, authorization of secu¬
ment
capacity. It soon became
rities, and the determination of
certain other corporate matters. 'apparent to the Commission that
its requirement did not obtain a
Here again, because of the im¬
sufficient disclosure of the indi¬
practicability of having all stock¬
vidual salaries of the policy mak¬
holders meet in person to make
these decisions, machinery had to ing officials of the corporation. In
letters to the Commission, stock¬
he created which would permit
holders had evidenced a great in¬
-each to
express
his individual
terest in this type of disclosure.
preference. The proxy has been
Because of this, the Commission
developed as a device for securing
in 1942 adopted the present rule.
this expression of the stockhold¬
decisions, such as
jnaterial need not
be filed in advance
must
be
sent to
only when it is
As
holders.
find
that
contest
in
a
of mailing but
the Commissiort
mailed to stock¬
consequence,
the heat of
those
soliciting
a
we
Menace of Expanding
close
Government
(Continued from page 5)
proxies appropriated
frequently go beyond the limits of
excusable partisan comment into
less than $200,000. social changes under the delusion,
Legislatures are now appro¬ that social progress and the gen—
priating hundreds of millions an¬ eral welfare can be promoted by
The
The
nually and the increase during the using the power of taxation tothe last 25 years has been several destroy, whereas under our sys¬
Commission's review of the origi¬
times greater than th£ increase for tem it should be used only to pro¬
nal material are lost in the flood
the previous century and a quar¬ vide revenue for the support of
of misleading unreviewed followter The budget of the City of New government. Indeed, that is ther.
up material.
The Commission is York has passed the billion mark. only use of the power that ac¬
also
placed in the position of Some of us remember when the cords with the Constitution. But:
having to apply for a court in¬ first Congress to appropriate a the motives of those exercising;
junction to secure a postponement
dollars
in
two
years the power are not open to judicial
In
this
revision,
requirements of the meeting and correction of billion
er's will. When the proxqy is mis¬
aroused such resentment that the inquiry; hence the power to tax:
were added for information as to
the material in
question.
This "ins" were voted out of office.
understood by the shareholder, or
becomes
in fact the power ta*
compensation
of
officers
and remedy is an extreme one. A bet¬
t '
Is abused by the management, this
destroy. Taxation which impairs
That sum is beyond our compre¬
others earning over $20,000 per
ter method would be an arrange¬
the incentive to produce,
apart,
purpose is frustrated.
hension, but we deal with billions
annum, and as to the compensa¬
ment for advance perusal, a prac¬
from
its
other evils, dries up
The proxy powers which Con¬
now
as
the Legislature of 1797
tion of individual directors and
tice many now use informally.
the sources of revenue, and ex¬
gress has given the Commission,
dealt with thousands and many
nominees.. It has been urged by
As you know, all registration
and Regulation X-14 which the
perience has shown that there is;
seem to think that it does not mat¬
many companies that the cover¬
a point beyond which increases in.
statements filed with the Com¬
Commission has promulgated pur¬
ter
much whether the national
age of the rule is too broad. For
rates diminish the revenue. If the*
mission under all the Acts which
suant to that grant of power, are
budget is a few billions more or
example, it requires disclosure of
institution of private property is:
it administers are public from the
both predicated on the idea that
payments to many minor execu¬ moment of filing. This is also true a few billions less, although prof¬ to be destroyed, it should be done*
management
is
a
stewardship tives and non-policy making offi¬
ligate spending and excessive tax¬
of proxy filings under the Public
openly
and by the
deliberatewhich must be directed by the in¬
ation always have led to misfor¬
cers,
salesmen and independent
choice of the people, not by sub¬
formed judgment of the owners
Utility Holding Company Act, but
tune.
contractors, such as tool designers,
terfuge
and
indirection,
the?
at the present time it is not the
of the enterprise. In accordance
architects, attorneys, accountants,
method by which that is being;,
with the basic philosophy of full
practice as to other proxy solic¬
Expansion of Public Services
advertising agencies and invest¬
accomplished, whether so intended^,
iting material. Comment received
disclosure whicji underlies all the
Of course, the legitimate needs
ment bankers. It may be doubted
or not.
from interested persons during the
Securities Acts, the proxy rules
of social progress require the con¬
in many cases that a useful pur¬
examining period as to material
are
designed to assure that the
-The indirect incidents of un¬
stant
expansion of the
public
pose is served by such disclosure
omissions
or
misstatements has
'vote of stockholders on corporate
sound taxation fall upon all and'
and, in addition, there may be been so helpful in other instances services and the necessity for ab¬
matters is based on adequate and
normal expenditures required by most heavily on those least ableconsiderable merit to the argu¬
truthful information.
One must ment that in many cases disclosure that it may be that a change in
emergencies does not end with the to bear them. But when the peoplethe rules making proxy soliciting
always appraise the proxy rules
can be
led to believe that a few;
of the disparity in remuneration
emergency. Moreover, it is diffi¬
material public during the 10-day
and their operation with that in
cult to dispense with offices and bear the burdens of government*,
paid to various minor executives
advance filing should be adopted,
tnind. You and I know from ex¬
bureaus
once
created, however they are not apt to concern them-L
gives rise to serious intra-corpoperience that it is difficult, if not rate personnel problems. This en¬ with resultant benefit to the Com¬ unnecessary they may become.
I selves with unsound fiscal policies,,
mission and to all concerned.
at
times impossible,
to inform
learned that after the first World although such policies are the fun¬
tire matter will be reexamined,
.shareholders fully, but all data
I want to mention one more
causes
of
inflation,,
and I am informed that our staff
War. Then, as now, an effort to damental
and
information available
and is
which inflict injury on the least
preparing to recommend some situation which requires the spe¬ eliminate useless accumulations,
relevant must be made available
cial consideration of those who that always occur under a spend¬ able to suffer it and which wechange in the requirements to
to them.
proxy
materials. Item ing regime, encountered a false are now making futile efforts taeliminate the necessity of disclos¬ prepare
5 (1) (4) requires the disclosure but
powerful propaganda to arouse stop, without attacking the funda¬
Revisions That Have Been Made ing information not material to
stockholders. In this connection it of all obligations of a director or fear that the public services were mental cause.
Over the years, the Commission
officer to the corporation. Under
Our unsound methods of taxa¬
being impaired.
Then, as now.
may be of interest to note that in
has gathered experience with the
a
director who sincere but uninformed persons tion-have led to two other grave?
the revision of our basic Securities Section 16 (b),
ooeration of the proxy rules. In
makes short-term trades in the
Act Registration Form S-l,
joined those with axes to grind in evils. The ease with which income?
the light of that experience, sev¬
adopted on Jan. 15, 1947, dis¬ stocks of the company is liable for protest and even competent de¬ and indirect taxes can be collected*
eral changes have from time to
his profits. Not infrequently such
closure is required only of
(1)
partment heads added their voices has more and more caused the lo—:
lime
been
made in the rules.
the
remuneration paid to each a profit is realized by a director to the chorus. But it was proven calities to lean on the States andi
Initially,
the rules were little
or
an officer without his
appre¬
director,
executive
officer,
or
then, as it will be proven again, the States on the Federal Govern¬
more
than a prohibition against
stockholder owning more than ciating that under the law such that wholesome trimming of dead- ment for grants in aid of local?
falsehood.
Experience with this
10% of the stock of the registrant, profit inures to the benefit of the wood increases the efficiency of projects. Waste and extravagence?
type of rule showed that it was who receives in excess of $20,000 corporation and that the liability the public services, just as pruning increase,
again
in arithmetical!
inadequate. Directors were voted
to the corporation must be dis¬ fruit trees improves the quality of
or
1% of the total assets of the
progression,, as the distance in¬
on without a
disclosure of their
closed in the proxy statement. Our the fruit.
creases from the place of spending;
registrant, whichever is smaller,
names—an
experience, I might
to the treasury from which theand (2) the aggregate paid to all experience has been that when
Unsound Methods of Taxation
we discover from our records that
say, which I have had myself as
directors and officers.
money is obtained. The reason is;
a shareholder in certain corpora¬
such a situation exists and call it
Our unsound and overlapping
that, instead of having watchful
tions. Important corporate action
to the attention of the company, methods of taxation have contrib¬
Stockholder's Proposals *
eyes to check profligate spending*,
was
proposed on the basis of
the profit is usually turned over uted greatly to the mounting cost local interest is centered on get¬
Some criticism continues of the
sketchy information or none at all.
to the company by the director of government. The 16th Amend¬
rule requiring the inclusion of 100
ting easy money to spend. .
In 1938 the rules were revised,
word
statements on behalf of or officer. Under such circum¬ ment opened a prolific source of
and for the first time affirmative,
Grants-in-Aid
^
stances disclosure in the proxy revenue to the Federal Govern¬
stockholder proposals in the man¬
specific disclosure was required
statement is not required.
But a far graver evil results
ment which has not only Vhred
agement soliciting materials. This
for the general run of corporate
from our present methods, which
As I have indicated, the basic
requirement is in addition to the
extravagence but has enabled the,
action
requiring
votes.
After
requirement of the proxy rules is
have made- it virtually necessary
working with these rules for sev¬ requirements for circularizing of
that the solicitation of the proxy Congress to impose taxes to effect
and for
eral years, clarifying and simpli¬ stockholder1 proposals
the
realm
advantages
of misstatement.
derived
from
Volume 16S„ Number 4596
THE COMMERCIAL" &
■
for the National
Government arid pialadminlstration and cause them
the States to make grants in aid. to take a
greater interest in the
That supplies an excuse for the
public administrations, local, State
Federal Government to take over
State functions and for the States
to
intermeddle in- local affairs,
devised,
The inevitable extension of Fed¬
is
eral power at
power, together with unnecessary
its adoption. It would require the
voluntary action of the Congress,
encroachments such
which
by
grants
break
to
the
in
down
as are
induced
threatens
dual system
national.
Such
of state
expense
aid,
our
and
system could easily be
but political expediency
likely to stand in the way of
of
to
a
is not apt to yield sources
ft' ,',t
FINANCIAL* CHRONICLE
variable rates.
1
"
11
■
.M
without impairing the functions ot popular appeal. Other
grave prfctoapply it uniformly the State and local governments. lems, both
foreign and dome&ie,.
throughout
the
The
ideal
is
rarely attained. are now engrossing attention. -A
country without causing inequali¬
However easy to devise such a drastic reform of our taxing meth¬
ties and dislocations.
plan, the difficulties in the way of ods must await a more propitious
its adoption are so (great as to time, but the demand for revenue
Localities Should Have Direct
is so great that
certainly taxation
discourage effort. Few have the
Property Taxes
for
that
purpose
alone
should
courage
and
the
tenacity
to
Obviously, direct property taxes struggle against seemingly insu¬ speedily be restored.
ernment
and
could
equitably
should be left to the localities.
Between
those
two
I am posing a problem which
perable obstacles, but a few men
methods, of the vigor, logic and courage of will be solved if at all only by
taxes, best Governor Dewey could overcome time and consummate statesman¬
localities, and the them.
ship. The day will come when it
Indirect indirect method, best suited to the
can be made
We
revenue', the incidents of which
are
destroy the spirit and virility
directly felt only by relatively
few.
local
self-government
from
which springs the very life-blood
of the Republic.
There
is
source
a
available
revenue
to
Government which
The present tendency is certain
to increase and the inevitable end
of
the
Federal
does not vio¬
that of direct
property
suited to the
National
many
are
Government,
of
sources
there
revenue
are
which,
late the principle of taxation most
crushed
told
to
that
earth
truth
will
though
rise
again,
but it will not suffice for it to be
with appropriate
action by the
proclaimed by the small voice cry*democracy, that all Congress and the State Legisla¬
lis not difficult to
foresee, unless contribute to the support of their tures, could be so apportioned ing in the wilderness. It requires
«our
methods of taxation can be
government
according to their among the units of government a chorus of vigorous young voices,
eo
harmonized that in the main
means, and thus have a sustained as in the main to give each its each having a forum and an audi¬
each unit of government can have
interest in maintaining good gov¬ own sources of revenue without
ence.
jits own sources of
In their quest for new overlapping,
revenue, which ernment.
and
if
necessary,
I am not suggesting a campaign
do not impinge upon the sources
things to tax, the States and the there could still be grants to sup¬
of the others. That would enable
localities are resorting more and plement local funds for purposes issue, for I fear that the slogan
fthe people to fix
responsibility for more to that method with many of State and National concern "soak the rich" still has too much
essential in
•
26
filed
Corp., Cuba, N. Y.
Advance
May 14
common.
(letter of notification) 20,000 shares ($5 par)
Price—$5 a share. No underwriting. For work¬
•
June
27
950,000 shares
The
remainder will
Dillon, Read & Co. Inc., White, Weld & Co., and Shields
& Co.
(jointly), and W. C. Langley & Co. and The
First Boston Corp. (jointly).
Offering—Price to public
by amendment. Bids—Expected about April 30.
be
offered
publicly.
Price by
amendment. Proceeds—To
prepay notes payable to ac¬
quire radio station WXYZ, to construct broadcast trans¬
mitter for station KGO at San Francisco
and for working
capital.
American Zinc,
Cyanamid Co.,
New
offered
the
for
ratio
mon
June
pre¬
Co., New
Offering—To be offered for
subscription by
stockholders on the basis of one share of
preferred for each
10.
Price
seven
shares of
common
held
com¬
new
as
of
by amendment.
Proceeds—To redeem
outstanding 5% cumulative preference stock and to fi¬
nance expansion program.
American
Machinery Corp., Orlando, Fla.
of
to
additional
one
stockholders
common
share
for
each
two
in
key
Underwriter—Townsend, Graff
&
Co.
and
employees.
Gearhart
&
share. Proceeds—For general
corporate purposes including reduction of bank loans
and
outstanding notes.
per
Proceeds—Working capital.
Offering in¬
definitely postponed.
Armour and
American Telephone &
Telegraph Co., New York
May 16 filed $200,000,000 40-year
debentures, due 1987.
Underwriting—To be sold at competitive
bidding. Prob¬
able bidders:
Halsey, Stuart & Co. Inc.; Morgan Stanley
■& Co. Proceeds—To finance the
company's construction
program and that of its subsidiaries and
associated com¬
panies.
preference stock, Series A, and 1,355,240 shares
stock (par $5).
Underwriting—Kuhn, Loeb &
Co., New York. Offering—The 350,000 shares of first
preference stock will be offered in exchange to holders
of its 532,996 shares of
$6 cumulative convertible
prior
preferred stock at the rate of 1.4 shares of first prefer¬
ence stock for each share of
$6 prior preferred.
Shares
of first preference not issued in
exchange will be sold
to underwriters. The
300,000 shares of second preference
offered publicly.
The 1,355,240 shares of
stock will be
a
will
new
Corporate and Public Financing
scribed
be
offered
of
the
share
for
shares
of
ment.
for
subscription
to
common
company in the ratio of one-third
each common share held.
Unsub¬
common
will
be
purchased
by
Beech
Dec.
22 said "we have come to the conclusion it will
not be necessary to issue
any additional shares of com¬
mon stock" as part of
Atlantic
March
City
(N. J.)
Electric Co.
19 filed 522,416 shares
($10 par) common, being
by American Gas & Electric Co. Underwriters—
offered
be
determined
bidders
by
include: The
competitive
First Boston
bidding. Probable
Corp., and Drexel &
(jointly); Shields & Co., and White, Weld & Co.
(jointly); Dillon, Read & Co., Inc., and Smith, Barney
& Co.
(jointly); Blyth & Co., Inc.; Union Securities
Corp. Price—To be determined by competitive bidding.
Proceeds—The offering is part of Americanos
plan to
dispose of its holdings of 1,150,000 outstanding shares
of Atlantic City. The shares
remaining after the public
offering will be distributed as dividends on American's
stock. This
dividend policy will become effec¬
tive June 15 and will continue to the end
of 1948.
Bearings Co. of America, Lancaster, Pa.
May 8 filed $500,000 of first mortgage 4%% serial con¬
vertible
bonds and
60,000 shares ($1 par) common.
Pacific Coast Stock
OPEN TO 6:30 P. M.
those
executions
on
which
Pacific
also
Direct
Aircraft
New York
for
Coast
have
Private
Exchanges
(E. D. S. T.)
brokers,
dealers
that
that
day
In all proba¬
bility, I shall not live to
see
securities,
eastern
Benrus
Watch
amendment.
14
Pittsburgh
principal Security
WALL
STREET,
it.
FRANCISCO
/
YORK
•
LOS
ANGELES
Inc., New York
Proceeds—The
shares
Under¬
Price by
being sold by
common.
York.
are
who will receive proceeds.
Sept.
12
(letter
of
notification)
shares of 5%
Offering price
$6 a share. Underwriter-r-Estes, Snyder & Co., Topeka*
Kans. To pay outstanding indebtedness and expenses audi
to open five additional stores in Kansas City, Mo. Offer¬
ing postponed indefinitely.
41,000
cumulative convertible $6 par preferred.
Berkey & Gay Furniture Co., Grand Rapids,
Mich.
s.
.
♦
Feb. 3 filed 733,575 shares
($1 par) capital stock. Under¬
writing—None. Offering—Company said all of the shares
issued and outstanding. The purpose of the registra¬
tion statement is to enable holders to effect sales by
are
of the prospectus.
Berkey & Gay said the shares had been sold in 1944
and 1945 to a group of about 50 persons who represented
they were purchasing the shares for investment and not
use
for
distribution.
So
far, 231,204 shares have been sold in the open mar¬
the Commission had raised the question as to
entire)
offering public. The Commission staff stated that regis¬
tration is required if any of the remaining 733,575 shares
ket
and
whether such sales had the effect of making the
are
to be sold.
Price—At market.
Proceeds—Go to sell¬
ing stockholders.
•
Bird
Machine
Co.,
South Walpoie, Mass.
May 15 (letter of notification) 20,000 shares of (no par)
common.
Price—$12.50 a share. To be offered for sub¬
scription to common stockholders of record on May 12,
1947, on the basis of one addtional share for each five
shares held. Unsubscribed shares will be offered publicly.
No
underwriting. For additional working capital.
(Continued
on page
46)
Underwriters and Distributors
Corporate and Municipal
including
of
.
Securities
a
Co.
5,
N.
Y.
•
HONOLULU
Kidder, Peabody^Co.
Founded 1865
Members
New York
Telephone BArclay 7-4300
SAN
Kan.
Berbiglia, Inc., Kansas City, Mo.
and Commodity Exchanges
NEW
Co.,
five officers of the company
markets.
MEMBERS
York Stock Exchange
San Francisco Stock Exchange
Honolulu Stock Exchange
Los Angeles Stock Exchange
other
Wichita,
April 24 filed 150,000 shares ($1 par)
writer—Hayden, Stone & Co., New
Wires
Dean Witter
and
Corp.,
and
New
Chicago and other cities
is
to working capital and used to fI**
production program.
Business—Manu¬
airplane
The
Boston
hope
will not be too late.
is
pyra¬
facture of airplanes.
the
unexchanged shares of $6 prior stock and to redeem its
outstanding 7% preferred stock.
George Eastwood, President, in letter to stockholders,
institutions
CORPORATION
which
inverted
May 2 filed $2,000,000 of 4J/2% convertible sinking fund
debentures
(subordinated), due 1957.
Underwriter—
Blair & Co., Inc., New York. Price by amendment. Pre-
Price—Public offering prices by amend¬
Proceeds—Net proceeds will be used to retire all
Quotations and
FIRST BOSTON
My
an
amendment.
Proceeds—Of the total, 140,000 shares am
being sold by St. Regis Paper Co., New York, and US®
remaining 40,000 shares are being sold by I. Rogostb,
underwriters.'
common
American Watar Worka
Co., Inc., N. Y.
March 30, 1946 filed 2,343,105 shs. of
common (par
$5)
plus an additional number determinable
only after the
results of competitive
bidding are known. Underwriters
becoming
mid.
incomparable
government,
ceeds—To be added
Co.
<•
fast
of
Beaunit Mills, Inc., New York
nance
Co., Chicago
common
To
and to preserve our
system
shares
company's refinancing plan.
Mar. 31 filed 133,000 shares (50c
par) common, of which
10,000 will be offered to officers and
Co., Inc. Price—$3.50
subscription
Unsubscribed shares will be offered for subscrip¬
tion to officers and directors of the company.
Price—By
of
functions
proper
Sept. 27 filed 180,000 shares ($2.50 par) common. Under¬
writer— White, Weld a&
Co., New York.
Price — By
held.
stockholders
York
May 13 filed 391,076 shares ($100 par) cumulative
ferred, Series A. Underwriter—White, Weld &
York.
Lead & Smelting Co., St. Louie
Sept. 6 filed 336,550 shares common stock (par $1).
Un¬
derwriting—No underwriting.
Offering—Stock will be
common
American
their
Underwriters—Dempsey-Tegeler & Co. and J. W. Brady
& Co., St. Louis, Mo.
Price by amendment. Proceeds—
To repay bank loan and for general working funds.
Second
($1
par) common stock.
Underwriter—Dillon, Read & Co. Inc., New York. Offer¬
ing—A maximum of 100,000 shares may be sold
by com¬
pany to persons, firms, or corporations with whom the
corporation had network affiliation agreements on March
11.
restore
Registration
July 12 filed 350,000 shares (no par) cumulative first
preference stock, Series A; 300,000 shares of convertible
Broadcasting Co., Inc., N. Y.
filed
in
<
American
to
to our State and local governments
INDICATES ADDITIONS SINCE PREVIOUS ISSUE
amendment.
Stamping Co., Detroit.
ing capital.
Now
—To be filed by amendment. Probable bidders include
132,740 shares
($1 par) common stock.
Underwriters—Herrick, Waddell & Co., Inc., and First
Colony Corp.
Offering—To be offered publicly at $5
® share.
Proceeds—Company will receive proceeds from
l£he sale of 68,880 shares and four
selling stockholders
the proceeds from the sale of
63,860 shares.
Company
ailso will receive proceeds from the sale
of 20,000 war¬
rants for common stock to underwriters at an
aggregate
|s>rice of $200.
Of the net proceeds ($292,940) $50,000
will be used to pay current bank
loans; about $20,000
Will be used for machinery and
equipment, and the re¬
mainder for working capital.
«
apparent to all think¬
ing people that a radical change
in our taxing methods is necessary
a
Securities
Acme Electric
W69rm
The Federal Gov¬
,
and
of
June
*
■"
J-1
of the New York and Boston Stock Exchanges
Boston
Philadelphia
Chicago
46
California
(Showing probable date of offering)
May 23, 1947
California Oregon Power Co.
Denver & Rio Grande Western
--Equip. Trust Ctfs.
Owosso
of
_Bonds
—
—,J8onds
Mfg.
New
England Electric System
(EDT)
•
.Debentures
P. C. Helicopter Corp
Weber Showcase & Fixture Co., Inc.—Common
1947
•
Michigan Consolidated Gas Co.....
(Continued from
(Sidney)
of
—
None.
Preferred and Com.
45)
page
For reimbursement
—
for
funds expended in re¬
demption of 3,907 shares of 7% cumulative preferred on
April 1, and for funds deposited in trust for redemption
on Oct. 1 of remaining preferred shares.
Although it was
proposed to offer the stock for subscription to stock¬
holders at $10 per share, company on Sept. 20 decided
to withould action.
Bobbi Motor Car Corp*,
Mar.
3
Birmingham, Ala.
(letter of notification) 60,000 shares ($1 par)
Price—$5 a share. Company proposes to offer
common.
12,997 shares of
common
in exchange for its unsecured
promissory notes in the amount of $64,985 held by dis¬
tributors of company's proposed products. Underwriting,
the stock will be sold by officers and directors of the
company.
For completion of display automobiles now
under construction.
'-
■ *. •
,
(no par)
common
stock.
general
funds to finance expansion program of company and
Canadian subsidiaries or to reimburse treasury for ex¬
penditures already made.
stockholders
of
record
June
2.
Proceeds—For
Carpenter Paper Co., Omaha*: Neb.
ly to officers and employees of the company at $45 a
share.
Purchasers must agree not to transfer the shares
for a period of five years.
Price—$45 a share. Proceeds
—To be added to general funds for purchase of addi¬
tional equipment
Carscor
Porcuplno Gold Minos, Ltd., of Toronto,
Ontario
June 24 filed 400,000 shares of common stock.
Under¬
writer—No underwriters.
Offering —To the public at
Proceeds—For a variety
exploration, sinking of
shafts, diamond drilling and working capital,
$1
a
•
A Power Co., Phoenix,
Arizona
& Co. and Stroud & Co., Inc,
will have non-detachable stock
Offering — Preferred
purchase warrants for purchase of 30,000 shares of com¬
stock of the total common, 375,000 shares will be
offered for sale for cash.
30,000 shares are reserved for
issuance upon exercise of warrants attached to preferred
and 95,000 shares are reserved for issuance upon exer¬
cise of outstanding warrants.
Price — By amendment.
Proceeds—Net proceeds, together with other funds, will
be used to pay the company's 2% subordinated note in
the principal amount of $5,268,750 and accrued interest.
Offering date indefinite.
Central Soya Co., Inc., Fort Wayno, Ind.
Cincinnati
(Ohio)
(Harry), Inc., Wilmington, Del.
Price—$12.50
common.
C. K. Pistell &
Co., Inc.,
New York.
Price—$25 a share for preferred and $11
a share for common.
Proceeds—7,000 preferred shares
are being sold by company, the remaining 5,500 pre¬
ferred shares and all of the common are being sold by
present stockholders. Net proceeds to the company, es¬
timated at $147,500, will be used to prepay to the ex*
tent possible outstanding $149,300 mortgage liabilities.
Offering date indefinite.
14 filed
Robertson, Mo.
50,000 shares ($1 par)
&
For
No underwriting.
share.
Suburban
100,738
Bell
shares
Underwriting—None.
six shares held
as
of May 12, 1947.
Claude Neon,
Louis, Mo.
per
unit, consisting
stockholders
common
shares held.
advance funds to
owns
21,
common
Bids Rejected—Company July 23 rejected two bids re¬
tor the stock.
Blyth & CO., Inc* and F. S. Moee
fey A Co. and associates submitted
480% dividend.
a
bid of 100.06 for a
Harriman Ripley & Co. and Mellon
Securities Corp. bid 100.779 for
definitely postponed.
a
4.40% dividend.
In¬
basis ofone
on
Price by
amendment.
acquisition
Company also plans
Summit Airways, Inc., of
on
basis of one
the
Continental-United Industries Co.,
-
Inc.
.
($1 par) common. Under¬
writers—Aronsoh, Hall & Co.* and P. W. Brooks & Co.,
New
York.
Offering—Of the total 102,500
shares are
being offered by selling, stockholders, Price $8.75 per
share.
Proceeds—Company, which is selling 50,000
shares, will apply proceeds to general funds.
!
,
•
Cooperative Wholesale Association,
Columbus, Ohio
'
May
(letter of notification)
15
Inc.,
($100 par)
150 shares
Class A common, 1,000 shares ($50 par) Class B common
and 4,700 shares ($50 par) preferred.
The. Class A com¬
and
preferred
will
be
at par; the Class B
"customers as evidence of
will be sold
issued
to
their share of patronage refunds upon business trans¬
acted with the issuer."
No underwriting.
For operat¬
ing capital.
.
Crawford
;V *
■
*
»•
Clothes, Inc.* L. I. City, N. Y.
Aug. 9: filed 300,000 shares ($5 par) common stock.
Underwriters—First Boston Corp., New York., Price by
amendment.
Proceeds—Go to Joseph Levy,
President,
Offering date indefinite.
May 31 filed 500,000 shares of common stock (par $1).
Offer¬
Underwriters—Sabiston-Hughes, • Ltd., Toronto.
ing—Shares will be offered to the public at 75 cents a
share.
Proceeds—Net proceeds, - estimated at $300,00$"
will be used for mining operations.
Daniels & Fisher Stores
Co.,'Denver
May 14 (letter of notification) 2,000 shares of common
on
behalf of Bosworth, Chanute, Loughridge & Co.,
Denver. Price—$39.50 a share. To be sold through Bos¬
worth, Sullivan & Co., Denver.
o
Dayton Power and Light Co.
May 16 filed 100,000 shares ($100 par) Series A, cumula¬
preferred and
75,000
shares
Series B
($100 par)
cumulative preferred. Underwriters—Morgan Stanley &
Co., New York, and W. E. Hutton & Co., Cincinnati. O.
ently outstanding 100,000 shares of cumulative preferred,
4%% series, while the Series B
to the public
preferred will be sold
through the underwriters. The underwriters
also will offer publicly unexchanged shares
of Class A
preferred. Price—By amendment Proceeds—To finance
shares
are
(no
Denton
Industries,
Inc.,
\
May 13 (letter of notification) certificates
1,200 shares ($25 par) common.
be
offered
through
Otis
licensed securities dealer,
Lee
representing
Price—$25 a share.
Fowler,
of
which
is
offering
of
North
1,714,524
Anierican
March 19 at $15 per share to the extent
land
for
Bights
are
to
every
five
expire May 27.
be
sold,
North
American
of
shares to
Denton.
•
one
Cleve¬
The/ remaining 133,383 shares
probably
through
competitive* safer
Probable bidders' include Dillon, Read & Co, Inc.}: The
First
Boston
Corp.;
White, Weld*
as
sold through Bennett, Spanier & Co.,
agent.
Co. and/ Shields
ill
(
t
I
B com4
Chicago,
The shares are being sold on behalf of three
officers of the company.
Divco
i
All. or part of the securities
Price—At market.
may be
a
To acquire sites and to con¬
„
'
.
of;• record
sharesheld.
To
Denton,
struct buildings for occupancy by industries locating
mon.
common.
"
Denton, Texas
whose
owned, by The North
stockholders
Co.,
par)
old
construction and to redeem unexchanged shares of
Disticraft, Inc., Chicago
1,847,908
filed
American
($100 par).
Underwriters—To be filed by amendment
stockholders
shares
Mar. 28 filed 152,500 shares
61%.
Offering—All of the shares
May 3 filed 70,000 shares of cumulative preferred fleck:
ceived
five
May 8 (letter of notification) 15,000 shares Class
Feb.
Union Gas Co.
offered for
Cleveland (Q.) Electric Illuminating Co.
working capital.
(N. Y.)
common
each
preferred at $107.50 a share.
par) common. Under¬
Proceeds—To finance airline operations and
For expansion of operating facilities and for
Brooklyn
for
presently held.
Price by
amendment.
Proceeds—Proceeds, together with other
funds, will be used to purchase additional shares of four
operating companies, Peoples Natural Gas Co. (Penna.),
Hope Natural Gas Co. (W. Va.), East Ohio Gas Co., and
New York State Natural Gas Corp.
•
Offering—Shares will be
share for each 10
stock it
'
Inc., New York
March 28 filed 223,954 shares ($1
writing—None.
Pro¬
construction
expenditures and for additional improvements.
to
Price—$5
Underwriter—White and Co., St.
share for each
one
ceeds—To reimburse company treasury for
Shares (10c par) common.
share of each.
subscription to
Price at par.
and development of oil properties.
one
capital stock,
($50 par)
Offering —For
27% cent cumulative, convertible preferred and 50,000
Of
■
Offering—The Series A preferred will be offered on a
capital.
Telephone Co.
stockholders in the ratio of
common
subscription to
March 24 (letter of notification)
share
tive
Economy Drug Co.
a
■
,
share for share basis to holders of the company's pres-»
April
Sept. 25 filed 12,500 shares ($25 par) 4%% cumulative
convertible preferred stock and 50,000 shares (200 par)
Inc.,
fered to the
•
(letter of notification) 12,000 shares ($10 par)
retirement of bank loans and for working
New York
Cyprus Minos, Ltd., Montreal, Canada
Aug. 21 filed 90,000 shares (no par) common. Under¬
writer—None.
Offering—Common shares Initially will
be offered for subscription to common stockholders at
rate of one share for each 7% shares held. Unsubscribed
shares will be sold to underwriters. Price by amend¬
ment. Proceeds—Working capital, etc. Offering indefin¬
itely postponed.
Cincinnati
Brayton Flying Service,
Consolidated Natural Gas Co,,
V
(letter of notification) $300,000 of first mort¬
gage bonds. Price—$500 per unit. No ^underwriting; For
retirement of preferred stock, for purchase of two alfalfa
dehydrating plants from Logan County Dehydrators, Inc.
and for retirement of latter's preferred stock,
..
/
holders who will receive proceeds.
—
•
May 15 filed 545,672 shares ($15 par) capital stocky
Underwriting—None.
Offering—The shares will be of¬
selling stockholders.
May 16
Sept. 27 filed 268,875 shares ($1 par) common. Under¬
writer—Van Alstyne, Noel & Co., New York. Price—
$7,125 per share. Proceeds—Stock is being sold by share¬
Underwriter
Consolidated Edison Co, of New York Inc..
struction program.
•
Bowman Gum, Philadelphia
stock.
•
outstanding
May 21 filed $60,000,000 refunding mortgage bonds series
Cr. due 1972. Underwriting to- be determined, by com¬
petitive bidding. Probable bidders; Halsey Stuart & Co.
Inc.; Morgan Stanley & Co, Proceeds to redeem at
101 % company's $35,000,000 20-year 3%% debentures
common
mon
common
Co., both of New York. Price by amendment. Proceeds
shares are being sold by Corning Glass Works,
New York, and represent 88,8% of the total
common of the company.
mon
March 13
Sept, 10. filed 30,000 shares ($50 par) 5% cumulative
preferred and 500,000 shares ($1 par) common.
Under-
Louisville, Ky.
—The
May 20 filed 160,000 shares ($25 par) $1.10 cumulative
preferred stock.
Underwriters—Ike First Boston Corp.
and Blyth & Co., Inc.
Offering—Company will offer
four shares of new preferred in exchange for each share
of $7 and $6 preferred.
Unexchanged shares of new
preferred will be sold publicly. Price by amendment.
Proceeds—Proceeds will be used to redeem unexchanged
shares of old preferred at $110 plus accrued dividends;
The balance will be used to finance the company's con¬
Mills, Inc., Dunbridge, O.
American.
Mar. 28 filed 182,520 shares ($5 par) common.
Under¬
writers—Harriman Ripley & Co,, and Lazard Freres &
share in Canadian funds.
Central Arizona Light
of North
Cohart Refractories Co.,
of purposes in connection with
Central
Braunstein
loan notes
due 1956 and to repay $24,050,000 short-term bank loans.
The balance will be added to the company's treasury,
Ltd., Toronto, Canada
Offering—To be offered to common
none.
(jointly); Kuhn, Loeb & Co. and W. C. Langley
(jointly); Otis^& Co.; Blyth & Co., Inc.; Smith,
Barney & Co..
Proceeds—For prepayment of bank
& Co.
3c Co.
*'
Boston Store of Chicago, Inc.
writers—Paul H, Davis
Breweries
Underwriting,
& Co. Inc.f Now York
Proceeds
treasury
company's
Canadian
Mar, 31 filed 10,000 shares ($1 par) common.
Under¬
writing—None. Offering—Shares will be offered direct¬
Aug. 30 filed 119,700 shares (no par) common and sub¬
scription warrants relating to 30,000 shares thereof.
Underwriting
Standard Gas & Electric Co. (parent,)
May 20 has been postponed to June 10.
.....Bonds
10, 1947
California Oregon Power Co.
Blumenthal
Ripley & Co. (jointly), California
Oregon will sell all of the preferred and 18,000 shares
May 14 filed 200,000 shares
1947
Popular Home Products Corp............Common
June
bidding.
competitive
Beane and Harriman,
.Common
June 9,
by
will sell the remaining 390,000 shares of common. Bids
:—Bids for the purchase of the securities scheduled for
Noon
June 2,
determined
be
Probable bidders include: First Boston Corp. and Blyth
& Co. Inc. (jointly); Merrill Lynch, Pierce Fenner &
of the common,
May 27,1947
(6/10)
March 26 filed 60,000 shares ($100 par) cumulative pre¬
ferred and 408,000 shares ($20 par) common. Under¬
writers—To
May 26, 1947
Netherlands, Kingdom
Riverside, Calif.
shares
($50 par) preferred stock.
Underwriting—To be determined by competive bidding.
Probable bidders include Dean Witter & Co.; Blyth &
Co., Inc.; Otis & Co. Proceeds—To finance expansion
and improvement program.
Bids expected early in June.
NEW ISSUE CALENDAR
(EMT)___
Electric Power Co.,
filed 80,000
May 5
Noon
Thursday, May 22,1947
(THE COMMERCIAL; 8C FINANCIAL" CHRONICLE
(2770)
i.j.;
j
i /-
Corp., Detroit
April 30 filed 34,963 v shares ($1 par) common. Under-j
writers—Reynolds & Co, and Laurence; M. Marks, &
both 6f New York.
Co,,1
Price—By- amendment. Proceeds—
Shares'are being sold by
a
stockholder. Twin i Coach Co.,
Kent O.V which will receive all proceeds.
Volume
165
Number
4596
THE COMMERCIAL & FINANCIAL
CHRONICLE
Douglas Oil Co. of California, Clearwater, Calif.
Roland E. Fulmer and Louis H.
the remaining 100,000 shares.
Newkirk, Jr., are selling
Price—$6 a share. Pro¬
purchase of sweet potatoes, plant expansion,
additional storage facilities, research and
development
work and working capital.
March 13
(letter of notification) 11,500 shares ($25 par)
$*/*% cumulative convertible first preferred. To be of¬
fered at a maximum of $26 a share. Underwriters —
Pacific Co. of California, Cruttenden & Co., Pacific
Capital Corp., all of Los Angeles; Brush Slocumb & Co.,
San Francisco; and Adele W.
Parker, Clearwater. To
purchase. 493 shares of capital stQck of G. H. Cherry,
Inc. out of
a
total of 625 such shares
ceeds—For
General
Co., Glendale, Calif.
April 24 filed 30,000 shares ($25 par) 6% cumulative
preferred and 10,000 shares ($5 par) common.
Under¬
writer—Wagenseller & Durst, Inc., and Lester &
Co.,
both of Los Angeles.
Price—$25 a preferred share and
$33 a common share. Proceeds—To repay $750,000 note
and for working capital.
presently outstand¬
ing.
'
Drackett Co.,
Cincinnati
April 28 filed 14,300 ($1 par) common shares. Under¬
writer—Van Alstyne, Noel & Co. Proceeds—Stock is
being sold by Harry R. Drackett, President (6,929 shares)
and
Charles
M.
Drackett,
7,371
shares).
Price
—
Glatfelter
(P. H.) Co., Spring Brook, Pa. '
May 14 filed 6,243 shares 5% ($100 par) cumulative first
preferred.
Underwriter—Stroud & Co., Philadelphia.
Price—By amendment.
Proceeds—For plant develop¬
ment program.
In addition, company said it also
pro¬
poses to sell at a later date $3,000,000 first
mortgage
3Y2% sinking fund bonds due 1967 to the New York
Life
By
amendment.
„
Duraloy Co., Scottdale, Pa.
March 12
(letter of notification) 25,000 shares ($1 par)
behalf of the issuer, 12,500 shares ($1 par)
the account of Thomas R. Heyward, Jr.,
and 12,500 shares ($1 par) common for the account of
common
on
common
for
Mrs. Thomas R.
Hayward, Jr.
Price—At market (ap¬
proximately $3.25 per share).
Underwriter—Johnson
& Johson,
Pittsburgh, Pa., and The First Cleveland
Corp., Cleveland.
The company will use its proceeds
for working capital.
Insurance Co. and 40,000
to Provident Trust Co.
Electric Co.
Mar. 28 filed 60,000 shares of
$10 par common. Under¬
writers—To be determined by competitive
biding. Prob¬
able bidders include
Harris, Hall & Co. (Inc.); Otis &
Co.; Kidder, Peabody & Co. The stock is being offered
by East Coast Public Service Co., parent. Bids for pur¬
chase of the stock scheduled for
poned
May 19 has been post¬
at par to
customers, officers and employees of the com¬
Proceeds — For corporated 'purposes
including
modernization and improvement of the
manufacturing
plant and machinery and equipment.
pany.
•
El
Dorado
Oil
Works, San Francisco
55,000 shares
of
will be supplied by amendment.
':<-t
per
unit consisting of $500 bond
No underwriting.
For mine
development.
Fairport
Materials
Corp.,
New
York
April 29 (letter of notification) 2,250 shares (no
par)
$5 cumulative preferred and 22,500 shares (lc par) com-s
mon.
Price—$100.50
preferred
and
10
per
unit, consisting of
shares
of
common.
one
share of
Underwriter—
Eastman, Dillon & Co., New York.
To purchase ma¬
chinery and equipment and for other working capital
10 cents
1040, common stock of the company at $11 a share. Price
by amendment. Offering temporarily postponed.
Federal Electric Products
Co.,
Newark, N. J.
26, filed 150,000 shares ($1 par) common class A.
Underwriter—E. F. Gillespie &
Co., Inc., New York.
Price—$7.25 a share.
The registration states
princi¬
pal stockholder has granted the underwriters an
option
to purchase 45,000 shares of class B
($1 par) common
at $7.25 a share, exercisable for a
period of three years.
Proceeds—Proceeds of approximately
$870,000, together
with $755,000 of other bonds, will be used to
Feb.
repay the
property mortgage, to pay off
$1,295,000 to Bankers Commer¬
cial Corp., New York, and for additional
working capital.
Ferguson
(Harry), Inc., Detroit
shares
of
Shares of
($5 par) class A stock
par)
common
initially
and
stock, of which
reserved for conversion of
class A.
class A stock is
common
other
films.®
convertible
into
2
stock.
—
($100 par) preferred
'
approval
from
various
Commissions.
Griggs, Coopsr A Co., St. Paul, Minn.
(letter of notification) 12,000 shares ($1
par)
Underwriters—Kalman & Co., Inc., St PauL
Price—$25 a share. Proceeds
For improvement and
common.
—
modernization program. Offering
indefinitely postponed.
Grolier
Society,
Inc.,
New
April 2, 1947
(by amendment), 30,000 shares at 4%%
cumulative preferred stock
($50 par) and; 170,000 shares
of $1 par common stock.
Underwriters—Riter & Co.
and
Hemphill, Noyes & Co. Offering—Underwriters to
purchase from the company
30,000 shares of preferred
and 70,000 shares of
common; and from Fred P. Murphy
and J. C.
Graham, Jr., 100,000 shares of issued and out¬
standing common.
Proceeds—To retire $6 cumulative
preferred, balance for
States
reduction of bank loans.
Utilities
Co.,
Baton Rouge,
La.
Jan. 20 filed 1,909,968 shares
(no par) common. Under¬
writer—None.
Offering—The shares will be offered for
subscription to common stockholders of Gulf States'
parent, Engineers Public Service Co., New York.
The
subscription basis will be one share of Gulf States stock
for each share of Engineers common held.
Price—$11.50
a share.
Proceeds—Purpose of offering is to carry out
a provision of dissolution
plan of Engineers approved by
the Commission.
•
Harlem
Co.,
50,000
of which'25,000 shares will
25,000 shares at $1.25.
shares
(letter of notification) 12,000 shares
capital stock. Price—$25 a share. No
($25 par)
underwriting. To
Hartfleld Stores,
June
27
Inc., Los Angeles
be
Underwriting
($1
offered
—
par)
at
$1
Investments
-
Fresh Dry Foods, Inc.,
Columbia, S. C.
Aug. 30 filed 450,000 shares (10?> par)
common.
Under¬
writer—Newkirk &
Offering—Of the total
company is selling 350,000 shares and
two
The
balance
will be added to
treasury funds.
Company has asked the SEC to defer action on its fi¬
nancing program because of present market conditions.
Interstate Power Co., Dubuque, Iowa
May 13 filed $19,400,000 of first mortgage bonds, due
1977, and 3,000,000 shares ($3.50 par) capital stock.
Underwriters—To be determined by competitive
bid7
ding.
Probable bidders: Lehman
Brothers; Goldman!
Sachs & Co., and The First Boston
Corp. (jointly)]
Halsey, Stuart & Co. Inc. (bond only); Harriman Ripley
& Co., and
Dillon, Read & Co. Inc. (stock only). Pro¬
ceeds—For debt
retirement, finance new construction^
and for working capital.
Iowa-Illinois Gas & Electric Co.
Feb. 15 filed
$22,000,000 of first mortgage bonds due 1977.
Underwriter—To be determined by competitive
bidding.
Probable bidders include
Halsey, Stuart & Co. Inc.; The
First Boston Corp.; Glore,
Forgan & Co.; Blyth & Co.,
Inc.; Harriman Ripley & Co.; Harris, Hall & Co. (Inc.)*
Proceeds—Part of the proceeds will be used to
pay mort¬
gage debt of $10,578,000 and balance will be added to
general funds.
& Oilier
Engraving Co.
Feb. 26, filed
102,000 shares ($1 par) common. Under¬
writer—Sills, Minton & Co., Inc., Chicago. Price—By
amendment. Proceeds—The shares, *which constitute ap¬
proximately 48.5% of company's outstanding common
stock, are being sold to stockholders.
•
Jewel
Tea
Co.,
Inc.,
New York
May 16 filed 75,000 shares
($100 par) cumulative pro*4
Underwriters—Lehman Brothers, and Goldman,
ferred.
Sachs & Co., New York.
Price—By amendment. Proceeds
—To reimburse
company for redemption of old pre¬
ferred and added to general funds for
general corporate
purposes.
Business—Operation of chain food stores.
Kentucky Utilities Co., Lexington, Ky.
May 9 filed $24,000,000 of first mortgage bonds, Series A,
due 1977, and 130,000 shares
($100 par) cumulative pre¬
Underwriters—To be determined by competitive
bidding. Probable bidders for securities include Blyth &
Co., Inc.; The First Boston Corp.; Halsey, Stuart & Co.
Inc. (bonds); Union Securities
Corp. and Merrill Lynch,
Pierce, Fenner & Beane (jointly) and Lehman Brothers
and Lazard Freres & Co.
(jointly). Offering—Bonds will
publicly while preferred stock initially will
in exchange for its outstanding ($100 par)
6% preferred and ($50 par) junior preferred.
The basis
of exchange will be one share of new
preferred for each
share of 6% preferred and one share of new
preferred
for each two shares of junior
preferred. Shares of new
preferred not issued in exchange will be sold at competi¬
be offered
be
offered
tive
bidding.
Price to be determined by competi¬
bidding. Proceeds—Proceeds from the sale of new
tive
bonds
will be used to redeem $21,000,000 of 4% first
mortgage bonds, due 1970, at $105.
Proceeds from the
sale of new preferred will be used to redeem un¬
exchanged shares of old preferred.
•
Kitsap County Hospital Foundation, Bremerton,
i*
(leter of notification) $75,000 20-year income
bonds. Price—$1,000 and $100 per bond. No underwrit¬
ing. For operation of hospital.
120,000 shares ($1 par) common stock.
Underwriters—Van Alstyne, Noel & Co., New
York, and
Johnston, Lemon & Co., Washington, D. C.
Offering—
To be offered to the public at
$5 a share. Proceeds—
Company is selling 50,000 shares and stockholders are
selling 75,000 shares. The company will use its proceeds
to pay the costs of
opening additional stores and to ex¬
pand merchandise in its existing stores.
Offering tem¬
porarily postponed.
Hawaiian
Mar.
31
Electric
Co.,
Ltd.,
Honolulu
filed
vious construction expenditures.
capital stock.
stockholders,
Proceeds—Net
proceeds
obligations, purchase helicopters
will
Under¬
Price—$3.50
be
used
to
a
pay
and equipment and for
working capital.
Hy-Grade Supply Co., Oklahoma City
Dec. 3 (letter of notification)
54,350 shares of cumulative
convertible preferred and 50,000 common stock purchase
warrants.
warrant
Price—$5.50 a preferred share and 2 cents a
Underwriter—Amos Treat & Co., New York.
It is expected that
with the SEC.
"
a
Co.,
Bay
City,
Mich.
(letter of notification) 30,000 shares of 5%%
cumulative preferred ($10 par).
Price—$10 a share.
Underwriter—White, Noble & Co., Detroit. For working
capital.
*
,
La
Plant-Choate
Cedar
Manufacturing Co.,
Rapids, Iowa
April 30 filed 60,000 shares ($25 par)
vertible preferred.
Chicago. Price
—
Inc.,
cumulative
Underwriter—Paul H.
Davis &
con¬
Co.,
By amendment. Proceeds—To be added
to working capital and will be used in part to reduce
current bank loans.
$5,000,000 first mortgage bonds, series F,
due 1977.
Underwriters—Dillon, Read & Co., Inc., New
York, and Dean Witter & Co., San Francisco.
Price by
amendment. Proceeds—To
repay $3,000,000 of short term
promissory notes and to reimburse its treasury for
pre¬
share.
Electric
April 28
filed
writer—Strauss Bros., Inc., New York.
Supervisors, Inc., and two officers of the
company.
For
payment of balance of
property lease and mine develop¬
Banks, Inc.
date.
May 12
Inc., New York
May i5
bid¬
applied for re¬
demption of 5% cumulative convertible preferred stock
not converted into common
prior to the redemption
Wash.
Hotel
Probable
Blyth & Co., Inc.; The First Boston Corp.;
W. E. Hutton & Co.
Proceeds—Net proceeds from the
sale of preferred will be used to
reimburse the com¬
pany's treasury for construction expenditures. Net
pro¬
ceeds from the sale of common will be
ferred.
York
Helicopter Air Transport, Inc., Camden, N. J.
common,
ment.
Securities
securing
March 14 filed
270,000 shares of
Mining Co., Denver
May(l7 (letter of notification)
and
Proceeds—$201
share; remaining proceeds, together with
funds, will be used for production of educational
Franklin
corporation
Each
Underwriter—Herrick, Waddell & Co., Inc., New York.
Offering — To be offered
publicly at $8.10 a unit consisting of one share of
class A
slock and one share of common
stock.
000 for retirement of
2,010 shares
stock at $100 a
Underwriters—By competitive bidding.
ders include
Kuhlman
Films Inc., New York
(10 cent
par) cumulative pre¬
(no par) common stock.
Jahn
Pittsburgh
Decatur, III.
design hotel and purchase site.
($50 par) 4%% cumulative
preferred and 250,000 shares ($1 par) common. Under¬
writers—F. Eberstadt & Co.,
Inc., New York, and Watling, Lerchen & Co., Detroit. Price by amendment. Pro¬
ceeds—To equip and improve
recently acquired Cleve¬
land, O. plant. Offering postponed.
300,000 shares
200,000 shares
the
State
Mar. 31 filed 100,000 shares
June 25, filed 100,000 shares
Drug & Chemical Co.,
May 5 (letter of notification) 150,000 shares of common
stock. Price—$1. Underwriter—Willis E.
Burnside & Co.,
Inc., New York. Proceeds to buy all assets of Mid-State
Pharmacal Co., Inc. of Bedford,
Ind., which makes a
complete line of over 150 drug items, and for additional
working capital. Expected to be blue-skied in states of
New York, Penn., Ohio, Indiana,
Georgia and Alabama.
Offering will be made to dealers by the underwriter
Gulf
of $34,000 of a
loans in the amount of
exer¬
—
Company has also Issued 55,000
purchase warrants to the selling stockholders at
a share entitling them to
purchase up to Aug. 1,
stock
requirements.
balance
for issuance upon the
of certain stockholders.
par)
Price—$550
and 500 shares of common.
are reserved
stock
Sept. 3
Elkhorn-Beaverhead Mines Co.,
Baltimore, M<L
March 12 (letter of notification)
$250,000 first mortgage 10-year 5% bonds, and 250,000 shares
(10 cents
common.
common
purchase warrants. Underwriter
Van
Alstyne, Noel & Co, Offering—The 300,000 shares*are
issued and outstanding and being sold for the
account
upon
May 15 (letter of notification) 3,238 shares of capital
stock, being offered by executors of the estate of Wm. B.
Reis, deceased. " To be sold at market.
Underwriters
($10 par)
Ql«ns(l«r Textile Corp., New York
Greil
Dec. 31 filed 5,000 shares
($100 par) 5% non-cumulative
preferred. Underwriters—None. Offering—To be offered
of
Illinois Power Co.,
47
June 17, filed 200,000 shares
($50
ferred stock and 966,870 shares
Aug. 28 filed 355,000 shares ($1 par) common, of which
indefinitely.
Edelbrew Brewery, Inc., Brooklyn, N. Y.
shares
of
Philadelphia and P. H, Glat¬
trustees for Sundry Trusts, at $12.50 a share.
felter,
cise
East Coast
Controls
(2771)
full registration will be filed later
Lay
April
18
(H. W.)
& Co.,
Inc., Atlanta
filed
16,000 shares ($50 par) 5% cumulative
convertible preferred and 15,000 shares ($1 par) com¬
mon.
Underwriter—Clement A.
Evans
&
Co., Inc.,
Atlanta.
Offering—All but 3,000 shares of the common
wiU be sold publicly at $6.50 a share. The preferred will
be offered to the public at $50 a share.
The 3.000 shares
of common not sold publicly will be offered to company
officers and employees at $5 each.
Proceeds—For con¬
struction of new plants at Atlanta and Memphis, Tenn.
Offering indefinitely postponed.
Lerner
Stores
Corp.,
May 2 filed 100,000 shares
Baltimore, Md.
($100 par)
cumulative pre¬
ferred.
Underwriter—Merrill Lynch, Pierce, Fenner &
Beane, N. Y. Price by amendment. Proceeds—To retire
31,870 shares of 4Vfe% preferred at $105
repay $4,500,000 bank loan.
(Continued
on page
48)
a
share and to
±
1947j
Thursday, May 22,
FINANCIAL CHRONICLE
COMMERCIAL &
THE
(2772)
48
47)
(Continued from page
,
notification) 300,000 shares of stock.
share. Underwriting — Cecil Buy
Brewer, of Mt. Vernon, Wash, and officers and directors
of the company. To equip and enlarge mine.
12 (letter of
Price—15-cents a
stock.
par) preferred
100,000 shares (no
April 30 filed
& Co. Offering — Stock¬
be given the' right to sub¬
the new stock at the rate of one share of
for each 36 shares of common owned. Rights
— Glore, Forgan
record May 19 will
Underwriter
holders of
to
scribe
preferred
expire June 2. Proceeds—The
complete a plant at Sunnyvale,
will be used to
other cor¬
money
man,
temporarily postponed.
Lithium Corp. of America, Minneapolis
April 2 (letter ot notification) 85,000 shares of common
and 42,500 common stock warrants not exercisable until
May 1, 1948.
Price—$3 a common share and two cents
warrant. Underwriter—Hautz, Engel & Andrews, New
/York.
For mine development and for working capital.
Francisco
San
& Co.,
Bond Fund,
Manhattan
•
Inc., New
Coil Corp.,
Manhattan
New
plant equip¬
ment.
stockholders. The
sold by seven
are
being sold by the company,
series.
-
.,
<•
&
of California,
.
t -- -
■
due 1969.
competitive bid¬
ding. Probable bidders—Dillon, Reed & Co., Inc.; Hal¬
sey, Stuart & Co. Inc.; The First Boston Corp.; Harris,
Hall & Co. (Inc.). Price—To be be determined by com¬
be
bidding.
funds
common
to
determined by
Proceeds — Net proceeds, together
the sale of additional
Michigan's parent, American Light &
be used to finance its property con¬
be received from
shares to
Traction Co.,
will
and to reimburse
its
treasury
for previous
construction expenditures.
Bids—Tentative plans call for bids June 9.
struction
equipment
and
of California,
stock
(par
common
per
share
$9.50 per share.
six stockholders
Mar.
March 25 filed
writer—Lester
share.
Los Angeles
58,000 shares ($5 par) common. Under¬
& Co., Los Angeles.
Price—$11.50 a
Appliance Corp.,
Proceeds—For construction
ing and an office
ery
of new plant build¬
of machin¬
building and for purchase
the terms of its
Light Co., Jackson,
mortgage and
Missouri Edison Co.,
deed of trust.
31
Louisiana, Mo.
—Blair &
—Shares
being
Treasurer
and
sold
by L. F.
Rodgers, Dallas,
principal stockholder, who
proceeds.
Tex.,
will receive
.
share.
$10,000
•
Proceeds—To re¬
betterments.
May
15
common.
f
par) com¬
preferred.
underwriting. To retire in¬
notification) $27,500 ($100
($100 par) 5% cumulative
and for working
Process
•
Inc.,Colorado Springs?
\
(letter of
and
mon
capital.
Engineering Inc.,
(letter of notification)
Price—$50 a share. No
Somerville, Mass.
1,400 shares (no par)
underwriting. For gen¬
eral corporate purposes.
Under¬
Y. Price
being sold by
Proceeds—Shares are
proceeds.
who will receive
shares
50,000
filed
—To be added
Olesen
May .15
Inc.,
Louisville, Ky.
($20 par) 5%
convertible
and an
to working
capital.
K.) Co., Hollywood, Calif.
notification) 11,460 shares ($5 par)
being offered by Otto K. Olesen, Holly¬
(Otto
(letter of
capital stock,
to purchase 11,460 shares of the
offered by Thomas H. Corpe, Dana H.
wood; and options
same
stock, being
Ben¬
and
M. Jones, Max Hebgen, Dan H. Hill
Ronald Button, all of Hollywood; and A. W. Benton,
nett, Charles
A.
of Burbank,
Calif.
exercise of option
•
80,000 shares ($5 par) common. Underwriter
Co., New York. Price—$10.50 a share. Proceeds
May 14
unspecified number of ($1
par) common shares into which the preferred is conver¬
tible.
Underwriters—F. S. Yantis & Co., and H. M.
Byllesby & Co., both of Chicago. Price—At par. Proceeds
Owosso
May 16
May 7 filed
Colo.
•
shares ($1 par) common.
Schoellkopf & Co., Buffalo, N.
cumulative preferred
•
Mississippi Power &
Industries,
Precision
•
W. Va.
Poindexter Distillery,
and equipment.
Miss.
May 2 filed $8,500,000 of first mortgage bonds, due 1977.
Underwriter—To be determined by competitive bidding.
Probable bidders include Halsey, Stuart & Co. Inc.; The
First Boston Corp. and W. C. Langley & Co. (jointly);
"White, Weld & Co. and Shields & Co. (jointly). Proceeds
-—Approximately $6,000,000 will be added to cash funds
and will be used in part to finance additional construc¬
tion.
The remaining $2,500,000 will be put in trust under
^
Calif.
Colorado, Denver
first mortgage bonds, due 1977,
and $7,000,000 convertible debentures due 1962. Under¬
writers
Bonds will be sold at competitive bidding.
Probable bidders include: Halsey, Stuart & Co. Inc. The
First Boston Corp., and Blyth & Co., Inc., and Smith,
Barney & Co. (jointly). The debentures will be offered
Public
•
May 16
Service Co. of
filed $40,000,000
—
Old
working capital.
Mission
additions and
behalf of Raymond
working capital, etc.
debtedness
April 22 filed 75,000
writer—Doolittle,
25c.) and 5,000 shares on
President.
April 1952 at $11
Co.
Y. (6/2-6)'
75,000 shares of common
Price—$3.75 per share. Underwriter
—Eric & Drevers and Hill, Thompson & Co., Inc., New
York.
Proceeds will be advanced to Staze Inc., a wholly
owned subsidiary, and used to eliminate factoring, to
purchase packaging materials more advantageously, for
Spector,
preferred
shares of
April 1957 at $12 per
Inc., Nitro,
Ohio-Apex,
stock (par
equipment and im¬
Products Corp., N.
of notification)
Price—$100 per share. No
bank loans and for
Kansas City, Mo.
May 14 (letter of notification) 30,601.4
mon. Price—$7.50 a share. No underwriting.
to
Popular Home
May 9 (letter
exercised through
and through
shares each ($100 par)
Price—$100 a share
Lake, Ida.
stock may be
Underwriter—Mitchum, Tully &
pay
property at Henry's
prove
Idaho
($100 par) common.
share, through
April 1950 at 10 per
being issued by com¬
underwirting. To purchase
each. No
Price—Preferred $25 per share.
stock (no par).
Warrants for common
program
Airlines, Inc.,
cumulative con¬
Investment Co., Inc.,
of notification) 250
preferred and
Jackson
Inc., San Jose,
shares of $1.35 cumulative
$25), with warrants and 40,000,
Club
Idaho
May 12 (letter
Chicago
April 16 filed 20,000
shares of com¬
To be added
Mid-Continent
•
Falls,
N. J.
par) cumulative pre¬
Underwriter—Paine, Webber,
Candy Co.,
O'Briens
' •
(par $7.50)
and proceeds
Pittsburgh
•
100,000 shares ($1 par) common. Under¬
writer—Stifel,
Nicolaus & Co., Chicago.
Price by
amendment.
Proceeds—The offering is being made by
three stockholders who will receive proceeds.
Michigan Consolidated Gas Co. (6/9)
March 7, filed $6,000,000 first mortgage bonds,
with
England
Price by amendment. Proceeds—
$1,500,000 bank loan and for working capital.
Nutrine
;
petitive
discharge
subsidiaries: New
Curtis, New York.
To repay
■..-v-
,
Underwriting—To
Purpose—Proceeds of
in part to
shares ($100
9 filed 25,000
ferred, series A.
Underwriter—Guardian Securities
of short term notes
-
San Francisco
will be used in connection with recent
purchase of four Chi Chi restaurants and cocktail!
lounges in Long Beach, Riverside, Palm Springs and San
Diego and for working capital.
pany
Chemical Co., Harrison,
Nopco
May
Corp., San Francisco.
For payment
or for other corporate purposes.
V
filed 50,000 shares
Proceeds—23,481 shares are
ment.
May 8 filed
$1,000.
and
$500
—G.
Associa¬
notification) $146,900 10-year deben¬
To be sold at face amounts of $100,
(letter of
tures, 4%
(5/27)
of which $25,-
North Boston Lighting Properties
and Massachusetts Utilities Associates in
compliance
with simplification plan. Bids Invited—Bids for the pur¬
chase of the securities will be received up to noon
(EDT), May 27 at office of New England Power
tion, 441 Stuart St., Boston, Mass.
Francisco
San
O.
preferred $2 dividend stock. Underwrite*
Brashears & Co., Los Angeles.
Price by amend¬
Association;
Power
remaining *50,000 shares
which will use its pro¬
Corp.
Acceptance
Mercantile
three
publicly held debt of
general corporate purposes.
ceeds for
Mar. 26
Kidder, Peabody & Co. (jointly).
new
debentures will be used
Brooklyn, N. Y.
shares ($1 par) common. Under¬
Inc., New York. Price by amend¬
the total, 100,000 shares are being
150,000
Co.,
Proceeds—Of
Dec. 26
$50,000,000 in 1977.
competitive bid¬
bidders include Halsey, Stuart & Co.
Boston Corp.; White, Weld & Co., and
Inc.; The First
(J. W.) Inc.,
writer—Burr &
England Electric System
Probable
ding.
automotive ignition
of rubber products.
Manontqueb Explorations, Ltd., Toronto, Can.
April 10 filed 300,000 shares ($1 par) common. Under¬
writer—Name to be supplied by amendment.
Price—
40 cents a share.
Proceeds—For exploration and devel¬
opment of mining claims. Business—Mining.
Business—Manufacture of
replacement parts and manufacture
Feb. 28 filed
Pig'n Whistle Corp.,
the New Bruns¬
& Oilfields, Ltd.
April 23 filed $75,000,000 of debentures,
000,000 will mature in 1967 and
Underwriters — To be determined by
ment.
Mays
Co., Newark,
100,000 shares ($20
vertible prior
Un¬
Price
shares
at $4
and to
at 102.507, while the preferred
will be offered at part and the common shares
each.
Proceeds—To retire bank indebtedness
finance purchase of machinery and other
Fredericton, New
—-$5.75 a share. Proceeds—Purchase of
wick Properties of New Brunswick Gas
converti¬
additional workipg
provide
par) cumulative con¬
vertible preferred. Underwriter—Van Alstyne, Noel &
Co. and G. L. Ohrstrom & Co., New York. Price—$20 a
share. Proceeds—For payment of loans and to replace
working capital expended in purchase of building froro
RFC and to complete construction of a building.
shares (no par) capital stock.
D. Elwell, Elwell & Co., Inc.,
and W. C. Pitfield & Co., Ltd., Montreal. Price
Boston,
due 1949-
and
Pharis Tire & Rubber
Sept. 27 filed
April 2 filed 300,000
Underwriters—William
Atlanta, Ga.
—The debentures
Oilfields, Ltd.,
Canada
Brunswick,
are
loans
bank
capital.
of
New Brunswick
5% cumu¬
$100. Un^
withdrawn unless
subscribed for within 40 days. To
Offering may be
none.
shares
reduce
Price by amendment. Proceeds—To
purchase products and services for reconstruction
the Netherlands in Europe and its economy.
York
filed $500,000 5% serial debentures,
.1957; 12,000 shares ($25 par) 5V2% cumulative
ble preferred and 85,000 shares ($1 par) common.
derwriter—Kirchofer & Arnold, Inc., Raleigh, N. C.
derwriting,
2,000
New York.
Co., Pittsburgh
(letter of notification) 3,000 shares of
2d preference stock (par $100). Price,
lative
To
external sinking
Loeb
price.
vestment business.
•
par)
May 9 filed $20,000,000 10-year 3%%
fund bonds of 1947, due 1957. Underwriter—Kuhn,
& Co.,
I
Pennsylvania Transformer
May 19
(5/26)
(Kingdom of)
Netherlands
shares of capital stock. Under¬
and Co., Inc. Price—Based on
Proceeds—For investment. Business—In¬
May 20
underwriting.
development of same.
No
Business—Telephone serv¬
ice business.
Carson City,
share.
a
purchase mines and for
writer—Hugh W. Long
market
Inc.,
Price—$10
common.
filed 1,500,000
May 19
(letter of
May 16
shares ($1 par)
indebtedness and
issued on exercise
of the option granted by the certificates of indebtedness.
The common will be offered at $1 a share and the cer¬
tificates at face amount.
Hanriaford & Talbot will be
the agent for the sale.'
Proceeds to be used to acquire
all the assets of McCormack & Co., a going business.
(letter of nouncacion) 25,000
common; $225,000 of 6% certificates of
15,300 shares ($1 par) common to be
April 14
Nev.
notification) 29,900 shares ($10
Mines,
National
The com¬
of June 9.
offer¬
general corporate purposes.
•
•
each ten shares held as
has not determined whether to make a public
ing of unsubscribed shares.
Price—$33 a share. Pro-t
ceeds—For plant expansion and improvements and for
pany
postponed.
a
McCormack
share for
McKeesport, Pa.
June 13 filed 250,000 shares of common stock (par $1).
Underwriter—Smith, Barney & Co.
Price by amend¬
ment.
Proceeds—Redemption of outstanding 4%% pre¬
ferred stock at $109 a share plus dividends. Indefinitely
(Q. C.) Co.,
Murphy
Fla.
16,079 shares (no par) common. Under¬
writing—-None. Offering—The shares will be offered for
subscription to common stockholders on the basis of one
May 12 filed
Underwriter—East¬
Co., New York. Price by amendment.
outstanding bank loans.
Dillon &
Telephone Co., Tampa,
Peninsular
America, N. Y.
$3,000,00 debentures.
filed
31
(5/27)',*
notification) 3,000 shares of capital
par). Price, $100. Underwriting, none. De¬
production adaptation of two helicopters of
sign and
certain specifications.
Proceeds—To retire
Calif., and for
Offering
porate purposes.
Plan Corp. of
Morris
Mar.
(no
stock
New York
Helicopter Corp.,
(letter of
20
May
May
McNeill & Libby
Libby,
C.
P.
•
Wash.
Inc., Mount Vernon,
Mitchell Mining Co.,
•
.
Price—$6.25 per common
and $2 per
option. No
share upon
underwriting.
Benton, Ark. (5/26)
notification) $200,000 first mortgage
Manufacturing Co.,
(letter of
Price—$1,015 per unit..
Lanford, Inc.; Southern
Securities Corp.; and E. L. Villareal ;&> Co., Little Rock,
Ark.
Proceeds—To retire Ioan;'io;purchase plant equip¬
ment and to reimburse working iC&pitALb
5% serial
bonds, due
1948-1959.
Underwriters—Hill, Crawford &
company's ($20 par) common
$8 of debentures for each
share of common held. Following the sale of bonds and
debentures, the company intends to offer 160,000 shares
of ($100 par) new preferred stock. Proceeds—The 'offer¬
ing is in connection with a comprehensive refinancing
program which provides for refunding of all fjiej com¬
pany's funded indebtedness and all presently outstanding
7, 6 and 5% first preferred stock. In addition part o,f the
proceeds will be uesd to finance a $9,000,000 construction
program.
„ re¬
for
subscription to the
stockholders on
public
the basis of
Service Co. of
Indiana Inc.
1}]S\
2%% convertible de¬
bentures.
Offering — For sub¬
scription by common stockholders in the ratio of $200
principal amount of debentures for each 20 shares of
common held.
The debentures will be convertible into
common from May 1, 1947 to April 30, 1959. Price—Par
Proceeds—For repayment of $11,500,000 of bank loanj
notes.
i/
$11,077,800 15-year
Underwriters — None,
March 26 filed
[Volume 165
Public
THE COMMERCIAL & FINANCIAL CHRONICLE
Number 4596
Service
of
share of preferred for each 30 shares of
Segal
common held.
Unsubscribed shares of
preferred will be
offered publicly at $10 a share. Proceeds—For
additional
New Hampshire
of
Co.
May 12 filed $4,500,000 of first mortgage bonds, Series B,
due 1977.
Underwriter—To be determined by competi¬
bidding.
Co.
•
ing capital and general corporate
Sussex
Quebec Gold Rocks Exploration Ltd., Montreal
Nov.
.13 filed 100,000 shares (50# par) capital stock.
Underwriter—Robert B. Soden, Montreal, director of
Price—50^ a share. Proceeds—For explora¬
development of mining property.
'
Refrigerated Cargoes, Inc., Now York
i
Trenton, N. J.
Proceeds—To
common.
be
used
in
organization of
.
-
Republic Pictures Corp., New York
Vv
covered 184,821
shares of $1 cumulative convertible preferred ($10 par)
and 277,231 shares (50c par) common stock, with Sterling,
Grace & Co. as underwriters.
Company has decided to
Issue 454,465 shares of common stock only, which will be
offered for subscription to stockholders of record Sept
originally
.
fi to the extent of
one
filed
31
July
\
;
share for each five held. Issue will
-
not be underwritten.
Salant &
-.March
stockholders who will receive proceeds.
Sayles
(R. W.)
May 15 (letter of notification) 1,000 shares ($10 par) 6%
100 shares ($5 par) common.
a preferred share and $5 a common share.
Underwriting—Putnam & Co., Hartford, Conn. To com¬
plete erection of a storage warehouse and garage and
to replenish working capital.
cumulative preferred and
Corp.,
sidiary, Textron Southern Inc. in the amount of $1000,000 each, and for working capital. Offering date
preferred share and $9 a common share.
will receive proceeds from the
a
mon.
and 25,000 shares of the
The remaining shares of common
-
com¬
being sold
are
by stockholders.
Company will use its proceeds to re¬
deem $250,000 of 5-year
debentures and to repay a
$450,000 bank loan. The balance will be used to finance
construction
of
a
plant at Bristol, Pa.
new
Service Caster & Truck
*
Corp., Albion, Mich.
April 10 filed 32,000 shares ($25 par) $1.40 convertible
preferred and 53,962 shares ($1 par) common.
Under¬
writer—Smith, Burris & Co., Chicago. Price—$25 a pre¬
ferred share and $10 a common share.
Proceeds—Proceeds, together with funds to be provided by a term bank
loan, will be used to discharge indebtedness to Domestic
Credit Corp.
'
.
Solar
Manufacturing Corp.
19
(by amendment)
filed
cumulative convertible preferred
110,000 shares of 75c
stock, series B (par $5)
Underwriters—Van Alstyne, Noel & Co. Price per share
$12.50 Proceeds—Net proceeds will be applied to re¬
demption of bank loans and to cover part of cost of
expansion program.
,
$32,000,000 first mortgage bonds, due 1977,
and 160,000 shares of ($100 par) cumulative
preferred.
Probable bidders include The First Boston Corp.;
Halsey,
Stuart & Co. Inc. (bonds only); Blyth & Co.,
Inc.; and
Smith, Barney & Co. Price to be determined by competi¬
bidding. Proceeds—Net proceeds together with $4,500,000 bank loan and if necessary, the $5,000,000 to be
tive
contributed by its parent, Cities Service Co., will be used
to redeem outstanding debt and preferred stock, involv¬
a
South Fork
Mining & Leasing Co., Inc., Spokane,
Wash.
May 13
Tucker
share.
cents
a
share.
To
Southern
May
15
series,
California
filed
due
$12,000,000
1977.
petitive bidding.
i
Gas
sold
through
•
20th
Co.,
exercise
first
mortgage
Underwriting—To
bonds,
be
sold
at
27/s%
com¬
Probable bidders include Blyth & Co.,
pipe line
reimbyxse company treasury for construction
Standard
Factors
con¬
Corp.,
on
exercised proceeds to the company would be $4,636,-
875, including $3,027,475 already received.
porate
to
common
in exchange
Darryl F.
CJ^ss A stock in exchange for
one
for their
share of preferred.
charge of production,
granted to
100,000
Zanuck
shares
common
was
on
April 16,
at
$13
Inc.,
New
York
50c).
Offering—The shares initially will be offered
..for subscription to common stockholders of
Segal Loek
& Hardware Co.
Inc., parent, at $9
At
that
time
a
;
•
:
<
Washington National Insurance Co., Evanston,
111.
(par $1) 25c cumulative
230,000 shares of
the exercise of warrants up to Jan.
preferred.
$5
per
15, 1950, at $3.50
Underwriters—Names by amendment.
per
working .capital.
Weber Showcase & Fixture
Co.,
Mar. 31 filed
Probable
offered
ment.
include
publicly through underwriters. Price by amend¬
Proceeds—To retire preferred stock and to reduce
•
Wellington Fund, Inc.
L.
Morgan
Proceeds—For
Co.
&
Price
investment.
Western
Nov.
27
based
competitive
Halsey,
Stuart
Air
Lines,
Inc.
1,200,000 shares ($1 par) capital stockUnderwriter—Dillon, Read & Co. Inc. Price by amend¬
ment.
Proceeds
Offering consists
of an unspecified
sold by the company and by
William A. Coulter, President, and Director.
Tfre amountn
being offered by each will be stated definitely by amend¬
number
ment
of
the
and
—
shares being
total
number
will be reduced if the
ber of shares.
Company will
minimum
a
bank
of
of
shares
Inc.;
The
First
presently stated
offering consists of
a
smaller
num¬
its proceeds estimated
use
$6,500,000 together with
a
$7,500,000
loan, toward payment of its promissory notes and
to finance
program
company's equipment and facilities expansion
now
Western
under way.
Electric
Co.,
New York
April 16 (letter of notification) 1,500,000 shares (no par)
To be offered for
of record May 27 at
No
underwriting.
$40
subscription to stockholders
share.
a
Rights expire June 27.
To reduce indebtedness and to reim¬
treasury.
White
Transportation Co., Inc., Ashevilfe, N. C.
May 5 (letter of notification) 2,000 shares ($100 par) 5%
cumulative preferred.
Price—$102
a
share. Underwriter
—Scott, Horner & Mason, Inc., Lynchburg, Va. To retire
present preferred bonds and for expansion
Wisconsin Power & Light Co.,
sold
at
purposes.
Madison, Wis.
bid¬
&
Co.
Co.,
consin
Co.;
of
shares
the
Boston
organized Feb. 26, 1947 to
stock to
Probable bidders include Glore, Forgan
Harriman Ripley
and
common
Underwriters—By
bidding.
competitive
Dillon, Read
to
are
be
&
&
Co._ (jointly); The Wis¬
&
Co.,
sold
Proceeds—Part
Inc.
by
Middle
West
Corp.,
top holding company of the System, and part by pret-
common
Co.,
market
on
Business—Investment
filed
amendment.
by
Under¬
common.
business.
Curtis
was
•'.-v-
May 20 filed 800,000 shares ($1 par)
of Wisconsin, who elect
&
Under¬
subscription to Weber's
stockholders. Certain shareholders have waived
rights. The unsubscribed shares will be
(bonds); Kidder, Peabody & Co.; Merrill Lynch,
Pierce, Fenner & Beane and Paine, Webber, Jackson &
Blyth
(6/2-6)
Staats Co. Offer¬
May 21 filed 550,000 shares ($10 par)
Inc.
(jointly);
Inc.
common.
bank loans.
Proceeds—For working cap¬
determined
bidders
108,763 shares ($5 par)
writers—Blair & Co., Inc. and Wm. R.
ing—Shares will be offered for
Price
$3,500,000 first mortgage bonds, due 1977
10,000 shares ($100 par) cumulative preferred stock.
ding.
■
•
be
bo
i
Watson
(H. S.)
Co., San Francisco
May 14 (letter of notification) 500 shares of ($50 par)
common.
Price—$50 a share.
No underwriting.
For
burse its
ital and expansion of business.
and
:••
compensation, but in no case more than $250
year. Proceeds—For retirement
fund. Business —
Insurance business.
(par
are reserved for the conversion of the
share for preferred.
4
>
their
Em¬
ployees will be permitted to purchase preferred at $4.50
per share. Of the common 30,000 shares are reserved for'
200,000
■
■
.
per
con¬
common
Price to public for preferred $5 per share.
share and
v
May 19 filed $600,000 of participations in employees re¬
tirement plan. Underwriting—None.
Offering—Under the
plan those eligible employees who elect to become
participants and depositors will deposit in the Fund 5%
common.
Manufacturing Corp., New York
and
-
erence
stockholders of North West Utilities Co., parwsl
which
dissolution
of
will
North
be
to sell such shares of Wisconalii
distributed
West
Utilities
to
them
upon
tba
Co.
acquire the capital stocks and assets of three Michigan
con-
avertible preferred. Underwriter—Floyd D, Cerf Co.
Inc.,
Chicago.
Working capital, purchase of inventory and equipment,
underwriting.-
1940, to purchase
share.
a
The option
selling around $10%.
U. S. Television
-
r
No
at
in
is the largest option holder and
Corp. Proceeds—Company
March 25 filed 25,000 shares of 60 cents cumulativo
;
cor¬
Zanuck, Vice-President
plans to offer 100,000 shares to the public.
Underwriting—To
the basis of $100 of bonds in exchange for
Fasteners
Proceeds will
working capital and used for general
purposes.
No underwriting.
Strauss
their
Company said it granted options to certain of its execu¬
tives to purchase 240,000 shares of its common stock 5,700
of which have lapsed, at price varying from $13 to
$25.87 V2 a share. Options to purchase 169,400 of these
shares already have been exercised.
If all the options
be added
Philadelphia
in exchange and conversion of
presently oiitstanding common. To be sold for cash, 600 units of one
share preferred and Vz share common
at $105 per unit.
price.
New York"
March 6 filed
five shares of preferred and $25 in cash, and two shares
of
exercised
share.
shares
.
writer—W.
Corp.,
options plan to offer
the shares to the public. Price—At market. Proceeds—
To be offered to holders of deben¬
Class A
Film
Upper Peninsula Power Co.
New York
May 7 (letter of notification) 4,500 shares (no par) 75c
ture bonds and
Fox
expenses.
"
cumulative preferred.
have
or
vertible preferred
Los Angeles
Proceeds—To construct natural gas
securities
Century
May 21 filed 234,300 common shares, which have been
purchased or are purchasable by 24 option holders.
No underwriting.
Offering—The option holders who
1
-
equip
ness—Manufacture of automobiles.
Nov. 4 filed 200,000 shares
nection to the Hugoton-Panhandle Fields, Texas, and to
,
and
manufacturing
plant at Chicago, and for other operating expenses. Busi¬
company
Inc.; Halsey, Stuart & Co., Inc.; Harris Hall & Co. (Inc.);
Merrill Lynch, Pierce, Fenner & Beane; White, Weld
& Co.
lease
175,000 shares of stock.
be
directors. For mining equipment.
•
Corp., Chicago
Proceeds—To
a
subscription
May 6 filed 4,000,000 shares ($1 par) Class A common.
Underwriter—Floyd D. Cerf Co., Chicago. Price—$5 a
share. The underwriting discount will be 70 cents a
the stock
(letter of notification)
Price—5
payment of $53,906,590, exclusive of interest and
cents
.
of
Edison Co.
Oct. 25 filed
was
,#
(O.)
>
-
,
Toledo
are
March
■
'
U»-
c+nrk
(letter of notification) 650 shares of 5% noripreferred. (pc S10Q) arv* 1.000. shares of
(par $10). Presently to be offered 500 common
common
•
Proceeds—For payment of
$3,950,000 of
bank loan notes; purchase of two notes issued
by a sub-
p^ftal
cumulative
common
Proceeds—The company
sale of all the preferred
-
dividends.
Philadelphia
May 9 filed 75,000 shares ($20 par) 5% cumulative con¬
vertible preferred and 75,000 shares ($1 par) common.
Underwriter—Herrick, Waddell & Co., Inc., New York.
Price—$20
"
amendment.
ing
Container
"•
Underwriters—To be determined by competitive
bidding.
& Son, Inc., Litchfield, Conn.
Price—$10
Seaboard
»'1
filed
28
300,000 shares ($25 par) 5% convertible
preferred. Underwriters—Blair & Co., Inc., New York,
and Maxwell, Marshall & Co., Los
Angeles., Price by
shares
($2 par) capital stock.
Underwriter—Eastman, Dillon & Co., New York. Price
by amendment. Proceeds—Shares are being sold by 13
•
Feb.
indefinite.
Salant, Inc., New York
filed 240,000
28
..May 14
a
Textron Inc., Providence, R. I.
:
:
expenses.
-
Vitalex Process Co.>
r
.
share.
Proceeds—From 45,000 shares
sold by company will be applied to
working capital
initially. Offering date indefinite.
^
:
>
•*
Proceeds—For developing mining property. Business—
Acquiring and developing mining properties.
^
.
Price—$10.50
npr)
derwriter—Paul E. Frechette. Price—25
.
•
Registration
Nov. 13 filed 400.000 sha*~ <$1
,
•:
■
Mines, Ltd., Toronto, Canada
Victory Gold Minos Ltd., Montreal, Canada
,
Aug.'28 filed 195,000 shares common stock (par $1).
Underwriter—C; K. Pistell & Co., Inc.
Offering—Com¬
coihpany. Price—The stocks will be sold at $105 per
unit consisting of one share of preferred and one share pany is selling 45,000 shares, and eight selling stockholders are disposing of the remaining 150,000 shares.
of
business.
Proceeds—For
operating
i of icDramon.'
Swern & Co.,
state¬
reserved for
Mar. 31 filed 500,000 shares
($1 par) common.
Underwriter—Name *to be filed by amendment. Price—50 cents
a share.
Proceeds—For general
$800 per unit, consisting of one $500 bond and 150 shares
No underwriting.
For retirement of outstanding loans and for additional working capital.
,
share.
Vauze Dufault
" \
Inc.,
Quarryville, N. J.
May T (letter of notification) $180,000 10-year 7% debenture bonds and 54,000 shares ($2 par) common. Price
.
Feb. 3 fi!ed 25,00Q shares ($100 par) 6% cumulative pre¬
ferred and. 25,000 shares (no par) common. Underwriter
—John Martin Rolph, Vice-President and director of
purposes.
Distillery Co.,
The
common.
common
Co., Inc., Boston.
per
""
.
company.
tion and
-
•
County
49
Underwriter—Carver &
Price—Debentures 98; common $3.75
plant construction, purchase
of equipment and for
working capital.
Co., Williamsport, Pa.
14 (letter of notification) 9,080 shares of capital
stock (par $25). Price, $25.
Underwriting, none. Work¬
May
gram.
:
1962, and 225,000 shares ($1 par)
ment also covers 112,000 shares of
conversion of the debentures.
Brothers
Stroehmann
(2773)
Utah Chemical & Carbon
Co.T Salt Lake City
Dec. 20 filed $700,000
15-year convertible debentures due
working capital.
Probable bidders include Halsey, Stuart &
Inc.; The First Boston Corp.; Lazard Freres & Co.
and White, Weld & Co. (jointly); Kidder, Reabody &
Co., and Blyth & Co., Inc. (jointly).
Proceeds—To
finance in part a proposed $26,868,700 construction pro¬
tive
one
share in the ratio
operating utilities—Houghton County Electric Light Co.,
Copper
District. Power
Co;
and
Iron
Range
Light
&
Power Co. The proceeds iwill be used in connection with
this
acquisition!jprQgrani. 'Bids—Bids
for
purchase
securities schedulddjforjMay 21 has been postponed,
of
Wooden
May
6
Shoe
Brewing Corp,,
(letter of notification)
Price—$10
a
share.
Corp., Cleveland, O.
Minster, Ohio
30,000
shares
of
stock.
Underwriter—The First Cleveland
For working capital.
(Continued
on page
5Q)
(
1
50
'
THE COMMERCIAL & FINANCIAL CHRONICLE
(2774)
Thursday, May 22, 19-47
Prospective Security Offerings
(NOT YET
IN
REGISTRATION)
INDICATES ADDITIONS SINCE PREVIOUS
ISSUE
(Only "prospectives" reported during the past week are
given herewith. Items previously noted are not repeated)
(Continued from page 49)
•
&
Baltimore
(5/27)
RR.
Ohio
(now held by the executors of the estate of Charles E.
McManus, deceased) will be offered at public auction,
at the auction block of Adrian H. Muller & Son, at the
Exchange Salesroom, No. 20 Vesey Street, New York.
Company will receive bids up to noon May 27 at Room
Wall Street, New York for the purchase of
$6,110,000 equipment trust certificates, to be dated June 1,
1947 and due in ten equal annual instalments of $611,000
each on June 1, 1948-1957.
Probable bidders include:
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler, and
Shroud & Co., Inc. (jointly); Harriman Ripley & Co. and
Drexel & Co. (jointly).
1304,
2
•
May 16
CEM
On May
Securities
28, 1947, at 12:30 p.m., EDT, a total of 25,000
shares of the
stock
common
Gas
Electric
&
Co.
authorized by the California P.U.
dispose of 140,000 shares of series A 4%
company was
($25" par) preferred stock without competitive bids. Of
the issue, 75,000 shares are to be allocated for exchange,
share for share, for the company's 5% preferred.
The
remainder, plus unexchanged shares, are to be under¬
written by a syndicate headed by Dean Witter & Co.
(Del,)
Corp.
Counties
Commission to
»
•
Coast
Denver
(no par) of the corporation
Rio
&
Grande
Western
RR.
mon
Corporate Securities
•
Bros. & Hutzler.
International
,
Bank
for
NEW
_
•
BUFFALO
•
PITTSBURGH
ST. LOUIS
•
SAN
Public
and
Co.
dealers
of
distributing the
During
i
1947
$3,800,000
expects
company
through
Unregistered Securities
(Continued from
issuance
the
raise
to
of
page
12
and make fraud
of the
Securities and
Exchange Act of 1934 and which, in effect,
provisions to the unregistered securities
of corporations having at least three million dollars in assets
and at least 300 security holders.
Part of the functions of the Securities
Act
The
and
In
the the regulation of the over-the-counter market.
SEC
in my
•
Thermoid Co.
increase
common
975,000 to 1,500,000 shares
option to purchase 24,250 com¬
mon shares (held
by F. E. Schuter, President and Ther¬
moid Manager's Group Inc.)
from April 16, 1948 to
April 16, 1951.
,
,
.
champion of preventive fraud.
is
concern
difficult
of
orphans" gag is utterly out¬
a
trading, the surrounding practices') all
in the medium of trade custom and
were,
'
no
group
created fiats by which trading
that
in unregistered securities was governed.
Actual growth
was
field, is
my
government in business, this paternalism
prescribe and dominate control in the securi¬
a grave
threat to
our
national welfare.
As these markets took form and
numerous
When
emerged, they acquired
characteristics which at times
Those who
contrasting.
were
and proxy
of another
own
a
man
knowingly seeks to invest in a market
type of disclosure with respect to registration
statements differs from contrasting requirements
market, it is his absolute privilege to
choice.
These
are
islation should
never
market is
heard
more
or seen
it contended
honest than the other.
contention would be
that, overall,
The
Clearly, such
stupid since both markets
are
fre¬
few
The SEC,
same
however,
firms and the
sees
same
follow
his
matters of individual
preference and
no
leg¬
change them.
knaves
ing around unregistered securities and feels it
shoo him away.
q*
ji
a
duty to
error
We
avail¬
looted
inducement to conform
more
the
or
with
request to list ownership.
dealers not to make markets
in these bonds after the outbreak
of hostilities.
sort
of wild
gyrations which the
Sterling bonds went through in
London, it points out.
There is,
of course, both a pro and a con to
this
subject.
American
bond¬
holders
and
the
are
a
dealers
with
they do business, so far as
can be
ascertained, are practically
unanimous in thinking that a free
in
these
securities
all
through the war would have been
extremely desirable.
They can't
see
why, that is, trading was ever
stopped in the first place.T Some
of them, however, do point out
that
since
trading
has
been
stopped and for so long it might
be
better
bonds
now
to
wait
until
the
be serviced before per¬
can
mitting trading in them again.
Undoubtedly,
it
will
considerations of state
bte
as
■:
high
much
as
the general aims and purposes; of
the SEC which will determine the
what and
the when of this quesr
SEC is known to be
The
tion.
ury
in consort with both the
Department and the Treas¬
Department in this whole
matter.
Treaties must be ratified
•
securities
field
will
not
be
can
to
happen.- Mean¬
while—since the Treasury Depart¬
ment
back
in
1942
permitted
forthright body of
as
men.
The
such.
for
the Government
advocate, in the public interest, the
curtailment rather than, the, extension of SEC powers.
losses
claim
income
tax
of
purposes—-
agencies take the
view the bondholders aren't really
worrying.
to
the
whom
before much
is its failure to treat them
contiune
American investors
thereby protected from the
were
bondholders
in
Securities dealers
SEC
bonds
were
acting
;
changed by legislation.
individuals
the bogey-man of evil hover¬
which
now
brought over or sent here- by
enemy nationals.
If trading had
been permitted right along, it is
argued, there would have been
100%
quently used by the
know
here
State
gained knowledge of these characteristics
selected the markets best suited for the intended purpose.
We have
the
to
able
market
Why should the SEC foster the one rule as against the
Why should it attempt to interfere with the market
for decades has had a specific growth through custom.
where
the yardstick.
theirs, only an in¬
complete listing was obtained, it
is reported, and so the
Treasury
Department today is in no posi¬
and
portfolio, that should be
other?
and
(Continued from page 6)
these assets of
The SEC is convinced it acted
an act of abso¬
If I want registered securities wisely in asking the exchanges
Today it's the securities field and tomorrow it may be
industry generally that will have the fetters placed upon it.
Having two roads, each of which leads to the same point
and being familiar with both, why may the public generally
not be free agents and determine upon its own course?
acting as agent, receiving a
liowise dependent upon membership in any special organi¬
zation or, lor that matter, in any organization at all.
one
Enemy Countries
securities medium should be
deal in unregistered securities, that
ties
along entirely dif¬
therein and when
commission therefor, was in
No
Interest in Bonds of
tion
which seeks to
The over-the-counter market grew
ferent lines.
The privilege of trading
usage.
Wall Street Notes
impossible of commission.
This mess.of
at different times.
it
from
and to extend
privilege.
If I prefer
should be a matter
of my personal wish.
I should be permitted to invest or
to speculate just as I see fit. As no one compels me to choose
one market or the
other, so I should be left free to adopt
the medium of the club-regulated auction market or the
over-the-counter market developed through trade custom.
to
in itself a flourishing and
speculative commodity, perhaps the better term is a vacil¬
lating commodity and a so-called seat on the Exchange is
the subject of market variations and brings different
prices
one
(subsidiary of General Public
Utilities Corp.), has petitioned the SEC for authority to
offer at competitive sale $16,677,000 first
mortgage bonds
and $5,000,000 of preferred stock.
The money would be
used
to, redeem $7,657,000 of mortgage bonds, to pay a
$3,500,000 bank loan and to finance new construction.
By and large, the public, generally, is in informed body.
such matters where it lacks information, it goes to an
Choosing
The auction market has been developed and controlled
The method of
Corp.
corporation
appropriate expert—to the cobbler to fix its shoes, to the
and to the financial
adviser to create and protect its securities portfolios.
This membership was and is
a
the
architect and builder to erect its homes,
by club arrangements, called Exchanges, wherein special
privileges have been accorded to those in a position to pay
for membership.
grew up, as
program.
The First
(jointly); Otis & Co.;
a
lutely individual volition.
«
improvement
Blyth & Co., Inc.;
Rochester Gas & Electric
worn.
and the over-the-counter market.
t
stock
The ancient "widows and
Exchange
decades, side by side, but possessing numer¬
ous differing characteristics, two markets have been flour¬
ishing, the auction market in registered (listed) securities
i
•
May 21
understanding. *The
waving of the shibboleth "in the public interest"
sincerity and sometimes acts as a cover for ineptitude.
lacks
For many
.
and
include
of
ers, was
..
refunding
bidders
continuous
1934, the Maloney Amendment thereto, and the
organization of the National Association of Securities Deal¬
t
company's
Probable
system of public education in the
securities field, the SEC would turn custodian of our ethics
3)
amendment to Section
additional
and
an
common
Not content with
would extend these
{
issue.
Hampshire
It would become the
an
the
Boston Corp. and White Weld & Co.
(par $1)
New
FRANCISCO
•
bill which constitutes
$5,492,000 of first mortgage
to
bankers
Service
CLEVELAND
•
CHICAGO
•
redeem
May 20 stockholders voted to increase $2.50 cumulative
convertible
preferred from 55,000 to 120,000 shares
•
PHILADELPHIA
to
investment
£> Co.
YORK
•
used
be
May 17 reported that the Bank may issue between $150,000,000 and $250,000,000 of debentures with an interest
rate of around 3%, plus J/2% brokerage commission. The
debentures may be sold between June and October with
INC.
BOSTON
would
bonds of four constituent companies and to
pay a $1,000,000 bank loan.
The remainder would be available for
Probable bidders: Halsey, Stuart & Co. Inc.; Blyth &
Co.,
Inc.; Glore, Forgan & Co.; Merrill Lynch, Pierce, Fenner
& Beane; Harriman Ripley & Co.
and
Reconstruction
Development
Blair
Public Service Corp. of New Mexico
May 21 company plans to market by competitive bidding
20,000 shares of cumulative preferred stock (par $100)
and $6,800,000 of first mortgage
bonds.
Net proceeds
Glore, Forgan & Co.
(MST) May 23 by the
company at 201 Rio Grande Bldg., Denver 1, Colo., for
purchase
of
$1,530,000
equipment trust certificates,
Series K, to be dated July 1, 1947 and due in 30 equal
semi-annual instalments Jan. 1, 1948 to July 1,
1962.
Probable bidders include Halsey, Stuart & Co. Inc.; Salo¬
State, Municipal and
•
proceeds to replace $2,200,000 short-term borrowings
to provide additional cash for construction.
(5/23)
Bids will be received up to noon
United States Government,
use
and
cases,
In
certain
hardshipi
particularly where the set¬
tlement
of
an
estate
was
being
mmmmrmm
Volume'165
Number
THE COMMERCIAL & FINANCIAL CHRONICLE
4596
held
up
because of the enemy
bonds, the SEC has made special
allowances, it says.
However, it
points out, too, it has had only a
few, a very few, requests for
action of this kind.
'
Ever since discussions
the
over
terms of the Italian Treaty began,
the
New
York Stock Exchange
election
UFE Wins Election
should
be
Drysdale, Loses at
Harris, Upham & Go.
Large Balance of
Payments "Gap"
fronted
mentative
the
ment.
securities in question.
The
Italians have been slow to comply
with the request and the result is
that trading in Italian bonds have
still
to
start.
Treaty-making to
full
disclosure
is
the
path on
which enemy bonds will have to
travel, apparently, to get back to
The
market
in
enemy
bonds
signs of life on
Tuesday when a $1,000 Japanese
bond
changed hands with SEC
permission, a trade consummated
Showed
in
the
some
usual
by
way.
one,
of the
tegular dealers in foreign securi¬
ties
the
on
which
"Street"
bank
a
and
involved
was
in
one
the
on
selling side.
Despite
;
all
the
Government's
much
publicized concern for the
foreign interests of the American
bondholders, 'the Government, ac¬
cording to many of the bondhold¬
anyhow,
ers
is
really not
doing
what it. actually can to substanti¬
their
ate
claims
at
points
where
such help would be of material aid
to them.
In the new treaties be¬
ing
with the various
nations in the European zone most
affected by the war, for instance,
drawn
up
the claims of the bondholders are
in a'negative kind
supported
of
reflecting, so the bondhold¬
think, the influence of Russia.
way,
ers
by
bondholders read something to the
effect that nothing, the fortunes
war
or
treaty,
the
not
limited
be
dividend
A
ferred
the
should
provisions
be
of
the
understood
to
June
5,
the
"free speech"
and »its> bearing
upon
the
...
A
dividend
ferred
today replied, "We have had
in
an
letter
the
is
not
the
of
New
York
be
set
position
to
orders
in
securities.
Financial
New
Box
WANTED
York
asidef~;~*
GREAT
of
of
$3.50
N. Y., May 20,
share
per
to
stockholders
May
ness
26,
of
record
■
H
III'
.•s;
•
service and
over-the-counter
Commercial &
25 Park Place.
New
York
5,
N.
.
York,
.
N.
Y.,
A.
May
SIMPSON,
16,
Treasurer.
1947.
May 16, 1947
cash distribution of twenty-five cents
(25c)
share and
a
special
cash
distribution
of
cents (50c) a share have today been de¬
clared by Kenneoott
Copper Corporation, payA
a
TEXAS GULF SULPHUR COMPANY
fifty
Ju'y h
.,_on
.
at
the
The Board of Directors has declared
1947 to stockholders of record
of
close
business
A.
S.
May
on
29,
of 50 cents per
dend
1947.
share and
divi¬
a
an
addi¬
tional dividend of 50 cents par share on the
CHEROUNY, Secretary.
Company's capital stock, payable June 16,
OF
NORTHERN
STATES
of business May 26, 1947.
POWER
W.
(WISCONSIN)
ATTWOOD, Assistant Treasurer.
Board
of Directors
of
Northern States
Company
(Wisconsin),
At
a
meeting
held on May 12, 1947, declared a dividend of
one
and one-quarter per cent
(iy4%) on the
Preferred Stock of the Company, payable by
Power
check
June
of
as
2,
1947,
close
the
of
quarter
H.
THE YALE & TOWNE MFG. CO.
On
31,
May
fifteen
to stockholders of record
business May 20, 1947, for
ending May
N.
the
1947.
payable
BUCKSTAFF, Treasurer.
at
20,
cents
1947,
(15c)
of
Board
dividend
a
share
per
Directors
out
of
by
earinngs,
to stockholders of record
July
1,
1947,
close
the
232
declared
No.
was
of
of
business
June
past
6,
1947.
DUNNING,
Secretary.
The Board of Directors of
Pre¬
PITTSBURGH CONSOLIDATION
Southern
at
the
close
of
busi¬
COAL COMPANY
at
a
meeting held today, declared
dividend of 35
mon
Stock of
J.
MAHER,
Secretary.
12,
the
at
cents
1947,
close
share
per
the
quarterly
a
the Com¬
on
Company,
•
payable
shareholders
to
of business
on
of
on
record
May 29,
1947.
Charles E. Beachley,
„
Secretary-Treasurer
,
WARD BAKING COMPANY
Atlas Corporation
Notice
*
The Board of Directors has declared
is
hereby
that
given
a
Bhare On Preferred Stock and a
the Com¬
on
quarterly dividend of $1.37H a
divi¬
the
regular quarterly dividend of 40tf pef
dend of 15 cents
Stock of Atlas Corporation, pay¬
June 20, 1947, to holders of
such stock of record at the close of
mon
a
share
Peterson, Treasurer
'
BRIGGS & STRATTON
May 15, 1947.
the Com¬
holders of record June 16, 1947.
to
L. T. MELLY,
business May 28, 1947.
Walter A.
on
Stock both payable July 1,1947
mon
able
unfair
DIVIDENDS
*
Common Stock
on
share has been declared
Treasurer
.
...
475 Fifth Avenue
New York 17. N. Y.
CORPORATION
81st DIVIDEND
privileged
The Board
Sept. 5,
I
doubt
that
on
a
PREFERENCE
sub¬
can
.
.
declared
Cyanamid
twenty-five
DIVIDEND
Company
on
May
cents
(25c)
Wisconsin priv¬
2.75%
ilege dividend tax, on the capital stock
of
20, 1947, declared a quarterly divi¬
dend of 1 Vi % ($.125) per share on
question,
June
record
16,
June
of the Corporation,
stockholders
to
1947
1947.
2,
L. G. Regner,
May 20,
1947
TWENTIETH CENTURY-
Secretary
•
FOX FILM CORPORATION
the outstanding shares of the 5%
Cumulative Preference Stock of the
payable July 1, 1947 to
the holders of such stock of record
at the close of business June 4,1947.
Company,
have joined me.
were
of
less
The Board of Directors of Ameri¬
holding of the majority with the
previous decisions in which they
"Even if the test
share,
payable
unable to reconcile the
am
has
Directors
(without par value)
Company
The' employer's
1946.
dividend
per
American Cyanamid
opportunity to exercise their
right of free choice in the electioh
on
of
.
May 20, 1947
A
whether
per
COMMON DIVIDEND
the
employer interfered with its
employees' rights, as might con¬
stitute
interference
labor
practice
would
in
still
SITUATIONS
that
be
my
payable July 1, 1947 to the holders
of such stock of record at the close
of business June 4, 1947.
WANTED
W.
P.
A
Competent
to
manage
dividend
of
25^
share has
per
declared,
June
to stockholders of record at
payable
July
1,
16,
has
been declared payable
to" stockholders
Of
close of business on
1947
the
1947.
Company
REEVES, Treasurer
DONALD
A.
HENDERSON,
"
Treasurer.
office
out-of-town
for
commission
mercial
icle,
&
May 15, 1947
or
both. Have
Financial
Chron¬
A dividend of
25
Park
York 8, N. Y.
Place,
New
The Board
twenty-five
**
cents
"
(25c)
Common
*
Cor¬
quarterly cash dividend of $.75
per share on the outstanding Com¬
mon
Stock of this Corporation has
been declared payable June 30, 1947
to stockholders of record at the close
of business on June 16, 1947.
will not be closed.
J. M.
at
Con¬
A
the close of business June 3, 1947.
New
30,
record
The transfer books of the
experience.
on the outstanding
Preferred Stock of this
share
June
notice
1947,
years
Corporation
quarterly cash dividend of $.37»/a
vertible
poration
dividend
A
been
Twenty
this
the
to
per
REEVES BROTHERS, inc.
STtfRTEVANT,
Unlisted Trader
of
payable June 16,
stockholders of record at
the close of business on June 4, 1947.
declared
been
1947
share on the outstanding shares of
the Common Stock of the Company,
the
Stock
Preferred
Cyanamid Company on May
20, 1947, declared a quarterly divi¬
dend of twenty-five cents (25tf) per
can
unfair
an
proceeding,
quarterly cash dividend of $1.12V2
share on the outstanding Prior
has
The Board of Directors of Ameri¬
•
•
per
share
Stock
on
of
the
was
this
declared
me.
of
record
May 29, 1947.
U
°f
.
THE DAVISON CHEMICAL CORPORATION
has declared
cents
Cbfecks will be mailed.
of Directors
''
a
,
Writer—Executive
($.25)
quarterly dividend of Twenty-five
per
share
able June 30, 1947, to
on
its capital stock,
pay¬
stockholders of record at
the close of business June 10, 1947.
M. C. Roop, Secretary
Baltimore 3, Md.
Philadelphia, Pa.
May 16,1947
treasurer
May 15, 1947
He gets
things
high-grade financial
City only.
Married.
Box S 516,
Commercial & Financial
Chronicle, 25 Park Place New
PHILLIES
York
I
■
J
THE
DAVISON
CHEMICAL CORPORATION
JAITIMOBE.J. MD.
8, N. Y.
26, 1947,
The stock transfer
closed for the payment of
Y.
,
•
New
May-19, 1947
an
tude of details have been valuable to
done."
Now employed as editor of
York
Broadway,
Checks will be mailed.
Y.
New
120
June
J.
Ex-newspaper man with over 25 years' experience writ¬
ing in various fields including securities, business
articles,
publicity, correspondence.
Has been executive assistant
to prominent men,
including a President of the U. S., who
said of him:
"He is able,
energetic, conscientious and
reliable.
His initiative and judgment in
handling a multi¬
weekly.
Pre¬
1947.
stockholders
s
be
not
J.
KENNECOTT COPPER CORPORATION
1947.
the
on
payable June 13, 1947, to
/
May
will
dividend.
SOUTHERN
Alabama* Great
The
Corporation
■
Monday,
COMPANY
New York,
circumstances, the employees had
M522,
N.
8,
this
Company has been declared payable at
the Treasurer's Office, No. 165
Broadway, New
York 6. N. Y„ on Monday, June
16, 1947, to
stockholders of record at three o'clock P.
M.,
1947.
Secretary.
accounts. Box MC 430, Com¬
give
Chronicle,
16,
WHITE.
this
a
or
execute
June
on
B.
firm. Now connected. Salary
TRADER
Wishes
business
books
The
"A very
York
SITUATIONS
QUARTERLY
DIVIDEND
of
One
Dollar
($1.00) per share on the Common Stock of
on
Secretary and Treasurer.
and
Exchanges and other
leading exchanges.
of
118
A
1947, to stockholders of record at the close
the
on
Secretary
Boston Stock
close
SANFORD
DIVIDENDS
Special to The Financial Chronicle
members
DIVIDEND NO.
Harvester
and that the election herein should
With Hunnewell & Co.
BOSTON,
MASS. — Louis
J.
Blute has joined the staff of Huntiewell & Co., 49 Federal Street,
the
COMPANY
Company has been declared payable
June 26, 1947, to stockholders of record at the
close of business
May 26, 1947,
A dividend of $3.50 per share on the Ordinary
Stock has been declared payable June 26, 1947,
practice proceeding—inter¬
ference, restraint or coercion of
employees in the exercise of their
right freely to choose their own
representatives—I am convinced
that
International
Railroad
labor
answer
request."
Stock
Dividend
and
the United Kingdom, Secretary of
the Treasury at his press confer¬
JACK,
RAILROAD
"However, even assuming that
the test in a proceeding such as
this—interference with the integ¬
rity of the .Board's election pro¬
as
at
the
W.
of
F.
'coercion.'
same
HARVESTER
COMPANY
Directors
OFFICE
Y.
and a dividend of
Preferred Stock of
ALABAMA
THE
Father Kelley said:
I question whether free
speech
should
enable
an
em¬
ployer to thwart the Board in its
statutory duty to ascertain the
representatives of the employees.
Furthermore, I see no reason for
departing from the test consist¬
ently used by the Board in pro¬
ceedings such as this. Nor do I see
a need for discussing the facts of
the case in terms of 'free speech'
cess—is the
N.
1947.
D.
"...
or
York,
share
per
SOUTHERN PACIFIC COMPANY
INTERNATIONAL
CO.
$1.25 per
on
the $5
American
& Light Company were declared on May
21, 1947, for payment July 1,
1947, to stock¬
holders
of
record
at
the
close
of
business
case,
.'
New
STOCK
$1.50
LIGHT
&
Power
Discussing
stantial
WASHINGTON, May 20 (Special
to the "Chronicle,"—Asked about
the prospect of a second Loan to
of
($6)
speech."
actions and statement cast
No British Loan Request
Stock
share
ineffective
to
Street,
PREFERRED
arguments
to
POWER
Rector
Two
they were swayed by any
presented, this
was
a
legitimate consequence of
free speech and presumably one
of its purposes.
Free speech is
of
rights of the bondholders.
bo
AMERICAN
appeals to their judg¬
Stand in the way of the claims and
ence
argu¬
sim$l£ issue is involved
pertaining to the rights of herein—wlietljgr under all the
Clauses
of
sides
If
issue
the market.
both
on
is the SEC's) disclosure of all per¬
tinent financial data concerning
on
51
DIVIDEND NOTICES
Company declared a quarterly dividend of ohe
dollar ($1.00) per share on the common stock
payable July 15, 1947, to all holders of record
labor policies
and the SEC have been in numer¬ and problems in a temperate man¬
ner, without threat of economic
ous conferences preparatory to re¬
WASHINGTON, May 21 — The
The Union
suming trading, it has been hoped, reprisal or coercion.
Department of Commerce today
in
its campaign literature used
in the listed government and
cor-^
announced its calculation of the
forceful language similar to that
porate bonds of Italy.
What is
gap between exports and imports
of which it mow complains, and,
happening in connection with the
during the first quarter at $3 bil¬
Italian
securities
will probably in fact, closed its campaign on the lion.
Exports were $4.9 billion
serve as a pattern for the
bonds day of the election with a leaflet and imports $1.9 billion.
of all other enemy countries. Here detailing its answer to the em¬
the SEC is insisting upon "full" ployer's letter point by point. The
DIVIDEND NOTICES
(the'emphasis upon the word full employees were therefore con¬
viewpoint
DIVIDEND NOTICES
The
(Continued from page 8)
and
(2775)
set
aside.
I am; unable to join
my
colleagues in an indiscriminate
usage of so important a right as
that of freedom of speech."
At
.
herein
America's N-( c/tjar
9/
■!
Thursday; May 22,1947,
FINANCIAL CHRONICLE
COMMERCIAL *
THE
■
' (2776)
$2
Balances
The Battle oi Sterling
;*Y
By PAUL
W.
■-
*
London American Chamber of Comis sounder than loans of money.
Randolph Burgess tells
Dr. Einzig reports
experience demonstrates it
Foresees long prosperity ahead.
nterce
In
of
an
address in
England, before the American Chamber
Randolph Burgess, Vice-Chairman of the
of the^
National City Burgess stated that business, like
banks is now equipped for such
Bank of New
"They - know prob¬
York, recom¬ operations.
mended
in¬ lems," he said. "They have trained
vestment of people and they will avoid some
and Egypt
London,
Board
American
old
in negotiations regarding liquidation of Sterling r
likely to press counterclaims against India
mistakes."
down of debts.
and demand a scaling
ENG.—Within the next few weeks negotiations with
expected to be resumed. Since the preliminary
LONDON,
India and Egypt are
talks "
<^-
earlier
t hi
year,
s
fened
rially strengthened his hands in
the Cabinet. He was now placed
■->>'<
consid¬
Then
erably.
speaking of domestic condi¬ it looked as
tions Mr. Burgess predicted some though
the
as aid in world
recovery.
He decline in prices _and Jn income, governm e n t
out
pointed
"the" ex-
that
perience
the
.20's
of
and
demon¬
strated
that
30's
direct
busi¬
abroad is
ness
far sounder
invest¬
ment by
W. R. Burgess
than loans of money
And, in the search for principles
to govern our lending, I suggest
we turn to England's experience in
War
half
I."
century before World
Burgess, however,
Mr.
but
said any readjustment or
is likely to be brief
cession
"Unfilled demands
so
great, and the
mild.
re¬
and
for goods
might
be
in¬
clined
to
,
serious
into
get
trouble for- having spoken out
oi;
With his usual persistence,
Crosthwaite-Eyre left the question on the paper, however.
turn.
Fortunately for Mr. Dalton and
cause of scaling down the
for the
sterling balances, the speech com¬
mitting the " government had a
very favorable press.
It is diffi¬
cult to recollect any other action
of the Labor Government which
deceived such a unanimous praise
in newspapers of every kind. The
position to argue that the large majority of the govern¬
opposition would make political ment's supporters in the House,
capital out of agreements grant¬ too, was greatly relieved that
ing too liberal terms to the. cred¬ they would not have to face the
itor countries. As a result he was unpopularity of too
costly debt
terms.
They
were
able to make some casual state¬ settlement
ments to the effect that debt fund¬ pleased with their Mr. Dalton for
in
stif¬
has
tude
-
«...••
.
atti¬
British
In
capital abroad
'
EINZIG
balances, Britain is not
there, W.
Commerce
the
might
latter
ac¬
a
ing agreements must take
account Britain's excessive
cept terms far
beyond
the
country's
ca¬
into
eco¬
Much s as~ he
having disarmed with one stroke
campaign which
the Conservative
efforts.
mightv otherwise
have
caused
to go further, he them much embarrassment. The
Chancellor
of
the
Exchequer's
could not do so for a long time.
"that if we can get over the hur¬ pacity.
This
Even in his Budget statement he move was distinctly popular both
dle of readjustment quickly we was
due
in
confined himself to vague gener¬ in the press and in the Socialist
ought to have a long period of part
to
the
Dr. Paul Einzig
alities.
Party. In the circumstances opprosperity ahead.
So¬
general
Most of the Conservative Mem¬ position to his policy within the
atti¬
"To get through such an adjust¬ cialist
Cabinet has melted away, and on
towards
countries with a bers who took up the matter
ment without a decline in prices tude
lower standard of living.
Many earlier this year had lost active May 12 the Prime Minister, in his
and income," Burgess continued
Socialists felt that it would not interest in it, as they thought that reply to Crosthwaite-Eyre defi¬
"would be a miracle. The impor¬
nitely confirmed that Mr. Dalton's
be
right to scale down debts they had forced Mr. Dalton to go
tant new opinion is that our re¬
owed to Indians *who are much as far as he was likely to go at speech expressed government pol¬
are
available
ample,". £urgess said
funds are so
nomic
war
•
would have liked
icy.
our recession — is worse off than Britons. They ig¬ this stage. They decided there¬
The first major engagement in
nored the argument that in exist¬ fore to rest on their laurels. This
brief and mild. That
ing conditions any improvement was done with the approval of the the "battle of sterling balances,"
is because it has been so widely
leaders who, with which was fought out in the Brit¬
in the standard of living in India Conservative
losses on loans."
foreseen and planned for by busi¬ would only be temporary, as it the
notable
exception of Mr. ish Parliament and behind the
On the willingness of private
would soon be counteracted by Churchill himself, never took a
ness and banking."
capital to enter foreign fields, Mr.
scenes of British politics, has thu3
the
increase
of the birth rate very keen interest in the cam¬
which, under conditions prevail¬ paign. Colonel Crosthwaite-Eyre, ended in a victory of the policy
ing there, inevitably follows any who initiated the campaign, con¬ of scaling down the debts. Cred¬
such improvement, so that the tinued to pursue it almost singleitor
governments will have to
His persistence eventu¬
net result of heavy sacrifices on handed.
take this into consideration. They
By Our Washington Correspondent
Britain's part would be merely ally bore its fruits.
Although a
additional millions of half-starved young "backbencher" who only can no longer build their hopes
Harry White is going to the New Hampshire countryside for
entered Parliament at the gener¬ to receive full payment on the in¬
Indians.
a rest.
Then he is expected back in Washington, his plans being
Another reason why the gov¬ al election of 1945, he has man¬ difference of the British public
reportedly—to act as a "money doctor" to foreign governments and
ernment was disinclined to show aged to force the government's which would enable some mem-*
counsellor to corporations.
*
*
*
hand in what is after all a mat¬
a firm hand was the fear that it
bers of the British Government
ter of major policy.
H
Silver study by the Fund is more or less pro forma. The resolu¬ might interfere with the delicate
Under the barrage of his per¬ to indulge in financial appease¬
tion governing it is not too tight.
political negotiations with India
*
*
*
❖
and Egypt. Rather than antagon¬ sistent questions to the Chancel¬ ment.
News leakages, such as the recent item about Ethiopia having ize these two countries, the gov¬ lor of the Exchequer, supported
started application for Fund help, annoy the Fund management very ernment abstained from indicat¬ by a growing volume of publicity
much. They suspect embassies with leaking. Also, on such occasions
ing its intentions of putting for¬ in the Press, Mr. Dalton decided
ward counterclaims. It looked as to take his courage in both hands,
a canvass is made of the whole shop in the Fund, to try to trace a
leak. European organizations cannot get used to American press ways
though
Britain
were
heading and to commit the government
INDEX
towards a policy of financial ap¬ definitely to a policy of refusal to
Gutt is of course a European in this regard.
*
*
*
r
peasement for political purposes. conclude debt agreements with¬
For detailed index of
Fund reports must be published for each quarter, but should noi
The members of the government, out a substantial scaling down of
whose main concern was friendly the amount. In a speech made at
be looked for too promptly, since they will contain statistics on Func
Holdings of members' currencies. However, some disclosure of Func relations with India and Egypt, the annual dinner of the Brazilian
contents see page 3
transactions may be made earlier in the periodic reports of central were distinctly inclined to press Chamber of Commerce in Lon¬
for a conciliatory attitude in the don, Mr. Dalton stated this pol¬
banks, and there is nothing the Fund can do about that.
Acknowledged that in the past "di¬
rect investments ran into trouble,
but much less than the heavy
adjustment
—
likely to be
Fund Jottings
*
❖
*
Mexican-American
Stabilization
matter of the balances.
Agreement reportedly would
There is a strong
confirm, that the
suspicion, which the Fund's
spokesmen do not
Mexican-American
Whether it will be, still remains to be seen.
Fund wanted the text of the
Agreement made public.
•' V'-';
'. ,
from bilateral trade
and monetary agreements in force in Europe, for instance in having
no "tied" clauses, one may wonder.whether the United States would
cot be in a better position to protest against foreign bilateral arrange¬
■
■'
While the
V
;■
*
.*
*
'
_■
agreement mentioned above differs
all existing
which this country is a party to
ments if it allowed
bilateral-stabilization agreements to
expire. "
'
whose
Dalton,
unmistakable terms. It is
that he spoke without con¬
sulting the Cabinet, and that some
icy in
chief con¬
permit Mexico to draw—up to $50,000,000—interest free for a three- cern was the effect of such an
month period. The amount is more than double what the Mexicans attitude on the Treasury's foreign
could get from the Fund in a comparable period. Past US-Mexican exchange resources, was for a long
stabilization agreements have not been used by Mexico, but the pres¬ time almost alone in favor of a
ent one is thought likely to be used, because of the prospective firm
policy. - He received sup¬
changes in Mexico?s balance of payments.
port, however, from unexpected
#
*
rjt
quarters.
A small but active
The Fund without doubt is fully apprised of the content of the group of Conservative Members
Mexican-American agreement. In any case, it goes without saying of Parliament began a campaign
that the United States would not be a party to violation of the letter in favor of a firm policy of hard
-or spirit of Rretton Woods.
Although they at¬
None the less, it might be argued that bargaining.
this is another instance of bypassing an international organization, tacked Mr. Dalton for his reluc¬
however justified the step may be for reasons of propinquity. One tance to come out with a categor¬
Fund Official points out world dollars shortage is so great that any ical statement in favor of putting
bilateral efforts toward meeting it are welcome to the Fund from the forward counterclaims, he was de¬
lighted, for these attacks mate¬
standpoint of removing pressure on the Fund,
Mr.
known
colleagues were very wor¬
about the reaction to his
of his
ried
exploit his victory, put
question to the Prime
Minister,
to ask whether Mr.
Dalton's
statement
represented
down
Preferred
government's policy, pres¬
sure was brought to bear on him
from various influential quarters
to withdraw his question, for fear
that Mr. Attlee might not ade¬
quately back up his Chancellor of
the Exchequer, or at any rate the
BOUGHT—SOLD—QUOTED
Domestic & Foreign
Securities
New Issues
M. S.W1EN & Co.
ESTABLISHED 1919. :
would in case of need turn first to the
the United States depends on the length of time Mexico
the help. In the Fund, the longer a member remains
higher is the cost to the member.
Fund or to
may need
Members
40
*
*
N.
Y„
Security Dealers Ass'n
Exchange PI., N.
indebted, the
Y. S
Teletype N. Y.
.
HA. 2-8780
1-1307
*
of the
monthly.
published on
experimenting with the circulation internally
balance of payments estimates for a number of countries
If the experiment warrants, these will eventually be
some periodic basis as yet undecided.
The Fund is
Teletype—NY 1-971
Firm Trading
:
a
the
HAnover 2-0050
4/4% Cumulative
Rails
anxious to
Whether Mexico
CORP.
LERNER STORES
Reorganization
Old
speech abroad. And when the
indefatigable Crosthwaite - Eyre,
'"Seaboard Fruit Co., Inc.
Genera! Products Corp.
Susquehanna Mills
Empire Steel Corp.
Markets
;
FOREIGN SECURITIES
:
*
Prospectus on
Request
Ail Issues
Kobbe &
Company
1
Securities Dealers, Ino,
INCORPORATED
Members
National Association
of
-
.
,
'
r.ARL MARKS
•
f:
.
55 Liberty
Telephone
BArclay 7-2663
Street, New York 5, N. Y.
,
Teletype
t;
.
t-m ;;
♦
NY L-277
50 Broad Street
r
& CP' Inc.
SECURITIES
SPECIALISTS
FOREIGN
fhi" V
AFF1LIATE:CARL MARKS
i New York
ill, Thompson & Co., Inc.
Markets and
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4, N. Y.
& COi Inc. CHICAGO;
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Tel. REctor
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:
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Broadway, New
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