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2 7 1949
MAY
ESTABLISHED 1S39
Bus- ADM.
I'ORARy
j
an
Chronicle
Reg. U. S. Pat. Office
Volume
169
New
Number 4806
Western
WhatYNoimal'? Some Deterioration,
By ALLEN M. BERNSTEIN
But No
President, Bernstein-Macaulay,
Inc.
of past eight years
sified
normal either
as
duction
to pro¬
as
Declares
prices.
or
pro¬
jected "normal" of both national
product and national income to
be one-third under 1948. Predicts *
loss would entail
25% sales
a
65% profits reduction, with dras¬
tic reduction in dividends. Con¬
cludes these factors
justify cur¬
low stock
"mysteriously"
rent
market.
Working with
dustrial
Graduate
the
(1) price policies that keep up sales; (2) reduc¬
(3) shifting and spreading work; (4) gradual and not
business decline;
ing costs;
precipitate inventory reductions; and (5) maintenance of capital
expenditure. Holds banks should be liberal with credit.
I
to
be
y,V/viV
year;
cline
ness
a
has
question—what
$64
(Continued
for
or
is
Dr. Joseph L.
42)
See pages
23-25 for pictures
Annual Spring
the
at
iness condi¬
Snider
have
deteriorating since the latter
The wholesale com¬
part of 1948.
modity price level turned down in
September of last year and has
declined 7%.
Industrial produc¬
for
country as
the
whole
a
turned down in December and has
declined
off
is
Personal income
6%.
since
3%
Outing of the San Francisco
Unem-
December.
(Continued °n page 41)
Security Traders Association.
::An
der
address
by
May 20,
creased United States loans and investments.
I
Mortgage
nave
been
<§>have
to
accrued
elapsed
I
last
visited
EDITORIAL
them.
I
Professor Sni¬
Bankers
Atlantic
City, N.
W-Us We JSeeplHI
A Simple but Basic
A valued friend
*
Germany,
Funds,
I
there
and
found that the
.
results
editorial, issue of May 12, captioned 'As We
ridicule the plan of the Secretary of Agricul¬
ture.
How would you handle the agricultural problem, or
doesn't it need handling? Can agriculture operate without
government supports? If it needs government help of some
kind, have you a pian? Agriculture doesn't set the price.on
what it sells or what it buys—it can't control production;
well-organized.
would appreciate it very much if you
the
of
merging of the
zones
of occu¬
pation, the is¬
the
of
suance
new
currency,
and
the
com¬
mencement
W. W. Aldrich
of
the setting ud
of
it is not
would tell me
a
ern
: :
<
banking system for West¬
new
y
together
Germany,
have
effect
(Continued
*An
a
but we hope
not. In any event we shall assume that such is the fact. It is
also quite possible that we over-value our own ideas and
their influence in supposing that others may be helped by a
really value our views on this subject,
address
Plan
on
the
on page
ex¬
had
already
penditures,
substantial
questions as these are often asked, as every editor
knows, less in the hope of obtaining information than in the
belief that they will embarrass the publisher. Perhaps we
flatter ourselves in believing that in this case the inquirer
Such
the
with
Marshall
of
assistance
ivhat should be done."
would
the
zone
in
"In your
"I
in
American
Economic and Social Philosophy
writes:
brief
a
stay
See It,' you
28)
by Mr. Aldrich at
luncheon of The
Pilgrims, Lon¬
don, England, May 23, 1949.
State and
STATE AtiD MUNICIPAL
across
Munidpal
Canada
Bonds
inc.
Monthly Commercial Letter
BONDS
A Mutual Fund
yield 2.82%
upon request
"
,
COMMON STOCK FUND
Prospectus
on
request
THE
PREFERRED STOCK FUND
Bond Department
BOND FUND
White,Weld&Co.
Members New York Stock
Exchange
THE NATIONAL CITY BANK
UTILITIES FUND
CANADIAN BANK
OF COMMERCE
INCOME (BALANCED) FUND
Prospectus
on
OF NEW YORK
request
Wall Street, New York 5
40
Philadelphia
Chicago
Boston
Head Office: Toronto
Providence
64 Wall
Amsterdam
London
FRANKLIN DISTRIBUTORS, Inc.
Street, New York 5
Bond Dept. Teletype: NY 1-708
New York
Seattle
Agency: 20 Exchange PL
Portland, Ore.
PACIFIC
Bankers
to
26,
SECURITIES
Distributors of Municipal
CITY OF NEW YORK
THE
Tide Water Power
Company
bonds & stocks
Underwriters and
Bishopsgate,
London, E. C.
Office:
Head
CANADIAN
COAST
the Government in
Kenya Colony and Uganda
NATIONAL BANK
San Francisco Los Angeles
NATIONAL BANK
of INDIA. LIMITED
THE CHASE
OF
COMMON
Prospectus
<fi
upon
Analysis
available
request
and
Branches
in
India,
Burma,
Colony, Kericho. Kenya,
and Zanzibar
Ceylon,
Kenya
and Aden
Corporate Securities
Paid-Up
Reserve
The
Bank
Capital
Fund_y
OTIS & CO.
£2,000,000
Established
£2,500,000
conducts every
description
exchange business
also
and Executorships
undertaken
1899
Cincinnati
Chicago
Columbus
Francisco
Honolulu
Stock
a
Co.
Stock
Angeles Stock Exchange
Toledo
Buffalo
BA 7-4300
Los Angeles
Direct
Wires
Members New York Stock
111
WOrth
40
Exchange Place, New York 5, N. Y.
Exchange
Broadway, N. Y. 6
4-6000
Boston
Teletype NY 1-2708
Telephone: Enterprise 1820
Private Wire to:
Honolulu
Seattle
IRA HAUPT&CO.
and other Principal Exchanges
Grporatioti
Exchange
San Francisco
Denver
Dominion Securities
Exchange
14 WALL ST., NEW YORK
CLEVELAND
New York
San
Los
(Incorporated!
of
banking and
Trusteeships
Dean Witter
Members New York Stock Exchange
Subscribed Capital—__£4,000,000
Bell System Teletype
NY 1-702-3
Hendricks
&
a
produc-
(Continued on page 32)
J.,
Franklin Custodian
interest
also
have
made
1949.
101.108%
Price
been
550 Branches
Bonds
2%% Series due 1979
and
just
Europe which
Service Company
First
arrived in London after a trip through Western
included Italy, France, Holland and Belgium, and I
greatly impressed by the degree of recovery which has
achieved in each of these countries during the two years which
have
———
before Pennsylvania
Association,
Texas Electric
Business
tions
tion
taken
se¬
depres¬
General bus¬
been
normal
a
on page
a.
be¬
and Prices
this
the real
to
from
sion. L
normal
come
we
busi¬
of
rious
nor¬
year?"
then
But
to
the
coming
that corpo¬
a
taken
I. The Outlook
in
ration done in
M; Bernstein
Allen
should
we
mal
what
as
current de¬
and
(2) greater United States tourist travel in Europe; and (3) in¬
since
some
prevent
profits
earn
or
o$>
s
Says trade barrier removals and currency stability can be accom¬
measures
which
company
what
1
suggestions
"What
achieve
a
make
the
should
shall
1
volume should
our
analysis of the economic situa¬
prospects for business and prices.
undertake to present an
shall
question is
frequently
asked.
improvement in
when Marshall
sees
warns
plished only by degrees and decries forced sterling devaluation.
Lists as final remedies: (1) increased exports to United States;
for investment
clients
conditions, but
Plan aid ends there will still be substantial annual dollar deficits.
^security
a
Western European economic
(1) heavy government spending;
depression:
severe
purchase
of
Speaking in London, leading American banker
factors
as
(2) agricultural price support*; (3) ample money and credit supply;
and (4) current sound banking situation. Foresees no such depres¬
sion as in 1920-22, and proposes as measures to prevent serious
preventing
considering
accounts, or
Snider lists
Professor
analyzing situation,
an
in¬
of our
Chairman, Board of Directors, Chase National Bank of New York
University
School of Business, Harvard
tion and some conclusions as to the
some
11..."."-v-'.U
After
European Recovery—
By WINTHROP W. ALDRICH*
Professor of Business Economics,
none
could be clas¬
Copy
a
Not So Fast!
Depression
By JOSEPH L. SNIDER*
Economic adviser maintains
Cents
Price 30
York, N. Y., Thursday, May 26, 1949
Eastwood, Inc., Phila.
'
$
2
COMMERCIAL
THE
(2262)
&
FINANCIAL
CHRONICLE
Thursday,
Future Business Possibilities
RIGHTS
Alabama &
By JOHN D. GILL*
American Tel. & Tel.
"
,
Cincinnati Gas & Eiec.
ing spell
South Carolina Eiec. & Gas
executive
as we
.predicts
will have
we
Corporation
5
Teletype NY 1-583
as
our
economic problem is complex, involving reappraisal of individual's eco¬
no boom last
year. We will have no depression this year. But we are taking,
take a deeper breathing spell, as we fumble with the transition from much to
plant improvement, and from inadequate to more consumers' goods. In support
moderate
of the
that
real per
last
v:
■
.■
Bought—Sold—Quoted
j
high
not
Brokers, Institutions
Banks,
trend.
income
Members
r
New
York
Stock
Exchange
York
Curb
Exchange
Tel. REctor 2-7815
i
trial
wage
worked
BROADWAY, NEW YORK 5
120
indus-
Few
earners
New
I
„
above
calculated'
a
frfC flONNELL & CO.
was
much
as
1 %
as
■
John D. Gill
over¬
time,
i.e.,
above
the
40-hour
standard,
assumed as economic
for the immediate postwar period
and
some
industries'
work¬
—
weeks
were
reduced
standard.
the
below
for
Our
than 20% below what, a
INVESTMENT SECURITIES
V 509 olive:
street
St. Louis 1, Mo*
Louis Stock Exchange
Members St.
American Air Filter Co.
Common
Black Star Coal
Corp.
Common
Kentucky Stone Co.
5%
Preferred
BOND ^
mBANKERS
Incorporated
Floor, Kentucky Home Life Bldg.
1st
.
LOUISVILLE
few years
Bell Tele. LS 186
Long Distance 238-9
fared
reason
why we have had de¬
done
to
achieve
cautiously
it.
groping
We
our
are
now
way
to¬
much
and
better—farmers
fared
businesses
worse.
nature
—
and
Throughout
acts of
a mar¬
performed,
were
ent
maladjusted conditions, wo.uld
is
—
QUOTED
*A talk by Mr.
Gill before the
employment,
purchasing power
National
Association
of
Credit
Consequently,
Men, Atlantic City, N. J., May 17, and consumption.
1949.
lacking experience in the control
should
Union
Stock
Commerce
Exchange
Building
be
aim.
our
Higher
income would insure
real
closer ap¬
a
basic trend and a
contiguous hovering about equi¬
librium. Thus we employ the ad¬
proach
Established
the
to
inflationary forces. We need an
economy that is continuously on
edge—heading into little booms
and
little depressions in quick
succession, but
fairs
might
be
a
it
that
essential
is
state
of
af¬
economic
will find
called
equilibrium. I think
,T1
members
!
New
York
Stock
Exchange
|
New
York
Curb
Exchange
Cotton
Exchange
j.
_
York
New
Commodity
,
Exchange,
Board
Chicago
Inc.
Trade
of
New Orleans Cotton
Exchange
And other Exchanges
getting far
never
Such
either.
1856
H. Hentz & Co.
■:.;i\
justing power of deflationary and
into
branch offices
our
proceed without neces¬
can
sarily lowering real income. In
opinion, real income can rise
by use of the productive capacity
created in the last two years. This
we
maximum
to
N.
Y. Cotton
NEW
CHICAGO
Exchange Bldg.
YORK
4, N. Y.
DETROIT
PITTSBURGH
GENEVA, SWITZERLAND
do not merely want to
We
philosophy and technique of spec¬
ulation.
Speculation sometimes
does
the
speculator good, often
at the expense of others.
us
INVESTMENT
don't need forecasts
to raise or lower our
to
trim
penses,
CLEVELAND
our
SECURITIES
adjust
depression; we want to avoid
depression.
Adjusting to fore¬
casted
depression
employs the
to
We
New York
:
Cleveland
wires to
Direct
my
Incorporated
Broadway
Member
we
lower
Royal Bank of Scotland
Incorporated by Royal Charter 1727
HEAD
OFFICE—Edinburgh
Branches
throughout Scotland
LONDON OFFICES:
3
Bishopsgate, E. C. 2
8 West Smith field,
49
E. C, 1
Charing Cross, S. W. 1
Burlington Gardens, W. 1
64 New Bond
Street, W. 1
TOTAL ASSETS
£
155,175,898
Associated
Banks:
Glyn Mills & Co.
Williams 'Deacon's
Bank,
Ltd.
well
WM. J. MERICKA & CO.
150
to
We
structive effects upon production,
SOLD
drift
supported by workers because of expected tem¬
kno,w
that
we porary decline in demand.
In¬
cannot
afford
a
depression — stead what is needed is stimula¬
for political reasons, national and tion of production by increasing
international. We know that there consumption.
is need for many adjustments, es¬
How often have forecasts been
pecially of prices, downward. But in error? And would our actions
in the past rapid price deflation to
adjust to forecasted depression
has been catastrophic, having de¬ help
to
precipitate depression?
effort
reason.
ginal
—
The
growth.
ward it.
which, while suited to the exist¬
BOUGHT
prices
NY 1-1*5*
Birmingham, Ala.
Mobile, Ala.
occasionally to doses
inflation.
of
HAnovw 2-0700
New Orleans, La.-
we
unincorporated
some
Cleveland, Ohio
prices
might gain great momentum,
A .good example of groping is
We are learning and practicing
showed it could be.
reflec¬ supplied by my own industry. I the techniques of control of a free
tion of boom. The new records of have never known a six-months' enterprise
economy.
The terms
economic activity, on which the period in which we have made so "control"
and
"free" may seem
boom
concept
has been based, many small price adjustments— contradictory. As I use them here,
really involved a belt-tightening mostly downward—while at the I think they are mutually consis¬
process, in which personal con¬ same time restricting production, tent. It is generally accepted that
sumption was restrained in order without creating unemployment, there is no real freedom for the
to get ready for greater outputs in order to correct inventory ex¬ individual in the absence of com¬
of consumers' goods.
cesses.
The price changes have pliance with unversally applicable
Otherwise,
there
is
But obviously we had substan¬ in the main tended to stimulate restraints.
tial price inflation in 1948, with demand, which could be supplied simply license and chaos.
Even
its
associated burdensome mal¬ readily out of the reduced current so in free enterprise. The test of
adjustments. That is, the postwar production and inventory with¬ the suitability of the control is
price- rise
continued well into drawals. Note at the same time whether it maximizes production;
1948, even though the downward that the industry's output restric¬
Increased Production Needed'
turn
began towards the end of tions helped to lower the Federal
the year. Thus the average whole¬ Reserve Board's index of indus¬
Nearly everybody seeks shortsale price index for the year was trial production, > the downward term forecasts, especially if the
movement of which has been in¬ fashion is to predict depression.
more than 100% above its trend;
the cost of living, 55% above its terpreted by some as foreshadow¬ But are we sound in trying to
adjust our affairs to forecasts of
trend; average weekly wages in ing depression.
For several months our national depression
in advance of need
manufacturing 36% above trend.
resultant of deflationary and in¬ arising out of the pressures ol
The average real wages of the
Surely, there is no
latter group were only 11% higher flationary forces has been oscil¬ competition?
than in early 1941, instead of the lating u n c e r t a in 1 y back and advantage to the whole economy
forth. This
is in keeping with in a business forecast which leads
expected 22%.
Some other seg¬
dismiss
ments of the economy, however, the search for equilibrium. The individual businesses to
earlier,
the economy many
Terminal Tower Co.
of
movement
downward
that the
York Stock Exchange
St., New York 4, N. Y.
The stock market gave no
KENTUCKY.
2,
adjustment of prices from very
have resorted
time equilibrium means, and how im¬
indus¬ portant it is; and bf what must be
production was only 2^ %
above the year before; was more
:
of
high levels, and fearing
a
trial
STIX & Co.
well-ad¬
pressions. 1 I think the reason is
found in our ineptitude in making
adjustments of dislocations be¬
tween prices, wages, length of the
generally
adopted
work - week,
output, and other lesser factors
which are part of the capacityto-produce-and -consume equation.
In the past, with painful delay,
adjustments have been made, with
loss of production
and all that
goes with it through unemploy¬
ment.
But, - today, the business
community is in a much stronger
position than ever to make ad¬
justments quickly.
We have
clearer ideas of what economic
year—
—
a
ple
the
quarter
Trading Market for
in
•Why will there be no depression
First consider the sim¬
capita
the
tolerated
this year?
our
in
income
be
not
justed economy.
I
fourth quarter
of
Members New
25 Broad
offer the esti¬
RIGHTS
'
Steiner, Rouse & Co!
.
preceding
mate
3%% due 1959
Bought—Sold—Quoted
first of
statements,
Amer.Tel. & Tel.
Louisiana Securities
We had
the
■
but will be taking deeper breath¬
Concludes
and may
120 Broadway, New York
\
year,
producer and consumer; relation between willingness to work and net incentive; and
development in persons of strong desire for more goods and services. ,
New York Hanseatic
|
depression this
sumers' goods.
BOUGHT—SOLD—QUOTED
Net
no
"fumble" with the transition to reduced plant improvement and greater supply of con¬
nomic worth
4
BArclay 7-5660
The Atlantic Refining Co.
Petroleum
N. Y. State Eiec. & Gas
•
26, 1949
essential
or
loans,
to
or
$35
INVESTED in
full
a
year's
subscription to the Monday
and
Thursday issues of the
"Chronicle"
ideas
will
galore and
give
pay
you
liberal
dividends.
to tell
prices or
operating
ex¬
borrow or reduce
extend or diminish
Commercial &
25 Park
Financial
Place
Chronicle
New York 8,
REctor
N. Y.
2-9570
(Continued on page 43)
Public Utility
Since 1932
Specialists in
i
Firm
Industrial
VIRGINIA—WEST VIRGINIA
N. Q. B.
Trading Market:
FRESNILLO
Railroad
NORTH and SOUTH
M
CAROLINA
unicipal
COMPANY
OVER-THE-COUNTER
INDUSTRIAL STOCK INDEX
10-Year Performance of
Common
MUNICIPAL BONDS
35 Industrial Stocks
■F. W.-
CRAIGIE&CO.
RICHMOND,
Bell
VIRGINIA
System Teletype: RH 83 & 84
Telephone 3-9137
A.C. ALLYN*™ COMPANY
Incorporated
I
NEW YORK
BOOKLET
Specialists in Foreign Securities
CHICAGO
BOSTON
MINNEAPOLIS
PORTLAND, 1VIE.
OMAHA
PHILADELPHIA
KANSAS CITY
WATERLOO
MILWAUKEE
FLINT
ON
REQUEST
ZIPPIN & COMPANY
208
South La Salle
Tele.
RAndolph 6-4696
St., Chicago 4
•
Tel. CG 451
National Quotation Bureau
Incorporated
46 Front Street
New York 4, N. Y.
Volume
169
Number
4806
THE
COMMERCIAL
INDEX
European Recovery—Not So Fast!
inlhrop W. Aldrich
Possibilities— John
1).
Cover/
Cover
Gill
S
2
Wholesaling Rail Securities— llenry Octjen.
5
Gold
Base
and
Realistic
Surrounding
\ear of
Exchange Rates
a
Critical
Management in 1949—:Craig S. Bnrlleu...
11
Reality—Jwmes JJ. Moonay.,
17
Business Is Celling Its Second Wind—Leonard A. Drake
13
Security- -Roger W. Ilubson
18
Why Private Insurance Is Better
'!
G.
.
(Economic)
Say Regarding NASD and Its Policies..
Situation
Is
Good,"
Says
Commerce
Secretary
Deplores Depression Forebodings
Canada Requires
to
Sterling Devaluation
12
Benjamin Fair lest* Is Optimistic
Business Outlook..............
on
Ralph Ilendershot Tfits SEC- Dealer Examinations.......,
Bond
Drive
i........
Benjamin Graham
Charles Fleetwood Warns
C. S.
.
.
.
,
14
/
,...,
on
17
18
Savings
................7. .7........
.
Conduct Seminar
to
Aid
to
7
.
18
Investment Technician,.J9
Mortgage Lenders
Over-Optimism.....
on
20
Young, President of Chicago Federal Reserve Bank, Optimistic
Business
on
Tax Institute,
FIG
Outlook....
Discuss
to
Banks Place
20
Local Finance.......
20
I M-en t teres.
20
George Bauer Lauds Swiss Circulation
of Cold
Coins...
21
last week. In
some
Balanciug Ecoiiomy
21
indicated
the ballot and in-other
foresees "(old Rubber' Giving 75.000-Mile Automobile
Tires......
22
Deposits in New York State Savings Banks Increased
22
Alfred P. Sloan Warns
Against Interferences
in
in
April......
Two-Year Comparison of Paper Companies Issued/.
SEC Counsel Rules on ."When
Reports
Home Mortgage
Standard
&
Debt
Poor.t
Passes $33 Billion
.
We
It
29
After
Man's
Canadian
Set urilie*
eral
V,
public
contributing
are
Puget Sound Pr. & Lt.
Petroleum Ht. & Pr.
Lithium
SIEGEL & CO.
39
YORK
preclude
our
Utah Power
Current
on
6.7%
request
EDWARD L. BURTON
& COMPANY
Established 1899
Bell
Teletype SU 464
160 S. Main St.
Salt Lake City 1
2
the
of
expense
SEC,
LAMB0RN & CO., Inc.
;
9 9
the
but
WALL
STREET
NEW YORK 5, N. Y.
SUGAR
PHOENIX, ARIZ.
able.
Many dealer members share this expression.*
8
Raw—Refined—Liquid
6
SMALL
Slump"
a
The NASD
From Washington Ahead of the News—Carlisle
Bergeron
7.,
"Indications of Business Activity
Mutual
NSTA
40
1 uuds
Observations -7L
Our
Our
Reporter
i'S
on
Utility
Saltan urn's Corner
the NASD has to spend is for just an¬
trade
many
already.
the country is afflicted with ton
help of these trade associations spend
;..
You
.
'
12
....';
41
association.
I
think
The '"hired"
most of their time "mending their, fences" with the members, and
particularly the directors who don't really care much about the
whole thing anyhow.
This goes for the American Medical Ass'n,
NAM and all the rest of them.
This is just my opinion for what it
is worth.*
1
YOU
•
The Stale of Trade and Industry,
and
PASADENA, CALIF.
would
The $500,000 per year which
14
Securities Now in Registration.
Washington
/
prefer to deal direct with the SEC.
Let them do the
Auditing, etc. They do it anyhow and have been most reasonable.
20
,.
(Walter
ANGELES/CALIF.
"Gestapo" in here.*
other
;
DIgby 4-2727
•
,46
.....
"Tomorrow's Market
have
we
2i
...
Securities.
Securities
Why should
17
Governments.
'Prospective Security Offerings.
Securities
LOS
Cannot afford the
I
Reporter's Report.......
Railroad
ignored the fact that'costs of distribution
29
...
Wilfred May.
Exports—Imports—Futures
TOWN
be so limited when
other business has increased their price level?*
every
14
About Banks and Bankers
Public
has
CALIFORNIA
soared and volume has dropped;
10
Notes
News
5
Whyte Says)........../.
38
.
NASD would not be needed
giving value
io
''Not available this week.
Published
The
Twice
FINANCIAL
*
Weekly
I
Drapersr
and,
COMMERCIAL
and
c/o
Gardens,
Edwards
Copyright
Reg. U.
WILLIAM
B.
S.
Patent Office
DANA
New York 8,
to
2-9570
KERBERT D. SEIBERT,
WILLIAM
WILLIAM
DANA
received.
were
There is
all dealers fair
and honest in
considerable evidence that
from their interest
many
D.
(general news
1
-
ad¬
vertising issue) and every Monday (com¬
plete statistical issue — market quotation
records,
•tate
corporation
and
Other
Chicago
city
111.
bank
135
S.
(Telephone:
Canada,
Other
1
Salle
Stale
office
of
Act
$25.00
St.,
0613;;
and
per
Monthly
$25.00
per
Note—On
March
rate
of
per
postage
made
in
York
funds.
leaders
towns
and
in
news,
11,000
villages
New York Times. That
to
turn
The
means
advertising is read by
interested
audience
all
U. S. with money to
over
an
the
invest. And
airplane delivery of The Times
year.
Spencer Trask & Co.
Members
25
New
Broad
extra.)
York Stock Exchange
Street, New York 4
HAnover
50
Congress Street, Boston 8
Hubbard 2-8200
Teletype—NY 1-5
-
Chicago
-
Glens Falls
it
on
cation in
-
Sljt
'All
for for¬
Albany
puts
sale the day of publi¬
more
than
100
key cities.
Members New York Curb Exchange
2-4300
fluctuations In
"exchange, remittances
New
interested in offerings of
PREFERRED STOCKS
year.
—
the
are
S.
Record—Monthly,
(Foreign postage extra.)
Earnings Record
Monthly,
of
cities,
High Grade Public Utility and Industrial
Quotation
(Foreign
34)
your
Publications
account
page
in
eign subscriptions and advertisements must
be
We
of
year.
year.
on
New
year:
they want all the
community
regularly and confidently
Febru¬
at
of
per
$38.00
per
(Continued
Eng-
Rates
$35.00
Countries, $42.00
Bank
the
La
the
Union
clearings,
news,.etc.).
Offices:
3,
news',
under
Other
and
post
Pan-American
RIGGS, Business Manager
Thursday
the
anonymously.
Dana
second-class matter
at
Dominion
President
"
C.,
B.
Subscriptions in United States, U.
Possessions, Territories' and Members
Thursday, May 26, 1949
Every
as
1942,
Y.,
N.
Subscription
Editor & Publisher
+■
E.
Commented
'
8, 1879.
N. Y.
9576
SEIBERT,
25,
York.
COMPANY, Publishers
Park Place,
REctor
25
ary
Smith,
by William
Company
CHRONICLE
Reentered
7.7
London,
&
1949
PROFIT
PASADENA, CALIF.
Because
-
Light
Yield
Information
seek¬
^The NASD needs revamping and its value generally is question¬
16
Eiti'/ig—'"Britain Fears
Dlgby 4-2370
Teletype NY 1-1942
CITY
the
to
Broadway, N. Y. 6
35
Dealer-Broker—-Investment Recommendations
Corp.
only is supporting the NASD, without benefit of
business promotion help from the NASD.
In a business as de¬
pressed as ours, there is no need, nor room for two regulatory bodies.*
12
...
Goniing Events in the Investment Field...
,
Southern Production
any
16
.
7.
NEW YORK
WHitehall 4-6551
securities business
Cover
Bookshelf
WALL STREET,
Telephone:
was
;In our opinion, the NASD has merely duplicated the SEC activi¬
ties, and has, to our knowledge, rarely taken any steps without con¬
sulting the SEC.
As taxpayers, the securities business and the gen¬
(Editorial)
Business
99
I
..
.
circumstances
as
NEW
Present
Rank and Insurance Stocks
"
securities
cases
ing individual permission to do otherwise.
7
See
the
of the comment
source
fairness not to reveal it
Regular Features
As
instances, the
27
..
Mark
Study Forecasts Good Business
Adjustment
on
22
Profits of Manufacturing Corporations in 1948.
on
Obsolete Securities Dept.
they were made
anonymously. Those in the latter category are distinguishec
by the symbol (*) appearing at the end of the statement
jWhere the firm name appeared, we consider it a matter of
22
Issued"-Trading -
SEC
of
dump it at
dealers
poll conducted by the CHRONICLE
the true, sentiments
u
'
- -
"
13
William McC. Martin Favors Banks
Dealing in World Bank hsutss..
N'VSF Appoints Committee to Study
Cutting Commissions.....
Manipulated National Currency Elicits Refusal
ascertain
from
and
against the NASD by
the securities industry.
Other policies were likewise con¬
demned as being equally distasteful and harmful by
heavy
majorities of the ballots received via the poll.
Among them is the regulation prohibiting members
from granting discounts to nonmembers.
The effect here,
as
many dealers point out, is to make membership an abso¬
lute necessity in order to be on a
par with merchants in
other lines of business who, solely by virtue of their status,
are entitled to the
benefits, including wholesale prices, ac
cruirig to the entrepreneur. Thus, the dealers argue, the
contention that
membership is the NASD is voluntary is
completely fallacious.
It is with respect to this and other aspects of the situa¬
tion that the
accompanying statements pertain and. as al
ready noted, the initial ones were carried in these columns
11
Exports
to
published
the counts of the indictment leveled
9
John A. Marsh Savs Increase ol British
order
received
Right Out
of IVIy Hair
small business enterprises. This doctrine of
price fixing, as
Indicated by the results of our poll, represents only one of
3
Sawyer
1 rank F. Allen
Stock
opinions of dealers as to the impact of the NASD's
f'5% mark-up" philosophy on I the market for securities of
Insurance
19
to
I'm Gonna Wash That
with the
Government
Copies
Wiiat Other Dealers Have
"Our
than
,
,
.
...
AND COMPANY
industry regarding the NASD. (The complete results of the
poll, incidentally, were given in the editorial, "Mandate to
Congress," which appeared on the cover page of the May 19 ACTIVE MARKETS
issue.) As we pointed out, such statements were in addition
$o those carried in earlier issues-which dealt exclusively
9
...
Investors—Earle C. King
Tlib Thousand Dollar Car—A Potential
—
in
the
we
8
Fumbling- -Francis Adams Truslow......
to
considerable number of comments
in connection with
7
Capital Markets—Emit Schram
Getting Financial Data Over
Social
It will be recalled that in last week's issue
Schenectady
-
Worcester
3
LicHifnsTEin
-
membership is "voluntary" assailed by dealers.
6
Bank Investment Portfolio
Problems
A
Healthy—11. E. Lnedicke
Philip Cor they
—
Say
Majority of comments express belief that membership in NASD, rather than being helpful, actually
is an impediment and needless expense. Claim that
4
The E eonoinie Outlook Not
I
4
Optimistic. Factors in the Business Outlook—Ariio II. Johnson......
Business Needs
(2263)
Regarding NASD and Its Policies
Cover
Some Deterioration Rut No
Depression—Joseph L. Snider
What's "Normal"?—Allen- M. Bernstein.;
Future Business
CHRONICLE
Page
Western
11
FINANCIAL
What Other Dealers Have to
Articles and News
—
&
tmrjs
Dork ^
the: News That's
Fit to Print"
COMMERCIAL
THE
(2264)
4
FINANCIAL
&
Optimistic Factors in
Wholesaling Rail Securities
•
By HENRY
OETJEN*
The Business Outlook
McGinnis, Bampton & Sell&er
Stock Exchange
Partner,
Thursday, May 26, 1949
CHRONICLE
Members, New York
specialist stresses importance
reorganized railroads.
♦
J. Walter Thompson
security
namely,1 and study them and get a very
railroad
seadequate working knowledge as
My
curities.
for se-
reason
j far as finances, management
production are concerned. .
The
I think the best way to do that,
I did in the railroad field, is
first
analyze
your
industry.
was
There are,
w a s j
purely acci-1
dental.
iirms
I
associated
as
as
Class I rails.
I stated before, 132
About 41 of them do
rail trans¬
of the total
with,
which
about 85%
were
only
portation business and
in
91
num¬
23
in
ber
true and
little over a million
that are of no
interest to us, because you can't
wholesale them, to begin with.
had the
background of
Oetjen
i 1
r a
securities
as
their prime
merchandise
to
sell.
r o a
d
piece of
serves.
was
think the first
I
and
im¬
most
visit, I always make it a point
to
drop in and visit with the
sales manager or a senior partner
of some firm with whom my firm
myself has not done business,
creating
or
with the idea of at least
haps
the
on
worthwhile
some
gram.
like
would
•I
first
give
to
first
merchandise
the board. Con¬
centrating on the 41 roads should
round
out your knowledge and
that
at
letter.
a
if
Now, that may sound
hard proposition.
It isn't,
the
If
like to work.
you
to work to
job
begin with,
be
by
necessary
can
enable
Take
knowledge
I
to cope with almost any
road
industry.
gentlemen have
from your previous
now
You will say
this
no
but
subject
up
•
for any one take the place of it.
man to
get a fundamental, basic
In order to do a wholesaling
knowledge of all 132 rails. Well, job, it is necessary that you have
frankly, it is, but it isn't necessary an audience to present your case
to do. that.
I don't think it, is to.
Naturally, this audience must
necessary to do that in the public be made up of salesmen of an
that it is pretty hard
utility industry, the chemical industry
the textile industry, or
or
industry where
any
have
you
a
large number of separate and dis¬
tinct
can
entities involved.
take
a
But you
certain number of the
!
the
necessary
*A
of
lecture
two, the
course
on
by Mr. Oetjen, one
13th of
you
to go in cold to such a firm
and
present your story.
sponsored
by
have
cess
will be
1949.
marked degree of suc¬
any
the
at
If you
start,
more
your
easily made
contacts
as
time
•
.
•
"
_«5»;
per
share
situated in
without
but
coming out to
people, agreed to it,
great degree of
any
enthusiasm.
This,
must re¬
you
first attempt and
was my
unknown
was
of
to
them.
How¬
I decided to make the trip
arrived at their office early
morning.
in
partner
A
securities
rail
on
three hours.
over
salesmen
better
the
that
Several
in
came
after lunch and started in all over
again.
seemed
to
I
The
in
whether
or
decided
convinced
what I
next
that at
talking
not I had enough sales
the .sales
to
was
they
only doubt that re¬
their
minds
was
present
to
to
some
be
knew
mained
afternoon
late
By
the
New York 5
is
and
this
They, being very nice
and courteous
form
60 Wall Street
6%
surplus income avail¬
spending or
chance
day
the
it
in
force.
it
speech
It
was
anyhow
salesmen
so
and
saving
as
great as
at the rate of over $103.0
compared to $26.5 bil¬
in 1940. This is the amount
prewar
billion
lion
of
now
available
money
over
required to
of liv¬
what would be
above
maintain
1940
a
and
standard
ing for the broad basic-items of
food, clothing and shelter. This is
available at the discretion of the
for raising
consumer
of
living
over
the standard
(4) The backlog of accumulated
savings of individuals totalling
over
billion
$200
1948 is
level
over
and
the end
at
three times the
has
purchasing
real
a
of
1940
today's prices about
double the purchasing power of
the savings that existed in 1940.
power
my
talk.
and listened
at
(5) Consumer debt is unusually
in relation to savings or to
low
disposable income. Debt could be
increased 100% without exceeding
the 1940 ratio to savings—it could
be increased
over
60% without
exceeding the 1940
posable income.
I am-very happy to
(Continued
on
page
26)
before
address
the
Association,
than in
ratio to dis¬
Mr. Johnson
Marketing
by
New
Chapter,
19, 1949.
York
New York City, May
non-agricul¬
earnings in
1947 were double the pre¬
rate and 5% higher than the
war
period of 1948.
same
All
indicates
this
of
that
we
high level of purchasing
power from current income plus
potentially powerful increments
to purchasing power through the
huge backlog of savings and the
low ratio of consumer debt if con¬
sumers should choose to utilize it
have
in
a
changing their standard of liv¬
ing.
V
spite of this increased ability
In
people have been hesitant
because of apparent lack of confi¬
dence in the future, fear of de¬
to buy,
resistance
pression,
in
of
anticipation
and
to prices or
lower prices,
perhaps because business men
are not doing enough
themselves
to
into
convert purchasing power
The ratio of advertis¬
ing expenditures to national in¬
purchases.
for example, was only 1,8%
1948 whereas during
come,
for the year
growth
the 44 years of our prewar
to
1890
from
ratio
the
1934
of
expenditures to na¬
tional income ranged between 3%
advertising
and 4%.
The extent to which the
public
buying is indi¬
cated by the fact that during the
first quarter of 1949 savings were
is holding back on
estimated to be at the rate of $21
billion
a
of
rate
period
almost double the
billion for the same
year
ago.
Savings in
only $3.7 billion.
year or
$11
a
1940 were
Or, to put it another way, dur¬
ing the first quarter of this year
people saved 10.7% of their dis¬
posable income after taxes as con¬
trasted
with only 6.2%
a year
and 4.9% in 1940.
ago
In
disregarding
facts
these
on
purchasing power we have done a
fairly complete job of talking
ourselves into a depression.
Ac¬
cording
to
the "Fortune" survey
(May, 1949) over 60% of the pub¬
lic
is
now
depression
expecting
and
a
period of
increased
unem¬
ployment.
Unemployment
American
1940.
pur¬
Average
industries in the first-quar¬
1940.
customers, totaling about 40
in number, sat down
to
four times
is
em¬
are
non-agricultural
now
of
ter
civilians
more
in
weekly
of
in
than
higher
The
*An
HAnover 2-0038
level
(2) Real purchasing power after
Middle West, and
the
stated that I was
visit them.
ability
STEWART J. LEE & CO.
1940
quality.
about.
37l/2C
the
times
(first-quarter of 1948).
(3)
least
Price
first
$75.7 billion and was up 7% over
the
same
period of last year
Club, Box
.
Common Stock
the
in
taxes
billion was over two and
one-half
charge of sales took me into a pri¬
vate office and subjected me to a
•
after
able for discretionary
lasted
°.
Boston
sity.
grilling
.
personal
disposable
Total
of $197
Club and Boston Univer¬
one
•
better
for
quarter of 1949 at an annual rate
be
being sponsored
by the Boston Investment
and
*
advantage
take
to
opportunities
the
first-quarter of 1948. This reflects
the increased ability of consumers
to
buy goods and
services as
measured in units or improved
ever;
U. S. OIL & GAS CORP.
move
the
(1)
page, are
I
800,000 Shares
of some facts
purchasing power
summary
prices is 53% higher than in 1940
member,
New Issue
suits
tural
of which appears on
I
in 1941 and over
over
$3,OQ0
compared to 16% in 1941.
(7) Employment in the firstquarter of 1949 was at an all time
peak for this time of year and
averaged 204,000 greater than the
same
period of 1948. About 14
incomes
have
50%
ployed
a
$5,000 after taxes com¬
pared with 4%
million
income
for
Salesman¬
goods and services that should
standards of
lectures, the most recent
first start this
type of selling, it is necessary
for
full correction for both taxes and
their
series in a
a
Investment
Boston Uni¬
versity and the Boston Investment
Club, Boston,
Mass.,
April 26,
ship,
When you
clients.
to
oppor-
nit y
in creased
the order of the Club. The
that particular firm
is interesting and
that it has enough possible appre¬
ciation and return to warrant his
it
u
the
living.
1604, Boston 5, Mass., and
checks made payable to
that your story
presenting
should
the
to
Investment
public.
It is therefore
to convince the sales
salesmen
companies in that particular field
addressed
of
manager
t
of
copies, $2
Orders
each.
investment firm who do business
with
real
Johnson
H.
Amo
families
in the CHRON¬
each; 11 to 50 copies, $1.75
each; 51 or more, $1.50
government, political
divine inspiration can
or
on
point to the possibility of
higher standards of living for the
American people and to higher
demands for goods and services as
being published
are
ICLE: 1 to 10
to
one,
groups
to
that
Salesmanship
vestment
serially
on
get
work
about consumer
all of the lectures on In¬
that
tious
comes over
can
Here is
prices for copies of a bro¬
you
lot
a
we
chasing power.
chure which will contain
necessary to be a successful sales¬
man.
I do not like to be repeti¬
rail¬
in the
the
There are
Commission.
realize
heard
industry 132 Class I railroads, all
regulated by the Interstate Com¬
merce
to go before a group
and discuss your sub¬
speakers regarding the hard work
example
an
as
you
21% of the families now have in¬
averted
proven productivity and our rec¬
ord high level of consumer pur¬
following schedule of
and eventually
groups
living made possible by our war-
announced the
has
income
heavily
result from increased
The Boston Investment
Club
by
groups. Even after deducting Fed¬
eral
taxes
which
apply
more
danger
inflation
ther
for
getting ject intelligently and lucidly.
studying and
situation that will arise.
j
enjoyable
be
of salesmen
you can
the basic fundamental
the
p r e s
and
potential upward surge in demand
Prices (or Reprints
families
of
tribution
on
the upper income
about 16 million families
most have moved up above the level
sing of $3,000 after taxes from the
of fur¬ $1,000 Jo $3,000 level in 1941. Over
corrected
markets—the
to obtain the knowledge
necessary
like
do
you
price
mala djust-ments
partly
done
to
satis¬
mands
fied,
1 wrote them
happened
They
level.
over present
.
sales
had
time
one
dormant account.
a
going into the selling of a permit you to talk with authority
particular industry, you should regarding them.
It is something
try to prime yourself to be one that you will only get if you like
of the top men in that industry the industry and enjoy doing the
work.
The extra curricular work
so far as knowledge of it is con¬
a
,
.
my
are
like
.
,
rather extensive business in
a
the others go by
portant thing for you gentlemen
to remember is that if any of you
cerned.
.
the sales¬
We had an account in our
men.,
office
be doubled
■
to
then
and
manager
provide continuing and expanded market, and
of
my
you
the
to
face
the
-
selling
in
experience
power:
some
growing pessimism and talk of depression and
unemployment let's take a realistic look at some basic facts that
make this a period of great opportunity.
Now with the long awaited buyers' market at hand, the pipe
lines .filled,^—
—
——
:—
most
de¬
(6) There have been some really
le. r r e $ de¬ startling shifts upward, in the dis¬
In
pro-
-
despite
concludes U. S. standard of living can
,
begin with and per¬
next visit sitting
down with the salesmen and dis¬
interest to
an
persons,
Stresses demand must be created by advertising
to
means
rail
It had, through negli¬
It is therefore rather obvious securities.
that you should interest yourself gence and lack of follow-up, de¬
in the 41 larger situations and let veloped into what might be called
aroused regard¬
ing that particular subject and 1
attempted
to
learn
something
about it.
I
interest
my
should be financed locally
territory which the railroad
They
in tne
Naturally,
year gross
a
and other
purchasing
consumer
of.employed
relation to income.
•
country to the various cities that
the other cussing
scattered smaller railroads,
are
dollars
t
I
each doing a
years,
•
and
Analyze Y,mr Industry.
j
part icular
field
Henry
(1) increasing
unemployment; (2)
improved real purchasing power of all groups; (3) surplus money
for discretionary spending is four times that of 1940; (4) backlog
of savings is three times greater; and (5) consumer debt is low in
number
I have found this to be
in my travels around the
goes on.
,
L;
garding business and employment situation, presents as basis for
high and increasing
little bit about my background, so , you
will have some idea of how I got into this particular type of business. I have always been
in the bond brokerage business and after my apprenticeship, specialized in one type of
ihree
Advertising executive, contending there should be no pessimism re-
i
1
^
Research,
Company, New York
j
thing I should tell you is a
I believe the first
JOHNSON*
By ARNO H.
Vice-President and Director of Media and
of knowledge and proper analysis in wholesaling of secur¬
ities, and cites illustrations related to railroad industry. Says necessary information required for whole¬
saling should be obtained directly from primary sources, and should be presented in a manner which
highlights specific information you are dealing with. Gives points in evaluating new securities of
Rail securities
There
the
the
has
Over-Emphasized
been
a
tendency
in
last few months to emphasize
rise
in
unemployment
(Continued
on page
with-
36)
Volume
169
Number 4806
Steel
iVLiUi
The Economic Outlook Not So
Production
k
Carloadings
^ 4
Commodity FVice Index
Food Price
Index
Business Failures
The picture of total industrial production last week
preceding lyeeks, declining slightly but showing
appreciable variation from that of the
corresponding period in 1948.
previous, while initial claims
in the
same
period
rose
when your program chairman asked me to polish my crystal ball and
bring it along to the Credit Congress at Atlantic City, I felt rather safe in accepting be¬
cause of the then widely held belief that by mid-May the business outlook would be much
clearer than
w
by 10%.
sjs
General
t
q
a
months
Motors
w
a
Corp. on Monday of this week adhered to the
formula it set in
February by again reducing auto and truck prices
in keeping
,y/ith a downward adjustment in the cost-of-living allow¬
ance to be paid its
employees. The reductions range from $10 on all
Ap ril
Chevrolet
the largest Cadillac cars, aver¬
the corporation's entire line.
Its wage formula
fication:
price index of the Bureau of Labor Statis¬
slightly between March 15 and April 15, but
o i
g o
.
aging less than 1 %
is linked to the
tics.
This
on
supposed to
bring
the
rose
clari¬
needed
on
one
Obviously, I
not
o u
myself.
enough to offset a sizable drop since January. As a consequence
rates at General Motors plants will go down one cent an houi
in the three months ending
Aug, 31. They were cut two cents an
hour in February on the basis of the January index. Thus, the three-
V
hourly wage boost granted its workers last July; will be wiped
put.; However, they will receive a three-cent increase on May 29
were
nearly
d
e
monstrated
sagging, the actual rise
—
in terms of volume
—
year
business, you must con¬
stantly keep up to date on busi¬
mated?
warning
of
word
other
One
than
rather
exact
pre¬
appropriate here.
constant necessity of
seems
exercised not to
must be
care
misled by
Credit Is Affected
How
pitfall in business
forecasting today is the acceptance
and repetition of widely circulated
With these
The greatest
preliminaries out of
economic
the way, what about the
picture
be
generalizations.
Greatest Pitfall in Forecasting
it affects credit today?
as
about
production, sales,
earnings, working
gospel truth. Most of them are costs, prices,
half-truths at best and, therefore capital, inventories, and the avail¬
cliches
economic
as
Let
give
me
a
you
are
to illustrate this point:
particularly for labor,
inflexible.
costs
duction
credit?
l
opinion today is sharp¬
ly divided into three different
camps.
There is extreme pessi¬
ability of
few exam¬
(1) We are told that prices can't
come down much because produc¬
costs,
What
if they were
particularly dangerous.
tion
your
ernment should not be underesti-
There is
a
checking;
one's specific
business decisions
such
crystallizations against the background of general
taken
as
direction economic trends. But in doing this
dictions.
be¬
fore you is a particularly tough
assignment because, in the course
of
be
should
ples
as
discuss business trends
To
Who says that pro¬
always
determine
Business
mism in
one
and
camp
an
amaz¬
ing degree of optimism on the
opposite side. In the middle, we
have a large sector of business¬
and economists who
men
will¬
are
And who says that costs
prices?
ing to say only that the situation
today is in such a precarious bal¬
ness developments.
(2) We are told that inventories ance that the pendulum can easily
That is why I am not going to
.are
nothing to worry about be¬ swing in either direction.
bore you with a long recital of
cause the ratio of stocks to sales
They usually add that either the
current
business
data.
I won't
on
record.
The
immediate future
long-range.
was
though
respect to
well as
economists—with
and
the
10%.
hit $13,500,000,000, making 1949 the third largest export
big question in the analysts' picture is prices, the article
"If
notes.
wide
t h e
lower, the United States export business for variety of opinions which cur¬
exceed that of 1948 judging from the increase in rently exist among business men
The publication says that government analysts
expect the present
rate to continue all year with an outside
possibility that the total
may
be
are
exports during the first quarter, according to "Business Week."
United States exports during the first
quarter ran at an annual
Tate of $13,100,000,000 or 4% ahead of last
year. However, because
prices
today
readily
Luedicke
E.
H.
Dr.
by
Although prices
not
can
as
"annual wage improvement" provision.
this year should
The
is
easier
cent
an
tsmarted
task
his projections in terms of
markers
wage
under
the
or
way
consumer
index
w as
express
i such accepted and widely used
| yardsticks as the Federal Reserve
Board index of industrial produc¬
tion and the Bureau of Labor in¬
dex of wholesale prices — even
other.
trucks to $40
and
cars
"Journal of Commerce"
Two months ago
As to the employment
situation, the Bureau of Employment Se¬
curity reporting for the week ended May 7, stated that total claims
for unemployment insurance fell
1% from the postwar peak of thf
week
Healthy
;
bankruptcies.
likened
was
\
"we are in a healthy readjustment" is hard to swallow, finds it ex¬
tremely difficult to go along with the Washington formula that "we are in a process or healthy dis¬
inflation." Says there is a cyclical downward trend which could reduce production to 20% below
postwar peak by end of year. Holds present high purchasing power overrated, and contends substantial
reductions in heavy goods output will cause secondary waves of adjustments in most non-durable
products. Looks for government anti-deflation policy, and sees no likelihood of heavy
very much to that of
no
LUEDICKE*
Dr. Luedicke, asserting phrase
Auto Production
Industry
By H. E.
Executive Editor, New York
Retail Trade
5
(2265)
CHRONICLE
FINANCIAL
&
Electric Output
Staie of Trade
and
COMMERCIAL
THE
can't
come
down?
they crack, a lot of foreign buyers might hold off purchases
hope of picking up goods at still lower prices. Then there
still is about the same as prewar.
no telling where our 1949 exports would wind
even
group them into favorable
up."
That may be so but isn't it true
However, the chances are against a crackup since this year's ex¬ and unfavorable factors.,
that
inventory positions) always
ports have some solid stuff behind them. Besides the big spending
Not that it is without value to
look best just before they turn
program for foreign aid, the United States is now importing goods present the contradictory forces
sour? And that can happen over¬
at a $7,200,000,000 annual rate, a new peak. The article
explains that working in the economy at any
night.
*
this means spreading Yankee dollars throughout the world—into
particular time in such a way but
(3) We are told by some econ¬
I
Asia, Africa, Latin America and Canada as well as Europe.
myself always feel rather let
omists that nothing can go wrong
"And these dollars are coming right back to the U. S. to
buy down when presentations of the
our goods,"
favorable
and
the
unfavorable this time because the Administra¬
the article adds.
tion won't let it happen. We know
factors end up with nothing more
that the Administration will not
While business failures continued to increase in April, the rate than the advice to proceed cau¬ stand idly by when the decline
of increase dropped to 3% from 24% in the preceding month.
At tiously; to wait and see before
becomes more pronounced.
But
378, April failures were*twice as numerous as a year ago. But they you jump; or, in a little more
don't know as yet when the
were considerably below the comparable
prewar month in 1940 when colorful language, to play them
Administration will act; how much
close to your vest. I am sure, you
1,291 businesses failed.
money it will spend on its efforts
The rate of failure per 10,000 concerns in
business, as indicated must feel the same way about
to reverse the deflationary trend;
by Dun's Failure Index, rose to 35 in April. This index projects this.
and what specific forms such gov¬
Similarly, you must be sick and
monthly failures to an annual basis and is adjusted for seasonal
tired by now of the constant repe¬ ernment intervention will take.
variations.
in the
Would be
months
next six
will
or
the next year
bring the answer to the ques¬
tion of whether
or
not
econ¬
our
from the postwar
inflationary boOm into a period of
sustained high level activity at a
lower price level without an in¬
tervening recession of consider¬
able depth.
omy
pass
can
Each
of
these
spokesmen
boasts
whose
command respect.
Yet, ob¬
important
opinions
^
tition
While the liabilities involved in April failures fell to
$31,945,000
they were twice as large as a year ago. In
fact, casualties this April had heavier liabilities than in any other
April since 1935.
Failures increased slighily in April in
most sections of the
the high level of government
expenditures;
that the
present
business decline is really, a bless¬
of
promotional efforts of many retailers were helped by favor¬
many parts of the nation last. week.
Total dollar
retail purchases continued at a high level in the week
buying slightly less than in the similar week last
The interest in
seasonal merchandise continued
Wholesale volume
too,
was
sustained
near
to
be
year.
The
same
available
to
economic statistics
all.
economic information
confidential
can
The
one
about the
adjustment"
previous week with dollar volume of wholesale commitments very
moderately below that of the corresponding week in 1948. Collec¬
is
nature.
today is of a
Then, how
expert opinion be so divided?
The obvious explanation is
that
attach dif¬
weight and significance to
government intervention will save individual factors in the presentus from a
serious recession. But day picture; often over-emphasiz¬
Other
just
isn't
the
as
economists
are
arguing
heatedly that no amount of
there
ample
evidence
these different experts
ferent
that ing
economic power of the Gov-
one
special aspect of the situa-
(Continued on page 14)
"healthy re¬
particularly
hard
to swallow. With
people going ou
of business to the right and 16ft
months ago
of
sections.
you,
it is all too obvious that
of healthy readjustment
painful for many of us.
tn iact, j.or tar too many.
; Vj
Let the politicians in Washing¬
this type
STEEL OUTPUT IN CURRENT WEEK SET FOR SIXTH STRAIGHT
WEEK
Factors
OF
DECLINE
MARKING LOWEST
LEVEL
OF
is mighty
194S
confusing and irritating to some people in the steel
A placid or wishful thinking attitude on the out¬
look does not jibe with the facts, according to "The Iron Age,'
national inetahvorking weekly.
Current output and backlogs are
are
market this week.
ton
argue
about the proper term
for the current business decline—
a recession or merely
good for July at least, but beyond that point the situation is taking disinflation: what you are inter¬
on a pattern which is more and more likened to that of 1937-38 when
ested
in—end that can
be
ex¬
orders dried up overnight and customers went on a hand-to-mouth pressed in words of one syllable—
buying slowdown.
is how far the drop will go and
There is no longer any doubt that steel consumers are in the
how long it will last.
midst of a serious paring down of inventories. Some users, stater
It is not enough to let it go with
the trade magazine, started to do this some time ago, but the great 'such statements as uiat the reces¬
majority are now in the process. Many in the steel industry feel, sion will not be "dee^" or that i+
however, that it is not safe for customers to let their stocks get so won't be protracted. How deep is
whether it is
that the.y would be caught short in case an upswing develops
general metalworking business.
\r
' j
A
lot of steel users have been carrying large supplies and
have been buying on a 6*0 day basis but all this is changing rapidly.
The reason is simple, according to "The Iron Age." Inventory looms
low
deep? And what is
in
cession"? A decline of
moderate "re¬
perhaps 10%
year's peak?
Or 15%?
Or maybe some would even call
a
20% drop moderate. I do be
f-om
large or small depending cn the size of incoming orders for finished
manufactured items. It is also affected by the flow of steel from the
steel mill. This week many steel consumers are finding orders for
neve
?n
and
further,
steel
orders
placed
some
time
ago
are
rolling
plants on time.
on page
39) 1 v
"\
he
11
an
economist accepts
should
on
be
business
willing
to
INVESTMENT
Members New York Stock
*An
address
tional
by
Dr.
INVESTMENT SECURITIES
BONDS, STOCKS, COMMODITIES
Luedicke
Conference of the Na¬
Association of Credit
Atlantic
BANKERS
Exchange and Other Leading Exchanges
UNDERWRITERS AND DISTRIBUTORS OF
BROKERS OF
before the
into
.
(Continued
that
invitation to cneak
trends,
their products continuing to fall off plus the fact that their inventory
reduction program is not keeping pace v/ith the drop in new business
a
lPct
Men,
City, N. J., May 18, 1949.
are
Very little basic
disinflation.
high.
the high level of the
tions were slightly more prompt, however, than a few
cannot all be right.
viously they
ing in disguise; that we are in
nothing more than a "healthy"
of
with shoppers
in many
no
1920; that no "deep" recession is
store;
that nothing can go
seriously wrong this time because
able weather in
volume
as that
repetition of
statements
be
can
in
country.
The
such
of
there
from the March high,
r
<
.
names
Privote Wires
•
Home Office:
Atlanta
•
Phone LD-159
(2266)
(j
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
Business Needs Gold Base
Britain Fears
_f
:■
Dr. Einzig reports confidence in avoiding
;
Coty Inc.
experts
\
,
now
Mr.
recent decline in
Britain's
Cortney, representing NAM before the United Nations, terms international gold standard indispens¬
convertibility, multilateral trade, and high productive employment in free society. Maintains
balancing of budgets together with reduction of g mrnment expenditure necessary for monetary order.
w
'which
vitally interested in the problem of main¬
free society. There is apparently no
Other countries, like Great Britain and
planned
a
<J>
—'
have
It is natural that each and every
socialistic
country should be concerned with
problems particular to itself.
the
econ¬
British exports and
for
drive
planning
ployment.
To
omists
relied
planning with requirements of in ;
national ^cooperation requires that
each
sources
economies
for the effects
so
avoid
to
as
times.
It
re¬
mains
to
be
whether
seen
other countries
on
taining a high level of productive
employment. All countries should
be strongly advised to seek an¬
swers to their particular national
all
at
country should have regard
its domestic policies for main¬
of
unemploy¬
ment
submit, however, that inter¬
temational
trade
the
Fund
to
"to
be
increased
seems
to
It
be
to
socialistic
of
problems within the framework
an international economic sys¬
eat its cake and have it too.
planned
econ¬
tem.
Sub-Commission
omies
are
compatibl
with
free
cieties
cies
so¬
devised
as
countries,
payments
strict! onist
tional
poli¬
socialistic
by
entail balance
difficulties
practices
on
all
countries that they should
national trade,
and
in
but
that the
import
trade
deficits
States
ommended
to
maintain a
high
employment do not de¬
stroy human freedom and human
of
rights. Furthermore, our free so¬
ciety is not only concerned with
maintenance
of
employment
per se but, also with the increase
in the standard of living. I agree
Ill
International
the French delegate that a
society cannot avoid valleys
and peaks in its economic activ¬
ity, but it can mitigate the ampli¬
the
Third
wish
I
to
make
clear
society in this con¬
text
I
mean
firstly
countries
which permit the free emigration
of their citizens. The right to leave
a
country is the basis of all other
human rights. A free country, as
understand
we
right of
to
best
a
individual to work
an
not
the
it, recognizes the
or
work, and the right to get
free
job he possibly
society the
In
can-.
consumer
is free
to use the product of his work in
purchasing whatever he wants.
international
to
cooperation
and
the
Sub-
Stability. My remarks
mainly to the inter¬
aspects of full employ¬
ment plans.
The report of the Sub-Commis¬
related
national
sion
stresses
the
points:
following three
1
*
Domestic planning for full
(1)
„
f
employment; it
the
age
plan
their
that
that
a
other
countries
nomic
the
become
soon
national
plans
foreign
and
of
eco¬
developments will affect
of each plan¬
country,
and
strife
create
independent nations.
among
of the Sub-Commission
report
balance
ties.
In
of
the
countries
is
payments difficul¬
of
name
payments difficulties
balance
of
most of the
their intention
to import restric¬
express
to have recourse
tions, which are only an alterna¬
tive for exchange controls.
We
that
anybody
would
deny
the fact that full employment pol¬
icies in accordance with Keynesian
principles
will
necessarily
Fund should follow such
a
equilibrium.
kind
policy
it would only perpetuate the dis¬
With
the
Commission
balance
would
of
a
reduction
problem
in
country,
We
depression,, suffers
its exports, such
insulation
but
are
country
a
be solved not
can
economic
how
see
difficulties
payments
opinion that if
pursuant to
a
to
be corrected.
ever
the
fail
we
of
by the
sUch
of
a
by
close
economic
with
other
countries
and
it
seems
worst
to
problems
enemy
cooperation.
obvious
solutions
methods
the
to
that
us
particular
should
be
of
Hence,
the
national
sought
by
compatible with the
es¬
sential
"I
particularly pertinent:
have
E/llll.
Document
alistic
The
Func
devised to further nation¬
not
was
economic
planning.
One
of the main purposes of the Fund
is to eliminate persistent balance
difficulties
payments
restore
the
and
tc
free
convertibility oi
currencies.
As the, report of the
Fund
well
remarked,
"It
is
charged with the responsibility to
shorten
the
duration
the
ternational balance
Be
lessen
and
degree of disequilibrium in in¬
of payments."
it
said in passing, Article 21,
particularly 21,4(b), and Ar¬
ticle 6 of the I.T.O. Charter signed
in Havana, undermine this fun¬
damental undertaking of all mem¬
ber countries which are parties in
and
run
balance
a
condition of long-
are
entirely compat¬
months,
on
external
a
problems
politely
called
essarily drop like
heaven, but that
gives
its
them
for
by Mr. Cort¬
fore
ment
the
Economic
Commission
and
of
Employ¬
the
United
'balance
and
a
(3)
of
nec¬
murrain from
a
any
nation which
mind
to
it
itself
in
half
with the aid of the
"'Statement made
realis¬
of balance of payments
causes
difficulties and would require ex¬
is
s
of
financing,
practical politics.
create
can
an
hour
printing
press
1
Free
It
is
Convertibility
that
apparent
is waning.
As
we see
and
reestablish the free converti¬
bility
of
currencies.
trade union movement."
free
convertibility
The
there is
empha¬
sized by the report is the one
garding the dollar problem.
re¬
:
bopm,
it, the main
problem confronting us presently
is how to restore monetary order
without
concern
infla¬
the
tionary phase of the postwar
no
the
We
submit
restoration
of
,ol
currencies
solution to the problem
of maintaining a
high level of
productive employment in a free
The report of the Sub-Commis¬
sion expresses its disapproval of
and to the problem of
expansion of international trade.
taining full employment, May 19.
import restrictions while it
We
1949.
mends
Nations
on
the problems of main¬
nationalistic
com¬
policies
of
society,
further
submit
(Continued
that
on page
only the
39)
is
,
improvement
.
,,
the
of
.
terms
of
trade which changed considerably
against Britain in 1947 as a result
rise
the
of
in
have
world
prices.
realize
to
come
all,... Britain
stands
rather than gain by
world
to
Now
that,
to lose
relapse in
a
First of all,
prices.
the operation
of
a
owing
large
num¬
of
kept
would
when
Lord
his
have
gold
foreign
and
serves
which
dated
to
investment re¬
have liqui¬
could
it
tide
these
ever,
over
i
dation
causing
is
foreign investments
eign assets
available.
are
In the circumstances British ex-
perts are now hoping and praying
for
halt in the decline of Amer¬
a
ican
prices
as.
to
least
at
they
short
some
which
have, fallen* British exporters are
with
faced
Besides,
growing
ability
the
American
of
ness
competition.
and willing¬
importers to
British
and
Sterling
goods has also declined. .
Area
time ago for a
extent, 'history
difficulty is, of course,
the rigidity of the British price
structure.
In existing conditions
it
difficult
is
further
rises
enough
in
prevent
to
and
wages,
it
would be
practically impossible to
out
any
substantial and
carry
widespread
order
to
reductions
keep
of
pace
the
prices.
Any wage cuts would be resisted
to the utmost by the labor unions,
and in existing conditions of full
employment and scarcity of man¬
power they are in a position to
resist
successfully.
Admittedly,
local unemployment in special in¬
dustries—for example
industry—has
in the film
resulted
in
some
reductions. But it would be
politically difficult, if not impos¬
sible, to attempt to apply similar
wage
methods
to
any
of
the major in¬
dustries.
In
the
essary
to
the
the
to
cern
then in
Government
Labor
office, and the reversal of
movement
first
at
was
quite
welcomed in London before longj,
however, it was realized here;
that, bad as the boom was for
the
Britain,
times
slump
the
could not be de¬
present setback
as
many
was
though
Even
worse.
slump, its disadvan¬
a
making them¬
the number of
people who now wish the clock
could be put back to 1945-48 is
on
the increase.
They now feel
tages
are
selves
already
felt,
they
did
were
well
Since
to
be
from
and
not
it
is
they
believed
isolate Britain
American slump, anxious
longer
no
possible
an
when
know
off.
to
increasingly critical eyes are
turned towards Washington from
this side of the Atlantic. It is felt
and
that the fate of British and Euro¬
reconstruction
pean
the
ability
thorities
it gets
of any
of
to
the
depends
American
arrest the
on
au¬
fall before
out of control. The absence
drastic measures of inter¬
vention
to
that
end
is
causing
Fears are enter¬
tained that, by the time the Wash¬
grave
concern.
ington
Administration
circumstances it
face
is
nec¬
the
Nor is it the government's
for
such
realizes
intervention,
the
prospects of
growing difficulties in the export
drive.
Twenty years
boom and the
activity that
accompanied it caused much con¬
wages
with
American
of
repeating itself.
scribed
The main
the same
hoping and
were
is
manufactures
liquidated
are
ago. the Wall Street
feverish
dconomic
American
Any
would bring nearer the day when
no
further easily realizable for¬
take many months before Britain
will begin to enjoy anything like
since it is not only raw ma¬
terial
prices but also prices of
liqui-
concern.
vailing before the setback, it will
over,
have become
accentuation of the pace at which
To
prices
of
ip, existing cir-
even
their? continued
cumstancs
,
a
lower
period
a
reserves
reduced, and
praying
of
very
declining trade. Meanwhile, how¬
decline.
benefit
Keynes
theory this
mattered
much, for Britain had substantial
chasing contracts, in which prices
are based on the high levels pre¬
full
the direct
by
up
import requirements
not
extent
the
be
a
forward
put
ber of long-term government pur¬
for imported raw materials. More¬
not
corresponding
imports. The latter
by
time
the
first
were
.
in¬
arising from capital expenditure'.
still
hoping and
praying for a fall in world prices
for
the
sake
oi
obtaining
an
experts
reductions
that
third
British
iin
internal
a
payments difficulties' do not
international trade.
ney on
behalf of the National
Association of Manufacturers be¬
and
There has been
ible with the preservation of free
or
the connection between
growing
tendency to rediscover that what
are
of
regarding
not sound
are
not
few
the
payments in
the Fund
which
last
furtherance
and
Commission
-
mean
policy.
country's foreign
Sub
of the opin¬
Britain
capital
exports would
indirect
and
blow to complacency.
employment.
of
be
would
exposed to reactions to setbacks in
world' trade.
A lew months ago
buy
•
recommendations
the
orbitant
the
progress,
that
thoughtful
els of productive employment,
a
In summary, we are
ion
V
1
of
phasis
of
Fund.
to
requirements of economic
international solidarity. High lev¬
maintenance of
the
the
during the
growing em¬
lull
arid
works
reduction
realize that, notwith¬
any Keynesian policy of
optimists
standing
fall
At
ruae
markets by pur¬
by
accompanied
are
sharp fall in the value ol
a
j
private enterprise.
would mean, however, that
This
It has made all but a few extreme
in
been much encouraged
observe, in the commentaries
persons
aealt
public
the
Ameri¬
an
a
policy of increasing
a
vestment
slump.
The
they
tic because they would perpetuate
is
international
an
can
after
to be
tionalism
Pro¬
in
maining isolated from
national Monetary Fund included
the
remarks
of
oi
less and less conl idem
Britain's
chances
of
re¬
,
cooperation
article published in the "Economic
Journal" in December. 1947 seem
na¬
connection,
they
by
cease.
cap¬
ital expenditure, both in the form
apparent
And
it.
check
to
their foreign
suing
policy recommended by the Sub- British exports during April has
of
this
ties
o
fessor Robertson's
peace,' and that economic
of
inability of the American authori¬
about
trade is the best economic servant
In
the
about
and
the
and
exports
soon
compensate industries for the loss
has
United
the
to
necessarily lead to unemployment
and trade depression.
In theory
position to
confi¬
progress
in
sterling,
the government is in a
growing
the
create
balance of payments diffi¬
the
on
recession
excess
exports.
over
the maintenance of peace. We are
convinced that free multilateral
culties.
reports
If
imports
of
(2) The second emphasis of the
on
finance
to
We wish to commend the report
submitted to you by the Inter¬
policies
the domestic plans
ning
requested
in¬
approach it will
clear
the Fund
other.
Wc
result of such
to
each
as
be
such
necessary,
by the flexibility of its costprice structure.
countries
economic
of
which
make
v
to encour¬
seems
individual
dependently
doubt
II
The United Nations is dedicated
of
a
of
report
Employment and
on
apparently
deficits resulting from an
Economic
are
submit
standing,
Their
of
given
Under the Keynesian
policy a
fall in exports should not in itself
considerably, however,
during recent weeks. They are
becoming increasingly uneasy
of
the
on
Session'
Commission
an
that by a free
of Full
wish first to make
we
comments
resulting from the business cycle.
avoid any misunder¬
Aspects
light of these preliminary
few
tude of business fluctuations, and
we can alleviate human suffering
we
restrictions
would
Employment
with
free
Sub-Commission
gues that in order to avoid
would
re¬
rec¬
means
stimulus
devaluation would
England.
dence
about
interna¬
a
Einzig
ar¬
effect of hurting other nations,
which have the effect
of restricting international trade.
remarks
are
PgmS
Dr.
un¬
the
or measures
weapon against human freedom.
Therefore, as we see it, we should
So that
as
gold. ..value
United
weakened
In the
the
principles,
pre¬
slump
a
the
in
avoid, in domestic policies derstood at present, would neces¬
for a high level of productive em¬ sarily bring about balance of pay¬
ployment, measures which have ments
deficits.
Therefore,
the
diabolic
level
Keynesian
temporary, for in existing condi-^
tions wages and other items iii
the cost of production would soon
catch up with the change in the
to prevent one
the
of
aware
fact that full employment policies
Exchange controls
only destructive of inter¬
make certain
tc;
The
to
trade.
not
are
is
wants
seek to
as
planned
of
Cortney
that full employment
ever,
that
suggest
we
in
me!
the Economic Council recommend
Philip
e
understood by the west¬
civilization. It is certain, how¬
ern
Therefore
inconsistent.
1,
Slates, aud on
Keynesian
policy of full
employment
On this poin
the Sub-Commission
f
o
e a
to
vent
through a depression1
resorting to deflation or!
import restrictions."
\
devaluation of sterling. In any
case such a relief would be
purely
rearma¬
ment
proceed
without
D
and
adequate to enable nations'1
be
to
a
Marshall Plan
re-j
Mon-1
so
asj
etary
looks
through
the
on
New
Sub-Corn-
of the International
world
out
slump.
intention to take the line of least
resistance and seek relief
men
operation
mission recommends that the
We
to avert
ant.
business
full em-j
reconcile economi:1
for
omies, claim
that they can
plan their
Points
LONDON, ENGLAND—There is a slow but perceptible increase
of pessimism in London regarding business
prospects. Until recently
aimost everybody was practically certain
that this time it would be
possible to avoid a real postwar slump. British politicians, adminis¬
trators, econ- v
!
economic
growing difficulties facing
sees
export expansion.
Washington
'
I
'Australia,
slump both in
considerably, and British economic
fear general fall instead of rise in world prices. Notes
able for free
The National Association of Manufacture:s is
serious
U. S. and Britain has weakened
By PHILIP CORTNEY*
taining a high level of productive employment in
problem of employment in countries like Rusiia.
Slum|>
a
By PAUL EINZIG
And Realistic Exchange Rates
President,
Thursday, May 26, 1949
need
the
psychological effect of the
may
have gone too far
setback
and the recession may
ered irresistible
have gath¬
momentum.
Volume
169
COMMERCIAL
THE
Number 4806
&
FINANCIAL
•
CHRONICLE
7
(2267)
~
'
'
,
From
s
••
'
»
'
,
'
By CRAIG
S. BARTLETT*
Vice-President, Central Hanover Bank
of the News
been
down which led
several
oped
regarding
earth.
It
yesterday.
Deal
analyzing desirable shifts in bank investment portfolios, Mr. Bartlett takes note of changes in eco¬
conditions which have reversed inflationary processes.
Concludes business is
undergoing painful yet healthy readjustment, and, although bank loans may decline, interest rates and
couple
but
become
refused
of the most
just happened
that,
important
city
friends
or
to
have
said
that
Instalment
Conference
St.
in
Louis
on
part: "Business conditions of yesterday, today and tomorrow justify neither optimism nor
he
rigid
advice
to
answer
Every
he
that
would
Central
Trust
call for
got
probably
the
a
they
high
-tability
both
recently,
last
decade
or
will
so
prevent
a
of
poucies
banks,
utives
ever
formation
statistical
better
have
which to base
on
in¬
their
ment credit
Carlisle
plans.
lending
Bargeron
Senator
«
highly regarded members of
took up 45 minutes, to. exco¬
completely. He told of the
columnist's motives. In the course of his remarks he applied a par¬
liamentary epithet. Throughout the country the papers carried this
one remark, confining the Senator's remarks to a paragraph.
The point is that the columnists are given a column of space to
deal with their victims day after day and the victim's retort is limited
to a paragraph.
Perhaps this is not so important as the kind of news treatment
that is given generally to the doings of Congress. Here is a legislative
body to represent the American people. It is composed of men and
women of all races and creeds.
Yet in a highly controversial issue in
which a score of members speak in an effort to acquaint the people
of the country with its merits and demerits and to explain why they
are voting the way they' are, many of them will not even receive
mention and others will simply have one or two sentences of their
remarks in the running account which appears in the papers. What is
carried can't possibly give a full picture of the member's views except
that he is for or against. '
The newspapers being limited in size to eight columns wide and
so many pages it is manifestly- impossible for them to give full ac¬
counts of what the members say. But they do have space a couple
as
and
well
in
elosely geared to business activity.
Of even greater importance is the
as
other
p h a s e
o f
banking,
every
Another is that the credit
banking
fact that
Craig
S.
Bartlett
This general policy, it
industry."
been asked
to
today.
of
lines
market will be in¬
to a major degree
by
business activity and by
the needs
respect to
In
Treasury.
in
demand
been
This
many
in
and
met
supply
some
exceeds
apply to
now
would
soft- goods
lines.
It
is
creeping into some lines of lumber
and building materials. The warm
winter along with increased ca¬
pacity served to create an excess
supply of fuel oil, and certain it is
that there is no dearth of radios,
business, there appears to be con¬ television
siderable confusion among econo¬
mists and those in high places in
the Administration.
On the
one
hand:
*
ators
and
many
to household
has
wait
to
electric
sets,
biles, and
refriger¬
articles
use.
One
common
unduly for
automo¬
steel
metals
even
longer
no
inflation.
again.
tures
bonds to the
stimulate
could,
inflation
Obviously, such expendi¬
would be less inflationary if
financed through
taxes.
It is my
feeling, however, that the period
of inflation is over and that the
forces of readjustment are becom¬
ing increasingly effective.
>
Outlook for Banking in 1949
Under these
circumstances, what
is the outlook for banking in 1949?
Let us examine some of the major
many
money
the
has
demand.
Business
The activities of the banks and
fluenced
pent-up
industries
Activity
of
have eliminated bank
we
Deflationary Factors?
The
have
you
speak to
Influence
The
I
which
about
portfolios
the
more
What Are Some of the
to me, can be applied aptly
to the management of investment
.
is
failures from the economic scene/'
seems
.
mechanism
and
business
of
sales of government
from
developing again.
One factor operative today is that
businessmen and corporate exec¬
practices
in our. instal¬
run¬
forces
'30s
and
similar
the
Similarly, should increased mili¬
tary expenditures be forced by
implementing the Atlantic Pact,
such expenditures, if financed by
depression of the magnitude of the
ity and adap-
a
Bank •stimulate
Hanover
Company
"Changes that have taken place in
the country's economy during the
alert¬
flexibil¬
ness,
umnist Blank."
One of the columnists who kept up
ning attack on Mr,, Forrestal carried on
attack a ' couple of years ago- against
George, one of the most influential and
the upper body. Finally one day George
riate the columnist and to answer him
a
degree
of
them, he would have got
pessimism.
Instead,
have
one
limitation
answer
the
and
-"fyis
fact
com-
placency
nor
paragraph saying scarcely more than that ''Secre¬
tary Forrestal today denied the statement of Col¬
.
address before the National Consumer
an
March^ 29, Mr. Evans Woolen, Jr., President of the American Bankers Association, said in
vicious attacks of a
radio commentators,
friends'
the
brutal
no
Federal monetary authorities. Sees,
urges an investment portfolio of
and in international situation, and
liquid securities with well-rounded maturities.
In
of the attacks against him
space
in the newspapers
limitation of time on the radio. Had he deigned
had
economy
on
steadily worse.
attacks.
The
nowhere.
however, uncertainties in
the serious situation that has devel¬
up
coverage
deeply under the
of columnists and
he
these
point
news
situation
a
Forrestal's
Mr.
bond prices will remain fairly constant and will be dominated
by
explanations of Mr. Forrestal's break¬
This article is not an attempt to give
It began with the advent of the New
has
and
smarted
the
isn't
Company, New York City
nomic and monetary
to his suicide.
another but rather to
and Trust
In
By CARLISLE BARGERGN
There have
....
Bank Investment Portfolio Management in 1949
Washington
Ahead
'
.
and
factors which may affect the over¬
all picture because these can in¬
the
fluence
bank.
forces
would
It
affecting
your
that de¬
posits
may
not
change
much.
Commercial, agricultural and
appear
business loans have decreased ap¬
preciably
and
decline
may
fur¬
ther.
However,
security loans,
especially in the larger centers,
may tend to increase. Investments
also may
the
increase
loan
the offset to
as
decrease
and
certainly
investments should increase
quired
ther.
reserves
Also, there
further shift
from
as re¬
lowered fur¬
are
could be some
short-term in¬
vestments
to longer-dated issues.
shown some price
Debt retirement,
which can •in¬
During the past three
fluence deposits,
should not be
years the productive capacity of
the greatest periods of business the nation has been
stepped up to large since no surplus for the
off when the syndicated columnists will take over the functions of
Treasury is indicated and a deficit
in
our
history." new peacetime heights and with
the legislative body. They have ways of making their views known development
is possible.
The gold inflow to
a
rosy
picture of the some wartime savings
already
and of selling them to the public, but the members of Congress, ex¬ Painting
current
economic
situation, Mr. spent, many of the pipe lines of this country seems likely to con¬
cept when they occasionally are invited to speak on the radio, nave
Snyder said, in an address to the industry and trade have become tinue, thus adding to deposits and,
later for a syndicated columnist to devote an entire column
attacking, the member for his views.
It would seem under the circumstances that the time is not long
of days
to
such
no
opportunity;
close
As
I
as
to keep
try
to the scene,
to the
debates in Con¬
I have frequently found that I get an entirely different picture
after
reading the Congressional Record.
Steady reading of this
Record is a profitable pastime I would recommend to anybody, pro¬
gress,
imagine there are niighty few men of importance these days
having to know "what goes on in Washington who depend upon the
newspapers for their information. Many of them, for one thing, have
the Record digested for them every day.
Also they subscribe to
one or more of
the Washington letters of which, I wrote sometime
there are at least 25, and so far as I know, written by
Executives
Club
"confidence
portant."
in
He
of
future
said
"financial
a
is
United
the
What of the Inflationary
itself is "beyond
question."
Should
forces
them
further
be
inflationary
action
develop,
must
create
to
taken
by the Con¬
gress and by the Administration.
Renewed
brought
On the other hand:
Factors?
the
seasonal
crease
inflation
about
in the
either
means
competent
could
by
an
normal.
seem
likely
others.
be
Reasons for Loan Decline
in¬
of payment, a
men.
just
,
if they were engaged in newspaper
as
But this is no
^
the liquidation of inventories, the
slowing down of capital expenditures, and because of repayment
Rom proceeds of capital market
financing. Indications are that the
increase, loaning policies ol the banks are
work.
depression
problem
Elected to
comfort for the members of Congress.
of
arises."
Speaking
in
when
San
it
Fran¬
area
if
be initiated, such an
substantial
their.constituents, they have difficulty getting cisco before the Commonwealth
an accounting of
their actions or an explanation of the issues with Club he warned that "Democratic
which thev have to deal back to the home people.
Some of them capitalism is drifting. Our econ¬
send back Weekly radio recordings and others write weekly columns omy is being stimulated by for¬
for their country weeklies.
But in most instances they have to be tuitous developments and tempo¬
careful of controversy and must confine their remarks to platitudes rary stopgaps.
Most important of
or accounts of errands they have' run for their constituents.
all, we are bracing up our levels
come
a member of the executive branch, world aid program, both without
President, but just an ordinary "departmental foreseeable terminal points as io
Military spend¬
head, Congress comes out at the short end of the stick. Just why the time or amount."
an
issue
the
is inclined to give more space to the; departmental head is ing and European "economic
props" are being used, and "we
something I can't understand. But it is a fact that they do.
press
the
In
two years,
past
I have on three occasions
been impor¬
have not
tutes."
as
and
yet developed substi¬
while
they
are
sup¬
Congressional committees to
posed to help the nation on the
help the committees get publicity, not the individual members, but
road to peace, "they also sustain
the committees. When Congressional committees have to go in for
economic activity at home."
the employment of publicity men there would seem to be some¬
Recent action by the Federal
thing radically wrong with our Washington news coverage.
by three chairmen of important
Reserve
John F. Shields Joins
*
Shields & Co. Staff
(Special
to
The Financial
ATLANTA,
Shields
has
G A.
Chronicle)
John F.
associated
—
become
with Shields &
SAN
Co., of New York
members of the New York
Mr. Shields was
Stock Exchange.
representative
Hugh W. Long & Co., Inc. -
formerly
for
Atlanta
Todd
to
The
Financial
Helser
and
of
Chronicle)
FRANCISCO,
C.
Mickle, Jr. have been added to the
staff
of
Walston,
Hoffman
&
Goodwin, 265 Montgomery Street,
members
of
the
San
Francisco
Mr.
Mickle
New
Stock
York
and
Exchanges.
previously
Buckley Securities Corp.
was
inflation
have
CALIF.—
Charles
Board
clearly
that, in their opinion,
Walston Hoffman Adds
(Special
City,
could
(Continued
re-
on
page
32)
DIGESTS for DEALERS!
We have
the
we
Congress and
between
necessarily
tuned
enough,
here and represent
However, the syndicated columnists are not the only banes of of activity by a huge military pre¬
existence to the members cf Congress in.the matter of publicity. In paredness program and a large
not
o
.
with
run
created
their
*An
address
the
"Association
Anheuser-Busch, Inc.
Irving Trust Co., N. Y.
Arden Farms Co.
Manufacturers Trust Co., N. Y.
Atlanta Gas Light Co.
Bank of America N.T.S.A.
Maryland Casualty Co.
Corn
N. Y.
Exchange National Bank
& Trust Co.
(Philadelphia)
Delta Air Lines, Inc.
National
City Bank, N. Y.
Portland General Electric Co.
Texas East. Transmission Corp.
Winn & Lovett
Grocery Co.
indicates
the forces
by
the
war
Trading Markets for Dealers
course.
Dr. Marcus Nadler, Professor of
Banking
and
Finance
at
New
York University, told officers of
before
prepared short factual reports on
following securities, copies of which
will be glad to send you on request:
Chase National Bank,
by
Mr.
Bartlett
Mississippi Bankers
Convention,
Biloxi,
Miss., May 18, 1949.
Trading Department
Merrill Lynch, Pierce,
70 PINE
'
Loans have declined because of
"Government intervention," ac¬ reduction in the supply of goods
cording to Reserve Board Gover¬ available for consumption, or both,
Probably the most dependable practice is that of several large nor Eccles, "is the only answer Should the European Recovery
industries of having their own reporters, men whom they've taken we have
yet devised, and it is Program be stepped up or should
a recovery program for some other
from the press associations or newspapers and who ply their rounds
likely to be the only answer to the
ago;
cir¬
than
Thus, total
to remain
about where they are but with
some
shifting possible—increases
in
some
places and declines in
deposits
period
economic
and
in all probability, money in
culation will expand no more
-
im¬
strength unexampled in our his¬
tory," The financial soundness of
the government
have
scrap
weakness.
Chicago, that filled,
the
States is entering this new
with
viding he has the time, and, of course, there is the catch.
I
Secretary of the Treasury Sny¬
predicted on April 8
that
America may be entering "one of
der
Fenner & Beanb
STREET, NEW YORK 5, N. Y.
Offices in 96 Cities
8
THE
(2268)
CHRONICLE
FINANCIAL
&
COMMERCIAL
Thursday, May 26, 1949
Problems Surrounding Capital Markets
By EMIL SCIIRAM*
'
•
President, New York Stock Exchange
NSTA Notes
»
Mr.
Schram, decrying lack of public appreciation of importance of stock exchanges in our economy,
points out the rapidly declining volume of new risk capital and the resulting institutionalization of
savings. Holds trend reduces new capital applied to industrial production and lays causes to unfair
taxation of dividends and capital gains.
Sees need of new supplies of equity capital for creation of
healthier capital markets and concludes inducement must be offered to put savings to work produc/
tively outside of
SAN
debt creation.
mere
I need not tell you that we at the New York Stock Exchange fully realize that it func
tions as a semi-public institution and that there can be no conflict between its welfare and
that of the public.' Stock exchanges, like many other American institutions, including pro¬
fessional
3>-
or-
anizations,
g
charitable
rge,
changes, sav¬
ings banks and
many
others
erned
:
quire its facilities. Unless diverted
out of its proper channels, trade
gravitates toward the best market,
whether the transactions are in
securities, wheat, pepper, or what
not.
have
I
interest
with
followed
proposal for the consolidation
Of the leading Mid-Western stock
exchanges and the drafting com¬
mittee's observation that the ninestate area has sufficient local list¬
ings to support and build
solidated
exchange.
does
It
facilities that will make for
market
that
im¬
an
attract
will
the securities of sound local
com¬
panies. On the other hand, I feel
strongly thai if. contrary to the
stated
objectives,
the result is to
be in the direction of
dilution of
a
the national market,
provided by
the New York Stock Exchange,
the public interest will seriously
There
suffer.
be
can
doubt
no
that the best market is the
which
there
is
the
greatest
centration of orders.
to
that
note
proposed
the
one
I
am
con¬
pleased
sponsors
consolidation
in
of
the
recognize
this fact.
the
from
and
sale
of
Stock
of
of
Importance
Exchanges
The place of the slock
exchanges
ally underestimated.
My fear is
that the harm done because of the
lack of
knowledge of the essential
character of these exchanges will
be irreparable unless the entire
security business puts its shoulder
to the wheel to educate the
respect
which
jobs
the
to
industry
and
is
public
processes
financed
opportunities
are
by
cre¬
In essence, we need to get away
from dull terminology such as debt
ratios, yield pat
and secular
trends; away from Wall Street and
La Salle Street, and transmit the
real
erns,
values behind
the
sputter of
the stock ticker and the imposing
prospectuses that have to be sub¬
mitted. Our interest in finance has
no
meaning except
beyond
nance
doubt
as we
that
establish
unsound
is synonymous with
fi¬
unem¬
ployment, whereas sound finance
healthy markets' lead to the
and
preservation of old jobs and
creation of
I
hear
new
it
the
ones.
said:
"The
issues. In the
billion
dinner
of
equity
funds
the postwar
exceptionally
with
years
two
*An address by Mr. Schram be¬
the Bond Club of Chicago,
Chicago, 111., May 23, 1949.
that
remember
must
orporations entered
large
liquid resources, and the deferred
capital investment and accumu¬
lated
demand for auto¬
consumer
mobiles
other
and
durable
con¬
profitable
Corporate debt being low
goods assured
sumer
season.
the
of
outset
a
this
period, re¬
tained earnings and funds raised
through the sale of debt securities,
by private placement and bank
loans, were ample, as already ex¬
plained. Nevertheless, the latest
report on
the working
capital
position of industry published by
the Securities and Exchange Com¬
mission shows that at the end
ohe
third
quarter
ratio
of
rent
liabilities
o*f
1948
assets
current
to
of
all
facturing companies
a
or
earlier.
the
cur¬
manu¬
than
Moreover,
of
the
2.75 to 1,
was
lower
little
a
year
aggregate
data must be broken down to get
at
their
real
significance. The
we
line, however, and
biggest
enterprises,
to
assets
sat¬
a
go down
leave
there
deterioration in both
current
in
are
isfactory position. As
the
is
a
ratio
the
of
liabili¬
current
so-called
that
m a
smaller
companies to
themselves
the
in
ratio, i.e., the ratio of cash plus
government
securities
to
total
liabilities.
current
refer, of
their
stubborn
tax
Their attitude rests,
to my mind, on several principal
fallacies. At the corporate level,
they seem to confuse profits with
cash accretions, not understand¬
ing that if production and em¬
ployment are to expand, profits
have
part,
and
be
to
into
raw
also
at
taxes
in
converted,
machinery
structure,
materials. Secondly, and
the
which
relatively high return
a
assured.
Already, the, pros¬
in'plant
and equipment expenditures, al¬
though competent economists
point out that plant and equip¬
ment
per
worker
are
actually
smaller than 20 years ago despite
the seemingly high outlays of the
past several years. At the. personal
income level, excessively progres¬
seems
is for
pect
sive
downturn
a
taxes
in
little
worth
are
Circular
—
—
Co., 65 Broadway,
letter
The
—
Canadian
Bank
of
Commerce, Toronto, Ont., Canada.
tual
reports
Gas
Anheuser
on
Arden
Inc.,
Farms
Light Co.,
Co.,
Bank
Busch,
Atlanta
America
of
Chase National Bank,
Exchange National Bank &
Co.
(Philadelphia), Delta
Corn
Trust
Airlines, Inc., Irving Trust Co. of
New
Co.
of
ualty
New
a
flow
tric
Corp.,
Winn
and
Lovett
&
Beane, 70 Pine Street, New York
5, N. Y.
Economic
of
Recovery
bonds
of
Great
Europe
Sweden,
Netherlands,
Norway
and
Denmark — New
study—Zippin & Co., 208 South La
and
during
expect to be
still
well off at the end of the week
as
at
the
beginning. This is the
an outstanding Eng¬
lish tax economist, Professor J. R.
Hicks. It is arguable that we have
proceeded for too many years in
a departure from this central cri¬
terion to turn back, but the con¬
cept is at least worth recalling in
formulating contemplated changes
in capital gains. '
as
definition of
Belgium,
Salle
un¬
bond
issue
pany
of
with
around
industrial
com¬
of less than
has been a
assets
million
$50
rarity. The
an
common
stock
issues,
again, in the main have consisted
of electric and natural gas utilities
and
the strongest industrial com¬
panies.
Even
so,
considering
the
low level, of money
rates, the cost
of equity capital has been heavy
and in almost every instance the
preceded
or
York 5,
Circular
—
—
Co., 44 Wall Street, New
N. Y.
Foreign Exchange Quotations-Folder
national
volve
no
listing
143
quotations
of
the world and also
containing two tables showing the
decimal
equivalent of
common
fractions and shillings and pence
Company,
Trust
turers
Manufac¬
55 Broad
department,
—Foreign
Street, New York 15, N. Y.
As
tion
~
importance
have
of
been
at the
which
is
and
troubles
awc.y
pler
v
I
am
am
happy
carry
burden.
get
therefore, sympathize
Executive
an
&
Co.,
Stock
the
-
-
Index
Industrial
Counter
almost intolerable
utmost respect,
give voice to
—
Booklet
recording
10-year performance of 35 indus¬
stocks—National
Quotation
York 4, N. Y.
on page
38)
California—
Special report—William R. Staats
Co., 640 South Spring Street,, Los
Angeles 14, Calif.
Also available is a circular on
with
companies
six
currently
a
high yield.
Food Fair Stores,
Inc.—Analysis
1342 Walnut
—Newburger & Co.,
Street, Philadelphia 7, Pa.
JuJius
Garfinckel &
Circular—Auchincloss,
Co., Inc.—
Parker
&
Fifteenth
Street,
W., Washington 5, D. C.
729
Also
is
available
a
circular
on
Chemical.
Mathieson
Co.—Circular-—
Floyd A. Allen & Co., 650 South
Grand Avenue, Los Angeles
14,
Calif.
*
*
!;«
Inc.—
Utilities,
South
Middle
Bros.
Circular—Sutro
&
120
Co.,
Y.
Broadway, New York 5, N.
Bank of Manhattan Co.—Circu¬
lar—Paine,
Webber, Jackson &
Curtis, 25 Broad Street, New York
4, N. Y.
Also
available
Common
Stocks
is
a
with
circular
long
on
Inc.*
70
Berry
Coffin,
Pine
Street,
Pacific
Missouri
Motors,
Inc.—Analysis—
Co., 123 South
Broad Street, Philadelphia 9, Pa. ''
Betz
Saxton
A.
Inc.
&
New
—
Co.,
York
5, N. Y.
New
—
Co., 115
York 5, N. Y.
Goodbody
4
Utilities,
South
Middle
Analysis—G.
divi¬
dend records.
&
Leaflet
—
Broadway,
&
National Bank
of Tulsa—Anal-
ysis—Uhlmann & Latshaw, Board
amazement at the President's
(Continued
.
trial
who
With the
must nevertheless
my
to
for a few days to the sim¬
problems on
my
Indiana
Chief
Day
Bureau, Inc., 46 Front Street, New
beset with
N'. Y.
Loven Chemical
Over
small
very
sometimes think
A.
Inc., 199
Washington Street, Boston 8, Mass.
institu¬
an
in re¬
lation to the great operation that
is
the
Federal
Government,
I
I
companies
of
executive
an
must
1 -
York 5,
N.
stimulus to the economy.
accompanied by a de¬
price of the outstand¬
but
revenue
Airplane
and
Engine
Special review — John H.
Lewis & Co., 63 Wall Street, New
—
Redpath,
token im¬
loss at all because of the
the
all
a
S. A.
the currencies of various countries
beginning; ultimately it would in¬
with
shares has
common
on
atively little loss of
been
new
Fairchild
Corp.
Filtrol Company of
Utilities
Electric
Blair &
provement and would involve rel¬
I can,
:
to
income
stocks would be only
farm.
ing stock.
Costs
A 10% credit against
adopted.
dividend
on
&
Hoffman
Walston,
Street, Chicago 4, 111.
-Chas.
longer rests
no
—
Bank of America, N. T. &
throughout
Double Taxation of Dividends
Study
Goodwin, 265 Montgomery Street,
Francisco 4, Calif.
Also available is a circular on
Britain,
ernment
week
be
public
utility
issues
and
the
strongest industrial companies. A
Consolidated Rock Products Co.
—
San
Market Notes—Current comment
largely of
La Salle Street,
Inc., 135 South
Chicago 3, 111.
Central Soya Co., Inc.—Circular
the merits, but on the timing of a
revision and the exact methods to
ket have been made up
Inc.—Bulletin—F. S. Yantis & Co.,
—Swift, Henke & Co., 135 South
La Salle Street, Chicago 3, 111.
Co., Texas Eastern Transmis¬
sion
Corp.,
of
Bank
City
of funds that one may use
Defense of this dishonest and
the
:
•
Utility
Public
Central
Portland General Elec¬
the
the
mar¬
New York 5, N. Y.
way,
and the ultimate effect upon gov¬
such
as
the
that
America—
of
Corp.
Celanese
Circular—Ernst & Co., 120 Broad¬
York, Maryland Cas¬
Co., National
New York,
Trust
Manufacturers
York,
Income is definable
but
aware
pipeline to carry Canadian Gas to
Pacific Northwest and Cali¬
the
N. T. S. A.,
raised at reasonable cost.
well
stocks for Investment and a
study of a proposed international
fornia.
just tax policy
are
15
Co.,
&
Street, New York 5, N. Y.
available is a list of com¬
Digests for Dealers—Short fac¬
equity markets, if funds could be
You
Bread
N. Y.
Monthly commercial
—
Grocery Co.—trading department,
Merrill Lynch, Pierce, Fenner &
the
tap
debt securities offered in the
ysis—Eastman,' Dillon
Also
Treasury—their
chief' purpose being political.
Thinking on capital gains is too
often the result of the mingling of
capital and income without re¬
gard to the facts of economic life.
to
revenues
to
Public Utility Issues Predominate
following literature:
mon
Canada
tend
investment in all but the projects
&
New York 6,
level, high
to defer
corporate
earnings
on
Brewing Industry
Fahnestock
firms mentioned will be pleased
interested parties the
send
to
large
all
indicates
It is understood that the
to
philosophy.
course,
Elsewhere, I have registered my
protest against the double taxa¬
tion of earnings paid as dividends.
This
growing need for
largest corporations
a
Recommendations and Literature
competi¬
financially
larger,
businesses. I
entrenched
Dealer-Broker Investment
things
k in g
for
for
harder
on
Kessler's "Offers."
between Stewart's "Bids" and Joe
ball game
sur¬
government are re-
ties, and in the important liquidity
cline in the
fore
were
depreciation re¬
serves
provided
the
necessary
funds to cushion this large amount
of
debt.
This
year,
we
know
profits will be smaller and bor¬
rowing less easy.
we
sponsible
tion .with
tained profits and
Now
in
establish
one
cast of "characters" both
a
On Sunday there was a championship soft-
seriously entertain
ironic
is
"liberals"
pre¬
that $2.4
Follies" with
Diablo
"The
Earl Thomas presented a four act playlet
first night
the
on
active sports and following
the two-day event were
Features of
ex¬
proposals.
Last
kind or another
increased by more than $20 bil¬
lion. In large part, of course, re¬
at
the
both
two years
raised, debt of
offering of
last
de¬
and
The task is difficult at best.
ated.
new
corporations used approxi¬
mately $27 billion of new funds;
only $1.1 billion represented stock
the
in the economy seems to be gener¬
with
elsewhere in today's issue of the "Chronicle."
appear
investment
by
had to tell
terms that manage¬
onerous
stocks.
common
largest corporations
Underestimation
of
was
year,
con¬
a
not
appear that the territory can be
expected
to
sustain
reasonable
growth possibilities for several
regional stock exchanges.
I can
add little to my earlier statement
on this subject.
The undertaking
deserves encouragement if the ob¬
jective, as indicated, is to provide
proved
Only $1.3
ferred
Schraro
<£mil
billion
billion
$28
some
rived
to
such
It
1947, American corporations
funds.
those who re-
the
almost
are
years.
used
best
Serve
discouraged
bankers who have
ment could not
In
its
ability
Photographs taken at the outing by Louis Spuller, Elworthy &
Co.,
entitled
two
gov¬
by
been
has
prising and diversified.
hiar-
is
ke t
financing
Stewart, Wilson, Johnson & Higgins,
ble, or could be effected only on
raised
of
amount
just
what
this
relationship has been in the past
necessity. The
a
much
Joe Kessler, Henry Swift
in charge of base¬
in charge of golf; and Art
Perenon, Wm. R. Staats Co., in charge of rooms and transportation.
Witter & Co., assisted by
Thomas of Dean
& Co. and Jim
ball; Ilodge Davidson, Bailey & Davidson,
nobody knows
stock
how
spring outing at the Diablo Country Club at the foot of Mt. Diablo
on May 14th and 15th.
The outting was a huge success and a tribute
to the efforts of the committee.
In charge of the event was Earl
underline vhere
by force of
up
been cancelled and
TRADERS ASSOCIATION
Security Traders Association held their annual
negligible in relation to the funds
available
to
industry." Let me
grown
size of
have
Registrations
pronibitive.
SECURITY
ecutives, reluctantly, that the pub¬
lic sale of securities was impossi-
the
and
funds
now
mention,
have
stock exchanges
if the
even
dormant
are
numerous
to
economy
in high gear, with
ample profits and full employ¬
ment and with no capital "shortoperate
can
cieties, com¬
modity ex¬
too
the
that
prove
years
so¬
FRANCISCO
The San Francisco
Book of the Month Club—Anal¬
Prmtirmcd
nn
nase
16)
Volume
Number 4806
169
COMMERCIAL
THE
"Our Situation Is Good": Sawyer
&
FINANCIAL
CHRONICLE
(2269)
A Year of Critical Fumbling
Commerce
By FRANCIS ADAMS TRUSLOW*
of
President, New York Curb Exchange
Secretary says we have come down from dizzy heights
inflationary pressures, with reduced business activity, but are
still
on
sound basis.
Commenting
Addressing the 30th Annual Convention of the National Restau¬
rant Association in Atlantic City on May 25, Secretary of Commerce,
Charles Sawyer, though pointing out some recent developments indi¬
cating declines in business activity, stated "that by any normal standcompa
is
rison.
do
f
a
ago
year
criti-
in
eally
short
supply — we
are,
in short,
eni-a lower
level,
but
ment
of
unity
tend
we
want
elusive glory earn the label "Dem¬
neither.
None of
;
1
Charles
"Reported business plans are al¬
i
-
Sawyer
it
their
to
ex-
ilwo weeks, Congressional tax ex-
what
g row
means
have
we
far- toward
so
n
cruel
chance,
advanced
goal.
our
heedlessly urge that
population
will
They
take the
we
old ideas and
lunge at the goal.
They seem to forget that "Rome
was not built in a day."
make
•
of course, subject to change tired
and
in the light of developing condi¬
•cease
to take
tions.
Buyers tend to grow cau¬ part
in
it.
tious if the outlook appears to be The
opinions
dubious, and a downturn, as well and even the
scrap
wild
a
..
in
are
not
we
the valley. ' Whether
maintain our' economy
shall
at
present levels will depend
as
There
Francis A. Truslow
as an
upturn, can feed on itself. prejudices : of
psychological factors As I have said
earlier, however, it every citizen represent the sum
as
upon
material factors.
Your is
well for the buyer to concern total of the raw materials which
opinion of what the future holds,
much
and
upon
personal
your
with
that
of
140
along
other
action
million
himself
herself with all of the
or
available
The
facts.
Americans, will have much to do
goods. is still large, even though
with the immediate development
many oi the most urgent require¬
of our economic future."
ments have been met, and we still
"As to that future," Mr. Sawyer
have farm price supports, unem¬
remarked, "I make no predictions.
ployment benefits, and other cush¬
Some of the facts upon which you
ions to a decline in consumer incan
dwell in connection with your
consideration -of
this
problem I
would like to give to you. The na¬
tion's output of goods and services
during
was
the first
of
1949
bil¬
decline from the
quarter
at an annual rate of $256
lion.
This
was
a
all-time peak annual rate reached
^expenditures. of Fed¬
eral, State and local governments,
VThe
Come.
are
laziness
mere
in
buy¬
consumer
the
situation
high activity.
continued
indicate
Let
us
hope that the
Free
A
Economy
before each of
the
us
be active
must
in this conflict—ardent advocates
Of
"We hear
own
even
arduous
more
forcing
the
that
hold and
we
their
clash
discussion
of views
participating in
the
with
views
our economy.
of
others.
flict
is
con¬
the
desire, which we all
hold, that the opportunity for all
people to lead fuller and happier
lives
or
shall
group
on
this
be
of
increased.
have
men
desire.
It
a
No
man
monopoly
is the
common
growth, and growth is not always
a year ago, and price changes
steady. What we Should strive for springboard from which all dive
reduced
income taxes have
than
and
to increase the buying
of those incomes.
"The decline in dollar value of
operated
is
nation's
quarter
output for the first
reflects lower prices, as
well
some
as
volume.
decline in
There has been
physical
relaxa¬
a
tion, probably desirable, of the in¬
flationary pressures which were
present until late last year. There
has been evident, of course, a cau¬
tion in the buying attitudes of
businessmen
as
well
as
housewives
and, in connection with the busi¬
in
elimination
the
shocks
power
from
come
flation
the violent
of
rapid and excessive in¬
deflation.
and
We
must
expect periods of adjustment dur¬
ing which
we
find variations in
Nor is it pos¬
the rate of growth.
sible
for
any
into the conflict.
Those who pre-
which
dislocations
and
*Remarks
of
Mr.
Truslow
Luncheon
don't,
of course,
want to
under¬
stand the vehicle which is
carry¬
ing us toward our objective. To¬
day yve; are endangering what we
havje by trying to drive that
hicle
too
If
fast.
don't
we
ve¬
stop
trying to cure all at once every
remaining misfortune, we are go¬
ing to be in the shop for repairs a
long time before we can hit the
road again.
If we don't temper
our
desire
common
with
some
prompt and honest cost account¬
ing we will cease to have the
world's highest standard of living
the home of its freest
and to be
men.
estimated
Federal
a
at
a
Many
from
now,
when
position to "sec¬
guess" today's decisions,
think they will look back to 1949
as
a
of critical fumbling.
year
They may even compare our cur¬
years
historians
are
in
a
ond
rent
effects of
increasing taxation; the
Executive Department has reiter¬
ated that it demands that
lion
of
activities
clown who
to
those
the
of
$4 bil¬
taxes, should
new
be laid
that costly social benefit and
subsidy apropos a Is should be
adopted, and that powers to curb
(of all things) inflation should be
on,
granted to it; Senators have talked
reduction
in
spending and the
Senate
has
voted
increased
of the
leading newspapers of the
country has editorialized
15 its approval of this
and
we
avoid increased taxation.
The
Executive Department on
May 17 -presented a program to
Congress under which unpredict¬
able millions of dollars would be
paid to farmers in cash to make -up
the difference between what they
received in selling crops and what
government thinks they should
have
received.
On the
authoritative
r
same
Research
tee for Economic
Development
activities
so
directions,
we
fast and
as
must effect
we
are
in
so
and
handed
was
frantically
Heavy Government Expenditure
conflict which those future histo¬
rians
What
is
will
the
current
read?
record
Within
the
of
would be
more
stable and better
organized if government planned
it.
As this record is reviewed it is
last
(Continued
on page
27)
avoid
to
This advertisement appears as a matter
is
clearly understood by you busi¬
nessmen
and by government of¬
of record only, and
no
public offering
being made of these notes.
down of the rate of
cumulation.
have
maintained
not
increase which
was
the
rate
of
characteristic
of the fourth quarter of 1948.
miracle
$60,000,000
men.
"The
blessing
very
virtue of
our
and
chief
Radio
free enterprise sys¬
"More cautious business
buying tem is that some things are left
produced significant declines
to initiative and to chance. Occa¬
in the production of some goods.
the initiative will be
Consumer buying also has been sionally,
Corporation of America
has
less
urgent,
gate
although the
physical
quantity
aggre¬
based
goods
game
of
misjudgment, and
upon
of chance produces
a
no
winner
being taken by consumers was ap¬
every time. Our system relies for
proximately as large as in the
its success upon the fact that the
fourth quarter of 1948.
"There are multiplying signs of greatest driving force for improve¬
•a
return to normal competitive ment is the desire of man to cre¬
.conditions and substantial price
ate a better life for himself.
The
concessions in
some
lines.
These
better
achieved
pense
comes
We
values
have
been
only in part at the ex¬
of lower farm and labor in¬
and lower business profits.
see
all down the line, with
return of
more
normal competitive
to go
his
a new
money
on
business—to risk
the first
idea—is
a. new
right which is fundamental in
business system; but no one
fail
to
recognize
American
a
money,
new
businessman
business,
or
Under
an
i, 1974
Agreement negotiated through the undersigned, $40,000,000 of the above'mentidned
7\[otes have been sold privately, and the balance is to be sold to the same
a
purchasers prior to December
29, 1950.
v
our
should
when
that
an
does
go
LEHMAN BROTHERS
risks his
he is entitled to fair play
the govern-
ment within its proper
quarter, the Department of Com- give."
American businessman
an
into
and whatever support
ductive efficiency.
the middle of
right of
the into
conditions, improvements in pro¬
"About
3% Promissory Notes due May
These
competitive conditions
have also produced improvements
in quality, as well as lower prices,
and greater availability of goods.
.normal
sphere can
May 20, 1949.
many
doing, and
rigorous economies
government or any
as
re¬
leased careful proof that we can¬
not afford to expand government
official to direct so
closely and wisely changes in our
situatioin
day
d
an
Policy Committee of the Commit¬
government
economic
May
on
housing bill
May 17 its insistance that
on
a hot po¬
in government.
>■'
.
juggled it
Perhaps those historians will
from hand to hand.
I hope they liken our conflict to the Tower of
will be permitted by history to Babel rather than to the shouts of
record how we stopped fumbling the clown with the hot potato.
through the brilliant solution of Certainly they will find it hard to
setting the potato down until it reconcile this current chaos of ac¬
cooled.
tion and opinion with the current
assertions that e c on p m i c life
tato
1949.
completely serious situations and
difficult problems. This should be
ex¬
the House- Banking and
Currency Committee has reported
out a costly housing bill and one
penses;
the
Meeting of the New
York University Men in Finance
Club, New York City, May 19,
particular, a slowing
ficials alike. You should not look
inventory ac¬
for miracles from your public of¬
Despite this slowing
ficials, nor should they labor un¬
,down, inventories are larger than
der the
delusion that they are
they were a year ago, but they
nessman
are
others, and I am
them, who believe that the
hasty ones don't understand and
among
of
job
At the eternal roots of this
lengthy discussions of
the need to stabilize
our
the
Never Stable
ing power, cushioned by unem¬
In our desire to stabilize the econ¬
ployment benefits, farm price sup¬
omy we should remember that a
ports, and other factors, has been
free economy can never be wholly
small.
Personal incomes of indi¬
stable.
Ours
is an economy of
viduals were still larger in dollars
the
exhaustion
products of this conflict will be
lopsided. Today more than ever
1948.
"The decline
of these
withheld through
components
or
some
points of view.
We
must be prepared to serve our
which take a large share of the
country not only by making our
national output, are still tending services available to our
govern¬
upward. ^The material factors in ment when required, but also by
psychological factors do not con¬
jn the fourth quarter of 1948 of tribute to a different result.
$265 billion, but is still above the
annual rate for the first quarter of
this conflict must temper and as¬
semble and cast out in national
backlog of
for all sorts of producer's
policies and laws. If
demand
have
perts
deficit
through conviction, self-interest or
ignorance, forget how far and by
ways,
we
attribute
of $3 billion next year if
How to advance this ambition is executive proposals are adopted;
the main source of conflict. Some, executive economic advisors have
cautioned against the depressing
us
elements
our
to
agogues."
need fear this
expenditures.
<S>—
appear-
ance
and
these reductions
conflict., The
will be offset by increased Federal
danger we
spending for national defense and
need to fear is
other purposes and by the rising
that important
trend of State and local govern¬
certain extent,
a
or
goods which
were
below the record total for 1948. To
we
the
demand
an
these expenditures will continue
at a high rate, although somewhat
flatipnary
one
Today our democracy is, as usual, seething with conflicting human ideas, ambitions
proposals. I say "as usual" because that is not only the normal condition of our form
government, but it is a condition which must persist. Only force and slavery can create
of
equipment expenditures. The
results-of that survey indicate that
heights of in-
such as the farm program, slum clearance, and social insurance, to
stroke, Mr. Adams points out the waste and heavy costs in additional
these ineffectual efforts. Sees danger of spending and taxing away all we have gained, with
resulting lower living standards and loss of individual freedom.
measures,
and
and
from the dizzy
proposed
on
society's ills at
taxation in
survey of
pressures,
have met
correct all
r
change Commission made a joint
business plans for plant
We
wn
good.
com e
and the Securities and .Ex¬
merce
situation
our
I-
<♦>-
historic
d
a r
k
9
10
THE
(2270)
&
COMMERCIAL
Thursday, May 26,
FINANCIAL CHRONICLE
1949
likely to be put to severe test and further substantial declines in,
commodity prices appear logical./Concurrent declines in business
,
Mutual Funds
IATIC$IAL
upon
request from
Hampshire recently passed a law permitting savings banks
to invest in mutual funds that can pass the following
in the state
investment dealer, or from
your
£o up while other prices are declining, they offer real insurance pro¬
tection against shrinkage in capital resources in the form of inven¬
tory losses, real estate losses, security losses, and decreases in income
A Mutual Fund
&
(1)
Minimum assets of $10,000,000.
(2)
Paid dividends during each of the past 10 years.
new york 5, n. y.
(3)
Selling charge does not exceed 1V2%.
SECURITIES
120 broadway,
Marking
medium
tor
-
,
fund
one
taken from an
further step in the recognition of mutual funds as a
savings under trusteeship, the law also requires that
as to fund management
be practiced (i.e. more than
Fund, Ltd.
Funds that
which
be
purchased)
1% of deposits.
be limited to
<
■/
simplicity and directness of the following tabulation
ad published by John G. Kinnard & Co..of Minneapolis:
a
must
can
and that investment in any one
meet the above
as
Invest¬
Insurance
Bank
& Loans
ment
Company
Funds
shares in XYZ Fund,
slogan,
a
Savings
Savings
QUALIFICATIONS—
fund
Mutual
Life
Federal
requirements might well adopt the
"Savings banks buy
currently returns over 4%. Why don't
following
Comparison
We like the
diversification
Bullock
business and price level slump."
which might result from a
requirements:
CORPORATION
NATIONAL
RESEARCH
management intends to stress the short side. An increasing number
of investors are recognizing that because Futures, Inc.,., shares can
Hampshire Savings Banks to Buy Mutual Funds y
New
Prospectus
prices have fallen back to more normal levels, as they have done
after every previous war'in American history, the Futures, Inc.1,,
By HENRY HUNT
New
Until, commodity
activity and security prices may also take place.
you?"
Operates under federal
'
;
Inc.
under the same sponsorship as Republic
leverage fund, is now operated on a formula
Investors,
Sovereign
Investors, the latter
a
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
Yes
Less Than
Less Than
3V2% in
Most Cases
2V*% in
3% in
Most Cases
Most Cases
Most Cases
and state regulations
Another Formula Plan
Nation-wide Securities Co.
Yes
and Less
Dividend Shares,
To quote from a recent folder:
between bonds and preferred
and common stocks, the directors of Sovereign Investors, Inc. will be
guided by a formula-timing plan which is an adaptation of the duPont
Institutional Investment Index. The adapted plan is the result of care¬
ful study b,y the Investment Research Department of Francis I. duPont
& Company, and is designed to provide a greater rate of income re¬
turn than the Institutional Index.
Reflecting the higher income re¬
turn, the adapted plan will provide somewhat less resistance to mar¬
ket decline than the Institutional Index,
but should have commensurately greater possibilities for capital growth during periods
Puts your money to
work
by investing it
investing plan.
"To
Frospectustt
svailablt
from
determine the proper balance
Spreads its investment.'
securities
(
CALVIN BULLOCK
Established 1894
of
Has
experienced
gers
continually watch¬
rising security prices.
duPont
"The
different
many
among
mana
ing each investment
Promises to return
a
specific number of dol
Institutional
Investment Index was designed pri¬
lars to you on
companies which normally
investments yielding a rela¬ Gives
demand
marily for institutions such as insurance
in fixed interest-bearing
invest largely
tively low rate of return. The individual inyestcrt usually requires
a somewhat higher rate of income return than is generally considered
adequate for institutional funds.
The Sovereign Investors
dollars
a
Formula-
More Than
Timing Plan is accordingly designed to provide its shareholders with
as liberal an income return as is
consistent with the principles of
Earns
sound investment."
Manhattan
your
chance to grow
you
return
a
for
2%% In
of
and up to
Earnings Continue Record Trend
Bond Fund
"For
half
over
the Dow-Jones Industrial Average
major swings of business in this country
century,
a
has reflected accurately the
'typical' common stocks used
through the composite experience of the
to compute this index.
INC.
"
Sets All-Time
'48
8% in Some
High.
The Drop in Commodity Prices
;
The
relatively mild decline, 3.4%, which has occurred thus far in
the all commodity index is due primarily to the fact that to date price
With fourth quarter earnings put at
Financial Weekly,' earnings attrition has been largely confined to raw materials. These declines
$23.07 for the have not as yet. trickled down to the consumer price level in any great
year—highest annual figure officially on record. This fourth quar¬ degree. In the area of primary prices, however, the declines in many
ter figure is also the highest for any quarter on record.
instances have been of such drastic proportion as to be very closely*
'49 Sets First Quarter Record. Unofficial estimates of the first comparable to the patterns of 1920-1921. This is clearly evident from
■■■/
A
quarter earnings are $5.50 per share, an increase of 44 cents over the table below.
1948
Percent
Current
the first quarter of 1948—higher than any first quarter earnings
$7.14 by 'Barron's National Business and
per
share of the Dow-Jones Industrial Average were
.
"
*
Prospectus from your Investment Dealer or
%
officially
HUGHW. LONG & CO.
iNCOP'ORA'tP
•48
lOV
WALL
STREET
NEW YORK
5. N Y.
CHICAC.0
ANChtS
on
record.
With $11.50 for the dividend
computed on the Dow-Jones Industrial Average, the year 1948 topped
every year but '29.
Dividends reported for the first three months
of the year were $2.57 per share, or 18% higher than for the same
Years.
Tallow
oil
Cottonseed
Alcohol
of Boston.
K e yston e
Custodian
beans
F,
:
Inc.
and other
—From
staples.
Certificates of Participation in
investing tlieir capital
IN
stated
pronounced
a
degree
°
commodity. futures, markets
■" (Special
to The
Financial
CHICAGO, ILL.
—
Chronicle)
Claude W.
Martin has become connected with
Kidder, Peabody & Co., 135 South
La
Sl-S2-So~S4)
Salle
Street.
Mr. Martin was
formerly with the First National
Bank & Trust Co. of Evanston.
Prospectus from
local investment dealer or
—50.0
$1.63
—48.5
:C $24.00
—43.8
$3.17
$42.75 %
Calvin Bullock's
:
/
"Perspective."
Method of Distributing Funds
on
the iollowing letter from Howard S.
Ga., office of Courts & Co.
-
"Nov/
that the distribution
1
<
COMMON STOCKS
Massachusetts
$1.35
wide acceptance,
Kidder, Peabody Co. Adds
(Series K1-K2)
Boston 9,
$2.70
(ner ton)—
McNair of the Atlanta,
have
*•
.
Congress Street
—50.0
this, while small sales of Mutual Funds represent a
real service to the purchaser, distributors will find that many of these
sales are consummated at a loss. I have in mind a gross profit per
"Further than
PREFERRED STOCKS
BO
—53.2
121/20
of firmness in the past two months
(Series B1-B2-B3-B4)
Tlie Keystone Company
of Boston
133/80
25C
—
The column is in receipt of
cottonseed oiL soy¬
Richard D. Donchian, President and Fund
"Although
BONDS
pour
_
of Mutual Funds has attained such
methods for best effecting their sale are receiving
widespread study and discussion. Someone has described many exist¬
which has resulted in a recent reaction in the Futures, Inc. net asset ing efforts as examples of 'the blind leading the blind.' Primarily, no
value per share to around $12, the underlying trend in prices is general distributor will get very far who considers his Mutual Fund
distribution as something apart from his regular business, and some
clearly downward." As huge croos come to harvest in the summer
advocated 'high pressure' methods which I have read and heard of
and fall, the effectiveness of the government support program is
are seeds of future trouble.
,
'
that
Manager
shown
INVESTMENT FUNDS
—65.6;
—57.5 '
28 y2c
_
_____
Comments
profits-during the January-March quarter were
:
linos
(Series
Steel scrap
devotes its resources to
Futures,
18340
Rye (No. 2—per bu)
the mutual fund which
buying and selling commodity futures, reports
for the initial 4% months of operations from. Nov 15, 1948 to March
31, 1949, a rise in net asset value per share from $10 to $13.91.
Futures, Inc., 40 Wall Street,-New York,
mostly derived from positibns on the short side in
$1.14
44.2C
(No. 3 yellow—per bu)____.
Corn
Selling Commodities Short
lb)
(per
—69.0 "•
.
—68.6
__
___
Lard
11.50
$3.32
bu)
(per
—74.3%
31.50 :
$1,001/2
Years. Yield on the Dow-Jones Cocoa (per lb)
Average on the average price for 1948 was 6.4%—topped only by Print cloth (per yd)__
1931 and 1932."—From "Keynotes," published by The Keystone Com¬
"Average Yield Highest in 16
pany
37.1C
(per lb)
(per gallon).
Barley
period in 1948.
200
(per lb)
Decline
5VsC
High
.
"Dividends Highest in 20
Price
•
Alfred Seebass With Otis
Prospectus
I
may be
obtained
from authorized dealers, or
SELECTED INVESTMENTS C0MPANV
135 South La Salle Street
CHICAGO 3, ILLINOIS
(Special
to
The
DENVER,
Financial
COLO.
Chronicle)
—
with
Otis
&
Co.,
formerly
in
in Denver.
First
even
distributing house loses money, but as
point will vary
National
Mr. Seebass
was
business for himself
break¬
a
widely with individual houses a figure ap¬
How!
{
"Before any dealer embarks on the sale of trust shares, he should
find a quiet spot where he can spend about a week reading all the
proceedings leading up to the 1940 Investment Company Act. If
plicable to one house cannot be currently
even,
this
it is
is
a
applied to another.
subject requiring serious thought.
done,
some
existing
ideas about
appropriate methods for
distributing funds might be changed."
■5
Cohu & Co. Adds
Fred L. Richards Dead
Fred
Lloyd
Richards,
of the New York Stock
died
in
Doctors
member
Exchange,
Hospital,
York, at the age of 62,
New
/.(.
.
Alfred R.
Seebass, Jr. has become associated
Bank Building.
sale below which the
Frank
A.
associated
Wall
the
Sanders
with
Street,
has
Cohu
New
&
York
become
Co.,
City,
1
ih
Retail Distribution of Mutual
Funds.......
..
,
■
Volume
169
Number 4806
THE
COMMERCIAL
Banker Deplores Depression Forebodings
be dead wrong in
can
forecasting.
Chief
that?
warned
the current
(To 1 e f u 1 re-;
trains regard¬
convert
retreat into advance.'
is
sound
advice
haven't
but
made
we
our
pretty
a
good transition from war to now
of them¬ with minor dislocations, and still
selves, pro-; retaining a good standard of liv¬
duce a depres¬
ing, with government spending
can,
by caus-; cut from 90 billion to 40 billion
fear and year?
sion
ing
lack
in
Frank
F.
faith
of
"Within -the
future.
Allen
market to
"I
should
remarks
about
like
with
a
to
preface
little
a
who
man
lines of
getting;
He had
a
few dollars saved up, so
opened
hot
dog stand on a
highway just outside of his city.
•It was not long before motorists
began to stop, and soon the man
had made enough money to rent
billboard space along the highway
telling the motorists where they
might buy delicious hot dogs. He
'gave
a
good
service
and
al¬
was
very
generous
with
the
mustard and relish, and soon his
ways
business
booming and he was
profits.
He
advertising
signs
■along the highway, made.an ad¬
dition to his hot dog stand, and
hired some help.
wonderful
rented
v
more
"At
.
that
time
■
the .man's
son
who had been away to college re¬
turned home. He saw all that the
old
had
man
him,
done
he
and
told
'Dad, don't you know that
a depression
coming? Don't
know it's dangerous to sink
there's
you
your money in this project when
the whole, economy is liable
to
blow
serious
is
in
up
minute?
a
recession
There's
a
ahead, the bust
the way, and you had bet¬
ter watch your step I'
one
(. "The
self,'
old
thought to him¬
man
'Well, 'if. Junior
has
studying economics in college. He
should
know
what
he's
talking
about, I'd better go easy.'- So the
old
fired
man
his
help to cut
down his overhead, took down his
Signs, began to be a bit stingy
with
the
mustard
"His trade began to fall off, and
(-
his
margin
and
to
give
he
of profit
less, until
business
left
said
As
up.
said
Junior
to
was
there
soon
and
soon
was
as
was
a
less
was
he
no
so,
golly,
he
—
depression
an
element of truth in
doleful refrain on every side
today? 'Be careful,' 'There's bound
to be a big blow-up.' 'The bust is
coming.' The tragic thing is that
So many businessmen
accept the
idea, and they start to take it
same
their
on
advertising;
inventories,
buying and their
they cut down their
cancel back orders,
and then wonder
selling
more
of
why they are not
merchandise. And
many
goods. The cost
it
all
declining
mean?
remember
us
predict
Well,
it
that
was
of
recession.
a
That experi¬
that it is impossible for any¬
to pose as an expert so far as
us
one
down
or go on part time for lack
orders, and the businessman
points to the increase in unem-?
ployment and says," 'See, what
df
a
i
I knew there
recession .coming.'--
\
-
picture is
with
our
men of little faith I
recommend the words of
late
President,
spoken
in
another period of economic crisis:
.''•"'The only-thing we'.have
fear. is. fear
many annual reports are still guessing
ing required of investors is being reduced.
itself—.nameless,
reasoning, i? unjustified-
to
un~
terror
worked
as
out in
the amount of
games,
;
SEC t;
f
guess-
Many Annual Reports Still Are Guessing Garnet" That is the headline of a
a
fairly recent issue of a well known financial weekly. The author's prin¬
cipal complaint is. that ".
all too many companies still feel satisfied merely to
present a
short article in
.
statement
one
of
year s
.
<♦>.
•
-
re¬
r—
r-——-—
——
Exchange Commission with
sults and leave
but
parative statements.
holders
proxy
statements indicates
jit to the stock¬
holders'
b
r y
or
search
ci
mem-
q v er
the.
.
plied
comparisons
changes' from'
densed
Six out of 34
the
only
ing
in
support of this
assertion
the
American
condensed
of
this
of
reports
of 58
only
-
of
One
-
group
Accountants'
nual
tables.
consolidated balance sheet
balance sheet of an uncon¬
and
an¬
a
a
companies published
.
cheerfully
sheet
sends
its
to
out
"
j
noth-4
itsj
stock-j
holders, and if the latter exhibit
enough interest in the matter to
con¬
another
that
request
published reports, 16
reports omitted comparative fig¬
ures
entirely and 11 others in¬
cluded prior years- figures only in
In
Institute
Of
hide
to
balance
group of 58
preceding
year'.'':
summaries.
-•
officers
the
"A corporation which has
supplied no compara¬
figures and five others sup¬
tive
not* to
and
and directors.
a
continuance,
slowly, of the trend to com¬
companies
re¬
dis¬
to
of
525
C.
Earle
the
professional
Such
probably
auditor
a
be
Therefore,
possible and dignified
every
the
with.
of
attached^
be
will
request
complied
certificate
auditor
in
way:
should
impress upon'
stockholders the many advantages
to
themselves
of
such
procedure.
"The value of the
publicity of
subsidiary. The
audited accounts cannot be over-.
amounts of the net earnings and
estimated.
In a general way aR
depreciation for the year were
solidated foreign
King
com¬
parative
be
reports.
The
disclosed
only
ience
irritating
an
for
irl
But let
author
little
a
President's
the
-V -T
port.
to feel that while this may
seems
into history
considering other
go back
me
before
corporations
re¬
T;
inconven¬
;..;A
politics and inter¬
affairs
that
those
of
us
who try to take an objective view
of
the
picture
splashes
have
of
red
been
nomic
and
daubed
art
politics
lies
the
"It
is
to
easy
such
a
talk
much
more
about
of
to
have
we
definite-way. There
is an old expression that, 'Those
who can,, do; and those who can't,
teach.'
is
the
firing line who are required
to take positive or negative action.
on
An economist
about
a
be dead wrong
can
trend such
as
we
are
wit¬
reports
been
"Auditing
will show
years
i
have
in 1912,
audit". "The sixth' in his list
.why the movement should
so
slow..
formation .which
has
year
18
more
tive
statements
in
r
Of
to
-
-
1947
to
-
One
crop
and
stockholders might be served would be to
Securities
form
and
the
to
English
stockholders
annual
meeting
uate School of Business Adminis¬
of
New York University,
City, May 10, 1949.
countant
company
his
a
the
as
elect
con¬
at
auditor
of
is made
.
the
to
reason
"It
:
is
about
can
certain
as
be
that
as
and
annually,
to
the
a
far differ--
public opinion would
have resulted.
ac¬
"Corporations which
,
the
are
tive about their accounts
isgue statements
stock¬
(Continued
can
page
30)
disastrous to those
prove
$3,150,000
.
"That is why I feel that bankers
should
today
keep a very sharp
the economic picture aS we
.a banker has a definite
eye on
see
The
maintain
Railroad
pros¬
perity in his community. The bank
is the leading enterprise of
any
2
community, and its responsibility
in community building is based on
the
service
it
renders.
That
Among
must
all
be
people,
to
one
the
maintain
banker
To
To be
balance, especially during this
period
when
unreasoning
fear
have
our
serious
Equipment Trust Certificates, Series I
annually $210,000
'•
-
to
-
•
V
yield 1.45%
'
♦
Issuance and sale of these
Reginald Dunbill ls ;
(Special
to
The
CHICAGO,
Dunhill
with
has
Lee
The
:.
v,
Certificates
.i
■
2.825%, according to maturity
to
: *;
•
'
•.
•
•
•'
'
•-
•
•
•••
:
•
subject to authorization by the Interstate Commerce Commission.
may be1 obtained in any State in which this announcement is circulated from only
undersigned and other'dealers as may lawfully offer these securities in such State.
Financial
Chronicle)
ILL.—Reginald
become
Higginson
HALSEY, STUART &. CO. Inc.
O.
-
associated
Corp.,
231
R.W. PRESSPRICH & CO.
"Mr. Dun-
:
OTIS & CO.
FREEMAN &. COMPANY
(incorporated)
has
he
was
an
officer'of
Wampler & Co. and
A. O.
"
-*■
«
♦-
••
are
•
Offering Circular
such of the
recently been with the
Treasury Department. Prior there¬
to
:
Higginson
South La Salle Street.
hill
each April 1, 1950 to April 1, 1964, inclusive
'*
...
With Lee
on
guaranteed unconditionally as to payment of principal and dividends by endorsement
by The Delaware, Lackawanna and Western Railroad Company.
Priced
consequences
domestic economy."
mature
.
of
could
Company
(Philadelphia Plan)
sense
a
Vz%
re¬
sponsibility is greatly increased
during times of economic flux.
in
Delaware, Lackawanna and Western
it, for
to
Stern,
a
partner in
Slaughter & Co..
V
,
WM. E. POLLOCK &
Way, 26, 1949.
•
t
." :
'
"
•
CO., INC.
'
■
j.-
secre¬
which:
certified
not
on
or
at present and nothing
damaged except his own
reputation, but let a banker mis¬
interpret the situation and his ac¬
tion
news¬
commencing,
four years ago,
say,
the
sent
be
who depend upon him.
any¬
certified
if
nessing
will
there-*
reason
publicity has been shunned. ;;
ent state of
for the ensuing year, and
report
four
During this
mysterious
some
secured
method.
professional
dollars
or
public, setting forth
papers
end
an
of
three
statements, of operations had been
manner.
in which such
way
For
thing
corpora¬
reasonable
There
New York
a
by
companies.
to the
nor
for.
tion) should be protected in every
than* in
*;An address by Mr. King before
Alumni Association of the Grad¬
tration
of
millions
lost
these losses and the
-
case
another,
ical statements to their stockhold-,
business (the stock¬
a
two
been
these
ers
he
interests of the real pro¬
feasible
the
•
-
newspapers
after
time they have not made period¬
was
which
to
respect
holders in the-
compara¬
-
reports
;
"The
sup¬
sampling of the current
of, ,1948
with
shows that prietors of
companies used
1946.,
A*
been
said:
in¬
Corresponding
plied for another
public
the
been
least
at
discussed the major advantages of
;an
in
ordinance
one
passed regulating fares/
of • course,
reducing
them*
During the last four or five years
Theory
While hopeful land Practice," published
attacked
and
who,
University, in the first
his
the pub-!
serve
"For
instance, in New York:
City, the taxicab companies have I
article finds it difficult to under¬ \protection,of stockholders and the
between
those who expound the principles
of economics and those of us right
saves
improvement, the writer of the
furnished
parallel
a
that' subsequent
an'
busi¬
a
some
"There
from year to year.
be
conditions. It ;is
banker for
a
edition of
who
rare person
stand
economist
an
New York
the
sec¬
^
difficult to be
or
to act in
whose
field
situation. All he has
do is
nessman
be
eco¬
only
are:
ondarily economists.
in
that
the
men
in
who
and
purple
on
by
canvass •
chief
only the loud
see
from financial centers unless he is
be
•
has
^publications it is a serious matter among -other ;
appointments, was
the current
completely mixed up for, the small, stockholder removed formerly a lecturer on auditing at all,
so
to
lie.
A Retrospect
Mr. Robert H. Montgomery
attempt to
any way
rently being produced.
financial
believed
are
making unreasonable profits, par¬
ticularly all corporations which in'
aspects of the annual reports cur¬
investors having access
to statistical services and
-
domestic
national
;
;<"To these
would
of accounting!deficiencies and di musses forms of statements
cases
"Just like last year,
was
V
-
;
made by regulations of New York
notes lack of precision in use of terms. Calls
progress
regulations. Concludes, though too
I
domestic economic situation is
our
concerned.-
then their sources, of supply close
did I tell you?
attention to
study
last year should convince all
ence
responsibility
the little story. Can't we hear the
easy
all
com-
F
"There is
Exchange Commission
history of corporate publicity and marks
Stock Exchange and SEC. Cites
examples of progress and
only a little over a year, ago that panies for fiscal years ending
commodity markets took a sudden July,1 1946, to June, 1947, is cited
as showing that
297, or 57%, Of
plunge,
and
countless
experts
rushed forward at that time to the companies provided no com¬
forced
did
himself, 'By
certainly right
ing!'
c
became
there
he
on
to Investors
*
and
relish, and
Stopped buying hot dogs and rolls
in quantity.
25%
consumer
"What does
been
.
to
steadily for the past six months.
was
making
10
of living index has been
for
he
changed from a sellers'
a buyers' market. Prices
from
cuts
my
along in years and was looking
something to occupy his time.
months
started on the decline, with
larger manufacturers announcing
story. It is
was
few
a
have
Allen stated:
V
have
we
Speaking
on
this topic, Mr.
past
n
"Too
in
the busi¬ own time. It would be foolish to
ness
outlook,* deny that we^are in the midst of
emanating! a period of economic adjustment,
ing
largely from
economists,
and
SEC official traces
which paralyzes needed efforts to
"This
(2271)
Accountant, Securities
'
r
V
CHRONICLE
By EARLE C. KING*
Frank F. Allen, President of the New Jersey Bankers Association,
who is also President of the Seacoast Trust Company of
Asbury.
'Park, N. J., in the opening address at the 45th Annual Convention
of the New Jersey Bankers Association at Atlantic City on May 12,
v
FINANCIAL
Getting Financial Data Over
?
Frank F. Allen tells New Jersey Bankers doleful refrains
regarding
business outlook are factor in producing depressions.
Says econ¬
omists
&
to,
THE
(2272)
12
Thursday, May 26, 1949
FINANCIAL CHRONICLE
&
COMMERCIAL
the
British Exports to
Looks For No Increase of
Canada Without Sterling
*
if
*
r
,-V
,
of
exported by Britain to Canada,
Devaluation
i
By WILLIAM J.
May 19 the Canadian Exporters Asso¬
ciation, of which he is the General Manager, John A. Marsh warned
that British export prices must be reduced or the- pound sterling
devalued to a realistic level if Canada is to increase purchases of
British
the
Board
'I rade, throw
of
McKAY
Mr. Harold Wilson,
into clear relief the
President of
tremendous
British
"During the
confront British and Canadian foreign trade. last few weeks
stake in the United Kingdom market is
there
has
-jeopardized as a result of the dra-4i>
been persis¬
?.matic change in world economic form of economic and financial tent
talk
in
conditions.
First and fo-emost if artifice.
t h e financial
The current efforts to preserve
now appears inevitable
that off¬
circles of
at all cost an artificial valuation
shore purchases in Canada under
London,
a
of the pound have a* striking re¬
the ECA program for shipments to
good deal of
Britain will be sharply curtailed; semblance to those made in 1931.
it
influenced
At
that time also natural eco¬
it is obvious and logical that the
by the thinkmounting U. S. surpluses of items nomic forces brought irresistible
in g of this
now purchased wnh U. S. dollars
pressure
to bear on the over¬
level
of
Sterling. Ex¬ continent, that
in Canada will
be increasingly valued
without de¬
diverted into ECA channels.
change reservesii were dissipated
valuation of
in a vain effort to stave off the
'7 A further apparently insuper¬
inevitable outcome.
The Social¬ Sterling it
able obstacle in the path of Cana-
-problems which
•
now
measure
Canada's vast $7C0 million
dian-U. K. trade is in the increas¬
ing difficulty of
British goods to
compete in the Canadian
market.
situation is
only too evident,' as Mr. Wilson
makes it clear, that in view of
Britain's
growing U.
S. dollar
deficit, British purchases in Can¬
ada must henceforth be financed
with the proceeds of British sales
in Dominion markets.
Even last
year when conditions were more
favorable Mr. Wilson pointed out
that there was a deficit in U. K.¬
Canadian payments of $470 mil¬
lion, and at the present time Brit¬
ish exports were paying for only
35% ~of British purchases in Can¬
gravity
The
of. the
ada.
'
this serious
situation, Mr. Wilson was unable
outlined
Having
to
suggest any constructive
this
stances
circum¬
existing
tion.,". Under
is
solu¬
certainly
not re¬
markable; handicapped by an ex¬
cess ~of
artificial
controls and
restrictions, the rigid British eco¬
nomic system is not sufficiently
flexible to cope with current con¬
ditions. Unfortunately also recent
statements by Chancellor of the
Exchequer,
Sir Stafford Cripps
offer little hope of any immediate
yielding
world-wide pressure
to
policy
that seeks to perpetuate wartime
trade/ restrictions and exchange
for
a
reversal
cQntrols.
of
.
British
,,
, .
offered
What alternative can be
in
Sterling devalution?
British exporters be called
of
place
Will
upon
point where
sold abroad at a loss?
to cut prices to a
in
then
Government
ist
will
power
ties
to
ment.
will
a
of natural
ation
more
once
meantime
the
the
urgent
will
a
that
in terms of the
stand in fa¬
there
was
CANADIAN BONDS
in
dollar and in terms
of disappointment,
Conference in
that it was
not desirable or necessary to de¬
value the pound. If this course of
action is not taken then it seems
likely that British manufacturers
will need to follow the course of
evi¬
before a Press
days
ten
ago.
the Austin Motor
Company,
month, cut 25% off
last
price of their
and that the
United Kingdom suppliers had al¬
ready been given instructions by
the government to put Canada on
buyer's
market,
of
on
a
and
nouncement
him
be
Kingdom
course,
We welcome the help
it.
which it will be to our lumbering,
and flour industries. The
fishing
amount of money involved, how¬
$25 million, when measured
against the loss already experi¬
enced in our export trade to the
ever,
is not large. It
Kingdom,
United
is, however, an indication of the
willingness on Britain's part to
reopen
her
market , to certain
surpluses which have
been banned or severely
Canadian
either
restricted.
"It
clear
seems
course
that
Canada's
should be the purchase of
British-made goods whenever ancl
Wherever possible.
It will be .the
problem of the United
to arrive at a
which
will
competition in
meet
market and
the
Canadian
ery
dates competitive
securable
Kingdom
price for their goods
deliv¬
with those
elsewhere."
"Much
the
By JOHN DUTTON
tell people
Weir & Co. Ltd. of Toronto, placed
a full page advertisement in the "Globe and Mail" which was entitled
"What You Should Know About Buying Stocks and Bonds," Welling¬
ton Jeffers, who is financial editor of the "Globe and Mail," after
the advertisement had appeared said: "That was a remarkable page
advertisement which McLeod, Young. Weir & Co. Ltd. had on page 7
of the "Globe and Mail" yesterday, I do not recall any previous in¬
stance where a firm of investment dealers put not only their/own
organization but the whole business of buying and selling invest¬
ments out on the counter for the public to look at
. . every person
who finds that advertisement should preserve it for study and for
reference."
motor vehicles sold
United States.
Canada would like
as
goods and
purchase many more
this full page ad. "What is
What is a broker? His functions. Why Buy
Bonds and Stocks? Putting money to work. Benefits to the investor
and the country at large. What is a Bond? Maturity date—interest—'
when paid—yield?
What is security for a bond? Government and
Municipal bonds. What other features do bonds have? How to under¬
stand the title of a bond. ; How to buy and'sell bonds. How the in¬
vestment dealer buys a bond issue? What are stocks? What are pre¬
Here
an
great volume from Britain, I do
see how this is possible until
not
British
duced
goods are drastically re¬
in
price
and
deliveries
pound Sterling
realistic level.
In my opinion, the United King¬
dom Government will choose be¬
tween these two courses of action
shortened, or, the
is
devalued
in the
near
to
a
future,
in plain language what they
stocks and bonds? McLeod, Young,
which,
in
that you could
should know about .buying
often wished that there was some way
Have you
the dollar
to
There was little change
Securities Salesman's Corner
and the
in Canada
corporate-arbitrage rate
Which remained steady at 11%In this event the case for Sterling
adjustment would require no fur¬ IOV2 %• Stocks were dull and ne¬
glected with a sagging trend still
ther advocacy. As matters already
stand
insistence
on
the main¬ in evidence. The golds provided
the only firm feature despite the
tenance of the $4.03 pound can no
reiterated denials of currency de¬
longer be justified on economic
valuations, but the Western oils
grounds. The present situation is
ceased to run counter to the gen¬
all the more anomalous since re¬
eral trend following disappoint¬
start has been made to every other
ment concerning drilling results
of the second Golden Spike well.
goods are
measure
a
Rome
underlying
supply,
especially of Canadian
Nationals.
The internal Domin¬
ions were also firm in sympathy
with
the
somwhat mysterious
strength of free funds; perhaps
the imminence
of the Federal
election has some bearing on this
situation.
that
provoked the Chancellor 01
to maintain, as he
did
growing
a
aim
He has stated that the
United
Kingdom fully realized
that the world had moved from a
world seller's market to a world
I think
the Exchequer
•
although
bilateral
and that her ultimate
multilateral
trading.
this is a
Sterling is
currencies.
"It is probably because of the
strong psychological resistance to
the
idea of devaluing Sterling,
During the week the external
section of the bond market was
of
mentioned by
of other world
that
dence
number of
a
possible.
overvalued, both
becoming much
plus
steady
Britain had concluded
United
was
placed by
in Canada,
welcome an¬
we
compliment
would
dollars
lion
index
indication
clear
wartime controls
still fetter foreign trade and
finance?
as
a point or two.
fair to assume that
it is
the
of
removal
Marsh pointed
in the
measured by
only lost
realism and the
of currency
that,
closing of this gap import restric¬
tions would be lifted
wherever
dropped scores of points, whilst
the
United Kingdom index has
Although her wholehearted
endorsement of the terms of the
Bretton Woods' currency agree¬
ments have so far failed utterly
to achieve their purpose, Canada
can still render signal service by
vor
said
Com¬
following his
continued to ad¬
vance from 360 to 405.
Since that
time the United States index has
trade.
taking an early firm
to,:'sell
of prices
Kingdom prices as
Reuter's
sooner
bring about
has
import restrictions in such Ster¬
ling areas as were under her con¬
trol and that in the process of the
Marsh
Moody's Index, fell in 1948 from
452 to 390.
Despite this United
rather
world¬
wide currency showdown. Canada
has not hesitated in the past to
take the initiative in an effort to
secure
freer and broader world
outlets,
later
than
A.
countries
States,
United
necessity of other countries out¬
side Britain to maintain foreign
trade
John
level
"The
to the recovery
He
states also that if the gap between
the dollar and the pound
were
closed Britain would readily lift
was
Continuing, Mr.
out:
economic forces
cause history to
repeat itself?
In
cline,
said.
coalition govern¬
Perhaps the normal oper¬
form
He
agreements with European coun¬
tries that this was now on the de¬
enough goods in North America to
close the dollar gap," Mr. Marsh
the opposition par¬
necessary
Europe.
considerable
Sterling
the
was
whereas
possible for
finally
had
to admit defeat—
Sterling was permitted to find its
true level—the Labor Party called
in members of
it
of
be
never
by
countries was a
preliminary
to
multilateralism,
pean
made? by
of Trade and
Minister
return from
the
United
Kingdom that new
orders to a total of some $25 mil¬
the
in a
Euro¬
necessary
pursued
Britain with
bilateralism
the
announcement
"The
merce
\V-
goods.
*
our
Addressing in Montreal on
Recent statements in Ottawa by
preferred list in the supply
engineering capital equipment
,
•
are
some
of the topic heads of
investment dealer?
ferred
What are common
stocks?
sell
Why do security
stocks worth?
prices change? How are stocks traded? What is
What docs it cost to buy and sell stocks?
When
a
stock exchange?
should you buy or
UNLESS HE CAN
More about
stocks? NO ONE SHOULD SPECULATE
TO TAKE RISKS. Why not get acquainted?
AFFORD
for the asking?"
whole lot of information to
bonds and stocks
put into one advertisement
that the "man in the street" will understand,
but McLeod, Young, Weir & Co. Ltd. did it. Then they prepared an
eight-page folder that was reproduced from the advertisement and*
they have also made it available to those who would like to study
the information which they have so well put together. AND THIS IS
That is a
and to say it
in
a way
opinion has
seemed in the last several weeks
to have undergone a change and
WHAT THEY SAY IN A SEPARATE LITTLE STORY ON PAGE
the utterances of The Right Hon¬
SEVEN.'
"ABOUT OURSELVES"
ourable Harold Wilson, President
of the London
Board of Trade
"Since few investors have the time, facilities or inclination prop¬
since
he
came
to Canada last
erly to investigate securities at first hand, reliance must be placed
First
week, have shown that the United
upon the representations of the investment dealer.
That is why it is
Kingdom
Government is well
(Special to The Financial Chronicle)
important for investors to be assured of the firm recommending
aware of the critical situation af¬
CLEVELAND, OHIO— Ray¬
securities—its reputation for fair dealing, its past record, experience,
fecting
Canadian-United King¬
mond F. Menning has become as¬
responsibility, and facilities for careful investigation of the secur¬
dom trade and is prepared to take
ities it sells."-. 1 7v-b%-'v
sociated with the First Cleveland
•'■■■:.mk 7
steps to better it.. I cannot help
Then a history of the firm is given and mention is made that
Corp.. National City Bank Build¬
but think that the action of the
the organization was founded over a quarter of a century ago. Also,
ing.
Mr. Menning in the past was
Canadian Exporters'
Association a resume of institutional and other important classes of investors was
an officer of Johnson, Kase & Co.
in its various representations to
mentioned as being customers of the firm. Direct wire connections,
our
government, - which in turn
the statistical service, and the work of the correspondence depart-,
has
brought
pressure
on
the ment which renders a mail service to investors were also explained.
James Ebert Adds
United
Kingdom
Government,
(Special to The Financial Chronicle)
In conclusion: "Our sales representatives are carefully selected and
have had a goodly part to play in
trained., Most of them are university graduates.
They began their
BAKERSF1ELD,
C A L I F.— this
change of attitude.
business careers with us and have worked in every department be¬
Clifford
R.
Dickhut has been
"Mr. Wilson in speaking to a
fore going out into the field. For character and knowledge, you will
Press Conference in Ottawa last
added to the staff of James Ebert
find the members of our sales organization worthy of any confidence
Monday is quoted to have said:
Co., 630 Chester Avenue.
that you may place in them. They will be glad to call upon you at
'Our objective is convertibility
your convenience during the day or evening. As Investment Dealers,
of the dollar and the nound Ster¬
it will be a pleasure for us to serve you and by the value of our
ling but we have a long way to
With Francis I. duPont
service to you warrant your confidence and good-will, not only by
go in balancing trade between our
'Special to The Financial Chronicle)
an initial transaction, but for many years to come."
countries before we can obtain
This is an excellent piece of sales literature. It. tells the story of
LOS ANGELES, CALIF.—Ru¬
pub lie
"British
Raymond Menning Willi
Cleveland Corp,
GOVERNMENT
PROVINCIAL
•
MUNICIPAL
CORPORATION
CANADIAN STOCKS
"
A. E. AMES & CO,
INCORPORATED
that.'
TWO WALL STREET
pert C. King is now with
Francis
NEW YORK 5,
I.
634
South
N. Y.
&
duPont
Mr. King was for¬
Spring Street.
WORTH 4-2400
NY
1-1045
Co.,
merly with Cohu & Co. and
rill
Lynch,
Beane.
.
:
Pierce,
V'-
since
outline
Britain's present position and the
probable
steps that
might be
Wilson's
"Mr.
he
came
Mer¬
taken
&
trade.
'■
seemed
Fenner
-
to
to
,
utterances
Canada
improve
our
mutual
that, while it
paradoxical to say that
He contends
simple language that any high-school graduate
understand. It is a real attempt at investor educa-,
lion.
I do not know whether our Canadian friends have any. extra
copies or not, but you might write to them at £0 Ifing Street West,
Toronto, Canada. Maybe they haye <a ;few'gopies theyCcan spare—it is
a mailing piece that you should read.
More of this kind of advertising
can be used everywhere.
;
;
•
:
investment in plain
should be able to
Volume 169
Number 4806
THE
Business Is
COMMERCIAL
FINANCIAL
&
CHRONICLE
(2273)
Getting Its Second Wind Jflff Fairless Optimistic
13
on
By LEONARD A. DRAKE*
i
v
Economist, Philadelphia Chamber of Commerce
;
-
.
Business Outlook
.
Asserting adjustment to buyers' market and temporarily-reduced demand for manufactured goods is
being taken "in good stride," Philadelphia economist points to impressive backlog of automobile demand,
large foreign orders, including military material, as basis for belief that outlook well into 1950 is for
1
U.
Addressing the annual dinner<£meeting on May 18, of the Cham-' if
ber
Business today is doing all
right, thank you.
'Taint booming along at quite the fever¬
ish pace of 1948, but there will be
sixty million employed this summer — and that was
Henry Wallace's dream goal for a postwar millennium as we all remember. A good case
can
be
that
this
buyers'
in
tered
mar¬
the
lion
tally
sounder
year
and
saner
dates
for
than the infla¬
more
than
sellers'
of
1949
we
go
from
here
is
the
I
Leonard
A.
Drake
Backlogs of such basic in¬
as
automobiles, heavy
dustries
.construction
and
steel
to warrant our
as
■while the full
still
are
confidence;
impact of European
recovery expenditures is only now
being felt in the American market.
The
supports
tional
and
beneath
economy
fact
that
has
ours
in the
this
lasted
decade; truly
the
na¬
measurably
strong despite
are
impressively
the
proseprity
for
of
than
more
a
record performance
a
history of American busi¬
ness.
wind
is
getting
and, in the
verting from
sisters
are
of
second
of
process
con¬
buyers'
a
casualties. Weak
(particularly
group
its
sellers' to
a
market, there
new
and
war
the
among
postwar
establishments) are falling by the
wayside under the brunt of fierce
competition.
work of
Within
the
considerable
undoubtedly
postwar
turnabout
in
prices
has
more-than-normal
a
ture
period of rising
prices,
it is often profitable to
"speculate"
in inventory—but quite the con¬
under
present
of
process
sustaining
initially
cutting down
in
sharply reduced
factory level. This
painful adjustment has already
taken place in large
degree in the
textile
and
clothing
fields.
orders
and
at
partial
covery
are
least
price
Re¬
level
well
below
a
ECA
re¬
funds
to our friends
abroad,
particularly in Europe.
Foreign
pump priming under ECA began
about
this
time
a
year
but
ago
consumer
industries
going through- exactly the
same
cycle of adjustment to
lower price pattern. Saving
grace
situation
on
is
that
that these
have
1929
the
other basic industries to carry the
eeonomy
through
the
involved
banks
far
toward
in
country was
speculation on
stock
remarkable
a
absence
of
credit abuses and marginal specu¬
lation.
Truly this is a saving
in this period of downward
grace
adjustments
System
and
renewed
competition.
Consumer
is
credit
the
has
been
on
Federal Reserve
letting down the
bars
further sharp expansion
certain—but any danger in
this direction would seem, on an¬
alysis of the figures, to be dated
at
than
approximately the
have
to
1951—rather
months
the
for
immediately
or
to
.over
Whatever
European
billion
are
dol¬
politics,
we
Year-ago comparisons tell
nificant story as follows:
;
'
.
JL948
vs.
Manufacturing
March 1949
16,269
Trade
__
&
Change
69
this
•first
period of true postwar: ad¬
justment
to
normal
peacetime
-competitive markets.
+ Automobile Demand Still
Impressive
+
backlog of automobile de¬
is
still
*An address
fore
the
impressive.
One-
by Mr. Drake be¬
Convention
tional Association of
of
the" Na¬
Credit
Atlantic City, N. J., May 17,
Mr.
Fairless said
the challenge
by dwelling on
what's wrong with the country,
but by fully assessing our advan¬
tages.-He stated that American
industry
has
fought
inflation
be
will
met, not
with
production, and pointed out
that
inflation
has
been
in
other
marked
countries
by advances in
prices that outran the purchasing
of wage
power
Mr.
earners.
Fairless
cautioned
period
a
of
that
in¬
and
monetary
flation the facts about
wages
"America's workers excel iri skill.
operation
real
engineers,
research
wages
supervisors,
technologists,
merchandising experts and busi¬
ness executives are of top quality.
Above all, America, is dynamic.
It
has
the
will
to
accomplish.
These
are
great assets and are
increased
bound to
This
make themselves felt.
"Short-term
for
developments
may
time confuse us, as
they con¬
Carnegie 60 years
ago, but I, for one, am confident
that marked progress lies ahead
for your district and for the na¬
tion at large," Mr. Fairless con¬
tinued. "We have problems, but
a
Andrew
fused
am
sure
that
they
be solved
can
This
announcement
sale,
or as an
is under
circumstances
no
offer to buy,
The
or as a
trend,"
he
"Real
stated.
increased
are
production
per man
by greater
per hour. And
productivity is made
possible by better methods, better
equipment, better plants, greater
knowledge and
increased
skill.
is
true
standard) of
everywhere.
living
can
The
be
no
higher than the production stand¬
ards of
a
country. It is productive
coupled with merchandis¬
and
business
ability,, that
power,
ing
determines real wages and living
standards. You in the Homestead
district
typify American produc¬
tive power at its best."
to
be construed
solicitation of
offer is made only by
means
an
as
an
offering of securities for
offer to buy,
any
securities.
of the Prospectus.
."
New York State Electric & Gas
Corporation
8
5,762
+ 216
+
4
9,529
—
—109
4,620
3,938
1,824
—
Common Stock
2
'
1,805
94
—
v
2
—
+
19
+
+
14
+
1
1,491
+ 255
($25 Par Value)
1
1,711
+ 21
'
.
_
__
___
Employed
Unemployed
...
__
,
+ 573
+
3,167
+ 727
62,305
+ 1,300
Rights, evidenced by Subscription Warrants,
+ 30
61,005
,
_
59,138
2,440
__l_
58.565
1
at
iiiii
+
subscribe for these shares
per
1949, as more
2%
to
share have been issued by the Company to its stockholders,'
rights will expire at 3 P.M., Eastern Daylight Saving Time, June 9,
$44.50
which
Labor Force
Thus, as of March, total national
employment was not down—but
actually 1% higher than a year
ago. It is true that the number of
credit. picture
which
warrants
a
corrective depression.
Our major
backlog industry — automobiles—
is still in great shape and
foreign
unemployed has expanded by 30% orders, including the military, may
but this is due entirely to a
sharpi be counted on to increase for
in
the
labor
force,
mostly
represented by veterans complet¬
ing their schooling.
Our national economy is return¬
somewhat " belatedly
to
a
peacetime
less
footing
emphasis
"Peacetime"
word to
use
and,
Western
of
are
,
1942-45
premium
has
we
the
wrong
fully
set
forth in the Prospectus.
.
on
taken
about
the
come.
our
outlook
for
These
the
by
to
rest
one-
special
a
manufacturingf. and
these
postwar
ratio of roughly one-quar¬
ter of national
employment. ;
"
prewar
Men,
My personal opinion is that
buyers'
the
market
adjustment
and
to
a
rarily reduced demand for
we
to
1949 and well into 1950 is for
ex¬
though ; not
necessarily
record-breaking business activity.
there
is
mon
Stock is then
plus the
amount
not
at
greater
prices not less than the Subscription Price
than the highest price at which the Com¬
being offered by others in the over-the-counter market!
of
any
concession to Dealers.
bright — not bril¬
\+';''.v'■ •+
During the subscription period the several Underwriters will
certain selected securities dealers, in those
been instrumental in
are
liant! 7":1• ■'
With
the
cases
pay fees to!
where such dealers have;
obtaining the exercise of Subscription Warrants byj
original holders thereok
Shuman, Agnew Co.
'.(Special'
to
The
Financial
Copies of the Prospectus
Chronicle)
"SAN
FRANCISCO, CALIF.—
William M. Kennedy :has joined
the staff of Shuman,. Agnew &
Co.;
155
bers
of
Sansome
the
New
Street,
York
nothing
in
the
be obtained in
San
The First Boston
Lehman Brothers
I'StlPC1"1
FT.
R.
■
"fN'
COLLINS,
Baker
staff
T»*p
of
has
Don
C-trONICLE)
A.
Merrill
COLO.—Robert
been
added
to
the
Chapin Co.,
155
Norih College Avenue.
any
State in which this
announcement is
the
mem¬
and
With Don A. Chapin Co.
tempo¬
manu¬
may
circulated from such of the underwriters, set forth below, and from
any of
selected securities dealers as may legally offer these securities in such State.
Francisco Stock Exchanges..
a
factured goods in good stride. Cer-
1949.1 tainly
unsubscribed Shares
forth above and
'
to bring this-one field of
human endeavor back down to its
taking
set
of
cellent
rearm
years
are
and any
are
conclusion
-
placed
all
that
to
behind
During the subscription period the several Underwriters set* forth below
may offer shares of Common Stock acquired through the exercise of rights
have expanded
However,. the
its accompanying
scarci-j
and
ties
be
personnel
Europe.
war
it
as
facts
which means
manufacturing., Prospects
may
military
fifth
on
time
some
the
.
The
mand
great
America's
1
4-546
1,697
1,236
Total
Total
equally
5%
—
7,393
4,729
"
:
*
au
sig¬
Change
—720
15,549
4,032
Trans..
Forces
'
have
prices are easily obscured. "It is
only by relating them to buying
power that we can ascertain their
'
Utilities
We
war.
challenge today."
73,333 Shares
5;546
_
Construction
Armed
are the best equipped in
world," Mr. Fairless declared.
plants
the
...
.
9,598 +
6,847
__
_
Public
thing to do. Ve learned how ef¬
fectively we could do it during the
during
"America's
good
and not for fac¬
advantage.'It is the sensible
Percentage
"
March 1948
,
,
a
(in thousands)
Service
tional
the
present.
Benjamin F. Fairies*
States,
■
Government
shadow
all concerned
other sections of the labor market.
we
National Employment Picture-?—1949
Agriculture
com¬
over¬
work them out for the
we
of
publicity has been given
substantial drop in manufac¬
a
on
future
a
pletely
[
amounting
a
our
Non-
turing' employment in the United
very little has been said
about the strength displayed in
a
program
something
in
While
to
year
$5 bil¬
same
rearmament
lars.
1950
Employment Shifts to
Manufacturing
offsetting
lion rate^—on top of which
apparently
late
in¬
is
threshold
that will
that
so
seems
slump
in
domestic
Congress is continuing
foreign aid for another fiscal
of
whole
margin. But, during this past dec¬
ade of booming business, there has
recent
can
automobile, steel, oil
•construction, television and a few
(national:
the
orders from abroad
new
gone
the
our
we
1907
ahead.
.
.count
in
working firm has reported to
me
dustry
the
over-extended; in 1921 the
was in major part due to a
pyramid of farm mortgages; and
for
year
<;
this
pre¬
panic
has only recently reached its full
flow. Many a Philadelphia metals-
ing,
Many other
■in
direct
a
In
a
beliefthat
were
fea¬
allocated
rise
expectation
ahead but at
ago.
;are
of credit.
the rise and
of course,
billion of
$5
re¬
logical
during the months
a
sion
These
are,
many
lies
in¬
the
a
danger signal for
price
of
Corp oration
American
A
cut-throat
sult
of- the
expressed
vious depressions was over-exten¬
orders for
machine
tools,
bearings, locomotives, electric
motors and machinery of all sorts.
conditions.
ventories to bare essentials shows
at
one
one
its: largest
ident
£++++;;::
..;+yv;
ball
Other
<
operates
Fair less, Pres¬
eign
wholesalers and retailers has be¬
s tr i c 11 y
hand-to-mouth.
up
turn,
is the increased flow of for¬
come
orders
a
1950.
number
our
Finance
a
to
assurance
additional
drop
in manufacturing
activity for the
simple
reason
that
buying
by
The
v
No Over-Extension of Credit
Foreign Orders Help
An
frame
price level downward, slowly but
almost
continuously
since
last
September. This first sustained
trary
look forward
may even
our
Competition and record-break¬
ing4 production haVe turned the
During
S. Steel
Corporation
that they are highy
to a faltering econ¬
arm,
stimulating
the
capitalistic system of
free enterprise, this
weeding-out
process is exactly as it should be.
caused
district, where-U.
like shots
the
omy.
heap.'; This is
scrap
Home¬
plan ts f M r.
government grants act
in
industry can pro¬
single year. Clearly the
business.
Business
<
the
recognize that these sizable
been
present high plateau right through
the
remaining seven months of
such
candi¬
must
my
neck out with the prediction that
business
will
continue
on
the
1949.
the
definitely
support for the present high-level
American business structure.
am
stick
to
is
willing
quite
are
Six mil¬
critical 12-
continued strong demand in
The automobile
industry, in
ques¬
tion.
and
the
and
with
Where
UnitedStates
manufacturers of lower price cars
have no major sales problem in
1946-48.
-
mark
a
regis¬
cars
10 years old.
beyond
are
duce in
haunted,
market
than
more
over-stimu¬
lated
stead
of
of
third of the 33 million
ket prosperity
is fundamen¬
tion-
Commerce
of
made
1949
marked progress
ahead, despite confused developments.
^
excellent, though not necessarily record-breaking business activity.
v
Steel President expresses confidence
S.
May 26, 1949
Corporation
Wertheim & Co.i
Lynch, Pierce, Fenner & Beane
THE
Thursday, May 26,
FINANCIAL CHRONICLE
COMMERCIAL &
Not So Healthy
The Economic Outlook
5)
tion to the point where it is pushed
out of its proper perspective. That,
Utility Securities
Public
By
(Continued from page
OWEN ELY
optimism or
much
Since
our
last review
of General
simism.
Public Utilities, the company
retire the entire S53 million funded debt
of Associated' Electric, the subholding company, from proceeds of
sale of stock holdings in its three New York properties—New York
State Electric & Gas. Rochester Gas & Electric and Staten-island
has
apoarently decided to
Some $34.5
Edison.
State common
earmarked
from the sale of New York
substantial part of these funds has been
the $2.0,854,000 "A-ELEC" 4%s on June 26
million was raised
stock, and a
to redeem
sale which
subscription basis to Gm U
the stock advancing about six
points from the subscription price of 41.
What will be the effect on system earnings of the dilution re¬
sulting from the sale of these common stocks to retire the A-ELEC
;4V2% and 5% bonds at call prices? Fortunately, in the meantime,
system earnings have made a sharp upward surge. In the first quar¬
ter of 1949 net income (including Associated Electric) was $5,580,760
was made on
stockholders, proved very successful,
stock
The
a
increase of nearly one-third.
$2.07 a share and if the
prevailed through 1949 earnings might ap¬
compared with $4 205,758 last year, an
the calendar year 1948 earnings were
In
rate of increase
recent
amounts include all the
should these figures be adjusted to a prp forma basis to
exclude the New York State properties and eliminate Associated
Electric Company's interest?
First quarter results excluded the
-operations of New York State Electric & Gas but included dividends
received from that company. The balartce of income of all operat¬
ing subsidiaries (before New York State dividends) in the March
'quarter was $5,938,374, compared with $17,378,553 for the 12 months
ended March 31. In the first quarter Staten Island Edison earned
$187,463 and Rochester Gas & Electric an estimated $750,000 (no
figures have been published for the latter).. Deducting these two
companies would leave an approximate $5 million, which projected
annual basis (with allowance for seasonal trend) might ap¬
proximate $2.75 a share;
New York properties.
but of course these
,
V
How
to
sing the physical aspect of
tion.
They are bound to
$15,000,000.
provement in productivity.
Others are convinced that all we
have
power
vinced
It is true that
ysis
in the
share of the postwar
boom, rushed duction.
sion
programs
which boosted the
rate of private capital
expenditures
way
above what
could be considered a normal rate
postwar
final anal¬
of
expansion and plant
moderni¬
to visualize.
duction
last
year
was
the egg.-
of them must be ap¬
praised together if you want-a bal¬
anced judgment.
For a long time now, w6 have
been told that there is no danger
ahead because purchasing power
is extremely high. That, however,
putting the , cart
It is an argp-f
and effect
mixed up. Purchasing power ' is
high because the production of
goods and services is high. When
production slips, purchasing
ment
new
.
prepared
They estimate
(assuming 7,170,company
while earnings'
of the Philippine subsidiaries should double from the 1948 level, of
$1,500,000, only one-third of the $3,000,000 earnings would be paid:
out in dividends. If two-thirds were paid out, this would mean an
additional 14 cents for the parent company which would raise the
parent income to $1.44. However, it seems probable that eventually
the SEC
require sale of the Philippine companies and hence it
unsafe to capitalize eventual earning power at a very high
be confirmed by a recent study
by Model, Roland & Stone, a Stock Exchange firm.
tliat GPU can enjoy consolidated earnings of $2.23
000 shares outstanding in the middle of 1951), and parent
earnings of $1.30. However, the study assumes that,
results seem to
power
gets cause
that
slips right with it—as in-'
deed it has done
ber.
since last Decem¬
;
-
Why Production
Why, then, has
*
Is Declining ';
production been
since last October-No¬
vember? Obviously because de¬
mand for most products declined,
and is still declining, and obvious¬
dropping
may
and more manu¬
coming to the con¬
clusion that, at this stage ot the
ly because more
seems
facturers are
earnings.
current trends a GPU dividend rate of perhaps
and $1.25 by 1951 would seem a reasonable expecta¬
tion.
If capitalized on a 6V2 % basis, resulting prices would be in
the range of 15%-19.%. The stock is currently around 14%; Of course!
the sales of Rochester and Staten Island might result in valuable
rights to stockholders and expectation of these rights may be re¬
flected in the current quotation to some extent.
the basis of
$1 early in 1950
game,
there
stemming
Pipelines are full.
are buying
on a
ent, level
why pro¬
driven to
not even
inuch because they are once
more
trying to reduce their inven¬
The bloom' is off the de¬
tories.
ferred
We
—
many
and
consumer
the pres¬
demanda
real
durable goods produc¬
cause
a
secondary wave
of downward adjustments in
most
non-durables because it would be
accompanied by: more unem pay¬
ment and enough general uncer¬
tainty
the, part; of buyers to
purchases further.
.,
is what the
on
curtail
This - eventuality
Government is now
ing...
replacement buying boom.
'i struggling
back to a
basis
in
still afraid that
in
will
tion
of
am
decline
....
.
closely watch¬
.
Administration's Viewpoint
are
straight replacement
?
At
present, the
i
U-
Administration
outlook
does not yet warrant the start of
non-durable industries
a
large-scale anti-deflation pro¬
felt the drop in demand first.
gram. Members of the President's
Some of them started to slip as
.Council. of Economic Advisers—
long ago as last summer. By fall,
for once apparently unanimousthey were in almost uniform- re¬
we
-
don't like it.
believes that the economic
As usual,
are
now working on a blueprint
for action in case the business de^
industries—ac¬
cline
threatens,, to4deepen. • But
counting for about 40% of total
they don't think;"that they will
production, as against 60% for the
have
to
swing into actio.i this
non-durables—kept up full blast
year.
. 1
''
/
longer* because of the postwar de¬
I have repeatedly tried to nail
mand for automobiles and the unsome members and officials of the
precedfented size of "postwar order
Council down to say whicu point
backlogs for producer goods of all
in the Federal Reserve Board pro-descriptions—from heavy generat¬
duction index or which level of
ing equipment to builders' hard¬
unemployment they would con¬
ware.
treat.
......
Durable
goods
.
signs,
is also
changing. The demand for. steel,
There
chance for
in
sales
reductions alone.
is little
the
Manufacturers
hand-to-mouth
basis—and in many cases
that
goods, and
been cut to well below
but. I
There lies the answer
It is true enough that
non-durable
zation.
■\
j
,
„
.difficult
instances production, as well, have
-
is very much like
before the horse.
im¬
the
~
11 fjrid,.such;a pattern
with bigger and better expan¬
in
strictly in the same cate¬ nearly twice its prewar level.
gory as the perennial puzzler of
Obviously,
a
relapse had to
which came first, the chicken or come. Consumer shelves are filled.
The: two
of
industries
industrialists, which are already well along with
trying to boost their individual adjustments in i prices and . pro¬
if
out
balance
be offset by
non-durable
portant
surplus soared.
And
American
longs
pears
On
sound method
ing to lay their hands on Ameri¬ able industries may
a
recovery
in some
can goods of any kind. Our export
serious eco¬
nomic
-distortions
are
to
be
avoided. > But
trying to decide
which of them comes first, be¬
may
multiple of
ward
consumption and production
must
It seems
York properties.
fear-inspired for¬ [Administration will let things get
buying rush for the purpose [that far without throwing its re¬
sources into the breach.
of building up larger inventories.
Some observers anticipate that
But even that was not all. For¬
eign nations were feverishly try¬ 'the impending decline in the dur¬
started another
lip.
taxes
of the New
of
holding the purchasing: power
of
vidual fields.
That is why, if left alone, heavy
inventories were
goods industries could easily drop
down to bare minimum working
stocks. On top of this deferred 130 to 40%
below their postwar
demand, last year's announcement [peaks within the
year. There is
of
our
rearmament
program .little chance, however, that the
Manufacturers'
But merely passing out
business.
were
retailer, were empty.
down to the
is to hold
purchasing
policy
a
dollars is hardly a
an
arising from sale
by
big
the
will
programs
goods. ILieir industry time to adjust its facili¬
empty; their ties to the present market demand
—before it starts to project mture
electrical appliances out of order;
needs. Such periods of hesitation
and of course, everybody wanted
a
new car.
Distribution pipelines, are the only sound way to avoid
in indi¬
from
the wholesaler and jobber serious over-expansion
higher
wages,
lower prices and lower
profits—-reinforced by a perma¬
nent high level of government ex¬
penditures, especially public works
and larger social disbursements.
There is, of course, no
doubt
that a high level of purchasing
power is synonymous with good
of
These
the so-called
completion,
be whether or not
will be launched to
take the place of the completed
ones. That still is the $64 question
today. Our guess is that a pause
in the postwar expansion drive is
likely, not only because of present
tax uncertainties, but also to give
new
consumer
shelves
closet
theory and they are con¬
that -this
goal can be
reached
postwar boom
result of extra¬
the
of
direct
starved lor aura Die anu non¬
were
power at or near its
peak level. They are fol¬
lowers of
approxir
elimination
Associated Flectric would cancel 107,000 shares of GPU stock and
additional 419,000 shares may also be eliminated by July, 1951 it
security holders of predecessor companies do not claim these shares,
likely that some part of this stock may have to be issued,
it
be reasonable to assume that instead of the present
aporoximate 7,700.000 shares there will eventually be outstanding
about 7,300.000. On this basis, the net income of $14 million (as es¬
timated above) would amount to about $1.92 a share. Thus it ap¬
that the effects of rate increases, economies resulting from
generating equipment, etc., may largely offset the loss ol
income
to keep the
going indefinitely,
recent
rest
the
durable
purchasing
holding company debt is eliminated, tbgether
with the interest charges of Associated Electric, expenses and
of GPU might be reduced to around $1 million leaving
mately $14 million net income for 1949, pro forma. The
and
do, in order
to
boom
The
their
After
problem
prewar.
was
produc¬
end up
pessimistic — particularly be¬
cause they are likely to underesti¬
mate the factor of continued im¬
....
Assuming that all
over
too
an
proximate
observers
Some
dollar, purchasing power
merely
leads to too
ordinary and, unfortunately large¬
too mucn pes¬ ly self-defeating,- factors. When
the war ended a tremendous de¬
are overstresferred demand existed. Consumers
inevitably,
almost
Utilities
General Public
'
1949
(2274)
14
however,
drop
through price
Obviously,
distortions
are
now
definite
that this picture
by far the most
significant baro¬
sider
nals
points, or as sig¬
launching of a con¬
anti-deflation program.
obvious reasons, they don't
to be tied down to any spe¬
danger
as
for the
centrated
For
between meter of
like
thq heavy industries, is
cific point.
supply and demand developed so
(
easing and steel production has
fast since late last year that one
But\it is my hunch that the
already
been
reduced slightly.
manufacturer after the other, one
Automobile makers are expecting Administration will swing into ac-'
industry after the other, are now
tion —with heavy guns —if and
selling trouble as soon as the
declining to cut back production.
when
industrial production gets
summer is over. New orders for
Look
at
it
this
way:
The
durable producer goods are lag¬ close to the 160 level in the Fed¬
Financial Editor of New York "World-Telegram" compares it with; > physical volume of production, ging and backlogs are rapidly dis¬ eral Reserve index, or unemploy¬
measured by the Federal Reserve
ment gets close -to the 5,000,000
appearing.
police invasion of every home to prevent crime.
Board index, reached a postwar
>
Downward readjutments in the mark.
peak of 195% of its 1935-1939 durable
At
the moment—that is midIn an editorial which appeared in the New York "World-Tele¬
goods industries, in the
average last October-November.
gram" on May 19, Ralph Hendershot, Financial Editor, in commenting
past, never have proceeded at a May—the Federal Reserve Index
That meant that physical pro¬
It was
on the plea by Chairman Edmond M. Hanrahan, of the Securities and
slow pace for long. Once they start is probably nearing 175.
duction then was nearly twice as
184 for March and 179 for April'.
to slide, they usually get going
Exchange Commission, before a Senate Appropriations Committee
large as before the war. Obviously
But there have been further de¬
downhill fast. That applies par¬
against reduction in funds for his$>
bulk of our security dealers and the country has not grown fast
ticularly to steel. A 25 to 30% clines since then.' Current! y;
organization, holds it is waste and
brokers are honest. Otherwise the enough to absorb that much more
unnecessary extravagance as well
drop in the use of steel capacity therefore, the index is nearly 20
jails would be filled with them. production. The population is now' within a period of three or four points, or roughly 10% below its
as bad policy for the SEC to make
some 11 or 12%
larger than pre¬
Mr. Hanrahan might be asked how
months is by no means something peak.
.
):
regular or frequent examinations
war and the number of new fami-;
many of these registered brokers
unusual. Some people are expect¬ y That is
already a goocl-sized
of all securities dealers and bro¬
and dealers were sent to jail or lies jumped sharply
during the:
kers.
Mr. Hendershot points out
ing such a drop before the end of drop.- But even if there are no
fined because of the examinations war. The rate is back to nearly
the current year; maybe as early major strikes in the steel, coal
that the Commissioner, in request¬
of his men.
How many segious prewar now. There has been ^ a
or automobile industries this sum¬
as in the third-quarter.
/
ing funds to examine regularly
violations of the law did they 'dis-, sharp increase in the standard, of
more than 4,000 registered securi¬
It could happen that way
v . mer, it is quite possible that the
living, particularly in those areas
cover?
index will slip below 170 at the
ties brokers and dealers, makes "as
which once were the typical back-' despite the cushion of defense and*
"It is unnecessary for the SEC
much sense as if he called atten¬
foreign
demand for steel and peak of the" summer slump in
ward areas in the country. In ad¬
to make regular examinations of
July or August.
tion to the terrible situation which
heavy machinery.
If that happens, much will de¬
these security people just as
it dition, we are now engaged in a
would exist if policemen were un¬
Private
plant expansion
and
tremendous defense and foreign
is unnecessary for policemen
to aid program, accounting roughly modernization still is rolling along pend on whether or not a satis¬
able to invade the homes of every
factory rebound occurs after La¬
search every person they meet for for about 10% of our total pro¬ at a fast clip. A large number of
person on their beats
to see if
bor Day. If the snap-back fails to
duction volume today.
expansion programs were blue¬
concealed weapons.
Some admit¬
reach its normal seasonal strength)
some of them were not committing
printed during the war for im¬
Take alt these growth factors,
crimes. Why does he suppose it is tedly may be violators of the law,
mediate
postwar
execution. •the adjusted Federal Reserve
add them together, and allow a
Board
index
could conceivably
but their dealings are a matter of
Enough of these projects are still
necessary to examine the opera¬
large margin for errors of under¬
slip back to near the 1-30 mark
public record and their clients statement—and it is still difficult uncompleted to prevent a sharp
tions of all brokers regularly?"
by the end of the year.
. !
would be quick to report fradu- to account for more than perhaps} drop in private capital expendi¬
I don't know whether the econ"It must be conceded," continues
tures
for
another - six
months.
a 50 or 60% increase in real, not;
lent acts."
•
I
Mr. Hendershot, "that the great
■
Hendershot Hits SEC Dealer
Examinations
i
.,
.
'-
Volume 169
omists
■»
4 about
i
are
consider
to
not.
•,/
160
in
Number 4806
now
a
17%
.
drop from
"deep" recession
a
THE
speaking
disinflation ; -j-
healthy
a
-
would
195
who
—
.
or
our
book, this would have
to be called a
full-grown reces¬
sion.
I
confronted
cost
problem.
costs
So
down
with
It...
or
either
was
management tried
psychological warfare. It
the
Bulletin
Board
directly to
would
such a recession
last; ho\y
"protracted" would it be?
<
ii
obtain
to
Further
further
insur¬
almost
overnight.
But don't
'v
' \
be lured
It
^
into
false
a
sense of security: improved labor
efficiency alone will not close tne
purchasing power:
present gaps
between
potential
i
(1) A cut in prices,:" resulting capacity and potential demand fast
from higher
productivity of labor enougn to avoid the need for fur¬
and management;
ther, at least temporary, cutbacks
•
[ <(2) A cut in profits-and then- in production. This will accen¬
distribution in the direct form tuate the problem of the marginal
of wages; and,
""
f, producer who will be squeezed
be used in order to
is
losses
in
in
that
probable
with
stimulate
will- ulti¬
we
receding commodity price
a
We had such
trend.
period dur¬
ing the early and middle '20s. But
a
repetition of such
a
not
likely in the
Thus
the
tar
pattern is
future.
a
near
retreat
in
whole¬
sale
prices has been quite orderly
and
moderate.
1
deceiving
because,
while
wage?
spell
the
awhile, this method would result
and
death
in: further
That
might;-, be
capital
.
boosted fa
cutbacks
little
for
of
expenditures
.
-
-
private
because
a
very large share- of these is
financed through earnings. -
,
r!
That
leaves
now
act
figures how much the national
.'product
drop
may
because
the
inventory boom is over .and the
frantic phase of the private capL
tal expenditures boom is
wearing
off. But it is conservative to es4
-
-timate
•
that
during
the
accounted
these
last
two
few
factors.
have
years,
for at least $20
a
in addition to
company's cost figt
viewing - its
record
and
against
the
general
economic
background, you must also knovi
something about. its labor rela-j
tions and the temper, of its em4
ployees.
\
billioh
annually—or just about as much
as our combined defense and for+
eign aid spending.
.
i
(
Yet, if the Government would
•
It is almost inevitable that there
will be a greater rate of mortal-among
businesses — unlesi
labor learns its postwar lesson fast
ity
.
.
like- to keep the national product
at or near the postwar peak level
'
of
roughly $250 billion, it prob-+
ably - would not :be enough
to
•
merely add another $20 billion to
Government expenditures because
there is a strong probability that;
«in
Government pro-i
executed, more private
-such'
case
•
gram
is
t. dollars
•
would
become
alarmed
discouraged and end up ■ in
hiding, instead of in investments!
(
the "chances for success?
•
'
be
can
trol
there
another
will
year,
although
be further declines.
Industrial price declines, on
other hand will likely be
erated—now
that
istic
policy with deficit financing,
leaf
;
raking;
tribution
of
building
defense
and foreign aid
outlays]
price props and * stockpiling ana
what have, you.1
-i
The purpose pf any increase ..in
gcvernmehf spending is, of course>
to bolster purchasing.
power-*-ariq
make, people. use their money" to
'
"
.'
buy.
'
,
.
the
At
moment
only
our
':,
,
;
have
we
international cold
hands; but a domestic
an
That
well.
tween
is
the
firm
steel
some
as
us
producers
picture
of
The. danger of looking at price
only is best illustrated
by the fact that a large number
of individual commodities
already
cold
war on
one
war
sellers and buyers
on
{
not
as
be¬
prices!
Public Wants Lower Prices
50
suffered very sharp declines]
fact, these losses" range;• from!
to
80%
from their postwar!
for
peaks
such
oil,
cottonseed
cocoa,
the
soft
in
in
as
oil,
totals.
current
liabilities
net
a
are
.accomplish—if if.sets out in
est
to do
A
year
thought
not
many
observers
Government would
ago,
the
able
be
earn¬
something.
to
support the
price
of its bonds. Today—the problem!
is to hold bond prices down rather
.than up.
Time and again it has
been predicted that farm prices
•
would
break right through their
support levels. Yet they are still
.up there, even though the support
floors have "buckled" from time
to time.
.
finished
Policy Turn
>;
j
Tide?^^
■
7 An all-out anti-deflation policy,!
I
feel
quite
,
sure,
could;'do
date
men t
stores is
favorable
have
That
was
$4.2
higher than at the end of 1947—
too
seem
billion.
slightly
that.
more
That
is
a!
surprising result because it means
that the physical volume of retail!
sales
thus
all—at
far
least
anj
I
This, of course, is a very much
dropped at, smaller decline than the
price col-!
over-all.
A
great lapse that occurred in
1920-21/
hasn't
all
the
.trick of turning the tide—but It!
Buying momentum, in the past,
has
frequently
carried
several'
months past the peak of the boom.
This is easily explained
at
the
first
retailers
their
would
seem
initely back
try
inventories
to
cut
down
even
if
\ this
really have to be "all-out",, means considerable sacrifices on
and not "too little, too late," as in
price. The public is usually quick
the early 30s....;
j in realizing its improved bargain-,
'( This, of course, would mean the ing position and will be
induced;
return
to an
inflationary policy to buy only if price reductions are
would
by
the
decline
to indicate.
V Commodity analysis is
on
a
now
selective
because,;
Money is going to be made
signs of real trouble,
will
degree
of
success
def¬
basis.;
or
lost
in
and it would further postpone the
substantial.
>
That puts a premium on successful
•time
when we can hope to get
Such
pride cutting; can,. of|
into
a
period of sustained but course, not the continued ad
infin¬
gradual growth—based on further! itum. There
comes a time when
gains in the standard of living and such lower
prices must be inte¬
powered by progressive price re- grated into the manufacturers'
cost
ductions as the result of gains in structure or
else.
That is
why
productivity.
v
Higher productivity holds the
key to our long-range economic
real
future.
facturers'
!
Much
can
be
accom¬
plished in this field quickly—but
any real and lasting progress will
come slowly.
'
There
is
the
story
about
the
Southern textile mill which found
thus
trouble
far
not
lurks
much
ahead
has
because
been
complished in the field of.
There
cost
ac¬
manu¬
reductions.
is Tittle
doubt
that, bar¬
,
ring an early start of a new and
potent anti-deflation program by
the
government,
retail sales will
continue to lose ground.
These
were
unchanged at
tremendous $36 billion.
a
But, of
behind this figure there is
very uneven distribution.
course,
a
No
Wave
of
Commercial Failures
Looking at the data
current
on
assets, recent price and inventory
changes and the price outlook for
the
balance
feel quite
no
of
repetition
mercial
the
year,
of
a
failures
wave
such
after World War I.
to
can
one
that there will
sure
remember
as
of
be
com¬
quickly
The
most .dramatic
curred
set
a
after
in
the
reversal
first
World
oc¬
War
1920
corporate earnings
peak and the very next
new
ended up with more com¬
panies in the red than in the black
year
—and
them
Of
fact is
indus¬
textiles,
coal
purchasing.
■
y.-i• V•
trend
Here
■/■v.i'yyy '.y1 !•■)
related to the price
is
the
inventory outlook.
again overall figures, as re¬
merce,
provide helpful background
information because they offer an
important
clue
in
trends—but there
market, such
existed
as
the
initial
the
same
during the
war
and
industries
companies
may
that
back from sellers' to buyers' mar¬
kets means a very quick reversal
in their
It
is
present
earnings outlook.
helpful, of
there is
repetition of
a
that at
course,
no
chance
for
This is miller
as
that which did so much after
World War I to push the economy
down
into
a
period of feverish
readjustment.
The
problem to¬
day nevertheless is almost as puz¬
zling. There is plenty of money
but nobody seems to want it. It is
those
one
of
you
don't need money, the banks
situations where:
as
an
offering of securities for sale,
or as an
offer to buy,
or as a solicitation of an offer to buy, any securities.
The offer is made only by means of the Prospectus.
Subscription Offer
of
.
!-
The Columbia Gas System, Inc.
The Columbia Gas
holders of record
per
System, Inc. is offering to its stock¬
May 24, 1949 the right
to subscribe at #10 J
share for 1,345,300 shares of Common Stock of the Com¬
pany as set
forth in its Prospectus dated May 24, 1949.
The First Boston Corporation has been
Company
to
organize securities dealers
tions for shares of the
certain
as
to
engaged by the
obtain subscrip¬
stock. Such dealers may, under
conditions, offer and sell.shares of the Common Stock
more
fully
set
new
forth in the Prospectus.
Any securities dealer who is
a
member of the National
Association of Securities Dealers, Inc.
may.
obtain
a
Pros¬
pectus and a copy
of the Participating Dealers Agreement
containing full information with respect to this offering, the
solicitation of
subscriptions and the compensation payable
therefor
by communicating with the
undersigned.
nearest
office of the
are so
'
Any prospective investor
spectus
from
in
any
such
Dealers
as
and
may
State in which this
of
may
the
undersigned
obtain
a copy
of the Pro¬
announcement
is circulated
or
any
other Participating
legally offer these securities in such State.
individual
generalizations
be misleading.4
exceptions
rather, than the general rule in
order to appreciate the potential
inventory dangers. See what the
precipitous decline in oil and fats
prices has done to soap manufac¬
Look
at
the
large
inven-,>
The First Boston Corporation
New York
Philadelphia
May, 25, 1949
if
would like to give it to you—but
earnings fig¬ the minute you really need some,
extremely favor¬ they won't let you have any. b
circumstances ta be construed
no
a
credit squeeze such
recent
been
analyzing
many im¬
You must look at the
It would turers.
in
postwar years. But, by
token, the transition
portant differences between indi¬
vidual
or
their industries find themselves in
the midst of a sellers'
figure for all of
together.
course,
have
ures
The
competitive
as
making a re¬
showing — experience
sharpest earning gains when
the
net deficit
a
taken
most
such
—
spectable
the
earnings picture of industries or
individual companies can change.
understand.
the
and
don't
petroleum—which in normal times
of buyers' markets have the
great¬
est difficulties in
occurred
But it is well
how
that
tries
spokesmen
y • Closely
ported by the Department of Com¬
.
securities
an¬
ticipating individual price changes.
"
.
the
bring it down to a level of
approximately silghtly more than
15% under its 1948 peak.
fields, But it is important not to let the
know, have been hard' relatively moderate over-ail de-'
hit already.
Yet retail sales fig*; cline overshadow the fact that
ures, at this stage of the business
prices in many individual fields
cycle, are apt; to be rather mis¬ are quite
vulnerable; very much
leading.
more so than the
we
for
due entirely
was
inventories.
increase of $4.3 billion
year.
Cash and govern¬
an
to
uncom¬
fact unions
a
—
Administration
an
disappearing all
would
number of individual retail
as
higher
quickly
have
as
been
even
than
habit of
•
sellers'
goods;
and there is little prospect for
early reversal in this trend.
r:,
overall
,
Will An All-Out Anti-Deflation
,
to
profits
now
products
running, the Bureau of Labor wholesale!
only approximately 5% below the, index over the balance of
1949;
last year. The figure for
depart-i will decline another 10% which
year
market
fortable
$65
billion
but the increase
to
high
billion
$58
capital
earning
•
Unfortunately,
of
of
working
cumulative
fuel;
lard,
During the early 30s, a similar
;i
must be coaxed into the stored
policy failed. But conditions are
!■:„ A Further Decline in Prices
'
and ' the
bait
used
is
bargain j'.?;• ;<■ ■' v.quite" different today and we havej
prices for special promotions. Re-j *'■ Summed up, it appears a rea-i
learned a' lot since,
particularly
tail sales-—in dollar volume—this1 sonably safe guess at this time
that]
during the -war. It seems rather
outdated today to be too skeptical
as
to what the Government can
companies report¬
losses is more impor¬
or
than
for another
spots
metal
other
number of
tant
of the end of 1948, showed
current assets of $123 billion and
Finished
goods prices usually!
lag behind changes in raw mate¬
But
the
as
"
rials.
an
tions,
or
of
re¬
porting
companies
had
moved
higher. This proves that as far as
earnings yardstick is concerned,
industry today
large-group including copper, lead;
hides,, rosin, burlap and others.;
developing
public—very; similar to the
industrjal. purchaser — is holding;
out lor lower .prices, *
Consumers
quarter
actually two-thirds of the
ing gains
turpentine, glycerine, printcloths
and, of course, the grains. They*
range from 30 to 50%
overall
first
tallowy
as
industrial alcohol, steel scrap,
well
The
items
reported
the
showed further gains. A
year ear¬
lier nearly 85% of the net total re¬
The latest computa¬
Securities
and
Ex¬
the
,
averages
In;
of
for
change Commission on the work¬
ing capital of American corpora¬
when
to believe,
lavish dis-*
benefits, mord have
more
social
nonferrou^
group has
definitely col-f
lapsed and the steel price struc-j
ture is no longer anywhere neait
new.
to
the
price
a
road
the
accel-j
into
from
reasorf
prices
kept under reasonable con¬
for
as
public;Works
no
to doubt that farm and food
still would like
.Would the Government be will4
ing ta throw all its resources into
such a fights—and if so; what are
-
tion
change in that policy
into
immediately... rushing
super-d uper inflation^
cur¬
farm
which
and there is
year
icktfd
a
and
.
capital
last
and the Administration is not pan-
.
-
this
government
has largely
year's record in-?
supplies/ There will be
in
essential
no
of
supports
neutralized
crease
r
it
strictly up to
Government spending.
i It is difficult to estimate in ex:
•_(
life
businesses'.
such
that,
means
looking at
ures
price
difference between
of
sj'stem
are
is excellent.
rent
effectively cushioned by the
more
many
To be sure, the overall
working-
they remain good credit risks?
Your 'decisions may. frequently
.
The decline has been
how
just quietly folding
they can no longer
stand the gaff.
ment
was
But it is rather
significant
despite the
1949
because
up
about 157.0.
peak
but
—
businesses
difficult; problems for some
time to come. To what point will
a
miracle drug.
.
v ;
A cut in profits would be highly
that
porting companies had smaller
earnings
and
only
one-t h i r d
most
\
totals.
now
enough
showed
do
can
are
increase
sale index has declined about 7%.
It has come down from 169.5 to
he
unless
able; particularly the cumulative
,,,
,
.
15
running at a rate about twice as
high as a year ago. That is bad
The fate of these marginal pro¬
ducers will present you with your
yf
.
than
■
failures
it is slpwr-working medicine rather
(
.
already.
expenr
/'
out
processors
suffered
Commercial
f Of these, the first one—higher
productivity—is the soundest bujfc
ditures.
/
'
have
Since its postwar
reached last August, the
Bureau of Labor Statistics whole¬
.
(3) Higher Government
(2275)
tory losses many food
something
very drastic about his labor costs.
.
.
f
-
declines
mately enter into another period
of
sustained
industrial
growtn
Therfe-apfc; three^ethbds whiclji
can
than 10%
more
commodity
prices. Recession and price defla¬
tion usually feed upon each other.
20% increase in labor efficiency;
a
annual
production
and sales will be accompanied by
miraculous:
was
1949
•
how
on
unemployment
The result
ance.
if the
CHRONICLE
can't make him drink.
posted
formula
a
surprising
FINANCIAL
below last year. It is easy enough
to lead a horse to water but
you
little
a
&
iotaT would not be
get
out of business.
go
the
on
be
serious
a
describing the regulations
That leads, of
course,
the second question; if;
there is a
drop to such a level, how long
Y
itself
COMMERCIAL
Boston
Pittsburgh
Cleveland
Chicago
San Francisco
1C
(2276)
THE
CHRONICLE
FINANCIAL
&
COMMERCIAL
-
low
NY
Bank and Insurance Stocks
Security Dealers
This
The Board ol
lias called
Week—Bank Stocks
Directors of the Bank of the Manhattan Company
meeting
a
of
rity Dealers Association held May
24, the following resolution was
adopted:
1.
RESOLUTION
special meeting of the stockholders of the bank to be
The purpose of this special meeting is to vote on a
Whereas, James V. Forrestal by
proposal to increase the capital from $20 million to $25 million. This his own efforts achieved a dis¬
increase in capital would be accomplished by the sale of 500,000
tinguished
career
in
the Wall
scares of $10 par capital stock and would increase the number of Street community and acquired a
shares outstanding from 2 million to 2.5 million.
host of friends in financial circles,
It is contemplated that the increased capital stock, if authorized,
and,
June
will
offered
be
each
for
four
stockholders in
to
shares
held.
been fixed but will be
The
ratio
the
of
subscription
additional
one
price
has
not
share
as
yet
determined in the light of market conditions
by the Board of Directors at the time of offering.
The offering is to
be underwritten, with First Boston
Corp., N. Y., probably heading a
syndicate which will purchase any shares not subscribed for by the
stockholders.
-
,
This change in capital stock will be the first since 1932 when
the capital of the Bank was reduced by a reduction in the par value
of the capital stock.
•
Over
has
the
made
past
15
years
considerable
the
Bank
the
of
Manhattan
Company
in building up its surplus and
divided profits account.
This, of course, has been reflected in
book value of the capital stock.
progress
un¬
the
These facts, along with certain other pertinent statistics con¬
cerning operations and condition, are shown jn the following tabu¬
lation:
he
Surp. and
and
Undivided
Beok
Reported
Divs.
Securities
Discounts
Profits"
Value
Earnings
Paid
World War and for nine years
de¬
the
service of his country, as Presi¬
dential Assistant, Undersecretary
of
the
Navy, Secretary of the
Navy, First Secretary of Defense,
3949
8
8
S
1,081,518
309,622
408,047
67,171
33.59
t0.65
*1.30
—
1,127,930
344,796
455,974
66,623
33.31
2T65
1.20
360,976
426.782
64,48-7
?2.24
2.06
"1.20
378,042
385,765
63,110
31.56
2.56
1.20
30.26
3.12
1.00
26.20
2.40
.95
1947—.——__
1.140,003
1946—
1,055,451
1945
1,290,314
004,255
388,178
60,526
1,104,706
550,258
345,133
abilities
great
of
measure
52,403
sustained
an
irreparable loss in his tragic and
untimely death, be it
Resolved, that the Governors of
New
the
York
Association
Security
hereby
Dealers
their
express
974,325
433,851
231,487
50,072
25.03
2.01
.90
deep sense of loss in his death as
well as their pride
in his un¬
equalled achievements and, be it
1942
939,412
424,371
221,112
48,559
24.28
1.81
.90
1941
further
—759.539
186,323
270,672
47,453
23.73
1.37
.90
1944
l.—
1943
—
1940
736,333
133,784
216,657
46,384
23.44
1.13
009,781
80,418
23.26
1.11
.90
522,618
110,733
212,077
216,402
46,513
1938—
46,178
23.09
1.13
1.15
1937
004,801
80,748
222,519
45,362
22.93
1.48
1.50
1936
508,152
80,487
240,737
45,432
22.72
2.01
Resolved,
.90
1939—
1.50
—
3935
—
433,173
84,189
205,195
45,432
22.72
—
1934—
514,153
111,386
103,691
45,432
22.72
"Present
dividend
rate
including quarterly of 30 cents and
tNet operating earnings reported for the first
quarter.
The
above
1.50
1.87
2.48
extra
2.00
resolution
James
be^ outstanding would be around $31
a
In order to obtain
to
10
New York Security Dealers
ernors,
DAVID
MORRIS
President
(000's omitted)
1947
1946
1945
1944
S
$
S
Interest
and
Iorivs—
Other
6,997
6.274
6,892
6,950
8 743
9,129
3,193
3,493
2,375
2,559
2,140
1.94C
697
dividends
ond
8.299
583
734
"604
DEWILLERS
20.275
20,340
18,870
8,310
7,996
7,045
5,584
5,171
5,780
for
5,756
4.926
4,454
4,163
3,450
3.405
3,257
2,504
2,888
17,540
Provisions
16.157
15,220
12,622
12,222
5, 295
4,118
5,112
6,248
Operating
share
share
Per
Per
Earnings^
(2,000,006.—
(2 500,600)
For the first
were
65
and 52
cents
cents
a
on
2.65
share
a
2.56
3.12
24-28,
1949
Association
2.04
2.5C
1.92
net operating earnings
the 2 million shares
presently outstanding
on
year
the increased number of shares.
on
years
annual basis.
an
the Bank has paid
dividends of
Considering the level of earnings
such payments have been conservative.
extra of 10 cents a- share was declared
Last year a special year-end
and paid in January of this
Mr. Baker, Chairman of the Board of the Bank, in
year.
letter
to
stockholders
indicated
that
unless
there
was
a
a
recent
marked
change in the situation, the present quarterly payment of 30 Cents
and the year-end extra of 10 cents would be maintained
creased number of shares to be
outstanding.
>
on
the in¬
Halsey Slicart Group
(Denver,
of
Stock
Colo.)
Exchange
Salt
Lake
City.
1949
A
group
Stuart
&
headed
Co.
Inc.
Equip.
by
Halsey,
awarded
was
yesterday (Wednesday) $3,150,000
The
Delaware,
Lackawanna
&
Wm.; E.
&
Co.
Inc.
The certificates will
be.
provide
for
the
standard-gauge
ment,
estimated
than
$4,025 000:
issued to
following /new
railroad
to
cost
seven
equip¬
less
Diesel-
not
equipment electric freight locomotives; 100
10
trust
passenger
certificates, series I, due hopper cars and
$210,000 annually April 1, 1950 to coaches.
19G4, inclusive. Issued under the
Western
RR.
With Tifft Brothers
Philadelphia plan, the certificates
were
re-offered
subject
to
au¬
thorization by the Interstate Com¬
merce
Commission
yield from
1.45%
to
at
prices
2.825%,
to
ac¬
cording to maturity. Others in the
SPRINGFIELD,
N.
MASS.—Frank
Gigliotti has been added to the
staff of Tifft
Brothers, 1387 Main
Street, members of the New York
and
Boston
Stock
;
National Dairy Products Corp.—
and
outing
Angeles, Calif.)
at
the
Bel-Air
Country Club.
Study—J. R. Williston & Co., 115
Broadway, New York 6, N. Y.
;
Also available is
offering
"Short
a
list of stocks
Interest"
in
the
present market.
June 10-12, 1949
(Minneapolis,
j
Twin City Security Traders As¬
sociation Summer Party at Gull
Portland
Oregon
Minn.)
Cement—Late
data—Lerner & Co., 10 Post Office
Square, Boston 9, Mass.
Lake.
June 10, 1949
Municipal
York
Puget Sound Power & Light Co.
(New York City)
Club of
Bond
Field Day at
—Analysis—In
New
Sleepy Hollow
Country Club.
June 15,1949
Twin
"Public
issue
current
Utility
of
Guide"—
Stock
G. A. Saxton & Co, Inc., 70 Pine
Street, New York 5, N. Y.
(Minneapolis, Minn.)
City Bond Club annual
at the White Bear Yacht
June 17, 1949
(Boston, Mass.)
(Cleveland, Ohio)
Security Traders. As¬
party at
summer
II. II. Robertson Co.—Circular—
Francis
I. du Pont & Co., 1 Wall
Street, New York 5, N. Y.
Rutland Railroad—Study of re¬
capitalization plan—Security Ad¬
justment Corporation, 16 Court
Street, Brooklyn 2, N. Y.
Also available is a study of the
recapitalization plan of the Atlan¬
tic & Danville Railway.
County Country Club.
17,
(Detroit, Mich.)
1949
Club
of
Detroit
Safeway Stores, Inc.—Summary
opinion—E. F. Hutton & Co.,
and
annual
61
Broadway, New York 6. N. Y.
ers
Club
ner
at Morrison
of
lation
of
Club
Field
June 21-24, 1949
Investment
(Canada)
Dealers
Association
of Canada 33rd annual
Minaki Lodge,
Ontario.
1949
24-26,
meeting at
<
annual din¬
Hotel, and instal¬
officers.
York
Bowlers
dinner
Joe
at
King's Rathskeller.
(Philadelphia, Pa.)
Philadelphia Securities Associa¬
tion
annual
field
day
at
the
Aroncmink Golf Club,
Pa.
Aronomink,
of
Toledo
15th
nual outing at Inverness
Club.
an¬
Country
annual
1949 (Chicago, 111.)
Traders
Bond
Club
of
Chicago
dic Hills
outing at the Nor¬
Country Club.
June
1949
summer
re¬
Inc.—Analysis
Stores,
Walker
&
Co.,
Stiomberg-Carlson
1
Wall
Company—
Water
(Detroit, Mich.)
Company-
Bond
Share,
&
Graham
Paige, and American Superpower
Preference.
Incorporated—Analysis-
William A. Fuller & Co., 209
La Salle Street,
South
Chicago 4, 111.
Sulphur Co.—Analysis—
Bendix, Luitweiler & Co.. 52 Wall
Street, New York 5, N. Y.
Cohu
Securities Traders Association ol
Power
Haupt & Co.. Ill
Broadway, New York 6, N. Y.
Also available are reviews of
Analysis—Ira
Union
28,
circular
a
Analysis—H.
M.
B.yllesby
and
Ccmpany, Stock Exchange Build¬
ing, Philadelphia 2, Pa.
-
Union
June 25,
is
Airlines.
Street, New York 5, N. Y.
Time
(Toledo, Ohio)
Club
Bond
>
Toppers Annual Outing at Rock
Springs
Country
Club,
West
Orange, N. J.
May 27, 1949
annual outing at the West¬
chester County Club, Rye, N. Y
York
June 24, 1949
May 27, 1949 (New York City)
H.
Electric
(New York City)
Investment Association of New
Security Traders Association of
Safeway
—G.
Tide
Security Traders Association of
Los Angeles annual spring party
at the Arrowhead Springs Hotel.
May 26, 1949 (New York City)
viewing the
Angeles.
(Los
Calif.)
Chicago
available
Also
York
Co.—Circular—
Sulphur
&
Co., 1 Wall Street, New
5, N. Y.
Detroit and Michigan annual sum¬
R. W. Pressprich &
Pollock
annual
Bond Club of Los Angeles field
(Chicago, III.)
Bowling League of Bond Trad¬
New
8)
page
Trade'Building, Kansas City 6,
Country
Club.
June
May 28, 1949 (San Francisco, Cal.)
Co.; Otis & Co.; Freeman & Co.,
and
Offers D. L. & W.
were
Buffalo
Wanakah
of New Jersey An¬
Day at Rock" Spring
Club, West Orange, N. J.
San Francisco Bond Club outing
offering
(Continued from
Missouri.
June 10, 1949 (Los
nual
Firms spring meeting in Denver!
2.40
1.65
quarter of the current
share
During the past several
$1.20
2.06
2.12
„
Holly¬
and Literature
of
the
at
June 24, 1949
Net
the
at
Dealer-Broker Invesl.
of
Club
Bond
picnic
Bond
Field
Investment
4,805
taxes-
Convention
at
June 17,1949 (New Jersey)
In
and
As¬
Beach Hotel.
(Buffalo, N. Y.)
10, 1949
EVENTS
Hay
Traders
Convention
Recommendations
Club
outing at the Grosse He Golf and
Country Club.
Hay 26,
Expenses—
Bondwomen's
COMING
17,02r(
securities
on
lees
earnings
June
Kirtland
620
22,835
Commissions
9,861
and
Weston
at The Wall Street Club.
p.m.
June
S
11,753
the
spring luncheon meeting at 12:30
Bond
•5
Outing
at
(New York City)
Municipal
sociation annual
E.
by the funds received from the sale of the additional shares. Per
share earnings have been arbitrarily
adjusted on a pro forma basis.
on
June 9, 1949
share.
1948
Annual
Club, Weston, Mass.
Secretary
the following earnings statements tor the last five years
are shown.
It should be realized that no consideration in the fol¬
lowing figures has been given to the earnings that will be generated
Interest
30th
Tournament
Golf
•<
.
CHESTER
some idea of the nature of
operating earnings
and the effect upon per share
figures the increased number of shares
—
Golf
Cleveland
(Signed)
Annual
Security
Annual
Boston Securities Traders Asso¬
ciation
June 17, 1949
•
,
Springs,
^
National
wood
(Boston, Mass.)
Annual
(Signed)
will have,
Earnings—
June 9, 1949
Municipal Bond Club of Boston
Outing at the Concord
Country Club, Concord, Mass.
cents.
(Colorado
Dec. 4-9, 1949 (Hollywood, Fla.)
Investment Bankers Association
Municipal Forum of New York
annual meeting and election.
picnic
Association.
of
1949
5-9,
Colo.)
jfnne 8, 1949 (New York City)
Mrs.
Forrestal.
Oct.
Country Club.
Club.
figures have not been adjusted for the
larger number cf shares to be outstanding upon completion of the
proposed offering. As the subscription price has not yet been de¬
termined no accurate figures on book value can he
given.
However, if you assume the price to stockholders will be around
$20 per share, the pro forma indicated book value for ihe 2.5 mil¬
lion to
V.
this
of
copy
a
forwarded
Sept. 9, 1949 (Pittsburgh, Pa.)
Bond
Club of
Pittsburgh Fall
Outing at Chartiers Country Club.
The Broadmoor Hotel.
By order of the Board of Gov¬
share
per
that
be
Gearhart
sociation
day
duty, and
Association
the
at
party for out of town guests June
6th; outing June 7 at the Kenwood
to
Whereas, in these posts he gave
unstintingly of his wisdom and of
his strength in a manner and to a
degree far beyond the
normal
(Cincinnati, Ohio)
1949
Municipal Bond Dealers Group
Annual
Spring Party.
Cocktail
and
$>
.
(Mar. 31)
1948
his
voted
and his friends have
Per Share
i000's omitted i
$
second
the
of
outbreak
Whereas, his country, his family
Government
Deposits
the
at
Capital
Loans
Dec. 31—
responding
to
the
traditions of patriotism,
abandoned his business career
Whereas,
highest
election.
June 6-7,
Bankers
meeting
Hotel, Gearhart, Oregon.
(Chicago, 111.)
Chicago Stock Exchange annual
the Board of
Governors of the New York Secu¬
JOHNSON
Investment
1949
;;v:'
June 6, 1949
a
held
H. E.
Scarborough,
Club,
Country
N.
Ass'n Resolution
At
By
Thursday, May 26, 1949
Exchanges.
at
Aetna
May SO, 1949
Bond
nual
June
'
.
\-
A
-'A
Club of New Orleans
day
Club.
at
the
an¬
Metairie
Club
of
Chicago
field day at Knollwood
Forest, 111.
June 3, 1949
•Nebraska
Bond
Woods, Mich.
Investment
United
the
Wall
Utah Power & Light-^Data—Ed¬
pre¬
ward
cocktail party June 27
Main
Athletic
Corporation—Anal¬
Dealers
Club
the 'Omaha
Gas
ysis—Vilas & Hickey, 49
Street, New York 5, N. Y.
spring frolic at
Omaha Country Club, to be
at
Club
in
L. Burton
&
Salt
Street,
Co., 160 South
Lake .City
1,
Utah.
honor of out-of-town guests.
annual
Club, Lake
June 28, 1949
(Pittsburgh, Pa.)
Bond Club of
Pittsburgh Spring
Outing and Golf Tournament at
St. Clair Country Club.'
:
•
Pointe
ceded by a
3, 1949 (Chicago, III.)
Bond
party at the Lochmoor Club.
Grosse
June 28, 1949 (Omaha, Neb.)
(New Orleans, La.)
field
Country
'
Springs.
mer
(Connecticut)
Wisconsin
-
Power
and
Light
Company—Analysis—Loewi & Co.,
225 East Mason Street, Milwau¬
kee 2, Wis.
Security Traders Association of
Connecticut
annual
summer
out¬ July 27, 1949
(Pittsburgh, Pa.)
~
ing at Wampanoag Country Club,
West Hartford, Conn.
June 3, 1949 (New York City)
Bond
Annual
Club
of
New
Field Day at
York
A
25th
Sleepy Hol¬
Bond
Summer
North
Club
of
Picnid
Pittsburgh
at
Mill
Mid-
(Special
to
The
Mitchell Co.
Financial
Grove,
(Oregon)
Pacific Northwest Group of the
Chronicle),,
;
H.
Lindy has become affiliated with
Remer, i Mitchell & Reitzel, Incl,
CHICAGO,
Park.
Sept. 9-11, 1949
With Remer,
ILL.
—
Robert
208 South La Salle Street,-
-
Volume
169
Number 4806
THE
COMMERCIAL
Favors Banks Dealing in World Bank Issnes
William
Points out
development.
McC.
behalf of the
o n
g r ess to
proximately one-third of the total
tional
votes
Bankand
the
Bretton Woods
!
A g reements
Act,
so
sued
for
or
anteed
and
Re¬
opinion
distribution
States
United
the
in
R. 4332)
widespread
the
facilitate
of securities issued
guaranteed
or
International Bank.
by. the
For
detailed analysis of the structure
and
operations of the International
Bank, particularly with respect to
the effect that the
na¬
We have
automobile
manufacturer
more
scale,
in
caused
i
American
to
our
economic
It
life.
we
have
seen
it
raise
the
.
of
a
standards
living
the
D.
.
automobile
is
full-
a
u c
a
part of
$1,000.
American people can have a $1,00C
car if they want it
badly enough.
Sitting around and wishing for it
isn't enough. If they really want
cars.
Great
Advances
to
take a look at the
industry's record of
upon
whom the burden of
rated
proposed legis¬
meeting pro¬
subscription calls would fall
"Adverting to the protection the
remembers that day, too. Today's
automobile
manufacturer
is
re¬
minded of it constantly by letters
which demand to know "when are
we
going
to
that $1,000
get
The Ten Million Car Year
been set by our
population growth
or our normal
increase in stand¬
ards of living.
On the basis of
transportation needs and the
car
pre¬
history of automotive de¬
velopment, we should today be
thinking in terms of the 10-mil-
let's
automobile
old-timer's special
trucks
the
There
look
back
at
the past 20 years. In 1929, after a
steady and rapid growth from its
early beginnings, the American
automobile
for
need
record,
nations
five
of
year.
That limit has not been set
by
our
ability to produce.
It hasn't
There is
Technological
prerogative
other
a
lion-car year.
industry from its
nation which might
early days share many
happy
tempted to default on memories. Not
the least of these
particular
foreign
obligation is the
memory of the day when
might well be deterred from such
you could get a good standardaction by the knowledge that
sized car for $1,000 or less. A large
default to the International Bank
segment of the motoring public
i% simultaneously a default with
47
cars
vious
otherwise be
to
high
still thinking
it, they are going to have to do
something about the factors that
are depriving them of
low-priced
a
respect
million
know-how
an
A
that
of
t
firm belief that the
my
reaching
level of 1929, we are
in terms of a maximum
Wewhohave
been
the
new
heights.
Mooney
automotive
d
after
years
standard-sized
American
people to
James
of
p r o
your door for less than
and
1
And
s o c
well-styled
Since it's
the Na¬ scription.
of
enactment of this bill (H.
■
$1,000 car in this country,
again. Nothing would please the
than to be able to deliver
-
.
.
—
the
profound
changes it has
.
tional Advisory Council that the
would
gold standard.
witnessed 'the
not sell its securities in
out -that cpnsentv^-^^
.
a
tion.
develop¬
ment, and also
Wm. McC-Marh-jf
'<Tt-^he»14Va4sb:'be»borne in mind
such
that the securities of the Inter¬
:
securities from the provisions of national Bank are backed
by the
the Securities Acts.
In his state¬ joint
obligation of some 48 nations,
ment to the House Committee, Mr. each of which is
severally liable
Martin remarked:
up to the full amount of its sub¬
the
the
visory Council; nor can the Bank
buy or deal in its securities with¬
to exempt
is
seen'J>
alter
face of the
may
International
the
have
it
this country without obtaining the
prior consent of the National Ad¬
by the
Develop-
"It
We
connection, it
that
Bank may
construction
and
want it.
tant
the
this
In
noted
be
is¬
guar¬
for
if people really
car,
Executive
Bank's
reconstruction
ment.
International
Bank
the
strong,
financing appropriate projects
the
securities
thousand dollar
a
two decades in efficient
ration of
for
in
again have
can
a
Bank a sound,
effective instrumentality
na¬
deal
to
of
making
banks
tional
we
technological advances in last
fectuating the United States policy
of
to
as
permit
Reality
'
great pleasure to be here today with the men who have played such an
impor¬
part in the making of modern history. Here of all places there is no need for me to
review the tremendous
accomplishments of the automobile during the past fifty-odd years.
Board, directs his activities to ef-
amend the Na¬
Act
17
operation of plant and machinery and
looks for ten million-car production
annually. Scores the "tax bite" as leading to shortage of risk
capital
and cramping auto market, and calls for end of
government interference with credit structure and resto¬
It is
'
•
(2277)
Former Fresident and Chairman of the
Board, WilV's-Overland Motors
Prominent auto executive contends
Martin, Jr., Assistant Secretary of the Treasury,
National Advisory Council on International Mone¬
tary and Financial Problems, appeared before the House Banking and
Currency Committee on May 23, in support of the measure before
C
CHRONICLE
By JAMES D. MOONEY*
Banking Committee, such a move will further interest of U. S. in
elective operation of eWorld Bank as factor in international
on
FINANCIAL
The Thousand Dollar Car—A Potential
William McC. Martin, Jr., appearing for National
Advisory Council
on
International Monetary and Financial Problems, tells House
economic
&
industry
sold
more
than 4,600,000 cars and trucks in
the
domestic
market.
We
sold
a
a potential market and
eight million cars and
year in the United States.
is
certainly
two million
and
cars
rest
of the
the
for
need
American-made
more
trucks
a
year
for
the
world.
Why, then, are we scratching
along trying to equal a goal we
reached easily 20
years ago in¬
stead of striving to meet today's
needs?
another 750,000 cars and trucks to
"Planners" Move In
lation would have on its market¬ United States investor
enjoys with we heard so much about during the export market.
ing operations, I will defer to the respect to foreign securities which
To anyone who has
In the 20-year period that has
kept watch
the war?"
on
representatives of the Bank who are not exempted from the Secur¬
the course of business affairs
I have the answer to that one
elapsed since that time American for the
will appear before you.
ities Acts, it may be appropriate
past few years, the answer
We are going to get the $1,000 car
"However, if I may, I would like to note that the essence of this when we, get a five-cent glass of industry has made amazing tech¬ is obvious. It is not hard to find
the forces which are
to touch briefly upon one of the protection is the requirement for
advances.
We
have
pressing us
beer again.
And when I say J nological
into an economy of
principal problems which will be full and fair disclosure of perti¬ five-cent glass of beer I don*
scarcity, as
learned how to make our prod¬
remedied if the proposed legisla¬ nent information.
The Securities mean
exemplified by our inability to
a
thimblefull
of
watery ucts better.
We have developed
and
tion is enacted.
build the $1,000 car or reach for
Exchange Commission does brew. I mean a man-sized
glass
greatly, improved productive the 10-miliion-car
not make a determination as to
"At the present time, although
year.
of real draught beer.
the
worth of a security offered
equipment and have learned how
national banks may invest in se¬
For 20 years commerce and in¬
By the same token, when we
for sale.
It is not the function of
curities
issued
to operate our plants and machin¬ dustry have been
by the Interna¬
talk about the $1,000 car we don'
hobbled with
the Commission to approve or dis¬
tional Bank, they are not author¬
mean
motor scooters.
We mean ery far more efficiently.
economic
~
,
ized under the National Bank Act
in
deal
to
The
securities.
such
proposed legislation would remove
this legal disability by amending
the National
national
ities
issued
in
secur¬
International
"Both the International Bank and
that in order that this per¬
mission may be really effective in
the
for
market
Bank's
securities they should be
exempted from the Securities Acts.
reason
is that the whole
mar¬
keting system of national banks is
geared to deal only in securities
which arc exempt from the Fed¬
Securities Acts,
eral
mainly Fed¬
eral, State and municipal secur¬
ities; and it is not adapted to meet
the various requirements pertain¬
ing to securities subject to those
Acts.
The
proposed
legislation
would meet this practical diffi¬
culty by amending the Bretton
Woods Agreements Act to make
the securities issued
experiments and bureau¬
full-sized, standard vehicles re¬
quired by this country's vast dis¬
tances
and
varying
road
and
through its quarterly and annual
the
the
so
the
"With respect to the Interna¬
tional Bank, it may be stated that
reports
makes
broadening
are
concerning
fully stated.
permit
the National Advisory Council be¬
The
securities
facts
to
Bank.
lieve
sale of securities
any
the
as
deal
to
by
long
Act
Bank
banks
approve
or
guaranteed
other
and
statements,
it
full disclosure to the pub¬
lic of all its activities.
Moreover,
a
under the proposed
legislation, the
Bank would be required to file
with the Securities and
Commission
other
such
reports
securities
as
Exchange
annual
with
regard
and
to
its
climatic
conditions.
change Commission should
time
be
of
interest
of
the
the
opinion
"In
connection
with
the
enact¬
ment of the proposed legislation,
careful thought has been given to
the
position
of
investors
United
States.
unique
characteristics
I
in
the
believe that the
of
the
and the nature of the safeguards
provided in the proposed legisla¬
tion constitute ample protection.
"It should be noted that by vir¬
of
the
large
the United States
subscription
in the
of
shares of
the International
Bank, there is a
correspondingly large official par¬
ticipation by the United States in
the
direction of the Bank.
$1,000 Car Possible
My thesis is that
Under
United
jected to the Securities
Commission
may,
with the National
"In my
of
the
have
with
progress
talk
at
Luncheon,
Automobile
delivered
the
Seventh
Metropolitan
by
Mr.
Annual
Council,
Old
Timers,
York City, April 28, 1949.
New
has
years,
one
out.
all
The
this
made
in
startling
industry
been able to equal
of
forces
remarkable
the
past
fact
has
20
stands
not
yet
its 1929 record
production and sales.
supply
and
demand
with
pered
straints
by
and
all
sorts
inane
in
of
for
sary
of its
Twenty
the
proper
functioning
business.
(Continued
on page
33)
consultation
Advisory Coun¬
Equipment Trust, Third Series 1949
2%%
Bank
.
the
without
prejudicing
the
rights of United States investors.
I, therefore, recommend favorable
action
Equipment Trust Certificates
legislation will
interest the United
(Philadelphia Plan)
on
To
To be
mature
$85,000 semi-annually December 15, 1949
to
June 15, 1964, inclusive
guaranteed unconditionally as to payment of principal and dividends by endorsement
by Missouri-Kansas-Texas Railroad Conipany
the bill under considera¬
tion."
Priced
to
yield 1.35%
to 2.80%,
McGinnis and McClure
according
to
from only
such
Patrick B. McGinnis,
McGinnis,
Bampton & Sellger, New York
of the undersigned and other dealers
City, has been elected Chairman
of the board and President of both
the John L.
Roper Lumber Co. and
the
Roper
Realization
Co.,
Inc.,
as may
lawfully offer these securities in such
Elwood
&
elected
.
R. W.
PRESSPRICH
& CO.
A. G.
BECKER & CO.
incorporated
McClure
Boyce,
Committee.
state.
HALSEY, STUART &, CO. INC.
Norfolk, Va.
E.
maturity
Issuance and sale of these Certificates are subject to authorization
by the Interstate Commerce Commission.
The Offering Circular may be obtained in any state in which this announcement is circulated
Have Been Elected
to
of
Baltimore,
the
Stein
OTIS &. CO.
(incorporated)
has
Executive
May 26, 1949
FREEMAN
re¬
Management has been denied the
right to make the decisions neces¬
Missouri-Kansas-Texas
Acts, the
in
"planning."
$2,550,000
the
opinion, the enactment
been
ap-
of
\
interplay of the basic
the market place have been
tam¬
that the automotive in¬
dustry
*A
Mooney
proposed
Bros.
Yet,
can
States
cil, suspend the exemption granted
under the proposed
legislation.
visory Council, the United States
Director, who holds
we
in¬
vestor requires that the securities
in the International Bank be sub¬
the guidance of the National Ad¬
Executive
our
The free
se¬
curities of the International Bank
tue
the extent of the advance of
technical skills.
States has in the continued effec¬
tive operation of the International
Acts.
testimony enough to
are
at any
that
by the International Bank exempt
Securities
1945
determine to be appropriate. Fi¬
nally, if the Securities and Ex¬
securities
the
to
cratic controls.
the Commission shall
further
under
The production miracles of 1940
&, COMPANY
I
18
COMMERCIAL
THE
(2278)
v
Social
Security
Schram appoints
sions
Federal system, payments
Thursday, May 26, 1949
Study Cutting Commissions
to take
proposal of lower commis¬
up
and another
nounced
sions
Schram, President of the New York Stock Exchange,
an¬
how
consider
works.
this
short-term
stock
transactions, and another to simplify and
provide clearance facilities for out-of-town mem¬
We each have
deducted from
takes
however,
government,
our
our
pay every
1%.
week
this
e
con¬
tributed
by
employer,
which he adds
the
goods we
make
1 ti
u
cost of
the
to
d
a n
is
e
ly
t
m a
paid by us.
Hence, in the
Roger W. Babson
col¬
long run, all of the money is
indirectly, from
All readers should understand
lected directly or
us,
Next, where does this money
go? It is not invested in a mis¬
cellaneous diversified
group
of
safe securities, which would help
industry and employment. Rather,
the government merely buys its
bonds
own
credit
This
money
when invested might be
to
note
a
compared
or I might
which you
give to. ourselves; or a better il¬
lustration, would be like the en¬
dorsing of our own I.O.U.
What Do We Get?
Briefly, at 65
of age, if we
years
quit work, we get a small pension
from the government. This ranges
from $10.00 minimum to $85.00
maximum per month,
according to
have
the number of years that we
contributed
average
the
to
married.
single
fund
and
our
during said years
are
single or
wages
whether
and
This
that
means
a
who has worked 40
average
wage
of
$150.00 during all these 40 years
at
can
an
retire at 65 and get $42.00 per
month;
with
if married,
or
get $63.00
^something for the widow at
death. If your wage averages less
than
$150.00
or
if
you
have
worked
less
than
cut down
are
40
years,
you
proportionally.
at
present and the purchasing
of the dollar so small, this
pension means little to a man and
his wife. I, however, do not object
so much to the small amount as I
object
to
Trade
Commission
use
the
of
label.
the
The
Federal
should
forbid
word
"Security."
fooling 50,000,000
people to think that by making
this
contribution, they will be
secure
in their old age. If the
This Iword
is
,
government
wants
to
it
call
a
"pension," well and good; but to
use'.the
word
"Security" is ab¬
solutely deceptive and wrong. If
any business
corporation should
attempt such misrepresentation, it
woulpl be hailed into the Federal
Courljs.
3s
thi^ Program for
No? doubt
Act
was
tion
is
the
for
good, but the real ques¬
whether
the
American
believe the nation is
or
worse
worse
off
today because this legislation is
killing the spirit of saving. People
are saying "Uncle
Sam will take
of* me."
Hence,
they
spend
their surplus funds on gambling,
horse
races,
liquor
and .other
wasteful expenditures, instead of
saving their money as did their
parents.
•
•
-
1
•
-
If the government was
promis¬
ing to
as
pay us
food,
column
July 1, 1949, they would
&
average
an
Have
(1)
can
small
a
in
go
emergency.
an
or
which
invested
be
can
the
at
cotting of the current
Palisade
Harry Smyth Joins
Otis & Go.
OHIO—Col. Harry
Smyth has become associated with
the Corp orate Buying Dept.
of Otis & Co., Terminal Tower, it is
i
,
as
well
practically his
in real things such
clothing
and
(shelter,
Governor
Mr. Krotter's Reply to the
Governor
Governor Peterson's Invitation to
as
Palisade,
entire busi¬
ness
STATE
financial
the
field
Mr. Krotter
_
in
career
NEBRASKA
OF
Krotter & Ward
offices
Palisade, Nebraska.
where
filled
he
posi-
sitions
of
Colonel Harry
rising to
Smyth
:
;
Serving in both World War I
World
and
holds the
War
rank
II,
Smyth
Mr.
of Colonel
in the
Officers Reserve Corps. In World
War I he served as
Sergeant with
infantry, 86th Division,
the 344th
with
As
service
overseas
plans
World
War
in
policies
and
he
II
France.
officer
in
participated in
our
..
United
the
armies
States
and
British
and
navies, -formulating
coordinating detailed plans,
and
from
orders
on
in Southern
Supreme
Head¬
the various services
of
quarters,
are
affairs
buying
J
power.
government knows—and 1
know—-that this great, safe,
proftable
thrift
didn't -happen
the war,
our
sure,
just
program
During
by itself.
in every- community in
state, volunteers put the Sav¬
friends
ings Bonds ^program together and
kept it going.- With the coming
C.
of peace, many
CHICAGO, ILL. — Banking
are
congratulating Hugh
Beelman, President of the Chi¬
cago
firm.
Lumber
Knudson and
Company,
was
.y.
..
Prominent in many of
an
equally impressive
the
29
YMCA
years
Directors.
as
Hotel's
YMCA
"
'
]
Chicago's
has established
Beelman
the.,city's
served
in the
spent in the service of
the company.
affairs,
Mercer
anni¬
the
year
The entire pe¬
lumber business.
riod
*on
50th
of his
versary
record in
work,
a
having
member of
lay Board of
public
intrinsic value,
to take for granted
prone
future
Our
Besfman 50 Years
to
be
that
suggest
you
"only in Congress" will my "pro¬
test have any
effect."
You may
not have considered the
hopeless¬
protest so long as
receiving Federal funds so
far outnumber those making "di¬
rect" payments to the Treasury.
With the right to demand and re¬
ceive metal of intrinsic value for
that
of
ness
those
his
paper
who
buy
have
a
thrifty
the
currency,
Savings
your
Bonds,
to restrain
power
the activities of gov¬
the
by
of
amount
be main¬
credit standing that can
tained in
taxes
free, unregulated, and
unrestricted money market."
a
President's
The
request
for
to regulate ■ and control
prices is based on the probability
power
.
.
.
.
mean
England.
"outstanding
to
currency
j
>
.
joint planning for the Normandy
invasion with representatives of
consider
ernment "within those limits pre¬
redeemable in more paper
which in itself has no
being a mere ex¬
rency
..
r
everyday
busy,
I
pression of good intentions at the that under our "irredeemable pa¬
time of issue?
I regret that I
outstanding public services being cannot consider such a "promo¬ per currency" the present "disin-"
flation" will be followed by a new
performed by many of our friends tion" an "outstanding public serv¬
rise in prices.
What is to prevent
and neighbors.
Devotion to com¬ ice."
such a rise in prices, with Savings
munity, state, and country can and
On Dec. 3, 1948. B. E. Hutchin¬
Bonds
and
market
type bonds
does assume many cloaks.
son, Chairman, Finance Commit¬
owned by banks and insurance
As you well know, the Savings- tee, Chrysler Corporation, speak¬
companies convertible into cur¬
Bonds program is a living, vital ing at the 53rd Annual Congress
rency on demand?
A few believe
force in the maintenance of the of American Industry, New York,
as
I do, that the most effective
American Democracy.
In excess said in part: "No first-class nation
way to
prevent such a rise in
of 85,000,000 individual Americans in modern times has ever retained
prices,, and .at the same time keep
an
irredeemable paper currency
own Savings Bonds, which repre¬
goods in a free market place, is
sent -their partnership and faith over the life span of one genera¬
to give the citizen the right to
Irredeemable p a p e r
in our form of free government. tion.
exchange his currency for gold
These bonds eventually will be¬ currencies are readily susceptible
coin. If you have a better method
to inflationary manipulation.
come new homes, restored health,
In than ineffective "protests to Con¬
security, comfortable retirement fact, generally speaking, resort is
gress"
by taxpayers,
for safe¬
for the aged,, and j.ust plain pleas¬ had to irredeemable paper cur¬
guarding the purchasing power of
ure
for our fellow countrymen. rencies with that precise purpose
the Savings Bond dollar that so¬
To business and industry
The private practice of
they in view.
lution will be most welcome.
we
busi¬
the
ness,
In
in
phase
every
L
Dear Mr. Krotter:
Government
and contain
promote the sale of
Saving Bonds payable in a cur¬
New
what
criticized
that can be collected, and by the
an
service"
and
letter
scribed
Is' it
Krotter
York
my
excessive spending by the Federal
would
Peterson,
Nebraska,
reply to
to Governor Peterson in which I
Dear Sir:
April 18, 1949
Mr. Dean
Val
Com.
Bond
Lincoln, Nebraska.
Lincoln
Halsey, Stuart
& Co., both in
their Chicago
Honorable
The
Executive Office
with
Nebraska,
April 26, 1949.
Governor of
Savings
Nebraska.
Dear Mr. Hupp:
Savings Bond Committee, follow:
ih
May 7, 1949.
Chairman,
Omaha,
which is engaged in a lumber, coal,
Smyth
spent
Committee
Mr. Allen Hupp,
In your open
communication
a
as
yours,
the
to
Krotter
Nebraska
grain business and has exten-^
I hope that you will advise me
sive ranching and Hereford cattle
at once that you will be with us.
interests.
'•~ TrY'V'i
v
Sincerely,
The exchange of letters between
VAL PETERSON,
Governor Peterson and Mr. Krot¬
ter,
both delusions that end
Palisade, Neb.,
without intrinsic value.
from the latter to Mr. Allen Hupp,
retiring Chairman of the Nebraska
to
work
more
•
Retiring
boy¬
United States Savings Bond campaign by a
Dean Krotter.
Mr. Krotter is a member of
Brothers,
Krotter
of
that
DEAN KROTTER.
and
CLE VELAND,
Col.
firm
the
Dept.
announced.
businessman,
it is
statesmen
take
Very truly
has been fostered in Nebraska through the
A controversy
If
come.
men
catastrophe.
Dominick & Dominick.
able in paper money
things.
Gol.
in
.take leading part in 'Bond campaign. Declares it is not "a public
service" to promote the sale of bonds payable in currency redeem¬
time in a well diversified
list of stocks, bonds, and good real
to
sweat,
money are
to
right
is
strong
people
Schram
Emil
Krotter, Nebraska businessman, refuses Governor's invitation
Dean
profession.
Make regular cash savings
(3)
will
It
Mr.
Give your children
and
wife an expert knowledge of some
v/hich
needed
not ease and lux¬
coming, that limitation of
production
and
printing
press
Manipulated National Currency Elicits Refusal
To Aid Savings Bond Drive
(2)
should
Federal
ury, are
lanta; John R. Longmire, I. M. Simon & Co., St.
Louis; Robert L. Stott, Wagner, Stott & Co.; and
you
its
as
collectively
that each
the
that
and
W.
sustenance
which
to
somewhere
strong
as
elected
the
tell
Cady, Carl M. Loeb,
Garland, Alex. Brown
Sons, Baltimore; Henry U. Harris, Harris Up-
Walter C. Winter,
is
members
from
now.
Thomson & McKinnon. Other
Sydney P. Bradshaw, Montgomery,
Everett
nation
we
ever
ham &" Co.; William E. Huger, Courts & Co., At¬
month
farm
Co.;
&
improved.
over
Rhoades & Co.; Charles S.
of only $34.50 per
pension. Hence, it is a
crime to your family to depend
upon this. Instead do these three
things:
get
are:
Scott
should
the
today without it? U 'honestly
care
this
of
reach 65,
Good or Evil?
motive
people would be better
off
members
top management.
power
the
Richard M. Crooks,
Save
to
The above means that if all the
readers
With the cost of living as high
as
Safely
How
we
person
years
very
Fund a
the
books.
its
on
gives
or
worth
be
of
event
Treasury
according to his needs and put in
only as he is able I can only weep
Klingenstein, Wertheim & Co.;
Scott, Dean Witter & Co.
to study out-of-town clear¬
facilities will be under the Chairmanship of
ance
trade
this.
then
may
little.
1.
q u a
amount
'our
These
added
is
an
To
in
would be tremendously
draw
Committee
The
na¬
conflict
,
tors and
and Haorld W.
-
our
working together.
With a philos¬
ophy prevalent among both elec¬
Joseph
Schley;
or
international
-
individual
mer
good dollars today and can pay us
in bad dollars when we are 65.
defense
strength
and
ency
another
The
Stevenson & Co.; George E. Barnes, Wayne Hum¬
& Co., Chicago; Thomas F. Fagan, Moore5 &
pensions would be O.K. The
these
national
tional security. Our internal solv¬
on
on
and
Congress could cut $10 billion off
spending without injury to
The'general idea of compelling us all to allot a portion of our ber firms. The'first committee will be under the
mothly income to help take care of us at 65 is splendid. No one
chairmanship of David S. Foster, of Pershing &
can take exception to this.
I, however, do strenuously object to the Co. Other members are: Aniyas Ames, Kidder,
government calling this social "Security."
:
Peabody & Co.; Francis M. Bacon,'3rd, Bacon,
First, let us<^
a
the
May 19 that two special committees have been appointed
by the Board of Governors, one to study a proposal to lower commis¬
Holds social security is killing
spirit of saving.
Condi¬
Review by the Federal"
Reserve Bank of Chicago.- I am
tions,"
our
Emil
"Business
1949
ruary,.
convinced that the President
simplify
to
group
clearances for out-of-town firms.
made by employees and employers are
diversified securities which furnish capital to indus¬
but used by government.
try,
one group
CHRONICLE
in-and-out transactions,
on
discussing social security, Mr. Babson points out, under present
not invested in'
FINANCIAL
NYSE Committee to
By ROGER W. BABSON
In
&
to the money supply by
counterfeiting has long been rec¬
adding
statutory: crime
public interest and
ognized
as
against the
a
such.
large
Yet
dealt
with
sqale
'deficit financing' by gov¬
as
ernments today enjoys an honor¬
able estate and is widely
practiced
through-out the world!"
,r
Even
the power to tax loses
effectiveness
as
a
restraint
on
its
the
price rise because labor considers
home
"take
of
a
pay
after
withholding tax"
as
deduction
justifying
request for increased wages; the
before
building
a
industrialist
estimates the
prob¬
able income after payment
of in¬
newvfactory
have four farmer coopera¬
come
tax.
Who
can
say
that
tive competitors building new
these considerations of "income
grain elevators out of tax (inprogram as a means of curbing in¬
after tax" do not become increas¬
flationary pressures on the na¬ cpme) free earnings and borrow¬
ing other low-cost money from the ingly important as factors failing
tional economy.
"'"
j \
of these volunteers
saw,the wisdom of continuing the
In
j We
Federal Bank of
recognition
of
the
public
do
have
not
service of many Nebraskans and!
taxable
with the hope that others will
own
fit'to assist
us
in
seiej
dinner
you
on
to fbe
my
guest
May 4, at 7:00
the Cornhusker Hotel in
' "■'":7i Nebraska.
at a
p.m.
ajtj
Lincoln,;
/'V"
Vv.\
left
out
of
earnings to finance our
without borrowing
commercial
banks.
I regret that I cannot see
how I can be of any service to the
from
check
(as the
the advance of inflation
progressive tax rates ap¬
proach the 100% limit)?
DEAN KROTTER.
The
state under these conditions.
I
to
business
furthering this' heavily
great cause, it is< my pleasure to
invite
Cooperatives. We
enough
have
mated
year
just reviewed the esti¬
Budget for fiscal
Federal
1950
as
enumerated in Feb¬
Ward & Company
Ward
way,
&
New
mitted
Company,
York
Milton
Admits
120 Broad¬
City,
Medlin
partnership in the firm.
have
to
ad¬
limited
Volume
169
Number
4806
THE
COMMERCIAL
FINANCIAL
&
.
CHRONICLE
(2279j
and
Why Private Insurance Is Better
Columbia Seminar
Than Government Insurance
Benjamin Graham, President of
Corp., 52 Wall
Street, and leading authority on
By W. G. CABLES*
Manager, Industrial Relations, Inland Steel
remote with
our
Caples outlines
as
Company
i
(1) because it is compulsory and invades personal freedom;
(2) because it is not self-sustaining and will add to government
ance:
and taxation;
waste
and (3) because it draws capital
from
away
industry. Says compulsory government insurance is socialism, and
suggests,
compromise, government determine insurance
as
There is a growing belief that all
industry does is bad. People have
by its very nature parasitic and creates
who are subject to all of the frailties,
all
we
security analysis, will join the
faculty of Columbia University's
of
Business
as
an
in
common
in
September
associate, to give
seminar
stock
will
seminar
a
valuation.
be
The
of
one
several
innovations in the curriculum of
the School after July
1, when it
will become
tution.
all-graduate insti¬
an
f
Mr. Graham has been in the in¬
vestment management field since
1914, the year he
from
graduated
was
Columbia
College.
Since
1934 he has headed Graham-New¬
man,
registered
a
investment
company.
He has also been a
director of eight corporations and
a member of
protective commit¬
tees
for
ferred
stock
he
war
various
bond
issues.
and
pre¬
During the
Chairman of the Re¬
was
search
Committee of the War
Contracts Price Adjustment
Board.
eral
He
is
books,
the
author of
sev¬
is
not
curbed by the
of
necessity
making
profit
has
tive
are
being spent cur¬
rently, the bonds which are being
issued to defray these expendi¬
tures are interest-bearing, which
so
incen¬
to
spend
it
what
calls for funds from general taxes
takes
wisely and ef¬
ficiently. They
to pay
have
forgotten
that
the
come we must go to general taxa¬
tion to meet the balance. In other
govW.
country
G.
Caples
the premise that the
on
State was
people. We have
the servant of the
corrupted the meaning of the wel¬
fare clause of the Constitution to
the
we
Associate
Dean
of
the
School
of
Business.
No stranger to
Graham
from
point where if we are not alert
may find ourselves the serv¬
ants of the State.
Industry is, I believe, generally
against "compulsory government
insurance" because of the fact that
to
be
seminar
York
Analysts,
as
Caterer
to
H.
his
new
cooperate
A.
Lionel D. Edie & Co.,
Service,
of J.
Latane
of
Inc.; Charles
Inc.;
Irving
Kahn
Williston & Co.; Arnold
R.
Bernhard
of
Arnold
Bernhard
&
Co.;
Arthur Wolkiser, Consult¬
ing Economist, and A. W. May of
the
"Commercial
and
Financial
Chronicle."
The seminar, according to Mr.
Graham, will emphasize "the de¬
termination of appraisal values of
common
stocks as a guide to .in¬
vestment."
could spread the
risk or guard against hazard by
purchasing insurance or you could
ta ke your own gamble. However,
the planners came and said this
is loo haphazard, we must make
these people do what we think is
best for their well-being.
investment
business
from
offices
Street, acting
and
dealers
market securities and
in
as
dis¬
general
doing
a gen¬
eral retail and institutional busi¬
ness.
Officers
T.
of
D.
Howel
you
Now that
the
new
Freeman,
Evans
and
firm
be done in
can
one
of
Richard
A.
der will be in
charge of the trad¬
ing department. Messrs. Freeman,
Evans, Boardman, Whitten and
The
the
put
government
in
the
insurance business.
in
will
maintain
Springfield,
been to put
the insurance
have the Federal
government in
We
Security
Administration
which
presently handles old-age benefits
and Federal
legislation pending
Mass.,
at
.
Street, and in Woonsocket,
I., at 162 Main Street.
Formation of Boardman & Free¬
man
the
was
previously reported in
of April 7.
"Chronicle"
determine what
people
will
$224 million.
When
protection
what
carriers
old
or
the
or
risk
chase
of
carriers
into
the
protection from
know
we
what
will be and the benefits
anteed for that cost.
as
if
pur¬
private
are
so
cause
we
the
coverages
to
but
be¬
have to.
That is
of
these
want
without
our
bur ability to
ages to
We
can
otir
use
needs of
now
having invaded
millions, it
proposed to put many mil¬
more
pulsion.
ners
say
of many
under
the
same
com¬
Why? Because the plan¬
that the government shall
determine the basic minimum
re¬
quirements.
The
The
Problem
Co., and Sidney Jacobs,
Sidney Jacobs & Co.
The team
approach
championship, during
hot contest
on
the last
Hank
will
Serlen, Josephthal & Co.,
be awarded
a
prize for high
individual score, of 244.
policy
Herman
Meyer had hign individual aver¬
age of 180.
The association expects to have
holders.
about 60 to 70
La Salle Street Women
James
and
men
at the
dinner,
F.
FitzGerald, W. L.
Canady & Co., Inc., President of
the Association, will be guest of
Re-elect Officers
honor.
CHICAGO, ILL.—At the annual
meeting of La Salle Street Women
all
officers
incumbent
for the
elected
Colina
Miss
President,
Secretary to
Dr.
Club Issues
Clow,
&
SAN
Glossberg;
their
Secretary,
annual
Springs,
Mrs. Dor¬
othy Petrie of Harriman, Ripley
Co., Inc.;
Treasurer, Miss Lil¬
business.
lian Birkholz of Ketcham & Non-
through
It
is
being
published
the
cooperation of
San Francisco "Examiner."
gaard.
THE
LIFE
OF
show us how. best
to best fit the
people and
secure
have none.
handling is another
the
know
worth
Notice is
promptness
fairness
and
which claims
in
handled
STATES
UNITED
New Y ork 1, N.Y.
hereby given that in accordance with the provisions of the
Insurance Law of the State of New York the Board
seeing
in
a
that
JOSEPH P. CHAMBERLAIN, New York, N. Y.
Director, Legislative Drafting
Research Fund of Columbia University
con¬
BERTRAM CUTLER, New
Member Personal Staff,
are
which
as¬
the greatest good.
York, N. Y.
John D. Rockefeller, Jr.
M. HARTLEY DODGE,
Chairman, Board
>•
New York, N. Y.
Directors,
Remington Arms Co., Inc.
with
claims
manner
Directors of The
JAMES B. BLACK, San Francisco, Cal.
President, Pacific Gas & Electric Co.
handled.
are
or
Equitable Life Assurance Society of the United States ha nominated the
following named persons as candidates for election as Directors of said
Society:
of any
by the
determined
is
insurance
ative
THE
for
with the private-carrier you
with government. As
all
SOCIETY
Notice of Nomination of Directors
do not have
you
EQUITABLE
ASSURANCE
ex¬
us
DOUGLAS S. FREEMAN,
Richmc»d, Va.
Newspaper editor and historical writer
WILLIAM J.
GRAHAM, New ?ork, N. Y.
WILLIAM A. KELEHER, Albuquerque, N. M.
Counsellor-at-Law
NICHOLAS KELLEY, New York, N. Y.
Counsellor-at-Law
Draining Capital Away From
Industry
W. W. KLINGMAN, Dallas,
Life insurance and banking
Another very important reason
for the desire to have private car¬
Tex.
RUSSELL B. LOWE, Fitch burg,
Manufacturer
riers carry risks is that the dollars
days of
money for in¬
dustrial expansion is hard to find
when your field is limited to the
keep working. In
confiscatory taxes,
Mass.
these
investor.
The insurance
company, as a result, has become
an even greater source than it was
EDWIN
P. MAYNARD,
Brooklyn, N. Y;
JESSE SLINGLUFF, Baltimore, Md.
Counsellor-at-Law
of
to
Financing1
this
problem,
Doughton, Chairman of the House
Committee on Ways and Means,
*An address by Mr.
Caples be¬
fore the Health ana Accident Un¬
Conference,
111., May 16, 1949.
Chicago,
in
the
investment funds.
and I doubt if
this is unique, has all of its debt
securities held by insurance car¬
riers. In other words, the premium
dollars have gone toward buying
the
new "tools
and
new
plants
which are necessary if our econ¬
omy is to keep expanding.
The
premium dollars which go to gov¬
ernment are in large part being
My
past of
own
drained
source
company,
away
for
the
as
an
investment
purchase
of
tools
A certificate of nomination
with the Insurance
of the said candidates has been duly filed
Department of the State of New York.
The annual election of Directors
of The Equitable Life Assurance Society
of the United States will be held at its Home Office, 393 Seventh Avenue,
New York 1,
N. Y.,
on
December 7, 1949, from 10 o'clock
a.m. to
4
o'clock p.m., and at said election twelve Directors, constituting one
Class of the Board of Directors, are to be elected for a term of three years
from January 1, 1950. Policyholders whose policies or contracts are in
force on the date of the election and have been in force at least one year
prior thereto are entitled to vote in person or by proxy or by mail.
ALEXANDER
May 23, 1949.
is
outing at
Aetna
May 28.
A lively and
humorous four-page issue, the pa¬
per will contain many entertain¬
ing advertisements of firms in the
Nelson L. Buck; Cor¬
responding
CALIF.—
Bond Club
again issuing the "San Francisco
Tapeworm" in connection
with
Recording Secretary, Miss Grace
Zern with
Paper
FRANCISCO,
The San Francisco
Edith
Miss
Gofen
of
San Francisco Bond
re¬
Melchoir Palyi;
Vice-President,
Jiencke
were
1949-50.
year
393 Seventh Avenue,
to
a
night of the
season.
money
our
course,
tact
;
the
won
private
aside from the freedom aspect, the
derwriters
Seaver &
cover¬
them the greatest possible protec¬
We have people who can
Not content with
lions
Sidney Mendelson, Shaskan
Co.; Harry Casper, John J.
O'Kane, Jr. & Co.; Charles Seaver,
were
failed in your duty to your
pay.
available
have
perts who
sures
personal freedom of any
subject to these laws.
freedom
by
&
impairing the solvency oi
our
sea¬
was
afford to paj
business and tailor
individual
the
private
permit the govern¬
ment to place itself in a position
where it is handing out checks to
a substantial portion of the popu¬
lation each year, socialism is not
coming, it's here. Unless you and
your companies educate your pol¬
icy holders and the rest of the
public to that, I think you have
considerable invasion
a
charge of the dinner.
winning team of the
led oy Captain "Duke"
Hunter of Huhter & Co. Members
son
far
within
we
in
The
that
we
our
we can
190
at 5:30, dinner at 7. Her¬
Meyer, Stern & Co., is Chair¬
man
guar¬
That is
to
because
at
Cocktails will be
maximum cost is concerned and
termine what
of
Kainskeller
served
man
responsible.
experience justifies we can
reduce
this
through experience
rating or dividends. We can de¬
to
King's
Third Avenue.
wage
retained
Security
cost
our
tomers happy and is most cooper¬
come
Joe
cov¬
let
placed with
be
party
then
the
of
Traaers Association of
New York
a
dinner on May 26 at
will hold
under
it
bowlers
The
^
protection
age
not—and
coverage
&
enter
we
disability bene¬
Many of us are forced
not
have
circumstances—be
A pri¬
vate carrier wants to have its cus¬
ly when Mr. Hoover wrote to Mr.
branch
95 State
R.
government has collected $52 bil¬
lion in tax and paid $14 billion
for claims—yet has a balance of
Claim
The trend here has
the
were
firm
plans to the voters at least be hon¬
est enough to state their cost? The
establish mini¬
give us advice as to necessary and
mum needs or requirements that
helpful changes in coverages as
an employer must meet to protect
conditions
change, a flexibility
workers
against the hazards of
which is impossible with govern¬
business,, such as workmen's com¬
ment insurance. Yet flexibility is
pensation laws—with the excep¬
tion of state fund set-ups—or you a necessity if the greatest good is
to be secured. Government plans,
can
financing of government programs,
previously with
is in itself scandalous, but for the
R. H. Johnson & Co. Mr. Whiting
first time I saw it attacked recent¬
was with Bond & Goodwin, Inc.
offices
obligations of the fund and we
talk of increasing benefits.
Why
can't the people who sell these
tion.
two ways; you can
is
are
President;
Whiting, Vice-President; Rolahd
H. Boardman, Treasurer; John C.
Whitten, Cashier, and Marjorie A.
Moore, Clerk. Arthur C. Alexan¬
Alexander
in¬
fits, etc.
BOSTON, MASS.—Boardman &
Freeman, Inc., is engaging in an
at 75 Federal
he saw
could be frugal or im¬
provident,
than
greater
for medical care,
Inc., Open in Boston
John
You
business.
Boardman & Freeman,
tributors
free to guard against the haz¬
fit.
Tatham, Jr., of Institutional Util¬
ity
individual—
man—the
was
In
committee of the
Society of Security
follows: Glenelg P.
and
forgotten
ards of life and old age as
plans
advisory
New
compulsion, wherein an in¬
dividual—that, incidentally, is the
lecturer in finance
closely with leading investment
analysts in Wall Street.
Work¬
ing with him to this end will be
an
from
1941.
was a
1927
the School, Mr.
become
tax rate is inadequate to meet the
created
was
what
pay¬
words, the so-called funding is a
myth. Added to that, the present
ernment of
this
the interest, and when
ments
of which, "Secur¬
ity Analysis," was written in col¬ it is compulsory. Our economy was
laboration with David L. Dodd, intended to be one which was free
one
program
Association of NY
source
payments
a
and
no
the
considering
now
of broaden¬
ing the tax base, increasing bene¬
fits and broadening coverage. Mr.
Hoover pointed out what has al¬
ways
been
true—the
premium
govern¬
ment
is
'Fair Deal"
have forgotten
Graham
that
School
which
They
men.
Benjamin
government does is good and
forgotten that government is
nothing; that it is run by men
mistakes, prejudices and fail-
investment
compromise because
clamor demands, then let
erages
the
Security Traders
present gov¬
must
When
<>-
other
of
ures
cover¬
and leave underwriting to private insurance carriers.
age
our
are
seems
controlling factor in
government
or
taxes
which
economy.
If
industry's opposition to government insur-
the
be
may
public
Mr.
thing
ernment—this
;;
Unless
expenses.
decreased—a
very
Graham-Newman
used for current govern¬
are
ment
19
McNEILL, Secretary.
the
20
COMMERCIAL
THE
-(2280)
&
Warns
FINANCIAL
CHRONICLE
Norlgage Lemlers
Thursday, May, 26, 1949.
time.
Cotton
goods,
radios,
jewelry, tires, shoes, and furs have
b(jen at it for a long time, and
Qver-Optimism
on
.
Charles
Fleetwood, Vice-President of Prudential Insurance Com¬
tells New Jersey Bankers lending in present'falling real estate
market presents a situation demanding more than
ordinary care.
would be in error to believe
all the trouble is still ahead.
Mucli
we
pany,
i
In
New York,
It becomes increasingly
City
Chicago & St, Louis
May 13, regarding the real estate mortgage and building out¬
Charles Fleetwood, Vice-President in Charge of Real Estate
for the Prudential Insurance
roads have made any effort
to curtail maintenance outlays despite the decline that has been wit¬
nessed in traffic volume. As a matter of fact, most of the individual
that very few of the
It is notable
railroads, and the industry as a whole, have actually made heavier
accruals in 1949 to date than they did a year ago. To
extent this obviously
not
fishing
well
we
dh
That
railroad securities on the part of both specu¬
enterprise, system.
As
on
tions,
four months
the
declined
slightly
ended
than $1 million from a year earlier. Main¬
just about the level of the 1947 period.
more
tenance outlays were held to
Transportation costs, however, were! cut by almost $600,000*' thereby
absorbing a substantial part of- the; drop in', revefmes. The transpor¬
tation ratio for the 1940 period was! 35.4% compared with-36,1% in
the 1947 interim.
While income taxes were somewhat higher than
age
investor.
"From- here on, any change for
the worse, so far as business con¬
ditions
are
would
be
and
cases
in the year, it is
running.much, if- any, behind last year's figures. ;This is hardly indi¬
cative of a dying industry.
;
,t
Last year Nickel Plate instituted a program for reducing the
arrears on the preferred
stock. An extra of $3.00 was distributed
in 1948 and one extra of $7.50 a share has been paid So far this year,1
It is believed that this policy will be continued until, at least half of
the accumulations have been liquidated.
At such time it should be
in
reflected
some
collection
foreclosures.
for
don't
all
It is
mortgage
C. S. Young says if we
in
Address Accountants
President
Association of
Accountants spoke
at the
Clinton
of
Cost
W.
Bennett,
National
the
meeting of the Brooklyn
annual
Chapter on Tuesday evening, May
24, 1949. Mr. Bennett is a partner
of
Cooley
&
Marvin,
firm of
a
certified '
public accountants and
management engineers in Boston,
Massachusetts. He is
Vice-Presidents:
Harris,
Leon
H;
Curtice, Treasurer, and Ralston C.
Hewitt,
Brown,
Secretary;
Ronald
F.
Franklin
L.
Buchheit,
G. Fallon, Howard B>
Heller, Edward D. Hoffman, Wal¬
ter F. Knight, Stanley Michelsen,
Harold Nohe, Jacob T. Schaefer,
William
A
Directors.
-
member of
a
Mechani¬
cal Engineers, the American In¬
the American Society of
New Orleans Bond Club
stitute of Accountants and a num¬
ber
of other
izations
of
professional organ¬
accountants
and
en¬
f
r
i
d
e n
gineers.
Arthur B. Gunnarson,
Secretary, and other distinguished
representatives of National Head¬
quarters, also attended.
A
technical
as
forum
on
Current
Problems was con¬
Charles
H.
Towns,
Accounting
ducted ' by
Chairman,
with
ders and Russell C.
Milton HudFlood partici¬
pating In the discussion which in¬
cluded
the
consideration
of
re¬
NEW
imistic
p e s s
about
the
present
i t
s
uation,"
all
I
have
believe
-
Mr.
and
years
single |
I
about
the
fu¬
Election
of
officers
and
tors for the fiscal year
was
direc¬
1949-1950
also held at this meeting. The
Nominating Committee under the
Chairmanship of R. C. Morse,
of
officers
day
will
banquet
for
be
and
the
topped
election
forthcoming
fiscal year.
W. C. Hildebrand of
tier
man
&
Sanford
White, Hat-
is General
of field day.
Chair¬
j
do
it
| local finance and the action being
taken to meet those problems.
Some—perhaps
I would
all
—
these
of
round tables will be sponsored
bv
universities/ Professor Robert S.'
Ford, Director of the University of
Michigan Bureau of Government,
25
over
remember
series of regional
They will be con¬
chiefly with problems of
a
'
the
a
will head the
Regional Round Ta¬
to make over-all
plans for these meetings. Dr. Fred¬
not
ble
have said exactly the same thing."
Committee
pal Research, Dun & Bradstreet,
Inc.;1 and. Mr. Carl.H., Chatters;
Executive
also
any
"Although
of
many
outlook is that the familiar
which in
the
spiraling,
cerning
"In
of
70%
loans
deposits.
Even
most
.-When
are
sale
s
little
a
disappointing
as
compared
with
there
be
ation
look for
to
ab¬
the
normal
Young
years,
seems
an
excuses
to
inclin¬
rather
then get down to fundamentals of
price, quality
product,
sumer
"If
and
con¬
services.
entering a period of
disinflation, recession, or depres¬
sion, it will be the best financed
of any like period in our economic
history. We are exceedingly wellheeled,
and
I
mean
we
'the
people,' we, the 'banking system,'
and we, 'American industry.'
are
we
"As part of
words
the central banking
about
Money is
tight, as it has
money.
dear
nor
make
new
loans
well-managed
even
if this
quickly relieve
sound
and
And,
the
not the case,
any
supply of credit.
is directed
to
businesses.
were
strain in the
Your attention
to the recent decrease
in reserve requirements, and the
easing of instalment selling terms
and of stock margin requirements.
"From
point
of
the
money
view,
of
and
credit
probably
the
strongest point in the immediate
loans
only 36%
were
and
assets
by
circulation, as distin¬
guished from money supply, was
then $28
billion, $26 billion of
in
Money
which
outside of the banking
was
Individuals had $50 bil¬
deposits, $56 bil¬
lion in savings accounts, and $70
billion in government securities.
If you want to go the limit and
system.
lion
in
demand
add
such
life
the
items,
insurance
liquid
people
total
American
the
of
means
of
value
cash
and
would not be far short of
$300 bil¬
lions.
Ample
"I
much
Capital Available
think
not
do
concern
there
to
as
the
lack
be
of
of
con«»
be
table
will
be
the
Michigan State College
reported. A summary
will
be
pub¬
discussion
the
A
sues
in
"Tax
successful
Policy."
'
offering of two is¬
Federal
of debentures of the
Credit
Intermediate
Banks
wag
made
May 18 by M. G. Newcomb,
New'
York,
fiscal agent for the
financing consisted of
$32,045,000 1.45% consolidated de¬
bentures dated June 1, 1949, due
Sept. 1, 1949 and $56,630,000 1.55%
banks.
The
consolidated
June
1,
will
be
dated
debentures
March 1,
1950.
Both issues were placed at
par.
Of the proceeds $38,070,000
1949,
used
of
amount
and
to
due
retire
debentures
a
like
maturing
June
1
and $50,605,000 is
"new
money." .As of the close of busi¬
ness
can
will
FIG Banks Place Oebs,
earning
deposits.
of
of
30%
round
at
serve as
lished
1933, after four years of liquida¬
tion, they were 52% of deposits.
Contrast that, if you will, with
that at the end
of
1948, when
business.
first
Cline
will
al¬
were
plans
University of
Michigan on June 3.
Michigan
State College and Wayne Univer¬
sity will cooperate with the Uni^
versity of Michigan in arranging
the program. Professor Denzel C.
causes
ican
C. S.
The
you.
bank
A
to
up
Further details
these
conducted
liquidating, reces¬
appear
to
exert
I hope a few fig¬
illustrate the point will
1929
set
Policy."
not
to
be
an^
nounced in the next issue of "Tax
or
do
will
committee.
organize and conduct each of the
past have produced
sions
Amer¬
Association,
the
on
round tables.
;-.~-
——
serve
local committee will
business
my
Director of the
Municipal
ican
ture of Amer¬
Federal Reserve authorities could
a
for
when
year
tic] not bore
&
field
I
for
particularly
cannot
ures
before nearly all
major business declines.
Banks
are generally liquid and able to
with
is
continuously
ness
am
been in the past
The
that
tables.
cerned
heavy weight.
opt im is
neither
Shober) "Dogs." Other athletic
events
include
swimming
and
horse-shoe pitching.
announced
conduct
round
reassuring—and you will be right.
However, I have been in the busi¬
re¬
Monday, May 30, at the
Metairie Country Club in New
Orleans, will be highlighted by the
traditional
golf match between
Kingston's (Lamar & Kingston)
"Cats" and Woolfoik's (Woolfoik
on
that
future
lender
mortgage
marked, "I
day
off
depreciation.
Bond
said
the.
Young
Club of New Orleans annual field
placement value being used as a
basis for
ORLEANS —The
all phases of taxa¬
on
just
year,
job on moonshine vodka, or
what-have-you.
"You may get the impression
are^
s
system, I believe it would be ap¬
propriate for me to say a few
Features
has
do the
entering period, of disinflation; recession:
are
the business outlook,
on
:
>
Field Day
tion,
Speaking at the 38th Annual Meeting of the Wisconsin Manu¬
facturers' Association at Milwaukee, Wis. on May 17, C. S. Young,
President of the Federal Reserve Bank of Chicago, struck a note of
the
following panel fpr approval by
the general membership:
Russell C. Flood,president; Her¬
A. Johnson and Michael E,
information
Gold¬
like period in history#
Holds there, should be no concern of lack .of* capital to finance cor¬
porate and municipal expansion.
presented
bert
Institute, the large non¬
organization disseminating
will, during the remainder of this
,
National President to
'Rube
some
through¬
The Tax
profit
Personally,
I
see
the old girl
to
for
be held
country.
far
so
has served
ours
to
out
berg' gadget which is supposed to
depression, it will be best financed of
or
possible to provide for the balance in new securities without any
great dilution of the equity of the common stock. It was the opposi¬
tion to any substantial dilution of the common equity "that blocked
the, chances of a stock recapitalization, last year. Proposed lease of
the Wheeling & Lake Erie, which may be consummated in a couple of
months, would further strengthen this situation materially.
President,
hell
one
thing that
well.
want
traded
Local Finance
Round table
Chicago Reserve Bank Head Optimistic
,
Past
manu¬
i
erick L. Bird, Director of Munici¬
practically $1.00 a share on the common.
granting further business deterioration later
difficult to visualize earnings for thq full year 194^ optimism
equivalent to
With this start, and even
concerned, undoubtedly
time
good
a
Last year earnings on the preferred stock, on which there
dividend arrears of $73.50 a share, were reported at $42.58 a share.
was
three
Institute to Discuss
Uncle
go—and
of
mare
old
the
is
mare
pretty
us
aver¬
-
be
the
this old
not
property.
This
makes
from
joint facility rents was reduced almost $400;000
Nickel Plate has for many years been a, consistently high earning
are
never
are
entire free
country
It
success.
more
should
this
made
a
even
equipment and
Earnings on the common, without allowing for *' preferred, dividend
accumulations, amounted to $39.09 a share. For the first fourmonthi
of 1949 there was a year-to-year increase of $333,720 in net income.
of
guaranteed
they were last year, payroll levies! wore down fairly sharply and
overall taxes were cut nearly $200,000. Finally, the net debit for hire
of
condi¬
such
has
attractive than usual to the
for the full four months.through
April 30. the road's gross revenues
Under
government
mortgages
.
For
different proposition from
a
amateur.
an
ports the contention of the bears that the industry must necessarily
fall to pieces on even a minor dip in business.
Even more impres¬
sive is the showing of the company
than ordinary care; Lending
falling real estate market is
lending at a time when every¬
thing is going up. It is no job for
April earnings. For the month, gross
nominally (less than $120,000) over a year
Net income was up by more! than-$194,000: This hardly sup¬
earlier.
a
quite
increased
has
Joe Cannon used to say—it's what
more
:
he
retailer and to the
word 'Profit' of course, is
one
as
But there
provided
our
sljiould screen all applications with
of the first roads to report
revenues
do
mortgage
good example of resistance to a falling off in business is
to be found in the case of New York, Chicago & St. Louis.
It was
to the
facturer."
reasonable profit.
a
stated, "I feel
One
one
make
the touch-stone of
e a
outstanding job |of expense "control. Although it lenders should
traditionally takes considerable time for railroads to adjust their do everything
Chas.
G.
Fleetwood
operations to a declining trend of traffic, the roads this year have possible
to
been able to cut transportation ratios as business falls off. Recogni¬
guard against over-optimism and
tion of this factor should, in time, be reflected in a more construca ttitudc toward
lators and investors.
intend ^to
we
can
liqqid
goods, priced right and well serv¬
iced, will keep the dollars rolling
as
e
a
roads have done an
ti ve
in-and-out of
an
in good times and that is
as
•What
h
on
the market basis. Come what may
we
must
continue to serve the
that
probably
lie
possible out of the way before the 40-hour week for non-operat¬
ing employees becomes effective next Sept. 1.
Where it counts, which is in the cost of transportation, the rail¬
i
operate
and
,
to
in the troubled
as
accomplished,
things he will rightly demand in
exchange for his .money as we1
move into this competitive econ¬
omy which is just ahead—price,
quality,
and
service.
Quality
collec¬
procedures — just in case —
hope for the best. Insti¬
tutions like ours however, can¬
and
Waters
represents an effort to get as much work
overhaultheir
to
borrowing public in bad times
"In
been
been before.
tion
care.
maintenance
some
lenders
ordinary
than
rich
Company, Newark, N. J., advised mort-
public toward railroad secur¬ gage
lenders
has been a good one earnings- to
guard
figures for the industry as a against oversubstantial dip in net income opi»mism
by
from a year ago. To a major degree, however, this is directly attrib¬
screening
all
utable to the traffic disturbances and heavy expenses incident to
applications
the particularly severe winter in the west.
with
more
apathy, if not active revulsion, of the
ities. By all standards the year so far
wise for the carriers, It is true that
whole for the tirst quarter showed a
.
has
I believe the financial situa¬
tion is thoroughly sound and that
John Q. Public, by
comparison, is
Jersey Bankers Association at Atlantic
on
look,
difficult month by month to justify the
already
and
talk before the New
a
June 1, 1949, the total
of debentures
amount
outstanding will bo
$598,440,000.
finance
to
corporate or
municipal expansion, neither do I
means
think there should
cern
to
as
power
be much
mass
available
American
be
the
con¬
purchasing
for
output
of
There may
disappointment, hesi¬
industry.
further
tation, and slackening, which will
bring on a cumulative weakening
of sentiment and
chology,
but,
a
defeatist psy¬
in that connection,
economic adjustments which expe¬
rienced people have recognized to
be
necessary
are
making
"All business and all
rise
PITTSBURGH, PA.—The Bond
Club of
Pittsburgh
announces
ihe
following outings planned for the
summer
June
and
early fall:
■
28—Spring outing and golf
tournament
at
St.
Clair
Country;
Club.
>■
progress.
not
great
Pittsburgh Bond Club
Schedule Outings
together,
nor
prices did
are
they
making their adjustments and re¬
tracing their steps at the same
July 27—Mid-summer picnic at
Mill
Grove, North Park.
September
9—Fall
outing
Chartiers Country Club,
i"
at
Volume
169
Number 4806
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2281)
I
Lauds Swiss Circulation of Gold Coins
as
well
in it
sees;
improved
is
that
whatsoever
good example for U. S. to follow.
as
or
that
does
even
a
I
not
I
really
can
for
see
real
a
recession
basis
no
Our
depression
of
Week—JVIay 22-28," George >F.
Bauer, Vice-Chairman Of the In-^-
Trade-Section, Ne w
York Board of Trade, said.
"This action by the Swiss com¬
with
pares
New
that
,
our
at
demand,
Board
removed
of
Trade,
35
gold
for hesitancy
a cause
the
and
into
credit
on a
"This-
.
\; 1'
arrangement,"
Mr.
work
Switzerland.
Mc¬
Furthermore,
and
improve
efficiency in doing business with
dealer
.any
look
enactment
increase
which
on
buy
can
shall
we
shall
we
now
on
forward
vert
a
amount
which, in turn has
per. ounce in
sound
basis
ternational
"Notice
from
order to provide a
for
of
the
domestic
in
in¬
and
•
-
late
H.
the
effect
favorable
one
Swiss
ceived from Mr.
action
in
Zurich
asked7
amount; he could order
without
account
if
on
letter
of
sell
to
any
sell to
Assistant
velopment
as
Chair¬
of
man
the
SEC will
suc¬
ceed Mr. Lund
Associate
as
Director of the
division. *
Mr.
open
credit
mission
f
Adams
was
\\
request.
charity
world
trade
Consolidate With
Sloan Warns
'
Against Interferences in Balancing
Economy -
In address to
country's largest brokerage firms,
announced plans for further ex¬
pansion of its services on July 1,
commodities
In
concluding his address at the Annual Meeting of the share¬
holders of the General Motors Corporation, held in Wilmington, Del.
May 20, Alfred P. Sloan, Jr., Chairman of the board, predicted
that there is not likely to be any recession in general business "unless
on
foolish $
do
we
things natioii11 y
in
the
a
validates wages, prices
that
tions
and business volume, and
justifies
profits in a free competitive econ¬
—such
as
a
omy.
The more interferences are
substantial in¬ kept out, the sooner the essential
crease in taxes
adjustments
will
be
accom¬
or
in other plished.'
economic
area
"I
third observa¬
ways, which is
These adjustments
not
that I
impos¬ tion.
have referred to in previous years
sible."
"In my talks are now with us.
Practically all
to you
v
i
i
n
P.
Sloan, Jr.
prices
Mr.
said, "I
have
Alfred
goods
meet-
s,''
g
Sloan
added
few
words
and
.
in
general picture, present
future.
believe
I
our
will
time
pass
in
are
be
the
of
perhaps
business.
However,
"I
point of view
vious years' remarks on this sub¬
ject
I
have
made
two
general
before
Capital goods
a
significant
economy,
In my pre¬
until
so
a
the
ditures in 1948 amounted to about
economy.
—is not out of order.
do
to
and
large expenditures on the part of
business—capital goods expendi¬
tures, we call them.
Such expen¬
to the
as
supply, and.
pressure
mentioned
have
general situation—if short enough
a
ample
continue
as it is, had best $19 billion.
in dealing with the af¬ ditures as
spent
a
feeling the
are
together, limited
fairs
to
reasonable balance is reached.
a
conclusion
about the
now
at pre-
o u s
pattern
in
factor
the
As they go,
to speak.
so
penditures
are
expen¬
now
most
a
are
whole
the
so goes
Such exr
falling off.
This, together with the fact that
consumer
needs, urgent and not
observations.
urgent,
"The first is that, in a situation
such as has existed, prices of ne¬
.
.
cessity
must
now
It
a
in
a
state of unstable
"equilibrium, both specifically, and
in relation to each other.
This
ample
is
question of the inevitable adjust¬
ment—how and
when?
The
ond
is, that such adjustment
only be brought about.; by
pressure
of
be
cannot
litical
goods
brought
propaganda
relationships.
on
prices.
about
on
by
such
sec¬
can
the
It
po¬
eco¬
In the state¬
to
move
natural
opinion
so
The
enlarged
under
&
brokerage
and
logical, phe¬
Nobody
that
lower level.
a
will
be.
the
when
knows
be reached
But
it
is
level
new
or,
my
will
I
made
to
.
the
firm
will
of
name
E.
.
.
Curtis
&
&
Co.
Franklin
of the
L.
G.
Hutton
Clement,
son
other founder, and Arthur
Lindley, with the Chicago firm
since 1908, will
both become
new-
E.
Hutton ,& Co.'s
F.
Chi¬
new
cago offices will be at the present
while, there
.
could
normal
or
course
through
some
rather
new
form
of
wage
principal offices in Los A ngeles, San Francisco and Dallas,
Ei F. Hutton & Co.'s nation-wide
wire
system
wire
connections
Chicago,
St.
in
Cincinnati,
Louis
firm
to
18
California, Ari¬
New Mexico and Texas and
zona,
to
extends
now
branch offices in
has
and
a
other
in
Boston,.
Geneva and
dam,
in
surprise
here
Pittsburgh,
cities.
.
.
.
But
.
.
.
Re¬
somewhere, because"
.
.
For-
.
a
great deal of "Open Mouth Operations" about
.
.
the
of
one
.
.
.
surprises that, the authorities might spring
Remember the unexpected has been happen*
IN
.
.
.
Surprise!
;
.
•
OFFING
Easy money market conditions that will get easier during the
may force the hand of Treasury in future refundings, and
despite surprises and uncertainty, something will have to be done
eventually to broaden the longer eligible market.
The loan trend
must be watched closely for money market changes as well as eco¬
summer
nomic conditions.
indices
try.
turn for the
a
...
time
Business
less demand for funds by indus¬
seems
better is not too far; away.
to be very
authorities.
under
Therefore,
...
,
such
The
...
mixed and this undoubtedly indi¬
supply of credit, - part of which will be
greater
the monetary
The.
means
borrowings.
But here again there are many that are very bearish, while
situation at best
a
reversal in liquidation of
a
others feel that
cates
On these two forces there is great diversity of
looking for a turn in the loan curve by late sum¬
still down which
are
.
.
.
.
others believe that it will take considerably more
while
mer,
...
some
.
conditions
created by
/
government
obligations,
should be in demand, and .unless the supply of the longer eligibles
broker and dealer,
.
to, prices of these obligations will seek higher levels.
added
is
London, Zurich, Amster-,
Buenos Aires and Monte¬
to limit
be
used
Savings bonds, and the restricted obligations, could be
.
.
too
some
sure,
don't,
of this demand fdr the longer eligibles, but
and just don't be
surprised, if you are surprised,.
First New Mexico Admits
ROSWELL,
N.
M.—John
M.
Holley, Jr., has admitted A. Clark
Eleehart s to > partnership
First
for
New
Mexico
in
the -
Company, 103
some
Mr. Fleehart
time.
Beckers Vice-Chairman Four New Partners
The Board of Governors of the
Stock
New
Exchange,
meeting,
ganization
K.
ner
McDonald, managing part¬
of McDonald &
Ohio,
Spencer
has
been
Co., Cleveland,
elected
to
the
board of directors of the American
Investment Co.
been
for
a
22
is
Vice-
a
partner
of
& Co.
He has
member of- the Exchange
Trask
years
Vice-Chairman
and
of the Board since
has
as
•
Beckers
Mr.
at its or¬
re-elected
Beckers
Chairman.
C. B.
Bioren & Co. to Admit
NYSE Board Reelects
William
C. B. McDonald Dir.
in¬
far.
too sure of itself?
ing and what is not looked for does take place.
clients in
Such
very
a
HIGHER PRICES
foreign representative,
than
panacea.
be
the market.
on
before there is
has been associated with the firm
interfere
a
in this way.
of
care
market gets
the restricted bonds, particularly the 2J4s of 1959/62, and1 hbw
they would probably be made eligible for purchase by commen-'
cial banks.
Much of this talk has subsided now, but this
With its home offices in New York
be,
in terms of physical volume
production, considerably higher
general prewar level.
I
hope we will let things follow
if the
was
opinion, with
and
that the
Surprises,
.
~
~
there must be
location of Clement, Curtis & Co.
in the Board of Trade Building.
of
than the
"
.
.
general partners.
..
.
the money managers have been doing the unexpected.
Hutton
F.
E.
.
.
member
Curtis, son
the founders of Clement,Co., will become a new
of
.
,
longer maturities would be taken
John G.
partner
coui'se.
will this happen
(founded in 1904 by
Edward F. Hutton) will continue
limited
.
.
There is considerable talk about the F and G bonds being re¬
opened to commercial banks, so that some of the demand for
16 present partners of E. F.
of one of
.
.
Hutton & Co.
with the firm.
.
.
.
of
Co.
All
.
does not usually take place: ... It should not be
forgotten
hide and seek game is still in style, so look for what?
continue
F.
.
Reserve requirements will most likely be reduced
again, but do
not count on its happening at the
expected time because the expected
.
-
only serve to prolong the
you
in 1947, I
stated as follows: 'It is the cash operation and, in the end, increase
its intensity.
My individual opin¬
register of the country reflecting
ion, for what it is worth, is that
hundreds of millions of transac¬ we are not
going down
ment
.
,
houses.
West Fourth Street.
creases
-
was
.
becoming well satis¬ video.
moving into,
supply, means that c we
nomenon.
their
.
by the authorities.
Surprise!'.
In the June refunding a
obligation was rather generally expected.
And what happened?
No, 1%%, but more IV4S.
The unexpected again.
Surprise!
are
distortion, in the very nature of the new level
things, must necessarily raise the where it will
nomic
It
.
.
.
evident with the decline in business and loans that reserve
requirements of member banks would be reduced.
But the mar¬
ket did not look for the reduction in reserves at the time it was
made
fied and all goods are
are
...
what about the unexpected
happening?
It could be that the
authorities will give the market another surprise and offer secur¬
ities that are not looked for,
It seems as though the moire
convinced the market is about certain issues
being offered, the
less chance there is of its being done. .
shareholders, Chairman of General Motors Corporation V when it will consolidated with
no basis whatever for real
depression or even serious recession ; Clement, Curtis & Co., one of
Chicago's
oldest t. securities
and
"unless we do foolish things nationally in economic area."
sees
*
certificates and the money
l\4s in place of them.
But
.
E. F. Hutton & Cov, ,61 Broad¬
way, New York City., one of the
,1/
...
Then next? operation is the July
markets are looking for one year
.
Clement, Curtis & Co. I
..
longer maturities, be¬
there must be surprises in the
picture.
cause
who
E. F, Hutton&Co. to
.
.
MANAGERS DOTE ON "SURPRISES"
...
active duty with the Nayy
1940 to 1945, has been with
healthy and
.
.
long-term obligations,
on
again."
the
tax
a
.
it gets shorts.... On the other
hand, if there should be opinions that
shorts will be offered, there
probably will be
or
numerous
a
.
The monetary authorities
appear to be playing "hide and seek"
with the money
markets, by always doing the unexpected. 4* r , Sur¬
prise seems to be the watchword of the powers that be.
If the
market should be
looking for intermediate or
about 15 years,
and
Mr.1 Mc-
Anthon Lund
monetary de.- from
experienced by one the
Commission since 1935.
capable of mul¬
"that will make for
There has been liquidation of
.
.
SOME CONCRETE EXAMPLES
might be increased. No immediate
on
.
-;
decision
made
MONEY
with the Com¬
the
firms .and
countries," Mr. Bauer concluded;
.
parting with their higher income
.
tiplication by
not
was
.
manufacturer and
the
.
.
Lund has been
cus¬
a
for
Both the small and
large banks have been very sizable buy01 the June and December
2s with the 2Ms due 1956/59 also
er*
Edward
the
to
shall
state in the Union.,
market
.
.
.
.
goods to
with
.
being well bought.
These institutions likewise have been tak¬
ing on the 2:;/|S due 1960/65 and the
2%s due 1955/60.
Outof-town deposit institutions have been
largely interested in the
2Hs due 9/15/67/72, and they continue to increase their
holdings
of this obligation.
However, switches from the eligibles into
restricted bonds are still being made in
volume.
*
Cashion.
tive
gold,
We
our
Switzerland
.
.
"It is this kind of
ha, President, Kennametal, Inc.,
Latrobe, Pennsylvania.
V "A month ago Mr. McKenna's
dealer
in
in
tomer
Philip; Mi McKeh-
able
assurance as we
same
re¬
was
be
dealer
a
the
.
Adam, Execu¬
buyer
of
in
New money as well as funds
obtained from switches
being invested in the eligibles due from 1953/54 on.
Savings
banks continue to add to their
holdings of the restricted bonds, with
the 2%s due
1959/62, and the 2%s due 1962/67 and 1963/68
getting
most of the attention at
this time.
Sherry T. Mc-
definite value
a
seller.
of
currency
then
commerce.
the
of
currency
definite
continue
are
trading and exchanges,
succeeding the
will,
the
into.
Philip M. McKenna
demand
forced the banks to borrow.
because the banks are not
.
division of
have been met,
namely unrestricted ability to con¬
George F. Bauer
sizable
...
of
credit
and
shorts
by the Securities and Exchange
Commission, to Director of the
legislation to coin
gold again. When that is done, a
prime requirement of internation¬
al
nave
Anthon Lund has been promot¬
actual
to
tone
.
ed
credit,
open
good
treasury obligations despite tight
money conditions.
The author¬
by war loan calls and
spotty support of the short-term market
ities
something worse."
Swiss
our
A
in
To SEC Division Dir.
returning to redeemable
currency
made good in gold, is
credit-worthy.
,K_
"While
or
Antbon Lund Promoted
country
amount
taxes
obligations.
Kenna tells us, "will make for re¬
duced " paper
in
which is not impbsmight accelerate the
,on
was
has been
increased.
gold coin
non-gold dollars
be
money
standard
convertible
money
recommended by
one
York
increase
Governments
on
By JOHN T. CHIPPENDALE, JR.
ways,
sible—we
When news came of the official
adjustment into
intention
to
make
the
Swiss
ternational
the
stantial
other
Reporter
consider¬
able consequence.
Of course, if
"Switzerland's reported plan to introduce new 25 and 50 franc
we do foolish things
nationally' in
gold coins for circulation at par with Swiss paper money is an encour¬
the economic area—such as a sub¬
aging sign for business leaders gathering in different parts of the
United States to observe World Trade
21
mean
what
Perhaps
much.
mean
George F. Bauer of New York Board of Trade
world trade
:
appreciate
twice
been
May, 1937. He
elected
ernor, serving from 1938
and from 1944 to date.
a
Gov¬
to 1942,
PHILADELPHIA,
&
;
PA.—Bioren
Co., 1508 Walnut Street, mem¬
of the New York
bers
and Phila¬
delphia-Baltimore Stock Ex¬
changes, will admit Sterling J.
Whitcomb, Gordon L. Keen, Wil¬
liam E. Slack and Thomas B.
Krug
been
June 2. All have
associated with the lirm for
some
time.
On
May
to
partnership
and
Walter
tirA
frnm
on
«
31, Harry
D.
Larzelere
nflrtnprchin
..
MacDonald
will
re-
22
(2282)
THE
COMMERCIAL
Foresees "Gold Rubber" Giving 75,000-liiIe
Automobile Tires
Gallery, Glore, Forgan & Co.;
F. Grimm, Eastman, Dil¬
lon &
Co.; David John Harris,
Sills, Fairman & Harris, and Ed¬
Redden, Halsey, Stuart &
II.
A.
Hutchinson,
Hutchinson
lecture delivered before the American Chemical Society at
a
Cambridge, Mass. on May 12, Dr. Charles P. Fryling, a chemist of the
Phillips Petroleum Company, Phillips, Texas, and an authority on
synthetic r-hber, revealed the progress made in producing a new
synthetic
material
rubber,"
which
ises
Chemists
the
prom¬
make
out
last
the
eight
and
visor
ob¬
the
Emulsion
Phillips
Company's
polymerization research.
polymerization is the
key step in synthetic rubber man¬
ufacture,
in which
two
liquid
long
as
present
tires.
as
D r.
of
emulsion
years,
According
be
ing to Dr. Fryling, who is super¬
aver¬
three times
or
could
low-temperature
a
but they could not make
ihe rubber rapidly and efficiently
without heat at that time, accord¬
motorist
age
material
process,
75,-
miles
on
better
a
tires that will
hold
war
tained through
pa ssenger
000
during
worked
GR-S, which was pre¬
pared in heated vats, realized that
and
to
who
to
Dr.
Chas. P.
Fryling
chemicals, styrene and butadiene,
are
Fryling,
combined to make GR-S.
The
before
discovery of
available by Rubber
ber at about freezing
new
it practical to produce
made
rub¬
government synthetic rubber or¬
ganization,
and
should
enable
synthetic rubber to compete on
(32 degrees
Fahrenheit), he explained.
The reason for the exceptional
strength of cold rubber seems to
favorable
be the regular
Reserve, the
terms with the natural
product.
rubber
described by
stronger
and
ordinary synthetic
rubber of the type called
GR-S,
Dr.
Fryling
tougher than
is
and outwears
natural
eyen
rub¬
given hope that "75,000-mile
senger tires may become
future."
9,000
and
10,000
a
pas¬
real¬
a
molecules, he explained,
resemble
they-could
ciently,
barb.ed
be
cold
be
more
if
wire
magnified
in
and
barbs would
Bond Club of
CHICAGO,
suffi¬
rubber
the
less uni¬
or
In
addition
to making possible
rubber, the new catalysts
better
also reduced
thetic
the cost of the syn¬
product,
he
reactions
said,
with
av¬
overhead
car be¬
miles
a
and
lins
Caddy
be
fee
sisted
Linneus
by
P.
will
be
costs
less
foursomes.
$2.50
for
18
singles will begin at 10
Teams
matched
the
by
committee
will
square
off
in
round robin doubles at 2 p.m. In
addition to the I. Newton Perry
Cup there will be other awards.
Luncheon
11:30
a.m.
followed
baseball
ald's
will
to
in
be
2:30
the
club
at
the
special
also
the 4th
ball
to be
by a
"Fitzger¬
m.,
"Oilman's
and
Odd-Lots," at 3:30
The
p.
from
afternoon
Fractions"
beer at
served
between
game
pure
announces
free
14th
and
and
game
events.
tee
Members
mittees
of
the
is
are
raw
now
can
Weld
various
Robert
Cruttenden
&
com¬
A.
Co.,
Po-
Chair¬
McCormick & Co.
Reception:
Alfred
S.
Wilt-
berger, Blyth & Co., Inc., Chair¬
man;
John
S.
Loomis, Illinois
Co. of Chicago; Julien H. Col¬
lins, Julien Collins & Co.; George
Spaulding, Northern Trust Co.;
Dean
McCormick,
Kebbon,
McCormick & Co.
Entertainment: William
J. Law-
lor, Jr., Hornblower & Weeks,
Chairman;
Carl
J.
Easterberg,
Riter & Co.; L. Raymond
Billett,
Kebbon, McCormick & Co.; Jo¬
seph G. Houston, Jr., Calvin Bul¬
lock; William H. Sills, Sills, Fairman
of
Wilder, Illi¬
Chicago,
Chairman;
Baschen,
J.
Northern
Trust Co.; F. Newell
Childs; A. L.
McDougal, McDougal & Condon;
Horace O. Wetmore, Blyth & Co.,
Inc.
Golf:
Robert
L.
Holt, Blair &
Co., Inc., Chairman; George H.
Willis, George H. Willis & Co.;
& Harris.
Chicago.
Baseball:
Allyn
John W. Allyn, A. C.
Co., Chairman; Earl C.
Thomson & McKinnon;
&
Tennis:
John
A.
Kelly, Smith,
Barney & Co., Chairman; Wood¬
ward
Burgert, Harris Trust &
Savings Bank; Walter J. Fitz¬
gerald, Jr., Blunt Ellis & Simnons;
Robert B. Krell, Bacon,
Whipple & Co.; Louis J. Stirling,
Hirsch & Co.
Indoor
Sports:
Rowland
H.
Murray,
Ketcham
&
Nongard.,
Chairman; Joseph P. Condon, Mc¬
Dougal & Condon; Fred M. Gil-
espie, Harris Trust & Savings
Bank; Art H. Oehl, Paine, Webber,
ackson & Curtis; Clark J. Rob;rtson, Sills, Fairman & Harris.
Trophies:
Lewis
Miller, First
National Bank of Chicago, Chair¬
man; George L. Martin, Martin,
Surns
&
Corbett;
Donald
B.
Stephens, Paul H. Davis-& Co.;
Robert E.
Simond, Halsey, Stuart
Three
Higgins, Paine, Webber,
Tackson & Curtis, Chairman, as¬
Has¬
kell, Smith, Barney & Co., Chair¬
Webber, Jackson & Curtis; John
George
S.
5,106,673
3,036,044
10,202,583
5,919,357
8.75
15,169,580
8,540,040
9.85
16,973,603
10,273,603
8.00
131,056,327
127,797,241
Container Corp
16,990,593
10,424,593
25,059,306
15,053,306
11.78
31,270,698
$ 2,723,216
19,614,698
12.80
1,716,662
11.07
15,514,124
7.96
_
9.88
2,549,907
1,625,907
57,713,219
15,658,727
9,528,727
16.51
60,336,664
Hammermill
13,065,215
8,015,215
13.28
2,517,511
1,467,511
8.32
2,322,072
1,402,072
Co.—
Paper
17,644,794
20,695,824
Pulp
&
•'
Paper
Fibre
;J
6.77
.—
■■'
'•
'■
•
.
—
■___
408,696,628
__
88,174,729
""42,396,550
10.37
458,802,749
Paper
90,301,759
""48,489,266
10.57
91,009,832'
7.88
Sav. Banks Increased
Mead
10,954,647
7,172,488
13,468,670
8,270,753
7.03
44.604,332
8,029,983
4,654,457
10.43
56,766,915
Kimberly
9,044,652
5,593,238
9.85
Clark
J Marathon
Mills
Paper
Corporation
National
Container
Corp.
_
net gain in savings
deposits
$29,808,000 during April, 1949,
for
the
savings banks of New
York
State, was announced by
State
Robert
&
York
Gair
St.
Helens
So.
10.17
23,902,303
14,859,803
9.13
57,252,636
4,401,309
2,856,650
4.93
6,314,179
3,839,179
5.22
10,711,072
6,611,072
26.82
9,874,888
6,149,888
24.98
5,751,241
__
Co
&
Bag
Adikes
John
deposited
from
Virginia
22.66
3,920,765
21.92
2,364,114
3,330,409
2,069,673
7.65
63,511,527
19,981,608
11,756,608
18.50
22,657,780
13,607,790
17.78
85,989.056
Paper-'
&
3,584,509
6,342,732
3.812,509
17,635,424
10.935,424
12.72
17,217,169
10,842,169
15,815,424
Pulp
&
Paper
ended
dissolution
$3.6
banks
tYear s
90.6%
million
ended
filed
was
30.
April
Assets
—
"■''Reserve
1 Yea i
taken
$12,000,000
ended
s
each
Oct.
Paper
1,
Co.
year.
"When Issued"
on
11.63
§ Aug.
31.
Publishers
by
over
9.39
Trading
Roger S. Foster holds exemption under Sec. 3 (A) (10) of Secur¬
ities Act of 1933 from "when issued"
no
different in
when
An
trading restrictions would be
appeal is taken from court order.
an
corresponding
opinion of SEC General Counsel, Roger S. Foster, concern¬
organization
made public
was
The text ol the opinion
May 24.
on
follows:
Securities Act releases Nos. 3000 and
"In
expressed inter alia, that
an
order of
3011, the opinion was
U. S. District Court enforcing
a
plan under Section 11(E) of the Public Utility Holding Company
a
deposits and ac¬
on a steady in¬
crease this year.
During the four
months ending April 30, deposits
increased
$206 million, or ap¬
proximately 21% more than the
$170 million gain recorded for
the same period last year.
With the exception of February,
every month so far this year has
seen deposits growing at a greater
in corporate reorganizations than
stay
a
ing "when issued"'trading in securities of concerns undergoing re¬
more
savings
of
cases
only
gained in April of
the
30.
Continental Can.
by
April.
were
with
Nov.
certificate
SEC Counsel Rules
savings
compared
for
16.43
the
and
during
widened
proximately
2,430,7o0
25,177,987
Paper
Co
Paper
Bag
UAcquired
the
than
14,631,325
24,654,020
_
Puln
View
"Years
1948
during April a year ago. Conse¬
quently, the net gain in savings
deposits of $29.8 million was ap¬
rate
23.956,783
8,02a.435
Co.
Advance
IWest
withdrawals
Both
1,415,750
1,425,136
17.65
2,448,136
143,864,583
-
by
withdrawn
than the
9.33
93,242,724
in¬
month
16.22
76,529,753
88.7% of the gross deposits during
the
10,287,045
27,046,296
The spread between the amount
Gross
17.02
17,357,045
17,885,403
Sav¬
7,328,004 and total deposits to $10,550,263,000.
banks
8,505,916
24,615,833
Paper
Sound
Ac¬
amount
4,266,397
Pulp & Paper
Paper Co.
of
money
5,381,232
6,847,422
73,597,062
Scott
state of
of
12.00
8,639,219
13,830,916
162,672,926
the
in
29.00
8,672,112
held
banks
31.79
49,964,001
St. Regis
by
savings
all
4,822,901
5,513,626
63,411,202
accounts
now
7,698,431
8,806,441
44,837,153
Co., Inc.
Rayonier
New
and
15.98
6,184,953
9,922.633
15,173,454
Paper—
45,801.106
of
of
of
25.20
'
Savings
ciation
'5.91
'10,913,358
19,009,331
Pulp
Sound
Puget
Adikes,
the
5,013 917
17,501,878
38,698,563
A
President
8,072,217
43,346,722
_
of
John
7.87
5,685,388
9,386,202
72,273,305
84,837,549
During Month of April
'
21.32
117,575.399
x\ct
of
ruptcy
Act,
in
plan
or
1935,
confirming
or
establishes
Securities Act of
the
exchange
property
cash; that
legally
'unless
tion
the
one
securities
on
appeal from such
in
order
the
of
the
a
an
of
3(A)(10)
securities,
outstanding
more
or
partly
or
Section
under
securities issued pursuant to the
any
such
an
exchange
for
order brokers or dealers may
when-issued basis,
that the
and
order would not affect the
lower
claims
partly
and
court
stayed
were
exemp¬
pending the
appeal.'
E. A. Harden Joins
for
the entry of such
such
an
for
plan under Chapter X of the Bank¬
a
exemption
an
1933
interests,
upon
sell
taking of
periods in 1948.
effect of
"The
nature
a
stay of
conditions
and
a
court order depends, of course, upon
of the
stay.
Since experience with such
plans indicates that the type of stay order normally sought would
Starkweather Company
Starkweather & Co., Ill Broad¬
New York City, members of
way,
the
Newr
announce
has
firm
as
tional
of
York
that
become
E.
Stock
Edwin
A.
Harden
Harden
with
its
of
manager
Department.
A.
Exchange,
associated
Inc. has
of
May 21,
1949.
•
effect
the
or
confirmation
would not
than the
the
Co.,
as
have
merely
of
order, it
affect the
-
Ggo, Exchange Member
Committee
Stock
the
Exchange
election
to
of
the
has
Execu¬
Chicago
announced
membership
of
Claude F. Turben, Vice-President
of
of
the
plan
taking of
an
is
my
opinion that
any
such
appeal without
a
rather
approval
stay
exemption from the Securities Act
order
any
more
stay."
;
Buckley Brothers to Admit
Ted Alexander With
Carl S. Wittmer Jr. Partner
R. A. Underwood Go.
Merrill, Turben & Co., Cleve¬
land, Ohio.
office
of
the
R. A. Underwood &
in the Wareham
Bank
Co., Inc., Mer¬
Building
in
the
municipal trading department. Mr.
Alexander
was
formerly
invest¬
S.
Wittmer, Jr., Resident Manager of
ander has become associated with
cantile
MD.—Carl
HAGERSTOWN,
DALLAS, TEX.—Ted R. Alex¬
ILL. —The
execution
delaying
than setting aside even temporarily the effect of the court's
Institu¬
The business
&
discontinued
been
tive
special committees: Wil¬
24.33
16,454,137
Deposits in New York
CHICAGO,
H.
19.55
3,337,487
Corporation
International
& Co.
liam
2,805,288
5,549,984
128,345,675
Zellerbach
SHawley
counts have been
Trust Co. of
5,624,797
6.60
67,611,197
Corp. of America
Eastern
Chairman.
Harwell, Chapman & Co.; O. Paul
Decker, American National Bank
21.19
Va
Gaylord
1948.
sisted by Ralph N. Ballou, Paine,
Refreshments:
tCrown
Co.,
and
Andrew
M.
Baird, A. G. Becker & Co., Vice-
Hardin H.
Hawes, Harris Trust &
Savings Bank; Vincent Coleman,
2,791,797
&
total
Glosser,
Thomas W. Evans, Halsey,
Stuart & Co.; James P. Jamieson,
Glore, Forgan & Co.; Carl H.
Oilman, Kebbon, McCormick &
Co.; George R. Torrey, Kebbon,
D.
Co.
E.
4,355,790
153,395,529
Container
Hibben,
Co., General Chairman; George S.
Channer, Jr., Channer Securities
Co.;
Henry
W.
Meers,
White,
counts
Harris
8.19
13,176,783
Inc.
86,735,837
the general com¬
outing are: Joseph
Kidder, Peabody &
of
Union
materials
Fred T. Rahn, Illinois Co.; James
D. Casey, Lee Higginson Corp.
man;
F.
nois
of
Corp.
3,936,278
13,720,113
Co.,
6,236,278
14,240,794
mittee for the
W.
Net Sales
$2,837,682
tChampion Paper & Fibre Co.—
York.
possible,
of
are
Arrangements:
Chesapeake
Allyn
Co.
Members
% Profit to
Surplus
$4,812,682
14,350,405
Manufacturing
Sutherland
at
series
a
Dinner
7:00 p.m.
desta,
Dinner:
&
p.m.
and
C.
Camp
ings Bank,
Jamaica, New
be employed.
Alt'ord
a.m.
A.
to
Before Taxes
48,070,000
A.
Murphy,
Net Profit
Net Profit
.
Sales
Lawrence,
First Boston Corp.; Elmore Song,
Goldman, Sachs & Co., and Ed¬
ward
for 1947; second line for 1948)
are
$42,630,468
Co.
"Brown
Jamaica
Chicago Plans Outing Events
for
used
first line
on
Net
5,881 bringing
holes.
Tennis
(Note:—Figures
Nordberg, E. H. Rol¬
Sons, Inc., Chairman, as¬
&
OF MANY
STATEMENTS
PROFIT
H. Gerald
because
ILL.—Features of man; N. C. Hamilton, Jr., Smith,
at the annual field day Barney & Co.; Robert G. Mead,
of the Bond Club of Chicago, to Stone & Webster Securities
Corp.:
be held June 3 at the Knollwood Geo.
I.
Daniels, City" National
Club, Lake Forest, 111., will be Bank & Trust Co.; Arthur Tresch,
tournament
golf for three club Smith, Barney & Co.; Jules F.
trophies. The IBA handicap sys¬ Cann, Lehman Bros.
will
COMPARATIVE
REPRESENTATIVE INTEGRATED PAPER COMPANIES 1947-1948
reduced
day
tem
pared by Frank G. Ross and is as follows:
Hutchinson & Co.
creased
the
The tabulation was pre¬
Banks Asso¬
faster
The
erage motorist drives his
tween
ber
would
In fact, he
declared, recent advances have
near
shape of its mole¬
cules, Dr. Fryling continued. Rub¬
form.
ber, the speaker said.
ity in the
by
John
C.
Rogers,
Hickey & Co.; Bradford W. Shaw.
Swift, Henke & Co.; F. Girard
Schoettler, Wayne Hummer & Co.,
and Henri P. Pulver,
McMaster
Unless otherwise stated,
the periods covered are for calendar years.
catalysts
to accelerate this combination has
cold
Co.,
showing results for the years 1947 and 1948.
if Hummel-Ross
the year is over a production capacity of 200,000 tons of
cold rubber will have been made
The
&
McMaster
Chair rh a n,
assisted
&
Branch, Cabell & Co., members New
Exchange, have issued in tabular form comparative earn¬
York Stock
Manufacturers Association.
"cold
called
according to the Automobile
year,
is
which
Comparison of ihe Paper Companies
The Richmond, Va., firm of
ings statements of many representative integrated paper companies
Co.
Fryling of Phillips Petroleum Company tells American
new synthetic material now being developed.
1949
Thursday, May 26,
Two-Year
Edgar
Chemical Society of
In
CHRONICLE
J.
ward J.
Dr. Charles P.
& > FINANCIAL
admitted
to
Buckley
Brothers
Building, will be
partnership
in
the
firm, which holds membership in
the
New
ment manager for the Texas State
Baltimore
Board of Education.
June 3.
York
and
Stock
Philadelphia-
Exchanges
.on
Volume 169
THE
Number 4806
COMMERCIAL
San Francisco
William
A.
Association
&
FINANCIAL
CHRONICLE
(2283)
Security Traders Association
Miller, Fairman & Co., Los Angeles, President of Security Traders
of Los Angeles; Bart McMahon, Merrill Lynch, Pierce, Fenner &
President of San Francisco Security Traders Association; Edward
Welch, Sincere & Co., Chicago, President of National Security Traders
Beane,
Walter J. Vicino, Blyth & Co., Inc.; Terry Dempsey, Merrill Lynch, Pierce, Fenner &
Beane; Edwin L. Beck, Commercial & Financial Chronicle, New York City
H.
Association
Jim
23
.
Powell, Harris, Upham & Co.; Tony Bottari, J. S. Stravss &
Joseph Kessler, Henry F. Swift & Co.
'
Pete Finnegan, Hannajord & Talbot; John Buick, American Trust Co.;
George Gumbel, J. Barth & Co.
Co.;
;4,
M
Collins
Macrae,
Emmet
Wulff, Hansen & Co.; Elmer L. Weir,
Brush, Slocumb & Co.
Whitaker, Davis, Skaggs & Co.; Frank Bowyer,
Tom Price, McAndrew & Co., Inc.
Connie Shafft, Shafft, Snook
&*Cahn; Cliff Morrill,
Walston, Hoffman & Goodwin
Schwabacher & Co.;
Lou
Bill
Davies, Dempsey-Tegeler & Co., Los Angeles;
Jack Quinn, Stone & Youngberg
Spuller, Elworthy & Co.; Jack Hecht, Dempsey-Tegeler & Co., Los Angeles;
Ernest E. Blum, Brush, Slocumb & Co.
24
THE
(2284)
Annual
Art Perenon,
Jack
COMMERCIAL
Wm. R. Staats Co.; Walter F. Schag, Davis,
Louis Rich, Schwabacher & Co.
Hecht, Jr., Blair & Co., Inc.; Houston Hill ('Junior'),
Co.; Joe Talbot, Hannaford & Talbot
Ted Baker,
H
Dean Witter & Co.
Fred Tantzer, Head Chef at the Club;
"Cookie" Faulkner,
Wulff, Hansen & Co.
& Co.;
(with violin); Jim Stewart, Wilson, Johnson &
Florence Del Turco, accordionist; Earl Thomas, Dean
Witter & Co., Chairman of the Entertainment Committee, on Miss Del
Turco's left; Bob Smith, Hill Richards & Co., on Ted Baker's left, singing
Thursday, May 26,
CHRONICLE
Dick Gianti, Blair & Co., Inc.; Henry Hefter, American
Rich Payne, Geyer & Co., Inc.
Skaggs & Co.;
Irving Lee & Co., San Jose, Calif.; Paul E. Isaacs, Sutro
George Kammerer, J. S. Strauss & Co.
Higgins (with guitar);
FINANCIAL
1949
Spring Outing Nay 14 and 15
J. S. Strauss &
Joe Larzelere
&
Trust Co.;
Forest W. Shipley, Quincy Cass Associates, Los Angeles;
John J. O'Reilly, Denault & Co.
John J. Ford, Douglass, Van de Naillen Co., Inc.; A1 Merrill, Raggio, Reed & Co.;
Ken Sayre, Needham & Co., Palo Alto
Richard O'Neil, Edgerton, Wykoff & Co., Los Angeles; Chic Harkins,
inc.; Jack Egan, First California Company
'■
Blyth & Co.,
Volume
169
THE
Number 4806
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2285)
25r
1
At Mt- Diablo
Bill
Belknap, Walston, Hoffman & Goodwin; Ted Baker, Dean Witter & Co.;
Bob Smith, Hill Richards & Co.
Robert Bourne,
Conrad, Bruce & Co.; Bill Raber,
Stewart, Scanlon & Co.
J. Earle May, J. Earle May
Jim
Country Club
Jack Hecht, Demysey-Tegeler &
Chick Harkins, Blyth & Co., Inc.; A1 Hewitt, First California Co.;
Charles Kane, Geyer & Co.
Co., Los Angeles; Jack
Hecht, Jr., Blair & Co., San Francisco, who has just made
Jack, Sr. a grandpa!
& Co., Palto Alto; Hodge Davidson, Bailey & Davidson;
Dick
Abrahamson, Weeden & Co., San Francisco;
Larry Pulliam, Weeden & Co., Los Angeles
At the Dinner
Stewart, Wilson, Johnson & Higgins; Brooks Weber, Davies & Mejia
Angelo Lamperti, Lawson, Levy & Williams; Robert Jenkins,
Jack Sullivan, First California Co.
*
First California Co.;
"Sandy" Hogland, Brush, Slocumb & Co. (in background); Tony Richman,
Davies & Mejia; Forrest Moran, Conrad, Bruce & Co. (in background);
Harry Schmid, Wm. D. James Co., Sacramento
26
THE
(2286)
COMMERCIAL
&
FINANCIAL
CHRONICLE
ruptcy, the Wisconsin Central al¬
ready being in bankruptcy was
Wholesaling Rail Securities
(Continued from
the next third should
4)
page
state that because of this, the ac¬
count became very active again
substantial
and
have
ness
office
done
been
both
to
their
with
has been
since which
ever
beneficial
of busi¬
amounts
firm
my
and
that
audi¬
our
what is the best method to
ence,
in
use
have
we
selling them on your par¬
It has been my ex¬
ticular idea?
it is necessary to
discuss the general background of
that
perience
the
Using the
example,
itself.
industry
railroad
industry
as
1921,
industry first felt the force of
competition through improvement
by the Federal Government of
the
which
able
were
through trucks
to
cut
rates
on
small-lot
goods,
through
pipe
approximating
250,000
miles being laid which took the
lines,
oil
business
from the rail¬
Then proceed to show that
roads.
away
for the next eight years
roads
the rail¬
efficiency factors
through
able
were
enable
and
penses
decrease
to
their
ex¬
to
still
can
then
them
remain in the black.
You
to say that in 1930 and 1931
railroads entered a period of
depression
with
capitalization
consisting largely of funded debt
go on
the
predicated
on
a
monopolistic
industry that had suddenly changed
to a competitive type of business.
The
business
of
amount
that the
railroads lost to their competitors
small, as against the total
transportation business, still was
while
not the
primary cause of the fi¬
nancial debacle that hit the indus¬
cutting
the
but
try,
rates
of
to
try to retain that business broke
the rate structure of the railroad
industry and just did not give
enough gross business to
them
their
combat
result
fixed
costs.
As
a
this, about 35% of the
total rail mileage was forced into
of
bankruptcy.
Up
them
to
time,
that
to
rail
sold
people
who
obligations did not sell
individuals but to large
fiduciaries
bought
who
block form.
them
in
fiduci¬
buyers of railroad
In 1931, these
aries stopped as
securities and became sellers
on
The result was, with no
balance.
buying cushion under the various
bond prices de¬
point where the
total capitalization of some com¬
panies was lower than the scrap
value of the rails, tie plates and
equipment.
In other words, ex¬
issues,
railroad
teriorated
plain to
to
your
of
destruction
a
audience that the
ra
i1
r o a
d
credit
could create tremendous bargains
for their
customers if selective
buying of special situations which
you would discuss later were fol¬
lowed.
From
this
point
you
should
present the optimistic side of the
picture, showing the reduction in
debt through open market pur¬
chases and through the reorgani¬
zation of the 35% that had gone
into
bankruptcy.
Naturally, the above is a gen¬
idea of the presentation of
eral
particular industry. The same
could be done in the utility in¬
one
dustry,
fer.
Once
specific
have to of¬
to the
down
it through to the
If it happened to be
Missouri
the
you
or
carry
nth degree.
the
proposition
get
you
devoted
Pacific, don't speak
"MOP"
5s, but* speak
Missouri Pacific Refunding 5s.
of
In
order to show you what I mean by
specific, I shall, a little later on,
take you through the development
of
one
railroad
reorganization,
Getting Necessary
the chemical industry or
industry. It is
the motion picture
important to show the bad
as well as the good points.
It is also very important that you
know something about the per¬
sonalities of the men operating
the various companies that you
intend discussing.
Are they, in
very
points
How
do
Information
get the necessary
present to your
There is only one way t(
you
information
to
people?
do it.
Get it yourself and get it
from
primary
Do not
the investment services
sources.
depend on
because right then and there, you
petent
management.
All this
background
knowledge
should
take up about one-third the al¬
lotted time that has been granted
you
for your discussion, and then
either
prove
your
point or disapprove it. Another
important point to remember is
that if a security is high priced,
it does not necessarily follow that
it is high grade.
Nor does the
fact of low price imply that it
is
low
grade.
I
know of
a
cer¬
tain
security that in 1936 sold at
$115 per share and that particu¬
lar security, in a period of a few
years, sold down to less than $1.00
share
and
mind you might feel
own
certain
that equitable treatment warrants
a
taking secondary information.
firm has always covered all
court
hearings
and
Interstate
Commission
it
to
than
been.
was
the
previous
From 1939
Central
was
proceed¬
ings regarding these rail reorgani¬
zations.
We
have
purchased
higher
price
than
the
current
the
of
amount
preciation
that
capital., ap¬
in your in¬
you,
traffic agree¬ formed judgment, believe is
more beneficial
able for the holder of such
the Wisconsin
on
able
had
one
to
show
fair
a
curity.
To
avail¬
se¬
a
earning
in this
demonstrate
power, show as you can
particular picture that the
pre¬
earnings based on its ferred stock which, in the origi¬
old
capitalization and naturally nal plan of reorganization ap¬
these earnings built up cash so proved by
the Interstate Com¬
of
amount
that
time
a
senior
came
could
arrears
be
when
retired
interest
1948
debt.
We
at
that
time
advised
our
clients of the possibilities in these
a
current basis.
age
out
of
the
Commission
merce
declared
was
the valueless, had earnings in the year
on
eventually
Our
Commerce
which
ment
show
new
a
was de¬ senior
mortgage bonds, namely,
plan of re¬ the
Wisconsin
Central
general
organization. It is also important mortgage 4s of 1949, and were able
to stay away from certain types to
place substantial amounts of
of situations which are too hard them with various firms
through¬
to judge because of the limits of out the
country. Our assumption
your own background, namely, a was
proved correct and in the
security which is dependent for early part of 1948 the last pay¬
its value on a purely legalistic in¬ ment of 18
points in back interest
terpretation of law. While in your was made which put'the bonds on
a
are
of
share.
tial
approximately
ferred will
speculate
all
$15.00
a
A reference to the substan¬
earning
the
of
power
cause
the
pre¬
audience to
your
the ultimate value of
on
securities
will
also
and
make them realize that your pro¬
jection of earnings and of prices
not out of line.
are
At
this
,
I would like to
time,
discuss another situation with you
is in your own backyard,
namely, the New York, New Ha¬
which
& Hartford RR.
With this
arrear¬
ven
way,
became
it is far easier to sell New Haven
we
convinced that liens junior to the
one for
it, the courts might inter¬ general 4s of 1949 would increase
pret the law entirely different and in value and we at that time asked
in effect cause a substantial de¬ our
people to make commitments
securities
in
I realize that
Louis
St.
and
also
easier to sell Missouri Pacific
curities
sell
in
than
Boston,
local
a
situation
se¬
it
is to
a
local
to
terioration in the price. Another in these securities. This was done group
especially in the railroad
transcripts of all the testimonies type of situation to stay away by talks and the issuance of vari¬ field.
Many people will allow
given at the various hearings so from, in my opinion, is the at¬ ous circulars.
their prejudices to interfere with
that we can review the oral argu¬ tempt to j
their
ustify a higher price
Again, we proved to be correct
^hardboiled judgment of a
ments
that we heard .discussed level for an operating subsidiary
and
these
because the cash still continued to situation
prejudices,
and keep ourselves abreast of all
of a company.
which
can
This is extremely pile up and the trustee
be minor in nature,
finally re¬
the necessary details to present hard to do as the parent concern,
quested the court for permission often times keep them from pur¬
an intelligent and sound argument
could
easily show substantial to ask for tenders on the senior chasing a. situation in which a sub¬
relative to the value of the securi¬ claims against this subsidiary and
bonds.
A
little more than five stantial profit can be made. How¬
ties that will be effected by the again .the courts will not allow
million bonds of a total issue of ever, I am going to chance it with
reorganization.
In our attend¬ sentiment to interfere with their 20 million
were
tendered to the you gentlemen and discuss it with
ance
at
court
hearings, it was interpretation of the law and the trustee.
This removed $5 million you, just to show you how a local
necessary in some instances to go risk involved by you in present¬ of
debt ahead of the junior issues picture can have merit and should
as far as sitting through hearings
ing it to your clients is not worth thereby
be given consideration.
creating
an
additional
in the U. S. District Court, the the candle.
value for them. The road has con¬
The effective date of the New
Circuit
Court
of
Appeals, and
tinued to make money and, as it Haven plan of reorganization was
Highlighting a Specific Situation
even as high as the United States
continues to do so, should be in a July 1, 1947. The plan was actu¬
When you have completed this
Supreme Court. You may believe
position shortly to request another ally consummated around Sept. 1,
that a great deal of this leg work general discussion, it is advisable
tender
operation
which
should 1947 at which time the new se¬
is not necessary, but I can tell in my opinion to recap it for them
further enhance the value of these curities
were
delivered to
the
you that it pays off in dividends
by highlighting the various fac¬ securities.
holders of the old. The reduction
to you and your clients.
As an tors you discussed in somewhat
I have discussed this situation in capitalization from the old set¬
example, let me tell you about the following manner. Has the
with you in a very general way up to the end of1948 showed a
one
specific instance in the re¬ industry seen its worst days? Is
but I think that you can get the decrease of $123,000,000 or 25%.
organization proceedings of a par¬ the overall management capable?
From the date of reorganization
ticular railroad in the Middle Has it enough cash on hand for point of how to present it from
until the end of 1948, the first
what has been said.
Naturally,
West.
necessary improvements? Have its
bonds
were
reduced
you would have to do it in greater mortgage
This road had about seven divi¬ efforts to get business been ag¬
detail, give greater background 12.8% by open market purchases.
sional liens upon which no in¬ gressive?—and any other impor¬
and offer more facts and figures. The income bonds were reduced
terest had
been paid since the tant points which you have men¬
That is something that you your¬ by 17.3 %.
All this was accom¬
bankruptcy proceedings had been tioned in your general discussion.
plished in less than 16 months.
self will have to work out.
instituted.
Until the segregation
♦The important point which I
In discussing this specific situa¬ Working capital sfill exceeds op¬
study and formula were prepared, would like to bring out, before tion I would
give first of all the erating requirements by a sub¬
it was impossible to tell which of going into the specific situation
total capitalization in dollars of stantial margin.
As of Dec. 31,
these liens were on money mak¬ to show you how I think it should
each and
every
issue. I would 1948, it amounted to $15,500,000.
ing divisions and which were on be presented, is that you should then
Subsidiaries • also have cash bal¬
give the progress that has
marginal or out-of-pocket loss di¬ have a memorandum prepared on been made
in the reorganization ances which leads to the belief
visions.
During the court hear¬ this specific situation to hand out to date. I would also
that further debt reduction can be
discuss
the
ings, when the formula was pre¬ to the audience after you have cash
position and what the cash
sented, we were able to ascertain completed, your discussion. I don't
requirements o f t h e company
that two of the liens, all during believe it should be done before
might be from here out. It would
the depression, had covered their because half of the
people in the then follow that excess cash could
charges anywhere from five to room will say that they have all be used as it
was in this particular
eight times. It was rather obvi¬ the information in this memoran¬ case
for tender operations or the
ous that in any plan of reorgani¬
dum and they will not listen as
reduction of interest arrears. Also
zation these particular liens would
attentively as they should. If you give various factors about the com¬
not be disturbed.
This informa¬ get them to listen first and then
pany as far as its operating ratio
tion would never have been ob¬ read about it
afterwards, it will and its transportation ratio is con¬
tained by reading about it in an give them a better
picture of the cerned in relation to
competition
investment advisory
service.
It situation which will be helpful to with
railroads in its particular
could only be obtained by being them
in presenting
it to their territory. If these ratios are lower
on the spot and knowing
the en¬ clients.
r
than the general average, tell why.
tire background of the company.
My firm several years ago first If they are
higher also explain
It
was
rather
easy
with this took a look at the Wisconsin Cen¬ them and
attempt to explain how
knowledge to go out and do a tral Railroad as part of the gen¬
they can be reduced. Naturally,
wholesaling job of these two par¬ eral routine in keeping up with the latter
can only be done if you
ticular
time
securities
which
at
that
all
rail
situations.
It
seemed
to
have
discussed
the
matter
with
selling around the 20 us to have very interesting possi¬
the operating officials of the com¬
level,
and
it was gratifying to bilities.
However, an important pany and if they have shown you
have them emerge from reorgani¬
factor, the timing on the situation, their immediate problem and how
zation undisturbed and finally be was way off. For the time
being they anticipate overcoming it. In
paid off with all back interest, we did nothing about it but kept this
particular case it would be
plus 105% of their principal in touch with it and kept our¬
necessary to inform your audience
amount.
If you are fortunate to selves
posted on all the pertinent of the large
holding by the Ca¬
run
were
across
time
to
such
a
situation from
are going to
make friends among your clients.
All
time,
you
situations
wholesaled
which
not
could
be
necessarily in
the reorganized rail field.
Some
solvent
carriers are low-priced
and worthy of consideration be¬
cause
of
special circumstances.
The best way to obtain first-hand
the railroad industry, that where information on companies of this
there is ownership management, type is, one, review the historical
there is nine times out of ten com¬ past and two, go out and discuss
opinion, competent man¬
agers?
If they are substantial
security holders in the company
of which they are an official, that
point should be made known, as I
think you will find, especially in
your
interpreted to
able to obtain
clared valueless in the
namely, the Wisconsin Central.
an
show them that in 1920 and
inland waterways,
specific
propositions that
of
theirs and also their customers.
Now
the
to
be
Thursday, May 26, 1949
are
information
which
we
could
use
when it finally came to the point
where the timing was right. When
in
opinion
our
reached,
we
were
this
point was
able to discuss
it with clients
a
very
important
ture.
The
New
Haven
improvement
days after
program dates from the
the
had
road
ruptcy in
gone
1935.
into
Since
bank¬
that
time,
equipment had been added to
new
such" "an
now
extent
that
the
road
leader among major
a
tems
far
as
freight
as
is
cars
concerned,
is
sys¬
modernization
of
with
most of their cars in the less than
10-year
The road's
equipment is also in ex¬
age
passenger
group.
cellent condition.
have
ments
Great advance¬
been
made
in
the
dieselization program. As of De¬
cember, 1948, 48% of New Haven's
switching mileage was done with
as against 38% of all Class
I Railroads.
95% of its freight
diesels
gross ton miles was
sels
done by die¬
against 23% for all Class I
as
roads.
miles
92%
of
its
passenger
car
hauled
by diesels as
against 46% for all Class I roads.
was
nadian
Completion
the
program
Pacific
of
$8,600,000
of
Refunding Mortgage 5% bonds
and show what
bearing a substan¬
tial holding of this
type will have
on
the general situation.
There
are
intelligently.
innumerable items that you
happens can present in an intelligent man¬
cog in the ner to your audience and there
Canadian Pacific Railway System. are various
interesting ways of
It is considered by many to be the doing it
sp that you keep their at¬
only important entrance that the tention.
Canadian Pacific has into the City
Projecting Values of New
of Chicago. We were able to as¬
Securities
the situation with the officials of certain in our study that the road
the company. I have always found had a traffic agreement with the
Finally, I think it is advisable
that if I had intelligent questions Minneapolis,
St. Paul & Sault to attempt to project prices on the
to ask I would receive intelligent Ste. Marie Railroad. In 1938 when new
securities, tell what each
information which could then be the latter road went into bank¬ $1,000 of debt will receive and
The Wisconsin Central
to be
anticipated in the immediate fu¬
of
this
dieselization
in the very near future
should enable the road to abandon
its
steam
engine repair shop fa¬
cilities which would continue the
downward trend in operating ex¬
penses.
One of the greatest assets
of a
is the ability of its
management. I have already men¬
corporation
tioned the successful debt reduc¬
tion
which has resulted
savings of more than
$1,200,000 per annum. The finan¬
in
program
interest
cial astuteness of the present man¬
agement warrants the opinion that
it will do everything in its power
to
continue
its bond buying pro-
Volume
long
gram as
the system's bonds why
as
Anotner
you
important
aspect of
capability is its
management's
into Mew Haven's service area and
ticular
build
thus
volume.
new
According
to
recent
a
statement of the President of the
In
stated:
tional virtue which is rarely
in
found
the
industry, namely, owner¬
ship management. The stockhold¬
botfi common and preferred,
are
directly represented on the
of
This situation
directors.
naturally
means
expenditures
over
insistence
operated
the company be
business and not as
that
as a
tradition.
a
The managerial
ability can also
be measured by another yardstick,
namely, the percentage of gross
brought down to net. The new
aided
management,
dieselization,
great
results.
the
income
new
a
ideas should
the following.
tne Southern
it
press
improvement
road
A Year of Critical
audience than
(Continued from
mentator
Pacific, Western Pa¬
ognize
about
the
should improve the
position of bonds that remain out¬
words,
your
the
above,
it
is
know
ture
from legal and
situations and present
bonds
income
and
possible
the
capital
I
to the last phase
come
you
must
cto
presentation. This is where
the entire discussion
job
a
for
it will
and
you
mate
1948 and promises to in¬
in
Profits of
ination of unnecessary
employees,
higher productivity of labor, more
efficient tractive power, and other
in
creases
charges
and
de¬
contingent
causes
of this im¬
economies and the
fixed
the
are
proved showing. The earnings out¬
tions
estimated
was
at
the
Commission
and
$10.1 billion of profits after taxes
first
which
cost the
$3,000,000, was not re¬
peated this year. In 1949, for the
first two months, the road was
able
show
to
against
better
loss in
1948.
Colony,
black
as
$2,500,000
a
In addition
perennial
a
figures
than
Old
the
loser,
money
has already been drastically cur¬
tailed.
114 daily trains were dis¬
continued,
leaving
only 87 daily
trains in operation. This resulted
in
additional operating savings.
We have estimated the
of this
earnings
property for the year 1949
considering all the factors which
mention
we
above
and
assume
a
freight traffic decline of 7.4% and
a passenger traffic decline of 10%
from
1948
levels.
assumptions,
we
Based
these
on
fixed
estimate
charges will be earned around 2.84
times.
Total
and
contingent, should be earned
1.74
times.
the
Earnings of $17.90
preferred
$4.70
the
on
with
on
earnings
common are a
of
distinct
The pro forma 10-year earnings
1939 through
1948, based
record
its present capitalization shows
earnings available for fixed
charges of 3.15 times. Total earn¬
ings after all charge of 1.92 times
and for the preferred share earn¬
ings of $22.40 with $6.35 on an
average
I
left for the
presented this to
men
in
a
you
manner
would expand upon
show the various fac¬
to
which
First of all
ground.
you
were
presenting it to a
It has been done in this
you
group.
tors
stock.
gentle¬
rather concise way which
naturally
if
common
should
be
presented.
short historical back¬
a
Secondly,
a
study of the
debt reduction which has been
ac¬
As
shown
of
rate
latest
available
Then
a
date
discussion
of
also
the
ment.
Show
has
what
manage¬
been
complished in this particular
by the
new
old
management
ac¬
case
and the
management and also by the
combined efforts of both manage¬
ments.
the
ture
After
earnings
that
a
discussion of
outlook for the fu¬
which, in effect, is the reason
for
the
the
1948
manufacturers of paper and
products
for
the
15%
were
confusion
present
the
For
is
above
corporations
sales for
total
on
16.0%
year,
ag¬
the
preced¬
compared to 15.6%. The increase,
were
however,
to
by
was
was
experienced only
the largest size class of cor¬
porations,
those with assets of
over
$100 million. Their rate in¬
creased
from
by
1948.
substantial
a
in
13.3%
1947
to
in
In contrast to this
trend, all
other size classes showed declines
in
profit rates. The smallest size
class, corporations with less than
$250 thousand in assets, showed
the largest drop, from 14.4% to
9.0%.
in
profits after
taxes
in
14% higher than profits
were
1947, there
was
considerable
a
industrial
showed
while
the
the
dustries
a
sult,
in
the
declines.
An
motor
most
after
taxes
equipment
vehicles
other
showed
the
improvement,
from
less
than
$10 million
of
profits after taxes in 1947 to $165
million
last year.
this
is
To
a
large
attributable
to
ex¬
in¬
creased
activity in 1948 by air¬
companies, which in 1947
craft
showed
loss. Other groups with
in profits in 1948 were
a
increases
the
petroleum companies, almost
higher than in 1947, and
vehicle
companies,
40%
higher. The iron and steel com¬
panies showed an increase of 35%
tries
the
non-ferrous
increased
In
and
for the
and
each
the
were
25%
a
showed
any
by
of
all
manufactur¬
a
equity
$74.4 billion, an in¬
of $7.3 billion
Book value of in¬
equity
year.
totalled
$29.7 billion,
$3.2 billion
vious year-end.
was
Other large
food
products
group
over
the
the
called
not
profits
of
into the
plunge
like respon¬
Do not be dismayed
called 19th Century
Coin
titles of
some
What
what
or
names
you
names you
call
are
During 1948 there
billion increase
are
and
govern¬
ment securities to current
ties, Which is
of
to
corporate
78%
pared
83%
preceding
end
of
end
at
year.
1948
companies
thousand
rough
liquidity,
the
at
to
one
amounted
of
the
1948
com¬
end
of
the
The ratio
at
the
61%
for
varied from
with
in
liabili¬
measure
less
assets
than
to
84%
$250
for
companies with $100 million and
over
in
Howard Brundage,Morgan Stan¬
ley & Co., who resigned
of
the
Placement
Committee
sociation
of
succeeded
of
the
New
by
as
head
Information
Invesment
As¬
As
matter
a
York, has been
Kidder, Peabody & Co.
Washburn,
Your
a
orat-
an
as
American¬
generosity is troubled
as
some¬
thing as I do about poverty and
slums; but before you get saddled
with this costly and
probably in¬
effective
legislation
read
what
Congressman Gwinn of New York
had to say about it in his
speech
of June 4, 1948. He opens with the*
statement, "I propose to show that
housing schemes are
such public
fraudulent
in their promises
to
and ruinous to our free
the poor
economy that alone can build
houses
and
cure
society of
slums." He then proceeds to
the
its
meas¬
his proposal in pages*
closely packed with facts and fig¬
ure
to
up
ures
the
on
There
to
subject.
still
are
few
a
study and make
the
on
days left
up
your
own
housing
bill for
which you and your children will
pay if it becomes law. If you like
it tell your representative to
sup¬
port it.
If
But
so.
don't, then tell him
you
by all
silent—don't
means
lose
don't keep
integrity
your
by default.
have
cited
the
farm
program
and the
housing proposals.
Obvi¬
ously these are two of many in
the
great
conflict
on
which
you
it to yourselves and to
your
country to have an informed opirv*
owe
ion and express it.
In every
•
phase of
our country's
life, in matters of the farms, the
villages and the cities, in matters
of medicine', in conditions of em¬
ployment, in private and public
for the aged and the handi¬
capped, in material things, in in¬
tellectual
facilities, in religious
freedom, and in the greater dis¬
of
ceas
threatening
Take the farm
now
for instance.
I
think
the
posed
National
and
years
and
our
have
we
a
We
more.
hun¬
have
this has
no
knowledge of
history.
would
are
our
we
we
not
show
line, but
a
a
uni¬
series of
productivity caught
have always gone
did
not
on
sacrifice
our
or our freedom to
desire to hasten the process.
our
solvency
program
the
as
but
up,
sol¬
our
Grange
only
wealth
rising productivity for
to wait
Today
I understand that the
and
our
progressed within the restraints of
our
dred
because
at
powerful American Farm Bureau
and
of
rising steps. We have often needed
fact,
ited popular support which really
exists for some of the costly pana¬
vency.
tribution
opportunities to enjoy it,
form upward
be surprised at the lim¬
you may
once
trying to cure all
remaining misfor¬
we are
every
tune
and, if we persist we will
only in spending and tax¬
ing away all that we have gained.
We will lose the high standards of
life, the power to continue up¬
op¬
succeed
National
Farmer's Union has expressed its
support.
The Housing Bill
ward
One of the most immediate pro¬
and
dividuals
ited from
to tangle with is perhaps
housing bill.
It
has been
passed by the Senate and will be
brought to the floor of the House
the
freedom
which
our
we
to
have
be
in¬
inher¬
past.
the
in
the next few days.
supporter
of
this
bill
Investment Women of
An ardent
wrote
an
Philadelphia Elect
open letter in the press the otherday stating that "During this en¬
tire
session
the
House
sentatives has received
no
letters
from
those
of
PHILADELPHIA, PA.—The In¬
vestment Women's Club of Phila¬
Repre¬
practically
delphia
who
Barnes, of Jenks, Kirkland & Co.,
President; Henrietta B. Kemmerer,
of Reynolds & Co., VicePresident;
Thelma
Ziegler,
of
Blyth & Co., Treasurer; Sara Grabill, of Stroud & Co., Inc., Secre-*
favor
public
housing—but
there
has
deluge of telegrams and
from opposition
forces."
I
think she failed to recognize
the implication.
a
Here
comes
is
law
a
as
bill
spending and
increase
our
has
elected
Ann
M.
tary.
which, if it be¬
will not
Elected to the Executive Board
it well may,
only add billions of dollars to
Betty C. Squires of Newburger & Co., Jane R. Loeffler of
were
our
taxes and vastly
the
power of an already Janney & Co., Leonor H. Silver
housing
bureaucracy, of Wellington Fund. Mary Cran¬
of
probably not accomplish ston
Pennsylvania
Co.
for
its
vaunted
slum Banking & Trusts has accepted the
purposes
of
clearance.
Here is a bill .which is
| chairmanship for Education Corn-
powerful
but
George
Socialism but
progress
letters
Heads Placement Comm.
beat
Anyone who does know our his¬
tory knows that a diagram of that
believe.
been
assets.
In
measure.
he
mine is and you want to do
our
posals
cash
of
as
doubts
democracy and they always have
been. Expect to be disappointed
and offended, but above all things
stay in and battle for what you
at the year-end.
ratio
speech
slowly but we have
progressed mightily. Anyone who
arguments; but they are a part
lusty conflict in a vigorous
;
The
Socialistic
a
progressed
of the
a
pre¬
record $6.6
group,
drop in profits of
are
own.
in net property, plant and equip¬
ment to a total of $38.9 billion
the
industry
below those
the
while
of
indus¬
profits
year.
in
leather
showing
about
of
about 30%
previous
declines
rise
must
opinions
the
of Investment Ass'n of N.Y.
group
decline
were
in
crease
profits after taxes for
apparel
largest
metal
their
in 1948.
1948
to
ventories
substantial
your
re¬
of
each
stockholders'
amounted
during the
transportation
taxes
in
same
assets
profits
which
you
four-quarters of 1948, $2.9 billion.
the tobacco indus¬
was
after
while
profits
in¬
goods
nearly
50%
in
1948
compared
with
the
preceding
year. Corporations manufacturing
than
the
Total
of
opinions and
representa¬
our
economists, economic royalists or
were
profits
about
We
reactionaries.
about
to
in
increases
consumers'
if
ing corporations were estimated at
$108.5 billion at the end of 1948,
increased
tent
amounted
general,
industries
goods
showed
exception
In
groups.
producers'
try,
taxes
come
variation in trends for the differ¬
ent
tives.
our
to
of
manufacturing cor¬
porations during 1948 from $40.0
billion in the first-quarter to $42.8
billion in
the
fourth.
Similarly
cogts and expenses rose from $35.4
billion to $38.1 billion while in¬
not
I
and
them
conflict
steady increase in
a
We have all
our
sible citizens.
over
$1.7 billion per quarter. As
While
1948
was
of it*
one
care
1947.
sales
me
to all the
access
need.
we
We must form
About $4.3 billion
paid out in dividends during
There
for
you
We have
do.
express
$6.9 billion.
the
of
now.
amounted
taxes
the year, an increase of 17%
amount,
16.8%
income
Federal
sufficient
not
to speak or write
thoughts. We know that
in a democracy the final power
to bring order out of conflict rests
in our representatives in Congress
and that they are intelligent, hard¬
working men like ourselves. They
are responsive
to personal letters
and my guess is that they are not
too impressed with form letters.
They must be allergic to them by
all
sales of
1948
year
is
think
to
1947.
manufacturing
is not
recent
been trained in school and in work
gregated $165.6 billion, about 10%
the
it
for anyone
information
allied
those
below
widespread
Even
proponents, Senator Sparkman, is*
hard put to it to explain why it
minds
down
was
over
report,
in the previous
than
about 25%
of
corpora¬
estimated at $147.3 billion,
approximately
the
same
per¬
centage
increase. Provision for
while
discussion
represen¬
It is impossible for me to
can
ing year, while costs and expenses
in the equipment and in the plant.
a
by
return
physical property showing the im¬
provements that have been made
Then
manufacturing
stockholders'
60%
shown.
our
timately muddle through.
There is something each of us
equity for all sizes of corporations
during 1948 was slightly higher
motor
the
total
repre¬
over
equally distributed
four quarters.
complished from the old
corpora¬
with figures from
This
increase
The
1947.
tion to the
new
14%
about
the
possibility.
on
for
both fixed
charges,
Stock¬
Federal^
the
last year's bad weather in the
period,
of
to sit by and
rely on mere faith that we will ul¬
$11.5 billion for the year
a
over
faith in the good
people and the ulti¬
my
our
patriotism
But
combined
Commission.
quarter
I
rests
that
or
1948, according to
quarterly estimates made public jointly on May 22 in
regular fourth quarter report of the Securities and Exchange
the
sented
road
belief
convincing our people that gov¬
ernment planning is likely to
pro¬
duce stability or
security as prom¬
slightly changed.
The net income after taxes for all U. S.
Trade
1949 prom¬
14% above 1947.
or
holders' equity return only
ises to be better than in 1948 since
look for this road for
this
believe
be
Manufacturing Corporations in 1948
SEC estimates total at $11.5 billion
ings in operations due to the elim¬
operating
that
ised.
in 1949. Sav¬
to about 4.3%
con¬
detached
a
tatives.
only to 0.5% of oper¬
ating revenues in 1947, it rose to
crease
on
of
sense
amounted
3.0%
admit
mainly
discussing.
that you will
are
do
you
us
irrevocably into state socialism.
beneficial to your firm and to your
clients.
throw
you
if
give
will not record that 1949
the year in which we
stepped
was
capture their respect and you may
get some of them to go out and
Answering Questions
now
industry
think
to
up
view,
or
appreciation.
9)
groups and not by
popular demands.
"It is
may say
historian, whom I have
jured
New Ha¬ oubsidiary
preferred the picture to your audience force¬
stock—whichever particular issue fully and intelligently and prove
you ore selling—can be purchased to your audience that you know
income
kindly he
It is my own belief that this fu¬
don't de¬
Don't second
else.
govern¬
trying to
them out at the risk of the
country's solvency."
get
subject,
your
that
see
carry
away
considered opinion that
cur
long to rec¬
predicament. He will
did it take those fel¬
sure
ism."
information,
get
guess,
our
I
put it in very few
on anyone
so
too bad that the politicians of 1949
didn't realize that the
only action
more
reprehensible than making
fantastic
promises
is
in
be
to
of
can
own
pend
used
wholesaling.
method
job
a
think you
won¬
torical path around the issue with
the statement "I conceive of thitf
is not too
In summary, I hope that I have
able to tell you something
program
We
our
us
com¬
will
Fumbling
page
spending more?" If the historian
than
more
been
doing
on
audience
your
27
can't spend
money unless it
can
raise it by taxation and that
taxation increases
the
need
for
the specific situation which you
have presented to them.
(3) Continuation of debt reduc¬
of
of the future
der why it took
will in the general discussion
you
service.
for
that the detached
guess
my
or
Colony Line "off hour" train
ven
(2287)
I have found
particular part
friends and
more
can
;
been
Whereas
this
other time during-the talk
for the simple reason that if these
questions cover, as an example,
freight and passenger
equipment.'•
TT
(2) Further savings can be ex¬
pected due to the elimination of
in¬
rate
by
able to show
improvements in operating
had
creases,
in
make
at any
par¬
and modern
tion
is
get closer to your
erational costs should result from
Old
for questions.
it
that you
CHRONICLE
be cific. Rock Island & Seaboard and
say, "Why
you have an intelligent answer to
lows so long to
Substantial savings in op¬ the questions asked, you will im¬
ment
closer watch standing.
Based
and a greater
a
this
FINANCIAL
that
your
recapitulation,
(1)
ers,
board
in
&
open
past
At the conclusion
case.
be given such as
road, "160 industries located new
plants and warehouses or ex¬
panded their existing facilities in
New Haven RR. territory during
1948, thereby creating 4,000 new
jobs."
'
The New Haven has an addi¬
the
of
have
we
as
traffic recapitulation of
road's
the
up
discussion
earnings record should also be in¬
cluded
attract
to
asking people to buy
are
short
A
industries
ability
COMMERCIAL
the securities should be presented.
selling at large discounts.
are
THE
Number 4806
169
will
being pressed by interested
pres-
|
mittee.
28
THE
(2288)
COMMERCIAL
Western European Recovery—Not So
which
(Continued from first page)
tion and distribution of all sorts of
goods, both for domestic consumprtion and for export. The increase
in trade, both intra-European and
between
of
rest
the
Western Europe and
outside
world
the
the
of
The
»
have
about' an
brought
peoples of Western Europe which
is very
striking.
It is true that this rapid recov¬
has been to
ery
large degree the
a
result of the operation of the Mar¬
shall Plan.
The
expenditures un¬
der the Marshall Plan
have,
to
up
the present time, necessarily dealt
with
conditions,
emergency
from
now
it
on
but
clear
that
seems
these expenditures will
and
in
more
result more
reconstruction
the
and: modernization
plants, the
of
improvement of transportation fa¬
cilities, the greater production of
power, and the making
other capital investments
such
of
with
touch
the
hear
with
who
us
the
stabiliza¬
monetary
of
Those of
closely
are
situation
the
Fast!
because it is impossible to
Government
States
foresee
often
question
asked "When
that nation stabilize
Marshall
I
Plan
an
of
end.
the
to
comes
unmindful
not
am
fact
play
that the World Bank may
very
S.
U.
Or
agencies when the
Governmental
Thursday, May 26, 1949
Therefore, it may well be that jn
order to bring about an imme¬
diate flow of the investment of
what further grants or loans may
be
available
from
the
United
connection
in
problems
Curtain, is most encouraging.
in
changes in the economic
situation
the
for
sort of comment is in
same
order
These
improvement in the morale of the
time
allow
readustments.
Monetary Stabilization
tion.
Iron
will
necessary
CHRONICLE
FINANCIAL
&
a
important part in supplying
American
and
United
cies;^ the
in
the
and
Western Europe
territories
their
capital
private
countries of
dependen¬
States
ment must
NY Sec.
Analysts
Elect Galanis Pres.
Joseph M. Galanis
President
the
of
changes until such stability shall
actuallv have been achieved.
f
at the annual
d
a
r
u
difficulties
tered
it
encoun¬
are
require
may
even
an
longer period.
Of
the
course;
case
that in
I recognize
of sterling, which
is not
enterprises,
both
large and small, which may desire
to expand their activities in West¬
ern
European countries 6r in their
territories
,
.
ated
.
.
•
,
•
,
.
from Harvard,
class of 1929,
I think that
American dollar loans in the post-
(1) Business
So¬
meeting of members.
holds
a
in.view of the com¬ and
will this or
Marshall Plan period, although it ments which I have noted in some degree awardand free its economy?" as if both must
be
remembered
that
the of your press during the last few e d by the
results flowed from a single, in¬ World
Bank itself is dependent days, I should disassociate myself University
of
stantaneous act and could there¬ for its dollar resources upon the from
those Americans, if there Pennsylvania.
fore be accomplished simultane¬ investment market in the United be any of them, who may be adHe was asso¬
with
ously.
The fact is, as we have States.
vocatiftg the devaluation of sterl¬ ciated
come to realize during the postwar
ing vis-a-vis the American dollar. Stan dard &
U. S. Capital Available for
It is entirely clear to me that the Poors Corp.
period, that the task of bringing
Investment
about
conditions in which cur¬
as
field
ana¬
the solution of the problems of
The private capital in
the when,,your internal economy has lyst for eleven
rency controls and other controls
United States available for invest¬
can be gradually relaxed and ulti¬
reached g balance and of the rates years, and for
mately removed, requires in most ment abroad is in the hands of of exchange Which over a period the past seven
three groups.
cases one or two years, and where
of time can be maintained in prac¬ years has been
special
York
Analysts, Inc.,
Mr. Galanis
g
elected
was
New
Govern¬ ciety of Security
give some sort of guar¬
antee to private investors which
will cover4 fluctuations in the ex¬
'
tice between
lar
must
sterling and the dol¬
should
and
determination
the
of
to
left
be
own
your
member
a
investment
the
Galanis
M.
research
depart¬
ment of Shields &
''
bankers.
government.
Joseph
of
For
the
Co., investment
1 •'.
•
;
-
,
past
two
Mr.
Galanis has been a lecturer on
national currency but one
(2) Commercial
banks
which exists between the people of the
upon
which- large areas of the are
already engaged in financing country where such investment is security analysis at the New Yprk
world are dependent as a medium
short-term self-liquidating trans¬ to be made and the people of the Institute of Finance, and has acted
of exchange in international com¬
actions in the moveme|iHt of:; im¬ iUnited States must be of such as Chairman of the Program Com¬
mittee of the New York Society of
merce, the time required for this ports and
exports between-; the character that on the one hand
process
may
be
considerably United States and Western
Security Analysts, Inc. During the
Europe the government of the country in
should be of such character that
longer.
the investment is to be past year he has been Vice-Presi¬
and which might be prepared to which
they will not only contribute to
It would seem, therefore, that
dent of the Society and Chairman
make short and perhaps5 Wen in¬ made is ready to welcome such
the
economic
reconstruction
of
at the time- when the Marshall
of the Program Committee of the
termediate term loans to increase an investment and to take such
each country but will foster the
National Federation of Financial
Plan will come to an end the
European or colonial production action as may be necessary to
eventual economic unity of West¬
countries of Western Europe and of
'
On the other hand, the Analysts Societies.
goods for export to the United -foster it.
ern Europe as a whole1,
their overseas territories and de¬
will
increase the production and dis¬
tribution of goods and foodstuffs
in Western Europe.
These invest¬
ments, which are the result of the
operation, of the Marshall Plan,
as
only
dependencies.
or
In
Unity Yet
quarters it is thought
purpose
of the
Marshall Plan is to bring about
European economic unity within
the operation of the Marshall Plan
some
that
the
-
major
itself, that is to say,, by the end of
the year 1953, so that by that date
multilateral trade
and
freely
pendencies
be faced
as
will still
of a
whole
a
the problem
with
investors
substantial annual
doilar
deficit in the exchanges if the
standards of. living of the coun¬
very
tries of Western Europe are to be
maintained at their present levels.
This, deficit can be met in three
Individual
(3)
may
investors
who
be willing, to purchase
securities
of
bankers
the
in
in
United
the
States
ital by "placing it within the con¬
the*
trol „pf the nation in question
foreign enterprises
the auspices of in*
issued under
vestment
-
musf.be willing to risk their cap¬
United
because
they have confidence that
will
they
such;things
States.
This latter group is at the mo¬
out
protected
be
as
adequate
against
expropriation with¬
and immediate com¬
definitely skeptical of for-, pensation, discrimination in treat¬
ment compared with that accorded
eign investments and it will na»
*%o dorfrestic investors, and against
(1) Increased exports
to the doubt take a
inter-convertible currencies shall
very considerable
United States from the countries
restrictive measures which may
have been established among the
period of time before it will be
nations which are members of the of Western Europe and their over¬ prepared
to make new invest¬ prevent the transfer into dollars
of the interest or dividends Or
seas territories.
ments abroad.
organization for. European Eco¬
amortization of the amount orig¬
In order that any one of these
nomic
(2) Increased travel from the
Cooperation.
I
entirely
United States to these countries groups may be persuaded to make inally "invested* or the repatriation
agree that
effort
made
every
should be
by the countries of Western
Europe participating in OEEC to
approach these results as rapidly
as
possible, and that unless real
has been made towards
this end by the termination of the
progress
Marshall
be
Plan, the Plan itself will
regarded as a failure.
But I
must confess that I do not believe
that complete economic unity can
be obtained among the nations of
Western
riod
Europe in
so
short
pe¬
a
of time.
There
is
doubt that certain
no
trade barriers
removed
but
in
that
others, such
should be
and
once,
at
remember
can
must
we
the
of
case
tariffs and quotas,
as
it is dangerous to proceed too rap¬
idly.
It is inevitable, for example,
that when substantial changes are
made in tariff schedules, produc¬
tion
will be
increased
in
some
places and reduced in others.
a
result,
labor will have to
As
move
ment
ways:
and territories.
investments
(3) Increased United States in¬
or
loans in
European countries
in,
or
loans
need
for
these
to,
seas
territories
their
or
continuous
(2) The nation where such in¬
vestment
American consumers
must first have reached
to
move
points
available.
this
create
is
such
as
terms
and—
human
of
—
trying
extremely
an
The rate at which
can
be
adapted
to
eco¬
new
circumstances is limited, and time
must
be
and
more
goes
It
more
allowed
to
carry
out
will
become
pressing
as
time
on.
is
equally
States
in
obvious
from
the
countries
the
that
of
in¬
United
West¬
loan
or
political stability.
the
creased; travel
situation.
nomies
labor
expensive
an
in
expressed
relations
where
Dislocations
LOS
ANGELES, CALIF,—The
Day of the Bond Club
of Los Angeles has been set for
Friday, June 10, according to the
announcement
of
the
organiza¬
tion's President, Jv Earle Jardihe,
Jr., Vice-President,' William
R.
Annual Field
It will
Staats Co.
be
all
an
day
event and will be held at the Bel-
Air Country
locale
Club, which was the
last year's highly suc¬
of
cessful outing.
Assuming that all of these con¬
ject of individual negotiation.
European rearmament.
Europe of the tastes and needs of
must
...
investment.
;
General Chairman for Field
Day
)
The
down.
study by the producers of Western
itself
over¬
of the
Angeles Bond
Club Outing Plans
or
arises,
industry
Western
Los
dependencies ditions have been achieved, the will be Jo M. French, Blyth' &
other than short-term self-liqui¬ question still remains as to what Co., President Jardine announced.
countries or their territories.
of investment
of United Other members of his committee
Increased exports to the United dating loans in connection with type
States will obviously depend upon the movement of goods, I believe States dollar capital is desirable to include: Charles F. Sill. Francis I.
the Western European duPont & Co.; L. Hartley Smith,
the goods produced by Western that the following conditions provide
countries with expanding econo¬ Dean Witter &
European countries being of such must first have been achieved:
Co.; Francis Moulmies
and
a
rising standard of
(1) The nations of Western Eu¬
character that the American mar¬
ton, R. H. Moulton & Co.; John C.
living.
Obviously, each invest¬ Hecht, Dempsey-Tegeler & Co.;
ket will absorb them, and upon rope must have obtained military
This condition will not ment should be of such character Waiter E. Lawrence, J. Barth ;&
the fact that the prices at which security.
such goods are offered for sale in have been met until the Atlantic as to create dollar exchange either Co.; Stevens Manning, Paine Web¬
the United States are competitive, Pact has been ratified by all of directly or indirectly, or to con¬ ber, Jackson &
Curtis; Abe B.
serve dollar exchange.
Generally Fox,
Stern,
Frank
&
Meyer;
taking into account the existing the nations that are parties to it,
rates of exchange, with similar and until the program of rearma¬ speaking, the investment should Ralph E. Phillips, Dean Witter, &
ment of the peoples of Western be made in partnership with na¬ Co.; Charles E. Driver; and
Elgoods produced within the United
tionals of the recipient country, wood J. Robinson, Elwood Robin¬
States.
Already we are beginning Europe has been adopted and put
into effect.
The achievement of although
this is by no means son Advertising Agency.
to see the difficulties with which
Western European exporters will military security ia of course vital essential, and in practice the man¬
Events planned for Field Day
in
which
each
individual include a
be faced in competing with do¬ and, in my opinion, the ratifica¬ ner
golf tournament, tennis
investment is to be made and the
tion of the Atlantic Pact by all
mestic producers
in the United
matches, baseball and horseshoe,
States in a buyer's market. These parties to it will not alone be degree of control to be exercised with a dinner and entertainment
The Pact must be im¬ by local and United States capital scheduled for the
difficulties will be intensified as sufficient.
evening.
'
%ould in every case be the sub¬
MP—
prices in the United States come plemented by adequate Western
vestments
from points where unemployment
or
years
a
States.
No Complete Economic
The attitude of mind which
(4)
'
threat
is
to
be
a
state of
That is to say,
Communism
of
made
have been eliminated.
must
It is
quite
apparent that the danger of the
spread
of
Communism
in
the
countries of Western Europe out¬
Europe is dependent on the
transportation facilities and hotel side the Iron Curtain has already
accommodations
that
may
be greatly diminished and that the
available from time to time, upon nations of Western Europe have
the maintenance of prosperity in even now achieved this type of
the United States and upon the stability to a very considerable
ern
It is apparent from
what I have
already said that the problem of
increasing American private in¬
vestment
in
Western European
countries and their territories and
dependencies
after
the
Marshall
Plan has come to an end is one
of
great complexity.
This does not
mean
that it is insoluble.
I am
convinced that if we can enlist
the best brains on both sides of
the Atlantic in the immediate and
continuous study
of this problem
Additional Nominations
For NYSE Committee
The
four
tions
nating
nomina¬
additional
members
of
Committee,
as
for
the
Nomi¬
for
called
the Con-
under the amendment to
stution
approved April 22 which
increased the Nominating Com¬
mittee from three members and
two
allied
bers
and
members to
six
allied
three
mem¬
members,
it can be solved.
It seems abun¬ were announced by the outgoing
to relative expense, again taking into degree through their own efforts dantly clear that the countries of Nominating Committee. Balloting
and
with the assistance of the Western Europe as a whole will
account
existing
rates
of
ex¬
be avoided.
On the other hand,
on
the special slate will be held
not have sufficient capital of their
change; of traveling abroad as Marshall Plan.
no better opportunity will ever be
on Monday, June 20.
own by the year 1953
to provide
(3) The nation where such in¬
compared with the cost of living
found than
Three Additional Members of
that which
is pre¬ in the United States.
Here again vestment or loan is to be made the constantly expanding econo¬
sented by the period of expanding the need for continuous effort to must first have reached a state of mies and rising standards of liv¬ the Exchange: For the term of one
nomic stability.
That is to say, ing to which their people aspire. year—J. Truman Bid well; Robert
investments under the Marshall encourage, popularize and facili¬
tate tourism throughout Western its internal economy must be in I devoutly hope that at the time
Plan for the accomplishment of
J.
Hamershlag,
Hamershlag,
balance and the exchange rates of of the termination of the Marshall
Europe is apparent.
the desired results.
It is my hope
The
question of increased its currency vis-a-vis the Amer¬ Plan conditions will have been Borg & Co.; Philip W. Nash, Nash
projects such
ship and
as
this if real hard¬
unnecessary
loss
are
that in proceeding towards a more
United
fully-integrated
countries
omy
the
European
nations
promptness
and
will
act
econ¬
with
determination,
but with caution and in
a manner
States
of
investment
in
the
Western
Eqrope and
in their territories and dependen¬
cies deserves
sis.
deal
more
careful analy¬
In making this analysis I
will
only with private investors
ican
dollar
must have
a
realistic
relationship to price levels exist¬
ing in both countries.
I have already indicated that I
do not think
bility
can
that this sort of sta
be
quickly
created
which
will
result
in
a
& Co.
;
;
•
substantial amount of United
One
Additional Allied Member
States investment funds being at¬
tracted to assist the Western Eu¬
of the
Exchange: For the term of
very
ropean
achieved. goal.
peoples
in
reaching
this
one
R.
year
W.
—
R. W. Pressprich, Jr.,
Pressprich & Co.
Volume 169,
Number 4806
COMMERCIAL
THE
:
,
,
&
FINANCIAL
ice;-of
of the
the
News About Banks
Directors
Newark
•CONSOLIDATIONS
NEW OFFICERS, ETC.
Bankers
and
-
REVISED
New
York
Associates,
Robert Morris
of
Chapter
national
mittee
association of bank credit men,
to
May
its
at
John
President
annual
T.
Vice-
Degnan,
of the" New York
Trust
President for
1949-
Company,
as
50; together with a slate of officers
to fill eight jpther posts.
•
Mil
Degnari succeeds Gordon
Woodward, 'Assistant Vice-Presi¬
dent of Bankers
who
was
term
on
Trust
elected
to
the Board
Others elected' last
Company,
night
are:
ment, bond- department Federal
Reserve Bank of New York.
elected
to
_
term
two-year
a
the Board of Governors,
on
in addition to Mr. Woodward, are:
George T. Newell, Vice-President,
Manufacturers
Trust
Company;
Louis L. Seaman, Assistant Vice-
President, Irving Trust Company,
and H. Herbert Steinkamp, Second
' Chase
Vi^e-President,
associatipp^jc^l^m
the
ensuing
year
National
Bank.
the
der
Vice-
charter
and
name
un¬
of the
Board for the Roanoke
first
Of-"The
birthday
New
Home
Buyers Exhibition1 'bf^'The
Dime
Savings Bank of Brooklyn,
N.
Over
Y.
38,000 visitors have
seen its many colorful displays of
interest to
home
seekers, home
builders and home owners during
the
of
tional State
Friday,
the
The
enlarged
Bank
and
J.
pel, who has headed
chants, will become
Chairman
and
of
^
\
„
*»*
v.•
Assistant
an
Vice
of
President
-
Brooklyn Trust Company, Brook¬
lyn,
N.
1'.
at
meeting
a
the
of
Board of Trustees of the Company
held
May 19, 1949. Mr. Miller,
who recently was designated Re¬
gional Supervisor of branch of¬
fices in Coney Island and adja¬
cent areas, will continue in that
on
Both the head office of the First
according to the May 16 "Bulle¬
tin" of the Office of the Comp¬
National Bank at Glendale located
troller of the Currency.
a
as
He
old
was
employed
Mechanics Bank
(later
of
with
merged
by the
$700 per share of common stock,
according to a special dispatch
from
Paterson, N.
J. to the New
York
"Times,"
May 20, which
added:
offer
Brooklyn
only
came
after
few
a
announcement
an
is
Hi
HI
is
It
learned
of
the
ployees continuing in their respec¬
the
tive positions, Mr.
May
of
effective
on
or-before July 1.
the
to
Manufacturers
New
York,
Trust
Company,
that
announces
Peter
J. Cuddy and Theodore L. Murnos,
both of the bank's Branch Loan
Administration,
have
been
moted from Assistant
Vice-President.
Assistant
Mr.
pro¬
Secretary to
Cuddy
facturers
with
began
Trust
Manu¬
in 1929
and was appointed Assistant Sec-J
retary in 1941.
He began with
Manufacturers Trust Company as
a
Company
Credit Investigator in
1921.
made Assistant Secretary in
1930 and I133 been in the Branch
Loan
Administration
since
1932.
.Richard
ident
of
Bank,
Hall
the
the
William
W.
Mr.
Vice-President
as
Bank
of
Savings
announced
York
New
York
New
after
Bank
30
continue
and
since
advice
will ^continue
Bpara of
as
have
to
benefit of. his valued
ence
the
of
service.
of
years
will
bank
Jr., Pres¬
L. Maloney,
The
resignation
The
of the
experi¬
Mr.
Hall
member of the
a
Trustees
which
on
he
has served for 39. years.
jAt its last meeting, the Board
of Trustees presented
Mr. Hall
with
watch, suitably engraved,
ir\ appreciation of his years of un¬
a
selfish service.
iJohn
J.
Hayes,
Trust
Company,
reelected
the
ensuing
year
on
the
of
McMahon, President of
the Glendale Bank, will continue
the
in.
a
the
at
of
May 17, at the
Brooklyn Clab, Brooklyn, N. Y.
Other
First
Klein,
Trust
officers
reelected
Vice-President
—
were:
Harold
F.
Vice-President, Brooklyn
Company;
Second
Vice-
Bank
Clifton
of
is
Na¬
part of
Jt,
„
Continuing its climb of recent years, the home mortgage debt
the $33 billion mark at the end of 1948, accord¬
ing to estimates published May 24 by the Home Loan Bank Board.
This is nearly 17% more than at the close of 1947 and' constitutes
an all-time record high. The study<e>
c overs
The dangerous shortone-to-four-family non- sion days.
term or 'straight'
mortgage, re¬
farm dwellings.
The 1948 figure of $33,355,000- newable only at a substantial cost,
with $19,208,000,000
1945, the last wartime year.
Viewing the trend over a longer
the
trust
company's
thus,
assets,
acceptance
an
,
_
of
ment
Federal
shipi^ Board of Directors of the Clifton
by air to threfe' /Trust Company by former New
Reserve Districts outsid^ Jersey State Senator Walter H.
checks
.
New
' %
England.
Through the cooperation
banks, checks payable fu:
their
depositors;- and which arte;
drawn upon banks located in the
districts served
by the Federal
Reserve
Banks
of
New
York,
Cleveland and Chicago will be dis¬
patched on a southbound flight
each business day. A special fire
resistant pouch will be provided
by the Federal Reserve Bank of
four
Boston.
The
checks
should
their
reach
destinations in time for collection
the
following
speeding
up
proceeds
morning, thereby
the availability of
the
to
Springfield
writ¬
tent. Most loans of today are
ten
on
modern, amortized basis
a
calling
in
regular monthly pay¬
for
ments,
cases
many
including
precaution of advance deposits
by borrowers to meet future taxes.
"Usually the home owner's, debt
the
does not come due in a lump sum,
former
a
practice which
of trouble
source
difficulty
because
during
refinancing
of
a,
of the
was
the
was re¬
28 issue
April
present
debt structure, according
Divers, Chairman of
to William K.
present
level is due somewhat to the
System,
Bank
the
are
and
Federal
debt
real
high
"The Government has also in¬
Trust
Company,
'
elected President of the Pennsyl¬
vania
Association
Bankers
on
May 20 at the annual convention
held in Atlantic City, N. J.
Mr.
Hayes is a member of the Bank¬
which
in
the
down
the
and
small
loan
is associations,
payment
amounts to
a
relatively high proportion of the
value of the mortgaged property*
"The pattern of the
can
the
Association
Bankers
American
Institute
and
of
of
% of
The
Bank
mond, Va.,
of
Rich¬
Virginia,
announces
that it will
Type of Mortgagee—
Savings and loan associations—_
Life insurance companies-
1948*
1947
1948
$10,300
$8,856
3,459
2,237
4,982
30.9
4,900
2,590
pay
Reserve
Systerif in their
Previously,
also in its Nor¬
accounts,
ville
counts.
Company, Thompson-
ville, Conn., had been" admitted to
membership effective May 10.
the
ing deposit limit
report for the week ended May 14
announced
that
The ThompsonTrust
s
40,236
Clinton
National
Bank,
During
$7,500.
savings ac¬
including
24,132
are
Christmas Club accounts.
member
of
the
ginia
to
ber
a
City Bank of New York.
May
J stock
16
dividend,//according
issute
of
the
to
"Bulletin"
new
home mort¬
reached the record figure
$10,742,000,000, which is slightly
of
House
the
of
Delegates
General
Board
rectors for The Bank
Richmond, Va.
of
from
of
banks
and
Life insur¬
mutual
savings
miscellaneous
lenders
companies,
ance
Vir¬
that city, has been elected a mem¬
Assistant Vice-President, National
1948,
loans made by all types of
lenders
of
Clinton,
Conn., has' .increased its
capital stock from $75,000
$100,000 effective May 12 by
gage
greater than in 1947.
lawyer and
365
486
1.1
8,550
28.4
$28,570
100.0
interest-bear¬
was
Of the bank's 158,472 customer
not
7.8
17.1
9,500
$33,355 1
Total
14.7
^Preliminary.
E. Griffith Dodson, Jr., Roanoke
The
5,700
—
The Board Of Governors of the
Federal
Total
Amount
#
folk and Portsmouth offices.
'
the
following table shows
The
estimated total debt outstanding at
Bank¬
become effective
HI
single
mortgage funds.",
contract
gage
Company all 6f Springfield, Mass.
Hi
largest
the
home
home mort¬
the end of 1947 and 1948, with its
itself
has
been
ficer andrDirector of the Ameri¬ greatly improved since the depres- distribution among lenders;
ing Board of the Commonwealth
of Pennsylvania and a former of¬
Springfield National
Bank,
the
Springfield Safe Deposit and Trust
Company and the Union Trust
Hi
of
source
1%% interest on savings de¬ Mutual savings banks
v
posits up to $10,000, effective June Commercial banks
1 in its offices in Richmond, Ro¬
Home Owners' Loan Corporationanoke,,Petersburg and Newport Individuals and misc. lenders
News* On July 1, the policy will
consolidating agent, the
powerful supports behind
stalled
estate
■
Re¬
the Third Na¬
mortgages by the
Administra**
of
the Veterans
or
tion.
the Home Loan Bank Board.
the
guarantee
FHA
prices of the postwar the principal types of financial in¬
page 1842.
period," said Mr. Divers. "A con¬ stitutions lending on homes by
Hi..
Hi
•■
Hi
siderable
volume
of
mortgage means of insurance of savings and
Norman T. Hayes, Vice-Presi¬
loans have been written with Fed¬ deposits. The Federal Home Loan
dent of The Philadelphia National
eral
Housing Administration or Bank System also now provides
Bank,
Philadelphia,
Pa.,
was
G. I. loan insurance or guarantee, reserve credit for savings and loan
participating in the plan,
members of
tional
in
❖
Banks
serve
v.-^^pfprmer. proposal
ferred" ^to'
The equity of
adverse times.
However,
Obviously,
common
has been eliminated to a large ex¬
ing.
banks.
all
,
the
Dey,
non-farm family, as compared
per
with $850 in 1930.
■Gardner of Passaic, N'. J.
President, Chase National Bank of
retary-Treasurer—Ralph W.
mortgage debt is now about $1,100
commenced the consolidated
President—Russell C. Irish, Vice-
City of New York, and Sec¬
announced.
was
the
considering the pres¬ owner is increasing month by
Interest rates are much
ent lesser purchasing power of the month.
dollar, the statement points out, lower than in the past.
"As a safeguard for lending in¬
the
average
mortgage debt for
Avenue (Brooklyn) Office.
-4,.q;led to come before the stockhold¬ each non-farm family in 1948 was stitutions, beyond the property
ers of the Clifton banks at a meet¬ about 10% below the average in securing their loans, the Federal
In
a
move
to
improve theipf ing to be held on June 4.
Government
is
The 1930.
back-stopping
service to the business community^
about one-third of the present to¬
paterson Savings and Trust Com¬
Many factors must be taken into
four Springfield banks on May
pany's offer was submitted to the account in attempting to judge the tal debt through insurance
or
annual
as¬
tional
First
the
of
Company, and from Septem¬
ber, 1948, to May 2, 1949, was
manager of the Company s
for
the
common/ stock
charge of the two branches as
Vice-President
of
California
Bank, it
of this country passed
in
would automati¬
cally include both banks
The First National Bank and
FifthJg^us^ Company's offer is sched-
the
.
was
Kings
Association
organization meeting
sociation, held
York,
New
President
Bankers
County
Assistant
an
Manufacturers
of
discon¬
was
of the DeKalb Office of
which is
Vice-President
when
From 1944 to 1948 he was
manager
He
was
Office
Office
Parkside
tinued.
Harvey D. Gibson, President of
Jamaica
King said.
Mark G.
city, that the trustees of the ClifCompany ) in 1915 as p pay-^
;ijt^;Trust .Company had agreed to period, the report says that the
-Eugene R. Black, who will suc¬
ing teller at its Bay Ridge
^
an offer of about $600 a share of
debt on last Dec.
3i was 70%
ceed John J. McCloy as President
In
1930 he was appointed man¬
common stock..
above the pre-depression peak of
of the International Bank for Re¬
ager
of the Prospect' Office of
The Paterson Savings and Trust $19,600,000,000 in 1930. During the
construction
and
Development,
Brooklyn Trust Company, which
tendered
his
resignation
as
a later became known as the Park- Company's offer also was made to intervening 18 years the nation's
the
stockholders of the
Clifton non-farm families had increased
Sqnipr
Vice-President
of
The side
Office, and in 1942 was trans¬ Trust
Company, since 90% of the in number by some 35%. The home
Chase- National Bank, New York,
ferred
California
Mortgage Debt Passes $33 Billion
000 compares
Trust
1265, South
operated
of
offices
According to Home Loan Bank Board, increase of 17% in 1948
constitutes an all-time high record.
and
the First National Bank
Trust Company, also of this
Boulevard and
at
with all officials and em¬
Bank,
HI
from
Comptroller
Home
office
branch
as
Currency that The First National
Bank of Canadian, Texas, has in¬
creased its common capital stock
made by
Brooklyn
and
16
issue of the "Bulletin" of the Of¬
fice
branch
Brand Boulevard will be
the
and
H.' Martin
been
have
at 336 North Brand
The bank
$75,000
Ben
formalities
the Cashier is A. G. Clarkson, Jr.
to
Company and of the First Na¬
tional Bank of Clifton, N. J., for
weeks
first
capital of
a
President
interests
on
a
Rip-
offered
concluded.
11,
Executive
19
soon
legal
or
is¬
of
the
stockholders of the Clifton Trust
The
capacity.
May
on
the
purchase
as
necessary
the
was
Capital funds of the
enlarged bank will be about $9,000,000 and resources more than
$100,000,000.
Company,
1949,
11,
as
May
The Paterson Savings and Trust
appointed
June
thereafter
"i
■'
effective
Committee.
'
was
of
as
of
,
Carolina
the past year.
Harry L. Miller
both insti¬
that actual trans¬
place
It is expected
HI
Bank
'/'/I.
South
the Mer¬
a
Director
the
of
of directors
tutions.
charter
Na¬
S.
*
National
First
EasJey,
sued
.jre-.1;:,.,,,,
President
,
L.-
fer of the business will take
has
continue
Frank
of
HI
Cashier.
HI
•JJflft2p£SirUman will
Advisory
office.
"HI
HI
...
boards
years^ld.
arid
Messrs. ,:;Hayes*. an
Klein, ex-officio^- -" ^
>-H**
from $75,000 to $100,000 by sale
new stock.
is
taz, President; Ray Provart, VicePresident;
H.
Lancaster,
VicePresident and Victor H.
Ritter,
National State Bank, which is 137
pany,
29
King, President of
Hi
HI
H:
\Vr'V V California Bank,
has announced
that California Bank, Los Angeles,
We
are
pleased to announce
Calif, will acquire the business of
that the Du Quoin National Bank
of Du Quoin, 111., opened for busi¬ the First National Bank at Glenness
on
May 17. The officers of dale, Calif, under an arrangement
which has been approved by the
the new bank are: A. J. Guerret-
The
Merchants
&
Newark,
President, Peoples National Bank
of Brooklyn; Lewis W. Francis^ 8$ftich is 78
years
old, will be
Vice-President,
Corn • Exchange paid for on the basis of $30 a
Bank
Trust
Company; JohirKSL share cash and 1/20 of a share of
Shares of
Smith, Assistant Vice-President, Nationalv State Bank.
State sell around $450 a
Chemical Bank/Zand Trust Com-5
Governors.
First
Vice-President, Stephen Van
Rensselaer, Assistant Vice-Presi¬
dent, First National Bank; Second
Vi.cenPresideiit, Talbot Babcock,
Assistant Vice-President, Bankers
Trust- Company;
Treasurer,
G,
Kenneth Crowther, Assistant
„Credit Manager, -Guaranty Trust
Company, and Secretary, Curtis
R.. Bowman,
Manager, Govern-
Those
the
for
surviving bank will continue
two-year
a
of
of
serve
of
and
both of
Bank,
N.
J„
have
approved
of the two banks, subject
to a vote of stockholders June 15,
according to the New York "Sun"
of May 17, which also said the
Charles Oldenbuttel,
were:
25
elected
on'
meeting
&
marger
Members of the Executive Com¬
the
Company
State
also
Dodson
Mr.
Chairman of the bank's
Hi
Merchants
Newark,
CAPITALIZATIONS
The
Trust
(2289)
all, President of "the bank' has an-,
nounced.
the
of
National
the
:NEW BRANCHES
Comptroller
Currency.
HS
*y
CHRONICLE
reported increases in lending vol¬
Di¬
Virginia,
Thomas C. Boush-
ume
in 1948
over
1947.
Totals for
banks
commercial
were
less
1943, than the previous year.
Evidence
the
date indicates
to
volume
of
in
.
;
that
this year
lending
will be less than in 1947 and 1948.
However, lending activity in 1949
should be greater
prior
to
the
the oustanding
to
rise
at
savings and loan associations and port said.
a
than in
postwar
any year
boom
and
debt will continue
slower pace, the
re-
relieve
themselves to blame if
made the victims of hos¬
legislation."
and
are
tile
a
tailed
condition of the company at the
Wildman, Pro¬ close of the fiscal year. Today, 12
fessor of Accounting in. New York national
stock
exchanges
have
The late John R.
University, under whom some
worked
have
may
you
Company
Desk
Warburton
on
of
the
ing," copyrighted in 1916, he said:
"Ideals are excellent, but they
should not be allowed to prevail
They should
common sense.
over
tempered with judgment. Pro¬
cedure
which
might
be
quite
he
in general would perhaps
to be changed in a case, for
proper
need
instance, where the stock of a
corporation is all owned
cetrain
by one man, the report goes to one
affects no one in the organi¬
zation but himself and is used for
man,
Certain opin¬
outside purpose.
no
ions of such
may
man
a
not co¬
precisely with those of the
accountant.
He
may
wish his
incide
kept in
books
certain
a
this is
because
feel
need
accountant
requiring that - corporations
securities are listed shall
submit annual reports to stock¬
rules
whose
en¬
gagement, had something to say
for the general guidance of audi¬
tors.
In his "Principles of Audit¬
The
way.
holders.
porting
the opinion that the ideas of the
proprietor are wrong and that his
v
way of
most
doing things are not the
but there is no
should drop the
approved,
why he
reason
engagement because of this fact.
position of the proprietor may
not
be a variation
of principle
The
but
of
represent rather
If such
opinion.
accountant
and
feels
countant
to
kept
properly
that
the
and
they
are
in the past have
made
that
is
there
still
ample
three-way
for
made
been
be
a
since
book
his
was
There still appear to
few managements who seem
to
apply
agreement among
the
trollers Institute of
America with
respect to the form of the
and
certificate
tors'
audi¬
certain
ac¬
counting principles.
of the SEC
Work
Concurrent with this
accountants
the
not
the
law
in
Commission,
and
activity of
the Stock
Securities Act be¬
May,
1933.
The
organized in July,
the Securities Ex¬
change Act, took over adminis¬
tration of the former Act in Sep¬
1934,
under
ment of income before
"Net
Income
for
arriving at
as
ad¬
year,
He also
observed "the surprising
develop¬
ment of employer ownership
of
corporate securities and the
.spread
of
customer
ownership
among the electrical public utili¬
ties" and the tendency after the
depression in 1920 "toward the
transformation of hitherto purely
personal businesses, closely
owned, into very widely held and
public enter¬
The chapters which fol¬
loosely
governed
prises."
low
x
introduction
this
Street
and
Wall
to
"Main
Street,"
were
in 1926 and 1927 and
brought together in the book in
1932—all rather significant dates
and the title may seem somewhat
prophetic to some people today.
written
As
most
Ripley
cial
of
was
you
very
may
remember,
critical of finan¬
practices of the
earlier, but where
he gave it as in
his citing of United States Steel
and General Motors.
His conclu¬
reporting
'twenties
praise
and
was
tion to the contingency reserve as
all
are
corporations whose securities
listed on that Exchange, the
Statement
Income
deductions
without
is
presented
for
additions
made
during the year to the Gen¬
eral Reserve for Contingencies."
are
due
that
was
the
"stockholders
entitled to adequate informa¬
turned
up
its samples.
the
practice in 1%
of
I shall return to Rip¬
ley later to show how
"horrible"
examples
some
have
of his
im¬
proved in 20 years.
Work of the New York Stock
Exchange
Any reference to the historical
development of corporate report¬
ing would be incomplete without
proper
acknowledgement of the
,
work of the New York Stock Ex- j
change.
It appears that listing
applications of that exchange used
as
early
as
1900 included agree¬
relating
28,
depreciation policy in 1922.
The
of shares was multiplied
number
sevenfold, accompanied by
times
four
crease
amount
fusion
in
financial
reporting
to
investors
in
company
reports,
press releases
and discussion in
of
over
dividends
an
in¬
the
This
in
paid.
stock."
#
"And
for
now
The
counts!
company,
balance
the
income
ac¬
niggardly
['X']
in its three-by-four inch
sheet,
stingy
even
of
the current and prior year are
previously disclosed in the President's letter,
mentioned, and excessive costs of and depreciation for the year ap¬
fixed assets
and
annual
in the income statement,
appro¬ pears
priations in contemplation of re¬ but the fixed assets are covered
and
inventory
reserves
placement of productive facilities
by
at
higher price levels discussed in
sheet,
addi¬
Form
clude
as
deductions from
tions
to
income
very
large corporation
certain
or
so-called
extraordinary charges and credits
referred to in the Institute's Re¬
search
sion
the
Bulletin No.
to
so
which
we
exclu¬
have objected,
32,
an
advised the Institute when
bulletin
issued, on the
grounds that misleading financial
statements might result.
was
a
1944,
ies
with
that
the
Com¬
prior
to
extensive plant stud¬
when
completed, no analysis of
property account
and
depreciation
credited to the asset account.
were
the
was
was
An
filed
disclose
10-K
mission
company's
available
analysis
shown in
a
for
subsidiaries was
schedule.
The amount
accumulated depreciation was
first published for 1944, the year
Before leaving the second
of
in which intangibles were writ¬
rny examples it may be noted that
ten
off
to
capital and earned
the "Statement of Earnings" sub¬
surplus.
stantially meets the income state¬
The next significant change in
accountants, registrants, and
ment requirements of Regulation
others
in
connection with the
this company's published reports
Net Earnings After
S-X and, in addition, by means
was
for
1945 when the income
Provision for Con¬
drafting of our accounting regu¬
of
a
printing
device,
appro¬
statement was improved to show
lations.
This practice was fol¬
tingencies
" priately
highlights
four
items,
lowed in the preparation of Regu¬
"net sales" and "cost of sales"
Dividends were then deducted "Earnings from Operations," "Net
and otherwise
was
substantially
lation
S-X,
our
principal
"Earnings Applicable
and the opening balance of earned Earnings,"
in the form prescribed by our
accounting, regulation, in 1940 and
to
Common
Stock"
and
"Net
surplus was added to arrive at
in subsequent additions and
Regulation S-X. A four-page glos¬
a
Share
of Common
earned surplus at the end of the Earnings
amendments.
With the passage of
sy insert presented pictures of the
Stock."
year.
In 1947 and 1948, this com¬
the Administrative Procedure Act
company's products. The company
pany's state me n't s of earnings
Twenty years ago Professor elected a new president during
in 1946 this program became man¬
closed
with
the
unequivocable Ripley, in commenting upon the that
year.
In 1946 the four-page
datory.
I mention this to empha¬
caption,
"Net
Earnings," after annual reports of the largest cor¬ glossy insert carried photos of
size the fact that practicing public
which dividends on preferred and poration in an important industry,
typical operations in the com¬
accountants and representatives of
common
stocks
were
deducted stated:
pany's plants—no other significant
registrants have had ample oppor¬
successively.
"Earnings Retained
"For
concerns
like the
['X'] changes appeared.
In 1948 the
tunity to present, and have pre¬
in the Business at Beginning of
company
such newfangled gew¬ company recognized its 50th anni¬
sented, their views with respect to
Year" was then added to the unversary by putting a gold paper
our a c c o u n t i n g requirements,
gaws as income accounts or depre¬
balance
of
earnings. ciation simply do not exist. . . . cover on its report for 1947.
which reflect our efforts to elimi¬ captioned
Deductions, including ''Appropria¬ Diminutive, dainty, tied up with More significant changes for the
nate questionable reporting prac¬
tion for Contingencies" resulted
tices and to adopt the best prac¬
fancy string, perhaps, these re¬ reader, however, were the addi¬
in
"Earnings Retained
in the ports are tenderly reminiscent of tion of a page devoted to a sum¬
tices as promptly as they can be
Business at End of Year."
The
mary
of operations of the "we
the parties of our youth"; "The
determined to have general ac¬
related statement of financial po¬
secretive
tactics
of
the
['X'] received—we expended" type with
ceptance.
sition at Dec. 31, 1947 and 1948,
the principal items also stated in
company, later to be commented
Except for amendments to cope
was
presented in the new form
with certain wartime conditions,
upon,
are
quiie commonly cents and per dollar of income.
advocated by some accountants.
Two pages are devoted to simple
ascribed to a desire to entrench
the addition of articles applicable
to
In
investment
this
statement the
Reserve
for
corporation
of
showing 10-year com¬
itself beyond
bar charts
tition
parisons of net sales, employees,
payroll, stockholders and divi¬
fore
as
a
all possible compe¬
low-cost producer be¬
the profitableness
possible rivals";
divulging
of its business to
dends.
These charts show that in
1947
the company had approxi¬
and, after referring to another
company's questionable use of re¬ mately 30,000 employees and 65,000
serves
to
juggle profits, "['X'] stockholders, all of whom were
whether dominated by the same potential if not active customers
of the
company.
For 1948 the
group in management or not, are
alike notorious for obfuscation
this
regard.
.
.
.
The
in
['X'] com¬
company's report—now grown to
8V2 by 11 inches—appeared in a
with 15,657 shareholders in glossy cover with a night view
of the plant on the front and a
largest manufacturer of
highly attractive picture of the
as an
addition to the reserve for its kind in the world, has like¬
roughly
handled
its ac¬ product just inside.
contingencies, having in mind the wise
As
a
whole, the report is a
correcting obsolete or presently losses which might result from an counts, always on behalf of those
the
know.'
Net
earnings strong competitor of reports of
inapplicable
material.
In
this abrupt decline in inventory prices 'in
after the war, as reported, long other companies which have es¬
connection we have been inter¬ and other unpredictable contin¬
ested in gleaning any
ideas we gencies. In view of the continued failed to reflect the full measure tablished a reputation for excel¬
The
10-year
charts are
can
from
published reports to high level of commodity prices of profits, through resort to all lence.
stockholders.
These
reports, during 1948, the Board made an sorts of fancy charge-offs to de¬ cleverly presented, the text is
while filed with us with proxy addition to $1,500,000 to this re¬ preciation.
History does not re¬ readable and illuminating on such
late whether this concealment of subjects as depreciation, reserves
statements,
have
not
generally serve.
The Reserve for Contin-j
been
profits was to discourage indus¬ for high-cost plant additions and
subjected
to
our
critical
gencies represents an appropria-, trial
competition for the time inventory (appropriated from
review.
tion of earnings retained in the1 being, or was. as rumored, on ac¬ earned surplus), employee rela¬
The
reading of current pub¬
count of the heavy war taxes on tions, expansion plans, and so on.
lished reports and their compari¬ business but will not be used to
sources
with
a
view to incorporat¬
ing im Regulation S-X any new
developments that appear to be
beneficial and to eliminating or
Board
,
course,
at
o n c e
reflected
in
bounding quotations for the
eral purpose contingency reserves
and
Another
trusts and the in¬
Contingencies
is
grouped with
in the regulation of
capital stock and retained earn¬
tion. and the State and general special
accounting requirements
ings to support the "Excess of
public have a right to the same for companies in the promotional
Assets
Over Liabilities,"
one
of
privilege."
Two essentials of an and exploratory stage previously
three highlighted captions on the
adequate statement he held to be found in the appropriate forms,
statement, the others being "Cur¬
a
balance sheet and income ac¬ Regulation S-X has not undergone
rent Assets" and "Working Cap¬
count.
The time had long passed, significant revision
since its
ital."
To complete this reference
he said, when the latter may be adoption.
However, we are now
one of the notes must be quoted:
refused to shareholders.
Yet the engaged
in gathering comments
"In the years 1941 to 1947, the
American Institute's study in 1948 and
suggestions from various
sion
No.
contingency reserves, appeared
Anyhow, all of
abrupt aban¬
an
ultraconservative
single caption in the balance
"Plants, Real Estate, Ma¬
the Institute's Research Bulletin chinery, Intangibles, Etc. (at Cost
a direct charge to earned surplus.
cash or
Capital Stock, Less
No. 33, all items which I think in
Comment of the President of the
for
Depreciation)."properly should be excluded from Allowances
company
on
this
change was:
the determination of income. Bul¬ The first filing of Form 10 and
"Following a suggestion made by
annual
reports
on
letin 35, however, also would ex¬ subsequent
the New York Stock Exchange to
justed," in 1948 reported an addi¬
was
corporations.
Bulletin
search
to
came
the
Prominent ac¬ in 1946 closed its "Statement of
written tember, 1934.
Professor
William Z. Ripley of countants assisted the Commis¬ Earnings" in three lines:
Harvard noted
that the Liberty sion in preparing its forms and "Earnings Before Provi¬
Loan campaigns of the first world regulations under both Acts and
sion for Contingeneies_$
Provision
for
Contin¬
war
led to a great increase in regular practice since that time
gencies
popular investment in business has been to seek the views of
other
Institute
criticism in the
sampling of reports I have exam¬ election by other companies of
ined for
the
purposes
of this this method of reporting additions
paper,
I think even Professor to reserves of the type in these
Ripley would have to admit that two examples, it seems to me,
a
substantial
improvement
has would have avoided much con¬
tunity
listing
Exchange, the American Institute
of
Accountants
and
the
Con¬
came
guarded."
and
first appeared in
report.
The American
of
Accountants'
Re¬
language
1947
suddent
in July, 1947, and Bulletin No. 31,
relating to inventory reserves was fulguration through the long oversmall dated
October,
1947.
Similar due disclosure of earnings was, of
commendable detail and arrange¬
Exchange
right, it is a different matter
entirely.
Ethics and honor are
two
things to be zealously
after this
the
a
donment of this
oppor¬
applica¬ ment but which in 1947 and ear¬
tions made after July 1, 1933. The lier years deducted provisions for
correspondence also disclosed the general contingencies in the state¬
with
connection
ac¬
all
Ten years
charges corporate income.
Despite the fact
time and effort.
of Mr. published.
New York
the
executive assis¬
to the Committee on Stock
difference
man wishes
a
Hoxsey,
re¬
Stock Exchange's
a
certify to the
effect that the accounts are right
the
the address
was
B.
and
been
of
rule advocated for financial periodicals, and prob¬ prepositions, gives us this and
more:
'Earnings, Year
prisoners of war—give only your ably would have avoided the ne¬ nothing
tant
Such a policy, mysterious
cessity for the publication by the 1925.'
List, before the American Insti¬ name, rank and serial number.
Institute of Bulletin No. 35 in or macabre, invites the comment
tute of Accountants in 1930 fol¬
Commendable Changes
October,
1948.
This bulletin that the record is either too good
lowing which the Institute ap¬
poor to
be frank about
makes a sound recommendation or too
I have observed a number of
pointed a committee to cooperate
Once again, mainte¬
which should be followed by all either way.
with the Stock Exchange in the commendable
changes
in
1948
nance and depr e c i a t i o n items
consideration of problems of com¬ over 1947, particularly in the form companies reporting for the bene¬
mon
interest
to
investors, ex¬ of the profit and loss statement fit of public investors, i.e., "that would be elucidating."
The earliest report to stockhold¬
changes and accountants.
This and in the .handling of appropria¬ the net income for the period be
ers of this company appearing in.
committee's correspondence with tions of income or surplus for shown henceforth without deduc¬
This
tions or additions of items which our proxy files is for 1942.
the Stock Exchange, initiated in various
purposes.
As an example
are
properly
[underlining sup¬ one measures 7% inches by 8V2
September, 1932, and published in of the latter, one company, whose
January, 1934, disclosed the inten¬ reports to stockholders (at least plied] excluded from the deter¬ inches, or four times the area of
mination
of
net
income."
The the 1925 report, and no fancy rib¬
tion of the Exchange to require from 1935) have been
presented in
Gross Sales for
items referred to relate to gen¬ bons tied to it!
audited
financial statements in
He may have
so.
M.
.
development
accounting
corporate
J.
offense
no
,
A landmark in the
of
This
with various studies that have
son
been
a
fascinating and I hope ulti¬
balance sheet giving a de¬
and accurate statement of mately a fruitful expenditure of
ments
have only
they
detailed state¬
of income and expenditures
publish
to
ments
income
future
properly applicable thereto." ;
Getting Financial Data Ovet to Investors
(Continued from page 11)
Thursday, May 26, 1949
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2290)
30
of
amounts
Directors
aggregating
set
aside
$10,000 000
pany,
1925.
the
,
Volume
169
Composition of the fixed asset to¬
tal In the balance sheet is disclosed
in
footnote.
a
disregards
But the
the
company
Institute's
recom¬
mendation with respect to income
and surplus by deducting substan¬
tial appropriations to reserves for
high-cost
plant
additions
from
"net income for the year" before
adding the first-of-the-year bal¬
ance
of
"unappropriated earned
surplus." The latter title suggests
another look at the balance sheet
presented in comparative form, as
the
were
combined
income
COMMERCIAL
THE
Number 4806
and
pany's "summary of income and
expense" eriHs with the caption,
"surplus net profit," suggesting
perhaps somewhat the same idea
as
the Helen,. E. Hokinson cartoon
in the Girard Trust Company re¬
"How much would the tax
port:
if
be
I
it
ALL
Our
the
files
leave
ernment?"
to
gov¬
suggest the
possibility that while the certify¬
ing accountant in this case appears
to have been in
balance
years,
sheet notes.
The
follow¬
eration in
search for improved
our
forms:
.in
(retained for
use
business):
"Insurance
gent
and
ccntin-
reserve
Reserve
for high-cost
plant additions--.
.
he may not have had much
experience with'(clients with se¬
curities listed on stock exchanges.
r\one of the faults
charged against" the published fi¬
statements
appeared
in
those contained in a registration
statement filed by this company
with the Commission in July, 1946.
Of interest in this connection is an
analysis
showed
Inventory reserve
Unappropriated
i
many
have
to
mad#
considerable
last
that tMhile
tion of the
"
devoted
which
certifica¬
year
the
financial statements of
registrars for 1946, with
aggregate assets of $100 billion,
2,265
this
think:■ it
may
was participated in by 416 inde¬
one example, for I
be considered fairly pendent accountants or accounting
typical of the metamorphosis of firms, 279 accountants or firms
financial reporting in the last, 25 each certified to financial state¬
ments for only one registrant and
years.
In June, 1946, the Commission 58 firms certified to only two each.
time
made
report
a
to
Congress en¬
titled "A Proposal to Safeguard
Investors in Unregistered Securi¬
ties."
This
report contained
a
reports to stockholders
companies not required to file
reports with the Commission but
having 300 or more stockholders
study
of
of
and
$3,000,000
assets.
a
•
or
cluded
attention,
reports
of
particularly
The study in¬
119
companies
companies whose
other
39
total
attracted quite
among accountants.
while
of
more
This study
little
reports were solicited through a
nongovernmental channel either
did
not
nish
reply
or
refused
to
fur¬
their reports.
of
Sales
Costs
and
of
amount
the
accumulated
de¬
preciation, * and
failure to ade¬
quately describe capital stock is¬
The
sues.
American
Institute
of
Accountants' survey of 525 corpo¬
rate
reports lor
1946-1947, which
registered and non-
our
files
re¬
companies included finan¬ not included in the tables reveals
cial statements in applications for a little improvement in most cate¬
exemption from the registration gories. A shift by some 30 com¬
provisions of the Securities Act panies from the multiple step form
of 1933, two of these being from to the single step form of income
companies which did not submit statement seerqs to
connection
with
the
study; the other three companies'
reports
show
improvements
in
some respects but not on all points
increase
an
of
cost
nondisclosure
in
sales
correlate with
and
of
profit.
gross
These two items
disappear entire¬
ly when the single step form pre¬
criticized. One company included sents employment costs and mate¬
in the study (on which work was rial costs separately—a form of
completed in May, 1945) listed its presentation deplored by some fi¬
stock
the New York Curb Ex¬
on
change
and
first
annual
thereafter
cluded
a
holders
for
1945
and
in¬
printed report to stock¬
identified
as
in partial
the
to
answer
filed a registration
November, 1945. The
report filed with us
was
item
of
the
form
brief description of
material changes during the year
requiring
in; the
a
general
business
done
character
the
by
and its subsidiaries.
port of the
of the
registrant
The 1944
re¬
which was
by independent pub¬
company,
nancial
analyses and not accepted
compliance with the provisions
Regulation S-X with respect to
profit and loss or income state¬
as
of
ments.
is
me,
sented
in
the
This
approach, it seems to
more appropriately pre¬
in more informal fashion
ties,
to' show
for
serve
!
i
the
amount of
doubtful
accounts,
re¬
to
classify inventories and to give
text
of the report
or
in
a
1947
annual reports.
Published reports of four other
:
companies criticized in the study
found in the proxy files—
the earliest for
1945
indicating
were
;
i abandonment'
:
of
nonregistered
status before the study was pub-
i lished.
i to
.
Two
correct
of
had
these
with
improved
little
some-
j what, and one was substantially
1
improved.
|
case
fied
But the most
of this group
serious
charged with
by
while
In these
33
cases,
sheets
balance
certi¬
firm of
one
three
accountants
in
a
group of
19 statements certified by another
firm.
In
were
of
33
balance
the
the
"reserve"
term
with
92
sheet
doubtful
in
the
cases
in
used
not
was
connection
accounts
and
de¬
preciation.
L
interested also in noting
to which prepaid ex¬
was
the
extent
included in current
This procedure, you will
penses
were
assets.
recall, was recommended unani¬
mously by the 21 members of the
Institute's Accounting Procedure
Committee and published in their
Research
Bulletin
gust,
indicated
in
30
Au¬
1947.
have
No.
Twenty-four of the
92 reports (including 18 certified
by one firm) followed the prac¬
tice; all 19 reports certified by
another firm did not.
(Since I
concentration
rather
a
of
heavy
reports certified
in
few
a
cases—appar¬
ciation
shown
separately
among
counting
total
for
sales
the
disposition
revenue
the
or
of
sales
dollar. One company is counted in
both groups and two of the latter
expenses with no reference in cost group
also presented a hybrid
of sales to its exclusion from that form of source and disposition of
figure; and several cases in which funds chart.
From
a
critical
depreciation is treated as an other
professional
deduction from income along with point of view nearly all of these
interest, far down the page, from statements suffer to some extent
"Net profit from Operations."
from a lack of precision in the use
of terms, due, it appears, to ex¬
Statement of Application of Funds
perimentation in developing the
There is one
other feature of form to appeal to the lay reader.
financial
reporting to which I Foy example, one two-year com¬
wish
to
call
attention
vite comments
usefulness
and
to
in¬
to form, general
whether it should
as
and
parative
form
called
is
the
bels
two
"In¬
an
formal Funds Statement"
and la¬
"Source
parts
of
require¬ Cash" and "Use of Cash." The use
ments—the Statement of Applica¬ of quotes on the titles appears to
be
incorporated
tion of Funds.
ment
SEC
in
This form of state¬
considered
during the
stages
of
Regulation
S-X
but
considerable
difficulty
was
encountered in designing a
form, acceptable to all of the
collaborators, that was felt could
be prepared by all companies with
a {reasonable expenditure of effort
was
formative
with
commensurate
the
92
the
and
technical
a
properly
reservation,
I think, for I am
so,
somewhat doubtful that "Reserved
for
is a source of
balancing item
working capital" is en¬
tirely comprised of cash. This ex¬
ample merely demonstrates the
difficulty in reconciling technically
benefits correct use of terms with a sim¬
anticipated.
Of
indicate
depreciation"
cash
that
or
the
"Added to
plified presentation.
reports I
have been
that
state
being complied with, for Rule 3-01
provides that statements
be
may
filed in such form and order, and
such generally accepted
terminology as will" best indicate
their significance, and prepaid ex¬
penses may be shown as current
assets or deferred charges.
may
32,368,000 Spent for direct taxes (other than those collected
on the sale of products)
A recent
inquiry raised
ques¬
a
$66,365,000 Left for wages, commissions, and employee ben¬
13.4%
efits
3.7%
18,137,000 Left for dividends to stockholders
54,494,000 Left for
use
11.0%
in the business
tion, not specifically answered in
Regulation S-X, which
tensive
SEC
trou¬
may
ble those who do not have
an ex¬
practice.
The ques¬
tion related-to the rule which per¬
mits
the
expression
in
amounts
thousands
in statements and
vided
statement
the
top of
rule
each
which
takes
again I think it is clear
that "Spent for" is an incorrect
term to apply to "Property Used
Up in Producing Income."
The
company Ripley so roundly criti¬
cized in my earleir references pre-
(Incidentally
only one
advantage
rule, and in doing
so
use
added
statement
feature
setting
of
lot,
as
follows:
•
.
.<
$11,^91,691
Net
profit
Capital Stock Sold—
,j
$1,737,214
2,847,760
Preferred shares
Common shares
4,584,974
1,175,652
Serial notes issued
this
of
$17,252,317
it gets highly
Disposition:
in
Excess of
Statisticians
Commission
tell
me
of
the
capital expenditures over provi¬
sion for depreciation and sales
that perhaps
of prop¬
$3,935,161
erty
annual
Increase in deferred
The
770,430
Mortgages paid
reports apply
specific question
1%
of
the
rule.)
was
whether all of the
provisions
applied also to finan¬
cial statements and schedules
omitted.
charges, etc.
230,167
Dividends—
Preferred
ex¬
the
formal
financial
statements, a procedure followed
by a number of leading' corpora¬
tions, including Du Pont and Gen¬
certified
eral Motors.
In-
a
of 92
group
which
deducted
income
taxes
or
was
My
that it
indicate
answer,
was
beneath
with
out
separately "Officers' salaries for
management of the business."
One innovation turned up in the
Source of Funds:
of asterisks to
thousands.
of this rule
the
similar
a
company
identify figures not expressed
the
sented
substituted for
be
involved in the
at
column.
provides that
omitted figures.
recall
or
100.0%
$493,724,000
Here
money
further
can
I
pro¬
that effect
schedule,
or
need not
zeros
money
dollars
of
beneath the caption of
the
The
of
schedules,
indication to
an
is inserted
the
6.6%
use
407,o4z
shares
3,496,146
Common shares
pressed in dollars only, with cents
of
8.839,446
course,
not necessary to
captions,
or
top of money columns, or to
substitute zeros when the figures
for cents were omitted. .Of the 92
published reports referred to pre¬
viously, 45 omitted cents and 47
balanced to the last cent.
$8,412,871
at
the
There is
extraordinary items separately—
10 of these being certified by the
same firm of certified public ac¬
countants) I
Only seven of the
discernible pattern (size, age,
certifying accountant, line of busi¬
ness, etc.) influencing the choice.
Ripley, in the '20s, ridiculed the
publication of large amounts car¬
recent
confidence
no
Note
the
that
this
solution
avoids
confusing theory that depre¬
is a source of funds—an
ciation
idea
fire in
these state¬
that has been under
current discussions of
modern
with a much improved annual
contained one idea
I have never seen before.
In the
center of the asset side of the bal¬
up
report which
ance
ments.
carefully worked out lows:
solution to this problem and I do
I have no
product in 1948 also came
sheet appears a5 box as
T
"Working Capital:
.
fol¬
,
1948
$—comments here to be
1947
$
discouraging the use
The figures are quickly checked
of either of the forms of analysis
ried out to the last penny, as con¬
in common use until a technically by a glance at total current assets
veying an assurance of exactness sound and at the same time useful and total current liabilities. The
that could not be. I should think
solution is found. A proposal that working capital figure is given
firm of accountants and the other the obvious economies in
compo¬ the
proper approach is to begin prominence by this device without
three divided between two firms. sition and neatness of
presenta¬ with sales or gross revenue sug¬ doing violence to the old principle
tion would cause more companies
gests the possibility of combining that assets and liabilities should
Recommendations for Reforms
to drop the cents. Perhaps those
certain features of the simplified not be netted in the balance sheet.
who retain the cents feel that the
A short time ago, on another
In conclusion, although I think
income statement and the source
psychological factors favor greater and disposition of funds state¬ as did the financial writer to
occasion, I discussed some of the
details with respect to
capital stock. No such criticisms
were
necessary with
respect to statements presented employment
the certified financial statements costs and material costs separately
contained in the 1945, 1946 and —four being- certified by the same
adequate
involved
17
supplementary statement than in
reports scrutinized in the course
lic accountants, had been criticized of preparing this paper I found
in' our study for failure to total 32 with some form of single step
statement (including
12
current assets and current liabili¬ income
not certified
balance sheet.
disclosed
ently included with costs and ex¬
penses but not mentioned; depre¬
-
tional
statement in
surplus, and eight others show the
term as a parenthetical alterna¬
tive, as in the General Motors
31
Simplified operating statements
using as raw material for this pa¬
run
into similar difficulties.
The
altogether there were
per, 11 contained a statement of
23 firms. represented, some with
j Returning to our 1946 study, we
application of funds in the gen¬ following is one of several well
found that the principal failures only one report.)
erally recognized sense of analyz- presented summaries:
in presentation were nondisclosure
Consideration is being given to
How the Company Used Its 1948 Gross Income of $493,724,000
of sales and cost of sales, combin¬ the specific inclusion in Regula¬
ing of cost of sales with other tion S-X of the substance of these $276;053,000 Spent for products, materials, services and all
operating expenses, failure to clas¬ Institute pronouncements with re¬
expenses
except wages, commissions, and em¬
sify inventories and indicate basis spect to surplus, reserves and pre¬
ployee benefits
_•
55.9%
of
valuation, failure to classify paid expenses.
At present this
46,307,000 Spent for property used up in producing income
fixed assets and to disclose the regulation does not prohibit their
(depreciation, depletion and retirements)
9.4%
Nondisclosure
registered corporations, revealed
veals that of these 119 companies substantially the same deficien¬
18
have
since filed registration cies, among others, with the nonstatements with the Commission registered companies showing; the
and one company which did not higher proportion of failures. The
report
covering
the
reply to the request for a report Institute's
has registered and now files an¬ same companies for the succeed¬
nual reports with us.
Five addi¬ ing year and additional companies
in
25
(2291)
treasury stock shown as an asset; ing the change in working capi¬
cost of sales and gross profit all tal *by adjusting net income for
too frequently
concealed by in¬ non-cash charges and accounting
cluding selling, general and ad¬ for non-operating sources and uses
ministrative expenses ^With cost of of funds, and 19 presented a sim¬
sales; depreciation for the year not plified operating statement ac¬
by two accounting firms, I should
includes both
A current check of
reports
terminology in place of surcompanies show "earnings re¬
tained in the business," or simi¬
lar language, in lieu of earned
new
nancial
Appropriated:
•
practice for
Nevertheless,
"Earned surplus
CHRONICLE
six breaches of good practice, 4n-,,„plus.
I think it is clear that these
eluding failureshow the amount recommendations are being con¬
of sales was no better in 1948 than sidered favorably.
Of the 92 re¬
it had been in 1944.
This com¬ ports just referred to, those for
surplus statement and supporting
ing presentation warrants consid¬
FINANCIAL
&
developments in the
sentation of financial data.
i
n
cl
u
d
e
d
the, recommendations
from several sources
ants to
br
of the term
cents
are
doubt it.
in
the
shown.
I
figures
am
when
inclined to
construed
ments resulting
accrual
—
as
in
a
conversion of
accounting results into a
modified
statement
of
cash
re¬
whom
I
referred in my
opening
remarks, that "Too Many Annual
Reports
Sftill
Are Guessing
Games," I am convinced that the
In addition to the foregoing I ceipts and disbursements.
for account¬
One
old
company
which re¬ —or guessing required
clarify their gained a few general impressions:
reserve and to use
an
occasional substantial item of ported complete conversion to a investors is being reduced,
abandon
use
pre¬
These
—
not want my
of
32
THE
(2292)
COMMERCIAL
United States.
As We See It
(Continued from first page)
:gg|§|
as well as our correspondent, that (1) it was less
specific proposals of the Secretary of Agriculture
than the philosophy with which they were defended
that was the subject of our attack, and (2) it was made
the
quite clear that we, for our part, were as completely out
of sympathy with this type of reasoning when applied
to other sectors of the economy as when employed to
agriculture. The editorial was
in reality a denunciation of the doctrine, no matter
where applied, of subsidy or special favor, certainly not
an attack on agriculture or an effort to deny it what was
ing
would
perhaps
Lest there be
,
admissible in other fields.
or
misunderstanding,
we
quote:
used by Secretary
by labor leaders and
"At bottom, too, this (the argument
Brannan) is the philosophy employed
political friends of labor leaders to defend the demands of
the unions—and is, for that matter, in increasxy^^^^^he
argument used by any and all elements u^Ko wish to get
their snouts into the public trough",
-
Or
again:
"Is all
this (some of
the implications of the Brannan
precisely as silly as all
those arguments employed by so many to defend so many
and so varied a list of subsidies and largesse. High wages,
shorter hours, unemployment insurance, free spending on
the part of government, and a dozen other of the 'modern'
antiseptics or depression specifics so constantly prescribed
in this day and time by so many amateur physicians are, of
Of course
arguments) silly?
course.
precisely
in
.
.
similar
are
it should continue to operate at
well
numerous
would
all!
that these candid, not to say
aware
say, are
us
as
often
are
claimed.
of the
be defended
not
they
areas,
economy
on
At any rate,
certainly not to a
agriculture, and
economic but only on defense
apply only in limited
broad segment
can
such
as
grounds.
is
not
Managed Economy Either
for us, therefore, to express any
opinion as to whether agriculture unsupported or unaided
could survive and flourish in an economy shot through with
subsidies and special favors to many others. We need not
concern ourselves here with the position of agriculture in
a ^'managed economy"; that would depend largely upon the
policies of the managers in many respects and upon the
ultimate aims and purposes of the management. We do not
believe in subsidies anywhere and we should like to see
the notion of a managed economy dropped at once and for
all time. In these circumstances we have not the slightest
hesitancy in saying that agriculture in this country can
operate and operate very satisfactorily without support from
the government—that is, "support" in the sense in which
The notion that
of
to
averse
We should like to
and the others grew
stand
their
on
"support" in
see
the day
one
form
Agriculture
or another.
when both farmers
course,
day and time.
agriculture is somehow sui generis
deeply imbedded in the mind of rural
banks
One
controls
over
new
di¬
steel, iron, non-
over
metals
con¬
rates would be
wage
other
and
com¬
modities in short supply.
M. S. Szymczak of the Board of
Governors,
ference
asserted
Pacific
the
fore
recently
Northwest
Banking
on
in
be¬
Con¬
Pullman,
Washington,
in a review of the
and postwar poli¬
cies, "The recent relaxation of in¬
flationary pressures should not
be interpreted to mean that the
Federal Reserve System's need
for more adequate authority to
restrain
inflationary
expansion
has ended.
The System should
System's
war
all
times
be
equipped to
with
whatever monetary
problems we may be facing. It
has been handicapped by the in¬
effectiveness of such traditional
at
cope
controls
raising
as
redis¬
and
by its limited
authority to increase reserve re¬
quirements.
But it has vigorous¬
count
feet.
own
savings
One might expect
ferrous
credit
willing and in fact determined to
rates
ly used its relatively modern ac-v
cessories — control over stock
market credit and over, consumer
Management in 1949
(Continued from
7)
page
credit.
instalment
It
influence
its
carefully
used
has
over
in¬
terest rates."
Despite such possibilities, the
size and character of the Federal3
debt still would suggest main¬
activity is low and the
tenance
of the long-term 1xk %
Treasury must resort to deficit firate
but
some
firming of the
served to slow down the expan¬ nancing.
The Treasury can influ¬
short-term rates might then be
sion of real estate loans.
ence the money market in its re¬
PYDPftpH
funding since it can control, to a
On April 28, Thomas B. McSupply of Capital Adequate
degree, the type of debt obliga¬
Cabe, Chairman of the Board of
The supply of capital appears to tions which it may offer, depend¬
Governors
of the
Federal Re¬
be adequate for the somewhat les¬ ing upon whether they are to be
serve
System,
in
commenting
sened needs that appear likely. held by commercial bank inves¬
upon the recent lowering of re¬
Capital expenditures in 1948 were tors or non-bank investors. It can
quired reserves stated, in part;
reported as $19.2 billion and some influence the market, also, in the
"The present action was taken
estimates have indicated a decline guarantees which it may effect.
in
furtherance
of
the Board's
to
$14.5 billion for
1949.
In¬
policy of adjusting all of its credit
The Policies of the Federal
creased military expenditures
regulations
in accordance with
Reserve Authorities
need not change this estimate nec¬
changing economic conditions and
essarily.
The demand for mort¬
What of the policies of the Fed¬
the credit requirements of the
In the
gage money does not appear to be eral Reserve authorities?
current business situation.
greater than that of 1948 and it postwar period, the Federal Re¬
"Since the first of the year there
co.uld be less.
Savings, too, have serve open market operations
has been a decline of approxi¬
becoming more conservative, and
the high cost of construction has
i
Sav¬
become
institutionalized.
ings
likely to con¬
increase through insur¬
sources appear
tinue
to
business
served
a
purposes
twofold purpose.
were
These mately $1,500 million in loans at
conflicting, for the
authorities
were
attempting
to
pension plans. As indi¬ fight the forces of inflation on one
cated previously, deposits are not hand and yet maintain stability of
likely to change much and banks the Government market on the
now have more
funds to invest. other.
The increase in Reserve
and
ance
member
banks.
"We have
credit
way
They should be tight¬
as general eco¬
street.
ened
frequently stated that
regulations are not a one¬
or
relaxed
nomic conditions
there would appear to be requirements served to offset re¬
in the
supply of serves created by the sale of Gov¬
money and thus no material in¬ ernment securities to the Federal
require."
Thus,
What of Bank
shortage
no
in
crease
money
rates
appears
likely or necessary. Assuming no
materially larger military expen¬
ditures
or
materially increased
System by life insurance
Reserve
companies and savings banks.
Of
importance to us, now,
however, are, what future policies
greater
expenditures for recovery pro¬ may we reasonably expect
grams, the declining needs of the
First, we can be reasonably sure
capital
market
appear
more that the 2.%.% long-term rate will
likely to invite some easing of be maintained.
money
rates
rather
than
a
Second, we have already wit¬
nessed the lowering of margin re¬
strengthening of them.
necessary
the word is used in this
is,
been
never
,
No
It
has
rather
be very explicit. We are not opposing
or
attacking only those subsidies or "supports" now
given or proposed for the farmers of the nation; we are
unalterably opposed to special favors or preferential
treatment for any segment or part of our economy. The
only exceptions we have ever made or have any inten¬
tion of making are those instances where national de¬
fense in a troubled and dangerous world demand special
action—and these instances, we suspect, are not nearly
Again, let
This, how¬
Bank Investment Portiolio
Implications
assertions—which, needless to
so
is not the whole story, by any means.
ever,
blunt,
certainly not intended
to carry any implication of discourtesy or lack of respect
for the opinions of those who disagree with us—- are quite
likely to come as a surprise, possibly as a shock, to some
of those under whose eyes they may fall. We are not for
that reason disposed to alter or soften them, but we do be¬
lieve that it is wise to place such statements in their appro¬
priate setting.
We
great proportion of
a
losing fight, and had better change their lines.
our
to whether
decades,
inclined to rail (and
quite justly so)
against special favors granted elsewhere in the economy
than to demand compensating favors for themselves. For a
decade or two, now, they have adopted the other tactic—
namely that of using special favors to others as an argu¬
ment to support the thesis that they, too, must be sub¬
sidized.
This change in tactics, doubtless, was in part a
matter of opportunism. The agricultural voters of the land
and their political representatives, finding themselves mak¬
ing no headway against the favors going to others (par¬
ticularly the tariff), concluded that they were fighting a
reply to one of the questions of our valued
correspondent quoted at the beginning of this discussion,
to wit: "Can agriculture operate without government sup¬
ports?" Our answer is obviously in the affirmative, and
once that answer is given there is no longer any point in
the other questions.
Of course agriculture can operate
without government supports. If it could not, which to us
is all but inconceivable, the question would at once arise
as
likely.
.
Now, such statements as these, it seems to us,
plainly imply
even
years,
were more
in¬
life insur¬
institutions.
probable and
sumption and
rect controls
farmers
en¬
might expect increased corporate
and
personal income taxes—ra¬
tioning and allocations would be
Let's End All Subsidies
our
new
include
over
companies,
and
many
expect
even
powers
ance
the same category
Plain
might
vestment
the rank and file.
For many
would
we
to control credit to be
We think that such powers
be over all the banks and
acted.
support plans to subsidize
conceded to be needed
again
powers
and women have, however,
of the ideas of Quesnay and the
others. It would be a good thing if, somehow, the residue
of their fallacies could be expunged from the minds of
riddled
ago
the other hand, we should
on
the forces of inflation return¬
see
country. Thoughtful men
long
the
New Controls—New Powers
If
in this new world. Without
doubt, the so-called Physiocrats played their part in
establishing certain notions about agriculture in this
reader,
and the
year
before, thus increasing
supply of securities.
"organized ourselves
we
1949
year
others, in point of fact.
cepted in France prior to the foundation of this Republic.
We brought a good many French ideas with us when
must remind (or inform) the general
we
they purchased last
wholly absent from the minds
We do not share any such
view, and we do not believe that it is possible to defend
it successfully before any dispassionate forum.
The
general idea was fully formulated and very^widely ac¬
of
further exposition or elaboration of the themes upon which
•our editorial of May 12 touched, but we shall proceed upon
such an assumption in any event.
But, first,
It is not
Thursday, May 26,
CHRONICLE
FINANCIAL
&
Fiscal Position of
Treasury
The fiscal
position of the Treas¬
ury can have an important influ¬
ence upon the money market, for
when business
activity is high, the
have a surplus
position to retire
The Government agencies,
should
Treasury
and thus be in
debt.
too,
can
kets
a
influence the capital mar¬
purchasing
by
long-term
Government securities in the open
market thereby supplying
institu¬
life insur¬
companies and savings banks,
tional investors, such as
ance
with
sizable
ible funds.
complished
redeems
of
Similar results
when
the
ing
cial
may
be
legislation
is
permitted
;to
Obviously these actions, which
have reversed the tightening pro¬
cedures of 1946,
1947 and 1948,
have caused
an
increased demand
for
are ac¬
diate dated
obligations and an
easing of interest rates all along
the
see
than
reserves
unless the existing spe¬
lapse.'
held
and
of required
necessary
invest-
Treasury
bank
In
the
business
of the
background,
light
foregoing
Treasury
policy and Federal Reserve
money
market policy, what
should be bank investment policy?
fiscal
Obviously with conditions so un¬
certain, with the Treasury debt
so high and with the Reserve au¬
shift their vast
the market in any di¬
quirements from 75% to 50% on rection, bank investment policy
the Stock Exchange, we have seen should aim toward the greatest
the easing of Regulation W and a possible safety, a high degree of
lowering of reserve requirements liquidity and yet provide adequate
Should the business readjustment income return. Investments based
continue, the monetary authorities upon earnings alone are bound to
may feel that some further lower¬ bring grief in the long run, and
of course, the
results are obtained when
other
obligations,
converse
amounts
Investment
Policy?
both
line
the
many
short-term and interme¬
has
been
reserve
witnessed.
We
banks selling back
of the governments which
thorities likely to
power over
yet investment based only upon,
liquidity
neglects the primary
function of the banking business.
Investment policy, also, must
^
take into
entire asset
investments cannot
account the
structure, for
disassociated from loans.
It
the loan risk is great, then invest¬
ments should be riskless and the
be
liquidity very high.
Investment
policy, also, must take into ac¬
count the ratio of capital to dei-vnoiic
ratin of capital to iisk
Volume 169
tal funds.
It
capital
as
assets
Number 4806
should
along
a
of
earnings
with
satisfactory
The policy should
liquidity ratios.
be
consider net
percent
adapted to the facilities
posits. If such
should
consist
banking institution
actly the
investments
which
cedure
one.
Analysis of Demand Deposits
be characterized
can
of
as
constant
taxables, there is
in
flux
neither
officers
position
of the other..
assets, es¬
pecially loans. It will depend upon
the directors of the institution
the
the
what
the
location
of
the
bank, as to
whether it is in a large center or
in a small
community. Considera¬
tion should be
given
acter of the
to the char¬
deposits and whether
they
concentrated
are
tively few
but
they
depositors
few
a
in
industries
rela¬
a
embracing
whether
or
faintest
earnings
of
sound
income
steady
whereas
should
be
reserve
set
bond
account.
have been
ket
consideration must be
given to the volume of inter-bank
balances. Then there are possible
but
in
too
swings in deposits. In
the
seasonal
areas
some
characteristics
are
especially pronounced because
crop loans. In other areas
business has
ing
a
of
capital position in relation to the
deposits and especially in relation
to risk assets.
Investment of Demand Deposits
The principal aim in the invest¬
ment
of
demand
deposits
cases
late.
In
bank
selling,
most
from
suffers
when
all
a
lack
resorts
one
of
of
analysis
savings
though the
in¬
this
should
of
of
posits
the
depositors
and
community.
One
should be
sure that there are ade¬
quate short-term issues to provide
for the demand for commercial
loans
the demand for
or
loans
and
to
unforeseen
mortgage
of
care
withdrawals
at any
occur
take
those
that
can
time.
shares
liquidity requirements for
large city institution should be
in
savings
associations.
shift, I would
increase
unless
rates
people
With
way
the
bank
in
the
smaller
ience.
community it would
able to hold
some
seem
people
desir¬
,
liquidity. This is especially true if
the institution holds 2s of 1951-53
or 1952-54 which have
been pur¬
chased at par or near par.
Much
be
produced
to
meet
ex¬
Thus, with the remainder
sources.
the demand
of
deposits it would
desirable
seem
to
have
well-
a
from 4 to 18 years,
depending
upon the situation, with some em¬
run
list
be
the
on
longer
if income
small.
larly
It
from
would
desirable
rounded
end
of
loans
the
should
seem
have
to
particu¬
a
well-
maturity distribution
where the officer in
be
in
touch
markets
as
with
closely
the
as.can
whose
cer
duties
of
investing
those
funds.
Spaced
security
are
offi¬
an
entirely
the
banks
maturities
also
one
should
be
sure
to
select the right guides;'
be
of
very highest quality,
preferably U. S. Government se¬
of
For
hold about 5% to 10%
the equivalent of.
investing primarily for
This
re¬
procedure
may
be
justified under limited conditions
to
as
my
way
of thinking it is
as the well-
good procedure
rounded
maturity
distribution. It
with
Bills
in
1
to
10
year
govern¬
ments, similar maturities in high¬
est grade
fully tax exempt se¬
curities
or
railroad
equipment
trust obligations of
highest quality.
should
high-grade
bonds definitely
for
investment
generally
bonds
invest
not
are
not
suitable
and,
long-term
desirable.
bonds
should
be
in
are
Where-
purchased
of
highest grade
adequate spread
in yield above U. S.
Government
obligations.
Convertible
bonds
and
an
be acceptable but they should
can
be
provide
purchased only
upon
their, in¬
yield.
Partially
Tax-Exempt
Treasuries
Partially tax-exempt U. S. Gov¬
ernment
obligations have
been
proved to be
a
very
vestment media.
curities,
desirable in¬
Use of these
however,
depends
se¬
upon
where the
dividual institution and, of course,
wide
swings in business and
de¬
a
satisfactory
yield
relationship
living.
the
ernment
securities
railroad
equipment
is
adequate,
issues
trust
And other unrealistic
meddling is curtailing in¬
dustry's ability to produce, pros- '
per, and offer stable employment.
Results of "Planning"
For the
assorted
past twenty-odd
bureaucrats
in
Washington
Business
under¬
going a painful yet healthy read¬
justment. The forces of inflation
relegated to the back¬
ground and are not likely to re¬
appear soon unless so forced by
of
expect
the
Congress
This
and
the
do
not
we
the longer term
as
ered
at
and
conse¬
rate
appears
2V2%, at least for 1949,
interest
low
rates
appear
likely for an extended period.
Nevertheless,
uncertainties
still
prevail in our social welfare type
of economy,
and threats from the
outside cannot be ignored. Under
existing circumstances, the best
safeguard against ajl contingencies
as
others.
carefully
supply of new fully tax-ex¬
securities that may come
well-rounded
a
maturity
dis¬
tribution, with the funds invested
quality under all cir¬
cumstances and with af high pref¬
in issues of
U.
for
erence
Government
S.
way.-J
is
that
to
nurtured
the
work
to
way
less.
They
capital to
cover.
And they have completely
disrupted the orderly conduct oS
day-to-day business.
our
The Depression
Now, nearly everybody in the
country seems to know that there's
a
depression moving in on us.
Everybody, that is, except
in
fixed
and
^currency
more
of
interest
our
philosohpy
contemplate.
The money and
capital markets will continue to
be dominated by the Federal debt
and controlled by the monetary
authorities.
The long-term gov¬
ernment
finding
has been truly
They have succeeded in.
running the public debt to astro¬
nomical heignts. They have wat¬
would be too unpleasant
quences
in
of
affairs.
our money
amazing.
have been
action
economic
ingenuity
spend
have
course
have driven investment
be
to
appears
nation's
Their
to
years,
of stargazers ami
groups
get
Conclusions
eco¬
nomic
the
rightfully be considered.
may
serious¬
are
standards of
our
se¬
these
long-haired
Washington.
What
spent 50
years
industry and by
through several
recessions.
•
now
wars,
of my life
have been
revolutions,
In the meantime, dur-
panics, depressions, inflations, and
ing the past 20 years, the profes¬
sional
economic
the
managers,
group to which I have the honor
of
belonging,
aside
in
nomic
and
have been pushed
discussions of eco¬
the
problems
left-wingers
by
Pied Piper politicians.
•
•
In
spite of this, I am going to
a few suggestions today for
arresting further movement into
depression. There are still some¬
make
things that
the $1 000
curities.
,
;-:'v
I have
in
...V
'
going to do about
are we
it?
few
a
bureaucrats
we
do to give us
$5,000 6-room
can
and
car
a
house of decent enough
American
young
quality for
GI
his
and
wife to raise their kids in.
The Thousand Dollar
What We Must Do
Here
Car—A Potential
Reality
(Continued from page 17)
And to complete the confusion
,
even
the monetary
system has not
escaped the meddlers.
subjected to
a
We've been
so-called "managed
that manages to do
nothing but keep us in utter dark¬
currency"
ness
concerning the true value of
savings and
our
The
business
tion.
so
The
structure
growth
of
sources
capital,
new
healthy
are
being
industry,
of
na¬
the
for
necessary
the
of
Of course,
get
the
it's rather difficult to
in
man
porations.
Bite
rates
As if this weren't enough, we've
of
of
our
the
street' con¬
are
But let's see what tax
doing to the standards
living of all
our
Rates
Tax
behind the
corporate taxes today amounts to
ters
before the
residual earnings
be made available to the peo¬
and
Anyone who is
fair way to be taxed right out
of business.
The bite of Federal
can
keel
even
slightly dry
in economic mat¬
ears
knovjs
Selling Frice
even
that
in
the
all
end
try
the
consumer.
When
the
we
/
the
possesses
facilites
industrial
best
known.
ever
natural
We
mon
in
sense
rich
are
skilled
resources,
workers, and experienced
agers. All we need is a little
making full
man¬
com¬
use
of
these advantages.
(2)
We
for
must
repudiate,
once
all, the philosophy of the
that
has
grown
up
irv
the past 20 years. Let's think and
talk more about what we can give
and
about
less
what
want
we
to
demand from the other fell'ow.
taxes must come out of the pocket
of
which
steps
again:
(1) We've got to quit yammer¬
ing, yapping, and griping about
how badly off we are. This count-
and
people.
five
are
take to get our economy on an
hand-out
What is left
competitive economy is in
a
38%
can
in
dried up.
cerned about the tax woes of cor¬
investments.
Tax
the
got to pay for it, too.
Hard
Work Needed
gov¬
so
(3) We must all take off our
slaps a heavy tax on a
corporation it is really taxing the coats and go to work again. No
man
who buys the corporation's economy has ever yet been able
to survive on a take-all and giveproduct.
This is because of the
simple economic fact of life that nothing basis, The Romansiearned
it is
all costs that enter into the manu¬
that to their
facture of
turies
investment and the risks involved.
Credit
portfolios
speaking,
are
only
obligations:
the income tax bracket of the in¬
subject to
well
watch
ple who put up their savings for
the business as a return for their
Iligh-Grade Issues Only
Banks
cars
cutting back
a
as
Certificates,
remaining 30% to 35%
the
invested
such
and
can, however, be justified where
the loan
portfolio is small and
bank-is hot
as
must
one
or
maturity
turn.
not
in cash
cash,
Treasury
prac¬
tice of
but
the
remaining 40%
deposits, one should
savings
and
a
need to
the
vestment characteristics with due
consideration for quality,
Investing for Return
Some institutions make
Where
.
the ratio
high, then the bonds held
they
but
upon
instruments, then the longer dated
holdings should be reduced.
If
the
holding of mortgages is
as
help
issues.
quality and yield spread in com¬
parison with the after tax yield on
partially tax-exempt U. S. Gov¬
is
Thus,
term.
bond
seem
uations in interest rates. Average
maturities can be something of a
longer
capital to risk assets. If mort¬
gages should increase, with the
higher return afforded by these
corporate
desirable for the larger bank
well, as they provide a good
hedge against the uncertain fluc-
something of a Federal
guarantee and may
prove
to be attractive to
bank investors
of
charge of the
portfolio has many other duties
to perform and where he
may not
these
support ex¬
well
that about
me
of
depend
ma¬
turities running from 1 to 10
years.
Again, in the case of the smaller
bank the
spaced maturities might
phasis
will
to
seem
bonds
curities.
rounded distribution with the
running from 1 to about
These obligations may
empt
■'
for
market
no
that
buy the
annually that it
Unrealistic tax rates
ly
for the investment of bank funds
60%
of
savings
deposits
can
properly be invested in mortgages
should
housing
sizable amount
very
the
and/or
penses, dividends and also provide
for
an
increase
in
capital re¬
national
new
a
both the credit of the issuers and
year or less but other govern¬
ment securities up to the 1952 call
date
can
provide
reasonable
Second, sufficient earnings
the
their
o
It would
million
fifty dollars
wonder
any
this
and
Investment of Savings Deposits
issues maturing
a
;
years
more
.
future
the
Government
interested
were
recognize,
years.
enjoy
save
into U. S. Savings bonds.
*
in
If
should
increase
may
turities
primarily for safety of principal
availability and for conven¬
solely in the interest rate,
funds probably would find
tax approaching
a
should
fully tax-exempt issues will be
coming into the market with ma¬
for
invested in short-term
maturities,
11 y
government
securities
with maturities of a
year or less.
mo s
$25,000
and pos¬
supply of bonds in the
40
ten
it
market cannot
attempted to direct the
liquidity
Fully tax-ex¬
of
higher rates can be
safely. The character of
community should be studied
many
maturities
poorer
annum
One
legislation
those
after
measured
to
under
earned
the
can
media
today, may not enjoy that status
tomorrow.
It is anticipated that
deposits
world
quality is an unknown factor.
Marketability is not always as¬
ists
mu¬
appreciably.
Municipal credits that are sound
and
funds, other
portion of savings
spread
at
yield
Administration.
the
this
inclined to
time
on
One
ahead
Despite
be
not
carefully, for
The
the
loan
to
appar¬
also, that the needs of states and
municipalities are great and that
some
posits from
of
should
meet the
scar¬
long
Is
the
tax-free Governments. Because of
the
hundred and
taxes!
is inadequate
with that on partially
brackets.
In
customers. There should be pro¬
vision for the possible loss of de¬
liquidity; liquidity to
call
Four
in
cases
recognize, of
course, that prices of fully taxexempt issues reflect, in many
cases, the tax exemption needed
by individuals in higher income
Al¬
deposits.
more
tax bracket between
53%.
localities, a shift of savings
deposits is taking place from com¬
mercial banks to the 2% savings
banks, and in some instances the
shift is going from
savings de¬
be
requirements
for
$50,000 per
sibly faced with
savings de¬
savings
the
as
investment
and
throughout
the
country
generally is upward and savings
usually grow in periods of good
business, local factors may affect
trend
the
as
able where the bank is in the in¬
be
deposits.
trend
bank
taxes, in most
marketability.
empt issues are especially desir¬
posits
the
suitable
come
similar
small
a
worth of direct and indirect taxes,*'
sured
and
Analysis of Savings Deposits
A
factor becomes
compensated
procedure.
made
issues
approaches and
be
the
to
these
provided the quality is high. The
maturity should not be over 15
years
and the bank should be
buys
cases
of
than for
compared
Fully
tax-exempt
state,
nicipal and authority issues
either sells
one
after
or,
come
vacation
the movement of deposit
On should consider the
upon
balances.
too
distinct bear¬
very
most
soon
Corporate bonds, generally
are not suitable for in¬
speaking,
vestment
33
needs?
Corporate Bonds
The
in
sup¬
assured,
no
such
support exists for any other longterm obligations.
when
Fully Tax-Exempts
accurately from time to time,
institutions,
par¬
ent.
able to guess the mar¬
some
well diversified. In
are
ma¬
the
the
government
seems
deposits.
city
profits
Some,
sup¬
relationship
Fluctuations in
date
security
perhaps,
a
bonds
While
long-term
present,
operating
aside in
indirect
the corresponding taxable
nessed
of
such circumstances. It requires the
use
of uncertain bond profits in
place
of
market.
of
port
porate issues and, as time goes on,
greater stability should be wit¬
be under
may
into the
(2293)
tially tax-exempt issues appear
likely to be less wide than for cor¬
of
conception
because
turities.
can
have
the
state
the
to
nor
and
constant
a
an
port
a
portfolio
is¬
premium
to be of little con¬
somewhat wider than that of
Deen
policy since it requires
guessing. It leaves the
The investment of demand de¬
posits will depend upon the com -
prove
taxable
The
if it is properly amort¬
ized.
While price fluctuations in
partially tax-exempt issues have
for a small portion of
portfolio, I do not believe in
policy of trading. This pro¬
the
the
with
taxes.
CHRONICLE
sequence
Except
no
lack
,
shculd
Trading No Investment Policy
ex¬
is
FINANCIAL
compared
after
sues
and the
the next
same as
the
primarily of U. S.
Government obligations.
'
Each portfolio must be
tailor-made job, for there is
a
when
policy is under¬
however,
management of the individual in¬
stitution.
a
taken,
&
COMMERCIAL
THE
In
addition, the investor is taxed
heavily on his dividends that
becoming more and more dif¬
ficult for industry to find the risk
capital
it
needs
for
healthy
growth.
ing
new
This difficulty of obtain¬
capital is reflected in the
prices
ridiculously low
on
of stocks
the New York Stock Exchange.
ernment
product must be cov¬
ered by its selling price.
The man who buys a car usu¬
ally
a
knows
that he
is
paying
a
Federal excise tax of about $90 or
He
more.
knows
that he
is
pay¬
ago,
the Spanish
During
seen
sorrow-*
several
later
and
recent
raids
cen¬
so
did
conquistadores.
years
various pressure
gan ize
on,
on
we
have
groups
ori¬
the United States
Treasury under the guise of sub¬
stabilization
payments,
sidies,
bonuses,
or
just plain: relief.
When corporations had to go to
These groups have not been lootb
price of the car."
the market for new security is¬
But
what
he
doesn't usually ing conquered races, as did the
sues, they were able to raise less think about is that there are a lot Romans and Spaniards. They have
than
one-fifth
of
their
funds
of other taxes he is paying, too. been looting themselves and all of
us.
through the sale of stocks in 1948. The income and
But the result will
be the
withholding taxes
ing
Shortage of Risk Capital
a
state or city sales
usually
about
runs
3%
tax that
of
the
-
The
other
four-fifths
had
to
be
raised through the sale of bonds.
In
1948
other words,
were
corporations in
able to raise only 19%
of
their outside
of
equity or risk capital compared
30% of 1947.
capital funds out
to the already low
This is
a
what high
pretty clear picture of
tax rates
are
doing to
befell the earlier looters
who make and
also a part of —political and economic chaos and
the car's selling price. So are the collapse.
It is certainly high time that we,
corporation taxes,
the property
who
have
spent years of hard
taxes, and all other taxes that are
imposed upon the manufacturing labor to build this great industry
paid
by
the
men
sell the vehicle
and distribution
day's
average
same
that
are
organization. To¬
in the lower
car
price brackets contains about $450
of
ours,
test
to
raise our voices in
"gimme" boys.
the
(Continued
on page
34)
pro¬
We
34
U
THE COMMERCIAL & FINANCIAL CHRONICLE
(2294)
:
Thursday, May 26, 1949
•
NASD members or not—local dealers by the state arid national
dealers-by the U. Sr Government; There should be a 'uniform blue
sky law arrived at by conference of State Blue Sky commissioners.
Would take time. - 4
J •• •
'
*
1
" V
are
The
$1,000 Dollar Car What Other Dealers Say About
-A Potential Reality
NASD and Its Policies
(Continued from
33)
the
,
^•
.:
page
made
and honest
know that this country was
great
work
hard
by
sweat.
And
that
that
know
we
(Continued from page 3)
see
resume the tactics that resulted in SEC
that present rules have hurt our business.*
is the only way it can stay great.
I repeat, it is time that we all
take off
again—the guys in blue jeans and
the guys in white collars.
Costs
brought
a
a
of
goods
short
with
Records should
at any
a
time but
and the $5,000 home
rates at their present
level.
the
Sure,
public
convinced
more
and
have to
we
But I
debt.
that
the
off
pay
quite
to get
am
way,
for servicing the debt
money
paying for essential govern¬
ment
is
services
through
lower
tax rates.
successful
Every
familiar
with
merchant
technique
the
is
of
lowering the rate of his return to
get a higher return in total dol¬
lars.
The same principle applies
to
At
rates.
tax
present rates,
taxes are killing the goose that
lays the golden eggs.
Last year's investment figures
tell
the
is to
attract the capital necessary for it
to
grow
and perpetuate itself,
we've got to lower the tax rates
that
discouraging
are
new
invest¬
ment.
And if
purchases are
that will main¬
consumer
to stay at a level
tain
and improve our standards
living, we've got to lower the
tax rates that are inflating the
prices of goods.
of
Controls and Laws of Economics
(5)
We've
economy
also
After
learned
trol
the
20
legislation
years
of
ex¬
should by now
you can't con¬
we
that
economics
of
laws
legislate
our
of other meddling by the
planners.
perimentation,
have
rid
to
got
than
any more
by
you can
the law of gravity.
away
We must demand that the gov¬
ernment
rates
monkeying
generally
and
around
interest
pegging
quit
credit structure.
with the
Let's challenge the government to
release American business, bank¬
ing, and
industry from
lam
of
ness
must get out
controls.
American
interference
of
the bed¬
busi¬
be
kept
make
flow
that
the
ment start
of
gold
moving back to the use
in our monetary affairs.
very
built
on a
paper
base of un¬
stable money.
sum
your
in the past 20 years
have imported
we
a
lot of crack¬
pot methods of running
our econ¬
We have seen where these
omy.
methods
have
led
neighbors
our
.abroad, and we can see pretty
clearly where they are leading us
There is still a way for us to
duck the
to
move
the
from
we
our
have come to expect
American, system,
I
am
the economic stargazers
meddling planners. It means
out
sound
kets.
It
in
free
means
structure and
interest
and
money
established
rates
money
mar¬
reasonable
a
common
sense
returning herewith
by law, limit the profit
your
In
short,
American
let's
way
go
surest way to gradually do away
This, of course, is the
American free enterprise
our
^
..
.
and
You may not know it,
tax
.
.
'
fpur principals,
back 30. years
we handle everything from U. S. Government and high-grade
exempts to "venture" stocks.
We believe our reputation in the
[
community is good.
questions, we feel there is just enough of the "have
you stopped beating your wife" variety among them to Tendet them
useless in a serious effort to poll the NASD membership. Yes and no
As to your
TOWN
.
,,
<
.
Personally—and it must be personal, because the fellow who sits
next to me and who talks over all problems with me, as I.do with
questionnaire regarding the NASD,
him—is Vice-President of the NASD.
public, in which I would have a>
many issues that have been sold in
syndicates at mark-ups of from 6 to 15%—but yet frowns or subjects:
me
multiplied bureaus made me unsympathetic if not antagonistic.
My conclusion now is that the results are good. ;
X:
I am a Republican and do not like bureaucracy. Mr.
is even
more so.
Our theory of good government under the American system
not "vox populi, vox deii"; but that competent and interested
representation which knows its way around, elected by the people,
and functioning through proper organization does the most intelli¬
is
That, as we see it, was what the founders of our govern¬
In a sense! they feafbiE "democracy'^ so-called. •
The answer then, as I see it, is to keep the NASD, but make sure
that our representation ; on its board is high grade, competent and
interested. That will assure an even keel and good results.
1
gent job.
ment had in mind.
PORTLAND,
ORE.
i!v; ,4- V f
Have always been sympathetic toward the original aims of SEC.
See no reason why we should be called upon to support-NASD- as 'a
'
self-regulatory organization.
securities which I have every reason to feel are sound purchases.
•
to considerable inconvenience if I use a mark-up in excess of 5%
on
He has been active in its work
And 1 have had the opportunity to appraise his efforts as
they reflect into the working organization.
When the Maloney Act
was passed and NASD was set up, I must admit my. natural dislike
for years.
of
Tucker to the
write-up of 10%—and there are
;
ORLEANS, LA.
In the first place ours is a small firm, composed of
three "cubs" and three, girls. Our experience goes
to just what extent. However, in regard to this situation, it seems
highly inconsistent that the NASD will permit me, as a dealer,,
as
more
state socialism for the entire country.*
more
me
stock such
once
is, but the industry.must-haye
some self-regulation and this is better than having none.
The-SEjC
and NASD do overlap;
!''/
V
t
ST. PAUL, MINN.
'
that this rule does restrict the market but it is somewhat difficult to
a
TOWN
at
The NASD is hot perfect, no one
by the SEC and until a complaint has been"
registered with the NASD, I see no reason for the duplication of
effort.
Under the Constitution and Bill of Rights, I dc not believe
anyone has the legal power to sit in judgment and act as an inves¬
tigator, prosecutor, judge and jury.
Regarding Question No. 5, it seems to me that smacks very much
of monopoly and restraint of trade.
As to the effect of the 5% mark¬
up rule on the market for securities of smaller corporations, I feel:
to
trend
the
reverse
On the other
hand, the NASD could be
force for considerable
a
good in the investment industry if it would devote a reasonable!
portion of its efforts to the education of the public regarding the func5
tion of the investment dealer or investment banker.
However, I ami
LOS ANGELES,
Do not approve of any
The
a
It
seems
and in
to
me
I cannot see
doing the
a
lot of good for this busi¬
things?
have
never
been
me
preceded the cre¬
the industry
infinitely better to
ation of the 5% spread. The problems which confronted
pattern
as
it
CITY
5% and have found each
basis. No fixed set rules-can
!.. !i.v-.!;.v/v
to., make
NEW
was
to what most reputable houses were doing, and to
present it to dealers as a guide, than to subject the
entire industry to
YORK
CITY
and is
no
,
"excrescence on the face of the
unnecessary.
The SEC really does a good job and there
over-lapping functions.
The NASD is, to me, an
NEW
concerning 5%
To properly appraise this entire subject, dealers should
at that time were 20% and 30% spreads, and
YORK
able
apply.
be
files from
::
opinion that the. NASD is an organization in restraint of
finance the suit, I'll take it up to the Supreme Court.
FRANCISCO, CALIF.
your
CITY
transaction has to be done on a personal
for more and more power. However,,
the justification for NASD at all.
Why have two-bodies*
in
YORK
If you'll
protection of the investor, although like all such bodies
same
~
NEW
that the SEC has done
V
inasmuch as the SEC has the - sarrfe
added burden in the way. of a. TAX. i Just
use,
1
regulation.*
You have correspondence
a
no
It is simply an
It is my
FRANCISCO, CALIF.
SAN
provide
of
NEW
trade.
CALIF.
is
"big stick."
We
SAN
NASD
authority.
would be asking too much.r
afraid anything as constructive as that
PENNSYLVANIA TOWN
SMALL
YORK
earth;"
should
CITY
the NASD because I do not believe in being
compelled to pay for the existence of an organization which is neither
representative of the majority over-the-counter dealers nor does it
represent the best interests of the majority.
Am not in favor of the
abolition of the Maloney Act insofar as the SEC is concerned. .Am
in favor of the SEC and the continuance of the Act only to the extent
Resigned
from
provisions of the SEC Aet. This iy not exactly pertinent
questionnaire; however, I believe the solution to the poor
in the securities business is not for the large stock exchange
of the fraud
policing by the SEC, which was then imminent. You have been ex¬
tremely diligent in trying to help the industry by publishing repeated
articles on this matter, but without these conditions which you criti¬
to
cize, the-industry would be worse off today.
obtain their business, but for
SMALL
NEVADA
,
TOWN
Why stop at the NASD? The whole damn SEC should be dumped
with it.
\
NEW YORK
an
discount of
20%
common
SEC to take 15% or
original distribution, giving your partici¬
pating dealers 10% to 12%,
the market there is
no
After the deal is sold, to help protect,
incentive for the dealer to aid by selling the
with
only "5% mark-up."
The Result!
Your "after-market"
stock
CITY
underwriter you are authorized by the
His salesmen will not cooperate.
down.
The rest of the dealers
goes
complain because their customers complain and there you are
a mess.
Everybody is in a hell of a mess.
in
a
hell of
your
business
over-the-counter houses in order to
them to educate the public as to quality
and knowledge of the business instead of quantity and plain order
taking. I think you are the only organization that has done anything
to improve conditions for the over-the-counter brokers and wish to
commend you for it.
Too much of the education of the public is
being left to the over-the-counier brokers who in most instances
presonally see prospective investors and offer securities of growing
American enterprises.
In many instances these same prospects thep
go to the stock exchange houses: to buy or sell due to their lower
commission rate, but lacking the thorough knowledge of the par¬
ticular industry being sold.
The customer then loses hundreds of
dollars in principal while he saves a paltry few dollars in commission.
Having been a customers' broker with stock exchange houses and in
the business for over 20 years I know whereof I speak.*
v
• M
house
to
try
to undersell the
tax
back to the
running our
country.
to
NEW
checked periodically
NEW
SEATTLE, WASH.
voluntary basis and in our opinion all
dealers in securities should be examined regardless of whether they
NASD should be put on a
of
have
system and substitute for it,
/ ;
:C;
and
mark-up by the securities dealers.
or
ILLINOIS
with
regard to Question No. 3, it seems to me that this is purely an
unnecessary duplication of the powers of the SEC.
All dealers are
to sell
oppose.
you
sorry
of citizens.
In
say
am
time, increasingly favoring the socialistic non-producer type
same
questionnaires disclosing the spreads on principal transactions or
the service charges on agency transactions until such time as it car*
pub¬
lic expenditures.
/
now
out
As
sweat for all of us. It means chuck¬
and
May I
New
In regard to question No. 2 which I have marked "no" I don't
believe the NASD should have the right of forcing its members to fill
as
Let's try that way this time.<
It means hard work and honest
I
will not do.
$5,000 home.
ing
old
an
destructive type of criticism.
symbolized by the $1,000 car and
the
requested.
as
am
SMALL ILLINOIS
depression that threatens
in on us and to obtain
things
I
the effect that
you are being subsidized in this campaign by various organizations
on the outer fringes of the industry, and whose efforts in the past
have been proven constructive neither from the standpoint of repu¬
table investment dealers nor the investing public.
spread, etc.
up,
comment.
have the full benefit of facts and conditions which
Summary
To
has been filled in
pertinent
You just can't have a stable econ¬
omy
our standing. - Incidentally. I
this one piece of good legisla¬
administration would have had to pass
overdue and any
which is wittingly or
unwittingly, penalizing and piling on increasing burdens upon the
back of the private enterpriser and producer, which is resulting in
the decline of their strength and numbers progressively while :at the
it has a tendency to reach out
govern¬
was
SMALL
but there is considerable talk around the country to
ness
demand
a
persist in
American
the
to
It
something like it.
examination could be made
an
In view of the fact that your ideas are not at all in agreement with
the leading firms in the industry, it is hard to understand why you
production, distribu¬
tion, and the use of money and
credit in the production of goods
their
that
Yorker, and
engaged in the security business with Kissel, Kinnicutt & Company
beginning in 1909.
For many years now, I have maintained an in¬
vestment business in Denver.
Being situated as you are in New York
City, you may not be aware of the fact that your continued attacks
on the SEC and
the NASD are regarded with amusement through¬
out the rest of the country.
The question has often been asked, and
is being asked every day, why you, as head of an old and conservative
financial publication, should suddenly be espousing the cause of the
cheap mining and oil stock brokers.
It certainly is adding nothing
to the reputation of. your publication, nor to that of you personally.
processes of
nnd
so
tion.
We
of this snake pit
with
the
daily
consumer.
It is
still suffering from the injury to
are
tremendous amount of time is required to make up
schedule of transactions over a period of two or three months.
industry
If
story.
.
a
The questionnaire
car
tax
CALIF.
SMALL COLORADO TOWN
Demand Lower Tax Rates
$1,000
much in favor of the Securities Act and the NASD.
am
I do not agree with your opposition. I
am afraid you are influenced by dealers who do not believe iri- the
fair trade policies of the association.
Certainly we had' plenty of
racketeering in the business before the SEC act was passed and We
DENVER, COLO.
(4) We must demand lower tax
rates.
We are not going to get
the
I
great help to our business.
don't give the New Dealers credit for
honest day's wage.
an
V
.
ORE.
NASD.
80% of the securities business firms."
of work
measure
high hourly rates. The only
way we can build the $1,000 car
is ,with an honest day's work at
for
and
Please explain how it is possible to be in 1his business and not
member of NASD?
I note they say their membership "includes
and services cannot be
down
with a 40-hour
week and
be
.
PORTLAND,
a
LOS ANGELES,
coats and go to work
our
Approve your continuing interest.
<
dealers would
We can't
TACOMA, WASH.
*Commented
anonymously.
While bulk of
our
YORK
business is
on
CITY
commission basis, we object to
"over-regulation" especially when conducted
*Commented anonymously.
by so many different
•Volume 169
aueucies;y ; This
all
brokers
dealers
on
transactions
could
be
ruled
belonged
that
this
to
be
may
°* ^or*d
'
yv'ith totalitarianism.
questionable
YORK
We file
no
Keep
up
"Chronicle."'*
the
.
good
NEW
your
CITY
The 5%
tions
in
rule is generally
rule.*
any
YORK
fair.
regulate
of the
if any
*
'
and
be
not need
SMALL
I have been
CITY
since
Congratulations
on your
'
'
to
I
regu¬
out
have
a
CITY
think that the securities busi¬
we
the
chanceon. being called on to show,our profits. Our opinion
exchange firms would not mind to see the latter put in
security dealers that would
taken off.
Look
Human nature is the
at
what
same
and
not
hesitate to
apply
happened when OPA
economics.
I
come
into
survive
with
business with
a
the
little to look forward to
as
I do not see how
best
look
to
for
a
a
few
security business in
a
months
well
,
antee
of
deposits.
investment.*
That
is
kind
the
■■■>' v.,"
-
risk
of
/'•'■
capital
available for
'
-
.■
-v.-'
CHICAGO, ILL.
securities.
Different
what
$1.00
are
or
cannot be set for different qualities
on securities purchased against
that
if
you
don't win
practically all washed up.—(Signed) In business in Chicago
years, member Chicago Stock Exchange and afraid to sign firm
are
CHICAGO.
don't
they
believe
in
exorbitant
is
the
''penny'' mining stocks,
or stocks: selling
investment dealer^ could
On the other hand, if a
the
main
"Commercial and
Financial
Chronicle"-has
holding them in line because, the
were
let go I think most of
way
been
doing
a
they started out, if
us
"
SMALL FLORIDA
There is
the
•the
no
question in
elimination
small
municipal
of
the
firms
our
small
are
CITY
mind that
we are
gradually going to
investment dealer firm.
Already
practically out of
business,
•those that have turned to selling investment trust shares.
except
In order
•to receive commission in investment
lor the dealer to
we
feel
sure
of nasd.
trusts, it has become necessary
belong to the NASD.
This is only one reason why
that all
municipal dealers would favor
\
the abolishment
are
ILL.
ST.
a
I cannot
see any
appreciative of
very
of
many
you success.
your
efforts in behalf of the small
IOWA TOWN
dealer
improving the position of
the
small
SMALL
Can
see
no
benefit either to the
public
or
dealers from NASD.
High dues are building up a surplus which can only lead to extrava¬
One does not dare to resign, it's almost a form of blackmail.
gance.
WICHITA,
of
Involved
the
Federal
in
issue
current
of
Policy," Vol.
XVI,
Nos.
(March-April, 1949)—Tax In¬
stitute, Inc., 150 Nassau Street,
3-4
New
York
7,
N.
prices
Y.—Paper—250
on
quantity
or¬
Colombia Gas System ?
Stock Offered at $10
First Boston
Mgr.
directors of The
Columbia
A:
as
by
following comment: Question No. 1—There
able limit.
SEC
which
have
should be
some
reason¬
Five percent may be a
1,345,300
shares
addi¬
of
There will be mailed
of
record
to stock¬
close of
at the
business May 24 transferable sub¬
scription warrants giving them the
primary right to subscribe at the
rate of 1 share for each 10 shares
and
an
subscribe
taken
The
on
under
additional
to
the
the
privilege
shares
not
primary rights.
subscription offer will expire
June
14.
little drastic.
Might well be in¬
The proceeds from the sale of
creased a little. No. 2—No.
No. 3—Yes. Thirty years of experience
the stock will be used to finance
indicates that such an examination is a good preventive of abuses
part of the System's 1949 con¬
and is in public interest.
It is as valuable in the securities business
struction program.
In March the
as it is in the
banking business.
No. 4—Having served on District
Committee and on National Advisory Committtee, I am convinced corporation sold $20,000,000 of 3%
debentures and plans to sell $11,that it is the most satisfactory method, and is not unlike banking
departments control over banks.
The accused has recourse to the 500,000 additional debentures later
in the year to complete the fi¬
Courts if he thinks the penalty is unjustified.
No. 5—'This rule is
justified for the reason that membership does have value and there nancing required for this year's
is
no
reason
why nonmembers should be given the benefits without
of the costs and responsibilities. No. 6—The Maloney
should not be repealed, but probably should be amended and
construction.
any
as
The First Boston Corp. is acting,
the manager of a nationwide
group
of
securities
who
obtaining
for
selling
dealers
will be compensated for
:
but
fair analysis of the
subscriptions ): and
underlying philosophy of
neces¬
the
shares.
only because it is impossible to enjoy fair trade among our fellow
made
the
ing to its stockholders.
to
Your fearless
Investment Fund
System, Inc., have fixed a
subscription price of $10 a share
held
KAN.
Since the questions on your printed form require a YES or NO
answer it is impossible to reflect one's real opinion. Therefore, the
very
existence of NASD has
our
dealers and to sell investment funds.
complete accord.
How
can
we
help?
We
belong
shares
the
for
new
stock
to
new
The- arrangements
compensating
participating
dealers follow substantially those
on page
36)
its
stock
offer made in October, 1948,
Commented anonymously.
(Continued
of
stockholders.
used
*
Bureau
Research,
IncM
1819
Broadway, New York 23, N. Y.—
Cloth-$6.00.
holders
IOWA TOWN
liberalized.
•
advantage in NASD except membership is
Commented anonymously.
11—National
Economic
be the objective of NASD.
of
improbable the issue of worthless securities.*
*
Studies in Income and WealthVolume
tional stock the company is offer¬
and
PETERSBURG, FLA.
things accomplished
Commerce, Inc., 18
Street, New York 17,
Y.—Paper.
for
Elimination
Act
PETERSBURG, FLA.
in order to sell certain issues such
approve
of
41st
The
WICHITA, KAN.
ST.
I
N.
profits but I do
the N. Y. Stock Exchange firms seems to
assuming
;y\-• ''v.--.--
Splendid work Herb—wish
sary
East
BEND, IND.
SMALL
would be out of business today,
•with the exception of the choice few.
•see
States Council of the International
Gas
We
thing to be taken into consideration.
This
thing of buying a security at $30.00 and unloading it on a customer
$40.00 is a practice that should be stopped—it was very prevalent
itr the old days.
I feel that NASD is doing some good work.
Also, I
tine job
planning necessary for the end¬
ing of the Marshall Plan—United
(special
ders).
Nice situation!*
name.
'at
think
Specter of 1953, The—Discussion
Issues
We admire your fight for the small dealer and
we
23
I
successfully operate on a 3% mark-up.
dealer is selling securities for
$20.00, $50.00, and $100.00, and he
took my profit greater than
5%, I think he should be put out of
business.
The investing public is entitled to fair
dealing at all times,
and
Union, 1802 Massachusetts Ave¬
nue, Lexington 73, Mass.—Paper
250.
"Tax
dealers.*
any
Owners
The—Tool
v
ILL.
connected -with the security business is entitled to
self-government.*
termed
High
Continued
for
Outlook
Employment,
Budget—In
SOUTH
$2.00, I do not believe
:
percentages
CHICAGO,
DENVER, COLO.
-Ob
16, N. Y.—Cloth—$3.50.
Local papers carry a large
A hard and_ fast percentage
DENVER, COLO.
in
A
—
Counsel—Ben¬
Graham—Harper & Broth¬
49 East 33d Street, New York
ers,
j
believe
The
Investors,
Practical
of
jamin
amount of adver
tising of the Home and Loan Companies, stressing the Federal Guar-
*
-under
Intelligent
Book
in
most peculiar position if there is an economic
need for the business.
*
We
N. Y.
business at this
^
them?*
York 15,
Chamber
was
'
shillings and pence—Foreign
that they were - dealing-with responsible people.
The necessity to
deliver a prospectus and the restrictions on advertising place the
in all business.
LITTLE ROCK; ARK.
,•
•
,
ing two tables showing decimal
equivalents of common fractions
I had
think everyone
fair profit or
wage.
And the time and effort one devotes to a situation should be
'I -think 5% is enough to make on an outstanding security; new
considered before NASD or any other regulatory body sets an arbi¬
issue is something else.
4.
;
" ' '
" " * '■ *
v
FA';"'
trary mark-up.
The industry functioned for years before NASD
'■
and will continue years alter they are gone.
LOS ANGELES, CALIF.
^The solution) Let
the Investment fraternity run its own business.*
What does NASD do for the
industry to justify the dues paid to
;
throughout the world and contain¬
His
I did not have the heart
orders and those.from inventories.*
is that stock
all the traffic would bear.
business
field of
of
quotations
143
of
>
• We
do not like to be regulated.
We also think NASD is for
the better; something •
worse, for instance, a disclosure of profits/
Regulation is here to stay and..we had better suffer the ills we have
are
the
Harvard in June.
my
retailing of securities.
can
listing
the currencies of various countries
have arrived at this point largely
due to legislation and the effort to make people feel that in the
purchase of securities they were more likely to be defrauded than
of
There
keep the records made that venture unprofitable.
ask him to
existing
BIRMINGHAM; ALA.
effect.
a dealer
the largest
usual $2.50
a
-About three years ago, I employed a salesman
I found the time it took to supervise
in
to
Coyle
Foreign Exchange Quotations—
Folder
and
experience.
has been
Challenge
Cushman
Department, Manufacturers Trust
Company, 55 Broad Street, New
TOWN
$5.00.
I did not pile up much wealth.
In 1930
and found it necessary to go into business for
one
laws and regulations.
a
longer need it.*
who will receive his Ph.D. from
as
West—David
own
some
to
the
Cloth—$3.00.
salesman with
allowed per bond the
was
Economic
and
Harper & Brothers, 49 East 33rd
New
York
16, N. Y.—
the large state universities as an instructor.
of the tightest monopolies in American
Industry, a condition which is the result, to some extent, of
thap take
son
1920s I
Reckoning—The Politi¬
of
Day
cal
Street,
the black out of several years. We
°;
biggest troubles with the Securities Industry of today
is. that it is over-regulated and hide-bound
by red tape with detriconsequences to both dealers, corporations and customers.
Wethink this is true not only because of NASD
regulations, but also
JSEC regulations and policies.
We particularly object to the NASD
lule prohibiting discount to
nonmembers, as we are sure this defi¬
nitely restricts distribution of securities.: We feel that the NASD
should be continued, but we believe
its regulations and policies
y
forced
am
business in shape when this time arrived to take
him into business with me.
He has accepted a position in one of
level
Furthermore,
of
my
hoped to have
MOBILE, ALA.
today, is
I
ILLINOIS
commissions
get out.
or
education
,
too many laws and regulations in the
security business.
Competition and the reputation of
reputable dealers should be given
more
opportunity to assert themselves.*
ness, as set up
on
his work and
CITY
efforts to change and improve this situa¬
;
with
miximum
a
was
myself
are
should be modified.
to
engaged in the security business since 1922,
During the
who has had
NEW YORK
There
1935.
underwriters,
country
NEW YORK
tion—Good Luck.
power
now be the direction in which it should be
pointed. We do
perpetual policeman standing every day beside our desks.
a
excep¬
country, subject to final review of all their acts and
decisions, by the proper judicial courts of the
•
It is definitely
and
to pay in order
Surely hope your effort will be effective in this
business.
in
yearly dues.
pay
This function has been completed—we no
such review is asked for.
r
'
disposing
business, consequently the NASD contributes absolutely
our
this should
approve and
lations
in
As a trade association, to promote a better understanding of our
business, to give us better selling campaigns and ideas, to show us how
to do a better job, to give us sales schools and
conventions, to bring
us together to
work for a higher professional standard by mutual
cooperation and suggestion, it (NASD) has completely failed.
And
believe in the SEC and think it is their
province
and duty only, to
regulate and supervise the entire Securities busi¬
ness
entirely
......
NEW YORK
I
is
respect.
CITY
However, there must be
.
:
.
securities
The amount of time and effort
necessary
a lot more than 5%.
ROCKFORI), ILL.
non-members, and this is not American, aside from being unr?!1 SJ: wil* never j°ir> an organization which has to use
HAMM^R-OVER-HEAD methods to its members vs.
non-members
to stay in existence.
^
NEW
'K'./.
I feel that the NASD should be totally abolished.
restraint of trade.
The SEC has- the authority
to
a detriment to the business through
and,has created animosity amongst the Dealers, mem¬
;-;.V
:
We
low-priced stocks is worth
nothing for which I
o'r\1G -^alQney Act has I been
bers and
unfair.
unlisted
customers.
our
some
with
becoming extinct.*
NASD, actions
V
to sell
in
appreciate
CITY
YORK
is
SMALL FLORIDA CITY
Under present rules and
regulations of both the SEC and NASD
Securities business is fast
NEW
a
YORK
experience
for the NASD.
dealers
rule
regulations
of them for
CITY
work—the
5%
MIAMI, FLA.
to do away
financial report to the SEC
reason
NEW YORK
fewer
Our
CITY
annual
an
see
the
35
(2295)
are for
free enterprise.
by the Federal Government the better.
America's greatness was built by free men, not Govrnment bureaus.*
The
}r^aY * (U. S. Army) I fought
at considerable expense and
kr
MIAMI, FLA.
think
We
whereoy. an>
between brokers
organization
upon by the ruling committee, we could see some
organization's existence.
for the
NEW
the
FINANCIAL CHRONICLE
is>6ur-rea^obi-^for vmotT?be^
and
rules
reason
COMMERCIAL- &
THE
Number 4806
which
[was
by
Columbia
in
heavily oversubscribed.
What Other Dealers Say About
choice
r
•
of preventing
We do not take 5% spreads but
not believe such maximum should be stated or inferred, as
dealers have situations where even 5% is not adequate for
We
in
are
of
favor
do
many
only to' the extent
controls
operations.
dishonest and predatory
we
ing
KENTUCKY TOWN
SMALL
the work done.
SHREVEPORT, LA.
I-think
the
facts
,
„
.
Whole campaign is biased and refuses to look at
that .5% is not an ironclad rule. (2) Most dealers'
your
(1)
transactions
at
are
The NASD is
(3)
spreads.
5%
than
far less
operated by the' mfe'rhbersr (4) Without NASD government
would have to sot up-some other regulating means.
*■
;-W
the SEC;
-
NEW ORLEANS, LA.
Please discontinue our
subscription to the "Chronicle."
We are
NASD, which we consider a meri¬
responsible for much good in the
business Ninety percent of your "yes" dealers are objecting purely
because of cost of dues, and give no serious study to the question:
''Shall we permit the crooks to come back in the business or not?"
sick of your mud-slinging at the
torious dealer organization and
TOPEKA,
We
but
much against it and
as
are
figures
everything it stands for as we were against the "Gestapo." It's rotten
is responsible for much of the trouble
with the securities business today. The man who conceived the NASD
from one end to the other and
to ycur
tunities
NEW
their
in
with
dealings
Character
otheis.
-
becoming
aged
about the
more
carefully
purchasing
higher during the first
quarter of 1949 than in the first
quarter of 1948./V
1'
discour¬
too
look
future let's
the
at
power.
details
on
Real Purchasing Power
6% Above
Year Affo; 53 % Ove* 1940
,
The
other
creased
1949
work. A good example of how
lation
from
in
changes
tween
the
analysis
labor
January
and
ing
words
above
American
the
the
be¬
year
(table I).
before
the
entered
we
1949 </o
Real
Disposable
In
come
1949
Increase
1st Quarter
1st Quarter
Over 1940
$75.7
$183.9
$197.0
100
168
170
70
$116.0
53
Index
160%
has
what
table
happened
illustrates
$109.4
ing power in 1920
business ethically, there will be no need
the Maloney Act.*
as
;•=.
.
•
.
.
tition of the
investigators will be held in strict
-such a guarantee. <4), NO.
It can
that the information gained by the
at
confidence and
the
there never can
only happen in the SEC, NASD. RUSSIA and its satelite countries.
It certainly prevents a more thorough distribution but it is
only reason the NASD exists.
If that restriction were to be
level
a
almost 2 and %
immediate
income.
consumer
f5) NO.
prides has
the
2%
with it could earn enough on their own
the minimum dues and that goes for the SEC too.
whether anyone connected
account to pay
in
The unsophistacted investor should be protected from the
V*
dealer.
lous
All
dealers
handling
the
public's
banks and insurance
We have
to
to
a
never taken more than 3 points on a
security selling
However, I do think security dealers should be subject
"surprise" audit just to keep unscrupulous persons out of the
security business.
'
NEW HAVEN,
little
practical
a
bearing
they
as
real
on
standpoint,
operations.
our
-
r
CONN.
the
5%
With
the
has
had
competitive
very
conditions
find it difficult to get a gross mark-up of 2% a good
Our principal objection to the NASD is the added
which is put upon us to support an organization which has
are, we
of
what
under
per
no
that
the
it
had
been
started
war
real
power.
substantial
*
as
you
doubtless know.
(Spec:9.l
Chronicle)
Financial
'Special
•
PASADENA, CALIF. — George
S. Hatch is now with E. F. Hut&
Co.,
~
Avenue.'
Garfield
North
10
.
WEST
Melvin
to
N.
Waddell
The-Financial
PALM
of
Middle
SAN
The
Financial
Chront<-lO
&
Pazol
is with
Herrick,
Reed, Inc.
V5——
Lowest
%_
_
staff
FRANCISCO,
CALIF.—
been added to
Building.
of Johnson
&
,
Co., Russ
:~
for -22%
1941
increase
the
average
among
%
Increase in
_
Real Money
Power 1941 to 1947
Income
14.7
,
.
19%
'
61%
17
36
13.2
24
69.1%
16.2 '
100.0%
100%
:
22
100%
100.0%
Money
1949 "7/
•r
Soecial
to
The
After Taxes
(Billions)
The
increase
since
come
staff
&
of
in
amount
1940
in¬
consumer
before1" the* war-takes
greater significance
on
needed
basic
when the
maintain
to-
standard
of
a
living at
present prices is taken out of the
basic
surplus
or
living costs becomes
discretionary spending
available
power
standard
of
the
improve
to
living
add
to
or
to
savings.
In
the first quarter of
.
surplus
income
of
1949 the
individuals
discretionary spend¬
saving has been at a level
or
the highest
times
levels. It is
war
pre¬
above
11%
even
the high level of the first-quarter
of 1948. This is after taking full
of the higher tax level
allowing for a 70% increase
account
1940 in
prices
consumer
basic living
ap¬
costs
living for food, clothing and shel¬
ter for our whole population. This
leaves a balance of over $103 bil¬
of
lion
income
current
available
for
discretionary spending or sav¬
ing in 1949 compared with only
$26.5 billion in 1940, and $92.6
billion in- the first-quarter. This
does not include any -of the huge
backlog of savings that have ac¬
cumulated
in
the
nine
last
years
(table III).
The market potentialities of this
fourfold
increase
spending
fully
discretionary
in
have
power
recognized.
been
not
discretion¬
The
spending power alone
ary
is
now
greater than the total national in¬
in 1940. How
come
will
consumers
apply this vast pool of new dis¬
cretionary spending power is a
matter
their
of
discretion.
own
savings, into increasing the quan¬
tity or quality of their basic living
items of food, clothing or shelter
or into additional things they may
desire which they never have had
before. Since this $103.2 billion is
discretionary spending power be¬
yond the things considered basic
necessities in 1940, it represents
opportunity for every
services, sav¬
ings plans or investments to in¬
an
open
of goods and
of this
and guide
purchasing.
the
discretion
.
■
.
vr
The Backlog of Individual Savings
Is Three Times
In
Greater Than
1940
It is estimated that at the end of
the aggregate of individual
savings, totaling about $207.0 bil¬
lion, was three times greater than
the total in 1940 of $68.4 billion.
This huge backlog of savings must
be taken into account in analyz¬
ing consumer purchasing .* power
ing
1948
1949
1st Quarter
1st Quarter
Increase
Oyer 1940
total
of
is the
half
$183.9
$197.0
.
form of potential buy¬
available at the discre¬
a
power
The present
consumer.
$207.0
billion irn;savings
equivalent of two and
times
come
$75.7
1
>
for
the
of 1940.;
V
/
one^
national
total
in-*
^
.
160%
Consumer
Living Costs to Maintain
Low
Living for
Debt
-
in Relation
Is
Unusually
to Income
and
-
Financial
*
Clothing
(Billions)
&
Savings
Shelter
49.2
91.3
93.3
91
been
Co., 1404 Franklin Street.
The
credit
Surplus
Income
for
tionary Spending
or
Discre¬
Personal
Savings
S26.5
(Billions)--
of
consumer
1947
in terms of dollars individual debt
Saving
(Billions)
expansion
during
and 1948 had.
been viewed with alarm, because
Chronicle)
added to the
Stephenson. Leydecker
has
1940
Disposable Personal Income
Basic
OAKLAND, CALIF.—James F.
Keresey
•'
added
(fable II).
Discretionary
Spending Is 4 Times 1940
V
tion of the
III
.
families *'
of
of -the
;
Surplus
the top
Sh. of Added
Real Purchasing
1947
15.9
■70.9%
real
while
1948
40
_
Food,
Leydecker Adds
••
Fred J. Allgeo has
the
1947
20% of families to 41.6% average
20
40%
-
1940 Standard of
With Johnson & Co.
to
18.3%
Income After Taxes
Families
%
Highest
FLA.—
Stephenson,
(Special
and
1941
changes ranged from an
a
in
.
fluence
Chronicle)
BEACH,
-
.
been
groups
growth in real purchasing power
after Federal income tax and price
With Herrick, Waddell Co.
!
ton
has
income
accounting
Share of Total Money
7r Of
Total
Hutton & Co.
to The
power
all
in
Between
increase
lower, two-fifths
accounted
groups.
TABLE
I
the
total
income.i after- taxes
money
seller
I.
in
they represented about
of the
since it is
Commented anonymously.
With E. F.
buying
after
lowest %
the increase
TABLE II
purpose
has been well handled here in Connecticut
60%
for
the
heavier income taxes in the upper
capita basis the real purchas¬
any
of protecting the interests of the industry from the activities
of the SEC rather than acting as a front for that organization.
It is
our feeling that
the State Bank Commissioners should be charged
with the policing of the industry in the various states.
The situation
but
families,
even
1913
tangible benefits that we can ascertain.
It would seem
association of security dealers should be for the
has been the most
war
the
on
real purchasing
pronounced among the
of
in
Purchasing
by All Classes
that has taken place since
in
and
not exist after
Real
in
Shared
before the
increase
They could put it into additional
The increase in
power
purchasing power
the entire population was 1%
expense
us
our
War
did
that
Power
In 1920 the real
before
to
World
after
real
prewar
after correction for prices
stabilizing factor of real im¬
Increase
increase in real pur¬
existed
a
in the
36%
of
reserve
World War I.
chasing power since prewar is in
sharp contrast with the condition
deal of the time.
provided
of
capita purchasing
per
This 53%
that
yardstick
increase
an
savings
aggregated
This
portance
population since 1940, there has
100.
From
level
Taking into account the increase
been
1939.
is
population could buy to improve
its standard of living over 1940.
in
of the
total of
buying power double the
num¬
ity of goods and services that
be
CHICAGO, ILL.
75
in
in improved qual¬
unscrupu¬
companies.*
;
or
should
money
We have profited from not having to re-allow discounts to
solvent.
50% in the
over
ber of units
real
the
of the
power
leaving a rea*
gain of over $40 billion in addi¬
tional
real
purchasing ; power.
This
gain
in
real
purchasing
power
after full correction for
prices would make possible an inincrease of
SEATTLE, WASH.
depression.
the
purchasing
savings in
3913, whereas the $207 billion of
accumulated savings at the end of
1948 represented a real purchasing
power
double
the
purchasing
billion
dissipated $81
under
power
of this new income
resignations would pour in. (6) YES. (7)-NO.—The whole
thing is an expensive nonsensical vehicle to provide jobs for people
who otherwise would be without earning.1 power.
It is doubtful
removed
con¬
purchasing
of the aggregate of accu¬
mulated savings in 1920 after cor¬
rection for consumer prices was
of
Inflation
be
power
times
level
prewar
1921
Furthermore,
-
of
of maintaining a 1940 standard of
9% under
sidered before jumping to conclu¬
sions that we must have a repe¬
purchasing power of the American
public since 1940, showing actual
figures reported by the govern¬
NEW YORK CITY
ment
for
1940
and
1948
(first
Comments on questions: (1) NO, How about investment trusts, quarter)
and estimated figures
now
mutual funds,, with a 10% spread or more?
(2)
NO.
We for the first quarter of 1949 based
joined wnen it was organized and resigned when they issued their on the first two months.
first questionnaire, although we furnished the information requested.
The
disposable
personal
in¬
(3) NO.
It is positively outrageous and violates all rules of privacy come rate of $197.0 billion after
and is one of the reasons we never rejoined.
There is no guarantee taxes in the first part of 1949 is
Act such
was
This factor should
1913.
real
the
to
rate
plicable to the
$75.7
above
the
of families
since
(Bil¬
lions)
rate
a
purchasing V power
was
not
as
great among the upper two-fifths
and
In¬
Personal
Dollars
1940
is at
1949
available for
1948
The
If dealers conduct their
an
While
about four
1940
Price
in
rat^ have be^W lowered.
tax
come
ing
TABLE I
bodies.
for
income
these
It doubt that
SMALL IDAHO TOWN
sonal
higher than 1947 and Federal in¬
total income. The remainder after
popu¬
over
full
Simi¬
In
power
war
February,
among
power
of families.
at
was
1 940.
over
currently has the purchas¬
sume
In February, 1949, 1,341,000
1949.
53%
quar¬
ability to buy and con¬
53 %
more
physical
goods and services than in the last
of
force
level
other
affect the unemployment fig¬
6%
was
quarter of 1948 and
same
a
this
prices—in the first
of
ter
the number of people who con-,
sider themselves to be looking for
comes
of-
power
personal
income
after
taxes and full correction for in¬
on
ure
purchasing
posable
words, the labor force has
volatile figures depending
quite
real
population—that is, the dis¬
our
buying
figures if available for the
first-quarter of 1949 would show
still greater increases since per¬
•)
-Unemployment- figures as com¬
monly quoted can be very mis¬
leading because of the definition
of an unemployed person as being
one; who is looking for work.
In
in
lar
real money income -
.
..
increase
the lowest 20%
632,000
of regulation by SEC and NASD, investors still may suffer and
anything can be done or will be done by either of these
years
Before
higher than in March, 1948).-Of even greater significance is
the fact that the number of people
employed and at work averaged
After
honesty.
makes
February.
significant.
It is par¬ i jobs and therefore were added to
significant that in the the unemployed total in Februfirst quarter of 1949 employment i ary even -though they did not have
a
averaged 204,000 higher than in
job in" January and in fact
the
same., period
last year.. {in were not looking for a job in
March, employment was. 318,000
January.
Consumer
legislation and rules make people honest
I have never felt that
for jobs in
look
ticularly
Disposable Personal Income
After Taxes (Billions)
ORLEANS, LA.
were, not
decided they
more
are-
and we're too old to learn to be barbers. This is in
recent questionnaire. Send us a subscription to your
for one year.
paper
would
therefore
force
labor
of purchas¬ Of these, 1,109,000 founds jobs
and marketing oppor¬ and were classed as employed in
the employment figures i February but 232,000 did not find
an
ilies to support,
answer
the
keeping house
were
standpoint
A1 Capone with a college degree. It makes John L.
Lewis look like a piker. Don't use our names because we have fam¬
surely
was
in
the
on
who
women
power
can
KAN.
members of the NASD
are
the
From
TOWN
Thursday, May 26, 1949
in' January and
rise in the level of employment.
thereof makes this
vindictive attacks on-the NASDv-
of your
questionnaire merely another
significant
more
questions and the phrasing
of
CHRONICLE
(Continued from page 4)
mentioning or featuring the
out
(Continued from page 35)
Your
FINANCIAL
Optimistic Factors in the Business Outlook
the
NASD and Its Policies
SMALL KANSAS
&
COMMERCIAL
THE
(2296)
36
$3.7:
S92.6
$103.2
290
has
$11.4
$21.0
463
years
reached
totals
above
prewar
and the increase has
been
Volume
169
Number
considered
an
inflationary force.
possible continuing influence
market
potentials, : however,
As
a
on
debt must be studied in
consumer
relation to disposable income and
to savings.
Consumer
debt
actually is low
according to prewar standards. It
could increase by between 60% to
100% without exceeding the ratios
which,
in
considered
Between $40 billion
1940,
conservative.
to
were
$65 billion could be added to
the
of
total
present
consumer
\credit and mortgages before
reaching the 1940 relationship to
disposable income or savings.
In
tal
1929
of
individual
the
billion
$49.3
$99%
of
to¬
debt
represented
the
aggregate of indi¬
vidual savings.
By 1940 the ratio
had dropped to 63% and by the
end
of
while
the
estimated
is
it
1948
combined
short-term
long-
$67.0 billion it
was
the
savings
aggregate
and
of
only 32%
indi¬
of
viduals. Individual debt may have
been
in
overextended
99%
of savings,
but
1929
it
was
' at
over¬
of
ing our full labor force and sup¬
plying workers
with
improved
tools of production we have been
able to step up our production so
that it is possible to have much
more
goods available for
con¬
sumption. Further, it is now evi¬
dent
that,
provided
and
be still further increased
that
of any
major nation in the world.
that
Now
almost
four
years
half way and
the
possibilities
for
increased
standards of living in peacetime,
we
must
look
carefully at the
other
side
of
the
creation
demand to provide
is,
the
to
purchasing
than
exceeding
conservative
the
1940 ratio.
In
individual
1929
after
taxes.
ratio had dropped
debt
By
repre¬
slightly to 57%
of sufficient
a market for
level
by the end of 1948 it is esti¬
and
mated that the total of individual
debt represented only 35% of
situation
normal
of
to
of
mass
our
reach
shelter
There
By Income
As
into
come
we
market the
Groups
they
buyers'
a
market opportu¬
new
and
on
entirely
purchases
the shifts up¬
ward in income groups of families
are a vital key to increased sales.
The present
The
that
defer
for
distribution of fami¬
is far dif¬
lies by income groups
ferent 'than
in
1941.
cording
to
Federal
money
income
U.
1947
total
the
better
jumped from 4% of
In number of
increase was more
fivefold—from 1,656.000 to
the
families,
than
9,366,000 families with incomes
over $5,000
after tax.
The total
with incomes over $3,000 jumped
16% to 22,300,50% of all families.
from $6,624,000 or
000
or
these
As
groups
tax
the
the
into
un
move
millions
of
families
next
in
building the demand for new and
com¬
21%.
to
factor
after
pared with 1941.
This
study
showed
startling
shifts upward in family income.
Families with incomes of over $5.000 after tax
educational
major
higher
of disposable income after
can change enormously
they
markets for goods
and
services depending
on
the
extent to which they take on the
standard of living of the income
potential
into which they move.
If
the 15,670,000 families who have
moved
up
above the $3,000 in¬
come level from the $1,000 to $3,group
demand for
stepping up from one standard of
living to the next in such a way
—
markets for
that
ices
products
a
goods and
serv¬
be expanded to the
point
where they will sustain the high
level of production and employ¬
ment this country is capable of
reaching.
Since the war our economy has
can
operated
must be
nesses,
in most busi¬
much higher than pre¬
so
that
war
are,
major recession in
demand would quickly
any
consumer
make
high level. It
kept high because "break¬
points"
even
very
a
on
production unprofitable and
to
heavy
unemployment.
is no need, however, for
lead
There
established
expenditure
tern of the group
times
great as before, depend¬
the product.
Changes in habits or standards
<of Jiving do not take place auto¬
matically with changes of income
since, it takes time to educate
ing
as
on
people to an acceptance of the
next i higher standard of living.
But the increased market poten¬
tials do exist and can be
developed
insist
and
the higher standards of
on
Provide
World
a
War
II
proved,
beyond
shadow of doubt, that Amer¬
the productive ability—
both in terms of materials, labor
any
has
ica
force, and the
to
accept
tive—to
ices
produce. goods and serv¬
di/ what > fwas
far -ib e y o n
possible in the days of
the "mature economy." By utiliz¬
dreamed
rural
point
of
all
that the
know
has
by
131,669,275
grown
now
cities
or
an
where
will
about
in¬
the
have
the
de¬
million
three
while
non-farm
million
have
births
which
important
an
A
of different standards
study
shows
living
clearly that the standard of
of the typical American
in¬
on school facilities, hous¬
requirements, and food re¬
quirements; that some 16 million
marriages since 4940 have brought
new
families into existence repre¬
over
% of all of
our
adults
our
ment
this
level.
In
govern¬
study of items purchased by
families
groups
in
different
income
showed that families with
almost
double
the
$25
a
week
II).
is
con-
now
potentials.
The second major factor in mar¬
keting
been
—
purchasing
in
covered
be at
a
power
detail
very
—
the
1941
$50
could
per
not
week
be
family
called
an
in
ex¬
cessive goal or a luxury standard
foresee
that
in
as
recession
a
intensity
but
the
the
as
de¬
a
1920-21
question,"
"Instead,
increasing
we
in
progresses,
year
proving to be relatively mod¬
over-all and comparatively
erate
in
short
and
is
high level.
marketing men
greatest opportunity.
We
have a market of 148,000,000
150,000,000 people with proven
high purchasing power but with
of
living which has
lagged
behind
that
purchasing
power.
This then is a job of edu¬
cation and selling to create the
demands.
Advertising is a basic
marketing tool and it is available
Contrary to general impressions
to
the
are a
unique
upward
happening
really
economy
the report is
is returning to
Sellers'
the
all
is
markets': have
according
now,
that
to buyers' markets in
few
lines, requiring
way
but
to
a
greater selling effort, a revival of
trend
ex¬
merchandising induce¬
price concessions.
"Normal" Not Prewar Level
term 'normal,'
relationship to
normal, if for no other
than
that
of
population
prewar
reason
is estimated that the
It
will
census
have
The
rate
thousand
4-color-page
per
circulation
magazines in 1948
pared with the
of
was
same
29
per
major
$3.57 corn-
cost of $3.57
1940.
The
and
1948
milline
511
was
$2.68 in
rate
Sunday
$2.77
1940
to
150,000,000,
of 1,781 daily
in
with
newspapers
compared
(a rise of only 3%).
as
show the United
a
earnings
average
appraisal
any
over
011
term of
a
years.
"Taking the 11 years 1938-48,
earnings per share on the
stocks, adjusted to our
index, were $10.77, against $22.75
average
industrial
in
alone.
1948
Even
that
on
con¬
servative longe-range basis, stocks
selling at 13 times earnings,
exactly in line with the average
price-earnings ratio for that 11period. Stated another way,
net income per share would have
year
to
of
population
with
increase of
compared
an
about
drop
1948
50%
from
the
1938-48
price-earnings ratio would be du¬
plicated.
figure
before
"This allows for
the
a
more
severe
contraction in earning power than
is
ard
&
Poor's
25%
this
are
10 times-those
Stanctt-
analysts
maxi¬
a
earnings
average
year.
"Stocks
not
industrial
currently looking for
cline
:
envisaged for 1949.
now
mum
today says
the report bears no
de¬
:il<. ;
selling at less than.
projected profits—
capitalization of
record low
a
earnings,
but
one
conservative
enough to suggest the possibility
of two-way markets and of cross¬
currents
in
to
response
varying
earnings experience."
14%.
additional
"An
factor
is
the
higher standard of living achieved
by a large part of the population.
Data on the distribution of income,
as
well
real
the average increase in
as
of various industries,
wages
People
do not readily relinquish advances
in living standards.
that attainment.
point to
"These
gest
a
two
considerations sug¬
for goods than was known
the
that
a
potential
dex,
us
Federal
as
Reserve
Board's
in¬
compared with a current
figure of approximately 185. Once
the adjustment to a lower level is
can make
profits on the basis of
production of 160."
accomplished, industry
excellent
Stock
Market
Well
Adjusted
Again quoting from the report:
"The stock market for more than
2V2
years
has prepared for the
taking place in the
In the interim,
now
economic
our
trend.
broad
fluctuated
Hilgen, Harry E. Lewis
Hubbard
added
&
S.
Co.,
have
Rust
staff
the
to
Sims
Chronicle)
CALIF.—
458
been
of
Marache,
South Spring
Street, members of the Los An¬
geles
Stock
Exchange.
on
record in which investors
"Stocks
cheaper
as
Detroit Bond Glub
Annual
Outing June 17
DETROIT, MICH.
June
Club
Detroit
of
will
assemble
Golf
and
Annual
—
Bond
their
guests
and
at
Friday,
of the
members
17,
the
Grosse
lie
Country Club for their
Golf,
Outing.
soft
ball
and other games are
scheduled for
the day's program.
The members
will compete in team play for the
Michigan
which
ter
won
Clarke
S.
Golf
Investor
was
Trophy
last year by Wal¬
Fred
Husk
contact
Frank
and
price index has
both of Hornblower & Weeks.
meaninglessly
in
a
have anticipated a
•
Herbert J.
and
Financial
stock
range 15% to 30% below its 1946
high, representing the longest pe¬
riod
to The
ANGELES,
floor
exists under industrial production
in the neighborhood of 150-160 on
the
LOS
before
Tentative studies lead
war.
believe
to
Marache, Sims Adds
(Special
permanently larger market
change
:•
ured
and
"The
in
The cost today to reach 1,000 or
1,000,000 people through advertis¬
ing is about the same as it was in
-
price-
earnings
are
prices.
1940.
result that the average
the
are
duration.
that
All
has
which
standard
will lay
progress
of stock values should be based
the report concludes.
131,669,000 in 1940,
in
Certainly the standard of living
of
severe
as
increased market
incomes of $50 a week were buy¬
ing and consuming at the rate of
the price
supply created
1929-32 is out of the
or
States
ception
detailed
pression
siderabty higher than in 1940. All
of these are factors that point to
advertising costs
year a
as
Moreover,
convinced
are
1950
Approximately half of the fami¬
incomes below
lowered.
growth.
of
lies in America had incomes above
same
survey
credit structure.
level
this level
approximately half
is
families; and that the educational
family could be doubled over pre¬ at bargain rates.
war levels without reaching what
might be called excesses. Prewar, Advertising Costs Are 40% Below
1940 in Terms of Real Purchas¬
in 1941, the $25 a week family'
ing Power
typified the American economy.
and
the
demands
actual
level
ing
a
living actually existing at dif¬
ferent levels of income, prewar,
healthy,
points out that many potential, de¬
mands
remain
to
be translated
fluence
senting well
in
now
Finding the economic structures
basically
in
29
expanding
or
Sees two-way stock market
price readjustment
Competition, the driving force in
American industry, has again
come into play.
to
of
and
ments,
million; that the abnormally
high birth rate since 1940 resulted
will
maintaining
era
21
from
Ability to Consumer
an
prewar
about
1949 for
varying earnings experience.
population will have increased by
soon
there
study of the industrial and investment outlook just published.
given
1940
that
seem
of good business lasting several years, according
to the conclusions reached by Standard & Poor's Corp., in a special
normal.
population
their
productivity.
business
The
the basis for
farm
from
would
plenty of opportunity in
markets.
basically healthy.
in response to
pattern and standard of living is
quite different; that by 1950 the
have
increased
economic structure
have moved from
by
be
good Business Seen After Adjustment
"We
12%; that about 7
creased
still
It
.
will
transitory, and that
looks first
from
to
more
Standard & Poor's study of industrial and investment outlook finds
the
over
areas
no
tell him about your product.
permanent, placing a floor under
people
in
technical ingenuity family for most items (see table
make that laboruforce produc¬
of
crease
field
had
Created to
Continuing Market
Demand Must Be
will
million
price levels yet it costs
for
present
by wartime financing is virtually
people because
148.000,000
living made possible by our pro¬
ductivity and by the increased
real purchasing power resulting
that
by aggressive marketing.
1940
purchasing
newspaper
the
at
are:
This leaves the third important
factor—the will to buy—as the
into which they
they would represent po¬
tential markets from two to five
16
over
1940
of
milline rate
down
from $2.68 to $1.62—a
drop of 40% (see Tables No. 3
and No. 4).
the
is
since
market
a
units
more
36%
up
words, that indi¬
tremendous money
public is educated
to
dollars
In
power,
is
other
represents
$36%
to
$2.09—a drop of 41%.
In
capita
per
of the average
factors
shown to
pat¬
moved
He
per page
1940.
real
ratio in 1948, as meas¬
by the 50 industrial stocks
in the Standard & Poor's daily in-i
dex, was the lowest since 1918.
It may be said—and rightly so—
that
1948's
record
profits were
this serious drop in demand if the
000 level in 1941 were to take on
the
living
week fam¬
basic
starting
wants and the translation of these
a
of
man
on
population
million
By expanding these wants ad¬
vertising and selling can become
in
S.
psychological fac¬
tors affecting desire and common
the
wants into active buying demand.
income
tax
the
to
Eco¬
January, 1949 gave a breakdown
of families as of early 1948 ac¬
is
have adequate purchasing
power.
This fact makes doubiy
they
President in
nomic Report of the
The
marketing
markets.
or
long periods of time even though
important
per
three
to his statistics
•
nities opened up by
In
(1) People
(2) Purchasing Power
(3) The Will to Buy
clothing. They could,
get along and sus¬
very much less than
buy. They could
now
many
standard
are
purchasing
thousand is down from $3.57
per
to
1940
that
power
reached
vidual
of
Consider this in relation
fact
purchasing
1940.
were
we
that make markets—these
necessary,
life
present if
the
the
dollars
into
population al¬
the 1940 ratio.
tain
production.
Advertising and the Will to Buy
ready lives at standards far above
the bare subsistence level of food,
if
and
at
1940.
to
at¬
a
disposable income. Debt could in¬
crease over 60%
before reaching
Changed Distribution of Families
the
to
on
typified by the $50
ily in 1941.
with its prob¬
lems of creating a sufficient de¬
mand to keep the factories busy.
The
than
in
In
the magazine cost
have
costs
reaching a person with an adver¬
tising message is the same now as
under
power,
selling
considerably since 1940
yet in current dollars the cost of
person
chal¬
terms of constant prices we would
have to produce and consume %
more
that
means
other
up
reaching 1,000 persons
through advertising is about 40%
real
a
real
a
drive
consumption
a
the cost of
tainable goal of double prewar in
"buyers' market,"
1948
to
have
of constant dollars this
53 %
presents
and
1940.
purchasing
power for other products of only
59c (the consumer price index is
now 70% above
1940).
In terms
lenge to business to maintain this
the
more
which
have gone
we
already have
power
and
than in
now
All of these costs are in current
dollars
higher
1940- is of major signifi¬
in
cance
equation—that
the
out
works is lower
Most
gone
37
levels.
But the fact that
postwar experience have indicated
1940 the
ings?
If not, then present debt
potentially could be doubed with¬
have
to the best prewar
of
income
sav¬
already
or
potentiality for production— per year after Federal tax com¬
for
increasing still further the pared with only 16% in 1941. Un¬
amount of goods available for con¬
fortunately, inflation and taxes
sumption—is still capable of large have taken such a large bite out of
expansion. In other words, there is increased income that we have pro¬
still a major opportunity for rais¬
gressed only half way to the goal
ing the standards of living in of doubling the real purchasing
America even though standards in
power and the resulting standard
this country are now the highest
of living of our people compared
personal
of
of
(2297)
The
cost
per
thousand radio
homes covered by two major net¬
our
sented 60% of disposable
at 63%
1940
best
units
our
passed the
point where our economy is typi¬
fied by families with $50 per week
money income, since, in 1947 ap¬
proximately half of our families
had money incomes of over $3,000
goods and services we have
proved we can produce. We must
consider the necessity of main¬
taining the hfgh level of domestic
consumption now that temporary
factors
affecting
demand
have
passed and we have returned to
in
extended
mean
physical goods and services
better quality.
V / V
We
CHRONICLE
ability
our
could
of
new
so
it
yet
nearly double
levels in- terms
prewar
population could
our
produce,
markets
improved equipment, the pro¬
ductivity of
FINANCIAL
&
living in terms of
to
investment
capital is made available for
that
debt totaled
consumer
COMMERCIAL
THE
4806
became
For
reservations
P. Meyer,
First of Michigan Corp;,
1500 Buhl
Bldg., Detroit 26, Mich.,
recession.
progressively
profits mounted, with
Chairman,
mittee.
Entertainment
;
.
1
Com¬
..
,
38
THE
(2298)
lated into
Tomorrow's
CHRONICLE
FINANCIAL
&
number of points
it is strictly aca¬
a
share,
per
COMMERCIAL
Problems
Surrounding Capital Markets
demic.
of funds in the investment market.
(Continued from page 8)
Markets
insistence
This
Walter
think
Says—
apply to
I
sell it
can
for
I
I
more
sonably
trend
being
broken. Topheavy short posi¬
tion an encouraging sign.
It
can
turn a minor rally into
Secondary
market
in
danger
of
now
hold
to
future. If I have
near
it
at
balance
loss,
a
sheets and income statements
its
not
I'll let
some¬
Between these verbal
In
the past week action indicated
what
the
hospital dietitian that even the
secondary trend
described as food. This ranged
was in
danger of following the
from Jello and hot (?) tea to
major trend. The only hope I
various foods congealed in a
could see was purely a tech¬
grease that looked even worse nical one.
The market was
subsist
to
on
than it sounded.
dary trend has been
overloaded
with
up.
short
posi¬
tions which is now the highest
Everything considered I had in 16 years. If a rally were
plenty of time to read things to develop these shorts can
which had something to do
easily furnish the fuel to feed
With the state of past, pres¬ such a
rally that it can go up
ent
and
future
business.
considerably.
I
was
little
a
amazed at
the
devoted to pundits who
nothing but slight "un-
*
*
1
space
Meanwhile
you're out
fact, stocks, with the exception
after reading a raft of things Newport Industries bought
it seemed to me that every 10, stop Sl/2. See no point
settlement"
In
ahead.
of
of
at
in
time
bargain abandoning it for the
counter. Yet, speaking to some being.
More next Thursday.
brokers almost every hour on
the phone, I could see nothing
—Walter Whyte.
in the market th at encouraged
stock
was
the
on
....
such
Stocks
belief.
a
went
through a tiresome pattern of
going up fractionally and then
declining by whole points.
This brings me up. to how im¬
portant is all this hullabaloo
about
business
a
improve¬
ment.
[The
article
time
views
not
do
coincide
Chronicle.
in
expressed
necessarily at
those of
this
any
with
They
are
those of the author
the
stock
a
meant
never
market
partic¬
anything to
me
unless the market indicated it.
And
market is
General
fistful
this writing the
saying the opposite.
Motors,
making a
to
up
of
dough per share,
interesting
reading.
makes
But unless this
presented
accepting
can
be trans-
Pacific Coast
Securities
his
Orders Executed
Coast
went
Schwabacher & Co.
Halsey Stuart Group
Offers KATY Equips.
New York Curb Exchange (Associate)
San Francisco Stock Exchange
Chicago Board of Trade
New York 5, N. Y.
Teletype NY 1-928
Private Wires to Principal Offices
San
Francisco—Santa
Barbara
Monterey-—Oakland—Sacramento
Fresno-—Santa
Rosa
opposing
as
view
of
encouraging
and consumption.
Of
a
what
it
is
use
the
outlook
of
need
a
acts .to push .prices. higher
tjian
they would be "and depress them
companies is
farther than would be the
somewhat misconstrued.
I
a tribute—as I spe¬
declared — to the ines¬
of insurance.
Un¬
cifically
timable -value
.
phase
possible
enced
of
it.
buyers
In
addition,
be given wide
acceptance
only
when their diagnosis of the body
economic
happens
to
coincide
and
sive.
der
The
certificates, issued
the
Philadelphia plan, were
reoffered by the group, subject
Interstate
to
Commerce
Commis¬
sion
authorization, at prices to
yield from 1.35% to 2.80%, ac¬
cording to maturity. Other mem¬
bers of the offering group were
R. W. Pressprich
& Co.; A. G.
Becker & Co., Inc.; Otis & Co.,
cer¬
of
$3,221,688.32, consisting
Diesel-electric
eight
freight
Bernard Pickard Joins
Daniel F. Rice & Go.
to The
Chronicle)
Financial
CHICAGO, ILL.
—
Bernard M.
Pickard has become affiliated with
Daniel
Trade
F.
Rice
&
Building,
New York and
changes.
Mr.
Co.,
Board of
members of the
Chicago Stock Ex¬
Pickard
was
for¬
merly Treasurer of Link, Gorman
& CO.
-
/ft-
tax
col¬
tax
pro¬
form of tax reduction
Institutionalization
The
of
Savings
institutionalization of
of
and
sav¬
variety
a
abrupt change
is in sight, creating serious in¬
vestment proolems for both the
causes
no
life insurance companies and busi¬
corporations.
ness
to
My
concern
is
develop interest in every phase
changes which have
looked
are
revenue
coldly, thi,s
has special
appeal, for, as I have pointed out
on
previous occasions, a readier
willingness to take profits would
add
rather
to
upon
than
reduce
reve¬
Over and beyond this
nues,
factor,
continuous, orderly mar¬
ket would help to offset the otherdisadvantages under which the
capital markets have been labor¬
ing. In a free economy, mobility
of
capital must be encouraged
a
more
occurred, in recent years, in every
rather than fettered. The situation
relating to saving and the
disposition of funds. Now, may I
make
myself
perfectly
clear.
of losses, against
There
tion
leaked out,
and,
In the frag¬
monthly report which
Dr. Edwin G. Nourse
far
as
as
know,
we
the
Other two members of the Coun¬
cil, Leon H. Keyserling and John
Clark—advocated that the Ad¬
D.
area
ministration abandon its tax pro¬
This
especially noteworthy
January Annual Re¬
port the Council still stressed the
inflationary
tendencies
in
full
the
swing toward the close of the year.
I point to the President's Eco¬
nomic
itself.
Report
"Guides
to
with
ended
these
dictates
same
which
Under
of
the
Policy,"
Economy
he
"The
words:
policy
for higher taxes in a
call
profess to
know
in
are
we
whether
not
or
"serious recessionary
a
movement."
with
Everyone
an
the
-
of Healthier
Markets
'
Capital
.'
for
contribution
the
capital
new
a
capital
shall
markets
of
supplies of
be opened.
must
of these
consideration
devote
can
stability, I urge
sources
brief
that
the
remainder
of
think
I can honestly say I am objective
enough to speak as an American
deeply interested in the national
welfare—that
no
other
single
step would do as much to invig¬
orate sentiment than a sizable re¬
duction
in
Federal
Government.
the
of
expenditures
In
local
communities, in states and in the
national capital, the revolt against
the present level of government
expenditures
is
crossing
party
lints.
insurance
ings, and
Britain,
the
hard facts im¬
posed by rapid socialization and
extensive social welfare legisla¬
tion are troubling the Labor Gov¬
ernment.
Recent
tendencies
at
polls indicate that the public
point will rebel when it
must squarely face
the cost of
these measures. I am hopeful that
some
are
conservative funds;
have
traditionally
(1)
funds
company
such
as
two
on
assumptions:
represent, in the main,
mass
sav¬
regarded
(2) those who
equity funds.
It is argued
reduction in taxes and a
a
constructive
revision
of
the
tax
structure, for whatever reason, do
not eventuate, then should not life
insurance companies be permitted
to purchase common stocks in a
limited
way
and
with
certain
safeguards?
To be specific, it may
be further argued that since* they
already arje the largest holders of
debt securities of electric utility
companies, might not life insur¬
companies couple investment
ance
in debt securities with investment
in
preferred
of the
same
and common stocks
companies, assuming,
broader. authority
course,
such
investments
to
is
electric
entitled to
utility industry is
fair return
a
ment and is in need of
on
invest
large
-
centage
sums
of
capitalization
total
of
up
preferred
and
com¬
provisions
limited way
guards" I
would determine "a
and with certain safe¬
am
It is
suggest.
an
not in a position to
my
contention that
alternative to this
ma¬
jor change in life insurance com¬
pany investment policy, respect¬
ing fully the economic circum¬
stances under which we present¬
Although
ly labor.
able
be
at
this
the higher
time
we
to
may
not
aid those
tax brackets to in¬
savings, we nevertheless
create the atmosphere that
will be dis¬ Will
bring equity funds out of hid¬
played in Congress to overcome
ing and put more individual sav¬
the pressure for larger expend¬
ings in the various income brack¬
itures. I hopefully recall that one
ets to work in the equity markets.
of the most respected chief execu¬
An approach to this end can be
tives,
whose
career
has
been made in two directions: (1) im¬
called a study in political courage,
prove the capital gains and losses
Grover Cleveland, challenged his
provisions of the Internal Revenue
own
party by a stern resolve to Code
(entailing no ultimate loss
let no one drink greedily at the
in revenues); and (2) grant to the
public trough.
individual a credit for dividends
suificient
A
crease
can
courage
second
avenue
of
funds
for
equity capital lies in the recog¬
nition of the change in the flow
and function of savings..
Several
received.
I
do
feel
we
simply stay put in
a
changing environment.
cannot
rapidly
I referred to the tre¬
additions to life
insurance funds and their grow¬
Capital Gains
ago
On the subject of capital gains,
mendous annual
ing
importance in
the allocation
thinking
lines,
along
have
to
we
;
eco¬
look
ahead. Last
May, 1948, in addressring the Chicago Board of Trade, I
pointed
out- -that,- despite
the
strong
upward
sweep
of
farm
products, exceptional demands in
1947
arising from drought in Eu¬
and extraordinary food
requirements
in
war-shattered
rope
countries
should
not
obscure
the
longer-term farm problem. I had
confidence
confidence
then, and have
either In tax
now,
credit policies founded
inflation. There
States
have
.wars
and
nomic
of
people
two
witnessed
several
or
fears of
on
in the United
are
millions
some
who
no
world
complete
eco¬
cycles. The impact of it all
to have resulted in
seems
deter¬
a
mination to save, and to place the
savings as nearly in a riskless
form
possible. Savings
running at ftn un¬
precedented peace-time rate, both
absolutely and in relation to the
as
have
seems
been
national
vidual
.biilion
the
income.
savings
in
and
annual
billion.
For
the
fate
first
indi-.
to
last
$15
quarter
amounted
the
In
1948,
amounted
to
$18
income
of
estK
mates of the Department of
Com-;
this
indicate
merce
rate
national
year,
of
traction
The
current
a
annual
excess
of $21
savings in
billion,
quarter
even in the* face of a cpnin national output.
•
Federal
Reserve
Boards
surveys of liquid* assets show that
the .lower
income
groups
are
determined to lay something aside'
than
a
before.
ever
greater degree
This
is
a
foundly deflationary influence
there
are
ments to put
sufficient
pro¬
un¬
induce-,
savings to work pro¬
ductively, and this cannot be done
safely merely by debt creation of
type or another. The ratio of'
spending for' private consumption:
to
income has already been re¬
duced. The emphasis lies in the
realm of changes that will build
confidence
among
all
saving1
groups; confidence in the owner-'
ship of property and particularly
in
American industry.
I
to
.have
the
capital
addressed my remarks
problems surrounding the
markets,
and
especially
ownership
would
capital,
remove
becauseI
the
layers of mis¬
understanding and prejudice"
which make it difficult to. get a
fair
hearing. Recently, Governor1
Szymczak of the Board of Gov¬
ernors
of
the
Federal
Reserve
System, a Chicagoan for whom I
great admiration,, discussed
have
the
monetary
approach
to
eco¬
nomic- stabilization. • I close. by
paraphrasing his apt remarks, as
they
epitomize
the
spirit
in
which, I
have
approached vthe
problems of equity capital: .We
must continue to seek the. a venues.
.
which promise
which
we
economic Stability
have
.somehow
to
achieve—and economic freedom—
.
weeks
,,
contribu¬
a
one
stocks, the higher the quality
of all the securities.
Just what
mon
in
the
to
offset-
gains.
make
to
are
nomic
less
of money; and the greater the per¬
made
we
liberal
more
for the future to
granted?
The
If
as
supplied
the
bulk of risk capital are either
unable or unwilling—under exist¬
ing
tax - laws—to
provide
the
there is
In
contentions
my
indisputable
life
also demands
no
base
I
make
It is my conviction—and I
to
brackets.
of
time.
my
largely
high-grade fixed
income bearing securities; and
(3) the flow of current savings
from
the
middle
and
higher
needed
Contribution
savings,
mass
committed
that if
all, employment, tell
neces¬
capital accumulated from
savings of past years presently
open
and, above
the story.
of
source
(2)
his
mind or who is aware of
surroundings will admit that
the trend has changed since the
report was written—the commod¬
ity markets, industrial production
the
as
must
institutionalized;
prudent
period of inflation would call for
adjustment designed to coun¬
teract
any
serious recessionary
movement." I do not want to play
on words and, in reality, I do not
pools of
we
equity capital:
(1)
is
distinct
savings which
consider
sary
since in
three
are
available
gram.
the
less than
when
ments of the
at
standard-gauge railroad
time
a
posals that surely involve
of the great
for
new
jf
influ¬
with the President's?
I
un¬
At
loss
the
establish
I
by the prospect of showing
lector.
curities.
ings is the outgrowth of
to
case
not
were
period when the capital markets
could not absorb ownership se¬
investment
advice is to
publicity
obtain funds in
un¬
and
Council of Economic Advisers if
their
To
an
(Special
Exchange
in
economic
equity
Members
Stock
record
on
increase
that
on
Exchanges
distinguished economist in
right. Earlier this month
own
he
make to economic
locomotives.
COrtl&ndt 7-4150
appre¬
ciate that the very size of the life
a
As
equipment, estimated to cost not
14 Wall Street
economic matters.
on
have had evidence of how the tax
Senator from Illinois, Paul Doug¬
tificates will J be^i4sed4q provide
York
President
the
were
las—a
healthier
Proceeds from the sale of
New
only Won¬
can
as
and Freeman & Co.
Pacific
I
advice
every
Unfortunately, my remarks
aided industry to
only.]
Halsey, Stuart & Co. Inc. heads
underwriting group that won
the award May 24 of $2,550,000
ipant I'm naturally interested
Missouri-Kansas-Texas equipment
in business conditions.
But
trust, Third
Series 1949, 2%%
first
and
foremost
I'm
in¬
equipment trust certificates, ma¬
terested in the stock market.
turing $85,000 semi-annually Dec.
Talk of better business has 15, 1949 to June 15, 1964, inclu¬
As
is
whose
corporations
on
tax
*
saw
der
tax
tion isn't moral.
tried
to-be derived from
levies
and individuals.
settled
for it. I'm in¬
prof¬
company
operating
Perhaps such a posi¬
past week I've been body else settle the question
on
my back in a hospital room of morality.
arguing with protocol-observ¬
ing nurses and surly orderlies
For the past few months
about the relative merit of
the major market trend had
lukewarm
water
over
ice
been down, though the secon¬
I
billion
terested in stock market
For the
bouts
$4
won't make up
returns.
big advance.
water*
ol
additional
increase in taxes
an
than I paid for it in the rea¬ Certainly not that of the junior doubtedly, these companies have potential profits with the
By WALTER WHYTE =
55
reasoning I
every stock in the market.
consider a stock a buy if
on
Thursday, May 26, 1949
I
speak with more certainty and
conviction,, having pandered over
which
we
dare not give
up.
One.
not, to be ignored is a
dynamic, functioning investment
avenue
market. :V
Volume
169
Number
4806
COMMERCIAL
THE
&
FINANCIAL
CHRONICLE
There
Business Needs Gold
The Stale of Trade and Industry
Base and Realistic
(Continued from
i
,
restoration
gold
the
of
with
standard
6)
page
international
an
the
help
of
International
Monetary Fund
will permit the resumption of the
free
convertibility
The
of currencies.
of restoring an in¬
problem
ternational
gold standard after
a
monetary and price upheaval con¬
comitant to a big war as we just
went
through
is
difficult
a
and
delicate technical problem.
Most
must restore
comparatively
concludes, no
avoid
international gold
an
and
make
pression
the
as
We
we
deep de¬
and
restore
can
if
we
after 1929,
we had
policies. We wish
emphasize the urgency of this
question;
ivithout
hate
it
should
be
delay, lest it
too
ever,
Commission
is
not
of
aware
tion
of free convertibility of cur¬
To restore monetary or¬
der, it is also necessary not only
rencies.
to balance the budgets but to re¬
duce
which
government" expenditure at
this balance is achieved.
Excessive
expendi¬
government
is destructive of the flow
ture
vidual
enterprise.
To
maintain
a
high level of employment and im¬
prove
the
standard of
living
(everywhere,
further
we
elimination
the
mend
recom¬
of
all
im¬
pediments to international trade
and mainly the removal of quan¬
discrimi¬
restrictions and
titative
nation.
As
to
dollar
the
that
convinced
are
solution
Loadings of
tent
the maintenance of arti¬
exchange rates and over¬
by
ficial
valuation
of
If
and
when
we
771,736
the
that
gap-
protect
capital should attract and
foreign investments.
i
ago.
Radio Corp.
Radio
The
has
Financing
completed
America
of
Corp.
arrangements
^through Lehman Brothers to bor¬
row
$60
million
investing
'from
Brig, General
institutions,
David
Sarnoff, Chairman of the Board,
7ahnounced May 19. The corpora¬
tion has drawn down $40
-of
borrow the
for
sory
will
num,
mature
only long-term debt of
ration.
per
an¬
i, 1974.
May
issuance, they will
!Upon
be the
the
bank
loans
maturing
through 1956, which are
ing in the amount of
It
is
ance,
added
used
>
poses
tion's
1951
outstand¬
$40 million.
PERIODS
OF
by
STRAIGHT
increased
use
WEEK
of
air
WEEK
ADVERSELY
borrowed,
will
be
slipped to
output
its
as
in the
prices developed a firmer tone, aided by the recent higher
hog values and a continued moderate export business. Cur¬
hog prices are about $1 per hundred pounds higher than a few
weeks ago when quotations dropped to the lowest levels since the
end of OPA.
Demand for steers was firmly active and prices rose
moderately. Fed lamb prices continued steady.
Domestic cotton prices showed a net decline of about 18 points
the past week following the upward movement of the week before.
Spot values showed strength in the first half of the week but tended
to sag in later dealings as the result of lessened short covering and
liquidation induced by more favorable weather reports from the
belt.
cotton
Other
factors
bearish
included
repossessions and continued
market.
the
There
was
trend
lower
in
also
slow
hesitancy
some
domestic
reports
of
increasing
cotton
business in the
cotton
among
loan
goods
traders due to
consumption and
a
lull in
export buying.
firmness
Early
price-fixing
reflected
against
export
sales
of
the
staple, and announcement of EGA allotments to Italy and Ger¬
many for the purchase of American cotton.
Domestic use of the staple during April, as estimated by the
New York Cotton Exchange, totaled only 615,000 bales, compared
with 721,000 in
March, and 830,000 in April a year ago.
daily rate of consumption in April dropped to 29,600 bales,
from 31,300 the previous month, and 37,700 in April last year. Entries
of cotton into the government loan during the week of May 5 rose
The
bales, compared with 62,000 the week before.
expanded, totaling 79,000 bales for the week,
against 51,000 the week before.
Loan entries for the season to date were reported at 5,274,000 p
sharoly
to
103,000
also
Withdrawals
Repossessions for the period amounted to 886,000 bales, leav¬
corresponding week in 1948, Dun & Bradstreet, Inc., states in its
summary of trade.
Good quality merchandise at moderate
States
Chrysler
about
remaining branch
was
assemblies
as
assembly
an
were
from
plants
increase
resumed
of
the
closed
about
previous
early
in
10,000 units
Dodge, DeSoto and
on
following the previous week's' suspension due to
Corp. strike.
cars
The
total
compares
the like week of
week's
Last
with 91,138 units
a
year
ago
and
of 91,937
16,995 trucks
and 2,505 trucks in Canada.
estimated
by Ward's at 2,169,000 units, compared with 1,892,000 in
period of last year. Canadian production to date is estimated
92,000 units, compared with 95,000 last year.
As
wear
Commercial
and
HOLD
STEADY
industrial
May 20, compared
with
failures
171
in
IN
LATEST
numbered
WEEK
172
the preceding
in
the
week,
week
&
Bradstreet, Inc., reports. Casualties were considerably more numer¬
ous than in the corresponding weeks of
1948 and 1947 when 92 and
88 occurred respectively, but they remained well below the prewar
level.
In the
same
Dun
week of 1939, a total of 289 failures were reported.
Failures
involving liabilities of $5,000 or more rose to 137 from
133 and exceeded the 78 of a year ago, while small failures under
$5,000 dipped to 35 from 38 but continued to be over twice as numer¬
ous
rose
commercial
32
to
service
24.
from
to
eight
from
16.
Manufacturing
More
failures
vu-,,g,.:
same.
than
a
year
ago
occurred
.
rose
to 53 from 46 in the
previous week.
New
England casualties fell to 18 from 23 and in
Pacific
East
North
and
29 failures
FOOD
respectively.
PRICE
INDEX
^
Central
States
they
numbered
34
touched
on
week
Feb.
8,
index since .Oct* 8,
represents
a
The
OF# SLIGHTLY TOUCHING
LOW
POINT
Wholesale food price index fell two cents
to^stahidj at $5.66. This equals the year's low
wbich'Vyygs the lowest point recorded for this
1946, when it stood at $5.40.
nesday
drop of 18.1% below the $6.91 of a year ago.
the sum total of the price per pound of
displayed
in
financing the corpora¬
kets.
The
Dun
a
^J^radstreet .daily wholesale commodity price index
mild uptrend' the past week aided by firmer grain
The index closed at 248.92
week
earlier, and witli 284,34
furniture
and
houseware
was
slightly higher
but
of
volume
for
last Week
a
the
was
attention.
in the period ended on Wed¬
estimated to be from unchanged to 4%
country
year ago.
Regional estimates varied from the
a
year
ago
corresponding levels of
England up 1 to
by the following percentages: New
3, East unchanged to down 4, South and Pacific Coast down
2 to down 6, Midwest and Northwest down 1 to down 5 and
Southwest down I to up 3.
down.
There
was
no
appreciable change in the total dollar volume of
It was, however, slightly below that
wholesale orders in the week.
the
became
comparable week a year ago. Orders for Fall merchandise
more numerous during the week, but generally, merchants
to limit their commitments to replacement needs.
continued
country-wide basis, as taken from
the week ended May 14, 1949,
by 3% from the like period of last year and compared
an increase of 2%
(revised) in the preceding week. For the
weeks ended May 14, 1949, sales registered a decrease of 4%
the corresponding period a year ago, and for the year to date
Department store sales on a
decreased
four
from
a
\
decline of 3%.
Retail trade
here in New York
terized by a sharp
the past week was charac¬
downward trend in dollar volume with
department stores estimated at close
of
sales
to 15% under the like
period of 1948.
MARKET&cSIIOWS MILD ADVANCE IN LATEST WEEK
general corporate piir-
for
preceding week,
below that of
The current figure
COMMODITY PRICE INDEX INFLUENCED BY FIRMER GRAIN
a
Retail
with
index represents
31 foods in general use,
working capital and be
dipped fractionally, but poultry and
the Federal Reserve Board's index for
The Dun & Bradstreet
latest
the
in
refrigerators attracted moderate
and
•
OF YEAR REACHED ON FEB. 8
the
of the
continued to be moderately less
than that of "a year ago.
Shoppers continued to display a sizable
interest in small tables, occasional chairs, floor coverings and kitchenware. A slight rise in the demand for electrical appliances in
several sections was apparent and promotional sales of reduced-price
in all
the
demand
The
of
Failures in the Middle Atlantic States
the
continued
less food than in the preceding
volume slightly below that
aggregate dollar
Interest in large meat cuts
failures
except commercial service in which casualties were
groups
consumers
dairy foods remained popular. The demand for fresh fruits and
vegetables rose somewhat, whil.e frozen berries and green vegetables
sold in large volume.
to 48 from 37, construction to 15 from nine, and wholesaling
rose
at high levels,
hovered
slightly.
with
week
last year.
Retail casualties fell to 69 from 85 in the previous week, and
as
temperatures
Housewives bought slightly
than
ended
the comparable
purchase large quantities of summer clothing. The demand for
women's lightweight suits, moderately priced dresses and sportswear
remained high with the total volume of women's apparel holding
close to that of a year ago. The interest in men's slacks and sports¬
and
cars
and trucks in the U. S. for the year to date is
FAILURES
marked change in retail apparel volume last
to
133,560 in
the like
BUSINESS
no
similar week last year.
consisted
built in the United States and 4,550 cars
cars
was
last year.
week
194g
output
Production of
sought by most shoppers.
week, but it reflected a slight drop below that of
115,987
13,000
was
There
Canada
ana
the Motor Products
to
;
granulated prices.
Lard
prices
United
estimated
an
down
was
week.-Offsetting this
for
expanded business,
refiner
current
BY
PLANTS
and trucks
cars
AFFECTED
contemplated that the bal¬
when
firm.
stronger and at the close of the
announced an advance of 25 cents a
was
rent
bales.
LAST
week
past
by Chrysler
in
.
LIKE
.
Ford's
the corpo¬
Proceeds will be used to prepay
term
the
1950. The promis¬
at the rate of 3%
Arrested
OUTPUT
week
wiil
which will bear in¬
notes,
terest
UNDER
markets continued
cocoa
market
sugar
large
one
reported
trend in
units, compared
to 119,634 (revised) units in the
preceding week, due to continued
strikes, "Ward's Automotive Reports" states.
remaining $20 million
before Dec. 29,
ARE
CLOSING OF MORE FORD
million
'by the loan agreement, and
BUT
raw
cash
of
was
Coffee and
noted.
week
and
year ago
revenue
Production of
principal amount provided
the
WEEK
.
AUTO
at
Lehman Bros, Arranges
week
stronger,
distributed by the electric light ing a net stock in the hands of the CCC of 4,388,000 bales.
and power industry for the week ended
May 21, was estimated at RETAIL AND WHOLESALE TRADE HELD AT HIGH LEVEL IN
5,255,272,000 kwh., according to the Edison Electric Institute. This
PAST WEEK BUT WAS SLIGHTLY UNDER CORRESPOND¬
represented a decrease of 1,704,000 kwh. below output in the pre¬
ING PERIOD OF 1948
ceding week, 169,860,000 kwh. or 3.3% higher than the figure re¬
Favorable weather coupled with aggressive promotions sustained
ported for the week ended May 22, 1948 and 592,414,000 kwh. in total retail dollar volume at a high level in the period ended on
excess of the output reported for the
corresponding period two years Wednesday of last week. It was, however, slightly below that of the
the
will lose much of its
apparent
difficulty.
A further
step to help solve the dollar prob¬
lem is that countries in need of
dollar
last
was
The amount of electrical energy
Euro¬
of
problem
one
cars,
decline
lished
certain
real
a
CONDITIONING
exchange rates to be estab¬
at realistic rates, we feel
the
96.8% of the old capacity
or
ELECTRIC OUTPUT LOWER FOR 16TII
of the
permit
in terms
currencies
pean
dollar.
of
number
a
to excect
seems
freight for the week ended May 14, 1949,
according to the Association of American Rail¬
roads.
This was an increase of 3,399 cars, or 0.4% above the
pre¬
ceding week. It, however, represented a decrease of 75,209 cars, or
8.9% below the corresponding week in 1948 and a decrease of 116,472 cars, or 13.1% below the similar period in 1947.
total
problem, we
its
natural
is delayed to a great ex¬
However, "The Iron Age"
r
1948-1947
Savings at its
the
tons,
PREVIOUS
of
source, arid destroys
incentives essential to indi¬
jobs.
out Of the industry
or
CARLOADINGS ADVANCE SLIGHTLY IN LATEST WEEK ABOVE
the
problems involved in the restora¬
buying
crop
hundred pounds in
1,744,800 tons for the average week in 1940, highest prewar year.
become too
difficult.
in
their
to
newcomers
one
lasting depression in steel.
and 1,719,600
tackled
I have, how¬
the impression that the Sub-
or
conditions later this year springs from
through three deflationary periods since
coming from steel people who are
over
been
wheat
The
operating rate is equivalent to 1,734,700 tons of
steel ingots and castings for the entire industry, compared to
1,762,400 tons a week ago, 1,797,400 tons, or 97.5% a month ago,
credit and wage
to
Government
This week's
properly monetary,
manage
caution
who have
that the operating rate of steel companies having 94% of the
steel-making capacity of the industry will be 94.1% of capacity
for the week beginning May 23, 1949, as against
95.6% in the
preceding week, or a decline of 1.5 points, or 1.6%.
.
international gold standard and
avoid the recurrence of a depres¬
type
the
The American Iron and Steel Institute announced this week
an
sion of the
of
men
with much of the optimism
had after
we
one
the crisis of 1929.
that
sure
prolonged and
a
grains
reports of continued
was
This they can do more each day as all steel items
easily available, this .trade authority adds.
some companies
and on some products have
slowed up in the past week, although this condition is not uniform.
Others find cancellations still running high compared with incoming
orders.
,;v»\
~
Steel people are afraid that in the process of
trimming inven¬
tories the trend may gather too much momentum on the downside.
1920
most
dry weather in the American and Canadian Northwest.
winter
Cancellations with
steel
in
The wheat market
tightness in the cash article and
by
period.
short
become
It re¬
quires technical skill of the high¬
est order but it can be done.
We
standard
aided
more
situation, the trade paper observes, is balanced against
the possibilityof a serious labor tieup in steel and coal, a pickup in
general business or governmental anti-deflationary moves.
Some
steel consumers weighing the matter have found their answer in
cutting inventory to the bone. They have also started to fill orders
when and as they come in, thus reducing their steel buying habits to
a
undertone
steady
a
39
wheat remained very slow. The
making excellent progress and
harvesting is expected to start in about two weeks in the South¬
west. Rye prices moved sharply upward, largely due to expectations
of a much smaller domestic crop this year.
Trading in the domestic flour market, with few exceptions, re¬
mained on a hand-to-mouth basis.
Some activity in export buying
This
Exchange Rates
was
with the trend slightly firmer.
I
(Continued from page 5)
(2299)
on
on
mar¬
May 17, as compared with 248.04
the corresponding date last year.
According to the Federal Reserve Board's index,
sales in New York City for
clined
by
9%
from, the
decrease
of 4%
department store
the weekly period to May 14, 1949, de4
period last year. In the preceding
registered below the similar week of
1949, a decrease of 8% was
same
week
a
1948.
For the four weeks ended May 14,
was
reported under that of last year and for
decreased bv 5%.
the year to date volum^
40
THE
(2300)
COMMERCIAL
&
Thursday, May 26, 1949
CHRONICLE
FINANCIAL
Activity
Indications of Current Business
The following
statistical tabulations
shown in first column
cover
.*
IRON
Week
INSTITUTE:
STEEL
AND
Previous
Ago
j
Latest
.
94.1
95.6
97.5
96.8
May 29
steel
1,734,700
1,762,400
1,797,400
1,744,800
—
of
PETROLEUM INSTITUTE:
domestic
Total
ions
each)
—I.
(bbls.)
(bbls.)
fuel oil outout
Residual fuel oil output (bbls.)
output
Kerosene
output
May
Stocks at refineries, at bulk terminals, in transit and in pipe lines —May
Finished and unfinished gasoline
(bbls.) at
May
Kerosene
(bbls.) at
May
.
,
Gas
(bbls.)
oil
fuel
Residual
(bbls.)
distillate fuel oil
and
oil
115,216,000
17,506,000
May 14
May 14
May 14
—
—
(bbls
Gas oil and distillate
14
14
14
.—May 14
May 14
at
at
^
5,422.600
5,172,000
17,530,000
1.831,000
5,143,000
16.919,000
2,065,000
§5,640,000
§17,141,000
§2,253,000
5,955,000
7,895,000
123,400,000
19,173,000
51,373.000
61,024,000
5.983,000
8,282,000
125,922,0C0
18,187,000
§6,800,COO
§9,002,000
§108,285,000
§14,065,000
46,169,000
60,030,COO
§36,267,COO
§52,930,000
!
1,706,000
5,821,000
8,519,000
14
4,911,600
4,896,750
4,899,350
May 14
runs
Gasoline
*
122,071,000
19,750,000
52,476,000
61,993,000
Refined
Revenue
freight received from connections
,_May 14
May 14
(number of cars)
765,890
625,074
768,337
621,801
771,736
608,993
CONSTRUCTION
ENGINEERING
—
RECORD:Total U.
construction
S.
Indicated
stock
(bbls.)—
Month
U.
(net
—
municipal
and
State
<
May 19
:
_
Federal
-
15,026,000
9,980,000
$107,322,000
50,398,000
56,924,000
51,125.000
5,799,000
South
America
Europe
To
Asia
Beehive coke
(tons)
May 14
May 14
May 14*
—
.
.
(tons)
-
tons)
(net
March:
of
———1—
120,035
111,217
131,111
(short tons)
504,142
539,717
641,110
91,629
93,866
of month
*97,123
83,741
83,165
104,044
76,127
*113,154
116,475
76,494
*68,450
67,257
month
For
—
11,050,000
997,000
148,400
11,200,000
982,000
137,200
11,450,000
824,000
136,000
236
*334
314
In
13,248,000
1,206,000
141,90G
293
U.
of
A.
stocks at end of period (tons
lbs.)
——————————
LINTERS
AND
MERCE
2,000 lbs.)——
(tons of
copper
2,000
DEPT.
—
>
_
597,031
consuming establishments as of
May 21
5,325.513
5,256,976
5,255,272
month
Linters—Consumed
5,085,412
INDUSTRIAL)—DUN
AND
(COMMERCIAL
STREET, INC.
BRAD-
&
•
May 19
lt72
—May 17
..May 17
May 17
v
193
public storage as of April 30——--—
3.708c
$46.59
$22.75
3.211c
$40.ol
$40.66
Finished steel
'
(per lb.)
(per gross ton)
Pig iron
;
—
—
—.
_
(per gross ton)
Scrap steel
;
(E. & M. J. QUOTATIONS):
"
May
May
May
May
May
-
*
refinery at
(New York)
Export
-
at—
Straits tin
(New York)
Lead
•
.Lead
Louis)
(St.
Zinc
•
at—
;
-
—
at—
—
(East St. Louis)
May 18
at
endowments
Matured
$143,484,000
44,426,000
corporate
-
"
Aa
May
—May
May
May
May
—
-
~
—
-
^
^
Baa
-I-II——I————
Railroad
1
Group
Utilities
Public
Industrials
!
Group
24
24
24
!
101.66
113.31
118.80
117.40
112.56
105.00
101.53
113.12
101.63
113.12
118.80
117.40
112.56
24
24
119.00
117.20
105.17
108.52
114.27
117.40
;May 24
May 24
-
Group
101.65
113.31
May 24
May 24
;
—.
Aaa
Disability
—
values
S.
Government
Average
108.34
113.89
117.40
LIFE
——
-
_
-
I———
—I
A
I
.
"I ""
Aa
Baa
—
-
■.
Railroad
Group—
Utilities Group
Public
Industrials
INSURANCE
LIFE
—
—:
—
Group
24
24
24
24
24
24
2.33
2.99
2.71
2.78
3.03
3.44
2.38
2.99
2.71
2,78
3.03
3.45
Ordinary
—
$1,337,000
$1,287,000
INSTITUTE
of April
Month
-—
414,000
433,000
39G.OOO
182,000
454.000
211,000
$1,852,000
$2,224,000
$1,894,000
672,000
636,000
460,000
72,052
Industrial
Group
106.74
108.70
114.08
116.80
:
Total
—„
PRODUCTS (DEPT.
March:
WROUGHT
3.25
2.94
2.78
3.26
2.96
2.78
—
Shipments
2.39
2.38
3.00
2.70
2.79
3.05
3.45
3.27
2.95
2.77
.May
May
__May
May
.May
May
—
-
—
omitted* —
tOOO's
3.00
2.75
2.85
3.04
3.35
3.24
2.95
2.81
426.7
345.7
343.4
344.8
—May 24
1
COMMODITY INDEX—
pounds)
( in
-——
COMMERCE)—Month
sale
For
producers'
86,767
35,074
50.065
33,909
31,670
36,702
26,999
43,969
102,379
118,313
203,351
$625,904
68,343
297,823
542,239
66,237;520
132,097,816
$550,366
$572,335
—
(short tons)___—
cancellation,
for sale
use
own
booked,
less
tons)
—
orders,
Unfilled
66,744
38,143
22,204
tons)
(short
For
ishort
of
(short tons)———
Shipments
Orders
OF
(DEPT.
March:
CASTINGS
IRON
MALLEABLE
(short
MOODY'S
55,083.000
$307,077,000
$1,256,000
PURCHASES
INSURANCE
OF
118.00
116.02
112.3,
112.19
105.00
108.16
114.08
117.60
-May 24
May 24
May 24
-
<
Aaa
46,239,000
$269,380,000
OF COMMERCE)—Month of
Bonds
coroorate..
41,704,000
58,889,000
-
—
MAGNESIUM
U.
8,356,000
19,438,000
•,
$326,028,000
dividends
Policy
41,746,000
$142,339,000
40,157,000
7,825,000
17,630,000
50,587,000
payments
Surrender
>
8,142,000
20,500,000
payments
Annuity
YIELD DAILY AVERAGES:
BOND
MOODY'S
$117,839,000
33,101,000
"
—
AVERAGES:
DAILY
PRICES
BOND
U. S. Government Bonds
Average
306,533
March:
of
benefits
Death
21.200c
21.650c
94.000c
17.500l
17.300c12.000c
21.200c
21.625c
103.000c
15.000c
14.800c
14.000c
17.750c
17.925c
103.000c
14.000c
13.850c
"12.000c
17.700c
18.000c
103.000c
14.000c
13.850c
12.000c
18
18
18
18
18
Total
MOODY'S
309.397
STAND¬
MANU¬
April:
—
of
INSURANCE—BENEFIT
INSURANCE—Month
at_.
refinery
70,345
21.695,000
units)
of
(number
230,332
112,730
PAYMENTS TO
POLICYHOLDERS—INSTITUTE
OF LIFE
Electrolytic copper—
Domestic
sales
Factory
LIFE
METAL PRICES
ASSN.)—Month
FACTURERS
134,063
358,957
20,425,000
30—
CLEANER
(VACUUM
SIZE
ARD
w_.
—
..
CLEANERS
VACUUM
HOUSEHOLD
fiRON AGE COMPOSITE PRICES:
2,861,102
97,144
252,656
spindles active as of April
92
1:3.705c
$45.91
$22.75
*
2,132,969
335,166
112,536
19,801,000
consuming establishments as of Apr. 30
Cotton
171
+3.705c
$45.91
$22.75
-
-
-
In
In
FAILURES
829,960
1,559,265
6,615,516
119,985
April——
of
720,892
1,448,450
5,871,447
Apr. 30
public storage as of April 30—
,
(in 000 kwh.)
Electric output
i
|
month of April—
In
INSTITUTE:
COM¬
OF
BALES—
RUNNING
—
Lint—Consumed
In
ELECTRIC
April:
of
lbs.)
of 2,000
(tons
S.
Refined
COTTON
—May 14
TEM—1935-39
KDISON
10,897
.—-—;—
Copper production in U. S. A.—
Crude (tons of 2,000 lbs.)—
9,966,000
23
(DEPT. OF
tons)—
(short
141,056
—
_
FORGINGS
STEEL
INSTITUTE
COPPER
55,015,000
SYS¬
RESERVE
STORE SALES INDEX—FEDERAL
AVERAGE=100
WEPARTMENT
+575,000
Deliveries to customers—
(tons)—-
lignite
anthracite
Pennsylvania
6,288,000
2
tons)—
(net
Unfilled orders at end
S. BUREAU OF MINES):
and
coal
Bituminous
'
v
226,483
(net tons)
(net tons)——._.
Refined
COAL OUTPUT (U.
377,861
~9~9~8U
——
—
Central America
and
To
846,945
696,696
$82,728,000
17,747,000
64,981,000
604,367
238,139
28,000 1
8,354,000
anthracite
Pennsylvania
of
tons)
North
COMMERCE)—Month
$130,991,000
57,863,000
73,128,000
63,148,000
337,950
11,344.000
(BUREAU OF MINES)—
March:
of
exports
S.
Shipments
$157,773,000
59,023,000
98,750,000
83,724,000
——May 19
May 19
—1
—May 19
:
166,596,000
155,224,000
COAL EXPORTS
-
May 19
Private construction
Public construction
::
'I-/V-vN.■'
:
-
-
!—
ibbls.)
Increase—all
;
NEWS-
ENGINEERING
;'% V
>'}
—
181,813,000
148,697
—
(bbls.)
—
consumption—domestic and export
COMMERCIAL
CIVIL
(bbls.)—I
imports
products
To
(number of cars)
freight loaded
*196,495,000
*2.805.000
300,652
(bbls.)
output
gasoline output
Benzol
output
(bbls.)
Crude oil imports
(bbls.)
ASSOCIATION OF AMERICAN RAILROADS:
Revenue
*180,070,000
*167,072,000
12,987,000
11,000
13,875.000
5,355,000
42-gal-
of
———
oil
crude
To
'
162.600,000
150,519,000
12,070,000
11,000
12,363,000
4,354,000
173,576,000
5,741,000
(bbls.
production
cacni
Natural
output—daily average (bbls. of 42 gallons
to stills—daily average (bbls.)——.
Crude oil
Crude
Ago
February:
Domestic
AMERICAN
Year
Month
INSTITUTE—Month
PETROLEUM
AMERICAN
May 29
operations (percent of capacity)
Equivalent to—
;•>'%'
'• r
Steel ingots and castings (net tons).—
Indicated
Previous
Month
Year
Ago '''
Month
Week
Latest
.
AMERICAN
production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of quotations, are as of that date) :
either for the week
are
end
sale
for
month,
of
tons)
———
—
STOCK EXCHANGE—As of Apr.
NEW YORK
30
(000's omitted):
COMMOD¬
FERTILIZER ASSOCIATION—WHOLESALE
ITY INDEX BY GROUPS—1935-39=100:
NATIONAL
——
.
"
Fuels
i-
—
:
:
163.9
187.4
172.1
167.6
189.1
180.2
177.1
215.2
165.2
212.7
212.8
139.2
213.5
232.8
150.5
139.4
142.9
150.5
153.1
204.8
158.6
136.1
143.8
138.9
May 21
May'21
—
—
Textiles
222.7
164.6
186.8
171.8
May 21
commodities
Miscellaneous
229.1
311.2
201.6
224.3
221.3
May 21
:
——
Livestock
146.5
May 21
May 21
—
Cotton
Grains
'—May 21
—
May 21
Metals
materials.:
Building
drugs
Chemicals
and
Fertilizer
materials
—
-
May 21
153.1
May 21
machinery
All groups
137.6
142.9
204.3
224.0
142.9
150.5
153.1
203.3
203.3
Fertilizers
Farm
237.7
301.8
266.1
361.5
265.2
256.2
228.6
May 21
Farm products
214.3
147.8
229.7
312.8
215.1
May 21
—
combined
'
223.3
margin accountscustomers' net debit balances——
carrying
firms
Total
May 21
.
Oils
and
216.4
146.2
227.8
315.7
203.2
220.4
222.6
May 21
May 21
May 21
:
Foods
Fats
Member
of
extended
Credit
Cash
Total
customers
to
customers'
of
value
of
Market
value
of
credit
free
listed
Market
S.-
balances—
shares.——
bonds
listed
borrowings
67.517,768
70,261,691
132,064,687
134,546,325
72.0%
78.0%
$177,836
$95,176
218.505
215,383
8.0
6.7
FORECLOSURESLOAN INSUR-
FOR
ES¬
< 1DB5-3J>=I 00)—
(BUREAU OF MINES) —
CEMENT
PORTLAND
614,000
AND
ADJUSTED
AS
66,192
382,998
550,781
$178,367
301,513
December
of
64,389
325,969'
8.5
SAVINGS
CORPORATION—INDEX
TIMATE
Month
on
REAL ESTATE
FEDERAL
ANCE
70.5%
——
Issues—
other collateral——
Member
NON-FARM
:—
——
price index, 12-31-24=100
borrowings on U. S. Govt.
Stock
Member
.
—-
and in banks in U.
hand
on
Month of March:
(NATIONAL
PAPERBOARD ASSOCIATION:
(tons)
received
Orders
__May 14
(tons).
Production
147,537
166,639
May 14
Percentage of activity
Unfilled orders (tons)
I—May 14
at
79
271,323
May 14
—
155,789
188,745
100
385,907
144,710
165,853
80
276,572
138,227
160,923
78
289.481
PAINT
DRUG
AND
PRICE
REPORTER
INDEX
—
AVERAGE=100
ESTATE
May 20
130.8
146.8
132.7
131.1
Savings
NEW
SERIES—U.
DEPT.
OF
LABOR—
.■>
;
.
/
'V
All
commodities
Textile
Fuel
Metals
_
Mutual
banks
Savings
than farm
and
Building
products
materials
7
of
years
3.74583c
188.7
177.5
149.1
Miscellaneous
139.3
130.6
168.1
195.3
129.3
131.5
171.5
149.5
132.7
157.1
196.5
196.1
Month
130.7
136.1
Shipments
(short
sale
(short
Producers'
17
17
17
17
138.8
130.6
168.0
193.6
129.5
161.8
May 17
204.8
221.9
„May 17
188.5
-
per
figure.
1937 to
II Includes
394.000
barrels
1940 inclusive and 1946 to
pound.
.
of
foreign
crud
1948 inclusive.
•
76.630
192.789
51.482
168.280
127,961
Individuals
163.4
148.4
162.1
199.6
220.4
186.4
163.2
Total
203.6
224.1
186.9
runs.
§Not
The composite
under the old method this week would have
(short
234.8
262.5
222.1
been
73%
71%,
TREASURY
RECT
.•«
OF
Net
Net
U.
of
$296,509
67,987
80,974
160,871
228,489
46,020
45,383
171,571
105,636
132,515
$881,033
$756,490
$955,441
133.839
135,042
162,891
102,027
36,362
99.425
125,550
35;617
37,341
284,754
(DEPT.
320.202
508,822
$1,505,250
$5,059,000
$106,764,000
OF COMMERCE) —
March:
orders
tons)
tons)
own
for
;-—
(short
use
sale
at
end
tonsil
of
month
tons)
MARKET
AND
S,
$223,906
152.070
-
-
Unfilled
——
institutions——
lending
CASTINGS
STEEL
214.5
comparable with other periods which are on new
reporting in California.
Principal changes exclude cracking stock from distillate and residual fuel oils.
tThe weighted
steel composite was revised for the years 1941 to date.
The weights used are based on the average product shipments for
"Revised
basis
the
171.1
163.4
146.9
138.9
May 17
Livestock
Hides and skins
finished
171.6
163.4
146.8
iMay 17
Meats
'
172.0
'
Grains
"
163.8
May 17
other
Special indexes—
I
156.9
May
May
May
May
—
metal
155.9
For
foods
156.0
May 17
May 17
lighting materials
and
r
All
other
products
and
$263,891
and Loan associations
companies
Trust companies—.
and
Banks
May 17
products
13,751,000
FINANCING
For
Farm
Foods
74%
.
May 17
All commodities
20,886,000
Insurance
V"y
1926=100:
.
S.
14,502,000
13,957,000
*22,206,000
IN NON-FARM
AREAS
OF
U.
S, — FEDERAL
SAVINGS
AND
LOAN INSURANCE
CORPORATION
—Month of March (000's omitted):
192G-36
_
PRICES
WHOLESALE
used
Capacity
9,134,000
23,106.000
Shipments from mills (bbls.).
Stocks
(at end of month)
(bbls.)
REAL
OIL,
14,539,000
15,439,000
(bbls.)
Production
I
TRANSACTIONS IN DI¬
SECURITIES
GUARANTEED
A—Month of April:
sales
purchases
"Revised figure.
,
,
—r
h
JDecrease—all stocks (in bbls.).
• ■
Volume
169
same
season
mercial
a
creasing
than
have
during
the
com¬
in¬
been
last
several
So far, the deterioration of busi¬
has
not
constitute
but
been
even
sufficient
mild
a
to
have
depressions.
of
one
shall
I
our
forth
set
in
following paragraphs the prin¬
cipal supports for these conclu¬
sions.
will take strong measures if
nec¬
merely
the
end
accumulation by
price
movements
furcher deterioration in
the
general
business
situation.
of inventory
which
existed
war,
of
ports
of
end
our
It has appeared
boom.
for several
months that supply was catching
to demand at prevailing build¬
Residential construc¬
has fallen off sharply since
costs.
July. 1948, and for the first quar¬
1949 such
of
ter
below
15%
construction
first
the
was
of
quarter
Price
spending or
spending' by business organizations
have spread
to all major com¬
is
the
more
dynamic factor in
modity groups.
Even the prices
of building materials, house fur¬ shaping the coarse of general busi¬
ness is an issue often debated-but
nishing
goods,
and
metals—
which
groups
than
the
tendency.
is
to
iron
of
longer
finally
have
the
declining
significant.
and
The
steel
scrap, a
useful business forecaster in
itself,
has fallen almost 50% since last
November. The nonferrous metals
—copper,
lead, and zinc—have
dropped severely in
and
have not
all
recent weeks
yet found
as
solid
a
resting place.
The index of 28
commodity prices, compiled b,y the
Bureau of Labor
Statistics, which
includes
most
of
the
important
agricultural
trial
products
and
indus¬
materials—commodities
price changes have often
given
early indication of a
change in the business situation—
has as yet given no evidence of
an
prospective
current
termination
decline
of
the
the
of
general
wholesale price level and of busi¬
activity.
ness
Continuation
of
a
lower price in the futures market
than
in
the spot market for a
number of commodities dealt in
in both types of market is another
suggestion of lower prices to come.
During the past year fundamen¬
tal changes have taken
place in
supply, demand, and price rela¬
tionships. Supply outran demand
at
previously existing prices, first
as
to
agricultural products and
subsequently
as
to
almost
all
groups
Buying
by
fallen
ultimate
off
continue
to
show
trade
has
unfavorable
Re¬
a year ago.
turned
down
defi¬
nitely.
The index of department
sales, adjusted for seasonal
variation, compiled by the Fed¬
store
Reserve
in
peak
Board,
July,
clined 14%.
1948,
The
reached
has
and
more
its
de¬
comprehen¬
sive index of retail sales
compiled
by the Department of Commerce
has
declined
somewhat
shorter period
less
of time.
department store sales
first
week
in
over
since
November,
comparison with
the
1948,
for
the
a
first
year
four
previous,
months
between them.
1948 alone the additions
easiness inventories amounted
to
year
several billion dollars.
to
The sizable
expenditures for accumulation in
will
1948
be
not
in
made
1949.
There
which
traction
are
by
are
few
very
ultimate
not
now
here
demand.
Moi ecver, it is probable that there
will be some inventory liquidation
during the year 1949. This could
become a depressing influence of
considerable importance.
Plant
tures
and
equipment
field
of
indicated
5%
the
ures
expected
for
parison with 1948.
com¬
The actual fig¬
available
now
drop
in
1949
for
first
the
quarter of this year are even more
unfavorable.''
The
W.
F.
Dodge
Corporation has reported that the
quarter plant expenditures
were 19% below the first quarter
first
last
of
year.
New
by
manu¬
Massachusetts
of
is
moderately below its peak reached
early in i948 but well above the
low point touched in the middle
of
The index for the
1948.
try
as
whole
a
compiled
coun¬
the
by
Department of Commerce shows
moderate
last autumn,
individual reports of
alarming
an
a
drop from the level of
sort
being
are
met
occasionally, but the situation as
portrayed by the comprehensive
statistics is not alarming.
Supports in the Current Situation
There
the
in
ports
several
are
strong
current
depressions.
situation
Businessmen
ment
placing
some
jus¬
are
reliance
on
(1) The large block of govern¬
spending
duced.
If
will
total
not
be
re¬
expenditures
the
Federal, State, and local
ernments, for both foreign
by
gov¬
eral
billion dollars of sales in
the
expectation
will
is
government
wiped
the
built
extent
of
be
not
1920
been
money
to a
the
up
through
bank
called in
were
of
in
considerable
expansion
loans—which
large volume after
port afforded
by the Federal De¬
posit Insurance Corp. constitute
a
noteworthy supporting factor.
Probable
There
Extent of
four
were
recessions
World
the
Wars.
Recession
between
One
busi¬
general
of
the
these,
two
1923-
1924,
was
mild; two, 1920-1922
1937-1939, were severe; and
fourth, 1928-1933, was catas¬
and
the
trophic.
The
accompanying table
shows the percentage decline from
the high month to the low month
duration
the
and
of
the
decline
recorded
by the Federal Reserve
Board index of industrial produc¬
tion
and
the
Bureau
Labor
of
Statistics index of wholesale
com¬
prices.
modity
EXTENT OF FOUR RECESSIONS
F.R.B. Indust.
B.L.S.
Production
—Prices—-
Dura-
De-
Dura-
cline
tion
cline
tion
'/r
Months
%
Months
33
13
46
1920-22
20
1923-24
18
14
9
54
36
39
53
1937-39
33
12
15
28
My analysis suggests that
are facing a general
business
cession
than
somewhat
1923-1924
not
but
1920-1922. During
as
commodity
"guess"
indexes
of
prices
that
is
we
re¬
46%.
time
before the end of 1950, will reach
levels something like 25% below
peaks of
production
much
prices
and
is
a
such
in
the forecaster.
realization
full
al¬
7%, the ex¬
further fall of
To make
specific terms
perhaps imprudent
of
have
as
or
15% to 20%.
as
forecast
a
some
Inasmuch
1948.
ready fallen 6%
pectation is for
as
the part
on
make
I
of
it with
risks
the
in¬
volved, but with the hope that it
may
sis
help to crystallize the analy¬
those who may chance to
of
consideration
give
Prevent
to
Decline
a
Serious
are
at hand in three
The managers of business,
areas.
cant
is
an
face of
(2)
of
business.
This
stable
spending
important support in the
declining private business.
Moreover,
may
government
increase in 1949 by
1(3) The Federal government has
be
recognized,
that the primary
sibility of the manager of
course,
is to
ness
failing,
but
most
in
policies
stabilizing
such
run
with
the
policies
additional
some
aim
the
general
the
Policies
Pricing
challenge
o:
business
has
turned
is
in
current
prices
In
the
that
boom
strong business concerns to make
expenditures for capital improve¬
which
reduce
costs of op-
expenditures
Such
and
cut costs.
Reduction
demand
terial
Raw ma¬
ordinarily decline
prices
promptly and more severely
more
eacl
for
raw
downturn.
business
a
as
of
cost
the
important element
an
attempt to cut costs after
in the
individual
analysis of the
careful
in
materials is
o:'
groups
business spending while they
up
can
are
deter¬
mined by the interplay of imper¬
price level. For
businessstability, the wise policy for pur¬
chasing agents to follow is to take
advantage of all reasonable oppor-
sonal market
tunities
to
be
sure,
also
fully
forces, but there
arc
considered
portunity
exert
pricing policies
markets there is
pricing
for
rial
op¬
oi
ers
plated
should
be
reduction
templated
or
series
and
the ma¬
lower
savings
prices, there are op¬
terial costs through more
buy¬
will it repel buyers by sug¬
of
disadvantageous
are
portunities for savings in raw ma¬
efficient
use of the materials. More careful
supervision will accomplish some¬
given tc
attract
markets
from
the double question: Will the con¬
ers
material
raw
terials.
respect to any contem¬
price
reduction,
careful
consideration
lower
products fabricated from
In
addition to
sa^Q
With
in
of 'general
only to raw material produc¬
but also to the sellers of the
not
tr
influence
stabilizing
a
an
policy
purpose
prices but to avoid contributing to
a demoralization
of raw material
markets.
Demoralized raw mate¬
markets where prices
largely as a result of care¬
these
In
prices
many
set
are
the
commodities
some
market
the general
than
commodity should be made before
a
pricing policy is set. There are
where
thing in this direction.
Savings can also be
that
made by
dropping out of the line of
reductions?
ucts those which are
a
In order to avoid
buying, the price of
the
the labor side,
On
nrod-
unprofitable.
a
action
individual
tional
tion
the
business
opportunities
the
at
means
at
of
level
unit.
of
Addi¬
exist for
community
the
level
ac¬
by
banking,
from
commodity to
depending uoon
the
A
intelligent
cooperation
labor,
civic
organiza¬
tion
will
some
reduc¬
in
and
supervisory
vary
commodity
sion
the buyers.
of
tract
price
the
attention
of
buyers
iJ
there is to be any effect on buyer
reaction.
Token
reductions
will
j
j
for
period
not be
be
a
such
of
individuals
business
in
a
should
overlooked but should not
charge
of business.
in
slack
is a
The provi¬
personnel
policy to be adopted.
customary
reduction,
moreover
should be of sufficient size to at-
upon
the operation??
Wage rate reductions*
proportion to the decline in the
of
living will bring some
ii
cost
-
previous prve was regarded
as abnormally high.
On the other
h and,
a
substantial
reduction
which
brings prices down to £
cost
saving
not
the
by community leaders in business,
commodity
when
ordering period
be
„
are
especially significant as they hold
commodities,
the
be
may
very
It is well
conditions
of waste and that
the optimum rate of operation
somewhat below the peak reached
during a boom.
There
is
an
opportunity for
furthei
generalization
commodities,
of
the
it
place,
that
contain aspects
adequately the pricing prob¬
lems of American industry. Pric¬
ing policies must be determine!
nature
first
recognized
price reductions.
A
What oppor¬
there for cost reduc¬
reduction in cost.
some,
eration.
for
«.
fact of
reduced operating rates after bus¬
iness
has
turned
down
brings
This
easy
purchasing power
spending as much
There is, of course,
purchasing power element in
business situation?
ments
no
in
cutting
spending.
are
observed
was* re¬
for
and
avoid
conflict between cost reduction
Purchasers feel that many
commodities
are
still
too
high
calls
sort
a
to
as
possible.
the
duced.
situation
such
of
business
the
Begin¬
ning with agricultural commodi¬
ties and spreading to all commod¬
ity fields, purchasers came to fee.'
that prices were too high.
De¬
current
of
tion which do not reduce seriously
re¬
a
be
tunities
te
business decline
measure
a
For the purpose
amouts
business
action against high prices.
at
its sales.
attempt to meet thir
considerable
business is
a
make
to
profit, Or
a loss, after it has reduced
selling price in order to hold
a
appealing to potential buy¬
The
ers.
operation of
and maintenance of consumer and
challenge. It is essential that the
things they have to sell be made
more
decline.
sales
continue
and
aftei
is
the
down consumer
keep their sales from falling se
riously. Their pricing policies are
perhaps the most important ele¬
ment in their
the
tions
biggest
industria
down
shortly will be forced to meet
lower price and, unless the
price stimulates total de¬
such
The
—
of
stabilizing the business situation,
it is important that cost reduc¬
indi¬
concerns
sales
Getting
business away from a competitor
through a price reduction is unstabilizing, in fact. The competi¬
as
confronting
commercial
the
to
producer.
up
vidual business units.
and
contrast
its
busines;
to
in
individual
an
avoid
may; involve
risk
pur*
business
the
price reduction is not.
a
effective unless it stimulates total
sales
to
though in the shor.
even
stabilizing
of
pose
situation,
in
is, therefore, consider¬
opportunity to determine op¬
erating
makes
price reduction. For the
essential in order for the business
general business decline
situation,
contrast
who
Cost Reduction—Cost reduction
there
and
in
the sales of the
on
producer
mand, the stage is set for a down¬
ward spiral of prices, which in¬
seriously threatened by fail¬
a
the
tensifies
are
ure
industry
an
individual
the
busi¬
not
of
with the effect
lower
o
businesses
a
sales
respon¬
a
important question in pric¬
policy is the probable effect
price reduction on the total
ing
of
tor
keep the business from
significant
Opportunities
of
national
should
An
employment and rates of
it is reduced should be re¬ pay are essential.
Such reduc¬
now that all measures possible be
duced to a point where the sellers tions should be kept to a minimum
taken
to
prevent
the
current
are willing to hold fast for a
for
both
economic and
human,
sig¬
downturn in business from devel¬
nificant period of time. The time
considerations.
The lay-off of
oping into a serious depression. which
is
some of the less efficient workers
importance
of labor and
amount
few
figh;
on
hand.
unfortunate effect of discouraging
in Business
It is of the greatest
take signifi¬
total
a
successful
point which "makes sense" will
stimulate sales if the buyers?
not
they
should, therefore, wait for further
credit agencies, may
large
It
first
Measures
A
gesting that the reduction is the
it.
to
II
with the cooperation
domestic purposes, are lumped to¬
adopted by only
vated by the resolve to adapt theii
policies to the general welfare.
cases.
the monthly
production
prices, at
diffi¬
against impending depression re¬
quires, .as in other types of socia]
crisis, that individuals be moti¬
related
fell
the
solve
industrial
and wholesale
their
if
concern
But
1920-1922 in¬
declined 33%
production
is
us
culty of getting widespread adop¬
tion of policies which are
clearly
wise if adopted
widely but pos¬
sibly unwise for the individual
severe
so
will
attack
confronts
severe
more
busi¬
that
by business¬
the threatening problem
on
which
15
1928-33
which
individual
of
undertake
can
successful
men
mand
De-
things
many
41
| have substantial inventories
help to avert a serious business
decline. The principal obstacle to
able
business turned down.
and
several billion dollars.
Sev¬
had
supply
ness
nesses
money
gether, they represent about 20%
spending
consumers.
issuance
sup¬
which suggest that we are not on
the brink of one of our severe
in
hands of
the
out—whereas
My
received
orders
changing rapidly. A part of the
very large purchases by consum¬
ers
during the last two or three
years was made lor the purpose
of replenishing depleted supplies
the
the
and
Orders
New
things
is
this
supply
built up largely on the basis
dustrial
in
situation
for
time
expendi¬
supports.
in ample sup¬
this
are
an
10%
to
tified
consumers
basis
that
also on the
downgrade. Some months ago es¬
timates made by specialists in this
by business
these
ply to take care of consumer de¬
mands. Passenger automobiles re¬
main
the
significant exception,
even
business
in
of
they were 3% below the
responding period of 1948.
bought
This will represent a notable con¬
cor¬
1949
and
continuing inter-
a
Supply seems to have caught up
co
demand, in some areas sur¬
passed
it, with
respect to the
things bought by business organi¬
zations.
Inventory accumulation
by business since the end of 1945
was one of the important reasons
for the postwar boom. During the
Weekly
have been showing an unfavorable
and
ad ion
Industries
probably
The
(7) The strong condition of the
is
are
managers
concerns.
(6) The money supply of' the
country is not likely to shrink
sharply, as it did in 1920-1921.
was
important part to play.
moderate
banks of the country and the sup¬
The
index compiled by the Associated
consumers
will
and
comparisons with
a
there
at
rates.
important
extremely
are
facturers have been declining.
Consumer Buying
eral
and
established
lower level.
a
tail
diture
solid price struc¬
a
has not yet been
ture
has
not
plentiful supply
a
credit
Both types of expen¬
be resolved.
of commodities. Prices have
declined, but
at
need
raw
whose
a
and
cannot
—
The weakness in metals
particularly
price
firm
were
others
succumbed
consumer
which
There is
potential
oonds—which
Business Buying
Whether
one
(5)
of
of
1948.
weakness
developed first
early in 1948, in grains and cotton.
In recent months price declines
a
Government
by the Individual Business
There
the
a
level
the
of the strong sup¬
postwar
inflation
one
was
the
at
-
strong support to the price
even
though it may not be
fully effective.
oe
shortage
a
.
(4) The agricultural price sup¬
port program can be expected to
Construction of residential
up
government
in such action.
Construction
buildings, to make
tion
Commodity
suggest
(2301)
Federal
the
an
Action
serious collapse of busi¬
a
The
essary
consumers.
Residential
to
and the people of the coun¬
try will support the government
for
accounted
be
by
prevent
in consumer ex¬
can
ing
Relationships
and considerable determination
reduction of 3%
up
Supply, Demand, and Price
certain amount of responsibility
a
and
severe
the
nally,
has
can
unfortunately further deteri¬
shall
CHRONICLE
ness.
recession,
oration is to be expected.
Happily,
it does not now appear likely that
we
FINANCIAL
accumulation. This is now
a thing of the past.
It has been
estimated that for the year 1949 a
tory
penditures
months.
ness
1948 were due to such inven¬
year
the
at
and
ago
year
failures
&
Deterioration, But No Dapiession
(Continued from first page)
greater
COMMERCIAL
tions, and local government." Fi¬
Some
ployment is
THE
Number 4806
effective,
particularly
to the
employer and
hardship to the workers; and
it may be necessary in many in-
no
(Continued
on page
42)
; >
further
in order to preserve the
reduce
to
stances
than that
wages
stability of the business.
be
done, however,
financial
should
This
only under conditions of neces¬
sity because take-home pay will
presumably
already by
been reduced
of a shorter
have
reason
work week,
of
Employment
Take-Home Pay—-The only
Maintenance
and
.
fully effective way of maintaining
employment and take-home pay
is to maintain sales, but there are
opportunities apart from at¬
some
tempts to maintain sales for hold¬
ing
These oppor¬
employment.
up
tunities
should
studied
and
carefully
be
acted
with
upon
imagination and courage.
Efforts
in this direction will help to main¬
tain
spending,
consumer
keep
to
morale, and hence the effi¬
ciency of the work force, as well
up
the
minimize
as
involved* in
holdings of the banks aggravate the problem of reliev¬
Although there is as yet ing human distress. :
I should also recommend that
no
question as to the adequacy
of total money supply, the current tax rates be not raised and per¬
cut instances where an intensely
haps, in some parts of the tax
competitive
policy militates sharp shrinkage in loans empha¬
sizes
the
importance of careful structure, be lowered as a relief
against the best interests of all
measure.
We should, moreover,
consideration of banking policies
concerned.
in the months ahead.
It is grati¬ reconcile ourselves to the neces¬
Capital Expenditures—The pol¬
fying to know that the bankers' sity of deficit financing. Govern¬
icy as to capital expenditures can associations of the country are ment borrowing will have to be
make a contribution towards sta¬
resorted to if business deterior¬
alive to the problem and are mak¬
bility or the reverse. If scheduled
ates very much further, because
ing plans to cope with it.
outlays are carried out as nearly
government
expenditures will
as
possible to the full extent
Community Action to Minimize
have to be increased and tax re¬
planned rather than being slashed,
the Business Decline
ceipts will decline.
such outlays will furnish consid¬
Much can be done on a local
Relief of Human Distresi—The
erable support.
Business should
community basis to prevent this Federal Government is the last
make reductions in these outlays
decline in business from becoming bulwark against the spread and
as gradually as its financial condi¬
severe.
Now is the time for com¬ deepening of human distress in a
tion will permit.
munity
councils
to
be
formed period of declining business.
To
Other Measurements
by Man¬ throughout the land to set up de¬ perform
this role effectively. I
agement—Past experience on the fenses against depression at the suggest two courses
of action.
part
of
many
companies
has grass roots.
A community coun¬ Our unemployment insurance sys¬
shown that there are numerous cil made up of the local leaders in tem should be extended, as to the
additional opportunities for main¬
business, banking, labor, civic or¬ nufnber of weeks of unemploy¬
each
(Continued from page 41)
period of dull busi¬
a
ness.
Work-spreading
attempted
was
seriously in the depression of the
early 1930s and
better
did
then.
time
this
results
than
Work-spreading
a
Moving workers to
other jobs
within the company also offers
some promise in many
large and
often
true
businesses.
that
when
and
covered
ment
tion.
to
recently
de¬
Manufacturers
its
should
their
area.
organization and operation of a
more
efficient employment ex¬
statistical chart,
business situa¬
tion.
It is, essentially, millions of
individual, persons in economic
not
trough
a
on a
impersonal
an
or
anguish.
mental
in
and
distress
present, widespread economic
At
distress does not loom ahead.
time
the
is
now
to
set
But
up
pur
personal psychological defense^ so
that, if widespread economic dis¬
should
tress
come,
succumb to mental
I
May
ourselves
in
tune
of
shall
we
not
anguish.
few lines - of
Let us remind
suggest
a
personal defense?
great good
our.
for¬
having been born, in this
part of the ..world, the
freedom and
so richly abound.
Let
particular
part where comfort,
friendliness
us
re-examine
so
that
the
compensa¬
nomic
we
our
may
scale of values,
not place the eco¬
values higher on
the scale
than they deserve.
a
cut in the pay.
check or a crash
in the stock market.
.
>
defense
new uses for change than probably exists al¬
Imagination and ready. It should provide a mech¬
Another
is
1930s
Personal Considerations
to find
try
products.
effort
distributors
and
be
business depression is
a
against
the
onset of personal anguish is the
simple activity of doing some¬
employment situation in employment opportunities be thing for somebody else.
The
It should provide for the available on a larger scale.
"Over-Forty-Club" of the, "early
why tions and
So
salesmen make extra
we
effort when business is dull?"
should
it
Finally,
sized that
an
effort.
extra
make
shouldn't
get
to
together in
force
bad.
empha¬
all, conditions cannot become
Delight in na¬
Secondly, the government ture, in the homey in The circle; of
joys of the mind, the
be prepared to offer em¬ friends,
heart and the soul should survive
of the weekly
amount
should
as
each with the good of
the good of
his although many elements in a gen¬ ployment opportunities. It is very
extra eral business decline are quite be£ important that public works be
session once a week to try to dis¬ yond the potential impact of local planned and managed in a much
cover constructive moves.
"When efforts.
A
community
council more efficient manner than was
business
is
booming," he says, should make and keep up to date the case in the early 1930s.
It is
"our production workers have to a survey of, the business corfdi- also important that government
is
It
some
is
determined
sales
good thing if the work does not
have to be spread too thin.
medium-size
also.)
sales.
effort
sales
it
is
vestment
inven¬
make
to
More and better ganizations and the local goverh?
important.
The ment can sustain local business to
sales manager of a small business some
extent and
can
keep lib
whose sales have dropped sharply morale
and
relieve
distress,
taining
probably yield
can
competitor
tory reductions as gradually as he
can.
Here is one of the clearest-
distress
human
Thursday, May 26, 1949
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2302)
42
Economic, political and organi¬
efforts
zational
are
the
case
a
in
point.
Unem¬
ployed men over 40 years of age
formed the club and each member
weapons
undertook
find
to
a
job for some
oftentimes
will
bring sur¬ anism for the interchange among in the struggle' to avert depres¬ other member.
Chins stayed up
partments are dull, others are still
But in this struggle, as in and jobs were found.
prising results here. Improvement local businessmen of all poten¬ sion.
active.
Shifting workers from one in the
quality of the products, tially useful ideas on stabilizing other kinds of struggle, the out¬
There is also the line of defense,
department to another requires
which is similar to a price reduc¬ their own businesses.
The council come may depend on personal and familiar to some and available to
training for more than one job, tion, may uncover new sales op¬
should also foster the closest sort moral qualities. Strength of char¬
and
also
raises some problems
all, of inward spiritual reliance.
portunities; and the introduction of tie-in between credit agencies acter may win the day.
As we The wise men of all ages agree
with respect to seniority. Neither
of new products, particularly
if and community needs and should look ahead now, we may feel that there is a power beyond our¬
of these problems needs to be in¬
they have been developed and exert a significant influence in the assured that if everybody "stays
surmountable if the management
selves which "we can surely find
planned in advance, will help.
promotion of management-labor in there pitching," if we "dare to
and representatives of labor go at
if we truly seek."
try the impossible," if we merge
cooperation in a time of crisis.
it with
intelligence and a co¬
Operating Policies of Credit
operative attitude.
There
also
are
Agencies
possibilities for
i n ten a n c e of employment
through the creation of new jobs
or through the
carrying on of cer¬
m a
tain activities which the company
had
planned
dull
times.
to
through in
types of
carry
Thus certain
maintenance work can be done by
production workers not needed in
production
departments.
Some
improvements
and
changes
throughout
and
Additional
funds
as
the
plant
may
be
experimental
developmental work, for which
made.
are
available,
can be used
In past periods of
stopgap.
a
dulless
various
forward-looking
companies throughout the country
have accomplished much in hold¬
ing
employment because they
ahead, were in a fi¬
up
had planned
nancial condition to make
some
additional outlays, and were im¬
aginative in discovering opportu¬
nities.
Inventory
has
ness
the
Policy—After
its
passed
peak,
busi¬
one
of
serious
problems which con¬
fronts manufacturers and distrib¬
utors
is the large size of their
inventories.
Typically, inventor¬
ies had been regarded
long
but
business
as
rather
more
as
was
after
a
downturn
of
This situation is develop¬
which
two
are
are
closely
Despite
other
the
groups,
best efforts of all
there
are
some
which
only the
(Continued from first page)
mitigation of a de¬ Federal
Government
can
take.
These functions The government can make a uni¬ year?
Is it 1926,. or the average than 1923-24 (mild) but not so
During
are the
supply of business credit fied attack of great magnitude of 1935-1939, or what is it? Ob¬ severe as 1920-1922.
1920-22, industrial production de¬
and the creation (or liquidation) which it is difficult or impossible viously, with our changed econ¬
of purchasing p o w e r.
It goes for individual businesses or sepa¬ omy, it would be rather futile to clined 33% and commodity prices
My guess is that the
without saying that the first duty rate communities to make.
go that far back.
We should, no fell 46%.
indexes
of
industrial
of commercial banks is to protect
But monthly
It seems to me that the govern¬ doubt, look closer at hand.
then what year are we to select prices, at some time before the
their soundness.
Great improve¬
ment's action should be directed
as a measuring stick?
ments in our banking system have
In the past end of 1950, ' will reach levels
toward two objectives to infuse an
something like 25% below their
ten years, we have had four wai
been
achieved
since
the
great
element of
confidence
into the
liquidation of the early 1930s, so economic situation and to keep years, when the value of our na¬ peaks of 1948." Continuing he re¬
tional product was distorted by marked that since production and
that the banks of the country are
related to the
cline in business.
.
human distress at
in
much
they
a
better
minimum.
a
position
to exert a
stabilizing influence after a busi¬
then
The
Infusion
were
liquidate inventories and to exert point where the credit supply is
It would
pressure
in collecting their ac¬ likely to be restricted.
counts receivable.
Both of these also involve encouragement to the
actions
tend
to
push
business banks to be lenient in calling bank
rather
down
than
what
Moreover,
to
banks'
the
it.
support
cus¬
and
loans
business
to
cooperate with their
by furnishing
customers
prevent injurious liquidation of
inventories or oppressive collec¬
inclination
of
business
ment is to clean
situation
as
production.
The
manage¬
the inventory
rapidly as possible.
up
This inclination appears to be
jus¬
tified because, by working its in¬
tomers
It
able.
business
is
suffer
for
is
the
seriously
credit in
a
most
hoped
is
that
sound
a
long
from
no
busi¬
pull
will
lack
of
short-run business de¬
cline.
A
be
to
which
risk
ness
need
may
'-'
'
^V
'
.
than a harsh
policy in calling loans also keeps
lower volume of sales, the busi¬ the
liquidation
of
purchasing
ness
The pay¬
gets itself into a sounder power to a minimum.
financial condition and in a good ing down of loans brings a reduc¬
competitive position.
But when tion in bank deposits, which con¬
rapid inventory reduction becomes stitute by far the largest part of
total
the general policy throughout an our
money
supply.
The
industry or trade, as it tends to do record-breaking shrinkage of
more than one
billion and a half
shortly after one of the competi¬
tors starts it, the widespread rapid dollars in commercial, industrial
ventory down rapidly to manage¬
able proportions
in terms of a
reductions
create
a
demoralized
situation in the market which de¬
presses
ditions.
rather than stabilizes con¬
Therefore, it is important
in the interest of stabilization for
.
war
production and almost four prices have already dropped 6 or
of Confidence—I j
7%, we may expect a further drop
years of postwar activity accom¬
would suggest that the govern-;
panied by huge plant expansion, of from 15 to 20%.
ment make plans to provide addi¬
If
ness downturn.
the filling up of inventory pipe
our
estimate
of normalcy,
tional support to agricultural j
Is it too much to expect that
lines, and the supplying of the then, be
correct and Professtor
prices, if the present support pro- j
the banks should come to the aid
pent-up demand for all types of Snider's guess be sound, the next
gram seems likely to prove inade-j
of their business customers as the
merchandise and machinery which twelve months-or so should be
quate to prevent further grave were unobtainable during the war from 5 to 8% above "normal."
clouds thicken?
It would be a
weakness in agricultural prices.
substantial
contribution
toward
years.
Surely, not one of these This, of course, would not be too
I would also suggest that the!
the stabilization of business if the
eight years could be classified as bad were it not for the fact that
government make sure that ample ! normal, for not only
banks would be as lenient as pos¬
were the we must consider what such a fall
sible in calling for reduction of credit continues to be available! number of units produced abnor¬ in the value of national product
This would involve mal but so were prices, both of would
loans
alter
business has turned for business.
do
to
corporate
profits.
down.
Calling for loan reduc¬ the replenishment of bank re¬ which naturally affected the value May we refer to our release .of
tions
March 16th in which we quoted
compels the borrowers to serves if they should fall to a of national product.
now
than
lines orders are falling off tional credit to help them carry
sharply than it is practical inventories and accounts receiv¬
to reduce rates of
.
.
credit support where necessary to
because in
What's "Normal"?
actions
needed
addi¬
ing at the present time
many
sound
expanding
suddenly became
burdensome
orders.
as
by
performed
there
Government Policies
various functions
commercial banks
the
Among
gentle
and
rather
agricultural loans since the
1948, has been accompanied
end of
by
an
demand
been
some
post
lead
as
to
us
a
.
a
starting point to
conclusion.
Suppose,
then, we take the ten years from
1939 to 1948 inclusive. These ten
gave an average value of
national product of $178 billion,
years
and
average
an
national income of
of
accounts
also
receivable,
It
the provision
involve
of
New
the effect that
upon
York, dealing with
a drop in sales had
corporate profits.
Omitting
confine ourselves
sampling of corporations
other figures we
to
the
whose sales fell 25%.
showed
This group
that such a sales declipe
ciable,
would
people
out
involve
throwing
pare
vania
Bankers
Association.
Said
"My analysis suggests that we
(There
has period of business downturn,
shrinkage in the in¬ ; would intensify the decline and
are
facing a general business re¬
in
of the National City
survey
a
Bank
$153
he:
shrinkage
from
billion, which figures com¬ resulted in a loss of 79% of prof¬
■ ' >
with 1948 national product its.
of $252 billion, and 1948 income
of additional guarantees or other
Disproportionate Profits Drop
of
$224 billion.
(Source: — The
aids to the banks, if such should
Granted that this drop in sales,
Economic Report of the President
become necessary
to make pos¬ submitted
to
Congress January coming during a boom period, did
sible the desired credit policies.
not permit corporations to adjust
1949.) We then have a projected
their
The government should increase "normal" of national
expenses
quickly enough;
p r o d u c t
nevertheless we, doubt, if under
its total expenditures if total vol¬ about 33%% below last year, and
ume
of private business declines of national income also approxi¬ favorable business control, a loss
of 25% in sales, would mean less
substantially, in order to relieve mately 33%% less than in 1948.
than a 65% drop in profits. How¬
increasing
unemployment.
Al¬
Further 15-20% Price Drop
though economy in government is
ever,
in view of the enormous
an
In this connection it is interest¬
important long-run objective,
profits achieved by corporations
a
period of business downturn is ing to quote a statement made by in 1948, a drop of 65% would not
not the time for it.
Economies in Joseph L. Snider, Professor of per se mean a depression year, but
the operation of government, if Business" Economics
at Harvard there is, of course, another most
they amounted to anything appre¬ University, before the Pennsyl¬ important factor to consider—
tion
would
which, in a
larger
deposits.
even
However, we must select some
sign
of work
cession
somewhat
more
severe
namely taxes.
Suppose,
had
000.
an
a
corporation last year,
operating profit of $1,000,-
Its net, after Federal income
Volume
169
Number 4806
THE
taxes, would be $620,000. Suppose
further, it earns next year 65%
less, or $250,000 before taxes.
After tax, its net would be
$217,000. The loss to the government
would be $247,000, and the cor¬
profits to sales
COMMERCIAL
they did
as
&
FINANCIAL
CHRONICLE
Future Business Possibilities
poration would have available for
retention in the business and divi¬
dends
than
percentagewise
1948.
Obviously, this' reduction in net
would result in
infinitely smaller
•dividends,
■smaller
with
consequent
paid to the govern¬
sums
in
ment
personal income taxes.
Then, too, the corporation would
have available far less for
expan¬
sion
which
might
ther contraction.
and
Both
If
these
figures
pessimistic
thesis.
our
had
may make certain
which tend to prove
In
a
of $103
1929,
gross
billion, and
an
year,
be
figures and esti¬
to
we
be
of
out
the
achieve
to
are
over¬
to
na¬
The labor
billion,
is, the multiplicity of taxes of
all kinds, growing; consumer re¬
sistance, and increasing competi¬
tion
in
and
billion,
almost 60%
less.
It
note
to
make
simple
a
$3.6
was
situation -being what
it
pencils
that,
is
the
problem
It
one.
Because
cries
of
of
some
faster
than
far
from
efficiency
an
expert can sharpen them.
it
But
while the tax rates were lower
in 1929 than
during 1935-1939, the
goes
"mystery"
of
far
the
to
losing the
in¬
an
flationary
period.
We are con¬
our
business—purchases
ducting
and production—on
day-to-day
month-to-month basis.
Quite
possibly this, fact alone explains
a
or
much
the
market.
in
$10/12,000 class now
four, times as much on
spends
clothing
the family of
as
highly
a
much for
as
equivalent; nine times
or
much
times
for
much for auto
on
much
as
recreation.
ity to
on
our
Tax
As
•
we
Incidence
stated
above,
the
hindrance to
consume are no
The
security
long view and confidence in
useful
citizen, who 20
adapted
I
invita¬
your
discussing the
although I am
dfappok,
required
cora||uously to
it. I may
be'J||&ng about
term. We
lf^giot make
adjustments
But
manner.
in
examine
the near
the nec¬
orderly
an
will make them,
we
or -^^S&ther,
sooner
or
At least that is the
story of
way
history.
When we look a long
back, observing our national
world-record
growth,
we
gain
confidence
in
our
ulti¬
power
and
earner
ago wanted to
buy
income.
approximatelypresent levels. However, the nor¬
mal
never
immediately follows
the abnormal. There is
always a
Our Federal tax bill last
roughly $40 billion,
year was
national income of $224
about 18%. If there be
billion,
no
hiatus
on a
the
material
the
normal
is
subnormal,
before
finally achieved.
WiiliamOlKyde With &
billion,
our tax bill will- represent
27% of that income—a totally im¬
possible burden. Or to express it
Wnt. E, Pollock & Go.
to remain
are
between, which usually
develops
or
cut
in
government expenditures
and national income drops to $153
differently, if taxes
in
William
G.
Hyde is now
armament and
our
and
programs
E. C. A.
to "service
our
of
ask
next vlO.
Perhaps
50
let
20
socially
first
mind
that
we
50
j
j
to
100
^ears back. Let
sight;
from;
us exercise hind¬
where we have come
see
then
where
we
if
accorded
of
his
vision of
a
of
and
other
during
the
men's
trend
wages
succeeding
several
ways,
decades.
In
similar statements
could be applied with equal force
today.
General Forecasts Not Adequate
The trouble with general long-
and
are;
years after
revolution
began,
was
our
economy
slowly
But
the
even
gaining momentum.
by 1850 the rate of
growth of real per capita income
in
this country was only about
0.25%..
per
Momentum
annum.
faster and faster.
grew
By the be¬
ginning of the present century the
that
proved rate of growth of real per
capita income was a little over
$15 Ibillion
a
billion
will
out
reduction
be
little
of
budget
of the
cut
question.
here
Aj
0.9% per annum. By 1940 the rate
of growth had increased to 2%%.
.At the beginning of last year it was
there
and
help.
is
Hence,
if
estimate of normalcy be real¬
ized,
we
can
look
forward
to
our
no
.
years of
However, let
uation in
ful
about
and
regard the sit¬
us
more
that
say
business
and
above
the
1935-39
50
to
and
units
that
did
in
sibility,
in view of our
accumulated
(Special
C.
billion,
charge
a
a
if
as
maintain
we
1103
Faster
$8
two
income
taxes on;
|
in spite of
competition, maintain
centagewise
the
same
offices
at
West Fair Avenue.
per
Do
ex¬
per¬
ratio
all
year,
dollars.
dollars
capita
In
actual
income
in
last
av¬
was
does
not
necessarily
follow
the
general
For example, since 1929—
that is, in the space of less than
trend.
two
decades
while
—
industrial
in¬
rials; growing mechanical power;
research; in short, all the ele¬
ments of production; and is not
lacking for support in the other
economic
N.
VERNON,
Y
—
Could
factor,
namely,
'Special
to
The
Financial
ations and
ilar
the likelihood
future
Fox
cott
is
now
&
members
Co.,
of
associated
Guardian
the
New
P.
with Pres¬
Building,
York
of j Cleveland Stock Exchanges.
and
specific industry. This is a highly
specialized art, the likelihood of
realization
of
decreasing
long-term forecasts
the
as
of
remoteness
the event increases.
(2)
Both
well
needs
changes
in
grounded
are
recorded
-
experience,
on
viz.,
the
answer
living?
times
a year on
That
sum
whole¬
is
about
long
past
Finally, consider an economic
fundamental, namely, that pro¬
duction cannot long exceed de¬
mand.
"Demand" in our dynamic
economy
is
power
to
services
is
crucial.
The
consume
our
sheer
goods
and
ceiling of output.
The ceiling today is much higher
than the ceiling of 10 decades
ago,
or even five or two.
The ceiling
of
consumptive capacity grows
>yith man's ingenuity.
No doubt
as
a limit; but for our
people
whole, the ultimate is a long
a
off.
way
tive capacity and our present
pro¬
ductive capacity is a problem both
in
technology and economics.
.
The
changing limitations
on'
technol¬
are
read¬
ily discernible.
Thus far in our
national experience we have seen
i
great
in
n creases
readily
achieved
size
production
when
we
knew
of
profitable markets.
appetites
quantitatively and qualitatively; Recent war experience established
and, changes in the intensity of the axiomatic nature of this state¬
competition between industries.
Where would the petroleum
ment.
The
in¬
technical problems are
soluble.
But
the
chief
dustry be if it had stuck to kero¬
readily
as its
principal product?
carriage builders if they had
Or
economic
ig¬
not
sene
one
of
And look¬
Because
as
personal
nature
so
obstacle
persists.
discernible.
easily
It
is
Its
gradual removal requires the ad¬
of the real incomes of
justment
great numbers of people to their
needs,
I
or
more
termed
their
pacities.
More
the problem
ing
broadly, to what
consumptive
ca¬
immediately, it is
of creating purchas¬
where
it
will
be
simplest and strongest promptly reflected
the
in
larger
de¬
free
freedom
of
to
enterprise.
we
have
change
the
,
power
mand
for the kinds
services
with
ments of the
of
which
goods and
other
population
are
seg¬
tem¬
demands, and be¬ porarily surfeited.
The economic problem is com¬
are made by
the freedom of
It involves such assorted
industry to com¬ plex.
pete with
industry, we cannot matters as the reappraisal of the
cause
our
great advances
economic worth of the
dustries
first,
confidence
as
far
as
we
can
ably project the entire
reason¬
economy.
businesses
can
as
a
portantly,
lation
individual,
producer, but also, im¬
as
a
between
consumer;
the
the
re¬
individual's
general willingness to work and the net
long view and employ the tech¬ incentive; and the development in
nique of adaptability. Each busi¬ many persons of a strong desire
ness
group can act in the assur¬ for more goods and services.
that
the
in
the
realization
of fore¬
average
casts of substantial growth in the
Many millions of
general
economy
will
provide
opportunities for all who practice
National, and some State, legis¬
lators,
through minimum - wage
laws, have been toying with this
problem
for
years.
Action
is
adaptability.
Short of that, we
our punches because of fear.
always belated; useful mostly as
back-stops.
I think the problem
last
year's
other families could spend $20,000
on wholesome
living. By 1975, if
family expenditures averaged only
$10,000, a national income of about
sume
that
factors.
the
consumers'
individual
Our
confidence
foreshadows the long future.
We
are tinged with defeatism and
give
too much
weight to unworthy
ogy's ability to solve it
Adaptation to change of cir¬
cumstances.
gain
a
that question your¬
self.
At last year's prices would
any one of you have difficulty in
$530
think our overall growth is re¬
tarded by these doubts, by ignor¬
ance
of
the
past,
or
lack of
it has
sim¬
of
in small demand will
now
big demand; and currently
security of
The power to satisfy
consump¬
individual businesses requires two tive
capacity grows
with
our
helps:
technology. But bridging the gap
(1) Long-term forecasts for the between our enormous consump¬
But
use
of
the
ones,
easily
family income.
Chronicle)
prospect
non-existent articles will appear.
How prepare now for them?
I
Because of such historical vari¬
trillion
dollars worth of goods and serv¬
ices 50 years hence?
You can
four
CLEVELAND, OHIO—John
the
except
project the affairs of specific in¬
people
our
spending $20,000
•
be in
1'82%; and electricity 222%*%"
individuals
mate¬
articles
36%;
petrol¬
112%;
chemicals
for
raw
haz¬
Security is maximized
adaptation to changing condi¬
py
only
volume
be
It has,
is
tions.
production, as a whole, increased
75%, the bituminous coal output
increased only 36% ; the railroads'
nored the automobile?
not
basic
Prescott Co. Adds
things for granted, first that
treme
erage
some
j
corporations will,
from
Gerard H. Coster is engaging in a
securities business from .offices at
175 Columbus Avenue.
Mr. Cos¬
ter in the past was a partner in
must take
we
engaging
business
Billings; Olcott & Co.
But when we estimate
profits and
Clayton
in a se¬
—
Opens
Dividends
in
is
OHIO
MOUNT
billion.
Fall
from
us
because
business
prospective manpower;
Chronicle)
Gerard H. Coster
18%
an
time.
demand.
at present we shall have
deficit of
Financial
savings
national income of $180
or
The
Chilcote
curities
impos¬
increased
higher living standards. But
again, if we are to have a $40 bil¬
lion tax bill, this will represent
on
to
LANCASTER.
and
22%
businesses,
different
deed, also the strong support of arguments
Clayton Chilcote Opens
an
population,
inflated
last
1935-39
historic growth trend.
the
We believe also, that the increased
units is not
to
well
when I
We believe that price stabiliza¬
tion will approach our estimate.
of
be
$1,500.
1935-1939 period.
number
municipal bonds and under¬
specific
each
when
even
likely to be substan¬
alarmed, therefore, ing at the matter from the other
confidently assert the pos¬ side, where might the railroads be
Beverly
Drive,
Beverly
Hills.
sibility of a national income of today if they had used more fully
a trillion dollars
by 1999. That is the great, advantage provided by
Mr. Hyde was
formerly an offi¬ over
four times last year's income their exclusive
high-speed rightscer
of Blair & Co., Inc., of New
of $224.4 billion. It is not merely
of-way?
York, with headquarters in San
a
conservative projection of our
In what I have just said resides
Francisco.
(ap¬
we
should
continue
carried
$860
of
South
proximately 20 to 25% below the
1948 peak), and we should have
to
produce
approximately 50%
more
about
writers of corporate
securities, in
the firm's California office at 232
55 %
average
has
year's
William G. Hyde
$200 billion in national product,
prices would have to stabilize
least
it
indefinite
an
terms
product will approach $200 bil¬
lion, and national income $180
billion.
To achieve a figure of
at
trend
nor¬
mal and that the value of national
themselves
for
1965
should
real per canita income of $270 in
1850 to $368 in 1900, $670 in
1940,
hope¬
will be somewhat better than
By
and
increase
This
somewhat
a
light,
3%.
4%
over
deficit financing of
inconsiderable amount.
many
forecasts,
eum's
Duripg the 75
tional debt. it is perfectly evident
entirely
term
finally take courage to look ahead.
The
past/ should provide some
'.baMs.idr considering the prospect. ton-mileage
power-and-machine-age
na¬
can¬
Well,
i
annual
years.
ahead.
mine,
on
Here, in a word, is the
income, but who hesi¬ riddle of the long economic fu¬
tated to do so, fearing future eco¬ ture: in time, some articles now
nomic events, might have been in large demand will have dis¬
led to take the constructive step appeared from the market; other
his
of
50
look
I
even
The desire for security is
But there
is
no
sure
prospect
change.
the
on
time-tested rule-of-thumb that it
should cost no more than twice
dis¬
forecasts
or
years
us
in
for
think
you
see
then,
this
persons
the
not
With
Industrial
asso¬
at 18%
of national income they I
ciated with Wm. E. Pollock & Co.,
would .have to be cut to $25 bil-;
lion. When it- is realized that this Inc., dealers in U. S. Government
;
latter amount is required to finance
locations.
ardous.
30 years
or
home
a
tially realized, is that they are not
directly applicable to the affairs
rant stock prices at
question seriously complicates the
problem during a period of falling
volume and contracting national
a
greater degree of
that would be possible
them.
But reliance on
natural.
to
Few
achieve
wage
talfepn future business
possibilities^!' did not expect tc
war¬
to
trious
longer future.
pros¬
casts of economic
without
Adjustments
that, in seeking fore¬
trends, your aim
assume
is
founded and
may constitute reasonable
perity, which might possibly
tax
1
trillion dollar output.
a
wanted to peer with you into the
normal
Aim of Forecasts
The
capac¬
forecasts,
reported
institutional¬
sense
a
operation; and five
times
ultimate limitations
product
above
in
are
home
mately to adjust short-term
somewhat
We
ized.
as
Therefore, we can validly
operation; three embrace the long look and act
furnishings, twice as accordingly.
on
Possibly, as we have attempted to
demonstrate,
a
gross
national
actual dollar amount of taxes paid
in both periods was the same.
records of the past
give reason¬
able assurance of their
continuity.
skilled wage earner of the $3,500/
3,600 class; four times
Most of
our
people are employed in large
corporations; most of our business
is done by large
corporations. The
the
the realization of what it shows is
When
essary
tieth Century economics.
necessary to give us courage to act
in the present.
Many an indus¬
Short-Term
one
ily
According
available, a fam¬
best data
de¬
the; small
,
tion
to the
overall industrial activityi
of
cline in
%nway
explain
stock
oui
"Wolf.
of
are
us
reckless over-confidence of
wearing out Jater.
is
change
trillion dollar income.
rent
Wolf!,"
question.
50%
a
how
and
course.
resistance.
average
interesting
resort
financing in lieu
all
are
Competition should indicate
value of
the
or
we
two
specula¬
upon
distribution, goods must be priced •spend
much;|®|me
attractively to overcome consumer riear-term
1935-1939
further
ourt
all increase in unit production and
billion, approximately 19 and 23%
less respectively than in 1929. But
in
1929
corporate profits, after
$8.4
dis¬
bent
are
of 1935-1939
average
Were
between
deficit
some
pear
average national income of $6*7
taxes,
somewhere
to
tion.
we
when
above
from
seem
unless
that
estimates, provided that
tional product of $84 billion, and
an
reduced.
normalcy with rea¬
sonable profits and dividends will
If
The so-called
normal average years
produced
are
and technological im¬
provements. Lower wage rates ap¬
national in¬
a
faster
efficiency
national product
of $87 billion.
come
boom
a
would
cussion
much
dividends
mates, but they involve the prac¬
tical
problems of reducing ex¬
penses and labor costs by greater
unduly
seem
drastically
These
we
comparisons
It
hence
of tax increases.
themselves.
upon
more
prosperity
depression have the habit of
feeding
we
still fur¬
cause
sales,
43
the
on
larger volume, and secondly, that
dividends will be only proportion¬
ately reduced; both suppositions,
(Continued from page 2);
however, will be found to be credits to
customers. Nor do we
highly fallacious.. As we quoted need short-term
forecasts to tel.
heretofore, profits fall actually us to sell or accumulate
inventory
and
$403,000 less than in
(2303)
ance
pull
A
long view forward is war¬ must be solved bit by bit by the
would be indicated. ranted by the facts of the long informed choice of business lead¬
prospective capacity to con¬ view backward.
It
is
justified ers who embraee all opportunities
is ample to the concept of
a; also by the facts of mid-Twen-j to maximize the national income.
billion
44
COMMERCIAL
THE
(2304)
Securities
•
Western
Allied
Corp.,
Oil
Clemence
per
Co., Chas. W. Scranton & Co., Hincks Bros. & Co., T.
W. Watson & Co. Offering—To be offered initially to
stockholders of record June 6 on a l-for-10 basis, With
ore.
®
Florida
5
stock.
Brokerage Co., Salt Lake City.
For mining development.
Light & Traction Co.
American
May 13 filed 634,667 shares of common stock (par
Offering—United Light & Railways Co., (parent)
the sale to its stockholders of
l-for-5 ratio.
The proposed sale is to conform
Underwriter—None.
Company Act Which
with SEC order under the Holding
holdings.
United's sale of American Light stock
calls for
$25).
plans
record June 1 of the 6^4,667
American at $12 per share on a
shares of
Telephone & Telegraph Co.
American
$400,000,000 tenyear 3% % convertible debentures, due June 20, 1959.
Offering—Offered for subscription by stockholders of
record May 6 at the rate of $100 debenture for each six
shares of capital stock held at par (flat).
Rights expire
April 21 filed between $393,000,000 to
to
subsidiary
Proceeds—For advances
associated companies; for the pur¬
for .subscription by such com¬
and
for extensions, additions and improvements to
telephone plant; and for general corporate pur¬
panies;
own
poses.
Anemcstat Corp.
9
of America, New York
(letter of notification) $300,000 2-year 6% in¬
stalment notes, due in
12 equal monthly instalments,
commencing Aug. 1, 1950, and ending July 1, 1951. To
be offered for subscription by stockholders of record
Ma.y 20
for each share of
Underwriting—
None.
To replenish treasury for expenses in moving
to newly leased factory premises, etc.
Office, 10 East
May 27 at 95, in ratio of $2 of notes
stock held.
Rights expire June 27.
Street, New York, N. Y.
39th
Argus, Inc., Ann Arbor, Mich.
1 filed 115,315 shares ($10 par) 5V2% cumulative
•convertible preferred stock.
Offering — To be offered
initially for sale to stockholders at the rate of one pre¬
ferred stock and purchase warrant for each 3V2 shares
of common stock held.
With each share of preferred
{purchased company will issue a purchase warrant en'itling the holder to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
Underwriters—Leason & Co., Inc., and First Securities
Proceeds—For working capital.
Power
Arkansas-Missourii
May
10 filed
1951.
Notes
Co.
of interim notes, due Dec.
$3,150,000
15,
convertible after June 15, 1950, into one
are
for each
$45 principal amount of notes. Underwriter—The First
Boston Corp.
Proceeds—-To pay $700,000 of temporary
bank loans, to provide $1,000,000 for current general
corporate purposes and for construction.
New York
Manufacturing Corp.,
April 22 filed 387,041 shares ($3 par) common stock. The
stock is reserved for issuance to officers and supervisory
executives under the company's
options
the
assumed
assets
of
its
the
by
former
Manufacturing Corp.
on
"stock option plan" or
company
acquisition of
upon
subsidiary, American
Central
Nov. 20, 1946.
Hydro-Electric Co.
($100 par) 4^4 %
preferred stock and 54,304 shares of common stock (par
$15). Offering—The preferred is offered to preferred
and common stockholders of record May 11 at rate of
one
new
share for each 20 preferred shares held and/
Bangor
(Me.)
April 22 filed 4,840 additional shares
one
new
$98Vi
preferred for each 80 common shares held at
per
offered
share.
to
The 54,304 shares of common stock is
common stock at the rate of one
holders of
share for each four shares held at $23 per share.
expire May 27.
Proceeds—For
Rights
Dealer Manager—Smith, Barney & Co.
corporate purposes, including capital ex¬
$100,000 5% cumulative
For work¬
No underwriter.
preferred stock (par $100).
ing capital.
California-Utah
®
Bradshaw
Mining Co., Tonopah, Nev.
Oct. 8 (letter of notification) 1,500,000 shares (5c par)
'Common stock.
Price—20 cents per share.
Underwriter
—Batkin & Co., New York.
To repair and renovate mine
of company and to exercise option to purchase processing
mill and move and erect such mill on the company's
property and for working capital.
(Conn.)
Hydraulic Co.
(6/6)
Co.; Halsey, Stuart & Co. Inc.; White, Weld & Co.;
& Co.; Lehman Bros.; The First Boston
Glore, Forgan
Md.
(letter of notification)
May 20
Light Co.
Underwriters—Names to be determined through
1, 1979.
&
Bottling Machine Works, Inc.,
Baltimore,
&
Power
May 20 filed $10,000,000 first mortgage bonds, due June
competitive bidding. Probable bidders: Harriman Ripley
.
Oil
Los Angeles
Co.,
*■"
(letter of notification) 100,000 shares of capital
stock (par $1).
Price, par. No underwriter.
For con¬
tract drilling.
Equipment purchases and general ex¬
Corp.; Carl M. Loeb; Rhoades & Co. and Bear, Stearns &
Co.
(jointyl);
& Co. and Central Republic Co.
Drexel
(jointly). Proceeds—To pay off $3,200,000 of short-term
borrowings from Central Hanover Bank & Trust Co. and
for construction and other corporate purposes.
May 19
13, Calif.
Canada
April 27 filed 500,000 shares of common. Price—60 cents
per share.
Underwriters — Name by amendment. Pro¬
Office, 417 S. Hill St., Los Angeles,
penses.
Carnegie Mines Ltd., Montreal,
ceeds
exploration, development
For working capital,
—
and other purposes.
•
Caterpillar
(6/7)
Tractor Co.
May "17 filed 250,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriter—Blyth & Co., Inc.
Proceeds
—To pay a
total of $21,000,000 of
promissory notes held
by 13 banks.
Centennial
Denver, Colo.
Inc.,
Turf Club,
filed $1,600,000 of 6% sinking fund debentures,
due Jan. 1, 1965, and 160,000 shares, of Class A ($5 par)
common.
Offering—To be offered in units of $100 of
debentures and 10 shares of stock at $150 per unit. Un¬
May 5
derwriter—Brereton,
Rice
operate
Proceeds—To build and
a
Inc., Denver, Colo.
horse-racing track.
Co.,
Products
Fibre
Central
Co.,
&
Inc.
(letter of notification) 3,000 shares of non-voting
common
($5 par). Price, $22 per share. Underwriter—
May 6
Bosworth, Sullivan &
selling stockholders.
•
Illinois
Central
Proceeds to
Co., Denver, Colo.
Public
construction.
notification) 68,000 shares of 6% non-
cumulative preferred stock (par-$4) and 68,000 shares of
common stock (par 100).
Underwriter—DeWitt Invest¬
ment
Co., 910 West St., Wilmington,
in units of one share of each.
ing machinery, working
Mass.
selling stockholder.
Gauley Mountain Coal Co., New York
Jan.
capital stock, of which
10,666 shares of
filed
19,
I,381 shares will be sold in behalf of the company and
9,285 shares will be sold by Norgreen Associates Inc. and
others. Underwriting — None. Proceeds — Company will
additional working capital.
Co., Carbondale, III.
May 17 (letter of notification) 2,904 shares of 5% cumu¬
lative preferred (par $100), of which 504 shares will
be sold for benefit of C. T. Houghton.
Price, par. No
underwriter.
To increase working capital.
use
its proceeds for
•
Good
•
Gracie-Glencoe Mines,
Luck
Glove
Inc.
of capital
To carry
mining operations and to purchase mines and mining
claims.
Office, care of Schioth & Salerno, 465 California
19
May
stock.
(letter of notification) 65,000 shares
Price, $1 per share.
No underwriter.
on
St., San Francisco 4, Calif.
Karwill, Inc., St. Charles, Mich.
(letter of notification) 3,000 shares of
common
May 9
Price, par.
Underwriter—Charles E. Bailey 8c
Inc.,
Enterprises,
Heidelberg Sports
Pittsburgh, Pa.
June 25 filed 5,000 shares
of class B common stock (pa?
$100). Price—$100 per share. Underwriter—None. Pro¬
ceeds—$600,000 to be used for spectator grandstand and
Industries, Inc., West Chester, Pa.
March 7 (letter of
Inc., Springfield,
11
Co., Detroit.
Service Co.
tiled 446,000 shares ($10 par) common stock.
Offering—To be offered to stockholders on a one-forfive basis.
Underwriter—The First Boscon Corp. Pro¬
Chace
Wallace,
(letter of notification) 1,000 shares of class B
common (no par) stock.
Price $16 per share. Underwrit¬
ers—Tifft Brothers and F. S. Moseiey & Co. Proceeds to
23
ceeds—For
&
Forbes
May
(par SI).
Del. To be offered
Building of factory, install¬
capital.
balance for related purposes.
Herald
•
Harbor Beach,
Inc.
(letter of notification) 675 shares of capital
stock (par $100). Price—Par. No underwriter. To pur¬
chase equipment, erect bathhouses and other improve¬
ments and for additions and repairs to the present fa¬
16
May
cilities.
Office, Crownsville Post
Co., Md.
April 15 filed 249,334 common shares (par $8.50). Offer¬
ing—Offered for subscription by stockholders of record
May 12 in ratio of l-to-9 at $22 per share. Rights expire
June 3. Underwriting—None. Proceeds—To finance con¬
Office, Herald Harbor,
Anne Arundel
May 17 (letter of
struction program.
Y.
shares of 500
(letter of notification) 37,400
cumulative convertible preferred stock.
26
Underwriter—
Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per
Working capital, etc.
share.
Louis, Mo. (6/9)
May 20 filed 150,000 shares ($1 par) capital stock. Un¬
derwriters—Merrill Lynch, Pierce, Fenner & Beane, New
York, and Newhard, Cook & Co., St. Louis. Proceeds—
To be added to working capital for general corporate
purposes, including construction of miscellaneous im¬
provements, replacements and additions to plant.
Coleraine Asbestos Co. Ltd., Montreal, Canada
Aug. 16 filed 200,000 shares of capital stock.
Price—
50 cents per share in Canadian Currency.
Underwriter
—P. E. Frechette.
Proceeds—For drilling operations.
•
Industries,
Clinton
Columbia
May 6 filed
Holders of
Gas
Inc.,
St.
Inc.
System,
(6/15)
1,345,300 shares common stock.
Offering13,452,874 shares of common stock of record
24 are given the right to subscribe
shares at the rate of one share for each ten
May
to the new
shares held,
additional
shares
not
taken
up
by others.
Rights will expire June 14. Price—$10 per share. Un¬
derwriting—None, but The First Boston Corp. will act
as
manager of a nationwide group of security deaiers
who will be compensated for obtaining subscriptions and
for selling shares of the new stock to new stockholders.
Proceeds—Will be added to the general funds to be used
in connection with company's 1949 construction program,
which will involve net expenditures presently estimated
at
April 26 filed 36.000 shares of common stock (par $20).
Inc., L. I. City, N. Y. (6/2)
notification) 300,000 shares of class A
stock (par 250). Underwriter—Cantor, Fitzgerald & Co.,
New York.
Price—$1 per share.
Working capital, etc.
Hoteievision,
Mfg. Co., Inc., Brooklyn, N.
Clarostat
Aug.
plus
penditures.
Bridgeport
Proceeds—To reduce short-
30.
June
loans.
Cincinnati Gas & Electric Co.
(6/1)
share of preferred and two shares of common
Avco
Burns
May
iNov.
Co., Chicago.
bank
term
offered
stock
of
chase
its
Underwriting—None.
20.
June
expiring
rights
,
(letter of notification) 400,000 shares of capital
Price 25 cents per share.
Underwriter—Cromer
May 9
Proceeds—To explore for iron
share (U. S. funds).
deposits.
&
•
City, Utah
>
PREVIOUS ISSUE
SINCE
ADDITIONS
Underwriters—Smith, Ramsey & Co., Gaynor,
(6/1)
New York
1,200,000 shares of com¬
mon
stock (par lc).
Underwriter—Atlantic Securities
Co., 699 Madison Ave., New York. Price—25c per share.
Drilling of wells, acquisition of oil leases, etc.
American Fork Consolidated Mines, Salt Lake
(letter of notification)
17
May
Registration
in
Now
INDICATES
Thursday, May_ 26, 1949
FINANCIAL CHRONICLE
&
861,958,000.
Consolidated Caribou
Silver Mines,
Horwood
Dec. 27
stock.
Gold
Lake
Mines
Corp.
(letter of notification) 100,000 shares of capital
Price—$1 per share.
Underwriter—Charles W.
Warshoff
&
For development of
Newark, N. J.
Co.,
mining properties.
Poison, Mont.
shares ($10 par) com¬
mon
stock to be offered at $10 per share and 20,020
shares to be issued in exchange for $170,200 first mort¬
gage bonds.
Underwriter—Tom G. Taylor & Co., Mis¬
soula, Mont. Proceeds—To erect and operate a bleached
sulphate pulp mill with a 200-ton per day capacity.
,
International Harvester Co., Chicago, III.
Idaho-Montana Pulp & Paper Co.,
Nov. 23
(by amendment) 180,000
April 29 filed 1,200,000 shares (no par) common. Offer¬
ing—To eligible employees of company and certain em¬
ployees of subsidiaries under its Employees'
Stock Subscription Plan of 1949. Underwriter
Proceeds—For general corporate purposes,
e
Kaman
Windsor,
Corp.,
Aircraft
Common
—
None.
Conn.
Locks,
May 24 filed 170,455 shares of class A non-voting com¬
mon stock (10c per share non-cumulative dividend) and
II.362
shares
class
of
Price,
voting common stock.
B
$5.50 per share. Underwriter—None. Purpose—To ac¬
quire machinery, tools and equipment; to buy land and
buildings; to produce 30 helicopters and accessories; to
complete engineering
ice departments; and
Kansas
Gas
&
changes; to setup sales and serv¬
to train service personnel.
Co.
Electric
May 16 filed 550,000 shares of common
which American Power & Light Co.
stock (no par) of
(parent) will sell
Inc.
376,250 shares (no par) common stock.
Price—$2.50 per share. An additional 50,000 shares will
be sold to the underwriter at $1 per share for invest¬
ment.
Underwriter—William L. Burton & Co., New
March
30
filed
York.
Proceeds—To develop
mining properties.
Offer¬
ing expected early in June.
Consolidated
of
Gas
Electric
Power
Co.
VS65
York
Baltimore
May 18 filed 238,000 shares of common stock (no par).
Offering—To be offered for subscription by stockholders
of record June 2 in a l-for-6 ratio.
Underwriters—The
Brown & Sons; John C. Legg
& Co.
Price—Expected about $60 a share.
Proceeds—
To finance company's construction program.
First
New York
Boston
Philadelphia
Pittsburgh
San Francisco
Private IVires to all
offices
Chicago
Cleveland
•
CO
%
Light &
hiem
i
bers
rtd Bo^or1
Boston Corp.; Alex.
Fenimore
Mines
Ltd., Toronto,
"VoR*-
UNDERWRITERS
Canada
May 24 filed 2,000,000 shares ($1 par)
Underwriter—Tellier & Co., New York.
capital stock.
Price, 25 cents
ki;',
.•'->4
fcosfO*
pvu*
Stoc
plUL
jko*
C^c
K GO
Volume
169
Number
4806
THE
COMMERCIAL
office
For
&
FINANCIAL
CHRONICLE
and
administration, for exploration and de¬
velopment and for equipment and road. Office: 301 In¬
NEW ISSUE CALENDAR
Building, Seattle 4, Wash.
surance
Oklahoma
June
Allied Western
1, 1349
Corp
Oil
—Notes
Chicago & Eastern Illinois RR.__Equip. Trust Ctfs.
Northern Pacific Ry.-.'-Equip. Trust Ctfs.
Public Service Co. of Okla.___
Preferred
(EDT)
a.m.
Bonds
Corp.,
June 2,
(EDT)
noon
Seaboard
Class A
Air Line
Equip. Trust Ctfs.
Carolina
Electric & Gas Co
Common
of
Indentures
June 6,
Gas &
New
from
Associated
—..Common
repay
Guaranty Trust Co. balance due
advances made
Labouchere
Oil
Co.
under
&
credit
a
Co.
agreement to
of Tide Water
shares
stock
common
and
for
development
Electric Co.______—_—-Bonds
purposes.
June 7,
Pay Rock Oil, Inc., Tulsa, Okla.
May 3 (letter of notification) 900,000 shares of common
stock. Price, 30 cents per share.
Underwriter—Security
Royalties, Inc. For the repurchase of stock of the cor¬
1949
Caterpillar Tractor Co
.Preferred
Public Service Electric &
Gas Co.__.
Bonds
Virginia Electric & Power Co.
June 8,
Reading Co.*,
Bonds
(EDT)_
noon
poration under offer of rescission and for operating ex¬
1949
penses.
Equip. Trust Ctfs.
-Southern Ry
^Equip. Trust Ctfs.
i
June 9,
N.
Noon (EDT)
10,
Baltimore & Ohio RR
June
Equip. Trust Ctfs.
13,
Power
14,
1949
New Yoik State Electric & Gas
Ccip
Pacific Western Oil Corp
To
Debentures
Scott
Columbia
Gas
15,
System
Statin Island Edison
stock
Equip. Trust Ctfs.
the
and Kidder
Peabody & Co. (jointly); White, Weld & Co.
Proceeds
Kansas
to
repay
Co.
of
Gas
will
proceeds of 100,000
pay for part of its construction program and
short-term bank loans from Guaranty Trust
—
to
New
Keller
York
and
use
•
station
Expected
wagon.
latter
part
of
;
Krieger
& Giliman, Inc., Monterey, Calif.
(letter of notification) 57,667 shares of stock,
May 16
which
45,000 shares
to
are
be
issued
to
Charles
Krieger and Harold K. Giliman in exchange for assets
of partnership of Krieger and Giliman; 6,533 shares to
certain persons in exchange for liabilities of the
corpora¬
tion; and 6,134 shares to be sold for $3 per share. No
underwriter. To increase working capital.
Office, 1009
Del Monte Ave., Monterey, Calif.
cumulative
convertible
share.
Underwriter—Sills,
Chicago. Working capital.
(S10 par)
Price, $15 per
and Harris, Inc.,
preferred.
Fairman
Lorain
(Ohio) Telephone Co.
April 11 (letter of notification) 7,500 shares (no par)
common.
Price—$20 each.
No underwriter.
To reim¬
burse treasury for outlays for property additions.
Maumee
Oil
Corp., Toledo,
May 12 filed 8,000 shares
(no
common,
of which
only about 2,614 shares will be offered publicly at $100
per share.
No underwriter. For general working cap¬
ital.
"
New
York State
Electric
stock
Underwriter
~
Gas
Corp. (6/14)
($100 par) cumulative pre¬
May 16 filed 40,000 shares
ferred
&
—
Names
be
to
determined
through competitive bidding. Probable bidders: W. C.
Langley & Co.; Lehman Brothers and Glore, Forgan
& Co. (jointly); Harriman Ripley & Co.
Proceeds—To
be applied to the discharge of presently outstanding $4,<000,000
short-term
Expected June 14.
of
notes
and
for
New York State Electric &
new
construction.
Gas
Offering-
Underwriters—The First Boston
Corp.; Lehman
and Merrill Lynch, Pierce,
Fenner & Beane. Proceeds—To discharge $3,000,000 of
presently outstanding $4,000,000 of short-term notes and
Brothers;
Wertheim &
for
new
•
Nicholson
May 17
common.
Co.
construction.
Creek
'
Mining Corp.,
(letter of notification)
Price, 25
short-term
Service will
one-for-
a
surrender
for
cancellation
evidencing its preemptive right
bank
to
sub¬
en¬
borrowings.
Underwriters—Names by
cents
per
•
18 filed
due
1979.
Co. of New Hampshire
$4,900,000 first mortgage bonds, series E,
Underwriters
—
Names
to
be
determined
through competitive bidding. Probable bidders: Halsey,
Stuart & Co. Inc. (bonds only); The First Boston
Corp.
Coffin
&
Burr
Inc.
(jointly); Kidder, Peabody &
Co. and BLth & Co.
(jointly); Smith, Barney & Co. and
Harriman Ripley & Co.
(jointly).
Proceeds—For con¬
struction, including repayment of short-term borrowings
for such purposes.
Public
Co.
of
Oklahoma
(6/1)
of
(jointly).
notification)
Ripley & Co.
and
Central
Republic
Co.
Froceeds—To pay the cost of property addi¬
Expected June 1.
Service
Electric
&
Gas
Co.
50,000
V,\
;
shares
V
class
A
(no
Barney &
Lynch, Pierce, Fenner & Beane. Offer¬
ing price and dividend rate by amendment. Proceeds—L
To pay off
outstanding bank loans and to augment com¬
Co. and Merrill
corporate
of
program
to
are
and
purposes
be applied in
in
part
improvements
and
part to general
to
company's current
additions to plant and
equipment.
•
Soundscriber Corp., New
19 (letter of notification)
Haven, Conn.
May
common.
Price, $5
per
69,000
share.
No
shares
(no
underwriter.
working capital and for new equipment and tools.
fice, 146 Munson St., New Haven 4, Conn.
South Carolina
Electric
&
Gas
Co.
par)
For
Of¬
(6/2)
April 11 filed 308,000 shares common stock
(par $4.50).
Offering—Offered for subscription by stockholders of
record
May 13 on a l-for-4 basis at $7.62 % per share.
expire June 1. Underwriter—Kidder,
Peabody
Rights
&
Co.,
New
York.
Proceeds—To
finance
construction
d/y,//.,
.
Southern Indiana Gas & Electric Co.
(6/1)
4
April 29 filed $3,000,000 first mortgage
bonds, due June
1, 1979. Underwriters—Names to be
determined through
competitive bidding.
Probable bidders: Halsey, Stuart
& Co. Inc.; The First Boston
Corp.; White, Weld & Co.
Shields
&
Co.
(jointly);
Kidder,
Peabody
&
Co.;
Union Securities Corp.; Harriman
Ripley & Co.; Carl M.
Loeb, Rhoades & Co. Proceeds—To finance a continua-r
tion of the
company's construction
Bids—Bids
program.
for purchase of bonds
Commonwealth
Street,
will be
received
at
the
office of
&
Southern Corp. (New York), 20 Pine
York 5, N. Y., before 11 a.m.
(EDT) on
New
1.
Gas Co., Birmingham, Ala.
May 13 filed 141,853 shares ($7.50 par) common stock.
Offering—To be offered to stockholders on a l-for-10
basis.
and
Underwriter—None.
for additional
ern's
May
6 filed $75,000,000 first and refunding mortgage
bonds, due June 1, 1979. Underwriters—Names to be
determined by competitive
bidding. Probable bidders:
Morgan Stanley & Co.; Halsey Stuart & Co. Inc.; The
First Boston Corp.; Kuhn, Loeb & Co. and Lehman
Brothers, (jointly). Proceeds—To reimburse, in part, the
for past construction expenditures; and to pay
maturity $9,475,300 of Hudson County Gas Co. first
mortgage 5% gold bonds, due Nov. 1, 1949. Bids ex*
company
construction,
stock investment
in
South-,
subsidiary, Alabama Gas Corp.
Co.
Stockholders
of
the
latter
company
will
receive
$12 of debentures and one share of
preference for each
share of Texas Public
Service common. Of the prefer¬
ence
being registered 18,378 shares will be used
by
Southern Union
to, pay for expenses of merger. Under*
writer—E. H. Rollins &
Sons, Inc.
May
Southwestern Gas & Electric Co.
20 filed $4,500,000 first mortgage
(6/13)
bonds, series C,
1979, and 25,000 shares ($100 par) cumula¬
preferred stock.
Underwriters—Names to be de¬
due June
tive
1,
termined through competitive
bidding.
Probable bidders
include: Blyth & Co.,
Inc., and Stone & Webster Securi¬
ties Corp. (jointly); Lehman
Brothers; Halsey, Stuart &
(bonds); White, Weld & Co.; Harriman
Ripley
Co.; The First Boston Corp.; Glore, Forgan & Co. and
Co.
&
W.
Inc.
C.
Langley & Co.
(jointly); Merrill Lynch, Pierce,
& Beane.
Proceeds—For construction and to
$2 million of bank notes. Expected June 13.
•
Spalding Realty Corp., Montezuma, Ga.
May 19 (letter of notification) 6,500 shares ($10
par) 4%.
preferred stock and 10,000 shares of common stock
(par $1).
Price, par for each class.
No underwriter.
To buy land and erect
manufacturing plant.
Sperry
May
(6/7)
Proceeds—For
common
Southern Union Gas Co., Dallas Texas
May 9 filed $3,679,464 of sinking fund
debentures, due
July 1, 1964, and 306,622 shares ($1 par)
preference stock
under a proposal to
merge with Texas Public Service
betterments.
Public
Hudson Fails,
Co., Chester, Pa. (6/14)
filed 45,000 cumulative preferred shares
Underwriters—Drexel & Co.; Smith,
prepay
May 9 filed 50,000 shares of ($100 par) cumulative pre¬
ferred stock.
Underwriters—Names to be determined
through competitive bidding. Probable bidders include:
Glore, Forgan & Co. and Smith, Barney & Co. (jointly);
Harriman
Works,
'■;■■■■
(letter
25
par).
Fenner
Service
Brass
Scott Paper
May
®
Service
May
13
June
1,
Lynch,
Corp., New York (6/2)
filed $20,000,000 sinking fund
debentures, due
1969.
Underwriter—Lehman Brothers, Merrill
Pierce,
Fenner & Beane and
Proceeds—To discharge bank
working capital.
Weeks.
Hornblower
loans
and
&
for
Staten Island
(N. Y.)
Edison Corp.
(6/1-15)
May 9 filed $2,750,000 of first mortgage
bonds, due May
1, 1979, and 40,000 shares ($100 par) cumulative pre¬
ferred
pected to be opened June 7.
through competitive bidding. Probable bidders on bonds:
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Har¬
riman Ripley & Co.;
Kidder, Peabody & Co.; Otis & Co.
•
Pueblc Kennel Association,
Pueblo, Colo.
May 16 (letter of notification) 100,000 shares of class A
common and 80,000 shares of class B
common.
Price—
$1 per share.
No underwriter.
To purchase land, con¬
struct grandstand and dog
racing track and for operating
Office, Union Depot, Pueblo, Colo.
expenses.
•
Realty Co., Denver, Colo.
May 17 (letter of notificaiton) 1,000 shares ($1 par) cap¬
ital stock.
Price, $27 per share. No underwriter. For
working capital. Office: 624 Denham Building, Denver
•
Corp.
common.
Offered for subscription by stockholders of record May
24 on a l-for-12 basis at $44.50 per share.
Rights expire
June 9.
(par $10).
on
2. Colo.
May 9 filed 73,333 shares ($25 par)
&
at
Ohio
par)
stock
common
stockholders
competitive bidding. Probable bidders: Kidder, Peabody
& Co.; Blyth & Co.,
Inc.; Harriman Ripley & Co.
tions and
Liberty Loan Corp., Chicago, III.
May 9 (letter of notification) 3,600 shares
75%
to
allotment; and holders
of
the
company's preferred stock will be offered a
similar opportunity to subcribe to the
new, unsubscribed
shares.
Proceeds—For construction and repayment of
R.
Iron
'
Y.
Southern Natural
any of the new common
stock. Common stockholders will be entitled to
purchase
shares in excess of their ratable
and
Hill
45
participating preferred stock, nonconvertible
(par $4).
Price—$5 per share.
Underwriter—Office of John L.
Nolan, Inc., Glen Falls, N. Y.
Working capital, etc.
June
scribe for the additional common stock to which it is
titled and will not subscribe to
Public
Corp., Huntsviile, Ala.
May 10 filed 5,000,000 shares (30 par) common. Under¬
writer—Greenfield, Lax & Co., Inc., New York. Price—
$1 per share. Proceeds—For plant facilities, equipment
and
working
capital
to
manufacture
a
low-priced,
June.
offered
Public
of
warrants
eight Kansas banks.
Motors
medium-sized
drilling.
Service Coi of New Hampshire
basis.
New
England
Public
Service
Co.
(parent), holder of 58.88% of the outstanding common
450,000 shares. Underwriter—Exemption from competi¬
tive bidding is sought in connection with this
offering.
If competitive bidding probable bidders include: Union
Securities Corp.; Blyth & Co., Inc. and the First Boston
Corp., (jointly); Merrill Lynch, Pierce, Fenner & Beane
shares
Proceeds—For adminis¬
eight
(EDT)__Preferred
Atlantic Coast Line RR
by amendment.
Offering—To be
...Common
noon
named
Public
1949
Corp.,
Capital im¬
Ltd., Toronto Canada
May 9 filed 104,804 shares of
Inc
18
and
Petroleum
tration expenses and
July 7, 1949
of
be
..Preferred
Preferred
Paper Co
June
Co., Philadelphia.
April 25 filed 1,150,000 shares ($1 par) common of which
1,000,000 on behalf of company and 150,000 by New York
Co., Ltd.
Price—50 cents per share.
Underwriters—
1949
Southwestern Gas & Electric Co.___.Bonds & Pfd.
June
&
provements, etc.
1949
:
•
Underwriter—Bioren
Capital Stock
June
J.
May 18 (letter of notification) 250 shares 6V2% cumula¬
tive preferred stock, series B (par $100).
Price, par.
.Equip. Trust Clfs.
Clinton Industries, Inc
N.
program.
PennsylvaniaN8c Southern Gas Co., WestfieSd,
1949
Chicago Rock Island & Pacific RR.
Sand
pany's funds which
Western
York, to
certain
acquire
.
Expected June 6.
Pacific
on
1949
Bridgeport Hydraulic Co._
(6 6)
Oil Corp.
(6/14)
May 20 filed $15,000,000 1-5-year debentures, due June 1,
1964.
Underwriter—Eastman, Dillon & Co. Proceeds—
To repay a $10,500,000 note held
by Guaranty Trust Co.
Stock
RR.
Sperry Corp
Oklahoma
bank loans.
•
Noon (EDT)
South
Bonds
1949
Hotelevision Inc
Co.
Corp.; Halsey, Stuart & Co. Inc.; Har¬
riman Ripley & Co. and Union Securities
Corp. (jointly);,
Lehman Brothers and Blyth &
Co., Inc. Proceeds—For
construction and payment of
$3,500,000 of short-term
Southern Indiana Gas & Electric Co.
11
Electric
The First Boston
-
Staten Island Edison
&
®
May
May 5 filed $10,000,000 first mortgage bonds, due June 1,
1979. Underwriters—Names to be determined
through
competitive bidding. Probable bidders: Merrill Lynch,
Pierce, Fenner & Beane and White, Weld & Co. (jointly);
—Common
Arkansas-Missouri Power Co
Gas
(2305)
Seattle, Wash.
300,000 shares (l'c par)
share. No underwriter.
Rickel
May
18
(H.
(letter
W.)
of
&
Co.,
Detroit,
notification)
Mich.
$300,000
of
Underwriters—Names
to
be
determined
On Preferred: W. C.
Langley & Co.; Kidder, Peabody &
Co.; Stone & Webster Securities Corp. and White, Weld
&
Co.
Corp.
(jointly);
Proceeds
Lehman
—
To
pay
Brothers; The First Boston
off $1,500,000 of short-term
notes and for construction.
Bids—Bids for the purchase
of the bonds will be received
up to noon (EDT) June 1
and for the purchase of the stock up to noon
(EDT) June
15 at Room 2601, 61
Broadway, New York.
Suburban
March 31
Gas
Service, Inc., Ontario, Calif.
(letter of notification) 4,000 shares ($25 par)
par) common—?
series B preferred and 20,000 shares
($1
issuable upon conversion of preferred.
Price—Preferred
t
51/2%
stock.
con¬
vertible
debentures, due June 1, 1961. Underwriter—
Wm. C. Roney & Co. Proceeds—For
general corporate
purposes.
'
.;,
"*
'&■ '^fY..'/"..'
'
•
$25 per share. Underwriters—Wagenseller &
Durst, Ine.l
and Lester '& Co.
To buy Antelope Liquid Gas Co.
•
Sun Oil Co., Philadelphia
May 18 filed 11,000 memberships in the 1949 stock pur-?
chase plan for the employees of the
company and its,
Sally Ann Bread Co., Kansas City, Mo.
May 17 (letter of notification) 2,000 shares of 5% cumu¬
lative preferred stock, of which 1,500 shares will be
offered at par ($100), and 4,000 shares of common
(no
par), of which 2,750 shares will be sold at $1 per share.
subsidiaries; and 105,000 shares (no par) common whicli
be purchased by the trustees during the period
July 1, 1949, to June 30, 1950. Underwriter—None. Con¬
tributions will be used by the trustees to
purchase Sun.
The
Oil
other
shares will be
underwriter.
For
sold
for
working capital.
other than
cash!
No
may
common
v
at hot
more
than the market
(Continued
cn page
46)
price.
46
COMMERCIAL
THE
(2306)
CHRONICLE
FINANCIAL
&
(par $10).
Stock will be offered initially to stockholders
about June 7 on a l-to-4' basis.
Underwriter—The
(Continued from page 45)
on or
•
Tennessee Gas Transmission
Co.
First Boston
May 24 filed $50,000,000 first mortgage pipeline bonds,
due
1969.
Underwriters
Names
to
be
determined
•
Corp".
Carolina
Power
&
Light Co.
to need $27,000,000 in new
years to finance its expansion
—
Probable bidders: White,
Webster Securities Corp.
through competitive bidding.
Weld
Co.
&
Stone
and
&
Stuart & Co Inc.
Proceeds—To be
used from time to time, along with other cash resources,
for expansion of company's natural gas pipeline system.
(jointly); Halsey.
•
Allentown, Pa.
Transutcast Inc.,
May 19 (letter of notification)
1,000 shares 5% cumula¬
stock (par $50) and 5,000 common shares
(no par). To be offered in units of one preferred and
five common shares at $55 per unit. Underwriter—C. V.
Converse & Co., Allentown, Pa. Working capital, etc.
tive preferred
Utilities
•
Co.,
Equipment
May 20 (letter of notification) $30,000 6% secured bonds.
Underwriter—Bioren & Co., Philadelphia.
Prepayment ol advances made for purchase of equip¬
Price,
par.
ment.
,
Virginia Electric & Power Co.
(6/7)
May 4 filed $20,000,000 first & refunding mortgage bonds,
1, 1979. Underwriters—Names to be deter¬
through competitive bidding.
Probable bidders:
June
due
mined
White,
Weld
Webster
Co.;
&
Securities
Union Securities Corp.; Stone &
Halsey,
Corp.;
Stuart
&
Co.
Inc.;
Glore, Forgan & Co. and W. C. Langley & Co. (jointly).
Proceeds—For construction.
Bids expected to be opened
June 7.
•
Wade
Inc., Memphis, Tenn.
Fund,
May 18 filed 20,000 shares of capital stock.
Proceeds—For investment.
—None.
•
Walter Ranch,
Inc., Garrison,
20
Underwriter
money over
and construction program
through 1952.
Presently it has
plans as to how and when this capital will
be raised.
Company expects to spend $53,500,000 on its
construction program in the period 1949-1952, including
definite
no
$5,500,000 which has been spent in the first four months
of 1949.
Currently it has approximately $8,000,000 of
available for
cash
Reno
12,500 shares
Oil Fields,
Inc., Denver, Colo.
May 19 (letter of notification) 800,000 shares of common
capital.
Price, 25£ per share.
Underwriter—John G.
Perry & Co., Denver, Colo;
For working capital and
drilling of wells.
Wichman
to
stock
and
Cebu
Co.,
City,
Mindanao Development
Philippine Islands
Jan. 5 filed 2,000,000 shares
of voting capital stock, one
per share (U. S. cur¬
rency). Underwriter—F. T. Andrews & Co. Proceeds—
To provide funds for plant construction, diamond drill¬
ing, exploration and repayment of loans.
Price—25 cents
value.
centavo par
(Edwin L.)
Wiegand
Co., Pittsburgh
Wyant & Sons Paper Co., Atlanta, Ga.
May 18 (letter of notification) $50,000 6% accumulative
convertible
debenture
No
bonds.
underwriter.
To
ac¬
quire additional lines of paper, to widen certain physi ¬
cal facilities and to retire current outstanding financial
obligations. Office: 121 Cortland Street, S. E., Atlanta,
Georgia.
Young
(Thomas)
Orchids, Inc., Bound Brook,
New Jersey
April 20 (letter of notification) 2,000 shares of common
stock (par $1).
Price—$30 per share. Underwriter—
Smith, Barney & Co. will act as agents. Proceeds to
selling stockholder.
•
Prospective Offerings
•
American
18
Gas
Philip
&
Electric
Co.
President, stated that company
to the new money market for equity
Sporn,
probably will come
capital this year.
The System expects to require be¬
tween $80,000,000 and $90,000,000 from new bond financ¬
ing in the next three years in connection with its expan¬
sion
program,
scheduled
to
cost
$251,000,000
common
ratio
of
20%
In
common
capitalization, only
would
stock
have
small
a
be
to
sold
Lehman
and
•
ICC
asked
company
for
authority
to
Brothers.
& Eastern Illinois RR.
(6/1)
company has issued invitations for bids to be re¬
ceived June
1 for $1,800,000 equipment trust ceitifieates, to be dated July 1, 1949, and to mature semi¬
annually from Jan. 1, 1950 to July 1, 1964.
Probable
bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Harris, Hall & Co. (Inc.); The First Boston
Corp.; Harriman Ripley & Co. and Lehman Brothers.
Chicago
(6/9)
Chicago Rock Island & Pacific RR.
the
purchase
equipment trust certifi¬
of $3,120,000
over
the
1949-1951 period.
Prob¬
Halsey, Stuart & Co. Inc.; Salomon Bros.
Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley
Co. and Lehman Brothers (jointly).
&
•
1, 1950-July 1, 1961.
bicldeis:
Columbia
Gas
System,
Inc.
May 23 company announced that it plans to sell $11,500,000 debentures later this year
to complete the financing
required for this year's construction.
Probable bidders:
Morgan Stanley & Co.; Halsey, Stuart & Co. Inc.; Merrill
Lynch, Pierce, Fenner & Beane; Salomon Bros. & Hutz¬
ler; Lehman Brothers.
Atlantic
Coast Line
RR.
Commonwealth
Edison
Charles Y. Freeman, Chairman!, stated that to
complete company's construction program an estimated
May 24
additional
of
$100,000,000
No
1952.
decision
must
has
before the end
be raised
been
made
to
as
ability of issuing mortgage bonds, debentures
stock as it is now too early to decide.
•
Delaware
Power &
the
desir¬
or common
Light Co.
May 25 company plans to sell $10,000,000 of bonds and
petitive bidding.
Proceeds will be used to finance part
of the $17,000,000 construction program scheduled for
this year. Additional financing may' be necessary later
this year to complete the program, it is understood.
Probable bidders:
Halsey, Stuart & Co. Inc. (bonds);
The First Boston Corp. and Blyth & Co., Inc. (jointly);
Shields & Co. and White, Weld & Co. (jointly); Lazard
Freres & Co. (stock); Morgan Stanley & Co.; Otis & Co.
(stock); W. C. Langley & Co. (stock).
•
Illinois
Power
Co.
application was filed with the SEC by the
North American Light & Power Co. and North American
Co. requesting permission to sell competitively 242,785
May 20
shares
an
(12.67%)
of the outstanding common stock
(no
of Illinois Power Co.
Of the stock to be sold,
72.785 'share are held by North American and 170,000
shares by Light & Power.
The sale will complete divest¬
par)
Light & Power of their
White, Weld &
Co.; Kidder, Peabody & Co. and Lee Higginson Corp.
(jointly); Goldman, Sachs & Co.; Hornblower & Weeks
and Paine, Webber, Jackson & Curtis (jointly); The First
Boston Corp. and Merrill Lynch, Pierce, Fenner & Beane
(jointly); Blyth & Co. Inc.; Smith, Barney & Co.; Leh¬
man Brothers and Harriman Ripley & Co. (jointly).
ment
by North American and
Iowa
in
Illinois.
Power
&
bidders:
Probable
Light Co;
12 reported company may be in the market this
year with $7,500,000 first mortgage bonds and $3,000,000
common stock, the latter to be sold to United Light &
Rys. Co. (parent).
Bidders for bonds may include
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kidder, Peabody & Co.; Lehman Brothers; Blyth & Co.,
Inc.; W. C. Langiey & Co., and Union Securities Corp.
May 24 reported
company
plans
the
sale
July
7
$8,685,000 equipment trust certificates. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; The First Boston Corp.; Harriman Ripley & Co. and
May 24 company asked SEC authority to sell $25,000,000
Lehman Brothers
sinking fund debentures, due July 1, 1967, at competitive
Co.
of
(jointly); Harris, Hall & Co. (Inc.).
Baltimore & Ohio RR.
May 18 reported
company
bidding.
(6/10)
is expected to be in the
mar¬
ket about June 10 for the sale of about $4,500,000 equip¬
ment trust certificates. Probable bidders: Halsey, Stuart
& Co.
Inc.; Salomon Bros. & Hutzler; The First Boston
Corp.; Harriman Ripley & Co. and Lehman Brothers
(jointly).
•
Bank
of
the
Manhattan
June 1 stockholders will vote
to $25,000,000 from
Co.
on increasing capital stock
$20,000,000 by sale of 500.000 shares
Michigan Consolidated
Proceeds
will
be
Gas
used
be
and operate
Montana-Dakota Utilities Co.'
facilities.
Probable under-;
Blyth & Co., Inc.; Merrill Lyr.ch, Pierce, Fen-'
writers:
the
her & Beane.
1
'
-
New
England Electric System
May 17 stockholders voted to increase common stock!
from 7,500,000 to
8,500,000 shares' and to reduce par'
from
$20 to $1. -Expected sufficient stock, to raise'
$6,000,000, will first be offered stockholders.
Probable
bidders include Merrill Lynch,
Pierce, Fenner & Beane,
Kidder, Peabody & Co. and White, Weld & Co. (jointly;;!
Ripley & Co. and Goldman, Sachs &-Co.!
(jointly).
New
Jersey Power & Light Co.
May 19 company asked SEC authority to sell competi¬
tively $3,500,000 first mortgage bonds and 20,000 shares'1
of preferred stock (par S100). Probable bidders for bonds:!
Halsey,
Stuart
&
Securities
Co. Inc.; Equitable Securities
Corp.; Carl M. Loeb, Rhoades
Corp.;!
&
Co.-
For
preferred: Salomon Bros. & Hutzler; Kidder, Pea-:
body & Co.; Drexel & Co.; Smith, Barney & Co;; Glore,
Forgan & Co. and W. C. Langley & Co. (jointly).
{.
Northern
Pacific
Ry.
(6/1)
The company has issued invitations for "bids to be re¬
ceived by noon June 1 for the purchase of $6,450,000 inf
equipment trust certificates, to be dated June 15,
1949,;
and to mature serially June 15,
ders: Halsey, Stuart & Co. Inc.;
1950-64. Probable bid-!
Harriman Ripley & Co.
Lehman Brothers (jointly); The First Boston Corp.;;
Higginson Corp.; Harris, HaJl & Co. (Inc.); Salomon
and
Lee
Bros. & Hutzler.
Pennsylvania Electric Co.
company is expected to be in the market
May 9 reported
for $5,000,000 of bonds and $5,000,000 of preferred stock,
When its parent, Associated Electric Co., has retired all
of its indebtedness.
Pi'obabls bidders for preferred:
•
Kuhn, Loeb & Co.; Kidder, Peabody & Co.; Smith, Bar¬
ney & Co.; White, Weld & Co.; W. C. Langley & Co.
Halsey, Stuart & Co. Inc.; Harriman Ripley
For bonds:
&
Co.; The First Boston Corp.; Equitable Securities Corp.
•
Pennsylvania
Power
& Light Co.
May 21 company announced that it plans to raise during,
between
summer
and $8,000,000 lor its
offering of common stock to
$6,000,000
The First Boston;
Traditional underwriter:
stockholders.
Corp.
•
i
*
•
(6/8)
Bids for the purchase of $3,700,000 equipment trust cer¬
tificates, series Q, will be received at office ol' 11. W.
Brown, President, Room 423, Reading Terminal, Phila¬
delphia, up to noon (EDT) June 8. Certificates will be*
dated June 15,
1949, and will mature $185,000 semi¬
annually Dec. 15, 1949-June 15, 1959.
Probable bidders:
Reading Co.
Halsey,
Stuart & Co. Inc.; Salomon. Bros, & Hutzler;*
The First Boston Corp.; Harriman Ripley'.
(jointly).
V
Freeman & Co.;
& Co. and Lehman Brothers
Seaboard
Air
Line
RR.
(6/2)
Bids for the purchase of
$3,435,000 equipment trust' cer¬
tificates series F, dated June 1, 1949, due in 15 equal'
annual instalments, will be received at office of Willkie
Owen Farr Gallagher & Walton, 15 Broad Street, New;
York, up to noon (EDT) June 2. Probaole bidders: Hal¬
sey, Stuart & Cd. Inc.; Salomon Bros. & Hutzler; Harri-'
man Ripley & Co. and
Lehman Brothers (jointly); The;
First
Boston
Corp.
Southern
(6/8)
Railway
bids to be- re.~
The
company, has issued invitation for
ceived June 8 for the purchase from it
of $7,500,000 in-
equipment trust certificates, to mature in 30 equal semi-,
annual installments.
Probable bidders: Halsey, Stuart.
& Co.
Inc.; Salomon Bros. & Hutzler; The First Boston
Harriman
Corp.;
Ripley
&
Co.
and
Lehman
"(jointly); Harris, Hall & Co. (Inc.). \
West
May
Coast Transmission
13 announcement
was
Brothers
._
,
Co., Ltd.
made of the initiation of a;
project for the construction of a 1,400 mile 30-inch nat¬
ural gas pipe-line to run from northern part of Prov¬
ince
of
Alberta, Canada, west and then south through
in the Canadian Rockies to Vancouver, B. C. and'
south
through
Washington
and
Oregon
into
Northern California.
An act has been passed by thepasses,
May
t
lease
construction program by an
Co.
(jointly); The First Boston Corp.; Glore, Forgan & Co.,
and A. G. Becker & Co. (jointly); Harriman Ripley &
(7/7)
will
the
.
•
Appalachian Electric Power Co.
May 18 reported company expected to do some bond
financing later this year, but amount not yet determined.
of western South Dakota.
cates, series E, dated July 1, 1949, due in 24 equal semi¬
annual instalments from Jan;
will
|
publicly financed, to build a pipe line costing $8,000,000,?
to. bring gas from the Worland (Wyo.) Unit Area, being;
developed by Pine Oil Co., into markets now being!
served by Montana-Dakota Utilities Co. in eastern Mon-;
tana, western North Dakota and the Black Hills region,
Union
The
for
Montana-Wyoming Gas Pipe Line Co.
23 this company is being organized and
May
•
issue
$2,060,000 equipment trust certificates.
Probable bid¬
ders: Halsey, Stuart & Co. inc.; Salomon Bros. & Hutz¬
ler; The First Boston Corp.; Harriman Ripley & Co.
24
•
Harriman
Chicago Burlington & Quincy RR.
May
interests
May
new
total
to
$50,000 shares of additional preferred stock, both at com¬
200,000 shares (no par) common stock
Underwriter—Hemphill, Noyes & Co., New York.
Price,
by amendment.
Proceeds—Will go to selling stockhold¬
ers.
Offering postponed.
Sept. 28 filed
•
of
unofficial
an
surplus
part of the $27,000,000 program of new financing.
as
•
Philippine
maintain
order
&
($10 par) common stock.
Price—$40 each. Underwriter—To be named by amend¬
ment. Proceeds—To qualify the company to sell life in¬
surance in any state.
Western
Another $13,-
its depreciation
accruals, current earnings and Other internal sources.
able
•
needs.
Company will receive bids at its office, Room 1136, La
Salle Street Station, Chicago, up to noon (CDT) June 9
20 (letter of notification) 20,000 shares common
stock (par $10) and 500 shares preferred stock (par $10).
Price, par. Underwriting:—None. Working capital, etc.
Western American Life Insurance Co.,
construction
its
000,000 is scheduled to be raised from
Price at market.
N. Y.
May
March 30 filed
expects
the next three
company
amount
Philadelphia
Inc.,
May
Thursday, May 26, .1949
Co.,
for
payment
Senate and House of Commons of the Canadian Parlia¬
ment and sanctioned by the Governor General creating;
the West Coast Transmission Co., Ltd., the Canadian
to construct and operate the Canadian part of
pipe line. It is expected an American corporation,
will be formed to construct- and operate the American,
end of the line and that application will be made to the
FPC in due course for a certificate of necessity.
The*
company
the
completed line will, it is expected, cost about 8175,000,-;
Detroit
the
thence
The
000.
financing of the projected line will be.handled
by Eastman, Dillon & Co.
of
Worcester
$3,500,000 ol promissory notes, to pay redemption price
of 40,000 shares of outstanding 4%%
preferred stock
for payment on some $7,000,000 of promissory notes of
a
subsidiary, Austin Field Pipe Line Co. and for con¬
struction.
Probable bidders:
White, Weld & Co. and
Salomon Bros. & Hutzler (jointly); Glore, Forgan & Co.
and W. C. Langley & Co. (jointly); Lehman Bros.: Har¬
Tlie
ris, Hall & Co. (Inc.); Halsey, Stuart & Co. Inc.; Harri¬
man
Ripley &- Co., Inc.; Dillon Read & Co.; The First
Boston Corp.
County
,
Electric
"
'
.
,
Co.
Merrill
has petitioned the Massachusetts Depart¬
authority to issue $5.50J,000,
company
ment of Public Utilities for
of first
years,
mortgage bonds,-to mature in not exceeding 30
Proceeds would
and bear interest not over 314%.
be used to pay
temporarily,
a
indebtedness to banks, incurred to finance
portion of the company's construction
Probable bidders: Halsey, Stuart & Co.? Inc.;
Lynch, Pierce, Fenner & Beane and Salomon
Bros. & Hutzler (jointly); Kidder, Peabody & Co.; The
program.
First
Boston
Corp.; Otis & Co.
' vi'ir' ;7/'L
Volume
169
Number 4806
THE
COMMERCIAL
convertible debenture 3 Vss in the
cover
last
000
few
days.
The
issue
has
been
those
among
acquire
it
for
who
participate
At
current
levels
and
the
yield
The -current
week
and
the
the
among
dullest
the year in
fortnights
of
is
dearth
of
ver¬
business
new
would reflect in
In
fact
investment
the
bankers
probably will not be at all
to
wind
which,
the
up
Auguring
op¬
the
field
corporate
is
sorry
month
current
the
at
the
registrations
rate
are
sudden
Commission,
it
June will be
busy month
a
bonds
with
by the
filed
of
those trying days on
with three medium to
prospective offerings and
for
up
for
sinking
sold
additional
provide
to
the
bids
one
the
end
Electric
of
&
GEORGE
The
Gas
lic
Federal
Common
17,
for
Co.
bidding
and
$4,500,000
for
i
Two
has
dividend
Stcck
share
May
of
New
STOCK
&
with
8,
s
just
record
W.
the
A
cash
share
by
30,
close
of
1949
business
been
$18,000,000
of
bonds,
reportedly
estate,
has
for
share
declared
1,
on
1949,
close of
to
business
declared
was
Common
1,
now
Tel.
A.
noticeable
&
J.
Tel.
Stock
of
of
can
I. Case
dividend
been
holders
of
$1.75
declared
of
11,
share
per
1949
at
July
cf
1"
v.,
.
B.
from
with
15
leads.
to
30
the
Have
established
'
of
thirty-seven and
(37V2c!j
per
day been declared
stock
payable
Willing
to
travel.
income
has
been
At
of
i
In
the
business
of
on
on
June
on
30.
of
the
May 23,
UNION
of
Fuel
to
the
has
Cumu¬
Stock
of
April
pavable
of record
on
at the
BBS
A cash dividend of
close
1949
MERCK, President.
1949.
stock
de
of
business
CONTROLS COMPANY
COMMON
30,
1949,
business
dealer
for
,./.
.
.
•
of
25c
June
C.
five
DIAL,
-%
quarterly divi¬
of 201 per share on
UNITED FRUIT COMPANY
Common Stock and
the
29u/f6(f per share on the
4M % Cumulative Con¬
DIVIDEND
vertible Preferred Stock
"
have been declared,
A
both
stockholders of record at
not
dividend of
share
payable July 1, 1949 tc
*
this
June
NO.
per
capital stock of
has
been
payable July 15,
stockholders
to
200
fifty cents
Company
clared
books will
the
on
of
de¬
1949
record
be closed.
June
9,
1949.
EMERY
\
Directors
N.
LEONARD
Treasurer
t
May 19, 1949
per
share
was
/
;
de¬
A dividend of twenty cents
§j
METALS
McGREW, Secretary.
gross
in
one
'
in
-
any
■
mon
tion
;
per
share
on
€»« he.
the Com-
Stock of this Corporawas
declared
A dividend of
payable
$1.75
per
current
June 15, 1949, to stock-
on
1949. Checks will be mailed.
declared
on
1949, has been
payable July 15, 1949
preferred stock
the outstanding
Company to holders of pre¬
of business
TREASURER
on
.he close
July 5, 1949.
Philadelphia, Pa.
May 20, 1949
Average
years.
Box
PHILLIES
519,
Commercial & Financial Chronicle, 25 Park
Place, New York 8, N. Y.
declared
1949,
on
of
America's N-i ciqar
15,
the outstanding common
Company, of the
value of $1.00 per
common
PREFERRED DIVIDEND
par
share, to holders
stock of record at the
on
COMMON DIVIDEND
The
regular dividend of one dollar
thirty-seven
and
one-half
cents
($1,375) a share on the outstanding
5
y% %
1949
cumulative
ferred
the
stock
July 5, 1949.
has
Secretary
pre¬
declared
for
quarter
the
close of business June
A dividend of
twenty-five cents (25<t)
at
15, 1949.
a
share
on
the
outstanding
common
stock has been declared
1,
payable July
1949, to holders of record at the
close of business June 15, 1949.
The transfer books will not be closed.
Checks
will
be
Manhattan
H. A. WAY
rpfc(r=m>Z7m W
convertible
been
ending June 30, 1949,
payable July 1, 1949, to holders of
the
May 25,
Reynolds Metals Building
Richmond 19, Virginia
record
share has
payable July
close of business
annua!
P
been
stock of the
year
u
A dividend of 50^ per
=
-
account of the
quarterly dividend period
ending July 31,
holders of record May 31,;
company
1%%, amounting to
share,
ferred stock of record at
territory.
REYNOLDS
close
1949.
6,
R£YnOLD/
June
jj
.
contacts.
past
G.
STOCK
dends
949.
May 25, 1949.
M
Shares
June 3, 1949.
r
Regular
to
i
Fund
Corporation
1 a red, pa y able J ul y 1, 19 4 9 t o
at the close of
c
stockholders of record
STOCK
PREFERRED
of the
.
Mutual
capital
has been
Greensburg, Pa.
Corporation,
A. R. BERGEN,
(20c)
sales
(50(J)
cents
Corporation
common stock; payable
stockholders of record at
on
Fifty
the outstanding
on
this
of
one-
Stock
its
to
share
per
WALTER H. STEFFLER
Secretary 6* Treasurer
Iron
CARBON
CORPORATION
28
July
ousiness
24,
AND
$4.00
issue date,
the
declared
been
stockholders
to
1949,
new
Preferred
30,
1949,
amounting
to 70c r
regular quarterly rate of $1.0f
June
at
chare.
Secretary.
Board
&
CARBIDE
1949, the regular dividend
amount
on
1949,
the
of
Colorado
on
D.
*
from
corporation
share
the
on
Second
share has to¬
*
PETERS, Secretary.
Common
«n
meeting
a
The
.*
many
share
a
Stock
1949.
the outstanding
this
June 8, 1
..y
Co.
$20,000
13,
dividend
Convertible
Corporation
Quadrupled retail
Have
over
this
June
initial
An
lative
stockholders of record at the close of
to
business
securities experience with
good
Experience in retailing, wholesaling, de¬
built large successful sales organizations of
■
■
business
The Colorado Fuel & Iron
.
wholesaling
Preferred
corporation, for the quarter ending June
30, 1949, has been declared payable on July 1,
1949, to stockholders of record at the close of
ROBERTSIIAW- FULTON
No. 58
firm.
.
Capable
CO., INC.
dividend of 87!;>c
Cumulative
Secretary and Treasurer
Corporation
June
investment
salesmen.
$3.50
10, 1949.
Dividend '
York, May 18, 1949.
MORSE
1949,
houses, seeks connection.
veloping
Bruce H. Wallace, Treasurer
SOLVENTS
WHOLESALE REPRESENTATIVE
years
1949.'
7,
this
1,
'
1949.
the
oer
COMMERCIAL
,
1,
close
the
&
regular quarterly
1949
WILLIAMS, Treasurer
M
25
payable June 20,
to
Checks will be mailed.
J. Osborn, Secretary
GEORGE W.
upon
OR
Executive,
at
transfer
stock
per
stockholders of record
the close of business on June
Company will not
MERCK
A
on
May
common
SALES MANAGER
'•
declared
1949,
New
13
I
1
been
June
202
the Preferred Stock has
on
the
at
on
SITUATION WANTED
*
-
Ave., New York 22
Electric Punched Card Accounting
jl
i
The
1949.
on
No.
quarterly dividend of $1.50
share
capital stock of
June
13, 1949.
quarterly dividend of 37^c a share on the
Common
Stock
of
this
corporation has been
declared
payable on
July 1,
1949,
to stock¬
holders of record at the close of business June
Company
payable
record
Ameri¬
new
Telegraph
A
de¬
been
has
Dividend
Preferred
The transfer
quickening of institu¬
&
15,
COMPANY
the close of business
clared
Telephone
June
ELEVATOR
Salt
A
the out¬
standing Preferred Stock of this Company has
been
declared
payable
July
1,
1949,
and
a
dividend cf 40c per share upon the
outstanding
$25, par value Common Stock of this Company
Debentures.
tional interest in the
payable
Secretary
on
of
record
"business
Rapine,' Wis.,' May 25,
A
help
by
the
Hervey
oi
(Incorporated)
City Housing
heartened
share
a
on
the close of business
at
BUSINESS
McCASKEY, JR., Secretary.
un¬
quoted around 97%,
are
stock,
May 27, 1949.
RICHARD T. FLEMING.
Company, payable July 1,
15,
payable June 10, 1949, to stockholders of record
the close of business on May 20, 1949. Trans¬
fer books will not be closed. Checks prepared on
half cents
held
Dealers
capital
June 15, 1949.
on
1949, to stockholders of record
Secretary.
The Board of Directors of this Corporation has
this day declared a dividend of $1.00 per share,
the
loan which is quoted around 94 %.
Amer.
this
1949.
CHEROUNY,
DIVIDEND
S.
June
York
clared
Quarterly Dividend
^
1949.
WM.
the New
GENTS
at
holders
temper of this market is
perhaps best indicated by the be¬
havior
of
the
recently
offered
Triborough
Bridge and
Tunnel
Authority issue, brought out at
and
divi¬
a
1949, to stockholders of record at the ciose
of business
company
The 137th Consecutive
The
par
closed
Treasurer.
OTIS
MACHINES CORPORATION
: "
.
Corporation,
payable
June
30, 1949, to Common stock¬
large
to
pany's
per
payable July
/International
Y.
meeting of the Board of Directors
Allegheny Ludlum Steel Corporation
held tcday, May 19, 1949, a
dividend of fifty cents (50c)
a
the
per
the
such
a
N.
Pittsburgh, Penna,
At
lugging
served
stock
common
June
Allegheny Ludlum Steel Corporation
has
not
May
to stock-
April 26, 1949
the situation any.
and
S.
1,
590 Madison
American
,w
close
of
the
on
business
York 5,
New
A. L.
sold issues for quite a spell, and
the recent offering of a block of
around
Y.,
be
not
LOCKWOOD, Secretary
June
on
A dividend of
have
quarterly
1949
INTERNATIONAL
now.
field
thirty-five cents (35c)
15. 1949, to stockholders of record at the
cf twenty-five cents (25c)
special cash distribution cf fifty
share have today been declared
Copper Corporation, payable on
to stockholders of record at the
a
per
Secretary and Treasurer.
JACK,
con¬
fairly sizable inventory of
the
on
distribution
and
(50c) a
Kennecctt
'
fa Her
S.
120 Broadway,
IBM
of
in
dend No. 135 of
Pre¬
$1.25
July
the
at
1919.
D.
momentary let¬
corporate field, be¬
dealers
N.
will
dividend.
SIMPSON,
19, 1949.
dend of 75 cents per share and an additional
dividend of 50 cents per share on the Com¬
A dividend of SEVENTY-FIVE
IBM
Y,
week hence clear¬
and
a
share
per
Machines will be mailed.
appar¬
the movement of municipal
flankers
Company have declared quarterly divi¬
share
KENNECOTT COPPER CORPORATION
June
to
of
were
payment
^
'
cause of the sluggishness
n
any
books of the
N.
on
Stock
Company
for
the
the
York,
DIVIDEND NO. 140
DIVIDENDS
dividend
a
Preferred
Light
1949,
stockholders of
By and large the underwriting
cerned
New
A.
TEXAS GULF SULPHUR COMPANY
The Directors of International Harvester
1949
COMPANY
York,
share
per
and
$5
25,
June
$1.50
($6)
"the
on
Power
,
down in
this
J.
COMPANY
declared
cents
Stock, payable June 30,
recfird at the close cf
r
A
ferred
Pressure in Municipals
a
FULLER
Gas & Electric reset its date
community is not too much
up
on
period set for
Directors
H.
of
registered
LIGHT
&
Street,
PREFERRED
Southwestern
ing the field for the two larger
offerings.
ent
POWER
Rector
Electric
Gas & Electric pushed the day
for opening of its bids ahead to
June 6, Monday, and Southwest¬
a
books
of
be closed.
But the threatened "jamming"
was " averted
when
Oklahoma
for June 13,
COMPANY
DIVIDEND NOTICES
AMERICAN
Gas & Electric, plus $2,500,000 of
1 o
preferred stock for the latter.
ern
with
unsubscribed
of
20,
to
variety
a
of
A.
been accompanied
by r;20,000,000 of bonds for Vir¬
ginia Electric & Power; $10,000,-
transfer
payment
1943,
May
a
Service
date and had
Oklahoma Gas &
take
to
the
of
fifteen
of
gage bonds heads the list for that
000 for
bank
"standby"
is left
A.
Board
dividend
Meantime Central Illinois Pub¬
mort¬
new
the
stock
the
HARVESTER
close of business
cents
Service
The
for
INTERNATIONAL
the
in
and
the
Stock of this Company has been de¬
payable at the Treasurer's Office, No.
165 Broadway, New York 6, N. Y., on Monday,
June
20,
1949,
to Stockholders
of
record
at
three o'clock P. M., on Tuesday, May 31, 1949.
The Board of Directors has declared
ready
Stock which
f.
a
purposes.
that day.
Cot p.:'s$75,000,000
stock
A QUARTERLY DIVIDEND of One Dollar
Twenty-five Cents
($1.25)
per
share on
Common
ac¬
share for each four
Bankers also will
hoid^'-s
competitive
funds
on
capital.
more
this
offices
from
GERARD J. EGER, Secretary
$25,000,000 of 18-year
fund debentures to be
in
provide
'
Public
of
with
W.
with R. H. John¬
Co., 30 State Street.
the first sold
compliance
crder
MASS.—Joseph
now
DIVIDEND NOTICES
Michigan Consolidated Gas has
7,
ones
being
purchases.
Power Commission.
as
though underwriters
would find themselves faced with
smaller
in
&
son
clared
"right" to subscribe
one
at
in competitive
company
bidding,
much
several
business
Huntington Bay Boulevard.
DIVIDEND NOTICES
the
the
20-year maturity.
a
This issue will be
recent
on
recent
more
into the "incu¬
go
pro¬
brief time it looked very
another
the
BOSTON,
Boudreau is
DIVIDEND NOTICES
Transmission Co.'s $50,000,000 of
new
first
mortgage
pipeline
that
appears
of
at
"added starter"
are
held
in
bation" period is Tennessee Gas
going
vided, naturally, that nothing
happens to disturb the plans of
potential issuers.
.June
for
times
better
offices
from
Berkeley W. Jackson Opens
7.
ratio of
outpouring of new
chiefly by utility
prospects to
which
now
into the Securities and
Exchange
a
for
Largest
However,
For
corded
buying orders.
corporations.
productive.
new
business
se¬
a
295 Main Street.
an
Shareholders
issue market next month
new
registrations,
all, has not been too
over
curities
curities
June
on
Moving Into Position
in
With R. H. Johnson Co.
EBENEZER, N. Y.—Nickolas R.
Mamula, Jr., is engaging in
in
the period.
erating
N. R. Mamula, Jr. Opens
47
Starter
shareholders will be
to
in the nature of
2.45%
a
(2307)
HUNTINGTON, N. Y.—Berkeley SOUTHERN PACIFIC COMPANY
the Manhattan Co.'s offering of
W. Jackson is engaging in a se¬
DIVIDEND NO. 126
500,000 shares of additional capi¬
basis much of the current interest
the field of corporate
underwriting judging by the
itable
the issue get down around
"standby"
a
on
specialty category, Bank of
so
eraging their positions at a later
date.
Expectation is that should
one
to
common
Although falling into something
of the
buyers have tal stock
appeared, probably intent on av¬
ahead very likely will go down as
here
An Added
scription feature.
arbund 2.36%
par
Underwriters would
basis.
investment
its
CHRONICLE
offering of 446,-
shares of $10
would
merit, rather than its stock sub¬
FINANCIAL
initial
an
shareholders.
moving
moving around 106% and is re¬
ported attracting growing atten¬
tion
&
ALLYN
mailed by Bank
Company.
of
DILLARD, Secretary
Dated, May 19, 1949
•
•
'
'•
Thursday, May 26,
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2308)
48
"...
quiry develops, in
BUSINESS BUZZ
The Administration
Capital
no
spite the presumption to the con¬
trary in all the Presidential and
Administration
other
from the Nation's
has
plan for fighting a depression, de¬
Washington...
m/g^-mf
JL l/ li/
/■ yi /"W
xJL M i/\A/
nutshell, this
a
report:
(1)
Behind-the-Scene Interpretations
1949
•
..
statements
they will prevent a depres¬
sion.
The lack of an anti-defla¬
that
'•"
s«
,
K.R KATNIP.JR.
tion
has
particular
in
plan
the
Advisers
Economic
of
Council
worried.
SECURITIES BROKER
of the biggest
decision of the House
death on the pending
The darling of the Fair Dealers, the public
C.—There is the possibility
D.
WASHINGTON,
bill.
housing
public
housing bill passed the Senate by
the
overwhelming
majority
of
57-to-13.
The
House
Banking
out
reported
has
Committee
a
expensive bill than even the
adopted, proposing that the
more
Senate
government build 1,050,000 hous¬
ing units—the amount the Presi¬
dent
asked—compared with the
approved
units
310,000
Senate.
by
the
/
the ac¬
tion of the House Committee in
with the
people's money than the Senate,
have been placidly awaiting the
going
liberal
more
the
House would
around to passing
bill by at least a 3-to-l ma¬
when
finally get
day
the
have even been
maybe
Rep.
Wolcott, ranking Re¬
They
jority.
that
snickering
P.
Jesse
publican on the Banking Com¬
mittee, has "seen the light" be¬
cause
he
announced that
he
thought it was futile to try to
trim down the bill by amend¬
ment in committee.
•
s.'s
history to pub¬
There is a lot of
Back in 1937 the first
lic housing.
program became
law. The 1937 act contains many
of
the
costly essentials of the
housing
public
present program. Then a year or
so later, the late President Roose¬
velt tried to get the program ex¬
panded.
great point the
Rooseveltians of the last decade made
about public housing was that it
consisted of a lot of self-liquidat¬
The
ing loans. They pointed out
the
Federal
Government
that
only
loaned the money, and the city
housing authorities would pay it
back, although, to be sure, the
would pay
subsidies to help
Government
Federal
rental
annual
maintain the "low rent
of the
character"
the
When
faced
at
bill
showdown
a
that time
before the
Wolcott,
more
than 10 years ago, went
before that Committee, and with
Rules Committee, Rep.
and
pen
demonstrated
paper
"rental sub¬
sidies" were equivalent to the
debt service.
In other words,
the
that
actual
since the Federal
lent
to
government
ments
Government's
subsidies were equiva¬
the debt service,
the
annual
over
instal¬
annual
in
a
of
period
housing project
In fact gave the
the
to
labor
four
unseated
Wolcott's
Detroit
case,
area,
is in Wolcott's
their leadership was ap¬
proached by Representative Wol¬
cott with the argument-that now
is the time to make the frontal
cans,
Fair Deal, and
the public housing program is the
attack
best issue to start
meetings of the GOP
two
were
Wolcott
question.
100,000
units and $100 million involved,
or one million housing units and
$1G billion. He in effect said to
his
leader
colleagues,
"how
about standing behind me?"
there
the
is
This
"
leader, Senator Robert A.
Taft. The thing passed the Senate
party
entire
This decision involves the hous¬
but due to the dogged
determination
of Rep.
Wolcott,
Republican lead¬
during the 80th
of
defeat ired the Fair
all
ranks,
types,
Deal¬
and de¬
persuade
file
will
be
handsome
a
join
the
of
them,
crats
so
party
to
enough Demo¬
that there will
minority
housing
the
than
the
Among
however.
much
involves
decision
This
bill,
conviction
that
nothing to
lose
the
GOP
1949, represents the
high water
by
gain
of the Fair Deal, and that
now
more
pose
depres¬
the prospectus is very attractive printed
lovely pale blue paper!"
THE
as
CURE.
business
in
and
control
Deal
all
on
fronts,
and
would
be
made
by
18-man
an
compromise or apologize
for what they haven't done.
But
the thinking underneath is work¬
commission,; half from government
and Congress, and half of private
ing that
question of monetary controls.
citizens, to
way.
And there is no more
Small
persuasive
into the whole
look
business
backing the thing
figure among the GOP leadership
for 1 his bold new approach than
ise that
Representative Wolcott.
readier
some
the
on
are
prem¬
how it will lead to
to
access
Their
of
is
housing.
of
explained
banks
will
grand
over
sum
property
rental
make
their
and
own
further
pattern.
a
ever,
trap and put a little
loans
sees
help
money
size of
idea,
not coincide with
"Chronicle's" own views.)
and may or may
Edward B. Cantey Opens
COLUMBIA, S.C. —Edward B.
Cantey has opened offices in the
South
Carolina
National
Bank
Building to engage in the securi¬
proposed
only
the
in
"confusion"
mind
public debate.
resulting
idea
mission
in
Unless Treasury
get
will
nowhere
i'{
!|{
$
Trading Markets:
Ralston Steel Car
'"Oregon Portland Cement
Riverside Cement A & B
Spokane Portland Cement
1949.
*
Government
independent
study,
Commission
Monetary
professional
and
lobby
Board.
the
This
is
.
small
Federal
the
want
know
to
what
deflation plan the
business
Reserve
which
study
agencies
Figures Available
report
that many outside the capital
it
develops, has for 'its backing
the
&
•
from
opposition is silenced, this com¬
cheese in
now
in the
past was with Abbott, Proctor
""Latest
The
Mr. Cantey
ties business.
how¬
dragging this qeustion Out into
if
the pri¬
$
Administra¬
has at least the covert op¬
public
"
-
of
commission
the
and
tion.
position of the Treasury, which
enterprise system, just set
it."
deal
to
of the
management
adopted
are
Congress
Paine.
It goes to show that
want to take over
ycu
vate
System
bonds.
This
bonds.
At the
same time they will to that ex¬
tent sacrifice their opportunity
to
the
term
dollars of hous¬
million
a
Reserve
they
the
Board,
public debt and the commit¬
ment to peg the value of long-
authority
ing
in¬
who
the
for turning
$160
as
Reserve
be¬
by the
Administration, and then shake
down in compromises between
the
and credit in view
"the big
some
such
one,
make
the
with
when this all shakes
"Maybe
down,"
the
first
Administration
the
(This column is intended to re*
troduced the bill.
For
fore
proposals
down,
fleet the "behind the scene" inter¬
pretation from the nation's Capital
study Offers the prospect that any
inquiry into monetary manage¬
ment will disclose the helplessness
Committee;
Banking
within
shake
to
have
capi¬
Senate
the
the conservatives
Congress were keenly disap¬
pointed at the anxiety of the big
correspondent banks to. get in on
the underwriting of public- hous¬
ing bonds and by that stand com¬
promise their opposition to public
Incidentally,
in
will
and subsidies.
diverse
these
Chair¬
venture
champion
Maybank
man
advocates
All
the
of
The Congress will back
economy.
local relief, tax cuts,
Fair
Thus
the planners will back everything
which
will
put government
in
this
on
will
offer
business
when,
is
city
anti-
the
Administration
as,
recession
and
if
gets bad.
to
on
to
it shall stop.
the
point, they
challenge
the
Firm Trading
the
LERNER & CO.
Investment
10 Post Office
Securities
Square, Boston 9, Mass.
Teletype BS 69
Telephone HUbbard 2-1990
In-
FOREIGN SECURITIES
AH
pro¬
Hill, Thompson & Co., Inc.
NEW
Markets
What
Executive
70
Issues
YORK
& Underwriting Offices
WALL
Tel.
5
STREET
WHitehall 4-4540
Senate's
"liberal" leadership, which says
that the
Teletype—NY 1-971
HAnover 2-0050
has
party must offer a less
including
organized
expensive "me too" alternative
labor, and they -set out to "get"
to the Fair Deal.
the Republicans who, under WolIt is a long way to the time;
cott's leadership in the Banking
Committee, had killed off their when the House Republicans will !
publicly demand that they fight
expensive pet.
scriptions,
Til take this stock,
everything
that May,
from
a
always
and
saying
mark
comes,
if
Administration
the
conservative GOP leaders
in the House, there is a growing
to
poor.
time
the
program
against
public housing. There is even a
dim possibility that the bill might
be beaten, although that is not
in sight as yet.
is
Congress.
itself. If the GOP
enough of the
program
not
when
Congress to plead its own special
of
public housing program.
lend
within the government and
group
perpetuate the low interest rate
year,
This
an¬
fight the
would
leadership
GOP
more
ers
the
to
attributed to Minor¬
nouncement
got behind the proposition
and enlisted the support of their
killed
led
events
of
course
ity Leader Martin, that the House
ing
erals"
was
were
week
last
which
languished since, and did not get
real vitality until Republican "lib¬
ers,
principle,
on
program
whether
public housing, except for
housing, has pretty much
backed by House
the public
fight
would
he
housing
more
last
this
announced
are
money
pushing
sion, then look for every pressure
tal.
instance there
policy committee to discuss
with
So
upon.
So at Wolcott's
stand
v/ar
the
upon
loans, and
annual subsidies, the majority of
the House was chagrined that they
had not perceived this deal and
enraged at the New Deal for put¬
ting this thing across.
*
Republi¬
year,
will
DOES decide to combat
refuse to
House
that
cash
to
that
ever,
the
to
risks
with the
of
When
(4)
There is
According
later this
and
full
banks
business
more
planners,
work
not
banks
persuade
straight across, or give up.
of
serious
of a
event
set-back
The Administration is pretty well
and more projects
if business gets
beginning to be
a sneaking feeling that now is the
time
to
fight the whole thing
to
the
worse.
the
In
sold that tinkering
something of a political
miracle, the Federal Government
is now entering an era of deficit
financing, the end of which can¬
not be foreseen.
The era of def¬
icit financing may also open the
way
Fair
don't anticipate monetary devices.
barring
and
*
(3)
business
conservatives in
and Senate that
House
the
both
argument
discarded
the
of
the thesis that it is
depression-preventing.)
growing-
a
additional
an
as
Deal program,
realization among
rank
*
is
There
present.
back
before the present ses¬
much
for
the
to
excited enough
far-reaching
get
to
(The Administration, of course,
uses
will
story
to
it
measures
1949.
the
un¬
sion of Congress.
the
leaders
authorities,"
about
"packed"
the House Banking Committee
at
the
beginning of the 81st
Congress,
to
guarantee
that
Wolcott would not succeed in
working out any combination so
that public housing
would be
brings
is
It
downturn.
business
istration
district, suddenly
primary in an
Democratic leadership
This
no
get bad enough for the Admin¬
jective, they cut down his nor¬
mal majority. Subsequently the
stymied in
is
programs
according to informed
observers,
that business could
get rid of Wolcott.
failed in their ob¬
to
they
actual
of
likely,
vcted in the GOP
attempt
There
measures.
being pushed just to anticipate
a
the drive, they
Republicans. In
the CIO in the
part
of which
behind
getting
Upon realizing the simple arith¬
metic .behind the facade of local
"housing
mote
organized
social
uplifters
years
free and clear to cities.
tration likely to sanction or pro¬
likelihood
that
projects.
really develops, is the Adminis¬
With everyone from
While
noting
Dealers,
Fair
If, only IF the depression
(2)
political news of a decade behind the tentative
Republican leadership to wage a fight to the
ram marks 4 r.o- Inc.
FOREIGN SECURITIES
50 Broad Street
AFFILIATE: CARL MARKS
Trading Department
120
SPECIALISTS
New York 4, N. Y.
& CO. Inc. CHICAGO
Tel.
BROADWAY
REctor
2-2020
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