The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
BUS. ADM.
MBBARV
ESTABLISHED IS39
tut. U. 8. Pat. Office
Volume
167
New
Number 4702
Industry and Science
Not Manpower
Determine Victory SI
Price 30 Cents
York, N. Y., Thursday, May 27, 1948
a
Copy
The Outlook for Interest Rates
Opposihfffactors in
iBusihesslOulibbklf
By JIM HOWARD ^
S Former veteran, with engineer-:
ing
contends
training,
capacity
of nation to create most effective 1
a
and not conscription or k
have led to ,
Says large peacetime j
weapons
military
manpower
victory.
\
stagnation f
and accuses i
I military officers of discouraging -
| military force
of armed
l
tneaBs
progress
voluntary enlistment.
I
:
?• *
of military i>er4
The crediting
sonnel with the major part
in this
foreign enemies
popular fallacy-responsible
for the
reasoning that military
officers, should dominate our civil
nation's defeat of
is
a
government;: and| control
mart$
power and industry even during
periods between;wars;v: vi; ^1t
i In spite of the fact that history
records no major £ world vpower
which practiced conscription in
peacetime for long periods that
has not been defeated by that na¬
tion which avoided conscription,as
a permanent peacetime method of
manpower
procurement for its
armed
services, J the
American
public is being told by contem¬
porary
military, officials
that
peacetime draft and even per¬
manent universal military con¬
scription (UMT) iare useful for
defense.
"It
accident that the free
was no
democracies of the West
..
.
Great
Britain and the United States
of
.
.
.
long peacetime period
conscription
and
well-de¬
without
veloped
a
;;
military ^bureaucracy,
able
v/ere
to
assemble
a
more
powerful striking force than the
Axis Powers. World War II was a
(Continued
29)
on page
State and
/,
fS
t
*
Bonds
CANADIAN
.nc.
>'
Municipal
Franklin Custodian
Funds,
?! r<: '■% & K
.
SECURITIES
A Mutual Fund I
I
COMMON STOCK SERIES
r
' Members New
York stock
Bond Department >;
PREFERRED STOCK SERIES
Hirsch & Co
,
BOND SERIES ;
,
'
THE NATIONAL CITY BANK
UTILITIES SERIES
Exchange
«5 Broad
St., New York 4,N. Y.
UAnover 8-0600
INCOME (BALANCE FUND) SERIES
New York
OF HEW YORK
Prospectus on request
Teletype NT 1-810
^.
Cleveland
Geneva
London
Bond
FRANKLIN DISTRIBUTORS, Inc.
(Representative) >
64 Wall
Dept. Teletype: NY 1-708
We1A avisi- prepared
memorandum
Town of Surf side,
Bell Teletype NY 1-395
Optional 1953
New
^■ v.-;and
"i
Copy
■<
upon
bonds & stocks
Dominion Securities
Est. 1896
(Incorporated)
V.
"v
Established
NewYork
Cincinnati
Chicago
Columbus
,
Members New York Stock
1899
;
CLEVELAND
r
Tele. NY 1 -809
OF
THE
CITY OF NEW YORK
Central Vermont
Public Service Co
PREFERRED
Corporate Securities
INVESTMENTS
Street, New York 4, N. Y.
Tel. WHitehall 3-2840
NATIONAL BANK
,
Gordon Graves & Co.
30 Broad
/
Toronto.;
request
sutro bros. & co.
INSTITUTIONAL
Montreal;
CANADIAN
company !
Distributors of Municipal
@ 3.65%
*
York:
a
the
on
general electric
Underwriters and
Due March 1, 1974
%BAnover8-IMO
Street,. NewYork 5
50,000
!/ Florida
'Security Dealers Assn.
52 WILLIAM ST.*N.T.
.
Chi care
CHASE!!
THE
and other Exchanges'.
Denver
Toledo
Buffalo.
.
s
..
Grporation
irahaupt&co
York Stock Exchange
Principal Exchanges
Members New
-' and
other
Exchange
40
120 Broadway, New York
,;;V:Telephone REctor 2-7340-
Exchange Place, New York 5, N.Y.
;
111
Broadway, N. Y. 6
WOrth 4-6000
*..
—.
Bell System Teletype
NY l«*702-3-
Boston
Teletype NY 1-2708
Telephone: Enterprise 1820
2
(2310)
#
4
THE
Consolidated Edison
Conv. Deb. 1963
BOUGHT
—
The
Rights
SOLD
QUOTED
—
of
%
Reserve
tem,
Broadway, New York 5
7-5660
Teletype
NY
the
Board remains
1-583
its
South Carolina
credit
5Yi% Pfd.
half
to
Request
B.
policy, the text of the article
published herewith in full:
Mackinnie Oil & Drilling
been
half
Citizens Utilities
of
rapid rate
1947,
in
the
is
This
was
restraint
Exchange
NEW YORK 5
on
the
part
of
imposed
some restriction
credit expansion. Drains
bank
in
Treasury operations
heavy, and during much of
the period banks were
obliged to
Michigan
U.
S.
Government
to meet their
ures taken
reserve
needs. Meas¬
by the Federal Reserve
plemented
of
Bought—Sold—Quoted
As
Troster, Curries Summers
Members
result
a
of
this
double
Teletype—NY 1-376-377-378.
restrictive
savings
effects
bonds by the
Treasury were sub¬
stantial during the first
of
these
fiscal and
quarter
This
year.
the
of
decline
1947
is
in
and
vestors
early
Reduction in deposits and
of INDIA, LIMITED
Bankers
the Government in
Kenya Colony and Uganda
to
Head Office:
26,
Bishopsgate,
London, E. C.
Branches
In
Colony,
1
*.
!
'
India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden
and
Zanzibar
.businesses and also in
commercial
£4,000,000
£2,000,000
£2,500,000
Paid-Up Capital
Reserve
The
Bank
Fund
conducts
every
description
posits
of
Trusteeships and Executorships
v
-
of
'
or
any
The Treasury showed
funds
from
a
cur-
surplus were made by the Treeswith differential effects on
monetary and banking conditions.
A small part—about
$400 million—
Treasury in excess of cash expen¬
ditures.
Surplus funds obtained
by the Treasury were used to a
large extent to retire securities
held by Federal Reserve
Banks
were
these
in
from ,ury,
was
retirement
of
maturing
ment securities offered
for cash
not returned to the
banks, either as de¬
reserves.
Borrowing at
returned to deposit accounts of
individuals and businesses
through
govern¬
voluntarily
redemption by nonbank
commercial
banking and exchange business
also undertaken
resulted
tax and other cash
receipts of the
and thus
Subscribed Capital
banks
of
Appliance Company
needs
:
banks by consumers and real es¬
tate owners continued to
expand,
but business demand for
credit
bank
the
by
result of
a
We Maintain Active
of pre¬
couplings, fittings and valves,
Company is in position to benefit
importantly from expanded
program.
• ,.
»
;
Book value
•'
(*:i\ *'
dii
31
Price
about
;
Powell River
Co., Ltd.
&
Pow.
(6-30-47) $9.60
$8.00
per
Paper
United Kingdom 4 % '90
holders
chose
to
present for cash payment; these
funds were returned to bank re¬
Pont, Homsey Co.
Milk
St., Boston 9, Mass.
N. Y. Telephone
Teletype BS
CAnal
424
6-8100
/
Brown Co.
:
,
; Noranda
Mines
115 BROADWAY
Telephone BArclay 7-0100
•
Members New
25 Broad
York
Stock
Exchange
St.. New York 4, N. Y.
NAnovar 2-0700
Now Orleans,
NY 1-1557
la.-Birmlnghain, Ala.
Direct wires
to
branch offices
our
surplusby drawing" down
tneir excess
reserves,
beginning
rarily at
of
1948
wnicn at the
tempo¬
were
hligh level of about $l.$
a
billioh-^much^^more-'than'has
tomarily been held in recent
These
substantial
excess
Joseph McManus & Co.
cus*
years.
Members
reserve
balances had been accumulated
by
banks as a result of the rapid re¬
turn flow Of currency from circu¬
lation in the week after Christmas
■
New York Stock
Exchange
New York Curb
Exchange
'
Chicago Stock Exchange
.•
.
rand large net sales of .government
securities
to
the
_
Reserve
Banks
_
latelm
laoth
the year, by
and their depositors.
39
Broadway, New York 6
banks
DIgby 4*3122
set
in
on.
pact
bank,
the
operations.
over
restrictive
of
reserves
A
TelePNV M6iO
billion
one
effect
)v
,
*
return
dollars
of
of
cur¬
corresponding
reserves.
Pi
Banks
;
a
of
amounts
.
as
the
L
?
serve
Treasury
remainder
|i|
Exchanges
Exchange end Other Principal
V
;
J
; NEW YORK 6, N.Y.
.
BOUGHT—SOLD—QUOTED
of
i
J. Roy Prosser & Co. i
'Established
INVESTMENT
opera¬
the re¬
1919
SECUEITIES
62 William Street
New York 5, N. Y.
Teletype NY
,
1-1723
' !
,
needs, amounting to $1.8
billion, was supplied through Re¬
serve
Bank purchases of
govern¬
ment securities.
Bank sales of government se¬
curities to maintain reserves were
throughout the first
January banks were
increase slightly their
In
from Treasury operations,
large
reserve
gains
RECOGNITION
c-
•
I
securities
owners,
and
banks could utilize the
excess reserves
be¬
held
beginning of the month! In
February apd March, on the other
hand, when reserve losses arising
Treasury operations
'r
i;;
..
^
A
limited
to
Active
amount
this
of
company
trading
our
data
per¬
is still avail¬
market
maintained.
un¬
at the
from the
^
The NEW YORK CURB EXCHANGE
able.
government
V
apparently realizes the sdme, as on
Wednesday, May 19, 1948, TOKLAN
was
approved for listing on that ex¬
change. We expect trading will sta^rt
shortly.
chases
of
'
'
;-
recognized TOKLAN ROYALTY
CORP. as an outstanding oil, as our
letters and postcards to you over the
past two months will testify.
taining
nonbank
i
j«.
We
from currency return and gold in¬
flow and from Reserve Bank pur¬
usually large
Teletype NY 1-672
f
request
serve
cause
v
"
■
on
.
group were able to
drain from
The
f-1
Resume
bank
quarter, more
than half of the $4.2 billion re¬
tions.
CRANE & HOIST CORP.
first
because * of
South African Mining Shares
i
rency from circulation and a gold
inflow of $400 million provided
reserves
-
SHEPARD NILES
Treasury
seasonal
holdings of these issues. This was
possible, despite a $2.2 billion loss of
f'*
Goodbody & Co.
Members N. Y. Stock
'"/*■'
"
..-
fuhds resulting from the Treasury
cash*
quarter.
able to
British Securities
Department
share
'
Steiner, Rouse & Co.
sub-}
during
bank
Canadian Securities Department
'
I
"
hblb|
mercial
Markets in U. S• FUNDS for
Abitibi
*y%'! 'J
•V--'
Banks met part of the drain of
,
from
HAncock 6-8200
!
£*•>• -'.■M.Cyy
(6-30-47) $19.44
Net current assets
Current
aircraft
.
••
Bought-~Sold~—Quoted
.
vban^:declihed: oveji
not continuous
Manufacturing complete line
.
time
same
as
h!
"> \
f
increased
were
$500 million
re¬
shown
as
$600 million was used to retire
maturing securities that commer-
Common Stock
cision
f
^
Louisiana Securities
operated tb
of
period,
At
;
30):;
Alabama <&
re*
meet, out of excess reserves held
at the beginning of 1948 and out
of new
reserve ? funds
acquired
investors. An estimated additional
was-seasonally slack, and bank
loans to businesses declined
slight¬
ly. There was a small net increase serves but not to deposits. About
in bank loans and the
funds cre¬ $1.2 billion of the surplus was
ated, together with those obtained permitted to accumulate in Treas¬
from an inflow of
gold, offset in ury accounts at commercial
banks,
I The Parker?
On page.
i
Large amounts of additional redebt,
of $6.7
billion, as is indicated in fSefye vfiind8;. obtained ^ by ' banks
;
from
other sources, in,, the first
Table i;
Various dispositions of the cash quarter of the year tended to off¬
and
reserves
permitted
as did
njeiarly offset I
was
for retirement of marketable
cur¬
holdings of individuals
amount
is
curity operations, before payments
; a
growth of $8.9 billion during the
rency
year.
full
rent fiscal and
nonmarketable se^
last nine months of 1947.
NATIONAL BANK
that
wished
surplus of cash
first
follows
who
the
issues
one
almost
the
quarter,
many in¬
to
acquire
reflecting purchases by
credit developments, total bank
deposits and currency in the hands
of the public showed a decline of
$5.3 billion during the first quar¬
ter
Ybrh Security Dealers Ass'n
the
when
v«.''
:;
the- period, because ? of
? the
stantial decline in deposits.
comparable
and outgo by quarters
during re¬
cent years are shown on Chart II.
In addition, net sales of
Treasury transactions. (Chart I)
II.
byl member
first quarter of 1948, as
large corporate and indi¬
vidual income tax payments. Va¬
riations in Treasury) cash income
in. :1947
(Continued
this increase,, the total
amount of required reserves
very
securities
System to increase the cost of, or
the need for, bank reserves sup¬
Chemical
the
occur:
Despite
;
•
1947
tors.; Moreover; subb d
-were
York
and
Chicago banks musf
hold against net demahd deposits:
Reserve hold¬
-
?
cor-'
responding period of
securities
creaSih|^tb^
of
de¬
periods of other
recent years, the stream of Treas¬
ury cash receipts was swollen by
were
sell
'
govern¬
market.
effects
by the Board Of Governor^
of-the Federal Reserve Systeriil in4
Treasury Cash Surplus
In
reserves from
'
about
'
that
Table
action
ings.
in
serves
satisfying
Federal
restrictive
Treasury deposits at the
the major faptbr
reduce the volume
traint on the part of the banks in
in
retire
Effect;oiii: Bank? Reserves
i The $4.2 billion drain as a.
reserve
crease
to
Reserve Banks.
readily accommo¬
banks.
Voluntary re-
a
sell
of debt
retirements in the first
quarter of
this year contrasts with the
held bjr; Reserve Banks br to ih-r
brease ^
dated
bank
on
either
in
banks,
on
used
first three months of the
year was
and
to
securities in the
,
1$47;- when onlybillion
Sustained de¬
securities
system
Funds used in this manner were
of the funds drained
irom>
withdrawn from the reserve - bal¬ banks by the Treasury surplui.?
were
returned
to
ances of commercial banks, as
them through
well; Sis from private 'deposits; Treasury retirement of govern-i
These " Withdrawals were much ment. securities owned, by vcomlarger than, in the first quarter of inercial : b^nks; and their : deposi- i:
vsiilt?of jTrbasur^ x>£>er ation^iW the
holdings
In
banking
had
reserves
The
on
to
government
balances.
ment
securities
from
reserve
ing
Banks, where
by
drew funds from deposit accounts
of individuals and businesses and
commercial
reserve
funds withdrawn by
the cash surplus, and banks
need¬
most
invest¬
such
loan
demands
would make possible an increase
in commercial bank
bank
di¬
were
the
the Federal Reserve
by consumers and
estate buyers and expansion
in loan demands- of businesses
could thus be
by
the
;
,
,
real
in
reserves.
reserves
government
the Reserve Banks.
mand for credit
policies
of ? monetary
authorities, together with self-
HAnover 2-947C
and
could obtain
or
selling
addition
Established-1923
New
ments
last
interrupted
was
operations
primarily toward securities
held b# the Reserve Banks. Such
debt retirement did not return* to
deposit during
the quarter or were
extinguished
as the
Treasury retired securities
owned ? by
the Reserve Banks.
probably not absorb
creasing their loans
chiefly the result of a seasonally
large Treasury cash surplus which
|
Frank C. Masferson & Co.
.
a
the first quarter of 1948.
Tudor City Units
Teletype NY 1-1140
at
retirement
The bulk of the surplus
funds,
about
$4.2 billion, were trans¬
ferred to Treasury account with
they remained
the remainder of
over
securities market, would also
sup¬
ply additional reserve funds to
banks. Banks, therefore,
may have
additional funds available for in¬
Monetary expansion, which had
Tide Water Power
quarter of 1948
transient.
Treasury
from purchases to maintain order¬
ly conditions in the government
statement of Federal Reserve
as a
opera¬
first
the reserves of commercial banks.
support
government
bond
"it seems probable that no
significant restraints on monetary
expansion can be expected from
further cash surplus of the Treas¬
ury." Because of its importance
>
the
of
Any net increase in Reserve Bank
holdings of securities, resulting
prices,
Tel. REctor 2-7815
64 WALL ST.
was restrictive in the first
quar^
ter of 1948 because
Treasury debt
reducing private deposits at
but* not total deposits or
bank
Further gold inflow ap¬
likely, and this will add to
pears
the
of
/
'
banks
reserves.
to
New York Stock Exchange
New York Curb Exchange
Curb
1948
likely
rapid
a
the
thus
bank
deposits and reserves, as
they have in recent months, and
may be a factor expanding bank
commitment of the Reserve Board
"
; 120 BROADWAY, NEW YORK 5
York
be
in
largely
the year will
deposit expan¬
sion, and ) in
McCabe
view
MC PONNELL & CO.
Members
of
there is
Thomas
Members New
expan-
effects
monetary factors
tive
are
transactions
that in second
Bought—Sold—Quoted
f
curb
concludes
cle
contractive
fiscal and
arti-
Electric & Gas
■
re¬
pow-
to
ers
The
ad¬
quest for
on
through sales
government securities: to, the
Federal Reserve System.
J
;
\.;
The impact of
Treasury opera¬
tions on bank credit
developments
,,
of
-
rected
part the reduction in deposits and
currency, from
Treasury opera¬
tions.
Sys¬
that
ditional
'Prospectus
were minor and^almost the full arhbunt of the drain
of funds was met
Governors
of the Federal
Corporation
120
othfer squrces>
May issue of the "Federal Reserve Bulletin," in the leading article, entitled "Treas¬
New York Hanseatic
BArclay
smalleiy-gainsinreserves^ frpm;
ury Surplus, Bank Reserves,, and the Money Supply"
indicates^ despite" the retirement of
Marriner S. Eceles and the appointment of Thomas B*.
McCabe as" Chairman of the Board
Request
on
Thursday, May 27, 1948
leading* article in "Federal Reserve Bulletin," the Reserve ;Board, now -headed
by Thomas B.
McCabe, sees need of additional credit curbs should money supply increase.
-Says present Federal
J
Reserve powers, because of requirement to support government
.bonds, -are ineffective.
Cementing Co. Common
and
CHRONICLE
Money Supply Situation
In
Halliburton Oil Well
Prospectuses
FINANCIAL
Federal Reserve Reviews
Sunray
Oil
/
V* % Cum. Conv. Pfd,
3%
COMMERCIAL &
were
S. R. Melven & Co,
125 Cedar St., New York 6, N. Y.
WOrth 4-7786f
;
Teletype NY 1-570
Huiftber 4702
'COMMERCIAL & FINANCIAL CHRONICLE
TOE
"ply
INDEX
Is ®his
*
Articles and News
.
Pw
Interest Sates^Murray Shields
'The Outlook for.
.—-
-Cover
Market analysts maintain recent break-through
—J im Howard
Is This
y a, u
-----
-
a—a.
-
-—y-y
-Vr'-'-r—- - -
>
—Cover
Bull Market?—James J. Quinn and Gilbert M. Haas
a
McNair
P.
Looking Forward
on
Corporate Bonds
—Allen N.
4
Sugar—George L. Wright___
*—L—:L—
Jones.
6
Britain's Crisis at the Outset of Marshall Aid
—G.
6
Findlay Shirras
TheDeparture from Sound Money Threatens Economic
Disastef—if/ H.FroSt.
_IT.
•.7
Industrials from 240 to 300.
'
___________
_
-
* *
._
our
Some Economic Aspects Of the Steel Industry
___!
.
bull market in
a
usual sense, but that we are
the
wit-
^1----^—i_i
—Henry Bruere
Effect of Current Economic Problems on
of? the
i
Banking
•
—Robert
Vy
J Policy—John
of OUr»
-
15
W.< Snyder—L_i^y^l.j-
:
18
The New Wall
19
street—Roger W. Babson_y.___._-__i^__—_
The Objectives of Our
v if.'
on
ly
19
the Economic Horizon—Simeon E. Leland—
20
Federal Reserve Board Reviews Money
degree may;
connectioh, the."
recent,, proposal of Dr. Vannevar'
Bush to Congress that a standby
law
J.
James
Gilbert M. Haas
Quinn
In
be
bnying
be
to
stocks
worth
and
nothin'.
Obsolete Securities Dept.
STREET, NEW YORK
4-6551
Texas Gal Trans. Corp,
Tennessee Gas Trans. Co.
Federal Water & Gas Corp.
Dorset Fabrics
to
permitting
induct
Service"
into
U. S.
all
;
Finishing Com. ft Pfd.' ?
J.K.Ricc.Jr.&C'o.
r
,
Established
<
1908
Members N. Y. Security Dealers Assn.
'
REfctor
■v
2-4500—120
Broadway
Bell System Teletype N. Y. 1-714 7
the
-A.tv
"Gov¬
citizens
in
nessing only an extension of the the event of an "emergency" is"
trading range within which prices illuminating.
•
have swung since late 1946. Main¬
tenance
of security prices
Shoring Up the Economy,
near
the
top part
of this expanded
We are all familiar with the
range for an indeterminate num¬
more visible political steps taken
ber of months is not only possible,
to shore up the ecdftrifny^-ERP,
but even probable. This will de¬
rearmament, the draft, income tax
pend upon the demands of polif reduction.
The
With,
alacrity
tical expediency as well as the
which these programs have beeri
ability of the government to cOnf passing through Congress Suggests'
tinue to intervene in labor dis¬
that sOmethirig iri addition to Eu-.
putes
on
behalf
of
industrial rope's needs' arid the fear of
ag¬
management, and at the same time gression by the Soviet Union
may
to keep our Russian relationships
be motivatirig their passage. Furf
sufficiently Hense
in
order
to ther evidence ofthe
Continuing
justify broad outlays for rearm¬ need of international tensiorlk to
ament,
the
• JERF, "hemi¬
keep the Rearmament Program at
spheric
assistance," and aid
to the right fever
piteh7 Was? seen in
China, Greece, and Turkey. When the handling of the two recent
2
Kingan Com. & Pfd.
y
some
this
passed
President
ernment
Supply Situation.,.-
supposed
Telephone: WHitehall
with
Tb- C6i>e
developments* ^a ' riatiorieliz^r
follow.
Foreign Assistance
--cPaul G. Hoffman
Foreign Aid
such;
oL setbacks.
:ing of labor in
17
International Lending and World Trade—W. A. B. Iliff______
7
always
99 WALL
•
series
Fofr&ffii
Reversion from Government Paternalism—Homer A. Vilas
khy
WalkoUt, asMabor's'reaction to its
Fleming__„___L-_--__----_____-___J__y_-i-^;i 13
Objective
bonds
fdiinds
try Wide 7 slowdown 1ft. ftiass-pro-'
dubtiori industries as7 \vfell as the"
more distant chance Of £ general
12,
—
are
Up/tilL ndto. Con-;
sideratidri should he givbri, hoty-evef; td > the possibility bf h eotih-
—11
Tot^tlitai'l&n Dlueprint^Kati1 B, Schwulst^y--iL_j
We
-
Banks
National Debt Administration and Savings
.
10
...
OF NOTHIN'
>
analysis* labof cctetfc. Th£ latest
developjment$ iri the fcdfttihuihg
struggle! b e t W ere fi iriari&gemerit
and labor have been going on be¬
hind the scenes for some time,'
with management winning most
is hot
Insurance Profits in the Public Interest
—Shelby Cuilom Davis_-__--_—^
[ '
costs, and that means, in the final
9
—
"
\
*
It is
Opportunities in the Over-thc-Counter Market
—Whitman C. Haff
WE'VE GOT PLENTY
feXt£nSiort of
view, oil the other hand, that
this
8
Zimmerman..-
E.
—R.
does
averages
Art
The recent action of the market in decisively penetrating the
upper-limits of its long trading range has led to the generally adopted
view that this is now a bull market with all the traditional implica¬
tions of broad expansion in production, employment, and profits
oyer
an
extended period of time. The$»
'
——
:—
minimum price goals now looked
at a practical peak and consumer
for by most market technicians
price resistance is mounting. The
range in terms of the Dow-Jones
only recourse left is reduction of
Savings Bank Investment
as
of
but merely
price structure.
4
—
AND COMPANY
fhrlhCipftrkdiii|Fiiingfe^• Tbfey ■ emphasizer? loflg-pull vulnefability of
3
Department Store Sales Up but Profit Margins Down
—Malcoim
indicate bull market lit usual sense,
not
Industry and Science, Not Manpower, Deteriftifte Victory
3
tarn
-
<
Investment Counsel, Mol & Co. 7
,,
,
filliott
C.
Bull Market?
a
By JAMES J. QUINN and GILBERT M. HAAS
Opposing Factors in the Business Outlook
—David
(2311)
Hungerford Plastics
.
Second List of Requisitioned Dutch Securities-
11
=_
Brooklyn chapter of KACA Elects New Officers----'-—----- 11
Secretary Snyder Foresees No Debt Reduction Next Year__
16
Hoffman Appoints ECA Fiscal and Money Aids.
16
Colonial Trust Co. Announces "New Look" for Bank Holidays 17
NASD District 13 Informs New York State Brokers and
~
Dealers of Transfer Tax
Taft Committee
Liability—_^o..
17
Attributes Inflation Trend
to Government
Expenditures and Taxation,
22
World Bank Sells Swiss Francs Bond Issue—
23
Committee, Headed by Percy H. Johnston, Reports
Economic Prospects of Japan and Koreal-
on
23
Inflationary Forces Again Dominant, Says Julien H. Collins. 23
Harl Reports Sharp Rise in Bank Deposits—.
24
Hettinger Named Consultant to Nat'l Security Resourpes Bd. 25
World Bank Bonds Legal for Massachusetts
Schram Again Attacks
29
Savings Banks.
General Motors Grants Wage Increase—.y'.',
_y
46
y
75% Margin Requirement—.
46
is
there
Regular Features
the
See It (Editorial),—,—
As We
Bank and Insurance
Cover
Stocks
____
Securities
Canadian
Coming Events in the Investment Field____
Dealer-Broker—Investment Recommendations
*___
surpluses,
which the Administration is
and
set
on
14
far
7
Growing
5
,
47
Politically,
limiting the
labor
12
Taft-Hartley
Act,
18
has
to
44
gains
Securities
Comer
State of Trade and Industry
5
(Walter Whyte Says)
48
Dominion
Published Twice Weekly
COMMERCIAL
The
Other
and
of
Canada,
$38.00
per
year.
Countries, $42.00 per year.
$25.00
~ '7
Reg. U. S. Patent Office
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Park
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to
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«
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■".
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of
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extra.)
fluctuations
in
New
York
funds.
in
achieve notable
reducing
stabilizing
or
certain
be
"contained"
if
the
de¬
clining trend of profit margins is:
to be arrested
the
three
earnings
or
reversed. Two of
ways
unit
per
improving
production
of
of
(increased production and/or in¬
creased
prices)
are
no
and
ences.
It would
negotiate
would
we
waged
invitation- to-sit,
an
down
rather
differ¬
our
almost
the
New York
Tel. HA 2^080
5, N. Y
Tele. NT 1-2425
Bloomington
Corp,
Limestone
■v^n'
units
Autocar
Company
■
V
Conv. Pfd.
Russians
than that they waged;
war
QUOTED
CORPORATION
that,
seem
—
Houdry Process Corp.
peace.
Economically, the signs of nacostiveness are- becoming'
tiohal
general.
more
Retail
have
basis
sales
on
a
been
declining
sharply in recent months, result-,
ing in the accumulation of retail
inventories at a record pace. The
rash of soft goods sales, particu¬
larly, testifies to the growing in¬
ability th''^Vh';'-jgdhds: 'fct currdfit
prices.'
Likewise,
in
the
hard
goods fields, furniture, /tires, re¬
frigerators, washing machines,
etc., show Signs of being iri heavy
supply. These developments re¬
flect
the
steady contraction in
consumer pufchasirig pbwei? which
in tufn flows from
of
ance
the
duction
record
has
over
46 Exchange Place, New York 5
WHitehall 4-8957
LAMBORN & CO.,Inc.
99
WALL
the
STREET
NEW YORK 5, N. ¥.
SUGAR
Raw—Refined—Liquid
a
Exports—Imports—Futures
assuring
inven¬
DIgby 4-2727
the coming months.
Financially,
Tele. NY 1-1404
pro¬
maintaining
pace,
further additions to retail
tories
real
in
importantly,
been
peacetime
George Birkins Company
the Chhtiriu-
downtrend
More
wages.
longer
available, since production is
accelerating
(Continued oh page 21)
now
TITLE COMPANY
We
CERTIFICATES
are
The
interested in offerings of
Public
& Trust
BohJ &
Mtge. (juar. Co,
HigH Grade Public Utility ahd Industrial
PREFERRED STOCKS
Lawyers Title & Guar. Co."
:' ";vv
V'
''
Mttiibm
Neii
fork
St, NX
977^
WHtetaQ 4-6330
:
,
25; Broad Streets New York 4
?
titbck Exchange
Bair. Teletype* NY 71-2033 ^
Miles
h
Spencer Trask & Go.
Mergbers New,York, Stock Exchange'
-;1v
Newburger, Loeb & Co.
15 Broad
of New
,
I*
'
Company
York
.
/.
Shoes, Inc.
,
'7
A'
*
r
..
,
Albany
TeTit -HA'novtr^E^SOO
V.-*
-
-jr ♦ V •
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Bostoh'
■
'
-
Members N%u> ~ftdtk 'Cnfb
135 S. La
-
•
3
.Tell FINanfcilJ 2330
«.
7Telety|)e—NY 1-5
Glens Falls
ixchkiltie
Sallfe St., Chicago
"
_
Schenectady.
?
C7
-V
' Worcester
C. E.
uj
*y^
.
Analyses available on request
PrudenceCo.
1.-A.
Bank
National
v.?§"*..V,•• V:/•••
Lawyers Mortgage Co.
seconds-class matter Febru-
as
(Foreign postage
,
[y\::'^
Reentered
Monthly,
—
mo¬
aegis of the
management
key indus¬
tries, in what is unmistakably a
nationwide movement—steel, rail¬
roads,
electric, equipment,
and
now, perhaps, automobiles. Labor
X Y.Ti(Ie & Mtge. C4. '
Copyright lS48 bf Williaitt 1B. Da'ttA
-'i. Company '5'ir'vvi
7"''-''
Stfy' 25% '1942,
Yotk,* N. Y.,
postage .extra.)
Record
rate of exchange, remittances for for¬
eign subscriptions and advertisements must
be
IVIanafjer
fy
Thursday^ May 27, 1948
:
(Foreign
Earnings
per
Record—Monthly,
the
Presid«ht
Business
year.
Note—On
9576
HERBERT D. SEIBERT, Editor & Publisher
WILLIAM DANA
per
Monthly
Publishers
$25.00
'25
and' Quotation
in
must
Other Publications
FINANCIAL CHRONICLE
able
labor costs in
38
gained
recently
Under the
been
Labor
trend toward
power of organized
mentum.
has
on
the
25
Utility Securities...
Washington and You
>
Limitations
of
SOLD
52 Wall St.
Russian peace overtures. The gov¬
was almost frantic in its
denials
—
7 FIRST COLONY
ernment
unit
Public
K
likely to be
reaching.
25
Salesman's
repercussions
are
45
The
st-
the
Our Reporter on Governments.
Tomorrow's Markets
i
timing,
22
Securities Now in Registration
.
its
the economy
Prospective Security Offerings
Securities
now
be
compelled in future
display in its juggling act can
readily be appreciated. Should
any untoward event occur to up¬
14
Railroad
,
will
to
41
Observations—A. Wilfred May
Our Reporter's Report
_i
7,
subsidizing marginal
buying up farm
the
degree
of
skill
and
16
9
Notes
foregoing
13
Mutual
NSTA
of
the
to
10
8
News About Banks and Bankers..
need
industries
Einzig—Ts British Trade Recession COhting?".—____
From Washington Ahead of the News—Carlisle Bargeron
Indications of- Business Activity.—
Funds
added
BOUGHT
?77
Unterberg & Co.?
Members N. Y. Security Dealers Ass'n
6, N. Y.
61 Broadway, New York
Telephone BOwlihg Green
Tplptvne
NY
9-3565
1-1666
1
(2312)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, May 27, 194,8
'
.
i
^
J
;'f j, |
X
s.\
,
wf Business Administration
^
de-
still
of
Tms
year
|
was
a
also^' in
wnich
remaining measurably above
the prewar experience.
tne year.
The
foregoing
highlights, together with the other findings in
this report, are revealed by the
the\analysis
of
the
operating
lilies crossed,
that
| 0f 4gQ firms carrying on* business
the
921 department and specialty
is,
trend
the
in
number
110ns
turned
,
while
the
MciNair
with
size
aveiage
P.
the
transaction
of
^d tne
a
smaller
1947
:
,
„
„
financial
number
sales,
w.™
Goods
Dry
between
1946 results for depart¬
set
are
forth
the
in
For the most accurate
the
comparison,
figures in this
on the reports
based
summary are
of only those 328 identical firms
+hQr.
therefore, was moie}
for by the rise in the
which submitted data for the two
accounted
consecutive
hence
these
dollar
amount
of
the
average
figures differ slightly from the
> transaction, presumably a refleccomparisons available, which
: tion
primarily of the h.gher retail
give trends of the general aver¬
price level.
age
results for all department
I As predicted, the gross margin stores reporting for each of the 12
[percentage again receded, contin- years from 1936 through 1947.
i uing its downward progression for Another chart offers a graphic
-the fifth year, though the extent
portrayal of trends over the past
rjof the decline in 1947 Was only 13 years in dollar net sales, num¬
>about one-third
as
great as in ber of
transactions, size of the
11946. The impact on gross margin
average transaction and total ex¬
jn 1947 of the significantly higher
pense per transaction.
markdowns,
1
softened
was
by
a
not
was
the
much
so
The dollar sales
; gross margin, however, as it was
' the higher total expense that did
the damage to net profits.
Dol§ lars of expense outlay mounted at
of de-
income
se
onlv moder-
In mf iSf short
V"
s!q"s
renortine
of
6%
to
toe
luremf
8 % for the larger and
1Fess Restricted number of stores
mented
and the consequent rife
reP°rting to the Federal Reserve
S
expense
and
Sank.' A£ter the startling sales
sales was the ' sharpest advance1 increase of 25% or more recorded
that has been recorded si nee the in 1946, it is not surprising that
2%
in
toe
ratio of
shows
in dollar sales, number of
transactions, dollar value of
1947
sales
the average sales
transaction,
average
expense
and
transaction.
per
These four series of figures are
all based on reports submitted to
the
Bureau by department stores
sales of $2,000,000 or more.
Since, changes in retail prices are
an integral part of the
story por¬
trayed by these trends. The chart
also
shows, for comparative pur¬
poses, for the, period from 1938
through 1947, a retail price index
based
1.939
on
to1
distinctly more moderate addepression year"of 1932. Snntrat!
Operat
vances were characteristic of the
ing profits, therefore, caught by
subsequent period.
Even though
the
descending blade of
gross
as
100. This index is
derived from two components of
the
United
Labor
States
Bureau
of
Statistics consumer price
.
index for moderate
lies in
ing
income fami¬
large cities, namely, cloth¬
and
house
furnishings,
weighted, respectively, three and
The
use
continued
for
one.
of
this
1947
index
in
was
order
to
have
a
1939.
The recently published spe¬
cial
series extending back to
indexes
same
agency
tion
with
;
developed
for use in
the
by
connec¬
the
Lifo
inventory
are
undoubtedly
more
method
tend
Department Stores in 1947
lower
'
chart^* that
graphically the trends over, the
13-year period from 1935 through
suitable,
Moderate Sales Increase for
slight advance in initial markon.
It
years;
reductions, principally
; retail
h
with
differences
stores
summary.
of
increase
.woo
Retail
/<,>:.-<
chief
and
ment
•
I moderate
series conducted
Controllers' Congress o.
National
The
| of purchases in department stores
in
1947 tnan; im
I94j6;aftd the
v,"
a
aver¬
age cost per transaction continued
climb.
In other words, con¬
made'
the
Association.
'to
sumers
and
States
annually by Harvard's Bureau of
Business Research in cooperation
the
in
Irenes
Prof. M.
United
the
the 28th in
was
wards,
o w n
a
in
stores
of
Canada, with net sales of ovei
transac-^3 8 billions in 1947. This study
saies
action, and Prices
but
they
further
do
back
not
than
ex¬
1941.
and
ana
the
me
rising
rising
disposable personal
income
in the
1Qd7
QTY,mir,+#vj
of
ux
blade
uiaue
overstates the retail
price advance in department store
merchandise
the
for
1947; instead of
15% rise shown in the chart,
a more
nearly correct figure
to 10%, /,
closer
was
The
have presented in¬
dicates the rise ih sales fen* these
department stores in the classifi¬
cations
was
above
$2,000,000
volume
6% in 1947. Since the size of
the
,
cards
j point, both in dollars and in
per¬
centages of sales, of the 28 years
inventories. occUpied
[ slightly higher
1946.
second
*
An
address
the
and
re¬
accumulated
gradual
savings,
increase in the
dollar
by Professor Mc-
advances
sales
that
times
as
were
great
as
in
the
The
United
States
a
2nd, under the provisions of the
Sugar Act of 1948, a United States
domestic consumption
quota of
7,800,000 tons to be drawn from
.
Secretary of
these
Agriculture at
this quota, because of abnormally
slow demand conditions
through¬
Washington is
now
in posi tion
000
almost
nate
completely the
market,
both
ply and price,
through the
Wright
George
of
mechanics
the
Sugar Act of
by
President
1948, approved
Truman back on
Aug. 8, 1947. Sugar, for many rea¬
to exercise
sons, seems
price
index
given,
but coincides almost exactly with
the
change in the presumably
more
representative
Lifo
index
referred to abovef
retail price level
the only factor
Change in the
however, is not
influencing the
peculiar
a
fascination for political figures in
In
1947, the
•
a
all
Tenn. Gas & Trans.
Crowell-Ctllier Pub.
Texas Eastern Trans.*
Detroit Harvester
Texas Gas & Trans.*
unit
to -offset
purchases
(Continued
■p [
*.
proportionally higher
might have tended
higher
nearly normal rela-
Art Metal Construction
and
on
in
page
hard
f-.,
VA
First
-
Sold
*Prospectus
on
-
man, woman and child of
48 states, which has had passed
every
our
for its exclusive benefit
a
Federal
115 Broadway, New York
Telephone BArclav 7-0100
-' I. \
.
*'
( "u
*
Teletype NYv 1-672^
i
*■
U
-»m
ing down the Avenue of 1948,
therefore', let us survey the sugar
supply and sugar price situations
as they shape up in prospect at
the present time in the light of
our
governmentally
dominated
situation. In making this survey,
it should be understood that
preview
goes
there will be
major
on
no
powers
the
war
.our
assumption
between the
during the current
Also, whenever figures
year.
are
mentioned with respect to tons of
,
;
,
and
all
forth
so
present
a
United
reserve bal¬
this
of
year,
but, from
indications,
tainly won't
run
short
you
on
cer¬
sugar.
It will probably be the
policy
;he United States Government
to
move
sugar
under
the
Eu¬
Recovery Program tp foreign riations ^wherever possible, to
ropean
prLvidi66d^siipplies
orf' the basis
of: sugar's great caloric value 'at a
cheap
price
as
other foodstuffs,
sugar
is
one
foods
energy
over
pound. ;
value.
raw
compared [with
Remember: that
of the highest basic
in the world, run¬
1,800
calories
10
the
Some people feel that sugar re¬
quests from foreign nations under
Economic Cooperation Act
prospect
of
a
record-breaking (the law legalizing the European
over-all
supply of sugar from Recovery
Program)
might
en¬
those sources which customarily danger the supply
picture some¬
The Sugar Supply Picture for 1948
We have before
us
this year the
supply the United States. The
availables
timated
areas,
from
es¬
these
including the huge Cuban
njow nearing completion, to¬
crop
approximately 10,700,000 tons,
the
what for the United States.
How¬
ever, there seems to be little
ground for fear on this score, in¬
asmuch as there will be a limit
to
the- grants-in-aid and loans
made available to foreign nations
ECA, and the countries .re¬
ceiving them will probably in turn
*An address by Mr. Wright be¬ put a limit, on, the total ampyni pf
fore Flavoring Extract Manufacr monies: which will be expended
hirers' Association of the United on sugar alone, In
addition, Eu¬
States, New York City, May 25, rope itself, including Russia (the
under
largest
single Europeansugar
producing country), given normal
weather, is probably going to pro¬
at
duce
Net Prices
Mortgage ,5s
f,7
.
/
Y
-f
mM*
..
>
>•
•••
v;. ^
i
Teletype: -NY 1-2948
in
all.
therefore, it would
seem
that the United
have
ample
own
use
servoir.
As
,V,
SteXiyS■■ 'Vt^v;'
States will
available for
from the Cuban "re¬
sugars
a
matter
tug-of-war is going
on
of
"fact,
right
a
now
between the sugar
producers sup-
(Continued
■
qqiping
.crop, average in: the three prewar
years of 1936, 1937 and 1938;'and
will become available next Fall.
its
"
1
beet sugar crop this
the crop of last year. It Will1
prob¬
ably outturn around 90% b'f the
mm
4 •'
• \v?>
a
campaign Which^ will[be approxi¬
mately 1,000,000 tons greater than
Corporation
ESTABLISHED 1927
Ye
This leaves
still available in that
island,
both the United States and
they represent short tons, ning
sugar,
TelephonyXExington 2-7300 4\R.
-X
I in-
shores other than the
States.
ance
ufacturers using sugar as an in¬ ample for requirements all around
gredient in their finished products the balance of this year. You may
run short on motor
cars, steel, oU
t
105 West Adams St., Chicago
f
to
All
'
#
of
regulating in effect its pro¬ for
duction, its quantity to be mar¬ foreign nations to drawn
upon,,of
keted, and; indirectly,[its price.
approximately
1,000,000 # tons,
Generally speaking, most man¬ which bids fair to be more than
Central National
;t'
armed
the: prospective ship¬
ments to these foreign areas will
Request
Exchange, and Other Principal Exchanges
our
principally Japan, Korea
and western Germany, as well as
law
v
;
occupied by
areas
forces,
exception to'this rule. Today we come from the tremendous Cuban
sugar occupying a unique po¬
supply, out of which it is esti¬
sition as the only staple food com¬
mated that Cuba has already sold
modity in daily use by practically some 2,200,000 tons for movement
Quoted
IIIHIjOODBODY S&|CO.
Member* JV, Y. Stock
the
see
i-if.
Bought
no
Missouri Pacific Railroad Co.
.
principally! in Cuba) of roughly
3,200,000 tons left; for foreign na¬
tions and for civilian
feeding in
Most
The United States has proved
Bought—*Sold-^Quoted
*
•
r
another.
or
1948.
42)
*
a
reserve for the United States
countries, and, like a mag¬ should some unexpected
develop¬
net, seemingly draws unto itself ments bring about an
abnormally
governmental control of one kind active demand for
sugar.
sales increases in basement stores,
down,
'
most
roughly
three
the increase In
total
1
'
take from the totaL esti¬
available supplies of 10,-
700,000 tons the present United
States .quota of 7,500,000
tons,
there is a.i balance (concentrated
to sup¬
as
26thj
we
mated
sugar
February
cohntry; was cut to 7,500,-
tons.
If
On
areas.
out the
domi¬
to
retail
in
1948.
Tidelands Oil
gov¬
toot-
1 1.
b
after allowing for local consump¬
tion
in
the offshore
producing
general situation settled back into
Portsmouth Steel
a
ernment
tal
Association, Chicago, 111., May 25,
more
retail
i
countries, before World War II, there was an old say¬
varying with the country, that sugar had become, over the
years, a political football.
^
Today, in the United States, we can elaborate somewhat on that
phrase
and
areas.
say that sugar
The Secretary of Agricul¬
has
certainly
ture originally set up on January
plausibly be argued that consumer
resistance to high: prices, trading
Congress
\ of the National Retail Dry Goods disposable income.much
.
size of the average: sale. It could
availability of goods resulted in
though
year,
to
recourse
|Nairbefore Controllers.
year
than at mally high wartime saving rate,
position
successive
earlier
the
in
as
to the ending of price
controls, reduction in the abnor¬
I stock-turn rate had sagged for the
I
In
1947
sponse
a
] the beginning of the year; and the
:
department stores to
anywhere near so large
increase in sales in
an
f covered by this seres of studies.
I At the end of "1947, department
I store
for
achieve
Lamborn & Company, Inc.
'
*'
'
* > ,V Vs,
y
these Lifo indexes
aye interestedj first, in its avail¬
with the
cruder index indicates ability and nsecorid; its price; Look¬
that the latter
Comparison of
average sale increased 10%,
calendar year 1947 amounted to from $3.90 to $4.30, the number of
total expense, were trimmed down
transactions must have declined;
$175 billion against $158 billion
| percentagewise for the third year. in the
and the index shows a drop of
preceding 12 months and
I But, after taxes in 1947, final dol¬
even though
sales of all retail 2.5% in the number of customer
lar
earnings,
though typically
purchases recorded; The 10% in¬
stores climbed from $100 billion
20% lower in total than in 1946,
crease
in value of the
average
to $118 billion, it was not in the
still stood at' the second highest
sale falls short of the rise of 15%
margin
margin
.
ing,
become
of Transactions, Size of Trans-
have
v
.
disposable income.
i
* '•
sugar
In many
Relation of Dollar Sales, Number
results
i,.
*
...
Looks for lower refined sugar prices- for- balance of year,' and
holds supplies will be more than adequate-.
tionship between total retail sales
and
,
•
situation, particularly in relation to the Sugar;]
-Act of 1948, Mr. Wright foresees difficulties and confusion in law
'.regulating distribution. and pricing: of sugar in'next live years.
most sig-^
yeiopment
'
•
Discussing
1947 registered a new peak in department store dollar sales volume hut a
drop in earnings both in percentage of sales and in dollars. A jump in the cost of do¬
ing business, to the extent of 2.% of sales,- made the major dent in profits and constituted
niticant
•
' A.
The year
;u*e
• ■■
By GEORGE L. WRIGHT*
Vice-President/
'
Noting increased sales* of department* stores in 1947 was .accompanied By lower, profitmarginsand
sharpest advance inl operating costs since 1932, Professor McNair sees it as dangerons trend if allowed
to continue.
Pojits oiit consumer purchases fell off numerically, and 6% rise in
sales, though a new
record, was more than offset by 10% rise in price level, while operating cost per dollar sale advanced
17% for stores having gross sales of $2 million and over.
ft
>;*i
1
'Professor of Marketing:, Harvard Graduate School
'K
s
LookingForwardon Sugar
Vj:''!.-
,
(,
on page
40)-
"# V-l
f**S" .•»'* -lyVi.*'
•
y:Ti •
v-.| :
FINANCIAL
&
COMMERCIAL
THE
: 5
(2313)
CHRONICLE
Carroll Dunham 3rd Dead
v..w5-;.v fc- .A
£'»?••
1.18
The
I*#;', », t *
IV
(
|
Electric Output
i
■
Carloadings'
of Dunham &
Fletcher, 65 Broad¬
way, New York City, aied of heart
attack at the age of 61.
■
'
Retail Trade
State of Trade
'
,'•> v" e
-><tl
/
"
V.' \
i
*
p
;
,
'•
Commodity Price Index
Food Price Index
'■
By A. WILFRED MAY
\
Auto Production
1
and Industry
0
The
picture
I
a logical approach to surveying the present status of the
itemizing some of the world's crucial issues
taking place completely outside that body's" orbit, " This
furnish both appreciation of the decline which has taken place
will
production last week revealed that
significant change from its high point R
industrial
of
^
output showed no
V*.
prevailing in previous weeks.
<
Slight increases werev noted for the week in output of some
manufactured, goods, but they were, for the most part, counterbal¬
anced by modest decreases in other lines.;
"With respect to order backlogs, signs continued to show a taper¬
over-all
,
'
us
,
<t
-'-
.
'
•
-
However, "Ward's Auto¬
9500
some
kind
of
Workers' CIO further complicated
As
with
some
slight
side
to
■
wage
reopen
'
#
■
*
'
The
step taken «by Lewis was prompted by his objection to the
presence
of Joseph E. Moody, President of the Southern Coal Pro¬
ducers' Association, who made an effort to participate in the dis¬
cussions. As a result, some concern was expressed lest a new con¬
tract
fail to
the meantime,
In
by June 30, when the old one terminates.
effected
be
the
operators have called for a contract on an
$
variations in retail trade volume during
the week with diversity in the weather largely responsible for spot¬
tiness in consumer buying.
The response to numerous promotions
bf seasonal items was favorable and, it was noted, total dollar volume
of retail trade slightly exceeded that of both the preceding week
and the corresponding week a year ago.
There
Some early showings of Fall merchandise were well attended
V
T
regional
were
with
new
numerous
There were
re-orders for seasonal merchandise with medium and low-
priced goods in demand.;. Wholesale dollar volume remained mod¬
erately above the level of the similar period of last year.
SCHEDULED AT 96.8% OF CAPACITY,
HIGHEST SINCE MARCH 15.
Almost three
;
years
after the close of the war there is no end
In sight for the current strong steel demands.
This week there was
little chance that steel consumers 'would see a buyers' market for at
longer; and there was an' even chance that a coal
would lose more steel, states "The Iron Age,"
national metalworking weekly, in its current summary of the steel
least a
year or
strike in July or sooner
trade.
Since
-
the
war
ended
more
than 20
million
net
tops
of
HAnorer 2-WW
Bell Teletype NY 1-395
Montreal
Hew York
Toronto
ruthless propaganda offensive
Copy of DuVal's
Consensus FREE!;
Before you ,buy
Organization whenever we have thought that to be more
over
Palestine, the UN is being followed neither as
sell, read
or
what MOST of the experts pre¬
dict and advise. Du
Val's di¬
advisory
gests ALL the leading
services, gives "total market
to
opinion" in
a
page report.
.
non-technical,
Get FREE
this
how
see
gives help
you
bulletin
weekly
need
-
one-
copy to
send name
Sb address to receive next issue.
DU VAL'S Investment CONSENSUS
Dept. P-1100.542 Filth Kit., New York 19, N.T.-
at Dumbarton Oaks and San
(1) removal of
the causes of war, (2) substitution of pacific settlement of disputes;
and (3) insurance of collective security by peace forces.
In contrast,
Lend-Lease or no Lend-Lease, excepting for the pouring out of our
economic help for "regional" economic defense, our. principal hope
for peace is pinned on our projected 70-group air force plus our other
sentative Warren Austin three weeks ago, as follows:
military preparations.
Clinging
to
,
^
Sovereignty Through
LonsdaleGo.
Common Stock
«
^
v
V.
r,;
.
,£■
'
v."";,'/
t
"When issued"
•
♦
Regionalism
European authorities are observing that even
narrowed orbit of the sixteen beneficiaries of the
Textron
within the greatly
Rights
Marshall Plan and
and already during this honeymoon
period
incubation, there is little progress toward the abandonment of
national sovereignty which must be the prequisite to any kind of
international league or society of nations.
For the past;.several
weeks, for example, the London "Economist" has been
Bevin for his "academic discussions of sovereignty."
Sold
Bought
—-
steel
twitting Mr.
Established
Quoted
"■
even
(of
Vandenberg
Senator
the internationalist
"new
.■■■[■
Exchange
and other leading exchanges
N. Y.
Cotton Exchange
YORK
NEW
CHICAGO
4,
DETROIT
Bldg.
Y.
N.
* PITTSBURGH
GENEVA, SWITZERLAND
look"), although opposing our underwriting of military alliances,
early this month issued a strong plea to the democratic nations to join
together in a "mutual defense arrangement," the ultimate test for any
aid coming from us to be the-national security of the United States.
While the Senator professes confinement within the Charter, this in
spirit ati least certainly breaks the bounds of the compromise per¬
mitting so-called regional arrangements, as it was adroitly worked
out at San Francisco by Anthony Eden.
Likewise "anti-Charter"
For
Banks,
Brokers and
Dealers
Textron;
during the "Cold- War": between the members of. the UN*, are, all,
for conditional military aid and economic subsidies
are
democratic, Western, or otherwise defined as
Incorporated
other proposals
to nations that
friendly.
«•
Members
New York Stock
•
Extremely
And
1856
H, Hentz & Co.
significant is the agitation for extra-UN action by
many of the »recognized traditional leaders of internationalism.
Thus,
even Field Marshall Smuts has this week decisively come out for an
association of the British Commonwealth and the United States.
*
order volume moderately higher for the week.
STEEL OPERATIONS
52 WILLIAM ST., N. Y. 5
of
*
*
*
the
the Western Union-ists,
Industry-wide basis, with all sections of the country represented.
.
HJ RT SMITH & GO
completely contradictory to the principles of the Charter written
Francisco, as enumerated by UN Repre¬
is
#
by Federal Judge Alan T. Goldsborough at the government's request
of penalties on the civil conviction of contempt against him and his
union.
end result of the Kremlin's
policy, based on union through military power combined with eco¬
nomic strength, means nothing less than a recrudescence of traditional
balance-of-power strategy. And surely the balance-of-power. system
negotiations with the auto union on
•
Imperial Oil, Ltd.
parties in consultation nor in the manner of negotiation.
Whatever may be the justification or lack of it, today's "Western"
the
On Tuesday of
:
an
Austria and
last week, John L. Lewis, United Mine head, once
again confounded the nation by stalking out of a wage conference
with the bituminous coal operators.
This action followed the lifting
I
Railway
International Petroleum
expedient.
Currently, in the long drawn-out controversies over the settle¬
ment of the Ruhr as well as all Germany, over a peace pact for
Wednesday.
••••'"
^
Canadian Pacific
ing lip service to the United Nations, conforming to and using i
it only when it serves our own purposes, and acting unilaterally out¬
believed, would set a 1948 wage pattern in the 1,000,000-man
It was reported on the same day that Chrysler
•'
'-iV
'
-
diplomatic skullduggery, the United States has been
forced into the position along with the other Great Powers, of giv¬
automotive industry.
agreed
May
vv,'.
overall
and
on
Tuesday, last, when after close on to 18 hours of continuous
bargaining with the union, General Motors agreed to an adjustable
11-cent-an-hour wage increase.
Eight of the 11 cents is the cost
of living adjustment and the remaining three cents covers the stand¬
ard of living annual improvement.
The eight cents is adjustable
•"either up or down on a quarterly basis, but at no time will it be
reduced by more than five cents either in one or a series of cuts.
The three cents will not be affected.
The foregoing settlement, it
had
Boulevard.
Doctrine.
the labor problems of the automo¬
industry by filing a ten-day strike notice against the General
Motors Corporation on Tuesday of last week.
The strike, which was
to have taken effect on Friday of the current week, was averted
tive
was
Monica
working
worries ex¬
pressed in 1945 at the California Conference over
possible interference with the fundamental pur¬
poses of the Charter through its permission of
regional arrangements, we are now, for example,
faced with the whole-hog of a "Western Union."
The mere feeler along these lines from
Mr.
Churchill at Fulton, Mo., two years ago was gen¬
erally regarded as shocking war-mongering; yet
already the concrete working arrangements of
Contrasted
_
A. Wilfred
Santa
possibilities of
international
•
•
added
to the staff of Fabian & Company,
^ our anti-Communist world have barely stopped
short ot military Lend-Lease reinstatement.
As
a
help to us in the taking of our bearings, let
us
note how unabashedly and with fish-bowl
Workers' Union will be made until a clearer view can be had on publicity the Union of the Western Powers now generates such an
alliance and neglects even to go through the circumlocution which it
General Motors and Ford contract developments."
was deemed still necessary to employ in promulgating the Truman
In this connection, it should be noted that the United Automobile
Reports," commenting on the two-week-old Chrysler strike,
stated that it "could be prolonged further than the previously antici¬
pated four weeks." It added: "It is hardly likely that any corporation
advances toward reopening negotiations with the CIO United Auto
motive
v
CALIF.—
HILLS,
body.
••
with one company still to effect an agreement, more or less offset
the deadlock which presently obtains in negotiations between the
carriers and the railroad workers' unions.
to conclusions about the future
achieving
ing off in some lines, while new orders for most goods, on the other
hand, gave evidence bf holding up well.
^
J
;.,V,,Qn. the labor front the situation could hardly be characterized
as
being tranquil, notwithstanding the fact that the settlement of
strikes in some areas had the effect of moderately increasing pay¬
rolls.
The termination of the two-month-old meat-packing; strike,
Staff
to
Chbonicle)-
hopes of San Francisco and, more
-
-
Financial
in the fortunes of the Organization since the high
important, aid
,
"
The
Fred C. Lanstriim has been
are
|
to
v BEVERLY
United Nations is by
which
———mrnrn.■
■
(Special
Surely
.
■
Fabian & Co. Adds
Realism About International Organization
Business Failures
member
3rd,
.
Observations
'
rA-,v a ,,»••.':••»
'.•I.
Dunham
Carroll
Steel Production
unilateral mili¬
the world and combined
privilege, makes even our
with the existence of: a, world body in any con¬
Irrespective of the purity of our intentions,
Rights
tary action confined to a small sector of
with unwillingness to relinquish the veto
ingots have been lost due to strikes and demand forlmore steel
'actions inconsistent
•capacity which has been argued fcrq and con for \wd yeurs/or more ceivably effective
V':•is expected- to: be spotlighted: moreJ strongly now ijiat §teei will be
i f.
In'addition to the veto obstruction ^(aggravated this week by
luhder to get, the trade magazine adds.;
^ ^
'
JA Ih the.next two years total steel capacity Of jt%e country 'may Mr. Gromyko's double,, jump .to a. score of 25) a main stimulant to
(Continued on page 46>
?■
hpprbach 97 million tons-->pnly a shott distance f ro$i the * goal^ef
maiided at various times by governmental critics of
the^steel industry.
.
lonsdale Company
"
But
basing point controversy and high freight rates that
Time Inc.
little rtiatter of capacity will not be too important, according to "The
Irbh'Age."
J^'.J(fTwo mills.In the past week
or so
**
have begun aellhig prrbductsf
that;icpmpany.;
•
-
The other firm has gone to an; f.o.b. mill basis on
hot-rolled sheets in order to make
that its sales do qot involve
actually incurred, but the entire
steel, industry has not gone to an f.o.b. mill system.
'
%
There was little doubt this week that the steel industry is in
for major changes in selling practices.
Unless Congress should pass
laws supporting the multiple basing point system, that, method of
selling is out in steel, states the trade paper.
• - * ; V \
r** >
p;-
Dravo Corp.
Bought—Sold-—Quoted ft
*
:r'"*
♦Prospectus
'^
McGraw
sure
But the fight will go to the bitter end because steel people
honestly, think,.that the present demands of: the; FTC on steeL
(Continued
on page
33)
'^}
request
r
Josephthal&Co.
(F. H.) & Co.
Members New York Stock Exchange
New York Curb Exchange
;
Bought—Sold—Quoted
and
=
it a"
i
'.i
.»
FREDERIC H. HATCH S CO.
INC.S,
MEMBERS1 lil.1
Y.
-
6?Wall Street, NeW York
:• >
V Ur..:
*4
x
120
Established 1888 '-'Xv.»—
...
-
on
i.
the payment of freight charges not
i
--'•
Universal Match
gnecause,
dn f.o.b.
millrates
basis.make
. .One
mill infreight
the Middle
Westtoo
hascostly
done for
so
freight
further
absorption
-
When Issued)
,by that time the face, of the steel industry may be so changed
because of the
sr
Cap:tal Stock
Other Exchanges.
BfoadM(ayf New York 5
'
.
Teiephone WOrth 4-5509,
■IVf
SECURIT^ DEALERS : ASSOCIATION
5, NIT.
'Teletype NY 1-897
!
/iffu
Telephone liAlayette 4629
6
it
(2314)
THE
COMMERCIAL
-
FINANCIAL
&
CHRONICLE
•mm
■
V
Corporate Bonds
Vs;V
V
"■
Outset of Marshall Aid
Partner, Morgan Stanley &'CQ. ?
I
J
Noting recent tendency to permit. moreflexible iaxesfmeot
fei;:ffytimftllt..fcfflti-Vl'
ment banker points out trend of high
grade corporate bond values has maintained" a. close differential
with long-term
government issues. Lists a 'number of corporate securities, which/ he holds, should be
made
;
.
e
n a-
econ¬
pro--
investment
vary
from state to
state,- and them ^re- those * who
think that some of the laws are
.our
too
is
It
omy.
only
by,,
viding
American
dustry
the
in¬
a
wit h
mit
necessary
capital,
words,
tools, that we
make
than
our
^Uen
cannot
hope for
I^. Jonps,
make
there
the
must
system
be
little
millions in other
many
parts of the world.
Your
in
American
industry through the purchase of
corporate
bonds
laws
you
operate.
of
the
is
governed by
in which
states
The restrictions
on
tAn address by Mr. Jones be?
fore the 28th Annual
of
the
National
Conference
Association
of
Mutual Savings
Banks, Atlantic
City, N. J., May 25, 1948.
,
involved
what
say
amend¬
with pointing out
pened and that might happen un¬
der the laws as they now stand.
In
the
period from
1931 to 1941 your investment in
mortgage loans, which was then
ten-year
major investment,
your
declined
in amount and in percent of total
assets,
investment in United
your
Government
States
investment
the
this
of the things that have hap¬
some
must
here
to
content myself
work, not only
for the good of the people «in our
country but for the good of peo¬
ple throughout the world.
For,
we
discuss
to
and
than is at my disposal, and I shall
competi-
work
I
to existing law might be
paade, with safety. To discuss this
question would take more tithe
enterprise
if
to per¬
investment
ments
competi¬
tive system
work, and our
system
flexible
more
matter
free
free
a
been
has
years
Your committees on leg-,
islation are much more competent
otner
can
There
policy.
in
or,
restrictive.
tendency in recent
creased from
in¬
bonds
$700 million to $3.5
ficulties
whicji the railroads
experiencing in the 30's.
$1.3 billion,
dependent
from
.or
assets.
tal
billion
$2.3
from 21.4%
to 9.5% of
This
was
to
of
$1.1
your
your to¬
occasioned
chjefly by a decrease of $900 mil¬
lion in your holdings of railroad
bonds, brought about by the dif-
PHILADELPHIA
in
was
national economy.
e s
cor¬
clined
B
Boston
Corporation
live
&
Maine
;
7
9%
deposits
of
in
increase*
the
the
tooth
(only
period)-
to
4rr.
ment bonds,
and the 'necessity of
bidding up for existing
government bonds or of finding
ain's
new
channels of investment.
hope,
however,
that
the
is that there is
reason
I do
abroad
your
assumption. jof, nindue
that
Walter J.
Connolly & Co., Inc.
24 Federal Street, Boston 10 *
TfcJ. Hubbard 2-3790
1420 Walnut St.
<•
do
not
half
Philadelphia 2r
New York 5
WHitehall 3-7253
•
Pripat^ Wirg ^System, petween,
Philadelphia,
New
York
in
it would
be to
with
obtain
'
ST. LOUIS
'•
Harshaw Chemical
Empire So, Gas.
Richardson.
Hydraulic Press Mfg.
riel<l, RicWT^s Si Ca
Union Com. Bldg.
CLEVELAND
^ Tele. CV 174
Union Cent.
Bldg.
CINCINNATIv
Tele.
Qi ISQj
Warner
H. M.
t
.
investment
securities
Teletype
PH 73
VIRGINIA—WEST VIRGINIA
'
NORTH and SOUTH
i
CAROLINA
MUNICIPAL
Members St.
H
BANKERS BOND £*
...
.
Incorporated
V
1st
Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
CRAIGIE&CO.
7
RICHMOND, VIRGINIA
Bell System
or
pf.Exphqnge from
A.M.,
Pac.
other
hours.
•
Std.
10:45
Time:
to
its, and
Teletype: RH 83 & 84
Telephone 3-9137
the
at
her
made
of
European
be,
largest recipient of
aid.
Without
gold
Stock Exchange
-
Peyton Building, Spokane 7
Branches at
sale
,
Underwriters
r'-
Kellogg, Idaho and Yakima, Wri.
export
Exports,
side
of
owing to'
ma'nly
and
bad.
misfortunes,
production
less than planned,.
great was the export drive
were
the
of
fall
of' 1947
exports
was
that
only
the
£75
shipped to the United
States,r
Argentina,. Jiard curmarkets, and the gap had to
be bridged by
drawings on goldJ
and, .dollar reserves.
Owing - td >
-
j?pli|k^^bbP®rtaintks ithrdtighout
from
Of
prewar/were
"Invisibles" in fact
*
-
the
which
aid
made
in
dollar
production.
shall
not
aid
supplies
mean
a
will
for
mean,
Britain
but
millionT,^
ff
Strategy of'Recovery
The- b?oad
lies iti Increasedr prqducv/
ti^/|ind:incre3s^di|c^xpprtSi.^Alir
-industrial ; productioni,'' is^
above, prewar jevch In FebruafYtbis
of
yesr
industrial
prQduptipjk
highest: since thp end '
Jt was 124 (Ip46=?l00);
as against 109 in 1947 and 120 idj
the lgst quarter of 1947.
These'
Wi^s at its
of the wnr.
are
remarkable
advances.
In
the
third quarter of |947 - industrial /
production
greater
(1938).
will
on
-
lost
Tfsadjr
and
reduction in the drain
deficit.VJThe gold
dollars
covery
Marsit
reflected
are
high record—£1,023
-
mi^-'
gold and dollars V
than 50% greater
and
?
•
purchases, bringing whole¬
unemployment, distress and
dislocation, in
on
new
The
the
decent standard
a
drain
was more
than the overall
Marshall
Marshall
nei
were
these adverse factors
in
••
muelr belpw*^
million as agaihst ® net^
£248 million in 1938. All-
plus
the
recovery,
very
hua £
for
as
investment, the latter being
'
have been delayed
Drastig cuts would have
had
CORPORATION
Brokers -Dealers
to
anticipated.
rency
would
for years.
to be
STANDARD SECURITIES
t
has
she will
linchpin
11:30
Spokane
so
had
more
was
so
that less
was
exports
the equivalent oi
now
prospect of
of
£ 124 mil¬
Canada and
.
Standard
with,
foreegst
coal
were
,
living
Members
of im¬
war,
million leSs than the estimate for'
the year. - Only 11 % of
Europe
depend-on outside
partly ; on lend, lease and
help,
Floor
Sp-82
total
much needed
a
and
the
at
account.
value
United States and Canadian cred¬
on
number of
a
the
result
for than
series .of
somp;. years
6f Orders
Quotes call TWX Sp-43
net
look
from
it
i ;
Saved
a
must
we
Britain in Whrld WarH sacri¬
mindedness
SECURITIES
U
obtained
weather,
must examine.
;• .•
for
us
it
exports to pay for
imports. Imports last year
was
the
reserves
haye been offi¬
cially estimated at not far shprt
of $30 billion. Her fanatical single-
WASH.
Fpr lmmiediate Execution
,
Bell Tele. LS 186
V
we
quite
before
the
a
the fprm -oi sterling balances and
the
running down of gold and
Louis Stock Exchange
BONDS
■F. W.-
m
•
This
with
in
be paid
internal and external djsinvestrnent, the incurring of debt in
NORTHWEST MINING
American Turf Ass'n
Qp,
aid,
miHiori
less than
Now
s^a,
SPOkANE,
Dealers in
Varnish
Marshall
be
solve
smaller
a
that
of output
one-fourth of her prewar national
wealth. ,, Destruction on land apd
RICHMOND, VA.
Murphy Chair Company
with
£ 250
*
fect and made the cost
lion greater than
the
wars
aid will no longer be
He believes that the hard
us.
T., *'"37
dollar
American Air Filter
Reliance
and more
.even
Mar¬
were planned and
only 75% of the 1938 volume. Ris¬
ing prices had a very adverse ef¬
live
be canceled by
productive power.
Her losses \y®r®
'STREET. ;;
"Jll1."!" 1 t
Consider H. Willett
were
her; exertions and; as Pitt would
have said, Europe bvher example.
Stock Exchange Bldg. Phila. 2
LOUISVILLE
these
with
materials
reorienta¬
a
with
-
;
PHILADELPH! A OFFICE
7
How
exports
raw
great
a
exports
-
the' world,1 'go
vernment--exi)endi-*.
tiife ;*wa$ hpdcK beyond fhe festi-'.
ficed everything to the; winning
i^ateii ^'Invisibles,'*
hotably^hefv
of .the
wak -She saved herself by Shipping earnings; and neh income
Byllesby & Company
~
materials.
only
can
of
already noted,
but
."■>
Stix & Co.
-
Company
Telephone
RIttenhquse 6-3717
increase
Britain's?. Example
stromb erg-Carlson
.
thgr
low
war
from
$4)|auy Mills Com. & Pfds.
1
more
realjtjeg qf our position, a precari¬
ous
position,, have been masked
Bates Mfg. Co.
Gisholt Machine
as
by
needed.
American Boxboard
Dracket t
food
battle not only
external
CLEVELAND
with
than
the
will not be easy to raise produc¬
tion, to a level-at which further
26)
years
ports
all
her
means
British
Even
To
be content for
from
her
a
This
of
-
it will
generation.
but of quality output, competitive
the losses sustained
But,
'
on page
is
particularly with dol¬
up
but
one
of her
more
accurate, investment
(Continued
solved
buy
raw
policy
balance of dverseas
a
minimum.
a
must
much
Sought
British
as compared'with £70
million in
the prewar year, 1938. The
prob¬
lem of the balance of
payments
?s not,
be it noted, a temporary
output,* and
their problems are en¬
tirely different. Nor is it feasible
to
be
generation, is not
tle
those of the
will
shall aid tliere, will jje-.ii^4948
industry necessary tc
meet her
declining role in work,
economy? Lord McGowan, Chair¬
man of Imperial Chemical Indus¬
tries, recently stated that the bat¬
the
banks
a
tion
deposits
Angeles
and Los
such
mutual savings banks, for outside
of the investment of their tin?®
PEnnypacker S-5076
Telp. B9 1?$
think
scene
population can
and work? After two world
risk's^
purchase, of
the
adverse
an
of
match
that
secure
of
;
imports of food and
sa
there
Payments
working^ proposix; gdv.erse balance
and
the
of
she
can
>
trade
A^ft/lhe/cutting,' dqwn bf imports'
to
cannot
half
consumed
to compare the invest¬
assets of the com-
of
merical
44 Wall Street
<
the
Jlay 'Shirras
behind
Britain
come.
a
of
stepping
%
bal¬
of payments is nothing more
less than living beyond in¬
nor
chief
growing
minds that
carefully selected corporate bonds
do provide an advantageous field
for
investment,
and
afford
a
in
;
,
G*.. Fin
quickly and that
ance
Balance
The first aim
lar countries.
,
nail
crisis
f
payments,
as
so vitai* With the
passing of the Economic Coopera¬
tion
Act
by the United States
Congress she realizes that Brit¬
either
cooperation
a
is to
n
ERP a
tinfie is
get
'
recovery—freer
the restoration of conditions
of multilateral trade.
with
and
to
come
"United
tk>n-
was
part by the cessation
of the sale of long-term govern¬
I
CORPORATION
the
implicit
freer
creased
and
States. Brita
in
the point
BUCKLEY SECURITIES
i n
understanding
in
reserves
exchanges within and
without Europe and with this in¬
been
watched
interest
corporate
vestment in corporate bonds
ments
Traded in Round tots
portant
and
mean s,
have
provides American in¬
dustry with more tools to make
our system tick.
Data on Request
necessary
in the current import
program. It
will mean—and this is
very im¬
bonds*
in L o n d o n,
amounting to $25 million in 1945,
Paris and else$142 million in 1946, and $250 mil¬
lion in 1947, has occurred.. Per¬ W h. e r e h asbeen - working
haps this modest increase in in¬
Seminole Oil & Gas
RR.
Prior Preferred
tariffs
gold and dollar
so
i t n
w
her
securities
Maryland Dry Dock
11 y
economy
of
in
ecia
p
that she could
each
vestment
and
Steel
American
v
success.
1947, to
adjust
her
years,
centage
the
El Paso Electric
Portsmouth
in
cuts
ber,
reasonable rate of return without
&
Maintains
since Septem¬
ex¬
the amount and per¬
corporate bonds de¬
year
through 1944,
and it is only since that date that
a modest net increase of your in¬
seven
realization
BOSTON
6.5%,
or
„
caused
assets
on
for ERP
pansion in percentage and amount
pf government bonds p.wned, oc¬
casioned
by , the war, is as it
should be, but it is interesting* to
note that, despite the great ex¬
pansion of deposits in the past
investment in corporate bonds de¬
billion,
Calls export
States
longer has moni fpr a pre-1914 Britain
world trade and finance, she must aim for
stable
were
porate bonds. ;The tremendous
about
clined
for quality and competitive
output.
but
At the end of
1947, of your
SCOTLAND,—It was an, American, Ralph
.Waldo Emerson, who in'a
$19.7 billion of assets, approxi¬
speech at Manchester in 1847 said that
Britain "with a kind of
instinct sees a little better on a
mately $12 billion, or 60%, was
cloudy
and 'in storm of battle and
in government bonds, 25% was in day
calamity has a secret vigour/' Her
s i e*a i efforts',
"
*
*
"
•
J
mortgage, 1Q3PS, and only about
billion, or 400%, and, what I par^
ticularly wish to point out, your
total
U
;
w* .yd*.*- •;
targels unreal unless properly proportioned to
production.
since world
economy no
.
tional
"
'
whv-.--.
'•
duction,
\
.
By G. FINDLAY SHIRRASn
-
an^ Genera 1 Finance in Berlin (1946;
Eminent economist declares
Britain's battle is not solely for pro-
eligible for savings bank investment, and concludes, with change taking place in corporate bohd
market, favorable opportunity exists to jnV£$t in corporate bonds;
channeling of those savings into the hands of American industry, to provide the tools by
t h
v
'Formerly President, University of
Bombay; Dean of Faculty of
Economics and Commerce,
Exeter; -Controller Genenal of
Fublfc Revenue
the aid of which the American worker makes his
livelihood, is of tremendous importance
o
v
I
'Doubtless all will agree that the collection of the
savings of the many, and tha sane
t
Crisis At The'
s
Members, Neft York Stock Exchange
]
;
Savings Bank Investment
as
Hy ALLEN NORTHEY JONES*
-
was
-
'
•
was 9% ab°ye prewaf/
Agricultural.. production *
6% above prewar, the
some
(Continued
on page
40)
7
a
^
Volume 167
Number 4702
.
.THE
.
COMMERCIAL & FINANCIAL CHRONICLE
The
From
Washington
Ahead of the News
Departure From Sound Money
Threatens Economic Disaster
bmi
v
Chairman of theBoard.Frost National- Bank; gan Antonio; Texas
The New Dealers
are
Prominent Texas banker, declaring threatened inflation holds possibilities of disaster to our
economy,
traces departures from, stable and sound
money principles since enactment of Gold Standard Act of
1900. Contends Glass-Stegall Act of 1932 led to: abandonment of sound
money set up by Federal
Reserve System, and bas distorted its provisions without accomplishing beneficial results. Says it;
amazingly successful with their propa-
so
ganda that it would seem, on the surface, almost impossible ever to
get them out of power.
They are unmistakably on the way out—
*
this is apparent from the way in which influential figures are run-
ning for
For
/
^
a
-
-
cover.
;■
Communist
of
the
ones
viet Russia
the hand-
-sees
writing
wall
and
.signs "to
re-
run
for the Senate.
Election
to
that body will
give
him
job
to be
Carlisle
a
for
Bargeron
is dead
New Deal
a
Senator, and a respected one, Carl
Hatch of New Mexico,
figures he
had
better
grab
that
security
with
.comes
Federal
a
Judgeship.
"You hear other
who
men
called
cashed
New
in
Roosevelt
Dealers,
the
on
so-
revolution,
be-
i,v "ginning to mock it and savim* U
-you
that it was the damndest
bologna
men
which
was
fed
ever
to
and
women, and they knew
such—so they say with a
the shoulders, all the
-time—but,f you know how it is,
.they played ball." All over town
the New Dealers are in an apolo¬
getic mood, apparently trying to
it
was
shrug
of
the.
•escape
.
.ostracism
coming
C
V-"
.
social
which
to them.
When
and
they
,
.
political
figure
is
•
things
you
^h°w that the New Deal Jig
is up.
contemplate the
But
when yoy
New Deal propaganda you wonder
how it can be so.
And in the
meantime,
this
propaganda,:; is
costing us plenty of money, not
for
the
the
itself, but its effects.
Take
..
the
burning
propaganda
question
of
Communism and Soviet Russia.
The
■,y
of
pay
fact .that
Stalin
is
today
astride of Eastern Euro^r* arv*
much of
menace
a
as
was, is of New Deal
would
think
Hitler
ever
they would be bit¬
y,;
admit is that this is the situation.
|
\ Instead, they make a virtue of
it.
They use iti to justify the
spending of some SI5 billion an¬
nually on the military.
Rather
than going about such an expen¬
diture timidly, they do it boldly.
They even put the Republicans
in
1
a
hole
They
capture
Senator
him
it.
on
an
the
Republicans'
Vandenberg and make
ally of their crusade to
stop
Communism in Europe -by
spending of some $6 billion
annually in addition to the mili¬
tary outlay. Indeed, they make the
Republicans apologetic. 4 Most of
them. Taft, for example, like to
tell
how
through '• Vandenberg,
they haVe pursued a bi-partisan
foreign policy. They don't like
the
way
the Administration is
pursuing this bi-partisan foreign
policy, they "Say,; but they don't
tell just where and why. ;
;
the
'
'
_
J
So beaten are they in this
prop¬
aganda that they may be forced
at Philadelphia to nominate the
man
who has
New Deal
on
beer} an ally of the
this proposition.
J Let's retrace
flow
this
ihonkeys
our steps and see
propaganda, has made
f : t h e
Republicans,
o
worried
about
the
maybe enough to dictate the
Republicans' Presideritialinomineei
*k-*
V, It
was
the
and I believe that, if the bankers
people
today
of
which
holds
what has happened and is hap¬
pening to the people's money, they
possi¬
more
would
aster
mand
to
our
economy
than
the,
of
by
question
further
It
to
is
appro¬
priate
forum
because of its conduct of the
war
and
am
having traveled
abroad
met
Pashas and Abdullahs
Emirs and Dictators, etc., its
and
con¬
for
no
the
dis¬
J.
cussion of that
par
t .i
H.
Frost
ular
c
problem than
Bankers Conven¬
a
tion.
It would seem that bankers,
the. custodians of the people's
money, should be more interested
Long ago, the New Deal, with
than any other class of the popu¬
its multiple tongues,
got off Main lation
in
the
maintenance
of
Street and began to have a de¬
sound money.
Curiously enough,
lightful time in the Old World
however, the history of most, if
salons.
not all, of the disastrous inflations
So, from the Republicans' con¬ of the
past indicates that bankers
cern about
Communism
front.
was on a
wide and global
cept of
a domestic Commie hunt,
the New Dealers made it a bigger
and
tremendous enterprise,
more
.right
on
as
have usually been quite compla¬
cent—and often have cooperated
always retain its purchas¬
because of the fiat of
government. On the other
hand, there were the advocates of
the
theory that money is not
wealth but a medium of exchange
for facilitating commercial inter¬
course, and that, if it is to be the
yardstick or measure of value, it
should consist
of or be readily
redeemable in
some»commodity
having a stable value in the mar¬
ing
and hold
own
as any
in. Greece,
jmonetaryfimit
no matter hbw far
depreciation of its purchasing
the
erally and China. In the meanpower may have progressed.
time, they have done little or
I- Another contributing cause for
nothing about such a trivial mar,
the bankers'
complacency is that
ter as getting the Commies out of
it is almost impossible to make
our
own
government.
Notwith¬
losses
during a period of rising
ice to
this Republican demand, prices produced by monetary in¬
flation.
The people who suffer
they have resisted to the limit of
their ability, every serious effort from depreciated money are not
the bankers or-custodians, but the
to get them out. r
standing they have given lip
The New
with
this
jority
Deal
because
serv¬
is getting away
the great ma¬
the
of
depositors
who
'were-against-Just
such as happened in Europe, the
killing off of Hitler to make room
of
owners
so
of
as
prevailed,
examples of shattered econ¬
omies, poverty and suffering di¬
rectly attributable to irredeem¬
many
seems
cates of the "easy money" policy
and the unlimited issue of dis¬
honored
currency,
irredeemable
in
How Irredeemable Money
•Came About
what he
coming
determined to bring
i.'
was
about.
_
that; a
Russia
jday.'-
can
clash
Congress
many
direct result of the
monetary disturbances and
as
discussions
less
a
which
continuous
from
the
end
until that date.
there
with.
Soviet
he> brought/about :,any
B.6*jh'fcvrarfcAhbtr:g6in& to
in
of
going to turn down ERP funds to
Western Europe from- Cords
munism.
They know it is 90%
Ibphk and ; that cbminue# iriaml
jtenauce of > the Military; r onthe;
is
coming. fo' live' ahd
the
power
as
was
jas ERP squanderxxig; they:; know
what Stalin could
hot hope la da. himself, ;but
until
when
they attain the Presidency
there" will be i an entirely
aces and
crises;
to
"sound
the
Civil
one
War
hand,
policy
(or unquestionably redeemable in)
a
commodity. which has
a
stable
value in the markets of the world
independent
of
government
means-'money whereinu the com*
mercial value of the bullion equals
its
coinage value. Sound money
applied
to
paper
or
token
money of any kind means that
as
which
is
redeemable
in
money
wherein the commercial value of
of
CLYDE
L.
PAUL
its
bullion
equals
its
coinage
(Continued on page 34)
HOWARD
AND
FORMERLY
PAUL
OF
ANNOUNCE
J.
LYNCH
THE
&
CO.,
INC.
FORMATION
OF
PAUL & LYNCH
DEALERS
IN
INVESTMENT
FIDELITY-PHILADELPHIA
123
SO.
BROAD
SECURITIES
TRUST
BUILDING
PHILADELPHIA
STREET,
TELEPHONE
KINGSLEY
9
5-820O
last
'
PUBLIC UTILITY PREFERRED STOCKS
:!cBirmingham Electric Company
•
Central Illinois Public Service Company
Florida Power Corporation
*
j of the: outstanding,
.
WicIuta River
Continued
about men*
capital
stuck
Iowa Elegtrie Light and Power Corporation
Kansas Power and
Light Company
Kentucky Utilities Company
\
Michigan Consolidated Gas Company
of
Oil Corporation.
drilling
produce
further
.locations
and
activity
successes
also
in
shduld
in
these
the
Michigan Gas and Electric Company
Doyle,
Minnesota Power and Light Company
rCruce, and Sholcm Alechem Fields, in
r Stephens
County,.. Oklahoma, where
Wichita
River
Oil
Corporation
'^Northern Indiana Public Service Company
Northern States Power Company
owns
properties.
stock
is
traded
in
the
v
•
'<
~
Oklahoma Gas and Electric Company
over-the¬
.
-
Northwestern Public Service Company
Qil. i Exploration " Company ' common
-counter market.
"
Florida Power and Light Company
Indiana and Michigan Electric Company
90 -days.
Public Service Company of Indiana, Inc.
,,
Sioux City Gas and Electric Company
Approximate Market $6
Southwestern Public Service
•
IComstock & Co.
r*'/'
CHICAGO 4» ILL*
231So. La Salle St.
Dearborn
Teletype CG 955
v
""Prospectus
~
upon
s
,.
Company
Request
ACJttIXN"®COMMNY
7;;-.V.f.-v'-j
1501
Chicago
New York
Incorporated
Boston
fiat.
Sound money as applied to coin
en¬
.; 4 ; successful.. pilfc-wells
have been
[?. completed in Tatums Field, Carter
County, Oklahoma,, arid 1 discovery
well in Clay County, Texas, by Wich¬
ita- River Oil Corporation- within the
?
us
or
during that period the
the "easy ; money"
based on an increase in
advocates
able to return money
same
intrinsic value and
•producing
hopes* to keep
this will do to
more
this eountry
On the
effort to influence events
%r Exploration Company
Save
it
were
were
Oil Exploration Company owns 51.25 %
basis
power.
should like to outline money" from time to time, I think
thoughts which I have I had better make clear exactly
with regard to the means which what I mean.
Whenever in this
have been employed in bringing "discussion I use the term "sound
about, the fantastic increase in the money," I mean "money made of
to be
purchasing
-
!:■ JThey know,, from; s^ Jexperi^
ence,
in
to refer
Great-
-of4
see
are
am
I
Now
days they talked against our be¬ jto ask and expect from the men
coming involved. They wore fight the head of American banking,
ing against it; necessarily they
were
pooh-podhing -the ^alarms
:;:An address by Mr. Frost before
that
the.; interventionists * were the Annual
Meeting of the Texas
spreading.
Bankers Association, San Antonio,
Now they are v being charged, Texas, May
25, 1948.
am azmgly enough, vwi,th not.
hay?
who could-
I
certain
Stalin, just what they pre¬ trusted to him by the depositor. I
dicted. In those pre-Pearl Harbor don't think that this is too much
Roosevelt
anything,
Since
.
an
of
have been defeated and the advo¬
able paper money.
for
iipg
advocates
redeemable in gold
where as today, they
the
to me
that the custodian should feel an
implied
obligation
to
at
least
Republicans
got
badly burned with Pearl Harbor.
make
They were the so-called isola¬
tionists
or
Somehow, it
money.
the
1900,
sound money
money..
Tiui;keyis.EurQpe^ gem*
in
ever
|in producing monetary inflation.
no little (This ■
supply of irredeemable money in
seems; to be largely due to
They made jthe fact that the liabilities of this country. In order to do this,
it an enterprise of
spending bil¬ ibanks are. all
monetary and can 11 think it necessary to go back to
lions for the military arid addi¬
the. year 1900, when
be discharged by
the y Gold
payment'in the
tional billions fori... rehabilitation
Standard ti Act
was
adopted by
good
power
kets of the world independent of
government fiat—the same line¬
up which we have today. How¬
involving the spending of
our
con¬
money
the
other prop¬
erty.
It is almost incredible that
this
liberty-loving people could
have apparently approved its gov¬
ernment making it a criminal of¬
fense, punishable by confiscation
and fine, for an American citizen
to own or hold gold in his pos¬
session, and this in spite of the
same
the
such
that
would
in gold, with
the part of any
redeemable
gold the
that
fident belief
themselves and de¬
American citizen to
seems
also
me
the money supply, with
understood
and finally effect a return
this country to a sound cur¬
the clear
flation.
really
arouse
rency
in¬
there
more
America
bilities for dis¬
more,
Republicans,.' who different -atmosphere
first raised the hue and cry about
American
quainted with world affairs,
they
though apparently not enough to
save the New Deal in
.November, intend to do' hothing to- stop ^ it
but
I think
except
that
having a
broader vision, being more ac¬
acquainted with the way in which
the world had "shrunk," having
purpose to use
we can all
agree that we are living in a period of great uncertainty. Undoubt¬
i edly there is room for disagreement with respect to the relative importance of the various
problems with which we are confronted, but it is my opinion that there is no problem
<£befpre the
Communists than the Republicans
devising. You
terly ashamed of it and that the
last thing in the world they would
:
more
were,
of
you tsee these
more
i
but the
is
going places with tneir issuev
even
Similarly,
>.
that,
Then the New Deal under
Harry
Truman announced
that it was
s'.x
years after the New Deal
and gone.
-which
idea
country, the way in wh.ch undei
New Deal sponsorship, they hac
infiltrated into places of influence,
into labor unions, Into the very
government itself. * They seemed
the
on
might offer,
powerful v and ; which
can't be
stopped by armies, atomic bombs
or
planes.
Frankly, they were
talking about the Commies in this
incidentally,
,
.
d;
riculture Clin-
better
Administration's
.
a n
physical military force which So¬
Anderson,
is;
Federal Reserve to further "easy moneyn policy, .and that only adequate
remedy., against insecure 1 currency h a return to; old gold standard; Advocates a monetary commis¬
sion to study currency reform.
"7. v»
• ?
Communists."
They were not talking 'about the
t Cabinet
.one
..
^[■'
■
member, Sec¬
retary of Ag,ton
-
<8>
Communism
example,
)
FROST*®5
By J. H.
By CARLISLE BARGERON
*
(2315)- 7
;
Milwaukee
S
Minneapolis
Omaha
,
8
(2316)
THE
COMMERCIAL
Some Economic Aspects oi the Steel
By
Vice-President,
R.
E. ZIMMERMAN*
&:■ FINANCl^ CH^
Thursday, May 27, 1948
Industry i
Dealer-Broker Investment
Research and Technology, United States Steel Corporation of Delaware
Recommendations and Literature
Dr. Zimmerman, referring to vast amounts expended by steel
industry in last decade to expand facili¬
ties, calls attention to risks of over-expansion and difficulties in increasing plant capacity in relation
to
raw
It is understood that the firms mentioned will be
send interested
to
materials and unstable market demands.
Points out producers want maximum
capacity, and
National Economic Committee in 1939 because of over-
cites, criticism of steel industry by Temporary
expansion. Says present high construction costs and consequent larger depreciation charges add to
financial risks of over-expansion and would lead to higher steel
prices.
Dividends
for
More
Decade—List of 266
issues dealt in
Within a few weeks millions of American taxpayers will be
indulging in spasms of
arithmetic, hoping that their figures, calculations, and estimates may yield answers in
harmony with the spirit and letter of a new income tax law. The 1948 Model has arrived.
Curb
the
on
Than
common
New
El
a
stock
Paso
Electric—Data—Buck¬
ley Securities Corp., 1420 Walnut
Street, Philadelphia 2, Pa.
York
Exchange
Also
oil which divi¬
paid in each year
more through 1947
dends have been
for 10 years or
pleased
parties the following literature:
available
data
are
on
Portsmouth Steel Corp., Maryland
Dry
Dock,
Seminole
and
Oil
&
'
■'
Mos t,
rr
if
aii
o
will
be
bers
—New
f
you,
mem¬
of
that
happy
calcu¬
lating group.
riod
of
partially satisfied require¬
ments
have
for
immediate
an
availability
ments
for
peacetime trade had been denied
the
desire
its quota of products in which steel
increase
in the
was
confused
an
important
item.
nue,,
Reve¬
citi¬
our
Zimmerman
in
ca¬
to be done ;on.a
Your
own
ion
attention
within the steel industry, that much
devote
to
c o u r s e
s" in
mathematics
and accountancy; combined with
an intensive review of logic: in the
must be Withheld
million and
a
currently from just
The steel industry of the United
large affair.
It must
be large tor accomplish two impor¬
a
tant purposes,
namely, to fill the
the consuming
trade and to Stand ready to furnish,
without fail, the needs arising
requirements
tons
products.
and
54%
of
That
finished' rolled
was
between 53%
the total
of
world
pro¬
duction Of: steel. A thousand
eus--
tomers
may rise in their seats to
"very well, but that was not
enough.'' Many others will join
say,
Berated for Over-Expansion
cies
the
of
the
Committee
The
Producer
Wants
Maximum
parenthetically,,
in
;
.
,
connection
-with various statements and mis¬
statements which have been made
'
in regard to supply'and demand,
nnd particularly with respect to
charge: oL intentional curtailmonfc of output, let it be known
,
and for all that the steel pro¬
ducer^ is;: unalterably in favo.r of
maximum possible produetionj and
once
that
he .is
sisten t
not
irked
demand
by
iri-
nn
for -larger
ton-
nages; -even though they, may be
beyond
his
immediate
ability
to
produce. Every feasible effort has
been extended in the direction- of
increasing production;-as the tfig^
ures
for 1947 will testifyf-^nd
the
battle of
the
backlog
is
still
If progress.
tJust how large the steel indus¬
try should be is a subject of bon^
siderable speculation,
controversy,
and debate. Many who have joined
in the discussion during this pe.
-\j
'i, Tr-''. k*
?
i\'A'
~
/,
"J
"An address by Dr. Zimmerman
before the New Haven
Chapter,
American
Society for Metals, New
Haven, Conn., May 20, 1948.
30
the economic depression.
Tj
Within a few years came the
.
Insofar
as
g-—Memorandum-in
data on Nickel
conflict; willr, the preservation of
the national security, they must
be accorded due consideration.
Glidden
,
Company
Memoran¬
—
Street, ■ New York 5; N. Y.'--" fte
Imperial pilr Limited
—
miemcP-
ritodum-e Sutro Bros * & Co., 120
Broadway, New York S; N. Y. *
James Manufacturing Co.—Mem¬
orandum— J o h n B.
Dun.b^r 'ArCo;,
Plate-Wheeling &
SOtrihnSpririg:Street;I^sAm^
geles• 14, Calif." •
' -•:''
;
-
Kearney^
Treckler -Corp.r—
Opinion and outlook—Riley & Co.,
Los
RailreadDeveJopments
rent
&
of
news
Hickeyi
the
Cur¬
Street.
New
•
California.
Water &
of
\
■
Broadway, New York 4, N. Y.
"Lynchburg Foundry Company,
Memorandum
Strader,
Taylor* & Co., Inc., Peoples: Nartional Bank Bldg., Lynchburg, Va.
Inc.
American;Water Works Co., Inc.
-
Dept.
;
American*: Overseas Airlines—
New: survey—Schwamm &
Co*,
50
Angeles
pdwer^^rcrilar—Heller, Bruce i
industry—Vilas Co.; .Mills TOwer, San: Francisco 4,
Wall
49
York 5, N. Y.
—
—Memorandum^A;
Kidder* &
1 Wall Street, New York 5,
N. Y.
"■■■>'•':
Co.,
.
—
—
Manufacturers
of
Trust
Company
New
York—Analytical sum¬
mary—Dempsey-Tegeier, &:: Co*
210 West Seventh Street, Los An-^
geles. 14, Calif.
Anheuser Busch, Inc.—Circular
—Stifel, Nicolaus & Co., Inc., 314
North Broadway, St. Louis
2, Mo.
Also available is
on
—
Morgan Engineering Co.—Card
A. Saxton &
statistical de¬
Mass.-
Beatrice
statistical de¬
are
Foods
Co.—Memoran-
dum^A^<G*v Becker
South La 'Salle
Pine
Street, -New
National Bank of Detroit—Anal¬
r;
Curtis,
25
Also
Webber, Jackson &
Street,
New
• ^
Broad
York 4, N. Y.
available
on
is
Security
Bank .of Los
memoran¬
a
First
Angeles.
National
?
v
120
National
Street, Chicago' 3;
Steel
Corporation-
Analysis—First Boston Corp., 100
Broadway, New York 5, N. Y. *
Illinois.
;
70
ysis—Paine,
scriptions of Maipe Central Rail¬
road and Bates Manufacturing. ^
j
Inc.,
York 5,
scription — A. G. Woglom & Co.,
Inc., 49 Federal Street, Boston 10,
Also available
,
memorandum—G.
Co.,
Appleton Co.
:f
,
a
summary of
Great American Insurance Co.
memorandum
a
Sanger Bros, of Dallas
.
Also available is
dum
-
&
Gould
634*1'
Wars
finishing facilities were pro¬
affairs of the world are still
badly
vided to keep operations reason¬
tangled. One cannot safely place
ably well balanced. In the face of
the label of uormality ;upori any
grave danger, and with armed
of the situations
hp finds today;
conflict raging on every side, or¬
Tomorrow the sighs may be dif-.
dinary economic rules had to be
fer ent* V Economic plans
.must: be
waived or subordinated to the ailadjusted .from time to time and
important task of preserving our
economic forecasts can be* made
national existence. Without hesi¬
tation-when- and ms "the need's de¬ only;withaXlowance-for-wide*yariation. In this -interlude nf; un¬
veloped, the economic rules were
certainly, perhaps there is nothing
waived, and the enormous job
unwholesome about mixing a few
wa^; done effectively in record
teachings from the: past with otir
time.
thinking and >projections for the
:
.Thus, due to the extraordinary
•future.
......
*V';
■
pressures and requirements of a
wartime economy, the steel indus¬
f
production Doubled
*
'
try ibf theiUnited^States camevtd
A look at the statistical record
have a peak capacity of
95,500,000 wil l show- that the-American Steel
ingot itons in -1945,; or approxi¬ Industry; for'' - many :
years
the
mately 14 million tons more than largest in the
world, has not been
in 1940. Incidentally,
14 million accustomed to the unusually rich
tons is almost the size of the pre¬ diet of
tonnage developed by the
war British steel
industry and is recent World War and its after¬
equal to the alleged prewar steel- math. Last year, as has been men¬
making capacity of Japan. Natur¬ tioned, the industry produced ap¬
ally there was some apprehension proximately 84,800,000 net tons of
W.
Lake Erie,'Central States Electric First
Wisconsin
National
Bank
Corp., and * Ash land Oil & Refining Building, Milwaukee 2, Wis. ~ • Company. ■$& ■ • ®' -■f *
might be esti¬
reasonable level of de¬
economic factors, do not
only—J.
•
Co., 60 Beaver Street,
New York;4; N. Y.
The producers of steel are more
than agreeable to the perpetuation
theory that in
Oil Company-
dum—A. M. Kidder & Co., 1 Wall
-
and
Production
CO.,
H. Hentz &
retained
£uch indiscre¬ mand for steel, to be produced in
tion lay one of the causes of unthe plants of ra postwar America*
employment and consequently a There is
an. economic side tri the
significant contributing factor to steel
business, a very critical side.
industry
major accomplishment.
&
^Fortnightlylrivestmeht'tette
dustry without; much delay, ^rid
as a
Crude
N. Y.
New Twn&s: in T^IIroad." Bond
:
F i n an c in
;
The ' pentr.up .demand
for its
products confronted- tbe steel in¬
inevitably work profound
changes, and we have but: recently
ever,
a
remarkable
peacetime creased by approximately 14 mil* come:
through -a cataclysm, un¬
Appropriate anterior
output and, under the conditions, lion tons.
paralleled in modern times. The
a
er-dealers
KheBtreet^:Ne^.Yo^
,
advanced mated
War. and the capacity which had
knows and
readily admits that it was not- elicited criticism was adjudged too
enough to satisfy all of the existent small. As rapidly as feasible and
demands promptly. It was, how¬ with a single objective, it was in¬
them.
Fifth Avenue, New York 19, N. Y.
look—Stanley: Heller
its /vigor for. more
than two years: -All at the same
time; more people have been pressi
ing .for more steel: than in any
other period within the
history of
j 10
or
12" years, industrialists, fi¬ the business. It is as though
every
nanciers^ professional economists outlet valve along; the lin6 had
and
others motso-called
have been opened, at once,^ and many
spoken their ^respective pieces on new outlets added; Industrial ac*
the subject, and the pieces have tivities have been in
high v gear,
not always agreed. There has even attempting the double task of mak¬
been time for some
ing
opinions to
up deficiencies while catering
shift sidewise.
to current needs.
of
-
General
Marketr^Memorahdmh^dh- out*
abnormally large mar¬
ket, born pf.years of starvation
iand veaiforceddenial.. »-•.!f *■
.1-
has
Missouri,
up-to-date memorandum for brok¬
a
1939, when the rated ingot of a high demand for their
prod¬
from all measures taken in the
capacity in the United States was ucts from the
consuming trade.
ixittfi-est of national security. Last between 81,000,000 and 82,000,000
They are likewise interested in
year, operating at an average 93%; tons per year, the Temporary Na¬
learning, as definitely as possible,
of rated capacity, the steel indus¬ tional Economic. Committee be¬ what
part of the current volume
rated
the
steel
try in the United States produced
industry for its al¬ is due to temporary
war-begotten
leged
over-expansion. Some agen¬
84,BOO,000 tons of ingots, or 63,shortages, and what
OOO.COO
one-page
and Casualty >/ Insurance
Stocks—Comparison of earnings
principal issues for 1947—Laird,
Bissell & Meeds, 120
Broadway,
New York 5; N.Y.:""
,"
-
States is
non-technical,
.
>
data, if not too many,
will serve to whet your appetites
for the* feast of jfigures you Will;
finish just prior to June fifteenths
giving total market opin¬
a
report—free copy on requestwrite to Department
P-1100, Du
VaTs Investment Consensus, 542
of
small segment of tbe situa¬
the customers who are in need of tion prevailing iri 1945, when ac-r
it. The construction and equip¬ tive hostilities came to ah end.
ping of steel plants is a matter There was certainly a nearby mar-r
;which ^requires large amounts of ket;-for such ,a - basic
as
material and time; many thousand steel, an
interpretation of sundry rules and
regulations;. In anticipation of ; the of tons of steel, and time meas¬
Wholesale treat which is thus in ured in" years; 4fnote^^
adstore for you, one wonders wheth¬ dilions are to be made.
This ' debate-over: size 'and ca-er. a' discussion tonight of certain
veconomic features of ther steer in-* paqity brhigs into focus, or should,
dustry should-bekept pri a purely; .a number of interesting economic
qualitative basis, or whether the considerations. It likewise raises
doors should be opened wide to questions which require, but do
the "onrush of pertinent statistics. •not? .always «receive, .reasonably
Perhaps on' this' occasion di few definite answers. Durir^ the past
necessary
in
Analysis—Scherck, Richter Co.,
Building, St. Louis 2,
Landreth
Co., 120 Broadway, 'New York 5,
illustrate
to
used
Gas.
Consensus—Advisory
Fire
nationwide basis.
anemic
considerable
"refresher
E.
increase
tremendous
washing ma*
consuming channels and used to chine and my neighbor's seven cy¬
build
new
producing facilities, linder car could be multiplied by
zens
R.
and
Val's
service
of steel with argu¬ tories were depleted, innumerable
enlarged
capacities, projects had been deferred, equip¬
pacity As steel is diverted from
Curb
Ely & Walker Dry Goods Co.—
Du
Inven¬
Periodically, millions of tons beyond the sub¬ ment was wearing or wornVout,
through the stantia expansion already well replacements and all sorts of
kindly disci-* under way* Of course we cannot maintenance work necessarily had
pline
of
the have both at once; that is, im¬ to be kept to a minimum, arid an
Bureau of In¬ mediate
increase in
availability enormous reconversion job was
ternal
York
Exchange, 86
Tjrinity Place, New York 6, N. Y.
not $>•
Canadiah Pacific Railway-
Memorandum.
—.
v
Hornblowerv &
National Tile &• Manufacturing:
Co.—Circular—Bond.&, Goodwin,
Wail Street, Npw* York
!Inc;, 63 .Wall Street, New York ^
7 /, "'
.•
J' Ni Y...
■"
'
*.V *
Weeks/ 40
k>, N;"Y/
.
.
.»
.
\- • Consolidated Rock Products .Coi
—Analysis
;
'"'New- York/ NeW Haven & -Hart^
andf comment-^-Max- fford RailroadT-Descriptive leaflet
weil,''^Ma!rshail^^cb;/J^
Spring^ Stwt,' Loa''Angeles :14j
California.,
Broad Street, New York 5, ;N.' Y.
'v
•
•
'
-
•••;
.
•
-
,
>
r
V
Deih£
Oii^Cfo^or^
randum—Kitchen
South:
Salle
Illinois:^'•
•
to> the maimer in which the ingots and
castings, a peacetime
expanded facilities in the United high.
Prior to 1940, the 20-year
States could be made to fit into average was a little less than
43,the long-term economic picture, 000,000 - tons, about one half the
after peace had returned.
;1947- production. The top figure
as
The ^ short-range outlook was
less uncertain. For five years the
.
reached
during
(Continued
the
First
on page
World
27)
&
Ohio
(dunv^VVm^'
^Mericka
Murphy, 135 lUriion Commerce Building, Cleve-^
^treet; Chicago .3
':. r''v.'' ^•
|l^d 14, Ohio
„
.
•
'
Denver & Rio Grande* Railroad
Oil
Exploration Co. — Data—>
Comstoek. & Co;,. 231 South La
.
Co.—Memorandum
Leather ..Co.T^Memoran-^
Sniithi-Bar^ Salle
street, Chicago 4, ill. ; , *
& Co., 14 Wall Street/ New
Yfork 5, N. Y.
ney
f Parker Appliance Company —
circular V\4U Pont^ Homsey
>Co^
3i Milk;Street, Bostori 9, ^ Mass.;
Pacific
Also available - are -circOlars fori
I'Monon^t and
Northern
i
J
■'
Railway? Co.
Pathe Indjistries-r-Card
Distillers Corporation-Seagrams
-Memorandum—Stern & Co., 25
Broad Street, New York 4, N; Y.
DuMontfLaboratories^Detailed
circular—JoSeph Mayr & Co., 50
Broad Street, New York 4, N. Y.
randum—Comstoek
&
South La Salle Street,
Illinois.
memo-'
Co.,
;
Public
National
23L
Chicago 4^
Bank
ff V
-
-
&
Trust
Co,>--Analysis-r-C,.Ev Upterberg
(Continued
on page
47)
V
w'5?v.
Volume* 167 "Number1-4702
THE
COMMERCIAL
etc.
Is British Trade Recession
.
Dr.
"*
"
■:
By PAUL'
Einzig, commenting'
Coining?
EINZIGV'^ii'
'"v
^
•:
end of Britain's inflationary boom,
reports falling off in demand of certain consumers' goods. Sees •
supply of money becoming tighter! and public spending reduced,;
While British exporters are-handicapped hy ~ lack' of sterUng in'
a
CHRONICLE
talk in billions of
of
deposits
our large banks
running into bil¬
hundred million-dollars seemed
immense. Today it is passe. With
so
many
Over-The-Counter stocks
yet
showing^ in
many cases;
tory, the investor
the: not
so
can well say,
far. distant future
in
"I
,
became availa
b1e
after-
having
in
aid
d
the most
ur
in g
; the"
snatched up in
^ very
short u
time. In recent';
S^asirig;power/'
a
e
r e
cious spiral of : contracting
rricnt will tend to create:1 further
ent time
selec¬
have'
sigps
hesitation
in face of
Thi
Financial
Chronicli)
Charles M. Cyran is with Ranson-¬
Davidson' Company, Inc., Florida
National Bank Building.
Stock Exchanges.
With
(Special
4 FT.
With A. G. Becker & Co.
Herrick, Waddell Co.
to
(Special -to Thi Financial' Chronicli)
Th» Financial-Chronicli)
WAYNE,
IND^-rClare
Johnson
is
Herrick,
Waddell
-
now
certainly missed the boat in the
Merchants Bank
Over-The-Counter market."
apolis.
connected
CHICAGO,
A. Freedman is
with
& Reed, Inc.,
Building; Indian-;
.
,
,
ILL.
now
A; G». Becker &
&
Henry
D.
Co., Inc.; 120 South
La Sallev Street.
with Straus
—
associated1 with
He
was
formerly
Blosser.
very-high level; and there"is™m
acute scarcity., of labor in many
industries, it is widely believed
that by; the end of the year a fair
tive, and buy-
of
cago
to
unemployment. While at the pres¬
employment is still at a
become
shown
Salle Street, members of the Chi¬
(Special
ST.PETERSBURG, FLA.—
pur-
has
s
has been added to the staff
of Brailsford &
Co., 208 South La
man
such! unemploy?'
months, how-1,
demand*;
ever,
e r
V
CHICAGO, ILL.—Walter J, Ly¬
iri
■
|
more
With Ranson-Davidson Co.
Chronicli)
this factor* is likely to become
important-single cause
resulting' in ^unemployment.
Through the operation of the vi¬
w
Financial
It is
directions
many
to Thi
9
fiafedvtha^
been'3
unobtainable
war
v
terials
Brailsford Co. Adds
(Special
selling at their lowest prices 1ft
the largest earnings in their his¬
;• LONDON, ENGLAND—There - are indications that the inflation»ry boom that has been going on-in Britain since, the war, is drawing
near its end.
Until; recently the. public : appeared to have almost
unlimited purchasing power, and almost any kind of goods which
ri
(2317)
—
years,
countries.
i.
'
have
we
Some
FINANCIAL
lions of dollars. A few years ago
on
many
Today
dollars.
&
degree
of
unemployment
make its appearance.
Dr. Paul Einzig
the
.will
high prices.
Possibly this view may be un¬
duly pessimistic.* But the former¬
ly implicit faith; in the permafires, etc., and industries produc¬ nancy of full
employment has
ing such goods had to dismiss tens become gravely undermined. It is
of thousands of employees. ? De¬
now realized that neither a liberal
mand for furniture and expensive
credit policy nor a policy of creat¬
household goods has also abated.
ing
employment
The retail trade is congested with
articles such
radio sets,
as
electric
by
of
means
Evidently, the supply of money well-timed public works and cap¬
available for the public for spend¬ ital expenditure program is nec¬
ing
on
consumers' goods is becom¬
ing tighter.
which until
ing freely
The working classes,
have been spend¬
now
on
goods hitherto out¬
side their
reach, are now less lav¬
ish in their expenditure. Wealthier
essarily
capable
of
preventing
large-scale unemployment if the
exchange
position
limitation
of
necessitates
material
raw
a
im¬
ports.
-classes,
too, had to curtail their
spendings.
Until
recently
they
were
drawing on their capital
with
comparative
equanimity.
They had reckoned that taxation
would
tive,
By WHITMAN C. HAFF
prohibi¬
that they would be able
so
But
they
now
to realize
cuts
Over-Counter Market
less
become
soon
to live within their incomes
more.
Opportunities in
are
Mr. Haff, noting many over-the-
once
counter stocks
beginning
est
that hopes for taxation
remote, and that the
capital levy introduced in
this year's budget is foreshadow¬
are
earnings,
small
ing
to
slowly
go
The budgetary surplus has con¬
tributed towards checking the in¬
flationary trend. But the rising
prices themselves have gone a
long way towards mopping up
surplus purchasing power.
If a
household
of
has
means
single piece of furni¬
buy one
ture, one
modest
carpet, one set of
cur¬
tains only, at the prevailing prices,
it absorbs all the
out
spare
the
goods except primary, necessities.
Tile removal of subsidies from all
than
has
food
other
goods
also
gone
some
would
long
,
This is due in many instances
difficulty in finding mar¬
for
there
in
an
buyers' markets, but also owing
to lack of sterling in many coun¬
tries^ Moreover, British exporters
handicapped in the "new"
countries by the prevailing cor¬
are
ruption in the allocation of import
The well-known integ¬
licenses.
rity of the British civil service is
proving
handicap in this
respect, for British firms are en¬
tirely without experience in brib¬
a
grave
therefore at a dis¬
in competing for im¬
port licenses in many countries.
ing, and
tn addition to the contraction of
the
dema'nd in the home markets
;f and in .the foreign markets, Brit¬
ish
the
business
lack
of
is beginning to
imported
raw
feel
ma¬
if
as
many
many,
stocks
their
seem as
trend, it
if Over-
The-Counter stocks cannot remain
long in their present price range.
:>
The
market
Over-The-Counter
has ; to
traders
largely,
depend,
retail
and
distribution;
upon
salesmen for
therefore,
securities
in this market, more or less, have
"talked
be
up" and explained
thei investor, while this, is not
quite
that
much the case' in listed
so
stocks.
It
is
many
also
possible
the Oversecurities business,
people
The-Counter
very
in
excellent
an
reason
being discouraged during the
past two years, cannot overcome
this feeling and turn to the opti¬
mistic side of the market.
If one will stop and think of the
billions of dollars that are about
be spent by this government
When you're in the spotlight and
to
over
the
next
few
years
for
all
kinds of merchandise, food, guns,
tanks, planes and ships he is apt
to
get
what
the
other
are
advantage
the
seem
upward
certainly
for
to
are
below
who have had
way
the
today
intrinsic
values yet showing large earnings.
With the present market in listed
far
sellers' markets
giving
in
been
could not last very
kets for exports, not only because
are
rise
has
certainly
Over-The-Counter
selling
to
to the
.
It
this situation
oh secondary necessities.
In several branches of industry
distinct trade recession has set
the
Over-The-Counter
listed stocks.
to
in.
;
essential
of
these
in
market, in general, to follow the
price appreciation and volume of
way towards reducing the amount
of money available for spending
a
'
of
of
the
would
savings.
phase
market
stocks
use
investors
shares.
failure
it necessi¬
of
Hence
the decline of the demand for all
kiftds
and
securities
money they can
of their current earn¬
ings, and very often
tates
despite larger
opportunity for
sees
V);
One
selling at low¬
are
years
|
their
with
spending.
to
dealers
things to come. So they
worse
have
prices in
reflected
market?
if
as
"blind
way
but
It
staggers."
all
can
in
the
this
go
there is
only
one
choice...
In
be
securities
certainly would
earnings could
you're judged by your hospitality,
up
seem
to
a
A
Schenley Mark of Merit
tPfiiskif
point where they will probably be
the
highest
ever
seen.
Billions of dollars for
prepared¬
ness.
Billions for European Relief
Rare Blended
Whiskey 86 Proof. 62V$i& Grain Neutral Spirits. Copr, 1946, Schenley Distillers Corporation, N.Y.C,
f
THE
(2318)
10
&/FINANCIAL CHRONICLE
COMMERCIAL
Banks
during May have been,moying,. up moderately, also, loans, as
follows:
3:\—••
Bank and Insurance Stocks
—y
•' '•
April 28, 1948'
Treasury. Bills.
By E. A. VAN DEUSEN
—
Bank Stocks
rate
Treasury Certificates to be offered in June and July
would be raised from lVa to 11/4%.' The subsequent announcement
on May 13
by Secretary Snyder that the rate would be maintained at
1+8% was a complete surprise. Only a few days previously, at the
on
American Bankers Association
12089
"high Treasury official''
had plainly intimated that the rate would be increased. Furthermore,
convention,
a
$1,278,000,000
891,000,000
Treasury Notes
!
U. S.
!
8,412,000,000
8,358,000,000
i
$10,878,000,000
.$11,091,000,000
652,000,000
232,000,000
123,000,000
141,000,000
660,000,000
231,000,000
132,000,OOC
194,000,000
5,062,000,000
;J
Bonds—
Total U. S. Governments.
Two weeks ago this column reported that it was anticipated that
the
May 19. 1948?
,
$1,058,000,000
880,000,000
528,000,000
j
Treasury Certificates
This Week
Thursday,,. May 27, T948?
Loans to Brokers—
'
:
Loans for Securities
Real
'
____
Loans
Estate
Loans to Banks—
Commercial and
'
Eastman, Dillon & Go. f
CHICAGO, i ILL.
564,000,000
.
5,030,000*000
778,000,000
Agricultural
Other Loans
Grimm & Roberts With!
767,000,000
—
Edgar
'
F.
Grimm is now associated with the
Chicago office of Eastman, Dillon
Coi; 135South, La Salle Street.
He has been > in the investment
,&
business for the past 20 years and
formerly!
Vice-President
was
Wheelock
thereto
&
he
Cummins;
of
prior
connected
was
with
Paine, Webber, Jackson & Curtis,
and Kidder, Peabody & Co.
Eastman, Dillon & Co, also an¬
Reserve* Board has been urging Congress for many
Total Loans
$6,956,000,000
$7,046,000,000 nounce-that Willis L. Roberts has.
tighten credit, while just the day previous to Secretary
joined the sales organization of
Snyder's announcement Allan Sproul, President of the Federal Re¬
Total Loans and Investments
$19,023,000,000 $19,230,000,000 the Chicago office. He previously
serve Bank i of New York, told the Congressional Joint Economic
was with
Wheelock & Cummins,
In closing this week's column on bank stocks it perhaps is not
Committee that it was definitely desirable to increase short-term
Inc., and Kidder, Peabody & Co.
inappropriate to quote "Moodys Stock Survey" dated May 24, as
rates and that this could be done without disturbing the present 2Vz %
follows: "Failure to increase* the certificate rate may postpone fur¬
long-term rate, It is significant, however, that Secretary Snyder is
Now Long Investment Co.
ther increases in lending* rates. But banks have not yet experienced
quoted as having said there might be an appropriate* time later to
the full effect of recent rises in interest rates. In view of the im¬
ABILENE, KANS. — The firm
make an adjustment in interest rates. *,; —
r. +,
f
'
It is all very puzzling; and appears to substantiates the* charge* proved outlook, and. an apparent reversal of the Administration's name of Robert J. Long & Co.,
credit
policies,
selected
bank
shares
remain
suitable
for
conservative
Long Building; has- been* changed^
eo» generally made, to wit: the Government's right hand doesn't know
income."
"
i
to the Long Investment
what the Government's left hand is doing. At least, both hands seem
Company.
all too frequently to work at cross-purposes.
Certainly, an easymoney low-interest policy is inflationary, whereas a policy of credit
restriction and high interest rates is deflationary.
So far as the market price of New York City bank stocks are
concerned, the disappointment of the bankers was not reflected in
By SHELBY CBLLOaX DAVIS*
the market. On the contrary, the American Bankers Index has moved
Former Deputy Superintendent, of Insurance;, State of New York
up 2.0% as follows:
American Bankers
American Bankers
Partner, Shelby Cullom Davis & Co.
the
Federal
months to
Date
»
May 10
+11
,< v
f ^
-
:
I
Date
40.8
41.0
May 17
41.0
12
J
Index
13
41.2
14
41.3
15
-
41.4
-
Market
'
prices of individual stocks
——
Insurance ProfitsTin the Public Interest
Index
Prominent securities expert
41.5
-
ance
41.4
-
investor'
41.5
-
41.4
41.6
May 10
Bank
of
25%
Manhattan
345
Bank of N. Y. & 5th Avenue
Bankers Trust
94
Central Hanover
May 14
May 21
261/s
25%
95
95"%
+ 1.3 +
38%
38%
+1.6
431/2
431/4
—0.6
Commercial Bank & Trust-
441/4
461/2
45%
+3.4
Corn
54
55%
561/4
1,320
1,330
1,360
+4,2
+3.0
286
288
285
—0.3
Guaranty Trust
Irving Trust
Manufacturers
National
52% y-
Trust
City
New York
Public
■
Trust
43
43%
92
93
92
43
42V2
*
U.
S.
Trust
570
570:
570
agents
for
adjusters
and
all
other
+ 1.5%
AVERAGE OF 16
and
Only four of the 16 stocks were lower on May 21 than on May 10,
these only fractionally, approximately 0.7 %. New York Trust
U. S. Trust show no change; Corn shows the maximum gain of
and
4.2% and Central Hanover the minimum gain of 1.3%. It is an inter¬
esting coincidence that the highest priced stock (First National) and
the lowest, (Irving Trust) both show a gain of 3.0%.
Holdings of Government securities by the New York Member
BANK
upon
task
pending
for
NEW JERSEY
and
Bell
Teletype—NY
Established
YORK 5, N. Y.
placed
their
MArket 3-3430
1-1248-49
(L. A. Gibbs, Manager Trading Dept.)
N.
Y. Phone—REctor 2-4383
WHOLESALE MARKETS IN
run
because of
sharp¬
are
high,
accusa¬
accusations,'all
simple fact, there
one
aren't enough profits to go around.
:
67
WHITEHALL 3-0782
Wall Street
NY 1-2879
BOSTON 9
CHICAGO 4
LOS ANGELES 14
10 Post Office Square
231S. l,aSalie Street
210 West Seventh Street
Russ Building
HUbbard 2-0650
FRAnklin 7535
Michigan 2837
YUkon 6-2332
BS-297
CG-105
.
«
LA-1086
PRIVATE WIRE SYSTEM CONNECTING: NEW YORK,
/
SAN FRANCISCO 4
—
t
SF-573
BOSTON, CHICAGO,
CLEVELAND, PHILADELPHIA, ST. LOUIS, LOS ANGELES, SAN FRANCISCO
TELEPHONES TO: Hartford, Enterprise 6011
Providence, Enterprise
7008
Portland, Enterprise
700J'j/
Detroit, JEnterprlse .6066.
for the
gressional
| Let' me illustrate the relative
poverty in fire insurance under¬
writing compared with other in-
upion
year
the
statutory
underwriting
insurance companies was an esti¬
million.
of
In
approximately $84
1946
$115 million.
it
was
In 1945 it
of $34 million.
of $22 million.
lost of
a
was a
And in 1944
a
loss
loss
On the other hand
the
average: statutory underwrit¬
ing profit for the five years before
the
war
was
million.
approximately
$28
Or look at fire insurance
Loss
of Ground
of this most
of
compari¬
it is apparent that fire insur¬
ance
loss
pressure.
; Even on the basis
conservative method
son
mated
most part of Con¬
investigation or labor
Relative
profit of all stock fire and marine
premiums
upon
fire
important
one
three
All
insurance
interest
thrive
on
in
a
profitable.-
adjustments
missions,
Necessary
come
more
salary
slowly,
is experienced on com¬
complaints* are heard
about lack of
capacity; dividends
incurred
earned
to
and
expenses
premiums
written).
Last year for stock fire insurance
companies have lost tremen¬
dous ground relatively.
If apolo¬
gists
are needed, in the language,
of the past war, it might be said
the
fire
insurance
executed
tegic
most
a
retreat.
1945
the
Jones
industry
successful
For
earnings
has,
stra¬
example, in
the Dow-
on
Industrial
Average were
share, in 1946
$13.63, and last year $18.86.
On
$10.56 per
common
of
industry today!
Amid a
high business prosperity,
this
ratio
four
years.
exist in this profits depressed in*Am address by Mr. pavis be¬
the Insurance ; Accountants
fore
less than
92%
in
the five
years
above the prewar
was.
bined, loss and expensp
ratio aver¬
bined
ratio basis.
Is it any wonder that investors
aged; 94.3% / during X93T-41, the
indicated profit margin, during, have not been battering down the:
those years < was, 5X% or nearly doors of fire insurance companies
,
Now.
what
about
other
corpo¬
rate
profits?
As a former asso¬
ciate director ol the New York
seen, the fire insurance industry
Chapter of the American Sta¬
is in the trough of depression of
tistical Association and for a num¬
profits. I will go further. Relative ber
of
years
chairman of the
to other industries, the fire insur¬
nationwide Capital Markets Com¬
ance
industry is less profitable
mittee; I claim, some familiarity
than at any time< since the San
with the tricks of the statisticians'
Francisco fire.
And worst of all,
trade.
In computing other corpo¬
this sad situation has prevailed
rate profits, however, I am going
for
long
Is it, any wonder that problems
other hand
98.3%, average. For fire insurance com¬
in 1946 98.7%, in 1945 99.6%, and panies underwriting earnings dur¬
in 1944 98.4%.
Indicated profit ing the past four years were more
margins on this basis were, there¬ than 100 % below prewar average
on
a
statutory basis — in fact
fore, the grand totals of 1.7% in
1947, 1.3% in 1946, .4% in 1945 profits have been non-existant—
and
nearly 80% below on a com-,
and 1.6% in 1944.
Since the com¬
companies
five times, as great as; during the
lag. The pot cause of each of
past four years.. Actually, the in¬
these ills, important in the aggre¬
dicated profit margin was more
gate to millions of persons, is lack
than five times as great in prewar
of profits.
because those figures are after
Now let us take a good hard taxes
compared with before taxes
look at the position of the fire in¬ in
recent
the greatest this country has ever
INCORPORATED
might bear during the boomtimes
of recent years without fear or
threat
years.
NEW YORK 5
could
stitutions.
sea
GEYER & CO.
marginal corporations who
charge what1 the traffic
more
preceding Pearl Harbor average
earnings were
$9.83,
In other
words earnings last year were no.
surance
BANK and INSURANCE STOCKS
the big corporations who; have
conducted their operations in a
glass bowl but by the smaller and
Relative Poverty in Underwriting
in An^prica today. Last
——
the
pressure
2, N. J.
interest
of
feelings
underwriting from another angle,
that of the combined loss, and* ex*
aries and other philanthropic in¬ pense ratio (losses, incurred to
fire insurance indus¬
try. Conversely ah three—worker
in insurance, policyholder, inves¬
tor—suffer when underwriting is
1891
18 Clinton St., Newark
7-3500
ened.
not
are
/■
-
..
for retired ministers and mission¬
not
Stock Exchange
BArciay
strike,
prosperous
I. S. Rippel & Co.
Laird, Bissell & Meeds
Telephone:
may
of
those
savings in the industry, including
university endowments, hospital
endowments, pension funds, funds
common.
SECURITIES
'/, < }'/:
120 BROADWAY, NEW
have
who
dependent
STOCKS
York
succor
are
And depending
it for existence is that large
silent
body
of
men
and
women
have
INSURANCE
New
upon
time
in
whom calamity
De¬
s.
All three of these great groups
and
Members
in
the policyholders.
upon
Divisions
tions follow upon
carrying out
appointed djustifies
it
■
Problems multiply in de¬
as rats in poverty.
the
need
|
per¬
formed
%
1
djustry?
it for livelihood1
upon
——
the
myriad
services
t
and
brokers,
for
+3.0
+ 1.7
+ 1.5 %
No Chg.
+3.6
Shelby Cullom Davis
No Chg.
53%
54
43%
411/2
—
171/4
17
16%
for
work
+3.2
Depending
—
companies pression-just
but those j who
43%
431/2
First National
the
—1.4
42 y2
38
those S>—
only
who work for
—0.5%
Chemical Bank & Trust-—
—
ft
from May 10
340;
V
•
very lives* of those who
great industry, I need not remind you, one
a
of the oldest and most honorable in America.
% Change
Chase National
Exchange
look to fire insurance for sustenance. JThis is
:
345
42%
>-
very bad postwar showing of fire insur¬
businesses, I Notes ; consequent extinction! of
interest in* insurance securities,, reflected m sharp^ market discounts from.*
liquidating values.
Mr. Davis concludes more adequate profits sorely needed for industry's progress.
as, com
My topic is close not only to the hearts but indeed to the
May 10 (before the an¬
nouncement), May 14 (the day after the announcement) and Friday;
May 21, are shown in the following table: 1
i
*
on
—Asked Price-
and, former insurance official cites
underwriting profits particularly
to bend
over
servative,
my
backwards to be
I,
am
going, to
con¬
use
as
yardstick the Dow-Jones In¬
in
order to
industry?
In
fact, the situation is quite the
reverse.
I myself have been bat¬
tering against the doors of various
of the savings pools in this coun-!
try and I would like-to tell you a
few
in
stories
raising
about
money
companies
ance
time.
During
months
as
the
difficulties
for fire insurf
at the present-,
the
past
'seven;
investment bankers we,
have been members of underwit*;
ing syndicates engaged in raising <
new
capital for seven insurance
companies; Our function-has been
to "stand by," as the expression
gpes,. and' at the end; of the offer¬
ing to stockholders to, take for
our
ate
own
account
share
of
proportion¬
our
the
underwriting
group for all shares unsubscribed
by stockholders. v
dustrial Average which is com¬
posed; of 30 of /the leadihg corpo¬
rations of the country;
It i&; well M Now.
Association, New York City, May known, that the greatest advances
12, 1948.
; jm ——£.:-V^ in profits have not been made by
invest their funds in.
this depressed
this
"stand
by"
relatively simple and
.
_
(Continued
as
on page
sounds?
easy
28)^
as.
\
"Volume 167
COMMERCIAL
THE
" Number 4702
&
FINANCIAL
CHRONICLE
(2319)
11
^Second List of Requisitioned Dutch Securities National Dobt Administration and Savings Banks
AMSTERDAM
(via
Agency)
Aneta News
The Netherlands
—
HENRY BRUERE
Bank has published the second list of foreign securities which resi¬
dents
must offer and-transfer to
mentioned in
'
American
2%%
Telephone
Associated
k
bulletin of May 19.
Telegraph Co.,<§>
&
due
1980,
with
coupon
bentures
Co.,
Electric
due
4Va% «gold
Co.,
with
1953,
de¬
1,
July
coupon
first
consolidated
1952, with
Bush
.
Line
July
1,
All
Sept.
coupon
debentures
1S48.
v.,
in
payable
due
1948.
consolidated
with
-
.
Canada
Government
S.' and/or
U.
Canadian
National
debentures
1957, with
guaranteed gold 5%
194S;
Oct.
coupon
due
1,
V/2%
Railway:
due
gold
t-'-
July 1,
due 1969, with
guaranteed gold b'/«
1948;
coupon
with coupon Aug. 1, 1948; guar¬
gold 4%% due 1955, with coupon
Juno 1, 1948; guaranteed gold 4'/a%
due
1956, with coupon Aug. 1, 1948; guaranteed
guaranteed
1948;
with coupon
due
gold 3%
anteed
gold
July 1,
1S48.
3%
1959,
due
Steel
West
Penn
with
Canadian Pacific Railways,
Corp.,
7%
Electric
„
first.
cum.
^
7Vo
Co.,
'
■
"
1
non-cum.
par
cum.,
Engle Co. Will Be
June
of
Wall
Street,
1, T. R. Engle Co
New
City,
York
tc
&
Ohio
gold
4 V2 '4,
ref. and improv. 3Vt%
with
1992,
■
Nov. 1, 1948; ref. and improv:
series E 1996, with coupon Aug. 1,
coupon
1948.
Chicago, Rock Island & Pacific Railway:
1988, with coupon July 1
first
and
ref.
gold
4%
matured
1934.
Service Company,
July 1, 1948.
1977,
deb.,
coupon
series,
i
3%
Power
1975,
Cuba
Company, first
coupon Sept,
1, 1948.
with
Company, debt, gold 6%
debentures
gold
3%
1949,
1949, and
with
coupon-
July 1, 1948.
L Delaware & Hudson Company, first anr
ref. gold 4'/, 1963, with coupon Nov. 1
Trunk
Grand
1948.
f"
Hudson Coal Company, first
gold
1,
5%,
series
A
sinking fund
with
1962,
Dec.
coupon
1948.
Central
Illinois
Railroad,
Louisville Di¬
vision and Terminal first gold 3*/a %, 1953,
with coupon July
1, 1948.
t
Kansas City, Port Scott & Memphis Rail¬
,
Co.,
way
Lautaro
:
Nitrate
bonds
income
mtge.
mtge. gold
Company,
ref.
4%
1936.
Ltd.,
first
Railway
Co.:
1975.
Louis-San
St.
Francisco
series
A,
engage in
Principal
the securities business.
of
the
firm
will
be
Tracy R. Engle, Percival J. Steind¬
ler and Raymond A. Kester.
Mr.
recently been asso¬
ciated with Buckley Brothers in
charge of their New York office.
Engle
has
Prior thereto he was President of
Engle,
Abbot
&
Inc.
Co.,
1997,
with
&
Co., which it
is understood, is
Kansas
-
Texas
-
Railroad
series A, 1962, with
July 1, 1948; priority lien gold 4%
coupon
series
with
1962,
B,
Missouri
July
coupon
1948.
1,
Kansas
Texas
Railway Com¬
gold 4%, 1990, with coupon
Dec. 1,
1948; cumulative adj. mtge. gold
5%
series A,
1967, with coupon Oct. 1,
-
first
pany:
1948.
National
i
'2% 7>
Dairy
Products
debentures,
with
Corporation,
June
coupon
1,
being
York
New
37c
sue,
June
Central
Hudson River RR.,
&
1997, with coupon July 1,1948.
City Transit Unification Is¬
York
New
stock,
corp.
1,
with
coupon
1948.
Railroad:
Pennsylvania
4 Vu %,
1980,
1,
1948;
general mtge.
1984, with coupon July
3%'
mtge.
series
1948;
1965,
mtge.
June
4>/2%
series E,
1948; general
with
coupon
1,
1985,
G,
gold
mtge.
cons.
with coupon Aug.
1,
general mtge. gold 4'/a',©
series A,
with coupon. June
1, 1948; general
gold 5% series B, 1968, with coupon
1960,
Nov.
1, 1948; convertible debentures 3 lA %,
1952, with coupon Oct. 1, 1948.
Southern
1994,
coupon
Winston-Salem
first
gold
first cons,
July 1, 1948.
Railway,
with
47,
Southbound
1960,
with
gold
5%,
Railway
Co.,
July
coupon
1,
1948'.
PREFERRED
.
American
Can
American
Locomotive
inve stt.s.
American
Smelting
cum.
outlets
for
American
Sugar
American
Tobacco
Refining Co., 7%
Co., 6% cum.
Dry Goods
77c. cum. second.
Atchison,
Co.,
Topeka
&
Corp.:
Santa
6%
Steel
Corp.
Cities Service Co.,
Commonwealth
bum.,
no
yields than government bonds af¬
ford.
Particularly,
we have made
investments in mort¬
substantial
Railway
Fe
(Del.)
$6 cum.,
7%
no
elected
to
for
serve
the
Edison
Co.
Corp.,
of
New
Inc., $5 cum., no par.
E.
riuPont
I.
Electric
ser.
F.
&
Co.:
$4.50
$7
cum.,
Herbert
A.
Johnson; Treas¬
urer, James E. Caulo; Secretary.
R.
Barkley Warnken; directors.
Franklin L. Bucheit, Emanuel R.
(a)
principal concern'
increase our earnings
our
to
deBechevet,
Harold
H,
Hieter.
D.,-Hoffman, Roscoe S.
construction.
About
(b)
to
our
at the meting was
Smith, National Presi¬
the National Association
of
of Cost Accountants and a partner
Kearney & Co., Manage¬
addresr
Consultants, whose
".cprmd Organization for Profit
Control."
'Sif?
v
par
ser.
series
A,
j
Third: We have done
ing of
$100.
Railway, 4%
-non-
•
were
annual
contest
Valued
"Most
other
to
and
because
some
became
we
the continued
re'port
will
man,
shift¬
OF
supporfadf the
i
fountain
pen
desk
set
was
par
$100<-
;
Railway Co.} 4%'ad£,
/
Service
Co.,
first, no par.'
1-,
$1.30
of
which
Notice is
3
you
with
some
on
L
J 4<*■
hereby given that in accordance with the provisions of the
holdings.
Abraham
We
H. BEACH
that
The
to
are
debt
J. C. B. EFIRINGHAUS, Raleigh, North Carolina.
Counsellor-at-Law.
officers
be
of the
Association
congratulated
R. STEWART KILBORNE, Jr., New York, N. Yi
President, William Skinner & Sons.
hav¬
on
ing secured the attendance at this
convention of
the
Secretary of
the Treasury.
It has never hap¬
pened before.
He may answer
some
of
the
questions
in our
minds.
(Editors Note: Secretary
Snyder's address appears on oage
16.)
He cannot answer all of
them, for several
First: No
the
future
pecially,
JOHN C. KNOX, New York, N. Y.
United States District
SAM A. LEWISOFIN, New
York, N. Yi
President, Miami Copper Company.
GEORGE V. McLAUGHEIN,
Brooklyn, N. Y.
President, Brooklyn Trust Company.
.
can
mine will
Counsellor-at-Law.
time and, es¬
since so much of
Some
our
FORDYCE B. ST. JOHN, New York, N. Y«
Surgeon.
own
SAMUEL A. WELLDON, New York, N. Y;
is in flux.
course
of
ourselves
we
WILLIAM ROBERTS, New York, N. Y.
look far into
any
now,
Second:
An
man
at
answer
Director, The First National Bank of
these policies
must
the
deter¬
we
City of New York.
these questions.
-
example of such policies is the
extent that
Judge for the
Southern District of New York.
reasons.
world which affects
which
Sugar Refining Company.
J. REUBEN CLARK, Jr., Salt Lake City, Utah.
Counsellor-at-Law, Chairman, Executive Committee,
Foreign Bondholders Protective Council, Inc.
shall presently hear from the
fountainhead of authoritative in¬
government
CARPENTER, New York, N. Y.
Vice-President and General Counsel,
The American
we
on
Straus, Inc.
President, Chicago, Burlington & Quincy Railroad.
fortunate
are
&
RALPH BUDD, Chicago, Illinois.
government bond
our
Directors of The
ROBERT E. BLUM, Brooklyn, N. Y.
Vice-President and Secretary,
of the main
with the outlook for the immedi¬
ate future of
or
Equitable Life Assurance Society of the United States has nominated the
following named persons as candidates for election as Directors of said
Society:
the
today chiefly concerned
are
UNITED STATES.
Avenue, New York 1, N.Y.
Insurance Law of the State of New York the Board
Holdings
We
THE
to have
riskless securities
manent
part
a
A certificate of nomination of the said candidates has been
with the Insurance
think it desirable
per¬
duly filed
Department of the State of New York.
The annual election of Directors of The
of the banks' port¬
Equitable Life Assurance Society
at its Home Office, 393 Seventh Avenue,
December 1, 1948, from 10 o'clock a.m. to 4
of the United States will be held
Joins Tifft Bros. Staff
New York 1, N.
(Special
Finally: To the degree that an
"atmosphere of uncertainty," as
it is called, is a desirable medium
in which to administer the public
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'
to Thb
Hammond
Financial
Chronicle)
CONN.
has
—
Charles
become
affili-r
""with ;Tirft;) Bros.," 49 pearl
Sired:, members: ot* the New York i:v,*An
j&ildt:Boston
was
cum.
38)
folios.
HARTFORD,
N.
page
on
Notice of Nomination of Directors
government bond market.
economic
A
eagerly
on
points covered in the report.
the
presented to the retiring Presi¬
dent, Raymond C. Morse, in rec¬
ognition of his outstanding lead¬
ership of the Chapter during the
We
EQUITABLE
393 Seventh
concerned
of the Committee
furnish
I shall touch
the
for their promotion of
Chapter's best interests.
paying for houses
(Continued
THE
atdct
/
Public
awards
space.
government portfolios
our
members
:
Norfolk & Western
Pacific
meeting
the
Member"
cum.;
York, Chicago & St. Louis RR. Co;,
cum.,
in
ers
Co.,- $5 cum.
1
Central, 47o "Leased Line" stock
$100.
; !
the
At
cum.
$5
intend
LIFE ASSURANCE SOCIETY
questions.
The speaker
are
rented
fo.
mortgage
account.
formation
dent
funds
supply
help
$400 million
have been added to
Lathe, Stanley Michelsen, Clinton
J. Norris, Edward Talvensaari and
Maxwell A. H. Wakely.
Mr. Mason
chasers
and thus to stimulate savings anc
furnish funds for urgent
housing needs now being increas¬
ingly met with new, if high-priced
Edward
past year.
Corp.:
Kansas City Southern
New
Corp.:
Qo'.,Thc., 77"
Motors
cum.,7 par $100.
*
and
Goodrich
Illinois
cert,,
Light
$6 cum., no par.
par;
General
B.
Nemours
&
Power
General Cigar
$3.75
de
$3.50 pref.
cum.}
par
are
Outlook for Government Bond
President, Malcolm B. Varney;
Vice-Presidents, Russell C. Floor
$6
York,
~
6%
ago,
year
1948-49
year:
par.
Southern
&
cum.
not
gages to
general history. For the past yeai
with respect to the National deb
made to members who were lead¬
par.
Consolidated
a,:
new
better
at
and the
cum.
cum.
57c rion-cum.
Bethlehem
no
found
funds
.
first;
-
7%
Co.,
have
our
evening at Michel's
Restaurant, Brooklyn, the follow¬
ing officers, and directors were
Wednesday
r.n
cum.
Refining
do
we
to
given equal instruments for doing
it.
This is particularly true in
government bonds
,
Associated
-
7%
Co.,
&
that
be made.
lyn Chapter, National Association
of
Cost
Accountants,
held
on
ment
cum.
Com/righted, by
The
Government" Bonds,
At the annual meeting of Brook¬
of A. T.
SHARES
7%
Co.,
cates
will justify the mortgage invest¬
ment 'at the time the latter is to
1948.
gold 3V2''<>,
com¬
a
vestors will be concerned that the
aver¬
have the great honor to be Chair¬
Com¬
priority lien 5%
pany:
house
the
Here
market rate for
The
1948,
1,
in
made
government bopd market}py the
central banking authorities.
£
"
Missouri
and
portfo¬
over
coupon
1,
Nov.
be
shorter
Mr.
Steindler is head of P. J. Steindler
1948; second mtge. income 4l?2%
series A 2022,
with coupon May 1, 1949.
St. Louis Southwestern Railway Company
of
Texas,
first
4%,
1989, with
coupon
July
»
4%
mtge.
Steindler
J.
p.
being dissolved.
'
1st
Engle
Pacific
Railway Company,
West Division; first gold sterling 3%, 1962,
with coupon July 1, 194&.
'■
Grand Trunk Western Railway Company,
first gold 4%, 1950, with coupon July 1,
field.
must
major role of savings bank invest¬
ments.
Recent experience indi¬
long in abandon this field. On the con¬
advance of the day the mortgage
trary, never before were we called
investment is ready because of on to do more in this field than
the time required to build.
In¬ how and never have we been
We
R.
Tracy
1948.
i
particularly
mitment
invest¬
respect to the insurance, planning
and inspection provisions of the
Underwood & Underwood
National Housing Act, or FHA as
reasons
are
Henry Bruere
Uncertainty has its advantages we call it. In the opinion of many
several.
in keeping speculation in check. of us, FHA insured loans, whether
JftFirst: Our deposit growth is bj But
it also causes sleepless nights on small or large multiple units,
no means what it was in 1947.
Tc
for prudent investors.
are the most attractive investment
date in 1948 our deposits have in-,
now available to us.
This is true
creased only about 64% as mucl
Principal Investment Problems
despite our anxieties respecting
as in the like
period of the year
Today, as opposed to our con¬ the high cost of construction and
before.
cern
for investment outlets of z
the consequently high prices pur¬
Second:
1934;
Consumers
ment,
future
for
readjusted for
age
general gold 4'/"
I Cities
necessary business expansion and
for building and urgently needed
our
construction
government
m e n
,
With
must
'
impor¬
buyers of
are
questions
question arises continu¬ houses in our communities.
minds in respect of
Home financing is the historic
a
in
commitment
long- term
lios
series D 1996,
Such
ally
not
tant
important
remain unanswered.
enthusiastic.
This year we
bonds
1,
Sept.
coupon
debt,
over¬
whelm ingly
:
general
Railway:
1948;
,
.
.
-<$>-
response
not
was
with coupon
..
.
managers'of savings barks,
we were worrying about the insufficient
supply of investment opportunities. Some of us urged the Treasury to issue more longterm bonds.
The Treasury later acceded to our
request, not precisely in the form some
some
...
\ Chesapeake
3 '/a%
Foresees continuation of government bond market support.
A year ago, as
are
As
will be formed with offices at 6c
coupon-
reduction in afriount of holdings.
as
had hoped for.
;
perpetual 4%
debentures stock,
Consolidated
8%
non-cum.,
1
»
Co.,
-
1
.
July 1; 1948.
V
Rubber
S.
4%'
Co.,
Formed in NYG June 1
1,
well
as
5% -non-cum.,
Co.,
RR.
,
S.
wit!
1953,
$100.
U.
T. R.
1, 1948; guaranteed gold 3%
with coupon Aug. 1, 1948; guar¬
1952,
with
Sept.
Pacific
U.
Aug.
coupon
due
1951,
due
government bond holdings from longer to shorter ma¬
Says Public Debt is in strong hands and is intelli¬
gently * and conservatively administered, steering a middle course between inflation and deflation..
Our
1970,
4Va'/f
Union
$100.
anteed
gold
Leading savings bank executive, j holding chief concern of savings banks is no longer outlet for investfunds, but rather to increase earnings, stimulate savings and aid in housing and business expan¬
$100.
par
Canadian
dollars.
-
series A.
Railway
Southern
par
i.''
;
Government Bonds and the Public Debt, Nat'l Ass'n of Mutual Savings Banks
President, Bowery Savings Bank, New York City
ment
turities,
Oil
priority
coupon
on
sion,^ looks for readjustment 4>f pavings banks'
par
par
Pure
5%
1955,
of
Dominion
bonds
1,
Co.,
due
..
Co.,
debentures
gold
Terminal
gold
4%
Railway
.
$100; 7% cum., par $100; 6%
$100; $5 cum., no par;
Co., 57o cum.j conv. ''
Republic
Steel
Corp.,
07
cum.
conv.
cum.,
cum.,
Coast
Chairman, Committee
Public
1948.
Atlantic
as
Pittsburgh, Port Wayne & Chicago Ry.
77, par $100.
Service Corp. of New Jersey: 87
1948.,
1,
15, 1948,
The list follows:
our news
debentures
Aug.
the Bank before June
StdOklB^bhariges/ Be
previously
dard &
with • Bay, Stod¬
Williams, Inc. ' '1 6
on
from
January 1, 1949. Policyholders whose policies
force
on
or contracts are in
the date, of the election and have been in force at least one
year
prior thereto
are
entitled
address by Mr. Bruere be¬
Convention of
the National Association of Mu¬
tual Savings Banks, Atlantic City,
N. J., May 24, 1948.
fore
Y.,
the
Annual
to vote
in person or by proxy or by mail.
ALEXANDER McNEILL, Swetary.
V-
OC:"
May 26,. 1948.
:
vsr.
*• •
iDtm-l":
!
,(
or
wel-
THE
(2320)
12
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, May 27, 1948
Totalitarian
'§$ ' 1By
^
^
Comment on Transportation Statistics of the
Transport Economics and Statistics of the Interstate Com¬
although hardly
cheerful, figures on passenger business of the railroads.
Preliminary
statements for last year show net3>
railway operating income for all riers.
Pennsylvania was on top
Class I carriers from freight serv¬ with a net operating deficit oi
ice
at
$1,206.3
million.
This net
had been topped
vious
peak
in only two pre¬
and 1942.
The
$1,394.4 million in 1942.
1941
years,
was
Passenger
and
allied
however, showed
services,
net operating
deficit of $426.4 millions. In other
a
income
the
realized from
freighl
New York Central's pas¬
service.
deficit of $30,114,000 was
than 56% of its freight serv¬
senger
more
ice
net
its freight service profits.
the passenger
and allied services had consistent¬
the
ly been showing losses.
From
1936, when separation of net oper¬
ating income by class of service
was first required by the Commis¬
report smaller dollar losses from
passenger services in 1947 than in
1940. These were Chicago, Rock
Island & Pacific, down to $5,712,-
sion in the roads' annual reports,
100 from $6,645,000,
New Orleans, down
Prior to the
through
these
passenger
service deficits averaged roundly
$245 million a year. The largest
loss in that period was $262.1 mil¬
in
lion
1940
while
the
smallest
$226.1 million in 1941, There
four
years
of profits
from passenger and allied serv¬
ices, with the best year, 1943,
showing net operating income of
was
There
million.
$279.8
The
unfavorable
in
1946, with
a net operating loss of $139.7 million.
Last year the loss jumped
63%
above
the
previous high
(1940).
This was in the face of
an
reappeared
increase
of
93%
in
revenue
miles between the two
passenger
years.
The Bulletin
also
the
performance in 1947 and 1940 of
25 large
steam railroads, those
with total operating revenues of
over $100 million in 1947.
These
roads
last
year
accounted for
about 75% of the freight revenue
compares
and 83% of the passenger revenue
of all Class I carriers. Among the
roads listed only
reported
the,New Haven
passenger operating
ratio below 100% in 1940 and only
a
Orleans
Pacific
ern
100%
last
(part of the South¬
System)
were
below
.Chesapeake
&
Ohio, with ratios of 192.6% last
year and 187.3% in 1940, was the
highest in both instances.
year.
While almost all of the railroads
ratios
reported
above
last
100%
for passenger services, a ma¬
jority of them had ratios at least
year
somewhat
There
below
were
hpwever,
where
last
1940.
1940
the
in
seven
increased
with
the
even
year
Four
as
of
of
25
were
able to
and Texas &
to $1,735,000
service deficits between
oassenger
1940 and 1947.
'
"In
general the passenger losses
in relation to
freight profits were
considerably less of a burden for
the major western carriers than
for the large eastern roads.
For
example, Union Pacific and its
leased
lines
about
showed
the
same
net operating income from
freight service as New York Cen¬
tral.
However,
Union Pacific's
passenger loss of $17,092,000 was
well below the $30,114,000 report¬
ed by Central.
Similarly, Atchi¬
Topeka & Santa Fe and its
son,
affiliated
companies had a net
operating deficit of only $14,815,300
in
its
services
and
passenger
allied
in
1947, compared with
operating income of $69,115,freight service.
net
300 from
Chase National Bank
Promotes Wm. Miller
William S. Miller has been ap¬
pointed
of
the
will
Second Vice-President
National Bank and
a
Chase
be
associated
with
other
members of the Chase staff han¬
dling the bank's- business in the
Middle
Atlantic
Southern
and
States.
Prior to his promotion Wednes¬
day, Mr. Miller had been an As¬
sistant Cashier in the Public Util¬
a
native
the bank.
of New Market,
He
Vir¬
ginia.
Seaboard
Air
Line
and
Southern
Clement Evans Staff
way.
(Special
jThe largest dollar losses in the
passenger
division
the
of
were
large
naturally
eastern
oar-
to
The
Financial
Chronicle)
Bonds
■
:
•O,:
'.';/
-v.
Special Securities
ment
over.
amined to make sure that
dif¬
Financial
MILWAUKEE,
is
Cannon
now
Chronicle)
WIS. ^ Leo ' E.
connected
with
Braun, Monroe and Company, 735
North Water Street.
Broad Street
New York 4, N.
Telephone BOwling Green 9-6400
Teletype
NY
1-1063
to
The
Chronicle) v
S
ings.
the
o
h
repugnant
It
us.
vide
a
was
to
was
possessor
i
from
A.
rack
indi-
both
Earl
national
H.
Corbrey
Spring Street.
%>%» '•* mu-f
j, > .wmvmiws*, m-mmmrmf-f 1
&
Co.,
650
of
the
Foreign
the savings
banking system has constantly
preached the virtues of thrift,
whether the prevailing economy
was deflationary or inflationary.
Now, all parts of our economic
system are emphasizing the value
of thrift and the importance of
saving in fighting the inflationary
forces that have taken hold of
The
ment, through
Federal
our
Govern-
its Security Loan
Drive, is currently making
tensive effort to
foster
in¬
an
the
prin¬
ciple upon which the mutual sav¬
ings banking system was founded
and we are only too happy to
further
the
and
cause
of
be
It
not many years ago
was
also
were
that
in
concerned,
a
world affairs. The
Proceedings of
the Association's Conferences dur¬
ing the late 1930's reflected some
apprehensionover
the
inter¬
national
situation. But, by and
emphasis was placed
at
those
meetings on the specific
problems of mortgage investment,
bond investment, service to the
public, business promotion and all
the other operations with which
we are daily engaged. We are still
engaged with those specific prob¬
large,
lems
and
our program will, I am
be of value in contributing
their
solution.
However,
it
sure,
to
clear
seems
again
had
been
received
Again,
20
some
ago,
years
find
Britain
kind
of
refused
claimed
and
pub¬
lished "Mein Kampf." In its pages
Hitler announced for the world to
long before he
his blueprint
read,
came
power,
for
conquest. The book was
a
into
world
failure.
During the first year of publica-
| tion this vitriolic document sold
less than
20,000 copies, and those
who
read
did
it
did
not
take
it
talk
common
that
Hitler
was
an
to
me
that
ourselves
once
we
in
world
a
in those former
seems
clear to
years.
me
that
time
we should give a little
thought to the dangers in¬
a
situation which could
not
only completely overshadow
the
operating problems of our
banks, but also change our entire
way of life.
Ten years ago, National Social¬
ism
was
on
the march; today,
Communism is traveling the same
I do not pretend to be
or
a
an
student of world af¬
But, from the
viewpoint of the
common-
in
"man
the street," I would like to com¬
pare
briefly the
some
10 years ago, not
forces
at work
then taken
seriously, with similar forces,
in
a
different garment,
working with like fervor
and intensity today.
are
Edgar Allen Poe, in his short
story
"The. Purloined
Letter,"
pointed out that
one
of the most
effective methods of concealment
is wide publicity. You will recall
that
the
main
was
gratulate
of
faith
Hitler."
in
Hitler's
You
Reports from
and Bucharest
Belgrade
reflected the
attitude.
same
all
are
familiar
with
step$ Hitler took from then
make his
world
the
pro¬
domination
extraordinary speaker,
a
great the delusions of
leader, and a political genius but, a grim reality.
to
on
seemingly fantastic
for
gram
Attitude
silly book."* The story is told that
not
one
British
statesman
not
paranoiac but
a
4
character
in possession of
of
a
the
valu¬
address
the
the
28th
by
Mr.
Annual
National
Schwulst
Confer¬
Association
of Mutual Savings Banks,
Atlantic
City, N. J., May 24, 1948. i
-rip***•
*
t»;
glance at a harmless Version first
"J
Communist
Movement,
"Mein Kampf," except for a brief
Just
as
ten
years
,-v/ -'.K
ago
we
were
pondering whether the announced
circulated in Great
Britain, uhtil ideology and aims of the National
some time in 1935. In that year
Socialistic movement in Europe
the Russian ambassador in Lon¬ should be taken
seriously, today
don circulated typewritten ex¬ we are again pondering how; seri¬
cerpts among British statesmen ously should be taken the ideol¬
which they reputedly referred to
being "very interesting." 2
as
aims of another political
Once again
ideology and aims are clearly
ogy and
and social movement.
When Hitler's ideas, as outlined
so-called
autobiography,
in * his
the
announced.
As
the
was
with
case
began to be implemented by ac¬ the. .NationalSocialists,
/'The
tion,
the
contents
of
"Mein Communists disdain to conceal
their
views
and
aims.
They
open¬
Kampf"
began
to
appear,
not
ridiculous,
but
quite
serious. ly declare that their aims can be
"Mein
Kampf" became
a
best attained only by the forcible over¬
seller second only to the Bible and throw of all existing social con¬
it made the author
a
rich
man.
did not plot out step by step
He
how
Yet, the world was put on notice
that
on
ditions."7 These exact words
National
war
Socialism
insisted
and bloodshed for its de¬
ternational
force.
In
speaking of
gress
in
by
1848
the
and
Sixth
The
writings
and
leaders
days
through the present
leave ho
have
and
taken
no one
different
a
can
distinguish
now
doubt
as
in
to
the role the Corhmunist movement
of world affairs. In
whether in this way we would not
have
obtained
what
so
many
declarations
the movement
of
is
course
Con¬
6f Communist leaders since the
of Karl Marx
Hitler,
would
reiterated
World
in 1928 at Moscow.
the Germany
of post World War I,
wrote,
"World
history
were
part of the Communist Manifesto
velopment and growth as an in¬ the Kremlin
destined
to
play in the
course
fact, the blue¬
print of Communist world con¬
quest is more pronounced and
well-defined than was that qf Hit¬
ler.
Lenin,
the
father of the
present Communist 'creed/ ,'fol^
lowed a straight line in his dogma
from the days of his relative ©b-i-
blinded pacifists today expect to
gain by begging, whining, and
whimpering: a peace, supported
not by the palm' branches of tear¬ scurity to his
ascendancy as head
ful, pacifist female mourners, but of a state.
In 1900, after leaving
based on the victorious sword of Russia for a haven in
Munich^he
a master people, putting the world
wrote, "We must e$ucatef men
into the service of a higher, cul¬ who devote to the revolution' hot
ture." 4
s* •"
'*
* .>
only their free evenings but th&ir
the struggle! for
In retrospect, it seems amazing whole lives
that in the face of an avowed publi¬ the political police demands fe¬
cial
cized program of terror, buttressed
qualifications, , professiqnaL
when we have
by deeds in line with the announced revolutionaries
a
detachment
of
program, the rest of the world sat
revolutionary
back so complacently and blindly. workers especially prepared by
When
German
troops began to long training, no police in the
occupy the demilitarized Rhine- world will be able to master them
rigorous secrecy, a minutely
,
,
.
.
/II A.* Hitler,
Mein
Kampf
.
.
.
,(Continued
(Boston:
.
on
Pjagq
Houehton Mifflin Co.,
1943), p. XVIII.
Tolischus,'v They
Wanted
War
(New York: Reynal & Hitchcock, 1940),
2 O.
p.
259.
3
4
•
Toward
read
.
"An
pro¬
their
Prague,
again
clothed
many
who
"One almost had the
impression that a large section of
fact, he said that "in questions of
foreign policy I never , shall ad¬
mit that I am tied by anything/'3
fairs.
were
Britain was almost ready to con¬
he intended to rule the world. In
analyst
There
stated that,
situation analogous to that which
road.
a
which
peaceful intentions in spite of his
oddly military manner of demon¬
strating them. One correspondent
seriously
because
the
contents
seemed
so
utterly fantastic.
Among Nazi party leaders it was
optimism
people
war.
ciple
wrote
to
was
anybody could
wicked as to risk a
so
kind-hearted
he
there
believe
to
really be
European
prevailed
herent in
insular
or
challenge
a
as
Britain
In
written
more
by either France
regarded
war."5
Adolf Hitler illustrated this prin¬
when
that
"it's too bad he had to write that
assistance.
we
be
Great
the wall with other let¬
that
stated
Versailles
obvious. The
so
through normal channels.
well-being,
economy.
made
was
on
ters
Schwulst
B.
vidualand
ence
Carter
Senate
the
Hitler's
of the letter had merely
put it in plain sight in his mail
the standpoint
of
it
cause
be-
so,
a use
hiding place for the docu¬
Desks were scrutinized in
a
na¬
turally
hollowed
were
ment.
f
sav¬
u c
concept
before
Y.
Committee
speech denouncing the
Treaty "appears to be
search for secret compartments. a tremendously encouraging step
Walls were sounded and the floors forward."5 Another Senator stated,
examined inch by inch. But the "Hitler's
move
will clarify
the
letter was never found simply be¬
European situation and must not
laid at
story
Financial
of
>
able letter he knew would be the
(Special
members
Relations
none
them
With Carter H. Corbrey Co.
60AKAWTEEP RAILROAD STOCKS-BONDS
One
of
out to pro¬
ficulties could
that
The
was
sconomic
previously
with
Merrill
Lynch, Pierce, Fenner & Beane.
to
thus break¬
Pact,
some
officials ap-
a very
As he had
our
then present
too
(Special
thorough search. land in March; 1936,
anticipated, his apart¬ ing
the
Locarno
systematically gone prominent American
Chairs were carefully ex¬ lauded the move.
object of
,we
of
source
ATLANTA, GA.—Jack J. Spald¬
ing has become associated with
Clement A.
Evans
& Co.,
Inc.,
First National Bank Building. He
With Braun, Monroe & Co.
,-:v..
v
i slative
g
sense
was<
Guaranteed Stocks
e
neard that the
this
To Hold Annual Ouling
BUFFALO, N. Y.—The Bond
Railway, operate in the Southern
.Club of Buffalo will hold its anRegion, and the seventh, Chesa¬
rtual outing at Cherry Hill Coun¬
peake & Ohio, is classified in the
Pocahontas Region. Seaboard had try Club, Ridgeway, Ontario, on
June
4.
Charles R. Staples, of
the largest increase, 7.87 points,
Halsey, Stuart & Co., is Chairman
followed
by Pennsylvania, 6.11
of the outing.
points, and Chesapeake & Ohio,
5.36 points.
The smallest increase
was 0.25 points for Southern Rail¬
Joins
those
1
chambers,
It likewise
Bond Club of Buffalo
Central, New York, New Haven &
Hartford, and Pennsylvania. Two,
an
not many years $go
was
rathe^ vague way,^ over the turn of
group,
eastern carriers—Erie, New York
It
excessive
is
were
;
unfriendlyact; Urges more intensive
adequate education of people and provision for more social security.
and
doorstep
ities Department of
the ratios
compared
propaganda oLNational-Sociatitm-And Communism and, in order? to
,
that
ratios.
these
_
President, National Association of Mutual Savings Banks
^
Executive Vice-President, Bowery Savings Bank, New York M
*
that further communist control in Europe will be
nations
to
only two roads, in
$2,875,000. The entire Southarn
Pacific system, however, re¬
ported a sizable increase in the
the New Haven and the Texas &
New
were
list
from
followed
ratio
operating income, while
Baltimore & Ohio's passenger los:
of $26,341,000 was about 48% ol
war
1941
•
i
\
that we, as savings bankers, were very much, concerned
$39,536,000 for passenger and al¬
about the economic
lied services. This was equivalent
philosophy then circulating in many quarters that saving was useless
to more than 55% of net operating
and old-fashioned.
Indeed, in magazine articles, books, university halls, and even in our
vyords, more than 35% of the net
profit realized on the freight serv¬
ice was absorbed by the passen¬
ger service losses.
.
■
-combat them, advises: (1) arousingpublic opinion at home and iir Western Europe on conflict between ;
v communism -and
democracy; (2) building, up of our economic and military potential;, and (3) notice
Commission for May carries some interesting,
merce
•
-
Mr. Schwnlst review? policies* and
The- Monthly
Bureau of
*
Blueprints
EARL B. SCHWULST*
>;
5 N.
,
6
Y.
V;;::
*Times," March 8, 1936.
Ibid., March 13, 1936.
7 Karl
••
Op. Cit., p. XX.
Ibid.,'p. 396.
36)ri
'
Marx.
Caoital
ing? (New York:
P.
355.
•
,•
.
■
and Other
Writ¬
ModerhLibrary, 1932>,
■
Volume 167
,
THE
.Number ,4702
COMMERCIAL- & FINANCIAL CHRONICLE
Enyart, Van Gamp Will Merge Willi First
(2321)
Effect of Current Economic Problems
Securities Company
;
13
Banking
on
By ROBERT V. FLEMING*
•
;
President and Chairman, of the Board, .The Riggs National Bank, Washington, D. C»
CHICAGO,- ILL.—The investment firm of Enyart, Van Camp & *! *
Chairman, Committee on Government Borrowing, ABA
Co., Inc.? will be consolidated with that of the First Securities Co.
of Chicago, 134 South La Salle Street, as of June 1.
Charles E.
i Prominent banker reviews wartime and
postwar economic problems, particularly as regard war financ*
—
-
.
'
•
.y?jn£» credit and inflation*? Opposes proposals of President and Federal Reserve Board to further curb -:\£.
credR and to institute special bank'reserves, while praising postwar management of Public Debt. Ad- f >
^ vocates adhering to anti-inflation program of ABA, and concludes any drastic increase in bank reserves
would lead to excess* deflation and Handicapping of banks in aiding national defense or
European . ;
Vr
:
'
'•
-
brief review of
recovery.
?
»:
and wartime problems as they affect the economy of
the country is, I believe,
appropriate. Therefore, may I recall to you that during the thir¬
ties, due to the stock market crash of 1929 and the serious depression which followed in
1932 and
our
prewar
1933,
<£-
our
economy
that time
at
in
was
state
a
of pronounced
Owen V. Van
J. A.
Camp
Horacek
deflation. The
'
,
Techniques of War Financing
government
Enyart and Owen V. Van Camp will become Vice-Presidents and
sought
J. A. Horacek Assistant Treasurer of the First Securities Co.
It is
raise prices by
Enyart, Van Camp & Co. will join
devaluing the
borrowing by the government from
the banking system or the Fed¬
dollar
in
eral
of
gold
understood that the entire staff of
First Securities.
terms
and
Annual Golf
COMING
rowing
June 15, 1948 (Detroit, Mich.)
more
,
In Investment Field
Golf
-v,';
Party
1948
(Pittsburgh, Pa.)
Pittsburgh
Securities
Traders
Association Annual Outing at the
Shannopin Country Club
May 31, 1948 (Dallas, Tex.)
Dallas Bond Club Annual Field
Day at Lakewood Country Club.
May 31, 1948 (New Orleans, La.)
Bond Club of New Orleans An¬
nual
Field Day
Country Club.
at
the
of
Detroit
Summer
the Plum Hollow
at
Golf Club.
June
May 28,
Club
Bond
Metarie
.
18,
(Boston. Mass.)
1948
Club, Concord, Mass.
To be pre¬
parties at the Hotel
Statler on the evenings of June
16 and 17 from 9:30 p.m. until
by
midnight.
June
(Philadelphia, Pa.)
Philadelphia Securities Associ¬
annual outing at Llanerch
Country Club, Llanerch, Pa.
ation
June 22, 1948 (Boston, Mass.)
.
:
Bond' Club of
*
Boston
(Buffalo, N.Y.)
ciation
Buffalo; Annual
Outing at Cherry Hill Country
Club, Ridgeway, Ontario.
Security Traders Asso¬
Annual
Outing at
29th
Woodland Golf Club.
jftme
at Knollwood.;
June 4, 1948
ciation
Municipal Bond Dealers Group
Spring Party
at the Kenwood
i
June
^
4,194$^fConnecticut) {
Security Traders Association of
at
Avon
June 4, 1948 (Los Angeles, Calif.)
Club of Los Angeles first
Bond
field
annual
day at the Bel-Air
Country Club.
June 4, 1948 (New York City)
Bond Club of New York Annual
Field
Day at the Sleepy Hollow
Country Club, Scarborough, N/ Y^
June 4, 1948 (Philadelphia, Pa.)
Bond
Club of
Philadelphia An¬
Day at the Philadel¬
phia Country Club.
nual
Field
June 11, 1948 (Atlanta, Ga.)
;
June 25, 1948 (Cleveland, Ohio)
Bond Club of Cleveland
1
of Cincinnati Annual
spring
ing the government used its ef¬
to bring about an
inten¬
tional
and
then
much-desired
sible
price inflation, which resulted in
long series of unbalanced budg¬
ets up to the Defense period and
subsequently throughout
World
War II. We had to raise $398 bil¬
a
for
supplies and equipment
armed forces and to meet
our
other
to the
war. We raised taxes as high as
we felt they could be raised with¬
out destroying our civilian econ¬
during the
this
from
44%
York
It
war
source
not
was
sum
irig
sources;
both
(New York City)
Meeting at Sleepy
Hollow Country
Club, Scarborough-on-Hudson, N.Y.
the " North
of
Bankers
Association,
May 18, 1948.
N. C.,
Carolina
Pinehurst,
had
In
effect,
imminent.
was
There
were
of much un¬
employment and predictions of
great demands upon the govern^
ment
relief.
for
It
from
war
to
asserted
was
that the reconversion
cam¬
and'FDIC
were
numerou$ forecasts
be
to
bond
war
reserves
of
industry
would
peace
bring
about
pronounced business dis¬
tress. Out of these inaccurate as¬
a number of proposals
by which several agencies
sumptions
arose,
of .the
government
undertaken
as¬
direct
business. The
the
would, hay©
financing lot
bankers of the
tion did not feel that these gov4
each
war
ernmental
came
the close of the
bond
campaign.
Then
and the
sary
flotation of the huge Victory Loan
which ended in December, 1945,
rose
war
and left the Treasury possessed
Recognizing^thie
fect of the huge
which
and the funds for re-?
conversion were supplied by the
of
banking system. A former
*"
i,
♦'«*-
*
in "the
your
Presi^
and of
Associa-n
Association
i
v'
'"i
the
of
No
man
effec-l
jtfvely^ than he, did in this
cause|
He. traveled from one end of the
Gov¬
on
country *to the blher, bringing. to
the Ameri¬
(Continued on page 32)
solicitation of
nor a
ever
more
Bankers Association, of which
offer to sell
\
on
'
Committee
an
movement.
worked ! harder
government
•
hands
i
v
the
this
in circulation
ernment Borrowing of
can
of
American; Bankers
tion, • and one- of .my dearest
pjmk deposits, the -friends, Mr.l Robert M. Hanes; |e<t
the> amountof
■'
the
purchasing power
created through
increase in currency
securities
dent
iriflationary ef¬
heen
had
the increase in
people,
to the needs of the country-a
economy-
funds far in excess of its needs;
1
agencies were necesi
desirable and once again
or
an
offer to
buy securities. The offering is made only by the Prospectus.
New York Stock
Exchange Golf
Association 49th annual golf tour¬
nament at the Winged Foot Golf
Club, Mamaroneck, N. Y.
ISSUE
NEW
July 9,1948 (Philadelphia, Pa.)
$30,000,000
Investment Traders Association
of
Philadelphia Annual Summei
Outing at the Tavistock Country
Club, Haddonfield, N. J.
National Dairy Products
July 16, 1948 (Toledo, Ohio)
Bond
Club
of
Toledo
annual
? .•-'v'.'"
,
,
outing at the Inverness Countrj
Club. V ~
-v
■
v_f£f
Corporation
"
f&70
3% Debentures due
)
v't)
.
Georgia Security Dealers Asso-: July 19-22, 1948 (Portland, Oreg.)
ciation annual outing and dinner
Annual Convention of National
-r
at
.the Druid Hills Golf Club.
Association
of
Securities Admin¬
June 11, 1948 (Baltimore, Md.)
istrators afcthe ■MuRnumahr'HoteL
■ti^oncj
of Baltimore annual
outing, at the, Elkridge Kennels*; r.
Nor.l5-18, 1948 (DaltM,Tex.)
Juneill-12-13, 1948 (LosAngeles)
ciatioirConventioii.^"-:^'?
■
Price 102% and accrued interest
National Security Trader*'Aaab^
-h
^Cebdntj^Ttaders' Association
Los Ahgeles Annual
*at
Spring party
iArr^head'^ Lodger-
Milton B Lewis Joins
Jl, 1948 (New Jersey)
liBond (Club of New Jersey An¬
nual1 ' Field I Day: at the -Montclair
Golf Club,
,-i
•
Jffnell,T948 (New-; York City)
'.Corporation Bond Traders Club
of New
York Spring Outing and
Club,
Mamaroneck, N. Y..
Dinner at the Wingfoot Golf
June 11, 1948 (Pittsburgh, Pa.)
r
Bond
Club
Bond Traders Club of
to
The
Financial
Chicago
Underwriters
as
may
obtained within
any
State from such of the
regularly distribute the Prospectus within such State.
r
Chronicle)
CLEVELAND, OHIO —Milton
B.. Lewis has joined i the staff s of
G. E; Jaffe ^ Co., Union Com-?
Bldg.,
members
of
the
Cleveland Stock Exchange. * : Mr;
Lewis was previously with W. P:
Quinn & Co*
Lehman Brothers
Goldman, Sachs & Co.
merce
With Daniel F. Rice Co. !
-
I
(Special
FT,
to
The
Financial
Chronicle)
LAUDERDALE,
John W. Haislet has
HL)
1
*
.
Pittsburgh An¬
Spring Outing at the Chartiers Country Club. -
(Chicago,i
(Special
,
of
nual
June 12, 1948
G. E. Jaffe & Co.
A copy of the Prospectus may.be
I'
June
FLA.
Corporation
i
•.
Smith, Barney & Co.
• T-r. *
'
vrVi:-
:*:•
r
:
.
)c9
;
;
.
,
#
o-
Blyth & Co.> ln&
A'. U-
May 27, 1948.
i
"■
-»i;-v' * L
^
.
V •'* '*?V'
...Union Securities Corporation
I, tv
?:•■■■.(r'.T -S-p
Harriman
Ripley & Go.
Incorporated
*
{..'v-v-.v ••
become con¬
nected with Daniel F. Rice & Co.,
Hotel.
Broward
The First Boston
'
na¬
banks became the underwriters of
This announcement is neither
(New York City)
sion
Re¬
to
thereon.
or
Fleming
the
and
the
therefore^ approxiMr.
in
sessment
entirely from non-bank-
by
hand, there
avoid
undue
unsettlement of the deposit struc¬
ture of the country, War Loan De¬
posit Account was used and to
encourage
use
of that account,
remainder* $222 bil-
address
*An
which
sums
paigns
period and
$176 billion,
trend* On the other
those in govern¬
ment and in the Congress who
publicly expressed their fear that
a period of deflation and depres¬
inflationary
so as to make pos¬
smooth transfer of
the
a
raised
possible to borrow this
Vast
tive
addition,
huge
of the cost of the war, was
vention
Annual
June 29,1948
incident
expenses
In
Federal
adopted and was a construc¬
step " towards offsetting the
was
System in order that these
could
be
purchased.
serve
delivered before the Annual Con¬
^'Municipal Bond Club of *New
through the
system
Fleming
and
(luting at Country Club.
June 25, 1948
V.
securities
lor
all realize that
you
Reserve
deficit financ¬
lion, or 56%, had to be borrowed.
Security Traders Asso¬
Outing
at
the
Golf Club.
Robert
taxes. Through
Annual
Woodland
(Cincinnati, Ohio) '
Connecticut ''Outing
Country Club-
23,,1948 (Boston, Mass;).,
Boston
June 4, 1948 (Chicago, 111.)
Chicago field day
in
realized. The
•
Bond Club of
it
than
omy
*
June 4, 1948
bor¬
received
sure
am
System results in
increasing the
deposits in the
banks by a corresponding amount.
It was also necessary to employ
other techniques, such as making
reserves available to the banking
and
spending
lion
18, 1948
I
forts
Municipal Bond Club of Boston
annual
outing
at the
Country
ceded
to
by
Party at the Acacia
Country Club.
EVENTS
now
have the honor of .being
Chairman, urged upon the then
Secretary of the Treasury Vinson
the desirability of shrinking bank
deposits
by retiring
bank-held
government debt, insofar as this
could be done with the surplus
funds available.: This suggestion;
mately $90 billion were raised by
selling securities to the banking
system and the Federal Reserve
System.
,.oO
it
^9"icfioO
.H
i* zfibn-.MW.
A-taY w*iH
.¥ •
(
>:y,i i
i
sntfaOS -oii r-'''"
;-3
€901-i
VII
HUlW't
(2322)
14
Thursday, M*ay 27, 1948
iHECOMMptpIAL &fiigher Earnings May Boost Dividends!
.
graphically tells the*story of the
earnings since the strike-bound first quarter-of 19146. 'Note
march'of
Mutual Funds
r
"Theaccompanyingchari
i
QUARTERLY EARNINGS OF 400 COMPANIES
r'luONS
t
NATIONAL CITY BANK INDEX,
DOLLARS
,
1946 TO 1948
1,100
By HENRY HUN1
1,000
Prospectusv
your investment
The Human
dealer, or from
SECURITIES
NATIONAL
RESEARCH
request 'from
upon
&
Y.
120 BROADWAY, NEW YORK 5. N.
900
investors lh individual securities belong to the old
school of "Buy 'em and hold 'em/' Such investors can always find
some reason for not selling a stock.
Recently we told a friend of
ours he ought to get out of a certain stock because earnings were
declining and the dividend was^
apt to be passed. His reply was i ance with a rapidly growing deToo
CORPORATION
Equation
many
that he couldn't afford to sell be¬
he
cause
had
paid more than its
mand.
Despite
the
800
700
600
500
tremendous
capital investment made during
this period to increase crude out¬
400
present price. Other investors re¬
fuse to sell for the opposite rea¬ put, erect new Refineries,- and to
son: they have such a profit that
expand distribution facilities/ the
it would swell their income tax industry found itself unable fully
to meet Requirements during the
too much.
.300
200
100
I
equation of fear and iperiod of seasonally high demand
:which comes during the heating
greed also militates against the
1946
1947
1948
Prices of crude, and
*PREUMlN*ff»
chances
of most investors who joil season.
its products have risen sharply in
ttempt to handle their own funds.
In this respect, the average in¬ response to this condition of short¬ I that overall earnings are higher in the first quarter of this year than*
vestor
is no
different
from
a age, and the boom prevailing in ,they were in any quarter of 1947. This may result in still higher divithe industiy has recently been re¬ idend
payments in 1948.
"
friend of ours who is one of the
flected by a burst of activity and
"Many stocks have sold at ridic¬ Notes
most successful short-term traders
a sharp advance in the prices of
ulously low piice-earnings ratios
in
the
"Street" — with
other
/Wellington Fund has published
oil equities.
During this period in the past year on the fear that a
people's money!
But he is the
handy
new
32-page
booklet;
of unbridled optimism, it is of in¬ earnings could not .hold up. These
first to admit that when he starts
covering income, gift and estate '
terest to review again after a first-quarter figures, when con¬
taxes.
Ask for a copy of "Pocplaying the market with his own
year's lapse since the industry sidered with the expected impetus ketax 1948."
*
capital, his. judgment is never as
was
last discussed in 'Perspec¬
of
.Distributors Group has issued j
good.
ERP, the defense program,
tive/ events of the past year, and
As
Cameron
Reed
and tax reduction should dissipate a new folder on its "Low Priced '
puts
it, to examine future
prospects.
Shares," designed for greater than
"Given equal knowledge and abil¬
,spch
fear?.,
"The industry last y ear wds-fore-;
average profits in a rising stock
ity, I.can do a better job man-;
"Since
the
first
quarter of 1946, market.
sighted and alive Jto the Neces¬
againg your money than you can.
have
increased
296% i Broad Street Sales Corporation
But by the same token, you can do sity of aggressively increasing the earnings
a
better job managing my funds production of crude oil in order to ; while .the Dow-Jones Industrial has revised its "Record of Man¬
meet
prospectively
"
higherK
de¬
than I can."
Stock Index has decreased 7.3%/' agement" booklets on National In- •mand.
Fortunately, with the de¬
vestors, and Broad Street Invest- '
f§ When an investor purchases a mise of the OPA, the industry was (Quoted from National Notes No. ing.
mutual fund for long-term hold¬
able to raise the price of crude so 455, issued by National Securities
Calvin Bullock has a new folder
ing, in effect he is saying to the as to provide an incentive for
on "Aeronautical Securities."
and Research Corp.)
management, - "I haven't got the
drilling. Thus, despite the steel
time to do a good job looking
shortage, the industry succeeded
after my securities. From now on,
in completing 33,000 wells of all
it's your responsibility."
In the
types during 1947, or-about 13%
long run, most investors will find over the
preceding year. Reflect¬
that professional full time man¬
ing more intensive exploratory
agement obtains far better re¬
activity, 5.461 of these wells were
sults than
the
individual
does,
wildcats, an increase of 21% over
partly because the professional 1946.
With the exception of 1920,
approaches his job objectively in¬ this
Tyas the largest number of
stead of subjectively.
;
.'
wells ever drilled by the industry.
The human
PUTNAM
FUND
$$oUon
t
'i
*
,
Prospectus upon request
Fund Distributors,
Putnam
Ino.
<
00 State St.,
Boston
-
.
Boom
Bullock's
May
issue
15
of "Perspective" discusses the pe¬
troleum
result of {his drilling pro¬
crude production rose dur¬
ing 1947 to an.average of 5,085,000 barrels per day, or 7% above
1946.
The rate of gain in crude
"As
Industry
Calvin
industry in part
as
fol¬
lows:
a
BOSTON SECURITIES TRADERS ASSOCIATION
gram,
The Boston Securities Traders Association will hold
output was greater than indicated
HUGHW. LONG & CO.
)NCO»f>OR ATtD
4£ WALL
STREET, NEW YORK
AMGIUS
tOS
5, N Y.
CHICAGO
of
month
1946.
Crude
reserves
The Dallas Bond Club will hold its annual field
uncovered by
exploratory and de¬
velopment drilling during the year
BOSTON, MASS.—The name of amounted to 2,464 million barrels,
Furst & Co., 1 Court Street, Bos¬ or a net increase of 614 million
ton, was changed to Securities Co. barrels after deducting crude pro¬
Changes Firm Names
of Mass.
April 30. There, is no
on
change in personnel.
The
""
'• •"*'
~
name
Trust
ment
Custodian
i
of the World Invest¬
changed
was
Funds
f
Certificates of Participation in
I INVESTMENT
during
the
at
the
year-end
In¬
to
vestment Trust of Boston on April
15. In addition to being the under¬
to
record high of 21,488
but
rels,
measured
an
Your
ing,
millipn bar¬
of
in terms
writer and general distributor for
Investment Trust of Boston, the
for.
Inc.,
Fund,
IN
as
advertising
Republic
and
Investors
Sovereign
In¬
years'
'
'
12.0 years in
1945 tp
1,1.6 years in 1947 because of the
vestors, Inc.
even
mand
more
rapid
growth
in
In addition to_the Bostpn office,
Securities
opened
Co.
an
of
office
Mass.
at
has
15
Street, New York City.
•
-
also
the
this period.
during
'
Those of
basic
even more
hope
(Series B1-B2-B3-B4)
PREFERRED STOCKS
our
Two With
With Herrick,
f
TO MUTUAL FUND
Earl
SPONSORS
(Series Sl-S2-Sa-S4)
FUND, INC.
Prospectus from
Dividend Notice
Could
proach in
with
local investment dealer or
The Board of Directors of Investors
Keystone Company
of Boston
50
Congress Street
Boston 9,
of May
;
^
„
*
shareholders on record
28, 1948.
June 21, 1948, to
as
-
■*
«"
E. E. Crabb, President
Principal Underwriter ana
Investment Manager
Massachusetts
a
fresh
cially
funds.
INVESTORS SYNDICATE
j
J
Ralpij
>%*£;; f
Waddell &
Herrick,
f:
for
can
your
Rates and samples of
work
supplied
|
ST.
King Merritt Co,
The
to
Financial
Go] din
and
Jr.
now
are
Chronicle)
L.
MO.—Jerome
LOUIS,
Herbert
@.
Koehne,-
with King Merritt &
Co., Inc., 408 Olive Street.
"
t With
(Special to Th#
that sell, espe¬
designed
previous
financial.: Chronicle)
to
The
Financial
CLEVELAND,
—
&
Union Commerce Build.ng,
of
Bishop
associated
Macklin
Gordon
Co.,
.
>
change.
•
cial aridPark Place, New York 7,
have
HPy&Slay ton, 3$;
~
408 Olive
added.;Philip
J.
Two With
Ex¬
tSpecial
-*
Joins Westheimer Staff
to
The
•DAYTON,
Financial
to
their staff.
Hugh Niven
to The.Pinanciat
Chronicle)
OHIO—Charles
H.
Chronicle)
IND.—James
INDIANAPOLIS,
(Special
Street,
Vogel
mem¬
Cleveland Stock
the
Company, Inc.,
Chronicle)
OHIO
P. Holstein has become
with
bers
dn
ST; *<?£OlftS£i
With^GoTcIqn; Macklin Cp.
request. Box A 513, Comiiier-
N. Y.
/"•/,.
t-
ap¬
sales litera¬
undersigned
write folders
25
Minneapolis, Minnesota
your
The
Selective
Fund,.Inc., has declared a quarterly divi¬
dend of eight cents per share payable on
Tke
use
(Special
ture?
your
you
Jen-
McKin-
ney and Arthur E. Emuhson; of.
Grand Island have become con¬
nected
(Special
i
NEB.—C.
OMAHA,
INVESTORS SELECTIVE
v / *v •
•
_
**'■"
"
"Ad Libbing" is mot like the man who buried the
sticking out to trip over.
■
'
Reed, Inc.-f'
COMMON STOCKS
#
..
hatchet and left the handle
Waddell in Neb.
(Series K.1-K.2)
!
$
We learned he passed a\yay last Sunday;
kins of York and John K.
I
j
:■
amusing and charming personality; of
conventions will miss the
We
'}
acute dur¬
ing the.year."
BONDS
f;
$
'
demand—supply situa¬
tion became
William
.
as
who have been rather regular in -the,'-,attendance at:
us
Bloom, Chicago.
de¬
Thus
completed
considerably/as soon as the
should swell
advertising
our
*
•
supply crude reserves de¬
clined from
not
committee has been announced and is at work.
•
>
-
'
committee while
yet, may
resemble the new Studebaker car inasmuch as we are receiving con^
tracts for our 1948 "Chronicle" NSTA Year Book; in fact; our Denver
affiliate has done a marvelous job and we understand their commit? <
ments are far above any previous year. This indeed is most promise,
time
all
day at the Lake-
LIBBING"
"AD
This
year.
hold an
Country Club.
.
tributor
FUNDS
investing their capital
duced
wood
brought estimated crude reserves
Securities Co. of Mass. is also dis¬
j
OF CONNECTICUT
ASSOCIATION
SECURITY TRADERS
"Operations of the petroleum
by these average figures, and in
The Security Traders Association of Connecticut will
industry during the past year have
December, 1947 was at- the rate
louting on June 4 at the Avon Country Club.
beeri characterized by a feverish
of 5,337,000
barrels per day or
attempt to maintain supply in balnearly
13%
ahead of the like (DALLAS BOND CLUB
.
eystone
their annual
outing June 22 at the Woodland Golf Club.
Longshore and Fred A. Stolte
have become associated with
1C.
Richie is with Westheimer & Co.,
Third National Bank Building.
Niven. .3510
Street.
'
/
"
Hugh
Pennsylvania
North
-
'
' '
/
4%
Volume
FINANCIAL CHRONICLE
THE COMMERCIAL &
Number 4702
167
bthef> eduntries to ^^odtice: and to uous investment in the industrial¬
Expanding World Trade—Primary
Objective of Our Foreign policy
feApoiv *nose igoods <and services
for which they are best suited by
By HON. JOHN W. SNYDER*
Secretary -Snyder, after reviewing present distorted world trade,
points out 'U. S. interest in -promoting a better balance "by a iiigher
level of ^trade.
Holds first requirementistoiiiaintaiiiour eco¬
nomic activity while
preserving essential natural resources. Says
must work for
we
world-wide elimination of trade barriers and
to
for the benefit of all nations.
The manner in which we develop,
employ, and distribute the abundant resources of the earth is the
of
attain in
I
the
security
we
lives and civilization,
our
its
i
imports
in
1938
from
the
am
accordingly "."delighted to United States, as compared with
this opportunity to discuss ' over 75% in 1947.
have
before
forum
your
of
some
the
Before
problems of maintaining and ex-' States
panding the present levels of inLet
ported
examine first the world
me
picture as it exists today,
necessity, I shall have to use
some
figures, but I shall try to
keep them to a minimum.
world's
1938,
only
exports
States.
14%
were
But by
has
America
the
amounting
eit
billion
$1.7
to
in
In
Latin
part,
America's post-
deficit with the United States
war
by dollars re-
the j ceived in payment for its surplus
the with other countries.
In view of
of
from
1947,
our
the very limited dollar availabili-
exports had risen to almost 35%
of the world's total
figure;
It is
[ ties of those countries, however,
important
to
realize,
Latin America has found it
however,
share
'creased
the
of
only 3%.
United States with all other
tries
plus.
had
and
America
Latin
have
been equally dramatic.
taking part in
European Recovery Program
for
in
41%
lQ^R
exports .m iosis.
of
Rut
the
ac-
world's
thp
Vw
firct
But, by tne tirst
half of
1947, this figure dropped
And,
whereas
these
countries
obtained
57%
of
the
27%.
to
world's imports in 1938, they ob¬
tained only 44% in the first half
1947.
of
Significantly, therefore,
the Western European nations had
a
trade deficit of approximately
$8 billion for 1947 with the world,
as
compared to $3.5 billion in
by heavy
the gold and dollar
accumulated by Latin
on
during the
Before the war, the trade
defi¬
cit of Europe was financed .pri¬
marily by money received from
European
investments in
other
countries, shipping receipts, tour¬
expenditures and other invis¬
exports.
But as a conse¬
ible
A cha"Sed Pattern Essential
J.trClmstaneestm"e^ltinar'Talgelf
avSdfit
SSflw
11 that
essen-
the United States Gov
ernment ,ovfoM
extend
1rtOV1c,
loans and, where
grants to Europe, thus
that continent to become
self-sustaining.
How¬
more
it is neither possible nor de¬
for 'this
government
to
continue
the
indefinitely
balance
world's
finance
to
of
payments
deficit with the United States.
had
to' be
and
of
question,
any
it is
in
that
country
international trade be brought
our
into
better
a
level
we
other
every
balance
trade.
of
at
How,
to attain this
high
a
then,
are
goal?
fi¬
sources
that
liquidation of capital assets and
'by various loans and grants from
{countries in the Western Hemi¬
amounts
sphere and by the expending of
gold and dollar reserves.
posi¬
'Europe.
our
surplus
with
"terms
Latin America did ndt
perience
private
It
recon¬
develop¬
is
essentia,
investment
maximum
extent
not
a
{
.
ex¬
partici¬
possible
carefully into the composi¬
The
of
of
Latin
United
Latin
America's
States
the
War
I
tne
figure
-today,
$7
billion
does
large, but let
very
me
.substantial figure.
diversity of the fields intc
which thjs foreign capital went
reads like a roster of our leading
[industries.
In
agriculture
numbers of
there
United
States
con¬
ment
of
capital
country.
Foreigr
the
particular
of enabling the country
any
serves
purpose
in
ventures
of
search
were
financed
of
gold, silver, copper,
iron, petroleum, coal, and so forth
This foreign capital also found its
way into the steel mills, refiner¬
ies, textile mills,' insurance com¬
panies, mortgages, all types oi
manufacturing companies and ar.
almost
endless
list
other
of
in¬
vestments.
imports
otherwise
vides
it
could
And it also
buy.
channel
a
pro¬
through
which
skills of
technical
needed
sorely
than
the highest order are brought intc
the country.
The participation of foreign cap¬
ital in the economic developmenl
of the United States is a dramatic
chapter in
last
half
the
and
were
history.
our
the
of
early
19th
years
cen¬
the
of
decades of tremendous
economic expansion in the United
States.
.Railroad
mileage
in¬
creased from 9,021 miles in 1850
to 240,831 (piilOs 1° 1910; steel pro¬
wonder, in view of its role
our
own
economic
expansion,
efficiency with which
foreign capital can give
vastly important assistance in the
economic development of a na¬
and
private
tion.
There is an
foreign
interesting angle tc
investment of
which
we
lose
Often
502
million
increased
tons;
in
manu¬
value
from
$1 billion to $20 billion; and the
value of farm land and buildings
increased
from
$3.3
billion
tr
$34.8
billion.
this expansion,
it might be noted
population increased fourfold,
92
to
Concurrently with
The
million.
—particularly
of
Great
Britain,
France, Switzerland and the Neth
erlands—made heavy
siderably
debt.
improved.
However,
on
the part of private in¬
In many cases there has
also been the feeling that outside
Capital is not wanted.
The flow of foreign private cap¬
into a country is governed
ital
almost
entirely by the investors'
of the prospect for; a
estimate
reasonable
return.
The
average
investor is prepared to take nor¬
mal business risks.
But when he
turns
foreign field lie
the
to
possible
1934,
strides
in
The
restrictions
imposed on foreignenterprise; the risk of con¬
fiscation; apd the risk that for¬
eign-exchange
restrictions
may
prevent him from freely convert¬
ing the currency he earns on his
investment.
Any country which
hopes to attract foreign capital
can
easily remove the first two
OWned
of these risks.
third
ments in the United States reached
almost
$7
assets
in
amounted
billion
in
1914,
oui
foreign
countries
$3.5 'billion.
Other
to
-
go
Latin-American
To dehl with the
admittely
Of
difficult.
the United
more
maintenance
States
by
high level of imports
a
and
to
exports will tend, however,
eliminate the unbalanced con¬
ditions of international
payments
which in turn give rise to burden¬
exchange restrictions. Every
country has the right and the obli¬
gation, of-course, to take #uch do¬
mestic
measures ¥as
it deems
other
nations
elimination
to
prises adhere to its laws on the
basis
same
those domestically
as
At the
owned.
time, assur¬
same
ance of fair- treatment is essential
before any,} foreign private capital
will invest iii a particular coun¬
try.
;
-A
The Bogota
It
Agreement
is
Turning to the Western Hemi¬
sphere, the needs for foreign cap¬
highly significant to note
the constructive accomplishments
is
particularly
For example, some of
of the Ninth International Confer¬
ital
investment
apparent.
ence
of American States recently
the Latin American countries have
concluded
huge petroleuni reserves, some of
The
which
American
resources
have
»been
sary
un¬
neces¬
to develop them has not been
available.
The
same
situation
is
true with other mineral resources.
Furthermore,
at
Basic
which
Bogota,
Agreement
Economic
was
signed
ference contains
which should be
to
of
offer to sell
&n
at
that
useful stimulus
(Continued on page 43)
solicitation of any offer to buy
offering is made only by the Prospectus.
securities.
-
120,000 Shares '
we
world
?
Gamble-Skogmo, Inc.
work
arti¬
trade.
5% Cumulative Preferred Stock
direction
program. of
through
reciprocal trade
Convertible Prior
to
•international
cooperation
July 31,1958—Par Value $50 -Per Share
Price $50 per
aimed
(plus accrued dividends in the
toward the removal of restrictive
trade.
case
share
of deliveries after date of issue)
and
discriminatory foreign Ex¬
practices,: !; jWe recently
signed; an agreement in1 Havana
A copy
for the establishment df
Underwriters
change
national
an
Inter¬
of the Prospectus
as
may
may
be obtained within
any
State from such of the
regularly distribute the Prospectus within such State.
Trade
acquired
America's i exports
and
deserve
our
Goldman, Sachs & Co.
^
taken
to
Lynch, Pierce, Fenner & Beane
whole-
i MA£ address,by Secretary Sny- hearted support.
before the
Second Annual
Th^adSitioh ;tQ^thetforegdhig^Tt
Foreign
Trade
Forum,
Miami, is necessary ^hat -measures; be
Fla.;-May 21, 1948. w
Merrill
Piper, Jaffray & Hopwood
exjpahd Hh^ capacity of
.
May 25, 1948..
con¬
provisions
private foreign investment an
capital is needed
nor a
Inter-
Cooperation
many
a
Colombia.
NEW ISSUE
have made great
we
this
of
nec¬
for the welfare of its own
nationals.
It must, for example,
insist that foreign-owned enter¬
essary
for Capital
Need
is
re¬
and
is
easily discouraged by three spe¬
some
and contin¬
we
Of
financial status of some of
South American countries is
not the only reason for the lack of
capital is at its peak, an outflow
of capital starts as vigorous enter¬
prises begin looking abroad for
investment
opportunities.
For
example, when
foreign
invest
countries
funded
he
The
tapped because the capital
capital markets of Europe
external
this
sight.
During their
early development, countries are
considered to be importers rather
than
exporters of capital.
The
truth is, however, that at the very
time when the inflow of foreign
through this same
experience of4 expotting. venture
duction
increased in the same capital at the r very time when
period from a few thousand tons
their
capital market must still
to
26 million 'tons; coal produc¬
seek strong outside aid.
tion increased from seven million
to
;heir
cial risks: the risk of burdensome
we
into which it flows to obtain more
essential
to reduce, and in some
stop entirely, -the service ©!
interest
speed
the
cases
vestors.
sider
private foreign investmen
highly desirable medium tc
promote the economic develop¬
capital for development, is
companies and cotton plantations
In mining there were investments
in well-established companies ana
in
a
ack of
in part due to the financial status
of many Latin American countries
which in the 1930's were com¬
land and cattle
were
as
in
developments in certain of
course, this situation today is con¬
The
in this country very naturally
have
a
healthy respect for the
<der
v
World
the
on
import
barriers
portant
-
$6 billion and
seem
No
Desirable
Organization de¬
32% signed to ^promote equitable and
treatment ;ii\
in '.nondiscriminatory
1938, as against 42% in 1947, while international: trade ;practicesiyi' All'
Latin America obtained 32% of of these measures are highly im¬
tion
.
.
However, it is important to look
more
to
of
very
Private Foreign Investment
We
ural
he, Latin American countries.
This unfortunate condition, the
the
trade deficit even in
1947, a year during which its im¬
ports were greatly expanded.
a
foreign-owned assets.
later, the total had in¬
jremind' you "that from the stand¬ pelled
agreements..
The. international
world of $229 million. Y In 1946, -Monetary Fund has been estab¬
that surplus had grown to $1 bil¬ lished as a means of
promoting
lion.
of
feve
scores
important condition is
and
■toward
Since
atrade
of
creased
adequate
supplement
those
to
we
[publics appears to be much more
♦favorable 'than ; that of Western
had
as
also
third
A
ficial
1938, Latin America
billion
This announcement is neither
stockpile materials in which
are in short supply.
tion of the Latin American Re-
In
the
economic
countries.
the
activity.
far
as
we
that
first glance, the trade
by 1897, there were; more tthart $3
for establishing and expanding a
great many basic industries, for
transportation and for agricul-
The first requirement is that we
maintain our present high levels
nanced in the postwar period by
At
promote
pate in this economic development
to
our
Without
Second, it is important that
preserve
essential
natural
has
that
factures
sirable
international in¬
productive and export capacity of
other
aiding
ever,
was
not' enough, however, tc
rely upon governmental or quasigovernment loans to expand the
tons
once
Recon¬
is
necessary,
of economic
the war, these sources
declined or shrank and
resulting greater European
deficit
and
for
ment; Of the world.
20th
^
clear that the pattern of
current world trade just sum
I marized, should not, and can not,
of money
trade
to
struction
Tnt
war.
Development
as an
strument
tury
i
the
py
and
established
The
quence of
the
struction
war.
the interests of the United States
1938.
ist
very
financed
be
America
the1
nations
a
„
,
counted
to
drawings
holdings
The shifts in the trade positions
pvnnrtc;
consequence,
deficit with the United States has
coun-
of other areas, such as'.Continental
The
a
20 times that of 1938.
was
Europe
As
sur-
large part of the Latin American
Thus, by 1947,
surplus of the
trade
annual
cur-
rencies for much of its trade
period,
imports in-
world
neces-
to accept inconvertible
sary
that imports into the United States
did not increase at
anything like
the rate of exports.
As a matter
of fact, during this same
our
ravaged
International j Bank
iexpe-
j 1947
ex-1 has been financed
ample, in
ex-
Since
;area.
designed primarily to
expansion of the pro¬
ductive capacity of European na¬
tions
a substant.al trade deficit
with the United States, that defi-
cant shifts in the sources and flow
of the world's exports.
For
United
that
to
it
than
is
rienced
Of
There have been
highly signifi-
America
Latin
war,
trade
the United
imported more
war,
normally
Latin
Jtiom
ternational trade.
the
States, and
financial assistance provided un¬ point of the economy of our coun¬
der the European Recovery Pro¬ try I bOfOre World War I, this was
It
may *—
United
jgtodfr at Mhiost^T billion. Tn the,
fi¬
worthwhile
development
projects in other countries.
The
facilitate
International trade is mankind's most ancient and 'most effec¬
tive way to use ithe human and the natural resources of the world
measure
Export - Import Bank of
Washington -has long been a suc¬
gram
expand capacity of other 'nations to .'produce and export. Stresses 1
heed 'of private foreign
'investment, and cites Bogota Agreement
as
step toward promoting Latin American development.
_
the
15
...
The
nance
;
of
A- decade
and .productive resources.
cessful;^^^instrtmieht through W
this government has helped
Secretary of the Treasury
-
of their particular natural
reason
ization
(2323)
•
i
16
(2324)
THEi<mMERCIAL
Thursday, May 27, 1948
Snyder Foresees No Debt Reduction Next Year g
Treasury Secretary says financial commitments, along with tax reduction and increased expenditures
may erase surplus, but adds, by decreasing now bank holdings of government bonds, it is still possible
to reduce volume of marketable debit.
By WILLIAM J. McKAY
Canadian healthy disregard of political
manifested following examination of the
There
advocate instead
a
Despite the immediate vocifer¬
tion
criticism of th^ three opposir
parties no substantial argu¬
ments
could
weaken
be
substained
Finance
Minister
to
Ab¬
bott's
strong case for «a sound and
farsighted fiscal policy.
Few
reasonable
will
moreover
Canadian
citizens
gainsay the funda¬
mental truth of Mr. Abbott's
con¬
tention that '-there will never be
a
better time to reduce the burden
of our national debt."
its
Cochrane, Ontario.
Thus the Canadian administra¬
with the problems that affect the
Dominion economy and recent de¬
velopments
that
the
order to assist the British to main¬
their
position in the Cana¬
dian market.
In. view of the in-ab'ilityof Canadian buyers to pay
the currently high British textile
prices the' previous British export target; of
50 .million yards
of piece^oods .had been
scaled:
down to SO million
this
Canadian
yards. Without
assistance
there
we»dd4iave been difficulty in :at*
Gauming-even this. drastically re¬
duced total.
A further indication
,
is thus afforded
of the
beginning
of the end
market
crease
of the. export sellers'
the concomitant in¬
the pressures on arti¬
and
of
ficially high exchange rates.
Another
interesting budget fea¬
ture is the
lowering «of the tariff
the importation of min¬
rates on
ing machinery and equipment. In
this
instance
ernment
its
the
once
Canadian
gov¬
demonstrated
more
practical vision,
and its real¬
ization of the tremendous
impor¬
tance in the Dominion
economy of
the
mining industry.
dian authorities
however,
to
achieved
holdings by commercial and Fed¬
eral Reserve Banks has actually
the inflationary fires.
coy Id *
been greater
keenly
ficial
policy.
While on the one'
hand capable control of inflai
tiopary factors, has a stabilizing
influence on the Canadian price-
the
the
other
of
that
the
coal,
iron,
and
base-metals,
precious
oil,
metals
other than gold have even
greater
claims on government assistance
in their exploitation.
Special em¬
phasis is given to this viewpoint
by the recent significant oil de¬
velopments in Alberta^ the discov¬
eries of lead
deposits
on
the south
shore
and
of the Great Slave Lake
in the James' Bay
Area, and
CANADIAN B3NDS
quirements
toial
of
the
ifor debt
reduction
ropean^
(Federal securities.
com¬
and
possible
re¬
near
time, they hold $86 billion. This
of $31 billion represents
decline
future,"
a
not
MUNICIPAL.,
CORPORATION
prices.
,
.
NEW YORK 5, N. Y.
such
was still on a. small scale.
stock markets were not no¬
The
nouncements
,
-
lhrge
r
ishtete]fdjt curfeht income. ~
United?
"The whole tenor of the
States
Security Loan drive is di¬
rected towards the encouragement
of personal-savings in any prac¬
,
,
an¬
stock
the
recent
profit-taking after
steep rise was easily
*
asking: that youbankers Continue
the fine support Which you have
rendered the savings bond pror
idly. We sold a considerable num¬ gram in the past—support which
ber of long-term bonds to the va¬ 1
well realize has been many times
rious
investor
classes.
Mutual
freely given at considerable ieh»
savings banks, as a group, were convenience.
The present cam¬
among
the
larger
purchasers. paign
will
undoubtedly
prove
Since then, mutual savings banks harder to
carry on than those of
have sold some long-term bonds, the war
years, and definitely will
on balance;
but their total hold¬ require greater efforts and activ¬
ings of Federal securities are now ities of people in every field of
only about $100 million less than national endeavor. Here, then, is
they were at their all-time peak a challenge—one which you, as
last summer. All in all; you have
savings bankers, are particularly
reduction
in
the
Public-
Debt, the Secretary said:
"Unfortunately, the combination
and
absorbed.
prevails .at the present
y
further
although the mining
of CPR common, which are now
commencing to be generally rec¬
ognized, led to further activity in
this
a&
time."
issues including the golds moved
farther ahead. The obvious merits
*
of tax reduction and increased
ex¬
penditure probably spells the end
of
debt
reduction
from
budget
surplus during
the
next
year.
However, even if overall debt re¬
duction Comes to
months
ahead,
possible for
us
a halt
during the
it Jmay still be
to shave somewhat
further the volume of the market¬
Sheridan, Bogan, Paul
able debt.
As you know, only a
portion of the $252 billion of gov¬
added $1
billion to
security
ment
govern¬
your
Frank
ernment
Hargear 28 Yrs.
indebtedness
is
in
the
the
the
security
comprises
the total
and other govern¬
money
ment trust fund
Continuing,
receipts."
Secretary
j|
the
"As bankers I am sure that all
ANGELES, CAL.—Frank
Hargear, partner in Sutro & of you are familiar with the policy
Co., Van Nuys Building, is cele¬ behind the debt pay-off program
brating his 28th year of service as it has been conducted. Increas¬
with the firm, having started to ing inflationary pressures in the
work in their head office in San
economy
during the
past
two
Francisco in 1920 following his years have made it imperative
graduation from the University of that fiscal and monetary policy be
tion
of
Paul
nearly
PA.
—
An¬
Lynch, members
Philadelphia Stock Ex¬
change, to conduct a general in¬
vestment and brokerage business
of
the
with
offices
at
123
South
Broad
Street, Philadelphia, Pa..
ciated
L.
were
with
Paul
both
and
-
Howard
J.
previously ;asso-
Paul
&
Co.,
Inc.,
whichlirin was'fotinded by Mr;
Paul in; 1916;^M y
increases,
but
it
larger proportion of
new
savings
was
a
10% of
during
the
Eight-member advisory commit¬
tee is headed by George L. Har¬
rison, Board Chairman of New
York Life Insurance Co.
Paul
G.
Hoffman,
Economic
Cooperation
Administrator,
has
appointed an eight-member ad¬
visory
committee
Chairman
the
o
is Chairmanof
individual
and
the
board
of
1947
the New York
flowed into mutual savings banks,
Life Insurance
against an average of 4% for
the war; years, and only a little
mere than that-for the entire pe¬
seven
as
riod
1935
Co.
bers
The other
m e m-
are
E. E.
Brown, Chair-
combating further in¬ Treasury is competing, through
creases
in price.
The very fact the sale of United States savings
that the Treasury was receiving
bonds; for the very same dollars
First National
in taxes than it was
paying out through its expendi¬
tures
was. of
major anti-infla¬
tionary importance. Hand in hand
with this development has been
our
Treasury policy, during the
period, of aiming at a reduction
money
the
When you come light
down to it, however, total savings
do not have a ceiling figure, With
each of
of
the
us
total
investors has paid dividends. You
even
war
we
issued
a
during
the
large volume of
.
larger.
savings
Our
bonds,
job
your
of selling
job
in
ex¬
panding mutual savings bank de¬
,
;
Chi¬
cago; W. Ran¬
Vice-Chairman
banks;
1
e
dolph Burgess,
rities to the needs of the various
that
t h
you
Federal
remember
Bank,
f
as
us, we hope that
totals for 1948 and 1949 will prove
will
o
tain
trying to get as much
as possible.
Savings
security holdings have been at a high level during
of the commercial banking sys¬
1948
and
1947, particularly in
tem.
In seeking to achieve this
comparison with the prewar years.
objective, we have found that our But, as long as the danger of in¬
wartime program of fitting secu¬
flation is with
in
man
that
are endeavoring to ob¬
savings deposits for your
and
f
George
L.
Harrison, who
new
"fiscal
i
is
group
of indi¬
during
1946
on
monetary
problems. The
of record,
case
matter
Hoffman Appoints EGA;
Fiscal and Money Aids
through' 1940;
"Some of you may feel that the
more
&
a
As
war;
savings
directed to
Philadelphia
wartime
Snyder viduals than
remarked;
Lynch Formed
two
the further accumulation Of social
LOS
Paul &
last
qualified to meet."
portfolios
during
years—mostly
in
form of marketable obligations.
long-term securities. And, a most
PHILADELPHIA, PA.—Sheri¬ The remainder is in the form of
interesting fact is that this billion
dan, Bogan, Paul & Co., Inc., will savings
bonds, savings notes, spe¬ dollar increase in governments has
be formed with offices at 1526
cial issues to government trust been matcned
by a billion dollar
Walnut St. Officers will be Ralph
funds, and other nod-marketable increase in mortgage loans and
E. Pendergast, Chairman of the
obligations. This non-marketable other investments. The fact that
Board; Charles Sheridan, Presi¬
part of the debt may go up by mutual savings bank assets, as a
dent; Charles J. McCue, John C.
something like $3 billion during reflection of deposits, have con¬
Bogan, Jr., and William Ward III, the
year ahead, thus permitting a tinued to increase in such volume
Vice-Presidents; and Walter Roe, reduction in the total of the mar¬
since the end of the war repre¬
Treasurer.
Mr. Pendergast
was
ketable debt. This is due primar¬ sents an
exceptional expression of
formerly with Paul & Co., Inc.
ily to the intensity with which public confidence in the service*
Other officers held similar nosiwe
are
pressing—and will con¬ of your institutions. The 1947 in¬
tions with Sheridan, Bogan Co.
tinue to* press—our savings bond crease in mutual
savings deposits
campaign. It is also because of may seem low as compared with
Go. to Be Formed
Lynch
NV-t-1045
upon
program of monetary controls de¬
signed
to
prevent
government
Commenting on the outlook for bond prices from rising too rap¬
activity
Clyde
WORTH 4-2400
impressing
the public the need for saving a
,
PHILADELPHIA,
TWO WALL STREET
We are all
united re¬
'
nouncement is made of the forma¬
INCORPORATED
in
our
.
In
A. E. AMES & CO.
than 25%
more
of
of
expenditures will have to
Looking still
farther ahead the Canadian policy be undertaken.
The, success of
supply,
these
programs is of paramount successful as this when we stood and *to absorb *
of a gradual
adjustment of Cagenerally* those' in¬
inadian prices to >.the-.''U. S. level importance to all of us. Undoubt¬ at the threshold, of debt pay-offs flationary dollars whiich aro a
"po*
>
r.
is a hecessaryiprerequisite for the edly, with a view to sound fiscal back in 1946.
v
■;
*
tent daiiger in qdr economy. Sec-»
/'L
should Hike now ' to touch ond, - we * must secure he' Wide¬
eventual removal of the restric¬ management,
these expenses
tions affecting the movement of should have been, financed within briefly on, your own position with
spread* an ownership* in govern^
a balanced,
budget.
And
goods and capital between the two
pertainly, respect do. government securities; ment securities as is possible, in
if we are to continue to pay off During most Of
countries. '
:
1947, it; Was the order ^to facilitate A the ; manage^
portions of the public debt accu¬ policy of the Tieasury to liquidate ment of our national debt and in¬
During the week both the in¬
mulated during .the- war, .we must some government trust fund hold¬
ternal and external sections of the
sure a
strong fiscal position. -X
do it during a prosperous, period ings, of long-term securities in
its, therefore have no hesitancy inr
bond market continued firm but
Canadian
California.
CANADIAN STOCKS
aware
and Federal Reserve tical
form; We are not acting lit
portfolios of government se¬ competition with other savings in¬
curities in just a little -over two stitutions. The government's
pri¬
years.This is a substantial achieve¬ mary ^purpose in promoting sucH
ment. We could hardly, have laid
savings is two-fold. 'First, we are
out, and we certainly .would not endeavoring to cut down consume?
have dared forecast, a program as demand for goods in short
F.
PROVINCIAL.
.
Bank
now
Recovery Program is just
defense
reduction of
than
commercial
theoutlook
can
thje gajj between U. S. and getting • under ,way.;Large*n&tionaI
reduce
Banks held;$117• billion of
At the present
serve
States
receiving
savings, rather
being spent to add fuel to
personal
On Feb. 28, sponsibility
public debt.
tain United
be accurately estimated; The Eu¬
the Canadian dollar at par rather
than at 10% discount serves to
than the reduction in
1946. commercial and Federal Re¬
cer¬
mitments
jthe > Secretary said,
Sutro & Go.
GOVERNMENT
ac¬
"Due to
John W. Snyder
Consequently
in
latter consideration
this
be
complished.
hand
disposed,
clamor
the gold-mining interests and
give
special dispensation to this sec¬
tion of the industry. It is recog¬
nized
on
Canadian
The Cana¬
not
are
heed
are
already
at its present parity is still
essential part of Canadian of¬
tably affected by the budget
•
taxpayers
from tax reduction invested in in¬
lar
an
of
adopted in
the
which
creased
.prices.
has been
for example, than to see
major part of the benefits
us more,
$3 billion, so that the reduction in
view
course
savings fields are really one and
the same. Nothing would please
the $28 billion
dian
piece-goods.
posits and the jobs of our asso¬
ciates in life insurance and other
maintenance of the Canadian dol¬
cotton
tain
,
indicate
expres¬
sed
tion continues to deal iq charac¬
teristically farsighted fashion
courageous budget' the Dominion
government has taken steps to
suspend the preferential tariffs on
rayon
the, banking system. As a result,
the view our job of paying off the debt
that in the held by banks has been consider¬
coming year it ably simplified. It is gratifying to
was
doubtful us that, since the peak of the
that a larger debt, nonbank holdings of Federal
reduction than securities have gone up by about
1946,
ore near
the
authorities
appreciate
the
undesirability of an undue
margin between U. S. and Cana¬
This
peak of$
$280 billion in shcrt-term bills and certificates to
also the uncovering of radioactive
In addition to the ahti'-inflationary measures contained in tnis level,
and
Secretary of the Treasury, John W. Snyder, in an address at the 28th annual confer¬
ence of the National Association of Mutual
Savings Banks in Atlantic City, N. J., on
May 24, after reviewing the history of the management of the Public Debt sincef it reached
policy of stern ^
retrenchment and debt retirement.
ous
once more
recent Federal budget.
few countries where it would be possible in the face of
budgetary surplus to defer substantial tax-cuts and to
are
record
a
■
expediency is
George L. Harrisc»
of
the- National
City* Bank,
New York;i Jay■ :E„
Crane, director of the Standard
Oil Co. of New Jersey; iJoseph
Dodge, President of the Detroit
Bank of Detroit, Mich., and Presi¬
dent of the
American Bankers
Association; Allan Sproul, Presi¬
dent of the Federal Reserve Bank
of New
York; Walter W. Stewart,
head of the Institute of Advanced
Study
.
at
Princeton
University,
and John Williams, Harvard Uni¬
versity Professor of Political Sci¬
ence
and economic adviser to
the
New York Federal Reserve Bank.
Volume 167
Number 4702
THE
The New Look for Bank
COMMERCIAL
Holidays :
The old conventional bank
holiday sign,
utter disregard of customers'
so
worded
as
IX
to indicate
Vilas
A Reminder
f~~NEXT
•
American tradition, thought and action, and
responsibility
Monday
c
We hope
convenient tc
you
will find
-t
arrange you'- baW
transections with
us
on
the
pnxt:
the foilowir.p business day
Crust <£ orapanu
loioaial
some
of
"know
how";
.
In its place, in all the bank¬
the
bank, therefore, not being open, we hope you will find it
convenient to arrange your banking transactions with us on the
preceding or the following business day—Colonial Trust Company."
Contrast this with those
something
like
this:
transacted."
still
"Monday
in
used
being
many
legal
a
banks, which read
no
business
holiday
.
of
been
d
ction
u
the
i b
r
the
u
methods
o n
of
a
young and im¬
portant
seg¬
of
the
ment
system of free
an
out¬
standing
Homer A. Vilas
ex¬
'
signs will reflect our friendly attitude and our appre¬ ample of this ' •
system and for your contributions
ciation of our customers," said Arthur S.
Kleeman, President of
to its success you have won fame
Colonial; "they should also help to dispel the out-dated and unjus¬
and the gratitude of a nation.
tified feeling that banks are cold and indifferent to the needs
of their
"Our
new
clients."
The
NASD Informs Brokers and Dealers of New York
Stale of Transfer Tax
Frank L.
Liability
Scheffey, Executive Secretary of District No. 13 Com¬
mittee of the National Association of Securities
Dealers, Inc., which
committee comprises the State of New
York, New Jersey and Con-
necticut, in
<S>-
a
notice dated
May 20, called
attention
t h
to
and
responsi¬
bility of deal¬
and
ers
under
tion
or
the
amend- v:
the
State
ment
to
New
Law
HA'
The
York
Tax-;
its
transfer
within
agent
of
broker's customer from the
1945.1
of
of
Stock
in
notice, to¬
which
the
the
stock
stood
name
before
of
Our
a
industry
minimum
a
governmental
interference,
made unbelievable strides in the
improvement, the production and
achievements have
realized.
is
share in these
the
distribution
of goods which
country the won¬
accomplishments.
created
Quite naturally, but nonetheless
unfortunately, however, growing
pains developed and the awk¬
wardness and apparently perma¬
nent
inability to coordinate and
derful standards of life which
previous
Ex¬
in
this
snow.
And
we
•
they
are
now
coming
to
urther realize that not because of,
out in
occasions
a
their ultimate perspective will dis¬
disturbed
economy
purposes and objectives and the ment in the American tradition
Increased Responsibility of Labor,
justification for its existence are was practically discarded.
Management and Financebased
on
the
contributions
it
In a few months the govern¬
Then
the
makes to the efficient functioning
responsibility
will
ment became one by men—not
and the
again be squarely upon the shoul¬
perpetuity of capital's part one
by, law, Control of the na¬ ders
in the American
of labor / and management
economy. The job
of
our
members
is
tion's economy centered in Wash¬
primarily to
an
New
York, even
though such transfer is made di¬
rectly into the name of the buying
the
Transfer
w
;
bro¬
kers,
In
working together with
could
cardthis; ■ travesty' on American
righted itself, reestab¬
change Firms is a national volun¬ lished its equilibrium and set-but tradition for the parasite and fail¬
tary ■. organization
of
members again on a path of progress—the ure that it is. Already it has been
and member firms of the New
country turned to what seemed to partially repudiated and it will
York Stock Exchange. It is the
not- be long before repudiation
be an expedient program of gov¬
will be complete.
tradi body of the industry. The ernmental
;
i
paternalism.
Govern¬
Association
appraise existing conditions from
opin¬
the point of view of investors in
ion dated Feb. 19,
1947, the Attor¬
the
securities
of
corporations
ney General has held that this ex-,
which are listed on the New York
emption is applicable with respect
to a transfer of record ownership Stock Exchange. It is the Associa¬
made on the books of a corpora- tion's job to help them do it well.
the stock transferred.
liability
e
customer for whom and upon
order he
has
purchased'
a
whose
f
o
members
to
•
dramatic
system
a
harmony
spite of, this paternalistic
consolidate
the
progress
and system, management,. labor and
growth caused a set-back—a de¬ capital
working
together
have
Drought
this
pression.
country
to
the
threshold of the greatest prosper¬
With typical
American impa¬
tience to quickly correct the con¬ ity it has ever known.
The unique qualities of common
ditions whiph resulted from the
sense and character of the Ameri¬
disruption—rather than await the
can
people when they arrive at
normal processes by
which on
e n ter
prijse.
You in Detroit
are
only in
proud to have had
dist i
that
knew
competitive
such
t
Colonial Trust Company of New York.
who
which charac-
and
ing rooms of that institution, a new and cordial announcement will
make its appearance before, the approaching Memorial
Day holiday.
It will read: "A Reminder: Next
Monday being a legal holiday,
capital,
the
terizes
p r o
and
are repudiating it.
Sees reversion imposing increased
labor, management and finance to cooperate for greater prosperity. Holds duty of
I
government to give no group advantage over other.
The Board of Governors of the Association of Stock
Exchange Firms is happy to be
holding one of its quarterly meetings in the City of Detroit, where we are privileged
tonight
to meet with
you—its business leaders—and thus be afforded the opportunity of exchangying ideas and
of
learning
young,
virile
nation—a
people management and venture
therefore, not being open.
or
on
legal holiday, and the bar
a
By HOMER A. VILAS*
on trend toward government paternalism which
developed after depression of 1929, Mr.
disillusioned American people are beginning to realize this trend is not in
keeping with
notes
,
being
17
President, Association of Stock Exchange Firms
Partner, Cyrus J. Lawrence & Sons, Members of N. Y.'S. E.
convenience, has been abandoned by
Commenting
•
(2325)
Reversion From Government Paternalism
Colonial Trust Eases Closing Announcement
an
& FINANCIAL CHRONICLE
Throughout
American
history,
| labor,
management and venture
capital have banded together and
worked
toward
a
common
objec¬
tive to make this nation the great¬
est, not from the standpoint of
broker's
and finance.
ington.
for
This condition has lasted
16 long years. And govern¬
It will be
day but it will be
a
happy
a
serious
one.
Then the traditional
leadership of
the country's economy will reaschance to prove that it could do
sume
the duties and obligations
more for more of our people than
of their heritage.
The first job
could the methods by which the
Will be to consolidate the gains of
country had attained its greatest
the century, for there is no ques¬
success.
It
ment by men lias
has
has
been given
failed!
every
Progress
been retarded.
Change
From
a
of
System
Paternalism :
Now
tion
that
learned.
disillusioned
sion.
i
.
lessons
I have
no
the leaders will rise
have
fear
to
been
but
the
that
occa¬
.'-y
<
There
American
is
no
question
in
the
minds of right-thinking men that
beginning to realize
the increased
complexities of a
that this system of governmental
ruling of Mor¬
Frank L. Scheffey
modern competitive
society, such
paternalism is not in keeping with
timer M. KasYork.
as ours, will require
The
correspond¬
amazing
progress
which American tradition and thought
sell, Counsel of the New York
"Numerous
inquiries
indicate was made in the first three decades and action. They are realizing that ingly increasing activities on the
State Tax Commission, dated Aug.
that this opinion has been mis¬ of this
century could only have its chief successes have been con¬ part of the Federal Government;
26, 1947, follows:
interpreted. It appears that many been made by a free people of a fined to placing a multitude of bui also there is no question but
"To Members of the NASD in persons,
that those activities must be in
particularly brokers and
obstacles in the path of progress.
District No. 13:
Effective as of dealers in securities, have mis¬
^Remarks of Mr. Vilas at Din¬ They realize that the greatest ac¬ conformance with the American
March 12, 1945, the New York construed the
opinion as holding ner Meeting of Board of Gov¬ complishment of this experiment conception of the functions of
State Stock Transfer Tax
government.
Government -capnot
Law, that no transfer made on the ernors of the Association of Stock has been to
pit the factors of pro¬
Section 270-3, was
assume the obligations and duties
amended-to books of a corporation in New Exchange
Firms, Detroit, Mich., duction one against the other.
read as follows: Tt shall be the York is subject to tax unless some
May 20, 1948.
(Continued on page 35)
They realize now that labor,
duty of the persons making or other taxable event incidental to
effectuating the sale or transfer* the transfer (such as the sale or
including the person or persons delivery of the stock certificates)
gether with
E:
%
&
to
whom
purchase, provided power per se, but from the stand¬
such purchase by the broker was point
of
creating the
highest
consummated entirely outside New standards of life for all the
people.
a
the sale
transfer
or
is
this article.'
v
'
:
:
v,'
\;
within
occurs
made, to pay the tax provided by not
tion
the books of
on
in
this State.
This
is
Interest exempt
Every transfer of stock
so.
made
New
York
a
&
are
from present Federal Income Taxes
under existing
corpora¬
regulations and decisions
,
is
subject to
was
to extend the liability for the New York stock transfer tax
unless
exempt
by
some
specific
payment of tax to persons other
provision of the Tax Law.
No
than the seller.
"The effect of this amendment
people
«
$13,600,000
^
''The provisions of this amend¬ exemption exists with respect to
ment
emphasize the importance of
establishing before their comple¬
tion the situs of such ^transactions.
,
^Very. truly
•NATIONAL
DEALERS, INC.,
DISTRICT No. 13."
Text of
11
Ruling
"To Members of the NASD in
The following is
ruling issued by Mortimer M.
Kassell, Deputy Commissioner and
Counsel for the New York State
Commission, under the date
of Aug.
■
'
26, 1947:
"Kassell, Deputy Commissioner
and
Counsel:
By
clause
(g)
of
subdivision 5 of section 270 of the
•
"-Tax
Law,
no
New
York
stock
transfer tax is imposed upon 'deliveries
or
transfers by a broker
'vfe.
Digitized for"Y'T;
FRASER
'■iy
seller
his
or
COOK COUNTY,
stock for his own account, whether
such
purchaser
person:
be
broker,
a
1%% -1%%
a
Likewise,
exemption
transfer
no
exists with respect to a
-
1.85%
ILLINOIS
-
1.95%
or
his broker to
Various Purpose Tax Anticipation
a
1948 General Tax
Warrants
Levy
Ac¬
cordingly, any transfer of either
of
these
types,
if made
books of
a
State
New York, is
the
of
tex
on
sell,
that
Price
the
imposed
by
the
270
sale, agreement to
memorandum
of
sale,
Stifel, Nicolaus & Co., Inc.
outside this State.
"NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.,
DISTRICT No. 13."
A. C.
and
•
occur
application
subject to
section
delivery of the stock certificates
all
on
corporation within the
of the Tax Law, regardless of the
fact
■
yYp
the
who has purchased
broker acting for the buyer.
■
a
-Yr
by
one
by the seller
District No. 13:
Tax
broker to
dealer in securities, Or any other
ASSOCIATION OF
SECURITIES
:S&
yours,
transfer
a
John W. Clarke
Allyn and Company
:
-
•
Incorporated f
THE
(2326)
18
COMMERCIAL
FINANCIAL CHRONICLE
&
i"
Thursday, ;May 27, 1948
i
International Lending and World Trade
Securities Salesman's Corner
Loan
and lawyers, who have checked
Professional men, such as doctors
that there
doctor for
the first time have usually been to several other doctors and for one
reason or another become dissatisfied.
This is often true of the legal
profession and it is certainly the existing situation in the securi¬
ties business.
In matters of health, the law, or finance people shop
around.
It is because these vital affairs loom so large in everyone's
life that it is only natural for all of us to seek the hast possible advice
t
t
.
,1
.
I
come
and
MAKING HIM
beautiful
capital city.
anyone
accepting
into
been
reason
that he does so
Washington,
whatever
control every situation or every cus¬
Everyone knows»a certain number pf people who will act
It is not always possible to
human beings no matter what he is sell¬
like cantankerous everyday
ing, t No piatter how tactful, forceful or inspiring you may be there
times when you must take orders instead of give them.
But
when you have an opportunity to open UP and show your customer
how important it is to HIM that he has a plan and a definite objec¬
are
tive in\his investment operations by all means go to it. The custom¬
er who has no plan, and no one that is helping hini to work that plan,
is the customer that shops around.
He is never satisfied with his
He doesn't know what he is
broker.
doing
or
why he is doing it,
so
particular security proves unsatisfactory he looks for some¬
else who will sell him only the type of investment that will
when
one
a
always go up price and increase the income that he receives from it.
But if your
customers realize that they have a certain percentage of
their funds invested in high grade bonds and preferred stocks, or good
stocks, or speculations and that the percentages which are
represented by each group are geared to the PREVAILING ECO¬
common
NOMIC
SITUATION
FINANCIAL
AND
IN
THE
NATION
AS
A
WHOLE AND THEIR OWN PARTICULAR INDIVIDUAL REQUIRE¬
MENTS AS
and
have
INVESTORS, then you have eliminated shopping around
?n edifice for every one of your customers
constructed
that will stand up and prove
Investing
money
satisfactory to them.y
today is not
a
ment dealer been able to
bring before-his clients the vast fund of
Upon sound information
good investment judgment rests.
It is a wise investor who goes to
his investment dealer and says, "Bet us sit down together and talk
over my Investment siiuatipri, let us plan a
program and watch that
program develop as we go along."
The only way anyone can do a
good job of investing is to know what he needs.
The best way to
find out is to bring all the facts into the daylight and start from
command today.
can
there.
Jacques Forget Heads ; Philip H. Smith Joins
Montreal Stock Exch.
MoliGo.in New Branch
MONTREAL, QUE., CANADA
—Jacques Forget, partner of For¬
get & Forget, has been elected
members of the New York Stock
Chairman
of
fice
Exchange
for
the
Montreal
the
Stock
1948-49.
year
He succeeds Raymond Allan,
will act
tee
of
as
Governor and a
the
gratuity fund
period of three years.
who
DETROIT, MICH.—Mol & Co..
Exchange, will
open a branch of¬
Penobscot Building
the
in
about June 1st.
Associated with
the new branch will be Philip H.
Trus¬
Smith.
for
with Alison & Company as Man¬
a
Mr. Smith
was
formerly
of fhe syndicate and trading
departments/.
ager
C. E. Abbett Co. Adds
(Special
to
The
Financial
With Philip T. Williams
Chronicle)
•
LOS ANGELES, CALIF.—Smith
B.
Davis
staff
has
of C.
been
added
E. Abbett
&
to
the
Co., 3277
Wilshire Boulevard.
(Special
to- Thc Financial Chronicle)
CHARLOTTE, N. C^Jack E.
Stevens is with Philip T. Williams,
Liberty Life Building.
States
is
the
in
that
London
England,
Paris
IWilliam A. B. Iliff
fact
is
or
is
This
France.
'
.
has
been
continuously and emphatically
so
impressed upon me by my Ameri¬
friends that I can be forgiven
I
if
have
believe it.
to
come
I
therefore, looked forward
visit to Detroit not only
with pleasure but also for the
opportunity afforded met of seeing
something;- of the real Amerjca.
have,
to
my
For jus
tion
of
Europeans, the very men¬
the name of your city
..
of
.
-
San Francisco
borrow
to
seeks
currencyj Jet
a
dollars, not because he pre?
the appearance of a dollar
fers
look
bill to the
of his
cur¬
own
Indeed, in a world where
rency.
issues of currency notes are
being made with almost the same
reasons
to
cerned,
the
in
by
are
creditable
no
the
dis?
means
nations
great
con¬
majority of
anyhow.
cases
?
It is this circumstance that
pro¬
vides the answer to the question
which is
is it
of
the
often asked
so
that
me—why
subscription
the capital
of the
none
member states
International
Bank
of
is
freely
lending, except the
frequency as new issues of post¬
available
stamps, it is my experience
that the artistic appeal of a cur?
subscription of the United States?
age
verse
with
ratio
its acceptability.
Actually, of course, whet happens
when
loan is made is this.
a
The lender passes
rower an
.
.
.
to the bor¬
immediate claim on the
on
goods and services of the lending
country equivalent to the amount
of the loan.
This result comes
whether
about
the
loan
is
sub¬
scribed
for
Bad Lending Policies
note tends to/varyi in in?
renpy
And
let
now
of
some
me
put to you
considerations with
the
respect
to
international
lending
which arise out of
an examination
of past operations in this field. In
times gone by, there was much
bad international borrowing, but
there
was
international
worse
lending, especially in the period
between
the two wars.
privately in the market in
Loans
country; whether the were made to build pretentious
a straight transaction be¬
presidential palaces in little coun¬
tween
the
lending government tries whose basic industries were
and the borrowing government; languishing for want of an
injec¬
the lending
loan is
whether
loan
the
is
made
by
a
tion of needed capital.
And
what
happens
when
Loans
were
ceeds
the
loan comes to be ^repaid?
A bor¬
doubt¬
already. This rowing which hfs been made in
were
often squandered
unproductive non-essentials.
-
confess what some of you
less have suspected
dollars, must be repaid in dollars.
first public appearance
But Ruritania can only Iky her
in the United States since taking
hands on the dollars necessary for
over the position of Loan Director
in the International Bank.
It is, servicing her dollar loan, if she
herself is able to sell, for dollars,
therefore, with
some
sense
of
a quantity of her own goods and
trepidation and a feeling of un¬
services sufficient to meet her in¬
easiness in the pit of my stomach
stallments of principal and pay¬
that I find myself making my
ments of interest as they arise.
American debut before so many
With the best will in the world
distinguished citizens pf such a on the
part of a debtor country, an
famous city. But I do not hesitate
international loan can never be
to avail myself of the privileges
of a stranger, and of a novice, and repaid unless the creditor braces
himself to accept payment in the
to throw myself unreservedly on
the
mercy
of your traditional goods and services of his debtor.
is my very
There is
other way.
no
on
Such lending policies inevitably
to defaults
defaults for
led
.
.
.
which the lender, as much as, and
perhaps rather
than, the boraccept responsibil¬
Moreover, the effects of this
ity.
situation
financial
as
more
must
rowerer
not confined to the
were
field.
nations
Between
between
.more
tions
individuals, nothing is
corruptive of friendly rela¬
than dishonored obligations,
from whatever
It
with
was
cause
some
they arise.
of these
con¬
siderations in mind that the archi¬
tects of Bretton
Woods, when they
planned the structure of the In¬
ternational
Bank
laid
down
cer¬
tain
principles which, under its
And now, let us consider for & Articles, the Bank is obliged to
I have been asked to address
And of
morpent in what circumstances a follow in making loans.
you today on the subject of in¬
nation is able to assume the role these, two of the most important
ternational lending in its relation
are:
First, that in making a loan,
to world trade. I would not pro¬ pf a lender. In this respect, a na¬
tion is subject to precisely the the Bank will have regard to the
pose to deal with short-term com¬
extent
to which the loan will serve
same limitations as an individual.
mercial credits which are the con¬
If any one of us finds himself in to benefit the economic system
cern
of the private banks.
Nor
the situation where his income not only of the borrowing coun¬
shall I discuss those aspects of
try, but of other member states;
international lending which make just balances with his expendi¬
tures—that is to say, where his and secondly, that the Bank in
up the stock-in-trade of our sister
making a loan will have regard to
institution, the International Mon¬ consumption is equivalent to his
production—he is in poor shape to the capacity of the borrower or
etary v Fund; these are primarily
lend even to his best friend.
But of the guarantor, if there is one,
concerned
with temporary disto undertake the financial obliga¬
equilibria in the external balance if any one of us should bp in the tions of
interest and amortization.
of payments position of our mem¬ unhappy situation where his in?
As a matter of policy, the Bank
ber countries. I propose to con-* come is less than his expend!?
American
fine
hospitaljty.
myself to those medium or tures, then he is ip
to
10
the
There
operations
30
extending
years'
period individual,
the field of the Inter¬
a
I
number of
prin¬
they are
forgotten that it is well,{
Indeed,
-pften
believe, to resurrect them and
let them
see
the light of day.
*An address by Mr.
World
Trade
affairs pf an
nation, hgve beep
or a
ordered that the individual or
so
the nation is able to produce more
Bank.
are
shape at all
pp
When the
to lend.
than
Week
Iliff before
Convention,
it
immediately
consume,
wishes to
it is then, and only then,
that the individual
can
become
a
or
lender.
the nation
,
introduced
has
is subject to close and continuous
supervision with the object of
en¬
suring
the
loan
that
the
for
which
the
of
the
on
pur¬
loan
was
granted, and only on those
poses.
Arrangements
too
pur¬
poses
made
tact
In the world of today, with one
proceeds
expended
are
under
which
'
U. S. Alone' Can Lend Abroad
procedures under
a loan
which the disbursement of
is
Bank
maintained
the
on
friendly
between
hand
one
are
con¬
the
the
and
unsubstantial ,and unim¬
responsible authorities in the bor¬
portant exceptions, there is only
rowing
country
on
the
other
throughout the life of the loan.
or
one
two
nation
which
finds
itself
in
that situation, ■ arid that; nation is
United
States
of
America.
I
peed not: go into the reasons un¬
derlying this state of affairs.
1
"peed merely to state the fact. But
The purpose here is to ensure that
the Bank may be able to follow
the effect of policies from time to
time
1
1
v.
the
us say
start/ I' have to
the
Detroit, Mich., May 20, 1948.
V-.:'
It is only four months
■■
■
What happens when an interna?
tional loan is made? A borrower
the
»
■
International Loan Procedure
United States is able to produce.
dustrial civilization.
Established 1913
4, N. Y.
stranger in a strange land.
quantities only to be
or agricultural
machinery or elec? the loans were used to finance the
in astronomical arith¬
trical equipment or some other projects in respect of which the
metic.
To us, Detroit represents
goods
and
services which
the loans had been made, and the pro¬
the zenith of North American in¬
ciples and a number of facts un¬
derlying this type of international
lending which are so simple, so
self-evident and so well-known
that I think we are all inclined to
k
as a
measured
so
/
{ \y),x
in
lines
forget jhpm.
,
■ r <r
'
Bank; or whether the loan is countries, in amounts which were
of working men and
made by an international organ? far
beyond the reasonable ca¬
tending tens of thousands
ization such as the International pacity of the country to repay.
of complicated machines in thou¬
Bank.
$10 million lent to Ruri¬ Loans were made for specific pur¬
sands of vast factories, and of the
tania means nothing more than poses, which were good enough in
fruits of all this human toil and
this: Ruritania is given the im¬ themselves,
but no
steps were
ingenuity rolling off the assembly
mediate means of buying turbines taken to see that the proceeds of
Over-the-Counter Quotation Services
Chicago
1
rj
\
thousands
national
46 Front Street, New YorIt
'
women
over
QUOTATION BUREAU, Inc.
'
>'
the picture of a
which are
For 35 Years
11 ' ,'
minds a picture
para-statal institution such as—in made, and indeed sometimes were
pulsating hive this
country—the Export-Import virtually forced upon borrowing
busy efficiency, of hundreds of
raises up in our
long-term
NATIONAL
be,
may
sense
-j
job for amateurs-f but the task
Bank for Reconstruction & Development
'
I'X1
\
new
it
not the United
Right at
is less complicated than at any time in our history because today we
are able to get the facts.
Never before.has the concientious invest¬
information which he
else
can
he is the order taker.
tomer.
me come
to realize that
^
suitable for his client and the
is that his customer is in the driver's seat and
have
to
made
The road to understanding and cooperation between
for securities that he knows are not
enough
too
any
has
it
But
preconceived ideas regarding
the
investor and his dealer or broker is too often hidden behind a fog
of indecision and lack of clarity on the part of hoth the investor and
the firm with whom he deals.
Before you can map out a course of
action for your client you must first impress upon him that it is just
as important for him to understand why certain securities are good
for him and some are not.
It is only once in a while that you will
hear of someone telling his architect how to build his house, or his
doctor how to cut opt his appendix, or his lawyer how to draw up his
will.
But the fellow who doesn't think he knows more about how
to invest his own money than any stock broker Or securities dealer
is a rare bird.
Too often, the salesman in this business takes orders
bullying
securities.
fcr^/
affection
your
This does not mean
IT.
LIKE
<>'
,
much
among you very
"This business is nothing
more than keeping people
satisfied and happy."
In a way he was
right, but we would go farther.
The building of a substantial clien¬
tele in the securities business begins with understanding what your
needs
v
since I landed in the United States.
The whole of that four months I have spent irj
Washington. That short time has been enough to inspire me with an. admiration and
securities dealer put it this way,
customer
International
(
1
ago
and assistance.
One
Director,
i
World Bank official, in outlining functions .of his institution, points put V.
is only nation in position
to extend foreign loans and it can do this through its participation in international lending institution.
Says World Bank will avoid mistakes of past international lending and will insist on supervising ex¬
penditure of loan proceeds. Lauds European Recovery Program and is optimistic regarding Western
Europe's reconstruction. Concludes U. S. must assume world leadership for generations.
•
up on where their new patients; or clients come from,-claim
is no such thing as a "new account."
People who go to a
'
.
.
By JOHN BUTTON
'MaSSS:
adopted by the borrowing
(Continued on page 37)
;r
''
»i
{..
i.
'
...
f:
^
jIJ
Volume 167 i Number 4702
THE-GOMMERClAli & FINANCIAL CHRONICLE
^hefilew Wall Street [
The
By' PAUL G. IIOFPMAN*
Mr. Babson calls attention to change in policy of Wall Street
and
Administrator
it is no.lohger trying to exploit»but rather to fgivo brotherly
help. Holds this: change will greatly lessen "boom and bust" his¬
tory of country and tend to stabilize business, prices and wages.
says
EftP head lists and analyzes
our
much
time
on
Wall Street.
worked
in
brother
there
1900
have
I
and
had
■
I
years,
———
.
There
"streets"
which
'
good times will continue
indefinitely.
other
40
over
,'.
■.
■.
need
in
more
are
many
this
country
religion besides
unrewarded.
He
had
made
a
g
e
r
a
the
Wall
discovery,
namely, that
Therefore, he
said, the ob¬
vious way to
satisfied group
present wages.
(This
especially applies to tie brick¬
layers who are a disgrace to the
entire labor
movement.)
Politi¬
of
cians
marines out of
Streeters have
been
self-
a
people liv¬
ing largely —
either directly
or indirectly—
inherited
o n
must
about
money
their
the
use
the
same
care
spending
the
taxpayers'
they do about spending
as
own.
We all need to observe
Golden Rule.
was
exploiting
others,
New Wall
This old
definitely scared.
it
U.
S.
com¬
Wall Street is
Staff of Adams & Co.
now
It is scared of
Department of Justice,
of Congress and it is
Vacha is
now
ILL.
C;
James
—
associated with the
is scared
especially
Bombs.
lieves
that
with
war
scared
Wall
of
if
the
Russian
chances
City would
be
means
wiped
their
This
put.
business
would
be
one
G.
Paul
Hoffman
that
ruined
arranged.
Wall
about
It
begin¬
the
James
C.
save
sure
it.
that
Wall
ginning to
*An
already lost trading department of Adams &
battleships; it Co., 105 West Adams Street, Jef¬
big air force will ferson K. Hoshor, President, an¬
Streeters are be¬ nounced. Mr. Vacha was formerly
a
believe
that
Commu¬
nism
can be headed off only by
making the peoples of the world
healthier, happier and more pros¬
They see that the real
fight between Russia and Abierica will consist of proving which
system will make the people of
Western Europe and Asia better
fed, better clothed and better edu¬
cated.
Instead of longer trying
to exploit people, they have a;
last concluded that they had bet¬
ter help people. This, of course,
includes the people of the United
States as well as those of England
and of Western Europe.
perous,
%
\
came
with
R.
S.
the
He
picture
had
in
idea
an
June
of
which
J
Dickson
&
Co.
before
address
dinner
by
Mr.
Hoffman
Committee
of
for
Economic
Development, New York
City, May 20, 1948.
if
he
would
about CED
the
result
alone
of-the
contribution made by Ted
Yntema,
Howard Myers and Herb Stein
to
and
other members of
well
as
the
as
?
then proceeded to enlist the serv¬
ices, first of Marion Folsom, later
and I am quoting a phrase of one
of my sons, "beat their
brains out
nessmen
of Walter Fuller to head the Field
,have
been
willing
The contributions made by the
Now
will leave CED for a
to discuss the
impact of
another idea. General Marshall in
Field Development Division under
with
Scott
Fletcher
at
helm
the
the
Executive Director have bee'n
as
"Europe, We would be well advised
if
helped the people of the
European nations help
themselves to economic'
Whether
The
accomplishments
of
the
Research Division* of CED undeh
Ralph ^Flanders and later -under
known.
Both
the
standard
several
sities
a
was
frightening
The task set by the
Congress
for the Economic
Cooperation Ad¬
ministration has no precedent in
leading univer¬
history.
By the use of American
dollars, American food, American
steel, coal and other goods, we are
to
promote
dreds
of
the
recovery of hun¬
of people in
millions
many great nations from the dis¬
astrous aftermath of the
world's;'*
legislative branches. As most terrible war.
and
matter of fact, when the Senate
Foreign Relations Commitee
these securities for isale, or
We
are
to seek above all to have
(Continued
was
on
page 36)
no
as
circumstances to be construed
an
as,
an
offering ol
offer to buy, any of such securities.
offering is made only by the Prospectus.
'*
NEW ISSUE
20,000,000 Shares
Playboy Motor Car Corporation
COMMON STOCK
associated with Shields & Co.
Wall
Street
sticks tcf /this
policy it should greatly lessen the
."boom and -bust"
history of
our
in their New York office.
It should tend to stabil¬
business; prices and wages. In¬
stead Of looking for bigger busi¬
ness,
more
wages
and higher
prices, this new policy should tend
to flatten out the curves. Any re¬
country.
ize
cession ^should, be
^gradual.
n
dent Roosevelt, should again com)e
into force.
-
doesn't
mean
that
Price
the
$1.00
per
Share
Admit Three Partners
F.S. Smithers & Co., 115 Broad¬
New York City, members of
the New York Stock
way,
Exchange,
will
admit
William
H.
Copies
of
the
broker
or
dealer
tion
act
ers
to
as
in
securities
42
:Mr. Burnham has been
with the firm for some time.. Mr.
thony & Co.
dealers
be
obtained
only
and
in
in
which
the
from
who
States
the
is
in
a
undersigned,
member
which
such
Prospectus
of
or
may
from
any
other
the National Associa¬
persons
legally
are
be
qualified
to
distributed.
TELLIER & COMPANY
and Robert B. Smith¬
limited
partnership
on
1.
White in' the past was with Lazard
Freres & Co. and
Tucker, An¬
may
participating in this issue,
Burnham
and Cleveland S. White to
general
July
Prospectus
of Securities Dealers, Inc.,
The partnership,
old Area Theory which. I have
preached for 30 years, which was
temporarily suspended by Presi¬
tfhis
F. S. Smithers & Co. to
May 27,1948
ring
very
responsibility of administering the
Foreign Aid Program.
colleges/ They are
accepted by economic sections of
execu¬
rang
loudly in
end1
Government, in both the
would
ray particular case, a
few weeks
ago, when I found my¬
self fading the rather
in
all church groups as being au¬
thoritative. They also1 are ^highly
regarded by the United States
words
around the world I do not know.
do know that
they
are
material
recovery.
knew
Seeretary Marshall
those
1
monographs
classroom
hundred
that
fefl
Ralph
by CED arfdthO Policy. ^
authored by the businessmen
tive
we
Western
ment.
after
de¬
that it we wish to protect our free
Institutions and keep alive the
spirit
of "freedom
in
Western
members contributed impor¬
tantly to the attainment of our
continuing high postwar employ¬
Rubieam,
address
by him at Harvard Uni¬
versity last June said in substance
tee
Ray
commencement
livered
so
:
we
moment
MariohPolsomy arid Walter (tfulldf
WASHINGTON, D. C.—Harry
Landry has become associated
Co., Met¬
ropolitan Bank Building, mem¬
Mr. Landry was formerly
Washington Division Manager for
Babson's Reports. At one time he
to,
days on end'," that has given the
Development
Division, and 'of material unique quality.
Ralph
Flanders,
the
Research
The Foreign Aid Program
Division.
with Robert C. Jones &
change.
our
Advisory Board headed by Sum¬
ner
Slichteri However, it is the
buy
fact that these scholars and busi¬
M.
bers of the New York Stbck Ex¬
staff,}
of
ours, WE would do our best to
work out the details for both.We
This advertisement is not, and is under
Robert C. Jones & Co.
our
members
Bennett Spanier & Co.
The
,
em¬
ployment by CED of top scholars.
All of us, of course, recognize the
and
Harry Landry Now With
my
Ad¬
as
by their knowledge/
publications.
.What About Prices?
...
If
up
fairly
Vacha
old
has
faith in armies and
is hot
then
Then the Honorable Jesse Jones
entered
1942.
Street is
think
Rule.
signed
finances
And
as though
project had been sunk right
along with the Pacific Fleet.
preaching of Hell-Fire by
put
religion
into
new
needed
our
churches
to
been
Pearl Harbor. It looked
their rural ancestors.
The
said
our
not
mutual
; uhderstahding; With
Uncle Jesse. We agreed to buy his
and
post
new
is, of course, its respon¬
sibility and high Quality. That is
a
idea
my
research
industry, large
came
for
The important fact
so
written by the scholars employed
had
determine
struck
was
of
activities, but also for
economists
the
Golden
to
from• grace and became a United
States Senator, are likewise well
and
"Fear of God" into Wall Streeters
*
of the 8 million unemployed,
to
me
Incidentally,
I
for
war
^ ihat4^e had4 time to
well
ning
only
from
sought Bill Benton. We
devote to
the; project. By the Fall of 1941,.
a
group of business leaders and
the.y would be lucky not to
own lives by the bomb¬
ing. The preaching of the Atomic
Bomb by scientists is putting the
the
not
and small. I was asked to chair¬
man ' theprdject. Immediately I
tails. In his usual energetic manfief he dashed around the country
and
the
was
proceed forthwith
plans
all commerce and
That idea I gave to Bill Benton
and told him to work out the de¬
lose their
>as
idea
that peace
mass unemploy¬
ment. He envisioned a grass roots
operation that would encompass
ness leaders. He- was at -that time
are
50-50 that New York
His
reconversion
expansion,
would not bring
talking to University Presidents
pfofessdrs of economics and busi¬
Streets really
be¬
there should be a
Russia
should
peace time
the tempera-
&
^
questioning
widely acclaimed that they
work in solving the problems Of heed only' the briefest mention.:
how high productive employment 'There is general agreement' that
the; 3,000 committees which were
could be attained and maintained
in a free society.
organised and the 70,000 commit-*
James Vacha Joins
CHICAGO,
it
bold
ture of the
Street
complacency has
pletely gone.
the
whether
Chinese.
or
Council.
develop
quick
raise
/■■■•■'
■
-
ministrator of ECA, they seemed
to be most impressed
by the fact
that I was Chairman of the
Board
of Trustees of CED.
to
Atlantic
to
•
-
..
fitness
that
drive the sub¬
the
engaged in consid¬
great effort had not gone
y:v";'-
•
......
Advisory
-
on
Rogers discussed the submarine
that industry should prepare for
peace in time of war. He proposed
ocean
to
the
money.
These
Conclusion
perfectly safe whatever
boiling point. "If you ask me how
might happen, believing that New
that
can
be
Usually when I come home from
done," he added, "my
York City with its wealth was fast New York
City, I am rather bltie answer is, I've given you the idea,
becoming the financial and rul¬ and pessimistic.
The selfish, you work out the details."
ing center of the world.
wasteful and unpatriotic atmos¬
;
In 1939 I had a great idea. You
Frankly, the game of old Wall phere found there, not only on will recall that in that year we
Wall Street but along the entire
'Street
was
to
sell
out
to
the
had approximately 8 million tinpublic when prices were high, let¬ length of Broadway, has made me employed; for the first time in the
ting the market drop to low levels sad. For the first time in some history of the United States we
until the public was forced to lose years I have come back truly op¬ were
'finishing a decade with
timistic. Why? Because there are fewer
their stocks, and then
people employed than at
re-buy them
real
and make millions. Until the Se¬
signs of Wall Street getting its beginning. My idea, both great
curities and Exchange Commission religion. All we need now is to and
simple, was that we should
this
new
came into
spirit*-spread enlist the services Of the best
being Wall Street could have
throughout
the
lie, browbeat, steal and get away
country to every brains from our universities and
with it. In short, Wall Street lived city, town and farm.
from business and put them to
Americans, Europeans
grim to face.
by Marion Folsom of the Business
felt
men
too
are
rather suspect had been sold him
Wall Street.
their
Cooperation
of his columns Will
one
<§>—
.
t
ly,
or
ever
Economic
He said he had devoted much of his
personal time and had
erable research to find some means to
put an end to it. His
for
by
for
responsibilities under Foreign Assistance Act. Declares $15 billion
with Marshall aid, for several
years ahead. Warns
menace.
since. Certain¬
close
Babson
present
...
During World War I in
Stockholders, manu¬ sub marines
facturers, and -Shopkeepers must could not opbe content with smaller profits. perate in boilWage workers must do more work i n g water.
an
office there
Roger
For
men.
spent^1■.
our
alternatives
Wall Street is getting religion! This.does not mean that they are
becoming interested in any form of theology or some special church
denomination. But Wall Street certainly is awakening to Jesus' basic
have
19
Objectives of Our Foreign Assistance
By ROGER W. BABSON
teaching—namely, helping
(2327)
jBroadway, New York 4, N. Y#
DIgby 4-4500
20
(2323)
THE
Foreign Aid
COMMERCIAL
&
FINANCIAL
CHRONICLE
the Economic Horizon
on
By SIMEON E. LELAND*
,
Thursday, May 27, 1948
Opposing Factors
"Business Outlook
Dean, College of Liberal Arts, Northwestern University
Dean Leland maintains
prospective appropriations for foreign aid do not add up Id much more than
various acts of assistance over recent past.
Believes (1) prevailing currents still inflationary; (2) rate
of upward movement is declining; (3) government will continue or increase current rate of
expendi¬
tures; (4) rel.ef from high taxes and prices is remote; and (5) business recession this year doubtful.
The most
important Single factor
the horizon, which even nowis shaping the course
the economic, social and
political life of the nation, is the current behavior of Russia.
So real is this
specter of Russian determination to settle all international matters ac-
of
cording to her
that
on
<S>-
dictates
own
tional government on the economy
can
not
be
neglected.
Is the
rearma¬
ment has been
budget
forced
next few
upon
be increased over the
years? Are the increased
to
availability of consumer
abetted
by
continually
prices.
(Continued from fifsv ?age)
but
relatively;; short
reaction
conversion.
strong
Then
followed
recovery,
ham¬
it was in its early
stages by long and costly indus¬
prices for
many
while and will add
a
goods for a
burden to the
domestic economy. The force ex¬
erted will be on the inflationary
And
for
good, as
world, this
problem should be kept in hand.
well
that
as
We expect
receive
our
of
own
the
foreign nations which
assistance
to
halt infla¬
»
tion, to stabilize currency arid ex¬
change rates, to increase .produc¬
tion of foodstuffs, livestocoal,
electric power, etc., and tq. do a
number of other things, in, order
enhance
to
chances' for
the
of the program.
success
the
Large as
the total program is, both in
aggregate
and
from
the
the
stand¬
point of drains on our own econ¬
it is not large enough to do
omy,
the
job unless substantial coop¬
eration is given by the recipient
nations.
we
It is difficult to see how
them to
ask
can
their interest than
to do in
our
own.
we
do
more
are
The
in
willing
more
our
price and cost levels climb,
the more illusory ave the benefits
own
to
us
from. the international .re¬
covery
program—and the less the
rest of the. world will
With
Federal
get
as
well.
expenditures
of
$42.5 billion in 1947 and projected
expenditures of $38 to $40 billion
in fiscal
ence
of
1948 and
the
*Excerpts
billion.
its
1949 the influ¬
activities of the Na-
from
an
address-by
or
what
might be
called
peace¬
time, tax reductions.
At present, as at almost every
period
in
history,
conflicting
forces, some generating inflation¬
ary tendencies, others working in
the direction of liquidation and
deflation, are at work. They must
Prices, of course, have been
moving steadily higher since 1939
with but few temporary reversals
of trend.
It matters little whether
Of that total 44%
taxation,
which
was
incidentally
was
better percentage showing than
in the three preceding major wars.
a
The remaining 56%, or $214 bil¬
change is measured by whole¬
lion, was raised through borrow¬
sale or retail prices, by consumers
prices, cost of living indexes, by ing. About $128 billion of this
came from
sales of securities to
the price of selected commodities
non-bank investors. This was the
be
identified and their relative or prices paid and received by
least inflationary type of Treas¬
pull determined.
In
the time farmers, the course has been up
ury
borrowing, since it repre¬
available not air factors can be and up.
sented mostly the absorption of
analyzed, but at least the drift
Retail
prices, too, have
ad¬
savings.
But non-bank investors
of some of them can, perhaps, be vanced faster than sales volumes.
did not purchase all of the war is¬
determined.
This
condition
needs
to
be
Among the potent inflationary watched carefully, particularly as sues, so that the remaining $86
billion had to be financed through
forces is the sustained flow of the number of units
purcnased the banks. Of that
total, $64 bil¬
personal incomes and the high declines.
Dollar
volumes
make
lion of Treasury securities were
level of purchasing power widely business
appear
more
healthful sold to commercial
banks, and
available throughout the economy. than
it
may
be.
These rising the other $22 billion were
bought
This flow of purchasing power
prices soon become rising costs
by the Federa Reserve banks.
arises not. only from continued Sales volumes are affected
by deThese sales of war issues to the
production but also from enhanced m a n d
curtailments
as
prices
banks were at the root of the rise
rates of pay. It is a function both
mount higher. These declines can
in the money supply which led to
of continued productive activity be
postponed for a time, as pur¬
inflation. In the narrower sense,
and of rising rates of remunera¬
chasing power flows more freely
tion.
money supply" means demand
among consumers,. but with re¬
Credit
instruments have fol¬ peated price increases "the situa¬ deposits in banks and currency
outside ..banks.
When
a
bank
lowed the same
pattern.
Bank tion becomes more precarious—
makes a loan, it ordinarily cred¬
loans doubled from June 1914 to the question is
merely "when." its the borrower's checkirig ac¬
June 1920; (i.p. from $15*2. to $30.7 (The answer Is worth much more
count.
This
increases, bank
billion), because a large share of than the traditional $64 and some
war-plant expansion carried on multiples thereof.) These rising deposits, and hence the money
Similarly,
when
the
for the government was financed costs also move further up the supply.
scale the break-even points so im¬ Treasury sold war securities to a
via. private loans.
commercial bank, the latter cred¬
; Consumer
credits which were portant to producers. The higher
these break-even points rise, the ited the Treasury's account.
As
drastically curtailed during the
more susceptible given
industries the Treasury spent the money, it
war
jumped markedly between
the
.
become
to
losses
was
deposited by the recipients in
their banks.
The net result was
a
If the definition of money
From this background, it is ap¬
parent that the two most power¬
ful
behind
forces
business boom
backlog of
the
postwar
the
were
consumer
enormous
demand left
from the war, and the great
over
rise in money supply and hence in
purchasing
power.
After the first
few months of readjustment fol¬
lowing V-J Day, the question
not
whether
was
have
would
we
a
boom, but rather, how long would
it last. The recovery in 1946 took
the Federal Reserve Board's index
of industrial
production, based
on
the 1935-1939 average as 100, from
163 in December of 1945 to 182 in
December of 1946.
When Will Boom Terminate?
By €he beginning of 1947 many,
though not all, observers thought
that
the business uptrend would
some time
during that
terminate
Most of these felt that the
subsequent recession would be
year.
mild
and
of comparatively short
Among the reasons fre¬
quently mentioned for the com¬
ing of recessions were: (1) the
pipelines, chiefly in consumers'
goods, were gradually filling up,
and this along with existing
high
duration.
prices would strengthen
resistance
down
in
and
cause
consumer
slowing-
a
their
expenditures; (2)
exports would turn down; and (3)
the rate of inventory accumula¬
tion would decline.
?
.But
the 1947 recession failed to
materialize—in
production
was
fact
for
and
1947
industrial
,
higher at the end
of the year than at the
as
a
beginning,
whole
10% larger than for 1946.
reached
it
was
Exports
an
extraordinary peak:
during the first half# although
they, did taper off thereafter. ;The
of
rate
tories
accumulation
dropped
of
off in
,
the
inven¬
second
quarter, but then picked
up again.
declining, con¬
sumer
expenditures actually in¬
creased.
In addition, some more
or less unpredictable factors en¬
And
instead
of
tered
into the 1947 business
rise,
including very poor crops in Eu¬
rope which stimulated the demand
for American
foodstuffs; the fur¬
ther
in
advance
rates and
wage
earnings; and the marked increase
in
captal expenditures
plant and equipment.
The basic
.
generated
by
1945 and 1946. Indeed, the scar-'
sudden
and.
unexpected
price
city of consumers durables was
'
'
probably more responsible for the changes.
rise in the-
a
is broadened to include
time and government deposits, the
increase was $97 billion—that is,
from $74 to $171 billion.
prede¬
obtained by
waRtft^ ex¬
was
supply
goods, trial strife. But the pattern has
rising deviated in that this postwar boom
outlasted
process
supply of money from $46 billion
on June 30,
1941, to $106 billion
on June 30, 1946, or a
gain of $60
business
already
case, the money
increa&t* accordingly.
The result of this
pered though
has
<61tixCr
In
was
pansion
we
curtailments. The enforced reduc¬
tions in supply will tend to hold
side.
supply
the
•
up
checks.
in
last half
1945, due to the sudden cessa¬
tion of the huge volume of war
orders and to the problems of re¬
business activity in the
of
cessors, so that purely on a timeFuture Saving Problematical
expenditures, if such are contem¬
lapse basis, the long-advertised
are
embarked
In addition to using current in¬
plated, to be covered by taxes or
postwar depression really is over¬
upon
a
gi¬
by increased borrowing?
If ex¬ come and credits to finance pur¬ due. Two questions are involved
gantic
remopenditures are not to be increased, chases, savings have likewise been here: (1) what has kept this boom
bilization
o r
are
taxes to be reduced or will employed. The redemption of U. S
going; and (2), is it likely to slide
"defense
debt repayments be stepped up— sayings
p r obonds is y indicative of off the edge some time in 1948.
this. Increased saving can relieve
gram. Indus^
or will increased military expend¬
trial
Inflation Background
produc¬
itures prohibit further tax reduc¬ the pressure on the price level
tion, the allo¬
tions, call for future rate increases but how much saving will take
Before
dealing
with . current
cation of ma¬
or be financed by loans?
If loans place in the near future is prob¬ trends, some background informa¬
terials and t e
lematical. In spite of the speed of tion
are to be utilized, will citizens or
may be helpful in showing
diversion
o f
banks supply the funds? ... These the reconversion of industry to the how we arrived at our
present
labor
from
and many more questions can be manufacture of peacetime prod¬ condition of record
Slmeon E. Leland
peacetime out¬
private
to
asked. The point is, so important ucts, notable shortages still exist.
put, peak employment, large pur¬
public contract work have begun is the influence of governmental Among the conspicuous shortages chasing
power, and high prices
slowly to indicate signs of this fiscal policy on the level of eco¬ is that of housing. In 1947, it is and living costs.
change. The talk about the rein- nomic activity that its operations reported, 1,250,000 new families or
The common phenomenon of
stitution of gasoline rationing and must be taken into account in es¬ households were established. The
all these postwar business booms
the reduction in the manufacture timating the course of economic number of marriages per annum
has been inflation.
All
of
our
of
has been running about a half
pleasure automobiles is not events.
great commodity price inflations
million more than this, indicating
merely idle talk. It springs from
have originated in war.
They
No Decrease in Public
a
considerations seeking to maxi¬
probable demand for future
have come about because the sup¬
Expenditure
mize again our amazing war po¬
homes of rather large proportions.
ply of money and hence of pur¬
tential.
It may not be too much to say, In contrast with the number of
Another factor with internation¬ therefore, that in the next few marriages and new families only chasing power, has grown more
rapidly than the supply of civilian
al import is the Marshall Plan for years, provided war does not in¬ about 833,000 dwelling units were
goods.
Major wars involve the
European Recovei y. Congress, in tervene,^ about one-fifth of the completed last year. The repeated immense
production of military
April, authorized the extension economic activity of the nation delays in finishing houses under
good£ for destructive purposes
of $5.3 billions in loans and cred¬ will be attributable to the ex¬ construction
indicates
innumer
But
people
receive wages
for
its as the first year's contribution penditures of governments.
The able shortages in building sup¬
making these things, arid thus ac¬
toward the economic and physi¬ deferred
demands of state-local plies and hardware—all of which
quire purchasing power at a time
cal rebuilding of Europe,
This is units for streets, highways, sewer are becoming more plentiful with when
the available quantity of
"the first step in a projected ifour- systems, public buildings and the the passage of time. Motor cars
civilian
goods is limited.
The
year plan envisaged to cost about like need also to be considered. are now obtainable with shorter
process is aggravated bygovern¬
$17 billion.
Any steps toward war or rearma¬ delays than heretofore, but the
ment borrowing for war needs,
ment on a significant scale will supply is still not great enough to
since governments find it impos¬
No Great Increase in Foreign Aid
enhance the economic impact of break the seller's market, or com¬
sible, or at least inexpedient, to
Great as are the appropriations public
expenditures.
It seems pletely eliminate black, dark or finance
great wars entirely by
for foreign assistance, they are doubtful, in view of the gathering gray market practices.,
Many raw taxation. The result is an unbal¬
not much greater than the assist¬ waf clouds andi the -international materials and
producer's goods aire anced: national
budget, a rising
ance
extended in various forms power bluff being played by. Rus¬ also short in supply.
Steel, for national
debt, and* an increase jin
during the last few years.
The sia, if public expenditures are apt example, is scarce. Gasoline and
the money supply which outruns
impact of the burden, therefore, to decrease materially in the near fuel oil, too, although produced in
the production of civilian goods.
on our economy is more
likely to future. Even the hacking at the greater quantities than
before, The
pressure of excess money on
fall in the future than in the pres¬ Federal budget by a new political are not adequate to meet current
goods sooner or later develops
ent.
Many of the goods needed administration will probably not demands. These conditions will
into price inflation.
have
already been produced. materially reduce the aggregate of sooner or later be corrected but so
From July 1, 1941 through June
Shipments abroad are, therefore, expenditures. Congress has dem¬ long as shortages exist,; an up¬
more apt to be felt in continued
onstrated
that this
year.
This ward pressure is exerted on the 30, 1946, the government raised
the enormous sum of $383 billion.
shortages rather than in additional seems to spell gloom for further, price level.
Now
us.
in
,
reason
for
new
for. such large
spending in 1947 was the great
strength of the demand for goods,
together with enough purchasing
power
to translate this demand
into actual buying in spite of high,
prices. True, by the end of; 1947
the wholesale
commodity price
index
was
about 100%
above the
level, and the retail cost
living index was 67% higher.
prewar
of
But the
indicators of
purchasing
.power, as compared with pre-war,
had
advanced
even
more
than,
prices.
Average weekly earnings
workers, for example,
135% higher at.the efid'oi
of factory
were
1947 than for the 1935-1939
age.
;
Disposable
after
money
taxes
personal
was
supply
178%
aver¬
income
higher;
275%, and
accumulated personal savings in
the form of time deposits and
gov¬
ernment bonds were up more than
215%.
was
up
Thus the public
as a
whole
possessed enough funds to buy the
gain in bank deposits—and per¬ gobds being produced, even?af ijie
That industry
Lqlgndbefore Conference decline in consumer's credits than
can
absorb all
Production? 'of> the American Ffeder&f regulation^;' Recent in- wage; demands without increasing haps also in cash, if some of the prevailing high [ prices; although
ManagementtAssociation, Chicago, fctease^too, cam be largely attrib¬ prices i is and has been illusory. recipients chose to take cash rather persons r/Mtltf fixed
incomes^- hr
to
the
May 13,
i "
• •
-riJ. uted
present
increased
(Continued on page 43)
than to deposit their government whose' incomes tad
H
lagged te&nd
Dean
on
smaller
price increases, were already feel¬
ing the squeeze. ^
At the
a
seemed
to
activity
reasons
were
ing,
A variety of
for
All
this
belief, such as a probable slowingdown in capital expenditures for
new
plant and equipment; the
further
cutting down of deferred
demand; the doubt that net ex¬
ports would hold up to the ex¬
traordinary level of 1947, even
With the Marshall Plan; tighter
Credit conditions, and the prob¬
able deflationary effect of the use
of the government budget surplus
cession
would
was
I
commence
before the year
over.
There is
much
to
be said
this viewpoint, and indeed
prove
steel, that impending tax
duction
would
the
a
for
re¬
reduction
enactment
add
something to
spending stream,
comes
of
the
the
European
Re¬
money-
supply.
for their continuance?
it could
and
law
the
and
consumers'
continued
during
output
high business activity
the first half.
Physical
has gone right along at
about the rate
of
1947.
Board's
The
index
Conclusion
j
j; I think that the opposing factors
today are pretty much as they
have
fraught with uncertainty.'
bromide sounds, impressive,
and also has the advantage of hot
been for
saying anything. However, since
something more specific is doubt¬
j
less
expected, I will' .take the
some
time, except
for the armament
question and a
possible
change in psychology
from that existing after the Feb¬
agricultural price drop. The
principal element on the downside
ruary
Federal
is still the piecemeal
catching up
with deferred
It
March
because
of
the
difficult at this stage to
is
appraise the effects of larger ar¬
chiefly be¬
itself can
time in accordance
mament expenditures,
cause
the
program
change at
coal
any
world
.with
strike, and will doubtless be down
again for April for the same rea¬
son. Perhaps we should
pay more
attention to the plans of Mr. Lewis
in. making month-to-month'fore¬
casts of the production index.
events.
Proposals
made thus far indicate the boost¬
military
of
ing
appropriations
$11 to about $14 billion in
the fiscal year 1949., This addition
of $3 billion is notary stupen¬
dous when compared
with our
from
national product, now run¬
of around $240
a
year.
Nevertheless, il
have a very considerable im¬
gross
Prospects of Last Half of 1948
ning at the rate
As to the prospects for the last
billion
half of
will
1948, two conflicting de¬
velopments have
o c c u r r
ed
pact on items already in tight
supply, notably
steel products.
And if future events should cause
plague the forecasters. The first
the truly precipitate drop* in
grain prices in February, accom¬
panied by weakening in various
other prices. In itself, this drop
represented the correction of an
overextended price level.
Much
improved
prospects
for
world
crops,
together with the nearcompletion of government buying
flationary.
crop
To illustrate the kind of mental
knocked grain prices off the
dizzy peak to which they had
ascended.
They have since re¬
gymnastics involved in contem¬
plating the effects of that sort of
program, take the single question
of the Federal budget. How would
the additional revenues be raised
wheat
for
the
current
year,
covered
likely. to
somewhat,
get back
but
are
(Continued from page 3)
J
cent
government and municipal
prices suggests that the re¬
increase in business loans
may
be short-lived. Moreover, as
rise in
bond
Another
was
factor
on
=
contrasted with their action a year
ago,
the
mentioned earlier—
plunge .and say that I anticipate
continued
high
during the rest
(business activity
<|>f this year, witt
the
production
industrial
index
for the last six months combiner
the
inability of
commodity
prices to respond to the inflation¬
ary implications of recent govern¬
ment pronouncements,
intimates
that the arrival of this bull mar¬
ket is being
servations
taken with some re¬
the business level.
at
Dow Theory
Unrealistic
Our studies of the historical re¬
lationship between security prices
and earnings measured in terms
unit
of
production reveal thai
justify a market
approximately 180 on the
current earnings
level of
Dow-Jones
Industrials
averages.
Without in any way affecting this
estimate, a 10% deviation either
side is entirely understandable, and
in fact has largely occurred dur¬
being probably not more than 5 %
different from the first six months
ing the last year and a half. In
this connection, we feel that the
Dow Theory
concept has long
since been out of touch with eco¬
The reason for this appraisal i<
nomic realities. Nevertheless, its
Simply that the possibilities foi followers are sufficiently numer¬
enlarged armament, added on to ous to warrant expectations of a
the other elements previously dis¬ material widening of the 1946-48
cussed, appear sufficient to post¬ trading range as attempts are
made to capitalize upon investor
pone once again the long-awaiter
postwar depression. I would no' hopes of a broad upsurge in se¬
hazard a guess as to how long il curity values in accordance with
could be postponed after 1948, be¬ traditional stock price behavior
cause
future world happenings patterns.
In view of the foregoing out¬
are unpredictable.
So in conclu¬
sion, here are one or two observa¬ line of fundamental conditions, for
tions concerning the more distant investment accounts we cannot
other words, if there is a re¬
action it will not be severe.
In
is,' the cumulative effect of
high prices on those living on
fixed incomes, or whose incomes
future: •
;
nave
lagged. Such persons can
Judging from what happened
perhaps live off their savings for
after our past wars, the usua*
a
while, or even borrow; but
eventually they will have to cut pattern would be for us to have
expenses unless they find some pur primary postwar depressior
and get it over with, and then tr
way of augmenting their income.
A third factor is that even al¬ enter on a lengthy period of good
lowing for the foreign-aid pro¬ business. But the pattern will
have to be reconsidered if we are
gram, net exports in 1948 may
going into a prolonged armed
decline somewhat from thd
huge
truce. That is something new for
1947 total—with the qualification
this country. We are not used tr
that exports to Europe are
likely
to spurt in the latter part of this carrying such heavy military bur¬
year.
The rate of inventory ac¬ dens in peacetime. If it were not
cumulation thus far reported in for world uncertainties—or to pul
1948 is a little less than a year it differently, if it works out sc
that we shall have real peace—
ago. Bank credit has been some¬
justify other than a high degree
of liquidity. While the evidence
suggests that the
present and
prospective trend of profits-perunit-of-production
warrants
a
security price level not very far
above current values, there is not
sufficent evidence
to
on
hand
as
yet
permit closing one's mind to a
possible lifting of that ceiling at
some
later
date.-Experience sug¬
gests that following such an un¬
interrupted rise as.the recent up¬
ward move, a
reaction is in order,
perhaps from
a
somewhat higher
j? level, Despite the extent of any
for prosperity in the 1950's. This such reaction, signs point to a re¬
sizable
government surplus for
this fiscal year has enabled the Is particularly so in view of the
sumption of the present, inter¬
the sights to be raised by an¬
worldwide need for goods, and the
mediate uptrend. Short-term in¬
other $10 or $15 billion a year, Treasury to whittle down the na¬
tional debt by $6 billion since last rapid growth in our own popula¬
bringing the Federal budget up
vestment policy should be tailored
tion
which will
require more
to say $50 or $55 billion instead June 30, nearly all of which rep¬
schools, playgrounds, community to that prospect. The speculative
resented
a
decrease
in
the
of $40 billion, the effect on busi¬
d§bt
centers, houses, home furnishings
risks, however, created by the ex¬
ness
activity would undoubtedly owned by commercial and Fed¬
streets and roads, electric and gas treme
eral Reserve banks.
be strong, to say nothing of in¬
vulnerability in the under¬
utilities, and many other things
On the other side
to
was
of
gresses.
downside
that
Effect of Armament Expenditures
pro¬
duction, after seasonal adjustment,
was 192 in November, 192 in De¬
cember, 193 in January, and 194 in
February. It then dropped to 192
in
their
a program might eventually
require, and partly because of its
psychological aspects.
Reserve
industrial
with
such
existing at the end
of
Program,
covery
"
1948 is
This
demand in a grow¬
im¬
We have
plications of increased spending, ing number of lines.
and that a third round of wage
seen it in such consumers'
goods
increases, should it occur, would although I think these were pretty as
tires, radios, some household
well discounted in advance. But
intensify
inflationary pressures.
appliances,
glassware,
the possibilities
shoes,
cloth¬
in an' enlarged
The lot of business prognosti¬
Other things
armament program have caused a ing, and so forth.
cate^ is not an easy one, but thus re-appraisal of earlier expecta¬ being equal, one would expect
far in 1948 most of them can point
more and more industries to reach
tions, partly because of the un¬
with pride to their predictions of
the
caught-up stage as time pro¬
known billions of dollars which
the
sudden
Still, when we read of
burst of anxiety to ob¬
tain both new and used automo¬
These things, in brief, spell pros¬
perity.
What are the prospects
to be correct. But the whole
tax
Bull
.
business activity
total
in
-
to reduce the national debt. Per¬ line of reasoning has been thrown
haps the underlying thought could into the realm of uncertainty by
be expressed in the phrase "This the second development—namely,
the President's rearmament speech
can't
go
on
forever."
On the
other hand, it was recognized that on March 17 which followed the
large backlogs still existed in such growing tension in our foreign
relations.
Perhaps I should add
leading industries as automobiles
and
of events.
the theory that prices in
on
a
Market?
hard to measure, .and is notori¬
ously subject to the shifting course
of
amount
Is This
This sort of thing is intangible anci
At the risk of repetition, I
peacetime, and is operating at or biles, it is. worth while to make
near its present
capacity. Labor a mental note. Further concrete
I Such signs and portents were is virtually fully employed, per¬ evidence of that sort might make
not enough to bring about an- im- sonal incomes are the highest in quite a difference in the outlook.
mediate decline in total produc¬ history, the population is growing i These are some, of the
opposing
tion, because they were offset by at a faster rate than for many elements in the business situation,
the strong demand still existing years, and there is still a backlog and at the moment
they are jusi
for steel products and other im¬ of demand for numerous articles. about
offsetting each other. After
portant durable goods.
But the Price inflation has cut deeply into trying to strike a balance between
the
feeling grew, though it was not
purchasing power of the dol¬ all the various factors, I should
but has
been
unanimous, that the scales would lar,
more
than really like to declaim that "The
be tipped later on, so that a re¬ equaled by the rise in total in¬ business outlook for the rest oi
be that the
advanced
,
general might go down.
long-expected recession Was due
to appear some time in the Sec¬
ond half of this year.
^
that customers were
certain
21
(2329)
night be on these grounds, and not on to move away to .some
extent
good;' lower the grounds of conferring any real from the spirit of caution evident
Even the used benefits to the civilian economy. in February and' early March.
be>'Slackening.-
cated
during the first half of 1948;
Opinions
differed
as
to
what
would happen thereafter,: hut the
concensus
CHRONICLE
this indi¬ should like at this point to sum¬
doing marize the business situation as
retrenching it stands on May
19, 1948. The na¬
and were willing to wait awhile,
tion's industrial plant is
turning
at least as to some of their buy¬ out goods at a
record rate for
to
This time;, the r feeling was 'Wide¬
spread that enough momentum
existed to carry business along at
current rate of
FINANCIAL
so
market in automobiles seemed
car
&
attendance;
restaurant-tips.
beginning of 1948, busi¬
about the
movie
business not
club
forecasters took another look.
ness
COMMERCIAL
THE
Number 4702
Volume 167
un¬
the top
crop weather
bad.
'
near
what
harder
to
obtain.
And
the
of the picture,
being caught up
with the demand for such impor¬
we
are
outlook
the
in
judgment
my
lying economics, even more now
far from
George F. Gomersall
Dead
Gomersall of Toledo
homes, machinery, freight cars, died on May 21 of a heart attack
oil pipelines, and public utility while trying to separate his large
tant
durables
as
automobiles,
equipment. Thus it is unlikely
that operations in the steel, auto¬
George F.
boxer and a cocker
spaniel puppy
than in the recent past,
cannot be
overemphasized.
Egerton President of
fight. Police had to shoot
dogs in order to give the
should become very
-—by renewed deficit financing, mobile, and some other durable
rescue
goods
industries
will
slow
down
squad a chance to try to
The question immediately arose or jacking up of taxes, or going
Th£* Savings Bank Officers'
in
the
last
half
of
save
the
dying man's life. Excite¬
this.
year.
Re¬
—would the effects of the agricul¬ to a still higher level of prices and
Forum1 'of Group IV comprising 68
lated to this is the very large ment of the dog fight apparently
tural price drop extend further, wages, or any two of these or
savings bank offices in Manhattan,
even
all three?
Someone will volume of capital expenditures for caused the collapse of Mr. Gomer¬ the Bronx and Westchester County
so that in future years we would
new
plant and equipment.
Ac¬ sall who had suffered a heart at¬
say,
cut
non-essential
government
point to February, 1948, and say
announced today the election as
cording to a survey published in tack two years ago.
f'That was the signal." Certainly spending. Certainly this ought to
president of Edgar C. Egerton,
April by the Department of Com¬
be
done,
but
it
could
hardly
turn
Mr.'
Gomersall
was
well
known
there was some reason to suppose
Vice-President and Mortgage Real
merce, planned expenditures for in the Ohio territory. In 1949 he
that such a sharp price reaction the trick alone, assuming $10 or
Estate Officer of the Seaman's
these purposes in 1948, will; be
became affiliated with Ford R. Bank for
would induce caution, which in $15 billion added for armaments.
Savings.
15% higher than; in 1947, although
Weber & COi, a connection he re¬
It should be realized, of course,
turn would strengthen the expecOther
officers ' elected ' were:
plans of course are subject to tained, although he also repre¬
Vice-President:'
William
Mc;tation of a downtrend after mid¬ that great business activity sup¬
change. Wage rates are still edg¬ sented the Leffler Corporation' in
year^
And an examination of ported by orders for armaments
Kenna, Treasurer the American
ing
upward;
there,
have
been
some the sale of Axe-Houghton Fund,
business mews during February does not call for cheers from the
Savings Bank;: Secretary, Albert
third-round advances and; there
Inc., and Axe-Houghton Fund B Sturcke,
iand the first half of March did purely economic standpoint. That
Jr.,
Secretary
Union
may be others, even in the face
'1J
Indicate a spirit of hesitation, at kind of business means the diver¬
Square Savings Bank; Treasurer,
of. stiffening resistance. We may
sion
6f
labor
and
materials
from
least in. consumers' goods. Here
E. D. Fox & Co. Foiming Theodore J. Kegelman, Asst. Vicesee
more
strikes,, which would
are >some of the news items ap¬
productive civilian purposes to
Pres., East River Savings Bank.
temporarily reduce output but
D. Fox & Co.,"members of
destructive
m i 1 i tar y purposes.
The savings banks represented
pearing at. that time: decline in
which would f mean that, much the New York Stock Exchange,
tine. sale,s and cutback of produc¬ There is no true . economic gain
in Group IV hold approximately
more production,later to catch up
will be formed as of June 4. Of¬
tion; farmers become more care¬ from .battleships, bombers, and
$5 billion in deposits which repre¬
In the present state of The: recent lowering of Federal fices will be located at 2 Wall sents 50% of all deposits held in
ful with their cash; mail order bullets.
sales slow down; substantial dip world turmoil and turbulence, the income taxes will add something Street, New York City. Partners New York State and 28% of all
in-furniture sales; candy makers public is willing to support an to consumer purchasing power, will be Elliott D. Fox; member of such savings deposits in the na¬
worried about drop in sales; pub¬ enlarged armament program as a and will
■'
:•
moderately increase the the Exchange, and Oscar K. Wil¬ tion.
this
season
unless
to meet a $50 or
$55 billion budget
in
a
Bank Forum
both
(
,
.
..
lic is buying fewer shoes due to
matter
high, prices; less demand for. tex¬
tiles; department store sales coni-
is hoped, as a method of prevent¬
pare({?less favorably with
still
ag^tjh^n ;.jWasthe
a
year
case, earlier;
of
self-protection and, it
ing another
more
war
costly.
which would be
The justification
for armament expenditures must
inadequate supply of venture
cgp-
..
liams,' who will acquire the Ex¬
change membershij) of
yj. Finally,\ after the prospective
Carroll
increase ^ih
been
B.
.
d
armaments - became
known, public psychology seemed
Alkcr.
i;h^! late
Mi;..' Fo^V^s;
active} &s #ji individual
broker. ^
oi
fisAuj
The
Foriim
Savings
provides
Bank
Officers'
opportunity to
an
Savings-bank' officers2forthe> interchange of informaftidh' in order
to keep abreast
trends in
the savings bank ind&&Fy.>::
.
22
(2330)
THE
COMMERCIAL
Taft Committee Attributes Inflation Trend to
give,:
any
weight
According
to
the
,
"It is gener¬
ally
agreed/
that
still
we
face
infla¬
an
cor¬
is
question
a
should
be
which
studied
far
we
feel
more
ex¬
News aiiion Banks
tion,!
in
one
which demand,
certainly
in
"
the world and
probably
the
in
NEW
State
.
,
.
.
.
<
; "We do not purport to deter¬
mine the relative importance, of
of
balance than
a
formerly supposed, but agri¬
prices
have
recovered
somewhat, and there may become;
cultural
projects.
further increase in wage rates this
that
spring;
ment
for
program
expenditure should be
care¬
inflationary fully screened and reduced
condition has been produced by'
those/items which are clearly
As the Presi¬
causes.
dent states
[ill his Economic Re¬
port] at page 41: 'The question
has; been ,raised as to whether we
,
had
sential and. of real value.
ter
.
government
This
cipitate
him
how
important,
to
es¬
tain
may
be
<
na¬
inflationary
the
on
"This appears to be
Allan
active
service
in any form
with
the
Prior to his resigna¬
tion,
been
he had
active
tional defense work for
He
in
served
Corps for
in
:
.
..
rvM
„.
❖
infiltration.
of
these
combined
too
great
available, supplies,
demand
a
"
factors
No
one
be singled out as the
cause.'
can
on
factor
principal
.
matter
how
tinue the
extreme forms
more
of
credit guarantee which
ultimately
will probably-do the veteran more
harm than good.
No matter how
"It is interesting to us that both
here and throughout the report
to
$2,000,000,000 in fiscal 1948
$2,800,000,000 in fiscal 1949 as
proposed in the President's budget,
$57
production
of
substance
at
of
*
our
sionTs that the- ihflaiionary
dition. is
due- to
accomplish
our
$204 7 billion; />; approximately'
of the- nationals
income, .or
25% of the gross national product,
Most of this expenditure does not
contribute/ ta the - production of
eon-
attempt
/
28%
conclur
billion^ with
total national income estimated
a
goods and jSeryicqs,
"The
to
than- i?; possible
that
the
present capacity for; pro¬ goods, so
government
duction. Just as England has been activity constitutes a
heavy bur¬
criticized for proceeding" too!
den
on
the
economic machine to
rap¬
at
we
tion tax should be increased above
the. present
of, 38% of the
be pointed out
tax reduction is immer
rate
net profits,
It
may
is concerned
from
payments to the public in calendar
"Taxes for the ensuing year are
years 1948 of over $40,009,000,OOOF; estimated "at1
approximately -$45*No, account is taken anywhere in 000,000,000,'j Taken
together with
the report of. the. inflationary as¬
State arid Ideal taxes of
approxi¬
pect of such expenditures, for the mately
$12,000,000,000, we find a
most part made without
any direct ta^ burden of
the
to the expansion of
activity.
In any event,
do not feel that the pbrpora*
seems
pact of government spending. On
page 47; he
says:
'The Federal
agencies will have to make cash
in
deterrent
business
that if a
/
pub&cC works,
this diately
inflationary the President's
tQ be np: time* |q>increase
plan is also inflationary as far as
the total public works
program its immediate effect
wholly fails to give
weight to the tremendous, im¬
increase
a
important
the President
any
No
important an increased amount of
housing, there is no reason to con¬
more
our
idly with her housing program in¬
of devoting more time to
production for export/ so: our peo¬
ple: and our government, both
executive
and
legislative,
may
well be criticized for
trying to
Which;
stead
look for;
we
our
standard
of living, This burden is expressed
:at the present time to a
large
extent ip/thet high price of, com¬
reduction takes effect at
whereas- the. corporations'
ments
1948,
on
profits
made until 1949.?'
once,
pay¬
are
hot
.
15
Hollow
Plum
the Sum¬
Golf
be
attendance.
of the
continuing institution, arid
later
succeeding
Alvah
Trow¬
as President.
In 1904 the
bridge
1948-1949, at ?
May 18 a'
the Downtown Athletic Club. Mr
John L.
McFarland, Secretary and
Director, Briggs Schaedle & Co.
Inc.; and Howard B. Smith, Chem¬
ical
Bank
New York.
as
Trust
an
Also
Vice-President
Company
elected
to
oi
serve
N. Leonard
was
Jay vis, of* Hayden, Stone : & Co.
Melbourne S.
Moyer, Manager
Fulton Trust Company
of New
York, was re-elected Treasurer
and EL A1 Ltoss;^SecretarydAipri^m
Federation
elected
of
N.
Y.
U.,
was
re'
Secretary 9nd> Assjstgrif
Past President Gover*
serve
for year 1948*;
Trust
President.
became
from
merged
the
He
retired
banking
field in 1912,
when -the
Trust
Company
of
America was taken over by the
Equitable Trust Company.
New
York
May 24 it
;
"The
at
$375
who
"Herald
had
of
the
rescued
bank's
stock
the
same
time
institution
during the 1907
r
banking panic."
the
of
share represented a final
triumph for Mr. Thorne,
from near-failure
The
In the
Tribune"
noted:
was
sale
a
financial
account also said: "At
the
Trust
was
sold
Company of
Equitable
Trust, Mr. Thorne announced his
purchase of the Corporation Trust
America
to
Company of New Jersey, explain¬
ing he did
only to provide jobs
employees who had
stood by him during his company's
for
so
faithful
crisis."
In his earlier business activities
Treasurer.
named to
American
with the Trust Company of Amer¬
on
Mr.
Thorne
became
President
of
were:
of
and
Trust, Com¬
York;
John
E
President. Johnr Wanar
/
New
of men
engaged in
or
lnterested iri
Club,
enjoyed by those, in
Guest fee, $10, Bowg-
a
Westinghouse subsidiary, he be-*
Vice-President of Union.
came
Although he was an Episcopal¬
Raasch,
maker; arid John Cerdesr of: Ger- ian Mr. Thorne gayeFgenerouslY
des & Montgomery.
The N» Y, U/ to; Catholic organizations. One o^r
Men in Finance Club is composed his^^benefactionsan: 1940 was-tho-
-
will
inf
ica, of which latter institution he
luncheon-meeting
finance <who have -been associated
Golf, baseball and various activi- /with the^ University/ in apy ca^
ties
In 1900 the
merged with the North
Trust
Company, Mr*
becoming Vice-President
in Finance Club for
pany
Golf Party will be held J.une
at
he shortly after
North
Ilanoyer < Bank
Party
announces
Com-
Trust
Switch & Signal
Mr, Foyej David, E; the National
Gotlieb, Chairman of the board, Company of Easton, Pa. When that
J. A. Deknatel & Son,; Craig S. company
was
absorbed by the
Bartlett, Vice-President, Central Union Switch & Signal Company,
DETROIT^ MICH. — H. Russell
Hastings, President of the Detroit
mer
Interna¬
the
&
New York, was elected /President
of the New York University Mer
nors
Detroit Bond Club
Bond Club,
week
a
his estate
American
Primus, E. Godridge, Trust Of¬
ficer, Bankers Trust Company of
1949
Summer Golf
of
became President.
stitution
Thorne
•
because any .personal income tax
for
fall at
a
which
of
panyj
❖
>
exerted
been
leg fracture suffered
a
Banking
i
•
❖
very
total
tional
Distinguished Service Medal."
y
had
he
result of
a
Vice-President
Quartermaster
three and one-hab
ultimately holding the rank
Colonel, and was awarded the
'
re¬
of age.
He was born in New
Hamburg, Dutchess County, N. Y.,
and came to New York in 1899 as
years,
of
highly
in Millbrook, N. Y. At the time of
his death Mr. Thorne was 81 years
na¬
pressure because: nated
Godridge, who
was
and
graduated
economies
effected
from the N. Y, University's Schoo'
of the without loss of
efficiency.
No ultimate, individuals
who pay the- of
high rate of business invest¬ faatter how
Commerce, Accounts, and Fi¬
important the. Mar¬ tax, in
part the stockholders and nance in 1911, succeeds Arthur B
ment, because of the large amount shall
plan;,, it should be possible in
part consumers. Many experts
of
residential
and
commercial to eliminate
Foye,
partner, Haskins & Sells, as
projects of doubtful
consider that all taxation should President of the Club. Re-electe:
construction, or because of the validity, and concentrate on
those be imposed directly on individuals
as Vice-Presidents
high ley el of consumer spending, Which
were
Dean G
give a clear case for effec¬
because they have to bear it any¬ Rowland
The answer is that we had infla¬
Collins, of the Graduate
tive assistance against communis¬
way,
and
the
corporation
tax
is
School of Business Administration.
tionary pressure because the sum tic
of large; exports, because
where
as
the
over
Tho'rne,
Oakleigh
following
time.
some
capacities
both
garded as an outstanding and im¬
portant figure in New York bank¬
ing affairs, died on May 23 at
Doctor's
Hospital,
New
York,
United
States Army.
^
na¬
r
Reserve
re
event, to adopt any.
of taxation.. Corpo¬
ration taxes at.best are only an
indirect method of reaching the
any
1948.
in
until his death.
8, 1942, when he resigned ► to enter
re¬
time, in
increase
no
Agent for the remainder oi
serving
1918,
Chairman and Federal Re¬
as
Bank from Jan. 1, 1934 until Jan.
depression.
payments
unex¬
manufacturers and distributors oi
voted ?, by
substantial
May 15
.Richard Kelly, who became a
trustee on July 11, 1517, and was
elected its counsel on June
12,
of
textiles, New York, and a director
of a number of other corporations.
fTe was#a class B director of this
,
balanced budget and make
for the
J "Mr. Stevens is Chairman of the
hoard of J. P. Stevens & Co., Inc.
at
tional debt.
No mat¬
tional defense, there-are^
certainly
duplications which can be elimi¬
a
their loss in the death on
Federal« Reserve
<
i of
trustees, of the
Savings- Bank of New
York have recorded the sense of
oi-
Sproul,' President o'v
Bank in announcing
this* om May-18, added?
e
armed
the
..a'/'!
+
The, board
Broadway
ap¬
class C di*
a
i'Ci'f'' '!*■*$:■.
'."F?.
System has
TV Stevens
as
i
FS
serve
the
the
It is essential that we
'
:
<
pired portion of the term ending
Dec. 31, 1950, and has designated
Congress is
raised by the possible increase in
forces.
A
Bank of New York
trus
The only doubt about the tax
duction
v
Reserve
of*
rector,
would
substantial
a
>f\
>»
pointed^ Robert
Plainfield, N. J.,
factor; : If
prices
down, it might ►pre¬
turn
f
The Board of .Governors of the
;
Federal
least $10,000,be a huge
sum to
take annually out of the
current earnings and the purchas¬
ing: power of the American peo¬
ple, and could be an extremely
000,000,
should
govern¬
underlying
variety of
allowing 'for
to
We do insist, however, budget expenditures for the
every
T h
'
•
'FF
Bankers
and
"
.
government; spending
programs.
That must be- deter¬
mined primarily by political judg?
menfS; oh .the international, situa¬
tion and the urgency of, domestic
supply and de¬
closer to
surplus,
payment
deflationary
different
was
a
cash
extent
home and abroad.
This
the greatest possible econ¬
omy in all government expendi¬
tures.'
other indications that the
"The
greatest
at
in the prices of
agricultural; commodities.
There
are
the
means
violent break
mand
to
expenditures.
?
CAPITALIZATIONS
194.8 / will: be at least'$7,O0(),*
000,000
higher : .thah t estimated
government
BRANOH^S,.
OFFICERS, ETC.
^
:
tensively and to which we shall
devote/ a good deal of the effort
of this cOmhiittee in the future. '
consistent with public obligations funds, will- be
Robert a.Taft
goods.
Since thei issuance \ of! the
President's report, there, has been
over-all forces
local,
or
the, available
supply, of
are some
government
It means. deferment of
expenditures-^Federal,
ruled
States, exceeds
a
rigid
means
v NEW
,
year
Tt
economy,
all
CONSOLIDATIONS
r
,
tionary condi¬
Thursday, May 27, 1948
par¬
"With regard to. immediate ac¬
credit policies, is the basic reasor*
tion relating to taxes, we disagree
for
inflation, which; otherwise with the President^ recommendacould hardly coincide with a large
don that a cost-of-living taxcredi,
government surplus.
of $40 be given for each itaxpayei
"Our first recommendation i..
and each dependent, and to offset
that government expenditures be
this decrease in government reve¬
reduced.
We quote Marriner Ecnues corporate-taxes be increased
cles of the Board of Governors
sufficiently to yield an equivalen
of the Federal. Reserve System,
amount! on the./ basis of present
testifying on a program to prevent figures.* Tax
receipts insthe/fisca
inflation:
Joint;
Committee:
production, affecting
ticularly* creative- artists and
tal
Report of the majority members of, the Joint,
Committee on
the Economic
Report, set up by Congress when it passed the Full
Employment Act, calls attention to
heavy government spending and
high, taxation :as> inflationary
fOTces,\ which the'; President, "wholly
to."
crease
CHRONICLE
executives; and experts
subject to • the -high: income trix
rates after a ../certain income has
been earned in any one year. The
question of the necessity for stim¬
ulating the accumulation of capi¬
Majority Joint Committee on Economic Report, headed by. Senator
Taft, criticizes President for failing, to give weight to
j impact of
^0V,efIlm^ spending. Wants no increase in. taxation ,at; this time.
to
FINANCIAL
poration
§ Government Expenditures and Taxation:
fails
&
pacity—as students? faculty
bers, council members, etc.
mem¬
of the
transfer
in
Chancellor
Estate
Millbrook, N. Y., to the Arch¬
diocese of New York
rial td his^^
as
a memo*
frieiid, theJate. Patrick
Cardinal Hayes for the establisha home for children.
M!r.
Thorne was a large; yearly con-ment of
las H. Campbell,
; First
of Michi¬
'AF a meeting of the board rif
because- in a, seller's gan Corporation, Chairman of the
tributor to St. Francis Hospital in
directors of The Commercial Namarket.,it. is. possible to pass, on
Entertainment
tional Bank and*^ Trust: Compaii^ Poughkeepsie in which, he "took
carry on at the same time so many to the consumer a considerable
Committee.;
a deep interest.
Mr, Thorne will
of New York held on
huge programs as those repre¬ part of the corporation net income
May 20
be remembered by his wide host
Jrimes Ki Cariipbeli was appointed
sented in our expansion of busi¬ tax and that
part of the income
of friends in the financial world
Assistant: Cashier.
ness
transactions,: our expansion tax which is withheld by em¬
and his, employees as a frank,'
of residential housing, our
support ployers;. to which, of course, must
friendly humanistic, man of per¬
of veterans' education and rehabil¬ be added the
excise. taxes which
The New, York State, Banking sonal charm arid interest..
itation, our government public- are. frankly imposed" upon the
.Department, approved on May 18
works program, our huge
CLEVELAND,
D.~
Warren
D.
consumer
directly.
On
a
Military
the change in the location of; the,
longAt the annual meeting of ? tha
Establishment, and our economic range. basis,, a general reduction Williams- ha? become associated branch of the Irving Trust Com¬
modities^
W.D;WilliamsV.-P.
Of Prescott, Hawley
.
.
of
support of free peoples throughout
the.entire world.
Liberal credit
policies
on
the
expenditures and taxes would
undoubtedly tend: toward an in¬
crease in take-home
pay or a re¬
part' of private and
public
duction in
agencies alike, and the
maintenance of low interest rates
"This
have encouraged the expansion of
these programs. We do not intend
to-
criticize
these
programs
taxation
prices
or
both,
tremendous
is. also
burden
of
deterrent to
hard, work,- and1 to increased « in¬
a
with, Prescott,
Hawley, Bhepard &
Co., Inc., Union Commerce Build¬
ing,
ager
as
Vice-President and" Man¬
of the Municipal Bond De¬
partment. Mr. Williams has been
with Ryan, Sutherland & Co., of
or, vestment in
productive enterprise. Toledo, where he was in
charge of
desirability.
We It takes from individuals
money the
municipal buying department.
merely point out that the attempt which might be saved and
provide
to carry them all on at
Prior thereto for many years he
once, with for i capital: expansion;
It
de¬
question
very
•
....
their
little/restraint
...
......
in
the
field
..
:
.
creases
the
incentive
of; consumer/spending and liberal? .ditionaleffort
rfofiKic
:5
by'/oi
■
to
required
the
ad
was
with
the
Provident
Savings
to, in¬ Bank; & Trust Co. of - Cincinnati;
/
pany of New, York. from MIWest
48tb„ Street, to 23-29 West 51st
Street.
,
Approval of the change of^lb«
of the: principal ; place of
cation
Kings
County
tion, held
Bankers
ident
of
Manufacturers
Company
elected
of
New
business of rthe J. Henry / Schroder
tion
ceeding
liam Street, New Yorkj to. 57-61
Other officers elected
Broadway,
Vice-President,
Vice-President,
State
announced by the
Banking
Department
May 18,.
•
on
Trust
York;
was
President^ the Associa¬
Banking Corporation from 46 Wil¬
was
Associa¬
May 18 at the Brook¬
lyn Club in Brooklyn, N. Y., John
J. Hayes, an Assistant Vice-Pres¬
on
for
the, ensuing
C h
a r
1
e s
year,
suc¬
Oldenbuttel.
First
were:
Harold F.
Brooklyn
Klein,
Trust
Company; Second Vice-President,
Russell
C.
Irish,,' Vice-President,
f
F
}
U
:
'
)
„
»»i
"
i
i
>
Number 4702
Volume 167
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
: (2331)
23
-L
df- the Cilt* throughw positions
Chase National Bank
of
Yofkh becretary-Treas1
New
W, rDey, Assistaht
Vice-President,
National
V i 1y
Bank 6f N6w York.
Ralph
urer,
•:' V'
■
"';^4/<-•• 4'
Y/4*'
Waller Rruch-
The election of
hausen and Donald G. C. Sinclair
of
Vice-Presidents
as
the Kings
County Savings Bank of Brookiyii,
N. Y., was announced on May
21
by Winthrop Taylor, Chairman of
the board of trustees.
In indi¬
dent for
same
of
with the law firrh
Wickersham &
been "a trustee of the
Cadwalader,
Taft,
has
bank
since
He is President
1936.
Brooklyn Bar Associatiori.
of the
Sinclair, trustee of the bank
Mr.
with the brokerage
since 1941, is
bank—and
now
the, Bank of. Jacksonville.
Hos¬
pital, Chairman of the Brooklyh
Academy of Music, etc.
The first
*
#
.,.
*
•
•
*
National Baiik of Port
Y., was placed in
Jefferson, ■ N.
voluntary
liquidation May
If,
having been absorbed April 30 by
the Bank of Port Jefferson, which
has changed its title to the Bank
of Northern Bfookhaven, at Port
Jefferson. A previous item as to
these changes appeared in our is¬
sue of May 13, page 2103.
it
#
-
•
■
point of service with The Na¬
promoted
Texas,, has- been
Assistant
from
Vice-President.
ant
22 other
serves
The
Crawford
in
remain
charge of the bank's Transit De¬
partment. Holder of the bank'sNo. 1 quarter century pin, Mr.
Crawford joined the bank June
Suburban
Company, sporisof
Northgate project, oh plans
fori;',the bank building which is
expected to
,500
cover
approximately
:
u
m
M*.
.
m
ss
John J.
McCloy
announces
He
Quarter Century Club;
attending the Mississippi
was
Bankers
Convention at th£ time
of his promotion.
$
«?
'*
'
'
'
v
H
the
alent of $4 million
Sank
for
is
Settle-
j
ments.
arranged to sell
Swiss
Franc
an
issue of 2%%
Serial
Bonds,
ma¬
turing in 1953
and
the
many
stated
its
"(1) Ameri¬
leadership
can
the
disarmed Japan should serve to
improve the chance of maintain¬
pe¬
ing
riod
be¬
hag
peace in the Pacific and else¬
where.
to repair
ruin Teft
gun
the
to
behind by the
Percy
H.
Johnston
that
leadership
and
have
every reason to strive faithfully
to
become
self-supporting and
000,000 Francs
would
occupation
with
Richard F. Campbell, Assistant
(equivalent to
Cashier, Union Bank & Trust Co.
Of
LOs Angeles, Calif., was elected approximately
The election is announced of
$4,000,000 ),
Kenneth N. Hilt as Trust Officer President of the Los Angeles chap¬
according
to
bf the PrOvideiide National. Bank ter, American Institute of Banking
an
announce¬
of Prdtrideiftfe,v K I.
He fills h at the annual meeting held May
ment by John
12:
Scott O'Leary,
2nd' Vicevacancy resulting frOm the resig¬
J. j McCloy,
nation front that post of H. B. President, Bank of America N, T.
Freeman to become President of & S. A*., was named First. Vice- p r e s i dent of
the * Interna¬
the
Phenix
National
Bank
of President; W. J. Thomas, Treas¬
tional
Bank,
urer, LoS Angeles branch, Federal
Providence.
Reserve Bank of Sari Francisco, on May 25.
which
during
,
amount of 17,-
relations,
run
not only to Japan but to ourselves
and the rest of the world.
Re¬
vival of the economic life of a
as
"(2)
The;
Japanese people have cooperated
aggregate
trade
advantageous in the long
oe
war.
in
1954,
quickly to increase production in
lines and to begin to restore
to
follows:
purchased by
International
vide Japan with the means to ob¬
tain raw materials will enable if
Secretary
the Army,
of
principal
:js
of
report, as re¬
ported by the
the
equiv¬
<£-
sum¬
.
Committee
Francs Bond Issue
The International Bank for Re*
the bank's
visit Japan and Korea
The
construction and Development haS
20
on May 19 made public
report of the "Johnston Committee" which he recently invited
to study the economic position and pros¬
pects of those countries and measures required to improve them.
to
mary
■
during, its organization
and
Secretary of the Army Kenneth C. Royall
the
feet.
square
;
days before the official
opening. Mr. Crawford, a native
of Melrose, Texas, is President of
25,^1912;
Trust; Company, holds industrial recovery of Japan is
to bring about a self-supporting economy.
Urges
financial aid of U. S. td permit purchase of raw materials.
►
necessary
ficiais presently are working with
on
will
Bank &
charter for the Northgate. Branch
been issued by the Comp4
trbller of the" Currency, Bank of4
board of directors meeting.
a
of Arihy and headed by Percy
Johnston, Chairman of Executive Committee of the Chemical
H.
has
promo¬
May 12 by
Presiderit, follow* -
of
)
Economic Prospects
Japan and Korea
on
Cominiftee appointed by Secretary
:
Washington
Seattle. A
outside
Cashier' to Assist*
tion was announced
A, D. Simpsbn;
which
communities
bankj
of the
tional Bank of Commerce of Hous¬
ton,
will be the 28th office of the
the
''
it
Thurman Crawford, oldest man
in
is
He
Bonner.
second
staters
May 7, 1877. The pio¬
establishment was. known as
neer
Mr.
&
the
oldest—on
ing
pany-Blythe
lqte W. K:
founded this city's oldest
Bafheft,
firm of Lawrence Turnure & ComPresident of the Caledonian
The;
states that Mr, Bar*
paper
nett's grandfather, the
May 21 Stated that Mr. Bruchwho is
Reports
board, in
of ; the
number of -years.
a
cating this the Brooklyn "Eagle"
hausen
greater re*
plans for establishment of a newi
branch in Nofthgate, 66-acre tract
being developed into a $12 million
J'anuafy df tnis year after having suburban shopping center at the
served as Executive Vice-Priesr-f north city limits of Seattle. This
-
of
of
sponsibility and'was prompted-' td
Vice-Chairman
to
employ fully
any
assistance
we
furnish.
may
in
ration levels and to Stimulate
the
in
Japan
Far
East
and
gov¬
eco¬
nomic rehabilitation."
In accepting the report, Secre¬
tary Royall expressed his appre¬
ciation of the services rendered by
the group, members of which are
Percy H. Johnston, Chairman of;
the
"(3)"Conditions
elsewhere
"(5) South Korea Will continue
require American food arid
materials to maintain present
raw
Executive
Committee
of
the
Chemical Bank & Trust Company;
Paul G. Hoffman, now Adminis¬
erning
the economy of Japan trator for the European Recovery
present a situation of serious dif* Program; Robert F. Loree, Chairficulty. The task that Japah faces man*
National
Foreign
Trade
of
attaining * satisfactory
self- Council, formerly Vice-President
support will require patient and of the Guaranty Trust Company,
sustained effort by the Japanese and
Sidney H. Scheuer, senior
people, American aid to relieve partner of Scheuef and Company.
These will
John J. McCloy
was
advanced
to
Second Vicepresent shortages in raw materia] The Committee was assisted by
President and George Clark, ad¬ be the first
and food, and feady cooperation Herbert Feis, Special Advisor to
bonds issued by the Bank in other!
vertising
director,
Farmers
&
on
the parts of the Asiatic and the
Secretary of the Army; Alex¬
than
dollar denomin ations. Tiid
MerchantsNational
.
The
Bank
is
West
of
to
Englewood,
change
Garden
National
Englewood
West
its
N.
J.,
the
to
name
Bank
National
State
.
Bank',; was
of
made
Teaneck, at Teaneck, N. J., effec¬
tive
June
Office
The
7.
the
of
Comptroller of the Currency reno actual change of lo¬
.
is
being purchased for
investment by the Bank for Inter-;
$
:•«
ports that
cation
entire issue is
Treasurer.
Two officers of the Anglo Call*
fornia National Bank of San Fran-
involved.
Cisco, Andrew
Anderson arid
national
Settlements
Switzerland,
interest. ,4
at
;
at
and
par
Basle^
accrued
''
t
other
countries who
ticipate
in
the
peaceful trade.
would
par¬
resumption
ander
of
Lirisman,TreasuryDepart-
meiit; and on textile matters by
Frederic
A:
Williams,
former
'
"(4) The program now under
cbnsideratioif hi Qohgrbss ,tb pro
THe proceeds of the issu6 Will
«L Herges, both Assistant
be made available to the Kingdom!
Vice-Presidents, rpassed away at of:the Netherlands for the
pur¬
their homes on May 19. Mr. Berposes
of the $195,000,000
loans
ges, who had recently undergone
granted to it last August.
an operation, died
suddenly.
He
Through this sale of securities
•
president of Cannon Mills Incorp¬
orated,
;;:"WBKMX
Ernest
Robert O. Wendling has been
promoted from the office of As¬
sistant
Vice-President
President
the
of
National
Bank of Cleveland.
the
Cleveland
Vice-
to
City
entered
According to
"Plain
Dealer"
of
and
May 18, Mri Wendling has been
with the National City since 1933
in the loan and credit department
'
Manager of Credits frorri
1943, when he became a
junior officer of the bank.
He
and
was
1938 to
started his banking career with
the National Commercial Bank of
Cleveland in 1916.
The purchase of control of the
Delmar
St.
Bank
of
University City,
Louis, Mo., by a syndicate of
business men for $507,360,
reported in the St. Louis
local
was
"Globe
Democrat"
May
of
12*
which further said:
"The
group
of purchasers is
headed by RoHa Wetzel, formerly
in
the
investment business;
L.
Peter
Wetzel,
his
brother,
Vice-
President of the St. Louis County
National
Bank;
Edwin
Schmid,
President of the Muttial Bank aha
Trust
Company; Alex Co'rnwel'h
real estate dealer, and Joseph H.
Grand, attorney and general coun¬
sel for the group. *
"Mr. Grand, who announced the'
*
purchase, said 2,240: of the bank's
2,250 shares of stock were bought
at $226.50 a share.
As of March1
31, the bank's capital was $225,000,
the
Anglo Bank in
1906
riperit practically his 'entire
career
in the commercial loan de**
partment.
He
was
appointed
an-
in
000
deposits
of
the
Claude Eaton,;
institution, will
tle'ments
the
President of IBA
deficit financing and consequent infla¬
darken economic outlook. Sees efforts to curb
credit expansion retarding inflationary influences, but points out
rapid deflation may lead td unbalanced economy.
tionary forces
International Set*
International; Bank
for Reconstruction
and
Develop¬
Warns
may
.
ment Will Obtain additional work^:
dinner meeting of the New England Group of the
ing furids in non-dollar currency,; Investment Bankers Association in Boston on May 17, Julien H.
sequently an Assistant Vice-Pres¬ and
will
make
that
currency
Collins,
President
of
the Investment Bankers Association, and Presi¬
ident. In 1939; he was placed in
Available td thb Dutch govern¬ dent of Julien Collins & C9., Chicago, warned that a possible return
supervision of the operations of
ment, which already had received to deficit fi^
'v
—. r
"
the commercial loan department
part Of its Original loan in Bel¬
according to Mr. Collins, would
nancmg
can
at the head office.
He was 59
gian
francs. ?With
the
present cloud the
have
been
proven
more
defla¬
years of age.
Mr. Anderson, 45
transaction, the Dutch will have1 present bright
tionary
than
anticipated
and
years of age, died of a heart at¬
received their loan proceeds in
economic out¬
would have unbalanced the econ¬
tack. Born in Minneapolis, Minn.,
the
currencies
of
the TJhited
look.
'
omy had not other expanding in¬
lie; attended the University of
States, Belgium and Switzerland.1
fluences counteracted the move.
inflationary
Minnesota and ivais connected with
"But
now the shoe is on the other
forces, Mr.
a financial institution in that; state
foot," Mr". Collins said, "and wages
before going to California in 1927; NeW Yoirk Stock
I Collins stated,
and prices promise to resume the
are
again in
when he joined the Ariglo Bihlc
Weekly Firiri Changes
the ascend¬
upward trend, and shortages off
staff at its Mission office. He was
The New York Stock Exbharige5
labor and material may again be¬
ance,
after a
successively teller, Pro-Manager,
has announced the following firm
come a more pressing problem."
Assistant Manager and in 1945 was
respite, and
changes:
The dinner at which Mr. Colliris
this
notwith¬
appointed Manager, receiving the
Transfer of the Exchange mem¬
additional title of Assistant Vice*
spoke
was
held at the Hotel
standing the
bership
of
the
late
George
C.
President in 1946. He was a meiri-:
budget sur¬
Somerset, Boston, and was pre¬
Jennings
to
William
J.
Nammack
sided over, by the Chairman of the
ber of the American Institute of
plus and the
Julien H. Collins
will be considered on June 3. It
New England Group of the IBA,
reduction in
Banking and was active in Mis¬
is Understood that Mr. Nammack
Mr. Philip M. Stearns
sion District organizations.
of Estawill -act as an individual fldof: thej Federal
;
debt during the first nine months bfook & Co.
brokCf,
of the fiscal year. Developments
Another new banking, unit in! ; Transfer of the member^hijr of'
of recent weeks, he pointed out,
Portland's (Oregon) business dis¬ George A. Loeb to Charles hJ
trict was opened this month by Woody; Jr.; will. be considered by: may; well serve to offset the prog¬
ress; made underi the controls that
the United States Natiprial Baiik^ the
Exchange on June 3.
Mr.
were applied to temper the rising
of Bortlandy the latest office being; Woody will act as a floor
broker.;
spiral. A deficit for fiscal 1948-49
its new Metropolitan Branch lo¬
James F. McGorniick, Jr., rb*
DALLAS, TEX—Lynch, Allen
Assistant Cashierrin 1924 and sub¬
Speaking at
a
.
Exchange
.
-
Hugh Bradford Joins
^
Lynch, Allen & Co- i
cated in the Public Service Build¬
surplus, $175,000 and undivided' ing. The completed project, which
profits, $40,174, with about $9,000,- brought a centrally located branch
President
to the Bank for
Inflationary Forces Again Dominant: Collins
within
head
five
blocks
of the
bank's
office, forrtjs the 36th unit
tired from
partnership in Mixter
May 15.
William I. Rosenfeld, Jr., will
& Co.
retire
Go.
on
from
Herbert
E.
Stern
&
is
possibility, lie wafned, and
deficit financing might again be
a;
the rule.
j
r
After reviewing the steps that
been taken to ward off- the
had
&
Co., First Nation&l Bank Build¬
ing, announce the opening of a
corporate trading department with
Hugh Bradford as manager. Mr.
Bradford was formerly with Dal¬
May 301
continue in that post.
in the United' States National's
B. L. Taylor, III,, general part-: effeqts of wartime expansion of las Rupe ^
statewide; system. - At the*! s&me n'er irt B, L. Taylor, III, & Co., be- production and- bank Credit, moves
*
*
«
.:
which he indicated served as a
Donald M. Barnett, Vice-Chair¬ time, President E. .G.. Samrribhs; camri b -general and limited part*
retarding influence to prosperityi
announced
the
appointment of ner bri May 14.
on
;
■
man
of the board of directors of
the
Barhetf. National
Bank
of
Jacksonville; Fla., died pri_May,17.:
He
was a
Chairman
Bank.
son
of
Of Bion H.
the
board
D. M. Barnett
was
of age.
Harriett,
of
the
56 years
He joined the bank in 1913,
Florida "Times-Union"
reports, he advanced progressively
and,
Waller Stokes & Co. to
Robert
Runyom* as Assistant
Manager of the new brarich, under
Joseph Hackett Will withdfaw- from Blair S. Williams &
Vice-President John F. Huxtable,
whose managership had been an¬
CO. on'May 31.
nounced previous to the
r,
'.'.V Ijc
\
....'c-'.-'r
the
V.
.
*,
\
,
.
>•?
■-<'
•
$
opening.
>
'
/• "v.\,
•
"•
,
•
'-*-"
v.-*
The National Bank of Commerce
of
Seattle, Wash., has announced
W.
Ralph Hall in Loiig Beach
LONG
BEACH, CALIF.—Ralph
Avenue, is
engaging in a securities business.
S. Hall, 1222 Freeman
Mr. Collins cited as the effects of
this
move
the sharp rise in short-
term! interest rates; the advance in
the discount ra te; higher reserve
Open N. Y. C. Branch
Walter Stokes
& Co.,
Philadel¬
phia investment house, on June 1
will open a branch office at 40
city banks; and, ftrice support of
Exchange Place, New York City,
government bonds at lower levels. under the management of George
The impact of these measures, Hayman.
raq uirements; fori central reserve
;■
24
(2332)
,
THE
COMMERCIAL & FINANCIAL
tional
Sharp Rise in Bank Deposits
ing their
individual, partnership, and cor¬
porate accounts marks continuing inflationary pressure, Chairman
record.
on
Total bank loans reached $43 billion, high¬
Banks' holdings of governments continued decline
from 1945
Insurance
H
Corp. announced May
a r
indi¬
counts
vidual,
part¬
nership,
and
1947,
ac¬
constituted
earlier.
since
In
1945,
continuing the
have increased
inflationary
and
pressure
erted
an
expanding
money
ception
growth
business
in
in
of
2-year pe¬
consumer loans
loans
.
indicative
as
of
future
deposits
the
end
of
that
however,
tionary
billion
this
decline
the
a
infla¬
The decline
was
the Federal
which
inactive
at
had
the
Govern¬
become
of
end
largely
the
war
when government purchases
drastically
reduced.
constituted
86%
United
deposits,
on
States
almost $12
1947,
billion
Govern¬
the
at
advanced
from
said,
"total
$43
bank
billion,
the
the
view
previous
of
the
18
loans
Companies
87,612,616
886,280
60,301
2,286,763
17,795,450
104,699
1,400
1,12*
113
10,172,103
63,327
552,685
54,424
278,708
211,856
3,525
31,121
31,121
direct
and
and
Trust
.
7,263,852
15,916
839
78,570,101
13,696,206
117,366
81,623,382
69,559,927
11,978,420
85,035
5,361,993
4,897,998
500,300
5,280,153
64,816
3,385,802
1,506,576
336,159
146,394
and
political
debentures
r
industiral
market
loans
9,024
5,560
17,747,
43,228,562
38,260,906
4,944,408
18,299,481
18,268,785
30,314
68,168
68,108
chasing
to
farmers
the
1,610,450
purpose
carrying
or
1,609,548
'■
714
188
land-
On
residential
other
properties
properties
830,520
1,243,966
1,236,344
2,287
5,335
850,272
10,869,369
821,982
27,580
3,936,557
710
to 'banks..'.-
assets—total
estate
owned
furn.
other
& fixt.
than
10,944
2,728
1,168
956,251
9,833
1,768
1,835,479
1,629,351
187,051
19,077
1,059,571
954,805
92,884
11,882
34,424
22,856
10,603
965
66,512
62,951
3,612
249
167,134
507,538
167,129
421,610
79~952
5,976
.
Sulzbacher, Granger & Co.,
Broadway,. New York City,
.
bank
*
premises
:—
Investments and other assets .indi¬
rectly
representing bank premises
other
or
real
estate
Customers' liability to this bank on
acceptances outstanding
i;
Other
Total
assets
assets
5
170,006,911
156,072,974
19,713,945
219,992
162,712,856
144,868,543
17,762,806
81,507
*79,847
founded in-1898 -when the Span¬
ish-American War was raging- and
Greater New York was
being con¬
solidated, on May 20 observed its
50th anniversary
change house.
Demand
United
Certified
—
—
Bills
officers'
payable
and
for borrowed
count
11,225
17,743,554
7,784,150
2,252
1,571
1,539,100
1,536,291
2,784
25
13,044,209
625
other
of
CAPITAL
decline
of
the
below the
na-
30,144
73,132
163
1,319
Capital stock,
Undivided
notes, and debentures
^
and
Capital Accounts
of all Banks in
the
United
States
Exchange
$2,000
6T,891
28,820
"seat."
a
of
a partner until his
retirement in 1939.
1922, Jeffreys. Granger and
Myron I. Granger, both ex-World
5
1,889,085
108,341
4.953
45.122
5,734,446
4,412,728
1,284,288
37,430
twenties, joined the firm and the
naipe was changed to its present
form—Sulzbacher, Granger & Ok
2,246,289
1,696,108
532,118
18,063
After
673,551
598,099
67,726
7,726
176,006,911
156,072,974
19,713,945
219,992
War I
Floor
Member
BILLIONS
OF DOLLARS
OF
are
not
available.
,
v;
for which
asset
and liability
data
,
DOLLARS
200
200
Goldman, Sachs Offers
eral
-
176
U.S.JG0VT. DEPOSITS!
.1
...f
.
J.L
'
.
150
a
PERSONAL
DEPOSITS;,
.
v
100
1947
for 1945.
Gamble-Skogmo, Inc. operates
of the major merchandising
chains, selling durable goods, and
and Piper, Jaffray & Hod wood to a limited extent soft
goods, at
headed a public offering May 25
retail through over 500 company
of a new issue of 120,000 shares of
operated stores and at wholesale
$50 par 5% cumulative preferred to over
1,700 independently owned
stock
at
Gamble-Skogmo,
Inc. and operated dealer stores. The
priced at $50 per share.
stores are
located for the most
Each share of preferred stock is
part in towns and small cities in
convertible, prior to July 31, 1§58, the middle
western, northwestern,
into 41/10 shares of'common and far western
states, and in
Lynch,
.
BUSINESS
Gamble-Skogmo Pfd.
Goldman, Sachs & Co., Merrill
'
in
million, or more than
the $71 million reported
$145
double
178
Sales
level.
price
were
Pierce,
Fenner
&
one
Beane,
stock of the company. A sinking Canada.
fund, beginning at the end of the
The Company holds as an in¬
conversion period,
provides for vestment
143,500
shares—about
the retirement for each year of 3%
19.1%—of the outstanding;: com¬
of the new issue. The preferred
mon stock of Western Auto Sup¬
stock is
subject4o redemption at
$52.50 per share and accrued div¬
ply Co. (Missouri) which is listed
the New York Stock Exchange.
on
idends prior to July 31, 1950, with
periodic
and
50
STATE a LOCAL
.
^
OTHER
.•
Federal
j9f,1945
' -mtS.
f{.
■
DEPOSITS
t'Htr;,
ACCOUNTS
:
.
J&H.W
j"'*''/
such
per
after
.000,0(1
uuu.vv
Own Investment Co.
WICHITA,
KANSAS —Harold
Null has formed
the Harold Null
Investment
of
been
President and Treasurer, with of¬
fices in the Beacon Building, to
primarily for car¬
rying increased inventories, such
additional
inventories
having
because
of
the
substantial
increase during the last two years
in both the business and the gen¬
youngest
were
the
death of
Myron I.
Granger in
1944, and the second
retirement in 1945 of Mr. Ulmann,
who had temporarily rejoined the
firm during World War II.
Looking back on the firm's
early business, Jeffrey S. Granger
said today:
"Clients consisted to a large ex¬
of the representative mer¬
tent
chants
who
ginning
funds
the top
composed
the economy,
to
of
and who were be¬
accumulate
which
could
be
surplus
emploved
in the purchase of securities.
The
surplus funds of these merchants
and
others
channeled
were
through the firm into investments
which
were
great
industrial expansion which
the background of the
has since taken place."
In
addition
to
its
membership
in the New York Stock
the firm
New
also
is
York' Curb
Exchange,
member of the
a
Exchange,
York Produce Exchange,
New
Chicago
change, Inc., National Association
Harold Null Forms
short-term bank loans which have
incurred
the
New York Stock
Board of Trade, Commodity Ex-;
date
share
July 31, 1958. The
company intends to list both the
preferred stock and common stock
on
arisen
1947
"-v<" wr-u,*
Deposit Insurance Corporation Division of Research and Statistics
on
$50
the New York Stock Exchange.
Proceeds will be used to reduce
LIABILITIES-
CAPITAL
and
to
on
DEPOSITS
INTER-BANK
-rt
GOV'T.
reductions
thereafter
and
the
of
Exchange. The only changes since
75
533
tl4,159
tlncludes 12- banks
officers still in their
army
Mr. Sulzbacher's death ip
1926, David Granger, Jr. was ad¬
mitted to the firm and became its
then
6ILU0NS
Shortly
joined by Albert Ulmann
was
who remained
9,998,600
3.291,665
114,767
trust funds,
$19,500
thereafter
11,996,026
3,341,740
banks
♦Uninvested
of
and
In
preferred capital
Number
payment
fee
191,229
and Possessions Pec. 31, 1945 and 1947
?
through
initiation
941,470
retirement account for
Total liabilities and capital accounts..
on
woolen merchant, became
member of the New York Stock
member
Liabilities
started
was
191,234
profits
and
business
26,
1,032,181
ACCOUNTS-5—
accounts—total
Reserves
12
62,054
or
Other liabilities
Capital
2,366
1,205,831
74,614
for ac¬
this bank & outstanding
by
years*
tional
he
2,598,675
liabilities
money
20
the
for
checks, cash
fi '
than
more
a dinner
partners tonight at the
Downtown Athletic Club.
by
a
52
-
ex¬
1898, when Joseph H.
Sulzbacher, a prominent interna¬
13,044,914
7,787,973
,
.
Acceptances executed
,
85,210,746
34,694,392
of credit, etc—---JLj—1^--,'■ 2,601,053V,,
liabilities—total
1,298,029 ,
Miscellaneous
assets," Chairman Harl concluded,
"banks with ratios
—
and
letters
85,301,818
Government
States
Interbank
with
May
.
52,437,998
stock
a
Employes of the firm, many of
them
The
deposits
of
individuals,
Partnerships, and corporations
Time deposits of individuals, part¬
nerships, and corporations
States and political subdivisions
as
service, will be tendered
liabilities—
Deposits—total
elected
Ill
116,154
967,862
was
Sulzbacher, Granger
Golden Anniversary
'
890,954
5,743,774
46.169
(lnclud. overdrafts)
premises owned,
6,922,368
1,687,002
Hugh D. Car¬
25
830,545
2,580,684
5,791,111
116,154
Group
Investment Bankers Asso¬
ter, Jr., Courts & Co.,
Secretary-Treasurer.
'V
Carter, Jr*
of the Southern
ciation of America.
of pur-
securities
the
of
382
loans:
On
Real
>
(excluding
estate)
for
farm
Bank
23,248
;
Hugh D.
ChairmaA
(in¬
paper)
months.
capital cushion in relation to risk
highest
notes,
real
on
Miscellaneous
same
"In
reached
of Georgia, has been elected
Nondeposit
7,280,607
—
All other, loans
5.9%
of 1947, in contrast to the increase
1947," Chairman
Banks
end
of 1947.
"At the end of
Vice-President of the Trust Com¬
about 13%
assets
during
Savings
92,383,673
directly guaran¬
Commodity Credit Corp.
loans
Loans
the
at
period. Moreover, the
ratio of capital accounts to total
assets declined during the last half
the other hand,
and Stock
Savings Banks
10,779,212
S.
Other loans to individuals-.^.-.^-.
v
nearly
declined from 15% of the total at
the end of 1945 to 1% at the end
Harl
"
U. S. Government obligations
shrunk from 26% to 22% during
the
All
Banks
farmers
by
On
and
deposits at the end of 1947
1945.
of
to
states
&
Real estate
"Other
assets.
1945 to 6.8% at the
of' 1947, the ratio of'capital
accounts to assets other than cash
compared with 73%. at the end
ment
-.1;
advance in this type of
during the last two years.
Total capital accounts increased
of
U.
collection
of
obligations,
open
to
Other
of
end
total
of
•
Group
GA.—J. W. Means,
foreign
Loans to brokers & dealers in secur.
at the end of
15%.
Individual,
and
corporate
ac¬
partnership,
bank
end
billion total
bank
banks)
in
in
process
of
loans
loans
26%
total
by
years
counts
as
all
for'gn
stocks
cluding
Although the
ratio of total capital accounts to
Meanwhile,
'
ATLANTA,
;
and
,
bonds,
Corporate
the capital cushion.
were
the active deposits of business and
individuals expanded during the
two
the
greater than
two years earlier. However, Chair¬
man
Harl emphasized that the
raoid growth in risk assets has
neutralized the improvement in
entirely to the reduction in
of
Govt,
S.
Other
asset
did
/
,
,
Head of IBA
the
banks
banks
subdivisions
steadily since the war;
thus, holdings of nearly $11 bil¬
lion on Dec. 31, 1947, represented
were
remove
pressure.
deposits
ment
of
in
Guaranteed
securities" held by banks have in¬
nearly
$4 billion below the peak reached
at the end of 1945. Chairman Harl
due
since
1945, the $82
half
develop¬
$163
1947
of
commented
in
Obligations
creased
Total
not,
earning asset."
end of 1947 still constituted
ments."
at
U.
Other
20%
banks
banks
Securities—total
Loans
Although bank holdings of U. S.
Government obligations have been
reduced
of
with
with
items
Decline
the banks' largest
From past experience it
unwise to regard this
;
,,
Mutual
17,796,687
discounts, and overdrafts (in¬
cluding rediscounts)—total
its advanced
be
,
Loans,
decline from .the 1945 peak, but
still maintained their position as
would
J. W. Means Elected
>
Commercial
38,559,197
banks
countries
ex¬
during the first
sharply after remain¬
ing almost constant during the
first quarter. Preliminary figures
indicate that deposits have shown
little change in the early months
31, 1947
2,392,862
Reserve
private
branches
balances
Cash
securities
on
half of 1947, repeating the pattern
of the previous year when depos¬
of 1948.
Amer.
the
ft
Federal
balances with
Balances
"Bank
y;
be in
through¬
will
collec-
of
coin
(except
teed
accounts
they
and
/;
r
and
with
S.
Other
two
Holdings of Governments
,
Maple T. Harl
to
stabilityr
of such
U.
of
end
17%
holdings of U. S. Gov¬
ernment
obligations," Chairman
Harl observed, "continued
their
the
total
Commercial
Bank
was
contrast
the
which declined 70%,
personal
deposits
of
substantial increases with the
supply.
This
and
Items; in; process
Demand
140%; commercial
industrial loans, 90%; and
real estate loans, 60%. All other
principal types of loans showed
ex¬
by
25%
compared with
as
years
riod
Loans and dis¬
of all banks at the
assets
thus
counts,
cash
tion
Reserve
record."
on
with other banks,
balances
'
"was
corporate
Cash,
Currency
level
in
ASSETS—
"Nearly all of this increase,"
out,
whereby
out the nation."
pany
<$■
pointedr
point
line with the other banks
a
(In thousands of dollars)
peak.
14.
1
to
DECEMBER
"Total deposits of all operating banks in the United States and
possessions increased nearly $9 billion during the six months ended
Dec. 31, 1947," Chairman Maple T. Harl of the Federal
Deposit
M r.
capital structures
Thursday, May 27, 1948
SUMMARY OF ASSETS AND LIABILITIES OF ALL OPERATING
BANKS IN THE UNITED STATES AND POSSESSIONS
Harl of FDIC reports.
est
should give im¬
consideration to increas¬
average
mediate
Six-month upturn of $9 billion in
CHRONICLE
act
as
Co.,
which
he
is
dealers in municipal bonds.
Mr.
Null
urer
of the Rittenoure Investment
Co. :
:
was
previously
^
Treas¬
of Securities
Dealers, Inc., and the
Association
of
New
York
Stock
Exchange Firms.'
With Baumann Investment
(Soecial
NEW
Poynter
to. The
Financial
ORLEANS,
has
been
Chronicle)
LA.—A.
added
to
staff of Baumann Investment
228 Carondelet Street.
.
v '
M.
the
Co^;,
Volume 167
Number
COMMERCIAL
THE
4702
FINANCIAL
&
CHRONICLE
(2333)
2S
J.
Our Reporter
Dorsey Brown
Renamed by Bait. S. E.
Governments
on
'
BALTIMORE, MD.—J. Dorsey
Brown, MacKUDin, Legg and Co.,
By JOHN T. CHIPPENDALE, JB. 5————
has
been
nominated
re-elec-
for
Reappraising Consolidated
The
government securities markets are adjusting to the rate
pattern that apparently will be in use unless the inflation spiral
should get out of hand.
Volume is fairly sizable as holders of
Treasury obligations make switches in positions in order to obtain
the best possible return in accordance with their individual require¬
ments.
The feature of the market has been the strength in the
ineligible issues which has taken these obligations to levels that
bring them in line with the bank securities.
Insurance companies
have done no important buying yet of the taps but they have, how¬
ever, ceased to be sellers.
Savings banks and other non-banking
institutions have been the principal buyers of the restricted obli¬
gations.
.
.
Since
sharp
.
earned in
.
.
sion
dictions
bond, with the interest in this obligation coming from
smaller banks mainly, although some buying is in evidence from
the larger institutions.
The other market leaders in the bank list such
as
tending with
from
each
to
one
the
for popularity
other
depending
other,
upon
under way.
.
undergoing
rather sizaole switches,
.
in this one.
now
.
.
a
which is what is going
The shift from short's into-longs that is taking place is the re¬
of what took plate the;- latter part of last year and the early
months of 1948.... In the short space of six months there have been
very wild gyrations in the
Federal at one time the only buyer.
same
ury
are
.
...
going to give Federal
an opportunity to make a profit on secur¬
bought in those/'dark days" when almost everyone
liquidity and the more liquid one could be, the better it
wanted
were
liked.
as
the banks must have other
up,
with
committee.
serve
the
larger return.
the
authorities
.
.
This brings
.
the question
up
to when
as
obligations, because they will sell securities to keep the
and to prevent it from going up too far.
This time they have the securities to supply the market with and
market orderly
.
.
.
line.
.
.
Insurance companies
.
Since Nov.
PA.—At the
PHILADELPHIA,
may
dinner held
election
May
Whitman's, Philadelphia, the
Barnes
be able to get
Club
Women's
of
Other officers
Lofland
&
Div.,
Jenks,
already buying eligibles and taps.
Sara-Jean
Treasurer:
Wagner,
Montgomery, Scott & Co.
.
.
Secretary:
.
.
.
.
.
2%s due Sept. 15, 1967/72 were between 104.24 and
103.7; the Z%s due Sept. 15, 1956/59 between 103.30 and 103.11;
2%s due March 15, 1956/58, between 105.21 and 105.1; and
the 2s due Dec. 15, 1952/54, between 102.1 and 101.27.
The
...
ineligible 2l/2s due Dec.
15, 1967/72 held at about 101 while the
of
000
1959/62
were
bonds
government
of
.
which
$895,563,000
were
due
.
in
The major part of the support of the government market came
between Dec. 24, 1947 and March 24, 1948, when $3,943,265,000 were
>
bought with issues due in
more than five years aggregating $3,758,These purchases were at "pegged" prices, such as 101
for the 2V2S due Sept. 15, 1967/72, 101.8 for the 2lMs due Sept. 15,
1956/59, 102.24 for the 2V2s due March 15, 1956/58, and 101.4 for
the 2s due Dec. 15, 1952/54.
882,000.
.
.
.
.
.
levels after
Banks
were
probably
after that date.
■
.
.
not
The
.
were
pretty much above
.
ineligibles continued at "pegged" prices
'
After March 24, prices of the longer eligibles and restricted
obligations moved away from support levels, which relieved a good
part of the burden of the monetary authorities.
Although longterm Treasuries were taken out of the market after March 24 by
.
the money managers,
Trust Accounts.
.
As
,
....
these securities went mainly to' Government
'
.
matter of
maturity of more than five years, although during this same period
they purchased $685,792,000 of Treasury bonds.
In fact last week
the Central Banks reported a decline of $1,000,000 of bonds due
longer than five years.
While some of the bonds bought by Fed¬
eral were at prices above those presently prevailing the bulk of them
were taken at levels that give-the Central Banks a profit now, espe¬
a
...
.
.
J
,
.
investment
short
eral will dispose of these securities.
workers,
to
company
on
the
retroactive—to
screen.
which
.
.
,
Freres
&
Co., New York invest¬
ment firm, has been named a con¬
sultant 4>to the National Security
Resources Board.
economic
of
adviser
plans and
which
just
He
to
will
the
program
act
as
board's
division,
Ralph J., Watkinghas
been
Watkins is
named
on
director.
Mr.
loan from Pun &
a
side
as
The
partially-exempts have a good tone, led by the 2%% due
coming mainly from Chicago and mid-western
banks. {.
Savings banks are showing a preference for the 2V4S due
1959/62, and the tap 2]/2s that become eligible in the early 1950s. .4
1960/65 with orders
York
pals
at
165
Broadway,
be
City, is announced.
in
the firm
are
Princi¬
Joseph A.
cents?
share in 1948, it is estimated
year's
wage
increase
per
which
tion
decided by an arbitra¬
was retroactive tf
was
board and
Jan.
1, cost the company about
$9,000,000 for the calendar year—
equivalent to about 50 cents ?
share after allowance for reduced
income
taxes.
This
ceedings have also
tration
it
and
Ryan and Ernest J. Hall.
is
year's
pro¬
arbi¬
to
gone
understood
£952/54 and the World Bank bonds.
were
formerly officers of
Herrick, Waddell & Co., Inc.
point
may
growth
substantial oper¬
the next two
over
Transportation of
the New York area,,
will facilitate
increased use of gas for apartment
heating,
air - conditioning,
etc.
(Natural gas will be used to mis
with manufactured gas.)
Edison
recently
issued some
by
1952,
to
third
a
increases,
of
round
wage
it is
possible that this
allowance will prove less
year's
generous.
Another
difficulty is the
con¬
tinued upward trend of fuel costs
It
recently
was
John
Lewis'
L.
estimated
that
maximum
de¬
it
privilege
version
2.75%
tance
due m
3s
shares per bond).
With the stockselling around 24, the conversion
privilege is definitely attractive.
The
bonds
are
selling
around.
106^. As a bond without a con¬
worth
will
debenture
$57,000,000
15 years which are convertible
into the comm on; stock of 25 (9C*
tha<
granted
hence
basis),
price indicates an
mium of about 3V2
conversion
might
be,
(about
103
estimated
an
the
a
present
estimated pre¬
points for the
privilege.
Consider¬
fact that the stock has
sold above $25 in each year since
1924 or earlier, with the excep¬
tion pf 1941-3, the long-pull ap¬
the
ing
preciation possibilities appear
worth the "call" of ZVz points.
mands
might raise the average
of coal for the utilities from
ton to $9.
a
It
will be conceded
seems
in the event
even
Forshew Associated
very
With J. W.
prolonged strike. How¬
ever,
even
if half of them are
granted, it is estimated that they
might cost Edison some $14,000,000
a
share
year,
or
after
last
of
only the last quarter,
pany
lower
75
cents
p
savings.
This
apply to only the
the year, or perhaps
course
half
about
tax
would of
the
as
com¬
has a stockpile bought at
prices.
Moreover, Edison's
electric
business
is
protected
by
Thompson
John H. Forshew has
of another
research
staff
the
of
joined the
J.
Walter
Thompson Co. in New York and:
will head activities there on the
J.
Walter
Thompson
Consumer
Panel.
The
Walter
J.
Panel
sumer
was
Thompson Con¬
set up in 1939
behalf of Thompson
timely check of buying
habits and consumer trends. The
to develop, on
clients,
Panel
a
represents
a
correct crossbuying
fuel adjustment clauses in the rate
section
structure,
public and by checking its mem¬
though
While
not
there
the
gas
would be
lag in the partial recovery
higher fuel costs, nevertheless
the electric rate clause is a shock
absorber.
The
from
loss
On
higher
quite small in
favorable
near-term
Consolidated
Westchester
iary,
applied
increases
about
day-to-day shopping record
to give detailed informa¬
tion on: Reasons for brand shifts;
is
able
frequency
purchase; variation,
and location in
brands
used
and
of
by income,
regard
age
to
consumed.
credit side there is one
factor,
several from the longer-term
look.
the, American
of
bers'
amounts
the
in
Edison
plus
out¬
and
Lighting, its subsid¬
some
gas-
.
Both
longer-term
a
expected
agair
be retroactive.
However, in view
of the present nation-wide resis¬
increase
any
.
be large buyers of the 2s due
$9,-
natural gas to
continued, earnings
reduced about 45
1948.
New
over*
three years.
or
If the 10% ratic
fuel costs might be
Hall & Co.,
an
on
.
to gross were
of
investment i securities, -f with
effect
unsafe,
($4,700,000/,to
ating economies
th(
some
Ryan, Hail & Go-, Inc.,
figure
will also permit
with othei
compared
large companies.
on
the
seems
benefit by con¬
of
residential
business resulting from construc¬
tion of apartment houses; etc:-—'-,
although the fact that so many oC
its
customers
are
apartment
dwellers limits
the
growth lof
heavy electric appliances such as
water-heaters, washers, etc.
The
gradual decline in the practice of
sub-metering should also prove
helpful to revenues.
The com¬
pany's big construction program
com¬
to be
some
cents per share from
changes
siderable
panies generally, Edison's presen'
seems
It
to
50
From
changes. In any event
despite a declining trend in thr
depreciation ratio for electric com
rate of accrual
the
and
years
reconciled to
increase of more than 2$
view, Edison
s
and other
business.
Bradstreet.
offices
reported to
rate
has not yet entirely agreed,
although a large section of sur¬
plus has been earmarked for this
cost
-
Formation of Ryan,
The deciding factor will
»
are
the
rates
400,000 before tax adjustment).
pa¬
on
the
has
estimate of
any
cents to
pany
$6.50
to keep it orderly.
Pacific' Coast banks
March
accrue
On
electric
two
revenues.
all net
Public
which required the
ago,
past
however,
to the Commission's as¬
sumption that the depreciation
reserve
should be substantially
increased to make "straight line'
a
picture, "Money at
Work," produced by the March of
Time and sponsored by the New
York Stock Exchange, was shown
Inc.,
.
of
motion
be the action of the government securities market and the need
.
field
Formed in New York
.
profit motive will not determine when Fed-
.
in
.
cially in the eligible issues.
However, the
ment, Eleanor Tobaben, Q. C. Collings & Co., Inc.
new
'
record from March 24 to May 19, the Federal
Reserve Banks did not acquire any government securities that had
a
Publicity,
WASHINGTON, D. C.—A. J.
Hettinger, Jr., partner in Lazard
.
.
year
on
said to be
the
Commission
unlikely that all of these demands
15, 1967/72 and 100.0 for the 2*4s.
due Dec. 15, 1959/62, forecasting sizable purchases of tap bonds
by the authorities.
1
Board:
Hettinger Consultant lo
Security Resources Bd.
1948, indicating the Central
too large buyers of these securities
of 100.8 for the 214s due Dec.
>
Executive
Margaret J. Patterson, Montgom¬
ery,
Scott & Co.; Membership,
Florence
B.
Poehner,
Rambo,
Close & Kerner, Inc.; Entertain¬
sup¬
February,
early
of
order
an
the
readjustment in these1
rates, although it is impossible to
increase as
The cut in de¬
was
to
Service
share.
investigating
make
wage
due
entire
Commission
per
been
the
the
downward
compared
Last
.
However, the longer eligibles
port
Crispin,
President, recounted her
impressions of her recent trip to
Europe and this proved mighty
interesting.
For further under¬
standing of the new comers to the
.
than five years.,
more
;
P.
former
between 100.16 and 100.13.
From Nov. 12 to Dec. 24, the Central Banks acquired $971,903,due Dec. 15,
possible
a
they had last year.
preciation charges
Inc.
Following the dinner after the
election
and
completion of the
club's minutes, the traveling re¬
porter, Miss Emma K. Edler, a
the
2J4s
Jane
Stroud & Co.,
.
The
•
for
would
.
12, 1947
.
.
charges in
only about
revenue
cents
hand,
company seems
10% last year; and (2) the
management had made no accrual
low
Kirkland & Co.
(when the authorities first stepped in and
supported the government market) to May 19, 1948, the Federal
Reserve Banks bought $5,600,960,000 of Treasury bonds of which
$4,653,445,000 had a maturity of more than five years.
The first
phase of the support was from Nov. 12 to Dec. 23, 1947, and prices
paid for issues bought in order to stabilize the market were on the
high side.
This is shown by the range of quotations of some of
the market leaders during these dates.
.
gross
and*
received, this would
$9,-300,000 after taxes,
to
other
for
show¬
related
Of Phila. Elects
.
are
good
84
or
ended
If
summer.
were
amount
share
a
this
sum
"straight line" basis at the month¬
ly rate of $2,100,000 (plus adjust¬
ments).
Possibly this figure was
Invest. Women's Club
enough outside investments to meet their needs, but the "safety
factor" might bring them back into the government market. .
.
Savings banks
this
depreciation
of
rent
Vice-President; Anna M. Barnes.
do not need to resort to "Open Mouth Operations" as in the past,
to keep it in
& Boyce;
Miller &
Co.; and Walter M. Weilepp, Wal¬
ter M. Weilepp & Co. The elec¬
tion; is scheduled for Jupe 7*
the 1948-49 season.
chosen were:
ury
'
Edward
were
Philadelphia, reelected Miss Mar¬
guerite A. Campbell, of A. C,
Wood, Jr., & Co., as President for
.
likely to be sizable sellers of longer Treas¬
are
nominated
on the
years
J. Armstrong, Stein Bros.
W. Carroll Mead, Mead,
Investment
.
t
Also
two
for
from
the first quarter were
ing
17 at
sources
of income and government obligations certainly fit that bill.
.
.
Also there must be a lengthening of maturities in order to get
-
(1)
7.6%
annual
;
President of the Baltimore
...
If loans do not pick
late
have
months
Commission
of testi¬
it seems unlikely that any
decision: will be reached before
For the calendar
12
Service
mony,
.
.
Central Banks may turn put to be the only sellers of Treas¬
It could be that these rapid price movements
obligations.
ities that
was
government bond market, with
Now it looks as though these
the
somewhat
J. Dorsey Brown
Board of Governors
on
verse
some
for
Stock Exchange, by the nominat¬
to
.
improvement
being-
considering the volume
However, two factors detracted
l|
tion
market that is
Public
March 31 $2.20 a share.
the tax¬
with demand moving
the operation that is
Such action is not unusual in
.
and
ing:
2s, the ZUs of 1956/59 and the ZV2s due 1956/58 are con¬
of
little
very
The statement caused apprehen¬
the<^-
over
Edison reported $1.90
year
/f
est taxable
able
quarters
been borne out.
The most sustained demand is in the long¬
.
.
the September quarter.
some
factors which had temporarily
depressed earnings and their pre¬
Activity in Treasury bonds especially the eligibles has been
very selective and spotty at times with interest shifting rapidly from
.
dropped to $1.61,
of
...
issue to another.
in
stock
common
safety of the $1.60 dividend rate.
However, spokesmen for the man¬
agement pointed to a combination
.
...
one
the
on
a
In the 12 months ended Sept. 30, Consolidated share
recovery.
earnings
.
Edison
last] fall Consolidated Edison's earnings have enjoyed
$15,000,000.
time
ag^J for
rates totaling
Hearings
are
still in progress before th£ N. Y.
Charles A. Day Adds
(Special
to
BOSTON,
Murphy
The
Financial
Chronicle)
I MASS.
has
John W.
added to the
Dayf^&iCo., Inc.,
been
staff of Chas. A.
Washington at Court JSjtreet,
bers
of
"change.
the
mem-
Boston, j$tock
Ex.-
26
(2334)
Thursday, May 27, 1948
Corporate Bonds
that
(Continued from page 6)
statistics on
the
great host
charitable
educational
and
of
that
Association
of
gov¬
differential
the
between
are
the
In
winter
the
of
1945-46
States had
same
told
the
Standard
the
as
mitted assets. Of this amount 39%
was
invested
in
United
States
Government. This
Government bonds, 16% in mort¬
credit
that
the
the funds for the mutual
savings
banks
amount
savings
about
the
their
strengtheningthe
not put on the
list of investments legal for sav¬
sinews /of
American industry.
ings banks in the
York
Questions^ Considered
bonds,
I
for
ential
on
gov¬
the
public
debt,
Murray Shields has addressed you this morning on the
Note:
for interest rates.
(Ed.
Remarks
of
Secretary
Snyder and Mr. Shields
elsewhere in this issue.)
Unfortunately
appear
business meet¬
a
ing regarding the sale by General
Motors Corporation of some mil¬
lion shares of North
American
Aviation stock kept me in
New
York
yesterday and deprived me
listening to the
of the pleasure of
Secretary,
but
I
did not announce
the
the
understand
he
any .reversal
of
policy which the Treasury and
Federal
Reserve
As
I
said
bond is not
recent
before, however, this
the
longer term
one
cannot
guarantee that the anchor of
gov¬
ernment bond prices
may not slip,
indeed that it
may not become
or
expedient for the
Treasury and
the
Federal
Reserve
to
allow
some
*ate,
some
increase in the long term
it would appear that for
period it may be reasonable
to suppose that the
long term gov¬
ernment market
may continue to
be stabilized at
around a 2V2%
level. In April, 1946 the
long term
government
about
little
was
on
2Vs%
a
basis, and in a
two years has been ad¬
over
justed to
bond market
a
21/2% level.-
With the
many economic factors
and with the
involved,
logical and
psycho¬
political
imponder¬
ables in the
situation, it of course
would be
foolhardy to
substantial,, increase
term
government
sible, but
my
in
rate
say
that;
the
is
a
long
imoos-
judgment would be
fair example of the
a
which
have
existed
years.
In general,
said that in the
Here again
to ask
ential?
In
it
new
market
or
being
Is
question
Vz of 1%
differ¬
a
a
reasonable
the light of
a
today's
barring any tre¬
change in the amount
bonds coming into the
conditions,
mendous
of
have
we
ourselves:
differential
this
over
about
on
neighborhood of y4 of 1%,
whereas earlier this
year it was
about Vz of
1%, and in a number
of instances still
approaches y2
of 1%.
V
in reference1 <; to long
Government bonds, namely
stabilizing prices of the bonds
at levels to
yield around 2V2% or
slightly less. While it is always
dangerous to prophesy, and while
term
of
sell
now
in the
that
pursuing
bond
might be
early
part of 1946 thO differential was
been
have
this
basis, or only some 15
io 20 basis points
away from gov¬
ernments of comparable
maturity.
in
of
of
2%%
mangement
outlook
Our
and
in the
created,
supply of capital
it would appear
substantial widening of
differential
would
attract
any
enough purchasers of% high grade
corporate bonds to restore the dif¬
ferential to about y2- of l %.
Arid
look
for
npw
to
prices
see
of
minute
a
what
hatfe
might
we
been
high grade bonds
the
over
a period of
years. I like to sim¬
plify it in this manner: by
saying
that in 1925 the
4 y2 %; ten
years
was
3%%; ten
proached
3%.
around
3J/2%
in
2 Vz
rate
years later it
%;
In
and
1955
again, but
the
when
crystal
we
we
ball
government level
high
grade
ap¬
it
now
it
is
might be
cannot
and
consider
tell,
the
look
and
present
of 2V2%
differential of about
a
about
was
later, in 1935, it
and
a
y2%, giving
corporate
level
around 3 %, it would
appear that
now have a high grade cor¬
porate market where the rate is
we
not
The
relatively
unremunerative.
possibility that
in
effect
and
times
3.4
after
had
effect
bonds. In the period
required
meet
to
the
obligations.
Until
such
the amount of the securi¬
sold or guaranteed by the
as
Bank
exceeds
or
an
lower
securities
such
on
into
the
time has
short
a
the price of the
yield—than electric utility
straight debentures of
bonds. The
$3,175,000,000, the
bonds sold by the Bank
telephone
immediately
preceding the past two and a half
years telephone bonds sold as hi'gh
or
higher in price—i.e., with* a
Bank's
ties
•
The crowding of so many issues
ever,
time
in¬
favorable than it was in 1947.
the
be
if
Federal
taxes. Various
public utility
commissions have permitted rate
increases to
offset in part in¬
creased expenses, so that the earn¬
ings picture should become more
come
in
guar¬
the American Company and of a
number of the operating compa¬
a
erties have risen
tremendously
due to sales and due to the con¬
never exceed
struction
lion of bonds, and to date has no1
guaranteed
There
which
will
be
sold
or
the
Bank
will
$3 billion. Certainly,
by
practical matter, the market
a
will not take in
excess of $3 bil¬
obligations, or obli¬
reproduction gations guaranteed by the Bank,
costs in the not tod distant future]
unless conditions improve so that
So from a security viewpoint/if the
obligations of the Bank itself
would appear that on the as;
and of other guarantors are such
debt relationship
the corporate as to command confidence. For
turn
may
bond is
stands
real
out
a
to
lion of Bank
be
sound
investment, arid; the
better basis than
a
on
estate mortgage
fhje'
at the pre
present,
anyway,
it
woulc
that the practical limitation
the amount of securities that
seem
on
medium of investment.
Let
are
who th'nk that the amount
bonds
as
issues.
any
guaranteed
of
complete new units
with mortgage debt representing
a
far larger proportion of what
and
us
turn to the electric
light
industry. It is
impossible to find a yield
on any first grade general
electric light and power
almost
of 3%
market
bonds.
The differential from government
bond prices is in my opinion too
small. Furthermore, the propor¬
power
tion of debt to total capital is
generally highland in general no
large amounts of earnings are
being retained, nor in most in¬
stances
are
large
stock
issues
being sold to bolster the equity
capital
position.
On
the
other
hand, the electric light and power
number^f might be issued or guaranteed by i ndustry is growing, and in some
corporations which over a numb# the Bank is
about $3 billioivand instances steps may be taken to
of years have earned their
charges the existing bonds are well within provide more
equity capital, so
for interest and amortization
by this limit.
that an investor is justified in
a wide
margin, and there are in¬
The bonds of the International watching
the
situation
to
see
ent time.
tinue
to
There
that
are
a
they
should
con¬
their charges by a
In passing, it is in¬
teresting to riote that the cost Of
earn
fair margin.
servicing corporate' bonds is gen¬
erally much less than the cost of
cash.
I
Bank
havb been made legal for
banks
in
most
states.
savings
There
are
now
standing; orie
a
two
In this
ing
connection, before turn¬
the electric light and
industry, I would like to
from
nine years,
power
less
mention one bond which has not
tha'n
priced issues of the Bank, or of
not wish to
do
whether favorable investment op¬
portunities arise.
1
out¬
issues
2JA% issue due in
selling to yield a little
2J/2%, and one a 3%
issue due in 24 years, selling tc
yield a little over 3%. It would
seem
that the purchase of these
J. securities
or
future
properlv
servicing real estate mortgages.
Furthermore, 'the corporate bond
is a readily marketable
security
and can be quickly turned into
as
yet been put
the legal Hst
on
for New York savings
banks, and
I do not know whether
step's are
being taken to make it eligible.
The bond is the Consolidated Edi¬
deprecate the
son 15-year 3% Convertible De¬
investment of money in real es¬ fissues guaranteed by the Bank,
would be a good investment for benture, convertible into common
tate mortgages or in government
savings banks, and in the case of stock at $25 a share, or at the
bonds, but I do wish to point out
future issues would help in the rate of 40 shares per $1,000 bond.
that at the present time it is pos¬
reconstruction of areas torn by the This bond is presently selling at
sible to
obtain from corporate
war
or
lacking capital for de¬ 106 and a fraction, to yield about
bonds a remunerative return of
2Vz%. The maturity and return
velopment.
about 3 % with relatively high
are such as to make it
attractive,
Next, I think you should con¬
grade security. Now, based on the
arid there is a good chance for
fact that, with the notable excep¬ sider the bonds of the Bell Tele¬
making
a
profit to offset losses in
tion of the Pennsylvania savings phone
System
companies. The
Other parts of the portfolio which
banks, you gentlemen have a rel¬ pent up and unprecedented de¬
are bOUrid to
eventuate, as no one
atively small amount of your mand for service has called for an
can be 100% perfect in investment
enormous expansion" of plant by
moneys
invested
in
corporate
the Bell System, and this expan¬ management.
bonds, let us look to see what
bonds you might wish to buy if sion of plant has necessitated the
Railroad Bonds
j
I know that the phrase "railroad
you were to decide that an in¬ raising of very large amounts of
capital.
Part
of
this
capital
has
bond"
vestment
is anathema to many of you.
by you in corporate
bonds riot only would aid the na¬ been raised through the sale of .The
falling prices and bank¬
tional economy by providing tool's mortgage bonds and debentures ruptcies of the 30's remain all too
for the worker, but also that such of the regional operating com¬ vivid in your memories. But in
purchases would be a wise invest¬ panies, and a part by sale of the railroad field there were and
.
.
ment
of
larger
a
part
of
your
funds.
World Bank Bonds
Some
might say that the Inter¬
national
Bank
is
not
a
corpora¬
tion arid that its securities
bonds.
corporate
are
Actually,
not
the
Bank is given many of the attri¬
butes of a corporation, as our
Federal
law
implementing the
Agreement pro¬
vides that, for the purpose of any
action
which may
be brought
withiri the United States or its
Bretton
Woods
territories
against
with
of
the
its
possessions
in
Bank
Articles
of
debentures
by
Or
accordance
Agreement,
the Bank shall be deemed to be
at least
debentures
were
been
or
sold, iri 1947 $1.1
billion were sold, and in the first
half of 1948 $410 million have
sold
to
arise
such action at
equity shall be deemed
under
it may well be advisable
to concentrate purchases on bonds
with maturities of 25 years or
have
less, rather than those with longer
such action.
United
courts
any
States,
of
the
ioi
000
New
pany
York Telephone Com¬
mortgage bonds to be sold
On Jurie 29<
While the preponderance of se¬
issued in the past two
curities
and a" half years has been in the
form of debt, and
proportion of
debt to total capital has increased
in
the
total
to approximately 50%
period, some 20% of the
debt
of' the
into
stock
system
is
con¬
States shall
converted, and to increase equity
capital by a greater amount due
original jurisdiction of
any
can
to
the
cash
frightened
selling
selling based 6n> t{ie
intrinsics of the situation. It is
true that the railroads have their
problems, the chief of which is
the labor situation, but all indus¬
try has the labor problem to a
greater or lesser degree, arid over
the years the labor problem will
have to be solved if Americari in¬
dustry is to endure.
<
;
v
j shall
)h.
men¬
tion, first, the Chicago Burling¬
ton &
Quincy 27/s% bonds, due in
selling to yield approxi¬
mately 3%. The head of this rail¬
road, Mr. Ralph Budd, is the dean
Of railroad presidents. The C;B. &
Q. earned its fixed charges iri each
22 years,
reduced its debt from $252 million
to $182 million, or 28%., arid in
Company. The effect of con¬
versions is to reduce debt obliga¬
of
than
of the indiscriminate
year during the depression of the
30*s; from 1941 to the end of 1947
tions by the amount of the bonds
the
rather
was
of the Ameri¬
the
laws
some
selling
Of railroad* bonds
district
the
and
United
scheduled
are
sale.
This, last figure includes
$60,000,000 of Illinois, Bell .Tele¬
phone Company mortgage bonds
to be sold on June 2, and $90,000,-
vertible
and
good bonds, and if we exam¬
happened in the light
of hindsight it would appear ,that
are
Telephone
and
Telegraph
Company/ Iri 1946 $550 million
principal amount of bonds and
from. 31 %
in
convertible
ine what has
an inhabitant of the Federal
ju¬
dicial district in which its princi¬
pal office in the United States is
or
and
debentures of the parent Ameri¬
can
First, let us consider the bonds
of the International Bank for Recoristr action
a rid
Development.
3Y2%,
disregarded,
ar.
re¬
times before Federal income taxes
market
of
located,
be
is
many
law
cannot
to
fixed
to
charges
of
000,000
situation,
period
so
what
where the stated values for prop¬
over a
however,
member
when
up
billion
absolutely counted upon. How*
the United States is com¬
mitted to provide up to $3,175,-
machinery will decline, I think
agree that in most in¬
of time the rate may go to
and
provide
$8.2
avail¬
of income
fixed
guar¬
antee of countries other than the
United States cannot in all cases
public
and industrials
up
dications
S.O.N.J. bonds
a
differentials
Mr.
instances
between government
spoke to you yesterday concern¬
ing government fiscal policy and
and
York,
prices and corporate bond prices,
it is interesting to note that these
government securities,
fiscal policy of the
Treasury
still
are
New
But, to get back to the differ¬
closely related to the rate of
the
Banking
helpful in
of the Board.
it is evident to all that the
ques¬
tions Of* rate of return and
timing
of
the
i
very
Differential Between Government
Bonds and Industrials
timing and rate of return,
Secretary
been
investment- in
there
risks?
The
While
has
sort, where it would seem to many
that
technicalities
overbalanced
investment merit in the decisions
(3) Can corporate bonds be pur¬
without assuming undue
ernment, to the management of
public debt by the Treasury
Department, and to the policies
pursued by the Federal Reserve.
would
broadening the list of bonds legal
chased
The
S.O.N.J.
sidiaries.
bonds?
the
the
indenture
Board
Is now the time to invest
in corporate bonds?
(2) Can an adequate rate of in¬
come be obtained from
corporate
to
New
not, in
relating
to
the
debentures, place restrictions on
the borrowing power of its sub¬
the
(1)
return
of
by the Banking Board be¬
cause
Now, of the questions which you
have to consider, if you wish to
contemplate increasing your in¬
vestment in
corporate
shall name three:
State
management,
the
of
to
of
able period of years in the future.
This is in contradistinction to the
real
estate
mortgage
the
were
capable
ratio
the
for
anteed by it are fully covered
by nies now sell to yield around 3%,
relatively what is in effect the United State: or a little more than do electric
small'percentage of what may be guarantee. ■ The Bank at the
pres¬ utility bonds, and would there¬
reproduction cost over a reason¬ ent time has
outstanding $250 mil¬ fore seem to. provide an attractive
point differential
term
government
bonds, they
that
reproduction
plants.
stances the debts form
May I inject here that, despite
high credit rating of these
funds invested in corporate
bonds,
so
as
to take a larger part in
are
of
15 basis
credit at that time.
investments and
small
very
all would
sell
long
a
■
of
As to
did
a
from
the percentage of their investible
#
Oil
but
the
present inflated costs for the con¬
struction of plant and acquisition
$85,000,000 of
debentures in May, 1946 they sold
an issue of
25-year 2%% bonds
on
a
2.48% basis, which was at
be.Jj.oped that the
can*lric"Mise
situation,
in
that
the
of S.O.N.J. was at a
for industrial credit and
the
ard
com¬
countries
amount
their values except by the
purchase of new increments of
plant. While it is to be hoped that
supply of the highest
grade corporate
securities
was
very small. Actually, when Stand¬
pany assets are more liberal than
those governing the investment of
banks, it is to
ing
a
rate
peak
of
the
Bank's
corporations quired to meet the Bank's obli¬
the fact that gations., Some
people have fell
by
forms
of
the
charges wa'S at its lowest point in
the past
10 years, consolidated
fixed charges were covered 4 Ms
commitments
the
in 1947,
able
including such men from our
country as Mr. McCloy, Mr. Gar¬
ner and Mr.
McLane, but also the
have not been
selling their plants
to each other or otherwise Mark¬
States
perhaps
was
buttressed
debt
but
Even
when
loans' approved
most
utilities, railroads
unique
loans,
and
approximately
billion, or about 28%, was
investment of life insurance
United
industry,
today of
value
of
approximately the
year money on
basis
Oil
same
percentage
our
office
invested in corporate bonds.
While the laws
governing
debts
ment rate and the long term cor¬
America
$51 billion of ad¬
the
porate rate?
New Jersey that it could raise 25-
over
in
govern¬
legal reserve life insurance com¬
panies operating in the United
$14.5
.
of
report that at the end of 1947 the
gage
.
Security and Risk
anchor
an
ex¬
conversion.
upon
tional
by the executive
directors, including Mr. Eugene
Black, and carefully screened by
And now let us turn for a few
minutes to the security risk. The
risk will vary
greatly between
industries, ahd between companies
ernment bond prices that will not
slip materially, barring winds of
hurricane force, what about the
Proceedings of the Life In¬
surance
term
,
take the premise
we
have
we
short
>
(
If, then,
tremendous.
are
the
,
,
maturities, unless' affected by
ceptional circumstances,"
long
occur over a
in
future.
companies have
today. The savings collected and
being collected by the life insur¬
companies
than
term
insti¬
the life insurance
ance
likely to
more
tutions, trust funds and individ¬
uals, as their problems are also
different, but it is perhaps in¬
teresting to see what investments
The
material change would be
a
The assets behind the Interna¬
Bank bonds are not only
Savings Bank Investment
as
premiums
payable
1947 earned its fixed
charges 5%
times.
Then I will riientiori the Central
Pacific 3 %s due in 20 years,* and
•
Volume 1.67
Texas & New Orleans 3 ^ s
the
'
THE, COMMERCIAL
Number 4702
,
due in 22 years, first mortgages on
important portions of the Southern
Pacific
System, both bonds selling
yield about '3^%. While the
to-
Southern Pacific
have
was
to
recourse
compelled to
banks
the
and
the
R.F.C. in the early 30?s and
again in 1938, it has since put its
house
in
order,
reducing- its
j funded debt from $750 million in
1939 - to $540 million at the end of?
1947, or by 28%, - and its fixed
charges from $31 million to $19
million, or 38%. In 1947 it earned
its
fixed charges 2.7 times, and
serving, as it does, the great de¬
veloping Southwest, provides an
Mr. C. P. Van
Sweringen and our
firm the mortgage securing these
bonds provides for sinking funds
sufficient to retire the entire se¬
ries by maturity, which sinking
&
FINANCIAL
CHRONICLE
an
-
'•
ing 3%, in this field we do have has been raised to present levels.
a number of bonds
of early ma¬ The problem reaches the whole
turity that are not unattractive. way back to the mines, and its
In the oil industry, bonds matur¬ proper solution is more formid¬
ing-in less than 20 years of the able, complicated, and time-con¬
Other bonds which - are worth Texas Company, Atlantic Refin¬ suming than the uninitiated have
ing,
Phillips Petroleum, Standard supposed, ;■ j/;■;/Q
your study
are:
the Chicago &
Erie 5s of 1982; Erie Ohio Division
Oil
of Calif.,
Union Oil, yield
A while ago, scrap was men¬
Bethlehem tioned as a major ingredient of
3 JAs of 1971, "underlying bonds Of from 2%% to 2% %.
1970 yield the steel-making
the Erie; Pennsylvania RR. con¬ Steel bonds due in
process. The in¬
sols 4 V2S of I960; • and of course 2%%, and National Steel 3s due dustry requires, or should have for
fund
has
important effect on
price, acting as a purchase fund,
and in, addition serves to shorten
the ayerage maturity, ^
;
I
an
should not pass
by, if you
can
stand the long maturity, Atchison
General 4s due in 47" years, sell¬
in
1965
yield 2.65%. An issue oi the present volume of production,
Dairy
Products
Corp. around 25 to 30 million tons of
National'
debentures due in 1970 is sched¬
attractive medium of investment.
ing to yield about Zlk%. Further¬ uled for offering this week, and
may be attractive.
more, while at the peak in 1940
These
are
but a
few of the
Northern General Mortgage 5% one to ten-year equipment trusts
bonds- of 1973,' selling at 122^. a sold on a 1% average basis, with bonds which you savings bankers
In the
high premium which should not the ten-year maturity on a 1.75 may wish to; consider;
bother you gentlemen as you can basis, now a good ten-year equip¬ states where bonds • of the types
amortize the premium and obtain ment maturity can. be bought be¬ mentioned are not eligible for
a
yield of 35/8 %i. While the Great tween a'2y4. and a 2 Va basis, and savings bank investment you may
Northern did not earn its fixed should not be disregarded as. a wish
through
your
legislative
committees to see what can be
charges in all years of the depres¬ medium of investment.
done
to
have
such
bonds
put on
sions of the 30'Si it - has* through
Industrial Bonds
v,
the legal list.
bond purchases, refundings and
With the change which has oc¬
And lastly I come to industrial
conversions of
debt into
stock,
effected a reduction in ; funded bonds. Here again, as in the case curred in the corporate bond mar¬
debt since 1935 of over $113 mil¬ of electric light and power bonds, ket in the past two years you
lion, or 32y2%, and cut its fixed it is difficult to find securities of gentlemen now have a more fa¬
charges from about $19.5 million the first rank to yield 3 %. Per¬ vorable opportunity to invest in
to-about $7.5 million at the present haps one of the reasons for this corporate bonds.
The larger re¬
time, a truly impressive achieve¬ is the great amount of industrial turn that you can obtain from
'Next-1 will
mention
the
Great
,
.
ment.
were
In
fixed
.
I would
;&
its
charges
earned almost four times.
Under
;
1947
Ohio
ordinary
circumstances
consider the Chesapeake
refunding and
Improve¬
ment mortgage 3%% bonds due in
,
1996, selling to yield slightly over
3 %%, as having too long a ma¬
turity, but by agreement between
issues
which
have
been
placed
privately with a relatively small
number of institutions rather than
having been publicly offered. It
is to be hoped that some amend¬
ments may be made to our secur¬
ity laws so that the machinery of
public offering can function more
smoothly and so that you may
Some Economic Aspects
them without undue risk may fa¬
cilitate
over a
increase
some
in the rate that you are
deposits, thus, en¬
(Continued from page 8)
was 50,000,000 and the boom
half million
allowable
depreciation rate
increasingly heavy export of
scrap
during the past 15 to 20 years, and
the immense quantities of poten¬
tial scrap shipped abroad in the
form of steel used in prosecuting
the War.
vestment
ished
ton
annual
per
steel?
of fin¬
The
depreciation
charge against the product pro¬
duced on the new equipment, at
the same 4% rate, becomes $12
per ton.
That immediately poses
a
troublesome economic problem
because the average proceeds per
seems
At
to have gone beyond recall.
the fortunate bal¬
which formerly existed be¬
rate,
any
tween
steel
scrap and new pro¬
duction has been badly upset, and
no
one
at
knows where
a
its
on
feet.
For support it '
the scant profits
the
older
low-cost
own
call
must
earned
upon
by
equipment; operating
rate of capacity.
at* a, high
>
,
A
certain
amount, but
certain limited amount, of
only
a
that
kind
corded
give
limited
of
support can be ac¬
something
must
before
Of
way.
course,'
there are
some
compensating advantages to
realized, costwise, in the oper¬
be
ation of
but not enough to offset the
torted economy.
Thus it would appear, at least
to a member of the steel industry*
■
,
a
happens under present conditions
when a brand new fully integrated
steel-producing venture,, requires
approximately $3.00 of capital in¬
Much, if not all, 6f that
supply of
the scrap is to be ob tained to serve
savings to the requirements of higher caprovide more capital or tools for pacities. The alternative is more
pig iron, more blast furnaces, an
American industry.
inordinate drain upon our precious
raw materials, and a severely dis¬
tons of steel per fis¬
is
moderate 4%, the cost of depre¬
ciation per ton of steel is $4, What
ton, from the sale of finished steel
prevailing prices, cannot absorb
such a high depreciation charge.
concerned with' the matter have There is simply not enough mar¬
not been effective in relieving this
gin between the total of other
situation, which plays such an im¬ costs and the selling price to take
portant role in setting the limits care of such an added burden.
of
economical
steel
production. Under current circumstances the
The shortage is due mainly to the new production could not stand
more
cal year, intended
27
ton-of steel product is $100—a
figure considerably higher than it
was
several years ago—and the
accumulation of
oi the Steel Industry
H«'.v
J
,
If, for purposes of illustration,
the capital invested; per annual
couraging greater thrift and
after?
At an operating rate of
for rehabilita¬ 90%; the 96 million ton capacity
year of 1929, preceding the eco¬ tion projects abroad. In the offing can produce more than 86 million
nomic depression,- brought forth: a is a new national defense program, ton;: of ingots, or in an emergency,
peak, up to that time, of 63,000,000 the steel requirements for which at a higher rate, something around
92 millions. The prewar tonnages
tons. ' Not until 1940, when the are not yet definitely known.
are dwarfed by such figures. With
impetus of planning for defense
; Problem
of
Increased
Capacity
deference to the new factors which
and the heavy European require¬
have
entered the equation since
More than two years ago the
ments was felt by American j in¬
dustry was that 11-year old record various units of the steel industry, 1939, even 90,. million tons of in¬
exceeded.
The year 1939/ prac¬ each and severally in accordance gots is / an immense amount
of
'
tically unaffected by the War, with their respective situations steel.
and views, were laying plans for
Regardless
of
whether
it
will
^witnessed the production .of 52,800 000 tons of steel ingots and their postwar activities.
Bearing prove to be adequte, the industry
castings, 32,000,000 tons less than in mind the lessons learned from knows, and you should know, that
the industry produced in 1947. In the long period of prewar per¬ any larger program of rehabilita¬
:
other words, the figures for last formance, but with the desire to tion and expansion could not have
serve the needs of the present and
been handled, physically and per¬
year represent an increase of 60%
most
over
those for 1939, a thought- future
effectively,
*they haps otherwise, .in the strenuous
arresting.; comparison.
The per adopted what has come to be a period since the cessation of ac¬
capita incr$as0
somewhere' be¬ step by step approach to the prob¬ tive, hostilities. The reasons are
lem of increased capacity.
tween 45 and 50%.
Men¬ definite. Sufficient manpower has
Statistics, it is true, relate main- tion has been made of the 95,500,T not been available. Necessary ma¬
| ly; to/thepasU Their implications 000 peak capacity reached in the terials have been in short supply
mpstbe combined with oth^r fac¬ year 1945. It was known then that and for long periods unobtainable.
tors, new influences, and estimated as soon as the military crisis was The capacities of the industries
trends; if a picture, of the future passed, a part of that capacity serving the steel producers have
is to. be.paintad,/ The figures cited would have to be retired from ac¬ been severely taxed to furnish the
thus far do not project the need tive service. The terrific and sus¬ supplies and equipment required
for a normal or ordinary; peace¬ tained/drive; for maximum output for the
present; program, even
time production of almost 85,000,- was; move* tImmsomo of 4he/ iur*/ with the times for deliveries ex¬
000 tons of" ingots in 1947; It/ is nates- could/ stand; - the; figurative tended by more than 50%. If you
reasonable to conclude, therefore, baling wire v/ith which they were wish to test the authenticity of
that the actual results with which being held together through the thes© statements, just start now to
<wd are confronted, and they are period of desperation was wearing build a fully integrated steel plant
very; real, have been
weighted out; With the - necessary / retire* forr the production of a modest
with extraordinary or unusual re¬ ment of old and inefficient equip¬ half million tons of ingot, and
quirements, some of which are ment4 the steel, making, capacity learn something of the obstacles.
'old, and some new. Patently, there dropped to approximately 92,00,- r Ingots cannot be produced by
000 tons in 1946 and 91,000^000 providing
are still deficiencies to be satisfied
simply open hearth,
tons in 1947.
! ihlj the"domestic, markets? At. this
Bessemer, and electric furnace fa¬
: moment they are at least, 20,0.00,000
Meanwhile, the rehabilitation cilities, There must be something
! tons larger than they should be, and expansion programs of the to
charge"; into/ the: furnaces-*^
War
purchased scrap per
or
Unfortunately, the supply of
scrap is extremely precarious and
has been characterized for a long
time as "tight." Strenuous efforts
on
the part of interests directly
year.
ance
period of time
able to pay on
"outside"
■
(2335)
opportunity to purchase Steel-making capacity is not a
industrial bonds.
?
simple one. Particularly is this
>
when
j. While it is difficult to find first true
capacity
has . been
grade industrial securities yield¬ added to capacity and production
have
more
M
that wiih all of the foregoing fac¬
tors considered and duly weighed,
very* liberal; course, has been
pursued in the; strenuous attempt
a
to
meet
One
the; demands
can
likewise
the probability
embarkation
of
various
steel.
discern
thai, artiimmediate
the much
on
larger
advocated
expansion
program
by
for
clearly
would have
sponsors
availed nothing.
?
-
,
Financical* Side of Picture
new
efficient
equipment,
high¬
depreciation
on that part which
provided at a cost of
$300 per ton of annual capacity.
Either the addition of very highcost facilities must be kept within
er
has
reasonable
economic
•
proportions, -
higher prices must be secured
or
for
the
products
made
Higher prices, in
nomic
a
;
been
our
and
sold.
present eco-
preferred
or
desirable method of
procedure if they can be avoided.
Even in the case of steel, which
by
•
situation, do not constitute
comparison
modities, is
with
other
•
com¬
surprisingly low in
are being made to
price, attempts
recede
from
the
levels
attained
during the past year. As to the
relative position of steel prices, it
is pertinent to recall that during
"
•
steel companies were under way. mainly//bl^t:/fnrnace/nron^and
steel-making scrap. The necessary
tonnage in the strikes which Progress
have occurred since the surrender had been anticipated because of iron can be provided by building
of Japan. \
shortages of skilled; workmen, la¬ more blast furnaces, but they in
bebause of the loss of that amount
of
.
Looking further,;
No one who
one sees that bor 'and materials,
commercial demands has not had a - part/in any such
unusually high, the program can have an adequate
limits being set only by the num¬ conception of the difficulties en¬
ber of orders the producer is able countered.
By Jan. 1, 1948 how¬
and willing to accept, within the ever, the total ingot capacity of
export regulations of the United the
industry slightly exceeded
States Government; In case the 94,200,000 tons, and with the com¬
bars ? were down
and - the
steel pletion of plans now in progress,
available, the tonnage which could an additional million tons should
be exported would be determined be added in each of the years 1948
only by the ability of the pur¬ and 1949. That means a rated
chaser to pay.
Another factor in steel-making capacity
of more
than 96 million tons early in 1950.
weighting
the
future» load
on
Who* knows,? with any degree
American facilities is the Europe¬
an j Relief Plan,
with its possible of certainty, what the demands for
■?i
the regular
.
for export are
,
allocation
of
two
to
two
*
and
a
steel
will
be
in
1950
and
turn
must
coke.
be
fed
Additional
with
ore can
if additional mines are
There
and
must- be
cars
ore
and
be mined
developed.
additional
boats
to transport it from the
mines to the blast furnaces. More
coke, which is in short supply, can
be made when enough by-prod¬
uct
or
ovens
The financial side of the picture
is interesting.
fact
that
It is
a
well known
construction
costs
have
the perio 1 1940 to 1947 inclusive,
wholesale price of all com¬
modities in the aggregate, accord¬
the
rapidly in recent ing to the Bureau of Labor Statis¬
years.
To provide balanced new tics, rose 108%, while the average
capacity in fully integrated steel price of steel, based upon r com- d
plant now requires the expendi¬ meicial
records,
increased; by
ture of approximately $300 per about 46%,
>
;
the
So
statement
that
steel;
yearly ton of salable product. In
other words, for a new one million prices
are
surprisingly
low
is
been mounting
ton
installation
investment of
an
readily defensible,
Even so,: it is
around $300 million would be in¬
hardly possible that the
volved.
advocates who
times
That
the
is
more
than three
publicly
that
have
the
group of
been urging
unit investment
Value of the facilities .which pro¬
proceed
duced American steel just before
another 10 million tons beyond its
per
forthwith
steel
to
industry
expand
;
by
Were the; already notable increase in ca¬
pacity, would be the first, to/de¬
book value—a fend or condone the higher prices
the second World War.
comparison extended * to bring in
the
depreciated-
kind of figure dear to the hearts
necessary to defray
the added cost
of
comptrollers, accountants, and imposed by the inordinately ex¬
perhaps economists, but a .sort of pensive .new equipment;,
epsilon-iron to metallurgists—the
For almost eight years the steel
,
contrast would be
startling.
industry? has
been
operating at
exceedingly high
in comparison with its long-term
amount of capital investment per
experience. We hope, and others
ton of product plays an important with, us, that this condition may
part in the economics of the steel continue long into the future.
A
business.
Capital itself is worth peacetime economy requiring
dollars per year to its: supplier; a near-capacity production of steel
very definite sum if borrowed, and would be a good economy for the
hopefully a reasonable annual re¬ entire nation. The faith already
turn to investors if it represents so .substantially expressed by the
the savings risked by the stock* various steel companies, through
holder. Beyond that initial obli¬ the funds dedicated to enlarge¬
gation on capital investment, look ments and betterments, indicates
One need not go that far, how¬
ever, to point up the idea that the
for
a
it
affects^
rates
which
are
determination
to
serve
all
in which
depreciation charges. genuine requirements as effec¬
Now depreciation, the factor which tively as possible, without doing
is intended as an offset to the violence to the principles* of or¬
moment at the way
wearing out of tools and equip* derly procedure. It is fortunate,
to carbonize
ment and must provide for their we think, that in this expression
requisite coking eventual
replacement, cannot be of faith in the future there is an
likewise is in short dismissed
admixture of business sense and
as- a fanciful figure of
are
built
convert: the
coal, which
supply and calls for a substantial
expansion of mining and trans¬
portation facilities.
the bookkeeper; it is very defi¬ regard for economic considera¬
When and as* additional
nitely a part of the cost of pro¬ tions.
duction, No industrial concern, if needs
are
foreseen,
the
steel¬
It is apparent from this rig¬ it is to survive with facilities un¬ maker, judging from
'past permarole that the job of providing impaired, can: avoid adequate de¬ formances, will hasten to
meet
there¬ properly
i
1 tlVeoi on a. rational basis
balanced; additions, to preciation charges.
•
to,..
./
s'V/;,-
28-
(2336)
THE
'■
»
•.
\ »•'
' ;4
,
V::''.
.
*
"
COMMERCIAL &
.*/■' .' ^i
\
•'**
•
v-
FINANCIAL
J CHRONICLE
Insurance Profits in the Public Interest
well as
(Continued from page 10)
proverbial "rolling off a log."
Nothing could be further from the
the
truth, v
The
underwriters
could
55#
I
and effort has to be
of insurance
stocks
on
rights are being issued but with
prospective future owners. * Many
holders
such
sons
and
relatively
-others
poor
earnings, and
subscribe
cannot
because
the
S.
Government
which
kind
of
should
have
1947-48
started
version
a
the
of
scribed
could
facilities for the public.
Truly
that
it is
the
sad
a
tools
which
commentary
make
fire
a
basis
a
great
deal
money should be paid for
tools.
It certainly costs a
to
deal
great
acquire them.
to build
of
up
a
good
a
agency plant and to attract to your
home office the best qualified of¬
ficers,
the
cultivating new prospects and en¬
deavoring to convert them into
aiew stockholders to
supply capital
for the fire insurance industry.
This conversion has not been
easy task.
I ^ crossed
continent
an
the
U.
S.
Government
bonds,
not
yet heard of the War Assets
Administration paying someone to
times, not only to the West Coast
but the southwest and Gulf Coast,
cart away any of its tools.
But
to New England and Canada on on the open market, together with that in effect is what the fire in¬
such ventures. But before describ¬ any mortgages or real estate, up surance
companies
have
been
ing the difficulties involved in to nearly 82% more would have forced to do to obtain new capital.
persuading an investor whether been received than the prices at They have had to say in effect—
he be an individual or an univer¬ which new fire insurance com¬ if you will come in as partners
sity endowment or philanthropic pany stockholders purchased these with us in our business, we will
Prime receivables would sell you our U. S. Government
institution, to convert a cash bal¬ assets.
ance, a U. S. Government bond, have fetched their face amount bonds, our high grade bonds, our
some
other high grade bond or with a discount of less than 1% stocks, our agents' balances, cash
high grade stock into funds for instead of up to 45%, And dollar and other assets at discounts up
the purchase of high grade insur¬ bills could have been exchanged to 45%. Was there in the history
ance
stocks,' let us examine in for dollar bills at the U. S. Treas¬ of American business ever any
many
other high grade bonds, preferred
and common stocks and sold these
detail
what was being of¬
exchange. If the "pack¬
age" is relatively unattractive,
them naturally
more
difficulty
some
ury
fered in
the
or
corner
grocery
store.
exist
have been received if the prospec¬
tive investors had not had to
in
offered
which
Price Discounts From Liquidating
Values
The
securities
which
have
been
underwritten
since Aetna started the parade to
the capital markets last July have
2>een priced at heavy discounts
from
liquidating value. In certain
the discounts to stockholders
have been as high as 45 %.
Now
cases
what
does
this
mean?
That the
assets of these
companies, consist¬
ing primarily of U. S. Government
bonds, cash, agents' balances, and
bigh grade preferred and common
stocks, could be purchased
at dis¬
counts up to 45% from what
these
•assets would cost -if
bought dkii the
■open market.
In other wordsr in¬
stead of paying par
or even &• pre¬
mium for Government
as
they
The
to
Business^ In Low Esteem
That'is
insurance
new
;
bonds,f such
a measure of the low es¬
to which the fire insurance
business has fallen in the esteem
tate
of
investors. Apparently
horny-handed
try
will
savers
not
pay
of this
plugged
one
nickel for those assets of
the
coun¬
a
fire in¬
surance
company which do not
a balance sheet—those
which actually represent its know-
appear on
how and its means of
operation in
the fire insurance field.
Among
those assets, priceless to my own
of thinking, are goodwill
which takes* longer to earn and
shorter to lose than almost any¬
way
thing I know
fair
and
—
a
honest
reputation for
dealings over
many years.
Sound underwriting
skill in the home offices is an¬
priced at discounts
were
in
effect
counts up to
represented
total.
The
more
same
than
could
half
-other high grade bonds and
preferreds and
a
high grade
stocks,
Or take
commons.
common
the
be said for
stock
like
Standard Oil of New
Jersey. In¬
of paying 80 for this stock
in the open
market, one could pur¬
chase it in effect by paying
only
stead
44
which
represented
a
out
various
home office.
other
duties
of
A fine
agency
is not only invaluable
lutely
the
plant
but abso¬
necessary. Only after many
years and at a cost of
maqy jnil-
lions of dollars
from
4.5%
to
5.8%.
to yield 5%.
out
can
tional
Vbait"
holders
company—those
which primarily
differentiate
<oL45%>.or 36 points, from the fire insurance
company from
market price of 80. again
by pur¬
investment trust
chasing this "package" of assets. these
XPrime
agents'
mpst any bank
to
balances,
which
would
happy
be
buy at less than 1% discount,
could be had in effect at discounts
up
all,
to
45%.'^ And most absurd of
good,
,
har$, American
repiesentedq byl? deposits
cash,
in
•
the
l^ding<?bi£ii^5':^ this ^country >&s
constitute
which
does
a
fire
the
a
an
comprise all
and many more.
they
the
Altogether
tools
insurance
business
of
with
company
insurance,
which is to insure. Without them
fire insurance company would
a
become
as
for
an
much
the
investment trust, with
knowledge and capacity
business as' an
insurance
trust.;
This' "was .addi¬
for the
inasmubh
as
new. stock¬
the highest
grade fire insurance stocks
were
yielding only 2l/z% and 3% at the
time with others yielding in the
neighborhood of 4%.
With the
yields on the new securities aver¬
aging around 5%, an increase in
yield of from 25% to in the neigh¬
was being offered
as another incentive.
Discounts
value
from
such
circumstances,
travels from
in
my
coast to another,
literally to beat
off would-be: purchasers with a
club in their anxiety to get in on
the not even ground but "cellar"
did
I
not
one
have
investments?
In
have to leave
home in the first place and go on
a
I
kind of fire insurance securities
drummer's credit?
as
I
suppose
(and' I
any
On my travels,
salesman
does
Nor 0o I mean
*pr.amy way to slight the functions
am
investor
in
fire
insurance
shares.
He might be in
Dall5s, he might be in St. Paul,
he might be on the campus of a
university as-its endowment of¬
ficer pr he might be amid the ancompany
asthesias
and
wherever
disinfectants
of
he
rectors
insurance
these
and
boards of directors
compa¬
hard-headed
care
too.
And
well
they should, for if the fire
insurance business, as represented
by fire insurance underwriting, is
not as profitable as other lines of
business, why buy a fire insur¬
ance
security?
Those were the
questions which were hurled at
me on every side in my travels.
"Standard Oil's yielding more
than 7% today and its prospects
are
bright.
Why buy such and
such fire insurance stock?"
"U.
Steel
S.
than
7%
is
yielding more
Why buy such
today.
and such
fire insurance stock?"
a
"American* Telephone, blue chip
of blue chips, which maintained
the
dividend
same
during
stockholders
more
than
em¬
ployees, is yielding 6% todaywhy buy a fire insurance stock?"
"The Dow-Jones Industrial Av¬
composed of 30 of the
erage,
part
would
be
fire
insurance
only
a
stock?"
Such
are
few of the questions which
confronted
me.
leading American
corpo¬
cordance
with
their
costs,
leaving a reasonable margin of
profit. If the ifire insurance com¬
panies can't do this—and I had
own
candidly to admit that they could
not—then it
fire
a
are
we
Nor
words
we
need
be¬
for the millennium
look
not
other
In
come.
not going to get it.
we
are
going to solve this
of fire insurance com¬
financing with other pallatives. Financing through issuance
problem
pany
preferred stock can be helpful
certain specific situations but
is certainly no industry-wide
of
in
it
solution, in my opinion.
Credit
for unauthorized reinsurance or
,
expenses is
either. There
only one real solution to the
problem of getting more capital
for our fire insurance companies
so-called prepaid
for
lasting solution
no
is
in order that
they can provide the
capacity and facilities which the
public interest requires and that
is
through
greatly
increased
profits.
How has the oil industry fi¬
nanced and how does it expect to
finance
its
19„48?
during
growth
My friend, Joseph E. Pogue, vicepresident of the Chase National
Bank, who is probably the lead¬
financial student of the pe¬
industry in this country,
estimates that 30 leading oil com¬
panies will spend $2,100,000,000 in
1948 for capital expenditures. This
ing
troleum
three times the
is almost
fire
stock?
Or
are
insurance
companies fully
against
the
general
protected
loosening, of morals which
seems
to
which
after
occur
finds
and
wars
physical
creased
expression in in¬
fires,
burglaries,
arson
misappropriations of funds and
higher claims generally as the
border
line
between
right and
definite in
becomes less
persons' minds. >" Of
they are not.
And what
another Texas City?
wrong
many
What about the
ing
all
up
duction
of
new
course
about
plants go¬
the country for
over
atomic
on
the pro¬
bombs?
Over
at
Patchogue, Long Island, for ex¬
ample,- where the world's first
atomic plant is being built, such
little
questions
being
are
asked:
How do you shovel out the ashes
from a uranium "furnace"?
And
after you've removed this highly
radioactive
material
by remote
control, what do
do with it?
Scientists don't yet really know
and would feel safer if they could
put the
and
the
waste
shoot
fire
it
you
into
rocket
a
into
off
ship
space.
Is
insurance
industry fully
protected against all these highly
volatile v, new, sources
of
energy,
including the atom bomb? If not,
joked the investment officer of a
great southern university recent¬
ly, whose portfolio contains not a
single fire insurance: security, "I
think I stay right where I yam."
which
amount
Is
any
stay
little
where
while.
.
they
Now
that
they'll
"yam" for
what
vestors who "want to think it
a
that is
little
increase
an
of
average
the
over
less
no
than
the
fire
business
insurance
less vital to millions of Amer¬
Why should not the fire
icans?
insurance
business
be obtaining
expansion, for provid'ng facilities which its millions
of policyholders and agents and
brokers require, from earnings of
its funds
for
the fire insurance business itself?
Not only would policyholders-and
brokers obtain this
capacity.
Many of the
other problems which have been
trying the souls of the industry
for many years would disappear.
Hard pressed university endow¬
ments, pensions for retired min¬
isters and missionaries, hospital
agents
and
wanted
funds and other
stitutions
philanthropic in¬
together With the mil¬
lions of other small investors who
have
placed their savings in the
fire insurance industry, would re¬
ceive badly
needed
increases
in
dividends. These dividends for the
most
since
part have not been
before the war
f
dividends
have
from
advanced
other
as
raised
although
securities
much
as
50%
and 100% in some instances above
prewar.
Surely these wdrthy iri-v
stitu tions and these forgbtten in¬
vestors
are
entitled
tier
a
break
when the cost of
.living has "gorie
up as much as 70% sirice before
the war and the average weekly
wages, according to the 'latest fig¬
ures
of the - Bureauof Labor Sta*
tisbes, have tfseii in rndny iridusi
tries
to
think
to
143%.
In other words, the oil
industry, which is so necessary
only to the Well being but to
the safety of this country, is be¬
ing
financed
through
retained
earnings from the oil business.
to
company
investors
year
not
financing today.
prospective fire insur¬
ance
earnings
this
$2,575,000,000 for these 30 oil
1934-45
of
many
estimated
more
than 100% since. 1941.;
Agents and brokers .are,entitled
inertia
Too
from
income
are
companies,
That is the trouble with fire in¬
surance
cash
of
asked—why buy
was
insurance
looking for
ap¬
so
cause
be
disposed of by existing stockhold¬
ers' in the open market.
I was
who! could
today so
before and
ing some of the chemicals which spent for these purposes during
traditionally return little, is yield¬ the period 1934-45.
And yet all
ing close to 6% today, why buy a of this $2,100,000,000 will come out
a
man
na¬
tion's leading corporations includ¬
just
a
the
which has
great depression, and
knew
in
man—
to find;
about the un¬
They get paid for doing
just that by their boards of di¬
was, I was looking
buy up those shares
of companies which we were go¬
ing to underwrite and which I
least
the fire
ever
much more dangerous. Cer¬
and
unfortunately,
the
Golden Rule is not suddenly go¬
yet
a
him—to
at
a
easy
nies.
hospital as its chief financial sec¬
retary.
Whoever
he
was
and
for
not
are
liquidating experimental research
and
yields were, therefore,
outstandingly attractive. Why un¬
der
men
of
ord
borhood of 70%
ideal
The non-balance sheet
assets of
fire insurance
discount
Most of the
securities have been brought
new
here going to drop the
high falutin' term of investment
this be built
banker) I used1 to dream; of an
,°Pv
a
up
45%, have had yields ranging
selling for today> one other, learned only through dint
buy them at dis¬ of rauch perception and long ex¬
45% by purchasing perience.
Other immensely valu¬
floor of these
this "package" of assets in which
able skills lie in the field of acfact, why did
Government bonds in most cases counting as well as in
carrying
could
are
Well, gentlemen, such
such
make living
which
much easier than
ing to be embraced so that the
current
postwar recklessness of
persons and of things can be over¬
Underwriting Record
These
In describing
ing
that
say
other marvelous inventions of sci¬
ence
particularly tainly,
rations, I might add, for the most
part can price their product in ac¬
Yields
the "package" be¬
to prospective in¬
interesting inves¬
take,
tors.
And
I take attractive
to along with these high grade as¬ vestors, I have concentrated upon
its
discount
from
mean its. price in relation to
liquidating
liq¬ sets, the present and potential lia¬
uidating value and dividend re¬ bility which in their minds con¬ value. My comments on yield will
be very brief.
stitutes a fire insurance
turn.
The new securities,
company.
would
and
care
didn't mind.
such "come on"?
Taking everything into considera¬
tion, certainly 80% more would
off
that his investment committee
derwriting record, the profits rec¬
all
new
stock, in most cases, has been
subscribed by brand new stock¬
holders.
Hence the importance of
it
didn't
years,
great
It costs
deal
shrug
of
Of course, they care
During 1947 and 1948
derstood is that most of this
record
fire insurance in¬
these
pective
un¬
mediocre
either he
or
erably chillier than zero—by the
investing public today.
On any
up in business and to qualify in
buyers.
What was this
the various state's.
Let some new
mysterious something which, in a
company
try to do all these things,
kind of alchemy in reverse, turned
this pot of gold marked down 45% keep a record of its costs and see
what real going concern value is
into just another pot of porridge
Might I suggest that this
that had to be sold, cap in hand; today.
might be a fertile field for the
by investment bankers such as
New York Department to explore
ourselves throughout the country?
once its very able staff has com¬
The mysterious something—the
pleted its uniform accounting in¬
something that has been added— vestigation.
i '
is a fire insurance company.
In
Even the War Assets Adminis^
other words, if you or I had gone tration asks
something for the
down into the safe and taken out tools which it is
selling.
I have
but what is not generally
the
dustry during' the riast few
provide insur¬
pros¬
95% of the stock has been taken
with
vestment trusts to
including underwriters, ac¬
Hush, was thrown in
countants and others.
It costs a
something less palatable, nay even
by present stockholders.
great deal, in fact, simply to start
obnoxious to the appetites of
Klondike
■
profits of the
rational
of
preciate the enormity of the, dis¬ pliers of capital tQ a growing fire
counts being offered arid .the. in¬ insurance industry? Certainly the
centives
being given in' higher atomic bomb is not going to be
than ordinary yields for insurance abolished, at least not that we can
securities. But I was also looking see
now.
Cert&inly
the, clock
for a man who, when confronted can't be turned back on all the
terests of Wilmington.
But it is
certainly not the function of in¬
counts from the market values
of
New stockholders had to make up
the difference.
In the end about
op
sponsored by the duPont in¬
insurance company what it is are
valued at zero—in fact at consid¬
months only 50% or less of
additional capital was sub¬
seven
a
exactly the trouble. That
was
what was wrong
with the
"package."
That was the joker.
Along with these enormous dis¬
was
bonds, other
high grade bonds, preferred and
common
stocks, agents' balances
and cash, the discount on any one
of legal prohibitions.
In many of
the
underwritings of the past
Indeed
the treasurer of
that
U.
low dividend return
as
mouths
your
trusts.
was
ance
do not have the
cash to subscribe to
additional shares, others may not
wish to subscribe for varying rea¬
investment
decade ago I
listing these juicy bar¬
gains. Surely they represent the
greatest "fire sale" in history!; But
simply
necesssary
hope I have made
water in
which
of
one,
"Great Fire Sale"
spent not only with present hold¬
ers
the dollar.
on
who
merely "stand by" are those who
left holding the bag. A great
are
deal of time
in the companies' offices,
obtained for as low as
be
Thursday, May 27, 1948
1/j
is
it
going to convert these in¬
over
while, yet" to active sup¬
break tool While the profits
companies have been squeezed
the vanishing point, they have
a
naturally had to look around to
cut their expenses with a resultant
controversial
commission
situa¬
v
tion.
Nor could they be as
liberal
they might have wished"., in
making necessary salary readjust¬
ments in;
tiiei^ owrr k^nie. of
as
v
'"w *v.
(2337)
Number 4702
Volume vl 67
v
..
XV'!;
X
r-
.
'■
X-'-
•
In suih, the whole fire insurance
industry has been living on short
rations—the hardtack of mediocre
profits—while the rest of the busi¬
ness ymrld: has been feasting on
the* greatest- boom America / has
seen.
ever
I
.
going to go into all
not
am
the
•
reasons-
this
for
mediocre
.
another
After they settled
one.
down to munch in that; field, the
cowboys began to ride around
im e-YtoCy city of this country. It
is impossible to control the tor¬
nadoes of Oklahoma jand Arkansas,
impossible
We&t-. It ls
the Hufri*
control
to
It
of the Atlantic seaboard.
canes
is impossible to control holocausts
such as Texas City.
if
But
business
the
of
costs
this
great
be controlled, the
cannot
The selling price
of everything which I buy has ad¬
vanced enormously, since the good
old days of prewar.
My shirts
selling price
can.
cost more, my coal costs more, my
bread
costs more, my
Bank
World
circles, waving their hats
yelling.
So the cattle mill,
continued "Cactus Jack," and stop
eating; That makes them nervous
and thiriX Being thin and nervous [
them
makes
much
less
able
to
whether
der
Underwriter's
used
Southeastern
the
has
Case
been
not
number of states giving mu¬
17
privilege of in¬
vesting in the World Bank issues.
A
i
bill
the
of
and
has
the Governor for
making bonds of the
goes to
signature,
International
neither
investments
a
time
the
tunity to put
the
nor
on any
fat.
oppor¬
Some of
passed both House
Massachusetts Legislature,
now
struction
Bank
and
for
Recon¬
Development legal
savings
banks
for
within that Corhmonwealth. There
chivvying ho doubt has been are 190 mutual savings banks in
necessary.
But may I make this Massachusetts and their aggregate
suggestion: That every program deposits are second only to those
this
of reform for the industry be re¬
examined right now
in*a spirit of
of
savings
State.
banks
in
York
New
At the end of 1947 such de¬
statesmanship and conciliation to
posits totaled $3,166,824,240 and
absolutely represented approximately 17.8%
essential.
What I am appealing of all mutual
savings bank depos¬
for
is, in a very real sense a its in the United States.
"breathing spell" for the fire in¬
The history of savings banks in
surance
business, a time for the Massachusetts reaches
back
to
determine whether it is
pork chops
cost more. Practically everything
business not only to get its breath
1816 and the savings institutions
that I know of costs nearly twice
after the many changes that have
in that State have earned a repu¬
as much as it did before the war
taken place during the past tour
tation,; for
integrity
which
is
except fire insurance. 1I cannot
years but to put on the necessary world-wide.
go mto a dissertation on fire in¬
fat to make it an attractive in¬
That is
rates here.
surance
sub¬
a
ject in itself. However, it is evi¬
dent that the troubles of the in¬
dustry
due to the fact that its
are
profits, which in the final anal-?
ysis
;■
dependent
are
have been
ing
upon
rates,
heavily depressed dur¬
boom time period. Satisfac¬
tory boom time profits should have
been realized not only to attract
a
the capital needed for the expan¬
sion of the industry today but also
to
set aside the
oning which
more
may occur
tomorrow.
than that. These profits
would have helped the
fire insur¬
industry work together as a
team—its three major components,
those who work for and with the
ance
companies, the policyholders and
investors, all pulling together in
unison to keep the insurance busi¬
ness
.and
of this country
the strongest
safest in its long and honor¬
able
history. Insurance profits,
generous
insurance profits, are
•necessary in the public interest if
this country is to maintain a grow¬
ing and healthy insurance indus¬
try.
invest
to
in.
Under
such
a
"breathing spell" all of us, those
who
work
for
the
companies,
agents,
brokers,
adjusters
and
others;
policyholders,
and
in¬
commis¬
insurance
vestors—and
sioners
too—might move forward
together with a clear understand¬
ing that profits and progress in
all phases of this great industry
are
closely allied.
for that
reserves
inevitable day of post-boom reck¬
Even
dustry to work with and for and
Back
in
the
early days of the
profits was a "bad"
word. [Stuart [Chase; in fact, once
Deal
New
wrote
confidential memorandum
a
for the New Deal ghost writers in
which he pointed out that certain
words have good public conno¬
tations and others poor. Savings,
he remarked, had a good conno¬
tation and people
Abner
winding
thought of Uncle
balls of twine
up
and
putting them on a shelf in the
family cupboard.' Public interest
was
a
good word. Profits was a
bad
word.;
;
^
:
isolation is past in
believe
enough
have
we
from
away
far
moved
those
early
days of the New Deal to have ac¬
quired the perspective and the
persists as long as in¬ courage to place
profits and public
surance is regarded as something
interest together. During the '30s
apart from other businesses; as and the
subsequent years of re¬
3ong as profits from underwriting armament and
postwar boom it
.are allowed to be microscopic or
was proved that profits and public
like Harvey's famous rabbit that
interest go hand in hand. Profits
-wasn't there.
The insurance in¬
are
still the mainspring of our
dustry cannot continue to attract
economy.
Profits are simply the
-the capital and the best brains of
wages of capital, which pay in¬
the country under' these condi¬ vestors for
its use, which provide
tions. Capital and brains flow into
industry with its needed funds for
those
sectors
of
our
economy
expansion and without which in¬
tionism still
which
promise
the
greatest
wards
and avoid like
those
whose
profits
♦Our industries
•one
from
are
the
re¬
plague
meagre.
are
hot segregated,
This is one
another.
•country, even more than it is one
-world.
>T'[/
'A.A:V
.
v
;•
'
■
•
■
'
•
[X^ Stop Chivvying the Cattle!
X^&at positive step can be taken?
*The following story which J heard
[ down in Texas, may-be; apropos^
[The
sage
of Uvalde., known by his
dustry. cannot progress in its
affairs
internal
commissions.
built
on
be
it
own
salaries
America
has
or
been
the cornerstone of profits.
I appeal: to the statesmanship arid
vision of the present commission¬
ers,
to such.worthy commissioners
with
whom
have
been
neen
of
I
am
proud
to
once
associated, as Bob DiYork, Ellery Allyn
New
of Connecticut, Frank Harrington
of Massachusetts, -Chris Gough of
New
George
Jersey,
out of 17 States
will
make
a
of
total
having mutual
savings banks in which Interna¬
tional Bank bonds are legal in¬
vestments.
Wall Street Blood Bank
t
Arrangements have just been
completed for establishing one of
the
largest blood banks * in the
country. ; Practically all of ^ the
employee organizations in the fi¬
nancial district have joined forces
to
available to their
make
bers,
numbering
over
mem¬
5,000
(and
Bowles
of
principal factor of military"
supremacy is the capacity df a
nation to create the most effec¬
tive weapons before a potential
enemy nation's scientists can in¬
vent them. This not only means
we
must attract to America; the
best foreign scientists but that we
in
clear
a
superiority
type of warfare, where
military tradition had not pre¬
the
the
of
use
most
fully aware of the value of
preparedness, but the high rate of
are
obsolescence that flows from
rapid
in
advances
added
to
.
.
.
the
technology
tendencies
established.
maintain
It
is far
better
be
with
won
to
mass
and
A
military, establishment based
permanent universal military
service or on peacetime draft will
become convinced of the perfec¬
its
methods'
nation
families) -a
blood and plasma.
free supply of
The New York
Post Graduate Medical School and
Hospitals' arranging to send its
Mobile
Unit
to
the
New
York
Stock
Exchange Medical Depart¬
ment, where voluntary donations
blood
will
be
obtained
from
It
hoped to eventually include all
Wall Street employees under the
plan, according to Andrew W.
Shuman
of
Association
the
of
Customers Brokers and Chairman
Of * the
Committee of Wall Street
which inaugurated
Associations,
the
idea.
and
plasma has been accumulated,
excess
When
sufficient
blood
blood credits will be avail¬
able for charitable and other pur¬
at
the
of
the
Committee
and
discretion
Committee.
Others
their
when;, Vice-President, was once
tasked point: blank by [ the late
Virginia,
Carolina,
.
the
Administration's
old
on
honor
a
"profit" is not
save
in
his
own
cowboys.
Let us resolve, [ from
No sooner was the herd country.
let into a good pasture for graz¬ henceforth, that this shall no long¬
ing^ pointed out "Cactus Jack," er apply to the business of fire
-than they were whooped out
into insurance.
-r
.
,
<*■[.;•
- :
k,
.
next
in
in¬
more
more '
he
[^
: ;
importance
procurement.,
•
■
•'■
achieving victory by one, na~ *
tion
another
over
in
warfare is
in, industrial capacity.
weapons
obsolescing
so
supremacy
With
rapidly they cannot be success¬
fully stockpiled for future use the
nation capable of producing the
greatest
quantity
of
whatever
weapon
is most effective at the
v,
time
commences
(and y of
itself to other newer
as
the war proceeds)
war
a
adapting
unteers whose desire for the mili¬
weapons
life led to their enlistment,
Allies to aviod
training of large segments of her
manpower for military service.
Developing a military strategy
based upon small forces equipped
tary
holds
forced by the
an
second
element
of
supremacy
capacity!to
discover first the best weapon to
produce.
;
only
the
to
American industrial capacity ia
with the best and latest weapons,
unsurpassed
because
it
is > the
through product of an unregimented free
experimenting in a new war tech-, enterprise
capital
system
the
nology emphasizing machines, in¬ stimulas of which is the profit in¬
stead of relying upon hordes of
centive. The costly machinery of a
Conscripted manpower like the draft and the even more wasteful
JErrench, amazed the world.
:
;
expenditures involved iri main¬
From 1918 uritil 1936; German taining a larger peacetime
army
industry and productive output, place upon American [industry a
unlike the French and Polish, was tax burden
capable of forcing it
not saddled with the tremendous into
government operation. [So¬
drain resulting when a large part cialized or
government - operated
of the manpower is conscripted
production systems are utterly in¬
into unproductive military train¬
capable of production comparable
ing. Only 200,000 Germans using to that realized through a free en¬
tanks and planes were employed
terprise economy, as is borne out
against the four million conscript- by {he experience of .Russia and
trained Polish army, which was Great Britain.
~
d
j
• >
annihilated in 23 days. Another
Obviously,
the
regimentation
German force of 300,000 men re¬
recommended by the ^orrestalduced, the
French
conscriptTruman plans, although proposed;
Irained army of over six million
in the name of security, are the
men in a few weeks.
the German army leaders
,
,
The
issue
surest
American
lished before the German attacks
of World War II discloses the false
are:
in the conscript sys¬
Maginot Line exhibited
by top French military strategists:
tem
sociation
and
ment of control
ment and the
officers still
cessor'partnerships
!
:
war
we
must
recognize the fap-
1 Page 24, MmoritV Viewk' oU Selective
Service, Repdf-t No. 1881,: 80ih- Congress,
Second Session. May 7.
1948.
on
huge surplus of
military payrolls.
a
miltary,, officefS' to, dis¬
courage voluntary enlistment and
to reduce the present size of our
armed forces during the period
following the ending of the war¬
time draft. Setting of new grade
requirements to turn away half of
the volunteers and to
bring about;
discharge of large numbersp
already in the service has
proven the most effective method
of producing a
"shortage" sup¬
posed
to
justify enactment of
draft legislation. Refusal to sup¬
port legislation designed to im¬
prove > military
justice and"the
caste system within the; service
In as been a factor contributing tothe lowered popularity of military
enlistment, which is the direct
the
of
.
America can prepare
successfully for. survival in future
civil govern¬
Every effort has been employed
byy th'e
.
[':» Before
over
perpetuation of'the
military jobs of
of
Charles E. Jank, Horace R. Wil¬
liams,
and [Edward ; S.
Goetze,
Vice-Presidents; and Dora Mc¬
Clelland, Secretary-Treasurer. All
were
formerly with the prede¬
method
of
destroying:
productive
capacity,
deadening scientific effort and
bringing about ultimate military
defeat. They have been proposed
by professional officers whose
primary interest* is the. develop¬
following reprint from an
"Time" magazine pub¬
of
confidence
the
organizations
Bill Hodges of" North
Hanratty,
Ed Larson of Florida,
saying that
without
The factor
in
men
responsibility of professional offi¬
cers.
*
by
re¬
,
"The French Army, 800,000 men
Harry E. Maigren, Accounting
Division, Association of Stock Ex¬ (with a trained reserve of 5,500,change Firms; John J. Boyen, 000) for a total male population of
Cashiers, Inc.; Edward R. Rim- 20,000,000, was the big armed
mels, Cashiers Section, Association force of Europe from 1919 to 1935.
of
Stock Exchange Firms; Neil
Last
September General Marie
Brady, Corporate Bond Traders; Gustave Gamelin, France's Chief
William Reid, Friday Night Bond
of Staff, assured his government
Club; Glenelg P. Caterer, New that he could roll his men through
York Society of Security Analysts;
the
unfinished
Siegfried
(or
Michael J. De Marco, Purchase & Limes) German Line like marma¬
lade.
Sales
Both
the
German
Division,
Association
of
army and
Stock
Exchange
Firms;
James [the Limes are stronger now; but
Fitzgerald, Security Traders As¬ as of June, 1939, the French army
•
mi(Ch
is
cherishes individual liberty.
.
being chivvied about entirely too
control
of the military, for the
telligent a ; man the
niques. It would resist change and
would rest on past standards of
performance.
.•,.■ ,
In
1918,
France and [[Poland,
blindly following the demands of
their military
leaders to whom
they
mistakenly attributed the
winning of World War I, adopted
peacetime conscription as their
method
of* military
manpower
New York; Walter is still the strongest all-around
Senior Margin Clerks fighting machine in Europe/- [
Division, Association of Stock Ex¬
"Gamelin
extended
the
con¬
Wade Martin of Louisiana, Mar¬
change
Firms;
David
Walsh, script period from a year to 18
vin Hall of Texas, N. P. Parkinson
[president Roosevelt, the .question:'
Senior Order Clerks Pivisipn, As¬
months, to two years. He has con¬
of
"What can I do to revive busi¬
Illinois, Jim McCormack of
sociation
of
Stock ■■■< Exchange fidence in the
army he has built,"
ness?;?, .yice-rPresident G a.r n e r Tennessee, Dave Fiorbes of Michi¬ Firms.
'
—"Time" magazine, June 12,1939.
.-fhqughi; !qver tliis question; which gan; Seth Thompson of Oregon;
Luke V Kavanaugh
X With the backward-mindedness
of
Colorado,
used to! bother so many of us dur¬
typical
of
American
military
ing the '30's, and then is said to Billy Sullivan of Washington — Frank Knowlton a Corp. 1
leaders today the French officers
hqve replied, "You must give the and their associates—to help in ..OAKLAND,
CALIF. — Frank
every Way
they: can to bring Knowlton & Co., Bank of Amer¬ had drained /their nation of its
•cattle a chance to put on fat." In
good Texan metaphor he com¬ profits back to the' fire insurance ica Building, is now doing busi¬ productive resources of manhours
and material to conduct universal
ness
as
a
pared industry to a herd of cattle industry;" < >
corporation.
Officers
■and complained that the stock was
Gentlemen, I seem to recall an are Eugene V. Flood, President; conscription during peacetime.
"^Tejcas friends: as "Cactus Jack,"
civil
when
placed by the deadening influence
tech¬
and
highly educated elements of
nation, are the first to leave that
a
on
of
which
indispensable to the successfur functioning of any creative
genius. The military life is domi¬
nated by the principle of blind
obedience to authority. Extension
of the military control invariably
destroys the initiative and inde¬
pendence vital to the growth of
scientific
genius.
The
scientist,
armies and obsolete weapons."1
tion
•-
are
a
a war can
■■-•'•'[
ments of scientific freedom
highly alert research
and
development
program,
an
up-to-the-minute ■■■: • aircraft
pro¬
gram, and an efficient intelligence
service. The day is long since past
when
*
.
must continue in force those ele¬
toward
conservatism, will work to defeat
the purpose for which the system
is
;
The
this
,
their
poses
which military victory de-
demonstrated
was
Plan Is Announced
on
pends.
Germany, restricted to an army
of 100,000 men selected from vol¬
M:;g
is
But isola¬
international affaiars.
the
11
roll
Massachusetts
of
to
of
■
The age of
addition
members of the various groups.
Profits—A Legitimate Need
I
The
tors
modern weapons and methods. We
:
rust page)
m
machines, and the
'unprepared' western democracies
scribed
tual savings bank
club, to chivvy the in¬
dustry about so that it has had
as
!
Act; raising to;
passes
(Continued fr<
.
of modern
war
Savings Banks
Legislature
Industry a*"? Scienc i Determine Victory
[
Bonds
Legal for Mass.
them in
and
serve the -public interest in1 the
showing. The problems have been
ways nature intended themr "
seen clearly by management- but
So has it been with fire insur¬
they have been beyond its control.
It is impossible to control the fires ance in many respects during the
that are taking place every day past few years. Sometimes I won¬
Texas and the Middle
29
•
"
In the face of these acts the-
employment of large-scale adver¬
tising by the army may be rec¬
ognized not as a bid for more
volunteers
channels
but
of
as
a
subsidy
public'[opinion
to
de¬
signed to seek newspaper support
the : military programs X for
[conscription; *'X;;Xv: :;;[;• X:
pf
30
(2338)
THE
COMMERCIAL. &
FINANCIAL CHRONICLE
month
FederalJReserve Reviews Money Supply Situation
(Continued from page 2)'
reserve
funds
from
other
.
by
Banks
sources.
as
a
group
lion
dollars—Were
contrasts
period
were,
with
retired.
the
This
of 1947, as is shown in
III, when debt retirement
Table
therefore, under necessity in early
1947
to
sell
only
moderate
operations reduced the holdings of
amounts of securities in the
these
investors
about
equally
ket to
meet
needs.
reserve
banks
were
in
loans
with
funds
mar¬
Many
commercial
position to make
a
received
ment
banks
off
agricultural
commodity
February.
Some run¬
loans.tc
in
in
New
York
ment Securities
sales
finance
The volume of government mar¬
ketable securities outstanding was
flect
a
reduced $4.8 billion as a result of
their
first
debt
quarter
stated
retirement in
of
1948.
As
above, the retirement
gram
was
securities
the
funds
and
primarily on
by the Reserve
redeemed for cash.
ably
bil¬
one
the
of
end
tent
bank
on
Utility companies prob¬
used
part
the
of
that
January.
bank
funds
ments continued in
large volume
during the first quarter of 1948,
ex¬
first
but
of
deposits
obtained
as
effected,
was
reserve
negotiated earlied
positions
bank
and
in
were
p'XM
'TOTAL LOANS
Although, for
held by individuals and businesses
Reduction of $5.3 billion in the
of deposits and currency
volume
number of months
a
during the
first quarter of 1948
resulted from the large Treasury
been some indications
tightening in the terms at
mortgage credit is being
made available, no important
slackening appears to have devel¬
-
a
120
sion
of
The
'
'V'V.,). i
100
volume
of
new
100
has -remained large and,
despite some reported moderate
tightness in the mortgage credit
market, banks have added sub¬
stantial
amounts
to
their
rency
gage loan portfolios. ■
T
Banks also extended additional
rv
hi
■:■%•.;
y
80
f
■>
;':v :;V'.
>
credit
60V T
V—
■
.'V
80
SECURITY:s
V:4 V
/
V
■:
'
V
.
<
60
.
•
.
y
banks
credit
at
continued
about
of
$100
%
■
'
1
.
i,
public,
com¬
a
flow
and
a
factors
were
increase
/
the
volume
currency.
tending
to
of deposits
The combined ef-
-i
Item—
gg
■
■
Jan.
"t
"
•
■
■
uary
20
'
i'T
OTHER
Treasury surplus cash funds
operating surplus—
Sales of savings bonds and notes, net
2
*
SE CORITIES
i
r
Cash
Total surplus cash funds
1
i
(944
Total
2.0
1.8
2.5
6.3
0.4
0.2
—0.3
0.3
2.4
2.1
2.2
6.7
Reduction in the volume of out¬
standing
1948
Retirement
Banks
of
U.
_
S.
able securities held
_
Govt,
TREASURY CASH INCOME AND OUTGO
^Commercial
16
0.5
0.7
1.2
1.5
—0.8
—0.5
0.3
by:
banks
_
0.1
0.1
mercial
14
0.1
0.1
ernment
security portfolios. Com¬
mercial
banks
0.7
2.0
of
Treasury bonds and bought
Treasury
bills
and
certificates.
These programs of portfolio ad¬
justment were reflected in the
security holdings of the Reserve
Banks, which in turn purchased
bonds
outstanding to businesses*
individuals,1 and State and local
governments, which during 1947
had been greater than in any pre¬
vious year in the history of Amer¬
icano banking, vslackened in the
first quarter of 1948.
Total loans
of all commercial banks increased
in this period by about $800 mil¬
lion.
This
growth was" larger
than in the corresponding
-■
0.2
(3)
1946, a year of very large loan
expansion,
but *was
somewhat t
-
smaller than
The
I
0.1
0.3
Including figures for week ending April 7, 1948.
net cash
receipts of U. S. Government agencies and trust funds.
than $50 million.
Factor—
decreasing available
re¬
serves or
increasing reserve needs:
2
Treasury cash transactions
ii
loan
ex¬
Growth in bank credit to
real estate owners,
'
years.
Loans for purchasing and
carrying securities declined grad¬
ually and irregularly.
On the
other
hand, expansion in' bank
credit to businesses, particularly
to borrowers at the big
city banks,
tration.
seasonal concen¬
the first half of each
In
.decreasing
reserve
Increase
v
Bank lending in the first quarseems to have been in
with
i |
small
Jan¬
Feb¬
uary
ruary
1.2
2.2
i
March
Total
4.2
0.7
loans
1ST
1948
Treasury Department data. For description, see "Treasury' Bulletin**; for Sep*
tember, 1947.
Reserve
Govt,
market,
-1
Including
2 Sum
balance
3
at
volume
At all
reserves.
0.2
,
0.4
0.2
r
i.o
turned
and
down
is indi¬
This decline,
largely the result of %
these
Chicago banks.
reporting banks out¬
centers
loans
the
was
loans
volume
well
of
main¬
or no
decline in busi¬
at banks outside lead¬
The
total volume, of
business loans bv banks .continues
at a much higher level thai) a
ago,:
,
Reduction
.
over
,
,
.
_
bank
loans "
r
outstanding to
City banks
.
appears to
V
■
y
haye reflected .primar¬
to food pro¬
sales finance companies,.
•0.3
ily declines inlobns
cessors,
0.3
and publid
futilities. "-Declines., in
loans to manufacturers- in the
the
in
in
.
the first quarter
'0.7
of
0.1
figures'for the week ending April 7,
Reserve
0.1
0.7
—-J
purchases
securities
net—
_
reserves
¥
weekly
commercial
as
a
of
business at New.York
of retirement of Federal Reserve held
Federal
entirely
the
of the year of about $200 million
0.2
Other factors, net—
type.
expan¬
curtailment in business loans
dicates little
...
0.7
excess
was
weekly
year
needs:
required
this
tained and outstandings increased h
slightly.
Available evidence Vin¬
0~4
Decrease in
r:
in
industrial
ing cities.
'
0.1
S.
decline
banks
ness
0.2
U.
almost
reporting
side
First Quarter 1948—
gold stock
Return of currency from circu¬
lation ii
^
Federal
pattern of
a
reflected
business
0.1
in
loans
the second half of each
year.
At
0.1
in
Reduction
in business
occurred
cated in; Chart III.
Factors making reserves available or
3
bank
at New York and
Increase in required reserves—
Other factors, net
::
1947.
of
pansion in 1947 and in 1946 re¬
flected different types of fluctua¬
tions in the various kinds of bank
however,
Factors
..
in
pattern
slightly in early 1948,
1
4TH
period
of
0.6
[In. billions of dollars]
3RD
issues
credit
3.9
Factors Affecting Bank Reserves and Federal Reserve Credit
1947
short-term
Slackened Growth in Bank Loans
some
•
sold
and
in the market. '
1.2
TABLE n
2ND
in¬
especially
institutional
holders, sold a substantial amount
0.4
*
12
./; 1ST
nonbank
and
vestors,
sion
3 Less
4TH
com¬
groups,
however, made large adjustments
in the composition of their gov¬
Slackening'in total loan
2 Includes
'3 RO
Investor
loans to businesses.
—
*Estimated.
1
1946
and
Banks
banks.
0.4
0.2
purchases of U. S. Govt.
securities for U. S. Govt, trust
funds
2 NO
in
folios—Reserve
line
Market
16
I ST
t
largely concentrated in a
banking system port¬
was
decline
ter of 1948
Federal Reserve Banks
BILLIONS OF OOLLARS
(3)
market¬
*Nonbank investors
10
government marketable
in the first quarter of
at city banks; the
sharp expan¬
sions in these credits occurred In
Commercial banksReserve
CHART H
TOTALS
small.
very
crease
Disposition of surplus cash funds
Increase or decrease (—) in Treas¬
ury deposits at:
-
for March.
QUARTERLY
in¬
as
of these years only a moderate in¬
1948
Figures are for all commercial banks in the United States.
Data are
for
December, 1940; June and December, 1941-1946; last Wednesday of
month, 1947
and 1948.
Figures subsequent to June, 1947, are preliminary.
Latest figures are
BILLIONS Of OOLLARS
March
,,
1946
other nonbank
by
indicated below, were
in
large
volume,
net
market
changes in their holdings were
vestors,
showed marked
"
1942
ruary
i
♦4
1
purchases
agencies
While sales and
mainly of urban houses, Was gen¬
erally sustained throughout both
First Quarter 1948Feb¬
-
LOANS
trust funds.
and
consumers and
/
relatively
a
small extent government
credit.
TABLE I
[In billions of dollars]
'.w.
balance sold $2 bil¬
Reserve Banks and to
continuation of the gold in¬
Treasury Cash Surplus and Its Disposition
40
/
20
the
deposit balances and to retire
and
the
million
held by
Further expansion in bank loans
,
on
government securities in
Purchasers included
Growth in the volume of bank
with¬
were
government securities held by the
Federal Reserve Banks.
com¬
at
V
/
1
:
/
\
ury
first
durable goods on
Growth in con¬
billion
the
-
•"i
40
mercial
rate
■
the
(■
.•
■•'•■■
/
/
/ V
'
other
instalment
sumer
*
j'y >'.
and
instalment basis.
N
/
in
consumers
quarter of 1948, largely in connec¬
tion with purchases of automo¬
biles
>
y
to
$6
in
pared with about $4 billion in the
first quarter of 1947, as shown in
Table
IV.
As
previously
ex¬
plained, this cash surplus was
used primarily to build up Treas¬
mort¬
y
/
y
of $2.7 billion
quarter of 1947.
drawn by Treasury fiscal and debt
management operations from the
total stock of deposits and i cur¬
mortgages
of
re¬
commer¬
This compares with
decrease
About
offered
-
?'
a
first
mortgage loans at banks.
f
>
1
cash surplus.
thus far in the demand for
oped
120
toward the end of
As the outlook for
Bank loans to others than busi¬
have continued to grow,
mortgage credit or in the expan-
of
AND INVI :STMENTS
/
the
securities.
fact
which
60
around
Decline in Deposits and Currency
there have
140
/
firm
were
govern¬
stability
is interest rates and bond
prices
improved, banks in March re¬
sumed their purchases of these
by
nesses
BILLIONS OF OOLLARS
-1
prices
and local
their
the market.
securities
corpora¬
the
in' the
State
1947.
eased.
loans
140
•
investment.
by
maintain
position, however,
cial banks
of
to
order
lion
supply
for
issues
In
serve
State
tions and
levels reached
out
insurance company loans to retire
BILLIONS Of DOLLARS
.
the
available
security
nies
bank
All Commercial Banks
,
to
quarter of this year were re¬
financed with insurance compa¬
supply
LOANS AND INVESTMENTS
-
relative
New
security sales, no net reduc¬
tion in bank credit and the
money
CHART I
-
of
large at
To
loans
portfolios
local
ties
such
proceeds
from security financing and from
investors, only
voluntarily for
presented
additional
very
bank
feet of these factors, as the table
shows, was less than in the first
bond
January and February.
Prices of
such
securities,
particularly
of
tax-exempt municipal securities,
had declined during the latter half
of
1947.
As
explained in the
March "Bulletin," this decline re¬
flected to a large extent an in¬
crease in offerings of new securi¬
de¬
company
some uncertainty in
concerning the future
government and corpo¬
rate securities did not increase in
Deposits
bulletin, insurance
posit balances were
last
interest rates and
of
prices,
balance to the Reserve
on
throughout
^
Of the matur¬
redemption—about
in
companies
which per¬
sources,
and
were created by
this process and, as
is'pointed out
in
an
article
elsewhere in th.s
insurance
other
credits.
banks and nonbank
those
obtained
from
mitted less direct reliance
were
ing securities held by commercial
cash
have
more,
was
focused
held
decline
seasonal
a
Refinancing of bank loans with
Other lenders may not be accom¬
panied by a reduction in total
Banks.
funds
factoring business.
Some
sales finance companies, further¬
pro¬
Banks, of which $3.9 billion
of
course
curities
re¬
may
for
need
Reflecting
the market
expansion
programs.
and
early in 1948 institutional
lenders,
particularly
insurance
companies, sold government se¬
bank
companies
reduced
because
nonbank
and
financing for
ho vvn
s
year.Xj
bank credit if these lenders obtain
their funds by
selling securities to
the banking system.
Late in 1947
„
,
in
prices
Changes in Holdings of Govern-
Treasury
by $4.7 billion,
divided between
investors.
from
redemption operations.
interim
corresponding
Thursday, May 27, .1948
;
1.1
0.6
1.8
1948.
securities and change in
Treasury
Banks, shown separately in previous table.
Change in Reserve Bank total holdings after adjuftment
maturing issues held by-Reserve Banks* *
>
for
retirement
of
food
processing industries' Were;.prob¬
ably partly seasonal but may also
have
resulted
quarter
smaller
of
part
from the
1947
of
and
the
readjust-
offset
a
contraction
Volume 167
generated
Number 4702
the;
by Treasury transac¬
tions.
cojp^rciaIi & financial chronicle
(2339)
growth shown in the latter half
theless,1 the necessity, because of existing inflationary
of 1947.
reserve
drains,
for very large
short period of time
.Demand / deposits, adjusted to t.1 Total
deposits and .currency,! sales in a
exclude U. S>; <Goverpqienk cter vpther\than U.- S.v Government de¬ probably induced some hesitancy
posits, interbank deposits^ ;ah<j posits- 'at the end
of
March on the part of banks to sell securi¬
items in process nf ^plleptipn. dP? amounted to $164 billion, or $3 ties at the same time for the pur¬
dined from the record high Pf billion more than a year earlier.
$$7 billion at the end of December Time " deposits increased during
pressures and
to the danger that further expan¬
sion in bank credit will make for
still
higher prices.
Bankers
were
urged to exercise extreme caution
in their lending policies and were
31
significant restraints
on monetary
expansion can be expected from
further cash surplus of the Treas¬
The effect of recent changes
fiscal outlook may be to
ury.
in
the
eliminate
the
Treasury
surplus
requested to curtail all loans for and possibly to bring about a
expanding Joans^i :
:
Drains oa bank reserves arising speculation, to guard against over- deficit, at least fox* the balance
'extension of consumer, credit; and of this calendar year. If govern¬
1$47 to $82 billion at the end of the 12-month period by more than from Treasury fiscal * and
/ debt
confine
extension
of
bank ment expenditures
March, as is ■show*1 |n Chart1 IYV. r $2 billion and demand deposits of retirement operations, and the to
tor defense
The
decrease in these deposits,
which are owned largely by indi¬
viduals
and; businesses, occurred
the fact that nearly $1
despite
showed
:
a
while..currency
decline.
;
v
Measures Restricting
billion of currency was returned
to, banks for deposit. A large re¬
turn of currencyfront circulation
is psual in January; as the need
for currency for transaction pur¬
poses is ■; seasonally low in the
post-Christmas period.
Currency
ajso declined in March, in part as
a. resplt of tax. payments in this
fprm;
Time deposits increased
further
at
about the rate, of
billion,
$1
over
i Pressure
ori
accompanying necessity for banks
tq sell securities in 4he market,
iv
Monetary
Expansion
.
pose of
were
,
restrictive
,
in
the
first
reserve
of the year.
Most banks have substantial hold¬
[In billions of dollars, partly estimated]
Quarter, 1947-
Market
for Cash
Net
fclass
of investor—
Change
(—)
—2.1
—3.9
Commerela|J)anics__»-^-^
U.. 8. Govt, agencies and
trust fundsJ___
—2.6
Other nonbank investors—
-4.8
—4.8
Federal
Reserve
Banks—
Market
Purchases
Retired
Sales
or
(—)
Net
for Cash
Change
or
(—)
—1 0
—0.1
—0.6
—2.0
—3.4
—2.5
—0.9
+ 0.3
(3)
+ 0.3
—0.4
—0.4
+ 0.1
(3)
—1.3
—2.2
—5.7
—5.7
+ 0.1
,
0.9
+
=•"
AU Uovt, marketable se-
,rA
1j
turltie^■
•r
1 Includes
figures for the week ending April 7, 1948.
2 Includes figures for the week
ending .April 9, 1947.
3 Less than $50 million.
"
i
,
TABLE IV
-
Major Factors Affecting Deposits and Currency
[In billions of dollars, partly estimated]
';r
t
Outstanding
During First
•
1
:
::
almost
of
3.9
1.0
0.6
2.5
1.5
0.6
0.5
0.6
0.8
1.3
0.4
0.7
'
Including figures for week ending April 7, 1948, and
obtained
above
that
through
the
was,
this
As a re¬
it
action,
no
was
—2.7
—2.9
+0.4
+0.8
previously
—0.9
—0.6
prevailing,
securities would
moderate book losses.
-these
Governors
sale
ol
result in
In
Leading
billions
announced
that
Outlook
for Monetary
demand
of dollars
0ates
fective
increased
16
16
Feb.
on
27.
required
This
should
increased,
may tend to 5
deposits and re-;
banks. In addition, bank
serves of
reserves
and
Future
Should such
a
seasonal
main
throughout the first half ol
1948 at levels below those prevail¬
ing at the end of last year.
In the second half of 1948, how¬
in
ease
positions, which
deficit
and
bank
reserve
Treasury cash
a
gold inflow would
tend to promote, would be a fac¬
tor
a
encouraging banks to expand
lending on an aggressive
their
basis.
If demand for
consumers and
financing by
real estate owners
continued large and if there is a
resurgence in loan demands by"
businesses, as is indicated by re¬
ports of business expansion plans,
there would be a strong market
tor
bank
credit.
Expansion
in
the money supply and consequent
additions
to
inflationary pres¬
sures
could result.
Under conditions of nearly full
utilization of productive resources
and
materials,
with
demand
pressing strongly on supply for a
broad group of goods, and with
large expenditures for military
purposes in prospect, it would be
difficult
to
avoid iqrther
in¬
creases
in prices.
Restraint on
bank credit expansion would J>e
desirable so that monetary ex¬
pansion would not add unneces¬
sarily to inflationary pressures.
Traditional
the
pattern prevail this year, loan
expansion at banks may show lit¬
tle further growth in the next few
months.
Total deposits and cur¬
rency
held by individuals and
businesses
accordingly may re¬
deposits prob¬
gold inflow*
mand- for bank
summer.
bank
ably will be increased by further
struments
loans, particularly
by businesses, somewhat slack in
the first quarter of a year nor¬
mally continue until about mid¬
be
both
expand
developments of the
type that tend to make the de¬
pansion
central
banking in¬
limiting such ex¬
not fully usable by
for
are
Federal
Reserve
because
of
the
System's1 responsibilities for
maintaining an orderly and rela¬
tively stable market for U. S.
government securities.
In view
of this situation the Board of,
Governors has requested the Con¬
gress to provide the System with
new authority as a substitute, or
partial
substitute,
for
powers
which, in substantial degree, have
lost their effectiveness as a result
of changes in monetary conditions
since prewar years.
In the ab¬
sence of additional powers,
the
authorities would need to impose
underlying
factors
may
bring about a resumption of rapid
deposit. expansion.
During this
such restrictions
period it seems probable that no
banks would also be essential.
ever,
re¬
requirements against net
deposits at central re¬
serve city member banks would
be increased from 20 to 22%, ef¬
Cities
Expansion
Seasonal
as
voluntary restraint
they can and
the part of
on
CHART IV
serve
Member Banks
rep 3rt
cost of reserve
reinforced
On Jan. 23, 1948, the Board of
Banks
eral
their
—5.3
CHART III
All Insured
upward movement in
part of 1947 in long-
term rates, the lowering of Fed¬
in the rediscount rate at the Re¬
?gqyei5fcnment securities.
COMMERCIAL BANK LOANS
interest
first
by down¬
ward adjustments on Dec. 24 in
StadMl Reserve support prices
s for
medium<rterm and long-term
April 9, 1947.
the
the latter
short-term
the
—4.8
,
in
in
.longer possible to obtain reserve
funds by the sale of longer-term
issues at large premium prices.
For many
banks that acquired
such securities at the higher prices
inflow--
rates,
rise
mid-
funds
reserve
sult: of
Changes in deposits and currency held by individV uajs and businesses, total
; \ Demand deposits, adjusted
Time deposits--
slow
in
increased
Increase in the
Expansive factors—
by a growing uncertainty
with respect to the future pattern
nesses,
1%
1%
Banks
funds
funds
Commercial banks
call
%
market.
Increase Treasury deposits
1
to
rowed
Treasury cash surplus used to:
Gold
from
sale of short-term securities in the
1947
Contractive factors-
RetireJt>y:
;
Federal Reserve Banks
critically
reappraise
quarter of 1948. During the same serve Banks.
The effects of official and other
period, yields on 12-month Treas¬
ury certificates
increased from pleas for voluntary credit re¬
% of 1% to 11/8%. Accordingly, straint by banks are not easily
in order to obtain reserve funds evaluated.
The
slackening
or
in early 1948 by selling short- suspension of the growth in busi¬
term government securities, either ness ioaris, while partly seasonal,
to meet reserve drains or to per¬ may reflect to some extent a more
mit loan expansion, banks were selective attitude on the part of
Loans to consumers and
obliged to sacrifice higher yield¬ banks.
ing securities than would have to owners of real estate, on the
been the case had short-term rates other hand, have continued to in¬
not risen.
Early in January, the crease.
tor
Quarter
1948
Factor—
to
Reserve support prices for
government securities near the
year-end, and the recent increase
discount rates from 1 to 1V4%,
thereby raising the cost of bor¬
Amounts
!
acted
Reserve
Changes in
•
Many banks were probably also
moved
with respect to term loans to busi¬
1947
Sales
(—)
—1.1
(3)
under-r
was
by the American Bankers
Association.
funds, introduced an element of
uncertainty with respect to pros¬
creased
( + )
1.8
+
bank credit restraint
taken
their lending policies, particularly
for
needs
in ' cooperation to
an increase in yields on
short-term government securities.
As a consequence of this action,
discussed in the March "Bulletin,
yields on Treasury bills had in¬
Securities, by Class of Investor
( + )
Treasury operations
reserve
System
permit
Changes in Holdings of United' States Government Marketable
Purchases
bank
purposes
production.
Early in January a
nation-wide educational program
to-'::io6ter;-',:voluntaryv action for
pective credit conditions.,
During the last half of 1947; the and course of interest rates. Such
NoneTreasury and the Federal Reserve uncertainty was a result of the
ther their loan portfolios.
Retired
measures
and
increase
ings of government securities that
they can sell in order to acquire
funds with which to expand fur¬
-2 First
by
Federal Reserve Sys¬
the Treasury.
These
measures, which included action
to raise the cost to banks of ob¬
taining" reserve funds and to
tem
quarter
TABLE III
_
effects,
taken by the
positions
from Treasury cash drains prob¬
ably had a significant restraining
effect on bank credit expansion
;
somewhat reinforced in their
credit to financing that will help
BANK DEPOSITS AND CURRENCY
billions of
billions of dollars
dollars
180
180
action
at
reserves
New York and Chicago banks by
$500 million and made it
for these banks to sell
additional government /securities.
Like the drains from the Treas¬
about
-
)MMERCIAL
;,
v.
necessary
i
■
cash surplus, the increase in
requirements had the ef¬
fect of reducing the supply of
ury
12
12
reserve
-
assets
which
available for
4
these
sale
had
banks
to the Reserve
Banks to create reserves for fur¬
ther loan expansion.
8
Voluntary Restraint on Credit
>
rfal
ESTATE
/
Encouragement
restraint in
.
of
voluntary
bank lending opera¬
restraint
lending that adds strongly to
inflationary ppessqres .has come
from
both
public and priyate
sources.
In its official publica¬
tions and in public statements the
tions and particularly of
in
all other
*
+
CONSUMER
t
nit
0
,
,
,
i
• *
-
real
#
estate
i
Board of Governors and the
AGRICULTURAL
0
„
„
X* LOANS
^,,,+
Reserve Ranks have repeat¬
edly pointed out the dangers to
the economy, as well as to banks
arid -their customers, qf excessive
FOR PURCHASING
pR CARPYlNft SFCiiRITIFS:
L
;
4
i
bank credit expansion. The pres¬
ident of the United States in his
others
^^to
and
brokers
dealers
|
_
to
brokers
and
dealers
Economic Report to the Congress
"
-irr.t's^^
•;
and
*
c/te
"
1946
1945
1947
1947
1948
*
All insured commercial banks' in; the United States.^ Commercial loans include
commercial and industrial loans, open-market commercial paper and acceptances.
Latest, figures aref«MyJ>eQ, 31," 1947..-'+" •
"K.:\
^
J "
For member banks in leading cities figures on commercial loans include
•
mercial,' industrial, and agricultural loans, open7market commercial
acceptances. Latest figures are for April 21, 1948. \
H O'S ■X/
'X
paper,
-■"
~
.
com¬
and
Council
in
of
their rer
ports have also emphasized the
urgent need for restraint in fur¬
ther bank lending and investing.
In
November
1947
a
joint
statement was issued by Federal
and State bank supervisory au¬
thorities
calling
attention
to
''
1944
1942
1946
1948
Figures are partly estimated.
Deposits are for all banks in the United States.
Demand deposits adjusted exclude U. S. Government and interbank deposits and
items in process of collection.
Time deposits include deposits in the Postal Sayings
System and in mutual savings banks.:;. Figures are for December, 1940} June and
December,' 19,41-1942; end of month, 1943-1946; last Wednesday of month, 1947
and 1948.
Figures subsequent to June, 1947, are preliminary; latest figures are
for
Marc^,:
•
,
-
President's
:
~
*
»!inSf
--+X+:
!
r:
„■■■
Rie
Economic«, Advisors
to other!r
1944
Fed¬
eral
j.
-
YT:
t2340)
32
THE COMMERCIAL & FINANCIAL CHRONICLE
Thursday, May 27, 1948
that the Administration
was of the notion that a
policy of in respect to. the changes Which
head that raised itself, if it were not to have taken place in interest rates
on government securities and the
our taste, is-essential to our future freedom.
We ardently
yv
*,
(Continued from.first.page)
handling of surplus funds, I be¬
hope that Senator Taft was more realistic when he laid lieve the debt has been managed
foreign policies, and likewise to find some Way of improving down his
foreign platform, as it were, and that in future as ably as possible. I think we are
the acumen and skill with which
they are given effect.
most fortunate in having in such
deliverances he will make it clear to the American
people
Senator. Taft or any one else does the people of this that their
high and ^important government ?
freedom is today often in more
danger
from
its positions men possessed of such'
country a real service in promoting such changes and such
professed friends than from its enemies.#:*
; ;
;
complete and profound under-*
reforms.
But the Senator is not
willing to rest the case
standing of the problems of debt
Whether we could go along with the Senator in his
there. In the address froni which we have already quoted*
management. I might also' addji'
proposal for "consistent opposition to the spread of
lie undertakes in. general terms at least to state what lines
that in the management of the
IliiAsiWeiSee
striking at
every
.
-
if
we
Here
foreign policies should take. With some of
suggestions we find Ourselves in hearty agreement •—
mind.
determination to
if consis¬
tent with the freedom of the American people.
:
1 1
"Second, consistent opposition to the spread of com¬
munism in this country and throughout the world,
V,
a
preserve peace
duty of
far
must, of
in any event,
renewal of our faith in liberty, justice
as a foundation of free government and a
determination to crusade' throughout the world for those
principles as the Russian Government crusades for coma
,
convincing ia
any
;
;
can
We
are
need
we
Governors
and
Open1,
•
J
so
proposals
own
business
of
our
faith
in
he says
that
liberty, justice and
We hope however that Senator Taft attaches
more
precise and realistic meaning to these phrases. Certainly,
should be disappointed if he would not place some
practical limit upon the words "consistent with the
; freedom of the American people."
To as, it often ap¬
pears that the Administration — and, we must say, a
good many other present-day leaders of. thought in this
: country -^ construe such terms to exclude almost every¬
thing in the world which collides with our ideas, or our
prejudices, or otherwise is not to our liking.
we
essity for making loans for
nec¬
recon¬
version
and
to
possible
way
in bringing about
balanced
assist
in
peace-time
government
creation
of
This
of
every
a
economy
subsidies
additional
was
demonstration
when
an
the
credit
ter
but, due to mortgage lending
installment credit, all loans
increased
between
$600,000,000*
and $700,000,000, or about half the
amount predicted. I believe that,
the
anti-inflation program
needs of
own
in
gage credit, of course,, has been
increased by those guaranteed is¬
That could
scarcely be expected should
gain control and remain in power. ^
as
a
they
may see
fit.
Communist regime
^
^
Much has takeh
place in eastern Europe and the
hardly conforms to our ideas of human
progress and ultiniate welfare.
This is as much true
during the past decade as in the years, and for that
matter, the centuries, which went before. Whether Rus*
Near East which
£ia's recent acts
are worse
than
some
of the tyrants
which
came before is beside the
point. Despite the fact
hardship, injustice, want of freedom, and eternal
conflict have been the lot of these peoples for
centuries,
one can scarcely fall to
regret what has taken place
there recently, and what is evidently scheduled to occur
tin the months and years to come. The
story of man's
inhumanity to man might, of course, be indefinitely
lengthened -— if there were anything to he gained by it.
that
I
!
Foolish
Indeed
I®:,
*
But, obviously we should be foolish indeed to take the
position that each and everyone of these unfortunate situa¬
tions is not "consistent with the freedom of the American
people." Possibly
of them do present a potential danger
to our liberties of sufficient
magnitude to cause us concern
and to warrant action of some sort
by us, but reasonable
discretion in deciding which' do and which do not fall within
this category is obviously called for: At times it has
appeared
some
of
sues
FHA
Nevertheless,
get
Eccles,
as
Board
of
on
production and economy
higher levels.
our
"GI"
and
loans.
the
increase
hasonly been about one-half of the
amount
predicted.
In April, Mr..
Acting Chairman of theGovernors, again ap¬
peared before the Committees of
Proposed Credit Restrictions
In
the
Congress and requested
to increase the orthodox
to
establish special
Kanes outlined the situation they
System, I have noted
as
requested in November.
ready and willing to cooperate
will
and
unite
to
real
render
i! 11
service.
-
Rising Prices
governmental
sources
and
wages
that ;either
statement
a
and also
System turns it cannot win.
thing applies to the
banking system. Due to the in¬
the
in
for
in¬
fact
that
loans, President Truman
in his message to the Special Ses¬
sion of the Congress last Novem¬
ber recommended legislation to
restore
consumer
and
restrain
to
pansion.
This
credit
bank
controls
credit
followed
was
ex¬
in
a
few
days by the request of then
Chairman.; Eccles,'
speaking
on
behalf of the Board of Governors
of
the
Federal
for
authority
cial
reserves
Statutory
the
Reserve
to
in
System,
establish
addition
As
reserves.
Federal
spe¬
the
to
know,
Council,
you
Advisory
s
of
which
have
the
honor
be
Vice-President
and
to
sent
I
,
to
repre¬
district, unanimously
opposed these proposals and
the securities market for' new is¬ some
of
us,
including myself,
sues
of corporate securities, it is
testified
in
op p osi t i on
to
not
surprising that bank loans these proposals for granting such
rose
rapidly to new and high authority. Again the American
levels in the last half of 1947. All
Bankers Association stepped, into
of us know that it takes a lot the
picture. An anti-inflation pro¬
more money to do business
today gram, on the basis of voluntary
than it did prior to the war. Fur¬
self-restraint, was formulated and,
thermore, not only our own people like his predecessor Mr. Hanes,
but also the peoples of the world President
Dodge and those asso¬
are in dire need of our
great pro¬ ciated with him and many mem¬
ductive abilities.
When
Reserve
v/e
we
examine the Federal
Bulletin
for
April, 1948,
find that deposits of all com¬
as of Dec. 30, 1939,
mercial banks
then
totalled
$57,718,000,000 and
$17,238,000,000 or approxi¬
mately 29.8% of the deposits at
loans
that time
invested in loans.
were
Figures are not available for
the Comptroller's Call of April 12,
1948, but the latest revised esti¬
mates
are
as
of
Jan.
28,
1948.
These
estimates. disclose deposits
of
all
commercial
banks
then
totalled $140,350,000,000 and that
loans
held
banks
then
000,
so
much
all
commercial
totalled
$38,240,000,-
by
that while
our
levels
are
higher—in line again with
your
bers of the ABA staff, presented
.this program before 13 pilot meet¬
tion dnd is being carried out down
to the group and county level.
such-
Effect of Additional Reserves
2
the
brthodox or present method
of reserves carried with the Fed¬
eral
Reserve
Banks
would
mean
additional
an
$12 billion couldB
be imposed by the Board of Gov¬
To
ernors.
tude
show you the magni¬
of
this increase, you must,
in mind that there is a very
small amount of excess reserves ini
hold
the country today and the
balances
carried
by the
reserve
banks
with the Federal Reserve System
amount to approximately $17 bil¬
lion.
Then, in addition, the addi¬
power of the special re¬
tional
serves
proposed, which would be
carried
ments,
in
balances
the
short-term
govern¬
cash, correspondent
or
excess
reserves
bank:
withi
Federal Reserve Banks,- also
be im posed. President
could
Dodge, of the American Bankers
Association, has characterized
these proposals if enacted into law
as ''putting the
banking system in
a
strait-j acket." To
is
prove how true
this
you
statement, I suggest that
take thq case of your own in¬
stitutions and make
as
to
what
situation
if
would
these
a
calculation
be
your
powers
own
Were
granted in full.
On
account
of
the
require
so
drastic-
a mopping
up of bank i reserves-"
On the other hand, it must be rec¬
unusually ognized that some economists add
great tax receipts, the Treasury
statisticians, while admitting thai
found itself in the first quarter
they too cannot see ahead toop
of this year with a large surplus
clearly, still believe the trend is;
which it has used with great skill
inflationary rather than deflation¬
in retiring Federal Reserve-held
ary.
It is interesting to note Mr.
debt and wthout causing too great
Eccles' estimate of $3,000,000,000
a
shock to the banking system
inflow of gold made last Novem¬
of
the
country. At this point,
I
would like to pay high tribute to
the
way
Under
Secretary
Secretary
handled
—it is
public debt. In
as
power
reserves
The Federal Advisory Council
ings held in key cities throughout
again has unanimously opposed
the country. This program is now
these proposals.
We do not see
fanning out into meeting such as
anything in the near foreseeable
this Convention of your Associa¬
future that will
production price and wage levels
interesting to note that
asked, in addition,
The additional power sought ora»
same'
crease
power
reserves
the Federal Re¬
way
serve
The
Due to the encouragement from
of the
Association
recent
testimony
of
the
former Chairman of the Board or
Governors of the Federal Reserve
civilian goods still were in short
future
Bankers
a
loans, a lower figure,
percentage-wise, than for Dec. 30,
1939, when we were struggling to
that
mere
Koreans free to mould their
about
quar-
break in commodity prices. Mort¬
excellent
fact
bankers have the
or
prices began to rise as
quibbling about words. The issues supply,
soon as the wartime controls had
involved are real, and far-reaching in their
import. One been removed,; with the result that
may easily understand why a communist China, for example, today our dollar has a very much
lower purchasing power and in
would not be much to our liking —
possibly less so than
many respects this distorts com¬
^ome of the other regimes which have succeeded one an¬
parative figures between 1939 add
other during the past half century in that unfortunate land. 1940
and present price* levels.
Korea supplies another very similar
When we take into considera¬
example. We should
tion the production level which is
be' hard of heart indeed did we not feel a
great deal of
currently running at the rate of
-sympathy for the people of this little country — if it may
$245 billion, and we consider also
be called that. It is natural enough that we, with our own
price and wage levels, and give
traditions of national independence, should like to see these consideration to the thinness of
a
declined
country presented to them as
clearly
and
forcefully as
Mr.
creased
Of Vital Import
This is not
loans
tablished Dec. 24, 1947, also had a
salutary effect as did also the
of Jan. 28, 1948, 27.2% of deposits
of all commercial banks were in¬
vested
be
At that time there wa$
the
are
to
and
.
.
estimates
the reduction in support prices on.
long-term government bonds es¬
(Continued from page 13)
the attention of bankers the
agencies.
on
proven
distinct bearing on this re¬
sult. On the other hand, I believe
of Current Economic
Problems on Banking
the
based
since
crease, $1,300,000,000 in the first
quarter of 1948. The fact is that
Effect |
if consistent with the freedom
programs.
")
prediction that; the inflow of;
gold, would total
$3,000,000,000
and that bank, loans 'Would in4
American
without
"
-
a
government." We hope the
early occasion to elucidate his stand
related questions somewhat more
fully.
•■of - the American
basis of their
was
have
erroneous.-
had
people.": Of course, it is true that few
politicians, even those in places of influence, in the present
Administration, would take open issue with the suggestion
as it is now worded.
Probably all of them would quickly
assert that such is precisely their own purpose and the
'♦
•
-
ber in favor of the special reserve
which
cases.
solidly behind the Senator when
these and
r
Now; of course, we are in no position to give precise
-definition to the ideas which the Senator has here set forth
in general terms, but; we can say what we hope he means.
Take the first ingredient of the Taft prescription — "a de¬
Marketc
Testimony presented in Novem¬
£ >#,'
"renewal
a
He Meant It This Way
termination to preserve peace
1
System.
equality as a foundation of free
Senator will take some
on
have had fine 1
the' Board of;
Committee of the Federal Reserve
necessary.
goverii
course,
they
frdm
$240,000,000,000 in the first
a
We Hope
we
fellow citizens of these facts —-
our own
debt
cooperation
.
Abroad, circum¬
We, of late, have
been rather too inclined to
inject ourselves into the
domestic affairs of other
peoples, or at least so it seems
to us. We are r&ther more, than
skeptical of "crusades",
international law."
I munism,"
as
stances
"Third, the strengthening of the United Nations by
on principles of justice and willingness to abide
-by and enforce the decisions of an impartial tribunal
"Fourth,
and equality
a good deal upon what he has in
have no faith in communism. ' We
we
all at every opportunity to do what
us
to convince
phasing it
based upon
Certainly
are, naturally, quite convinced that it holds nothing of
promise to the people in whose behalf it is supposed to
function. We have not the slightest doubt that it is the
correctly understand what is in the Senator's mind.
his four "points":
are
"First,
;
public
communism^ depends
lie thinks our
these
.
the
Snyder
management
my
and
Wiggins, have
of
the
judgment, both
ber has been
changed in his more
recent testimony to between
$1,500,000,000 and $2,000,000,000 and
advices I have received from sta¬
tistical
sources
accurate,
which I believe
are
indicate^ that but. $1,000,000,000 in gold—or onerthhrd
-
of the amount originally
-—will be
predicted
coming into this country
this year.
1
i
While the power sought by the
Board of Governors of the Federal
'
The State of Trade and Industry
(Continued from page, 5)
firms
might hot be
exercised, once it is on the statute
books, we know that bankers are
boundi to adjust their asset posi¬
Reserve
try;
System
to
-
.
products.
The index figure closed at 284.84 on May 18,
with 283.33 a week earlier and with 254.37 a year ago.
33
comparing1
Irregular movements of recent weeks were again visible in <
leading grain markets in the past week. Wheat was less active
of corn and oats increased somewhat on the Chicago
,.
but sales
steel Indus¬
of steel i
lack practical knowledge of the
are erroneous,
Board of Trade.
theoretical and are dangerous to the free flow
throughout the country.
7
are
(2341)
& FINANCIAL " CHRONICLE
COMMERCIAL
THE
Number 4702
Volume 167
Milling demand for cash wheat was relatively slow with price*
price-wise than they steady to strong despite larger receipts and reports, indicating im¬
have ever been in their lives.
There was no rhyme or reason to provement in the outlook for Winter wheat as the result of rain#
tion to such form as will allow the crazy-quilt of steel prices at major centers.
Some prices were in parts of the West and Southwest. Government purchases of cash
them to meet or nearly meet the lower than others, depending on who the supplier was.
In some wheat were smaller than in recent weeks. In its May 1 report, the
maximum increase permitted by cases
freight was being absorbed on distant hauls—in other cases Department of Agriculture estimated this year's Winter wheat yield,
at 845,000,000 bushels, or about 15,000,000 bushels less than its fore—
the broadened powers. For we all it wasn't.
'
'
'
v
''
know that once such power has
Corn displayed strength throughout the week
Consumers were working overtime studying possible future loca¬ cast of a month ago.
been granted, it would not be pru¬ tions and their relation to adequate and cheap steel.
However, "The with shipping demand fair. Domestic flour trade was confined mostly
dent banking to await the imposi¬ Iron
Some
Age" concludes, the steel consumer was rapidly finding out to scattered small lots for immediate or nearby shipment.
tion of such reserves. This might that his distance from his consuming market played as big a part increased activity was noted in the export flour market.
'
users
Steel
this week were more confused
users
■
cause
tion
contraction which would
a
in
result
in
this
very
our
time
when
cannot
we
The American
-
see
too clearly.
For instance,
In my judgment, it is very; doubt¬
of
ful if expenses for European Re¬
month
before next Fall. Should we
a
situation where we
must promptly
ar^d rapidly step
jup ^defense preparations, or be-r
involved
<:
-
in
war,
2
in
A
-
1940, the
as
get pro¬
;fproductive
labor troubles.
.y
;
3.8% BELOW PRECEDING WEEK
3;
.
generally expected. Total consumption in April was placed at
860,000 bales, or a daily average of 39,100 bales, as compared with.
878,000 bales at a daily-rate of 38,200 in March.
Exports of lint
cotton-for the current season to date have been running at aboutone-half the volume of last year, according to the New York . Cottun
been
v
Total shipments for this -season amounted to l,409,00Ch
bates, compared with 2,809,000 for the corresponding period last yean
^Activity in cotton textiles was only fair with prices showing" *
Exchange.
<
and greatly, ELECTRIC PRODUCTION OFF AFTER THREE WEEKS' RISR
purposes,
Increasing reserves will certainly
hot channel loans into productive
,
report
according to the Association of American Railroads.
This was a
decrease of 33,214 cars or 3.8% below the preceding week.
They
also represented a decrease of 40,805 cars or 4.6% below the corre¬
available to facilitate prompt fisponding week in 1947, but an increase of 159,193 cars
nancing of a war. As bankers, we
aboye the .same week in 1946 when coal loadings were reduced- by
all know that in order to
duction, loans must be made for
*
The New York Cotton Exchange in its
issued on Wednesday of last week indicated an increase in
the daily rate of consumption during April, whereas a decline had
.
Loadings for the week ended May 15, 1948, totaled 847,403 cars,
want reserves increased at such a time because re¬
serves
would have* to be made
not
f
agreement had been signed.
••
..
DIP
live-r
prospects for an
higher last week with prac¬
tically all futures contracts reaching new seasonal highs on the NewYork Cotton Exchange.
Supporting factors included the prospects
of early action under the ECA and other foreign aid programs and
the reported increase in; the: daily rate of cotton consumption during
April. Buying was also stimulated by strength in financial and other
outside markets and the announcement that the Japanese credit
highest prewar year.
r.'r-v.
CAR LOADINGS
in the principal
Cotton prices continued strong and
is (equivalent to 1,744,809 tons of /
against 1,719,600 tons last* Week,
1,560,900 tons a month ago, 1^669,400 tons, or 95.4% of: the old
capacity one year ago and 1,281,210 tons for the average week
cer¬
we
the
recorded
were
evident.
increase of
an
95.4% last week.
This compares with
indicated rate was 86.6%,
1.5%.
or
ago
ingots.; and castings
steel
into
tainly do
points,
1948,
advances
markets towards the close of the week as
early settlement of the strike of packing house workers became
This week's operating rate
'
omy
come
Substantial
stock
Steel Institute announced on Mon¬
and
capacity for the week beginning May 24,
1.4
make much impact; on our* econ¬
get
Iron
operating rate of steel companies having
94% of the steel-making capacity of the industry will be 96.8%
covery
:.
.
day of this week the
ahead
Belief, defense or even the
recent reduction
in taxes Will
.
his nearness to a steel source^
as
unhealthy situa¬
country, especially at
a
•
further easiness in some constructions.
the electric light
Trading in the Boston raw wool market showed some improve^
the week ended May 22 was 5,085,412,000 ment in the'week ended
May 18. Competition for available fine and?
kwh.,
according
to
the
Edison
Electric
Institute.
This
was
23;261,000
'■%
half-blood wools Was keen at firm prices.
In foreign wools, most
kwh. below the output for the preceding week and was the first time
-Wilt simply narrow the area- in
activity was rep
in medium1 scoured grades for woolen jnilT
since the week ended April 24 that a decrease was recorded when"
Which loan
be made; and
consumption.
Knitted mills were also active purchasers of the
compared with the previous seven days' period.
The production for medium
whether or not a loan is for pro¬
wools.
v...V ;.V
the May 22 week was, however, 422,554,000 kwh., or 9.1%, in excess
ductive, purposes is a matter which of that for the week ended May 24, 1947, and was the 20th consecutive
can
RETAIL AND WHOLESALE TRADE SLIGHTLY ABOVE
best be determined at the
week that over 5,000,000,000 kwh. were turned»out.
v
.;
purposes any more than they, will
for non-productive purposes but
The amount of electrical energy distributed by
and power industry for
PREVIOUS WEEK AND LIKE PERIOD OF 1947
local level.
Every banker has an obligation
to his institution, his community
and
AUTO OUTPUT RISES AS RESULT OF SHARP
nation, to decide wisely
the economic justification
upon
for every loan he is asked to con¬
sider.
Therefore, in the interest
of
our own economy, which is the
public interest, I urge that the
principles laid down in the antiinflation program of the American
Bankers Association be carefully
adhered to. We must all recognize
that in the final analysis what is
In the best interest of the nation
Production of
last week
rose
(revised)
units from 83,275
estimated 88,641
brought the year's volume to above the two million mark, with an
vehicles made in both countries since Jan. 1.
Lingerie,
in the previous week, com¬
industrial failures in the week ending May 20 fell from
to
economic well-being of the coun¬
Inc.
reports.
downtrend begun
the
Continuing
92, the lowest number since early
For the first time this year, concerns
April, Dun & Bradstreet,
failing
were
than in the comparable week of 1947 when 102
ous
failures
occurred
decline
The
in
involving liabilities of $5,000 or more down from 81 to 78
involving losses under $5,000 down from 19 to 14._ While
and those
mortality
last year,
the small concerns exceeded by one the 13 reported
among
with
■'i
pared with 32 last week.
the Mu¬
Club of New York
will be held on the evening of
Friday, June 25, at, the Sleepy
Hollow Country Club, ScarborOugh-on-Hudson, N.Y.
Bond
nicipal
The
.
following
has
slate
son
fell
•
.
;
'
States
claimed
with 26 in both these regions.
Although casualties
preceding week, they
considerably short of the 38 reported in the comparable week
I
1
' '
,
'
I
Mixed
.
fluctuations
in
prices resulted
in
a
two-cent decline to
the
number
of
declines, the total rise was more than offset, by a
sharp drop in the price of butter.;!;,
;
The
$5.95 of
current
a
year
figure
ago.
?
represents
,■.<■' '•
a
•
-t.,.
:
rise
of
!>.
;>
16.1%
Advances for the week included
lace
to The
Financial
Chronicle)
v
A.
Boyd
are
and,
Howard
.Kinnon, 340 Central. Avenue.
•
.,
There were
oats, bellies, butter, cottonseed oil, eggs and currants.
PRICE
PREVIOUS
The
&
INDEX
WEEKn\r;:
EXTENDS
ITS
; i:/.yv .-M;;;.,,;
GAINS
Regional
r
following
;■
daily wholesale .commodity price index, compiled by Dun
Bradstreet,„Inc.,
continued its mild uptrend, in the week ended
May 18, aided by continued strength in. cotton and other
estimates
percentages:
country in the weekly period
ended on
above
to be from 5 to 9%
at
many
There
week.
agricultural
Northwest 7 to 11, Southwest 6 to 10,
Coast 2 to 6.
Attracted by early
ance
exceeded those of a year ago by the.
New /England and Middle West 3 to 7,
4 to 8, South 5 to 9,
and Pacific
very
>OJ
was
a
moderate
rise in new order volume.
Buyers
with a pref¬
be evident. Wholesale
selective and stressed moderate prices
for well-known brands continuing to
volume
attend¬
during the
showings of Fall merchandise, buyer
wholesale centers increased substantially
remained
moderately above the level of the corre¬
sponding week a year ago.
Department store sales on a country-wide
the Federsll Reserve Board's index for the week
increased by 7%
an
ended May 15,
by 6%.
; •
preceding week..
the
This compared
For the four weeks
1948, sales increased by 8% and for the year
to date
-
In New York retail trade the
volume for
basis, as taken from
ended May 15, 1948,
from the like period of last year.
increase of 6% in the
past week was active with
department stores approximately
like week
one
According-to
OF
;,.i —.v..
the demand for bakery products
equipment, lawn furniture and household hardware were
Retail volume® for the
flour, wheat, corn, barley, hams,
COMMODITY
Ei
with Thomson & Mc-
the
.
slight decline in
ago.
with
declines in rye,
PETERSBURG,FLA—Wal¬
Neville
.»
above
.
McKinnon
(Special
18.
$6.91 in the Dun & Bradstreet wholesale food price index for May
a
„
purchased in substantial volume. "Many farmers sought tools and
equipment with building supplies and paints frequently requested.
Sporting goods volume was moderately above the level of a year
dollar
;
Two With Thomson &
noted.
erence
FOOD PRICE INDEX MODERATELY LOWER FOR WEEK
;
but
country,
was
remained
.........
lard, cheese, cocoa, potatoes, rice, steers, hogs and lambs.
ST.
one-half
over
I
Poultry and cheaper meat cuts sold well along with canned and
frozen foods.
Picnic specialties were popular in some parts of the
East
Pacific
year ago.
nald'M,- Schmidt, Blyth & .Co., Inc.
'
and
the Pacific States increased from 19 in the
in
numerous
as
week last year.
Atlantic
the week's failures,
a
almost twice
,
Nominating Committee con¬
sisted of Walter H. Steel, Lazard
Freres & Co;, Chairman; William
G. Laemmeh Chemical Bank &
Trust Go. of. New York, and Regi¬
-
same
Middle
were
demand for
,^^ar ago.
marked rise from the 1947 level appeared in whole-
where failures at 17
and
Apparel dollar volume
high-priced meats and butter.
Wednesday of last week was estimated
that of the corresponding week
I
While the, number of individual price increases was almost double
& Curtis.
The
*'/'.J*;•.
in the
The
compared
as
29 retailers failed as com¬
attention
corresponding week a "year ago.
their purchases of fresh,
vegetables, fruits and fish and continued to seek substitutes for ,
In both these groups, casualties were less
year ago.
a
The only
sale trade
as
preceding week, while
the
in
frequent than
been
presented: President Orlando S.
Brewer,
Phelps, Fenn & Co.,
>'Vice-President; Norman S. Dow¬
ney; Union Securities Corp.; Sec¬
retary: - William
T.
Hall,
Jr.;
Treasurer: ; R.
George
LeVind,
Blyth & Co., Inc.; Board of Gov¬
ernors:- El?- J. Altgelt, Jr.,
Harris
.Trust & Savings Bank, and E, M.
McLaughlin, Paine, Webber, Jack.-,
37
succufnbed
Thirty manufacturers
Slate for Election
favorable
Housewives in many areas increased
larger failures fell short of their 1947 total of 89.
decline in mortality.
attract
to
straw hats increased somewhat.
compared favorably with that of the
Garden
Manufacturing and- retailing accounted primarily for the week's
and hosiery sold well with sun-back, dresses
popular.
Men's lightweight suits, slacks and sport
continued
Panama and
less numer¬
failed.
Mi ? ;
large and small casualties, with
both
specialties were sought. -
scarves
beachwear
jackets
in other areas
for rainwear and accessories, while
demand
Summer clothing and vacation
and
'
100
The annual meeting of
the
BUSINESS FAILURES CONTINUE LOWER TREND
mercial and
Of New York Gels
period ended on Wednesday
slightly above the level oJt
the corresponding week a year ago, Dun & Bradstreet, Inc., report*
in its current summary of trade.
Some retailers reported an increase
estimated 2,077,267
What is in the best interest of the
Municipal Bond Club
of; last week with retail dollar volume
week, according to "Ward's Automotive Reports."
Collec¬
Output a year ago was 96,651 units and, in the like week of 1941, in requests for credit and instalment buying was frequent.
tions in some localities were as prompt as a year ago.
Numerous
it was 133,560 units.
This week's output consisted of 57,301 cars and 26,313 trucks promotional sales stressed quality at reasonable prices.
made in the United States and 3,040 and 1,987 made in Canada.
This
Cool, rainy weather in some parts of the country stimulated
try
:
an
and Canada
units the previous
is in the best interest of banking.
is good for banking and, in
this period, when we cannot see
ahead too clearly, I believe we
should formulate our policies aceordingly.
to
the consumer demand for man/
types of seasonal merchandise during the
and trucks in the United States
cars
There was a slight increase in
OPERATIONS
GENERAL MOTORS
IN
the
ADVANCE
year
the
sales
5% above that of
ago.
Federal
Reserve
store sales in, New York City for
Board's index, department
the weekly period to May 15, 1948,
ittcreas^d 8%' abov6 the sam?e?^period last year. ; This compared vdttt
an
iheye^se of 4% (|ti the preceding week. For the four weeks ended
May 15, 1948, sales
increased by 7%, and for the.year to date by 5%.
34
(2342)
THE
The
COMMERCIAL
FINANCIAL CHRONICLE
&
Departure From Sound Money
(Continued from
value."
"Hepburn
in
1915
Contrary to what
be
ment
page 7)
This definition
is,
by A. B.
of
course,
is considered to
sound
money
by those 'in
charge of our present monetary
•policy, and it is not necessary thai
•either they or you
accept it into
vocabulary as correct. I am
simply giving it for the purpose
of having you understand w^at i
your
when I
mean
use
in
15
days—a very short
maturity. Nothing in any of this
could possibly indicate any sug¬
gestion of modification of the re¬
demption provisions of the Gold
Standard Act of 1900, nor was
there inherent in the Federal Re¬
being able to comply with the re¬
quirement of that Act to redeem
our
present monetary position,
that the Gold Standard
our
let
me say
Act
of 1900 gave us
redeemable
rency
there
was
a
sound
a
in
cur¬
gold, bui
defeci
serious
very
in
our monetary system of that
flate, which was brought into glar¬
ing evidence by the panic of 1907.
This was the lack of any
legaj
provisiorf by which the supply of
pUrrency would automatically in¬
crease
and decrease for the pur-
TpoSe of either meeting an emergency or to provide for fluctua¬
tions in the
establishment of
serve
the
and
the
Federal
System
test.
severe
First
World
Re¬
War
to
put
was
a
However, at the end
the war,
of
we still had a sound
redeemable in gold, even
.hough it had expanded greatly to
meet
wartime
emergencies and
currency
he
enlarged requirements of ag¬
riculture, industry and
This
due
was
ously
the
to
referred
commerce.
fact, previ¬
that
to,
Federal
Reserve Notes could not be issued
monetary -require¬ against
government obligations
as
ments of industry, commerce and collateral, and to the further fact
Agriculture. This defect was rem¬ that the System refrained from
edied by the Federal Reserve Act,
which became law in 1913.
The
Federal
Reserve
Act
did
not
in
any way alter the Gold Standard
Act of 1900, but it did authorize
issuance
the
of
new
a
kind
of
jnoney
(Federal Reserve notes)
which could only come into being
by
purchasing government securities,
either in the open market or di-
directly from the Treasury, ex¬
cept
for
extremely
temporary
and
purposes
for
comparatively
inconsequential
clearest
been able to find
which
on
reason of a need for additional
I
just
an
obligation
Banks
fact,
if
mind
coordiate the purchases and sales
buggy"
df government
Re¬
purposes
,of
the
by
issues
deposits."
have had clear
"as
have
to
for
seen
the
note
an
elasticity
under
currency
collateral
the
new
nature
issues."
expansion
of
We
of
our
and deposit structure to
currency
far
greater degree than would
been
possible under
the
sound provisions of the Federal
a
have
Reserve
Act
before
the
ments brought about
amend¬
by the advo¬
cates of the
"easy money" policy.
However, elasticity does not only
mean
"to
tract"
as
expand"
but
"to
con¬
well, and the quality of
liquidation
of
"semi-automatic
Reserve
in
Bank
the first
gess'
book
credit"
mentioned
does
not, in my opinion,
sound definition of elas¬
To my way of thinking,
a
Dr.
Burgess' statement is close to
recommendation of 1 pure fiat
as
with
legal requirements
to amount or quality other than
reliance
Federal
on
no
the
imbued
with
of those guiding the legis¬
lation through Congress would for
a
any
moment have favored the meas¬
if
they had dreamed of the
possibility that the Federal Re¬
serve
System
wquld
be.
so
ure
amended and debauched as to
become the vehicle for the issu¬
of
ance
fantastic
a
amount
of
irredeemable currency, which, if
continued, can ultimately only
lead to incredible disaster and
national
the
bankruptcy.
Federal
could
Nor
Reserve
System
as
originally provided for in the
Federal Reserve Act have been so
Used
abused, since, under the
or
original
Act,
Federal
Reserve
Notes were required to be secured
by the deposit of eligible paper,
which
consisted
of
rediscounted
notes, drafts and bills of exchange
issued or drawn for industrial,
commercial
agricultural pur¬
poses; and it required a war-time
amendment
in 1917 to provide
that
15-day notes of member
banks
ment
or
when
secured
obligations
might
be
by govern¬
as
member
b^nks rather than to
the Treasury by the purchase of
government securities.
To quote
debtedness,
ai$d the volume of
was adapted
changes in credit requirements.
direct
or
Such
a
most
difficult,
Treasury, could
collateral
for
not
from
be
Federal
used
the
as
Reserve
Notes. Thus it is quite clear that
the original concept of the Fed¬
eral
Reserve
Note
issues
was
sound, and no Note could be is¬
sued unless the need therefor was
evidenced
by
"being willing
member
a
to
bank
rediscount
result
would
have
if
impossible,
not
ment
of
pledging
1917
bank
the
secured
by government obliga¬
tions, there was the same evidence
^■of
need,
bank
was
suming
a
in
that
the
borrowing
paying interest and
as¬
direct liability for pay¬
the basic
about in
conditions favorable to sustained
suring elasticity, the specific col-!
lateral held
tem has
as
the
to
what
the
are
Federal
purposes
of
Reserve
System.
To
illustrate, I should like to quote,
first, from Dr. Burgess' Revised
Edition
lished
of
in
the
1946,
book, pub¬
same
which
shows
the
change ip thinking which has oc-1
curred in his
own case
and which
■
has proved less im¬
portant than
.
which notes
tions
are
upon
the
are
mechanism
issued.
inflation
or
by
Limita¬
deflation
organized
developed
a?
broader ob¬
jective, namely, to4 help prevent
inflations and deflations; and to do
its share in creating
in
ories
for
you
and
securities
gess
his
that
they might be used
fective
buy
the
statement
which
which
Dr.
I
Bur¬
stressed in the 1947 edition of
as
important—that the
Reserve
System
government
furnished
such
was
as
by
,war
At
did
not
obligations
but
Federal
Reserve
required to finance
loaning to member
the
beginning of the
war, on April 19, 1917, the Fed¬
eral Reserve System owned a total
of
government
securities
in
the
amount of $93 million, and at the
end of the war,, in November,
1918, they Owned
a
total of gov¬
ernment securities in the amount
million, which is
of
total amount
a
inonly
an
of
iSTGrowth in Federal Reserve
and
Re¬
the Federal Reserve Banks
instrument
money
;
Bear in mind, the Federal
poses.
Reserve
System had Jbeen in-op¬
eration
at
that
System at
much
any
over
one
time was
$600 million,
a
great deal of experience had been
gained and the managers of the
Reserve
System
had
learned entirely by accident to
appreciate what a powerful
weapon for inflation and defla¬
tion of currency and deposits had
been inadvertently placed under:
their control.
(It was in that;
period
that
the
term
"high
powered money" was first applied
.
to Federal
Reserve credit.)
"inadvertently"
of the
erations
been'made.
System had j ust
*<•:'' ^
*_
•"
.'
Depression
Administration
adopted an "easy
money" policy, with the thought
that, if the money supply
in mind
sufficiently increased, de-.
prices would be raised,
business
activity would be in¬
duced, and prosperity (which was
"just around the corner") would
were
pressed
be achieved.
On
because
there;
to
land selling government securities!
as a
means -of creating reserves;
member
banks
on
Sept.
.
30,
1929, the
System
$162,000,000 of
government
securities, and the
"easy money" policy adopted by
owned
the
total
a
Hoover
sulted
in
of
Administration
net
purchases
re¬
of
gov¬
ernment securities
by the Federal
System of $1,719,000,000,
bringing the total holdings of the
System on March 8, 1933, io $1,881,000,000. During the period that
these tremendous purchases were
taking place, money, of course,
Reserve
becoming more plentiful and
were finding it less neces¬
banks
to
sary
have
with the
either
Federal
rediscounts
Reserve
borrowings from the
or
This meant that
System
System.
the Federal Re-
System was running shoit
"eligible paper" for collateral
of
against
Federal
and
faced with the necessity
of
was
which
a
Reserve,
Note?
either
depositing gold-as coir
lateral or reversing its inordinate
bond purchasing program. There¬
fore, in February, 1932, the Glassr
Stegall
Bill
was 'enacted
into
law, which provided for the au¬
thorization
pledge
ment
of
the
directly
Federal
to
govern¬
security for
as
Reserve
eased
course,
System
owned
obligations
Notes.
This, of
situation com¬
the
pletely, although it
was well
ognized at that time that this
rec¬
was
very close approach to, if not a
direct issue of, fiat money—and
the authorization was made as.an
a
and temporary meas¬
continue for a period of
emergency
to
ure,
one
year,
the
Act
at the end of which time
to expire
was
unless
ex¬
tended by a new Act of Congress.
The Act was extended
by Con¬
gress a year or two at a time un¬
til on June 12, 1945, it was made
permanent.
the
The
fact
Glass-Stegall
Act
permanent
in
from
it was
that,
when
was
made
1945, it attracted
hardly casual attention on the
part of. bankers
or
economists
throughout the country, seems to
me to be conclusive evidence that
the monetary philosophy of the
country had completely changed
-the,
what
< emergency
I say; passed.
be every reason to be¬
lieve that the authority for buying
for
nine
for
serve
Federal
seems
time
the* discovery of the
potency of the Open Market op¬
years,' and
were
left with very few earning assets,
never
so
ef¬
in influencing
market,
the inter¬
national gold flow and other pur¬
the
was
Bondholdings
"After the war was over
tfte contraction of Federal
the
an
of "Open Market operations" was
well understood, and the Hoover
with
book
Credit
by the
as
respect to
made—and
Federal
to,
policy.
I should like
to- especially remember
.
note
have
first
was
order
Now, by the time that the Great
came
along
in the
early 193O's, .the. powerful effect
and beliefs
monetary
in
1923,
several Federal Reserve Banks
and
the United States, the long
objective of the Federal Re¬
serve System is to do its part in
fostering monetary
and
credit
development of our monetary pol¬
icy, and especially in their ideas
an
notes
come
run
philosophy of the leaders in the
collateral for note issues. In (as¬
authorizing
to illustrate
high employment, stable values,
and a rising level of consump¬
tion."
Then, the heading of the
first chapter: "The principal pur¬
pose of the Federal Reserve is to
regulate the supply, availability
and cost of money, with a view •
to contributing to the maintenance
of a high level of employment/
stable values, and a rising stand¬
ard of living."
Then, the first
paragraph, as follows: "On Dec.:
23, 1913, President Woodrow Wil¬
son
signed the Federal Reserve
Act establishing the Federal Re¬
serve System.
Its original pur¬
poses as conceived by its founders
were to .give the country; anelas-,
tic currency, to provide facilities
for discounting commercial paper;
and to improve the supervision of
banking, Over the, years the Sys¬
on.
of member
return again to my
narrative
with
regard
to
how
we have reached our present the¬
by Dr. Burgess) had taken place,
change which has
Market Committee which
,
to
Philospohy
"In
been
I think is typical with
regard to!
agricultural, a < very large segment, (if not a
industrial or commercial
needs, majority) of the American
people.
such rediscount
costing the re- The quotation is as
follows: "It
discounting
bank
interest
and
has
indeed
been
to
necessary
further (involving <a
contingent change some ideas
formerly held,
liability for the payment of the
especially as to the nature of the
obligation. Even after the amend¬
obligation based
■
Now,
serve credit (so warmly approved
book, we find in
the first paragraph this sentence:
change in the
'bpen market
in payment for gov¬
ernment bonds?
Change in Currency
foreword of this
Reserve Bank credit
to
paper
by the Federal Reserve
whether bought in the
Re¬
-
Federal Reserve Note issues. if the debt had been owed
by the
It is important in this connectiongovernment."
to note that under that amend- j h Since that
time, there has oc¬
.ment .government obligations curred a very basic
owned
order
Federal
.
for
Banks,
In
of the
credit
they began, each one in¬
the philosophy of those in charge
of the administration of the Fed¬ dependently on its own account, to
in part, he .says:
"The Treasury, eral Reserve System, I should like buy
government
securities
in
to its everlasting credit, did not
order to earn expenses and divi¬
to refer you to your copy of the
borrow directly from the Federal
dends. During the period of, 1923
Federal Reserve Act; * where you
Reserve
Banks.
io 1929, several operations of
To
the
extent will .find it to ^be headed as fol¬
that Federal Reserve Credit was
lows: "An Act to provide for the what were then regarded as quite
required to finance the war, it was establishment of Federal Reserve large increases—and correspond¬
created by borrowing on the part
ingly large decreases—in govern¬
Banks, to furnish an elastic
ment holdings were carried out.
of member banks, with the obli¬
rency, to afford means of redisgation which that involved for the
From Dec. 13, 1921 to May 31,
counting commercial paper, to
eventual return of the loan, or it
establish a more effective super-*
3922, a net increase of $369 mil¬
took the form of open market pur¬
lion
took place.
vision of banking in the United
chases by
the Federal Reserve States, and for other purposes."
From May 31, 1922 to July 31,
Banks of commercial obligations
Then, I would like to refer-you 1923, a decrease of $505 million.
which were salable in the open
to the very .attractive black book 7'From July 31, 1923 to Oct. 31,
market.... The principle that was
published by the Federal Reserve 1924, an increase of $486 million.
From Oct. 31, 1924 to Oct. 31,
followed, of not lending directly Board in 1947, and sent with the
to the Treasury but lending to
compliments of the Board to every 1926, a decrease of $283 million.
From Oct. 31, 1926 to Dec. 31,
banks, resulted in a semi-auto¬ member bank in the
System and,
matic liquidation of Reserve Bank
1927, an increase of $316 million.
I feel sure, to many thousands of
credit as prices fell and gold was
From Dec. 31, 1927 to July 31,
other people. The title of that book
imported.
.The banks used all is: "The Federal Reserve
1928, a decrease of $402 million.
System,
surplus funds to pay off their in¬ its Purposes and Futtctiohs/' In the
While the
maximum held by
collateral
eligible
or
accepted
to
a paper
Banks
serve
the
1
nor
books
which, in
which $29 million.
spending theory of prosperity.
Basic
the
on
discretion of the
Reserve
Administration
be
can
irredeem¬
structure
reserve
turn; is created by
Board,
conceivably could become domi¬
nated by and subservient to an
A
a
banks.
tion
a
on
the
lost.
of
paper money and the crea¬
tion of irredeemable deposits built
has
been
Board
able
quotation of Dr. Bur¬
completely
Expansion without contrac¬
satisfy
ticity.
believe that the avowed
man
achieved
assets just as are the
the
sane
were
specific security
by all Federal Reserve
we
during
the
"horse
and
days of "sound money"
redeemable in gold.
Does any
Reserve
they
the
of
hearing before the House Com¬
mittee on Banking and Currency
in April, 1926. In that statement,
Governor Strong traced the origin
and
development of the Open
to
for
Federal
rising
a
of
without
that point is
country
as
reserves
elastic
as
but backed
have
the
statement made by Dr. W.
either to
Randolph Burgess in his book
meet an emergency or to provide
"The
Reserve
Banks
and
the
for increased requirements of in¬
Money Markets"
(published in
dustry, commerce and agriculture.
Woodrow Wilson, who was then 1927), on pages 104-105, where he
makes the following statement of
President of the United States,
the advantages of the extension of
wa~
a
"sound money" advocate,
credit by Federal Reserve Banks
And neither he nor Carter Glass
by the
money
and
money,
The
amounts.
statement
bank
Notes would be just as safe
philosophy
System, the country became
the
even
In
currency.
serve
of
Within about 2^2 years after the
involved in
or
Undoubtedly
System
Now, to get back to my under¬
standing of how we have arrived
the
by
evidence of the extreme
Distortion of Federal Reserve
■■■'■'A;
pursued
collateral
in gold.
currency
the term in this
discussion.
at
Act any reason for our not
serve
policy
issue and not in restrictions
ment, stable values, and
leval of consumption/' ; You. will
observe that the Board seems to
point with pride to the great im¬
provement in the purposes of the
System as presently operated in
comparison to the purposes in
Threatens Economic Disaster
f.jf-*r.
Thursday, May 27, 1948
in
1932
^measure
.;■«
.
when
•
wajs
A
■
Furthering "Easy Money" Policy
The purposes of the Adminis¬
tration 4n -using -the Federal 'Re¬
serve
System to further the "easy
money"
policy were a dismal
,
deposit structure of several times
failure insofar
the amount could be huilt was not;
ness
considered
concerned, and many had hoped
that the process would
be re¬
versed. under/lheSRoosevelt j Ad¬
ministration
which
came;- into
a
or
possibility
thought of as
by the Committees
even
of Cbngress responsible for fram¬
ing the Act, and the fact that the
members of the Federal Reserve
Board
and -the
Governors of, the
Federal Reserve Banks
had; never
previously; used the device seems
to justify the presumption. that
they had not realized its power¬
ful effects. This seems further to
be made clear in the statement of
conditions, fa¬ (Governor 'Strong; of the Federal
to be found in the broad credit vorable to sustained
high employ¬ Reserve Bank of New York, in the
revival
as
and
inducing a1 busi¬
prosperity *Vas
.
in March, 1933; However,
this was mot to he, since the new
Administration adopted the same
"easy money".po!lcy, with the re¬
power
sult
that
by
Dec.
31,
1933, the
total holdings of government se¬
curities by the System amounted
to
$2,437,000,000, and there
$600,000,000
government
were
bonds
THE
Number 4702
Volume 167
/pledged to secure Federal Reserve atotal Of '$24,262,000,010^;pti/gpf?:
securities
ernment
Notes.
as
compared
Dec." 31,
Beginning in 1934, the net loss with $2,484,000,000 on
Federal Reserve Notes out¬
Of gold, which was $446,000,000^ in 1939.
•1932 and $173,000,000 in 1933, was standing stood at $24,649,000,000
as
compared to $4,958,000,000 on
reversed and there was a net gain
Security for these
in gold of $i;i33,912,000 for 1934, Dec. 31, 1939.
f
is
aigreeemnt with - regard .to
no
the
^
most desirable
this
should
which
method ;^by
be
accom¬
plished. The opinion of the mem¬
Board,
the President's Council of Eco¬
nomic Advisers, and, in fact, all
with further similar and larger Notes fconsisted of $10,523,000,000 authorized representatives of the
increases thereafter. This gain in Gold
Certificates,
$417,000,000 present Administration in Wash¬
Hhe gold stock, of course, operated eligible paper, and $15,420,000,000 ington, seems to be that interest
bers of the Federal Reserve
member of government securities as com¬
that the pared with $5,371,000,000 Gold
-purchases of government bonds by Certificates, $1,365,000,000 eligible
the Federal Reserve System had paper, and no government securi¬
been, operating, and it was be¬ ties at all Dec. 31, 1939.
to
increase
reserves
the
banks in
same
of
way
•
lieved that these
would
reserves
be used by
the member banks not
only* for the purpose of financing
the budgetary deficits of the gov¬
for
but
the
of
financing an increased business
activity to be induced by the
"easy money'' policy. These hopes
;
were not
realized, and increased
'business activity and the use of
bank credit by private enterprise
did not take place, so that a period
ernment
purpose
I; of
tremendous excess reserves
standing to the credit of member
-
banks
with the Federal
Reserve
System began. The Roosevelt Ad-
.
'ministration and the Federal Re-
:
-; serve Board came
that
to the conclusion
further purchase of govern¬
ment securities by the System would
a
H only'
increase
without
excess
reserves
about the desired
results, and therefore no
additional purchases were made,
although the holdings of the Sys-
:
/
tem
bringing
were
not
allowed to
run
off
P for fear that the financing of the
budgetary, deficits might have to
made at higher interest rates
"than those prevailing under the
"easy money" policy. The tremen¬
'
be
'
Postwar
1945
banks
owned
the
at
end
of
$78,338,000,000 H of
government
securities as com¬
pared with $13,223,000,000 at the
end of 1938, and all banks in the
United States (exclusive of the
Federal
Reserve
Banks)
held
government
$101,295,000,000
urities
as
se-
compared with $17,953,-
1938.
The most
casual observer can hardly fail to
000,000 Dec. 31,
that although possibly jus¬
tifiably so as an exigency of war
our
monetary structure by Dec,
31, 1945 had been strained to a
dangerous
degree.
One
would
agree
in market price
2ViVo yield basis.
In
drop
that, in lieu
automatic
credit
based
credit
means
liquidation
inherent
on
of the semi¬
the
to
in
an
of
extension
banks
reserve
expansion
instead
of
such
of ; by
of direct purchases of gov¬
ernment securities by the system,
the money managers would have
substituted
voluntary liquidation
of reserve credit in order to bring
about contraction of. the monetary
a
structure; r;-
Reserve Banks.
below
a
deposits thus created
tend to increase to
and
sues
will constantly
such
the
extent
an
that
their
ratio
supply of gold will reach
redemption (be¬
impractical and impossible.
the
to
point. that
comes
uncontrolled inflation would be to
buy all government bonds of¬
fered at par, and this, of course,
enables banks to sell bonds to the
Federal Reserve System, thus cre¬
reserves upon which a fur¬
deposit structure can be built.
In order to offset the inflationary
ating
ther
of
the
additional
It
is my
institute
a
ready* cluding
to
increase
in the deposit
own
monetary
ther belief
of
ever
that there is no hope
achieving that goal with¬
Congress (possibly as the first
step), passing legislation to pro¬
out
would authorize the creation of
drawn, the right to deposit such
collateral in the future should be
member banks to
be
invested in
certain classes of government ob¬
ligations,
>
The
Federal
Reserve
Board would be authorized to
ex¬
ercise various forms of qualitative
credit control. The Administration
would
be authorized
to
set price
labor or capital.
restrain the ele¬
production so that one
cannot gain a lasting advantage at
the expense of the country's wel¬
It must simply
of
ments
the
the
of
another
of
or
Government
other
be
must
people's en¬
deavors to improve their stand¬
ards
of
living
by
competitive
methods in a free society.
umpire
in
our
in¬
policy
definite required plan
or program looking to a resump¬
tion of the gold standard in this
country, with all forms of money
redeemable in gold. It is my fur¬
vide
a
of management,
A Revision
a
structure, they rec¬
ommend the granting of extreme
control powers to the Government
and the Federal Reserve System.
Among other things, these powe» 3
kind of required reserves of
(Continued from page 17)
elements.
rates in the market, they
Reserve Banks must stand
Paternalism
Govt.
fare
Gold Standard Advocated
order to
level of in¬
that fixed
take the position that the Federal
effect
They believe that
currency is¬
Reversion From
is inevitable that
it
opinion that the
only manner in which we can
successfully combat the ravages oi
maintain
new
think
kept low at all haz¬
which, in turn, are. cheated by a
paper credit for the purchase pi
government obligations by the
ards and that long-term govern¬
ment bonds not be allowed to
Developments terest
Currency
Member
rates must be
35
(2343)
FINANCIAL CHRONICLE
COMMERCIAL &
of
Laws
Needed
The multitude of administrative
laws
which
over
the
first
be
revised.
There
been
have
enacted
past several years must
reviewed
carefully
and
Some should be repealed.
are
few people in the Stock
Exchange
industry, for example,
who
believe
that
the
Securities
gradual withdrawal Exchange Act should be repealed,
government securities held. Practically all of us, on the other
as collateral against Federal Re¬
hand, believe that a review care¬
serve Notes, and, after such col¬
fully, made will indicate the .de¬
lateral has ultimately been with¬
sirability of revisions which will
the
for
of all
discontinued. This need not in any
way
of
interfere with the elasticity
Federal Reserve Note in
the
order to meet either
emergencies
or the fluctuating need of agricul¬
ture,
industry
and
commerce,
since currency could still be is¬
ceilings, to ration all commodities
considered to be scarce, and, more
Importantly still, to set ceilings on
manner
wages.
sage
sued and
reserves
created in the
provided for in the Fed¬
eral Reserve Act before the
pas¬
the Glass-Stegall
Act,
namely, by rediscounts and loans
of
enable
the
objectives
law to
and
at
accomplish its
the same time
permit, industry to perform better
its functions in
to
make
tributions
more
to
our
economy
satisfactory
progress.
We
and
con-
cer¬
industry, have no de¬
sire, and definitely recognize the
dangers, of going too far in the
tainly,
as an
revisions of this act.
The primary
need with respect to most of
laws is to
provide again
these
a govern¬
ment of laws and not men.
Time does not permit any de¬
Congress realizes the need for
by Dec. 31, 1947, two
to member banks.
tailed
discission
of these pro¬
revision of many of these laws. It
after the end of war financ¬
The suggestion in Dr. Burgess' knows that if our nation is to be
ing, the System had reduced its posals, but it is my thought that
i
the granting of any such powers, Revised Edition of "The Reserve
strong in this troubled world pro¬
holdings of government securities
and the experiment of attempting
Banks and the Money Markets," duction factors must be
permitted
by only $1,700,000,000, while in
prosperity until the United States
to
enforce
to
the
effect
that
Federal
Reserve
them,
can
only
result
to function with freedom.
And
the same period, the net increase
}■ undertook the Lend-Lease policy
in complete failure and economic
Notes might well be issued withof Gold Certificates held by the
Congress needs the support of us
I and its own military preparation
disaster, just as similar govern¬ out any form of collateral and au
\
: for
entry into the Second World System amounted to $3,850,000,- mental efforts have resulted in without
any gold reserve require- ,
^here is no question but that
War, which was finally precipi- 000, so that reserves of member
every case in history (and there
ment, assumes superhuman wis-1
banks had increased about $2,000,management, labor and finance
tated by the Pearl Harbor atare many of them) in which they
000,000.
tack in December, 1941.
?i?1Tli
self-restraint, as well as.I jiavc ieame(j much from the exhave been tried.
the loftiest purity of motives.
It will be observed from these
periences 0f these last few years,
i
yp-It was foreseen by everyone that
On the other hand, there is a
The
American
people, in the i although it has been by an expenthe financing of the government comparative figures that the Fed¬
Constitution adopted in 1789, gave sjve method. We have learned that
group of orthodox economists and
eral Reserve System has not even
y during World War II would be a
a good many/bankers, industrial¬
decreased* its .bond holdings since
good evidence of wishing to have. there is no progress without good
terrific undertaking, and a plan
Dec.
31,
1945, by a sufficient ists and insurance executives who a government by'law rather thhn human relationships; The actions
for such financing was worked out
believe
that
there
is
only
one
amount to offset the new reserves
by men, and it is my opinion that management, labor and finance
,.y by representatives of the Treasury created by the net gold imports, sound way in which the effects of tne power to issue money should
have taken to inspire greater ad¬
Department, the Federal Reserve
be governed by very strict laws, miration
monetary
inflation
can
be
coun¬
and
which, of course, indicates a con¬
respect
between
System and the American Bankers
teracted, and that is by a correc¬ both as to reserves and collateral themselves and with the
tinuation of the "easy money" pol¬
public is
y Association. The plan adopted icy without regard to inflationary tion of the monetary inflation it¬ requirements.
in 'tself encouraging and presages
| provided for the financing of the results and the corresponding de¬ self. In other words, this group
I realize that what I say, or, broader
understanding and co¬
7 war on a low constant level of
terioration
in
the
purchasing are of the opinion that the effects in fact, what any of us say, with operation in the future.
It has
interest rates.
It was recognized
on
the price structure of large
power of the currency.
regard to the monetary policy Of taken steps to eliminate prejudice
that, in order to accomplish this,
issues of irredeemable paper can¬
the country can have only a very and
Also, please bear" in mind that
misunderstanding which are
it, would be necessary to abandon this
not successfully be opposed by
greatly
inflated
monetary
insignificant effect on the future almost always the cause of un¬
'7 all thought of our "sound money"
price ceilings which have failed development of such policy. How¬
structure
could
not
have been
satisfactory human relationships.
/; t policy of the past and to discard
in every great inflation of the
built without
the authority for
ever, it has occurred to me that
You, the industrial leaders of
]; as .impractical the plan used in pledging government securities as past. They believe that, if we are the dangers of a disastrous infla¬
Detroit, have
shown a wide
to avoid extreme price inflation,
y financing the First World War, collateral to Federal
Reserve
tion in the United States are so breadth of
approach to the solu¬
which was so warmly praised in
with all of its concomitant suf¬
Notes which was provided for in
great, and so generally recognized, tion of your problems, and your
tfye quotation from the 1927 edi¬ the
monetary structure that Congress would be justified
Glass-Stegall Act. of 1932, re¬ fering, the
courage in frequently taking the
tion of the Burgess book.
In newed from
(which, of course, includes de¬ in creating a committee such as haid
year to year by Con¬
way against an easy way be7
other words, the decision to adopt
posits and all other forms of was created in 1908 by the Aldgress, and finally made a perma¬
cause
you consider the country's
•a' policy of a fixed low interest
money) must be contracted to the rich-Vreeland
nent authority on June 12, 1945.
Act.
That
Act
welfare
first, is encouraging. La¬
rate was made, with a full recog¬
point where currency will again created "The National Monetary
It seems to me that the figures
bor and most of labor's leaders
become redeemable on demand in
nition of the steps which would
Commission," which was designed are also
which I have given should satisfy
taking a broad approach
:have to be taken, to carry it out.
a commodity having a stable value
to safeguard the general situation
any reasonable person that
we
and consider what is best for the
/The managers bf. the Federal Re- have a sufficiently great infla¬ in the markets of the world, in¬ until a comprehensive law could
country.
The highly publicized
serve System had already had: • a
dependent) of
government
fiat, be passed, and it consisted of nine
tion of our monetary structure,
disputes, many conducted by un/ sufficient, amount of
and they believe further that our Senators
experience
and
nine
Representa¬
based not upon gold but upon the
American methods, are not typical
own
issuing Federal Reserve Notes
experience since the estab¬ tives. The Commission put forth
issuance of irredeemable paper
of the present relations between!
^secured by government bonds
lishment of the Federal Reserve a tremendous amount of
study
and
money* to cause all of us to won¬
>
^bought by theBystem, and in ere- der how much farther we may be Act and the various amendments research in connection with the management and labor.
Such examples of leadership are
thereto, as well as the history of subject of Banking,
gating reserves for member bunks
Currency and
able, to go along that road before
inspiring. The ingenuity and the
all previous monetary inflations
[i by, the. purchase of government a fear of the future
Credit, and it was largely as a
purchasing
throughout the world, make it result of the educational influence ability of our people coupled with
"7 obligations in the Open Market,
power of our currency may per¬
to understand how easy the proc¬
quite clear that we are not justi¬ of their published findings that such an understanding and such
vade the entire population and
courage shown by our leaders will
fied in entrusting to any individ¬ the
ess. "would
be to, increase
the cause a
Federal
Reserve
Act
was
flight from m$>ney into
ual, or Board, or governmental made possible. Such a Commission give us the increased production
money supply to a fantastic de¬ material
things,
thus
bringing
^administration, the power to issue could be of inestimable value to so necessary to the welfare of this
gree .without people in general,
about uncontrollable inflation and
money except under very definite the United States now, and could, great democracy of ours as well
/appreciating the deterioration in economic chaos.
legal limitations. These limita¬ in fact, :be the instrument by as to the welfare of the world.
f the quality and purchasing power,
At any rate, we have had evi¬
tions
should be of such a char- which a disastrous
viCot.an.unlimited,supply of irre*
monetary in¬
dence of uneasiness with regard
acted that the outstanding supply flation
r deemable, currency
and deposits;
might possibly be avoided.
to the inflationary spiral of prices of
paper money and of bank de¬
The mechanics are familiar to. all
and wages, which have cornel from
:.osf .°you."
posits shall be supported by such
The Federal Reserve
expressions of the Federal Reserve securities and shall bear such a NASD District 13 to Close
Ranks purchased bonds,, thus in¬
Board through its Chairman, from
ratio to the gold supply of the
creasing the reserves of member
the President's Council of Eco¬
Alexander Siedler,
Jr., Presi¬
>
country that redemption in gold Saturdays in Summer
bgnkSj and member banks in turn
nomic Advisers,
dent of The Bond Club of New
and from the will at all times be feasible and
i
The
Executive
Offices
of
the
bpught five" or six times as many President of the United States
Jersey,
announces
that
the An¬
practical. They also believe that District No. 13
y bonds in order to put those re¬
Committee, Na¬ nual Field
himself, to say nothing of many such a condition (currency re¬
Day will be held at the
serves to work. The Government
other
important
organizations, demption in gold) is incompatible tional Association of Securities Montclair Golf Club, on Friday,
spent the proceeds of these sales
economists, bankers, etc., through¬ with the theory that any par¬ Dealers, Inc., will be closed on June 11. C. Wallace Smith, Chair,
of bonds, and the money became
out the whole country.
ticular interest rate can be per-* Saturday, May 29, 1948, and each man of the Committee, has pre¬
.additional, deposits in the hands
pared a program which in addi¬
I believe that the general con¬ manently maintained, either by the
Saturday thereafter • through the tion to
i of the public.
By Dec. 31, 1945,
golf and otljer sports, will
sensus
of opinion is that some¬ issuance of currency secured by
months
of
Juney July^Apgust and include / sf/hUmber of surprise fea¬
> which
concludes the period of thing must be done to counteract government bonds or by the cre¬
dous
?
excess
reserves
continued to
they stood
at $6,600,000,000) without bring¬
ing about business recovery and
grow (on Dec. 31, 1940,
However
years
'
r
>
*
'
.
New Jersey
Te
Bend Club
Hold Field Day
.
v
;/
war
financing, the System owned
the
inflationary trendy but there
ation of deposits based on reserves
September^ 1948.
d <x(
o:
.
-
tures.
fRidaU
/:
36
(2344)
THE
COMMERCIAL
&
FINANCIAL
(Continued from page 12)
the second stage (February 1917October 1917) had likewise been
consummated by consolidation of
'
lastly,
complete fraternal con¬
fidence among revolutionaries
a
.
what
is
need
we
a
military
ganization."8
^
<
.
Communist
and
or-
-
'Again in 1920, after Communism
had
become
reality
a
Lenin
in
Russia,
,
to.
necessary
use
any
ruse,
forward
to
non-Communistic
states
United States.
was
He
like
the
living not merely in a state,
but in a system of
states; and it
perialistic states.
Ultimately one
the other must conquer. Mean¬
shall have lost
our
strategic
of
number of terrible clashes
a
between the Soviet Republic and
the
bourgeois states is inevit¬
able.'^
Not
the
only have the objectives of
hierarchy been
Communist
announced
time
but also the
and
time again,
by which the
means
dictatorship
is
throughout the
to
be
world
spread
have
also
been publicized.The various
countries of the world,
according
to the program of the Communist
International,
schematically
be
divided
three
main
may
into
types.
In the first group are the
countries
of
highly
developed
capitalism
States
have
such
and
the
as
Great
United
Britain
that
centralized
production and
long established democratic politi¬
cal systems.
In such countries the
program aims at a direct transi¬
tion to the dictatorship. The eco¬
nomic demands
are:
Expropriation
of the whole of large-scale indus¬
try; organization of
ber of
in
State
contrast
to
large
a
Soviet
this,
num¬
farms; and,
a relatively
small
portion of the land to be
transferred to farmers for indi¬
vidual cultivation.
In
countries
with
a
moderate
development of capitalism such as
Spain, Poland, Hungary and the
Balkans, the Communist
program
adopted in 1928 calls for a- process
of gradual transition. In
general,
the revolutions in these countries
were
planned as being primarily
agrarian by organizing the
peasantry along cooperative lines
and, later,-by combining them in
production.
borders
of
beyond
country and
tions
)
such
as
Argentina and Brazil, the
program varies from
a
experience
es¬
thejir effectiveness. At Yalta and
Teheran, we learned that Russia
The
Marshall
stage
also
any
retreat, if
to
gain
to
Turning
to
a
recent
more
It is maintained in some
quar¬
ters that the announced
ideology
and method
of world
found
Stalin
again, in a radio broadcast
from Moscow, left little doubt as
to
his
adherence
to
the
basic
velopment of world economic
political
forces
through
60
million
necessary to go to
such extremes in order to
solidify
the movement in
Russia, but that
such aims do not now reflect the
ideas of present Russian leaders.
How does such a view stand
up
under
the light of the words and
deeds of these leaders? In one of
tons
author not only endorsed Lenin's
would
are
sad commentary
a
that country's good faith.
In
this respect, Russia has again fol¬
the same pattern as Nazi
Germany.
Union
has
As
and
William
C,
Bullitt,
out, it is
difficult,
at a time when the
Soviet Union is in such
great need
of consumer
goods, to reconcile
this tremendous increase in steel
What
capacity
waging
I
With Russia's actions in the ac¬
quisition and control of formerly
independent countries
of
without
November, 1945,
Peter II was de¬
be
^
anti-Communist leader in
garia.
In 1947, three more
ment crisis
leading to the
Czechoslovakia.
"hihtual
as
own
interpretations of
of
soon thereafter in the
depression with
a
men
It
is
this
tem
to
a
of
which
it
or
dom.
of
That
the
-»
V-
;*
A1-' ' s'"-V
v»*•'
v\
•••- —-
*
1
•
Itself
(New
Sons, 1946),
*
in
$ The
York:
Charles
54.
Infantile Sickness
Scribner's
p.
of ^"Leftism"
Communism—1920,- Chapter 6, as
in Bullitt, The ^titeat 'Globe It
self,
quoted
p.
r
6.
10
U
i.
•;> .itfjn; (iJfyi ;£'.•)•*, •:
Blueprint-for* Worldj{Qonquest, The
Official
Chicago:
Compiuni.st' fiagyi
Human Events), p.'^09.
that
the
us
become
and
all
A
carrying
available
propagate
we
are
the
stop in its
11
cow:
The
'1939)
1 as*
of Leninism
for
(Mos¬
reproduced
communist
educated
man
is
truly
atomic fission.
-•-*
Grentu Giohe (itself^Appendix cUtlJ (
men
in
this age'
electronics,
That
is the
and
chaM
the death knell of
communism.
free.
<v
*
our
kind.
forth
it.
to
each
of
these
nations
cooperate
(5)
fully with all the others. We are
to help them to help themselves.
must
We
are
to
use
our
We
need
a
assistance
in the form of
(6)
If assistance is extended
as
a
turally, industrially, commercial¬
ly.
own
We are to exert ourselves to
utmost to strengthen nations
which
garded
in
the
past we have re¬
rivals and competitors.
as
We feel
great sense of urg¬
ency in getting on with our work.
a
possible,
grant, the participating country
must place in a special account
its
the
into the
Where
be extended
loans.
own resources
to build up other nations agricul¬
We
protect and to
i
(Continued from page 19)
to
our own
demo¬
currency in
commensurate
amounts.
Such funds are to be
used for
recovery purposes within
that country.
;
a
business at hoipe.
The
*
inspired^ revolution
or
ing
maintaining the soundness
subversion to extend further the of
currencies, budgets, finances, in
communist control of >;■ European
18 countries.1
^
'; or
*
.
governments
will
be .considered
ap unfriendly .act and will lead to
•
14 H. A. .Wallace, Toward World Peace
(New York:
Reynal & Hitchcock), pp.
68-92'
).
15
•
destroying our free-'
challenge con¬
is the
(7) We
to
are
maximize
the
facilitate
of
use
and
private
channels of trade in procurement.
(8) Assets and earnings belong¬
ing
to
citizens
countries
but
States
to
are
of
participating
situated
in
United
be, as far as possible,
put to appropriate use in further-,
,
announced (plans
Stalin,''Problem#
our
J upand. iriain-
Yet, as in the 30's,
again hearing from pre¬
well-intentioned people
that,.,4$ thwart
end
to
must put an end
sooner we can push this
program ance of the recovery program,:,
[
column, well led and
(9) Participating countries
well financed, to counteract the through and get out, the happier
{are^
the American
td facilitate the, transfer, to
people will be;"
communist: fifth
column.
We
^the
should and can show the Kremlin
The. breadth and' magnitude of United States: on reasonable; terms.'
the
and
in
reasonable
that we know how to fight fire
inspiring objectives set for us
quantities of
with fire and that propaganda: is by the Congress are reflected in materials which weiriai^'
the following analysis of our re* as result of deficiencies
a sword with two
edges. *
;iri o(ir
sponsibilities under the Foreign own resources.
(3 i A building
themselves.
sumably
end
sys¬
an
fifth
cratic
take
facts. speak
an
put
that chal¬
Does/ the^
me
phe¬
point I
vigorous Mr. Harriman in Paris
on May 11
campaign as to what we stand for,
expressed the feeling of all of us
what our system
is, and what when he
said: "The United States
great strength and resources —
wants to make Europe self-sus¬
economic, spiritual, and military
taining and then get out and tend
—are
present program of land acquisi-*
tion arid ideological - -
to
jobs.
bust
Foreign i Assistance
and
.
/sAr—The Spark (Moscow),
1900, as
quoted in W. C. Bullitt, The Great Globe
put
we
machine,
;
•:
(10> Increased
such "materials for
may be
i
encourageutilization
the
Bullitt, TheGteat Globe itself, Ap¬
pendix I.
;
(4) We
stimulate
nations
facilitate
must
trade
with
and
by each of these
all
the
others
and
with, the United States and with
peoples of the
the rest of the free
world.
production,.}?;
futurg ^iiv^yf
negotiated.' iC
(11) The
Administrator; iis ? toi
the
largest: possiljlev
of
manpower;
participating countries;
(12) The
<
;■ a
must
we
And
and
of
democratic
our
will
system.
■
-•
boom
slough
millions of
crying for thousands
nomenon
opinion
Assistance Act of 1948; :* '
■'.*
expansion?; tenance of dur econoihic and mili¬
parallel* of :the <pro¬ tary potential, together with that
Our Responsibilities Under the
nouncements and deeds of / Ger¬ of our
the tactics to be used in
friends, in such a measure
achieving
man
Law
National Socialism, on the •as to make it plain as
the ultimate
aim
of the
Com¬
day to all
one
munist
commuiiist
hand,
and
the
(1) We must promote agricul¬
party. Speaking
equally pub-,
"police states that they
of the
Russian Revolution, Stalin stated licized aims of Communism, and can 'never hope to control the tural production in 18 nations*
the steps taken thus-far to
that the first stage
fulfill ; balance of world power.'1
!; (2) We must promote industrial
-V
(1903-1917)
those aims, on the other
liad been consummated
hand,
by the
J(4) A; pl^in statement tOytliose production in* 18 nations.
have
any significance?
overthrow of the
It seems
states that! an attempt. through
Tsars; and that
(3)- We must assist in restor¬
philosophy, but also implemented
it with his
ing
first
follows:
communism
communist countries of
in
Will Russia Stop?
.1
Where, will Russia
with
must
(2)
police
and
key
cabinet
posts,
failed to dominate
the-elections.,
r
are
evangelists for Our
cause just as the communists are
evangelists for their cause.
demand for, a 10-year
aid" pact.
Last month
of
between
course
Last month, Fin¬
but, lacking control
over,
boom with millions of jobs
crying
men and wallow¬
for thousands of
fronting all free
A
democracy.
The eighteenth cen¬
tury fervor for individual freedom
must again become a religion with
coun¬
concerted effort to
a
our
The Objectives of Our
and
thorough v-arousing
of
public opinion at home and in
Western Europe to the nature of
the ideological conflict now in full
also, the Communist party in Italy
made
short-term
as
fThe short-term
Bul¬
coup
century i
a
wonder
society finds
periodically
strangled, soaring at one moment
on the high tide of an
inflationary
ing picture program which day in
and day out insults
everyone with
the intelligence of a 15
year old
the
early shooting war. As
time, these things may
classified
;(1)
usurpation of police
precipitated the govern¬
potoer
As
number of
a
No
itself
to it without
long-term.
provisional government took
Albania.
September, 1946,
the Communist
over
an
related to
December, 1945,, the Commu¬
nist
are
Do?
to do?
our way of life, based upon
enterprise and political and
civil liberty, is to be preserved
throned and Premier Tito
signed
a collaboration
pact with Moscow.
In
to
we
were
ago.
free
in
when.. King
totalitarian
well-defined things that we must
War II, you are all
acquainted.
The program since the end of
the
began
it, there
see
We
are
they
half
a
pressure' groups.
still in large meas¬
a life well rounded in
lenge. I believe we can and will
things cultural and spiritual. produce that
statesmanship. I be->
.Ignorant men* no matter under lieve we shall find a
way to har¬
what outward form of institutions monize
our
free enterprise
sys¬
they may live, are never free.
tem with economic
security for
They are and will always remain
the individual.
And I know that*
slaves of the greatest of all
tyran¬
nies, their own ignorance. Only we must find it. That will sound!'
do if
Europe
before and since the end of
World
war
Are
Then, what
war.
where
ure
and
have
developing
public
the ;
those
states.
production with any other
policy
than that of
building up
for
with
intelligent
have
than
no
are
taste, and
what to expect from international
agreements
in
to
need only refer
you to the typical radio and mov¬
The
assurances,
paralleling
twenty-six similar violations by
Germany
from
1939
through
1941.15
This
illustrates
clearly
United
States Ambassador to Russia from
1933 to .1936, has pointed
servient
in this country, I
our
Since 1939, the Soviet
violated twenty-eight
year, or three times the 1940 rate.
travel
faster
lenge confronting those of our1
am making is that
people who would export without
long-term requirement is importing, who would have
higher
more intensive and more
adequate wages without greater
production,'
education of our people; an edu¬ who
would have
bigger profits;,'
cation which will
de-emphasize without lower prices. That is the:
the importance of material wellchallenge that demands the best
being and power—the twin gods we have in
political, financial,
we now
worship—and emphasize business and labor
statesmanship.
the importance of the
arts, good I believe we shall meet
on
a
to
we
much
child.
lowed
international treaties, agreements,
Stalin's
books,
"Problems
of
Leninism " published in
1939, the
really
and
of the wari
in¬
capitalism. In
address, Stalin declared
an
objective of future planning
to be the development of" a steel
of
lated
Russian activities since the end
same
production
yet
sibilities.
herent workings of
the
As evidence of how far
in Europe after the war.
He said
that Russia was only half popu¬
and
the
desire for territorial expansion
keep Russians
busy at home without undertaking
any additional territorial respon¬
tenets and teachings of the total¬
itarian philosophy.12 He attributed
the Second World War not to the
actions of Hitler, but to the de-.
conquest of
it
no
in an
system. ^The
price
physical sciences
The latter
com¬
leaders; and must
economically, upon the
smooth functioning of the free
and open-market price
system,
readily and quickly responsive to
the interplay of the forces of de¬
mand and supply.
1
good-neighbor policy and
a
based
is
liberty
political and social sciences. The
former recognizes no national or
political boundaries; they are sub¬
by competent
emphatically declared that he had
date,
land' became part of the Soviet
die Communist party was the
military block when it capitulated
philosophy of a group of zealots to
Stalin's
who
for
individual
and
■■
willing to work *
which
economy
progressed
depend,
ing, Stalin proclaimed his desire
enemy and to assemble forces so
as
to
take the offensive
later.
arts
society
the conve¬
nience of the moment and with no
in order
decompose the
problems, arid the
insist
allf
open-market
Strategy
adequately, must depend, politi¬
cally, upon a well informed and
intelligent public opinion guided
thought of abiding by them if they
should interfere with Communist
objectives. At the Teheran meet¬
necessary,
time
to jjauge
and will
able and
are
an
upon
munists make much of that fact.
Our system; if it is to serve
signed agreements for
pointed out
that Communists must learn how
to
which
upon
intelligent leadership.
in
freedom,
our
democratic
system has not found the answer
to certain
to recognize
who
sonal
pacts and agreements
states are con¬
have a wealth of past
the
specific
a
Communist
Aggressive Tactics
:
we
the
would
(1) With all its blessings of re¬
spect for the individual and per¬
creating the
of
at.
systematic tries,
Poland, Hungary and Ro¬
development of agrarian revolu-.
mania, were added to the Soviet
tion to national
uprisings.
orbit.
In February of this
year,
„
as
in
that
able
upon
(2) The second long-term, ve-f
quiremerit is that we learn how to
provide economic security fori
important
defense
war
Long Term
totalitarian
cerned,
the basis of condi¬
inspired pleand semi-developed
besite dethrone six-yearrOld
King
countries such as China and India
Simeon and the
hanging of the
and in South
x
As far
most
The long-term are as follows:
war.
revolution, while remaining
sentially the same throughout
one given stage."12
In colonial
American countries
limits
danger of
with
shooting
certainly follow.
the right to tell
beyond which we
cfannot enter without
the
line
direct
given
begun." 11.
saw
.
be
would
us
on
Under this
concept, the Russians would be
told, the points beyond which we
cannot tolerate their; further ex¬
pansion. Conversely, the Russians
extends
one
peace.14.
the epoch of world revolution has
or
while
revolution
revolution
is inconceivable that the Soviet
Republic should continue for a
long period side by side with im¬
only .the
consolidate the
speaking of the strategy to
be
employed,
Stalin
says,
"It
changes with the transition of the
blunt: "We
not
also, the source of its inspiration
arid; vitality. And* moreover we
In
are
lost
I. The third stage, begun in Oct. frank, joint discussion of
geopo¬
1917' and still going on,, aims, to: litical power will start us on the
the
with
wars
have
a
road toward
are
therefore intelligent,'leader-*
ship will take care of' itself, be¬
cause. an intelligent people will be
to' communism,
Europe
shall
we
candidate,
cradle of our own way of life but
"The
cun¬
Western
Henry Wallace, has stated tiiat
support for the spread of dictator¬
unlawful
looked
Russia
withdrawal from World War
that'lie is truly educated.'
v
"
If our people, are educated and
knows
is to invite war,
/One presidential
ship in all countries. Stalin stated,
method, evasion,
concealment of truth,"9 and that
he
within
strong
s
and he is free only to the degree
fbrce and will •yield
upon,
only to force which it knows is
superior to its own and which it
will be used. If we lbse
by a police state
defensive meas¬
ures
dictatorship in one
country,r using it as a point of
continued to jristify any
iheans for the attainment of world
domination
by
stating,: "It
is
ning,
forces
,
based
of world conquest
through
Thursday, May 27, 1943'
Irresponsible police statism is
war.
Totalitarian Blueprints
careful selection of members and
'
CHRONICLE
within
io I'h 'ri
Administrator ..,is
to
request the Secretary of State to
the
agreement
of
those
obtain
countries
concerned that capital
equipment scheduled for removal
as
reparations be retained in Ger¬
many
if such retention will most
effectively serve the purposes of
the European
Recovery Program.
;
(13)' The Administrator
structed
to
promote
travel
in-i
by1
:
citizens-of
and
v
the United
within
:
tries.
•
States to
participating ' $oun-
i':
'
;
THE
Number 4702
Volume 167
encourage
American
business to invest and assist in
(14) To
European
Admin¬
the
recovery,
istrator is authorized in the
case
of
projects approved by him and
the participating country to guar¬
antee the exchange of local cur-,
rencies for dollars to the extent
only of the dollar investment in
each such
project
i
With respect to American
(15)
books, magazines,
motion
pictures
Europe,
such
newspapers
and
distributed
in
have fo become a garrison state.
We would have guns, but no but¬
propriation
(16) We
freight charges from United States
ports to foreign ports on contri¬
butions for relief in participating
countries donated to or purchased
by
voluntary
non-profit relief
agencies recommended by the Ad¬
,
visory Committee
on
Foreign Aid
within Europe.
to arrange with
the Post Office Department for a
(17) We
are
reduction of
in
viduals
postage paid by indi¬
the
United
States for
sending packages of food* clothing,
medicine, and so forth to indi¬
viduals, in countries which are re¬
ceiving assistance in the form of
grants.
Such reduction is to in¬
clude payment, by ECA- of ocean
freight and, where possible, pay¬
ment in local currency of termi¬
nal charges in the country of des¬
tination.;^:
Vv
.
in
the
production of other
modities for
participating
which
delivery to
European
would
be
use
com¬
any non-
country
refused
an
ex¬
port license by the United States
for such commodity in the iriterest
of national security.
(19) The Administrator is en¬
joined to see that United States
commodities
shall
be
exported
first to participating countries in
preference to countries wholly or
partially in Europe which are not
members of the Organization for
European Economic Cooperation.
(20) The
maintain
a
Administrator
is
to
constant review of the
(including commodities,
facilities, and services furnished
under ECA) to promote recovery.
(21) The
Administrator is to
obtain
from
each
participating
country, at least every quarter, a
full statement of operations under
the bilateral agreement.
Administrator is
en¬
are
ocean
ves¬
sels flying, the United States flag.
(23) To^the
the
maximum extent,
Administrator
is
to
procure
petroleum and petroleum products
from
sources
States
and
fuels'br
outside the
to
see
sources
that
United
alternate
of power are used
(24) Ity / carrying out
responsibilities
all
and
the
in
recovery of other
nations, the Administrator is enjdmed to minimize the drain upon
pur own resources and to avoid
impairihg the fulfillment of vital
of
resources
haps
per¬
We must do this be¬
more.
the only language dictators
cause
is
the
force.
of
language
•
,
As Beardsley
Ruml has said, the
problems with which we must; deal
beginning in 1948 are immeasur¬
ably, more complicated and more
difficult than those we faced in
1942.
All these billions we must
.
ting under way.
And now you
have this whole set of new prob¬
lems
which
must
be
thought
through before the time comes
when they have to be met.
But
I am certain that even though, as
Beardsley Ruml says, the program
of
CED
and
one
are
That the
of the factors that
problems
are
we
fac¬
both
be
deepened, this
broadened
will
and
can
warfare.
but in the future.
(Continued from page 18)
country, and to make representa¬
tions to the government of the
borrowing country, if, in the view
of the Bank, those policies are
detrimental to the general finan¬
cial; and economic situation of the
country, or to the servicing of the
Bank's loan in particular.
By observing the principles and
altogether too
If totalitarian rule
grim to face.
should >be -imposed
upon
people of Western Europe,
the
the
United States "would of necessity
are
earmarked for definitely pro¬
and
the
on
people
the
death
continent
whose
of
itself
everyday
sanctions
immense, but already il
was
has
been in
good.
But
fects
grc?at measure made
the psychological ef¬
these
of
brutal
experience!
will endure
longer.
Since V-l
Day Western Europe has already
made a vigorous recovery.
Pro¬
duction has increased to
without
extern
an
exaggeration,
considers
car
the
battering that
Europe and her. people have had
and what Europe is already doing
is reminded
one
of
remark about the
Dr. Johnson's
women
preach¬
"The marvel," he said, "to me
that they do it badly, bu'
that they do it at all." And there
ers,
not
I shall leave Western Europe.
chinery, transportation equipment,
and basic raw materials, which
the borrowing countries need to
step up
production and which
more
that
general cir¬
like to
should
I
entirely without an element of
For example, there is the
act
of
God:
earthquake, flood,
risk.
tempest
drought.
or
is the regret¬
table prospensity on the part of
humanity to indulge in the con¬
Moreover, there
of
vulsion
in
once
War about
generation, and it
World
a
every
the
was
effects of World
War II
which forced default in their ex¬
ternal
services
debt
several
on
again, take the case of some
little
country whose staple ex¬
Or
ported is some raw material. But
the march of human science may
synthetic
substitute,
which if developed commercially,
invent "
a
that
spell
may
little
ruin.
"
tangible
are
country's
■
but some of the in¬
imponderable
and
haz¬
ards that lie in wait in the fairwav
for the international lender. And
the Loan Director who could in¬
against all of them, oi\ for
them,
would indeed be an adept crystalsure
that
matter against any of
know, and
the
our
as
to
field
of
reconstruction,
operations have
confined
to
Western
so
in
subject
of her
solution
fete
and
own
am
.
.
.
.
Europe.
Uo
is
themselves.
much
smaller
which
The
under-de¬
than
the
planel
grandfathers lived
In their day, distances were
for¬
bidding barriers to intercourse,
and
our
communications
were
slcjw.
Continental, and indeed national
isolation in^posed upon all but,,,*;
very few dh ignorance of the con¬
ditions
and
mode
of
life
of
his
' But
neighbor.
this
today with the
coming of the aircraft, the radio
and above all of the movie, the
not
Occidental way of life has become
known
in
every : corner
of the
fields in which the inhabitants of
city have so justly earned
preeminence, we in Europe can¬
hope to compete and could
profitably learn
many
lessons
from
experience
your
formance. But I
not
count
me
am
sure
immodest
certain
in
and
other
per¬
you
if
will
I
say
fields
of
human
activity, which are .per¬
haps no less important,,, Western
Europe has made, is making, and
will continue to make, a contribu¬
tion without which our common
civilization would, be very much
the
I
poorer.
also
to
the
past
the
have had to
criticism
listen
that within
globe
or
four
years
Western Europe has
been too in¬
clined to indulge in
political ider
oiogie& whose ■■ basic philosophies
,
are
not
those
that are
the
best
adapted" to the tirgenittasksv- In
hand. I may;say,
to
the
worker
in
the
peasant in the mountains of Iran.
They hear iabput, and they see, s
standard of life far exceeding any¬
that they themselves have
or believed to exist.
They cannot be blamed for imag¬
ining
that
what
others
have
achieved,
they
themselves
can
thing
known,
achieve.
task
three
...
Chilean copper mine, to the coolie
in the Chinese rice fields, to' the
ever
velopment and formulate and de¬
velop its lending policies, keeping;;
ward
not
always its obligations to¬
its
all
alone
member
those
to
states
who
are
and
po¬
tential borrowers.
Borrower's Attitude
other aspect of.
lending that I shall
mention, and it is this: For the
lender, virtue must be its own re¬
ward; let him not expect any
•;
There
is
one
International
gratitude from the borrower! %t
is a melancholy but well estab¬
lished fact in the story of human
relationships that the lender of
money has always been regarded
as an unloved and unpopular figr
You will remember the re~;
ure.
pellent picture which Shakespeare
paints of the money-lender in the
"Merchant of Venice.'r In Ireland^
I
from,
come
we
have
at
this, "A banker is the sort of fel^
low who hands you out an um¬
brella when the sun i s shin ing
and asks for it back as soon* as:
the rain comes on."
In Ireland
sent
on
International Bank must approach,
Development
In
of
told
.
.
West¬
ern Europe is inefficient. I am not
prepared to admit that Western
Europe is any of these things.
True, in certain fields of human
activity and in particular in those
decrepit, I
Western Europe is lazy
far been
the Bank has made. six
all.amounting Til total
lo
$513 million. Four of these
were to Europe: to France, to The
Netherlands, to Denmark and to
.Luxembourg. All of these loans
now,
loans
the
problems. Western Europe is ef¬
that
In
on
•
_
;■The International Bank, ^as you
all
the
towards
•
am
better¬
its problems in the sphere of de¬
where
these
countries,
realizing
thai
Pittsburgh and Detroit were not
Western Europe, I should like, if
built in a day, are laying plan!
I
may,
to take off my Inter¬ for
development on prudent, or¬
national hat for a few moments,
derly, and modest foundations
and, as a Western European my¬ Other
countries,
however,
are
self; to make a small excursion on more
ambitious; and the demands
somewhat
controversial ground.
if they were added up, of all theii
Since I have been in Washington,
five-year and ten-year plans tha*
I
have inevitably found myself
have been received by the Bank
engaged in a good deal of discus¬
within the last 12 months, would
sion, argumentation, and debate in terms of
finance, several times
on
the subject of the European
eat up the total loanable funds oi
Recovery Program. I have listened the
Bank, and in terms of capital
patiently
and
always,
I hope,
equipment, would far exceed the
good temperedly, to candid and
production potential of the manu¬
forceful criticism on the part of
facturing countries of the world
my American friends of the ap¬
We are living on a planet whicl
proach of Western Europe herself
I
social
bitter little saying which runs like
contribute to the reconstruction of
While
can
The Field of Economic
the other branch of the
Bank's activities, namely the field
of Development, a host of fasci¬
nating if difficult, problems pre¬
.
for
and
progress,
in mind
destruction of the
country's basic
a
that the foundations
ment and contentment. It is against
this general background that the
were
camp.
war
building-up
be laid for economic security and
her
forced labor and the concentratior
It is only by a slow?
patient and unremitting-
effort in the less spectacular fields
the- skies,
ground down undei
a
relentless invader
were
heel
from
ductive purposes.
They have been,
or
are
being, used for the pur¬
chase of specific goods, primarily
industrial and
agricultural ma¬
process of
her
years
.
There is one
cumstance
velopment.
are
long
veloped countries of the world
the
procedures,
Europe as a whole. I think the divide
themselves
which I have outlined, the Bank
conveniently
Bank can claim without undue
into ' three
regions:
the Latin
hopes to be able to steer clear of
complacency that these loans have American
some of the pitfalls that have be¬
Continent, Asia and Af¬
made an important contribution
rica, and the Far East. All three
set the path of international lend¬
during a vit^l period of the Eu¬
display at least this characteristic
ing in the past.
;~+y
ropean econoiriife* resurrectibn.
in commoh: they are all highly
There Must Be Risk
"development-conscious."
Some of
Western Europe Situation
following
by
That is
quite a list of specific
responsibilities, but they must be
met, because the recovery pro¬
gram must succeed. The alterna¬
of
that,
International Lending
And World Trade
specifically instructed as to how
agricultural procurement is to be
Vrogr&m Must Succeed
For five
The material
new
sesses
civilian population lived in nightly
terror
one
the title of the
institution implies, ;walv^ estab¬
lished to operate in the field of
international reconstruction and
in the field of international de¬
economy;
through her cities,
villages and across her
countryside. Her industrial cen¬
be done.
Your
forward
be described as remarkable; Wher
gazer.
success
must
chairman, Mr. Walter
add to the complications.
It all Williams, is a terrific and enthusi¬
He needs, of course,
adds up to this, that in 1942 we astic worker.
all the help you can give him.
were faced with the problem of
combating
postwar
unemploy¬ And you are going to have to add
ment.
Again those
Today the problems we new brain power.
recruits can be found.
The great¬
are facing involve our very free¬
ness
of
CED
lies
not
in the past,
doms.
spend
need^'of the people of the United
States.
He is particularly and
conducted to protect the domestic
them.
wrought by indiscriminate aerial
annually,
our
fiscal
just get¬
i:
backward
and monetary policy, are
$15; billion
These
prbmQjting .the
tives to
in a human generation important, but their importance
Western Europe has been a battle-^ lies not 4n their own sake but iii
ground* Over great areas of her the extent to wfrich they neces4>
surface, armies numbered in mil¬ sarily serve the basic economic
structure of the country that pos¬
lions, have contended
ters have had to suffer the havoc
Certain of
been realized.
not
or
up-
Twice
basic studies, such as that on
extremely high level, per¬
an
WhereVef'practicable.
foregoing
Recovery.
ropean
telecommunications
the
economic stability of a country is
to be secured. These things are
at
then been exemplary.
States
plan for Eu¬
a
towns and
within
United
of
and
European countries whose reputa¬
tion in this respect had up till
the
need
set for ourselves in 1942 would be
joined to assure that as far as
practical at least 50% of the group
tonnage of commodities procured
transported abroad in
the
largely completed. That hope has
is
of such
resources
countries
(22) The
lie
In addition for
billions of dollars.
mention, and it is this: there can
be no international lending which
of the
must
are
several years ahead we will have
to continue defense expenditures
pating country to insure the effi¬
use
changes
no
,
economic situation in each partici¬
cient
We
doubt.
can
that
;
countries of commodities for
mills or hydraulic plants
by the widespread installation
by the erection of the most
to-date port
facilities that
one
37
of steel
or
of modern
....
(18) The Administrator is to
refuse
delivery to participating
no
these criticisms ignore the simple
and obvious reasons which under¬
alterna¬
other
is
■
with
of my friends
in Britain. But I think that all of
understand
contemplated ap¬
of $300 millions.
are
to
pay
ocean
criticism advanced
same
less force by some
be;
sure
The
freedom.
out
total
structure
business
and
(2345)
accepted
tive to success is a third World, that would put the very freedoms
War.
That alternative I refuse to we are trying to defend in jeop¬
consider. Even if we won, we ardy.
We can afford, and I am
would face utter, disaster.
The. paraphrasing John
Stuart Mill,
fruits of victory from World War neither .ignorant
opposition toi
II are back-breaking burdens.
» change nor ignorant change.
I had hoped that when I left
The financing of the program
of European recovery will cost CED the research program we had
no
tle
haps
a
call for changes in our
may
economic
ter, and, far more importantly, lit¬
guarantees during
the first year of operation are
limited to fifteen million dollars
of
ing
CHRONICLE
FINANCIAL
COMMERCIAL, &
of
them in
cidental
about
But
their
it
is
the
leaders
the hard
creed
standards
only
to
difficult
educate
that Oc¬
have
come
through processes of
of capital and ■ of
accumulation1
technical skills, which
musti;"go on
npt'm'er;ely over ,#ye'y ears- or ten
yeats/but over>'generations. w It is
I; have heard the "seJiby)ithe pveftw®ht f.?9s^Miori
we
have much more rain than w£
liaye sunshine, so you can imagine
in whose custody the umbrella
most often is. Doubtless some of
here may know the story that
of one of your eminent
you
is
told
financiers.
American
He
was
lunching one day in his club with,
a
friend, when an acquaintance
passed by his table, gave him a
very cool nod, and hurried
on.
The financier turned to his friend
and said: "I wonder why it is that
so-and-so dislikes me so. I can't
recollect that we've ever lent him
any
I
ish
money."
reluctant, however, to fin¬
am
on
this note of cynicism.
r
all
gratitude is but ;.,a
soothing syrup; and it is a poor
substitute
for
the mental, and
After
spiritual satisfaction that is earned
from the sense of a job well done.
For generations to come, per¬
haps even for centuries to come,
the mantle of leadership of world
civilization must rest upon the
shoulders of the people of the
United States.
That mantle car¬
responsibilities.
ries with it heavy
Not the least of
the wise
is
ties
those responsibili¬
material
of the vast
at your com¬
use
resources
support of
lending institu¬
In its vigorous
mand.
the International
tion to which I belong, your gov¬
ernment is making
a
magnificent
contribution to world reconstruc¬
development and in the
Cooperation Act, you
not
merely
displayed
a
tion and
Economic
have
statesmanlike approach to the cure
of
the,
I which
economic; sickness from.
non-American world
but you have also
the
is. suffering,
given one more manifestation of
the warm-hearted
generosity of
the American people.
These are
but two of the directions in which,
if I
may
have
to say so, you
presume
capacity and
the high des¬
unto which it has pleased
proved
your
willingness to fulfill
tiny
God to call
v'
you.
t
,
————~
w
With Dreyfus & Co.
.
/i
J
Dreyfus & Co. f announce that
Miss Miriahi Minden is now asso¬
ciated
with "t'hem
as
broker- kr4h&'-firm's'
a
customers'
Hotel Madi-
38
(2346)
THE
COMMERCIAL
profits is when there are buy¬
ers bidding
for them. This
doesn't mean that you'll get
Tomorrow's
the
Markets
maximum
out
of
^
Says—i
J
==By WALTER WHYTEss
New advance indicated
•
recent action.
strength
on
not weakness.
—-
*
#
„
by
Time to sell is
❖
#
-
.
Two weeks
ago', in the issue
May 13 to be exact, I wrote
".
the market (is)
working
of
.
.
itself
into
violent
week
a
occur."
can
later
*
stepped
where
corner
move
the
a
A
>f
:J;
ifi
For
tho.se
who didn't
see
optimism. It half at 42 or better, stop half
makes for cheer and good at 33. Caterpillar, bought at
fellowship. But I'm more in-'55, stop half at 61, take half
terested in profits.
Boasting profits 72 or better. Dresser
to the boys in the next chair,bought at 22, stop 24 ^ No
in the customers room about nearby profit
taking point
dog at 10 and casually
pointing to where it is now—
some
15
makes for
—-
nice
a
Yet, I'd rather be
We may not
the
receiving teller
bank.
The glow is
more
in
in
a
permanent.
disregard the need
attracting savings by paying a
for
oetter
return
all
fairness
J
.
the result Of competition of the
Treasury in the "sale of savings
and
security bonds at an ulti¬
higher
mately
standard
bounded
alent it
that
optimism
prev¬
so
must be admitted
now
just
showed
un¬
market
the
as
violent
ahead,
does it
show something of the same
thing now. In fact its recent
move may be dwarfed if the
corner it's in now is
squeezed
any smaller.
-'
1'
a
weeks
two
move
ago,
*
so
*
*
[The
article
—Walter
Whyte
expressed
in
this
necessarily at
any
views
do
not
Charters Secretary of
But
despite
move
of
the
technical
another
sharp
I still
feel, as I did last
week, that the time to take
Certificates
Duie each October 1, and April 1*
from October ;1948-April
1950
rate in
1.35%-2.65%
York
York Stock
Curb
Exchange
Exchange
(Associate)
San Francisco Stock Exchange • 1
Chicago Board of Trade
14 Wall Street
OOrtlandt
Michael
Robert
Private
Wires
Teletype NY 1-928
to
Principal Offices-
Ban Francisco— Santa Barbara.
Monterey
31
;
—
Oakland -^Sacramento
Fresno dlifv'.
correct, will be
for
by
Bond Holdings
With all these considerations in
mind
have been making some
we
changes in our government bond
portfolios. This we have done in
some
shorten
to
cases
our
aver¬
age
maturities, partly in response
to
bank
examiners'
comments
_nrflv +n malro
„ne
giblp fufu^ iancereasesy & The
rate.
money
Despite these shifts,
government
our
holdings
bond
the past two years. A more
significant fact, However, is that in
the category of public marketable
securities, which represent about
97% of savings banks holdings,
short-term
holdings
sharply
in¬
creased.
Thus, holdings of securities
turing in five years or less
from
8%
to. 20%
of
in¬
the
Charters
has
I
scribes
have
been
rather the
saying
climate
de¬
of
our
our
pur¬
wish to hold
security." And elsewhere, he said:
"A most important part of our
debt management policy has been
the program to support the market for government securities." ,j
of
substantial
a
arnouni
higher yield governments.
shall
have
invested
after
abundant
We
still
sums
in
government
bonds
have met the immediate
we
of
problem of stimulating savings by
increased interest
rates, supply¬
satisfactory
lack
support would
nancial demoralization.
state
policies
W.
Peake, who has been appointed
Secretary 'Emeritus, it was an¬
nounced today by Homer A. Vilas,
Mr. Charters is
braska where
he
schools and in
the
the
native of Ne¬
a
attended
public
1934 he graduated
University of Nebraska
School.
He
is
admitted
to
practice of law in New York
his release from the Navy
Since
in 1945
as
a
Lieutenant Comman¬
source
&
Co.
are
—
much
very
of
the
ately
a
Treasury
fiscal'welfare.
to
do
sum
$12
invested
our
to The
FRESNO,
Drew is
now
Financial
Chronicle)
in
no
Francisco Stock
trustees
of
of
Callaway,
the First of Michigan
Corporation,
Building, has been elected a
director#
we
governments;
is
and
more
we
is
that
the
the
mil¬
of
useful
cit¬
of
against the broad
the sound man¬
public debt.
Public Debt in
in
funds
Our policies must continue
background
The
investors and
patriotic and
first
fact
the
main
About 35%
MICH. —David H.
Jr., Vice-President of
as
the
agement of the
of
"DETROIT,
the
being drawn to other forms
izens.
Exchange.
Callaway Director
•
attention
interest in it
lions
CALIF.—William E.
affiliated with Bailey,
Davidson, Fulton Fres¬
Building, members of the San
for
billion that
should review our thinking with
respect to the National debt, and
as
Bailey, Selland Co.
should
not find
investment, it is timely that
8135 Forsythe Boulevard. Partners
With
National
we
could
investments
of
partner
proportion¬
the
of
Even if
Since
our
Roy W. Longstreet, Lester M.
Abbott and Craig M. Smith.
and
we
so
have
securities business from offices at
are
responsible
a
custodians
wish
of
Longstreet-
engaging in
socially de¬
Strong Hands
to
public
in
bear
debt
is
"strong
or more
National
in
debt
marketable issues.
held
hands."
than
is
mind
a
in
third
non-
Of the remain¬
ing $166 billion of marketable se¬
curities, $27 billion, or 11%, are
held by Treasury trust funds and
agencies and the Federal Reserve
banks.
Thus, approximately 46%
to
reduce
the
pressures.
ary
the commercial
billion
of
end
of
had
been
In February, 1946,
banks owned $94
governments.
At
the
December, 1947, this total
reduced
to
of
*;
-
.
inflationary#
over-abun-#j
an
and
currency
direction
the
and
Banks, thus effecting
important brake on inflation¬
an
of
They have made
eral Reserve
de#J
bank
firmer
money
by raising the rates
certificates
and
lowering:"'
by
the peg on
the long bonds. Pow- #
voices, have
repeatedly #
raised warnings against the
con##
erful
tinuance
the
of
policy,:#
support
crying out that the evil of infla¬
is
tion
great that the Federal
should have restored to
so
Reserve
it the power to, curb credit which
recall
in
vThe
word.
a
it is difficult for it to do
ability of the commercial bank?
readily to increase their reserves
by selling their governments to
as
the
informed
Federal
it
made
to
the
at
possible
pegged rate
for them
to
virtually unlimited funds
commercial
borrowers.
gency in lending is not a
in itself except when such
in
controlling
Reserve
Bank
abeyance,
reduction
mercial
bank
holdings
was a
in
com¬
government
bond
The main objective of debt man¬
to
steer
the
a
forces
middle
has been
years
course
between
inflation and defla¬
of
price level of the debt.
#
of
#
the
lease
Federal
Reserve
to
to;#,
re-#-
Board;#
#
#
to return
to their function of
regulating the
supply of credit.
This position
has been supported by other influential
!
persons. '
Aware of these
#;
#
#
>
views, the
#
cen-
tral bank authorities have
theless
their
with
never-#,
adhered to ,#
courage
The
course.
statement
best
f
reasons
M
why they have done so was that
the President of the Fed-
#
I
that
have
of
seen
the
made by
Bank
eral Reserve
Mr.
of New
York,
Allan Sproul, before the Joint
Mr.
unexpended' proceeds of the Vic¬
as
so
Reserve banks
the
and
bank-held debt.
the
|
#
One well-
November last, that the prices
Committee
were
■.
voice urged at the fall
conference of this Association in
Thus the budget surplus was
used to reduce the short-term,
tion.
So also
long;
seek their own level
prudent, indeed an
essential policy for the Treasury
to pursue*.
agement in recent
as
to maintain the
government bonds be allowed
largely
very
on
Strin¬
of the Fed¬
power
it is called
virtue
lending
readily swells prices by encour¬
aging inventory accumulation or
speculation. Under conditions with
#
bills;# I
on
useful
to
#jj
beginning in
a
of
$68 billion.
Why this is beneficial it may be
sirable the objects of such invest¬
alternative
CLAYTON, MO.
gov¬
our
ments may be. As holders of $12
billion of the Federal debt we are
vast
Abbott
how
matter
no
der he has been associated in the
Longstreet-Abbott & Co.
upon
portfolios merely as a
of supply for other invest¬
New York law
offices of Rogers
look
in
ernment
ment
President.
from
self-interest
even
been
,#
fi-
cause
posits and the great' demand for
f
both capital and consumer
goods.#-;
rates
thinking itself. We cannot
William
has
face
the
price rises due to
government bond holdings of the
commercial banks and the Fed¬
Firms
succeed
in
dance
recent
#jj
They have recognized the para-#dox
of
continuing this support $
and hence relatively easy money
gent and conservative administra¬
tion of the debt since the war.
the
to
of
rates
outstanding effect of
policy. It has been die-
FederalReserve Board believb
the
the government bond market
is due in large part to the intelli¬
The
f
,.
tated not only as an obligation of
honor, as the President suggests,
but because the government and
Intelligent Administration of Debt
present
x
It has taken courage on the patty#:
the fiscal authorities to main- "
tain this
ing homes and adjusting our port¬
folios according to our investment
needs as opposed
exclusively as
eral
the
than
h-;
.
faith in the government's financial
administration
rather
"
propriate restraints on bank crealt --v
be .applied without abandon- ; f
ing or impairing the sound prin- ;
ciple of government price support
of bonds which the people have
bought as an expression of their
by others.
The long-term
prospect is that
we
of the savings banks
shall
supply
ma¬
'
/
And also in the same report the'.
President said, in another connec- ;k :
,can
com¬
additional
their #
of
tion, "Debt management policies ; y
should be so conducted that ap-:it,
re¬
holders, if
some
are
value
chases
thinking respecting National debt
Buhl
•
by
pensated
appointed Secretary of the
Association
of Stock
Exchange
New York 5. N. Y.
7-4150
our
Readjustment of Government
Selland &
Members
New
New
portfolios. A reasonable
duction
The
What
been
(Special
Schwabacher & Co,
cial banks may seek increased in¬
come by adding to their
govern¬
degree.
to be formulated
To yield
which
result to which the government
has contributed in an important
more
V/i% Equipment Trust
billion a year;
As commercial
loans stibilize or recede commer¬
ment
the
necessary."
.
participate.
We are also
increasingly aware of the grow¬
ing pulling power of federal sav¬ during the war to the necessitie
ings and loan insured investments, of the Treasury.
total.
Hoge and Hills.
Illinois Central R. R,
the
than
banks
Stock Exch. Firms Ass'n
Law
indications
bond
yield
ing
..
the time. coincide with those of the
little Chronicle They are presented as
' those oi the authoT onIy']
the
to
than
savers
preponderant investment of our
funds in governments m^kes pos¬
sible. This condition is, ii# part,
creased
In
to
increased about $900 million dur-
visible, so just hold on.
More next Thursday.
glow.
hero to
a
current investment necessities
our
and
for
how cute I've been in buying
holdings of Treasury agencies
may increase by $2 or $h
maintain
to
bonds will be exercised wherever
fhese
of
selling prices are re¬
brokers who
showed
their peated. Anaconda, bought at
32 Mj, stop at 35 for half, take
glee by being almost unani¬
half profits at 42 or better.
mously bullish.
Bethlehem, bought at 31, sell
I'm; all
in
,
a
last week's column the stocks
5
The
represent stability as long-term
xioiders in varying degrees.
There will be a gradual increase
government bonds to premises
week where all the
exception of one or two
days when volume was still
big. Incidentally the increase
in volume was welcomed by
.
.
cation.
the
^
remaining 54% gress in January, 1948, in discusbuilding practices and a bet of the debt, or about $107 billion, ; sing the sale of savings bonds:
0?
supply of materials. Until t^t is in marketable securities ownect ["The new bond buyers and mil- v
demand for houses is supplied wi oy commercial
banks, insurance lions of loyal Americans who enmall continue to make housing companies,
savings banks, corpor¬ abled their country to finance the ^
oans, exercising all due care ant ations, individuals and state and
war are
assured that the power #;,udgment as to type, price and lo¬ local governments, all of whom which their
government possesses
Up to this writing the air¬
Depending on the continued de¬
planes are still acting coy mand and tiie availability of funds
with two, G. L. Martin and jom
other
sources,
such
as
Douglas,
performing
quite growth of deposits, there will be
transfers from
our
governmen
suspiciously. Douglas, for in¬ oond account to our
mortgage ac¬
stance, has a
stop at 61. count. To the extent that we may
Chances are that by the time ook forward to reasonable sta¬
you read this, it will have bility in the government bone
market we shall tend to restrict
broken it. If it does, and you
our sale of
potential at 15, with a*stop at 181/#
buyers who had given the where half should be sold if
market
a
'
jaundiced
eye, broken..
*
*
*
f
jumped off the bench and
rushed to the order clerk. My
The rest of the stocks act
metaphors are mixed but I alright. None of them have
think you get the point.
gotten to the profit-range or
sjs
*
ijs
the stop point,
so
the list
During the past week the (with the exception of the
tempo has slowed down, with airplanes) remains the same.
|
^
the President himself.He said to
Economic Report to the Con¬
his
dent
market sell half you will still have a
record 9 point profit. You bought it
It was a at 52. G. L. Martin came in
breaking Volume.
conditions.
-
.
*er
.with
out
be said to present
market problem under present
no
1948#
Thursday, May 27,
of the debt may
from time to time evidence
lower costs [through more evi¬
;ome
than it means
that you buy stocks at their
lowest point when everybody
s
selling. If it works out that
way it's an accident.
Whyte
CHRONICLE
(Continued from page 11)
any
move, any more
Walter
FINANCIAL
&
the
on
Economic
#
f
y
;
#
Re-
Said #.
Sproul: "In view of the large
port on May 12 of this year.
involvement
of
our
whole
econ**
#
accumulation or omy with a Federal Government
funds and agency debt of over $250 billion,.in view #
funds were, in large part, used tc of the continuing need for refi-#
stabilize
the
government
bond nancing parts of that debt, and injv?
Loan.
tory
The
the government
market
:
de¬
circumstances
when
manded.
market
the
stabilized
itself below present levels due to
action
an
the
Reserve
lems
and
meet
abroad, it
our
to
commitments
that those.
who suggest raising the discourit
rate sharply and selling government securities put of system! ag-;
seems
me
y
>
;
.
counfe "without regard to the ef-;
feet
on
the
securities,
a
price and yield of such
talking in terms of
are
situation
ently
which
exist.
Such
does
not
pres¬
action
woul'd
orobably be effective in checking
the [further expansion of H bank
.
banks
credit, but at a cost in fiscal and
and the Treasury agencies in buy¬ financial disorder, and in terms of
ing and to repeated almost iden¬ reduced production and employ¬
the
tical
of
assurances
from
various
re¬
ment which no one would want to
T
government authorities contemplate now. A general mon¬
question of government etary control, if used drastically t!
sunnort of its bonds at about par. enough, w.orks through a
restrigThe most authoritative state¬ iJon of production. The steps fit#,
sponsible
on
the
ment
on
this
.
imperative demand
for maximom; production, if we lt
the Christmas ate to solve our domestic prob- < y
Last year, when
surjprise reduction in the govern¬
ment peg of long bonds occurred
a wave of selling of long bond r
took place.
The Federal Reserve
banks stepped in- and bought, up
the excess supply. Simultaneously,
they sold short maturities, prin¬
cipally bills and certificates, to
meet the demand for replacements
of the sellers of the long bonds.
Presently
the face of
V
...
score
was
made
by the
process
are
restriction
Of?.
Volume 167
Number 4702
COMMERCIAL
THE
the
the
and
in¬
supply*. rise- of .interest may be kept informed of
rates,*, contraction of' employment thinking and, programs: of:
and production, contraction ofin- Treasury as far as it is proper
come. I know- of no, monetary, de¬ possible for
us to be. kept,
money:
vice, which
would enable
avoid
consequences, and 'I
illusion to think that
.these
think it is
an
some, painless way
of
of
usf
to formed. We are aware that the
policies of debt management can*
not be static but,, must be/ ad¬
avoiding the justed to meet the demands of
credit changing: circumstances. We are
really .tight can be -found.
To also aware that they are closely
ge]t the. effect our critics suggest, linked with our concern over and
consequences
making
.
Would
that
mean
,
.
action
our
involvement in the affairs of Eu¬
rould have to be drastic enough rope and Asia. We are aware that
oC lower the money income of a they are greatly affected by the
large, segment of the consuming budget problems, our foreign re¬
ublic.
Such action could,
lations entail
well
by those
The
runaway inflation due solely or National debt is not merely an ob¬
rimarily
to
monetary
causes. ligation to pay, it is a great instru¬
That: is not our present situation ment of fiscal policy. We have no
nd* that cannot be: the right pol¬ doubt that it will be paid.
We
are confident that, with free dis¬
icy now."
t r
'
...
^justified if
we were
only
faced with
of
as
domestic
our
as
economy.
'
cussion and the action and intel¬
.Government
Bond
Support
to Continue
Now, to
v
;
...
v
familiar phrase,
think we may say that central
apk and Treasury support of the
ong; r government market,, prob*
ably at the present levels;; will
use
a
continue for the "foreseeable:'fu¬
ture."-y
*v
«
r
y
Meanwhile, in part due to re¬
lease of funds by tax reduction,
the public is becoming interested
in] tequity
investment^ .perhaps
only speculatively, )but perhaps
also1 for the long pull. If this is
so^
there may be opportunity for new
equity financing, and if that oc¬
curs/the bond market will take
ligent
interest
classes
of bond
cleave
to
of
the
principal
shall
owners, we
wise policy of
a
management.
debt
i
j.L hope that the mutual savings
r
banks will
play
ever-increas¬
an
ing part in determining that pol¬
icy. ■
?
In
conclusion, let
wise
remarks
the Under
quote the
me
recently
made
by
Secretary of the Treas¬
Said Mr. Wiggins: "The task
ury.
in
ahead
sound
the
and
is not
an
current
administration
effective
one."
easy
and
fiscal
the
of
policy
and bond yields
well
may
cease
may
develop,
to the trend of. the price of money.
And
ute to
instability in business and
that fluctuations in the price of
credit are essential if the intricate
The shortage of
capital is world¬
wide in scope, for it has its origin
in the well-nigh universal sociali¬
no
mechanisms of money and credit
are
to fulfill their proper func¬
zation of the tax structure which
custom in
they can.
repudiate it through inflation;
they can reduce it rapidly by
backbreaking taxes, or they can
the
release-
forces
business expansion
to
the
debt.
tolerable
The
making
and
is
for
a
solution
an
have
in the past,
that
we
the
capital
taxes
situations
as
a
stimulant
to
business
we
not
Treasury.
tolerate policies which
obviously necessary expan¬
long
hold
sion in check.
The Outlook
The conclusion: to which these
considerations point is that de¬
long-term trend will be: moder->
ately upward for a long while to/
come.
It may well be that the^
first phase of the postwar read¬
(6) "Where is the money com¬ justment upward in interest rates
ing from?" is a problem we shall and bond yields was completed in
probably have to face in depres¬ the early part of this year, and
sion as well as in prosperity.
It we certainly should make* allow*
is now granted that it will be ance for the
probability that the
markets.
difficult
with
amounts of
reduce
to
are
bonds
much to support the view that the
this country so that the pres¬
for new funds should in time
find
response
in our securities
structure
decide
and
and
spite the many elements of: un¬
certainty which exist there is
converge
on
debt
may
expansion
sures
icy of rapid payoff of the Federal
we
stocks
on
ment if the tax authorities do not?
de¬
during the war, and the
technological changes which offei
an opportunity to expand capacity
the demand of most of the world
pol¬
investors,
of
likely in time to make the adjust¬
developed areas of the world. And
While
pay.
Should we not
allowance for the take-
pay
yields
not
and to industrialize the less well-
match yesterday's rise in the debt
tomorrow's
expansion
in
some
home
up
with
a
vast
It has become the
some
take-home
in¬
with high standards of financial
integrity. The second is politically
difficult if not impossible to ac¬
complish.
It is quite possible,
therefore, we shall decide that the
most
practicable method is to
and
income.
there is much to commend
the
levied?
were
struction
nation* for
production
depression,
readily available?
a yield of 8% today
higher than 4% in the years
before really
back-breaking taxes
give
for
grow
first
of
not
.is not
ever necessary to
prevent a de¬
cline in the
purchasing power to
probably
some debt in three ways:
a
quarters to assume
that wages have to
go up when¬
constricts savings in the high sav¬
ings income brackets. Meanwhile
decide the world is at the beginning oi
a
that the way to deal with a public
period of vigorous expansion ir
debt of the magnitude- of that we industrial capacity occasioned by
rapid
expansion in popu¬
inherited from the depression and the
the war is to grow up to it. Na¬ lation, the inability of industry
tions can take care of a burden¬ to
expand in
the long years
shall
We
can
markets is
tion within the economy.
-
we
after taxes.
How
corporation build its
capital
than
through
retained
earnings if access to the new issue
that stable interest rates contrib¬
(3)
39
level
else
,
as
''real"
commodity prices trend
over-riding objective of upward when workers and sup¬
government fiscal; and banking plies are short in relation to de¬
policies, We probably shall have mand, a persistent capital short¬
to
learn from hard experience age would give an upward lift
shall need and hope that the revenues will
skill and wisdom and courage. We be large enough to enable us to
care of itself.
shall need restraint on the part pay the debt down moderately.
But, meanwhile, we must use of the business and the banking This we did following World War
our" opportunity to put our port¬ community, on the part of labor,
I, and we again face an opportu¬
folios in order that we may con¬ on the part of government, and on nity to do so for we are in the
tinue
and
the
expand.; our proper
part of the consuming public. pilot plant stage of a revolution
function of stimulating savings by We will need and should' seek in industrial technology so pro¬
found as to provide the basis for
more
>
rewarding^ interestyincen* Divine guidance..
tives and by assisting in supply¬
; May
I add, that if we can as¬ one of the greatest expansions in
r
ing
the
necessary' capital
for semble all these forces all that production in the- world's history.
housing and industrial expansion; remains for us to pray for. is that We shall realize such vast poten¬
That we have intelligence and we may have, let me say continue tialities only if we adapt our poli¬
cies' to the necessities of a high
courage in the handling- of; our to have, in the future a wise,
National debt is a great boon. We sympathetic, and non-political ad¬ investment economy, but that is
wquld. like to feel in the future, ministration of the United States our tradition and I think we shall
that
rates and
(2347)
toi be the
To meet the
new
FINANCIAL CHRONICLE
&
socialized
a
the
generate
tax
vast
equity and debt funds
by industry in periods of
needed
good
to
But
business.
it
is
not so
generally
appreciated that the
government may face a very real
and
possibly
no
less
difficult
problem of raising funds in a pe¬
riod of depression.
Our govern¬
ment is counted on to spend bil¬
lions of dollars to shore up the
economy in case private business
slumps. It is expected to engage
in great public works and relief
programs in case private employ¬
ment falls off.
It has insured tens
of billions of
deposits, billions of
mortgages and the level of agri¬
cultural prices.
It will have to
supply billions of unemployment
insurance
funds
It has tens of
in
case
of
need.
movement of
be
yields and rates
downward
demand
for
in
periods
credit
is
may¬
when
light
and
when the government is an active
borrower, but these are apt to be
temporary interruptions in the
longer upward trend.
This view presumably is shared
by a number of experts who par¬
ticipated
in
an
informal
poll
which
I
conducted
recently. I
asked
28
students
tell
the
of
nation's
investment
of
leading
trends
to
whether they thought that
me
five
years
from now yields on
long governments, on long highgrade corporates, on mortgages,
and on Treasury one-year certifi¬
cates would be lower about the
moderately,, or up sub¬
and their views are
summarized in the following table:
up
same,
stantially,
billions of demand
(4) Representations by govern
obligations outstanding which Opinions of 28 Leading Experts
*mental officials of their intention
holders may ^redeem in depress
the Level of Interest Rates
to control or to set the pattern of sion.
But where will the govern¬
and Bond Yields Five
(Continued from first page)
interest rates probably will, as the
ment get all
these funds?
The
Years from Now
ties.
And
here, I think, we can say years go by,' be taken much less debt is already a quarter of a tril¬
party conventions and then in the
Yields on long governments—
national elections.
that it will be surprising if over seriously than has been the case lion
dollars, the government is
Lower
These are curiously confused the coming decade we do not wit¬ of late. Their record has in fact already collecting and spending
About the same
times. The money markets were ness a reaffirmation of old-fash¬ been less than impressive. At the about
$40 billion in taxes per
Moderately higher
disturbed for weeks on end wait¬ ioned precepts as to interest rates end of the war governments of annum, but the "leverage'' in our
Materially higher
ing for the decision of the Secre¬ and a calling into question of most nations were determined to tax system is high and revenue*
Yields on long high-grade
tary of the Treasury as to whether many of the theories which have hold interest rates and bond prices would decline sharply if business
corporate bondshe would permit the offering rate played so important a role in gov¬ at the wartime levels, they la¬ slumps.
Where will the money
Lower
on
Treasury certificates to rise ernment fiscal and monetary poli¬ bored under the illusion that they come from for the government to
About the same
by a mere Ys of 1%. And his re¬ cies during the past 15 years. could do so, and fiscal and cen¬ use in preventing a slump from
Moderately higher
tral bank
officials issued many
fusal to do so against the counsel We may witness such profound
developing into a long depres¬
Materially higher
ok the Federal Reserve officials changes
and turbulent fluctua¬ statements declaring that no ma¬ sion?
Perhaps we shall have to
spoke ■ volumes on the relative tions in business, prices, and fi¬ terial declines in bond yields or search for means of stimulation Yields on mortgagesLower
weight given to economic and po¬ nance as to do violence to many advances in interest rates would other than through heavy govern¬
About the same
But the record is ment outlays.
litical considerations.
From high of the notions of the day concern¬ be tolerated.
If so, this is a
echelons of officialdom we are ing interest rates, the role they one of rise in bond yields and in
Moderately higher
problem our financial statesmen
Materially higher
promised repeatedly that there play in our economy, the influ¬ fact the past two years may be might well be facing up to now,
shall be no sales below par in ences which affect them and their described as a postwar bear mar¬ for it will be dangerous to ap¬ Yields on Treasury
The Outlook forInterest Rates
__
governments but al¬
the proviso that
the guarantees apply to the forer.
seeable future—whatever period
long-term
most always with
of
days, or weeks, or months, or
years that may imply.
those who in September
Many of
relation
to
government policy.
Therefore, I would like first to
explore briefly some of the areas
ket in government bonds.
in
British
our
problem was to stop
government securities from rising
in* price- were soon: taking
the
view that without substantial sup¬
port by the Federal Reserve banks
the? market would, cjollapse, And
events
well force
may
believed
that the big
which
a
of
the
future
thinking about interest rates;
disposed in the decade
more
ahead
level
to
take
the
view
that
fied before
we
will be entitled, to
take a more nearly positive view
of the
tive prosperity into
immediate prospect.
Therefore, I shall direct
my re¬
ary
boom.
an
Easy money:
stead
to
fective
as
be and
we
just
(2)
Stability
as
officials
are
assume
it1 to
learning that "it is
as it is of
true -of credit
commodities that'in the long
price
controls
work very
f
not
are
well,
A World-Wide
likely
run
to
f
Shortage of
Capital
'■
inflation¬
expan¬
sponsive to changes lit dermhd/as
sionary in depression, but it is in¬
'
off about 3 points. In
the Netherlands the
While■ interest rates and
bond' yields will, of course, be re¬
the decade ahead, in¬ flationary in prosperity-,.-;,,
of to the' nearby perplexi¬
1946.
points
(5)
diusiness
of interest
c"
rates
ebps andJloipSj the trend,
Lower
adjusted
on
positions, and
maturity
essentiality of old-fashioned
standards of credit worthiness. It
that the lia¬
business failures
is interesting to note
bilities
of
the
the
past half decade have ag¬
gregated less than half what they
were in the single year 1932, and
than
even
less
years
of the
Such
a
in
the
average
twenties.
not last in¬
nrosperous
condition may
definitely.
; ■
;
04
14
10
0
4
14
10
,:
2
12
Moderately higher
Materially higher
14
The
Loans
the
in
3
Indifferent
Warns Against
Attitudes
14
0
the-Same
About
I:
in time-tested standards
_
V;•'•'
..
hdv&Occasion pfo1foundhtiutq r$w§£i$£ijg tbwkfos
(8) W^rnay;
the longer future is likely to
reflect thk threat of a world-wide abbufoolpr&e+eamfowt xatldsvUind
shortage of capital. Just' as wage1 bond yields in relation to ■■ their
over
marks
in
23
declines have been moderate, but
are
monetary
expansion which converts produc¬
off
0
11
certificates—
a
without
verses
of finan¬
in the former case only, at the
cial
strength:
The government
expense of heroic support by the
has been on a 15-year financial
Central
Bank.
And
our
own
binge and this clearly is no time
government
securities
declined to be lulled into a sense of false
sharply a few months ago, as we security as to the need for real
all know only too well. Govern¬
duality in loans and investments;
ment
power
to control prices the appropriateness of carefully
seems
never
to be quite as ef¬
•
invitation to. the sort* of
are
period of business re¬
a sound, realistic
and
carefully thought out pro¬
gram of action.
proach
(7) The years ahead may well
give the nation's financial insti¬
tutions reason to retain their faith
bonds
•
such questions, to be clari¬
early
were
consols
French
under
Sweden and
the
interest rates and bond
yields is less important to our
national welfare than many other
factors such as the soundness of
our credit system, the strength of
the institutions
of savings,
the
adequacy of savings in relation to
of
.
many
they
points
28
are
half, Bel¬
gian bonds have declined about
16 points.
Canada dropped the
pegs about 5 points recently, Swiss
j (1) We shall probably be more
and
,
in the past year and a
reorientation of
those who took panic and
sold their securities on the decline
arev now re-rentering,* the market
.The'money markets, have the the demand for. funds in, an ex¬
feel. of uncertainty. The govern¬ panding economy, and the pro¬
ment has pegged the;2.%s but no tection of the purchasing power
oner.seertis to be very comfortable of our money and of our savings.
aboub it. The values on which our The strength of conviction, that
investments rest- may be such as these are all more vital than the
to; warrant use of the word "risk- cost of credit to the Treasury or
less" but it is now far from cer¬ the prices of its obligations may
tain: that this implies absence of well be increased and we shall,
fluctuations: in prices. We shall probably recognize that too low
have to wait, I am afraid, for interest rates represent ah open
many* of
obligations
where
on
consensus
is that a few
from now interest rates and
bond yields will be higher than
years
they ate today, but the increase
levels will in general
from present
be moderate for
government long-
securities.
term
If
than
more
moderate increases in rates occur,
they
and
more
likely on mort¬
high-grade corporate bonds
governments than on
are
gages,
short
long governments.
It
should
be
that
stated
the
above views were subject to many
qualifications.
For example, it
granted by most of those
whose
opinions
were
obtained
was
that
were
the
nation
at
war,
or
increased
program, or were the
country to be in a depression, in¬
in
engaged
a
greatly
armament
terest rates and bond yields might
not be
higher than they are today
moderately indeed.
But the preoonderance of opinion
and, if
is
so, very
that
business
during
periods
of
active
the^qmand for funds is
likely to be ^. substantial that the
will be upward on the
whole interest-rate structure,
pressures
40
(2348)
.
.
how sugar is to be regulated in
this country: for the; next five
(Continued from page 4)
industrial
this country on
users of
the other, as to whether the Washington Administration should
.
vmake, in the immediate future,
further
in
cut
the
1948
quota because of the abnormally
low distribution since the first of
refined
this year. On a percentage basis,
it is the lowest in over two dec¬
ades.
''to'#
■M
industrial
The
carry out
manifold
Meanwhile, regardless of what
quota pretty low, inasmuch as in
We consumed
since
that
the
moves
government
and
the
prices;
sugar
cane
and
beet, for the balance of this
year
will
be substantially lower than
those which prevailed at the be¬
ahead at the present
time.
However, in view of the heavy
supplies liberal enough to supplies of sugar available for the
guard against any contingencies, United - States,; there is a grave
and supplies sufficiently
large to question in the minds of many
bring about a reasonably low price well-posted sugar observers as to
level. : The producersj also natur¬ whether even a deep slash in the
ally. enough, for their part, want quota will have more than a tem¬
Just the opposite—a smaller quota porary psychological effect on the
be
limitations
of
the
should
more
the
at
than 15%.
outside
If Britain
is to* maintain her present, stand¬
ard of living, exports will have; to
be a greater proportion of produc¬
tion than this. As things are it is
unlikely that, as there is no pos¬
siCrisis At The
mately 10%.
the
which
put
naturally
users
can
supply of imported raw material
and steel. The higher export tar-*
gets," therefore; if achieved, must
mean a higher
proportion of out¬
not be
have had a
of approxi¬
we
increase
of
cause
ginning of the year and that sup¬
plies will be more than adequate
throughout the same period, so far
as we can see
view is that it is doubtful
o>vn
if the target for end-1948
reached, and manufacturing out-*
put could scarcely increase by
more than 5% above the current
level by the end of the year be¬
6,890,000: tons, and
time
population
prewar year,
may
going that it would take the Arch¬
1948 consumption quota from 7,- duties and responsibilities which
500,000 tons to 7,300,000 tons, or have been thrust upon the Sec¬
retary of Agriculture through the
even as low as
7,000,000 tons. The
wording of the Act.
latter figure would be
1940, the last normal
Agriculture
years, you can see from the fore¬
cutting the
a
sugar
of
make under the Sugar Act, it re¬
mains probable that the average
plying the United States, on the be at Washington, in order- to angel Gabriel himself to
one*hand, and certain groups of bring this about, may slash the to the letter all of the
fjj;
Secretary
want
sibility of
a dramatic increase in
manufacturing output over
total
(Continued from-page 6)
three-year average 1935-1938, in
same quarter.
The production
of coal is
averaging over 4 million
of
the
next
five years,
four or
our
the
possibilities of industrial export trade can be increased ex¬
achievement.
It was
not
until cept by a higher proportion of
September, 1947 that for the first exports to production, at the very
tons a
week—it could still be time target? were; arrived at'
on
and higher prices.
most; of 20%. We must realize that
price structure from the stand*
considerably increased—and steel ta| ^ore;
re$Ksti£ •-basis. Targets World War I brought about a fun¬
Obviously, the supply situation point of bringing a permanent
production
in April was at a new were fixed for individual
will have its> bearing oil the price halt to the current decline. After
export damental change in econom ic de¬
high record, an annual rate of groups and mdividuhl industries;
velopment.
Countries protected
picture in 1948; In the next few all, any quota loses some of its
15,283,000 tons.
When this was done the 140%
their own industries and fiscal
minutes let us look at the price significance for the
long, pull, if ; (Exports in the first
quarter of target was postponed to mid-194i. changes led to the overthrow of
prospects against the backdrop of there is an adequate^ supply of
this year reached a level of 126 and the end-1948
objective wa.
the gold standard and free trade,
the supply picture which has just sugar in reserve.
V
of the 1938 rate and the
target set at 160%, It has been neces¬ World War II has witnessed the
libeen portrayed, ;
.
*
for the end of this
year is 154%
sary to revise
these projections continuous
shift
from
external
Conclusion
the
-
It is
no
When it
secret to any one of us
to the matter of
comes
considering both the
sugar supply
Jhere that
we have been in a stead¬
and
sugar
price pictures as a
ily declining market in sugar in combined unit, the Secretary of
this country since the beginning Agriculture, under existing legis¬
of the year. Sugar has been feel¬ lation, carries tremendous
respon¬
ing the full force and effect in sibilities in fulfilling the intent
crecent months, from a price stand¬ of the Sugar Act of 1948.
Poor
toto
top-heavy supply man!
situation and the hparding spree cules
point,
of
the
which
&V.
to>
■
the housewives and some
industrial users of this country in¬
"fv.
m.: v
The twelve labors of Her¬
were
as
nothing compared
with the labors he must put forth
to comply rigidly with the
provi¬
commencing with the sions of the Act and its complex¬
Just as an
early part of last June and end¬ ities.
example, the
ing in late November. Since Jan. Secretary in setting the sugar con¬
19; 1948, the price for a hundred sumption quota for each year, or
pound bag of standard cane re¬ any changes in the quota, must,
finers' sugar has dropped in ■ the in addition to
mhny other duties
New England, Middle Atlantic and under the Act, take the
following
dulged
in
Pacific
Coast
states
90
points, into consideration:
from
$8.40 to $7.50, and in the
balance of the country a full 100
J points to $7.40, all less the cus¬
tomary 2% cash discount.
Beet
sugar prices have declined even
farther.
the
Even with these
price
is
structure
(1)
in
The
r
amount
of
sugar
that
actually distributed for con¬
sumption in the country during
the
12
months, ending October
was
31st,
declines,
still
immediately
year for which
shaky condition.
history repeats, after World
War II, the pattern of commodity
price trends which prevailed after
If
preceding
the
being set;
(2) Deficiencies
a
somewhat
figure is
new
or
the
surpluses in
general decline sooner or.
in the prices of Virtually
everything
from
the
war
and
postwar peaks. Just how far these
a
.later
declines will
tion, but
tional
&L
go
many
is
economists of
level out
finally at
an
some
50
level
which
1941.
At that time sugar was sell¬
ing
at
60%
or
$4.40
most of the
above
existed
in
will
the
the
per 100 pounds in
country, and slightly
If
we
nally
that Sugar, along
commodities, will fi¬
be
for
and which
fairly and equitably protect
welfare of those engaged in
domestic sugar industry. In
everybody;
stabilized
pricewise
-around 50 to 60% over the Jan^
-
consumers
"ideal" consumption
figure which
will bring an "ideal"
price level
assume
other
industry by providing such
short, the Secretary must, by div¬
ination
almost,
determine
an
lower in the South.
with
engaged in the domestic
supply of sugar as will be con¬
prices which will not be
price
January,
monthly program rate. As far as
possible exports are channeled to
industry in the light of the avail¬
ability of raw materials, notably
hard
markets and to
which is a source
currency
South
Africa,
of
lit?;)
;•
•
:.v
In addition to all the fore-
mensurate with present resources.
such
longer than the span
of the remaining seven months of
1948 to bring this about.
fined
Reverting to the fact that the
United States Government has
of
been given a mandate, under the
cost
may
take
•Sugar Act of 1948, to dominate the
sugar market (and this mandate
includes price, as well as supply,
through the Secretary of Agricul¬
ture's authority, to regulate con¬
sumption quotas) it is entirely
possible that the governmental
•agencies concerned with sugar
Will take action, one way or an¬
c.
United States, as. compared with
relationship for prices of re¬
sugar
and the
general
living in the United States dur¬
ing 1947, prior to the termination
price control—in other
words,
the first ten months of 1947. The
of
living figure is to be that
established by the-Bureau of Labor
of
Statistics
Labor.
of
,
the Department
..
last
described, he should have
tablished
cane
sugar
price at the refinery
per
the price decline which has taken
place in sugar values since the be¬
per
Many feel that the pnwers-that*
es¬
quota for 1948 which
would have resulted in a refined
a
price
of
pounds.
$7.50: ;to
;£• ****
$7.401
100
current
100
v
AltHoUift'
sets
forth "in
profuse detail just
industries,
especially machinery
and vehicles, and balanced as far
as
be
lated
act
an
goods
as
of
wisdom
export
unrequited exports
investment
new
to
in
or as
colonial
de¬
velopment in the hope of
possible by increases in textile
exports.
The targets are calcu¬
"as
plus
ment, however, is pushing ahead
with
the
development of new
sources of food and raw materials
but
in
the
of
the
ground nut
Africa,
grain
production and pig farming in
Queensland and poultry farming
in Eire. Arrangements have also
scheme
case
in
East
made
with
Denmark
and
we
of
exports
at
of
1948
rate
a
reached,
was
can
of
as
it reach
126%
longer room in the
economy
of today fori a
country such as Britain was be¬
fore 1914, existing on world trade
have
we
and
the
of
1948
second
in
fixed.
125%
was
136%
which
We
a
there
have
will
and
at
economy
full
be
tive
investment
and
em¬
trade
abroad. Willard Thorp,
i
policy
the United
States
Under-Secretary of State
for Economic Affairs, has recently
emphasized another point. He has
Americans
told
that
the
seen,
has
aim
to
national
ployment, a stable and prosperous
economy, coupled with a construc¬
put other countries
a
half
finance.
maintaining
target of 154%
lor the end of the year? Progress
has so far been chequered.
The
volume of exports for the first
half
no
world
1931
of
is
consumption.
domestic
over
There
according to the Economic Survey
During the first quartei
for 1948.
as
rate
a
In¬
dustries in future will depend on
the home market and exports will
contribute a relatively small sur¬
moment of time—the end of 1948'
a de¬
ferred return in any great degree
at the present time. The govern¬
is
to
on
buy their gooc(s.
over
a
way
to
their feet
Last year
third of the world's trade
flowed outwards from the United
foi
States
beer
iffs
Against these forecasts the
and
cuts in American tar¬
agreed
at
Geneva
last year
actual
monthly rate of exports are another step of many that will
during the first quarter is much- have, to be undertaken before the
favorable.
more
will
be
the
Export targets
less
The second
real
can
testing
hali
period
be unreal
European Recovery Plan is com¬
pleted.
un¬
carefully framed with
regard to production, the recquipvery
ment of
industry in view of longcompetition in world mar¬
term
must
kets, and similar factors.
The
pay either gold or dollars and to
high taxation, for example, c4
build up alternative sources of profits
impedes incentive as weli
imports in non-dollar countries; as reequipment and it is wry sat¬
to buy only the minimum of food isfaction at the
present time tc
to maintain health; and to buy the
see
large exports of machinery.
minimum of raw materials to en¬ It is folly to starve our industries
able industrial production to be of reequipment which is essential
maintained at a high level, Two to the survival of exports when
facts illustrate the decided empha¬ the full blast of
competition again
sis on exports. In the first place occurs.
the numbers engaged on manu¬
Declining Export Proportions
facture for export—1,893,000 as
Compared with 410,000 in mid*
My last point is—will it be pos¬
1945 and 990,000 in mid-1939. Sec¬
sible to raise the proportion of
Brand, Grumet & Tenser
t
To Be Formed June 3
Harry W. Tenser on June 3 will :{;
become a partner in Brand, Grumet
&
Co.,
55
Broadway,
New
York
City, members of the New |
York Stock
Exchange, and the
firm's name will be changed to ;
Brand, Grumet & Tenser.
Mr. J
Tenser in the past conducted his
own
investment business in
York.
New
Women's Bond Club of
February, 1947 the expansion of
exports slowed down and the vol¬
ported
Export Targets Per Se Insufficient
The adoption of a policy of ex¬
port expansion
as a prime object
government
policy
requires
further comment.
Is the fixing
of
of export targets alone sufficient?
In the Washington loan discus¬
sions in the fall of 1945
an
overall
export target of 175% of the vol¬
ume
in 1938 was fixed.
In the
set
a
caused
of
ume
of
exports
1938
1947.
for the end of the
140%. Owing to the upset
by the fuel shortage in
target
year of
rose
to only 117%
The
early 1947
targets
were
of
1945
determined
17%
33% in 1907; 40% in
was
in
in 1924; 22%
1935
Calculations
and
1948
by
suggest
and
made
in 1930;
15%
in
for
1946
12y2%,
the
and
the expansion of production,
not
by
,
detailed
Survey
\
and
expan¬
sion of exports being
the
1938;
Hartley Associated
same as
i
With R. H. Johnson Co.
/
the balance of payments position
t
J
New York Elects
1912; 27%
by the fourth quarter of
|
.
exported net output to total net
output?. We can never again exr
pect to export so large a propor¬
The
following
officers
were
tion of production as we did in elected at
the annual'meeting of
the golden age of British economic the Women's Bond Club of New
and financial leadership, the quar¬ York;
President, Miss Isabel H.
ter of a century which preceded
Benham, R. W. Pressprich & Co.;
the outbreak of World War I,
Vice-President, Miss Dorothy R.
when our main industries (which
Funck, Assistant Vice-President
offered the best wages and gave of
Irving Trust Company; Secre¬
the surest profits and at the. same
tary-Treasurer,
Miss
Ruth
E.
time commanded most political
Clayton,
Clayton
&
Wheaton.
influence)
were
the industries
Newly elected to the Executive
most engaged in exports, such as
Board were Miss Frances B. Rand,
textiles,
coal,
engineering and American
European
Securities,
shipbuilding. It was the period, and Miss Lucile
Torhlinson,: in¬
too, when this country depended vestment
company consultant.
on cheap imports of food, as we
Continuing as members of the
were outstanding among the great
board
are
Miss Jane Baldwin,
countries of the world in the ne¬
Irving Trust Company, and Miss
glect of agriculture. The propor¬ Ruth
.Hoffman; Gamwell & Co.
tion of industrial production ex¬
early part of 1947 the 'government
;
.
Now if the
Secretary had car¬
ried out to the letter the
provision
other, in the not too distant fu¬ today of around $8.80
ture^ to stem, so far
possible, pounds as against the
ginning of the yeartoito?
cost
of
markets to the home market.
provisional, and they
steel, and the import restrictions
in foreign markets. In
March, tht
overall
target for exports wa.
The generous scale of
repayment
in the last 16 months cannot and*
will not be continued.
It cannot
ondly, after World War II,. the
the Act requites that the volume of
exports is 25% above
nary, 1941 price* you may see the' Secretary take into Consideration
the prewar year 1938; after World
price level flatten out ultimately the relationship between
prices War I the volume was only 71
jsomwhere between $6.60 and $7.00 for refined
sugar that will result
in 1920 and 50 in 1921 (1913=100).
per 100 pounds, possibly a little from his.
quota determination and These
figures strike the eye.
lower, if we allow for the swing the general cost of
living in the
wielJ
be
gold for Britain. The volume
unrequited exports, goods ex¬ lowered from 160 to 150% and
ported without an immediate re-' in April reductions were made ir
turn, is limited to an amount com¬ the exports of the main
steel-using
ig,
of the pendulum somewhat farther
fhan estimated. However, it
to
have been discussed in deta.l witi
of
the welfare of the
consumers and
which were, be it noted,
expressly
stated
from countries to whom
protect
excessive to
the
of
to account—a consumption figure
will be sufficient to
sumed at
average of
half
require and get in return larger
supplies of food. Complementary
to export policy is an import pol¬
icy based on three principles—to
buy as little as we possibly can
sugar
na¬
first
Holland by which we can export
products which they particularly
of those
repute feel that prices will
the
The rate, therefore, for the
first quarter is slightly above the
cause
that
moot ques¬
a
for
1948.
been
inventories;
(3) Changes in consumption be¬
of
changes in population
all previous wars in which the and demand
conditions;
United States has engaged, going
(4) —and this is still a con¬
back to the Revolution, there will sideration which he
must take in¬
toe
125%
and
The Sugar Price Picture for 1948
PHILADELPHIA,
Johnson &
announce
Co.,
1528
PA.
—
R.iH,
Walnut
St.,"*-
that Edmund K. Hartley v*' i
My has joined the firm.:«-
.
\
Volume 167
Number 4762
THE COMMERCIAL & FINANCIAL CHRONICLE
(2349)
The following statistical tabulations cover
production and other figures for the latest week or month available (dates
shown in first column are either for the week or month ended on that date, or, in cases of quotations, are as of that
date):
Latest
•'
AMERICAN
IRON
AND
STEEL
-V'-?:.;
Indicated steel operations
;S Equivalent to—
•r
Bteel ingots
;r
AMERICAN
INSTITUTE:
and castings produced
PETROLEUM
May 30
(net tons)
May 30
■.p.
,
(bbls.)_„
1,669,400
5,422,600
5,412,750
5,390.650
5,008,050
5,640,000
5,602,000
5,521,000
May 15
17,141,000
2,253,000
6,800,000
16,963.000
16,588,000
4,902,000
14,833,000
2,144,000
2,390,000
2,220,000
7,126,000
7,091.000
5,740,000
.—
„_
f\ ^
Kerosine (bbls.) at,
rx;
Gas oil and distillate fuel oil (bbls.) at——
Residual fuel oil (bbls.) at—,-—
.
1,560,900
1,719,600
May 15
distillate fuel oil
-
v
1,744,800
ALUMINUM
95.4
May 15
—May
output (bbls.)
May
Residual fuel oil output (bbls.)—
.;
—May
Stocks at refineries, at bulk
terminals, in transit and in pipe linesFinished and unfinished gasoline. (bbls.) ,at„
————May
and
Ago
86.6
——
15
15
15
9,0(fe,000
,
9,242,000
8,755,000
108,385,000
109,313,000
110,838,000
99,041,000
14,065,000
13,572,000
12,015,000
10,837,000
.—.——-May 15
36,267,000
35,117,000
33,985,000
32,109,000
ivxay 15
52,930,000
51,868,000
49,110,000
44,447,000
———.
45,699
9,354
Not avaS.
$143,159,000
$150,959,000
$139,828,00®
54.065,000
48,328,000
42,035,00©
10,121,000
8,833,000
12,261,000
12,191,00©
10,547,000
13,259,00©
3,798,000
1,639,000
101,00©
22,081,000
17,461,000
7,686,00©
$242,057,000
$241,195,000
$215,100,00©
$1,269
*$1,166
*941
DOLLAR
NEW
; Revenue freight rec'd from connections
^
CIVIL
ENGINEERING
"
r. f .
r
i
(number of cars)
CONSTRUCTION,
Domestic
shipments
Domestic
warehouse
ENGINEERING
880,617
785,668
888,208
*726,086
602,165
702,465
•••:;•;
||C0AL
credits...
May 20
$82,728,000
17,747,000
$149,236,000
81,067,000
71,656,000
.May. 20
64,981,000
68,169,000
65,087,000
$113,164,000
54,617,000
58,547,000
May 20
55,015,000
56,640,000
55,751,000
29,891,000
May 20
9,966,000
11,529,000
9,336,000
28,656,000
May 20
.
$136,743,000
...
between
—
...
Total
CONSTRUCTION—U. S. DEPT. OF
of
(in
April
}
millions):
construction
Private
construction
990
Residential building (nonfarm)
Nonresidential building
(nonfarm)
All
:
OF
——
on
Total U. S.
State and municipal
l
Industrials
construction—-
BANK
April 30 '
goods stored and shipped
foreign countries
NEWS-
i | Federal
,
847,403
693,864
May 15
:
'
RESERVE
of
.
construction
Public
Public
i
1
other
Farm
53,032
OUT¬
-Dollar exchange
Commercial
;
FED.
—
^ RECORD:f
Private construction——
Public construction..
jj; y
$
May 15
ACCEPTANCES
YORK—-As
LABOR—Month
cars)
...
utilities
construction
:
—
$920
713
500
*475
310
263
*267
238
115
*120
142
88
*89
50
60
*58
43
37
23
190
*176
279
*225
Residential
building
Nonx-esidential building
naval facilities)
~
30
135
.
215
7
*5
1©
74
*65
40
military
(except
:
1
Industrial
OUTPUT (U. S. BUREAU OF MINES):
^'Bituminous
coal
and
lignite
(tons).
May 15
V;*]Pennsylvania anthracite (tons)——,
Beehive coke
x.
All
13,235,000
.....May 15
(tons)
1,206,000
138,300
May 15
*12,735,000
1,132,000
7,730 000
1,054.000
12,856,000
1,074,000
*134,600
32,300
138,700
..
.v ' ■;
8,423
New
(number of
Ago
Stocks of aluminum—short tons (end of Mar.)
ASSOCIATION OF AMERICAN RAILROADS:
freight loaded
Year
Month
51.874
BUILDING
Revenue
Previous
Production of primary aluminum in the U. S.
(in short tons)—Month of March—
Based
—————————-May 15
Latest
Month
OF MINES)
Imports
8,271,000
15
—
1
(BUREAU
STANDING
Crude oil output—daily average (bbls. of 42 gallons each)
Crude runs to stills—daily average (bbls.).
,vv: Gasoline output (bbls.)
Kerosine output
Year
Ago
95.4
BANKERS
.<
«■> Gas oil
Month
,V; Week
96.8
INSTITUTE:
.ry^v
"if
Previous
Week
(percent of capacity)
Z.
——J.
other
Military and naval facilities
Highways. 4—
—
Sewer' and water
ij—...i—:
1
1
4
73
*64
3©
19
*16
15
80
*52
7©
38
33
39
35
25
22
*19
17
$18,839,410
26
'
Conservation
DEPARTMENT STORE SALES INDEX—^FEDERAL RESERVE
$YS-j
V^TEM—1935-89 AVERAGE=100_'—
.
...May 15
EDISON
AGE
"Finished
COMPOSITE
INDUSTRIAL)—DUN
v.
.
--METAL PRICES
'
—
i
' ->
-
INC.
of April:
England'
New
.4,662,858
DUN
—
100
100
102
&
315( CITIES
—
*
$13,632,673
$14,267,213
64,982,146
69,345,082
45,750,375
25,099,432
44,459,2«4
24,860,5©3
...
72,955,559
—i
49,051,107
58,152,603
62,828,452
—
" East
.
92
(E. &
M. .1.
May 18
3.24473c
*3.24473c
3.27585c
2.85664c
—May 18
$40.53
*$40.20
$40.11
$33.15
—May 18
$40.66
$40.66
$40133
$29.50
'
'
...
—
—_—
Central
South'-'Central-dri—_—li————
22,797,913
..i_.—,——
(St. Louis)
at
at
—
^ "Zinc (East St. Louis) at
States—
COMMERCIAL
.
.
May 19
.21.200c
21.200c
21.200c
22.635c
__May 19
21.525c
21.675c
21.425C
23.675c
—May 19
May 19
May 19
94.000c
94.000c
94.000c
80.000c
17.500c
17.500c
17.500c
15.000c
17.300c
17.300c
17.300c
14.800c
.May 19
12.000c
12.000C
12.000c
10.500c
I
ERAL
—:
—
City
York City—
Outside of New
—_
(New- York)
York) at..
United
York
.
-
| MOODY'S
S.
Average corporate..
Aaa—
:
——
Aa
"s
Railroad
Public
May 25
101.53
101.29
May 25
113.12
112.93
118.00
..May 25
May 25
„
'/ k Baa——
•
____
Group.
Utilities
Group
Group—
Industrials
;
117.80
116.02
I————II—II————————IIIIIIIII——*May 25
rni
PAPEE
RESERVE
11,303,521
9,221,686
80,910,187
$364,453,745
$337,086,030
34.559.626
40,756,373
$228,172,582
22.659.07L
529,894,119
296,329,657
205,513,511
$275,000,000
$311,000,000
$256,000,00©
NEW YORK—
OF
1
4
L^..—
ERAL RESERVE DISTRICT, FEDERAL RE¬
SERVE BANK QF N. Y.
1935-39 AVERAGE
—100—Month
104.50
112.37
117.00
1J17 40
-112.50
116.02
115.63
112.19
111.81
116.22
106.74'
106.56
105.00
109.60
of April:
(average monthly), unadjusted-.—Sales (average daily), unadjusted
Sales (average daily), seasonally adjustedStocks, unadjusted as of April 3Q——
Stocks seasonally adjusted as of April 30
EMPLOYMENT AND PAYROLLS—U.
120.22
OF
All
MOODY'S BOND
U. S.
«•'
Govt.
YIELD DAILY
;May 25
May 25
108.70
108.34
107.09
111.62
Durable
114.08
114.08
113.89
118.60
Non-durable
May 25
116.80
116.80
116.22
120.84
V
Aaa
Baa
Railroad
n Public
Group
| MOODY'S
2.85
2.85
2.87
2.64
3.07
2.84
3.19
May 25
3.24
3.26
Group
Group
3.33
FERTILIZER
INDEX
BY
ASSOCIATION—WHOLESALE
GROUPS—1935-39=100:
Miscellaneous,
commodities—
Building materials.—
,
...
and. drugs..
Fertilizer materials-———,':
groups
combined.—J.———
PAPERBOARD
All
3.08
V
Unfilled orders
OIL, i PAINT
-
AND
15,510,000
*7,846.000
7,840,000
1,376,000
May 25
425.6
420.9
416.2
397.2
1,169,085
manufacturing
IRON
.May 22
237.7
238.3
537.0
212.2
.May 22
301.8
299.4
283.3
205.9
266.1
258.5
257.0
MERCE)—Month of
361.5
360.2
365.1
342.1
.May 22
265.2
269.8
267.6
256.6
.May 22
256.2
242.7
.May 22
228.6
228.6
.May 22
177.1
.May 22
215.2
.May 22
1652
•'
17G.6
215.0
-
.>
164.2
240,0
227.0
228.6
170.4
(short
232.8
232.2.
158.6
if.
155.6
136.1
">'
136.1
f
.May 22
143.8
143.8
.Mav 22
139.2
139.2
223.3
j
For
producers' own use
(short
OF
161.8
149.3
For
227.3
189.7
For
157.4
127.5
134.6
138.8
125.3
220.4
195:4
155,789
213,822
188,745
; v
,
15
PRODUCTS
:
of
producers'' own
Orders
booked, less
(short
i
..
tons)"
use
-orders,
i(short
tons)
YORK
Total of
Credit extended
'
102
418,994
403,008
532,231
146.6
'>!. .146:5
-fti
Cash
,187.9
178.9
.
__
i
Textile
*
products..
Fuel. and.,
•1'
.
•
'
?..
"•?;*
■
:
—
and 'allied
6pecial group's—*
_
;
materials—„—_.aa—
Semi-manufactured, articles
Manufactured products.aa—
.
■
,
'
<
iRaw
•?
-
1
-
F,
f
I,
.
.
86,767 "
of
for
sale
lor
sale
—aaa—a_aa—.„a—1^1
HII!
>♦Revised figure.- \
•"
189.0
.
;
.
f!»
P3.4
156.5
>'..195.9
-
.
ir.
,
174.8
!"«.
178.8
188.2
'•
v
:
'•>
.
'
,
/.*
:
* 1156.8 ''
•195.9;
133.4
144.7
'144.6'
121.3
'vft'".;
;v
.
.134.4
121.2
„j
.
187.2
.
i f
rV;..
i
j. :.f>.
147.0
176.9
•or:
; •V i
i
'
n
1
I
-j.May 15
159.0
157.6
.^.May 15
158.0
.156.9
May 15
149.0
148.9
153.3
'
1?8.5
131.9
104.1
157.1'
141.8
194.9
177.4
136.8
125.9
144.7
129.4
121.5
115.9
=
i-ri
s«
3,78*0
.
153.6
'
157.8
•
;
60.2
M{43.2
i' 1^
142.2
140.5
'
•:
i:V'
76,602
43,488
33,114
46,270
50,194
209,447
280,724
customers',
to
balances—
$572,335
customers.—
banks in U. S——-
'66,192
382,998
free, credit balances—
614,000
70,261,691
net
debit
$549,973
$552,533
of
customers'
prices index, 12-21-24=100———
Member borrowings on U. S. Govt, issues—
134,546,325
Member
!
h
.Month of
March:
(thousands > of pounds)——
(thousands of pounds).
Magnesium (thousands of pounds).—.
Zinc
(thousands of pounds)—
;'
1481
132.1
MUi
61,664
61,922.
-375,741
416,70©
591,930
664,915
67,756,696
134,166,852
140,833,000
■
64,520,000-
75.5%
75.7%
$95,176
$68,502
$81,000
215,383
203,814
196,000
42,26©
MERCE)—Shipments,
i,
Aluminum
41,794
37,963
Copper
96,344
87,169
704
655
; 717
41,521
37,682
41.34J
1,482
1,079
1,23©
Lead
die
(thousands
PORTLAND CEMENT
iS Month
of
pounds)..——.—
Production
TRUCK
•
>
94.530
(BUREAU OF MINES)—
of
March::
v
'
(bbls.)——————
Shipments from mills - (bbls.)—
Stocks (at end of month); (bbls.)
•
'
175.1
;4'
152.5
>
.»•
EXCHANGE—
"
14.502,000
TRAILERS
—Month
Production
of
(DEPT.
March:
\
'
(dumbe* 'of linlts)—
figure.
14,205,000
8,338,000
12,133,000
*20,340,000
22,178,000
71%
70%
71%
pF COMMERCE)
Shipments v(niunb^r;dnitsI^^^LL.L^M*« >
Shipments (value, in dollars)-——
'■* *Revised
13,347,000
13,957,000
20,885,000
Capacity used
177.7
...May 15
75,1941
42,582'
32,612
43,921
month,
borfoWings ort :*oth^f collateral.. —
%
NOW-FERROUS CASTING^ (DEPT. OF COM-
161.1
166,4
•
145.9
133:0. •
,
'' '
.162.9
189.2
H8.2;
.
50,017
36,750
Stock
.
—
•
May 15
:
588,000
—
Market value of listed shares—.....—■
Market'value oflisted bonds——
•
r
i
y
184*0 '
y
148.1
,
15
^_a'a —May 15
a»»—
—ia———
■'All commodities other than farm
products.
i,
1
%
All commoaities other than farm products and foods
|
15
15
15
May 15
May 15
all_I
^a....May
:
!
I",a_.May
I]
May
——„„—a_a_:.i_.May
a '■ >
L-.—.
products—
*; "Miscellaneous commodities
,
—
Metal and metal products—
Btilldlng materlalsa
Chemicals
...May 15
r..u.
lighting materials
K Jlousefurnishings^ goods
'
i
<■
,161.9;
; '
.
413,000
"<
hand and in
on
Total
147.2
■!
'.1163:5;
460,000
OF
l—
end.
STOCK
153,869
M-
,
2,979,326
633,844
April 30." (000's omitted)':
firms "carrying margin accounts—
of
179,155
100
ff
A1L; commQdities_w*_;__
a—a'———.May 15:
*, Furboi products.-—'——a.——a—
.a.—.May 15
Foods.
a.;._^--:I:^-lT-I-IIII May' 15.
2,769,408
203,351
160,524
101
146.8
2,726,415
(short tons):
cancellation
——l,
Unfilled
455,984-
1,089,828
.
(DEPT.
(DEPT.
(short tons)
(short tons)_™J——
sale
453,044
March
Z.—:—
CASTINGS
1,024,450
571,406
month
of
COMMERCE) —Month of March-:
186.438
-
191,787
385,907!
end
■—
pounds)
IRON
Shipments
"
-10Q
at
659,821
509,264
'
221.4
■
155.4
sale
WROUGHT
(in
MALLEABLE
215.3
—
(short tons)
COMMERCE)—Month
Shipments
176.1
for
—
—i
tons)
MAGNESIUM
164.9
143.7
March:
(.short, tons)
orders
COM¬
OF
tons)
sale
215.8'
136.4
(DEPT.
For
Unfilled
243.8
.May 22
—
goods
CASTINGS
Shipments
i
a.
15,875,000
*1,390,000
'?'?
v*HIdes and leather products.a—U.aa.aa—
f 219-2
manufac¬
*15,785,000
'
-
S 349.9
*309.6
1,396,000
'"'iNDExIIlVac -30
DEPT» OF LABOR—19^1001
7 314.1
*:<80.7
309.1
industries-
v
S,
*344.7
389.5
348.9
goods
7,829,000
...May 21
WHOLESALE PRICES—U.
154.0
Non-durable
tMiMay
PRICE
132.8
Durable goods
aa.-—!—.Mayis*'
' DRUG I REFORTEfe
180.9
136.0
2.72
——j—^May 15
(tons) at___.—
*155.7
*180.7
135.7
2.61
...—May 15
,
156.6
183.2
2.96
As
i—
—
2.8'4
Member:
^Producttont (tons)—_1
;'|ii>Percentag^M-;ii0tivRr;4i-^L^i;—
6,532,00©
6,082,00©
2.95
ASSOCIATION:
.V- Orders received (tons)——
'.
-
*6,524,000
*6,232,000
2.81
.May 22
—
12,614,000
6,614,000
indexes—-
turing
NEW
i?ATIONAI.
*12,756,000
2.95
.May 22
machinery^.—
230
2.81
.May 22
„
—:■
—
255
May 25
.May 22
.Chemicals
232
249
6,215,000
manufacturing
'
...
.
••^Fettili^rSiii-i^-—1-1;—
•
—
Non-durable goods _———
Estimated number of employees in
COMMOD-
IHI.
254
May 25
.May 22
——
235
251
#
goods
Durable
GRAY
i Livestock
All
All
2.53
2.44
3.45
products
.
2.80
2.78
3.05
■
;:'%*$£ Farm
Payroll
3.04
2.76
3.36
;Wl V'! Cotton
„r,\,
2.20
3.01
2.75
3.04
15v Fats and oils
V" Farm
2.39
3.00
3.35
COMMODITY INDEX
NATIONAL
ITY
May 25
May 25
2.41
223
229
12,829,000
manufacturing
May 25
I——II—IIIIIIIIIHIIIIMay 25
Utilities
Industrials
goods
Non-durable goods
_—
22®
234
255
DEPT.
S.
...
goods
Durable
Average corporate
;
248
237
Employment indexes—
AVERAGES:
Bonds
242
LABOR—Month of March:
manufacturing
All
<£
5,217,573
42,647,149
OUTSTANDING—FED¬
BANK
'As of April 301
100.87
112.37
31,032,491
13,739,977
DEPARTMENT STORE SALE S—SECOND FED¬
BOND PRICES DAILY AVERAGES:
Govt. Bonds
51,948,412
'
17,895,915
78,773,714
Sales
^
.
i
Total
New
■
,
QUOTATIONS):
copper—
Export-refinery at™
Lead
5,027,280
West Central
; Domestic refinery at
3
5,108,673
PRICES:
(per lb.)——
f'
tin
VALUATION
Mountain
steel
(New
....——
PERMIT
South Atlantic
.r_,—;~May 20
—
t- Etraits
5,085,412
BRAD-
&
—•
Pig iron (per gross ton)—:
-Scrap steel (per gross ton)—
Electrolytic
other public
BUILDING
Middle "Atlantic
AND
v.1*""*>•
,;
273
L'
development
,
Month
—May 22
—
—
vu'. Lead
294
i'
.^FAILURES- (COMMERCIAL
-fe-i' STREET, ; INC.
:
,
330
BRADSTREET,
output (in 000 kwh.)__
'■
>
293
ELECTRIC INSTITUTE:
'Electric
IRON
All
•
and
:••■■«•*?■
4,221s
*3.671
"
5.910
4,701
*4,004
>> 6,744
$13,352,654
*$11,358,450
$15,861,787
•;
/
42
(2350)
THE
'■>/*.. t
*.
i»V
'iV
,
•*
*f
COMMERCIAL
•*
;
.
A
■'
,
&
FINANCIAL
if.
»'
,-V''A
,'1
..
»."W
•••
ui
CHRONICLE
*i '
..
turn, ratio of credit sales to total
Department Store Sales Up But Profit Margins Down
(Continued from
4)
page
Final
-
gain after-taxes re¬
ceded to 4.5% of sales from the
goods to an extent that would ex¬
plain a smaller advance in the
average
sale' than in the price
record, figure, of 5,9% in 1946.
With Federal tax rates on cor¬
level.
porate
The sharpest rise of any of the
five factors enumerated was
reg¬
istered in the total expense
per
transaction,
up
17% over 1946.
When the number of transactions
turn downward and when the rise
in
cost
transaction
per
outstrips
advance in the average size
of transaction
by so wide a mar¬
gin, it requires no forecasting skill
the
to_ predict
trends
the
will
effect
have
on
essentially
changed, final dollar earnings
gross
20%
this
result
times
rate
was registered in the
preced¬
ing year, it is to be remarked
that, from the high point of 38.7%
reached in 1942, gross margin has
now
slipped back by i3.4% of
sales, almost the equivalent of the
final net darnings figure, in
many
recent years.
In all but one volume classification- for which figures were avail¬
able, the initial markon percent¬
advanced slightly in 1947, the
weighted average increase being
close to Vz % of retail.
Markdowns,
age
the
other
hand, were
higher,
typically
con¬
by
about %% of sales. The net effect
of the two opposite tendencies on
gross
not
margin
so
was.
much so
as
A With
the initial markon and the
markdown
factors
pulled
ad¬
versely,' v;
discounts.
weighted
aver¬
basis. Presumably pressure
from manufacturers
brought about
age
this result.
Although the highest
figure, 2.9%, appeared for the top
and
the
lowest
figure, 2.4%, for the bottom vol¬
ume
small
a
and
typically
as
was
6.8%
and
against figures ranging
stores below that vol¬
The final net earnings after
taxes showed less variation, but
the figure of 4.3% which
appeared
for all three of the
top volume
groups
group, their differences
was
not great
enough to indicate that
large stores enjoy any special adVantages in the form of higher
the
was
lowest
In
terms
of
cents
figures
stores
transac¬
for
are
large department
only.
Sharp Jump in Total Expense
In
the
dangerous
to
were
a
by the
in
preceding
that recorded
rates
in
was
with
range
small
22%
stores
in
rates
expense
a
from
pattern of low
maintained
of
in
of
receivable
sales—there is
overage
to
total
strong
a
sales
in
and
The
from
figures
Bureau
cialty
stores
stores
characteristically
1947.
reports
155
Other
sales
$10,-
oyer
Specialty
difficult to develop reliable com¬
figures by volume groups.
With this limitation in
mind,
the principal conclusions with re¬
Conclusions for
times
spect to specialty stores in 1947
be summarized as follows:
In
1947, specialty stores as a
barely equalled their dollar
volume for the preceding
and apparently suffered a
group
great in the largest
reporting stores as it was in the
very small stores, and there were,
as
sales
year
decline in the
sales
smaller
higher
dollar
for
sales
and
the
sales
divided
1946,
average
total
ployees.
This slight rise
volume.
With
increase
1947, these tendencies
open;
There was apparently a very
slight rise in the average per
capital sales output, that is, the
net
came
total
a
in
into
cost
of
doing business jumped by 2% of
sales. As already
remarked, this
a
number
consequence
since there
evidence
of
any
by
of
of
was
the
tal
clear
likewise
increase in the
for 75
typical
per
the
number,
of -transac¬
man-hour
apparently
of 1.6, with
vicinity
the
most
such forces
they
are
a
Perhaps the next
fact about the
most
signifi¬
1947 expense
schooled
in
this
Thus the
expense rate con¬
important' than
by more than one > avenue. Im¬
provements in the design and op¬
eration
of
systems
plant, equipment, and
a prime necessity in
are
order-to convert store plants/into
more
efficient
t4machiriesM
for
selling; and here opens up a wide
for the application of en¬
gineering and production tech¬
field
niques. Surely there /cannot be
permitted a complete failure of
between
manufactur¬
ing establishments and distribut¬
ing establishments with .respect
to the part played by plant, equip¬
ment, and system in producing
higher output per worker. But
this alone
is not enough.
It .is
equally important to tackle the
productivity problem from the
angle
of
training
and
personnel
and
morale.
selection
relations
what de¬
velopments are accomplished in
plant, equipment, and system, it
is not possible to achieve the best
productivity unless people them¬
selves, right from the grass roots
up,
interested in
are
accomplish¬
ing
more and doing things better.
That is why, in a number of stores
today,
encouraging 'progress is
being made with the so-called
"work
simplification" program..'
All this requires more attention
to the personnel side of the de¬
partment store job, and it prob¬
ably requires, initially at least
greater expenditures on personnel
In fact; most 6f the sug¬
gestions that may be advanced for
coping with those expense prob¬
work.
lems
that
stem
initially/ from
more money.
and
higher advertising outJ^rsiv .The;( expense advantage of
department"? stores, however, was
much
more
marked in
the
lower
and
employee
No matter
of
sales,
run,
nego¬
a
ment stores
by approximately 2%
the difference residing
par¬
long
wage increases probably
at the outset the
costs
to take
a
involve
expenditure of'
It will be necessary
long-run point of view
now on engineer¬
and spend more
ing,
designing,
and
personnel
management in order to have sub¬
stantial savings Tater/*4^;
In the second
than-in the higher: volume ranges.
place, ^sing oper¬
ating costs flow to a considerable
depart¬
ment stores, small specialty stores degree from price and rate ad-r
vances
covering such things as
reported lower total expense rates
and gross margins in 1947 than did supplies, fuel, transportation and
services,
To cope with such in¬
the- larger^ stores.Since the dif¬
creases there is need for
a'jhore
ferences^ teetotal expense were
effective purchasing function in
greater than the difference an
department
stores.
Since.the
pro¬
gross margins, higher percentage
curement of supplies and services
earnings were reported by the
As in the
ing the war years, the 1946 and
1947 indexes fell well below the
1945
in¬
principally in higher real estate
affecting ex¬ increase
in
productivity.
strongly than though productivity climbed dur¬
sales.
substantial
tinued to exceed that of depart¬
significant
more
a
identical finm
specialty istore
are now
far
penses
scored
amounting
to
1.9%
of
based on aggregate results
crease,
typical sales value per mandevelop¬ hour ranging from $5.40 to $5.90.
ment
in
the
1947
Indexes of man-hour produc¬
department
store situation. It is characteristic
tivity, in terms- of ^sales transac¬
of inflationary forces that
they tions, prepared for 12 identical
always work unevenly, and in large firms over the
period'since
the
department
store
business 1939, failed to reveal a consistent
is
drop in 1947 similar to that in
department store figure. To¬
expense
in specialty stores
a
The
in
specialty stores than
stores, registered
the
en¬
sales
tions
for
typicallly
department
number of transactions per capita.
was
available.
Gross margin, always
higher
no
not
was
em¬
was
well
more
parallelism
may
The dollar compensation of in¬
dividual executives was more than
ever
per man-hour. This is an objec¬
tive which needs to be approached
concen¬
mon
Department Stores
tirely
substantial increase; prices,
that
to
with
assumes
than
program of increasing
productivity of personnel —
is, obtaining greater output
the
spe¬
group
stores
large extent concealed
tives
tiation is
received
in
importance
ticular task. But in the
97 firms operating
under
ratios, the func¬
negotiation
before. Department stores need to
have thoroughly qualified execur
presump¬
Specialty Stores
large
the
of
greater
tion that working capital in rela¬
tion to sales volume will have to
ex¬
000,000, having expense rates of
30% to nearly 31%.
v.
10
tion
credit
trate in the sale of women's wear¬
to 30.8% in the
ing apparel and ready-to-wear ac¬
$50,000,000 group.
cessories, and as a rule, carry
For 1947, reporting firms fell into
neither yard goods nor home fur¬
three reasonably distinct group¬
nishings.
The wide range iri the
ings; stores with sales under $500,- size of
specialty stores, the some¬
000, having expense rates of 22%, what
greater individuality,
the
or 23%; stores with sales of
$1,- frequent location of small stores
000,000 to $10,000,000, having ex¬ in
large cities, and the small num¬
pense rates in the vicinity of 28%; ber of
reports available make it
$250,000
$20,000,000
and
of rising expense
ac¬
even
in:. 1947
common
tendencies
year,
expense
very
dollar
cant
>
.Stock-Turn
The rapidity of stock turnover
per
counts
ratio
number of transac¬
tion,
net
gain
before
taxes of
course,
more
executives
in tions
amounting to as much as
dropped from 33 cents to 28 cents.
large stores than in small stores. 10% in the
Since Federal taxes dropped from
largest stores. Three
In
percentage of sales volume, factors contributed to
12.5 cents to 10.5
this devel¬
cents, the final
however, almost exactly the op¬ opment: (1) consumer resistance
earnings represented 17.5 cents
posite comparison appeared: the to high
apparel prices; (2) slug¬
out of each sales transaction in
smallest stores typically required
gish acceptance of radically new
comparison with the 1946 figure
over
six times as great a per¬
of 20.5 cents. Figures for both
fashions, and (3) reaction from
centage of sales to,cover executive the unusually high volume of soft
1945'and 1946, however, were very
remuneration as did the largest
goods business during the war
substantially
above
the
1939
stores providing this information.
years
when
other ? merchandise
figure
of
6.5
cents.
All
these
cash discounts.
>\j.
common
figure recorded.
the
group,*
sales,
as
groups of
1946 and 1947, dropped from
2.9% of sales in 1946 to 2.7% of
volume
profits
as
and
increase still further.
higher
stores,
ume.
much
on
in
a
to
of
$10,000,000 mark, net gain before
taxes
purchases,
the subject of heated
controversy
sales in 1947, on
respect
percentage
adverse, but
in 1946, when
both
Cash
3V2
the typical dol¬
as
lar figure for 1939.
from 8.1% to 9.6% for the several
than
on
great
as
than
more
general
35.9% in 1946 to
35.3% in 1947. Although this was
a
substantially smaller decline
sistently
still
was;
great
as
normal
pense
the previous year. Even
notable drop, the 1947
over
after
from $1.01 to $1.18, an
rose
1946.
The
ran
stores fared better than the
very
large establishments. Above the
margin
in
estimated total decline of
an
6.9%,
The typical
dropped from
more
advance
parallel to net gain before taxes,
with
sales,
stores with sales of $2,000,000 or
un¬
moderately large department
Gross Margin
-
incomes
these
that
the
health and well-being of The de¬
partment store business if they
continue unabated,
*
net
c-^Thiii-sd^y, May 37, ii948
/{
peak.
picture is that, in sharp contrast
case
of small
Sales per square foot oi tptal
1946, payroll expense alone was space ranged slightly higher than
diminished moderately in 1947, no longer
predominantly respon¬ in 1946, again because of higher
with a decrease in the
weighted sible for the increased dollars of prices, since there was no evi¬
average from 5.25 times to 4.85 expense
outlay. The sum total of dence of an increase in transac¬
times, based on 12 monthly inven¬ all the nonpayroll items
tions per square foot.
consumed
in operations has al¬
smaller stores in both classifica¬
amounted
tories. The slowing
Real
estate
up
of the to more than half the rise in the
costs
ways
been so greatly oversha¬
per
square tions.
stock-turn rate in 1947 was
of doing business
dowed by the job of
ap¬ cost
between foot of total space appear to have
In
relation to
sales specialty
purchasing
parently common to all volume the two years. A third
significant advanced slightly in 1947 for the store earnings before taxes were goods for resale, there are grounds
categories.1' 'a
:
for
fact, however, is that the rise in majority of volume groups.
surmising that
department
down for
the third consecutive
store purchasing agents and
As in previous years, size of
payroll to the extent of nearly
pur¬
year.
Again the change from 1946
Earnings and Federal Taxes
1% of sales was one of the
sharp¬ city was a more potent cause of in the earnings rate corresponded chasing systems are not generally
Net profit, in the narrow
on a par with those of manufac¬
variations in expense ratios than
sense, est advances recorded
to the results experienced by the
for any
(i.e., the pure merchandise oper¬
was volume
of sales, and it con¬
single
year
for this
series
of
department stores. Because of the turing concerns.
ating profit over and above a studies.
tinued to be true that among the
In the third place, all the'
lag in sales volume, however, dol¬
total expense figure
johs,
including an
moderate-size and large stores the
The
total
lar, earnings of specialty stores that are- done or the tasks and
payroll
imputed interest charge) fell off
percentage lowest
expense rates and the best were cut more
functions
that
are
moved up
performed in a
severely than were
smartly from 15.9% in
by more than 2y2% of sales in
profits
were
1946 to 16.85% in
characteristically those of department stores. Al¬ department store cost; money. It is
1947; from 7.8-% to v5.2%. Thus
1947; real estate found in the
smaller cities.
incumbent
on
costs
were
top
though
(drastically reduced from
three years
management,
only slightly higher at
of decline
in
this
The rise in the
proportion of the^ extreme levels of 1943-1945, particularly at the present junc¬
ratio have carried
22%; but advertising, at 2.45%,
it, down to a
credit sales to total sales was ac¬
the
ture,
to
scrutinize
and
weigh care¬
registered
an
increase
to
point less than half as high as
specialty^ store earnings rate,
approxi¬
companied by a slowing up in the before
taxes, ; of i approximately. fully all these jobs, tasks" and
the wartime peak figure of
mately the 1943 level; and the
10.5%
turnover of accounts receivable,
sum total of all the
6% %? <>£ net 1 sales was still double functions. Perhaps- k ihajorjty and
in 1944.
other natural
with the result that a higher im¬
Certainly the most, important, of*
the prewar normal. V
divisions went up from 7.8% to
v:; Net other income (including the
puted interest cost was incurred
the functions performed are for
8.6% of sales.
credit for imputed
Expense divisions for the
interest) in¬
working
capital
needed
to
Approaches io;.the Expenses^ * consumers; it is,1 of ; course,- the I
which contributed
creased somewhat in 1947.
prominently to carry this credit business. ^ Never¬
Thus,
:
Problem.
>
performanceA of thesei furictioh?
this higher
net gain before Federal
taxes on
percentage total were
theless,
the
ratio
of
accounts^re^:
The
expense problem is the one that gives a ..store its, reason for;
income (i.e., the
ordinary business interest, supplies, and service pur¬ ceivable
outstanding to net credit uppermost: in the minds of most existence.
But management must
profit before taxes) diminished
by chased; traveling was the only na¬ sales was still
substantially below department store executives be on guard against purely com¬
tural division in 1947 to
not quite 2l/2% of
sales, dropping
display a its prewar level.
today. The substantial advance in petitive
multiplication Uof
con¬
from 9.6% to
7.2%, a decline to tendency to decrease percentage¬
For 76 department stores with dollar expense outlays, the jump sumer services; and it must also
the extent of more than
5% of wise.;
sales of $10,600,000 or* more;: cur?-1 in
the
expense - percentages
-sales from the 1944
in give thought to the fact that in
Total dollars of
peak. In dol¬
expense outlay rent assets assumed a
less liquid
1947, and the growing rigidity of some other types of retail distri¬
lars of profit before
taxes, the for 328 identical firms ran
to
•
h
.
,
,
•
,
.
<
.
-
'
decline
was
approximately 20%
from the peak reached in the
pre¬
ceding year, 1946.
*
With
these
ings, Federal
-
lower
taxes
dollar
earn¬
typically
re¬
quired ,only 2.7%
of
sales
as
against 3.7% in 1946, and against
the peak figure of
8.7% in 1944.
This was the smallest
percentage
of sales required to cover
Federal
taxes in any year since 1940.'
ahead: for; the
year.
same i
For
12.6% character on Jan.
31, 1948, than
these they had exhibited a
year earlier,
firms,
payroll
dollars
climbed 11.2%, while all other ex¬
pense
dollars mounted 14.4%.
No
the rising cost of do¬
ing business be ascribed to payroll
longer
can
advances alone.
Probably
measure
1947
was
action,
the
.
most
significant
of expense increase in
the dollar cost per trans-
which
for
department
yarious types of expense, notably
payroll, are making many depart¬
with a decrease in the ratio of
ment store operators apprehensive
cash and government securities to
about
high
break-even
points.
total current assets from 22% to
Some -reflections possibly are in
18%.
At the year-end_net-Jwo»kr
order, therefore, with respect to
ing capital was 20% of /pet,sales*, ways: in which the expense prob¬
a slight increase over
the-flpening. lem:«anibe-approached.;.
figure.
In view of the
the first place,: since wage
fhatr
prewar norms have no^: ^etlbeen
advances, together-with changes
reached with respect to / any- ope
in the working hours, are clearly
of the three
factors-^rato^stoiE^^ionei of the most significant causes
bution from time to time notable
advances in
efficiency have been
through reduction in con¬
scored
sumer
fer
services and
of
bution
of
some
functions
themselves—as,
supermarkets.
functions
even
the
for
by trans¬
retail
to
instance,
performed
of
the
the
in
Another group of
in
ment stores is undertaken
half, of
distri¬
consumers
employees.
considerations
depart¬
on
be¬
In view
mentioned
-Ypjume 167
Nuroher47<)2
(2351)
r
above in connection with prriducv methods also
warrant "review. Too
of^fopd1—rests with- the- pressure
tivity problems, -this is. perhaps few stores are
budgeting person^ groups of American farmers. •}
/ hot the time to^cut down on serv¬ nel requirements in terms v- of v A number of
forces are at work
ices to employees,
iTop manage- transaction output per
man-hour, which may offset some of the in¬
ment must,
however, A carefully and too few stores: are
rpafeing flationary- pressure,we have been
weigh the values of all such serv- sufficient
application
of
what
considering. The increase^ avail¬
ices
against: their costs. Then many manufacturers have learned, ability- of goods with the
gradual
there exists a -sizable i^group of about the use of
elimination
of production bottle¬
variable''expense
functions undertaken in stores on
necks
and
budget geared to several different
shortages will take
behalf of management. These are
prospective levels of activity. Ex¬ much pressure off of the market
for the most part jobs of
gathering pense-budgeting tools in most de¬ for goods. The end of the seller's
facts and information for the
use
partment
stores
arenot
sharp market will be a favorable sign.
or satisfaction of
We have already
management, and enough.
mentioned this
it. is a prime
duty of management
in connection with
radios, re¬
Fifth, it goes i without paying
to devote particular atteptipn to
that to achieve good expense con¬ frigerators, an(i motor cars. In¬
this group of functions to
make
ventories are at their
peak and
trol, a general cost consciousness
surp that unnecessary - costs are
while
this
improves the ready
must pervade the entire
organiza¬
not
being incurred
merely to tion.
availability of goods, it also makes
In periods of
inflationary
satisfy curiosity or a thirst for in¬
firms more vlunerable to the con¬
excitement this objective is dif¬
formation without any commensu¬
sequence of price and trade de¬
ficult to obtain, but that
fs
all
the
rate benefits to efficiency of op¬ more
clines, If price; changes are con¬
reason
why management
eration.
But whatever the
type of must bend
particular effort to the sidered, inventory policies were
job or function involved* top man¬
more conservative in
1947 than in
creation of' such awareness of
agement must pot shirk its re¬
1946. It is reported also that
costs at the present time.' /
the
sponsibility for weighing carefully
liquid assets of business firms
the necessity- of
Finally, it is of particular im¬ have
continuing it,
decreased markedly and that
portance for approaching the ex¬
A fourth approach is from
the
many
concerns
are
depending
standpoint of expense budgeting pense problem that every sizable upon banks to
carry their inven¬
department
store
should
have
one
apjd control. Good expense per¬
tories and to supply increased
formance is impossible without or more executives who can keep
amounts of working capital. This
their desks
effective
sufficiently clear of condition enhances
planning, authorizing,
the opportu¬
checking and follpw-pp. Organ¬ current operating details to be nity fpr a
"squeeze play", by the
able to think
ization ior these, tasks too
radically,
to
strip
often
bankers as uncertainty as to the
fUils to be
sufficiently clear-cut, problems down to basic essentials, future increases. This
predicament
especially where relations are in¬ to find out what are the signifi¬ for the borrowers is
a measure
cant questions to ask, and to think
volved between the control
of insurance
and
against continued ex¬
operating pyramids of the store in a straight line from premises to pansion in this field.
organization.
Expense-budgeting conclusion.
Already there has been an in¬
*
•
•
,
.
•
'
in
crease
is
rate
Foreign Aid/on
4
^as^lso-been
Fewer
,
offset if the productiv¬
leather
ity per worker increased as
wages
advanced, but so far labor has re¬
fused to be greatly
concerned oyer
'its
own
productivity
and
has
taken refuge in the fact that
over¬
were
112%.
up
Wholesale
increased
all
as
price
much,
commodities
has
A
from labor to the
So
ery.
has
of machin¬
use
far mechanical
ingenuity
been
of real help*-rtechnical
progress has been ahead of wage
demands,
but
there
limits.
are
One ef
of
them, is the- general lack
understanding of many of
an
the principles of
norpics
b,y
those
responsible
labor union poitcies:<
for
Pong
sun
rather,than^hort i^^gahas
tp
be
considered
need
certainly
and
prpd^hpn naed fd he-iop^ed into,
-... £ JI
A;
.> %
i^^Oh'^o^side^pf trioutise/i&'thu
'
t>y qniQo leaders,^
fact: that
•;
had
risen
year
the rate of increase
to have slowed down
seems
what.
'
"
ihbasiiiSed:
"
The
increased mechanization of
operation require? larger
capital than in forme? years, thus
closing farm ownership to many,
farm
same
the
of
debts
other'
accompanying depressions,
shortage: of farm labor has
been one of the factors
contribut¬
the *
ericouragemeut
or :a> mftr e
livihgvindex, it is
general- ppsti of
59.2.
:
;
v
highly
mechamzed
trial .'•depression
' The break in farm* prices in
February 1948 seemed to be a sig¬
as
the
what is ahead in
stock
goOdLs.
v
to
income and production.
The
market
s
Prices
and
in
on
in
the
some
supply
farms, and
the
shortage during the past
dicate both reduced
livestock and high
some
'
year in¬
meat
prices
time.
increase.
Farm Products
The price of
an
:
of
feed
marketing of
The Great Relative
;
on
inretailstoresalsqdeclined.
reduction
livestock
for
farm
in
food, moreover, is
important factor
situation.? Since 1939
in
the
no
prices for
labor
broad groups of
commodities have
when/
beebmes
acute,
experience
may
:
-difficulty/than
after ly29)_, iij
(say
gqing hack "to farms to escape un¬
employment. Such depression, too,
Wtil reduce the market for
food
stuffs and if farm
production with
its mechanical tools
does not curb
its
supply
tural
of
products,
products
government
;;V:
nal
pf
mechanization. Increased produc¬
tivity has been another. Industrial
rdbpression^will ^aiugnmi^^h^
Heretofore
-
of
tions
------
1935*39 is taken as 100, the index of
purchasing power in January 1948
measjurecTby .wholesale priees has
n declined
to 48.6; as measured by
^tail-food pricps it has declined
:/ t0
prices;
classes
The*
more«.«ecmomic
."
time it increases
farmers. It also makes both,
groups
more vulnerable to
the liquida¬
ing " to
agricql*
apart
can,
intervention,
from
be
ex¬
pected to drop
precipitately. The
ever.
narrowing margin, Aas^at
present,, between gross .and ^net
farm income stands as a
veritable
barometer
for
the
prediction of
appeals
for
for
preservation
the
nomic
political
position of
has
operated
the
past.
It
intervention
of
the
in
that
may
be
the
eco¬
farmer.* It
manner
in
confidently
expected that the heat
generated
by
the
agrifultural block be
turned on Congress
whenever the
present favorable
economic posi¬
tion of the American
farmer is
threatened. No small
part of the
cause for
industrial
strife—raising
wages
to
keep
up
accounts
buying
been
more
the
Weakness
with
the post
on
Price
on
the price
of
weakness^ haye appeared* The
break in farm prices in
February
softened the price of
ties price index four
its
points below
mid-January high. Steel
panies which earlier
price advances have
announced
advertised
recent reductions. The stock
ket ato declined
com¬
mar¬
sympathetically.
iiomic
and
trends;made both business
consumers
cautious
more
early in the year than they
Ift be ttodajM>ut; they are
cautious. In fact,
consumers
and
the
seem
still
caution
of
businesses, whose
memories of previous events have
riot completely
dimmed, accounts
TOr ,the, fact that conditions
are no
worse today than
they are. Con¬
sumers were expected to speculate
and buy more
freely than they
credit for con¬
siderable restraint
In the
monetary field the banks
authorities have been
and control
e^iating
spme restraininginflu*
erices toward expansion.Fpr some
time the Federal
Reserve authori¬
ties have been interested
in rais¬
ing interest rates both on govern¬
ment issues and
other loans.
on
A-Tke Treasury in reducing the
public debt from its
war-type
peak has followed the
policy of
maximizing payments
cial
and
reserve
thereby to
hoping
ease
The
sqres,
to commer¬
banks,
*
inflationary pres*
American Rankers
Association has also been conduct¬
ing
a
voluntary campaign
its members
sion of
avoid
inflationary
effective
may
to
these
the
among
exten¬
credits.
control
They agreed
that they would
not take
unjusti¬
fied, unreasonable or discrimin¬
atory measures which would in¬
jure
or
How
measures
be, only time will determine.
They are straws in the wind. Also
should be mentioned the feeble
efforts to meet the
problem both
by Congress and the Executive
branch of government. The simile
the
legally
acquired rights
interests of nationals of
other
countries in the
enterprises, skills,
capital, arts or technology which
they have supplied.
They agreed
that they would
impose no un¬
justifiable restrictions
upon
the
withdrawal of the
earnings on
foreign investments or the re¬
patriation of those
investments.
They
to
agreed
provide just and
equitable treatment for all
per¬
sonnel, national and
foreign, em¬
ployed in foreign-owned
enter¬
prises and to permit the
employ¬
of
a
reasonable
and
number
of
administrative
regardless
American
of
nation¬
States
agreed
thmr
they
to
income
from
foreign
and to avoid
discrimin¬
or
unduly burdensome
In
this
tax¬
connection,
United
the
States Government is
pre¬
pared to consider various
possible
revisions in its tax laws
in order
to facilitate the flow
of interna¬
tional
investment
capital.
Treasury continues
to
The
look
with
favor
toward the negotiation
bilateral tax treaties to reduce
of
in¬
ternational
double
taxation
Our government is
incomes.
pared to
other
of
pre¬
discuss such treaties with
government and is hopeful
that much progress can
be made
in such negotiations.
Our Latin American
neighbors
may be confident that
Reductions in wholesale prices of
women's shoes for next fall have
algo been announced. Increased
doubts as to the course of eco-
The
American
agreed, for example, thai
foreign capital s ha 11 receive
equitable treatment.
ation.
Front
foods, hides,
America.
States
atory
front, signs
approach the future with
The
government seems
.
likely
to
crease
long
continue
current
as
mittent
if
not
applies
power
pressures'on
international
in¬
to
expenditures,
Russia
scene.
its
so
inter¬
Relief
the
from
high taxes and high
prices
seem
remote. Business
recession in this
year seems
doubtful,
(Continued from
Latin
sources
rise
43
;
,
,
/
.
Expanding Woild Trade—Primary
Objective of Our Foreign
Policy
apply
than
leather, print cloth and some in¬
dustrial raw materials. These
de¬
clines reduced the
con*
respective
constitutions,
to liberalize their
tax laws as
but it is not clear that the
physical
volume is also up.
Even
and
sumers
caution.
,
of
whole
cautious
Business
further that they would
individ¬
ually seek, within the framework
receivable
on
somewhat.
The
trade
all-Commodi¬
**
k^^|ridusr^ways and^by? 'factory', workers
*'i!j4r"
,
some¬
.
while at the
on
declined
sales
to
oply
sequences from both. If farms are
continued td decline; Thisi
can he
' '
"
<v-V"
past
decreasing,
at—and
understand no precision
is attempted—it
appears that the
prevailing currents are still infla¬
tionary. The rate of movement
upward seems to have
personhel,
ality.
currently
The index for
largest toll from con¬
but fortunately, during
sumers,
been
balance is
a
technicians
of promptCash
bevapplied tfo tiieso
.A; IA
struck and the
pulls in each direction are
guessed
If
ment
the
sometime ago. The dollar volume
of retail trade continues
had
111.5%. Among increases in cost
productivity has advanced. of living items,
food.prices haye
This is due, in
large part, to the continued to advance most and to
increased, use of machinery.
The exact the
the
discounts.
perienced
Consumer
all"
higher wages become the greater
the incentive and the more
impor¬
tant it is for producers to
shift
have
in
started.
have
been
rising
and
slower collections have been
ex¬
No other
index
firms
concerns
credits
commodities in the Bureau of La¬
bor
decline
a
new
i>e)e^,takjhg.advantage
have
Wage advances have been paid increased as
much as farm prod¬
for, on the whole, by consumers in ucts,
The wholesale price index
the form of
higher prices. Each of farm products in
December,
hike
increases the danger and
1947, was 201% over 1939. Whole¬
probability of decline at some fu- sale food
prices m tye same pe¬
ture date.
Some of this danger riod
were up to 153%; hides and
be
~
of
payment
(Continued from page 20)
would
The
serious and has been
concentrated in small firms. There
the
Economic Horizon
I'■',0^
failures.
not
number
•
business
of -straws ran
efforts.
A™.-
cerely determined
ever
reasonable
we are
sin¬
to take what¬
and
measures are within
practical
our
power in
order to promote
economic devel¬
opment and rising
standards of
living in that area. We only ask
that they, for their part, also dp
what i$ reasonable and
practical
for the same
objective.
I should like to
mention one
further agreement
reached at Bo¬
page
15)
of
activity in the United
States,
with
high levels
and
of employment
The ability to obtain
income,
from other countries
goods and
services which
they can produce
at relatively
low costs or which
can supplement
goods and■ ser4
vices unavailable in the
UnitecJ
States will enhance the
productive
efficiency of our industries and
will improve
the standards of liv*
ing of us all.
It has been, and
is, the desire
Unityd States to help de-i
of the
serving countries.
But we must
emphasize that our resources have
definite limitation.
.
a
we
Moreover,
have
incurred
<an
enormous
debt in helping to
prosecute the
recent war.
We have
exhausted
a substantial
part of some of our
natural resources in the
defeat of
forces of domination and destruc¬
tion,
We are continuing to as¬
sume huge
obligations in order to
promote world economic
recovery
and to put a stop to
aggression,
whether
direct
all these
efforts,
are
acting in
nations which
ing
and
the
,
indirect.
or
are
making
common
everywhere.
f
of
a
will¬
contribution
development,
protection
In
we know that we
concert with those
/V
strength
re e
'
to
and
countries
~Vt A/Vy*
V
\
The patterns of
growth of those
nations
must
necessarily
vary,
greatly, Rut/tiemqcratic prims
ciples which basically guide that
growth
firmly
remain
beliey^
the
.
in
dignity and freedom
we
must
be
We
same.
the
of
essential
man.
And
sufficiently practical
to subordinate
any immediate dif¬
ferences to the preservation of
these beliefs.
I arn convinced that
cooperation which has .con¬
spicuously marked oiir interna*
tionaf relations will prove to the
the
world how sensible
itabie it is fo?
an
and hftW prof*
nations to live in
atmosphere of friendship hnd
interdependent weli-boing.
Justin Jacobs Is With
Strauss Bros., Inc,
Justin Jacobs, Certified Public
Accountant, is now manager of the
gota, namely, that pertaining; to
the
expropriation
of
foreignowned investments.
It was
gen¬
erally agreed at Bogota that no
American State will
deprive for¬
eign
enterprises
or
capital of
legally acquired rights or property
for reasons, or under conditions
different from those
constitutions grid;
spective
States
expropriation of
owned
n a tj
enterprises
Furthermore,
which
the
laws of the re¬
provide for the
any
dually*
capital.
or
expropriation
must be accompanied
by payments
to the owners
in
a
prompt, ade¬
quate and effective form.
Justin Jacobs
Thus, briefly, we have summar¬
ized some of the more
significant
problems confronting world trade
today and we have considered
of the steps
necessary to sur¬
mount these problems.
The con¬
clusion is clear-cut.
It is vital tc
some
the United States and to the
world
that international trade be main¬
tained
at
the
highest
possible
level.
nomy
every
It
is
and
essential
to
pplitical
welfare
country.
the
eco¬
of
The prevalence
of large
e^poft markets make it
possible to achieve maximum pro¬
ductive
efficiency in
many
lines
investment research department
of Straqss Bros, Inc., 32 Broad¬
way, New York City.
Mr; Jacobs
formerly syndicated "Highlights
of Wall street" for J, F.
Reilly &
Co. and the "Wall Street
lights for Luckhurst &
Ditch
Bashford
(Special to The Financjai,
$earph^
Co.
Formed
Ohbonicle)
MASSILLON, OHIO—Grant
F.
pitch and Q. P; Bashford have
formed the firm of Pitch and
Bashford, to engage jg
business.
g spQuritiOS
'
44
(2352)
THE
> «•<
tn v'
,:<4
■•
%iir,
COMMERCIAL
Securities
FINANCIAL CHRONICLE
&
Now
in
Registration
■U.if"''*,
it i
•
•
All-American
Drinks
Corp., New York
Ma.y 24 (letter of notification) 30,000 shares of common,
stock (par $1). Price—$2.50 each. Underwriting—None.
Corporate purposes.
•
INDICATES
•
Basin Oil Corp.,
Fort Worth, Texas
May 17 (letter of notification) 50,000 shares. ($2 par)
common
stock.
Price, par. f To purchase Oil' and gas
leases in Pecos County, Texas.
No underwriting.
.,
•
Bitter
May
Root
Corp. '
•
,
1
Dayton Consolidated
.
facture and distribute Bitter Root spark
plugs;
Botany Mills, Inc., Passaic, N. JLftlft
May 10 (letter of notification). 2,0b0 shares of common
stock.
Price—$16 per share. To be sold through Greene,
Ellis & Anderson, New York, for the account of-Louis H.
HaH.
California Electric Power Co.-
(6/32)
-
May 3 filed $2,500,000 first mortgage bonds, due 1978.
Underwriters—Names to be determined by competitive
bidding.
Probable bidders include: Blyth & Co. Inc.;
Halsey, Stuart & Co. Inc.; Kidder, Peabody & Co.; Har¬
riman, Ripley & Co.
Proceeds—To retire bank notes
for
construction.
Bids—Bids
for
purchase of the
Bankers Trust Co., 16 Wall
Street, New York, up to 10:30 a.m. (EDT) June 2.
bonds
will
be
received
at
•
Cannon Shoe Co., Baltimore
May 21 (letter of notification) 2,373 shares of common
stock.
Price—$9.
Sold by William Wallace Lanahan,
Baltimore. Underwriter—Bakerj Watts & Co., Baltimore.
Mines
fund
convertible
mon
shares
5%
reserved
bonds due
for
1953
conversion
and 300,000
of
bonds.
Harvester
com¬
(Paul)
&
Co.,
Corp.
Underwriters of common—Coffin & Burr.
Bonds
to be placed privately.
common
Common stock will be offered to
stockholders through subscription rights and to
and
common
preferred
stockholders
tion privileges.
Proceeds—Forand repair of flood damages.
>
•
Cincinnati
Gas & Electric
a
through subscrip¬
construction program
;
;
Co., Cincinnati
May 21 filed $15,000,000 first mortgage bonds, due 1978.
Underwriters
To be determined by competitive bid¬
ding. Probable bidders: Halsey, Stuart & Co. Inc.; Mor¬
gan Stanley & Co.; /"W. C. Langley & Co.; Blyth, & Co.,
Inc. and The First Boston Corp. (jointly); Union Secur¬
ities Corp.; Lehman Brothers; Merrill
Lynch, Pierce,
Fenner & Beane; Glore,. Forgan & Co. and
White, Weld
& Co. (jointly) .
Proceeds—Construction program/i;
—
Consolidated Edison Co. of. N. Y., lnc.
March
1 filed
due 1963.
(6/9)
$57,382,600 of 3% convertible debentures,
Convertible into
stock at $25.
Offering—Common stockholders of record May 20 are given
common
light to subscribe for debentures in ratio of $5 of deben¬
tures for each share held.
Rights expire June 8. Un¬
derwriters
Unsubscribed debentures underwritten by
Halsey, Stuart & Co. Inc. and associates.
The issue was
awarded May 18, the underwriters paying $1,008 the
underwriting privilege.
Proceeds—To redeem 273,566
shares of outstanding $5 cumulative preferred stock and
to reimburse treasury for expansion
expenditures; &c.
Consolidated Vultee Aircraft Corp.
—
May 5 filed 1,159,849 shares ($1 par) common stock..
Offering—Stockholders of record May 28 - are given
the right under a firm subscription to subscribe for the
stock at rate of
one new share for each share held at
$9
share. Rights expire June 14. In addition stockhold¬
ers will be given the right to make
contingent subscrip¬
tions for any shares not subscribed for
by exercise of
per
firm
subscription,
holder of
11.4%
subject to allotment.
Atlas Corp.,
of outstanding consolidated stock, will
non-voting prior
Price, par.
To remodel
stock
No
($100 par).
underwriting.
Florida Power & Light Co.
Consumers
to general funds for manufac¬
transport planes.
Power
Co., Jackson,
Proceeds
To acquire and construct additional prop¬
erty and retire $3,860,000 of 1%% notes issued for in¬
terim financing. Bids are expected to be opened June 14.
—
Lamston
(M. H.), Inc., New York
May 17 (letter of notification) 7,060 shares of 6% cumu¬
lative preferred stock (par $25) and 7,060 common stock
purchase warrants. Price—$25 per unit of one preferred
share and
one warrant.
Underwriters—Childs, Jeffries
Thorndike, Inc., Aetna Securities Corp. and Syle &
Co., New York. Statement may be withdrawn.
&
•
Langsenkamp (F. H.) Co., Indianapolis, Ind/
May 19 (letter of notification) $250,000 of 5%* sinking
fund debentures, due 1950.
Price—$100. Underwriter—.
City Securities Corp., Indianapolis.
To pay bank loans
and increase working capital.
(6/8)
remainder.
worth
competitive bidding.;
Probable bidders: Harriman Ripley & Co; and The First Boston Corp. (jointly); Morgan
Stanley & Co.; White, Weld & Co. and Shields & Co.
.(jointjy). Proceeds^-To acquire property, construct and
expand facilities.
and
at rate of
—
For
unsubscribed
shares
price for
an existing textile firm known
Co., a Textron subsidiary.
share for
Blair
&
Co.,
Price—•
as
Lonsdale
•
McFadden Stores, Inc., G!endale, Calif.
May 17 (letter of notification) 23,717 shares of Class A
6% cumulative shares, to be sold to stockholders at $1.25.
To build and equip new grocery stores in Los Angeles
County, Calif. No underwriting.
•
Huntington
Mid-Continent
'Airlines, Inc., Kansas City, Mo.
(W. Va.) Chair Corp.
May 18 (letter of notification) 2,500 shares of 5% first
preferred cumulative Stock ($100 par). Working capital.
—Kitchen & Murphy, Chicago.
No underwriting;
•
May 19 (letter of notification) 6,000 shares of common
stock ($1 par).
Price-^Market ($8 lb $9) . Underwriters *
:
Idaho-Montana Pulp & PaperCo., Poison, Mont.
May 17 filed 100,000 shares of 4% cumulative preferred
new
$3^ per share. Proceeds—To be applied to the; purchase
develop properties
No under¬
; ^\
^
one
stock.
held.
Inc., and Maxwell, Marshall & Co., New York.
common stock. Price—$1.35. Underwriter
Steinberger, Los Angeles. For general cor¬
*
common
Rights expire about June 10. An addi¬
60,000 shares will be issued to officers, director's
some employees of the newly organized company.
one
Underwriters
non-assessable
•
stock of record
May 24 of Textron, Inc.,
porate purposes.,
Mich.
May 18 filed 200,000 shares of cumulative (no par) pre¬
ferred: stock. Underwriters £4 To be determined under
common
Offering—Offered to holders of
each
;
—Gordon E.
Lonsdale Co., Providence, R. I.
April 26 filed 1,192,631 shares ($1 par)
tional
Holister Coil Spring Mfg. Co., Los Angeles
i
(letter of notification) 14,225 shares ($1 par):
•
begin business, when net
—
Open-end investment
cago.
Mines, Valley County, Idaho.
'k
To
Liberty Loan Corp., Chicago
24 (le'tter of notification)
10,800 shares of 75c
cumulative convertible preferred stock ($10 par). Price
—$15; also 10,000 shares of class A ($5 par) common
stock, to be reserved for conversion of the preferred.
For working capital. Underwriter—Max
N'edwick, Chi¬
Gateway Gold & Copper Co., Inc., Boise, Idaho
May 14 (letter of notification) 500,000- shares (10c par)
To
—
Business
•
•
cents.
Proceeds
$100,000.
May
—
Price—20
is
company.
Products, Inc., Stockton, Calif. ^ *
Underwriter
:
•
Lewis (John H.) Fund, Inc., New York City
May 20 filed 200,000 shares of capital stock. Management
Lewis Management Co., New York. Price—$5 for each of
the first 20,000 shares; net asset value plus 2J/2% for the
Floyd D. Cerf Co., Chicago.
Price—preferred $10; common $6.
Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
Common shares and company 125,000 preferred shares
and 75,000 common shares.
Company's proceeds will be
used for general corporate purposes. Effective
May 5,
ment.
Proceeds—Added
Probable bidders: Halsey, Stuart
(bonds only); The First Boston Corp.; Kuhn,
Co.; Salomon Bros. & Hutzler and Union Secur¬
ities Corp. (jointly); Lehman Brothers; GHre, Forgan &
Co. and W. C. Langley & Co. (jointly); Shields & Co.,
White, Weld & Co. and Central Republic Co. (jointly).
March 6 filed 385,000 shares of 60 cent convertible pre*
ferred stock (par $5) and 325,000 shares of common stock
May 20
(6/14)1
& Co. Inc.
Expected about June 8.
capital stock.
Power & Light Co.
Loeb &
May 6 filed $11,000,000 first mortgage bonds, due 1978.
Underwriters—Name to be determined by competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.;
The First Boston Corp.; Harriman Ripley &
Co.; Leh¬
man
Brothers; Drexel & Co.
Proceeds—To pay off
$4#00,000 in indebtedness owing to the Central Hanover
Bank & Trust Co., New York, and to meet construction
at the Dewey
(Mo.)
competitive bidding.
Exchange Buffet Corp., New York
May 19 (letter of notification) 500 shares of capital stock
(par $2.50). Price—$7. Underwriter—Delafield & Delafield, New York.. Proceeds to selling stockholder; ■*
(par $1).
?
May 14 filed $12,000,000 first mortgage bonds due 1978
and 80,000 shares of cumulative preferred stock (par
$100).
Underwriters — Names will be determined by
preference
new store.
•
Flotill
Co.,
a
.
Kansas City
Corp.; Kuhn, Loeb & Co. and Smith,
Barney & Co. (jointly); W. C. Langley & Co. and Glore,
Forgan & Co. (jointly); Harriman Ripley & Co.; White,
Weld
& Co.
Proceeds—$14,000,000 of proceeds, plus
563,000 shares of new common stock, will be delivered
to the Philadelphia Co. in exchange for natural
gas
properties now under lease, outstanding capital stock of
Equitable, notes and other claims owed to the Phila¬
delphia Co. and to the Pittsburgh and West Virginia
Gas Co. Expected about June 8.
writing.
ture of commercial
penditures.
Ellenburger Exploration Enterprises, Inc., Fort
Worth, Texas
May 20 (letter of notification) 99,000 shares ($1 par)
common stock.
Price, par. To drill a test well in Erath
County, Texas. No underwriting.
costs.
.
Spokane.
demand note
to General Telephone Corp. (parent); repay a $100,000
bank loan, and reimburse the treasury for capital ex-
•
exercise its
subscription rights to purchase enough stock
to assure Consolidated a return of
$7,000,000 from the
stock offering.
Underwriting—None. Price by amend¬
Murphy Favre, Inc. and Paine-Rice &
Price, by amendment.
Proceeds—To pay
San Francisco
convertible
1978.
—
.
May 18 (letter of notification) 500 shares 6% cumulative
redeemable
;y- '
•
Cooperatives Ipc., New York
May 18 (letter of notification!) 30,000 shares of capital
stock (par $5). Price—$5. Underwriting—None. Work¬
ing capital.
Elder
-
Interstate Telephone Co. (6/8)
May 20 filed 9,238 shares of cumulative preferred stock
(no par).
Underwriters
Paine, Webber, Jackson &
Curtis and Stone & Webster Securities Corp., New York^
Eastern
•
y
y
>\
Underwriters—Names determined by com¬
bidding.
Probable bidders: Halsey, Stuart &
Inc.;:Morgan Stanley & Col; Glore, Forgan & Co.Proceeds—To be applied toward repayment of advances
from A. T. & T. for general corporate purposes.
Bids— ;
Bids for the purchase of the bonds will be received at Room 2315, 195 Broadway, New York, N.
Y., up. to 11:30
a.m. (EDT), on June 2. • > - :
•
Dungeness Oil & Gas Inc., Port Angeles, Wash.
May 20 (letter of notification) 50,000 shares ($1 par)
common
stock.
Price, par.
To acquire additional oil
•
«■
•
Co.
stock, to be sold to employees at market price (hot less
No. underwriting.
:y.•;
;
petitive
than $9). -For working capital.
The First Boston
Service
due
Price—
Corp.
,
\
-
Bell
Telephone Co. (6/2)
April 30 filed $60,000,000 series B first mortgage bonds,
May 20 (letter of notification) 22,500 shares of .common
and gas leases.
day capacity.
Illinois
$1,000 per bond with 1,000 common shares. Underwriter;
S. K. Cunningham & Co., Pittsburgh. To receive cur¬
rent obligations, working capital, etc. 'M
Detroit
—
200-ton per
par).
Public
($100 par) and 500,000 shares ($10 par) common /
Underwriter
Tom G. Taylor & Co., Missoula;
Mont.
Price—$300 per unit, consisting of two shares of
preferred and 10 shares of common stock. Proceeds—To
erect and operate a bleached sulphate pulp mill with a
stock.
May 14 (letter of notification) $100,000 first lien sinking
March 30 filed $1,500,000 Series E first mortgage bonds
and an undetermined number of common shares (no
Vermont
stock
Virginia * City,
Co.,
Equitable Gas Co., Pittsburgh, Pa. (6/8)
May 6 filed $14,000,000 first mortgage bonds, due 1973.
Underwriters—Names to be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co., Inc.;
Central
IP
yyYy.;;y yy'y'' :y y
...
1,000 shares ($50 par)
non-assessable common stock.
Underwriters—August R.
Kurtz and Clarence J. Brown, Hamilton, Mont. To manu¬
and
Nevada
•v
ISSUE
Plywood Corp., Cleveland
(letter of notification) 2,000 shares of Class B
common stock (no par).
Price—$60. For working capi¬
tal and pperating expenses.
No underwriting.
•
^
(letter of notification)
19
PREVIOUS
Davis
May 24
•
SINCE
May 19
All-American Drinks
Corp., New York
(letter of notification) 100,000 shares of com¬
mon stock
(par $1). Price—$1.50 Underwriting—None.
Corporate purposes. V ' *' \
'
>
4"
ADDITIONS
Thursday, May 27,-1948
.
For working capitalJ
/ Minder (J, W.)
Chain & Gear Co., Los
Angelas
May 19; (letter of notification)- 1,500 shares Class; A (no,
par) stock anil) i,500 shares Class B (no par) * dom'mdfi* >
1
PACIFIC COAST
I
iXThi
YY*N j>:;YY"
:
j u
HAWAnAN SECURITIES
'
<■
Direct
-
private
Wires
,
^
|§
IHMB
1865
lfr
Nil?
Dean Witter
4
Y;; Y Y:
Exchaug^
.
Honolulu Stock
New York
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Pittsburgh I.-, Chicago
■>
,y
;
■■
Private Wires
to
Offices in other Principal Cities
>
Exchange
&
Co.
YYYYY: *'■ /-'YY:;/^Y
San Francisco Stock Exchange
members
.
New-York Stock
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.
-
*
■-
^
rv
Los Angeles Stock Exohange
.14 WALL STREET, NEW YORK
uY }/■
SAN FRANCISCO
Telephone ;BArclay ^-4300'
•
LOS ANGELES
'
'
V-
-
^HONOLULU
York*:*
DtO
brokers
Cvuc
osalers
<-'f
OUtlERWRITERS
,
f
CO
Me*
Bos^oS
AGO
-v'
,
Volume
THE
Number 4702
167
&
COMMERCIAL
FINANCIAL
CHRONICLE
(2353)'45
•
•
Pic-Art, Inc., Long. Beach, Calif,/:
;
Wichita ((Kan.) Building Material Co., Inc.
May 19 5(letter of. riotificatiorj), 94,274/ shares; ($1 /par). • May 19 (letter of notification) 1,050 shares of 6% pre¬
rstockZ Price, par. For fequipment; labor arid materials./ ferred stock ($100 par) to be offered at
par, and
.
NEW ISSUE C/ttENDAR s»«
5
June If
1948
No
*
Powder River Oil Co., Denver; Colo*
4
Nafragansett Eleptric Co., noon (EDT)—7^-rBonds>
U New York State Electric & Gas Corp. ■7
/ / '//;///
'/..'Noon (EDT)—"—
.Preferred
Segal Lock & Hardware
.Debentures
1948
a.m.
(EDT)
Bonds
—
Illinois Bell Telephone Co.
"11:30 a.m. (EDT)—
Bonds
—
Interstate Telephone Co.-
.'•/ / Rarif an
(N. J.) \ Mills
ft
Homes, Inc., Philadelphia
(letter of notification) 1,385 shares 6%
cumulative preferred
class
non-
(par $100); 11,385 shares of
stock (par 10c); 56,922 shares
voting common
of class B non-voting stock
(par 100). Price, par for
Underwriting—None.
General
corporate
class.
purposes.
North American Aviation, Inc
cumulative
Capital Stock
Homes,
Inc.,
June
preferred stock
non-voting
1948
8,
(par
Florida Power &
Light Co
Bonds
/: Kansas City Southern Ry
June 9,
non-
$100); 8,615 shares of
noon
a.m.
Bonds
1948
for
ture
10, 1948 V
each
Sierra
June
Montana-Dakota Utilities Co
Common
100
shares
/
tion notes.
(6/14-18)
stock.
Un-
;derwriters—Blyth & Co., Inc., and Merrill Lynch, Pierce,
Fenner & Beane, New York.
Price, by amendment. Pro¬
ceeds—To be used in expanding electric and gas utility
- property.
; _//
•
Motor
Truck
Co.,
Cleveland,
Ohio
,
,
Narragansett Electric Co.
(6/1)
bidding.
Probable bidders include:
Halsey,
Inc.; The First Boston Corp.; Kidder, Peabody & Co. arid Stone & Webster Securities Corp; (joint¬
ly); White, Weld & Co.; Lehman Brothers and Goldman
Sachs & Co. (jointly).
Proceeds—To reduce short-term
i loans and continue a construction program.
Bids—Bids
..for the purchase of the bonds will be received at the of¬
Stuart & Co.
fice of the President of the company, Room 512. 49 West-
;minster
St., Providence, R.
/June 1,
4
I.,
up
to
noon
(EDT),
on
Iron
New York State Electric & Gas Corp. (6/1)
April 30 filed 35,000 shares ($100 par) cumulative pre¬
ferred
stock.
Underwriters
Names
by competitive
Probable bidders include: Harriman Riplev &
Co.; Hemphill, Noyes & Co. and Drexel & Co. (jointly);
Kidder, Peabody & Co.; W. C. Langley & Co.; Lehman
/ Brothers and Glore, Forgan & Co. (jointly).
Proceeds
~-Tq be applied toward a construction program. Bids-?—
bidding.
Bids for the
the
4
purchase of the stock will be received by
at Room 2601, 61 Broadway, New York,
to noon (EDT), June 1.
company,
N. Y., up
iWth
American Aviation, Inc.
(6/3)
Underwriter—Morgan Stanley & Co., New York.
eepds—Proceeds will
go to
General Motors Corp.,
Proowner
/of;the shares./
•
Opekasit-Ohio, Inc., Hamilton, Ohio
May )3 (letter of notification) 4,692 shares ($5 par) Class
4 R common stock. Price, par. For working capital. No
underwriting.
4 *" • - *
'
I //
:
\
*
•
Pacific Western Oil Corp., Los Angeles
(
May 21 filed 450,327 Shares ($10i
par) capital;stock/ZUn-;
dertwriting—None.
Offering—To be offered by the own¬
er/J. Paul Getty, President of .the Company, from time
tpltime onjrie floor of the New York/Stock:.Exchange,
•Vjchf "to, specific persons, firms or ^corporations," in sales
outside the Exchange.
due
to
a
American
Gold
&
possible
changing present 750,-
(par $1), of
750,000 class A
outstanding, into
(par $1) and also create
of class B
on
capital stock
a
new
which
692,644
stock
common
issue of 750,000
shares
stock
common
(par $1). The Attorney General
of the United
States, who holds 77% of the presently
outstanding stock, has indicated, that he intends to sell
near future.
Shares held by the AttorGeneral will be converted into class B, in order to
distinguish between shares subject to restrictions as to
ownership and those which are not. Probable bidders
for government held
(535,000) shares: Glore, Forgan &
Co. and Lehman Brothers
(jointly); Blyth & Co., Inc.,
and Merrill Lynch,
Pierce, Fenner & Beane (jointly).4
revision
of
-
clude:
Due
1968.
the
•
Underwriting—Names to be de¬
by competitive bidding. Probable bidders in¬
& Co., Inc. and Kidder, Peabody: & Co.
Blyth
1956; balance for construction
Squankum
Feed
of
J.
(6/1)]
W.
Co. and Dick & Merle-Smith
Platinum
(jointly); Halsey, Stuart & Co. Inc.; The First Boston
Corp.
Proceeds-T-$14,000,000 will be applied to the
payment (exclusive of accrued interest) of 13A% notes
due
& Pacific RR.
1, 1958.
Probable bidders: Halsey, Stuart & Co.
Inc.; Salomon Bros. & Hutzler; Harris, Hall & Co.
(Inc.);
Ripley & Co., Inc. and Lehman Brothers
(jointly); L. F. Rothschild & Co. and Gregory &
Son,
Inc. (jointly); Phelps, Fenn &
Co.; Kidder, Peabody &
Co., N. Y.
(letter of notification) 22,000 shares of capital
Price, market (about $4.50). To be offered on
fund bonds.
office
.
purposes.
&
(jointly).
Chicago Rock Island & Pacific RR.
Bids for the purchase of
;
(6/10)
$4,590,000 equipment trust cer¬
tificates, dated July 1, 1948, due semi-annually Jan.
1,
1949-July 1, 1963, will be received up to 11:30 a.m»
(CDT) June 10, at office of compariy, Room
1136, La
Salle Street Station,
Chicago. Proceeds will be used
in
connection
with the purchase of
equipment to cost
Probable bidders: Halsey, Stuart & Co.
Inc.;
Salomon Bros. & Hutzler;
Harris,.Hall & Co. (Inc.); Harjriman Ripley & Co., and Lehman
Brothers
(jointly). •
•
Commonwealth Edison Co.
$5,733,220.
May 25
company
year to raise
said,
man,
is planning sale of mortgage bonds
additional funds, Charles
this
Freeman, Chair¬
stockholders meeting, Mr.
At
the; annual
Freeman estimated the
company would need
much
as
as
Supply Co., Inc.
Farmingdate, N, J.
May 24 (letter of notification) 1,000 shares $5.50 cumula¬
tive preferred stock (par $100). Price, par. Underwriter
—Fidelity Securities & Investment Co., Inc., Asbury
Park, N. J. Working capital.
$175,000,000 new capital for a construction program run¬
ning: through 1952. He saidL^Jt is likely that the
first
portion of the new funds required will be
obtained
through the sale of mortgage bonds. Halsey, Stuart &
Co. Inc. organized the
underwriting syndicate when
•
Stage Publications, Inc., New York
May 21 (letter of notification) 2,500 shares 41/fe% pre¬
ferred stock (par $50) and 10,000 shares common stock
(par 10c); Price—$50.20 per unit of one preferred and
The 1947 annuai
report states that company
two
shares.
common
•
^
Underwriting—None.
(New Jersey)
par)
no
capital stock.
par
value
com¬
Co., Ltd., at the
rate of three Standard shares for 20 International shares.
Underwriting—None. Purpose—To gain control of
national, a Canadian corporation.
Tube
Co.,
Inter¬
fered to Class B
common
in the ratto of
one
definite
no
underwriters:
plans
have
been
made.
per¬
stock,
Tradi¬
Paine, Webber, Jackson & Curtis
Corp.
shareholders of record June 10,
new stock for each three
Price—$3 per share.
Fort Industry Co.,
of 122,757 shares of Standard Tube stock,
expects
buy $250,000 of the new stock, with the purchase price
against the $250,000 loan previously made
by Fort Industry to Standard.
/ United Rayon Corp., New York City
March 29 filed 9,950'shares (no par) common
'
-
proportionate share of the company's output.
writing—None.
Proceeds—To provide capital
•
On
Under¬
for
8,000,000 founds of viscose staple fiber,
•
Upson Co., Lockport, N. Y< 4
May 24 (letter of notification) 250 common shares (par
Kuhn, Loeb & Co.; Halsey.
'
.
Michigan Bell Telephone Co.
May
25
requested permission from the
to issue $75,000,000 in bonds '
notes, held by the American Telephone
& Telegraph Co.
The proposed debentures would be
dated Oct. 15, 1948, and would mature in not more
than
40 years.
Interest rate would be determined by sale
company
competitive
Stuart &
& Co.
share. Underwriter—J. W. Gould
•
Co.
bidding.
Probable
bidders:
Halsey,:
Inc.; Morgan Stanley & Co.; Harris, Hall
(Inc.).
^
-
/
//
•
"
MUwaukee
Foundry Equipment Co.
May 24 reported that an early filing of 100,000 shares
of stock for the account, of selling
stockholders, with
Canton/Fitzgerald & Co. as underwriters;
,
-
"
'
■Jfr}*!* tflf.
^
to retire demand
at
.
Penn Allen Broadcasting Co., Allentown. Pa.
//&
Co., New York. Proceeds to selling stockholder.
May 13 (letter of notification) 12,000 shares of class A
common
•
Van Norman Co., Springfield,
(par $10) and 2,000 shares of common stock
Mass////
(par $10). Underwriter—Converse, Pokorny & Co., Al- / May-24 (letter of notification) 10,000 shares ($2.50 par)
\lentown,' Pa; Offering—In units of six class A/shares / common stock, to be delivered along with $30,000 cash
and one. common, at $70 per unit. Building television ; to purchase the Fitchburg Grinding Machine Corp. No
', station, etc. '•'///:
/: underwriting.
■■ /'////////%//;//
(4
Inc.#
Michigan P. S. Commission
the
purchase and operation of a plant with an annual pro¬
ductive capacity of 4,000,000 pounds of viscose filament
-
Probable bidders:
Stuart & Co.
Price—$1,000 each.Each share is to be accompanied by
a "production warrant"
permitting the holder to buy a
*
,
f
/■'••
The 1947 annual report states that
company contemplates
interest.
stock.
*
<
Lexington Telephone Co.
,
to be credited
per
/
•
Long Island RR.
Ma.v 24 reported company probably will be in the market
during the near future with a*new bond issue
designed
to provide for retirement of its
$32,000,000 refunding
mortgage ,4% bonds due March 1, 1949. New
offering
will be for
approximately $30,000,000 and will be guar¬
anteed ;by /Pennsylvania RR. as to both
principal and
share of
held.
Price—$16.50
,
•
liquidating note indebtedness of $2,000,000 through perfinancing, consisting of sale of bonds and
stock,
as yet no definite
plans have been made.
Financing
may be made privately.
owner
$10).
tional
yet
but
14 filed 136,667 shares of Class B common stock
(par $1).
Underwriting—None.
Offering — To be of¬
rayon and
as
manent
Detroit
May
to
but
^
*
Oil Co.
stock of International Petroleum
Standard
*
contemplates
Kansas City Southern Ry. (6/8)
May 6 reported company expects soon to
offer, at competitive bidding, $14,000,000 of new first
mortgage bonds
to refund a like amount of
promissory notes of Louisiana
& Arkansas Ry.
Probable bidders: Halsey, Stuart &
Co. Inc.; The First Boston
Corp.; White, Weld & Co.
Expected June 8.
V
11 filed 1,265,255 shares ($25
Offering—To be offered holders of
'
Telephone Co.
and Stone & Webster Securities
May
mon
Associated
Lumber
Co., Winona, Minn.
May 20 (letter of notification) 2,000 shares ($100 par) of
common
stock.
Price, par.
For working capital.
No
underwriting.
Standard
Indiana
liquidating $1,800,000 note indebtedness through
manent financing,
consisting of bonds and capital
\
y*;
Standard
company marketed the last bond issue in 1944.
•
Corporate
-
shares
of
Harriman
Southern Natural Gas Co., Birmingham, Ala.
May 19 filed $28,000,000 first mortgage pipe line sinking
shares
/Mayf 14 filed 1,000,061 shares of capital stock (par $1).
-•
shares
June
19
purposes.
*
National
Works, San Diego, Calif.
May 17 (letter of notification) 30,000 shares of 6% cumu1 lative preferred stock, non-assessable. Price—$10. For
4 general corporate purposes, indebtedness, and working
/ capital. No underwriting.
•
Halsey, Stuart & Co.
New York Stock Exchange through G. H. Walker & Co.
Proceeds to General Development Co.
•
March 30 filed $10,000,000 Series B first mortgage bonds,
due 1978. Underwriter—To be determined under com¬
.
8/.American Bosch.Corp."
noon (CDT) June 1,
Severs, Vice-President, Room 744,
Union Station Bldg.,
Chicago, for the purchase of $7,120,000 equipment trust
certificates, series "DD."
Certifi¬
cates will mature $356,000
semi-annually Dec. 1, 1948-
asked California P. U.
60-day extension of time in which to
securities
South
termined
Equipment
preferred stock, to be offered at par, and 300 shares (no
common stock.
For operating capital.
No under.writing.
s;r
>
t
~-
petitive
•
stock.
par)
.
the
a
May
No underwriting.
common
Mil.
Prospective Offerings
June 2 stockholders will vote
at
On May 15 company
land, Ore.
Co.
$25.
working capital./
Chicago Milwaukee St. Paul
Company will receive bids up to
Co.
amount of bonds to be issued.
//May 18 .(letter of notification) 1,500 shares ($100 par)
,
Power
To be offered to officers, directors and stockholders only.
To buy new building, parking lot and facilities in Port¬
•
Rights expire May 28.
Probable bidders include:
issue
j
held.
J
Pacific
Commission for
Utilities
at
•
Chicago & Eastern Illinois RR.
«
May 24 reported in market for sale of $2,460,000
equip¬
ment trust certificates. Probable bidders:
Halsey, Stuart
& Co. Inc.; Salomon Bros. &
Hutzler; Harris, Hall & Cp.
(Inc.); Harriman Ripley & Co., and Lehman Brothers
(jointly).
Proceeds—Construction costs and the payment of $650,000 to National Shawmut Bank of Boston for construc¬
Kansas City Power & Light Co.—Bonds and Pref.
Montana-Dakota
(6/1) /.
Inc.; Blyth & Co., Inc.; Stone & Webster Securities Corp.
14, 1948
1/May 18 filed 150,000 shares ($5 par)
c.ass.
March 26 filed $3,500,000 first mortgage bonds, due 1978.
Underwriters—To be determined by competitive bid¬
-Equip. Trust Ctfs.
ding.
1
-
offered
Proceeds—For repayment of two notes and general cor¬
(EDT)—Equip. Trust Ctfs.
(CDT)
for each
$2,000,000 15-year 6% convertible sink¬
ing fund debentures, due 1963. Underwriter—Floyd D.
Cerf Co., Inc.
Price—95 (flat).
Offering—Offered to
stockholders of record May 4 on basis of one $100 deben¬
Chicago Rock Island & Pacific RR.
/// 11:30
par
24 filed
porate purposes.
June
Price,
General corporate purposes.
Segal Lock & Hardware Co., Inc.
.
March
Consolidated Edison Co. of N. Y., Inc._-Debentures
6 Pennsylvania RR.,
(par 10c).
common
Underwriting—None.
—Bonds
be
ney
class A voting common (par 10c); 23,078 shares of class B
/, Equitable Gas Co.-.-,-^*----—
to
this stock in the
....
Reliance
Philadelphia/
May 21 (letter of notification) 1,495 shares of 6%
1948
:t;;
000
stock
A
stock
common
;
.
Reliance
20
par)
H. L.
—
(letter of notification) $300,000 mortgage par¬
ticipation certificates.Price/par." Underwrttinff-^None.
Expansion, etc.
.////'
:pW'rl
•
June 3,
Underwriter
May-20
each
——Preferred
For
ri'l
V
May
California Electric Power Co,
Price—25 cents.
stock.
Hughes and Co.," Denver.r .For, working capital.
•
June 2,
10:30
common
($20
/ ////////;/ Underwriter—Prescott, Wright, Snider Co.; Kansas City,
Mo.
May 11 (letter of notification) 400,000 shares (100 par) /
Chicago Milwaukee St. Paul &
Pacific RR., 11:30 a.m. (CDT)—Equip. Trust Ctfs.
2,605
shares
underwriting;-^;/.r-'/../v'';^/.:/>
>
.
(Continued
on page
46)
\
-
?»:\:
•
46:
(2354)
Thursday, May 2?, 19.48
■
-
(Continued ftdtti page 49)
New >■'f*6Wer& Light Co.
•
•
:• r;;:
Reported
May I&* cofti^ny asked SEC tiejhrnigsion td- • issue and
sell $6,000,001) of first mortgage bonds due 1078.
3Pfoceeds
Will
used
to
finance
Probable bidders:
program.
The
be
First
Boston
Corp.
company's
construction
Halsey, Stuart & Co. Inc.;
and
RacificCur &
Kidder,
common
Foundry Co.
considering the issuance of ^additional
preferred stock, the proceeds to bemused) to
or
Pacific
holders at $100 a share.
•
sued to
April 27 stockholders authorized the execution at
time
any
Or. before
'
probably
on
each
common
six
Subscription fights Will be is¬
shareholders of record
1948, one right being issued for
June
15,
used by company to repay
tures for construction and extension of its
facilities
at
sioned
for
interest rate
writers:
not to
4%.
exceed
Prob&ble under¬
Hay den,Stone & Co.; Halsey, Stuart & Co. Inc.
General Motors Grants
latef adjusted
wages
11c per hour, to be
Of First Cleveland
bjr changes in cdst of living index.
(SpeCldi to
KaSe
First
immediate rise of 110 per hour, to be
demand
Co.
May 19 stockholders approved proposals to increase \ to
$100,000,000 the amount of the first and refunding mort¬
gage bonds which may be at any one time
outstanding;
be
also increased the authorized common stock from
4,000,000 shares to 6,000,000 shares hhd reclassified the com¬
occa¬
telephone
James Kase Joins Staff
garding wages during the riext two yeafs, whereby the workers are
an
will
,
,
Virginia Electric & Power
-
mon
stock
from
shares
without
par
value
to
$10
par
Value.
It whs aftn'outtced oti May 25, that General Motors Corporation
and the United Auto Workers CIO have come to an
agreement -te*
to receive
Funds
advances covering expendi¬
public
heavy
shares.
•
service.
Wage Increase
Strike averted by agreement to raise
the
by
preferred
or
Street
(jointly).;.
and preferred
mortgage/the initial Series to be limited to $12,000,000 ;
an
com¬
to sell 601,262 corhmbn Shares of.stock: to share-'
common
••:&eb^H/:.IsabSt^:YiC#i5fesidC^
Room 1811
Station, Philadelphia, for the-purchase of$11,055,000 equipment trust ceftificatesL series U,.to [be
dated July 1, 1948, dM/td
hiatUfd;!$^,00^ai^Uallyi
July 1, 1949-1963.
Probable bidders: Halsey, Stuart &
Co. Inc.;
The First Boston Corp.; Salomon Bros. 1&
Hutzler; Harriman Ripley & Co., Inc. and Lehman Bros,
Broad
Aug. 1, 1951 (when company's $10,985,000 first mortgage 4% bonds mature) a new first
on
at office
'
.
Telephone & Telegraph Co.
Peabody & Co.
(jointly); Lehman Brothers; Harriman Ripley & Co.;
W. C. Langley & Co, and Glofe, Fofgan & Co/(jointly).
New York Dock Co.
/
,
May 18 the California P. U. Commission authorized
pany
Pennsylvania RR. (6/9)
T*
Company will receive bids tip td noon. (EDT) June 9
company
increase working capital.
•
• i
Tfia FiisrAfrciAfc
Schram Again Attacks
Corp.
GKAtitticLi,
Cleveland,ohio^ james
has
75% Margin
'
In betrdit address, President of the New York Stock
Exchange!
says it is hampering functions of capital market.
Suggests reJ
qtiired margin be lowered to 50%.
i
>
become associated .With
Reiterating his
previous protests against the Federal Reserve
ClevelandJ€0$p;, National Board
rulC, requiring^^ -cash: margin- of 75%* bh -!tdck eXtharfge
,.
further adjusted
.
transactioris,. Emil Schram, President of the New Yoi'k Stdck
"Exciiange^itold, the' Spring < Meeting? of the Board of CJovernors fof
.quarterly in accordance with thi^
Bureau of Labor's cost-of-living pounds made to sell in the $1,000
.index.
class. The convertible top will be
In a statement issued by Gen¬ all-steel. The Playboy is Intended
eral'Motors Corp. announcing the for Sale as d low-priced auto and
j
agreement,
the
wage
formula also is expected to appeal to per¬
'Taiopted is explained as follows: sons interested in acquiring** a
"Under; this formula the imme¬ Companion or second car..
*
v
diate increase for all employes
The- Wat* Assets ^Administration
-.eligible will be 11 cents per hour, has accepted the company's bid
of which 3 cents represents the for the plant, which/the IMn
annual
presently occupies at Tondwanda,
h^roy^^
8 .cents a cost-of-living adjust¬ New York.
Manufacturing area of
ment.
The
improvement factor the plant is about; 414,000 square
c&ils for an additional 3 cents per feet. Estimated
capacity ;of the
hour which will be added to the
plant, when equipped according to
base pay of all eligible' employes
jjfc James Kase
Company planS,. will be 100,000
starting Mky 29, 1949.
cars a year on a one-shift basjs,
City
Brink
Building, members of
"It is hoped that the cost of with two shifts in the
press room.
the Cleveland Stock Exchange.
living will come down. It has
More than 70 % of the total cost
Mr. Kase was formerly resident
been agreed that only 5 .cents of of
production, the company esti¬ manager for J. A. White & Co.
the 8 cents will be subject to re¬
mates, will be represented by the Prior thereto he was with Presduction so that if a sufficient de¬ cost of
fabricated mparts and equip¬ cott & Cd* and headed the invest¬
cline in cost of living occurs the ment
purchased
from
outside ment firm of Johnson, Kase & Co.
workmen will immediately enjoy
sources.
The company plans to
a better standard of living.
Such produce the basic body and frame
an improvement would be in ad¬
and related fittings and parts such
dition to the 3 cents an hour an¬ as
doors, trim, hood, rear lid, top*
nual
improvement underwritten
fencers, bumpers, gas tank, and
by the company.
miscellaneous bracket! and parts.
"The first quarterly cost Of
liy-r It plans to purchase from outside
Goldman, Sachs $ Co. abet Leh¬
ing readjustment will be made in manufacturers
necessary standard man Brothers head & group 6f 111
the first bay period starting after
operating paris Such as engine underwriters which is offering
Sept. 1, 1948, and will be based on and
engine accessories (starter, publicly
today $30,000,000 Na¬
the ^uly consumers price index
generator, distributor, carburetor, tional Dairy Products Corp. 3%
published by the Federal Bureau
etc.) clutch, transmission, univer¬ debehtutea due 1970 at 10^% atid
pf Labor Statistics, which is ex¬ sal joints, drive shaft and rear accrued interest.1
pected to be released late in Au¬
axle, brakes and brake drums, fit—
Net proceeds will be Used in
gust. V/
/ tings and
linings, wheels, tires, cemhectidn with the corporation's
*'As: an example of how this
electric systems and lights, in*
program of replacements and ad¬
'plan works, if an employe under terior trim and
instruments, radi* ditions to plan ahd equipment*
this agreement is now
earning a
tor, battery,
steering
column, Tentative plans now under con¬
$1.50" per hour, his wages will be
gear
shift, and similar and re¬ sideration would require the ex¬
increased immediately by 11 cents
lated items.
penditure by subsidiaries of the
per hour to $1.61 per .hour, of
As of March 31, 1948 there were
corporation of approximately $00,which 8 cents is cost-of-living ad¬
t h
e
Associa¬
tion
of. Stock
risk-j while the other/is bound to
Exchange
Firms in De-
be
'
?
concentrated."
-
Hel hlso ie- ;
the;^Chroiiicle"[ of May 13) tHaf
Dttghly linsound"
i
n
d ic
"lack
a
and
a
t ed
of
tne
Officers Are ^ Elected by1
capital
La Salle Street Wdmeh
He
as
CHICAGO, ILL.—At the annual
meeting of La Salle "Street Women
"
Cmil
Schram
held
the
May
13, at" the
Cordon
ficers were elected for the
"For .the life of me," Mr. Schram
stated, "I cannot understand why
year
isn't
better
practice
thousands
of
to
have
in
fact,
maybe
several
hundred
thousands, owing the banks a $1
billion, secured by $2 billion Of
Dairy Products Debs.
on
Club, Chicago, the fdilowifig of¬
minimum margin requirement.
several
common
stock
or
persons,
ownership
in
f.merican
industry.
Instead,from
inustry is driven
to borrow'
'fiscal
President, Miss Co-
1948-49:
lina
Clow
with
Jiehcke} Gbfeh &
cording
Zern,
Nelson
-
Buck;
.Re--
Gracd
> Corre-f
DorothyJ
Petrie,' Haffifhhrt, Ripley & Co.^
holz, -Ketchiaiitt
distributed
L.
Miss
sponding Secretary, Mr&
one
have
Melchior
blossberg;
Secretary,
Ihe.;
you
Dr.
Palyi; Vice-President, Miss Edith
insurance companies or banks. In
case
fu.
un-
Board.
it
edo-
.
suggested that
50%- be sub¬
Goldman, Sachs Offers
/
'
a
markets by the
stituted
•period of stability -exists in
nomic conditions.
de r ! t aridibg'*' -f
ot
•
iterated his belief (as'recorded in
"thor-/
w^ s
|
Schram
also
advocated, a
reduction of thd capital galhs thx
troit, Mich] on
May 20 fhatjthe,
regulation ^
'
more
Mr.
^ehSuref/^k LiitUeh
Nongkrd,
i
1
Observations
.
in
justment and 3 cents the begin¬
ning of the annual improvement
effect
approximately
220
car
distribution franchises granted by
the company 10 dealers and ap¬
factor."
proximately
15
to
distributors.
The company will attempt to sell
between 800 and 900 dealer fran¬
chises.
Tellier&Go. Offers
Playboy Motor Gar Stk.
Outstanding
Tellier & Co. is Offering today
as a speculation, 20,000,000 shares
,
of
the
company
this
financing will consist of 25,-
000,000
of common stock of Playboy Mo¬
capitalization
shares
upon
of
completion of
common
stock.
Car Corp.
The price to the
public is $1 per share.
Proceeds of the offering are to
be used by the company for pay¬
Russell Nominated fo
the
plant; rearrang¬
ing and reconditioning the plant;
on
equipment
(press
room,
Municipal Forum
Of New York
steam
Paris Scott Russell, Jr., Glore,
Forgan & Co.,
,
plant,. welding equipment, dies,
tools, etc.); outside tooling, prod¬
has been nom¬
and production engineering;
development, pilot operation, preproduction and "startiiig-up" ex¬
uct
pense, and Working capital.
j
Production of Playboy bars to
■
.
demonstration
'
models.
The
inated for the
presidency of
Municipal
the
.
date, ha! been limited to pilot
or
cor¬
Forum of New
York. Other
nominations
were
Robert
poration Was formed in 1946 to T.
V e i t,
develop, produce, distribute and Shields & Co.,
sell automobiles.
As of May 4, for Vice-Pres¬
1948 the company had completed
ident; George
41 pilot cars which are
being used T. Ragsdale
for test and exhibition purposes,
and Rudolph
y
Initially only one model is planvned*—« :4-cylinder, 2-dOor, 1-seat,
3-passenger,
Convertible
coupe
with
a
overall
90-inch wheel base and
weight
of
about
an
2,035
The
new
titled to
a
the
days of San Francisco's compromising, it is provided that an amend¬
adopted by a two-thirds vote of the General Assembly, thbn
ratified by two-thirds of the UN
members, and, above all, subject to
veto by an.y of the Big Five nations in the
Security Council.: As an
ment be
1048
years
debentures will be
additional cause of UN
insufficiency, it must be remembered that the
General Assembly is merely a debating society with no
power other
than to make recommendations which the individual members are
free to adopt or not as they please, And in many
ways the UN is
intrinsically less effective than was rthe old League of Nations.- This
en¬
sinking fund providing
2%
nor
more
than 4% of the
debentures for each of the years
has beCh evidenced in the continued
the latest impairment
1950 through 1954; not loss than
3% nor more than 6% for each
the
of
and
years
not
less
8%
I960
1955
through
1959;
than
4%
nor
more
the
years
for
each
of
■
tJN, are the difficulties blocking the
possible^
amending of the original Chartef. Initially iriSferted^^^dtitihg the trying
for the retirement of not less than
paralysis of the SecuHty CbUftcil,
of which is extehded to the hth degree ift the
series of Palestine crises.
.
The
Palestine
The latest arid most strikihg
is
.
-b
Phase
.;••• -y] |f
example of^ the UN's "fiegativjzirig'V
en^bddied iri the Palestine events. This writer does ftpt profess
know the degree to which Mr. Truman's volatile behaviof Was'
motivated by domestic pdlitical eonsideratiohs, bqt it should be
fe&l%
the striking fund at pricap ized thet home politics in the vaHdtts^^ 'democratld^^ Cotithtries 'iritfst!
through 1969.
They are
to
re¬
deemable otherwise than by oper¬
ation of
Head
ment of the initial and second in¬
stalments
during
through 1950.
than
tor
:
000,000
(Continued from page 5)^; j
this veering from the
scaled
from
the, last
104% %
year.
to
100%
always inject an additional obstacle to smooth-working international
cooperation. > In any event, rwhen the President saw' frHo fecdgriize
the Jewish provisional government twenty" minutes aftet
the iuah-*;
date's end, and after his previous double-reversal on partition arid'the
"temporary trusteeship" scheme, the United States was consequently
placed in the position of making a gesture of mockery at the Security
Council. Andr of equal importance, unaccompanied by the
definition
Of frontiers, our tecognition pronouncement incited both sides to
making waffate' inevitable- "ifhe condition/In which the. yvorl^|inds
itself regarding Palestine is made up of the alternatives 6f
(IX mili-V
tary occupation by the United States or Soviet Russia, (2) continuing
Qt recurrent fighting between the Jews arid: AHbS, Or (0). a settle-^
ment made directly or indirectly through bi-national
agreement
between Britain and the United States (despite
Secretary Marshall's
ltihcheon conference at the Waldorf-Astoria Hotetbm Ti^sday),.
Aiiy
x3f thesd eventualities, of: ooUfseij^^
yepresent' & V&Ff l&f
frOfii the
peaceful settlement of disputes through an international Organization!
in
If redeemed by
the sinking fund,
operation of
prices are scaled from 102% be¬
ginning in 1950 to 100% in the
last
year.
National Dairy Products Corp.
was
1923.
incorporated in Delaware in
Through its operating sub¬
sidiaries it buys, manufactures or
distributes diversi¬
processes, and
fied^dines ',bf 'food product^
In
1947, consolidated net sale!, Con¬
sisted 30% of fluid milk and
22%, cheese; , 17%, ice
8%, butter; afid ihd re¬
maining 23 % a wide variety^ of
fhiscbllaheoul
k,
cream
and; ico creath are dis¬
tributed largely east of the Mis*
sissippi River. Kraft Foods Com*
cream;
,
.
cream;
.1 Ithe'solution for. this situation is, of course, the $64] ■dlollai'ques¬
tion,'which is. over-large for this, spacer But, irrespective/pf whether
Harper
•tody's; Worlel is ready for am impartial legal body to adminls^it- the
were named
laW
Of r nationsvetd-lessly land:£
overcoming;; the^ Sovefeignty
Paris S. Russell, Jf-.
p&riy, ' a1 *subsidiary? distributed
tot fe-elec¬
bbstacle^it is an ail*important requisite for the citizenry realistically
tion as Secre/
Cheese, salad dressings, ttiarga- to Comprehend the present
sor^ statusrof international organization,
t&fy and Treasurer respectively. riue; and other food products, - - including-'-thej- democracies' forced contribution thereto.
J;
,
Volume 167
Number 4702
THE
COMMERCIAL &
FINANCIAL-CHRONICLE
(2355)
47
'
Hnaiic& a plant and equipment Re¬
placement program far the com¬
pany and its
I Recommendations I
Union Electric of Missouri
•
.
Competition
for
Union
souri's
4;(Continued from page 8)
Co., 61 Broadway, New York
rath^f keeh
was
Electric
Co.
of
Mis¬
Also available is
analysis of
an
Miles Shoes, Inc.
sought
groups
6,
120
Broadway,
at
the
close
of
business
The pendulum in the
ber
bidding for
took a full swing back
toward, debt securities, this week/
after a fortnight in which
equities
316%
had held the
indicated
center
of
the
stage
i
Largest single issue slated for
public offering was that of the
National Dairy Products Corp;,
23-year
debentures,
of
100.75
it
absorption judging by the
inquiry
^ almost
since
weeks-ago*
chaser
Inquiry
for
Only
the
S.
son
falls
complete
have
short
of
i which
set
the
6f
has
3%
;
rating
which the
lilghv
portfolio.
for
men.
bit pf diversification.
Melven
(Special
contem¬
r-
Corp.—Data—
&
Co.,
LOS
to
The
125
fbeeit
of
some
a
done
necessary
the
borrowing
the close of business
used for. gen-;
era! corporate purposes, chief
ly to
been
ANGELES,
CALIF.
to
of
ARBITRAGE TRADER
Familiar4 with listed and
listed
Canadian
Write-,
Box
giving
full
details,
-Commercial
K
527,
Chronicle, 25
i Places New Ydrk, 8, * s
Financial
t
Un¬
State
.securities.
Public
Service
Commission
for authority to float a* hew
to
&
issue.
This* would Consist of
>
000
of debentures
$75,000**
with
a
turity of not less than 40
.
•-*
•
"
;
The
Financial
POWER
preach the foregoing figure around
Customers
two
>Main Office.
: New
Box
N
Exchange
Brokers
for
Stock
&
LIGHT
Oct.
15
for the
next,
new
the
date
Experienced
trader
in
unlisted
available.
Also
Servicing Wires.
share
the
on
Power
May
&
26,
$5
Preferred
Stock
Light
Company
were
1948,
June 8.
of
for
payment
record
Park
experienced
Box W 518,
& Financial Chronicle,
Place, New York 8, N. Y.
i
5
Natural,
or
Independent Dealer
It
}
V
'■
Experienced
man,
:
active
Oxperf
full'
-
to
in
Street
on
references.
results
'**
&
a
percentage
W.
inter¬
securities
drawing
account
basis.
Highest
profitable
Box
Financial
New
C
519,
Chronicle,
York
8,
to
refinance
61
amount of 2s
now
With
(Special
The
Financial
at
on
of
of
the
1,
close
Rice
Herrick,
has
joined
Waddell
&
Third National Bank
the
staff
25
Park
N. Y.; ;;
be.
Secretary
to
The
*
Dowell
&
Co.,
Buhl
A. Mc¬
Building,
members of the Detroit Stock Ex¬
change,
have
added
Storch to their staff.- *
•
Helen
A.r
:
A dividend of 30c per share has
declared, payable June 30,
1948, to stockholders of record at
the closS of business June 10,1948.
Broadway
J. B. McGEE
Treasurer.
.
May 18, 1948
COMMERCIAL SOLVENTS
££i££2L£4l
half cents
(37Vac)
Pre¬
common
on
stock
of
on-
June
payable
on
1948,
Dividend Notice
Corporation,
per
American
to¬
the outstanding
this
30,
1948,
The Board of Directors has this date
declared
to
(25^)
stockholders of record at the close of
to
business
business
on
LOUISIANA
one-
share has
per
day been declared
$1.25
8HREVEPORT,
A dividend of thirty-seven and
June 9, 1948.
a
per
of the
dividend of twenty-five cents
share
on
the Common Stock
Corporation, payable July 1,
1948, to stockholders of record at the
A. R. BERGEN,
close of business
on
June 10, 1948.
J. H. Misacls,
May 26,1948
Secretary
Broadway, New York
Company, payable June
19,
1948,
to
stockholders of record at the
close of business June 4, 1948.
•
OTIS
Electric
Power if Light
common
ELEVATOR
COMPANY
Corporation
Preferred
E. I. du Pont de Nemours
NOTICE
A
The Board of Directors has this
day
declared
per
share
& Company
a
Wilmington, Delaware: May 17, 1948
The
Board
of
Directors has
declared this
dividend
a
on
of
$1.50
the $6 Preferred Stock and
dividend of $1.75
per
$7 Preferred Stock
share
on
the
of this Corpora*
tion, payable July 1, 1948, to stock*
day
regular quarterly dividends of $1.12
a share
on the
outstanding Preferred Stock—$4.50 Series
and 87
a share on the
outstanding Preferred
Stock—$3.50 Series, both payable July 24, 1948,
to stockholders of record at the close of
business
holders of record
ness
the close of busi*
at
the close of business
May 26, 1948
Board
of
Directors
30, 1948,
record
85lh DIVIDEND
ness
an
of
Directors
twenty-five
has
cents
declared
(25c)
extra dividend of fifteen
New York, May 19,1948.
of
a
EDISON
June
15,
1948
t^eco^d June ;1, 1948.
g.
May 18,
1948'
"*
ttiuca::
to
CALIFORNIA
COMPANY
the
its
payable June
close of busi¬
June 10, 1948.
M. C.
cents
stockholders
on
stockholders of
to
at
share
Roop, Secretary
Baltimore 3, Md.
;May 20,! 1948
Preferred Dividends
quar¬
a
per
(15c) per share, less 2.75 per cent Wisconsin
privilege dividend tax, on the capital stock
(without par value)
of the Corporation,
payable
per
capital stock,
CORPORATION
of
($.25)
cents
BRICGS & STRATTON
Board
June 7,
The Davison Chemical Cor¬
(Briggs&Stratton)
The Board of Directors has
authorized
thepaymentof the
following quarterly dividends:
37 i cents per share on Orig¬
inal Preferred Stock, payable
June 30,1948, to stockholders
of record on June 5,1948.
27
centsper share on Cumu¬
4.32%
Series, payable on June 30,
1948, to stockholders of rec¬
lative Preferred Stock,
ord
,;
on
June~5,1948.
of
o. v.
Showers
i,':
.
V
JtEQNER, Secretary
\*
■
i.:
'
<»
•
•
•'
THE
DAVISON
CHEM
per
C. A. Sanfobd, Treasurer
Treasurer.
SOUTHERN
dividend
on
COPELAND, Secretary
The
198
1948.
'
L. duP.
share and
No.
share on the Preferred Stock has
been declared payable June 21,
1948, to stockholders of record at
H. F. Sanders,
July 9, 1948; also $2.00 a share, as the second
interim dividend for 1948, on the
outstanding
Common Stock, payable June 14,
1948, to stock¬
holders of record at the close of
business on
May 24, 1948. :>•'
Dividend
quarterly dividend of $1.50
Checks will fie mailed.
June 10, 1948.
on
of
Chronicle)
the
been
hjew York 6. N. Y.
pet share on the Common Stock of the
Reed, Inc.,
Building.
Financial
on
May 25, 1948
The
(Special
share
Tennessee
Corporation
MNNCSKI CORPORATION
81
terly dividend of Twenty-five
Joins G. A. McDowell Co.
per
.
FLEMING, Secretory.
DIVIDEND No. 54
the
of
75c
Ex¬
declared
July
of
close of business May 28,1948.
*
RICHARD T.
.
SPRINGFIELD, MASS.—George
W.
tional dividend
15,
poration has declared
Chronicle)
SIMPSON, Treasurer.
The Board of Directors has declared a dividend of 50 cents per share and an addi¬
Allied Chemical & Dye Corporation
outstanding.
Herrick, Waddell
to
A.
York, N. Y„ May 20, 1948.
de-
the. Company Will not
has declared quarterly dividend No. 109
of One Dollar and Fifty Cents ($1.50)
similar
a
New
Allied Chemical & Dye Corporation
new facili¬
DETROIT, MICH.—Geo.
Commercial
been
Hervey J. Osborn,
Moving . under
the
Holding
Company Act, the .firm also seeks
to sell $11,550,000 of
2Vz% serial
notes
this
1948. The stock transfer books
JACK, Secretary and Treasurer.
ties.
with
professional,
Unusually
nec-
essary
registration
with
the
SEC. Proceeds would meet notes
incurred in financing construc-
using
guaranteed.
Write
Place,
;
connections,
handle
to
Co.
**
stockholders of record at the
of business on June
of
bond
and
person
Gas
maturity and has filed the
operator,
analyst,
employing
operations
and
and
contact
time,
and
angles,
tax
Wall
wishes
ested
•
trader
securities
•
important
good
stock
has
W. C. KING, Secretary
plans
to
issue
$28,000,000 of
sinking fund bonds of 20 years
.{tion and for further
Large Private Investor
share
May 26, 1948.
issue.
Southern
i
To A
a
the capital stock of this
on
DIVIDEND
Securities
DIVIDEND
of
One
Dollar
share on the Common Stock of
Company has been declared payable at
the Treasurer's
Office, No. 165 Broadway, New
York 6, N. Y., on
Monday, June 21, 1948, to
stockholders of record at three o'clock P.
M.,
on
Tuesday, June 1, 1948. The stock transfer
books will not be closed for the
payment of
this dividend.
v-.v --..
•
'
per
Secretary.
projected
are
contemplating widespread ex¬
pansion of their carrying and dis¬
tributing facilities.
-ii*
1948.
D.
Spurred by the enormous
growth in demand for their prod¬
uct, natural gas pipe line firms
Commercial
25
.
:
TRADER
122
QUARTERLY
($1.00)
Company, payable July 1, 1948,
PREFERRED STOCK DIVIDEND
Pipe Line Financing
SITUATIONS WANTED
DIVIDEND NO. 130
A;>•,
CENTS
COMPANY
dividend of $1.50 per share
ferred Stock ($6) and ^dividend
•
York 8, N. Y.
.V-
BBSBBSBBBBSBBBSBBBBeBBB
Chronicle)
A
notes
520, Commercial
1 House
Stock
DIVIDEND NO.
A
capital stock, payable Juno
15, 1948, to stockholders of record at the
clared
to
Two Rector Street, New
York, N. Y.
:v
would
Financial Chronicle, 25 Park Place,
Established
jV
Company's
close
,
AMERICAN
ma¬
.held;; by v American Telephone, &
Telegraph Co., (parent). It is ^stihjajted; fhat such accriials will
Old
9-
SOUTHERN PACIFIC COMPANY
Corporation
rate to be set by
the bidders at the time. of sale*
By
*
years,
■>-6 Proceeds,: it was; statedr
be used to retire demand
.
J.
company
—
j. the interest
WANTED
at
International Salt
Co.
the- Detroit
stockholders
Park
May 26, 1948.
TEXAS GULF SULPHUR COMPANY
DIVIDEND NOTICES
shown
taking is Michigan Bell Telephone
Co., which has applied to the
por
the Com-
A dividend of SEVENTY-FIVE
change.
Latest to proj ect such an under-?
(25<J)
on
*
DETROIT, MICH. — Frank C.
Pundt is with Charles A/ Parcells
&, Co., P6nobs6ot Building, mem¬
advance of prospective issue dates.
WANTED
on
June 3, 1948. Checks
on
May 24,1948
.
Co.
Chronicle)
(Special
before, believe in
planning their financing well in
HELP WANTED
cents
Stock of the
Corporation, to stockholder#
of record at the close of
business
tnon
.
•With Charles A. Parcells
Bell System ; companies, as has
r
the Com¬
on
Secretary-Treasurer
Looking;;Well Ahead
.
share
per
Will be mailed.
"
Rroceedsvwili be
cents
of the
Company, payable
1948, to shareholders of record
closed.
be bers
may
this year.
-
dividend of Twenty-five
Cedar
Financial
Walters Securities
its program, and despite its strong
cash position, it was indicated that
issuer
enjoys and by the opportunity
> afforded
Royalty
With Gross, Rogers &
.Thfe big Chicago utility plans to
spend upward of $300 million, oh
:
•
consideration ' of- the
12,
memorandum—Brailsford
Co., 208 South La Salle Street,
Chicago' 4, 111.
lion:
this:
fact appeared more than1 offset"
.credit
Stock
&
to increase
projected borrowing to $175 miU
institutions;
for v themselves,
mon
June
quarterly
a
Webster Chicago
Corporation—
Co. calculated that its financ¬
new construction
COMPANY
meeting held today, declared
a
*
to riiaturityv v
bit
a
at
plated through 1952 would, run Paul C.
Buetow has joined the
around $100 millions.
staff of Gross,
Rogers & Co., 458
But,, at>,theannual theetirig tni$
South Spring
Street, members of
Week,. Charles Y. Freeman, Chair-* the Los
Angeles Stock Exchange.
man, informed stockholders that
Ho was previously with William
plans have, been revised so that it
Though the calculated return
i;tninimum
R.
c
a*
ing for
indicatedyieid
an
CONSOLIDATION
COAL
corporation made
debentures
.:
Dividend No. 9
A
share will be paid
July 15, 1948
Street, New York 6, N. Y.
short time ago when the
public its an.nual report, Commonwealth Edi¬
pre-
experienced
:
1948.
*
Corporation
Charles e. Beachley,
Toklan
Raising the Ante
1
around 3.88
.
Goodbody & Co., 115
Broadway, New York 6, N. Y*
pro¬
reoffering at a price
return the buyer a
required
Wichita-River Oil
'
June 30, 1948.
Joseph L. Maktin, Treasurer-
dividend of 50
Tidelands Oil Corporation—Cir¬
cular
bid
—
rate and
1,
The Board of Directors of
Current
negotiated Undertaking,, the
issue carries a 3% coupon and a
price tag of 102, giving the pur?
'
be
placement,
placed in registration two
were
,
Co., 52 William Street, New York
5, N. Y.
.
offering
,!.by
to
3%
June
on
&
Shepard Niles Crane & Hoist
Corp.—Resume—J. Roy Prosser &
was
were
was
would
the market today,
issue, it was expected in
dealer circles, would find
quick;
^
a
' y
Y.
PITTSBURGH
in¬
group
N.
CHEROUNY, Secretary.
a
as
reported substantial although
expected
several
days
was.
Dueon
;;f
bidders
yield of around* 2.95 %.
due
this
for
ceeded with
involving the flotation of $30,000,of
num¬
issue
The-successful
100.2799
v
000
that
—Loewi
shooting for a reoffering basis
of just under 3%.
capital market.
.
the
loan. But in both
stances, observers noted, it
pretty much. In fact, all things
•considered, it was a relatively
•quiet period in; ? the corporate
•
with two of their
coupon
issue
new
tnarket
5,
Schuster
& Co.-—Circular
Co., 225 East Maston
Street, Milwaukee 2, Wis.
3%
a
¥ork
"»AMfty 21
1948
A cash distribution of
twenty-five cents' (25c)
a
share
and
a
special
cash
distribution
oi
fifty cents (50c) a share have today been
declared by Kennecott Copper
Corporation, pay¬
able on June 30, 1948 to stockholders of
record
A. S.
Ed.
The majority stipulated
New
<•'
\
the issue.
•
DIVIDEND NOTICES
KENNECOTT COPPER CORPORATION
Sf/'
n. y.
$25,000,000 of 20-year de¬
bentures put up for bids on Tues¬
day^ Six banking
DIVIDEND NOTICES
Broker-Dealer Jill!
constituents.;
CORPORATION
May 21,1948
'
Secretary
THE COMMERCIAL & FINANCIAL CHRONICLE
(2356)
48
Thursday, May 27; 1948
•pel him
BUSINESS BUZZ
A ff ^
jTjL I(U
from the Nation's
«
Capital
;
jto give him. the power he; wants:
does
JL C/U
; Ihw
after program over the side in the desperate drive to make
of an early preconvention<§>
to a group comprising about a
adjour nment
before
being
fifth of the Congress, and hence
swamped by too heavy a load of
unwieldy.
Training.. Add to these the fact
that Congress has got to engage in
avoid
or
out
fight
same
knock-down and drag-
a
act
civil rights, and the
on
the
on
draft
enough,
Contrarily
will
sent,
bills.
They
conceivable
con¬
about
subject.
every
The
sad
spite
char-
of this
bills
'
acter, the committees just don't
Quite get around to taking them
and polishing them off until
up
Just about the last minute. The
last minute rush is on.
Thou¬
sands
and
people
little
special
industries
of
.affected
by
these
pieces of legislation will not dis¬
unless they have paid
servers
or
researchers,
cover,
these
until
passed
have
bills
after they be¬
perhaps months
law.
come
Congress' early deadline is
the
one
features of the
1946
Legislative
Reorganization
Act. It provided
that Congress
shall get out by July. This time the
act is not needed, because of the
desire
peculiar
of
the
gentlemen
home and electioneer.
of
the
early
to
I
economy,
the
Hoover
ganization
it
concerned with
to examine into govern¬
mental
functions
as
well
as
competition
end
the competition
out
to
Maybe, though, early
adjournment may result in a total
net diminished volume of legis¬
lation. But this advantage may
way.
"by-
consideration
issues..:
t»-
.
•
■
*r
more .half-baked
of truly important
t
•-*
*
❖
*
.
❖
the
same
very little con¬
the Hoover Commis¬
about
The former Pres¬
sion, however.
enlisted
has
of the
brains
of
some
subject to recapture for gov¬
ernment
So
the
country to do
peculiar phases
this job. He has also sworn them
Legislative Reorganization
to silence. The idea is to keep the
Act is the so-called "legislative
vested bureaucracies from finding
budget'!: whereby Congress is rer
out before.-the election: whom* the
quired by Feb. 15 of each year'to
Hoover Commission would hurt
establish a so-called ceiling ;on
in; the
interests, off substantial
the "sessioh's prospeetive expend¬
would
they
where
transferred
itures to suit the
Congress
volume of
rev¬
fix
up
this
provision.
It
was
hoped to delay the date of the
legislative, budget to
some
time
later in the session, when Con¬
would know better what it
gress
was
doing.
It was hoped to
re¬
duce the budget committee to a
small
wording
group,
instead of
special
Offices
pictures
ordered
adorned
the
and
to
that
the
own
Presi¬
doo--
own
Of course there is
whether
his
with
deskwith Jiis
dent's
dads.
ing
has
President
Executive
Attempts have been made to
is
report its findings as soon as the
new
what: it will spend;
game,
commission
This
can't
possibly
jguess accurately that early in the
enues.
!
no
know¬
President
and
new^ Cohgress .will ' swajlow
pill—for it will
mean
that many tax eaters will
or
a
This
10
In the last two days
sion then
that a
for
retained
to
gency—and
become
There
taxpayers.
*
*
are a
*
'•>&
gency,
to
have
will
if
It
the
that
out
fears
scare
they
Lonsdale Co.
of the
Textron Co.
U. S.
ses¬
fight
to
against
consider
There is a
$
House ;Bankteg;;<^^
the blue-ribbon for opposing ttte
most
powerful
special
interest
to
those
whom
its mur¬
tjf, vv:;'-;;; .
m.s.wien&co.
be
*•
ESTABLISHED 1919-
lth§
i
Teletype N. Y. 1-1397
No
bill has
been
built
With
had
up
mobilized
such
a
behind it
for
the
terrific
as
has
omnibus
-
All - the* lefties are
' Many" vetersms^favor it.
Administration
blessing
terrific lobby has been built up
behalf.
Not
the
least
of
*-<!
J.
...
■;
V*
»
"v
^
President, Truman
a
on
the
even
an
should
Ralston Steel Car
-
Oregon Portland Cement
not
will
Riverside Cement A & B
Congress give him
Spokane Portland Cement
unmodified extension of the
Hence, any future
present act.
\ operations under the act deI p e n d' entirely , upon * the Presi* :•
dent in office next January. If
he
reciprocal
opposes
then
agreements,
-
grading MarUe^s::
fea¬ I have: time to negotiate a sin-'
gle new agreement from no on,
tures, and Wolcott is not light in
more than, one sense of the word.
pressure
•'
H.A. 2-8780
Exchange PI, N. Y. 5
great deal of mystery,
;sional' majority, .'will^ extend
tiealert Atfn
Member* N. T, Security
40
tinged with perhaps amusement,
over the heat generated
by the
Administration advocates% about
the form in which thcCongres.^
ting on the omnibus housing bill \
inflationary
rights
Finishing
Dorset Fabrics
lobby before the second session of reciprocal trade agreements pro¬
the 80th Congress. Wolcott is sit¬ gram.
many
i.
w.
the
any,
beginning to look like
Jesse Wolcott, the Chairman of the
its
Stoer,
It is too early
public housing
of its sup¬
derers.
is
with
U. S. Good¬
*
meetings.
f;.
•
are
Memphis Natural Gas
runs
beginning to write
are
diatribes
part of
a
say
porters
emer¬
an
avoid
*
its
'
v.'-
'
bill is dead, but some
the headache of the next emer¬
fot -it:
to
V,.',"4'
-
Gas Transmission
Texas
remaining, the public
shortage of time.
be
a
executive
comes
production capacity* probably
costing originally more than $2
billion and requiring from 18
to 24 frantic months to build,
can
holding
bill.
bill. After June
it must pass the
safe-keeping,
new try at
means
Wolcott and in
on
housers
housing ' billJ
'„s>
v^v
of
the
on
leadership
substantial nucleus of vital war
the bitter Hoover
■
Building. Officers
mayors
is
actually
hearings
House GOP
sale under the secur¬
or
clause.
the;
have
-
man,
President, and
A.
the Secretary and Treasurer.
was.
The hearings probably will not
end before June 10—unless the
Public
the
to
lobby
-
numerous
Wolcott
extensive
be
broken up for the bricks and
mortar, as it were. The new bill
provides that these plants Shall
basis
a
of the
economy.
V
cities.
otherwise
Ass e (s
War
of
support
use.
this
of
elements
would have had to sell them on
ity
hear
will
You
crete
best
One of the other
were
leasing
of bureaus
special fa¬
ers.
ident
,
"Oh, it isn't an old war wound—just doing some
bidding again!"
maintenance,
to
propose
or
K
:.•!
Investment Co. of
Works Agency for
vored classes of voting custom¬
.
offset,
be
serve
the
SHREVfi FORT, LA.-^-Associated
Louisiana, Inc.,
is engaging in the securities busi¬
ness from .offices in the City Bank
jjimt
be
organization. It can and will
suggest
elimination
of entire
It is likely to end
was
the
that
has
Commission
Hoover
power
go
worked
is
.
The
be
further $
a
Associated Inv; Co..
the
knocking pins down in one alley
and setting them up in another.
would plan
year,
hasn't
S
ing. the bureaucrats'
nice flow
charts -of
organization,
or
of
hang around all
It
•
real
a
merely alter¬
functions.
work.
do
commission
This
bureaucrats.
be
vpnterprise^l>:5^
achiev¬
at
terrified
has
before
not
should
Should
increase in production and
government.
that Congress, knowing it CQuldn't
its
prices.
job. It will, propose.a shake-up in
government organization such as
never
ef¬
of the areas of managed
Practically frozen wage,
study
will
the
of
words,
other
In
rates militate against long-range/
govern-:
any
commission .will
This
■
and
continued.
come from
Commission on reor¬
ing
-
present capacity for
maintenance of free competitive
directed
reform
ex¬
be: rediueed^v
FHA's Title VI is in¬
flationary
*
there'is to be
If
ment
The theory
adjournement
*
#
Government
must
our
vestment.
de¬
the reor-
evading
the
employment
full
is determined to go into the
) ganization act if it did not—of
setting a fictitious budget.
not
of
for
criticism
V
fect of taxation in retarding in¬
February again will Igoj
through: the process—to; avoid-
;
Kv^b:<
'-m
'
legisla-;
outside
be
the
production."
i next
truth is that although there are
innumerable
probably,
boys,
there isn't just one Villain and .£
one set of cures. JEU next year
$40 billion government,;;
a
•?
:
\'-V J'• *
planning.
sible at
the
So / Congress
non-controversial
cover
"
to accomplish more than is pos*
beginning of an actual
legislative budget in fact to re¬
place ztho/theoretical - one.
upon
scores
pass
of
"scores
however,
■
-
Inflation is due "to our attempt
jit killed all chance to promote
even
unanimous
by
-Congress,
issue.
' ;:
( ,*..T( j'1'
newspaper
should
penditures
Appropriations com¬
ranking minority
turned down this idea,
member
•
Ideas—Social
sphere of
'
the
and
-j*.
*.
■
the
few
tion"
r
House
the
mittee
•'"•x
.('■'••'it
■
an
of
A
of
Chairman
the
When
Senate.
,*.
y-;;'bVvV -S; "V
•
Military
Universal
and/or
,?T
looking for the spot news, over¬
Congress
that
•
5>
?•:
f."
w
looked this substance.
at least
ing regular appropriations, actual should
bring in a single budget,
money
allowances for ;.ERP,_ tax with
all supply-items in one ap¬
xeyisidn (if any), social security,
propriation act. Such -a1 proposal
displaced -persons,
housing, the was
favorably reported to the
draft
•
/■ ■
Many
Finally, Senators Butler of Ne-|
braska and Byrd of Virginia pro¬
posed
ar^
interesting back¬
ground to be gleaned from a care¬
ful reading of the Joint Economic
Committee report even discount¬
ing the fact that it is purely ad¬
vice and not proposed legislation.
program
has been made
up to now in finishing a tremen¬
dous back-log of business, includ¬
",-v v
There' is
the port
progress
purposes of political
:Jt
*r':
•■vi
,
Little
for
gument, until the next President
decides what he wantef-;.
WASHINGTON, D. C.—Congress begins the process of lighten¬
.■
So all the "one year extension"
is continue the form of the
;
ing ship. It is customary under these circumstances, when there is
an early adjournment deadline.
Capitol Hill is about ready to throw
business.
for 'this purpose.
•
fmmm
i
single
favors
a
he
If
such
agreements, he probably
lean persuade the next Congress
Washington...
Behind-the-Scene Interpretations
negotiate
to
agreement.
new
:
the
LERNER & CO.
"
trade
broadest
;
••
Investment Securities,,
10 Post Office
:
•
•
■'
Square, Boston 9, Mass.
Telephone Hubbard
Teletype BS 69
1990
authority of law could not com-
couple of these "lit¬
tle" bills, the kind which if they
pass
Herbert H. Blizzard & Co.
at all will pass by unanimous
Teletype-^-NY 1-971
HAnover 2-0050
consent.
Empire Steel Corp.
One of these bills sets up an "in¬
We Are
dustrial reserve"
Specialists /n
built
plants not presently
to industry under the
"security clause." By this clause
the government has been selling a
Co., Inc.
limited
Preferred & Common
owned
that
number
CUar
Philadelphia 9, Pa.
thro—Montgomery, Scott & Co.
New York dt Philadelphia
>
dustry
may
i
to
would
war
them
on
'
condition
All Issues
T.ARL MARKS & no- INC.
an
foreign securities
production. In¬
bid
not
worth
FOREIGN SECURITIES
government-
be returned in
200 to 250 of these
find
of
plants
war
they
emergency
123 South Broad St.,
Susquehanna Mills
war
saleable
WILBUR-SUCHARD
Chocolate
of government-
for
,
from
plants, didn't
while
if
they
;
50 Broad Street
:
■
~
'V
,
f
Z'.-.-s
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
>t
t.
}'
'
.
-
•
*
-
A
Hill, Thompson & Co., Inc.
Markets
specialists
'
V.
and Situations for
120 Broadway,
Tel. REctor 2-2020
Dealers
New York 5
•
Tele. NY 1 -2660
@FedFRASER