Full text of Commercial and Financial Chronicle : May 31, 1951, Vol. 173, No. 5016

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UNIVERSITY

UNIVERSITY
OF

OF

-

ESTABLISHED IS39

hi*h\ftws,ty
OF

MICHIGAN

MICHIGAN

MAY 31 1951

Reg. U. S. Pat. Office

Volume 173

Number 5016

New York, N. Y.,

Thursday, May 31, 1951

Price 35 Cents

a

Copy

EDITORIAL

The Business Outlook at

As
The

We See It

By LIONEL D. EDIE*

drag along,
lagging. For one thing,

so

many

that not

a

of this year and

level of capital

from

come

further
is

prolongation of the now stale drama. It
today clear—as it was before all this started-—

The

policy of the Administration, if
such, has certainly not been mas¬
terful. .This is,
perhaps, particularly true of our
handling of the Korean situation from the day we
first

entered

clear,

it

as

that

unfortunate

land.

It

is

expenditure.

business

some

tain acts of his

critical

unprecedented and,
pardonable.
But

where

does

question, the

were

military matters

as

all this

leave us?

which

to

is

make
a

certainly not
beginning

i

advance

as

stances

be

to

to what

which

ready with

actually developed,

It is

"resist"

our

clear that

now

are

our

D.

middle

Edie

Red

latter

into

part

was

pre-Chinese

or

intervention

Potential

the

late

world

summer,

in

Korea.

particularly

are

bad investment.

one, I am sure, in. this group of well-regulated
citizens, will take issue with the statement that the need
for

increased

never

productivity in the steel industry was
greater than it is today.
By the same token the
capital to provide increased

need for

productivity
the

almost

remain

in

is

tremendous.

staggering

everything

from

tin

hensions

cans

force, it would
about

business.

our

the

to

no

I

the

future of
do have

long-term

future of the industry.
The id6a that steel and other basic

industries
can

should

support

expand

until

and at the same time maintain

clude

a

so

few

unrealistic

words

upon

be

program

that

it.

realized,

I

shall

Should
either

especially sensitive to that overhanging possibil-

"Transcript of

address by Dr. Edie before National Industrial
New York City, May 18, 1951.

By 1953
♦An

an

Conference Board,

Continued

IN

Special

NEXT

WEEK'S

ISSUE—The

"Chronicle"

on

of

page

R. H. Johnson & Co.

Request

INVESTMENT

our

Stock

address

Iron and Steel

by Mr. White at 59th General Meeting of
Institute, New York City, May 24, 1951.

Continued

34

Thursday, June

64 Wall

Street, New York 5

BOSTON

Tele. BS 424

BROADWAY, NEW YORK 5, N. Y.

Tel. WOrth 2-0115

'

on

American

page

32

T, \vill in¬

><

State and

000 Branches

-Mr

^

across

Bonds

Canada

Monthly Commercial Letter

SECURITIES

Exchs.

31 MILK STREET, BOSTON
9, MASS.
'

White

industry and conceivably for the nation.
industry will have accomplished in two or

upon request

duPont, Homsey & Co.
120

M

Municipal
Established 1927

Tel. HAncock 6-8200

c

Section containing pictures taken at the Annual Field Day of the Bond
Club of New Jersey.

Bought—Sold—Quoted

Members New York & Boston

a

volun¬

Common Stock

on

wrste

such

& IRON

Circular

ris¬

and other basic

I am'

32

PICTURES

VALLEY MOULD

a

ing standard of living for the nation

change the whole face of the future.

an

page

we

major defense program

a

'

on

that

appre¬

potential with possibilities of sudden surprises that can

determination to

Continued

for

tanks

seem

early

However,
about

While

demands

steelmakers need have

we

is

Surprises

present moment and

affairs

a

No

tarily or under governmental pressure, it would in the
long run be nothing less than economic suicide for steel

in

was

subdivided

Between

basically

aggression in that ill-fated land

the

time main¬

Points

:

apprehensions

ones.'

new

and

—

Chinese

in

embarrassment

inter¬

Red" intervention in Korea and postLionel

should do in the circum¬

we

responsible for much of
Korea.

decision

a

some

Korea;

again

is, of course,
obvious that
vacillation, lack of clear purpose,
neglect to be ready to deal with obviously quite
possible developments in Korea, and failure ap¬
even

the

ot

Last, year, for instance, was divided
into two parts—pre-Korea and post>

easy To find. Not more at most than the
of wisdom is to be found in Korea. It

parently

events

thing has happened that has caused
great pain and agony to the fore¬
casting brotherhood. They have had
to tear up their old forecasts and

un¬

is

This

in

Each year for several
years past at about this season, some¬

'

answer

as

v," *.-■

national field.

indeed

go,

time

same

bring about repetition of industrial slump of
out huge capital requirements for in¬
creased expansion, and need of
plowing back profits to
supply it. Says profits are too low, and asserts increased
production without increased productivity turns oat to be

probabilities on the sub¬
ject of war and peace.
This happens to be a particularly

now

and at

rising standard of living, prominent steel executive
seeking 130 million ton steel capacity is dangerous

1930's.

think of the

'

......

expand steel produc¬

program to

and may

marily by the structure of war and peace.; The source of
direction of business trends is what the American
people

immunity from blunders or
of this oratory, and that cer¬

"area commander"

as

warns

at any time, mid-year, end of
beginning of the year, is governed pri¬

Arthur cannot claim*

absurdities in

a

outlook

the yeaivor the

from the first, that General Mac-

was

Cites population factor

preventive of postwar depression,

be called

can

tain

well into next

*

that the Far East
it

Calling unrealistic the

tion for major defense program

year.
Expects civilian
consumption to follow horizontal course/ the expansion
of total business coming from
step-up in defense spend¬
ing (at a minimum of $35 billion) as well as very high

probably led to the conclusion

great deal of good could

President, Republic Steel Corporation

Economist expresses firm conviction that volume of
general business will continue active throughout balance

to gain political

capital from it all, as well as the counter tactic of
preventing loss of political standing, has doubt¬
less long ago wearied
many, if not all, thoughtful
observers—and

By C. M. WHITE*

Chairman of Lionel D; Edie & Co., Inc.

/

command in the Far East continues to

the obvious effort of.

Productivity: Serious
Threat to Steel Industry

Mid-Year

"investigation" into the action of President
relieving General MacArthur of his

Truman in

but interest in the affair is

Low

Tele. NY 1-315

Troy

Bond

THE NATIONAL CITY BANK

THE CHASE

PHILADELPHIA

Albany

Buffalo

Harrisburg

Providence

Williamsport

Washington, D. C.

Allentown

oiGommeice

OF NEW YORK

Scranton

Wilkes-Barre

Head Office:

Bond

Dept. Teletype: NY 1-708

Department

/Veio York
Seattle

NATIONAL BANK

Toronto
OF

THE

Agency: 20 Exchange PL

Portland, Ore. San Francisco

CITY OF NEW YORK

Los Angeles

We maintain active markets in
Dominion of Canada

Massachusetts

Internal Bonds

Placer

Investors

Underwriters and
Distributors of Municipal

Second Fund

and

Corporate Securities
Pmfxclui from authorized dealeri

Los

Angeles
..~




•

■
.

.

&

Co.

J

\

COMMON
Analysis

DoMcaoTf Securities
Grporatioti

New York

Chicago

Denver

Dallas

Cincinnati

Columbus

Toledo

Buffalo

upon

request

1.15 BROADWAY

105 W.ADAMS ST.

NEW YORK

CHICAGO

IRA HAUPT &CO.
Members New York Stock Exchange
end other Principal

MEMBERS NEW YORK STOCK EXCH.

CLEVELAND

Chicago

Public Service Co.

CANADIAN DEPARTMENT

ESTABLISHED 1891

1899

BONDS & STOCKS

Superior Oil
Company of California

Goodbody

(Incorporated)
Established

BOSTON

New York

;'

OTIS & CO.

Devonshire Street

.

Development, Ltd.

Central Vermont

Canadian

or

VANCE, SANDERS & CO.
Ill

Development

Great Plains

CANADIAN

40 Exchange Place, New

York 5, N. Y.

111

WOrth 4-6000

Teletype NY 1-702-3 /WHitehall 4-8101

Boston

Exchanges

Broadway, N. y. 6
Teletype NY 1-2708

Telephone: Enterprise UMBO

The Commercial and Financial Chronicle
2

Thursday, May 31, 1951

(2242)

TRADING

National City
Stock

The

MARKETS IN

Bank

A continuous forum in

Rights

&

in the investment and

Interstate Power Co.
Metal & Thermit

New York Hanseatic

Corporation

they to he regarded,

are

120 Broadway, New

York 5

Partner, Hill & Co., Cincinnati, Ohio
Members of N. Y. Stork Exchange
Lion

article

Since 1917

120

York
York

Exchange
Exchange

Stock

New

Curb

BROADWAY, NEW YORK 5
Tel. REctor

2-7815

at

insurance institutions is the Amer¬

days since that
time that it has

a

Its

high
time

short

sold

ican Insurance Company

low

as

ago.

of New¬

ark, N. J. This
is
the parent
company
of

as

46 made just
Since the last

was

the
A

so

m

i

Group

the Chemical Division.

Dan River Mills

called

-

e r

appeared,
great
strides
have been made by Lion Oil both
in their Refining Department and

Ins

article

American Furniture Co.

A

u

,

,

Lynchburg, Va.

monia

LD 33

Tele. LY 83

llllllllllllllllllllllllllllllllllllllllllll

570 tons of amday,
approximately

per

one-fourth

The

such.

which

of

sold

is

is

remainder

used

as

in

Lion's

plant for the manufacture
of other materials. The main prod-

Development,
Limited

OIL

-

engine

gas

horsepower under

John R. Lewis, Inc.
avenue

ELiot 3040

105

The

world.

this

roof in the
containing

one

building

is

power

in the shape of

a

792 feet long on the stem,
and 588 feet long on the bar of the
cross.
Electrical power is gener-

cross,

SEATTLE
Teletype SE

building condriven engines,

ated

from

these engines in

suffi-

cient

quantity to supply a city of
250,000 people. The plant circulates 133 million gallons of water

General

daily.

Alloys

*

In the

Company

velopment

pleted, the company is producing
crude

more

Net

quick assets

share.. .$12.75
share
20.65
per

Accumulated dividends:

per

refinery
and

13.47
9.27

pfd. share 1950..

2.11

they

plus
accumulated dividends in liquidation

Sales 1st quarter 1951 more
than double 1950

YORK

EXCHANGE

High 4

Range 1951

the

company.

tured in the

motor

oil,

Butane

Naturalube

and

Propane

tractor fuels, diesel fuel, road
oils, asphalt, both wroofing and
paving, greases, plastic cement,
and rust preventives.
gas,

Lion

Oil Comnanv

is

Low 2'/2

ning at the rate of more than $10
million annually. The company is

NIELSEN, GORDON
& HALL
Members

120

New

York

expending approximately $40 million

a

year

supplies and

Stock

Exchange

Broadway, New York 5

Telephone

BArclay 7-7340

a

Institute
Boston on

ber

Marine

Wood,
and

of

Teletype
NY




1-2739

for the purchase
raw

The company

of

materials.

orous

in

bids

on

e w

issues.

bohd

He stated that

the
Wood

stone"

Wisconsin Central R. R.
Ref.

4-1959

Missouri Pacific R. R.
Serial 5

%

GEKSTEN & FKKNKEL
N.

Members

150
Tel.

Security Dealers Assn.

Y.

Broadway

*

Jew York 7
Tel. NY 1-1932"

DIgby 9-1550

sim-

"I have often wondered why
municipalities, when they desire
to sell bonds, simply publish a
notice which in effect says to the*
investing public, 'We have some
bonds for sale if yoq, are inter¬
ested in bidding for them,'" Mr.
Wood commented. He pointed out
that
this was the
antiquated
method of advertising used by

$112,411,000, capital of $5,000,000,
annual premium income of $47,563,000 and policyholders' surplus
(capital plus surplus) of $43,160,000. There are now outstandin§ .2,000,000 shares. Par value
$2.50.
\
Comparing the company's in- merchants generations ago. He
vestment income per share for the recommended the methods of the
years 1949 and 1950 we find $1.15
modern merchant who through
in the former year against $1.84 in newspaper and other advertising

the latler- At. thia rat? °f prog: m?dia cFeates an interest in the

Giant Portland Cement
Alan Wood Steel Co.

Houdry Process
Atlantic City Electric

Rights

Pennsylvania Railroad
Central Electric & Gas

Central Public Utility 5Vis
American Marietta

Henry B.Warner & Co., Inc.
Members

Phlla.-Balto.

Stock

Exchange

123 South Broad St., Phila. 9, Pa.
Bell System Teletype

Phila. Telephone

PH 771

KIngsley 5-2700
New York

Direct

City Tel.: BOwllng Green 9-4818

wire

to

Ames Emerich,

Chicago

ea™"lsJor I?5*
™nds °£ the public for the goods
exceed $2.25 which might he has to offer,
mdlPataa? "":rease ln the pres~
"Why cannot municipalities

res?; the

ent ?1 dividends
adopt, at least to some extent, the
Marketwise, American shares at techniques of modern advertising
$20 are cheap as the current dis- in offering their bonds lor sale?
count from liquidating value is
about 40%.
' "'
.For the five year period ending
with 1950, the company s growth
bas beea noteworthy as shown by
anEremillnl in<:ome ^ai.n
about
%, a tatal income increase ot
abaut 50%, and a combined loss
expense ratio of 92%^ indicating an underwriting profit of

investment

in ?ddltl?n

in_n

What you are offering when you

advertise bonds for sale is the
credit of the people of your community," he added,
jje

that

suggested

nnvin**

hppn

pnrnrmnv

-

•

aromnnnS munlc,pal 1?°nds' ,.*° 0d told
tfme to timef withoutTn- members of the Instltute'
termlssiofl s-°ce ?873 just a year
"In a sense'the townsh'P is Iike

U.

S.

SAVINGS
J

BONDS

Over-the-Counter

on

stock

a

«« "orgamzat.on on a stock

Quotation Services
for 38 Years

the

merchant

offering

a

com-

advertising

tech-

^

for ^ ^

national Quotation Bureau
Incorporated

fore.

to

assured

show

the

the

better

future^

the

writer

that American

results

than

will

hereto-

This is especially true as to

current

-

.

reorganization

after

BUY

municipal

cier^s use the same methods in
the sale of municipal bonds as
they would if they were trying to
interest a large Indus'ry to build
a manufacturing site in their reSpective towns. The same "Cham-

p°™Pf"y

third

system. Us-

Rights

adver¬

tisement

for the bonds at a certain time
and place.,

feels

souri Pacific's entire

&

"tomb¬

ancl the $291,907 surplus.

dmdual shipper on any railroad
m the State of Arkansas, and the

the Mis-

City Bank of N. Y.

methods

their

M.

Rights

advertising

for

David

&

Common

.

nicipalities to
use more vig¬

ply described the bonds by date,
maturity date, interest rate, and
that sealed bids would be received

As

on

Common

Nat.

mu¬

$291,907. Upon reorganization as
a stock corporation in that year
the $600,000 scrip became capital

is the largest in-

largest shipper

Virginia Elec. & Power

King,

urged

which

-

1

Dawson,

strongly

In-

grown

to

Teletype BS 259

:

:

N. Y. Telephone WOrth 4-5000

York
firm

law

Fire

Mutual

the

of

New

the

as

^

seniormem¬

in

to $600,000, in
the company
had accumulated a net surplus of
had

1872,

request

on

of Municipal Clerks of
May 23, David M. Wood,

Co., it issued profit sharing dividends to its policyholders in
scrip which, by the year

now

run-

AEROVOX CORP.

148 State St., Boston 9, Mass.

approximately 2,300 fhTunelned memfum TesTrve ber of Commerce" sales talk coukl
rSSr'« th.e C0mpensati0n paid And this fineold and "raiy Amer- &£Ihe sale'of
to their employees
now
™
d°Vd"ld*L
ine
rf
is

j

Tel. OA. 7-0425

talk before the Fifth Annual Conference of the National

In

surance

addition

branch offices.

our

a rec-

Advertising of
Municipal Issues

In¬

.

Refinery Division in-

Ethyl gasoline,

Mobile, Ala.
Direct wires to

Advises Broader

ericari

m

&

NY 1-1557

New Orleans, La. - Birmingham, Afa.

Analysis

Incor¬

1846

Norman T. Robertson

*

York 4, N. Y.

HAnover 2-0700

growth

unblemished

and

porated
A

Curb

25 Broad St., New

rea¬

any
a

employing

ON

CURB

than the
Dorado,
themselves

El

Some of the products manufac-

The
249,996 SHARES COMMON STOCK
NEW

in

find

now

in the history of

elude

Both classes entitled to $11.00

LISTED

day

per

capacity

sellers of crude for the first time

Unstamp. stock (6,430 shs)
Stamped stock (17,200 shs)
Earned

that the Scurry deis
practically
com-

company, now

7% Cumulative Preferred]
Book value per

Refinery Division of the

so

of

Thereafter the American grew
ranging from 1,000 to 1,400 horse- as the country grew but probably
power. This is believed to be the at a faster rate as its annual relargest concentration of gas driven port for
1950 shows assets of

tains 62 large gas

GOLD

available on request

1006 second

nitrogen

proximately 1,000 people and is a
24-hour-day operation.
• •
.
■

Trading market maintained

Analysis

are

The Chemical Plant employs ap-

The
-

plant

fertilizer and nitric acid.
,

4,500,000 Tons Lead-Zinc Ore

TUNGSTEN

this

of

ucts

Placer

could

more

Columbia

Fire).

stepped up accordingly, This plant
is one. of/the most modern of its
kind irf the United States, and is
producing

,

investor ask of

ranee,

Bankers

greatly

now

What

erican

m

demnity

been

Scott, Horner &.
Mason, Inc.

c a n

sisting,

The Ozark Ordnance Works has

Handley Hardware Co.

Currently the stock of Ameriis quoted around $20 a share
which gives a stockholder return,
with the present $1 dividend, of

(con¬

added to since its
purchase from the
government
and
their production
has been

Moore

Exchange

New

-

in

Outstanding

N or man S. Hill

Exchange

York

ord?

City

American Insurance Co. of Newark, N. J.

there

York Stock

Members

result of

a

as

can

security of

New York

the

Board

that.

1950

occurrence.

5%.

years.

28%. I do not

Big

Steiner, Rouse & Co.

the last 19 years and a similar period may intervene before a re-

Shelby Cullom Davis & Co.

have been five

Trading Markets

the coming

the compara¬
tively small group of centenarian

believe

IIIIIIIIIIIIIIItllllllllllllllllllllllllllHI

over

The stock at

on

Bought—Sold—Quoted

Members New

NORMAN T. ROBERTSON

bullishness.

selling

ertson, Shelby Cullom Davis &
Co., New York City. (Page 2)

sonable

that time was

Members
New

ment

m p

for my

reasons

men

long-term investment holding and
should prove an excellent invest-

point

s o

management

with excellent

of high integrity. I feel
that this stock can be bought for
by

time I

to

out

frfc PONNELL & CO.

tion,

Arkansas, and
that

Louisiana Securities

of

Company

Insurance

storm losses in

that has more possibilities for development and produc-

Company of
El Dorado,
at

??», water ?nd trucking, the Lion
^Company moves the of finished
equivalent
of 50,000 railroad cars

company

Oil

Lion

tried

S.

Norman

& Co., Cin¬
cinnati, Ohio. (Page 2)

furnished an

was

company

Rights & Scrip

—

Partner, Hill

This is a forward looking or- the Northeastern hurricane
ganization, and, subject to the im- amounted to about $4,500,000.
that time, and my position by the government of ab- This storm was so unusual that no •
company'has not normal taxes, I know of no other similar disaster has occurred in

pealed to me at

the

Company

Oil

Hill,

the company which ap-

on

opinion of this
changed. That

Specialists in

Lion

Newark, N. J.—Norman T. Rob¬

of transportation,

means

Selections

Their

American

products each year.

Oil Company

In March of 1950 I

Teletype NY 1-583

all

ing

HILL

S.

NORMAN

as an

1920

Established

BArclay 7-5660

are not intended to be, nor
offer to sell the securities discussed.)

(The articles contained in this forum

5Vi/52

Central Public Utility

particular security.

and

Participants

Forum

^hich, each week, a different group of experts
advisory field from all sections of the country

participate and give their reasons for favoring a

Corp.

Week's

This

Security I Like Best

year,

as

its

wind-

modern

m0st
ninn#a<-

^
the
was

ohnnlrt

hp

tombstone

n«?Pd

in

iiI^pp

^
advertisement,

Mr. Wood's final advice.

-

Established 1913

of

46 Front Street
CHICAGO

NewYork4,N.Y.
SAN FRANCISCO

.Volume 173

Number 5016

.

The Commercial and Financial
Chronicle

.

.

(2243)

If Peace Breaks Out
By

Dr.

Palyi, pointing

INDEX

MELCHIOR PALYI

Article» and New•

out the Administration has

virtually

Low

com¬

mitted itself to Mac Arthur thesis
that Formosa must be defend¬

ed, contends Russia

Says logic

is in

to be

seems

position to interfere in Far East.
MacArthur's side, and attacks Ad¬

Far

EasJ;,

crisis since the 1930s.

continuation of

we

might be faced with

If Peace Breaks

preparedness

Business

'

son

not nearer either to

asserted,

"and

main¬

tained

render
to force

ever

to

or

only started.

York

amples

"Times,"

t

h

while
U.

e

would

S.

the

UN)

not

veto
Dr. Melchior Palyi

.

/*

'

that

•

.

of

the

t h

■"Very decided impression" that
•entrance

the veto

.State

into

e

to

nese

let

UN.

we

\

.-

re¬

would

MacArthur

thesis

within

must not go

overboard; it is send¬

Formosa

result

the

and

need

French

would
less

be

forces

that

in* the

Far

'realistic
o r '<*
opportunistic
enough not to challenge an Amer¬
ican public aroused
by MacArthur

hammers
What

incessantly:

would

Russia

do

if

we

the

material

announced

Formosa need

[

to China.

export

at present,

the

"make

of

UN

not be

but

on

More¬

decision

later

of which does
impending change

Eastern

scene.

It

be

left

to

•'

-v

Advertising

to

offer

against

the

thesis

that the over-worked Trans-Sibe¬
rian railroad is

incapable of serv¬
large-scale war. But they

Far

icing

so

far,

insist that this is

a

a

the attempt to placate the Ameri¬

ment, and that their own
public by a somewhat sterner judgment is better than the opin¬
ion of a "theatre commander."
policy,
nothing
more.
General
Ridgway's boasting that the enOf course, no one can
predict
•emy has passed the apex of its the future course of the
Kremlin
force has been disproved a fort¬ with
certainty. But Mr. Truman
night later. Nor is there any indi¬ was aware of the
danger of Rus¬
cation
that
the
Administration sian intervention when he moved
has changed its mind and is
us into Korea—at a
time when our
ready

Zelomek.l—

•

"

.

'

*

'

*

*

Bank

and

•"

'

'

'

"

Bates

■of

throw

at

China

the

full

blast rearmament

aerial and naval
power, or
to unleash Chiang
our

was

far less

Products
36

—

and
7

and

advanced,

Europe's defense far more in¬
Kai-shek, not¬ secure, than at present. The Ruswithstanding Dean Rusk's ideolog¬ siana could not be more violent
ical blast against Mao
Tze-tung (verbally) than they were a year
that has been disavowed
by Ache- ago. Why could he take a chance
son.
then, and does not dare now? The

—

-

18

—•

News About Banks and Bankers

answer

.The

seems

obvious:

the

UN

|

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•

'

'

^

K

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'

41

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Collins Radio

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Washington and You

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Europeans are not even did
not object
then, but does now.
Willing to extend the arms em¬
It was willing to have us
protect
bargo to countries like Indonesia
Korea, (at our
expense), but it
which
keep
exporting to Red
China, thus thwarting the whole
Continued on page. 15

We

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Coming Events in the Investment Field

the

on

19

,

war

us)?

ment

herald

means,

(as if she

making

they know nothing about Russia's
intentions.
They have no argu¬

on.

not

one

are

Direct Private
Telephone

Banks Place Debentures

,

China

on

Marshall and Bradley admit that

"discussed"

should

war"

wouldn't be the

war

about-face:

an

All

an

point

by Embargoing

Foreign Secretary Morrison

over,

has

General's

as

1

13

Severe Defense Economy

a

Communism and Its Threat
(Boxed)..

•

proach

j

,

f

...

spare more for Europe.
That brings up the crucial
ques¬
tion, on which the Administration

they condemn unani¬
mously). Step by step, they ap¬

view, such

; "v

.

,

(whom

•

Government Held Primary Factor in Bank
Deposits Rise

East

of

NEW YORK

to announce that

Defense Economy—Walter S.
Tower__
'

"Tapeworm" Appears in San Francisco

and could

a re'

a

NYSE Members Seek
Saturday Closing-

war

yet

rid

WHitehall 4-6551

We

Y.

FIC

would

we

Telephone:

11

State Bankers Association
Objects to Interest and
Dividend Withholding Tax

„

Asia. The

on

\

.

N.

China, greatly contracting
hold

WALL STREET,

Demand—Thomas W. Phelps___ 12

Robert Millonzi to Be Member
of SEC

en¬

from

civil

a

,

Advises Broader

by the Nation¬

turned into

the Bolshevist

ing advisors and defense materi¬
The5 British

y

likely

be

New Oil

Hazards of Inflation Under
—Theodore J. Kreps__

•

get

\

<

alists should suffice to reduce his
potential in the North. The
Korean
"incident"
most

late, the Administration has
virtually committed itself to the

6

.—

war

As of

als.

drawn

K. Thurlow_____

The Outlook for Our
Garrison Economy—A. W.

.

,

Mao in the South

-

that

been

don't

you

your

may

Obsolete Securities
Dept.

6

99

Opinions—Bradbury

Outlook for Consumer
Finance Industry Under Credit
Controls—Ernst A. Dauer

sup¬

South China is sufficient
proof for
his contention: that
harassing of

the Japa¬

on

force has

emy

other symptoms.

are

which,

part of the

Also, the

definitely

treaty;

And there

;

the

Mao in

peace

for

ghost in

a

obsoletes

Investment

an

.Current Economic Trends and
Their Implications
—O. Glenn Saxon

end
the trouble.. All he
promises is to
relieve our troops. The mere fact
that a substantial

against Mao's

Department

fuses

he takes

posedly, we are not prepared?
y
In reality, MacArthur has never

Secretary Marshall
speaks most emphatically of his
use

Russia

as

Needed: New
Leadership in Foreign Policy
—Sen. Richard M. Nixon

gauge of

majority." 'But implied that his plan would

presently,

would

by

Ability to Meet

W

at¬

tack

would

we

.

a c c e p t

judgment

ac¬

tion, and that

Fiber and

__v

The Steel
Industry in

hole argument of the Administra¬
tion:
that
serious
any
action
against Red China would prolong
the conflict and risk an all-out

we

would

or so are a

if

3

to Obtain It—Morris
M. Townsend

influence

in Korea

coer¬

cion,

Our

•

those

8

has

slaughter
continues, American pa¬
tience is likely to run short.
^Will
it be tempered
by the ace-in-the-

the seating of
Red China

(in

r

W. Babson

Cobleigh

Security and How

If the foregoing ex¬

MacArthur's

what may happen when
"to the road," and if the

oppose

under

of

in two months

a

but
you

them.

The Changed Credit
Policies—Marcus Nadler

of'Korea.

have

not

may

haunt

7

sur¬

However, the great debate

You

Values in Today's
Market—L. Kop^anoff

Washington's action

the evacuation

since,"
quot¬
ing the New
"that

Peiping's

"GRAMERCY GHOST"

Cover

4

No Ground for Bearish

lustily as long as no blockade is
imposed). In other words, we are

As recently as March
31, Ache-

D. Edie

3

Opportunities—Roger

—Ira U.

.MacArthur already has accom¬
purpose
(to say nothing of the
plished
quite
a
little,
though smuggling traffic that can go on
piecemeal and by indirection.

Mid-year—Lionel

Out—Melchior Palyi.J

vCelanese Preferred—As

expansion is not yet in sight.

1

AND COMPANY

Outlook—Raymond Rodgers

Business

warns

end of monetary

economy means

LlCHTfRSTEIR

Steel Industry

garret

The

worst economic

Notes ending of buying
spree, but

to

White--

The Business Outlook
at

vacillating foreign policy. Holds mere threat of
likely to force Reds to evacuate Korea, and should

peace come in

M.

B. S.

page

Cover

ministration's
sanctions is

Productivity Serious Threat

—C.

no

on

J

Other Publications
Bank and Quotation Record —
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}

Chronicle

The Commercial and Financial
4

.

Thursday, May 31. 1951

.

.

(2244)

words, more than 85% will be left

penditures, aggravated by the fact

The Business Outlook
School of Business

Graduate

Banking:,

of

Professor

ating at full speed. In plain, sim¬
ple economic terms, these military
expenditures mean the diversion
of
a
portion -of the productive
capacity of the country from the

RODGERS*

RAYMOND

By

York University

Administration, New

outlook, Dr. Rodgers foresees
liquidation of accumulated inventories due to tightening
credit, thus causing temporary downward readjustment in

Analyzing short-run business
some

Says prices

several sectors of the economy.

in much more

are

than is generally realized, and a "peace
scare" may have serious effects. Advises businessmen to be
cautious and "to get your financial house in order." Foresees
in months ahead a severe inflationary test.
vulnerable position

talked to

I

When

on

you

you
were
quite conabout declines in business

1949,

23,

cerend

activity in many lines, just as you
are today.
To
reverse
that

be-

relaxed

credit

restric¬

tions

several

times, had re¬
reserve

requirements
had

and

otherwise

as¬

sisted in credit :i-

Raymond Rodgers

expansion-

- -

Administration had

The

efforts.

inter - departmental
committees
in
Washington
to
speed
up
the disbursement of
government funds and to funnel
government orders for supplies
and equipment into certain areas
where unemployment was begin¬
organized

problem.
reassured you
quote, "Without a

ning to become a
M that time, I

that, and X
substantial reduction in the means
of

and without a ma¬

payment,

the disposable

terial reduction in

of individuals there can¬

income

be

not

deflation."

serious

a

This

repeated
three
in the talk and, as you will

conviction
times

was

recall, the business activity index
turned
upward in August and,
with the exception of one month,
the trend has been sharply up¬
ward ever sincer This is repeated
in

not

any

spirit of "I told you

so," but because today I shall
again take a contrary viewpoint!
As yon gentlemen know, during
the past two
months, consumer
durable goods sales have not been

soft goods in

to expectations,

up

lines have encountered seri¬
sales resistance, inventories

many
ous

have accumulated and

weakened. As

concerned
this

a

fear

I

As

One is Russian

of

Nonetheless,

"pie"!

War

of World

future.

Is

deflation

as

the

serious

today

it was

as

in

1951.

are

two ways about

no

this!

-

The Short-Run Outlook

endeavoring

in the street
the right word,

use

panicked by the talk of cutbacks

*

'-

'

is

forever—there

a

limft

to

even

increased

to

The

third

threat, the threat of
real; its causes
only too well known. Pres¬
ently, the danger stems from the
necessity of increased military ex¬
is

very

are

pleasure in announcing the opening of

$66 billion by the end of March.

tory total of more than $66 billion
is indeed monumental compared
with

the

billion

$26

the prewar

1929,

of

or

total of $25 billion in

JERSEY

course,

these

totals do

not

a

they include the consumer inven¬
tories John Q. Public has "bunked"
(just in

away

misunderstand

I

me;

am

men,

CITY 2

under the management

In

this inventory situation
volumes — it requires no
i.

-

connection

*

with this inven¬

tory situation, two closely related

E. A. ABELE

facts should be kept

tightening

Telephone—Dlgby 4-9373

TELLIER & CO.
ESTABLISHED 1931

constantly in

Businessmen, particularly those
have borrowed money from

who

Adjusted Index of physical pro¬
duction (actual goods; not dollars)
is currently above 222% of the
1935-39 average. This represents
an increase of 20% during 1950 to
.the highest peacetime level ever

attained; in fact, it is within less
than




New York 4, N. Y.
Teletype NY 1-1171

banks

commercial

the

to

carry

in¬

needed

normally

than

more

ventories, would be well advised

carefully the possible
tighter credit restric¬
This implies not
merely

to consider

effects

of

tions.

higher rates of interest, but also

inability to borrow or to renew
who is forced to

A debtor

loans.

liquidate

or

his

reduce

to

loan

may be compelled to dispose of
inventories even if liquidation re¬

sults

The

losses.

substantial

in

possible adverse effects of tighter
credit restrictions should be care¬

fully considered in order to avoid
the necessity of selling inventory
on

Business¬

distressed market.

a

in general, during recent
years
paid no attention to the
credit policies of the monetary
authorities; but now, they will be
well advised to pay close atten¬
tion to such policies, especially if

men,

they are borrowing on any conse¬
quential basis.
This

voluntary

tion Program, and

Credit Restric¬
the probability

that there will be further govern¬

spotlight the
having adequate
capital to support your scale of
operations. The great danger of
restrictions,

ment

of

importance

inflation

tory
This

to

is

businessman

the

generally confuses inven¬

that he

real

with

mark-up

profit.

mistake often causes him to

profitable
this^ expansion,

true

beyond

expand
limits.

To finance

another,

he borrows in one way or

Continued

on

page

17

the increase come from
financing:
Since the end

deficit

there has been

of

World

no

deficit financing!. And, finally,

War II,

did

increase

the
the

purchase

of

not

come

bonds

Reeves Soundcraft

from

Eskimo Pie

the

by

banks:

Since shortly after the end

of

war,

the

the total of govern¬
by the banks has

Bought— Sold

ment bonds held

Quoted

—

steadily declined—in fact, declined

What, then

nearly $30 billion!1
cause

crease

is:

sharpest price in¬

the

The answer

in our history?

JAMES J. LEFF & CO.
Incorporated

The

People—people in action.

50
1 All

banks

in

U.

S.,

12-31-45,

006,000,000,

St., New York 4

Telephone BOwIing Green 9-5920

$73,290,000,000.

.288,000,000,
12-27-50,
All
commercial
banks,

Broad

$101,-

12-31-45,

$90,-

Teletype NY 1-3018

12-27-50, $62,390,000,000.

Established

Hotel Weylin
meets the

requirements

1856

H. Hentz & Co.
Members

of the discriminating

Exchange

New

First, the Federal Reserve Board

peak!

by govern¬

credit

of

ment direction.

mind:

Complete Trading and Clearance Facilities

fair degree of certainty a

a

case!), which un¬
at all-time peak

elucidation!

of

expect

tinue to increase, one may

are
To wide-awake business¬

levels!

PLACE

speaks

Broadway

the further ex¬

curb

Nor, did

did

1941.

doubtedly
EXCHANGE

Telephone Dlgby 44500

are

more

Only a little more than half of
society.
Hence,
the fight this over-all increase of $15 bil¬
against international communism lion was caused by higher prices,
must be directed to keeping our
so, it represent a substantial in¬
economy and, above all, the pur¬
crease
in actual physical quanti¬
chasing power of our dollar sound. ties of goods. The March inven¬

NEW JERSEY OFFICE

42

Re¬

voluntary

through

to

measures

with

madness!

government stockpiling
and military inventories; nor do

Direct

under

operating

of the Federal
Board
of
Governors,

auspices

has

Don't

Of

15

the

serve

include

We take

committees

two

of the dollar, the man

to

commercial

the

present,

banks, life insurance .companies
and investment bankers, through

in

been,

same

fore¬

were

Program
At

and fearful of further
the purchasing power

II,

declines

results

The

Voluntary Credit Restriction

much larger

a

mindful of the shortages

free
»

address

21,

imperial¬

periods of booms and depressions,
are the best way to undermine a

inflation

May

than 85%

production

spending power increases. Unless
something is done to check this

further

by Prof. Rodger6 at the
Annual Convention of the Empire State
Petroleum
Association, Buffalo, N. Y.,
♦An

more

the

doomed.

In

anticipated.

short, for consumers, we can add
to greatly
expanded inventories

that

time

same

in generally

important,

more

exactly

did

thing!

In order to understand current
and must
not guaranteeing that prices will
business developments and avoid
be understood if we are to defeat
continue to go down for three or
being misled on the long-run out¬
them
and maintain our way of
four months before they resume
look, we must take a good hard
life.
<
*
the upward march; in fact, they
look at the short-run factors and
Russian
imperialism is not a
will not go down at all in many
appraise their relation to the longnew
threat; in fact, it is as old
lines!
I am just saying, don't go
run
probabilities/ Let me- first
as modern
Russia. It can be met
overboard—moderation is always
give you my conclusions-on the
and, it is being met by force. We
the best policy in business.
immediate outlook, and then we
need
not fear Russian imperial¬
will analyze the pertinent facts
ism. If it is merely a question of
Prices More Vulnerable Than
from which the conclusion is de¬
cold
Realized
steel, we can out-produce
rived.
The short-run situation is
Russia and all her satellites with¬
It follows that prices are in a
marked by the accumulation of
out much strain on our resources.
large inventories, based to a con¬ much more vulnerable position
As
you
gentlemen
well know,
siderable extent on bank credit. than is generally realized. A peace
the United States is producing at
The tightening of credit, the adop¬ "scare"—the very term is ironic
the
rate
of
108.000,000 tons of
have serious effects on
tion of a more flexible open mar¬ —could
steel per year, as compared with
ket policy by the Reserve Banks, our economy through cutbacks in
78,000,000 tons in 1949, and with
and the forthcoming more rigid military spending and cessation of
about 26,000,000 tons in the Soviet
and
other accelerated
credit controls are bound to lead hoarding
Union.
Moreover,
they assured
to
a
liquidation in inventories, buying. I hasten to add that I do
me
in Pittsburgh last week that
which may temporarily cause a not expect this, but the possibility
within two years from today our
dowiiward readjustment in sev¬ should not be overlooked by busi¬
output will be around 120,000,000
eral sectors of the economy, par¬ ness. As you know, the Russians
tons annually.
As for that other
ticularly in the soft goods fields. have the initiative, and even the
"sinew
of modern war, oil, you
Now, let us take a look at some faintest indication of the end of
gentlemen know even better than
their intransigence would be seized
I do that Russia is not even in facts.
on and magnified in this country,
Orders and Inventories
our league!
as
we are
so anxious for peace.
I regret to say the second threat,
On the manufacturing side, the
Undoubtedly, any consequential
the
fight
against
international present situation can be epito¬
conciliatory move by Russia would
communism is much more diffi¬ mized with this statistic: At thesummarily end what my distin¬
cult.
However, once we under¬ beginning of 1950, unfilled orders
guished colleague, Doctor Marcus
stand the basic aims of interna¬
totaled $19 billion, but by the end
Nadler calls the "inflation psycho¬
tional communism, we shall alSo of 1950, these backlogs had soared
sis"; and, businessmen should be
know better how to cope with this to $39 billion—and today, they are
in a position to view such a de¬
modern
scourge
which enslaves more than $50 billion! That speaks
velopment with equanimity.
the bodies, minds and souls of for itself—and loudly!
A word or two as to why prices
men!
Let there be no mistake
Paradoxically, on the distribu¬
are so high will be helpful in un¬
about it: Communism's basic aim
tion side, inventories, instead of
derstanding their vulnerability.
is to detroy the capitalistic system
shrinking as the unfilled orders
Contrary to popular opinion, the
wherever it is found, and they
might indicate, actually increased
increase was not caused by gov¬
adopt all means, fair and foul—
nearly $10 billion during the cal¬
primarily foul—to undermine the endar year, to a grand total of ernment spending: Since the end
of World War II, the government
free societies.
The Russians real¬
$61.6 billion in December. This had
has taken in more than it spent!
ize that inflation and deflation,
than

-

unwarranted

the

at

avail¬

Even

buy.

business

nonmilitary consumption

able for
than

goods

to

increase and other measures, and has pansion of credit. Should they be
Three Threats
which is bought wildly and blindly. This successful, no other measures may
be needed.
If, however, the vol¬
easy to accomplish — commodity
unreasoning stampede has at last
see
it, today the United
ume
of bank loans should con¬
is
confronted
by
three prices inevitabJy must rise. There slowed up; it couldn't continue

States

greatly

become

about

of

there will be far more

supply of commodities, especially
consumer durable goods, will de¬
crease

indicate that

clearly

military,

spending power, or to
production —neither of

prices have

result, some busi-

have

nessmen

physical production and the lim¬
ited amount to be taken by the

the

that

means

inventories, coupled
high
rate of

current

-

consumer

duced

This

the

anticipatory buying spree set in
motion
by the Korean involve¬
ment caused people to use their
income to buy, to borrow to buy,
and to draw down their savings

All these are important

ginning in
March,
1949,
had

ahead?

international com¬
munism, and the third is inflation.

au¬

thorities,

months

the

what do we face

ism, another is

the

monetary

in

threats.

downward

trend,

In short,

1949?

May

These large
with

production of civilian goods to the
production of military goods. At
present, only between 8 and 9%
of the gross product of the coun¬
try is going for military purposes,
hiit toward the end of the year,
12 to 15% will be used for such
purposes.

civilian consumption.

for

is already oper¬

that the economy

10%

of

the

World

War

II

Second,

rearmament

will take

considerably less than 15% of to¬
tal production this year; in other

Stock

York

Curb

Exchange

Cotton

Exchange

•

Central Location

New

•

Spacious Rooms

New

•

Homelike

Commodity

•

Delicious Food

Chicago

•

Intimate Cocktail

New

•

Excellent Service

Atmosphere
Lounge

York

Trade

other

Exchanges

Exchange Bldg.

NEW YORK 4, N. Y.

«

CHICAGO

Madison Ave. ot 54th

of

Cotton Exchange

N. Y. Cotton

Archibald, Manager

Inc.

Exchange,

Board

Orleans

And

For reservations
Theodore B.

Plaza 3-9100

.

York

St., New York 22-

-

"

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND

*

Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2245)

r
Steel

The
i

.

1

Business

Production

Electric Output

«

CaiToadings

State of Trade

Retail

Food

#■

and

Price

Auto

Industry

By ROGER W. BABSON

Index

Mr.

Babson, contending business

opportunities for

J

good today

as

cites

eight

Stresses

point.

earner

In the latest
week, that of May 5, initial claims for unemploy¬
ment insurance altered their course of
previous weeks and trended
announcement that

duction
week

new

spot

in

the

week's

news

the

was

all-time high in daily average oil pro¬

Output of steel

dipped

fractionally last

103.6% of capacity, which

was close to the record mark,
production advanced slightly in the week, but

automotive

was at

a

achieved.

was

to

while

bright

A

much lower level than that which obtained

a

Despite

substantial

a

increase

in

set-asides

one

for

During

savings

to

the

steel

may

believed,
Because

into balance much

come

"Steel,"

says

markets

for

saturation point and

be at least

may

past

me

weekly

magazine

consumer

of

goods

of Federal

is

Let

close

to

credit restrictions

temporary period this

year

willing

mill

rolling

schedules, states this trade medium, are
" With only a few day's lead-time

remaining, most of the mills are lining up their production plans
the month with a
sizably heavier burden of defense-support
projected.
Some producers already are sufficiently com¬

and

they

can

expect

smaller

are

advising civilian

to

for

tonnage to round out their DO-rated

get

consumers as to

unrated

on

quotas.

(1) Although

But

curtailments

just

be

will be hit.

consumers

Steelmaking operations continue
pace.

will

ahead.

countered.

Because

molybdenum,

for

Also,

cobalt

repairs

vacation interruptions
shortages are being en¬
the
extreme
scarcity v of
nickel,
columbium, the National Production

raw

of

and

and

material

Authority has notified producers

of alloy and stainless steels not
to use their metals in June
production for defense rated or directed "
orders until further notice.
This action was taken because melt
schedules for May show substantial increases in use of these

alloys.
Despite brief interruptions in its operations, the auto
industry
to show a
stability which should bring passenger car

continues

v

completions to 514,000 units in May, for its second-best
monthly
i volume since last October, Ward's Automotive
Reports stated.
With

*

NPA

restrictions

on

metals

States popula¬

tion

permitting

(when

470,000 assemblies in June, United States plants
a

are

expected to

lation

(2)

There

■

.

retail

stores the choice of

This

that

means

if

a

store

freeze, it will not have
as

the retail

or

chooses to

remain

sold and the volume of business done
in

most

Public

Small

will be allowed

retailers

some

subjects,

and
where

Libraries

one

(3)

The

average

under

Both the

❖

•'

for

hours.
He wants an "easy
This gives those few who

article

.Wr

■

"The Stockholders' Meeting, Mr. Avefy*
was excellent and
I'hope that investment trusts'
and security holders
generally will take your suggestion seriously;'5
As you know I have
always felt that cor- v
'-'.it
porate democracy as well as political democ¬
racy
is essential to the maintenance
and

healthy

growth

Failure
affairs
lead

to
as

to

of

capitalistic

our

exercise

in the

on

one's
of

case

vote

on

system.

corporate

political contests

can

unfortunate consequences.

Investment trusts and funds have attained
an

important place in our economy and as the
f.or thousands of large and small in¬
vestors they have an obligation to do all that
trustees

is necessary properly to protect the funds en¬
trusted to them.
It is my view
that such

responsibility clearly requires the voicing of
their opinions with respect to
corporate mat¬
ters
affecting the corporations whose secu¬
rities

held in their portfolios.

are

Intelligent
Welcome

holders.

corporate

suggestions
Investment

from

management will
informed security

trusts

and

funds

in

are

do

>

*

.

.

,

glad to work hard and long
much better jobs and faster pro¬

E.

a

T.

McCormick

position to offer"'

so.

EDWARD
New York City

T.

McCORMICK,

President, New York Curb Exchange.
'

*

■>'

v

From the Financial Officer of

are

an

Important

'

•

.

the

general

by May 31,

must

be

con¬

workers

remaining under the general

freeze

price boosts to offset increased costs.

Plant shutdowns resulted in two
industries from shortages of
rubber and steel.
In Akron, two companies stated

they

were

want

_

I

young

possess

(5)
labor

let

who

with

have

to

good habits—
liquor alone and
don't
smoke
during business
hours.
As each year fewer job
applicants appear to qualify for
good habits, those few who do
those

them have

Those

who

union also

an

advantage.

belong

have

an

to

no

advan¬

tage in getting good jobs and fast
promotions.
This gives another

opportunity to

people not

young

read

article

appearing
great deal of interest.

a

your

in the "Chronicle"

people

its

of

is

a

f,

enlightening.

the stockholders is

a

Obviously, management's
definite

and I

one

securities

in

the

would

if

company

responsibility:1J<L

think it would be

if management in its decisions would

that the only recourse stockholders
their

theory

stockholder should sell his stock if he dislikes
management

very

take

proceed

on

a

have would be to

they

dislike

mis*

the theory
sell

management's

actions.
I

enjoyed

your

article very much.

Chicago, 111.

W. J. L.

Continued

on

page

to

ments

tire-making facilities for

ning, May 26.
division

from

one

week, beginning Saturday

Seiberling Rubber Co. will
midnight

Saturday

until

eve¬

idle its passenger-tire

midnight

of

this

•

(6)

Another

Toledo, the Champion Spark Plug Co. will close

for at least
sitated

a

week, beginning last Monday.

by the failure of

a

The action

sary

large steel company to make

Continued

a

Continued

on

We

page

6

Announcing the formation of
'

,

..."

1

•

■

,

lf

'•

•

11

SCHAFFER, NECKER & CO.

plant

neces¬

delivery

on

ability

to put 40% cash down.

Wed¬

its

was

young

borrow
money
for a home.
When I got married it was neces¬

nesday.
In

advantage
have today is the

page

Harry & Myron Kunin

Packard Building,

Philadelphia 2, Pa.

LOcust 7-3646

36

PRIVATE

INVESTORS

LOS ANGELES

Dealers in

MEMBERS

MIDWEST STOCK EXCHANGE

Since 1932 Specialists in

State, County, Municipal and Revenue Bonds

We'lb

VIRGINIA—WEST VIRGINIA

Specializing in City of Philadelphia Issues

NORTH and SOUTH

309 olive;

& Co.




iff/r/i'j

Russell W. Schaffer

Carl Necker
MUNICIPAL BONDS

OF SEASONED COMPANIES

■F. W.-

IN SOUTHERN CALIFORNIA

street

St. Louis l.Ho.

-

,

CAROLINA

Stix

-

,

BLOCKS OF

CRAIGIE&CO.
Teletype: RH 83 & 84
Telephone 3-9137

Charles A. Schaufler
...

June 1, 19 SI

,4

,

Linford B. Cassel, Jr.
Joseph J. Tunney (Limited)

INQUIRIES INVITED FROM PRINCIPALS

RICHMOND, VIRGINIA
Bell System

banks

i

brokers

403 W 8 St. Los Angeles

,i;'

May 3

The observations that you make in connection with the

that

possessed by elders.

cutting operations because they have used up their rubber allot¬
for May. The General Tire & Rubber
Co. will shut down

^

Exchange-Listed Company

motions.

(4) Employers

■<*

(■

'v.-.

(

I think
your
and the Funds"

person
or

ii

Exchange President and Former

.

types of goods

by each store

an

constructive assistance and should

young

variety of

a

the interested sectors.

May

SEC Commissioner

can

merely

today will not work hard

fiduciary' "re¬

comment there-

some

DEAR MR. MAY:

excellent

get a good education by
systematic reading.

determining whether it is exempt from chart-filing-

provisions.

Degree

all

in

a

v''t:

DEAR MR. MAY:

mark-up order.

to file detailed pricing charts

required by CPR-7, the retail order.

sidered

These

Scholarships
good colleges, very cheap
Extension Correspondence Courses

in

week, gave about 100,000

determining price ceilings under

either the general price freeze order

before.

ever

op¬

advanced

'

!

■

more

free

in

are

r-

j-

z

What Employers Want

The government, it was learned last
small

•

many

for

include free

long

last year.

people.
are

portunities

attend¬

management

emanating from

❖

From

in¬

Hence, popu¬
in favor of to¬

are

education than

job."

January-June volume of 3,106,000 established

figures
young

second-quarter total of 1,492,000, only 9% below the first-

record

today,
has

workers

for

in¬

1900

at $10

153,490,000

to

day's

quarter figure, according to the agency.
This would bring firsthalf car production in the United States to
3,100,000 units, second

only to the

in

first job

got my

demand

has

75,994,575

creased much more.

4

show

I

week)

the

maximum of

a

from

creased

per

to be pushed at near-record

United

our

Roger W. Babson*

what tonnage they
allotments

July and in all probability still smaller for August.

Both large and small

loom

Such

rea¬

prove

it.

quotas

Wilfred

do

Here

to

sons

for

for defense

on,

day's

eight

are

rapidly for July.

up

work

mitted

to

good

work.

Steel

shaping

company

Below is

me answer

A.

a

(as

meetings) by in-'

ago."

wrong so
far as1 it ap¬
plies to those

when there will be

annual

position.

complaint is

there

responsibilities
at

vestment

all

the

more

and others who

by "saying this

generally

dis¬
com¬

ance

50

were

years

and

the

active

pany

many

good opportunities today for young
people as

metalworking.

are

suggested

-

charge of their stockholders'

winter

there

widely

dissatisfied philosophy, and

-

wage-

people have complained to
saying: "There are not as many

steel than will be absorbed.

more
■

a

the

various

because

than

sooner

embraced if - you - are
sell
your - stock

best

as

from

THE FUNDS" decried the

the

young

defense-support work, steel leaders believe supply and demand
for

ago,

employer.

year ago.

defense

years

to prove

advance

to

means

ago.

50

as

•

This column dated
May 3 under the caption, "THE
STOCKHOLDERS' MEETING, MR.
AVERY, AND

young men are

reasons

•

By A. WILFRED MAY

Production

Business Failures

Confronted with an increase in conversion
difficulties, total
industrial production last week continued to hold at the level
of
the preceding week, but was
noticeably higher than that of a year

noticeably higher.

Observations.

Opportunities

Trade

Commodity Price Index

t

5

The firm of Schaffer & Co. has been dissolved

as

of May 31, 1951.

14

C

The Commercial and Financial Chronicle

(2246)

tracts of .timber to

Celanese Preferred—As
And

a

keep the sup¬
ply flowing! This timber and the
resulting cellulose, is importantly
supplied by a Canadian subsidi¬
ary, Columbia Cellulose Co., Ltd.

Filler

Investment

as an

So in summary,

By IRA U. COBLEIGH
Author of

"How

to

Make

a

i

"

Killing in Wall Street and Keep It"

Providing a thumb-nail sketch of one of the principal underwritings of 1951, and giving some account of the diversity
and growth of Celanese Corporation of America.
With

the

markets

pf the

brisk

past

fortnight definitely on the soggy
side, the attention of investors has
again been, called to the necessity
of

for

fense,

Exas¬

solid¬

sumes a

ly ursine man¬
tle (fancy talk
meaning "to
turn

bear¬

ish").
On

April

5

^lodging a
'figure. '

article

In

an

in

these

is

Celanese

by

no

(For com¬

five-year

a

order

G.T.C.

at this

a

—»

we

Series

A

still
—

sults—sales

$232,484,000
$40,361,000.

and
•

.

preferred

net

Management,

taken

most
ical

an

I

learned

And

surely

a

sheltered

in

way

which to share in the future prog¬
ress

of CZ

is through ownership

that Celanese

...

and

stock¬

is

the

solid

success

.immediately

and

the

pleased-

new

above the subscription
now

ble

change

„

.

cellulose

are

the

acetate,

or

gov¬

ernment bonds

the

for

three

past

years

remain firmly
B. K. Thurlow

Such

called

be

a

times

four

move

can

unimportant

and

hardly
by any

judgment,

of

standard

Rational

and the market follower who has

failed to take
late

this

date

advantage of it at
would do well to

recognize the psychological im¬
plications of his position, even if
•he derives solace from the recent
6%

correction in stock prices.
Still Crying "Wolf"

That

Ex¬

t

many

<

The fact that

.

.

'

.

they are still pre¬

,

buying stocks today, after a
two-year rise and in open defiance
of the above obvious facts,, can
know what he is doing. Yet stoclc

prices, after four months of severe

psychological warfare, still show
an
uptrend, with new 20-year
highs established this month. |>os-!f
sibly those who have been recent
buyers are not as foolish as others
may think.
They may not have
followed the obvious course of

a

profitable one, and it would seem

to

that the, passage of time and

me

steady accumulation of income is

strengthening their position.
Market Outlook Favorable
Few people may agree

One

in all serious-

point to

will perhaps

with me

this point, but I think the

on

fu4

ture, as far as stock prices are
concerned, is easier to foresee to-«
day than at any time since * Mr.
Truman's reelection.
(By future
I man the important trend over
the next two years or so where

will be made or lost and
inconsequential one or.twd
which are the ob¬

money

not the

months' wiggles

ject of so muph misguided atten¬
tion.) I believe that there is a law
human

of

behavior

individual

who

whereby an
a
major

makes

mistake in judgment is caused ul¬

timately to
mistake.
is

lose

by <that

money

If individual,

experience

averaged into that of

a

group

the offsetting influence of luck be¬
comes

negligible.

Assuming thai

the majority of those looking for

Jower prices today
who

were doing sq
believe that the

I

are

the*same

two

years, ago,

mistaken

same

emotional bias is go¬
ing to force them at some future
date to reverse their positions and
begin buying stocks at a time when
reasoning

or

they will be equally wrong. When
this reversal takes place, I hope
I'll have the courage to disagree
to date.

ness.

con-t

duct, but so far it has been mostly

with

statement is made

words, no person who

In other
is

strikes me as being
perhaps the strongest of all argu¬
ments for higher prices, and this

for two years

them

as

strongly

I have

as

Until that time I

am

will¬

ing to remain with our optimistic
opinion on stock prices, based priJ
marily on the idea that in today's
disintegrating world there is no

statistician who pre¬ refuge for money which looks safer
dicted collapse as early as 1926 or more promising.
and stuck to his guns until he was

the

•

,

.

certainties.

dicting collapse after being wrong

.

—

work lower because of all the un¬

convinced and

net worth

more.

.

lose, whereas acetate yarns are a
The new money is being well
In addition, they
true chemical compound and have over 20 years.
.used first to call in at 105, 420,000
chemical and physical properties today have Social Security, Acci¬
shares of old 4%% first preferred;
dent Insurance and other benefits
which
differentiate
them
from
and second, .to provide funds for
viscose process yarns and which which Mrs. Babson and I never
about
a
$32,000,000 addition to
impart distinctive qualities to fab¬ had.
plant in the next year.
As we rics made therewith." Whew! I
(7) As a statistician, I must
shall see, a company growing as
didn't know it was loaded!
remind readers of how the coun¬
rapidly as Celanese can make
Seriously, the foregoing was try's birth rate will help gradu¬
most profitable use of plant ex¬
If you
cited not to be humorous or sa¬ ates this coming June.
pansion.
during the early
tirical but to demonstrate how were born
■j
Just how good a preferred is arduous and formidable is the task "thirties" when there was great
this, anyhow, and how well can it of the investor to
glean useful unemployment and few marriages
fight off a declining stock market
knowledge from the sometimes and babies, you now have not so
(if we get one)? Answering the
bewildering e l a borate factual many to compete with.
first part, net assets appear to be
presentations contained in. pros¬
(8) The pension plans which
$228 per share, and an average of
are
now
pectuses.
rapidly increasing, not
•earnings for five years (1946-50)
So let's look at Celanese an¬ only eliminate the oldsters rpore
would have covered, on an over¬
other way. If you walk into your rapidly, thus making promotions
all basis, the 4Mj% preferred div¬
easier for you, but they also fur¬
idends 41/2 times; and that's pretty living room this evening you will
nish you security in your later
velvet coverage!
So it has quali¬ probably be touching, standing or
days.
ties ingratiating to "prudent man" sitting on, or- looking at, Celanese
yarns in a dozen different' forms
investors.
But
is
it
too
high
Don't Let the Draft Worry You
C a r p e
ts, upholstery, drapes,
priced? Is it a sucker for early
crepes, satins, alpacas, jerseys, rot
I
repeat my previous advice
market erosion? I think not. I'm
•not very good at this "market to mention such submerged items that you go ahead with your plans
as
girdles, ladies' lingerie, and for college or for
survey" routine, but I did go to
getting a job the
other elements- of ladies' apparel
the trouble of asking half a dozen
same as if no war were possible.
which barely escape TV exposure!
Wall Street analysts with widely
Congress is acting on Universal
The company also produces a new
.scattered backgrounds this ques¬
Military Training just as I fore¬
high strength yarn, Fortisan, all cast.
tion: "If Celanese 4 Vz preferred
Moreover, those who are
had no conversion gimmick, what of. which has recently been snap- drafted are about as safe" as those
ped, .up for military, products as who
should - it sell at on a 'straight
stay at home; while the 85%
income' basis?" The answers were parachutes, shrouds and uniform who return
»okay will have benejlinings.
,
all between 98 and 99. So to be
fits; as veterans which the nonNor does this diverse enterprise drafted
conservative, we'll suggest that
boys will not have.
Celanese 4^ preferred is worth stop there. It produces cellulose
One
more
thought.
The
98 in a-damp cellar!
acetate plastics,
But it now
and has added question as- to whether
you will
sells at 107; so by a perfectly bnl- new plant capacity for that pur¬
become an employer some day
liant bit of slide rule
work, we pose; it turns out a whole line of instead of always remaining a
see that the built-in right of each chemicals from liquid
petroleum wageworker will
largely be
•of these shares to convert
(into gases, including acetone, formal¬ determined
by this simple rule:
common at $55 a share-till
dehyde. methanol, and other alco¬
May
If you save some money each
...
2, 1961) is today appraised by the hols.
week, you can some day hecojne
market at exactly $9. With com¬
Naturally, its principal raw ma¬ an employer.
If you don't save
mon at 48, and
paying $3, $55 is terial is cellulose derived from
money each week, you will always
not such a remote target in a wood
pulp, and requiring vast remain a wageworker.




capital in

cash

Opportunities

well

price. They

on

investa-

erstwhile prophets
viscose and cuprammonium proc¬
of lower prices do not yet recog¬
esses,
production *• by the latter
nize that they have been wrong is
process being relatively small. In
•immediately apparent from five
the case of the viscose and cu¬ could'borrow only 60% and only
.minutes' conversation or (if ♦they
for three to five years.
Now, any
prammonium processes, the yarns
are the literary type) one para¬
produced are regenerated cellu¬ good couple can borrow 80% 'or
morb
with
payments extended graph of their market opinion.

everybody

the Stock
at around 107.

appear

fr(om

a

shares

(but the shorts by moving

of

bulk

their

Business

was

as

individuals

the

.

underwriting

tinge

who have had

Cela¬

Celanese is indeed deeply woven
biggest producer of into the
fabric of American life.
these fibers on our shores, turning
It has become a word in rayons
holders, in ratio of 6 shares pre¬
out rayon under1 the trademark
ferred for each 35 shares of com¬
like- frigidaire
in, refrigerators.
"Celanese."
Then I got real cu¬
And in tailoring your own investmon) for purchase at $100; and
rious and sought to learn some¬
to old 7% second preferred stock¬
mest list, you too may, in due
holders for exchange at the rate thing -about th£se acetate proc¬ course, find Celanese preferred!
esses..'
;1
\ '
of $150 par amount ndw Series A
Well, here's what the prospec¬
for each old share held; with the
Continued from page 5
balance of either unsubscribed, or tus-says and, with some misgiv¬
unexchanged, stock underwritten! ings, I quote:
"Processes used in the United *
,by an elegant group of 200 in¬
States for the production of yam
vestment houses
from coast to
The

fanat¬

a

'their

such

rating.

wanted to' know, too, and

Celanese

common

al¬

on

fibers made from cellulose acetate

exalted' investment

is, indeed, rio trivial finan¬
cial emanation—$100,000,000 face
amount of 4 %%, convertible pre¬
offered to

has

aversion

which

The impressive history of

this

times

Corporation was the of the 4V2% convertible preferred
pioneer in commercial production --preceded only by $74,375,000- of
in the United States of textile funded debt.
;

what

new

of

it does to

deserve

con¬

the

time

aversion in

try to convince
,others that their market judgment
has been right. For their informa¬
tion the trend of stock prices
since June, 1949, has been sharply
upward. A number of investors
have enjoyed
10%-15% income
returns and
60%-75% gains on
their, money
during this brief
period while some of the more
speculatively inclined have, to my
personal
knowledge,
increased

prime

stress
this

This

coast.

curious

a

around -the investment com¬

and

.

.

.

Corporation of America.

ferred

is

There

highly competitive in¬

.

vertibles

,

.

__

dominant

a

,

.

.

may

Here

col¬

.

points out reasons why stock prices face no col¬
continue upward. Says views of pessimists are
based on "inherited and undigested theories/'

lapse and

dustry.
Growth here has been munity toward accepting some of
fantastic. Look at 1941 with sales the
eminently logical processes
at $66,227,000 and net of $7,106,of the market000; then ponder over 1950 re¬
place.
At
of

■

•

Mr. Thurlow

-

in

research laboratories

■
nese Corporation of America,
its
I've been spending all this forward-looking plans for intelli¬
umns
called
time talking about CZ,. using no th¬ gent
expansion,
especially
in
Ira U. Cobleigh
"The Convert¬
ing but numbers. That's kind of a chemicals and plastics, i s aggres¬
ible Is Now in
1
backward way to describe a tex¬ sive and productive research, all
enterprise,
as
somewhere suggest that the growth curve of
'Season," the protective value of tile
American Tel. and Tel. convertible along the line you'll want to know this textile titan has by no means
Celanese is, anyway, and reached the
debentures was outlined, and to¬ what
"flattening out" stage.

day

Partner, Talmage & Co.

Members, New York Stock Exchange

CZ, while pri¬

originally
was
pretty well bound up with
$3.50.)
You may protest that a the Brothers Dreyfus (Dr. Camiile
10-year call on Celanese at this Dreyfus and the late Dr. Henry
moment is too highly tagged at $9 Dreyfus) is now broadened under
a
share; but you will'.agree- it the able leadership of Mr. Harold
would be a sterling value at $5. Blanke. The board is no array of
If you do
that, what you are formal financial penguins, seven
-really saying is that CZ preferred of its ten directors being officers
is an authentic "buy" at 103; and active in the affairs of the com¬
ydu may even go overboard by pany.

the

change

as

leader in

warrant on
Universal Pictures at 10, with the
stock
at 8%, is quoted
around

event that the

Stock

common

to be sneezed at,

parison

de¬

in

the

company

and two

a

Opinions

By BRADBURY K. THURLOW

a rayon

the United States

10-year call
of so dynamic a.

market; and

means

bas¬

some

tions

on

No Ground foi Bearish

manufacturing en¬
terprise, spills over into chemicals
and plastics, operating direcily or
through subsidiaries, 12 plants

marily

31,1951

Thursday, May

...

.

famous

right, but today's pessimists, in my
opinion, are not' comparable. In
the first place, they are a large
and vociferous segment of professionaT investment opinion, not a
lone economist. Secondly, they did

Schaffer, Necker Co.
Formed June 1st
PHILADELPHIA,

not form their forecasts of lower

nouncement

prices after a long, speculative rise
but hear the bottom of one of the

mation of

most

protracted declines security

is

Pa.

made

of

—

An¬

the

for¬

Schaffer, Necker & Co.,

June 1, with offices in the Pack¬
ard

Building, to act as dealers in
state, county, municipal and rev¬
ly, their pessimism has been based enue-bonds, specializing in City of
on inherited and undigested theo¬
Philadelphia issues. Partners' are
ries:
"Business
declines follow Russell W. Schaffer, Carl Necker,
every
war"; '"1952, because of Charles A. Schaufler, and Linford
cycles, will be the worst year since B. Cassel, Jr-» general partners,
*1932"; empirical catch phrases: and Joseph J. Tunney, limited
"The Dow-Jones Industrials have partner.
prices have ever witnessed. Third¬

The firm of Schaffer & Co. has

failed to sell below 200 in

never

year"; "Formula timing by been dissolved as of May 31. ,
Formation of Schaffer, Necker
our plan required 90% cash or gov¬
ernments at the 220 level"; or out¬ & Co. was previously reported in
;
right nonsense: "Stocks" will go the "Chronicle" of May 24.
any

down

because the

unable

to

balance

government is
the

budget";

"Higher taxes must force prices
lower." These give a fair sampling
of some of the principal opinions
heard during the past two years;
all apparently find
common agreement in the propo¬
sition that
if peace comes the

Tellier

In

economic

must collapse; if

house

of

cards

the
stock market will collapse; while
war

comes,

quo will
nrices to

continuation of the status
obviously

cause

stock

Jersey City

Tellier & Co., 42 Broadway, New

Today: they

whole

Opens Branch

City, announces the opening

York

of

a

branch office at 15 Exchange

Place, Jersey City, N. J. under the
management of E. A. Abele. The
new
branch will have ! a direct
4

telephone

York.

connection

to

New

1

,

yolume 173

Number 5016

.

The Commercial and Financial

.

.

Chronicle

(2247)

From

extra

Values in Today's Market

on

While urging extreme caution
during the current period of
market correction,
particularly toward groups recently popular,
Mr. Komanoff
suggests as candidates for new

of the News

By CARLISLE BARGERON

Korea,

see

it, they

confident

are

Republicans the
On

this

war

latter

they

The rise

dustrial

soned

reaction

among the Washington professionals is that
the Democrats, with their
Denver speeches,
doth protest too much.
I

understand

can

that

the

We

are

passed

becoming quite callous, and the indi¬

er

risen

in '20
thfe

much

The

,

this

picture:

Truman, Marshall

and

night,

decided

to

into

go

Korea

without

consultation

with

of

his

military advisers, the Democratic Party is for
peace and, in effect,
constitutes the peace
party in this country as against MacArthur

and

the

Republicans

Although this crowd
about the guns

because

to

extend

the

hotel

a

Korea

lest

we

set

President jAuriol

off

of

to

the

that

we

holocaust,' and

France.

At

watch

he

was

step

our

followed

as

one

b,y

offending Russia; they forget all about that
propaganda about
their being right under the
guns and being in the path cf imme-~
diate destruction once
Stalin's ire is aroused; they prepare to
strike in Iran and to strike
quickly just as they have struck down
through history whenever their toes were
stepped
upon.

now

they
I

have

are

have

to

restrain

impatient

stated

them

and

there

is

every

evidence

at the restraint.

propaganda picture which has been given
the American
people. It should now be obvious to
everyone that
it is the bunk.
It must be manifest that the
British, in wanting
to land troops in Iran to
protect their oil properties, have not the
slightest worry about Russia sweeping to the
English channel and
civilization.

It must be manifest
they are not worried about
Russia—period. And you can
understand their annoyance when
they are held in check in regard

that

to Iran

by

our

forcefully will

government

make

fools

the

on

of

parent, though, that it is fools

our

grounds that for them to
government.

It

should

be

act
ap¬

knaves they are.

or

>

(Special to The Financial Chronicle)

FT.

offering

instances

E. Aratus has become
sociated with A. M. Kidder &

Ft.

Lauderdale

National

Building.




Joins

as¬

Co.,

Bank

of

as

seemingly

These issues

.

a

Since

in

minimum of $2.00

An

interesting side¬

around

now

Battery—

when

the

T

around 38

'

BOTH

issues

BOTH

the

enjoy
New

well

are

active

an

York

The

has

"Dow"

was

find

low

shape

as

as

as

U. S. Pipe &
Foundry is the
largest maker of cast'iron pressure

pipe

and

about

fittings,

hall of

accounting

for

the

industry total.
It also makes
heavy castings and
equipment for the chemical, coal,
railroad and other industries. ■Total sales volume this
year is
expected to run sharply higher
than

in

1950

with

several

new

products, such as stainless steel
tubes, contributing to the gain.
U.

S.

ally,

Pipe reports

semi-annu¬

and

in

fraternity
pretty
season

done

1951

should

S.

one

be

about

$3.75

a*

declare

the

few

companies

to

dividends in

January for
This enables the
stockholder to know at the
begin¬
the entire year.

year his minimum in¬
So far this year, U. S.
Pipe
declared
four
dividends
of

75

cents

view

each, payable quarterly.
of the sharp increase in

earnings expected this year, it is
possible that the company might
do what it did in 1949—declare

rather

off

satisfactory job of

such

inventories

rertiaiyed

over
from deals
in recent weeks.

through

Meanwhile
in

the

untenable

municipal

as

put
#

grow¬

Reserve's

policy in the Treasury issues since
the

turn of

correction,
the

cure

the

year,

underwent

although in this

painful for
involved.
■
' • ■

those
The

was

area

some

in

BOTH

their

are

municipal market is the
stronghold of the ruggedin

world. And some,

the

financial

according to

re¬

ports, were not rugged enough to
stand the gaff. Banks have done
some
calling of loans to clean up
the situation here and in the
proc¬

ess

some

people

have

been

"cleaned out."
Since the municipal dealers are
neither the Securities and

under

Exchange
National

Dealers,

Commission"
Association
no

financial

Continued

an

nor

of

the

Security

statements
on

page

43

and

respective fields.

companies with

with

ex¬

records,
ESB going back to

that of

190l.r

SELLA

,

BOTH

selling at only 6-7
times estimated 1951 earnings.
are

BOTH

1582 Union Commerce

are

earnings this

companies
whose
year, despite heavier

taxes, will show good gains

over

Bldg.

Telephone—CHerry 1-5050

Cleveland 14, Ohio

Teletype—CU 565

/

those of last year—yet are selling

considerably below their 1946 best
and

are

currently

1951 payments.

yielding
on

•

be¬

probable

-

Electric Storage Battery is a
leading manufacturer of storage
„

batteries, marketing its products
principally under the trade names
"Exide"

and

"Willard."

than half of sales

more

A

are

little
to the

automotive

industry with the re¬
placement market accounting for
a major portion.
The balance con¬
mainly of industrial batteries
sold

are

to

the

added

to

Electric
e.

NATIONAL CITY BANK
OF CLEVELAND
COMMON

RIGHTS

railroads,

the

staff of Walter,
Woody & Heimerdinger, Dixie Terminal Build¬
ing.

Storage

Battery

has

fine

record

tions

going back to 1900, with

unbroken

profitable

dividend

back to 1901.

is and

of

a

opera¬
an

record

Its financial

dating
position

always has been unusually

Circular

on

of

last real

strongly situated companies, being
leaders

•

positions

market,

ing out of the Federal

individualist

Pipe is unique in that it
of

a

working

Stock

managed

good

gets
this holiday week. In¬
quiry among dealers and banking
firms
indicates
that
they have

despite higher taxes,
earnings for the first half

share

is*

itself

the vacation

under way

important outlets.

Chronicle)

Ohio—John

been

underwriting

must

170.

In

43

(2) U. S. Pipe & Foundry—now
*

*

1946-47-48,

ning of the

Storage

is

year

The current price of 43 for Electrie Storage
Battery compares with
a price of about 57 reached
in each
of
the
three
years

has

(1) Electric

investor

1923

each

come.

are:

the

minimum of $3 per share. U. S.
Pipe has sold considerably above
its* present price of $38 in each
ye^ir going back to 1945, with a
high of $60 reached in 1946.

utilities, mining, aircraft and other

Walter, Woody

Cincinnati,
Froehlich

securities

marked undervaluation.

sists

(Special to The Financial

LAUDERDALE, Fla.—Mrs.

Bertha

*

ex¬

searching for such

careful investor two

which

With Francis I. du Pont

pur¬

annum.

U.

tween 7 and 8% based

the

destroying Western European

for

that

seem

cellent unbroken dividend

,

Well, sir, it so happens that about
this time, the
Persian";:
Nationalists seize the oil
development which is owned by the Brit¬
In a fiash, the
British, reacting as they have been long
taught
to react, forget all about
the holocaust which will be
caused

We

candidates

cur¬

in

share against $2.35 a
year ago.

France

ish.

that

market—

issues, this writer suggests to the

by

to

-v

in¬

correction—-such

or

After careful

in

take the wrong turn in
Korea, the Russians
would destroy Western
Europe, and France and Britain, having
forsaken our
leadership and let us go it alone, would just sit
there and permit themselves
to be destroyed, out of spite for
us, so
t

are

the

1951.

payments

share

of

this, the Administration evolved the
theory that not " ' market on
only did MacArthur and the Republicans want to
start World,
Exchange.
War III, but they wanted to
"go it alone." Analyzing this, it must

to speak.

the

in

per

have been overlooked and not

of

were

by

to deduct this from the

price of $38 for U. S. Pipe, it

light is provided by the fact that
in the
depression year of 1932
Electric Storage
Battery paid out
$3.00 per share in dividends.

ploited marketwise..

werg right under-the gun.
When Russia started, when Russia was *
finally provoked,-why. those ' two .countries would be destroyed
before you could say scat.
*.

we

averages

joyed this large appreciation,'but
in deserving issues which

aggressiveness that they wondered whether for their'
own
safety they should not deny our global leadership.
It was
explained by the propagandists that both Britain

be that if

the

currently taking place

new

level

$2.50

rather

the

and

of

lies in

chase should be sought not in the
vulnerable groups which have en¬

our

Cut

the

—that

time, we were told by the
newspapers, on the strength of stuff
beging fed to them by Admin-"
istration propagandists, that Britain and France
were so nervous
abdut

price

course,

heavily

so

readjustment

of

plead

action

It would seem to follow there¬
fore that in any period of market

Britain,

here

of

that

a

over

the

over

namely, the oils and chemicals.

destruction—at the hands, of
course, of Russian atomic bombs.
A few months ago, Prime Minister
Attlee of Socialist

a-running

and

outperformed

so

Florida, Millard Caldwell,,
telling the people that we face

came

between the

answer,

fact

-

the-country a lame duck governor
for government
stipend, has been

highs.

therefore:

clusion of those issues which have

few nights ago I read a
placard which told
me that in the event of atomic
attack I should walk
calmly put-"
side the room and lie down on the
floor in the corridor. Over all
room

arises

"Dow"

weighted

Now, had they fired the wrong gun at the
wrong place, Russia
would have moved in, World War III
would have been started;
the Russians would have
quickly swept to the English Channel,
they would have rained bombs on Britain and
France, and they
In

the

the

war.

or

on us.

question

The

they have been very careful
just how and where they fired them
have contained the war.

would have rained them

their

nearer

of

a

minimum of

a

Steel

capitalization

easily reach the $3.00-

per

many good grade issues?

went into Korea

they used

and.in this way

they. want

than

the past year

,

at

of

have equalled

Komanoff

Why this sharp divergence

Bradley have
telling the American people that although Truman,
over-^

been

I.

their lows of the last

nearer

1951

own

paying the equivalent of only $24
per share for U. S. Pipe which is
currently earning at the rate of
nearly $8 per share and paying out

ca¬

a

of

dividend

issues

16 'years

at

272,500

owns

its

would
are

it

Sloss-Sheffield

rent

earnings for the first six

$3.50

secu¬

price-earnings ratios,
dividend * yields," favor¬
earnings outlook for 1951—
currently
selling at prices

yet

with

that

of

were

which comprise

1950 could

excellent

Foreign policy has not figured in our last three Presidential
campaigns.
If certain influential Republican forces
have their
way it won't figure- -in the Presidential
Campaign of next - yea^ '
However, it should.
'
•£•

outstanding0

mon

the entire capitalization.

Dividends

low

able

net

$3.25-$3.50 per share as against
$1.87 for. the like period of 1950.

their

could still find

high.1

1950

months

av-

rity buyer

with

of

timates

level

various

end

Electric Storage
Battery reports
semi-annually, and this writer es¬

years,
discrimi¬

nating

the

fact

695,000 shares outstanding. At the
present price of $34 for Sloss, this
equals about $14 per share for
;
each share of U. S.
Pipe. If one "

large backlog of
orders
assuring high sales and
earnings for some time to come.

had

to

highest

pay the taxes."
In spite of the payroll deductions for taxes
this fellow is seemingly far from
being tax-conscious.
His takehome pay is what he considers to be his
wages, and that is

get

the

At

Currently operations

time

age s

strong..

the

against

working capital equalled $36,50 on
each of the
907,810 shares of com¬

pacity

by¬

a

when

are

glad

Let's

sea¬

and

At

a

to

so

neglected.

"prosperity"

lot of
easy money is being made these days.
On the question of
high taxes, I hear too often 1
the statement
by the man in the street that "if
they will let me make the money I'll be

Bargeron

se¬

ties have been

that the people are
coming to take
the drafting of their sons in stride.
A lot of
them are being maimed or killed
in Korea,
but not
enough apparently to cause any great
universal
resentment, or to offset the fact that

Carlisle

competent

securi¬

virtually

issue might stand the Democrats in
good stead.

cations

Dow-Jones in¬

during the past

amazed

grade and

the

the

curity analysts in the fact that
m a
ny good

the

party.

proposition,

in

averages

has

year

they

as

make

can

is

the

shares

purchases two
issues well deflated with
good earnings and dividend prospects.

The information about the
Denver Democratic meeting is that
they were cocky as nobody's
business, that they feel the "pros¬
perity" which the country is
"enjoying" will return them to power
regardless of scandals,
corruption, high prices and high taxes; and
on the
insignificant matter of

dividend

of $1- at the end
year
in addition to tho
regular $3 already declared.
An important factor in evaluat¬
ing the worth of U. S. Pipe stock
of

By I. KOMANOFF

Ahead

7

Request

8

The Commercial and Financial Chronicle

(2248)

The Changed
Professor of Finance,

themselves at

Commenting

the agreement of Federal Reserve and

on

Says

step in right direction.
does not

mean

Treasury

new

flexible

market policy

open

unprotected government bond market, but

an

the banks in

guided primarily by movement of prices and volume of
commercial loans, and more reliance on quantitative control

will be

Foresees
being stabilized at higher level.

regulate flow of credit and capital.

to

The

the

constitutes

Treasury

of

one

oc¬

It

1937.

to

act

flation"

has

case

Remains

Problem

of

authorities

marks

the

a

policy

credit

new

de¬

eral

Reserve.

new

policy,

The

will to

government securities
important part of their

As

an

The
the

t hori t ies

new

market policy of
authorities will be

open

Reserve

by the move¬
commodity prices and the

primarily

guided

only

too

well known

a

initiative

the

the

activities of the investment bank¬

generally misunderstood. The generaPbelief is that the prime pur¬

York 5,

the

of

pose

policy

new

was

to

One

in

in

will

authorities

serve

that the

expect

may

Re¬

Industry—Analysis—Milner,
Street, Toronto 1, Ont., Canada.
*

the

The

of credit

the new
open market policy was to make
accessibility to Reserve Bank
prime

credit

of

purpose

and

difficult

more

more

rely

more

qualitative

on

of capital.

be

Less re¬

liance will be placed on

quantita¬

and

this

because

control

interfere not only with the

national defense program but also

supply of funds available for in¬

with the output of

vestment to institutional investors

ian

insurance companies and

as

Prior to the adop¬
policy banks could

savings banks.
tion of the new
create

balances by selling

reserve

government securities to the Fed¬
eral

practically without
investors

stitutional

loss. In¬

a

others

and

could also create reserve balances

deposits by selling their long-

and

and medium-term

curities
above

at

government se¬
premium

moderate

a

many

par.
The result was that
institutional investors looked

upon

their government securities,

short-

well

as

long-term,

as

as

cash. They made
commitments 'way beyond their
expected income, believing that
government securities were for all
practical purposes cash items.

equivalent

to

the country

So long as

confronted with serious
ary

was

not

inflation¬

dangers the old open market

policy of the Reserve authorities,

long

whereby
securities

-

were

term government
pegged at a fixed

all waste and unnecessary

essential civil¬

goods.
authorities

Reserve

The

must

type of security that will be

a

to

acceptable

investors

also

but

the preparation of the money mar¬
ket to make it

possible for inves¬
particularly commercial

and

tors

banks

to

buy the

securities.

new

Readjustment About Completed
As

be expected the new

to

was

market policy of the Reserve

open

authorities led to

in

adjustment
ment

bonds

downward

a

prices

grade obligations.

of

govern¬

other

all

and

re¬

While

high-

the

re¬

adjustment was taking place the
opinion was often expressed that
rates were bound to go
higher as compared with the

money

much

level which

prevailed prior to the

enactment of

the

credit pol¬

new

in

that

based

market

and

on

maintenance of such

position

of

policy be¬

on

analysis of the

an

money

particularly
the Treasury.

the

untenable the moment mili¬

together then the

tary expenditures unloosened in¬

bond market is impossible because

flationary forces and threatened
the purchasing power of the dol¬

not

only could it undermine con¬
in government credit but

fidence
also

Protected

Market

The flexible open

market policy

of the Reserve authorities does not
mean,

however, that the govern¬

ment bond market will

tected

and

widely.

be unpro¬

permitted to fluctuate

As in the past, so in the

future, the government bond mar¬

could

set

prices

of other

lead to
of

a

high-grade bonds, would
sharp increase in the cost

credit, and could do
good.
that

respect
man

Mr.

it

is

interest

of

Martin, the

new

to

note

Chair¬

of the Board of Governors of

the Federal Reserve System,

when

he took the oath of office on April

the

'Summary

of

before

Association,
25, 1951.

a

the

talk
New

Atlantic

delivered by Dr.
Jersey Bankers

City,

N.

4




J.,

May

One

the

has

However,
market

under

ment bonds

more

in

as

the

prices
well

obligations

widely

the

than

money

taken

as

was

The

new

Fairman

61
an¬

private

Bonds—Review—Ira Haupt & Co., Ill

Pan

of

Cleveland—Circular—Gottron-Russell
Building, Cleveland 14, Ohio.
Co.—Memorandum—Beer & Co., Gulf

Co., Union Commerce
American

Sulphur

Building, Dallas 1, Tex.

States

Railroad

Pennsylvania

Co.—Bulletin—E.
Y.

F.

Hutton &

change.

William

Philip

Co.—Report—Gartley
N. Y.

Brewing

Pfeiffer

Morris

Broad

& Associates, Inc., 68

Street, New York 5,
&

Co.—Memorandum—Herzfeld

&

Stern, 30

Street, New York 4, N. Y.

Salle Street,

Ltd.—Analysis—John R. Lewis, Inc., 1006

Seattle 4, Wash.

Inc.—Analysis—Sincere and Co., 231 South
Chicago 4, 111.
— Card memorandum — Lerner &
Square, Boston 9, Mass. Also available ia
Gear Grinding Machine Co. and on Seneca

Cement Company

Co., 10 Post Office
memorandum on

Falls Machine Co.

Continued

Federal
&

Reynolds Place Budget
Finance Securities

on

Finance

Plan,

Inc.,

a

preferred stock. Reynolds & Co.
made
arrangements for the • fi¬

$500,000 5% convertible prior

nancing.

Machine

Welder
Primary Market

privately

Co.,

Broadway, New York 6, N.

61

a

Bancorporation—Sum¬
Northwest Co., Exchange

Commerce—Marine

of

Bank

City

National
&

Broad-*

&

the

of the

Inc.—Analysis—Strader, Taylor &
Bank Building, Lynchburg, Va.

Co.,

mary—Frank G. LeCocq, Pacific
Building, Seattle 4, Wash.

Riverside

and

credit policies

Bank

National

La

fluctuate
case

Goodwin,

/

Co., 210 West
7th Street, Los Angeles, members
of
the Los Angeles Stock
Ex¬

Budget

15.

New York 6, N. Y,

Remington Rand,

$1,000,000 4^%
term
debentures of 1961, $750,000 4Vfe%
serial subordinated debentures A,

before.

way,

Second Avenue,

California corporation, has placed

govern¬

Foundry

Missouri Pacific

open

other high-

will

direct

Co.,

&

Loeb

Co., Inc., Peoples National

place.

new

of

their

M. Byllesby and Co., Inc.,

Street, New York 5, N. Y.

Lynchburg

Reilly Wire

that

Co.,

Street, Philadelphia 2, Pa.

telephone to Los Angeles is now
with

therefore,

may,

already

policy

harm

more

nounce

Street,

Street, Los Angeles 14, Calif.

Co.—Memorandum—Walston, Hoffman &

35 Wall

can

Reilly & Co., Inc.,
Broadway, New York City,

Street, New York 5,
West Indies Sugar.

on

Cement—Analysis—Newburger,
New York 5, N. Y.

Star

Lonsdale

the

F.

-

Broad Street,

New to Fairman Go.
J.

Shearson,

Co.-—Memorandum—Morgan &

Set Screw

&

1500 Chestnut

Lone

—

Shops, Inc.—Report—Cohu & Co., 1 Wall

Placer Development,

J. F.

Memorandum

Smelting Co. of Canada, Ltd.—Bul¬

Gisholt Machine Co.—Analysis—H.

credit poli¬

authorities

—

5, N. Y.

South Spring

634

play an important role in main¬
taining the soundness of the pur¬
chasing power of the dollar.

greatest portion of

readjustment

market

grade
Nadler

obligations

government

of

state

that

forces

be accompa¬
nied by similar declines in prices

to be protected

continue

motion

would automatically

by the Reserve authorities. In this

will

in

which would be very hard to con¬
trol. Moreover, a sharp decline in

than

ket

new

cies of the Reserve

cipitate decline in the government

lar.

on

Co.

Co,

Cap

Ferry

sacrifices

imposed

being

are

Bronze

Co., 14 Wall Street, New York 5, N. Y.
Also
are
memoranda on Joy Manufacturing and Otis

New York

people. If government, business,
banking, labor and farmers work

A pre¬

a

broad

&

&

Federal Bake

position to exempt them¬
the

Co.—Analysis—Ira Haupt

letin—Stanley Heller & Co., 30 Pine
NV Y.
Also available is a brief report

expen¬

easily

from

Service

Consolidated Mining and

icy. However, this opinion was not

price, fitted in more or'less with
economic conditions. However, the
came

a

Graphite

available

This
applies to all people and does not
exempt those who because of the
strength of their unions or their
political strength in Washington
selves

&

Bros.

York 5, N. Y.

Public

Vermont

Elevator

of living of the people.

are

Wall Street, New

Hammill

temporarily in the stand¬

least

ard

&

Henke

Co.,

Gas Co.—Review—Sutro

Natural

Cleveland

tures is bound to lead to a decline
at

Co.—Memorandum—Swift,

Co., Ill Broadway, New York 6, N. Y.

without saying that an in¬
in the military expendi¬

crease

Felt

&

120

Central

industry in their expenditures for
capital purposes.
Only t h 6 s e
needed should be undertaken;
those not considered
essential

It goes

148 State Street,

Broadway, New York 5, N. Y.
63

postponed. This
also do their utmost to make the
applies with even greater force to
refunding operations of the Treas¬
public works and other similar
ury successful.
That implies not
expenditures. It also means great
only the offering by the Treasury restraint on the part of the people.
of

Co.,

Capital Airlines, Inc.—Special review—John H. Lewis &

government in general
Federal, state and local.
It
means
restraint on the part of

be

Bay

Co.,

:

ditures by

could

Hair

American

on the part of the gov¬
and the elimination of

ernment

»

Co., 135 South La Salle Street, Chicago 3, 111.

•

—

credit

tive

could

risky and to reduce the potential

such

American

at

economy

credit control to regulate the flow

ture

330

Boston 9,

curb these forces of

fu¬

bring about an increase in money
rates.
This was only incidental.

Co.,

&

Ross
»

•

Corp.—Analysis—Raymond &
Massachusetts.

Aerovox

present cannot alone
inflation. To
successful
it requires great

force

*

N. Y.

Steel

credit restrictive measures as are

ing houses.

j

Railroads—Bulletin—Smith, Barney & Co., 14 Wall St., New

in

authorities has been

Reserve

ment of

to

National

enlarged capital outlays by cor¬
vQlume of commercial leans. If porations are inflationary forces
which must be reckoned with. The
the creation of the
Marcus Nadler
voluntary credit controls work
reserve
bal¬ —and it
certainly is to be hoped prime task of the United States in
ances.
Although it has caused a that they do work—it should lead addition to strengthening of its
great deal of uncertainty in the to a reduction in the volume of military might is to keep the econ¬
bond market in general, and in loans considered as nonessential. omy sound.
This can be accom¬
the government bond market in It also should have an important plished only if confidence in the
particular, it must be considered bearing on the activities of the purchasing power of the dollar is
maintained.
However, it should
as a step in the right direction.
insurance comp'anies in their pri¬
The new open market policy of vate placement policies and on the be fully recognized that moderate
the

of

some

up-to-date com¬

yield and market performance over an 11-year period—
Quotation Bureau, Inc., 46 Front Street, New York
4, New York.
•
*
as

problem of inflation, in spite of the
present leveling off of commodity
prices, is serious. The increased
armament expenditures and
the

functions.

and

restored

is

however,

•

parison between the 30 listed industrial stocks used in the
Dow-Jones Averages and the 35 over-the-counter industrial
stocks used in the National Quotation Bureau Averages, both

nancial institutions of the country.

our

^

■

Over-the-Counter Index—Booklet showing an

of the

success

;

York 4,

options—Thomas, Haab & Botts, 50 Broadway, New
New York.

parture from the past and has in¬
creased the prestige of the Fed¬

market

to the Reserve
au

the

operation which the monetary au¬
thorities will receive from all fi¬

in¬

of

was

fare" of the

"an

as

than

clearly indicates that the Reserve
authorities still consider the "wel¬

of

obligation

engine

will be much

loans

large extent depend upon the co¬

money

Federal

the

the

freely
and that

in accord with the dictates
national security.".
This

re¬

from

moved

The

Reserve

partners

curred since

reproduc¬
records for the
lows, earnings,
capitalizations, volume on virtually every active stock on the
New York Stock and Curb Exchanges—single copy $10.00;
yearly (6 revised issues) $50.00—special offer of three edi¬
tions of Graphic Stocks, 1924 through 1935; 1936 through 1947
and up-to-date current edition, all for $25.00—F. W. Stephens,
15 William Street, New York 5, N. Y.
'Information Please!"—Brochure explaining about put-and-call
tions of 1,001 charts complete with dividend
full year of 1950, showing monthly highs,

past.

Inflation

to promote the welfare
of the government securities mar¬
ket and to regulate the supply of

control
has

that

am

Treasury and the Federal Reserve
System must work together as

in the field of

credit

in the

convinced, the more so since
the war in Korea began, that the
"I

developments

the most important

of

careful

the following literature:

Graphic Stocks—January issue contains large, clear

be as

before

as

screening

2, 1951, had the following to say:

agreement between the
Reserve authorities and

-new

Federal

available

more

sellers' market for
not

send interested parties

to

This in turn means
will

credit

that

rates

money

a

credit.

bank

pleated

It is understood that the firms mentioned will be

decrease in availa¬
bility of Reserve credit has for the
first time in many years placed
the

Further,

1951

Recommendations and Literature

level higher than

Federal-Treasury agreement.

new

market operations, Dr. Nadler hails it as

the Reserve's open

on

a

prevailed prior to the

that which

Thursday, May 31,

Dealer-Broker Investment

rearmament

of "the

has already been reached
rates will stabilize

and that money

University

New York

duration

rates,--at least for

money

program,

NADLER*

By DR. MARCUS

in

the

Credit Policies

low

.

that the

Reserve authorities mean
.

*.

Troster, Singer &
Members: N.

74

Y. Security Dealers

Co.

Association

Trinity Place, New York 6, N. Y.
HA 2-2400. Teletype NY 1-376; 377; 378

Telephone:

Private

wires

to

Cleveland—Denver—Detroit—-Philadelphia—Pittsburgh—St. Louis

page

33

Volume 173

-Number 5016

.

.

.

The Commercial and Financial Chronicle

(2249)

9

THE

OF

its

announces

i*.

;

t

I'
t

•

issue
$500,000,000

on

INDEPENDENCE

the occasion of its third

'

1

.

.

•

'

'

'

ISSUE

anniversary

'
,

..

'

7

•

State of Israel
INDEPENDENCE
two types

of bonds

are

ISSUE

offered

a) Interest Bearing Bonds Denominated
Fifteen

Year

3Vi% Dollar Coupon Bonds

(in denominations of $500

b)

$100,000)

to

Capital Appreciation Bonds Denominated
Twelve Year Dollar Savings

(in denominations of $50

to

This is

not an

offer

as

Bonds

$10,000)

Maturity Value: 150% of issue

pectus

V

as

amount

sell

these securities. They are
subject to the registration and pros¬
requirements of the Federal Securities Act. Information about the
issuer, the securities
to

and the circumstances of the

Copies of the

prospectus may

offering is contained in the

prospectus

■»

'■

required by that Act.

be obtained from the undersigned.

HEN
HENRY MORGENTHAU, JR., Chairman, Board of Governors

I

Ame
American Financial and

Development Corporation for Israel

State of Israel Bonds

AMERICAN




development

CORPORATION FOR ISRAEL

120

BROADWAY, NEW YORK 5, N. Y.

Please send

;

STATE OF ISRAEL BONDS
120

BROADWAY,

NEW

YORK

5,

me

a

copy

of the prospectus describing the

$500,000,000 State of Israel Independence Bond Issue.

N. Y.
NAME.

ADDRESS-

CITY-

-STATE-

-ZONE-

'

10

The Commercial and Financial Chronicle

(2250)

.

.

rose

accumulation of inventories in the

of 8.9%.

last

Mutual Funds

INVESTMENT PROGRAM

By ROBERT R. RICH

An

lnvest<me?Oc\:ount

Open

of

Details

and
request

prospectus

upon

&

SECURITIES

NATIONAL

CORPORATION

RESEARCH

YORK 5, N. Y.

120 BROADWAY, NEW

last

year's splurge of scare pur¬
chasing, to the belated effect of
restrictive

credit
tuted

of

production

DIVIDEND

Press

until

Up

to

get

our

.L.OU-

cows,

large volume of consumer goods,
the firm states. As a result "goods

But

1942

then

the

nature

a

to

as

material relaxation of

Defense
superimposed on a
program.

pect of a serious economic slump
for

Incorporated. Registra¬
these changes was

Fund

tion

covering

effective

made

SEC

the

by

and

future

foreseeable

the

Jr.,
senior
Dreyfus
&
Co., 50
New
York,
N.
Y.;

J.

Jack

Dreyfus,

of

Broadv/ay,

Exchange,

York Stock

New

the

of

members

President

voted

was

and Director of both the Fund

the

and

announced

He

Corporation.

diversified

that the fund will be a

investment company of the open-

end type and that John G. Nes¬
continuing
inflationary'
bett, President and Director of the
pressures."
Holdings
of
common
stocks former Fund has joined Dreyfus
amounted to 85% of total net as¬ & Co.,' and will serve as Vice-

suggest

began to.

effects of civilization

On the other

high and rising level of national
income virtually forbid any pros¬

the

and

war

any

armament

expenditures

could

man

a

of-such

be

cause

Grade A bride for six
one bull and ten goats.

a

on

partner

Asso¬

from

report

pressure

will

luxury

a
an

downward

a

change the name to the Drey¬

to

fus

May 24.

don.

unexpectedly

an

-

and

ago,

ciated

insti¬

measures

months

some

have become
according to

they
item,

higher taxes
will

as

Wednesday, May 23, to authorize
the change in managment of the
fund to the Dreyfus Corporation,
an affiliate of Dreyfus & Co., and

hand, it is unlikely that develop¬
ments in the international sphere

price of brides in East Africa
among
the Gusii tribe until

during

by consumers

such

corporate earnings.

style inflation has boosted the

"a
mild
deflationary
trend" due, among other things, to

encing

overbuying

trend,

and price and credit controls,

reported glumly that Western-

experi¬

nation currently is

this

exert

vestment firm of Calvin Bullock.
The

lull in a longer term infla¬
tionary trend. Efforts to combat

Office

Colonial

British

The

.

in¬

the

of

publication

monthly

tightening of credit
conditions,
is likely to prove a tempo¬

the

voted

Fund

Nesbett

former

this

Of African Brides

Gap"
"Perspective,"

in

contained

the

to

of

STOCKHOLDERS

THE

concurrent

the

and

-

,

the

all

1950

of

manufacturer

from

way

Inflation Boosts Price

cussion of "The Inflationary

program

months

rary

in 1952

1951, according to a dis¬

than in

six

consumer,

PRESSURES

INFLATIONARY

will be somewhat greater

26,610—a gain

from 24,437 to

phase, stemming from the heavy

NIATIOWAL

Thursday, May 31, 1951

.

„

piled up at almost all levels
Business inventories at

have

SHARES

of

estimated

of March were

the end
at

the
British
Crown Colony of Kenya.
In-1947, there were com¬
plaints among the young tribes¬
men
that
they were being

$66.1 billion against $51.5 bil¬

lion

a

earlier,"

year

with

combined

factors

These

asked

direct credit controls instituted by

bull

the Federal Reserve Bank and re¬

investment dealer

or

government

in

sult

York

New

cur¬

and
incomes,"
according to the-analysis.'
"However, by 1952 the story
may
be different," the
review
states.
It points out that by the
1951 consumer inventories

end of

probably will be worked down to
more
reasonable levels; that in¬
creased turnover of deposits along
with the increased money supply
can

ing power to support much higher

INVESTORS

is

that

order
In

pre-inflation

The

Board

Selective

of

Fund

Directors
has

terly dividend of nine

payable

June

on

record

holders on
H.

K.

quar¬

a

cents per share

to

1951

21,
as

Investors

of

declared

share¬

of May 31,

1951.

BRADFORD, President

;

than normal pro¬

larger

and

requisitioned by government
while an equal amount of earn¬
ing

Investment Manager

INVESTORS DIVERSIFIED

SERVICES

Established 1894 as Investors Syndicate
Minneapolis, Minnesota

ings of those engaged in such pro¬
duction will not be requisitioned

Hence, earnings will
probably outstrip the goods pro¬
duced for consumers, competition
for
the
short
supply of goods

by taxation.

should develon and prices tend to

t

rise to close the

however,

"hidden"

same

the

year

eystone

Custodian

of

fiscal

ended

year

reached

$83,080,412

holders

in

INVESTMENT FUNDS
capital

IN
BONDS
(Series B1-B2-B5-B4)

PREFERRED STOCKS
(Series K1-K2)

COMMON STOCKS
(Series S1-S2-S3-S4)

new

a

compared

to

conclusion

Annual

as

the

to

it is

"Although

opinion

just
following

Report,

the

outlook

for

our

considered
States

United

the

that

will not be in an all-out war with

Russia this year,

nevertheless, we

expect governmental spending for
defense to continue
at the un¬

Congress Street

Boston 9,

Massachusetts




pe¬

In addition,

increase .in unreal¬

an

in

the

market

$7,261,816.

months

and

was

gain,

a

unrealized,

of

unrealized

realized

$14,694,320.
appreciation

'

as

whole,

a

believe

we

those

mate

record

"Based

though
wide,

—

new

a

foregoing, al¬
as to
industry

variations

continue

will

careful selection

a

rities should

for

year

year

the

on

issues

and

last

of

high.

the

Featured

Annual

result in

to

of

secu¬

31

$91,329,495
with
and

be

favorable

a

March

1950.

showed
on

and

assets

illustrated

is

Enterprise

of

a

$83,698,269

when

you

own

a

Stronger"

grade bonds for income purposes,
24%

in cash, government and

are

other
serve

The

high

bonds

grade

—

share

Nesbett

former

organized
as

Shares

NET

on

b,y

assets

April 30

est for the

its President.

on

Dec. 31,

During three months ended

March 31 number of shareholders

had,

for

18

years,

pervision.
been

10

For

years

were

year.

than

that

spite

In

last

prevailing

OPERATIONS
versified

Investors

of

Di¬

for

the

Inc.,

Services,

Prospectus upon request

enter¬

Loiid, Abbett & Co.
Chicago

—

Atlanta

Los Angeles

—

Dividend

the high--

close of any fiscal pe¬

company's history, ac¬
cording to the semi-annual report
for the six months ended April.
30, 1951.
The fund, reported
that total
assets on April 30 were $96,469,619, equal to $1.85 a share on 52,-

of increased

cor¬

958

April

on

30,

1950.

Market

value of the fund's investments

on

A Diversified - Investment

April 30, 1951 -was $24,824,597 hr
of cost,

excess

the report stated.

Prospectus

*

American

corporations

for

-

the

current year are expected to ap¬

proximate

of p last

those

which registered an

year

all-time high.

Corporate dividends for the first
quarter

ported

of
as

1951

15%

have

greater

been

re¬

Hugh

in the report:

served
ent

may

Company

be obtained from your local
or The Parker Corporation,

investment dealer

Bullock, -President,, ob¬
"The pres-*

200

Berkeley Str, Boston 16yMass.

"

~

dangerous international situa¬

tion

confronts

new

and

While

than for passing

the

the

investor

complex
economy

through

a

with

problems.

is

currently

deflationary

J

a;.

»

he had
M.

rate.

opinion, be maintained at a level

and

Loeb, Rhoades & Co.

Fund, Inc.

are

—

been

Carl

with

associated

year, the
American

of

t

security analysis and account su¬

Affiliated

a

New York

Prior to

organization of the Fund, Mr.

095,161 shares of capital stock
record outstanding.
These
compared
with total net assets of $82,490,"Industrial activity will, in our 705 on Oct. 31, 1950 and $79,715,-

high

Fund, was

explaining

American
year

re¬

Jan. 2, 1947 with Mr.;

on

women

in

for

buying power.

increasing number
desiring to

an

prise and thus,

TOTAL

medium

and

stocks

preferred

in the

own

in man¬

previous

year

A page is devoted to
American System is

and

men

At the time of change

agement 55% of the fund's assets
in common stocks, 21% are in

are

the philosophy

how mutual investment funds

of

tions.

on

"It's Easier to Believe in Ameri¬

attracting

Drug

investor.".

Report

the

Inc., and a member
of the board of various corpora¬

Miller

active in the field of market

that date comparing

$62,122,232
with

net

President of

Harold A. Weissman,

Nesbett

FUNDAMENTAL INVESTORS

Howard B.

corporations;

the

$21,-

was

and for

year

various

Nesbett

cost)

Fund are:

Keppel, partner of the Perry En¬
gineering Company and a Di¬
rector of the fund since its organ¬
ization
as
the
Nesbett
Fund;

(excess of market value of secu¬
over

its

board of

Bachner, senior partner in
the law firm of Koenig & Bachner
and a member of the board
of

rities owned

ex¬

in

Lester

peacetime

precedented

porate taxes, over-all earnings of

Xke Keystone Company
of Boston

during the

directors of the Dreyfus

riod in the

investors:

and

business

the

Other members of the

ago.

year

contains,

issued,

higher
Prospectus may be obtained from

a

11th

The

'A

six

$62,657,381 a year ago with 14,- vested interest ih the
621,546 shares outstanding owned System is distributed among more
by 45,310 shareholders against 13,- and more people—and America
200,620 shares and 42,846 share¬ grows stronger from within.

Funds
Certificates of Participation

announced

Assets of National

Series

Securities

high

50

period last

'

-

from

value of investments of

corporate dividends will approxi¬

"Why

the

are

-

*

realized

$7,432,504.

was

81c

was

The overall market result for the

the world.

over

out,

778,158 on April 30, 1951.
the

Growing

for

Wives

moral?

paid

appreciation

Total

The

can

gap."

Corporation,

April 30, 1951.

ized

etc.*
So, the price
has started all over

ident of National Securities & Re¬

results

were

cows,

pensive all

on

April 30, 1051

on

securities

of

there

especially desirable
daughters are demanding "un¬
der-the-counter" payments in
addition to "the fixed price of

part of it!"

search

from

Fathers

.

with

HENRY J. SIMONSON, JR., Pres¬

investing their

inflation.

$4.88

profits

riod

G"su

the

suffering

is

economy

portion of national production be¬
Principal Underwriter

Net

bull and ten

sale

goats.
Now,

six

was

$107,593,348

Net asset value per

including 25c
or^ 19%.
*

"rollback" rate

one

with

1950.

with $4.30 on Oct. 31,
1950.
Increase per share for the
12 months ended April 30, 1951,

,

analysis concludes that, "as
we see it now, certain distortions
in the economy will tend to bring
about
inflation.^
These
results
The

a

or

cows,

on

compared

again.

during 1952.

form

six

of

spiral

later this year and

ary pressures

share

re¬

a

which began

year,

compared
Oct. 31,

Gusii wife at the

brand

reporting

Npv. 1, 1950, shows net assets on
April
30,
1951
of
$123,463,491

emergency.

the price of

pegged

liable

operations may
the inflation¬

Treasury

the

meet

to

fiscal

rent

estab¬

were

FUND

assist

and

the

of

Director

and

President

Dreyfus Fund
management.

Oct. 31, 1950.

on

for the first six months of its cur¬

one

as

1948, the grand tribal coun¬

cil

add considerably to

Dividend Notice

AFFILIATED

picked up at half
few years ago.

controls

of April 30, 1951 compared

as

with about 89%

lished by the tribal councils in

"our feeling

price levels; and that

FUND

SELECTIVE

the purchas¬

available

make

cows,

sets

20 goats
quality wife they

many

same

have

Price
,

production

rent

Established 1894

of

imbalance

the

from

as

the price a

market

bond

substantial effect in

a

preventing the outbreak of the
strong inflationary pressure this
year which would ordinarily re¬

CALVIN BULLOCK
One Wall Street

due

the

"will have

weakness

recent

to

lend

Prospectus from your

could

16

deliver

to

and

for the

banks' willingness to

of

striction

into

penetrate

trade.

as

*

"s*

.Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2251)
calendar

income
spared
dar

1950

year

of

produced net

$6,454,411,

with

1949,

year

as

$1,365,485
Earl

calen¬

E.

Crabb,

-Chairman and President, revealed
today in the company's annual re¬

:

port.
-'

pointed out, however, that
while neither widespread inven¬
tory liquidation nor serious price

corn-

for

concessions

theless

investment

companies

and

tual

its

certificate

affiliated

mu¬

investment

.$820,153,104

companies were
of March 31, 1951,

as

.the report stated.

As of March 31,

"the

policies

amount of

of

one

the

ity

THE

CURRENT

television

set

accumulation

inventories

as

was

its

as

temporary situ"over the long run our
a

preventive.

making
construction
loans
the
mobilization
period
will be reduced by materials con¬

to* obtain

trols

credit

developments

'centers

The

will continue to finance

company

'such

restrictions.

when

controls

permit,

»

not

powerful

,

PRODUCTION CURBS

goods before the end of the
will

mer

ventory

obviate

any

deflation

in

April 30,
at

$12.74

outstanding shares

500,000

share.

per

mark

for

The

number

first

time

during the last quarter, Mr. Tripp
noted.
-

,

corporations
were
obtained
by
Delaware Fund executives recent¬

AVIATION
nrenared

attempt

an

to determine
whether withdrawals of metals for
defense

were

to cut back
production in time to avoid a de¬
flation of inventories of consumer

capital goods.
"The

snecial

a

of

earnings in 1951. The report
v
explains why larger profits and
are

Copies

year.

opinion," Mr.

Barringer stated, "is that

in

-

defense

out

for

We often hear people
don't want great wealth—

building

are

fast and

up so

between

sue

this

labor
has

and

grounds for expansion,
extent that

some

manage-

given
of them

-

the

even to

of

investment needed to

production

will obviate any

curbs

that

serious inventory

Mr.

1950.

Barringer

added

that

the

The chart indicates

1950, compared

ducing industry

vestment

Fund's

diverse

was confirmed

other

fields

in

sources

as

by

such

s.ocks,
$1,700

-

-

in

with

a

$9,000

$4,000 in-

a

1941.

In

common
i

..

retailing, trans¬

portation and finance.

the

"enabled

the

on

other

needed

was

only $3,000

was

,

hand,

in

1941

,

only
and

needed in 1950.

.

force js
creates

an

■

h'dS

and
to

people

to

go

caused

or

50 State

to

get

couple

a

such

is

security.
in

secure

forced
to

many

the

of

war.

ag-

without

~

no

PLEASED

TO

for

eternal

s

cur

*An address by Mr. Townsend
the Rotary Club, Southern
Pines,

May

T.
as

J.

THE

ELECTION

18,

President

were

Crats to

before

N. C.,

1951.

Aviation Group Shares
Bank

..

-

Manhattan
AND

Group Shares

-

Diversified

HIS

Bond

ADMITTANCE

AS
■

t

Funds,

"

A

Inc.

Fund,

GENERAL

'

Insurance Group Shares

Inc.
PARTNER

*

OF;

Stock and Bond Group
Shares

,

*

.

J

Manhattan

Research Associates
'

-

.

o.

(Mutual

Investment

w.

long

and

/
Of

'

WALL

n

'

\

:

NEW

YORK

24,

1931




full

accomplish-

auow the Bureau-

destroy all of this

Or

us

the

down

of

our

HARE'S
RECTOR
YORK

show

ter,

that

for

more

of

system

individual

me

one

that works bet¬

produces

more

benefits

people,

in practice, not
joist in theory. Those who do not
like

our

should

system
to

move

of
the

government

country

of

their choice.

LTD.
STREET

6, N.

Y.

Prospectus may be obtained from
the above or local dealer.

soundness

For,

not

of

our

be
ex¬

thrifty

only

if enough of
productive
an4
national economy

are

can

a

survive.

Everyone knows that the cost
living, the prices of most goodsi
and some
services, are inflated to'
of

the

danger

point—danger

collapse and
less

severe

take

we

of

of

a,

deflation un-;

steps to prevent

That is the part

our

it^

economic;

sub-structure that needs
strength-;
ening—and urgently. Our money
supply is inflated to a point where
the

dollar

has

declined

in

pur¬

chasing

power to the fourth lowest
level since 1775. Measured
against

normal

a

that

was

buying

power

than 57

it

will

is quite

show

a

year,
1939, the dollar
then worth 100 cents in

is

worth

now

less

cents, and in some goods
buy far less than that. It

likely that the dollar
willj
further drop in the
years'

ahead.

lj

For many years the
majority of,
the people of this nation
have led';
a

day-to-day,

curity.
the
and

mouth-to-mouth'

without

Smart

real

any

leaders

se-j

recognized'

longing for financial security;
provided

better

programs. The

of

gram

retirement

Savings Bond

the

U.

S.

pro¬

Treasury,j

through the payroll savings plan,

and the Bond-A-Month Plan
has
been most effective in
creating fi¬
nancial security for a great
many,

people. However, this program
iSj
not complete in
itself, even though;
it is a "must" for all of us. The
Life

Insurance Companies of
the:;

nation have made
to

Real Economic Security

provide

through

a

noble

financial

annuities

attempt

security,

and

monthly.
security settlement
plans of policy claims,.
enjoy in this world grows
but again this has
failed, to a de-i
Out of his own chance to do some¬
-

The only real economic

man can

gree.

provide for his own and their
future and their welfare. Insofar
he* depends upon the state for
state

is

straction^but
man

mercy of the state.

not

a

majestic

collection

ab¬

of hu¬

beings with human weak¬
plus an inevitable appetite

nesses

for power.

This collectivist idea, you
know,
is nothing new in the world. We

]

The

to

The
19

the

people

existence

I believe in the future of Amer¬

it, he is at the

Distributed by

NEW

MAY

for

we

State Department to "sell
the river"?

as

j

STREET,

Ltd.

/

...

48

be-

thing for himself and his family,

Shares,

company

INCORPORATED
r,

Funds)

■

Institutional
hugh

was

that

enterprise which is the best yet
devised by man—the best
by test.
I do not think our
system is ob¬
solete and I will not until someone

OF

^

government

loosed
^ih

can

of

for the first

continent,

any
a

the latent powers in man,
mental, physical, and spiritual,

ty.

Herbert

Vice

on

time,

^

fhrwTrrr*

ANNOUNCE

the

to

and his ingenuity for his own adhaving vancement.
Here, for the first

least, is

means

And

families.

you

State.-Here, for the first time, the
individual was given an opportunity to exercise his initiative

The

ica,

ARE

making

mean

Americans, 63 million working
Americans, 39,750,000 American

of

longed to the people, rather than
°* a people who belonged to the

security

nations to

extent

part

but

resources,

On this continent,
time

gressively promote their interests
even

ascribe

may

rewards for individual enterprise.

love

'

WE

of

we

the ground is 155 million
individ-*
ual

our spiritual and human resources
under freedom and a system of

they

When

their

We

founded

Last, but by

Street, Boston

speak

strong,

in

""f* "nJ/f of it has been
main part nfTh«eSI1 due

Some

have committed suicide when
faii

the

PHILADELPHIA 2, PA.

preach a
that, but I am far from

this to natural

™any

extremes.

<'Mother-land"

Putnam Fund
Distributors, Inc.

we

economy is not something to
left to politicians and
financial

to

with the greatest productive power and the highest standard of living the world has ever

The desire for home security is

prospectus from

investment dealer

;

When

today.-In a Century and a
half, the United States reached a
position of preeminence; among

45 years of age. This
old age security prob-

complete control of the world.

your

States

United

Economic Strength Essential

world

Soviets, I believe, are convinced
they cannot have security for the

S/]o6ten

Gallup

on a

pled.

hot'going

am

known.

strong

has

FUND

would

the

mistake.

figures

thority is responsible, more than
anything else, for the plight of the

over

The desire for National

PUTNAM

thought England
and

fight

would

.

home.

eorge

not

perts; it is something that must be
believing that loss of
built from the
ground up—and
faith in God and His Divine Au-

other, this tends to bring
happiness and security into the

£7/e St

when they

Christianity.

by the Imperial
Government
in
1914,;

saw some

ai0ne

growing proportion of

a

1

for each
nnimHniiHwmwniwiwminunwi
IIIIIMHIIIIiniHIIIMMMnHHinMMMH

made

German

Russian

*be population to survive to old
age* Today> one-third of the labor nations,

investment in bonds is needed in* lem.

general opinion in the metal-pro¬
the

size

pay

"ffrocerv bill" in tne nprindc 1Q41
g
eery Dili in th* periods, um-

deflation."
*

letter, analyzes the

"outlawed"

sermon on

be-

are

i

,

perience

The

The?

madmen indeed to
repeat the

mistakes

Communists.

unions

-

latest

Peace.

fast enough.

.

obligation

its

of

avert

this country-

I only want enough to continually unbelief does not change the facts, only in the military sense, but in.
su^ a11
need.s" ' '
However, their unbelief and lack the economic, for a strong econ-4
'
The Question of job security has of church attendance does play omy must be behind the good
right
been one of the key points of is- directly into the hands of the arm of Uncle Sam or he is crip¬

19 Rector

before the end of the
summer, ex¬

too

hereafter, the
immortality of the soul, but their America

from Hare's Ltd., coming "totalitarian" in their outStreet, New York, N. Y. look.:
being translated into production
Ours is an aging population. The
so
fast that civilian goods
will, INCORPORATED INVESTORS, in advances of
medical science have
orders

that

be

politi¬

another

of the Kremlin would
have to

men

poll
of
various
nations
which
showed that 34% of Americans do
not believe in a life

our

.thinking.

obtainable with¬

are

fact

is

we can

not; or of Hitler,
Musso-j
lini, Tojo and Company in 1939-^
41, when they made the same

I

us,

Morris M. Townsend

para-

in

America—physical,

political, and insincere
probably temporary. As for

and

se-

ment..This

indicated

'

consensus

for

craft

dividends

.curity is

the

of

to the fu->

—

security is due in

to

weakness

any

cal, and economic
world War. I believe
that war if w.e make

patently

personal

sa^

renort

part

.leaders

desire

.mount

ture of

that

reason

.Their recent relenting toward the
Orthodox
Church
was
quite

•

Financial

OFOTTP

vestors and dealers on the favorable outlook for airlinp and air

likely

for

the

crossed

•

main

making it work, I

fear for the future of this

no

own. system:
The greatest menace

have turned away from the

.Prince

many

$6,125,746

The

the

in

forms:

lack of

.great

appear

three

a

the

at

strong enough,

This

se-

can and

does

is

that

our

world.

many

$6,480,209 at

were

compared with

of

metal-producing industries, D.
Moreau Barringer, Chairman, Del¬
aware Fund, reported
today.
The
opinions of the various

in

desire for

Eternity.

all

—

notions

they work. If we
American pattern and

our

hard

country due to

communism has grown so
rapidly
.in this nation and
throughout the

The

curity

have

se-

fully

.

new

a

in

slave

proved

~

.satisfied

go

around.

this

to make

The desire for
security is so deep*
"
implanted within each of us
that the fact it has not been

ly

of

society

beyond

anxious

"

the

wheels

Television-ElecInc. of $12.97 per

months' earlier total of

in

ly

makes

'

of

Fund,

Total net assets

sum¬

serious in¬
the opinion

number of major corporations

a

raw

high for any quarterly report date,

civilian

on

scarce

quarter, established

*
,

/motive

something
are

their'position

cure

Western

from

Authority

have

life and

most

in

-

assets

second

'

nor-

Divine

old-fashioned

security. Self-interest, I need

share at April 30, the close of its

it

stated.

was

of

Net

tronics

business

as

necessary

His

stick to

is the
that

the

away

those

work

,

materials."

and

the

occurs,

and

for

Thinking individuals realize there
be

in

get

get back to

must

for

When

to

fundamentals of honesty, in-adustry, thrift, the sanctity of con¬
tracts, an honest day's work foif"
a
day's pay—and belief in GocI

strength
aid

states

the

the

menace to

as

struggle

Deep in the heart of every individual is the desire for
personal

;
-

Television-'tell-you,

rise

greatest

economic

up

slave

of

economy and pistol politics.
What, we need is to

family's wel¬

Stresses systematic investment

the /animates most
"There may well people. It. is
be a rather tight situation
espe- .the
motive
cially if manufacturers are unable power that

seasonal

long
world

individual financial
security.

Electronics Fund.
mal

war as

similar

Babylon

topless
towers and Egypt of the
pyramids*
We Americans are the
heirs of a

Funds

and his

own

building

urges

fall, he added,

^during

*

of his

grows out

Sees another world

•

loans

-

enjoy

America's future, and

of

ceeded," according to Chester D.
Tripp, President of

investments
in
new
mortgage
during 1950 were approxi¬
mately $195 million.
The report
pointed
out
that
opportunities

man can

fare and future.

studies indicate that 1950's record
sales will be
substantially ex-

na¬

principal sources of mort¬
gage funds.
The company's total
;

certain

a

had

since

Mr. Townsend lists
types of security desired by
individuals,
societies and
nations, and points out only real economic secur¬

liquidation, but the ef¬

ation and

tion's

Vice-President, Axe-Houghton

Reserve's

force

have

Obtain It

to

By MORRIS M. TOWN SEND*

being

fect is expected to be minor."

.certificate holders and sharehold¬
is

Federal

may

characterized

Investors

never¬

are

dangerously large bank'
"In such cases," he con¬

»1951, the I. D. S. group of com¬
panies had approximately 5 ft,500
ers.

anticipated,

inventories

Security and How

on

Investors, its tinued,

subsidiary

are

some

carried

credit.

Total net assets of

11'

He

primary

Savings
of

has

the

Bond

Life

failed

is

reason

program

Insurance

that
and

the '

that'j

Companies

\

political one: The
continued devaluation of the dol-,
lar. To foster selfish political
a

am-J

bitions

the

administration

has

brought about a most difficult
j
position for those relying on fixed:
savings such as Savings Bonds or-*

Continued

on

page

35

VNW4*it***4*E'.WiWi»

The Commercial and

Our Ability to MeetNew Oil Demand
PHELPS*

By THOMAS W.

Assistant to the Chairman

of the Board of Directors
Company, Inc.

of

Socony-Vacuum Oil

Phelps warns reduction in percentage depletion allowances
would seriously injure the now vitally important development
activities of all elements in oil industry, falling most heavily
Mr.

on

produclbility available for supplanting it.

excess

What has furrowed my

with

connection

brow in

discussing

the

subject of our ability to meet new
demand for oil is that I have not
able

been

conditions

.

.

Thursday, May 31, 1951

.

lubricating oils would

run

about

for each daily barrel in¬
crease in capacity.
The cost
of additional trans¬

would

facilities

wall of which

portation

Tennyson

enormously
depending
on
dis¬
tances and the type of transporta¬

wrote—that if

tion

but

could

he

idea of what is in¬
volved.
You gentlemen know so
much more than I do about the
line

know

what God and

are—this

man

Thomas W. Phelps

of

subj ect

directions. To
discuss it, for example, without
reference to Iran or Soviet Russia
would be roughly the equivalent,
it seems to me, of that admonition
to small boys wanting to go swim¬
seems

to lead in all

"Hang
hickory limb

ming:

clothes on a
but don't go near

your

an

of

marketing

of

not going to

am

facilities that
make any esti¬

mates in that direction.

Obviously, if it costs $5,000 for
barrel of additional daily

production in this country, an

oil

increase

of

even

as

little

million barrels would

of

increase

an

the

from

more

one

cost $5 bil¬

The experts have

lion.

as

estimated

than

1950 rate to

twice
1960's

estimated needs.

be

events other than

shouldn't

then

hand

those

and what
the chances that history may

are

"if"

is

the
he

one

of the most useful and

satisfying in

least
as

That little word

way?

their

go

in

by

attend

to

of

kind

iffy evening.
warm

the

as

had

time

a

askea

was

had.

he d

he said,
it was an
If the soup had been

Well, sir,

wine

he

officer

superior
what

nearby castle,

and u the
old as
the

wine,

been

as

Much Sales?
Thus far, too, we have not con¬ chicken, if the duchess had been
as pretty as her maid
and if the
though, let's try to stick sidered the creation of any stand¬
Some people think maid had been as willing as the
to estimates based on no war, not by capacity.
we should have a million barrels
duchess, it would have been tops.
boom, and continuation of present
trends in demand for our various a day in that category. There goes
Necessarily, every estimate of
another $5 billion.
the future must be based not only
products. On that basis, there is a

opinion

on

Where

1960 we are
■t.-

will

Where

the

the

Money?
money

/

them

shape

to

jn world trade

bility

of

draw

to

called

be

produciif we

excess

which

on

should

to

suddenly

on

western Europe with the
now
coming from Iran. That

supply
oil

could affect your

businesses, par¬

ticularly if other countries should
follow Iran's lead.
The
most
basic
fact
in
the

may

might upset those

change that ratio in Russia's favor.

relationships.
Of
course
governmental regulation of your
prices and competitive practices
would do the same thing. Such
price

threats to your
businesses. If you go out to meet
them> instead of waiting for them,
you can do a lot to keep them
from becoming realities,
possibilities

hands-across-

a

representative of his unit,
he reported
back to his

the

When

as

Amen-

an

England

How

substantial body of expert

margin

We have

Europe.

to

went

oil

little

are

during
last war. One night, for which
had other plans, he was or- Importance of Iran Nationalization
sergeant

the-sea dinner at a
as

language,

our

illustrated

was

are,

First

that between now and

of those Middle East exports

60%
of

East and nearly

Middle

the

from

good businessman but he

consider what

we

those certain turns

dered

each

would

assumed in making the estimates,

can

that

the water."

gives

cost
I

demand

new

capacity in a long pipe¬

ditional

aboutithe
would

about
of ad¬

but a figure of

used,

$500 for each barrel a day

all

know

vary

of storage,

both our own and the

be a
world
today is the
contest of
is a poor
strength between the Soviet Union
the oil industry or the added cost citizen, and these are times when
and energy losses which would be good citizenship is vital.,
and#the West. No appraisal of the
oil industry is complete without
incurred by refining to the higher
0ne
of
the
assumptions
on
reference to that contest. Prob¬
quality level. Based on piesently
our estimates of future deknown petroleum technology, that mand are based is that we shall ably 10 times more oil was used
in the Second World War than the
energy loss would be high.
An- jjave no radical change in present
first one.
other point, of course, is that if
prjce
relationships between oil
Including the foreign holdings
100 octane number gasoline were
and CQal and gas At a time when
of Britain, France
and Holland
generally available many of the we are imp0rting nearly a million
along with our own, we have
older cars on the road would be
barreis a day, it seems obvious
something like a ten-to-one ad¬
using it unnecessarily,.
that any barriers raised against
vantage over Russia in current oil
If, as I have suggested, the imports at home or any restraints
production. It would not be sur¬
foregoing estimates of the future put 0n oil* exports by the counprising if the Soviet tried hard to
might be drastically changed by tries originating most of the oil
capital investrequired of

of

dollars

that

turns

is

probably

$7,500

Like

crannied

the

refining

$1,000 a barrel while the
cost of additional capacity to make

flower in

.the

ordinary
capacity under

additional

for

about

which I am

familiar.

oil

figure
current

with

area

or

<

grade gasolines,
whether it was for lubricating
and
aviation
gasoline. The

advantage

full

take

customers',
whether progress would
not be But you might be interested in
better served by building engines considering
some of the things
capable of getting more useful that could upset our estimates,
energy out of the gasoline now There's a chance for you to do a
available point out that in esti- constructive job on some of them,
mating what motorists might save too.
Any man in business no
by using higher octane gasoline matter how large or how small,
than can now
be manufactured who tries only to take advantage
we must not overlook the several
of events without ever lifting a
ment

for regular

was

gasoline

to

figure out how
to limit it to
an

it

gasoline than the industry is now
able to make. Those who question

billion

and independent operators. Reflecting
nationalization of Iranian oil, he warns of shortage of our
smaller companies

on

*

Financial Chronicle

(2252)

12

present facts but on certain as-

sumptions,

which

is to say, on
Crop estimates, for
based on intentions

come

of

Nationalization
jran

something

means

to

of

your

great deal—
Americans are not

business—possibly
though

even

oil

the

a

parties to the concession. History
-g jn
making over the right
soverejgn government to set
jts own agreements at its
scde discretion. There is reported

Q£

a

As

Russia would

ting

provision in the Iranian
Government's agreement with the
be

a

0il Company that

Anglo_Iranian

concession shall

by the government and

nuned

an-

the

therein contained shall not

terms

altered

be

not be

either

by

general

or

special legislation in the future,
or by administrative measures or
any
other acts whatever of the
executive authorities." The agree-

week,
gain doubly by get¬

part
of
the
Middle
oil, first because its loss

any

Eastern

would

weaken

its

cause

us

gain

communism.
the oil

now

and second

chief

The

is its

the

Western

value

of

to bolster the

use

Europe and

of western

economy

from

be¬

strengthen

would

to make, it unnecessary

to send oil

Hemisphere to

Europe. But the oil of the Middle
East

could

be

vantageously
development

used

by
of

just

as

China

ad¬

for

Russia

the

and

other

parts of the Far East friendly to
the Soviet
in

as

Europe.

asjde

to

out'in

Carmical pointed

J. H.

the New York "Times" last

by the western world

If

Russia

is

contem¬

plating further aggression

—
and
our country takes that
possibility
seriously enough to be buying

billions

of

dollars

of

insurance

against it—any marked improve¬
ment in her supply of oil would
remove
as

one

did her

atomic

brings
nearer

bomb.

the

deterrent, just

more

success

in producing an

That

Middle

possibility
East

much

home, doesn't it?

certain "ifs."
sell more oil than ever
All the estimates of increases in
from?
Well, the oil industry has example, are
before. As you might expect, the
demand and capital needs to meet
experts don't stick together when spent over $10 billion in the last to plant, or on acreage actually #rnent was made in 1933, and was
them could
be
knocked
into a
five years in expanding its capa¬
it comes to saying how much. The
planted at the time the estimates to have expired in 1993. How
cocked hat by a real business de¬
earnings plowed are made, and also on the assump- could events in Iran affect you?
most
optimistic forecast I have city. Retained
pression.
back into the business, borrow¬ tion that temperatures and rainheard is
that domestic demand
The
United States is now prowill
be
normal.
Similarly ducjng more than six million barwill be at least 8 million barrels ings and some sales of stock have fall
supplied the funds. With the pos¬ petroleum demand estimates have.*.rels of 0il every day from wells
a day by 1955, and between 9 and
sible
exception of the standby to be based not only on such facts within our own national bound9V2 million daily by 1960. Last
year
demand
in
this
country facilities, which are hardly com¬ as automobile registrations, oil aries. That is more than half of

going to

Wni. G.

if they are to be burner installations and existing
capacity for emer¬ price relationships between oil
gency use only, the further ex¬ and competing fuels, but also on
as though we might hit 7 million
barrels daily. Our own people in pansion that is foreseen probably projections of trends of petroleum
can be financed pretty much as it
product uses, how we think genthe Flying Red Horse Companies
has been in the past — barring eral business will be, and what
have tentatively set their sights
major changes in interest rates, we expect from Russia.
at 7 million 775 thousand barrels
of average daily demand in the security markets and tax laws.
Logically it might seem that we
Reduction in the present per¬
United States in 1955. For 1960
should require each forecaster to
their somewhat hesitant guess is centage depletion certainly would
give us as many different- esti8 million 650 thousand barrels a seriously and adversely affect the
mates of future
oil demand as
exploratory and development ac¬
day.
are
different assumptions
there
tivities of all elements within the

about 6V2

averaged
rels

a

million bar¬

day, and this year it looks

mercial

truly

all

at

excess

•

.

.

.

,

.....

in¬
dustry will cost billions of dollars.
Any such expansion of our

One figure

for

000

barrel

a

frequently used is $5,overall cost of each

the

day added to our present

supply of oil products. That fig¬

of course, includes all costs
from exploration for new crude
oil reserves to placing the finished
ure,

product in the hands of the ulti¬
mate consumer.

and

oil

combinations

of

assumptions

industry, but naturally would
which might affect that demand
fall most heavily on the smaller
in a major way.
But even if we
companies and independent oper¬
did have a long list of different
ators who as wildcatters have dis¬
covered

large percentage of the
resources.
Regardless
of theoretical and technical objec¬
a

nation's oil

tions to percentage depletion,

or

of
a

sumed
have

on

future

wide

conditions,
to

decide

demand

oil

variety
we

of

as-

still would

which

was

the

the
right one. Try as we may to avoid
against reducing
the
risk
and
responsibility of
eliminating it now is that to
forecasting,
we
cannot
escape
so would curtail our oil find¬
argument

great
do

estimates
based

oil being produced in

ab the

With such

entire world.

sbip

a

the

Carey Partner

In Albert Week Co.

leader-

jn 0ji production from our
reserves why should we

domestic
worry

about the oil situation any-

where else?

that much

Might it not mean just

more

prosperity for the

American oil industry if some of
the foreign production was shut
down for a while, or even diverted
to Russia?
To

see '

.

Middle

the

East

in

perspective, we need to
remind ourselves first that the
United States which has less than
a third of the world's proved un-

proper

derground
about

oil

reserves

of

two-thirds

all

is

using

the

oil

produced in the world. Even if we
take
into
account
the
oil
of
Canada and of all the countries to
the

the

we

still have in

Western

Hemisphere

south of

entire

us,

W.

G.

Carey

William G. Carey has been

ad¬

partnership in Albert H.
Week Co., 60 Wall Street, New
*York City. Mr. Carey is Manager
mitted to

the
firm's
over-the-counter
than
half
of
the
world's of
figure that ing efforts at the very time when acting in accordance with assump- \ess
tions as to the future, nor can we
known
reserves
from
which is trading department.
finding and developing additional the industry is being urged by the
avoid being judged by the cor- being
produced
nearly
threecrude oil production in the United government to carry out a maxi¬
rectness of those actions.
States now costs somewhere be¬ mum
of exploration as an im¬
fourths of the world's current oil
tween $2,300 and $2,600 per bar¬ portant part of the country's de¬
Probably the worst thing we supply. Thus whether we conrel a day. of additional output. fense program. If we deduct im¬ can do from our customers' point sider the United States alone, or
Except in the Middle East, which ports of oil, we have practically of view is to be caught short of take the entire Western Hemisis in a class by itself, the figures no reserve of excess producibil- having
all the oil of whatever phere as a unit, our part of the
PHILADELPHIA, Pa, — John¬
probably are not appreciably dif¬ ity. To make an activity less at¬ kind he wants when and where he world is drawing on its known re- son, Keen & Co., Girard Trust
ferent
abroad.
That is
because tractive taxwise at the very mo¬ wants it, no matter what happens, serves of oil at a much faster rate
Building, members of the Philathose
expenses
abroad
include ment more of that activity is If we have too much oil in the than the rest of the world. Even delphia-B altimore Stock Ex¬
housing, schools and hospitals that urgently needed seems to me a wrong place at the wrong time, so, we are unable to supply the change, announce that William
must be provided at oil company hell of a way to run a railroad.
that's our hard luck and the sym- needs of our friends in western Powell
Scott has become asso¬

Very

roughly

we

Wm. P. Scott With

^

Johnson, Keen & Co.

s

vast production
in world trade
all at home. In
The cost of additional refining
took more than
capacity per barrel a day would will be needed is the speed with dead of winter that he will have a fourth of the 3.3 million barrels
vary greatly depending on whether
which
the automobile industry to burn something else because we daily of oil that moved in interbuilds higher compression engines don't have any more oil: to sell national trade as well. Nearly half
*A talk by Mr. Phelps at the annual
than any now available, which in him. We do not think that will be of all the oil that moved in intermeeting of the Empire State Petroleum
Association, Buffalo, N. Y., May 21, 1951. turn will require higher octane necessary this winter if we all national
trade last year came
expense

in such operations.

development
that pathy we get won't be bankable.
bearing on the ability Still I think everyone of us would
industry to provide the ad¬ prefer almost anything to having
ditional capacity the experts think to tell a regular customer in the
One

may

Cost of Additional Capacity




other

have

of our

a

Europe. Our own
is of no account
because we use it
fact last year we

ciated

with»them

as

Manager of

the mutual funds department.

Joins King

Merritt Co.

CLOUD, Minn. — Paul C.
Barthelemy has Joined the staff
ST.

of King

Merritt &. Co., Inc.,, 161ft

St. Germain Street.

*

'

•

*:

Volume 173

Number 5016

.

.

The Commercial and Financial Chronicle

.

13

(2253)

there

The Steel

Industry in
Economy

and

come

the

Present

tons.

Mr. Tower reveals growth of steel
industry since outbreak of
World War II along with current

plans

call

for

total

above

if

118

million

what

Consider

Even

bring the

that

means.

military

industry. Points out concentration

In the late 1930's, a well known
steel

made

man

speech

a

about

the

million

These

fostered inflation.

industry.

notable

That

fact,

high points of what steel has

done since similar conditions were

which

faced

Such recollec¬
throw some light on the
making
was question whether the experiences
not then such of that period need be
repeated.
a popular pas¬
The defense program of
1940

fense

itself

was

speech-

for

steel

men, as it has
since
become.

But still

more

notable

his

was

in

the

mantle

Elijah,
prophet,
that

twentieth
u r

y,

cen-

some

hundred

million

tons

of

ingots

poured from the steel furnaces of
this country.
That prediction

burst

of

optimism about an
which was still feeling

the hurts of

a

output

million

tons

depression, when a
dropped to 15
an
industry which

had

—

hearing harsh criticism

was

a

wild

industry
year's

like

seemed

from

government for being oyer built.
Now,, as you sit here hardly
more than a decade

later,

our

re¬

ports shqw a total production just
above

hundred

a

million' tons

the past 12 months.

efforts of

At

years.

the

the

of

steel

out

of

almost

facts

are

of

program, the steel indus¬
was
making 67 million tons
ingots for the year 1940, with

in

from

that

level the

rise

con¬

tinued to the top of war period
output at 89.6 million tons in 1944.
In those five years, 1941

through
1945, when military requirements
of

will

be

taken

by the de¬
and the shrinking

program

"availability of steel for the
lar economy."
In that connection

regu¬

it would

be

first

importance,

steel
production aggregated 427 million

another

way of
saying into the
strengthening of the general econ¬
omy

tries

in

the

first

this

12

year,

weeks have seen
duction top the 2,000,000 ton
and in March, for the first
the monthly output went

pro¬

level,
time

beyond

9,000,000 tons.
Only half a dozen
have

steel

match

can

that

other

coun¬

industries

which

weekly figure

made

satisfaction

of

of

steel,

although

desires

for

some

such articles had to be deferred.
No great war
ever
has been

fought without

some

sacrifices by

the people so engaged. Nor can a
great defense mobilization be done

speedily without

some effects on
previous scale of easy living.

a

In

by'

the

five

years,

1946 through

their output in seven months. And

1950, when civilian demands

only four

unrestrained

exceed in

plants

of
a

did

those

countries

can

whole year what
your
March or in April.

in

While this morning session
lasts,
enough steel will be made to build
a big
battleship or a hundred diesel locomotives.
It is a record of

performance which approaches the
unbelievable.

Pauper Industry

or

Characterized

.

"prince

long

ago

as

a

pauper" industry, steel
has not felt any
pangs of poverty
for
a

or

more

than

a

decade.

princely role has

Whether

been

played

in that time may be
open to doubt,
but there is no doubt that 10

years

of

reasonable

strong

sinews

plenty
and

have

given

great,produc¬

tive

power
to
this
industry on
which so much
depends. Steel is
well equipped to
play its vital part
in full mobilization for
defense.

From long experience

that the

largely
the

determines

rate

of

either

the

scale

As this

try

to

prepares

need
come,

World

itself

War,

and

industrial

military expansion.
third

know

we

adequacy of steel supply

or

be, without fear

prevent

to

fight,

of the

it is worth while to

♦An address

or

coun¬

a

if

out¬

recall

by Mr. Tower at the 59th
General
Meeting of the American Iron
and Steel
Institute, New Yok City, May
24, 1951.




and

were

practically

in¬

satiable, steel production amount¬
ed to 415 .million tons of
ingots,
in spite of numerous strikes and
work stoppages. Almost all of that
tonnage went into capital goods
and

consumer
durables, like auto¬
mobiles and household appliances,
to create in this
country the rich¬

est
A Prince

Over these recent years many resourceful men in steel companies,

Right
best

are

now,

estimate

use

of steel

ter

of

of

1951

finished

month.

eighth

the

military

during the third

quar¬

is

about 700,000 tons
rolled
products per

That

of

example,
direct

is

less

than

one-

stock

of

such

goods

ever

the hands of any people.
It
this moment a reservoir of

country.

It

is

their

In

of expanding the steel industry so
much more than ever before in a

l,ike period.
what

is

that the
lion

tons

were

say

Others still insist that

planned

is

really

even

through

a

civilian

supply

period

of

of

be

more.

needed

I

enough,
130
If

mil¬
more

venture

to

that existing companies would

,

of

prospect of steel out-

year,

by

such

any

sustained

tonnage
to

demands

war

and

the

Twentieth

meet

its

mand.

third

With

Century
great

ready

This is not the

place,

have I
the full

nor.

story of what your technical men,
operators, engineers and research
metallurgists have contributed to
the

of

art

steelmaking

of

years

But

lion
in

is

evidently

verify the. sayings of

let

conspicuous
mention

me

in

these

progress.
few items

a

products.

More

of furnace

automatic

controls,

efficient

details,

use

of oxygen,

or

electronic

thermal

highest

mills—all

these

designs

speed

and

rolling

many

.

.

of

yesteryear.

As

you

all

+

to

know

be

the

...

,

steel

at

If

this

that

..

.

be

he

.

re¬

glut of supply,
demand, and un¬

effects

economy.,
A

high.

given

like to have, the likely
would

pleasant

on

whole

our

;

New Period of Regulations
And Controls

When you were here a
year ago,
outlook for continued
high
demand was a bit
the

then

was

hazy. There
feeling that steel

some

companies

would

be

looking

for

orders before the end of the
year.
War quickly reversed the outlook,

Now,

for

the

second

time

in

a

decade, the steel industry is facing a period of regulation, restrictions and controls to align its operations with the dictates
rison state. Ten
gram was

of

of

years ago

a

gar-

the

pro-

avowedly for a period
war, its duration
be-

all-out

lieved

be

to

relatively short, its
clear, its outcome be-

objective

yond reasonable doubt. This time
the program is for mobilization
and

readiness,

uncertain

to be

not

able

over

more

It

a

period

of

duration, but believed
short, unless an inexor-

course

of events leads

into world-wide

WOUld

be

rapidly

fighting,

fruitless

consequences of

Beyond its obvious effects on
output of mills and aggregate steel
supply all of this achievement

to

specu-

real

measure

vate

of^the^merit o"

enterprise.

It

is

product

a

in

individual

ward* It
national

is

initiative

part of

a

and

the

future,

re-

may mean to
omy,

tion

offered for sale and this

Finance

and
of

And it is not

"

our

national

especially to

the

steel

econ-

the posi-

industry,

as

the

,

Continued

announcement

Plan, Inc.

Calijornia Corporation

Reynolds & Co.

garrison

to consider what that

guarantee of

are not

a

indefinitely into
within the realm of

reasonable appraisal.

strength—strength to jus-

placed privately. They

are

pri-

of that incentive which is inherent

having

state, prolonged

$500,000

May 31,1951

all

a steadily imlate here a5out the possible effects
performance, until one 0f all-out war on
our
economy
hears reports of open hearth heats
and the position of the steel induswithin the limits of a single eighth
try jn tbat economy. But the likely

to

propjiet

supply that

a

proving

capacity

destined

could

moment

have contributed to

military de¬

our

country which

is fantastically

everyone

5% Convertible Prior Preferred Stock

mark, actual output of steel

1951

a

population,

dearth of future

Improvements

$750,000

already well beyond the 100 mil¬

the

"shortage"

parisohs,

postwar

productive

civilian
than

used in any year prior
The cry of

strange in

worid>s

4%% Stria! Subordinated Debentures "A-

boom, averaging over the 10 year
span an ingot output close to 85
million tons a year, the steel in¬
dustry faces this second half of

powerful
a

has*hMf bf the total world steel
for barely
6%, of
the

$1,000,000

prior

for

so

1950.

4Vz% Term Debentures of 1961

stimulus

steel

military forces, plus
supply not much less

sults

living.'

A

except 1950.

After

ample

means

that production of consu¬
durables in 1951 will compare

favorably with output in

strength of
which it

And much

Technological

Budget

seems

the

on

put rising steadily and substantially above 100 million tons yearly

likely
mer

depends

in

com¬

state-

the civilian economy on
is based, the

is at

cur¬

that

all will agree,

Accepting the broad principle
that the strength of a
military effort

appears as a matter of record only.

steel

With

you

thaTthey^ave ^ofHvlnrwhXbv all°co 3
reflected in the added

much.

These securities have been

equip¬

without impairing the basic
forts of living. But it now

not

goal should
or

en-

hour shift.

quarters there have
been questions about the wisdom

ment which has
many more years
usefulness.
If the need arose,
that
reservoir
could
carry
this

nation

to

some

of

tailed

response

any

supply

prospective

government urging.

concerned."

leP of the metallurgyatofevery and
in steelmaking,
aspect
iron

the knowledge, to tell you

for
of

a

group

ment, I know

sounds

of indus¬
always large con¬

of steel.

is

or

large and small, have been lookmg with questioning eyes at every

supply. In to illustrate the vigor and fore¬
other words nearly 90% of a rec¬
sight of this industry; how the
tons of ingots.
ord breaking output will be for theories of
According to our
yesterday become the
best information more than half uses
normally regarded as part of everyday practices of tomorrow.
of that huge tonnage went into our civilian
economy.
What has
There have been many improvenonwar goods.. Although some of
the regular economy lost if so- ments in the
efficiency of existing
those goods were essential to sup¬ called programs are set
up to as¬ equipment and in the technology
port the war effort, like freight sure necessary supplies for any of essential
steelmaking processes,
cars, factories, pipe lines and in¬ number of major uses of steel, like Yields
have
been
increased by
dustrial
equipment, their value car building, oil and gas produc¬ better preparation of raw matedid not end with the cessation of tion, agricultural
implements, pub¬ rials, by sintering ores, washing
fighting; they were not a part of lic utilities, and so on?
coal, sizing coke, by scrap selecthe economic waste of war. Quite
That figure of 118 millions, just tion. Time
has been saved by beton the
contrary, they added to and mentioned, does not include any ter physical facilities for
handling
were
important
factors
in
the capacity for new ventures which
scrap, hot metal, open Hearth slag,
postwar economic vigor of this hang precariously on the hopes of and in various
steps of processing

aritcles

of

successive

tries

matter

building more furnaces and
producing
more
raw
materials,

wide variety

a

that

sumers

Currently in¬ country.

commonplace.

Since

simple

once

of

better, if the public could be learned is
clearly how much steel is tons of steel which your com¬
actually going into direct defense, panies are now contributing to

are

look

outgrown the

far

Federal
funds,
projects
which
Military requirements during have been aptly described as re¬
being poured at the rate
of more than 107 million tons for that greatest war in history, did flecting only the "covetous
gleam
the year
1951.
And new steel- not at any time take the major in some promoter's eye." All the
making capacity is being added on part of our available steel supply, expansion figured into the 118
and it is probably fair to
a
scale
never
equalled
say that million tons is planned by estab¬
before,
civilian-needs in that period did lished, competent companies, and
which means that recent
records,
not suffer
impressive as they are, £ will soon
seriously from lack of is widely scattered around the

gots

Expanding steel capacity and
increasing output have completely

following four and how much into so-called de¬ protect the future of this country
beginning of that fense-supporting uses,' which is and maintain its bountiful mode

defense

were

year would see

a

of 1941 and the full' scale

program
war

and

before

the end of the

t

quickly into the mobilization

grew

of the civilian economy going at a
the high rate. The next year the ingot
with figure was nearly 83 million tons

prediction

a

decade ago.

a

tion may

try

appear¬

ance

Walter S. Tower

tons

which,

told

in

because

-

II,

significant be¬
cause so much is
being said about
the
large part of total, supply

time

the
a

War

enough to equal the annual aver¬
age for civilian uses during these
past five years of unbridled boom.

up military power must not sap nation's basic indus¬
strength, and asserts no economy is strong enough to sur¬

vive effects of government

Wcrld

likely, there would be left

on

building
trial

of

object, loudly
being used
to create competition
aginst those
who pay the taxes.
money

by

"it-is

that

man

of enemies, could
present any real problem to this
nation, so far as steel for defense

steelmaking ventures. No

and should

statement

steel

difficult to conceive how
emy,

properly object to private
capital going wherever the lure
of possible profit
may lead.
But

long, to-tax

recent

prominent

can

can

118

steel

new

one

and

short of full scale war, seems On-

on

ate

one

figure

fify. :the

a

ing their privately owned plants
seeing government funds ere-

requirements

adverse effects

-

com-

and

to match the highest
yearly

were

for further expansion. Warns of
probability of extended duration of the Garri¬
son
State, with accompanying controls and allocations and their
program

But steel

choice between
unwisely expand-

enough
added steelmaking
capacity with¬

industry

Steel Institute

make, Unavailable,

panies should not have to make

in the next 18 months to

By WALTER S. TOWER*
Iron and

to

more

Present Plans of Expansion

A Defense
President, American

is

is swift.

pace

on page

22

14

V

(2254)

The Coihmercxal and Financial Chronicle

Continued

Benjamin Currier With
Raymond & Co., Boston
t

1

Canadian Securities

(Special to The Financial Chronicle)

emulated

From

which

Britain

BOSTON,

Walsh

Mr.

was

also

con¬

nected.

the

southerly thrust of the LaurenShield

tian

yet been
Dominion au¬

the

Western Canada is emi¬

recent column

has

redun¬

a

to

asso¬

British

of

and

Columbia

to

a

lesser extent,

of

Western

order to

custodians of the public interest'that
"faith in the manage¬
ment," they would "sell their stock." Actually
such a statement is made to cover up a good
it they did not have

on a

cooperation

I am glad to say the public stockholders are
beginning to veer av/ay from this idea.

worth-,

You

Anglo-Ca-*

while scale the closest
nadian

can

the

migration

a

on

the

ernmental - level is indispensable/
Possibly the best idea yet proposed

Government

*

Wilma Soss

satellite industrial cities.

Alaska, arid the North West Ter¬ Siddely Co, Little .imagination is
ritories were responsible for the required to visualize the results.
unlocking of the northern fron¬ that could be obtained if British

Provincial
Municipal

tiers

Corporation

the

qf

Dominion's

The

Empire.

Western

tremendous

of

world-wide

in

fame

such fields as,

shipbuilding, steel,
machinery,
chemicals,
textiles,
empty territories in the North feather, and others were given of¬
West were further heightened fol¬ ficial encouragement to establish
lowing the recent construction of themselves in the. manufacturer's
nomic

CANADIAN STOCKS

eco¬

prospects of Canada's vast

the Alaska Highway.

then

Since

paradise of Canada's empty West- ;
oil erri Empire. Large-scale indus¬

/

,

the

spectacular
discoveries in the
prairie provinces have set in mo¬
tion a steady westward flow of
U. S. and domestic capital that
serves
constantly to expand the
economic growth of the Canadian
.West. The knowledge of the.ex¬
and natural gas

A.E. Ames & Co.
incorporated
I

Two Wall Street

"New York 5,IN.Y.
NY 1-1045

WORTH 4-2400

firms

trialization of the Canadian West
would also be beneficial to U. S.¬

Canadian trade just as the growth
of

industry in Eastern Canada was
immediately followed by greater#
trading activity across the border.
During the week there was
istence of vast mineral and oil moderate activity in the external
section of the bond market which
resources,
together with almost
unlimited' cheap
hydro-electric was largely confined to dealings
power, and cheap factory sites, is in the new Ontario, Edmonton,
atten¬

and

Toronto

tion of U. S, and domestic indus¬

still

offerings of unplaced

try. At the present time the huge
$500 million aluminum project of

Fifty Congress Street
Boston 9, Mass.

of

the

the

provoking

now

Aluminum Co.

close

of

Canada

in

the

latter

Ontarios

issues/
two

There were

issues

bonds

but

the

quoted at a small
premium. The internals were dull
were

northern British Columbia is the

and neglected but the market in
undertaking. It is Canada now appears to be well
envisaged that eventually a new stabilized at recent levels. Cana¬
industrial city with a population dian dollars were lower in the
of 50,000 will be established on neighborhood of 6Vi % to the con¬
tidewater at Kitimat. The Cela- tinued bewilderment of markejt
nese Corporation of America's am¬
experts, but whatever the cause
most important

ROOM FOR GROWTH—
IN CANADA!
Canada's thriving economy and
sound financial policies lend
themselves favourably to invest¬
Our

ment.

Canadian
benefit

to

long experience with
industry will be of
you in selecting suit¬

able' investments

this

in

fast

growing neighbour.

tion

jMLilner, Ross

O.

Members!
The Toronto Stock Exchange

The Investment Dealers' Association
of Canada

of

Bay St. Toronto, Canada.

Hamilton

Brantford

Wlndaot
Brampton

Sudbury

for

the

construc¬

million

$50

chemical

Canada,

eration

these

will

follow

the

lead

of

Canadian

Securities
on

request

sides

of

weighed

the

the

border

have

long

Montreal

MEMBERS

The

&

Toronto

Montreal

Morgan

Stock

Exchange
Stock Exchange

Curb

Market

26$ Notre Dame St., W., Montreal
38 King Street W.
Toronto

61




Queen St.
Ottawa

is

case

still

stockholders,

The

British

area.

a

coal, oil and natural
British

gas.,

our

Outcrop deposits
grade coal that haye

of

highest
long lain dormant for want of

a

convenient market.
is

a

greatly increased population.

The Dominion authorities

as

acter

of

an

such

balance

a

has been

char¬

lamentably lack¬

ing.*

Negative measures such
the lifting of certain previous
strictions have been adopted

as

re¬

but

positive action comparable to the,

check

and

between, labor

and

management,

(

and the tax road ahead.
x

Very few people know how to appraise

good management
book

which is why the American Management Association wrote a

the subject. What most people mean is that they have, faith, in
American management so long as-the company is capable of ir akon

-

•

or its management has been associated with* profit;
When Americans generally lose that faith, private enter¬
prise will be dead.
/
If stockholders sell their stocks because they do riot like certain practices of a company instead of using their ownership to change :
those practices through individual effort and stockholder organi¬
zation, with many of these practices carried, from one company to

ing profits

making.

another by outside directors or copied from one
will the stockholder find his Switzerland?

another? where

•

.*■■■•'•/ WILMA SOSS,

,

President, Federation of Women Shareholders
New York City

in American Business, Inc.
*

as

From

an

*

.*

..

1

Investment Trust Authority

DEAR MR. M£Y:

industrials

Your

Sewell
Ward

provocative

column stimulated by
at the Montgomery

Avery's remarks
stockholders'

meeting should prompt a

good deal of careful thinking.

My main

»

ror"

of

concern

pensions.

is with Mr. Avery's "ter¬

A primary responsibility of

investment companies today is to bring home
to businessmen who are saddled with the prob¬

Securities

Corp., 1520 Locust St.,
Philadelphia-Bal¬
timore Stock Exchange. Alii were
formerly associated with Euler &

of pensions the

higher

income and

growth, available

sion funds.

Managers of pension funds have, through
purchase of investment company shares,
provided themselves with the advantages of
profesional selection of sound common stocks,
wide diversification and constant supervision.
the

Arthur Wiesenberger

members of the

New York

Co,

-

And From

an

ARTHUR WIESENBERGER

Investment

Company President
'

DEAR MR. MAY:

Morgan & Co. Add

unique opportunities for
capital

from sound common stock investment for pen¬

"*

Three cheers for your column concerning

(Special to The Financial Chronicle)

,

stockholders' meet¬

85. Prior to his retirement in. 1940

ings and contained in the May 3 issue of the "Chronicle." I am cur- •
the President of Central-Illinois Securities Corporation, ;
which is a relatively srhall investment company, and have been
associated with other investment companies since 1928 and know
first hand of. the many weaknesses existent in connection with
annual stockholders' meetings. As you no doubt are aware, your :
article, if anything, understates the case,
I wjll not attempt a long letter of my viewpoints at this time
but I think it cannot be contradicted that the great preponderant
part of investment company management has been, and is missing ,
a wonderful opportunity to do constructive work for all stockhold¬

he

ers

LOS

ANGELES, Calif.—Charles

M. Fischer has been added to the
staff of Morgan & Co., 634 South
Spring Street/members of the Los
Angeles Stock Exchange.

are now.

ambitious

should perform to the best of our abilities^
a capitalistic system,

"incentives," he will inevitably surrender to government control,
those businesses which are no longer profitable for him to finance.
With the government demanding heavier excess profits taxes,'
withholding taxes, double taxation of dividends, it is the stock¬
holder, who has too much "faith" in management to exercise his
corporate citizenship, who will be wiped out unless he makes it:
plain that stockholder incentive must be part of the "me-to-ism."
The stockholder may soon be the twin of the taxpayer in the bar¬
rel, if he will compare prewar dividends with last war dividends

lem

giving belated attention to this
subject but
so
far
long-range

planning

we

check which is fundamental to the preservation of
private enterprise now so largely financed by public stockholders.
Unless the stockholder uses his votes to make his money talk arid *

First Securities

hre * vast

"pension

capital, protect our income, and preserve
system. Economic voters like.political voters provide a system -

Four Join Staff of!

border

as

of balance arjd

On the

Cojumbia-Alberta

regard

in order to preserve our

possibilities of
a great steel and
B. McLean and John S. Niemdnd
industry in the have become associated
with( First

establishment of

may

the duties and function of the stockholders in

PHILADELPHIA, Pa.—Donald
the U.
Hildreth, J. E. Kemp, Melville

But the West's most crying need

Robertson

gains.

For exam¬
interests on both

industrial

there

Available

1951

pioneer efforts.

large part in this project
and consideration might also be
given to Alberta's vast reserves of

all

decline the

dollar

agricultural West. Many ambitious to the general trend.
plans, that until now have bden,
only at the stage of early consid¬

play

on

parity

what they

Stockholders Must, Function' to Protect Capitalism

As

but

Seattle-Vancouver

Information

un seasonal

the

country because-

for constructive remedies tvhere necessary.

the forerunners once more displayed the greatest
penetration that weakness, the base-metals were "
will ultimately change the char¬ mixed, and the Western oils and "
acter of the hiterto predominantly the golds showed most resistance '
are

Columbia iron-ore and coal would

CANADA

for

like

not

industrial

an

shipbuilding

INVEST IN

of the

its

These

ple,
330

a

your

grabs" or stock options, or they think the dividend policy is too,
niggardly (if they can afford to hold the stock) or too many old¬
sters are being retained on the Board (some still nod on in the
eighties and one company had a gentleman in his, nineties). They»
should use their corporate citizenship and make their, money talk)

plant at Edmonton is another in¬ strong as ever. Stocks were again
dication of the recognition of the lower and the market in less than
industrial
promise
of
Western two weeks has lost about half of

in

Correspondence invited

scheme

bitious

leave

not

citizenship! Investors are corporate citizens.They should "not sell a good stock, with rea¬
sonably good management, because they do:

is the establishment in Canada of

The

CANADIAN BONDS

do

do not like some of the laws or some of*
the people who administer them—you use your
you

gov-,

A constructive example of the
disappearance of low cost
agriculture land in this country, great possibilities of Anglo-Cana¬
which caused art extensive north¬ dian
industrial
collaboration is I
ward
migration to the prairie Canada's new but virile aircraftprovinces, gave further impetus to industry which came into being as
Canadian Western development., a result of the establishment in
Cold discoveries in the Yukon, Canada of the British Hawker-

personal laziness, the feeling that they
get better entree if they "go along with
management" and some playing of footsie.

deal of

in

However

from the British Isles

British

tories.

Canada.

bring about

on

so many

British
industrial
genius and
climate, prolific mineral skilled workmanship would find
resources, and fertile valleys, the a more congenial atmosphere in
economic progress of the Province the vast economic treasure-house

the prairie provinces
has been necessarily slow. The
of Courts & Co., 30 Broad Street,
in the Corporate and Municipal linking of the Pacific and Atlantic
coasts
by the Canadian Pacific
Bond Department. Mr. Knox was
Railway was the first important
formerly with Harris Hall & Co.
step towards the opening up of
and L. F, Rothschild & Co.
the Dominion's rich western terri¬
ciated with the New York office

of sabo¬

the part of the management." This
apt statement I heartily endorse!
I do not subscribe to the idea voiced by
tage

nently adapted to settlement by
the people of the British Isles.
moreover

on

holder toward his company,
shduld be based on criteria of value, not as a consequence

a

as

.
.
the attitudes of the public stock¬
you wrote that "liquidation of stock

^

In your

ince of Ontario has not

perate

Courts In New York
John J. Knox has become

Champion of Stockholders' Rights

munications. Thus despite jits tem¬

John J. Knox With
.

a

further dancy of population in relation to
East-West com¬ her dwindling natural resources.

serves

impediment

immigration efforts of the Prov¬
by

Thursday, May 31,1951

5

page

DEAR MR. MAY:

thorities.

.

Observations.

By WILLIAM J. McKAY i

Mass.—Benjamin W.
Currier and William R. Walsh
The development of the Cana¬
have become associated with Ray¬ dian West has been retarded by
mond & Co., 148 State Street. Mr. geographical barriers to a greater
Currier was formerly Vice-Presi¬ extent than that of the Western
dent of Luckhurst & Co., Inc., in United States. In addition to the
charge of their Boston office, with mountain barrier of the Rockies,

from

..

William S. Lounsbery
William
away

S.

Lounsbery

at his home at the

was

countant

Cashier

and

Chief

for Hendrickson

New York

City.

passed

of

age

Ac¬

rently

and the

capitalistic system itself.
C. A. JOHNSON,

& Co.,
(

,

New York City

President, Central-Hlinois Securities Co.

Volume 173

Number

5016

.

The Commercial and
Financial Chronicle

.

.

(2255)

Continued jrom page 3

creasing tempo; trying to combat

ideological Communism by finan-

Ii Peace Breaks Out
does not want

to

us

into

endanger the

Despite his admitted
out

data

any

to

substantiate

Own

stand/ Marshall
intervention "is

a

possibility/' But if Russia inter¬
in the Far
East, she would
have to concentrate in that
venes

major part of her

major

region,
Moscow, a

7,000 miles from

some

air

power,

at

tlje

creased

ex¬

would

war

first

recede;

prospect

the

of

pace

New

armaments.

be

hit

where

are—the

And

it

not

Russia

have
she

in

without

belief

for

expect

to

do

fresh

Asia

her than

expan¬

yet.

The

least

the

on

one

domestic

material

so,

"rea¬

help

is

more

appear

speculation

but

ing

turn

envisage

prolonged

and commitments

curtailed,

would

give

as

True,

program

the

not

-

And
not

if

she

A

an

evi¬

But

all

Harry D. Miller

Edward

Hinckley

war, would it
her first move to
overrun

be

Western

Europe

and

rearmament

rather

broil herself

at

to

stop

than

to

its

-

an

Why should the

munity? Nothing
therri, and their
than

more

Arthur

and

Marshall
the

ing
a

be

To

does

of

did

white"

once,

China

million (?) casualties
naive, indeed. Her net

annual population
growth is in the

of 5 to 8 millions, and her
leaders are not of the sentimental

^ Logic

seems

He is

asking, not for

tension of the
his

forcing

the

Korea.

Most

strong

of

idea.

It

our

is

sia's

for
on

a

very

large

seg¬

people supports this
sick

and

leadership that first
dominance

rope and

as

but

certainly,
a

ex¬

relax

to

of

an

China,

charge,

Chinese

sentiment

ment

into

war

opponents

tired

of

a

built up Rus¬

Central Eu¬

over

,

China; then sold

us

been

next,

it

jumped

armaments

and

armaments";
headlong into

the

Korean

ven¬

ture,

as

while

the

reve^

impending

behind

so

lag

at

least

premature,

Under

such

material

raw

other

credit

controls
of

help,

too.

increasingly

allocations

important

perhaps the
single factor.

a

stoppage in the inflation

—rthat

/
as

be

actually reversed
if China would give way. Con¬
sumer
buying of durables and
may

WASHINGTON, D. C.

dent

Truman

nated

become

at

the

wrong

wrong
In

enemy.

Congress, the working

ance

between

alli¬

Republicans

and

Southern Democrats
may be slow

Revolving. But if the inconclu¬
sive
blooding-letting continues,
public opinion

erupt and up¬
set the neatly concocted
time-ta¬
bles of the State and War
Depart¬
ments.

The

sanctions

Reds to

may

threat

mere

is

likely

to

force

of
the

evacuate Korea.

Should

peace

break

out

in

the

Far

East, we might be faced with
the worst economic
"crisis", since
the
193G's.
EJven if
armaments

continue

—

would—the

as

they

^ reaction

undoubtedly
might
be

instantaneous.
The

brings

fear

the

of

such

business

development
community




market

are

ated, to

say

likely to be accentu¬
nothing of inventory

speculators.
But
could

on

not

weeks
and

or

will

economy

On that

•>

the
last

whole, the reaction
longer than a few

months.

stay
on

We

still

are

in

a

a preparedness
world-wide scale.

point, there is

no

quarrel

between the Joint Chiefs and MacArthur. Raising Federal expendi¬
tures

to

in

the

$70 billion

coming
or

well

fiscal

above;

year
ex¬

panding industrial plant and
equipment to the tune of $24 bil¬
lion annually;
maintaining farm
prices; filling up military stock¬
piles;
fostering
higher
wages;
bringing more nations into the
armament

whirlpool

at

an

in¬

output.

or

price control

level at which

of

in

power

risk.

Even

they

from

it,

a

leftward

Edward

T.

McCormick

his

post

who

March

on

President

York Curb

of

re¬

31

the

If

direction .would

the whole

the

Socialistic
!

we

were

confronted with

by thousands of

the prospects

Exchange.

are

assistant counsel to

York

State

Department

Agriculture and Markets;

Even the advance

L.

Friedman

on

June

1

limited partner in

a

Seligman,
Lubetkin
&
Co.,
30
Pine Street, New York
City, mem¬
bers of the New York Stock Ex¬

change.

-

'

ULM, Minn.

Olszewski
nesota

is

with

Co.,

Street.

to'hit

—

State

261/2

AJbin
Bond

North

runs

A.
&

inflation the decision
would the choice of

nor

If

the

securities chosen

or

price

level

to

were

But

so

rise

long

as

difficult.
consumer

Anybody who orders

the risk

Nevertheless,

of

a

a

goods is not without

number of suits

or

over¬

change in the fashion—or in his figure.
are

absolutely durable there is

the chances

are

can't

afford

it will

a

risk of

that most

of

those

who

can

try to borrow in order to be able to hedge.

The latter could be prevented to a

titative

or

a

of

pay,

unless drastic control

anti-inflationary

In view

of

means of quan¬

On the pther hand, the gov¬

entirely powerless to prevent hedging by those who

position td

appear

large degree by

qualitative credit control.

extent to which

Min¬

runaway

afford it will hedge to some extent, and that many of those who

Any

(Special to The Financial Chronicle)

Mortgage

liable

are

wastage and deterioration.

ip

With State Bond & Mtg.
NEW

coats

ernment is

-

a

purchase of

Unless the goods chosen

Seligman, Lubetkin Partner
become

such

that inflation remains relatively moderate the

disadvantages.

Helen

aggravate

-

hundreds of per cent less than the average.

some

later acted

will

measures

,

difficult,

if the value of the goods

much

choice of the hedge is very

of

greatly

cent then it would not matter very

per

Millonzi, an•; attorney : of
Buffalo, N. Y.., received his degree
Buffalo University in 1935 and
New

the replacement

ensure

though holders of liquid funds would not be immune

on

advanced

at

the

a

the

The change in the political balance

hedge present unduly difficult problems.

to

New

Mr.

as

of

'•

sufficient to

used up.

or

curtailment

a

which would reduce profits to

measures

are not

the

measure

depends

the public is prepared
risk

involved

in

every

measures

for

its

are

success

are

applied.
on

the

to abstain from hedging.''

form of hedging it

may

expedient to hedge against that risk by limiting the extent

hedging and face in preference

some

-

ac¬
as

also exposed to increases of

are

invested capital harder.

May 22 nomi¬
I.. Millonzi as a

*

-

Holders of industrial equities

the

signed

prices, with severe damage
to
merchandising
firms,
espe¬
cially. The repercussions in the
building trade and on the stock

government decisions resulting in

change Commission for a term to
expire June 5, 1952, succeeding

lower

called, claiming
place,
time, against the

result of

.

There is further the

intervention.

If somebody
quires sound industrial equities he is exposed to depreciation

of the stocks sold

Presi¬

safe hedge.

as a

government

whether to hedge would not be

that the

is in the
wrong

of

on

Robert

might
then
fall
precipitously in the expectation of

war

risk

ever-present

member of the Securities and Ex¬

knowing that Russia stood
behind it;> and turns
appeaser now
when its bluff is

semi-durables

—

sort cannot be considered

any

taxation

V

*

Member of S.E.G.

most

process

'

Robi. Millonzi to Be

The

The result is to be described

C.

Possibly the extent of damage would
large that its repair would be entirely beyond any govern¬

so

ment's resources or credit. The whole of
it, or a very large part of
it, would then have to* be borne by the victims. Once such a pos¬
sibility is envisaged the acquisition of real property or of goods of

Roos,

a

tightened

is

William

expired term.

prices. Relenting on official stock¬
piling (tin, rubber, wool) is one
of
the
proverbial
last
straws;
threat

J.

Co.; and W. K. Van Hise, Parker
&
Weissenborn
(for three-year
terms); and Carl A. Preim, R. W.
Pressprich & Co., to serve an un¬

as¬

circum¬

and

done in the next World War.

Hinckley, Newark.

Treasurer:

Governors:

stances, consumer resistance had
develop against the speculative
in

pensation to those who suffered material damage
through enemy
This does not necessarily mean that the same
would be

be

Wallace Smith,
Smith, Barney & Co.; James S.
Johnston, Bramhall, Barbour &

to

tide

in mind. There is the war risk.
It is true, during the
second World War the British Government undertook to
pay com¬

MacBride, Miller & Co.

and

.

*

dropped

Moreover inflation is by n(* means the
only risk which has to

Secretary: Edward S. Hinckley,'

$20

already

of goods at the pres-

action.

Adams &

rising prices and under

or

have

be borne

Vice-President: Fred J.
Brown,

have been building up

sumptions.

materials

raw

a certain amount of
speculative risk." Nor is this
Apart altogether from the possibility of a turn of the
trend,
the question is, have present prices not
discounted already a sub¬
stantial future inflation?
If so those who get in at the
present
price level would pay an insurance premium, of something like a
100% in order to be safeguarded against inflation.

H. L. Allen & Co.

had I

Business

some

all.

Roos.

President: Harry D.
Miller, Nu¬
gent & Igoe, East Orange.

war

what

William

The following slate has been
presented for officers of the Bond
Club of New
Jersey, to be voted
on at the annual
election June 14
at the Down Town
Club, Newark:

it proclaims to be.

anticipated.

the

dollar program
"an alternative to

.

The

inventories and incurring commit¬

ERP multi-billion
as

J.

fiscal

Federal

expenditures

or

consumers

false,

MacArthqr's

on

Federal

.

billion

ments at

humanitarian variety.

that

about

with Russia

by suffer¬

range

side.

worried

a

is

is

boosted

of

ent prices entails

expect

billion.

prices

sharply. In the circumstances the acquisition

fact to be borne in mind: it shows
that the" government
is not as

assume—as

staff

now—that

"bled

even

year

al.

_

wholesale

the black to the

$3.5

;

long? The possibility that the infla¬
tionary peak of prices is within sight mUst be borne in mind. The

nues, military spending so far is
running only some $6 billion over
the
pre-Korean annual rate—a

sponsors,
Mac-

testimonies

reason

to

actually,

in

about

has

led

were

end

of

prime

,

we

will

tboom

dismissal of

general

ours

could

Russian

that

tune

could encourage

the

et

Jap

and

the

Even those who have overcome
any moral objections against
some awkward problems.
In the first place,
have they not hesitated too

hedging have to face

a

early; deficit;

1951

while they are
being assured on highest Wash¬
ington authority of practical im¬

of

buying spree
that had been induced
by false
expectations, or rather, by false
timing, thanks to official scarewarnings. Most significant is', the

em¬

of attrition in

war

continues.
Chinese give in

?

!

rise in prices.

witnessing since March. This
let-down

a

fact

Anyhow, the

the majority of their fellow-citizens remain
loyal; for if
everybody tried to hedge the result would be an immediate
sharp

a

'

Attrition

Korea

Einzig

ought to safeguard' the interests of those
depending on them by *
hedging against inflation, but who are aware that in
doing so they
would be acting to the detriment of; the
public interest: Those who /
are trying to
escape the inflation: risk can only do so
provided >

would

we

is

the remotest and

of

Dr. Paul

that

words, what

been
'

least vital outpost?
War

The

There is a conflict of loyalties in the
minds of heads of families who feel that
they

serious sharp¬
the "reaction" we have

ening of

an

tion.

that

Buying Spree Let-Down

have to expect is

wants

possibility of

altogether impossible.

as

The decision is not simple. There is in the
place the ethical argument, against it.
Anybody hedging against inflation contributes,
however slightly, to the accentuation of infla¬

scant compensation
losses' involved.

In other

to avoid?

happen here"

first

industrially

unprepared
Russia
to. risk
atomic
world
war—which

runaway
in various

;

of

be

offer

l'dr the

a

contemplation of its bare possibility confronts
people with a dilemma whether or not
to.hedge against such inflation.

wait--

little-sense.)

would

can't

many

checked, and the
Administration's chances to tighten
controls
would be impaired, too.
(Price ceilings on "soft. markets"
make

"It

a

price

increase of prices by some hundreds of
per cent

.

mounting .trend

taxes might

the

experienced

was

countries.

is not ruled out

likely

a

in.

seriously"

expects
as

rise

is the substance of British
opinion on the sub¬
At the same time the

to

;

substantial

ject.

buy¬

way

such

continental

private

are

and

Nobody

inflation

is

consumer

as

and-see attitude.

would mean an "all-out"
attack
with the intent to
drive the Com¬
munists out of China.
Nothing of
the sort is
contemplated. What is
meant is an alhout
pressure on
China to get out of
Korea. Is that
enough to induce an

dently she is trying hard

level.

might

could

bearish;

becoming increasingly
purchasing power of the cur¬

Until recently the increase in the cost of
living was looked
upon as something quite
temporary. The persistence of the upward
trend resulted in a
change in this respect.
Most people are now inclined to
•

scene

means

LONDON, Eng.—The British public is
conscious of the depreciation of the
rency.

a

is Europe?

They try to make it
though the MacArthur

as

as

escaping losses from currency depreciation. Points
out
difficulties involved, and concludes it
might be expedient for
holders of industrial equities to limit
the extent of
hedging
and face, in
preference, some inflationary losses.

more
apathetic attitude toward
ago—if official war-danger-forecasts.
Raw

justifies the orders
spokesmen's
ap¬ to be

that

to

paredness.

logic

monetary

hedging

of

ever-

pre¬

earth

on

Administration

important

time

position

waiting

parent

America?

attack—would

some

a

What

in

and

eliminate
for

Tl

British attitude toward
inflationary trends,
Dr. Einzig discusses
problem of individual
on

Slate of Officers

The

Welfarism for the benefit of

forces

elementary

would

attacked

were

sons"?

main

Americans

is

that

his

Commenting

Jersey Bond Club

posing the homeland to devastat¬
Europeans, to be sure, would be
ing air attacks. Is it not elemen¬ quick to
resist any further
temp¬
tary strategy that the enemy has tation to
sacrifice an iota of their

to

price

to

as

need

of

waves

By PAUL EINZIG

to resurgent

the

so

British Inflation Fears

«

without

or

cleaning-up—

sion—is not imminent,

in¬

an;

of

imperative

fresh

would

so

of

deflation

wage structure

a
trickle
(as Mao's present
preoccupation reduces the
fighting
in
Indo-China) has "frightening"
aspects businesswise. The fear of a

real

very

the

fighting

to

that

up

inflation. The great

a

But an early
victory of the
General in the Great Debate
that
would reduce the Korean

his

insists

Korea, it all adds

thur.

ignorance

intention, and with¬

their

cial Trumanism—with

paradoxical situation. Over¬
whelmingly, it supports MacAr¬

Communist-regime in China.
of the Soviet's

15

inflationary risk.

'

The Commercial and Financial
16

Chronicle

Thursday, May 31, 1951

.

.

.

(2256)

Our

Of Mirtial Fund Ces.
Election of T. J. Herbert
President

as

Diversified

of

Inc.,

and Manhattan Bond

mutual

nies,

was

nounced

Interest

Governments

on

By JOHN T. CHIPPENDALE,

In

JR.

in announcing a 91/2-month, 1%% issue for the
certificates kept to the short-term end of
the list in taking care of the refunding. This was expected. The
1%% rate, however, was a bit more than the market had been

Fund,

by

authorities want the
There can be no chance-taking with
favorable effects of the credit limiting

Hugh W.Long,

refunding to be a

operation, because the
be undone if the refunding did not go over in a big way.
obligation being offered in exchange for the

this

Mr. Herbert

success.

is well known

could

in

Also the fact that the

banking

and

circles

t h

the

to

should
in

mutual

Vice-Presi¬

of

T.

J.

•

American National Bank

taking care

Market Acting

the

15

& Trust

preceding that

years

the

with

somewhat

associated
Farmers Trust

Bank
Company of .New York.
City

bank

Trust In¬
vestment Committee of the Illinois
Bankers
Association
and: since
1943 a member of the investment
the

of

Chairman

governments

be the mone¬
tary demands of these non-government commitments are not so
pressing at this time,- and the owners of salable Treasuries are
hoping to get somewhat better prices by holding these obligations

written
on

Bankers Association

Rutgers
and

It

commitments that have already been made.

School of
Banking conducted jointly by the
and

institutions because
sizable amounts of
that must be sold in order to get funds for other

the liquidation policies of these
to reports there are still fairly

according

faculty of the Graduate
American

less

in

change

University. He has1,
lectured extensively

:

off the market for awhile.
What is the reason for the

investment subjects and is-the

may

*

.

signs of stabilization that are being

has not been
enough of the climactic type of selling, according to experts, to
book, "Investments,"" to be pub¬
say that the market has been sold out, or oversold, what is the
lished by the American Institute
cause of the moderate improvement in quotations? Some attribute
of Banking.
'
the betterment, to the action of the monetary authorities in aiding
the market during the June and July operations, with an eye
toward those that will come later on.
In orjder for the Treasury
to carry out a successful refunding, securities must be taken by
others than the Central Banks. This, it is believed, however, will
mean, a certain amount of protective work by Federal, but. still
PHILADELPHI AylvPa.—Charles j
not enough to undo to any important extent the credit limiting
L.
Kauffman has
become asso¬
which the Central Banks have been so anxious and concerned
ciated with Rambo, Close & Kerabout carrying out.
Stabilization in the Treasury marke£ is more
ner, Inc., 1518 Locust Street. Mr.
vital at the moment in the near-term end of the list because of
Kauffman
was
formerly
Vicethe refundings, yet there must be something done to keep the
President of Euler & Co.
more
distant maturities in line, because quotations cannot be
allowed to slip to levels where it is profitable to let out other
Frank D. Newman Adds
governments in order to purchase the longer-term marketables.
of

author

the

forthcoming

the

in

noted

text¬

government

Since

market?

there

Charles Kauffman Now

With Rambo, Close

t

(Special to The Financial Chronicle)

MIAMI, Fla.—Raymond L. Pear¬
son, has
become
affiliated with
D.

Frank

&

Newman

Co., Ingra-

ham Building.

With Waddell & Reed
(Special to The Financial Chronicle)

Neb.—Norton

SCOTTSBLUFF,
R. Long is
Inc. of

with Waddell & Reed,

Kansas

Short-Term Issues in Demand

*

^

V.

intermediates and the longs,
have had, according to advices, a somewhat better tone than the market as a whole.
It seems as though the near-term obligations,
while being sought after by corporations other than commercial
banks, are still the issues which the deposit banks are willing and
able to acquire in rather sizable volume.
The liquidity prefer¬
ence
idea is keeping the short-term end of the; list in tip-top
shape. The intermediate-term issues, and this goes for the partials
The bank issues, the shorts, the

City, Mo.

well

as

as

the

taxables, have been finding a few more venturesome
securities. While only small

souls that have been taking on these
amounts of these

obligations have changed hands, more could be

used, becaues the sell side of these securities has been rather thin.
As for the longer-term eligibles, it appears as though the partials
have

U.

these

S, TREASURY
-

of the buying

the better
The

that has been going on in
institutions are still very tax-

deposit

dends

House

Means

Com

mittee,

has

obligations, there is plenty of demand for the longest taxbonds paced by the 2%s due 1960/65.
The 21/2s due
9/15/67-72 are going away in not too large amounts and it seems

Committee

While the- buying has been

this trend will continue.

ii'j

that the

order

"averaging buyer" is taking on modest amounts of them,
to get a better overall cost of the entire lot of their

holdings.

SECURITIES

The small banks continue to be the dominant operators

in

in the longest

eligible obligation.
Pension funds, it is reported, have

.

.

.

Aubrey G. Lanston
& Co.

Two
Broad

Street

45 Milk Street

With Dayton-Gernon

(Special to The Financial Chronicle)

MEW YORK 5

BOSTON 9

WHItehall 3-1200

HAncock 6-6463

(Special" to The Financial Chronicle)

*'

*

ST.




Joins Central Republic

PAUL,

Minn.

—

John

C.'

MINNEAPOLIS, Minn.—Wayne

Grams and Jack L. Niemaber are' A.
now

associated

with

Dayton

Gernon, Pioneer Building.

&

Tully

with

has

Central

Rand Tower.

become affiliated
Republic Company,

Muench

'

.

and Means
tentatively voted a

United States
Department to levy a

by

the

tion of their depositors.

The necessity for a with¬

"(4)

holding provision, such

York State

Bankers

as

the one

proposed, is questionable since the
present law requires that all pay¬
ments of interest, rents, etc., in
excess
of $600 and all dividend
in

payments

$100, to¬

of

excess

gether with information as to the
payees, be reported on forms 1096
1099.

and

bookkeeping

additional

"The
burden

New

to build up
for the protec-,

their capital funds

dividends and

on

interest.
"The

of commercial

case

earnings

retained

of

Ways

withholding tax

both

the

on

i.e.,

payors,

Association represents 98%

of all

corporations, or individ¬
uals, and the government in order

commercial

State.

to

banks

serious

After

in

the

banks,

for

which

information

obtain

of the most part is already available
what the imposition of such a tax adds
strength to the argument
would mean to the banks, the de¬ that the proposal is unwarranted.
positors, and the nation, it hereby
"Furthermore, aside from the
registers its opposition to such a tremendous cost to the banks and
tax

..consideration

calls

and

others in performing this proposed
proposal. withholding function, the cost to
being opposed the Internal Revenue Department

this

This matter

is

for

reasons

selfish

for your

upon; you

defeat

to

support

not

but

for

the

would be enormous because of the

listed below:-

millions of savings accounts that
majority of com¬ would have to be considered both
mercial bank depositors, such as from a refund and collection
widows with small income, de¬ basis."
pendent children and elderly
reasons

-"(1)

vast

A

liability would be deprived of

tax

a

refund

This

would

the funds withheld until

obtained.

be

could

impose

hardship, for in
being deprived of this

dual

a

addition to

needed income their refund might

Anshel Co. Formed

f

people who are now exempt from

AnsheL Goldberg is

of

which to

religious and educational institu¬
which

tions

who

are

income

stockholders,

are

depositors, and
otherwise not liable for
and

tax, would have

the

to

reduction,

in

obtaining
"(2)

by

additional bur¬
would be entailed

in

E.
LAS

Dotson

a

J.

imposition of

the

which

Faced with
a

20% tax
not liable.
loss of this income

they
a

a

are

period of from three months

over

a

year,

initiating

necessity
unfamiliar

and the

wholly

refund procedure would
discourage
participation

tend to
in the
regular
savings
bond
purchase
program.
Resistance is already

being

met

bonds.

in

the

Upham

(Special to The Financial Chronicle)

LOS
L.

ANGELES, Calif.—Robert
has

become

associ¬

Harris,

Upham

&

Co.,

He

was

Lindstrom

ated
523

with
West

formerly

Sixth

Street.

Dempsey-Tegeler

with

Co. and Marache Sims & Co.

&

With Paine,
.

Webber Co..

(Special to The Financial Chronicle)

PASADENA,

Calif.

—

John

T.

of these

Berdan has become affiliated with

the sale of

50 North Garfield Avenue. He was

sale

*

Paine, Webber, Jackson & Curtis,
deterrent, to

"Any

these securities to individuals and

the

depositing of
funds in savings accounts

trustees

and

represents
our

Dotson Opens

VEGAS, Nev.—Edwin J.
has opened offices in the

Joins Harris,

of whom are net subject to
income taxes, would be penalized
for

en¬

securities business.

curities business.

many

by

J. W.

—

Boggs Building to engage in a se¬

bondholders,

Savings

York

164-01 Northern Boulevard to
gage

refund.

a

offices

New

Creighton, Jr. has formed Creigh¬
ton and Fox, Inc. with offices at

In addi¬

an

den of expenses

Street,

Creighton & Fox, Inc.

their al¬

hardship imposed

engaging in
under the

from

City.

ready reduced income diminished

by this withholding tax.

Co.

FLUSHING, N. Y.

"Likewise, the many charitable,

bondholders

Broad

60

at

Anshel

of

name

these taxes.

recover

business,

securities

a

by default because of their lack
knowledge of the manner in

go

excess

INCORPORATED

.

House

proposal
Treasury

the

un¬

particu¬

which, unable to attract
additional capital, must rely on

of Mr. Muench's letter

Committee has

of

2&S, the 1962/-37s and the 1963/68s..
According to reports, a rather sizable block of the December
1967/72s were worked off (without help-from Federal)
by a
couple of dealers last week in not too much time. This seems to
be indicative of a betterment in confidence among buyers.

L.

Albert

follows;
"The

only

not

be

banks

stock and bondholders.
The text

paid.

but dangerous,

larly in

the

the Asso¬
ciation, it is pointed out the pro¬
posal would impose hardship and
losses on bank depositors as well
as

for an increase in the

would

fortunate

by Albert L.
Muench, Secretary

to

into the

pressure

"That

Congress

of several

buyers

to

rate of interest

mem¬

of

.

such,

and salaries, so will the
withholding tax on interest lead
wages

New

York

bers

1959/62.
Volume,
nonetheless, has not been too large in these purchases, but on
the increase from what it has been.
Swaps and switches are
still being made in the ineligibles, with the nearer-eligible ones
again in good standing.' This has brought a bit more activity

been

maturities of the taps, including the 2Vis due

15

to

sent

for

..

for "increasing

pressure

dated May 16,

the

though

and salaries

in

of

letter,

a

resulted

tax on wages

Association.
In

withholding

And just as the

ing.

the New York

tion

cautious, it is evident that another type of buyer has made, an
appearance in the market for this issue.
Initially, it was those
that sold the bank 2V2s out at higher prices; now it is reported

MUNICIPAL

severe

Executive

cipal

as

actually receive as the
amount which their bank is pay-,

criticism from

the

interest

of

amount

the

regard

which they

brought

forth

their employer

paying them so will the own-;
ers
of savings accounts come to.

is

Ways

and

their

in

find

the salary or wage

by the

already tentatively voted

the

the amount they
pay
envelopes as

nation to regard

withholding tax on divi¬
and
interest
payments,

20%

sheltered

and

■-*

bit

securities.

conscious and while this has brought buying into State and muni¬

STATE

.

a

salaries has led the workers of

proposal to levy

The Treasury's
a

State Bankers

Well

especially the restricted obligations. Sellers have not been appear-1
ing as, frequently or with as large amounts as was the case a short
time ago.
However, it is not believed this signals any immediate

Mr. Herbert has

In recent years

first hurdle
well taken.

Banks, which have also been more aggressive and
discriminating in their acquisition of Treasuries,

Central

time, Mr. Herbert was

been

certificates, according to

market has been showing modest improve¬
ment from the lows of the year with all sections of the list giving
evidence of the belief that for the immediate future at least the
worst of the storm is over.
Volume and activity is still on the
restricted side, but there have been more buyers around than
had been the case not so long ago.
These buyers are aside from

,

Chicago where he
spent seven years in trust invest¬
ment research and management.
For

'

,

.

,

^

The government

of

Company

the July

.

satisfactory. It seems as though the
of called and matured issues has been

Herbert

the

*

and

.

be very

funds, he was
dent

:

.

opinions expressed by followers of the money markets, are well
satisfied with the l%s and exchanges into the new obligation

as¬

suming his po¬
sition with the
two

2%s

the

of

Holders

country.

Prior

give the Treasury an

may

favorable rate at that time.

ghout

r ou

in the not too distant future,
opportunity to refinance them at a more

mid-year maturities, will come due

invest¬

ment

would

majority of stockholders and
depositors, and endanger savings bond program.

impose hardship and expense on

looking for, and it is evident the monetary

President.

Muench, Secretary,

Committee, through Albert L.

proposal of House Ways and Means Committee

says

called 2%s and the July

compa¬

Association's

New York members of Congress,

letter to

Executive

The Treasury

an¬

investment

Reporter

Vice-

Funds,

Inc.,

Objects to
and Dividend Withholding Tax

N. Y. Slale Bankers Association

T. J. Herbert V.-P.

a

to

very

formerly

real danger to

savings accounts.
withholding tax

Just
on

as

wages

the
and

Merrill

Lynch,

R. R. Littlefield

economy.

"(3) Equally important will be
the psychological effect of a 20%
withholding tax on the owners of

with

Pierce, Fenner & Beane.

Raymond B. Littlefield, head of
Littlefield & Co.,

passed
of 56.

away

Providence, R. I.,

May 25

'at the

age

Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2257)

Continued, from page 4

keeping inventories on an oper¬
ating rather than U speculating
basis.

The Business

Conclusions
In

conclusion, don't be mislead
by the current temporary weak¬
ening of prices in many lines. On

Outlook

the

and

foolishly seeks size at the
of financial strength.

pense

In

an

inflationary period, the necessarily
investment

greater

a

to

severe

enough strain

difficulties before their customers
feel the pinch of shortages.

owned

on

capital in most enterprises, when
to

this

increased strain

is

In the months

expansion
territory and facilities, the risk

increases geometrically.
ber,

it

is

Remem¬

over-expansion

ahead, the great

have

can

will hurt
The

buy as
large
since last June,

they have

as

the time

of

growing expansion of

duction facilities and
weakness of

the

will

have

stage
great
sense

saved
I

am

belief

that

more

our

championship girls softball

to

runaway inflation in this
land of plenty.
The good

sure

it

the

times in the past;

is

not

hope that it will

save

too

much

us

again.

to

Linden

both

at home.

which

If the

man

in the

street,

465

California Street.

•

the

U.

are

and

son,

cham¬

Peterson, President; F. Wil¬
Vice-President and G. Ames,

Secretary-Treasurer.

will

their

renew

rivalry

L. W.

which

*

Jr.

is

engaging

business from
Moore

the Field Day but later lost to

at

L. W.

up

v

The current

...because
and

thin, he "breaks

so

back"!

r

tightening of credit

of. higher

increasing

interest

credit

rates..

risk,

the ; credit

restriction
programs
under way, make it
advisable

now

.

plus,

-

,

for you to
get your
in order.

.

financial house

/; •
"
.There is another
extremely im¬
portant reason for you to
guard.

.-

.

••

your

financial strength.- You

in

growing,

a

which

is

of

way

*

dynamic

vital

life.

to
It

the
is

;

are

industry
American

industry
which, fortunately for you, as well
as
the public, is
intensely com¬
petitive.
'

which

It

has

is

an

that

caused

'competition

industry

your

to

grow and continually expand
!,its usefulness in all sections and
■at

all

levels of the
economy.

Fi¬

nancial

strength to continue that
competition is imperative if
industry is to continue its

keen
this

have put thei*
money
the Bell

unparalleled
ever

to

growth.
If the day
that you have to turn

comes

the

United States,

company

v.'

.

i",

M

'

'

"

'

Demand and Supply in
Months Ahead

'

f %

^

'

■

be

in

at,

these
are

the

months

a

month

will

is

rate of $5

raw

said

ma¬

passenger

cars,

5

million

m

more

r$P
W

than adequate

■'

stand¬

fellows who bet on short¬
in textiles and several other
lines have
already had ample oc¬
casion to regret their lack of
faith
American

productivity!
This
of the
danger of
in inventories again
the
importance
of

speculating
dramatizes




"

*

*

v.

f

v*
♦

,J

v'J
m

WmM

The

ages

in

V;:
"A

ards!

demonstration

are

live

towns and

on

farms

small stockholders. More

Over 350,000 have held

women.

ten

years or

can

see

now an

owner

that many,
many

of A. ,T- & T.

people have

-

a

stake in the

telephone business. It's their savings
helped to give this country the most
telephone service in the world.

Im¬

telephone is vital in time

BELL TELEPHONE

economic

by present

owners

m

sets,

standards; and pos¬
sibly, although not probably, more
adequate

women

throughout the United

of national
emergency.

'by historical
than

and

refrig¬

standpoint,'d e s p i t e the dire
threats emanating from
Washing¬
ton
of
shortages and squeezes,
supply will be

many owners.

in cities,

portant in peace, the

cooking stoves, 3 million
washing machines and 7 million
an

are

and the best

because

television

From

You

that have

4 million

radios in 1951.

are

the United States is

present plans contemplate the pro¬
duction of more than 5 million

erators, 5 million

million

are

buying

This

a

longer. Some 200,000
telephone employees and thousands more
are
buying the stock under the Employee Stock
Plan. About one
family in every forty-five in

as

which

since Korea day, I would
say that
we could meet this
increased de¬
mand without too much of a strain

prices.

They

their stock for

terials.
If the American
people
had not put on two
sorry exhibi¬
tions of panicky "scare"

on

as

men

communities

Most of them

begin to turn into

payrolls and demand for

States.

than half

de¬

levels

orders

being placed at the

billion

history of the

and from all walks of life.

~

ahead

unprecedented
government

in the

is owned by

the

Despite credit restrictions,
mand

has half

in: 19,000

reacracy is well known!
.

company

These million

accept the government's embrace;
so
impossible to escape its clutch! /
And, the deadening effect of bu•

a

people. The American Telephone and Telegraph
Company has reached that mark. No_ other

that day will mark

the end of the fantastic
growth
of the industry. I say this because
it is so inviting and so
easy to

;

Today, for the first time

.

wise to interfere with the
present

market,

Telephone business

for assistance,

government

or
to
regulate your prices andcompetitive practices, or other- -

free

in

SYSTEM

;,;

Wells,

securities

offices at

Wells, Jr. Co.

over-expanaed!,' : - ;
sincerity, may I say, there ? '
is no ,sadder
sight than that of a
*
businessman who works so hard
own

W.

in -the

Avenue, under the

In all

his

Wells, Jr. Co.

TERRELL, Tex.—L.

The time to expand is when
bar- V.
gains are " available
because, of * such collapses. Wait and

and spreads out

Baseball
the game.

P:

collapse; and
they all collapse sooner or later—
always sooner than expected! '

pick

Amateur

Leasehold Dealers Inc.

and

the i el low who

S.

Leasehold Dealers, Inc. has been
formed with offices at 44 Wall
Street, New York City. Principals

announced.

Brakettes

Arians,

national

pions of their respective
leagues,

all booms to

causes

Raybestos

the

teams
-

Committee,

The

of the American
people has

many

of

principal sports event
spectators at the Bond Club
Field Day on June
8, C. Russell
Lea, Chairman of the Field
Day
Baseball

people

in

Association, will umpire

two

for

a

us

between

game

Brakettes

championship.
•
George Dickstein, chief official

will be the

war¬

than

.sense

baseball

pro¬

current

prices, however,

the

A

the

Champs
Play at Field Day

To

price inflation that
for years to come.
a

us

rant

Girl Softball

a

increase in government spending
was a feature of the bond
men's
D. J. Pickrell
will put the
economy to a severe
Opens
outing at the Sleepy Hollow Coun¬
inflationary test. Nonetheless, if
SAN
FRANCISCO, Calif.—
inflation, gets out of control, it Daniel J. Pickrell is
try Club in 1950.
Last year the
engaging in a
will be largely because of failure securities
business from offices at Arians won in a sizzling 1-0 game

added

the financial burden of
in

we

Currently, businessmen are feel¬
ing the pinch of working capital

the

carry

gallons of inventory places

same

contrary,

face more and
more controls if prices are to be
kept in line next fall, when the
real
pressure
will materialize.

ex¬

emotionally
part
we

17

his wife, continue to

and

201

East

name

of

The Commercial and Financial

Chronicle

.

.

.

Thursday, May 31, 1951

(2258)

18

may

News About Banks
BRANCHES

NEW

OFFICERS, ETC.

CAPITALIZATIONS

an

of

Assistant

the

Dey,

National

York

New

of

Bank

City

was

Group VII,
New York State Bankers Associa¬
tion for the ensuing year at the
annual meeting of the Group on
of

Chairman

for the

Bank

the

with

sociated

past twenty years except for three
and one-half years service in the

during World War II,

U. S. Navy

he

which

from

discharged

was

Lieutenant Com¬
He is a graduate of The
School of Finance, Uni¬

with the rank of

mander.Wharton

designated as senior officer in the
Investment Department.
A native of Macon, Miss., Mr.

bank's

Virginia Military
University of

attended

*■

*

announcement was made on

An

cf New York

Company

Trust

that the

Commercial Na¬

the

of

merger

Bankers

the

by

28

May

and Trust Company
with the Bankers
became effective on that

Trust

The stockholders of both
companies approved on May

day.
trust

de¬

plans for the merger,

the

23

tails of which
issue of

were

given in our

The

April 26, page 1766.

Hankers Trust Company in its an¬
nouncement of May 28 said:
,

ployees

of The

Bank

tional

officers] and

former

"The

have

'

t

and

em¬

1

to

open

joined the combined
The office
at 46

tution,

insti¬
Wall

Street, previously occupied by
Commercial National Bank,

The

change, will admit Robert B.
schel, Exchange members, to
nership

continued.

who

served

on

been

has

active

Menpart¬

Mr. Menschel

June 1.

individual

an

as

broker.

floor

their

the Federal

by

&

-

Wall Street,

York

City, members of

New

York

Stock

admit William J.

the

Exchange, will

Bergrath to gen¬

partnership and Hazel Dun¬

eral

ham Harris to

limited partnership

in the firm on June 1.

'

.

11

Co.,

New

Notes

NSTA

supervisory authorities.

$667,500.

to

and Maestre

Hemingway

Messrs.

of

plan provides that
stockholders of the Mississippi

stated that the
the

Co. will receive in
325,000 shares of $25
par
value stock of the merged*
trust company in exchange for the
Trust

Valley

The

stock

branch office at 344

a
*

1

'

Co.

:/•.

of Elmira, N.

outstanding, and that the
of Mercantile-Com¬

now

Y., reports a

the

in

receive

aggregate

shares of the $25 par

capital
of $1,000,000,
increased
from $800,000 as of April 30. The

will

Co.

Trust

and

Bank

merce

Canal Trust Com¬

The Chemung

shares of $25 par value
of Mississippi Valley Trust

last

the

Association

Traders

Security

of

N.

Y.

Bowling League on May 25, 1951,

(STANY)

bowling night, finished with a hotly

stockholders

-\-

*

ASSOCIATION OF NEW YORK

SECURITY TRADERS

the aggregate

500,000

contested match for the
J. Burian
to

(Daniel F. Rice & Co.) led his team

victory.

together with an interest in cer¬
tain
surplus
assets
which the

John M. Budinger,

final winners. Arthur

value stock

of the consolidated trust company,

will $800,000 capital had consisted of
40,000 shares par $20 each, while
Mercantile-Commerce Bank
and
President of The the $1,000,000 capital consists of
Trust Co. will withhold from the
Commercial National Bank, and 200,000 shares, par $5 each.
new institution. It was announced
William T. Taylor, formerly Vice$
*
.*
that all officers and other per¬
Chairman of the Board, have been
The capital of the First National
sonnel of the two institutions will
elected Vice-Presidents of Bank¬
Hank of Bloomingdale, N. J. has
be retained by the merged trust
ers Trust Company and will serve
been increased from $250,000 to
company and that the ranking of¬
as
members of the Board of Di¬
$500,000, effective May 15; part of
ficers of the merged trust com¬
rectors."
the increased capital resulted from
*
*
*
pany would be: Chairman of the
a stock dividend of $125,000, while
Lawrence
C. Marshall, Presi¬ the sale of new stock to the Board, Sidney Maestre, now Presi¬

be

the

had

by

plan

the
and

1134 Broadway, re¬

149th Street. 4

pany

of

Harris to Admit
Harris

of the New York Stock Ex¬

bers

each. The
also authorized on May, 240,000

was

East

of

stockholders

approval

stock is in shares of $5
bank

and

..

$302,500

from

Senior
fol¬

Faul and Thos. F. Regan as

Vice-Presidents

companies would be merged upon

approval from the State
Department as of April
increase its capital» stock

to

and

sound

a

plan whereby the as¬
business of the two trust

sets and

Banking
30

maintain

to

satisfactory

a

and State

Industrial Bank

New York, at

ceived

tinue

50

City, mem¬

and

Bank

institutions

respective

Co.,

&

of. the

announced on May 21
Boards of Directors of

the

that

*,

v

Commercial Na¬
Trust Company

*

*

Royal

The

Chairman of

Sidney Maestre, President of the

Broad-

Goldsmith

W.

Broadway, New York

of that City

.

York

II.

Company, of St. Louis and

Trust

Sproul, President of the Federal
Reserve Bank of New York.
*

proposed addition of capi¬
will enable us to con¬

funds

Admit

H. W. Goldsmith to

*

Mercantile-Commerce

System effective May 17,
made known by Allan

Bank

New

of

8

stock.

Directors

of

Board

the

been

has

of May

as

*

*

approved

Reserve

,

in¬

Pa.,

to $700,000 by the

W. L. Hemingway,

their

a

capital

$600,000

sale of $100,000 of new

Broadalbin, N. Y.,
member of the Federal

.

tional

its

creased

from

became

%

'

National, said:

"The
tal

of

President

,

Philadelphia,

dalbin Bank of

Virginia.

profits account from $31,609,594
to $35,969,594, consisting of $14",-

Mississippi Valley Trust Company,

Announcement that The

the

and

Institute

First

of directors,

board

McDonnell,

A.

on

of

Bank

*

%

the bank's

lowing officers: Robert M. WalmPhiladelphia
at their
000,000 in capital stock, $16,000",- sley III as Vice-President; John
May 25, elected as a
Wax
as
Vice-President and
000 in surplus, and $5,969,594 in E.
director of the bank William S.
undivided profits. St. Louis Union Comptroller; Charles A. Bonneau
Louchheim, Executive Vice-Presi¬
Trust Company, with which the and Frank A. Brown as Assistant
dent
and Treasurer
of Bobrick
bank
is associated, has capital, Vice-Presidents; Errol E. Buckner
Manufacturing
Corporation,
ac¬
surplus and undivided profits to¬ as Assistant Vice-President and
cording to an announcement by
taling $14,000,000, qf which $?,- Trust Officer; Irwin Glaser as
Harold
Entwisle, Vice-President
291,080 represents ownership
of Assistant Vice-President; Frank
of the bank.
capital stock in th£ bank. It is
*
if
%
J. Basile and A.- F. Finnegan as
stated that the trust company will
The Northwestern National
•
exercise
all of its subscription Assistant Cashiers.

meeting

$1,000,000.
❖

a

undivided

and

surplus,

stock,

Trust

and

Bank

of

pany

dividend

$4,000,000 by a stock

of

11, to consider

for June

called

the bank

Tradesmens
Com¬

The directors of the
National

capital from $3,000,000

to

W.

■

-

creased its

if

if

relationship between
the bank's capital funds and its
line of proposal to issue and sell 100,000
loans and deposits."
" .
shares of additional $20 par value
credit of $4,000,000 to its larger
Agroup of investment firms,
commercial
accounts,
and
the capital stock of the bank. The
headed by G. H. Walker, & Co. of
stock would be offered for stock¬
larger capital structure will not
St.
Louis, will underwrite the
holders
subscription
at
$44
a
only provide a better balance in
issue.
relation to deposits, but will en¬ share, on the basis of 1 share, for
*
if
if
*
each 6 shares now held, and would
able it to further expand its serv¬
The Board of Directors of The
increase the number of shares of
ices and activities. Plans to en¬
the bank's capital stock outstand¬ National Bank of Commerce in
large the capital were noted in
New Orleans announces the elec¬
ing from 600,000 to 700,000. The
our April 5 issue, page 1488, and
proceeds of the sale will be used tion of John A. Oulliber as Exec¬
May 17, page 2062.
to
increase
the
bank's
capital utive Vice-President; L. W. Mc*
*
*

000,000. This will enable
to
extend a
maximum

Garden City Hotel,
Garden
City, N. Y.
Ernest L. versity of Pennsylvania and the
Brooklyn Law School, and is a
Dane, Vice-President of the East
member of the Bar of New-York
Rockaway (N. Y.) National Bank
State.
&
Trust
Company, was elected
*
*
*
Vice-Chairman, and Edward H.
Guaranty
Trust Company
of
Dawson,
Vice-President of the
New York has announced the ap¬
Jamaica (N. Y.) National Bank,
was
elected Secretary-Treasurer, pointment of William S. Clough,
Jr., and Lawrence Hoguet as As¬
*
*
if
sistant Secretaries. Both are asso¬
Horace C. Flanigan, Chairman
ciated with the foreign depart¬
of
the Board
of Manufacturers
ment at the bank's main office.
*
*
#
Trust Company of New York an¬
nounces
that Charles H. Jones,
The newly enlarged capital of
Vice-President has been elected a
$13,234,375 of the Public National
member of the General Adminis¬
Bank and Trust Company of New
trative Board of the bank.
Mr.
York, increased from $10,587,500,
Jones has
been with Manufac¬
by the sale of new stock to the
turers Trust Company since 1932
amount of $2,646,875, became ef¬
when The Chatham Phenix Na¬
fective
May
11. Details of the
tional Bank and Trust Company
plans to enlarge the capital ap¬
was
merged with Manufacturers
peared in our issue of April 26,
Trust. He was made an Assistant
Vice-President at that time, and page 1766.
if
if
❖
was
promoted to Vice-President
Effective May 11 The Grace Na¬
in 1936. Last year, in addition to
tional
Bank of New York
in¬
his regular duties, Mr. Jones was
May 23 at the

Jones

for

$243,780,352.13.

adjustments will be made in the
The board of directors of First
undivided profits account to bring
National Bank in St. Louis an¬
the bank's surplus account up to
nounced on May 25 that a special
a total of $27,000,000, and capital
stockholders
meeting
has
been
and surplus, combined,
to $40,-

Bankers

and

REVISED

elected

of

if

NEW

W.

of

completion

Upon

proposed financing, said Wil¬
liam Fulton Kurtz, President and
Chairman of the Board certain

the

CONSOLIDATIONS

Ralph

shares.

posits

be- bought and sold to make

full

Vice-President

showed
de¬ rights to the new stock. This will
$348,980,441.40 and re¬ involve purchasing 31,446 shares,
an
additional investment in the
sources of $381,818,834.63. Missis¬
sippi Valley
listed deposits* at bank of more than $1,380,000.
In making
the announcement
$225,409,477.25 and resources of
cantile-Commerce

shares

by which fractional

made

as

.

Ail awards

of prizes

will be made at the

bowling dinner June 7 -at Antlers
67

Wall Street, New

Restaurant,

York City.

^

Bank of the Manhat¬
of New York has
announced the promotion of Les¬
ter F. Grieb to the rank of VicePresident. He will continue to be
associated with the bank's out-oftown division, handling and de¬

dent of the
tan

Company,

veloping business in western
Pennsylvania, Ohio, Michigan and
Indiana.

Mr. Grieb has

been as-

amount

of

capital

up

half

to

the
million

brought

$125,000

a

dollars.
*

proposed increase of 200,000
shares in the authorized capital
A

Pennsylvania Com¬

stock

of The

pany

for Banking and Trusts

Philadelphia

May 28 at

a

approved

was

of

special meeting of the

Oklahoma

Turnpike

Authority

the

proceeds of the new fi¬

will

nancing

$6,000,000

exceed

after the deduction of all expenses

in

with

connection

The

additional
the

to

offered

shares

are

being

stockholders

of

Valley

the

Board

Bank

of

Trust

Mercantile-

of

President

now

Commerce

Bank

Executive

Vice-Presidents,

now

and

Trust

Co.;
Eu-

Executive Vice-Presidents of

J. Mudd

gene

and Hord Hardin,
Bank

Mercantile-Commerce

and

Trust

Co.

Trust

Co.,

It

was

Mississippi

respectively.

stated

in

the

N.

a

result

of

the

merger

a

that
new

sources

known

as

Bought—Sold—Quoted

Each stockholder will therefore be

Company, which name it is stated

close

of

business

of

entitled to subscribe to 2/11

qAllen & Company
30 Broad Street, New York 4
Phone HA 2-2600 —Tel. NY 1-1017




share

of

the

new

stock

for

a

each

company,

is the

same

Mercantile

the

as

before

the merger

with the National Bank of

fix the offering
price of the new shares to stock¬

merce

company

will

holders of record at

June

4.

a

meeting

Arrangements

will

on

be

Trust

of the Mercantile Trust Company

share owftfed. The directors of the

The
notes

bank

in

Com¬

that

in

statement

Frankel

Roy

Warnes

.

The

Security Traders Association of Los Angeles will hold its

Annual Spring
June

Neiland

Van Arsdale

promises that
than

Party at Lake Arrowhead Lodge the week-end of

22, 23 and 24.

ever.

of Blyth & Co., Inc. is Chairman and

this traditionally famous occasion will be
*

,

Democrat"
the
on

latest

also

public

April 9, Mer¬

better

•>

An additional feature

this

year

will be

a

special event to be

evening cocktail hour.-:* v..1
;
guests this affair is: recommended asr a fine

conducted during the Friday
For outrofrfown

opportunity to become thoroughly acquainted with Los

1929.

"Globe*

Harold

B. Van Arsdale

Louis

St.

"Globe Democrat" of May 22
as

&

Valley

May 28, in the ratio of one new
shares owned.

the

ANGELES

Mer¬

&

share for each 5V2

3!/2%-3% Revenue Bonds

at

OF LOS

Trust

will be formed with re¬
exceeding $600,000 to be

record

TRADERS ASSOCIATION

Co.; President, Gale F. Johnston,

issuance.

the

of

cantile-Commerce

on

bank's stockholders. It is expected
that

Mississippi

Arthur J. Burian

;

SECURITY

Co.; Chairman of the Executive
Committee, W. L. Heminway, now
Chairman

*

*

ol

dent

*

hospitality.
Other

<

members

Angeles

_

committee are Roy Warnes of Hill
Frankel of Fairman & Co. *

of the

Richards & Co. and Harold

Volume 173

Number 5016

.

.

The Commercial and Financial Chronicle

.

19

(2259)

Bank and Insurance Stocks
By H.

E.

being ground

Needed: New

Leadership
In Foreign Policy

JOHNSON

U. S.

One of the most
significant developments so far this year in
banking field has been the trend toward increases in
capital
funds.
These increases in a
great many cases have been made
through the sale of additional capital stock to
existing stock¬

in

holders.

The

financing has been occurring in all sections

of the

The

Of

and

than

more

institutions.

by

operating

Another

shares

the

was

When

factor

China

augment

on a narrow

their capital

in

encouraging

the

sale

perative
for

is liable for

this

tax

it may

be

advantageous,

This

was

the

higher credit

undoubtedly

the two New York

the

of

one

allowed
factors

on

new

capital.

subscribe

Bank

issued

rights

to

its

;

to

the
larger banks include the National City Bank of Cleveland, Penn¬
sylvania Company for Banking & Trusts (Philadelphia), Anglo
California National Bank (San Francisco) and
Republic National
Bank (Dallas).

shares.
at $32

The

City Bank of Cleveland

to

are

proposal to increase the capital stock by 125,000

a

additional

share

a

held.

on

on

shares

would

the basis of

be

offered

Approximately $4,000,000 would be added

Stockholders of Pennsylvania

to

stockholders

additional share for each five

one

to

capital funds.

Company for Banking & Trusts

recently approved an increase in the authorized capital stock by
200,000 shares. These new shares are to be offered to stockholders
in

the

ratio

of

shares held.

additional

one

,

share for each

five

and

one-half

This sale is expected to add over $6,000,000 to
capital

accounts.

The

offered

stockholders

250,000

share for each three held.

one

$30

Anglo California National Bank during March and April'

share.

a

In

additional shares
The

Thus about $7,500,000

April stockholders

of

in

the

subscription price
was

Republic

ratio

was

of

set at

National

Bank

a

held.

share

on

the basis of

one

new

to

Republic.

the

factors which have tended to encourage the increase

of capital funds

still

present.

will

be

As

through the sale of additional capital shares
a

undertaken

are

result it is expected that additional financing

by other banks.

ot INDIA, LIMITED

good

on any

26,

London,

Subscribed

Paid-up
Reserve

Capital

Capital
Fund

£4,000,000
£2,000,000
£2,500,000

conducts every description of
banking and exchange business

The Bank

Trusteeships and Executorships
also undertaken




on

policy

a

to i disaster
and

or

on

power

of

that

country does not want unity
on
defeat, or unity on disaster.
Disunity hurts our cause without

question
which

was

have

on

policy

a

could

wrong

bring
,

just returned from

Eu¬

where I had the opportunity

rope

to

unity

greater disaster.

even

I

but

talk

about

to

General
of

some

He

is

the

Eisenhower

problems

doing

job

great

a

he

against monumental odds. What is
there

needed

well

as

as

every¬

where else in the free world is the
to win.

Once the will exists

can

INSURANCE
STOCKS

stand

and

repel aggression.

no
question of the
ability of the free nations to with¬

That

is

portant

why

it
the

that

is

Members New York Stock
Exchange
Members New York Curb
Exchange
120 BROADWAY,

clear,

that

one

policy

of

the

faith.

and

inspire

begging

with

us,

Rather

we

as

we

well.

con¬

understandable

will

and

must

—r

confidence

than

bribing
to
join

allies

our

win

their
our

re¬

ene¬

The type of leader¬

presently have in Wash¬

confidence

of

Teletype—NY

7-3500

Specialists in Bank Stocks

that

mistake,

made

our

ly that

that

our

convinced

a

allies

son

defend

Russian attack

aggression.

that

says

our

♦Excerpts

our¬
un¬

Mr. Ache-

policy is

"de¬

from

address

by Sen.
Meeting of
American Iron and Steel Institute, New
York City, May 24, 1951.
Nixon

at

the

59th

an

neces¬

and

waste

on

inefficiency in

will

we

ning the

Other¬

the risk of win¬

run

militarily and losing

war

it economically.

(8) The greatest failure of our
policy today is in the ideological
field. • Here, where we should be
the
strongest,
the
Communists
with

an

have

done

inferior

product

far

a

to sell,
job sell¬

better

We should recognize that one of

the greatest assets on our side in
the present struggle is the mil¬
lions

of

have

General

curtain

we are

behind

people

but

I

tremendous

the

tarily

as

we

the

of

to

We

recognize that if

foreign policy is to succeed
place equal emphasis
upon
the necessity of resisting

on

must

Communist
Asia

and

domination

in

both

If either

Europe.

Asia

control, the Communists will have
gained the manpower and the re¬
that

sources

and win

peace we,

they

world

a

need

begin

to

If

war.

we

want

therefore, must not al¬

low this

sev¬

Communist

gov¬

talking

quit

defense

and

the offensive in the
We must

about

and

go

ideological

never

write off

the

people behind the iron curtain
and must give them hope and en¬
couragement in their struggle to
become
An

Europe falls under Communist

or

the

should

conflict.

our
we

en¬

they

abroad,

the threat they would

containment

must

from

ernments.

arably damaging the economy of
We

coun¬

be able to immobilize

present

strong mili¬
without irrep¬

the country.

(5)

growing in

are

eral divisions of Communist troops

as

can

groups

couragement
would

because

(4) We must be

iron

Communists.

not

are

tries, and that with additional

am

in

support

who

Recent reports have indicated that

confession of

country.

the

free.

indication

of

our

ideological field

parent when

grounds
come

of

If

in

study the back¬

we

those

who

Communists

.States.

failure

becomes ap¬

in

have

the

be¬

United

like Hiss and Rem¬

men

ington, from good families, with
eventuality to occur..
(6) We must recognize that in¬ top-paying government jobs and
_

definite continuance of the
is not in

war

interests

our

in

and

the best educational

backgrounds,

become

that the only way to end the war
is with a military decision on the

Communists, what can we
expect abroad?
What is needed is a campaign of

battlefield.

can¬

truth to combat the falsehoods of

give

the

be

not
our

Such

obtained

decision

a

unless

we

commanders in the field

power

more

than they have at the pres¬

time.

ent

That

is

why the Macwhole or in
part, must eventually be adopted.
There are those who say that
Arthur

the

in

program,

continuance of

but

The implication of such

invite

why it becomes

government at home.

wise,

the

enemy

the

has

war

hurt

it has

than

more

us

or

statement is that until that time

we

our

that such action would

they fail to recognize that not

United

1953.

war

Secretary

consequences

be

til

is

tarily to defend the nation against
enemies abroad, that we declare

impossible because of the

political

our

from

strength in the iron curtain

is

Russian soldier

to

ourselves

ing it.

a

war

position

bankruptcy in

resistance

error

con¬

enemies aoroad.

adopt¬
ing a new policy which will avoid
the mistakes of the past.
It is

one

a

military

a

the

defend

to

That

past policy on'China

our

wrong and

have

sary as we prepare ourselves mili¬

of State down should admit frank¬

was

Stalin

and

in

on

into

way

our

replaced.

the

and

this

whole

contrary they
be able to force us to spend

efforts

develop inevit¬
seeds of .mistake

the

in

nations

that

(3) Administration leaders from
President

their

again that they
not have to defeat the capi¬

may

and failure in them.

the

of
be

over

talist

now

the

carry

is

in

Korea

States,

suffering

not

is

fighting in
it

and

is

the

Russia, which

casualties

1,000

a

As

as

Allies in

our

Europe
as

great

interest in settling the Korean

war

as

we

materials which
ster

the

The

have.
are

defense

men

and

needed to bol-

of

Europe

are

.

similar

agency

the

to

ECA.

It

must be staffed with the best per¬

sonnel
funds

available.

The

amount

of

appropriated for this pur¬

should be at least equal to
appropriated by the Com¬
munists, rather than less, which is
pose

that

case

Our

far

concerned, they have

are
an

opposition
on
a
scale
far
than any we have ever
contemplated before.
The Voice
of America
organization is not
competent to handle this assignment. The whole program should
be taken out of the State Depart¬
ment and set up as a separate
greater

the

week,

1-1248-49

(L. A. Gibbs, Manager Trading Dept.)

be

and

flict;

should

also

Lenin

over

may

of

to

Acheson

For
example,
Administration
spokesmen state that we will not

NEW YORK 5, N. Y.

Telephone: BArclay
Bell

ably

Korea

im¬

doubly

United States at this time be

selves against

Laird, Bissell & Meeds

Having

be

the respect of our enemies.

Bishopsgate,
E. C.

Branches in India, Burma, Ceylon, Kenya
Colony, Kericho, Kenya, and Aden
and Zanzibar

unity, but it

the

the

Kenya Colony and Uganda
Office:

with

agree

policy and
be expected to make
other. In other words,

cannot

should

policies they

the

ington is not designed to inspire

and

and

recognized

built

claimed that such

who

made

who

ship

BANK

said

want, this minimum
into effect:

Secretary

ment

more

adopt

we

spect and the respect of

NATIONAL BANK

Head

led

who

mies

Bankers to the Government in

those

as

perpetuation

sistent,

same

that

is

our

has

those

share for each eight shares

This financing added about $4,000,000 to the
capital funds of

The

but what

there

voted

•issue 100,000 additional shares of stock to
existing shareholders at

$40

which

will

added to capital.

confidence

home

long

have

Marx,

and

resign, not because there is any
question of his loyalty or even his
ability but because he has lost the

State

The country wants
does not want unity

faces.

to

is

all

well

as

among

vote June 4

Nixon

him.

This should add $40,000,000 to the bank's capital.
Some of the other recent sales and announcements

National

M.

policy should rep¬
resent the best thinking of our
national leaders, including those
who disagree with the President

share.

of the

the

important

above

to

Stockholders

R.

right policy in a moment of great
national danger. This means, that

151,250 shares of stock at $40 a share. This added
$6,050,000 to capital funds. National City Bank is in the process
of selling 1,000,000 additional shares to its
stockholders at $40
a

in

important

influenced

shareholders

both

are

City banks to. undertake financing during the

National

(1)
Sen.

Depart¬
ment's leadership and in its pol¬
icy as well. Both these principles

past two months.
Public

need and

we

for

ness

•

new

which

the

at

can

decisive in the long run as
strength.
The Commu¬

and

strength.

position that the
unity and the recogni¬ confidence of
the people and is
tion of the principle of civilian
incapable of giving the nation and
authority over the military are our allies
the leadership' we need.
even more important than whether
(2) Those in the State Depart¬
MacArthur was right or wrong on
ment who made the fatal error in
the policies he
advocated.
This
judgment as to the character of
in itself, is a confession of weak¬
the
Chinese
Communist
move¬

$10,000,-

of

restore

people

phases

strategy around it.

their

use

ideological

have

fact

our

fighting

as

nists

program should be put

effect taken the

Thus, it is possible, particularly, among the larger institu¬
tions, to broaden their tax base by selling additional stock and
benefit

note
con¬

Admin¬

need

existing law allows corporations using the
invested capital method of
computing their excess profits tax base
to include 12% of the first
$5,000,000 of invested capital, 10% of
the next $5,000,000 and 8% of the
invested capital over

the

the

own

and

military

give
our friends abroad the
consistent,
strong leadership that they and

istration apol¬
ogists have in

income remains the
same, lower its tax liability.
For example, the

obtain

to

this

some

new

capital additions, however, 12% is allowed.

just

the type
in Korea

away

they

do

their

To

signif¬

icant

while
to

our

one

fritter

satellites

retain

State

is

in

providing pre-tax

new

the

like the

we

strength

leadership

It

profits tax law.

is in the excess profits tax income
bracket, it can by adding
capital, increase its excess profits tax base and,

On

need

in

providing other factors also favor the sale, to enlarge the
capital
base by adding new
capital funds. In other words when a bank

000.

where

change

a

of

by

nomic

the present world conflict

We thereby play di¬

of incident

We have failed

adequate

* consideration,
however, to the fact that the eco¬

war

brings

home

give

re¬

military strength at

our

home and abroad.
to

has-been

so,

the necessity for

upon

building

aggres¬

risk of

encourage them to create

again the im¬

capi¬

of

the

run

appease¬

possible.

as

phasis, and properly

rectly into the Russians' hands and

of

funds

resisting

victory and not

soon

as

(7) In the great debate on for¬
eign policy which is going on in
the nation today, the
major em¬

Policy
Association,

Department.
some

not

with Russia.

^m

-

that

extent

sion will
r?

with

ment

placed

the

Dean

over

nection, that

important

excess

bank

a

to

controversy

speech
before the

year earlier.

One of the results of these various
changes was that
the banks which had
previously been

ratio, found it necessary
the sale of additional stock.

the

exemplified

as

Rusk's

were not spread
uniformly through¬
Some banks increased their loan totals consider¬
others.
Deposit gains varied between localities

tal

foreign policy,

to

war

signed to prevent war." The im¬
plication is that we will resist
aggression but only when and to

and vacillation of the Administra¬

course, these changes

out the economy,

ably

a

inconsistency,

tion

Demand deposits of member banks
have been increasing dur¬
ing this period and at the end of last year totaled
about $89 billion

compared with $83 billion

confusion,

at

volved in in Korea today and that
for that reason we must end the

and Asia.

One of the
principal reasons for this action has been the in¬
crease in risk assets of
the various commercial
banks. Within the
past year loans of all member banks
have increased from approxi¬
mately $36 billion to $45 billion. At the same time
investments in
U. S. Government
obligations for the same banks have declined
from $57 billion to around
$50 billion. These same general trends
have continued to
operate over the past few months
although
exact figures are not
yet available.

as

Senator from California

State Department's Far Eastern
policy makers; (3)
build-up of military power without damaging nation's economy,
and (4) resistance to Communist domination in both
Europe

try with both large and small
institutions in almost all principal
cities obtaining additional
capital funds.

policy would involve us
"wrong war in the wrong

the wrong time." They,
recognize that that is ex¬
actly the kind of war we are in¬
fail

ment of

coun¬

his

the

place

Attacking Administration's foreign policy as lacking consist'
ency and clearness, Sen. Nixon advocates among other
things:
(1) resignation of Secretary of State Acheson; (2) replace¬

the

the Korean

on

General MacArthur's critics say
that

By HON. RICHARD M. NIXON *

This Week—-Bank Stocks

up

battlefield.

at present.

task

is

to

prove

to people

both sides of the
Iron Curtain that the hope of the
world does not lie in turning to¬
everywhere

on

ward

dictatorship of any kind but
development of
strong, free and intelligent de-

that it lies in the
a

mocracy.

20

The Commercial and Financial Chronicle

(2260)

.

.

Thursday, May 31, 1951

.

Mark Borgatta

With
Troster, Singer & Co.

Securities Salesman's Corner
By JOHN BUTTON

Missouri Pacific

The Program

Opponents of the Missouri Pa¬

(Article 4)

cific plan of
Did

Jiis

you

Joe Louis in. situation

see

ever

prime?

spar

block, and wait for an
then

when

•rhat

is

he

you

interested.
of

aome

Jines

3

those

in

suggested
series

this

of

you

you have it all in black
white, make an appointment
to come back for your second in¬

Ar¬
have

your

if

is es¬
going to show

Jhim

are

you

how

situation

ment

his invest¬
can only
be

improve

to

and

asking questions.
Sometimes the opening comes to
ascertained

in

you

by

another; watch
But

one way or

fjor it

only do this after you have soft¬

Here

suggest here.

can

protect himself

from

•what will my

ministration!

What

American

do

prospect asks you,such ques¬
here is the answer: "Mr.
Jones, I want to answer your ques¬
tion and it is a vital one, but may

your

tions,

I

suggestion?"
"Sure, go ahead."
you will be finan¬

first give you one

He

will

say

"Isn't

where

cially,

a year

jfrom now,

from

five

now,

years

and even 10 years from

the most important consid¬

bow,

eration?

You

do

want

to

keep

what you have, and build it up

if
you can for later years;
that is
just plain common sense, isn't it?"
"Sure," he will say again. "Then
there

is

it
is the way our most astute inves¬
tors have been doing for almost
a century. Booms are followed by

.

only

one

depressions, wars, panics, infla¬
tion, and deflation. Yet our col¬
leges, insurance companies, large
estates and many private individ¬
uals, not only keep what they
have but they make money. Here
is how they do it.
They have a

■

i

program.

They distribute their as-

sets

scientifically.
When
stock
prices and real estate are low they

i

have

;
-

-

money

to buy.

golfer
bers

in

turning

expected

are

to

success

the

difference

Article

ment

Ex¬

Winner

of

mitted

"Let

us

say,

find out where you stand

now—let's

see

if

you

have

your

a

of

be¬

Constitu¬

the

is

Constitution

pro-

petition signed by 175

to the membership

ceipt with
the

of

within

without the approval

or

Board

of

for

Governors,

balloting by'the membership.-

the

attend

FIG Banks Place Debs.
A successful

David P. Currey of

of

Intermediate

with

a

the third

for

mov

Benjamin Jacobson & Co.,
score of 78, won low gross

Richard

N
New

M.

Crooks,

.

banks.

successive year.

Credit

17

kv

m

X fjcili
York, fiscal
v

The

Banks

for

agent

financing,

Exchange,

io^n o^pt- f'
495,000 2.25% consolidated

will

and

the

be

will

tee

afternoon in company
P.

guest' of

off

in

mid-

tures

with Robert

L. Stott.

•

<

•

due

consolidated

March

3,

debendeben¬

1952.

issues will be dated June 1,
and were placed at par.

Boylan, John A. Coleman and

Robert

the

totaling

000

honor

Of the proceeds,

Joins R. H. Johnson

used

to

retire

a

BOSTON,
Thorner "has

Mass.—Robert
become

Mexico
other

had

as

stock.

that the present

and

$59,835,000 will be

NYSE Members Seek

Saturday Closing

been

A

petition signed by 329 mem¬
bers of the New York Stock Ex¬
change

was

of

new money.

1951, the total amount of de-

to

.the mosi liberal treatment in any

plan of reorganization or readjust¬
ment. What was particularly grat¬

ifying

•

submit

balloting,

Butler

B.

with

has

Calhoun

S.

become
&

C.—John
associated

Company,

124 ^

Morgan Square.

W ltJl

f

u

ness

Board

•

DENVER

SALT

•

voted

(Special to the financial chronicle)

were

cumstances.

•

when-

that

provides

Constitu¬

the

of

XVIII

Article

'favor, and the I.-G. N. Adjustments

proposed by a petition signed by
175 or more members, it must be
submitted
to
the
membership
wjthin from two to seven weeks
after receipt, with or without the
approval of the Board of Gov¬
for balloting by the mer-

ernors,

bership.

'

-

/

^Special to the financial chronicle)

SAN

130 Montgomery
A

affirmative

cast

74%.

in

These particu¬

been

have

votes

speculative

'

,

.

' '

Street.

•

f

_

Two With In v. Service
(Special to the financial chronicle)

DENVER, Colo.
Hiatt
have

—

Jerome

and

become

William H.
Schaefer

G.

with

connected

vestment Service

distributed
holders.

17th Street.

With HutcHnson Co.,

individual

among

(Special to the financial chronicle)

tional

holdings

are

therefore,

ters,

few.

very

been believed in

had

institu¬

Concentrated

some

that

It

quar¬

publicity

against the plan might have had

theaeSe

whh

Ze

PUEBLO, Colo.—Robert S. Barr
has

become

chinson

associated

and

with

Company,

50 BROADWAY
Tel.:

WHitehall 3-6700




New

York

Stock

other Principal

WORCESTER, Mass.—Harry W.
is

Co.,«Inc.,

&

now

with

390

H.

L.

Main

Street.

ap-

DETROIT,

majority of the af-

a

finished

no means

Building.

(Special to the financial chronicle)

as

J.

Hurwitz
Francis

BEACH, Fla.—Maurice
joined the staff of
du Pont & Co., 2809

has

I.

Collins Avenue.

ting to the U. S. District Court by
the ICC. Because there were some

to

voting

District

the

have

against

Court will

hearings

the
now

before

it

terms
have
may

certify the plan finally as fair and

Mich.—Edward

MIAMI

tification of the results of the vot-

classes

equitable.

These

hearings

have

Vitale has been added to the staff

been set for June 25 in St. Louis
and

&

Weeks, Penob¬

must

filed

Peabody

(Special to the financial chronicle)

-

Exchanges

NEW YORK

4, N. Y.

Teletype NY 1-1856

objections
be

filed

questionably

With Kidder,

Exchange

Hut¬

Thatcher

With Francis I. du Pont
the

yet. This
latest step merely marks the cer¬

I. A. HOGLE & CO.
'and

In¬

Corporation, 650

Specialists in

RAILROAD

SECURITIES
-

•
-

Membeis

*

■■

With Protected Investors

that they have become widely

so

by

(Special to the financial chronicle)

,

an

amendment to the Constitution is

70% in

^

scot Building.

1915

deter¬

opening of the Ex¬

because of unusual cir¬

necessary

in favor of the plan,

73%

the Convertible 5V2S

of Hornblower

established

be

change on a specified Saturday is

The Missouri Pacific General 4s

'fected security holders the case is

With, Hornblo wer & Weeks

LAKE CITY

shall

Governors

of

mine that the

the ICC proposals.

held

.*

I

„

not

shall

Exchange

for the transaction of busi¬
on
Saturdays
unless
the

open

FRANCISCO, Calif.—Rob¬
the plan ert P. Davis is now affiliated with
bondholders of Protected Investors of
America,

junior

proval of

ii*

d

Kobbms

L.

rl.

I

Western Markets in

the

that

to proponents of

that

While the plan has had

Rutishauser

,

the

to

amendment

an

Constitution which would provide

.

\x7*j.l

SPARTANBURG,

meeting

May 24, asking the Board to
to the
membership, for

on

national-Great Northern also upb
1rJ
rrr nrftnn,aiB

$742,570,000.

ndiDg WiU am°Unt

With Calhoun & Co.

to ' the

submitted

was

Board of Governors at its

position, would be accorded

issues

As of the close of business June

Co., 70 State

plan will eventu¬

ally be the one adopted.

trading favorities for many years

debentures maturing June 1, 1951,

M.

as

half to two

a

off no matter whether the
present plan or some substitute
finally prevails. Nevertheless, the
latest development justifies hope

tion

the

of

scale,
generally ex¬

end

pected, senior bond holders of all
three' constituent roads (Missouri
Pacific; New Orleans, Texas &
Mexico, and International-Great
Northern) voted large majorities
in favor of the plan.
These are
the bonds that, because of their

lar

connected

FOR BROKERS AND DEALERS
SPOKANE

&

1951,

1,

Prompt Wire Service

•

On

ratio of

amount

Robbins

ANGELES

New

by

&

the

Texas

and

Texas

the

I

LOS

Serial 5 Vis,

Mexico com¬
mon, voted some 80% against the
plan, and this same percentage
negative vote was naturally car¬
ried through to the pledged stock.
In "effect,
obviously, "these two
classes of security holders repre¬
sented only one group. The fourth
opposing vote came from minority
holders of unpledged New Orleans,
Orleans,

Both

$47,665,000
like

considered

be

and

year

a

years

=

(Special to the financial chronicle)

I
t

To

some

properly cast votes were against

was

w

of the Board of Governors of the

2.05%

was

preferred
95%
of the

t\tboth Missouri Pacific and Inter-

n

$107,500,000, consisted of $35,005,-

Chairman

group

Pacific

where

was

carded 92-25-67. Robert J. Jacobr
son

offering of two is¬

of debentures of the Federal

sues

Co.,/who

&

still

must

carried

be

Consumma¬

to

terms.

the

approved

the plan. The Secured
which
are
secured

lien

Cup

(Special to the financial chronicle)

and

necessary

a

from two to seven weeks after re-

.

Luitweiler

Bendix,

between

paper

on

members, it must.be sub-

or more

net

Governor's

the

last year was

Then find out if he agrees. Take

pencil and

XVIII

the

to

posed by

mem¬

ket, Mr. Picoli said.

and failure."

out your

Exchange

of unusual circumstances.

cause

Street.

is

the

of

outing after the close of the mar¬

which they, have—in other words
the way they distribute their as¬
—

of

Board

the

specified Saturday is

When stock

bonds, savings accounts,
They always have invest¬

unless

on

tion provides that when an amend¬

low

the

300 additional

Some

provide that
Exchange shall not be open

opening

Governor's Cup, presented
annually by the Board of Gov¬
ernors
of the
Exchange to the
score.

amendment to the Con¬

an

Governors shall determine that the

on

for the

with R. H. Johnson &

sets

petition asks the board to

Saturdays

scheduled to compete

are

ments, but the kind of investments
-

]

,

for the transaction of business

by Henry Picoli,

members of the

200

About

change

classes

10

Exchange at

24.

entitled

plan a substantial ma¬
jority of those casting ballots in

stock

the

Chairman of the Association.

prices and real estate are high
they have less of both, and more
of stable assets such as cash, gov¬
etc.

announced

was

of/security

creditors

and

Missouri

loting,

be held

the higher courts.

•vote on the

stitution which would

Tuesday, June 26, at the Winged
Foot Golf Club in Mamaroneck, it

ernment
-

holders

classes

14

major dissenting

its meeting May

Stock Exchange

Association will

Golf

the

the

the New York Stock

Tournament

Annual

52nd

In

ted to the Board of Governors of

Tournament June 26

and

answer,

Closing

announced

will

thing

whole

the
to

°£ Sentlm6nt

Corp.

petition signed by 329 mem¬
submit¬

The

of the New York

as

there can not have been any great

The

A

right approach as outlined in

The

When

*

nature of the resuits

bers of the Exchange was

will start with

NYSE Golf Ass'n

think

you

Telephone?

-of

submit to the membership, for bal¬

I've got

stocks do?

of

terms

For N. Y. Stock Exch.

them—don't trust this- Ad-,

about

of

Petition Sat.

advising rejection of the
the plan by all classes
security
holders. From
the

ghany

is that

of the voting,

results

the

being

debtor

course,

Judge Moore will almost certainly
confirm the plan. Just as certainly

tion

-

gestion for saving him consider¬
able money through his gift ex¬
emptions. You can find this' out
too in your first interview.
It is
not difficult, at all to obtain this

stocks but I don't know much

some

had been

by substantial changes in

publicity campaign waged by
corporation and Alle¬

the

Marache

Granberv

& Co. and Standard & Poors

close.

inflation? What if this boom busts,

been

uncertain. The
general feeling, based on the his¬
tory of the whole proceedings and
of

ballots stemming from the exten¬

sug¬

a

How

some

are
man

a

openings;

with

be able to come back

Borgatta

A.

with

formerly

previous articles in this series. :
Next week—second call and the

up

sonal than those we

should

children and

grandchildren comprise his fam¬
ily, and if he is going to be in the
high inheritance brackets you may

the

your prospect by asking
questions that are less per^

ened
other

By this time you

proved.

information if you

then go to work.

and

gestions if his situation can be im¬
also know how many

Mark

Troster, Singer & Co., 74 Trin¬
ity Place, New York City, securi¬
ties dealers, announce that Mark
A. Borgatta has joined the organization as manager of the research

report

man

had

is

end

eventually

will

it

How

still,

sive

prospect that

your

Commission

had been that the delay
•caused
*

firm will make a confidential
to him, and specific sug¬

way

This information, of course,

sential

Tell

terview.

voting

delayed considerably longer than
-is customary. The general feeling

After

the

the vot¬

-Commerce

everything.

you

Certification of

the

holders.

not entitled to vote.

ing to the court by the Interstate

and

sale.

a

tell

an¬

by

of

recently

under

eliminated

the re¬
security

sults ' of

you
price

the

blow with

severe

a

issue, which is
the plan, was

This

stopk.

mon

reorganization were

nouncement

it down.

Write

so that you can
How do you find
owns, how much
Jie has in the savings bank, in the
checkbook, in building and loan
associations, and whether his
stocks are owned outright, etc.?

the

paved

make your

out what

amounts,

the

will

man

ask him

you

th$ questions along

of

ticle

After

dealt

paid and date of acquisition if
possible. You will find that your

do when you
are
probing with questions—you
open your man up and you dis¬
cover the main point in which he
is

which ones do

your stocks,
own?"
Get

BOOM!

it

found

what

both

against

protected

inflation and deflation. How about

and
opening-

would

He

Reorganization

Sale

BOSTON, Mass.—David
Doughty Ogden has joined the
staff of Kidder, Peabody & Co., 75
Federal Street.

at

least

to
confirmation
by June 15.
Un-t

Selected Situations at all Times

objections will be
by the debtor ccr-i

If

poration, Alleghany, and presum¬
ably, holders of the Secured Se¬
rial 5v4s who voted against the

25 Broad Street

plan. The debtor corporation and
Alleghany are both fighting to get

Members Nat'l Assn. Securities Dealers, Inc.

some

recognition for the old com-

j

m c o

i/yw* * * 1 •
»

f

New York 4, N. Y.

Telephone BOwling Green 9-6400

i

Volume 173

The Commercial and Financial Chronicle

Number 5016

/

eral

Current Economic Trends

(2261)

expenditures from 1789

costs

of

six

and

wars

the

Implications

seriously strained

national

our

and

revenues;

and

the

of

end

since

short

1914

been

the

United

converted

unimportant
cultural

ber

of

space

from

and

36

years

States

has

relatively

a

strictly agri¬

a

and

the

be

na¬

imum

the

put

produc¬

of

rearming
are

borne

abroad.

Our

cannot

1950

ob¬

ourselves

save

time

from

—

world's

the

largest debtor

way

nation

we

its

to

largest
creditor

ter up

ficient

O.

Dr.

Glenn

ful, the most
productive and the most
standard

of

prosper¬

living

ever

history.
only 6% of the population
and only one-seventh of the land
With

of

our

ductivity,

known in

area

Despite

Saxon

nation of the world, with the

highest

policies,

the

world, we produce
nearly half the annual world pro¬

ruptcy.

largely

the

two

past

seriously

decades,
strained
our

duction of goods and services. Our
man-hour productivity is 2 to 10

economy.

If these policies

times

mament

free

than

greater

nations.

It

is

that

the

competitive

of

result

other
our

and

system

of

our

capital savings, which have made

possible

technological

develop¬

ments that have increased the real
wages

of

those

of

sharply

people to five times

our

100

years

reducing

hours.

while

ago,

their

working

our

over-all

Meanwhile

productivity has increased at the
of

rate

about

doubling

2 V2 %

per

year,

production every 30

our

The World Wars since

1914, with
inflation, the

their devastation and

intervening

world-wide

sion with its

depres¬

disastrous

deflation,
formerly pow¬
erful nations, the breakup of the
German, Italian, Japanese, and
British empires, and the world¬
the destruction

of

wide economic and political revo¬
lutions of the past three decades
have forced upon us the responsi¬
bilities of empire, of leadership of
the

Western

World,

tection of its

its

and

and

of

In

liberty, its territory,
of life from aggres¬

way

the

past

the

responsibilities

fought for by na¬
tions which lived to a major degree
upon the resources and manpower
of their

were

conquests

of the peo¬

or

whom

external

they defended from
aggression or internal

disorder.

This

we

not choose to do.
no

nation

in

cannot

and

do

On the contrary,

history, except the

United

natural

income

resources, and

others

without

to

expectation

of repayment or profit.

upon us cannot be avoided

as.

empires

greater

this

in

the results will almost

form

and

the

trend

and

the

disaster to

the

to

World,,

so

rest

long

ourselves,
of

the

the

as

with¬

as

well

Western

threat

of

world-wide aggression and totali¬

first

127

eral

expenditures

government

billion.

period

The

stat-

►

address

by

Dr.

Saxon

opening Session of the 31st
ference
Mutual

of

the

National

Savings
Banks,
N. J., May 7, 1951.

before

Annual

Atlantic




of

of

the

for long

can

25%

of

national

government

for

without

to deficit

spending, largeborrowing, sharp increases

through

money

one

device

is

at

least afford to pay
it falls haphazardly

can

best

equity, logic,

economic effect.

Too heavy
taxation,
destroys incentives to

burden

however,

over

future

genera¬

tions, but generally it fails to ac¬
complish that objective. The ad¬
verse
effects, however,
can
be

$27

minimized

for

the

borrowing.

by

proper

methods of

ments of

the

standard

Revolutionary
War

of

the Mexican War, the
War, and the War with Spain.
the

from

next

1916

Federal

24

alone—

years

through

1940

expenditures

—

than

total

soared

I

and the

1933-40.

Deal

1940—Fed¬

lus of the rearmament program, it
is highly questionable whether for

only $169

long, except in time of all-out war,

were

we

•

However, in

the five

for

these

five

have been

$72
to

In fact, his expendi¬

tures

last

five

$56 billion in

excess

years

the

debt

debt

fell
per

healthy

back

to $257
capita and 120%

condition

or

decade

a

the

threat

Western

This

with

of

or

By

is not

of

more

a

II, they hit

only 24%—to $235.95 in.
when they were 6.3 times

those of 1940, though national in¬
come
between 1940 and 1950 in¬
creased less than 3 times.
In

1930

ceipts
local

the

of

combinedtax

the

Federal,

governments

re¬

and

state

absorbed only

11.9% of the net national product.

By 1935 they were absorbing 16.3 %
in

1940 they took 18.2%.- By
they absorbed 25.9%. In 1949

they took 23 %,
11.2%

from
of

costs

„

War

declined

1945

rearma¬

World

of

all-time high of $309.27. Since
the end of World War II
they have
an

and

and the rest of

World.

$37.61 and in 1945, at the peak of
costs

to

War

In

the

and

36

1950

between

years

Federal

our

1914

debt

has

from

capita.

$12 to $1,708 per
Meanwhile our national

income

has

increased only from
$34 billion to $222 billion and our

decline of only *.
the peak of

a

1945

World

at

War

II.

More

Growth

of

million.

At

Federal

the

$129

million-^-13%

Debt

was

end

of

only
the

of

In

mid-1950

(pre-Korea)

the

combined Federal, state, and local

governmental
States

national

income

capita.
4.3

debt

of the United

$281 billion—131%

was

This

times

and

$1,865

per

total

was

combined

the

of

combined

debt' of

1940, while 1950 national income
(in dollars) was less than 3 times

record

of

debt

growth

is

technically due to the unbalanced
budgets during two world wars
and the depression of the 1930s. It
is mainly due to a stubborn re¬
since

need for

1933

debt

to

recognize the

reduction

in

times

of

from Federal surpluses were dis¬
tributed among the states.

War

raised

the

na¬

the

tional debt is of

long

no

consequence so

it is owned internally. This

as

doctrine

has

been

in

in

accepted

order

to

jnstify

continuous expansion in the func¬

tions and expenditures of the Fed¬
eral government without regard to
the

current

ability of the nation

to .sustain them, and without con¬
sideration of

potential
has

the requirements of

tions. The 16th

became

sequence

rived"

eventual

—

1900

in 4 years

national

balanced

the

1930—other than

of the World War I
Federal budget

each

pe¬
was

except

year

Between

amounts.

nually—about 40%
tax

reduced.

for
1920

in the decade

rates

Between

steadily

were

1930

and

1950

budget has been balanced

only 2

a
a

in

1947 and 1948 —
Republican
Congress

years

when
forced

—

balance upon the admin¬

istration.
This

it

debt

record

raises

de¬

source

apportionment

This

Amend¬

levy taxes

income

net

rate

and

at

on gross

rate it de¬

any

levy either

may

(proportionate) tax

flat

a

or assess

highly discriminatory and steeply
graduated

limit-

rates—without

either gross or net

incomes, as
by
Congress.
This,
of
course, is the acceptance of the
unlimited graduated income tax,
on

defined

by Karl Marx in 1848,

of

one

the

destroying

methods

surest

of

society.1
This tax is used by all socialistic
governments as the most effective
vehicle

capitalistic

a

for

redistribution

the

wealth and income from
group,

son,

another

group,

private

.to

com¬

or

the best device
accumulation of
and capital for

well

as

as

the

prevent

of

per¬

community

or

person,

munity,
to

one

savings

job-creating

risk-absorbing and
private enterprises.
The
The

grow

ultimate

were

tional debt to $2.7 billion (in 1865)

tance

of total Fed-

—50% of national income and $78

monetization

relates

to

the

continued

of the debt

Federal

Federal

has

1933

we

well

in

become

(as
.

a

tax on capital

income.

as

tax

on

individual

defined

in

by

with

1913

rate of 1 %

in¬

net

Congress)
normal

a

only, with a graduated

ranging from 1 to 6%

brackets).

higher

these

so¬
re¬

road

has

The

the

to

more

the

comes

surtax

purposes.

down

cent years

since

have already been

The tax

far

started

Tax

graduated in¬

these

for

tax

cialism.

as

the

used

Through it
taken

Income

government

surtax

By

rates ranged

(on
1939

from 1

By 1939 in time of peace
the normal rate had risen to 4%,
to 20%.

with the surtax ranging from
many

without genuine fears of
repudiation in toto,
either directly or, more likely, in¬
directly
through
inflation. The
second question of major impor¬
its

1913, author¬
levy taxes "on in¬

states.

gress can now

sires

and 1930 the debt was reduced an¬

—while

was

condi¬

Amendment, which,

without

among

come

to

the

nominal

tax

a

modern

ment takes off all the brakes. Con¬

con¬

bankruptcy.

—

accord with,

whatever

from

comes

income

effective in

izes Congress to

emergencies. It
steadfastly adhered to,

been

riod

of

apportioned

are

not feasible under

income

future

despite the almost inevitable

From

levy

they

population. Such

advocated

portant is how much greater*can

capita. -This debt was
entirely eliminated by 1835 and
for some years annual dividends

their

as

acceptance of the socialistic
that the size of the na¬

1913,

derived

constitution

the states in

among

gency periods. This attitude is due

doctrine

Federal

prohibited

prosperity in order to have a
margin for debt growth in emer¬
to the

to

were

individual

or

The

taxes unless

or

This

Prior

largely from excise taxes and im¬
port duties without revenues from
corporate

annual

per

Civil

burden.
revenues

taxes.

150 million.

problems. The first and most im¬

The

tax

Federal

population only from 113 million

only $15

t

•

by 1935 they had nearly doubled '
at $28.11. In 1940 they had risen to

III

which

World

*

re¬

raised them to $43.39 in 1919. By
1933 they had fallen to $14.40, but

capita

per

national income of the period and

$16.5 billion and Fed¬

the

our na¬

national

War of 1812-15'the debt had risen

pre¬

$225 billion.
in

without

In 1790 the Federal debt

ex¬

expenditures have exceeded

the

national income.

the
The

by $152 billion. *

City,

income

bankruptcy, economic chaos, and

war years

actually exceeded those of the
vious 151 years

government

years

$191 billion. Federal

penditures in these five

all

socialism.

only $130 billion, and

were

deficit

for

than 33% to 40% of

tional

through 1945
—total Federal expenditures sky¬
rocketed to $321 billion, total rev¬

take

can

more

of

years

World War II—1941

scared to

methods of taxation.

Over the entire 151-year

expenditures

office—raised

$259 billion—$1,890

1950

is certain to rise under the stimu¬

billion.

the

proper

course re¬

of

period—1789 through
eral

War

people is greater here

improper methods of
taxation or borrowing can lead to
national bankruptcy.
While our
(real and dollar) national income

These expen¬

New

our

elswhere, but this

quires

ditures include the costs of World
War

of

In any case,

to

$142 billion and the accumulated
debt to $42 billion.

took

capita tax

per

ceipts of the Federal government
only $6.16. World War V

1950,

II—by
1945, when President Tru¬

(mid)
man

Washington

The United

1812-15,

of

the costs of the

and

that

Five years of World War

concealed form of tax-'

a

Civil

debts

War

was

than

the

were

to

States, with its high
living, can afford to
tax more heavily than nations with
lower living standards because the
margin above minimum require¬

nized

debt which

another.

the

our

the

Con¬

Association

annu¬

produce.
Large-scale borrowing is resorted
to, therefore, in order to spread

was less than $1
billion.
figures include the recog¬

These

eral
*An

than

more

only

deficit

a

greater

created by World War I.

fusal

—

versus

never

combined

50%

nation

without reference to

Yet, in five peacetime years of
tarianism hangs over a world di¬
President Truman's administration
vided about equally on
ideological
pre-Korea — Federal
deficits
lines—free enterprise

had

the

maximum

no

or

of the Fed¬

were

net

expenditures,

those who

nation—from 1789 to June 30, 1916
—total

II

added to estimated Fed¬

are

and

sound

of

billion

1915

the

War

ation, but it falls most heavily upon

our

out.

years

created

decade

$5.5

In

of taxation and the distribution of

money

some

The Growth of Federal Spending
In

all-time

Fundamentally, the that of 1940 and the 1950 national
reason is the lack of political cour¬
production (in volume) was not
age to tax adequately to maintain more than
45% above the 1940
balanced budgets.
Printing-press level.

monetary, fiscal, and tax
policies. It is not too late, but the
is fast running

The Growth of Federal Taxes

—and

or

sound

time

income—an

appreciably
increased
1914—but, let's look at that

record.

risen from $1.2 to $257.4 billion—•

paper

certainly be

reestablish

national

not

since

from 4 to 120% of national income

World

in the national debt, and the issue
of huge amounts of irredeemable

free,
competitive,
constitutional
democracy. We still can reverse
our

had

important than the per¬
centage taken for government in
taxes, however, are the methods

scale

avoid

of

of

high national, income, which

recourse

century,

destruction

to

high until then. The deficit spend¬
ing in nine years of the depression

ment of ourselves

take

rear¬

the same—totalitarianism in

maximum of $90
all-out war. This

without

income

to

spending of

$45.9 billion (including guaranteed
debt)—$350 per capita and 67%

Past experience here and abroad

national

efforts

our

rearmament

a

shows that

has

enues

The great responsibilities- forced
out

in

un¬

Administration

face the

over

of

Roosevelt

of

are con¬

decade

the

Federal

(1950) national income.

If that should happen here,
happened to many great
empires of the past and to even

States, has poured out bil¬
lions upon billions of dollars of its
assist

the

vency.

as

In

empire

ples

this

der continuous deficit
the

billion—$1,708

combined

World War III, we are quite likely
to be forced into national insol¬

pro¬

sion.

of

into

projected

minimum will absorb 40% and the

principles' of free enterprise and

years.
.

tinued

aver¬

later (1939) it-had risen

years

under

eral

have

we

Between 1946 and

that the tax burden and tax rates

debt

and 152% of national income!

ally

of unsound monetary,

fiscal, debt, and tax policies

they

would expect,-in view of;<
this, debt expansion record, to find

ditures of $15 to $20 billion

and

as

1940

na-

One

exceeded $80 billion (in 1929). If
state and local government expen¬

of national bank¬

Already,

consequence

In

this

to

before

skilled labor force, there are lim¬
its beyond which we cannot
go

without danger

income.

reduced

coming decade President

time

pro¬

resources,

10%

1930

budget about 41% of the $220 bil¬
lion, estimated as our 1950 all-

practices

great efficiency,

natural

about

in¬

billion, but by mid-1933
depression deficits raised it to
$22.5 billion—$163 per capita. Six

has

billion

Nor can
assistance

or

absorbed

of national

surpluses between

minimum Federal budget will ab¬
sorb about 34% and the maximum

communistic

or

$6.2

and

per

disastrous consequences to the
tiofi.

$16

$75 billion and

merely to bols¬

socialistic

ex¬

about

1920
to

program to an annual minimum of

which otherwise would collapse.

most power¬

billion—$240

spending

tottering, sterile, and inef¬

economies,

the

as

Socialism.

annual

averaged

(pre-Korea) they have

For the

remain

we

afford to permit our

na¬

today

unless

to be used abroad

tedly, we standi:

ous

house,

Admit¬

tion.

world

1930s

national

1914.

Truman

We

of

of

of the average national
income of that period.

strong externally and protect our
own
internal economy from col¬
lapse into Communism or its half¬

the

the

and

the rest

or

of

most 21%

we

house in order.

own

nation

all

$25.5

Federal

come.

aged $45 billion and absorbed al¬

encourage max¬

self-help abroad, while

our

4%

absorbed 11.7%.

alone. Much of the cost

tive industrial
of

In

of national

and

our resources

jective must be to

tions
most

costs

great for

manpower

family of
into

the

defending the free world

far too

must

mem¬

of

Yet

decade

about

penditures

ism.

the

in

annual expenditures
about $3.5 billion and

billion

the

I,

After

1920s,

income.

Federal debt.
In

period.

absorbed

of

monetization

(personal)

that

War

averaged

investment,

encourage

of

World

can

ing balanced budgets; tax revisions to

production

income

financing. Sets forth
be avoided, stress¬

war

conditions under which further inflation

of the current national

reviews economic

economy,

developments, particularly in field of
:

through 1914 averaged less than
$1 billion and absorbed about 2%

mone-

past two decades, we have

over

to

capita and 40.5%

Yale economist, contending, in consequence of unsound

tary, fiscal and tax policies

capita and 4%

per

national income—in

1919)

.Income

Annual expenditures of the Fed¬
eral
government from 1900

slowly

was

World War 1 raised the debt
(in

Federal Expenditures and National

Professor of Economics, Yale University

.

lion—only $12
of

By O. GLENN SAXON*

This debt

reduced over the years to $1.2 bil-

great

depression of the 1930s.

And Their

capita.

per

through 1940, which included the

21

and

its

on

incomes

those

over

of

$4,000 to

4% ~
on

$5,000,000. The all-time

peak was reached in
the

75%

normal

rate

surtax of 20%

was

on

1944, when*
3%, with a

the first $2,000,

ranging up to 91% on incomes
over $200,000, but with an over-all

ceiling

of

90%.

At

Continued

,

_

present,
on

page

the

22

The Commercial and Financial Chronicle

(2262)

.

.

.

Thursday, May 31, 1951

Continued from page 13

The Steel Industry in
A Defense Economy
threat of

more

New Issues

all engulfing,

war,

continues to hang over us.
.A garrison state and wide con¬
trols by government appear to be
•

'

inseparable.

In theory, it always-

feasible

seems

^patriotism to

to,

high

expect

prompt

assure

,

■'

..

pri¬

ority for all defense needs,-while
pure altruism is expected to pro¬
duce

fine

a

balance

of

complete

equity in the division of anything
that
may
be available beyond
those needs.. However, the most
.plausible- theory can fail when
with

faced

the

effects

selfishness and

of

:,

human

advantage. J Then

conditions

are

created for government to step

M*y t, 1951

in

Callable, at the option of the

■

wit-h

its

-

ever-ready- regulation ''
"

and controls,

.

Thus it

; -

when

was

war was

%

•

•

-

" or on any

■

*

interest payment date4he

press•

ihg io*1917 and 1918 and again in
,1941 and 1942. Now the cycle is
seemingly under way for the third

;

-

6%>

Public School and Institutiona

desire for special

•

.O'

-

Principal and geiai-annual interest (NoTtmber 4 and? May 1) -.payable"at tire
State
i.
>
1
*
.
btate'of Washington in New y«rk?City; Cwiipon bonds in denomination pt$
_

time.

It is already evident

theory is failing
.

-

whether
need

like it

we

it,

the

.•

that fine

■VInterest

before, and that'

as

not,

really
industry v is

or

steel

•

or

'■

j

sweeping controls. In
the early framing of such controls,

•

Savings Ranks for
and

Legal Investment

marked for

sRanks Sro/
gniva in Con

,

men from the

industry were asked
give advice and help. Likewise
men of practical
experience and
knowledge have been drafted for
to

AMOUNTS, COUPON RATES. MA

responsible places in the adminis¬
tration

of the

controls.

To

Amount

Due

$2,399,000

-(Accrued intere"

Amount

-

Rate

^'

therefore,

industry wisdom
ability have helped so far to

gree,
and

Rate

de¬

a

'

.

r

guide the

of action.

course

result, the transition from
unrestrained

consumers'

As

to

largely regulated economy is be¬
ing accomplished without undue

1953

1.30%

6

1954

1.40

2,695,000

great

a

boom

6%

2,543,000

a

6

1955

1.50

3,116,000

l3/4

1956

1.50

3,171,000'

1957

1.55

3,226,000

1958

1.60

$3,009,000
3,063,000

a

disturbance of steel
industries.
,

unwise

2,857,000

other basic

or

2,907,000

Fortunately

controls,

so, because
inept admin¬

or

istration

can

nation's

economic

2,958,000

1%

seriously weaken the
and

3,282,000
3,339,000

defensive

,

strength.
If this initial policy prevails, it
may be possible for
steel

industry to

regimented

a

The above

-

Bonds

without permanent

or

offered when,

are

an

and if. issued and recei

*

go for some time

Messrs. Preston, Thore/rintson # II

--.r;

too serious

damage to its essential efficiency
vitality.; But there is room for

or

grave doubt

regarding the sur vival ....
policy through a pro¬
longed persistence of the garrison >■

of that initial

state.

Can

continueu

the

-The Chase National Bank k The National City

Jr

V

.

.

of New York
J

: make

of broad expe*-

men

,

C

-

i'

Continental Illinois National Bank

-

and Trust

and

outstanding abilities v
needed to deal wisely with the 1
many problems that are una void-*'
able

in

great

and

-steel?
be

applying

asked

controls

complex

Will

the

to

A. C.

companiesprovide -

If

must

answer

only

the

ment rests very

begins

self

hand

be

interest

rooted,
dies.

Thei

c

of

Braun, Bosworth 4 Co.

Incorporated

Domini

Incorporated

City National Bank 4 Trust Company

-

Wood, Struthers

Francis I. duPont & Co.

Fidelity Union Trust

Kansas City

govern¬

withers

Schoellkopf, Hutton & Pomeroy, Inc.

Incorporated

R. H. Moulton &

Bureaucracy,

rarely

It may

;

is

long, bureaucracy

flourish.

to

::

A. G. Becker & Co^

Incorporated

,

is far less certain.

Wherever

I

: i

:

avail¬

are

considered, the job must be ade¬
quately manned. The government
answer

once

Allyn and Company

.■ >_

Roosevelt 4 Cross
company

obvious.

The First Best

Blyth A Co., Inc.
v

The Philadelphia National Bank

Phelps, Fenn 4 Co;

able?

never

Company of Chicago

a

to

such men, even if they

The

:

industry like

steel

allowed

or

T

Bank -The First National Bank
rvV* •
of Chicago

companies

indefinitely t to

available the
rience

steel

i

Newark

Company

:

National State Bank

Wm. E. Pollock & Co., Inc.

Newark

'

and

'

Andrews & Wells, Inc.

:: i

be cut back; it

-

Ball, Burge 4 Kraus

-

Bramhall 4 Stein

Kaiser 4 C

may be transplanted. But its will
to survive goes on forever.

Pacific Northwest

If there is any real ground for
present

concern,

it

is

not

Company

Swiss American Corporation

G. H. Walker 4 Co

how

much steel may be left in the free

„

market, for making the gadgets of
living, - but it is the grave
question of what may be done to

by prolonged bureaucratic contrdte, imposed in the name of an
--emergency for which no ending is
*uS

•-

:

visible.
•

~

-

Blunt Ellis 4 Simmons

5

E. F. Hutton &

easy

-rl&ght

.f'*

--

.

The

Robinson-Humphrey Company

Stockton Broome & Co.
there

comes

Company

Stein Bros. & Boyce

A. G. Edwards 4 Sons

the big prob-

lertt:* how to

of

.

-

Whiting, Weeks & St

:Fulton, Reid 4 Co.

Robert

-McCormick 4 Co.

The Pa

keep the direction

and ^purpose

W. E. Hutton & Co.

controls

aimed

A. M. Kidder 4 Co.

Only at the first goal of mobilizatiOrt

and

preparedness,

how

John C. Legg 4

Company:

.

to
~

make

sure

that

controls

do

not

.

:

-

Sills, ^airman 4 Harris
-

livd beyond the time of
imperative
need.

Otherwise

there

opens

an

easy way for government to hold

Continued

on

page




23

New

York, May 24, 1951

--Incorporated

■

.

-

*
I

Stern Brothers 4 Co.

-

:Taylo

.Volume 173

Number 5016

.

.

.

The Commercial and Financial Chronicle

(2263) -23

Continued from page

22

The Steel

Industry in
Defense Eeonomy

A

permanent share in the conduct

a

of this

industry, and there

still

who

want

are men

government

em¬

powered to build and operate steel
plants. Call it nationalization, or

i'

by

other

any

the

the effects is

name,

It is the nature of gov¬

same.

ernment to

efficient than

less

be

"■..V private enterprise in
*

*

:Any

iJ

loss

making

id

2% '

living, less economic strength, less
military might for the nation.

i

Basic Industrial Strength Must

uilding Construction: Bonds

tar af par and accrued interest.
«ar«r

In

—

.

..

r

.

au

to-principal only

.

-of tlie

:

to both 'principal- and '.interest.

i

2

v;.•

t

with the

,

:

try

and Massachusetts

•

-

--

:.

Will

we

threat

pri-

realize before

we

long this

coun-

stand the economic stress¬

can

their

be

is likely to
The situation

product?

calls for constant watchfulness
steel

HIES AND YIELDS OR
be

added)

3ue

PRICES

sibly

Yield

Amount

•

Rate

Due

Price

or

tions

with

59

1.65%

$3,398,000

'60/59 @100

3,466,000

'61/59© 100

3,535,000

2%
2

,

1966/59 @ 100

1967/59© 100

2

who

is

recently said, "we could be

we are right on
policy the country is

rich and

2

1969/59

2.05

virile that it could pull out. of its
domestic mistakes and continue iis

2

1970/59

2.10

forward march."

3,752,000

2

Just

1.90

;

1.95

i

foreign

our
so

3,606,000

1.80%
1.85

65/59

other subject and

still if

3,678,000

62/59 "
63/59
'64/59

rela¬

our

nations may

grave

wrong on every

2.05%

1968/59

preserve.

important
other

be,
peril" revealed in
the attitude of an eminent citizen

Yield

there

■

aim to

we

However
or

by

to safeguard their in¬

men,

dustry and with it the whole struclure of our economy, which osten¬

.

,

f

Price

v

■

;

mail*.

What sort of economy

;■

-

be-

of indefinite Teadiness for war?

es

ds in New York and certain other States and
'cut

continued

it is too late how

..

.

not

of ,war those other threats to

agement?

-

must

vate enterprise under private

o

:

Federallncvme Taxes

efforts to build

on

power

strength of the country.- Will
detect

ageney

,

..allowed to sap the basic industrial

.

?

or as

military

up

,

)

.

Olyt^ia, W<ashiiigton%©r}. at tiie optioir-of tk« holder,f seal

If r^isterable

Concentration

May I1*953-71, *mcl.
...

'on-May I; 1959,

•

Not Be Sacrificed

■.

Due
numerical order

*«•

any
field.
of efficiency in steelmeans
less
satisfactory

1971/59

,2.10

how,

pull

we

instance, would
the mistakes of

of

out

r.

•>

for

socialistic injection of government
into

industry?

steel

Only

imtl subject to prior sale and approval ofl^jality by

strength can suc¬
withstand
the
present

cessfully

tz, Attorney*, Seattle, JVauk.

How

internal

solid

.

yus,

could

continue its forward march?

*

threats from without.

grave

mistakes

mestic

strength could

negative

Harris Trust 4 Savings Bank

*

J. P. Morgan 4 Co.
~~

.

There

"4

never

was

V

National Bank
Hand, Oregon

Dominick

^

.%

Ripley 4 Co.

tfWorpOMrtad

•

-

.

the trend, with plans for
important plants in locations near

Hallgarten 4 Co.

Harris, Hall 4 Company

Hayden, Stone 4 Co.

Barr Brothers 4 Co.

/

the eastern seaboard.- Foreign ere
.

Central Republic

Company

sui plies are taking on wholly
&>nLTicance, while
solving

ridw >

of

Carl M. Loeb, Rhoades 4 Co. Laurence M. Marks 4 Co.

Hirsch & Co.

Stroud 4 Company

F. S. Smithers 4 Co.

Trust Company of Georgia

Incorporated

Northwestern National Bank

Incorporoted

of

The Ohio Company

static.

v

Laird, Bissell 4 Meeds

Company

William Blair 4 Company

Bacon, Whipple 4 Co.

Mercantile Trust Company

the
ap¬

Events

Much

that

Steel is not

is

purely
speculative may affect its future
profoundly. But one fact endures.
With the

able

of

Winthrop 4 Co.

success.

try crowd into view.

now

industry as it stands to¬
it can continue under

as

private hands,

be any

Minneapolis

taconites

new

significance to this indus¬

day and

W. H. Morton 4 Co.

domestic

to have met

pears

of vast

Illinois

:

Two other items belong in this

westward, two big companies now

lnc«rporot«d

(Incorporated)

obert

government-fos¬

reverse

Bache 4 Co.

pany

of

rapid look at the developments of
a
notable year.
After almost a
hundred years of steel migration :

-

(Incorporoted)

o.

inflation.

;

Sea Hie

'•»

economy

'

Weeden 4 Co.

Bear, Stearns 4 Co.

.

effects

tered

Seattle-First National Bank

^

for¬

wise.

or

strong enough to survive the sap¬

l»vtorpofot*d

ping

Harriman

poratlon

>an.

that

any

eign policy, however right

herfiiTrusf Company o

Do¬

impairing

there

cannot

question about the future

this

country

far

so

steel

as

supply is concerned!

...

Esfabrook fo Admit

of Baltimore

Kemble and Sears
>Wood, Gundy 4 Co.
Incorporated^

.

Robert W. Baird 4 Co.

J. C. Bradford 4 Co.

Incorporated

■

BOSTON, Mass. —Estabrook &

Co.,

eft 4-Sons

-

G. C. Haas 4 Co. :

Halt 4 Company

Hayden, Miller 4 Co.

the

15 State Street,
New

York

and

members of

Boston

Stock

Exchange, will admit William T.

National Bank of Seattle

Reinholdt 4 Gardner

Ryan, Sutherland 4 Co.

Kemble and Edmund H. Sears to

partnership

on

June 30. Both have

been with the firm for

ompany

:

Tripp 4 Co.
Inc.




Tucker, Anthony 4 Co.
»*

some

time.

E. E. Mathews Adds
-{Special to The Financial Chronicle)

BOSTON,
Grant

is

Mathews

now

Mass.—Francis H."
with

Edward

Co., 53 State Street.

E;

.

The Commercial and Financial Chronicle

.,

Thursday, May 31, 19i>l

.

(2264)

24

they anticipate progressively

since

Outlook lor Consumer Finance
DAUER*

;

j

try in almost a century. It is this
problem which has brought con¬
trols and constitutes their alleged

threat to economic stability in century,
Dr. Dauer decries effect of consumer credit controls as infla¬
creates greatest

wages

The

consumer

finance business,

along with other segments of the
its

best

enjoyed
1950.

credit industry,

consumer

year

record in

on

In

York

New

the

country,
measures

lower
models to stimulate sales.

attained

the

peaks:

of

volume
loans

made,

the

outstand¬

ing

loan

count

ac¬

the

at

end

the

of

in¬

year, gross

and net

come,

risin g,

p

the

represented

not

is

This
s u r

the fluctuations in activity of re¬
cent motlths resulted from

fear of

shortages—fear which was trans¬
lated into action by consumers

and

since

The inflation

businessmen.

the result of

Korea has not 'been

expenditures, or of gov¬

defense

deficits.

ernment

Defense expen¬

practically no in¬
1951.
In this fiscal

ditures showed

until

crease

there has been no Federal
fact this is only the

year,

deficit—in

income.
Dr. Ernst A. Dauer

important to recognize that

•It is

peak

third year in 20 in which the Fed¬
eral government has not had a
deficit.

postwar business activity,
both in terms of physical units and
dollar amounts. Industrial produc¬

civilian

of

production

war

facilities

be

can

to

accom¬

been

three

of

months

1950,

consumer

instalment credit outstandings in¬
creased

increased

payment
increased

rate

fected

all

sumer

credit

the

The

of loans made declined.

ume

segments

the

of
in

field

con¬

essentially

Some segments
credit field suf¬

degree.

same

af¬

repayment

of

only $116 million, as com¬
an increase of almost

act

the determina¬

Price

controls

months.

In

the

consumer

also

showed

first quarter of
instalment credit

greater than

a

decline.

that

But

sea¬

not

does

doing

Their

disrupt

either

they

so,

production

conceal

merely

fail to control prices.

or

lies

merit

in

giving

us

a

purchasers

marginal

some

did

effects of inflation.

defer the

and

In

they require.

as

of

volume

the

drastically from $283 ^ mil¬
in the first half of
million per month in

$2.5 billion in the preceding nine

of conclusions must suffice. prove that inflationary pressures
We
can
keep inflation within have been thereby reduced.
bounds, only if we face economic:
The regulation has eliminated
to

fell

ers

1941

mary

realities and have

production

lion per month

sonal

tion

bile

credit granted by automobile deal¬

pared with

problem, would require more time
we can devote.3 A brief sum¬

goods to stimulate their

cost

all

transfer

1951,

sets have brought out some

and
g hout

they anticipate an eventual
sharp reduction in output. Rapid

inflation

the

with

deal

to

than

Manufacturers of television

sale.

have

which

measures

taken

dealers have marked down prices

t h rou

1950

the

categories,1 finished goods
inventory has accumulated. Some

State,

since

the various different controls,

many

of durable

To discuss, in detail,
and

justification.

Regulation W will not reduce con¬
sumer loans by more than 6% in next year.
Points out field
most effectively served by finance companies in current situa¬
tion and urges realistic policies in combating inflation.
Estimates present

tion curb.

as

when

The rate of re¬
and the vol¬

versely affected.

-

Though asserting declining production of civilian goods over
next few years in face of high level of employment and higher
"

expectation of declining
production of civilian goods, over
the next year or two, in the face
of a continued high level of em¬
This

goods produce
long as they can,

ployment at high

.

.

much and

manufacturers

plished only through material al¬ of the consumer
and increasing locations and manpower restric¬ fered much more drastically than
tions.
others with respect to the volume
wages, has created the inflation
problem—the greatest threat to
Controls can prevent the growth of new business put on the books.
the economic stability of the coun¬ of consumer credit.
Because there was no automo¬
In tne last

Credit Studies
Corporation, Chicago, 111.

.

of

durable

as

Director of Consumer

Household Finance

that

consumer

Effectiveness of General Controls

Industry Under Credit Controls
By ERNST A.

indicates

curtailment.

severe

more

have

not

earning

sufficient

that

or

half

first

the

of 1942

and

half
of 1943.
Thus credit granted in
the first half of 1943 was only 7%
of the amount granted in 1941.
If we compare this decline in
volume of credit granted by auto¬
mobile dealers with the decline in

outstanding balances of automo¬
bile

instalment

sale

However, it is

find

that

are

Regulation

un¬

had

W

a

material influence upon the effec¬
tive demand for
durable goods

$18

to

million per month in the first

to meet the higher

power

requirements.

likely

who

cash

to $39

they

credit,

we

exactly

the

Automobile instalment sale

same.

credit

lowest
March,
exactly 7% of the peak

outstanding,
of
was

its

at

million

$167

point

in

breathing spell—an opportunity to

during most of the period in ques¬

1944,

review and reappraise the future.

tion.

volume

Basically, price and wage controls
deal with the symptoms and not
with the causes of inflation.

entirely by the degree of fear of
impending shortages, of higher
prices, and of deterioration of
quality. Those fears caused wide¬
spread use of savings to obcain

gust,

1941.

sale

credit

goods; the very large volume of
liquid assets prevented the normal
effect of higher requirements on

goods to be financed. This decline
in outstandings would have oc¬
curred to an almost similar de¬

Inflation is the result of

a mone¬

tary demand for goods and serv¬
ices which .exceeds the available
supply.

To

created by

income,
(1)

we

fronts:

several

on

need economy in govern¬

we

determined almost

was

high and rising current
need prompt and vig¬ demand.

action

orous

with the problem

cope

That

put through the

of available

use

million

$2,320

of Au¬

It appears clear that
the basic and outstanding cause of
the sharp decline in instalment
the

was

automobiles

of

absence

other

and

durable

if there had been no Regu¬

gree,

The purchase of continued out¬

of

lation W.
We

this

contrast

can

the

with

will bank deposits and liquid assets experience of consumer finance
eliminate
unnecessary
waste in activated deposits which were ly¬ companies. Their volume of loans
From this point on, government
granted fell from an average of
both military and nonmilitary ex¬
ing idle and not being used. This
expenditures will play a bigger
tion, new construction, civilian
$80 million per month in the first
role. During 1948, 1949, and 1950, penditures and defer all nonessen¬ has exactly the same effect inflaemployment, hourly and weekly
half of 1941 to $68 million in the
defense expenditures amounted to tial civilian expenditures; (2) we tionwise as an equivalent amount
first half of 1942 and to $63 mil¬
earnings, total personal income,
have
about 5% of the total output of need adoption of appropriate taxes of consumer credit would
consumer expenditures,
lion in the first half of 1943. In
total re¬
balance the budget, had. The
the country (i.e., the gross national which will
very small increase, pro¬
tail sales—all were at peacetime
other words, the volume of loans
curtail civilian expenditures* and
portionately, in the total money
product). During the first quarter
peaks.
Thus again the truth of
not impede
production; (3) we supply, which unrestricted use of granted in the first half of 1943
of
this
year,
defense absorbed
the axiom was verified, that the
was 79%
of the 1941 volume.
consumer
credit
would
have
about 8% of total output. Now it need a realistic government policy

year of

finance business is

consumer

good,
good.

when business in general is
The

half

last

of

sharply from the first half in its
characteristics. Beginning with the

outbreak

of

the

conflict,

Korean

business

activity was influenced
an increasing degree by actions
brought about by defense mobili¬
zation. The country was subjected
to

to periodic
the

Washington pronounce¬

which usually

ments

exaggerated
rapidity of in¬

and

degree

in the proportion of output

crease

to be required by

the defense pro¬
gram, and the extent of the de¬
crease in available supplies of ci¬

vilian goods. There were also fore¬
casts of

price, wage, and material
controls, alternated with denials
of

their

Since

need.

consumers

had vivid recollections of the
cities

of the quality deterio¬
the last war, it is not

and

ration

scar¬

of

surprising

that

they

anticipated

10%,-

is about

Defense

that by the end of this year the
figure will be 15%. In 1952, when
the Defense Program will reach

peak, he estimates that it will
take about 20% of all goods and
the

seryices. This figure may be com¬
pared with approximately 45% at

For the
purpose of this discussion, I am
assuming that defense production
the peak of

will

the last war.

increased

be

at

the

about

projected rate.
It is possible, of course, that the
increase in defense production will
be somewhat less rapid than Wil¬
has forecast. Up to

the present
has
proceeded at a much less rapid
rate than was anticipated, and has

son

the

time

acted

as

tooling-up

bottleneck.

a

tinue to

process

do

for

so

It may con¬

considerable

a

all

at

which

levels,

will

which

•

Wilson, Director of
Mobilization, has stated

Mr. Charles

differed

1950

ment

The General Business Outlook

long-term

encourage

savings;

and

(4)

possible

effort

need every
increase total

we

to

manufacturers

and

powerless to prevent credit ex¬
in the face of the huge
Federal debt. If the Program for

instalment

pansion

Restraint

Credit

Voluntary

does

prevent further credit expan¬

not

sion, the Federal Reserve can do
so only if it is given drastic pow¬
ers through new legislation.
if

Even

materials.

raw

Unions

and'

em¬

ployers alike attempted to "beat
the gun" on controls. Higher wages
and

material

raw

passed

on

costs

were

through higher prices,

thus causing a spiral of price in¬
creases.

Current Business Situation

The
In

January and February,

sumers

ing

engaged in

chiefly

spree

durable
seem

that
able

to

goods

scare

for

a

of dur¬

continue

to

considerable

be

buying,

which

normal

decline

goods.

in

general

theless
years

in

at
a

greater than
sales

of

dur¬
ex¬

ciation, New York City, May 16, 1951.




ac¬

and

rising level,

with

declining proportion

gradually

by ci¬

will

be

at

an

irregular

pace,

as

dictated by restrictions on the use
of materials.2 Work stoppages will
occur

and
to

to

an

there,

secure

a

materials.

increasing degree here
as

a

result of inability

proper

balance of

raw

However, manufactur¬

will continue output of civilian

goods at

as

high levels

as raw ma¬

terials and manpower will permit,
1 In

of

the

first quarter of
1951, radio
27 % above the first quarter
television
output
was
37%
Car production was also higher.

was

1950;

higher.
2 The

allocation

the

These

form

excessive

the

of

remain

tionary

The

forces

infla¬
strength,

potential

as

of

great

Controlled
of

scheduled

steel,

Materials
copper

Plan

for

and aluminum

to become effective July
1,
Currently the use of steel for cars
to 80%
of the monthly aver¬
age of the first half of 1950.
This is to
be cut to 75% beginning June 1; a fur¬
ther cut to 70% on July 15 is
anticipated.

Appropriateness of Selective

limited

from 1929 through
1950, has the increase in consumer
single

year,

The
sumer

weak

selective

controls

stock

con¬

on

credit

market

are

with which to try to

reeds
back

such

It is desirable to

what

outstandings

1^% of
income, that

personal

disposable
the

of

increase

after

consumers

that

power

Even

purchasing

annual

total

in

credit did not result in

a

taxes.

consumer

commen¬

surate increase in the money sup¬

million.

Only $4,400,000 of that
or less than
15%, was

represented by an increase in bank
loans.
The
balance represented
sale

greater detail, the appropri¬

The

announced

purposes

Regulation W, when it
critical

of

reim-

(1) to facilitate the

posed, were:
transfer

was

of

and manpower

raw

investors

to defense produc¬

and

retained

earnings.

of

loans

of savings,

it was nonin-

flationary in effect.
the

in

million,
65%

period

review,

under

in August, 1941.

ing

of

companies

Let

us

now

turn

our

attention

to the matter of most direct con¬
to

cern

the

The rate of repayment

60%

almost

was

than before the
result of

ing

balances

in

the

faster

war.

in

This

1943
the

was

number of factors:

a

(1)

12-month maximum maturity

the

fixed

Federal

by

loans;

for

regulation
(2)

the

high

incomes of most consumers,

enabling them to repay faster; (3)
the uncertainties

regarding the fu¬
the

possibility of

service, which

caused

people to make an unusual

effort to put
in

order;

sumer

their financial affairs

(4) the absence of con¬

goods in the stores, which

eliminated

normal

for

avenues

spending money.
It

the total of outstanding loans.

During World War, II, outstand¬

entire

instalment credit

sumer

of loans,

shown by Household's records,

as

finance in¬

consumer

dustry, the effect of Regulation W
on

finance

the increased rate

of repayment.

many

Outstandings in World War II

appears

consumer

was

military

The Effect of Regulation W On

Thus, it

of the decline in out¬

cause

standings

sumer

fighting inflation.

were

million

clear that the basic and outstand-.

ture, including

effect in

1943,

October,

the peak of $534

of

therefore,

the regulation of con¬
credit has had a negligible

com¬

panies, at the lowest point of $346

wage

was

use

Outstanding
finance

consumer

credit

in consumer
made possible through

than the vol¬

more

made.

of loans

ume

outstanding

however,

instalment

the

of consumer finance

case

Since that expansion

materials

tion; and, (2) to reduce inflation¬
ary pressures caused by growth of

insurance

to

companies and other nonbanking

powerful forces.
consider, in some¬

ateness of Regulation W.

securities

of

In

credit, on real estate credit,

on

hold

credit

amounted to. as much as
is

Controls

and

no

legacy

con¬

field fell

is

difficult

these factors

to

was

say

which of

the most impor¬

tant, and to what extent each

con¬

It seems clear that

cus¬

tributed.

precipitously, declining from over
1941, to a tomers, of their own - volition,
consumer instalment credit.
not have chosen the 12low of $1.8 billion in April, 1944.- would
Let us examine these purposes.
Consumer credit controls cannot These, as well as the other figures month maximum maturity, which
to be mentioned, are the Federal
facilitate the transfer of critical
was fixed
by Regulation W. On
$6.3 billion in August,

raw

materials and manpower from

peacetime to

defense

production.

Experience of the last few months,
well

as

during World War II,

as

1951.

is

"An address by Dr. Dauer before the
New York State Consumer Finance Asso¬

business

In

person.

and

our

any

vilian durable goods. The decline
in output of civilian durable goods

is

high levels in

in

of total output ^represented

demand for¬

Since output has

ceeded last year's

high

a

output

a

letdown

of

average

money supply and the huge vol-' increase,
ume of accumulated liquid savings.

tivity is nil, unless peace "breaks
out."
Total
production will be

period

had

likelihood

The

clear.

ers

The resultant elimination

part moved

able

convinced

supplies

will

ward, has brought
seasonal

consumer

then, they

have, become

available for

of

second buy¬

Since

goods.

substantial

of time.

a

con¬

is

the

con¬

vastly overrated

vigorously, never¬ ply. For example, during 1950,
of almost 20 the outstanding loans of House¬
of deficit financing remains hold Finance Corp. increased $30

promptly

in

take all these steps

we

is

credit

sumer

by

were

overbought

inflationary effect of

The

Credit controls of the traditional

In the

companies,

loans declined

pattern—open market operations
and rediscount rate changes—are

buying
in¬

a

Businessmen, too,

spree.

view.

production.

ready to burst forth if consumers
period of time.
Regardless of the rate of rapid¬ and business are driven again by
an intense desire for goods,
such
ity of increase in defense produc¬
fluenced by these developments.
as occurred last summer and win¬
tion, the general business outlook
Merchants
built up
inventories,
ter.

their needs and went on

brought about, is almost insignifi¬
cant from an inflationary point of

3 A

Reserve

erators

of

American

28,

can

be supplied upon request.

to

of

1951,

my

before the

As. op-,

finance

you

of¬

know

by changes in two factors: the rate

talk "Can Inflation be
Chicago Chapter,
Statistical Association, March

copy

Controlled?"

consumer

that the amount
loans outstanding is controlled

fices,
of

Board estimates.

of

repayment, and the volume of

loans

put

1943

on

the books. From 1941

both

factors

were

ad¬

the other

hand,

our

records show

that the rate of repayment started
to

increase early

the

imposition

in 1941, prior to
of

controls,

thus reflected both the higher
comes

and

and
in¬

the uncertainty which

S

Volume 173

Number 5016

.

.

.

The Commercial and Financial Chronicle

25

(2265)
caused

people to

attempt to put
affairs in order*

their

financial

Also,

consumers

which

incomes

meet,

and

even

had

panies restrict the size of loans,
the average size of loans should

the

higher continue to gfqw> despite controls,
enabled them to m adjusting to the increase in the
exceed, the rate price level and'in incomes which

of repayment required

under the

has

Regulation. If that had not been
true, our records would have

can

shown

a

doans;

call

re-

those

on

we

namely,

which the terms of repayment are
extended as a result of the inabil-

lty of the

borrower

that^hL

stores

meet

the

occur.

The absence of
the

to

rL *S s*£n^*card

that this did not
in

be

expected to be somewhat

sharp increase in delin- higher in

fluency, and in what
newal

occurred and will continue.6
The rate of repayment of loans

consumer

not

goods
increased

only

1951 and 1952 than in
the first half of 1950. This is the

result

the

of

increased the

Vhere

pressing influences
With average

rate

of

repayment-during World War
II, except that they will not oper-

at

this

time

monthly outstand-

bags

5-6%

the

higher than in

amount

1951

1950,
income in

of

gross
he

should

similarly

in-

creased.

of

factors,

same

which

course,

loans outstanding, and the rate of
gross income from loans
is
no reason why the rate of
gross
income should
be subject to de-

'

Operating Expenses. The dollar
amount

of

gories
crease

is

some

as

*° the same degree: (1) High Thus, the

certain

result of

a

cate-

expense

almost

to

in-

rising prices,

Prono<?al«? for ndriitinrmi

forms.

which

bank
of

equal

an

or

latest

i

u

u

i

fnr ,+ Ka

its

increase

as

in

a

If this

interest,

to

c

Ranks

such

Competition With Banks
of

the

the

con*

*ncRldinS aR

'

™mnanls

'

effectively

for several

loans

alone

serve

canont

area

bv his

reauire

serve

(1)

reasons*

a

'rate

hieher

cbarge than is usually allowed

ComDetition With Rankc

discussion

ftaance

effectively

can

that

our

J

1T

an^

sum£

ing the special

In

of

area

character rf the torower

income

expanse to the bank of maintainreserve.

an

partictdS determined byThe

the

cover

is

mere is an area oi ine con*

each'

percentage

loans.

1

There

mom+o

adopted banks would prob-

increased

tivelv

considerable

ably not grant additional credit
unless the customer pays a greatly

tion of gross income.

enabling
repaysdoans faster than

to

call*

calculated

were

The

attracted

of special reserves bv

nance

expenses wili
larger propor-

take

them

has

backing

operating

incomes of consumers are

^

forTeFederal^ ReserveTavl which6 theyTn*serve'mosT Jec-'
taken various

banks*
vol-

(2)

limited

contractual maturities

the

in

bank

the

is

distinctly

of

degree

risk

-

require, but
Salaries are the largest expense ume
Joans p*consumer finance which it can take, since its prithe
of repayment of
loans,, it the inducement to do so is less, so item.
Average hourly earnings of comPani®s> nothing was said about mary responsibility is to its dealso
decreased the demand for long as normal nvenues for
spend- factory emplovees increased
10% comPetition from other lending positors.
From them it received
loans. There was
reduced

a

ber

of

the

num-

purchase of

applications

loans

for the

avenues

mg

remain

money

for

tially; (2)
of uncertain,

clothing and
furnishings.
In
addition,

home
with

for

spending of

closed, there was a reduced
for loans for the consolida-

in

crease

large

with

compared

as

money

War II, and will affect

need

segment

tion

This

debt.

of

reflected

was

in the number of loans made for
that purpose.6

of

substan-

open

of the

a

World

younger

population,

most

whom

are'unmarried and do
have financial obligations,

not

Thus,

camexpect less

we

effort,

today»
p^financ.ial affairs in
C
w
nfJ
S order; (3) The maximum maturloan rnltn?fLfr'ity under Regulation W Is now 15
?wn9
/VfJ fw VS? instead of 12 months.
^; ?r
To summarize, if Regulation W
Expected Chanire in Outstandings

t

nr

JL/Tt/*u
and then

f!A, p rate n,
of

books

<tw
♦ofi

•

+

er^
that

on

the

credit

sumer

•
re-

,

at the

u

to be every expecdemand for

con-

will

not

decline

as

drastically in the next year as it
did during the comparable
period
World

in

II.

War

a!i<?2ei

of

^

ini°?L

1

j

all of 1951 and

Production

early 1952, though

reduced from the peak 1950 outputs, will still be very high in
terms of prewar levels.

Relatively

little decline in nondurable goods

output has been indicated.
there

believing
sales

Thus,

to be good reason for

seems

that

finance

credit

granted

by

companies,

by

de-

partment stores and other retailers, will continue at a level not
too far below that of 1950 or 1949.
Under those

circumstances, credit
granted by consumer finance companies for consolidation of debt
and for those other purposes which

arise-through the inability or unwillingness of wage earners to
manage their money, will not show
a
a

material
material

derline
aecnne.

The continued
ine enntinnerl

remains

at

months,

15

with

change in its exemptions

no

other

or

important provisions, the outstanding loan account in the confinance

sumer

the year ended Feb. 28.

Since

wage control is not
vent
a
continued

going to

pre-

increase

in

hourly and weekly wage rates
The existing wage formula
provides for

the

10%

a

Jan.

15,

raise above
level.
But

pay

1950,

agreements for raises exceeding
10% have been reached by unions
and management in more than

1,000 cases, subject to approval of
the Wage Stabilization Board. It
is safe to assume that the Board
will continuously find ways to
break the 10%
formula.
Confinance

sumer

companies

could

industry will probabby. nof decline by more than 6%

hardly resist an appropriate increase in salary rates, under such

during the next 12 months. There-

circumstances.

after, during the last eight months
0f 1952, there
might be a further
decline of as much as 3%. Since

Advertising rates, commercial
rents, and all other general forms
of operating expenses will probably increase to reflect the impact of inflation on prices.
The high level of employment
and high consumer incomes will
probably cause the rate of baddeb* charge-offs, after recoveries,
to decline as it did during World
War II.
/

the outstanding, loans of consumer
finance companies increased about
16% from the end of 1949 to the
end of 1950

it appears reasonable,
then, that 'the average monthly
outstandings for 1951 will be 5-6%

higher than thev

In

these/estimates,

making

I have
that the degree of comwith other segments of

assUmed

petition
the

in 1950

were

credit field will not

consumer

change materially. I will refer to
the
question of competition : at
iength

some

little

a

later

Thus? tL/Ltinuance

oi

.

Net Income Before Taxes. On
balance, I would expect the dollar amount of net income before

taxes of licensed lenders in New
York State to be about the same
in 1951 as in 1950.
-

high
Federal Taxes. The rise in Fedlevel of civilian production, along eral tax
rates has
again made
with defense mobilization, under- taxes a close rival of
salaries as
scores

and

If'

+

the

Xsumlr finan/e ?n- coLe

LX1p

•

a

emnhasizes the imnor-

tance of the

a

dul1\0T<?1Csf

largest

charge

ln fact

a

in

against

in-

companies

some

'
5UIVf
,
all forms of taxes paid in 1950 exA

.

ceeded

salary payments. If Congress votes an increase in taxes
of any
kind this year, political
considerations

will

nrobablv

die-

^mfincase PaTso in co?ssss1 - »income or excess profits

SSS5
goods,

some

increase

in

savings

dental and
slst

4 Cash

loan

collections, as a percentage" of
increased slightly early in

hospital bills,
relatives;

or

to

as-

upset

rising

by

costs

of

living

"a'hd taxation,
(4)

account,

To

the

after

the

i5-month, and shortly there12-month, maximum maturity

for

failure

expenses; and,
(5) To take advantage of oppor-

tunities

to

make

money

or

im-

5SSct!ons'ecCont^uIdetoPrisrl7?hefioans

?r0ve the iamily standard pf liv"

with

in2-

shorter

proportion

maturities

the

of

became

outstanding

larger

a

loan

ac-

haRh/teern
there-

After

lSmonths^"oitober^f6194#^h/neJ°
ca.<=h

of

centage

collections

dropped

count

months,

sharply
again dropped

it

since,

to' loan' ad

for

The number of accounts closed
payment

die

began to

move

up

through
as early

ofCi942 continuously6untf/^he

May

of

of the

1943

when

several

the

cumulative

mideffect

reductions in maturity

gradually, but reasonably
tently, until early 1947.

were"°quUe

had

and

a

w

and

1945;

lower from

1942

seasonal

defense

to

the

usual

seasonal

vari-

less pronounced in 1942 and 1943. Loans
for the consolidation of overdue accounts

1942

and




1943.

income

net

of

return

of

li-

in New York will

6.5%

of

average

1950
used

largely

from

dealers

in

companies.
Banks in New York City

a

consider-

the

of

mobilization

come

to

the

upon

in-

statement.

ment
Here,

SV/

the

direct

mobilization

finance
program

time goes

as

would

be

the

aLunt

ot

consistent

with

the

"had 'been
rising until
to

1943

1941, flattened out from 1941

and

has

been

rising

since.

The

borrowerT'detinned0 somewhaTduring

1942

and

began to rise in 1943.
Thus the
larger
repayments
required
by
the
shorter maturities under regulation
seemed

to

affect;

aware

the

size

granted somewhat, but not

of

the

loan

materially.

the

that

they

.

realization

The

set

Reserve/will

up

urged

employee

in-

in

ba^s

factors, such

nriennaev

which

Fu

nf

law

onerated

thev

the

the

as

the

eral Reserve

to

curb

will

credit

up,

ser4e

th^s ressrrto

themselves

share of the market,

a

the market grew and part of that

growth
entry

can

of

be

attributed

commercial

The

to

the

banks

Ushe.d c??sllmer credit„dep^"

deDends

Thus

it, seem,

probable that these credit instituRons will not
look
with favor

has actually taken business

>.

consumer

_

SZM

8,1

Calif.—The
hum0rous
publication, of the San
Francisco Bond
Club, issued in
SAN

FRANCISCO,

"Tapeworm,"

Francisco

San

^

an

increased

use

of

credit

by the consumer finance industry,

examine Federal Reserve
on

personal

'

,

.

is now bging distributed. The p
per

contains satirical articles, pic-

tures and
,

advertisementsprepared

mGmbers of tbe ciub
.

The "Tapeworm,

which has ap-

peared annually since 1929, is pub-,
ijshed

for

f

the

Club

the
(1-

the

by

*

„

lapeworm

is

San

Trdi+nr

wlnQr»

*/

consumer

fi

Rollins

&

.

n

nf
.

benjamin

n a n c e

years.

bank share is about the

TTnnwltnn to

exeeption

of

seems

period.

some

porges to Admit

as

the

communities,

reasonable

to

is

general manager.

The

same

With

Co

Goetze, T rank Knowiton ac
.,
art director, and Carl Wakefield,

or*

prewar

Ed

Incorporated.

Co.

instalment

cash loans, the type of loan which

be-

li^ve that the banks have taken
^

over

nartv

pnn4linpfinn wifb thp annual

1 _

essentially the entire share

-J-,

,

qi

i.

Porges & Co., 15 Broad Direer,

New York City, members of the
New

York Stock
r>

uDon

a

FfdllCISCO
,WIW

Brindley, Vice-President of Blair,

we

i*.

1

ApOBflfS

_

In

away

fben

unon us

13i)GW0riTI

field

the

con-

New

BrSrSS
ILo

as

credit

in

successfully

How

="^r finance companies in

wide-

more

consumer

.t-

.

temP°raniy> feelln£ that it will

the

necessarily correct to assume that
the entry of commercial banks
into

.?

0££ered by

the Fed- not increased in recent

Congress
with which

press

powers

go

may

business

cUCh

,PPnre

t0., sec„ul<r. s

ments.

anTtee Te'-

If

that if that total goes

banks

help carry the overnead of estab-

and'

t

the

+n

;empt

effec

th?fradvertistnv
of their ^ersonnS
+

4Arrin+

nnHer

companies
happens to the total amount of make, it seems reasonably clear
outstanding credit.
They know that the share held by banks has

for additional

area

alwavJ further" The? ^ "?* t0 ££
bave b(Ln servfng
The rate at 011 U?eC°n°mnC
nSr *°fnar/ tnn
which thev secured their share of are
° Sm?
°£ wnic+
wnicn trmy secured tneir snare 01 expensive for them to handle
the market depended of course, profitably. Some banks may atupon a number of

in

be judged b.y what

the

individual

ag-

commercial
of overlap,

ttPSiS ?hef Xu d

Restraint statistics
Federal

increased

expect

may

Banks drew to

whole.

the

active in

to become more

Some

to

by

'

t

therd

that

previously had.

degree

Credit

companies

make.

§ressiveness, f rom

cooperating

are

Voluntary

Program,

the

finance

consumer

serve

of the loans which

consumerfinancecomDanie^ad

Commercial bankers, invest- from

on.

effectively,

could

and

n/ viewin§ prospective borrowers,

field> the.Y made cons.lderable

spread recognition of the appropriateness of financing durable
what about interest rates?
Fed- goods purchases through
credit,
erai
Reserve
anti-inflation
ef- the recognition of the role credit
forts have brought about an in- has played in extending mass
crease in commercial bank rates markets, and the resultant general
to prime borrowers from 2% to approval of the use of credit, has
2V2% within less than one year, widened the market to* include
There seems little likelihood that many who formerly questioned its
money market conditions will be- respectability.
Thus, it is
not

which

Gross Income. As you know, the
amount Qf pross income will 'be

to,

from 5 to 10%

Among

were

are

now

estimated that banks would wish

first to make instal- appiy for

competitors.

credit to

a

other things, every new
is told to go out and
a loan from a consumer
cash loans to consumers. finance company, in order to
as in other communities, fearn the techniques of inter-

among the

and

turn

us

relatively
small
area 0f overlap in which the two
types of institutions appropriately
compete.
It has been variously

Lastly, among
the charges against gross income,

come easier.
The need for

of its funds, largely

is

connection with the repair and the field. Mr. John Galvin, Vicemodernization of homes. Thus, President of the Marine Trust
only the balance, or 20%, of the Company of Buffalo, in his adfotal. so-called consumer credit dresS) pointed out that his bank
holdings of commercial banks can bas reinaugurated a program to
considered comparable to the train all branch employees to
loans made by consumer finance make unsecured personal loans,

effect of controls,
government regulations, inflation,

Let

demand basis,

a

There

,

finance companies,
ment - bankers,
and
insurance Certainly, consumer finance comcompanies will be anxious to pro- panies have prospered and grown
vide such credit.
However, the at a rate reasonably comparable
bankers and insurance companies to the growth in the country as a

Effect Upon Income ana Expenses

0r more

0n

interest Rates.

will become greater
'Lr

tt

6 This

bu
through 1945; the usual
peak in December wai

noticeably lower in

mo-

shifts in

necessary

Ct ,942,'°; 94^
',Uo PqUutaSae

were

bilization

due

consis-

ation, with highs in April and December,

sharp

dislocations

TtZLed gby

clined

1944

Penditures which are the result of

maturity Tn September"T948. ation

maximum

cash

several

gradually
ever
for a very temporary respring of 1949, which re-

except
ini the

addition, "'the consumer fiindustry today must be
prepared
"provide
cash
promptly for those unforeseen ex-

sh^piy when industry.
thereafter*

i947,adrcppiiig
versa!!

in

nance

namely, in the middle of 1943;
after, it declined very gradually.

taxes,
lenders

and useful assets.

compensate

It/n'cr/al'd sL'rpiTbegSnning Twlz to savefor periodic
when

higher
censed

90%

automobile dealers television and would be a decline in the volume
radlo retailers, and other sellers 0f retail instalment paper has
of durable goods. Another 24% prompted the consumer credit
90nsists of direct loans made to officials of commercial banks to
individuals to purchase automo- review the personal cash loan
bRes or other major durable field.
At the
Consumer Credit
goods, loans which are secured by Conference, held by the Amerithe durable goods purchased. can Bankers Association in ChiAnother 16% consists of paper ac- cag0 jn March, bankers were

tete

(3) To adjust modest budgets be materially less than the

firnnm

^Unless consumer finance com-

un!

afencies. Since the end of World
War IIj commercial bankers have
made no secret of the fact that
they.were more interested in financiug durable goods than in
making, personal loans. The Federal Reserve statistics give evidence of tbat interest. Although
commercial banks have over $5V2
billi°n of consumer credit putstanding, 40% consists of retail
instalment paper purchased from

quired

.

dustry in the economy. The inlarge volume of dustry must be
prepared to meet
consumer goods in the stores will
the need
for
temporary use of
result in continued spending. Thus,
cash credit for the usual causes:
liquid assets will not be built up
/i\
m
offcpt thp in<3« nf innnmp
by consumers to such a degree as
m
temporary

availability of

in

Although the future is average hours worked also
inthexcontemplated in- creased, average
weekly earnings
military forces is not increased about 12%. So-called

Exchange,
A vrirUrl

will

admit Mildred r\ Arnold to p«ri
Turp

15

nership on June lo.

t

.

26

The Commercial and Financial Chronicle

(2266)

less to

The Outlook for

the ef¬

many

fects this would have on economy

write

and

on

speculate

now

the position of

on

retailers.

will

By A. W. ZELOMEK*

retailers that although dollar volume will

forge ahead, profits will be strongly influenced by manner of
handling sharply rising cost factors. Predicts supplies of soft

now

Retailing in a garrison economy
a very interesting and provoca¬
title.

tive

These

It is also

a

title that

can

get the

trouble. How¬

curtailed rate of produc¬
automobiles, new homes,
appliances and most other hard
lines,
particularly
those
using
a

metals.

have

I

chiefly

to

blame

shortages Will not be as

These

but

extreme

one

those of the last

as

think the sub¬

ject is inter¬
esting enough
to justify the
risk I may be

In

But the

taking.

fact,

there

purchasing

hands of the public will

the

the
In

to

A. W. Zelomek

come so

Sometimes

concerned with these

has

been

no

we

be¬

we

from

the

old

ones.

My first point to
is

that

will

you,

be

therefore,

relieved

of
of your old duties or respon¬
sibilities. In fact, the importance
you

none

of

carrying

creased

these

out

effectiveness

with
and

in¬
effi¬

ciency merely becomes greater.
What the Garrison Economy Will
Be Like
It is important that we have a
clear picture of what the garrison
economy is

'

Even

new

forget that there

relief

metal.

the

in the
keep*on

have

'<■./
the

so,
be

to

distributor

careful.

amount

of

mill

since

fall

retailers

will

have

season

within

the

will

for

quality
In

for

many

some cases

next

Thus

soft

lines

the

demand

should

trend

extreme

break of

an

situation,
actual

of

out¬

Although I believe
the probabilities are against this
during the next year, it is a pos^war.

ity, military orders on an annual

The
garrison economy on a
minimum basis will be something

like

this:

ply will

be

defense

This

big plant expansion pro¬
which will intensify the
squeeze
on
hard lines in 1952,
gram,

will continue

show

to

gains, and

the whole, will be great¬
than
any
increases in unit

these,
er

on




ahead.

It

some

to

to do it in his own way.

Your

salespeople are
from

be under pressure

In

tomers.

cases

some

going to
your cus¬

it will be

if they reduce

better

their emo¬
tional
pressure
by
gazing
at
nothing for five or ten minutes
at a stretch than by blowing off
steam with

What

I

a

customer.

getting at here is

am

that you must have some way of

measuring results, in buying ef¬
fort and in selling effort.
You

who works in your

establishment,

and it will require a lot of
on

thought
part to get a satisfactory

your

sure-fire, quick
Flexibility in Management
and easy formula that would en¬
Functions
able you to get your costs down.
I do not have, however, and I
Flexibility is a word that I think
* have
not found, among all my we should pay some attention to.
good friends in the retail field, You people in my audience are
any who have solved this prob¬ chiefly management people. This
lem to their satisfaction.
means that the inspiration in your
Obviously you should give fur¬ own operation has to come from
ther

attention

to

the

costs

in¬

volved in the physical handling of
merchandise.
If your

warehouse is not in a
state of efficiency, it will
pay you to put it there.
If your arrangement of store
stocks is not the most convenient,

high

the

from
than

you.

I

have tried to

outline certain

guides, based on prospects for the
economy as a whole, highlighted
by some of the important internal
problems that you will encounter.
I

realize

fully that I have not

been able to give you a

viewpoint, which

manpower

is letter

blueprint

perfect, and which

rearrangement is in order.

a

you can take home and follow.
It is impossible to do this.
you
will probably • have
The most that management can
higher wages to your en¬
tire staff, you must make every expect is a general outline of this
effort to increase both buying and sort which establishes a reason¬
selling efficiency.
able perspective in which you can
On the buying side, alertness, tackle your internal and operating
intelligence and hard work will problems.

Since

to pay

be

more

On

than

the

ever

selling

necessary.

side,

lem

the prob¬

What
must

this

have

means

is

flexibility,

that

you

and

that

may

be

even

more

difficult,

,

you

because it is broader and involves

but I also know that

dis¬ has been possible to buy advantageously in this respect! and in

is rather point¬

Your
buyers
have a lot of
thinking to do, and everyone has

a

some

stores

♦An address by Mr. Zelomek before the

However, this point is

battle with "costs, 'which
a victory for the: store,
take
into
account
the

Any

results in

solution.

I wish I had

,

tance

'

Personnel

must, of course, have some way
of rewarding good results and of
be reduced even more at a penalizing bad results.
I caution
later date, as inflationary pres¬ you against a superficial inspec¬
sures revive.
tion of your plant. This is a basic
At the moment,, your dollar sales problem which involves even one

.

Conference, Portland, Ore., May 16,1951.

improvement. in selling cost

factors.

may

tions, your buyers and merchan¬
Defense production and spend¬ will lead to an increase in
supply dising staff should have a full and had done much more with it than
ing will reach a peak sometime in in 1953.
complete knowledge of your most others.
1952, probably in the second half
New plants will be in operation profitable cost brackets in your
I think it might also pay you to
of the year.
rate your departments against the
then, and total capacity of Amer¬ pricing charts.
Defense spending at the peak ican industry will have
experi¬
As they go out into today's marr- city, where you have the figures
will not be far from an annual enced another enlargement.
kets they should make every ef¬ to do this.
rate of $70 billion. That is almost
If the garrison economy follows fort to get merchandise landed in
Every store is strong in some
three times the actual rate
during the present schedule, there will be your store at the cost that is most departments and weak in others.
the first quarter of this
a
year.
Sometimes there are good rea¬
declining demand for military favorable for your mark-up.
Dislocations of civilian supply hardware, beginning some time in
Fortunately, there has been a sons why this should be the case.
will begin to develop in the sec¬ 1953.
Metals and manpower can
certain amount of weakness in A careful examination of your
ond half of this year and will be then be diverted back from mili¬
own
strengths and weaknesses,
many of the wholesale markets
tary to civilian output.
during the past month or two. It however, is in order,
Pacific Northwestern Retailers Clinic and

some

must be able to transmit this
feeling on down to the lower
levels without impeding the
coordination
of many
activities.
Obviously, your promotional ef¬ progress of programs that are al¬
forts help your sales staff to sell ready in the works.
more goods.
I know that you do
For example, it should be quite
not ordinarily think of promotion plain, from what I said earlier,
Price Controls
and advertising as an aid to re¬ that
the
general background I
You are already
under price duction of selling costs, but the have described to you can be very
controls, have gone through your point might be worth keeping in substantially and suddenly
calculations, and know what the mind.
changed if there is some new in¬
Aids to increase selling efficiency cident abroad.
present
regulation
implies for
This is obvious.
your markup.
There are only a may also be found in the arrange¬ But merely because it is so obvi¬
couple of things I would like to ment of merchandise, with the ous, I think it necessary to em¬
view of stimulating multiple sales.
say in addition.
phasize the importance of keeping
First of all, in current opera¬ I know this is not a new idea, this possibility in your thoughts.

these dislocations in civilian sup¬
increased

is that any basic improvement in
sales is almost bound
to bring

duced, at least moderately, by the
present price regulation, and they

volume.
capac¬

already apparent; and it will be¬ basis should never take more than
come much more
apparent later 12% of cotton, 5% of rayon, and
in the year.
20% to 25% of wool fabric output.

caused not only by
spending, but
by the high level of business
spending on new plant, machin¬
sibility that cannot be eliminated ery and equipment.
from our thinking.
Bigger Supplies in 1953
would be

a

up

war.

In terms of total textile

of

this is

'

The

possibility emphasizes
other points I want

the

little higher. Average mark¬
for most stores is being re¬

ing

strengthen

going to be like.
There will be times, of course,
I believe, personally, that be¬
This, of course, requires looking fore 1952 is
over, consumers will when procurement officials may
the future, I won't pretend
have adjusted themselves to this schedule deliveries iii a short pe¬
to you that we can look with ab¬
change and will be taking up the riod of time and thus exceed the
solute clarity into the future, be¬
full supply of this new ersatz mer¬ estimates stated above.
cause none of us has as yet found
chandise. But I very much suspect
Similarly, there are some types
a perfect crystal ball.
that the public will balk at first, of fabrics, like ducks, fine goods,
You will agree with me, how¬
and that this will have an effect high-tenacity rayons, and nylon,
ever, that it is better to have a
on hard line sales, possibly later" where the percentage of military
definite concept of future pros¬
this year.
takings will run much higher. On
pects, even though it may have to
This creates a peculiar and dif¬ the whole, however, there will not
be revised from time to time, than
be a serious encroachment on the
ficult position for distributors.
to go along on a rule-of-thumb
Over the next 18 months, I be¬ civilian supply, and the capacity
basis, making new decisions every lieve you can expect shortages of of these industries, as you all
day.
hard lines in relation to the po¬ know, is very great.
The garrison economy as 1 will
tential demand. But quality will
describe it to you is, I believe,
be going through a transition pe¬ ,*
How to Operate
about*the way it will work out
What I have said so far sketches
riod; it is impossible to say ahead
according
to
present
defense of time which items will be read¬ in the general background of the
schedules.
ily accepted and which ones won't. garrison economy, at least from
Let me say right now that these So
distributors, for the time being, the economic viewpoint.
schedules will be carried through, must follow a policy in which
In addition to these distortions
no matter what happens in Korea.
liberalism and caution are mixed. in economic relations, there will
What I
am
You can buy liberally where also be government controls, par¬
describing to you,
therefore, is the minimum pros¬ quality is up to par; but you Will ticularly
price
controls,
which
pect.
have to proceed cautiously, test¬ will influence your operations.
I would like to take the rest of
It is quite possioie, even prob¬ ing as you go along, where sub¬
able, that new developments will stitution has made considerable my time to outline four or five
areas
where it will particularly
progress.
cause a further increase in mili¬
I
might point out here that pay you to be on your toes.
tary budgets and military produc¬
course,

of

some

lion men, will be proportionately
smaller than it was during the

view¬

point this means, if not a dete¬
rioration, at least a substantial last

of

the

we

chases.

into

tion.

since

can use
his own ingenuity encounter serious over-all short¬
substituting one material for ages. Military buying, geared to
another, to maintain total output. the needs of an army of ZV2 mil¬

change

local

My point, at the moment,

you

moment, but may become impor¬
tant later on.
I mention it now^

to

in

these items.

sure

to make.
days.
Cost Factors
get into the fall retail
It is obvious that your profits
period, and even more as we get
into 1952, the declining supply of are going to be influenced very
durable goods will create some greatly
by how you handle cost
excess purchasing power, part of
factors.
which will go into soft line pur¬
Taxes are high and will be go¬

As

Government

distributor's

improve; your

a

The problem is academic at the

turer

the

am

then have to absorb it.

curtail¬

policy so far has been to limit the later this year, and should be
consumption of metals, but not quite active in 1952.
In
these
markets
the production of end products.
generally,
This means that every manufac¬ however, you will probably not

From

It is quite obvi¬

will

it

showing against your

figures.

has

30 to 60

using

goods

favorable cost.

that

ous

sales

Looking beyond the

I

begin operating more actively for

demand, therefore,

consumers'

most

problems for

problems that

able

there will be definite shortages of

new

distributors.

certain

up to new high levels, and
public will want to spend it.

relation to

a

moment will be worthwhile.

ment has developed. Seasonal fac¬
tors are also becoming more favor^

going

economy

going

will

power

Obviously
any change in

create

war

still
be a reasonably good supply of
hard lines,
in terms of actual
needs.
By "needs" I mean what
the public could comfortably get
along with.
period.

myself, and I

is

,

involve

will

at

little confusing.

near future, human element.
f
realize that there
It is not possible for a retailer
buying in textile and apparel mar¬
squeeze in the re¬ to
go out into his plant with a
kets last fall, production advanced
regulation. This is stop-watch, time operations, re¬
rapidly, and in most of these mar¬ hidden in the words, "OPS ad¬
arrange them, and set up stand¬
kets excesses appeared early this justment charge."
You are not ards for personal efficiency.
year.
We have just been going allowed to count "OPS adjustment
On the contrary.
through a period of liquidation charges" as a part of the invoice
You will probably walk through
and digestion.
price.
your store and see some of your
What this means is that OPS
This
period of liquidation is
buyers with their feet on their
can, at a later date, grant a price
just about over.
desks, and some of your sales
Unit volume at retail has begun increase to a manufacturer, but
people manicuring their nails or
to improve, under the stimulus of tell him to separate it in his in¬
staring out the window.
Don't
active promotions and good values. voice and label it as art "OPS ad¬
jump to the conclusion that these
On the other end of the scale, a justment
charge."
You
would are bad signs.

tion for

speaker
into
great deal of
ever,

throughout 1952.
dislocations

in

which

Thursday, May 31, 1951

.

built-in
tailer's price

characteristic part of the civilian

«

a

no

a

in the

been

is

on.

economy

than it has

on

period since the invasion of Korea.
There was a lot of speculative

goods will remain ample, with demand for them strengthening

Is

come

season,

Line

Soft

Economist, International Statistical Bureau, Inc.

from here

it is also possible to
orders for forward

Supplies Ample
I suggest that you make every
Supplies of most soft lines will effort to work put programs of
sort
with your
be ample throughout the period of this
important
the garrison economy, as I am sources of supply. It will be more
difficult to dp this later on, when
describing it here.
However, the demand for soft Ihese markets tighten up, and any
lines will be a lot stronger from progress ;yop can make at the

Our Garrison Economy
warns

some

delivery, for the fall

a

Economist

cases

.

.

This point,

about bringing weak

departments up to par may be a

However, the need for flexibil¬

ity is not limited to that.
Let's
assume
that
general conditions
will develop exactly as I have
described them.
Even so, there
will be sudden changes in indi¬
vidual

markets

which

would in¬

fluence your buying; and sudden
shifts
which

in

consumer

your

selling

demand, to
and promo¬

tional staff will have to be alert.
For

instance,

although

I

have

great confidence in the estimates
I gave you as to the total amount
of government takings in different
fial/lc!

nrVion

\xr£x

rfot

rlftlim."

tn

in.

Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2267)
dividual items there will be sud-

.

'

"

den and unpredictable

Potential

Demand

changes.

'"lines. You

that for

'

must

some

in

.again;

which

rush

to

buy

durable

of government

case

regulations, flexibility will be rei!quired.
Inflation control so far
involved

considerable

a

..irgree of shadow boxing.

de-

There is

guarantee that the present in¬

no

tentions of

OPS, to squeeze busiprofits, will be fully carried

*

;

ness

if

out

full-scale

a

does

war

not

'

develop.
1

But the attitude of OPS
actions of

the

and

Congress, and
the nature of the many controls

1

which

under-

-

will

you

operate,

will

that

ments

of

none

advance.

it

or

than it

is

It may be much

be much

may

now...

1

;

worse,

••

-

a

like

would

about
-

-

to

back

come

^'briefly- to the first point that I
*

made, that retail management still
all

the

problems and re¬
sponsibilities that are normal; and

that

it

take

must

problems

new *

'

and

responsibilities

in

its

stride.

Your

primary motives are essentially those of self-improvemerit. Most of you represent stores

■? ' of

substantial

and
self4 improvement involves a strength-

,

scope,

|r ' ening of weak points,
External conditions are both a
handicap and an advantage. Your

j
,

dollar

but

volume

will

ahead,

forge

will

costs

probably go
Your problem, therefore, is to
your

up.

'Combine

the

'

'

i

know

I

i

great

a

We work very

them, and
friends in the

y

retailers.

many

closely with

of

.

many

have

we

field.

many

From

the

vantage point of this experience,
I

can

have

say

frankly

quite

yet

never

met

that

I

retailer

a

1 when he

|
y

was not disturbed about
serious problem, either in-

-some

ternal

,•

or

connected with the gen¬

eral economy.

that I

...'

But I

cannot recall

also

can
a

say

where

case

the retailer has not met this chal¬

lenge, and met it with
gree of success.

high de¬

a

will be
period for all

v

omy

J

certainly

mostly

most

a

of

you

interesting
because it

consitute

does

a

chal¬

lenge.

customer is
total

Outing June 8

Y. — The Bond
Club of Buffalo is holding its an¬
nual outing at the Wanakah Country
Club
on
Friday,
June
8.
Valuable prizes will be awarded

'

1

to

N.

participants

in

the

gold

and

tennis tournaments planned. This

;
"

year

cup

a

is being awarded

by

Edward Cornelius of Edward Cor¬
nelius &

Co., Inc. as a golf prize.
An invitation is extended to out-

of-town
i

dealers

and

brokers

to

attend.

*;
-

ward

Wunderle

of

The

of EdLioerty

*Bank of Buffalo, Chairman; John
3

Kraus, Manufacturers and Traders
Trust

Co., and John Lautz, Trubee, Collins & Co.

R. N. Newman

ORLEANS, La.—Robert J.
Newman has "opened offices in the
Hibernia Bank Building to engage
in

a

securities

diversified, and plants

and the second largest

a

metal bearings

character.

The southern area is chiefly rural in
thus differs from other Ohio companies
relatively high residential and rural business (41% of

The company
a

and low industrial revenue (26%). Toledo Edison has
43% industrial, Cleveland Electric
52%, Cincinnati Gas & Electric
44%,-Ohio Edison 35% and American Gas 43%.

steam power, buying only 2%. About one-third of total
capacity
been installed since the war and over half
since 1938.
The
latest 40,000 kw. generator
(one-eighth of the total 320,000 kw.
capacity) commenced operation in August last year, and a similar
unit (at the Poston Station near
Athens) in the previous year.
Construction has been started on another unit of
60,000 kw. at the

business.

In

the

;

past he was a partner in Newman,

I

Harris & Co. and H. W. Newman
& Co.




In

a

special memorandum, dated
May 23, 1951, Dwight W. Miche¬
Director

ner,

posits and

increase in advance of produc¬
tion of goods, but this
approach to
the problem of inflation
places the

emphasis in the wrong place.
"The major cause of the
20-year
rise in bank; deposits (the infla¬
tion) is the expansion of bank

points out the
chief

of

cause

the

rise

in

bank

deposits
during the last
20

Joans' to the government in the
form of government securities
pur¬

has

years

chased. Government securities
held by the banking
system have
declined from the wartime
peak,

been the pur¬
chase

the

by

banks of gov¬
ernment

but

they still remain 16 times as
large as in the late 1920s. Even

secu¬

rities, and de¬

after,
Korean

post-Korean

to

expansion in

When these two installations

completed over half the capacity
will be of modern postwar type. The
capacity figures given above
are
based on name-plate ratings, and modern units can

usually

generate at least 10-20%

more than the name-plate
rating.
The company's revenues in 1950 were 83%
electric, 17% transit
and less than 1%
heating. Like some other Ohio utilities, the

company has had municipal difficulties. For some time the City
Council of Columbus permitted the
company to earn a generous
return on the electric rate
base, in order to continue the nickel
fare on the transit system. Several
years ago, however, the City
Administration decided that the time had come for both the elec¬
tric and the transit operations to "stand
company

also had

company

of

an

asked

was

to

some

cut

electric

on

rates

their

very

litigation with the city

own

feet."

The

sharply, and the

over

interpretation

old rate ordinance.

In

the fall of 1949 the

nickel bus

city attempted in effect to freeze the
(5 tickets for 25 cents or 6 cents cash with free

fare

transfers)

five-year basis.

In the meantime the company had
sold, leased and sub-leased the transit facilities to a newly-created
on a

subsidiary, Columbus Transit Co. The latter
have the ordinance declared
court to

charge

held the
the

same

issued

a

filed suit to
allowed by the

company

confiscatory and

was

temporary higher fare. On June 1, 1950 the court
ordinance void but the city passed a second ordinance of
a

character and another suit

preliminary injunction

on

was

loans,

credit

level

is

not

of

W.

D.

Michener

past

greatly

1929.

the

to

government

made

customers

decades, expansion of
deposits in the future, and

to

loans

who

to

Charles H. DeLoca With
A. M. Kidder & Co.

frequently pointed out
that such increases in loans bring
into being new deposits, thereby
adding to
the
'money'
supply.

(Special to The

FORT

is

private

—

as¬

involuntary methods, Building.

true

that

business

bank

do

"

increase

was

Harold

to

de¬

Mr. DeLoca in the past

in the investment business in

New York

,,

loans

Chronicle)

sociated with A. M. Kidder & Co.,
Ft.
Lauderdale
National B a n ky

this expansion of deposits must be
terminated
if
prices are to be

brought under control;

Financial

LAUDERDALE, Fla.

Charles H. DeLoca has become

Therefore it is concluded that, by

"It

City.
C.

Martens

has

1951, preventing

&

Co.

en¬

forcement of the provisions of the second ordinance
pending final

disposition of the

case by the court.
On May 21, 1951 the City
third ordinance setting a fare of six tickets for 50 cents,
cash, to be effective June 20, 1951. On May 21, 1951 Tran¬
sit Company announced a straight 10-cent fare to be effective
May 23, 1951. The Transit Company has been losing money on the

passed

Communism and Its Threat

a

10 cents

fare of

seven

tickets for 50 cents and would lose money

of six tickets for 50

cents, 10 cents cash.

on

a

It may discontinue

Operations in 1950 resulted in

fare

serv¬
a

net

loss of $160,000.

to

providing

a

reserve

in

the amount of transit losses incurred since Nov.
1, 1949. The com¬
pany is anxious to-dispose of the bus subsidiary but has been un¬
successful thus far and is
to its

considering the feasibility of distributing
stockholders, or of selling the subsidiary to

own

municipality.

"

\

In the meantime, however, a complete
agreement was reached
on electric rates last
year. The settlement ordinance retroactively
reduced rates, and the company

expects this

excess

000.

summer

to refund the

amounts

Without

mated that

previously collected, amounting to about $1,060,describing the new ordinance in detail, it is esti¬

1950

electric revenues if calculated at the new rates,
including adjustments made (or under consideration) in the sys¬
tem outside of
Columbus, would have been about 5.5% less than
with the old rates, and operations for 1950 reflect the
major part
of this reduction.

Share earnings

have been

Year

Amount

1950

as

follows in recent years:
Year

Amount

$2.30

__

_

_

1944

1.25

2.07

1943

1.46

2.22

1948

1945

2.57

1949

1946

"That our country is beset with external dangers
readily concede. But these dangers, at their worst,
are ones of
physical destruction, of the disruption of
our world
security, of expense and inconvenience
I

and sacrifice.

The parent company will not make
any further cash advances
the transit subsidiary.
It is, however,

1942

2.00

2.17

1941

1.38

President Poston, in a recent talk before the New York
Society
of Security Analysts, estimated that on the increased number
of

shares (1,700,000) and with

a 47% Federal tax rate, 1951 earnings
might approximate $2.03; with a 50% rate, the amount would be
$1.92, and with a 55% rate, $1.73. The percentage payout of the

on each of these bases would be 69%, 73% and
81%,
respectively. The above figures do not include earnings of the
transportation subsidiary which would be a loss figure. The EPT

"shelter" is about $2.20 on the new number of shares. The Presi¬
dent indicated that there would be no dividend increase under
present conditions.
The company will spend a maximum of
$55 million for con¬
struction in 1951-53; the probable sources of these funds will be
55%-60% new debt, 25% new common stock, and the remainder

rible

These

are

things, but they

serious, and sometimes ter¬

are

all things that

we can

take

and still remain Americans.

"The

internal

of

different order.
people. There is
there are lots of
people; but it does not add up to America. America
is something in our minds and our habits of outlook
which causes us to believe in certain things and to
behave in certain ways, and by which, in its totality,
we hold ourselves
distinguished from others. If that
once
goes there will be no America to defend.
danger is

a

America is not just territory and
lots of territory elsewhere, and

"I

see

should not proceed on
panic or complacency, rec¬
ognizing our domestic Communists and their wellwishers for the genuine though limited problem that
they are, but refusing to let this divert us from the
greater problems we have before us or to lure us
no

our course

reason

why

we

without either

into reactions which threaten

us

with the loss of the

national soul.
*

*

"The worst

thing that

our

*

Communists could do

to us, and

the thing we have most to fear from their
activities, is that we should become like them."—

George F. Kennan

on

Communism here and abroad

in the New York "Times."

There is
say,

that

a good deal in what Mr. Kennan has to
but there is another very real internal danger—

our

shall

be led to suppose that communism
something akin to it, would solve any of
problems.
we

itself,

or

also

joined the staff of A. M. Kidder

filed, in which the court

May 17,

bor¬

have

It is

or

non-government

rowers."

non¬

them since the Korean out¬

voluntary

.

resulting problem of inflation,
be
more
dependent upon
(in many cases unproduc¬
tive) to the government, than upon

making every effort to meet
the extraordinary demands placed
break.

1929 total.

loans

been

upon

borrowers,

only moderately

will

the rise in prices, much attention
has been centered upon control¬

loans

loans

the

"In the current effort to retard

bank

are

post-

bank

two

bank

the

above

According

of

"Judging from the record of the

Chase research specialist:

ling

loans

above the

the current

extraordinary

expansion

non-government

these

volume of such

are

the

spite the huge

business

the money supply

cause

to

of

Economic Re¬
search of the Chase National
Bank
of New York,

plant, scheduled for service in March next year, while an¬
other 60,000 kw. unit is on order and scheduled for service in
1953.
same

$1.40 dividend

Opens

NEW

-

is well

The

company's largest industrial
natural gas pipeline, which contributes about 2.5% of

1947

The committee consists

.

1

area

size.

contributing 1.5%.

company,

the

Bond Club of Buffalo

BUFFALO,

a

in

electric revenues,

the stock

Annual

moderate

ice unless relief is obtained.

I think I am safe
in saying,.
therefore, that the garrison econ-

;

Industry in the Columbus
are

utmost

efficiency in
buying and merchandising, with a
t; consistent and general sharpening
up of internal operations.

*

University, and a retail trading center for the
surrounding suburban and rural area.

has

"

faces

home of Ohio State

Columbus & Southern Ohio Electric generates almost all of its

.

spent at this point.
I

has al¬

Dwight W. Michener, Director of Economic Research of
Chase
National Bank, says loans to
Government, through purchase
of its
securities, was major factor in expansion of
dsposits in
past 20 years. Holds credit controls to
curb inflation places
emphasis in the wrong place.

estimated population

nected, with the exception of the City of Delaware and surround¬
ing area, which are scheduled for interconnection this year. Colum¬
bus, with a population of about 375,000, is the State capital, the

.

Conclusions

My allotted time is just
*

money

Primary Factor in Bank Deposits Rise

area

revenues)

can

*

better,

an

Gov't

Company

of 515,000, and also a southern area in Ohio with an estimated
population of 230,000. About 78% of revenues are derived from
the Columbus area.
The company's electric system is intercon¬

fore-

us

"

cast in

in and around the City of Columbus with

by<develop-

-influenced

be

stock

of 200,000 shares in
April, and $10 million of bonds will be sold
later this year.

Columbus & Southern Ohio Electric Company serves an

in having

'

*

Columbus & Southern Ohio Electric

will

i i gqo,ds.

has

Nearly $4 million of common
ready been provided this year by the -sale

By OWEN ELY

cannot

we

consumers

in

Even in the

equity at the end of 1953
different from the

or not very

realize, however,

reason

foresee there may be another

now

.period

common stock

present rate.

Utility Securities

selling, I have pointed out a
general transition in favor of soft

/

fr?™ internal cash. The

will, it is estimated, be around 29%

Public

Durables

for

In

"

t

27

28

The Commercial and Financial Chronicle

(2268)

Continued

from

in 1913 to 239 in 1920. It fell back

21

page

150 in

Cmrent Economic Trends
And Theii

the

of

gold

Implications

the

of

1925 and to 138 in

old

dollar

100c

1929.

it stood

at

standing

Effects

of

pudiation had been practiced ear¬

except for
World War II, prices in terms of artificial,

lier

the unconvertible 59c dollar would

with

but

$200,000,

with the surtax
on the
first

17%

from

ceiling

a

77%.
much

This does not leave
for

expansion

in the

present

armament emergency.

the tax becomes
rather than

dollar

re¬

any case,

capital

on

the

income,

is

tax

which

levied

would

on

not

exist, if the taxpayer were allowed
to deduct from income the loss in

purchasing power of the invested
capital which produces the dollar
income. Failure
to permit
such
deductions

investments

bond

on

results in taxation of grossly over¬
stated

,

levels of

100c dollar!

earlier paper

their

part

cur-

rencies.

nanced

government

fi¬

43%

of

extent

by

by sale of

balance

The govern¬
the lesson of

notes.

had learned

ment

was

1812-15

the

to

and the

taxes

.

and

monetization

of

to

the

paper i money.

notes

government
of

discount

a

instead

debt

the

irredeemable

of

of

device

the

used

45

80%

to

during the war. Wholesale and re¬

of

tail

prices rose sharply — about
50%. They declined steadily over
the next two decades to 30% be¬

corporations (as defined by Con¬
gress) has likewise risen sharply
over
the years. In 1913 the tax
was only a flat rate of 1%
of net
income. During World War I the
rate rose to 12%, with a graduated
tax on excess profits ranging up
to 80%. In 1922 the excess profits
tax was eliminated and by 1929'

which already
had-risen shairply due to the Na-;
poleonic Wars in Europe.

the normal rate fell to 11%.

balance

1938 the rate

In

/

•

.

low prewar levels,

The Civil

War

financed by

was

taxes (and sales of Federal lands)

only

the

to

of'23%.. The

extent

financed

was

sale of government

graduated

was

in

14%

The

19%.

to

i a

profits

excess

tax

was

re¬

Since then the average corpora¬

i

tion

of its net income
when

paid 38%

in Federal taxes until 1951,

combined

the
rate

normal

and

surtax

raised to 45% and

was

new

a

profits tax levied, with an

excess

over-all ceiling of 62%.
This

rate

all-out

again

for

margin

increase

war.

become

and

time

,

of

capital. Where-

on

replacement

ever

little

leaves
in

/.

Here also the tax has

tax

a

'

costs

of

plant

inventories)
are higher than original costs, the
prohibition against deduction«of
equipment

(or

reasonable annual

to

reserves

re¬

partly

by

plant and equipment—

results in the taxation
overstated

profits

of

and,

grossly

in

many

of nonexistent profits. The

cases,

result, of course, especially in the
heavy industries, where plant and
equipment replacement' costs to¬
day

2 to 3 times original costs,
rapid dissipation of equity

are

is the

capital,
ted

result which, if permit¬
continue, can have dis¬

a

to

astrous consequences to our entire

This already has hap¬
in England, where during

economy.

pened
the

war

and

ist Labor

later, under

a

Social¬

Government, the income

tax has

already destroyed a large
portion of the accumulated capital

oti centuries. I
The

.»

4v

Financing of

-

Past

Wars

Revolutionary War was fi¬
nanced chiefly by state and Fed¬
eral greenbacks, which were irre¬

only to

in

gold or silver, and
minor degree by loans

a

and state taxes. These greenbacks

progressively

became

Between

greenbacks
at

done

C

worthless.

prices first fixed

those

of

1774,

then

eight- and

d i t y

Index

and in 1896

years

the

and

rose

level in

taxes

The

The

balance

nanced

of

•

which

bonds,

costs

World, War

effects

are

Roosevelt

a

now

the

terms of

Administra-

dollar

corporations

individuals

or

borrowed

banks

to

These

bonds

sold for

from

finance

a

much

while

.••/.'

$22

throughout

to

$46

to

that

billion

large

the

at

a

national

mercial

debt

bonds

banks

by

a

the

—

com¬

equiv¬

—

have

by offering
to

real

Further

and

fair interest rate

a

savers.

T

monetized

bonds

of

use

Federal

for

the

collateral

as

Repudiated

debt

by
Federal

for

loans

Reserve

issue

bank

serve

the

dollars of the

of

notes.

the

gold

clause

in

Made all U. S. money irredeem¬
able in gold
(except at the

discretion

of

the

Treasury)
subject
to
progressive
partial and possible total re¬
pudiation through inflation.

and
■

arbitrary and arti¬
ficially high values for foreign

devalued

(59c)

dollars.

and

In

1933,
Congress, at the request of Presi¬
dent. Roosevelt, outlawed the "gold
clause"

in

both

past

future

and

contracts, and authorized the

demption of these bonds in
lar

which

was

re¬

a

dol¬

unconvertible

and

a

This

Drained away the gold reserves
of
i

foreign nations and forced

them
and

to

managed

created

currencies,
practical mo¬

a

U.

S.

earlier

eral)

currency — redeembale in
and silver—was instituted
to halt the inflation. Both the Fed¬

gold

greenbacks

were

gold

repudiation

decisions

and

1935

Court,
of

the

by

the

despite
Interna¬

of

Justice

at

the

British

highest

Court of Appeals in,similar
that such

of

sustained

was

in

Supreme
Court,

value

'unilateral

and

the

cases

retroac¬

With

During World War I
rose

this

consumer

101%. The Wholesale

completely repudiated. Then Commodity Index

rose

from

100

of

is

inevit¬

taxes

financed by

was

only to the extent of 46%.

The

remainder

sale

of

financed

was.

government

contain

by
which

bonds

gold

clause and are
payable in irredeemable paper dol¬

lars

no

which have

become progres¬

sively less and less valuable. More
bonds

—

the

portion

These

basis

constitute

bonds

of

commercial

total

the

total of the

banks, thereby

that

debt.

of

$83 billion—was sold to

commercial

tizing

monby

commercial
hold

of

mone¬

the

then

new

became

sharp expansion in
deposits which

bank

the

major part of
supply.- Today,

and

our

the

Federal. Reserve

about

bonds out of

$92
a

billion

of

total of $257

billion.

In 1945

Congress authorized the

reduction of the legal requirement


I«**ws•«n!


[i.»i.iiJhiiH.ii;i,hihi

war

rearmament

50%

as

the

at

very

* time

in its supply, after serious

impairment of its quality (through
devaluation and
1933

inconvertibility).

the total

money supply
deposits plus coin and
currency outside of banks — was
only $19 billion. By (June) 1939

—demand

the

Roosevelt

Administration's

policies had raised this total to $39
billion! By (June) 1950 the total
had
the

increased

to

i.r' ' i»' UF luii Vr

or

10-cent

a

or

5-cent

a

dollar at the end of the next dec¬

Price

ade.

controls

in

every

war

have proven ineffectual. All for¬
eign experience confirms our own
record.

Controls merely act upon
symptoms, not the causes of
inflation.
Even
if
controls
are

$110 billion.

In

income

unless

the

generated

by war or ar¬
production is siphoned

mament

off

by taxes or by sale of nonmonetized bonds, as production of
civilian goods decreases, the ac¬
cumulated

increase in

the money

supply forces a sharp spiral
inflation, once controls are
moved, if ever.
The

inflation

and

pean

clear.

records of

Asiatic

Most

of

of
re¬

Euro¬

countries

are

their> currencies

have been
completely destroyed
during World Wars; I and II by

inflation which wiped out all sav¬
ings of the lower and middle in¬
come

groups, invested in fixed ob¬
ligations, thereby paving the way
for

socialism

and

communism

through national bankruptcy and
economic! andi political anarchy.
thai stage the only alternative

At

to totalitarianism is
turn

to

a

prompt re¬

the

only sound currency
gold standard.
by such a step can a free

known to man—the

Only

democratic
lished.

society

Already,

be

reestab¬

capital
savings—both individual and cor¬
our

own

porate—have been sharply im¬
paired and are being rapidly dis¬
sipated. The rate will be accel¬
erated under the Current
ment program
reverse

unless

direction.

our

rearma¬

quickly

we

Shall

we

wait until present policies take us

completely

down the "back road

to communism," or will we insist

the

upon
course

change, in

necessary

now?

following six months the total
at

rose

an

unprecedented rate by

six-fold!!!

The population has in¬

creased less than 25%

in the

same

period!

Our present money sup¬
ply is about 2i/2 times that of 1940,
while
the
physical
volume
of
goods and services produced has
increased

less

than

45%

since

Further Inflation Can Be Avoided

(1)

The

Budget Can Be Bal¬
Department of Com¬

anced;

The

merce

reports

that

real

our

per

capita gross national production
in .1950.,was .34% higher than in
1940.

of

This

means

total increase

a

$57 billion (above 1940) which

if

can,

be spent for all
the United States

necessary,

government in

and still maintain
ard of 1940.

1940!

our

living stand¬

In that year we

spent
all government only $18 bil¬
lion, which, added to the $57 bil¬
lion, gives us a potential $75 billion
for

Price Inflation and Price Controls

Despite quickly established and
enforced
price controls

strictly

for

budget without impairment of

impact of

1940

the

sharp increase in
supply and sharply

money

expanded
tween

production,
prices

1939

the

latter

modity

of

wholesale
in

ent

Federal

to

114% above their 1939 level. They
fell
back
8.5%
by
(December)

billion

$28

or

and

com¬

1948

our

Our pres¬
is running about

production

10%

Through

in

rearmament

living standards.

the

With

controls

soared

the

be¬

rose' 37%

price

year,

prices

wholesale

1946.

and

cancellation

a

shifts

extra

produce

48-hour

$7

we

$10

to

above

1950.

week
can probably
billion more.
work

This would give us a total of $110
billion for all government—suffi¬
cient to meet the

$90 billion maxi¬

Federal Budget projected by
President Truman and still pro¬

mum

1949, but since Korea have soared
an all-time peak, with a

vide $20 billion for state and local

rise of 16%

governments,

again to

in the past 8 months.

Meanwhile,

prices

consumer

rose

while maintaining
1940-living standards, except

our

.

28% from 1939 through 1945, 71%
from
1939 through
1948, fell

for sacrifice of some luxuries and

slightly in 1948, and since Korea

consumer

have

The Federal Budget can, there¬
fore, be balanced—if there is the

rising 8%

to an all-time peak,
since, (June) .1950 to

above 1939.

background, the cost

of World War II

tive repudiation was contrary to
banks
legal and equitable principles.
these

prices

J

about 78%

v.

than one-third

consitutional

as

Hague

1789, with the organization of the
Federal government, a new
(Fed¬

theoretical

green¬

when the value of money is being
reduced
by
non-productive
in¬

currencies.

nopoly of gold in the United

in

time

result

20-cent

it is not at
will have a

we

during World War II, under the

Re¬

States.

1930s

in

This

commodity

billion of such
however, paid off in

inconvertible

dollars.

ent

banks

Federal

sold. More than $20

the

of

*

past and future contracts, pri¬
vate and governmental.

same

(or the monetary equiva¬
as
when the bonds were

amounts

■"

the

Federal

weight

smaller

ef¬

even

backs.

government bonds and
out¬
lawed the gold clause in both

"gold

government contracted to redeem

lent)

to

Established

contained

which

them in gold

as

issuing of green¬
a
step which could
been
avoided
merely

backs

1920s
of

seven

alent of the

purchase.

discount

and

World $8 billion to a total of $118 billion
in early 1951, and the total is still
portion of rising! Since 1933 our total money
by sale of supply has increased more; than

major

a

government

who

early

promptly

by

I.

Monetized

in

increase

an

occasioned

War

to

par.

These bonds

clause"

their

entire

its

of 12 years.

years—as

commercial

the

unbalanced

an

on

Increased the Federal debt from

18%, .but later fully

as

recovered

in

much

In

'

budget
term

sale to
sale

in

41%

gold.

ply.
Operated

of

by

or

being

ther to dilute the money sup¬

large portion of

banks

II,

Partially remonetized silver fur¬

"

by

react

fectively to the bald issue of

creases

Devalued

fi¬

was

were

tion:

by

billion

$25

monetized

was

commercial

then

its

by sale of

Federal

as

financed

was

wealth.

and

inflation

and

with

came

felt.

only to the extent of 28%.

tional

state

chaos

from
I

would

it

whereas

diluted,

an

the seeds of eco->

permitting

flation could not be controlled. In

and

income

years

and its full

again reached the prewar

War

steadily

much

rose

The Financing of World War I

than

wind

nomic

1913.

World

insidious

more

de¬

planted. The reaping of the whirl¬

24% below

was

These

or
the "pres¬
period when the
production of civilian goods and
services may be reduced by as

level. Then it slowly

perwar

are

being

able

1865),
the later

but slowly declined over

ten-fold, and, finally,
twenty-fold, but the spiral of in¬

eral

supply in

money

of

those

(between 1858 and

had

maximum

the

oz.

om m o

113.5%

vices

history.

our

past 17 years,

unlikely that

temporarily effective,

greenbacks, because the public is
not so conscious that its money is

tribution
In

During the Civil War the Whole¬
sale

in

before

in

redeemable in gold on demand at
per

had

Supply

devices for

these

arbitrary,
non - productive
in¬
creases
in the supply of incon¬
vertible
money
(without corre¬
sponding increases in the supply
of
goods
and
services)
made
monetary inflation inevitable and
more
readily effected than ever

rencies, price controls, and redis¬

by Congressional order in
1878—five years after the United
States had adopted the full fledged
gold standard, with all its money
$20.67

the

1939

and

the Money

in

All

Increase

The result, of course, has been a
sharp and unnecessary rise .in
effort to finance its extravagances prices and
a
corresponding de¬
and waste, and experiment in so¬ crease in the value of the dollar
cialistic theories of managed cur¬ and all fixed obligations payable

bonds—main¬

ouly 59 cents.

four-fold

1932 before de¬

things to impair the
dollar and artificially

many

increase

finally redeemed

were

in

they had sold

1933

value of the

par

Prices soared in terms of the de¬

at

prices below

Roosevelt Administration

1864. After bitter debates dur¬

preciating currencies. The 13 states
by law established price controls
with

which

at

at

bonds were,

(

The

deemable

dollar

The Financing of World War II

ing three political campaigns these

these increased costs—^-limit¬
ing* such reserves to recapture
merely of original costs over the
ful life of

in 1939 some

valuation.

extreme discount of 65% from par

coup

estimated number of years of use¬

In fact,

:

in

pealed in 1946.

low

the

in terms of the

1932-33

the 100c dollar in

ly to commercial banks —?and
During World War II the normal partly by greenbacks, which were
rate rose to 24%, with an addi¬ made
legal tender by law,; but
tional graduated excess profits tax^ were not convertible in gold or
arid an over-all ceiling of 80%. silver. These greenbacks fell to an
from

below

fallen

the 59c

those

greenbacks, the memory of which
was still fresh from Revolutionary
days,

have

soon

commodities already were selling
of

War

The

fell

capital.
on the net income

The tax

level

1933

tion). It appears that,

in

However,

nonexistent real income

or

tax on

—a

the

which at one time or an¬
other had repudiated in whole or
onies,

income in all situa¬

on

where

tions

In

tax

a

room

12 of the 13 original col¬

by

was 26% below
(before devalua¬

only 63.5, which

of the

all

Thursday, May 31, 1951

.

the

Artificial

the

of

$2,000 up to 88% on incomes over

ranging

out¬

in

currency

prices fell precipitously in terms
of the new ''hard money."
It should be noted here that re¬

normal rate is 3%,

behind

reserve

circulation
By 1933 it had fallen to 86. With from 40% to 25%, permitting the
the 41% devaluation of the gold issue of $4 of Treasury Certificates
dollar in 1934, the index rose to (instead of $2Vk) for every $1 of
bullion in the Treasury—
126 in 1937, but by (August) 1939, gold
it fell back to 107 (in terms of the again effecting an addition to our
59c dollar). At this point in terms total money supply.
to

.

.

soared

Over the
cent

tax

political

longer term, the 100-

can,

value

fiscal,
vogue

the

of

debt,
since

1914

and
1933.

dollar

(in

1920,

as a consequence of the
financing World War I.
1933, however, its value had

methods of

risen

to

72 cents

78

cents.

It fell

only to
by 1939, despite the 41%

devaluation and other inflationary
devices of the Roosevelt Admin¬
istration.
these

when

freedom

of

choice

of

goods.

courage

$90

to

do

so—even

billion

level, and we
will, have both guns

and

purchasing power) fell to 50 cents

By

the

seriously impaired by Fed¬

monetary,
policies in

The

in

at

gold dollar of 1873-1933 has

been
eral

complete

But

devices
the

the

full

were

dollar

effects

felt

in

became

of

194$

worth

if

we

butter, rather than one or the
other, with living standards of

1940.

Senators Byrd and Douglas (both
Democrats) and the Hoover Com¬

mission have demonstrated clearly

that from $4 to $10 billion
saved

from

present

expenditures.
mental

poned.

is

less

the

than

41

dollar has

declined in value 43%. '

If, in the current rearmament
period, we continue the policies

govern¬

be

on

put

a

can be post¬
Doubtless also, economies

administrative

1939

more

can

Many public projects

ing

value

be

basis, such as the
Post Office, the River Valley Au¬
thorities, and new toll highways.

in

power

can

nondefense

self-sustaining

only 42 cents. Today, its purchas¬
.cents,. Since

Also

services

.

the defense

budget alone and

efficiency in stock¬

piling, exchange of U. S. products
for; necessary defense materials
(rather than giving them free to
could save, per-

foreign nations)

iVolume 173

Number 5016

.

.

.

The Commercial and Financial Chronicle

59

(2269)

haps,

much

as

billion

$5

as

Stockpiling, which
has been grossly
mismanaged, can
and

should

be

reasonable

used

prices

to

at

longer

and

socialize

abroad rather than to drive them

our

10%

reckless bidding

materials.

scarce

to

by

of

for

A release of 5 to

revenues

can be salvaged
loopholes of illegal
and legalized tax-ex¬

tax evasion

emption of business activities.
(2) Encourage Expansion of In¬
vestment, Production, and Reven¬
ues by Tax Revision: Our
present
Federal

tax

is

structure

whelmingly socialistic.
be revised at

excise

rapidly to combat inflation
the

time

same

increase

revenues.

Past

tax,

when occasion demands.
is

levy

a

capital without ref¬

on

to

ability to pay and results
anarchy. It results in the

erence

in

Inflation

tax

partial depreciation pf the

or

money and of their sav¬
ings in all fixed investments, pay¬
able in such money (bank depos¬
its, insurance policies, mortgages,

can

individ¬

on

ual incomes be limited to not

more

50%; that rates on the
brackets—where the great

lower

bulk of national income is earned
•—be

increased, but that all invest¬
of savings from income be

ment

from

exempted
studies

the

tax.

Various

show that by such a pro¬
and production

will

be

stimulated

and

revenue

yields actually increased.
The

tax

triple

even

is

case

results

in

cor¬

taxation

all

too

capital,

on

any

tention
and

replacement

costs, and jus¬
tifying governmental claims that
industry needs government capi¬
tal for expansion, replacement and
modernization of plant and equip¬
ment.
it is

As

tax

now

"excess

an

profits"

tax

added.

The tax

all corporate income

on

and

of

excise

lower

comprehensive system

a

taxes

rates

higher rates
Britain
range

necessities

to

and

luxuries. In Great

on

today

up

established, with

on

the

excise

100%.

taxes

Excise

taxes

encourage taxpayers to limit their

purchases to necessary items and
act

as

effective substitute for in¬

effectual

rationing

and

price

controls.

The

the

and

the

excise

present

taxes, along with
miscellaneous taxes,

could yield sufficient

revenues

to

balance the maxium Federal bud¬

get of $90 billion. When the pres¬
ent emergency is
over, the excise
tax rates could be

and

the

sharply lowered

proceeds used

to

reduce

the national debt.
The

tax

on

individual

incomes
every

tax structure needs and the excise

would

give the highly de¬
sirable stability of revenues, which
is now lacking. These two taxes
would

impose

no

greater burden

on

the lower income groups

our

present system and emergen¬
will require. The taxation of

cy

than

than

gold

now

tion

to put a
Congressional

whether

not

or

The

first

duty of Congress—
it

balances

the

private

mortgages,

ance

savings

bonds,
policies,

revises the tax structure

or

by

gress

law

should ! ban

further sales of

funding

issues

new

issues

of

eral Reserve

old

re¬

bonds

or

banks, either directly

indirectly. The Treasury should

be

compelled

rates

to

offer

interest

sufficiently attractive to real
to induce them to invest in

savers

government bonds (and hold them)
in sufficient volume to absorb any
necessary

bonds

new

the

or

re¬

The recent action of the Federal
the

Board

market

The

at

government
above

bond

is

the
the

monetary field since 1933! It

was

or

which has

present
for

constructive

been

par

action

step which

courageous

overdue.

It

Federal
level

is

bonds

on

be

to

If

find

their

in

Socialist

a

England
free

a

a

own

allow

government

enterprise

30%, surely

nation

of

$35

per

adequate. Re¬
prices abroad in

not
fair gauges
of
value, especially when

are

true market

the United States holds

than

more

60% of the world's monetary gold
stocks and stands ready to sell it
abroad for all legitimate purposes
at

$35

per ounce.

and

complete

for

erendum

ref¬

which

held, in

was

a

the

tion

shduld

remain

Europe where

its

on

is

no

of

Congress

of

not

the

longer be

a

captive of the Treasury. Its func¬
be

clearly redefined.
In this connection, the use of Fed¬
eral

bonds

as

eral. Reserve
be

collateral

bank

for

Fed¬

a

come

groups

tween

80

to

is

which
90%

rearmament

the

lower

now

of

the

earn

this

from

of

excess

any

of

point of
kind what¬

that

ceiling.

States

is

for
of

a

decade

our

a
or

national
more.

states and many

sales

only




time

would

o'her single action.
longer term it will mean

slow, steady decline in the gen¬
eral price 'level, as technological
developments year by year reduce

tax

now

and

power

mean

redeemed
w

Both

them.

the

that

War

of

1812

occurred

fully

afflicting

now

recovered

price

to

m-

great

as

and

us
new

hazards

as

this

strength

ahead

whether

of

of inflation require the

or

virtues

as

keeping

If

a

small nation

operation,

great continent that has
gold

can

This
to

tolerance

co-

my

its

vast

resources

return

can

fate of Europe.

happen here.

For that

pen

here

we

act

of

field

danger,
while

state,

special

my

inflation,

of

,hiiri7*r]

has

not

while

tn

Hate

evoked action on the part of the
Congress and the public adequate
permanently to avert it. The third,
that of injuring the long-run eco-

can

nomic

to

soon

garrison

that

n

It has already hap¬

unless

the

to

pened here to the extent of 50%
in the past ten years. It will hap¬

of

it.

prevent

the

danger,

gold before it is too late to avoid
the

of

that it must be.given at least a
superficial treatment. The second

to it, surely the United States with

and

military

effectiveness

human resources, can

our

ly be said

wages,

and

salaries

steadily rising stanard of living for all and not mere¬
ly for privileged groups.
a

(4) We should Return to the
Gold Bullion Standard: The Gold

0£ success jn World War II. Those

that work well for
0£
no

The

Parker,

Philip

a

B.

J.

.—Edward

Stovin

of

of

of

(Special to The Financial Chronicle)

H.

Arthur

Musliner

Nestle

have

111.—Allan
C.

and

joined

Keene,

L.

Jack

facing this
to be neither one
now

nor

a

of

10-

two-way

peace.

or

It

20-year

preparedness

a

relatively shorter period

extremely critical danger

may

lie

immediately before us. Should,
one hand, such all-out war
come
(may God forbid it), this
on

the

nation
vance

William

L.

side

the

of

must

be

to full

years.

staff

a

Co., 135 South La Salle

Street. Mr. Keene
with

was

previously

Webber-Simpson & Co.

There

3s

tech-

normal

can

niqUes Qf peace be indiscriminately applied. For example, in the

ahead we cannot aff°r(l to fight inflation by the traditional method of

directing con¬
reducing the general
employment and produe£jve activity. Ours is the harder
£r0]s towar(j

jevei 0f

0f keepjng down prices while
expanding employment and pro-

duction

toward

-

maximum

...

few

On
«■

staihord

levels.

,

.

creasing farm output and in

equipped

to

ad-

promote productivity ^meas
ab°ve all developing and
usbandlnS the most important r
source ^hich this country Pos-

jesses: the: potentmhtms the skdls,
loyalties of its workers, its

];

farmers, and its businessmen,

l respective of differences of back-

ground, affiliation status, and
P°'nt °f ylew- No -natIon
ei!^e£ he strong or prosperous in
wh,lch Zrou?s mutuaHy frus rate
and exhaust each other by st v-

gain^ition irt the expense

ot the general welfare,
the

clamor

the

rather

other

hand,

than

,

Tuesday'

r»

*

v

we

do!

all

the

country, there are always

few impatient extroverts who
lack the stamina to settle policy
by the methods of patient consideration of differences in point
of view, compromise, persuasion
and the delays involved in securing the "consent of the governed."
They want action, a czar, a definite policy, a leader. This is probably the besetting sin of those
unable to endure the "intolerable
toil of thought."
Under the pretext that "there is

*££ ffSSS
increased in the determination of

government policy.

I°r direct controls

•

of

the citizenry

a

military strength inmonths

&-

*£ial Production. More is required,

*

Bache &

effort.

our

Neither

war

of this

armed

out that

Four With Bache & Co.

State

alert, although the possibility should in no wise be ruled
or

.

war

rather

be

period

308 Tampa Street. Mr. Stovin was

appears

all-out

may

associated with Louis C. McCIure,

Chevlen,

of

long run econQmic problems in production fer

Amid

situation

country

and

Charles P. Woodbury have become

CHICAGO,

intensive

soiution

period
long period

a

groups that make up

(Special to The Financial Chronicle)

F 1

£ess

short

a

fail utterly in

may

hard-

yet even to be clearly

as

The Garrison

costs.

of all money, fixed

H *s not en°ugh merely to apply formulas that had a measure

perceived.

TAMPA,

crea-

innovation.

and economy> and to direct puh-

evening it is

beyond

aban¬

cooperation and constructive
tive

iic-works programs toward in¬

and

competence, is of such importance

steadfastly cling

can we

our

purpose

con-

patient

restraint

the

out of

self-

cool head, quiet

a

that

Statism.

way

Moreover, it is not enough
merely to grease industrial caP.acity Nor is it enough, in additl0n thereto, to develop natural
resources with maximum speed

monetary inflation and laid
to

"

that

fidence in each other,

open

the

or by searching
out and
condemning one another's economic and political sins. The way
out lies along the road of patient

Revolutlon
a

brought our
through the critical
period of their day-qualities such

people are too
(on both sides of

a

chasing

low

Alexander

discus-

This will slowly increase the pur¬

Thirty-two

ci.ies

this

production and distribution

national

the

at

prevent further infla¬

investments,

United

not* had

the

to

in¬

major nation of the world which
has

action,

more

be¬

income.
The

do

which

solutions. Nor

new

emergency
and

present total money

creation

in

the

to

hazards

ceiling and prohibit

any new money
soever

from

Hamilton

government

decline

Two With McCIure

establish the

the

levels

that

or

will

a

limit my remarks to a

ended.

as

Continental

bonds

worth

not

is

sion of three of the major
that lie ahead. The first

Finally, Congress by law should
supply

it

forefathers

should

notes

of 1812.

the Iron Curtain) which have seen
their free economies destroyed by

a

slatus

and

no

to nations

until

same

other nation

doned

the

down

defense

tradi¬

should

Reserve Board, as an

executive. It must

close

in

little sound basis for fearing that
the value of the dollar will go

Swiss

The

cul-

by indiscrminate applicathe
techniques
useful

another

suf-

or

as

so

predicament by carping criticism of one

as

be facing alternating
periods
of
optimism
and
pessimism, though again there seems

The

on

gold.

find

defeats

such

of

require

dur-

may

nation

tional gold standard (in the heart
of

Kreps

we

to return.

problems

h

and mcreased stature.

size of Switzerland in the heart of

reestablish

independent

the Federal
agency

all

s u c

ing the Revo-

flation

Last week in Switzerland

should

encourage free markets.
In
addition, Congress
once

once

permit its bonds

can

discount of

y

occupation

We

was

interest rates to become free
more.

n

which

to

peace

either in war or in peace. We cannot afford the luxury of thinking
with our memories. New

will

military

Capitol

hoped

free market and

a

a

.feiz.ur?u al?5
in the War

almost

higher
artificially overvalued depreciat¬
ing currencies on free or black
markets

tion

to fear

we

minated

gold is

ported

be met

no

experience

accounts,

gold), or should accept cur¬
long rency management and irredeem¬
that able
money in its place.
After a
the Board
will
not
falter, but campaign of six months the na¬
will hold to this policy and let
tional vote was 7 to 1 in favor of

a

that

lution,

1940.

price

r

The
economic
problems of a
long period of armed alert cannot

has

now

fer

discontinuing question was put to the entire
practice of sup¬ Swiss electorate whether that na¬

in

first

one

reason

Theodore J.

in

10-year-old
the

of

ounce

funding issues of old bonds.
Reserve

and

fall, though

annuities, and pension funds, the

any

or

notes to the commerical and Fed¬

or

war

rise

may

insur¬

of Winter Park.

the

threat of

vive full confidence in all govern¬
ment obligations,
as
well as in

formerly with Security Associates

for

I

><V

*

occurred

tion than any

war

Z'Jy

of

ways

The imminent much long

|

.

In

or

;

Executive spend¬

or

the point of diminishing returns.
The only source from which sub¬
stantial additional revenues
can
secured

generation,

would do

other possible ac¬
brake upon reckless

any

This

program

and
and

\

the higher income groups has long
since reached the point of nearconfiscation and long ago passed

be

the

A return to gold now would re¬

Ended:

Be

tions should

gives the flexibility which
taxes

Must

to sell at

individual income

national

To return to
more

gold.

porting

and profits should be cancelled at
once

Debt

operates,

violently-socialistic, especial¬

ly when
is

the

production, engender social
climate; and (3) danger that
tax policy
may permanently injure economic
productivity
military effectiveness, along with deterioration of skills
energies of our population. Holds high corporate and
per¬
create subversive

take

can

cut in half since

steadily destroying equi¬
capital, forcing abnormal re¬
of earnings for expansion

ty

gold

value

tax

uncontrolled inflation may restrict

turmoil, and

sonal income taxes are shifted to low
income masses.
refuge.
Like
our
great revolutionary must always remain
Wherever it might go, it would
ready for the
in the
be more subject to seizure by a forefathers
period from day (and may it soon come) when
1776 to 1815, we are
communistic
or
socialistic
living in a we can again fully devote our
gov¬
critical period that, may
ernment.
last a loyalties and our energies to the
in

where

government.

(3)Monetization of the Federal

Economy

Professor of Business Economics
School of Business, Stanford
University

more risky
ing. It is easy to appropriate or
through ownership of spend dollars that need never be
stocks and physical property (the
paid off except in steadily depre¬
prices of which rise as the value
ciating or worthless paper, and
of the dollar declines) can, for a
quite another to appropriate or
while at least, escape confiscation
spend dollars or sell bonds that
of their capital—until it is done
carry a promise of payment in a
directly by a socialistic or com¬ fixed amount of

munistic

0

Among the major hazards of an inflationary defense
economy,
Prof. Kreps lists and discusses:
(1) Danger of supplanting
democratic techniques by a
garrison state; (2) danger that

Nor is there any safer place
the world than this country

tion of the debt in any form. Con¬

In

this

at

ance.

—is to put an end to all monetiza-

a

Graduate

have

any

profits.

on

By THEODORE J. KREPS*

its

competitive

return

a

in

on

frequently

not

than

and

time to the gold bullion standard.

individ¬

and

it is

case

debts

free

budget

grossly over-stated real profits

and

of

and

uals, passed on to consumers. As
it is levied today it is also a tax
on

system

its

double

indirect tax

an

afford to invest in

and most vital

the income of

on

porations

the
and

States

ventures

investment

gram

assure

States

United

we are to avoid fur¬
a
majority -of the
inflation, which is concealed world's gold. The present ratio of
results in haphazard our gold stocks to our money sup¬
confiscation of capital. It is in¬ ply is adequate to support the gold
dulged in by governments which standard now. If we should lose
do not have the political courage gold for a
time, it will soon come
to tax fairly, logically, and heavily back as a result of our trade bal¬

bonds,
annuities, social security
funds, pensions, etc.). Those who

than 45 to

to

that the

redeem

We

uity require that the steeply grad¬

eq¬

the

enterprise

proposed, is

as

uated rates of the tax

experience, logic, and

will

miscellaneous

people's

at

of

world

taxation and

total

and

United

the

Hazards of Inflation Under
A Severe Defense

ther

so, we can

By doing
also expand production

more

people

essential, if

free enterprise system.
more

step would do

revenues,

its

The

over¬

It should

to preserve our

once

of

as

money in honest dollars and retain

billion,
and
taxes $11.5 billion.

Also

annually

by plugging

tax

well

as

$10

spiraling or
prices, and make

foreign
possible substantial savings.

82%

produced

Federal

national

a

international standard. Its pri¬
mary advantages to a nation are
internal
advantages.
No
single
an

personal income tax yielding
$21 billion and the corporate tax

existing stocks from time

rigged

Standard is

no

the

time will prevent

from $2 to $5 billion of additional

can

eventually
In 1948 the

economy.

taxes

total

will

taxes

our

income

skyward

nation

ignore the fact
sales tax, the pres¬
to

a

income

ent

The

tax.

afford

that without

maintain

home

this

use

per

year additional.

omy

The pressure
the econ-

over

becomes ever stronger. Man-

Cai£.d Aprii,24!°ms".niv'rsit''' s,an'°r<1,

Continued
I

on page

30

30

(2270)

The Commercial and Financial Chronicle

Continued from

"Lenin is said to have declared

29

vaae
y

/

mm

#

_

llSVSVIlC

f|

*

If

■

I fit IXI If ATI
AllAlllilVlft

At
Wl

UCIi«|III1m

that

.

Prices

and

rents

are

Priorities, defense orders, conser- to continue their upward trend,
orders,
allocations,
set- despite intermittent lulls.
asides, limitation orders are isThe
important economic fact
sued in bewildering number from needed
constantly to be kept in
an increasing array of bureaucramind is that the real burden and
vation

cies.

Government

orders

mean

sacrifice

more

expenditures

economic

life

and

independent businesses

more

death

or

to

while manpower needs cause mil-

represented

by

cannot

defense

be

escaped.
Whatever guns and munitions we
produce must be produced by di-

lions of young men and'women to

verting labor and capital from the

drop all long range plans for education and entry into normal pro-

production

fessional

usefulness

—

waiting

in

uncertainty for the military bugle

terms

now

as

to blow.

we

items.

for

pay

matter

go—no

In

defense

Sparta and Rome
to the present no military so-

jciety has

ever been a free society,
1 As an eminent group of business'men organized as a Committee for
'Economic Development have so
in

stated

their

notable

this:

Shall

and

sacrifice

taxation,

the

be

with

distributed

by

regard for
fairness in the present and future, or shall it be distributed by
inflation, which imposes the burden without

+pamphlet on "National Security
'and Our Individual Freedom":

probably

or con-

troi.

X

some

equity, order

"'Our security

;!ens

our

iWhen
our

.individual

freedoms,

increase

we

ment

(scheduled
roughly 18%), we
enlarge the

share

the

devoted

resources

threat-

program

scope

to

of

arma-

Inflation

terrent

represents

the

to

increased

de-

production,

and civilian.

Infla-

in industry,

might otherwise have bought.

and

to

freedom,

number of guns that

creases

ends in what has aptly been

half the

.

.

a

evidences

points to
fleeted

in

Service.
Alien

is

It is re-

Selective

shown

reminiscent of Aaron

close

censorship
technical

and

Committee

by modern
Sedition laws, treason

and

trials

this

peacetime

It

with

effect

of

garri-

a

numerous.

are

cured

funds,
inflationary price

almost

is

Burr,
scientific

over

information,

and

substitution of military power for
such more important non-military

instruments of national security as
diplomacy, economic aid and effective knowledge of the language

will

specialists

in

violence, however great their
military prowess.
Finally it is
disturbing to note that even the
granting of foreign aid is being
hitched to

military aims and
needs rather than to.the goals and
our

aspirations

cooperating
garrison
The
»ir

with

state

is

free

peoples

Verily

us.

the

upon us.

....

i

r\

£

j

r*

~

preparation

ably

for

war

are

invari-

inflationary,

when

made

at

particularly
the height of

^a^H1S'lng H°0nJ'
ahead, m

r

nf
of

are

absorbed

Nation

s

°i an lncreas®

real

output

estimated further

an

almost

8%

llationary

an

for fiscal

pressures

of

10-n

19o0,

increase

1952,

will

be

inso

gr.„ tail to hold direct controls
Jmat.present
will
the

price

line

of

destruction, and does it in
which not

ner

one

a man-

in

man

Even

ri'

excess

it

1.

the

V

Ipids

$16

billion

most

•

8

in

.

1952.

in

optimistic esti-

r
1
ueu'
the hands of conu




,

mil-

a

^

js

significant

"almost

that

without

for checkcontrol." At

with adequate

means

ing,

and

auditing

there

present

is

greater

secrecy

organizes the .flow
a

of

production

shambles of

alloca-

orders

and procedures.
Inflation frustrates the thrifty, especially those who patriotically buy

Government
bitterness

bonds,

and

brings
disillusionment to

and

those seeking to cooperate with
the defense effort. Inflation
gives
its
biggest
rewards
to
groups
whose spending and manipulative
activities provide

a sardonic conthe sacrifices asked else-

trast to

where

the horr;e

on

front and

on

the battlefield.
Efforts

to

T,.

f

,

.

,

in

pxtcnsivclv

study made

a

the Joint Commhtee
n0mic Report

Spring

the

on

for

Eco-

by the Federal Re-

Board

serve

and

published this
Part II of its study on

a«

"The Economic and Political Haz-

at

moreover,

of

0f

about

levels

likely

are

increased

to

inflation

^ ™

Z leaS\tW°
If additional capacity is

respects.

built-and

built—the

more

should make

war,

no

military

ap-

propriation unless and until ade0uate Federal

does

not

"inflation

was

serious

a

con-

KuZintaneon theChinese

sjon

earlv

bevonrt

1947

nower

war

to

of the

the

conditions

drags

war

they

tax

revenues

are

the

exist

urgency

to

a

steel mill

or

atomic

Chinese

Chaotic

favorahlo

arp

the

stronger

be

In

capitalizing

which

on'the

social

from

such

arises

economic instability, and can play
a waiting game.
No terms short
of

complete

capitulation

the

on

part of the Government will
.

.

now

;

be acceptable to them.
"In short, in substantial
.

civilians

wages

an(j

Production
premium

profits.

is

If

additional

obtained
for

through

munism.

individual

freedom

and

wrecK- l.ne economy n noc

7r%

«~aftea°r
I1SLd* year
cal

fZ

mw
,,

,

titled

"Economic

tremely

high

despite

interest

generous

rates,

and

assistance

J
years ago:

Uld11

the

articulate

out

from

in

succeed

under

their

getting

fair

share,

tion because it is unorganized and>
defenseless. Even if it votes, its
votes are too widely scattered anddivergent to weigh in the politicalscales.
It is politically easy, therefore,
hike sales taxes, excise taxes'

to

income

and

whenever

tax

rates

upward"

requirements1

revenue

or to maintain them at
high rates when the more politi-;

increase,

demahd

tax

relief

illustra-?

(as

budget message of

^

to

undermine

the

Chinese

econ-

omy from within until the people
themselves threw overboard the

regime

that

millions

of

had

heroically kept
Japanese soldiers at

bay for a decade.
In
addition
they repudiated a spiritual and
political leader of most ancient
and

eminent
The

renown.
son

was

lineage

and

of

on the Chinese that
a go-easy "too little and

tolerated
too late" procedure with respect

tSSd
timid,

Government ,expendi-

procrastinating

and

governmental

leaders,

inef-

whether

fud enterprise and democracy

hiehlv

has

defense"

and

had

lone

devplnnpd

hnw

the

skill

hnur

nf

and
anv

This
most
nrn-

nation

_

„.„nftt

Win«t

+hic

+n

Idvnntnop« wl
{L1^1."
f,tii wlnnrvznrk
/I™
thlIhiZtlill 15
Z
tn

nt

e

"^1

Thl

uai,uu6

oxvrxxv-u

ZZZZ Z*
cnSnfiSn
owcmuii,

I?^

Z
Q

Ifv
l}
to

"

'1
° J ,Z™
? Z ZZT
iot
Sml

{

A,

;

Z
fn

u

«

in his renort of Anrill

the President

a

thP

sit"ation

may

J

last for

world

many years

r,pnlptp

taxes,

fixe\
>

There-;

rigid

masses.

I refer:

here specifically not merely to.
those on Pensions and to .low-in- ;
farmers but include

come

organ-

in

the current:
of 564.00 at
week in manufacturing industries,)
assuming that workers enjoyed asmuch as 50 weeks a year of em- i
Ployment on the average, amounts
to only $3»200 a year" Probably:
three out of five spending units in >
the United States received less;
.

than

that amount,

Studies conducted at the University of Michigan show that the

j

spending units (this includes the
earnings of all the workers in
multi-worker families) whose in-

;

comes total less than $3,000, while

,

goods' only 27% of the li*uor>
28"8% of a11 goods at retail ex~
31.3%

tures"

manv

J

ou^

coUeces

choulrf

^ J d

ab?p

to

nav

he

Financial
nrovided

their

?

of all
'

consumer

'
expendi-^

On the other hand, those getting

etnHpntc

own

wav"

51.2% of all goods sold at
retail excluding food' and account

ex

fm

for 48^° of a11 consumer expendi-

" tures' In fact, the approximately
2,500,000 spending units "with incomes
in excess of $7,500 spent
nearly 3 times as much on durable
goods as did the 17,000,000 spending units getting less than $2,000."
clearly it is the spending of those

Such

physical productivity

as

well as

an

attack obviously has to

consist first and foremost of spe-

provide healthy recruits for the ciai increases in income taxes in
armed services.
the brackets from $3,000 and up,

economy

misguided

governmental

advocates but from tax

prs

«'industrT

1949),

pp.

*
^

:

s^sist- hquor,
for

;

tbey comPrise about,54% of the ■
total, buy only 26% of the durable;

anri

from

of

not done hy the

FInZZ over $4,000, comprising only 27%
Antnr*
nth^r
of the spending units, buy 54% of
mm?'rnntinnp to flnL out a11 durable goods, 50.5% of the

expansion,

paraphernalia

Surprising as it may be to the r
uninformed, most of the consump-:
tion in dollar volume simply is :

niir

Sc

ment and commercial bank credit

the

the idee

0f the consumption.

hi ehlv-

nnp

assets-our

Pra[LpS np4nn^Pi

Mieht''

critical

nresent

.

entitled

renort

„nZZTaZeritZ

_

Paid on government bonds, and
the like. In the long period ahead
on

as

Intprnrife nf a7rPenennieTnized workers. Even
iftn« Lr;nd nf armpd aWt ahpad
average weekly wage

ex-

isted, and became the foremost

I prefer to rely

fanaci0us

as

that gq% of the people must do
g0%

Droduction

COUntrv

can-

shifted to "foreign devils."

taxes,

or

there seems,

as persistent?

f?re- U is alleged, in order to ,
channel resources 1 n t o defense,
Th.
r
.
,
, rpnHv
hPPn
good? military necessity compels,
cfrp^prl
that
ppnnnmir- anJ mili
heavier taxes predominantly on;
ZZZZh fmon thp fhe low-income masses, no matter,
hrainfa^
how muc^ humanitarians may
HJ pv' " dthl meI PJ dlsllke such measures-

lay directly
to

quite

no

Productivity

rea-

The blame

be raised will, of course,,

The Danger of Injuring Human

world

basic economic

internal.

can

W1tb the amounts consumers,

vary

Id* spend' Un£oPtunately,
to be
notion

levels

maximum.

from

abroad, hyper-inflation continued

.

Consequences

ordinary citizen, if the or-;
ganized, the strong, the crafty, and

1 ,e ie^eis da~

,

f f Presldent represent an abso-

demo-

overtime

purposes
of
ComIn his famous book en-

fall

the

on

which

f.

architects, in fact, of Chinese
p y
w y.
]abor or higher incentive
prices
communism."
v
-This means that proposals for
incomes will be increased faster
Many measures have been ad- governmental economy which
than production
again serving at vocated as essential to prevent the would result in impairment of
ieas{- temporarily to aggravate the spread of further inflation, many physical health, proposals to diproblem of inflation.
of them mere palliatives of dubi- minish housing and other civilian
payments

major

will

„

part,
inflation, not only did free
private enterprise disappear but
due to

geoie of uncontrollable inflation,
themselves destroyed whatever

to

the

burden

not 111 excess of industry leadership which consti-,
a long tute a high challenge.
P?rlodarmed alert ahead, lavThe total amount of excise taxes

fact

at

available

tax

a

and the longer

on

same time that those who
build such plants are earning high

suppiies

cut the

the

^0% of national income. In

Govern-

will

position
are

is

ston either the

to the Communists

their

of

It

the inflation.

or

pronnmio

that

Chinese

nresent

econ-

survev

the conclu-

to

came

the

or

at

careful

a

in

the

nat;0n
rnent

civil

main-

One of China's leading

land

fectual fiscal, budgetary and credit
investment, policies Chinese business and

piant, will in itself

of

era,1 governmental spending for manufacturer's excise tax to yield.
de£?"se> including not only the as much as $20 billion, and piously,
military items but also foreign aid, urges it as a "bold, constructive,
a.to™lc
and other non- new solution" presenting "an op-;
"vilian programs, should be lim- portunity and a responsibility for.

through inaction or ignorance,
themselves
unleashed
the
evil

energy

part

definitely in sight. In a long pe- caily influential elements of the.
riod of heavy defense expendi- community, especially businesstures such as now faces us, there men and persons of large income,-

capacity must be

additional

whether in

by

An

tributine element to the fall of the

production,

present high

employment,

income. By
sheer default,

or

and

Inflationary Defense sPend first and then look arouncF tiohs, note the tax legislation of?
Economy."
A
portion
of
their and see how much the gevernment 1946 to 1948). The National Asso--.
findings with respect to China
need to borrow in order to ciation of Manufacturers now, for-"
may well be in point
I quote"
Pay its hills. Instead, total Fed- example, advocates a general.:
ards

not be

increase

.

sentatives of various groups urg»-

about military expenditures than The general public presents an es-<
there was during World War II. ' pecially tempting target for taxa-

exception every country
sufjering a run-away inflation in
In order to curb naive, hysterrecent
years
has not only had ical and extravagant spending of
rigorous laws on the books pro- military funds the Joint Commitviding
for direct controls over tee on the Economic Report stated
prices, wages, and materials, but "the defense garment should be
virtually astronomical interest cut to the revenue cloth. Measurrates
and
drastic
penalties for ing with care the things that must
non-compliance."
be done, Congress, short of all-out

^
.....

over

the

ernment
to
recommendation
that
the
"military
budget be given a major overhaul

distributing out- cratic government. Despite drastic ?
thP world
Tt has also had thp
put rather than increasing it. By direct
controls
(e.g., scores of ctimuhicnfprpativp vnliintarism
encouraging the hoarding of ma- price-ceiling
violators
arid
the Ihp initiative resniirpPn,inesC and'
terials and of labor, inflation dis- like were
beheaded), despite ex-

served' the'

.

reacn

I refer in particular to its

report.

in

Pe" the

•

°q^ a5i,SerfhfltSf
9% above that for r1SC1
fiscal

and
of

SP

the

in

so

increase

way

Inflation invites

foolproof way to make money,
Manpower and capital facilities

bring

build a strong defense
only with strong dollars. War and
can

no

in-

side

the

on

of

lion is able to diagnose."

unrest

wage

a

Second Hazard: Inflation
«

We

the

of

in

and

efficient expansion of production.
Inventory accumulation becomes

and makes

skilled

if

business to seek profits by manipulation of markets rather than by

tion

tained from

in-

as

enemy action."

total production.

and- customs

Only in a garrison state does
might make right. Only in rare
instances can a democracy risk
action in the field of foreign policy on the basis of counsel ob-

same

the

order had been

price

the

of peoples all over
earth, especially those who
misunderstand
and
mistrust
us.

the

oh

guns

Further
creases

be pro-

can

available

destroyed by
such

of

which

state

son

called

state."

garrison

The

.

Or

quote a report of the Department of Defense, "In terms of the

undermine our free
institutions
and lead us along
a' dangerous
road—a road that
can

law

not

to
be in
unavoidably knocked out of the sky a large
of Government fraction of the airplanes our taxes

in politics, in science
education,
and
in
every
sphere of life. Security measures
uncurbed by the requirements of

economic

process

the hidden forces

all

only knocked a hole omists after
consumer
budgets
but
has the m-oblem

now

subtler,

no

currency.

present

greatest single

both military
tion has

at

There is

documented

burden

necessary

to debauch program is that recommended in Washington hotels have been
Lenin was cer- the famous Hoover Commission crowded to the rafters by repre-^

was
.

implication:
n0 surer the of overturning the finding that the and its services ing Congress not to tax their in-;
means
military
debauch
The
funds"

what

The only choice that remains is

From ancient

well

we

financial policy we follow.

*"

up

civilian

of

real

Thursday, May 31, 1951

.

physical materials controls. But pressures. Nobody likes taxes, esin my judgment the most vital pecially not on his own income.

existing basis of society than to "are far too prodigal with Gov- dustry
engages

.

fixed, sumers and businessmen will still
controlled, be large enough to cause prices
are

to destroy the

way

tainly right.

'

is drafted. Wages

best

capitalist system
the currency. . .

I

11 fin AY

VAMvA

XA17AYA
IlATATtCA KfAllAltlir
AH
Vt f
HVVVIV IfvlVllilv ¥1
MWAftVAKljr
power

the

.

.

27-28.

BeUeves''

(New

York

>

Volume 173

Number 5016

..

The Commercial and Financial Chronicle

.

(2271)
.tween $4,000 and $15,000.

Another

example, that
top coat only

sumption is, of course, to increase

Jan., 17, 1951, referring to recent proposed increases in corporate taxes, flatly states that
.
.

excise

the tax

the

new

cotton

public, perhaps not in all cases
immediately but certainly sooner
Are the Low-Income Masses
or later
net earnings after taxes
Untaxed?
are
what regulate competition.
Often the fallacious argument
"They vary from business to
lor increasing the taxes on the
business, depending on the risk

that

her' wool

highly practical

.

taxes

to curb

way

durable

on

on

con-

consum-

will

be

passed

to

on

that his

>r's goods, liquor, and luxuries.

low-income

So,

are

is

masses

of course, they

the

federal

.cerned.

are

income

far

so

tax

is

But that is by no

wife

ten

have

can

street

car

15

16

or

only

one

attached

and

as

con-

the

amount

needed

of

last

buy

can

once

Other

years.

*the whole story.

to

Committee

in

the

on

'Economic Report by Professor R.
-A.
Musgrave and -his research
group of the University of Mich-

[igan.

His calculations
"course, based on the fact
-eral

and

resent
of

of.

are,

income taxes rep¬
one of several types

only

^families.

It

is

>foot the tax

by the Nation^
they who in fact

bills for which busi-

messmen

and others make out the

■cheques.

Upon those in the lower

income

brackets

shifted most

are

of the property taxes not
only on
■the homes they live in
(whether

;

jthey own or
Terence) but

rent

makes

also

Of

those

that

dif-

no

those

general

property taxes and excises which
are part of the costs of
doing busi-

standard

been

computed

a'basis

on

figures.

This table

$1,000

suffered

Heavier

ciency level for
Tax

Burdens

Mass

on

Even

lions

of

attam *

zation ahead.

this point the

Journal"

in

its

it

Street

editorial

that
ious

or

excessive.

It

provides, for $6,000;

.

#

*

TABLE I

To

Estimated Distribution of Consumer
Expenditures for 1948
*

•*

(In

per cent of

total)

these low-income

though small

Consumer Expenditures

may
Total

Income

Consumer

Total

Expendi-

Retail

Sales

Personal

Food

3.9

4.1

3.9

.9

3.9

2.2

9.3

11.4

8.2

8.9

11.4

5.6

2.6

18.1

20.5

16.7

17.2

21.1

18.2

8.5

not

come

.1

18.1

2-3

Less

Sales

9.3

1-2

Food

Sales

3.9

0-1

Retail

tures

be,

will

Retail

Brackets

(in $1,0(1(1)

than

Liquor

Tob.

Sales

Sales

Durable

Income

Sales

20.7

20.7

21.8

20.1

22.5

22.9

20.0

12.9

14.4

14.4

14.2

14.5

12.7

14.3

15.8

12.2

5-7.5.,

16.1

16.1

14.6

16.9

16.4

14.1

17.0

19.6

7.5-up_

17.5

17.5

13.3

19.8

21.4

12.2

21.2

44.1

revenue,

that net

as

additional
small

Total

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Hearings, Joint Committee on the Economic
Report, in January,
1951, Economic Report of the
President, pp. 347-8.

to

'

•

TABLE II

;

Income Received and Estimated
Minimum Income Required
For Family Maintenance
by Income Classes—1948

(Billions of dollars)
*

Deficiency
4 M)
\
)
*

fEst.

'
'

♦Adjusted

Federal

Af

nr

Excess of

Needed

Estimated

Federal

for

"Minimum

Liability

Inc. Tax

Maint.

$4.3

$0.1

6.5

$4.2

$11.8

—$7.6

0.2

10.5

-

-

6.3

9.5

—

0.4

10.1

11.5

—

of

Of the remaining

$82.9 billion worth of goods, about
was
bought by those get¬
ting less than $3,000. A 10% re¬
their

on

tional $2.4
billion, if one assumes
that prices and costs would go up

solely by the amount of the tax.
such

billions

creasing by 30 to 50% the deficit
in

income

required to maintain
productivity.
F u r t h e r
injury
would

be added to that already
cruelly inflicted by inflation.

On the other
is

only

13.4

12.7

0.7

16.0

13.1

2.9

„

Statistics of Income

the

amount

that

after taxes

rose

and

1.0

16.3

11.4

4.9

1.0

14.2

8.9

5.3

13.0

0.9

12.1

6.8

5.3

minimum need that is enjoyed by
the highest 9% getting over $6,-

9.7

0.8

8.9

4.6

4.3

000 income.

12.6

1.1

11.5

5.3

6.2

den

17.2

1.8

15.4

5.6

9.8

even

26.8

6.6

20.2

3.0

17.2

$15.4

$148.8

$104.3

$44.5

_

-

-

-

on

1948, Part

the basis

.

of

I

(Preliminary).

number of families by size groups within each
multiplied by an estimated minimum income figure needed
to sustain a
family of a specified size—i.e., $1,000 for each individual
living alone; $1,500 for two-person
families; $2,000 for three, $2,500
for four, $3,000 for
five, $3,500 for six, and $4,000 for families of seven
income class

mcrd

of

1949

1950, despite
higher corporate income and ex¬
cess profits taxes.
It is less than
a

it

tenth of the

on

persons.




the

more

now

In

or

half

_$164.2

6,000 to 9,999___
10,000 and over

t Estimated

hand, $2.4 billion

17.3
_

5,000 to 5,999

*

the pyramiding
margins, thus in¬

corporate profits

0.7

the

at

through

distributor

between

0.9

levied

were

15.2

■

4,500 to 4.999

Total

tax

a

manufacturers level, prices would
be raised an additional $2 or $3

1.4

14.1
_

purchases
an addi¬

excess

In

income

over

short, the tax bur¬

masses

will

be

disproportionate

made

than

is.

conclusion,

permit

to

me

point out that the question of the
proper

the

balance between taxes

upper-income

those

lower

on

treated

as

primarily
tween

a

brackets

brackets is

on

and
often

though it
involved
conflict of interest be¬

workers, and capitalists,

or

by

create

new

Syndicate

and

a

success.

higher standards of physical and
mental efficiency. Any increase in
houses, headed
physical stamina of the lowest Baring Brothers & Co., Ltd.,

half

of

the

population

markedly

de¬

percentage
that is rejected

45%)

over

will

the

military service. It is apparent
it

will

future

also

increase

their

so

apparent is that

productivity of

of

the

labor

a

force

Inflation and

more.

derwrote

licly
of

31/2%,

20-

bonds

of

Interna-

tional

Bank

Recon¬

struction

some

offered pub¬

issue

an

year

for

ma¬

later

and

by

un¬

£5 million

of

the

ahead will be increased

and

Development.

even

The

taxes reduce

syndicate

spending such as that
for family education and better¬

comprises, be¬

ment

B rothers

marginal

do

more

sides

drastically than they

current

consumption. The

Baring
&

Co., Ltd., three
other promi¬

ac¬

cumulation of educational deficits
will be even more

nent

centrated

banking

heavily

in

the

of

houses:

is therefore no funda¬
conflict between the wel¬
fare of the poor and the

Schroder

on

tional health, future

the

they

industrial
For it is

in

and

military

and

progress

beings

their

few minutes after

a

commenting

on

the transac¬

Development, has

stated in London: "We
this

opportunity

to

are glad of
offer .World

Bank securities in the British mar¬

ket and

thereby to obtain pounds
use in future loans.

new

about.

Morgan

opened.

construction and

our

methods that economic

comes

Henry

of the International Bank for Re¬

strength.

and

were

In

mainly by ourHnvestment

human

ideas

constitute

Sons, J.
Co.,
and

tion, Eugene R. Black, President

ficient work and the human capi¬
that

&
&

books closed

in¬

and resultant national
strength. Sound tax policy should
protect both the incentives to ef¬
resources

Black

on May 24, was reported as
over-subscribed, and subscription

come,

tal

R.

place

the

buy¬
future na¬

national

Eugene

M.

Grenfell & Co., Ltd.
The public offering, which took

privileges

of the rich, On the
contrary,
basic criterion for
appraising
effect of taxes on consumer

N.

Rothschild

There

mental

ing is their impact

London

con¬

lower ranges

the income scale.

sterling for
We

also

are

grateful for the

co¬

operation of the United Kingdom
applied, in lieu of
authorities
and
of
the1 London
the opportunistic and
plutogogic
banks which are handling the is¬
appeals to immediate advantage
If this test is

of

those

who

sue."

receive

dividends,

profits and high incomes so fre¬
quently
heard
nowadays,
our
present over-taxation of the lower
income

brackets

will

be

found

prejudicial to the real interests of
a

class

issue.

"The

World

Bank," Mr. Black

continued, "can obtain funds from
its

member

countries

either

by

obtaining releases from their
shares of its paid-in capital or, as
in this case, by selling its securi¬
ties in the capital markets of these

countries.

Summary

are

not

and

is

these

While

methods

mutually exclusive,

a fea¬
major hazards of an infla¬ ture of the second is that it allows
tionary defense economy to which private investors to participate,

The

tail

tax

offering

the

evening
(1) The

sales

the

On May 17, a syndicate of
Lon¬
don banking

attention

of

mass

consumption

28.8%

3.2

16.9

__

1
.

Inc. Over

load

is

headed by Baring Brothers &
Co.,
Ltd., of £5 million of its obliga¬
tions pronounced

and

all income groups. It is not

spent for food.

Need"

-

$1,000 to 1,499
1,500 to 1,999
2,000 to 2,499
2,500 to 2,999
3,000 to 3,499
3,500 to 3.999
4,COO to 4,499

After

Inc. Tax

revenue

tax

the low-in¬

example, retail sales
total $127.9 bil¬
which $45 billion* was

'

Under $1,000..:

.

Amount

Personal

Received

Income Classes—

Income

Gross

Income

Adjusted Gross

al¬

recipient.

lion,

If
■

upon

will yield

masses

presumably would raise
Source:

load

the

Public

progress

estimated to

are

3-4

the
be

in

In 1950, for

Tax

4-5

8%

below $3,000.
the tax

increase

disappointingly little

Spendrng
Unit

less

and

brackets
:

more

in quantitative terms even than 23% in the hands of persons
budget hardly seems luxur- receiving over $4,500 but less than

Yet

x

Wall

leading

over

vigilance

be

mo¬

Marketed in Britain

groups

only

scientific

as

..

v

-

receiving
$6,000 but less than $10,000;
persons

must

World Bank Bonds

Economic and military
strength
advance over the
long pull

jority

excise taxes, or lowered exemp¬
tivity are being eroded away.
necessarily charged into prodTo he sure, economic literature tion.
uct prices by the merchants
who abounds in controversies concernThe table likewise indicates
/sell them the consumer 'goods inS the "efficiency level" of con- where the
money in excess of such
they buy. A certain proportion of sumption or the level of "mini- a minimum
may be found. Of the
, the corporate income taxes is likemum need."
Thtis, for example, total of roughly $44.5 billion in
•wise shifted upon
them, particu- the minimum health and decency 1948 that may have been available
-larly in periods characterized by budget currently published by the in excess of
minimum need, $17.2
<a sellers' market such as has
exBureau of Labor Statistics is one billion, or 40% was in the hands
isted during the last five
of persons with incomes of
years, so high that even at current high
$10,such as seems
likely to exist for levels of national income, nearly 000 or over; another 22% in the
of

other

view.

years

families

democratic,

resources

Eternal
price of liberty.

benefit

What is not

and single in¬
Moreover, any new tax falling dividuals that receive less than
those getting less than $3,000 $2,000 a year come short
by many
will cut production much more billions of dollars in obtaining the
than it will cut or divert con- income necessary for efficiency
sumption.
Elementary computa- consumption and productivity. As
tions summarized^ below indicate a defense measure, incomes not
that tens of millions of families higher than efficiency levels ought
have had their budget so cruelly to be kept inviolate and not fur¬
cut by inflations that minimum ther squeezed by general sales
standards of health and produc- taxes or general manufacturers'

population hands

spiritual

bilized.

only from a short-run, and
completely opportunistic point of

the

on

:ttoee-fo«tts of the

taxes,

productivity.

this basis, as the table
clearly indicates, the tens of mil¬

Incomes Seriously Endanger
Defense Effort

spirit, all economic,

scientific,

continuously and efficiently

mass

incomes, lower exemptions

excise

that

on

-ness

the period of. full defense mobili-

and

for

married couple.

a

low

on

(now

that

assumes

is about the mini¬
substantial declines all had en- mum for efficiency levels of liv¬
joyed in 1929 rates of profit ob- ing *on the part of individuals. It
viously so high as to invite com- assumes that $125.00 a month rep¬
resents a similar minimum effi¬
petition."

and

productivity

military strength. When

crease

year

a

tomorrow's

en¬

maintenance, low tariffs,
further increases in bracket rates

of

more

brackets

military,

price

than one-third lower than the BLS

that Fed-*

State

taxes, borne

1929.

this

living is $1,630 for a single person
and $2,330 for a married couple.
In order to be highly conserva¬
tive, the figures in the table have

*

Joint

finance

of the human

today's real in*

lower

are curtailed
by im¬
posing administered prices, resale

erators,

sary

the

real incomes

durable

uum

;ting less than $1,000, in fact bear tax rates.
as heavy a tax
burden measured
"In 1929 the corporate tax rate
by the percent of their income was 11% and in 1949 it had more
'absorbed by taxes as does any than
tripled to 38%. Yet out of
;other group in the population ex- 20 lines of industry in 1949, eleven
cept those getting $7,500 or over, showed a net
profit, after taxes,
Data
on
this point were
reon each dollar of sales which was
cently presented in hearings be- about the same as, or greater than,
the

and

every

One of the best- dividual industries as well as for distance
removed
from
luxury
kept secrets of the century is the industry as a whole. But the vari- consumption, yet at 1950
prices
/fact that those in the low-income ations bear no relation at all to the income estimated
by the Bu¬
brackets, and notably those get- increases or decreases in income reau of Labor Statistics as neces¬

^fore

larges

goods such

in-

to

in

come

a

.

means

The expansion of

year;

to

underprivileged and tyranny. To
uphold the dignity of
the individual and the
sovereignty
shortsighted.

the well-fixed. This
conception is
both superficial and

The radio has to

years.

nine

a

has

low-priced

between the

a

years;

only

dress

dress

The family

last

buy

can

in

as cook stoves, refrig¬
washing machines, vac¬
produce a
cleaners, sewing machines,
dollar of sales. They also vary as have to last 17 years or longer.
In
between
quantitative
depression
years,
fair
terms,
such
a
years and good years, for the in- budget level seems a considerable

that

used

relatively untaxed, vestment

now

man

five years.

...

'they

a

once

31

has
are

been

directed

therefore

this

threefold:

danger

democracy
niques by

of supplanting
democratic tech¬

and

a
garrison state.
(2)
danger that uncontrolled in¬

The

a

restoring
to

step in
a

the direction of

flow of private capital

international

investment.

"Another significance of this is¬

sue," Mr. Black said, "is the addi¬

tional demonstration it gives of
restrict production, the part that other currencies be¬
engender
social
turmoil,
and sides American dollar can and do
create a thriving climate for sub¬
play in world economic progress.
versive movements. (3) The dan¬
Such nondollar resources as ster¬
ger that particularly in our tax
ling are important to the World
policy we may permanently injure Bank.
Many of our member coun¬
flation

may

the

economic
productivity
military effectiveness of our

and

tries

have only limited earnings
dollars, and orfly limited ability
precious of resources: the skills to incur dollar
obligations. The
and energies of our population.
availability of other currencies to
In

these

times

more

than

most

ever

need to remember that human

we

liberties

are

creative
toward

the

source

inspiration

of

man's

and

progress

in

the Bank

greatly

enlarge the scope of
lending operations and

can

the Bank's

assist economic

ment in member

develop¬

countries whose

full

development of his foreign-exchange earnings are
latent abilities. To be on guard
chiefly in currencies other than
against those that would enslave, dollars."
while indispensable, is not enough.
The United Kingdom, which is
Maximum

while

e c o no m

i

c

strength,

essential, must be

supple¬

mented. The sword and the dollar

the second largest holder of capi¬
tal

stock

in

the

International

not

enough. These are valu¬ Bank, is now the first member
able only when harnessed to quiet
country outside the United States
spirtual strength, a tireless con¬
are

for
justice, freedom
and
righteousness. These are the qual¬
ities that have put this country
cern

the

head of universal spiritual

forces

propelling the free nations

at

of

the

world

challenge

monopoly,

toward

of
race

all

a

relentless

imperialism,

in which World Bank bonds have

been
ever,

sold.

In

Switzerland, how¬

which is not

a

member coun¬

try, the Bank has sold two 21/&%
serial

bond

issues

amounting

to

45,500,000 Swiss francs, equivalent

discrimination and to $10,587,551.

.

32

The Commercial and Financial Chronicle

(2272)

This Is the

Continued from first page

eleventh hour decision.

A clear, consistent line of policy

during the years preceding June of last year might very
well have prevented the rise of the situation by which we
are now faced in Korea. Just what has been gained in that

gained,

country, or could now be

even

by a resounding

or whether such gains or possible
could be assessed as worth the American lives that

victory there

—

sacrificed in Korea—is

been

a

gains

have
question the future must

decide.

thing is clear enough. We shall not be able to
for our problems emanating from the

One

solution

a

anywhere in the Korean peninsula, or, for that
matter, anywhere in the Far East—though, of course, de¬
velopments there may have some effect on the world situa¬
tion as presumably did the outcome of the Berlin blockade.
We have to remember, however, that Korea, and even
Kremlin

China,

.

of world-wide scope. It
troubles in Korea began in Teheran,

are mere pawns

has been said that our

in

sources

in the concessions made upon

these occasions,

more particularly in the supposition underlying these
arrangements—the ''Grand Design" of dealing with the
Kremlin as if it could really be trusted.

and

But it

rent

to

seems

into history

us

that the trouble goes

farther back

than is suggested by such a diagnosis of cur¬
leadership of Woodrow Wilson we

Under the

ills.

to end all wars. We held back from participa¬
world organization which quickly degenerated
statistical bureau plus an instrument through which

fought

a war

tion in

a

into

a

the

old

imperialist urge in certain of the participating
given practical effect. It is sometimes

countries could be

by professional reformers that our refusal to take part
all this rendered the League of Nations helpless and

said
in

impotent—a thesis we should certainly not undertake to
defend.
We think, on the contrary, that we were quite
well advised to remain aloof, and we believe that the
events of the past year or
•

two tend to sustain our view.

But with the rise of Hitler in

Germany, Mussolini in

Italy, the war lords in Japan, and Mr. Roosevelt in this
country, the old League of Nations idea came to life. Be¬
fore there was any war, even in Europe, the President of
the United States

began to shout from the housetops about

"quarantining" the dictators—meaning, of course, chiefly
and Mussolini (and not Stalin, apparently).
The
United States was stepping dutifully into her role of
"world leadership."
Long before Pearl Harbor we were
taking part, and an important part, in World War II, what¬
ever
the technicalities of the situation may have been.
Pearl Harbor will, indeed, "live in infamy," but the cold
fact is that we had long been engaged in helping in the
destruction of nations against whom we had no direct cause
of complaint.
Hitler

•

With Tyranny
Then

came

It

was

and

soon,

our

full

indeed it

into the

same

Now

necessity is a hard master. Stresses and strains
produce strange conclusions. The blandish¬
powerful men in need of help are insidious. Presi¬

ments of

dent Roosevelt

was

much inclined to the notion that he

three

Joseph Stalin into the comity of the
world, or for supposing that
by this or that line of personal treatment it would be pos¬
sible to cure him promptly of his bad habits, his custom of
deception and treachery, his contempt for the non-Com¬
munist world, and his
long-preached determination to take
the remainder of the universe into his
camp, it would be
difficult to say, but it happened—and before the rest of
one

the world could awake to realities

or

do

anything about
it the Kremlin had pre-empted
strategic positions for his
postwar campaigns of insidious or open warfare against
his former allies.




unless

all of the

of

as

essential

1950s. We

middle

'50s

with

catch

economy

leads

inflation, they
tant factor in

up

that in

brake

if not

on

only

of

ment

three

peacetime years during the
past 66 years for which records
exist have steel operations aver¬

annual

planners

there is

moral

a

1

,

/

industry is thinking subconsciously
waiting period in the mid¬
dle of this decade, or whenever

of that

it

when

comes,

greatly

his

than

capacity

operations.

If

annually,

our

ex¬

at

panded facilities will perform

considerably

govern¬

,

Every management man in this

perhaps

pushing for.

steel

of

t

less,

capacity

are

earnings in
sense.

before we

sound need for 130 mil¬

a

tons

lion

further

legal

a

which

but

represent mortgages

future

our

of

sheet; which are
the figures we

130 million

will reach the

or

tons

again

repeat

a

are still an impor¬
expansion plans.

It will be many years
need

to

me

well-known fact

the

higher rates is

of

capacity.

our

This

needs

in

profits,

as

nevertheless
on

even

things that don't show

balance

publish

panies borrow funds. Granted that
the
situation
underlying
these

a

the

while

national

our

have

war,

of the

is

because

today

reflected

not

tories, build new plants or do any
things for which com¬

in the

result,

a

all-out

productivity.
productivity

the

on

of the many

absence
somewhat
painful waiting period during the
may,

increased

our

bring with them in¬

Increased

Productivity—Serious
Threat to Steel Industry

or

less,
He

is

wondering where the break-even

point will be.

Are

overlooking
will

we

those moral obligations which

loom

large

indeed

when

opera¬

off?

industry will fill it without pres¬
sure.
I am one of those who pray

tions fall

great feat
of memory to recall that during
the unlamented '30s, when we had

that such outside pressure will not

hind the 118 million tons of ingot

nothing to fear but fear itself, the

to

aged 90% of capacity.
It doesn't

theory of

require

any

force

reached

been

fool¬

Let

me

capacity
of

recommend

look

be¬

will shortly have. All

we

have

us

a

made varied

and

far-

reaching
have

commitments to assure
supplies of raw materials.
The
huge investments of our own capi¬

leaped forward at a fantastic rate.

tal appear in our normal financial

producing

facilities

The

industry has kept faith with
the nation. In 1940, 81 million, 600

Our

America.

in

and

During the past few years our

horizons had

our

reckless

another 1929 tragedy.

steel

Washington and
elsewhere. This school of thought
in

maintained that

into

us

hardy expansion which could lead

mature economy was

a

held

widely

exhibits. But, in addition, we have
contracts

signed with others, ob¬

told, thousand tons; in 1946, 92 million ligating ourselves to take millions
should be with social gains and a -tons; today,
104 million tons of tons of ore and coal over fu¬
and by
more equitable distribution of the
the end of 1952, close ture years.
We must re¬
On the strength of these.com¬
wealth acquired during our period to 118 million tons.
member that expansion
can
be mitments,
of growth and development.
others
are
investing
overdone, bearing always in mind huge sums of money, some of it

future

concern,

were

we

Question of Capacity

high fixed charges with which borrowed, with only our contrac¬
tual agreements as security.
burdened.
On
the basis of faith in our integrity
Capital Requirements Huge
they
have
put
together
large
But few people understand the blocks of coal property and large
reserves
of ore.
They have bor¬
huge sums of capital required for
expansion such as the steel indus¬ rowed money to build railroads,
port facilities, town-sites, steam¬
try has undertaken.
Since 1946
steel industry expansions have cost ship lines.
Furthermore, there are certain
$2,400 million. By the end of 1952
the total will approach $5,000 mil¬ fixed annual cash charges against
lion.
And this $5,000 million is operations which must be met re¬
buying only an additional 26 mil¬ gardless of our rate of operations.
the

the industry is

the successors to this
group, and in some cases the very
same
individuals, are clamoring
Today

for

million

130

steel

of

tons

ca¬

I have completely lost the

pacity.

ability to be either surprised at,
or

shocked

nomic

the type, of

by,

thinking

that

eco¬

to

seems

thrive and flourish in the benign
climate

of

national

our

capital.

The danger to

industry lies in the

effect

propaganda on the

such

of

American

meeting the highest levels of
sumption

By contrast, at the beginning of

and

con¬

are

For

during these postwar years.
example, there are now 49

been

compared

as

the

at

end

example:

of

the

at

of the

end

wired

there
and

homes

over

Hardly

Wilson

cently
will

10

in

be

1946;

by

taking 20%

there

production

the

all

durable

the country really needs.
with him.
These

130-million-ton

I

re¬

total

agree

sult

planners

more

7.1%.

is small
some

producers

of

are

six times

or

is that
have
spend for producers'
me

alone

in

million

$70

Re¬

each

year.

an

amount in

our

case

of another

$70 million.
This
clude

$140 million does not in¬
Republic's capital commit¬

ments for
appear

in

new

our

ore

sources,

which

normal financial re¬

ports,
for
steel producing
and
manufacturing facilities and for
debt retirement.
But

suppose

operations decline.

What happens then?

—

gross

of

the

improved

regulations

covering the amortization of emer¬

brought out the ris¬
ing cost of money. I refer to the

and

items

over

discouraging to capital investment nized
and
unrecognized invest¬
if it had been deliberately de¬ ment in the huge expansion pro¬
signed for that purpose. This situ¬ gram into which the steel indus¬
ation has been changed as the re¬ try hhs been led or pushed, de¬

that

have also not

recent

these

is

tools of
These facts are cited
only to
almost 8%
of our emphasize the necessity for main¬
national product. taining profits at the highest pos¬
This 8% does not include the vast sible level even in a
period of de¬
sums spent for construction.
This clining operations. It is the only
was done under a system of taxa¬
way
we can
possibly carry the
tion which could scarcely be more tremendous
load of both recog¬

rearmament

goods

of

public

equipment—the

country's

national output, but with our in¬
creased steel capacity we should
have

steel

been able to

a

there

our

was

amazing thing to

use;

of

total

in the five postwar years we

now

statement

1952

sales was
the first

background it

durable

in

for

century

leading

The

fourth home. C. E.
the

made

that

had

anyone

million

in every

one

Now

are

set

on

average

this

this

so-called

return

selling for only five
their earnings.

67y2% of

one.

of the wired homes

86%

the

use

equipped.

is

had

inter¬

as

property

In addition, under the same con¬
ditions, operations must bear other
relatively fixed charges such as
lush '40s
salaries and depreciation totaling

wonder that the stocks of

war

almost 34 million in

are

the

The

of

With

almost 20 million elec¬

were

tric refrigerators in use;
the

half

Another

war.

In

average

51/4%.

million

34

to

the

money,

industry has for many years
a
notoriously poor invest-

ment.
the

million automotive vehicles regis¬
tered

out this expansion program?

Our

*

that

sums

carry

equipment which
has been built up in the hands of

Where do we get the
are being used to

amazing.

vast

producers'

users

borrowed

investment taxes, capital stock and franchise
mil¬ taxes, rentals, insurance, royalties,
lion tons of capacity was $5,800 pension costs, and contracts against
current delivery of iron ore.
The
million. These comparative figures

goods

consumer

new

on

1946 the total property

not take into account the tremen¬

dous stock of

est

in the steel industry with 92

It does

recorded.

ever

These include such items

lion tons of capacity.

public.

are

taking

indeed

der

creased

the expansion Which
normally have been spread

most

over

for Their Job

Low

Too

gentlemen, profits. haven't
been too high; they have been too
low to do the job they are called
on to do.
But profits will be slen¬
No,

page

years

would

other

so-called democracies of the

profits since Jan. 1, 1946.

our

Profits

some

Low

television

sible for

of

more

could bend

strong men to his will.
Which of these, or
circumstances, and in what proportions, are respon¬

think

investments

there

sometimes

Republic, as an example, and
it is typical, we have re¬
invested $122
million or 60%
In

I

Washington, not Korea, that the men and
ought to be able to look con¬
fidently for hope.

to total business inventories while

attitude of mind.

all the

of the United States

almost at

was

which will not tax away
profits.

program

It is from

ity has been great enough to add

a

governmental expenditures and
the folks in Washare
in developing a fiscal

inton

where the Kremlin may move.

from first

be

how intelligent

apparently the result of the successful
balking of the Berlin blockade. The willingness of at least
the United States (and the ability) to fight effectively in
far-off Korea against enormous numerical superiority can
scarcely fail to have face-saving (or face-giving) effect in
the Orient. But there are many other parts of the world

Continued

suf¬
available

Whether

will

profits

depends in some part on the size
of

was

participation

holy crusade against enemies of freedom. The
Administration at Washington persistently refused to face
the fact that while we were fighting against tyranny and
all the rest, we had as a principal ally one of the most
notorious tyrannies of all time, and one which had already
shown itself quite without honor and far more bent upon
taking the remainder of the world into its camp than our
enemies had ever done. It is hardly strange in these cir¬
cumstances that the great rank and file of the people fell
once,

sort

This propaganda does not point
out that our total industrial capac¬

Against Tyranny

Pearl Harbor

in the "total war."

the

a game

Yalta, and Potsdam. There is much truth in the statement.
The more immediate of our troubles with Moscow find
their

of

women

Not in Korea

find

against this background that the Korean situation
is to be examined. It would appear reasonable to hope that
something at least could be gained by balking the bald
effort of the Communists to take over Korea. Something

Thursday, May 31, 1951

.

expansion.

nance

ficient

It is

We See It

As

Background

.

.

gency

facilities.

pending on your point of view.
I

Our industry has given too little
to
these
unrecognized

attention

in the past because
Obviously, profits of our indusincreases, in interest rates
yields, which make it •try must be plowed back to main¬ they were on a modest scale.. High
expensive to carry inven¬ tain efficient operations and fi¬ unit costs and the tremendous ton-

bond

.

investments

[Volume 173

involved

nages

them

Number 5016

have

.

The Commercial and Financial Chronicle

.

made in Blast Furnace and Open Hearth
Segments of the Steel Industry?'

now

be in¬

factor which must

a

.

Father Hogan says, "In the analy¬

cluded

in

costs of

doing business. We expect sis just presented it will be noted

calculating

to treat them

the

such in

as

future

our

com¬

that

the

overall

hours per ton

trend

in

man-

(blast furnaces)

and to give them full weight
determining our own concept steadily downward, with a feW
minor interruptions, to 1942, after
of an adequate price structure.
which it swings upward.
In
Reinvested Profit and Productivity the matter of
manhours per ton
As steel operators, it is up to (blast
furnaces)
in this sevenpany

is

in

...

to

us

that

see

reinvested

these

year

period, 1940-46,

we

find that

profits, together with new capital the best results were obtained in
which may be secured from other 1941, when the figure dropped to
sources, bring the productivity we 0.459 manhours per ton,
after
.

that it fluctuated and

expect.

can

With

planned increase of

a

capacity

production
1940

tween

happened

and

to

44%
what

be¬
has

productivity?

our

dollars

While

of

1952,

our

increase

can

pro¬

duction, unless more units are
produced with the same human
effort

not increased

have

we

our

Increased

production
without
increased productivity usually
turns out to be

bad investment.

a

It is

.

finally stood

at 0.606 in 1946."

With

hours

downward.
course

by

to

Hogan
trend in

range

ton
.

says:
man-

definitely
However, the

was

.

.

of the descent was marked

several

interruptions, and in

was

1946,

through increased productiv¬
Almost all of you will, I believe,
we lower costs, enlarge
find largely the same pattern in
markets and improve our stand¬
your own

living.

New

capital alone

may

not in¬

the productivity of our op¬

crease

erations.

There

quirement.

is

Our

second

a

employees

re¬

must

be willing

to use the new equip¬
fully and efficiently. Then

ment

the investment

can

be justified.

operations. It is evident

that capital expenditures alone are
not the answer to increased pro¬

ductivity—even

though

they

are

the essential basis from which pro¬
In the final

of the steel
cult

times

analysis the welfare

industry in the diffi¬
ahead

will

depend

on

First, let's consider the place of the caliber of its leadership. The
capital in increased productivity. greatest thing this country has
Historically, the productivity in to share with the rest of the world
the steel
industry has gone up is not our natural resoifrces, which
2 to 3% a year. That increase re¬
we
continue to squander at an
quired new capital — lots of new alarming rate, but our manage¬
capital.
ment
ability to bring together
This new capital replaced hand
material
and
parts from many
mills with strip mills; 75-ton open
places, put them on an assem¬
hearths with 250-ton furnaces; 14bly line and turn out a finished
foot
blast
furnaces
with
giants
product. The finished product not
having nearly seven times the
only works perfectly but replace¬

hearth area—all within the

mem¬

in this room.
Without such improvements we
would be living about the way
people lived in the early 1900s.
At the same time, the number
of dollars required to supply
a
ory

of most of

us

scarcely compete with the prop¬
aganda mills supported by public
grind out

been

funds which continue to

this

Marxian

doctrine.

The

only
possible answer is a careful cam¬
paign of education at the grass
roots level which will ultimately
pay off because it will appeal to
the fundamental

American

the

common

people.

sense

We

of

must

the true
relationship be¬
profits and productivity on
one
hand and higher living

show

tween

the

I

the

on

other.

convinced that

am

ments

can

be

for

ordered

productivity is to his advantage?
For

he has been told by
his union officials that produc¬
tivity gains. benefit the company
years

He

does

results

not

realize

that

of

consistently increased
productivity
are
divided
three
ways:
The
employee
benefits
through increased wages and in¬
creased

jobs;
the
stockholders
benefit through more satisfactory
the long term the

over

customer

benefits
through
de¬
prices, which again is to
the employee's benefit because he
creased

is the customer of the customer.

by

the

words

"production"

the

When

same.

he

is

told

are

has

.

detail

reports

what

its

equipment

will

exactly.

how much

it will increase output

facility

or

We

do.

piece
are

of

told

and how many years it will take

lems. This so commonplace to all
depending on
of us in our business operations
the
plant
facilities
and
other
that to have secrets is practically
factors, to create a new job in
immoral; yet such spontaneous
the
steel
industry
might
cost
group action in no way precludes
$10 to $15 thousand.
or
diminishes true competition.
Last
fall
the
plans for our
It does, however, put competition
Cleveland expansion were com¬
on
an
intelligent plane where
pleted. The capacity of the Cleve¬
ideas,
initiative, ingenuity and
land
plant was to go up 672
skill are rewarded; but the prog¬
thousand tons at a cost of $75 mil¬
ress of any individual or company
lion. Some 800 new jobs would be
adds up to the sum total of knowl¬
created.
And each new job calls
edge for the industry.
for $90 thousand. It didn't sound
The great new phenomenon in
sensible.
America, a philosopher friend of
Recently Ben Fairless said that
mine says, is the emergence of the
each of the 4,400 jobs in the new
Fairless Works at Morrisville will corporation as a social force as
well as a profit-making entity. I
also have $90 thousand back of it.
can
agree in principle because I
We felt better.
am
sure
the steel industry and
If ever increased
productivity
its leaders are fully aware that
is essential, it is in this period of
their
policies and their actions
high
expansion currently be¬

study

to

which

would

ago,

.

cost

have very

ing carried out by the industry.

the

far-reaching effects on

entire

economy.

However,

government
Capital Foundation of
Productivity
leaders—must never lose sight of
While new capital is the very the fact that without satisfactory
foundation of productivity gains, and uninterrupted profits, no in¬
this one, can
whether or not we get those gains dustry, including
depends on how efficiently the remain a social force or any other
business leaders—and

New

new

facilities

are

long.
leadership
in

kind of force for very

used.

Business
this
all familiar
with the heavy capital installa¬ country is not inherited—it is not
tions made by the steel industry a right. It devolves upon those
able to accept the
in the 1940-46 period. These should willing and
have given us increased produc¬ responsibilities that go with it and
For instance, we are

that

itself.

facility to pay for
is largely based on

new

This

But

the

realized

tivity

have

we

much

productivity
employees

if

increased

their

to

given

added
result

that

is

not

produc¬

personal

and

low

reached

in

1942,

that

man-

the

individual and the cor¬

Safety Education
Look

back

on

as

our

Example

guarding
belts,
fly-wheels,
all
sorts of moving parts. We sought
safety through mechanical devices.
And still, accidents did not de¬
crease
as
rapidly as they should
have. Men still kept on getting
hurt.

.

.

started

working with
the men. Through personal con¬
tact on the part of supervision,
we began to teach safety, to show
that safety prevented accidents or
we

with

death

the

hours

per

;

ton

down

were

concept.

that mansignificantly
the
1942

Productivity

below

Living

tivity during the 1942-46 period is
outlined

by

Father

William

T.

Hogan in his book, "Productivity




-

Higher

Standard

been

in terms of

employees

economics. We

income

I

make

those

the

on

like to

summarize this

and

suggest the
might well find a place

walls

of

office: <' *,

your

and

1.

Taxes

balance sheet. We show" that

the

2.

Contract obligations for pen¬

job creation and stability depend
on
profits. This is being done
through our plant publications,
posters,

communications

to

We

also

are

visors

basic

teaching

sions, for minimum royalties,
railroads, new ships, new
harbors

A

;

must be

15 units has been developed
cooperation with the University
of Chicago.
About 3,200 super¬
visors, foremen, superintendents,
and managers have finished or are
taking the course. We expect to
in

club

to

of

we

officers.

union

teachers

and

third

do

few

teach?

we

the

of

Here

lesson

15

foremen

our

and

new

means

ment
is
4.

as

far

wasted

as

invest¬

the stockholder

concerned.

The

employee's stake and
in
productivity
must be
clearly proven to
him on a continuing basis.
advantage

of

women.

What

and

get productivity
capital expendi¬

from
tures

Another

a

to

con¬

a

Failure

3.

again that
have had a

cover

In addition

many.

class

it

han¬

for

docks

factor, and a large
factor, in the individual de¬
termination of selling prices.

course

of

extend

and

dling ore will require
tinuing expenditures

our super¬

economics.

y

part of costs.

are

new

our

employees, and other methods.

a

To

follows

as

summary

inter¬

statement

would

talk

ahead. In

our

facilities.

gency

facilities pay out we must produce
as we have never produced before.

made, the

way

rec¬

shown

was

Congress provided for the
rapid amortization of emer¬

more

that

me

fact

Some

are

large

titles:

of

giving up a
time to this

are

us

share

of

our

educational work.

If each of you

will match the time of those of us
who

are

it

job,

really

working

this

at

be done.

can

With Cruttenden Co.
(Special to The Financial Chronicle)

superin¬

tendents
nomics

basic

about

know

as

eco¬

Nangle

in

general and to our company
particular, they will be able to
interpret some of these facts to
the men who work for them. They

in

will be able to clear up

deal

nomic
cleared

Exchanges.

misunder¬

Should

more

(Special to The Financial Chronicle)

S. Nicholson is
&

Study Employee Attitude

of

relationship
a study, if
made,
might show us why apparent in¬
creased productivity is too often
only a reflection of increased cap¬
ital
expenditure. It might also
show us how to increase produc¬

tivity
through
greater
human
cooperation. There must be many
facets to a
man's viewpoint, of

productivity but

don't know

we

Boston

the

Ex¬

Stock.

Mr. Nicholson was previ¬

With White-Phillips
(Special to The Financial Chronicle)

the employee and his

productivity. Such

William

ously with Spencer Trask & Co.

thorough study of

it is realistic and carefully

—

with Kinsley

now

Adams, 6 Norwich Street; mem¬

bers

it might be worth

to

•

WORCESTER, Mass.

v

while making a

>

With Kinsley & Adams

ignorance
and
can
be
up
by economic knowl¬

I believe that

added

►

men.

Mr.-

—

been

has

the New York and Midwest Stock

intelli¬
After all,
many
of the differences which
arise have their beginning in eco¬
and

gently with their

Sidney

A.
to the
staff
of Cruttenden
& Co., 209
South La Salle Street, members of
111.

CHICAGO,

they apply to industry

DAVENPORT, Iowa —Roderic
Van Scoy is with The WhitePhillips Company, Inc., First Na¬
tional Bank Building.
H.

With Harris,

Upham

(Special to The Financial Chronicle)

\

Mass.—Bernhardt G.
is with Harris, Upham &

BOSTON,
Harig

Co., 30 State Streets

Continued

from

page

8

'

•

,

gratifying results.
The steel industry is today the
fourth
safest
industry
in
the

.

[

.

'. t

•

Dealer-Broker Investment

United States.
Doesn't

this give us an idea?
provided our men with
the
very
finest equipment and
tools that
inventive genius can
devise and money can buy. But
have

We

have

we

much

made clear to them how

they

will

profit

if

they

in

the

standard

of

living

come

the

increased

only

wages,

lower

productivity; that
safe way of increasing

of getting better goods at
prices and hence higher

wages for all workers, is
through increased productivity?
I am sure they don't believe

this. Too many workmen still be¬
about correcting lieve that wages can be increased
such widely held misapprehen¬ out of profits. They still believe
sions? It is useless to rail against that profits are for the sole benefit
them in meetings like this one. of the stockholder. They believe
How do we go

This adverse trend in produc¬

Means

with

agree

start has

of this

This brought

real

brought
figure.

will

the

of this world." The

accompanying

We showed that it was

hardships.

smart to be safe.

ditures had been made,

ton steadily increased,

when

we
done very much' to¬
making our employees rec¬
ognize the advantages to them in
cooperative effort?

pret

paying for these facilities

"out

ognition

Have

a

frightening rate. The prices

are

are

ward

experience

safety. In the beginning we
spent large sums of money safe¬

from

per

nqt costs. This

handbook.

in

Then

facilities.

especially

important
Today the steel industry is
investing in new facilities at' an

leaf directly out of the C. I. O.

while

is

change.

poration, while economically re¬
not decreased,
through 1946.
It sponsible, were socially irrespon¬
was not until 1950, and after tre¬
sible. All of today's social legisla¬
is based on this mistaken
mendous additional capital expen¬ tion
hours

we

a

are

edge.

selfish advantage.

tivity, but in fact we find in that these involve many things beyond utilize these facilities to the very
period a reversal* of the long-term the earning of profit—vital as that best advantage?
Have
we
told
them so
The political theory of the
they
downward trend in manhours per is.
ton of steel. Starting from the rec¬ 'thirties was based on the premise believe it that real improvements
ord

almost

is

standings

mathematics.

rocket.

decade

Chamber of Commerce maintain¬

ing that taxes

This

that

fit

for

subject,

.

Engineers'
new

know

we

now.

If

ties, etc.

Until

are.

in production

increased, he in¬

American industry
will rflake availa¬
ble his own experience and his
man
with the tools he needs for
acquired knowledge to others who
his job has shot up like a sky¬
may be faced with the same prob¬
A

of fact, we have
just recently to the

Managing
Your
Income;
Your
Wages;
Exploring
Costs;
Why
terprets that in terms of produc¬ Profits?; Republic's Balance Sheet.
tivity and not in terms of capital
Before-and-after tests show us
expenditures which have provided
that there have been encouraging
him with
higher speeds, larger
results.
furnaces, better handling facili¬
production

they

about this intricate

shall fail to get the full return
from our new capital investments
we

spectacle of a suc¬
cessful business man and former
President of
the
United
States

and

"productivity" and thinks they

costs.

matter

a

treated

of school

The employee has been confused

what
more

enlightening

the

this

We expect in

of

objective is a long
ing productivity from the employ¬
Republic we talk to
ee's viewpoint. Does he realize that

any

that every man

As

part

a

a

knowing in advance that
quality and dimensions will

part,

are

You

have

we

mountain of work to do in study¬

dividends;

ductivity gains start.

also that it is profits before taxes
that count and fail to realize that
taxes

definitely reversed. Thus
although the manhour
—the stockholders and the bosses
per
ton figure was 49% below
—but that increased productivity
that of 1923, it was 34% above the
works him out of a job. ,
1942 all-time low."
by

ity that

ard of

if all
American
industry
eye-to-eye, which it doesn't

and could act in concert, we could

hearth

open

Father

per

Even
saw

standards

regard

operations,
"The long

1943

productivity.
-

.

33

(2273)

Recommendations and Literature
Shedd-Bartush

Foods,

Inc.—Memorandum—Blair,

Co., Inc., 44 Wall Street, New York 5,
Solar Aircraft
Salle

N. Y.

Rollins

&

/

Co.—Analysis—Cruttenden & Co., 209 South La

Street, Chicago 4, 111.

Southwestern

Public

Saxton & Co., 70

Sprague Electric
La Salle

Service Co.—Card

memorandum—G. A.

Pine Street, New York 5, N. Y.

Co.—Analysis—Dayton & Gernon, 105 South

Street, Chicago 3, 111.

,

comment—Eastman, Dillon &
Co., 15 Broad Street, New York 5, N. Y.
Trans
Caribbean
Airways—Card memorandum — Gearhart,
Kinnara & Otis, Inc., 45 Nassau Street, New York 5, N. Y.
United States Radiator Corp.—Memorandum—R. C. O'Donnell
& Co., Penobscot Building, Detroit 26, Mich.
Valley Mould & Iron—Circular—duPont, Homsey & Co., 31
Sprague Electric Co.—Follow-up

Milk

Street, Boston 9, Mass.

Webster-Chicago

Corp.—Analysis—Republic Investment Co.,

Inc., 231 South La Salle Street, Chicago
is a'circular on Flying Tiger Line, Inc.

4, 111. Also available

k

34

The Commercial and Financial Chronicle

(2274)

Monday's market
probably one
worst pieces of bad

Tomorrow's

Walter

Whyte

By WALTER WHYTE=

The final
week's
the

news

paragraph in last

column

with

closed

following words: "If

you

—

Macy

and Gimbel. When these

Says—
=

of

the battle between R. H.

Markets

hit Continued from first
the

was

with

com¬

panies announced the price
war
following the Supreme
Court's decision upsetting the
price-fixing law, it must have
shaken the entire inventory
structure.
There is hardly a
distributor

merchant who

or

has not loaded up

with inven¬

during the past few
If he is threatened with
falling market, he will have

tory

plan to do

any buying, now is
the time to do it. If you are years.

interested

in

quick turnover
will have a chance be¬

you

tween

end

the

and

now

Instead

unload.

to

.

infla¬

of

*

*

*

.

*

*

When this
market

In

.spite of this turn of
written the events, the market now held

in the midst of

was

and

reaction

*

was

a

numerous

gave

signs that it would have more
of the

same.

was

strange unanimity

a

But while there

about the continuation of the

break, there
turn

in the

was

first that

signs that
making. The

were

called

this column

This sort
of action speaks volumes for
the underlying technical
strength of the market. The
stocks which show the great¬
est strength are the chemicals
and the pharmaceuticals; they
may even make new highs on
the current swing.

*
*
*
the presence
of, what for the lack of a bet¬
But before you start throw¬
ter description, I called a tening your hat in the air at the
day deferred move. The sec¬
ond consisted of a series of prospect of a new bull mar¬
little things applying to many ket, permit me to caution you
that the rally at this point is
Stocks, the total of which in¬
a
technical one.
dicated an end to the current primarily

doesn't

This
*

be

can

lightly.
If the
retrace 70% of their

leaders

But

it

off

shoved

*

mean

last Friday the signs
losses, it will still be gratify¬
multiplying, and this
ing to be aboard. I don't,
Was
happening while the
more
worst day of the current re¬ however, think that
than a two-thirds retrace
actionary phase was being
from the extreme lows will
witnessed.
By the following
be seen.
day, Saturday, it became clear
*
*
*
•
that a rally was right ahead.
Among the groups which
should participate in such a
rally are those which were
Were

Pacific Coast

most active in the recent de¬

cline.

Securities
Orders Executed

These

the

are

if

we

steels,

the

Pacific Coast Exchanges

p

«

Y

O

ochwabacher 6C Co.
Members
New

New
*■

York

San

York

Stock

Exchange
Curb Exchange (Associate)

Francisco

Stock

in

this

article do not necessarily at
with those

any

Chronicle.

the

shall

stand

Private

San

Wires to

Barbara

presented

are

as

BOSTON, Mass.—Ernst M. Par¬
sons

of

has

Coffin

Street,
Stock

been
&

added

Burr,

members
Exchange.

to

the

staff

Inc., 60 State
of the Boston

•

Amer.

CALL

OPTIONS

Per 100 Shares Plus Tax

Distil'g @50
@31

Studebaker

....

or

Explanatory pamphlet

period

any

87.50

22

200.00

19

225.00

16

187.50

22

75.00

22

75.00

12

100.00

16

100.00

19
8

100.00

Members Put & Calls Brokers & Dealers

Association, Inc.

Broadway, N. Y.

.

.34

....

.

Pacific..54%Aug. 17

Booklet

on

Puts

and

Calls

on

175.00
Request

4, Tel. BO 9-8470




Filer, Schmidt & Go.
Members

Put

Dealers

A

Call

Assn.,

30 Pine St., N. Y. 5

Brokers

&

Inc.

WHitehall 3-9177

have to

say

wage»con-

on wage

all

volume

that

of

of

will

follow

this

will

be

great

make

to

that

going to make

dif¬

I

not

if's

no

and's

but's.

or

going to start

I

Army

on

doesn't get better,

explosive,'

and so
will happen. Regardless of the un¬

that

or

Iran

in
to

should

war

proves

other

some

broaden
take

the

place,

The

is yes.

answer

The uncertainties

the

not

and

year

at

least well into next year.

index

will

on

change that business outlook

materially and significantly in the
of '51 and in the early
I have talked

average

volume.

this year than it averaged in the
first three months. There is no

parts that
follow

I

make

that

that

up

divergent

volume
Some

courses.

of

increase

every-day working tool.
shall

not

the

means

dollar

value

all

year.

It is the

individuals

and

services,

business

sum

spend

plus

spends

what

for

We

are

and

I

product

billion.

At

the

end

of

1951,

$325 billion and

a

little

inventory accumulated during
past. We have been through
period of great boom in residen¬

the
a

tial

the
•

building.

vast

sums

This

has required
for mortgages.
That curve will go down, and in
the latter part of the year, instead
of putting in new mortgage money
at the annual rate of $12 billion,
I think we shall be putting it in
of money

from $300 billion to between $325
billion and $335 billion will be

partly due to physical volume and
partly due to price rise. The part

decrease

to

of the

increased
little

a

total

physical

more

increase.

than

Some¬

thing less than half will be due
to a change in the value of the
dollar
during
that
12-month
period.
volume

gross

of

business

is

on

of increase in

due

it

the year goes on we

as

at the rate of

is

$8 billion or less.
through a period

We have been

are

coming into

now

in

consumer

period of

a

enlarging

off debt

his

change there will be

sharp

The

debt.

consumer

will be paying

than

rather
The

debt. We

consumer

a

debt.
rather

be

looked upon

as

a

reason¬

capital

amounts

to

program of pri¬

expansion

about

which

$26 billion for

the year as a whole.

Those

are

the

great

dy¬

namic forces that will push busi¬
ness

volume

remain

firm,

ahead

and

remarkably

and

with

tendency in the

a

steady

slight

curve

make

it

and

upward

through the

will prove

reasonably

satisfactory to most of the stores
that

field.

The

total

civilian

level of the economy

is measured
perhaps in easiest terms by the
figure that is called personal con¬
sumption expenditure. In the last
months

that

has

been

at

an

thinly

it will drop below $206 billion
by
a
small amount, $3 billion or $4

billion, but will end the year back
started, at the $20$

about where it

billion level!
)

Civilian Consumption Course
Horizontal
The
will

civilian

follow

zontal
or

nothing

consumption

level

less

hori¬

more

a

far

as

or

It will provide little

course.

the expansion

as

of total business is concerned. The

expansion, of
from

come

the

total

two

step-up

in

business

other

will

sources—*

defense

spending

and the

very high volume of pri¬
capital expenditure. Bur the

vate

expansion

of

year and next

•

i

■

One other particular feature of
this gross national product or one

it is the problem of
This defense,
program differs from the one of

private

investment.

ten years

in

ago

impor-;

one very

tant

respect. It leans almost en¬
tirely on private capital. The gov¬
ernment
for

is

not

productive

building directly
Private

capacity.
industry is doing it.

•

.

If, in. this program; the govern¬
ment

were

doing

direct

much

as

expansion of production facilities
it did in the last war, the Fed¬
eral budget would have to be $1Q
as

billion

to

$12 billion more, than
is. That burcjen has
been shifted over to the private'

it

actually

and

economy,

has

nessman

busi-.

private

scramble

that' amount

find

and

the

to

of

around

capital

in order to carry out the program

Trade

good the challenge that

Divergences

This

shift

great

of burden

iorr

*

In the retail

field,

divergent

very

we

trends,

face two

the

hard

goods type of merchandise down
the

and

soft goods

chandise up. By

reversals

tendehcies

of

that

capital

purposes *

cussions
on

on

a

had

reper-»

the bond market and:

rates and will continue

money

to have

has

fundamental bearing on'

the trends of these financial mar-*

kets

during the next

year or

two.";

Extraordinary tension and strain!
is placed on

the financial markets,

because of the shift of this respon-*

from the government to*
the hands of private enterprise.
*

sibility
-

have

prevailed

year or two.
There
will
sad

two

think department

I

year,

sales

is placed on him.

are

and the business
vate

toward the end

as we come

the

and make

reversal.

Retail

type of mer¬
December of this
two great forces that are con¬ year, I would expect retail sales
of hard goods to be running 10
stantly pushing it ahead. These
to 15% below a year ago, and the
forces in 1951 are the defense pro¬
sales of soft goods to be running
gram, with a target of spending of
10 to 15% above a year ago. Those
$50 billion by the end of the year,"
can

ably assured projection because of

But,
of

of the parts of

think

I

lion, in dollars of then current
purchasing power. That increase

that

than

lower

will find that business is drawing

$300

$335 bil¬

peak of
total

expect

Furthermore, I think
good possibility that it

a

be

the

near

should

today.

pur¬

services.

about

was

any¬

ture.

today.

will

private

That is the gross national product.
At the end of 1950 the gross
national

or

is

plus what the government

and

inven¬

inventory at the end of
no higher than it

there is

r

poses,

sudden nose^

a

strike

the economy this
will gain practically
nothing from- the civilian side, the
personal
consumption
expendi¬

business

goods

capital

or

buyers'

a

this year to be

of

of what

for

business

total

tory.

all product and services during a

given

in

that,

attempt to go into
defining it. It simply

total

or

and is
the way
that particularfigure will have to work itself out

different

measuring this general lines will be up and some lines
by the business outlook. will be down, and I will take just
The way is in terms of the gross a moment to try to draw a little
national product, a phrase which blueprint of these component parts
sounds technical, and many people of the
picture. We have gone
are
not familiar with
it as an through a period of tremendous
I

setback

as a

about the overall

realize

statement

details about

the

thing of the kind. It is simply one
of the tricks of simple
arithmetic,

part of 1952.

higher in the last nine months of

way

not

but that

season,

balance

By remarkably firm and re¬
markably steady, I mean that the
production

summer

will

happy, in

annual rate of $206 billion. I

the foreign
front and 6n the home front will

this

sales

too

few

remarkably steady
and remarkably firm throughout
of

minus sign on

a

store

general?

continue

balance

.

would you still say the same thing
about
the
business
outlook
in

fidence and great conviction that
the volume of general
business
will

of

area

affairs today,
ready to say with great con¬

am

in

provocation

way

certainty of world
I

situation

wave,

psychological matter. Ojec*
tively, and from any fair stand¬
point, there is no reason to regard

in

so

year ago,

people

store

the

hoarding

a

oughly and decisively, and there
should be peace in the Far East?
Or, on the other hand, suppose

the assumption that the war situa¬
tion doesn't get
worse,
or that
peace

Suppose the Korean
should be whipped thor¬

is

that

am

by saying,

who will say,
from the

news

front?

war

make it with great confidence and

with

others

but what about the

am

but I want to

one,

a

dive

of business.

very

consumer

coming

outlook for

general vol¬

making comparison with

department

that

forecast,

a

tough

pretty

July. Why? be^
has suddenly

trade

,

July

will not prevent the realization of

are

year-ago

vious year.
.
■■
,
>,
In comparison with that
type of

year or

There

a

when for a time department store
sales jumped 45% above the pre¬

happen

the

of

>

on

be

of a year ago, which was
the first month post-Korea of thh

happen

that.

some¬

July

to

beyond

month

that, that the overall make
business

will

retail

20%,

out of bed? No, not at all.
Because in the month of July
they

to

Having made it look
ficult

.....

request

THOMAS, HAAB & BOTTS
50

Moly

Dumont A

Magnavox

Johnston?

What about the

face

A Basic Forecast

,

The

137.50

112.50

7

price change
on

(Plus Tax)

West.

87.50

23

@13%Nov. 17

Subject to prior sale

Per 100 Shares

Climax

OPTIONS

137.50

9 $112.50
6

July
Pepsi Cola... @10%Aug.
Radio Corp... @19%Oct.
Armco Steel.. @44%Oct.
Chesap. & 0. .@33% Oct.
Curtis Pub.... @ 9%Oct.
Am. Saf. Raz. @ 9% Oct.
Pufre Oil
@53% July
Southern Rail @55% July
Western Union @41% July
U. S. Steel... @47
Oct.

CALL

satisfy

we

the

remarkably steady course?
The
answer
is,
without any
qualification, yes. Those factors

likely

certain

volume will be

July 2 $212.50
18% Sep. 24 187.50
16%Oct. 23 187.50
Zenith .......66
July 30 400.00
Crucible Steel.40%Aug. 13 175.00
Penn RR
18% Aug. 27 200.00
Philco .......23%Oct. 19 250.00
Warren Pet.
.2J%Aug. 27 275.00
Mo.Kan.Tex.Pf. 56% July 30 350,00
Chrysler
69% Aug. 27 550.00
Stndebaker ...31
Aug. 17 175.00
Pepsi Cola.... 12
5/8/52
125.00
Avco
8% Oct. 23 100.00

July
July

..

Int'I Nickel... @35

Warner Bros.

•

SPECIAL

Mr.

and

in

ume

is

almost

during

half

SPECIAL

to

stabilization will be
pierced? What about the impact
of controls? Do you still say, in

and

gross national product will be be-

(Special to The Financial Chronicle)

Monterey—Oakland—Sacramento
Fresno—Santa Rosa

They

Coffin & Burr Add

Teletype NY 1-928

Principal Offices

Francisco—Santa

up

presumption to

that

or

is

or

tween

Exchange

New York 5, N. Y.

COrtlandt 7-4150

expressed

those of the author only.]

Chicago Board of Trade
14 Wall Street

views

ings

some

are

spending for goods

[The

DiSalle

out

trols and the danger that the ceil¬

a

war

motors, some oils, liquors spends. It is the sum of the spend¬
(particularly Schenley) and at ing by three groups of spendersleast
one
utility, American individuals, business spending for
capital purposes, and government
Telephone and Telegraph.

on

make

such

in

are

there

who

amount

have

to

pay?

period in matters of

peace,

.

decline.

Mr.

diffi¬
culties on the part of the prophet
and the predictor at the present

firm and started up.

attention to, was

*

and

What about the forms that

have

we

to any¬

occur

during the balance of this

.

trols?

What about the taxes

that

one

to

range.

fallen

Some people may say, but what
about the impact of all these con¬

nature.

critical

that

comparison
cause

The Impact of Controls

am

can

Obviously, it will

to 15

up

The minus sign

aware that no human
predict what will hap¬
pen in our relations with Russia
and in our foreign affairs situa¬
tion generally. I shall not attempt
to make any predictions of that

ity. I
being

7%

or

where in

The Business Outlook at Mid-Year

this

of tion, it could lead to deflation.
*

June

a

a

6

page

Thursday, May 31, 1951

..

.

and sick

in

field

will

the

hear

the

from

during

the

past

Perhaps that is a good thing, as;
all want to see private enter- i

we

be

a

particularly

month

in the retail

month

of

July. You

great wails and groans

department

store mer¬

prise
can.

do
But

criticism
an

ies

that

on

what

goods,

everything,

will

run

year

ago.

balance of this year and well into

rather

the early part of 1952.

By sharply, I mean anything from

sharply below

a

as

it possibly'
without'

mention that

one

interesting

their total sales, hard goods,

soft

I

way

or

fact,

another as-

to

give

ex-!

planation to many of the myster¬

chants in the month of July, be¬
cause

much

as

surround

taking

is

us

these.days:

place

in

the

business world and in the finan¬
cial world.

-

So much for tke gross

;

national

Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2275)
product. I turn
tion

of

the ques-

to

now

inflation, surely

honored

question

everybody

has

time-

a

that

one

hashed
the

for

nauseam

and

ad

over

last

several

years.
I

speak

less

inflation with much

on

confidence

and

conviction

"than I have spoken on the general
of business. I have if's,

'volume

-and's

and

far

'as

but's

;

Inflation

-

-''

j

in

my

However,

the

on

it

that there will be

is.

in

the

latter

year,

different

from

some¬

what

anticipating.

are

flation

in

was

most

in¬

For

material

raw

com¬

modity prices. During the next
nine months, I don't expect much
-if any change in the average of
(leading raw material commodity
<prices. There will not be a raw
material price inflation.
<
r
Coming
to
industrial
prices,
;

particularly the prices of
we had

manu¬

factured products,

in¬
of 18% in this price index

crease

from

by

The

rate.

week

and

February last

these industrial

an

the

of
be

as

will

It

year?

the cake

2

up

annum

or.

it did in the

as

per

period

very

We will not resume that
fast pace of inflation of in¬

dustrial prices.
What

•

...

„

.

the

about

•

,

of

cost

living

index? That index,

recently at 184,
will probably end the year pretty
close to 190, something like a 3 %
further.* increase
of

1951.

in

the

balance

Inasmuch

as

labor

many

living index, let

con¬

me

for

pause

moment to show certain
{relationships between the wage
a

outlook and the cost of living out-

look.

I

shall

this by saying,

start

if the General Motors formula is
,

allowed to operate, the wage in-

*

be

should

crease

four

cents

hour in June for annual improve¬

three cents an hour for
the cost of living. And by Decem¬
ber there should be

additional

an

three cents for the cost of living,

making

not

be

cost

in

tion

of

hour

an

in¬

and the

now

end

year.

"if." Now let's take
"if."

if the

said

I

in

an

look at the

a

formula

is

lowed to operate. In the last

days

Washington have been making

need

statements
for

going to

fight
on

about

the

if

controls

more

question
age
.

excess

inflation,

I

to resist the
the

but

will

think

it

not

hill

of

>

for

they

four
go

the

What

Some

cour¬

coming

unions,

this

occur.

to

me

will

a

try

to

allow

say

this

doubt

excess

to

seem

ca-

will

be

The

excess

have

to

me

exaggerated

effort is not to

munitions

how much

see

be

to

solete at

a

process,

if

the

is

will continue

stand-by and will

as

not be usable for

in

purposes

that

%

post-emergency

will

not

The

war

is

<ri

of

plants

»

for

does,

part of these
will

occur

than

unusually

solescence

in

a

important

an

productive fa-

are

many

smaller

other

com¬

panies, that don't immediately re¬
spond and give the same wage as
is given by the big leaders, and

regarded

even

war,

will

wars,

high

rate

of

The

ob-

figures

a

be

very

sidered

and

reexamined

carefully
to

con-

allow

higher rate of obsolescence,

allowance

has

to

be

made

for

a

?»

ft'**

way,

Payroll Increase

then

emergency

something




*'"v> The

will

the

of

end

the

Population Factor

There

is

another

constructive

factor that will tend to protect us

from the

ravages of a great postdepression, and that is the in¬

fluence of population which offers

dynamic force in the

very

econ-

°™,y !?r the en(tir<; ,de.cade °£ th,<:
50 s. It is operating today and will

c0"t!n"e to °.perate t.n° ™atter
what happens
and

the fleld o£

m

they would'The

business

supdotUo

£ pePPd

-n

seemed

riong

,5|_

possible

even

^

recently

as

When

consider

we

all

these

things, we don't eliminate en¬
tirely the prospect of read just,

,

.

when

nt

.

,

,

begin to dimin sh

we

defense program. But it seems

our

to me that we get a prospect that
might be simply defined as some¬
thing of this magnitude: that we

should

be

able

to

from

changeover

this

make

the

strenuous

effort in defense to the aftermath

phase
ment

with
not

a
business readjust¬
materially greater than

that which occurred in 1949.

tronr

1949

4a

as

cnt

m°del year to set
fnt*
-fVi

fairly good

a

nrs

nnt»

m

in

up

our

in

mmdc

minds
vy-i

stimulates

war

emergency,

^My

fourth and last point is
another one upon which I should
like to speak with considerable

i.1.

•

re¬

_

V

incentive
on

will

saved

you

power of the
about $35
all-time low.

new

a

turned
this

that

be

That

a

half from

a

and

way

prediction to

occasion.

and

year

will

out

same

I

vou

to

year

now

you

pointing with great pride

perate people follow spellbinders
into wars of conquest.
But the
century that produced the atom

bomb,

the

jet plane, the

guided

dol- missile of sudden death, has
duced

and

produce

can

pro-

other

The

happiness and security 6f miracles of applied science and
family depend first on the improved techniques that can raise
ability to produce and earn. the standard of living of all peo¬
Almost as important is his ability
ples willing to apply them conto save, but the individual must
.structively instead of destructivegive thought
not only to how ly. What a world we might have
the

man's

much he

can save, but what form
of savings he should use. It is no

today if

had spent $350 billion

we

in five years or $50 billion in one

longer wise to put all of his sav¬
ings in Life Insurance, Savings
Accounts or Savings Bonds. He

year, on constructive and produc¬

must seek to

much money,

ing

well

as

protect the purchas¬
his "saved" dollar

of

power

to

as

have

the return of

for

tive projects for ourselves and the

world,

instead

of spending that
billions of hours ol

productive time, and incalculable
treasure of

our

resources

assurance

principal.

on

all

suppose

Role of Investment

natural and human

destruction.

the

nations

And

that

the

left

war

bankrupt and in ruing
had joined us in a $10 trillion war

Systematically
investing
will
help satisfy the longing for finan- against
poverty,
want,
disease,
cial
security now, and it will ignorance—for $10 trillion was
supplement the retirement income

the money cost of the recent war,

provided by social security, com¬
pany pension plans or savings ac¬

Foundation of Successful Life

counts

You

annuities.

or

larly is
is

He

more

a

efficient on the job,
producer, is more inwelfare. The
saving WOrker is happier because
is

better

a

terested in company

he

has

financial

a

in¬

to

reserve

himself against loss of earn¬
ings due to accidents, sickness or
loss of job, and at the same time
sure

he is

building

self and

also

gram for

what

educational

an

individual's

retirement

income may be or the

i

account,
regular,
investment in Mutual
"

i_

•

Fund

size of his

bank

systematic
-t-i

pro¬

No matter

shares

..«n

'

i

will

ji.

enhance

them

Sunday

my

young

is the foundation

man

of

a

be

the foundation of

successful life.

world.

school
inward

that

men

with God and with

peace

fellow

our

it is not just pious talk

tell

security,

Security

It

must

also

successfu

a

begins at home

within the

individual, the family,
through the nation anc.

to spread

the world.

estate for hyn-

an

his children.

the

see,

regu4 when I
valuable worker.' class of
saves

more

ji

'

nr.

greatly.

of

the

outcome

of

is

Only by a miracle can that hap
to the world in the lifetirr

pen

of anyone here today.

But it cou
happen if enough people on bot
sides of the iron curtain could L

made to see that neither side i..
third

a

World

War

iU4*^, J J

could

win

U«

that there would be nothing

are

in

engaged
®

"

great

a

O

ef-

to

spend

research

pay

off

ac-

in

a

«

4L

_

won

Every

individual

should invest in American indus¬

If he knows what stocks to

try.

buy, and
it

when to

do

he

so,

can

himself—if

Mutual

gives him

rectly

not, then he
investing through

Investment
a

This

Fund.

stake in American in-

When
own

A

ik«

^

the

winning for the survivors

be, he should al-t share.
Let
something aside for a

day."

dustry.

We

i.

No matter what his pres¬

lay

"rainy

ultimate outcome.

people

more

interest

an

4L

di-

in

our

us

own.blood
the

God and to show
for

with

one

arts

of

That

war.

is

task

a

to

which we have set ourselves and
the cards have been dealt. We don't

always like the cards that
to have in

pen

we

hap-

we

are

going to play the hand out. The
question is, where is the end re¬
is

the

ultimate

out¬

come?

To

ence

.

at

gloomy

this,

that

there

is

-

...

.

that

_.

time

..

was

of faces

sea

in

the

that

I

most

getting

my

into

controls

God's

*s an
begin
r* A

can

in

mind

magic

no

road, no
security. No

"blast

and

rfl m

this

to

gift to

our

earth,

mankind.

way

to

will

nnltr

xirill

f 4^

in

M i

*♦

our

The solution

hoiro

iito

maoaa

have peace and

we

Joins Ohio Co.

V*

A r\ v«r

-

rtMyf

4-Vi

through the nations.
be

now

members

with

Ohio

The

the

of

Midwest

Stoc..

Exchange.

With Edward E. Mathews
(Special to The Financial Chronicle)

BOSTON,
Broderick

Aw

then

is

Company, 51 North Hugh Stree-,

Security

hearts—and

must

Hunter

be

individual matter—it must
,

work outward

_

_

_

staff of
53

Mass. —Donald

has

added

been

_

_

Edward

«

«

E.

Mathews

,

W.

to the

_.

«

jna

Co.-

state Street.

both moral

and material.

So

have

life. The blue
indigo blue. People felt downseen

comes

relations

(Special to The Financial Chronicle)

be¬

soon

security unless it be the security
a dead planet.
Security, when

it

the necessity
our

COLUMBUS, Ohio—Richard S.

streamlined train to

super-bomb

us

security.

"wasims."

my

hearted and downcast. They were

just

will

of

answer

.

"isms"

However, please bear

hand, but the

our

cards have been dealt and

What

come

hav

Security wit

acknowledge Him and give Him
the preeminent place—then, and

When control of business concerns
4— —
is distributed more widely among

people,

ope

to

freedom,

^
^at would destroy
the

the

uals and the nations of the earth

+V»am

our

l

another.. When individ-

not

schemes

Cross to

living aright in

American corporations, they will then only, will
socialistic

that

everyone

Eternal

and

peace

the

on

for

way

industry for research, engineering and technology into the

tolerate

forget

never

<

Prince of Peace Himself shed Hi

fort to turn the genius of AmeriCan

was

which

lar to

a

ever

tivity

dollar

the Purchasing
of

do

business but by the
profits tax. The operation
of the excess profits tax provides
ever

bZness

J

has lost much of its

should consider

question

—

_

needs of the

an

The

ago

confidence, and it is a very positive point in my own mind. It is

sult?

than

pointing

th*

11

page

purchasing power and forces in
action today are likely to drive

i rtV\'f

mind goes
post-war period are a direct back to ten
years ago, to the profunction of the amount of research
gram to-which the chairman reduring,the war period. The re- ferred in the introduction. I was
search, work of American, business on,thissame
platform in 1941 with
will be stimulated not only
by the General Knudsen, and the audi-

more

years

present

I think of
nrlol

from

The individual who

a

_

10

12 months ago.

as

tn

accomplished.

It

a

nrirfp

that American

make the
on

eiannin*

Security and How to Obtain It
Annuities.

war

?°r the marriage rate has declined
J? % pasA12 ™lhs' as
p p

has

hp

|

Continued

Neither the birth rate

peace.

search and capital expenditures in

excess

However, if the lead is set in
this

'

business

lag of that kind.
Total

these

periods.

•

ereat

output

some

emergency period.

cause

given industry in the period
three or four years from now

_

their backs and

gentlemen,
you
feel has again done the
job it was
Pretty bad and pretty confused, called upon to do, and in so doing,
Pretty discouraged, but you have American business will occupy the
yourselves-to the task of turn- good graces of the American peoln& ou* a so5*
muscle 0f output, pie and will command the admiai? a Jear xr°,m to<Jay> a year and ration of the whole world for its
a half from today, this same bunch remarkable genius in production
°* men» w"° are s0 downhearted capacity.

going on in this country
today, what I shall refer to as the

that people use about the capacity

J

on

to the fact that American business

saic*>

the

be

to

plant.

Furthermore,

*

ways

this

outside

essence of it was simply this:

defense

the

Obsolescence

other

at

impossible,

but. I recall my effort on that occasion to say something I thought
would be to the point, and the

in favor of that.

are

quite

that

So

new

Furthermore,

that

in the leading

There

companies, and

that

and

about

that depends to

reconversion

what

High

will

other

35

ent income may

to

of

for

seemed

tor the readjustment that might
°ccur when we taper off from this

stand-by in nature.

a

pace

about

purposes

and

have

and

'most

a

tonight

with

disheartening to

is usable

purposes.

it

was

It

stand-by capacity theory does not
apply. But in a great many other

more

to

Russia. If Russia should

a

it

it

extreme degree.

peace

steel.

same

it

true

same
t

i

cilities

down

important cushion
against shakedown, transition and

interchangeable,

it

make the

be

certain prod¬

are

are

steel.

as

ordinary civilian

the

That

things. There

such

taper

year.

will provide an

the

theory of stand-by
capacity, and much of the ca¬
pacity that is being built today

for

a

thing to do is to assume a con¬
tinuing defense operation at a

manu¬

that

so

products.

ucts

decide

For practical purposes, the only

in

suddenly turns red-hot, we
quickly turn out the end

period.

on

the odds

fast pace, but the

very

bugs all ironed out of the

facturing

in

don't

we

we

stockpiled

bureacracy and regimentation

suddenly turn very friendly and
kindly toward us, build a peace,
why we might discontinue, but
you know, as well as I do, what

intent of the theory is to increase

That

$60

or

we

period of time.

extent

warehouses and which become ob¬

can

$55

and will continue at that

produce in the way of finished

formula

function

zero,

some

ca-

theory of this whole defense

crisis

around

and then

year,

would be around $35 billion a year

a

of

considerably the threat of excess
capacity. Much of this new caparity is of the stand-by variety.

an

a

taper off. We don't taper down

war

there

amount

read-

tions

increase

somewhere

The most probable tapered figure I can suggest

and

program

should
little bit

Suppose
program

billion

now,

that they will allow the

"

0f

peace.

or

pacify, then. However, most authorite who have discussed this

as

total

g0 to a peak defense

we

the top of the

post-emergency

no

certain

about

two

from

years

over

defense

a

have

great

a

guess is

industries.

•

briefly, a ques¬
find is growing in im¬

justment, what about
pacity at that time?

all

to

war

are

from

«»ly»hofghah1nnf1'«^1,mi?iferTh»f
£lg"re
billion. That

formula to go through or not. My

amount will

•<

American

scrapping of old plant, high-cost
plant, than is normal under condi¬

wage
■■

infla¬

We
go

~

into

the

more

more cour¬

would be

insidious

.

not

pressure

labor

big

whether
'

is

wages

the question is

increase

the

capacity?

are

to apply the power they al-

from

total

12

great

we

ready have. If they have the
age

in

businessmen.

many

"

power,

from the

portance in the minds of

al-. fields

two

of the control officials

some

some

in

or

in the next

arise

payroll

tion that I

or

I started that statement with

:

prices

shall treat rather

can

demobilization.

likely next time to

$5 billion

living index, but the

economy.

'

,

industrial

of

months will

whether

the

of

cents

ten

between

crease
«

not

to

threat of inflation

an

ment plus
*

complete

Of course,

the

re-

To try to stand up at that time
When I think of the post-emer- and say
anything that was useful
gency period, I do not think of or that one could have conviction

to

months, will be in payroll. It will

I

such

embody the
.

where

Thus, the net conclusion that I
might draw would be that the
big inflation over the next 12

produc-

research.

the productive capacity, to get the

tracts today are based on the cost

just

suits of

at the

billion.

five years

or

new

to

period

$20

four

or

through

now,

tive facilities

.

f

of

from

increase

a

up

until February and March of this

-year.

we

period three

now*

a

say

again at the rate of 18%

go up

of

kind.

if

as

year. That would probably be
$180 billion, roughly, a year from

aw-

it would
3%. But it will not

fully thin, I would

-be

that

figure for total income
$160 billion of labor income

was

get

prices,

to get down to slice

i

^

of

end

come

The base

by less than 5%, and if I had

up

•

;

year

Where will this index be

the

into

rate

or

i

of

payroll will

we

,

«

factors

coming

three

.'

would

However, it would look

when

i

-

balance

from overtime pay, a longer work

to Feb¬

ion

More1Yian half from a
of that
would come

the straight-time hourly

in

ruary of this year. We stand today
'i about where we were in February

;

$20

billion

change

from now it
billion more than

year

a

a

stance, over the past nine mdnths,
*the most striking part of the in.

$20

think

I

payroll, somerather astounding,
payroll would increase,
is

be

annual

-I think it will take forms

'people

!oiS

are

but that it will
'not
be as exaggerated
as
most
people today seem to anticipate.
what

that

s°

would

revival of the

a

trend

to

that

total

total

Resurgence

here

'inflationary
'part of this

mind

own

anything I say
question today.

as

•inflation

happen
thing
The

total

long

as

there

are

men

and

Joins Gibbs & Coe

nations lacking the means of liv-

(Special to The Financial Chronicle)

ing decently which others enjoy,
long shall we have social strife,
hatred and wars; so long will des-

Kerrigan is now affiliated With
Gibbs & Coe, 507 Main Street.

so

WORCESTER," Mass.—John
_

J.

36

The Commercial and Financial Chronicle

(2276)

group.
There was a rise among small casualties, those
liabilities under $5,000, to 41 from 36 in the previous week

The State oi Trade and
of

Industry

About 2,500 Champion em¬

this month "as promised."

steel

ployees will be laid off.

Optimistic statements

on

future steel supply by top-drawer

officials of government and industry will probably come true in
1952.
But right now, and for a good many months to come, there
Is not enough steel to support the guns-plus-butter economy to
which

are

we

committed, states "The Iron Age," national metal-

working weekly, the current week.
being debated,
heavy expansion commitments which will
raise the industry's annual capacity close to 120,000,000 net tons
by the end of 1952 or early 1953. This is almost a 20% expansion,
While

other

a

expansion programs were still

Food Price Index Turns

alon$ is about what Washington officials estimate will be
needed for strictly military needs.
This capacity will fulfill the

estimates of future military needs
civilian economy. Yet no one
is being starved for lack of

and still support a record-breaking
can
blame the manufacturer who
metal from

taking

a more

shortsighted view.

The blunt fact is,

there is not now enough steel to meet all demands by all types of

The

in food

prices

represents the sum total of the price per pound
use and its chief function is to show the
general trend of food prices at the wholesale level.
The index

of 31 foods in general

Wholesale Commodity Price Level

,

The orders have

asides.

mills still have

come

in

so

fast and heavy that

One mill reports it will have to again boost the amount of
plate produced on its strip mill to meet its share of the directive
on plates.
Another mill has been turning out a large tonnage of
plates on its strip mill for several months. If steel for their own
expansion is added to DO and directive tonnage, several mills are
now getting close to 75% controlled distribution—on some prod¬
ucts it is 100%, this trade weekly notes.

Consumers

are

books

closed.

redoubling their efforts to get DO's in before
Some are sending orders by registered
mail, which requires a dated receipt. Some customers who have
extended DO orders are canceling them and re-entering them in
an earlier month—-this is made possible by the revised set-asides
percentages, concludes "The Iron Age." .
the

are

The American Iron and Steel Institute

announced this week

that the operating rate of steel companies having 93% of. the steelmaking capacity for the entire industry will be 102.7% of capacity
for the week beginning May 28, 1951, based on the industry's in¬
creased capacity of Jan.

1, compared to
decrease of 0.9 of a point.

ago, or a

The steel mills

ingots

2,071,000

in operation

on

Memorial Day.

date last year.

a

and

castings

for

the

A month

week ago.

duction yielded 2,079,000

entire

ago

industry, compared

the rate

was

104% and

to

pro¬

tons.

A year ago it stood at 101.5% of
the old capacity and amounted to 1,934,900.

Electric

Output Shows Improvement

The amount of electrical energy distributed by the electric
light and power industry for the week ended May 26, 1951, was
estimated at 6,652,699,000 kwh., according to the Edison Electric
Institute.

♦

The current total

*

93,481,000 kwh, above that of the pre¬
vious week, 758,917,000 kwh., or 12.9% above the total output for
the week ended May 27, 195Q, and 1,382,528,000 kwh. in excess of
the output reported for the corresponding period two years ago.
was

carried prices to the lowest for
in

the

decline

The

week's total represented an increase of 66,162 cars, or
8,9% above the corresponding week in 1950, when loadings were
reduced by railroad labor difficulties, and an increase of 35,565
cars, or 4.6% above the comparable period of 1949.

Mildly Higher

Combined motor vehicle production in the United States and
Canada the past \yeek, according to "Ward's Automotive Reports,"
totaled 160,325. units, compared with the

156,111 (revised) units and 186,249 units

previous .week's total of
a

year

ago.

The auto

industry faces a drop of more than 20% this week,
to about 120,000 units, according to the above trade
authority,"
since assemblies will be halted
Wednesday for Memorial Day.
Almost the entire industry intends to operate this
Thursday and
Friday, except Lincoln-Mercury which will be down because of
materials shortages, the agency added.
For

the

United

States alone, total output was 152,804 units
against last week's revised total of 146,292 units, and in the like
week of last year 179,063. Canadian
output in the week totaled

7,521 units compared with 9,819 units

a

week ago and 7,521 units

in the comparable 1950 week.
Total output for the current week was made
up
cars and 34,431 trucks built in the United
States and

5,347

cars

of 118,373
a

total

of

and 2,174 trucks built in Canada.

Commercial and industrial failures rose to 191 in the week
ended May 24-from 171 in the
preceding week, Dun & Bradstreet,

climbed to

the highest level in the last seven
.weeks, they, were slightlv below
the 214. and 206 in the comparable weeks; of 1950 and
1949, and

down 37% from the prewar total of. 303 in 1939.;
Failures involving; liabilities of $5,000 i or more increased to

were
.




break

in

Washington

Offered to Investors
A syndicate

constituting a mer¬
headed, respec¬
tively, by the National City Bank
ger of two groups

of New

York and the Chase Na¬
tional Bank of New York, was the

successful bidder for the

$60,000,-

000 public school and institutional

building

bonds

construction

May 23.

of¬

The winning bid

a
price of 100.0094, a net
interest cost of about 2.0253% for
was

the bonds

to bear interest, at

varying rates,

as follows:
$40,000,000 public school build¬
ing bonds consisting of: $5,091,000
6s, due on May 1 from 1953 to

1955

inclusive;

$20,619,000

l%s,

1 from 1956 to 1965

inclusive;
due

and
$14,290,000
2s,
May 1 from 1966 to 1971

on

inclusive.

the rapid progress reported in planting of the crop under very
favorable weather conditions.
So-called dry areas in the South¬
west received further beneficial rains last week and tended to

$20,000,000 institutional build¬
ing bonds, consisting of: $2,546,000
6s, due on May 1 from 1953 to
1955 inclusive;
$10,309,000 l%s,
due on May 1 from 195*3 to 1965
inclusive; and $7,145,000 2s, due
on
May 1 from 1966 to 1971 in¬

limit

clusive.

were

course

rye

Corn, Which showed the greatest drop, was also depressed by

in wheat both for domestic and export
growing weather for oats and continued heavy
imports from Canada had a depressing effect on that market.
buying

interest

Good

account.

Domestic flour bookings continued on a hand-to-mouth

basis,
with export business remaining at a practical standstill.
The
actual cocoa market was steady the past week, while futures

largely due to continued absence of pres¬
primary markets. Domestic raw sugar prices moved
irregularly with final quotations around the previously estab¬
lished highs, following some easiness ip earlier trading. The world
sugar market was strong, reflecting a tightening statistical position
in Cuba.
Sales of refined sugar were slow, following the heavy
purchases prior to the recent mark-up to 8.50 cents a pound.
Coffee futures trended slightly upward in light trading.
scored small advances,

from

sure

Warehouse stocks

the first time in
Lard

was

of coffee

more

than

a

showed

a

decline last week

for

month.

irregular and higher at the

close, as rising hog

exerted a firming pressure.
Steels developed a strong
undertone following a sharp drop early in the period when values

prices

were

.

depressed by heaviest receipts .of the year.
steady to slightly firmer.

Slaughter lambs

Bonds Publicly Offered
The

Chase

National

-

National

City Bank syndicate made public
reoffering of the bonds at prices
to 'yield
from 1.30% to 2.10%,
according to coupon rate and date
of maturity.
The bonds are inter¬
est exempt from present
income taxes and legal
ments

Federal
invest¬
for savings banks and trust

funds

in

other

States,

York

New

and

certain

and

for

savings

banks in Connecticut and Massa¬

chusetts.
New Issue Advertisement

The

bankers'

of

advertisement

the terms of the public offering of
the issue appears on page 22 in
this issue of the "Chronicle.''

Spot cotton prices continued to hold at or near ceiling levels
while futures moved in a narrow range with little net change
shown

the

for

week.
Trading in futures was rather slow, but
spot markets increased moderately.
Demand from
mills showed some improvement, but trading was confined mostly
to small lots for prompt shipment.
Export inquiries for cotton
were more numerous with a slight increase in sales noted in the
Southwest.
Consumption of cotton during the five-week period
ended May 5 was estimated at 900,000 bales by the New York
Cotton Exchange Service Bureau.
This was equal to a daily aver¬
age of 36,500 bales for the period, as compared with a daily rate
of 45,600 bales in the previous, period, and 36,100 bales for the cor¬
responding period a year ago*

activity

Trade Volume Last Week Again

Despite
out

COMING

in

much

Lifted Modestly Above

promotions and favorable weather through¬

numerous

of the

nation,

spending was generally un¬
Wednesday of last week. What
increases there were occurred more frequently with soft goods
than with durable goods.
T6tal retail dollar volume was slightly
above the level for the corresponding week in
1950, Dun & Brad¬
street, Inc., states in its current trade summary.
consumer

changed in the period ended

on

Shoppers flocked to apparel stores last week to buy

a con¬

siderable amount, unitwise, in response to widespread markdown

promotions; dollar volume, however, was only slightly above the
levels of last week and a year earlier.
Among those lines in
rising demand were popular-priced cotton dresses, cruise wear,
lingerie and accessories, as well as men's furnishings.
Sports
_

items were also

increasingly sold by many clothiers*

Total retail dollar volume in the period ended on
was estimated to be from 1 to 5% above

Regional estimates varied from the levels of

a

year

Wednesday
a year

ago

ago.

by the

following percentages:
New

+4;

East

+.3 to —1;
South 4-1 to -J-5; Midwest and Southwest
+2 to +6; and North¬
west +3 to +7.

country-wide basis, as taken from
the Federal Reserve Board's index for the week ended May 19,
1951, increased
compared with

4%

from

on a

the

like

period

of

last

year.

This

increase of 3%

in the previous week, and an
increase of 4% for the four weeks ended May 19, 1951.
For the
year to date department store sales registered an advance of 11%.
an

estimated

trade volume

pro¬

in New York last week to an

5% gain above the like period of 1950.

"*

<-

According to the Federal Reserve Board's index, department
City i for the weekly period of May 19,
1951,. advanced 3% from the like period of last year. In the pre¬
store sales in New York

ceding week
week of 1950.

an

In

Investment 'Field

increase of 1%

was

registered, above the similar

For the four weeks ended .May 19,1951, air increase

of 5% was recorded above that of a yeas ago, and

'

June 1, 1951 (Baltimore, Md.)
Bond Club of Baltimore annual

outing at the Elkridge Club.
June

(Chicago, HI.)

1, 1951

Bond

Club

of Chicago

Field

Day at Knollwood
Lake Forest, 111.
June 1,1951

annual
Club,

(Cincinnati, Ohio)

Cincinnati Stock & Bond Club
Annual

Spring Outing aboard the

Delta Queen,

June 1, 1951 (New Jersey)
Bond Club of
nual

Field Day
Golf Club,

New Jersey An¬

at the Montclair

June 7, 1951 (New York City)

Security Traders Association of
New York

Bowling League dinner

at Antlers Restaurant..

June 8, 1951 (New York, N. Y.)

Bond
annual

Club of New York
Field Day

Hollow

England and Pacific Coast 0 to

Department store sales

EVENTS

-

-■

of last week

motions lifted retail

Inc.,^ revealed the current week.: Although casualties

sharp

longer.

Increasing demand for seasonal goods and good price

Business Failures Advanced Last Week

.

the

or

prices in Winnipeg and recurring talk of negoti¬
ations for peace in Korea.

grain and

Carloadings Advance Mildly in Latest Week

Auto Output Lifted

several months

1950 Level

Loadings of revenue freight for the week ended May 19,1951,
totaled 809,475 cars, according to the Association of American
Railroads, representing an increase of 1,348 cars, or 0.2% above the
preceding week.

State of

due on May

Grain futures on the Chicago Board of Trade fell sharply last
week under successive waves of liquidation and selling which

were

week's operating rate is equivalent to 2,053,000 tons of

This

steel

were

rate of 103.6% a, week

a

wholesale

The continued downtrend in the general level of

prices during the past week brought the Dun & Bradstreet daily
wholesale commodity price index to the lowest since the first
week of January.
The index closed at 319.13 on May 22, com¬
paring with 319.68 a week earlier, and with 262.22 on the like

some

idea where they stand for July.

Others are
certain, from orders received so far, that they will have no "free"
steel left over in July on bars, shapes and plates.
no

Extends Downward

Course

Thursday, May 31, 1951

.

.

$60,000,000 Bonds of

fered

Influential

Steel mills this past week have been swamped with a new
avalanche of DO orders resulting from the last ihcrease in DO'set-

were

wholesale

Bradstreet

&

DUn

year ago.

this trade authority points out.

users,

Irregular

irregular during the past
food price index for
May 22 declined one cent to $7.17, following the steadying move¬
ment of the previous week.
The latest figure represents a rise
of 21.5% over the $5.90 recorded on the corresponding date a
Fluctuations

steel companies made

which

having
and 38

year ago.

week.

Show Further Mild Decline This Week

Steel Operations to

135, but did not reach the 1950 level of 176 in this size

150 from

Continued from page 5

.

for the year to
date, volume: advanced 11% from the like period of last year.

Country
rough, N. Y.

27th

at the Sleepy
Club, Scarbo¬

June 8-9-10,1951 (San Francisco,

Calif.)
San Francisco

-Security Traders

Association annual spring party at
the Diablo Country Club, Diablo,

Calif.

y

June 11-14,1951 (Jasper Park,

Canada)
Investment Dealers Associa¬
tion

of

at

Canada. Convention

Jasper Park Lodge. '*•' *'
June 14, 1951

(St Paul Minn.)

Twin

City Bond Cltib annual
picnic and Golf.tournament at the
White

Bear- Yacht

Clufc—to

be

preceded, .by; the usual pre-picnic
get together Wednesday evening;
June 13.

[Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

The

Indications of Current
Business
AMERICAN

IRON

AND

STEEL

(2277)

week

Activity

Previous

Month

Week

Ago

June

3

102.7

Steel

(net

June

3

2,053,000

castings

tons)

month available.

month ended

Week

(percent of capacity)

and

or

or

Latest

INSTITUTE:

Indicated steel operations
Equivalent to—
ingots

following statistical tabulations

latest week

103.6

2,071,000

on

production and other figures for the

cover

Dates shown in first column

that date,

in

or,

of quotations,

cases

Year

Crude

PETROLEUM

2,079,000

oil

and

output

—

average

(bbls.

of

OF

1,934,900

NEW

Gasoline

daily -average

—

output
output

Kerosene

(bbls.)

6,177,100

6,162,100

6,143,750

May 19
May 19

(bbls.)

116,405,000
20.847,000

6,460,000

6,265,000

(bbls.)

;

;
May 19
fuel oil output (bbls.)
May 19
output (bbls.)
May 19
Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished and unfinished gasoline
(bbls.) at
May 19
Kerosene
(bbls.)
at
May 19
Gas, oil, and distillate fuel oil (bbls.) at
May 19

Gas,

oil,

and

fuel

Residual fuel

-

oil

(bbls.)

at

20,962,000

2,650,000

20,060,000

5,117,250
5,477,000
18,580,000

2,485,000

2,778,000

8,172,000

9,148,000

8,601,000
138,891,000

on

goods

foreign

OF

AMERICAN

124,669,000

CIVIL

ENGINEERING

CONSTRUCTION

of

14,698,000

39,432,000

Total

37,223,000

36,557,000

35,899,000

39,330,000

Private

ENGINEERING

—

Total

S.

U.

Additions

682,489

684,567

698,070

655,409

OUTPUT

(U.

$177,115,000

$151,792,000

$284,691,000

$291,190,000

80,789,000

74,811,000

129,041,000

May 24

S.

96,326,000

76,981,000

155,650,000

159,839,000
131,351,000

May 24

69,840,000

45,157,000

62,031,000

63,579,000

31,824,000

93,619,000

67,772,000

——

BUREAU

396

248

151

142

70

126

76

44

24

alterations—

(nonfarm)

„

125

coal and lignite
(tons)
Pennsylvania anthracite (tons)
Beehive coke (tons)

building

9,720,000

9,620,000

80

10,630,000

9,743,000

May 19

782,000

845,000

730,000

138,700

•139,200

129,700

106,100

and

Farm

STORE

TEM— 1935-39

SALES

INDEX—FEDERAL

AVERAGE=100

RESERVE

.

.

Other

285"

May 19

318

281

275

ELECTRIC

Electric

output

kwh.)

000

and

May 26

6,559,218

6,673,505

(COMMERCIAL

STREET

AND

INDUSTRIAL)

DUN

—

INC.

191

May 24

171

162

Military
IRON AGE

COMPOSITE

Finished steel (per lb.)
Pig iron (per gross ton)
Scrap steel (per gross ton)

KETAL

PRICES

(E.

4.131c

4.131c

3.837c

Miscellaneous

$52.69

$52.69

$46.38

Conservation

$43.00

$43.00

$34.17

All

24.200c

24.200c

24.200c

27.250c

24.425c

24.425c

20.425c

tin

(New

(New

Lead

(St.

Zinc

Louis)
St,

(East

S.

at

BOND

139.000c

139.000c

142.000c

78.375C

Private

17.000c

17.000c

17.000c

12.000c

Public

May 23

at

16.800c

16.800c

16.800c

11.800c

State

17.500c

17.500c

17.500c

12.000c

May 28

97.44

A

97.98
111.44

115.82

115.24

115:43

120.63

114.46

114.27

119.20

110.15

110.15

110.52

Group

Utilities

.-

105.52

105.86

106.04

107.80

108.16

107.80

Group

U.

S.

May 28

111.07

111.25

111.44

YIELD DAILY

114.85

115.04

115.24

(net

ERAL

As

2.67

May 28

.

8

$886,864,000

1

of

558,498,000
494,936,000

3.10

3.09

3.09

.

2.86

Group

2.89

2.89

2.88

2.93

2.94

3.16

3.14

2.88

May 28

3:42

3.40

"3.39

3.26

May 28

3.29

—

6,680,321

♦G,001,538

6,041,790

* 5,398,562

638,531

'"602,976

302,052

1,265,889

"1,068,698

549,897

$387,000

$381,000

$257,000

341.9

•340.8

309.4*

tons)—

—.-

tons)

of month (net

end

OUTSTANDING—FED¬

PAPER

BANK

YORK—

NEW

OF

(000's omitted)

April 30

-

i--

PURCHASES OF COMMODITIES-

< 1935-1 !>»!>=

INC.

—

month

of April:'

Copper production in U. S. A.—
Crude

of

(tons

Refined

91,055

•91,243

83,782

—-—

103,494

112,933

103,293

—

114,744

116,793

'101,729

52,800

55,609

57,028

25 7,658

•235,752

192,590

•203,814

155,011
164,440

209,100

240,000

176,400

pounds)——

2,000

of 2,000 pounds)—

(tons

Deliveries to customers—

3.27

3.29

3.11

3.10

3.09

2.81

In

May 28

Utilities Group
Industrials Group

2.91

2.90

2.89

2.65

Refined

3.13

U.

S.

(tohs of

A.

2,000 pounds)

stock

copper

of

end

at

period

(tons of 2,000 pounds)—
COMMODITY

INDEX

May 28

492.3

497.0

517.9

390.9

May 19

206,161

203,058

225,583

193,546

May 19

257,930

252,035

256,538

209,234

May 19

106

104

107

92

May 19

.—

activity-.

orders

(tons)

at—

680,105

732,449

694,218

358,627

INSTITUTE

OF

(AMER¬

STEEL

CONSTRUC¬

STEEL

TION)—Month of April:

*

—

(tons)

Percentage of
Unfilled

ASSOCIATION:

(tons)

STRUCTURAL

FABRICATED

ICAN

PAPERBOARD

Production

5,280,660
4,978,608

—-—

—

tons)

(net

RESERVE

of

May 28

„

received

55,741,060

Mar.

—

tons)

(net

COPPER INSTITUTE—For

2.69

3.16

Public

Orders

551,681,000
335,183,000
279,442,600

2.62

2.93

May 28

;

;

NATIONAL

344,574,000
177,524,000

2.31

May 28
2—

,

MOODY'S

884,358,000
522,098,000

264,860,000
230,076,000

1—-——

& BRADSTREET,
100)—Month of April

2.63

2.68

.—May 23

—

■

Railroad

13
73

7

'

'

—.

Aa

—

13
58

EN-

Month

—

DUN
J

Aaa

Baa

«

8

—

stocks at

120.02

May 28

-

—

—

MINES)—Month of

OF

coke

COMMERCIAL

AVERAGES:

Bonds

Average .corporate

A

CONSTRUCTION

municipal

coke

Oven coke

116.80

May 28

Government

52

18

—

——

CONSUMER

KOODY'S BOND

:

NEWS-RECORD

(BUREAU

Beehive

110.70

Industrials Group

and

Oven

108.34

May 28

—

145

53

115.43

—May 28

..—

Railroad

•110

38
■

70

enterprises—

development

construction

Production

102.56

111:44

115.24

May 28

4

—

Baa

;

.
—

111.25

May 28

—

1J.

97.33

May 28

114:46

IL

Aaa

rr.%—

36
•38

$1,053,434,000$1,406,456,000

public-service
and

construction

Federal

DAILY AVERAGES:

Bonds
,

13
87
40

-

47

construction

S.

May 23
_

PRICES

corporate

U.

May 23

:

Louis)

Government

Average

Public

Total

May 23

at

at

39

59

public—

ENGINEERING

COKE

KOODY'S
U.

York)

York)

115

April ^

20.200c

May 23

Leau

other

GINEERING

May 23

refinery at
refinery at

178

•42

46

facilities-.

water—

4.131c

Export
Straits

and

$43.00

Domestic

•232

41

institutional

naval

$52.69

Electrolytic copper—

28

160

and

May 22

CIVIL

506

35

'

125

—

-

and

May 22

QUOTATIONS):

11

•546

,

50

May 22

-

J.

M.

&

Sewer

40

187

,:5

262

building

Highways

PRICES:

36

190

'

41

———————

Other nonresidential building—

214

26

665 '

building

Hospital

88

253

20

6

——

Industrial

BRAD-

&

83
246

38

—

-

.

construction

Nonresidential

5,893,782

10

'

205

telegraph-.

utilities

Educational

FAILURES

19

268

,

private

Residential

INSTITUTE:

(in

17
27

95

—

public

ether

20

16

22

—

*

All

Public

EDISON

26

32

25

utilities

Telephone

SYS¬

.«

38

.

15

v

construction

Public

52
102
•

34

—,—

institutional

Railroad
DEPARTMENT

35

979,000

May 19

128

26

recreational—

and

82

132

-

Educational

Miscellaneous

May 19

.

35

nonresidential

Religious

»

Bituminous

45

—

Other

Hospital

MINES):

OF

and

Warehouses, office and loft buildings—
Stores, restaurants, and garages

Social
COAL

12

408

Nonhousekeeping

May 24

municipal

,-70

16

units

743,313

26,486,000

and

£00

•60

(nonfarm)

Commercial

construction

State

dwelling

809,520

__May 24

:

882

775

—

building

808,127

NEWS-

:

1,482

•851

OF

millions):

(in

construction

Nonresidential building
Industrial

construction—

construction

Public

$1,988

•1,581

70

DEPT.

•$2,127

911

S.

April

construction

809,475

RECORD:

Private

$2,353

825

of

14,596,000

$236,794,000

16

Month

—

new

26,493,000
$478,590,000

1,688

CONSTRUCTION—U.

14,648,000

42,957,000

May 19

cars)

8,466,000
25,000

between

31,297,000

May 19

(number

shipped

$455,904,000

LABOR

17,740,000
47,056,000

New

freight loaded (number of cars)
Revenue freight received from connections

and

countries

BUILDING

18,725,000
48.826,000

RAILROADS:

Revenue

1,703,000

credits

stored

Total

Residential

ASSOCIATION

9,260,000

18,278,000

,

7,435,000

134,522,000

—

exchange

Based

7,068,000

132,742,000

May 19

$157,392,000
47,055,000

11,952,000

BANK

-

warehouse

Dollar

2,140,000

8,035,000
8,956,000

oil

105,731,000

OUT¬

of April 30:

shipments

Domestic

8,353,000

distillate

Residual

$314,433,000

11,634,000

2,380,000

YORK—As

Domestic

May 19
stills

to

runs

Ago

11,978,000

ACCEPTANCES
STANDING—FEDERAL RESERVE

42

gallons each)
Crude

Year

Month

110,874,000

DOLLAR

Exports

daily

Previous

$287,741,000

BANKERS'

INSTITUTE:

condensate

of that dates

are as

Month

101.5

Imports
AMERICAN

the"

either for

are

Latest

Ago

104.0

37

—

,

Contracts

GAS

(tonnage)—estimated
estimated-—

closed

Shipments

_

(tonnage)

MANUFACTURERS
of April:

APPLIANCES

ASSO¬

CIATION—Month

OIL,

PAINT

AND

DRUG

REPORTER

PRICE

INDEX—1926-36

STOCK

TRANSACTIONS

LOT

DEALERS

FOR

AND

THE

sales

Number

ODD-LOT

SPECIALISTS

EXCHANGE—SECURITIES
Odd-lot

ON

EXCHANGE

by dealers (customers'

of

ACCOUNT
THE

N.

OF

Y.

ODD-

153.8

154.5

120.6

(units)
METAL

~

May 12

35.027

38,178

30,496

1,054,901

911,732

895,211

—May 12

$48,829,178

1,154,695
$53,432,366

$40,480,963

$38,005,059

May 12

30,853

34,320

28,718

Number of

May 12

orders—Customers'

Customers'
Customers'

Number

short

208

261

398

172

other

sales.,

30.645

34,059

28,320

other

>

972,495

806,061

sales—

9,401

6,118
946,487

$36,163,276

May 12

Rouncl-lot sales by dealers—
Number of shares—Total sales

963,094

$37,121,079

$41,932,600

$32,976,365

May 12

_

sales

Round-lot

262,910

259,080

Number of

(in

May 12

227,210

259,080

U.

S.

DEPT.

OF

227,210

410,080

362,890

450,750

258,740

LABOR—

products

156.3

198.2

197.1

202.4

165.6

183.0

184.7

189.9

170.9

Textile

than

farm

and

foods

Building

metal

materials

railway operating
income

•

INCOME ITEMS

and

•Revised.

JNot

allied

273.8

220.3

Income

160.6

Other

276.8

234.3

Net

171.1

171.2

.171.7

147.9

184P

183.3

183.9

136.3

138.5

138.4

138.3

132.3

^Includes 5G3,000




189.5

189.5

189.6

170.1

May 22

products

available.

227.4

•227.4

227.5

199.1

358.9

358.9

358.9

X

142.2

•143.6

144.0

116.1

May 22

barrels

$715,758,861

$743,325,732

610,060,029

of foreign

crude

runs.

.

:

574,408,276

(est.)

OF U.

$18,9 58,789

$77,690,910
19,636,593

$14,772,247

31,485,326

*85.23%

$71,478,680
18,958,787

77.28%

$79,745,441
75.762,315
51,000,000

Commission)

Commerce

February:
income—

———

for

fixed

deductions

from

fixed

charges

—

structures & equip.)—
defense projects

4,126,335
32,346,37-

2,620,142

92,822,068

28,865,184

f472,736

income—:—-

charges

income

57,960,725

15,156,514

3.035,152

3,161,444

54,925,573

18,317,958
34.842,685

36,441,925

Depreciation (way &
of

Amortization

Federal
Dividend

income

taxes

On

common

stock

preferred

Ratio of

———

1.662,582
20,917,350

1,898,759

1,374,594

57,151,311

10,147,574

10,055,982

20,983,673

6,764,695

14,308,456

2.66

0.S5

appropriations:

On

income

•Revised.

i'.-r'oha
32,3o6.968

stock
to fixed charges———r-

fMonthly

16,713,4)79

4,505.435

3.045,579
^518,315

deductions

available

after

t3,000,000

S.' CLASS I

income

Income

188.0

1

of

Miscellaneous

274.4

May 22

1

Chemicals

$875,475,035
679,662,378
77.63%
$101,438,761
78,262,802
51,000,000

income

Total

259.3

May 22

;

_

151,517

—

income before charges

charges

railway operating

•187.7

«

alter

(Interstate

RYS.

267.0

May 22

."

products

materials

Lumber

13,534,927

•56,878

-

,

Net

187.5

May 22

lighting

and

ICRS.)

-

274.7

May 22

products

and

Metals

other

AMERICAN

Operating ratio-per cent

May 22

commodities

ROADS

I

operating revenues

May 22

May 22

Meats

,

.

May 22

Foods

Fuel

183.6

182.2

May 22

Livestock

All

182 4

CLASS

operating expenses

Net

-May 22

Grains
:

•3,395.847

March:

Total

Other
Farm

3,724,895

——

319,910

1926=100:

All commodities

+35,823

97,327,503

OF

—<

Total

—Month
—

t75,583
1199,307

•33,870

tons)—

Net

262,910

May 12
SERIES

•73,012

•150,340

63,094

ounces)—.

EARNINGS

of

SELECTED

shares

NEW

fine

(ASSOCIATION

'

—May 12

PRICES

83.086

162.344

—

tons)———

short

(in

Month

319,910

purchases by dealers—

WHOLESALE

the

37,615

1

ounces)———————

short

Taxes

sales

Other

1^861,834

13,969
792,092

May 12

,

value

Short

(in

RAILROAD

952,605

7,758

sales

Customers'

(in fine

Silver

33,660

869.592

May 12

short

Dollar

1

May 12

—May 12

—

sales

Customers'

Gold

'Lead
Zinc

sales

sales

shares—Total

of

total

—

33.832

,*

Odd-lot purchases by dealers (customers' sales)—

,

MINES)

States:

(in short tons)—

Copper

29,282

May 12

——

value

OF

March:

of

United

purchases)—

(BUREAU

OUTPUT

production of recoverable metals in

Mine

orders

heaters

water

gas

—

Month

STOCK

COMMISSION:

Number of shares—
Dollar

153.2

May 25

automatic

of

Shipments

AVERAGE—100

average

1950.

XDeficit.

0.99

38

(2278)

The Commercial and Financial Chronicle

Securities Now in
Air Lifts Inc., Washington, D. C.
April 23 (letter of notification) 30,000 "senior shares"
(par $1). Price — $10 per share. Underwriter — None.

Proceeds

Nov.

1

filed

($1

Gold

Mines

Hollywood,

Corp.,

of 198,000

or

&

Co.

•

(owner

Co., Chicago, III.
May 8 (letter of notification) 7,652 shares of common
stock (par $2) to be offered in exchange for 15,304 shares
of common stock (par $1) of Metal Disintegrating Co.,
Inc., on a one-for-two basis. Underwriter—None. Office
•

May 24 filed 368,428 shares of

scription privilege; warrants to be mailed on June 15;
rights to expire on June 29. Price—To be supplied
by amendment. Underwriter—None. Proceeds—To assist
subsidiaries in financing their property

sion programs,

Appalachian Electric Power Co.
May

23

filed

June

Probable

bidders:

Stuart &

Co. Inc.; Kuhn, Loeb & Co. and Union Securities Corp.

(jointly); The First Boston Corp.; Harriman Ripley &
Co., Inc.
Proceeds—To repay bank loans and for new
construction.

Bids—Expected
(EDT) on June 26.
+

a.m.

to

received

be

up

11

to

Arizona Edison Co. (6/5)
April 24 filed 40,000 shares of common stock (par $5).
Price—To be supplied by amendment.
Underwriters—
William R. Staats Co., Los Angeles, Calif.; A. C. Allyn
& Co., Inc., Chicago, 111.; and Refsnes, Ely, Beck &
Co.,
Phoenix, Ariz. Proceeds—To repay bank loans and for
new construction,
^
•

Armstrong Rubber Co., West Haven, Conn.

May 21 (letter of notification) 1,000 shares of 4%%

(par $50) and 1,000
par). Price — The
preferred at par and the common at $25 per share.
Underwriter—Gruntal & Co., New York. Proceeds—To
Frederick

Machlin, Vice-President of the

Arwood

April

18

Casting Corp.
notification) 4,000 shares of 5%%
non-convertible preferred stock being of¬
of

fered; to stockholders and publicPrice—At

par

($25

up

to

July

1,

share).
Underwriter—Nonecapital. Office—70 Washington

Street, Brooklyn 1, N. Y. •;
•

Ashland Oil & Refining

Co., Ashland, Ky.
May 21 '(letter, of notification) 1,000 shares of common
stock

$35

(par

per

$1).

share).

working capital.
Ky.
•

Atlantic Oil

Price—At

the

Underwriter

—

market

None.

(approximately
Proceeds

—

For

Office—1409 Winchester Ave., Ashland,

to

offered

ment of

a

representing

/

(6/12)

Proceeds—For

working capital.

Culver Corp.,
Oct.

—

None.

Proceeds

—

For

equipment and

working capital. Office—300 Wall Street, Seattle 1, Wash.
Bigelow-Sanford Carpet Co., Inc. (6/20)

May 16 filed 100,000 shares of

cumulative preferred stock
(par $100), of which 39,604V2 shares are
issuable to holders of 26,403 shares of
6% preferred stock
on the basis of
Wz shares for each preferred share held.

series

of

1951

The dividend rate "will be not
less than 4JA%
than 5%. Price—To be

nor

more

supplied by amendment. Under¬
writers—Harriman Ripley & Co., Inc.;
Kidder, Peabody &
Co., and F. S. Moseley & Co. Proceeds—For general cor¬
porate purposes. Stockholders will vote June 19 on
ap¬
proving issue,
+

Burlington Mills Corp.
March 5
stock

filed

300,000 shares of convertible preference
(par $100). Price—To be supplied
by amendment.

Underwriter—Kidder,

Peabody
&
Co.,
New
York.
Proceeds—For additions and
improvements to plant and
equipment. Offering date postponed.

Byron Jackson Co., Vernon, Calif.

May 18 filed 100,000 shares of capital stock
(par $10).
Price—To be supplied by amendment.
Underwriters—
Blyth & Co., Inc. ana Elworthy & Co. (of Los
angeles
and San Francisco). Proceeds—To
construct and equip
a plant in the Province of
Ontario, Canada. Statement
subsequently withdrawn.




^

.

.

explora¬

ana

^

•

23

filed

Chicago, III.

132,182 shares of common stock

(par $5),

of which

4,818 shares were subscribed for by stockhold¬
127,364 shares are to be offered to public. Price—,
To stockholders at $5 and to public at about $6.77 per

ers

and

Underwriter—Dealers may be underwriters. Pror
investments in railroad and kindred secur¬

share.

t-

stock

common

rarily postponed.

Louisiana

Electric

Cumberland

(par $10)

Co., Inc.,

of common and

held

a
as

stock

(par 10 cents).

writer—None.

Co., Inc.

basis of 4/10ths of

on

l/25th of

share

a

share-

share of preferred for each
of record March *13*"'This

(Md.)

Motor Express Corp..

-m

Deardorf Oil Corp., Oklahoma City, Okla.
May 18 (letter of notification) 200,000 shares of common
,

which the preferred stock and 214,800 shares are being
offered in exchange for shares of common stock of Gulf

Public Service

Offering—Tempo¬

April 11.

*

April 26 (letter of notification) $150,000 of five-year 5%
notes and 50,000 shares of common stock (par $1) to beoffered in units of $1,500 of notes and 500 shares of stock.
Price—$2,000 per unit. Underwriter-rF. S. Yantis & Co.,
Inc., Chicago, 111.
Proceeds—To retire thre£~year 5%.
promissory note. Office—Springdale and Third St., Cum-,
berland, Md. Offering—May be made privately.

.

.

Statement effective

ities.

219

Price—70 cents per share. Under¬
pay obligations.
Office—

Proceeds—To

Fidelity Bldg., Oklahoma City, Okla.

v

,

...

Drewrys Ltd. U. S. A., Inc., South Bend, Ind.
\
May 14 (letter of notification) 6,915 shares of common
stock (par $1).
Price — $14 per share. UnderwriterBear, Stearns &-Co., New York. Proceeds—To Carleton
S.

Smith, the selling stockholder.

.

•

ElgiiU Sweeper Co., Elgin, III.
* ..i*
April 18 (letter of notification) 38,864 shares of common
stock (no par..being offered to common stockholders of
record April 28 on basis of one share for each two
shares held, with an oversubscription privilege; rights
to expire about June 11.
Price—$5 per share. Under¬
writer—None.
Proceeds—For working capital.
Office
^

offer will expire on June 15 and will not be extended.
Of the remaining 35,497 common
shares, 20,348 shares

offered

to

Central

Louisiana

May 1, 1951 at $26.50

share for each

17

stockholders

common

share

basis of one
shares held, with rights to expire on
per

on

Statement effective March 12.

Underwriter

drilling

sinking fund debentures due1
April 1, 1966. Price —To be supplied by amendment.
Underwriter—Halsey, Stuart & Co. Inc. Proceeds—To
reduce bank loans by $9,000,000, and the balance added
to working capital.
Offering—Indefinitely deferred.

less

Underwriter—

than

None., Purpose—To acquire not

429,600 shares

(80%)

of Gulf

common

stock.

5

Chevron Petroleums, Ltd., Toronto, Canada
March 14 filed 900,000 shares of common stock
(par $1)
to be offered "as a speculation."
Price — 50 cents per
share.

Underwriter—Willis E. Burnside & Co., Inc., New
Proceeds—To take up option and develop prop¬
erties.
Offering—Not expected before the middle of

York.
June.

Oak

land, O.

May

Illuminating Co.

(6/19)

23

filed $25,000,000 of first mortgage bonds due
1, 1986. Underwriter—To be determined by com¬
petitive bidding. Probable bidders Halsey, Stuart & Co.
Inc.; Dillon, Read & Co. Inc.; Blyth & Co., Inc.; White,
Weld & Co.; The First Boston
Corp.; Glore, Forgan &
June

Co.

and

W.

C.

Corp., Erie, Pa.

(6/13)

Proceeds—For working capital.

Farmers Mutual Telephone Co., Madison, Minit.

May 9
Electric

Resistor

May 21 filed 84,000 shares of common stock (par $5), of
which 19,593 shares are for the account of the company
and 64,407 for selling stockholders. Price—To be supplied
by amendment. Underwriter—Fulton, Reid & Co., Cleve¬

*

Cleveland

Street, Elgin, 111.

Erie

•

(par 1 cent), the latter to be issued to Walter
Berry for services. Price—For preference stock, $1 per
share, and for management stock, 1 cent per share.

24

Cudahy Packing Co.

the construction and equip¬

June 4.

ment stock

and

March 23 filed $10,OoO,000

building and for other general corporate

Oklahoma.

Berry Metal Co., Seattle, Wash.
May 22 (letter of notification) 298,508 shares of prefer¬
ence stock (par 25 cents) and
149,200 shares of manage¬

in

tion expenses and

common

stock to be issued at par ($5 per share) in
part payment
of additional
producing oil properties in Kansas and

Office—629 Kennedy Bldg., Tulsa 3, Okla.

Chicago,

of voting trust certificate*
share of one and two cent par com¬
companies.
Price—$2 per unit.
Un¬

one

derwriter—None.

Co., Ltd.

.

common

stock

mon

250,297 shares of common stock (par $10)
21,480 shares of 4.5% preferred stock (par $100), of

Gulf

Inc.,

Cuban-Venezuelan Oil Voting Trust

Jan. 25 filed
and

Harris,

&

ceeds—For

new

Central

Fairman

March 29 filed 1,500,000 units

Underwriter—Harriman Ripley & Co., Inc.,
Hemphill, Noyes, Graham, Parsons & Co., New York.

of record
common

writers—Sills,

amendment.

purposes.

Corp., Brazil, Ind.

5

Gearhart, Kinnard & Otis, Inc., New York. Proceeds—
For working capital and general corporate
purposes.
Temporarily deferred.

stockholders, of record June 12,
1951, at rate of one new share for each three shares held;
rights to expire on June 26. Price—To be supplied by
and

Car-Nar-Var

Price

Proceeds—None.

(letter of notification) 150,000 shares of com¬
(voting) stock (par $1). Price—$2 per share. Under¬

mon

Copper Co., Ltd., Vancouver, B. C.,

Carrier Corp.
be

Inc.

supplied by amendment.

Continental

April 20 filed 200,000 shares of capital stock. Price—At
par ($1 per share). Underwriter—Harry M. Forst. Pro¬
ceeds—For exploration and development work.
•

Co.,

by executives and employees of the company.

March

Canada

are

Corp., Tulsa, Okla.

May 15. (letter of notification) 43,046 shares of

& Gas

owns

Statement effective March 2.

tion

(6/11-16)

Canam

now

Can

Continental

—to be

May 24 filed 1,000,000 shares of capital stock (par $1—
Canadian). Price—To be supplied by amendment. Un¬
derwriter—Hemphill, Noyes, Graham, Parsons & Co.,
New York, as to 875,000 shares and Gardiner, Watson &
Co., Toronto, Canada, as to 125,000, shares. Proceeds—
For exploration and development of properties in Canada.

1951.

per

Proceeds—For working

Calvan Consolidated Oil

Proceeds—To help finance

Precision

(letter

cumulative

company.

and

..

•
t

May 24 filed 216,575 shares of
cu¬

mulative convertible preferred stock
shares of class A common stock (no

Inc.,

Co.; Blyth & Co., Inc., The First Boston Corp.
and Salomon Bros. & Hutzler (jointly).
Proceeds—To
repay bank loans and for new construction.
Bids—Ex¬
pected to be received on June 12.
^
j
;

(6/26)

Halsey,

Co.,

Weld &

$17,000,000 of first mortgage bonds, due
Underwriter—To be determined by com¬

1, 1981.
petitive bidding.

&

(jointly); Shields & Co.; Merrill Lynch, Pierce, Fenner
Beane and Kidder, Peabody & Co. (jointly); White,

expan¬

(Consolidated

May 24 filed 230,000 shares of common stock (par $20)
to be purchased in open market and offered for subscrip¬

&

.

..

Co.

•

bidding. Probable bidders: Halsey,' Stuart & Co. Inc.;
Smith, Barney & Co. and Carl M. Loeb, Rhoades & Co.

and

Manufacturing

expire June 29.

California Oregon Power Co. (6/12)
May 21 filed $6,000,000 of first mortgage bonds due June
1, 1981. Underwriter—To be determined by competitive

of which company plans to offer 334,935 shares to com¬
stockholders of record June 12, 1951, at rate of one
new
share for each ten shares held, with an oversub¬

Bates

51,400 shares, or approximately 13% of the 391,500 out¬
standing Bates shares) on basis of 11 shares of Consoli¬
dated for 10 shares of Bates stock.
Exchange offer to

Price—To be supplied by amendment. Underwriters—
Blyth & Co., Inc., and The First Boston Corp. Proceeds—
To repay bank loans and for new construction.

mon

system

of

(6/12)

Underwriter—Blyth

share.

per

Co., Inc., New York
(par 10 cents),
stock

offered in exchange for 200,000 shares of common

Oregon Power Co. (6/6)
May 21 filed 250,000 shares of common stock (par $20).

(no par),

stock

Consolidated Textile

California

(6/15)

common

aniencl-

Dec. 27 filed 220,000 shares of capital stock

Hooker & Fay, both of San Francisco, Calif. Proceeds—
To pay part of cost of plant expansion program.

St., Chicago, 111.

American Natural Gas Co.

Calaveras Cement Co.

$10

American-Marietta

—43 East Ohio

ISSUE

—

May 23 filed 118,066 shares of common stock (par $5)
to be offered to common stockholders on basis of one
new share for each two shares held on June 12.
Price—

15.1% of outstanding shares).

shares,

Allen

ADDITIONS

PREVIOUS

Where

sources.

(★) appearing at the end
of the respective listings. As heretofore, the symbol
(*) preceding the name of the prospective borrower
indicates that it is an entirely new listing.

American Bosch Corp., Springfield, Mass.
May 17 filed 98,000 shares of common stock (par $2).
Price—At the market (approximately $15 per share).
Proceeds—To

reliable

changes have been made during the past week, this

Calif.

Underwriter—None.

compilation is brought up-to-date
week in accordance with later information made

is indicated by the symbol

Price—At

stock.

common

SINCE

Underwriter—Eastman, Dillon & Co., New York.
Proceeds
To prepay short-term bank loans and for
working capital.
Offering date postponed.

this

available by the SEC or other

per

80,000 shares of

data in

each

share). Underwriter—None. Proceed*—For
further development of mine and for working capital.
par

INDICATES

ment.

equipment and administrative costs to
manufacture aircraft. Office—1835 K St., N. W., Wash¬
ington 6, D. C.
Alhambra

Thursday, May 31, 1951

.

.

series of 1951 (no par). Price—To be supplied by

ITEMS REVISED EACH WEEK
The

For

—

•

Registration

.

(letter of notification)

stock and

2,600

shares of

common

1,200 shares of preferred stock.

Price—$35 per
share for common and $50 for preferred. Underwriter—
None.
Proceeds
To rebuild rural telephone system.
Office—Cerro Gordo, Madison, Minn.
—

•

Federal Machine & Welder Co., Warren, O.
May 22 (letter of notification) 60,000 shares of common

Langley & Co. (jointly); Equitable Se¬
curities Corp.
Proceeds—For new construction. Bids—
Expected to be received on June 19.
^
•

Colonial Acceptance Corp., Chicago, III.

May 23

(letter of notification)

common

stock (par $1).

writer—Straus

&

Blosser,

selling stockholder.
•

9,500 shares of class A

Price—$4.37 Vz

Chicago,

/

per

111.
"

share. Under¬

Proceeds—To
•

Commercial Credit Co.

May 29 filed $40,000,000 notes' due 1961, Price—To be
supplied by amendment/ Underwriters—Kidder, Pea¬
body & Co. and The First Boston Corp., New York.
Proceeds—To increase and maintain working capital and
a
portion*of the proceeds ultimately will be used for
the payment of a

$35,000,000 1%% note which matures

Aug. 1, 1951.
Consolidated Cigar Corp., New York "
March 9 filed 50,000 shares of cumulative preferred
stock,

New York

Boston

Philadelphia

*

Pittsburgh

San Francisco

Private Wires

to

all

offices

Chicago

Cleveland

Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2279)
stock

of

(par $1) to be issued at $5

trade

accounts

due

to

share in payment

per

creditors.

of common stock

Office—Overland

Avenue, Warren, O.
•

Financial Industrial Fund, Inc.,
Denver, Colo.
28 filed 9,000 systematic investment certificates

($10,800,000 aggregate), 900 cumulative investment

June

tificates ($900,000
aggregate) and 400,000 shares of capi¬
tal stock.

•

&

Wallace, Inc., Springfield, Mass.
May 21 (letter of notification) 1,000 shares of class B
non-voting stock (no par). Price—$20 per share.- Un¬
derwriters—Tifft Brothers of Springfield,
Mass., and F.
S. Moseley & Co., Boston, Mass.
Proceeds—To Andrew

New

Wilton Woolen Co

•

Gas

-

Co., Kansas City, Mo. (6/19)
May 24 filed $5,400,000 of first mortgage bonds due 1971.

Corp.

be offered to stockholders at rate of
15 shares held as of June

one

due June

Common
Common

Preferred

Common

12,

1951
Common

Carrier Corp.

Common

Loeb &
rities

Public Service Co. of Colorado

Co.; Union Securities Corp. and Equitable Secu¬
Corp. (jointly). Proceeds—For construction pro¬
Bids—To be opened at 11

gram.

Glenmore
Dec.

28

(EDT)

a.m.

on

to

Preference

Victoreen Instrument Co

159,142 shares of class B common stock
Price—To be filed by amendment.
Under¬

Offering—Expected

Co., New York.

Proceeds

June

13,1951
Common

United Stores Corp

general corporate purposes.
be withdrawn and new filing

Preferred

June

14,

1951

Texas & Pacific Ry._

.....Equip, Trust Ctfs.

June

15,

1951

American Natural Gas Co

Goebel

(Adolf), Inc.
;
May l4r(Jetter^f notification) 10,000 shares of

Common

Erie Resistor Corp...

—

expected to be made covering 30,000 shares of preferred
stock (par $100), with warrants attached.

Common

.

stock

(par $1).:

share)..
Corp.,

Price—At the market

Underwriter —The

New, York.

First

(about $5.25

Guardian

Proceeds—To Anthony

June

per

Securities

11

Ltd.,

Montreal, Canada

Hotels

Corp., Chicago,

a

Co

Preferred
Debentures

Peoples Gas Light & Coke Co.
11

on

a.m.

(CDT)

...Bonds

:

June

20, 1951
Bigelow-Sanford Carpet Co., Inc

&

Preferred

-

.

June

24, 1951
Public Finance Service, Inc..,.

•

Hudson Pulp & Paper
Corp. (6/11-16)
May 23 filed 220,000 shares of class A common

(par $1), of which 20,000 shares are to be
selling stockholders. Price—To be supplied
ment.

Underwriter —Lee

Higginson

Corp.,

Proceeds—For General corporate
purposes.
Idaho

Power

offered

June

by

American

11 a.m.

None.

1951

National

construction.

new

Construction

17,

1951

Bonds

received

by

company

Stuart & Co. Inc., which

ing—Postponed

on

was

March

27,

from

Halsey,

returned unopened.

indefinitely.

Statement

Offer¬

effective

14.

Jersey Central Power & Light Co.
Feb. 21 filed 40,000 shares of cumulative
preferred stock
(par $100). Proceeds—From sale of preferred, together

May 22 filed 256,842

bank

loan

sares

supplied

The First Boston
and

of

by

common

amendment.

Corp., New York.

for

new

stock

(par $8.75).

Underwriter—

Proceeds—To repay

construction.

•

Kentucky-Utah Mining Co.
May 17 (letter of notification) 596,061 shares of assess¬
able capital stock (par 10 cents), of which
96,091 shares
are reserved for issuance
upon exercise of options grant¬
ed May 8,
1951, to two individuals. Price—111/2 cents per
share. Underwriter—W. D. Nebecker &
Co., Salt Lake
City, Utah. Proceeds — To explore and develop mine
properties. Office—310 Pacific Nat'l Life Bldg., Salt Lake
City, Utah.

with

proceeds to be received from the sale of 350,000
additional common shares to General Public
Utilities

be

Kentucky Utilities Co.

Salomon Bros. & Hutzler

rights to expire

common

stock

(par $10)

to be offered to common

27, which

was

(jointly),

returned

was

received March

unopened. Statement effective
March 14. Amendment—On May 8 SEC granted an ex¬
emption from competitive bidding.
Preferred may be
privately
placed,
but
reported,
temporarily
aban¬
doned.




York.

Proceeds—To

1951

at

rate

of

one

on

stockholders of record June 1,
share for each seven shares held;

June

18.

Price—To be

supplied by
& Co., Inc., New
York, and* J. J. B. Hilliard & Son, Louisville, Ky. Pro¬
ceeds—For property additions and new construction.
amendment.

Underwriters

—

Joe Weinstein, President of
selling stockholder. ^

McCormick & Co., Inc., Baltimore, Md.
May 3 (letter of notification) 7,795 shares of non-voting
common stock (no par) being offered to
employees and
stockholders up to and including June 6 subject to allot¬
ment. Price—$25 per share.
Underwriter—Alex, Brown
&

Sons, Baltimore, Md.

Proceeds—For working capital.

Office—414 Light Street, Baltimore 2, Md.

May 17

(F.

H.)

& Co.,

Hartford, Conn.

(letter of notification)

4,650 shares of common

stock

(par $2).
Price—$9 per share.
Granbery, Marache & Co., New York.
working capital.

Underwriter—
Proceeds—For

Mercantile Acceptance Corp. of California
May 18 (letter of notification) 4,881 shares of first pre¬
ferred stock.
Price—At par ($20 per share).
Under¬
writer—Guardian Securities Corp.
Proceeds—For gen¬
eral corporate purposes.
•

Mines

Management, Inc., Spokane, Wash.
(letter of •notification) 125,000 shares of com¬
Price—25 cents per share.
UnderwriterLouis Payne of Spokape, Wash.. Proceeds—To develop
mines ip Stevens County, Wash. Offices—612 Chronicle
Bldg., Spokane, Wash., and 507 Bank St., Wallace, Idaho.
stock.

mon

•

Mission Corp.

(6/19)

May 24 filed $12,000,000 of 15-year sinking fund deben¬
tures due June 1, 1966. Price—To be supplied by amend¬

Underwriter—Eastman, Dillon & Co., New York.

chase,

in

bank loans incurred through pur¬
market, of Tide Water Associated Oil

repay

open

Co. stock.
Missouri Power & Light Co.
(6/18\
May 17 filed $4,000,000 of first mortgage bonds due 1981.
Underwriter—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Kidder,
Peabody & Co. Inc.; Equitable Securities Corp. and Har¬
ris, Hall & Co. (Inc.) (jointly); Otis & Co., Inc.; Salomon
Bros. & Hutzler; The First Boston Corp.; Carl M. Loeb,
Rhoades & Co. and American Securities Corp. (jointly);
White, Weld & Co. and Shields & Co. (jointly). Proceeds
—To reimburse treasury for expenditures made for'con¬
struction program and for general corporate purposes.
Bids—Expected to be received up to 11 a.m. (CDT) on
•

Myers Motor Supply Co., Joplin, Mo.
(letter of notification) 150 shares of

stock

to

to

Price—At

be

offered

be
par

then

to

stockholders.

offered

($100

per

Any

common

subscribed

to employees and officers.
share).
Underwriter—None.

general corporate purposes.

Office—501

Street, Joplin, Mo.

National Research Corp., Cambridge, Mass.
April 16 (letter of notification) 2,000 shares of common
stock
(par $1).
Price—$27 per share.
Underwriter—
Paine, Webber, Jackson & Curtis, Boston, Mass. Proceeds
—To William A. Coolidge, the selling stockholder.
•

National Tea Co., Chicago,

III.
120,000 shares of cumulative preference
stock, convertible series (par $100). Price—To be sup¬
plied by amendment.
Underwriter—Hemphill, Noyes,
Graham, Parsons & Co., New York and Chicago. Pro¬

May 29 filed

ceeds—To

retire

bank

loans

and

outstanding

$50

par

value preferred stock.
New England Gas & Electric Association (6/4)
May 16 filed 197,243 common shares of (par $8) bene¬

(6/IX

May 14 filed 260,071 shares of

Corp., the parent, will be used for new construction.
Bids—Only one bid, from Union Securities Corp. and

as

company, the

Wall

—

Jersey Central Power & Light Co.
$1,500,000 first mortgage bonds due in 1981.
Proceeds—For expansion program.
Bids—Only one bid

their preemptive rights

held,

Proceeds—For

Kansas Power & Light Co. -(6/12)

Price—To

filed

Mays (J. W.), Inc., Brooklyn, N. Y. (6/5)
April 27 filed 50,000 shares of common stock (par $1).
Price—To be supplied by amendment. Underwriter—
Carl M. Loeb, Rhoades & Co. and Lehman
Brothers,

shares

Alabama Power Co

Corp.

Proceeds
For
improvements of buildings in
Office—424 Chapman
Bldg., Los Angeles 14, Calif.

was

May 22
Preferred

September 11, 1951

^

statement

^

June 18.
Common

July
Mississippi Power Co

(par
Daly

Feb. 21 filed

March

Bonds

29,

United Gas Corp

.

was

Debentures

1951

(EDT)
June

May 18 (letter of notification) 7,719 shares of preferred
stock.
Price—At par ($25 per
share).
Underwriter—
Israel.

26,

Appalachian Electric Power Co.

Co.

Corp., Boise, Idaho. Proceeds—For
Israel

stock

by amend¬
New York.

(6/4)
May 14 filed 35,000 shares of 4% preferred stock
$100).
Price—At par.
Underwriter—Wegener &
•

.Bonds

Mission Corp.

of

offer expires
M. -Loeb, Rhoades

withdraw

Dodge & Co., New York. Proceeds—To redeem $281,000
of preferred stock and for working capital,
jc

ment.

Bonds

Glenmore Distilleries

share-for-share basis;

Dealer-Manager—Carl
Co., New York.
^

share

Proceeds—To

Gas Service Co

III.

holdings

on

27.

Bonds

19, 1951
Cleveland Electric Illuminating Co

March 30 filed 153,252 shares of common
stock (par $5)
offered to holders of common stock of
Hotel Wal¬
dorf-Astoria Corp. in exchange for. their
stock

.Preferred

June

now

June

Debentures

Sutherland Paper Co
Texas Electric Service Co., 11:30 a.m

of advances and working
capital. Offering—Date not set.

such

...Bonds

North Penn Gas Co

Mines

Proceeds—For drilling
expenses, repayment

Hilton

(CDT)

a.m.

-

April 9 filed 750,000 shares of common stock.
Price—
At par ($1 per
share).
Underwriter—George F. Breen,

New York.

Common
....Common

Missouri Power & Light Co.

De Angelis,

to

May 22.

on

May 18

18,

1951
General Public Utilities Corp
Kropp Forge Co

common

President, the selling stockholder.
Golconda

waived

a

McGraw
Bonds

Southeastern Public Service Co

Distilleries Co.

writer— Glore, Forgan &
For working capital, and

Common

Public Service Co. of New Hampshire
Noon (EDT)

June 5.

^

filed

$1).

par

May 23.

request

at rate of 15/44ths
of record about June 5, 1951; rights
to expire on June 15. Price—To be
supplied by amend¬
ment.
Underwriters—Hornblower & Weeks and Clark,
of

.Bonds

Chicago, St. Paul, Minneapolis & Omaha Ry.
Noon (CDT)
Equip. Trust Ctfs.
Kansas Power & Light Co
i
Common
New England Telephone & Telegraph Co.__Common

campaign directed from Edmonton, Can¬
carry on drilling program.
With¬

Manning, Maxwell & Moore, Inc. (6/5)
May 16 filed 150,000 shares of common stock (par
$12.50), to be offered to stockholders of record who have

the

California Oregon Power Co
Calaveras Cement Co

(jointly); Blyth & Co., Inc. and Kidder, Pea& Co. (jointly); The First Boston
Corp.; Kuhn,

mail

a

Proceeds—To

New
June

bonds

of

means

not

11,

(par $1).

Price—50 cents per share. Underwriter—James T. Chiles
Denver, Colo., who will conduct offering to public by

of

with the SEC

Squibb (E. R.) & Sons

mortgage

& Hutzler

Statement effective

Loyalta Oils, Ltd., Edmonton, Canada
April 16 filed 750,000 shares of capital stock

Common

1951
Calvan Consolidated Oil & Gas Co., Ltd...Common
Hudson Pulp & Paper Corp
Common
Oswego Falls Corp
Preferred
Sangamo Electric Co
Common

1, 1981. Underwriters—To be determined by
competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Morgan
Stanley & Co.; Lehman Bros.; Harri¬
man
Ripley & Co. Inc.; Shields & Co. and Salomon Bros.

body

Co., both of New York; and Morgan & Co.,
Angeles, Calif. Proceeds—To be added to working

Los

ada.

Bonds

June

share for each

Sherman &

drawal—A

6,

June 7, 1951
Manufacturing Co

Rheem

Price—To be supplied by amendment. Un¬
Gearhart, Kinnard & Otis, Inc., and L. D.

derwriters—

Common

(EDT)

(par $5) to

14; with rights to expire on'
July 9. Price—To be supplied by amendment.
Under¬
writer—None. Proceeds—To repay bank loans and for
general corporate purposes.
^

Georgia Power Co. (6/5)
May 4 filed $20,000,000 of new first

Common

Pennsylvania-Reading Seashore Lines

(6/18)
stock

Common

1951
Buffalo Electro-Chemical Co., Inc.
1:30 p.m. (EDT)
California Oregon Power Co
Noon

common

Bonds

—Common

June

pected to be received June 19.

Treasurer).

capital.
.Common

Teleprompter Corp.

Lehman
Brothers; The First Boston Corp.; Merrill Lynch, Pierce,
Fenner & Beane and
White, Weld & Co. (jointly); Union
Securities
Corp. and Harriman Ripley & Co.,
Inc.
(jointly). Proceeds—For new construction. Bids—Ex¬

Un¬

Kropp Forge Co., Cicero, III. (6/18-23)
May 25 filed 123,000 shares of common stock (par 33%0),
of which 9,276 shares will be
offered for the account
of Raymond B.
Kropp (Executive Vice-President and

1951

Yale & Towne Mfg. Co

(jointly);

Public Utilities

5,

Tracerlab, Inc.

Underwriter—To be determined by competitive
bidding.
Prooabie bidders: Halsey, Stuart & Co.
Inc.; Blyth & Co.,
Inc., and Kidder, Peabody & Co.

General

June

Georgia Power Co., 11 a.m. (EDT)
Manning, Maxwell & Moore, Inc
Mays (J. W.), Inc..

Service

May 16 filed 504,657 shares of

Common

Arizona Edison Co..

Wallace, President of the company, who is the selling

stockholder.

Preferred

England Gas & Electric Association__Common

v

share.

•

Common

Idaho Power Co

Forbes

B.

1951

4, 1951
Chicago, Milwaukee, St. Paul & Pacific RR.
Noon (CDT)
.Equip. Trust Ctfs.

Proceeds—For investment.

per

& Co., Detroit, Mich. Pro¬
ceeds—To Estate of Anna E.
Kresge, the selling stock¬
holder.

June

Underwriter—Investment Service Corp., Den¬

Colo.

ver,

1,

Kentucky Utilities Co

cer¬

Price—$39

derwriter—Watling, Lerchen

HEW ISSUE CALENDAR

May

(par $10).

39

Blyth

Kresge (S. 8.) Co., Detroit, Mich.
May 10 (letter of notification) approximately 7,690 shares

ficial interest to be offered

to

common

stockholders

of

record

May 31 on basis of one share for each eight shares
then held; rights will expire on June 20.
Price—Maxi¬
mum of $15 per share.
Underwriter—The First Boston
Corp. to act as dealer-manager. Proceeds—To pay shortterm notes and acquire stock of subsidiaries.
New England Telephone & Telegraph Co. (6/12)'
May 23 filed 777,850 shares of capital stock to be offered
Continued on page 40

40

(2280)

The Commercial and Financial Chronicle

.

.

Thursday, May 31, 1951 j

.

(

r

Continued

from

to stockholders

page

June

in

8

ratio of

one

share

The

held; rights to expire July 10 will
Price—At par ($100 per share).
Proceeds
To reduce outstanding
temporary borrowings,
ir
issued

June

on

12.

Underwriter—None.

•

—

Nancy Hanks Mines, Inc., Reno, Nev.
May 16 (letter of notification) 25,000 shares of preferred
stock (par $1) and 250,000 shares of common stock (par
1 cent) to be offered in units of one share of preferred

May 3
stock

Acceptance Corp.

Avenue, Detroit 7, Mich.
employees of company,
if

acquisition

for

of

assets

debenture holders.

$100

of

of

Co.

•

Producers &

Price—At par

stock.

(50 cents per share).

Boston Bldg.,

as

broker.

to

and

open

bids

bidding
at

noon

June 12.

Rheem

23

Manufacturing Co.

filed

Underwriter
in

Price

To be supplied

—

Paul H. Davis

part

a

—

Blyth & Co., Inc.
of capital im¬

program

&

by amendment.

(par $10)..
Underwriter—

Co., Chicago, 111. Proceeds—To reduce
working capital.
if

bank loans and for

Underwriter

Sattier's, Inc., Buffalo, N. Y.

Office—404

Hornblower &

Weeks, New York. Proceeds—To Charles
Hahn, Jr., President, who is the selling stockholder.
Withdrawal—Registration statement withdrawn on May
23.

Proceeds—To two selling stockholders.

•

*
Schubert

Publications, Inc., Chicago, III.
(letter of notification) 8,000 shares of common
stock (par $1) and 470 shares of 6% cumulative preferred

•

May 23
pre-

ferreck stock

(par $30) to be offered to common stock¬
holders of record June 11, 1951, at rate of one
preferred
share for each five common shares held.
Price—To be

stock

(par

$100).

Price—At

Underwriter—None.

par.

Proceeds—For working capital.

Office—220 So. Michigan

Avenue, Chicago 3, 111.

supplied by amendment. Underwriter
Hornblower &
Weeks, New York. Proceeds—For working capital.
—

Pacific Western Oil

Smart

Pan

Jan.

9

State

filed

by

Uranium

stock

of

EaJ?xey' r^art & c°-.I?c.; Glore,
&

Co.

Public

subsidiaries,

Southwestern

Forgan

(jointly); The

To repay bank
loans, for
additional investment

Probable

bidders:

&

Co. and
First Boston Corp.

new

(estimated

construction and

at

Underwriter—

April
fund
_

30

filed

(Canada)
shares of capital

384,000

Service

Co.

expenses,

preferred

stock

shares

(no

of

par)

if

N'eb.

from May 21 to June 5.
Underwriter—The First Trust

Proceeds—For working capital.

tive

May 21.

Price—$20
Co.

of

broker for over-the-counter sales.

Proceeds—To

Schwartzmaii, the selling stockholder.

offered
June

first

5, with

to

possible public sale by certain selling stockholders f
during the same period," at market about $73 per share, {
Underwriter—None.
•

Statement

Sutherland Paper Co.

Statement effec¬

Co.

of

capital.

May 21.

,

if

holders of record
one

stock

posed

on or about June 18, 1951, on the basis
share of preferred for each 25 shares of common

|
f
(par $5) which will be outstanding following pro-p
2-for-l stock split-up.
Price—To be supplied by J
Underwriters—Lehman Brothers, New

amendment.
and

f

York,

Harris, Hall & Co.

(Inc.), Chicago, 111. Proceeds—
From sale of stock, together with funds to be received
f
from private placement of a long-term note issued curj
rently being negotiated through Lehman Brothers, will j
be used to retire

outstanding 4V4% cumulative converti¬

ble preferred stock and for working capital.
•
Teleprompter Corp., New York (6/5)
* *
May 28 (letter of notificationM9,009.sh^r^^p^, common
stock (par $1) of which 20,000 shares are being offered

by

selling

writer—L.
Betz

&

stockholders.

Price—$5

Rothschild

H.

Co.,

&

Philadelphia,

share.: Under¬

per

Co., New York, and Coffin,
Pa. Proceeds—To purchase

Texas Electric

Service Co.

(6/18)

May 17 filed $11,500,000 of first mortgage bonds due
June|
1, 1981. Underwriter—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;]
Union

Securities Corp.; Carl M. Loeb, Rhoades &
Co.;]
Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fennerji
&

Beane

(jointly); Salomon Bros. & Hutzler; The First
Corp.; Kuhn, Loeb & Co., Lehman Brothers and
Blyth & Co., Inc. (jointly); Harriman Ripley & Co., Inc.,|
and Stone & Webster Securities Corp. (jointly);
Hemp-j:
hill Noyes, Graham, Parsons & Co. and Drexel & Co
(jointly). Proceeds—For new construction. Bids—Ex-i

Boston

to be

Texas

received

11:30

to

up

Southeastern

stock

to

be

offered

to

Gas

a.m.

Co.,

on

June

Bellville,

18.

if

Tex.

19,434 shares of common

common

stockholders

through'

($5 per share) J
Proceeds—For working capital.
Price

warrants,

—

At

par

•

j

Thorkon

Co., Atlanta, Ga.
May 21 (letter of notification) 15,000 shares of 5%
lative

preferred

common

common

stockholders

stock

from

(no par)
21 to

May

(par

$10)

(par 25 cents)

unit.

per

Underwriter—F.

30,000

May 10 filed 175,000 shares of
be

supplied

E.

stock.]

McMichael

Proceeds—For working capital.

Tracerlab, Inc., Covington,
Price—To

cumu-:

shares ofj
to be offered in units of
and

share of preferred and two shares of common

one

by

Ky.

ji

(6/5)

common

amendment.

Lee

stock

(par $1).

Underwriter—j

Trans Caribbean Air Cargo Lines,

Statement effective May 21.

+

III.
common

Inc.

j

(letter of notification) 20,000 shares of capita:
stock (par 10 cents).
Price—At market, approximately]
May 8

dent
•

an

4,288

Spiegel, Inc., Chicago,
May 2 filed 85,850 shares of

stock

stock

Underwriter—Gearhart, Kinnard &j
Proceeds—O. Roy Chalk, Presi-|
the selling stockholder.
per

share.

Otis, Inc., New York.

oversubscription privilege and a maxi¬
shares to employees of company (latter
not underwritten).
Price—$20 per share.
Underwriters
mum

effective

(6/18)

May 29 filed 34,399 shares of cumulative convertible pre- I
ferred stock (par $100) to be offered to common stockj]

$2.37 y2
Investment

common

f

for

per

Lincoln,

if

Southwestern

i,

Philadelphia, Pa.
■ *
-.
May 3 filed 11,000 "memberships in the 1951 plan," effec¬
tive July 1, 1951, to be offered to employees upon their
becoming eligible for membership; a maximum of 111,000
shares of common stock (no par) which it is anticipated
may be purchased by the trustees of the plan during the
period July 1, 1951, to June 30, 1952; and 193,262 shares
of common stock which "it is anticipated may be offered

ufacturing Co., manufacturers and distributors of X-ray]
apparatus and equipment; and for working capital.
if\

—Schneider, Bernet & Hickman, Dallas, Texas; G. H.
Walker & Co., St. Louis, Mo.; and Dewar, Robertson &
Pancoast, San Antonio, Texas.
Proceeds—For working




May 22.

Co.,

cumulative sinking
being offered first to

Pepsi-Cola Bottling Co. of
Wash., D. C., Inc.
(letter of notification) 5,000 shares of common
stock (par 10 cents).
Price—50 cents per share. Under¬
writer—Non6, but Ferris & Co.,
Washington, D. C., will
act
May 11

as

Oil

Co.

$1

April 30 filed 22,288 shares of

Bernard B.

Sun

Co., Hartford City, Ind.

(6/12)

$7,700,000) in
equity securities of Texas Illinois Natural
Gas Pipeline
subsidiary. Bids—To be received up to 11 a.m.
(CDT) on June 19 at Room
1625, 122 So. Michigan
Avenue, Chicago, 111.
*

-

Statement effective

Higginson Corp., Boston, Mass. Proceeds—To retire
outstanding bank loans incurred in connection with ac-;
quisition of a controlling interest in Kelley-Koett Man-,

stockholders
share.

(par $15)

high and low quotations on day preceding offering $40
per share.
Proceeds—For general corporate purposes.

Price—$12

if

Investment

15,000

>

w

Ltd.

—

Offering—Indefinitely

bidding.

share.

May 22 filed 20,000 shares of 6% cumulative convertible
preference stock, series A (par $25). Price—To be sup¬
plied by amendment. Underwriter—Bioren & Co., Phila¬
delphia, Pa. Proceeds — For additional investment in

26 filed 160,000 shares of
51/2% prior preferred
(par $25). Price—To be supplied by amendment.
Underwriter—A. C. Allyn & Co., Inc.,
Chicago, 111. Pro¬

Peoples Gas Light & Coke Co. (6/19)
May 22 filed $25,000,000 of first and
refunding mortgage
bonds, series H, due June 1, 1981. Underwriter—To be

per

Mines

amendment

Southeastern

March

for

Price—$7.25

■

& Co.,

Inc.
April 27 filed 100,000 shares of capital stock

pected

Ltd., Los Angeles, Calif.

commissions, exploration and development
working capital.

and

stock

Weld

Vare, the selling stockholder.
(J. P.)

Underwriter—None.

For

Peabody Coal Co.

White,

Stevens

transferable

la Mexico and for general
corporate purposes.

Proceeds

Co.,

Price
At par
($1 per share).
UnderwriterOptionee—Robert Irwin Martin of Toronto. Proceeds—

200,000 shares of common stock. Price—At
($1 per share). Underwriter—None. Proceeds—To
purchase machinery and equipment,"to construct a mill

by competitive

To Addison F.

May 16 (letter of notification)

stock.

Far

determined

Final

(no par).

April

Milling Co., Las Vegas, Nev.

postponed.

(6-11/16)

stock (par $1), to

a

•

South

24 filed

ceeds—For construction program.

common

Sterling Engine Co., Buffalo, N. Y.
April 27 (letter of notification) an aggregate of not to
exceed 16,000 shares of common stock (par 10 cents).'
Price—At market (about $2.25 per share). Underwriter
—None, but Bache & Co. will act as broker. Proceeds—

Blvd., Los Angeles 53, Calif.

President of the company,
selling stockholder.

American

&

June 22 of

on

Pacific Coast Securities Co., San
Francisco, Calif. Pro¬
ceeds— To selling stockholders.
Office — 4510 Colorado

Exchange at time
Proceeds—To J. Paul Getty,
who is the

& Sons, New York

stock

of

capital stock (par $4).
on quotations on New York
of sale).
Underwriter—Noi\e.

Stock

(E. R.)

March 22 (letter of notification) 12,561 shares of common

Corp.

10 filed 200,000 shares
Price—At the market (based

before

or

equipment and for general corporate purposes.

March 22 filed 200,000 shares of common stock (par $1).
Price—To be supplied by amendment.
Underwriter—

Salt Lake City, Utah.

May

1953;

basis'following approval of
proposal to change each $1
par share into two 50-cent par shares. Price—To be sup¬
plied by amendment. Underwriter—Harriman Ripley &
Co., Inc., New York. Proceeds—For plant additions and
improvements.
^

of

Sangamo Electric Co. (6/11-16)
May 21 filed 111,000 shares of common stock

common

Oswego Falls Corp., Fulton, N. Y. (6/11)
May 25 filed 96,000 shares of 5% convertible second

1

mail

.

2.

Olympic Radio & Television, Inc.
April 16 (letter of notification) 8,800 shares of com¬
mon stock (par $1).
Price—At the market. Underwriter
—None, but Van Alstyne, Noel & Co., New York, will
act

June

to

are

provements and additions and for general corporate pur¬
poses.
■
*
"""
4
/

Refiners, Inc., Salt Lake City,

Proceeds—To acquire oil royalties.

—none.

about

or

plans

plied by amendment.

Utah

May 22 (letter of notification) 600,000 shares of

one-for-ten

Proceeds—To finance

(jointly); The First Boston Corp. Proceeds — For con¬
program.
Bids—Indefinitely postponed. Were
Oil

a

company.

(6/7)
100,COO shares of 4y2% cumulative con¬
vertible preferred stock
(par $100), convertible into
common
stock until June 1, 1961.
Of the total, 70,000
share are to be publicly offered and 30,000 shares placed
privately with Bethlehem Steel Corp. Price—To be sup¬

struction

•

on

May

Bro¬
Langley
Weld & Co.

to have been submitted up to 11:30 a.m. (EDT) on
May

on

(EDT)

Probable bidders: Morgan Stanley &
Co.; Lehman
thers and Bear, Stearns & Co.
(jointly); W. C.

White,

on

Bids-—Present

papers

Co.

and

common

11

program.

150,000 shares of pfd. stock (par $100).
Underwriters—To be determined by competitive bidding.

Co.

(par $10),

to

Inc.; Otis & Co.; The First Boston Corp. and Coffin
Burr, Inc. (jointly); Kidder, Peabody & Co. and Blyth
& Co., Inc.
(jointly); Eqiutable Securities Corp.; Carl
M. Loeb, Rhoades & Co.
Proceeds — For construction

filed

&

stock

offered

be

Co.

Co., New York.
Proceeds—To Warren E. Eaton, the selling stockholder.

Forgan

(6/12)

common

to

are

&

Underwriter—Reynolds &

Glore,

shares

Hampshire (6/12)
filed $3,000,000 first mortgage bonds, series F,
1, 1981. Underwriter — To be determined by
competitive bidding. Probable bidders: Halsey, Stuart &

(letter of notification) 2,100 shares of common
stock (par $2.50). Price—At market
(approximately $19

Co.;

249,116

due June

May 2

Sc

Colorado

Public Service Co. of New

subscription

Edison

which

May

loans.

Ohio

$13.50

$15 per share
1954; and $16.50 per
May 31, 1956. Proceeds

31,

to be offered under "Stock Purchase Plan for Employees"
to certain employees of company. Price—At average of

construction program.

privilege will expire on June
14, 1951.
Price—$23.50 per share. Underwriter—None.
Proceeds—For working
capital to be used to make

March 30

addi¬

basis and 24,911 shares to
Price—To be supplied by amend¬
ment. Underwriters—The First Boston Corp., New
York;
and Boettcher & Co. and Bosworth, Sullivan &
Co., Inc.,
both of Denver, Colo.
Proceeds—To be applied toward

Northern Illinois Corp., DeKalb, III.
May 7 (letter of notification) 3,080 shares of $1.50 cumu¬
lative preferred stock (no par) being offered to certain
stockholders of record April 20, 1951, subject to allot¬

share).

Service Co. of

employees of

loans.

per

Public

stockholders

Co., Inc.; Drexel & Co.; The First Boston Corp.; Lehman
Brothers; Smith, Barney & Co.; Equitable Securities
Corp.; Union Securities Corp. Proceeds—To repay bank

Pharmacal

Proceeds—For

Office—18 West Chelten Ave.,

May 24 filed 274,027 shares of

Under¬

writer—To be determined by competitive bidding. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; A. C. Allyn &

Norwich

(in denominations of

Philadelphia 44, Pa.
•

The

Price—At par

Underwriter—None.

each).

tional operating capital.

Citizens Loan Corp. Office—765 West Lancaster Avenue,
Bryn Mawr, Pa.
North Penn Gas Co.
(6/18)
May 1 filed $2,700,000 of debentures due 1971.

Reported sold to

Public Finance Service, Inc., Phila., Pa. (6/24)
April 30 (letter of notification) $250,000 of 6% cumula¬
tive debentures,
1950 series to be offered to present

28 (letter of notification) a maximum of 9,317
shares of 60-cent dividend series preferred stock (par $5)
payment

(letter of notification) 5,000 shares of common
(par $1). Price—$4.25 per share. Underwriter-

4445 Bellevue

May

ment.

Squibb

Baker, Simonds & Co., Detroit, Mich.
Proceeds—To
Emery Investment Co., the selling stockholder. Office—

North American Acceptance Corp.

in

on

May 22 filed 300,000 shares of
stockholders

—$10 per share. Underwriter—Michael Investment Co.,
Inc., Providence, R. I. Proceeds—For working capital.
Offering—Postponed temporarily.

issued

May

before Nov. 30,

or

share thereafter and

listing.

new

before

or
on

—For general corporate purposes.

Plywood, Inc., Detroit, Mich.

Office—139 No. Virginia Street, Reno, Nev.

be

entirely

on

|

be split up on a two-for-one

stock.
Price—$1.10 per share.
Proceeds—For mine equipment and

North American

to

an

share

per

As heretofore, the symbol
(•) preceding the name of the prospective borrower

indicates that it is

stock for each share of preferred stock at

thereafter and

of the respective listings.

March 20 (letter of notification) 15,000 shares of 60-cent
cumulative convertible preferred stock (par $5). Price

•

common

common

Underwriter—None.
shaft.

this compilation is

is indicated by the symbol (if) appearing at the end

New

and 10 shares of

data in

brought up-to-date
each week in accordance with later information made
available by the SEC or other reliable sources. Where
changes have been made during the past week, this

for each two shares
be

be offered to holders of cumulative preferred stock upon
exercise of stock warrants on basis of one share of

ITEMS REVISED EACH WEEK

39

of record

.

Gas

Corp.

1951,

on

with

an

8

••

(par $2)

to

(6/29)

basis of one new share for each ten shares held
oversubscription privilege; rights to expire or

on June 29. Price—To be supplier
Underwriter—None. Proceeds—To pur
United Gas Pipe Line Co., a subsid
iary, which, in turn, will use the proceeds to pay cost

July 19 will be mailed
by amendment.

chase securities of
>

stock

United

May 25 filed 1,065,330 shares of common stock (par $10
to be offered to common stockholders of record June 27

of

new

construction.

yolume 173

Number 5016

,

The Commercial and Financial Chronicle

.

.

American

•

United Gas Corp.
May 25 filed $50,000,000 of first mortgage and collateral
trust bonds due 1971.
Underwriters—To be determined

the

from

ployees" under

an

common stock (no
time to certain key

time to

United

Corp.

ter

on

May 4

(6/13)

Co.
of notification) 1,000 shares of capital
offered to stockholders of record May 1,

'

Van Lake Uranium Mining Co., Van Dyke, Mich.
May 15 (letter of notification) 100,000 shares of common
stock. Price—At par ($1 per share). Underwriter—Titus
Miller & Co., Detroit, Mich. Proceeds—For exploration
and drilling of mining claims. Office — 23660 Van Dyke

Ave., Van Dyke, Mich.
Victoreen Instrument Co.,

Cleveland, O. (6/12)
May 22 filed 374,000 shares of common stock (par $1),
of which 221,000 are to be issued by the company and
153,000 for account of John A. Victoreen, Chairman of
the Board. Price—To be supplied by amendment. Un¬
derwriters—Barrett Herrick & Co., Inc., New York, and
Ai H. Vogel & Co., Detroit, Mich. Proceeds—For new
equipment and working capital.
Virginia Electric & Power Co.
May 2 filed 449,674 shares of common stock (par $10)
being offered to common stockholders of record May
25 on basis of one share for each ten shares held; rights
expire on June 11.
&

Webster

ceeds—For
•

new

Price—$19 per share. Underwriter
Corp., New York. Pro¬

Securities

construction.

★>...*•

.

'

;

Western

Inc.,

Carson City, Nev.

shares of capital
"market" but not
exceeding $3.50 per share. Underwriter—J. Arthur War¬
ner & Co., Inc., New York, N. Y.
Proceeds—For explo¬
ration and development of Utah properties.
8 (letter of notification) 30,000
(par 10 cents). Price — At the

May

stock

Wilton Woolen Co., Wilton,

Me.

authority to build

Co., De¬
Proceeds—To 11 selling stockholders. *

Inc., Chicago, 111., and George A. McDowell &
Yale & Towne Mfg. Co., New

York (6/5)

jMay 16 filed 102,197 shares of capital stock (par $25)
to be offered to stockholders at rate of one share for
each five shares held on or about June 5; with rights
expected to expire June 20. Price—To be supplied by
amendment. Underwriter—Morgan Stanley & Co., New
York.
Proceeds —To repay bank loans and for new

R. S. Dickson &

Prospective Offerings
ACF-Brill

be

used

to

assist

construction
to

Co.,

increase

subsidiaries

finance

to

Stockholders

program.

authorized

common

a

part

voted

stock from

of

will

Union

be

received

by

the

company

at

their

on
May 15
8,000,000 to

Room

744,

Station

Bldg., Chicago 6, 111., on or before noon
(CDT) on June 4 for the purchase from it of $5,300,000
equipment trust certificates, series NN, to be dated

June

1,

1951

and

to

mature

in

20

semi-annual

instal¬

ments of $265,000 each.
Probable bidders:
art & Co. Inc.; Salomon Bros. &

Halsey, Stu¬
Hutzler; Harris, Hall

& Co.
•

(Inc.).

Chicago, St. Paul, Minneapolis & Omaha Ry.
.

,

Bids will be received at the office of the company, Room

1400, Daily News Bldg., 400 West Madison St., Chicago
6, 111., up to noon (CDT) on June 12 for the purchase
from

it

of $1,005,000 equipment trust certificates to be
July 1, 1951 and to mature in 15 equal annual
instalments on July 1, 1952 to 1966, inclusive. Probable
bidders: Halsey, Stuart & Co. Inc.;
Harris, Hall & Co.,
Inc. and Equitable Securities Corp.
(jointly); Salomon

Bros. & Hutzler.

Columbus & Southern Ohio Electric Co.

May

16 J.

B.

plans

gage

bonds.

an

Poston, President, announced that com¬
early offering of $10,000,000 first mort¬

Underwriters—Last

issue

of

bonds

were

placed privately

on July 1, 1948 through Dillon, Read &
Inc., New York.
If competitive, probable bidders
may include Halsey, Stuart & Co.
Proceeds—For ex¬
pansion program.

Co.

Commonwealth Edison Co.

May 22 Charles Y. Freeman, Chairman, announced that
the company's scheduled construction program for the
1951-54 period calls for the expenditure of about $450,000,000, of which it is estimated that $200,000,000 will
be

provided out

This

means

of cash

resources

at

the end of

1950.

that additional capital of about

(48.6%) in ACF-Brill to a

Manufacturing Corp. is
common stock interest
group headed by Allen & Co.,

contemplates issuance
and sale of $10,000,000 first mortgage bonds. Under¬
writers—To be determined by competitive bidding. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; Morgan Stanley
& Co.; Blyth & Co., Inc.; Harriman Ripley & Co., Inc.;
Shields & Co. and Salomon Bros. & Hutzler (jointly);
Drexel & Co.; Union Securities Corp. and Equitable Se¬
curities Corp. (jointly); Kidder, Peabody & Co.; The
First Boston Corp.; Lehman Brothers. Proceeds—For ex¬
it was stated that company

pansion program.
Bids—Tentatively expected to
opened on Sept. 11. Registration—About Aug. 10.

be

Telephone Co.
company may soon

file a

covering $300,000 of
6% convertible bonds. Price—At par (in units of $100
each). Underwriter—Tellier & Co., New York. Proceeds
-r-For new equipment and for expansion.
letter of notification with the SEC

American Airlines,

Co.

of New

Hal¬

Glore,

& Southern Ry. ap¬
providing for simplification of that

Inc.

16

it

•

General Foods Corp.
May 24, it was reported that the company is consider¬
ing a plan to issue and sell approximately $30,000,000 of
debentures.

Traditional

& Co. and Lehman

underwriters:

Goldman,

Sachs

Brothers, New York.

GI?nmore Distilleries Co. (6/19)
April 23 it was announced company expects shortly to
file a registration statement covering 30,000 shares of
$100 par preferred stock (with warrants attached), and
to withdraw statement covering
159,142 shares of class
B common stock
(par $1). Underwriter—Glore, Forgan
& Co., New York. Proceeds—For
working capital and
general corporate purposes.
•

Glidden

May 28 it

Co., Cleveland, O.

announced that company plans to issue
exceeding $10,000,000 of unsecured notes,
the proceeds to be added to working capital.
Previous
debt financing was done privately,.*
-

an

was

amount not

Green Mountain Power Corp., Montpelier, VI.
May 4 SEC announced approval of a plan for reorganiza¬
tion, which, among other things, provides for sale of
104,094 shares of new common stock (par $10) through

underwriters, subject to the right of present preferred
stockholders to subscribe for the

new shares.
Proceeds
will be used to repay bank loans and for new construetion.

v':'.'tl

•

Hussmann

/

""'V

Refrigerator Co.

May 28, it was announced stockholders will vote June 18
on approving issuance and sale of
23,000 shares of 4%
preferred stock, series B (par $100), to Penn Mutual Life
Insurance Co.
The proceeds would be used to redeem
16,000 outstanding shares of series A preferred stock
(held by the same insurance company) and the remain¬

ing $700,000 added to working capital.
Idaho

Power

Co.

.

May 14, it was announced company is presently consid¬
ering the issuance of approximately $15,000,000 of addi¬
tional first mortgage bonds in July. This is in addition
to registration of 35,000 shares of 4% preferred stock
(par $100). Bonds will probably be placed privately. If
competitive, probable bidders may include Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc., Lazard Freres and The
First Boston Corp. (jointly); Equitable Securities Corp.;
Kidder, Peabody & Co.; Salomon Bros. & Hutzler and
Union Securities Corp. (jointly). Proceeds will be used
for additions and improvements to the company's prop¬
erties.
Iowa

Public Service Co.

May 22 it
sell

was

T

announced gompany plans to

$5,000,000 of first mortgage bonds.

issue

and
Underwriters—

To be determined by competitive bidding. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; The First Boston
Corp.;

Otis

and

refunding mortgage bonds, series H, due May 1,
(in addition to $40,000,000 series G bonds filed with
on March 30).
Underwriters—To be determined
by competitive bidding. Probable bidders: Halsey, Stu¬
art & Co.

Inc.; Morgan Stanley & Co.; The First Boston
Corp.; Merrill Lynch, Pierce, Fenner & Beane and White,
Weld
&
Co. (jointly).
Proceeds — To -redeem a like
amount of Westchester Lighting Co. 3^% general mort¬
gage bonds due 1967. Offering—Postponed.
Denver &

Rio

Grande Western

RR.

April

12, Wilson McCarthy, President, stated that due
to prevailing market conditions, the
company has post¬
poned to an undetermined date the taking of bids for
the purchase of $40,000,000 first mortgage bonds to be
dated May 1, 1951, and to mature on May 1, 1981. Un¬
derwriters—To

be

determined

by competitive bidding.
Stuart & Co. Inc.; Morgan

& Co.; Kidder, Peabody & Co.; Glore, Forgan &
Co., A. G. Becker & Co. Inc. and Wm. Blair & Co. (joint¬
ly); Harriman Ripley & Co., Inc.; Equitable Securities

Corp.; Salomon Bros. & Hutzler.
its 1951 construction program.

l-T-E

Kansas Gas

nounced

that

may

both due Jan. 1, 1993.

&

Salt

Lake

income

*

"

v*;

mortgage 3%-4%
\*

v"

bonds,

1951.

the

company's present

of the board,
construction

an¬
pro¬

calls for expenditures of more than $8,000,000 in
To finance part of the expansion program, com¬

pany may

(jointly). Proceeds — Together with treasury
funds, to redeem on June 1, 1951, $35,062,200 oustanding
first mortgage 3%-4% bonds, series A, and $8,666,900 of

& Electric Co.

Murray- F. Gill, Chairman

&

Co.

Breaker Co.

May 24

Halsey,
Stanley & Co.; Kuhn, Loeb & Co. and Bear, Stearns

bidders:

Circuit

Proceedsr—To finance

Bids—Expected in July,

May 28 it was announced stockholders have approved
proposals to increase the authorized indebtedness of the
company to $3,500,000 from $1,500,000, and the author¬
ized but unissued preferred stock from 15,000 shares to
30,000 shares, par $100.
^

gram

Probable

Denver

Manufacturing Corp.
dispose of its 257,600 shares of common stock of

,

Glass

April

York, Inc.

March 23 company applied to New York P. S. Commis¬
sion for authority to issue and sell $25,000,000 of first

May 21 it was reported that Avco




debentures:

program

1981

(9/11)

April 25 it was announced

or

a

Ry.

Colorado

the SEC

■,

Alabama Power Co.

Probable bidders for bonds

Stuart & Co. Inc.; The First Boston Corp.;
Forgan & Co.; Morgan Stanley & Co.

Denver City

Fibres, Inc.
was "reported that company may do some
common stock financing later this
year. Traditional un¬
derwriter—McCormick & Co., Chicago, 111.

Chicago, Milwaukee, St. P. & Pacific RR. (6/4)
Bids

&

stockholders of

Georgia Natural Gas Co., Albany, Ga.
May 24 the FPC dismissed the application of company
to construct a 335-mile pipeline
system in Georgia and
Florida, estimated to cost $5,100,000. +

10,000,000 shares.

Consolidated Edison

New York.

•

&

Co.

Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.; Salo¬
mon Bros. &
Hutzler; The First Boston Corp.

Co., Charlotte, N. C.

bidding.
Probable bid¬
Inc.; Smith, Barney & Co. and
Harriman.Ripley & Co., Inc. (jointly); Lehman Brothers
and Lazard Freres & Co.
(jointly); Kuhn, Loeb & Co.;
Carl M. Loeb, Rhoades &
Co.; Ladenburg, Thalmann &
Co. and Wertheim & Co.
(jointly).
Proceeds—To be
Blyth

'

mortgage bonds due 1981 of Fort Worth & Denver City
Ry. and the transfer to the latter of stock and other obli¬
gations of seven Texas companies. Probable bidders:

,

determined by competitive

ders:

ap¬

company's corporate structure and for the refunding of
the indebtedness of the
company and its subsidiaries.
This program calls for a new issue of
$20,000,000 first

natural gas pipeline system

sey,

18 it was reported Avco
negotiating for the sale of its

Alaska

proved

&

Central & South West Corp.
April 10 it was announced company plans to issue and
sell approximately 400,000 shares of common stock
(par
$5) late in 1951 or early in 1952.
Underwriters—May

Motors Co.

.

Feb. 6

Allen

.

mined..

May

a

company

Smith, Barney & Co., New York.

Fort Worth

May 17

$250,000,000
will be required through 1954.
Neither the timing nor
the nature of this new financing have yet been deter¬

equipment.

•

•

to serve certain areas in North and South Carolina. Esti¬
mated cost of the proposed facilities is $3,595,295, to be
financed by the sale of first mortgage bonds and the
issuance of junior securities. Underwriters may include

pany

(6/4-9)

May 14 filed 195,800 shares of common stock (par $1).
Price—$6 per share. Underwriter—A. C. Allyn & Co.,

troit, Mich.

bidders:

announced

Chemical

underwriter:

dated

1, Wash.

Gold Mines,

SEC for

(6/12)

Inc»r Seattle,

Fifth Avenue, Seattle

Probable

Feb. 20

^

Wash.
V
May 21 (letter of notification) 5,244 shares of capital
stock.
Price—$53 per share. Underwriter—None. Pro¬
ceeds—For working capital.
Office—Ranke Bldg., 1511
Weisfield's,

bid.

Carolina Natural Gas Corp., Charlotte, N. C.
a fourth amended application was filed with the

,

a

—Stone

said

plans to sell

WHt

was

April 5, Leland I. Doan, President, stated that the com¬
pany plans to spend $65,000,000 on plant
expansion in
the current fiscal year
ending May 31, 1951, and expects
to spend- somewhat more in the
following fiscal year.
He added, however, that no decision
has been reached
on any possible
financing in this connection. Traditional

Co.; Smith, Barney & Co.; Merrill Lynch, Pierce, Fenner &
Beane; A. G. Becker & Co- Inc.

l-for-4 basis; rights to expire June 5. Price—
At par, ($100 per share). Underwriter—None. Proceeds
—To expand plant facilities and for working capital.
Office—820 Noyes St., Utica, N. Y.

to

of

announcement

w

\

Dow

mit a bid for the stock is an amount
aggregating $3,034,800. Accordingly the auction will be opened by the

(letter

1951, on

program.

(6/6)

resented by Charles A. Buerk (President of the com¬
pany), Schoellkopf, Hutton & Pomeroy, Inc. and Lehman
Brothers and including many of the stockholders and
employees of the company, has formerly agreed to sub¬

June 13.

being

Inc.

The sale does not represent new

Utica Cutlery

stock

;

Co.,

(no par value), being 45.98% of the outstanding stock.
financing. A group rep¬

em¬

wholly-owned subsidiary, to be used to discharge a bank
loan in that amount, and the remainder will be used for
general corporate purposes. Offering—Expected to be
t

Electro-Chemical

-

19 it

early
Underwriters—To be determined by competi¬
tive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; Coffin & Burr, Inc., and Spencer Trask & Co.
(jointly); Morgan Stanley & Co.; The First Boston Corp.;
Dillon, Read & Co. Inc. Proceeds -— For construction

$3,000,000 helicop¬

a

—W

this Fall.

Broadway, New York 5, N. Y., at 1:30 p.m. (EDT) on
purchase of 5,058 shares of common stock

par)

supplied by amendment. Underwriters—Union Securities
Corp. and D. H. Ellis & Co., both of New York. Proceeds
—To advance $495,000 to Cassels United Stores, Inc., a

mailed

construction of

Fort Worth, Texas.

near

—-

41

proximately $35,000,000 of first mortgage bonds

Bids will be received at the office of Alien Property, 120

share for each 10 shares held. Price—To be

one

to finance

plant

Buffalo

May 25 filed 103,170 shares of $4.20 non-cumulative sec¬
ond preferred stock (par $5) to be offered for subscrip¬
tion by present holders of second preferred stock on
basis of

Co., New York.

Aircraft

be used

incentive plan. Proceeds—For general

Stores

—'

March

Corp.
May 28 stockholders approved a proposal to borrow
$2,500,000 on bonds to mature serially. The proceeds will

corporate purposes.
•

of

Probable * underwriters—Lehman

June 6 for the

May 21 filed 1,300,000 shares of
offered

outstanding.

Bell

United States Steel Corp., Hoboken, N. J.
be

Airlines, Inc., which represents about 4%

total

Brothers and Emanuel Deetjen &

Probable bidders: Halsey, Stuare & Co. Inc.; Dillon, Read & Co. Inc.; Equitable Secu¬
rities Corp.; Harriman Ripley & Co., Inc., and Goldman,
Sachs & Co. (jointly); The First Boston Corp. Proceeds—
To purchase securities of United Gas Pipe Line Co., its
subsidiary, which, in turn, will use the funds to pay
$7,000^000 of 3% promissory notes owned by United Gas
Corp., and the remainder for its construction program.
by competitive bidding.

"to

(2281)

sell $5,000,000 of first mortgage bonds. Under¬
be
determined
by competitive
bidding.
bidders:
Halsey, Stuart & Co. Inc.; Union

writers—To
Probable

Securities Corp.; Merrill Lynch,

Pierce, Fenner & Beane
Continued on page 42

42

The Commercial and Financial Chronicle

(2282)

Continued

from

page

Kidder, Peabody & Co. (jointly). There is a pos¬
sibility that company may also decide to refund its
outstanding $16,000,000 first mortgage 3%% bonds due
1970 (held by a group of insurance companies)
and
$5,000,000 first mortgage 3%% bonds due 1978.
•
•

McKesson &

on

a

indicates that it is

registration is expected on
first mortgage bonds. Under¬
by competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Shields &
Co. and Equitable Securities Corp. (jointly); The First
Boston Corp. and Glore, Forgan & Co. (jointly); Otis &
Co.; White, Weld & Co.; 'Lehman Brothers and Drexel &
Co. (jointly); Union Securities Corp. and Salomon Bros.
& Hutzler (jointly); Kidder, Peabody & Co.; Coffin &
Burr, Inc. Proceeds—For expansion program. ^
it

(

(7/17)

Mississippi Power Co.

(par $100). Underwriters—To be determined by competi¬
bidding. Probable bidders: W. C. Langley & Co.,

tive

Glore, Forgan & Co. and Sterne, Agee & Leach (jointly);
Blyth & Co., Inc.; The First Boston Corp.; Kidder, Pea¬
body & Co. and White, Weld & Co. (jointly); Lehman
Brothers; Union Securities Corp. and Equitable Securi¬
ties Corp. (jointly); Merrill Lynch, Pierce, Fenner &
Beane.
Proceeds—For
construction
program.
Bids—
Tentatively expected to be received on July 17.
tration—Scheduled

June

for

Montana-Dakota

and

Wyoming,

interconnections

construct

to

between

properties to be acquired, and to build additional
facilities. The estimated total cost of the
facilities to be acquired is $4,770,389 as of Sept. 30, 1950,
the

compressor

plus

or

be built

minus book adjustments, and the facilities to
are estimated to cost $708,774.
To finance the

of

plans to issue and sell $2,000,preferred stock and $3,000,000 of first mortgage

bonds.

000

company

Blyth & Co., Inc. and Merrill Lynch, Pierce, Fenner &
Beane.
(2) For bonds: To be determined by competitive

Probable bidders: Halsey, Stuart & Co., Inc.;
Blyth & Co., Inc.; Merrill Lynch, Pierce, Fenner & Beane
and White, Weld & Co. (jointly); Salomon Bros. & Hutz¬
ler and Dick
Merle-Smith (jointly). i( *

Ridding.

National

March

Co.

Utilities

of

sought FPC authority to construct
about 76.7 miles of pipeline, at an estimated cost of $1,500,000, to be financed by issuance and sale of first mort¬
6

company

gage bonds.

& Hutzler.

Proceeds

—

For

1951

construction program.

Expected late Summer and early Fall.
New York State Electric & Gas Corp.
May 4, Joseph M. Bell, Jr., President, announced that the
company's $66,500,000 construction program for the three
years through 1953 involves new financing of $41,500,000
in addition to the $10,500,000 provided thus far this year
through the sale of 2.80% first mortgage bonds, in ac¬
cordance with contracts entered last August.

underwriter: The First Boston

Traditional

Pfizer

F.

haps more, which it expects to raise some months hence
through the sale of new securities. Probable bidders for
bonds: Halsey, Stuart & Co.
life.; Morgan Stanley & Co.;
The First Boston Corp.;
Glore, Forgan & Co., White,
Weld & Co. and Union Securities Corp.
(jointly),- Pro¬
ceeds will be used for construction

"

•

was

stated

plans to issue and sell
first mortgage bonds next year and

$10,000,000 of

new

later offer to

common

stock

on

a

l-for-20

company

stockholders additional

basis.

common

Underwriters—For bonds

be determined by
competitive

to

bidding. Probable bidders:

Halsey, Stuart & Co. Inc.; Lehman Brothers and Blyth
& Co., Inc.
(jointly); Thef First Boston Corp.; Merrill
Lynch, Pierce, Fenner & Beane and White, Weld & Co.
(jointly); Harriman Ripley & Co., Inc. and Union Se¬
Corp. (jointly); Equitable Securities Corp. Pro¬

curities

ceeds—To finance construction
program.

Panhandle Eastern Pipe Line Co.
May 17 it was stated company has applied to the Mis¬
souri P. S.
Commission for
authority to issue and sell
to the public $20,000,000 of
sinking fund debentures due
1971, and to issue 60,000 additional shares of common
stock to key employees under a stock
option plan.
derwriters—For debentures, to be determined

by

petitive bidding.

Probable




bids

may

include

Un¬
com¬

Kidder,

.

Proceeds—To

Inc.

reimburse

Stuart

early

or

in

1952.

bidders:

construction costs.

the

•

a

Halsey,

poses

6

on

increasing

that

stockholders
common

from

1,250,000 to 1,750,000 shares.
It is planned to offer later
150,000 shares for subscription by common
stockholders on a l-for-7 basis and 50,000 shares
this year about

to

employees under

writer—The

First

a

plan.
Under¬
Proceeds—For expan¬

payroll reduction

Boston

Corp.

sion program.
•

Rochester Gas & Electric Co.
was announced stockholders will vote June 6
increasing secured indebtedness from $10,900,000 to

May 16 it

It is planned to issue arid sell $5,500,000
institutional investors. Proceeds

will be used for

new

to construct 527 miles of natural gas

markets

pipe line to supply
Georgia and Florida, the estimated cost of

in

was

between $10,500,000 and

$12,080,000. ^

South Jersey Gas Co.

24

Earl

Smith,

President,

announced

company

plans a bond issue of more than $8,000,000 by fall of
this year. Underwriters—May be determined by com¬

bidding: Probable bidders: Halsey, Stuart &
Inc.; Lehman Brothers; Blyth & Co., Inc. Proceeds—
To refund the presently outstanding $4,000,000 of 4Ys%
first mortgage bonds and repay outstanding short-term
petitive
Co.

bank notes which

are

due before the end of the year.

April 4, the company indicated that it would soon be in
the market with $18,000,000 of senior securities.
able bidders:
Halsey, Stuart & Co. Inc.; Blyth

Prob¬
& Co.,

Inc.; White, Weld & Co.; Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane and Harris, Hall & Co.
(Inc.) (jointly).
Offering—Expected in the Fall, ic
Southern

Union Gas Co.

May 23 C. H. Zaehry, President, announced that com¬
pany

plans the issuance of $5,000,000 new first mortgage
Traditional Under¬

bonds within the next 60 to 90 days.

writer—Blair, Rollins &
construction.

Co., Inc.

V

'

,

'

■

*
»

'
f
*

>

a

stock

covering
to

l-for-3

be

200,000

offered

basis.

additional

first to

'

common

Underwriter—Kidder, ;

Power
it

was

Light Co.
cohipany-'durrng'1951

announced

sell 200,000 shares of

common

'

pro-

stock

$10,000,000 of first mortgage bonds.
Un¬
be determined by competitive bidding.

bidders

;

(1) For bonds:

.

SEC

approval to borrow from

$12,000,000.

★

banks not in

-

-

of

excess

:

Valley Gas Pipe Line Co., Inc., Houston, Tex.
May 9 FPC dismissed application of company proposing
the construction of a $144,500,000 pipeline project. to
carry natural gas from Texas and Louisiana to markets
in
Indiana, Ohio and Michigan.
The company had
planned to build 1,500 miles of line.

;

*

March 30 it

was announced company plans to issue and
sell 100,000 shares of new convertible second
preferred
stock (par $50). Underwriter—F. Eberstadt &
Co., Inc.,
New York. Proceeds—Together with funds from

A

;

private
$4,000,000 of 20-year sinking fund notes, to be
used toward expansion program.
Stockholders to vote
on proposal on June 8.
^
sale

of

Virginia Electric & Power Co.'
May Lthe company announced that it is contemplated
financing to an amount approximating $20,000,000, after sale of the additional
common
stock registered with SEC (see above), inci¬

that there will be additional

-

-

dent to the 1951 construction program, and that further

be required in 1952. Probable bidders
Halsey, Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Stone & Webster Securities Corp.; Union Secu¬

financing

will

for bonds:

Southern California Gas Co.

•

.

Victor Chemical Works

Co., Atlanta, Ga.

May 24 the FPC dismissed the application of company

which

,

Halsey, Stuart & Co.
Inc.;, Kidder, Peabody & Co.; Lehman Brothers, and
Bear, Stearns & Co. (jointly); White, Weld & Co.; Sal¬
omon
Bros. & Hutzler; First Boston Corp., and Blyth ;
& Co., Inc. (jointly); Union Securities Corp., and
Smith,"
Barney & Co. (jointly); and (2) for stock: Blyth & Co.,
Inc.; W. C. Langley & Co., and Glore, Forgan & Co.
(jointly); Union Securities Corp., and Smith, Barney &
Co.
(jointly); Lehman Bros. & Bear, Stearns & Co. '
(jointly); Kidder, Peabody & Co., and Merrill Lynch,
Pierce Fenner & Beane (jointly).
However, common
stock offering may be made directly by company, with¬
out underwriting.
Offering—Expected this fall.
Pro¬
ceeds—-To
repay
bank loans and to provide addi¬
tional
construction
funds.
May 18 company sought "•

construction.

South Georgia Natural Gas

-

.

will vote

stock

.

reported company expects soon to file

to issue and

Probable

Electric Corp.

authorized

8

derwriters—To

stock for each 100 shares of class A stock.

June

^

statement

on

and estimated

was announced stockholders will vote June
approving the issuance of not more than $1,859,256
6% sinking fund debentures. These, together
with class B stock, would be offered in exchange for out¬
standing class A cumulative and participating stock on
the basis of $700 of debentures and 25 shares of class B

announced

was

common

Utah

March

of 20-year

was

.

t

Utilities, Inc.

registration
of

:

Peabody. & Co;, Inc;, New York.

Reading Tube Corp.

it

*

stockholders

on

16

United

shares

Corp.;

Rochester Gas &

*

Proceeds—To be used to finance

Textron, Incorporated
May 10, it was announced stockholders on June 8 will
vote on authorizing the creation of a new issue of
250,000
shares of 4% preferred stock (par $100). On May 23,
they will vote on increasing authorized common stock
from 2,000,000 to 3,000,000 shares.
Traditional underwriter: Blair, Rollins & Co. Inc., New York.' Proceeds
are to be used for expansion program.
;

May 28, it

May

& Hutzler.

Bros.

mon

Kidder, Peabody & Co., Merrill
Lynch, Pierce, Fenner & Beane, White, Weld & Co. and
Salomon Bros. & Hutzler (jointly); Kuhn, Loeb & Co.
and Blyth & Co., Inc. (jointly); Dillon, Read & Co. Inc.;
Harriman Ripley & Co., Inc.

5

,

Co. Inc.; The First Boston Corp.; Blyth &
Co., Inc.;
Kidder, Peabody & Co. and Smith, Barney & Co. (jointly); W. C. Langley & Co. and Glore, Forgan & Co.
(jointly); Carl M. Loeb, Rhoades & Co. and E. H.
Rollins & Sons (jointly); Union Securities Corp.; Drexel
& Co. and Hemphill, Noyes,
Graham, Parsons & Co.
(jointly); White, Weld & Co.; Equitable Securities Corp.;
Harriman Ripley & Co., Inc.; Lehman Brothers; Salo¬

Inc.; Lehman Brothers, Stone & Webster
Corp. and Union Securities Corp. (jointly);

Boston

.

company

May 22 it

Probable

»

(6/14)

.

Co.

&

Securities

Pacific Ry.

Texas Power & Light Co.
i
May 21 it was stated company may offer either $7,000,000
or
$14,000,000 of first mortgage bonds late in 1951 or
early 1952. Underwriters—To be determined by com- :
petitive bidding. Probable bidders:
Halsey, Stuart & *

Potomac Electric Power Co.

fall

Dillon, Read & Co. Inc., New York,

&

First Boston Corp.; Harris, Hall & Co. (Inc.).

May 10 it was announced company has arranged to
borrow up to $10,000,000 from 17 banks and expects to
fund these loans through sale of permanent securities
this

day.

on June 14 for the
purchase from
of $5,500,000 equipment trust certificates,
series K, to be dated July 1, 1951. Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; The

for plant expansion programs already approved
and under way for further expansion and for working
capital.

April

Oklahoma Gas & Electric Co.

May 21 it

Co.

&

a

Bids will be received

company

program.

1

Eberstadt

Texas

the

& Co., Inc.
announced company plans issuance and
stockholders of 444,015 additional shares

first mortgage bonds to

stated that this company, a subsidiary of
American Gas & Electric Co., will need
$36,000,000, per¬
was

Corp.

around

•

(Chas.)

$16,400,000.

Ohio Power Co.

May 15 it

first mort¬

of new common stock (par $1) on a l-for-10 basis, fol¬
lowing proposed 3-for-l split-up of presently outstand¬
ing 1,480,050 shares of common stock (par $1) which
will be voted upon on June 21.
It is also proposed to
sell to the public an issue of 150,000 shares of cumula¬
tive convertible second preferred stock.
Underwriters—

on

Corp., New York.

'

Pennsylvania Water & Power Co.
May 28 John A. Walls, President, announced stock¬
holders will vote July 25 on approving changes in the
company's charter provisions which would permit the
issuance of the remaining 78,507 preferred shares as
cumulative series preferred stock with a par value of
$100. These shares are now without par value. Com¬
pany now has a $25,000,000 expansion program, the fi¬
nancing of which will be accomplished through a later
sale of securities to the public. The present outstanding
21,493 shares of $5 cumulative preferred stock were
subscribed for by common stockholders in 1933.

•

Jersey Power & Light Co.
was reported that company tentatively plans
to issue and sell $2,500,000 of preferred stock to public
and $1,500,000 of common stock to General Public Util¬
ities Corp., parent.
Underwriters—For preferred to be
determined by competitive bidding.
Probable bidde/s:
Drexel & Co., Kuhn, Loeb & Co., and Lehman Brothers
(jointly); W. C. Langley & Co.; Smith, Barney & Co.
and Union Securities Corp. (jointly); Kidder, Peabody
& Co. and White, Weld & Co. (jointly); Salomon Bros.
19 it

000,000 cubic feet

of

•

New

Feb.

listing.

bonds due July 1, 1951 and $2,200,000 of 5% bonds due
May 1, 1954.

First

Michigan

Gas Transmission

company

underwriter:

Underwriters—(1) for preferred stock: probably

transactions, the

•

Underwriter—Lee Higginson '

outlined before the FPC plans for a
601-mile pipe line project to cost approximately
$45,300,000/ The program would increase the
company's daily
delivery capacity by 240,000,000 cubic feet to over 900,-

bonds, series A, to be dated July 2, 1951 and to
mature July 1, 1976
Probable bidders: Halsey, Stuart &
Co. Inc.; Salomon Bros. & Hutzler; Kuhn, Loeb & Co.;
Drexel & Co.
Proceeds—To retire $1,926,000 of 4%

sale

May 24 the FPC authorized company to acquire natural
gas facilities of three companies operating in Montana

Texas

May 28

gage

May 18 it was
to common

Co.

stock.

Tentative plans include the sale
$30,000,000 of bonds (which may be placed
privately with insurance firms) and about $10,000,000 of f
preferred stock (depending upon market conditions), '
The-'balance of the funds needed will be obtained from 1
treasury cash or temporary bank loans.
Traditional .*

Regis¬

15.

Utilities

common

Corp., New York.

June 6 for the purchase from it of $4,000,000

new

Feb. 6, it was reported that this company contemplate!
the issuance and sale of $4,000,000 of preferred stock

additional

Pennsylvania-Reading Seashore Lines (6/6)
Bids will be received by the company at Reading-Ter¬
minal, Philadelphia, Pa., on or before noon (EDT) on

determined

be

new

construction program.

announced

was

$10,000,000

entirely

Thursday, May 31, 1951

stitutions of

Peabody & Co.; Merrill Lynch, Pierce, Fenner & Beane
and Halsey, Stuart & Co. Inc. (jointly).
Proceeds—For

Minnesota Power & Light Co.

May 27

an

.

company plans to raise about
$10,000,000 through the issuance and sale to private in¬
an issue of bonds and a
public offering of

brought up-to-date

of the respective listings. As heretofore, the symbol
(•) preceding the name of the prospective borrower

Bobbins, Inc.

500,000 shares to 2,500,000 shares in order to provide for
a probable offering of additional stock to common stock¬
holders. Probable underwriter: Goldman, Sachs & Co.,
New York. Proceeds will be added to working capital.

writers—To

this compilation is

changes have been made during the past week, this
is indicated by the symbol Or) appearing at the end

was

June 7 of

in

each week in accordance with later information made
available by the SEC or other reliable sources. Where

announced stockholders will vote Oct. 23
proposal to increase authorized common stock by

May 24 it

data

The

.

•
Speer Carbon Co.
May 18 it was reported that

ITEMS REVISED EACH WEEK

41

and

.

Proceeds—For new

rities Corp.; White, Weld & Co.

Washington Gas Light Co.
March 8 it

was announced that company may Issue ap¬
proximately $9,000,000 of bonds or obtain bank loans (or
some combination thereof)
during 1951 and apply the
proceeds toward its construction program. Probable bid¬
ders for bonds: Halsey, Stuart & Co. Inc.; Blyth & Co.,

Inc.; Smith, Barney & Co. and. White, Weld & Co. (jointly); W. C. Langley & Co. and The First Boston Corp.
(jointly); Equitable Securities Corp.; Alex, Brown &
Sons (jointly).

.*

;

Volume 173

Number 5016

.

The Commercial and Financial Chronicle

.

.

(2283)

Continued

jrom

shares

7

page

will -be

around

Oar

Reporter's Report

is

there

check

no

except

banks, themselves,

.

But

by

However,

the

the

slowing down

in

new

has

firming

withdrawn

reflected

ments

in

that

the

tent.

i

•

deals

v

satisfaction

i

who claims he

of

all

are.

the

can

than

present

Corp.
a

stock¬

nothing

definite

it is reported
that

has

of business

dled

,

plans for

the flotation

;

on

a

be

course

negotiated

han¬

basis

if

on

a

one-

Commerce

'

t

'

Kansas

30 Qinrcb Street

New York a, N.

Preferred Dividend No.

stock,

Dividends

of

dollar

one

share

per

I

on

record

the

at

of

close

Preferred

share)

July 2,
ord

Stock

1951,
the

at

1951.

of

business

NOTICE

tion

IS HEREBY

of

price

New

the

to

date

Preferred

York,

Agent,
July 13,

on

payment

in

such

Stock

of

the

of

(i.

$35

e.

of

June

record

1J4% ($1.50

The

of

payable July

are

be

are

received

New

and

are

requested

1951.

Trust

business

Upon

for

each

of Common

1

the

to

surrender

share

Stock

of

of

on

the

all

16

Bankers

15,

New

Trust

York,

Company,

with

a

said

date

accrue

to

New
the

in

basis

of

surrendered

satisfaction

Corporate

letter

Trust

requesting

Preferred

Stock

1 Vi

2,

1951,

the

on

the

the

the

at

Hecla

available

are

($0.20)

to

accrue

of

the

25

business

broker

or

other

the

at

CENTURY-FOX

privilege

have

FILM

NOTICE OF REDEMPTION OF
HEREBY GIVEN

that

for

Holders
Chase
11

Prior

National

Broad

after

of

1551 to

said

transfers

date
of

After

New

the

these

after the close

date

Preferred

Bank

Street,

the

of

the

York

holder

DIVIDEND

of

business

A

on

(i.

e.

$100

and

the

dividends

(25c)

able

STOCK

which

will

payment
transfer

in

cash

books

of

of

at

redemption price.
No
Corporation can be made

July 13* 1951, all dividends

on

the

shares

called

for redemption

except

registered

The

Chase

in

National

Bank

of

Prior
the

will

cease

to

only the right of
Preferred

,

holders

May 24, 1951.




CENTURY-FOX

has

been

today

outstanding

common

of

this

Corporation, payable

29,

1951, to

stockholders

UNITED FRUIT COMPANY

on

DIVIDEND

shares

shares

dividend

of

NO.

208

- five
on the capital
Company has
been
declared
payable July
13, 1951 to stockholders of

cents per

stock

of

seventy

share
this

EMERY

Secretary

N.

and

LEONARD

Treasurer

Boston, Mass. May 21, 1951

METALS
m€TQL/i

of

Florida

Electric

of

Common

Stock

stockholders.
to

will

The

arrange

pany's dividend
fractional

share

be

COMMON

for

agent

the

The

regular dividend of one dollar
thirty-seven and one-half cents
($1,375) a share on the outstanding
51/2% cumulative convertible pre¬

and

ferred stock has been declared for the

to

250th Consecutive Dividend

1951, pay¬
July 1, 1951, to holders of rec¬

able
ord

at

the dose of business

June 20,

1951.
A dividend of

twenty-five cents (25(f)
outstanding common
declared
payable
July 1, 1951, to holders of record at
the close of business June 20, 1951.

pro¬

a

share

stock

for

the stockholders.
B. M.

YALE & TOWN E

quarter ending June 30,

Com¬
handle

equivalents

Handling

Equipment

DIVIDEND

pay¬

issued to

Company

Locks & Builders' Hardware
Material

PREFERRED DIVIDEND

Power

Bond

^

company

Reynolds Metals Building
Richmond 19, Virginia

Company Common Stock.
No scrip representing fractional
shares of "Florida Power & Light

on

has

the

been

The transfer books will not be closed.

Checks

Betsch,

the

Secretary-T reasurer

CORPORATION.

By: DONALD A. HENDERSON, Secretary.

A

REYNOLDS

Dividend

will be

dividend

City of New York.

FILM

the

on

cents

record June 7, 1951.

of

By Order of the Board of Directors,
TWENTIETH

Sec'y.

r

twenty-five

New Youk 6, N. Y.

the rate of 2.2 shares for each

poses

.

and all rights with respect to these shares
will cease,
the holders to receive the redemption price without interest.
Letters of Transmittal have been mailed
to all

No. 66

June

on

Light Company Common Stock

100

accrue

the

the

July 12,' 1951.

available at the office of

&

J. OSBORN

Exec. Vice Pres. &

dividend, subject to the

The

1951.

are

the

of

share

per

stock

Share

accrue

and are

matter.

redemption, $0.35).

receive

on

dividend

declared

the Securities and
Exchange Commission, on
the
Common Stock, payable June 30,
1951, to stockholders of record
at the close of business May 31,

Century-Fox Fiim Corporatidn has called
all of its outstanding Prior Preferred Stock, at the

Stock

will

on

this

1951.

Corporation

value of $50

Common Stock

wish

15,

June

on

HERVEY

fPMMERCIAL SOLVENTS

COMPANY

a

the

Company will not be closed.

and

clared

on

of

The Board of Directors has de¬

concerning

PREFERRED

share has been declared

business

Secretary.

CORPORATION

PRIOR

a

payable July 2, 1951, to stock¬

May 28, 1951.

CORPORATION.

148

FIFTY CENTS

of

capital stock of this Company,

Boston, Mass., May 24, 1951

the

requested to surrender all certificates to The
City of New York, Agent, Corporate Securities Division,■,
15, New York, on July 13, 1951.
Upon surrender on or

certificates

of business

of

$4.50

DIVIDEND NO.

Boston, Mass.

Wall

Twentieth

redemption on July 13, 1951,
redemption price of $100.35 per share
15,

advisor

FILM

company

Checks will be

A. R. BERGEN,

office of the Bankers

KENT, Secretary

holders of record at the close of

Directors

par

Two Rector St.,

the close of

International Salt

June 7, 1951.

been

at

azceii.

Colony Trust Com¬

of record at the close of business

r

financial

CENTURY-FOX

dividend of twenty cents

June 5, 1951.

Broadway, New York 4, N. Y.

holders

may

bank,

a

share, payable June 20,1951

ELECTRIC BOND AND SHARE

cease

IMPORTANT

TWENTIETH

per

mailed from the Old

Secretary and Treasurer

of

par

Copper Company

stockholders of record at the close of

to

EARLE MORAN

approval

their

Consolidated

has declared

June 5, 1951.
C.

Company,

STEPHEN G.

conversion

16

this

of

The stock transfer books of the

of

close

quarterly dividend
share on the capi¬

The Board of Directors of Calumet and

share, payable June 28,
1951, to stockholders of record

will

before

a

business June 4, 1951.

I1ECLA

per

15,

shares

the right

conversion

stock

CONSOLIDATED COPPEll CO.

a

Secretary

Board

Directors has this

of

Common

holders of

to

Board

the

and

1951,

30,

York

May 24, 1951

(

DIVIDEND NO. 172

of

conversion.

conversion

will

except only

One Wall Street, New

HAUTAU, Treasurer

CALUMET AND

1951. The stock transfer

June 4,

stock

Bankers
York

Department,

such

Company

Checks will be

holders of record
share

per

has today declared a
dividend of Seventy-five Cents
($.75) per share on its capital

Careful consideration should be
given to the market value of the Common Stock of the
Corporation into which shares of Preferred Stock may be converted. Holders

from June

will not close.

$10., payable July 2,1951, to stock"

AnacondA

from

holder

for

of

Irving Trust

The

1951.

J. II. Elliott, Secretary

By: DONALD A. HENDERSON, Secretary.

1951.

IS

June 8,

pany

will

Street,

the

on

Stock

issuable

TWENTIETH

NOTICE

business

Anaconda Copper Mining Com¬

certificates

Wall

after

or

holders,

redemption price without interest.

with

Stock of

A dividend

Film

surrender

cease,

consult

of

close

the

pany,

STOCK

which

Accounting Ma¬

chines will be mailed.
A. L. WILLIAMS, Vice Pres. &
Treasurer
April 24, 1951

CORPORATION,

May 24, 1951

dividends

Preferred

not

are

75^

May 23, 1951

By Order of the Board of Directors,

to

Common

the

on

FINANCIAL

T.

8,

the

of

Letters of
Transmittal
and
instructions
mailed to all registered Preferred holders
and
Trust Company.

May 24,

(

close of business on May 18,1951, Transfer
books will not be closed. Checks
prepared on
IBM Electric Punched Card

of 20 cents per

rec¬

June

Ave., New York 22

The 145th Consecutive

day declared

American

the

by

York

the

Secretary

Common Stock

on

declared

been

I.

transfer books

W. F. Colclough, Jr.

CORPORATION

Department,

business on July 6, 1951.
July 13, 1951, all dividends on the
rights with respect to those shares will

receive

Dividend

'

Hilyard, Treasurer

PREFERRED

Century-Fox

After

to

McGREW,

A quarterly dividend of $1.00 per share in cash

Checks will be mailed.

FILM

$1.50

close of
all

of

1951.

payable July 1, 1951, to stockholders of record

privilege, but in lieu of fractional shares non-dividend and
non-voting scrip certificates.
will be issued by the
Corporation.
If a shareholder decides to
convert his shares of
Preferred Stock to Common
Stock, the Preferred Stock certificates to be converted
must

590 Madison

8,

at the

C.

books will remain open.

the

upon

redemption price. No transfers of these certificates on
Corporation can be made after July 12, 1951.
on July
6, 1951, but not thereafter, the shares of
convertible into fully paid and
non-assessable shares of Common

Stock

Fractional shares

Street,

machines corporation

record

June

181

Preferred Stock for

the

on

ending

quarter

redemption, $0.0583).

Stock

Corporation, at the option

Common

ir m international business

CIJ. FINANCIAL CORPORATION

has

Secretary

dividend

quarterly

before the close of business

or

Preferred
Stock

OF

Twentieth

Corporate

cash

transfer books of
On

that

share

per

Company,

receive

the

cents

June 6,

on

dividend of 25tf per share on the

Corporation has called
1951, all of its outstanding Preferred
Stock, at the redemp¬

July 13,

on

of

REDEMPTION

GIVEN

$35.0583

29,-1951

Holders

Trust

OF

Treasurer

cents

tal

May 29, 1951

TWENTIETH CENTURY-FOX

-

redemption

the

Company

The

June

five

•

REDEMPTION NOTICE

for

in

The

•

NOTICE

C.

MICHAELI,

stock,

to stockholders
on

H.

May 22. 1051

held

Bank ISote

stockholders of

to

close

Harry L.

70,000

^

1951

business

of

common

its

on

1951, to holders of record at
business June 8, 1951.

one-half

and

declared

of

dividend

American

Tobacco Company, payable in cash on

Meanwhile Rheem Manufactur¬

;

thirty-seven
was

of

J.

Directors

Corporation,

regular

2,

close

STOCK

of

May 24, 1951.

Dividend

has been declared

Preferred

ing Co. has registered to sell
100,shares
of
4.5%
cumulative
preferred stock of which

,

the

Iron

of

close

the

and

Fuel

FRED W.

New York3,N. Y.

A quarterly dividend pf

000

J

able July

)

Stock have been declared. Both dividends
187th

-

^

The Board of Directors has de¬
dividend of 25* per share on the
outstanding Capital Stock of the Company
of the par value of $12.50 per share, pay¬
a

mailed.

is

offered publicly with the proceeds
to be used for payment of bank
loans and to finance
construction.

LIGHTING COMPANY, INC.

AND

the

Board

1951,

share

172

seventy

Secretary.

Quarterly Dividend

at

May 24, 1951

(1 /%)

a

1951

5, 1951,
Trust Com¬

The Board of Directors of this
Corporation has
this day declared a dividend of
$1.00 per share,
payable June 9, 1951, to stockholders of record

declared, payable July 1, 1951, to holders of

A

negotiated

18,

HAMILTON,

THE SAFETY CAR HEATING

Common Dividend No. 171

111 Fif th Avenue

a

May

W.

record

Y,,

of twenty-five cents K25^) per share on the
Common Stock of this Company have been

cy

basis, will not be offered first to
present shareholders. It will be

*

of

the Preferred Stock and

on

Preferred Dividend No.

offer about

however, which

bandied

JOHN

Secretary.

Common Dividend No. 105

•

&

value.

par

will be mailed by Irving
Dividend Disbursing Agent.

1951.

COMMON

the

D.

12, an additional block of
256,842 shares of new common
This

ON

of

28,

amount

DIVIDEND NOTICE

Power

Light Co., is slated to

being

Colorado

May

at

June

stock, $8.75

31,

ASHBY,

~

Meanwhile

-

the

meeting

a

payable June 29,

Building.

'

Kansas Power & Light

'

-

Secretary

1951. Transfer books will not be closed.

With H. c. Hopkins

for-ten basis.

'

DIVIDEND

per

($1.75)

undertaking, when it de¬

Union

shares first to holders

stockholders

B.

Corporation

(Special to Thi Financial Chronicle)

i-

Capital

The Colorado Fuel & Iron

May 29, 1951.

Public Service Co. of Colorado
CLEVELAND, Ohio — Harlow
likewise is offering 274,027 shares Greenwood has become connected
with H. C. Hopkins &
Company,
of
common,
including
249,116

;

to

business May

the close

CARL A. SUNDBERG

tion.

the

on

Checks

pany,

been

Company,

at

880

DIVIDEND NO. 210

on

Credit

precedent holds.

basis, with underwriters standing
by to take any unsubscribed por¬

has

clared

June 8, 1951.

one-for-three

a

the

W. C. KING,

in market

Commercial

velops, would of

"Carrier Corp. is slated to offer
216,575 shares of additional com-

1951

24,

Fifty Cents

11

At

has

issue of debentures.

new

This

holders.

mon next week on

Stock of

holders of record

$20,000,000

of

the Com¬

on

been forthcoming yet from official

of

May

share

per

AMERICAN LOCOMOTIVE COMPANY

Although

circles

1951,

of

W.

payable June 20,1951 to stock¬

is

big utility, it has been an¬
will apply
the funds

sources,

STREET

Fifty Cents ($.50) per share

debt

new

market

15,

at. the close

Ahead

substantial

June

Quarterly dividend No. 121
of

program.

tions, with shares involved being

;

of

mar¬

COMPANY

Directors has declared dividend
No.
880
of
fifty
cents
($.50) per share of
$12.50 par value Capital
Stock, payable June
15, 1951 to stockholders of record June

Stock of the Company, pay¬

through this medium, to
financing its construction pro-

r are
sufficient to keep a number of
^houses busy for a spell. Two are
in the nature of standby opera¬

.

because

Pa.,

dividend

declared

& DYE CORPORATION

state¬

raised

Forthcoming offerings are not
large as such things go, but they

to

SEC,

Issues

next

The

A

($.50)

nounced,

through the medium of competi¬
tive bidding.

first

the

MINING
DIVIDEND No.

The Board of

.

has

Co.

HOMESTAKE

COMPANY

RACE

Phila.,

of first mortgage bonds on
which,
it is indicated, bids will be opened
late next week.

the

way

1513

CHEMICAL

mon

much bet-

a

'•

offered

ALLIED

able

with

The

underwriter

do

ter job for the client this

,

Jackson

registration

financing slated for
Georgia Power Co.'s

vogue at the moment, much to the

„

its

New

Negotiated Deals Lead

Negotiated

METER

DIVIDEND NOTICES

Incorporated

has been declared

'

;

..

AMERICAN

consequences

■

•

DIVIDEND NOTICES

by
the

ket," it announced.

of the long let-down in prices have
been softened at least to that ex-

?

DIVIDEND NOTICES

of

up

"depressed condition of the

of the market with

up

result

been

'

♦

publicly

balance

taken

firm has decided

one

Byron

common.

through quasi-volun¬
control of credits in such

directions,
the

be

projected sale of 100,000 shares of

'

a

The

to

to forego, at least for the present,

emissions,

tary

is

Steel
Corp., at
price fixed for public offering.

lenders.

as

issue

offered

12.

Bethlehem

required of them. Accordingly

are

;

this

June

43

will

be

mailed

by Bank
Manhattan Company.

of

Since 1899

On

May 24, 1951, dividend No. 250
of fifty cents (50$) per share was
declared by the Board of Directors
out of past earnings, payable on
July 2, 1951, to stockholders of rec¬
ord at the close of business June 5,

'*51'

F. DUNNING
Executive Vice-President and Secretary

ALLYN DILLARD, Secretary

May 24, 1951.

Dated, May 25, 1951
—immmbhimiim mm

i

THE YALE &TOWNE MFG. CO.

44

The Commercial and Financial Chronicle

(2284)

.

.

and

year,

a

would

This

interest

Washington...
/■

are

actions

C.—In

before

its

completing

majority

great

in

was

much

Congress
not

for

stand

to

the

when

the

of

mood

a

time

the

$5 billion.
first
the committee

over

At

5 points. Second,
its

a

madd

be

the

of

"normal"

The Administration's more

cutting

less phony proposals for

depletion allowances and hitting
capital gains hard, phony in the
sense

that

_

they

fairly

were

,

caste

the

;

opening

the

of

tax bill
political toy. In its final or

perceptibly

House com¬

the

amounts

bill

mittee's

the

treat

to

near-final form,

to

about

posing

,75% pure political
positioning.

has been turned out is a bill

is

which

preponderantly a CIO "soak
rich" and corporations enter¬

prise.

ap¬

base

and. may or may not

income,

it
by observers is the 12%%

seen

phony aspects as

Offered to Investors
The American Financial and De-.

120

defined

pursuant, to

hides

the

it

taking

to

amounts

This

of

Issue, two types of bonds are
being
offered
as
follows:
(a)
3% % interest bearing bonds, dated
May 1, 1951, and due May 1,-1966,

out

and

of the CIO book.

as

You're fresh!
*

*

<5

is

that

Why should I tell

after becoming

brackets.

in various

the

Kean

with
would

or

reduced 2%

$5,000

Democratic

ground to say that the

majority of the committee simply
went CIO in the tax bill.
fundamental

of

core

the

is "don't tax us
laboring guys, but tax the filthy
rich." This assumes placidly that
program

there

bill-back

to

committee

for Re¬

This prospect, however, appears

to

be

fading

nized

a

little in

weariness

ship in the

of

being

the

the

ago¬

member¬

with which

arrogance

is

nonsense

seriously

the

Administration
"roll

back"

can

meat

purport

prices

one

to

the tax

pay

income, the reduction would be
2.9%;
for
the individual
with
$10,000 of taxable income, the tax
would
swipe an additional 4%.
brackets include all of the

These

of

cream

time-and-one-half

the

double-time boys.

However, the net

the

of

pay

fellow

of

lion

taxes

new

"take home"
with $100,000

Adminis¬

the

meant a combina¬
tion of personal income
and/or
excise
profits taxes that would

tration

asked,

the

hurt

voting

wouldn't

trough, it just
This committee
general

confirms the

majority of
Congress is afraid to go at best

impression

the

that

the
and
even
if it went this half way, it
would do it with great political
than

more

half

down

way

road the Administration asks,

trepidation.
*

by 24.2%. If Mr. Kean is correct
or* if these computations collected
for him

are

correct, it is reasona¬

ble to have the gravest doubts
to

the

publicly

that

mate

much

as

this

as

announced
would

tax

as

esti¬
raise

million.

$2,085

actual

the

able

is that

situation

leadership

F. George

the

this

House, to

awful

buck

chore,

does pass the
George, the latter's

Mr.

to

of

task of writing a sensible bill will
be

complicated

fact

that

record
a

for

CIO

what

by

greatly

House

the

is

has

a

substantially

...

^

,j,

~

...

One of the quirks of the House
bill
is
a
provision

of

income

man

owing

with

no

poses,

practical pur¬ paid the applicable existing sur¬
tax bill pending at all. taxes plus the new 12%% defense
tried

committee

to

write

a

bill, failed, and instead just
laid a brick, albeit a mighty hot
one.
Hence the question raised
tax

explanation

and

complicated.

how

of

this

In

any

case,

upon

increasingly lower levels of

income, to the point where a com¬
bined individual "normal" rate of
3%

plus

is
all income over

upon

$80,000.
the

almost

moving,

income

of

more

a

a

matter of fact,

Committee

just between

Internal

on

Revenue,

whose statistical honesty has never
been

questioned seriously in the
of most newsmen.

memory
.

to

In

observers

of

upper

middle

any

assume

using the tax

tax

manner

a

tax

bill

anti-infla¬

an

because

device

where

as

it

the

wouldn't

spending money
is accruing—in the lower brackets.

possibility

One

<

*

.

«




describing

bonds

may

Development Corporation for

and

Israel, 120 Broadway, New York 5,
N. Y.

In Hamilton

Management

(Special to The Financial Chronicle)

DENVER,
selin,

Jr.

F. Asaffiliated

Colo.—Urgel

has

become

Hamilton

Management Cor¬

poration; Boston Building.

With Courts & Co.
COLUMBUS,
&

now

Ga.

—

Arthur T.

affiliated with Courts

Co., 19 East 12th Street.

income
some

at

level,

could
say

be
per¬

Off hand, but only
off-hand, this method of resisting
socialization

sounds

pat¬

ridiculous, but if any one
has a good friend of reasonable
economic
literacy
in
Congress,
check

it with

him:

Provide by Congress,

top

socialized

CLASS B (common) STOCK
A

lead

the

personal

nickel shall be

leading

in

by

an ap¬

producer of

fast-growing

Analysis
a

cement

Southern

an

drive

income.

this Company

available

on

and

Indus¬

request.

Selling about $14.00

for

(Not

"expense

of

review of the Cement

try

leaders—the labor

labor
who

RIVERSIDE CEMENT CO.
1

California.

propriation or otherwise, for an
average salary of $50,000 for some

a

WE SUGGEST

$50,000.

haps

200

For

Large Appreciation Potential

LERNER & CO.
Investment

ac¬

10 Post Office

Securities

Square, Boston 9, Mass.

Tel. HUbbard 2-1990

will be

in

this

space

in

one

was

recently,
way

suggested
that the

written, might take matters into
own hands. The House might

its

attempt
tax

of

bill
a

to write some general
instructions in the form

recommital

.

a

Allied Electric
FIRM TRADING MARKETS

or

motion,

or

it

might recommit the bill in such
way as to give the Democratic
With respect to the corporation
majority clear word that it wanted
income tax schedule, the com¬ no more of such nonsense. Or the
mittee has actually proposed to Rules Committee might laugh the.
*

the

written.

another,
case, it
is reasonable
obviously unsympathetic to the
that the 12%% defense
kind of a "bill" the committee has

supposed Administration objective
tion

what

of

the $500,be obtained
upon application to Henry Morgenthau, Jr., Chairman, Board of
Governors,
American
Financial
000,000

moderately

to

well-to-do

action

the

House

surtax does not conform with the

of

by

the

Copies

issued.

Ware is

of the Ways and been repaired, and contrarily, by count".) Give some $25,000, some
Means Committee is the one which entirely competent sources within $50,000, a fewer number $75,000
us
girls, this estimate of $2,085
millions as "the yield was NOT basically, has been pending since
made by the staff of the Joint February, of when, where, and in
As

of

this trend toward the socialization

purpose.

officially by the

ma¬

150%

is

that there is a way by which

leaders

committee that this oversight has

the

and

,par

prospectus

retained

than $25,000.

connection

this

month

the

toward

have

the

the

value

amount

once

should

S.

par;

bonds,

day. of

at

turity

advocated by the
Franklin, that no one in

U.

agree

is

Congress

inexorably

proposition
Great

first

with

Thus

at

appreciation

h i ch

w

offered

surtax rate of 81%

a

applicable

surtax, using the $100,000 for the
It is contended

in¬

any

however, each year the maximum
surtax rates-have been applicable

about

$1.02 to the Treasury after he has

today there is, for
The

upon

below

ently

—

committee

a

ceiling
than

a

bill

works out is unbelievably esoteric

income

program.

"...

establish

effect

stopped

the

made

not;

from interest
exempts, in the U. S.

tax

In

itself

quit

has

investors

to

subscription is
accepted
and
maturing
in
12
years.
These b o nd s are
being

other

The

the

(D.,

in

come,

the Finance Committee.

$100,000

before Federal taxes would be cut

So

the

which in effect leaves

*

*

.

under

and his capable members of

If

committee got up

drink.

thus

action

Ga.)

nerve.

particular

this

to

Senate

of Senator Walter

it

by faulty language the

$100,000
on

that

committee,

would

ped¬

dled by the Administration. When

to

the

that

writing.

enough

are

left

rich

So when the

of

in

bloc of the Demo¬

a

majority on the Ways and
Means committee, however, it is
not an altogether factually accu¬
rate
explanation
of the back¬

capital

dated

total stranger,
7-8600?"

cratic

defense surtax.

individual of

the

For

income

"spendable"'

income

by the 12%%

individual

taxable

his

have

home"

"take

single

of

$2,000

According to

you, a

Meatball

phone number is

my

priced

(b)

with the 12%%. defense
gadget, this is strictly out

gether
surtax

with

.

ence

corporations. To¬

of

agreement

an

Israel, is. making,an
offering
of
$500,000,000
Israeli
bonds.
Designated the Independ¬

profits

excess

Broadway, New York 5, N. Y.t

the State of

profits tax rates, said latter
applicable upon

legally

Corporation, of Isreal,

velopment

"normal'!

25% of their
pre-Korean volume
they would pay; at -

•

and

'

Stale of Israel Bonds

unliquidated day and the next bust the stretched
bill, an wage "ceiling" by 6 cents for the
assumption which, at least pri¬ meat cutters without the public
frightened of a 3-point increase
rising in a howl of utter derision,
in personal income surtax rates vately, few members of the com¬
there is increasingly a feeling of
mittee
personally make.
in all brackets.
What happened is that the ma¬ "what's the use,"
Rep. Robert W. Kean (R., N J.)
of the
committee, con¬
It may be that the House will
of the committee, had a check jority
fronted
with
the
stark
reality
made by the staff
narrowly pass the buck to the
of how this
that raising
an
additional even Senate, so that the tax bill in
thing would work in respect to
the income of a single individual $7 billion, much less the $10 bil¬ fact will have to be written in the
defense surtax. This was what the

committee adopted

Mr.

coincide with

the "Chronicle's" own views.)

income.

CIO

#

*

of the

One

is

the'Children of the

(This column is intended to re¬

remaining

rates

The
t

or

income,

Leftish

faced with the
question of how to get real
money of the people, the commit¬
tee,
after
first discarding the
-phony, reverted to the same. What
basic

the

lunch

school

free

a

flect the "behind the scene" inter¬
pretation from the nation's Capital

three-fourths

on

legally-titled

their

of

and

other words,

In

of

for

Hottentots under Point IV.

income. Second, upon

excess

with

last two
Democratic Congresses, began im¬
the

taxation

of

the committee was packed

whom

ent

income

"normal"

left-wingers

the

Then

a

$50,000.

cost

52% versus 47% under pres¬
law of regular corporation

pay

earlier

committee's

the

to

deliberations.

as

for

necessary

versus

serious

doomed in advance, gave a

at

be

gave

means.

or

i;.

<:

not

pay

program

85%,
the present law's
the impression of base.
making a
serious
endeavor
to
Thus, corporations would be hit
raise tax revenues by acceptable hard twice. First off,
they would
whole

leaders

Even if taxpayers
it all, however, the total
cost
would
aggregate only $10
millions, probably not more than

prof¬

excess

75%

above

so-called

or

as

would

rate

tax

plicable

the

union

very

taxpayers to pay all $his 200

did

bill, in the incidence of taxation on
majority of the corporation "normal" income. The
Ways and Means Committee has "normal" income would be hit in
dispelled the mystery of why that two ways.
majority seemed to be actually
First, the "normal" rate would
coming out for $7 billion of a tax be boosted from 47 to 52%, or by
at

after
brackets

agitating for the de facto

might

times

by the most drastic boost

Democratic

increase

upper

#

the draft of the proposed tax

the

the

vested

a

pay

"rich."

get virtually all of the additional
revenue

home

socialization of the income of the

the
WASHINGTON—D.

provide

take

the

among

who

It

latest

in
in

taxes

\f /\j|
JL 1/ UL

"W* fw

JljL I1/fJL

from (he Nation's Capital

substantial number,

a

$100,000.

BUSINESS BUZZ

Behind-the-Scene Interpretations

Thursday, May 31, 1951

.

FOREIGN

Products

SECURITIES

Prospectue

on

requeat

P.ARI. MARKS & CO. INC,
FOREIGN SECURITIES SPECIALISTS

50 BROAD STREET...NEW YORK 4, N. Y.
TEL. HANOVER 2-0050...TELETYPE: NY 1-971

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