Full text of Commercial and Financial Chronicle : May 6, 1948, Vol. 167, No. 4696

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ESTABLISHED 1839

eus.
library

Reg. U. S. Pat. Office

Number 46$6

Volume 167

New

The Threatened

Human Freedom Rests

RR. Strike and

By DR. ALLEN B. DuMONT*
President, Allen B. DuMont Laboratories, Inc.

Prominent television producer traces development of television and

By HON. HOWARD BUFFETT*

By ELISIIA M. FRIEDMAN

i1T:U. S. Congressman From Nebraska

Consulting Economist

Congressman Buffett stresses relation between

dissenting rail unions

re¬

ject Board's findings. But "feath¬

er-bedding"

not practiced on,
subways or British
railroads. Taft-Hartley Law pro¬
hibits
"feather
bedding" and
York

New

-

should also

rail workers.

cover

ening

a

strike

dissent f

v,-

\

Is there
deemable

r o m

a

>.

V

cepted

the

i

n

ship

there

g

sist

also

on

■■

r e-

in

would increase

own

human

as

1 i b-

costs

A Form of

Those of

who

us

Escapism?

television

;r 7

little older than

like to admit

of television is

rather old. As

are a

we

sible for "little lamsie

divy ,' and other nonsensical gibberish
which constituted the warp and woof of *fhe incantations
of later generations.

habit

in the leaders of three railroad

ing press

paper money, then again
impressed with the pos¬
sibility of a relationship between

you are

_

engineers, firemen and
switchmen, representing 150,000 a gold-backed money and human
workers?
This is the large issue freedom.
*
>
that confronts the country.
; : £
In that case then certainly you
unions,

Present Railroad Feather-Bed

and

Demands

the

The

-

railroad

unions

have

(Continued on page 47)

I

as

Americans should

connection.

(Continued

de-

*An

,
,

address
before

American

■

v

-

•

.

•

46)

it

may have taken hold of many other peoples,' too.
Certainly it sometimes appears as if it" had. As to ourselves,

however, there

be

gainsaying the fact that continu¬
ous, if not organized self-deception — usually inspired by
some resonant
"radio voice"
has apparently become a
fixed habit which virtually nothing can break. S ;>
can

The

of

inal

i d

e a

scanning,

as

it

Use

we

of
to¬

day, is just 65
years
old. It
was

Allen B.

DuMont

originally

proposed by an Austrian by: the
name
of Nipkow, in 1883,
and
still use that same principle
in breaking up the picture and
transmitting it over a single radio
we

(Continued

on

page

43)

no

—

most

frequently mentioned example at the
our "disappointment" in
Russia and the Kremlin.
Precisely how we could ally
ourselves with one of the world's most notorious despots

\

e r

fact, the orig¬

^'Stenographic report of an ad¬
by Dr. DuMont at Luncheon
Meeting of the New York Finan¬
cial Advertisers, New York City,
April 28, 1948.
dress

by
the

Small

Congressman
Conference

of

Business Organ¬

(Continued

on

38)

page

State and

*

..'V

Municipal

Lithographing Go.

Bonds

R. H. Johnson & Co.
Established

—

page

know

find

"chasing rainbows" and "blowing bubbles in the

izations, Washington, D. C., May
4, 1948.'

Havana
'•,

on

must

But

t t

m a

a

present moment is, of course,

Buffett

:.7\

We

art
idea

readily remember when the "flappers" of that day were
Always chasing rainbows" or "blowing bubbles in the air"
It may well be doubted whether the authors of such
popular
songs had much more in mind than those who were respon¬

government'of 140,000,000 people,
or

the

and

air" has for something approaching a
generation appeared
to be a favorite pastime of the American
people. The same

.

to

know that the

by $1,erty.
Howard Buffett
400,000,000. In
Also, when
past their dissent had been
''V/V-'you find that
successful.
The government re¬ Lenin declared and demonstrated
convened
the
judicial^ body to that a sure way to overturn the
satisfy the dissenters' demands. existing social order and bring
Where resides sovereignty—in the about communism was by print¬
Elisha M. Friedman

the

might be

interested

connec¬

and the
rare prize

Lie

kn

I think that
you

be

may

gold,

bed

-

maybe go back a little bit further than that to give you a
on the subject and then, to try and take a peek
''7;
<S 8S tO tlOW thiS
thing may de¬
velop..
'

background

•

EDITORIAL

between

deemable

Those

rules.

years and

little

going to try to cover, today, in the time at my disposal, a
what *has happened in television within the last few

about

that

money,

additional

feather

was

owner¬

some

tion

adoption

of

indi¬

sense

and in¬

the *

I

little

of gold,
begin to

you

in¬

wage

crease

sion.

to

was

vidual

unions

conce r n

early price reductions in receivers, but looks for
and reduction in costs of transmis¬
Concludes, within 5 to 10 years, television will be one of
top industries.

,

ler

outlaw

19

by

1947, to

continual improvement in sets

,

was ac¬

other

progres*,

Does not foresee
<

:

Board,

ing
which

indicated by an increase from 200,000 re¬
over 340,000 at present.
Sees television
supplementing radio, and predicts eventual large television hook
ups, which will include small as well as large population centers.
rapid

ceivers at end of

connection between Human Freedom and A Gold Re¬

Find^

-

its recent

money

Money?

the President's

Fact

rV-v-'-iv

belongs
sphere.
But when you recall that one of the first moves by Lenin, Musso■■;• lini,
and 'Hit-3>——
'.■■■■•'. ■ ■"
——

opinion of

an

■

At first glance it would seem that money
to the world of economics and human freedom to the political

11. They

May

on

■

and freedom
and contends without a redeemable currency, individual's freedom
7% to sustain himself or move his property is dependent on goodwill of
politicians. Says paper money systems generally collapse and
result in economic chaos.
Points put gold standard would restrict
government spending and give people greater power over public
purse.
Holds present is propitious time to restore gold standard.

r:

Three railroad unions are threat¬

Copy

a

on

Gold Redeemable Money

Feather-Bed Rules
Three

Price 30 Cents

York, N. Y., Thursday, May 6,1948

i

1927 '

7

7

•

7.

_

★
"

INVESTMENT SECURITIES

,

Bond Department

Hirsch & Co.

64 Wall

Members New York Stock Exchange
and other Exchanges

BOSTON

.

25 Broad

HAnorer 2-0660

NEW

Genera

London

(Representative)

;V

.

Albany

Wilkes-Barre

Woonsocket

THE NATIONAL CITY BANK HART SMITH & CO.
::

PHILADELPHIA

Buffalo

Harrisburg

Teletype NY 1 -210

Cleveland

Chicago
J U:.

Troy

St., New York 4, N. Y.

Street, New York 5

Syracuse

OF NEW YORK

•

Scranton
;,

-

52

THE

York Security

WILLIAM ST., N. Y.

Dealers Assn.

■

■

HAnover 2-9980

NATIONAL BANK

Bell Teletype NY 1-395

Springfield

f Bond Dept.Teletype: NY 1-708

Washington, D. C.

CHASE

Members

:

New

THE

OF
New York

Montreal

CITY OF NEW YORK

Toronto

ISSUE

For

AMERICAN MACHINERY CORP.
(Orlando, Fla.)

•

Due Mar. 1, 1958

Wisconsin Power

CANADIAN

&

SOUTH AFRICAN

$295,000 10-Year 1st Mort. Conv.
6% Bonds
Dated Mar. lf 1948

Banks, Brokers and Dealers

Underwriters and

;

>

SECURITIES

BONDS & STOCKS

Light Co.
COMMON
/

Price 100 plus Accrued Interest

Distributors of Municipal
and

Convertible into 333 shares
of

common

stock per bond

Copies of Offering Circular on request

Corporate Securities

(Incorporated)
Established

INSTITUTIONAL INVESTMENTS

30 Broad

Street, New York 4, N. Y.

TeL WHitebali 3-2840




Tele. NT 1-809

-

OTIS & CO.

Gordon Graves & Co.

1899

CLEVELAND
New York

Cincinnati

•Bought—Sold—Quoted

Chicago
Denver
Columbus Toledo Buffalo

Analysis

Dominion Securities
SUTRO BROS. & CO.
Est. 1896
Members New York Stock

120 Broadway,

Grporation
40 Exchange Place,

New York 5,N.Y.

New York

Telephone REctor 2-7340

v

request

IRAHAUPT&CO.
Members New York
,

Exchange

upon

'

Stock Exchange
Exchanges

and other Principal

111

Broadway, N« Y. I
Teletype NY i-2708

WOrth 4-6000
Bell

System Teletype NY 1-702-3

Boston

Telephone: Enterprise 1820

2

,

FINANCIAL CHRONICLE

Thursday, May 6, 1948

Problems in Administering Securities

Trading Markets in

Act

By ROBERT K. McCONNAUGHEY*

Equip. Mfg.

Standard Railway

&

COMMERCIAL

THE

(1974)

Alabama &

;

Commission

Member, Securities and Exchange

Texas Eastern Transmission
Commissioner McConnaughey,

Texas Gas Transmission

after describing

Pacific Gas & Elec. Co.

Air Products, Inc.

v

Sees need for refrain¬

of orders before expiration of waiting period.-

sals to allow tentative solicitation

Louisiana Securities

and working of registration requirements for

purposes

securities-offerings, points out, under present restrictions regarding the 20-day v/aiting period, underwriters cannot diminish risks through rapid turnover.
Sees friction in this, and outlines SEC propo¬

Bought-^-Sold^-—Quoted

of competitive bidding and concludes, if Justice Department anti-trust
against underwriting firms is successful, competitive bidding will have wider scope.

ing law, particularly in cases

New York Hanseatic

Corporation
BArclay

Teletype NY 1-583

7-5660

What I want to try to do today is to give you a birdseye view of some of the problems
when the Federal Government undertakes to regulate a highly complicated, fast

■;r

back-

a

ground
basic
shall

Allegheny Ludlum Steel

■::,i■"

'

commonly

v;.'.

the

of

Members

New

120

~

:A

York Stock Exchange

New

York Curb Exchange

REctor

in

writers at

per¬

spective

i

to

you

give

of
a
signifi-;
il t S e t! of

So. Production

we

Great Am. Indus.

Soya Corp.

is the

I want to do is to
a

SIEGEL & CO.
DIgby 4-2370

modern

in

field, of the dynamic and ex¬

perimental aspects of regulatory
action,

law in

f

,

of course, that many,
perhaps most, new issues of the
securities of large businesses are
You know,

underwritten

In the

distributed

-

syndicate

so-called

method.

Aetna Standard Engineering

and

.

the

through

actual Tftarkelfr Qu

' ,,v,r'

typical case, the business

Baltimore Porcelain Steel

securities

Blue Moon Foods

consults

investment

an

house.

Clyde Porcelain Steel

investment house may range

"A"&-

Botany Mills

International Detrola
Kirby Lumber
LaSalle Petroleum

Mackinnie Oil & Drilling Co.
•

Punta Alegre Sugar
Sunray Oil 4*4% pfd.
Pacific Telecoin
Time, Inc.

r

United Artists Theatre
United Piece Dye Works

U. S. Finishing com. & pfd. *
Merchants Distilling
Telecoin Corp.
Utah Southern Oil

oreeneondGompami
Members N. Y. Security Dealers Assn.

37 Wall St., N. Y. 5
Bell

Hanover 2-4850

Teletypes—NY 1-1126 & 1127

distribution

genuinely needed in
probably, a good

Stock

York

Curb

York

New

that

may

stantial size he is likely to explore

piecemeal

distribution by

the interest of other large houses

extensive

organization

Chicago

Board

to

whether

determine

they

will

Of

participate with hirh in the under¬

less

course

with this sort

of

And

house's willing

to

Commissioner

of:

purpose

accounts for many of the

system's characteristics. Its effect
shoots through the system, from
the basic contracts that fix the

Active Markets in U. S.

Exchange

Powell River Co.,

Minn.

Inc.

&

Ont.

Ltd.

FUNDS for

Paper

Noranda Mines "

Canadian Securities Department

.

United Kingdom 4 % 790

other Exchanges

1

adverse

market,

The

tions.

YORK

4, N.

■

DETROIT

British

South African Mining Shares

Securities Department

Units

Frank C. Maslerson & Co.

among

Established
Members New

un¬

1923

York Curb

WALL ST.

64

Exchange

NEW YORK 5

Teletype NY 1-1140

HAnover 2-947C

hot to prejudice the distribution

Curb and Unlisted

institutional

purchasers to take
large parts of the issue off their
hands
thus avoiding small-lot
retail selling.

while undistributed
still in

Securities

Joseph McManus & Co.
York Curb Exchange
Chicago Stock Exchange

Members New

39 Broadway

New York $
Teletype NY 1-1610

Digby 4-3122

securities

accounts

the

for

pressures

Gas ;

Texas

Transmission

are

the hands of the groups.

Purposes of Securities Act
To

Texas Eastern

for

Transmission;'
•
,

* Prospectus

request

on

-

Troster,Curries Summers
;;

V..,

,;v\'' V. ;'.V::l

■

'/

Members

Y.

Members N. Y. Stock

PITTSBURGH

115 BROADWAY
Telephone BArclay 7-0100

The effort to make it effective in

we've

had

of the

in

may

it

that

requiring

6, N.Y.

Teletype NY 1-672

Utah Southern Oil

Equity Oil

James M. Toolan & Co.
67 Wall Street, New
Tel. HAnover 2-9335

of

not

this

come

interference

practices^ by
and

Producing

under¬

land

1948 earnings.
half million

over

Has
acres

yet

available.

truth

36)

in

undeveloped. Dividend
payer
since
1940.
Capable ag¬
gressive management.
Statement
v

S. R. MELVEN & CO.

they have for

page

higher

interests
of

125 Cedar
_

on

Current

cate

with

A more drastic regulation
might be easier to administer —

(Continued

net

1946.

sale.

.

oil
and
natural gas'.
earnings
222%
above
crude prices indi¬

1947

merely

investors the

about the securities

5,'fl.Y.'

Selling Under $3

Act

from

is

issuers

York

Bell Tele. NY 1-2630

OIL STOCK

accomplish its protection with
minimum

Ass'n

Empire State Oil

essentially a
mild regulation—that it attempts
to

Dealers

Teletype—NY 1 -376-377-378

trouble that

making

fully effective
fact

Security

of 1933

practice has evolved some rather
complicated machinery. Whether
that machinery has been effective
in proportion
to its 1 complexity
has frequently been questioned.
I'll try to tell you some of the
reasons why. You plight consider,
as
you listen
to this discussion,
some

York

abuses

regulate

writers to tell

Exchange and Other Principal Exchanges
NEW YORK

New

Congress
found to have grown up within
this system, the Securities Act of

a

GENEVA, SWITZERLAND




contracts

the

v

Goodbody&Co.
-

CHICAGO

Tudor City

otheri condi¬

or

derwriters and dealers usually by
their terms require each of them

established

N. Y. Cotton Exchange BIdg.
NEW

Citizens Utilities

The underwriter's contract with

the issuer gives the underwriters
various "outs" in the event ol

whether

4 Brown Co.

Trade

Exchange

Tide Water Power

mar¬

underwriter
could and thereby speed the dis¬
one

setup, adjusted to rapid distribu¬
tion and based on relatively lim¬
partici¬
ited capital, failure in a few large
1933 was enacted. That legislation
pate form a group to share in the
issues could have serious conse¬ is intended to protect the investor.
initial purchase of the issue at a
quences.
Roughly, the way it is intended to
wholesale price. This group, usu¬
protect the investor is to require
ally a relatively small number of Risk Diminution in Underwriting
that he be told enough about the
houses, is the underwriting group
investment to enable him to make
In view of this possibility one
or syndicate.
an
intelligent appraisal of it be¬
At a later stage a larger group of the primary aims in the pres¬
fore; he buys it. That sounds like
ent American
underwriting sys¬
a
fairly mild sort of regulation.
tem is a diminution of risk.
This
The

Exchange

New Orleans Cotton

a

writing.

We Maintain

of

diversified

more

any

less they; exist.

a

and

intensive methods.

Management, Dartmouth College,
Hanover, N. H., Jan. 22, 1948.

Exchange,

and

than

be, the

Exchange

Cotton

Commodity

offices

^

Members
York

wider

It

all

H. Hentz & Co.
New

branch

our

Mackinnie Oil & Drilling

These
comments
are
not in¬
probable market reception of a erally, or even collectively, would
particular interest or dividend not conceivably be sufficient to tended either tb condemn or to
commend any of these character¬
enable: them to buy, over a sim¬
rate.
ilar period, a comparable quan¬ istics of the system. They are in¬
Before an underwriter commits
tended
only to point out that
himself to take an issue of sub¬ tity of securities for inventory and

^Remarks

New

to

that,

that's

However

man¬

McConnaughey before Prof. John
A. Griswold's Class in Financial
Established 1856

individual

of

the participa¬
They also reach closer to a

tion.

ket

burden

spreading

by

speedy wholesale and retail dis¬
agement proposes to issue, or the fact is that enormous amounts,of tributions, utilizing all the arts of
appetite of the market for such a securities are distributed every salesmanship likely to contribute
security, to such details as the year'by houses whose capital sev¬ toward that result.
of security the

ticular kind

Equity Oil

'i

is

capital

from

suit¬ business
ability to the issuer, of the par¬ thing.

Empire State Oil

wires

—

broad questions as the

such

Electric Bd. & Share Stubs

Northern New England

the

with

discussion

The

Boston & Maine R.R.

fact

NY 1-1557

.

organization
proposing to seek
public funds through the sale ol

American Time Corp.

risk

quantities of securities as large as
frequently offered.
In a
sense
the system is flexible and
It
accounts
for
the practice
efficient. By varying the number
of relatively small participants to known as stabilization, in which,
correspond' to the size and prob¬ subject to limits set by rules of
able dispersion of the;.particular the Commission, in certain situa¬
an
underwriting
group
issue it accommodates itself fairly tions,
market
purchases
readily to diverse sorts of financ¬ makes open
ing.
It utilizes a comparatively during a distribution in order to
small amount of capital to accom¬ support its price.
It accounts for
various
penalties
against
plish the distribution of
large the
amounts of securities. It achieves group members for sales made to.
free riders or quick turn specu¬
the / distribution f rapidly
and
thereby frees the
underwriters' lators who dump their purchases
capital quickly to* be used in fi¬ while the distribution is going on,
nancing the distribution of other thus creating the threat of an un¬
securities. To the extent that the controllably
disordered
market

•

Teletype NY l-r»42

the

those

impor¬

an

of

and hold for leisurely

describe to you

concrete example,

tant

Direct

generally by selling under the fixed offering
speaking, individual underwriting price. Risk avoidance accounts in
houses
do
not have sufficient large part for the zeal with which
capital independently to acquire underwriters frequently seek out
sult

system
of underwriting and distributing
securities; and the instrument of
regulation which I shall analyze
in part is; the Securities Act of
1933 as it applies to securities un¬
derwriting and distribution. What
sketchily)

General Aniline & Film

for retail dis¬
their own sell¬

ing organizations.
R. K. McConnaughey
The American system of dis¬
encouter in admin¬
istering the Securities Act of 1933. tributing new securities is geared
The particular point of contact and powered for rapid turnover.
between government and business It's difficult to tell whether that
I
propose
to explore
(perforce situation is the Cause or the re¬

ACTIVE MARKETS

Broadway, N. Y. 6

issue

the

part

tribution through

C a

)

of

picture

questions

of

spread

rather

2-7815

mechanism

price.
Its proiit is
between the dealer's tribution process and minimize
price and the retail price.
The the time capital is tied up in the
underwriters customarily
retain distribution of any one issue.

the

reason¬

a

HAnover 2-0700

NewOrleans, La.-Birmingham, Ala.

itself.

the

liorate
:

discount off the pub¬

a

un¬

Syndication and group forma¬
themselves, risk spread¬
They not only ame¬

offering

lic

n

order

!"

1

the

Exchange

ing devices.

selling

the

called

r-.

in

York Stock

St., New York 4, N. Y.

tion are,

The selling group buys its por¬
tion of the issue from the under¬

ably adequate

BROADWAY, NEW YORK 5
Tel.

group.

as;a

whole
broad

HC RONNELL & CO.

the

the

to

distribution

of dealers formed to assist
the
retail
distribution is

group

with

SEC

Prospectus on Request
■

.ri'.'A

to

the

relationships

derwriting

buy a part of the issue
underwriters for retail
distribution.
The usually larger
the

describe
work

various

formed

will

who

from

opportunity to

.ii:

Bought—Sold—Quoted

have

sacrifice

;

.

is

dealers

additional

of

I

ideas.

25 Broad

4>-

/

for
fairly

some

Members New

discussion will be somewhat technical, I want to

moving national business. ' Although my
lay

$4.50 Conv. Pfd.

Steiner,Rouse&Co.

raised

5

New York

Broadway,

120

suit

/

St., New York 6, N. Y.

WOrth 4-7786

Teletype NY 1-57C

(1975)

INDEX
Articles

Pa**

News

and

<

Progress ind Future of Television—Allen B. DuMoQt—_-Cover ,
Human Freedom Rests on Gold Redeemable Money :
::'*;V',A

•—Rep.

---Cover

Howard

The Threatened Railroad Strike and Feather-Bed Rules

—Elisha

Problems in

—Robert

—

Our Foreign Aid

...

—

Dollar Policy—M. A. Kriz—

Policy in Operation—Hon. John W. Snyder
*

There

been an almost dramatic reversal of psychology in
during the past 60 days. The small minority of market
insisting that the October, 1946 lows of the
Dow-Jones Industrial Average were not likely to be broken mate-r
rially,
if
at
the spring of 1947, when these
all, before the

12

upward

"-

Depression

"

19

Says "Shots-in-the-Arm"

of the .market

resumed,
are no longer
being ■ looked

30

TrendSji_---^--iliT.-7-__^-)-i^---.

Nadler Sees Conflicting
NYSE

Revises

-7

Printed

8

timists.

buying

#

seem

Schram and Boylan Comment on End of Exchange Strikes..

21

Prepared for

Documentary Film of Natural Gas Industry

■The

the

,

to

N.

Third Parties (Boxed)-—^

vs.

Y. Chamber

of

Commerce

market-

—

Monetary Standard

Committee

Public

on

Debt

Policy

-—

-

Prices as

Stable

Protection of "Future Dollars" of Insurance Policyholders. 24

with

Texas Gas Trans. Corp.
Tennessee Gas Trans. Co.

round of

the

Federal Water & Gas Corp.

to

help sustain
during the recession
told

last

the

was

Dorset Fabrics

Kingan Com. & Pfd.

inevitable,

U. S.

depression

a

in

year

drive

to

put

We

"by

trotted

was

connection
across

J.K.Rice,Jr.&Co.

the

told that

were

—

24

Established

Congress did

approve

the

Anthony Gaubis

\of
October, 1946, and/or

This reversal of

May of 1946. r

psychology and

predominance of bullish
opinion cannot' help but be dis¬
turbing to the thoughtful and
sophisticated investor. Is it pos¬

current

seems

to

dence

that

died

be

down

than

more

talk
in

of

a

May of

the establishment of

pattern

and

a

a

second

coinci¬

a

Corporation

1947 with
wage

round

of

Broadway

Teletype N. Y. 1-714

A Metal Forming

depression
new

2-4500—-120

Bell System

.

Plan, the inevitable de¬
cline
in
exports A would < surely
bring about the depression which
had been promised for 1947, but
got lost somewhere along the way.'
I may be wrong, of course, but it

190$

Members N. Y. Security Dealers Assn.

Marshall

increases, and again in Feb¬
ruary of this year, Once the pas¬
FHA Reports Record Home Building—--^,
24
•
sible that Wall Street is now just
sage of the Marshall Plan was
Export-Import Bank to Provide $1 Billion for Latin American ;, :•
as wrong in expecting materially
assured.
Unfortunately, the pre¬
:A Republics'1
higher prices over the; next, six dictions of our Washington bu¬
"New York Stock Exchange Suspends Broker_--i----—--5^2^^ ^ to twelve
months, as it was wrong reaucrats have a major effect on
Internal Revenue Bureau Clears Up Tax Liability on Loaned
in expecting, almost universally,
the psychology of radio commen¬
Stock
28
a business recession and a repeti¬
tators and the ecoriomic writers
First National Bank of Boston Calls for Economy in.Non,
i
tion of the 1920-1921 stock market for such
national publications as
■■ii Defense Items
28 ,1 pattern during / 1947?
While I "United States News,*' "Business
^Guaranty Trust Co. of New; York, Holds Reduced Tax on
personally disagreed with the pre¬ Week, and "Kiplinger."
It is not
; 11 High Incomes Benefits All
28,
vailing Wall Street optimism of surprising, therefore, that public
New York Curb Suspends Member..
31
early 1946 (and recommended that psychology is more or less domi¬
NICB Survey Reports Business Executives Optimistic—... 51
investors be prepared for a probA nated by what seems to be nothing
''''A;;'A^AAA-A'AP-'-A
' 'V/;.able
decline to somewhere be¬ more or less than a
propaganda
Regular Features
tween 160 and 170 in the Dow- line. ■
•
As We See -It (Editorial)._i:.i_i-i--^—^--i^-_----SulCover"i?:
Jones Industrial Average during
Our Washington propagandists;
Bank and Insurance Stocks.....
12 A
that year); and again fought Wall
have
not
Business
Man's
Bookshelf...
27
only stopped crying
Street
opinion throughout 1947
"wolf, wolf" during the past two i
Canadian Securities
18
(when fundamentals, as I saw months but are now
telling us of
Coming Events in the Investment Field....
11
them, suggested that a majority the
possibility of shortages of
Dealer-Broker Investment Recommendations
J——_
8
of the better grade issues were
manpower and materials by sum¬
Einzig—A "Keynes Clearing Plan" for Western Europe...__ 27
definitely 'in a cyclical buying mer or
From Washington Ahead of the News—Carlisle Bargerbn...
fall, and are predicting
6
area); -I believe that Wall Street' new
high records in production ]
Indications of Business Acfivity-i--^-^r--_i--_^-^---i--il. 45^,
will prove justified in its current
and consumer incomes during the
Mutual Funds
20
optimism: for at least • the next
very period when we had been
NSTA Notes
10
six to eight months. After all, pre¬
told to expect a recession. What
News About Banks and Bankers..
29
vailing opinion in Wall Street is is behind this
change in the Wash¬
Observations—A. Wilfred May
5
not always wrong, the general im¬
Our Reporter's Report—
ington point of view?
At the
51
pression to the contrary notwith¬ moment we can
Our Reporter on Governments—.
only guess. Could
29
Republican Senators Blast Congressional Appropriations

Finishing Com. & Pfd.

REctor

unless

ret¬

since

bogy of

Marshall Plan.

ish since April and

23

—

—

with

May, 1947.
Generally speaking,
Wall Street has not been so bullr

22

Foreign Gold and:

on

Urges

course)

Change in

A--

—

—

Federal Reserve Board Reports Drain
Dollar Holdings

21

—1— 22
No

Recommends

were

out 4dte

ing trend of the

-

forces
second

a

the last half of. 1948"

be

roactively,
Senator McCarran Wants Freb Gold Market—

Telephone: WHitehall 4-6551

primarily because commodity
prices had been decontrolled.

op¬

ready
to
/reclassify
the- underly¬

Accounts' ^
Charles O. Hardy Holds International Relations No. 1 Problem

power

that "we

getting

Spur Dividend Payments._ 15
17
N«-Y. Reserve Bank Issues Text of Treasury Rule on Swiss.

joined

secure

increases

wage

theorists

Dow

J. K. Lasser Holds Tax Cuts Will

Murray

WALL STREET, NEW YORK

Even

of

some

Requirements......!-....-._ 11

Listing

CIO to

,

down upon as

misguided

—____

^____

_

''

Postwar

Delay

theorists

was

';A;AAAA'Ar:A

•

trend

23

Roundup of Business Conditions—Kenneth Field.—____ 25

Economist

■

students who have been

Capital Shortage!—Harry L. Derby.— 18

Production?—Henry Hazlitt.

v..;;

has

Wall Street

...

We Are Winning the Cold Wat—Erwin D. Canham
Bank

dt,spore of c-bsoJetes.

Obsolete Securities Dept.

240-260.'

-—

How to Find True Value of Paper Dollar—Lewis Haney____
A

to

us

which could raise Dow-Jones Industrial Average tp about

year,

—Sigurd R. Wendin
:___ 14 A
ERP—Misguided and Expensive Venture—B. J. Gardener.. 17
What Makes

to

99

Banking in Michigan Today—Morris A. Schapiro—
Money, Government Spending and Interest Rates

or

"Everybody who is anybody conies

____

_

What to Do About Prices?—Jay D. Runkle—
Economic JRelation of Wages and Prices—Earl Bunting

Reduced Taxes

PEOPLE CONGREGATE"
—at ;99 Wall Street, of course!

opments could lead to revival of normal confidence before end of

• •—

Thinking About the World and Its Economics
—Beardsley Ruml

"WHERE PARTICULAR

Investment Counselor

Gaubis, after analyzing recent stock market trends, contends
realistic appraisal of fundamental economic forces justifies conclu¬
sion of impending substantial rise in values.
Says favorable devel¬

Optimistic Wall Street Psychology Justified

—Anthony Gaubis

AND COMPANY

•! Mr.

2

llCHTEIlSTfir

-

By ANTHONY GAUBIS

'

'

,

A'''^:~AA:

McConrtaughey...

Switzerland's Gold and

'('*

Cover

Administering Securities'Acts
K.

•

•

Friedman—

M.

Optimistic Wall Street
Psychology Justified

3

A BOUGHT

wage

SOLD

—

Current Bulletin

—

QUOTED

on

Request

——

'

"

FIRST COLONY
CORPORATION
52 Wall St.

New York 5, N. Y.

'"Te/e.

Tel. HA 2-8080

1-2425

________

—

NATIONAL BANK
of INDIA. LIMITED
Bankers to the

Government. in

Kenya Colony and Uganda
Head

-

Office:

26, Bishopsgate,
London, E. C.

,

.___

'

Branches

in

Colony,

—

India, Burma, Ceylon, Kenya
Kerlcho, Kenya, and Aden

r

and

Zanzibar

Subscribed
,

Capital.^
£4,000,000
Paid-Up Capital-..
-£2,000,000
Reserve Fund
.£2,500,000

—

——

...

'i Railroad

Securities....

14

...

Salesman's

26

Corner

Securities Now in Registration
The

50
27

...

_

Securities

Securities

48

_

State of Trade and Industry

Tomorrow's Markets

5

(Walter Whyte Says)

42
52

Washington and You.
^

Published Twice

The

Dominion

Weekly

COMMERCIAL

Other

and

of

FINANCIAL CHRONICLE

Bank
$25.00

Reg, U. S. Patent Office

1

WILLIAM B.

DANA

COMPANY, Publishers

23 Park Place, New York 8, N, Y.

#

WILLIAM
WILLIAM

A-,':

-

',

\

^

v

•

-

DANA

SEIBERT,

D.

'■''

RIGGS,

A

;

v

:

i,Other

135

.

,

S.

La

Salle

1948 by
•

25, 1942,
York, N. Y.,

ary

8,

vV

St.,

William B. Dana
Company

>

-

-

in

Subscription Rates
Union,

New

York

funds.

'

^

cause

of the improve¬

Street' psychology

in Wall

may" be traced largely to the
change. in the economic propa¬
ganda
line
from
Washington.
Throughout 1946 and ' 1947, the
would-be economic planners who
to be in control of the eco¬

nomic;,; propaganda
machine in
Washington were telling us about
the 'terrible
things
that
were
bound

first continue,

of
particularly vocal in

controls.
was

fundamentals

are

LAMBORN & CO.,Inc.
99
■

.

WALL

STREET

'NEW YORK 5, N. Y.

ber, 1936: "Business does, not just

current

"explanations"

of

of a business
seems

The

.

be

to

rather

SUGAR

the

in the forecasts
(and stock prices)

right-about-face

chorus

The

undertaken

also

happen to be good, we planned it
that way!")
In any event, the

and then reinstate,

price

of

bureaucrats realize

and that they might as
well try to* get credit, at the No¬
vember
elections, for the high
level of prosperity?
''Remember
the campaign keynote of Novem¬

happen if we did not

to

our

business

sound,

Psychology

The' basic
ment

We

CERTIFICATES
VV-V'

?.

•"

.

/'■

'■ '•

".'A A

■

•;.>>:' :-"s: -t■

superficial.

Raw—Refined—Liquid

Exports—I mport$--Futures

tax reduction
bill and the ERP legislation was
a fairly safe prospect by Decem¬
ber of last year. Stepping up the
(Continued on page 34)
'
passage

of

a

DIgby 4-2727

■

S35.C0

per




year;

in

The

interested in offerings of

Public
&

High Grade Public Utility and Industrial

Lawyers Mortgage Co.

PREFERRED STOCKS

Winters

Mtge. Co.

Spencer Trask & Co.

Members New York

New

York

St., N.Y. 5

Bell

Teletype

Stock

Exchange

WHitehtll 4-6330
NY 1-2033

New York

&

,

Crampton Corp.
Common

Prudence Co.

15 Broad

Bank

Trust Company
of

Lawyers Title & Guar. Co.
N. Y. Title &

National

.

Bond & Mtge. Gnar. Co.

Member*

S.
of

are

i;Vv«

Newburger, Loeb & Co.

Subscriptions in United States, U.
'Possessions, Territories and Members
Pan-American

made

post office at New
the Act
of
March

1879.
•

account of the fluctuations in
exchange, remittances for for¬

second-class matter Febru¬

at the
under

>

that

TITLE COMPANY:

3, 111.
(Telephone: State 0613);
1'Drapers' Gardens, London, E. C., Engc/o Edwards & Smith.
.A-

;

of

rate

it be that

Basis of Improvement In

doom

Chicago

Copyright

conducts
every
description
banking and exchange business

Trusteeships and Executorships

:

yland,

Reentered ai?

Record—Monthly,
iForeign postage extra.)

Quotation

year.

•

seem

eign subscriptions and advertisements must
be

Thursday, May 6, 1948

Offices:

and

per

standing!;,

Manager

'; Every Thursday (general new* and ad¬
vertising issue) and every Monday icomprete. Statistical issue — market quotation
records, corporation news, bank clearings,
state and city news, etc.i.
'
*
5

year.

Monthly Earnings Record — Monthly,
$25.00 per year,
«Foreign postage extra.)
the

President

Business

per

Other Publications

»Note—On

REctor 2-9570 to 9570,
HERBERT D. SEIBERT, Editor & Publisher

$38.00

Canada,

Countries, $42.00 per year. /
.A

>

Bank

——

Prospective Security Offerings.
Public Utility

The

Stock Exchange

25 Broad Street,
A/

,

A \" •

Albany

Tel.:

HAnover

A- A.a
-

New York 4

Tel.: FINancial 2330

2-4300

v.-_

Boston

A Members New York Curb Exchange
■
135 S. La Salle St., Chicago 3

-

-

"Teletype—NY 1-5
Glens Falls

-

Schenectady

-

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C. E.

Unterberg & Co.

Members N. Y. Security Dealers

61 Broadway, New

Ass'n

York 6, N. Y.

Telephone BOwling Green 9-3565
Teletype NY 1-1666

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(1976)

Thursday, May 6, 1948

Switzerland's Gold and Dollar Policy Our Foreign Aid
By DR. M. A. KIIIZ*

^

*

Policy in Operation

Federal Reserve Bank of New York

Dr. Kriz

explains current Sw^ss gold policy in light of balance of payments developments. Concludes
although Switzerland acted voluntarily in suspend Jig gold sales to public, ic actually realigned its gald
policy with International Monetary Fund.
.

By HON. JOHN W. SNYDER*

.c

the

on

<£-

V

'

ZH

economy—
the an-

out of 1,552 million last
(149 million dollars, out of
363 million).
In 1946 this balance
francs,

■?;

t

.

sales

.he

of foodstuffs and raw ma¬

during the war, it
might be inferred that the deficit
is likely to diminish as the stocks

policy

1947

its

reconstituting

now

terials depleted

reversed

in

is

stocks

in-

francs, etc.
was

regulations blocking
part of the dollars received as

a

land

Swiss

This

the

5

payment

damentally the iact that Switzer¬

on

dollars

o

c

on

Miroslav A.

of

Kriz

stuffs

food

and

materials

raw

the other
hand, however, Swiss exports are

in

replenished.

are

.

On

other

for

than

ished.

These

imposed
ceived

the

amount

goods
abol¬

crade

deficit

argest

(363 million dollars),
with a deficit of 747

compared
"million francs

that

the

Finally,

of Jan.

as

1, 1943, t'ie

in " Switzerland

shows,

,

a

several >• months

Bank
_

eficit, which, however, is easily
overed by the favorable balance
of

noncommercial

ncluding

tourism

As

a

m

the

result

/ear,
ments

and

to~*take~measures"to~

,

ago

began

limitations

income

the

remove

on the transferability
dollars into francs at the offi-

abroad.

of

the

Swiss

the

l

transactions,10f

investments

Swiss

rom

tional

that had
been established during the war
great increase and the immediate postwar period,

trade

Swiss

deficit

balance

ciai

last

of

pay-

Bank

suspended sales of
the
commercial

coins

to

rate

ivlore

of

exchange

particularly, with a view to

| increasing the inflow of dollars,

buying gold accruing from Swiss
exports by raising the necessary
francs through the issue of Treas¬

current

account

was

the

/. current

deficit is due in
the

deficit

of

large

'

trade

to

measure

Swiss

conversion

trade

with

income

also

"The author is

the staff of

on

the Federal Reserve Bank of New

jYork.
ure

The opinions he

expresses

personal.

for

in

1946

and

in

1947.

income

current

for the

income

only

.

rate

of

exchange up to $200 per

duced

meas¬
toward

billion

establish¬

ending
billion

eration in
r

for

nomic

eco-

toward

cially is the European Recovery
Program an outstanding example
of united and practical effort foi
the

common

Certainly,
which

the

tries

were

required to help meet

the costs incurred
in

bank

Swiss

Government

discon¬

was

tinued, and the national bank in¬
stead took

from the govern¬

over

ment

Among the

measures

was

the

most

conditions which

cesses"

WE

maintain

in : gold

dealings; Gold
sales led to widespread arbitrage
operations, under the disguise of
which gold purchased in Switz¬

facilities

in

"ex¬

new york

erland
world

completeTrokcrag^^^™™"^^™*''

sold for dollars

was

the

gold market, the dollars

obtained

returned

were

zerland and sold

facilities for clearance of New York and out-of-town

on

on

to

the free

so

Swit¬
mar¬

basis.

.....

-

or

ceeds.

%

.

there, and gold was purchased
again with the Swiss franc pro¬

"disclosed"
,,

.

,■

,

more

Our

staff

service in all

.

is

trained

specially

for

r

phases of this type of business. ; ;

-

on

dollars

were

by profits made
The large dollar sales

gold.:

on

personalized

Losses

than offset

(Continued

on

page

32)

;

>

Managing Partner

of such

New York Stock

Exchange

Commodity

Exchange (Assoc.)

New York Cotton Exchange

-%

sion

among

covery

the

,

-




1

the

of

work

had

been

over

a

period of
-

The

Administrator, under the
direct authority of the President,
is responsible for reviewing and

objectives of the United Nations."

appraising

the requirements of
participating countries, for de¬
veloping programs of assistance to

Working of Program
I think
.

meet these

It is essential to under¬

directing

some

to

clearly the actual working

tion.

1948

foreign

Assistance

authorizes

recovery

$5.3

Act of
billion for

Cooperation

execu¬

of

the

Adminis¬

istrator, the Deputy Administrator
and the necessary operating
This
headquarters will- be

for the 12-month period

ending next April. This particular

marily

was determined after con¬
sideration of the minimum recov¬

figure
ery

efficient

The / headquarters

tration is in Washington, and con¬
sists of the offices of the Admin¬

be accomplished*.
The

requirements, and for
their

Economic

results which are expected

charged

with

staff.
pri¬

allocating

funds for the purpose of the pro¬
gram, and with

needs which were estimated

curement

ment

*An address by Secretary Sny¬
at the 1948 convention of the
Missouri Bankers Association, St.
:

be

der

will,

so

carried

United

arranging the pror
supplies. Procure¬
far as is practicable,

of

channels

Louis, Mo., May 4, 1948.

out

through normal
private business atid

of

States

manufacturers' and

suppliers will deal directly with
foreign buyers.
Some goods will
be bought, however, through gov¬
ernment

agencies,, although these
probably will be f of

purchases

the next year or

they have been in- the
past.
This government purchas¬
ing will be principally in the case
of
goods which
are
extremely
and

subject to export al¬
where competitive

or

buying

might

have

j serious effects on the market price
! of

113 Hudson Street

Jersey City 2, N. J.
Bergen 4-7892

over

than

so

'

-m—

which

months.

j independent

"

act. This quick
possible by the

new

lasting peace, the general welfare
and national interest of the United
States, and the attainment of the

W. P. McDERMOTT CO.

Teletype NY 1-2584

an

by the executive branch of

locations,

Telephone WOrth 4-29IO

with

bill. How¬

recovery

made

was

scarce

.

Administrator

task in

the Government

existing situation in Europe en¬
dangers the establishment of a

AMERICAN MINES

120 Broadway, New York 5

by
Recovery Ad¬

confronted

lesser extent

i

Teletype NY 1-2534

law.

is

done

Specialists in

v

Telephone HAnover 2-6600

as

became

advance

bill itself clearly describes
in these words:
"The

Inc.

BROADWAY, NEW YORK 6, N. Y.

the

action

issue

New York Cocoa Exchange

/'

Senate

ized under the

citizens. The re¬

our

New York Produce Exchange

Chicago Board of Trade

29

Exchange,

Mr.

nominated by

confirmed

mediately with supplies author¬

widespread public discus¬

MEMBERS

New York Curb

speedily.

was

and

sions

:

J

re¬

establishing the
machinery to carry out the provi¬

PHILIPPINE GOLDS &

Joseph Faroll & Co.

Hoffman

enormous

Direct wire to Chicago and other wire facilities.

Please address your inquiry to

moved

President

bill

ters of state have been the subject

ket

transactions—upon either "omnibus"

over-em¬

the

administration of the program and

to

cannot

ministrator within hours after the

ne¬

bank ascribes

action

recog¬

economic

the

the recovery program.

stand

this

is

the

They have been described in great ever/he established a skelton or¬
detail in the newspapers, in the ganization at once in order to get
the program promptly into action.
magazines, on the radio and in
Congressional debate. Few mat¬ Ships sailed for Europe almost im¬

its

In

we

have

Paul

the

annual report for 1947 the national

-

We

taken the

spectacular.

to

Hoffman

cessitated

The assistance

covery to the United States.

ac¬

of

China, I

phasize the importance of that

promptness

aware

to

of Western Europe and
economic
stability.
I

believe that

the

well

to

provided

crucial

as

recovery
world

bipartisan foreign pol¬

are

ending

corresponds

assistance

being

to

Congress passed
this legislation is a vigorous dem¬
of
the
operation
of

You

period

1949,

program.

is

nized

onstration
American

12-mbnth

30,

Aid

that

support which the fore'gr
legislation received from the
great majority of the American
people is singular evidence of oui
ability and capacity to meet a

suspension of domestic gold sales

clearing

the

The

with

the

wish to confine my remarks today
to the Western European phases of

aid

tion.

15-month period
30, 1949. The $5.3
which Congress approved

authorizes

good.

critical situation with effective

the

June

Although the Recovery Act also

the
Espe¬

peace.

re¬

to $6.8

this estimate.

and

pre¬

serving

Paris estimates

for

March

recon¬

struction,
JohnW. Snyder

the Executive Branch

the

ment of coop¬

world-wide

take advantage of ad¬
exports to certain coun¬

to

by far the greatest part of
its gold holdings. This policy is
As of
reflected in Chart I; it will be
tourists were permitted to convert
commented upon later on.
into Swiss francs at the official

convertible.
May 15, 1947, American
had been

1945

process

the

wished
ditional

fncome

accrued

as

Previously
yeaf

■\

following

initiated
ures

meeting in Paris last
Our Government care¬

fully examined this appraisal of
European needs in the light of
available supplies in the Western
Hemisphere.
By this screening

coun¬

icy.

or may

1/ usual Iurplus' a!-

Switzerland's

took/ the

bank

and

threat

strong

bills, was at first continued in
1947,
and
the
exporters
who
ury

by the national
sterilizing gold. In the
I gteps'
-■:/
fall, however, in view of the
even
have been passive, instead,
ro
M
14
1947 restrictions on slowing down of the gold influx,
■ the
of
from it became possible to abolish this
a
Payme
contribution^
•• / '•*>i ■..- ■
:
i blocked dollar sssets (when propstatistics are available.
The purchase of gold by the
erly certified) were lifted for such
on

rrobably barely balanced,

-

coun¬

tries at their
summer.

tries. We have

national bank began to accept on
limited scale the transfer of dol¬

National Bank suspended sales of

by the 16 Western European

to. people

war-devas-

ened

a

banks, which in turn were selling
them to the public.
Observing these foreign trade
The
gold sterilization 'policy,
developments', the Swiss National under which the government was

million francs (58 million dollars)
1945.
Normally, the balance of

ing
of

b e<*—;

reassur¬

wa r

Changes in Dollar Policy

m

most

na¬

event

any

snould

/;V.

stated

gold

ars) in 1946, and a surplus of 248

rade

foreseen,

doubtedly outstrip its receipts.

dol-

million

(175

be

cannot

Government, through its foreign aid policy,
has instituted a program unparalleled in history in an effort to re¬
create world confidence, courage, and security.
We have taken a
positive and unprecedented step in constructive statesmanship which

tional bank would have to convert

Switzerland's gold bars to Swiss commercial
current payment-obligations vis¬ banks.
On Sept. 9, 1947, the Swiss Na¬
a-vis the dollar area would un¬
in

but

the

was

year

recorded—1,552 mil¬

ever

lion francs

last

restrictions

States

into francs.

tw1"!

:ome
of Swiss foreign trade de¬
velopments in 1947. Switzerland's

peaceful foreign policy.

our

United

The

re^

lars from capital investments. For
described in the
considerable the time
being, however, only
introductory part of this article, encountering / very
the main body of which reviews difficulties because of the shortage 10% of such capital may be con¬
the sequence of measures taken j of Swiss francs, a currency even vened at the official rate.
by the Swiss National Bank in the more scarce
than
the United
Changes in Gold Policy
recent past.
States dollar: a large number of
Further evidence that the Swiss
countries recently prohibited or
Reversal In the Swiss Balance of limited the import of Swiss prod- no longer fear an excessive con¬
into
Swiss
Payments
;
I ucts (the United Kingdom, Can- version of dollars
francs is supplied by their gold
The change in the Swiss: gold
policy:
and dollar policy is a direct out- gal, among others). What the cu
On March 4, 1947, the Swiss
mulative effect will be of these

conditions briefly

European nations in effecting cooperative measures of reconstruc¬
tion.- Says ERP administration is in excellent hands and will assist

re¬

dollars

:

/countries to relieve pressure on U. S. goods and services. Stresses
phase of self-help'provisions, and notes progress of 16 Western

were

to

• war

of

payment

as

of

were

restrictions

during

the

duce

exports

watches

i

Says basic financial policy comprises
both gifts and loans, and that supplies may be procured in
foreign

1947, restrictions
the
export
of

Sept.

dollars), while in 1945 it was
by 148 million fiancs (35
million dollars). Since the deficit
in the trade balance reflects iun-

.he conversion
of

1,

lifted

were

active

t itative

.imitations

:

working administration.

watches to the dollar area; and on

passive only to the amount of
million Swiss francs (22 mil¬

lion

to

public,

u a n

.

.

95

ilization,

e r

to $125.
As of July

iU

up

was

ry
measures
-uch
as, gold

jold

week, instead of only

person per

year

inflation-

-

million

States—637

United

the

domes-

.ence

.i

V/

-.

Secretary Snyder reviews conditions leading to ERP and describes

1947 saw a profound though gradual change in the Swiss gold and dollar polzy. During the war and in the first year and a half after its end, Swiss policy was largely
.lotivated by vivid apprehensions as to the inflationary impact of the influx of gold and doljrs

-

•

:

The year

^wiss

y-.-./

Secretary of the Treasury

,s<

1

l

the

eases

in

be
and
;

commodity.

Conspicuous

of government buying will
the procurement of wheat

coal.'

Where

(Continued

on

advisable,
page

35)

cer-

Volume 167

COMMERCIAL

THE

Number 4696

,

.

■

,

FINANCIAL

&

.

1

* ■

•

(

'

'

•

f

.

,

CHRONICLE

'

^

Municipal Bond Glub of
Chicago Elects

■

,

Steel Production

(The
/iQ.

iw.*'

*v. '*

"

»*•

•...

A*

■**

•

***

Carloadings

Commodity Price Index
Food

CHICAGO, ILL. —At the an¬
meeting of the Municipal

Trade

Retail

State of Trade

Observations

Electric Output

;

nual

By A. WILFRED MAY

Index

Price

S

(1977)

-

Club

Bond

of

Chicago,

held

Auto Production

>

and Industry

Confusing the Stockholder

Business Failures /

For

decade-and-a-half

a

now

Federal

our

securities laws have

been

rigidly prescribing the disclosure of company information.
Management has been evincing growing realization of its obligations
to stockholders. And the public s interest in the reporting process is
v
awakening (stimulated by vigorous'public rela¬

moderately the past week with
continuing to hold somewnat above tne
the corresponding week of last year.

Total industrial output advanced
the production of most goods
level of

tions activities such

as
company report contests).
Nevertheless, despite these constructive happen¬

Despite scattered temporary lay-offs in some lines, total employr
ment and

payrolls remained close to peak levels.

Orders

for

products, it

many

was

>

ings, it unfortunately must be concluded that the
very important communal function of getting the
rank-and-file of investors intelligently informed

v

exceeded output and

noted,

practically all types of durable goods remained in large demand.

remains largely unfulfilled.
The shortcomings are the joint result of stock-,
holder apathy, of certain deficiencies in our se¬
laws, and the normally varied policies

still losing production this week as a result
of the walkout of coal miners which ended in late April; the Amer¬
ican Iron and Steel Institute reported on Monday of this week.
Production the current week will be 117,300 tons lower than the
Steel companies are

curities

pursued

the steel industry's

The strike has interfered with

>

:

set

ings

Production in the first quarter of 1948 was slightly more
tons, a record peacetime output for the first three

effective May 1, has
been authorized by the Interstate Commerce Commission.
This in¬
crease is also shared by water carriers and freight forwarders.
' '
A third interim railroad freight rate boost,

in granting additional rates, recognized that the eastern
relief and hence, increases

railroads need the largest proportion of

will raise rates in this section 30%

October

The

levels.

railroads

eastern

petitioned

for

above last

an

increase

of 41%.

Southern roads were granted 5% additional rates, bringing the
total to 25% over last October. They had asked for 31%.
:

factory settlement of a dsipute over wages and working conditions
which has been under discussion for a period of about six months.
in

Involved

the

dispute

the Brotherhood
Truman

President

Union.

Switchmen's

the

are

of Locomotive Engi¬

the Brotherhood of Locomotive Firemen and Enginemen and

neers,

was

reported

said that he believes Federal labor mediators will settle the

rail

unions, the
with, such

contend

workers

at

the

solution

is

found

the

coal

its differences with

Then, too,-unless some satisfactory
industry during the present month,

there remains the danger of another coal strike when the miners'
contract

expires

on

June 30.
*

'.(u.

by an increase in the consumer demand for seasonal
merchandise, retail volume rose slightly during the week.
While
resistance to luxury goods remained strong, early buying of. gradua¬
tion and Spring wedding gifts stimulated the demand for jewelry in
w

.

Boosted

'

some areas.

solicitation

»

large number of buyers attended the wholesale centers and
retailers continued to be cautious and selective.
There was very
A

little change in wholesale volume during the week, with total
volume moderately above the level of the like week of 1947.

dollar

v'lV'

' 1

f

-

sfjf

'•

'V

■>'

"s '

1

in management or control,
character of the business, stock¬

business, fuller details relevant to that spe¬

which

delivered

are

i''

*•

1 r

i»v

~

'•

'

,

*'■

' - "■\

*r

r

. 5». ,

in the

the shareholder's

; s
Secretary—Warren S. Yates, C

Glore, Forgan & Co.
,

Childs

F.

Continental

were amazing to other steelmakers.
On top of that move
the Supreme Court ruling against the basing point system portended
either financial ruin for some steel companies or an "anarchy" in

Franklin

enjoy unlisted trading privileges (as on the
are exempted from the compulsion to give informa¬
financial results and changes in personal stock
holdings, and from the restrictipns placed on. proxy solicitation.
.
not listed

are

New York

tion

Curb)

Moseley

&

Co.;

Schanck,

Jr.,

The

that > shareholder

evident

enlightenment

largely

on the voluntary activities of management in reporting
directly to its shareholders, wholly outside of the regulations of the
purview of the statute. »,
<

depends

Commission and the

,

receives

quarterly

statements—some

a

The

meeting); occasionally propaganda flyers, as during a wage dispute
showing the relationship of dividends to wages; and in some cases
monthly house organs.
.But1 it is the report covering [ the entire

i.The steel price cuts by U. S. Steel were more numerous and

Ballman
W.

In the face of increased freight costs on raw

steel price cut was not

as

is

not

a

success

it

and others which have gone

be

a

It is

only

a

a

event, it seems to be a moot pragmatic

question whether

elaboration of the annual report is not ever

beginning to defeat its own ends.
Perhaps some shareholders, fai
being impressed by the extravagant ultra-decoration, are instead
imbued with more confidence.by the modest, simple, short recital oi
from

.

visible "good

a




33)

The

Financial

Chronicle!

ber, Jackson, & Curtis, 626 South
Spring Street.

Canadian Pacific

Railway '

Imperial Oil, Ltd.
International Petroleum

For
a

example,

a

HART SMITH & GO
'

Bell Teletype NY 1-395

152 WILLIAM ST., N. Y. 5 HAnorer 2-0980
v

,

/

Toronto

Montreal

New York

old-fashioned" balance sheet,

Some directors are already

beginning to search their souls aboul

this year
by a query infer-

large electric manufacturing company

sharply abbreviated report, accompanied

(Continued

page

on

16)

Royal Bank of Scotland
Incorporated by Royal Charter 1727
■;

t

•

,

•

V"

,

HEAD

•>.

\

.V

t

OFFICE—Edinburgh

Branches throughout Scotland

Dravo
r-

LONDON OFFICES:

Corp.

3 Bishopsgalt,

Universal Match

8 West

-

49

McGraw

'V.

(F. H.) & Co.

E. C. 2

Smithficld, E. C. I

Charing Cross, S. W. I

Burlington Gardens, W, /
64 New Bond Sired, W. I

>

Bought—Sold—Quoted

."

TOTAL
'li.

FREDERIC H. HITCH & CO., INC.

costly lesson for U. S. Steel

page

to

ANGELES,

*'

...

the current adorning and

Established

xt/'*
MEMBERS

bitter pill for the steel industry to find Congressmen, whe
on

of

CALIF.—Max
W. Schlutsmeyer, formerly with
Maxwell, Marshall & Co., has be¬
come associated with Paine, Web¬

A

the prospectus.

•

month ago wailed about a price increase, now talking about

(Continued

Bank

all

operations.

N.

Y.

SECURITY

•

*

P 'f

-

■'

■'

1

.

Associated

DEALERS

ASSOCIATION

** \

J

Wall Street, New York 5,

""'"it.'

\

N. Y.]

Bell Teletype NY 1-897

Banks:

Glyn Mills & Co.

Williams
63

ASSETS

£141,823,667

■? i

1888

~

^V

National

First

(Special

LOS

materials, the possi¬

along in the move,...:'

Clarke, In¬

Publicity—George B.

Chicago.

direct and indirect ramifications of the
few companies even send out two
simultaneously, one being exclusively devoted to pictures
Some of these publications, resembling garden seed catalogues, ir
their efforts to woo the shareholder may well be unwittingly circum¬
venting the intent of the Securities Act with its strict limitations or.
photographs depicting

companies to strike a'telling blow at

will

Ballman,

now

warranted, this trade authority notes.

If the attempt of all steel

inflation

John W.

Clarke,

corporated;
Wendt,

P,

Main; Finance—John

sections

bility of higher coal costs and perhaps the imposition of controls
(which tend to increase costs) later, some steel officials believe that
a

John

—

&

single page, to the increasing number of ever-expanding
in the form of weighty volumes filled with oceans oj

a

documents

items than could have been imagined and came
other steel companies which had to study U:
"

Winkle,

,

some

/

follows:

Van

K.

issued run the gamut from a few
like Allied Chemical's, which limits the president's explanatory state¬
(These annual reports

-

similar move.

appointed
as

year's operations that is all-important, and over which our greatest
concern should be shown, from the viewpoint both of the .manage¬
ment's as well as the stockholder's interest.
<
*

pn others, they have made deeper cuts and on others they have met

a

—

Attendance

manufacturing costs—if he can estimate. U. S. Steel's cuts have not
all been'met by other steel mills.
Some steel firms have refused to
re.duce the price on items which were showing a loss or little profit,

to

President

new

With Paine, Webber Firm

summaries; perhaps minutes or other summary of the annual meeting
(sometimes in the form of a progress report printed ahead of the

prices for the same kind of product that it may be
difficult for him to make any rhyme or reason out of his estimated

costs before making

R.

Boston

Paine, Webber, Jackson & Curtis;

listed company sometimes

reports; more frequently he gets semi-annual
being voluminous descriptive matter and some

steel

own

Francis
First

.

Striking Divergence Among Listed Companies

issued

shock

&

Dempsey & Company.

.

is

it

Hence

&ru tlfpr 'the first time,says the tnagazine, the steel user is finding

a

Boettcher

or

regarding

;

as

Bickmore,

Company; Robert B. Pelton, F. S-

P.

this.

stheif

Hawes

Program

^rade. 1

j

H.

Savings Bank; J

chairmen

selling if eventually the same ruling applies to steel, states "The
Age," national metalworking weekly, in its review of the steel

> J deeper on some

Trust &

&

1

Hardin

Directors:

Harris

Eyam.

committee

Iron

-

W.

National Bank

111.

Nevertheless, there remains great difficulty in getting this infor¬
shareholders because they are
indifferent or ignorant about data which are merely available in
official files or in the proxy solicitations which there is no compulsion
to issue.
And it must be remembered that directors of companies

the facts with

Hi

Company.

Trust Co. of Chicago.

mation uniformly into the hands of the

In any

U. S. Steel

competition.

and

Treasurer—Thomas

Overstuffing the Goose

of the steel price cuts made last week by

scope

in

Jamieson

P.

Corporation, and Harold H. Spink,

COAL STRIKE
The depth and

so. many

an

changes

data,

forms

STEEL OPERATIONS AT HIGHEST LEVEL FOLLOWING

;

in

to quarterly sales figures, detailed earn¬

elected

were

Q All this information is set forth uniformly by all listed
companies (excepting investment funds).
. '

company's

favorably with that of the corresponding week a year ago.

<

good and some quite ques¬
the SEC, carrying out the
Exchange Act, the
exchange-listed
industrial

and directors

President^-James

oi

mailbox.

ment to

Promotional sales Of many types of goods attracted very favor¬
able
attention
and
retail
dollar
volume
continued to compare
v

receiving ficers

multitude

have

nation will still have other possible strikes to
the threatened walk-out of the automotive

for

are

a

Jamieson

P.

April 30, 1948, the following of¬

cific business, as those concerning directors, must be included
proxy

railroad

as

Chrysler plant.

in

J.

V-

Securities

the

So it is that even the stockholder of

Should the railroad industry speedily adj ust

stockholders

companies

Through
of

in the general

changes

transaction of company

dispute.

wage

the

to

them¬

...

holdings of "controlling persons," granting of options, etc.—all
through inspection, of the files of the Exchange on which the stock
is listed, or by visiting or writing to the SEC in Washington.
Also,
under the SEC's rules, if and when proxies are solicited for the

which

Developments in the railroad industry last week portended a
possible strike on May 11, next, affecting 132 Class I railroads due
to the failure of union officials and management to arrive at a satis¬

access

sheet

balance

and

material

than 22,000,000

additional 10%

mandate

is granted

company

months of the year.

an

May

their

shareholder

1948, it was expected that this year's output would be greater than
in 1947, and go far toward restoring the balance between supply and
demand for those steel products which ( have been most eagerly

of

"selling"

ways—some

tionable.

in

The ICC,

in

rv"'':\V

American

about

divergent
A. Wilfred

produced approximately 84,800,000 tons of steel, an amount greatei
than ever before in peacetime.
With additional capacity in operatior

sought.

Today

:

news

attempts tc

In 1947, the industry

production record this year.

steel

neW

a

managements
:

Non-Uniformity the Basic Fault

by the cessation of mining will be more than 1,535,700 tons.

caused

by

selves.

output in the week immediately preceding the start of the walkout
March 15.
Through this week, the total loss of steel output directly

Dearon's

Bank,

Ltd.

\

-THE

6

COMMERCIAL

FINANCIAL

&

Thinking Akul the World and Its EconomicM

From

By BEARDSLEY RUML*
Chairman of the Board, R. H. Macy & Co.

Mr.

*

»

-

Thursday, May 6,M948

CHRONICLE

Washington
^ o/# the News

-

„

Ruml, holding that, in foreseeable future,

we shall have neither war nor peace, sees armament
likely to put some strain on production and lead to some allocation and controls;- Points i ■«.
out, however, expanding production can ease burden.
Stresses need of U. S. prosperity for whole-M
some world situation, and looks for impulse to push for constitutional basis of peace as favorable sign, i
program

The

as

By CARLISLE BARGERON

East and go out

When you get away from the
and rural people of a State like

among the urban

Ohio, for example, and

these

see

for this meeting was "Understanding the World and Its people at their daily tasks it is difficult to realize that uppermost
Economics" but this seemed to me pretty ambitious, and so I have changed the title to in their minds is the question of whether the Senate will confirm
David Lilien-*>
"Thinking about the World and Its Economics."
This much at least we can do.
The
subject assigned to

me

•'

first

subject

must think

we

about

is

and

have

War

This

is

the

questions

affect

lieve

and

or

if

I

am

in

tant,

question

related
world

the

to

its

and

economics.
I

find

United

we

n

t i

a

head

In

presenting the

C

E

sion.

the

have

such

the

a

want

burning

that I feel these consequences are
so
unfortunate
that
we
should
withdraw

mentators and

from

defense

our

re¬

colum

issue

to

If,

Beardsley Ruml

we

are

in

peace

I do

not believe that

*An

address

we

shall

tremendous

a

Whether this information is
by Mr.

Ruml be¬

fore the Second Annual Magazine
Forum of the National Association
of Magazine

Publishers, New York

rect

cor¬
not, and I believe that it

or

is,„ it., is. relatively/ unimportant,

izij

comparison| to ^the consequences
of

armament

indefinitely for the

ing reconfirmed.

him'

assure
that
the

Bargeron

City, April 27, 1948

with

LYNCHBURG

American Furniture Co.

&

Prior

Maine

Bassett Furniture IncL

It

the

Street, Boston
•

Tele.

Scott, Horner &

10

Tele. LY 83

LD 33

iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
ST

Stix&Go.

Boston Edison

increase

kinds of

mate¬

raw

in productivity,

such

.as

i

Telephone—

OLIVE

STREET

It

-V 'l

(,.

ii>r„

!p-

tyiS

.

y >.*

'I'/i

,

'

raise

the

goods and

St. Louis LMof

.

both

K

\

in

output of consumers'

the standard

of living
United 'States anid

the

elsewhere

throughout the world.

Members St. Louis Stock Exchange

Increase

in

we

SPOKANE, WASH.

are

two

American Turf Ass'n
Consider If. Willett

NORTHWEST MINING
SECURITIES
For
or

Immediate Execution of Orders

Quotes call TWX Sp-43

on

Floor

of

Murphy Chair Company

Exchange from 10:45 to 11:30
A.M.,
Pac.
Std.
Time:
Sp-82
at

other

Co.

hours.

three years to reach

or

m BANKERS BOND co:

Members Standard
of

Incorporated
1st

Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
Bell Tele. LS 186

Brokers

-

Stock

Exchange

Spokane

Dealers

-

Underwriters

Peyton Building, Spokane
Branches

Kellogg, Idaho

and

at

Yakima, Wn.

7

a

total, it is

year

to offset this demand

ductive capacity
annual
increase

on

$30

a

proper

our

pro¬

by the ordinary
in productivity

resulting

from improved techni¬
cal methods and a
growing labor

force.

is

It

faced with the

situation

when

the

"Under

conditions

That. seemed to

cessor.

such

as

thinking about, the annual
increase
in
productivity might
a

be

three

12%,
billion

as

much

year

4%,

period,

perhaps
a

as

as

,

as

much

or,

over

much
•

as

$25

as

<'

year.

This increase would be

an

r.

over¬

all
increase, and would not be
fully applicable to the particular

requirements

of

(Continued

on

an

armament

page

39)

be

$

at the time that "studies"

this

we

to han¬

were

Frankenstein.

their off time.
Lilienthal having

.

now

injected

himself into the picture, there fol¬
lowed the hue and cry that of the
million

140

people in this

coun¬

try, he was the man. Those be¬
hind
this
organized
agitation
know exactly what they want andi
it should
be fyll and
complete
reason as to why Lilienthal should
not have the job.
In his relatively brief Admin¬

*

of

istration, in fact, is ample addi¬
evidence.
The
Energy
Commission has got completely

tional

of

out

of

hands

the

Congress.
its occult
carryings-on, it keeps the legisla¬
With

emi¬

its

tive body

But Truman has

mystery,

and

perpetually intimidated.

Recently there was an article in
a
nationally circulated magazine

sought to preby sending to the Senate

Lilienthal's. renomination

It has attended

since his name^was pro-*

Surpris¬
ingly in the midst of the studies,
came
one
by Lilienthal and that
great scientific mind of the State
Department, Dean Acheson. No¬
body had asked them to make- a
study. Presumably they did it on

nently fair.
vent this

was

dle

same

matter

ever

determine how

Lilienthal's

ahead

by

of time, and his. appointment now
is for - five- years.
This is de¬

the

a writer who is very close to
members of the commission.

It described how inquisitive mem¬

and bers of the Congressional appro¬
priations committees, seeking to
For, the Republicans to demur and find oqt what the commission * is
insist that if they have to act doing with its money, are fright¬
upon him at all, they will con¬ ened into silence by a play such
scribed

statesmanship

as

broad thinking on Truman's part.

firm

him

for

but

told

are

make

Member of Commission:

as

and

no

now

that

of

case

against him,
him again.

you

you

Congressman
an

have

if

to

"Well,
insist upon
question, you

you

your

to

take

the

conse¬

quences."

can

two

He turns to

misconduct

should confirm

of

rear

room

burly

with

drawn

in
pistols

men

and carrying a bag.

"Bring the bag up here," he Or¬
o- < >
"Now,
Congressman,
warning
you again of the consequences, I
ask
you,
do you order me , to

expectation that

one

ders^ gravely.

would arise.

He is simply not the type of ad¬

ministrator, for this: post under a
Republican Administration.
He

open

New Deal.
comes,

from

an

that bag."

•

The 7 Congressman
shakes. ! all
over and hastily explains that no,

fits in nicely, -of course, with the
Lilienthal

answer

will

There was never any allegation
of misconduct against him or any

is

this:

as

a year's
term,
playing politics to
the extent of jeopardizing the se¬
curity of the country.
You confirmed him once, they

is described

old

he

He

commission's secrets, he simply
wants to find out what becomes

at

best a "public ownership"
Charges have been made in
House, of w
that he is a Communist. These are

doesn't

want

man.

of the money

the

to

know, the

ates.

Senate and

looked

were

have

show

how

the

as

too extreme

and

undoubtedly
embarrassed
legitimate Republican opposi¬

Congress appropri¬

Those who gave

story

upon

the writer this

not openly trying; to
they made fools of

Committee.

His

leanings

unquestionably Left¬

Congress;
they were trying to
emphasize how ultra hush hush
and dangerous their wo.rk is.
i '
But they have no hesitancy in
telling you, apropos Lilienthal's
reappointment, that once a man

"public

gets a place of responsibility with
the commission, it would be dan¬

tion

him.

to

active

However, his quite

daughter

House

is

listed

Un-American

are

by

the

Activities

we are

well

STANDARD SECURITIES
CORPORATION

Presidency.

were

line of Wisconsin Socialists,

the,, armament

prograhi
contemplating will require

billion

American Air Filter

They

i

Productivity

;■

LOUISVILLE




allocations

some

..Since

Varnish

kinds

and, some
will certainly limit
production of capital; goods
that otherwise* might be available

Street, Boston
,

likely

the

DAYTON HAIGNEY & CO., IncJ
•<

a

of production. It may make neces¬

to

REctor 2-5035

billion

$30

a

year armament program is
to put some strain on some

sary

509

Long Distance 238-9

defense, it

rials, industrial plants and skilled
labor. -At the moment, such ma¬
terials, plants and labor are being
rather fully utilized, and a vast

controls.

INVESTMENT SECURITIES

New England Lime Common

Reliance

build

Nevertheless,

Boston Railroad
Holding Pfd.

York

that

increase in productivity is not re¬
quired for defense.

Boston & Maine Prior Pfd.

Private New

money

occurred from 1940 on. is not in
the picture.
Fortunately such an

LOUIS

Trading Markets

75 Federal

frequently

namely,
that
requirements do not

is particular

Lynchburg, Va.

!

been

upon,

themselves

Mason, Inc.

BS128'

has

fully
state
the
true
economic
problem.
It is not the dollars

Preferred

Tel. HUbbard 2-3790

that

commented

RR.

the

behind

being made; by a Senate
committee, by a group appointed
by the President, by tne Army, to

appointment
first
At the time they de¬
billion a few years from now and came up.
for as long as we need armament* cided th^t; the • easiest ^solution
was to give-him a short-term ap¬
for defense.
and
a
Republican
But there is another aspect of pointment,
President could name
his suc¬
$30 billion a year armament pro¬
gram

Walter J. Connolly & Co., Inc.
24 Federal

■>:

Dan River Mills

Traded in Round Lots

without

1

were

bitter decision for them to make.

some

and so we may be facing total
Federal budgets of some $50 to $60

Trading Markets

Bm

or

compares

$11 billion originally
planned for the next fiscal year;

BOSTON

Boston

year

This

how

ganized.

too much.

indefiniely.

us

jected for the job. And the pro¬
jection itself was clever and or¬

of $30 billion a
v
Apparently, the Republicans are
year is mentioned as a likely re^
quirement for defense.in the budg¬ .squarely ,faced with - the proposi¬
tion., of accepting a man whom
et two or three years away. And
ihey;■>: heartily- despise or doing
after that, $30 billion a
more

to

take shape.

propaganda

us

when the figure

upon

Lilienthal should preclude his be¬

•

defense.

to

are

Then it is

The very fact that there is such

stupid Repub¬
not. going to have
licans
with
the foreseeable future,
discuss war
in
their
What does adequate armament the Presidency almost
then we are going to have defense
and peace from the, point' of view
for the United "States mean in hands may > throw it
away
by
indefintely,
and
this terms of economics—first in terms turning Lilienthal down. It seems
of economics. War and peace to programs
It of dollars?
be properly discussed should be means armament indefintely.
fantastic, these fellows
We have-had some utterly
considered on humane and moral means armament indefintely, not
glipmses of what the global** fig¬ say, -. that in the present world
only in the United States, but ures
crisis the Republicans would jeop¬
grounds, and the economic should
may become and we are not
be
subordinated, except as the largely, if not generally, through¬ deceived by the moderate/ and ardize our security by playing pol¬
I have been told
economic, too, affects humane and out the world.
The people
even then presently unspendabie itics with this man.
moral values.
But the subject as¬ that. some of the younger and as funds that have been
are pretty well fed up on Truman
requested by
under-developed
countries the
signed to me is the world and its yet
Administration. We knbwthSt and« the New. Deal, we are told^
and prepared to make a lot of al¬
economics, and here the matter of want steel plants or more steel these funds are
preparatory' for
war
and peace comes first.
We plants for their own armament, building an armament that will lowance for the Republicans, but
shall have to subordinate the dis¬ and-that at least, one that as yet be
adequate when fighting is done they, won't go so far as to jeop¬
tasteful and the unfortunate to the has no navy wants a couple of with
ardize our security. In that, the
atoms. Consequently it does
cruisers and a few destroyers for not
necessary.
come
as
a
complete shock Republicans are simply .asking for
distasteful

develop¬

age

us.

important

gravely
Carlisle

the

these developments

ists

n

a

lives of all of

certainly

in the press.
Our
com¬

sponsibilities. On the contrary, the
consequences though serious ate
not intolerable, and as
long as vTe
have no peace, armament, ade¬
quate armament, is inevitable, i-

that

the., atomic

revolutionary impact

because

is

told

are

of

it

of an armament program, I do not
to give you tne
impression

'

We
ments

case

consequences

private enterprise, or by
set-up such' as

socialistic

TVA.

this

Yet

must., be

v[■■■j:;.

uted. by
another

n-

Commis¬

ergy

Consequences of Armament

to

the

up

Atomic

Program

the

o n

tion is just how these great bene¬
fits will be developed and distrib¬

renom-

i

States

thereby for the economics pf

>

.

hand, I do not be¬

difference.

it

the

the world.*

discuss

.

impor¬

of

wrong,

to

are
going to have
foreseeable future
either; and this does give us
something to think about. If I am
wrong about this, and I sincerely
hope I am, that would make quite
a difference — literally,
quite a

every

other

Also

that

peace

signifi¬

cantly

not

-

On the other

,

and peace

war

right

little

very

anyway.

concerning

economics

am

because

have

we

fu¬

difference for this dis¬

no

cussion,

but

foreseeable

the

Whether I

makes

un¬

in

war

ture.

Peace.

fortunate,

that's

<♦/-

associations

and

ist.
But

his

ownership"

philosophy should be sufficient in
itself

to

•

there

way,

atomic
tific

is

energy

miracles

to

supposed

and

other

available

be

scien¬

for

the

betterment of mankind. The ques¬

'ever to dismiss him.
He
might be disgruntled and there is
no telling what he might do.
Frankly, I think we'd better do
gerous

justify the Republicans'
Sometime,
in
some

opposition.

away

with the commission before

it is too late and take our chances
with the bomb.

THE

Number 4696

167

Volume

COMMERCIAL

Says "Shots-in-the-Arm"
Delay Postwar Depression
bank

Unnamed

"shots-in-the-arm," such

slump did not materialize because of

if proper corrections in

;

our economy

-

would be

j

; 4

Chairman of Board, National Retail Dry Goods Association

\

7

'

Vice-President & General Manager, Crowley* Milner & Co., Detroit
"discovered by the Administration" and fostered by bureaucrats, has led to price

war scare,

uncertainties and

threats of

new
controls, perman ent retailer attacks government officials for dissipating military strength.> Holds further inflation is not necessary if rearmament is conducted sensibly

;i

had beea made" k
sounder basis. ■

on

\

-Asserting

present boom

(1979)

CHRONICLE

By JAY D. RUNKLE*

j

as

high expenditures for foreign aid and rearmament.
Foresees aFederal deficit resulting in credit expansion and more inflation, and
maintains

FINANCIAL

What to Do About Prices?

I

expecied postwar business

contends

economist

&

,and

Says renewal of government controls will stifle

Washington propaganda machine is turned off.
v

::v

'

our economy.

;:v

v

/..;

,,

Controls, and more controls, are the bureaucrats' answer to all problems.
When it
Only vigorous "shots-in-the-arm" have kept the American econ¬ :fi'
comes to prices, it is the
omy from experiencing the depression which, according to the busi¬
only answer that fits into their thinking, for that leads to more
ness cycle theory of
the late Leonard Ayres, should follow shortly power and more jobs for bureaucrats in government.
Such bureaucratic reaching out
after every major war, an economist for one of the largest banks oi
m o r
r
u

*

to remain^

New York who prefers

pointed out this week.
Students
of
business v cycle

anonymous

Ayres
postulated two depressions after
every major conflict; a primary
depression and (.a secondary de¬
pression with a period of relative
prosperity between the two de¬
pressions. The primary depression
the

and

short-lived

be

to

was

that

recall

will

theory

ent

-

forces

boom.

he

out,

reach'

will

construction

tion
It

or

and

major crisis.:

times

three

than

more

much

of what
business
after World War I. It" wai Ayres?
view, however, that his theory
had general application to- eco¬
nomic
events,
particularly
in
modern times. The primary de¬
pression that was to have fol description
ta American

theory is
happened

a

is

as

the

f

armament

that

It is just

times
e m e r

D.

Jay

and

Rtinkle

in

of

g e ncy

peril.

A

if

d

it

its

make

ernment

in the attempt
it appear that the gov¬
did not want inflation,

everything

period

war

very

But

soon.

the

President's speech on St. Patrick's

it would not continue and did just
about

siride.

mand,

afarid

the politicians were

while

The country

program^

was

which has gone on
to

' differ

Supply in most fields
rapidly catching up with de¬
so
that there could have
been relief from the excessively
high prices of the war and post¬

double-talk

economic

themselves

just about ready to take the
European Recovery Program in

reprehensible is the

so

of

whether

or

was

That is understandable, but what
makes

re-

intensified

Public de¬

Economists

Economic Double-Talk

bu¬

o r

limited

be

Widely in their opinions regarding
(he effects of this so-called re¬

just before election.

amount

way.

Though there has not been
highway construction and
repair since the war, now the
prospect for such construction is-

one

nothing

acted

(2)

No

to

the prices are going to be higher.

to want to kill Santa Claus

always

much

going

is filled with

implications.

political
seems

reaucrats have

as

$5,200,000,000 figure

brighter, he believes.

prices.

ment official which

knows whether the supply is

one

De
changed over night by some
pronouncement of a high govern¬

under the

sun,:

of 1939.

the Leonard Ayres'

of

a

$18,700,00(1,000 this year
about 15% more than last year

in

considera¬

any

of

secondary depression was to be a
In essence,

with

oned

new

total

be reck¬

must

industry is going
ahead with plan& for record-ex~*
penditures
of
new
plant
and
equipment in 1948.
New indus¬
trial

jobs

more

(1) In spite of high costs,

points

and

power

sustaining the present

in the book to

Day,

knocked

that

into

all

a

that cocked hat. No one knows where
real
be
emergency
found,
on
again, he stands now.
probably be felt this summer, he
Some economists maintain that
thinks.
There are unprecedented something must be trumped up to they are out in full cry for con¬
balances in state highway funds create such a state of emergency trols, and more controls. For them we can absorb both the ERP and
in the minds of the people, so that the war emergency is back.
and over a billion dollars of un¬
lowed World War II was sched¬
,the preparedness plan without a
It might be asked in passing rise in prices, and assure us. that
uled to have gotten under way expended
Federal aid is now government will have an excuse
to exercise its powers to the full¬
there will be plenty of merchan¬
available
for
how this nation's military power
road-building, he
just about a year ago.
est This is a part of the growing shrank from the mightiest in the dise this fall. Others take exactly
The economist for the New York points out.
philosophy that the individual is whole world, to our puny defense¬ the opposite view and maintain
bank mentioned above feels that
(3) Despite the weather and
made for the state, instead of the
less position at present, all in a that the ERP and Preparedness
the- forces which Ayres saw at higher building Oosts, more resi¬
that the state is the little over two years. < How is it Plan will absorb a large part of
dential units were started in the principle
work, following every war are
first three months of this year servant of the people.
that we suddenly wake up and. our production and that the in¬
very
much present in the con¬
temporary economic picture even
though depression has not actu¬
ally appeared. It's the "shots-inthe-arm" which have prevented
the depression from taking place.
Should
*

:

"shots-in-the-arm"

the

'to; nbe>K administered,J

ceases

the

depression would be immediately
upon
us,
he feels.. In a sense,
therefore, the depression is merely
being postponed. The economist is

will

travel"

"smoother

for

mand

than in the similar period of

1947,

he points out.

In fact, the pres¬
ent prospect is that total, residen-

tial

this: year

construction

surpass

scale

universal

program;
men away

and

also

will

A largemilitary traihing

that of last

year.

however, would take
from construction work
demand for

the

reduce

at¬

hqmes.
'
■ 'v'
(4) Extraordinary demand is
causing many so-called "short¬
ages."
Consumer
resistance to
high prices has not yet appeared

tempt to analyze the current eco¬

in volume, the economist declares.

nomic situation.

Consumer credit, now

convinced

the

that

represents

Ayres' theory

starting

good

a

f ran* which to- proceed

in-

point

any

Postponement of the depression,
only means

the economist reasons,

that

certain

abnormalities

are

creeping into the economic sys¬
tem: The primary depression was
to have been only a mild one but
it

have

would

economist

calls

made
some

the

what

rather

nec-

porrecticms:: Had" the de¬
run
its course, starting

vessary

pression
with

last

would

spring,
be

now

the

on;

economy

the

upswing

again. The corrections would have
been made
would

and the
been

have

present boom
on

a

sounder

foundation.
Now greater

;

and greater "shots-

in-the-arm" must be administered

believes.
the

At

for

a

moment,

conditions

no

free of pre¬

vious official controls, totals about

iTust

when

the

price

situation
through

about to correct itself

was

the normal operation of
of

the Law

| Supply and Demand,

a new
discovered by the
just as if ii had

emergency was

administration

it running. And
inflation
is marching

keep

now

had

creased

junked the billions of dollars in

creased

find all this out. just after we

war

the

cfeated

night.

over

Price

The c6n-

Prices stiffened immedi¬

arm.

ately,.

and

which

the

the

government

sup¬

was

posedi to; be So- concerned about
wais oh* the march

Ut

again.

-

demand is nullified

and

takes

chinery.
are

our

over

The

/

when the

economic

Uncertainties

really

knows?

We

the economist
are
favorable

prolonged

coal

strike

continuation of the boom in

dustry from catching

ma¬

up

with de¬

was just about ready
into easier supply. At the

mand, and it
to

industry and business
to
the nth degree.

rate

things were going early this
steel would have been in
easier supply by the end of this

confused

Government

men

come

year,

have been going

ticians in Washington

year

,

v

i-

\

1

Kane, Rogers & Co.
,

for

more

than 20 months.

this boom does,

through the end of this year, the
economy, for the second time, will
have
moved
through a period
when reaction was to be expected.
The economist

sees

The "Stimulants"

If

infact^continue

The

"stimulants"

the-^arm"

that

are

or"shots-in~
now"

at

the

point of taking effect in the econ¬
omy are five in number, the econ¬
omist says.

four differ-

(1) The foreign aid

(Continued

on

page

4

County,
well

i
A New Report

in

River

Field,

been

Carter

Oil

Corporation

within

j

..

\

Wichita

Request t

Oil

drilling, activity

River

successes

also 'in

and

|

PHONES-—Daly 5392 * Chicago: State 0933




GENERAL

jshould!
Paul E. Alm

Oil

in

Corporation

PRESIDENT

w

,

MILWAUKEE

Company

traded
ma

rket.

the

in
•

"

CHICAGO 4,

(2)

Teletype MI 488

!23! So. La Salle St.

|

:,,i

*

.

common
over-the-

«

VICE-PRESIDENT

~

'

Herbert G. Wickstrom
TREASURER

Marion C. Freiburg
SECRETARY

FORMERLY WITH C. L. SCHMIDT 8c

ILL.
955

..

Vincent T. Kane

-

Dearborn

Teletype CG

Arthur W. Rogers
VICE-PRESIDENT

-

,

is

u

owns

Comstock & Co.

Stock Exchange

ST.

>

BUSINESS

the

properties.

Exploration

counter

l
Chicago

A

TRANSACT

INVESTMENT

Approximate Market $6

Members:

-

271

the

these
Doyle,
Cruce, and Sholcm Alechem Fields, in
Stephens County, Oklahoma, where

stock,

MASON

cg

teletype

TO

further

produce

locations,

★

EAST

3

telephone financial 1620

Exploration Company owns 51.25%
the outstanding capital stock of

producing

225

La Salle Street

Chicago

'

days,

Continued

COMMON STOCK

■

have

wells

Ta turns

-

\ Wichita .River Oil Corporation.

on

Nekoosa - Edwards Paper Co.
Will Be Sent You On

in

Company

Oklahoma, and
1 discovery
Clay County, Texas, by Wich¬

last -90

of

oil

successful

completed

ita

16)

39 South

Oil Exploration

Oil

I

has

undoubtedly stopped the steel in¬

around "surveying" the industrial
early this
summer, according to reports.
who were afraid that prices field, giving the impression that
How long it will take now to
they are about to place large
might actually be reduced and
catch up in the steel industry is
orders, which- must be given
bring about deflation. The war
Automobile and
priority over civilian production. anyones guess.
scare fixed that up for those who
This causes manufacturers to be
heavy 'appliance
supplies ! have
The "shortages," however, do were anxious to ride the band¬
hesitant about their own opera¬
dried up, although both industries
not actually represent a scarcity wagon to victory in November.
tions and about what can be done
of products. A housing "shortage"
were on the way to intensive sell¬
There is a deep, dark suspicion for civilian distributors.
is spoken of when actually per
throughout the country that there
ing campaigns to move their proManagement in the field of dis¬
capita residential space, the coun¬
has been a lot of talk in Washing¬ tribution is confused because-no
continued on page 31)
try over, is larger than ever be¬ ton
against inflation and high
fore.
The automobile "shortage"
prices which has not been entirely
is one in which car registrations
sincere. What chances have honest
are at an all-time-peak. Per- capita
mdn in industry or business to
meat consumption is substantially
correct
a
price situation,' when
above the pre-war level and yet
the whole economic picture can
WE A.RE PLEASED TO ANNOUNCE
people speak of a meat "shortage."
THE FORMATION.OF
The average family is using some
1
wi'1 "•'i
/•'•I1* vV^'ft-'
-Xr'
/Vv.A
"An address by Mr. Runkle at
50% more electricity than it did
before the war and total power the 36th Annual Meeting of the
output has risen to a new high Chamber of Commerce of the U. S.,
Alm,
point and yet there is a "shortage" Washington, D, C., April 28, 1948:
of electricity.
with offices at

$13,000,000,000
at
the
present
time but, if it continues to in¬
crease as it has during the last two
years, will amount to about $16,000,000,000 before the end of 1948.

business which has been in .prog¬
ress

mer¬

chants would like to know.

.

in

Men

/

pretty evident that there
some
badly scared poli¬

was

were

and

Who

inflation government steps into the picture

very

prices to still higher
;
\
rj: :

levels.

of supply and demand will never
^equehces were that inflation of work unless giyen a" fair chance
prices was given another shot in by government. The law of supply

been

in¬

payrolls, and the greater
for
less civilian goods

will boom the

with

And what has all this to do

prices?
It has everything to do
with them, for the normal!laws

employment,

higher

demand

materials? "y. .:

■

to the economy to keep depression

from materializing, the economist

thinks,

n

can

1501

may 1.1948

;■

CO., INC.

Economic Relation of Wages

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(1980)

8

Nadler Sees

and Prices

Managing* Director, National Association of

controlled

attacking

University economist cites factors for and against price
stabilization and continued boom, but says commodity price trends

Manufacturers

depend

Mr. Bunting points out unless it is realized heavy govern¬

economy,

University,
the 42nd Annual Convention of the American Spice
New York City on May 4, could see only con¬
flicting trends in our economy.
"Unless rearmament expenditures
materially ex-<$>
—
ceed $3 or $4 commodities has caught up with

Denies war controls keep down living costs and contends
added to living costs.
Opposes excess profits taxes.

has

I think

each

rise

wage

addressing

Trade Association in

billion

mistaken position—a-trap—in dis¬

sometimes let ourselves be drawn into a

we

in

futile, and third round of wage rises could become catastrophic and

rise without goods-rise is

lead to collectivist economy.

what Congress and Administration will do.

on

Dr. Marcus Nadler, Professor of Finance of New York

spend.ng and high taxes are the real cause of labor's futile attempts to increase purchasing power
by continuous wage increases, there is no remedy for present industrial unrest and confusion. Holds
ment

wage

they

the

m

have

Party of Germany. And even our

also

in

civilized

more

superimposing austerity

terms are

past—

a

friends

British

the

any

supporters
would

economic

still in¬
tending to keep their political in¬

was

the

Jence in

on

their

like

us

to

ignore.
They are as
discredited
the

dependence.
and

Russian

Exoerime'n t

Western

Earl

by generous

Bunting

working

the

to' rescue

2rom the oppression of

steps to prove the ne¬
cessity of price controls now, just

capitalism

as

Jlarx

the

is

century

him

into

trap

Instead

ocialism takes

an

over

man can earn a

go

along

it.

The

Russians

in

are

now

But

presence.

the

Nazis?

name

the

National

was

svident

see

ectivists

Trades

of

the

you

Their

full

Socialist

National

Association

became

American

our

to

col-

came

the

world

were

continued

their

recovery

In the United States

the New Deal embarked

its

on

na¬

tional programs of economic man-

igement, intended thereafter
eliminate
depressions, great
mall.

in

Controls

agriculture,

housing,

structure,

ganically

filled

Social security

Can a nation

carry?"
The' other nations of the world
to

on

but
the

recovery

States

stayed

in

high

new

three

every

or

four

the
de¬

the

lowest.

The

depression

the

of

materially increased, since
1946 and 1947 nearly $30
billion of capital producers' goods
installed.

were

"To

great

occasion

awaited

the

Hagerstown, Md., April 29

by collectivists since the
prediction of Marx that capital

would
ers

accumulate and the work¬

would sink deeper and deeper

into

misery until they revolted
violently. Year after year since

r

this

added the

be

that the money market has
become tighter and that it is not

longthe
case only a few months ago.
The
expected increase in the certifi¬
as

to obtain short-

easy

or

term credit at present as was

and

cate

ther-put

League

"In

many

of

Nations

Private and Commercial

$1.50
From
*

guese,

I
I

1
I
e3

$2.00

a

The League

$2.50

production

our

a page

$3.00

From English into

enough

100.

as

114

as

and

recorded

the

the

Second

World

War

Building Industry
of

issues

in

—

Tabulation

divisions of

various

the

controls

was

is

economy

commands

only.

no

the

to

get

<^1 the wartime
economic

con¬

of them

were

many

I will handle your entire

unconsidered, how many of them
own purpose.
Now
war;

it is again suggested that con¬
will repeat the same per¬

as

formance.

■H

$25.00

following rates:,

".

up

to

5,000

words

maximum

5,000 words

a
a

a
a
a

grown

you

on

rates

Take

advantage

account

have

pays

to

mail,

rather

me

than

what

to

of

to

of

lower

take

the

are

of

special




paying

better

overhead.

charge

hire

you

help

terms

You

your

may

foreign
for

that

now—and
I

am

even

able

find

the

save

to

offer

that

correspondence,
purpose.

it

vast and complex
be allowed to roll

so

cannot

avalanche.

As

a

matter of fact

is truly vast in ex¬
tent; but it becomes complex only
when someone tries to direct it as
a

economy

unit.

a

*

»

.

it

by

attitude

of

management to¬
and
prices
today

wages

therefore

differs

that of

year

a

materially from
and is

ago

a

con¬

tributing factor to the belief that
for the remainder of the year

the
country will be
by greater stability and
that the spiral between prices and
of

economy

the

marked

have

to

come

an

end.

ministration than

on perhaps any¬
thing else.
If the additional ap¬
propriations for national security
are
kept within the maximum
stated by the President and pur¬

chases

esting stocks for retail—H. M.
Byllesby & Co., Stock Exchange

Bldg., Philadelphia 2, Pa.

New York.

Why We Built the Train of To¬

City

of

Valuation

Philadelphia

Bonds—

—

booklet

Descriptive
the

on

illustrated
General

new

and

and

appraisal

—

*

appraisal of Railroad Eauin-

ment Certificates and

ings ratios and yields

A1I

price-earn¬
on

123 ruo-

lic Utility Common Stocks.

Circular
pany,

*

American
—

*

Aviation,

Burnham

Inc.

—

Com¬

and

15 Broad Street, New York

15, N. Y.
Fire
and
Casualty Insurance
Stocks—Comparison of earnings
of principal issues for 1947—Laird,
Bissell & Meeds, 120 Broadway,
New York 5,

American

30 Broad

N. Y.

Stock

selling

Statement—S.
125

Cedar

Corp.—

Graves

& Co.,
Street, New York 4, N. Y.

Atlantic

Oil

Machinery

Circular—Gordon

R.

under $ 3—

Melven

&

Co.,

Street, New York

6,

Refining

Company —
appraisal ■— K a 1 b,
Co., 25 Broad Street,
New York 4, N. Y.
Investment
Voorhis

N. Y.

Also

&

available

is

a

review

of

Sylvania Electric Products, Inc.

Opinions
—-

Circular

on
—

the Market Outlook

Bissell

Laird,

Canadian Pacific Railway Com¬

&

Meeds, 120 Broadway, New Yor*c
5, N. Y.

pany—Memorandum—A. M. Kid¬
der

&

York

Co.,

I

Wall

Street, New

5, N. Y.

into the future, undirected, like

the

these

con¬

an

.!

<

a

&

who

on

a

difference.

people

business, by telling them
great and powerful economy

that

%

Faroll

the

cur

'

plus $20.00 for each additional

Compare

fool

for

duct of.a

languages, at

a

•1

to

possible

experienced in the

not

are

is

has

the

i
i

It

collectivists

foreign correspondence

in any and all of the
above-named

2)

Joseph

defeated their

paring against another world

MONTHLY FEE BASIS

bJ
U
U

—

knows bet¬

trols
h]

The
ward

Stroud Motors stream-lined, Diesel pow¬
& Company, Inc., 123 South Broad ered train—General Motors Cor¬
poration, 1775 Broadway, New
Street, Philadelphia 9, Pa.
further
Also available is a valuation York 19, N. Y.

way

po one

the

of

trollers, how

-

industry

under complete
command.
Imposing

economy

it should be told, as we are pre¬

and Swedish

and

higher and higher prices re¬
duce the number of potential buy¬
ers and lay the foundation
for a
really serious setback later on.

morrow

to make sense out

German, French, Spanish

race

prices

and

wages

that

United

ter than the industrialists who had

a page

economy

.

production. Yet

German, French, ' Spanish; Italian, PortuSwedish, Danish, Norwegian, Russian and
Dutch into English

the

Co., 29 Broadway, New York 6.

patriotic businessmen as the proof
that complete national control of

a page

danger to

between

peak year of inflation following
the Second World War."

the

production for
1938, using the 1929 level

problem. It is customary to point
to
the wartime performance of

Technical and Legal

page

the

resulting from the constant

the money

on

of Nations index of

government

Schedule of Rates, Effective April 15, 1948

ized

It is understood that the firms mentioned will be pleased
to send interested ■
parties the following literature:

this

shows

of the world in 1937.

put
W3

Company
in
refusing to
increases in wages and in
reducing prices clearly indicates
that management has fully real¬

Recommendations and Literature

which dropped to 16th on a list of
the 21 largest industrial nations

Then

—

Steel

grant

Dealer-Broker Investment

government-managed
depression
was confined to the United States,

States as 64.

Phone: 1186

decline in prices

of food and farm products.
"The action of the United States

The Bulletin of Statistics of the

of

Hartsville, Great Barrington, Mass.

ought to wit¬

we

moderate

a

lines the supply of

damper

a

market.

Production and employment

Britain

Translator and Interpreter

ness

by the government for for¬
eign account are handled careful¬
ly and skillfully, the year 1948
may go down in history
as the

discount rates will fur¬

April,

JOACHIM JOESTEN

United

rather favorable

tude of the Congress and the Ad¬

should

fact

fell 36%.

1929

capacity has

productive

The result was a new depression
in 1937-38, twice as steep as the
1929 decline which had halted in
1932.

in

for

"The future trend of commodity
prices depends more on the atti¬

question now forgotten through¬
out the world: "How much debt1

United

but

outlook

wages may

extended

went

risen

inventories

and

the

mar¬

more

during

relief and public works were
until they raised the

a nd

he

and

in Europe and for grains in
States at present is

crops

the

buyers'

more

Since

^lso

rela¬

no

expenditures,"

becoming

evidence.

been

money,

if they had

as

stated.

pointed
out, "can easily be counteracted
and
counter-balanced
by the
forces of readjustment which are
also quite pronounced at present.
Not only have the pipelines been
ment

Labor and prices were treated or¬
tion to each other.

Nadler

Dr.

inflationary forces aris¬

ing primarily out of the reduction
in taxes and the increased arma¬

ket is

to

finance.

and

new

dur¬
past

the demand and the

or

established

were

years/'

"The

power

years, and never left more than
two per cent unemployed at the

Asso¬

1948.

of action

:ession of cycles of excess and
correction that bad' established a

Metal

and

Waynesboro Manufacturers
ciation

of

a

not

have

enjoyed
ing the

Dr. Marcus Nadler

few

by

degree of stability such as
we

after pression until, in 1937, the govern¬
1929. Up to that time the national
ment decided to pull some of its
production had climbed in a suc- control levers.

very

do

addressby-Mr. Bunting at

dinner

a

depression

a

undisturbed.

*

when

furnished

*An
.a

nations

into

world

,

pattern

The

The pace and style of the re¬
pression* depend on* the native
brutality of those who undertake

remember

economy.

let us examine their
which the facts now

tistical proof.

whereby

The police

re*

Jand out beyond the need of sta¬

to that.

much

for

League of Nations records that the
industrial

corporate
use

discussing what these
from economic freedom

do,
record, in

living. He must

die.

or

then

of

would

economy,

t is astride all the wa.ys
i

has
simple

be

to

marked

i

sense

:heck against the record.
The Bulletin of Statistics of the

war¬

of

controlled

a

retreats

When

a

the

last stand

establish

from

which he cannot withdraw.

1946.

planners who wish to
the present threat of war to

>ossession of the qommon man. it
entices

off in
controls

came

time

take

to

used when

was

price

the

were

by Karl
vehicle of

greatest

controls

price

ago

discovered

ever

the first round

Moreover,

doctrine

plete that the .socialistic

of the

one

man

The demonstration is now -com¬

mwer

back

turn

in 1929 and that all

I propose therefore to show that
the third round of wage raises is

Ignity and security,'surrounded
oy the good things of life.

a

to

went

;

to establish him in personal

aunched

nly

common

...

As the first
ompletely socialistic state in the
history of the modern world, it

tnd

economic

plain that

year

economy

ought

yho made the depression of 1929
nto the Great Depression.
It is
30

rest

of the country

of the New Dea

accusers

our

together
coming
price Control with Third Round of out conventionally in 1932 in mid¬
summer.
The other nations of the
Wage Raises

spirits who
Relieved its promise.

was

our own

It is what has made that

aelp possible.

ago

years

home to

ast at

reedom.

sympatheti¬
cally hailed
30

Europe to hold off Rus¬

sia, makes it vital for us to hold

so

was

to help them
the other friendly nations of

Our undertaking

as

Great

which

but

freedom,

and

the

of

further public coni'iprivate enterprise.
Yet the record is plain that i<

.gainst

austerity, and proceeding at a
more
civilized pace away from

which

been

the

for

the unaswerable argument

as

to

seems

reached

great depression, it has been

^sed

of infla¬

have
-

future.

They

tion

are

the

the

of

crest
wave

cussing what the managed economy, or renewed price controls, or another wage rise would
do to this country.
We discuss them as if they were entirely matters of speculation because

Conflicting Trends

New York

By EARL BUNTING*

After

Thursday, May 6, 1948

To

illustrate:

driving his two
much less

a

man

sons

t.

on

to town

page

Income

Mortgage

49 Wall

Also

Street, New York 5, N. Y.
available

is

a

leaflet

of

.

who

is

30)

*

Forman

Realty

Corporation —

Analysis—Rogers

&

120 South La Salle

Street, Chicago

Tracy.

Inc.,

3, 111.

current Railroad Developments.

has

complexity in.the oper-

(Continued

Railroad

Bonds—Circular—Vilas & Hickey,

,

What
memo

to

Buy?

—

highlighting

a

Easy-to-read
dozen inter¬

Kuhlman

randum—A.

Electric
H.

(Continued

Co.—Memo¬

Vogel
on

page

&

Com-

16)

Volume 167

THE

Number 4696

aMv

van

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1981)

iS&r*
'

»■

...

7fo better you

,more oil you
the evil
...

A report on

the biggest, hardest

most

year we ever

i
and

more

this country and

n

more

oil. To do their part

in meeting the great need for oil in 1947,

Ul
I

job in their history. They produced

i

;■

,

:■

ffp

.

people than

)■

to meet

ever

more money;

than

more

ever

based

on

year,

Q

Cost of research also increased —$18,200,000
was

new

other

accom-

'

<

•i-..'\
-••V-

1A

World-wide, the need for oil surpassed all

}

•.

income reached

creased

8%

1946,

over

was

setting another

A record

in¬

employees.

new

record. Their production was 14% of the world's

total for the year.
1

•

v

.

.

-

.

/.

In
**

•

,

'

•
,4.

I

rT.

.

'.

v" y

,i

/ i;r

.was

■ •

f

,

\

yy

"

-

twice

as many

million and

a

homes; five times

more cars

and

at record

to fuel than

tractors and trucks

a

half

as many

more

on

year; In meeting this need, we set new

output records month after month, accounting
for 9% of U.S.

refinery

total crude oil, and 14% of total

runs.

The unusually hard winter made heating

supply

a

were

oil

special problem, By

people all along the line,

we

able to deliver about 25% more

of these

such

big

demand,

big

supply, and

rising prices, money came in-and was paid

out-in all-time record figures. Total dollar in¬
come

reached $2,387,000,000—45% over 1946.




.§

'

J
*

V

;

.

-*

v

•

£";

v

V

,

as

per

he
1h]

share
The

for

year was

new

wells,

it takes to get the oil you need. Part of a

billion

dollar program covering the two years 1947^48,

by far the greatest capital investment we
faced. .The money, came almost en¬

tirely from earnings, past and current-money
made

on

the

jobs ahead

H

" 'o

*

'■£[

V. V..V; [■

v'«:■ ■■

Transportation of oil
f

was a

»'••« ;■<

• • <■'■'•

£ V*: • ;■; V^

.

ordered 6

ships, the largest
were

pushed to

new

we ever

new

big job. During

than in 1946.

early

26,000-ton, 16-knot

operated. Pipelines

records—our trunk lines

delivering 83 billion barrel-miles,
more

or

11 billion

rests

It is clear that

the

social

.

better

an enter¬

responsibilities of profit

understand

that

the

peace,

and the security of the

(New

own

as

progress

—

must

advancement,

people of the world

the best guarantee

of the Company's

and security. We intend

now;

always, to demonstrate in action that the

free, competitive American enterprise
tem

is far superior to any

sys¬

other. We believe

that the Company and its affiliates are so

organized, and their business

they will continue to

STANDARD OIL COMPANY (NEW
AFFILIATED COMPANIES

a

full realization of

a

so

serve

conducted,

people well.

in this report satisfies the provisions of Section 11 (A)

AND

democ¬

a

with the individual and the indi¬

Jersey) must exercise

that

m,

job was a big one.

bigger still. In

of the Securities Act of 1933 J
[Copies of thefull report are available on request. Address Room 1626, 30 Rockefeller Plaza, New York 20, N. Y. 1
The earnings statement

by

.

prise like Standard Oil Company

¥' 1.:

the year, we bought 23 ocean-going tankers

1947

are

vidual enterprise.

job went back into the job.
'

./

the responsibility for making

world

are
;■ -

Thrift

saved

was

rrv

compared

important dollar figure of the

ever

employee

$20,987,000

year

A total of

earnings of the Company

the 426 million dollars spent

was

saved ,in

rec¬

compen¬

1

1

plants, tankers, pipelines and all the other things

it

was

Company and its affiliates.

1

?

'I

,

/ i/'» 1 -N1-

11.3% of total income

or

this year we
With

i'

from the U.S. Maritime Commission, and

products than in the winter before.

■

i't

affiliates—$269,000,000—equalled $9.83

Most

*

A

;

V-K

exceptional

harmony. Employee

which

vV
*"

adjusted upward during the

was

'*

remained

employees and $34,409,000 contributed by the

racy

extraordinary effort in refineries and hard work

were

-

J

*

•

.

our

Plans,- of

our

paid by the parent Company.

•":■'? ¥

and long hours by

:

'

share,

have

and kerosene

1

1

*

relations

$55,396,000

1946.

paid to

was

10.8% in 1946. Dividends of $4.00

diesel locomotives.

Total U.S. consumption of oil products was 11 %

war

$466,954,000

•.

'

help meet rising living costs.

oil-heated

greater than 1946, 12% greater even than the

peak

to

of

Net consolidated

°

"

per

levels. Three million

farms;

2

..

1

••

C

~ V Jv- j.'"

'

the U. S., too, the need

pre-war;

^

I'l

•

•
•

sum

*

; v

Labor-management

excellent, continuing

Operating charges and other deductions from

records. To

over

efficient and

liquid fuels synthetically from natural

sation

$2,118,040,000-44%

more

oil shale, and coal.

gas,

*
v

help meet the need, crude oil

knowledge. Considerable

made in finding

lower-cost processes for making gasoline and

highlights from this significant

are some

spent for

progress was

paid for out of

of great

was a year

*

7

■$.

more

the Company's Annual Report to its 171,000 stockholders... I;

production by Jersey Company affiliates

reserves

in spite of record consumption.)

to

t

as

than last year.

increased by 600 million barrels during the

ord of industrial

•

spent 5 times

we

more

were

spent for facilities

was

single

a

past and current earnings of the business. It

year,

oil,

new

pre-war-16%

as

♦

products;

more

workers and served

more

growing needs —426 million dollars in

plishment; great progress. Here

discovering

much

•

♦

year,

oil and delivered

more

employed

before. And far

f

(Altogether, the country's known oil

Company (New Jersey ) and its affiliates performed the biggest i

took in and paid out

In

J?

Standard Oil

(r

O

through the world, human progress calls for

•

JERSEY)

(1982)

10

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday* May 6, 1948

t<r 8txmty oir the roinmorr after

"

Pennsylvania Brevities

Steel Corporation

Portsmouth

Dumont Laboratories

El Paso Electric Co.
Data

v

Y?

directors to further reduce the senior issue.

44 Wall Street

Philadelphia 2

reduced to

New York 5

PEnnypacker 5-5976

WHitehall 3-7253

$7,000,100 and it is

that the program will be
continued until another $2,000,000

between

has been retired. It
that

the

are

lower

a

For

the

Jan.

Philadelphia

31,

earned

the

fiscal

1948,

for

$2.20

the

with

compared

preceding

cost

common

its

in

New sales

year.

million

iil Stocks YSli

actions

W.

Philadelphia Transportation Co.

in

Brightman

1946.

told

1421

Philadelphia

Street,

Chestnut

stockhold¬

Phila. Phone

/

;

he

of

bilities of

$5*700,000.

Buy?

easy-to-read

^

esting

.

suitable

a

of

>■

:

depend

H. M.

PHILADELPHIA OFFICE

Telephone

be

could

without

wages

Teletype

;

would

Lukfens

Stock Exchange Bldg. Phila. 2

fare

economically

>

a

not

-

'

are

frith

trend

#

..

.

Hajoca

1900 Rittenhouse
Phila.

Sq. 5V2-1950

Transportation Issues

Lehigh Valley RR. Annuity 4Vg

Aberfoyle Mfg. Common

Philadelphia

Packard

,

.

>

if,

2

N. Y. Phone v
COrtlandt 7-6814

chemical;

873 shares

; years

the

oil arid

utility

t

stock

#

'■

*;; v-

:

-

^

-

Leonard *£.

Beaie,

President of

Philadelphia 2

&

*Offered

Mander

PH 677

Com.
Com.

Com..

that

formula"

there

by

.

is

which

Net profit for the. quarter

no

Abram J. Feuer will become

Incorporated

PEnnypacker 5-0100

1528 Walnut St., Philadelphia 2
San

Boston

Chicago

Francisco




a

as

:

New

York Stock

May 17th,

on

date

film's

the

•

Y*. 'Y;

Exchange,

on which
will
be

name

changed to Spiegelberg, Feuer &
Co.
Mr. Feuer was formerly a
in

partner

thereto he

&

Marx

was

&

Co.

Prior

with J. R. Williston

CO.,
'

"

-

•

-

I

bv purchase and through

•;

•

Johnson, keen & Go.
Fornted in Philadelphia

far

as

a--

members of. th6

which

subsidiary

J. Feuer

Xbrim

}y. ">

•

PHILADELPHIA, PA.

1902.

B.

Keen

has

been

—

Joseph

admitted

not

to

be¬

James Ci Webster has withdrawn
from the firm to accept an
ap¬
pointment with the Treasury De¬

Transmission

to

partment in connection with the
distribution of Savings Bonds.

allocate

else¬
gas

ginning July 1.
Eastern

Texas

Co.^s
Gas

contract

with

the

reported

as

delivery of
feet a day by
a

Charles H.

$505,562, equivalent

Frazier,

mer,

'

j-

£! 'v.' ;
Valuation ahd

Appraisal*

y 7

#

'!

I

-

officer of

an

Kerner,

Boggs to Manage

Hogle Office

ah addi-

LOS ANGELES, CALIF.—John

10,000,000 gallons

of oil
to manufacture gas. Because of

D. Boggs, who has been with J. H.

Hogle

result

\yYv

in

an

operating deficit
which would have "to be passed
to consumers.

Horace P. Liversidge, Chairman
of the board of

tric Co.,

Philadelphia Elec¬

has announced the elec¬

&

Co.,

507

West

Sixth

Street, since 1937, has succeeded
C.

the

A

Appraisal

Price-Earnings Ratios and Yields
123 Public

the firm will need

tional

on
".

was

Rambo, Keen, Close &
Inc. and of Battles &

higher costs, this, he said, would

.

RAILROAD EQUIPMENT CERTIFICATES
\

Prior thereto he

assistant

pany, says that if the company's
gas needs are not met this sum¬

*V«

Johnson

Co., Inc.

to the President of the gas com-

Valuation and

Mr. Keen has been with
Lindley
& Co. for some time.

Philadelphia

Works stipulates

was

Jerome

Cable

office.

admitted

firm,

as

to

Mr.

as

Manager of

Cable

has

partnership

in

been

/the

previously reported in the

Financial

Chronicle

of

April 22.

on

A

Utility Common Stocks.

Continuing Interest in:

American Meter C6,

Souiheilrn Advance Bag & Paper Co.

Grinnell

Common

E. H. Rollins & Sons
York

in

partner in Spiegelberg & Co., 30
Broad
Street, New York City,

Cannon Mills, Inc. Classl'B"

Corpoi-ation

Talon, Inc.

Standard Stoker Inc.

only by prospectus

Bought—Sold—Quoted

New

kind

Feuer; New Firm Name

V. /'

day ; starting Oct. 1, 1949.

stated

Phila. Elec. Co. Common
f
Richmond Cedar Wks. Com.

Roberts

Company,

48,000,000 cubic
Oct; 1 and 57,000,000 cubic feet

Allentown, Pa.

Serv.

its

Spiegelberg Admits

YYY?

in the
Railways

where the supplies of natural
which it is scheduled to get

disappointing" because of
rapidly increasing costs of labor

Phila, Transportation Co.

"magic

SECURITIES

Chemical
Pub.

continuing

Pittsburgh

Commission

9%
higher"* than in the corre¬
sponding 1947 period, "net results

CITY OF PHILADELPHIA BONDS

Ind.

of

partnership in Lindley Johnson
& Co., Old Broad Street
Philadelphia Gas Works
Station,
The Philadelphia Gas Works and the firm's, name has been
Co. has asked the Federal Power changed to Johnson, Keen & Co.

Co.,' ' told stockholders that al¬
though first quarter sales were

average, investment rating.

v'

Harshaw

are

and its

babk

^

Pennsylvania Salt Manufacturing

payments provide this
with a ftiuch better than

Incorporated

Nor.

window, the first
Philadelphia.

Master Watson B.

exchange of securities. The

pany

Penna. Salt Mfg. Co.

indus¬

dividend

Charles A.Taggart&Co.

Elec.

.is
deposit

*

ships bfelfrefeii the parent com-;

outstanding March 31,

—

City

An

be

Securities & Exchange Commis¬
sion is scrutinizing the relation¬

Available Publications

^Atlantic

it

through, stock ownership, is en¬
deavoring to prove its claims in
respect to system securities acqtfired bVer a lorig1 period of

EXCHANi

Branch: Dime Bldg.,

should

Ebert

PHILADELPHIA

" Tele.

month.

be

meeting of Phila¬ and materials which have not yet
delphia Transportation Co. stock¬ been compensated for in the
price
holders,
President
ICharles
E. structure.

MEMBERS

1500 Walnut St.,

part of the

unusual feature of the
building
the
autmobile
drive-in

borrofr additional

Philadelphia

At 'the annual

'Phone KIngsley 5-1716

latter

Avenue

1947

controls the Railways Company

were

INVESTMENT

than

Co. feorganizatiofi proceedings.

earnings

*

continuous

•

STOCK

the

Castor

St., Philadelphia,

Corp.'s annual meeting

muddled

Corp.

1947.

tries. ^Conservative,
management
and a long record of

>,

:M

i

a

paid.
This company, na¬
tionally known for installation of

Steel

Adair

earnings was, established by the greater than a year ago, increased
Grinnell Corporation
during 1947. costs reduced the company's net.
Net earnings for the common stock Per share
earnings were $2.06 on
were
$10.78 £ per share, out of the 115,121 shares mow outstand¬
which dividends of
$2 per share ing, compared with $4.28 on 69,were

of

■

Exchange

Bldg., Philadelphia

Teletype
PH 375

Stock

made

fore Special

and specialties,
of $237,000
for the March
quarter, compared
*
'v
Ywith $299,000 for the
correspond¬
Grinnell Corporation
ing quarter of 1947. Although sales
A new record of bbth sales and in the first
quarter were
7%

automatic fire protection
systems
and
equipment, also serves the

Samuel K. Phillips&Co.
Members

believed,

ftailways Co.^
PlTTSBURifiHt-IIeirings be¬

plumbing supplies
announces

occupy its hew quarters

corner

Helleriftari

Pittsburgli

Hajoca Corp;, manufacturer: of

corresponding

the

of

Trust

io

..:"

1

Co.a will

at

and

branch

Frankford

creased
$19,000,000 in the first
quarter? het
to
$1.93 on the common, compared
frith $2.41 ih the 1947 period.

.

business

«

■■

Castor

new

Philadelphia's

frai told that although sales in¬

litigation; Mr. Ebert said.
*s>

4f

PiTTSBtJRGU--J'one & Laughlin

■

,

1500 Walnut St B-1950

Co.,

meeting

"good year" in

a

*

of

,

*

funds.

common stocks will

the

on

manager

at Coates-

ville, Penna.
J

•;' '.v

<

■

•

he

have, been

company

protect,

works

!'

been

qr194S. ;Batikfn|rjarrankeihbhts

threaten¬

to stay in

■'

Cambridge Bldg. 3$ 1953

looked for

better,

resource, its solvency, its

v;~:;"

increase

immediate rise/in the selling
jpHces of its products.

PH 73

on

He

earnings
in - the
coming
months and on the outcome of the

unsound to raise wages at this
time. He added, moreover, that

Byllesby & Company

RIttenhouse 6-3717

it

annual

refinancing in 1945,
capital improvements, in¬

gross

and

Mr. Stackman told the union

that

& Navigation

the

cluding those planned for the
remainder of 1948, will total
almost $13,000,000. He said that

Resumption of dividends ;on. the

Steel Co.

Y;•;Y|!>

•

to

re¬

since

that

only

cent

one

"that i the

preferred and

•

retail.

informed

public service."

Amdricd,

G. D.

for

to

general

has

Robert V. White, President of

^Lehigh Coal

■;

right to earn and its ability to
function As a pfdgiessive, "effi¬
cient provider of an essential

■

union, has been rejected by
Stackman, Vice-President in
charge of operations of Lukens

brifefly

Y,'

.

revenue.

these efforts

pforbised

increase" by

C.I.O.

dozfeii intei>

stocks

wage

United Steel Workers

memo
a

earnings

1948 and that results would

every

Steel Conforms

"substantial

highlighting

lecord

he

•will ^continue

COATESVILLE—Request for

for

Send

of

than

stockholders;wCi'ev; |necessary to

'

Lukens

\

than

the

ported in 1947.

$400,000

pointed out.. ihat
earnings, after all taxes
more

has

company

blamed for

Ebert

dollar

that

'

-

to

about
are

ing P.T.C.'s ability
business. The

Cash alone

amounted to $6,800,000.
' 4 '
♦
♦
*

What

company
removal

that

Curtiss

of Lukens Steel Co.

The

PITTSBURGH-^Stbckholders at
the
annual
meeting of United
Engineering & Foundry Co. were

better

which

that continuing efforts
being made to "deny the
company
fair
earnings"
and

$18,500,000 against current lia¬

"named

M.

.

charged

another

mains
of

,

winter weather

and

:''r' Y-';''''

Lester

,

pansion program.

largest backlog in its history and
profits in 1948 should be equal or

be¬

11

and real estate.

Y^

-j; Y \

loan

a

were

confident

Company's financial position re¬
strong with current assets

New York Phone

Teletype PH 257

which

February

expenses amounted

each

$3,000,000 under

informed

operating loss which Mr. Ebert
the company sustained in the

little

a

good year.

WHitehall 4-2400

Locust 7-1477

was

the

and

current fiscal year is continuing

2

rates

wage

snow

1947

the upward trend. He stated that

H.N.NASH&CO.

increases

YYiYY

a

'

effective

Mr.

Harry

that business thus far in the

ers

2039, Pfd. & Common

than

fare

March quarter.

customer trans¬

more

fares. The

says

records were set with more than
a

r

severe

Brothers

Lit

on

the

ended

year

its in¬

pay.

subject of current court

Higher
came

$2.31

shares

Bank & Insurance

the

granted

review.

dividend rate.

borrow

agreement which provides that an
additional $2,000,000 may be bor¬
rowed in the next year or two,

charge of engineering and
Ramsey as Vice-Presi¬
charge of purchases, in¬

N.

in

surance
-

without obtain¬

expenses

recently

outstanding

might be refinanced at

can

ing more revenues from

indicated

was

remainder

to

H.

dent

if needed, to help finance an ex¬
company

creased

ex¬

pected

Philadelphia, New York and Los Angeles

3-6s

Originally, the preferred

was
outstanding in the amount of<$
$12,000,000.
This has now been transit

CORPORATION

Private Wire System

of

in¬

an

the

company's indebt¬
by amounts not to exceed
$10,000,000.
The. company plans

At the annual meeting, "stockholders of Lit
Brothers, Philadelphia
department store, approved management's policy of retiring com¬
pany's $6 cumulative preferred stock by purchase arid authorized the

BUCKLEY SECURITIES
1420 Walnut St.

dent in

edness
Lit Brothers

Request

on

in

crease

tion of K. M.Trwiri as^Vtce^Presi-

;

Stockholders authorized

-

Corporation News and Notes

Stminole Oil & Gas

'

preferred dividends.

STROUD & COMPANY

r

ESTABLISHED

1914

Incorporated
123 SO. BROAD STREET

120 BROADWAY

PHILADELPHIA 9, PA.

PEnnypacker 5-7330

REctor 2-6528-29

f Boenning & Co.

NEW YORK 5, N. Y.

Allentown

;

Pittsburgh ,f

■

•:

^Lancaster

; -

Members

Members

New

Philadelphia Stock Exchange
York Curb Exchange (Associate)

1606 Walnut
New

Scranton
Telephone

York

Street, Philadelphia 3, Pa.
Telephone—COrtlandt 7-1202

PEnnypacker 6-8200

Bell

System Teletype PH

1

—

30

■

Volume

Number 4696

167

ments. He also pointed out that,
-in connection with the issuance of:

NYSE Rrtfefcs Prilltf
COMING

Listing Requirements

EVENTS
In

Investment

The New York Stock

Field

Exchange

is making public a revision of its

printed requirements with respect
to the listing of stock issued in
May 6, 1948

(New York City)

Bond Club of New York Dinner

Meeting

the

at

Waldorf-Astoria

Hotel.

Election
Stock Exchange.
12,

New

York

1948

(Toronto

and

Montreal)
Investment

Bankers

13 in
Montreal).
(May

Association

Toronto;

May

or

.u.-v

special
■' ; i;,;,,

Schram, President of the
Exchange, said that it has been

policy

the

of

Exchange

for

time to require approval by
stockholders of management op¬

tion, profit participating or special
remuneration plans as a prerequi¬
site to listing the stock issued for
this

Meeting of Canadian Group of
;

option

and

customary

for

the

Exchange

fore listing
the revised

additional shares.

purpose,

desirable
the

to

and it
state

published

now

deemed

this

policy in
listing
require¬

The annual

meeting of the Mu¬

CMCAdO,

June 14, when new of¬

ficers will be elected for the

com¬

ing year.

following nominating Com¬

tion of property which is
stlbstan-j
in proportion to the size of

the listed company, or which is to
be
exchanged for property in

United

Vv

With A. M. Kidder & Co.
(Special

to

The

Financial

—r

South Palm Avenue.

States

Trust

Co,

associated

The

Blue

William
Bank

&

List

G.

cago,

elected

director

a

&

Co.,

122

West

added

Street, have

John

Eeeden to their staff.

14,

(Detroit, Mich.)
of Stock Exchange
Firms
spring
meeting
at
the
Book-Cadillac Hotel

from

Francisco

a

storm?

(San FranTrader*
aV

Bond

annual

ouRnv

Northwood. Lodge, on Russian
River.

May 28, 1948

(Pittsburgh, Ra.)

Pittsburgh

Securities

Traders

Association Annual Outing

Shannopin Country Club

at the

Yes indeed!

June 4, 1948

(Cincinnati, Ohio)
Municipal Bond Dealers Group
of Cincinnati Annual Spring
Partj

come

a new

a

sudden,

product,

better method. But the

idea alone is not

enough—jobs

the

actual

goods

day at the Bel-Air

come

from

^making and distributing of

services.

or

Country Club.
June 4, 1948 (New York City)
i

Bond Club of New York Annual

Field

Day at the

Sleepy Hollow

Country Club, Scarborough, N. Y
Jtfhe U, 1948 (New York City)
Corporation Bond Traders Clufc
of New York

Spring Outing and

Burnet at the Wingfoot Golf Club

Mcimaroneck, N. Y»
June 11, 1948 (Pittsburgh, Fa.)
Bond
nual

Club of Pittsburgh An¬
Spring Outing at the Char-

frbfti

a

"wire?

tiers Country Club.

:

Jtme Ifc, 1948 (Chicago, HI.)
Bohd Traders Club 6f Chicago
Annual Golf Party at the Acacia
Country Club.
' lr
,

June 18, 1948 (Boston, Mass.)
,

Municipal Bond Club of Boston
outing at the County*
Club, Concord, Mass. To be pre¬
ceded by ; parties at
the, Hotel
Statler on the evenings of June
16 and 17 from 9:30 p.m. until
annual

midnight.
June 18, 1948

(Philadelphia, Pa.)

Philadelphia
ation

annual

Securities Associ¬

outing

at

Llanerch

Country Club, Llanerch, Pa.

without

als and

profit. Without good
management to direct all these operations
•of the

no

a

with which

finished goods at a

capably, there Would he

June 22,1948 (Boston, Mass.)

Absolutely! No

Certainly! It takes a live wire to find
'markets, d^ign the product, specify
materials, organize ptoduction, ^sell the

in

pay wages.

as

much

as

of

Philadelphia Annual Summer'
Outing at the Tavistock Country
Club, Haddonfield, N. J.

I Where do these working dollars come from? In

more

July 16, 1948 (Toledo, Ohio)

jk Bond
outing

Club

of

Toledo

annual

%
;;

July 19-22, 1948 (Portland, Oreg.);

;V-A Annual Convention of National
Association

of

Securities Admin¬

istrators at the Multnomah

Hotel.,

Nov. 15-18, 1948 (DaKaft, Tei.)

I National Security Traderi Aioo
elation Convention.




free country,

come

and better jobs, to

produce

more

and better goods. That's

why the New York Stock Exchange believes it imperative that

'

at the Inverness Countn

Club.

a

from the people themselves. From millions of investors
fe whose dollars make it possible for business to grow—to provide

they

;

people have an incentive to save and invest. That's why our government's policies—particularly its tax policies—must be so shaped
that investors

are

...

$40,000!

Boston Security Traders Asso¬
ciation
29th
Annual
Outing a1
.Woodland Golf Club.
,

July 9,1948 (Philadelphia, Pai)
Vj Investment Traders Association

operate

Every job

industry Represents

of at least $1,500

industries,

name.

company can.

backlog of working dollars,
to build factories, buy materi¬

equipment,

modern

vestment

jobs worthy

>

a

finer service, a

from?

Jutie 4, 1948 (Los Angeles,
Calif.)
Bond Club of Los Angejes first
field

somebody's brain storm—in

breath-taking idea for

at the Kenwood Country Club.

annual

Every job had its beginning

.

in

May 4.

JACKSONVILLE, FLA.—A. M.
Kidder

The next regular meeting of the
Forum will be held June" 3.

Association

on

Joins A. M. Kidder Staff

Co.;
Chemical

Trust

Co., and Rollin C.
Bush, National City Bank.

May 20-22

of

Candy Co. at the annual

meeting of stockholders

Publishing

Laemmel,

was

Nutrine

of Investment Bankers Association

San

<

Joseph D. Murphy, President of
Stifel, Nicolaus & Co., Inc., Chi¬

McGee,
R.
W.
Pressprich & Co.; John J4 Rust,
Equitable Securities •Corporation;
Phillips T. Barbour, First Boston
Corporation;
Roald
A.
Marton,

of America.

Association

,

j

—mmmmm—

May17> 1948 (BOStoft, Mass.)
Meeting of New England Group

May 22 and 23, 1947
cisco, Calif.)

with

Joseph Murphy, Director

Chair¬

Cushman

man;

Chronicle)

SARASOTA, FLA.—Annette B.
Van Slyke has been added to the
staff of A. M. Kidder &
Co., 203

become

'

The

tial

•

Ban¬

Barcus, Kindred & Co., 231 South
La
Salle
Street, in the buying
department.

on

mittee has been appointed tb pre¬
sent
a
slate:
Elmo
P.
Brown,

interest.

M.

croft has

be held

change also may require approval
by stockholders, as a condition of
listing securities for the acquisi¬

an

ILL—E.

nicipal Forum of New York will

Ill

requirements, the Ex-i

which officers and directors have

j

Barcus, Kindred & Co.

to

await the vote of stockholders be^

some

Bankers Association.

13-14,

officers

Emil

the

(Detroit, Mich.)

1948

to

'

Meeting of Michigan Group of
Investment

May

issued

directors under

Annual

May

stock

remuneration plans.

May 10, 1948 (New York City)
,♦>

connection with mergers, reorgan¬
izations and similar transactions,
and

E. M. Bancroft Jokis

securities for mergers, recapitali¬
zations and reorganizations,, it is

able, and willing, to put their dollars to work.

an

in

in¬

some

,

Forsyth
C.

Van

j
!

-r

12

(1984)

THE

r

*

•

COMMERCIAL

&, FINANCIAL CHRONICLE

Thursday, May 6, 1948

if-1«

i*- '

;

Bank and Insurance Stocks

By

MORRIS

A.

SCHAPIRO*

it jQ

+,++;.y

President, M. A. Schapiro & Co., Inc., New York City

==

By E. A. VAN DEUSEN

This Week

===

"S. Bank

Insurance Stocks

—

Choice fire insurance stocks
cost of 77% of

are

Makes statistical comparisons with banks for nation
as whole as well as between Detroit and rural
Mich'gan banks. Concludes expansion of loans and other J
risk assets is enabling banks to meet rising costs, but because of
inadequacy of capital and higher
"break-even" point, Michigan banks are justified in paying out only 30% of current
earnings in divi¬

/

today purchasable at

;

-

analyst reviews position of Michigan banks.

an average

liquidating value. Only one stock in the appended I s,
dends. Declares test of adequate bank earnings should be based on required as well as actual
capital. ;
the market higher than liquidating value
Az: St. Paul F.re & Marine at 1.04; next highest is Insurance Co. of
Banks in Michigan hold a preeminent position among American banks because of
the
North America at 0.06. Ten stocks are priced between 80% and 90%, industrial
importance of the area they serve.
How they are affected by changing condi¬
s follows:
Boston, Continental, Fidelity-Phenix, Fireman's Fund, tions is of
interest to banks everywhere since within Michigan one finds both the most
j'ranklin, Glens Falls, Hartford Fire, New Hampshire, North River
highly developed manufacturing^—
._
and Springfield. The
remaining 12 stocks range downward from 78%
centers
and
rural
communities.
therefore, the country member would have been no net current
^Phoenix) to 49% (American Equitable).
jf 24 is

currently priced by

An

Asked Price

Market to

Apr. 30, 1948

Liq. Value

Liquidating Values (Consul.)
ac.

.Aetna

$78.39

*$65.14

47

97.93

58

Boston

41.06

0.80

60

0.80

>

§

107

84.93

54

26.68

21»/4

29.02

Falls
American

■

58.27

43.69

Fire

43.66

133.07

137.92

Home Insurance
Ins. Co. of No. Arner.—
National

New

108.66

Fire

fNorth River

31.01

Phoenix

243/4

114.86

%

0.83

0.78

Providence Washington

54.09

*45.72

33%

75.05

:> 75.70

78%
28%

1.04

0.60

46%

0.83

54

There

0.73

Security Insurance
Springf-eld F. & M
fU. S. Fire

47.75 <7

51.39

*55.69 /

66.59

74.15

75.63

,

were

419

mercial banks in

0.73

St. Paul Fire & Marine

mem¬

Detroit, and
3.75 times for the country. Total
capital
accounts
of
Michigan
country member banks would haw

insured

Michigan

31, 1947, of which 229

com¬

were

mem¬

bers of the

Federal Reserve

tem.

member

This

Dec.

on

bank

Sys¬

group

comprising 78 national banks and

be increased by about 40%-to
bring this ratio down to the na¬

103.7-3

sources

96.74

,.

AVERAGE OF 24

0.77)'.

•Reflect# change due to new financing

lnl947.tP&rent:

subsidiaries.

no

Michigan member bank

three

group,

It

will

be

observed

.

Some

the

of

drop is

national

banks

three state member banks

V

\ *

,

and

are

lo¬

ning of 1948. It will be seen that
although total deposits increased
$1.6 billion average in 1945
to
$1.8 billion at beginning of
1948, the ratio of total deposits
to capital funds declined from 18.2
from

times to

16.5

in the market
companies. The Dow Jones

In

way,

discus¬

our

sion tonight deals with the
prob¬
for example, dropped from 103.76 on Dec. 31, 1946
lems of the country member banks
value of 6.8%. On the other band,
in
ommon
Michigan. Most of my fellow
their portfolios appreciated 2.2%,
when measured by the Dow Jones Industrial stock average, which guests tonight are officers and di¬
rectors of such banks, and this
moved up from 177.20 to 181.16.
<,
The principal factor in the drop of liquidating values, however, meeting affords us the opportu¬
was the squeeze
on surplus
occasioned by the continuation of the nity to discuss their banking prob¬
strong demand for insurance coverage, at inflated values. According lems. In the series of charts

40-Bond Index,
to 96.74

for

100

stock

-

insurance

fire

companies,

in

Best's Bulletin Service, net premiums
unearned premium reserves increased

written expanded by 22% and
21%, but policyholders surplus
declined 4.5%. Since "policyholders' surplus", includes capital as well
as surplus, and since
capital remained substantially unchanged, excent in a few instances of capital increases, it is obvious that the drop
in surplus alone was greater than the 4.5% decline in capital and
surplus.

:

The

:

*

-.

following tabulation shows

-

•<

some

examples:

•SurplusDec. 31, 1946

Dec. 31,-1947

Agricultural
Fire Association

$4,878,000

$1,751,000

11,180,000

$3,127,000
9,482,000

North

18,405,000
51,835,000

16,695,000
48,535,000

1,710,000

5,277,000

3,768,000

—

River.I,.*?;

Phoenix

—

_

Security.

-Change-

■

-

.3,300,000

-

Agricultural

$10,803,000

Dec.

'■

'i* J

6.4

tI ' >

%

$11,511,000

-f

2,179,000
2,195,000

14,796,000

1-3,975,000

+

10.282 000

1 12,477.000

+

16.858.000

21,026.000
9,992,000

Security

9,188,000

TOTAL

insertion of figures of

the

would

have to

?K-

6.6%
+ 14.7

•

+ 21.4 +
+ 24.7

+

8.8

* + 15.2%

>

be

Comparison of Famines
of

principal

Fire and

Casualty

Insurance Stocks for 1947
Copy

on

Request

Laird, Bissell & Meeds
Members New York

Stock

Exchange

180 BROADWAY. NEW YORK 5, N. Y.

Telephone:

BArolay

7-3500

Teletype—NY 1-1248-49

(L. A. Oibbn.

Manaeer Trading Dept.)




On

the

35.9%
1

other

hand, unearned
premium reserves expanded an
average
of ;.15.2%, ranging be¬
tween ,6.6%
for Agricultural to
24.7% for Phoenix.

cant, however,
ures.

Total

reserves

are

More

the

signifi¬

the dollar fig¬

unearned

for

increased

of

raise

million,

to bring the deposit

the

'

premium

five

companies
$10,054,000 and a
portion of this was

by

substantial

times.

question

:

The six

reserve

as

concerned,

the

unearned

apply

premium
as an offset.

reserves

in

banks in

States,

Michigan, Detroit,
Michigan excluding De¬

in

troit, for the
1947.

shown

member

1945, 1946 and

years

'

/

-

The

"break-even"

been

rising.

yield

realized

So

point

has

on

the

has

actual

loans

average

and investments

1945

to

2.63%

in

reflecting the increase
in total loans, the improvement in
rates on loans, and the somewhat
better rate

situation in securities.

The rate realized is the resultant
of the yield on loans and the
yield
on securities.
Thus, the yield re¬

alized in 1947 by country member

period, cash and U. S.
Government obligations declined
$95 million.

banks in Michigan of 2.63%, came
from a rate of 4.81% on average

same

With such fundamental
as

have

occurred

operating

since

results

for

loans, Table 7, and
on

Critical Yields: 1.63 %,2.63

%

changes

1945, the

the

summarized

in Table 4.

a

rate of 1.73%

investments, Table 8r

average

Loan yields and investment yields

presented

are

in

Tables

7

and

for the years 1945, 1946 and

period
become especially significant. The
story of income and expenses is
is

that

net

Average

Bank,

$8.6

How

is

the

8

1947;

Million

Resources

The fact

current

operating

have

been

experiencing net

cur¬

rent

operating earnings of 10% of
capital accounts, paying out cash
dividends

of

ties other than U. S. Government

city

banks in

or 21.1 times their
capital accounts of
million, as shown in Table 2.

com¬

7%.-It

obligations,
rise

the

was

in

-

,

average

member bank in

with

>

the

income,

gross

resulting
which en¬

these

their

In

rate

banks

of

net

to

earnings.

+

>

posits,

shown in Table 4

country

member

only

or

16.5

banks

times

in

their

a

is expressed in

combined capital accounts of $109

Table 5

million..

age loans and investments.

On

the

x,

v+•+;

other

/,./<»<

hand, deposits at

risk, that is, deoosits not covered
by cash and U. S. Government ob¬
ligations, bear a higher proportion
to

capital accounts in the

case

of

operating

an

The

Obviously,

1.63%

by. Mr.

Schapiro

Michigan Bank Correspon¬
dents, of The-Manufacturers
tional

•

Bank

of

Detroit.

Michigan, April 22, 1948.

deficit

in

1945.

just

in

1947.

This

rate I which

in

1946,

++/++/,//>+

"break-even"

point
was

1

was

the

av¬

all

banks

in

country
Michigan as a

required

on

$1.5 billion to-

member
group

and

1.41%

1.63% in 1947/

ratio

before

Thus,

even," is shown in item 3.

1.32%

and

erage

address

aver¬

and investments in order to avoid

as

*An

percentage of

.

Michigan, with a ratio of 5.25 to
1, than the six reserve city mem¬
a

a

average, rate of interest re¬
quired by country member banks
in Michigan on their average loans

the 223 country member banks in

(Table 2).

as

the

"break

Detroit with

Na-( tal loans and investments to stay
Detroit, | out of the red.
If the rate real-

,

*:

Bank

Table

for

Country

in

Michigan" are
presented in Table 9, derived from
3

all

the

223

country
that our;
with total resources
of $7.5 million in 1945 has grown
member

banks.

We

see

average bank

to

$8.6/million

in 1948.
It is
today by about 4 to 5 of¬
ficers and by about 19 other em¬
ployees.
Capital accounts total
$489,000.
staffed

meet

Michigan held $1.8 billion of de¬

223

The

Member

Its holdings of U. S. Govern¬
their ment
obligations have declined
rising costs, and maintain thereby, from
$4,400,000 (58.7% of total as¬

abled

period of rising costs, the
yields of yesterday are no longer
sufficient to do the job of today.
To
illustrate,
the
information

$116

liquidating val¬

drop in
surplus would be directly applic¬
able, but only 40% of the increase
would

United
and

all

in

figures

billion,

of 4.15 to 1

in

6 for

yield and

are

and

whether

of

Detroit held total deposits of $2.5

ber banks in

are

Table

realized,

2.07%

3%, and retaining
growth in risk
assets, namely, loans and securi¬

These

Michigan banks are working with
adequate capital.-

cline for these comoanies was
$9.-

968,000. So far

cap¬

Michigan

present national fig¬

14.5

oresumably financed by transfers
from surplus.
Total surplus de¬

ues

"break-even"

yield

your

increased

bined

but surplus declined
substantially, from 6.4% for Phoenix to
for Agricultural. The average droo for the five
wa<? 19.1%.

a

ure

;*

With each of the five companies the
capital remained unchanged

We have prepared

30%

or

down to the

+

+$10,054,000.

+7+ +/+*'

+

country member
Michigan. ++
yields, that is, the

1947,

United

ital ratio of 18.9 times in

4,168.000'
804,000 1

+ ';

.

•Average.

"

$708,000

River_.._
i__.

of the

case

bank group ih
The critical

country
Michigan affects
earnings (item 7), rose 37% de- ed today by rising operating costs?
own bank for
comparison.
spite the increased Federal income j What is the outlook for current
/.V.i!:
)
•!
-A- *v'-'H i'"
tax liability (item 6). The banks
Are Michigan^ Banks
earnings in 1948?
How is the
Adequately
met their rising
operating costs average bank situated with re¬
Capitalized?
!
(item, 1), with sharply higher in¬ spect to the adequacy of its capi¬
Capital ratios for all member
banks in the United States and in terest income (item 4), resulting tal accounts?
Michigan are presented in Table principally, as will be seen, from
To begin with, let us loofc at
1.
All member banks in
The banks also the
Michigan expanding loans.
figures of this average bank.
held on Dec. 31, 1947, 3.47% of obtained a moderate increase in
Comparative statements of Assets
total deposits of all member banks service
charges, fees and other and
Liabilities
of
"A
the

gan

-Change-

31, 1947

Association

Phoenix

in the

from

greater significance, how¬
is the rise in deposits at risk
from $277 million to $572 million,

miscellaneous income (item 2).
States, but only.
2.66% of total capital accounts.
The figures show that the coun¬
Total capital accounts in Michi¬ try member banks in
Michigan

-19.1%

$9,968,000
+

Bell

submitted, space has been
provided, wherever practical, for

in

9.3

-28.6

1,509,000

Unearned Premium Reserve

Fire

herein

from $225 million to $295

Dec. 31. 1946

ject to Federal income taxes, and
actually represented
$15 million

-

-15.2

1,698.000

TOTAL

North

-35.9%

1.00% on the average volume of
loans and investments constituted
net current operating income sub¬

ever,

Dec. 31, 1947, a loss in
stock equities held in

to'figures summarized

as

by country mem¬
Michigan, improving

on

,

decline

charge-offs developed.
actual yield realized was
2.63% in 1947/ The differential of

ber banks in

In the

general

a

would

and

The

securities up $39 million.

Michigan.

to the decline

attributable

value of bonds held in the portfolio of the

accounts

losses

the

status

in

that,

tal

cash
dividends, and
capital. Existing capi¬

new

required

1945, 1946, 1947, and
at the begin¬

actual

and in the corresponding ratio of
cated in Detroit, a reserve
city.
general, liquidating values were
deposits at risk to capital accounts,
other
223 member
banks
lower on Dec. 31, 1947. than on Dec. 31, 1946. Moderately higher The
from 3.15 times to 5.25 times. The
liquidating values, however, were reported by Continental, Fidelity- throughout 'the State,/constitute increase in risk assets was due en¬
Phenix, Fireman's Fund, Insurance Co. of North America and St. the group officially designated as
tirely to loans up $282 million, and
Paul Fire & Marine.
the/"countiy member banks" in to other
' *
+
M
'

banks

Of

in Michigan,

Of the

(

stockholders

for the years

their

times, reflecting the
151 state chartered banks, held marked
growth in capital accounts
88%
of the
total
banking re¬ from $88 million to $109 million.

$181.16

$177.20

.Dow Jones 40-Bond A v.

operating income from which the
Treasury could get income taxes,

The
changed position of the
country member banks in Michi¬
gan is shown in Table 3, which
gives average assets and liabilities

.

Dow Jones Indus. Aver.

-

meeting. Ordinarily, this informa¬
tion would not have been avail¬
able for some months. 1

0.89

90

29.94

:

119.70

0.96

44%

49.85

54.08

Hampshire,

each of whom provided the neces¬

0.55

47

84.74

f

country

times compares

for

tional average of 3.75.

sary data on banking operations
for the year 1947 in time for this

0.75

104% "

109.24

90.74

times

4.15

to

erations, Federal Reserve System,

0.69

0.86

28%

Research'1 and

of

banks of 5.25

Statistics, Federal Deposit Insur-

0.72

28%

Division

,

ber

ance Corporation and E L. Smead.
Director of Division of Bank Op¬

0.80

0.87

;

118

37.91

;p

37.96

omist

0.64

31%

41.40

Hartford Fire

,

46

*52.58

44.66

-

Upham, Deputy Comptroller of
Currency, Tynan Smith, Econ¬

the

0.87

123.10

88.70

fFranklin Fire
Great

75.46

123.C-3

Association^—

Glens

/:/ 54

67.91

i

/ 74.57 ;+

X'

Fireman's Fund-.

Hanover

.'

66.83

Insurance.

Fidelity-Phenix

bined cooperation of Messrs. C. B.

to

greater need of addi¬
capital.
The risk factoi

with

0.49

0.88

appear

the

ratio for Michigan

18%

„

assets would

tional

Our discussion this evening has
been made possible by the com¬

81.98

have

their higher percent¬

with

banks

age of risk

problems everywhere.

72%

38.55

84.90

Insurance

Continental

an

0.59

j'American Equi table---

understanding of banking
in Michigan gives one
understanding
of
banking

problems

0.72

112.43

Agricultural

Fire

Dec. 31. 1947

31, 1946

ized

had

been-no

higher,

there

sets) to $3,900,000 (45.2%). In the
same
period, its loans have in¬
creased

from $900,000 (12.5%) to
$2,200,000 (25.8%). Total risk as¬

sets of

000,

our

average bank, $1,636,21.8% of its total assets in

or

1945, have increased to $3,090,000,
36.0%

or

These

of total

age or theoretical

be used

by

assets

figures represent

country
to

trends.

1948.
aver¬

bank, and

may

basis of measurement

as a

all

them

in
an

banks, enabling
their
own

compare

/.+

The

operating results of "A
Country Member Bank in Mich¬
igan" are presented and analyzed,
in Table

10.

continuation
1948.

In

penses,

The figures show
of

rising costs
estimating
1948

salaries

of

about

4

a

in
ex¬

to

5

officers at $5,600, which compares.
with $5,400 in 1947 and $4,400 in

1945,

total

$25,200.

Salaries

of«

Number 4696

Volume 167

COMMERCIAL & FINANCIAL CHRONICLE

THE

_

.t

$

f,

<■

*'

(1985)

13

.

~

f

> I

t

employees at whether those who do use their on its present Capital accounts Of
§2,080,
which
compares
with banking facilities are indeed pay¬ $489,000?
To ao sq it will have
§2,010 in 1947 anff $1,600-111 1945, ing their fSTr sK'Sfe*' oF the cost? to have' a net-jof" $49,000 after
total $39,400. Interest paid on time Banks
Federal; income .taxes. ^ Without
everywhere, ^ larger arid
deposits of $4,100,000 is calculated small, share this common problem, any exempt interest and without
at $34,850 by using the apparently Taking the long*view/ can;*banks any deductible losses, and disre-1

enced in 1947, as shown

?

.

tax-free

minimum effective rate of 0.85%,
the rate paid in 1945, 1946 and

■■■

.

other

19

about

with

equivalent, ng^essary to 1 poses the questioh of adequacy of
produce the desired income. Our capital.
country bank actually held $3,883,000 U. S. Government obliga¬
tions and *$798,000 other Securi¬
ties. Based on the yields*experi¬

The policy' followed by theife
jbanks in recent yea^S of paying
cash dividends^ Of only 11&%»oLnqt
current
operating earnings and

in Table retaining 70%, is today fully ju$*
8, which included some partially- tified by the present situation. Of
1947.
Other current expenses are
serve
Method
for
Losses, our exempt income from United States equal importance is the question
estimated at 6% higher in 1948
country bank will need net in¬ Government obligations and some of
adequacy of bank earnings.
over
come
1947;
of $79,000 subject to Fed¬ wholly tax-exempt income from
Thus* total expenses
It is clear that when the ade¬
of our average country bank in
eral income taxes of 38%; total of1 municipal
securities, it appears
quacy of bank earnings to tota.
Loan totals now stand at a new 24 % normal and 14 % surtax, With .! that the country member banks
Michigan shown in Table 10 at
capital accounts is Considered, the
$147,670 for 1948, are up nearly high, but even with the good rate a requirement of $9,000 in addi¬ in Michigan will undoubtedly be
test should be based nOt only <h
6% over 1947, and nearly 40% of 4.85 %, the figures show that tion to loan income, our average able to secure the desired invest¬
what total capital accounts actu¬
over 1945.
^'
loan income in 1948 will still be country bank will require total ment income, and maintain in
ally are, but also on what the tota.
After
allowing for estimated less than the total interest income investment
income,
net
after 19^8 the satisiactory rate Of 10%
capital accounts should be. Therv
fees and service charges, we find required by our average country amortization of bond premiums, earned on their capital funds in
must be earnings or the prospet.
that
the
critical
"break-even" b&nk to "break even." The fact of $88,000 from a portfolio of fully 1946 and 1947, this despite the
of earnings to Warrant the desireyield is up again in 1948 to 1.69%. is that our average country mem¬ taxable securities having a book continued uptrend in operating
capital increase.
Otherwise, nev
The
Question may properly be ber bank finds that it needs $9,000 value of $4*681,000.
expenses.
money sought will not be forth An estimate of 1948 earnings of
raised of whether banks are giv¬ from investment income in addi¬
In conclusion, we should stress
ing enough attention to service tion to its loan income in order "A Country Member bank in the fact that expansion in loans coming.
In general, the figure
Michigan" setting forth the pre^ and other risk assets is enabling show that current earning powfe
^charge schedules and item costs. to "break even."
Have the banks been too com¬
ceding calculations, is presented
banks to meet rising operating of Michigan banks is at a levL
Earnings Situation Summarized
in Table 11. Total investment in¬
placent in this respect? Operating
The increase in risk assets sufficient to support only mod¬
costs are up,
How will our average country come is calculated on an over-all costs.
Should not banks
bank be able to

TABLE I

:

Ratios
All

And

✓

Member

of

Other
of

As

(Amounts shown

Member

stated

Banks' In ,U.

>-V-;

S."

1947

31,
in

'

millions

'

*»

-

-

.

Number

..LlL.

'National

■

78

4,927

1,915

151

1,764

fixTdta

6.920(A)

\

229

1. Demand

Deposits

6,691

$94,138

^;!2; ..(Time; l^ejpbslts'';
3. Total
Total

8.

All

9.

$122,511

Total

U.

Other

Gov't

S.

$4,250
(3.47)
$225

$8,238

(ioo;oo)
$90,746
41,297

Obligations—..

(2.66)

1,297
$4,494

$132,043

10.

Deposits at Risk (*

11.

Ratio

$127,549

31,765

1,053

__14.48 to 1

Total

18.89 to 1

_

Deposits

Accounts

Net

8.

Cash

Accounts

f ■

Note

(A)

represents 51.6%

cial banks, shown as follows;

the

of

number of all

(86.9)

13,403
(100.0)

(109.0)

Banks

j
Banks

229

All

*

__—_____

Insured

etc.

,

i l 1.9)
$5,102

n

$259

deposits

as

by cash
fw< '■, • /

•:

-

.

-

of • Member Ranks in ; Detroit
;*nd All Other Member Banks In Michigan
As 'of December 31, 1947
-

Per• Cent

of

f bmounts shown irer Stated

-

3,

Interest

5. Net

Income

Current

Federal

$5,408

$7,360

2.90

2.96

i

7.59

7.35

National

78

-3"

;

-

J43':

-

$1,343

.

223

229

i®4»—- %•

-

•

Demand
Time

Deposits
Deposits

—

Total

3.

$2,449

$1,799
(42.33)

$116

$109

Cash

(51.56)

$1,970

1947

8. Other

1.84

608

2.08

9.

10.

1,053
18.89 to 1

11.

Deposits at Risk <*)
Ratio of Total Deposits

12.

Ratio

Accounts
of

Risk

at

21.13 to 1

Subject to
1.00

0.75

-

0.91

0.15

'

0.22

0.60

i

0;69

^ :'V

P 111

■

0.19

6.21

0.50

0.52

Dbtroit;
(6)

.

a.

1.50

2.

TABLE m.

"

-

^

-

,

a.

.'Average Assets and Liabilities of All Country Member Banks in
Miehigan for Tears 1945, 1046, 1947 and Position at Beginning of 1948
(Amounts
H

'•

are

■t-.."

'',7.k1.-\

Number

shown

of

A '*■

stated

in

millions

of

1.66

6.

2.32

40,384

$136,628

94,978

109,120

1946

(225)

1947

(222)

^

^

(Number

1948
a.

-"-5 ' • Assets:
It Cash

12. D- S.

-v-:-

-•';

.-=

-;:V

Pup,

v,

$329

>•

Gov't Obligaticns__^

Securities
Assets

.

211

;

I™-'

*

-

•/•

7f>,r Total

.

Assets

;

Other

8.

^.•.

b. Interest
c.

$36i
'•

X'•'?'»

$1,599

.:

,

Average

.A ■ "v r

$1,916

■•.■■'v;-.-

and

Liabilities

________

3

.1

.

V..:-;;,.:

11.

Total

12.

Cash

Liabilities

31,690

Deposits

31,599

&

13. Deposits

U.

Ratio

15.

to

of

916

Number

-

.

-

.'.i

(6)

$357,000
11,163

$455,000

$498,000

3.13

3.55

5

7

105

•

8

a.

$1,858

$1,916

$1,738
1,362

$1,746
l,23o

$1,799
1,227

277

376

511

572

Deposits

Capital

at

■

"s-'U




(222)

9,73?

v

4.61

s :

f

2.

3.88 to 1

*

-

f

■'■"r*-i

0.31%

1.72%

.

v

0.19%

.

1.73%
num•

,

•

\

TABLE XI.;,

1948 Earnings
Loans:

on

•

of "A Country Member Bank

in.MicUgid

Income:

$2,211,000

•

1

<fP

$107,230

4.85%__—

Income:

Investment

,

?

•

U.

$3,883,000 :

Government____,

S.

Other

»

_

■

798,000

Securities

Current

$4,681,000 <0
Operating Income

Current

Operating

(223)

$493,000

3.

Other

88,000

1.88% (♦)

31,440

'V_ 'w—

4. Total

4.81

^

$226;670

lncome.____

Operating Expenses:

Salaries, Officers (4 toi 5)—
Salaries,

; > ',.r
stated in thousands of dollars)
r,-

Average
Yield

a.

Interest

(IS)

others

_i

Paid_ ort Deposits,. ($4,100,000

Other

All

^ '4
$993,000 $1,028,000
J 4,942

1948

0.85%)-_-

Expenses„___—

9. Total Current Operating Expenses™—~

(223)
10. Net Current

$891,000
,

1.71

1.G7

$168,060-

$139,000
,

__•„__

$150,000

,3,087

3,052
2.03

$178,000

3,138

2.22

Holdings

1.87

-

11.

Federal

12.

$866,000

Net

Cash

1G 63 to 1

16.50 to 1

0.87 to 1

Average
Interest

Income

c;

5.25 to 1

Yield

.."r'-.-K

»•«

-

k-f'

-

.

'-•

.4

-

C-'
■

•-.

:

ir

.

18.356

-*'20,266-

1.59:1.72

t'vV; ;■
.

18,029

^

r;

"~l—:—

Taxes

(38%

-

.

''::r

Ve./

Dividends
Out

—-—-<

of

b.
c.

Cash

Earnings
Dividends

—

Current Earnings—

Can'tal Accounts, Dec. 31,

Net

$49,0W
14.700

Operating Earnings—___

.

1947— .*—

-1

-: 11

lO.Of
3.01

——

Retention

$34,-

$489,0«f)

——

—

'(°). Fully taxable, or tax-free equivalent.

1,73 -i

.

Current

14. Retention
15.

$1,132,000 $1,17$,000 $1,059,000 $1,044,006

Holdings

a.

Operating Income Befqrc- Fed." Income' Taxes

Income

15,218

*

Income

(%)

(223)

■*

17,214

1.51

(CU )

Average
Yield

1947

(222)

'

13.

Holdings
Incojne

b. Interest
c.

1946

(225)*

Obligations:

b.
3.15 to 1

0.56%

.

dividing figures in Table IV by the
respective years. - •
:
.

..v>

of

1. Interest

■

(223)

$437,000
21,010

'

\v

Banks—

Other Securities:

Risk

Accounts,

'

9.QQO
4,681,00.

obtained by

Current Operating

All Securities:
17.92 to 1

14,911

4,748,000

1.59%

Banks for the

Estimate

a.

18.17 to 1

Accounts

of

b. Interest

,; .109

$1,840
'-

,

.■•

$991,000
v

.

■

16,153

$310,000
14,317
''
4.62

(225)
$211,000
f

___i

U. S. Government

-"tir

\,.\y

(6)

1945

883

'1,322

Gov. Oblig.
Risk_______

S.

at

Capital

(6)

$1,799

893

Ratio of Total Deposits to

14.

(6)
$306,000

Income

(Amounts shown a^e

c.

Total

4.17

•-'■;

97

88

30,487

5,307,000

0.70%

Even

Break

.n

v.

.

Begin, of

$1,746
/

to

-

,

35,591
5,031,000

/-

37,163

'V...rpra(Excluding Detroit)

853
*834

;

Incomc____

Investments-^Required on In¬

C»)Data
ber of

Average Investment Yields of-Member Banks in Michigan

•

708

Saviags__i

Loan

(229)

$892,000

5LE VIII

is

SI,858

r

1948

3.82

Banks )-___

(',«)

116,23'

.

1

178

'

$1,738

891

—

Current

493

..18

;'v

Begin, of

25,480

:
—•

;9. Total Capital Accounts___
10.

Yield

31,440

30,502

'

Loans

Interest Inc. from

Operating Deficiency af-?

866

437

18
$1,840

$1,690

Liabilities:

07,i Deposits - -;
a. Demand
Time

'

-

-

X!,

b.

168

150
310

•
.

'-j'.-if--

•;

'891

>•*«■
'

13

1

$344

1,028

•

139

...

,{3;(Other
j4,. Loans
'5. Other

$334

993

'

$667,000

:

48,22,

$147, dc

'

1947

.

.

1.69%
1.32%
1.41%
1.63%
$938,000 $1,396,000 $1,960,000 $2,211, Opt
4.
4.81%
4.85%
4.61'
$107,230
343,258
$94,215
$64,491

________

Loans ________
Average Yield.

Investments

•:(228)

:

of

4

to

Even

11. Actual Yield Realized on

(231)

Loans

Average

78,849 '

Even"__^_

Average

vests,

j

& Invests.^ $5,969,000 $6,703,000 $0,708,000 $6,892,000

Loans

Break

ter

(229)

Income

(% )

Michigan (Ex-Dctroit):

■

i

Interest

Yield

e.

(228)

(228)

"Break

9.

2.90

Loans,

30,761

$123,604"
28,626

2.63.

' ..V

100:0

.

nuniber

.1948
(estim'd'
$6.4,600
: 34,85r»

.

$106,107
27,258

a.

1.27

1946 '

47:s

.

$60,314 ■
33,825 1
,
45,489

36,254

8.

1.94

1945

$52,456

26,578

stated in thousands of dollars)

%

1646. v:1947

.

.

$43,275

—

"Critical Yield"

8,878

Banks )^__

3.

Begin, of

1945

•

;v b.

*

;

:

OthOr

Avg.

$517,000
33,611

Banks)

r

dollars)

-;

1

Banks^_~__-__L__

are

' '

•;

Interest. Raid

5.

1.41

2.24

:

All

Total
2. Income Other than Int.
3. Interest lncohie Requir.

3.60

Average

.100.0

c.

7.

Income

of

;'100.0 *•> -100.0

•

--•••■•

.

(%)
('No.

9-7

;

;

:

Wages__

nd

4.

1.07

1.42

Detroit:

a

1.32%
*

.

L

074

5.6

46.1

'■■■-■' Average position (*)

l ]

Salaries'

2.07

0.89%

1.94

1.93

2.18

Average

0.4

5.3

1945

1. EXpOftsW: i

(228)

1.22

1.01

Yield

—r..iiiC

VV-

V

b. Interest

0.3

b.

-

a.

0.2
5.2

'v

Ih Michigan
(cx-Detroit)

In

:

1.06%

-

c.

48.1

'table i

,

<2 29)

s;

v

45.9

Operating Conditions of "A Country Member Bank in Michigan"

-o-

1.72

of
Loans

94.0

49.1

.

0.73

>};.•! d i-

Michigan

0.90%

Michigan:;, (No.

93,9

94.4

45.3

•

0.27
-

Average Loan Yields of Member Banks in Michigan

1.

I

94.6'

41.9

Savings_lj.__

Liabilities

10. Yield

4.15 to 1
5.25 to 1
Vtal Acrounts
4.68 to 1
(x) Capital^ surplus, undivided profits, reserve for contingencies,
etc.
(*) Defined as deposits not covered by cash and United States
Government; obligations.
-

100*0

52.7'
>

Total; Liabilities

to

(Amounts shown

100.0

100.0

,

•

(♦>Data obtained b^ dividing figurestIn Table HI by the
of hanks for the respective years;
»
M:.;.Y;; ,.-:f

16.50 to l

Capi-

to

_

_

10.

Required

Capital

to

—

Deposits

: 0.9

•

1.63

V

$1,916
.572

;

Assets

9ii

25.8

1.0

"v

-•

1.0

Capital Accounts

TABLE VH
Total

9.

9.0

23.6

8.2

2.63

689

$2,578
481

8. All other Assets

e

16.8

1.41

<«,92»)

Realized

12.5

0.45

:'v ; -'i-

•

45.2

_________

Awets

a.
Demand -'
b. Time and

Ranks

i

47.S

r. -t

^__L.

Assets

Total

0.43

1946

:•

18.3

55.9

7. Deposits

'•

%

18.5

58.7

Obligations.

j

Liabilities:

-All Meriiber Banks1--

Realized

$1,227

(100.00)
Gov't Obligations

S.

■

%

-

•

18.1

Securities

5. Other

.1047—;^0X2

(48.44)

$3,197
1,297
$4,494

and U.

Loans

6.

%

%.

-;-v:

■v--■

Gov't

Other

'

1

.

7.

$2,451
(57.67)

$8,592

2.32

;l S--

Required

/

$8,332

|

Realized
1946—

$225

(x)_:i'--

Accounts

S.

4.

916

$4,250

4.-Peircent-

( 5. Total Capital
6. percent

U.

"

$883

885

(100.00)

Deposits

*

$1,566

1,801

a

$8,288

.19.5

_3.

V - 'i-V

0.41

Required
1.

489

r

•

2.

36

471

1.32

i

•• -.

31

437

391

—

•

$1,496

$1,488

0.46

Taxes

Dee.: 31, 1947.—
Total

22

2.67

States
-

$8,067

"Break Even"

In United

of

4,10*.

Liabilities

Assets:

(TMtibal Yields of All Member Banks (of Years 1945, 1946 *n& 1947

Nwmbfcf

3,9Wi

4,001

Cash

"

Income

75

*-3

■

.

;v

Slate

3,826

8,757

(223)

„(222)

0.19

.

4,072

3,147

Distribution of Assets and Liabilities of "A Country Member Bank
In Michigan"

19461947

■■}, (225)

0afch Dividends

*

$7,829

3,i)60

Liabilities

10. Total

2.

Net Curfgnt Gperating Eafhlngs____

?

V

$7,107

Capital Accounts

3.03

TABL^ Vl

t

$7,830

.81

$8,59:.

:

i_L_

____^

and

9.

*

Interest___'_

Operating Income,

Detroit -All Dth;

Michigan

-

81

$8,332

Savings-

—

Demand

Other

10.38

7.

.

81

79;

2,211

$105,000

10.55

Total

v

«

1,960

$8,288

8.

$7,717

$97,000

9.04

,{/
..

1,396

*

Rcalized__f_;_I.__

Id

Actually

Income

Federal

3.882

3,095
753

/

(29.2)

$83,000

6.

■

:

; •

2,876
(28.1)

1.78

Required

income

f4. Interest

.

676
:

b. Time

$10,904
3,187

$10,236

(32.1)

1945

-Member Ranks• v

$7,959

for

than

4,631

618

"

______ —

'

Average;'Loans and-Investments

Operating Income pther

4,413

Obligations-

Securities

V.

'do^ars)

in 'millions-of

'

'

Number vof Banks:

4,127

(27.5)

Operating Expenses

,

'

3,262
(24.2)

6.14

Investments

-

>

a.

2,062

(7o )_____

and

9. Retention-

<P:

Deposits

(20.6)

Taxes_i___ji__

1.

and United States*
• / i' •' •;
'••

CapitalRatios

.

7.

Gov't

$1; 61:

Liabilities:

"(%)__—i

2.

■'•'

TABLE n
■'r'

Assets

8.

covered

not

Assets

Total

15,031

;Period ;(QOO,OQO's nm4tted-)_^__________-___

f (lOO.O)
Capital/ surplus,; unulvidW pWhis; Reserve for/contingericlcs,

(®) Defined

Other

6.

S.

1948

$1,543

24,335

21,085

39,366

Banks__-^,__:i^u___"___--'_

of

Loans

'(100.0.)

-

Loans

'-""Vt945

(88.1)
$608

V

(13.1)

419

(K)0.0)

Government Obligations, ^.«•>

-

(45.3)

_

Banks__L______

Commercial

(80.9)
J
$34

190

•

4.

13,498

Earnings___
Current Earnings,.

"$4,49i J

$225

.

(54.7)

Non-Member, Insured
Percent

of

Average

i■

Percent-1

"Percfent

Out

Number
i

$152,773
(100.0)

'

6,802

2,551

Net

(86.4)

(13.6)

6,355

/

■'/ Yields Required to "Break Even" and Yields Actually Realised
on
Leans
and
Investments, Country Member Banks in
■■>
\-r~
*
Michigan for Years 1915, 1946, 194$

$20,730

(13.1)
$9,736

v

TABLE V

$8,463 : $132,043
$1,273

Other

34,583

Operating Earnings

of

■

-

1947

-

$1,504

1.

Total

(48,4)

v;

3.

10,021

Dividends

Retention

Assets

^•Michigan—
Member

Rate

commer¬

Accounts

(51.6)
6,483

__

Non-Member, Insured

AU

"

Total Cap.;

j,

6,920

;l'erfceht\_._________:
All Insured Commercial
Percent

v

Number

Banks_____

Member

Percent

;i,.y '

U.

10,144

; 27,762

Average
Capital
Acpounts_____
a. Net Current "Oper. Earnings (% )_
'b. Cash Dividends
(%)

"

3.73 to 1

insured

Income

*
>

United' States-^All

4.68 to 1

<"3.75 to 1

Current

Retention

9.

10.

'

2.

8,965

5.

Actually Realized

Tax

Percent

a.

to 1*

Federal

Effective

7.

30,712

14;36

12. Ratio of Deposits at Risk to Capital
ii'

Total
a.

Capital

to

6,829

13,450
7,543

'

6.

>

Assets

11,646

Break

Current Operating Income SubJect to Federal Income Taxes

$87,549
40,000

to

Cash

Net

~

.

(97.34)

$3,197

.

Required

.

1.

17,741

5.

(96.53)

38,463

(x)_2—

Assets_______________

of

Income

.

1946

1945

i

$31,137

*

6,133

Even

Interest Income

$118,261

(100.00)

•

Capital Accounts

6. Percent ;;
7. Cash and

Interest

'■i/.y', ■/■i
4.

Deposits

4. Percent

3.

26,572

(*)

in thousands of dollars)

Begin, ol
Assets:

$27,440

..

9,737
5,980
8,157

:

Operating Income Oth. than Interest

$91,689

1,801

'

Country Member Bank in Michigan*

'

(223)

Other,

i1;:-;'. c.

"A

Average Position

(222)

Paid

b. Interest

\v

;

Wages

of

1947

$23,874

2.

$2,449
i

28,373

-

aiid

" a. Salaries

i,

Liabilities

and

(Amounts shown are stated

1946

(225)

Banks_„

of

71. Operating Expenses

States

Michigan

5,005

•State

5.

All Oth.

Stales

-?

.

Assets

stated in thousands of dollars)

are

capital increases.

TABLE IX

1945

All Member Banks

Number of Banks:1

(Amounts shown

•

erate

banks

'!:

-

dollars)

of

United
.

TABLE' IV.

' "

Michigan

by

experienced

1.88%, or

Earnings and Dividends of Country'Member Banks in Michigan
;
For Years 1945, 1946, 1947

*:\

Michigan

*

'

/
in

fully taxable yield of

10% in 1948

earn

;

Banks

December

are

garding such deductions as are
permitted under the so-called Re¬

to depositors and
alike, justify doing
business without profit, just be¬
cause there might be "corollary"*
advantages -which so often have
proved temporary?

re-examine this field to determine

Capital

fairness

stockholders

:

7.01

14

(1986)

THR COMMERCIAL, &

FINANCIAL CHRONICLE

;

Thursday, May 6, 1948

_

'By SIDLED k. WENDLX*

:■/■

President Hcb^r-Fuger-\Vc"dim Inc., Detroit, Mich.

Mi;. Wendin reviews factors relating to„ use and: value of njoney and
thjQ cqijrsc of interest rates, Points
only wiib increased business activity, unless artificially stimulated
by gov- \i
eminent
Holds gold is best credit basis, and ascribes
expanding credit to increased gold supply and
fiscal policy resulting from postwar
depression feaj;. Says government talks deflation, bitf acts in re1
verse.
Sees possibility of mote deficit spending, and concludes
demand; for money will continue high
and its price wi|l not come down.

With

the railroad stocks
generally attracting an enthusiastic fol¬
lowing in recent months, Chesapeake & Ohio common has
been under

out cr^dijt volume expands

conspicuous pressure.
Last week the stock sold down
to. 38, the low¬
est level reached since the uncertain
days of 1943 when it hit a low
of 33 %. The extent of the market

£

ceterioration

these

of

shares

is

suited

obvious when it is.
considered that
in 1943 Great Northern sold at
s
low of 21% (now 46 ¥2) while

Southern

Railway and

in

combined
Pere

both on the same
regular dividend basis as Chesa¬
peake & Ohio ($3) while South¬
on

of

its

hold¬

action

than

Ohio has been
even

It

liberal dividend

a

was

consistent

a

earner

during the depression

it had

conservative

a

ture, and it had

era,

debt struc¬

Thus it

than 80%

of its

any

feasible.

For

'

longer

'm

-

thing, a large amount
equipment has been pur¬
chased and financed with
equip¬
ment obligations.
Based on the
obligations outstanding as of the

of

the

Opening

Li

1947

share;

a

quarter

For

were

the "full

year

measitre

fi¬

nancial if

tory if
to find out

thirties, and then World

than

more

best.

1948

earnings of

$4.00j a share at

it dees*

Dui;ipg World War I and in the
so-called

subsequent
there

recovery

a

and

in

then

the

late

War

constant

II,
in¬

Presumably

serious.

"

concluded that

..

was

RoM lb McCrary With
Bateman, Eichler 0o.

money system

complicated

what

it

does

-

During the last
has

been

30

7

there

years

tremendous change in
concept of government and
It might be said that prior

the

a

money.

to

World Won-' fe thfc/WQxfifr open-."--v

pretty much on a so-called
free enterprise basis with a
mini¬
mum
of regulation and interfer¬
ence

by government,

While there A

wide

vate banking
qnd -private indus-.
tryl tended to h forge4 aKeaid; ipfr k ^
long" term rising;; tren#;
War I and the

What

the

money

of

man¬

may! do to. alter

agers

the course
oy: what business

governments have little control
do to alter the course oi

money, then we have reduced

problem

tjo two broad

subsequent collapse
brought about new con¬

1921

cepts of control.

You will

remem¬

ber the Federal Reserve
came into

pondiiidnsj oyer which, individuals
or

de¬

supply of

this kind of money which affects
interest rates.

being in 1914

and; it

its. (jevelopment

-

as-

thpught

was

&

•

dominant

r

factor in tne
money system would
prevent
all
future
depressioqs.

our

of. During the Twenties the cpncept
Immediately then, the of central banking was
growing
point will !be raised in your mint*; all ovet* the world; arid
areas

discussion.

.

£©$?£■ just* how, far; can goyerpr;
mentsi baij!kers or, individuals in-

banking
felt

ceritjqal

.

making its influence
and more.
The : 1929

was

more

ihat no .one fluence the course of
money, and stock market crash and subse¬
expect tp understand
no^ business con,-: quent depression accelerated the
It is probably true to
say that ditions determine the course of trend toward more
managed econ¬
so

could
it.

our

does

may

this would be crease in the regulation of money,
sufficient to justify maintenance and the techniques of
money man¬
Of the regular dividend rate, but agement tended to obscure basic
any sizable dip below that might fundamentals.
Many people have
be

that money

-

prospective

fluctuations, in", the
economic cycle
nevertheless, pri¬

~

Course of the Money Mfarkpt

agree

and

mand in relation to the

were

«'•

prosperity of tiie mdney,

period,

eyident

was

The

namely,

,

depression

of value;

present

ated

ever

If for sake of argument we then

we are

why money does what

subsequent

has

1

his¬

it

as

tjiat

s o m e

pertinent

-

world

does not imply that
regained as a. constant

.it

and

year

vyqs, put

Highly regarded

as

throughout the

priate ;toj: re¬

Sigurd R; Wen din

safest haven of capital

dollar^ is

can:

appear appro¬

the company reported
earnings of
$4.44 a share. Barring a prolonged
coal strike again in June the
prospects-from here on pQint to year-

full

far

prob¬
lems it would

$1.39

1947

back-

the

partial

a

yardstick,

money

apd- still has the best money sys-:
tern of any country in the
world,
and that tbe value of the Ameri¬

money

view

the

be in¬

can

indicating

as

of

is sliil the

based.

a

this

one sense

even in this country.
It should be
emphasized that the United States

sys-

ground

share earnings declined;; to
$0.54. Pro forma earnings fpr the

opening

is

In

terpreted

order -'to

have

op¬

more

one

new

tern

:

—lil—;

•

failure

our

monetary

lj948 quarter

per

any

earnings,

in cash dividends.- Under
present
conditions it is doubtful whether
such a large ratio is

up

which

ualize

standing. For a pe¬
riod of ten years
prior to merger
with Pere Marquette,
Chesapeake
& Ohio had
paid out an average
more

In all,

expenses' were

bank

money, and
the gold upon

p

$10

For

•

•

time.

arouna

deposit

earnings
improvement.
Nevertheless, it is difficult to vis¬

no

was

road's credit

of

largely

the

to-year

maturity prob¬
possible to pay
out a-large proportion of
reported
earnings without endangering the
lems.

for

million, and this was
only partially offset by a cut of
some $4 million in
-income taxes.

.

payer.

off

was

erating

of

Chesapeake
& Ohio stock has
naturally en¬
gendered some anxiety as to fu¬
ture dividend
policies.
Traditionally
Chesapeake
&

Ohio—

&

revenues

topight, will
commonly termed currency in chv
'

much around the
money in your pocket,
culation. but'»:■•
'' r>
■■■■'
*■'
V.

so

.

for the current year.

ings of stocks of other companies.
recent

revolve not

Even in March,
only about 13%
Maintenance costs, however, were
materially higher in the 1948 pe¬
riod. Also, the transportation ra¬
tio jumped from 33.9% for the
opening 1947 quarter to 39.5%

instances,

through distribution

,

like 1947 interim.

apeake & Ohio for the past
eight
years has also
paid extra divi¬
dends in cash or, in two

The

Chesapeake

Marquette

gross

$4 basis. Ches¬

a

v

The word money represents a most vital
subject which everyone should,
try to under¬
stand and to
constantly review. Mooeyin the broad sense, in our discussion

Despite the adverse influeqpes,
reflecting higher rates,

are

Pacific is

activity

gross revenues for the first quar¬
ter
were
almost
identical
with

commons both sold, at 15%
(now 45 and 54, respectively).
Great Northern and Southern

ern

reduced

some

and ip part

Southern

Pacific

Railway

in

number of, industrial plants.

a

ever

alsowhetlferq^

it would take

a

superman to

have money, or;the reverse, It has al¬
$9, all-seeing comprehenriye Ain- ways been
my well considereddprEtandirig of
<ier; opinion that the economic or busi¬
taRs of a managed
money market, ness conditions would
eventually

and in This country, fbfre
beip& the. Reconstruc-f ^
tkin Finance Corporation with its
F^pjcx/i, Chponicle)
amount to $9,006,000
per annum.if
LOS
subsidiary corporations, and, then
ANGELES, CALIF.—Rob¬ which in turn
In addition, serial
implies an under¬ be reflected iiv
refunding and
th^ money market in an effort to, prevent abuses of
improvement mortgage bonds fall ert B. McCrary has* become asso¬ standing of all those forces which
and that money is not the
master^ earlier periods, and/or to encour¬
due to the rate of
$1,380,000 every rted " with Bateman'* Eichler & inlluence money.However, the but, the
servant ,o£ business and, in¬ age the revival of business, addi¬
year.
Equipment and roadway
thes.s for our present
argument, dustry, ,anfi of tjbe people,
How tional governmental corposatiQiis
depreciation and.. amortization
if: you will* Is, that; everyppc! can could it be otherwise if one
of one kind, or another were cre¬
keeps
charges last year were less than
and must understand a
few basic iirmind that the fundamental con¬ ated, In
yoyr own field you of
$5 million in excess of
the com¬
fundamental relationships if we cept of
money is that it merely i$ course* are familiar with
bined annual maturities. Consid¬
Fpdr
are., to preserve our democracy apd
a medium j of exchange, and' thus; eral Housihg Adniinistration, the
ering the normal property needs,
the, ideals for which we stand.
reflects in, a sense, business con¬ Home Owners Loan
and additional
Corporation,
equipment no\y 09
It
is important
to
remember ditions.
You of course, are all the Federal Home Loan Bank, and
order, this overage, equivalent to
that money in: itself
others of that type.
familial- With such statistics as
$0.64 a share, can
The basic
hardly be con¬
Money throughout the ages has bank debits and other financial f undamental
sidered as any cushion for com¬
purppse Of these orend of last

yeaf, serial maturities

fSnppia]

Ift THIS

.

omy^

camp, into,

.

been

mon stock
dividends.
Moreover,
regular bond maturities this
year

its

excess of $2
million. Net
working capital at the end of Feb¬

ruary
down

amounted

to

$9,350,000

from

earlier.

<:

Earningswise,
in

a

year

Chesapeake

Ohio has been off to
start

$12)246,000*

the

a

current

&
The

opening months were influenced
by the very severe weather con¬
ditions.
tures

Storms and low
tempera¬
interfered

seriously

operations

costs.

and

with

involved" heavy

Moreover, weather condi¬
closing down
factories, particu¬

tions resulted in the
of a number of

larly in Pere Marquette
territory,

for

a

time.

March

by

This

the

strike which cut

fic.

April

was followed
in
bituminous coal

deeply into traf¬

results

will

also

Robert H.

Coy

McCrary

formerly

Special Securities

Spijirig Street,

? Mr.

McCrary

Vice-President

Crary, Dearth
Moines.

&

-was

of

Mc¬

;

New York 4, N. Y.

Telephone BOwling
Teletype

NY

Green 9-6400
1-1063




common

data

whiclji would lend consider¬ ganizafiob15

able weight to this conclusion. Yet
it must be recognized that in a

Cameron

Co.,

K.

Reed

York

name

with

Inp.,

of

United

Herrick, Waddell

55

Liberty

City,

has been

rick, Waddell
The

branch

&

and

Street,

the

firm's

changed to Her¬
Reed.;

company has just opened

office

in

Chicago

at

a

332

South
Michigan Avenue under
the management of
Paul Herbert.

special

firm, died
an

Whelen

partner

Parkinson,

in

Boston
at

of

what people do fp .it.
When
ppople do too much to money it
loses its value as a
yardstick", and
barter of

one

form

or

the

inve

age

s

t

for

contracts, which is an¬
way
of saying law and

other,

order, and confidence
mental

policies/

in

Please

govern¬
note

the

plural because policies other
thap
fiscal
policies
alone
influence
money.
If you will review the
full or partial failure of
money in

It

is

volume

of 45 after

and fall
under

fundamental th,at credit
anjd business activity rise
together. It is impossible

our

government

It is

was:

present

a common

today

as

it

was

at

some

as

in

saying
much

previous

*An address by Mr. Wendin be¬
fore the Detroit Mortgage Bank¬
ers

Association,

April 29, 1948.

Detroit,

Mich.,

or

at

money

low

could be kept at relatively

levels it

would

induce

to

utilize

that

ness

men

busi¬

money.

Tho results, may indicate an an¬
swer to the question of
hqw fpr
can a government
influence fun¬
the prospect for
tial profits were

making substan¬
relatively small,

the Roosevelt Administration

was

using business men as
whipping
boys, and it was considered in¬
famous to make substantial profits,
Business did not take sub¬

present! type of credit finane-stantial
advantage of the easy
ing to havp low credit volume and;
high business activity, or vice nioppy readily available. It is like
If

versa.

business

optimistic

come

the

then

men

and

be¬

business

is

good, and they consider expansion
plant and sales, the demand for,

of

credit will increase, and naturalh
the effect! on
interest rates, all
other

things being equal, will be
for them to rise. During the war
years
we I were
in a, period of
great

business

not

in

capitalistic system with

its

varying in degrees as to its lack
pf law and order and confidence

pattern

:

Acclivity "

controlled

baste

that money is not worth

t

Yalamq and Business
I

various countries of the world
you
will find that the

&

m e n

illness of several
months.

spect

pvery case.

Greenough,
Hutchins

urally raises, the, question of—can
it
happen here?- Satisfactory
money hps as its, background re¬

was to provide either
indirectly credit money
relatively low cost. It was the
policy of the government; rightly
or
wrongly, that if the price of

djrectly

damental conditions. At that time
Credit

another de¬

money system, which in turn nat¬

Funds, Incorporated, ,has become
associated

governments and economic condi¬ price of money, or as it is more
tions.
History shows that money comhipply i known, the interest
largely does what it does because rate.

European countries to realize that
something went wrong with their

Herrick, Waddell, Reed

Malcolm
WAKAHTEEP 1AILR0AD STOCKS-BONDS

a

-

Malcolm Greenough Dead
25 Broad Street

as

Co., Inc., of Des,
velops. You merely have to look
at the recent
experience of the

*

New Firm Name Is

New

Bonds

South

Exchange,

&

Guaranteed Stocks

453.

members of the Los Angeles Stock

pre¬

sumably be adversely affected by
the continued
stoppage which re-

exchange, and

ha^, been ppset. by the ness. It then becomes obvious that
manipulation of kings, politicians, changes ip mpney will pffept the

very poor
year.

is

money

;■:> 'v-:.

./

value

yardstick in measuring wealth and
as a convenient
way of measuring complex civilization and monetary
business transactions of ail kinds; syst&m?
changes in money do have
From a long range point of view an important influence on busi¬

in

are

medium of

a

great

most

of

under

the

a

expansion,

credit

came

j government

set

but

through

financing

pattern of rates, and

through .private

sources,

and

in the post war period the further

expansion
but

the

of

industry

continued,

of credit changed

source

from the government to the bank¬

ing structure and the capital

mar¬

ket. These factors are mentioned
to emphasize the fundamental re¬

lationship
credit.

fidence

between

Credit

in

money,

a

and

business
sense

it

is

is

and
con¬

largely

old story of
leading
to; water but not being

a

horse

able

to

make him. drink.
:

Gold the Best Credit Basis

Further

analysis of; conditions
prevailing in the thirties bring out
ttya.t deficit financing was con¬
stantly the order of the day, and
increased ^ the
supply
of
bank
available for lending.
Be¬
of world uncertainty during
period
so
called' "smart"

money
cause

this

fleeing to

money was

and much of

this

a

safe haven,
came to

that money

country with the subsequent

result

that

gold

into

came

this

country at an increasing rate, es¬
pecially after we * devalued the
dollar in February
of 1934, at
which
the

time

world

in

we

"boys,

will pay you $35 an

(Continued

effect

come

on

said

on

ounce

page

in,

to

we

instead

37)

Volume 167

Number 4696

THE

Holds Tax Gut Will

Spur
Dividend Payments
J*

K.

Lasser,

York

New

ac¬

countant, also points out recent
tax

measure

of

sion

lead to

may

small

corporations

to

able income tax reductions in the

brackets,

upper

the

fall

tax

no

The

this

of

dependents, will
than

greater

corporation

earning

proprietorship

that

pay

on

$5,000

less

would

"A similar and

vantage is held

Bond Glub Field

have

porations should
into

by

the

the

partner¬

of the Committee
ation
of

of

the

N.

Y.

State

conver¬

May

Oliver

Ac-

.'

Newbert

has

&

Co.,

618

South

will

oi

announced

Exchange:

financing the company's eon-5program.
This program
for estimated expenditures
of $13,500,000 for 1948 and $15,T
000,000 each for 1940 and 1950.
calls

for trading most of
terminate with a dis¬

open

tribution of

its

afternoon.

assets late in the

The

will

floor show

on

be

dinner

a.

tournament

hundred

bond

and

the club house ter¬

public utility engaged principally
in the production, purchase, trans¬
mission, distribution and sale ol
electricity and in the production

Offers

day

the start of other attrac¬

see

Halsey,

Corp.

swimming

,

fair,

diving

exhibitions,

and

5

1978,

interest.

&

minor

Gas

bonds,

3%

on

a

properties

of

bid

in

rendering

100.3299,

it

provides electric

ice,

both,

or

or

within

ball,

Net

proceeds

of

to be applied

are

the

of the State.

area

law

before

300
of

members

the Society at

meeting

a

at

the

Engineer¬
ing Auditori¬

29

um,
39th

West

Street,

New

York

City, Mr. Las¬
said that another result of the

ser

rill

income tax reducaons will, be the
conversion of a large number of

closely-held

small,

corporations

to

unusual dividend

'

*-

>

M ■M

iVl

IfcfttVuit.'R'S
>';

the

of

.

partnership oy proprietor
ship form of operation,
Mr. Lasser based his prediction
increases

on

the* fact that u factor sometimes
governing dividend rates is the
of

amount

large

income

II

I
M

.

obvious fact," he said,

an

'

v.'*

fy

'

"It is

|ft L

Stock*?

%holck-rs c%n keep after taxes.
"that dividend payments of

t-l

a cor¬

poration

predi¬
major

cated

on

directly
much the

be

can

how

stockholders

will

left

have

M

over

after taxes. When personal income
tax

rates

sible

high,

are

stockholders

prefer

controlling
have pos¬

to

dividends plowed back into

the development of the company.
But when

income tax rates drop,

high

dividend payments

more

natural.

"Corporations

will

ularly
conscious
stockholder need

:

be

this
for

become
partic¬
of

year

funds

be*

cause; of..inflation.
Greater divi¬
dends' are bound to follow. .

"One reason for the low divi¬
dend, rates since 1941 is. that it has
cost; the

individual top much tax-?
Wise to; get money. The overall
percentage of dividends' to profits
in

1941

it

was

only 48%.

was

even

less:

little

For

1947,

39%,
according to Department of Com¬
estimates.
a

1948

appears

STARTED IN 1884 asl ifc small bone-grinding

to

the

be

righ.t year for high dividend5.
again become profitable

has

COMPANY is

it
to

ducer?

law, with introduction of
community property rule
.

the
and

lowering of surtax rates, has re¬
sulted * in tax reductions of I as
much as $16,000 in the $100,000
income

v

f

CHEMICAL

see. a

west

of the

Allegheny

Mountains*

The

again

in

1919

V-:v
V

the rieh

to

of Ohio, Indiana/ Illinois/

areas

:;v:

*'

a

rock

major

■

'

•

commercial plant food,
could

tivated

feed

npt

pro¬

without which this na-

itself

with

its

present

used

in

-

ingredient

making
of

cul¬

research

for

methods

and

the

better

manufac-

dependability

of

its

products/contribute to the fundamental economic

"Superphos¬

commercial

Federal's

acreage.

fertilizers, its constant improvements in

Kentucky, Tennessee, Alabama and Mississippi.

phate,"

•;

Company distributes fertilizer in-

farming

Phosphate

at Mt. Pleasant,

processed

Fully one-fourth the food, feed and fiber

ftion

At present the

Federal in Maury and Wil-

and

.-v-v..

j. ,.w>

>

counties

duction of American farms is directly attributable

ian, Mississippi and Columbus, Ohio.
../

is mined by

Tennessee,

tucky, Nashville and Humboldt, Tennessee, Merid¬

;V.

liamson

J luring

terrific

surge in dividend payments. - The
realization that income taxes may

raised

v

of the oldest fertilizer pro-?

bracket, for example.

"This fall should

be

one

FEDERAL

Company operates large plants in Louisville, Ken*

make money. The new income tax

v

Louisville,

over

merce

"But

tilizers,

plant in

fer¬

soundness

of America.

because

of the cost of the European recov¬
ery

gives

program

petus

to

paying
thisr year/'

further

im¬

high dividends

Another

Southern

Urging conversion of small cor¬
to proprietorships
Mr.

em

porations

advertisement

industrial

industries,

is

in

the

scriesihy

Equitable Securities Corporation

development /'Equitable has

ready,

to

'do

its

part

in

helped

supplying

to

finance

others

with

featuring

many

South'

capital

funds.

Lasser pointed out the tax advan¬

tages wfiich the latter .form
holds.

]

now

..V1

"In the last six or seven years,"

NAS

HVILLE

said, "numerous small com¬
panies changed from the proprie¬

DAL

tor to corporate form because

BIRMINGHAM

he

cor¬

porate taxes for them were lower
than personal income taxes.
Un¬
der the
reverse

of

new

-

cases.

"A

NEW ORLEANS

MEMPHIS

income tax law, the
great number

EQUI TAB LE
Securities Corporation

YORK

HARTFORD

GREENSBORO

CHATTANOOGA
AND

JACKSON

BROWNLEE O. CURREY, president

.,

322 UNION
sole

$55,000
which

K NO X V ILLE

NEW

is true in a

'

;

LAS

proprietorship earning
year, lor instance, in
the proprietor is married
a




STREET, NASHVILLE 3, TENN.

gas

about

Fed¬

new

eral -tax

entirely

located

are

'

soft

steam,

within the State of New York, and

the

of

extent

heating service and bus transpor¬
tation
service.
The
company's

and

Award

made

was

sale

100.75%

at

purchase and distribution and
of natural gas and manufac¬
tured gas. It is also engaged to a
or

Inc. of¬
$5,500,000

Electric

mortgage

due

bonds

tournaments, jockey

Co.

&

May

State

first

series,

shoe pitching

county

Stuart

publicly
York

accrued

club,

Utility Issue

enlisting

New

scaled from 103.75%
at special prices

and

ranging from 100.80% to 100%.
The company is an operating

race.

will

100%

to

Club,

men

bonds will be redeem¬

new

able at prices

Winding up the day's

activities

tions, including tennis and horse¬

Spring Street,

|

\

been

Club

thereafter through a crowded

been

1

has

Bond

be

the day and

fered

members of the Los
Angeles Stock
':

will

get under way at 8 a.m. Each hour

ANGELES, CALIF.—
H.

golf

several

Chronicle)

J

Speaking on
the effects of
the

Financial

the

Hollow
Country
Scarborough, N. Y.

added to the staff of
Noble, Tulk

|
f

on

4.

.

The

?

ants,

stated

LOS

to

Day

Sleepy

Noble, Tulk & Co.

(Special

Society

Certified

Public
count

York

A

With

struction

-The Bond Club Stock Exchange

Field Day Committee. The outing
will take place on June 4 at the

sion."

Federal Tax¬

on

to

versions.

by Charles L. Morse, Jr., Hemphi!, Noyes & Co., chairman of the

cor¬

immediately look

possibilities of

Day .of

New

year may see a "terrific

surge" of
corporate dividend payments, J.
K. Lasser of New York, Chairman

.hole-in-one contest and other dL

A schedule of sports and events
vhich will feature the 24th annual

greater ad¬

Any small family-held

CHRONICLE

FINANCIAL

.

Field
even

&

Events Listed for

a

this tax advantage
up to earnings
of just under
$70,000. *•' : ; ^

ship.

I

indirect result of the siz¬

an

a

conver¬

partnerships.
As

and has two

COMMERCIAL

TWO WALL STREET, NEW YORK 5,

N. Y.

serv¬

35%

16

(1988)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, May 6, 1948

Says uShots~in-the-Arm" Delay Postwar Depression
(Continued from page 7)

by the EcoCooperation Act of 1948 is

jmic

of the

>ne

iie

(4) The changes in the budget

provided

irogram

strongest stimulants to

national

economy

being

now

ueing applied, he points out,
A
partial list of the requirements of
.he program for the

current

year

'.re

557,000,000. bushels of grains;
161,000 tons of fats and oils; 38,-

position
ment

of

the

Federal

happen

finished steel;

cotton;

54,000

freight

609,000 tons of

trucks

and

possibility
expansion,

increases the increase demand by the price re¬
additional
credit duction because demand is
already

of
the

economist

points very high, he points out.
out.
Some Treasury
authorities,
The steel companies might have
he
declares, estimate that the done
better, possibly, to use the
government may suffer. a cash
money, now being
turned back
deficit of $2,700,000,000 for the
to steel consumers in the form of
riscal

1949

year

In addition to the amounts be¬

there

grants

are

being

countries

the

instead

of

the

lower

not take into account the

''T

.;

re¬

ex¬

feels.

substantial

foreign

expenditures in occupied areas, he
says. The Act provides that China

exercising

aom

their

The
and

Turkey

are

getting $275,000,000 in

aid.

The

vide

International

Children's Fund has been granted
$60,000,000 for child care
and

it

that

the

addition

eral

banks

sition,

defense

about

to

toward

voluntary

credit

mand

for bank

and

tax

present

thinks.

time,

an

offer
to
.

of

buy
;

is not,

these
any

.
.

>

and

is

shares

of

such

ume

of

crops

sufficiently to

would

become

possibility,

he

in

the

situation,

Prices

to

the

National

ference
new

Board,

this

probably only
that

the

as

experi¬

an

steel

The

steel

companies

wanted

to

against

the

under

not

to

no

circumstances to

or

sale

as

The

Offering

a

solicitation

offer

is

made

Prospectus.

that

be construed
an

only

construc¬

the

increase.

constructing

new

plants and equipment and the cost
of residential construction
more

in

than double what

are

they

now

were

1939.

Dealer-Broker

they

what

see

of

reflect
of

themselves

criticism

tried

the

have

may

protect

Con-

reached

Over-all

year.

cost

could

as,

(Continued from page 8)
pany, Penobscot Building, Detroit
26, Mich.
.
7 ' v. ;
.

.

,,

.

by

,

Nekoosa-Edwards

'.V

New

77

report

Paper

Loewi

&

Co.—

Co.,

225
East Mason Street, Milwaukee
2,

T V:

Oil

—

Exploration

Comstock

Co.

—

Data

&

—

La

Securities

Corp.,

1420

Walnut Street, Philadelphia 2, Pa.
Also available are data on DuMont
&

Value 85

per

Laboratories, Seminole Oil
Gas, and El Paso Electric Co.
National

Company
Quarter

Price $11.00 per Share

berg

of

Bank

New

&

York

—

First

Analysis—C. E. UnterCo., 61 Broadway, New

&

A. O
the

Prospectus

several

prospectus and others

as

may

may

be

underwriters

obtained
named

in

from
the

lawfully offer these shares

in

compliance with the securities laws
of the respective states.

Smith Corporation—Mem¬

orandum

on
interesting speculation-j-Bendix, Luitweiler & Co.,
52 Wall
Street, New York 5, N. Y.

particularly because
the data which

are

Courts & Co.

in

under

the

Cohen

j

The prescribed annual
balance sheet and
hidden reserves and

profit and loss account
require specification of any non-recur¬
ring items contributing to profits, but still permit the
withholding of
gross sales and profits figures.
It is noteworthy that the British have
plagiarized our proxy rules to the extent that
one-twentieth of the
voting rights may use the company's
proxy machinery to circulate
their own proposals, albeit not free of
charge.
.7-7
As regards directors'
remuneration, Britain's 1947 Companies'
now bar

Act provides that the
aggregate amount paid to all directors shall
be shown, rather than to each
individual (in accordance with over¬
all British policy
barring disclosure of the individual's affairs). In
showing only the total cost of management to the
shareholders, this
follows our provisions for annual
filing with the Exchange under
form 10K than

our

more

minute proxy requirements.

Taxation and Management Compensation
It is quite

interesting that a new provision in the British Law
specifically makes it unlawful for a company to pay a director
remuneration free of income tax. * This
brings to mind the growing
American practice of
including in annual reports demonstrations of
now

burdensome effect of

our

generally high tax rates

May 4,

1S48




on

managers.

corporate

To the writer the

propriety of this in the report, presumably as
a
(needless) "guilty conscience" defense of salaries, seems to be
questionable.
In the first place, the nation's
general tax policy as
set by the
Congress, although extremely unwise, particularly in its
steep and high progressive rates, is a matter
lying entirely between
the

taxpayer and

stockholder.

In

the Treasury and is no material concern of the
the second place, the calculations of the
impact of

on salary
are, acknowledgly, partly theoretical because of each %
individual's other income, exemptions, etc.
And in the third and

more

practical place, the extension of partial exemption from tax
by
as a soporific
keeping the considerable body
of corporate management from
waging their full and needed fight
with the Congress, along with other sections of the
community, for*
the stockholder will act

relief from confiscatory tax burdens.

%

,

•

,

New York

Minutes of the Annual Meeting

„

In the

circulation of reports concerning the annual
meeting, we'
again have complete non-uniformity, as there is on the other side
of the Atlantic.
In Great Britain the chairman's formal
speech and
the report of the
meeting is often published by paid advertisementsand/or, less frequently, by circulation to the shareholders.
Presently
they seem to embody everything from company results, to dividend:

policy, to inflation, to reflections on the international political situa¬
tion, to outcries against the "steam-rolling" nationalization policy of
the

Labor

Government.

Angeles 14, Calif.
Wisconsin Power & Light Co.
—Analysis—Ira Haupt & Co., Ill
Broadway, New York 6, N. Y.

our large companies issue
quite detailed reports, taken
stenographic transcript, of the happenings at the stockholders'
gathering. The general adoption of this practice is being vigorously
urged in proxy solicitations by some minority stockholders,
notably
the Gilberts, on the ground of the
general inability to be present at the
meeting.
As the cost of such reporting is quite negligible ($2,500
versus $18,000 for the annual
statements of one representative com¬
pany), there would seem to be no great objection in cases where a

from

a

reasonable

amount

of

interest therein

catering to publicity-seekers could be
I

of the above-mentioned diffi¬
legally prescribed by the SEC,

Some of

Sterling Electric Motors, Inc.Analysis — Maxwell, Marshall &
Co,. 647 South Spring Street, Los

Atlanta

of vital data which

interesting to note here that despite Britain's age-old
laxity
financial
regulation, the recent revision of her Companies* Act

Trust

York 6, N.Y.

of

pictorialization, the inclusion

to the writer that the
report should not be the place for
salesmanship. Instead the text should as
objectively as

seems

Share)

Public

such

But,

can

taxes

Portsmouth Steel Corp.—Data—

Buckley

only

and

relationships.
While these facts are con¬
tained in the proxy statement in full
detail, when proxies are not
the stockholder is
dependent on communication with the
SEC if he does not reside in
Washington or near the Exchange; and,
in any event, he cannot
get the full remuneration information there
from the Commission's form
10-K.
Surely, at the least, companies
which do not solicit
proxies but get out voluminous annual stockhomers' reports, should
supplant some of the surplusage therein with
thp rlala about
msnaeement and directors which
they would have been
obligated to distribute with the proxy statement.

the

offer

Common Stock

Offering

as

actually omitted.

our

Recommendations 7

GENUINE PARTS COMPANY

the

one

Britain's New Widespread Reporting

an

high of $1.41 an
hour during the first three months
of

were

Industrial

also

Co., 231 South
Salle Street, Chicago 4, 111.

of

the

It is

points

all-time

costs

150,000 Shares

Copies

On

real¬

a

Wisconsin.

(Par

.

the

supply

"statistics."

solicited

exports, he says. These
easily be absorbed if
current plans for exports
during

immediate

distasteful

these voluntary reports
going direct to the shareholders should
carry
the important portions of that
statistical information".
The minimum
would include adequate
summary of the earnings and balance sheet
items and the full data
about directors' stock
ownership, remunera¬
tion and other corporate

can

over

him

Pertinent Data

problem, he

major

well

In any event,
culties in getting

inflation

the next 12 months become

j

as

prospectus

agriculture, the

the

spoon-feed

possible relate the good and bad
elements in the past
year's developments, the bullish and bearish factors
in the company's
future, citation of some of the
imponderables, and company policies.

of

crops

f

The

had

the

of

of

to

glamorizing "new look" away from the conventional
ICC-type
railroad statements
exclusively devoted to pages of accountant's
figures, has undoubtedly been needed. All polls taken, as
previously
cited by this writer, have shown a
startling lack of stockholder inter¬
a

is humanly

emergency re¬
quirements abroad as well as do¬
mestic needs and the normal vol¬

to the

companies
lowered their prices, he believes.

shares.

itiealls of

care

tion

ment

he

for

take

reduced

was

p"f;/v.:.

This advertisment

field

recently will probably be raised
again, the economist thinks.
It

some

the

the

hand,

deep

which

of

ity, but should the emergency
of, requirements abroad be
reduced,

reduced dedue

real

very

has been increased

by the

uncertainty will be less im-

Steel prices which

of
the
saving will
probably go to relieve the acute
equity
capital
situation
which
at

to

a

production

■

less

by those
with incomes below
$5,000, it is
likely that the tax saving will be
used mostly for
consumer
pur¬
chases, the economist feels. How¬

exists

In

de¬

Treasury

limitation

States

price

the

extreme over-stuffing, apart from
antiquated habit of under-statement, is the effort to
stockholder apathy, and to use it as
sugarcoating

Committee is quite stringent on
these phases of
uncertainty regarding the future out.
reporting.
Whereas in the past only a bare minimum
of business, the economist points I
of informa¬
Production costs are high for
tion had to be filed with the
)ut. However, during the
government's Registrar of
Companies,1
coming the
manufacturing industries, he now the directors' report is required to be mailed to all the
share¬
months, voluntary limitation of
says.
Rail rates are continuing ! holders 14 days before the annual
credit by banks and reduced de¬
meeting, and the balance sheet 21
to increase. Wage rates,
according days in advance thereof.
mand for bank credit due to busi-

saving will be enjoyed

ever

Fed¬
:

further

with

It

states.

Association

credit

.

the

of

Bankers

Treasury income nortant factors
by nearly $5,000,000,000 a
le thinks.
year
beginning May 1, 1948, is so de¬
Steel
of

for

remains

ag¬

"loaned up" po-

a

reduces

bulk

he

$438,000,000 since
but this has

bank

;7>
(3) Since the tax reduction bill

the

the

have

encouragement

American

$3,481,000,000.

not yet certain how

hinks.

that

sell,

of

System

them closer to

creased
military demands upon
American industry are
likely for
he months ahead, the economist

signed

have

surplus funds to pay off matur¬
ing government obligations held
by the banks, bringing some of

peedily the plan will be dealt
With and, if put in
force, just how
ast
the
spending
would
take
place, it does seem clear that in¬

Which

to

the first of the year,
been due to the use

estimate

the

who

for

reason

from the glamorous

not

sure

Reserve

creased

66-group

to

program would cost

Though it is

a

those

bonds

member

ng

his

of

expansion

Commercial, industrial and

(2) Military expenditures are
expected to be increased by an
additional $3,500,000,000, the econ¬
omist points out. Defense Secre¬
tary Forrestal
recently outlined
1
sharp increase in the military
program,
including
Air Force.
It was

will

credit

overcome

goods

United

the

of

the former elaboration.

main

reaction from the

is

production

over

The

understanding of the simplest rudiments of company
on the other hand, extreme
jazzing-up is out of
be definitely harmful.
While the "hot-air" can be
recognized by the professional analyst, the uninitiated
may falsely infer

total resources of
manpower and
equipment have apparently been
utilized at about the peak of our
present "capacity to accomplish,"
with the present
strong demand
for goods and
services, the pres¬

ricultural loans of weekly report-

/T

.

the

for

government
points out.

feeding. The United States Army
will spend $1,000,000,000 in Ger¬
many.
Trieste is to get $20,000,000 in aid.

funds

fication

order

expanded
appreciably
during the last 12 to 15 months,
the economist points out.
Since

mechanism,
he
states.
Under
present practices, the Federal Re¬
serve System is compelled to pro¬

economic

total

(Continued from page 5)

entially suggesting that the stockholders might prefer such
simpli¬

est

excessively high at

services in

has

function of controlling the expan¬
sion of credit through the reserve

$338,000,000 in eco¬
nomic supplies and
$125,000,000 in
military assistance. Greece and

are

Observations
7

statements.;

present, he thinks.

traditional

is to receive

.

the

It cannot be said that steel

earnings

government bond market at par
prevents
the
credit
authorities

with

.

though operating at ca¬
pacity, is not meeting demand, he

"7'7; '

'■

along

present,

It is commonly recognized
the present pegging of the

to

United States

as

(5)

tax

that

very

made

well

as

penditure/

pro¬

steel,

American economy as a whole at

military

increased

nor

prices, to expand capacity

because

original budget which did

duction

ing sent abroad under the aid
gram,

in

16,000

cars.

they

likely

very

140,000 tons of coal; 1,824,000 tons surplus of $4,800,000,000 estimated
jf

if

cut their prices.
They could not have expected to

Govern¬

Zonolite

Company

memorandum
ment

—

— Analytical
Barclay
Invest¬

Co., 39
South
Street, Chicago 3, 111.

La

Salle

is

evinced.

met

The objection to
by keeping the question¬

ers'remarks anonymous.

-

777

At any rate, under present practice, data about
the annual meet¬

ing comprise
procedure.

but

one

more

element

of

non-uniform
•

and

confusing

Number 4696

Volume 167

N. Y. Stock

COMMERCIAL

THE

&

FINANCIAL

Exchange Strike Ended

terms

on

Executive

the New York Stock Exchange on
April 30 agreed to return to work on the basis of an agreement out¬
lining the terms of a new contract. This was announced in the fol¬
lowing statement issued jointlv bv Emil Schram, President of the
New York Stock
Exchange and^
both

P.

Boylan,

members

"We

employees:
glad that the strike is

are

and

over

Chairman, to

and

happy to welcome
employees back to the Ex-

our

are

A

A

||®«e 9

"■ !#■ lloaO €£ tvi
p

*

i

-iiiA

„

,,

■

.

"The

Exchange
*-xcnange

the
the

and
and

Union
Union

suggested that my subject be the outlook for foreign trade, with particu¬
lar reference to
export. The political, social and economic morass that encompasses all of
Europe, Asia, the Far and Near East, one might say South America and the whole world
makes,

.'vv

to

..

the

C. Haas &

New

with

York
in

offices

York

to

a

part
in¬

on

rank

tion

P.

Robert

Schram

Boyla

York

signed

of

memorandum

a

agree¬

this afternoon outlining the

ment

terms of the

contract. Within

new

few

days, the new contract will
be signed.
It will run until April

a

30,

1049.

Major

clude:

provisions

in¬

>

Bond

Leighton

signing of

sign if they wish to.
there

will

the

Thereafter,

had in

we

our

"mainte¬

same

of membership"

nance

that

be

re¬

provisions

is

even

or

and

know

we

that

the

pay

(Special

to

LOS

650

Flesher

W.

have

H.

Carter
South

Flesher

Financial

was

reasons

become

my

affiliated

Corbrey

&

The

best

propa¬

to you to decide.

opinion and

far

as

as

world, the

time
and

years

usually

is.

strike

Co.,

Paine, Webber, Jackson & Curtis

everything that the

tury

stood

for.

against

trade and free

as

We

19th

have

$3

terminated.

was

In

Europe

undernour¬

created the communists of Europe.

& Co.

This announcement is neither an offer to sell nor a ^solicitation

Sal¬

knew it and against

it, and against
sanctity and freedom of the
individual, and the Christian con¬

the

cept of
are

still

the

dignity of

in

the

man.

We

of

this

process

revolt and

have its

next few months.

All that

The

of an offer to buy any of these Debentures,

offer is made only by the Prospectus,

and

$74 will be increased $4 a
Salaries over $75 will be
Increased $5 a week.

week.

"(3) Employees at all times will
handle

the

business

of all

$100,000,000

mem¬

bers and member firms, regardless

whether

of

have:
or
;■

the

Union

claims

dispute, with any

a

firm.

,

to

Southwestern Bell Telephone Company

jnembe£

'

.

«'(4) The volume bonus will be

continued and

a new

volume bonus

Thirty-Five Year3Vs% Debentures

period will start at the beginning
of the pay week in which the new
contract is signed.

"(5) The Exchange has worked
with

out

Union

a

the

cooperation

of

Dated May

the

for the generous
employees
whose

program

treatment

of

u

Due

1,19$

'

i

„

«

Interest

,v<{

s

i

|

*

l,r

V

+

1* v•}

*-•

,

„_> •

,

^

-

<

/«

x

v

May 1, 1983

i

payable May 1 and November I in St, Louis or

New York City,

positions have
been
eliminated
due to permanent streamlining of
Exchange procedure.
This num¬

be under 100.

ber will

Reduc¬

tions will be made with every re¬

the

for

gard

employee and

interests

of

Accrued Interest
and

Price 102'/2%

the

the Exchange

op¬

erations.
"With

minor

few

a

relating to sick
time off

and

Union

at

exceptions,

leave, demotions
own

for

expense

officials, agreed to by both

Copies of the Prospectus may be obtained from only such of the undersigned as may legally
these Debentures in compliance with the securities laws of the respective States,

the Union and the Exchange, pro¬

of

visions
will

be

the

previous, contract

in the

incorporated

offer

new

contract.
"The strike

of

all

for

was a

dents in the

change that

trying period

There

us.

were

inci¬

§ MORGAN STANLEY & CO.

picketing of the Ex¬

to be regretted by
fair-minded person. Those

every

incidents
mediate

are

behind

are

us.

The

BLYTH&CO., INC.

im¬

problem ahead is the con¬
of operations with the

THE FIRST BOSTON CORPORATION

tinuance

minimum of

HARRIMAN RIPLEY & CO.

personal friction. We

v*'"2"

hope an atmosphere of mutual co¬
operation and respect will prevail.
That is the only sound basis for
any

successful

taking."

,

business

JSrwlal

V'

LOS

to

THF

;

LEHMAN BROTHERS

Marshall Co.

ANGELES,

A. Strelsky has become

connected

Maxwell, Marshall & Co., 647
South Spring Street, members
the Los Angeles Stock. Exchange^




MERRILL LYNCH, PIERCE, FENNER &
STONE &

UNION SECURITIES CORPORATION

CwwwtcL*!

CALIF.—Leo

with

LAZARD FRERES & CO.

•; J

SMITH, BARNEY & CO.
Fin*NCI*I

KIDDER, PEABODY & CO.

f GOLDMAN, SACHS & CO.

BEANE

under¬

.

With Maxwell,
-

Incorporated

'

ti'f*

May 1948.
5,
«*

\

.

f

a

knew

Salaries between $50

week.

a

cen¬

had

capitalism,
free
enterprise, against

last contract.

below $50 will be increased

aries

our

have had two world wars
have had a revolt, in
brief,

revolution, and it will
concomitant, another war
ished. As Senator Lodge stated at —this time to stop Communism.
In conclusion, I am not a seer,
the
Mississippi
Valley
World
Trade Conference in New Orleans. a prophet or a diviner and can¬
not prognosticate the future for
"The
Russians
are
not
smart
enough to have singlehandedly foreign trade outlook for even the

and

underprivileged

Thursday, April 29th, the day

the

war.

In

we
we

/*(2> The wage«scales, offered
by the Exchange, go into effect as
of

of

we

can

Europe's chronic ills—overpopula¬ know is that we are going to ship
♦From a talk by Mr. Gardener
tion, maldistribution of goods and huge quantities of merchandise
before the Foreign Trade Club of
wealth.; ■ the ^ selfishness
of
its and raw materials to Europe and
New York University's School of
to other areas of the world until
wealthy.
These
are
the
fact
Commerce, Accounts and Finance,
which create communists." In view something happens.
New York City, April 30, 1948. f

Spring Street. ; Mr.
previously with

and Livingstone

influence.

great majority of the people are

ship¬

—

Howard

and

as we

in most countries of the

matter of self in¬

a

as

up

revolution

we

ganda for Communism is the fact

the costs of such

or

accompanied by 30

law

only Russian propaganda

that in most of Europe, as well as

going to do this for humanitarian
terest, is

revolution and revolt

religion

and

Chronicle)

CALIF.

ANGELES,

Grant

with

The

a

revolt

raw ma¬

though that means
ourselves to a large ex¬

we

ap¬

Europe and the i est of

to

tent

bad,

was

against the feudal system, against
the economic rigidity of the Guild
and against the Church. This was

of

It isn't

going to ship huge quan¬

that

as

there

as

United

the world, even

Co.'s Phila¬

half

Europe.

ments ourselves.-Whether we are

A.

riod of 15 days from the

terials

Man¬

With Carter H. Corbrey

members will have

the formal contract in which to

as

years

that

on

tities of merchandise and

delphia office.

Charles

escape pe¬

Mcllvaine,

H.

All

count

States is

of the firm's New
Department, as will

ager of G. C. Haas &

"(1) Employees will be free to
join the Union .or not to join, as
they choose.
All present Union
an

few

how impossible

see

trade.

years.

of trade with Eu¬

scope

and the whole world during

can

can

predict the future of in¬

I feel that almost all Oi
Europe is bound to try the experi¬
ment within the next five to 1C

Gardener

J.

next

months.

Manager

as

Bernard

the

Myron F. Schlater will continue
Emil

the

rope

partner.

on

you

to

communistic parties in the rest o

to

probable
or

is

War, already one-third of Europe,
in fact, all of Eastern Europe, is
communistic,
with
very
large

pure

foretell

amount

not

were

condi¬

proximately % of Europe became
totalitarian.
After
this
World

specula¬
and

guesswork

Haas, G. Hinman Barrett, Wi P. Marseilles, Jr., member
New York Stock Exchange, Rich¬
ard W. Ince, Robert C. Townsend
and AHred
Levinger, a limited

tions

After

failure.

the First World War when

matter of

a

123 South Broad Street.

2.

so¬

The period we
inroads. Parenthetically,
is are now in, may be likened to the
misguided and expensive ven¬ period of the 30 Years War, when

ture and doomed to

my

be

liam

economic and

which has been
since
approximately

ternational

any more

any

deed. It would

continuing firm are George

in

if this is its purpose, I think it

Wall Street and in Philadelphia at
in the

going

1910,

audacious

Partners

an

'■

—

we are now

revolution,

it

be

63

at

humanitarian reasons, but
stop Communism from making

cial

for any

forecast would

Co., members of
Stock Exchange,
New

with

—

feelings that

the midst of

make

remaining partners
that they will continue

the business under the firm name
of G.

foreign

any

the

announce

Recovery Program is
countries of Western
Europe get back on their feet, not
help the

to

of my

degree of
accuracy.
To

-

the

partner 0f the firm of Seasongood

Haas,

—-—

European

outlook

trade

—

concerned, the purpose of the

is

measure

the

.

<$—

an

for

retirement of
E- A> Seasongood as a limited
&

it

impossibility

T01K

rUllRGII III NOW

Seidelmann Corporation

Vice-President, Ernst

It has been

I

V

|g

Following

change

:

17

By BERNARD J. GARDENER*
„

Some 800 union employees of

Robert

(1989)

Misguided and Expensive Venture

After 32 days,

striking union employees vote to return to work
substantially the same as offered before walkout began.

CHRONICLE

WEBSTER SECURITIES CORPORATION
WHITE, WELD & CO

COMMERCIAL

THE

(1990)

18

FINANCIAL

&

CHRONICLE

Reduced Taxes

Canadian Securities
5

current

Member, Board of Directors, National Association of Manufacturers

By WILLIAM J. McKAY
Of

wave

diate parity changes.
Now it would appear that there

among the certain European cur¬
rencies
which
are
destined for
Moreover even as mat¬

revision.

definite indications of official

are

for the realignment
of
certain
European
currencies
which curiously enough has not

time the
current level of sterling has to be
constantly defended. With the de¬

received

adequate attention from

valuation of the currencies of her

vociferous prooo-

European competitors for foreign

ters stand at the present

preparation

the

previously

ments of devaluation.

markets, the British

The latter,

sure

flimsy evidence,

on

■

.■

The

•

■

success

failure of

or

terprise with,profit There!
so-called "large businesses/;
businesses. At
the

risk

1

»

the ability to conduct the enin the Nation three million small businesses and 500,000
Bear in mind that all large businesses were originally small

&

}

of

Government

stress elemen-

\

share

consid-

f

on

tary

would

like

to

you

business

j

has

.

as indicated by Chancellor of
its beginning. 1
Exchequer Cripps, whenever
S o m e o n e,.
British exports have difficulty in
must have an
finding markets, the question of idea for theesthe exchange level of the pound
tablishment of
will again be
examined with a a
business, and

(1) The International Monetary
has decided, apparently in

Fund

view to

with
the
countries
that the parities of
certain European currencies must
agreement
concerned,

appropriate revision,

As far:
Canadian

as

position

the

if

of the

is concerned

dollar

be

ness

big

a

its

taxes

various

upon

than

$50

American

billion

people—an

amount greater than the nation's
total expenditure for food.
It would seem that this is too

"Government"

much

one

for

Free

a

People to indulge in.
This cost
falls very largely on business in
its first impact and, ultimately,

Harry L. Derby

re¬

dealing
with
be /adjusted in order to permit the cent official ■ * statements
clearly prbduction, he must take ffom his must be passed on to the individ¬
indicate that: the; Dominion has savings or borrow the funds to ual consumer.
necessary expansion of exports.
One marvels that such a huge
(2)
In
the
interests of the rejected currency devaluation as purchase the facilities to produce
smooth

functioning

of

the

a

Eco¬

solution of its present economic

problems. Unlike the British and
European positions Cana¬
dian exports are not impeded by
costs and prices too high to com¬

nomic

Cooperation
Administra¬
tion program Great Britain has
been obliged to modify her attitude

other

in

article

the

question.

lished

business.

a

merit
estab¬

tain

indi¬

his

If

burden could be borne by any
Nation and still be able to main¬

Having

done so, if his product has
and finds a market, he has

even

living. The
our

European currencies.

activities, he hires others to help
him, and from his profits' or from
the investment of capital by him¬
self or others he purchases the

(3)

Further

chances of full

to

uncertainty concerning the Cana¬
the

During the week the external

of the ECA

section

program,
authoritative
quarters
here favor a healthy realignment

(4) British and other European
how meeting price
resistance in foreign markets.

ports weakens the case for the
maintenance of artificially high

parity levels.
face

of

these

is;

imminent.

now

circum¬

One develop¬

re¬

suc¬

cessful.

this

previously

definitely

over ^bear¬

Taxes

ish.

as

Cost

a

taxes

the

devaluation

currencies that

pean

over-valued

the

of

both

in

event,

level
U.

of

S.

out

the

dollar

further

could
be

relation

Philip Garret To Be

to

sterling.

the

pound

Euro¬

palpably

are

U. S. dollar and

this

the

In

artificial

vis-a-vis

the

maintained with¬

UrieconomicV restrict

portant

Partner in Gammack Go.

that

factor

am

in

springboard of creative ac¬
complishment. Contrast this with
theory of Government com¬
pulsion and 'we become aware of

business

logic of the former.

there

Could

into

the pound

figure
the

account

does

The

1933

Budget

Co., 40 Wall
Street, New York City, members
of the New York Stock Exchange.

CORPORATION

Mr.

Carret

dent of

has

been

Vice-Presi¬

it

ical

was

prepared

a

tax

of

$320.00

$1280 per family.
The cost of

operating the Fed¬

Government

eral

is

27%

of

Municipal,CountyandStateGQV^

Ben Gold to Staff

ernments

A.E,AMES&CO.
f

'

! '■

INCORPORATED

;

out

Street for about 2J/2
however his experience in

the street dates back to 1928/

previous
with
WORTH 4-2400

NY-l-1045




has. been

of Wall

years,

1

Gold

Fox

F.

&

connections
J.

Lisman

Co.; he

was

&
a

P.

find

that

one-

F

partner of

ture, permitting the sale and dis¬
tribution of goods in great volume.
What Goes to Profits
We

frequently hear the state¬
that
business profits
are
excessive, but the Government
ment

records show that last year
was

of

one

best

the

years

half Of that—in the form of dividends

the

interest—was

and

investor in

cilities

the

tools

to

needed

paid to
fa¬

and

the

produce

goods.
for

us

moment, consider

a

what happens to the

earnings of a
manufacturing company or of any
other business, for that matter.
sales

its

As

added fa¬

increase

cilities must be provided and

vest

the
must

facilities

these

for

money

from those who wish to in¬
their

in

savings

a

business

farms

one

having good prospects, is well
and in sound financial
the investor gives his

condition,

to

money

end

the

company

stock

ceives

in

the

year

of

and

in

Even the

cows

New York State
that

the

1870

unit

re¬

exchange. At the

if he finds that

and

earnings have resulted, he is

hopeful

adequate

receiving

of

dividends in return for the use of

his money.

of

The

government steps in at that

2,500

was

__

.

where in the world.

dividends to the stockholders, the

During the last eighteen years
American workmen have received

dividual stockholder 20 % to 00 %

80%

of

all

income

produced by
manufacturing
industry.
This
large share of the National Income
has had the effect of creating in¬
creased demand for goods, with a

consequent further
production.

expansion

of

government further taxes the in¬

depending
investor

on

his tax bracket. The

finds

instead. of

that

a

satisfactory share in the profits
of the
enterprise in which: he
invested, that the government.has
taken by far the lion's share/arid
left him with but a very small

'

.

Standards" of living have risen
the purchasing power of the

return for the risk and

use •

of his

and

American workman's hourly earn¬
ings today are five and one-half
times as great as the workman of

Not

machines

is

our

National production

required to pay ' the/ex¬

now

of Government.

is made

estate

and

up

This bur¬

of taxes

personal

.on

real

property,

by the State, County and local

work,

His

have /been
Co..

we

and

progress, our system

our

school taxes and other taxes lev¬

den

Mr.

over

ups

ied

pense

department.

TWO WALL STREET
NEW YORK S, N. Y.

of

tion of Ben Gold in their

trading

and

earth. .While,

on

there have been

does
thisunduly
the. investor -.through
double taxtion of business profits
one hundred years ago; One of the —first, upon the earnings them¬
reasons for this is found in the
selves, and secondly, upon the
fact that one' hundred years ago distribution of the earnings to the

third

Siegei & Co., 39 Broadway, New
York City, announce the associa¬
,

Nation

any

America
unequalled by

record

point and, under the present tax
laws, takes approximately 40% of
it amounted to 6,000 pounds. Thus,
the earnings of the company in
food for an ever expanding popu- the
form/of / Corporate;; Income
lation .has been available in quan-; Taxes.
Out of the remaining 60%,
tities and quality not found else¬ that
portion then declared out as

the

the coming year. Add to this stag¬
gering total the cost of operating

Siegei

a

pounds while, seventy years later

contemplated National Income for

CANADIAN STOCKS

show

production

each

for

and every man, woman and child
in the Nation, or an average of

Carret, Gammons & Co.

wireless

of

of American

equipment.

statistics

presented to Congress before

is

marvels

have responded.

United States in winning the first
World War.
To put it otherwise,

&

The business system of

has made

that

The Budget for 1949 is ten billion
dollars
more
than
it
cost
the

Gammack

year

1943.

through the employment of scien¬

was

contemplated cost of Government.

in

businesses

during the

business has been prosperous

expense of the present De¬
fense Program was added to the

MUNICIPAL

small

exist

to

managed

the

Production

the

Philip L. Carret

com¬

tific methods and modern mechan¬

700,000,000 land this

PROVINCIAL

million

one

ceased

has also greatly increased chiefly

The 1949 Federal Budget is $39,-

GOVERNMENT

duced economically, then private
enterprise can no longer function
successfully.
It is of more than
passing importance that nearly

enterprise.
Assuming that the company is

members of the

Federal

$3,800,000,000.

and

been

Kettering
have found inspiration in oureau cratic compulsion?

not take

Fighting Forces.

CANADIANIBONDS

in the way of success such a multi¬

plicity of rules and regulations as
to make it impossible to realize
a profit, or if,
through such rules
and regulations and the resulting
hindrances, goods cannot be pro¬

come

Edison have

communication; would

were

ment.- This

«

longer

no

discover

2,012,143 civilian
employees of the Federal Govern¬
year

Government

pelled by Governmental edict to
invent the
electric light; could
Marconi have been required to

March 1 this

on

has been

the

In 1933 there were 630,000 civil¬
May 15th, Philip L. Carret
will be admitted to partnership ians
employed by the Federal
As

Springboard

The incentive system

War.

Government.

as

the

of conducting the last World

pense

the

views with favor the operation of
a
business for profit and places

Let

costs,
referring to the ex¬

not

to

with ab¬

and

energy

Incentive System

im¬

most

a

forefathers

our

original Ideas
may be turned into profit f and,
under this system huge production
and great efficiency have resulted.

of Business

become

for

incentive system, whereby initia-

tive,

On

going facts would certainly lead
the conclusion

I

and

tions which would jeopardize the
success of the ECA
program?
A
dispassionate review of the fore¬
to

have

available

(which
Of
profit) there remained for the in¬
sence
of old-world controls and vestor in the 'tools and
production
restrictions. Here, the individual facilities
only 6.2% from the sales
has had the opportunity, under &n of those products, and less than

yeats

is

here

is that

reason

freedom of choice and

However, in the last fifteen
Government spending and

ment appears almost certain. That

The

adopted a Constitution guarantee¬
ing the right of every individual
to work out his own destiny with

,

ECA assistance* to Europe
providing many essential im¬

*(5)

the

bond* market

duction facilities.

is

The success of any business de¬
pends upon obtaining the lowest
possible
costs
consistent / with
quality and service; High over¬
head charges, all non-productive
markets recovered well after a spending, excessive sales cost, and
decline due to profit-taking that excessive advertising and other,
expenses are all a drag on attain¬
was easily absorbed.
The Inter¬
ing low costs, but this sort of
national
Monetary Fund state¬ spending is controlled by the head
ment provided the stimulus for a of the business and his
judgment
belated rally in the gold stocks (prudent
or
otherwise)
is
the
the outlook for which had been chief determining factor.

exports; are

In

the

the

with little ac¬
tivity.
The internal Dominions
following a reaction in free funds
were quoted a
little below their
recent
peak
levels.
The
stock

parity levels of the
European currencies.

stances therefore it would appear
that action on the currency front

making the progress
that the United States has made in

mained steady but

of the unreal

in

of

When

the development of its resources
and in the expansion of its pro¬

business expands and

becomes

Of =Tree competition hari; been a
country m the world has levelling force in the price struc¬

No

succeeded in

additional tools and facilities, and

dian dollar.

improve

success

sale and other

would

of the ordinary citizen.

downs in

the

manufacture,

mobile
purse

great" productivity of
industries arid farms.

cial cooperation with the continent

answer

the

one-unit

as

King's ransom but, as pro¬
large numbers, the auto¬

a

the years,

lies in

pete in world markets.
On the
other
hand
the
placing of the
of Europe.
Sterling thereby will
become less insulated from the pound at a more realistic level
influence of movements of other will remove one of the causes of

cost

duced in

to the question

vidual efforts are insufficient for

towards full economic and finan¬

moderate standard of

a

manufactured

including

moie

the

from

busi¬

the

excise

exacted

the

These, facts

Federal

for

gasoline,
jewelry, furs, leather-goods, tele¬
phone and telegraph messages, etc.
Aggregate taxes in 1948 will have

f

a

through

products,

i

con-

how

sider

in

comes

levy of taxes
income, for Social Security and

the

I 1

erations,

the

and

Governments,

to •;

appearing

business venture rests upon

a

are

and

are now

of accepting the solid facts.
are the following:

wary

export posi¬

be further weakened,

would

tion

perhaps having previously weak¬
ened their case by ill-timed pres¬

Leading industrialist, stressingineed for risk capital to maintain and expand prosperity, holds high tat
are destroying business incentive.
Says we are threatened with a capital shortage in form of
equity investments, which can be overcome only when taxes are reduced.

rates

rumors,

currency

Capital Shortage!

or

By harry l- derby*

despite its relatively
minor impact on exchange levels, is perhaps better founded than
many of its predecessors.
On previous occasions inspired devalua¬
tionist propaganda has directly clashed with official statements that
have
definitely
precluded
an><£
action in the direction of imme¬ should logically
be included
The

,

Thursday, May 6, 1948

;:'An

fore

address

the

ministration,

Gold Bros, just
prior to his leav¬

New

ing the street.

1948.'

by Mr. Derby be¬

School

of

Rutgers

Brunswick, N.
-

:

Business

7

Ad¬

University,

J., April 29,

did

only

whereas,

6%

of

today

man's

they

do

80%.
Mass production has resulted in
costs of

modern

,

owners,

but

it acts

as

a

definite

brake upon the flow of investment-

mOney
(capital)
enterprise.
.

into

American

*-

.

Over the years, more and more
pioney ha$f(been heeded to pro-

unhet rd

J(j

century, to¬
automobile,
if

(U

goods which

were

of in the nineteenth

day's:

only

penalize

'

-

i

(Continued

on

page

34)

l

Volume

THE

167s Number 4696




COMMERCIAL

FINANCIAL

&

CHRONICLE

(1991)'

19

rfwnrtnmt aiwaaa—Mah

have .been

ic&nsumin&jpiir capital

and''not'increasing
It Is because
stand

•

they do not under¬

what makes the production
we all depend that well-

which

oh

jneaning reformers
toll

over

ly

and politicians

the world have been busi¬

destroying

production

the

and

incentives

the

to

of

sources

They have been try¬

production.

ing to distribute wealth

and in¬
"fairly" with¬
out stopping to inquire what it is
come

that

"equally"

brings

wealth

into

existence

The

lesson

once

more

total

or

in

that

first

place.

must

we

learn

is that the size of

production is
important

more

income

and

the

our

incomparably

to

the

common

than any possible redistribu¬

man

of it.

tion

Two New Members
Of Moreland Firm
DETROIT, MICH. — Paul I.
Moreland, President of Moreland
&

Co.,

investment

R.

Eis

and

an¬
Valette

of

A.

Vaughan Herrick
Eis, long-time "Gris-

to the firm.
wold

brokers,

admission

the

nounces

Streeter"

and

a

member

of

Detroit Stock Exchange since

the

1930, will be
Director

Vice-President and

a

in

and

charge

of

the

firm's floor trading activities. Her¬

rick, manager of the Moreland
Bay City office, will be a Direc¬
Walter

tor.

Eis

is

joining

the

firm's sales department. Moreland
&

with offices in the Pen¬
Building and branches in
Lansing, Muskegon and Bay City,
Co.,

obscot

is

member of the

a

Detroit Stock

Exchange.

NEW ISSUB

800,000 SHARES

Sunray Oil Corporation
*

V

'

\

'

'

1

''

^

'Q

"

"

'

" *1'-

1

^

'

'

'

1

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/ '

*

'

^

"

'

'

'

4V2% Cumulative Convertible Preferred Stock, Series B
($25 PAR VALUE)
")
V
I
'

>

,

Price $25 Per Share

Copies oj the Prospectus may be obtained onlyJram such oj the undersigned as.may.
ojjer these Securities in compliance with the securities taw£ ojjthe respective stales.

Eastman Dillon a Co"

Clore, Forgan & Co.'Goldman. Sachs & Co.

The First Boston Corporation
v
„

f

&

t

•

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xi

,

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1

Kidder, Peabody & Co.

A. G. Becker

First California Company

Incorporated

Lee Higginson Corporation

HAyden, Stone
}

e

&

W. C. LaNgley

■'

&

i '•
,T-.

'

f

•'•••• '

I*.

•

&

Co.

;

H arris, Hall & Company
(Incorporated)

:

Bear, Stearns & Co.

c

'V*

i

i F.

Co.
i

:

^ •>>(:. :: V' £

'■

'C

V^: V-': '■C;

S. Moseley & Co.

E. H. Rollins & Sons
Incorporated

Hallgarten

.

&

Co.

Hornblo wer & Weeks

Hemphill, Noyes & Co. i

Co.

Z'U

'.v.-,

§ Smith, Barney & Co.

Lehman Brothers

'

''

'

"

•

^'

V

Reynolds &
r

|''

■

:

•

THE

With
CSoeciaJ

,

ST.

COMMERCIAL

&

FINANCIAL

'If*

1

uhronxu.e)

'<

earnings, of $2.37

LOUIS, MO.—Clarence F.
&

Co.,

Street.

Inc.,

408

($2.42 in

N. Y. Economic Club

1946)

Appoints Eckerman

and! the

Krone has become affiliated with

Slayton

Thursday,- May 6,v 1948

idend rate of $1.64. Latter is equal
to
69%
of average
1947'share

Slayton & Co.:;;-

o

CHRONICLE

-: average < price - is.
10.8,
share earnings.
A 10% to

times

Olive

in

contraction

12%

;....

1948,

conservative

a

would

earnings

lower average

The

in

b y

we

all the
believe that selected

utilities

are

entitled to

a

defensive

their

Rieftu.

President
the

place in

club.

v

Mr.:

Eckerman

well-rounded investment accounts
for

Theodore

m.

rate.; Balancing

factors,

,

Director of the Economic
Club of New York was announced

to

dividend

of
Dwight
position of Ex¬

the

to

ecutive

$2.09-$2.13, about 29%
greater than the present average
ings

appointment

Eckerman

approach,
share earn¬
>

succeeds..

characteristic

and

Prospectus
your

upon

NATIONAL
RESEARCH

from

request

investment dealer,

dependable income, but sug¬
gest that the need for disci imination
is today
probably greater
than
at
any
time
in
recem

from

or

SECURITIES

a

years."

CORPORATION

for

man was

"A P-51 fighter plane of World

•

burned

fueL per

gallon:
current jet-

hour;

month
he

trial

are over

3.5 million.

Seemed vi. Important,"

your

issued

investment dealer

by

Since

"

New

2, PA.

of

(3) 70% of the nation's private

should

women

if

be*

a

logical and

,

other

prominent

economic' and

social

includes

subjects.

leaders

of

business, industry, finance and the
profess'ons, principally from New

American

our

and

Membership

wealth.
as

on

figures. The club serves as a non¬
partisan forum for the discussion

S

railroads.

looks

appeared

Supreme Court, Cabi¬
officials, Governors, business

executives

homes.

It

have

of

1907,

platform4 have included Presi¬
States, mem¬

net

of the stock in U.

who

Club

founded in

bers of the

■;>

48%

Economic

was

dents of the United

(1) 40% of the 30 million U. S.
(2)

the

York

speakers
its

According to the Institute of
Life - Insurance, American women
own:

years

engaged

"Journal-Courier," one of
country's oldest daily news-:
papers.
Previously he was head
debate coach at Michigan State
College. He was born in Washington, Iowa.

Wealth and Women
PHILADELPHIA

been

.

the

Selected Investments Company o.

Chicago.)

has

'

Uni-»

Haven

heavy fuel oil were
using 288,000 furnaces in '41; now
432,000 of them are roaring."
(Quoted from "These Things

prospectus from

i

-

Yale

fore that he was editor of the New

Indus¬

of

users

Eckerman

:

.

in public,
relations work in New'York. Be¬

.

there

-Dwight
>

Hottem.-: and

versity. For the past several

to

In *41, 2.4 mi lion homesize oil furnaces were in use; now

aOO.

edu-

lated at Mon-

65

about

cowered counterpart takes 300

established J928

IgH flHpp

y

new

War II
of

HaS

di-

years,

why the demand for ■ pi
peak leyels:
"

h8H

as

Executive

following excerpt from the
"Wall Street Journal" cites a few
is' at

/*jB|Bpl

WG8L

after

serving

Oil

The

■reasons

of

retired last
year

Demand

the

.

the club, who

•

Record

120 BROADWAY, NEW YORK 5. N. Y.

of

one

founders

York City.

>,

fertile field for mutual fund sales¬
men.

.

N. Y. Reserve Bank

Gourls & Co. Offers

Issues Text of Treasury
Rule on Swiss Accounts

Genuine Paris Stock
&

A syndicate headed by Court®
Co. on May 4 offered 150,000

shares

common

Parts Co.
Prospectui How your Investment Oeoler or

price

HUGH W.tONG&CO.
WAU

STfiHT, N£W YORK 5, N Y

'ItHH

t-

of

(par $5). The offering
$11 per share,

New

York

has

received

the

following letter, dated April
1948, from the Treasury_Depart-

Thjs Georgia, corporation, whqse
!ment:l:g;il^
are in Atlanta, has
"In our
been engaged in the business of
recently concluded dis-.
distributing wholesale automotive cussibns with the- Swiss^ Delegate!
parts and supplies since 1928. Five tion, it was agreed that the prin-,
warehouses, 29 jobbing stores and ciple of General License No. 97
be applied to Swiss omnibus ac¬
one parts rebuilding plant are di¬
rectly operated by the company to counts, provided that the Swiss
serve areas in Georgia,
states
in
Alabama! Compensation ■ Office
headquarters

1NCOS'OS Alio
4E

was

The Foreign Exchange Commit¬
of the Federal Reserve Bank

tee

stock of Genuine

CHICAGO

Y/Ss/S.yA

Union Common

Mississippi, Louisiana, Arkansas.
Tennessee, North Carolina, South
Carolina, New York, New Jersey,
and Connecticut.

Stock Fund
Prospectus

~ upon

request

Genuine

Parts Co., which w;as
by Carlyle Fraser, its
present Board Chairman, began
as
a single supply house
in At¬

fohnded

lanta

INCORPORATED

Chicago

■

'

New Orleans

Los

Angeles

SHARES OF CAPITAL STOCK OF

with

original capital of
$40,000. Its expansion has. been
financed primarily through rein¬
vestment
of
retained
earnings.
Gross sales in 1928 were $75,129.
In
1947, they were $18,531,472.
Capital and surplus at end of the
latter year was $3,029,334.

outstanding

debt

in

company

now

amounts which are the subject of
the un blocking instructions
rep-:
resent the aggregate value of
only

those

wijl

retiree all
place- the

and

position to further
sound basis in areas

on a

covered.

accounts

on

the

books of

the respective Swiss banks which
contain property valued on

an

"^present financing

expand

writing to the American custo¬
dians of the assets, the correctness
of the representations
by the re¬
spective
Swiss
banks
that
the

Aug. 1,

1947, at
owned

$5,000

or

less

and

are

beneficially

by
persons
whose property is eligible for un¬
blocking under General«. License
No. 97.
-

"Accordingly,
to

advise

banks

you are
and

requested

other

inter*-

ested

persons that any statement
of the type described above
signed

by the Swiss Compensation Office
or before Sept.
1, 1948 shall be
effective for unblocking the prop-**

on

if

erty designated therein.

New England
Fund

Prospectus from
your local

Tke

investment dealer

are

.

General Distributor

1

i

of Boston

Prospectus

I

Congress Street

.

,.

\

your

.may

be obtained from

local investment dealer,

Coffin & Burr III
Incorporated

or
-.

Boston 9, Massachusetts




.

4

>,

|

y

'

THE

PARKER

3

'

.Founded 1898

CORPORATION

ONE COURT STREET. BOSTON 8, MASS.

|

boston mi
NEW YORK

'

?

;

HARTFORD

•

^

*1

1 PORTLAND ^
(' 3 B^NGORJ

arrange^

ment, all dollar accounts held fq^
any one person by any Swiss bank
regarded

account."

ORGANIZED 1931

or

Keystone Company
50

;

For the purpose of this

||

as

constituting
1

'

one

J
:

Volume 167

1 THE

Number 4696

COMMERCIAL

CHRONICLE

Documentary Film of
Natural Gas Industry
RelationsNo-lProblem
Prepared for Public
of Joint Commiltee
Economic Report
great j

Staff Director

on

risk is not that

■

FINANCIAL

I

Hardy Holds Interifatxoxial ~ ^
*

&

we

lose

may

1 economic and political system
version

says

but that

a war

be destroyed.

may

The

of democratic j
Praises recon- i
rI

essence

accomplishments.

tell

first

1';

;

release

to

;

States in Washington, D. C., on April 29, Dr.
mist and Staff Director of the Joint

was

;At the Town Meeting of the Chamber of Commerce of the United

'

\ Economic Report,; in

Charles O. Hardy, econo^Congressional Committee on the
symposium on "What ^Makes Production??

a

i ntained

m a

that

interna¬

tional
tions

rela¬

are

our

No. 1 problem.

"No

e c o-

balanced its budget and

done

this, not by expanding the
government control, but

removing controls faster than

nomic group,"

aid

Hardy
seated,
"has

world.

yet

lar

to

any

meas¬

of stabili¬

ure

zation

that

will reduce its
share

own

total
or

ac¬

total output.

However, this

the

dol¬

short be¬
looks to us for

Dollars

world

are

food, for the tools of production,
and

the

price

of

means

inflation

to

Such

defense.

have had, is a small

as we

for

pay

economic

the

achievements of 1945-1948.

"(4)
l

Jyyi'

We have maintained

land of freedom in

tion would in¬
crease

shortage.

cause

output,

such*

other' country
in the
This, in my judgment, is

any

the explanation of the world

admitted

that

Charles 0. Hardy

of

a

of

area

by

Dr.

consented

paid off

smail fraction of its debt. We have

an

is¬

world that is

a

ushing to political and economic

authoritarianism.

It is

no

accident

point is academic until such for¬
mulae have been developed.

that the stronghold of democracy,
the chief defense of international

that
'power
corrupts
and
absolute
power corrupts absolutely.'
'
"I have four points, partly grow¬

peace,

V

"I

agree

With

Mr.

Street

,

ing

of

cut

has

what

,

said,

been

which I want to emphasize.-.1

•

The No. 1 problem is in¬
relations, and under
present
conditions
this
is
in¬
finitely more important than any
S internal economic question. The
"(1)

ternational

frictions which threaten the peace

Z of the

world,

moreover,

not

are

economic questions; they are ques*

lions of ideology.

Absolute

power

threatens

peace, - and
dogmatic
convictions which are held more
•

than economic prosperity,
itself, also threaten peace.
"The great risk which confronts

dearly

life

or

t

is not that we shall lose a war,

•

us

tut that either we shall win a war

v

in winning it destroy the es¬

y and

of

sence

and
'

1

our

democratic economic

system—as

political

Russia

already lost the essence of So-

as

5 cialism—or, alternatively, that the
will

world

civilization

>

develop
in

a

which

is

peace and no real war—no
real distinction between peace and
in which there will be

con¬

stant pressure to sacrifice demo¬
cratic

and

government

market

the

free

the ever-in-

to

economy

demands of the State,
more or less Justified by the everincreasing responsibilities of the
creasing

State abroad and at home.

I

"(2)
:

with Mr. Street
terrific plight of the

agree

the

bout

is

Britain

British.

the outpost—

'

the frontier guard—of freedom. In
of

case

their

war

position

the

country.

same

period of historic capitalism

is the

only period

nomic "progress,

of rapid eco¬

the development

of toleration of free

speech, of re¬
spect for law and property, and of
humanitarianism. These things are
all an outgrowth
of the .same
basic attitudes, which developed
as

reaction

a

against

feudalism,

absolutism, guild controls of trade
and

industry, .mercantilism, the
doctrines of a just price and the
sinfulness of 'interest-taking;: in¬
ternal trade barriers, and constant
warfare.

Smith

Adam

in

'

eco¬

nomics, and Roger Williams in re¬
ligion and Bentham and Thomas
Jefferson in politics, preached the
same

"There

looks

hopeless; in case of peace scarcely
less hopeless. Britain has built up

at

audience

an

of

financial

narration

and

phase of

every

gas

and

M.

Crocker,

5

of

the

"are

panies,

magnitude

operating

of

the

turn

of

bring

hand.

a

them

operations,
few

a

of

in

met

We

the

story

of

few

these

problems that

providing

gas

ists

are

tion."

for

/

-»

The

film

is

exhibition

groups

large

in

in

have

institutions

the

that

America

made

great, and
rush to the nostrums developed in
the

civilizations of

decaying

old world."

1.

..

,

the
-

s

Carreau &
New

York

New

York

has

as

found

be

to

against each other
,

Third

parties, thereby bringing

hopes of the propagators of Third

is

mighty convention that the Communist party

directly responsible for the organization of

Mr.

groups

Murray's allegation

surd to us,

»

was

I charge in

time to mince words.

a

Third

R.

Frank

pro¬

although

we

trifle ab-

seems a

make

no

claim to much

knowledge of the subject

by Wilding : Picture, T^ro%

m interest, in it^

Columbia's agency, Cecil & Pres-

brey, Inc.''

7:

]yybf 'Zfffy ;7%y77-:;
i

FT.;

to

The

Financial

Chronicle)

M.

Kidder

7

supporters

7|; lowers.

&

Lauderdale
National
He was formerly

Fort

with

Daniel

Merrill

F.

Rice

&

Co.

•y

and

U

"'7' V.y

y

great deal more is the

which presumably is be¬
"have

an

interest in

*

'

such

as

Mr.

his fol-

Murray and

''r'v- -r'7-

Their essential un-Americanism is far

more

damaging and dangerous; than |hat of the Third

Lynch, Pierce, Fenner &

5

Beane.

party conglomerations.

This advertisement appears as a matter

V. Lynch

with the
of its wholesale

y

of these shares for sale,

termination

or as an

The

of record only and is under no circumstances to be construed as an offering
offer to buy, or as a solicitation of an offer to buy, any of such shares.
offering is made only by the Prospectus. ;
*
*'

active

of

duty in the U. S. Naval Aviation
Reserve

Service, where he

was on

the staff of Commander Air Force.

Atlantic

Fleet,

and

later

yyyfyy^yyyyyyy<

Senior

150,000 Shares
■■

A.

■ yvy:.:;

• yv'..'

Air

Idaho Power Company
Common Stock
i

%

/

.

($20 Par Value)'

y

.

"committed

to

relatively

in-

free

'

}erpational trade, international in¬
vestment, and international peace.
Now, again under British leader1

the world has drifted strongly

t<?r economic

isolatjonism, aban¬
doning the free market and the
international,

fi

n a n c

ial

policies

wlpch make
possible.

.

overseas investment
\;•
:>■;• y7y..

';1 l'*(3)' Domestically, America has
done
We
our

of

great job of reconversion.

should

stop

apologizing

postwar program.

the last three

lull

.

a

for
The record

years

is

of

one

Publish¬

7

ing Co. and business manager and
assistant
publisher of "Nation's
Business."
He was formerly a di¬
General Bronze Co.

rector of the

is

and

presently

member

of

Price $31.50 per share

the

a

director

Executive

and

Com¬

mittee of Sterling, Inc.
Mr. Lynch served as
in both World

7

''Aan

Copies of the Prospectus may be obtained from the undersigned only by persons to
whom the undersigned may legally offer these shares under applicable securities laws.

officer

Wars in the Naval
;V

Aviation branch of the U. S. Navy.
He

was

Yale
the

Unit"

first

Naval

a

member
and

one

of

the

"First

Blyth & Co., Inc.

qualified among

hundred

Lazard Freres & Co.

designated

Wegener & Daly, Inc.

Aviators.

Kidder, Peabody & Co.

employment and high produc¬

tion; we have raised the standard
cf living of the mass of the popu¬

lation, greatly increased domestic
investment end broken all peace¬
time fetoMs fcr
the

troller of The Butterick

same

nety^ports.,

time the gorverhment




•••'

has
;

XCJ. '

A. G. Becker & Co.

With Geo. C. Lane & Co.
<Soeei»l

NEW

to

The

Financial

HAVEN,

May 6, 1948

CONN.—Fred-

eudfc.G»i<AJlen is with George C.
L^n^vi&nCo., Inc., 70 College St.
(MMiMIMnK IS'*-*''..

V

t

; y;

Central

Republic Company
(Incorporated)

Incorporated

Chroniciei

v

-*

/J

and admit little

the labor movement," and in the activities of its

v •

-

LAUDERDALE,
FLA. —
P. Wright has
become
A.

y.

concerns us a

lieved by Mr. Murray to

Garland

affiliated' with

What

"conduct of the party,

With A. M. Kidder & Co.
(Special

—

t

ductions under the supervision: of

associated

manager

:

'

duced;

department.
Since

v«

party in the United States."—Philip Murray.

Kentucky

City.' It

no

City, members of the
Stock Exchange, an¬

become

firm

past
com¬

Co.,'63 Wall Street

that

nounce

about

"This is
this

Bank Building.

For Carreau & Co.

almost every

political matters and about political candi¬

in Ohio, Pennsylvania,

be available to small

Co.,

Lynch Wholesale Mgr.

in

party ideas in the United States of America.

*

through operating

York

found

and

Virginia and Virginia. It will

New

ofttimes

opera¬

fundamental truth. But there

faith

our

are

being' distributed

York,: Maryland,

West
also

•

is to be

about the desired

of the Columbia System,

operating
.New

-

months

dates
;

distribution system in

Philip Murray

has

about

country. It is not Columbia's story

gas

what

fighting each other and quarreling and bickering

of homes and industries oyer the

any

country.

our

of

munity throughout this country, where trade union¬

to millions

alone, but the story of

of creating confu¬

ities in the United States in the course of the

to

out

sought to impose

transpired with reference to the Third party activ¬

at the

of the drama and

some

the

set

movement,
deliberate

that its propagators

reflection

"A

the

operations

which bring them this fuel

sense

was

sion and division in

com¬

of

unaware

creation

erate purpose

System, Inc., parent

System's

was

party idea on the
American people for the delib¬

The

of

not in

It

Third

the

President

Columbia Gas

labor

the

in

its

in the

of gas," said Stuart

users

are

movement.

and its creators

pro¬

duction and distribution.
"Most

by people who

labor

terest

nearly

covers

natural

question

no

The Third party was

the American people
by organizations that have no in¬

tions. The story was photographed
in full color with sound, dialogue
and

!>

-thrust upon

news

writers and analysts of New York
insurance and financial institu¬

Controller, Northwest Sector,
Mr.
Lynch has been associated
a
population dependent for two-, with Van
Alstyne, Noel & CO. in
thirds of its food supply on • im¬
the buying department.
ports.
For such imports it is tra¬
Prior to World War II, his prin¬
ditionally paid by overseas trade
cipal interests were in the paper
and the proceeds of overseas in¬
manufacturing and publishing in¬
vestment, an exchange which was dustries. He has in the
past been
possible when, under British lead- a Vice-President and Director of
% pr^hip, ythe • civilized world was the Munising Paper Co.; Comp¬
*

created
the

special preview-

a

be

can

about that.

is great danger that we shall lose

no

| real

war.

The

in

are

of

type

there

and the last refuge of capi¬

talism

to

shown

/i

the labor movement of the United States.

non-com¬

*

:

;

of

causing confusion and dissension and undermining

mercial audiences by The Colum¬
bia Gas System.
v
.
•Titled "Eternal Flame," the film

'

divisionist party created for the purpose

a

■

documentary film to

for

'jThfe Third party in {he United States of Amer-'

ica is

natural

readied

S:,ff

VS.

comprehensive story of the
gas
industry
is
being

a

m3>

-

•

yi
v..;i

(**?*(#. WAi^nir (i

,v<

22

THE

(1994)

COMMERCIAL

&

FINANCIAL;

CHRONICLE;

Thursday May 6, 1948

.i

4* t4n

t

Senator
Introduces bill in Senate permitting transactions

Change in Monetary Standard

in gold in U. S. and its territories and allowing gold
.'
'

exports without licenses or restrictions.

ff.yYi%Chamber #Commerce Recommends No

,

\

:

In report on proposal

.

of Col. E. J. W. Proffitt, its Committee on
Senator Pat McCarran (Dem.-Nev.) on April 28, introduced in the Senate a bill .that
Finance and Currency, headed by John M. Schiff, reviews
history
would nullify the late President Franklin D. Roosevelt's; Executive Order
nationalizing pr of gold standard and present international situation and recomgold and prohibiting purchase, sale or exportof the metal without special license. According ; mends immediate withdrawal of President's authority to alter gold
to a statement
■Sp'r.i,content of dollar.
v.

issued by Sen.
McCarran:

As

"I have been

1937-38, when we

result, in

a

had

of > our
stock,

half
gold

only

monetary

ready
its

present
It
wag

asked to com¬

which I intro¬

gold from going into the moneftary system, thus preventing the
creation
of further inflationary

duced

pressures.

on

bill

my

S.

2583,

April
to permit

18,
the

sale

is

"There

of

'

-

within

same

the

United

ditional gold to get into

States,

its

"I

for

Sen. Pat McCarran

other

-

,

purposes.

"The bill would establish
market for gold either
in the United States,

tories

free

a

(1) mined

its Terri¬
including
(2) imported into the
States, subsequent to en¬

and

Alaska,

possessions,

or

United
actment

the

of

uals, will serve the same purpose,
and provides a reserve for a fu¬
ture

rainy

day,

just

Bonds do. In the

payment

of gold

case

interest

of

Savings

as

no

involved

is

legisla¬
tion; and would permit free and
unrestricted export of such gold.
"My bill also implements the

inflationary dollars by
permitting gold tq be. privately

President's

owned.

proposed

anti-inflation

pro¬

gram."

Continuing his explanation for
introducing the bill, the Senator
states:

"The

lias

Federal.

been

Reserve

Board

complaining

that au¬
thority is needed to increase bank
because of the large impoits of gold which add to bank

and, therefore, it is considerate
cheaper for our government tp
immobilize

"When money is tied up in gold
it is not likely to be spent easily;

and

increase

bank

deposits

inflationary

and

pressures on

the money supply and goods. The
Board points to the fact that dur¬

ing the fiscal

1947,
had

from

July 1,
Treasury ? has

year

to

date, the
cash surplus of $7 billion,
of which
developed from

a

most

Decemberthrough March. Through
December

the

billion

even

surplus

-

was

an

dollars; in January,

$1.4 billion; February $1.9 billion,
March, $2.8 billion surplus; and'
for

the

first

26

days of April,

a

deficit of $286 million. When these

surpluses

added

are

and after

up

subtracting the deficit in April,
they amount to approximately $7
billion.

This

represents

total

a

surplus for the year, as the other
months just about balanced out.
The Board points out that in order
to

buy $2 billion of
gold during the fiscal

.

imported
year-

had to contract the
money

they

supply

ceipts
used

the

expenditures

over

and

"Whenfree-market

gold

brought into the picture,

was

bank

re¬

bank

these

rency

gold

or

pansion

of

reserves

cur¬

six-to-one

a

of ,bank

credits

are

created.

It

would

just be

an

between'> individuals.

would

not

bank

or

reduce

bank

deposits;, it

quently

would
'

*

and,

money,

*

anti-inflatiod-

be
,!

«

conse¬

-

<?

the

Treasury to buy all newlyand imported gold at $35

ounce,;
and
automatically
makes unnecessary the imposition
of

further

any

government

con¬

trols;
arid
does
this
without
changing our banking structure in
any way. Thus the gold would not
enter into the

on

the

banking system.
"No question would arise as to
the confidence of the public /in
the currency

since

the

of the United-States
dollar is the only cur¬

rency that Will

buy things in any

quantity anywhere without seri¬
ous

restrictions.

/

..

"

"In every boom period in world

history the gold miner has. been
pinched between rising costs for
labor

and

materials

and

a

fixed

price

for

Cooperation Administration

and

ary

which

pressures,

basis

for

cf bank credit

"Gold

1938,
the

was

and

of

gold

gold certificates
the

gold

Knox and

into the
to

the

a

deposits.

meaning that contracts
payment

and

as

expansion

sterlized in 1937 and

validated, possession
or

serve

six-to-one

a

was

was

was

at

not allowed

Fort

to

get

banking system. In order

sterlize

the

gold at that time,
Treasury had to go into the

money
amount

market

and

borrow

of

money equal
to
the sterlized gold

an

the

value of
and
had to pay interest on the
money;
it was an
expensive

proposition.

During 1937-38 when
want

this

gold

we

a

get into the
monetary system we had a gold
stock of only $12 to $13 billion.




The

Eco¬

Department have
great deal of thought to

of"

currencies

public

that

paper

acceptable.:

Oliver

Wellington

and

voiced

C-

opposi¬

tion to the Committee's original
recommendation, and agreed as to
the desirability of further
study. *
To clarify its own thinking
upon
the subject the Committee held a

con¬

no

be

made in pres¬

ent: monetary
legislation be¬

debt;

yond

the

re¬

individuals

peal

of

the

with

it

would

not

require the
purchase of outstanding bonds, afp
feet the interest rate or theprice
of bonds,
-

"The

series 'of meetings with informed
who could furnish it

authority
given
the
President un-

"Enactment of my bill (S.
2583)

The, text

report follows:

mind, and

I

As

believe

it

the

expresses

views

of
many
members of Congress
who would prefer to accomplish

these

results without

establishing

an
elaborate system of controls.
This would also
accomplish;; the

results
that the Reserve
Board hoped for by
instituting an
elaborate system of controls over

same

the

banking

tems."

*

The

and

monetary

sys¬

.

text

of

McCarran's

Sen.

bill'follows:
A

To

■/•■y-v'

ifv

permit

the; sale

within the United

of

port.

History of Gold Standard
/
The gold standard seems to have

From there it

since

In those cities, however, gold was
used only by the merchants—the
silver standard still was official.*

January 1947.;, ;;
At that time Colonel Edward J

W. Proffitt
the

brought the matter to

Chamber's attention, and the

brought by the

was

Crusaders

to

Italian

mercan¬

tile cities

(Florence and

Venice).

the

;

The gold standard was used' in
England as early as 1717. It made
the subject.
A meeting "* of the little headway, however, in other
Committee was held on Jan. 22+ European countries and in other
1947, which Colonel Proffitt at¬ parts of the world. In 1785 France
tended by invitation. It was de¬ went on a bimetallic standard

Committee

directed to study

was

,

cided, that, because o| the subject's

(silver

and

Holland

gold),

reverted

and

in

from

1847

bimetal-

ism to the silver standard.

both

prior

to
the
Civil War the
States also was on a bir
Such an investigation was made f metallic
standard,
Because
of
by the Chamber's Research De¬ gold's more favorable ratio to
.

Be it enacted

j

result of these conferences

a

Currency has had the desirabiltt;
returning to a full
gold standard under consideration
of the nation's

investigated further, so as
gold put. the considerations on

ritories, and possessions, including
Alaska, and for other purposes.

and

gold

originated in the Byzantine Em-r
during the
Middle Ages.

bp
to bring!

States, its Ter¬

the

The Committee on Finance andj
pire

controversial nature, it should

BILL

to

the Committee presents the above
resolutions and the following re¬

Committee's

the

of

both: "for"

return

a

standard.

John M. Schiff

have

will enable the President to reach
the objective he has in

information

"against"

position of other countries
exchange controls im¬
the Gold
posed on the flow of funds would Reserve Act of; 1934, to alter the
not be affected in
any way be- gold content of the dollar.
cause
gold can only reach this
Text of Report
country if it is legally exported.
that

House

sides of the question.

United

of

-

itj?

and

.

possessions

in¬

cluding Alaska, may be.bought,
held, sold, or traded upon the
open

market

within

the

United

States, its Territories, and posses¬
sions, including Alaska, for: any
purpose whatsoever, and may be
exported

without the imposition
duties, excise taxes, the re¬
quirement of licenses, permits, or
of

any

restrictions whatsoever,

f
|
SEC. 2.
Gold imported into the
United States after the effective
date

this

of

bought, sold,
open

v

Act

may be- held,
traded upon the
within the United

or

market

States, its Territories, and posses¬
sions, including Alaska, for, any
purpose whatsoever, and mav be
exported without
of duties,
excise

the

imposition

taxes,

the re¬
quirement of licenses, permits, or
any restrictions whatsoever.

in

other

confidence

is made

money
•

•

,

in

With Kidder in Jacksonville
ISpecial

to

The

Financial

JACKSONVILLE,

—

Mrs.

which
a

we

matter

must
of

concede

years

will

rather

be

lion

will

tend

to

stimulate

world's

production.

supply

is

now

in

paper

such

since

we

have

a

huge
much

supply
of

to

TAMPA,
&

Co.,

The

Financial

FLA.—A.

of

which

paper

has

al¬

also

and

to

The

decision

systems

and

resorted

connected

with

to

paper

At the end of this period,
however, the silver standard still
money.

was in effect throughout
Europe
reached at its
and the East.
meeting on Feb. 24. The Com¬
mittee was urged to continue its
Trend Toward Worldwide Gold
studies along .the lines suggested
Standard

had

which

in

his

been

resolution.

new

r.r

'

J

■' •'

r/,

■■

The trend toward

In

a

worldwide

January 1948 Colonel Prof¬ gold standard started in
Germany

fitt again urged
take action.
In

Finance

submitted

in

meeting
"thgt it

and

With

the

collected

a

the

be

of the Committee

Currency read
received

premature

a

Colonel

to

Proflit*

The Chairman
on

Finance and

letter which

from

Colonel

that in view of

he

Prof¬

more

indemnity from the Franco-Prus-?

and

sold

silver

in

equally large
unloading • • of
large quantities of silver on

quantities.

The

Barclay Investment Co., 39 South

Chamber's
draw

his

value

of

the

as

all

of

were

the

the

of

defense,

the

served

currency

countries

that

on

depreciated the

silver which

basis

which

standard.

In

in

then

self-

therefore,
to
prevent
from obtaining all of

Germany

recent

developments,
particularly
the
opening of a free gold market in
France,
he was
requesting the

La Salle Street.

of
as

to

report

fitt agreeing to such a disposal of
the subject. He pointed out, how¬
ever,

sums

France

Cur¬

gold- standard -at

resolution of

had

huge

from

its

would
to.

1871.

sion war, Germany decided" to
go
the on the gold standard.
To do s<v
February 1948 if; bought gold in huge quanti¬
which it concluded ties in the international markets

on

at

in

money

to this request, the

response

Committee

the Chamber to

the world market

Financial*ChroniciS)

become

progress,

the

to

as

in

should be tabled."

CHICAGO, ILL.—Allan E. Niel¬
has

had

the

Kidder

5C-3 Florida Avenue, have

(Soecial

to the studies which

as

Committee

n^ron"** r"*

With Barclay Investm't Co.
.

Colonel Proffitt

M.

Tampa

added Francis C. Bid well to their
staff.

sen

money,

Currency
the

1947

brought the

such

the

establishing confidence in

to 1871 was marked by wars and
revolutions
in
Europe and the
subject to the
Civil War in this country.
Most
Chamber's; attention. At that time
of the important countries aban¬
a report, was made
on beha'f of
doned their established monetary
the Committee on Finance and
In March

again

this time" and recommended "that

A

large gold
particularly essential

currencies

(Snp^isl

than

months, requires the largest pos¬
sible supply of
gold, and any in¬
centive of a higher
price for bul¬

time

ber's

return

Kinder Adds in

this

to

upon

rency

reestablishment
of
the
stability of European currencies,

of gold

This "experience shows clearly
to offer a resolution
the subject for the Cham¬ the effectiveness of monetary pol¬
consideration..
The
Com-, icy and human management in
mittee's Chairman reported to that bringing
about
fundamental
effect at the meeting of the Exi- changes in a nation's monetary
ecutive
Committee on Feb, 25, system.
The quarter-century from 1848
and that Committee concurred.
that

Chamber

Building.

great quantities

mitte. believed it inappropriate afcj country.

to the staff of A. M. Kidder & Co.,
Barnett National Bank

'

.

Chronicle)

FLA.

into operation March 1, the Ccm

Margaret D. Camp has been added

"The

did not

to

product.

countries, chiefly in Europe,* and
gold is essential to the establish¬
order

outlawed,

buried

given

ment

coin

his

Stabilizing

in¬

were

♦

sirability of such
Captain John B, Trevor

"It would not affect in any way
the
management of the public,

the JState

for

of gold

'

who

to the de¬
further study.
as

Territories,

reducp

demands .upon thje
Treasury under the law inquiring

nomic

inflation¬

price

Other

Committee

an

would

reserves

substantially

avoiding

resultant

a-

national

the

mined

and' bank

for the next 12 months at
$2 or $3
billion
and
I
am
interested
in

the

changes

at

that

of

present agreed

.vere

by the Senate and
silver in France,
however, gold
Representatives of the partment, including several days
tended to gravitate to that
coun-?
United States of America in Con'" work in Waehington> The refultg
try, and virtually none came to
gress
assembled, That, notwith¬ of thfs investigation were re¬
viewed by the Committee at a the United States. To bring gold
standing any law or Executive crjder, gold in any form, mined sub¬ meeting on February 24, 1947, and to the United States, the ratio was
The new ratio
sequent to the enactment of this because the International Mone¬ changed in 1834.
Act within the United States*
tary Fund was scheduled i to go operated very well, and attracted

"This method of treating the prob¬
lem of increasing the money
supply

ex¬

estimated

members

ad¬

buying any new gold
above $35 an ounce.

-

•

study the subject further.

a

ditions

not

an|r

<£-

in view of un-.
settled 1 inter-,

reserves

would

additional

accompanies

vocating

It

contribute to the creation of

ary. "

gold. The Treasury coulrf

■

dollars

'

re-

a

resolution

ex¬

change of the existing supply of

would

take place.

"Imports of gold

in¬
dividual or firm buying the metal
would exchange his dollars for
gold, but no new dollars would be

money supply and
not be necessary to im¬

reduction
of
about
$0.5
in currency which had to
offset.
The Board contends
upon

ijs

any

elaborate control

a

that

to

it would

billion
be

turned in

pose any

deposits influ¬
by the imported gold. There

enced

be

Treasury for dollars.

•

/:

.

Treasury

to offest increased

serves

was

of

excess

gold is not
portion of the Sav-

re¬

by reducing bank deposits.
"The

the

case

spent, but a
ings Bonds will

reserves

reserves

either

In

<

would be freed of the necessity of

Treasury Sav,-

dollars, and are cashable. on 60
days' notice. Newly-mined and
imported gold, if held by individ;-

issued

port,; which-

any

the monei-

way

Alaska,

and

the

a proposal of Col. E. J. W.
Proffitt to recom¬
return to the gold coin standard by the United
States, has

a

gold without any obligation to sell
of it or to redeem any cur¬
rency with it, and the Treasury

thje

permitting adH

on

had under consideration

mend

still retain $23 billion in
monetary

ings Bond Campaign now under¬
(during
April
and. May).
These bonds will immobilize 'hot'

includ¬

ing

commend

Currency and Finance of the Chamber of.
Commerce of the State of New York which, for several
months, has

rency in

tary system at all.

Terr itories,
and
posses¬

sions,

results by not

The; Committee

quire the United States to sell an;j
gold at all, or to redeem any curl

-

and we can accomplish

money,

gold

would it rei

nor

v,

o)

value.v*■■■:-v■/'/•;j

at $35 an ounce,

to ,borrow

need

no

large proportion

a

"A free gold niarket .would
no|
change
the; obligation
of
the
Treasury to buy all gold offered

deemed desirable to prevent more

ment

lost

;

permission
to M with¬
Committee's report and

1 R. G.

Hawtrey, The Gold Standard in
and Practice, 5th edition, 1947,
65. All of the historical matera! with
regard to the silver and the gold stand¬
Theory

p.

ard

is

taken

from

(Continued
■

.

•

Hi'

■

this

on

source.

page

42)

>

Yolrm? 167

Number 4636

Reports Drain

^

on

THE

COMMERCIAL

SAN

cms

April issue of the

Federal

FRANCISCO,
First

with

built up to

edly

high

during

tne

war,

bay,

taking
foreign

large portion of

a,

and elsewhere found it

dollar is what

spend their current dollar earn¬
ings because of supply shortages.
Since

the

reserves

end

of

rate

of

Tne

marked

increase

in

ex¬

substantial

be

to

on a large scale, main¬
for United States exports

pay

could

not

be

financed

in

other

ways.
Total foreign hold¬
ings of central gold reserve and
of banking funds in the United
States, which increased from la
billion dollars to nearly 23 billion
during 1939-45,
declined
again
during 1946 and 1947 to around lb

billion.
v

-Although still larger in

terms

money

than

before the war, in
purchasing power foreign
holdings of gold and dollars at tnt

terms of

end

of

1947

less

were

than

half

what they had been in 1938. Fur¬
thermore, the large concentration
of reserves among a few countries
from which the world was

already
has been
accentuated in some respects by
war
and
postwar developments.
Despite the additional source oi

suffering before the

war,

funds which has been provided to

foreign

countries through
t h <
of the international

creation

of

rise

in

prices.
Merchandise imports, on the other
hand, were only slightly larger in
1947 than in 1946, and the entire
growth was accounted for by in¬
creased import prices. In relation
national

to

export

income,

gold,

imports into

V

r

,

300

Imhof

R.

James

/

•>

.|-l:/,| :.'l|'

>

,,

L*

-v..

Street.

Montgomery

commodities

supply

difficulties abroad, particularly in
Europe. Merchandise imports from

which in the interwar
accounted for between 40

Europe^

years
and 50%

find

Open

.'SAN FRANCISCO, CALIF.

The San Francisco office of E.
Rollins
closed

—

H.

& Sons, Incorporated was
as

of

April

according

30,

Alexander

to

McAndrew, Vicecharge. At the same

President in

time

his

announced

McAndrew

Mr.

retirement

the

from

Rollins

can

we

things.
need free markets for

we

and

labor.

for

This

lies be broken up.

defi¬

nitely

Free

what

dol¬

oqr paper

How

lar is worth in

true

Gold Mart

find

we

can

out

what

a

labor

objective

p.

in

respects.

;

Lewis

H.

Haney

..

,

country, there is

dollar's

worth

financial

of

is when gangs of outside
"goons" from the seamen's union
mass
picket and viot as I have
seen
them doing with my own
eyes?
:
-

any

these,

of

one

In this

In San Francisco

do that,

we

we

mar¬

require .that the govern¬
ment quit supporting farm prices,
and that organized labor monopo¬

don't

way

McAndrew & Go.

free

would

tips out.
jAt present,
know

these

First,

curren¬

to

■

a

•

flection of production and

Not till

kets.

too low,

or

establish

to

know

w.e

the

In

past he was Manager of the trad¬
ing department for Monasch &
Co., and for Chapman & Co.

the United States have been much

smaller;than before he war. This
lag in imports is primarily a re¬

have

eign

,

liquidated

had

to

the

ly tb

1945,

have

will

commodities,
la|bor or for-

made possible

was

may

cies

dollar volume of merchandise

ports last year

"prices" are high

we

tqrn

billion

21

buy,

aftd

dollars.

by the expanded physical capacity
the: United. States to produce
for export, but it also reflected a

which

however,

annual

foreign

or

<♦>

it| will

were

an

labor,

in: -(1) gold; (2)-commodities other than, gold; (3)
labor,
(4) other currencies—pounds, francs, etc. The real value of the

and

28% larger in 1947 than
1946. At the peak in the second

at

impossible

to

these

in

turn to price of gold, commodities,
currencies to find this out.

its value

quarter of 1947, they were moving

of

requirements, especially
in Europe, and when many coun¬
tries in the Western Hemisphere

we may

There are at least four ways to find out what is the true value
of the paper dollar (the only kind of dollar we have). We can find

Chart. Exports of goods and serv¬
ices

'

■■

Haney states that although real value of dollar is what it will

!

quarters of 1946 and 194'
shown in the accompanying

are

■'■

'

Dr.

„ignt

when Lend-Lease operations were
care

1C'

<

,

unprecedent-

an

level

Professor of Economics, New York University

Co.,

Reserve

•

ana aonar reserves

were

By LEWIS HANEY*

asso¬

California

•*

Bulletin, published by
the Board of Governors of the Federal Reserve System has a leading
article covering the postwar drain on foreign gold and dollar reserves
and
the consequent increase in *he U.
S. gold reserve in 1947.
According to the article::
^ wv..'1 II,/Villi-——--;
—
■

Foreign gold

Of Paper Dollar

CALIF.—

James R. Imhof has become

ciated

23

(1995)

How to Find True Value

(Special to The Financial Chronicle)

j

r

69% of monetary gold, exclusive of 5% held by
Inter national Monetary Fund.
Finds-gold holdings have expan:
sionary effects upon monetary factors in U. S. |'
?
|V
The

CHRONICLE

First California Go.

Federal Reserve Bulletin points out "sharp acceleration" in foreign
gold losses and steady increase in U. S gold reserve in 1947.
now

FINANCIAL

James Imhof Joins

Foreign Gold and

\v;|BoHar Holdings
U. S.

&

free
gold market. We can't buy and
sefl gold freely, so we don't know

Second, we must have free mar¬
kets for foreign exchange. Today,

how

the

much

gold

wpuld buy. „
I!All we can

no

paper

a

dollar

do is to find out
what foreigners pay for gold and
for dollars, and thus guess at the
true
rate
of
exchange between
the

government arbitrarily main¬
"official"
exchange
rate3
that have no validity.
tains

J,

Third, and most important, we
must have a free market for

gold.
stand¬
ard of value that may be truly
objective. Commodity prices we
can
only measure as partial and
unreal
"averages."
Foreign ex¬
change
will
always
be
"con¬

This is

two.

our

only hope for

a

of all imports of goods
To
be
sure,
our
Government
by the United States, amounted to organization and the formation of
McAndrew & Co., Incorporated.
h^s a fixed "buying price" which
only115% of the total in 1947.
the Treasury pays for gold.- This
5 The new firm occupies the old
i The. export surplus has been fi^
is; $35 per ounce. But that' is an
n&nced rin: large part
by grants Rollins quarters on the 19th floor arbitrary arrangement, and rep¬ trolled."
;
of the Russ Building and will con¬
and> credit# ; extended
by
the
resents no free or continuous mar¬
Gold is one simple thing about
United .•JStates
Government/ ; ai duct a brokerage underwriting ket.which we can know, and all men
'* »; .
"
nay be readily seen in the ac¬ and investment banking business: ; ' It is designed to ''fix" the price
can agree.
A free gold market is
companying chart. In fact, govern¬ Direct wire connections will be iofS gold,; rather* thafti to tfirid out our
greatest need.
^
ment aid programs covered nearly maintained with the Rollins of
what the dollar is'Worth;
one-third of total United States, fices in New York, Boston, Phila¬ IPII, j■)'V
^| ■
'1'.
"
1 ••J.r'-?**• r f
V.•' 1 J.- v'
Probably Too Low
v
xports during the two years 1946- delphia and Chicago.
Du Bois a Director
.

•

,

#

*

Monetary Fund, most of the
finds

itself

equipped
dollar

inadequately
liquid gold an
Only
a
few

very

with

resources.

countries

lar

work

hold gold and dol+
in an amount suffi

now

reserves

47. Of he net exports
from

this

source,

riot financed

some

nart

has

dollars.

Earl G.

Burns, August W. Carne,

much

Robert

H.

tion given by all -foreign markets.

the

provide

them

liquidity

with

rea¬

in their inter¬

national transactions.

larger v part,

States have had significant expan¬

and

the domestic
monetary and credit situation.United States Exports and Sources

of Financing
Since the end of the
countries

have

had

«In

-

foreign
rely upon

war

to

the United States to an unprece¬
dented degree as a source of
sup¬

ply for food,

materials, and

raw

manufactured equipment and sup¬

plies.
United States exports ot
goods arjd services amounted to
15
billion dollars in 1946 and
reached 20 billion in 1947.

Relief

and

reconstruction in large areas
Europe and the Far East have

of

absorbed

immense

these exports.
tries
>

end
the

quantities of
In addition, coun

which escaped

war damage
notably those in
Hemisphere, have made

dollar

heavy

demands

upon

United

reserves '•

the gold

directors and

funds in the United States, and—

since early in 1947—-their drawing

eights

upon
the
International
Monetary- Fund.The drafts- upon
these reserves may be- regarded,
from the point of view of foreign
countries, as the final balancing

their gold
process of setting
upon

reserves

in

covery

of other

sources

of supply.

Less than half of total

exports
currently by
funds derived from foreign sales

could

be

paid

for

Upon

that

Nature

Dollar Reserves
The

specific

in

^

-

categories

included

sources

dollar

other i

And'

assets.

dollar

financing available to for¬

eign countries.
of

the

A summary table

international

transactions

of

foreign countries in 1946-47 af¬
fecting their gold and dollar hold¬
ings is given at the end of this ar¬
ticle.

,

United
and

the

v

States

export

»-/•

;!l

exports,: imports,

surplus




in

the

is worth

if

in

we

know what gold

of

other

have

To Be. Bioren & Co. Partner
PHILADELPHIA,

even

terms

did,

we

paper

of gold.
wouldn't

wish.

dollars

Co;, 1508 Walnut Street, mem¬
bers of the New York and Phila-

is worth in terms
we can't

was

Gardiner & Reed.
tenant

in

a

or

whether

permission
from the "California Mining Jour¬
with

nal,^ May,. 1948.

during World War II.

>

of

1

form

a

Co'^

to

The

Fsnancial

Chronicle)

Building,

•

of

gold

and

■

'V >'. '

.

:"v'

gold reserves, i.e. gold

.

•

Due April 1,1978

.

Price 100.75% and accrued

interest

be supplemented in
by private gold hoards.

may

The

Prospectus

the

may

be.obtained in

any

State in which this announcement is circulated only from
as may lawfully offer these securities in such State.

undersigned and such other dealers

for

making inter¬
payments, and in any

resource

national

are

'•

present

conditions, how¬
foreign countries can scarce¬
ly rely upon such hoards as a po¬

case

.

au¬

ever,

tential

Corporation

dollar

holdings of foreign monetary

Under

•

ggi|| First Mortgage Bonds, 3% Series due, 1978
Dated April 1, 1948

reliable data

regarding them

not available.

Foreign

banking

funds

in

HALSEY, STUART & CO. Inc.

the

United States represent a regular¬

ly reported statistical series cov¬
ering all short-term claims, i.e.,

•"(Continued

on

page

40)

May 5, 1948

&

have

George W. Weadock, II to
staff.

ill

New York State Electric & Gas

re¬

'

1

.

MICH.—Marxer

Bearinger

added

their

:

llilSaii $5,500,000

con¬

Navy

Marxer & Co. Adds

CSpecial

an offer to sell or a solicitation of an
offer to buy these securities.
The offering is made only by the Prospectus.
- V

'

■>

Lieu-1

the

This announcement is not

■<$4

in

t

worth,

^Reprinted'

He was

Commander

SAGINAW,

dalphia Stock Exchanges, will ad¬
mit -J; Raymond Leek to partner¬
ship on June 1.

Mr.

Assistant Counsel

an

Federal Reserve Board

the

as we

'*

are

the

of

Seaboard

Washington from 1933 to 1936 and
later was associated with the law
firm
of
Davis
Polk
Wardwell

In order to find out what paper

PA.—Bioren

6

of

has

Inc.,

member

a

Surety Co., it is announced.
to

goods, because

gold, and exchange it

Secretary

Co.

Directors

'

-

Central

some cases

balance, amounting to
dollars during the
two-year period, placed a heavy
strain upon the various sources of

David

a

of

DuBois

This is the indica¬

don't know what

&

"foreign gold

reserves"

types

thorities,

The

we

elected

Board

DuBois,

Morgan

Foreign Gold and $

of

of .goods and services to the United

19 billion

So

dollar

up the Fund and
their drawing rights
institution;

'

States.

over

J.

too low.

P.

been

prices by 'depreciating
Now, however, the $35

treasury price of gold is probably

Lynch, ThomaS W. Price, William

.

many

Hugh

raise

J.

the

grouping for purposes of
large deferred demands for analysis even though they cannot
products, and the slow re¬ be
sharply
distinguished from

their

to?

new

J. Quinn; JV-. F., Taylor and
S. Tucker: *

establishing

and

income,

Cummings,

addition, foreign

venient

domestic

of the

Delafield

J.

of

part of the New Deal scheme

was

Jacks,. Axton F. Jones, Kenneth R.

countries have had to make drafts

States production because of their

of

officers

of

item in their transactions with the
United States. In

hgh

levels

board

Tbe

■■

of

foreign
countries;; i.e. their central gold
reserves, their holdings (both of¬
ficial
and
private) of banking

disruption,
West

however,1? has

drafts upon

necessitated

sionary effects

upon

Originally, $35 (paper) per gold
was
much too high, and

ounce

firfn will include, in addition to
Mr. McAndrew, Baptiste Barthe,

eign dollar balances in the United

to

Incorporated,

composed of former Rol¬

the United

The gold inflow into the United
States and the liquidation of for¬

cient

be

ling :iassoci&tes:

States; by loans from
the International' Bank;
which
commenced
active operations in
1947; and by the liquidation of
miscellaneous foreign-owned as¬
sets in the United States. Much

sonable

McAndrew & Co.,

will

bben paid for by am outflow of
private gifts and investments from

-

-

24

(1996)

COMMERCIAL

THE

Wants Stable Prices

Sufro & Go. in L. A.
(8neclal

Public Debt

on

Policy, of which W. Randolph Burgess
is Chairman, says Treasury and Federal Reserve can curb
inflation,
but in applying fiscal remedies, it must
guard against deflation.
Notes decline in investment earnings of life companies, 43% of

LOS

to

The

liam A. Johnson has become asso¬

————

that

b 1 e myj rinds, net investment earnings of
made
public a representative group of life in¬
on
May 4. surance companies dropped from
Three out of about 5% in 1930 to 2.9% in 1946.
p r o

four

reduction

This

American

described

families

of

own

life insurance,
represented

policies
amounting to
$191 billion,
by

millions

and

other

of

peo¬

ple depend for
some

W. R. Burf ess

support
»x)lic

have

the

matured,

points out.;

on

t*»at

es

committee

.

,

the

Because

their

of

cost

of

living

has

according to the study,
thousand dollars of life insur¬

gone
3

up,

buys much less in 1948 than

ance

would

it

have

bought

large numbers

of people cannot purchase the ad¬
ditional insurance they need; fur-

;her, the net cost of insurance has
risen because of the Government's

policy of keeping interest rates at
an extremely low level.
In

order to preserve the value
of the "future dollars" for which

olicyholders
that

pay,

management

it
is
of the

urged
public

debt work towards economic

flation

or

deflation.

"As positive

steps," says the committee, "the
Treasury and the Federal Reserve
have
bat

the

actively to

power

com¬

inflationary trends by paying

off the debt out of budget surpluses and by causing the posses-|

sion of

Treasury securities to shift
gradually from commercial banks
other

to

tend

investors.

to

reduce

and

money

Both

the

bank

steps

volume

out¬
prevent the in¬

standing and to

money sup¬

ply,

prices and wages. Both, of
course, have to
be taken with
care,", to avoid deflationary in¬
fluences.

The

V;

,,

committee

on

current

that since

says

investments

new

rates of

of

ment's interest rate policy in the
future will continue to affect the
of dividends
paid to pol¬
icyholders and hence the net cost
of Insurance.
amount

The study shows that since
the
early 1930s there has been a pro¬

gressive downtrend in
scales
of

•Thus,

in

ceived

back

of their

dends

insurance

1930

that,.the

dividend

dividends

as

of

turn

Much of the

of the inevitable price

created

of

sions

passed,

wartime

and

compul¬
finance
have

:-v

Life

There

inflationary

management."

*

insurance

companies hold
about $20 billion of government
securities and compose the largest
single group of purchasers of the
long-term 2J/2% bonds issued dur¬

36% of these bonds. 40% of the
assets of the life insurance busiis

ness

ment

invested

now

in

govern¬

securities.

The

study

undertaken by

was

Sherwin C. Badger, Second VicePresident and Financial Secretary
of

New England Mutual Life In¬

Co.,

reviewed at va¬
rious stages by the Committee on
Public Debt Policy and appears

surance

the

was

committee's

W.

Randolph

of

the

is

the

its

Committee

Committee

insurance,

is

esti¬

approximately $390

mil¬

Although
altered,

old policies could not
many

companies,

cording to the study, found

it

ac¬
nec¬

essary to increase their premiums
oh new policies.
The combined
result has been that the net cost

carrying

life

oremiums less the

insurance

(the

dividends)

was

from 10 to 30% higher in 1946
than in 1930,
depending on the
type and plan of policy and the
age of the insured at the .time of
its issuance.

Because of declines in the prevd'ling rate of interest, the study
•




baseball
is

events

to

be followed

at

night.

will

be

by

ever,

assumes

which,

the

J.

ment is

of

a

made of the organization

South

securities

Offices

is

will

Salle

La

Rogers

general

a

Street.

President,
and

be

at

39

Paul

E.

Arthur

Vincent

T.

W.

Kane,

strom, Treasurer, and

Marion

Freiburg,
Secretary.
formerly associated

All

B.

Dunbar

firm

have

C.

&

Co., who has

Attendance:

C.

A.

of

Purkiss

L.

Publicity: Elwood J. Robinson,
J. Robinson Advertising

viously reported in
icle" of April 22.

the

which

must

savings if

$2

come

the

billion

Congress

and

Republican

party are
faith with the people.

One,

to

and

or

economy. The
aggregate reduction in these bills

As

would

There will
ate

than

the

not

mil¬

The

Baseball:

Stevens

Blyth & Co., Inc.

Crowell,

Crowell, Weedon & Co.

,

Entertainment: F. Stuart Rous-

sel, First California Co.
Curtis

H.

Bingham,
Bingham, Walter & Hurry.
Special: Clifford E. Poindexter,
Turner-Poindexter & Co.
Dinner:

ects

Charles

E.

of

should

projects

Horse Shoe: Warren H.

Tennis:

"Large-scale expansion and
celeration

Manning,

public
be

works

limited

in

ac¬

Senate.
has

bill

The

before

now

Senate

increased

this

to

declare

that*

stands, this bill is bad

now

extravagance
The

Senate

party

owe

on;;: a

large

the

and

scale.

Republican

it to the country arid

to themselves to act promptly to

the

this

correct

Committee

sum

it

legislation, embodying waste and

are
deemed urgently
to the public interest."

the

We

therefor.

sons

42, the House provided $606,558,in

a

as

such

Notwithstanding the declaration
of policy contained in S. Con. Res.
766

•

greater length

minority report our strong
against
the
exorbitant
spending in this bill, and the rea¬

as

necessary

eco¬

protest

proj¬

to

control

programs

financial needs of the

and

We have stated at

declaration:

M.

flood

harbors

and

country.

Senate Con. Res. 42 contained this

Jo

jbe

rate consistent with the

a

nomic

appropriation
bill
carried
million for these purposes.

$415

continue

rivers

at

appropria¬

an

named will—if the

and

carrying rivers and har¬

bors and flood control items.

earnest

our

sum

and

before the Sen¬

come

early next week
bill

$720

experienced

declare

ceeded in future bills—the appro¬

more

based

legislators, we
judgment that
Army
engineers
intelligently
observe
the
rules suggested—fully meet
every urgent or important need

is about $360 million. At this rate
is not likely to be ex¬

reduction

be

be completed with reasonable
appropriations; and (4) Projects
where the State or municipality
bears a portion of the expense."

legislative

to

that their selections

recommendations

can

than half the total avail¬

more

projects which they
important both

most

on—(1) Urgency; (2) Long-range
importance; (3) Projects which

aggregating about $7 billion,

able for

be

control, and

keep

sidered and
bills

the

to- rivers and harbors and flood

as

the

the

to

deem

both Houses, have con¬
passed appropriation

or

this bill

reduce

$200 million. We further

to

sums

of

legislation, with its

waste of men, money and materi¬

$708,-

586,666.
-

Driver,

Blyth & Co., emeritus.

We protested, filed
als sorely needed in these critical
a
minority report and served notice days and in the months immedi¬
of

intention

our

to

move,

the

on

ately to follow.

Harris, Hall Opens

FHA Reports Record Home

CHICAGO,
&

Co.

have

ILL.—Harris,

Hall

the

announced

ap¬

as manager of a new Pacific
Coast office which will be opened

at

San
Francisco. May
Montgomery Street, f;

5,

235

the
exception
of
four
with the U. S. Navy, where

attained

the

rank

ant-commander,

Mr.

of

lieuten¬

Elliott

has

been

associated with the Chicago
office
of
this
investment
firm
1935.

He

from Princeton

graduated

was

University in 1934.

Harris, Hall & Co. also have
office in New York.

building construction figures for the first quarter of 1948,
made
public - by Federal
Housing Administration Commissioner
Franklin D. Richards, tend to bear out the belief
that the current
to be

year may prove

that

than

more

record 12-^onth neriod

a

twice

as

manj

dwelling units were started
the first three months of 1948

in

under FHA

inspection than

60,432 in 1948 compared with 25,562 in 1947; a gain of 128%.

were

2.

Dwelling units completed un¬
FHA inspection, 51,479 units
in 1948 compared with 11,798 in
1947; a gain of 336%.
;
,-'V.

an

der

1947.
More

than four times

as

many

dwelling units, built under FHA
inspection,
were
completed
in
these
the

first

same

Twice
tion

three

months

period last
as

many

3.

with

1948

as

filed

were

received

during

In

1947.

Louis A.

District

was

pre¬

"Chron¬

Love Opens

cited

'

MELO PARK, CALIF. —Louis
A. Love is engaging in the securi¬
ties business from offices at 700
Hermosa

Way.

In

conducted 5 his
business
and

was

office

North

of

in

the

past

4.

v -:

investment

Tacoma,

Washington

the

San

Independence

America.

Francisco

Fund

there

to

was

applications

the

for
such

over

of

first

FHA

mortgage
existing struc¬
applications in

quarter

figures
•KFjt'l

dwelling *

starts under FHA

gain

of

21%.

Pledger & Co. Adds
(Special

.Ci

to

The

Financial

Chronicle)

on
tL'sJl

ANGELES, CALIF.—
Pledger & Co., Inc., 210 West
Seventh Street, members of the
Los Angeles Stock Exchange, have
added

New

a

LOS

which these statements are based
are:

1.

1947;

FHA

operations
in

1947.

The

new

three

gain of 21%

a

insurance covering
tures

in

first

applications
covering
existing structures, 43,186 as com¬
pared with 35,638 in 1947; a gain

that

he

own

with

addition

76,909

covering
the

178.435 compared

132%:

during the first three months of

.

for

months of 1948,

construc¬

were

Applications,

construction

in

year.

new

applications

than

These figures show

<S>

new

started under similar conditions in

With

he

Building

Home

of

No. 8 of the National Association
of Securities Dealers.

Formation of the firm

remains

to

"That the Army ' engineers be
instructed to apply the remaining

items, there
$12,936,551,560,
out
of

Elwood

Prizes
and
Trophies:
French, Blyth & Co., Inc.

Reed

M-

propose—;

other

some

Agency.

new

than 25 years and are well-known
in La Salle Street. Mr. Aim was

for

tion—and

instructions

total by

Forces; Veterans Administra¬

1948

Walston, Hoffman & Goodwin.

been

year

Air

period in

principals of the

last

on

public debt; debt retirement;
government and relief for the oc¬
cupied territories; Army, Navy,

tion

Blyth & Co., Inc.

were

C.

engaged in the
investment business here for more

Chairman

Clyde

Senate floor, to recommit

Committee Chairmen:

as

Golf Committee: Pat Patterson,

Schmidt & Co., Inc. here.
The three

Styles Bridges

with

items—interest

John

Vice-Presidents, Herbert G. Wick- since

with

Sen.

lion—not $2 billion.

liott

new

conduct

Budget estimate for fiscal

1949 appropriations was $32,926,201,511. After deducting the

priation

athletic

pointment of Frank Osborne El¬

Announce¬

—

The

Chairman for the field

General

the

San Francisco Branch

Chicago

CHICAGO, ILL.

in

how¬

Aim, Kane, Rogers Go.
Formed in

enacted

—which

for

selected

responsibility

no

findings.

econ¬

year

prizes,
contests,

many

Falk Founda¬

Pittsburgh,

for the

by

is

control

amount

Chairman, and

financed

are

Maurice and Laura
of

of

City Bank of New York,

studies

tion

Cha'rman

Burgess,

Executive

National

approval.

flood

iay! will be John B. Dunbar of

ing the Defense, War Loan and
Victory drives, holding more than

Aim

lion.

date

day

etc.

nual

of

athletic

entertainment

man-like

business.

cost

of golf, tennis,

dinner

a

years

The

the

at

field

planned for the day, culminating
with

;

later.

annual

other 1

to

years

office

locale for the event. A full

program

awards

difference between these two
fig¬
ures, representing the added an¬

of

the

as

national

less than 8.9% of their
•

Angeles

selected

first

forces and call for wise and states¬

debt

date nei¬

present form, will jeopardize
the
possibility
of the Congress
staying within
its self-imposed
appropriations limits.

depart¬

trading

Los

of
the Bon Club of Los Angeles, with
the Bel-Air Country Club chosen

the

potential

as

been

the

16

were

premiums

be

of

part

our

tinue

the

ANGELES, CALIF.—June

has

war-

large national debl
expanded money supply con¬

and

the

of

for

LOS

Chicago investment
house, Aim, Kane, Rogers & Co.,

premiums, whereas divi¬

mated at

While

debt remain.

and prior thereto was

Co.

Angeles Bond Club
Field Day June 4

that all ol

large

by a

To

its

.

Los

society paid for a great war, "but,"
says the committee,
"the dilem¬
mas

call.

"untouchable"

re¬

as

roll

a

the

4

effect of the

bred inflation is described

'',i

of Cruttenden & Co.

insurance

life

&

ment

companies
will rise as rapidly as it declined
during the 1930-1946 period.

re¬

15.7%

investment

overall

companies.

policyholders

bar

manager

income

investment

-

Building.
Mr. Johnson was for¬
merly Treasurer of John B. Dun¬

in in¬
surance portfolios.
The committee
says that even if the trend of interest rates is higher during the
next few years, it seems unlikely

insurance

companies,
but
also
through refunding operations, on
the earnings on
holdings already
in
their portfolios, the
govern¬

and

^William ,X. Johnson,

return, and does not in¬
the

re¬

pledge, and the Senate, if tne
pend.ng bill on rivers, harbors

invested at higher

are

be

omy

from the securities already

with

rates
on
government securities
set the pattern for rates not
only

without

in¬

life

public opinion of the

under the

ther House has fulfilled this

the extent that

to

only

funds

crease

of

deposits

flationary spiraling of

surance

new

benefits

this

that

sta¬

bility and not towards either in¬

if

in the wages

that interest rates on
securities stiffened some¬
committee com¬

ments

bar of

the

1949 budget es¬
billion. That resolution
passed the House by a vote ol
315 to 36 and passed the Senate

Noting

prime

before

That is especially true of the Republican

timate $2

invested savings."

securely

trial

on

appropriations would

duced

what in 1947, the

in; 1941;

also, because of higher living costs,
and heavier taxes,

40%

about

of

"a cut

as

is

majority.
' *
1
On Feb. 9 this year a joint com-<$>
mittee of the Congress, through S.
Con. Res. 42, pledged the people

burdens upon those why rely upon life insurance for protection, the
Committee on Public Debt Police finds in its sixth study of the

every

Senate

United States of America.

rapid rise of the national debt since 1940 has set up forces,
inflationary and otherwise, which have placed increasingly severe

debi^

The following joint statement was issued on May 2, by three
prominent Republican Senators, Styles Bridges (N. 11.); Clyde M.
Reed (Kans.), and Homer Ferguson (Mich):
The

whose assets comprise government securities.
The

national

(Kans.), and Homer Ferguson (Mich.), say Republican Majority
are not
fulfilling economy pledges.

ANGELES, CALIF.—Wil¬

ciated with Sutro & Co., Van Nuys

•

Congressional Appropriations

Three Republican Senators, Styles Bridges (N. H.); Clyde M. Reed

;

Chronicle)

Financial

Thursday, May 6, 1948

Blast

Protection of "Future William Johnson With

as

Dollars" of Insurance Policyholders
Committee

CHRONICLE

FINANCIAL

&

Ipon^fr^ctip'p.
j

Leabman

jstaff. He.

inspectiojp wepeVBrashears

Willard

to

their

previously with G.
& Co.

;was

COMMERCIAL

THE

Number 4696

167

Volume

FINANCIAL

&

CHRONICLE

filled

^
•

•;

of Business Conditions
•/;. Ry KENNETH FIELD*

•'.'

Director of Industrial

:

' J /

-

'• : >.

Relations Research,

;>>'•

Carnegie-Illinois Steel Corporation
•"

.y

'

,•

..

' >

•/;

,,

' ■*

„

Dr. Field reviews current monetary and banking

factors

affecting business conditions, and contends

well

as

as

" •/..•

»

y

•

y.

agricultural and industrial develop-

-

recent rearmament appropriations

jiistments have, enabled inventory

that

significance

f shall refrain from venturing

business,

prices

in
be

bank credit.- Sale of

the balance of

pressure

savings bonds will likewise tend
to cause reductions in bank hold¬

it

is

since

not

pos¬

to

dis¬

sible

associate

pri¬

as

a

on

government bonds.
In
words, the government is no
longer bidding for goods with
printing press dollars.
ings:

my¬

self

of

other

vate

The credit

ual

lowed

sue

from

ments

views
reflect

those

of

the

to-

p re s s u re

other

being fol¬

Federal

the

Reserve

during the past two years in¬
creased
by
approximately
the
amount that government deposits

my

employer, and
due

now

System, is likewise conservative.
Although private deposits in banks

that my
may

policy

by the banks, in coopera¬

with

tion

inference

the

Dr.

of

Kenneth

Field

decreased, this policy of rapid ex¬

pansion has now been halted

and

is being exerted system¬
opportunity to de¬ atically to prevent the financing
of excessive inventory accumula¬
termine the position of the corpo¬
matters,

pressure

I have had no

ration.

tions viritK bank credit:

,

.

Perfect, bench marks do not ex/

of the

Because

of

notfed

impact of gov¬
ernmental expenditures on prices
and because .of the long period of
relatively high prices; many dis¬
cussions *
are
concerned
with
whether prices will rise further,
stabilize, or decline.
Since this
question is in the public eye" at
the present time, it may be well

ist

determining the

for

inventories

which

level

become

at

exces¬

Peacetime requirements for

sive.

inventories. in manufacturing

are

Business

adjustments1

In

.

while both busi¬
individuals, with,; of

and

conclusion

much

positions — positions which
always facilitate orderly adjust¬

both

ward

which existed in 1920 .and in 1929.
Such comparisons are of interest

the

and

it

of

might' be well

past

learned

have

we

20

conditioning

prices

and

con¬

years

downward

production.

i,
I

the

in

cerning

quid

Knowledge

mention that

to

course, notable; exceptions, have
maintained relatively, strong
li¬

of

up¬

movements

of

Resources

industrial

of

team¬

work and general business admin¬
,

.

Agricultural

■

;

istration

are quite as important as
physical resources in dealing, with
business
trends, * and these re¬

Factors

substantial; part of the
; One of the main points of dif¬
of
the
readjustments ference between the agricultural sources have been increased im¬
following the 1920 and the 1929 factors in the present boom and mensely in recent years.
boom
periods was traceable to those in past booms is that farm¬
These factors; namely, (1) sta- :
forced liquidation brought about ers have held their debts to much
bility of bank credit^ as influx
more
conservative levels than in
by contraction of bank credit.
enced by stability of public debt,;
the past and hence their credit
Today bank deposits are gen¬
deposit insurance, / a reasonable
positions are basically stronger.
erally insured. This fact will pre¬
tempo of private spending, hnd
vent the type of bank: runs which, Further, the level of farm prices conservative
administration
of
is so high that even with a sub¬
in recessions of the past, caused
bank
loans;
(2)
completion of
stantial reduction in prices the in¬
banks to seek liquidity by discon¬
business adjustments in numerous
come level of farmers would still
tinuing sound loans and thereby
lines while the boom was in prog¬
be attractive.
'
/
.1
forcing strong holders to liquidate
The
continuation; of: the food ress; (3) governmental suonorts
at any cost. Further, a large part
for agriculture; and (4) increased
crisis for so long after the war
of the! bank deposit structure is
business know-how with respect
was traceable to droughts as well
based
upon
federal
securities
as to the effects of the war.
Cur¬ to the national economy, consti¬
which cannot be repaid on the
rently the food situation is in tute :
same scale that private loans have
significant differences from,
easier condition, as are also many
been liquidated in the past.
For
the
conditions which existed in
non-food
agricultural products.
these
reasons
the
money
and
1920 and 1929. :/
\ "
credit supply which is support¬ Basically the supply and demand
ing the present price level is
basically more stable than that
because

a

sharpness

i

.

,

which existed either in 1920

in

or

These unprecedented
ele¬
than are wartime 1929.
requirements. The wide diversity ments of mass credit stability in
of products Offered in peacetime turn provide elements of stabil¬

much

be

that, these

ments.

the year,

of the eeon-.

conditioned

previous"boorh'periods.: It isrto

nesses

during

area,

will, of course,
by the legislation
actually enacted.

shifted with a
disturbance unparalleled
to

have taken place

specific forecast of industrial production and

a

iri"

not much changed from
those
industries
have* adjusted previous booms-except for gov¬
their
positions to more normal ernmental price supports which
prospects while other industries are now in process of restudy by
were sustaining the postwar boom.
Congress. Such supports will be
These
industry-by-industry
adf of: considerable significance; but

lack

It is my purpose to discuss certain factors in the economy in relation to each other and
in relatibn to historical patterns in order to throw some light on the present cdndition of

this

25

are

surpluses

-

in

omy

industries

situations to be adjusted and labor, be

and tax cuts
should not affect the present balance between production, money supply and credit: Points out better
knowledge exists concerning conditioning of upward and downward movements both of prices and
of industrial production and better teamwork in business has been combined with physical resources in
dealing with business trends.
■
*
ments

.

factors

in many consumer
this country; and

ready

A Roundup

(1997)

greater

larger inventories, as does

causes

4 0 Years Growth in 2 Years

ity for both prices and business.

to start with some of the monetary

the absence of governmental allo¬
During the
which have cation of materials.
changed during the past year and war the government-scheduled the
which have changed since prior flow of materials so that plants
and

boom

Public Debt and' Price

factors

banking

many

given supply:. elements in the economy adjust to
Now industry must* carry inven¬ take account of changed relation/
tories adequate to protect against ships. After such adjustments are
could be

periods;

Stabilization

•3^heh price level changes,

of a1

sure

-

Monetary and Banking

Current

Factors

Prices

bid

demand.

of

sult

are

up

Under

a re¬

normal

goods or services pro¬
duced by a seller are exchanged
for; the means of ' buying /other
processes

goods

and;. services.,

Production

thu s creates the demand for pro¬

duction—and if money factors are

kept constant, price-level remain

relatively stable.
j

are

-

price level

Changes

called inflationary come

which
about

made, further changes tend to

interruptions of supplies.

all

only as

re¬

further - adjustments;;.; and
even
though a trend is revers.ed
bank Credit
arid various factors tend to push
the remaining source of possible
adjustments toward the original
inflationary pressure is a more
starting- point,. such, adjustments
rapid tempo of private spending.
are; painful and cause' dislocations
The price level has. not > risen to
comparable in severity in many
the heights logically to
be ex¬
respects, to the adjustments made
pected from the increase in money
when the factors were moving in
and bank credit because the piib/
the
previous direction.
Because
lie has not chosen to spend its
of the impacts of different factors,
money at as fast' a rate : as for/
there is; a tendency to shun ad¬
merly. The increases 'in- money
justments wherever possible. The
and bank credit in the last. 15

With the

supply of money arid
no longer increasing;

quire

,

through increasing the money and
credit supplies in the community. years have been; partly offset by
public's
unwillingness
td
By printing more money or ex¬ the
changing bonds for the right to spend. During the prewar period;,
draw checks, the government bids lack of confidence caused the pub=lic to hold larger than normal idle
up prices with money, and credit
During "the. war,
which were not obtained by put¬ cash reserves.
-

(

equivalent quantity of high prices, rationing, and lack of
goods into the market to be pur¬ goods became important factors in
chased by others. These facts are causing the public not to spend.
ting

an

well known

to

this audience,

but

As

result the

a

turnover of bank

because I wish ^ to deposits constantly decreased/
Were the public now impelled
emphasize that inflationary price
I repeat them

increases can come about only

by

to

reverse

its

habits and

recent

pi^eftt ;10y£ls; of/n^tioriaLancome^

prices, and public debt do not ap¬
pear to be exceptions to this gen¬
eral tendency to oppose change.
Today there appears to be little

disposition to reduce the federal
debt drastically; in-fact there is
much

more

duction
Such

sentiment for tax

than

for

of the
continue

management

debt operates to
amount

re¬

debt reduction.

a

public
large

duction in the amount of bank de¬

pressure
during the coming
months of 1948.- The total supply

and credit has remained
practically4* stable for more than a
year./ The Federal Budget has
finally been balanced and. is prof
ducing a surplus. Recent rearma¬
ment appropriations and tax cuts
should not' seriously affect this
of money

In "addition, social secur¬

balance.

opments' do not usually continue
on a

sustained basis;. Rate of turn¬
bank'

of

over

deposits

creased during the last
but: such

,

has. in¬

six months,

activity tends-, constantly

to eliminate

impatient holders of

liquid/;funds from the markets.
eliminations

Such

ity* {axes and1; other trust furidS; added
are

stability: to

the; general

M o n e ta r y a n d'

held gov¬

j ''An address by Dr. Field at the
fath' Easterrr Regional Convention

of^thp^ational /.Association^ of
Bank' Auditors'and ; Comptrollers,
Pittsburgh, Pa.,.April 24, 1948. ;'




it

may

;

be well to point out

certain/ fundamental'
which

,

have been

distinguish

,

v

the

'

were

mendous f
and

tear

deistructioh:

which the

European

upon

*

heavy

ment in
omy

at

a

a

a

large sector of the econ¬

present

y

up'

with

ages. '

-

war-created

short¬

Supply pipelines have

al¬

••

wrist, which

can

system for transmitting tele¬
phone conversations by superhigh-frequency radio waves. Both
are
designed so they can be used
for Television as well as Long
new

v

the-increased* value of

.

Distance calls;
And research

on

still

There is the extension of tele¬

new

electronic

trucks, busses, boats, trains, and

-

airplanes. \
There
program

is

'*

•

.

the

$2oo,ooo„ooo\

to extend and irriprove

wider

horizons of electrical

communication within view.

phone service to autbmobilesf

-

It's allJa part of progress and
constant effort to make tele¬

our

phone service better and more
for every telephone user*.-

| useful

time' when other indus¬
the

/

cany 1800 Long Distance calls at
one time.
And along with it is a;

in¬
'

ended

telephone- company, .are extend-: / devices, now under way in Bell
ing its scopeand usefulness. *
Telephone Laboratories, brings

sustained demands

high level of employ¬

thicker than your

telephone service. Many neW
developments, worked'out in Bell
Telephone Laboratories and now *
being put intb. service, byyoiirL

imposed

country. These demands have

provided

-

war

Then there is coaxial cable, no

growth* is; not the only

measure of

industry

cefittain heavy industries; in

forty.

Today there
rural telephones

areas.

50%

more
than when the

your

arict; wear

war

born—in about-two. years

stead of

The tre¬

taking place.

changes tries' have" been rapidly catching

bank' credit .situation'from,-those

;/■■

economy

are

been added since these little tots

.

yZ/'v

Turning from current compari¬

sons,

tial adjustments irt the

this

Ba n k i ng C h a n ge s

Since 1929
•;

those of 1920 and 1929 is the pe¬

service in rural

years

six million

telephones iff this cduriftyr;
there are twenty-nine mil-

But

"the5present; situation and

were

;liffff;:§Tfe/last;:;si^ pillion' have/

Factors

riod of time over which differen¬

on'

obligations with resulting

Now

Another factor ot difference/be¬

tween

have produced

producing- additional surplus structure/
causing re¬

purchase of" privately

General Industrial

probably

have

reveriues^

ernment

Bell

begin

parent that only the public can recurrence of government deficit
produce
a
further inflationary financing. However, such devel¬

telephone was- forty

old before there

turn tend to prevent re¬

these in

spending more feverishly, posits. Hence this resistance to
the demand; side of the market passing bank deposits and money debt'
reduction
constitutes
a
from hahd to hand, without too
process
without correspondingly
factor which will; terid to' liriiit
much regard for prices, a much
increasing the supply of goods
the amplitude of any downward
available for purchase.
higher level of prices' undoubt¬
Bearing-this5 in mind, it is ap¬ edly would develop without any fluctuations in prices.
increasing the money released on

Ihe

bonds outstanding and

of

BELL

TELEPHONE

SYSTEM

26

(1998)

THE

COMMERCIAL

By JOHN DUTTON

CHRONICLE

Thursday, May 6, 1948

The following are ideas that we have come across
during the
past several weeks that may be of some assistance and benefit to
you in your quest for more business.

will

supplement private credits and will cooperate with World Bank.

one

improved,

real good profit."

a

When you boil it all down to

loans

simple illus¬

a

ment

this, that is the kind of sales presentation that
understands, and it is effective.
as

AND

SO DID. THIS

several

times

over

what

effectively
funds."
*

SALESMAN

they

are

customers; especially when

400.

MONEY.

IT

IS

THIS

IN

THE

APPLIES

EVERYTHING ELSE.

we

TO

Maybe

can

a

eration

MAKE

THE

New York paper.

information from Iceland.
plies. All were answered

The

But you couldn't
telephone
a
letter and a

ad

brought in

The

you

U. S.

shares.

The

Army Ait Corps.

around—even in Iceland?

over

a

or

make

a

new

mailed/

order

customer happened to be

Doesn't this

nomic

instrument for inter¬
governmental financial coopera¬
tion.

However,

that

re¬

the

So

be

addressed

have

municipal bond
Vostal

was

department.

formerly

a

the

has

21

years.

it, since it must

to the private
cap¬

is

for

more

this

OIL

&

The
and
to

Bank

local

B. E.

countries

are

should

hot

ensure

development of

will

not

be

re¬

tarded by a lack of capital.
The

existing

between the
and

OIL COMPANY

the

the

in

Export-Import Bank

latter

order

to

Bank
ensure

institution

will

wil

that
have

every

such loans.

governments

TekptowJCEysteee
,*■ #

•

3M! ■'?

p

■




J <

Company

ocal

sources

B«tt

in

ocal

currency

of

capital to cover
requirements, and

in view of the obvious

source

credits.

also

The

ensure

of

develop

cooperation

that

no

sounc

development project which cannot
be privately financed will
fall into

;

a

Teletrp* DN157

v.

between

gap

tions.■■

•

/

;

\

the

two

institu

-,r"

Everyone here/1 think, Under¬

of the Board of Gov-?
of the New York Stock Ex-

desirability

for

six

months

of

Nulty, an allied
Exchange and a

William

member

general

E.

of

the

Dreyfus & Co., for
violation of Sections 6; 7 and 16 of
Art. XIV

of

the

Exchange's Con¬

stitution.
The

*
the

;
of

substance

according to Mr. Boylan,
"a

registered

/

charges,
was that'

representative

of

Dreyfus & Co., sold on Feb. 3,
1948, for the account of two cus¬
tomers, pursuant to discretionary
authority, shares of Kaiser-Fraser
Corp.; listed on the New York
_,

Cub

Exchange and of General In¬

strument
York

Corp., listed

Stock

on

Exchange,

the New

that

partner of the firm knew
proved
of
such

or

no

ap¬

discretionary
transactions; and that these orders,
although executed as 'long' stock
were actually 'short' sales. In
con¬
nection with the sale of the shares
of

Kaiser-Fraser Corp, common
stock, the firm failed to deliver.
On

the

next

full business,
day
employees of the firm in effecting
delivery against this sale, in ad¬
dition

to

borrowing

other

brokers
of

in

stock

from

the

regular
business, in this single

instance .and without the knowl¬
edge of any partner of the firm,

borrowing

failure to supervise
diligently or¬
ders
entered
by the

registered

representatives was a violation of
Rule 506.
The failure to have a

partner approve discretionary or¬
ders

currencies, have chosen to borrow

the

to finance

fect

Since

the

establishment of the

in excess of
$1 billion have been
authorized for the other Ameri¬
can

Republics.

credits

been

aave

Since 1940 alone

aggregating

$908,000,000

authorized

countries.

for

was

violation of Rule 513.

a

actually been utilized.
In
instances, changes in the
plans of the borrowers, inability
to obtain desired
equipment, or
other
factors,
prevented
"the
planned utilization of these cred¬
its.
However, as of March 15 of
laye

some

this

$466,000,000 had been
by the Export-Import

year

disbursed

under

credit

commitments

for the other American
and

Republics,
$200,000,000 had

than

more

As of that

$266 million

was

date

same

outstanding and

be drawn under still
or

existing
commitments.

au¬

I take great satisfaction in the
concrete record of
accomplishment
in the form of

plants,

railroads, highways,
and

power

and

other

1 industrial

productive

in¬

stallations throughout the Amer¬
I take equal

icas.
I

satisfaction,

am

sure

cellent
the

all do, in the

you

record

sound

of

as

of

judgment, in the first
the borrowers,
and, in

second instance of the
Bank,
in the selection of the
projects to
be financed.
/ I look forward to
the continuing exercise of such

judgment

on

the part of all

of us.;
V

We also look forward to

of borrowed

delivery

stock to ef¬

violated

Rules

X-

ties and Exchangfe • Commission.
"These y violations
occurred,

without

the

knowledge of any
but Mr. Nulty, as Hie
partner in charge of these em¬
ployees, was held responsible."
partner,

New York Stock Exchange

Weekly Firm Changes

The New York Stock
Exchange
has announced the
following firm

changes:
On May 13 transfer of the Ex¬
change membership of the late
Alan
M.
Mayer
to
Archibald

Douglas, Jr. will be considered
by the Exchange.
Mr. Douglas
will continue as a partner in
Pershing & Co.
+Transfer of the Exchange mem¬

bership of the late
to

con-

W. R.

K.

Carroll B. Haff

Taylor will be

con¬

sidered by the Exchange on
May
13. Mr. Taylor will continue
as a
partner of W. R. K. Taylor & Co.
On May 13 transfer of the

Ex«

change

membership

of

MacArthur

to Leo J.
will be considered. Mr.
it is

understood,

individual

Goldwater,
Goldwater,!

will

member

Malcolm

act

of

as

the

s

change;

aji,

Ex-,

Cesare Barbieri limited
partner
in

Ackerman, Conte, Mattielli

Co.

withdrew from
April 30/ •
'
'

the

firm

&
on

Anita I.

Gwynne, limited partin Bonner & Gregory, retired
from the firm on April 30.
ner

,

Victor
in

Emanuel,-limited partner
Emanuel, Deetjen & Co., on

April 30 retired from the firm.

,

James F. Shea & Co. was.dissolved Oil April 23.

-I
a

use

10A-1 and X-10A-2; of thfe .Securi¬

ex¬

repayment

This record reflects

the

sound

improper marking of the or¬
ders, the failure to deliver, and

your

Not all of these funds

'

partner

The

xport-Import Bank total credits

•

in the firm of

avoiding
the
unnecessary
amassing of obligations in foreign
only foreign exchange
requirements.

v

change, announced the suspension

of

instance of

ment

Denver 2, Colorado/
'

Applying

enterprises

discussing their financial require¬

these credits.

will

Simpson

and

ments with the Bank have in most
cases found that there were in fact

opportunity to discharge its
functions as the principal inter¬

.»

April 30, Robert P; Boylan,;

ernors

approval of such customers. Such
of securities was an
act
inconsistent with just and
equitable principles of trade. The

electric

cooperation

International

continue

>'"!

close

On

-

ever, it is the experience of the
IBank that there is
rarely justifi¬

cation for

thorizations

It

*

•

borrowed 800 shares of customers'
securities, without having secured

roughly $200 million remained to

met.

v

currency require¬
so.
How¬

cover

ments and it has done

velopment projects which

DRILLING COMPANY

V;-&a,fforn*a Building,

loans

able to consider all those
requests
for credits to finance sound
de¬

MARKETS|

-

make

cases,

been repaid.

otherwise

.

in exceptional

can,

justified

to
our

■

Chairman

course

type of endorsement.

Bank

your

Established IQ29

rea¬

exists for the omission of this

governmental

MACKINNIE

re¬

increase should make certain tha
the Export-Import Bank will be

Mr

partner of

.

KUTZ CANON OIL &
GAS CO.

the

of

request for an increase in. the
lending authority of the ExportImport Bank has been made. This

CRESSON CONS. GOLD M. &
M. CO.

KINNEY-COASTAL

that

reason

that the economic

PRIMARY TRADING

may

than its Latin
American members alone.

'

Joseph Vostal

to

recourse

quirements of

Kidder, Peabody & Co., 17 Wall Vostal, Hall and Company and,
Street, New York City, members before that, had been associated
of the New York
Stock
Exchange, .with; Kidder, Peabody & Co. for

announces that

Bank

ital market for its funds and since
it must have regard for the re¬

the firm
New
York

its

aware

may

It

of

International

also

not at all times be in a
position to
meet all the requests which

indicate that there is business

manager

we are

assurance

guarantee, and where valid

son

Social Council earlier

year

principal

become associated with
as

and

it was agreed that the
International Bank should be the

But you do have to GO AFTER
IT.

Joseph Vostal Joins
KhUer, Peabody & Co.

actively participating in
pre¬

came

with

a

pared by the Inter-American Eco¬

request for

hundred

The

are

it management. At Bretton Woods
and in the Draft
Agreement

this

call to Iceland very well.

was

have contributed to its capital

and

sufficient

payment is provided without such

It is, as

stated, "your
Bank" because
practically all of

|j

a

International Bank, as its
is not the agency

any one government.
Mr. McCloy so aptly

AS

and private entities.
It
make loans to private entities
without
government
guarantees

implies,

of

by telephone, writing and personal call.

descriptive circular

back for 200

They received

as an

name

If you ADVERTISE
you never can tell where your orders will
from.
A New York firm advertised
a low priced stock in the
a

coop¬

ment.

come

of

financial

required. We are
the International

intergovernmental in¬
stitution will play an
increasingly
important role in supplying such
capital as well as in stimulating
and
facilitating private invest¬

DON'T LAUGH AT

OPENED A NEW ACCOUNT IN ICELAND

be

confident. that
Bank

YOUR

SAME

will

govern¬

ments

can

where

ter-governmental

new

THE VILLAGE JUNK
MAN WHO IS OUT
BUYING SCRAP IRON FOR 5 AND
100 ON
THE DOLLAR.
DID YOU EVERY- HEAR OF ONE
OF THEM
WHO WENT BROKE?
How's' that for putting it into words that
SELL?"

Sunday edition

private

capital must play the major role
in the economic development of
Latin America,
nevertheless, in¬

buy them for

YOU

SECURITIES

with

,

today.

BUYING THAT

develop¬ does make loans to both

We in the United States recog¬
nize clearly that although private

invention will
improve the earnings of some industrial company
well above their
present level.
That is all to. the' good.
J hope it
happens someday.
But what we are trying to sell to our customers
is value TODAY.
Take XYZ stock for
example. There is $50 of
cash, governments, and high grade staple
inventory behind every
share of stock in that
company, and you can buy it for $40 a share
today.
And that is without
considering additional fixed assets
worth several times more than
the prevailing price of the stock in
the market.
So what if dollars aren't
popular now? I like them,
and so do our

about

well-planned

most

Another successful salesman who has specialized in
selling high
grade common stocks with ample book value, net
quick and sub¬
stantial earnings behind them
put his story this way: "I am not
interested in what MAY
happen.
Maybe a bridge will be construct¬
ed or an airport will be built that will
increase the earnings of some
railroad

for

projects which are econom¬
ically justified and to cooperate

every¬

serve

living of all

•

/

Suspends Broker

-

tration such

will

New York Stock Exclr.

-

at

productive

more

which

peoples.

at

place before an
speculation.
Sometimes and operations of the institution, particularly in its relation to Latin
companies that have been doing poorly will turn the corner.
Re¬ American
search and investigation often shows
up a change for the better in countries,
a s
stands
that., the
Export-Import
the company's affairs.?
At such a time some exceptional profits can follows:
i'Sfk
3ank is a/United States Govern¬
be made by buying these common stocks
when they are available at :; A week ago
ment lending; agency.
It has a
a
very low price. .However,'many dealers do not care to sell this yester,d a
y
broad charter, and so
long as it
type of security; claiming the risk of losing customers is not worth (Aprii 9)
at
facilitates the financing of exports
the potential profit their customers
might derive from such pur¬ the
Plenary
and imports it has
authority to
chases.
Nevertheless, there are many investors who are interested Session
you
make its own lending policies sub¬
in buying low priced
speculations at the present time. If they are all heard read
ject only to two important limi¬
sold right, the risk of losing customer's
good will is negligible in the .the* message tations'- placed • upon
it
by the
event of loss. *•/"•■■■
'
-'
'*
4
"
of the
Presi- '•
United States Congress. The first
;*
One salesman who has had more than
dent
average success in the
of
the:
rplates to private capital. We are
sale of low priced, speculative common stocks does it this
United
way: He
States
specifically directed to .supple¬
never oversells
his customer.
He states quite frankly that they
to the, United
ment apd encourage and not to
may even wind up with a total loss on the commitment.
He also
States ; C o n~
compete, with: private; capital/ In
says that there is a good opportunity that for a SMALL investment
gress request¬
he se^ohd place, our loans must
they may reap a very substantial profit.
The other day one of his ing
an
in¬
:>e for definite projects and
must,
prospects said to him. "You admit, this company has not been doing crease
Wm. McC.Martin.Jr
of $500
:n the judgment of the
Board of
very well."
The salesman replied, "That is right, but we believe million
in the
! Directors, have reasonable assur¬
from now on that it will do better."
Then he asked, "Did you ever
lending authority of the Export- ance of repayment. Within these
hear of a grocery store that was for sale and
everyone in the neigh¬
Import Bank. As stated in his imits, however, and
borhood knew that it was run down?"
they are the
The customer replied that
message "This increased lending
imits which must
he had often heard of such cases.
inevitably ap¬
"Well," replied the salesman, authority would place the bank in
ply to the operations of any Bank
"this is exactly the same sort of
proposition.
When the grocery a position to assist in
meeting es¬ designed to assist in financing de¬
store was doing poorly
anyone that wanted it could buy it at a very
sential requirements for the fi¬ velopment,
the
low price, but when business is
Export-Import
good that is the time you would
nancing of economic development Bank can make all the
have to pay a high
types of
price for it.
We think this company has turned in the other
American Republics.
oans which may be
the corner.
required for
Buying the stock now at a low price will make it poss¬ It would
permit the bank to make development purposes. It can and
ible for you to sell it
someday, when their business has

many

raise the level of

Addressing Committee IV of the Ninth Pan-American Congress
Bogota, Colombia, on April 16, Wm. McC. Martin, Jr., President
of the Export-Import Bank of
Washington, explained the .purposes

|||

One type of security that is often difficult to
investor in its proper light is the low
priced

expressions

progress,
facilities

out over $1 billion has
of Latin American republics, and that bank

use

many more con¬
of
economic

crete

Martin, Jr., its President, points

been authorized for

-

tinuation of the highly
satisfactory
cooperation we have enjoyed in
i;he past
and we are confident
that
through
this
cooperation
there will appear

Pan-American Congress

Wm. McC.

SIMPLE

FINANCIAL

Export-Import Banh and

Securities Salesman's Corner

HE MADE IT

&

-

Volume

167

Number 4696

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1999)

27

A

"Keynes Clearing Plan"
a&CFoi Western Europe
'
r

v;.:

;v'

By PAUL EINZIG

*„

Dr.

Einzig tells of proposal of Sir Stafford Cripps for a
European
currency clearing system, originally offered
by the late Lord Keynes
for entire world.
Would constitute a
clearing institute, which would

Fertilizer

Index"

Industry
The

—

New

In

—

in

Utility

Earnings

Current

earnings reports of some of the leading
utility com¬
?
panies are making an irregular showing.
For example, Consolidated:
Edison of New York, which in. the
issue own currency to settle international
quarter ended Sept. 30 earned only
balances.
Holds scheme
40 for the common stock, causing some
conjecture in the Street as to
would obviate use of dollars in
inter-European payments and would V continuance of the $1.60 dividend■
•
■■
■"
*
aid toward success of Western
rate, was able to show a sharp pared to $2.54 for the
European reconstruction.
previous;
come-back in the December and
year;
and March earnings, after
LONDON, ENG.—The economic integration of Western
Europe March quarters. In the final quar¬ charges, were about
stands or falls with the success or
15% below
failure of the

"The

York

Cross-Currents
f

Trust

.

.

Company,, 100 Broadway,
York 15, N. Y.—paper.
^

New

'

Financing; Old Age—Hehry

Steinhaus

National

—

efforts to create some
form of international
currency clearing between the 16 countries con¬
cerned.' Without it there is little
hope for, an expansion of trade
between them.

W.

Industrial

Conference Board, Inc., 247 Park
Avenue,; New York 17, N. Y.—
paper.' ■ •*-. .■ *
•; •

In

their

-

for

sent i

isphere;

Rela¬

will

tions

there

be ;

,

-

relation

settled

other.

Public

Outlook

Investment

1948

—

Supply—Department

C. D.

of

defend

Re-

other

Supply, Ottawa,

An

Essential Industry
for Palestine—Leo D. Rosenstein

in

Club

of

Broadway, New
paper—$2.00.
Economics

of

—

is

for

the

Western European dol¬

currency
countries

16

stands

Corre¬

United

but

dollars to spare for
to
such
a

no

little

are

The
have

their

con¬

pool,

tributions

Overseas

the

of oper¬

chance of being adopted.
participating governments

and

dollars allocated for

no

purpose

in
the

the

first

year's

program
of
Marshall
Plan.
What is needed, as an alternative
to
bilateral
balancing of trade

Guaranteed

of

Bel¬

establish¬

clearing between

America,
1475
York, N. Y. — that

Commerce
—

the

the

purpose

a

Wage, The—Report of the Com¬ between these
mittee on Economic Policy, Cham¬ clearing system
of

by

each

absolutely in¬

circumstances

a

require gold

Economic Research De¬

The

or

its

up

contributed

substantially.

In the March quarter

iary,

the subsid¬

New York Steam

Corpora¬

tion fared much better than

adverse

an

a

year

the

use

no

"bancor"

Sir

partially due
winter). Edison's de¬
preciation accruals this year were

to

settle

10.1%

her

that

It would

ain

last year.

the

policy

reflects

Denmark and Sweden. Trade could
be carried on within the 16 na¬

possessed

if they

as

adequate dollar re¬
serve to
pay for their import sur¬
pluses.
They would only need
dollars

an

for

their

imports

from

countries outside Western Europe.

Needless
would
trend

not
of

to

say,
the system
solve
the one-sided

trade

balances.

In

all

probability Switzerland, Sweden
and
Belgium would accumulate
in

and

"bancor,"
Italy
In

while

would

order

run

up

that

the

scheme should operate smoothy it
is
essential
that
the
"surplus"

a

Service

straight-line

/

of

.

of

Consolidated

Only 320
stock

common

Edison's

share

a

the

on

earned

was

com¬

pared with 710 last year.
This ap¬
peared
due
to
several
factors
which are considered

largely

recurring.

non¬

A special year-end

(in lieu of
this

about

a

permanent rate cut)
iri a decline of

resulted

$1,250,000 in January reve¬
Damages from the severe

nues.

winter storms increased
expenses
about $450,000, and a transit loss

during

the quarter has been

timated

at

es¬

about

$200,000.
The
partment, Chamber of Commerce Stafford Cripps is the application
company has applied for an in¬
of the U. S. A.,
Washington 6, of the well-known Keynes Plan. countries should be willing to ac¬ crease in
bus
fares
and
it
is
D, C.—paper—20e (lower
prices It was put forward by the British quire and hold "bancor" balances.
thought that the impending in¬
for quantity orders).
Treasury five years ago as a post¬ Their unwillingness to accept pay¬ crease in New York
war

New Chapter of Erie, A. —
The Story of Erie's Reorganization
1938-1941
Henry S. Sturgis —
—

Erie Railroad

Company, Midland

currency
United Nations.
ture

scheme

Cleveland

15,

Ohio

—

a

clearing

to

the

in terms of

monetary

a

the

in

the

form

currencies

countries

of

of

the

was

balances

the

in

"deficit"

cause

of

the

City transit

fares
for

will

improve

similar

a

Jersey.

,

the

prospects

increase
■

„

in

New

,

interna¬

called

participating

ments

ment

trading difficulties within West¬
Niagara Hudson Power made an
ern
Europe. There is no reason,
unfavorable showing for the first
however, why they should not ac¬
cept payment

institute which would grant cred¬
its

tional

Building,
cloth.

the

Its essential fea¬

the creation of

was

for

new

unit

govern¬

'

in

"bancor"

which

quarter

330

—

a

share compared

with

480 last year.
It is under¬
could be used in payment for pur¬
unit,
though
stood that the result was
largely,
chases in any of the participating
Prospects and Opportunities for stable in relation to gold, would'
if not entirely, due to low water
Companies in the Air-Condition- not be convertible, but the partici¬ countries.
conditions,1 which
resulted
in
The advantage of the scheme is
ing, Heating, and Plumbing In¬ pating governments would accept
heavy -use
of
obsolete
steam
dustries—E. W. Axe & Co., Inc., it in settlement of their export that it obviates the necessity for
equipment.
Late in March, how¬
surpluses in relation to other par¬ contributing
730 Fifth Avenue, New York
dollars toward an ever, water
19,
power conditions be¬
N. Y.—paper—$1.25 (50c to Pub¬ ticipating countries.
It will be
inter-European
currency
pool. gan to improve. New England
lic Libraries and non profit insti¬ remembered that this scheme was
utilities have also suffered from
opposed by the American White Moreover, as "bancor" cannot be
tutions).
drought conditions.
Public Serv¬
Plan, and the
plan
eventually spent in the Western Hemisphere ice of New
Hampshire, perhaps
adopted in 1944 at Bretton Woods there would be less temptation for the worst
sufferer, reported earn¬
did not include the essential fea¬
surplus countries to maintain their ings of only $1.83 for the 12
"bancor."

Thors Heads Div. of

tures of the Keynes Plan.
It was
not without regret that the idea

Executive

and

employees

investment

of

banking

surplus in order to be able to ob¬

of

N. Y. Fund Drive
Manhattan's

This

tain dollars for its proceeds.

the

"bancor"

dropped

by

continental
also

system

Britain,

was

and

governments

most
would

have

deed there would be
ducement

for

the

a

months ended

March

31

as

Company,

on

the other hand, was able to make

impressive

an

months

report for the

Onded

March

31.

12

Eveh

after

giving effect to the com¬
pany's distribution of major util¬
ity interests during 1947, pro for¬
consolidated

ma

share

earnings

for the 12 months ended March 31
amounted to $1.85 a sha're, and on
a corporate
basis $1.48.
This fa¬
vorable showing was due to sub¬

stantially to rapidly growing in¬
come from, the
non-utility subsid¬
iary, West Kentucky Coal Com¬
-North American is current¬

pany.

ly obtaining dividend income from
this company at the annual rate of

$2,400,000,,

increase

an

of

50%

the previous period.

over

Rising

coal

*

costs

account

for

losses reported by some of the
manufactured gas companies, such

Brooklyn Union Gas, which hasv

as

slow to obtain adequate rate-

relief from

Albany. On the other
Bridgeport Gas Light Com¬

hand

is

pany

in the

one

of the fortunate few

industry to have

a fuel ad¬
justment clause in its rate struc¬

ture, and the company's net earn¬
ings for 1947 were $1.69 a share
compared with $1.72 in 1946 and
$1.46 in 1945. ;

re¬

bate in December billsvwas made
to residential electric customers
and

last year.
North American

been

New

Jersey
sharp define in its
quarter earnings, just the

trend.

way

March

depreciation

a

reverse

tions in the

same

in

method of accrual.

Britain, between Brit¬
Denmark, and between showed

and

It is understood

change

Public

overdrafts.

b,y

doubtless

was

to the cold

France and

France

favored

sales

in

longer be necessary to aim at
balancing of trade between

which
dollars.

balance

ago,
with

it would be
in "bancor."

purchases from Sweden.

balances

is
a
does not

trade

Britain;

by payment

countries,

solution

to

monetary
to a cer¬

Britain, in turn, would pay in that smaller than a year ago by $1,410,form
her
import surplus from 000; this year the ratio to gross
Denmark, and Denmark would was only 7.5% compared with

the

proposal

there

the

than

from

lar pool for the

request.

Foreign

1947-1948

reserves

import

ating

Rayon Corpora¬
tion, 65 Reade Street, New York,

Who

dollar

to

the

ment of

Palestine

spondence

their

more

gian

on

Einzlf

dispensable.
In

Y.—paper—copies

Dr. Paul

to

to

avoiding

*

Rayon,

They

continue

of Reconstruction

has

each

have

factors

interest-free

of

"bancor,"

the

between

and

granting

$1.15 against 850 last year.
these sharp fluctuations?

Of course seasonal
changes had a
good deal to do with it but other

nominal,

as

terms

the

report

earning $2,132,000 compared
$1,019,000 a year ago (the
tain proportion of the
quotas of company had obtained a rate in¬
the participating countries.
France crease, and the sharp increase in
unit

left for settling

sonstruction and

States

in

trade balances

Ont., Canada-—paper.

ber

by

loans

r

in

Why

may be incurred.
institute would begin, opera¬

of Eco¬

Social

Howe, Minister

Press

ifri-?;£

purely

previous year and
of 1948 the

quarter

was

initial expenses and

cover

Institutions,
University, Princeton,

in Canada

Who's

\'

a

ports from the

be

losses

The

Western Hem-;

will

N.

such

,

J.~paper—$2.00.

--The

only to

covering

;

and

Private

and

suffice

would

the

first

subscrip¬

tions

none

Section, Department

nomics

Princeton
N.

Industrial

—

,

will;

Edi¬

earned 540 compared with
250

son

in

in it would be fixed on
the basis of their relative volume
of foreign trade. Actual

their most es-U

Management Procedures in the
Determination of Industrial Rela¬

ter of the year Consolidated

pation

:

aid

dollar

barely

Corporation of America,
Plaza, New York
20, N. Y.—paper.
?£ ."v;'.*Rockefeller

tions Policies

..of-

,

resources

—Radio

tions

spite

Marshall

Magic
ofMaking
Television
Picture Tubes—Illustrated booklet
30

-

-

com¬

Among

the

electric companies
Texas, Louisiana, etc.
particularly favored by their
ability to use natural gas as fuel,
at stable contract prices.
Those
those

in

were

included

Southwestern

Publie

Service, Houston Light & Power
and ALMNO (the Electric Power
&
Light group of companies).
Among the coal-burning compan¬
ies American Gas & Electric's sub¬

sidiaries

were

continued

outstanding in their
in net;

gain

pany controls its own

the com¬
strip mines,

where it produces coal with great

efficiency and at low cost.
Obviously it is unsafe to fore¬
cast
results
for
any
particular
utility company based on the gen¬
eral trend for the industry; it ia
important to analyze the effects of
operating methods, geographical
trends, weather conditions, etc-.
Also, it is unfair to take results
for a single quarter as indicative
of a future trend of earnings.

L. J.
L.

Marquis to Admit

J.

Marquis & Co., I Wall
Street, New York City, members
of the New York Stock

Exchange,

will admit Max L. Heine to part¬

nership

May 13.

on
'•7

-i

.

r-,';,:r

.v >• .•*

V

'■

In¬

•

H

strong in¬

surplus

Newport News

coun¬

firms have organized a committee
to solicit the investment

preferred
it
to
the
Bretton Woods Plan, for the sim¬

tries to buy more from the deficit

field in behalf of the Greater New
York Fund's 1948 appeal.
Heading
this committee
as .Chairman
is

ple

countries

latter the International

banking

Emerson
ager

Thors, syndicate man¬
jOf. OKuhn, Loeb & Company.

:;The anouncement was made by
John E.i iBierwirth, President of
the New: York
Trust Company,
who is

fhe Fund's Manhattan Fi¬

Insurance Solicitation
Committee Chairman, n

nance

and

reason

that

while

under

the

in

order

to

liquidate

Shipbuilding and Dry Dock Company

The
Monetary their "bancor" balances.
Fund merely re-allocates foreign
successful operation of the scheme
exchange contributed by its mem¬
should go a long way toward as¬
bers, under the Keynes Plan the
proposed,clearing institute would suring the success of Western Eu¬
actually create credit for the re¬ ropean reconstruction.

Keynes

"poor
the

man's

man

Plan

is

plan."

indeed

The

of

Billing* during the period

1948

who has to start business

headed!;by Henry
Vice-President
&

of

J. P. Morgan
campaign Chair¬
The Fund seeks $8,000,000 as

Company,

man.

by borrowing from his bank in¬

.campaign is
C. Alexander,

as

stead

of

paying in a deposit.
It
suits the requirements of the im¬
pecunious
European
countries.
For

this

reason

chance of

"business's share" of the over-all

it

stands

being adopted.

good

a
,

contribution need required by 423

local

hospitals,.health and welfare

The scheme would be worked in
the following way: The 16 nations
would agree on the establishment

agencies in, Nfew York City. The
campaign
'continue through

of

June 11.

stitute.'

.

~

'




■

an:

international
Their

clearing

respective

,

in¬

partici¬

.

.

.»

■

,—

Thirteon

Other work and

operations

~

Hammiil & Co., 14
Street,
New
York
City,

stock

and

announce

firm

of

York Stock

and
other
principal
commodity exchanges,
the association with the

James

Harrell

Howe

as

co-manager of its uptown office.
Mr. Howe is a former partner of

Leopold & Co.

unbilled

Number of
»The
■

$ 3,547,000
4,095,000

1,272,000
1,337,000

338,000
743,000
8,723,000

$20,780,000

$

$70,522,000

$46,260,000
11,443

Estimated balance of major contracts

Shearson,
Wall

members of the New

194^

13,457,000

Totals

,|

March 31,

$ 4,714,000

.

«

WeekslFnded

March 29, 1948

Ship conversions ond repairs

I

Shearson, Hammiil
Exchange

:

-

-

Shipbuilding contracts

.

Thet Fund's

,

Hydraulic turbines and accessories;

J. H. Howe Joins

' >

Employees
t

'

the

plan

Quarterly Statement of Billings, Estimated Unbilled
Balance of Major Contracts and Number of

quirements of international trade.
The

0

:

at

the close of the

period

employees at the close of the period

12,174

Company reports income from long-term shipbuilding contracts on the percentage-

of-completion basis; such income for any period will therefore vary from the billings

Ion

the contracts. Billings and unbilled balances on

to any

; V ".

Government contracts are

adjustments which might result from statutory repricing and profit
,

April 28, J948 ;r.

subject^

!imifd9fOPfifi<*

By Order of the BverttTf Directors
v.

'.•''•'•A

V

R. I. FLETCHER, Vice President and Compfroffer

COMMERCIAL

THE

(2000)

28-

sion that

f Clears Up Tax Liability on Loaned Slock
E. I.

recognized gain

or

a disposition of property which results in
loss for Federal income tax purposes.:
£

John C.

Korn, Secretary of the New York Stock Exchange, has
sent to members the following notice regarding tax liability in the
lending and borrowing of stocks:-^ / ,
To the Members of
The

the Exchange:

following

'

communication

;

dated

19,

has been

1948,

received

by
this
Exchanged
through its Counsel from E. I. Mc¬ borrower pays the lender for the
Larney, Deputy Commissioner of use of the stock), or on an inter¬
Internal Revenue:

est basis (the lender of

"Reference is made to your

let¬

ruling is requested on behalf of
Exchange as

a

the New York Stock

to whether the loan of stock

lender

constitutes

lender

ities,

the borrower notifies the
the se¬

or

curities.

so far as the lender is
concerned, either for the purpose
of computing the holding period
of' the stock or for determining

er,

gain or loss bn the stock loaned,

certificate of the

action, in

"You

in

that

state

Exchange

connection

order to effect
for

temporarily

stock

transfer

of

security

lend their stock is in

traceable to

ure

of

it

tributes

through the manifold

spending channels.

:

"Despite record peacetime Fed¬
eral
expenditures, top planners

recommending ambitious pro¬
grams for education, medicine, so¬
cial security, and the like, involv¬
ing in the aggregate many addi¬
tional

billions of

these

projects

considered
in

when

merits.

in the

as

capacity
as

"Now

with the

additional

need

billions

of

for untold
dollars

military purposes, there is
cal

urgency about
Federal financings

a

for

crici-

the issue
In order

of
to

safeguard
and

our private enterprise
democratic form of Gov¬

our

to return the

"You also state that in all cases

the authorization of the customer

stock any

time the

lender notifies him to do so; and
that the lender does not have

speci¬

limited

of the money

un¬

ranted drain

on our resources

tifiat

critical period.

such

a

To the extent that

with the lender the current

stock;

mar¬

secur¬

"It is held that the loan of stock

ities in order to secure the lender

against

and that the party
partially unsecured

loss;

who becomes
a

as

may

result of

lender,

a

ognized
income

'marked to

market.'

such

"The information submitted dis¬

closes

that

if

record

a

holders is taken for

of

the

the; circumstances
is not a disposition

gain

results in rec¬
loss for Federal

or

purposes;

tax

and

that

transaction does not affect

a

the lender's basis for the purpose
of determining gain or loss upon

stock¬

dividend

a

under

to

of property which

demand in writ¬

ing that the loan be

thereof

return

set forth above,

change in market

a

require by

the

and

the sale

or

rights to subscribe while the loan
is outstanding, the borrower must

stock,

turn

the

disposition of the
the holding period of

or

lender."

the dividends

over

the

rights

or

nor

stock

in

to

the lender; that sometimes the
loan is made at a premium (the

Calls for

armament

progi-am;

Bank

of

Boston

security of this country," says The
its current New England Letter.

"We

the battlefield.

on

launching a new de¬
fense program at the peak of the
are

boom. Our
six

times

-

four times

Federal debt is almost
and
as

the

budget

much

over

when the

as

defense program for World War II
was started
in June, > 1940, > while

commodity
than twice
so

prices are now more
high.
With stakes

great and the hour

so

late,

we

problems, and adopt sound meas¬
ures all along the line.
There are
grave

J dangers

in

sugar-coated

slogans that" have the appearance
of short cuts to utopia but which
in reality lead down the road to
serfdom.

.

"For the
eral

fiscal

•

.

r"

»

>

past 15 years our Fed¬
; policies i have
been

largely based
doctrine

decline in effective demand
by deficit spending.
Economists,
labor leaders,; educators, govern¬
any

upon

which

the Keynesian

has

-

caused

so

much confusion that economics is
now
'all
sail
and
no
anchor.'

Moreover, these theories

served

as

basis for the New Deal spending
program, the easy money policy,
the lack of concern about a
large
a

officials, and

even

business¬

y;*,>■.•:;;.

•

■

to the liberal inter¬

pretation; ttiade by the disciples of
Keynes, the cause of depressions




bonds

to

banks

further-

would

inflations .and

thereby decrease the purchasing
of the 'dollar, which has
already shrunk 40% in value since

power

The

1939.
we

bear

can

of

more

the

burden

along, the
economy be forti¬
fied
to
with the trying
cope
problems that confront us.
better will

"The

as

we

go

our

bitter

and

perhaps, long

energy we can muster.

effective

The most

of

strengthening our national fiber
to withstand the vicissitudes that
may

come

turn

We

shpuld

our

our

way.

backs upon the soft life
seeks shelter and comfort

under

the

protective

wing of a
benevolent Government, for vic¬
tory will go to the nation whose
people work hard and unflinch¬
ingly face their problems in a
spirit of realism."

hopped aboard the Keynes'
bandwagon as his theories were
so
*

the

followers

of

Coleman of San

in Federal credit
every time there
was a let-down in business would

ment

lead to

an

accumulation of malad¬

that should be liquidated.
The
grants and subsidies provided to
those who cannot meet the test of
the market place, as well as the

squandering
of funds in other
channels, result in the piling up
of Federal debts that in the

of time

would wreck

terprise,

well

as

as

course

private

way

for

form.
"So

en¬

the democratic
of

some

~1

the years our domestic

policies have rested

lowed

shameless

large incomes that industry
normally depends for a consider¬

dollar," according to "The Guar¬
anty Survey," monthly review of
business and financial conditions,

able

just published by Guaranty Trust
Company of New York.
an

expansion of plant and equipment;
gains in labor productivity, and
advances in wage levels.

tendency for reports
analyses of business earnings

of historical fact that the level of

*

'Since-then there has been

and
to

Francisco, Presi¬

Cbmmbriwealth

"It is not a matter of

emphasize the fact that through¬
industrial system the re¬

real

closely

turn to labor,

amount

instead of being (as
is
commonly supposed) smaller
than the return to capital, is ac¬

each dollar received from the

The

sumer.

inescapable

upon

experi¬

raids' upon- the

\

capital investment per
Those who are sin¬

cerely desirous of improving the
groups can work

come

effectively

toward that objective, not by try¬

con¬

ing

conclu¬

throw

to

share

the

of

a

disproportionate

tax

burden

on

the

sion is that real and lasting gains
to labor can come only from ad¬

higher incomes, but rather by
seeking a tax structure that will; '

in productivity, and that
attempt to increase labor's
share substantially at the expense
of capital is an attempt to draw
on a fund which simply does not
exist in anything like a sufficient

permit and encourage individual
investors to supply venture 'tapir
tal in amounts sufficient to meet

vances

any

the reqiurements of an expanding
and

h&s the effect of making the high
tax rates on these brackets rela¬

Who Gets the Personal Income?
"It would be

interesting to know tively unimportant from the fiscal
the

extent

what

Federal

tax

If - the

standpoint.

effective

tax"

rate

on
adjusted gross income in
1945 had been limited to a maxi¬

largely instrumental in restrict¬

so

progressing industrial system.

"The small amount of aggregate
income
in
the
higher brackets

amount.

the flow of venture capital
industry rests upon similar
errors concerning the distribution
of income.
Is the political pres¬
sure
for steeply progressive in-

mum of 50%, with rates remain¬
ing otherwise unchanged, the rev¬
enue loss to the Treasury would

belief that

rate had been limited to 25 %V the
loss would have been less than

ing

into

come-rtax rates due to

the lower-income

a

groups

have been equal to about one-halfof 1%
of total receipts.
If the

be

can

benefited, or that large
amounts of government revenue
can be; raised, by high tax rates on
large incomes?
If so, it is based

greatly

on

5%.
"To what extent is the situation
altered by the newly enacted rev¬

is

is the

meas¬

a

incentive to

enterprise
rate oh increments of

tax

income at different

levels, since it

is these increments, diminished by
the

tax, that the individual must

weigh against the efforts and risks
involved in any given project. - Of
the increment of income between

not

only because
unduly high tax rates ori large in¬
so

Important-as

of the

ure

widely at variance with
the facts, and as unfortunate in its
consequences,
as the
idea that
labor can improve its position at
the expense/of capital.
as

"This

law?

enue

idea of income distribution

an

that is

have unintended economic

comes

results,

$20,000

the total income received by the

and

high-income groups is ,too small
to have an important effect on in¬
the

at

comes

government

lower

levels

or

under

revenues

Invest¬

ment" between

any

a

group

he

,On May 13 Richard G; McDer^
will

acquire the New York

Exchange membership of
Edgar A>: Hellman ;and

late

distribution

the

of

income

to

students of eco¬
Yet it seems that

all

in

Peter

City, members of the

of the

affairs.

majority of the people, who
analysis determine tax

for 1945,
in

-

which was made public
of this year, shows

January

income above the

that individual

$25,000 level—that is, the excess
after" allowing
$25,000 for each

changes.

total

Schuyler Jaekson is

now

as-

&

Co., 36 Wall

member

of

the New

and

York

Street,
Stock

other

ited

Exchange; now a liin-*
partner, on the same date will

beeome
Frank

a

T.

general partner, ahd;
Ryan, general partner,
a limited partner.

will become

White With* Laidlaw

-

Laid law;

& Co., 26 Broadway,
New; York; City,1 members of the'
New

York

nounce

Stock

that*

Exchange,; an¬
Leslie White" lias,

joined5 the firm; irf its~ municipal:
bond department?
White for-

fne^ly^^asi;

associated; with*: El-

dredge^ & Conine.

—

turns.

Bhcon, Stevenson Adds i

Bache

*

?

preliminary report Of the
Treasury on statistics- of income
"The "

ed by

-

against

ber of the

in the final

N6W7 York Stocks ahd^ Curb i Ex^
'

as

leading na¬
tional exchanges: will admit Wil¬
liam J. Flynn to partnership; on
May 13. Adolplbt Woolner^ mem¬

total individual income

partner

$9,000 and $10,000,

keep 80.64%,

exchange

New York

a

may

Bacfae & Co, to Adntifr

are

clearly set forth each year by the
Treasury
Department and
are

taxpayer receiving more than that
amount
was equal to 3.27%
of

become

keep 68.25*%,

Some Hypothetical • Cases

"The essential facts concerning

/

To Be McDermott Partner

may

71,50%."

semination ;of those facts.

addressed

$25,000, he

against 47.37% ; of the incre¬

as

on

conceivable tax system.

pany.

E.

long' term
the
average

economic position of the lower-in¬

If our? deomcracy is
defeating its own best interests
by pursuing a tax policy based on
a
misunderstanding of easily as¬
O'Brien ,& Co;, wholesale distrib¬ certainable facts; thereisobviousutor of the shares for this* cbjii* ly;,an ; urgei$-;rieed%io^.;w|der? dis¬

will

the

over

parallels
of

theory but

wage earner.

legislation.

the

wages'

out our

of
investment dealers in the Chicago
district on May 4 at the Attic Club
under the; sponsorship of. John J.

Co.,

Stock

part of the risk-taking in¬

vestment that is indispensable to

increasing

nomic

sociated with Baeori, Stevenson
by pressure groups. Co., 39 Broadway; New York CityV
Under the spell of the spending members of the New York1 Stock
theory, there developed the illu¬ ;and Curb Exchanges;?. ,-.vVa~

Treasury

these

P.; McDermott1 & Co.V 44' Wall St.,

totalitarianism

over

dent ;;of

mott

form of government, and pave the

—

ital in the distribution of the sales

ILL.—S. Waldo they must have escaped the notice

CHICAGO,

Keynes
overlooked the fact that. pumping

justments and the preservation of
incompetent business enterprises

shares received by labor and cap-

familiar

Hear S. W. Coleman

simple and alluring;
"But

measure

$90,000 and $100,000, the indivi¬
inhibiting: industrial de- dual is now allowed to keep
veloprnent, limiting; employment: .36.-75%,.. as. agajnst-J 7.92 % xtjtnderopportunities and restricting all' thrbld law; of the increment beiincomes, large-and small alike. It r tween $40,00.0 and
$50,000^ he may
is
so
for a
simpler and more keep 50.40%,; as against
defense program.
Our ef¬
33.31%;
easily demonstrable reason: that of the
should
be
devoted - to
increment between
means

men

public debt, the controversies over¬
mentation instead of sound and
savings, wages; profits; and full
tried principles.
The doctrine en¬
employment, and for other poli¬
couraged spending and leaning on
cies that have the earmarks of
the government, and ' there fol-'

J sqciaHsm. f
"According

of

that

.

as

should face the situation in a real¬
istic manner, think through our

be

is lack of adequate expenditures,
and the government
can
offset

ment

sale

generate

of the

in

can

als, which would tend to cut down
on
consumption.
In contrast, the

forts

closely

are

it

safeguarding
Government credit and of fortify-;
ing business enterprise * would be
for all groups, on the basis of
capacity, to share in the financing

heavy armament costs danger
policies with more inflation.

and Federal finance

unavoidable,

struggle that lies ahead will be a
challenge to all the ingenuity and

in

Continuing the Bank says: "The struggle against communism
lost by unsound fiscal policies as<?>:
well as

the

Secretary.

sees

related as they both involve the

First National

of

JOHN C. KORN,

oE reversion to unsound fiscal
new

hands

Economy in Non-Defense Items

First National Bank of Boston

"the"

the

is

"

r

of strikes then sweeping the country was probably due in
to widespread misconceptions regarding the relative

wave

to

in

should be financed out of savings
by the sale of bonds to individu¬

ket value of the borrowed

the

some

structure that seems to have been

and particularly

borrowing

deposit¬

recent tax reductions.

I "At the height of the early postwar industrial unrest there ap- f
peared certain reports, based on public-opinion polls, suggesting that <;

time,

ed

use

High Incomes Benelils All

should not be countenanced at any

fic, must be obtained in advance
of any borrowing; that when stock
is loaned, the borrower deposits

with him, but must' return it
when the borrower returns the

on

Guaranty Trust Co. of N. Y. attacks theory heavy taxes on rich ease
burden on low Income groups.
Computes individual gains from

family, expenditures
tually many times larger, and that
kept within financial
the return tq,. capital is in fact
or
trouble follows;? as
equal to only' a few cents out of
night follows day.

a

be

surely

affairs,

of

All

worthy

individual

on

national

of

must

dollars.

are

Thursday, May 6, 1948

Holds Reduced Tax

are

.

the shares loaned.

or

money
from
individuals,
corporations, and institutions by
taxes and borrowings, and redis¬

tax; and that when the
ernment, we must pursue sound
delivered, the lender
policies. No time should be lost in
returns the borrower's deposit.
eliminating waste and extrava¬
"The above-stated facts clearly
which now menace our
show that the borrower does not gance
become the owner of the stock he security. Raids upon the Treasury
borrows and that he is required by pressure groups are an unwar¬

loaning of the stock would result
in a realization of gain or loss on

(lender), either general

back

stock

without payment

name

wealth.

nor

come

certificate is

meas¬

some

the

transfer'

belief that the

a

transfer

to

into its

to

owners

the

firm

customer; and that the re¬

a

luctance

stock bor¬

same

regulations
which
lender's brokerage

tax

permits

in

required delivery

a

by delivering any

so

rowed, together with the appro¬
priate exemption certificate pro¬
vided for in the Federal and State

ist, or an odd lot dealer may find
it necessary to borrow shares of a

particular

he does

nothing.
But
create in¬
It merely col¬

the government dos not

case

requirements of
broker, a special¬

a

something for

get

But

makes delivery to the lend¬

rower

stabilized economy was

a

security for all from the 'cradle to
the grave.'
"The people have been hypno¬
tized into believing that by the
wave
of a magic wand they can

"It is stated that when the bor¬

with the delivery
the

borrower that

the

lender that he is returning

closed trans¬

a

notifies

he desires the return of the secur¬

to a

to the

thereof

return

broker and

the secur¬

ities pays the borrower for the use
of the deposit); and that a loan
remains
outstanding
until
the

ter dated March 3, 1948, in which

CHRONICLE

lects

'

>

April

FINANCIAL

being created that would provide

McLarney, Deputy Commissioner of Internal Revenue writes

N. Y. S. E. loan is not

&

for

as

it

was

equal to

2.29%

re¬
of

Hay^en^Stbne vto • A'dimt*

national; income.

On May 13* Graham Bell \yill
acquire the New York Stock Ex¬
change membership of Herbert G:

percentages-show how fal^

Bell and will be admitted to part¬

estimated

personal

entire

country,

the

2.15%These

report¬

tj^sefiling Federal tax

of

the

lacious is the idea that

a

income
and to

substan-

.

nership in Hay den. Stone; & Co.,

tial part 'of the counti^'siincqmO 25 Broad/Street; Ne#iYork City,
'Yo^k? ;St6cR:
is received by persons in the high-';
income

brackets.*-- Yet* it is upon

Exchange and .'other exchanges.

Volume 167

Number 4696

THE

COMMERCIAL

ing

News About Banks
NEW BRANCHES

REVISED

FINANCIAL

57

County

Jersey Bank

Revision

Act,

is

designated as "a clarified
modernized banking code,"
according to an item appearing in
the April 30 issue of the Newark
"Evening News" by C. J. Hamberger, in which it is stated that
and

the revision clears up many con¬
troversial points for stockholder

lingshead. As Assistant Managers:
Otto Bruggeman, David Sime and
Dominic A. Suplina. In the Cor¬
porate Trust Department as VicePresident, Harry C. Thompson.
"At the 30 Broad

Street Office

Vice-Presidents:

as

V i

Assistant

c e

-

clears

As Assistant Treasurers:

law

trust

on

ac-

As Assist¬
L. Hauser.
M. J. G.

cpunts and also clarifies the func¬

Logan and John W. Marx.

tions of a bank and

sistant

pany.

.

The
ernor

trust com¬

a

y-;';,i^:

■

revision, started by Gov¬
Edge, was delayed on pre¬

sentation

in

1946

1947

and

but

speeded through under Gov¬
ernor Driscoll this year. He signed
the bill last night.
■
was

Likewise from

the

account

Mr. Hamberger we quote:
"For the first time, so
commercial banks

far

of

as

concerned,

are

there are specific limitations on
mortgage lending. Previously the
banks

could

restriction

make

without

loans

second, third

first,

on

fourth mortgages. Now they
limited to first mortgages and

and
are

further bound

the

to

percentage of
value of property

appraised

involved.
"The

a

,

.

task

the re¬

on

Louis

was

J.

Cohen, chief revision counsel for
the State

Department of Banking
and Insurance; Israel Spicer, his
associate; J. Fisher Anderson, par¬
ticipant for.the New Jersey Bank¬
ers Association; James L. R. Lafferty,
counsel for the
Federal
Trust Co.; Alan Lowenstein, coun¬
sel for Fidelity Union Trust Co.

chairman

NJBA

the

of

Corbin

K.

Horace

for

and

as

special

committee, and Waldron M. Ward
for the savings bank,
"Another point is the increase
allowed to banks
The limit was
to

small loans.

on

raised from $1,000

$2,000 on loans banks may
on special interest charges.

make

*

The

"

if

if

merger

Bank

of

of

New

York and The Fifth Avenue Bank
became effective at

of New York

As As¬

Comptroller, Walter
E.
Sparling. As Assistant Personnel
Director, Roger Hornby.
"At the 512 Seventh Avenue Of¬

fice

as

Vice-President, Edwin Van

Pelt. As Assistant Vice-Presidents:

Stafford

F.

Cleary

Walter

and

As Assistant Secretaries:

Freund.

Royal M. Anderson and Raymond
J.
Young.
As Assistant Treas¬
Gilbert C. Henne

urers:

Al¬

and

bert W; Van Gelder.

the

"At
Office

Madison

345

ant

Avenue

Vice-President, Carl C.
As Assistant Vice-Presi¬

as

Lang.
dent, William Pfaffle.

»i:

-

-'

!»«

t

.

,;...

;

as

manager of the

Department.

School; Savings

',/ >•/.

'

William

sj:

F.

."

offices

of

the

Bank

&

thus completing

plans for the taking over by the
latter
of

the

of the

assets

Continental.

Vice-

panies

given in his honor by the officers
To signalize the oc¬
casion a watch suitably engraved
was presented to him.
Upon re¬
tiring in June, Mr. Ferguson plans
to spend
his time between his
New

at

Rochelle

his

and

country place at Worcester, N. Y.,
a
community
with
which
his
family has long been identified.
Mr. Ferguson was appointed As¬
sistant

1927,

Treasurer

office

the

the

of

bank

being

in

re-estab¬

1819.

He

1932

Mr.

became

Treasurer

Vice-President

and

in

the

of

World War I he

assets

the

of

approved by the Continental's

stockholders at

special meeting

a

in

United

the

and
At

business

the

6ame

on May 3, N. Baxter Jack¬
Chairman of the Chemical
Bank ;■&)
Trust
Company
an¬

temporary injunction sought by
group of minority stockholders

a

a

to restrain the sale.

proposal

the

of

Details of the

Chemical

appeared in our issue
128, page 1225.

States

Navy

served for two years

as

and

deck of¬

ficer

on the U.S.S. Indiana, sister
ship to the U.S.S. Oregon which
made the famous trip around Cape

of

Bank

March

following to

The Personal Credit

Department

York celebrated

anniversary

May 4 its 20th

on

with

record

a

of

3,786,082 credits granted for

a to¬
$1,137,788,988 58, an aver¬
age of $300.
With the establish¬
ment of the department on May 4,
1928, the National City was the
first major commercial bank to

tal

of

of the Ebenezer State

Bank of Ebenezer, N. Y., and the
Manufacturers
Co,

Buffalo,

of

Traders

&

N.

Trust

has

Y.,

been

voted by

the directors of both in¬
stitutions, it is learned from the
Buffalo

"Evening News" of April
30, from which we quote:
"This
President

the

made

was

Lewis

G.

known

by

Harriman
&

Manufacturers

The merger,

which must be ap¬
proved b,y the State Banking De¬
An
interesting exhibit at the
partment and the stockholders of
International Travel and Vacation
the two banks, is expected to be¬
Show at Grand Central
Palace in

is

which opened

that

of

The

Bank

of

Check

Division.

New

York

effective about June 1.

come

May
City

on

National

Travelers

Featured

in

business

Oct. 1, 1921.

on

the

*

in Grand

Cen¬

facsimile

of

pointment of John R. Keener as

the Domestic

traveler's check hand

Seaman.

Assistant

As

Brummer,

Daniel

Vice-

Albus, Harold
A. Finlayson,

Jr., John F. Hughes and James J.
Mead.

As

Einar

display

Hammer.

Vice-President,

As

Harold

is

a

Chinese

diorama

a

similar to
of thou¬

woven

a

into

colorful map
showing National City Bank
branches
throughout the world,
and a display of posters.
Kodaa

rug,

scenes

19

foreign countries will be
stantly on show.
■

,

*

■

«

s

•

in

con¬




of

board

The

directors

of

The

National City Bank of

Vice-President.

been

This results in

.

great deal of talk

a

much .volume.

too

Insurance

...

com¬

.

.

They

fairly active in acquiring

corporate bond

new

are

OPPORTUNITY

are
watching the longer eligibles very closely, be¬
possibility that weakness might develop in these obli¬
gations, with the upping of short-term rates.
; Any price reces¬
sion, however, would be looked upon as a buying opportunity.
Although the market has been expecting a higher certificate rate as
well as an increase in the discount rate for some time now, it could
be that prices of the longs will be subjected to mild price fluctua¬
tions, as the anticipated changes become effective.

of the

cause

.

.

.

.

.

...

Psychology is a definite market force, and its actions are
difficult to forecast, but based on some past happenings it.might
be the factor that could bring about a temporary unsettlement
in sections of the government list, when the looked-for rise in
rates is announced by the Treasury.
...

RATE

INCREASES

AWAITED

The financial community is looking for an increase in the cer¬
tificate rate of V8%, along with a rise in the discount rate of either

Vs%

V4%.

or

have

.

.

.

no

.

.

.

...

' ^

NEGATIVE INFLUENCE
Will

' '

the

raising of short-term rates lessen the tendency of in¬
vestors to sell near-term securities in order to buy longer-term
obligations, as long as prices of all Treasury securities are protected
by the money managers?
Also will the upping of the discount
rate have more than a passing psychological effect upon the money
market?
To be sure, the spread between short- and long-term
rates will be lessened, but only to a very minor extent.
.
.

.

.

...

.

The; fact that investors

,

hoping for weakness in the more
distant maturities of government bonds (with the changing of
short-term rates), so that they can purchase the higher income
obligations seems to indicate that just slightly higher certificate
and discount rates are going to have very little if any influence
:

are

the trend from shorts into longs.

upon

.

.

.

ANOTHER EXCUSE?
^

' '

-

1% Is the Treasury's apparent

concern

over

'

:

the ability of private

business to finance its working capital needs in the defense program

just

an

excuse

to line up against proposed bank credit curbs;

or

is

there another rabbit in the hat that will be pulled out at some later
date?
Is the Treasury getting concerned over future short-term
.

.

.

financing at advancing rates, which would increase already heavy
debt charges?
Low interest rates are imperative, as far as the
Treasury is concerned, and while an increase of lk% or J/4% in
short-term rates would still mean low interest rates, it might be
...

the trend of interest rates that has them concerned.
TIME

.

OUT

Greater powers over reserves of the member banks by the Cen¬
tral Banks would be one way to offset the inflationary forces of
the

rearmament program without curtailing government expenses,
immediately increasing taxes, which were only recently reduced.
It could be that the Treasury fears that larger reserve require¬
ments would result in the member banks' putting their funds only
in the safest and most liquid investments.
This would mean
or
.

.

program

of certain businesses for the defense

would not be taken care of by the banks because of the

greater risk involved in making loans to these concerns.
be

also

see

\

that

old

the

political

waiting

what might happen is being

game

.

.

.

It could;

of playing for time to

dusted off again.

.

.

of New

BANK

Tot.

York.

NATIONAL

ILLINOIS

AND TRUST

The

CO. OF CHICAGO

Apr. 12, 1948
Dec. 31, 1947
resources_S2,193,605,354 $2,422,901,275

2,002,333,256

Deposits
and

U. S. Govt,

curity

571,430,086

.634,122,208

-

1,210,873,167

hld*8. 1,097,986,763

discounted,™

profits-

will

be

feeling seems to be growing that corporate income taxes
increased

tures and this is

u

426,652,281

27,856,775

;

■

490,000,603
27,399,698

(Continued on page 38)

next

year

keeping

a

tially-exempt governments.

because of enlarged defense expendi¬

good demand in the market for the par¬
..

.

/

institutions are now taking oil state and
municipal obligations in place of the partially-exempt Treas¬
uries because they believe that they have better tax protection'
in these issues than in the governments, since surtax rates
However,

se¬

Loans and bills

UndiV.

2,229,664,369

due

Irom banks.:■■

.Arthur S. Hleeman, President of

Colonial Trust Co.

TAX PROTECTION
CONTINENTAL

Cash

-v

ahtioiiK¥4(f1 V&'.'/Anril' 29
H£ Hol- pointmbht; 6'f' A. Kenneth Spauld-

Assistant

.

the quiet side, although the former institu¬

a

chrome slides of travel

Assistant

Secretary,
Robert J. Lockton. In the Foreign
Department
as
Vice-President,

on

...

tral-Terminal,

Presidents: Paul A.

also

that the working capital needs

if

if

sands of travelers

T.

i

Investors

.

The Ebenezer State Bank began

& Trust Co.:

Banking De¬
Vice- Presidents:
Charles S. Parker, Jr., Mark B.
Peck, Herbert M. Prior and John

with

Sheperd, President.

Bank

as

.

BUYING

Traders

Evansville,
Ind., recently announced the ap¬

"In

bills,

...

of

those which catch the eye

partment

Treasury

...

official staff of
of whom were for¬
merly officers of the Continental
the

for

evidence

in

.

of The National City Bank of New

3,

the Bank, all

.

However, such a small change in these rates should
important effect upon the inflationary forces, which higher
money rates are supposed to corhbat.
For the time being at least
the expansion of bank credit has not only been halted but has ac¬
tually declined.
It is indicated that the contraction in bank credit
Presideht of The First National is
.due much more to the Treasury's debt retirement policy and the
Bank of Chicago, on April 25 was
'voluntary cooperation of the banks in limiting, loans and invest¬
elected Secretary of the Federal ments as anti-inflation
measures, than to the raising of short-term
Advisory Council of the Federal rates.
This brings up the question whether the expected increase
Reserve System.
in short-term rates is going to accomplish what the monetary au¬
thorities evidently are counting upon it to do.
if
if
if
A merger

New York

appointmept of the

.

.

,

son,

the

as more

the

commissioned

April 14, and on April 21 the
Horn,
Appellate Division of the State
,VrvA-r- -K,:v\
Supreme Court upheld a lower
Herbert
V.
Prochnow,
Vicecourt ruling in refusing to grant

on

await

also giving preferred stocks some attentiop.
Sales Of taps have been made by Individuals and ismaller
institutional investors to go into the equity market. . .

with

was

are

issues.

1945.

connection

Ferguson's

in

.

discussion but not

tions have

of the bank.

home

.

is

demand

Treasury obligations.

ago—when he entered its employ
as its first
stenographer. During

sale

good

and

Secretary, Clyde W. Hiseler.
Raymond

time,

nounced

A

luncheon

a

to

switching out of the 1949, 1950 and 1951 still going on. . 4 The
V/t % yield curves continue to get plenty of attention in an
effort to master-mind the future trend of yields and prices of

tirement

April 29 at

sidelines

the month.

on

Chemical

Trust- Company,

.

President of The Bank for Savings
of New York, announced his re¬
on

the

to

.

s|e

Ferguson,

dealers take

and

expected
raising of shOrt-term rates.
This time it seems as though hold¬
ers of Treasury obligations are
not going to outsmart themselves
as they have on occasion in the past, but are going to hold off until
things actually happen.
They should not have too long to wait
since it is believed that an announcement by the Treasury on the
certificate rate will be forthcoming by not later than the 20th of

Mr. Burckhardt has

inaugurate small loan service for Trust Co. and President William
April 30. individual borrowers.
Beginning J. Daetsch of the Ebenezer State
Operating under the name "Bank with a staff of five
Bank.
persons, the
of New York
and Fifth Avenue
Personal Credit Department today
"In bringing the two banks to¬
Bank,"
the
merged
institution has a
personnel of 15 officers and gether, the Manufacturers & Trad¬
opened for business on May 3 with 754
employees. The department's ers Trust Co. is paying cash for
four
offices, total resources of 20th
birthday was marked by a the stock of the Ebenezer Bank,
more than $400 million and capi¬
dinner dance and entertainment in which has 10,000 shares of stock.
tal funds in excess of $34 million.
the Grand Ballroom of the Wal¬ The
stockholders, about 300 in
The merger was approved almost
dorf Astoria Hotel. Roger Steffan, number, are to receive $35 a share.
unanimously by stockholders of
Vice-President, founder of the
"This will give the Manufac¬
both banks on April 15—reference
Personal
Credit
service* intro¬ turers & Traders Trust Co., with
which appeared in our issue of
duced the principal speaker of the
resources of more than $235,000,April 22, page 1773.
evening, William Gage Brady, Jr., 000 a total of 10 offices outside
Chairman of the Board. Greetings
;
'
*
if
H
of Buffalo.
On May 3 the three offices of were extended by
W. Randolph
"The bank has 18 offices in Buf¬
the
Continental
Bank
&
Trust Burgess, Chairman of the Execu¬
falo, including the main office at
Company of New York, became tive Committee, and Howard C.
Main and Swan Streets."
the close of business

'Activity continues to decline in the government market
investors

been with the bank since 1933.
,

Reporter oh Governments
By JOHN T. CHIPPENDALE, JR.

the bank began in 1907—41 years

The

was

%

'

As Assist¬

As Assistant Treasurer,
R. Robrecht."
:

Our

of

a num¬

National and State

lished then for the first time since

Continental to the Chemical Bank

'working staff

construction

Co.

The Bowery Savings Bank of
New York announces the appoint¬
ment. of Cortland O. Burckhardt

Presidents:

Percy J. Hebard, Peter C. Newell

procedure and corporate elections;

the

F.

Thomas

J-,

''

As

the

Mrf

examiner,

1./

Bennett and Ferdinand M. Bissell.

and Arthur H. Queren.
ant Secretary, Russell

up

Trust

Ithaca, N. Y„ end ' was for

The enactment into law of the

15,

of

Street.,

who wili assist F. H.

ber of years a

New

office

William

Tompkins

bank

29

(2001)

Assistant Vice-President,

downtown

Spaulding,

CAPITALIZATIONS

which will become effective Sept

CHRONICLE

Zimmer, Vice-President in charge
of that office, was formerly Exec¬
utive
Vice-President
of
the

Bankers

and

the

bank,

CONSOLIDATIONS

NEW OFFICERS, ETC.

as an

at

&

some

might be upped with higher corporation taxes.

30

THE

(2002)

COMMERCIAL

FINANCIAL

&

CHRONICLE
the

In

We Are Winning the Cold War?®

earnings

income

lower

labor

spends

brackets

of

most

its

living costs, the pinch

on

equity capital in 1947 than in 1946,
and accounted for about only one-

—.

sixth

the

of

Editor, The Christian Science Monitor

v

quiredduring
made large

millions

Stating U. S. in combating communism is in stronger position, prominent newspaper editor holds there
is still big chance freedom will win.
Says U. S. aid to Europe is appreciated.

<

outcry for relief from

an

of

solution

is

the tax

The

voters.
to

collect

political
much

as

of

possible in the higher
brackets,
although * the

as

income

capital

new

of the short dollar is felt acutely.

There is

By ERWIN D. CAN II AM*

Let

where

Thursday, May 6, 1948

1947.
of

use

re¬

Business

previously

ac¬

cumulated funds for expansion of

output during

1947.

approaching

are

There is
ital

These funds
exhaustion.

no

be

means by which cap¬
provided for the future

'way beyond my terms of reference and tell you that from my observation
at Geneva, which I left the night before last, 1 believe that the United States is in a stronger
position than it has been since the end of the war. The atmosphere at the United Nations

higher

supply the
venture capital of business.
;
Unless labor recoginizes taxa¬
tion as the real cause, it will con¬

and

Conference

on

tinue

mation

far

their funds in equity investments.

was

than

us

me

go

Freedom of Infor-^

favorable to

more

it has

been at any other

There

is

longer

ern

Europe.

any

doubt among Europeans as
and tremendous

?

the disinterested

Those who would compromise and

contributions Americans

communism

appease

far in the

are

background. The neutrals and the

middleground nations are all pret¬
ty much on our side now. We are
winning the cold

The

war.

com¬

munists still have powerful weap¬
ons,

and

any

time.

they

may

But

which

weapons,

them

use

at

long-range
based on a

our
are

practical application of the ideals
of freedom, are making solid and
steady headway. ERP is deeply
appreciated everywhere .in west¬

freedom

Report of Committee

a

Freedom of Information made

on

still

Men

was

tors,

New

April
"
'

City,

1948.

,,

,

16,
,

,

is

in

Europe,

newspaper

in

J.

G.

York

world,; there

Europe, still know the
meaning -of freedom
and
will
fight for it. There are men like

Society

Edi¬

the

big chance for freedom to

a

win.

ican

Newspaper

there are
impediments to

although
new

in

freedom

by Mr. Canham before the Amer¬
of

and

many

information for it

of

that

means

men

*Part of

mak¬

are

The charge of imperialism
against us is not sticking, for as
the Europeans say: "If the Amer¬
icans wanted to dominate us, they
would not urge us to unite, but
would try to keep us divided."
All of this has a real bearing
ing.

on

Goedhart.

Van Heuven

He

Chairman of the Dutch dele¬

gation to the Geneva Conference,
Chairman

and

the First

of

also

follow

to

the

of

lead

po¬

Basic Tasks of the litical and union demagogues in
to; Press. Mr. Van Heuven Goedhart accusing capital of reducing the

no

United Nations meeting since 1945.

brackets

Corn-

j

mitlee,
is

on

editor

"Het Paroolwhich

of

during the

higher price
that

on

He

of

There

war.

any

gaunt, raw-boned, witty and
biting. He will fight compromise

to the end.

his

He is of, the

first

war

whom

and

assistant

kept

stufl

same

during

the

Germans arrested

the

imprisoned

for
two
decided to
they called in

Now the

:

hold

the

to

price level which

it?

postwar spending and labor's
successive wage raises are putting
up.
The proposed solution is an
excess

profits tax

taking

unless

(Continued from page 8)
ation than

taking

a

of

500

colonel who is
motorized column of 1,an army

someone's

sons

the

over

cial"

route.

same

because

Cost of Living?
As to the achievement of

war¬

time controls in keeping down the
cost of living, labor may be will¬
ing to recall that it didn't eat so
well

during the

it does recall,
on the other
hand, it was able to
accumulate
savings
because
it
didn't have to spend so much for
what it could get.
\
It

is

well; enough

not

how this

war;

known

done.

was

procured the first round of wage
rises through industry-wide col¬
lective bargaining.
In any company,

clothing, shoes, food, and such, did
a

business

divided

between
vilian supply and war
supply.
costs increased and producers

plied

to

the

Office

ministration
raise

costs,

they
be

war

ducers to

costs

That meant the
vilian goods
cost of

war

ernment

relief

no

long

execute

today.

him,

they

and

With such men,

and

cooperate,

can

we

be proud of

can

the chance.

a

on business. Bylarger share of the prof-1
its, government would correspond¬
ingly shorten the corporate share
for capital reserves and dividends

and

omy

why.

Corporate
by

the

States

goods

the

pro¬

fair aggregate.

rising cost of ci-

was

carried onto the.

goods, where the gov¬
price
as
no

regarded

matter and where the

excess

war

profits tax would keep the situa¬
tion under control.
r
;

v^This civilian subsidy

remains

debt.

Citizens

hidden in the

war

who

thought they were eating
cheap beef, if they could get it

anywhere under controlled
prices,
be paying a supplement for
that beef for a generation. The

will

savings they thought they
mulated
control

under

will

be

taxed

back

them

as time goes on to
costs the debt concealed.

This

the

maneuver

civilian

not

control

from

pay

the

only gave
-prices a

of

false appearance of
success, but it

trapped

industry

squeeze of

controls.
carried

ceased,
were

in

a

postwar

profits under continued
goods which had
the civilian costs
civilian
producers

but

expected

anyway.

to

hold

the

line

..■/

its toward extinction, gave the

12*

en¬

terprise system a parting kick by
freeing wages before prices. Then
it suggested semi-officially from
the

Office

Wallace

ly,

in

of
the

Secretary Henry
Department of




which I will discuss short¬

could

reduce

raise

not

its

added

was

current asking

full

in

to

the

price of the goods

services. '

or

So

far, the market has paid the
price and business has

increased
gone

on.

1

-

,

the

But

increased

price of

company's product leads the
chasers

in

other

for

clamor

to

all

increases

one

pur¬

employment
in

their

pay. They make up the price
increase, meanwhile, out of their

own

savings

borrowings. As the
working population, in
private business or in government,
or

rest of the

catches
the

with

up

increase

the

in

wage

prices

raise,

becomes

general.

The price index of all
commodities rises parallel to the
general increase in hourly wage
rates.

Everybody
but

money

worth

take

the

is

paid

dollar

more

becomes

correspondingly less.
home

real

of

goods

The
is

the

the

to

his

his own
and he re-invests

expenses,

remainder

pays

of

machines,

more

share of the

a

proportionate

stock-holdings, he
living

un¬

When the stock¬

share

the

in

materials,

more

more

management. The bigger the
stockholder's share the more he
has

re-invest

to

after

living expenses.
labor

paying his

minutes

The 60

which

still

are

Fair Share

a

The collectives insist the work¬
should

er

get

increased

a

suggests

ence

fair share of his

production.

defined

are

tax

as

law of the United
the difference between

raise

white-collar
hind

of

the

second

the wage-earner

on

that

The insist¬

the

worker

but

the

workers further

be¬

out-goods raise,
round

strophic.

was

could

futile.

become

A

cata¬

A fourth round could be

collectivistic conspiracy.

The worker's contribution is 60
minutes of labor in an hour. The

stockholder's
capital

for

contribution

machines,

and management.
er

multiplies

with

back.
er

the

is

the

materials

The stockhold¬
worker's

hands

machines

and
unloads his
In his 60 minutes the work¬

makes

more

goods

nowadays

le-

at
$17,800,000,000,

that

business during the

ond

half

of

000

into

sec¬

1947 put $11,200,000,-

construction, $18,000,000,000 into producers durable
new

equipment and $2,500,000,000 into
increases

ing

for

maintain

capital
1945

the

to

mately

its

historic

formation

rate

extent

of

of

1930

from

to

approxi¬

was

$144,000,000,000.

Capital

not providing labor with the
it needed, which they had

providing during the 60
ending in 1929—during the
equipment—the wear being, average of those years capital for¬
figured as a standardized yearly mation havinc taken out of gross
per cent of the original costs of national
product
approximately
the equipment.
When these costs 20% per year. This money was
years

deducted
from
the
selling used for capital formation during
price they give the profits. Out that period of industrial growth,
of these profits the government
and until the incentive to risk has

are

first takes ihe corporate profit tax

been

of 38%. Then the

be

corporation takes
the increasing cost of ex¬
tending credit to customers ana
away

of

maintaining inventory, together

with

reserves to

restored

impossible

to

America

for

it

capital

will

to

be

provided for the new tools, the
industries, the new processes
which are awaiting investment.

new

cushion the oper¬

Profits Determined by

ations

of
the
enterprise.
The
amount ef reserves is a matter
of managerial j udgmeni. If they

Competition

During

: -

could be paid out safely as divi¬
dend?, they would be. The 14,000 -

century and a half,
until 1929, the prices and profits
and the flow of goods and serv¬
ices in this country were regulated

stockholders

of

all

corpora¬

tions in the United States

are just
anxious to get more dividends
out oi the corporation as the labor

as

force (ot about, the

same

number)

time of most of the business

by

a

the free competitive market.

In such

a

market, private

volume

of

goods

produced by a
hour doubled.

to get more pay.

operations and profi-s.
is important to have it
derstood on the one hand that

ing prices. They are finally de¬
cided only when the sales are
finally concluded, by the buyer
and

the

seller

getting-together.

The

It

tained

"cap-?,

ital alone does not decide the sell¬

tal

man¬

in this loom, from the turn
of the century down to the
begin¬
ning of World War II, the physical
agers

un¬
re¬

capital

costs are vital to
the current operations of business.

ability pf purchasers to
purchase is fully provided in ad¬
vance
by the cost payments to
labor, to government and to cap¬

ital—including capital's expecta¬
a profit.
As any profit is
made final, it becomes purchas¬
wages, that is the physical vol¬
ing power that catches up with
ume of goods he took
home, dou¬
the goods in the market.
Capital
bled also.
out diminishing the business.
as
a
purchaser behaves like any
On the other hand, dividends
It is not generally recognized
other purchaser. The willingness
that government spending is the paid out are to insure the growth
to purchase, which must go with
real
cause
of
labor's futile at¬ of business in the future as in the the
ability to purchase if goods
tempts to increase its purchasing past. Dividends are compensation and services are to be
sold,-de¬
power 'by
a
succession of wage of those who ventured their capi¬ pends on the assortment offered
raises without goods raises.: - Let tal in an enterprise; (>They are the
for sale. Our economy has a char¬
us start by
recognizing that what¬ incentive, if any, tojiyenture fur¬ acteristic which neither
wage

In

in

earner

the

an

40

same

years

his

real

ever
the government spends, its
citizens- must give
up
through

taxation.

;

Without

counting the European

of capital operations, by all
individuals in this country.

Because

third

labor, rent,'

of all the busi¬

wear

Div idendi are the end-point arid
residue of this accounting of capi¬

the

ishing savings.
The operation, wage-raise-with-

and

been

materials,

are:

is anxious

the

raises, with dimin¬

pay

profits

depreciation, etc.)
rate of

ness

On this the economic record is
unquestionable.
During the life¬

wage

was

(for

annual

an

tools

doesn't get such a fair share.

before the wage raise.

effect

be

000

Worker Gets

Recovery Program and all other
foreign
and
defense
proposals
awaiting
decision, ' all
taxation
same.
Both
raises
reduced
the currently takes 13 cents more than
purchasing value of his savings it did in 1939 out of every dollar
and life insurance. They also left
of income received as
wages, sal¬
millions of public
servants and aries, and miscellaneous proceeds
The

risk

to

that

serves

losts

could with his

ever

products

government,

profit.
Consequently the cost of the wage

a

It is illuminating that the gov¬
ernment, which had spent a year
of postwar
squeezing private prof¬

he

holder takes home

would not-reduce its
The management, for

spending.

War

part of

The

government.

however,

willing

according to the Pres¬
ident's report, page 95, in the sec¬

to

profits

interest, and

all the
price of the output unless it
is taken out of the profit paid to- worker has to contribute in an
ihe owners of the business or out hour, thereby become more and
of the taxation collected by the more productive each year.

same as

accu¬

this sort of price

than

aided handicraft.

of

the

the;

as

civilian

enabled

recover a

to

pay

same output, the
raise must be added to

cost of the

Ad¬

to cbver the

so

of

goods

ap¬

of Price

told

were

given

combined

As

permission

civilian prices

would

and

for

ci¬

when the

is raised for the

reasons

Most producers of civilian goods,

repudiated
after it had

was

later

months

some

Did War Controls Keep*Down

it

individuals

from

in inventories, account¬
expenditures for these
purposes
amounting to $31,700,his wife for a last visit. His first
Thereby it would shorten I the 000,000, f which
exceeded
the
words to her were; "Are they still future of
jobs and goods.
amount
of
undistributed
profits
printing the paper?"
Let us prepare for this attack
and reserves retained by $13,900,That is the spirit of many of by examining what private capi¬
000,000.
v..'
western Europe's newspaper men tal gets out of the American econ¬
The truth is that business failed

Finally

years.

Wages and Piices

Commerce,
that
business
had
enough profits to afford a 25%
wage rise without raising prices.
I call the suggestion "semi-offi¬

growth of this country
comes

I,In this connection, it should
noted

the selling price and all the costs
of tlie goods sold. The deductible

Economic Relation of

it

institutions

undistributed

government wants

down

industrial

ond half of 1947 business retained

Excess Profits Taxes

was

his head than
other Dutchman.

on

is

as

profiteering.

the chief Dutch underground

was

paper
a

standard by

can

clip

the

personal

individual's

income taxes

pocketbook,

and

because corporate and excise
taxes swell the prices he pays, the

citizen's earned dollar is 13 cents
shorter than it used to
be, when
he

goes

out to

spend it.

They arise from the current

ations

and

they

oper¬

persua¬

ther.

•

sion nor coercion can change:, it
rewarding the dividends distributes
goods strictly in re¬
are for venture
capital is regis¬ turn for some contribution to the
tered by the stock market.
Stock
economy. The equities of this dis¬
prices have been sliding slowly tribution have been established
by
downward
since ;• the
middle of
the free play of markets.
They
1946. In the first quarter of 1947
shift gradually with time.
The
and again this year, as annual re¬
play of markets keeps the econ¬
ports and
dividend declarations
omy balanced between labor and
appeared, stock prices registered
capital, while both support gov¬
a pronounced sag.
ernment.
All together, labor and
The declaration of 1947 profits government and capital constitute
as the highest
in history did not all the customers. A fair price is
stir up a flow of the venture capi¬ what is found by trial and error-to
tal which the corporations need.
keep the customers coming in.
It is true that all coiporate profits Fair pay is what will keep men
were $28 billion
in 1947, but the coming to work.
Fair profit is
government took $12 billion in what will keep venture capital
taxes, the corporations had to re¬ coming in.' Taxes are whatever it

How

-

tain

$10

dends

billion,

and

the

actually, paid out

divi¬

were

$6

billion.

He is pursuing an

tion of

given their
proportions by those operations.
They cannot be diminished with¬
are

costs

It

to

keep the government.

is evident President

Truman

illusion, how¬
Those $6 billion dividends are
ever, when he attempts to recover
this 13-cent shortage through a the lake-home of the stockhold¬
corresponding
income • increase. ers. They are the practical meas¬
Instead
of. abating
the 13-cent ure of the reward cf capital for
shortage in the pay-dollar, each last year's enterprise.^')'

still believes the removal of price
controls was responsible for the

round of pay

OP A

dollar

raises makes his

slightly shorter than

pay

ever.

The

President

securities

stated :that> the

markets

furnished

'

less

rise
in
prices;
conse¬
that the restoration of
price controls would remedy the

present

quently

situation;

The

fact

is that

when

removed, full produc¬
tion set in immediately as promwas

'

'4* W

Volume 167

Number 4696'

o

' ised

by industry. Prices were sent,
however' by two rounds of
wage raises and by the ruray of
\ inflationary
pressures which the
'President himself. listed earlier

>

\ up

•

'this year

in his economic report.
; Apparently the President does not
yet recognize that th£ pressures on
;his

list

own

likely

to

explosive

it threatens to
only with the impersonal lay thd eniire world under con¬
differences that arise from, occu-v tribution to that system by force.
patron, location and size, but with
the personal differences that arise
from the fact that each business

"the course I have retraced, we
got
1prices that truly represented the

can

in the

'money

..; that.

,

world

'•

•,

•_

'in

>

the

world,

dollars.

everybody

-'is the visiting card of the

designed to go together.
The individual American busi¬

one

»

>

y'omy, and

fully and in
Under

a

Controlled
we

at

econ-

or

of

who may

•

necessarily two

are

thev

are

all—and usually he must
act—he
must
also proceed : on

But. his

judgment

experienced, for the

is
of

career

nation's

economy

for

there

him

is

is
no

such

-

-

t

of

thing as nearby data. If he
hasn't the nation-wide data, he
has nothing of use.
Experience during the wart'rae
.

could

It

be

operations.-

economic

.

r

|

mai>

is

economy

a

censorship—an

This discussion of the free

ket

is

mar¬

far from

ideologic. It is a
recognition that collectivism has
come from under cover, not only
elsewhere in the world, but here
also. It.; is emerging on a scale
that represents a century of propr
aganda since Karl Marx decided

his

on

the controlled

20 years of further thought
capitalism could better be
overthrown by infiltration.,
after

that

fiis

at

•running a
new.
And

was

aavice

plant

to

key

institutions

cational

vital

and

public services. Now they are
mobilizing their forces and their
disciples; and they all seem to
share a deep conviction that in
this crisis we should again have a
managed: economy in America.
American

Our

collectivists

be¬

of. command- economy lieve it will solve the
problem of
; proves there is only one thing
high prices and stop Russia if the
; certain about his judgments and
President is made Commander-inI his orders: It is certain they won't Chief of the national economy.
fit most businesses or most busiIf they really think that would
'nessmen.
His, predictions
are
,

*

! quesswork unless he is in
:

absb-

lute command of the entire econ-

[pmy. Then the predictions are

a
report of the orders

'consolidated
he

has

issued.

Their

correctness

'

is

only

his discipline,
•Their results may not be good at
good

as

as

all.

'...
:

wartime

experience—the
experience of Britain —

current

[shows that control is an all-ornone proposition.
In a highly de«veloped economy, like a busy city,
-you can't regulate traffic on the
without also regulating it
the side streets. An ability and

avenues

.on

experience
:

capacious

enough

to

implications of
job, would have too
.much capacity to undertake it in
the first instance. Moreover, the
control

a

'controller would be at the mercy
*

of'demagogues

vcast suspicion
the

on

that

who

on

need
only
his motives and

business,

had equipped

responsibilities
him so far as

"any one can be equipped, to
•••.tan economy."
'
♦

^The ineffectiveness of the

run

man-

;.aged
economy
arises
not
only
,from the impossibility of getting

rthe necessary control data in time,
the

superhuman mental capa¬
city to digest it after it arrives.

•or

.

.

r

this

That is the

level.

*

The

lies at the

-level.

"

•

Every

handicap at the top
difficulty

substantial

operating

or grass

roots

'

business

in

America




is

since it was established
it has high prices
goods that it is

economy

30 years ago, yet

and

the

the

living is the primary task

self-control

the

omy.

There is

other control device

no

self-control that

low

a

for

get

of living
out of an
that is paying as we are
past war and a prospective

a

cost

of

war

will

unprecedented cost.

:

;

being

are

we

led to believe right now.

It is my
opinion that textiles and
textile products may be purchased
in more reasonable price ranges

humble

for
agriculture,
business, government and
than
principal factors of our econ-r

In

.

present

our

page

7)"'

who

are

ton

trying to sca^e the
people of the country into accept¬
ing such controls>are doing this
country

must

great

a

be

opposed

in recent years.

war

scare

came

The

upon us.

price of calf leather had been
and

duced

calfskin

re-*

shoes

handbags had reflected

and

this drop

.

That

with

;

is why I
sense

raise the test of

—

not

minds

only to meet
but

to

smell

disloyal.

I doubt if any man of common

sense

can

Stalin

is

mediate

longer believe that
propelled by an imr
hot zeal to spread the
any

Russian vision of
The

man.

under

go

organization which
at

center

our

in

is

It

pressure.

cannot risk

we

this

faulty

a

will

products

depend

crisis.

risks

more

he

is

for every

taking

are

the

free

balanced

to

recognize what Russia needs
beyond postponement is not con¬
verts

to

Socialism

but

industries

in

going condition. That is
necessity,
By

now

a

brutal
•

it is plain, also that if

Stalin steals Europe, he must also
knock
out
the
United
States.

power

as

he

his

ment

^freedom.

:

conquered

it.

Let

us

recognize that in Russia

N. Y. Curb

Suspends
Dreyfus, Jr.

Jack J.
The
on

New

York

Curb

of Jack J.
member

is

Certainly,

conscious of
the threat of communism in Eu¬
we

and in

rope

are

qui

own

country. But

of

to

come

only

us

on

March 17,1948.

It should have been

evident to us
Teheran, Yalta, and Potsdam,
Why
are
we
discovering
this
at

emergency just now, after all our
military strength has been dissi¬
pated?
Now

we

that

controls
to

we

must

haste,

consequence

loose.

;

>

'

inflation

Further

is

not

neces¬

if the government will

sary

and

expect all kinds

of
in order
the inflationary forces

as a

control

let

that

feverish

must

we

told

are

with

rearm

con¬

duct this business of rearming

sensible

in

and if the
propaganda machine is turned off
in Washington. No true American
a

wants

the

manner,

there is

in

country to be weak

our

situation.

world

present

But

stiength to be gained
throwing the country into an

by

no

imposing

American

farmers

farmers'

income

their

and

a

people

want

of

none

omy,

Dreyfus, Jr.,

of

the

New

be

to

Farm prices are more likely
lower rather than higher

before

1948

is

suspen¬

The

a

Now

regular

York

Business

let

of

ness

Curb

over.

of

Controls

examine

us

controls

this

which

present

economic
be

can

met

and

po¬

with

the

greatest present and future bene¬
fits to ourselves and to the whole

7:^

;

Our

litical crisis

world:

busi¬

seems

to

(1)
our

If

we

continue to

domestic

increase

production, and

re¬

costs
be one of the chief topics of con¬ duce
and
prices through
Exchange and a partner in the
versation in Washington and the greater efficiency in production
firm of Dreyfus & Co. The board
heart's desire of those who would and distribution.
imposed on Mr. Dreyfus the addi¬
like to regiment our economy. The
(2) If industrial and business
tional penalty that for-a period
unfortunate thing is that most of management and labor will work
of six months he may not have
those who are strong advocates of together to minimize the infla¬
actively associated with him as
government controls
are
them¬ tionary forces, and to bring about
a partner in a member firm Wil¬
selves the rankest kind of ama¬ an orderly readjustment of prices
liam E, Nulty, a partner in the
teurs and theorists in all matters so that more goods will be avail¬
firm of Dreyfus & Co. The two
pertaining to industry or business. able at prices people are willing

penalties
at

imposed effective

were

once.

'

'

Being

.

,

thus

theory

than

-||

Formation of Hall & Company,

in state and
municipal
bonds, is announced by Denton D.
Hall, partner in the new firm. The
company, with offices at 70 Pine

dealers

Street

New

York

succeeds
to the business of Vostal,
Hall
and Company which dissolved on
April 29, 1943.

City,

practical

causes.

MOINES, IOWA

same

—

T.

Henderson

&

building

dam across the mouth

a

of the river at New Orleans.
If there were to be controls, and

if controls

controls

are

then the
put on the
rather than

should

be

inflation
upon the effects or results. These
causes of higher prices of the fin¬

Landstorfer

of

was

McCrary,

put controls

No

raw

one

i

-

economics

or

affairs of the
think of trying to

on

results unless

economic system

it
to

person in these United
States who loves freedom and be¬

i

(Snecial

members

to

The

DETROIT,
&

Financial

MICH.

Co.,
the

Chroniciei
—

Ford

Watling,

Building,
York

and

attempting to make
them work by force. The system
has j not; enly corrupted the Rus¬

added Edward H. Lerchen to their

sian economy but also the Russian

staff.

Detroit

•■•

of

Stock

New

Exchanges,

have

develop

we

a

uniform

unifed national policy on in¬
ternational
affairs, and - at the

time build

our

economic and

military strength for the protec¬
tion and the preservation of our
American Democracy. ••<

Wright Mgr. of Dept.
For Butcher, Sherrerd
PHILADELPHIA, PA —Butcher
&

Sherrerd,

members

of

1500
the

Walnut Street,
New

York

and

Stock Exchanges,
announce the appointment of Wil¬
liam M. Wright, Jr., as manager
of their municipal bond depart¬
Philadelphia

Every

lieves in our free enterprise sys¬
better
bestir
himself
and

tem

Watling, Lerchen Adds

If

ment.

;

'

(4)

but

be those who do not want

present

work.

costs of

practical
would

would
our

in

amateur

the

world

J.

Empire Building, members of the
Chicago Stock Exchange, as ViceMr.

rank

'

necessary,

of

causes

in

Co.,

black markets.

and

products are the
materials and wages.

Landstorfer has become associated
C.

pay.

it would be to try to control the
flood waters of the Mississippi by

T. C. Henderson Staff
T.

to

and create

as

a

with

more

sense

It is just about as sensible to try
to control prices at the retail level

ished

Landsforfer Joins
DES

with

endowed

than

they
(3) If we prevent government
immediately make the mistake of controls from stifling our economy
trying to control results rather which would restrict production

Hall 8 Go. Is

Lerchen

and

there

than

We should ask

Europe.

government officials,why that
is so. '
''

economic

period of three months

a

another

are

more

propa¬

our

is

Exchange

May 4 announced the

sion for

resisting the consequences
of piling one socialistic falsity on

we

here

over

right in

war

more

at

We
:.

income

and

ability to buy industrial products that, and once they are aroused
high prices; A high priced in¬ to the dangers right here at home :•
dustrial economy';cannot be sup¬ they will rise up in their indigna¬
ported by a low price farm econ¬ tion and put an end to it.

i

———

industrial

would be drained similarly.;

ganda

thai there is far

say

talk

the

are

President.

drain

our

an

at any moment.
It is the strong way because it

we

formerly Treasurer
Dearth & Co.

would

Europe
war

important factor in determin¬
ing the demand and therefore the

of where

awareness

enjoyment of
maintaining a
that

as

economy

The

the

commandv People

our

strait-jacket
through
lot of senseless con¬
trols on wages and prices.
If we are going into a full re¬
is the honest way.
price for industrial products.
Farm income is like a two-edge gime of controls, we are moving
In that way let us use the
sword, which cuts both ways. If straight in the direction of so¬
weapon of
common
sense
more
prices are low, industrial cialism, communism, or some other
than it has ever been used be¬ farm
fore. It is the chief mental arma¬ workers like it; but low prices cut form of totalitarianism. Surely the
us a

Otherwise he cannot be safe in the

his loot, without
huge armed force

well

as

and the reports are for a
very favorable crop condition iq
most of Europe this summer. That
own,

time.

arid

who have lately come over from

situation in Europe and other

will materially affect our farm
is
However, it is
only device that will keep us price structure.
strong enough to carry out our generally oelieved that farm prices
will remain about normal pre-war
commitments, because it is based
on a free market which will
give levels for a considerable length of
believe

I

too large and too coldly studied.

I think it is only common sense

the

upon

the

Formed in New York

honest

out the

our

disservice,
with all

that consciousness should not have

Leather products were begin¬
ning to feel the effects of a more
balanced supply to demand before

the

strength at

>

little

so

desperate.

understand the full

such

•

instead of hindering us in
crisis, they ought to notice
that Russia has had a command

help

common

Our

for
and

labor,

labor

in

unions, government
offices^ information sources,; edu-r
men

•.period

'

search
wages

as

parts of the world

For

iron curtain at home.

collectivist section of the economy

not

a

of

sense

this fall

short

as

lations which eventually must let

behavior.

center.

sort

momen-

own

speculations

By contrast with the free

experienced judgment and on
nearby data which he is used to
handling. If the controller of the

judgment.

■

crop

ket,

own

,

this

An Iron Curtain At Home:

guide to achas changed

situation

their

have to expose their

Economy

.

of

why

of

organ

■

high costs in deficit fir
nancing or dam them up in regu¬

When

The free individual acts

acts

get

in

them

a

they
of historic iri-

a

out of

tion to help the rest of the world.
Or by those who did not want to

en-

Difficulties of Controlled

.

will

level

company

results

discarded only by those who don't
understand how it got us in posi¬

ate action.

s

common

the

make

an

•,

is

That

to

of Europe

economy
Moscow.

cost of

is

iened a market which was begin¬
ning to sag before this emergency
was discovered.
If I were betting,
which I am not, I would be that
the supply of textiles will not be

information

under the adjustments
individual businessmen
be free to take immedi-

by

Stalin

as

supply, and this has stif-

that the free market is the tested

'

reasons.

meanwhile under its
and

ton

of their

bury

do turn uo,

-made

that

reporting of

terest rather than

Itum

producers
they are the ones who
going to be "tapped" for a part

feel
are

factors in motion, we require alert

economy

The

a

crisis: than the remote

war.

tiOn.

lower prices.
Most of the textile

collectivist economy,

or

•

■

or

or

♦

:

the

more

plenti-

honest relation

more

three months late.

•

(Continued from
duction at the present price levels

control office in Washington.
In this crisis, with such massive

more

'The control figures for the
tire

of Washing¬

economy

hope to survival.
Unregimented patriotism right

During
the war we tried it and in vary¬
ing degrees during the first at¬
tempts at a controlled exit from

i

determined to make

as

economy an organ

others is

*

the

defend

to

in the market,
Now prices are
situation, to
promise a low cost of living under being restored to their former
high levels, with no assurances
a managed economy is either mis¬
taken or deliberately misleading, for the future.
The prices of food and farm
A, managed
economy
can
only

variety of

a

for

apparently
our

except

econ-

controlled

a

preparing

individualism that distinguishes a
service
or
a
product from
all

know what is going on

never

for

free

■'
; •
,
•
•
politically managed,

costs.;

V

a

get it

can

'

'to

out of

more

than out of

omy

tion,

na¬

we

designed for competi¬
the free market where

nesses were

wants

tion that has demonstrated

a while

America and strengthen the world

attempt to manage

will be as
as
any mechanism put
with
parts that were

together

At the moment the dollar

CCan -get

any

in-f

of

instead

never

United States but everywhere else

.s

units

American economy

wasteful

does

generation of Ameri-

businessmen who will behave

the

only

which

new

a

dividuals,

s

■ •

standard parts into a

as

statistical

as

For that reason, not only in the

•

•.

breed

by

..V;- V "■

Our dollar is at present the

to fit

patterned economy and unless we

cost of the goods and services
pur¬

chased.
':"

•f

■

ness

1

(2003)

i

,

re¬

off,

;

against further Russian aggres¬
started with some individual and, sion,' we must not let ourselves be
its growth has been individualistic infiltrated by our domestic col¬
in character—no matter how big lectivists.
k,
it is now.
>
1. *
They have done a comprehen¬
Unless we reorganize each busi¬ sive job of propaganda which is

sults if confined without the
safety
•valve of the free market.
V
When OPA was taken

>

FINANCIAL CHRONICLE

not

ness

potent producers
Moreover
they
are

produce

COMMERCIAL &

different fromteyery other bu§k*

are

results.

of *

THE

fight this trend of thinking in
Washington leading us into an¬
other
set
of strait-jacket con¬
trols.

Once

we

let

our

government

place such controls on us in peace
we shall
in all probability

time,

never

be able to throw off that

strait-jacket again.
The

propagandists in Washing¬

Edw'd

Kling to Manage
Dept. for Janney & Do.
PHILADELPHIA, PA.-^-Edward

become associated
& Co., 1529 Walnut
Street, as manager of their newly
opened municipal bond depart¬
ment.
He was formerly in the
municipal department of Butcher
W.

Kling

has

with Janney

& Sherrerd.

.

32

(2004)

THE

COMMERCIAL

CHRONICLE

FINANCIAL

&

Thursday, May 6, 1948
215 milli¬ gold of the Swiss National

190 and
of fine gold.4

between

ing

/

flexible.! Gold sales

Within these limits the Swiss Na¬

(Continued from
brought

heavy

dollar rate

on

"thus

counter

ran

the

to

'financial'

for

level of the official parity."!

which

reason,

the

taking this measure on.
volition, solely in the

and

without

has
*

rious limitations

Swiss

pursued

Swiss

the

recommendations

dollars).
francs

f

to

when

ings

of

Monetary;

(1,349

they

they

have

million

million

Swiss

dollars)

in

February—the latest
government hold¬

available.

are

The

then

5,836

date for which

Fund to its members at the end

June

1947

Since

the middle of

government

v

.

.

stock reached

peak in January, 1947—1,258
million Swiss francs (291 million

1947."!

the national bank
regarded the sale of gold
event,

any

now

bank

commenced

back

ly as "an emergency measure of
monetary
policy,"
since
"the
growing import surplus created 4

to

take

gold

government,

with

the result that

situation

that

from

the

by the end of the
the government's stock had

year

fallen

to

million

610

francs

gOld."2

Swiss francs

formal

to

that

Bank

longer

no

.;;.g/

Contrary
ment

the

made

Swiss

relative

issued

domestic

sterilization

longer regarded as neces¬
sary and had been abandoned.It
is true that the national bank took
no

the

gold previously held by
the government, but this gold—to
over

the

1,028

National

to

that gold

Of

announce¬

sales of gold, no official statement
was
was

million francs

of

over

(238 million

into francs
exchange,

of

rate

only dollars received from Swiss
(with certain exceptions)
and from a very restricted num¬
ber
of other
bona fide transac¬
tions were accepted for transfer

at

official

the

francs

dollars

4.28

Swiss

All

this

On

other

only at
market.

Trading in gold in Switzerland
continues to be subject
to tne

tained

be

not

it

to

im¬

gold

from

gold

ers

dollar

-of

other way of

assets

had

who

converting them into

francs.

;

dollar, 30% in 1946, was gradu¬
ally reduced, as may be seen from
Table II.

"Financial"

francs

counted

States

under

the

1946

the

market

Treasury

bills

lars)

ference

crease

especially issued for-, this
purpose.3 In this respect the dif¬
the

between

policy is

new

while the
were

and

Report

2

3 In

Annual

June

tional

bank

million

ctally

mine).-

francs

the

special
francs
that

of

the

available

on

the
of

end
in

bills

was

4.1

of

na¬

espe-

million

created

of

May

1947

the

year

Chart

II.

Since

1941

the

Swiss National Bank has sold
gold

totalling
francs

about

1.5

billion

Swiss

for

The

896,-

francs.

gradual

strictions

on

lifting

the

of the

re¬

transferability of

TABLE I

Gold and Dollar Holdings
-Gold-

End of

-

Nat'l Bank

1S38

Govt.

(In millions of dollars)

Total

2,890

Dollars

1940

1941

277

2,262

360

2.173

__

2,890

2,262

....

1939

2,173

995

2,879

;;

Total

Gold

Dollars

Total

3.167

701

65

766

2,622

:-V 549

84

633

502

232

3.168

734

2,879

672

1942

3,565

3,565

57

3,622

824

1943

13

4,173

4,176

67)

4,243

965

16

981

4,554

463

5,017

101

5,118

1,159

24

4,777

1,183

1,030

5,807

161

5.968

1,342

38

4,950

1,380

1944

1945

__

1946

1,239

6,189

5,256

610

5,866

1948,

Feb.

14.._

5,606

"•230

5,836

1948,

Mar.

31_—

5,625

1947'

*Feb.

—

16.

tNot

t

158

3,551

665

'•'*

157

822

f

,1,430

37

1,356

24

1,380

5.969

1,349

31

1,380

t

t

16

t

.

67

..(

SWISS

or

str/ss

on

the

of

use

some

from the grow¬

seen

the

nominal

Switzer¬

on

1'

(4)

.

Finally,

Swiss

the

suspension

of

brought about by the

balance

of

payments

de¬

velopments, has relieved Switzer¬
land of any possibility of em¬
barrassment in the light of the

by the
policy in 1947.7
maximum
prices

-

gold policy being pursued by the
"owing International Monetary Fund and
gold jits principal members. Although

since

circumstances

bars

not obtainable

are

market

for

,

,

,

the

time

-

j Switzerland acted on its own volition, the actual outcome was a
realignment of its gold policy
that

Swiss gold

; of

other

principal

j'-'/;

countries,

dollar

and

policy reflects the basic trends in
the Swiss balance of
payments on

4.23

and the first year and a half
afterward this balance was heav¬

4.13

March

ily

4.11

.

active,

xC

■

Candidates for Curb

during the

The "financial' dollar rate

rose

considerably after gold sales were
discontinued early in September,
and again at the end of the year
it

announced

was

that

a

could be converted at the official
rate

of

exchange.

February

The decline in

attributed by Swiss
commentators to precipitate sales
was

by Swiss
nationals
who, on learning the
news regarding the disposal of the
remaining blocked assets in the
United

States,

Swiss

preferred

francs

at

rather than to

tional bank
fer

was

dollars

all

to

take

lower

a

rate

wait until the

the

at

had

sake of

Present

:

,*

*

chances

that

do 4 not

in

the

have

Swiss

been

affect-

gold

reviewed

the

basis

that

policy. > The

cree

the

of

present

system rests
Federal

on

Swiss

Council

of

trade

deficit

strictions

began

to

show

current

on

a

the balance

and

of

Swiss

27,

1936,

National

under

which

Bank

structed to maintain the

ity of the franc at

a

the
in¬

was

gold

par¬

value rang¬

| announced

petition

is

the

Swiss

only

reference—the
4

The

thus
a

between

maximum

an

of

rate

average

average

gold policy
fixed point of

one

buying
currency

minimum

a

price

devaluation
of

25.3%

and

dollar.

5 The

law
the

of

bars

account

or

for

the

and

coins

account

for

of

its

7 The

Townsend

fine

for

Report
following
Gold

1947,

page

maximum
bars

per

15.

prices

gold—4,970.00 Swiss
gold
pieces—30.50
Swiss
A 4% sales tax brings the price
20-franc

coin

to

31.80

&

29.

K.

&

Co.

Veldran of

Kier-

and

Chester

C.

.

Nominees for Class B member¬

ship

O.

are

Viking

Pollak

Hedberg

&

of

Richardson;

Henry Parish, II, of Carl M. Loeb,
Rhoades & Co. and Charles J. Wil¬
liams of Edward'J. Duffy & Co..
A

..

primary election will be held

May 17 at which time eight Class
A

candidates

ballot.
in

No

the

case

will

be

elected

primary is
of the

by

necessary

Class

3'candi¬

1948.

eligibjy& for

are

.

the

OF SWISS

Haupt

Ingalls & Snyder.

final

election

scheduled

SWISS GOLD SALES TO THE PUBLIC

(MILLIONS

Ira

Co.; Garry Onderdonk of L. A.

dates, all of whom
CHARTH

of

Harden of Brown.

Mathey

francs—or

5,170 francs per kilogram.
As the
gold content of the coin is equivalent
only to 28.80 francs, the purchase of
gold implies a capital loss of about 9%.
8 Swiss
Bank
Corporation,
"Foreign
Exchange. Bank Note, and Gold Rates,"
Feb.

Allen

&

nan

francs.
a

E.

Co.; Arthur C. Brett of Goodbody & Co.; James F. Byrne, Jr.;

are

kilogram of
francs;
20-

Swiss-franc
of

A

&

Auerbach,

effect:

Class

as

third

parties.
6 Annual

:

nominated

members of the committee include,

April 7, 1921 simply au¬
to
buy and sell pre¬

in

-

candidates for Class A

as

Class B candidates.

bank

metals

exchange

Co.;: Josepji J. . /Harris;
Robert
A.
Kugler of Shearson,
of
Hammill & Co.; William N. Moxis
ley; N. Matthew Nilssen of Laird

of 34.5%, corresponding to
devaluation of 30%—that is,
parity rate of 4.37 francs

thorizes

ten

membership
on
the
exchange
nominating committee. T h r e eJ
membersV have h been
named
as $

John

(2) In
there

Truslow, Presi-

that

members have been nominated by

Those

to

Sept.

Francis Adams

dent of the N. Y. Curb Exchange,

re-

dollar

on

Nominating Comm.
i

account

transferability
were
partially lifted, gold was
partially desterilized and domestic
gold sales were suspended.

of

the De¬

the

sustaining its export trade.

payments

cious

The

mainly- for

probably became passive, the

per

Gold Regime

,5° ^
gold and

,

of

part of the gold that

a

accepted

of

ance

record

an

higher official rate.

i?y

influx

However, when in 1947 the bal¬

na¬

willing to trans¬

into francs

the

.

sterilized
it

Switzerland restricted
.

limited

currency

francs)

be

can

land.

gold

be

to

our

H

GOLD HOLDINGS

is

restrictions

the

Marshall Plan dollars

gold

upon

current account. When

CHART I

(billions

the

and

position is likely to last for
time

has

3.97

January
February

here
.

bank

war

policy

available.

in¬

be

may

logic of Switzerland's present
international position. That this

unaffected

are

(1) The

1,467

5.968

133

it

national

"financial" dollars is indicated by

gold sales,

controls

present

in

'

6,347

102
■

decision

a

4.15

837

3

of

^transfer

with

3.94

December'

the

the

no

Conclusions

of certified dollar assets

(In millions of Swiss francs)

the

by the Federal Price

in

3.81

.

which

that

relaxation

In

bank.

were

such

price

coins and

/ j3.73
Jl.OO

portion of the Swiss dollar assets
"Financial" Dollar Exchange Rate

for

being." 8

July
August
September

when

(347 million dollars)!

spe¬

considered. The national bank

was

to

*

On the

ing restrictions imposed by other
and sold each month. In its An¬ countries on theirr imports from
nual Report for 1947 the national Switzerland, from the
uncertainty
bank stated that "the question of of the European economic and
po¬
cancelling the regulations of Dec. litical situation, and from the un¬
7, 1942 regarding dealings in gold certainty as to the impact of the

seem

U. S. dollar

Swiss

yet willing to accept more
gold. The proper conclusion to be

to

However,

3.82

..

November

were sus¬

pended, the national bank sold
gold
worth' 480
million
francs
(111 million dollars)—by far the
largest amouht in a single year
since the1 inception of the gold
program in 1941, as may be seen
from

—

into

not

in

but
keep
figures
on
the
amounts of gold that they bought

only

changes

"

dollar

however, Swiss dollar

10%, from

their customers,

of

addresses

Control "

3.67
3.86

gold

transferable Only up to

are

ferred

longer
required to record the names and

maintained

3.66

October

to Sep¬

up

national

dealers

3.71

1947

gold sold to the public: from the

to

the

accept and retain gold.

assets

yet arrived." R

Francs per

.

limited

of

other hand,

amended to the extent that

were

licensed

The

End of:

They
greater in¬

tember 9 when the sales

amount

was

a

the

from

mit

3,77

—„

June

1948.

shown

this

profits

account

31,

dol¬

but for the large quantities

beginning of the

Swiss

for

have

million

to

November,. 1946,. these regulations

-V

April

..

100

of
gold
debited to

>

bank's

this

>

purpose

been

the

page

1947
the
the market

cost

fund
of

.

.

.

Treasury

for'

out

At

July

The
had

,

14

page
.

.

Report for 1947,

and

issued

1946.

1947,
-

placed

sterilization,

purpose

for

mine).

(translation

000

of degree:

one

that

1 Annual

still

and

(1,300

March

on

would

sterilization operations

(translation
1

former

previously of such magnionly the government

tude

14

the

francs

ability

of

increasing transfer-;

cially-licensed banks, and imports drawn from this apparent con¬
and exports of gold require a per¬ tradiction is probably that further

moment

3.54

—-

February
March

consequence of the
return of the gold to the national

Swiss

•

3,45

January

Agreement. In

is

Switzerland

bars

suspension

point to the conclu¬
sion that the national bank wishes

however, does not deem that the

1947"

Washington

francs (1,141 million dollars) in
January, 1947 to 5,625 million

on

Francs per
U. S. dollar

End of:

dollars) was, however, ac¬
for by the payment to
England, France, and the United

million

-

,

II

Dollar Exchange Rate

bank, the latter's gold holdings in¬
creased from 4,936 million Swiss

was

■

TABLE

December

250

\

(

The discotint on the "financial"

(58

dollars),

no

and4 gold

coins

The

irancs would

regulations enacted Dec. 7, 1942.
Under these regulations, trade in

used

both

(3)

sales and the

40%

ob¬

was

into
Switzerland;
supply was considerable

emanated

sell

27,

thus

demand

dollars

goods

port

while the
as

the

the

could

"free"

a

on

market

since

small

of

dollar.

transferable

were

premium

a

rate

the

to

sponding to a gold con lent of 205.- tion, there has been/no ^official
tine per franc and announcement whatever; and the
a
franc-dollar parity of
4.3276 lilting of the restrictions on dollar
francs to the dollar.
convertibility, extremely gradual
'There is, however, no legal ob¬ as it was, does not involve any
ligation upon the bank to buy or policy commitments.

347 milligrams

gold;5 and the decree of Sept.
1936, while maintaining tne
gold-cover requirement for
the note issue, released the bank
from the obligation to reimburse
its notes in gold on demand. ;

exports

million

placing

_

transfer¬

the

on

dollar

November

the market—was sterilized by the
national bank itself by the latter's

.

the

(53 million dollars).

total' reduction

not sold to

the extent that it

-

official

the

million dollars) and by the middle
of February, 1948 to 230 million

new

.

of

at

va¬

(141

necessitated the continued sale of

.

"financial"

the

on

dollar market. Because of the

dollars). At that time the national

bars and coins to the market sole¬

.

suspension of
of * gold had

.

In

•-

and

domestic' s'ales

speculators and from Swiss hold¬

its

'

of

March,

reached the all-time peak of 6,169
million Swiss francs (1,432 million

currency

International

aggregate gold holdings of

until

policy" in# line '

the

Holdings

the national bank and the govern¬
ment increased steadily from 1940

declined

intervention
from abroad, the national bank
v/ith

Dollar

summarized in Table

The

dollar

ability

and

reflected in Chart I, and

are

are

any

a

Gold

carry

The changes in Swiss gold hold¬

ings

own

interests of the
•

dled by the national bank.

bank

,

"By

marked effects

the

already had expressly invoked in
suspending sales of gold bars for
arbitrage
operations in
March,
:
1947, was accompanied at the time
-of the suspension of the sales of
'gold coins in September by a sec¬
ond one, namely:
its

the

the

a

This

national

the

them

now appears that the pres¬
has diminished to the point
where sterilization can be han¬

was

bring the
to

position to

sure

efforts

dollars

in

out, it

,»

the

on

the free market and

of the national bank to
rate

4)

page

pressure

Bank.

For the rest the

policy is essentially
are officially
tional Bank buys gold at 4,869.80 suspended only "for the time^befrancs per kilogram fine, corre¬ ing'; as regards gol&,des(eriliza^
grams

Tuesday, June 8, 1948.

FRANCS)

The

500

exchange nominating

mittee

400

A

is composed

members, who

of

for

.J.

•./,

com¬

fotir Class

300

regUlaf

ex¬

change members and at least

one

of

in

whom must
the

are

be

engaged solely

commission

business

and

200
three

Class

member
1939

1940

n n

1111

1941
.




n i n

1111111111

1942

n 11

1943

iUllllHllHLlIlin.inllliii
1944

1945

IHIHI nn n 11) I!

1945

1947

li

members,

who

are

associate member partners Of,non-

100
0 d: 111111H111111111111111H11111

B

1948

bo

2G

,?£ li'iq/r

trilOCj'-m'jfO'l

.

fiOJ.fi'

regular

member i firms

business-for
fr

of

partners

aSsocia.te

11111 Hill

•'

the

public.

.-/'b'.-;

or

doing
:

v

u.-i 'wA

'
*J...

_

Volume

167 ; Number 4696

Stock

THE

The Board of
Association

Stock

of

"watching to

Exchange

The

May

20,

22, it

by
A.

Homer
Lawrence

areas.
> ;
i*
''VV ,\
.?'•
It is all very
confusing to steelmakers and their customers. -But
it will be more serious when and if the

basing point ruling definitely

applies to steel, "The Iron Age"

Laur¬

of

system rather than

Bennett,
&

■

,

':i

;

be
on

dinner

a

General Motors

Proving Grounds

capacity

Friday afternoon, May 21. The

on

in

meeting will be attended
by members of the stock exchange
industry in Detroit together with
officials of corporations
in the

Detroit

area

listed

whose securities

the

on

New

York

Board

Chairman

the

of

of

York

New

increase

Vilas.

and Mr.

the

General

stock

C.VGray,

conducted

York

the

and

v

by Edward

Stock

latter

by.

of

cialist
York

and

on

a

Wv

the

floor

of

the

and

other

key

last

v

/

.

in liaison work with financial in¬

stitutions throughout the country.

joining the staff of the

World

The ' First

War

I,

was

Director

and

: Boston

■

;

,

for

25-years.
a

Corporation,

For

the

half years he

charge'-of

the

past two

has been in

Chicago

The Fik-st Boston

f

''

office

week

and trucks

cars

declined

(revised)

to

an

total,

in

estimated

the United

according to

from

last

week's

"Ward's Automotive Reports."

..Predicting .further-production. cutbacks due to-the coal tie-up,
agency said May production in the United States and Canada

week and 70 a year ago.

of

Corporation.

numerous

as

All

1945

-

to

The

Financial

of the

Chronicle)

each.

Small

week's

nor as

be

promotional sales helped to stimu¬

and furniture with price reductions neither

and

numerous

as

Requests for credit continued
remained prompt, states Dun &

as a year ago.

collections

Bradstreet, Inc., in its survey of trade.

7

:

,

;

,

,i -7 Practically all .types of lightweight clothing were sought
by con¬
sumers
the
past
week.
Women's suits, blouses and accessories
continued to sell well with sheer Summer dresses and beachwear

in

some

Promotions

areas.

bridal

of

and

gowns

gifts

attracted favorable attention along with increased buying of
wedding
rings and graduation gifts which boosted jewelry volume in some
stores.
Men's tropical worsted and gabardine suits were

steadily

purchased

the

as was

The

consumer

case of

sport jackets, slacks and light hats.

-

'"-'jj.'-r*'.

Yv

■'

A*":)-' %

,1c f

.

a

failures

under

week ago and below last

$5,000

tinued

to

to

be

sought.

'

:

%

•

1

year ago.

for

Following

1.3

of $6.02.

$-".76
the

.

linens

was

-7

**'

.1^

■

•+.-

*

••

r-.

.

}'

' Y

7

-.A." /•.

...

f

-.

V'

*

'•■■■'

V

of

foods

canned

were
con¬

increased

sewing

paints

Waxes,

as

sought

were

cleaning preparations

and

Draperies, slip

V

supplies

covers

y

by

were

and Summer, furniture

did nationally advertised refriger¬

Sporting goods and automobile supplies, equip¬
in large demand.

also

were

volume

Wednesday of last week

was

that of

a

by

year

the

ago.

in

country

the

period

ended

on

estimated to be from 6 to 10% above
Regional estimates exceeded those of a year

following

New

percentages:

England

and

;

Middle

West 5 to 9, East 6 to 10, South 3 to 7, Northwest 9 to 13, Southwest 10 to 14, and Pacific Coast 4 to 8.
A

slight decline in re-order volume reflected chiefly the dispo¬

sition of
The

.

some

total

retailers to reduce inventories of

dollar

of

volume

wholesale

trade

some

seasonal

remained

close

goods.
to

the

high level of the preceding week and moderately exceeded that of
the corresponding week
on

year ago.

a

seasonal merchandise

and

Buyers generally concentrated

responded very favorably to offerings

specially priced promotional goo.ds.
Department

store

sales

on

a

j

;

countrywide basis,

as

taken fropi

the Federal Reserve Board's index for the week ended April 24, 1948,

increase of 8% in the

an

of last year.

preceding week.

This compared

For the four weeks

ended April 24, 1948, sales increased by 4%. and for the year to date

still 12.3% above last year's level

•;./

home

and

the

with

1.3% IN WEEK

nine-cent rise last week, the Dun & Bradstreet
price index fell by a like amount the past week to
on April 27.
This represented a percentage drop

week, but it

•
,

increased by 11% from the like period

^

a

^

t

purchasing

for

of

Geographically, the week*® failure were concentrated in the
Pacific States with 29. the East North Central with 21 and the Middle
Atlantic with 20.
The East North Central States had the sharpest
a

The

favorable attention,

Retail

year's 13.

trade, with 43, continued to have the most failures, fol¬
lowed by manufacturing with 29.
In both construction and commer¬
cial service, casualties were low, claiming six and eight
concerns,
,

--

heavily purchased.

housewives.

many

10,

Retail

•

■■ t

v '■

also in large demand.

involving

fell

>f

Fresh fruits and vegetables
plentiful and in large demand and meat and butter substitutes

airo

liabilities

-ifj-

Yln^some sections of the, cCrtintry-picnic specialties, .soft drinks

and beer were

services

in

.,

respectively.

"

?, ;<•£ '

and

centered

buying of food increased slightly, particularly

f- in rural areas!

ment

was

,

With Wisconsin Co.

numerous

widespread

ranges.

-

Ray

by 6%.

back

due

to

cold and

centage increase

//■'V'-V

'

.

'

Retail trade here in New York the past week suffered a set¬

over

weeks.

rainy weather, resulting
last

year

..

than
.

was

the

in

case

a

lower

per¬

in preceding

•

COMMODITY PRICE INDEX RECEDED FURTHER LAST WEEK

According to the

Chronicle)

teadilv
MDuh'if Bradstreet daily wholesale commodity price index
past/week, reflecting easiness in foods

-

MILWAUKEE, WIS.—The Wis¬
consin Co.,
100 East Wisconsin
Avenue, have added Brenton H.

andV^fcul&rcai

Rupple to their staff.

the




large

and

prewar

wholesaling with 20 or twice as high as last week. Wholesalers
7 failing were more numerous than in any week since 1942.
;

of

Financial

sales of appafel

ance

to

More businesses failed than in the preceding week in manu¬
facturing and the two trade groups.
The rise was sharpest in

Federal Securities Building.

to The

Mild weather and

attracted

involving

one-half their number

at

(Special

twills

late consumer buying.
Retail dollar volume increased slightly during
the period ended last Wednesday and remained somewhat above the
level of the corresponding week of 1947.
There were scattered clear¬

ators

increase

failures

stand

•

demand for drills and

i;^

in the Boston wool market continued dull last
week,
to the lack of desired types of wools.. Contracting for
new-clip wool in the range States showed considerable decline from

Casualties continued to be about five times

WHOLESALE FOOD PRICE INDEX DOWN

-

"■

Business

$5,000 or more.
Ninety-six of these larger failures
occurred, rising from 80 last week and 57 in the comparable week
of 1947.
Included were 10 casualties with losses of over $100,000

wholesale food

—

the active

was

due largely

of

W
Clark has been added to the staff
of E. E. Henkle Investment Co.,
NEB.

cotton cloths remained generally steady.

gray

market

for third quarter delivery.

moderately, but fresh fish and poultry sold well.

Join. E. E. Henkle Staff
/Special

in most

progress

the result of improved weather conditions.

as

Prices for carded

and

1946, but were far below the
registered in the corresponding week of 1939.

total of 281

liabilities

in

as

'increase from both last week and

LINCOLN,

••

preparations and planting made good

A feature of the

popular
States and Canada

102,039 units

Commercial and industrial failures numbered 106 in the week
ending April 29, reaching the highest level .in six weeks, reports
Dun & Bradstreet, Inc.
This compared with 100 in the preceding

a

of

with which he has been associated

and

"

Ward'ssaid last; week's output included $6,163 ;;)bafs
^nd| 30,27^
trucksTriade in,fhd United States^
'' " / , ' ' ,'' \, „,.*

International Bank, Mr. Mudge, a
of

year ago.

Household

and

Vice-President

-

BUSINESS FAILURES SIIOW SLIGHT RISE THE PAST WEEK

"Development
has announced the appointment of
Louis G. Mudge as Assistant in
the Bank's Marketing Department,
located at 33 Liberty Street, New
York 5, N. Y.
He assumed his
duties on May 3 and will engage

veteran

-

y

probably will total 392,400 cars and trucks. Preliminary figures put
April output in the two countries at 458,950 vehicles.

The International Bank for Re¬

Prior to

127,600 bales in the previous week and 108,300 bales in the like
period

^

representatives

Louis G. kludge With
International Bank

..;

1948 week when output amounted to 5,436,-

y'

Production of

107,093

the

construction

in the Jan. 24,

This compares with 101,690 units in the like week of 1947 and
130,610
in 1941,

employees of the

member firms.f

country pending movement of the new crop.
Sales of cotton in the
ten spot markets were reported at 105,500 bales last
week, as against

RETAIL AND WHOLESALE TRADE REFLECTS A SLIGHTLY
HIGHER LEVEL FOR WEEK AND 1947 PERIOD
V

s&fv

spe¬
New

Exchange. These dis¬
cussions will be attended by part¬

registered

Heavy and sustained profit-taking set in and prices
declined rapidly, influenced also by reports that some of the ECA
.recipients were contemplating deferring purchases of cotton in this

.

AUTO OUTPUT SLIGHTLY UNTDER PREVIOUS WEEK

Stock

ners/

of 41,403

430,000 kwh.

Stokes,

prominent

were

the previous week. Advices from foreign
primary markets indicated
Continued strength and advancing prices.

reached

Hoyt & Co., New York Association
Governor

8.5%,

Exchange,

Walter

Jr.,% partner

Stokes,

or

a net low of about %
Contributing to the -early strength of
better outlook for exports of the
staple, the im¬

-sections of the belt

kwh., according to the Edison Electric Institute.
This was an in¬
crease of 15,072,000 kwh. over the
preceding week, which in turn was
59,546,000 kwh. below the figure for the week ended April 17.
The
May 1 week was also 401,981,000 kwh., or 8.7%, in excess of the cor¬
responding week of last year, and was the 17th consecutive week that
production exceeded the 5,000,000,000 kwh. mark.
The peak was

Vice-President of

First

the .New

market

Soil

The amount of electrical
energy distributed by the electric light
industry for the week ended May 1, 1948 was 5,042,352,000

on
problems
exchange administrative

be

to

cars,

mid-week,

of certified cotton.

and power

exchange
floor trading procedure, the for¬
mer

66,641

at

season

The New York spot quotation finished with

.

by labor troubles.

discussions

and

After reaching new high levels for the
cotton prices broke rather sharply.
:

ELECTRIC PRODUCTION SLIGHTLY HIGHER AFTER DIP

Motors

field Hiils Country Club.

procedure

were slightly higher for the
week,-while steers and lambs declined.
Lard and other facts and oils continued to show weakness.

cars, or 4.6%, below the corresponding week in
an increase of 192,045 cars, or 29.1%, above the same week
in 1946 when coal loadings were reduced

officials at dinner at the Bloom-

stock

indicated a further downward trend in the
consumption of
chocolate products.
Coffee showed resistance to the lower trend in
other commodities; demand was fair and prices remained firm.
Hogs

a

1947, but

Grounds the Governors
will be guests of General Motors

Panel

of

decrease

Stock

Proving

of

week

average

1

Following the in¬

the

of

advices

the

above the preceding week.
This
increase over the previous week was due to
partial resumption of coal
production and heavier ore loadings.
They represented, however, a

Exchange, Emil Schram, President
of the New York Stock Exchange,
spection

1,281,210 tons for the

consider-!

sympathy with the reaction in wheat...
buyers avoided making commitments beyond their immediate needs.
Cocoa turned sharply lower following last week's rise and recent

^

The speakers will be Rob¬

Boylan,

and

prewar year.

was

declined sharply in
Flour demand was slow as

provement in textile markets and the continued decline in the stock
-

Loadings for the week ended April 24, 1948, totaled 852,309 cars,
according to the Association of American Railroads.
This'was an

Exchange, and officials of Detroit
P.

ago

•

Stock

banks.

year

conditions in southwestern Winter wheat areas.
There
able selling pressure in corn and oats and prices

CAR LOADINGS UP DUE TO GREATER COAL OUTPUT
AND
'n-r. HEAVIER ORE SHIPMENTS
' '•'"v.

are

ert

one

1940, the highest

futures markets.
Bearish factors included a Department of
Agriculture release indicating adequate stocks of wheat for all antici-:
pated requirements and reports of .good rains and
improved soil

cent per pound lor the week.

90.6% of the old

dinner

Chicago Board of Trade

last week, comparing
28,500,000 bushels the preceding week and 24,800,000 bushels
same week a year
ago.
Although Government buying of cash
wheat continued in fair volume, prices fell
sharply in both the cash

i;

; *

*

the

on

of 33,200,000 bushels

average

for the

tried except

...7/7

to be
visit to the

a

daily

prices sagged

with

-''A"

This week's operating rate is equivalent to 1,640,300 tons of
steel iiigots.ancl castings as against
1,560,900 tons last week,
1,521,300 tons a month ago, 1,585,400 tons, or

r

meeting

May 20 and

.<'■

ity fcr the week beginning May 3, 1948, an increase of 4.4 points,
or 5.1%.
This compares with 86.6% last week. A month ago the
indicated rate was 84.1%.
;

ness

will

paper but has never been
vY<-

•the

charge of the arrangements.

held

on

on Monday
this week the operating rate of steel companies having 94% of
steel-making capacity of the industry will be 91.0% of capac¬

cf

of : the

Features of the three-aay Busi¬
conference of the Governors

.

that" steel

The American Iron and Steel Institute announced

Association, is

' "

serious

basic industry ripped to shreds because of

a

in court.

Michigan
Regional Gov¬
ernor

see

theory which looks good

a

Co.

Detroit,

and

Homer A. Vilas

So

officials shudder to think of what will
happen. A possible out could
be that Congress
may favor legislation to legalize the basing point

P. Smith,

partner

concludes.

a

33

and

.

consumer

&

C i t y,, Presi-

Smith

^

assembly costs, but lacking in steel customers,
will find it, tough going to compete with other steel firms in
large

Co., New York

of

consumer

If the basing

•

in areas'with favorable

Vilas, Cyrus J.

ence

that steel firms do not uniformly reduce prices."
FTC charge against the steel
industry indicates an

point system, which evolved on a trial and error
basis over many years, is out for steel, in a
year or so fundamental
changes in doing business will have to come.Steel firms clustered

was

announced

(2005)

Volume of sales of grain futures

-

reached

amazing lack of understanding of practical producer and
problems, "The Iron Age" points out.
*'
'

21

dent.

5)

see

of

tenor

page

on
-

and

l :

(Continued from

Governors of the

Detroit

'

CHRONICLE

Grain markets were irregular last week and
under the influence of heavy liquidation.- ^

Firms will hold its spring meeting
at
the
Book-Cadillac
Hotel
in

in

FINANCIAL

Exchange Firms

Ass'n Will Meet

.

COMMERCIAL &

lower

April 27,

as

in the

commodities.

Tne index

figure closed at 281.01

corresponding date last year.

increased 10% above the

on

compared with 286.80 a week earlier and with 253.35 on

Federal

store sales in New York

an

Reserve

Board's

index,

department

City for the weekly period to April 24, 1948,
same

period last

increase of 6% in the preceding week.

year.

This compared with

For the four weeks ended

April 24, 1948, sales increased by 3% and for the year to date by 5%.

THE

(2006)

34

COMMERCIAL

FINANCIAL- CHRONICLE

&

contemplated
expenditures
for
military purposes from $11 billion
to $14 billion also does not justify
such a icoihplete reversal in the
business forecasts for the last six
months of 1948.
We

learned

ministration

should

(or

have

Hoover Ad¬

the

Under

learned)

economic

that

elements in
We have

controlling

the

the

business

outlook.

this lesson during

been relearning

As pointed out in
an article which appeared
in the
"Commercial & Financial Chron¬
icle" on Nov. 20, 1947, the funda¬
the past year.

behind

mentals

economic
justify

our

structure are too strong to

come.

spiral in
prices for
With our

enormously

expanded

the fear of a downward

either business or stock

to

time

some

present

base, and the tremendous
demand for the prod¬

credit

worldwide
ucts

of

cyclical

highly

most

our

has seemed to
be every reason for believing that
the
ever-recurring
maladjust¬
ments in our economy could be
corrected without bringing about
there

industries,

a

Developments

downward spiral.

Jecline in savings

past few months are con¬
firming that view. It may be said,
therefore, that Wall Street is now
merely recovering from the jitters
which had no substantial basis,
and which were
caused largely
of the

during 1947

are

other, examples of either super¬
ficial economic thinking or eco¬
nomic propaganda. Shouldn't this
type of data be related to the level
of our economy as a whole, and to
he prewar relationships to sales
and

fun¬

damentals rather than propaganda
are

credits, as Well as the emphasis
placed by some economists on the

that

noted

be

It might

incomes?

consumer

also

great deal

a

of the talk about the lack of

con¬

buying power has been
based on a questionable choice of
sumer

for
comparative
pur¬
without any attempt to
check conclusions against the de¬
tailed
and
impartial
statistics
periods

poses,

compiled

the

by

Commerce

Department

Federal

and

of

Reserve

Board.

view

the

that

stock

prices

are

headed

in all' probability our
will .operate from this
point on at a much higher than
prewar price level. / J /
' /;
'

practical value, as there
would be no point in adding to

stock commitments if

rise of say

a

only 5% to 10% were in prospect.
investment action is tanta¬
mount to making at least an im¬

Any

plied

prediction

pated

gains

antici¬

that the

greater than the

are

ences

well

as

similarities

the

as

between conditions
•'

the differ¬

prevailing two

after World War II, and
those following World War I.

years

In all fairness to

New Deal

our

of

of

ness

many

orthodox

prominent
public

our

economists.

The

has

been told, for example, that
commodity prices were quite cer¬
tain
to
decline
fairly soon to
somewhere
near
prewar
levels

because such

decline has always

a

been witnessed following previous
None

wars.

these

of

economists

to place much weight on the
fact that for the first time in our
seem

history

our

reached
times

a

our

national

level

of

about

maximum

tional income.

has

debt

three

prewar

Isn't this

na¬

major
difference with the past record?
Another
popular
theme
has
been

the

venture

told,

so-called

a

shortage

of

capital

which, we are
be corrected only by a

can

substantial reduction in

taxes

high

bracket

Granting

that

personal

reached

incomes.

tax

on

rates ; have

level that is detrimental

a

to our economy, is it true that
legitimate requirements for capi¬
tal are not being met?
For one
thing, a way has been found to
secure the equivalent of venture
capital from the growing funds
of insurance
companies.
(Such
organizations as Sears Roebuck,
and the Koppers company, for ex¬
ample, have secured the equiva¬
lent of "equity" capital by selling
some of their buildings to insur¬
ance

companies, and then leasing

these structures for
of years).

of small

a

long period

The funds of millions

investors

are

also

being
made available for equity invest¬
ments through the excellent sell¬
ing job being done by some of our

payments
than

-

-

represent

now

ratio

normal

•

a

to

earnings.

However, dividend
payments of the Dow-Jones group
of stocks this year are reasonably

share.

In the

$9 a composite

past, even when the

usually
much
smaller than it is today,
and when government bonds were
selling on a yield basis of 4% or
more (instead of
2.5%), the stocks
which

make

up
the Dow-Jones
Average have tended to

Industrial
work

toward

a

level

where

the

action

courses

of

evenly balaned.
The
real danger in making forecasts
lies, of course, in the possibility
of

a

are

conscious

influence

unconscious bias

or

because

of

broker¬

activity; and in the difficulty
chat
many
superficially trained

age

haVe

between

ing

is

It

in

differentiat¬

co-variation

and

market projection based on
single approach is much more

any
a

dangerous, and definitely less

servative,

than

least

at

on

different

types

forecast

a

two

con-

based

three

entirely
market anal¬

or

of

Fortunately, we are now in
period when conclusions drawn

yses.

from

economic

analyses,

timing
long-term
technical approaches, are all "in
gear*"
In any event, the studies
studies,

which

potential of 257.
On

the

and

several

I' have

found

to

be

most

of

basis

the

indicated

manent)
the

decline in the value of

dollar,

260

also appears to be within the

realm
If

of

reasonable

price level

our

possibilities.

over

the years

immediately ahead is to be only
about

67 %

above prewar
(and
merely reflect the re¬

therefore
the

in

the

dollar

gold

since

content

1934), the

statement.

I have

emphasized the prospects

for the Dow-Jones Industrial Av-

in this review because the

erage

majority of conservative investors
concerned primarily with in-

are

dustrial stocks.
are

of

no

wish

to

Utilties,

class,

as a

interest to investors who
secure

protection

some

projections

tios,

in

prospect
and

-

the

conservative

price-earnings ra¬
the above projections

Dow-Jones Industrial Av¬

quite reasonable.

erage appear

Conclusion

in

stated

As

for

of

that

for the

the basis

or more, on

months

12

for the

■

/;;/■ /v",/://

articles prepared;

"Commercial &

Financial

Chronicle" during 1947, a realistic

appraisal of fundamental economic
forces

would

conclusion
whole

has

since

seem

that

justify the

market

been

laying
1946, for

October,

rise.

substantial
from

to

the

A

thinking of the

a•

base

another

trend

away

economic

one-sided

the

as

a

are willing
involved' i in

risks

blindly following the more popu¬
formulae plans would prob¬

lar

ably agree that

level equiva¬

a

lent to 154 in pre-New Deal dol¬
lars would not be "out of bounds."

Turning to some of my tested,
long-term
technical
approaches
which

I

like

to

use

at

of the past 50 years,

as

double

a

my

permit

Limitations of

space

to touch upon only a
independent ap¬

me

of

few

December

these

In

first

the

fundamental economic and
timing studies), I find that it

if the Dow-

Jones Industrial Average rose by
somewhere between 45% and 60%

18 months,

past

together with favorable develop-;

dustrial

Average,
has
received
support at about ten times earn¬
ings or higher, at the low for the
year, and has sold at the equiva¬
lent of at least

13

high for the

times earnings

(In using
this approach, it is necessary, of
course,
to eliminate such non¬
year.

recurring items as unusual inven¬
tory profits from the earnings
data, since non-recurring earnings
are
seldom
capitalized
by the
market.) Last year was one of the
aforementioned

e x c e

p

t i

on s

in

that stocks failed to reach
f 13 times
.

almost

exactly 10 times
projections -which

included-in

a

article published on
the present
able

to

time, it

"Chronicle"

July 24.)

At

seems reason¬

rise

mean

while

mean

Industrial

teed."

I

A

rise

of

60%

level

for the

would

Dow-Jones

studies must be used

as

guides, of
forecasts

165

Average of 264.

above

merely

course.

tentative,

personally believe that
probably will not sell

the market
up

into the
Jones

Dow

-

240-260

Industrial

until and unless
to

we

of

zone

the

Average

have

a

return

what

might be called normal
confidence.
This iff turn would
to

seem

depend

definite

largely

on:

evidence that the

(a)

Wash¬

which really believes in the
capi¬
ance

system; (b) general accept¬
already held in

of the belief

some

quarters that

evitable,

and

at

able

the

next

for

war

least

is not in¬
not

three

prob¬

to

five

report satisfactory earnings under
normal
competitive conditions
(when pipelines are full and there

work

share

clusive

for

of

Stocks

out

the
any
were

to

about

current

$18

year,

-

a

ex¬

(c) a realization that
leading American companies

inventory

profits.

are

to

merely

usual

sell

at

the
a

above

lines,,

revival of norma!

Under the circumstances, it

year.

wise to go along with pre-*

Wall. Street

vailing

for the time

psychology*

being.

Reduced

Taxes;orlggj®
§§Sf§| Capital Shortage!
18)

(Continued from page

vide expanding production facilH I
ties and that money has largely

purchase of

securities

of

shortages of goods or
pentup demands, as for

no

—

stock

and

ings banks. There
life

of

owners

insurance

country. There

million

Americans

accounts.

policies

rate of 3.8%, per year,'
compounded annually.
Also,
in this 6u*-year period;
productivity Of labor was doubled/
as the result of the worker being
given more and better machinery
And, at the same time, labor's real

These

the life

the

54

are

sav¬

million

are over

with

funds'

in¬

are

vested

by the insurance companies
savings banks in American

and

business.
If

government waste, excessive

taxation

other

and

in production in America—

cerase

50
savings

American industry by

in this

other

or

insurance companies and

hindrances

an average

and

with

tools

which

wages—^purchasing

work.:

to

power—*were

doubled.

Now,

-

\

undoubtedly remem-.
ber the succeeding decade, 1928 to
to 1938.
In not a single one oi
those years did capital formation
you

one-fifth

block the flow of capital into the

reach

productive system, the country

Output. This was the first decade*
sihcfe the Civil War whbn^the*

whole suffers.

With world

as

con¬

of

the

national*

there is in¬
creasing necessity for production
of American goods. Unnecessary
government spending and waste

level

should

pression pf 30's.

Biit there is felg-":

system further revised to promote

nificance

fact

that period of

our

can

they

as

be

are,

stopped,

and

retarding

our

tax

our

economic

progress.
These

practical

course, rather than as
which can be "guaran¬

Dow-Jones

Average

along

instead of

the

price objective of

a

a

high

a

The

before

year,

cycle runs its
45% from the

of

would

this

years;

Industrial

both desirable

course,

and practical to check conclusions

ditions

of

that earnings for
the 30 stocks which make up the
will

expect

ments

seems

is, of

a

240,

were

It

from the lows touched in the first

measured

Dow-Jones In¬

the

dustry.

would be in line with the record

current

at the

conclusions drawn from

on

place, during the
past two decades (with only two
exceptions); the stock market, as
by the

about

or

amount which might normally be
invested in any single cyclical in¬

quarter

proaches.

than

through funds indirectly invested in the securities

the

the past 18 years all point
to a definitely rising trend (albeit
a
highly selective market) until
or

portfolio,

stocks

more

the

take

ing

November

usually represent not

those individuals who

check

least

railroad

to

helpful, in actual practice, dur¬

of this year.

in

During the 60 years I ifien-J
market at a level of 260 would
tiohed-—from 1869 to 1930—-this
be really selling at the equivalent
originated from the savings of in- ploughing back of capital into in-J
of 154 in prewar dollars.
Even dividuals, either directly—through dustry led to an eight-fold in-,

If




this

of

stock

level of inventories and consumer

.

j trusts^ will attest to the truth of

50%

are

earnings

Average to about 250-

earnings

without

averages,
particularly
pronounced rise or de-

ties
of

next

rise in the Dow-Jones

a

Industrial

talistic

is

any

cline over a period of six months
or longer. The performance records of any of the investment

permanent (or at least semiper¬

duction

firm .conviction that

my

price

mean a

the

available

While

capital

the

confidence before the end of the

3Vz % basis would

limit, this
may be a blessing in disguise be¬
cause it helps to restrict
expan¬
sion of plant (and therefore po¬
tential competition) to
a
point
where operations have a better
chance of holding above break¬
even
points during periods of
minor business recessions.
The hue and cry about the high

not

trusts.

equity

where

ment

a

to

that

true

levels

could lead to

the

to

as

lent

investment

is

at

yield was 4% or less, and usually against inflation, along with cur¬
only about 3.5%. Dividend pay¬ rent income and capital gains.

ington reform group will be re¬
placed
by
an
Administration

it

the

with

; during

was'

coverage

a high
earnings (ex-inventory
profits)
by
about
10%.
(Last
year's low, however, was equiva¬

mutual

a;**

5% to 15% of the average invest¬

assumptions

sibilities in alternative

a

maintaining

fully invested position in equities
if they find that a
majority of
the better grade issues are
selling,/

at 4%, would give us a price ob¬
jective of 225, while a capitaliza¬
tion of this level of dividends on

It

correlation.

and/or propa¬
of the bearish-

about

twice

a"'-X

As

should

believe that anyone can avoid

to

of

some

investors

Investments

statisticians

wish-thinking

think

rule,

ments of $9 a share, if capitalized

economists, it. should also be noted
that there has been a great deal
ganda behind

Individual Issues

'

s\

pecfs for individual issues*
general

is unrealistic

risks.

apparent

or

Orthodox Economists Also Biased

i: Averages Merely Composite of

of 16 times earnings would "buy the averages," the- "fact re¬
equivalent to only about 260. mains that almost any broad se¬
It has been argued that "earn* lection of medium or investmentings mean nothing," since divi-1 grade issues will tend to move

dividend

little

,

be

To

merely that the trend of
the market is up, or down, is of

,

level

certain to exceed

say

Thursday,1 May *6^ 1948

'

;
appreciation
cyclical rise
in stock prices.
If the market were ~i Some investors seem to believe possibilities do not appear to be
iO rise to
16 times our $18 pro¬ that ; studies * summarized in the definitely greater than the inter*
mediate risks. (It is partly on this
jection of earnings, this would form of projections of the Dowmean
a
price of 288! '/Allowing Jones Industrial Average are of bpsis that I was on record in Jan¬
for the fact that reported earn¬
only theoretical value.
This is uary, 1937, with the belief that
the 1932-1937 bull market was at
ings would
probably be about true only if the investor confines
10% below the $18 level if special his purchases to stocks which'are approximately a cyclical -peak.)
not likely to-be influenced by the At the moment, there are so very
reserves were set up by all com¬
panies to put depreciation charges trend of the market as a whole.- many stocks selling at levels from
on
a
although
few -people which the appreciation possibili*
replacement cost basis, a However,

upward, must ask himself:
-'How high could the market go?"

(1) the publicitygiven
to
the not disinterested future, in determining investment
predictions
of
a
Washington poliy: merely taking a hedged
clique; and (2) Wall Street's in¬ position is tantamount to assum¬
ability to properly appraise the ing that the risks and profit pos¬
relative importance of

16 times earnings during the sec¬

£.'

economy

ond or third year of a

dend

Any investor who agrees with

high of at least

group sells at a

tte

smaller

How High Could the Market Go?

making

by two factors:

13 times these earnings, this would
nean
a high for the year of-234.
Normally, the Dow-Jones compos?

',i4l,';,V v,-i*

that

fact

(Continued from page 3)

"

thoughts
with

are

like

to

leave

effects of
First, this
grown and prospered
of capital investment.

heavy

about the
income taxes.

nation

has

as

you

result

a

I do

production

in

America*

not

capital

imply that the lack of'

formation
the

in

caused

the de¬

that

durihg:

deficiency of new
capital there was no prosperity.-

fundamental

two

would

I

of

did not advance.

Threatened

Capital

Shortage

'

now—in this period of
prosperity—with national income*
and employment at peak peace-,
time levels, we are again threat¬
And,

with

Economists term it capital forma-

ened

tion.

vestment

deficit of capital

a

because

of

i'n-:

excessive:

Federal

spending and high taxes.,
the nation's
Without
bothering
you
with,
from 1869
technical adjustments of available'
1930, you will find that about 20%
Of the total production has been data, the answer is that the capi-;/
ploughed back, decade after dec¬ taL formation required to main¬
tain a healthy growth in America's
ade, in the form of investment. There
is
nothing
theoretical economy will average $44 billion
about this.
This
Capital formation has over ihO/ next; five years.
may be compared with a total of
gone on in all stages of history
from the first savage who found
only $35 billion In 1947.'
T *
Where
is
the
that his hunting would be more
ihoney coming;
from?
It isn't
effective if he took time out to
coming.
Exces¬
sive Federal spending and
make a bow-and arrow, to modern
high ,:
If

you

will

study

growth for the 60

times
more

dies-

where

we

years

have

found

it

efficient to make jigs, tools,
and

■

other

machines before

un¬

tomobile,

ex-

any of

the

we

labort, saving

make the,

electricQwasher

au¬

income taxes are Choking it off
from* the economy's" bloodstream.
Studies based -on governmental
and other authoritative
statistics,
indicate

or
the other consumer goods, t an

that

average

we

are

faced

annual deficit

with

of

$8*

Volume

billion

167

Number

4696

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(2007).. .35

of

required capital—or a
total of $40 billion over the next
five years.
This includes capital
of

all

types—bank

loans,

in Paris two weeks

mort¬

(Continued from page 4)
materials will be purchased
by the participating governments

overwhelming need
at the present time is for the stock

tation.
ther

objective of the Aid Program

regional

to establish economic

tain

,.

the

tween grants and loans, we must

continually bear in mind that the

outside the United States

gages,
stock
investments
and
other venture types.
;
// The deficit is the more serious
because

mese

and, in

cases, funds will be allocated

the purpose.
The recovery act further
pro¬
vides for the establishment of an
ior

,

investment and other risk capital.
This is the type of capital which

only
from the
retained
earnings of corporations or from
comes

American organization in Europe,
under the direction of a United

the

,

savings of individuals who are States
Special Representative, for
able and willing to take a chance the
supervision of all the Ameri¬
with their money.-Of;/''if /
can activities of
this program in
For the provision of such capi¬
Europe.; This Special Representa¬
tal, the nation is mainly depen¬ tive is/Mr/ Averell
Harriman,
dent on the savings of individuals
who will have the rank of Am¬
with
incomes exceeding
$10,000 bassador;
He is

is

stability in

Europe.

An important factor that
must be considered is the
ability
the

of

recipient countries to re¬
The Congress has estab¬

pay.

lished

two

basic

criteria

for

determining the extent to which
any country should be aided on
grant,

a

basis.

to

opposed

as

First

credit

a

is the character

and

*

per

Those

year.

the

with

cannot be

comes

risk

lesser

responsible

in¬

the

are

participating

so

taxes

This

reduced.

are

effected

in

the

Federal

are

Govern-

embassies

be

ment.

at

their service
attached

Of course, you can have the al¬

and

with

as

whole.

a

to

Certainly, the results of Socialexperiments in Europe to¬
day hardly recommend abandon¬
our

In other words, I would impress'

promtes

and

protects

the

liberties

of the

rights,
in¬

dividual.
'

•

<

The United States is the' last of
the

powerful

States which upholds the right of the individual

? to live his life as he may

:

desire.

ceed John P. Powers of New York

•

■;/

as a

'

member of the National As*

sociation
trators

.

of

Securities

Convention

Adminis-

Examination

Committee, Securities and Ex*
/change Commission Liaison Committee, and as Vice-Chairman of
the Stock Exchange Committee.
Louis J.' Conley has been appointed a member of the Pennsyl¬
•

;

<

aspects

be

required

to

advise

and
on

matters

of general policy.
This
Board is to consist of the Admin¬

istrator,
tional

chairman, and 12 addi¬

as

members

will

who

be

ap¬

who

zens

have

had

to be

are

U.

S. citi¬

broad

a

The

self-heip

of

the
are

stipulation

measures

include

the adoption of
policies.
These

domestic

sound

nations

foreign-aid

the

of

individually
and jointly to accomplish internal
improvements.
Their Organiza¬
tion

acting

are

for

Economic

Cooperation

in Paris is

charged with responsi¬
bility for determining matters of
policy, formulating programs of
cooperative action and carrying
additional

out

functions

the collection

of

such

information

a*

and

is

the

so-called

mary
sure

off-shore

authority.

Its

pri¬

is to relieve pres¬
goods and services in

purpose
upon

States,

would

nor

to attempt to
modities

do

it be desirable
Some

so.

com¬

in short supply here

are

purchasing abroad will alle¬
hardship

tion

will

and

for

popula¬
instances

our

in

many
cost of

net

the

Pro¬

instance, the needed

of

food

all

cannot

be

obtained in the United States.

vania

Securities

Cmrimissipn

by

Gov. James H. Duff and thus be-

.

comes

.

i

The

large
have

,

of

the

Associ-

ation.

•

v

member

a

the

Association reports that

number
of
already been

Convention

reservations
received

be held

to

Multonomah 'Hotel

a

for

at

the

in

Portland,
Oregon, July 19 through 22. Mayor
Earl Riley of Portland, who represented the mayors of the United

,

States

on

tour of Great

a

:

production,
programs

mates

import

luncheon

the
in

convention

the

of the Equitable

will

be

submitted

government*.

best

use

Building.

Guides

to / conduct

throughout the building
which is built of
aluminum, the

,

by

It

study

the

and

tion

on

will

matters

such

international

coun¬

promote consulta¬
tra^e.

as

movement

first of its kind in America.

With
.

navments

to

The

Financial

CHICAGO, ILL.

—

A

and

the

will

also

body
-Street.

joined the staff of Good& Co., 105 West il Adams
-

/;,

••

' //•/-




■

■

reports
the

for

sions

Basic

Let
of

me

taking place

are

the

of

We

But there

are

fore

tance

needed

was

details

to certain

organisation

aspects

assis¬

emergency

Western
make

can

rit

to

essential

supply

state

large

of foods
Europe and at

amounts

materials

to

time maintain necessary
from the United States

same

imports
it

is

the highest

of

that

tance

impor¬

avoid

disturbing
the flow of essential exports from
th is

we

country
Latin

we

States,

are

trol of credit has been introduced.

coun¬

And, in France, too, considerable
orogress has been
made toward

view¬

internal stability.

heavilv

from

Canada

Western

tries.

our

on

equally dependent

imports
other

and

and

Hemisphere

the

From

further

the

Canada

dependent upon the import of cer¬
tain
types of /goods from the
United

been

long-run

and

the

in

Hemisphere

encouraged.

be noted that

And

should

it

Re¬

the European

administration

The

Program

covery

maintenance

these

of

rela¬

A Two-Way Program

has

the

been

European

is

Recovery

that

Program

program.

The

.

United States provides assistance

but,

in

the

words

the

of

Act

"continuity of assistance provided
bv

all

the

United

States

times, be dependent

tinuity

should,

at

upon con¬

cooperation

of

countries

among

participating
in
the
The record made
.

,

the

since

Paris

meetings

the

bv

in

nrogress

These

the

of

in

Re¬

excellent

reoutations

of

Mr.

Harriman

Mr.

and

and

cooperation

emphasized

two-way

a

is

as

American

as

citizens command the respect and
confidence of us all, and with the

tionships.

It

The

Hoffman

16

of

last

participating

one

mutual

of definite

countries

cooperation.

have

been

en¬

and

American

people

tain

too

of

in the

a

backing
we

notch

of

be

can

the
cer¬

nerformance

carrying out of these

responsibilities.

grave

This, then, in broad outline, is
in constructive
statesmanship,
the
outstanding
of cooperative

ole

the

tor

endeavo**

good, of which
spoke
when
he

common

President

the

have

already
determination

firm
full

share

the

of

to

reflected

is

iob

This deter¬

that has to be done.

mination

the5'-

do

formidable

in

the

while

the

form

position

assistance

a

of
in

credits.
a

receive

to

on

countries

on

are

a

will

credit

sound

all

dollars.

of

basi*

receive

all

grant bas s.
Most of the
however, will receive

aid-'

«>?:

®'.

7s ; </// '

'I

5

They

have

to
of

avoid

gold

or

moved/to

shift unemployed labor across na¬
tional boundaries to .those coun¬
tries

in

power.

better

partly pn a' grant basis itid
Parfiy dn ^loah basis. In dete'tfpiriittWJ'the;I division of aid be-

designed
transfers

unnecessarv

countries,

.,-•7:

more

nped

of

Thev

additional

are

use

of

oromotness with which thev took

last

of

internal

fullv

have

U.

And.

since

proceeding with their

grams

Government

S.

reeoverv.

cooperated

themselves

and

with

then,
uro¬

thev
the

amongst

in / improving

clarifying the original Paris
gram;

metallurgical coke, mining eauio-

tion

ment, steel and internal transpor¬
•

summer.

and

man¬

acting to make
such resources as

to

but

to

was

of

The continuing
the

put into

the
our

How¬

security will

and

safeguard.

prove our

There is

sufficient strength

united

America

no

great¬
force

to deter

in. its

an

goal

of

world peace and economic stabil¬

ity.

;■'/■■■

/■.;//;/■•-/

V

•

Bond Club Nominates

Leness for President
J.

George
Lynch,

Merrill

of

Leness,

Pierce,

Fenner

&

Beane,

the

Bond

Club

coming

of

year,

New

pro¬

organiza¬

York

to succeed T.

Jerrold Brvce. of Clark, Dodge &
Co.
The election will be held at
the annual meeting of the club, on
June

4,
at the Sleepy Hollow
Country Club, Scarborough, N. Y.

Charles L. Morse, Jr., of Hemp¬
hill, Noyes & Co., has been nomi¬
nated
ceed

for

Vice-President

Alfred

Shriver,
Stanley & Co.

of

to

suc¬

Morgan

C. Cheever Hard wick, of

Smith,
has been nomi¬
nated for Secretary.
William B.
Chappell, of The First Boston
Comoration, has been nominated
&

Co.,

for Treasurer.
/'

Nominations

the

Board

of

for

members

Governors to

Dean Witter & Co.: Harry C.

organization,

in

a

alone

not

nations,

three

The 16
countries
demonstrated their

European

action at the Paris Conference of

promote

threat

oarticioating

tion of European resources. They
have set uo a European clearing

together
to
effective utiliza¬

work

ever-

signed the Recovery Bill.

Cooperation Act will be partly in
the form of outright grants and

to

the

nation to use our knowledge and
ability to work together for peace

Barney

/ ' ?/"

/

the great venture
exam

For

dissen¬

ever, I believe that wide^ recogni¬
tion of this fact and the determi¬

for the

Hands

sustained

which

world

whole democratic concept.

of

Administration. In Excellent

Western

be

must

breed

has been nominated for President

point, it is clear that the*e trading

relationships

to minimize

causes

strife.

Eurooean

of

has

to

and

insidious

chine

have permitted
the continuance of approximately
the existing level of rations.
It

and

peace.

exerting
devoting

aggressive power of totalitarian
force has become -a vicious and

est

deavoring

countries

sion

The sunplies enabled

and

the
is

means

underlying

continue

them to keep their industrial ma¬

going

Western

establishment

of

influence

those

complete collapse durin^

the winter.

the

to

possible

every

would
of

of

free

European Re¬

Administration

every

the

upon

Western

are

Without

the

of

The

preservation

This

these

of bas:c financial policy.
The aid
to
Europe
under the Economic

nartly

and

begin

part

other

to

America

effects.

to

now

can

and

foremost,,

provided, these coun¬
have approached
a

were

tries

we

the

President Truman's foreign pol¬
icy has been dedicated, first and

coun¬

possible to re¬
duce
unemployment and to in¬
crease production.
You have seen
the
positive
results
in
Italv
Steps have been taken to put the
internal finances of that country
in better shape.
A rigorous con¬

countries.

Hemispheric
and

the

see

supplies

and

months

degree

foreign policy objectives.

our

We have been able to fur¬

nish

last

growing
between

covery Bill has been an effective
instrument in
furthering this co¬

because of the

desperate situation of these

accomplished

operation and will continue to be
a strong lever in the promotion of

are

This

be

these

in
a

Hemisphere.

the

Austria.

have

countries

the

Recovery Act became
law, Congress provided funds for
interim aid to France, Italy and

seeking now
tasks,

are

peoples of the Western European

recent devel¬

some

cannot

cooperation

of exceptional
You will recall that be¬

import.

they

countries has been

from

now

We

We should not, of course, at¬
tempt to judge the European Re¬
covery Program by the results o'
the first month of its operations

opments which

they

witnessed

discus¬

among

they

tasks

confront

overnight.

Scandinavian countries.

possible through these off-shore
purchases for these countries to

program

Financial Policy
turn

Similar

What

that

is time to accomplish these

emergency supplies of .raw mate¬
rials and foodstuffs with" which

Hemisohere/

United
coun¬

them.

fully

are

tremendous

obligations

for

neces¬

other ^countries

'

aid

Hale has

It

participating

Other
G.

union.

countries
the

of

and

also

countries

summer

tfcp

Chronicle)

Reuben

labor.

prepare studies and
the
information
of

Some

Goodbody & Co.

(Special

of

European
aware

effi¬

are

countries themselves

where, by their own efforts, they
can pay for what
they import by
exporting goods and services. The

proces¬

more

These

must produce most of the
goods
which they consume.
They must
achieve
a
level
of
production

products,

meat and other agricultural oroducts
can
be
procured
only
in

esti¬

the member

will

dairy

colonial

Italy and France

customs

recovery

a
prodigious task and sooner
later must stand on their
own

or

feet.

other

and

tries.

export
of

tive capacity of the member

enough

.

and

basis

of the labor and produc¬

tries

a

auditorium

new

furnished

at

members
•

the

on

tries.

attending

the
and

businessmen

States and the

the! gathering on July 21.
Mr.
Cake will also be host to those

with

the

sociation of Portland will address
•

bourg

information

Britain,
will
attend
the
meetings. Also
Ralph
Cake, President
of
the
Equitable Savings and Loan As¬

•

cement

horticulture

hands.

IT. S. Special Representative in
Europe.
It will prepare over-all

pos¬

industries of Belgium and Luxem¬

covery -Program
off-shore /Pro¬
curement authority will facilitate

assistance to the

yet

during the war years.
Economi¬
cally speaking, the Benelux coun¬
tries comprise a great trading and
industrial area.
By uniting the

the preparation of joint programs.
This
Organization will provide
and

not

if is

glass,

to

stability we all seek., The
European participating countries

hoped that free
interchange of goods can be ac¬
complished within a year or so,
thus
completing
a
long-range
project which began in London

steel,

is

this aid

face

is

area

aid

and

large percentage of the require¬
ments
of
grains, fats and oils,

,

.

But

As

sary adjustments which must be
made prior to establishment of a

For

participating countries which

sible.

free

this

however,

you,

American

as

recovery of Europe,
alone will not secure the

postwar mal¬
flow of goods

This

procurement

and

Board

among

adjustments,
within

remind

me

vital

on

Feet

the

severe

intensively examining the

the

of the

the Benelux union.

as

result of

a

plies outside of the United States

members

from

as

tained.

pointed by the President with the
approval of the Senate.
The 12
selected

known

Let
that

Luxembourg:

funds for the procurement of sup¬

amounts

consult with the Administrator

the Netherlands and

sing of the Netherlands,

viate

on

Own

cient utilization of manpower and
material resources is being ob¬

be of special interest to
One is the authority given
the Administrator to expend

recov¬

distribution

to

which

ERP

Europe Must Eventually Stand

customs unions.
In
this latter endeavor, the most ad¬
vanced effort is that of Belgium,

should

and

to meet at least

month

each

once

the

of

And, they have been fur¬
exploring the possibilities of

you.

taking

are

The Recovery Bill also creates
Public Advisory Board which

program

; / LINCOLN, NEB.-ilohn Rutenj berg has been appointed to. suc-

cial

other finan¬

several

are

For

a

I Membership; Changes

There

gram.

a

and

grants applicable to each country.

the

will

loans

of

Recovery Program in the United

yaned experience in matters af¬
fecting th'e public interest.

Sees. Administrators I

proportion

policy

own

the

the

of

reduce

The other form of government
lreedoni and

observe

consultation

Advisory Coun¬
cil, will make the determination

able and will report in detail
the orogress of the urogram.

•

•

their

The

repay.

with the National

of supplies which we make avail¬

free enterprise sys¬
tem in its favor.

'

about

will

ery,

istic

,

bring

recipient country to
Administrator,
in

short supply in the United States
It will not be possible to obtain
all the materials needed for the

which the

measures

the assistance. Second
the anticipated capacity of the

purpose of

is

both

foreign

participating countries

"

that there are two kinds
of governments, apd only two;
/
In One, the individual serves the
State—be it Socialism, Fascism Or
Communism.

of

recovery program
The special missions

cialism. I don't think we'd like it.

upon you

spe¬

the

will studv the

of

a

each

coordination

over-all

our

viding industry with the capital
it needs.-That's simply state so¬

ment

to

and

efficient

with

ternative of the government pro¬

'

es¬

Washington and
also to the head of our diplomatic
mission
in
each
country' con¬
cerned.
In this way there should

relief is

possible only after economies

have

Administrator in

only when

overcome

Or¬

legations in
the participating countries. These
SDecial missions will report to the

'

be

mission

our

theory.
The dearth of
venture capital is already being
felt by industry. ,,;
;V
can

have

cial

much

economic

It

countries

will

the simple facts. They
as

continuing

tablished in Paris.
Ambassador
Harriman and his staff in Paris

'

dismissed

be

the

of

for
European
Eco¬
Cooperation
which
the

nomic

But, it is
the incomes over $10,000 that are
so
heavily penalized by Federal
Those

work

ganization

ply of venture capital.

cannot

the
work
of
the
Administration
with

American

Historically,
they have provided only a minor
proportion of the nation's sup¬

*

for

coordinating

expected to take

involved.

income taxes.

after the Re-r

covery Bill /ya? enacted.

vears

are

Austin

of

serve

Brown, of

Clif¬

ford, of Kidder, Peabody & Co.,
and Thomas T. Coxon, of Hallgarten & Co.
Continuing
Robert

E.

Governors

Broome,

of

will

be

Guaranty

Trust Comoany

of N. Y.; F. Ken¬
Stephenson,
of
Goldman,
Sachs & Co.; Joseph A. Thomas,
neth

of Lehman

Brothers; Clarence W.
Drexel & Co.; Ray¬
Equitable Se¬
curities Corp.. and G. H. Walker,
Jr., of G. H. Walker & Co.
Bartow,. of

mond D. Stitzer, of

The Nominating Committee con¬
sisted of Robert E. Broome,

Chair¬
Bartow,-: F.
W.
Fenton

European

countries

Clarence • W.
Malbone
Blodget,

effective

operation

Johnston and R. Parker Kuhn.

man;

THE

(2003)

36

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, May 6, 1948

security before they are bound to

(Continued from page 2)
don't mean it would be better.

I

just be simplier to apply.
first let's see what the ma¬

It would
But

chinery is.
To effectuate the dis¬
closure requirement the law pro¬
vides that securities proposed to

through public distribu¬
be registered with the

sold

be

important information

issuers. That information they are
free to use in making their own
decisions

as
to participation and
pricing. This factor is not insig¬

nificant.

It

not

was

unusual,

be¬

the Act, for underwriters to
on deals on the basis of the

fore

take
most

SEC, and that a prospectus con¬
taining required information about
the securities shall be distributed

kind of surveys,
almost exclusively
to the selling qualities of the is¬
suer's name and deputation.

civil

The law has provided informa¬

tion shall

to

purchasers.

provides

It

sketchy

with

an

liabilities for fraud

tion,

and for sales based on statements

who

because of material mis¬
statements or omissions, are mis¬

These

criminal

and

which,

leading.

to

securities

register

the issuer files with the Commis¬

completed form which calls
information about the com¬

sion

a

for

pany's structure and financial or¬

management and
nature of its operations. The
provides that a registration
its

ganization,
the
law

shall

statement

effective

become

twentieth day after

the

filing.
amendment to the
original statute it provides also
that the Commission may permit
the registration to become effec¬
tive
before
the
20
days have
on

By virtue of

an

"acceleration."
The

past

bution than the ultimate investors

in

did

deciding whether to buy.
they do have, if the law is
obeyed and they avail themselves
of their rights — an opportunity
to see a full-fledged
prospectus
before committing themselves to
Now

the deal.

.>

All of these consequences of the

legislation

within

fraternity
selves

in

have

reflected

benefit

vestors. Even if

the

ultimate

them¬

ultimate

to

should

we

investors

prospectus, it
that

financial

the

in¬

assume

never

would

still

see

be

the

necessity for dis¬
probably -inhibits many

closure

bad deals from the start; and im¬

the quality of many issues

proves

that do

come

out because the dis¬

tributors have
take

a

fore

opportunity to

an

they

good look at the facts be¬

commit themselves
take part in the distribution.

to

Friction Points

ultimate

of the Act—in¬

purpose

forming the prospective investor

sort of period of quiet
contemplation. According to the

—we

statute,

sales,

no

offers,

or

or

becomes effective. The idea

apparently was that, during this
period, the information in the reg¬
istration statement would seep out
to the

public and the Commission

would
make

have
an

opportunity

an

to

administrative examina¬

tion of the registration statement.

certain

friction

points. ;No
one is completely
happy with it—
neither those regulated by it nor
those administrating it.
The

friction

mainly
called

points

what

around

"resistant"

a

center

might

be
the

of

area

underwriting custom. The feeling
generally persists that an under¬
writing
must
be
consummated
speedily if undue risk is to be
avoided and the system preserved
in
its present basic form.
The

procedure in such a way
accomplish >these
two
I don't believe tr.est
difficulties are insuperable.
But
they are genuine difficulties. And
they stem mainly from the char¬
acteristics
of
speed
and
lisk

themselves- into a
like to see

avoidance

thq law changed to make it plain
is legal. ''
/ The Commission has a good deal
of sympathy towards a change in

pointed out.

>

law

that

have

would

that

effect. But,,while the Commission
been
willing to sponsor a
change in the law that would per¬

seller

the

to

the
registration
statement
becomes
effective, it
has not been willing to foster a
change which would, at the same
time, permit the buyer to be sub¬
jected to a firm commitment to
purchase without having had an
opportunity to examine a clear

buyer

before

approach

the

completed

a

registration

state¬

in

distribution

the

which

process

that doing so

the

tne

changes.

deal, and they would

have

I

already

.

The Commission's staff has ten¬

is

and

suggested

tatively

n^w

giving further study to a proposa.
that is intended to rccompLsh ths
two improvements in the law 1
mentioned a while ago as desir¬
This proposal

able.

is designed to

correct snd complete
price and related in¬

prospectus
except for
formation.

proposal

no

buyer could be bound until a ter
the
statement
became
effective,
From the Commission's point of and unless he had had a complete
view the law or the practice un¬
prospectus for a leasonable time,
der it needs improving in at least sufficient to enable him to con¬
two important ways.
sider what was offered and de¬
Commission's Viewpoint

First: The practical

desirability,
ascertaining the

in many cases, of

potentialities of
fore

the

distribution

market

is

be¬

undertaken

whether he wanted to buy

cide

time

reasonable

a

for

that pur¬

recognized and some
suitable provision made whereby

pose; Maybe it i3, maybe not.
the buyer had been turnished

that

correct

should

be

might be done without sacri¬
ficing adequate protections against
buyers being stampeded into im¬
inadequate

inaccurate

or-

liminary information. That
simple. It isn't.
Second:

sounds

a

v

statement

of

facts

about

the

se¬

curity before he is committed to
buy it.

As the law

he has

operates

now

The

waiting period has never
fully served its anticipated func¬
tion of

permitting correct infor¬

mation

about

curity

to

the

registered se¬
wide circulation

get

among the

public.

a

a

became effective he could make a

commitment
forthwith
receiving the missing price
If he had not gotten

binding
upon

information.

statutory prospectus before the

statement

after

from
;

effective

became

have

would

he

business

full

a

getting
the

day

withdraw

to

one

purchase,

;

Either; alternative would give

the buyer an
sider

such assurance.

no

before the statement

fective,

opportunity to

con¬

complete prospectus be¬
fore he could be bound to take the

the

At

time

same

it

would enable distributors to offer

securities before the registra¬

the

tion statement had become effect¬
ive.

They could control the timing
timing

of the final distribution by

becomes ef¬

it

purports
alternative ways

sellers

If'the

to,
of

seller

makes

his' offer

effectiveness
he
the buyer
full prospectus after the state¬
before

have to furnish

would
a

ment becomes effective and would

give him

thereafter

his mind

definite time

a

which

in

make

to

up

whether he wants to go

through with the purchase.

;
;
giving
the buyer this option to walk off,
however, by furnishing him a cor¬
rect prospectus before the state¬
The

seller

avoid

could

effective

becomes

ment

viding the information
and

data

related

ment has

In

and

after

pro¬

to price

as

the

state¬

been declared effective.

order

for

this

alter¬

latter

native to be ef any use the dis¬

tributors must have

some reason¬

able

opportunity
to
distribute
complete prospectuses before ef¬
fectiveness

perfect

and

able

thus- be

to

sales

promptly when the
price information becomes avail¬
able

and

the

effective.

statement

Otherwise

they would have to
distribute prospectuses after ef¬
fectiveness and give the buyers
a
suitable period of grace there¬
after to determine whether

to go

a

security.

that

and

getting the prospectus information
to the buyer. '';:;

If

full business
before the statement

prospectus

day or more

a

The

buyer should be
an
opportunity 'to con¬
concise, clear, correct

assured

sider

on

pre¬

it

the price proposed.
Let's as¬
sume that a full business day is
at

its

Commission, in regulating rail¬
financing, have for some
time required that securities is¬
sues w/ithin
their jurisdiction be
submitted
for open
competitive
bidding by underwriting houses.
Competitive bidding ; is also re¬
quired by some state laws or
regulatory practices.
If you will recall the SEC staff's
proposal you will remember that
it would legalize oral or written
offers of securities after the filing
of a registration
statement but

have to

staff's

the

Under

a

in

road

orally

effectiveness

SEC

the

now

regulation of public utility hold¬
ing company
system
financing
and ; the
Interstate
Commerce

permit them to use for written so¬
before

not necessary

reasons

elaborate

•to

give

licitation

a private
bargain
through discussions

writers. For

sellers to offer securities
after the filing of a rcgistrat on
statement but.: before
tne state¬
ment is declared ef ective; and t_
permit

ment.

find that the law has devel¬

oped

place until the registration state¬
ment

tying

reframe

thus far to

to

as

from dealers and large investors
before

frustrated

have

law and

interest"

of

provident commitments based
to the

we come

have been conceived by the Con¬

solicitations of offers, or attempts
to dispose of a security can take

"evidences

elicit

and adequate prospectus, based on

. ..

.

(

However, when

gress as a

least " with
reasonable
they have to test their
markets before committing them¬
selves. Consequently they usually
do

difficulties

attemps

safety,

mit

.

waiting period appears to

their func¬

has

the

In

Various mechanical and concep¬
tual

in

out

between the issuer and the under¬

Reframing the Law

cheeks.
firm con¬

at

tion,

worked

their

to fulfill

that

viction

new

that

to'the ease with which the
financing can be understood
by investors, and to'the public
interest generally. ^ d'
The period between the filing of
a registration and its effectiveness
is generally called the "waiting"
or
"cooling" period. The process
of permitting effectiveness to oc¬
cur earlier than 20
days we call

for

in

tongues

They evidently have a

they had
little more to go on in deciding
whether to take part in a distri¬

true

new

notori¬

been

underwriters

with

business.

of
public
information
already available about the com¬
pany,

have

dealers

ously dependent on, their affilia¬

passed if the disclosure meets cer¬
tain standards relating to the ade¬
quacy

smaller dealers

the

to

join in the retail sales groups.

tions

'; ;;

•

order

In

eye

too,

their

the

about

determined

take it.

Problems in Administering Si icuiities Act

It has been claimed that

alternative
in

or

not

through with the purchase.
is

such

no

available

feasibly

competitive bidding. When an

issue is

to be

petitive

sold

through

com**

bidding

various under¬
writers who intend to submit bids

consult "with

may

other

under¬

had/ the result in their request for effectiveness or writers to form a bidding group
speed; the terms
and agree on the amount of the
many
cases
might
have
been the
and apparent purpose of the law
registration statement.
bid. There are likely to be several
more
harmful
than
beneficial.
reason to believe that the regis¬
Offhand it would appear thai
pull in the direction of less speed.
such groups. None of them knows
Many registration statements are amendments
tration statement is so inadequate The
along
these
lines whether it will be the successful
perfect .pnswer would prob¬
defective when they are filed —
or inaccurate as to be
misleading, ably
would accomplish the sort of ad¬
be
a
compromise
which
bidder. They may not know how
sometimes grossly defective.
it can either prevent the state¬
would tolerate as much speed and
justments which seem generally
many dealers, or which dealers,
Widespread public dissemination to
ment from becoming effective or
be
considered
desirable.
If
simplicity as is consistent with
they will invite to form the re¬
of information taken from such a
terminate
its
effectiveness
and
they vvould work, in practice tail
reasonably effective protection of
selling group if they win the
statement might do more harm
thus stop further sales until the
investors. The history of the law
they would seem to accommodate
issue. The obvious problem for
than good.
statement is corrected.
the law to the underwriter's desire
is, to some extent, a history of
each group is how to arrange for
The fact has been, however, that to
Congress did not rely entirely efforts to reach such a
begin offering his securities advance distribution of the pros¬
compro¬
upon the public filing of a regis¬
while
some
mise.
people
get photo¬ before he had an effective state¬
pectus without unwarranted waste
Meanwhile, if the Commission,
through its
examination,
finds

if

Even

trade pushes for

it

-

tration

statement

information

to

as

the

quired also that

a

of

source

public. It

re¬

prospectus, con¬
taining significant excerpts from
the registration statement should
be provided to each purchaser.
Thus

the

Act

to transmit

mails
for

the

a

in

or

a

makes

it

unlawful

security through the
interstate

commerce

of sale or for
after sale unless it is
accompanied or preceded by a
purpose

delivery

prospectus

which

quirements

of

the

the

meets

law.

:

;

re¬

let's

see

regulation has worked.
Through its fraud provisions the
law has considerably diminished
outright swindles. In reputable
.

it

enormous

vestors

.

has

probably been of
help not only to. : in¬

but

to

registration statement is declared

to

underwriters

and

issuers.
have

internal

had

to

survey

make

of

a

their

situation in order to prepare
reg¬
istration
statements.-, In
cases

ing

a

many
the very process of
prepar¬

registration

statement

has

reconditioned the company's ideas
about
the kind of

financing

it

wanted.

have, since the
Act, been perforce presented with




as

as

soon

thejr

pub¬
statement

mere

availability of the

during
not. in
eral

filed,

actually examine them

in the public files, the

lic

are

the

waiting

period

practice, result in

does

ment.

statement.

would

a

prospectus which reflects in¬
effective registra¬

statement,

tion

an

and makes it a
try to sell orally

crime

also
the

to

statement

is made

ef¬

Consequentlv the prospectus,

or

form of ft. must be the pri¬

some

mary

of

source

full

information

to prospective investors.

The law

by

short

forming to those requirements,
stricly construed, would be re¬
quired in many cases to commit

making it

sendin?

themselves

until

issuers

to

without

its

It

pose.

is

tions,

under

other

appetite
issue.

there

would

Underwriters

other

underwriters

this

—

investors

has

a

been

be

what

for

the

contact

can

before

effec¬

syndicate group
permitted
by

virtue of interpretation of certain

language in the law. But activities
beyond this, calculated to stimu¬
late
not

interest
been

under
It

the

regarded

the

is

in

terms

notorious,
do

as

of

issue, have
permissible

the

law.

however,
go

that

further

—

probably not with their hearts in
their

mouths

but

doubtless

falls

effective for that

permits

a

seller

the
to

It

seller to defer

is

nresent

withhold

auite

lawful

Act: for

the

delivery

of

a

orosnectus to the buver until the
securitv is actually delivered f^ter
sale.

At

moro

than teH the buyer what he

that point

has bought.
won

bv

He

the

can

uncen

it

does

little

be wooed and
sored

I

be

ment

of

its

of

some

to

of

you,

workable
refine¬

features

present

or

dis¬

practices—perhaps both.

of

Case

it

further

revision

tribution

the

consistently
either

drastic

serious
proposal,

are some

outlined

have

without

of

a

complete.

ii

Competitive

arts

of

Coupled

with
suii.ible
pro¬
dealing with ; some
problems affecting trading in the
visions

new

for

securities and

assuring

that

some

the

means

of

prospectus

would be sufficiently concise yet
sufficiently informative to be gen¬
uinely useful to the investor, it
would

probably work in

a

nego¬

tiated deal of the sort I described
to

at

you

discussion.

beginning

the
It

runs

into

of

more

difficulties when you attempt
apply it to sales made through
competitive bidding.

to

is being sold to him until he has
bought it. It would seem to make
^ood

sense

to change the law and

the practice so that buvers would
have a chance to consider a cnr-,

with .rect

statement

of facts

about

the

First

a

word

as

to the distinction

between competitive bidding and
the negotiated deal. Lr;the case I
outlined

to you

in

com,-

regis¬

a

tive in two stages. It becomes ef¬
fective first, without price infor¬

mation, for the
bids.

When

and

the

of inviting
bidding is over
determined, it is

purpose

the

price

declared effective for the purpose
of public distribution. Thus final

effectiveness does not

until

occur

the

bidding is over. Until that
time,
no
single
group
knows
it will get the issue.

the

staff

the
give
all of its dealers the advantage of

winning

an

out

proposal

group would have to

clause unless it had made

pre-effective
distribution , of
prospectuses to dealers before it

a

knew
And

it

the

would

win

Hhe*.award.

in turn i| must
have been given enough prospec-'
tuses in sufficient time before the
award

so

dealers

that

they

could

make

this pre-effective distribution to their
seri¬ 'retail
customers. Since any one

ous

vided with

He is rot pro¬
full picture of what

It is the SEC practice

petitive bidding to permit

tration statement to become effec¬

Under

oral salesmanship.
a

of effort and expense.

whether

Bidding

pur¬

nrospectus to the buver
the last act of distributor,

finding out from dealers, institu¬
or

terms

own

cushion

they would,

whether

questions

be

formation in

fact

However, there
as

spe¬

would

also

In

effective, improve the efficacy of
the law as a protection to in¬
vestors.

any gen¬

public knowledge of the

They

the adjustment to make it safe foi

investors.

cific information contained in the

underwriters

"

Underwriters

copies of registration state¬

and others

dispose of" a security. It re¬
quires that the first written offer

tiveness to form
Issuers
careful

static

ments

fective. Underwriters stricly con¬

how this scheme

of

deals,

dealers

and

effective. The Act broadly defines
a
"sale" to include "any attempt

before

.

How Has It Worked?

Now

What underwriters

probably like least about the pres¬
ent law is that they cannot
sell, or
offer, or solicit offers, before the

of

the

the

bidding groups

successful

mean

one

*

might

this;

be

would

that, lacking some common

arrangement for general distribu¬
tion

of

prospectuses, each group,

if .it.;wanted

to

avoid

the

out

the price the ui^' clause after effectiveness, would
derwriters paid to the isSuer was have to make a wholesale dis-

Volume

tribution

THE

Number 4696

167

of

prospectuses, before
opened, to all dealers
and
retail purchasers
whom it
might ask to buy if it should be
the bids

are

the successful bidder. The obvious

disadvantages, in the absence of
some
arrangement, for common

distribution, are undue expense,
duplication and possible waste ot
time, money and effort by the
unsuccessful bidders.

It

not

seems

that

a

practicable method of organizing
a

pre-effective distribu¬
prospectuses
could
be

common

tion

of

worked

if

the

meet this

out to

industry

problem
genuinely wants

to meet it. None has been worked

out

yet that

way

of

deal

ment

of

has

there

tion

that

into

law

any

would

is

nor

firm convic¬
proposals if made

the

many new

This

possible effects

been

not

give rise

in

field

The

be

reluctant ;tc
to use i

have issuers encouraged

because of less rigorous disclosure

the

,nto

is

there

that

assurance

their

foreseen and

oeen

natural

a

without

law

re-,

changes

substantial

effects

have

provided for.

not inconceivable that

is

course

to

follow

c

the

this

at

would be a candidly ex¬
perimental one. Some, at least, oi
he objectives of the statutory re./isions that have been under

to

ichieved

negotiated deals.

-

Commission's

,

view¬

point too that alterantive is ob¬
jectionable for the same- reason
in a different aspect. If it is de¬
sirable to

have the selling group
retail buyers informed about

the

security
in advance in
a
negotiated deal
it
is
at
least
equally desirable that they have
a

chance to consider the

aw

ones

and

which sales

on

the

less

made

are

changes

un¬

plainly

are

pointed out by striking publicity.
A Proposed Plan

Perhaps the thing to try would
be for the Commission to exercise

in a competitive deal.
Competitive bidding is designed
in part to procure the best price
to the issuer. It does not guarantee
lower prices to investors, nor does
it have any necessary bearing on
the quality of the issue. There is
no
reason
why investors should

of

accelerate

patently evident

the

circulation

chink that

of

the

and underwriters.

plainly warranted under the
the

As I have

indicated, the 20-day

waiting period has not, in and of
itself, proved very effective in
achieving its main purpose of en¬
abling investors to find out about
the investment before being called

pres¬

sanctions

originally

tended to assure truthfulness

and

omissions.

criminal

in¬

were

liabilities

and: material

Those

would

r./': //.'/;

effective.

remain

^/...

Y

..

Such a modification of our prac¬
tice would enable sellers to speed
heir distributions if they had con¬

in

fidence

their

It

statements.

would probably lead to the state¬
ments being better prepared in¬
It

Period

)

ent law. Indeed it seems probable

chat

itially in many

Defense of Waiting

mis¬

prospectus.

misstatements

and

is

would be rather

course

civil

rules

it

leading, hold it in suspense only
long enough to permit a general

the

administrative

more

the face

on

that

statement

for

changes
were
accompanied
by
;ome
corresponding • changes in
the habits and practices of issuers

formation

to

power

con¬

policies developed under the pres¬
ent
law,
especially
if
those

in¬

same

the

would

cases.

restore

the

civil

Criminal liabilities of the
the

and

Act

as

operative sanctions to assure
in the selling of se¬

truthfulness

curities.

and Interest Rates

best

at

might be substantially

without changes in the
through modification of some

)f : the

Money, Government Spending

enforced

• waiting
inadequate or
may be positively
misleading. The first impressions
based on this preliminary inade¬
quate information are often the

^tage

sideration

and

this

is

to

small

which

to fix wholesale

requirements in competitive bid¬
ding cases than those applicable
the

during

period

inaccurate

is not

which

uctance

they don't favor competitive bid¬

From

be.

(2009), at¬

be

ever

in

It

•

may

badly prepared the
that gets circulation

information

'Z/'':'/

problems.
a

information

good as it will

the

meeting

modifications.

would

the

on

the
as

If it has been

discussion.

and

comment

wisest

and

about

Approximately half a year has
passed since we first published
the
proposals of our staff for
changes in the law. Those pro¬
posals have been widely distrib¬
uted. They have generated a good

bankers don't like that. In general

ding

pared

the

freely before examination is com¬
plete, and, unless delay is re¬
quested by the sellers, where it

of competitive
bidding
cases to permit a continuation of
present practice either as a whole
some

make

on

CHRONICLE

juite sure of the full consequences
cf changes. Therefore it is a field

ception

with

to

FINANCIAL

changes may have wide implica¬
tions; in which no one can be

problem might be to make an ex¬

or

and

arrangements
basis of the prediction.

&

generally ac¬

seems

ceptable.
Another

substance

practical

There has been no general agree¬

i

unlikely

known

COMMERCIAL

would

It

relieve

the

that build up during the
waiting period. It would eliminate
any reasonable basis for
claims

pressures

to buy. The period has been

(Continued from
of

$20.67." Now gentlemen, let no
one ever tell you that gold is not
the

of

base

best

In

figures

because

investments

statistical details, but
sweeping changes.
February, 1934', our gold supply
of

mass

In

somewhat

was

in

billion, and went

of $7
constantly to

excess

up

about

$22,700,000,000 at the end of
1941, and during the war years it
ranged between $20 and $22 bil¬
lion, but during the last year it
has been going up so it is at the
highest level in history at more
than $23 billion. It should be ob¬
vious to all of you that we have
real

no

money

current

shortage of basic
supply, and that the longer

the trend continues in

a rising di¬
greater will be the
for a reduction in inter¬

the

rection,
pressure

est

rates, all other things remain¬
ing the same. Of course, not all
other
things remain the same.
With

reference

to deposit bank
the total deposits adjusted
were approximately $38 billion in
1934; $65 billion in 1941; $149, bil¬

money,

the

important
proportion

securities.

In

1934

were

billion, with a peak in 1945 of al¬
$110 billion.
Current fig¬
ure is around $92 billion. Remem¬
ber, that the

in

rather in broad

heavy

im¬

us

most

cussion
a

for

about $18V2 bil¬
lion and at the end of 1941, $34^2

which

in

low

certain

and

the

of

of government

for

interested

reveal

trends,

trend of investments is

This
merely emphasizes
importance of knowing what
is happening to gold. In this dis¬
not

relatively

studying the money, certain

portant

could.

are

at
■

bank

the

we

still

are

levels.

credit

supply.
Every conqueror since history was
written, as his first move at¬
tempted to corner the supply of
gold in the country which was
being over-run.
Hitler, for ex¬
ample, talked about his ability to
finance without gold, but he did
what
previous
dictators
before
him had done, namely, take the
gold out of the vaults in the con¬
quered countries as fast as he

14)

page

rates

time

large

longer

ended in 1945 at

war

the government

scale

was

investments

need

financing

necessary.

during

no

The

the

drop
years

1946 and 1947 totalled about $15y2
billion, most of which was in gov¬
ernment securities, but loans went
up
almost $12 billion, deposits
went down $8 billion, but the gold
supply increase $2 billion. Time'
loans were going up and govern¬
ment

debt

bonds

had to

make
sure

■

sold

be

retired;'

in order to

loans, with consequent
the market.

on

The

being

was

of Postwar Depression

Fear

At the close of the

ernment

pres¬

•

war

the gov¬

greatly concerned
with the probability of a depres¬
was

The conclusion

sion.

that the

was

soldiers
and
sailors
could not be quickly absorbed in
the working force and therefore,
encouraged inflationary measures.
The ability of business to convert
quickly from war to peace made it
possible to take quick advantage
of the remendous pentup demand
for
homes,
cars
and
wartime
shortages, and since people had
money and were willing to buy
returning

that delays are based on quibbles
lion
in
1945,
and currently
is
about statements of marginal ma¬
around $144 billion.
Gold went
registration statements a teriality.
opportunity to
up three times and the deposits
appraise the purchase of a se¬ thorough,
critical
examination,
It might; result in some bad se¬
curity underwritten competitively and acceleration customarily has curities being sold on the basis of 21/2 times between 1934 and 1948. business turned out to be ex¬
It truly could be said that our cellent.
The planners in Wash¬
in the light of the public offering not been granted until so-called
some
bad statements. But a few
price as they would have in the "deficiencies" disclosed by that stop orders where really mislead¬ money bags were swollen, and ington were completely wrong in
that there was an ample credit their guess.
However, the infla¬
examination have been corrected. ing statements were used,
straight negotiated deal.
coupled
been done.
The Commission does not guar¬ with successful prosecutions for supply in relation to the demand, tionary damage had
The ; Suit Against Investment
Controls had been removed to a
consequently, the money condi¬
antee the correctness of the state¬ wilful
misrepresentations,
and
Bankers
tions during most of that period large extent and the Victory War
ments. It does, however, do its civil suits to restore the losses
Further, such a concession pre¬ best to discover materially mis¬ would probably raise the standard favored low interest rates which Loan Drive of December, 1945 was'
tied in with the policies of the heavily
over-subscribed.
Up to
sumes that competitive bidding is
leading statements or omissions of disclosure fairly promptly and
Administration money managers. that
time deficit financing had
the unusual procedure for which and see. that those discovered are keep it high.
But, with the ending of World continued. When it became evi-'
exceptions may be made. How¬ corrected before the statement is
One of the principal question
War II, budgetary surpluses came dent that the demand for private
ever, we can't be certain that as¬ declared effective and sales can marks about such an optional op¬
sumption will continue to be cor¬ be made. That service to issuers portunity is whether sellers would into being and retirement of bank money or credit was coinciding
rect, The Department of Justice and underwriters the statute does utilize it. It would be interesting held debt occurred, reducing bank with the government's unneces¬
has recently
In 1945 and 1946 sary demand and inflation was de¬
commenced a suit not require the Commission to to
discover
whether
what
is deposit money.
the
government
re¬
against
17
large
underwriting perform. It has probably resulted wanted is really the opportunity gold was relatively stable around veloping,
houses and others. The bill in that in
substantial
improvement in to sell quickly" after filing, or the figures in excess of $20 billion, versed its position to a certain ex¬
but in 1947 and to date monthly tent, and began to consider de¬
suit alleges among other things many statements. But it may not
opportunity to sell quickly with¬
that
the
syndicate and group have been an unmixed blessing, out responsibility or liability for figures show a constant increase. flationary measures which might
World confidence and trade con¬ be adopted. Yet, it insisted upon
method of. securities distribution and it may be the cause in part misleading statements.
4 •»"
as it is customarily carried out is,
of some of the difficulties the re¬
If it should be used, especially ditions are the main causes of maintaining a wartime pattern of
interest
rates
which
of course,
in certain aspects, in itself a viola¬ vision program is aimed to cor¬ if it could be
coupled with an ad¬ change in the gold supply and
tion of the Sherman Act. It is rect.
ministrative definition of "offer" until there is a substantial im¬ were obviously inconsistent with
provement in the law and order, the money conditions. The rela¬
impossible, of course, to foresee
Obviously the time required that would permit purely explor¬
and respect for contracts in other tionship which had existed from
the full consequence of this liti¬
for examination of the statement atory inquiries calculated not to
1932 through 1945 on a constantly
gation. If the relief sought should
frequently delays effectiveness. If commit buyers but to forecast parts of the world, a reversal in
be granted even in part or if the
the corrections
that result/ are the market for the issue, we might gold trend does not appear immi¬ increasing supply of credit in re¬
nent.
However,
in
connection lation to the demand, was now
industry's
practices
should
be
genuinely beneficial to investors be able to make substantial im¬
modified
voluntarily in partial the time may be well spent. But provement in effectiveness with¬ with the bank deposit money, just the reverse. The government

.not h'ave the

upon

used, however, by the Commission
to

same

give

'

„

•

accommodation

to the complaint,
out statutory ghange.
many statements are filed in ex¬
We haven't fully explored the
competitive bidding in some form cellent shape. The delay incident
or
other might come into sub¬
to examination of such statements possibilities of this alternative to
stantially ^ividen use; as a normal, before effectiveness may be un¬ the more or less rigid remedy of
rather than an exceptional method
It may / de¬
necessarily wasted time. Mere- Statutory revision.
Of ■ initiating a distribution; of Ise*/
over, Z this
practice
encourages velop, however, that mutual ad¬
curlties.
justment to the aims of both the
some sellers to file statements in
If that should occur it would
incomplete, inadequate form, re¬ Commission and the industry can
be

plainly

essential lying upon the examination proc¬
than it is in the present context ess to catch errors and omissions
that
the
legislative regulations and put the statement into suitable
provide a suitable and practicable form. The time spent in examina¬
method of achieving their object¬ tion
of
such
statements
might
ives in competitive bidding cases. better be spent by the sellers, with
1

even

■

more

The
Commission has
not yet
fully explored all the implications
of the pending suit on the revi¬
sion program. Until it does it is
not in a position to make definite

proposals.'

*

; /

-

// The

reasons for this should be
obvious. The burden of my dis¬
cussion today

has been to indicate
securities regulation
is a matter of action and reaction,
a matter of adjustment as between

how

law

vitally

and

practice.

To

attempt to
regard
for what the practice will be is
like attempting to predict the be¬
havior of two gases in combina¬
tion when only one of them is a
formulate

rules

without

„




saving of public expense, in pre¬

paring an adequate statement and
prospectus in the first instance.
While

all

is going

this

the
sellers are likely to be champing
at the bit, itching to find out how
much

interest

there

is

on

in

what

be

made/more

feasibly
by
a
process of rule making which al¬
lows greater flexibility than that
permitted by statutory changes.

With Geo. A. McDowell Co.
(Special
*

to

The

has

become

with

Geo.

Buhl

Building,

Detroit

McDowell

A.

Stock

&

members

with

recently / been

tically, itching to sell. The com¬
petitive pressures that cause the

Assets

was

son

He has

the

Administration.

past he

trouble continue to build up dur¬

ing
one
or

this enforced wait. If some¬
jumps the gun, others have to
competitive disadvant¬

suffer

ages.

Many do.

SPRINGFIELD,

Looking at this thing realistic¬
ally it seems probable that if the
registration

172

well

pre¬

the

In

with Marquardt, Wil¬

Fleming

curities

is

Chestnut

MASS.

engaging

business

Opens

from

Street.

—

in

John
a

offices

se¬

at

to

debt

reduce

with

a

through either government subsequent reduction in bank de¬
private loans, a change in posit money, and as previously
the demand for credit would cause stated, the gold supply remained
substantial fluctuations.
relatively stable in 1945 and 1946,
while

Balancing Demand and
of

Supply

Credit

the

credit

to

and

demand

finance

finance

to

for
private
increased sales

plant

expansion

In

attempting to bring into per¬ became exceedingly great. It be¬
spective the balance between the came more and more difficult for
supply and demand for credit, the private borrowers to obtain loans
loans in all banks may be used as at extremely low rates, and the
a
guide. In 1934 there were ap¬ open market rates for private
proximately 22 billion loans by credit were in a definite rising
the

1941

last

year

was

approx¬

billion and for the
end about 43 billion.
been

has

There
basis

figures

$27

a

on

an

absolute

substantial increase,

very

but it is not so much the absolute

but
are

The

trend.

government

seemed

reluctant at first to recognize the

change in conditions. Corporations
which had husbanded their re¬
sources

during

the

war

period,

confident in the postwar
the relative changes which period they would have an excep¬
tionally
strong working capital
of definite influence on the
position, found because of the rise
Remember, that the

interest rate.

increased

during

the

of

the

feeling

in

costs it was necessary to

have

capital
period in the case of gold three position in order to finance the

credit

base

times

,

been

War

& Co. and Dart & Co.

John B. Fleming
B.

has

Co.,
the

of

Exchange.

they have to sell or, more realis¬

H.

associated

started

tured

loans or

imately

Chronicle)

MICH.—Robert

DETROIT,

Wheeler

Financial

most of which has been manufac¬

and

money

in

case

bank

2V2 times, but current loan

figures

are

only

indicate

much

same

ance

These pro¬

loan

why

money

greater

working

unit volume of business as

prewar.

approximately

95% over 1934 figures.

portions

a

Large banks and insur¬

companies

increased

term

financing directly to indus-

(Continued on page 38)

38

THE COMMERCIAL & FINANCIAL CHRONICLE

(2010);

An"'4

oy governmental agen¬
cies, and if the government does
set up an agency to buy your 4%
loans, then the government will
have to get the money to
buy
your loans
through taxation or
borrowing. Since we have just re-

Thursday, May 6, 1948

msuiance

Money, Government Spending
And Interest Rates
(Continued from page 37)
try and
of

sure

stable, then an even balance

mam

loans went up tne pres¬

as

bond could be maintained in the money
investors be-' relationship.
The
increase
in

earnings from

market lessened and

the

yield-; credit in tne last half ot I«4 7 has
ing government securities when oeen causing the President s Coun¬
higher
yields
were
obtainable cil of Economic Advisors some
elsewhere.
■';\-;V,.r.;:y concern, and the increase in con¬
credit has also caused

sumer

Maintaining

War

Interest
In

attempting

Pattern

of

Rates

to

to interested groups.

cern

maintain

developments,

fairness to

that

when

decided

over

a

price

can

in

considerable

performance

and
.

of

cannot

between 109 and

110, which

compares with the current market

of

101%

today. You are, of course,
familiar with the
pegging of gov¬
ernment bonds and right now
gov¬
ernments
to

are

little

a

above

the

The question would arise

pegs.

whether

we

are

having

a

as

nor¬

mal

rally in prices after a big
decline, or whether conditions in
money have changed to a point
where

we

again

may

expect

a

decline in interest
rates.
Interest

rates

on

long govern¬

ment bonds tend to set the

all

on

other

Whether

not

or

market

we

is

really have a
point of

another

argument. Take your GI loans or
loans
for
example, with

limitations; is that

any better or worse than the peg¬
ging of a government bond on a

2%%'. basis?

Ask yourselves if

government

policy

can

ever

a

be

consistent.

The
is
government
influenced by political considera¬
tions as well as economic consid-

tions.
that

it

I think
everyone is agreed
would
be
advisable
to

eliminate

the double taxation of
corporate dividends, but political¬
ly it may not be feasible.
For

example,

it

might be well to
eliminate capital gains
taxes, but
politically that would be suicide.

Currently, the
talks
tain
mass

the

the
of

policy
through cer¬

and

measures

the

understand,
deflation, but
hand, action is just

cause some

other

reverse.

The

government

recent

bonds

prices definitely put
in

which

of voters do not

hopes to
on

government

deflation
credit

the

hands of

at

more

pegged
money

banking institu¬

tions to lend out, but in all fair¬
it must be mentioned the re¬

just

the

of

government

opposite

debt

effect,

has

If

has
the

in

wealth

and

our

you are

terrific

income, and

size, was not particu¬
larly burdensome.
The depresfully : sion period was entered with a

government

words.

I

would

hate to ask

show of hands in

a

indicate

this

room

VI

market

a

for GI

Title

and

mortgages. Passage of the Bill

will

be

inflationary and increase

of

of

excess

debt.
the

want

lower food

wants

prices—the

national income

because goods
better to actually

property are
hold than the yardstick measurejment of the value of that property,
venture

to

guess

that the inflation bubble is about
to

burst.

that

we

There

be

may

indications

are

the peak. The

near

far in

debt

to

rose

f

the

around

will

not

be

high,

studies indicate that
cession

would

if

but

cause

in¬

to operate at a loss because

nesses

of the rise in break

points

even

so

as

compared with

grant great wage increases at this

These comments lead to a con¬
clusion which indicates
every ef¬
fort must be made to
keep income

time,

the

apparent reluctance of

to strike, and the filling
the'pipe lines in many indus¬
tries
gives
pause
for
serious
thought.
Yet tax reductions, the
of

European Recovery Plan, and the
Rearmament program
are infla¬
tionary influences, but these take
time to be actually felt.

It is to be hoped that

of

The
could

in

Future

ditions and permit
of

sound

a

Rates

factors currently at work
conceivably resolve into a

of

group

forces

make for

which

reversal of

a

would

the recent

tendency of interest rates to rise,
but because of the apparent
large
prospective demand for credit one
would be lead to believe that such
a

change would not be
a
long
character.
If for example,

range

the

reduction

of

Federal

taxes,
the
European
Plan, and rearmament,

income

creates

conceivable

that interest

will not tend to rise.

rates

if

will

mand

be

with

for

not

It is

developed. In

de¬

will

continue

will
1' /

money
,

,

there

a

is

definite

trend

increasing the rates
this

trend

on

toward

the

between

loans

yield
-

and

government bonds will

widen, and
general conclusion would
to the yield differentials

same

apply

between

other

types

of

invest¬

ments and government bonds. The

than

buyers

by the increases in private credit,
plus the purchases of government

reluctant

bonds, and gold and currency

loans

force

Your

this

are

and

more

the

own

make

regardless

of

market

actions

conclusion.
to

any

sellers
is

rein¬

however, many,

First

National

Trust

it has

has mailed shareholders warrants

subscribe

to

additional

shares

common stock ($10 par
value)
at the rate of 1 share for each 2 Vz

shares

held

added:

"Any
after

•

$22 50

per

4//Vi/f y;

shares

—

Blyth

&

Co.

Inc.,

and

including

William

J,

mon

stock

40,000
and

shares

of

are

italization
of

will

stock.

now

if

our

goods

:

an

accel

¬

accept the popular

v

destined to flow at
we

are

to

a

are

-

t

re-

thing

we

>

financing with these huge gifts. Indeed, the so-called

'■?
*

:

J

Recovery Program) represents the very essence of
planned economy—that is, industrial and other economic

operations planned by the States involved, in collaboration, more or less, with one another and directed by pub;v-';
solely ;/!: lie authority.

;

t

;

retirement of all

consist

180,000 shares of $10 par com¬

mon

other countries into which
are

little

lowed the reports emanating therefrom, and which constitute the basis in good part for the planned
European

com¬

outstanding preferred stock. Cap¬

4%

It is,;
of;

even,

Paris Conference (as is well known to all who have fol-

R.

offering involves the is¬
of

as^

notion—to stem the tide of much the sort of

Dewar Co. .yr/y-.

suance

some

flowing and

ownership of industry is

erated rate in order

for

Staats Co., Wesley Hall & Co. and

"This

spected in
are

May 11, next, will be under¬

Dean Witter & Co.

friend,

strictly American tradition of individual initia-

tive and private

y

unsubscribed

a

acumen

The

share.

written by a syndicate headed by

You

or

at

furlongs distant from

merely by the fact that;
enough to see what it would do to production,,
and is shrewd enough to understand what effect it would
have upon the willingness of the American public to con¬
tinue that country upon its list of charities.

Cal.

to

many

"nationalize!/ most of the economy

and

Savings Bank of San Diego,

more

guarantee

have always known it in this country? To'
answer it.
•
v;
.)

the
people the rights and privileges individuals have!
traditionally enjoyed in that land. It carefully eschews the;
label ,v'communism," and in fact if the Russian
regime is the-

(Continued from page 29)
The

long term 2xk% government bond
There

question is to

private ownership of most or certainly many types of prop-*
erty. It has been restrained somewhat in its campaign to;

becomes less attractive for income
purposes.

as we

a

And Bankers

loans. As

accelerates

differential

violently promised to eradicate Fascism and HUleri$m;
Italy and Gerniany* Would the>
fa s,uch an*,

only type of communism, is really not communistic.

Indicating this in its April 27 is¬
sue,
the
Los
Angeles "Times"

on

way

News About Banks

the present time toward
rates

developing and aiding ini

to

of

interest

•
»

sense that they derive their power from the;:
majority of the people in the land, are, nonetheless, obviously,
and avowedly bent upon
ending private enterprise in most;
of the more important branches of the
economy, and which;
for all practical purposes
apparently never intends to return;

ac¬

this reasoning

hand, contacts with lenders of all
types throughout the country in¬
dicate that there is no thought at

reducing
loans, rather

we are

*

cratic in the

volume

that high dollar

down.

come

'

Britain as an; Example
Britain, our most ardent supporter and our most:
favored "poor relative," the
government is in the hands of;
a
party, or of elements in the population, which, while demo-;

con¬

program.

money

:

In

continuation

high and the price of

some

ask such

several

business

so

•

:

event, then be left purely democratic and devoted to private.4

inflationary'measures will

expanded

cordance

a

On the other

money

likely

income

Recovery

deficit which will be large
enough
to involve bank
financing, then it
is

be

next

a

in

some

will create stable word

years

quite

Interest

the

over

[

or more

an

enterprise

current and prospective ex¬

our

falters
Factors

prewar.

high.

penditures

respects.

from

refusal of various corporations to

workers

many

virtually all directions; Suppose even;
not now discernible we are. ultimately
successful in wiping communism out of Russia as we have
that

re¬

busi¬

many

'

good

Moscow outward in

recent

minor

a

a

all ways "short of war"?
Suppose we succeed in "stemming";
the march of the Russian inspired totalitarianism from;

Our debt

burdensome

remain

comes

century

a

But what of the allies

estimated around the

was

$63 billion dollar level.

■>

•

high of $25 billion, gross national,
income

for

readily concede

always been since

us, now

j We understand now that in Moscow
all-powerful regime which is fhe epitome
of statism, of totalitarianism, of ruthlessness, and of
very nearly all the attributes we so heartily and justly
condemned in Fascism and Hitlerisnv '

during World War I when

public

majority of

j

was

there exists

i

excess

other fel¬

the interest rate up,

anyone

emphasize
previous years

was

>

of the New Deal,

^

$2£0 billion of

in

manufacture

prior to that time; we
see
plainly enough now und acknowledge that the
Kremlin has never had more than a strictly hypocritical
interest in the Atlantic Charter or in any of the other
idealistic schemes and plans evolved in the inner circles

figures

that

Even

Historically inflation tends
force the price of
money or

Would

what it

of government debt. Now it is less.

low.

or

These

fact

the scales to

to

the "October Revolution"—and in

the

Everyone

higher.

wants deflation for the

to

v

with

compares

figure -of-

-

had made fools of our-'
of World War I did nothing at all'
we

that Russia is still quite what it has

facts

16

which

rough

cause

all events, the vast

many

million, while na-.
was
approximately
90 billion.
Currently national in¬
come is running around
$240 bil¬
lion

r

This fact is quite obvious to the thoughtful observer
in both the international and domestic fields. We, or at

slightly in

was

:

be just another

and programs.

tional income

will put pressure on rates to rise.
You

debt

to

drop from our eyes. At any rate,:
slogans and set utterly un-!
realistic and self-deceptive "objectives" before ourselves aswe
proceed to develop and give effect to our postwar policies;

experience. In 1930 the public

the volume of credit which in turn

farmer

for

hate to face

out

about

continue

we

unsatisfied

we

>
v

us

notions

failed to

credit.

maintained

,

;

of much greater destructiveness.
And now disappointment;
over the results
of World War II to date appears to have;

estimated

our

*

from developing equally foolish and unreal¬
what we could reasonably expect to>
accomplish in a second conflict of similar proportions and'
prevent

istic

when

financing

relation to

be

weak.

re-

deficit

was

debt

national

turned

We Still Have Not Learned

selves about the issues
to

easily

thirties

ago

Evidently the revelation that

subject to sudden

the

Yet

reduction in debt is not
exceeded




In

years.

buying the

ness

duction

banking

the

FHA

their legal rate

demand

pattern

types of interest
rates, especially in a free market.
free

measured and is

change.

more

;/

money.

Confidence is not

.

.

help but think of high prices prevailing in 1946 when the bonds
sold

the

disapproval of the
pending Bill in Congress to reac¬

back

pattern

giv¬

problem which is of great

a

concern.

nardly

tivate

govern¬

look

now

of

>

war.

some concern

soundness

In your own field

for

to

fundamental

interested

the

This is

deficit without

a

than

Using the United States
Treasury bank eligible 2V2s due
Sept. 15, 1972/67 as an indication,
bonds

of

for

forces.

ment

that loans

at

government

can any

or

horrible

the confidence question.

long

Now, we have been talking de¬
flationary measures, but as 1 said
before, our actions speak louder

allow

today is considered inviolate
by the money managers.' ^Here
again then we see that over the
long-term money managers may
attempt to cushion the changes in
money, but that it is extremely

investors

all

decades;

relatively
small
national
debt,
Mortgage Now we have approximately a
credit is but one phase of the 250 billion debt but national inoverall money problem. Willingj come is exceedingly high, and our
ness
and ability to take varying ' economy appears to be
operating
degrees of risk also change as at a peak. Everyone knows that
ideas on money change.
peaks of the present -kind can

even

oppose

In

to

as

turn

in absolute

demand

2Vz% rate which apparently

to

various

banking structure

that

mean

aware

the Treasury Bill rate to rise to
levels which they considered rea¬
sonable, in relation to the long-

difficult

up

ulti¬

begins to, take on the depth and bitterness of our
disappointment that the war to end all wars three

some

orings

For how

there

of mortgage

were

to

the

been satisfied.

In June of 1947 fis¬

authorities

made

curb credit.

to

time

every

gets help, and this in

come

our

ment

government

group

not

as
highly liquid as they were
during the war period with low
loans, they would liquidate the
lowest yielding items represent¬
ing excess liquidity in order to

make loans.

budget problem

Credit

Spending

the

time

same

ally as "democratic" and a lover
of any system which even remotely resembled the
American way of life, is still a mystery which will probably never be solved; but convince ourselves, apparently, we did — or many did — and now our disillusion-

,

Deficit

aggravate

apparently have held at relative¬
ly stable levels during the first
quarter of this year, but this does

acquired

banks

means

The Fed¬

it should be mentioned

roughly 16 out of the 17 billion
outstanding. The same trend was
developing on the Treasury 7/8
Certificates, for it was certainly
obvious

has

Reserve

repurchase agreement which was
in effect, banks held a very sub¬
stantial proportion of %% Bills,
nevertheless, by 1947 the Federal
had

one

as

combating inflation.

proposals

Bank

We

.from.first,page.I;,V';'*•■/v-V

another, and at the

mately to regard

'

operate

eral

Reserve

are

Threatened

41'(Continued
to overthrow

it

sure

ue

borrowing.

''

ing thinking citizens

curb credit

to

while during the war through the

term

expands.

can

tion

brunt

these

You

you

in

result

of the American Bankers Associa¬

the

of

of

con¬

familiar with the splendid efforts

wartime pattern of interest rates
the Treasury Bills first stood the

cal

will

less interested in low

came

w-vcS

uuctu

As We See It
■i:'

;

-

It may be that self-interest requires that we do
of this sort of charity work — we
again express doubt

<

much

about

r*.

kin.

k

Volume

167

Number

4696

THE COMMERCIAL. & FINANCIAL. CHRONICLE

to

as

czun)

i&rr:..

.

the wisdom

o|

good deal of it

but

shall certainly gopdjs,

Such a policy necessarily
ibe foolish if we-build up
hope of re-establishing a world, or means a, slowing up of production
fpi;v consumption in many, coun¬
H>f creating a world, iji which our traditional ideas
prevail tries; for a limited period of time,
.even in, reasonable degree.
We may or may not be able to bpi the- results in the not too dis¬
.prevent some of the extremes of statism and of post-World tant future will justify abundantly
•War II versions of Fascism and
Communism, but we shall the retarding, of some immediate
gains u\ present standards of liv¬
mot be able to shape the world in the
image of the United ing.
&

—

we

;States of America from the days of Washington to the time
tpf Franklin Roosevelt —- the years in which we grew to the
;greatness which has for

long been the

so

;the rest of the world.

///

of most of

-.--"'."V..y"'j.^///'.'//?!:

be strange indeed

;//

upt do in any event, but it would

if

'

reconstruction

of

humane program fpr making real
others what is potential in

for

their

Europe

pean

goods

parts

of

and

the

machinery

world

where

|
*

;

;

vwhere is the political leader today who has M
1
sho\yn in this, election year any great stomach for tradi!
tional American ideas?

i

>'■

American manufacturer today has

field.

open

ful

in

that

This will be pain-*

detail,

it

but

will

it

is unlikely
quickly
or

come

tioned

factured overnight by loans from

:is

Nevertheless the offset

considerable,

apparent

and reduces the
burden of the defense

•undertaking.I.;

say

.burden"

the

because

^productivity

"apparent
increase

allocated for

in

the International Bank and

that of state

believe these things.
They know
that most of their capital goods
must come from their own real;

savings.

to

sumed

no

trade increases, the wodd- stand¬
ard

of; iiyipg including

But

our

our-own.

own prosperity is a poprerequisite-vfor lowering

litical

oft, still further the barriers to world

arma-J commerce

that

already

we

im-

correct

involved

V

clear.

the problems can be
discussed.
The points of

view of the countries of the world

what

not

be. available

,?

otherwise

.qally possible
perative.

and

morally

im¬

*Sii)bjeQt$; Affected by Armaipent
'

;other

subjects

glut of supply.

because

When

.

technology,

receive

we

the
exclusive prerogative
of a
too, totalitarian state. Some Americans

share

we

benefit,

we

well

as

as

give. Prosperity makes us more
agreeable to take the always un¬
certain
chance
of
technogolical
four)
export and exchange. We are sure

Outlook

; " In addition to
'war and peace,

a

our.

.

the question of
there

are

which

;tb.ink about when

we

must|

thinking)

artless mfndful xif whft we'
economics/} ^ ® ^
® mindful, Of What wobr'atfected by^the'armamenf oiS-' ^ When we are prosperous,
we are

about the world and its

"look, but

each in a special way,'
*pd each has complications of its;

P

i,ne tour

t

mind, and there

an

,

doubtless

are

Slates.
2.

the time will

in

the

,

United

of

torn

war

particularly of Europe.

■areas,

and

affecting state trad¬

state

interference

with

tradj?.
4?; Development of the under¬
developed areas of the world.

•

Let

.

us

discuss

them

briefly in

order;.
First, prosperity in the United
States.
Our own prosperity is a
necessary condition for a whole¬

v

some

wonld

.This is not

although

economic
a

it

situation.
selfish proposition,

is

loaded

interest. It is not

osition,

a

although

with

self-

political prop¬
its
political
for

consequences

the
world:, of prosperity in the
United States arise as a result of
vi'

.

,i

•

,

.

.

tbaee conditions that exist when
we have a high level of produc¬
tive

employment and confidence
tha.t it can be substained.
;
;;
(a) When we are prosperous,

.

we

are

more

imports,
.world

when loans by

come

its

and

willing to receive
to. take/from the

specialized

production

if

even

this

time

stitutions

are

for

substitute

no

multitudinous private Lending
host

a

of

quential

individually

transactions.

on

inconse¬
such

For

lending,

prosperity is necessary,
because prosperity induces lend¬
ers

to take the risks of occasional

capital loss.

;

)

The

second subject which I
mentioned in thinking about the

/

world

and

its

economics
of

war

is

torn

the

areas,

particularly of Europe. We have
a
moral responsibility to partici-

Pate hv this
ia

recovery both by gift
onH
by loan, and we Viovo a clonr
have
clear

onH
and

lAon

economic

\iro

interest

o

in

the

speedy

restoration of productivity and in¬
crease in living standards
every¬
where.
But

we

have

a

special economic

interest in industrialized Europe,
although this does not preclude

produc¬
provide

industrialized

If the world

prosperity at home that makes us
willing to receive the products of
others in exchange.
If is
elementary that
world




trading monopoly.
that

means

All o( which

tremendous amount

a

of

thinking, and of controversy
too, hps. ahead qf us.

ing

and
trade, it

state
seems

with

state

trad¬

interference

in

other

parts

Europe

is

of

due

the

to

the fact that only from this source
can

come

substantial additions tp

the productive plant of the
world,
not
provided
by
the
United

States.. >./''/.
The

world's

goods

are

ority

must

who

can

so

■/'■"./'/' //';/•'"
needs

for capital
great that first pri¬
given to others

be
also

produce

capital

the

the

to

of all.

me

that

one

opment

cannot

I

this should be the case, since state
subsidies and; restrictions on im¬

port

nomic
It

by

are done

mote

to

cost

is

a

its

therefore

as

an

state at
own

an eco¬

citizens.

to

proper

pro¬

objective, the conduct

of international trade

on

the basis

of

economic considerations only,
recognizing that state interference
should always be kept on the de¬
fensive, to justify a need or bene¬
fit that is paid for at the expense
of its own nationals.
r

The fourth and last subject

that
think¬
ing about
the
world
and
its
economics is the development of
the under-developed countries. It
was recognized by the United Na¬
I mentioned as necessary in

Sub-Commission

tions

nomic

Development

on

Eco¬

that strictly

speaking all countries are under¬
developed and have needs for cap¬
ital goods for their citizens' wel¬
fare.
Nevertheless the disparity
between the
less

great,

more

developed

that

no

developed and

countries

is

so

substantial ambi-

push for some kind of a limited
federation, limited only tp

the

countries

that

in the

accept

first instance the minimal and es¬
sential qualifications for member¬

ship and cooperation. The demand
for a, world constitutional conven¬

tion, preferably within the frame¬
work of the United Nations, with¬
out it if necessary, is again fre¬
quently
heard
in
responsible
quarters. With the passing of the
1948. election and with reasonable
of the European Recovery
Program, the impulse to push for
the constitutional basis for peace
success

become very strong.

may
If

we

eously

advance

can

on

moral and

simultan¬

on

constitu¬

tional lines, and if we can advance

rapidly enough,
reach

may at Igst
point where the economic

a

burden

of

we

armament

will

once

again be negligible.
And then our thinking about
the world and its economics will

mu¬

have

mentioned

be

different, a difficult, but
pleasant task. Perhaps
we ourselves may be able to un¬
dertake this job some day. Who
a

much more

knows?

fear.

or

four

points,

,

in

prosperity

the? United

Blyth

States;f

war torn lands,
trading
and
interference-,
with trade, and the development;
of under-developed countries.

common

additional

distorted

the

by

many,

will

programs of armament which the

of peace

for

as

a

point of departure

thinking about the world and:

its economics,?

For the short

certainly yes; for the longer
well, perhaps not,

run;
run

War

or-

j

Peace.

armament
program, necessary as it is for our
own defense, as an adequate an¬
swer to the problem of our gen¬
eration, which is the establish¬
ment of a just and durable peace.
not regard

do

In recent weeks

a

an

new

non-sentimental,

a

character
among

is

ferment of

non-political

•

men

the

of

will

transmis¬

distribution
include

of $3,300,000

the

facilities.

repayment

of bank loans made

by the company for interim finan¬
cing of new facilities now under
construction.

Let us remember that the peo¬

ple

sale

along

production,

and

This

-

Need of Adequate Answer for

the

be used for additions to the

sion

have to take the absence

we

from
shares

company's

absence of peace makes necessary
Do

Lazard

and

with the
proceeds from the sale privately
of $10,000,000 first mortgage bonds

profoundly influenced;
by the problems of war and peace.
are

are

Inc.

stock at $31.50 per share.

Proceeds

All of these subjects, as I have

All

Co.,

offering to the public an issue of
150,000 shares of Idaho Power Co.

state

said,

&

Freres & Co. jointly head an in¬
vestment banking group which is

reconstruction, of

manifesting
itself
' whose
leadership
be
qualities / are
indisputable,
but
and state interference with trade.
who are not prominently in the
These countries will not abandon, public mind.
Let me give two
their powers over trade, unless symptoms of this tendency which
they feel assurance in their secur¬ I have observed, f
ity! and that their welfare lies
First, there was the advertise¬
along another road, In the end ment published during the past

country as a whole must
safeguarded by state trading
a

second symptom of this fer¬
a renewed determination

world

that are
important in thinking
about the world and its economics,

tinction' is useful, namely, whether
these practices are engaged in for

fare of

A

ment is

withou

proceed

exploitation, jealousy

dis¬

become
the
recipients of
public bounty.
Today there are
many situations in which the wel¬

bppe which perpetual armament
and powei; politics can never giye.

/

with

to

hope
future, a

some

distant

more

why with;
patience and good will, the devel-t

state

a

have

But

should come, these formidable in¬

abroad

is to have these American prod¬
ucts, we must have a level of

can't do business with

you

home.

iwill be

ly,

employment

ucts of every kind.

a

geared to support a
weakening of business activity at

the American government direct¬

tivity
dollar

exchange which can be
used to purchase American prod¬

are

is to support at public ex-!
pense the special interest of some
producer or group of producers,
who by tradition, guile or force

preage

to

we

purpose

by

even

or

world where urgent needs are evi¬
dent.
Our economic interest in

and

we are free,
capitalist, pri¬
vate enterprise, republican democ¬
racy. Thpy also seem to think that

as

Export-Import Bank,

assistance

and

evils from which

are

being

the International Bank and by the

of

finished goods and raw mate¬
rials. Obviously this tends to in-

practices

the benefit of the economy of the
nation as a whole or whether their

reconstruction

overtones aj-e enormous.

..." Xbe economic

'ji

busi-

.

Reconstruction

// 3, Policies

ing

the

situation is bad; and perhaps

ness

jothers, are;
/' k Prosperity,

to think that these

seem

Iq, connection

capital goods. Logically,

<,WTheW?our SSS >?c«JsuDjects wmcn i have
domestic
ports is when the domestic busi
when

.

,

from

the

And there is no reason

They can be
fork pose.
analyzed, evaluated, and gradu¬
might be a'.'gen(b) When we are prosperous, ally a consensus op a common
^raf and' substantial increase in, we are more ready to share with, ground, may emerge. After
that, it
jthe standard of living during the! others our technology and know- may be possible to have public
.comparable period.
This is un-; how.; We, are more ready to as- agreement or at least public ac¬
;fortunate, even for the United sist others to produce because we quiescence concerning the
prin¬
.States, where an improvement in, are less fearful of competition in ciples that havq been matured.
tconditions of life for very large, world- markets and less
; ? State
trading and state interfer¬
appre•.numbers of people is both, techni- hensive about over production and ence with trade is
by no means,
will

onent

for

the>

Over the decades to come, the
development of the under-developed countries is for the world,
developed and under-developed,
its greatest economic opportuntiy.

,

available to all.

that

investment

tual advantage

where

are

be

must

serve

after

institutions

financial

Fortunately in the International
Organization a forum ex-

ists

to

And

Today they talk,
preferring
governmenta
loans; tomorrow the.y will have
worked out ways of using private

Trade

openly

ahead, but it does offer

about

by

are

inade¬

welcome.

and

as-,

proportions,
policies to deal

problems

means

their

that
are

western world will be imperative

formidable

Jahd-the

^

7/

has

and

that

know

know

They know that incentive

work

provided.

several# American,
headaches.. State trading and state
trade

institutions

quate.

trading and state

with

They

financial

thinking

to'^produce

interference

tech¬

nical scholarships from UNESCO
But these leaders do not really

about the world and its economics

is

with

(Continued froni page ,6) *
;program.

important

as;

sure,

¥■>■' .'

ionship. .This symptom, even if it
is as important as I hope it may¬
be, can hardly affect the economic
events of the years
immediately

to

it will not

be

the
under-developed

Thinking
about, this subject is likely1 to go
on for a long time, and it is
likely

And lts Economics

is literally fan-

powers

come quickly.
leaders of the
countries
are
aroused and they are impatient
They would like to believe that
their development can be manu-,
To

interference with trade.

Thinking AboutWoxld

own

But

to
the

could make

we

oppor¬

tunity for the western world in a

headway in this ^ abruptly. The European require¬
ments
for
European production
direction at a time when we appear to have given up
are
still
very
large/ and only
the idea of retaining this type of society and economy j gradually will the markets of the
here at home. For sueh we appear rather definitely to J world have access to
reasonably
have done, regardless of the slogans now in use which
1 full range^of European supply.
The. third subject which I men^
at face value would lead to other conclusions/ »
/i

*

economic

The

countries.

will involve the export of Euro¬

an

/'•? What of Ourselves? /."' /-'/'vi
Such we could

J

envy

The

guity wUU/artee in, talking, about
the
development of the under¬
developed countries.
Most of the world's population
lives, exists, in under-developed

The

company
is an operating
utility engaged
princi¬
pally in the hydro electric gener¬

public

distribution

ation,
electric
served
area

square

tral

and

The

power.

of

sale

territory

by the company covers an
of •! approximately
16,000
miles in southern and

Idaho,

northern

Nevada.

cen¬

and

Oregon

eastern

The

area

em¬

braces

principally the
Snake
Valley and is primarily
agriculture. The popu¬
lation of the territory is estimated
at 250,000.
River

devoted to

the

For

March 31,

ended

year

1948, operating revenues amount¬
ed to

$10,084,498

$1,967,853.

was

been

paid

and

the

on

net

income

Dividends
common

have
stock

week by The

in

Friends,

early 1947 payments have been 45

American Society of
the
Quakers,
calling
strong attention to the fact that a
worthwhile lasting peace can only
be

found

in

the

dimension

moral solution of the
humans

of

this
shrinking and inescapable planet.
Now to be sure this fact has been
stated before, and stated forcibly
living

together

on

too, but I find significance in the
use by the Quakers of paid adver¬

tising to bring the point again to
public attention. I take it that the
Quakers mean business and that
a
new impulse is to be given to
the. search fpr peace in the moral
realm.

The Quakers are

singularly ten¬

and a course of ac¬
tion.
They know that the road
they have chosen is a long one
and. a. hard one, but that it Isl the
only true way.
And they know
too that their journey cannot be
successful if they are forced to
a

1917.

quarterely.

Since

/

,

Giving effect to this financing
the company

will have outstand¬

ing

shares

700,000

stock;

of

common

131,000 shares of 4% pre¬

ferred stock of $100 par and

fund¬

ed debt of $23 000,000.

Bourbeau &
(Special

LOS
thur

to

The

Douglass Adds
Financial

ANGELES,

W.

Chronicle)

CALIF.—Ar¬

Graham has been added

to the staff of Bourbeau & Doug¬

acious when they have determined
on

since

year

cents per share

a

problem of

each

lass, 510 South Spring Street.

purpose

follow

it

alone

without compan¬

With Burke. & MacDonald
(Special

to

The

KANSAC
H.

Luce,

Jr.

Financial

Chronicle)

CITY, MO.—William

has

been

added to

the staff of Burke & MacDonald,
907 Walnut Street.

'.*K/

m

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(2012).

-

currencies^ but in such

Reports Drain on Foreign Gold and
Dollar

(Continued from page 23)
deposits, short-term commercial
paper, Treasury bills, etc., held by
foreign residents with banks in
the l/nited States.
They comprise
both official funds (those held by
foreign central banks and govern¬
ments, including as a special item
certain foreign
government de
posits with the United
States
Treasury) and funds held for pri¬
vate foreign account. While pri¬
vate banking funds may not al¬
ways be readily available to a
foreign country for the settlement
of international payments, most
countries are at present enforcing
exchange controls which in effect
accomplish this purpose.
In any
case, it is necessary to cpmbine
official and private funds for pur¬
poses of the present survey since
these categories' are not shown
separately for individual countries
in the regularly published data.
^
In addition to

banking funds in

the United States, foreigners hold

relatively small amounts of other
short-term claims upon this coun¬
try, e.g. advances to Government
corporations and private enter¬
prises, balances with brokers and
security dealers, and holdings of
actual

United

States

Private citizens abroad

long-term

large

currency.

also hold

investments

in

this country, some of which could
be mobilized by foreign countries
in

case

with

of need to settle balances

the

States.

United

Ordi¬

narily, however, foreign countries
are most reluctant to requisition
and liquidate such assets, espe¬
cially since they are the source of
current dollar

dividual

income to the in¬

owners

and to the

try concerned.

«•

The advent of the International

Fund as an operating
early in 11947 estab¬
category of inter¬
national reserves, the conditional

Monetary

institution

lished

new

drawing rights of member cbunupon the resources of the

tries

.

.Fund.

of
•

a

>

One of the basic purposes

the Fund

as

expressed

~

in its

Articles of Agreement .is "to give
confidence to members by making
resources

perity."
Hence,
each
country
which becomes formally eligible
to

the Fund's resources—i.e.,

use

which fixes the parity of its cur¬

agreement
with the
Fund, and thereupon pays up its
subscription to the institution—
is given a qualified right to pur¬
chase from the Fund against pay¬
in

rency

ment in its own currency.

available to them under-

the

total

purchases and the rate at
they can be made. Even
within these quantitative limita¬
tions, access to the Fund's re¬
which

is

sources

words of

an

In the

official interpretation

by the ' Fund's Executive
Board, drawings shoiild be limited
"to

use

in

with

accordance

its

[the Fund's], purposes to give
temporary assistance in financing
balance

of

payments deficits

on

current account for monetary sta¬

bilization purposes."

certain to last under

are

circumstances for

any

several

years,

li

because of

the

quantitative limitations upon
drawings by individual
member countries.
While these

the rate of

limitations

be wkived in spe-

can

fic cases by

the Executive Board
of the Fund, such
waivers are
likely to be granted only in ex¬
ceptional circumstances.
.

It should also be noted that the

Fund's

its

ability to supply dollars to

members

amount

is

limited

dollars

of

—

the

to

of

and

in

by

of

case

resources/v

Further

maladjustments in their bal¬

without resort-

States,

than 3.5 billion dollars in the two
mained
when

aid

quarter of 1948.
Almost all gold transactions be¬
tween the United States and for¬

be X subscribed

in

national

Monetary Fund.

The aggregate gold holdings of
MEANS

OF

FINANCING

existing

by

new

members

memoers

that have

thorities. At the end of

gold

a

gross

contributions

the

to

Inter¬

national Monetary Fund amounted
to 670 million. The remaining sum
of around 700 million

presumably
industrial
con-

represents i net

By Foreign

1946-1947

(In millions of dollars)
Period
Amount
1946—Jan.-Mar.

269

___________

Apr.-June

46

■

July-Sept,

V
6

Oct.-Dec.

94
295

_

Total, 1946

____

1947- -Jan.-Mar.

705

__

632

___________

Apr.—June
July-Sept.

778

—

683

Oct.-Dec.

763

Total, 1947

2,836

Total, 1946-47

3,541

1948—Jan.-Mar,

X 344

:

1

to

sales

of

the

gold

United

by

can

usually be measured with reasonable ac¬
curacy by
adjusting the reported net
imports

of

gold

not

Billions op dollars

the

into

United

^

f

ivf.
,

was

States, 35% by foreign monetary
authorities, and 4% by the Inter¬
national Monetary Fund.
The
recent
pattern of world
gold transactions has been domi¬
nated
by direct transfers from
foreign central reserves to the
United
States.
Hence, although
data for sales of gold to the United
States are not published by coun¬
tries, the principal foreign sellers
can
be
readily identified from
changes in the gold holdings of
individual foreign countries. The
accompanying table presents data
showing the changing distribution
of foreign gold reserves during
the past two years.
In
1946 France

was
the only
country that sustained a major
loss of gold, and this was laregly
offset by gains on the part of the
United
Kingdom
and
Canada.

Other scattered

losses

States

and

the

In¬

ternational

Monetary Fund, which have
so
far consisted solely of the payment
of the
United States
gold subscription
to
the
Fund
in
February
1947.
Tht
reported import and export data Include
gold consigned to, and shipped by, the
Fund; but the figures for gold under
earmark also include gold owned by the
Fund, so that gold transactions by for¬
eign countries with the Fund, or shifts
of gold by the Fund between its deposi¬
tories in this country and abroad, cancel
out

in

calculation,

this

This

method

deriving

has

followed

been

in

the

figures in .this table, ex¬
special adjustment has been
made in the figures for the last quarter
of 1946 and the first quarter of 1947 to
correct ', an
unusually
large
distortion
arising at that time from lags in the
reported statistics.\*
4"
cept

that

a

.

STATES

NET

SERVICES

EXPORTS

&:

• ,£

v

OF-

which
for

foreign central
225

million

con¬

net loss from

a

of

reserves

dollars

during

some

billions of dollars

QUARTERLY

■

the

There

v;■ ;*.

a sharp acceleration
gold losses early in
gold subscriptions to
the International Monetary Fund
contributing to
the
movement.
was

The

losses

during the year were
widespread; only the
U.S.S.R., as a result of the reten¬

very

tion

of

most of its

domestic

new

production, registered any sub¬
stantial gain. Over 1.2 billion dol¬
lars was lost by the countries of
Continental c Europe J which
are
scheduled to participate in the
European Recovery Program; this
amount included a further large
loss
by France, which brought,
that country's total liquidation of
gold during 1946-47 to more than ;
billion

dollars.

-United

The

Kingdom,

4

billions op dollars

South
Africa,
and
Canada all became losers of gold
in 1947, in contrast to their gains
in the previous year/' accounting
together tat losses.' bf/oyer 800
million dollars. Argentina, which
sustained only a minor loss of
gold in 1946, experienced a major
gold outflow in 1947, none of
which represented a contribution
the

Fund

International ;

Monetary

since

Argentina is not a
member of that institution. Other

-

5

losses in

NET

Latin America, notably
Mexico, Columbia, and Uru¬
guay, partly offset by a relatively
substantial gain on the part of
Cuba, brought total gold losses by
•that
area
during the year to
nearly a billion dollars.

EXPORTS

by

all other means op

financing t

-

countries

of

to

4

the

cerned, resulted in

a

''

6

;

changes, including
Mexico, Sweden, and
were
relatively

by

foreign
1947, with

United

the

?

-

more

billion dollars. Over 60%
then
held
by the United

between

4

3

1947, the

reached

year.

(a)

yet established the parity of their

quarterly

had

than 37

States

EXPORTS ANft 'lMFORTS OF GOODS AND SERVICES

STATES

billions bf dollars

figure

changes in gold under earmark
for foreign account at
the Federal Re¬
serve
Banks; and (b) gold transactions

for

UNITED

GOODS AND

total

foreign

States

held
about

was

and

45% by the foreign monetary au¬

severe

estimated.

Partly

NOTE—Net
countries

the United States

others

by

or

total central gold reserves of the
world amounted to about 36 bil¬

gold to the United States came to
3,540 million dollars, and foreign

is

of

due

degfee of precision can be
claimed.
At the end of 1945, when the

lion dollars, some 55%

there

of

greatly expanding and with Gov¬
ernment aid programs providing
only half of the necessary financ¬
ing (or about the same absolute
amount as in 1946), net sales of
gold to the United States approxi¬
mated in each quarter the entire

foreign^ countries, but

residual figure for which

by

United States net exports. In 1947,

however, vjpth the export surplus

in
a

no

loss of 4.9
billion to account for. Net sales of

programs

two-thirds

this is

that

inflow re¬
during
1946,

Government
covered

dollars

billion

1.8

sumption and accretions to private
hoards

in gold from new production, so

The

moderate

alone

about

as

be seen from the table on the
subject matter, amounted to more

into

amounts

derived

Net Sales of Gold

need—sub¬

of ' the;; foreign ' members
now
formally eligible to use the Fund's

ing a net loss of 3.1 billion within
the space of two years, During
the same period foreign countries

foreign

gold,

converted

be

the end pf 1945, but to Only 12.9
billion by the end of 1947, reflect¬

may

1946-47.

16 billion dollars at

Countries to United States,

gold

countries to the United

years

authorities

monetary

amounted to

Reserves

sales

Net

eign
countries
are
conducted
through official channels and con¬
sequently are reflected in changes
scribed by member countries. To¬ in
the central gold reserves of for¬
tal dollar and gold subscriptions*
eign countries. The gold holdings
so
far
amounting to about 3.4 of foreign
monetary authorities
billion- dollars,
including f 2,^5Q are also affected, however, by new
million in dollars and gold from
gold production, industrial con¬
the United States and about 670
sumption,
and
movements
in
million in gold from other mem¬
private hoards in foreign coun¬
ber countries. ;This sum is, sub¬
tries. In. addition* there was in
stantially smaller than the maxi¬ 1947 the special factor of foreign
mum
theoretical drawing rights
gold subscriptions to the Inter¬
could

foreign

Gold Inflow and Foreign Gold

>;

cor¬

period of

a

oniy

Thus draw¬
ings are expected to be made only
if they can be repaid within a
reasonable period of time. Subject
to these various qualifications, the
amount received in the previous
drawing rights Of member coun¬
calendar year. By the end of the
tries upon the Fund constitute a
year several countries which had
contingent international reserve been
large sellers of gold were ap¬
supplementing their independent
proaching ; exhaustion
of
their
holdings of gold and foreign ex¬
holdings.
As a result, the inflow
change.
slackened considerably in the first

course

UNITED

not automatic.

issued

ing them with opportunity to
of payments

sources

coun¬

try's

gold--may

ance

each

of

amount

adequate safeguards, thus provid¬

rect

drawing rights for dollars will al¬
ways exceed the Fund's ability to
supply that currency. Nonetheless,
the Fund's gold and dollar re¬

These "drawing rights" are sub¬
ject to specified limitations upon

dollars
:

measures
destructive of
international
or
pros¬

to

which

coun¬

■

ing

national

rights

also

Holdings

draw¬

case

upon the Fund will
increase.
Hence aggregate

ing

Thursday, May 6, 1948

4
2

-

In
summary,
the major
changes in the distribution of for¬
eign gold reserves in the past two
calendar years have been the dis¬

dollars drawn from inter-'
national monetary fund

placement of France and Argen¬
-

tina

from

their status as major
holders in the world, and
relatively heavy encroachments
on the reserves of other countries^
including notably Sweden, the
Netherlands, and Mexico. On the
other hand,
the U.S.S.R. added
moderately to its stocks during

3

gold

sales of gold to

united

;

states and drafts on

banking funds in united
states

I

(net)

-

2

the

two-year

period, |while .the

two

other principal gold holders
outside
the
United-.States—-the
United Kingdom and
government aid (net)

—showed

period at

Switzerland

change dvbr ;the
whole. Whereas at; thq

little
a

end of 1945 these three

xdiintjries

had held enly about 35%

1946
*The

0

broken

1947

horizontal line

in

the

third quarter of 1947 indicates net exports
quarter.
In this quarter, the estimated net drafts by foreign cou irtie*
various sources of dollar financing considerably exceeded estimated United
States.net exports.
■'
>
tIncludes private United States donations and investments abroad, disbursements
on
International Bank loans, liquidation of other foreign assets in the United
States, and errors and. omissions.,
:
for

the

of for-*
eign central gold reserves, by- thd
end of 1947 they held, 46% of a
substantially smaller total.

upon

.

1946

1947

Source.—Department of Commerce.

SOURCfi—Based-,.largely

-upon

Department of Commerce data.'
,.1

S.'.lvuf;

of

Foreign

Banking

Funds in United States

Concurrent with the net flow of

foreign gold to the United States,,

;

rr,




Liquidation

i'U'l

.

THE

foreign countries
been

whole have

as a

making steady and substan¬

tial

drafts

which

ances

during

the

banking
States.

dollar

the

upon

they
in

war

funds

bal¬

accumulated
the

in

form

of

United

the

As may be seen in the ac¬

companying chart, official funds
(those held by foreign monetary
authorities) declined by 2.5 billion
dollars, or 58%, during the two
years
1946-47.
The 1 aggregate
amount of private dollar banking
funds, on the other hand, has con¬

to

came

only

about

COMMERCIAL

billion

2.2

dollars in 1946-7
one

billion in

(something
each year).

over

|

for around 30%

accounted

of the

private
was

the other principal losers
China, the United Kingdom

and France.

These four countries

Gold

res.

at the

Increase

\

1945

Country—

end of
1947

1947 a

the

1.577

1,342

88

.

;

—74 /

1,356

749

2

—138

613

482

—101

..,—276

105

421

Congo)

Netherlands
Indies)

v..

':■■./

Norway

;

(and

v

3—5

the

►.Other ERP countries

—9

./.: —3

—251

1,036

At

the

group held
the outside

// 3,753

\

3—716

—1,238

'■

u.s.s.r.3

5,707

2,250

150

175

690

2

—4

United

than

Kingdom,

world's

one-fifth

of

The

same

Dollar

1,966

445

,.,—386

914

—26

471

—26

361

182

Other Continental Europe

International

Other

sterling area5

__

_

Canada

.

>

.

became

China,

on

ready

in

addition

to

to

the

with

The

period.
Switzerland, Cuba
Argentina made the largest
gains in dollar holdings over

to

that

1

ances

Argentina

;'

-

-

1,197

___

Brazil

289

—783

354

Mexico

354

294

I...-—

"—113

—81

100

191

■

;Cuba

/ s.

—125;

35

53

279

—723

631

732

Other Latin America—

ZZc/:/.;22.

2,768

—181

—934

1,633

828

Total

—107

—36

particular
of

pressure

as

re¬

a

of

temporary suspension

drawings

drawings

its credit with

upon

Treasury. Large
also

were

by

.made

France, which has had to resort
to

wide

a

dollar

two

variety of

financing

past

Mexico, although its

years.

drawings

for

sources

during the

relatively

were

small,

was^the only country that

exer-

685
Increase or

Total for countries with net
gains during year

Holdings at

Jpp ■;/';

Area and

273

997

____

v^y \

losses during

year

—1,223

__

"/

Net total

15,955

—226

—2,848

(other
France

1 Data

*

have

Holdings at

1947

End of 1947

been

than

.

-223

-100

69

; 73

Switzerland

Belgium-Luxemburg (and Bel¬
gian Congo)—
Sweden
—£

-36

(and

N.

W.

In-

—83

-92

275

211

FIGURES

—177

:

>

pendencies)

__

__

49

755

Canada and Newfoundland—.

/

—139

/

1

41

21,366

Argentina
-Brazil

—432

•

:

'

—524

36

195

—-

Total----U.-:

5

123

236:"

—69

105

139

25'- //

82

235

:z—4 f ZZz —9

479

114

1,194

.

.

72Z

;

; /

4—182

629

/

area

in

1941

v

.

1943

1945




July

4 Includes

42

] -'.•■> 489 1

—202

—336

48

246

230

>•

—97

r

1,

Zj/J 197

in

'I

1947

-

tions

to

of

the

stocks

throughout,

.

use

of

111

27

each

is

member

subject.
countries

formally eligible
during 1947, only eight

to
ac¬

tually resorted to the Fund's
This

be

re¬

taken

as

evidence of both self-restraint

on

the
of

may

part of foreign members and
on the part of the

vigilance

Fund's Executive Board in
that the Funds

only for

resources

seeing
used

are

consistent with

purposes

the Fund's Articles of Agreement.
It may be added that

during

the first quarter of 1948 total dol¬
lar
drawings
from
the
Fund
amounted

lion,

1

of

to

further

a

which

60

$132 mil¬
million was

taken by the United Kingdom. Al¬

though by now. a few individual
countries,
notably
the
United
Kingdom and France, have made
drawings on the Fund in excess of

represented by their gold
Hence the Fund's

the

still

resources

ex¬

amount

;

United

for

States

exports

effects

upon

monetary factors

obvious

most

example

•

is

in

gold from foreign coun¬
the two years 1946-47.
gold

was

gold certificates to the account

of the Federal Reserve Banks, and
had the effect of expanding by a

of

amount

the

the

Federal

re¬

Reserve

banks. The result

was

to

substantially to the capacity
of the banking system to extend
credit.*

•

net

The

..

]

reduction

in foreign
banking funds in the. United States
over the
two years 1946-47 may
be accounted for entirely by the
decline

of

about

half

billion

a

dollars in deposits held by foreign
central
banks
and governments

7,069

although

1947./,"
the

which

the

were

draw

\

—1,062

with

United

Egypt

billion dol¬

during the year without ex¬
ceeding the quantitative limita¬

add

million

Egypt

'-"'v f ''
dollars

withdrew

from
■

during

1946

//'

for

the

sterling
""

redemption

and

the

by

Federal

Reserve

Banks

the liquidation of about
holdings of

billion in foreign

1.7

short-term United States Govern¬

ment

types

funds

were

Movements

securities.

other

of

foreign

small

and

in

banking
mutually

•

of

of Phillippine
currency
held by the United States armed forces
Philippines.
To this extent the decline in dollar reserves was matched
by a reduction in the foreign liabilities of the Philippines.
,
5 The
regularly reported figure for China at
the end of 1945 has been
adjusted to include official Chinese holdings on that date^ of 186 million dollars
of
United
States
Government
securities
maturing
in slightly more than one
year
and therefore falling outside the strict definition of ^hort-term" hanking
funds.
These holdings were converted into "short-term" United States Govern¬
ment securities during
1946.
'/"

excess

,

___p__

one

lars

mercial

more

the

3 Includes

1939

have drawn about

Banks, the reserves of commercial
banks, and the deposits of com¬

complete information concerning the movement of foreign banking
States, see regular tables on pp. 480-81 of the Bulletin.
2 The resrularly
reported figures for Canada and France at the end <->f 1945
have been adjusted to allow for the fact that on that date certain special funds
were
being held by Canada on behalf of France. This arrangement was terminated
during 1946.
"-v
in

lack of

maining

corresponding

year_—___

Net total

1 For

funds

re¬

upon

agreed exchange rate, the re¬
foreign members could

an

serves

gains during year_____v-^

pif; /

the

newly-acquired

Total for countries with net

during

draw

of

"monetizied" through the issuance

—13

5768 /

losses

that

to

because

410

Total for countries with net
OFFICIAL

countries

ineligible

Fund

mod¬

After allowing

in

30

1,008

'

Rest of worlds __r

^Beginning June 1942, official funds include all short-term funds held with
banks and bankers in'the United States by foreign central banks and govern¬
ments and their agencies, part of which had previously been included in private
funds.,-:
."//•
'
v-

mained

lars

'

China

•

during 1947.
member

the

resources

said to have been

tries

—21

492

v

Philippine Republic...!.—-_

/AND CERTIFICATES

for

the Fund's

upon

be

may
erate

This

.

'

/

V

general, the scale for foreign

t The

399

128

//

-

drawing right

153

V

116 /

.>

(equiva¬

in the United States,

153

46

—1

40

•

77

:

—.

TOTAL

r

In

of

— .

pounds sterling
dollars).

million

1947.

drafts

ary

74

27

.

—217

6 '

/; Other Latin America

OFFICIAL HOLDINGS

6.0

to

in

during' the
Netherlands

the

to

the net purchase of 3.5 billion dol¬

_

___

Mexico
Cuba

OF U. S. TREASURY BILLS

million

1.5

transaction

engaged

sale

has had certain direct expansion¬

.5.-1,507

de¬

(and

non-dollar

Fund

the

The liquidation of foreign gold
and dollar reserves in partial pay¬

14".

f 32

106

1

only
the

was

:

J

•V.'v

Kingdom

28

77

Europe.^..

Union of South Africa-

8

/

year

1461 7

the United States

,—396

Other sterling area3-A.-;-7_

BILLIONS OF OOLLARB

PRIVATE

1 The

which

ment

United

5.0

Total

Effects Upon Monetary Factors in

—61

2,080

Total

Continental

8,8

10.8

;

Latin America:
END OF MONTH

•IlllONS OF DOLLARS

*

Turkey

,

'

—68

__

Other ERP countries—•

Other

3.4

12.5,

initially con¬
tributed by the United States.
,

f/iO-'rJ:

-69

ussr

17.0

,

gold and dollar

-114

f

''dies);;

Norway

22.5

—T—

ceed

'

/

Chile

11.0

22.5

..

Denmark

subscriptions.

43>

-37

-

Netherlands

56.3/

still drawn fewer dollars than the

(and dependencies)__

,

*

46.0

—

—

Belgium—^Mexico

amount

.

.

68.8

Netherlands

240.0

,

their
initial
gold subscriptions,
foreign countries as a whole have

Program
United King¬

dom):

12,881

partly estimated in the case of some countries which do
qpt jssue^full„ reports concerning their gold holdings.
',,
2 Decreases in
1947 include nearly 670 million dollars
of foreign gold con¬
tributions
to
the- International
Monetary Fund, including 210 million by the
United Kingdom, 80 million,':by France, 74 million by Canada, 69 million by the
'Netherlands, and 56 million by Belgium.
*
v
3 All
the data"'for the U.S.S.R are conjectural.
Russian gold reserves at
the
middle
of
1947
were
estimated
very
roughly at 2.5 billion dollars :'n i
recent
report
to
the Senate Committee on Finance by the
National Advisory
Council
(see
"Bulletin" for February
1948, p. 164).
The figures in this table
have been derived from this base, making allowance for estimated new domestic
production and for such exports of gold from the U.S S.R. as have been renorted,
4 The gold reserves of the United Kingdom have been estimated by deducting
from
British
reports
concerning their combined official holdings of gold and
United States dollars, the amount of British official dollar balances as reported
by banks in the United States.
/ ,,
5 Includes Egypt throughout, although Egypt withdrew from the sterling
area
in July 1947.
6 China is known to have
been the principal lo6er of gold reserves in this
group
in 1946-47, as. a result of gold sales in its domestic market.
There are
no published
reports concerning China's central gold holdings, but these holdings
at
the end of 1947 were estimated at 96.5 million dollars in a report submitted
to
the Congress by the Department of State on Feb. 20,
1948, in connection
with the proposal for a Chinese aid program.
' **
\

-Decrease (—)-

End of 1945

Recovery

ropean

—3,121
■

r

Country—

Countries participating in Eu¬

Total for countries with net

>125.0

sources.

the

(In millions of dollars)

'f'

131.3

that

Change in Foreign Banking Funds in the United States, 1946-1947 1
Rest of world 6

—l_

the

when

year,

not

are

France

But

the United States

data

325.0

United Kingdom.
during the last

the

der

ordinarily pub¬
lished
showing the distribution of offi¬
cial and private balances, separately, by
countries, an exception was made in a
report presented to the Senate Commit¬
tee pn Finance by the National Advisory
Council on Dec. 18, 1947.
A table con¬
tained in that report shows the distribu¬
tion
of
these
balances
for
all
foreign
countries holding significant amounts as
of
June
39, 1947
(see
"Bu.letin"
for
February 1948, p. 164).

Latin. America;

of

sult

together, France and Can-

1 While

the

-

446

294

.

were

United Kingdom found itself un¬

a

Considering gold and dollar bal¬

762

lists

The principal drafts, amounting
more than half the total, were

months

partial offset
heavy loss of gold.

very

coun¬

drawings
Fund

occurred

a

member

the

upon

by

constituted

exchange
table

made

ances

Kingdom.

during

during the
remaining ten months of the year.

gold during

in 1947

United

cised its maximum

1947,
became

following

dollar

made

the

1,

it

in

engage

transactions

tries.

which

upon

Drawn

Period

Monetary

March

on

These

2,025

—249

substantially

a

operating finan¬

an

Amount

12-Month '

central

TheM International
Fund

true

was

two-year period 1946-47; the
two
countries
also
gained
some gold, but in the case of Ar¬
gentina the increase in dollar bal¬

688

—177

of

Monetary Fund

the

to

United Kingdom4
Union of South Africa—___—

this

1945

Drawings Upon

date

and

the

in Any

Country—

of

the

and

Drawing
Right

lent

institution

net

2,575
Z<

to¬
net

one-quarter

over

first

Total

of

end

cial

and

782

/■;7

Z,/100

-

72

'

riod.

.

Philippines.

ances

255

—19

Kingdom

foreign losses of gold and dollar
balances during the two-year pe¬

heavy liquidation of dol¬

Brazil

this

'*$1

—161

United

and
Switzerland, accounted
gether for about half of the

substantial amounts of dollar bal¬

W.

N.

the

than

the other
hand, along with Sweden, Nor¬
way, and the Netherlands, found
it necessary to liquidate
relatively

570

—319

/

other

avoiding net drafts on their
gold holdings during the periocl as
a
whole, did find it necessary to

France

—C88

participate in the
Recovery
Program,

-

Maximum

to

European

individual

(In millions of dollars)

over

smaller total.

and

lar balances.

...

scheduled

foreign bank¬

on

International

on

Monetary Fund
1

billion each. The countries

a

while

'

.

drafts

Doliar Drawings

billion,

a

ada

of

--

_______

the

three-quarters of

and Sweden and China with

half

greatly affect

any

in

gold
reserves and dollar banking funds,
but by the end of 1947 it held less

Belgium (and Belgian—
Sweden

of

losers

ing funds are considered in con¬
junction with the changes in gold
reserves in 1946-47, the main new
point which emerges is that Can¬

r

——;

not

.

resort to

Switzerland

,v

position

If

loss of

during 1946-47
throughout the world

did

heaviest

'

The increase in

country.i

Eu-

Program
(other than United Kingdom):
'//;
f
■
France (and dependencies)

•

hence

the

were

1946-47, accounting for 1.3 billion
and 1.0 billion dollars, respective¬
ly.
Argentina followed with a

balances

diffused

and

ropean Recovery

.

(

res.

at the

or

decrease (—)•

end of

in

official balances.

were

Gold

participating

ada

,

losses;

(In millions of dollars)

Area and

tually offsetting.
At the same
time, many of the smaller changes
were relatively
very important to

of the
countries in the the countries concerned, e.g. the
liquidated dollar balances losses by Sweden, the Netherlands
during the two years, but these and Norway and the gain by Cuba.
losses were partly offset by gains It may be noted that the changes
on
shown in the table are
the part of a few countries.
rougnly
As the table reveals Canada alone representative of movements in

Change in Foreign Central Gold Reserves, 1946-1947 1

Countries

CHRONICLE

Most

moderate

a

FINANCIAL

world

accounted for the entire net loss;
expansion, so
that the net loss in total foreign smaller gains and losses by other
countries
were
mubanking funds in the United States individual

tinued

&

offsetting.
*

A

with

';

decline
the

in

foreign

Federal

has the same

deposits

Reserve

Banks

expansionary effects

the commercial banking sys-;
tern as an inflow of gold which

upon

•

-

(Continued on page 42)

42

COMMERCIAL

THE

(2014)

FINANCIAL CHRONICLE

&

ger on something tangible for
'attributed to

Markets

or

it

ever

Walter Whyte

is,

cannot be

it is present

Foreign Gold and gl
dohar Holdings

ano

shrugged away.

:

(Continued

that

means

reaction

a

perhaps more than techni¬
proportions is in the mak¬
Reaction
signs continue to
ing, though there is nothing
gather.
Raise stops and be to show when it will occur.
prepared to buy stocks back But unless other things
at lower levels.

Seven

element,

when

tion

than

given here, seemed silly
not downright dangerous.
I remember correctly this

if

column

almost

was

alone

last

will

though

advice

was

If

liquidation

the

It

equal
multiple

an
1

run

may
think.

it

until

1879

Because

used

As in the

domestic
bank

upon

holders,

the

effect
deposits

and

reserve

in

of

this

placed

was

silver

depends

the

(some 14

a

merer,

country,

but

the

upon

dollars

directly:

this

coined.

Such

coinage

during

the

country.
"

gold coin

.

.

.

or

.

free coinf
be of great

.

.

may

.

facilitate the

may

efficient

operation
of
a
gold
standard, but neither is necessary
to the existence of a gold standard.

stopped

crisis

acknowledged
gold standard
To quote him

convenience and

be

was

.

the
the

age of gold

of

could

financial

1893.

%

limit

a

number

which

of
on

one

authorities
in

influ-

political

upon
whether the net
purchasers in the market are the

".

of

banks, or other holders. In
general, foreign sales during the
past two years have probably

feated decisively at the presiden¬
tial election in
1896, and the na¬

redeemability in gold (or
equivalent) of paper money
and of fiduciary coins
is 0
privilege in most successful gold

tion

standard

necessitated

that the

means

(b) nor (c) are essemgold standard, however,
according to Dr. Edwin W. Kern-

tial to

wielded by the western silver
interests, silver continued to be

of sales

case

trade.

Neither

States

ence

by

Bringing this all down to
essentials

not

was

^

^

deficits in the nation's inter¬

gold.2

United

standard

Reserve Banks,

commer¬

cial

in

gold standard.

United

years after the termination of the
Civil War) that paper
money was
made freely convertible into

foreign

short-term

of

of

case

the

Federal

it

we

further

a

on a

in

reserves

clear-cut.

long,
deeper

very

national

Situation

States Government securities, the
results to be anticipated are less

ture, I don't think the reac¬

or

In

and

tries also went

expansion of bank credit becomes
possible.

change in the immediate fu¬

eight weeks ago I
suggested buying stocks. The
time

amount," and

cal

the gbld, most of these other coun-

by the Treas¬

Commercial bank
and deposits increase by

of

By WALTER WHYTE;

(Continued from page 22):

;

ury.

Change in Motiefary Standard

;

from page 41)

becomes monetized

This

6, 1048

H. Y/ Ckamber at Commerce fecefflrcends No

explanation. It could be
potential news,
something else. But what

this

Tomorrow's

l^nrsday, May

most occasions ad¬

on

The silver groups were de¬

definitely went
with

of

.

.

full gold

on a

enactment

critical

.

its

is

the

.

..

systems.

This privilege
desirable, but it is not

highly

points in the stocks ditional purchases by the Federal Gold Standard Act of 1900.
forecasting an advance. The
necessary.
"Ail
rest is history.
the
above
recommended, bought and Reserve Banks, resulting in fur¬
mentioned
ther expansion of the credit base. Nations GO Off Gold Standard qualities are useful devices for
held by you, grow more im¬
During World War I
Finally, dollar drawings by for¬
maintaining the gold standard, but
portant. In some cases the
Soon after World War I started not
;
Two-three weeks ago I be¬
one
of
them
is
eign countries upon the Interna¬
absolutely
critical levels will be raised. tional
in 1914 all of the
Monetary Fund have hith¬
belligerents, necessary.
Furthermore, a cur¬
gan pulling in my horns. I
But in practically all stocks, erto been financed by the Fund with the exception -of England, rency system might
conceivably
began warning that reactions if the
went off the gold standard.
Eng- have any or even all Of them and
stops are broken, they through the redemption of de¬
were indicated but doubted
mand notes of the United States land still permitted conversion of
are to be
j still not be a true gold standard,
re-bought at lower
Treasury, in wbich the bulk of its paper money into gold. Export of A good illustration
they would last long. Inten¬
is found
prices. In fact n the antici¬ dollar funds are invested. The gold, however, although theoreti- in
the Union of South Africa
sity of the expected break,
pated reaction is witnessed I Treasury has therefore had cor¬ eally still permitted, was so ob¬ in 1919 and 1920."4
however, would be severe.
respondingly less funds available structed by difficulties of war¬
/ According
to Dr. Kemmefe^,
In the interim various other may add to the list but only to retire marketable
debt, par¬ time transportation, and so much maintenance of the currency
a
at specific prices.
ticularity that held by the Reserve official pressure was exerted to par with gold internationally iB
groups began working their
Banks, with the result that com¬ discourage it, that for all practical what he calls "the 'constituting
way up. We saw the oils and
Half holdings should be mercial bank reserves and de¬ purposes ^England was off the quality' of a gold standard." 5
"
the rails move up. It was no¬
(2) Under the - gold bullion
sold in Anaconda if it breaks posits have tended to remain gold standard.;; Af t£r the war was
ticeable, however, that dur¬
over
...

,

.

.

.

...

v

35

and

rebought at 32 ^ or
Stock was originally
the old groups which started better.
the rise, began fading with at bought at 321/&.
Avco stop should be raised
least one airplane stock vio¬
ing the rise of

new

groups,

where

5V2

to

lating its critical level.

sold.

half

is

1

Sometimes

ing periods

rest¬

main

include minor

can

But

setbacks.

these

other stocks in the list

in

these setbacks

most

as

is.

More next

Thursday.

cases

—Walter

limited to

are

certain levels and the

[The

resting

views

article do

period isn't protracted.

time

re¬

nt)t

in

this

necessarily

at any

with

coincide

of

those

trie

Chronicle.

The

pattern for

a

bull

They are presented
those of the author only.]

mar¬

ket isn't fixed for any period.
It fluctuates but still
keeps

If

case.

and

when

the

United States subscription (some¬

thing

$2

over

billion),

it

The

could

the

as

United

entered the
drew the

drawings by its
only by selling gold to
the United States.
Hence in the

the

future, the Fund may bfecome the
source of ■, an additional
gold in¬
flow into this country.

Aside

to

most

from

as

it

money

in 1917, but with¬

the

United

thO other

of

of

countries

absorbing

or

Were

(3) The gold exchange standard
(as employed by Czarist Russia

a

at

case

the

countries in which

originating in

pressures

monetary

What Kind of Stalndafd
is the U. S. Wn NOW?

The immedia'te

war

of

All Countries Off Gold Again by

sources.

it

whether

one

decide

to
United

the

operated

was

(2)

financial

problem is

attempting

<1)

States

ought
gold standard as

to Return to the

1937

international

cur¬

gold is freely

obtainable.

whether

inflationary

exchange of local-

for drafts payable in other

rency

gold

of the

recently by India) in¬

volves free

bank deposits and reserves and to. in 1914.3

curbing.

more

modified form }of

outbreak

early l900's,

the Philippines from 1905 to 1910,
and

States,

the

presents
paper
other currency of the

or

in the late 1800's and

countries 'ex¬

On

is sold at a
tvho de¬

anyone

and

required value.

such standard than had been the

The

prior to 1933, and

there

should

be

an

originating with the :insol¬ immediate return to such a starndj
ard.
vency
of the
Austrian
Credit
Anstalt in May ; 1931 and. Eng¬
There is considerabie difference
crisis

Morgan Stanley Group Offers $100,008,000

itself in bounds.

soon

price to

mands * it

perienced serious difficulty in re¬
turning to the gold standard. By
1927, however, a greater number

monetary

directed

policies

-as

fixed "Weight)

a

stated

prohibition shortly after
over
(in June 1919).

■

and

of

prohibited

was

standard

fiscal

(as it was practiced in
England from 1925 to 1931, for ex¬
ample) gold bullion (gold in bars

Back oh Gold by
1928

Altogether it is clear that the
liquidation of gold and dollar re¬
by foreign countries has
had important effects upon mone¬
tary factors in the United States,
of

war

war

standard

ifrbst Countries

served

tiveness

States

export of gold

meet further dollar

members

ft has served to redifce the 'effec^

Whyte

expressed

the

Fund exhausts the supply of dol¬
lars which it derived from the

^

Raise stop in half position
During bull market cycles
in Bethlehem to 32.
Raise
groups after groups advance.
But while one moves up the stop Douglas to 62. Raise &tbp
in Lockheed to 20.
Buy it
other doesn't decline as much
again at 15. Rest of the prices
as it
goes into a resting pe¬
in

riod.

been

be

to

.

(in 1919) export of gold was
prohibited in. England, and the
gold standard thus officially w&s
suspended,

higher than might otherwise have

■

.

Southwestern Bell
But underneath it all there

is

The largest

from

{which

means

stocks)

that

the

the

tape

action

indicates

financing operation by

of

3 Vs %
more

debentures due

debentures

1983.

priced

were

strength. In the past week or and accrued
so, this feeling has been slow¬ about 3.01 %
offering was
ly fading.

interest

The,<?

to

ties and

Exchange Commission.
Shortly after the offering it

was

Illinois Central R. R.

sale of the

2l/i% Equipment Trust

will

r

October

To

yield

1948-April

be

1956

1.35%-2.65%

construction

war,

Exchange

Sith Francisco Stock

COrtlandt

For 1947

and,

-to

the

of

the

com¬

date,

expenditures for

construction

Principal Offices

were

$110,000,000

Teletype NY 1-928
to

history

in

it

and

Pew

approximately
$32,000,000

for

Bell

on

high level

Texas and
At

2,739,153

a

of

telephones

r

Telephone

service.

V

■

-c

-

.

—

—

Santa

Oakland

—

the

Barbara

Sacramento




first

prospectus

Fresfto

quarter
states

of
it

that expenditures for
)

i.'-

,v

1948.
is

new
.i'X

'

The

expected
facili-

operated in such
nation

McDermott
Peter
Wall

P.

to

Admit

McDermott

Street,.

New

members bf the

&

Co.,

\
44

4

Exchange,
McDermott

will
to

i

partnership

ft.
on

W.

Kemmerer,
1944,

«p.

Cold

86.

"

and
-

v

'

standard
of

the

is

characteristic

the

gold

exports

systematic

unit

currency

value

in

of

terms

When

may

;

.

.

to

V

of

'into

discharge this
licensing of

free

preserve

the

gold

the

gold standard.
.
i.
j
a legal
standpoint the gold
.

"Thus 'from

of the dollar is by rio nj^ns *•
firmly established as was required by the
gold standard traditibns of the nineteenth
century.
But the difference is not so
material
"

!

as

at

first

sight seejns.

"The "gold value of the "dollar
has
been
fixed, "and

i
in

world

a!

gold

has been, established and main¬
by administrative action, in spite

standard
tained

.

export

parity

.r

-

a

g*old in irlterthre

convertibility
a

the

the

lish

of

the

narrow
res-frictions
imposed ifh
dealings in gfold and the holding of go)d
home." Hawtrey, pp. 62, 168, 169,
,t22i;
—

at

..

r-'VL.

of

mainte¬

close

though -only &t the disc'fetion
licensing authority.
<rr
:
"The
Gold
Reserve
Act,
though
it
confirmed the previous legislation
-against
holding gold and against transactions fb
gold, nevertheless did in effect reestab¬

v/iv; V

....

pp.

I.

standard,

Kemmerer, source cited above, -p. 111.
According to him 69 doilnfries had Ijeen
on
the gold standard in 1914.

■'.i'-'Z

above,

13i.

markets.

of

3

;■

p.

is
prohibited,
gold at home, ceases
function.
"Even then

the

:.!

[in it knd

ci'ted

source

markets

Standard,

that the

136.

■gbld

at

2 EdWin

way

lack of integrity

or

national

any time, and (d) gold
unrestrictedly into and out

Gold

a

practical purposes

confidence

constant

York- City, fof the country to balance surpluses
John

off

a

i,6 "The .essential

gold

New York Stock

admit

public

5'Kemmerer,

or currency converted Into

hioVed

all

on

Kefnmerer,

135,

was

'gold

for

the integrity

effect in the United States prior

'

been

full gold standard.6
This authority emphasizes
strongly
that any monetary system reflects

the

mortey

technically has

standard, the system has been

has been

to 1'933, and it is the standard to
Giving effect to this financing, which H. R. 503'1
proposes that
the company will have outstandt
the
nation
return.
Under
the
ing funded debt of $175,000,000 "standard
(a) the dollar bore a
and 2,600,000 shares of common
definite value in terms of gold,
stock (par value $100 per share),
(b) the government Would coin
the latter being owned by Amer¬
unlimited quantities of gold for
ican Telephone and Telegraph Co.
any citizen at a fixed charge, (c)
any; citizen
could get his paper

,

Jftancisco

■■wtjr
:

the

are

O) The gold-coin standard
in

Act

nation

United

nance

~

on

the Gold Re¬

of
1934.
A
leading
authority
On
the
gold
^tandatd points but that Miile "the

off

Tpere

of

,

of

British

three generally r^cognlzed types of gold 'standard:
(1) the gold-coin or gold-specie
standard, >(2)
the gold bullibn
standard, hnd (3) the Igold ex¬
change standard.

in

*

The

to the
type
nMion has been

ra's

this

enactment

serve

Thfree ^fyjpes of Gold Standard

1947. it had

Service,
more than half being located
in
the
15
exchange
areas
haying
100,000 or more population.
The
company
also
supplies
certain
other communication services, in¬
cluding teletypewriter exchange

standard.

opinion

since

gold after the banking
crisis of 1933.
France managed
to stay on gold until 1936, but by
1937 Belgium was the only coun¬
try istill on the standard.

small section of Illi¬

the end

the

went

phone service in Arkansas, Kan¬
sas, Missouri, Oklahoma and
nois.

standard

large

a

part of the world's following suit.
this crisis only the United
States, France, Switzerland, Hol¬
land and Belgium still riemairied

Co. furnishes local and toll tele¬

rowings from the parent cdmpahy.

New York 5, N. Y.

7-1150

Private Wifes

the end

at

largest

pro¬

has been financed in part by bor¬

(Associate)

Exchange
Chicago Board of Trade

14 Wall Street

the

This

program.

started
is

pany's

Members
New 'York Stock
Exchange
Curb

debentures, $95,000,000
by the company to

used

from American
Telegraph
Co.,
parent organization and the bal¬
ance will be
applied toward the
requirements of the company's
gram,

Ybrk

the

advances
Telephone
&

Schwabacher & Co.
New

from

repay

DuO each October 1, arid
April 1,

from

announced that the issue had

Southwestern

a

of

September 1931 led to

After

———

during the next few years.

maturity.
made immediately

been completely sold.
Of the net proceeds

—:

yield
The

to

in competitive bid¬
ding and clearance by the Securi¬

It is hard to put one's fin-

•

—

"ties will continue at

the group

to

a

102 V2

at

following the award of the issue

Certificates

land's going off the gold standard
in

member of the Bell Tele¬
phone System so far this year was undertaken May 4 with the public
offering by an investment banking group headed by Morgan Stanley
& Co. of a new issue of $100,000,000 Southwestern Bell
Telephone Co.

feeling of confidence

a

emanating

Tetephonep Debentures

•

WV-""
;.

..

,,

Hi

;

Volume

*

167

Number 4696
m

of

THE

2

J

in

he

the

terms

dollar

7

abroad.8

Dr.

i

present standard

in

.

as

"new

of

standard

type

the

of
"-;-v " -1

and that

' v;

critics of the
monetary system

,

maintains

ft

the

r

gold bullion standard of

i
f,

.

nation

-/>! •'

the

standpoint of the

cepted rules governing

^vstandard

the

not such

Jr ^ihe

ac-

limits.

system

modified

<

standard

a

.

.

.

gold

standard,

it

is

V

Present

The

-

;

should be enacted.

'

.

present

No.

2072,

Jan.

31,

1934,

1730.

monetary

Eastman Dillon Offers

Sunray Oil Preferred 7
Eastman, Dillon & Co. and

-

,

problems

asso¬

ible

course

shaTe.

stock

is
is

and

par value of $25

a

The Series B preferred

priced

at $25

convertible

share,

per

into

common

stock at $14,625 per share.
Proceeds

from

Series

new

added

B

the

sale

preferred

of

the

•-''X A number of practical consid;

v

i,
♦

erations
that
have
been
cited
above question the
feasibility and
the practicability of the nation's

returning to the gold-coin standard

at

this

evidence

bell-Swinton, an Englishman, back
in 1913, and he
pretty wbll pro¬

time.

The

available

the

posed

system

that

have

we

today. He proposed a form of a
pickup tube similar to an icono¬
scope, proposed
with
a
beam

scanning that tube
of

electrons

and

picking the charges from the face
of the tube
corresponding to the
lights and darks

of the

sending that signal
then

and

picture and

over

using

wire

a

another

ray tube at the receiver
reform the picture; and then

to

after

the

will

be

company's

general

these early inventions so that you
cbuld do something with them. Up
until that time

had

you

means

of amplification of
and you could not

television

a

Well,

from

system.

1913

lot

a

of

•

;

•

until

1925,
thought given

*

"

simultaneously, C. Francis
Jenkins, down in Washington, and
Baird

in

England succeeded in
ransmitting television pictures for
the first time. They went back to
the Nipkow system of 1883, which
mechanical scanning device.
1925 to about 1931,

From about
art did
cal

people
a

interested in this

lot of work

mechani¬

on

scanning systems. They found

that

it

corporation's refining
portation facilities.

mechanical

inertia,

synchronization

that

time

unanimously approved

*

its stand.1,2

Pending changed

international

conditions

holding forth more faVorable prospects of a successful

■

:

return

to

the

gold-coin

standard

^ and continuance
'

thereon, the following step might be taken -to
"put the nation's house in order"
for

eventual

an

return

to

such

a

Santa Maria, Calif. Currently pro¬

ducing properties are located in
Arkansas, California, Illinois,
Kansas, Louisiana, New Mexico,

bulky,

was

that

was

that

so

was

it

very

the
very

difficult.
Around 1931, a number of

com¬

panies and

people decided to go
Campbell-Swinton
idea of 1913 and figured that
you

of

standard.

-

-

-

t

,

-

-

company's

crude

1947

oil

and

amounted

net

processed

pany

4,903,789

of crude oil in its

own

in

bar¬
com¬

barrels

refineries.

According to an independent
by Raymond F. Kravis,
petroleum engineer, the company
•

report

y
♦

;

had

Jan.

on

to fix the weight of the gold dol-

reserves

lar at not less than 50%

1, 1948, net proved
153,081,910 barrels of

crude

nor

more

than 60% of its previous weight13

of

oil, 17.978,497 barrels of
condensate, 4,854.300 barrels of
gasoline and other liquid
products, and 637,177,000 M.C.F.
natural

,

;

7 "It

the

real

"

4

ory,

as

human
»

should

credit

as

never

he

forgotten

that

subject-matter of monetary theof all branches of economics, is
behavior.
Economic forces, such

restriction,

work

through

the

human mind.

,

*

"Experience
shown .
,

in

many

countries

has

that it is only too easy
to pass legislation to
suspend or amend
a
gold standard law if the monetary au.

of natural gas.

The

■ ■-

corporation

month

to

products
Duncan

place

pipeline

in

plans t his
operation a

connecting

its

-

(Government and Central Bank)
choose.\If there is an obstacle in the

so

%

cohfidence", is discussed more fully later
this'study, y"y yy

In

9
«

f

Kemmerer,

pp.

121,

'

131.

"

•

V 10

Walter E. Spahr, "Should the United
States
Adopt
a
Gold-Coin
Mon«»*ary
Standard?"
Economists' National Com¬
mittee on Monetary Policy,' Publication
No. 226, Dec. 1, 1947, p. .4..
'
_

11 A.
■ment

„

.

W. Crawford, Monetary Mana?e"the
New
Deal, American

Under

Council

on

Public Affairs,

1940,

p.

84.

12 See

Appendix B. Kemmerer predicts,
"In the gold standard of th"
; (Future
the gold-bullion
standard
will
probably play an important role."
y.

i

p.

176,

.

,

>13 31

U.

S.

Code, 821.

"

^




^

ent

100-octane aviation gaso¬

a

American

which

Independent

Oil

Co.

organized to explore
oil possibilities in the Middle East,
was

particularly in the neutral
Kuwait

on

the Persian

zone

of

Gulf.:

Giving effect to the present of¬
fering, the company will have
outstanding a funded debt of $32,325,000; 1,018,957 shares of 4y4%
preferred stock, Series A; 800,000

television sys¬
not mechanical but

was

electronic

a

television

Use of
The

use

of

system.

Standards

standards

/

v

•

7

has been

interesting. Back in 1931,

we were

using only 48 lines to the pictures.
Over the years, we have increased
that from 48 to

60, to 120, to 240,

to 343, to 441 and now it is 525
lines which compose the picture.
Of course, these changes neces¬

sitated
eral

hearings before the Fed¬
Communications Commission

and

before

standardized

turally,
the

system

a

for

the

an agreement

manufacturers,

and

the

could

public,

government
that

•

be

na¬

amongst all
broadcasters

was

as

to

a

satisfactory,

that would continue for

use

for

a

long time and that would give a
satisfactory picture to the public
was

line refinery with its crude oil re¬

thorities

receivers

lot of problems

a

to solve.

Obviously, in order to get
a
television system in operation,
somebody had to go out and put
up

transmitters and spend

money

necessary.

The

actual

standardization

of

this system occurred in July 1941.
Of course, we all know that six
months later we had Pearl Harbor

television

and

was

taken out of the

pretty well
picture; so the

manufacturers who had started to
make receivers but had just about

we

the

had

revised again and

of color
picture, which
long time tended to hold
back the development of the in¬
dustry.
'■•
-;'A, -V' V'
thrown

for

into

problem

the

the

receiver

early

telecasters, or broadcasters
could hardly expect to make any
money
until
enough
receivers
went into the hands of the

the

stations

that

is

for

public

using

advertising pur¬
some
figures I

have

I

poses.

being made
Receivers

receivers.

on

in

Existence

At the end of 1946, there were
6,000 receivers in this country and

the

at

end

of

1947

there

were

only

possible that the

television programs,
by and large,
could stand a lot of
improvement.

Several programs

on the Hooper
been running over 46
a
Hooper of 46, whereas your aver¬
age
top
radio
programs
have

have

—

seldom gone over 30. This

that when

means

television

set

a

in

simply

person has

his

home

a

is

it

utilized more often than the radio
and from the

indications we have
had, people who have had sets in
homes

340,000 \ receivers

located

are

of

pretty-well continues for a long
period of time. The big thing that
we
are
worrying about today in
television
these

is

how

to

distribute

throughout

programs

United States.

1

the

^

V

Television Hookups
^
It is quite obvious that in order
to put the kind of
programs on we
to

put on, it is

neces¬

distribute those to a con¬
siderable number of stations and
hence spread the
cost, as is done
in radio
broadcasting. At the
sary to

pres¬

re¬

ton; so far, there is no station at
Boston, but the first Boston sta¬

in

:

number

a

this

in

However, about 75% of the
ceivers

-

over

indicate that it is not just
novelty
proposition,
that
it

ent time, we do have
cable con¬
nections from Washington to New
York and from New York to Bos¬

200,000 jreceivers in this country,
and as-of laslxFriday, there were

the

metropolitan New York area, so
that this is the most active section,

tion should

be

able to

the air

on

month from

a

and

now

within

we'll

be

distribute in

Washington,
Baltimore,
so far as programs are
Philadelphia,
New
concerned,
York, Schenectady and Richmond,
and as far as the interests of the
advertisers
are
concerned;- The Virginia, within about a month.
point is that
ceivers

large

out

have enough re¬
and we have s
audience. It is not

we

now,

enough

what

would

hope to have six
months from now, or what we
hope to have five years from now;
but
it
is
a
sufficiently
large
we

audience

to

interest

consider¬

a

able number of advertisers to put
their programs on the television

statipns, and

we have had some
interesting results on Hoop¬
er surveys that have
been made,
over the past three months.
very

Television

and

Radio

One very

interesting fact is the
a person purchases
receiver, he uses his
radio very little, and in the sur¬
veys ; that
have been made so

fact that when
television

a

far,

where

hundred

they

people

television set and

have

called

a

that had both a
a radio set, they

looking at the television

are

which of
high percentage,

grams,

the

hundred

that

way

cut

into

do

not

the

a

very

and five out of

still listening to
simply shows you
the television will

radio business

think

question

is

in

that

the

there

and

I

Technically,

there

any

the

broadcasting people now that this
new medium is
going to gradually
replace or at least put our present
broadcasting system in a supple¬
mentary role to television.
teresting people to manufacture
receivers, and that has been pretty
fact that

care

as

of. In spite of the

of this date

no

broad¬

casting
company,
no
television
broadcasting station, is, making
money, it looks good enough so
that at the present time some 70
television stations are being con¬
structed

and

approximately

215

Commission. This will

mean

that

there will be stations in 96 of the

larger cities in the country.
Television Advertisers

cable

we

had
and

31
in

advertisers

1947,

we

on

had

great

problem

in

doing it, by

co-axial

a

still better, as far as I

or

am

concerned, with a micro-wave re¬
lay. However, the cost so far of
either

these

of

chased

from

facilities

the

A.

as

pur¬

and

T.

T.,
high. In other words, we
probably establish networks

too

are

can

in the East

here, where

we

have

a

lot of cities close together, but we
feel that it is just out of the
ques¬
tion to set up a national network
with the present rates.

Just to give you
what

those

idea about

an

rates

amount

to,, it
$35.00 per mile per
month, and then there are certain
charges for station connections
about

and

whatnot

cable

and

between

somewhere
of

in

$225,000
also

you

the

cost

New

Washington/ both

York

of

a

and

will run
neighborhood
year.
Now,
if
ways,

the
a

feed

stations

in

Phila¬

delphia and Baltimore, of course,
divide

you, can

that

into

four

probably line it
up all right, but when you con¬
sider tying in Los Angeles to New
York, it means more than several
you

can

million dollars
in

a

year

to tie those

and when you get west of the

Mississippi the cities
between.

are

few and

However,

I think
and means of
reducing the cost of these micro¬
wave relays.
The Western Union
that there

are

ways

Company has

come

prettv

good

so-called

idea

up

and

reversible

with

that

one

is the

relay, which

cuts the amount of equipment in
It does take you 30 seconds

half.

to reverse the

circuit, but

usually

in

work

you can

local

plug or
something, and the saving in cost
makes

a

it well worthwhile.

Another

be done to
present
time the picture signals are sent
over the microwave relay and not
the sound signal.
I believe there
reduce

are

The increase in the number of
advertisers is also interesting. In

any

methods of

far

As I say, it is a problem of in¬

well taken

isn't

transmitting pictures from one
city to another. There are simple

and

is

of

minds

cables will be available for
that section of the
country within
about
that
time.

pro¬

are

the radio. That
the

course

The

runs

find this, that 60 out of 100 people

1946,

seems

was

the television
programs have been

would like

340,000

television

hardly

question

on

running considerably higher than
the Hooper ratings
normally run
in radio, in spite of the
fact that

a

manufacturers to make receivers,
to put them out. Obviously, the

settled just about a year ago, and

color

in

increase

years

interest

to

a

The

viery definite

ings that have been obtained

order

going when the war came applications are in for new sta¬
along had to discontinue their ef¬ tions, which are awaiting action
forts. At the end of the war, the
from the Federal Communications
were

a

advertising. The Hooper rat¬

their

got

standards

the

for shows. You had to do that in

it

:

be¬

not

a

We have had

$1

value. ' :

would

.

shares of 4%% Series B preferred,
and 4,904,647 shares of common,
par

assurance

;

standard

y'

finery in Allen, Okla.
In March
crude oil pipeline, was opened
way
of a change, it is to be found not
connecting the Beckett refinery
A in the statute book but in the minds ot
the
authorities
or
in
public
opinion." to the Velma, Okla., field.
Hawtrey, pp. 120,
The
7y/7
corporation
owns ( 5,000
8
Hawtrey, pp. 177, 178. This ''oVershares < of capital
stock in the
i

that

the

completely electronic, with
no
moving parts in the system,
and from 1931, of course, we have
had the development of our pres¬

production

condensates

to

12,435,253
During the year the

rels.

•

P
tinder the Gold Reserve Act of
j 1934 the President is authorized

tem

to

Oklahoma and Texas.
The

receivers

transmitting

the

overnight and a
receiver would
be able to expect to use it just as
long as the set would hold to¬
gether.

was

the

the

of

with

buying

person

In 1925,

the company's own refineries in
Allen and Duncan, Okla., and in

more

the

obsolete

come

about \

Currency in February 1935 went
7 on record as preferring the bullion
standard, and the Chamber at

-

a

sale

that the

of

sale

countr;

had to work out

«

gold bullion standard would be

the

and

demonstrated.

crude oil is sold to other compan¬
ies and the balance is refined in

a

-

the

equipment,

never

was

practicable move. In fact,
Committee on Finance and

to

in

Actually, during that

it

back

return

show

time

was costly and it had

operating income of the
company for 1947 was $38,117,794
and net income was $10,008,611.

Were

to television.

noisy and it

trans¬

time

satis¬

no

weak currents

The company produces both crude
oil and natural gas.
Part of the

indicates that

43

210; and, aS of last Friday, there
237, so that there again we

in¬

time, but the standards
finally set and the question

of

would like to give on the progress

lot of

a

proceeds also may be used for ex¬
pansion and improvement of the

and

m,ade

sort

a

ment vacuum tube made

various

Grofes

were

been

such

to interest the advertisers in

was a

acquisition of interests in
and development of prospective
and proven oil and gas lands. The

terval

has
in

occur

1913, or right
time, the invention by
Doctor DeForest, of the three ele¬
course,

tion,

standard ios* the time being.

!

vante

It is expected that among
the purposes for which the funds
will be used will be the explora¬

monetary

.

to

funds.

is for the United States

-immediate Steps

came along in 1897.
jump from there, and the
important scientific adwas the proposal of Canvo-

can

there was

per

circumstances, the most feas-

to remain on its present

'

You

next most

build

>

;

tube that

ray

factory

Oil

•

the

the invention of the cathode

was

Series JB with

y

,,

new

long history wnici.

very

Corp. 41/2% cumula¬
tive convertible preferred stock,

te-

which

other

is behind the idea. Another im¬
portant contribution to television

Sunray

With the European
Recovery
Program (Marshall Plan) getting
y
underway, and with the Internar
tional Monetary Fund in opera'(*■; tion, 7 but stilly

-

usually a

ciates publicly offered on May 5 a
new
issue of
800,000 shares of

y

main to be worked out, the present
i
appears to be a most inopportune
time to
take precipitate action
i
which might complicate further
an
already complicated interna;1 tional financial situation. Under

of

about that

of

of

Stat.

lot

a

that

progress

Should

ideas> when you go back and look of color standards was thrown
at them, you find but that
every¬ out, just about a year ago, ahd
body thinks it is new, but there is we were able to proceed at that

fcireuit

•

to

cathode

14 Proc.
48

Similar

of

nation's

number

Enactment of

legislation is urged

in the resolutions above.

lars, which In itself shows no lack
confidence
in
the 7. present
"standard. 7..
£
1

Z

not

To remove all such doubts,

such corrective

j.-standard is serving the purpose
Mthe vmoment. '7 The' other ha;i
tioris in the world are seeking dol•

the

gold cannot be changed further
except by act of the Congress, ap¬
propriate
corrective
legislation

in

Inadvisability of Change at

.

Secretary of
delegation, do

of

a

reality a managed currency systern only loosely linked to gold." 11

;

the

and to make certain"that the value

while

.

standard may be called

new

and

weight of the
dollar within the two prescribed

provided by the Gold Reserve Act
was

to whether the Presi¬

as

Still have the power to make fur¬
ther changes in the

full gold

a

monetary

agreements

of

treasury by

restricted type."
•
•
Another source points out that
the

monetary

absence

dent,

highly

a

con¬

revoked by

making provision for the

for doubt

"international

an

sources

been

clarifying legisation, however, there still is room

that

■.

"From

•

has

receiver.

United States' participation in the
international Monetary Fund. In

outspoken
nation's
present

;

(2015)

new

has

Woods

ton

gold

a

\

Jan. 31, 1934,

subsequent legislation, especially
the legislation ratifying the Bret-

the

meets

quality'

on

informed

some

tend that it

country
gold-bullion

standard." ®
;;
One
of
the
most

*;!

and

'•

this

which

.;

.

'constituting

r

CHRONICLE

weight
at_
previous weight,
making the price of gold $35 per
(Contlhued from first page)
ounce.1*
That authority has not
channel and then
reforming it at
been used again since that
time, the

and

-

describes

c

.

*

•

Kemmerer:

a

home

at

*

♦

FINANCIAL

59 1/16% of the

"overconfidence"

both

proclamation
fixed
the:

he

v
country Immediately following its
tgoing off the gold standard was

what

&

y

the

public officials who operate it J In fact, he maintains that
orife of the chief difficulties in this

*

COMMERCIAL

<*+

.

the

thing

can

cost.

At

the

— I know'a
have been ex¬
perimenting with that, and have
had fairly good results—to-eom-

ways

and

means

number of people

(Continued

on

page

44)

&

COMMERCIAL

THE

(2016)

4i

FINANCIAL

CHRONICLE

sion

Progress an id Future
tion receivers are, so far, not

(Continued from page 43)
picture and the
the same microwave

the

both

bine
sound

over

relay, and that will save the cost
cf the separate voice circuits be¬
tween the various cities.
Subdivisions of Television

general
picture on television.
I think it
might be interesting to take up
much

So

for the

just

the various subdivisions

In

of it.

thinking of the
cathode ray tube manufacturing
and I am thinking of the receiver
manufacturing and also the trans¬
mitter manufacturing.
The cath¬
other words, I am

ode

tube,
consists

as

ray

know,
with

electron

and

gun,

probably

glass blank

a

surface,

flat

rather

a

you

of

an

fluorescent

a

the inner surface, which
is caused to recreate the picture

screen on

tak¬
the direct view.
When
you
build
a
receiver
where you look directly at the
tube, it is possible to get a much
brighter picture, some ten times
as
bright, and it is also possible
to get the picture with somewhat
ing

well

as

as

better detail and somewhat better

I think it is pretty

contrast.

obvi¬

why that is so. When you take
a
small picture and magnify it
twenty-five or thirty times, you

ous

definitely going to lose

are

very
brilliance

and

going to
lose
detail
and
you
also lose
contrast. In other words, the con¬
is

trast

white

black

in

have

ratio

the

blackest

are

you

the

between

and

whitest

the

the

picture.
When you
very small tube and the
there is a yery detailed

a

picture

there is a very bright spot
point, right next to a very
dark spot, it is impossible to focus
Last year, that is, in 1947, we
the
electronic
beam
sharply
had only one manufacturer,
enough so that there is not some
namely the Corning Glass Co.,
spillover
and
where
you
are
making about 225,000 of the glass forming the picture on a very
blanks. Libby-Owens has recently
small tube and then make a

making glass blanks and is
hoping to increase production. All
these blanks, last year/, were sostarted

blanks.

called hand blown

all made by

were

have

ever seen a

They

hand and if you
glass shop work¬

that, you can realize that
production capabilities of a
shop like that are rather low.

ing

on

the

nifying process,
have

you

blacks not

should

be.

Contrast

going to

are

black

as

as

.They will be a gray.
on
the projection

runs

set around fifteen to one,
on

direct

a

have

they

the

view

whereas

where

set

you

elements

farther apart,
hundred to one ratio.
In other words, it will compare
very favorably with the contrast
range you have in the motion pic¬

have

you

a

December of
companies de¬
automatic machin¬ tures. The television sets are be¬
ery for making these glass blanks. ing put out, of course, with wide
This is just getting into operation ranges, as far as costs are con¬
now.
The bugs have not been cerned.
I think the cheapest set
worked out of it, but the big prob¬ that is advertised
today is a set
around

However,

last year, the glass
cided to put in

lem

far

as

the manufacture of

as

with

seven-inch

tube, which
picture approximately
five inches, and is just

a

receivers is concerned, is just how

gives

you a

fast the industry can go this year,
and in my estimation pretty much

four

by

depends
blanks

upon
can-be

how

glass

many

the

from

gotten

glass manufacturers.
At the

they

present time, they figure
turn out this year around

can

700,000 blanks and maybe they
going to beat that a little bit,
but we know from personal ex¬

a

to the
most expensive set, around $2,500,
and, really, that particular set is
not a television receiver, it is a
home

go up

entertainment

In

device.

are

other

perience that in spite of the fact

standard broadcast, F.M., and au¬
tomatic phonograph, and a four¬

that they are running

teen

about three
the demand
for them may be ten times over
the number we can get, so that
times

the

last

over

year

problem, as far as the
tubes—and that is a
limiting factor of the receivers—
ray

is something to

definitely

about.

Now, in
out

that

worry

order to try and help

situation, several

manu¬

facturers have experimented with
the manufacture of cathode ray
tubes

where

the

envelope of the
that is the conical portion,

tube,

going to be made of metal and
just seal the face plate on
the front and the glass neck at the
bottom for the electron gun, but
are

then

the chances

are

that there will be

few of those this year, and it will
be 1949 before there are any sub¬
stantial changes in the amounts of
these tubes that will be available.

are

far

television

as

short

wave,

start off with sets

having tubes of seven-inch diam¬
and

eter

then

(
i

think

that there

is

you

can

to

go

been

able to

reduction
dise

of

take

a

little

in

see

like

yet

as

price for

quality.

receiver—I

comparison

any

merchan¬

You

have

can

made

here,

just

a

to

show how it is—I have
compared
receiver
we
manufacture,

the

which sells for around
$445, com¬
pared with one of the receivers

selling for less than $200. In the
first place, you have a twenty-two
square inch picture on the cheaper
sets,
as
against a
seventy-two
square inch picture on the larger
receiver.
In

«

,

order

to

<

*

,

cost

save

the

on

receiver, they cut the volt¬
the cathode ray tube. In

to

other words, they use two thous¬
and volts

the anode, instead of
thousand volts.
That means
on

the

small

lumens

receiver

and

ninety

the large receiver.

on

practical purposes, that

means

For
that

pretty well, on the smaller set
you'll have to dim the room in

eter.

order to

called
look

are

sets with the

direct view,

in which

directly at the picture

so-

you
as

it

is reproduced on the cathode ray
tube. '

Then, there

are other types of
available, the so-called
projection receivers where you

receivers
use

a

relatively small cathode

tube of either four

the picture properly.
the other receiver, you can

With
use

see

or

ray

five inches

and

sive
the

set

is

simple

width

a

thing, the way
picture from a
machine.

very

project the
motion picture

you

These so-called projec-




in the

design of the

tubes.

of

home

cheaper set and the

by

twenty,

is

larger,

more

out from the

detailed

the

all

information

transmitter is sending out.

instance,

the

You

in

properly
to

or

look

order

to

on

designed for
a

smaller

set,

of

For

in

cost, they cut out
designed for a band¬

about

whereas the
and

width

receiver.

save

It is
of

the

band

two.

more

a

megacycles,
expensive set is

band width of four

half megacycles.

What that

of

talent

the

to

pro¬

own

grams.

a

We

feel

of

important

and
one-twentieth
of
operate the other prop¬

in

networks

is

even

television

operating

television

By and large,

because of the small
number of tubes, is not very sharp.
That means that you will get more

had

than you are

developed

have

to

this
because ii

tnrough

perform¬
for

tele¬

people who have
experiences in the drama or

(

too good on television because,

the

in

of radio artists,

case

they have
not learned how to act, in many
cases, and simply know how to
read a script and we put on a tele¬

the better selectivity curve
gives a minimum of interference.
the cheaper sets, no noise

found:

the

vaudeville; people that have
through radio or the
movies, in a lot of cases, are not

sets,
In

the best

have

are

in

expensive

more

.'we

ers

curve,

the

im¬

munity circuits are used and auto¬ vision show and they have to
mobile
ignition will make the memorize their lines and act out
picture jump. In the more expen¬ the parts and in many cases they
sive receiver, three tubes are used have not learned how to memorize
their lines for a lengthy-produc¬
to eliminate this condition.
tion; so that we feel that New
Price

of

Receivers

York

is

extremely important
as far as television is

an

key point,

point I wanted to bring
We think it is going
everybody seems to concerned.
prices are going way to be the main point. ;
The
other point that is very
down
on; television
receivers.
Well, that is true. You can throw important is Washington, from
some
wires and tubes and com¬ the political scene, and the net¬
one

that

is

think

that

together

ponents

and

get

ture, but the places you
that receiver and

In

it.

going to make good
use
of
Washington pickups to
keep the television audience in¬

can

other

you

words

formed

quite

are

of

political

pay

you

are
■

use

the service you

get out of that receiver
comparable to the price
for

works

pic¬

a

few

can

I

that

would

rather

a

and

little

a

spend

and

money

comfort

little

have
you

have

There

v

The

is

see

largest

the

reduction

reduction

we

last

I

ing that
there

the

worked
and

second
at

sav¬

of

sound

several
are

Cities Be

are

whereas

least

In

have

four
a

we

and

a

to have

have

half

several

concerned, there are
problems that
If you are

that

rate

of

putting

a

speed and

we

fluor¬
and off
we

are

television station in a town five miles, and we are hoping, be-r
New
York,
where
it >is fore the end of the year, to use it
planned to more or less be the in connection with our New York
key station of a network, it is station for picking up events at
up a
like

very
a

easy

to

million to

spend

a

from

a

million dollars

half

the

equipment

The

thing that has concerned us
are we going to get televi¬

is how

and

the

the

for

Garden, at various theaters

ball

to

and
sending
them
the transmitter for re-

broadcasts.
i

or

parks

back

studios.

interested

The

in

reason

working

beam,

so

but
transmitter,

beam
the transmitter

carry

hand

the receiver

and

the

and

less

be

than

total

cost

thousand

a

the present time

At

we

only

that

longer distances.
be

even

lays

ultimately

useful

it

and

number

for

of

can

we

use

It might

inter-city

re¬

provide

any

might

channels

between

wanted

that

you

in

this

cities

country.
Looking

little further

ahead,
like maybe four or five
from now that it might be
very useful in the smaller cities
of this country. In other words,
a

it looks
years

the cost of the transmitter in that
small

city

thousand

would

be

about

a

dollars, instead of fifty

thousand dollars. You would have
to

put

light
ilar

a

pole up, maybe three or
feet high, with a
the top, and a lens sim¬

hundred

four

on

to

a
lighthouse lens, and on
house in town, a pole up on
the house, with a little black box
in it and you can receive the pic¬

every

tures that way.

We do not think
practical for more than a

that

is

four

to

five

television
would
any

mile

radius, but the

receiver

use

that

person

would not have to have

R.F. amplifier, oscillator, in¬
frequency
amplifier

termediate
and

be

The receiver would

forth.

so

just

sweep

the cathode ray tube
circuits: and
the
power

supply. You would save there. In
words, the receiver prob¬

other

ably would

run

about half of

an

equivalent receiver today, so
there
are
a
lot
of
develop¬
ments
coming
along
in this
field.
However, the increase of
,

our

present

standard

doubtedly will

system un¬
forward very

move

fast and I don't think there is any

question

I think

that

the

will

will

be

\

be

industry in
year, and

this

well

up

industries in this

top

try.

television

growth
States

that inside of five

it

years

or

ten

among
coun¬

\

Harry Cohen Dead
Harry
for

Cohen,

chief

statistician

Bear, Stearns &

Co., died at
the age of sixty.
Before joining
Bear, Stearns & Co., 20 years ago,

he

was

tax

active

as

an

expert; he also

of the New York

educator and
was

president

Realty Operators,

Inc.

James C. Willson Dead
James

years,

developed

light

it lor

.

last

finally

have

to

million

" \

the

bulky,
around

to

get a
would have

we

a

other,

would

good television pic¬

making experimental setups now
where when
we
wish, we can
transmit
television
pictures on
a
visible, light picture, a visible
light
beam,
or
aninvisible
light beam, up to a distance of

trans¬

different

of interest.

a

Rebroadcasts

Served?

television

over

only

ture.

whether they
by increased labor

the

bit by

a

at

as

the

order

as

light
can

one

that
near

However,

about

Small

the

man

the

very

cart

Sta¬
costs

difference there,

no

greatest

involved some
four thousand cycles per

cycles for

When

quite

escent salt that will go on

far

with
the

in

with

is

a

to

We have

picture,

have

to

It is

hard

sight,

United

light beam
during the

Navy.

transmission

or

a

out

used

the

and

thiee

something we don't know
right at the present time.

Can

good

transmission of

of

costs is

As

of

the Yankee

transmitter

up.

the

been

The

beam

but

offset

line

set

the

them, something

means

light

bigger production,
be some economies in

may

be

on.

war

Army

are

into

manufacture,
will

definite

be passed

can

get

we

a

by

well

was

have
in
the
cost
of
glass
blanks, when they are made au¬
tomatically.
So
far, they have
not passed any of those savings

but that will be

to

or

a

are

working on;
method of transmit¬

a

wave.

sound

to

on,

the

on

on

Now, there

of

have

we

radio

going; to be reduc¬
tions, but they have not occurred
yet, in the prices of television re¬
can

One

and that is

are

ceivers.

unit,

to send pic¬

we use

the

about $12,000,

ting television by means of a light
beam, rather than by means of a

the

situation in television.

same

goings

possibilities
hear about in the

may

future.

more

the

scene.

interesting

you

buy a Crosley automobile
and
drive from here to Chicago but
more

to

think

mora

it has been in radio.

as

vision

In

dium

transmit on the light
system for several miles, but we

Networks

it

that

pick up thirteen stations. In the
less-expensive receiver, the selec¬

cerned.

present micro-wave trans¬

mitter, which

can

Importance
V

city

num¬

picking
sending them

and

tures back from

dollars.

their

the

economical.

Our

do a

on

said

back to the transmitter. It is also
more

in

good job

around

innumerable

an

programs

in

on

Com¬

which
I

ber of relay channels for
up

shows, and we feel it is pretty
hopeless to expect these towns to

tions and the more expensive sets

tivity

with

th;

put

,

at

expen¬

i

erly. ■; That means the
less-ex¬ country than radio
costs more to put the program oo
pensive
receivers
can
not
be
used much over twenty or twen¬ and there are only a few spots in
the United States where you hav^
ty-five miles, if that far, from the
a large reservoir of trained talent
transmitter,
whereas
the
more
expensive receiver in a lot of to use, and of course, New Yo.k
is the number one spot, in that re¬
cases can be used seventy-five or
a
hundred miles from the trans¬ gard.
v
The importance of Hollywood
mitter. The
inexpensive;receiver
is designed to pick up eight sta¬ probably will not be as great in

mitters

more

requires

of

cost

re¬

have

to

It

studio.

a

order

that

have

the

equipment, and a lot o_
technique, and, of course, youi

There

thousand micro-volts
to operate the one set

of

broadcasters

there

lot

designed for a sensi¬
tivity of about a thousand micro¬
volts, whereas the less-expensive
set
has
a
sensitivity; of fifty
signal

the

here

heavy

of

Federal

before, it can be either visible
or invisible, but it would
provide

as

or

the

Commission
eliminated.
As

tion

are

micro-volts.

idea

is the problem of

with

munications

what have you, or t.u
various theatricals
occurring ii
the town, but the largest expens.
in the operation of a television
station, of course, is the opera¬

the

expensive

two

they

and

games,

number of other differences.

are a

dollars
or

The

it.

run

the

in

will start off thai
they move along
they
can
buy
mobile
pickup
equipment, so they can go out
and
pick up the local basebal
games and
the local basketbal

get

you

to

at

programs,

somewhere

of

that

is

way

expen¬

transmitter,

network

on

operators

sive set, of course, being designed
for the full band width, as sent

about

television receiver.

at

Another difference between the

mately
means

can. go

the

instance,

by
lens, a

everybody

business

of diameter and project that pic¬
ture
to a larger size,
approxi¬

fifteen

the

With

the normal illumination in the

room

his

i

resolution

less, the information is not there.

out

thing
that we have been harping on,
and that js the fact that we have
one

ten-inch,
twelve-inch,
fifteeninch, and the twenty-inch diam¬
Those

neighborhood of $50,000
and
would require one

the

The

Receivers
I

familiar everybody here would be ten
with the various types available, that the brilliance of the
picture,
but there is a pretty wide selec-; in terms of
lumens, is fifteen on
can

horizontal

but

an

cost

a

only around two hundred resolu¬
tion lines.
Of course, it isn't too
serious in the small picture, be¬
cause the picture is so small that
the angle that your eye makes
with the picture can not distin¬
guish too well as to that, so that
is not too serious, but neverthe¬

Future

age

receivers

concerned, I don't know how

tion—you

100%

the 525

Contrast of Cheap and Expensive

small

Variety of Receivers
As

has

by eighteen-inch, direct view
picture. • )

not

•

;

it

words,

glass

cathode

In other words, there is
lines in the picture,

still

ference with other stations is con¬

From there you can

thing,

one

picture.

picture and

with

for

only
taking
advantage
of
approxi¬
mately two hundred lines in the

The price is around $149.

set

in

inexpensive transmit¬
ter which can be put up in these
smaller towns
where they rely

entitled to, as far as
diathermy interference and inter¬

television

sound.

cities

small

are

For-

mag¬

the

veloped

is that the small set is

means

ceivers

one

all

licenses

one, or

■

into

the United States, and the partic¬
ular company I am with has de¬

at

receiver.

at the

Television

oi :

Thursday, May 6, 1948

we

this

are

out,

C.

Willson,

veteran

of

the early days of aircraft and air¬
line financing and until his re¬

tirement head of James C. Willson
&

Co., Louisville, Ky., investment
firm, died at the age of sixty-two
after a long illness.

Joins Staff of A. E. Weltner
(Special

to

The

KANSAS

Financial

CITY,

Chhont<-t.e)

MO.—William

F. Chaves has joined the staff of
A.

E.

Weltner

West Tenth

&

A. H. Gordon
Albert

H.

Co.,

Inc.,

21

St.

a

Director

Gordon, partner in
Kidder, Peabody & Co., has been
elected a director of Burlington
Mills Corporation.

,Volume 167

Number 4696

THE

COMMERCIAL

&

CHRONICLE

FINANCIAL

(2017)

45,

Indications of Current Business Activity
The

following statistical tabulations

shown in first column

month ende d

or

Latest

AMERICAN IRON AND STEEL INSTITUTE:
steel

Indicated

operations

\

(percent of capacity)

Equivalent to— '■■)>
Steel ingots and castings produced

Vii*

'•!
tons).

'

(net

previous

Week

Week

'
May

.

other figures for the latest week

production and

cover

either for the week

are

91.0

9

on

that date,
:

Month

of that date):

are as

Latest

90.6

ALUMINUM

(BUREAU

Previous

Year

Month

Ago

84.4

•Vd,

T'

month available (dates

or

of quotations,

cases

Year

Ago

;

86.6

in

or,

Month

Ago

MINES)

OF

Production of primary aluminum in the U. S.

May

9

1,640,300

1,560,900

1,521,300

1,585,400

short

(in

tons)—Month

of

February—.

45.693

Stocks of aluminum—short tons (end of Feb.)
AMERICAN

PETROLEUM INSTITUTE:

Crude

oil output—daily

Crude

runs

to

Gasoline

output
output

(bbls.)

.Apr. 24

5,415,400

.Apr. 24

5,517,000

!___ .Apr. 16
___.

16,515,000

.Apr. 24

2,452.000

16,588,000
2,390,000

j .Apr, 24

.0,831,000

.Apr. 24

______

__

Gas oil and

distillate fuel oil output
Residual fuel oil output (bbls.)

'

gallons each)

(bbls.)_______

average

(bbls.)

Kerosine

AMERICAN GAS

(bbls. of 42

average

stills—daily

(bbls.)_—
:

_.

(bbls.)

at

4,709,000

7,682,000

5,394,000

8,755,000

8,854,000

8,131,000

110,838,000

112,991,000

102,026,000

10,459,000

9,807,000

34.237,000

12,015,000
33,985,000

30,717,000

30,636,000

49,572,000

49,110,000

48,334,000

Revenue

freight loaded

Revenue

Manufactured
Mixed

COKE

(net

Beehive

Apr. 24

852,369

Apr. 24

785,668
602,165

697,419

664.375

(net

coke

612,014

713,289

CONSTRUCTION,

ENGINEERING

All

U.

Private

S.

NEWS-

construction

FAMILIES

foods

'

S. BUREAU

y i

j

DEPARTMENT

;..

$136,743,000

68,849,000

Apr, 29.

$218,784,000

71,656,000

$102,480,000

OF

136,726,000

54,724,000

vjj;

'V/,

T

/j

STORE

SALES

k,

*«

i

'

I

65,087,000

82,058,000

47,756,000

66,553,000

55,751,000

50,792,000

33,108,000

47,851,000

9,336,000

31,226,000

14,648,000

'

,'v '-Y/

11,352,000

Apr. 24
Apr. 24

67,730,000

2,120,000

,

1,162,000

1,054,000

892,000

&

"32,300

13,400

138,700

and

of

Apr. 29

174,7

204.4

104.0

186.9

194.2

219.1

174.4

176.8

178.G

196.3

195.1

184.3

116.3

116.0

109.0

'

130.3

130.0

117.6

93.8

93.2

92.2

>

166.0

165.9

142.5

194.9

193.0

182.3

146.2

146.4

138.2

83,574

<82,959

84,445

110,896

93,588

95,964

106,823

123,382

68,582

70,146

83,736

$52.25

<$51.83

'

•

1

—

electricity

L

_J.

(tons

of

L——

in

month

U.

S.

A.—

2,000 lbs.).

customers—

to

-

i

!

100

_

91

70

—

O'

;

.:

FACTORY

'-fv.'hV.

'■$}>:

lbs.)

EARNINGS

3.23940c

-2.86354c

$40.11

$40.29

$33.15

$40.33

$40.11

•

DEPT.

3.23940c

$40.25

$29.92

J

$40.33

|

(tons

——

AVERAGE
LABOR

OF

HOURS-

AND

ESTIMATE —U.

.v

'j--'

!).V

.23940C*

122,988;

stocks at end of period

copper

2,000

Month

—

Durable

S.

March:

of

Earnings—
'
All
manufacturing
■

—

goods

<

19!).6

March:

of

lbs.)„—j_—,

2,000

of

(tons

WEEKLY

Apr. 27
T_____Apr. 27'
______

.

Pig' iron- (per gross ton)
Scrap steel (per gross ton)_^*;_«.__________^_____^______^_^____w_Apr. 27

.

106

-

•Ji-', tv

(per lb.)____

187.5

J;

sweets

production

Deliveries

BRAD-

IRON AGE COMPOSITE PRICES:
Finished steel

204.4

.

191.7

INSTITUTE—For

Copper

24

<

189.2

_Jj

__■

—

Miscellaneous
COPPER

STREET, INC.—

■

207.6

213.0

;ii;J;:.In.,U.^S._Av.-(tons of 2,000
INDUSTRIAL)—DUN

148.1

224.8

186.3

oils

and

Refined

AND

171.8

206.9

,

—

and

Gas

1,071,000

66,900

(in 000 kwh.)_.

(COMMERCIAL

189.5

204.7
.

201.1

...

—

;_i__

Refined

r

J

•

Z

FAILURES
■

202.3

171.0

'
Other fuels and ice.
Housefurnishings ———

;

SYS-

TEM—1935-30 AVERAGE^lOO—Apr.

output

156.3

166.9
j

224.7

electricity and ice

12,825,000

'/

,Mt-/

,

167.5

CITIES

—,

vegetables

Clothing

____Apr. 24

RESERVE

675,621

15:

.'

Sugar

Fats

Crude

:

LARGE

i

Fuel,

.

INDEX—FEDERAL

807,478

...

and

114,404,000

' * ?

_______________

595,164

715,527

tons)

(net

MODERATE

March

:.

Beverages

■

rDISON ELECTRIC INSTITUTE:
Electric

IN

Rent

\ '

MINES):

5,658,410

<539,279

bakery products—-—

J

Fruits

Apr. 29

_________________________________

v,

$183,253,000

Apr. 29

Bituminous coal and lignite (tons)
Pennsylvania anthracite (tons)
Beehive coke (tons)
;

FOR

of

•_

and
-

Apr. 29
(U.

6,253,574

5,512,838

...

Eggs

Apr. 29

construction.—

OUTPUT

<•6,052.117

320,475

'

Federal

COAL

184,691

5,973,015

.

Dairy products

Public- construction-a—■;
State and municipal

■;

INDEX

PRICE

Meats

RECORD:
Total

232,583

177,353

tons)—

items

All

2,509,343

268,647

146,140

!

tons)

(net

Oven coke stocks at end of month

893,712

2,926,617

2,896.284

5,652,540

J

tonsi

coke

Oven

INCOME

cars)

3,342,284

247,514

therms).^—

(M

therms).—__.__i_.J_;;

19W5-1939—100—As
of

3,124,745
2,731.091

:

(BUREAU OF MINES)—Month of Mar.:

Production

RAILROADS:

(number

freight rec'd from connections (number of cars)____

ENGINEERING

(M

47,002
Not avail.

'

—

therms)

sales

gas

''.

''

(M

sales

gas

Cereals

CIVIL

sales

10,484

Month

For

—

>■.'

.

therms)

(M

42,280,000

>

CONSUMERS

ASSOCIATION OF AMERICAN

,

sales

gas

Natural gas

2,157,000

7,091,000

ASSOCIATION

March:

Total

14,326,000

2,647,000

12,481,000

.Apr. 24

15,783,000

111,128,000

.___

of

4,929,900

8,877,000

Stocks at refineries, at bulk terminals, in transit and in
pipe linesFinished and unfinished gasoline (bbls.) at—_j__
.Apr. 24
Kerosine (bbls.) at
;
-Apr. 24
Gas oil and distillate fuel oil (bbls.) at
-Apr. 24

Residual fuel oil

5,377,250
5,324,000

; 5,390,650
". 5,521,000

48.767

9,354

55.77

<54.97

48.53

<43.53

"

J

I1ETAL

PRICES

(E.

&

M. J.

Hours—

QUOTATIONS):

Electrolytic copper—
Domestic refinery at—J—____-'-_yc-2yj,yj...
Export refinery at
J Straits tin (New York) at—.
Lead (New York) at
Lead - (Stj. Louis) at
'Zinc (East St. Louis) at-—

■

Non-durable

,

.

,

-

21.425c

94.000c

17.500c

17.500c

23.675c

,

94.000c J

17.300c

17.300c,

14.800C

12.000c

Durable

14.800c

12.000c

"

^

Non-durable

100.85

100.81

Average corporate_

...

4

112.37

112.37

111.62

4

117.60

117.60

—L-———:

.

Aaa—

-May
May
May.
._.May
May
—May

——________—

Aa
-

.

A—————:_—j

—i—

Baa—

;

Railroad

Public

Group

;

_________

.»

.

Utilities

Group___
Group

Industrials

4

111,81

4

_______

105.34

4

107,44

X;

115.63

4

107.09

113.89

4

116.22

106.56

'

:

BOND

U. S; Govt.

■

YIELD

DAILY

Aaa_—

■

.

'

.Railroad

■

Public

—^__May

LIFE

112.56

J

113.89

113.31

121.04

-2.44

3.04

!

3.04

2.44

••'•

,

2.77

.

3.07

4-

3.43
3.31

3.33

3.36

2.96

2.96

2.99

4

2.84

2.84

4

417.1

413.2

_______________May

.

COMMODITY

NATIONAL

ITY

INDEX

Foods...

Fata
Farm

FERTILIZER

BY

'■

ASSOCIATION—WHOLESALE

May

._

—

3.08

-.

.

'•

^

235.4

237.0

269.7

—May
May

254.4

■

283.3

'

17,911,000

Policy

values

dividends

METAL
•J'

44,694,000

52,452,000

41,377,000

$278,138,000

$238,744,000

OUTPUT

Month

Mine

of

(BUREAU

8..

■

line

(in

short

267.6 X
240.0
228.6

176.1

337.9

IN

'

68,866

FACTORY

(AUTOMOBILE

MANU-

—

2.592,928

<43,509
*

\

,

29,817

,

<3,120,772

47,841

FROM

ASSOCIATION)

133,996

<33,230

,

2,389-,667 j.

SALES

63.385*

;;

<159,175

32,029-

tons)—„„*

S.

<73,088

145,450

—J-

ounces)——

U.

'

■

■

March:

335.4

'

,

5

v

-

51,338

-

,

.

,

of

Month

\

'

268.4

243.9

492,013

<382,991

421,180

235.1

227.7

Number

of

passenger

274,847

301,525

228.6

Number

of

motor

cars
trucks—______

349,998

169.8

107,054

118.234

175.0

158.1

Number

of

motor

coaches—.___.—

140,606
1,409

212.0

215.0

l

175.2

May

—

fine

'

.

,

t

in

tons)

VEHICLE

PLANTS

r

ounces)..—

short

FACTURERS'

241.1

?

X

(in

(in

•"

—

,

metals

tons)—:

short

(in

(in

MINES)

'

recoverable

of

Lead

MOTOR

OF

February:

production

the U.

240.3

250.3

;

228.6

—

7,393,000

__L_——J-;$250,600,000

'Total

2.71

215.9

228.1

257.0

237.9

commodities

36,123,000

28,099.000

396.7

229.2

264.4

Miscellaneous

$107,841,000

38,987,000

endowments

32,694,000

2.60

__.May
——.May
May

—

$121,007,000

LIFE

31,425,000

3.15
?

410.6

Livestock—
—

OF

February:

24,275,000

3.03

i

2,87

/

Grains —i_—i--——May
—

of

2.80

3.50

v

365.1

:

2,986,741

'

3.44

358.91

Fuels—

2,802,685

'J

18,014,000

Zinc

——rMay

■

—

2,769,408

—

TO

PAYMENTS

Surrender

2.78

;

3.12

.

"•

.—.May

and oils——_jy_j____
products—

583,252

426,718

month

of

benefits

Silver

i

end

at

8,723,000

COMMOD¬

.

sale

,

7,111,000

GROUPS—1935-39=100:

________—

Cotton
■

—Jjy___——:

584,238
480,097

35,496,000

for

Gold

INDEX—

1.009.970

571,406
453,044

(short tons).—

tons)

Copper
MOODY'S

1

2.53

4

Group

:

$113,860,0'00

orders

INSURANCE—Month

2.63

4

_______

f

2.80

Group_w____—____—___May: 4

Utilities

:

2.88

'

2.87

.

__.May
__.May

i

——

'

-

tons)

INSURANCE—BENEFIT

Death

2.20

3.08

#Xj;2.77:

2.88

■

j__May

y

J__J

Group—

Industrials

4

,May; 4

________

.

1,064,335

COM¬

OF

—

POLICYHOLDERS—INSTITUTE

118.80

115.63

2.44

4

————————.May

'

Aa——————;
:
A__—j-—_jy._iJ.-jJj_jj;
Baa—JijjjJJ__j—•
.j_:—

,

<1,357
<-1,220

117.00

110.34

'

■

1,359

1,220

Disability payments
Annuity payments

Bonds—May'. 4
—

39.8

<$1,290

-

1,024,450

(DEPT.

February:

Unfilled

AVERAGES:

Average corporate—

of

producers' own use

Matured

MOODY'S

CASTINGS

For

116.22

.

'

r

•"

(short tons)_
(short

;

-

sale

(short

j

___J'jTT——J_.

For

120.43

104.14

<40.5

39.8

^

.

122.50

110.68

105.17

J

j

>.■

117.40

*

115.43

111.62 '

,

104.43

117.00
"

__^__May

__.

i

115.43

4.

_May

—

IRON

Shipments

^00.84

<40.2

•

41.0

goodsT

MERCE)—Month

-

tr. S. -Govt.. Bonds—4

J;: 40.4

—:-

—

goods

10.500c
GRAY

MOODY'S BOND PRICES DAILY AVERAGES:

,

$1,293

Hourly earnings—*
All
manufacturing

yy is.oooc

.

_

'

80.000c

15.000C-

.

j

v

Durable goods
Non-durable goods

21.225C

12.000C

Apr. 28

—

21.475c

94.000c

_—__Apr. 28'

—

21.200c

21.425c

"Apr;28

_______

21.200c

:

n

manufacturing—

v

21.200c

Apr. 28Apr, 28

r

All

,

&
v/ -.Apr. 28

goods —JiJ—

'1

214.6

l

164,9

164.9 X;:.'

163.5

227.3

227.3

230.4

155.8

155.4

156.8

136.3 >

136.4

137.7

143.7

143.7"":

j

number of

Total

:

vehicles—_—„—

<1,090

1,421

7,873

10.247

283

276

•

Textiles™:
■

—__i_—

Metals__—_

•

May.
—May
__May

—_——i

Building materials__i___^__—
drugs-

—

V Chemicals'•■.and

*

Fertilizer

materials

May

Fertilizers—

.

.May

—

machinery
L—_—
All groups combined——

Farm

■

:

rtte

215.8

—May

—

139.2
219.3

;

.

iJ'SX

-j

147.9

156.9

M

220.4

BRADSTREET,

NUMBER

134.6

138.8

TURE

125.5
195.6

J

Orders received

Production

.

(tons)

■

—Apr. 24
———

,

190,294

J

181,068

—Apr. 24

—

(tons)

Percentage of -activity———X.—.
Unfilled orders (tons) at———

J

_i—Apr. 24
—Apr. 24

*

176,395

153,415

193,650

FARMERS
DEPT.

OF

farm

534,297

,

■->.

•-

INDEX

—

,

*
291

grain and
grain

Feed

—.

277

284

223

329

—

!
————

—:

140

-

DRUG

REPORTER

PRICE

INDEX—1926-36
145.8

..Apr. 30

,

146.2

146.5

Truck

j

147.9

')/'

WHOLESALE PRICES—U.
All

;

S. DEPT. OF LABOR—1926=100:

commodities.

Farm

i—l.

products.—i.

162.9

Apr. 24

—_

163.6
188.9

p

189.2

161.1
186.2

'J

146.8

177.6

•

'
:

materials...

Metal and metal products
Chemicals

...

160.3

Fruit

186.2

171.9

148.2

.145.9

145.2

137.8

132,6
;

products—

.—Apr. 24
..Apr. 24

goods—

-.

*

157.1

131.7

131.9

157.2

Apr. 24

135.5

J

156.0

_

194.9

195.3

•:

commodities.,

:

178.0

144.4
122.2

135.1

136.8
'

•

:j V;/'

144.7'.,

130.5

Special groups—

298

■

.

yy.

331

257

; 204

,,

218

144

140

vy

232

240

——'—

276

307

300

267

238

231

225

'•

S

'

■

'

•

s

*

________—-

—,

Shipments
Shipments

115.2

xy, 120.8
'

342

212

282

V

—____j__—_——

TYPES ONLY
(DEPT. OF COMMERCE)—Month of Feb.:
Production
(number of units>_—

128.6

144.3

"v

121.5

295

358

302 /•

:

TRAILER COACHES—HOUSING

'

.Apr. 24

:

140.8

'

Miscellaneous

223

■>'

—-—

products
Poultry and eggs

103.9

y

-

192.5

.

•

214

Dairy

-

'

347

Truck crops

Apr. 24

...

allied

and

Housefurnishings

174.8

187.2

..Apr. 24

...

Building materials

173.3

187.1

Apr. 24

Textile

180.4

Apr. 24

;

'■

296

products
and eggs

.Apr. 24

—

Hides and leather products-i.
products
Fuel and lighting

•

Poultry

Seasonally adjusted—

'

Foods

V

304

_J"

.260

339

351

X

products

animals

Meat

Dairy

_Apr. 24:

and

387

-'

"j'

295

340

i-

creps

Oil-bearing crops
Livestock

y:

372
256

142

—_—

y- 245

319

•

371

275

— ■

'

OIL,
PAINT AND
:^VERAGE==100

269

262

260

291

——J____

Cotton
Fruit

—i,

hay.

_____

.„—

y

276

268

'_j_—-

grain

Tobacco
:■

9,346

—

/

;•

AGRICUL¬

/j——J

Feed

100

'419,845

403,008

v

&

1914—100—As of

V
products.—

Food

180,227

104

/

100

393,044

S.

August, 1909-JuIy,

j

160,524

186,438

.

BY

U.

Crops

f.V; i

102

—

April 15:
Unadjusted—
All

NATIONAL PAPERBOARD ASSOCIATION:

INC.—Month of March

RECEIVED

PRICES

127.5

216.8

INCORPORATIONS—DUN

BUSINESS

NEW

203.2

,

143.7

•

138.8

.May

—

:

TRUCK

(number of units)__i
(value of)—

TRAILERS

(DEPT.

OF

4,791

4,131

<4.305

3,963
$6,851,148

■

—,

<4,089

4,549

<$7,219,729

$7,398,114

.

COMMERCE)

"

Raw

materials

Apr. 24

Semi-manufactured
Manufactured

'"•y

-V 153.7

173.0

161.3

products.

—

;

farm

All commodities other than

farm products and foods_

•Revised figure.




products

t:

;

Apr. 24

'*.';

157.8

158.9

Apr. 24
Apr. 24

153.6

:

'

158.0

148.3

^

,

155.9

■

>:

y

Production

i4i.i

If 5.5

157.1

149.6

y •: 152.9

—Month

144.7

175.9

i-r-.

■

All commodities other than
!

177.8

—Apr. 24

articles

.

140.1

147.4

132.0

J

Sbioments

Shipments
"Revised

of February:

(number
(number

(value

of

units)—.

of -units)

,

$11,342,279

in dollars)

figure.

"Preliminary figure.

■

;

..

.,,

3,667
4,000

<3,445

6,554

<3.295

5,988

<$9,019,769

$13,652,252

COMMERCIAL

THE

(2018)

46

FINANCIAL

&

CHRONICLE

had

ber

Human Freedom Rests

Gold Re deemable Money

on

Fort

Knox, that gold is not sub¬
even
if money is a difficult and ject to demand by American cit¬
izens. It could all be shipped out
tricky subject. I suppose that if
of this country without the peo¬
most people were asked for their
views on money the almost uni¬ ple having any chance to prevent
versal answer would be that they it// That is not probable in the
near future, for a small trickle of
didn't have enough of it. ;
gold is still coming in. But it can
In a free country the monetary
happen in the future. This gold is
unit rests upon a fixed foundation
temporarily and theoretically par¬
of gold or gold and silver inde¬
tial security for our paper cur¬
pendent of the ruling politicians.
rency. But in reality it is not.

page)

(Continued from first

dollar

Our

of

kind

that

was

generally
willingly.
Remaps

This '14V2

the

at

free

and choice of

option

flation

.

Stability

*

.

That

dition.

*

.

*

large degree of stability.
The owner of such gold redeem¬
able currency has economic inde¬
money a

He

pendence.

either within

without his

or

if

1933,

possessed
paper
could exchange it at

you

you

money

option for gold coin.,
This
/'gold coin had a recognizable and
your

definite

value

It

so

does

all

over

the world.

In most

today.

tries of the world this

coun¬

gold piece,

pieces as money in this country,
Russia, and all divers other places
is outlawed.
The

Hitler or a
the mere fact
that his money can be called in
and .depreciated at the whim of
his rulers. That actually happened
in Russia a few months ago, when
the Russian people, holding cash,
subject

Stalin

had

is

it

turn

to

of

hold* here

I

old

in—10

and receive back
*

a

a

one

new

small

rubles

ruble.

packet of

this second kind of money—print¬

ing

the

the

One

Various

tax

is that

ac¬

every

steadily

have
this

plans

to

printing-press

reverse

hooked

under

a

fixed amount

a

is

Congress

All

of

these

they

But

good.
under

proposals

our

unrealistic

are

paper

system.

money

our

and

The

v

Budget and Paper Money

Under

the

passed

by

Senate

and

the

quired to fix

kinds
arc

House'

could

•agreement

When

the

people's right to.

I'll

disconnected.

was

In

January

budget

that

so

an

maximum

the law

ig¬

was

nored.

being

are

dent's message to

our

paper

harshly
let

would

.

money—technically

suade

p er-

c a n

himself /that

in numerals is very large.
This little packet amounts to CNC
money

$680,000.

It cost

me

$5 at regular
understand I

ready
will

passed or on the docket
certainly take expend¬

most

itures

past the

$40- billion mark.

exchange rates.* I
got clipped on the deal. I could
have gotten $2% million if I had
purchased in the black market.

The statute providing for a maxi¬

But you

in

readily see that this
money, which is a fine
can

Chinese

grade of paper
individual who

I

gives the

money,
owns

it

no

pendence, because it has
demptive value.

inde¬

no

re¬

Under such conditions the indi¬
vidual citizen is deprived of free¬
dom of
movement.
He is
pre¬
sented from

ing

power

laying away purchas¬
for the future. He be¬

dependent

comes

upon

the good¬

will of the politicians for his

bread:

Unless

he

lives

daily
land

on

that will sustain him, freedom for
him does not exist.

budget

mum

wayside

fallen

first

the
two

operating

in

even

and

the

has been

it

years

has

by

period of prosperity.

a

There

final

decision

public spending

on

our politicians regularly announce
/their intention to stop inflation. I

/believe I

show that until

can

they

move to restore your right to
•gold;that talk is hogwash. /

own

labor.

tion

would

give

This restora¬

the

people / the

final

say-so
on
governmental
spending,
and
would
enable
wealth producers to control the

issuance

of

paper

and

money

But first let

me

bit of underbrush.
time to review the
per
as

money

I

clear

away a
I will not take

history of

experiments.

So

pa¬

discover, paper money
systems have always wound up
with collapse and economic
chaos.
Here

somebody

interrupt and
now

is

on

true,

the

ask

a

if

we

like
are

gold standard.

internationally,

domestically., Even
is

might

lot of gold

to
not

That

but

not

though there

buried




down

at

mand economy. Before

will

that this
action is the only genuine cure. '
you

There is
iness

agree

parallel between bus¬
politics which quickly

a

and

illustrates

the

in

weakness

po¬

litical /control of money;/
Each
make

for

common

sense

to

return

to

Washington.
Raids

on

Treasury

.That happened on various occa¬
sions
and conditions sometimes
became

think

of

make

business.

in

is

you

profits.

If

business

firm

your

profits, it

to

does
of

out

goes

curred

strained, but nothing
like

the

ultimate

oc¬

conse¬

of paper money inflation.

quences

/Today- Congress is constantly
besieged by minority groups seek¬
ing benefits from the public treas¬
ury.

Often

enough

these

in

votes

groups^ control

Congres¬

many

sional districts to change the out¬
come
of elections. : And so Con¬
gressmen

suade
to

find it difficult to

themselves

pressure

not

groups.

to

pur-

give, in

With

bad

no

consequence
it
be¬
bring a immediate
product to you and say, this item comes expedient to accede to a
is..splendid for your customers, spending demand. The Treasury

but

you

without

far

can

spending. And so neither one does
so,
and the people are ' largely

,

bonds/

not

Paper Systems End in Collapse
;

the Republican Congress is under
real compulsion to cut Federal

1933, when¬
to the producers of the
nation. ever
the people became disturbed
The producers of wealth—taxpay¬
oyer Federal spending, they could
ers—must regain their right to ob¬
gq to the banks, redeem their pa¬
tain
gold in exchange for the
per currency in gold, and wait
fruits of their

I

All

have been proving him
Neither the President nor

we

right.

only one way that
But it wag riot always this way.
these spending pressures can be
Before 1933/ the people them¬
halted; and that is to restore the selves had an effective
way to de¬

I do not ask you to accept this
contention outright.
But if you
look at the political facts of life,

the other party's doorstep.

date

conversation."* To

is

i You have heard a lot of oratory
on
inflation from politicians in
both parties.
Actually that ora¬

on

"just

as

helpless.

tory and the inflation maneuver¬
ing around here are mostly sly
efforts designed to lay the blame

v

omy

•

If

I

-would

profit,

ness—well,
out

of

I

your

have
or

that would put

to

were

you

at

office,

a

it

loss

of busi¬

out

would

sell

to

even

thrown

get

perhaps

po¬

litely, but certainly quickly. Your
business must have profits.
In

politics votes have

vital importance to

ficial.
but

it

an

not

probably

sides

the

back

home

inexhaustible.

unorganized
may

not

Be¬

taxpayers
notice

particular expenditure—and

this
so

ideal,

because

it

goes.

take

a

quick look at/ just

June 30,

1932, there

were

On

2,196,151

people receiving regular monthly
checks
ury.

from

the

Federal

Treas¬

On June 30, 1947, this num¬

our

of

gold

our

then

currency

coin

gold

stocks

must

we

to

.

act

ident of the Federal Reserve Bank,
of New

And if you were

York, who said:

"Without

,

ent

here

government Donas, undertaken for

to

lend

a

the

Taxpayer

hand

in

putting

Forgotten

or

the business

purpose,
laudable
or
otherwise, would be likely to find

Man

almost

an

market

bottomless

first day

the

on

support was with¬

drawn."
Our

will

finances

never

be

brought into order until Congress/
is compelled to do so.
Making
our
money redeemable in gold
will create this compulsion.
/

that makes mil¬

oppose Federal expen¬
He has to earn his own

ditures.

System), under pres¬
conditions, almost any sale of

whatever

lions from spending schemes. He
cannot afford to soend his time

trying to

support (the Fed-*

our

eral Reserve

Far awav from Congress is the

The

paper money disease has
pleasant habit thus far and*
not be dropped voluntarily •
any more than a dope user will;
without a struggle give up nar¬

been

a

living and/ carry/ the burden of will
taxes/as well.
>

for

But

Federal

most

beneficiaries

paycheck

a

*

cotics.

test,

Always

unequal

an

an

ernment

finances

I

the

this

wav.'

If

desirable

a

no

-evidence to sup¬

lands.

Because

critical stage/.

rives,

Congress

our,

When that day /ar¬
rulers will

political

f'iua

oab'v

»

mat

foreign war
is the
to domestic
the way out for

ruthless regimentation

and

receptive to reckless
spending scnemes, depositors' de¬

cunning

mands

the paper-money economy

the

would

strife.

coqntrv for gold

become serious.

soon

That

alarm in turn would quickly be
reflected in the halls/of Congress.

the

in

Treasury

was

en¬

firmness.

acted

would

forced

be

to

The

.

gold

silent

a

standard

watchdog;

may

to

do

would

gress

sion

d'»nug

pressures

when

a

will

meet their

depres¬

and

portray the

worse

than

you

nations

It

country

just the high

war

have heard about.

by

can

more

take

a

or

human

to

frugal
savings of the humble people of
America

continue

to

Some day

past 10 years?

inflation,,

galloping

liberty

is

we must

to

cause/;

For

if

survive

in

support.

win the battle

honest money.
is

no

more/important

sue—the restoration of your
dom

they have

in the

willing to

are

challenge facing us than this

deteriorate

in the next 10 years as

you

your

restore
There

external in¬

.the

Suppose

to

America,

less

communism without

They have had

/and / slavery,/then •. this

demands

nation to

fluences.

sound,

opposition intelligently

vigorously.

But, unless

Monetary chaos was followed in
Germany by a Hitler; in Russia
by all-out Bolshevism;
and in
tyranny.

to

surrender your children and your

experiments.
is

return

15 years of unbroken victory.

end of the road of all paper money

It

a

You must be prepared toy

money.

is a question I leave
to your imagination.

prices that

oppose

pe¬

comes

I have not time to

who-are/ getting rich frojm

the continued American inflation;

What: Con¬

prosperity;

outwardly seemingly favor

abroad-

only briefly outlined the
inability of Congress to resist
of

that politicians of

you

parties will oppose the res¬
of gold, although they

Also those elements, here and

it.

I have

soending

of Hit¬

toration

prevent unlimited public/spend¬
ing;
* ./
/'•///

riods

warn

both

spending demands with

as

was

of it.

I

Congress

That

theF* remarks I have only,
touched the high points of this/
problem. I hope that I have given//
you enough information to chal-'
lenge you to make a serious study

dangered.
confront

alternative

ler and others.

The legislators would' learn from
the banks back home and from
the Treasury officials/that confi¬
dence

our

s

But we can be approaching the

goH

seemed

over

of

treng t h the paper
money
disease here may take
many years to run its course.

standard, Congress would have to
again resist handouts. That wdnl
work

other

economic

had an .individual
right to
protect himself by obtaining gold.
restoration o*

not

ultimately than such experiments
in

run

according to his ide^ of soundness

a

each case the end'

is

hope tqac our tiat oaoer
Venture will fare better

a

money

he

With

in

find

can

port

con¬

weren't

road

the

prospect.

heretofore he
equalizer.
If gov¬

possessed

But

of

becomes

soon

The taxpayer is completely out¬

matched in such

other

Let's

the payroll pressure elements.

similar

elected of¬

That situation is

exists,

a

is; seemingly

in

The danger was recently high¬
lighted by Mr. Allan Sproul, Pres¬

the Republi¬
vijtal in his life. He usually will
On March 4 this year the Mouse cans would do the same
known as fiat money because its
thing if
value is arbitrarily fixed by rul- and Senate agreed on a budget of they were in power. Already he spend / his full energies if neces¬
Appropriations al¬ has characterized our talk of econ¬ sary to hang onto this income.
ers or statute. The amount of this $371/2 billion.
press paper

cause

disappear,
promptly.

that deal through Congress.

system/.

think¬

restoration

foreign
government,
getting
billions, perhaps you could oersuade your prospective suppliers

It made

his

confidence

that

a

judge
him
too
that/ pe'rfohnance,

for
speculate on
Certainly he

us

ing.

-

Marshall Plan?

office depends upon pleasing a
majority of the pressure groups.
you

re¬

Successfully propagandize for the

Because his continuance in

Before

gold

be exhausted.

soon

little

on

ness for your firm, wouldn't you
invest a few thousands or so to

Congress, or at

currency

would

for

scramble

a

enormous

our

Actually, this argument simply
points up the case.
If there is so

real forgotten man, the taxpayer
message was "pie-in-the-sky" for
•who foots the bill.
He is in a
everybody—except business. These
different spot from the tax-eater
promises were to be expected un¬

der

and

en¬

V the Marshall Plan meant $100
million worth of profitable busi¬

re¬

heard the Presi¬

you

spend

be

would

gold

serves

businesses that

that that restoration

but claim the time is
propitious.
Some argue that

there

other
There

many

groups.

,h

is essent.al,

propaganda, may be
the most dangerous of all.
can

back

come

least you heard about it.

re¬

reach

not

this

om

pressure

'

,,

Propitious

Most opponents of free coinage

;;

are

comes soon.

Time

of gold admit

ing and foreign handouts. These
firms, because of the money they

There is no sustained hook¬
with the taxpayers to give him

were

House

Is

not

Congressman working for econ¬

now

in

one
way
or
another.
Eventually, this individual move¬
ment into tangibles will become a
general stampede unless correc¬

riched by national defense snend-

the Why?

a

of

been

tive action

with

1946,

maximum budget
In 1947 the Senate and

each year.

the

Act

stream-lining

Congress in

there

remains

long time shrewd people
quietly hoarding tan-*

a

direct

grants-in-aid.

Then

They will not stand against post¬ Harry Hopkins, in memory, look
war spending pressures.
The ac¬ like Old Scrooge himself.
curacy of this conclusion has al¬
Truman's State of the Union
ready been demonstrated.

For

gibles

these

still have rent-

we

fixing and rental, housing
a desperate situation.

1932.

payroll
voters, there are a large number
of State,
county and local em¬
ployees whose compensation in
part comes from Federal subsidies

omy.

look

than in

more

/ -

example,

have

Besides

to this later.

for debt reduction. /

year

-500%

or

national election.

be

10% of the taxes be set aside each

For

beneficiary accounted for
(and only half ex¬
this
payroll
allegiance
response) this group would ac¬
count for 25 million votes, almost
by itself enough votes to win any

reduction.

debt

.hat

demoralized.

Excluding

four/votes

Another
is strain public spending by demand¬
prohibited by ing gold coin was taken from
statute from appropriating more them,
the/ automatic
flow
of
than
anticipated
revenues
in strength from the grass-roots to
enforce economy in Washington
peacetime. .Still another is that
for

of production and distribution are

about. ,2

getting schooling or

hibited

system is in
fireman running
building with * a

it

rationing. \Wnen currency loses
its/exchange vaiue the processes

checks.

If each

money

So

says
he wJl stop inflation
by price-fixing, wage-iixing, and

them, the total is about 12 V2 mil¬
lion

of strength.

would go

year

line.

GI's

on-the-job-training.

right at the other end

up

the

of

who

figure does
mill/on re¬

2

includes

it

However,

.

Congressman

omy

up

each

revenue

red

debt

proposed
spiral of debt.

serf by

a

into

mounted.

if you

have enough of them, will
give you much independence. But
today the ownership of such gold

we

been

For

example, I hold here what
is called a $20 gold piece. Before

It

an

as

our

and

year

coun¬

because his money holdings
have accepted value anywhere.
try

upon

financial con¬ the position of a
should
disregard into a burning

of

went

ment

around

move

can

So

WPA.

global

our

relied

million

so**, conservation

.

million

{he current flush treasury in con¬ hose that is not connected with
the water plug.
sidering this problem.
His courage may
be commendable, but he is not
From
1930-1946 your
govern¬

gives

right

redemption

be

curate gauge

Redemption Right Insures

».

and

cannot

the holder of paper money.

the people will almost certainly
flock to. "a man on horseback"'

fantastic

ceiving either unemployment ben-

'

right now say¬
ing to yourself: "That's just what
i nave aiways thought.
The poli¬
ticians are thinking of votes when
they ought to think about the
future of the country. -What we
need
is
a
Congress ^ith some
'guts/ If* we elected a Congress
with intestinal fortitude, it would
stop the spending all right!" ,/
you are

I went to Washington with ex¬
Also, currently, we are enjoy¬
ing a large surplus in tax reven¬ actly that hope and belief. But I
had
to
discard it as un¬
ues, but this happy condition is have
only a phenomenon of postwar in¬ realistic. Why? Because an econ¬

that

system paper currency is redeem¬
able for a certain weight of gold,

the

to

about

include

not

■

Under

1933.

before

money

risen

total of 14,416,393 persons.

gives up power

one

no

Thursday, May 6, 1948

j

to

secure

gold

in

is¬

free-/

exchange

for the fruits of your labors.

V

Volume

Number 4696

167

THE

COMMERCIAL

FINANCIAL. CHRONICLE

&

The Threatened RR. Strike and Feather-Bed Rules
(C9ntinued from first page)

.

44

mantled

changes

*

These

rules.

into

classified

-

additional

7

work;

.

demands

three

may

groups:

little

lor

pay

Congress to limit

,

were

working

in

or

Referees

bed"

(2) subterfuges to increase
(a) devices to increase

employees de¬
mand an entire day's pay for a
few minutes' work by one craft
''i>- and a penalty of another whole
day's pay for the craft not used.
example,

men

If

who do

than

more

:>'the.

engine is used
require

one

rules

new

would

double pay for

the
extra

that were
engaged or
pay for those
who do not work. Or, for doing
a

men

minutes'

work

the: shift,

the

few

£ after

before

or

rules

new

-/'^ivould

require an entire; day's
4,pay at the overtime rate, or IV2
\ times
the ^regular rate. Thus, 15
ymtniites^would be paid
the.'

"

equivalent

gineer.
i

or

or

throw

tional

-

12

of

An

hours.

en¬

fireman may not flag
switch but ah addi-

a

trainman

be carried,

must

!

though there is only onq jpb
the, entire trip*

even

*

on.

Again, some rules,< are subterftiges to-increase pay. The, wage
rate on the local freight trains
is the highest in effect. Trainmen

at

-

bv wish

to

raise

all

services

to

the

local

freight
level,-, except
through-service. For example, if
in a passenger train the conductor

<•
-.

-:

& carried
to-be

package

a

dropped

.

of

stationary,

off for. a-station

^ agent, every member of the crew

)-; on^uch

a; passenger train would
receive art increase in wage up to

'

the basis, of local freight service.
.Again, a .full day's payvis d^v,manded fQr every J sidertrip,, in
addition to all of the time earned
v- on
the day. For example, on- a
4 turn-around freight run of the
.

Western out of

Norfolk and

Wil-

City.

of the Union of Railroad

the

at

men

the

electrical

sity

efficiently." He thereupon
several orders,
a few of
which are given here: (1) Amend

On

rates,

and

the

railroads,
must

consumer

service.

factories.

the
pay

shipper
more

for

The

v

trip

day,

the

And

if

>
.

;,

.

'

train

be

15

Sun¬

days.

should

stop en
few cross-ties,

order

day's

work

suggests

some¬

thing of unsoundness in the argu¬
There

ment.

is

in: it

the

funda¬

of

some

members
more

the

competi¬ gested the elimination of "feather¬

Inter-union
the

mental

resulting from mis¬
conception and' misapplication of
the

error-

labor

to the unions. Under

"Railway Labor Act, the ref¬
in the Adjustment Board

rules."

He

showed there

was

justification for awards of this
type. His opinion was dictated to
a stenographer of the Adjustment

no

Board.

and,

information^ leaked

The

as

a

result,

executives

of

the

the

four

R ail

chief

n o a

d

Brotherhoods

jointly
signed
a
telegram hastily withdrawing the
case.
!
■
;
"
•"
■

Evil-Results* of Feather-Bedding

The'result

of

such ^"feather-

selected for

a

group

of

cases.

Referees who decide against labor
are not called again.
There is no

provision for appeal to the courts.
The

interpretation of the rules
does not follow a legal procedure.
Therefore,
each
interpretation
opens the way for
new demands.
There is,no. time limit on the fil¬

ing of claims. The interpretations
make it possible for. workers to
hidden

increases

wage

Carrying

a

raises

package

car

farm

on

the

of stationary
passenger

of

every

that train. To pick up

with - livestock ;• at-a nearby

a

wage

increase by

rolls

on

the

rails

diverted

but

to

alone would increase pay¬
by $91 million, or almost
,

11%-of the total train and engine
service wages.

;

efficiency
is checked.
management improves effi¬

Again,
The

change is rapid

and

new

in¬

obsolete.

Old

{disappear

as new

desire'■ to

hold

jobs

then

should

jobs arise. The

on

to

a

dead job

or three is
pathological.
day's -work.
was not car.* Experience on Other Transporta-

the trucks. The total cost of side-

trips

cal

ventions will make old procedures

requires side-trips,

days' pay for one
Therefore,- livestock
ried

a

wages

1938

rules

-

tioa

Systems—Domestic

and

•..'.•••.s-'r1"'-'-Foreign

Other" "transportation
systems
no
"feather bedding.'
For
example, on the New York City
subways! the workers put in a
full day.
Each group of workers
have

Board

unions

for

put

were

changing the

into

The

effect.

unwilling to permit a
fair inquiry and thus can defeat
the public interest.
are

,

The' problem

needs

funda¬

a

mental approach. Labor is defined

"bodily exertion directed to
supply society with the required
things
and
services."
Wages are defined as "pay for

as

material

work

or

service," Under "feather-

bedding,"
sense.

to get

4

train

the

rate, to obtain pay for not work¬

bed";rules*is artunmitigated" evil. interpreting a rule,
Operating
costs
are
increased.
In a dynamic society, technologi¬
in the baggage car of

costs, and recommended "a

nor

or

of

and
candid inquiry." But
1941, the unions threatened to
strike if the recommendation of

which do not appear in the hourly

ing,

reduction

in

~

obtain

the

frank

erees

are

payments,

and

dues

more

bed"

More

demands.

mean

power

basis for

there

is

in

the

wage

Either

labor

and

drop

a

ciency by increasing the

power

of

must

perform

to them.

any

jobs

Men may be

is

(

the railroads

or

York

amendment

to

Anti-Racketeering
eliminated

this

evil.

late

constitutional test of

any

Hobbs

the

amendment.

The

AFL

vigorously carrying out
the law and stamping out abuses,
although it was equally vigorous
in fighting the passage of the law.
now

The Taft-Hartley Law does not

apply

the

to

Labor Act

Railway

of 1926, and it should be
the

for

extended,

deals with

Act

the

rail¬

roads'

problems. Under the TaftHartley Law management has the
sole authority to say who gets
the work and thus> would be pro¬

tected against

paying twice for the
job. "Feather-bedding" is
prohibited. It is illegal "to cause
same

employer

an

to pay

services

for

formed

which

not

money

any

not

are

per¬

to be

performed."
Complaints of unfair labor prac¬
or

tices

become

basis

for

invalid

the

when

complaint is

the
more

than six months old. The informal

hearings

before

revised

are

evidence

that

shall

Board

Labor

a

"so

rules

the

of

be

applicable in
such
proceedings."
The 'Board
shall have the power to petition
any Circuit Court of Appeals. No
employee can claim back pay for
re-employment when he has been
discharged for a "cause." The ex¬
tension of the Taft-Hartley Act to
the

railroads

causes

and

of

effect

the

of the

much

,•

so-called

actually

of

cure

a

remove

"feather-bedding"

v,;/

The

is

would

some

rest.

fundamental

"feather-bedding"

be stopped

must

neither

1934

against

j

Hobbs

out-of-

on

New

general counsel of the AFL,
Joseph Padway, advised

the

that

man

entering

"right to strike"

the

"right

cripple

to

will

ultimately go broke. - The al¬ j the country." Shall the few so en¬
ternatives are simple—adjust or danger the many?
Where public
perish.
\
>*
health and safety is threatened,
"Feather-bed" rules might be an
injunction by the* government

eliminated in

a

trade for increased

essential.

seems

wages per hour.

suggested

by

who offered

% The

coal

operators,

to raise wages

portal-to-portal
nated.

This remedy was

the

pay

dual

were

basis

if the
elimi¬

of

pay

should be changed to eight hours'
work

for

cause

road

eight
men

mile, they insist
other
the

work.
New

hours'
are

on

This
York

There, road

pay.

is

paid by the
not

true

Taft-

the

the

Railway

does not.

Labor

Act

1926

of

The remedy is to

mod¬

ernize the law.

Be¬

extra pay for

City

This

Hartley Act of 1946 provides, but

on

Robin Is Vice-President of

Whitney National Bank
James

subways.

and yard men
interchangeable. There is also
men

A.

Robin,

Vice-Presi¬

a

dent of the Whitney National Bank
in New Orleans, La., died on
25

at

Stockton, Cal.,

stated, he suffered
The

heart attack.

a

"Times-Picayune"

Orleans,

on

tion.

in

The

Mr. Robin

the

same

1918

the

Bank

in

for

paper

a

that
Vice-

Whitney National

was

1918

vaca¬

said

before becoming

Bank in

which

New

left for California
month

President of the

old

of

April 27, stated that

Mr. Robin had

earlier

April

where, it is

connected with

of

New

was

Orleans,

consolidated

.

,

7

1
*"

-

v

*

;

the

would

a

-which section laborers would un¬

'

*

pay

on

in

assigned are
difference
between
express
shifted back no
a
locomotive. Then the workers and forth between road and yard. and local services.
load, the trainmen who stood by
raise costs by asking for higher They are not paid by the mile.
Other
unions
have
adapted
and watched would receive two
rates on the more powerful loco¬ Therefore, on faster trains, wages union practices to meet techno¬
more
days' pay, or a total of 17.
motives, .although; theyx are not are no higher than on the slow logical
change.
When
a
new
Another rule would reduce the
harder to operate. Now the em¬ trains.; In fact for the same pay, machine is
introduced, for three
mileage
for
passenger
service
ployees wish to jack up the rates the senior employees prefer the months the workers about to be
from 150 to 100 miles per day and.
on light locomotives to the higher
fast express trains because, with displaced are charged against the
the minimum time from
eight
level.
fewer stops; they are easier to new machine, but they are trained
hours to six hours, and overtime
There are no monopolies of for a new craft.
This is a prac¬
"Feather-bed" rules are an eco¬ run.
would accrue after five hours.
introduced
in the
Interna¬
nomic disease. They create inflex¬ jobs between groups of workers. tice
This is really a demand for a rise
ibility. This disease is contagious An electrician may swing a ham¬ tional Ladies Garment Workers
of 50% in wages. Yet, at the pres¬
A carpenter may insert a Union by their Engineering-Man¬
and affects other industries. Ulti¬ mer.
ent 150 miles basis, the -hourly
mately, it must lead to the death fuse. The only rule is "no work, agement Department, under Dr.
rate is $4.22 per hour worked.
no pay."
of private enterprise in a democ¬
William Gomberg.
On some of the fast trains, the
racy. To pay a full day's wage for
The railroad workers' quest for
In the Soviet Union, when the
monthly pay would be fantastic,
a few minutes' work is demoraliz¬
Assistant Commisar of Railroads security
should
be
considered.
so the working days are reduced.
ing, a form of graft. There is no was asked whether two groups of They
already
have
the
most
For
example,
between Chicago
relation between work
men were paid, one for perform¬
favorable
insurance and retire¬
apd pay,
and Fort Wayne, engineers and
between effort and reward. The ing the
job and one with a sup¬ ment features. But, workers dis¬
firemen work
16 days for
49 lk
daily mileage of 150 miles a day posed monopoly for not perform¬ placed in a declining industry
days';pay, or, 3.02 days'; pay for for
passenger trains, fixed about ing it,
he said "Such practices should not be saddled upon it to
one day's work. Between Wash¬
70 years ago, can now be accom¬ would be considered
sabotage and aggravate the decline. The road
ington: and-New York, fpy 10 days'w
plished in a few hours:-Then, men a crime against the country."
should have schools to train men
work there is 46.2 days' pay, or
not working on the road, as yard¬
On the British railroads, there
for multiple duties in yard, or
4.152 clays' pay per work-day.
men, also seek methods of getting are
no
"feather-bed" rules. Mr.
road,
or
as
maintenance
men.
Other rules are devices to create
something for nothing. The total C. E. R. Sherrington, in charge of Then
workers
displaced,
after
work,-The new rules would limit cost of the new "feather-bed" de¬ the Bureau of Research of the
being given an adequate sever¬
freight trains to 70 cars and pas¬ mands is estimated at $1.4 billion, British
Railroads, wrote, "We do ance pay, could be transferred to
senger trains to 14 cars. Of 164 compared with total wages of $4.3 not
pay men for not doing work.
rising industries, as aircraft man¬
bills introduced in State Legisla¬
billion in 1947, net income of $480 An
express locomotive crew may
ufacturing, plastics or electronics.
ture^ frbmi 1925-45, only four ^were million, interest charges of $307 be called
The
relocation
of
victims
of
upon to return with a
passed, in three states they were million and common dividends of
freight
train
if
necessary, ;to
technological advance is a na¬
never
enforced, and in Arizona, $182 million.
switch
at
any
junction and. tional problem, and it should be
the laHv1 was declared Unconstitu¬ r;
to
make
the
best taken care of by some central
"Feather-bedding" retards a dy¬ generally,
tional. The unions are now trying
use
of their time.
I would go organization.
namic expanding society. Central
to obtain the same result by bar¬
heating made chimney sweeps un¬ further and say that I think our
The procedure of the Railroad
gaining, after having failed in the
necessary. Electric lighting made employees are sensible enough to
Adjustment
Board
should
be
legislatures and in the courts.
unnecessary the lamp lighter that wish to oppose the operation of
brought within the scope of judi¬
Again, the new rules demand the
such rules as I see are in force
trimmed and lit each individual
cial process. Perhaps the most ef¬
service of additional but unneces¬
on the American railways, which
lamp in the city streets.
fective remedy would be legisla¬
The au¬
sary men. Unions claim that it is
tend to make railway operations
tomobile
made
tion. The astronomical claims for
unnecessary
the
a
safety measure. But the I.C.C.
both difficult and ineffective from
horse-shoer
and
the
harness-portal-to-portal pay were pressed
analysis of 301 accidents proves
the labor viewpoint.
maker.
Suppose these had been
by the unions until the law made
that this is a fallacy. From 1932In
organized into powerful unions.
illegal.
The
legislative
Mexico,
the "feather-bed" them
34, 13 bills were introduced into Then each central heating fur¬ rules on the railroads were so remedy
has
proven
successful
route

1

made

were

contracts

The
of

The

oper¬

ated

issued

extra

an

trucks

Federal

Act

neces¬

,

tion for members is the

a

If the

patriotic duty and
that the railroads be
a

existing

Court of Minnesota, studied
a
group of cases and held, "the
startling result, four days' pay for

employee

trips^ ,Under the proposed rules,
the crew would receive one basic
day's pay for working, four additional days' pay for each ..of the
side-trips, making a total of five
days' pay, then double pay-hercause
two
engines
pulled
the
train, or a total of 10 days* pay.

is

town

Workers,

required in automobile

"It

putting

official

an

makers and horse-shoers might be

preme

is 38 miles and includes four side-

,;

addressed

who

,

to the courts to end the racket -of

standby

efficiency.

liamstowri, West Virginia; the trip
v

Thereupon, the general
of the National Railroads

Mexico

plants and the union of harness-

yaru

many
years of failure
of
pleas to the workers and appeals

public statement to the Secretary

of

47

after

manager

*

c

were

necessary

an idle
chimney
standing by. The oil-lamp
lighters
union
would
require

to be Associate Justice of the Su¬

one
1

railroads

"feather¬

crews

.

-

.

day's pay

service.

security holder is
At expropriated as in the wave of the railroads make the fullest use
the same time, the yard employees bankruptcy since 1930.
Even the of manpower and equipment. (2)
who were not present also receive worker himself is hurt. An atti- Eliminate
entirely
from
labor
the work during the few minutes. ture of
non-cooperation, obstruc¬ contracts any provisions encroach¬
In one case where a railroad had
tion and graft becomes a labor ing upon the rights of manage¬
to pay penalty payments over a tradition in the
ment. (3) The management may
industry.
discontinue
train
service
where
long period of years to the yard
What Are the Causes of
crews who
did not do the work,
earnings are insufficient to cover
Feather-Bedding?
these men were no longer em¬
maintenance. (4) Amend articles
The work is excessively divided in the labor contract so that they
ployed. One had moved to Cali¬
Each union con¬ do not limit employees from per¬
fornia, one had become a farmer, into sections.
another a postmaster and another siders its job its own
any
incidental
duties
monopoly. forming
was in jail.
**
' ;
iV\ If the work were more finely di¬ which may come up.
On one claim of four days' pay vided and there were more craft
What Is the Cure?
for one' day's
work,' a referee,- unions,;! there
would
be
more
The 1938 Emergency Board sug¬
;
Royal A. Stone, who happened "feathfei^hedding" and more in¬

men or yard
incidental work.

some

Road

the

that

rampant

incapable of giving the

receives three days' pay.

crew

This applies to road

,

rules.

these

if the
switching is done at an
intermediate point, then the road

1"

For

of

switched equipment were granted
another

would have

nace

sweep

under

awards

no

work.
*

but none

Railroad' Adjust¬
ment Boards have issued fantastic

be
(1)

and

pay;

crews,

passeu.

(2019)

.




with
years

the

Whitney.

of age.

SURE

-:;v

-

He

was

; ;

SAFE

PROFITABLE

U. S.

SAVINGS

BG

74
""

THE

(2020)

48

COMMERCIAL

Securities
•

Air Lanes, Inc., Portland, Me.
April 26 (letter of notification) 10,000. shares of preferred
stock and 10,000 shares of common.
Price-—Preferred,
$10 per share and common 1 cent. For plant and equips
ment costs and working capital. Underwriter—Frederick
C. 'Adams- & Co., Boston.;: /'

American

Broadcasting

Co.*

Inc.,

struction.
•

New York

warrants.-

•

&

..

For working capital.
::

Angus Mines, Ltd., Montreal, Canada
Feb. 12 filed €00,000 shares of common capital stock ($1
par).
Underwriter—James A. Robb, 70 Pine St., New
York.
Proceeds—To develop gold prospects;
Coast Fisheries

Atlantic
2

filed

lateral

Feb.

trust

par)

Underwriter

stock.

each

Offering—Bonds

are

Doolittle

&

Central

offered to stockholders of

nied

.

April 27 (letter of notification)
stock.
Price—$8.
To be sold
only.
To increase capital and
ing.
Bareco

an

amendment.

of

for

capital.

pre¬

Challenger Airlines Co.,

Proceeds—To pay off

•

•

—None.

Price—$2

BrockwayGlass Co., Inc., Brockway, Pa.
April 29 filed voting trust certificates representing 50,304 shares of ($50 par) common stock.
To be issued by
Deposit National Bank of Dubois, Pa., as sole voting
Business—Glass manufacturing.

a

share.

fpurchase and general funds.
Clinton

(Iowa)

Baking Co., Savannah, Ga.
1
^
(letter of notification) 14,750 shares of 6%
($20 par). Price—Par. Un¬
derwriter—Johnson, Lane, Space & Co., Inc., Savannah.

,

To

.

.

Dixie

..

i%.{

Industries, Inc.

•

Engineered Products, Inc., Denver;
(leter of notification) 40,000, shares ($ I/par)

common

stockholders of record April 28 in ratio of one new
share for each six shares held.
Rights expire May 12

Consolidated Edison Co. of N. Y., Inc. (6/3)
March. 1 filed $57,382,600 of 3% convertible debentures,

and

due 1963.

Convertible at the rate of

share

each

Chemical

debentures.

of

one

common

stock

Offering—Common

stockholders will be given right to subscribe for .deben¬
tures in ratio of

$5 of debentures for each share held.
S. Commission May 4 granted comr
petition to issue the debentures.
Underwriting—

The New York P.
panys

Price—$1.25 each.

To increase

indebtedness.

inven¬

No underwriting.

Equipment Finance Corp., Chicago, III.
: i
filed 15,000 shares ($100 par) preferred stock.
to employees and officers of the
company and its parent, Curtiss Candy Co. - Price—$100
per share. Proceeds—To be used for trucks in connecOffering—To be sold

t

tion with the Curtiss' franchise method of
•

Federal

Unsubscribed debentures will be offered at competitive

distribution.

Mining & Milling Co., Russell Gulch,

Colorado

April 29
common

$25

stock.

tories and pay current

Detroit.

mon

•

Earfe

April 30

(letter of notification) 10,000 shares of stock
$5% each (market price), for selling stock¬

for

^

Feb. 26

Co., St. Louis, Mo. y-v
April 29 (letter of notification) 2,700 shares of 5%
cumulative
preferred stock ($100 par).
Price—-$110.
For working capital and inventories. No
underwriting.

California Electric Power'
Co., Riverside, Calif.
May 3 filed $2,500,00 first mortgage bonds, due 1978.
Underwriters—Names to be,determined by competitive
bidding.
Probable bidders" include: Blyth & Co. Inc.;

-

Machine Co.

Underwriter—Charles E. Bailey & Co.,

Cole

v

Appliance Distributors, Inc., Escanaba^
:fV; -;:i;Vh-.
April 26 (letter of notification) 150 shares ($100 par)
.preferred stock.
Price, at par.
For working capital to,
expand lines of merchandise.
No underwriting. !;;;■

purchase outstanding stock of American
Corp. and its, sales affiliate.
Indefinite.

Brunner Manufacturing
Co., Utica, N. Y.
April 21 (letter of notification) 33,333Vs shares of com¬
mon stock
(par.$1). Price—$6.25 per share. Underwriters
—Mohawk Valley Investing Co.
Inc.; George H. Cooley
& Co., Inc. and Cohu & Co. Offering—Offered to com¬

•

plant.

Michigan

to be sold at

holder.

subscriptions are payable at First Bank & Trust Co.,
Utica, N. Y. General corporate purposes.
\

•

and

(Mich.)

bread

ployees, executives and management personnel. Price—
$3.49 a share.
Proceeds-r-For working capital,\ ,
- .

—

Clinton

new

Domestic Credit Corp.; Chicago
filed 150,000 shares ($1 par) Class A Common.
Underwriters—None.
Offering—To be offered to em¬

Newhard, Cook & Co., St. Louis, Mo. Proceeds—To re¬
pay a $1,500,000 bank loan to J. P. Morgan & Co., Incor¬

April 15

a

Fasteners, Inc., Chattanooga, Tenn.-

April 14 (letter of notification) 75,000 shares of class B
common stock (no par) of which 45,000 will be offered
to the public at $1 each.
For additional working capital,
machinery and equipment.
'
'
1 -

Utah

March 26 filed $7,000,000 15-year debentures, due 1963.
Underwriters
Smith/Barney & Co., New York and

Partition

construct

Dec. 29

City,

,

30

cumulative preferred stock

Proceeds—For equipment
•!

Derst

April

;

March 1 filed 600,000 shares ($1 par) common stock, of
which 400,000 are being sold for the company and 200,000 for the account of Claude Neon, Inc. Underwriting

porated

improve working capital position.

Lake

Salt

Davis

Plywood Corp., Cleveland
VS 2
April 30 (letter of notification) 3,880 shares of 6% cu¬
mulative preferred stock ($25 par). Price, par. For gen¬
eral funds and operating expenses.
No underwriting, i

*

^

-

*.

-

•

Brothers; Glore, Forgan

registration statement.

,

3,850 shares common
Price—Preferred, par; common, $35. Under¬
writers—Wm. H. Flentyre & Co., Aurora, 111.; Charles-;
W. Johns, 2002 N. Logan Avenue, Danville, 111.
Working
capital.
*
(no par).

,

Vermont

working capital.

No underwrit¬

•

trustee.

effectiveness

Hardware, Danville, III.

(Thomas)

Crampton Manufacturing Co.
Feb. 5 filed $600,000 first mortgage 5V2% sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
($1 par) common stock. Underwriter—P. W. Brooks &
Co., Inc., New York. Proceeds—To retire secured indebtedness, finance inventories and supplement working

Proceeds—To purchase rolling mill, equipment and for

rV.;

Bristol-Myers Co., New York (5/17-18)
April 23 filed $10,000,000 20-year debentures.
Under¬
writer—Wertheim & Co., New York.
Price and interest
bank loans and

cumulative

Couron

tive preferred stock (par $100) and
V

4,000 shares ($100 par) common. Under¬
writing—None. Shares will be sold at par by directors.

Co., Tulsa, Okla. (5/18)
April 26 filed 162,435 shares ($1, par) - common stock.
Underwriter—KebbonViMcCormick )8q Co., Chicago. Price
—87 each.
Shares are owned by the Phillips Petroleum
Co.
.v;;'.- -

■V)

•

April 21 (letter of notification) 1,000 shares 5% cumula¬

:

Light Co.
($100 par)

Proceeds—For acqui¬

Price—At face amount.

sition of additional office and plant facilities.

Nov. 10 filed

Co.,
.

Oil

rate to be filed in

&

40,000 shares

■

filed

members.

Under¬
Dec. 8,

common

Missouri

16

stock

Century Steel Corp., Hollydale, Calif.

25,845 shares of common
to existing stockholders

surplus.

new

Cooperative Assoc., Kansas City,

1
$1,000,000 4% non-cumulative common
($25 par); $4,000,000 of 3Vz% certificates of in¬
debtedness cumulative; and $1,000,000 of lVz% loan
certificates cumulative. No underwriting. Offering—To
the public. Common may be bought only by patrons and
Oct.

Public.Service Corp.,
Rutland, Vt.
March 30 filed $1,500,000 Series E first mortgage bonds
and 360,000 shares (no par) common stock. Underwriters
—Names to be furnished by amendment (probably Kid¬
der, Peabody & Co.). Proceeds—For a construction pro¬
gram ahd repair of flood damages.

Baltimore (Md.)< Colts Football Club, Inc.
April 29 (letter of notification) 200,000 shares of capital
stock.
Price—$1 each.
To take over assets of the Bal¬
timore Professional Football Club, Inc., and operate a
professional team a?.part of the Ail-American Football
Conference.. No underwriting.
Insurance

Consumers
:

Price by amendment.

Underwriters—Lehman

Central

•

Fire & Marine

share held.

of

consolidated stock, will exer¬
purchase enough stock to

return of $7,000,000 from the stock

Underwriting—None.
Price by amendment.
to general funds for manufacture of
commercial transport planes.

for each pre¬

new common

share

a

offering.

& Co., Dewar, Robertson & Pancoast.
Proceeds—For
property additions and expenses. On April 15, SEC de¬

^

Birmingham, Ala.

one-tenth

Power

filed

ferred.

common

Bankers

common

Nov. 21

Co.,

April 14 at par (flat) in ratio of $1.50 of bonds for
share held. Rights expire May 10. The stock
will be reserved against conversion of the bonds. Unsub¬
scribed bonds will be publicly offered by underwriter.
Proceeds—General corporate purposes,

•

and

Consolidated

..Proceeds—Added

Pro¬
ceeds—For construction and repayment of bank loans.

record

each

share

of outstanding

11.4%

assure

Power Co.

the basis of one-half share of

(5/11)

—

Maine

] 947 and only one bid, that of Blyth & Co., Inc. and
Kidder, Peabody & Co. was submitted and was rejected
by the company.
They bid $13.75, less $1.75 under¬
writing commission. Now expected on negotiated basis
through Blyth & Co,, Inc. Offering—To be offered to 6%
preferred and common stockholders for subscription on

ferred

$556,500 4V2% general mortgage and col¬
convertible bonds and 166,950 shares ($1

common

Buffalo.

Co.

-

stock.

common

cise its subscription rights to

County Club, Inc., Danville, N. J.
April 29 (letter of notification) 500 shares of capital
stock (par $50). Price—$50 each; Underwriting—None.
Approximately 100 shares will be offered in exchange
for existing debentures^.
Proceeds of balance for im¬
provement of property, etc.
Nov. 10 filed 160,000 shares ($10 par) common.
writing—Company called for competitive bids

April 19 (letter of notification) 100,000 shares ($1 par)
common stock for company and 20,000 shares for Frank
J. Shade, President.
Price—$2.50 each. Underwriters—
C. G. McDonald & Co., Detroit and Investment Securities
Co., Jackson, Mich.

of

.

Cedar Lake

•

Central

Detroit

Conveyor Co.,

*

-

($1 par)

Offering>-To be offered present stockholders at the rate
one -new share for each one held.
Atlas Corp., holder

■

s

1,159,849 shares

May 5 filed
of

Black, Detroit, Vice-President To buy equip¬
inventory for carpet manufacturing.
No un¬

derwriting.

San Diego,

California

ment and

Ampal-American Palestine Trading Corp., N. Y.
April 7 filed $10,000,000 10-year 3% sinking fund deben¬
tures.
Underwriter—Name to be filed by amendment,
if any is used.
Proceeds — $5,000,000 in mortgage loans
for construction of housing in Palestine, $2,500,000 in
loans to transportation and industrial cooperatives, and
$2,200,000 in loan to Solel Boneh, Ltd., for public works.
Steel

Consolidated VuStee Aircraft Corp.,

•

of¬

Carleton Looms,

Oliver

April 29 (letter of notification) 62,500 shares of capital
Price—$1.50 per share. Underwriting—
None. Construction of Delcars, working capital, etc.
stock (par 500).

Anchor

be

will

Securities

June 3 and debentures must be of¬

fered not later than June 15.

Inc., Los Angeles
April 29 (letter of notification) 4,000 shares ($5 par)
common capital stock, half to be sold at par to William
C. Osborn, Arcadia, Calif., President, and half to-* J.

New York

Inc.,

redeem 273,566 shares of outstanding" $5

be invited before

;

directors, officers and promoters of the com¬
pany. To be offered in units of one debenture and 400
shares of capital stock at $1,040 per unit. To retire pur¬
chase money mortgage ($114,000); build additional cot¬
tages/working capital, etc.
; /

with which the company had network affiliation
agreements at Jan. 31, 1948, and to such other persons
as may be selected from time to time by the company."

Morgan Stanley & Co.;
The First Boston Corp.

preferred stock and to reimburse treasury for
expansion expenditures.
Bids for the debentures will

fered by

persons

bidders:
Co. Inc.;

cumulative

Bay Corp., New York

Underwriter—None.

&

Stuart

Proceeds—To

■

.

Canceel

Probable

bidding.
Halsey,

April 28 (letter of notification( $220,000 five-year 5%
registered (non-convertible) debentures, due June 1,
1953, 176,000 shares of capital stock (par 100) and 220

Company now has plans to spend about $5,325,000 for
television facilities in New York,, Los Angeles, Chicago
San Francisco and Detroit. Shares will be sold to "the

Motors,

ISSUE

Halsey, Stuart & Co. Inc.; Shields & Co.; The First BosCorp. Proceeds—To retire bank notes and for con¬

13, filed 250,000 shares: common ($1 par) at pro¬
posed maximum offering price of $12.50 per share. Un¬
derwriters—None.
Proceeds—For corporate purposes,

American

PREVIOUS

SINCE

ADDITIONS

ton

Feb,

•

INDICATES

Registration

in

Now

Thursday, May 6, 1948

CHRONICLE

FINANCIAL

&

for
•

(letter of notification) 695 shares ($100 par)
Price, par.
To develop mine sites and

stock.

working capital.
Finch

No underwriting.

Telecommunications,

Inc.,

New York

;

(letter of notification) 1,000 shares of capital
(par $1). To be offered at $5.75 per share through
Littlefield & Co., Providence; Proceeds to selling stocksApril 28
stock

holders.

-

.

-

.

i -vy* VbT,--

Fission Mines Ltd., Toronto,

Canada
April 16 filed 200,000 shares of treasury stock.

?'

|Jnder-

'

ill!

PACIFIC COAST

ill

•\

HAWAIIAN SECURITIES
*

.

Direct

•

Private

Wires

,

,

Dean Witter

&

.New York
:

Boston:

Private Wires

to

Pittsburgh!Chicago

Offices in other




Principal Cities

''

.

'

San Francisco Stock Exchange:
Los Angeles Stock Exchange

14 wall

street, new york

Telephone BArclay 7-4300
SAN FRANCISCO

;

Co.

MEMBERS
New York Stock Exchange
Honolulu Stock Exchange

.

.

LOS ANGELES

•

temms
C«^c'

DEALERS

umwmmms

$1*

t}° STOH,

•

/ •

.

HONOLULU,

"v#.

-

"*)

Volume

COMMERCIAL

THE

Number 4696

167

FINANCIAL

&

CHRONICLE

•

Kuttig Sash and Door Co., St. Louis, Mo.
April 27. (letter of notification). 625 shares ($5 par) com-,,;
mon stock,
owned by Roy R. Siegel, President, and 875
shares of common, stock, owned by Charles M.
Huttig,
Executive Vice-President, to be. sold at
$33.50.
Under¬
writer—Stif el, Nicolaus & Co.,
Inc;, St. Louis.

NEW ISSUE CALENDAR
///

May 6, 1943
(EDT).Equip. Tr. Ctfs.

'

Southern Pacific Co., Noon

•

;

May 10, 1948

;

Trans Caribbean Air

_____Bonds

;

May

11,

Atlantic Coast Fisheries

1948

X"

Co

(EDT)___Equip. Trust Ctfs.

International

:

Asbestos

Jan.

filed

30

1,500,000

Underwriter—Paul E.

..Common

shares

May 17, 1948
Bristol-Myers Co./

Debentures

Car Corp..

©

Common

Island

E.

Noon -(EDr).Cl. A & Com.

Smith

/

P. Frazee & Co., Inc.

Power

Co._r______

......Bonds

Kansas

June

1, 1948 Corp.^^.Preferred
Service, Inc...Debentures

Finance

X Illinois

Bell

Telephone
y

June

4,

June 7, 1948
Joseph J. O'Donohue, IV...

Co., Toronto.

Price—$1

stock/

/;/

,

;

Fraser Products Co., Detroit,
100,000 shares

&

Co.

Mich.

:

Merrill

and

•

Lynch,

stock/ Price, par.

Gulf Public

/

,

,

Service Co.,

,

,

.

.

■

•

,

Halliburton

Oil Well Cementing Co.

;

company.

Hastings

(Mich.)

•

Hermann

Manufacturing Co.

stock.

common

/../

Electric

Co.,

Lancaster,

//;/ X

Proceeds

////•?•

&

•

Gas

Inca

Gold

drilling.

/

Mines,

Ltd.

common stock (par $1).
Mining Co., Ltd., Toronto.

Downs

Racing Association,

—

Nov. 28 filed 34,900 shares ($10 par)

Inc.,
No

common.

un¬

derwriting.
Price — $10 a share.
Proceeds—To build
trotting and pacing race track near Ocean City, Md.

Under¬
Working
-'

'

\

'/

Price—$15 each.
Underwriter—First Securities Corp.,
Durham, N. C.
Proceeds—General business purposes.

Playboy Motor Car Corp.

common

Underwriter—Tellier

& Co., New York.
capital equipment and working funds.

Plainville, Conn.'

•

Exchange,

of

;

Brooklyn, N. Y.:

Inc.,

(letter of notification)

Concord,

2,000 shares ($25 par)

Price—Par., To be sold to customers to

and provide working capital.

underwriting.

Co.,

Methuen,

Metalube
..i ;

'

Corp., Newark, N. J.

?

April 12 (letter of notification) 448,051 shares of capital
stock (par 250). Price—500 per share. Underwriting— '
None up
to present time, but it is expected that an
underwriter or dealers will be employed. Working capi¬
tal and enlargement of facilities.
X •
X
Midland

Co.,

South

Milwaukee, Wis.

(letter of notification) 20,000 shares of 6%
cumulative preferred stock ($10 par) and rights to the
purchase of 30,000 shares ($2.50 par) com. stock. To be

April

12

to be held until April 1, 1951, under option
Corp., Syracuse, N. Y. at $2 each. • All stock
to be offered to a limited group of stockholders, cus¬
tomers, and designated persons.
For inventory and
working capital/ No underwriting.
•

Public Finance Service,

Inc., Philadelphia

(6/1)'

April 28 (letter of notification) $250,000 6% cumulative

debentures, due Dec. 1, 1962. Price—Par. Underwriting
Company is offering the debentures, as of
June 1, to the present debenture holders.
Operating
capital.
'■■'/
■

—None.

•

•

Regina Cargo Airlines, Inc., Brooklyn, N. Y.
May 3 (letter of notification) 270,740 preferred shares

aircraft

common

shares.

Price—$1

class.

each

for

Un¬

•

to common stockholders in units of one

and

on

a

commission basis.

Purchase additional

equipment, etc.

Roto-Wing Air Service, Inc., Washington, D. C.

April 29 (letter of notification) 250 shares (no par) cap¬
ital stock.
Price — $80 each.
Capital funds for addi¬
tional machinery.
No underwriting.
,

Sandy Hill
New

Iron & Brass Works, Hudson Falls,

York

April 12 (letter of notification), 59,000 shares class A
participating preferred stock (par $4). Price—$5 per
share.
Underwriter—John L. Nolan, Inc.," Glens Falls,
N. Y. Working capital.
.-•.
-

Segal Lock & Hardware Co., Inc., New York
<
March 24 filed $2,000,000 15-year 6% convertible sink/
(Continued on page 50)
/
•

issued pro rata

($5 par)

common

and directors

I'.///■- .///://.X'Xv

/;/xX;///

12,500 shares

derwriting—None, but stock will be offered by officers

Mass. /X/;/

(letter of notification) 50,000 shares ($5 par)
stock, to be sold at par to stockholders.
For

No underwriting.

Aids, Inc., Van Nuys, Calif.

(letter of notification)

to Lamson

and 450

Mills

Proceeds—For

preferred stock and 12,500 shares ($1 par) common
stock, both to be offered at par; 12,500 shares ($1 par)
common to be reserved for conversion, and 25,000 shares

.

For

Production

April 26

'

,

.

Improvement Corp.,

stock.

Price—
Not more than 100,000 shares will be of¬
employees and officers at 87 V2 cents per share.

$1 per share.

Los. Angeles

Farmers'

(5/17)

Feb. 13 filed 20,000,000 shares common (lc par)'.

//

H.

Old North State Insurance Co., Greenville, N. C. '
15 filed 100,000 shares of capital stock ($5 par).

r

March

(letter of

working capital.

,

903,572 shares

Proceeds for exploration and development.

fered to

.

Merrimack

common

Ohio

filed

Underwriter—Transamerica

(letter of notification) 20,000 shares ($5 par)

Martinson

April 19

;

(letter of notification) $250,000 5% sinking
fund secured debentures, due 1960.
Underwriter—The
Ohio Co., Columbu^.
Proceeds—To redeem outstanding
first mortgage notes and provide additional working
capital. ■-.
•' •
■
>•" -




par)

Berlin, Md.

Price—$46 each.

/X'

//;

Merrimac

26

■

($1

March 10 filed 666,667 shares of

notification) 500 shares a of capital
stock
(par $100).
Price—$100.
Underwriting—None.
To purchase tax liens, etc., in New York City realty.

No

•/' '

11

North

\

^

shares

"pay current indebtedness

(5/12)

XX;///'X.X<X///;X/,'

Manufacturing

State

chase of property and

common

April 28 (letter of notification) 208 shares ($2 par) com-/
mon stock, to be sold by Harold J. Newton and Louise B.
Newton.
Price—$10.50 each.
No underwriting.
•

April

develop minini

of the company and its subsidiaries.

Markley Corp.,

April 30
/

'

•

York

Ocean

Marador Corp.,

N.

stock (par $5).
Underwriters—Lehman Brothers and Blyth & Co., Inc.
Proceeds—Shares are being sold by certain stockholders
and Company will not receive any of proceeds.
Of the
shares registered 50,000 are to be offered direct to em¬

ployees of

shares

(no par) common stock.
Underwriter—F. H. Winter & Co.,
New/York.
Proceeds—875,000 shares being sold by
company and 28,572 by stockholders. Proceeds for pur¬

Chicago

11,845

none.

April 29

•

Inc., Lafayette, La.

April 23 (letter of notification) 8,900 shares of common
stock
($4 par).
Price—$11.125./ Underwriter—A. C.
Allyn & Co., Chicago. Proceeds toi selling stockholder.

April-20 filed 730,000 shares of

Proceeds—To

stock, to be offered to warrant holders at $5.
corporate purposes.
No underwriting.

par) :

50,000 shares, ($1

—

share.

mon

To operate' mining claims.
r

Co., Buffalo, N. Y;

Price—70 cents each.

April 29 (letter of notification 1,540 shares ($1 par) com¬

Inc., Central City, Colo. //,.

common;

No underwriting.

•

Co.,

(letter of notification)

Gypsum
filed 422,467

New

March

Canada

($1 par) common treasury
To be supplied by amendment

•underwriting.
■

Gold Chief Mines,

Ltd., Toronto,

stock, of which 10,000 shares will be sold at par
to 11 designated persons.
To purchase equipment and
machinery to expand plastic book binding business/ No

Inc., Omaha, Neb.
4,000 shares ($50 par)
preferred stock. Price—Par. To retire RFC indebted¬
ness remodel and expand.
No underwriting. '/ •
•

Expected

program.

May 24.

•

common

(letter of notification)

April 28

construction

Proceeds—For working capital.

one new share for each one held.
60,000 shares will be issued to officers, di¬
rectors and some employees of the newly organized com¬
pany.
Underwriters—For unsubscribed shares Blair &
Co., Inc., and Maxwell, Marshall & Co., New York. Price'
by amendment, j Proceeds—To be applied to the pur¬
chase price for an existing textile firm known as Lons¬
dale Co., a Textron subsidiary.
'
- * •

.

Provisions

a

?

filed

March 22

Hopwood, Minneapolis. Price and number of shares
by amendment.
Proceeds—To reduce short-term bank
(oans totaling $13,850,000.
Temporarily postponed.
Glaser's

continue

fered stockholders of record about May 10 at the rate of
one new share for each four held.
Rights expire

An additional

&

•

and

Underwriters—W. E. Hutton & Co. and Blyth &
Co., Inc.,
New York/ Price by amendment.
Offering—To be of¬

Textron, Inc., at rate of

:

common."

Pierce. Fenner & Beane, New York, and Piper, Jaffray

April 30

Halsey,

•
(Joseph J.) O'Donohue, IV, New York (6/7)
// April 30
(letter of notification) $160,000 5.5% sinking
Co., Providence, R. I.
/..X/X\
fund bonds, series 1948-1973. Price—Par. Underwriter—
Bioren & Co., Philadelphia. Personal and business re¬
April 26 filed 1,192,631 shares ($1 par) common .stock.
Offering—To be offered to holders of common stock of
quirements. XX"

Gamble-Skogmo, Inc., Minneapolis
March 30 filed 120J)00 shares ($50 par) cumulative pre¬
ferred stock, convertible prior to July 31*1958.
Under¬
Sachs

include:

Lonsdale

—

writers—Goldman,

bidders

month.

April 20

(no par) value common
Offering—To be sold to certain officers and key

21

writing,
capital.

Under- *
writers
Campbell, McCarty & Co., and Keane & Co.,
both Detroit.
Price—$5.25 per share.
Proceeds—The
shares are being sold by 14 stockholders who will re- ;
eeive proceeds.
Registration statement effective Jan. 16.
par)

($1

a

Link-Belt Co.,

April

Products, Inc., Stockton, Calif.*•/

filed

Probable

National

No underwriting.

X

'

(par $1)./ Underwriter — Floyd D. Cerf Co., Chicago./
Price—preferred $10: common $6.
Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
common
shares and company 125,000 preferred shares p
common
stock.
Price—$1 each.; For working capital, i
k

this

.

Le Roi Co.y Milwaukee

March 6 filed 385,000 shares of 60 cent convertible pre- ; stock.
ferred stock (par $5) and 325,000 shares of common stock > -employees

Oct. 21

loans

April 19 (letter of notification) 30,000 shareT*($^>0 par)
common stock.
Price—$4,875.
To reduce bank loans.

Riverside, Colton and San Ber¬
■:

cents

properties.

associates./Price—$100 per share.
Pro¬
7% preferred stock.- Business: "Super

•

Underwriting

Price—50

retire

Flotitl

.

June 27 filed 300,000 shares

Fitzsimmons Stores, Ltd., Los Angeles, Calif.
2 filed 10,000 shares of 6% cumulative first pre¬
ferred stock ($100.par).
Underwriting—Officers, direc- :
tors and employees of the company will offer the stock

Markets" in Los Angeles,
nardino County. -

bidding.

Stuart & Co. Inc.; The First Boston
Corp.; Kidder, Peabody & Co. and Stone & Webster Securities Corp. (joint¬
ly); White, Weld & Co;; Lehman Brothers and Goldman
Sachs & Co. (jointly).
Proceeds—To reduce short-term'

Products Co., Inc., Emporia, Kans.

Legend Gold Mines,

share.v

a

■/:

:

Feb.

to friends and

per

„

Bonds

Proceeds—For mining and business costs.

ceeds—To

-

to

Brothers and Glore, Forgan & Co. (jointly).
March 22 filed 1,500,000 shares ($1 par) common stock.
Proceeds
—To be applied toward a construction
program.
Ex¬
Underwriter—Heronymus & Co., Sheboygan, Wis. Pro¬
pected June 1.
ceeds—To open and equip bottling plants in California
North Canadian Oils
/cities. / Price—$1 per share.
//•./:-'/././X'1
////
Limited, Calgary, Alberta

J/X

writer—Mark Daniels &

par)

»

1948

Kansas City Power & Light Co.-Bonds & Preferred

•

(no

(no par) class B

—

3, 1948

Consolidated Edison Co. of N. Y., Inc...Debentures
June

shares

| Dec. 3 (letter of notification) 3,157 shares

Bonds

2

10,000

Corp. (6/1)
($95 par) >'. April 30 filed 35,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriters
preferred. Price—$95 a share. Undewriter—Kenneth Van
Names by competitive
Sickle, Inc., Emporia. For additional working capital.
bidding.
Probable bidders include: Harriman Ripley &
Co.; Hemphill, Noyes .& Co. and Drexel & Co. (jointly);
Kool-Aid Bottling Co., Inc. of Calif., Sheboygan,
Kidder, Peabody & Co.; W. C. Langley & Co.; Lehman
Wisconsin

.

Co

Kansas Soya

Laboratories, Inc., Worcester,

.

Manufacturing Co., Detroit, Mich.
(letter of notification) 15,000 shares ($5 par)
stock, to be sold by seven stockholders. Price—
share.
Underwriter—William C. Roney & Co.,

petitive

Electric

.

-

June 2, 1948

For

mining

Narragansett Electric Co.

Co., Wichita (5/12)
April 16 filed 150,000 shares (no par) common-stock,
to be sold by American Power & Light Co. (parent).
Underwriter—Union Securities Corp', z Price—Ajjout $26
per share.
/

New York State Electric & Gas

Public

and

Gas

develop

March 30 filed $10,000,000 Series B first
mortgage bonds,
due 1978.
Underwriter—To be determined under com¬

...

May 25, 1948 //;/X/
'.Union Electric Co. of Missouri_.._.I~__Debentures

to

non¬

each.

Detroit.

Inc., Oshkosh, Wis.
April 13 (letter of notification) 1,000 shares of 5Vi%
cumulative preferred stock ($100 par).
Price, par. Un¬
derwriter—Aim & Co., Inc., Oshkosh, Wis. • For current
obligations and working capital.

May 24, 1948
Pacific

$6%

and

Funds for purchase of equip¬

working capital.

./

(letter of notification)

3

common

Price

plant

supplies

cents

Motors Metal

Johnson Foods,

(Alexander) & Sons Carpet Co._-Preferred

Sierra

milling

and

25

—

No underwriting.

April 14

Air

ment and facilities and

1943

May

construct

machinery

Price

working capital and
develop headlight control system. No underwriting.

stock

principal underwriter.

stock.

common

Moore Electronic

May

Ferries, Inc., Bohemia, N. V. (5/11)
May 4 (letter of notification) 40,000 shares of common
stock (par $1).
Price—$2.50 per share. Underwriter—

May 18, 1948
--

Proceeds—To

assessable

class A common stock and 2,000 shares
shares.
Price—$100 each. For

purchase equipment.

......Common

Co.L.

"United Brush Mfg. Co,

each.

—$1

Co., Milwaukee.

Moonlite Mining Co., Inc., Colville, Wash.
April 26 (letter of notification) 250,000 shares of

Sherbrooke,

common

stock rights for $10/
units, Gardner F. DalTo buy production machinery.
common

unsubscribed

,

Mass.

Expect¬

49

•

•

Frechette, Hartford, Conn., is the

U. S. authorized agent and

Oil

Ltd.,

($1, par)

v

Underwriter—For
ton &

claim.

Quebec

Kansas Gas & Electric Co._—

> Bareco

Co.,

preferred share and 1 \'2

additional

from A. T & T. for general corporate purposes.
ed June 2.

Well Cementing Co.„—Common

Playboy Motor

(6/2)

Proceeds—To be applied toward repayment of advances

___i_Bonds

May 12, 1948

Halliburton Oil

Telephone Co.

,

Chesapeake & Ohio Ry., Noon^__Equip. Trust Ctfs.
Island Air Ferries, Inc
_.______Common

Long Island RR., Noon

Bell

April 30 filed $60,000,000 series B first mortgage bonds,
due
1978.
Underwriters—Names determined by com¬
petitive bidding.
Probable bidders: Halsey, Stuart &
Co. Inc.; Morgan Stanley & Co.; Glore, Forgan & Co.

Cargo Lines.,-Eqp. Trust Ctfs.

West Texas Utilities Co.

Illinois

(2021)

THE

(2022)

50

(Continued from page 49)
•ing fund debentures, due 1963. Underwriter—Floyd D.
Cerf Co., Inc.
Price—95 (flat).
Offering—To be of¬
fered initially
to stockholders on basis of one $100
100

debenture for each

shares held.

Proceeds—For

re¬

payment of two notes and general corporate purposes.
Sierra Pacific

Power Co.

(5/24)

March 26 filed $3,500,000 first mortgage bonds, due 1978.
Underwriters—To be determined by competitive bid¬

ding. Probable bidders include: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; Stone & Webster Securities Corp.
Proceeds—Construction costs and the payment of $650,000 to National Shawmut Bank of Boston for construc¬

tion
•

notes.

Expected about

May 24.

Silver Knight Development

-'OS.,

Co., Ltd.,

Prescott, Ariz.

Smith

(Alexander)

Yonkers,

N.

Y.

150,000 shares ($1 par)

Price—At par. To develop

&

York.

Interest

and

rate

price to be filed by amendment,
Proceeds — General
corporate purposes.
Business — Manufacturers of wool /
California

Southern

«uu,uuu

vertible series

Edison

(par $25).

Reimburse

oi

picierence

company

Price by amendment.

property extensions, etc.
Southwestern

Virginia
Martinsville, Va.

due

Co.

stock, con¬
Underwriters—The First Bos¬

snares

Co.

Gas

and

program.

and

Lehman

•

(5/10)

Brothers.

Proceeds—For

Service

Corp./

Price—Par.> To

Wolie

a

Expected about May 10.

first

C.)

Hardware,

Inc.,

March

26

of

(letter

notification)

which

Hot Springs,

2,000 shares of 6%
Price—Par. Un¬

retire

$65,000

loans

of

and
•/

purposes.

Suburban

Gas

Little Rock, Ark.
for general working
,

Service,

Inc., Ontario; Calif.
12-year b% series sinking-;iund

March 22 fjled $500,000

debentures, due March 1, 1960, with purchase warrants
attached for the purchase of 50 shares of common stock
($1 par). ^Underwriters—Lester & Co. and Wagenseller
&

Durst, Inc., Los Angeles.

Proceeds—To purchase the

California Butane Co.
Tabor

Lake

April 2 filed

Gold

300,000

Underwriter—Mark
Price—60

cents

a

Mines, Ltd., Toronto, Canada
(par $1) preferred stock.
&
Co., Toronto, Canada.

shares
Daniels

share.

Proceeds—For

mine

develop¬

ments.
•

Theatre Candy
Utah

April

21

the

Power

SEC

&

April 29 (letter of notification) 300 shares ($100 par)
preferred stock. Price—Par. To increase working capi¬
tal and open a Montana branch warehouse.
No under¬
writing.
;
„

Tonopah Divide Mining Co., Reno, Nev.
April 19 (letter of notification) 87,500 shares of
assessable

common

capital stock

($1 par).

Price,

non¬

par.

For obligations from operation of Gaston mine and
mill.
No underwriting.

granted

the

Price—Par.
York.

■

;

•'.

Underwriter—Gearhart
'

■

......

Trans-Marine

Oil

Refining

Milwaukee, Wis.
March

19

filed

Price—$1 each.

&

May 15, 1951.
Co., Inc., New

4;

Corp.,

'

($1 par) "common stock.
Underwriter—Distribution by company.

common

$5,000,000

bonds.

would

be

used

to

Proceeds
Falls

line

will be used to buy
Hydro-Electric Corp., a
Connecticut River Power

must

first

be

offered

to

the

Co., Jackson,

Co.

(jointly).

company's
the

bonds

stock.

common

and

will

stock

Proceeds from

provide funds to

Northern

States

Power

Co.

of

Minn.

*

<

-

i

-

'<*

(jointly); Lehman Brothers and Riter & Co. (jointly).

Proceeds-—For

•
Pacific Telephone & Telegraph Co.
April 29 directors voted to sell 601,262 common shares
of stock to shareholders at $100 a share.
Subscription
rights probably will be given to common and preferred
shareholders of record on June 15, 1948, one right being
issued for each six common or preferred shares.
Funds
will be, used by company to repay; advances covering
expenditures for construction and extension of its facilii
ncras'^^ed by the heavy public demand for tele¬
phone service.
■

-

con¬

Florida Power & Light Co.
May 4 company is expected to file with (he SEC this ;
an issue of
$11,000,000 new first mortgage bonds.

week

will

of

forming into groups to compete at the sale.
The newi
securities will be designed by the utility primarily to
provide; funds required by its construction program.
Probable bidders: Halsey, Stuart & Co. Inc.
(bonds
only); Smith, Barney & Co. and The First Boston Corp..

struction work.

Proceeds

company

new

Inc.; and Leh¬
Corp.; Blyth 8c

by competitive bidding. " Probable
bidders: Harriman Ripley 8c Co. and The First Boston
Corp. (jointly); Morgan Stanley & Co.; White, Weld &
&

sale

•

determined

Shields

Jersey Power & Light Co.

April 30 reported officials of company are discussing pos¬
sibilities for sale of new securities in the amount of
some $30,000,000.
Investment banking firms already are

April 30 company asked SEC permission to issue
200,000
shares (no par) preferred stock.
Underwriters—Names-"

and

result

for all of the operating company's 1948 construction
requirements, and part of the 1949 prospective outlay.

Co., Inc.; Harris, Hall & Co. (Inc.).

Co.

a

Mich.

Bros. & Hutzler; Harriman Ripley &
Co.,
man Brothers
(jointly); The First Boston

be

as

pay

present

The certificates will be dated May
15,
1948, and will mature from May 15, 1949, to May 15, 1958.
Bidders:
Halsey, Stuart & Co. Inc.; Salomon *

to

New

$1,750,000 in

Probable

Power

Hampshire during low-water periods

company's financing program, General Public Utilities
Corp. (parent) will make an additional investment of

stockholders.

Consumers

-

preparing to sell competitively
first mortgage bonds. Opening of bids
is expected between June 1 to June 15. As part of the

trust certificates.

•

plans to redeem its first mortgage 5% bonds
redemption date. 4 New England Power,
supplies electricity in Massachusetts and Ver¬
next

any

be

used for construction and to
pay off
already incurred for the purpose.:' Probable /• •
San Dieeo Gas & Electric Co.
bidders:
Lehman Brothers; Drexel & Co. and Central
April 27 stockholders approved an increase in authorized,
Republic Co.- (jointly); Halsey, Stuart & Co. Inc.; The
common stock from 2,000,000 to 6,000,000 shares, and the
First Boston Corp.; Glore,
Forgan & Co.: and W. C.
preferred from 750,000 to 2.000 000 shares.
There is no
Langley & Co. (jointly); White, Weld & Co.; Blyth &
immediate plan to issue additional stock, .officers de¬
Co., Inc. and Smith, Barney & Co. (jointly); Harriman
clared^ Traditional underwriter, Blyth & Co., Inc, r
Ripley 8c Co., Inc.; Lazard Freres & Co. and Lee Higbank

.

debt

'

ginson
•

Corp.

Expected early in June.

(jointly).

Southern Pacific Co.

May 4 the SEC
13,811 additional
share.

Shares

granted

Warrants

20.

United

be

will

one

be

Unsubscribed

Gas

company permission to sell
shares (no par) at $90 per
offered for subscription by

common

would

share

mailed

shares

Improvement Co.

-

for

to

each

two

is inviting bids for the purchase of
$11,100,000 equipment trust certificates, series X, to
mature in 10 equal annual instalments and to be secured
by new railroad equipment costing not less than $16,650,-

will

be

purchased

bidders:

S. Commission of

seeking

and

York,

by

approval

$1,000,000

...4

v*

issue

preferred

received

at

the

office

of J.

A.

Halsey,

Stuart

&

Co.

Inc.;

Salomon

Bros.

&

Hutzler; Harriman Ripley 8c Co. and Lehman Brothers
The First Boston Corp.; Blyth & Co., Inc.;,
Harris, Hall 8c Co. (Inc.).
"
J

/: /(jointly);

N

sell

;

The

and

stock.

be

Treasurer,/Room 2117—165 Broadway,, New"
at or before noon (EDT), on May 6.. Probable

Simpson,

(parent).

to

petition
bonds

All bids must

000.

v

about

Indianapolis Water Company
May 3 company has filed with the P.
a

:

V

shares

stockholders

•

$1,000,000

(5/6)

'The .company

Harrisburg Gas Co

Indiana
of

notes

,

$7,000,000 for construction.

Bellows

of

$6,000,000 of

subsidiary

•
Chesapeake & Ohio Ry. (5/11)
Company will receive bids to be opened at noon on
May 11, on an issue of $4,450,000 of serial equipment

May

850,000 shares

:r

United Brush

Price—50 cents each.

Manufactories, New York 1(5/18)
proceeds would be used to reimburse treasury in part
The Attorney General oi the United States invites bids
for funds spent on extensions to
property.
for the* purchase of 1,059 shares of common stock (no
•
Kansas City Power & Light Co. (6/4)
•
par)j and 210 shares class A 5% first cumulative pre¬
May 5 company asked SEC for permission to issue ! ferred stock (par $100). These shares constitute approxi¬
$12,000,000 of first mortgage bonds and 80,000 shares/ mately 10 59% of the common and 35.77% of the class A
($100 par) cumulative preferred stock.
Proceeds—To '
outstanding.: Company is engaged in the manufacture

develop

acquire

$2).

Price—$5 per share.
Underwriter—
Pittsburgh. Discharge indebtedness
representing borrowings for working capital.

A. E. Masten & Co.,
•

stock

common

common

stockholders in ratio of

machinery.
Trion, Inc., McKees Rocks, Pa.
April 26 (letter of notification) 50,000 shares
(par

a

charter to

held.

South

Proceeds—To build and equip

stock

company,

of Electric Bond

•

Trans Caribbean Air
Cargo Lines, N. Y. (5/10)
May 3 (letter of notification) $150,000 7% convertible
equipment trust certificates, series A, due

proceeds

loans and

May 1 reported

Light Co.

•

Distributing Co., Salt Lake City,

bank

construction
,

mont, will be able to bring power from New England
Electric Systems southern properties to Vermont and

Prospective Offerings
Carolina

new

cumulative preferred stock ($100 par).
derwriter—Southern Securities Corp.,
To

the

mortgage

the

on

•

inating from company's charter the provision that

(F.

$1,500,000

company's

,

,

of the proposed purchase.

underwriting.
Arkansas

retire

finance

company

(A.

& Share
Co., permission to amend its
permit the public offering of additional com¬
mon stock without first
offering the stock pro rata to
stockholders.
Stockholders will vote May 19 on elim¬

Stearns

Of

properties

Co., Phoenix, Ariz.

Stanley Works, New Britain, Conn.
April 14 (letter of notification) $300,000 of common stock
at the average bid price during April, which at the
present bid of $60 would be about 5,000 shares.
To in¬
crease
cash working balance and pay bank loans.
No
,:

to

to

National Fuel Gas Co.

New

•

,

used

funds

•
New England Power Co.
April 29 reported company will ask permission of Fed¬
eral
and State utility commissions and the SEC for
authority to issue riot more than $11,000,000 30-year

B.), Inc., Scarsdale, N. Y.
May 3 (letter of notification) 300 shares of capital stock
(no par),-to be issued as a stock bonus employees' in¬

$35,000 6% debentures,
bank loans, purchase
Underwriter—Bioren
T. Williams 8c Co., inc.,

,

5

-

..

•

repay

;

Co.

L.; A. Brown, President, states that during the next six
months company expects to sell $12,000,000 new deben¬

centive plan.

C.

A

owned by
April 8 (letter of notification) 300,000 shares of common -'
stock (par $1). Price—$1 per share. Underwriter—Ari¬
Co., and to retire bank loans. All three companies are
zona Securities Co.,
wholly owned subsidiaries of New England Electric Sys¬
Phoenix, Ariz. To buy oil leases and
tem.
Following sale of its properties, Bellows Falls
equipment for drilling.
/
/

equipment, and for 'general funds.
& Co., Philadelphia, and
Baltimore, Md.

Power

1

tures.

Co.

States

be

provide

retire bank

&

com¬

$1).

on

proceeds will

Underwriter—To be determined by competi¬
Probable bidders include: The First Boston
Harriman Ripley & Co. and Blyth & Co., Inc.
(jointly); Halsey, Stuart & Co. Inc.; W. C. Langley & Co.;
Kidder, Peabody & C©.; Stone & Webster Securities
corp.; Merrill JLyneh, Pierce, Fenner and Beane; Kuhn,
construction program.

Co.

April 20 reported to stockholders that
it ? was negotiating the sale privately of
$3,500,000 first
mortgage bonds and $1,000,000 preferred stock.
The

(letter of notnication)

1968.

Mountain

transmission

Harris, Hall & Co. (Inc.)
Proceedsfor expenditures for acquisition of

and

Corp.

April 22

Utilities

Western States Oil

April 23 filed

•'*

The company

N

March 29 filed $5,000,000 Series B first mortgage bonds,

Loeb

Products

portion of the additional stock will be offered for sub¬
scription by stockholders.
Proceeds will finance recent
acquisition of company's new Dearborn (Mich.) plant.

Corp., New York
April 8 (letter of notification) 44,443 shares of common
stock (par $5).
Offering—Offered for subscription by
stockholders at par in ratio of one new for each two
shares held.
Rights expire May 18. Working capital.
Not underwritten.
<

rug yarn.

ton

Steei

West Texas

Screw

(par

April 27 (letter of notification) 8,000 shares of common
stock, to be sold by Gilbert Verney, President.
Price, at
market (about $12).
Underwriters — White, Weld &
Co., New York, and F. S. Moseley & Co., Boston.
Webrib

Masco

Corp.;

Sons Carpet Co.,

New

•

Verney Corp., Boston

.

Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley &
(jointly).
;

Stockholders recently approved an increase in the
mon from 354,000 shares to
600,000 shares

due 1978.

(5/19)

Dominick,

&

8c

tive bidding.

April 29 filed 50,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriters—Morgan Stanley & Co. and
Dominick

•

Thursday, May 6, 1948

Co. Inc. and Lehman Bros,

-

No underwriting.

mine claims.
•

stock.

common

FINANCIAL. CHRONICLE

&

writing—None.
Proceeds—To provide capital for the
purchase and operation of a plant with an annual pro¬
ductive capacity of 4,000,000 pounds of viscose filament
rayon and 8,000,000 pounds of viscose staple fiber.

>.-;>■

April 26 (letter of notification)
non-assessable

COMMERCIAL

•

-

Triumph Gold Mines, Inc., Oatman, Ariz.
(letter of notification) 450,000 shares of

April 29

assessable

common

To purchase

and

capital stock.

instal

No underwriting.

mill

and

ore

non¬

reserves

Union Electric Co. of Missouri
(5/25)
April 19 filed $25,000,000 of debentures, due 1968.
derwriters—To be determined

Un¬

through competitive bid¬
Probable bidders: White, Weld & Co. and Shields
8c Co. (jointly); The First Boston
Corp.; Halsey, Stuart
8c Co. Inc.; Dillon, Read & Co.
Inc.; Lehman Brothers.
Proceeds—To pay construction loans and
provide con¬
ding;

struction funds for

and

$3,860,000 of

a

subsidiary, Union Elec.

Power Co

Expected about May 25.
United Rayon Corp., New York
City
March 29 filed 9,950 shares (no
par) common stock.
Price
$1,000 each. Each share is to be accompanied by
a "production warrant"
permitting the holder to buy a
proportionate share of the company's output.
Under¬




construct

1%%

additional

notes

issued

property

for

and

financing. ■
Bids are expected to be opened " June 14 and
public
offering about June 17.
Probable
bidders:
Halsey, '■
Stuart 8c Co. Inc. (bonds
only); The First Boston Corp.;/
Kuhn, Loeb 8c Co.; Salomon Bros. & Hutzler and Union :
Securities
Corp.
(jointly); Lehman- Brothers;- Glore,
Forgan 8c Co. and W. C. Langley & Co. (jointly).
-

Long Island

RR.

and

retire d

interim

requesting bids for the purchase of $4,035,000 equipment trust certificates, Series K, dated '»
May 1, 1948, to mature in 15 equal annual instalments of
$269,000, from May 1, 1949 to May 1, 1963. Bids must be

brushes^having

:

•

Westinghouse Electric

debt

issue
or'

from

on

*

-

increasing

$50,000,000 to $150,000,000.

Sgfithorized

It is planned to

$70,000,000 to $80,000,000 of debentures to

retire

a

refund

portion of $100,000,000 obligations maturing

in 1951. These

tures and $80,000,000 of bank

able Bidders:

Corp. '

July 12 stockholders will vote

delphia 4, Pa., at or before

(EDT), May 11. Prob¬
Halsey, Stuart & Co. Inc.; Salomon Bros.

Reported net-

Department of Justice. 120 Broadway, New York 5, N. Y.,
on or before noon
(EDT), on May 18. Stock will be sold
only to American citizens.
•;
»,
•

received at the office of Geo. H. Pabst, Jr., Vice-Presi¬
dent, at Room 1811, Broad Street Station Building, Phila-.
noon

principal office at

a

118 Wooster St., New York, N. Y.

worth of .company as of Dec. 31, 1947, was $443,023. All
bids must be presented at the Office of Alien Property,

(5/11)

The company is

s&le .of-.'paint

116 and

obligations consist of $20,000,000 of deben¬

writer, Kuhn, Loeb & Co.

loans.

' : S

Traditional
i

under¬

Volume

167

Number 4696

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

little to attract his funds in the

Survey Shows Business Executives Optimistic

market

tions

expected to continue, with ineffective price resistance.
to continue "at or near an all-«
through the first half of 1948, according to the latest sur¬
vey of business practices conducted by the National Industrial Con¬
ference Board, These executives also report that the business outlook
has ■ "not
been
significantly al- <&tered" by the break in commod¬
productive efficiency. In general,
ity prices earlier this year.
the break-even point is still high
regarding the

in

nearly

all

companies and has

considerable

caused

latter half of the year. Attention
is called to the "marked change

because

in the business picture which is
likely to occur" as a result of any
large
remobilization
program.

level of production.

trend

New

of

apprehension

orders

reported as still
received
in
substantial

being

are

quantities,

and few cancellations
reported. Profits are expected

are

the

there
of

even

The

is

little

"deciding
of

cushion in

reduction

a

is

held

the

in

the

points and
the im¬

convertible

costs

continue

may

further

of

to

and

present
points.
With

mounting and
increases

majority

of

high
fixed

third round

a

the

possible,

wage

or

wage

rise

increase

break-even
costs

that

executives

little

see

hope of reducing prices.;

no

are

operating
it

to

near

"at

capacity

as

or

availability oi

materials and labor will per¬
mit." A few industries, however
raw

have

already experienced reduc¬

tions in operations owing to lack
of demand for their products or

resistance to

prices.

Comparing

y.

operations

in

of

1947,

•

no

the

expect

companies antici¬

change.

...-

.

The

outlook

good."
the

for
is

1948

Slightly

reporting

the

and

six

in

same

halves

of

the

the

One out of four companies

year.
sees

last

companies; expect

second

decline in

a

only

in five

one

increase.

demand, while
sees

possible

a

that

warn

capacity

operations should not be taken to
that

mean

as

strong

the
as

it

sellers'
was

Many companies

market

a

are

year

off

is

ago.

alloca¬

tion and numerous executives

re¬

port that, while they can sell their
full

output,

a

cus¬

price in¬

likely

stock

unani¬

With
the

began

of

willing

to

of

the

unmeasurable

European

and

program,

ef¬

Recovery

the

possible

general

third

There-is

feeling, however,

net income

that

after taxes will about

equal that of 1947.
Profit

margins

somewhat

celerate

efforts

to

will,

like

have

less

power

'y

it

in

surveys

have

the

as

and

dollar,

equals
the

net

even

that

have

Both

for

run¬

aroused

shares

paying

56,

debt from

The

company

Edison

of

than

of

the

from the sale
used to

gations

paper.

3^s, the

winner

102.06999

and

the

run¬

offering 101.43,

the

1951.

than

side

The
maturing
debt
includes
$20,000,000
of
debentures
and
$80,000,000 of bank loans.

sold in less

and

more

mium of

being

to

rose

a

DIVIDEND

point on the
103 bid

a

in¬

quoted

A semi-annual

to

are

JOHNS

IOWA

ijtw IJorl

of

Delaware

the

on

Common

Company
1948

Stock

of

Commercial

Financial

Chronicle, 25 Park
New -York. 8, .N^Y.v'Uv

CORPORATION

the

June

payable

the

B33

15,

A cash dividend of

1948.

per

EDWARD

L.

SHUTTS,
President.

May 4, 1948.

share

stock

of

declared,

declared

has

May 4,
1948

■

i

-

a

of Directors

today

quarterly dividend of

250 per share

per

on

A regular
quarterly dividend of
3iy40 per share on the 5% Con¬

pany,
'■

payable June 15,'1948,

stockholders of record

to

declared

payable June 1,

stockholders

of

1948.

at

the

has

record

1948,

Common

declared

to

payable

stockholders

May 15, 1948.

Secretary

M. E.

Qualified

to:

>

1. Forecast market trends.
2.

Analyze individual

4.

convincingly.

securities.
-

•

Appraise situations based

//

—-

GRIFFIN,

Dividend

April

Notice

THE FLINTKOTE

Preferred Sleek Dividend

quarterly dividend of
1 One Dollar Eighteen and Threequarter Cents ($1.18%) per share for the •;
quarter ending June 30, 1948, on the
4%% cumulative Preferred capital stock of
the Company, issued and outstanding in
the hands of the public, has been declared
out of the surplus net earnings of the Com¬
pany, payable July 1, 1948, to holders of
such stock of record on the books of the
Company
at
the
close
of
business
_

3. Talk

on

quick field visits.

THE

COMPANY

regular

Burlington Mills

30

May 5, 1948

CORPORATION

The

Board of Directors of
Burlington Mills
Corporation has declared the following reg¬
ular dividends:

Preferred Stock
A

$1

per

share

quarterly

6.

Common Slook Dividend
^

of Twenty-five Cents (25c) and 2/100ths
of a share of the Common Stock of Atlantic

See samples of my work.

Engi¬

neering studies and C.P.A. back¬
ground have helped balance my
judgment and train me to make
sound

J 422,

decisions

speedily.

Commercial

Chronicle,

25

&

Park

Box

Financial

Place,

•

••

§

the quarter ending

'

H. D. ANDERSON

May 5,1948.

•

|

Secretary

STOCK

1948

to

payable

stockholders

June

15,

record

at

on

of

the close of business June

share

1, 1948.

ZVi% CONVERTIBLE SECOND
PREFERRED

STOCK

Common Stock

87 Vt cents per share

City Electric Company on each share of
the Common capital stock of this Company,
issued and outstanding in the hands of the

public, has been declared out of the sur¬
plus net earnings of th& Company, to be
payable and distributable June 15, 1948,
to the holders of such stock of record on
the books of the Company at the close of
business May 12, 1948.

PREFERRED
per

the $4

Cumulative Preferred Stock of this

Checks will be mailed.

June 30, 1948

New

York 8, N. Y.
••

I

CUMULATIVE
87'/2 cents

THE regular quarterly dividend for

Manage Statistical and Under¬
writing Departments.

•

ZVi%

of $1.00 per

dividend

share has been declared on

4% CUMULATIVE PREFERRED STOCK

June 4, 1948.

5. Write reports to stockholders.

Rockefeller Plaza

New York 20, N. Y.

Corporation,




the

on

been

28,1948

v

,

REASONABLE SALARY

attempting to reduce

Support

1948, to
May 15,

quarterly dividend of

share

per

Stock

May 28,

close of business May 14, 1948.
W. D. Bickham,

A regular

250

record

;

AMERICAN CAS
ANII ELECTRIC COMPANY

Financial Writer

expenses.

by raising

DIAL,

Secretary-Treasurer.

previously reported in

point

G.

their

been

to

Secretary and Treasurer

the outstand'

ing capital stock of this Com'

Treasurer

.

Board

declared

been

JOHN E. KING
.

.1948,

vertible Preferred Stock has been

'

&

1,

the close of

at

Woo PALL INPUSTRI Est | NC'!

149

The

payable June 24, 1948, to stock¬
at the close of business

Place,

July

COMPANY

Dividend
No.

(20tf)

June 4, 1948.

(500)

•

holders of record
on

payable

stockholders of record

'

cents

business June 4, 1948.

OIL

Pilliluryk

Stock

Fifty

the outstanding capital
this Corporation'has been
on

MORSE

DIVIDEND

Common

CARBIDE

CARBON

stockholders of record

to

June 1,

payable June 1, 1948, to stockholders of
record at close of business May 21, 1948.
on

Philadelphia,"Fa.

AND

SautTartj

A dividend of twenty cents

of

1948.

HOPKINS, Treasurer

UNION

•'

-

Dividend Notice

A quarterly dividend of $1.75 per share
on the Preferred Stock has been declared

share

28,

UTILITIES COMPANY
r

NOTICES

CORPORATION

has
June

SOUTHERN

INCORPORATED

than

payable

THE UNITED GAS IMPROVEMENTCO.

SOCONY-VACUUM

Radiator

par

stockholders

to

May

Stock,
share,

per

1

Standard

American

1948,

record

The Board of Directors has de¬
clared a dividend of 250 a share

Interest

dollar,

faster

29,

big
telephone
issue
sight with the filing

into

probably
>

DIVIDEND

Capital

$13.50
declared,

April 27, 1 948o

Monday.

1947,

dividend of 65c per

the

on

been

DIVIDEND NOTICES

additional $1. par- com¬

Underwriters

NOTICES

pre¬

share

Another
loomed

National

Reawakened

of which will be

retire outstanding obli¬
of $100,000,000 due in

debentures,

were

hour

an

$57,382,-

scheduled

to is¬

proposes

$70,000,000 to $80,000,000 of
long-term debentures, proceeds

103% asked.

any

au¬

$50,000,000 to

$150,000,000.

the

telephone

for

On
reoffering
priced at 102 Vfe,

offer

prospect

reach market next week,

Young man experienced bookkeeping,
stenography, presently employed in¬
vestment securities
house, seeks new
K

special meeting to increase

a

thorized

the

of

vCOMMON DIVIDEND

Box

Westinghouse Electric Corp. has
disclosed plans for new
financing
through a call to shareholders for

value

California

is tentatively

mon,

SITUATIONS WANTED

high

stock at $100 a share to meet
such
future advances from A. T. & T.

com¬

because

rivalry

bid

Gypsum
Co.'s projected offering of 422,467

replacement

mounted

ers rights to subscribe for an
ad¬
ditional 389,995 shares of common

New Telephone Issue

immediate

PREFERRED

materially reducing

break-even

in

Meanwhile

The purchasing

machinery

fore July 1, to offer to sharehold¬

sue

in the

groups

if 1948

of

consumer
„

tinue to borrow from its
parent to
cover forward needs.
'
«
It proposes later,

Kentucky

600 of convertbile debentures.

reserves.

by the Conference Board,

been

to

as

Edison Co. of New York's

expected to

are.

bankers

$100,000,000

by the end of the current month.
But the
operating unit will con¬

Several compa¬

by cutting overhead

Others,

the

Co. 800,000 shares of $25 convert¬
ible preference, and Consolidated

of dividends is down sharp-

and

costs

compa¬

nies reported that they had

successful

for

the

as

bidding

petitors

to

'

in¬

maintained

value.

connection.

4ower

latter

subscribe

Southern

are

on

down

be

income

net

nies included in the survey to ac¬

break-even point.

the

much interest in

interest

constant

for

issues which will be under¬

by

the

usual

ner-up

of

to

two

of this issue is

purpose

Big Industrial Issue

as

circles

ning

of

fraternity

records

a

Derby did in racing.

finding grow¬
by an ing evidence of a reawakening of
increase in unit production.
public interest in equities, prob¬
If
ably brought about as much by
substantial rises in wages
occur,
the improved tone in the seasoned
net income will suffer.
market as by any other force.
Some executives point out that
The individual naturally finds
will

come,

C Prices and Break-Even Points

many

most

Largest

AVAILABLE!

prices has induced

the

prove

the market,

new 35-year debentures of the
Southwestern Bell Telephone Co.

With
out

on

This week's sale of $100,000,000

of

The

B

1978.

for
repayment
to
the
American Telephone &
Telegraph
Co. advances of about

averted.

market

first»mortgage, series

due

unsubscribed proportion.

Program, the impending defense

years.

to

closing

banking

thumb

"rights"

re¬

than at any time in the past few

resistance

the

new

bonds

probably be¬

of

share the

a case of
first permitting present holders
to
exercise
their
pre-emptive

Income

the

peo¬

really

Giving Citation A Run

small pre¬

"ice-breaker"

the

to

a

a

stances, however, it is

new

are

new

probably

raised almost

equity prospects and came
up with several of rather husky
proportions, -f

this

occur

mounting customer

companies

will be

espe¬

'/•

this

way

In

to

forecast their net income for 1948

type' of salesmanship is required

Consumer

following

the books.

aggressive

more

bid up to

was

mium

written

be

so,

,

Net

fects

as

firms. Offered at $25

likely to take place either,

because

regarded

wide underwriting group of 120

time, increases

same

is

would

dash of cold water

other

almost

are

the industrial

'

Executives

not

sistance.

than half of

production to be the
first

not

because of

a

"not quite so

more

of

round of wage increases.

Last Six Months of 1948

months of

form

their

which

cially in view of the splendid
reception accorded the offering
which was handled by a nation¬

have

.<•.y; ;,y v

At the

Few

declines, although

out of ten

seven

pate

companies

more

are

would

in stating that price decreas¬

year.

«

>

first half of 1948 with the last half

increases than

the

/'••:.

are

es

but

along to

Companies

repjort that they

the

as

in

creases.

mous

Most companies

absorbed

passed

tomers

Level of Operations

;

be

is

stock

underwriting cir¬

likely to usher in

as

This

in material and labor costs
the result that their break¬

be

distributor

underwriting
fraternity
quite
understandably is hoping
strongly that a railroad strike,

a period
activity in the fielcj of
equity financing.

point has been pushed "very
high."- These companies report
that further wage increases can¬
to

western

The

of greater

even

not

preferred

looked upon in

of

provide

looked alive again.

Sunray Oil Corp.'s offering of
800,000 shares of new cumulative

51

by Illinois Bell Telephone Co., of
registration to cover $60,000,000

in¬

ple interested in buying stocks

Numerous companies have
absorbed part of their past in¬
with

expressed

only

the

and added that his books

creases

are

buyers of

in 18 months he found

pending third round of wage in-,

Fears

obliga¬

are

on a visit,
reported that for the first time

creases.

"to hold close to the 1947 level."

to

recently in New York

be

to

secondary

even

A middle

cles

.

factor"

break-even

prices

in

securities

stitutional type.

Production is generally expected

queried

debt

offer yields that

attractive

time peak"

Some doubt in the minds of the

for

where

National Industrial Conference Board reports 1948 business peak

executives

(2023)

COMMON

STOCK

($1

par

A

value)

■

to

dividend

Stockholders

business May

is

of

payable
record

June
at

the

has

,

dividend

of

declared

been

$.50

per

on

the

Common Stock of this corporation,

payable

\

Each

quarterly

share

(45'h Consecutive Dividend)
37 Vt cents per share

1, 1948,
close

of

5, 1948.

on

June 10, 1948 to stock¬

holders

of

record

at

the

business May 27, 1948.

close of

Checks will

be mailed.

CLIFTON W. GREGG,
STEPHEN L. UPSON, Secretary

Vice Pres. and Trees.

of

52

COMMERCIAL

THE

(2024)

FINANCIAL

&

CHRONICLE

Thursday, May 6, 1948
representatives may

be expect¬

ed

BUSINESS BUZZ

vigorously,

to

it

oppose

perhaps refuse aid.
ft

on.

U.

for

East

is

soil

American

the

fertile

most

Despite this, the Adminis¬

tration

determined

had

no

,

.

Latin America is said to offer

relatively

so

are

rich

the

because

seed
area

of

and

the

are

poor

so

rich

very

$500

.

■

'

ft

.

to

Add

t the

this

dislocations

the

war-induced

which

part

of

played

Something
the

of

which

mess

be

pulled

times

by

and

places

their

suit

at

objectives

There

seems

is

is

to

doubt

South

American

the

Latinos

reached

Marshall

eral

.why.
•

:

.

continent,

away

and

5j:

If

they've got
sionally
trained
there

don't

tween

strategic

six

seven

or

Germany
and

U.

years

was

Africa.

in

impossibility

It

not

that

-

on

bases,
from

which

could

aircraft

German

subs

an

is

White

de¬

House

impend¬

an

Federal

planning

agen¬

What

it.

borne in mind, how¬

that

be¬

program

any

will

a

deficit

fiscal

amount.

Th«

tell

you

for

at

boys
street

the

will

the

com¬

about

by

year

that

boys on the Hill

present programs

will not threaten

deficit.

a

other

tell

sure.

There

any

end

you

additional

will be

The

of

the

deficit is

a

doubt if

no

programs

are

sur-v

not be par¬

through France and estab¬
lish themselves in Africa. Should
dire situation

the Latinos will
come

develop, then

see

U.

S. dollars

rolling down to Rio.

General

Marshall

strategic

things

still

has

a

of
looking
at
though the top for-

way

even

t

1

even a

bloody communist upris-

ing

or

two is not going to

ace

seriously the security of the

men¬

From this system
get 2% compounded and

can

withdraw

demand.

on

this

the

anomolous

situ¬

Congress

U

of

cannot

lower

postal savings interest rate

1%.

from

Chief objection

the

Post

which

ment,

Office

gets

subsidy money to
eration

comes

Depart¬

just
carry

little

a

the

he

Thomas

postal savings. Pro¬
ponents of the lower interest on

postal savings
up

have

to

replaced

B.

McCabe

let

customers just complain

it go

him

of

to

bear

con¬

point where she
chance to elbow

a

been

are

Wilson, McMaster
The

Financial

at that!"

stick

by

around.

to

handle

Board)

his

(Ec-

That

proposals
Mr.

of

in

Eccles

returning

timent,
now,

pansion of bank credit.
Then

Mr.

Truman

ex¬

repeated

on

recently his plea
to' enact the "10-point anti-infla¬

it

of

for the

political music, just

weeks

straints
credit.

Tru¬

couple

a

recommended

ago
the

on

re¬

the

C.

Co.,

134

He

was

partner in ^Abbott, Proctor
«

it is

little

of

ing

This

disinclined

are

legislation

Treasury

offi¬

to

either

to

reserves

deposits

or

secondary

Mr.

Eccles

the

motions

impose

of

tics

higher

the

new-fan¬
which

reserve,

again

in"

FR

commercial

on

Until

Mr.

the

Eccles

is

own

control,
that

hears

from

Mr.

has

best

run

out

present

Eccles

will

political

the

ESTABLISHED

Members
40

complications.

hold

the

U.

back

its

S.,

1919

Security Dealers Ass'n

Exchange PI., N. Y. 5

H.A. 2-8780

Teletype N. Y. 1-1397

S, will not attempt

Trading Markets:

keep

as such by
threatening ; to

its

Ralston Steel Car

aid.
on

Oregon Portland Cement

the other hand,

foremost

before

governments of recipient
tries

Y.

will avoid

or

The U.

•

N.

"mixing
interfering with local poli¬
the country receiving aid.

withholding

will

lips the word

President

credit

Hence

advocating.

;;

Mr. Truman's

of

practice

channeling aid will take
cognizance as necessary

country

or

M. S. Wien & Co.

,

and

to balk nationalization

went through

Finally, the White House let the
word drop that it had given no
thought as of that time to desig¬
nating Mr. Eccles Vice-Chairman
of the Board.

in

local

sec

empowering the

Soya Corp.

industries

socialist
regimes.
good chance that when

a

principle

as

"high

Tucker Corp.

on

announced, this is about what

In

Tidelands Oil *

;,:

official

an

Finishing

Dorset Fabrics

*

'

it will be:

re¬

that

-U. S.

under

S.

widely printed

*

moment

Transmission

Gas

Memphis Natural Gas

be anticipated that

nationalization of

U.

come

Texas

of ERP aid in connection

use

abroad

expansion of bank

-''

.

guess

a

nation¬

a

policy has not been announced

There is

words

may

this

the

economic

from

'
As

with

gled

Louis

the staff .of

Street.

& Paine.

couple of weeks from

a

■v

tion" jprogram, including curbs on
credit.
Then, too, the Council of
Economic Advisers, which writes

bank

Salle

La

good time will be had by all.

a

.

several occasions

on

1958

wide swing to test banking sen¬

and that of the board for stand¬

that

He has until

Governors takes his seat, af¬

ter

did.

by authority to restrict the

legal

joined

McMaster

wait that long. Meantime, when
the new Chairman of the Board

Congress.

of

Chronicle)

—

to pack his bags, if he wants to

remain

man

ILL.

has

formerly with Shearson, Hammill
& Co., Faroll & Co., and Farwell,
Chapman & Co.
In the past he

Chair¬

as

paramount

the

Riverside Cement A & B

coun-

*

objective,

Spokane Portland Cement

which is that the purpose of for¬

eign aid is to boost the produc¬

tivity and economic strength of
the recipient nations. It cannot
give

aid

primarily

socialization.
tion

will

increased

to

Where

hamper

the

further■;

socializa¬

LERNER & CO.
:

.

v.

Investment Securities

10 Post Office

target of

productivity, the U. S.

Square, Boston 9, Mass.

Telephone Hubbard

1990

Teletype BS 69

frightened to

their proposition. They
served

notice

HAnover 2-0050

Teletype—NY 1-971

that

"the friends of the little people"

be based

our

Mr. Truman asked Eccles

man,

op¬

of

bring

Today's markets

From

Treasury baby bond one can get.
2.9%, if he holds the obligation to
maturity," but much less Uf he

the

imminently necessary, and
losing
the
main
battle.
And;

-though

Board

you

money,

not

of

any

and

of wise money.

ation, and despite the fact that
-deposit insurance protects scared

opposition at points where it is

South

"Why can't

cials"

Despite

The contest is hottest in Europe.
There is no use scattering your

to

that

c

to

Wilson,

Originally designed as a haven
for scared money, the postal sav¬
ings system is now a repository

cashes in advance of maturity.

eign officer of the government.

seem

out

West.

Seaverns

Now

,

push

a

every

CHICAGO,

ports in the newspapers assert¬

forthcoming—and get enacted.

alleled unless and until the Reds

such

•

'• *' •''':-

on

be

Federal

ing

ships

and

any.

face raiders.
That situation will

get

pressure

(Special

reiterating his recommendation

a

Brazil,

and

get

yond what is presently cook¬
ing in Congress will guarantee

S. needed,

in

formerly

S.

climate

ft

prospect of

go

ever,

patrol the south Atlantic,

combat
'

U.

particularly

the

prob¬

own

the

expect -to
^

appropriate

cies

this side of the Atlantic.

Furthermore, the

not

feels she has

cles-FR

should

she

might have been able to grab
base

than

line;

will

bring

the

Atlantic

was

then

hope

stantly at

military material aid pro¬
gram
for the "Western Union"

Nazi

ago.

the

on

little

tain

of

ing

and

now

make

the

nies the

down

situation

S.,

to

and

While

vast difference be¬

the

told to solve their

ever
'"V
,.v,

;L'V:

good, profes¬
general

confronting the

sus¬

a

cur¬

was

they
•'

-■

all those wearing
pretty uniforms, he can probably
guess
why
Marshall
kept
his
checkbook in his pocket.
a

a

is

i.e., like Yugoslavia. Neverthe¬
less, Russia
will continue to

habitable for U. S. investments if

among

There is

There

war.

Louis C. Seaverns Joins

lems

.

a

for

Staff of

were

know

*

*

manpower,

of their produc¬

■

however, to start some thinking in
view of General Marshall's.; flat
turn-down of easy money. Latins

Bogota fully

-^v

'

■

mobilized

Russian stooges behind the

are to be enticed, some¬
must be done to protect
them against confiscation. There
was not enough of this to estab¬
lish a trend.
There was enough,

benefits

economic

are

thing

with lush
freely donated
once more by Uncle Sam.
They
got the cold-shoulder from Gen¬

prepared to walk

major

a

They

investors

or

the days when the U. S. was wor¬
ried about the Nazi penetration of

the

S.

deficiences

tained

Latin

a

aware

was

vestors, and that if private U.

accepted here. Remembering

so

avoid
U.

to

little

be

to

the

ft

there

and

country

prospects,

war

The Russians defi¬

are aware

tion

velopment capital, it would have
come
from private U. ,S. in¬

other

factual situation

a

they

the fact that if it wanted real de¬

points in Latin America.
that this

Here

ence.

American

ft

•

about

greater

upward, there were a few
encouraging signs at the confer¬

commies at
which might

the

disad¬

ties for production. Despite their

Latin with the hand outstretched,

was

Europe \

impressed with U. S. potentiali¬

palm

staged at Bogota probably could

western

ft

want

more

big

a

not

problem

snapshot of the latest

a

with

war

Despite the dismal picture of the

in

counter¬

a

nitely

of

inflation,

S.

U.

the

part.

K.

ft

take

"

of today:

as

<

poor.;

very

The

strategical

it

them thereby loving the
U.
S.,
Congress wouldn't lend
them a cent.
*"
■*:
'

'

will

,

and keep

that

put

least

vantage.

billions to solve their problems

in

for the communist

bed

good

a

ft

%

them.

which

the

thinking

down in

money away

of the woods.

at

loans

bank

least for the time being it is going
to throw

that neck

items

million of E-I
may
be
withheld.
Should the Congress ever get the
pitch of how completely the La¬
tinos expected the U. S. to kick
the

Even

at

that

to

Here is
#

Redskys

eco¬

western

will be to trade the commies those

the spot.

to

in all the world for the communist
seed.

valuable

U. S. until and unless the commies are geographically in a
position to cash in on same by
moving troops and equipment

that the Latin

The

of

nothing in payment which is

the amigos Latinos interpret Secretary Marshall's offer to pro¬
vide them with $500 million of Export-Import bank loans, and not a
cent more. There is an interesting story behind the hardening of the
U. S. attitude toward all the good y •
--——
—
——
way

It is believed here

rehabilitation

Europe.

That is the

.

indispensable to the

are

nomic

WASHINGTON, D. C.—Santa Claus died at Bogota.

room

Cur¬
Some of the products of the

tain.

Capital

neighbors south of the Rio Grande.. It involves a seeming paradox

ft

likewise is expected to leave
trade through the Iron

Behind-the-Scene Interpretations
from the Nation's

it

S.

foreign aid to the 16 co¬
operating
European
countries

•

•

Empire Steel Corp.

Firm Trading Markets

will sound off if they try to get

On yearnings

action

rather than earnings.

„

on

.their bill.

Marriner

\

S.

Eccles

eral Reserve Board is
't

4

*

★

★

Herbert H. Blizzard & Co.
;

123 South Broad St., Philadelphia 9, Pa.

FOREIGN SECURITIES
of the
as

Susquehanna Mills

Fed¬

All Issues

innocent

^

of

suspecting that President Tru¬
man might not mean what he
says
as

high

any

school

student

of

r.ARL MARKS & TO. INC.

current events is who reads Presi¬

FOREIGN SECURITIES

dential messages and statements.

SPECIALISTS

Hill, Thompson & Co., Inc.
Markets and

Situations

'

Clear thru—Montgomery, Scott <£ Co.

When

the

President

asked

"

Neu> York £ Philadelphia




Mr. * Eccles
Board

as

to

remain

on

Yice-Chairman,

the
even

50 Broad Street

New York 4, N. Y.

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