Full text of Commercial and Financial Chronicle : November 11, 1948, Vol. 168, No. 4750

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

.A'1-Ui.Lv

W'l-'

H^'

w**iwi*wA*fr^^

UdUwrtji'

NOV 12 7940*
./

'»

ESTABLISHED 1S39
BU5.

APM

UBRA*t

,

X

i

Reg. U. S. Pat. Office

Volume

New

Number 4750

168

The Executive and

By WALTER SULZBACH

tion

Columbia University
i

Stressing incentives

as

greater production,

to

essential
Dr. Wol-

curbed,

convert; nation

will

socialistic
I

system.

:

the

all know is an important
problem. I shall talk particularly

you

,
>

|—.. b

f

I

on

I

T h

.

might

have

called

place, the la¬
problem
a

cratic

coun¬

which

what
Prof.

Leo Wolman

we

is

are,

soluble
lem.

Yoti

can

the

and

lems,

address

•An

of

by

Wolman

Dr.

30th

at

Gas

American

that

37)

on page

at

Em¬

of Personnel

Relations Luncheon

Committee

for

reasons

(Continued

ployee

you

Convention
Association, Atlantic

:

cept;

found

con¬

would

economic

implications
care

of

its

ef¬

of themselves.

The

ECA

has

second

chosen

to

In

course.

adopt
field

a

grain of thought should
more highly appraised

a

have been
a

of

ton

was

exportable

goods,

taken immediately and

thought appears to have been
given to the meaning of the "dol¬
lar scarcity" which we are trying
to heal.
As a result, billions of

12.

no

opinion of

Commonwealth

all

action

no

forts to take

action

from

"dollar

have
had
been clarified.
Or the ECA might
have started right away shipping
goods to Europe leaving it to the
and

Kansas City, Mo., will be

the

the

been taken before this concept

ing of the Bond Traders Club of

In

s-

and

scarcity"

.

than

page

t i

a

out

the

*

where

on

t

meaning of

the

taken at recent meet¬

PICTURES

the Treasurer of the
interest

present

Massachusetts

exempt

is

Federal

and

(Continued

income taxes.

election

of President

Truman plus

on page

we

ally, he achieved a very effective redistribution of wealth as between

Massachusetts
i%%

'■

■

;

Presi-

dent

;

velt

Roose¬

party

repre¬

all the

sented
—

Some Second Thoughts

American cit-,

beginning let us freely admit that we were
surprised as the other one hundred and forty-odd
with the outcome of the Presidential election. Let

At the very
as

much

million

further assert quite candidly that we were and still are
disappointed.. We had felt and still feel that a change in
Washington was needed. While far from enthusiastic about
the particular change which would have occurred had Gov¬
ernor Dewey won, we believed and still believe that there
was more to be said for it than against it. With this much on
the record, we may proceed to certain observations without
risk of being accused either of talking "sour grapes" or of
indulging in excessive rationalization. '
Our first observation is this; The country has once again
confirmed its choice of a definitely New Dealish philosophy
—and would have done so in almost equal degree had it

us

chosen the

July

1,

Prices

to

1.50%

Established

Republican candidate for the Presidency. Indeed,
rejection of the Rooseveltian

there would have been no clear

dogma even if a Republican "conservative," such as Senator
Taft, had been elected. So powerful has the world-wide
trend toward socialistic notions, and, in this country in par-

izenship yet
actually he
his

and

sup¬

porters arbi-.
trarily fa¬
vored

some

above

others.
main,

the

In

the

was

voting

merical

strength

population

ferent

Loeb

nu¬

of

groups

dif¬

which

favoring the lower income

meant

groups.

All

way

the world the "revolt

over

masses"

the

of

has

been

under

in some form or another. As

thought seems to travel
starting like time at
"Greenwich."
It seemed a few

always,

westward

days ago
*

if this nation might

as

(Continued on page 34)

continued on page 32)

State and

26)

1927

Bonds

,

1959-62
INVESTMENT SECURITIES

—

1.65%

\

Bond Department

White,Weld&Co.
Members Sew York Stock Exchange

Troy

Street, New York S

BOSTON

Chicago Philadelphia Providence
Amsterdam
Buenos Aires

THE NATIONAL CITY BANK

PHILADELPHIA
Buffalo

Albany

Syracuse
Scranton

Harrisburg

Wall Street, New York 5

Boston

G. M.

yardstick

his

yield

64 Wall

40

his

and

R. H. Johnson & Co.

Registered Bonds
Due

.

Municipal

-•<
■

^ '•

sec-

popula-\

Commonwealth of
-

Democratic Congress

a

significance than any election since that of 1932. In 1932
embraced what President Roosevelt labeled a "New Deal." Actu¬

We See It

The Election

of

Annual

City, N. J., Oct. 7, 1948.

The

has far more

tion's

As

a

asked them to

Walter Sulzbach

.prob¬

anything

do

s

find

in¬

don't solve the prob¬

like and you

t

ticians)
.

is

still

an

high levels with lower proits. Conduces unfavorable side of picture f
is likely to be overdone.

tion.

have

in

,

(economists,
10

demo¬

try,

immediate prospect of "a bust," but predicts business at fairly {

EDITORIAL

economists

bor
in

consider prospects

any

tors of the na-

C A

number

first

the

of reduced corporate earnings. Does not seeI

now

should

ures

E

e

ordinary election, but repre-1
as result, markets must:

was no

-<frdifferent

might have
been a dopted.

mind.

my

In

possible

oroced

-I
into

what

victory

Republicanism in U; S., and,

the<3>-

for

-two

o r e

plunge

end of

ERP either of

tew

e

worse, as
we

of making their currencies convertible.

funds

prelimi-inary remarks
a

Says

European Recovery

to make

want

from bad to

go

sents

to the outcry of

Bargain-

ing,",, and

Mr. Loeb holds Truman

Program is the answer of the United
the Western European nations that they are
short of dollars. It is an attempt on the part of the American people
to solve the "dollar shortage" problem. Once the Congress had voted
The

States

about "Collec-

Vtive

will

1

■

Hutton & Company
Members, New York Stock Exchange

help to countries who sacrifice their "money prejudices" and

follow honest policy

going to talk briefly to you
labor' problem, which

am

about

restrict

i

war,

allowed to persist.

are

Labor Government

Partner, E. F.

re¬

European nations and paralysis of mar¬

shortage," which is not result of

a

By G. M. LOEB

Declares ERP cannot achieve its purpose and "dollar

long as,exchange controls

...

Maintains controls causing

is true.

converse

duction in trade between

tor

,

actually

kets at home.

collective bargain-;
ing transfers authority from the:
employer to union and, unless

shortage,"

controls result from so-called "dollar

exchange

whereas

] man contends
{

Under

Political economist maintains ERP is being operated under assump¬

LEO WOLMAN*

By

Professor of Economics

,

Copy

a

Investment Probabilities

The Foremost Problem of ERP

Collective Bargaining

Price 30 Cents

York, N. Y., Thursday, November 11, 1948

52 WILLIAM ST., N. Y. 5

OF NEW YORK

Bell

Washington, D. C.

Woonsocket

Bond Dept.

Teletype: NY 1-708

New York

THE CHASE

HAnover 2-0980

Teletype NY

Private

Springfield

Wilkes-Barre

HART SMITH & CO.
1-395

NATIONAL BANK

Wires Connect

Montreal

Toronto

OF

THE

CITY OF NEW YORK

London

We

have

prepared

memorandum

HUGOTON

PRODUCTION

Central of
Underwriters and
Distributors of Municipal
'

and
Bou

glit—-Sold—Quoted

Corporate Securities

Gordon Graves & Co.

OTIS & CO.
Established

INSTITUTIONAL INVESTMENTS

30 Broad Street,

(Incorporated)

Tel. WHiteball 3-2840

Tele. NY 1-809




New York

Cincinnati

Chicago

Columbus

Georgia

Toledo

Buffalo

BONDS & STOCKS

&

upon

request

Dominion Securities
SUTR0 BROS. & CO.

Grporation

1896

■

"■* ' "*

'V

IRA HAUPT&CO.
Members

40 Exchange Place,

hi

.'V

w

111

Broadway, N. Y. 6

WOrth 4-6000

Bell Sy.lem
f*

New York 5, N.Y.

5

«■«

w

Teletype NY 1-702-3

-

Boston

York Stock Exchange
Principol Exchangee

New

and other

Stock Exchange

Telephone REctor 2-7340
"W

Light Co.
COMMON

120 Broadway, New York
Denver

Wisconsin Power

5% Preferred
Copy

Members New York

CLEVELAND

New York 4, N. Y.

CANADIAN

Railroad Co.

Est.

1899

a

on

Teletype NY 1-2708

Telephone: Enterprise 1820

(1954)

THE

f

Interstate Power

Interstate Power
Stock

80LD

—

CHRONICLE

Thursday, November 11, 1943

By HENRY ANSBACHER LONG

Alabama &

Louisiana Securities

Sixty-five per cent of the open-end investment funds purchased common stocks on bal¬
during the third quarter of the current year, while in contrast all but two of the
closed-end companies reviewed in this
survey sold equities. These latter two companies,

QUOTED "

—

FINANCIAL

Open-end funds purchase utilities, oils, rails and bank stocks. Half of all trusts increase cash and gov¬
ernments, while others decrease liquid reserves. Managers now report watchful-waiting period
pending
|
clarification of new Administration's political program.

6% Debenture Escrow Certificates

BOUGHT

&

Open-End Tiusfs Bay,Closed*Ends Sell

Polaroid Corp.

Common

COMMERCIAL

ance

New York Hanseatic

Adams

Corporation
BArclay 7-5660

Ex¬

and

press

portance

placed

in

not

Opinion

in

I nternational

Teletype NY 1-583

anticipated

American

120 Broadway, New York 5

instances

ciate this latter point of view

Corporation,
which

Lonsdale

most

that there would

them-

has

been

submitted

the

by

Axe

firm

re-election of Mr. Truman and his

working majority, but this state¬

Light purchases
ing October by

balances,

ment

funds

even

though

and

cash

tion

their

acquisition

amounted

York

Stock

Exchange

percentages

York

Curb

Exchange

proximately half the number of
funds in each of the three
group¬
ings of balanced, common stock

BROADWAY, NEW YORK 5
Tel.

REctor

2-7815

and

of

total

closed-end

creased

cash

assets.

Ap¬

categories

reserves

in¬

during the

three-month period.

popularity and, exclusive of port¬
additions
resulting
from
stock
dividends, were purchased

Members
New York Slock

25%

Exchange

below

also

were

The

Tele. NY 1-1610

to

Priced

of

the

well

Utilities
favor

rail

metals

the

upturn.

continued

although' the

purchases

from

Stocks

there

sues

number

Industrials

and

Obsolete

Stocks

Removed From the

New

York

Exchanges

was

of

a

quarter.

relatively large

increases

in

Members Nat'l Ass'n of Securities
Dealers, Inc.
William

portfolio
Motors

Sales

were

Total transactions
decreased by
third in volume from 1 hat of the

Montgomery St., Jersey City 2, N. J.
Teletype NY 1-105

Refining Co.

quarter

number of

under

review

the

additions to portfolios

in

the

preceding

based
the

Sold

as

of

three

at

outlook

the

"(1)

Business

main

on

at about

were

the outlook previous to

elections, the question arises

dustries

are

the
re¬

capacity levels for

likely

to fluctuate
they have over the

about the way

piecemeal while activity in
high.

gen¬

eral remains

at

clarification

of

the

sponsored

Incorporated

this

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

funds

survey

one

a

agricultural

is

likely

to

commodity prices
but

occur,

likely to have

it

is

important
\

an

eral effect.

un¬

gen¬

may

are

by

quar¬

covered

week

after

that

changes

quently

even

might

necessitated

in
the

the

feeling

be

subse-

by

the

un-

industries,
general level of earnings
likely to remain fairly high.
"(5) Price-earnings ratios are at

a

low

level..

to the

fact

very

partly

This

that

is

due

in¬

some

New

York

Stock
Curb

Exchange
Exchange

New

York

Cotton

Commodity
Chicago

Exchange,

Board

of

New Orleans Cotton

average

wait

for

to

commence

And other Exchanges

comfortable
end

NEW
CHICAGO

DETROIT

GENEVA,

4,

the

of

of war.

....

.

what strengthened during the last
In the long run these

to

have

effect

an

though

on

are

tion."

BRITISH
'

PITTSBURGH

SWITZERLAND




had

DIgby 4-2727

a

the

at

increased

its

buy

u.

their

stock

With

dustry

individual

to

three

groups,

to

evaluate

other

little

affect

than

questions

on

3

temporary

were

asked

8 West Smith field, E. C. 1

dam

most

part water

*~49

during the last 10

sanguine and

erally

a

Burlington Gardens, W. 1

food

and

other

-

in

essential
The

of

cost

outlook

-

i

of

that

living

was

•

.

more

the

query:

our

M.

Werly,

Trustee

Biswit

We

do

Bankers
...

a

Fund

to

to

come

as

We

fear

to

result

a

Head

back

Branches

snap

somewhat

around

60%

on

position

the

Government

in

Office:

26, Bishopsgate,
London, E. C.

In

India,

Burma, Ceylon, Kenya
Kenya, and Aden

Zanzibar

the

of

Subscribed Capital——£4,000,000

Paid-Up Capital—

£2,000,000

Reserve

£2,500,000

The

Bank

Fund
conducts

description
banking and exchange business
every

at

Trusteeships and Executorships

judgments.

which

the

Colony, Kericho,

are

any

to

walk

tread.'

preliminary reaction is to

The

Ltd.

seems

of 'Fools

trying to view
realistically and not

situation

Our

Bank,

conse¬

elections

case

angels

elections.

inl¬

►

Co.

Kenya Colony and Uganda

and

not

the

the

&

NATIONAL BANK

of

anticipate any drastic
change in the investment policies
of

Deacon's

and

investment
the

of

where

in

executive

on

the

of

quences

programs, particularly in regard
to taxes, price controls and allo-

emphasis

National

almost like

pointed out earlier in this
article, the majority view indi¬
cated a policy of waiting clarifica¬

with

sion

Banks:

Mills

of INDIA, LIMITED

FUNDS:

Aircraft; eliminated Baband Wilcox).
"Any discus¬

eock

As

cations,

Glyn

following statements have

Purchased

in view of elections?"

legislative and

'

United

of October?"

of

'"

Williams

Fund—(Slight
change in balance during October.

in¬

Associated

f

indus¬

made by executives of sev¬
of
the
leading investment

Charles

had been

in cash and
position during

£153,656,759

gen¬

equities

companies

supply

Street, W. 1

TOTAL ASSETS

less

was

was

V

64 New Bond

Out¬

years.

squeeze

anticipated

Charing Cross, S. W. 1

the

over

look towards bank stocks

BALANCED

do you presently contemplate
cash, type security, industry

tion

the

eral

Second—"What general shifts if

group

ex¬

little "to

was

FPC, SEC or
regulatory bodies—that was

local

manage¬

generally

month

in

,

One

OFFICES:

Bishopsgate, E. C. 2
'

there

The George Putnam

First—"What changes

any

liquidation.

said

companies in reply to

ments:

throughout Scotland

LONDON

expressed the opinion that
would

utilities,

OFFICE—Edinburgh

manage¬

there

The

post-elec¬

HEAD

Branches

in¬

ments

be

i

Incorporated by Royal Charter 1727

holdings.

respect

,

also

undertaken

cut

Fund's

is

now

to

and

change the
certain industries.

of

Fund's

backlog of 23% is
highly liquid, being primarily in
short-term
Treasury certificates

MINING
BANKS

commercial

and

paper."

Carl A. R. Berg, President Rus¬

AND

AFRICAN

sell

SECURITIES

Berg

Fund—-"Have

-

stock

common

ing

Goodbody & Co.

45%,

taken

tions

Members N. Y. Stock
Exchange and Other Principal Exchanges'
115 BROADWAY
NEW YORK 6, N. Y.
Telephone BArclay 7-0100

reduced

on

a

commitments

capital
tions

place

just

after

the rally before

expenditures

may

be

reduced

(Continued
-

»

.

»

on

J
»

>

HODSON &

to

t

■

J

of

in

the

COMPANY,

Inc.

10% reduction hav¬

ond break in the market.

Teletype NY 1-672

'

! Royal Bank of Scotland j
•

common

been

tion
investment
sentiment,
al¬
though admittedly somewhat pre¬
mature, the following two general

savings;

■

position,
while
the
Berg Fund lightened its

optimistic on the heavier
tries, metals and oils.

prices
immediate

will probably be influenced
largely by psychological factors."
order

s.

bonds

equity

.

N. Y.

Exports—Imports—Futures

smaller

type 1 operated
diver¬
gently 'since the elections, al¬
though both had excellent cash
positions on the first of Novem¬
ber.
Wellington Fund increased

course

SECURITIES
SOUTH

SUGAR

Two open-end funds of the

items.

likely

stock

5, N. Y.

purchase

position

quarter

for

CANADIAN

Exchange Bldg.

YORK

cash

later return to prewar levels. But
the
main
cause
of
low. price-

making for continued

STREET

YORK

Raw—Refined—Liquid

fear from either the

even

WALL

NEW

to^

liquidity both previous to and
immediately follow'ng the elec¬

about

N. Y. Cotton

placing

Trade

Exchange

99

at- which

Another
fund
which

unreasoned

forces

office*

were

decided

level

commitments.

closed-end

weighting

Inc.

has

now

lower

a

ecutive

earnings ratios is fear

branch

our

LAMB0RN & CO., Inc.

which
planned

election

still imagine,; as
they did
1922-24, that the general pricelevel and earnings will sooner or

The

to

buy around the 176 D-J indus¬

vestors

INDUSTRIALS

CANADIAN

Mobile, Ala.
Direct wires

companies

equity

CANADIAN

Exchange

York

reserves

the

trial

in

We Maintain American
Markets For:

New

to

decline Russell

H. Hentz & Co.
Members

open-end:

some

cash

these

but the
is

NY 1-1557

La.-Birmingham, Ala.

dur¬

made

were

category from cash
through sales of their

One,; of

its

.

"(4); Profit margins
moderately in
some

whose

people of the nation registered
their will at the polls. In
general,
officers of funds and boards felt
it was too soon to make
any sub¬
stantial
alterations
in
portfolio
composition and

1856

of

managements

HAiMMr 2-9700

"husbanding their liquidity" and
pursuing a very cautious policy.

to

Co!

Exchange

in

this

received

Stock

25 Broad St., New York
4, N. Y.

Now Orleans-

balanced

"(3) Some further readjustment

r

in

vestment

ter

™I BANKERS BOND

Established

in

past two years. Elsewhere, read¬
justment is likely to
continue

made

made

obtaining the opinions

Long Distance 238-9

activity

time.

as
to
subsequent shifts in
appraisal of the financial and eco¬
nomic picture and
changes in in¬
vestment policy.
An

Sold

in

York

industry groupings.

previous

follows:

"(2) The semi-durable goods in¬

In

attempt has

2,

the
as

see

heavy industries is likely to

been

LOUISVILLE

time

present

be summarized

may

^

Since these operations

Stock

Standard Oil Ky.

let

state¬

can

economic fundamentals

months.

Bought and

Axe

six months.

30%

Bought and

the

26,

the

eliminations by -30%
contrasted with a like
figure

Common

Oct.

ment reads: "So far as we

business activity
and
moderate
further inflation have been some¬

exceeded

Ashland Oil &

post-el^c-

in the number of sales was almost
twice that of purchases.

Thus, in

St., N. Y. C. 5, N. Y.

Tel. DI 4-2100

General Electric.

the

preceding quarter, but the decline

STEIN & COMPANY
27

down

was

June

concentrated in the shares of com¬
panies in the beverage and food
fields.

a

1

and

bank

and

noticeable

liked,

of

previous

holdings of both General

Stocks

the

Managers were also bullish on the
steels, tobaccos and aircraft com¬
panies and among individual is¬

TRADING MARKETS IN:

Low

in

both
a

nonferrous

be

one-half

Oil

that

marked

of

took

number

&

to

period.

in

purchases
stocks

39 Broadway, New York 6

Mining

that

three-month

Chicago Slock Exchange

DIgby 4-3122

equal

preceding quarter.
Volume
of
selling transactions, however, was

Exchange

Neiv York Curb

volume

with

executives.

some

folio
in

the similarities to

present

alterations

substantial

Oil stocks still maintained their

Joseph McMantis & Co.

Congressional

a

up

contrasts

Dated

New
New
120

points

their

drastic

no

Members New

own
participations to the public
Larger
closed-end
trusts
with

substantial

Members

of

foresaw

fund

Henry A. Long

to

policy since the

picture as reflected in the
subsequent replies furnished „by

reserves

tyC PONNELL & Co.

their

to

as

Steiner, Rouse &

cor¬

an
excess-profit levy.
Those
companies, both open and closed-i
end, heavily committed in equi-<
ties, with minor, cash reserves,;

only to very
light purchase

Request

on

was

higher

a

of

Fund,
submitted
by
Ruth Houghton Axe.
No opinion

moreover,

Prospectus

order.

poration tax, but n6t in the form

quarter re¬
shareholders of the Axe-

selves,

Bought—•Sold—Quoted

be

that

port to

com¬

mitted

Company

we

Houghton

spon¬

sored,

political results was
uniformly shared. To appre¬

quote from the third

are

jointly

Bought—Sold—Quoted

elec¬
sec¬

Believe
corpora¬

view, of

page 30)
J

t

••

165

Broadway, New York

Volume 168

Number 4750

•

COMMERCIAL

THE

INDEX

—U.

M.

Loeb

The Foremost

.

Problem

The Exeeutive

page
.

.

k,

of ERP—Walter

and Collective

\

-

Labor Government

a

Laying

...Cover.

.....

Sulzbach....

.....Cover

have

Bargaining—Leo Wolman..........Cover

The

<

Monetary Reconstruction—Allan Sprout.
On Behalf of Air

6-

.

.

!

Is Electric

Election's Effect

Factors in Bank Stock

.Y.V.».uV»

..

Foreign Trade—A Case of Give and Take—W. C. Haddon...

Jj. McCloy.'..

•••_':<"

Spahr Replies

V

-

Leffingwell

to

of

Domestic

Gold

...•.............

Growth in Private Debts Discussed

t

v-

■

.

•

-

r

-

^

.

Raymond Moley Foresees No
r* Election Results.........i..

Business
v.

"

'

-

he'll

charge

-

for

a

Disturbance

;J.

....

f..22'

v.

h

a

p p e n

this

reverse

take

it

operate

the

France

free

and

gold

change

22

cents

of

porterhouse

pound in gold.

a

for

Also,

some

Federal officer would tap you on
shoulder and invite you to

Long Range Upward Trend of Interest Rates.... 22

Bank Earnings

Up in First Half of 194o, Reports Preston

come

Delano

SEC

i

Amends

Proxy Rules.,..

New York Trust Co.
i

,24

.,

1

■

\

.1

This

government

tics

Thera

of New York.

..

..

v..

trazi

>

How

Uncle says

.,.24

if. you

Regular Features 4

,

As We See

(Editorial),.....

It

j

•,

'

*.

•

'

'

-

Bank and Insurance Stocks..;

.

.

•

Cover.
y

r-"'-

••
.

carpenter

1

day's

: -

| The

some

other

.

.

-

the

For

Bookshelf........'.5

Securities...

18%'

past

15

Coming Events in the Investment Field............
Dealer-Broker-

8

Einzig—"Economic Recovery of Britain".
From

Mutual

Business

Activity.......

Funds.....

NSTA

.

Observations—A. Wilfred May.
Our
Our

...........".

........,,,

Notes

.......

.

Reporter

seal

16

r.;........ ,v

7...........7.'.....,.. /

seal

"greenbacks,"

interest-bearing currency of
denomination.
Billions of
such
currency
floating around!
Paper money galore!

5

/
'

Prices Not

;

But,"

what's

Going Up

all

figures
95

dozen, steak at $1 a
pound and a $4,000 house selling

21

a

$12,000 and all the other prices
have
trebled
since
1933,
have not done so because of profi¬

at

Securities

Railroad

27

Securities Salesman's
Securities Now in

Corner.................

Tomorrow's Markets

Industry.........................7.........

(Walter Whyle

Says)

.,

on

greedly

or

5

on

the

put

many's
the

1

Published Twice Weekly

Drapers'

and,

The

COMMERCIAL

FINANCIAL

and

Gardens,

Edwards

c/o

Copyright

Reg. U.

.

WILLIAM

B.

Patent Office

S.

ary

DANA COMPANY, Publishers

25,

York.

C.,

REctor

2-9570

to

the

office

post

under

the

Subscription

9576

Subscriptions

HERBERT D. SEIBERT, Editor & Publisher
WILLIAM

WILLIAM

„

DANA
D.

SEIBERT,

President

RIGGS,^ Business Manager

Act

at

of

Union

Dominion

Canada.

Thursday, November 11, 1948

corporation

and

,4 Other
Chicago

city

news,

Offices:

3,

111.

news, .bank

clearings,

etc.).

135

S.

(Telephone:

$25.00

Salle

State




St.,

0613);

per

Empire State Oil

:

hullabaloo

about

Throughout-

.

the

Equity Oil
Mackinnie Oil & Drilling

hap¬

was

Utah Southern Oil

truth

BOUGHT

their

that

was

to
their

-

SOLD

'

QUOTED

-

Orvis Brothers 6 G>.

up

approaching extinction.

14 Wall St., New York 5, N.Y.
REctor

! /

2-4930

1-1434

New, York

Too Many Dollars

In the very
tion is merely

the

al¬

last analysis infla¬

a phase of the im¬
mutable,. unchangeable and
in¬
variable
law
of
supply
and

demand.

In; inflation,

Seaboard Ice Co. 1st 4s

however,

Victor Fuel Co. 1st 5s

^supply

is in the amount of
all kinds outstanding.
have
just
too much
The late Dr. Kemmerer,

Okla.

money of
We
now
money.

whom there

than

these

in

simple words: "Inflation
'
'
-

is too much money."

When there is too much money
the value of each

in

it

what

will

dollar has lost
of. its

piece

down

goes

buy, just as
60-70

about

our

City-Ada-Atoka Ry. 1st 6s

Hudson River

greater

no

was

authority on money in the West¬
ern hemisphere, .defined
inflation

"

!

Day Line Pfd.
'

' ■'

Bought—Sold—Quoted

George Birkins Company
40 Exchange Place, New
WHitehall

York 5

Tele. NY 1-1404

4-8957

cents

In the early
rgo to your
three pound
prime rib roast for 75 cents. Now
buying power.
you
could

'Thirties

butcher

and- buy

same

When

,a

beef costs you $2.40-$3.

30

passed
counter your

the

you

<

cents

eggs.

Now

than

three

cost

they

butteT;

(times

20

more

you

a

pound

the

Selling

repeated

securities read

"Securities

Sales¬

a

The tripling and
quadrupling of such prices in to¬
day's markets is because the value
of your dollar is going down.
It
too often, or

man's

a

regular

every

Thurs¬

Corner,"

feature

in

day's

issue

of

the

"Chronicle.",

too much emphasis that the

reason

!

on

clever, helpful hints

much,

as

pork chops.

be

For

for selling

pound of
16 cents a pound

cents

sliced bacon and
of

Pointers

grocer

Twenty-nine cents bought
of

over

would
dozen fresh grade "A"

hand you a

servants at the nation's

We

are

the dollar is going down is

(Continued

interested in offerings of

on page

28)

and

$35.00

U.

Members

of

year:

High Grade Public Utility and Industrial

S.

in

per

$38.00

per

PREFERRED STOCKS

year.

(Foreign

/

of

Winters

Company

New

&

York

Crampton

Corp.

5

Analyses

postage extra.)

Earnings' Record

Trust

year.

Record—Monthly.

(Foreign

Bank

^

New

March

Publications

Quotation

year.

National

Public

The

j

&

Monthly,.'

postage ex^ra.).

Spencer Trask & Co.

Members

New

York Stock Exchange

Members New York Curb Exchange

York 4

135 S. La: Salle St., Chicago 3

25 Broad Street, New
'V

Tel.:

HAnover 2-4300

TeL: FlNanfci&l 2330

-•

C. E.

available on

request

Unterberg & Co.

Members N. Y. Security Dealers Ass'n

61 Broadway, New

York 6,N.Y.

J

Note—On

account of (he fluctuations in
exchange, remittances for for¬
eign subscriptions and advertisements must

the

La

and

per

Monthly
$25.00

it will be

better

Countries, $42.00 per year."

Bank

Thursday (general news and ad¬
vertising issue) and every Monday (com¬
plete statistical issue — market quotation
records,

of

Rates
States.

United

Territories

Other

Every

Btate

Possessions,

in

Pan-American

Other

.

matter Febru¬

second-class

at

Y.,

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

Broadway

System Teletype N. Y. 1-714

Eng-

8, 1879.
v

our

REctor 2-4500—-120
Bell

Smith.

by William B. Dana
Company
-

as

1942,

N.

E.

of

have

we

Established 1908

.

1948

CHRONICLE
Reentered

London,

&

because

us

i

Let's stop it.

people did not waken
was
going on until

mark was

with

of

i

Members N. T. Security Dealers Astn.

by

caused

are

what,

really the fault of each and every

43

lowed
*■'

unions

shoulders

our

going down.
In Ger¬
1913-1923 inflation orgy,

cannot

one

■F

cannot, be

labor

over

realized what

the

grasping farmers. ' Such prices are

38

v... .,.

big

blamed

44

Washington and You.

!

business;

teering

Registration

The Slate of Trade and

which

20

J.KJUce,Jr.&Co.

the

in periods of inflation people

.

the price tags—eggs at

on

cents

trying to

money was

the

r

this

got to do
With $1 porterhouse? Just this. The

46

Utility Securities

notes; red
and, most of

all,

".V 23
........

Hawaiian

large

..........47

.v..

Prospective Security Offerings
Public

Meanwhile, there

seal Federal Reserve notes;

brown

41

Governments.

on

has

to have

brown seal Federal Reserve Bank

.I .'11

Reporter's Report.

it

years

rj "assignats"; blue seal silver notes;
7
yellow
seal
"Invasion"
bills;

..,,

.

.■*.

.'.

green

17

:

•

The sooner we

the

present

when-

busi¬

gold pocket piece in

a

possession.

100.

letting

the wool

request

on

stands

as;

i

in

Prospectus

your

have been floods of paper money,

Washington Ahead of the News—Carlisle Bargeron............

Indications of

than

more
our

8

Recommendations..;......

Investment

;........

Com. & Pfd.
*

pening to their currencies. They
thought prices were
going up,

of the

use

us

•

Corp.*

going down—and down
us.

not

-

United Piece Dye Works

high cost of living, however,

have

NEW YORK

Finishing torn. & Pfd.

i

historical..

the

been illegal for any of
Canadian

U. S.
,

the

yellow metal.

14 '•

,Y>V.

......

STREET,

Hugoton Production (w. d.)

of

isj

ages

office!

your

Texas Eastern Trans.

the

for

t l.y.

use

no
or

prices

down

for all of

.

.

•

Business Man's

in

dollar

our

—and

that you are a criminal
gold in this country
are a jeweler or tooth

or

high

of

Chase National Bank
,

two-

the' index

with 1939

is just

ourselves

obso¬

your

within walk¬

is

Telephone: WHitehall 4-6551

all wakeri up to the fact that to¬

even

or

Because

which requires the

ness

in

e^es any longer.

own

unless you

.

...

come.?

WALL

99

dollar.

our

c u r r e n

ppliticos pull

off the coast of California-—Alca-

i

Intra-European Payments Plan Analyzed by Federal Reserve Bank

which1.

kid

..

The

about

value

same-

shown

abound: 305-306

Fort

at

Atlanta,

or

distance

the U. S. Bureau of Labor Statis¬

Uncle Sam's fameid Summer resort

Appraises Consumer Credit Controls and Trends. 24

•

the

Levenworth,

24-

./.

of

.

ing

worth about 33 cents in

now

is

along with him arid' be the

guest

*

place to take
securities

■*

destroyed

gold.

33

the

National

The
lete

U, S,

60

your

a

kind

same

IBA Issues Personnel Selection Manual..............................

would

to

pound

a

have

dollar

paper

$20 gold piece? Why,
your butcher, if he knew money
values, would let you have the

From

Arising

in

them, with

i t h.

porterhouse.

just

dollars

paper

$1

How would

could

you

w

dollars and

juicy,

could

Pfocess?
if

"

what

—

you

market

;...,

,and

next

your

you

good

Now

if

16 '

20

plane

shop

*
Zimmermann

•'

6^

.

.

,

The unsound and absurd monetary
aftd' fiscal
policies of the New

Deal

,

BUS DRIVERS STRIKE!

going up!
The
value nf our dollar is going down!
Ili has been doing so for 15 years.

York butcher

,

"

•

E. M.

t .Ui. Vv- 20

i

Dunbar, Jr., Opposes View That Investor Needs Tax Relief

William L. Stead Sees

F-ri,..,

*; V:

by Northern Trust Co. of Chicago. 18't

(Boxed

Forrest S.

.4

not

:

It> is

19 :

CoiuV i^

i..

are

thirds of the value of

them.

day
take yourself
to
your
New

by, ^
r...;.....,-',13 i
..

with

on

the

f)isru>s«'d

Overby Made Deputy Managing Director of Monetary Fund

paper

Prices

Step aboard

6

Overstrjessefl?'-(Subject"

LET THE

;

—^
-3^—^
capital to print too many dollars.

ture

17

Merger Still Under Discussion.... .Vi ,v....'

of

Equity Financing
Stanley L. Miller)
...

Whv ?

14,

........

V

a scapegoat.

George Wash¬
ington's pic¬

'•

.*

Wisdom

on

States

60

dollars

f'

>

.4

Mid-West Stock Exchange

,

j

#

•

Standard'

Lack

1

13

'

••

your

for

.V. 1.. 19 \

. . ...........

and

$20 gold piece

-

~.%

rIdV

United

.

a

Labor, Wages and Production—Roger W. Babion......

Is

.L

search for

a

the^

market in

-

.

change

8

.

Appraisal—Morris A. Schapiro.!.'............

Aspects of European Recovery—John

.*

;•

.

Business—Raymond Rodger*:".,t....;* 9

on

I)o Now About Inflation?— Ltfo Barnes

to

and there is, accordingly,

w0

High Rate of Spending Will Keep Business Going—W esley Lindow. II
What

^

,

Says inflation acts as anesthetic and
crack by either Republican or Democratic
parties

Compete!—John M. Itancoek.A'

Utility Industry Approaching Maturity ?—Edivard J. Doyle.

AND COMPANY

halted inflation.

never

3

itnsTtir

<

Yes—sixty, one dollar bills for a
ngle twenty dollar gold piece!
Sounds fantastic, like a tale from
"AUadin's Lamp" doesn't it? But, it's true as gospel. You can go into
the gold and excha'nge market in Paris, the one.
legitimate free gold

4

Transportation—W. A. Patterson....................

-

THREE] DOLLARS FOR ONE!

4

U. S. and U. K. Trade With the East—Max Winkler..,

B. S.

r' V*:

;

currency

it is hard nut to

3:

Money Mill and Prices—E. M. Zimmerman...............

''

inflation to the New Deal, Mr. Zimmerman asserts
prices do not go up but value of dollar goes down, because of "too
much money." Traces inflation
history and indicates price controls

2 1

to

(1955)

ZIMMERMAN,'■ 7T

By E. M.-

■

.

Open-End Trusts Buy. Closed-Ends Sell—Ilenry A. Long./

Let's Have Freedom

FINANCIAL CHRONICLE'

The Money Mill and Prices

Articles and News
Investment Probabilities Under

&

be

rate

made

Teletype—NY

1-5

Telephone BOwIing Green 9-3565

<

of

in

New

York

funds.

Alhenv

-

Bostori

-

'

GlenS Falls

-

Schenectady

-

Worcester

Teletype

NY

1-1666

4

THE

(1956)

COMMERCIAL

FINANCIAL

&

CHRONICLE

On Behalf of Air

Monetary Reconstruction

;

By ALLAN SPROUL*

Transportation

By W. A. PATTERSON*

President, Federal Reserve Bank of New York

President, United Air Lines

Asserting soundness of dollar is cornerstone of world monetary reconstruction, Federal Reserve executive lays inflation more to rapid velocity of monetary circulation than to large money supply. Admits
government bond support hampers credit restriction, but points to large public and private expendi¬
tures as heaviest inflation pressure which cannot be coped with by tougher monetary policy. Sees no
immediate danger to dollar soundness and predicts dollar deficit abroad beyond 1952. Holds stable
exchange rates less important than unemployment, and difficult task of International Monetary Fund is
to get nations to abide by disciplines required by an international monetary - standard.

*

Thursday, November 11, 1948

-

Using springboard that air transportation has become

necessity in

a

social and economic

life, Mr. Patterson describes its progress and
I accomplishments. Lays principal responsibility for airline difficul} ties to Civil Aeronautics Board, which has failed to assist air lines
to obtain- increase in mail rates to

!

cover higher
operating costs
and calls for investigation of its stewardship

I last two years

i

Since the Chairman of your

air lines.

•'

:

•

;
•

over
over

-

'.I

:

-

•

Bankers not only in Iowa but throughout the rest of the United
New York Convention Committee has been a sometime i
States should interest themselves in air transportation
together with
policies of monetary reconstruction in the United States, I am'tempted to be¬ its
problems, because air transportation today has become a neces-r
gin my remarks with some reference to domestic monetary matters. This is not so foreign sity in our social and economic life.
I wonder how many of
you

critic of
to

our

foreign

a

trade

realize
is

conven--

tion

The ( cornerf
:;s t op e-o

you

inflation.

of

must

distinction be¬

mind- a

tween the

total, money supply apd
intensity - of 'its use. Because

the *

increase in the

any

If

I

had

to-the

taken

supply.*

money

the

,

(end of
August,
1945),* the: comparison
With the. figures for June 30,1948,
would have shown: an increase of
$8.3

$lace in production and in prices

three years.

war

or[ 8.3%

billion

In

nearly

i. /;•

:

'

after

post-war
y&ars there has been a tremendous
increase
in
the
gross
national
product of : the United States, ex¬
■during' the

two

d e s tructive

world wars,

'

'

-

•It may well be

that

there

expansion

dollar.

during

this

To reestablish

Rational product is not far from

should

have

United

States
world

a

What it has been in times past. In

mone¬

other

Allan Sproul

system

tary

there must be

world

the

in

reference, and
today- that-fixed

fixed point of

some

dollar—

point of reference is the

dollar it is gold.
undermine the stability of

and through the
If

we

dollar, we shall
cause
of inter¬

the United States

not

the

serve

reconstruction.

national monetary

No one would have

the temerity,

that the dollar is
sound currency
—and so long as we keep our
fiscal hduse in order and so long
as
our international
balance of
payments does not pass perma¬
nently into deficit, a most un¬
likely contingency, the dollar will
remain a sound currency. What is
asserted or charged or implied,
however, is that by following a
I assume,

not

to

say

presently

a

faulty and inconsistent policy

of

words

urgently to further inflation¬
pressures, it would have to
express
itself largely in an in¬
crease in
the velocity of money,
and the impetus for such an in¬
ary

would

crease

risking

the inter¬
national position of the dollar,
and to the international position
of the country at a critical time.
Specifically the charge has been
made that there has been an in¬
crease in the money supply since
the war,
that this increase has
come about largely because of our
support of the government secur¬
ity market, and that .this has been
eventual

the

to

damage

of inflation.

cause

Our more

sophisticated critics, of course, do
not

make

but

I

bald

such

product in the rough.

the volume of credit.

could

all

I

agree,

suppose,

accumulated

and

currently

be¬

coming available, is in excess of
the existing

supply of goods and

services, valued at current prices,
and when

*Address

that purchasing power
of

Mr.

Sproul before

35th National Foreign Trade Con¬

vention, New York City,
1948

.

,

.

v.

,

Nov.

8,

the

[money supply

period'
been

that there

or

contrac¬

some

tion, growing out of the use of a
substantial budgetary surplus for
anti-inflation" purposes.
where some of

have

been

that

the

curity

mostly

market

addiction

to

is

out

and

of

our

government

the

of

fault,

at

groves

fault

support

That

critics say we

our

se¬

and

low

alleged

our

interest

rates.

I

of

the,

2jProgress Accomplished

piishment;

•;

It **

Was neppssary,,
first that we
have8 in

the time * we, ..were assigned the
responsibility of developing com¬
mercial air transportation. <-K few

pri-r5

vjate .business

years

nien" like

made

my * *.

predecessors,
Messrs.

W. A. Patterson

in

P. G. Johnson of the

Co.

Boeing Air¬
Boeing Air

the

and

support

is

policy
in

the

restrictive

more

changed
interests

credit

or

of

policy,

a

I

a

Douglas DC-4
speed of 230 miles

per

We must also recognize that in

1920s

airplane

had

we

men

in

Johnson, had faith in the
and

commerce

its

Defense.

Those

velopment

usefulness

well

as

decided that

the

The

sengers, was conceived

and Mr.

abandoned

passengers.

airplane with

facturing in the West.
early

was

of

cruising speed and an increase
carrying capacity from 10 to 21

in

Transport, Inc., pioneers of air
transportation and aircraft manu¬

any

the money supply. But, before our

the introduction

transport plane, a
gain from 150 to 180 miles an hour

and'

plane

later-another' advance
—

Douglas DC-3

E.

W.

Boeing

: -•;*{

This progress was accomplished
within a period- of five years fromt

accom-:'

farsighted

the

in

National

as

men

commercial

de¬

air

of

transportation
under pri¬
Through the Post

hour and

war,

and

was

under

capacity of 44

a

construction

started..

of

when

way

This

pas¬

before the
fleet

a

the

war

same

plane, desig¬
by the Army as the C-54,

nated

became the backbone of

mili¬

our

tary transport fleet.
The

air

National

Defense

transportation

been stressed

as

value

has

one

of

of

always

the

over¬

testimony
before the Senate Banking and
Currency Committee that expan¬

out

to

which

behind

was

sion of bank
the

my

in

a

major

the

inflationary pres¬
sures which have been generated
in our economy. I said:
''Some

credit

of

that

expansion of
necessary and the rest
minor part in creating

was

played a
existing
inflationary
The

pressures.

present^inflationary

ment

received

from

sharply
a
first,

from

its

move¬

main

impetus
rising food prices,
second, and third

round of wage

increases, and from
high level of capital expendi¬
tures, all operating against the
background of wartime deferred
a

demands
funds

of

and

accumulated

people,

our

heavy demand

for

our

liquid

and the
products

from all parts of the world."

which. I

know

involves

argument, I gave the com¬
mittee
comparative
figures
of
total

and

demand
currency

which

is

one

deposits

adjusted

outside

of banks,
definition of the

supply. Figures as of June
30, 1948 showed that the money
supply, so defined, was $108.3 bil¬
lion, which was a reduction of
money

approximately $5.3 billion since
Dec. 31, 1947, and a reduction of
$133 million

since

June

30,

1947.

In other words, I said, the rise in
the general price level

during the

year

has

occurred

without

is

us,

What

Some

do

critics

our

that

say

we

suggest?
wrong

to

securities

at

are

support government

Georgia-Pacific Plywood*

South
on

Sold

Jersey Gas*

Request

it

and

would

deter

seller, in most
to show

loss

a

selling since the
would have

cases,
on

his sales.

Other

counselors, also wise in the ways
of timid investors, say, however,
that another engineered drop in
prices, which would create this
loss-sale situation, would also lead
to

further

selling of

government

securities to prevent possible fur¬
ther losses. They say the urge to
cut

losses

is

at

least

equal to or
stronger than the urge to take a
small profit.
That leads to

critics

who

second group of

a

that

say

the

engi¬

neered decline in prices should be
to a point at which the yield on

long-term government bonds
would

Quoted

Exchange and Other Principal Exchanges
105 West Adams St., Chicago
Teletype NY 1-672

airlines'

value

Na¬

became

a

most

with

exclusively,

engined

with almost

gation.

prise,

It

was

and
lost

men

singleoperating
at

airplanes

•

hour

aids to navi¬

no

hazardous enter¬

a

literally
their

an

lives

hundreds of
in the pio¬

neering effort of the Post Office
and

the first commercial airlines.

We realized that

develop

major

other

or
we

the

could never

traffic

passenger

of revenue

sources

found effective

munication
the

we

with

means

the

of

island

most

o,f the.

service

daily.
United

*

air

and the ground could not be ac¬
complished. Through the determi¬

nation

and

ingenuity of Thorpe
Hiscock, an early associate in pre¬
decessor companies of United Air

no

.'.

/

advised

that

from

Australia

via

a

San:

inter¬

None of the personnel of
Air Lines had ever been
five

weeks

received

we

service it

was

men

in United

Air Lines called into the

around

It

for

Beyond this there

hundreds of

service.

the

from

the request

established and op¬

erating daily.
were

flying, and

over-ocean

within

day advised

the

period.

required

to

engaged in
time

between

coast

were

mediate points in the Pacific, and
such service was to be provided

yet

communications

Alaskan

then

was

Francisco

until

that telephone

war

were

com¬

airplane in

the

Uninak. There

as

We

air., The technical experts of
us

off

known

facilities for navigation.
We per¬
formed our mission and continued
service throughout Alaska during

to

military

great extent
pilots
that
the

was

airline

a

be about 2%%—that such
Lines and a man without any for¬ Army and Navy's great Transport
yield would provide a living mal technical
Command and Naval Air Trans¬
training in the field
for insurance companies and other
service
were
established..
of
electronics, two-way aircraft port
institutional investors, that faced
radio communication was devel¬ Others • were selected to become
with a loss on sales and a living
in
leaders
the
airborne
Troop
oped.
This accomplishment be¬
wage
on purchases,
they would came a reality within three years Command.
Practically every im¬
soon
become
buyers instead of after we were
portant mission during this war
assigned the task
sellers of long-term governments,
of
developing commercial avia¬ involving the movement of troops
and
thus
our
support problem
by air was led by airline pilots of
tion.
would disappear. I am not going
the United States.
The National
During the same
period we
into the social-economic question
Defense value of air transporta¬
were
also working on new air¬
of "providing a living' for insti¬
tion in America was proven be¬
planes, and at about the same
tutional
investors."
Quite apart
yond a doubt in World War II.
from such broad considerations, time that radio was developed, the
a

matter of

a

judgment,

opinion,

or

to the level at which the whole

airlines introduced multi-motored

passenger planes.

planes

were

Some of these

developed by United

Air

Line's affiliated
company—
market, including the institutional
investor market, with whatever the Boeing Aircraft Company. An¬
other plane was developed by the
aid we might give, would
regain
approximate balance under pres¬ Ford Motor Company—the famous
ent conditions. Would it be at a Ford tri-motor. With these planes,
price of 95 and a yield of slightly we advanced from a speed of 80
of

Goodbody & Co.

The

program.
tional
Defense

tually pioneered the air mail serv¬ reality in World War II. The first
ice after World War I, contracts call we in United Air Lines re¬
were
made with private compa¬ ceived was at the time of the at¬
nies to fly the air mail.
When tack by the Japs on Dutch Harbor
commercial airlines began in the in Alaska. We were ordered to fly
middle '20s, we flew air mail al¬ supplies and ammunition to that

speeds of about 80 miles

or

over
—

Office Department, which had ac¬

slightly above—that this
invites selling in a supported mar¬
ket, whereas if the support price
were
slightly below par, say 99,
par

In partial support of this state¬

elements of the chicken and

which

being pointed
and further down the
road our country must travel in
these critical days. r

credit since the end

has not been

war

Texas Eastern Trans.*




-

all objectives of the Federal avia¬

Stromberg Carlson, Com.

Telephone BArclay 7-0100

may

action with

respect to restraining
expansion of bank credit or

hour to
/•

re- "

for..

In-.

was

an

'•«"

>

tion

■

Cleveland-Cliffs Iron Co.

•**

be

sponsible

hour.

am

could best be fostered

of

Grinnell Corporation

Members N. Y. Stock

creased'fromliO miles

[150 miles

government who, like Mr. Boeing

as

115 Broadway, New York

ing 24??' Again the speed

.

ket has restricted

freedom

the

first modern low-wing, high speed
transport plane known as the Boe¬

;'

transportdtion- /during
the ;pa?.t. 20
years,and who

the

our

introduced

we

-

r

vate initiative.

kind

Portsmouth Steel

—

!i

would have to agree that support
the government security mar¬

of

this suggestion resolves itself into

Bought

a

later,

years

complished. .inY

road

Art Metal Construction

•Prospectus

ac¬

should want to look further down

past

,

of

«>-

what

been

the

the

egg

that when purchasing power, both

course,
been no

has

reasoning

is

That

_

some

Money Supply
We

from

come

It

ment,

Gross National Product and

to

the supply of money it¬
might be said that a real
labor of
Sisyphus is trying to
combat a rise in the velocity of
money by forcing a contraction in

self.

with the

here

dealing

am

statements,

have

outside

support of the
government security market, we
are
contributing to a decline in
domestic purchasing power of the
inflation—and

con¬

a

and

element

dollar—to

to

upon us.
If the existing money
supply were to contribute actively

of

and

have,

siderable extent, grown up to the
increased money supply which the
necessities of war finance forced

combined restraint of bank credit

expansion

we

argued, of

should-have

pressed in dollars, and the rela¬
tion; of our ;money supply to gross

the

is

r

i

*

-

Effect of Low Interest Policy I

;

-

and

been

has

and

war

*

date

nearest

the

end-of

6f the increases which have taken

world,

the

market,

-form

a

'here,- however, '.we

keep in

jfV/

mdnetary* reconstractionr.
in

the

on

have

Even

i g h t Seem. ;

m

pressing

.

will

as.it«

2%%

3%

3%%

or

or

at 91%

or

at

83 %

where?

and

and

a

yield

yield of
Opinions differ
a

miles

an

hour

to

110

miles

an

hour, and increased our passenger
capacity from a maximum of four
to

fourteen

passengers.

Two

1

Preliminary
estimates
for
July —
September 1948 show an increase in the
supply but at a lesser rate than

money

in

1947,

parison

so

that

would

the

still

(Continued

year-to-year

show

a

decline.

on page

32)

com¬

Even before the end of the war,

plans
line

the

before

address
the

by Mr.

62nd

Convention,
Des
Oct. 27, 1948.

Iowa

Patterson
Bankers

Moines,

Iowa,

the

manufacturers

construction

of

a

miles

hour

an

for

the

Douglas
cruising speed of 300

DC-6 with

and

capacity

a

of 52 passengers plus cargo.
Costs
You

of

Starting Air Line

be interested in the
relative cost of starting in the air
may

transportation
mail

business

with

compared
air

*An

completed by the air¬

were

and

today.

planes

we

in

The

used

1927

first

cost

us

$14,000 apiece.

today

will

replace,

The Douglas DC-6
cost us $1,000,000 to

and

the

(Continued

Boeing
on page

Strato-

39)

Volume 168

THE

Number 4750

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1957)

N. Y.
The

Electric Output

To Hold Annual Dinner

Carloadings
Retail Trade

Staie of Trade

The New York

Commodity Price Index

dinner Dec.

Auto Production

Industry

V

MORE ELECTION ERRORS!

Business Failure*

As With Great

Millions

slightly de¬
but notwith-

The intrusion of Election Day the past week had a

production,

industrial

over-all

on

high level which obtained in the corresponding week
As

true

was

of

true

adskilled
For industry hs

last

weeks, strikes

previous

}

a year ago.

week

again

.

j versely affected production in some lines/as did shortages of

i labor, which continue
j

j

a

whole

a

unabated in some industries.

employment

payrolls remained moderately steady

and

high level.

'
*

•_

RoOm

|

The stock market

-

;

(4)

Dewey's

have made

postwar high in Sep¬
tember, reversed its course in October and showed a drop in receipts
from the sale of farm products of 3% under those of -October last
year, the Department of Agriculture reports.
<
.

It

.

the

further

that

war

that

states

farm

this

was

fell

income

the

time

first

that

below

be

the first

about

4%

income

was

months

of

last year.

as

same

However, not all farmers fared better than last

from

livestock

from

crops

This

and

livestock

dropped 3%.
difference between

$25,000,000,^

Receipts
while income

year.

increased 9%,

products

'

livestock and

that prices for the former increased, while prices for crops declined.
Record crops pulled down prices, but livestock supplies continued

relatively short, causing

further price advances.

some
sji

Election

Although

*

•

-

promotions

•

•

'

j

favorable con¬
the past week, total retail
volume fell fractionally.
Dollar volume continued to be slightly
above that of the corresponding 1947 week.
Consumers were in¬
terested largely in Fall and Winter apparel and in gift items. Men's
sumer

and

home

encouraged

women's

and

Day

to many seasonal items

response

furnishings and accessories were
furnishings continued to sell well.

frequently

sought

wholesale

volume

last

week

was

close

to

to

declines in some sections were generally offset
by advances in others. Prompt delivery was requested by numerous
-buyers. Winter apparel continued to be ordered in considerable vol¬
with

orders for

numerous

the

HISTORY

OF

THE

SCHEDULED

HIGHEST RATE

AT

metalworking weekly, in its current summary of the steel trade.
Voluntary allocations, which the industry thought it had settled,
are anything but settled.
Most steel officials had expected that by
the end.of February that plan would be out.the window, but, states

the magazine, the voluntary allocation

plan is now the only thing
straitjackety government imposed
allocation plan—something that would be extremely hard to get rid
of

in

stands

once

it

was

the

way

of

a

T

fastened down.

Some form of allocations is in order

voluntary allocation plan—with
that there will be
Steel

go up so

a

as

few reservations—there is

a

chance

strict law.

no

It is this
Americans

spending,

Federal

Close-Fitting

writer's deep

caring

look-and-listen

inflated

na¬

Pattern.

British

conviction that it is absolutely vital for

detailed

examination

its impending slide into full-scale planning and
apologias of the Beveridges, the Laskis and the
Shinwell's were of course to be taken for granted: it is the completely
misguided judgments and inferences by the middle-grounders and
the liberal pro-capitalists that are so significant.
an

The

instance

the

of

post-election complacency of Britishers
York "Times", cabled the fol¬

the London correspondent of the New

lowing on-the-spot interpretation July
election results

were

"TIME
{,

;

26,

1945,

the day after the

announced:

raw

say

wage

steel leaders.

That

costs.

may

may

find

not be advanced

on

Purchasing Power of

Dollar—Edwin Hopkins—Ed¬

win

Hopkins, 255 West 43d Street,
Y.—paper—$4.00.

New York 18, N.

Production

Employment,
Income

in

Area—W.

the
E.

and

Chicago Industrial

Hoadley,

Jr.,

and

G.

Wright—Federal Reserve
Chicago, 230 South La
Salle Street, Chicago, 111.—paper.

Bank
.

the

the

of

taking the Labor

time in the next five years to experiment
of industries other than coal or power
."
.

.

Industry

Bargaining

Wide

—

Leo Wolman—The Foundation for
Economic Education, Inc.,

Irving-

ton-on-Hudson, New York—paper.

That "Muddle-Through" on Both

With J. A. White & Co.

Sides of the Atlantic

(Special

The

following day, July 27, the "Times" reported
significant reaction from London:

this highly

as

on

posed

harmlessness

the day after

a

Americans comforting themselves with the
of our New Dealism and "mildness" of

sup¬

tics

our

Financial

Chronicle) -

O.—William

J. A. White & Co.,

E.

Union Central

He was formerly with the
Savings Bank & Trust
Company.
A
Bldg.

Provident

With Browning & Co.
(Special

to

The

Financial

Chronicle)

our

laborites of the PAC and PAC-type, will get scant comfort from the

following on-the-spot analogy offered by

The

Stanton has become affiliated with

national election in America
[sic], the Conservatives conceded they had over-stated.their fears
in the heat of election and were ready to grant that the country
could 'muddle through' without disaster regardless of the party
in power."
.
"Today,

to

CINCINNATI,

British brethren:

CINCINNATI,
and Company,

"LONDON, Aug. 8, 1945—What has happened in British poli¬
in the last month can be translated into American terms by

O.

—

Browning

Union Trust Bldg.,

have added Jay

W. Dick to their

staff.

•

.

v

.

an

on page

47)

Time Inc.

»

overall basis until and

Kingan & Co.
McGraw (F.

H.) & Co.
International Petroleum Co.

American Maize Products Co.
•\

>

*

•

Standard Oil of N. J.

Bought—Sold—Quoted

it is highly improbable that steel labor would strike

over social security or pension controversies—or
law should be changed

to

even

over

wages.

make strikes easier for labor,

might develop in steel next year—if
^magazine points out.
•

;onc

a

wage

impasse
*

_

comes,
,

•

now

on

the

basing, point

(Continued




on

vs.

page

29)

f.o.b.

mill

will

be

FREDERIC N. HATCH & CO.. INC.

HART SM1TH &C0.

Established 1888

the
,

"

Hearings

Crime of Inflation, The—How to
restore

<A

Nationalization A.

(Continued

Taft-Hartley bill changes mean little to steel people.
The strength of the United Steelworkers prevents any change in rela¬
tions between steel companies and the union. The only possible part
a revision might play would be in strike
provision changes. As the

But if the

Rela¬

Public

If these

Possible

now

V.i

REFORM.

no

with nationalization

unless steel wages go up again.
There is no bar to changes in
"extra" charges to bring special services inio line with higher costs.
This may be in the offing at any time.

law stands

—

be true—it

trap with price teeth in it threatens the industry.

prices

states"

(lower rate for quantity orders).

C.

LABORITE

BAR

"LONDON—Britain's business community is

would have been truer if Mr. Dewey had-won. Cautiousness will
be the watchword on steel prices for the simple reason that a bear

Steel

TO

Chance of

^

will

"economic

tions, Inc., 522 Fifth Avenue, New
York 18, N. Y. .<— paper — 50c —

imagining that Sidney Hillman's Political Action Committee, having

material, freight and

will steel prices,

HELD

"British Business Gives Regime 5-Year Limit, with Little

„

plans for preventing trend toward
collectivism being produced, the
author believes, by huge private

of the British public's com¬

placency toward

As

| Quit MonSteY Business—An
appeal for independent, decen¬
tralized enterprise, with specific

for our freedoms in this November of 1948, to stop-

in

people have claimed, and still claim, that steel prices

must be tuned to

:

even

1

Wall'Streeters—high

The many good

long as the steel shortages
exists, and this trad<* authority predicts that it will exist for the
next six months at least, and maybe much longer.
If steel heads
can convince the Administration that
they again have faith in the

r

A

INDUSTRY

caught all steelmakers off base on their hopes and
predictions, so they will find the next four years just as difficult
to take as they have the last 16, according to "The Iron Age," national

that

Av

A. Wilfred May

that "somehow it can't be so," the clear
pattern for our present behavior was set in the British public's atti¬
tude toward the victory of the Labor party in the elections of 1945
(whose result was almost equally surprising).

The election

-

George A. Searifkt

de

E.

the: Entertainment Committee.

comforting faith

ernment

OUTPUT CURRENTLY

IN

'

party victory in stride because it is convinced that the new Gov¬

Spring styles booked.

Viceman.

Willers, C. E. de Willers & Co., is
Chairman of Special Events, and
Michael Growney, Growney & Co.,
is in charge of- Hotel Reservations.
John
J.
O'Kaae, Jr.,
John J.
O'Kane, Jr. & Co., is Chairman of

•

Apart from the traditional worldwide foible of shutting our eyes
program clearly stated by a Lenin or written in a Mein Kampf

a

the high level

of recent weeks and

STEEL

;

,

Total

ume

By

collectivism.

•

is

-

The

:

,

the fact

reflected

crops

Wien,

Chester

-

tional income and Keynesian weapons-in-the-eloset may after all
entail a higher stock market.

in

The income for the 10-month period was reported at

000.

S.

press

to

the like period last year, reflecting increases
during the first eight months of this year. September

about the

(9)

-

.

of

1948, total income was reported

the/
Mel¬

poll (!) concluding that the new Congress will
strike price-control from Truman's program, indicates thab antici¬
pations of its radicalism are exaggerated.

aboye

last year

over

10

be

Democratic Congress would have been

a

of

Truman's promised farewell-to-office after this term will-

(8) A

month of the previous year.
For

can

better President than Truman.

a

disastrous.

(7)

corresponding

the

of

the end

since

rities»

Chair

Communist.

a

lessen his demagoguery.
new

e c u

Co.,

the

"concealed"

(6) Dewey with
more

S

MAS. Wien &'

left
wing-ism
perpetual. /* :
(5) Dewey . and
Truman
are
really '
Tweedle-dum and Tweedle-dee; and
Dewey
(a district attorney-with-moustache) would not

only add to the inflationary spiral that
already besets our domestic economy and make more difficult the
return of some semblance of stability of the economies of Europe.

are $12.50.
George Sea-7
right,
Aetna,

ville

*

:

can

a

portent from

would have made the New Deal

government spending both at home and abroad.

ets

dinner.

(3) Dewey's "right" wing-ism would have:

"'A

As¬

toria Hotel, at
7:30 p.m. Tick-;'

man

set the stage for Communism in 1952.

:
;
: )' \
\
through his campaign promises,
business can expect the revision or outright repeal of the Taft¬
-Hartley Act, higher corporate taxes, new'minimum wage legislation
and credit controls, price controls, Federal Housing and stepped-up

income, after advancing to

j

'

wishful

,

.

(2) Truman is not

Should President Truman carry

Farm

by

.

*

program

motivated

following:
(1) Campaign oratory and promises
discounted.,
■
.V
.
A v

attitude until the 813t Congress convenes.

a

•••,

form of assertions like the

Dewey of New York for the Presidency by the present incumbent, President-Truman, business in general must assume a waiting

Such

:

on

staunch believers of free enterprise. "'A
Such self-soothing consolation is taking

nor

■

being

course

even

Following the initial shock of the unlooked for defeat of Gover-

►

not

or

most unrealistic minimization of the

inter -

mittently and left values close to their, low September levels./

'

of

are

the

r

Corp. is Chair- A

FQr, whether

the outcome

over

newsprint

implications of what actually happened

i

"A:

jf of the Election when stock prices on both of those days broke

j

of

|

*

j ample evidence of the investing public's feelings
I

tons

whistling-in-the-dark, the air is being filled with

Wednesday, and Friday of last week gave

on

and

Ball;

of

Waldorf

Nov. 2^

at

:

-

words

th e.A

Grand

poured forth in explanation of the universal
mis-forecasting of the
Election results.
But of even greater Importance is it that in the
not-too-distant future reams of excuses will
again be poured forth—
but this time for our present
mistaking of the

standing this, manufacturing output compared favorably with the

f

i

of

in

10.

Britain, Whistling-in-the-Dark Over the

Results Will Make Us Deserve Socialization

pressing influence

Security Dealers

Association will hold their annual

By A. WILFRED MAY

Index

Food Price

and

Security Dealers

Steel, Production

V..--,

5

52 WILLIAM ST., N..Y. 5

•;

MEMBERS N.

Y.

SECURITY DEALERS ASSOCIATION

no
63 Wail

Street, New York S, N. Y.

""""

"

.

>

•

..

t

WU TeJetype^rrr 1-SWF15,1

Bell Teletype NY

Vow York

HAnorcr 2-M90

1-395

" MoatraalA

•

A

•

;

Toronto

6

(1958)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

U. S. and U. K. Trade

Spahr Replies to Leffingwell
Executive Vice-President of Economists' National Committee

Monetary Policy takes issue with state¬

on

by Chairman of Board of J. P. Morgan & C$., regarding restoration of redeemable gold

ments

Thursday, November 11, ia48

With the East

currency.

Dr. Walter E.

currency

issue

Oct.

By DR. MAX WINKLER

Spahr, Professor of Economics at New York University, and Executive
on
Monetary Policy, in the Novem¬
of ''Monetary Notes," published by this organization, replies serially to statements
C. Leffingwell, Chairman.of the Board of J. P. Morgan & Co.; relating to a
gold
as contained in an article in "Fortune," which also appeared in the "Chronicle/'

Vice-President of the Economists' National Committee
ber issue

of Mr. R.

of

6).^~

1948 (p.

7,

~~~~

~

ouying
and
spending
heavily
abroad and were lendleasing our

1

desirable to
his

thus

exports and not being paid for
them; a currency able so far to
meet the postwar world adjust¬
ments
in
what
is
the
gravest

clear

peacetime

comment follow:

economic

has

world

job today is to keep
for

our

the

endured.

ever

good

crisis

for

responsibilities,
in
war, not to tinker with

or

.

of

,

result

"The
our

of

paying gold out
into the hands

reserves,

booms
in

and

busts.

The text of Dr
vations follows:
In

article

an

Spahr's obser-

.

,

Inflation" in "Fortune"

(October,
1948), Mr. Russell C. Leffingwell,

Chairman

Morgan

the

of

Board

of

J.

P.

&

Co., in a section
"Gold Currency," said:

on

"Some suggest as a
remedy for
inflation the return to gold cur¬

the late Twenties

in

reserves

This

Banks.

defenses in

would

case

Reserve

weaken

deflation

„

time

in

a

of

#

"The place for our gold is

of

Federal

our

in the

Reserve

Banks, not in the pockets of the
In the reserves it gives

people.

1

confidence

is avail¬

at home and

able to meet

busts.
It did not do ,so in the
hundred years of peace from Na¬

poleon to the Kaiser.

what

immunity from

gave

booms

or

the

and

did not

It

prevent the inflation
Twenties

never

of

the

deflation

late

of

the

early Thirties.
"Our
cient

gold

now

reserves

to

currency, if they
are
for the support of that

and

limited

to

sound

a

conserved

have.

we

Let

us

not

med¬

■')

dle with it."

r

"

The

opinions expressed by Mr.
Leffingwell are widely held to¬
day.
At the same time there are
many people who believe that the
United

States should return

to

a

currency,

redeemable

meet

to

use

suffi¬

are

maintain

our

ough-going gold standard, it is
important that, as many people as
possible,
.particularly
Congress

our

and

money

a.

thor¬

-

external obligations..
"The

dollar

is

the

most

gen¬

erally acceptable currency in the
world.
As such it hai to bear the

Administration,
understand the, issues involved in

burden

trade;

of

and

much

the

of

the

gold

our

in

a

dollar
would

each.

ol

the

have

standard

proved

the

world's

gold

'

reserve.

"We

on

a

•

j

sound

very

gold
It has

today.

currency

itself

adoption

reserves would bei-

effect

two

systems so that the
either may be the
result of an understanding of the
virtues.. and defects inherent in

world's

hope

ultimately be based
exchange standard.
come

these

Federal

That

best

future is that other currencies will

mean

the

and

able' to

the

meet

gold export demands of the greats
est war of all time, when we were

of

of

'

.

Since Mr, Leffingwell is a man
wide experience and respon¬

causes

counteracting
several

would

have

views
seem

to

validity it
that ft is
.

follow

.

Stix

that

„

INVESTMENT

Philadelphia 2.
PEnnypacker 5-5976

,

SECURITIES

OLIVE

St.LouisI.Mo.

New York

New

York

Members St. Louis Stock

Exchange

WHitehall 3-7253

and

Los

Angeles

SPOKANE, WASH.

business

a

Primary Markets

(a)

7

Immediate Execution of Order,

Quotes call TWX Sp-43

on

Floor

of

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

other hours.

"The City of Investors"
i

H. M.

Byllesby & Company
PHILADELPHIA




or

PH 73

£100,990.000

STANDARD SECURITIES

CORPORATION
Members Standard Stock Exchange
of

Brokers

-

Peyton

Spokane

Dealers

-

Underwriters

Building, Spokane
Branches

at

Kellogg, Idaho and Yakima, Wn.

members

of

to

the

soundness

of

the

point (b)

portance to

Bloc

Dr.

is

Max

Winkler

compared

Trade

With

Albania

.

•

•

the

\

-

.

presented hereunder:

are

Eastern Bloc

11948

1947

1946

£0.55

£0.04

7_~~~

£0.50

*

BulgariaV----------^----

0.36

16.43

8.52

40.36

-Finland

0.14

16.74

Czechoslovakia
•

*

,

in million pounds)

are

Total Trade With

39.55

22.48

7.44

4.15

0.31

17.66

_ _

11.56

11.48

-

3.36

0.22

0.0.9

29.46

21.89

16.12

7.2-3

6.50

7.23

Trade_.___

£3,602.00

£2,984.00

£2,266.00

-.Trade with EastL__.__l__

122.68

100.99

66.73

; -

.

nation's

-Estimated;

money;

today.'
/ ■ j
One may not properly suggest,
that a gold currency system is de¬
because

it

does

of

for, supposing
monetary system

is

provide imT
future business
,

gold

a

be

to

Nor

can

a

therefore,
is

'

,'j

-

v

'■■1948

Czechoslovakia

——-

Russia

-

_

_

_

currency

condemned

oh

that it does not

give

$125,483

99,090
190,052

43,334
$184,014

226,605

458,275

10,826

-—

.

f

1916

$72,391

122,072

Finland

Poland

1947

$102,970
59,990
164,968

36,962

125,483

:■

■

Yugoslavia

:_____

Total U. S. Trade-

Trade with

$20,088,066 $14,676,171 $14,319,406 '
360.826
525,100
936,589
1.80% ;
3.58%
6.57%

East___—

Percent of Total____

...

was

basis, apparently
that the ' present

2.95%

(Figures in thousand dollars)
'"

Our

1920-1921.

'3.38%

3.43%

January-June-figures.

Total U.S. Trade With

sharper, for the period involved,,
good

of

*

U. S. Trade With Eastern Bloc

.

present type of monetary system,
so widely
approved, has not given
immunity from a boom, nor did it
give immunity from the business
1937-1938 which

basis

on

'r

-

give

mentioned.

immunities

not

Total U..K.

v Percent of Total____

•

because of-1he

is of greatest im¬
all, but it is almost

us

-

•.

overk

completely ignored

the

Eastern

$3-30.826,000

(Figures

ways:

credit and
(by- in
encouraging production and long/

fective

On the

areas.

figures, U. S. trade with

U; K.

can

of

time commitments

This

r.

to influence rather markedly com¬

.

its termination.

*

Estimated

on

f Represents

...

t Includes

iV:

basis

only

U.

S.

U.

of January-June

S.

exports

of

exports

figures.

_

Poland.

to

$183,849,000

''

and

of

imports

$165,000.

only

*;

',/

One is tempted to speculate as to the extent to which England is
benefiting economically at the expense of the United States which is
permitting her ideological differences with Moscow to affect her
trade with the East, thereby depriving American business of securing
legitimate profits which would be accruing if economics could be
divorced from politics which the British appear to have been able
successfully to achieve.
/
/'
/
1
,

ant}

ground

one.

;

known to man-that

ea

and

inot be .un¬

or

system

man's

for

abus£

credit, for his widespread dei
structiveness in going to .war, fof
the mismanagement of. a nation's
economy by government
A
pertinent question

Has the world suffered
more

from

so

far

a

paper

Mid-West Market

is

.

-

■

.

thisj;

had

contribute to confi¬

dence, if there is any
it, not to booms.

for

(Continued

on

proper

basis

It is badly

page

36)

of

Oct.

of

Associated

the

21, Homer P. Har¬

grave,

Stock Exchange, said the decision

L 1 p
r c

h

d
d„

y

a r

of

the group, has
in
Cleveland.
As noted in

previous
sues

is-

of the

Chairman

Homer

P.

Hargrave

sideration

changes
which
to

of

in

would

the

Chicago

by the Detroit exchange to with¬
posed

merger

"will

not

affect

further,

study of the plan." "The
proposed merger," said Hargrave,
"is in a preliminary study stage,
and the study will go right along.
It may be completed by the mid¬

dle

of

November

December."

It

"Chronicle," a
plan has been

is

first

or

of

representatives

Orleans

merging

the

of

draw from discussions of the pro¬

under

..

money

dispatch

a

Press

Chi¬

announced

very different

paper

to

Nov.

B i

a

history if it is prop¬
erly interpreted.
*
■
;
A gold standard and redeemable

~~r\

in

12,

mankind, and
have

—

Cleveland, Cincinnati, /St.
Louis and Minneapolis. According

on

Chairman

irredeemable paper money
has been cue of the greatest evils
silver

will

——

-—

cago,

meet

war,

and

,

Oct.

cago

the evidence is clear that next to

gold

of

consoli¬

dation

stability,.' reces¬
sions, and depressions?
I believe

that

mechani- '♦

aspects

new

of

confidence,

afflicted

enter combination.
on

proposed

a

the

have

the
cal

fronjr

money"

may

announcement

*

20, by the Governing Com¬
mittee of the Detroit Stock Exchange, that the membership had voted
to discontinue discussions relative to the
proposed foundation of "a
Mid-West Stock Exchange, a sub-committee that has been studying

monetary, system
contributing factor to busif

ness

■

Merger Still Under Discussion

Exchange
Despite the

officials!.

more

-

/Detroit Stock Exchange withdraws from discussions of proposed
consolidation, but Homer P. Hargrave, Chairman of Chicago Stock-.
Exchange, says study of plan will continue. New Orleans Stock

redeemable currency

a

as

.

mon-r

etary system >■ be similarly conj
demned,- including
our 'present

that

OFFICE

Stock Exchange Bldg., Phila. 2
Telephone
Teletype

RIttenhouse 6-3717

mechanism

helpful in at least two
in holding down an

is

SECURITIES
For
or

;

£122,680,000 (or

with

recession, but it "should

extension

in

NORTHWEST MINING

TRY PHILADELPHIA

the

Russian

S. Trade

_

irredeemable

For

to

the

States, the East-West tension

to, amount

Eetails

certain

a

or

U.

on

of January-June

is,

of

5

United

principal

>

-

ard
Street

Private Wire System
between

Philadelphia,

' There

destroyed if mankind
(usually
government
officials)
abuses it sufficiently.
But it if
a mistake to, blame the
gold stand¬

STREET

the

Similarly,
the
corrective-forces

introduction of

dermined

!

CORPORATION
Wall

amount

inter¬

with

year

within

compared

No monetary system thus far //
Hungary
employed by man ever "gaveMmV' I-;;; ).Pola n<f- L 2J
Rumania
munity from booms or busts." A
/ Russia ■
gold standard cannot prevent ris¬
l'l> Yugcslavia
ing or falling prices or a boom o?
be

England

with $525; 1C0,000 in 1947 and $936,589,000 in
1946, declines of 31.28%
and 61.47%, respectively.
•

valid basis for the

no

.

expected

arise,

There is probably no institution

„>•

509

44

the

If,

Co.

the

The

busts

many.

munity against
recession.

'

BUCKLEY SECURITIES
St.

and

or

single program
prevent a boom

common

Walnut

follows:

as

or

apparently,

any

posing

basis

''

"immunity
from
booms*
busts,'"so should every other

request

to

financial

and

current

countries

million)

is. permitted

assumption, sometimes advanced;'

system

'

the

mercial relations between the two

force but from 'sev¬

many.

that

wisconsin

1420

or.

are

the

power & light ■/

economic
for

the

is expected

In

the deflation

or

booms
one

than

PHILADELPHIA

on

of

not from

there

op¬

ST. LOUIS

Prospectus

here

careful

the

do

Spahr: I should state the issue
involved

recession of

If

not

inflation :6f

the

prevent

sibility in the fields of monetary
and fiscal affairs, his opinions de¬
serve, and doubtless will receive,
consideration.

did

years

early Thirties."

eral

,

reserves

not

the

ox

our

of war, and might

possible recession into

a

disastrous
peace.

Federal

our

obligations, and
perhaps our necessities, abroad.
We do npt need a gold coin or
gold certificate currency, but a
gold standard currency.
That is

Yet gold circulation

rency.

her

trade

and

■Effect

of peade
Napoleon to the Kaiser,
ft

did

people lor domestic circu¬
might be to create, in panic
wartime, an insufficiency of

convert

"How to Control

on

It

the hundred

from

lation

Leffingwell

with

Her

U.S.S.R.

about $595

or

C.

ests.

asia (or about $407 million) last year and £66,730,000
remedy for inflation the return to (or about $269 million) for 1946, gains of 21.04%gold currency. Yet gold circula- and 83.85%, respectively. V
tion never gave immunity from
so

to

"Some suggest

of the

R.

terfere

.

.orbit

Leffingwell:

orbit

.

it.

Walter E. Spahr

*.

*

Russian

ideological qualms.

our

oeen
pursuing with respect to Moscow, it
significant that Britain does not permit her
ideological difference with the Kremlin to in¬

V 1
'
1
specific statements of Mr.
Leffingwell on which I wish to
-

with

,

extent to which

is

The

-

trade

our

.

.

nas

-

-

over

.

showing

Although the United Kingdom is primarily responsible for the.
policy which the so-called Western Bloc, headed by the United States,

r~

making, as
basic issues

the

handing

are

because of

our currency

world

peace

involved.

we

Our

needs and

own

our

possible

as

^

International finance authority cites data

them against

measure

statements

Bernard, Winkler & Co..

<

six

Mid-West

include

in

con¬

ex¬
area,

addition

Detroit', the exchanges of Chi-

that

reported

from
the
Neyv
Exchange also would be

invited to attend the next general

meeting of the general committee
on

the

the consolidation to be held in
near

future.

.

'

,

Volume 168

Number 4750

V

,

THE

1

•

-

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1059)

to

From

Washington
Ahead of the News

By JOHN M. HANCOCK*
Partner Lehman Brothers, Members New York Stock Exchange

Pleading for freedom

,

ment,banker

By CARLISLE BAFGERQN

grief caused by the unexpected

respondent

is

happy

to

report—the

into the national political picture.
ocratic wreck -

election

1928

which

o n

it

pos-

for

e

Roosevelt

win

He got

kicked

around

pretty

meant

in trouble.

It

takes

of

sight cf this.

of

A1

with

Smith, and be¬

Bargeron

1936

the

fore

campaign had formed the Liberty
League, which sought to defeat
Roosevelt fof a second term.. He

reservation
since, having been a Willkie

had been off ihe party
ever

Democrat

But

still

1940.

in

when

the

days

this

and

Democrat

a

year

darkest for

were

Truman he announced his support
of him.

His friends thought

there

must be

something

in his

perverse

nature,
that he
just
couldn't stand being with a win¬
ner.
He contributed to Truman's

political

.

campaign when contributors were
sorely

other¬

and helped

needed

wise.
the

Washington

corre¬

in their usual
pastime of picking a Cabinet they
had better keep Jouett in mind.
He is ,of that calibre.
spondents indulge

an

example of what is now

come

bor,

lost
in

the
all

time

no

that

effect

the

over

Stessen

on

in

planting

Washington

a

the

over

story

a

to
big-wigs"

newspaper

"party

country have moved

urging him to take
of rebuilding the

task

His youth and vigor and
ideas,, etc.
These "party

party.
liberal

big-wigs,"
pared

back

to

told, are pre¬
him to the limit

are

we

financially.
In

the

first

of

more

standing
nated

'48,

Mr.

'

in

nomi¬

'40

and

"Liberal" in '44 and

a

haven't
"Liberal" enough.

apparently

gone

Notwith¬

Stassen.

"Liberal"

as

they

yet

to

nominating a Republi¬
can.*
The fact is, of course that
the
word
"Republican" figured
only sl'ghtly. if any, in the recent

that

columnists

and

the

was

...

Day bv day, Mr. Truman ham-*
merer!

at

the

of

record

Congress. Bob Taft,
issue.

considered

to

be

80th

pieces

the

business

of

"those Republicans" with
whom he had but slight associa¬

the party, that he intended
get rid of the "reactionary"

and

he

"isolationist"

got in.

ated

elements

Dewey

this; instead, his actions sup¬

ported it, ;

/ </.'

.

be made for

rards of the

the

are

Stassen, the

it

party

rem-

in the hands
Taft and Joe Martin. They

cf Bob

are

that

ones

is

no more

than he had to have

From the outset, the Republican

command

the

Senate
the

were

polls
was

last

knew,

that

regardless

control

of

the

in jeopardy and with¬
two or three weeks,

prepared to write off

a

loss

in the House, though not control.




tic

office.

in,

are

this writer's

it

to have

there

itably

n e v

bound

with

of

up

t

e n

prise

not be a
handicap to
developing
our
industrial might beyond its
present state. The primary desire,
asj I see it, should be to increase
our
industrial strength—and the
truly secondary object should be
tq decentralize it, if that can also
be attained.
This problem will

e r-

before

never

this

was

clearly
as

so

true

n o w

I

—

naturally

have accepted

tional

gracious

invitation

but

to

il

of

the

sub¬

your

speak for no one except my¬
I

organization, and

pany, no

that

guess

citizen

American

no spe¬

proud

the

of

achievements of American indus¬

try—in

as a way

of

American industry I mean
comprise it—inves¬

all those who

labor, management, and the

tors,

who

supply much of the

they intend to hold onto it. They
are the ones that day by day do

fanners

the work, make "the party record.

that all of these must truly serve

They did.it

the broadest

in

the

only to
have their party, nominee ignor,
in fa<"t. try to escape, what they
had

past

marily"

putting

talk

considerable

Carroll

Reece

He

as

back

commend themselves to you.

is

unquestionably the
best organizer tne party has had
in

that job

ory.

in this writer's

he

And

•

is

the

mem¬

only

under whom the party has
one'

in 18 years.
He isn't
of"those "Liberals" and his

appointment would

cause

wail¬

a

ing and gnashing of teeth

the

on

ists. - But

the

day in

some

Republicans

have

Republicans.

way,

some

to

got

be

//'■

(Special

:

to

The

Huey Co.

Financial

Chronicle)

become

associated

with

Chiles,

Huey Co., Omaha National

Building.

Mr. Beck
of

manager

the

was

Bank

formerly

trading

depart¬

Burns, Potter & Co., Inc.

A. W. Zucker Go. Is

policies

ing

W; Zucker Co., with offices at

wili have to probe are not
only complicated and delicate—
they reach ultimately to the bed¬
rock of thei principles and prem¬
ises upon
which the American

As

I

are

brokers^
cor¬

poration and municipal trader for

been

associated for

truly

in

Their fac¬

many

formidable.

it, these questions as to
to be the legal rules of

the

you

.

do not lose the forest for the

trees

that
you
do
cardinal principles.

Necessarily,
marshal
data.

You

raveled

a

will

you

vast array

a

have

disentangle

of

legal concepts
and knotty verbal wool.

But
nomic

the
boundaries
mark out on the free¬

all,

which you
dom

to compete

portant sign
tinued

will become im¬

either to

posts

democratic

freedom

economic statism.
This

is

not

-

con¬
or

.to

and

which

pure

decisions

examining will
control the pricing and operations
in a majority of basic industries.
The

list

are

from

runs

automobile

as

reach

the

be

may

of

these

been

of

arguments,

there

I

are,

affects

What

modest

a

contribution

to

factories

those

lieve,

your

inquiry is not, I be¬

and

sense an

laws.

should not be in any
attack upon the antitrust

I

have

American

heard

never

businessman

any

urge

that

the Serman Antitrust Act be

New

offices
York

securities

at

40

City to

portation system/
You
are
not
dealing

with

The idea of free competition is

part of the American soil.

parts to transportation equipment.
It includesiron, steel, and non-

—from

business.

Since

trade

metals—machinery of all

kinds—rubber, leather,, and textile
products—food, tobacco, and bev¬
lumber,
many

cement

of

all

types—

paper—and

and

other products.

These

policies

the very beginnings of American
in the days of the Colonies
the

time

that

Conestoga
Alleghanies
carrying goods from seaboard * to
the new interior—since the time
wagons

crossed

the

that flat boats first floated
goods

and down the Ohio and the
Mississippi-—in the opening of the
up

will

apply

not

West by wagon train and railroad
now in being, but
plants needed over the years —the abhorrence of monopoly and
for'an expanding economy and a the refusal to permit conspiracies
growing population.
More than in restraint of trade have been
that, they will determine whether articles of political faith of the
these plants are to be built at all. American people.
to

Every thread in the
or

torn apart on some of the the¬

ories
lav/

now

said

be

to

a

conservative

aggregate

affected

of

over

American

businessman

wants to compete and not to con¬

spire.

He

part of the
estimate the

does

his interest.

not

believe

not
for

on
,

on

the

a

"long range" basis—

basis of what is

represent

an

conspiracies, and he
knows that they do not work in
He knows that

com¬

petition is good for business be-

(Continued

$50,000,000,000

We

pleased to

are

on page

38)

announce

installation of

A Direct Private Wire

between

our

Offices

America

today,

but

over

on

have

decades ahead.
determinations will

an

inescapable

also

bearing

ST. LOUIS

the

many

Your

SCH ERCK, RICHTER COMPANY

good

basis of what is best for America

a

Direct private wires to
New York,

Dallas, Louisville, Los Angeles

on

national security

industrial

quite obvious desire

First Securities Company
of

being

formed

Wall

Street,

cock

in the

Policies .Committee,

•A statement made by Mr.

D.

before

the

C., Nov. 9, 1948.

Senate

CTiicaoo

Han¬
Trade

Washington,

in

price-fixing

of the land.

industries

The

industrial

fabric may be strained or stretched

a

transitory problem. You must deal

There is

engage

re¬

pealed.

will

jobs, their accumulated technical
experience,
their
homes,
their
families, and the communities in
which they live.
The wider rip¬

Formed in NYC
with

your

labors.

affect the workers in them—their

structure.

is

believe,

our

with the vitality of our

Baker & Co.

Co.

eco¬

questions,

several
simple
and
important
principles controlling the inquiry.
With your
permission I should
like to develop a few of these as

First,
nor

commission

you

vast

however prickly may be the legal

...

theory

speculation. According to a recent
Dun
&
Bradstreet
survey
the
court

Simple and Important Principles

which are so intimately bound up

&

to

of economic

also

must

skein

forget

not

—

which Congress

answers

citizens have
invested in plant facilities.

savings

the problems of

years.

Baker

State

every

Thus the scope of your inquiry
makes it doubly important that

busi¬

enterprises.

new

As

sands of cities and towns in which

Mackenzie & Co., Inc., with which
he had

is

located

are

of the Union.

pricing touch every businessman,
large and small/ On their sound
resolution by the Congress turns
the future development of thou¬

Street, New York City, to- with it

formerly

task

see

municipal
was

is founded.

of life

Your

act

Zucker

this inquiry
The areas you
and the questions
toe,

to

explore

the

Above

you

37 Wall

Mr.

at

far deeper.

must

tories

only to plants

important

first glance you may regard pric¬
goes

They
16,000,000

largely affect the nation's trans¬

Abraham W. Zucker has formed

bond

how

matter

the detailed impact

of

erages—containers

segments of our population."
No

investment.

approximately

ples of Congressional action will

Formed in New York

as

in

rectly affect the welfare of broad

what

With Chiles,

'

directing this in¬

quiry states that its purposes "di¬

wav

Fred Beck Associated

own,

The resolution

one

gained

victory

a

I do hope they will

are

my

a

American

employ

of American workers.

ferrous

V

,

of

chairman of the National commit¬
tee.

forgetting

While these ideas and opinions

,

is

not

public interest, pri¬
own
American con¬

our

sumers.

done.

There

material—but

raw

for

One

will provide will measurably con¬
trol the venturing of risk capital

the fostering of the

in

enterprise system

life. By

war—and

in

and

peace

interested
free

Planning Board,

these questions upon all

ness.

appearing for no com¬

am

Na¬

answer.

;Because

responsibilities
ufider Senate Resolution 241.
self.

Resources

the

of

Hancock

M.

of

before

come

the problem is not

hasty
John

here
today to dis¬
cuss
with members
appear

committee

may

serious

and

—

questions whether,
line of thinking by

grave

Government, there

the

American

,

industry decentralized, tout

are

in the present

maintenance

free

Because I believe that the future of the demo-

so.

of

way

cial interest other than that of an

,

,

Regardless now of the" Gover¬
nor's position as: titular leader,
whatever that is,-and of the push
to

i

when

repudi¬

never

appearance's sake.

high

in

different

from

on

apparently,

Dewey,
it

the

Republican,

a

would have torn him to

of

something

was

A.

tion,

commen¬

campaign
at the- theme that

drummed away

Dewey

pete and every encouragement to do
era

your

throughout

tions.

for

an

campaign,

rate and apart from

this

personally worth

The

ment for

ren-

Labor d'd not

tators

a Dewey-War¬
something sepa¬
the Republi¬
can Party.
In several States, not¬
ably
Tennessee,
there
were
Dewey-Warren organiza tions
Working at cross purposes with
the Republican
State organiza¬

It

campaign.

helped by La¬
"brought" ' about
Mr,

OMAHA, NEB.—Fred, Beck has

Some day, maybe, they will get
around

candidates,

hearing

Republicans

the

Congres¬

.

their

of

But we shall be

a

Dewey

hands

the

and

rocms

Democratic

the

of

part of the columnist propagand¬

place, it is doubt¬
ful if these "big-wigs" have yet
been able to get out of the steamrubbers.

work

an

cam¬

investment.

among

of

one

lose

we

National

a

the

was

condder him

the Republicans,
Stassen'-s * henchmen has

As

to

hopes of the free world rest on the American economy. The vitality of our econ¬
demands that the individual businessman be given every reasonable freedom to com¬

still exists—is

one-man

that

Truman's triumph.

And

When

{.

sional

to

insisted he was

he always

The
omy

life—where

so

are

compete in order to preserve nation's economic vitality, prominent investCommittee virtual identity of prices can result from competition as well

-

is¬

and

We

for the Senate is

integral part of
scores

tion

t

•.«

Each candidate for

'Vgre^s and

Cc

It

of his associa¬

Carlisle

organization

Roosevelt

paign.

crowd because

'

•

mentally confused by the

the

by

himself,

Dewey,

to win elections.

sues

Roosevelt

badly

occurred to them

never

this

to

1932.

in

It

them.

was

i b 1

s

apparently did -not disturb

that

made

.

the Dem¬

over

=———

This

organiza-

an

Shouse

Jouett

he who took

was

up

built

.and
t i

the

after

age

of

reemergence

It

to

Senate

conspiracy. Combats assumption most businessmen are inherently law violators and advocates ereating public confidence that legislation will not casually change or interfere with rules of business or
that energy and enterprise will not be frustrated
by legal uncertainty or administrative tinkering. >■

j

outcome of the election, there comes at least one story which this cor¬

tells

as;

•.

from'all of the heartaches and

v

7

Members

Chicago Stock

Exchange

S

COMMERCIAL

THE

(1960)

FINANCIAL

&

Dealer-Broker Investment

By EDWARD J. DOYLE*

Recommendations and Literature

President, Commonwealth Edison Company

Mr. Doyle points out

growth in uses of electricity is not ended, and though depressions may tempo¬
rarily halt it, generating and distribution capacity must be expanded. Holds most serious problem is
necessity of expansion in face of uncertain earnings and rising costs, but looks for greater use of
veserve capacity and improyed load ratios, along with greater operating efficiency, as counter-balancing
factors. Says atomic energy use will aid utilities in solution of fuel problem, while new plant construc¬
tion, though high in relation to past will have longer life. Urges avoidance of excessive debt expan¬
sion and

I do not have to tell you

port and expansion of the

that more and

trustees

citizens each year.

of professional
assistance
and are making use of it. On the
tages

June,

I

think

hours

1948, the

greater than for the

was

December, 1947.
in kilowatt-

12 months ended

advan¬

the

learned

have

vestors

increase

increase

the

generated

slightly

was

other hand,

larger in several of the war years

welcomes

than

business management
high level of under¬
standing on the part of those who
own its securities and is happy to
inform them and their counsellors
fully

as

a

thought of

as a

report to secur¬

ity holders. This report, however,
will be somewhat unconventional
shall

I

as

of

uture

talk

than

industry

our

the

about

more

its

I shall do so because I asyou, as trust officers,
have a particular interest in what
past.

that

ume

G ahead.

You examine the pres¬

merely to disover the key to the future.
This
discussion, therefore, will be of
ent

the

and

past

the

influence

which will

matters

development of the electric utility

ndustry. While, in general, I shall

Speak of the industry as a whole,
1

shall have to

order

refer

to my

time

from

ompany

to

illustrate

to

a

own

time in
particular

point.

year,

in that period, this

fact is not remarkable.

as

has been

persistent

so

the appearance of a

to assume

natural force.

However, as

we

all

know, maturity comes eventually
It is the business

all industries.

to

of

management

business
the

it

is

to

and

investors

as

observe

your

detect
maturity and decline in
their
earliest phases.
It is, therefore,
perhaps worthwhile to examine
the expansion which has
taken
place and to decide whether it
growth

factor

and

to

ample.

Edison

take

me

Demands

increased

have

as

an

of

limited

slightly

to

420000

over

kilowatts, all that could be added
during

the

retrenchment?

the

immediate

and

war

which
be

period.

the

ias

Is

it

in

one

of capital can

sources

freely

reduce their

to

if

demands

tem¬

periods of emergency

porary

oc¬

This condition exists in many

tapped or in which
money will be scarce? Time alone

cur.

will

real operating problems but it il¬

these questions. There

answer

is little doubt,
well

do

can

as

well

most in an economy

as

trenchment, shrinking
ply and lower prices.

of

as

re¬

money sup¬

parts of the country.

It presents

industry survive the present

of

electric

home

unprecedented

pe¬

expansion

high cost plant,

capitalization

ficient-earnings

on

a

and

ca¬

lop¬

insuf¬

invested capi¬

tal?
I think it
manent

because the per¬

can

long-term demand for

service

is

our

still

growing, because
building efficiently to
meet it, because we are avoiding
we

are

excessive
cause

debt

there

and,

are

finally,

evidences

be¬
that

ing

is

not

.hould

yet

general

increase

continuing trend
fair return

on

of
in¬

vestors' money cannot be earned.

The electric

power

industry is

Still indisputably dynamic. As far
s 1 can see. it has been
growing
just about

as

rapidly this

year as

it

has grown at any time in the
last 20. According to reports, rev¬
enues increased more in 1947 over

the previous

year

than they had

Since the early twenties and for the

ystems of the industry.

address

broader

utilization

of

accepted appliances

even

well-

such

the range,

as

the
home
freezer,
the
water
heater, the dishwasher, the clothes

dryer

and

the

>.

electric

blanket.

Market saturation in these devices

long

a

off.

way

of home

Even

in

the

some

lighting,

ex¬

perts expect present intensities to
be at least doubled.
In addition
to

these well

others

are

known

which

emerge from

uses, there
will
surely

the laboratory with

the passage of time.

The

President

of

Hotpoint,
whose company is just completing
here in Chicago a plant which
alone

will

be

electric

more

produced
before

in

the

ference of the American Bankers

only

servant

able

has

to

ranges

the

war,

that the

that

era

produce

than

whole

recently
of

gone

the

for

answer
•

to

the

pointed
domestic

good,

"a

are

and
the

housewife's

Mechanization

home offers

were

country

labor-saving devices

Association, Chicago, 111.;: Nov. 4, problem.




Old Ben Coal corporation—De¬

City banks—First Boston Corp.,
100 Broadway, New York 5, N. Y.

scriptive brochure — Comstock &
Co., 231 South La Salle Street,
Chicago 4, 111.

Business

1948 due to in¬

$3.30 in June of
creased

use, the $3.80 represents
smaller portion of the average

man's
The

to

budget than the $2.99 did.

Bureau

Tal¬

San

Eastman, Dillon* & Co., 15 Broad

Street, New York 5, N. Y.
Also available is an analysis of
Sharp & Dohme, Inc. and a bul¬

9/10ths

of

the

tremendous market

Calif.

4,

of

1%

of

with

outlook

of

try—Discussion

reference to a group of
unlisted issues—Goodbody & Co.,
115 Broadway, New York 6, N. Y.

special

available

Also

is

Light

American

North

leaflet

a

on

Power

&

the average

a
study of Missouri Pacific
Reorganization Plan and the Bond

Market.

Stocks

Insurance

Spring

1.6%

Analysis

—

Staats Co.,

William R.

man's budget today as opposed to

the

Thus, an
optimist might predict that when
the electric utilities through in¬
creases in capacity are able again
to promote use
vigorously, they
will regain

—

Street,

Angeles

Los

residential

the

from

average

about

customer

$75

against about $36 in 1939

and about $44 in

Steel

develop¬

Corp.—Circu¬

&

Co., 120
New York 5, N. Y.

Broadway,

Puget Sound Power & Light Co,
—Memorandum—Buckley Securi¬
ties
Corp., 1420 Walnut Street,
Philadelphia 2, Pa.
Railroad
cussion

Market

Outlook

comment—Cohu

Leaflet

—

&

Co.,

available

American
Lake

&

Street, New York 5, N. Y.

Needs

Hentz

—

Dis¬

&

Co., 60
Street, New York 4, N. Y.

Also

of

Wall

1

Capital

H.

—

Beaver

data

are

on

Airlines, Inc., Wheeling
and

Erie,

New

Orleans,

Texas & Mexico.

Outlook

If they succeed, they

receive

Portsmouth

lar—Otis

14,

their former share of

the market.
will

war.

current Railroad

on

ments.

640 South

Calif.

before

letin

Corporation—Analysis-

and

Statistics

Labor

of

Oliver

&

Street,

California

519

bot,

that electricity costs amount

?ays

Depres¬

and

Booms

sions—Chart—Hannaford

Stocks
&

for

York 5,

Insurance

Fire

Circular

—

Meeds,

120

Laird, Bissell

—

New

Broadway,

N. Y.

1947.

- Vandervoort - Barney,
—Circular—Dempsey-Tegeler
& Co., 407 North Eighth Street,
St. Louis 1, Mo.

Scruggs

Inc.

Securities—List with comments
Rural and Commercial Use of

Electricity
Rural

has

use

Hanseatic

York

been

growing

Y.

N.

t

customers
Admiral

and the manufacturers of electri¬

cal

equipment are just beginning
to appreciate the labor saving pos¬

M.

twice

as

home

and

use

much
it is

our

than

the

as

average

Co.,

&

61

Commercial
has

been

These

of

expanding

customers

electricity
vigorously.

offer

conditioning, air cleaning, ele¬

vators. electric stairways and im¬

The

new

offices

are

They
have modern fluorescent lighting
of adequate ihtensity.
The kilo¬
watt hours used in this space are
now three times as great as before
the

and increased

hand

in

.

labor
saving
of electricity go

use

hand

with

It looks

then, without going fur¬
ther, that the growth in uses of
electricity* is by no means com¬
plete.
Depressions may retard it
temporarily but not for long. It is
obvious that intelligent manage¬
ment • and
intelligent investors
must include expansion in their
plans for and analysis of the
future.

confidence

our

high
while challenging our managerial
ability. Generating capacity must
be

expanded.;

tems

must

spondingly.
necessary

estimated
1

Co.,

South

enlarged

•

corre¬

Money to finance the
construction program,

for

the

(Continued

entire industry

on page

42)

Salle

La

Street, Chi¬

Broad¬

120

Winters

Crampton

&

Corp.—

—C. D. Robbins & Co., 810 Broad

Street, Newark 2, N. J.

Miles Shoes, Inc.

Electric Power & Light—Leaflet

In

the

same

formation

leaflet is

brief in¬

Empire

District

on

Electric Co.

COMING

Emery Air Freight Corp.—Anal¬

ysis—Reynolds & Co., 120 Broad¬
way,

EVENTS

New York 5, N. Y.

In

Eureka

—/L
G. -Edwards
&
Sons,
61
Broadway, New York 6, N. Y. - •
Also available is a special re¬
port

Guayana Mines, Ltd.

on

Field

Investment

Ltd.— Summary

Corp.,

Nov. 13, 1948

(Chicago, BL)
Club of Chicago

Traders

Bond

Luncheon

-

for members of NSTA

passing through Chicago on way
Ferry-Morse Seed Co.—Circular
C.

Co.,

&

Roney

Buhl

Building, Detroit 26, Mich.
Firemen's

Circular

Co.,

Fund

—

Nov. 15, 1948

&

Investment

Slocumb

San

Street,

Montgomery

1

Nov. 14-18, 1948

Co.

Insurance

Brush,

to the Convention.

(Dallas, Tex.)

National Security Traders Asso¬
ciation Convention.

Francisco 4, Calif.

(Philadelphia, Pa.)
Women's

Club

of

Philadelphia dinner meeting.
Nov. 15, 1948 (Philadelphia Pa.)
Meeting of Philadelphia Securi¬

Star

Lone

Co.

Gas

Data

—

—

Rauscher, Pierce & Co., Mercan¬
tile Bank Building, Dallas 1, Tex
available

Also

National

Tank

is

a

circular

and

Co.

Natural Gas Co.

on

Republic

\

a

ties Association at Provident
Trust Co.
Nov. 18, 1948
*

(New Orleans, La.)

Orleans

New

Security Traders

Association entertainment for del¬

egates

coming

Glenn

L.

Martin

Bulletin—John
63 Wall

H.

Company

Lewis

&

—

Co.,

Street, New York 5, N. Y.
Fuel

ysis—Write for
R. H.

Supply—Anal¬

copy

attention of

to

be

announced

later*

Nov.'18,

1948

Association
Firms

Mountain

NSTA Con¬

from

vention—details

annual

(New York City)
Stock

of

meeting

Exchange
and elec¬

tion.
Nov. 22,

1948 (New York, N. Y.)

L. Burton

Bond Club of New York lunch¬

South
Main
Street, Salt Lake City 1, Utah.

meeting at the Bankers Club.
Nov. 24, 1948 (Newark, N. J.)

&*

Burton—Edward

Company,-

160

N. O. Nelson Compapny—Anal¬

ysis—Edward D. Jones & Co., 300
North Fourth Street* St. Louis 2,
Mo.

-

Distribution: sys¬

be.

Corporation—

111.

cago 4,

eon

Bond

It is this probability of growth
which holds

Refunding

Analysis—C. E. Unterberg & Co.,
61 Broadway, New York 6, N. Y.
Also available is an analysis of

industrial

Apparently
the
big
electrical equipment manufactur¬
ing companies are turning out
small
motors,
air
conditioning,
drying, heat processing and other
electricity consuming equipment
in quantities almost great enough
to absorb fully the kilowatts of
generating capacity turned out by
their turbine shops.
progress.

&

Bros.

-Wm.*

remodeling.

Mechanization,

Webster-Chicago

New York 5, N. Y.

way,

Kingdom 4%

Analysis—William A. Fuller & Co.,
209

Central of Georgia Railroad Co.

extensive

opportunity for the application of

building.

&
Co.,
1342
Philadelphia 7, Pa.

expected that his

use

Broadway,

City Electric Co.-r-Cir-

Walnut Street,

—Sutro

Analysis—E.

61

Loan—Write-up—Zippin & Com¬
pany, 208 South La Salle Street,
Chicago 4, 111.

cular—Newburger

will continue to expand more

rapidly.

air

Atlantic

own

more

uses

United

Corp.—Circular—Carl

Broadway, New York 6, N. Y.
-

in

farmer

average

territory already

—

Co.,

6, N. Y.

..

sibilities of electricity on the farm.
The

&

*

Rhoades

Loeb,

Company

Hutton

F.

New York

»

*

Texas

Corpora¬

tion, 120 Broadway, New York 5,

Rural

rapidly.

very

—New

—

by Mr. Doyle at
the 17th Mid-Continent Trust Con¬

1948.

But

forgets home heating com¬
pletely, residential use undoubt¬
edly will be doubled
through

out

*An

average

if one

field

a

it

killowatt-

the

times, with obviously revolu¬
tionary effects on the distribution

is

a

use,

it

12

will recognize the
necessity of in¬
creased charges for our services

rising costs,

if

but

proven

into

come

would

regulatory bodies and the public

P, due to

of Sept. 30 on New York

to

completely air conditioned.

by from 7 to

definite future with too much
a

1939

in

by ceiling panels. The economic
feasibility of this method of heat¬

heating

inflationary economy with¬ hours
supplied to the
burdening itself for the in¬ residential customer

sided

$2.99

One company has recently moved
to new quarters in a loop office

in an

pacity,

from

"

or

The real problem, in a nutshell,
Can the regulated utility

out

increased

either by means of the heat pump

is this.

of

monthly residential elec¬
tric bill in the United States has

proved lighting.
Each remodeling
job in an office building or an
ity growth is not yet finished.
;; apartment is accompanied by the
Residential use will certainly installation of new kilowatts of
continue to rise.
You have all demand and an increase in use.

read

The Real Problem

riod

connection, it is interest¬
that while the

however, that the lustrates vividly that electric util¬

utility industry

Stocks—Comparative fig¬

as

appliance manufac¬

observe

to

778,000 kilowatts,

Thus,
demand
present and
grown faster than supply.
On
the probable prospective economic several
occasions
the
recently,
environment in which the electric power demands on the system
Utility industry must live?
Is it nave equalled available capacity.
one
Of continued price inflation In other words, our customary re¬
or of deflation?
Is it one of tech¬ serve is gone. We have even asked
nological
development and in¬ 7,000 of our larger industrial and
creased demand for electricity or
commercial customers to prepare
is

Bank
ures

the utility.

average

system

our

on

ex¬

generating capacity have been

co

postwar

what

Just

In this

48% since 1940, while additions

;r

the

per year

will continue.

Let

both

ing

a

The growth in the use of elec¬
tric power

Therefore, I think it appropriate
that the rest of my remarks today
be

dustrial plant

and prospects.

lems

last

the

but when
considers the additions to in¬

one

possible of its prob¬

as

in

for

turer and

*

the following literature:

Electric Light and Power Indus¬

Trust companies, insurance companies and pen¬

months ended

12

of
Individual in¬

firms mentioned will be pleased

send interested parties

to

Francisco

larger and larger number

manage

It is understood that the

sup¬

the savings^

sion
of

a

of the capital which is essential to the

more

American industrial system is being supplied under the guid¬

of skillful investment management.

ance

adjustments.

rate

new

Thursday, November 11, 1948

CHRONICLE

luncheon

Hotel.
Dec.

Club

New

of

•

5-10, 1948 (Hollywood, Fls.)

Investment Bankers Association
1948 convention at the

Northern
pany,

Aj

C.

States

Power

-

Com¬

Jersey

meeting at Robert Treat

Beadt Hotel:

.

:

Hollywood

.

Dec. 10,

1948 (New York, N. Y.)
-Minn.—Special write-up—
New ' York
Security
Dealer's
Allyn and Company, Inc:*
Association Annual Dinner at the
Street, Chicago 3,

100 W. Monroe

Illinois.

■

*

Waldorf-Astoria.

:

Volume 168

m

Number 4750

qOWBCIAL & FINANCIAL CHRONICLE
crops is really phenomenal., Corn,
for
example,with a yield > of

Oil
*

than

than

Prafe^rfof^Baiiklni/•V"

""

,

'

age.

Dr.

Rodders, after analyzing significant changes in the domestic and international political and economic
structure which affect future of business, foresees business readjustment due to: (1) end of agricultural
boom; (2) downward swing in demand for consumer goods; and (3) end of accumulation of inven¬
Sees export

tories.

ity, and concludes

maintain them.

distant

ly

on faith. In
between these

extremes
h

i

u s

is

n e s s

"terra

i m?>y

in-,

cegnita," qr;at
largely
link

no wo

ground;
*

In

how¬
there-

years,

have

been

d

Raymond

fun-,

great

t

a me n

Rodgers

1

a

affect business in the future.

In

fact,. these changes are so basic
that they can almost be said to
be 'controlling factors. By analyz¬
ing some of the mor;e important
of-these changes, we can get a

we

and increased

War.

I

convinced

am

that

the

,

>

other

countries—England, for ex¬

But the fact remains that
do have a socially minded

ample.
we

of
in

government.
This use
power
of
government
of

fields

social

security,

the
the

educa¬

tion,
labor, ana regulation of
business, will continue — in fact,
may

Opinions

as

ultimate

grow.
to
the

may differ
desirability

and need of these socially inspired

activities, but there can be no
question as to their cost. More
government means more expense
regardless of political promises to
the contrary.

burdened

ourselves

with

the

ment is in the making..

greatest public debt the world has
ever known, we find it difficult to
realize

what

to

children.

our

it

to

means

Yet

our

us

debt is

so

large that we must manage it

or

it will manage us.

Debt Management

Effects of
Debt

management,

ment to

however,

later forces the govern^

sooner or

Grounds of Business

Readjustment

and

enter, and at times dom¬

inate, the fields of money, credit,
and investment.
Our high debt
makes the Treasury more power¬
ful in money and credit than the

'

belief that we are ap¬
proaching a business readjustment
is based on many reasons and
facts,
the
more
important
of
My

heavy

cost

of the

which it is claimed

are

forms of

national defense—will cost an ad¬
ditional $7

billion, it is estimated.
Thus, we are spending annually
some $20 billion because of the
world
political - uncertainty.
It
may come as a shock to some of
you to hear this terrific cost of
preparing for future wars!
But
consider also that the expendi¬
tures for past wars, in the form of

bonds.

ernment

vember,

Since

last

is over and the

in

sues

such

farmers.

that there

was

at least

some

re¬

public
debt, will
require
nearly $13 billion more.
This
gives us a combined annual total
of some $33 billion which cannot
be reduced very much in the near
future.
As a matter, of fact, it
will, in all probability, be in¬
creased. And, of Course, the many

.Maintenance of artificially low
interest rates on our public debt—

other

operations

will cost

a

few

more

Amortization of
of

more

a very

of

government
billion.

our

public debt

than $250 billion will, on

minimum basis, require an
$3 to $5 billion an¬
we start to amortize it

additional

nually, if
—and

we

pertainly should.

*An address by Dr.

Rodgers be¬

which

market

means

current issues—has

measures

can

But

support

*

With the

.

4

once

the
consumer r goods
boom seems to have reached the

mobiles,

More and more:

alone

have climbed, to ?

total of more than $30 billion.
This inventory situation is

••
'j
be-;

prices at which large contracts are
closed in cotton textiles, stainless
steel, hardwood lumber, second¬
ary brass and aluminum and some
vegetable oils. Even more signify;
cant from' a business forecasting
standpoint is the August statistics
showing that the index of the
value of factory output has risen

end

of the upward
swing. In¬
creasing sales pressure is neces¬
sary to maintain volume in the
household appliance field.
Dis¬
counts from list prices are being
given here and ihere. Contests,
bonuses, and all of the old-fash¬
ioned sales razzle-dazzle are being 9.8% above the index of farm in¬
used.
None-automatic
washing come, which, is generally consid¬
machines are backing up in the ered a good indicator of the nor¬

warehouses.

Vacuum cleaner sales

mal

demand

for

-

manufactured

in

,

important

in

taken

lines.

some

are

This advertisement appears

not

only

(Continued on page 43)

Luxury

being offered to the public.
as a matter

of record,'

$60,000,000

Aluminum Company
3%

of America

Promissory Notes

due December 1, 1973
\'

'

;

'

'

•

.•

Private

the cash

1

'

.

*

-

,

•

r

.

placement of these Notes was negotiated by the undersigned.
r

surplus disappears—and it may
disappear in the near future —
market support will have to be
abandoned, unless the monetary
authorities are given new powers
by the Congress.
It is highly improbable that the
will be aban¬

Nov.

the

doned, because of the great size of
debt.

-

This

means

that

the

are

to appear between the» quoted in^
dustrial prices and the
actual

big exception of auto¬

These Notes have not been and

given

low. interest rates




more

support of
possible

be applied with one

market

ana

with the other.

fore the Triple Cities Association
of Credit Men, Binghamton, N. Y.,

10, 1948.

the

been

during the past year, because of
the cash surplus of the Treasury.
So long as we have a cash bud¬
get
credit
restrictive
surplus,
hand

will

fected,

that

duction of Federal Reserve credit.

the

they

holdings of government is¬
declined about $1 billion, so

on

veterans' benefits and interest

of

No¬

volume

a
'

yield

some

than $8 billion of
government bonds were purchased
in the market support program.
Fortunately/during the same pe¬
riod they were able to sell Treas¬
ury bills and Certificates of In¬
their

show in¬

psychology of the ginning to be reflected in pressure;
be adversely af¬ for sales. Large gaps have begun <

more

debtedness

to

year,

September dropped 15.5% be¬ products. This alone indicates the
low last year.
Serious price cut¬ need for a downward readjust¬
ting has started in men's suits. ment in prices or volume, or both,
which 1 shall now discuss.
Price reductions are* being used but when to this evidence we add
The agricultural boom, which
more and> more to move women's
the certainty of a sizable shrink¬
has exerted so much inflationary wear.
Sales volume
has been
age in farm income the over-ex¬
pressure because of the effect of
(down for several months on shoes. tended condition of manufacturing
rising food prices on, wages, has In cotton textiles, the New Eng¬
activity is apparent.
come to an
end.
A record har¬
land mills are now beginning to
vest, nearly 13% greater than last
Export and Housing Boom
go on a reduced schedule because
year and 8%
greater than the of lack of orders, and as early- as
Tapering Off
previous peak yield of 1946, has last May the Southern mills re¬
The export boom has tapered
brought back our great prewar duced production somewhat be¬
off because of what is euphemis¬
economic headache of farm prod¬
cause
demand has
been over¬ tically termed the "shortage of
uct surpluses. The increased

armed commercial bankers or the Fed¬
factor eral Reserve authorities, our tra¬
In the ditional money and credit man¬
fiscal year ending July 1949, the agers.
For example, the Federal
military establishment will cost us Reserve efforts to contract credit of
approximately $13 billion. Par¬ and fight inflation are largely
ticipation in international affairs, nullified by the necessity of sup¬
especially foreign aid financing— porting the market prices of gov¬
The

peace is another economic
of the greatest importance.

ventories

price. support,; Nonetheless,

the agricultural price honeymoon

*

..

last

nomic standpoint.

the early 30s because, of govern¬
ment

fairly accurate idea of their im¬ osophy of recent years, let us not
Russians do not want war as they
pact on future business activities. deceive ourselves; most of the
believe we are headed for such
Let us make a quick survey of large items in our budget can be
a
serious depression that
their
slashed but little, if any.
the more significant changes.
...
American stooges will be. able to
The economic implications of
take over without difficulty.
Increasing Socialization of
pur $250 billion public debt are
Government
If, as I anticipate, we shall have
not
fully appreciated by* most
no
One of the greatest changes of
war, and, of course, no hys¬
Americans.
Throughout our en¬
our times has been the increasing
tire history, we were fortunate terical preparation, for war, with
socialization of government. This
enough to escape the many bur¬ expenditures t in excess of . those 1
'enumerated earlier, then it seems
has been a world-wide trend and dens of a
large public debt; Now,
to me that, a business readjust¬
we have been affected less than
when we, almost overnight, find
.

continue

over

Ifi " the: form ture;-;.-'.-.-*'■.1 r
Although I have little statistical
i^ash" 'Inconie: of" fariinenSyr'^vhticfi^ evidence on which to .base my>,
ranged from $7 billion in 1935 to conclusion tha t /the inventory'
nearly $9 billion in 1937 and av- boom is about over, surely I can't:
eraged $8 billion in the 1935-39 be far wrong, as it seems incon¬
period, reached a record high ceivable that it can go much fur¬
level of more than $30 billion last ther.
Total business. inventories •
year. Despite this extremely high have reached the utterly fantasticlevel and the greatest crop of all total of
$53 billion, which is. 0
time, farm income cannot shrink whole lot of inventory any way
disastrously as it did in 1921 and you look at it! Manufacturers' in¬

hope that rigid econ¬ fact, business will be/so controlled
efficiency in by the government that it is idle
to
speculate on just what the
government will free us from a
continuation
of
the
"increased business pattern would be. I has¬
ten to add that I do not expect
taxes, increased borrowing" phil¬
While

dollars

creases

corn goes to;market.
Of pOrk v '/•/'{, :

.

omy

in

prices and less, and less goods can;
government price.
Corn ; is still only, mean social
tragedy if con-:>
somewhat' above
the.
support tihued;too
far.xThatis why, under,
level, but that is ,largely because present 1 circumstaiiees, we
wel-;
hogs are - nearly 50 %. above their come; evidence of
breaks/ such as
price floor. and, asyoUknow,most I have described in the
price struct

.

changes in the domestic and in¬
ternational political and economic
structures which will profoundly

yield.

below
the
government support
level and cotton is resting on the

,

cent

r e

ever,

the Federal budget fight on inflation will not be
of the f uture will be several, times pressed
too vigorously by the
the prewar total. To be specific, monetary authorities, unless in¬
it is difficult to visualize a na¬ flation
gets completely out of
tional budget of less than $35 to hand, and, barring war, I see little
$40 billion
in the foreseeable, prospect of that/ Of course, it is
future.
^ possible; that; the Congress may be
willing to take the-responsibility
High -Taxes: to Stay
for deflation land: vote new credit
/This means- that high taxes, arp and other: controls, • but' I,' pe rsonhere to stay! In fact, we shall not ally, dpubtit.
*
/
:
be able'to maintain the present,
If,/however,: despite our • best
tax rate.unless we can keep arhja^ efforts the armed: peace should be
ment expenditures at reasonable succeeded by armed war; then we
levels; and can control - inflation, should expect:va; great deal more
and can refrain from embarking of inflation, or government con¬
on new. spending programs.
As a trols of all sorts, such. as. ration¬
matter of fact, rearmament and ing, allocation, control: of man¬
other
military expenditures in power, and so on. These controls,
1949-50 now promise to unbalance particularly
those on business,
the budget or to force a tax in¬ will
undoubtedly *. be far', more
drastic than in World War II. In
crease.
_

least

demand;

is 22%

bumper crops, there have been liable to be misleading because
spectacular breaks in their mar¬ the increases are nearly air due
ket prices, ranging from a decline
to the higher prices of 1948. Phys¬
of 48% from the 1948 high for ical volume
in most cases has
oats to a 20% drop for cotton.
actually declined. This, of course,/
Wheat has actually dropped 1.5% is
very unhealthy from an eco¬

Inevitably,

we
must rely,
almost, entire¬

more

As you might expect from such

/

future,

bushels

age

and housing boom tapering off and other weak spots appearing in business activ¬
debt and military machine require high level of economic activity to

our enormous

but for the

and 27%
-

In. the used-car market;
greater than
espe¬
last year, and 21% over the 10* cially in the case of
new
cars,
year average.
Wheat production there has been a precipitous.de¬
of 1,285,770,000 bushels, while 6% cline in volume and in
price in
less than last year, is neverthe¬ Die'last two months.
Even in the
less 36% above the lQ.-year level. new car
market, in most places
The cotton crop of 15.2, million you can get
quick delivery of the
bales is 28% larger than the 11.9 more expensive cars
and also of
million bales of last year, and most "trucks.
27% higher than the 1937-46 aver¬
While most retail sales figures,

promises considerably more than I can deliver. Application of
economic and psychologieal principles to current statistical data, enables us to form an
opinion as to probable business developments in the near future, that is, for six months or
so;

year

the 1937-46 19-year aver?Oats produtcion of l,4i92;957;-

000

The title of this talk

.

last

a

goods of all kinds have felt the
pinch of declining sales for sev¬
eral months.
In fact, soft spots
are beginning to appear in
nearly
all lines as supply catches
up with

3,567,955 000 bushels, is 49% high¬
er

By RAYMOND RODGERS*

•••

(1961)

The First Boston
November 10> 1948,

'

■

Corporation
*

:

■.

'

10

THE

(1962)

COMMERCIAL &, FINANCIAL" CHRONICLE
be

Illinois Brevities
The

Peoples Gas Light &

stockholders of record Oct. 22,

net

1948 will be
Stuart & Co.
inc., who may or may not offer
them publicly.
The net proceedsreceived
by Peoples Gas Light
will be used to pay for construc¬
1,

Dec.

on

#

A.

sole

the

utility

tion, etc.

Largely, as the result of special
non-recurring
account
entries,
consolidated net income of Peoples
Gas and its subsidiaries decreased

bonds,

$911,664,

the

for

third

$1.39 per share
1947 to

or

quarter of

$554,458, or 85 cents per share for
the three months ended Sept. 30,

due

interest; and

Co.

3 \\

%

Co.

Service
at

1978,

due

102%

of

used

to

months

net

totaled

year,

pay

for

*

current

the

nine

first

the

For

1943.

of

4:

BEN COAL

*

Western

Common Stock
of the best bituminous coal pro¬

One

ducing

fuel distributing prop¬
nation.

and

erties, in

the

stock out¬

877,500 shares of common

standing.

share as

per

of

ber

31,

1947,

per

share

earned in

Decem¬

$20.22.

$2.76

dividend

Current
share

100

$0.15

oil

!j:

per

C.

A.

quarterly.

estimated

coal

producing wells.

reserves

Approximate Market 11(4
brochure

interested

available

dealers.

to
"

Y.,

with
r

have

two

insurance

firms

securities

of

Sugar

Dearborn 1501

Co.

Co.,

of

serial notes due Sept.

Corp.
Income

5%-—1952

Milwaukee

1, 1949 to

The

Blair

directors

Co.,
a

Railway

of

is

monthly

dividend

on

the

date.

same

also

Jan.

plies.

H.

were

3, Feb.

1

of

Davis

March

Hf

S. La Salle Street

on

CHICAGO 4

group

Oct.

Co.

were

14

in

Carter

of $2.50

Oct.

C.

25

offered

homa

payable
1, 1949

investment

publicly

-

bankers

offered

at

who

$11

per

stock

of

tral Arizona Light & Power Co.

dends.

Kansas

Nebraska

The

share and

per

net proceeds

Co., Inc.

Harris
on

$5 Par

Brothers

Oct. 27 filed

cation

Common Stock

are

with

a

the

$

■

*

'

>

par

:Ji

value)

*

.

Cen¬

if

■

\

Co.

letter of notifi¬

on

Oct.

of

Exchange
Commission
covering
10,000 shares of common stpek to

to

be

offered

at

These

Electric

period.

This compares

share

number

$1,775,100,

the

shares)

o'f

on

for

the

totaled

$10,310,600
months

the

$7,408,500,
taxes

come

to

first

up

to $1,871,-

-

Aldens,

Chicago,

Inc.,

showed

increases in both sales and profits
for the three-month period ended
Oct.

W.

vided

mail

order

and

retail

the

corresponding

H.
on

share.

were

$19,991,115

cents

per

share,

common
or

74

M.

Hf

if

Byllesby

Oct.

27

Co.

&

further

In the public
shares

(par

$1)

offering of $350,-

of

of

(Special

share for the correspond¬

to

The

KANSAS

Diego

Financial

CITY,

Gas

with

dated net sales amounted to $56,-

Chronicle)

MO.—Francis

G. Kulleek has become

quarterly
periods ended Oct. 1, 1948, consoli¬

associated

the

the

first

three

Prugh,

Inc.,

1016

Combest

Baltimore

&

COMPANY, MINN.

W. C. Pitfield St Co., Inc.

Stock

SOLD

—

KINGDOM

4% FUNDING LOAN

QUOTED

on

BOUGHT

Request

Disintegrating

—

1960/90

SOLD

Write-up Sent

—

on

QUOTED

Request

Common

Associate

Member

New

York




AC.ALLYN«®C0MPANY
Incorporated

Curb

South La Salle St., Chicago 3, 111.
Tel. ANDover 5700
Tele. CG 650-651

Chicago

New York

In

$55,226,547 and profits after taxes

UNITED
—

Special Writeup

135

Land,

Avenue.

past, Mr. Kulleek was a part¬
ner in Kulleek, Wheeler & Co. and
prior thereto was associated with

DUE

Members New York Stock Exchange
Members Chicago Stock Exchange

stock

common

San

Portsmouth Steel

STRAUS & BLOSSER

(Inc.)

participated

&
Electric Co. at $13.50 per share.

cents per

Common

Metals

1947

.

if

1, 1948, according to Robert
Jackson, its President.
Con¬

solidated

in

period.

948,424, and net profits after taxes
compared with sales of

BOUGHT

Common

nine

Ht

Common
-

in¬

Federal

$652 623,

Common

Detroit Harvester

and

$8,983,700

the

were

nine

Costs

and

for

against

first

year.

increased

expenses

from

last

of

part
have

$14,891,6*00,

for

With Prugh, Combest Co.

per

Texas Eastern Transmission

;

or

(based

Crampton

;

of

87

$12.50

The net proceeds will be used for

NORTHERN STATES

Common
...

shares

outstanding at the

000, compared with $1,089,000 pro¬

For

POWER
Winters &

sales

ing 1947 period.

Tele. CG 146-7

1,007,303

stock

months of 1948
*

$3,Fed¬

corresponding period in 1947. Net

Harrison

which

for

taxes, equal to $4.04

on

per

months

totaled

provision

net profit of

a

same

nine

1948

000

Members of Chicago Stock Exchange

Tel. Dearborn 5600

income

$1.75

Central

were

$28

representing a
gain of $517,382 or 2.7% over the
total of $19,473,733 for the similar
period in 1947.
Net profits after
Federal taxes totaled $348,980, or

William A.Fuller & Co.
Chicago 4

after

share

with

at

at

if

Co. for the

common

Co.
*

common

•

eral

if

Sept. 30,

051,200,

by Standard Gas &

against $305,452,

209 S. La Salle Street

if

Cement

Okla¬
Co.

Co.

profit of General Portland

ended

per

California

of

Telephone

.

Chapman

II.

shares

shares

750,000

$25,

cu¬

preferred

sales for the third quarter of 1948

6,000 shares of Fxco Products Co..
Chicago, common stock, par $2.50,

and

par

(Inc.)

of $1.40

convertible

&

Net

com¬

of

Co.

participated in

share flat.

per

Robins

of

were

Carter

and

25

filed

was

with the Securities and

Commission

$20)

Farweli,

(Inc.),

Co.

Republic

Oct.

underwriting

share,

Hf

Exchange
25 covering

A letter of notification

Co.,/ Chicago,
Securities

(no

to

be used to pay for construction.
'

Natural Gas

divi¬

.Central
on

or

year

'

mulative

(Inc.), II. M. Byllesby &

been owned

Co.,

Co.

$48

Co.

&

value, of Central Electric & Gas

par

Co.

&

common

at

&

Hf

fiscal

...

the public offering

Col¬

Oct. 21 publicly

Electric

&

the

■■■"■

shares

$4,381,142

for

if

also

600,000

on

stock outstand¬

with

share

a

1947.':

&

$583,158

depletion

share

a

common

compared

ing,

$7.30

Republic Co. (Inc.), Harris, Hall

Hf,

share 300,000 shares of

no

the

on

(par

Gas
per

;

cumula-

stock,

stock

mon

$34.25

Inc. and Kebbon, McCormick &
Co. were included in the group
of

shares of

Co.

if

250,000

cents

&

if

in

which

offered

pay¬

the 20th

Allyn

equal to $11.71

at

and

and

.of
patents,
7,027,335, which was

to

stock,

of

taxes

amortization

end of the

Included
group

20, Central Republic

Co./(Inc.), A.

included

publicly

shares

preferred

On

H.

underwriting

an

which

30,000
Jive

and

&

Harrison

Co.

Hf

and

if

shares

Hf

day of each preceding month.

&

1,500

Three

declared,
and

income

depreciation

Water

'■

if

if

,

ended

year

amounted

Engineering Co., Detroit, common
stock, par $10, Ex-Cell-O plans
to operate the Robins firm as a
subsidiary.

20,

of

for

de¬

Ilall

if

the

year.

deducting $4,253,000 for Fed¬
income taxes, .$460,000
for

State

Corp., on Oct. 15
filed a registration statement with
the Securities and Exchange Commision covering 27,000 shares of
common
stock, par $3, to be is¬
sued in
exchange for the out¬

the

to

25

to stockholders of record
*

ter

eral

Ex-Cell-O

50

Hf

,

the

Glore,

were;

share, for

per

period last

Net profits for the fiscal year 1948
to earned surplus af¬

of

1988

(Inc.), A. G. Becker &

standing

Nov.

3%%
15,

Harris,

if

$1.81

or

transferred

lins & Co.

&

of

20

The Illinois Co. and Julien

Wrigley,
3 de¬

addition

each

sup¬

A. C. Allyn & Co., Inc., Cen¬
tral Republic Co.
(Inc.), Paul

Brailsford & Go.

Co.

Co.,

previously declared for

ment

Co.,

&

$16.8714

Aug. 31,
1948, Masonite Corp., reported net
sales of $36,472,950, against $25,338,958 in the previous fiscal year.

share

one

Oct.

on

Oct.

of

$796,532,

$1,53

or

;

1948 at $15

40-year

due

to

same

For

Inc., Central Republic Co. (Inc.),

Garnon

record

in

dividends

*

Co.

share, payable Dec. 1 to

This

regular

&

Nov.
dividend

additional

*

offering

&

Moran

Wm.

working capital
to meet the higher prices of live¬

Stock

Common

&

on

special

h

cents

increase

of

Chicago,

stockholders
1948.

746,

-

Co.

Dayton

clared

material

Allyn

Holley,

>

#

raw

28,

the basis of

on

102'J and interest,

Glore,

Republic

stock and other

Chicago, North Shore &

208

G.

A.

at the rate

was

share. Net profit after taxes

the

four

Forgan

Mullaney, Wells & Co.
*
Hf
I

cents per.

to

Co.,

shares

sljare, for the quarter ended
Sept. 30, 1948, as against $676,-

$75,000,000 Michigan Bell Tele¬

stock

Mason,

Co., Chicago, has just
recently placed privately through
Kuhn, Loeb & Co., New York,
N. Y., an issue of $40,000,000 3^2%

used

share

public

at $18.75 per
were

Central

William

sinking fund debentures due Sept.
1, 1968, the net proceeds to be

Public Utility

per

Oct.

of record

for each

Power

Co.,

notes

Armour &

Central

&

20

Tail

Chicago,

Jr.
»/■

stock

Oct.

Inc.,

Sept. 1, 1959 and $1,500,000

promissory

*

ers

offering

common

Otter

88,723

per

to the latter's stockhold¬

(par $5)

Service

and

$2,500,000

Corp.:

*

including, among others, Glore,
Forgan St Co., Chicago, has under¬
written
the
offering of 319,916
shares of Bucyrus-Erie Co. (South
Milwaukee, Wis.) common stock

Harris, Hall & Co. (Inc.), Straus
& Blosser, First Securities Co.

the

mortgage

of

on

(Inc.),

TTnited

4%

if

banking syndicate headed by
Harris, Hall & Co.
(Inc.), and

Chicago

bankers

common

Forgan

1951.

CG 955

$5)

share

privately

placed

at

per

phone

the

among

retire

amounted

if

141,490 shares of

II.

E.

due

CHICAGO 4, ILL.
Teletype

Mo., and

following
States

Included

announced .this

was

Colorado

of

dividends but after

investment

Sons, Inc., New York,

it

month,

COMSTOCK & CO.
231 So. LaSalle St.

Louis,

Rollins &
N.

Descriptive

St.

Inc.,

\

Co.

A

for additions

if

and

estate

first

expiring

Public

Chicago.

used to pur¬

were

of Thor common stock from the

20,

bonds have all been sold.

if.

Illinois

chase

100(4

Oct.

Co.,

This

1948 at $15.25

if

at

&

with

through

concerns

net proceeds, plus $497,201

102.06% and interest. The latter

on

bentures

Co.,

&

on

placed privately

Collins

treasury funds,

of

Chicago,

Service

were

rights

to pay

Hf

•

Corp.,

of the late E. N. Hurley,
formerly Chairman of the Board.

against $4,108,951 in the previous
12-month period.

will

Thor

3%% series due 1978, of Public

improvements.

(par

Nicolaus

Co.

and

The

series

1973,

•

Co., Inc., Chi¬

Allyn &

Ry.

interest;

re¬

shares held. Rights
will, expire at 3 p.m. on Nov. 15.
provi-.
The net proceeds will be used to
sion for depreciation, of $914 926,
as
compared with $1,031,339 in pay for expansion.
*
Hf
if
the corresponding period of 1947.
The
Chicago
investment
For the 12-month period ended
bankers
participating
in
the
Sept. 30, 1948, net was $4,451,574,

if

if

Stifel,

cago,

1

years'

Griesedieck

and to finance expansion.

merge,

1947.

payment

owned.
53

'which

with'

value

Book

the

used

ferred

covering 50,000 shares of 5%
cumulative convertible preferred
stock, par $30, which will be pub¬
licly offered through Edward D.
Jones & Co., St. Louis.
The net
proceeds are to be used to prepay
a
portion of the long-term bank
loan to Hyde Park Breweries, Inc.,

of

been

810,000,000 first mortgage bonds,

Springfield, reports for the
three-month period ended Sept.
30, 1948, a net income, before pre¬

Brewery

Virginian

has

par

Co.,

sion

CORPORATION

share,

1,

the

to common stockholders

if

Co., Belleville, on Oct. 28 filed a
registration statementJ with the
Securities and Exchange Commis¬

OLD

shares

bonds,

Oct.

and

&

dividends.

and

par

due

'

.

,

1958,

under¬

and

.*

if

com¬

stock,

publicly offered

at

Central

Griesedieck

securi¬

mortgage

3(4%,

if

and

tion, etc.

$4,598,068, or $7.01 per share, com¬
pared with $4,916,596, or $7.49

27

construc¬

new

C,

$1. The preferred

par

were

common

be

to

issues will be

proceeds of both

funding

Nov. 9. The net proceeds are

on

net

The

following

of record Oct. 27,

New Hampshire

interest.

and

bankers

the

stock,

per

of

groups

v ;•*'

An issue of $1,000,000
3.75%
sinking—fund.-, debentures
due

and

two insurance

offered

Public

of

(Inc.)

Julien

by

Oct.

bonds, series

two

period last

same

if

15, $9,500,000 first lien

Co.

un¬

The

and

Hf

the following securities: On Oct.

shares

Oct. 20, $7,000,-

on

000 first mortgage
D

103

at

with

and

headed

mon

Co.

$518,415 in the
V* •" '

year.'

if

(Inc.)

Republic

$100, and 33,730 shares of

1, 1978, of In¬

July

Power

Inc.

Co.

cumulative preferred

4 J/6%

if

William Blair & Co. participated

Light Co.: 5,000 shares of 5.40%

$5,-

15,

underwriting.
if

Hf

&

of

working capital'. .There

no

for

used

ties of the Black Hills Power

past

mortgage

be

Dillon, Read & Co. Inc. who

pub¬

be

writers in the public offering of

vestment

two

the

Oct.

On

first

terstate

of

were

during

viz:

month,

000,000

from

which

issues

will

Harris, Hall &

will

Allyn

derwrote

underwriter

offered

licly

additional

present

to

included in the list of in¬

were

Halsey, Stuart & Co. Inc. was

Halsey,

by

C.

Central

*

*

proceeds

if

for $16,400,000 of 3% convertible debentures due Dec. 1, 1963,
in the ratio of $100 of debentures for each four shares of capital stock
held.
Any debentures not sub-'
scribed for under the terms of the per share, for the corresponding
offering, which expires at 3 p.m. period last year.
(CST)

rata

pro

working, papitah

Coke Cp,eXfoicag©i40- off«rirrg Jd1 its
1948, the right to subscribe pro rata

at par

taken

offered

stockholders at $10 per share. The

Thursday, November 11, 1948

Boston

Milwaukee

ZIPPIN

&

COMPANY

Specialists in Foreign Securities
208 S. La Salle St., Chicago 4, Illinois

Minneapolis

Omaha

Telephone RAndolph 6-4696

Teletype CG 451

Volume

168

Number 4750

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1963)

11

High Rate oi Spending Will Keep Business Going
By WESLEY LINDOW*

Vice-President, Irving

LAST CALL FOR DALLAS
The

Dallas Bond Club is sending the
following letter to all
planning to attend the National Security Traders Association

traders

Convention Nov. 14-18:
"You have been
ment
14

hearing a great deal lately about the entertain¬
activities planned for you at our NSTA Convention Nov.

and

through

But, lest

overlook anything, here's
help prepare you for your biggest date of the

minder to
"If

17.

you're not

you

golf,

final

a

re¬

sports may relax
or

with

on

your

year.

may

shoulder and

to

gun

you

participate in the trap

skeet shoot—a heckling contest of 100 birds.

"The
vember

normal average

is

65

to

70

By

then

we

are

wearing

tweeds

and

gabardines^ the latter of which should be quite comfortable. How*ever, since it is not altogether unlikely that a 'norther—a
cold
windy change of temperature—may develop about that time, it would
be well to bring along a light topcoat:
*

"Checking over our schedule of events you will see that a
Wagon' party will be held Tuesday, Nov. 16. For this oc¬
you might toss in some very informal clothes.
Most of the

there have been

war

in business sentiment tend to be
factor

of

un-

certainty.
not

lot

a

dictions

ance

pre¬

about

is

going
to

mean

business—but
f

venture

to

that

say

shall

shifts: in

we

hear

about

a

have

subject in the

have

next

share of

weeks.

members

boots

plaid skirts
'out heels.

will

or

be

wearing loud

hats,

be

We'll

probably be rolling in the hay part of the time on
Western Night, - and plan to dress accordingly. The last

this, our
night of the Convention will be

semi-formal

a

banquet

and

dance,

for which you may, if you like, wear a tuxedo.
So, during your stay
in Dallas1 we suggest, for the
men, one heavy and one or two medium-

weight suits, a topcoat, and a tux if you
tomary fall clothes and a formal. For all,
clothing.
;

care.

some

For the

ladies,

cus¬

casual Western night

"Internationally
famous
geologist
and
oilman
DeColyer will feature the Corporate Forum with a

Everette

L.

discussion

of

The Natural Gas Industry, while Austin J.
Tobin, Executive Director
of the Fort of New York
Authority, will address the Municipal
Forum.

Many other nationally-known figures will be presented.

"You
ever

can

and very

see
that we are promising you the BEST convention
sincerely hope to have you on hand with us."

SCHEDULE

OF

EVENTS

Sunday, Nov. 14—
Convention Special Train Arrives Dallas 4:00 p.m.
Informal Cocktail Party 6:30 p.m.
:

Monday,.Nov. 15—

Open House Financial District.
y

.

.

.

.

Style Show by Neiman-Marcus.
Tuesday, Nov. 16—

Opening Meeting for Delegates.
'
Corporate Forum—Guest Speaker, E. L. DeGolver,
Internationally-famous geologist. Subject: "The Natural Gas
Industry." t
»
v

Afternoon

V

Chuck Wagon Dinner.
Old Fashioned Square Dance.

Cocktail Party.

FOR

For

SPECIAL

ARRANGEMENTS:

Co.
CLUB OF KANSAS CITY

The Bond Traders Club of Kansas

City held its annual Fall Party
Country Club, Quivira, Kansas. Mem¬
bers of the National Security Traders Association from Topeka, Kans
the

at

also attended.

John

point

of view

economic

to

the

of

machine.

deter¬

I

Latshaw, Harris, Upham & Co., is President of

the Kansas City Club.

whole

of

consider

all,

This

government.

Government

billion,

$39

and local

of

the

to

the

the

business

overall

picture.

weak1

sellers'

market

to

Swan, Slickley Go.

Dallas

National

Bank,

Main

at

BOSTON, MASS.—Swan, Stickley & Co., 75 Federal Street, an¬
nounce
that
Lawrence F. Hoh¬

Stone, for the past 18 years, has mann has become associated with
been appointed manager' of the them as general'
manager.
Mr:
Bond Department.
was
He succeeds Hohmann
formerly
with
Will Miller who is now with the
Hayden Stone & Co. and GeorgeBank Correspondent Division.
son & Co.




a

temporary

buyers? market, and then to
anced

there

the

homes.
an

signs of weakness

are

more

expensive classes' of

However, there
still
backlog of demand

enormous

for

houses

new

in

the

lower-

priced categories.

It seems? rea¬
sonable to expect that next year's

residential

construction

concentrated
units

and

in

pretty

the

less'

total

close

Will5

to

be

expensive

volume

this

may

year's

their

strength
Many of
spots, incidentally, are
short-lived; they represent situa¬
tions- ih which adjustments are
taking place in moving from a
of

bal¬

a

market.

figure.

will prob¬
ably continue to- spend the bulk
of their income just as they al¬
ways
have. 11 do not think we

-

-

.

Business Spending
Business

spending

in 1948 is
$31 billion.
This
includes $28 billion of new plant
and equipment, and about $3 bil¬

running

lion

about

of

additions

to

inventory

units held.

Many

j

spending

peak

and will

is

argued

postwar

by business
Thus

think that

people

ness

It

the

Next year, consumers

shall

see;

consumers

busi¬

has reached' its
decline next year:

that

a large part of
expansion program
has been completed.

far, there are few statistics
this view or to oppose,

to back up

another

ing

about

leading

'4

spending

the
spending

year,

is

and

the

state

usr

it.

It

is

ever,

'

■

Federal
State

"

39

and

Local

16

-

-

Nongovernment Expenditures:
Individuals:

■■

Consumer
*

...

goods

and

New residential

services

177

-

dwelling units

7

Business:
Plant

and'

Equipment

28

Additions to Inventory Units Held__
Foreign Purchases (spending in U. S. financed by gold,
dollars, etc.)
--V--f

_

Total

:

billion,

$16

making

$55 billion for all levels oi

government.
outlook

for

1949

suggests

increase ill government spend¬

national

on

defense

In addition, there is

We

on

page

40)'

a

This advertisement appears
be construed

to

stances

offer

buy,

to

securities.

or

as

The

a matter of record only and is under no circum*
an
offering of these securities for sale, or as an
solicitation of an offer to buy. any of such
offering is made only
by the Prospectus.
"
as

as

a

n

NEW ISSUE

can

$500,000

state and
local
governments
on
schools,
highways, and othef construction
are
expected
to
increase next
expenditures

by

PLYWOOD INC.
5% Sinking Fund Debentures

year.

Individual

Next,

we

Spending

fo spending by

come

individuals.

This

year,
individ¬
spending $177 billion for
goods and services, and
about $7 billion is going info the

(With Warrants to Purchase 50,00.0 Shares of Common Stock)
Dated August 1, 1947

Due August 1, 1967

are

consumers

of

residential

new

including- both houses
Of course, there
is a good deal of talk about con¬
sumers' resistance to high prices.
It seems to be frequently over¬

Price:
>

Copies

of

from

signed may

that

such

looked,

however,

sistance

the

97% plus accrued interest
St

the

and'-apartments.

Prospectus

undersigned

may

only

by

be

persons

Lindow

before

Division

of Bank

Nov.

of

5,

remarks
thef

by

Mr.

Middle

I N C O B P

At¬

of the Association

Women, New York City,

1948.

to

within

whom

Prospectus

any

the

in such

State
under¬

State.

s

re¬

O ft A'I t O'

ESTABLISHED

"Summary

obtained

regularly distribute the

is spotty and specialized,

lantic

3
273

(Continued

also count
on a continuation of expenditures
under ECA at a high level.
Fi¬
nally,

3

Technical Note—The total exceeds the estimated gross national
product of $250 billion by including $23 billion of government ex¬
penditures for interest, pensions, and other items which are not
counted as part of the gross product.

dwellings,

L F. Hohmann With

DALLAS, TEX. — Robert P.
Murphy, who has been with the

than

v-

governments are spend¬

construction

For Dallas Naff Bank

sales

public dis¬
The tendency is to play
without giving adequate

up

in

in

to
a
birds-eye
elements of

think they will throw some light
on
the business situation in 19491

uals

Murphy to Manage Dept.

retail

shall try

goods
houses, on the part of
business for plant and equipment
and inventories,'and spending in
this country by foreign purchas¬
ers using their own money.
These
figures make up what we may
call the gross expenditure stream
If we analyze them carefully, }\

Quivira

Pictures taken at the party appear elsewhere in today's issue
the "Chronicle."

in

more

attention

attention

new

itary defenses.

—
Golf, Johnny Cornell, Dallas Rupe & Son; Tennis, Jesse
Sanders, Sanders & Newsom; Skeet, Hugh Bradford, Lynch

Dinner

seek

good possibility that some kind of
program will be instituted to help
Western Europe bolster its mil¬

Rauseher, Pierce & Co.

Sports

and

of

new
-

interesting to note, how¬
that plant and equipment
into a recession because of a re¬ expenditures this
year are turning
do
this
briefly by
duction in their spending.
out to be higher than were ex-i
analysis of all the
pected.
Moreover, some indus-i
spending in this country this year.
New Construction
tries, such as public utilities and
The total volume of
spending v Now, as to housing, no one can petroleum, are working on a longwill
amount
to
something like be certain that the
$7 billion of range expansion program, which
$273 billions in 1948, as the ac¬
Gross Expenditures Stream in 1948
companying table shows.
I am
(In Billions of Dollars)
including here all spending on the
part of government, on the part Government Expenditures:

the

penditures

General Complaints—Talk to Jim Jacques, First Southwest Co.

:•

should

mine what changes in the pattern
of demand are in prospect from

next year.

Entertainment—Wire John Canavan, Rauscher, Pierce & Co.

&

spending;
classes

some

and

ing by several billions. It is gen¬
erally agreed that' the Federal1
Government will enlarge its ex¬

Information—Jas. Walker Davis, E. F. Hutton & Co.

Allen

We

mand.

an

M. Bennett, Dallas Rupe & Son.

Sleeping Quarters—Rogers Ray,

BOND TRADERS

thinking about the business
situation, it is a good idea to try
to
look
through the recurring
swings of sentiment to the more
basic
underlying factors of de5-

The

optional).

(Additional Activities for Ladies)

To Register—Carrol

—

for

chance

fall.

about

(Tuxedo

much'

as

In

by

Meeting for Delegates.
Afternoon Municipal Forum—Guest Speaker, Austin
Tobin, Ex¬
ecutive Director, Port of New York Authority.
Dance

in

the political forecasts did

as

Federal

Past Officers' Breakfast.

Dinner

this

skeptical
predictions

very

such

have

First

v

Wednesday, Nov. 17—

Formal

error

ohem

be

evaluating

and for

Cocktail Party.
Dinner. v

'

to

received

cussion.

will

wise

which

Wesley Lindow

of individuals for consumers

"

Day—Golf Tennis—Skeet.

it

I

brand'

construction this year will be
repeated in 1949. Prices are high,
new

come

•

i-..:

•

,

Field

few

think

or

plaid sport shirts, blue-jeans.
similar 'cowboy' regalia, and the ladies
square-dance dresses, and boots or sports shoes with-

and

of

kinds

the

weaknesses

casion

Texas

lower

to

gained.

The

'Chuck

local

The resist¬

goods have lost ground, but others

this

And

a

■

stores .and4

some

deal

great

optimism and

Now the election upset introduces

than .general.
does .not
lead

spending Jby .consumers in the ag¬
gregate, but! only to a different
pattern of spending. This is obvi¬
ous- from "he fact that total con¬
sumer spending has gone steadily
up and up. What has- happened is
that there have been tremendous

what the elec¬
tion

of

waves

change quickly and the swings

—\

rather

going

of

intermittent

The mood tends to

overdone.,

„

I

to try to make

to

temperature in Dallas the middle of No¬

degrees.

Ever since the end of the

pessimism about the business situation.

am

wish to bring along
a
tennis racket, for some pretty good
competition will be provided
on the courts.
Those of you not inclined toward the exertion of those
up

Trust Company, New York City

Asserting business outlook for 1949 is excellent* despite popular uneasiness over election
results, Mr.
Lindow, points to high rate of government, business and individual spending as cfttef factor in
main*
taining high level of economic activity:
Says uneasiness about boom has provided' healthy restraint m "
speculation and may hel{* tor alleviate extremes of boom~an&bust cycle.

lis BROADWAY
November 8,

1943

1907

NEW YORK 6,

N. Y.

■

12

THE

(1964)

Hunter, Geo.r K. Baum & Co.; Walter I. Cole,
Beecroft, Cole & Co., Topeka; R. E. Fritz, Estes & Co.,
Topeka

Co.,

Jack

&

Co.;

J.

Peter

Charmley, B. C. Christopher & Co.

Zahner, Soden-Zahner Co.;

Topeka;

Charmley,

B.

Art

Hanni, Seltsam &
City Star; Jack
C. Christopher & Co.; Don Seltsam,
Seltsam & Co., Topeka

Ben

Schifman,

Kansas

Ted Wagner, Harris, Upham & Co.; Leonard White, Wahler, White &
Co.; B. F. Piercy,
Stern Brothers & Co.; G. H. Lounsbery,
Herrick, Waddell & Reed, Inc.

John Latshaw, Harris, Upham & Co., President of the Bond Traders Club of Kansas
City; Earl Combest, Prugh, Combest & Land.- Treasurer; Don Belcher, Martin-

Holloway-Belcher, Secretary; Harry L. Coleman, H.: O: Peet & Co.




Thursday, November 11, 1948

Beecroft, Cole & Co.

Vic

Fitch

CHRONICLE

George Baum, George K. Baum & Co.; James McKim,
City National
Bank & Trust Co.; Walter I. Cole,

Soden,

Barrett.

FINANCIAL

Russell Sparks, Harris, Upham & Co.; Don Belcher,
Martin-Holloivay-Belcher; Laurence B. Carroll, Prescott,

Soden-Zahner & Co.; Fred Armentrout, McDonald & Co.;

North,

&

Wright, Snider Co.; Milton Luce, Jr.. Burke & MacDonald

Pete

Frank

COMMERCIAL

Claude

McDonald,

Securities

&

McDonald & Co.;
Commission;

Exchange

C. L.
John

Overbay,
Latshaw,

Harris, Upham & Co.

Members of the club harmonizing, with Earl Cbmbest at the piano

Pete Hunter, George K. Baum & Company; Earl Combest, Prugh-Combest &
Land;
Vic Zahner, Soden-Zahner & Co.; George Baum, George K. Baum &

Company*

<

Ben Schifman, Kansas City Star

Volume 168

Number 4750

Is Lack of

THE

COMMERCIAL

Equity Financing Overstressed?

Stanley L. Miller, Economist

of Federal Reserve Bant of New

By DR. LEO BARNES*
Chief Economist,

equity financing and the substan¬

'^a™ard'Busil

^"Review0"
eittee

?hiUer b<igins his arti*cle by
/trf,/P S,0n o£ its New
the
Exchange in

York Stock
one

•

•

MSark1ts"aXtoR7hre«ec1
°f a" biadequate

supply of venture
capital, there is

have6

toanigesortthaL"inK,iStry wiI1
to'debt fj6

limits of sound
policy
instead of equity

Rnant

If

.

.

| had

setbark*

in

.

oacK: in business will find

Pn

ci,,.tS"5p 5,';

•SSiW&StriS
the form
Of interest and
inerest
amortization

SSt inWt!mesWof

diffiCU,t

bu

Thus.readru6Lttbandne?eco4Ciky
delayed
will

be

ened

and

unnecessarily.

points out

"Rh

that the lack

bas

Xw
d~

losses

haad'" Mr- Mi"er
be,en stated

of™.

been.overst^r^S?
nrfnl i"adi"stments
stock

on new

to the data

exchfri

flotations to

issues sold for
purposes

i,er

menetXPorSIo? °f n^P'an"
nolably by

Of

that^he

investigator

nwney stock

by one

issues

^'"total

^"dW^appro °ffe!'ingsthat
in
approximated

1946

nrei/Q.-i-

lng the 1920's exyearV923 and 1929.

external

the

fi¬

of

sources

been

larger than in the 1920's and

even

larger

There

has

in

than

been

1929.

trend

a

.

.

toward

increases in business loans in 1946
1947

largest for
The expan¬

record.

years on

sion in 1947

the

were

60% greater

was over

than the increase in 1946 and

more

than twice the 1941 growth, which
was the largest gain for any pre¬
year.

ments

.

These

.

the

—

bank

.

borrowings

markets
in the

develop¬
away from
the capital

swing
to

(including equity issues)

1920's and the increased

liance

on

years—give

in

entirely dif¬

ferent picture with respect to the

proportion of equity capital in the
financing
of corporations
through external sources of funds.

ing

proportion is increased dur¬
the 1920's and decreased in

the

postwar years.

financing
has

in

been

the

Thus

equity
period

postwar
in

small

relation

In

ex¬

comparing the availability of

venture capital in the 1920's with

in

recent

com¬

paratively

un¬

regulated free

enterprise,
isn't that ideal

pretty much
will

-

of

wisp?
"

It

me

boom

•

that

con¬

Leo

Dr.

Let

Barnes

ployment

levels

requires

more

ment controls than

Amencans

and

—

businessmen

Therefore

I

em¬

on

the

only

have been

ex¬

time, however, practically every¬
body is at work and the real in¬
elements

in

never

related

to

venture

the

earlier

actually credit.
credit

capital
years

The

available

to

as

was

volume

of

investors and

speculators in the 1920's for pur¬
chasing and carrying new -and

losses

in
As

sellers

to

the

been

the constant threat of

Yet

seem

workers;

more

'

.

these

three

inflationary

of

to

punch.

and lowered take-

home-pay for many

:

today

springs

businessmen, unemploy¬
some

lost

have

most

main¬

pressure

their

of

Let's take the first

That's the tra¬
ditional cause of inflation, espe¬
cially in countries which have lost
wars and in more primitive Latin

so

decline-in incomes usually causes

American

more-buffering and discomfort
man the

In the United States the enormous

made possible

has

more

has

been

stocks,v was/ well

that

And the huge flotations of

available

cossitate a.roaring' bull
unde-

marirni

,j? understand the
uation
the face

present sit

this"
Cnecges^%Mri M,iIler teeh? "
an

of

con

? ly to Iook

closelv at

I1rinr -faCt°rs: (1) the lar§er

capita
capital requirements
of todav**m
the trend toward

bulinLs Sow-

Of.f1"0"1 banks, and
particularly in the

(3) the

use

early nostwar

Z??. of the substantial
''OuM assets

amounts

accumulated

corporations

during the

by

war.

can4fil1Sft«a^ination of €0rP°rate
Stes- "WhUurement?. the autbor
relative to ! e, financing through
financing
relative
total oiuity
t

vearS if been the pastin-this
rethan in higher

1928

recent

in

and

1929

much the abundance of

as

the investment

as

of

decade

.

by

been

the

venture
a

profits

enterprises

Whether
of

the

because

capital,

themselves.

of

dearth

a

as

or

deliberate

generated

Busi-

"6S?o^pitial exPenditures alone
th-ff -a fU1947 averaged more
than twice the 1922-1927
average

expenditures;

and

undoubtedly

ine^mcrease in working capital
-particularly

corporate

with

higher

inventories, in the

years

averaged

much

post¬

larger

t0, I922"1927 than did the
of capital
expenditures.




supply—it

due

have been nowhere

great as it
has been.
Unfortunately — and
this is more than just crying over
spilled milk—many of us who are
horrified by deficit financing are
also strongly opposed to higher
government taxes.
For that rea¬
son
it was simply a political im¬
possibility to avoid defict financ¬

Pr\C-44i are "0w ^eg^nnmg to get
a
little
panicky because falling
signify to them the begin¬
ning of a recession like 1920-21.

prices

fbc upshot of all this is simply

corporate

managements have been meeting that, granting the undesirability of
both wild runaway inflation and
their
needs
for
funds
largely

through ploughing back earnings

drastic deflation, as between mild

into their operations.

inflation and mild deflation—mild

.

.

In 1946

.

slightly more than: half the earn¬
ings-after taxes were paid out to

stockholders,
in

with

compared

as

1929.

1939

and

exhilaration
you

if

or

mild

in

not

thought

If

we

accept this scale of

preference, then it

ably

total

have

sources

in recent years,

ments have to
tent

avoided

a

the

seeking equity

necessity
funds in an

favorable

market

financial

structures

with debt.

manager

considerable

or<

'

•

of

ex¬

of
un¬

creating

top-heavy

1. "■

me

that

what

long-term capital gains
contributed to this

no

change in

porate financing practice*
/

.

(Continued

doubt

on

cor¬

Divi-

page 43)

have

seems to
to strive

or

depression. Over-stressing the
of inflation may well

dangers

at

money

balance.

The

of

New York

Society for the
Management,

of

.City, Oct. 28, 1948, "with

rhindr modifications made by Dr.
Barnes
at
the
request .-' of the

"Chironicle"

in view of Mr. Tru¬

man's reeiection.

/

in

which

and

turn

caused

the

liquidation of much of the savings
accumulated during the war by
individuals

*An address before the Annual

Advancement

housing

Even the

is

probably

come to an end, and that, accord¬
ingly the cost-of-living index has
just about reached its peak for the
present boom.

£ \s

.

bank

weakened:

credit in

recent months.
•

Appraising

that

the

situation with

statistics, it seems
today the total money supply

some

overall

I

force

refer

to

ac¬

has

too

the infla¬

to have gotten into the habit

seem

of

asking

for a wage increase
each year.
They regard it as part
of their members'
due, -regard*
less

of

the

what

sales outlook
be.

price, profit/;#

for

a

Management

business may

has helped

to

establish this labor habit becausb

of its willingness to go along in
the years since V-J Day.
Sellers*

th'^ general ex¬
supply macte
to do so.. ..We all kiuMti

markets-dtie Jtd'^
cess

it

of demand

easy

that

over

will be much tougher for

it

most managements to go

1949,

the

when

fourth

round

along in
question of the

comes

Fortu¬

up.

nately, management will be aided
by the fact that, since meat prices
and- other food- prices have stopped
rising and are/turning downward;
the chief legitimate argument for

boosts greater than those
might be warranted by small

increases

•

In

any

where
still

in

-

event,

labor
the

disapi

productivity

'

pears.

and

in

many

other

areas

costs

are

rise,

slackening cusr
preventing the
full reflection of increased cost§
in
higher prices. * This impli^
on

demand

tomer

that the

of

our

tion

is

inflationary consequences

third mainspring of inflfti

also petering out.
"
Outlook Deflationary

are

>

ri

»

has also been slightly
by moderately tight¬
consumer

this

tionary;^impact- qf rising wage
rate£ and other rising production
and - distribution
costs.
Unions

and business firms. It

and

which remains most

tive—though

For

counteracted
er

third main source of

inflation

that

to
time the
seems

inflationary impact
of war deficit financing has just
lQng the present boom; and that"
about
spent itself. It has been
what we have to try desperately
mainly counteracted by the high¬
to avoid are measures that will
er prices which it itself produced,
convert that boom into a recession

Conference

"High surtax rates on personal
incomes and the lower rate on

we

it may, it
the present

as

supply and the over¬
all price level are just about in

for are measures that tend to pro-

funds than corporations
raised
through
external

more

that

that

me

eco¬

nomic

knoW/

us

wage

would have voted for it.
Be

profits and depreciation
allowances
providing
consider¬

as

ing during the war—neither the
Republicans nor the Democrats

depression, if
are ih fact
happier in a

will—most people

condition of mild inflation.

undis¬

tributed

re-

years

m

of

the result

policy,

With

than^Tf earlier P3St two
the ^ rG periods.

the recent reaction of

tnis fact in

money

largely though not
entirely to the huge volume of
deficit financing which the gov¬
ernment employed during the war

of

demonstrates,

"has

two-thirds

mailer proportion of
capital

example

the

than tripled since 1939—

.

.

fact has little
significance at pres¬
ent in. view of the much
larger

2 cars. . . . Security fi~
311
-kinds Provided a

good

in

the investing

in

°f

by lower prices.

Oriental economies.

or

people to falling clothing prices,
much
publicized
in
past few
public weeks. Well, isn't it that just what years. ?If we had financed our
went into debt, while in the cur¬ people have- been shouting for?
war program
100% through tax¬
rent
once
period
corporations
have Yet
clothing and
textile; ation, the money supply would not
been going into debt.
have increased anywhere near as
prices started coming down many
much as it has, and the increase
"The chief source of corporate of the same people who had been
crying . for Jhe need .-for,, lower- in prices over prewar levels would
funds," Mr. Miller,
that

almost three-fourths

.

sav¬

a

some consumers: increase

ings.
During the 1920's and par¬
ticularly in the last two years of

cent year&
cent,

tlnlnt
fquirements of business

re¬

somewhat/ the

gains to

current

to

of

one—

too much money.

outstandingsecurities/, -particu¬
common

most

ferrous metals.
boom

thatu even -though living , costs
might* come down

.

relation

markets " have

indefinite

By contrast, think of the

ment for

.'I'll

Basic Supply Shortages

Now let's take the second maht
cause
of inflation—basic supply

.

n?'h!? a living grumblingthe same
because
of rising ,lot.of costs.
At

have

fact, wholesale prices
today 213% above June, im.

are

beginning to taper oft
As we all know, there are three Fortunately,
prices in most*- if
chief mainsprings of inflation:
(1) these few areas of remaining
Too much money; (2) Basic sup¬ shortages
are
what
economists
ply
shortages;
and
(3) ' Rising call 'administered," that is, th#
move up
or down comparatively
wage' rates and other mounting
In the most explosive
production and distribution costs. slowly.
Prices tend to move up when price areas—farm products and
foods—the largest combined grain
any one of these factors oper¬
ates.
The basic economic reason crop in U. S. history means the
end of virtually all U. S. food
why our postwar inflation was so
This in turn
spectacular in 1947 was that all shortages in 1949.
the major upward
three of these causes were oper¬ implies that
pressure on the cost-of-living has
ating at the same time.

To be sure, even mild inflation

most

matter of

a

demand.

inflation.

periencing in the last few months

of

^ef0r,e the June, 1939,to rise As
be Texpeded level. to
208% of

shortages

them

possi-

in practice—

as we

fast—208% to

virtually
prolongation of vanished except in a handful/of
the present boom, and
carry with areas—automobiles, steel and btsP

what people say™aj°rity of Americans
prefer No. 2, namely moderate in-

ation, such

the
start of
miltary
shipments to Western
together practically as¬

sure

^ a/t°j' ( ^ Moderate inflation;
and (4)
Of these four realizable

as

supply of goods
qufe
tily theory of money, prices might

Europe,

(3) Moderate deflation;
Sharp deflation.

tactI1

and

gram

than twice

more

lend-lease

or

fnfW'10n a/ne, ™ur: (1) Runaway

regardless of

inflation is in¬

more

Probably the prevailing
opinion is that the present mili¬
tary rearmament program, plus
proposed increases in that pro¬

tolerate.

inflation

dustrial

evitable.

govern¬

to

believe*

have

we

*■

explain a little more in
why I don't go along with

the view that

probably most
surely most

care

—

of

same

be exact—as the

me

detail

high

at

prevailed just before. World Wi*
JI began in June, 1939.;'At ^

In accordance with the old

Lost Punch

to

price

stability

comes

re¬

Inflation Mainsprings Have

•

tinuous

t

downward

a

the-

<-

seems

choices

start

and

adjustment.

a

consequences of mild deflation. In
industrial areas, it means income

termed

above-

stable!" whlchT would be

growth

sys¬

of

boom—and that

is about 342% of the amount

time/total productionbining the physical Volume of I
production, agriculti*
other burst of inflation
;<but rather output. and copstruetioh—has
that, in striving- to avert this im¬ creased to aboutft6$% 1ft tfie
agined danger, the 'government/ ievel. V Divide 342 by 165 and.
and in particular the
monetary get 208.
In other words the sup¬
authorities,
will terminate
the ply of money has increased a little

been

credit

war

our

tem

post-war

perched at its peak
longer than any other in our his¬
tory -the real danger & not an¬

higher.

stocks during

needs,

der

the

of

boom has been

observes that "much of what has

flected

man

trap of pre¬
cipitating deflation. At this stage

unr-

Mr. Miller community

years,

years.

in

ideal. But

——-—r#

—

make us fall into the

wonderful

a

1

v——■——4——*«—

re¬

of funds."

sources

•

Of course.

not

only to total corporate capital
quirements but 'also to total
ternal

-

•

Price stability

total

The

-

re¬

the banks for funds
an

■

.,.

.

business borrowing from the banks
since the middle 1930's, and the
in

'entirely

.i n.vol-.

untaVy evil.

larly

mb'7

tLr

an

is

Mr. 'Miller says: "The
volume of outside financing has

i

foffh

cem

not

,

nancing,

that

SSttfhand
"ew

eVuip-

excluj[ng

years
J
a o

relation¬

same

than it actually was." *

recent

nav

common

recent

would have been 20% larger

ume

war

:™"i-

of

in

ah

to capital expenditures thai
it did in the 1920's, the dollar voir

any

ae~g°.^a7ndw«hafebt,
k!
m> and that any

volume

maintained the

and

sh6rt

the

flotations

iiuiauuiid

My attitude toward our subject—inflation—is a trifle on the unorthodox side.
Frank¬
ly, I have a sneaking suspicion that the vast majority of us don't really want to stop infla¬
tion.
If we had
really wanted to do so, we would have succeeded.
Inflation, in shorVfs

ship

u

nomic Progress- Tav V—

Capital

.

stock

j oi/vviv

Prentide-Hall, Inc.

Holding inflation mainsprings have lost their punch, and money supply and overall price level are in
balance while goods shortages are tapering off, Dr. Barnes sees
price outlook more deflafionqfyihaN^
inflationary. Says armament expenditure, unless greatly stepped up, will not be inflationary
facto^f
and immediate danger is not more inflation, but action
by government and fiscal authorities stepping
on the brake and
throwing economic gears in reverse.
Upholds present peg on government bonds.
,

instruments characteristic of corporate financial
practice in the postwar
years have thus far had no serious conse¬
quence for corporate
financial positions."
This is the conclusion of
Stanley L. _Miller, economist ol^
the Federal

Reserve Bank of New
York, writing on "The
Equity
Capital Problem" in the Novem-

13

What .to. Do Now About Inflation!

'

funds in unfavorable market has been avoided.
new

(1965)

IXJ

York,

writing in Harvard Business Review, contends relative dearth of new
equity financing has thus far had no serious
consequences for cor¬
porate financial positions.
Says chief source* of corporate funds has
^been ploughing back
profits and because of this seeking equity
"The relative dearth of
tial reliance on
debt

FINANCIAL CHRONICLE

&

all these reasons, it

to some

Of us, at
combined H overall

|
seei#

least, that
price outlook

for the next few months at least
is

somewhat

more deflationary
(Continued on page 42)

14

COMMERCIAL

THE

(1966)

FINANCIAL

&

Thursday, November 11, 1948

Factors in Bank Stock Appraisal

Bank and Insurance Stocks

By MORRIS A. SCHAPIRO*

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

E. JOHNSON

By II.

CHRONICLE

Bank analyst,

This Week

The announcement of last week

of

by a transfer of funds from

the past several years bank

capital

State,

most bank stocks have

selling for the past two years (20-30%
the present time), and
the relatively low rate of return on capital accounts, have made it
unattractive to obtain supplementary capital funds by selling addi¬
tional stock to the public.
;
As a result capital funds have been increased almost entirely
through the retention of earnings which have not been paid out to
been

In the case of New York City bank stocks at

the

In

dividends.

as

City bank stocks, this has meant few
dividend increases in the past several years while at the same time
only approximately 60% of earnings has been paid out. As a conse¬
quence capital accounts have been increased and the ratio of deposits
to capital funds has declined.
The following tabulation presents figures and ratios, of a selected
list of leading banks in New York, Boston and Chicago. The table
shows the total capital funds, deposits and ratio of deposits to capital
as of Dec, 31, 1945 and as of Sept. 30, 1948.
Also shown in the last
column is the percentage capital funds have increased.
.

f-'"

Pctge.
Incr'se

-As of Dec.

-As of

31, 1945-

De--

Capital
Funds

Deposits

De¬

Capital

Depos.

fr. Dec.

1945 to

Sep.'48
9.0%

Central

Chemical

Bk.

Commercial

6c

Funds

(000)

(000)

Funds

21.3

$65,991

$1,204,692

18.3

1,749,590

12,2

153,665

8.6

7.2

1,842,737

15.6

129,104

10.6

19.1

325,676

1,524,161

1,324,085

Manufacturers

York

New

Public
U.

Tr.-^

20,922

173,879

8.3

21.0

44,792

752,548

J.6.8

800,221

6.0

136,824

529,767

3.9

3,309,453
1,277,920

10.6

365,330

2,344,107

11.6

116,006

1,031,416

,9.0

6.4'

16.8

5.1

8.9

22.6

127,884

2,125,898

16.6

13.0

5,308,657

19.2

305,621

4,664,438

15.3

10.5

59,895

881,263

14.7

65,492

594,432

9.1

9.3

26,892

545,498

20.3

30,972

500,895

16.2

15.2

30,710

140,355

4.6

29,397

115,902

3.9

—4.3

•Banks Outside NYC:

donl'l Illinois Nat'l-

147,471

2,646,722

17.9

jFirst Nat'l ChicagoJFirst Nat'l Boston—

113,687

2,347.653

91.160

1,578,278

12,082,217

12.6-

12,3

20.7

tl65,548
1139,028

12,017,594

14.5

22.3

17.3

57,622

1,359,920

13.9

figures of City Bank Farmers Trust Co.

at their

highest point.

this district face

in

lars,

V:j

or

in

fact, moved ahead

today in

institutions hold

because these

share

a

nationwide

4

hardly

the

of

basis.

so

country's
re¬
on

is

There

business

enterprise oi
importance which does

a

have

network

bank

we

refer to

City banks,

th^ New York
central

city group comprising 3f

reserve

Since that time the contraction in

Each

is

To

another

of these

has

total deposits of around $500 mil¬
lion.
one
shows an increase of

million

$50

other

shows

million

or

close

bank

a

decrease

a

in

level

the

of

$400
to

addition to serving the large bor¬
rower.
On
the other hand, the
lost

deposits

since

usually banks serving
depositor,
doing the

business

almost

between

operation. Of

the

wholesale

the

whole

course

banks

retail

banks,

and

there

is

a

institu¬

banking

of

range

active in both fields.

tions

a

as

a

of

consequence

generally improved relationship between capital and deposits.

considerable number of

the traditional

While there has been
years

a

the ratio is below

cases

or only slightly above
capital to each ten dollars of deposits

dollar of

one

In

because of the sharp expansion in commercial loans, it is be¬
most banks have improved their capital positions.

lieved that

The action

is

believed

by National City in proposing to increase its capital

by

authorities

some

dividend sometime next year.

26% of the $8.6

than

billion total

for all of the -3,925 member banks

the

in

United

States.

increase in risk assets in the past twc

some

to

foreshadow

Whether

or

not

an

a more

increase

in

the

liberal dividend

policy will be adopted by the various banking institutions will depend
upon their individual circumstances. In view of their improved capi¬
tal positions and outlook for earnings, larger
payments are possible.

Position

of

New

What

server?

has

been

re¬

What

today

is their

as

actual

result

a

Although

120

York Stock

J. S. Rippel & Co.
Established

BROADWAY, NEW YORK 5, N. Y.
Telephone:
Bell

BArclay

Teletype—NY

7-3500

1891

MArket 3-3480

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

refer to this

is

essential

N. Y. Phone—REctor 2-4383

WHOLESALE MARKETS IN

2-O650

WHITEHALL

BS-297

FRANKLIN

15

Schofield Building
SUPERIOR

LOS

ANGELES

the

second,

the

con¬

210 W. Seventh Street

7644

MICHIGAN

CV-394

2837

LA-1086

SAN

FRANCISCO

SF-573

CONNECTING
:
NEW YORK, BOSTON
CHICAGO'
ST. LOUIS,
LOS ANGELES,
SAN FRANCISCO
Hartford, Enterprise 6011
Portland, Enterprise 7008

PHILADELPHIA,

TELEPHONES TO

:

Providence, Enterprise 7008




Detroit, Enterprise

that

York

2%

had

which

to

you

bankers

have

uni¬

the Federal Reserve Bank, reduc¬

look at Table I in which

ing the total of their earning as¬
sets by a like amount.

these

affected

banks

us

the figures of de¬
investments of

presented

loans

member

and

banks

in

Here

York

New
we

how

see

these banks must
maintain approximately $1V4
meet,

additional cash balance al

billion

Under these

banks have

loans

and

1947 and

4%.
How

the

banks

While

banks.

posits

10%
the

fared

in¬

are

ertheless,

down,

as

some

actually

a

group

banks,

gained

de¬

nev¬

funds.

of

un¬

only $18.6 billion total
investments today, a
nearly
their

from

level

average

this

has

the

on

group

billion,

$2

average

$4.8 billion

contraction
roads

have

conditions, it is

derstandable that New York City

decline

or

of

made

earning

or

level in

20% from

1946.

This

serious
power

in¬

of

of banks.

ments at $10.7 billion are down $6

significant fact, how¬
the impact of this
development was most
marked
that

is

the

among

had

wholesale

banks

and

its

smallest influence among
derby banks. To illus¬
again, the contraction in the
of earning assets since 1946

•'^Address

fore

the

by

Mr. Schaoiro

"

1946.

Correspondent

PVonomic

now

us

major

in
in
that operating costs other

Table II

Income taxes have increased

than

from $216 million in

estimated

million

million.

6066

pany,

Pittsburgh, Pa., Nov. 4, 1948.

doing

a

wholesale business, having

deposits

today

of $2,300

million,

rise

same

item

By applying this latter
operating expenses, the
from $130 million

to

net deficit is up

to

This net deficit,
II, is the amount

$164 million.

Item 3 in

Table

of interest income these banks re¬

quire in order to stay out of the
red and just break even. Table II
shows that the critical break-even

advanced ,from 0.53%
0.88% today. This is

has

point

1945

to

the rate of interest

required today

by these-banks on their reduced
volume

investments

and

loans

of

billion in order to break

of. $18.6

■>.'

even.

■..

-

.

,

Again, among these large New
York
City banks, although the
break-even point has been rising

1945, the average figure of

since

0.88% conceals wide variations in
the break-even rates of individual
Let

banks.

sale

bank

us

take

large whole¬

a

in the Wall Street dis¬

trict, admittedly an extreme ex¬
ample. Its break-even point last
year was

if

all

of

0.46%, which meant that
its earning assets, loans
rate

the

at

vested

been
in¬
0.46%, it

had

investments,

and

of

broken even. If
yield had not

would have just

this bank's average
been

have

to pay

0.4-3%,

than

higher

would

been

no

there
income

net

taxes to the Treasury, diviand net

dents to the stockholders,

addition
us

for

its

capital.

Now let

consider another case, also ex¬

this

treme,

time

a

brown

with deposits totaling

bank

million.

derby
more

This bank re¬

quired 1.41% to break even. De¬
spite this comparatively high re¬

quirement,

however,

the

brown

derby bank, because of the steadi¬
ness of its deposits,
dealing with

total

of three of the banks

a

table, income other than interest,
as fees, trust department, etc.;
million to $115

at

case

1948,

30%. In the

has risen from $86

able

in the

or

1945 to $279

for

such

the broader

Banks

second

the

to

turn

development, the rise
operating costs. We can see

trate

Meeting of Peoples

'

Rise in Operating Costs

Let

be¬

First National Bank & Trust Com¬

from the level

billion, fully 36%
of

than $500

The most

ever

coverage in this
little business as

As shown in Table I, although
outstanding loans of New York
City banks, amounting to $7.9 bil¬
lion, are up $1.2 billion or 18%
from their 1946 average, invest¬
ments are off sharply.
Invest¬

the brown

6-2332

BRIVATE WIRE 8YSTEM

CLEVELAND,

4

Russ Building
YUKON

New

not

dividually? We find that the de¬
posit figure vanes widely among

753S

CG-105
14

deposits for the

the

by

serves

its broad contacts
through its many branches. The
in the earning assets of
this bank since 1946 is only 15%.

in

now

the
CLEVELAND

natu¬

operating expenses
Contracting earning assets and
rising expenses, however, have

or

A

231 S. LaSalle Street

3-0782

total

131/2% from the average level of
1946. From the 1947 position, the
decline in deposits is $1 billion

NY 1-2875

have

The record shows, however,

total deposits now at $23.7 billion
have declined
$3.7 billion, or

INCORPORATED

HUbbaro

increase
accounts.

of

the

CHICAGO

such

vestments;

posits,

GEYER & 10.
67 Wall Street

of

number

sharp

that

remember

to

City since 1946.

NEW YORK 5

the

a

is, the total of their loans and in¬

are

BANK and INSURANCE STOCKS

9

In addition,

war.

been

Federal Reserve Board
compared with only one increase

Let

BOSTON

in

has

35 separate and distinct

are

formly.

10 Post Office Square

than before the

balances

the New York City banks,

current rise in

18 Clinton St., Newark 2, N. J.

1-1248-49

bank

larger

City banks as a group are lower
Naturally, as a result, the volume
of
total
earning assets is also
entities, no two of which present down. In addition, these banks
the same situation.
have this- year been subjected to
Since the war, these banks have higher reserve requirements, and
been adversely affected by two •today, following the three succes¬
major developments. The first is sive increases of 2% each ordered

SECURITIES,

Exchange

and low income groups now

maintain

their pros¬

are

we

posi¬
these

of

remembei

constantly

a

the cumulative proceeds
deficit financing.
Small busi¬

nesses

ex¬

institution

decline

of $63

Assets

to

been

Banks serving them
rally benefited.

tion

the decline in earning assets, that

New

has

lems?

there

STOCKS

Members

important

there

there

it

NEW JERSEY

laird, Bissell & Meeds

Liquid

history? How have they made
their adjustments to postwar prob¬

pects?

INSURANCE

their

is

of

growing diffusion of liquid assets
throughout the economy, repre¬
of

cent

group as

and

Banks

York

It
that

leading

a

big business, maintaining

as

million

senting

What is the picture which these
banks present to the close ob¬

adjustments? What

BANK

Diffusion

serve

It

area.

exclu¬

business rather than the

little fellow's

of

with deposits of $3,800 million. Its
business is highly diversified, hav¬

.

national

interest to note the

perience

sively, serving companies doing i

System having total cap'tal
accounts of $214 billion, or more

deposits

only 13%, 4% and 14%
respectively. At this point it is

of special

effectively

public. They are brown derby
They serve little business
as well as big business, doing what
might be called a retail trade in

wholesale

traction is

well

success¬

banks.

large

Here

day of $2,100 million, $1,200 mil¬
lion, and $500 million. The con¬

them?

were

the

the

period.

same

banks with deposits to¬

would

namic, and growing contacts with

which

the

How

maintaining their wartime
of deposits have broad, dy¬

banks

in

three

are

interpret

analyst

the war, are

Now, let us look at the brown
banks and see how they

derby
fared

ing the broadest

these figures mean
observer?

Those banks which
ful

while

45%.

What do

the

10%,

or

member banks of the F'ederal Re¬

government debt retirement and the
increase in capital funds by the retention of earnings has resulted in

Both

billion.

here

again,

$530 million, and $175 million, is
23%, 26% and 28% respectively.

figure,

bit.

a

of $2

excess

pair of banks.

in

mean 'the

we

1946

its

of these banks have total resources

illustrate

City area, but 1
will find that the prin¬
ciples outlined are applicable to
banks everywhere.
Bankers throughout the counfry
are always interested in what the
New York City banks are doing—
especially 'how
well
they are
doing.
This interest is natural

from

one

billion dol¬

a

while the deposits of another bank
in the same period held
up and,

in the New York

When

the peak of the
capital-deposit

illustrate, the deposits of

bank alone declined

think you

bank in New York.

*>.

lAs of June 30, 1948.

19^5

were

7.1
.

The year
was selected because it represents
wartime expansibn in deposits and the time when
ratios

bankers

somewhat different from those

are

of correspond¬
relationships built up
over
the
years
and
embracing
-most
of
the
14,000 commercial
banks
of
the
country, is cen¬
tered largely about this group of
•New York City banks. -The opin¬
ion of financial people everywhere
is frequently sought regarding the
relative standing of this or that

*

2,555,886

Trust—,

existing among

City banks.
realize that the problems which

ent

2.6

113,137

Trust—

•Includes

conditions

large New York

intricate

11.9

276,516

National

S.

the

the

banking connections in
New York.
Also, the useful but

10.3

110,341

12.7

842,037

110,411

City

to

I

not

'

Guaranty Trust
Irving Trust
•National

12.0

15.2

244,444

133,379
312,676

National

To

national

8.5

19,188

Exchange

First

12.9

40,011

Tr.

Nat'l

Corn

an-^'

than

My observations will be limited

9.2

5,742,180

1,323,885
1.367,452
4,206,944

100,051

Chase National

(0001

$1,290,334

118.260

_T_

posits

to Cap.

300,240

Hanover

posits

to Cap.

.Funds

investors

to

other.

banking resources. Customer
lationships of these banks are

143,317

Trust—

Bankers

attractive

large

$60,526

Manhattan

of

am honored to be here
today to discuss with you the subject of commercial banks,
competitive position, and the essential factors in judging the relative values of their
capital shares. I shall try to describe some of the factors which make one bank stock more

Funds

Ratio of

(000)
Bank

I

in Cap.

Sept. 30, 1948—'—

Ratio of

power

their

you

New York

of

case

earning

on

certain bank investments

on

have

accounts.

stockholders

exemption

supervisory officials, both Fed¬

exerted pressure on banks to increase their
The .reason for this has been the sharp rise in
deposits, loans and investments during and since the war.
However, the considerable discount from book values at-which
and

eral

of banks dealing with large business. Stresses factor of income tax
as element of earning power, and underscores safety elements of
quality of bank assets and adequacy of capital as bases in judging bank stocks.

making inroads

again calls attention to the capital position of all banks.

once

For

among

that the National City Bank

New York plans to increase its capital

surplus

in outlining factors which make individual bank stocks investor's choice, notes that
New York banks, those which serve little as well as big business have increased deposits, while
those serving big business only have lost deposits.
Sees loss of deposits and higher break-even points

Bank Stocks

—

its

to

public as it does, was
the fullest use of

make

loaning and servicing onportuIt realized a rate of 2.11%

nities.
on

its

bank

earning assets, while the
previously mentioned real-

;■

Volume

168

Number 4750

ized only 1.43%.
are

now

THE

Against

a

trend
loans and

increases in

in

of

which

also been
upward, be¬
cause of the
changing pattern oi
the
money market, and the
change
in the
composition of

earning

to

the 2.00%

on

Table II

as

reserve

the

Vere

earning

en

receiving only 1.20%

Incidentally,
in

the

the

dividend

first

case

brighter than in the

sets. The rise has
been from 1.40%
in 1945 to

of

ceived

full

But

banking

pros¬

appea.

more, the yields realized
from
bank
to
bank, and

This

reported

time,

however, the wholesale banks en-joy an advantage over the
retail,

-brown derby banks.

The

principal

condition
ward

is

1

changes in

the

for

thir
up¬

the money

yet

re¬

among

again

are

pos¬

changed conditions

what

extent

the

do

earnings

reported by banks reflect condi¬
tions now obsolete and no
longer

recent

reason

that

as

To be realistic, the
question must always be raised—

Effect of Rising Interest
Rates

renewable?
In

this

connection

also, .high

bond yields, coupled with low tax

mar¬

ket, the basis

of rising
yields, are rates are an abnormality, a re¬
occurring at the wholesale level. flection of the more
favorable
In other
words, an increase in the conditions of the past.
Frequently

commercial

wholesale

lending

condition
is
by
a this
the
result
o
bank
from
\xk%
to writing off the premium on bonds
increase of 50% on the
rather, than amortizing the pre¬

214%

is

same

rate

dollar volume.

an

transaction,
who

rower

In the retail

however,
had

us

say, 31/2%
and is now

the

been

mium

bor¬

paying,

alert

let

recent months have

direct

benefit

to

in

the

loans which

more

of

the

banks which made

ing a period of
Hence, there is
or

by

such
on

of

net

delays

actually

are

re¬

spread of 1%, or
will, represents-

you

operating

in°n^o

r'

before state and fed¬

income taxes.

banks

these

and

mal

interest rates of the day in their

In

banks

New

York

require'1

are

surtaxes.

Income Tax Liability

earnings.

Here

Another

fact

which

the

of

bank

we

is not necessarily the interest rate

currently available

to

banks.

is

To

to

come

while

another

of

its

bank

has

investments

2.00%.

It

is

at

the

obvious

that

ket

and

interest

rates,

last

eral

an

im¬

of

an

with the statutory tax
40.8%, the stated and Fed¬

taxes for this group of

mem¬

reported by the Fed¬
Reserve Bank amounted to

eral

as

mediately affect the first more $47 million, an effective tax rate
favorably. In the event of a re¬ of only 26.9%. Here are individ¬
funding of a particular hsue into, ual figures of four selected banks
let

us

1%%,

say,

the

first

One reported its earnings to stock¬

bank

will show improvement in income
whereas
the
second
bank
wil
show

a

reduction in income.

holders
the

to

the

second

accruing

taxes at
another 27%.

35%,

third 21%, still another 18%
Why did the New York City

banks

interest of 2%. the business would
be
nrn
profitable to the first
than

of

the

Fur

ther, if both banks were tn
ticipate in a loan bearing a rate of

bank

after

rate

only

taxes

nay

26.9%,

at

when

the

the

Federal and state rates

bank,

rate

of

combined

40.8%?

are

And why are there such wide dif-

TABLE I

Deposits, Loans and Investments

of Member Banks in New York City

(In billions of dollars)

'

.•

.

v

Current

1946

Average deposits
Average loans and investments

23.4

Average investments Y——

~ -

6.7

16.7

-

Position

$23.9

$23.7

19.2

18 6

7.5

7.9

11.7

10.7

20.5

6.7

——r-

1948 (est.)

$24.7 •'

$27.4

—_

Average loans

1947

13.8

.

..

mal tax.

Amounts of such

an

certain

income,

from bank to bank.
important point is to as¬

the

tax-free

extent

which

to

investments

are

such

renew¬

able, and how that affects reported
earnings.'
But the factor of exempt
est income is not all.

inter¬

There is also

the reduction of tax accruals aris¬

ing from capital transactions. Let
consider, for instance, the new
Treasury formula for bad debts
accounting under which banks can,
in effect, take the write-offs be¬
fore the losses are actually sus¬
tained.
Heretofore, banks took
us

write-offs

for

when losses
either

tax

actually occurred. Ir
when

case,

only

purposes

a

bank

accrues

lower taxes because of a
bad debt write-off, -and reports
earnings on the basis of the re¬
or

pays

duced tax, it is obvious that thq
earnings result obtained is greater

than

the

true

recurring

earning
The tax re¬
reflection of true

of the bank.

power

duction is not

a

earning power. To think other¬
wise, is to be unrealistic. Unusual
tax credits arising from deductible
or anticipated, should
segregated if the true earning
power of banks .is to be kept in

losses, actual
be

clear view for stockholders.

Critical Yields of Member Banks in New York
City
(Amounts in millions'of doliars)■

in

Banks

York

New

City like

banks throughout the coun*
have availed themselves of

try,
this

new

method of bad debts

ac¬

counting. Some banks do not use
the
method.
However,
among
those which do, there is a large
number whose earnings are over¬
stated by comparison with other
banks because of accounting pro¬
cedure. There were banks in New

which last year used
the reduced tax in calculating net
current earnings for stockholders,
producing ^thereby an earnings
figure higher than their normal
earning power, which will become
evident when the temporary ad¬
vantages of this method have run
City

out.

Oh the other hand, many
more

banks,

realistic, and recognizing the

importance of reporting their net
current
operating
earnings
to
stockholders on a pure and recur¬

1.

2.

Operating

expenses
other than

Income
.

interest

of this element'-. In these cases,

the
applicable to
their normal operating income, is
effective

with

line

in

tax

rate

the

rate

tax

of

the

1948

(est.)

The $47 million of income taxes,

4.

Average

loans

investments

6.

Rate act'lly realized

required

break

even

$279

100

107

115

115

$150

$167

$164

$164

24,700

23,400

20,500

19,200

18,600

0.64%

0.81%

1.52

1.67

1.81

1.34

1.40

0.86%

(b)

Investments

,

0.88%

1.82

1.87

2.10

2.30

2.40

1.46

1.49

1.49

7. Net current operat¬

ing income
8. Effective tax rate—




0.87

0.88

0.86

42.0

32.0

26.9

the

case

LOS

Blythe

of

affairs

institutions.

utive committee.

Walsfon, Hoffman Co.

Opening NY Office
Walston, Hoffman & Goodwin,
members

that

it

had

to bor¬
25-year 3%

arrangements

$60,000000

row

notes,

to

be

on

dated

Dec.

1,

Driscoll

V.

William

resident

as

partner.

.

formerly

& Co., will
partnership in the

Shields

of

be admitted to

firm

'

-

1, Edmund W.' Tabell,

On Dec.

will

and

head¬

his

make

quarters at the newly opened of¬
fice.

/

•

R. D. Jacobson With

Smith, Burrjs & Co.

1948.

ILL. —R.

CHICAGO,
Jacobson
with

has

Burris & Co., 120
Street, in their
trading depart¬

Smith,

South

La

Donald

.

associated

become

Salle

over-the-counter

ment, specializing in industrial
and public utility stocks.
He was formerly manager of
.

trading department of the
Chicago office of Riter & Co. and
before that was senior securities
the

analyst
;

Deposit

Federal

the

for

Insurance Corporation.

Martin Brosnan Is Now

With Tellier & Go.
Martin T. Brosnan is now asso-t

22
a&
avail¬
manager of the firm's retail salep
fcr the company's construc¬
department.
He was formerly
program.
with Simons, Linburn & Co. ancjl

to repay existing
loans and to augment cash

partly

With

The

First

Boston

bank

Corp.

conducting negotiations for Alcoa,
the Metropolitan Life Insurance
Co. agreed to provide $55,000,000
of the total to be borrowed and
trustees of Alcoa's employee re¬
tirement

the

and

Exchanges,

Wall Street, New

do

Gets $60,090,000 Loan
10

Stock

branch office at 35
York City, with

have opened a

Aluminum Go. of Amer.

Nov.

York

New

the

of

Francisco

San

otherwise, is to weaken the cause
of the private banking system.

announced

E.

Ryons, Pacific Company of "Cali¬

as

To

,

Vice-Chair¬

of

well

as

-elected

was

George

fornia, .were named to the exec¬

responsibil¬

world.

business

the

as

Jones,
Paul B*
National
Bank, was chosen SecretaryTreasurer.
Ralph
E. - Phillips,
Dean Witter & Co., and Joseph L.

of industry, and the
economy itself, it is essential that
banks everywhere recognize the
importance of these trends, al¬

to

Inc.,

Named

Mitchum, Tully & Co.
Kelly, Anglo-California

of' banking,

ways mindful of their
ities to stockholders

Co.,

was

man

interest

In the

&

chairman.

result
slowly
but

the

California

Group of the Investment Bankers
Association,
Thomas
E. Morris,

a

on

ANGELES, CAL.—At the

annual meeting of the

plan consented to lend

other $5,000,000.

ciated

Tellier

with

&

York

New

Broadway,

Co.,

City,

J. Arthur Warner & Co., Inc.

i
'|

mm

—

Allyn to Acquire j
N. Y. S. E. Membership

A. C.

It is understood that J.

Douglas

Casey of A. C. Allyn and Co., IOG
West Monroe Street, Chicago, 111,,

Bond Club of N. J. to Hear

has

Captain Eddie V. Rickenbacker,
President and General Manager

the New York Stock

of Eastern Air Lines, will be guest
of honor and speaker at a lunch¬

Cambist Assoc. in Chicago

meeting of The Bond Club of
Jersey to be held at the
Robert
Treat
Hotel,
Newark,
Wednesday, Nov. 24 at'12:15 p.m.

Associates, Inc., is engaging in a
securities business from offices at

result, there is

banks

are

doing.

as

This

to

has

reacted unfavorably on all banks

These
tests

1.58

In

Group

Elects Morris Head

of this
surely,
bankers themselves are becoming
increasingly conscious of the need
for meeting this growing interest
of the business community. It is a
fact that
already a number of
forwardlooking banks are taking
special pains to inform fully and
completely their depositors and
their

■

Federal Reserve by no means por¬

how

1.40

be.

California IBA

corporations. These execu¬
tives are taking a deeper interest
in how their depository bank§ are
doing.

stockholders

Scherck,

r

insufficient

as

offices.

Dallas and Louisville.

These, in total, make up a yard¬
stick which professional invest¬
ment
analysts use to compare
banks,
all
banks,
your
bank.
Banks
increasingly are coming
under the close scrutiny of not
only experts in the investment
world, but also, of their principal
customers, the financial officers
and treasurers of our large na¬

Largely
situation,

their

Richter Company also have direct,
wires to New York, Los Angeles,

capital,
there should be high earnings "or
the prospect of additional earn¬
ings to warrant a desired capital
increase,
Tnese
considerations
underscore the importance of es¬
timating properly the true re¬
curring earning power of banks.

tion

of securities.

confusion

$279

0.53%

with

able

sale

understandable

$274

'

Loans.

should

banks

Here it

the

is well to

a

to

(a)

counts

point out that the mem¬
ber banks are obliged to report
their operating figures to the Fed¬
eral Reserve on forms designated
by this agency. Unfortunately,
this form in disregarding net cur¬
rent
operating
earnings
after
taxes, obscures the true earning
power
of banks. Actually, the
combined earnings figures of the
member banks
released. by the

on

ports issued by banks to their own

$130

Rate

tween

is
actually too low, the rate of net
earnings on existing capital ac¬
counts is usually high. It is clear
that when the percentage of net
earnings to total capital accounts
is considered, the test should be
based
not
only on what total
capital accounts actually are, but
also on what
total
capital ac¬

Proceeds of the loan will be used

,

stockholders. As

and

5.

134 South La Salle Street,;
Chicago, announced the installa-1
tion of a direct private wire be¬

where capital

cases

income, reduction in taxes due to
the bad debts method, and the
smaller taxes arising from losses

tax

0.96

0.99

28.9 *•

28.9.

'

are

some

of

eon

New

Captain

!

—

First
cago,

con¬

completed

effective

and their stockholders.
3." Net deficit

those

In

be taken into

rate, as
reported by the Federal Reserve
reflects the presence of exempt

26.9%

or

Position

$250
!

should

The Aluminum Co. of America

day.

-

$216
86

—

1947

formula

standard

no

the adequacy of bank
capital. In each individual case,
there are many different factors
guage

ring basis, kept their figures free

Current
1946

is

Richter CompanyBldg., St. Louis, and
Securities Company of
Chi-j

tray the real situation at these
banks, nor are these figures easily
reconciled with the published re¬

TABLE II

1945'

There

Chicago

Scherck,
Landreth

tional

many

banks

year,

ber banks

mar¬

will

often confused by the super-

so

rate of

rate

improvement in the money

tax

analysis may hinge on this point.
For instance, in New York
City

income
the

income

v'sory agencies and the
themselves, that the value

illustrate, one New York City
bank has current income from its
investments at the rate of 1.20%
from

the

prior to

March, 1941, ex¬
empt from the 24% Federal nor¬

York

analysis
liability of
analyst must keep constantly in banks, one of the most
important
mind is that the rate of income factors in
determining their true
from investments, as indicated
by earning power. There are so many
the earnings statement
a hp-1elements involved, and the matter

V
•

by

40.8% which is the net of the stat¬
utory 41/2% New York State fran¬
chise and the 38% combined nor¬

reflecting fully the higher

current

required

to pay income taxes at the rate o'

lag which

these

banks

State,

loans, in

This

current

eral

These

money dur¬

time

they

"take," if

these

low interest rates.
a

rate

from their currenl
investments at the rate

a^d

1.87%.

net

some

banks.

effect, sold options

loans

long-term

made

wholesale

prevents
from

interest

alizing income

wholesale

the

are

were

varying
the

among

the critical break¬

seen

appears that

-banks because of their more con¬
centrated holdings of short-term
Treasury
securities.
Offsetting

this, however,

the

be

these banks to
stay out of the red
estimated at 0.88%.
Currently it

over

been of

must

.

the

rate

recognize

We have
even

short-term

earnings

banks.

income increase

Similarly, the increases
Treasury's

and

accounting procedures

paying 414%, provides
an

of

purposes

Again, the bank analyst

in the first instance

the bank with
of only 21%.

for

to

To First Sees.,

is, adequacy of capital,
major element in judging the

a

value of bank stocks.

sideration, such as the quality of
assets, type of business, and the
general exposure of the bank to
business and economic changes.

of the present.

To

issued

state

which

not

earnings

tax-free, some.from
and
municipal securities,,
wholly tax-free, and somfe from
outstanding Treasury obligations

was

15

Scherck, Richter Wire

The second

income

of course, vary

recognition

sible under the

course,

is,

assets

Here,

observers, and is ofter.
neglected by bankers themselves
By renewability we mean whethei

the average conceals the
variations found
among the

individual institutions.

has

the quality
which, of
underlies all other tests.
hank's

the

second.

^

1.87% estimated today.

once

earnings

of

first

The

factors.

(1967)

renewability

This matter of the

as¬

more

power

bank than to the bank

was

pects

requirements

obviously

year,

harmful

point,

yields

average

investments,

this

con¬

a

break-even

shows, has

again,

CHRONICLE

since both would have to
reduce ferences among individual banks?
increased- at¬ their investments to provide the' The immediate answer is that a
analysts and iii- necessary reserves. And again, the certain
-part of their investment

background

rising

the

wide

FINANCIAL

These variations

among
vestment sources.

vary

&

receiving

tention

stantly

COMMERCIAL

the

major
in

which should be applied

competent appraisal of the
earning power and prospects of
an
individual bank, whether in
New York, in Pennsylvania, or

any

anywhere
else
in the
United
States. They, constitute, however,
no
more
than
a
preliminary
screening. I would like merely to
mention two additional important

will

be,

Power."
same

subject

Rickenbacker's
"Air

Power

Is

Peace

A -motion picture o£ the

title will

be shown.

With William H. Coburn
(Snftcial "to

The

Financial

applied for

a

membership in
Exchange.

'

.

ILL.

CHICAGO,

—

Cambist

Officers
Edgar J.
Schoen, Aaron Taymor. Directors
are
the officers and Daniel H.

33

South

are

Street.

Clark

Herbert J.

Schoen,

Cooney, Walter Erman and

Lester

M. Eisman.

With Merrill Lynch
(Special

Chronicle)

to

BOSTON,

The

Financial

Co.;

Chronicle) '

'

MASS. —George L.
staff

BOSTON, MASS.—Randolph G.
Sharp has been added to the staff
of William H. Coburn & Co., 68

of

Devonshire Street.

& Beane, 10 Post

Shinn has been added to the

Merrill Lynch,

Pierce, Fenner
Office Square. v

,

f«

THE

J1968)

COMMERCIAL

&

-

CHRONICLE

FINANCIAL

Thursday, November 11, 1948

Purchasing Power Above Year Ago
"Although living costs are now increasing faster than the average
of the past nine years, the purchasing power of the average family
is still greater than it was a year ago.
This is revealed in the
monthly Investors Syndicate survey of 'real income.'
Real income is
the relationship of revenue to living costs.

SECURITIES
Prospectus

upon

By

NATIONAL
RESEARCH

1939," the survey reports, "living costs have increased an
6% each year over the previous year. Today costs are
10% higher than a year ago.
However, average family income is up

Income Type Funds Selling Best

from

request

Since

from

or

&

SECURITIES

CORPORATION

120 BROADWAY, NEW YORK 5, N. Y.

12%

the

September, 1946 market break, income type mutual
funds, including balanced funds, have been the best sellers. The urge
to buy low yielding growth funds or so-called "Appreciation type"
funds

to have been rather dormant in recent months.

seems

The

see-saw markets of the
past two years, in which it is easy
whip-sawed, may account for the current preference for income
type funds.
However, Charley Werly of the George Putnam Fund
has an ingenious explanation for this situation which he considers

to get

basic trend.

a

According

Charley,

to

who

investors

most

purchase

mutual

funds today, or at least shares of The Putnam Fund, are in their 50's
cr 60's and naturally are more interested in income than capital ap¬

Bullock
Dividend

of

average

investment dealer,

your

"Since

HENRY HUNT

Fund, Ltd.

Shares, Inc.

Nation-Wide Securities Co.

due to the

the

negligible income taxes of that

On the other hand,

era.

youpger generation has been faced with- steadily mounting income

taxes,

as well as rising living costs, with the result that outside of a
government bonds, their savings available for investment are

small.

Charley

be right.
However, our guess is that if the "Dow"
large volume trading on the "Big Board," we will
witness a sharp revival of interest in mutual funds of the "appre¬
ciation type."

available

crosses

from
Investment

Dealers

may

200 with

or

Big New Markets
"Between

CALVIN BULLOCK
Established 1894

last year,

1939

and

1948,

|

population

increased from 131
million to 146 million, an increase of 15 million people. This added to
our
population the equivalent of more than two states the size of
growing California.
Even more important in enlarging our domestic
markets for goods, however, has been the increase in real buying
power of the average person.
During 1939, personal income pay¬
our

ments after taxes averaged $536 per

This increased to

capita.

approx¬

imately

$1,265 for 1948.
An increase of $911 would have been
sufficient to offset the higher cost of living that has made a prewar
dollar worth

only 60c today. These figures indicate that the average
has had an increase in real buying power—the ability to buy
pounds of food, pairs of shoes, suits, dresses—of approximately 40%.
person

"The

worker

average

who

earned $25 per week in 1939.

married

is

From that

has

and

was

children

two

leaving the average family approximately 2%

"Because these figures are averages, they do not reflect drops in
buying power among workers in some lines," Investors Syndicate
pointed out.
"While many families continue to increase their pur¬
chasing power, others are beginning to feel a pinch.

"Our economy in

the past months has demonstrated its ability to
stated E. E. Crabb, President of
a leading distributor of investment securities.

level off unevenness that appears,"

Investors

Syndicate,

"There is every reason

to believe these stabilizing forces will even
temporary breaks there may be in buying power.
Economic activity should continue high for some time.'"
out

whatever

preciation. Men (and women) who first went to work in the 'teens or
early '20s have been able to accumulate fairly substantial savings

few

Prospectuses

from

better off.

Start

Saving Taxes Now

"You should start saving taxes now if you have a loss in any
securities held less than six months.
It may cost you money to
wait

until

the

end

the

of

for

you may lose substantial tax
security with a loss is between
five and six months after purchase because short-term capital losses
(securities held less than six months) can save you twice as much in
taxes as long-term losses.
On short-term losses you can deduct the

savings.

full

year

The key time to look at

the

of

amount

loss,

while

any

long-term

losses

you are
only
only deduct your net
capital losses against your net capital gains but the excess of such
losses up to $1,000 may be deducted from your ordinary income.
Any
on

allowed to deduct 50% of the loss.

You

not

can

balance of losses may be carried over the next five years and
deducted against net capital gains and income in the same manner.
"One

the

of

most

important

principles

of

successful

investing

is to promptly take your losses before they become serious. 'Cut your
losses and let your profits run' is a time tested principle that experi¬
investors

enced

follow.

Too

many investors do just the opposite.
as only on paper.
They hold
disappointing securities hoping they will come back.
Unfor¬
tunately, many securities never return to previous price levels. When
the investor finally realizes his security has permanently deteriorated
because of poor management or industry obsolescence, he usually
has a crippling loss which is almost impossible to make up with
present high taxes." Quoted from "Wellington News."
t

They

apt to think of their losses

are

these

.

deducted 25c for social

An Unusual Cover

security; his take-home

pay was $24.75.
The typical worker today
Social security and withholding taxes amount
a take-home-pay of $53.
After allowing for the

receives $54 per week.

Hugh W. Long has issued a new folder called, "Dividends Every
$1.00, leaving
Month," which has a most unusual cover.
It has an almost three
higher cost of living, the family with this income is able to buy riimentional quality, seldom seen in two-color printing. Why not write
in and ask Hugh for a copy?
approximately one third more units of goods than before the war.
"If one's personal experience does not bear out this increase in
buying power, it is well to remember that for each person whose
income has remained relatively stable or who has been hurt seriously New York Stock
Exchange
by increased taxes, there are many workers in factories, mines,
forests and on farms whose buying power has increased considerably. Weekly Firm Changes
The New York Stock Exchange
It is estimated that in 1936 there were 6.3 million family units with
an
annual income of over $2,000.
During 1948 approximately 30 has announced the following firm
million family units will have had income of over
changes:
$2,000.
to

Overby Made Deputy
Managing Director
of Monetary Fund

Proposed transfer of the Ex¬
change
membership
of
Edwin
George Thomas to Edward T. H.

HUGH W. LONG & CO.

tive

Talmage

NEW ECONOMIC MAP OF THE U. S.

Monetary

the

iNC0*»0»*Tf-D

48

WAU

STMET

NEW

YORK

mage

5, N Y.

of

will

Exchange

considered

be
on

by

Nov. 18. Mr. Tal¬

will continue

as

a

partner

Montgomery, Scott & Co.
Donald L.

"

Samuels, member of

the Exchange, died on Nov. 1, as
of which date the firm of Herr& Samuels

mar.

Louise

limited

Keystone

"new states"

to

goods and

that of the 48 states

services since 1939 has. added the equivalent of the population
which composed the market for goods and services in 1939.

Gillen

(The "land mass" which extends into the Pacific Ocean, in the Drawing above, is all of the states west of the
Mississippi, plus Wisconsin, Illinois, Michigan and Indiana, drawn in reverse.)

Custodian

"These figures and other observations indicate that the average
has had an increase in real buying power since 1939 of at least

person

one-third.

Funds

This

population!

is

equvalent to adding 44 million people to our
Together with the actual population growth of 15 million,

there has thus been added to

Certificates of Participation in

year

INVESTMENT FUNDS
inventing tkelr capital

and

that

domestic market since the prewar

retired

N.

&

in

Buckley

Slee

Co.

Oct.

30.

in

ceased

Alex.

Nov.

&

Sons

Morris E. Goldstein will

be

under

Mr. Goldstein will act

as

Mississippi, plus the states of Illinois, Indiana, Michigan
Transfer of the membership of
Thus, we have a new economic empire.
It means the late William W. Lanahan to
current economic conditions, there is a 50%
greater Benjamin H. Griswold III will be
units of goods as compared with a decade ago."
(Quoted considered.
Mr.
Griswold
will

from Hugh H, Long's November "New York

BONDS

Letter."

continue

<5»>-

as

a

in

partner

Alex.

Brown & Sons.

(Series B1-B2-B3-B4)

Brodnax &

PREFERRED STOCKS
(Serie* K1-K2)

Knight, Inc.

COMMON STOCKS

Formed in

Birmingham

INC.

CSeriei 51-S2-S3-S4)

(Special

Capital Stock

Prospectus from
local investment dealer

to

The

Financial

the former firm of Post Brothers

of 75.

Prospectus

on

&

formed

Request

INVESTMENT MANAGER

AND

gage

UNDERWRITER

in

Officers

SO

Russell, Berg & Company

Congreu Street

'*

^

*

».

IT

*

'

offices

Bank

the
are

Inc.
in

.

—

is

securities

being

to

President; and R. W. Knight, Sr.
1

'

f

,r""^




,75 Federal

Street, Boston

.^TELEPHONE LIBERTY 2-9550

*

•

;

:
'

Mr.

Brodnax J

Gaines,

was

Brodnax

Knigftt'J5f

an

member of

Exchange, f

the

in

officer

Co.;

as

He

U.

by

for¬

was

Assistant

of the

the

to

S. Treasury,

officer of the Federal Re¬

Bank of New York and the

Trust Company of New
During the war he served

a

Lieutenant-Colonel

the

in

United States Army.

New

Cgo. Exch. Members

CHICAGO, ILL.—The Board of
Governors of the Chicago Stock
Exchange has elected to member¬
ship:

Frederick

H.

Mason,
Mason,
Chicago; William C.
Gibson, W. C. Gibson & Co., Chi¬
cago; Hunter Breckenridge, McCourtney-Breckenridge
&
Co.,
St. Louis, Mo.; Frank E. McDon¬

Moran & Co.,

With

the

admission

members, the Exchange

these

of

has

now

a

total of 171 member firms.

New

Ray. V. Edwards Opens
MASSAPEQUA,

(Special

to

The

Financial

Chronicle)

a

1

BOSTON, MASS.—Thomas G.
Ronayne and Werher W. Staaf

at

V.

Edwards

N.
is

Y.

—

Ray¬

engaging in

securities business from offices
Jetmore Place.

.

-

have become affiliated with Jack¬
son

T. U. Crumpton & Co.

States.

Special

an

mond

of

Mr.

Overby

charge of international finance,

Irving

.

With Jackson & Co.

&

Co.,

Ronayne
& ;

a

York Stock

business.

Mr.

Mr. Post before his retire¬

ment was

en¬

Broadnax,

United

Secretary

the First

Building

Marion J.

Brod¬

President; R. W. Knight, Jr., Vice-

Investment Counsel

Bxtea 9, MuiacktMlM
'

W

with

National

Keystone Company
-

Knight,

Fund.

Chicago.

&P Co. died at his home at the age

Chronicle)

BIRMINGHAM, ALA.
nax

or

of Boston

the

Henry Morgan Post, partner in

*

the

ald, Jr., Frank E. McDonald & Co.,

Henry M. Post Dies

-

RUSSELL BERG FUND

N.

is atpresent serving as Executive

con¬

individual dealer.

an

Andrew

1.

Transfer of the Exchange mem¬
bership of Herbert R. Hastings to
sidered.

International

has' announced

Deputy Managing Di¬

as

of

York.

Brown

the

Direclor of the Fund appointed

serve

from

Interest of the late W. W. Lan-

ahan

rector

and

withdrew

of

Fund,

appointment' of

Overby

merly

from

Oct. 30.

on

Board

the

Wisconsin.

demand for

IN

our

1939 the equivalent of the whole of the 1939 population living

west of the

James

of 26

Willet

partnership

Brothers
Growth !a die market for

S.

dissolved.

was

Carnille Gutt, Managing Direc¬
and Chairman of the Execu¬

tor

31

was

Milk Street.
Mr.
previously 'with

J. JL Goddard &
was

Co... Mr.

Staaf

with Bond & Goodwin, Inc. *

F. S. Beveridge

Opens

i

WESTFIELD, MASS.—Frank S.
Beveridge
curities

is

engaging in

business

-from

183 Western' Avenufe'.

a

offices

^

se¬

at

Volume 168

Number 4750

THE

COMMERCIAL

Economic Recovery of Britain

&

FINANCIAL

CHRONICLE

By W. C. H ADD ON*
Representative of the. Westinghouse Electric International Co.

Commenting on the guarded optimism in Britain during last few
weeks, Dr. Einzig ascribes it to Marshall Plan aid which will enable
United

Foreign trade executive* asserting international trade is key to high standard of living, denies our
export business is cause of inflation and denounces as falsehood ECA has made prices high. Defends\

Kingdom to balance its payments for current fiscal
Says danger is wave of optimism may go too far.

year.

LONDON, ENGLAND.—The clouds of gloom arid despondency
that settled over Britain after trie suspension of sterling
convertibility
in August, 1947 are lifting at least.
During the last few weeks a
feeling of guarded optimism began to manifest itself.
While until
recently most
pi

peo

e

turn

r e-

garded
grave

Britain,

of

time,
the
feeling
that

such

g

optimism

more

tend

been;

i

a

i

n

The

change
in

due

•was

p ar t

Dr.

the

to

Paul

Einzig,

bad

■publication

of
the Memorandum submitted to the
OEEC and to the ECA covering

the

economic

for

program

the

United Kingdom for the first Mar¬
shall Aid year. ; Its figures show

that,

allowing for

the

balance

twelve

of

1949, is

now

Marshall

ended

aid

substantial
further

there

it
was
spite of
,

would

be

a

deficit

fall

leading to a
the gold reserve.

in

On the basis of the official figures
it now appears that, after all, the

"gap"

may

disappear and the gold

stock

can

be

its

maintained

around

present

figure.
Indeed, the
figures of gold sales for the third
quarter of 1948 show that the out¬

flow has

slowed

down quite

siderably.

v

con¬
•

,

,

be

achieved,

said

to

have

from

the fact that but for Marshall Aid
there

would

be

gaping deficit.

a

What matters is that there

atitpresent

to

be

,

a

depletion
of * the
gold
reserve,
leading to a drastic curtailment of
the import of essential food and
materials.

raw

the
was

sion.

of

particularly

the latter

that

viewed with much apprehen¬
While it would be possible

effect

to

is

It

possibility

cuts

in

rations

of

the will to

outlook

is

without

grave

not only through causing
unemployment but also through
compromising the export drive.

crisis,

That

danger, anyhow, appears to

have

been

averted

for

the

Production

figures, too, show'
increases.
The
steel
output has reached the limit de¬
termined by the quantity of raw
gratifying

iron and scrap

available.>In other
directions, too, output figures are
Even

international political
viewed

now

exert themselves

with

less

amidst

the pre¬

vailing uncertainty.
Now it is
that, even though there may
be
frequent scares, actual war
may
not come, at any rate for
time.

There

inclination

to

.The

plans.

is

now

make

possibility

more

long-term
of large-

interfering with
economic
recovery
is not over¬
looked, but it is assumed that,

should it become necessary, there
would be a military Marshall Plan
to

supplement

the

civilian

Mar¬

shall Plan.

Internal

political developments

viewed

are

optimism.

with

somewhat

less

The prospects of steel
are causing wider-

nationalization

spread

uneasiness,

it

appears

that the govern*

ment intends to

apply the law by

now

May

1,

that

this

steel
the

especially

Apart

1950.
would

lead

from
to

a

as

fears

fall

in

output, it is also feared that

bitter fight between the gov¬

ernment and

Steel

and

effort

to

when
is

Bill

will

create

a

atmosphere and will be

detrimental

a,time

opposition about the

national

unity, at

combined

particularly

national

essential.

a

Frank C. Moore & Co.
Gerald F. X. Kane has been ad¬

mitted to

general partnership in

coal

The

housing

is carried out according
to
plan,
even
though
building
workers are deplorably slow and
the cost of building is unjustifi¬
ably high in consequence. So the
housing
shortage
is
subsiding
gradually. Other scarcities, too,
have disappeared.
It is now pos¬
sible to buy many kinds of lux¬
program

uries
since

which
the

were

unobtainable

*"

Gerald F. X. Kane

include




which

in

P

i f i

a- c

terranean

w. c. Haddon

and

Palestine.

Most

the

of

world

places

its hopes within the bold
framework of this leadership be¬
cause we have served notice that
evolution did not die in 177*3;

our

are

we

ciples

on

expanding its

every

front

prin¬

and

con¬

tending against the Russian revo¬
lution with the dynamic ideology
of

individual opportunity.

During
our

the

past

decades

position in the world

economy

diately

acknowledged by public
opinion.
Today we are the only
major power definitely committed
to the preservation of

a

free econ¬

based on private enterprise;
nation that expects responsibil¬

omy

they live.

difficult

seems

for

there

is

cause

we

of

for

room

no

people

responsibility,

ready

illusion

cannot shift the

for

not

or

international

be¬

burden

Whether we are
the mantle of

leadership,

are

we

age

ing and a
emerging.
grasp

tion

facilities.

We

has

been

about

for

failure

our

responsibilities
lack

our

to

sooner

information

of

day-to-day events and

the

full story behind the international
I

scene.

that

realize

we

have

theatres and
more newspapers than ttye rest of
mankind combined, but as a rule
these instruments indulge our in¬
more

written

not

for

because it

the

layman

A A quick- look
at a newsstand
shows us that leg art and excerpts

facts

automobiles,
than half
the refrigerators, half or more of

radio's,

its

We

rubber.

more

have

operated

with singular success under a sys¬
tem

of

best

"give and take" by which
individual, the best in¬

make

If Missouri can

other.

with each

New
England
and
can
sell
them
cheaper, the general public bene¬
fits and New England must then
shoes

good

as

as

to

We

by

sit

us

hydro-electric equip¬
have

this

in the

all

the

gadgets

world, yet many
midst of oppor¬

almost, if not quite, as
living as legs or Kinsey.

are

basic to

Foreign Trade—Key to High

way,

New

Dermott

Co., Inc.

&

York

City,

it

Peter

imaginitis, scarecoma and a

is
P.

an¬

Of

course,

selves,

we

in

must

to

our¬

remember

that

justice

as¬

Mc-

Co. and Luckhurst &

*An address by Mr. Haddon at
the World Trade Council Lunch¬

'f

eon,

"

Pittsburgh, Pa., Nov. 4, 1948.

investments
reached

a

abroad

have

now?,

high of $16 billion-

new

lion

industrial

iri

workers

this-?

country have jobs definitely de«
pending on exports.
,

Lack

of

knowledge

is particu-*

larly dangerous today because

our •

the past, the general public
took its time in acknowledging
In

the key to high
living, simply be¬

foreign trade
it

as

of

standards
cause

had

discovered

not

the

with most
of us aware of the good business
and the full employment brought
real facts.

about

by

ent

on

well-informed public to«
We are living .

a

in

a
world-community which? is
something like a frontiertown v

where

Even today,

exports,

we

lawless

elements

shoot up,

the place on Saturday nights and 4
the idea of unity becomes a matter

which

of

It

side

is

you

munity where

happen to be

the

not

kind

we

of

com¬

back

lean

can

hitching post and whittle.
it a community where we
take for granted the protec¬

on

a

Nor is
can

of

tion

locked front door, or

our

the

even

roof

We

room.

?over

living;

our

certainly livings
community?
where less Jhan one-third of our •
neighbors share our Western evo?
lution of experience, which rnearif
are-

dangerously in

that

a

two-thirds

knowledge
than

have

much

less

motives
have about theirs. A /
A

we

about

our

A trade union leader in Poland

motion picture which
passing shot of work¬
ers' automobiles parked outside a
witnessed

included

factory
nant.

a

a

and he was very indig¬
"Why," he demanded, "do

Americans try to fool the poor
Poles by pretending that ordinarv
American workmen
own
cars?"
In

like manner, many people in

a

our own

country exhibit a relative

lack of knowledge when they ob¬

ject to supplying other countries
with the machines and the tech¬

Standard of Living

fourths of the world's

half of its

c
-

sumption because of better prices;
and (3) that the Economic
Coop¬
eration Administration has made
prices high. Few realize that our

on.

radios,

more

three-

use

is

give it direction.

reason

our

is

order

world

new

ring inclination to watch from the from the Kinsey report are greater
sidelines.
eyecatchers
than
the
economic
Here, on 7% of the earth's land facts of life, even though these
with only 6% of the world's
population, we account for more
than 50% of the world's produc¬

trade

significant factor in this government is constantly sounding"
where old values are dissolv* out public opinion and is depend¬

difficult to understand

area,

export

the most

wa&>

recur¬

Many Americans

tnat

selves, preferred happy illusion to which returns annually $750 mil*
lion to investors in the Unitedreality until we were hit on the
head at Pearl Harbor.
Today States; or that more than V-k mil¬

newy-foreign policies, but, there vis
a

(1)

game

,

th®<Ameuican people do back,our
seriousTack of knowledge .about

beneve
a

for

ability to face unpleasant facts
international trade to be rather than lead us into an ac¬
borne by individuals rather than
ceptance of conditions
as
they
by states.
It is well for us to exist.
Radio programs are writ¬
project our strength in helping to ten with a minute hand in mind,
bind up the wounds of an injured and
newspaper headlines dreamed
world, but we must also remember up for people catching trains.
Of
to take up the slack between our
course,
enlightening information
avowed policies and our thinking is available for the curious
and
habits.
Our statesmen and diplo¬ the studious, but generally it is
mats are only as strong as the na¬
difficult to find because it comes
tion behind them.
Substantially, in unattractive packages and is

a

self-sufficiency.

';—

ancient myth of'

an

indulged in by a few op*
and portunists; (zj that American in-

ity for

international affairs and

origin to

neat
as that

so

bees,

which

on

One

two

has phanged so abruptly that na¬
tional policy is -not always imme¬

a

of

suc¬

a democratic system
to face unpleasant facts.
We, our¬

;

c

never

system

a

and

living under

general fearosis of living.

Mr. Kane's former

procity from countries

the

into the Medi¬

from

sociations

basis of reci¬

of

It

is¬

lands

management

their

of dustry
overlooks
the
domestic
example; market and earmarks large quan-.
governments and societies .tities of goods for foreign con*

ants

earth

Japan

the

and

govern¬

have always been of a makeshift
character and as variable as the

into

China,

come

sometimes

nical

Their

knowledge.
the

takes

tion

stand that

opposi¬
we

are

injuring our export market by;
setting
up
competitors abroad
The best answer, of course, is the
classic
example of
the Unites
States, which was a backward,
agricultural country in the 19th
century. Our great ability to pro¬

permit ourselves to be mentally
astray by distortions of the
truth which point to exports as

brought about by the investment

domestic econ¬

American market was the world'r

led

parasites

of

our

For

the

and

duce

of

example,

accusation

we

all have heard

that

inflation

for

single

respect.

In 1938, the United

billion worth
of goods and exported $3.5 billion,
or 4%.
In 1947, we produced $230
billion worth of goods and ex¬
ported $14 billion, or about 6%.
In other words, foreign inflation¬
demand on our. economy in
was
not greater than
6%.
The bulk of the pressure, or 94%,
was caused right at home by do¬
ary
1947

mestic demand.
Numerous Falsehoods

Numerous falsehoods

international

trade

the country, most of

are

about

our

flooding

them tracing

customer,

accounting

Regarding Americans

caused

States produced $84

Last year this

Foreign Misconceptions

the

any

ability to buy war

$7 billion worth of goods.

and

scarcity of materials is largely
by exports, but the facts
fail to substantiate this charge in

our

foreign capital.

best

omy.

.

nounced.

a

the

human

Eu¬

rope

only,

have

making

four-square

-

a

the

We

in

ceeded

tunity too scared to act; nervous
of a veto, frightened to death of
the atomic age which we have
made for ourselves, and suffering

home market

on

beyond

to

and

societies.

way
of
life
which extends

of

Frank C. Moore & Co., 42 Broad¬

imported

of

needed

some of the goods earmarked for
export had to be released for the

now

ment

or

r o m u 1

gators

has

race

lately to the business of

are
chief

the

now

ment.

part of the war.
This is due in part to the fact that

as they could not be
Besides, luxuries are

it

we

monicas

early

sold abroad.

like

we

not,

r

e

its Yankee ingenuity to
develop * some
other
activity.
Representing all this power, in¬
genuity and production, we face
a world which needs-all our prod¬
ucts
in
abundance
from
har¬

weather which tends to discour¬

absenteeism.

t h

e

human

'

^—a.

—-—■——T———^—.—•—

the

call upon

recovered with the advant of cold¬

age

W h

$

stage.

the best industries and
the best products emerge victori¬
ous.
We are constantly competing

output,
which
showed a
decline during
the third quarter of the year, has
er

tional *

vention,

Partner in

^

now

interna-

the

Kane

high standard of living.

a

formally assumed world leadership. For many years wev
have had the necessary mental and
physical equipment to handle such a responsibility*
but this potential has now become a
living reality as our statesmen take the center pf the*

was

felt

some

developing
The United States has

that

time

being.

satisfactory.

time Britain's pros¬

widely
considered as imminent, and many
people felt that it was futile to

class-war

a

confidence.

of the third world war

Iron

in

the

pessimism than a few months ago.
During the Summer the outbreak

terials

result

At

work, is subsiding.

Even the

major ill-effects, any curtailment
of production for lack of raw ma¬
would

production

drive.

little

a

the first

seems

danger of

no

the

export

need

For

been

altogether

apart

weaken

and

American investments abroad and denies present policy is to build
up our foreign competitors.
Says v
U. S. best weapon is powerful and perfected economic
machine, the most powerful instrument fori

p

too far and may

scale rearmament

Possibly the official figures may
err on the
side of optimism. Tn
any case, the deficit is being bal¬
anced partly by the liquidation of
some of the
remaining foreign in¬
vestments,
so
that
equilibrium
cannot

cham¬

pects of being able to pay her way
by 1952 are beginning to be taken
seriously.
This should help the
government in achieving an im¬
provement of the national effort.
Defeatism, which tends to weaken

31,

expected to be bal¬

recently
believed that in

Marshall

the

June

Until

widely

Aid,

payments for

months

anced.

wines,

moment, however, the recovery
from unmitigated gloom is pro¬
ducing a gratifying psychological
effect, as the British public was in

ground lately.-'
-

luxuries

(

brandies.

may go

to

drive

g

n

of

li¬

has

government

The danger is that the wave of

through'

has

coun¬

their trade with

French

as

other

and

import

pagnes and

,

ain will mud¬

once

the
the

censed

after all Brit-

dle

Moreover, in order

France

tries in balancing

a

matter

mere

assist

to

eco¬

nomic crisis

prepared to import Brit-?

are

ish luxuries.

a

17

Foreign Trade—A Case oi Give and Take

By PAUL EINZIG

the

(1969)

misconception

Another
our

way

■;[
about

of life was unearthed by ?
during a trip? to

Johnston

Eric

Here he met a cabinet

Norway.

minister who firmly

believed that;
oppressed

all American labor was
and

had

ment

chance for advance-?

expression of its griev¬
was surprised to learn
John L. Lewis had recently;
or

ances.

that

no

signed

He

a

contract

whereby the

miner would;
receive a basic wage of $4,000 per;
year, since his own salary as a
cabinet minister was only $4,50GC
Obviously, our neighbors need
more facts in order to analyze our
average

American

(Continued on page 35)

COMMERCIAL

THE

(1970)

*3

FINANCIAL. CHRONICLE

&

Thursday, November 11,-1948

Growth in Private Debts,.,

Blunt, Ellis & Simmons

Northern Trust Co. of

To Form New Firm
CHICAGO,. ILL.—John E. Blunt
R. Winl'ield Ellis have

3rd, and
resigned

By WILLIAM J. McKAY

Vice-Presidents

as

suggestion that the Canadian dollar be permitted to find its
own level on one free market appears to have fallen on fertile ground
north of the border.
This idea was the principal topic of debate at
As

Vancouver.

might

be

inasmuch

as

such

development

a

also imply the removal of

would

restrictions.
Al¬
though
some
objections
were
voiced on the part of the banks
trade

foreign

there

almost

was

complete

una¬

nimity in principle and the doubts

expressed

to the

confined

timing of

ex¬

an

Unsettled

of this kind.

periment

entirely

almost

were

world conditions and the fact that

completely
solved the problems of the chronic
not

has

Canada

yet

imbalance of trade with this coun¬

try, were among the reasons ad¬
vanced against any early action
in this direction,
-

is certainly

There

currencies

the

of

most

The establishment

of

the

of

purely artificial

at

one

the

levels.

.

of

bond

the

in New York,

markets

surprisingly

affected,

hand in view of Canada's current

recent

Richard W. Simmons John

Directors

losses

in

economic strength and unrivalled

Dominion is in a
unique: position to undertake a
bold experiment of this kind. At
the outset it is probable that the
of

exchange restrictions
give rise to a repatriation
movement
of
foreign
blocked

would

funds.

initial

On

would

hand

tend

investment

vent

any

of

free

a

other

the

widening of the exchange

discount
fresh

the

thus

pre¬

disorderly depreciation
Canadian

dollar.

Fur¬

thermore Canadian exports would
stimulated

be

at; the

further check

a

to

movement of the

In

any

.Canadian
in

every

eign

ration

as

with

those

of the

side

scale
regis¬

expected that the

border.

ket to follow the New York
reflected in

was

on

about the first of the year.

or

P. W. Brooks & Go.

Quackenbush

Offer Plywood Go. Bob.

Heads

W.

P.

Brooks

& Co., Inc., of¬
$500,000 Plywood
Inc. 5% sinking fund debentures
(with warrants to purchase 50,000
shares of common stock). The de¬
bentures, due Aug. 1, 1967r are
priced at 97% plus accrued inter¬

fered

Dominion Bank's Foreign

Exchange Trading Dept.

:

E. A.
Quackenbush has been
appointed an Assistant Agent, in

Nov.

The
the

8

Aug. 1, 1948.

proceeds from ^the

debentures

The
sure

both directions

conducted

would prove

to be

a

stimulus.

•

kind

would

still greater
i

receive

national

of

approval

the

the

wood

ucts
un¬

'<

Fund but it
would certainly be in accordance
with many of its avowed
purposes.

Foremost among these is the
moval of restrictions that

E.

Inter¬

Monetary

are

re¬
now

responsible for the maintenance of

A.

related

by

retail

announcement

I

to. The

NEW

Financial ;'Chrojvicle)

HAVEN, ;CONN.~-N;

ton

&

Co.,

C.

209. Church,- Street,

and

deemable

at

the

if redeemed

down

..

Andrew J. Arrant Joins
Paul A. Davis Co.
to. The

Financial

rant

has

Paul

A.

become
Davis

Chronicle)

associated

&

billion, about the

the national income

with

Co., Tng'raham

Building.
Mr. Arrant was: for¬
merly head of Ajax Corporation.

at

prices
to' par

Canadian Stocks

in

as

1923.

Imperial Oil Ltd.

INCORPORATED

TWO WALL STREET
NEW

YORK

5, N. Y.

,

%

,

Circular

on

Request

Charles Kino & Co.
Members-Toronto Stock Exchange

WORTH 4-2400

NY

1-1045

1

61

Broadway, N. Y.
Direct wire

WHitehall 4-8990
to

Toronto

of

acteristic

quickly mount should
fall.

"Changes in important segments

movement

of

the

The

omy.

partly

a

prices.

American

swings

in

econ-?

and partly an
swings in business and

Is

cessive?

private

What

debt

now

the

are

ex¬

economic

implications?

lion, having risen $22,4 billion in
1947 and

the

to

national

private debt is

in¬

$10 billion in 1946. Since
1947 all

the end of

have

"In relation
come,

the end of 1929 to the end of 1947.

are: On the latter date the aggregate
ef¬ of net private debt was $172 bib-

debt

cause

fect of the

risen

types of debt

further,

%

>

l

i

'I

i

■




*

)

>

■

i\

faster

some

and others slower than a year ago.

deal! The

good

figure of $190 billion given
is a rough estimate of the
ago.
The national income is now total now and is probably low.
running at the rate of $220 billion, The 'other' category plotted on
a
year, so that the agg/egate of the chart includes debt of uninr
less than in

the

of
the

1929

a

than

or

no

national

national

national
the

income

ratio

bil¬

$88

was

only $67 billion,
also

was

185%.

The

total of private debt could double

the

from
be

no

present figure and

heavier

in

relation

tionaftincome than in

above

than 86%, corporated
In 1929, other than

more

income.

income

10 years

lion; the ratio of private debt to
incomes was 185%.
In 1938, with

still

to

na-

ings

debt

than

the

is

even

above

less,

gest. \ '■" //

relatively,
sug¬

single-payment loans, charge ac¬
credit (doctors'

counts and service

bills, etc.)."

as

now

Angeles,
Cal.,
mining and
securities, are giving

Street,

Los

matches in a gay copperA slogan—"We Have
Trade
That Service Made"—

away

color cover.
a

hand, more than kept
with the rise in incomes.
public and private debt to¬

gether

6th

;

Kraft & Co., 530 West

dealers in unlisted oil,

on

other

pace

Striking Idea"

industrial

huge growth in public
distinct from private debt has,

Net

"A
Oscar F.

,

(

"The

the

and policy loans of life
companies.
Consumer
instalment credit,

includes

past

many

comparisons

banks to purchase or
securities, customers' debt to

brokers,

rates

the

debt

farm

real estate, borrow¬

insurance
debt

When the decline in inter¬
on. borrowings is taken
into account, the actual burden of
est

businesses,
on

from

carry

years.

such

as

interior

finish

strikes

the

strikes

a

eye

each

time

Oscar!

total close to $425 bib

one

clever,

Very

match.

v

MAJOR TYPES OF PRIVATE DEBT
I 92 9rl947
Billions

Billions

ofDotlore

ofOollof

NET CORPORATE DEBT

60

~

60

50

option

of

40

the

ranging from
before

after

Aug. 1,
Aug. 1,

SHORT TERM

LU*N

30

'v>

purchase

common

stock

of the

INDIVIDUAL

time on or before
July 31, 1952, at a price of $4 per
share

if purchased on
July 31, 1949, and at $5

before

or

per

30

bK

■.l*-—>■

company at any

ond

NONCORPORATE NET DEBT

40

40

7

share

thereafter.

Upon completion of this financ¬
ing capitalization of the company

$1,000,000 5% sink¬

URBAN MORTGAGE

30

mon.

30

V

X

ing fund debentures, 525;150 shares
of common stock, and
74,850 com
stock purchase warrants.

20

Jones and Smith Ara
OTNER

& Go,
-

10

10

-PHILADELPHIA, PA.—Norman
Jr., for

merly of? Van Alstyne, Noel & Co
have, joined Hecker & Co„ Liberty
Trust Building, members .of the
New York and

F>x<"banges,
sentatives.

r

are

record national Income

on

rising

and

downward

"factories,

B. Smith and Paul Jones,

,

ratios

a

would

and

20

A. E. AMES & CO.

It

over-emphasized, howr

of private debt are .of great interT
prices,
and? est.
The
accompanying
chart
in periods?
portrays the figures for the main
economic adversity, are char¬
categories, plotted annually from

perity

'The warrants entitle the bearer

will consist of

CANADIAN STOCKS

same

based

strong upward movement of
private debt in periods of pros¬

are

that the present

ever,

The

1966.

to

MIAMI, FLA.-—Andfew J. Ar¬
CORPORATION

cannot

be

the
now-

taken into account.

current

aggregated

to
retirement by
redemption through
the sinking fund at pot exceeding
102 V2%, the debentures are re¬

105%

(Special

especially when
extremely low interest rates

or

1957,

MUNICIPAL

low,

addition

Exchange.
GOVERNMENT
PROVINCIAL

total debt is still rela¬

The

building trade.

In

company

.

1938.

tively

manufacturers, public insti¬
tutions,^ lumber companies, and

members of the New York Stock
,

income is now about
195%, as
against 220% in 1929 and 270% in.

case

purchase

Hosking is with. Chas; W. Scran¬

cabinet

mills,
heavy
industrial
plants,
sign and display concerns, show

the

(Special

accounts,

and

architectural

according to an
today
from
the

bank's head office in Toronto.:

was

The ratio of total debt to national

outlets, woodwork¬

industrial

furniture

charge of foreign exchange trad¬
ing at the New York office of The
Dominion Bank,

close

three-

with $192 billion
$181 billion in 1938.

plywood and related prod¬

to

ing

Quackenbush

With Chas. W. Scranton

CANADIAN BONDS

and

items, and is
businesses
formerly
its
predecessors.
The company manufactures and
supplies both softwood and hard¬

•

qualified

for

continuing

border

It is doubtful whether action of

this

used

Plywood, Inc., incorporated in
1947, manufactures and sells ply¬
wood

the

be

of

working' capital and
may also be used for the acquisi¬
tion of standing timber or addi¬
tional plant facilities or both.

attracting

across

will

sale

additional

discount vis¬
one

and

the figure

ago

private debt is

ing of the stock-arbitrage rate.

capital funds
from this country
but there is
little question that the ability of
U. S. capital to move freely in
way

Chicago,

lead

further widen¬

a

total

to

Two

and

In 1929 private
$162
billion,
was the peak until recently.
In
1935
and
again in 1938 the
•figure dropped to a low of $125

firm

new

The failure of the Canadian: mar¬

essen¬

capital.

will form

will open for business in

encourage
the inflow' of for¬

S. dollar is

is

It

Dominion

a

Higginson Corpo¬

make application for membership
on the New York Stock
Exchange.

of

stage

development it is
way

U.

this

on

issues?

relatively small

Lee

for many, years,

est from

this

investment

of

a

comparison

tered

industrial

Cor¬

partnership under the name of
Blunt,' Ellis ■ & Simmons, to en¬
gage in a general investment and
brokerage
business, ' and
will

their

of

Higginson

a

rate.

Canadian dollar at
a-vis the

serve

excessive

any

event? at

tial that the

of

expense

imports and this would

in

on

most

with

ated

attract

to

and

were

held

the

the

prospects,

removal

base-metals

Blunt, 3rd

Hotchkiss, who has been associ¬

the

and

Lee

of

E.

poration and Richard W. Simmons
has
resigned as Vice-President.
They,
together
with
Eugene

spectacular gains and the

Oils

Western

estimated

billion.

compared

1929

only $140 billion.

little

considerable
justification for a cautious ap¬
proach at this time. On the other

larger sums
Net
private

before.

years

lion,

debts

the Canadian stock

were

for

which

serious break

Despite the

are

$190
quarter

individuals

and

debt

ever

to

though
offerings
continued
in
scant supply. The internals were
also in steady demand in sym¬
pathy with the firmness of free
funds.

in

now

debts

al¬

market

this, the

on

in

"Corporations

than

case

section

categories of private debts.

November

Commenting

war.

are

Canada now has an
exceptional opportunity to take a
long step in
the direction-of
greater freedom of the world's
exchanges and foreign trade.
During
the week
there was
persistent strength in the external
any

the

article states:—

rate of

exchange for the Canadian dollar
would also be favorably regarded.
In

up $50
before, it is still lower

ever

issue of its monthly bulletin "Business Com¬
ment," The Northern Trust Company of Chicago calls attention to
rapid rise in public debt since 1945, but remarks, despite the increase,
debts owed by individuals and corporations, in relation to national
income, is much lower than before <♦>-

ex- *

world

in
In

the recent annual convention of the Canadian Chamber of Commerce

ia

though net debt is

argues

higher than

than pre-war in relation to national income. Cites important changed

and

The

pected the representatives of in
dustry
were
unreservedly
in
favor of freedom of the exchanges

Chicago

billion since 1945 and is

Philadelphia Stock
as registered
repre

FARM MORTGAGE-

CONSUMER

7333

1.1

I

■

W'34

'36

Source: Survey of Current Business

Prepored

^38

0
'40

'44

42
-

by THE NORTHERN TRUST COMPANY-Chieooo

.

46
r

'

rt

•'

Volume 168 ' Number 4750

-

THE

.

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1971)

19

| j ■;

By ROGER W. BARSON

;

Noting recent price rises due to labor's refusal to increase produc¬
tion along with higher wages, Mr; Babson holds both labor and'

Mr.

management have erred and it is

-

is financial

labor

-

silly for management to sweat
demand; higher wage^ without reference

it is for labor to

as

"""

*'

•

""

to

as

ontpntr

.*.-•«———.«

—

purposes and accomplishments of ERP and asserts most
urgent need in Europe
stability. Decries nationalistic egonomy prevailing iri" Western-Europe-and calls for eco¬
integration, but does not expect political union can be quickly achieved. Proposes IL S. aid be:

nomic
-

———

McCIoy describes;

~

•

""btta*etl

ujTim

"

One of

great national headaches today seems to be getting our
production rolling and maintaining it at a-good level.
Daily'headlines
in our own newspapers read, "Carpet Manufacturers.
Announce Price
Increases to Offset Higher Costs of Materials"; "International Har¬

Ups£

Prices

On

Tractors,
Farm

Equip¬
ment"; "Meat
Prices
Rise

Due

B

o

Rates

o

t

s

"New

Car
A d

to

Further";

"Gas

e

d";

Ford

Prices
need."

v a

is

for

labor

to

expect

higher

wages; without reference to out¬
put.
Labor
and
management
have both erred.
their

rights.

living

They both have

Labor's search for
and

wage*

a

management's

for

quest

justifiable profits will
not be. ended,
however, by either
the stopwatch and the
slide-rule,
nor
by artificial restrictions and
formulae

I didn't
Bank

discuss with you some

the

result:

"Bank
c

o

Ac-

u

t

n

Trimmed

s

as

Cost of Living

Babson

Takes
Bigger
Chunk of Income" All because
ia*?
bor refuses to
up production

along

with

higher wages.

French
the

1

■ -

cabinets have fallen
by
over
the question of.

dozen

labor-management problems,

and

wage and

price controls. The Brit¬
ish Labor Government
in its at¬
tempts
to
increase
production

of

tion which
at

the

lated

The solution lies in developing
intangible traits of char¬

;

And when I speak of char¬

acter, I'm not thinking of Sunday
School goody-goodies either.
I'm

thinking of
which
the

makes

other

mean

and

attitude of fairness
it possible to see

fellow's

problems.
I
loyalty, sincerity
in one's work, giving

courage,

pride

full

an*

Character can't be

measure.

measured, but put to work, it re¬
sults
in
health,
prosperity and
happiness for all. -

along with wage increases has
become' the target of
sharp criti¬
cism

of

same

currents and

its

servable

world.

Trade

Unions,
eddies

throughout

The

The

the

Russian

entire

ideology

spreading too rapidly to other
tions.

This

with

creased

be

can

lower

is

na¬

stopped only
through in¬

prices

production.
The Easy, Life

The

recent

Trade

gress assembled at

land,

suggested

were

Unions Con¬

that

unionists

Marcus

Goodbody, senior part¬
ner
of
the
brokerage firm
of
Goodbody
&
Co., will ob¬

able reaction to another round
wage rises.
for years of

waiting

for

labor

isoaking

current

When will*

our,

that; the way
dilemma is not- by

the

and

similar

a

learn

their

wages

There is

America.

wealth;

workers

philosophy

leaders

of

of

therm when

gained control.
here in

of

They had; been told
the hoard

pernicious

out

rich:

further?

salaries

are

As,

/

increased,

production must likewise increase.
Otherwise, prices will be upped
that

so

year,

which

will

we

kill

the

geese

laying the* golden eggs,
.There is
something fundamen¬
are

tally wrong with
when

demands

our

for

moral fibre

one

hike

pay

as

of

o o

make

America great.

world

It

was

and

nineteenth

centuries.

Perhaps this desire for something
nothing.has been a potent fac¬
tor

in

Britain's

lesser role in

slipping' into

world

a

affairs.

for

When I

Increased

kid the good oldincentive
system was

was

fashioned
based

on

than

a

more

better work.
ter

Production,

for

pay

more

In return for

normal

be

joined

firm

turn

could

The employee in
to

buy

houses

shared

greater

gained.
became

Our
the

I realize

has

in

the

profits

productivity.

been

agements

the

in

the

of,

incentive

abused

by

living;
system

some

man¬

with hide-and-seek in¬

centive

hocus-pocus.
But most
employers today know that it is as
silly for them) to attempt to run

profitably by sweating labor




as

it

European
exchange .had
to, dangerously low Levels

other

Western

der

Marcus Goodbody:.

telephone boy.
Previously

he

one

a

year as

had worked for
clerk for the Great

Northern Railway Company in

St.

Paul; Minn., following his gradu¬
from

ation

stability. It is hard, to over-em-.
phasize the importance of this.
Production, trade and investment

possible

economic

coL

were

these

fully

of course;
vitaP as they

aware,

loans,

plished. Without it,
impossible.- *
•>

and

the

industrial
dislocations

governmental

Sheffied

the

School of Yale

Whon

Mr.

Scien¬

went, to

the firm, it had a total
employees and three par-

in addition

main, office and

York,; there

offices

are

employs

six

for

the

to

in New

branch

a

It clears

20

in

member

550

people,
is-; a' member off 19 principal se¬
curity and commodity exchanges.
This

some

afternoon

in

financial
row

will

there

be

a

the

honor.

office

for- his- friends

of

Mr.

in

the

community, and tomor¬

there

partners

will- be

and
At

luncheon

a

employees

the

of

in. his

luncheon,

Mr.

Eromett Lawshe With
Gar! M. Loob, Rhoades
Emmett Lawshe has become

as¬

Exchange firm of Carl M. Loeb,
Rhoades &

as

Manager of its bond,

department; it- is announced.
Lawshe* is

a

Shields & Co.

ensure the
production of essential goods,, to
increase the availability of* goods
for export and to pub European.)

on

the

trade

the

basis.

on

firmer and

a

more

stable

•

.

Economic Integration of Western

confidence! seepiing miracles
production
can? bel accom¬
is

recovery

Europe

t-

I

i

would

like

another
lieve to

-

matter
be

■

to

turn

which

now*

also

I

essential for

'

■

to

be¬

the

suc¬

far-reaching

necessity- fbr a*
integration, of the
the

scale far

is the liferblood of. the ERP coun¬

pean

tries1 economy; It pre fits little to

on

m

produce

world, the seriousness

former
"

partner
-

Mr.

of

cess

of ERP

—

the

.

of,

countries.

Western
.

Euro¬
•

I think we would all agree
that,
for many years, Europe has been

more'goods -unless they

be freely sold; in the; markets
world. Yet--we- -can * only

suffering from

the

tionalism.

The

an

of!

excess-

fact

is

na¬

that? tech-*

and'urgency of Europe's situation, progress from the refined barter
were
recognized by far-sighted techniques which still characterise
leaders of the United States and
too much* o£ intra-European. trade
as a
result of their efforts, com¬
and! reestablish/-itr on; a* healthy
bined with a really hopeful dis¬
multilateral, basis if confidence is
play of initiative and cooperation, restored I in • the
currencies
in
the

on

part of

the

Western

Eu¬

nological changes have outrun, tho*
development of political, institu-.
tions., The drive of nationalism
during the 18th and 19th.centuries*,
whatever its other drawbacks,.was
from an economic standpoint' a
which such trade is conducted.
unifying. influence, which stim¬
!
~
^
i The
prevailing lack ofv confi¬ ulated and strengthened' the ex¬
dence in European- currencies- is panding technical and
economic
forces of that era. The growths qt
perhaps rmosK dramatically
re¬
flected in, the .flight.of capital now
national
states
destroyed,
the

themselves, / the
European Recovery Program* was
brought into being. That program,
in my judgement,
happily com¬
bines

the

best:

qualities: of, the

American tradition

generosity,

—r

daring and realism.
.

,ERP has

for

a

to

us

has

now

program - and
of
which lie ahead.

is

believe,

to

culties
and

the

problems
.

•

tendency always. I
emphasize the diffi¬

a

of: every

great endeavour
to. minimize. the accomplish¬

ropean

already realized
judgment, quite remark¬

recovery

my

able. In fact; I. think it
be said that in most
countries

the

'both

ity

ments achieved; So let- me say at
the outset that the degree ofi Eu¬

is, in

+**

t

going on. The
are

There

been in operation

sufficiently long period* fop
begin to take stock of what
been
accomplished by the

There

-

B

countries

fairly

can

European

emergency

recon¬

struction phase is over. Industrial

be-

of

causes,

political

can-

#

war

level.

Transportation

facilities have,

power

been restored.
tural

And

production

in general}

even

is

and

agricute

rapidly

*Anbefore
of the

address

by-

im-

Mr." McGloy

the 55th> Annual, Meeting
Savings Banks, Association

of the State of New

York, Atlantic

City, N. J., Nov. 6, 1948.

remnants

course,

fettered

economic.

and

financial!'stabil¬

no*

broke

in

the absence of sound fi¬
nancial .policies, but there can also
be

implications. Ttr isn't

necessary,- of
that all political tensions

before

removed

,

cam

we

take

j

which

down,

trade; it
j
provincial barriers |

marketsj

the

has such direct and'vital economic

be

feudalism

major European countries; it j
the petty principalities <u
of Germany and Italy; and its irm-j
perialistic extensions, while: pro*
j
ducing grave
political
tensions
j
and
social
injustices,
at
least..
helped to promote the. expansion 1
of Western technology into un-j
developed areas of the world.
J
abolished

stability' without
confidence on
the
part of- the
people, in the political future of
thein country? This explains why
the
problem of military guar¬
antees, now so widely discussed,

course,;

of

production and

and; widened domestic

financial

no

'

But,

today

ionalism

firm constructive steps in the eco¬

rather

nomic field, but the minimum

the

seems

effect

to

be

of

nat¬

divide

to

economy.

must have, is

there is not
war

is

The

a

a*

we

situation in > which
-

common

belief that

inevitable.
financial, policies

controls to

than

to unify the world
The techniques of mass
production and mass distribution^
that

make

Belgium

essential
production in
all
of; the major for stability are both simple and
Western European nations, except1 well understood. They involve a
Germany and Italy,, has closely balanced governmental budget; or;
approached or exceeded the pre¬ preferably, even a surplus; credit

Co., 61 Broadway, New

York

City,

overfall' volume- of*

economies

.

reception

market;

I Equally
important, - financial
stability ismecessary for the free
fjlow -of. inter-national, trade, which

ropean

University.

Goodbody

Today,

ners.-

increase' the

such

*

tific

for the/

production, but also to

money they receive
thmrrgoods.or services; Given,

of

trade

markets

the

fbr

of

to

brief, restoration of financialstability is necessary, not! only to.

un¬

,

foreign

in*-

In

of* millions; of' individuals. A pre¬

value* of

•

no?

manufacturer

mechanisms of the

less they are translated into, action
through the efforts and initiative

part of. the businessman,
fSarm'er and the laborer in

'

permit of realistic, prico
readjustments through the normal

no* matter howl well; con¬
ceived, on the ^ national or- inter¬

the

-

which

,

requisite for that- is conf idence

and

to

the

that

all

can only be remedied
by creating
conditions of monetary stability

plans?

lapse.

is

goods*non-essential;

for

and

sale of his products. This situation

j Perhaps the most urgent need

tries

result

strong that there is

so

of

essential

more

demand

centive. for

ih Europe r today;, is? for financial

national level, are .worth, little

prices

diversion

essential

look

Hemisphere
countries had
largely; been J ex¬
hausted. They served, P believe,
their intended purpose of helping
to prevent a disastrous drop in. the
production of-the borrowing coun¬

free

at
a

is

production, prob¬

.

Europe Needs Financial' Stability.

can

and

clerk

domestic

.

df

sociated: with the New York Stock

world;'

when

of dollar

sold

cause

both

to more subtle.- but; equally
essential, financial issues. •

necessary. Fortunately for Europe

Everyone

standard

best

of

time

a

resources

lems

and for the

and furniture for cash because he

had,

at

came

urgency

be

can

which

the; production of
items. The second

The emphasis and
have shifted: from

pjurely: physical-

or¬

daily

afford

1947, we made a series
European
loans —
to
France,
the
Netherlands, Den¬
mark and Luxembourg — aggre¬
gating $497, million. These loans
of ; four

the

as an

output, a* Goodbody will present gifts to the
worker was given extra financial
13
employees with 25" years or
inducement.
It was this greater
more service.
output that brought about more
goods at lower prices which;found

bigger markets.

of

summer

same

non-economic products

beyond anything the bank could
conceivably afford was clearly,

when

or

bet¬

a

and

pated. Financial: aid

business
1898

Goodbody
Need

spring,

securi¬

firms,

for.

the

in

leadership during the eigh¬

teenth

construction., In

the

/

•

started-

cities.

for

"'v

■

the

now

but

two years- ago.

John J. McCIoy
-

since

Britain's

responsible

re-

not

are

which

items they were "a; year or

tion

work,for

not

European1

1902,-

of five,

not

of

purposes

n e r

only of shorter hours, longer

cations, less production, and more
pay;
That kind of thinking did

drucial'

have been for

by the war left a far*wider
crevice in Europe's
economy than
any but a very few had antici¬

after another follow with
thought
va*

date

caused

in

manu¬

labor, materials and power,fromv!

to

and

ties

the

knicknacks

bottlenecks

loans

been

the

on

ashtrays,

bank

the

physical devastation, the disrup¬

part-

of

granted by the

body, who has
a

premium is placed

facture

labor

and5 other

rpore

were,
provided only
a { partial
solution to Europe's problems. The

d-

a

and more transport
Would
unquestionably
increase
production Substantially-. But these

that

the firm.
Mr.. G

of

most

doubtless-

We

a

e r

b

can use to buy;
rationed commodities. Two results
flow from this. The first is that*

was not enough labor
enough- transport! Today there
ik still far from a surplus of these
items, and more coal; more* steel*

dr

know, most of

today

m e m

ture

ajnd there

area.

and

50 Years in Wall SI.

bitterly

disappointed over
Labor Government's unfavor¬

the

Goodbody

his f i f t i.e t h

Margate, Eng¬

t vital

a

"ashtray
With the price struc¬
maladjusted and prices of
essential items rigidly controlled
in many
countries, people fre¬
quently
have
more
money
to

economy."

creased recovery were specific
physical* bottlenecks. There werecjritical shortages in coal and steel, spend than they

observations
in t h

what has been called the

pre-war

....

ago-—even one year
major obstacles to* in¬

ago—the

Dperations and

and credits from the United States

Marcus

serve

ajverage.
j Two years

re-

a

towards •; the'

proving

of'our

fallen

ob¬

are

we

bank

as

11

su

As

certain
acter.

today tosgive you a sales talk about the virtues of the International
Rather, % came in response to an invitation from your President) to
of the views with respect to the present European
monetary and ecc<£-

have formu¬

you

Character

situa-

nomic

legislation.

Importance

here

come

of its bonds.

or

cLayjt.WnrJfLRanLwilL«upplem<mt ERP aid by concentrating
are good.
..........

specific projects where prospects. o£repayment

on

And here's

Roger

'seif-herp a§~"Weit~«j5 Httdy

our

vester

,

By JOHN Jt MfcCLO¥*'

President; Internajtional Bank for Reconstruction and Development

that the bank¬

within

market

or

France

Kingdom,

as

and:

within?:

area

Sweden,

or

the

inadequate

even?

United*:

for

to-}[

day's purposes as, say, the 19th? ?
century kingdoms of Saxony ord
Sardinia were in their day.

More-;|

the idea of nationalism it
ing system does not create exces¬ spread out from Western Europe:
sive
means
of
its
emphasis changed; it begani,
payment;
.and
appropriate price* and wage ad¬ to- be- directed less toward; the;
justments
so*;
that goal of integrating a group of in-|;
internally
productive resources are not di-i dependent or loosely-knit states?;
verted into non-economic output
into an economically sound unit: i
and* more
toward giving every
as
a
result of -price maladjustethnic
group
ap
independent d;
dientSr. '
, In this connection,,it:is interest¬ sovereignty, each with its separate [
(Continued on page 34)
ing to note the development of
ensure

.

qver,

as

18

THE

(1970)

&

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, November 11, 1948

Growth in Private Debts

Blunt, Ellis & Simmons

Northern Trust Co. of

T<t Form New Firm
CHICAGO, ILL.—John E. Blunt
R. Winl'ield Ellis have

3rd, and
resigned

By WILLIAM J. McKAY

Vice-Presidents

as

than pre-war in

suggestion that the Canadian dollar be permitted to find its
on one free market appears to have fallen on fertile ground
i-orth of the border.
This idea was the principal topic of debate at

In

level

currencies

the

of

purely artificial

establishment of

the

the

levels.

The

inasmuch

exchange for the Canadian dollar
would also be favorably regarded.

such a development
imply the removal of
foreign
trade
restrictions.
Al¬
though
some
objections
were
voiced on the part of the banks
there was almost complete unawould

as

also

unity in principle and the doubts
were
almost entirely
confined to the timing of an ex¬
periment of this kind. Unsettled

i

expressed

world conditions and the fact that

Canada

has

not

completely
problems of the chronic

solved the

yet

imbalance of trade with this coun¬

try,

the

among

were

vanced

against

ad¬
action

reasons

early

any

in this direction.
There

In

section

of

pathy
funds.

Despite

in New York,

Land in view of Canada's current

recent

Dominion is in a
unique position to undertake a
bold experiment of this kind. At

surprisingly

the outset

it is probable

that the
exchange restrictions

of

would give
movement

held

the

in

the

and

most

their

of

spectacular gains and
in
on

industrial

the
a

with

issues,

those

of

side

this

on

the

relatively small scale

comparison

tered

little

the

regis¬
border.

The failure of the Canadian

a repatriation
foreign
blocked

of

On

other

initial widening
discount
would
fresh

any

of

free

a

the

of the exchange
tend

investment

vent

hand

thus

pre¬

disorderly depreciation
Canadian

dollar.

Fur¬

thermore Canadian exports would
be

stimulated

at; the

expense

imports and this would
a

further check

movement

In

any

to. any

of the

serve

of
as

excessive

Quackenbush

Heads

Dominion Bank's
E.

Quackenbush

A.

has been
Assistant Agent" in

an

rate.

event at

this

stage

of

.Canadian

development it is essen¬
tial that the Dominion encourage
in every way the inflow; of for¬

eign

investment

Canadian dollar at
a-vis the
way

of

U.

one

Directors

Lee

of

Blunt, 3rd

E.

Higginson

Cor¬

Hotchkiss,

who has

with

ated.

ration

associ¬

been

Lee

Higginson Corpo¬
many, years, will form

for

partnership under the name of
Blunt)' Ellis
Simmons, to en¬
gage-in a general investment and
brokerage
business, ' and
will
a

make

application for membership

on

the New York Stock Exchange.

It

is

expected that the

kind

qualified

would

receive

approval

of

the

the

un¬

Monetary Fund but it
would certainly be in accordance
with many of its avowed
purposes.
Foremost among these is the re¬
moval of restrictions that are now
responsible for the maintenance of

E.

A.

Quackenbush

charge of foreign exchange trad¬
ing at the New York office of The
Dominion Bank,

according to an
announcement
today from
the*
bank's head office in Toronto.;

(Special

to

The

Financial

] Chronicle)

NEW HAVEN,
CONN.—N; C.
Hosking is withChas. W. Scran¬
ton
&
Co., 209 Church.: Street,

members

of the New York

Exchange.

,

Stock

.

W.

& Co., Inc., of¬
$500,000 Plywood
Inc. 5% sinking fund debentures
(with warrants to purchase 50,000
shares of common stock). The de¬
bentures, due Aug. 1, 196.7, are
priced at 97% plus accrued inter¬
est from Aug. 1, 1948.
The proceeds from*'the sale of

fered

Brooks

Nov.

8

debentures

Andrew J. Arrant Joins
Paul A. Davis Co.
(Special

MUNICIPAL

Will

be

for

used

related

and

items, and is
businesses
formerly
by
its
predecessors.

architectural

to. The

Financial

Chronicle)

rant

has

Paul

A.

become
Davis

associated

&

Co.,

*

with

Ingraham

Building.

Mr. Arrant wa£ for¬
merly head of Ajax Corporation.

and

interior

finish

mills,
industrial
heavy
plants,
sign and display concerns, show

was

was

1035

In

In 1929 private
$162
billion,
the peak until recently.

and

again in 1938 the
'figure dropped to a low of $125
billion, about the
The

downward
of

acteristic

The

omy.

partly

a

are

record national income

quickly mount should

on

"Changes in important segments

of pros¬

of private debt are .of great inter¬
and; est.
The
accompanying
chart
periods- portrays the figures for the main

prices,
in

movement

of

ratios

present

a

would

and

movement of

rising

economic

based

It

in 1923.' the national income fall.

same as

strong upward

taken into account.

are

be over-emphasized, how¬

that the

ever,
i

the
now

adversity,

are

char¬

categories, plotted annually from

American

the

econ¬

the end of 1929 to the end of

swings

in

debt

are

On

the

latter

the

date

1947.

aggregate

and partly an ef¬ of net private debt was $172 bilv
swings in business and lion, having risen $22.4 billion in
Is private debt now ex¬ .1947 and $10 billion in 1946. Since
cause

fect of the

prices.
cessive?

What

the

are

economic

the

implications?
"In

relation

the

to

in¬

national

come, private debt is a good deal
less than in 1929 or than 10 years

The national income is

1947 all types of debt

end of
risen

have

further,

faster

some

and others slower than a year ago.

The

figure

above

is

$190

of

given

billion

rough estimate of the

a

is probably low.
category plotted on
the chart includes debt of uninr

corporated

of

the

the

no

national

national

than 86%

more

income.

income

now

In

1929,

$88 bil¬
lion; the ratio of private debt to
incomes was 185%.
In 1938, with
national

the

income

ratio

was

only $67 billion,
also

was

185%.

The

total

and

now

'other'

The

other than

businesses, farm
on

debt

real estate, borrow¬

banks to purchase or
securities, customers' debt to

from

ings
carry

brokers,

and policy loans of life
companies.
Consumer
instalment credit,

insurance

includes

debt

total of private debt could double
from
be

the

no

single-payment loans, charge ac¬
figufe and still counts and service credit (doctors'

present

heavier in

relation

to

na-

bills, etc.)."

tionailincome

than in many past
years.
When the decline in inter¬
est rates on borrowings is taken
into account, the actual burden of
the debt is even less, relatively,
than

the

above

comparisons sug¬

Oscar F.

"The

huge growth in public
distinct from private debt has,
other

hand,

as
on

than

kept
pace
with the rise in incomes.
Net public and private debt to¬
gether now total close to $425 bil¬
more

Kraft & Co., 530 West

Street,
Los
Angeles,
Cal.,
dealers in unlisted oil, mining and
6th

industrial

gest: '

the

"A Striking Idea"

\

securities,

are

giving

in a gay coppercolor cover. A slogan—"We Have
a
Trade
That Service Made"—
strikes
the eye each
time one
matches

away

strikes

match.

a

Oscar!

Very

clever,

'

«

Billions

NET COR

ORAT

of Potior »

DEBT

60

60

building trade.

In

addition

to

50

retirement

by
through
the sinking fund at jnot exceeding
purchase

102V2%,

redemption

or

the

deemable

debentures,
the
option

at

are

re.-

40

of" the

company at prices ranging from
105% if redeemed before Aug. 1,

down

to' par

after

Aug.

1966.

1,

SHORT TERM

i
50

30

V>

*.

The warrants entitle the bearer
common

stock of the

time on or before
July 31, 1952, at. a price of $4 pershare if purchased- on or before
July 31, 1949, and at $5 per share

INDIVIDUAL and NONCORPORAT E NET DEBT

company at any

40

40

7

thereafter.

Upon completion of this financ¬
company

will consist of

$1,000,000 5% sink¬
ing fund debentures, 525,150 shares

Canadian Stocks

1929^1947
of Dollors

manufacturers, public insti¬
tutions,- lumber companies, and

ing capitalization of the

canadian stocks

MAJOR TYPES OF PRIVATE DEBT
Billions

case

to purchase

MIAMI, FLA.-^—Andfew J. Ar¬
CORPORATION

The total debt is still rela¬

tively low, especially when
extremely low interest rates
cannot

plywood'and related prod¬
ucts to retail outlets, woodwork¬
ing industrial accounts, such as
furniture
and
cabinet
factories,

1957,

GOVERNMENT
PROVINCIAL

1938.

close

three-

running at the rate of $220 billion
year, so that the agg/egate of

& Co.

Offer Plywood Co. Bob.

the

With Chas. W. Scranton

CANADIAN BONDS

is
now
about
195%, as
against 220% in 1929 and 270% in

wood

Inter¬

national

income

private debt is

W~ Brooks

P.

The company manufactures and
supplies both softwood and hard¬

It is doubtful whether action of

this

and

compared with $192 billion
and $181 billion in 19381

1929

current

firm

new

will open for business in Chicago,
on or about the first of the year.

wood

border

Two

debt; in periods

Eugene

.

Plywood, Inc., incorporated in
1947, manufactures and sells, ply¬

greater

estimated to total

billion.

and

conducted

the

still

before.

perity

both directions

a

"Business Com¬

The ratio of total debt to national

larger sums
Net
private

private

with

together

continuing

across

for

They,

capital funds
from this country but
there is
little question that the
ability of
U. S. capital to move freely in
would prove to be
stimulus.

lion,

individuals

and

debt

poration and Richard W. Simmons
has
resigned as Vice-President.

working' capital and
also be used for the acquisi¬
tion of standing timber or addi¬
tional plant facilities or both.

attracting

this, the

aggregated

which
Richard W. Simmons John

may

sure

monthly bulletin

only $140 billion.

additional

discount vis¬

a

S. dollar is

its

debts

the

The

capital;

on

quarter years ago the figure

P.

Foreign

Exchange Trading Dept.
appointed

are

$190

ago.

ing of the stock-arbitrage rate.

in

now

ever

to

lead

further widen¬

a

attract

to

and

reflected in

of

in

"Corporations

debts

mai>

ket to follow the New York
was

*

than

rise to

funds.

were

Oils

Western

the

prospects,

serious break

the

the Canadian stock

were

base-metals

losses

firmness of free

with the

justification

economic strength and unrivalled

al¬

market

though
offerings
continued
in
scant supply. The internals were
also- in steady demand in sym¬

affected,

removal

bond

the

Commenting

war.

are

case

certainly considerable

for a cautious ap¬
proach at this time. On the other

.

Canada now has an
exceptional opportunity to take a
long
step
in
the direction
of
greater freedom of the world's
exchanges and foreign trade.
During the week there
was
persistent strength in the external
any

markets

is

one

issue

Northern

article states;—

of

rate

favor of freedom of the exchanges

November

The

up $50
before, it is still lower

ever

Trust Company of Chicago calls attention to
rapid rise in public debt since 1945, but remarks, despite the increase,
debts owed by individuals and corporations, in relation to national
income, is much lower than before<^-

the recent annual convention of the Canadian Chamber of Commerce

in Vancouver. As might be ex-<;
pected the representatives of in¬ most of
dustry
were
unreservedly
in world at

the

ment,"

though net debt is

argues

higher than

relation to national income. Cites important changed
in categories of private debts.

and

The

own

Chicago

billion since 1945 and is

of

common

mon,

stock

UR8AN MORTGAGE

X

30

30

V

X

stock, and 74,850 com¬
purchase warrants.
20

A. E. AMES & CO*

ial Oil Ltd.

INCORPORATED

& Go.
Circular

TWO WALL STREET
NEW

YORK 5,

N. Y.

on

Request

NY

1-1045




:

PHILADELPHIA

10

10

PA.—Norman

B. Smith and Paul Jones, Jr., for

Charles King & Co.
Members r Toronto Stocfc .Exchange

WORTH 4-2400

20

Jones anil Smith Are

61

Broadway, N. Y.
Direct wire

WHitehall 4-8930
to

Toronto

merly of Van Alstyne, Noel & Co.,
have, joined Hecker & Co., Liberty
Trust Building, members .of the
New York and

Philadelphia Stock
as registered -repre

Exchanges,
sentatives.

-

1930

'32

'34

'36

Source: Survey of Current Business

Prepored

38

'40

42

.

by THE NORTHERN TRUST COM PANY-Chicago

'44

'46
t.

Volume

168

Number 4750-

•

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1971)

10

Wages and Production
By ROGER W. BABSON

By JOHN J; MfcCLOY*-

.

Noting
tion

recent price rises due to labor's refusal to increase

along with higher

Pfesidenfr, International Bank for Reconstruction

produc¬

Mr; Babson holds both labor and'

wages,;

Mr.

McCIoy describes

and

Development

amd accomplishments of ERP and asserts most urgent need in Europe
management have erred and it is as silly for. management to sweat
is financial stability. Decries nationalistic
economy prevailing in Western Europe and calls for eco*labor as it is for labor to demand! higher
nomic integration, but does not
wage^ without reference
expect political union can, be quickfy achieved. Proposes IL S. aid, be
-|0~ output;"
•^based u^oh sell-Help as welTar need,/and says World Bank will
r —
:
supplement ERP aid by concentrating
One of our great national headaches
today seems to be getting^bur
on specific projects
where prospects, of repayment are good.

-

purposes

*—

t

production rolling and maintaining it at a good level.

Daily headlines

I didn't

in

our own newspapers
read, "Carpet Manufacturers. Announce Price
Increases to Offset Higher Costs of Materials"; "International Harvester Ups®

Prices

On

Tractors,
Farm

Equip¬
ment"; "Meat
Prices
Rise

Due

Further";

"Gas

Rates

Boost
P

a r

A d

c e s

need."

v a

the

result:

"Bank
o

A

u

c-

t

s

n

Trimmed
Roger

as

with higher wages,
,
<
French cabinets have fallen
the

over

tempts

with

wage

currents and

servable

world.

eddies

throughout

The

The

the

Russian

ob¬

are

entire

ideology

This

with

creased

be

can

lower

is

production.

!

Importance

The

recent

Trade

School jtjV/VVlj gVV/VAlViJ vlv^ivi •
goody-goodies either.

suggested

were

the

other

Unions

able reaction

to

rises.

They had; been told

of the hoard

years

of

waiting for therm when
gained control. There is
pernicious
here in
labor

America.

soaking

workers
current

that

the

dilemma: is

the

wages and

similar

When will-

learn

their

wealth,

a

philosophy

leaders

of

out

our.

way

not

by
further?As

rich:

salaries

are

increased,

production must likewise increase.
Otherwise,) prices^ will be upped
that

so

which

will

we

are

There

is

kill

the

geese

laying the golden eggs.
something fundamen¬

tally wrong with
when

demands

our

for

moral fibre

one

thought

only of shorter hours, longer

va¬

cations. less
production, and more
pay.
That kind of thinking, did.
make

not

America great.
It was
for
Britain's

responsible

world

leadership during the eigh¬

teenth

and

nineteenth

centuries.

Perhaps this desire for something
nothing has been a potent fac¬

for
tor

in

Britain's

slipping

into

a

Need

for

When I

Increased
was

fashioned
based

on

than

worker

a

more

Production

kid the good old-

system was
pay for more or

In return for

normal,

was

that

bet¬

a

daily output,

a

given extra financial

inducement.

output

I

of

ner

Goodbody

&

will

ob¬

today

the

as

It

was

brought

this

greater
about more

of

greater

I

has

the

profits-

productivity.

gained.
became

in

Our
the

realize

been

Everyone

standard

best

the

of

in- the

by

living,

worlcL'

incentive

abused

of

but

bottlenecks

labor,

the

loans

to

date

have been for

cjrucial'

of

purposes

European-

re¬

construction.

In

the

spring .and
1947, we made a series
European
loans —
to
the
Netherlands,
Den¬

of

summer

four

France,

.

and

Luxembourg — aggre¬
$497 million. These loans

gating

at

came

time

a

when

European

of dollar exchange
.had
dangerously low; Levels

to

had

.

to prevent a disastrous drop in. the

production of-the borrowing coun¬
tries and possible economic col¬
lapse.
were

trade

and

the disrup¬

the

governmental

industrial

dislocations

since

by the war left a far wider
crevice in Europe's economy than

started*

any

in

securi¬

pated. Financial aid

business

in

1898

lie

Marcus

one

worked

had

he

....

year as a

for

clerk for the. Great

Northern Railway Company in Sti

Paul; Minn., following his gradu¬
from

ation

tific

work

Mr.

Scien¬

Sheffied

the

School of Yale

When

went

to

the firm, it had a total
employees and three par-

in addition

Today,

ners.,

a

antici¬

had

few

very

on

a

scale far

the

to

result

of

their efforts, com¬
really hopeful dis¬
play of initiative and cooperation
on
the part of the Western Eu¬
a

bined

with

a

countries themselves, the
European Recovery Program? was
brought into being. That program,
in

judgement, happily

my

bines

the

com¬

best;

qualities- of} the
American tradition
generosity,
daring; and realism.

cities.

six

for

20

member

550 people,
principal se¬
curity and- commodity exchanges.
is

a-

employs

in"

offices

are

It clears

firms,

branch in New

a

This

there

will

in

for. his, friends

the

there will- be

be

of

office

financial community,

partners
honor.

a

13-

sufficiently long period* fori

a

and* employees
the

At

in

luncheon,

employees

with

25

years

and

There

is

believe,

to

luncheon

a

-

of

his
Mr.

or

service.

-the

problems

tendency

always, I
the diffi

of

which lie ahead.

the

and- tomor¬

been in operation

now

to begin to take stock of yhat
been
accomplished by the

Mr.

in

Goodbody will; present gifts to the

more

us

has

program

afternoon

reception

row

for

some

oL 19

member

ERP has

,.

a

emphasize

culties of every great endeavour
and to. minimize the accomplish

in

all

of:

me

Germany

as-

sociatedfwith the New York Stock

Exchange firm of Garl M; Loeb,

man¬

the

major

and

approached
war

level.

power

or

Italy,, has
exceeded

closely

the

Transportation

facilities have,

been restored.

And

pre¬

and

in general*

even

agriculJ-

Rhoades & Co., 61 Broadway, New

agements with hide-and-seek

in-

centive

York

City,

as

Manager of its bond,

hocus-pocus;
But most
employers today know that it is as
silly for them; to attempt! to run

department} if is announced.

profitably by sweating labor

Shields &t Co.

^

as

it

Lawshe- is

a

former

partner

tural

*An

before

Mr.

of

that

of

f

power, from"-

more

essential
is* that

3

goods,
essential and non-essential;
strong that there is no; in-

both
is

diversion

a

so

*

The

demand

for

foreign

to

result

second

the

for

all

manufacturer

to

for the

markets

sale of his products. This situation,

S Perhaps the most urgent need
ih< Europe: today is: for financial
stability. It is ,hard,., to over-em¬
phasize the importance of this.

only be remedied by creating
of monetary. stability
which permit of realistic price
readjustments through the normal

Production, trade and investment
plans, no- matters how well; con¬
ceived: on the national on 'interrtational leyel, are .worth, little unlfess they are translated into, action
through the efforts and' initiative

mechanisms of the

r

.

of millions; of individuals. A pre¬

requisite for that- is confidence on
the part of the businessman,? the
farmer

the

and

laborer

in

the

of the money they; receive
thedirgoods.or services:. Given,

can

conditions

,

market:

In

brief, restoration of financial
stability is necessary, not! only. to.
increase

the overfall volume o£;
production, but also to. ensure the
production of essential goods, to

increase the availability of goods
for export and to put European
trade

on a

firmer and

stable

more

basis.

valtie
fbr

Economic Integration of Western

confidence! seeding miracles

production, can't be- accom¬
plished. Without it} recovery is
impossible. - •
•
tV
■

j Equally

important, •' financial

Europe

•>

I

,

would

another matter
lieve

stability is: necessary for the free

economies

is the life-hlpoci of

pean

the,- world.

Yet-

we

can

only

andrreestablishi it-

on:

a

healthy

multilateral basis if confidence is
restored /in} • the
currencies in

Irade is

which such
1

conducted.'

prevailing; lack ofv confi¬
European currencies• is
r most
dramatically-; re¬
flected in, the .flight.of capital now
in

perhaps

The

going
are

on.
'both

There

causes,

political and

can

be

no^

I

of

we

the

Western
.

be¬
suc¬

Euro¬
-

..

would all agree that,,

for many years,

Europe has been

suffering from
tionalism.

the

the

countries.

I think

also

for

■

The

an

fact

excess-

is

off

na¬

that; tech¬

nological changes have outrun, the,
development of political institqtions.. The drive of nationalism,
during the 18th and 19th centuries*,
whatever its other drawbacks, was
economic standpoint; a
influence, which stim¬
ulated and strengthened' the ex¬
panding technical and economic
forces of that era. The growth* o£
national
states
destroyed
the j
from

an

unifying

The

dence

which

•'

to

now

necessity fbr a
integration, of1«, the

—

far-reaching

flow -of. international, trade which

the. ERP coun¬
It pre fits .little to

turn;

be essential

to

of ERP

cess

to

like

of course,
economic.

financial stabil¬

remnants

of

feudalism

which

production and trade; it
down, provincial
barriers

fettered

broke

t

j

!|
ire/

the absence of sound: fi¬
nancial .policies, but there can also
be no financial stability without
confidence
on
the part of- the

and. widened domestic markets*

people in the political future of
thein country; This explains why

perialistic extensions, while: pro* j
ducing grave
political tensions/*
and
social
injustices,
at
least ;

ity

in

the

problem

of, military

guar¬

antees, now so widely discussed,
has such direct andwital economic

the

major European countries-; it jthe petty principalities /
Italy; and its im*\j

abolished

of Germany and

helped to promote the expansion
of Western technology into

j

un-j

say

Western European nations, except

Emmett Lawshe has become

is

j
implications. Itr isn't: necessary, of developed areas of the world.
course, that all- political tensions i
But. today
the effect of na*
at
be removed before we can: take
tionajism seems to be to <- divide
the outset that the degree of* Eu¬
firm constructive steps in the eco¬
rather than to unify the world
ropean recovery already realized
nomic field, but the minimum we economy. The techniques of mass
is, in my judgment, quite remark¬
-must -have, is m situation, in. which production and mass distribution/*
able. In fact; I. think it can fairly
there is not a common belief that
make
that market
area
within; •
be said that
in; most European
war is inevitable.
Belgium
or
Sweden,
or
even\
countries the
emergency
recon¬
France
and
the Unitedf
The financial- policies essential within
struction phase is over. Industrial
ments achieved; So let

production

Garl M. Loob, Rhoades

first

and

production of

centive

of Europe's situation, progress from the refined barter
were
recognized by far-sighted techniques which still characterise
leaders of the United States- and too muck oF intfa-EUropearw trade
as

the

cause

look

Europe! Needs Financial Stability.

cif

Fortunately for Europe
for the world, the seriousness

—.

main, office and
York,/ there

essential financial: issues.

tries* economy;
produce more'goods unless they
can be freely sold, in the.: markets

ropean

University.

Goodbody

for

of five

purely; physical production! prob¬
lems to more subtle, but equally

andJ urgency

Goodbody

telephone boy.
Previously

shifted ' from

The

materials

domestic

have

urgency

this.

which

items.

and

or¬

and

clerk

der

items they were a year or

necessary.

when

as an

but

beyond anything the bank could
conceivably afford was clear-ly

joined the

firm

same

of

of

1902,
ties

the

now

from

premium is placed on the manu¬
facture
of
ashtrays, knicknacks
and* other non-economic products
which can be sold at free prices*
a

two years- ago. The emphasis. and

such

and

the

not

are

rationed commodities. Two results

the

John J. McCIoy

caused

system

some




pjroduetkm.substantially. But these

bank

know, most of

been

and furniture for cash because he

shared

granted by the

doubtless,

body, who has
ner

items rigidly controlled
countries, people fre¬
have
more
money
to
than they can use to buy-

many

quently

flow

of

most

tion

part-

were-

ojr enough transport. Today there
ik still far from a surplus of these
items,, and more coal, more> steel*
more
labor and more; transport
would
unquestionably
increase

.

physical devastation,

firm.

specific

were

essential

spend

area.

solution to Europe's problems. The

Mr.. Good-

a

in

recovery

With the price struc¬
maladjusted and prices of

ture

critical shortages in Goal and-steel,
and there was not enough labor

in t h at vital

fully aware, of course;
that
these loans,
vital as they
were/ provided
only
a; partial

goods at lower prices which found
bigger markets. The employee in
turn could afford to
buy houses
had,

observations

We

a

e r

b

what has been called the "ashtray

economy."

^

pjhysical bottlenecks. There

Hemisphere
largely been'ex¬
hausted. ' They served, V believe,
their intended purpose of
helping

Goodbody, senior part¬
the
brokerage
firm
of

pre-war

creased

11 of'our

countries

Marcus

the'

'
j Two years ago—even one year
ago—the major obstacles to; in¬

and credits from the United States
and
other
Western

Marcus Goodbody
50 Years in Wall St.

towards

average.

re-

a

resources

incentive

better work.
ter

world affairs.

proving

operations and

fallen

Goodbody

lesser role in

su

as

mark

hike

pay

after another follow with

not

problems.

measure.
Character can't be
measured, but put to work, it re¬
sults
in
health,
prosperity and

year

another round; of

lated

full

m e m

unionists

<$>-

we

bank

have formu¬

of

Con¬

that

the

mean courage, loyalty; sincerity
and pride in one's work, giving

bitterly

wage

fellow's

X

his fiftieth

disappointed over
the Labor Government's unfavor¬

for

I'm
XX1

MviivV/i-

Margate, Eng¬

assembled at

land,

Character

of

The solution lies in developing
certain intangible traits of char¬
acter.
And when, I speak of char¬

serve

gress

at

you

:

Co.,

The Easy Life

situa¬

tion which

today toigive you-a sales talk about the virtues of the International
Rather, I came in .response to an invitation from your President! to
of the viqws with respect! to the present European monetary and eco-

.

nar

stopped only,
through in¬

prices

here

discuss with you some

As

f

come

of its bonds.

or

nomic

legislation.

criti¬

spreading too rapidly to other
tions.

formulae

restrictions and

production happiness for all.
increases has.

the target of
sharp
of its Trade
Unions.

same

artificial

increase

become
cism

of

and

price controls. The Brit¬
Government in its at¬

to

along

.

by

question

labor-management problems,
Labor

by

nor

thinking of am attitude of fairness
which makes it possible to see

along

ish

justifiable profits will
be. ended, however, by either
stopwatch and the slide-rule,

la-

WXlvO

''

wage and

for

quest

acter, I'm not thinking of Sunday

-»•

dozen

management

Cost of Living
Takes
fo6
Bigger

Babson

Chunk of Income." All
.because
bor refuses to
up production

the

higher
reference to out¬
expect"

They both have
Labor's search for a
and
management's

rights.
living wage-

the

i

r

to

both erred.

their

not

And here's

c

have

d";

e

labor

wages; without
put.
Labor
and

Ford

"New
C

to

for'

is

Bank

of the

production

is

rapidly

im-

address

both simple and Kingdom, as inadequate for to-/
They involve a? day's purposes as, say, the 19th|i
balanced governmental budget; or; century kingdoms of Saxony or/
preferably, even a surplus; credit Sardinia were in their day. More-/
for

stability

well

controls to ensure that the bank¬
over, as the idea of nationalism t.,
ing system does not create exces¬ spread out from Western Europe ;|
sive
means
of
payment; .and its emphasis changed; it began/
appropriate price and wage ad¬ to be directed less toward the;
justments
internally
so*
that goal of integrating a group of in-/
productive resources are not di¬ dependent or loosely-knit states?/
verted into non-economic output into an economically sound unit/,
giving every/
as
a
result of price maladjust¬ and' more toward

by Mr." McCIoy
the 55tht Annual, Meeting:,
Savings Banks. Association ments*.

of the State of New

York, Atlantic
City, N. J., Nov. 6, 1948.

are

understood.

*

f

ethnic
.

In this conn ection/it is. interest¬

ing

to

note

the

development

of

group

an

independent/,
separate i

sovereignty, each with its

(Continued on page 34)

20

THE

(1972)

Thursday, November 11, -1948

FINANCIAL CHRONICLE

&

COMMERCIAL

restoration
*

rH

i

Why

,

,

Securities Salesman's Corner
Those of
forces which

us

Crossley poll showed that the Truman and
the Dewey vote would be even if all adult citizens
voted. In its final interviewing three weeks before
the election it indicated considerable apathy toward
both candidates, but somewhat more toward Tru¬
man than Dewey."—Archibald M. Crossley.'

contributing our share to the great economic
America by going out into the highways

who are

have created

and byways of this land and telling others about the opportunities
for investment in the stocks and bonds-of the nation's business enter¬

if

that bothers

know

"Which

Much

will bring

he

the defensive. If Mr. Truman is a great
he will call his party
work out the many conflicting economic and

around him and strive to

labor

to

should

own

never

rest, if he spends recklesly, then those

engaged in the investment business have a most

policies curtail investment and busi¬

prevail, will in themselves bring about a change in our

unemployment,
business bankruptcies, and chaotic economic conditions. For a while
it would be possible to continue to penalize the investor class, making
up the difference in the required capital needed for the continuance
prosperity by further inflation of the money supply, but eventually

government.

No political party can withstand mass

the economic realities would assert themselves.

This then is where

we

think that selling securities has been a tough way to

of

earn

living during the past 16 years and that now we may have it

a

easier, I hope they are right. For my part I don't think so.

However,

there, is no reason,to believe at this time that it will be more
to seU securities than

I do not think

exerted.

ties

in the past, providing

defeatist attitude

a

is advisable

industry

millions of people

own

by any means.

on

to the

as

cepted

as

difficult

ingenuity plus work is
the part of the securi¬

If only for the fact that

securities, the insurance companies, the banks,

ground of forebodings regarding the future.
now

up

to the

new

Administration.

one

can

say

more

With certainty at this time. The future of the investment business
well

as

the nation's future is

Company.
us

I

am

sure

now

in the hands of

that nothing would

more

Harry Truman and

greatly please all of

who have sincerely opposed his advocated policies than to see his

new

Administration do those things which would enhance the

perity and welfare of all our people; and that certainly

pros¬

means

the

that

attaining his rightful position in

Robert

A.

Investor

Gilbert's

Must

article

Have

"The

our

Tax

omies

to

50%,
in

made

and

that econ¬
expendi¬

Federal

prosperity this country has
ever experienced, it was also fol¬
lowed by the most severe depres¬
sion
this country has ever ex¬
perienced. Sych a depression as

insidious.

The

for

need

in this

economy

the

"Chronicle"
views

be

made

article

worth
not

Must

of

definite

provide
which

reading.

state¬

economies

where

to

as

an

and

Gil¬

A.

Robert

material
it

make

However,

I

able
the

to agree
with the
article "The Investor

Have

Tax

Relief!",

therefore, with what must be

therefore,

more

was

This tendency was the

excessive

capital

investing

and

of the productive
capacity of industrial enterprises.
We
as
a
nation certainly don't
want our economy to progress in
overexpansion

after

World

would

seem

maintain

to

the

of

World

War

fers

wouldn't

we

I

Mr.

as




opposing opinion

as

to

"The Investor Must Have Tax Re¬

lief!"

seem

advisable

to

at¬

to

Although it is useful to bring
light, as Mr. Gilbert did, the

difference

in

the

financial

economic condition of the

and

current1

this

writer

objects to

is

presentation of a policy or a
point of view with the claim that
it is essential to

the maintenance

American standard of liv¬

ing. There is no doubt that a few
people would benefit for a brief
period if a limitation of 50% was

placed
comes,

on

total taxes

but

capital

of

corporations

has

$38 billion since 1939
reaching a recent total of $62 bil¬
lion. Corporate holdings of cash
and government
securities have
increased $22 billion since 1939."
From the "Chronicle," date un¬
known, a table "New Security Is¬
for Purposes of Raising New

sues

Capital"

indicated

totals
for

issued

the

$1,859

"the

that

for

non-

corporations the

governmet

first

were

million

million
1948,
first six

$3,037

six-months

for

the

of

months of 1947, and $1,105 million
the first six months of 1946.

for

These
trend

need for

any

tal

figures
which

show a
definite
quite contrary to
revival of the capi¬

is
a

markets.

"A

restoration

to his

of

the

investor

rightful position" is

ample

of

Mr.

Gilbert's

an

ex¬

use

of

generalizations.
Whose
judgment should be applied as to
what the investor's rightful posi¬
tion should be? Certainly it would
vague

involve economic chaos and disas¬
ter

to

his

selfish interests

allow

munist
make

tant

with

such

fact

a

to

the

monopolist with
or

the

his radical

be

brought

Com¬

views

decision. An

to

impor¬

to

mind

in regard to investors' interests is
the

A table indicating the
disposal of(income originating in
corporate business in 1947, the
source for which was the Depart¬
ment

of

Commerce
Survey
of
Business,
July,
1948,
a
disposal of 5.9% of

Current

the

of the

a

business.

in¬

should do. To be sure, it

depression.

this

maintain

Gilbert

it

your

with

to

effect after

tempt to make the same mistakes
that were made prior to the 1929
What

volume

comparatively large percent¬
age of
the corporations' profits
which are plowed back into the

changing

that which was in

and,

to continue

present trend of

instead

taxation

way

to be to the economic

of this nation

benefit
to

it did
War I. It, therefore,

similar to the

any way

con¬

Mr.
Gilbert's
object in
it.
I would
appreciate
consideration of the point of

was

1929, grew ever so gradu¬

Federal debt.

country's Federal expenditures is
a
point of view with which all
citizens will wholeheartedly agree,
and in the Sept. 9, 1948 edition of

1929

after

suffered

largely the result of a tendency
which began a number of years

and,

Louis¬

ville, Kentucky on Sept. 22, 1948
said, "Both individuals and cor¬
porations have built up assets of

ing

ness

ally,

Super¬

at

increased by

though 1922 and the six years fol¬
lowing was one of the most in¬
tense periods of peacetime busi¬

before

of

Banks

accumulated since 1939. Net work¬

economy.

after
World War I, it
should be clearly recalled that al¬

was

State

highly liquid financial position.
The liquid assets of individuals
are
now
estimated
at
approxi¬
mately
$200
billion, of
which
more
than $140 billion has been

period

sidered

San Francisco

V

Association

of

sufficient

•

view presented in this letter with
the hope that the readers of the
"Chronicle"
may
be
presented

Chicago

are

'

National

writing

Street, New York 4, N. Y.

which

In regard to the need fpr a re¬
vival of capital markets, the Sec¬

ac¬

inferences, of. implications which attempt.to substantiate such con¬
clusions.
Too many of,the writers on,economic and financial topics
are guilty of this practice.
In callr-^-rttm—■ ■.
—n
rr
-p
ing attention to this weakness in period and that of • the similar

am

46 Front

and

facts only

as

statements

reasonably proved.

This writer takes exception to the practice of presenting state¬
ments,, points of view, or, policies without including logical reasoning,

title

Established 1913

economic

an

accept

country

those

Editor, The Commercial & Financial Chronicle:

well

■

of

personal benefit and that of

the

preventing revival of capital market by keeping

are

the investor from

could

NATIONAL QUOTATION BUREAU, Inc.

my

My goal is to
attention of others
much of what we read,
the

too

own

Forrest S. Dunbar, Jr. takes exception to statements in Robert A.
Gilbert's article in the "Chronicle" of Sept. 9, in which it is held

for

For 35 Years

present

this time.

to

nature, are statements
presented without logical reason¬
ing, and that we should for our

Needs Tax Relief

ments

Over-the-Counter Quotation Services

one

financial

Opposes View Investor

have shown their faith in the future

by investing in the stocks and

this

than
I

visors

bert's

business.

or

purpose

my

which

-

of

number

a

broader

on

especially

LETTER TO EDITOR:

millions of good Americans (both Republicans and Democrats) who

bonds of American

taking

retary of the Treasury, John W.
an address before the

tures should be used to reduce the
as

statement a

a

without

Snyder, in

limited

No

is

views at

by implication raises serious questions

Relief,"
our educational system and in fact
which is an excellent example of
our entire national fabric and
welfare depends upon the ability of our private enterprise system to such a practice, this writer an¬
swers that the capital markets do
survive. In addition, millions of people who own securities are a lot
not need reviving, that profits re¬
less concerned over the results of the election than those of us who
ceived by investors are consider¬
are so close to the economic factors involved.
The man who knows ably more than appears on the
that
excessive
savings
less about these things and goes out to sell, disregarding the pitfalls surface,
and
capital
investments which
and obstacles that appear to loom so large to many of us today, is
caused the
1929 depression will
quite likely to accomplish more than those with a statistical back¬ result if the taxes on incomes are
It is

mere

a

accurately.

validity of many important data long
a matter of course.

present tax laws

stand—it is not going to be an easy road.

If any

us

than

of

living. Many

such

times

mistake

serious

article

which in

confidence becomes impaired then the economic forces

the end must

their failure

difficult task before

the unsound activities of the government.

Of course, if governmental
ness

a

offer them are being

securities if the Values and equities which we
drained off day by day by

us

interest investors in the purchase of

It will not be possible to

us.

of

of

to
give it careful thought,
gradually accept it, and be¬
fore long a few, like parrots, will
be spreading it on to others. It is

hoped that these gentlemen will render
possible for statisticians to determine whether

it

of

read

we

object

this

his

to

will

It is to be

land
who are

which any particular group in our

beyond

point

a

investor

time

Techniques employed by these "pollsters" are in
respects identical with those used in market
analyses, many other business reports, and even in
the gathering of official government statistics.

If he attacks profits viciously, if he elevates

property.

if

us

many

persecution of

problems without vindicativeness or hatred and

those who

the

of

people make, and

all

true.

make a state¬
Gilbert, that a

to

easy

did Mr.

standard

can

stayed

in

be

to

to the maintenance of the Ameri¬

bring

the people together and

so

as

number

failure to forecast election results

country is now definitely on

statement

large incomes to 50%, is essential

if

involved

is

rtiore

going

why he believed

that for the huge-ma¬
citizens this is putting

restoration

polls?"—George Gallup.

the prob¬
retailer of securities. Whistling in
the dark may make us reel better for the moment but it won't solve
our problems.
Facing realities it adds up to this. Capitalism in this

in his

rightful position and a revival of
the capital markets, specifically,
by a limitation on total taxes on

home? Only 47,000,000
polls Tuesday. Another 47,000,000 stayed home. Was it the Republicans, or the
independent voters wfio failed to show up at the

time for wishful thinking or for minimizing

no

of

is

It

voters went to the

lems which will lie aheacj of the

fiscal

voters

if

above

ment,

....

This is

reasons

appears

that

wasn't

state

he

literally and less figuratively, put¬
ting the cart without the horse.

was wrong.

if

is what
of the

98%

the cart before the horse, or more

The thing

wrong.

did

article

jority

most at this moment is that I don't

me

why I

Gilbert

into the

I have, of course, always
known that it was in the field of finding out why
people vote as they do or why and how firmly they
hold certain opinions that we researchers had made
the least progress."—Elmo Roper.
;

-i

man

Mr.

present
the

more

living"

other

people who do not fall into this

if

"I could not have been

of

the

exceptionally high income bracket.

Sept. 9 I predicted that Mr. Dewey would
win by a wide margin and that it was all over but
the shouting.
Since then, I have had plenty of
chance to hedge on that prediction. I did not do so.

the New Deal. Though often misrepre¬
sented to the public, Wall Street I think has conscientiously believed
that all would eventually be poorer if controls of prices, favoritism
toward organized pressure groups, pegged government bond markets,
deficit financing, paternalism and bureaucracy, were undertaken in
the most extreme manner by the government. Today, we are faced
with the reality that a majority of the voting population have en¬
dorsed these ideas and have placed in office a complete administra¬
tion that has promised to put such policies into practice.
During the past few days I have asked many of my friends who
are also in the securities business just what they think lies ahead for
our industry.
The answers have been as confusing and contradictory
as you yourself have probably obtained from some of your associates.
For this reason I am going to omit many of the answers that I re¬
ceived to my queries and if just one more opinion on the confused
welter of the waters is not too much for you, here is the way it looks
'J:

interests

"On

by the economic doctrines of

me.

if

standard

can

It

been doing some stock taking since last Wednesday,
Nov. 3.
It is no doubt a correct assumption that the majority of
Us who are engaged in the securities business have never believed
that the welfare and prosperity of the entire nation could be enhanced
prises, have

to

to the maintenance of the Ameri¬

"The

By JOHN DUTTON

investor to his

of the

rightful position and a revival of*
the capital markets are essential

on

large in-

reasons' why

a

shows

the

that

total

dividends,

income

was

made

to

disposal of 1% of the
total income was made to interest,
and a disposal of 9.6% was made
to profits plowed back into the
business.
amount

be

This

last

which

added

by the

a

to

can

the

owners

figure is an
theoretically

returns

since the

received
money

is

"Volume 168

Number 4750

to be used in the
corporation and
will increase the value of it. This
means
of
disposing of profits is

misleading to people with savings
who

are unfamiliar with
corpora¬
tion practices. For these
potential

investors it tends to decrease the
attractiveness of owning shares in
corporations having such a policy
because these people with

THE

consumption cycle to overtake, us,
resulting depression will be
just what the communists have
the

been so

acquainted with the full

not

disaster

amount of returns realized

If there is any

owners.

by the

real need

eagerly awaiting. Such
be

can

avoided

self-interest force of
be

our

a

the

if

economy

of in¬

found

changed by clear and pro¬
thought and by a united

corporations, an ex¬
planation of this policy of plow¬
ing
profits
into
the
business

spirit,

to

should

to

for

increasing the numbers

vestors

in

induce

of

many

these

can

balance

force

a

in

will allow

dedicated

to

a

our

economy which
capitalistic system

our

people to invest their savings be¬
cause
the
profits available are

operate dynamically and pro¬
gressively as it should.
It is true there still seems to be

considerably

an

more than appear on

the surface.

Gilbert's

state¬

ments which sounds good but does
stand up under careful pe¬

not

is "At the outset of this dis¬

rusal

cussion

it

unending

demand

products such

Another of Mr.

should

be

that

noted

as

for

few

a

petroleum, steel
corporations

and automobiles. The

which

have a foothold in these
fields aren't expanding their pro¬
ductive

capacities

to

extent

any

though they are making huge
basically the revenue loss is really' profits and the necessary
capital
insignificant compared to the re¬ is available to them.
These in¬
sumption

of

The

progress."
of this

sound

economic

and

use

meaning

statement should

seri¬

be

ously studied and questioned. This
writer is of the opinion that the
statement
worded

that

noted

the

nearly monopolies

new

producers, i.e., Kaiser &
Frazer and
Tucker, find it ex¬
tremely difficult to get estab¬
Even

few

It

be

used

should
loss

revenue

and

period just 20 years ago and after

considering

the

forces

the balance

disturb

so

certain

significant after thoughtfully re¬
calling
the
unsound
economic

which

that

are

lished.

the gain to the investors is really

-arefully

dustries

be

follows:

as

even

correctly

should

neces¬

for sound economic progress
i"> our capitalistic system.
sary

&

FINANCIAL

CHRONICLE

(1073)

21

would have us believe his sugges¬
nally, Secretary Snyder's state¬
tion would do, our high standard ment
previously quoted in regard
of living would drop to a new' to the fact that
both individuals
low. What is a more serious threat and
corporations have built up
than
this, is that if we allow wealth of sufficient volume to
another
overinvestment - under¬ maintain a

savings

are

COMMERCIAL

if

without

sion

of

investments

industries

the

in

could

be

causing overexpanproductive

the characteristics of

capacity,

our

capital¬

highly liquid financial
position, indicates that our system
could

tolerate little, if any, fur¬
capital investment if it is to

ther

avoid

the

consumption

cycle because the
which changes suffici¬

quantity

to over-sufficiency is
paratively small quantity.

ency

a com¬

could

counts for about 6%

be

in

made

Federal

ex¬

penditures should be used as a
weapon to counteract the grow¬
ing inflation pressures by further
use of the policy of
directing debt
management to a rapid reduction
of the Federal debt,
particularly
that held by banks, instead of giv¬
ing the savings derived from these
economies to the persons in the
highest income bracket. By leav¬
ing our progressive income tax
rates as they are and not limiting,
Mr.

as

taxes

Gilbert

suggests,

large incomes to 50%,
this counteraction to the
present inflation can be realized,

transit business

this

of

revenues.

North

30,000

Carolina—nearly

products in this

are

area

'

.

altogether.

miles

square

Principal

wood products, machinery-and metals,
leather goods. Electricity is retailed to
nearly 1,000 communities with an estimated population of 1,748,000;
including Richmond, Norfolk, Portsmouth, Newport News, Alexan¬

chemicals,

and pulp,

paper

stone and clay products, and

dria, Fredericksburg, etc.
The earnings record on the common stock has been as follows:
12 Mos. End.

Calendar

9/30/48
9/30/47

;

Year

$1.38
1.62

1942—
1941

Calendar
Year

1946
1945

;

2.16

1943

1,21

,;.?5
1,06

4-*

2.66

1944.

$0:93

..

_

1940_„__

possi¬
overcapitalization and

make

credit

banks

decrease

reduce the amount

property,

and credit

overinvestment and

may

the

will

in

;v

tobacco, ships, textiles and rayon, foods,

1947

able to

of

•

integrated^system serves (at retail and wholesaled
the greater part of Virginia, and also parts of West Virginia and

in

the

reduce

The

disposed of in 1945, but manufactured gas ac¬

was

be

power

amount

bility

to

froi#

The company's

on

also

but

growth, accounted for an increase in electric revenues
1941 to the current figures around $45 million.

$17 million in

total

not only

formerly controlled by Engineers

Service, but ownership passed to the public when the holding
company, distributed its,major .holdings, in.,1947.
In May,-1944, the
company absorbed Virginia Public Service Cp., a large subsidiary
in the former Associated Gas System.
This move, together wittj
natural

Federal

was

Public

surplus resulting
from the application of the econ¬
omies
that
Mr.
Gilbert
stated

The

istic economy, which this writer is
in favor of
maintaining, private

risk taking, the motive
force of profits, the accumulation
of capital, the use of bank
credit,

Virginia Electric & Power
Virginia Electric & Power

overinvestment-under¬

addi-

1.81

1.71

——

—

1939——,

of installment

.95
.83

1938

1937

.80

-

1936

.71

-

in earnings' in 1944-5 apparently resulted from the.
be able to
merger with Virginia Public Service, which permitted certain tax
eliminate
some
of
the
forces savings; refunding operations also reduced interest charges. How¬
and freedom of individual initiawhich tend to cause the disequi¬ ever, earnings leveled off in 1946-7 at somewhat lower levels, ana
tive, are such that although in¬ librium in overinvestment-under¬ in 1948 have
dropped-sharply.vestments might possibly be made
consumption cyclesr "
July net was
/ about $247,000 vs. $453,000 last year, and
in a few industries in which they
The jump

buying consumers will
accomplish, and thus

,

To quote again from Secretary
Snyder's address on Sept. 22, 1948,
"The

boom

which

in

ended

1929

unbalanced

was

by nation-wide
stock market speculation." In 1929
had

we

sive

notable

a

savings

of

case

exces¬

could

be

used

progressive^^

for

velopment, investments would also
be

in

made

and

there

capital invest¬
ments playing the principal role
in destroying the balance in our

them,

industrial

the

other

would

industries

be

a

host

of

duction.

system. As

enormous

in

and

and old productive

new

prises, and of
the

flow of

capacity of our
industries, the
products in the

goods

consumer

markets increased

of

used

in

volume

and

rapidly than that part
money
income

more

the

national

to

purchase

services.

and

enter¬

rapid increase in

a

productive

consumer

value

result of

a

savings and investments

ability of

goods

consumer

Because

all the consumer

in¬

purchase

to

consumers

the

of

products

our,

in¬

dustrial system was capable of
pj/Oduclpg, the enterprises pro¬
ducing "such

goods

services

and

were
unable to operate at full
capacity. Other industries depend¬
ing
upon
the
consumer
goods
enterprises were also forced to

curtail

their

tion had
of

a

production. The

market

production in 1929.

portion
had

capacity
small
used

the

of

been

a

to

An

excess

income

national

used

na¬

capacity

excess

increase

to

our

of

production, and too
portion of it had been
purchase the goods and

services for human

industrial

system

which the

use

was

capable of

producing.
The

who

incomes

their income for

huge

be

are

added

it

In

that

the

used

to

for

built

up

the

already,

goods
to put

conservatively, sufficient vol¬
of savings and
capital in¬

that

we

Mr.

Gilbert

suggests

increase the wealth of

our

largest income receivers, thus also
increasing the huge amounts they
are
not able to spend for con¬
sumer goods and, as a result, fur¬
ther add to.the already sufficient
supply of savings and capital in¬
vestment.
This
certainly would
promptly bring about a condition
of excessive savings and capital
investments, the principal cause
of

in

the

destruction of
industrial

the balance

system which
initiated the depression of 1929.
Quite to the contrary of maintain¬
ing the American standard of
living, which is what Mr. Gilbert
our




ex¬

in

regard

to the

necessary balance between
investment
and
consumption.

First, the present extended

mar¬

kets, caused-to quite an extent by
our supplying of the war-rhvaged,
war-weary

countries of the world

and by the

6,

power

Box

281, North Campus
Norman, Oklahoma

Hear Wjtt. K.

Barclay

the

at

speak

more than $8 billion dur¬
ing the three years since V-J Day,
bringing the total consumer credit
outstanding up to $14 billion as
estimated by the Federal Reserve

Board.

This fact clearly indicates

number

a

providing

a

of

our

present

so¬

mar¬

demand

with
purchasing
they have not yet received.
Besides having to supply the de¬
mand
provided by the greatest
power

The number of

However, President Holtzclaw has indicated that earnings
have been about 40c higher
Point
in

dinner " meet-

(around $1.78)

generating station near
month

a

or

so)

had

the

new

share

Alexandria (due

adjustment.

tax
was

discount

A 5%

On Aug. 1

Club of Phila- '<■

who

Appli¬
Commission' for permissioh to

former

in

Sept. 30, but must be
which
the

associates

of

the

club.
absence

the

A.

Miss

President,

of

Campbell,

Vice-President

Miss

Mar¬

the Club's

Barnes,
will
the din¬
Campbell is

Ann
of

the

about 45%

M.

club,

considered in relation to the July earnings,
below last

(mentioned

of $1.78

figure

current "normal"
~

In

were

of Phila¬

position
subject of interest to

earnings.

year.

This would

Mr. Holtzclaw)

by

<.,V.

.

"

further adjustments

However,

are necessary

seem

amount.

•' ^
to give a complete
>

,

A

sell 750,000

25% in the outstanding

$1.41.

On this basis share earnings would

temporarily be

larger number of shares from the above

the

Moreover, if the convertible debenture
into

stock

introduce Mr. Barclay to

verted

increase of

be paid out of future national in¬

guests.
Miss
accompanying the
Philadelphia
group of investment traders who
are attending the National Secur¬

The amount of purchasing
furnished by the future na¬

ity Traders Association Conven¬
tion
being Iheld Nov.
14-17 at

for each four shares held

reduced

estimated $1.78 to

bonds should be con¬

in the future there would be a further

present, however.

Dallas,

to make

about right as

picture. The company has announced thabit will seek to
additional common shares or an increase of

on

the total

However, this figure cannot

consistently added to the $1.38 reported for the 12 months ended

be
Wm. K. Barclay, Jr.

Securities Dealers, is in a

guerite

share after income tax adjust¬

gain might be around 80c per annum.

Bond Club

investment

a

ments, it is estimated, and with the additional fuel saving

Presi¬

to discuss a

All of these Increases taken

neighborhood of $500,000.

the

together would amount to about 47c

-

delphia and during 1942-46 served
witn the National Association of

all

in Norfolk and Newport News; estimated annual gains

raise gas rates
are

the

dent of the

year',

schedule) resulted in a gain Of $300,000 a' year./

on

His

was

commercial and

another small rate adjustment (a fuel clause in the com¬

cation has been made to the Virginia

15.

on

annual recovery of around $1,300,000 in revenues.

ment Women's

1 p h i a

12 months, and

It is estimated that

eliminated Sept. 1, after being in effect a

mercial rate

e

the

plant will save nearly $1,700,000 per annum, or about 35c
after

by the Invest¬

Nov.

to go into operatiott

been operating during

"

ing sponsored '

d

would

(1) the new Possum

if

(2) if certain rate increases had been in effect.

and this means an

delphia Stock
Exchange."
Mr. Barclay,

panded*

higher.

and maintenance expense was 42%

industrial bills

"Our -Phila¬

market

a

were

outstanding increased slightly due to conversion of debenture

a

will

School,

demand

of

1948,

September,

for

expenses

last year, compared with a gain of 16.7% in rev^

bonds.

Wharton

Second, in
this
period of greatest national
income in our history, credit ex¬
tended to retail buyers has ex¬

short

over

shares

Phila. Inv. Women to

units

goods produced.

operating

necessary,

nearly 29%

September, however, showed $407,000

enues;

subject? will be

for

vsf$470;b00.

With fuel costs up sharply and increased purchases of

$471,000.

vs.

1948

rebuilding of our mili¬
tary machine, will undoubtedly
decrease
rather
suddenly,
and
thus leave some of our productive

national

income

in

history,
also supplying
our

our

industries

the

goods for this additional de¬

mand

of

come.

ume

vestment.

steam

more

ket

goods.
which can

consumer

of

Oct.

ing into the class of writers who
present a point pf fview .or policy
PHILAliELPHIA, PA—An au¬
without logical reasoning or basis,
thority on financial matters, Wil¬
there must be included some facts liam K.
Barclay, Jr., of Stein Bros.
and inferences which lead to the &
Boyce,
a
graduate
of
the
belief that we have good reason
University of
to apply the brakes rather than
Pennsylvania

total

consumer

amounts

result

a

effort to prevent my fall¬

an

are

make up

as

capital investment, would
excessive capacity of pro¬

ciety

of the national money income who
are
not able to spend enough of

These

an

quite

large percentage of the receivers

not

have

such

have

tax is greater than 50%
a

cessive

that

people

enormous

which

August $271,000

FORREST S. DUNBAR, JR.

;

power

$14

are

billion

which

is

to

tional income will be less than at

present
tional

because

income

crease.

This

purchasing
future

by

is

future

be

amount

of

available in thm

further

amount

of

decreasea

$14

billion

which will have to be used to pay
for goods now being bought on

credit, and the result will be that
the

future

market

demands

be considerablv smaller while

industries

ductive

will
our

which

expanded pro¬
capacities in response to

huge demands of the present

pe¬

riod

ex¬

cess

will

have

market

nroduced

an

supply of goods.

Texas.

na¬

expected to de¬

reduced

power

will

the

the

ner

Fi¬

common

about 687,000 shares and

version of any

United

further dilution of earrings

The

stock

new

debentures). Con¬

substantial amount of the bonds appears unlikely
will be offered

scribe expiring Dec.

Perkins Heads Div. for

a

(partially offset by interest savings on the 3Vs%

1.

on

the basis of one

new

of record Nov. 12, with the right to

share

sub¬

Stone & Webster Securities Corp. heads,a

The subscription is on a novel
on the instalment plan—thfe
utility issue of this character in recent years. One-third of the

group

of underwriters for the issue.

basis, in that payment may be made

Hospital Fund

Richard S. Perkins, a partner

in
Harris, Upham & Co., has accept¬
ed the chairmanship of the bro¬
kerage
division
for
the
1948
United Hospital Fund Campaign,
it was announced by Thomas J.
Watson, Jr., Chairman of the Busi¬
ness and Professional group.
The

first

price will
June 1.

be payable Dec. 31, one-third

Interest at 6% will be paid on

the time stock

certificates are delivered shortly after June

payments may be made Dec. I
and dividends.

March 1, and one-third

the previous instalments, at

1.

Full

if.desired, with adjustment for interest

Proceeds of the offering will be applied to

repayment

charges.
Virginia Electric is now selling, on the Stock Exchange around
fund is seeking $9-845 988 to aid
16
and is paying dividends at the annual rate of $1.20, to wield
86 voluntary hospitals in Greater
New York.

of bank

loans, thus reducing interest

about 7.4%.

It appears likely that the

$1»20 rate will be

maintained^

22

THE

(1974)

COMMERCIAL

the

The Taft-Hartley Act will be amended but not repealed by the
Eighty-First Congress, it was predicted on Nov. 4 by Raymond Moley,
contributing Editor of "Newsweek" and former Assistant Secretary
of State, in an address before the annual dinner of the ^Corset arid

Asof

mands of, labor for favorable leg¬

n

islation.

It

;

hand in

the

greater '

islation,

In the

,

.

c o n

fidence

and

stiffness

for

favorable leg¬

Moley,

assured.
The

the

of

conservative

Raymond Moley

and

C a uses

will

be

•is too

«.

■

of

conservative

Republi¬

Democrats

But there

strong for that.

will be amendment."

-

-

-

-

Despite some "disturbing pros¬
pects," he said, there are certain
elements of

before

reassurance

business: .*
"One

Democrats

been

"

element

is

•

the

that

fact

natural forces in economic life

are

is

elected

which

that

deflationary

attacked
of

action.

by

kind

one

level by

This

-

factors

means

will

years

That

means

may

peaceable

a

Truman

time

as

term that will

a

as

certainly be

his last."

In

dent

which
to

Moley

the

contributing

returned

the

White

mentioned

Greater

the

Presi¬

House,
these

effectiveness

Mr.

forces:

of

labor,

great farm prosperity, over-confi¬
dence and inertia in the Republi¬
can

party, and because "better

were

men

running

Senator

states

for Governor and
at
least four crucial

in

—

Ohio, Indiana, Iowa and

Colorado."

Among the consequences of the
election, mentioned by Mr. Moley
are

the

its present status. This means that
tax

outlining

causes

with

keeping the budget reason¬
possible dur¬ ably within the general limits !of
have

to

following:

in in¬

courses

than

more

President of^

universities

20

the F

colleges throughout the coun¬
and in which close to 2,000

students have been enrolled.

Publication

(2)

of

1

of

lege

textbook

veloped

as

Fundamen¬

that has

been

reduction

is

even

be

some

part

effort

some

of

the

to

restore

profits

excess

This would be-very difficult,

tax.

de¬

the

formal

the

since,

and

I have indicated before,

as

old

coalition

conservative

still

hold

and

the

edition

C

n

of

Chicago

1849.

Publication

(3)

of

cessful

on-the-job training
in actual operation.

grams

Committee

and

,

will

conservative

Stead

H.

swing

of

would

tend

Publication

(5)

of

manual

The

manual

and

viewing and testing materials
based

on

a

are

study of the abilities

and Characteristics responsible for
success
in
investment

banking

work.

from

More than 600 individuals

bated

IBA Score Sheet

In

foreword

a

the

to

member

firms,
including
partners, executives, senior sales¬
men, traders, analysts, and other
personnel, were tested and inter¬
.

viewed
The

as a

part of the study.
completion of the project

in

school

sports

and

and

possessed

personal
utes.

certain

particular

(psychological)

attrib¬

,
.

.
.

The

tunities

M, J. McCabe Joins

declines,

want

to

that

announces

operating

....

present type

or

to

of

v••

Treasury

maintained

to

in

orderly
market.
As

assure

the

*

are

successful

in

the

responsibility

members

of

the

of

a

field

sub¬

sub-committee

included:
Dee

Ostrander, William Blair

Co., Chicago.
-Henry M.

Beissner,

&

Moroney,

Beissner & Co., Houston.
Robert W. Fisher, Blyth &
Co.,
Inc., New York.

Herman B. Joseph, T. H. Jones
& Co., Cleveland.

Survey
successful

findings
men

indicate

that

in the investment




criticism, and!a
capacity for instilling corifidenCe
and trust in others.'.
Furthermore,
the successful investment
banking
employee accepts responsibility, is
not a chronic worrier, and is high¬
ly realistic.
The

ual

of

Personnel

constitutes
the

overall

Selection

Man¬

the -latest'

phase

recruitment

and

training program of the IBA Edu¬
cation Committee, a
program that
was initiated
by Julien H. Collins,

maintain

derly

System is obligated
a

conditions

in

that

market,

not

primarily because of an im¬
plied commitment to wartime in¬
McCabe

vestors

McCabe

is

now

in

firm

its

public utility trading department..
Mr. McCabe was formerly indus¬
trader

Co.

&

-

for
.

Frank

" ' •'

•

C.

Moore

'

City Jr.

but

because

26,
of

sity

Arthur

MINN.

Upgren,

Economics at

of

Minnesota

Editorial

.

Editor

>

the

that

felt to be of unstable value.

'When

the

Profes¬

the

and
of

On

Univer¬

Associate

the

-

Minne¬

apolis "Star Journal,' sploke at a
dinner meeting of the Junior In¬

ensure

throughout the economy if the
vast holdings of the public debt

bined, it

—

widespread

would

consider

you

one

and

all other debt in the

MINNEAPOLIS,
sor

of

public debt is

Brokers Assncialion
Oct.

their

repercussions

"

Twin

that

savings would
be protected, nor to aid the Treas¬
ury in refunding maturing debt

were

the

are- characterized
by .'stabil¬
ity* industriousness, a desire for
committee of the Education Com¬
activity, persistence at difficult
mittee under Nathan D.
McClure, tasks, loyalty, self-reliance, ability
Harriman Ripley &
Co., Incorpo¬ ito get along with others, construc¬
rated, Chicago, Chairman. Other tive acceptance of

was

,

the

market for govern¬
ment securities and to assure or¬

trial

H.

with

Ellis
the

became

First

asso¬

Securities

Chicago, .134 South La Salle

Street,

members of the Chicago
Exchange.
Miss
Fischer
formerly in 'the trading de¬

Stock
was

partment

of

Ellis

Kitchen

was

&

Murphy.

with A. L. Schmidt

Co.

&

can

System support operations hi

f.

the

Co. of

state¬

-

J.

John

Opens Own Offices

be.

with

and

ciated

sec¬

the government bond market must

Matthew

Chronicle)"

William W. Bouden, Jr.

and

associated

Financial

The

the two most important are sup¬
port operations in the government

"The

that

to

various

are

trend.

J.

(Special

of

security market and possible cyc¬
lical swings within the
long-term

M.

"

Louis.

CHICAGO, ILL.—Lydia Fischer

rates.

my

There

*

St.

First Securities Co.

Mr.

qualify

are

in

operate to reduce this underlying
tendency in strength.
Probably

Co., 120 Broad¬
City,

volume

interest

on

Bank

Fischer and Ellis With

will prevail.

ment, however.

J, W. Gould & Co.

the

belief that the

own

wew

factors

York

absorb

pressure

It is my
"I

New

tional

opportunity,

interest rate

to

Chronicle)

Bennett & Co., Merchants Ex¬
change Building.
He was for¬
merly an officer of the First Na¬

the economy

as

The -Financial

LOUIS, MO.—Ben S. Lang

E.

.

ward

ond

way,

that,

Lang Joins

has become associated with James

being der
One

groups.

seeking investment.
This
group believes that the demand
for capilal and
greater produce
tivity -of capital will lead to up¬

the methods recommended."

&

the

so

funds

all of our members, in em¬
ploying new personnel, will bene¬
fit by careful study and use of

Gould

is

various

bogeyman and that the economy
sufficient resilience to pro¬
duce enough investment oppor¬

common

study points out that per¬

who

sons

rates

to

(Special -to

ST.

economic maturity argument is a

that

W.

phenomenon
7bv

The other group contends that the

sincere conviction

other

or

interest

for

James I. Bennett Co.

the; present

amount of investment

Instead they

merely-represent applied

J.

Ben S.

has

techniques set forth.
our

long

Chairman McCabe pointed out in
August and recently reaffirmed in
Boston: ,'
'
■
; *

activities; later joined adult clubs,

cycie

a

riot shorter

matures, the supply of investable
becomes larger than the

""There is nothing esoteric in the

It is

the

on

funds

Mr. Fennelly states:

sense.

is

whether

group holds

manual,

milestone in the recruitment and

active

Dr.

accidental variations.
we
are
in an upward

or

porary

panying special screening package
an

place

conditions

school, have college training, ma¬
jored in economics, business ad¬
ministration, or liberal arts, wefe

cause

said:

somewhat higher rates are a tem¬

the ..accom¬

and

Walter

Com¬

a

as

demand

soften, aespite the
basic underlying trend
upward.','

or

Whether
trend

and Training Investment Bankers.

'The

to

cyclical

bro¬

two

wish

trend of interest rates,

chures: Toward Careers in Finance

the

banking filed predominantly come
from large families,(three or more
children), earned at least half pf
related inter¬ their
spending money while at

Education

and

'The emphasis
I

guidance service in
New York and Chicago.

program being developed by the Investment Bankers Asso¬
ciation of America, a new Personnel Selection
Manual is currently
being made available to member firms, according to John F.
Fennelly,
Glore, Forgan & Co., Chicago,<£
Chairman of the Investment Bank¬

Association

result,

a

erican

m

Stead

(4) Maintenance of recruitmenl

training

mittee.

both

and

capital funds drops. On the down¬

,

ers

turns

investment

the

of

ciation,

and vocational

By Investment Bankers Association
a

cycle

"

Personnel Selection Manual Issued
as

tends to decline,

Bankers Asso¬
William

George of Georgia."

CHICAGO, ILL.-—Hailed

the

business

Di¬

A

pro¬

will

be

As

vision

booklet which presents a series
selected case histories of suc¬

a

discussion.

the Trust

On-the-Job

Training for Investment Bankers,
of

a

rate

governments.

at 'downward,

by

having
low

second
point — possible
influence—needs no long

cyclical

Confer¬

held

Treasury

in

reasonably

lor

"The

t

ence

Sendte

the

n e n

Trust

balance (\of/power,
of

ti

of this text is to be published by
Prentice-Hall, Inc., in the spring

Republicans

Democrats

Chairman

Finance
able

the

of

market

the

interested

ana

17th Mid-

new

o

financing,
be

stable

before

sufficiently to
return to large-scale

a

would

A

courses.

however, to get through Congress
the

deficit

Speaking on
Nov. '4

probably out for
two. There might

the next year or

Bank

*

to rise

were

necessitate

Louis,

of

part

a

St.

——

tures

ral

e

Missouri.

tals of Investment Banking, a col¬

instruction

d

e

Reserve

'

con¬

Another is the radical in these respects, because
disposition on the part he will generally be -concerned

President

ing

and

the expansion

man's top advisers.

probable

high demand for capital will provide an upward
long-term interest rates, assuming there is not much
change in the next decade or two in the inclinations of individuals
and businesses to save, according to Dr. William H. Stead, Vicein

tendency

ary
forces will be subjected ito designed to measure an applicant's
some sorts of controls.
qualifications in - relation to the
average of the group tested are
"(3) There will be no drastic
based on a survey made for the
movement
toward
a
managed
Association by Robert N. McMurry
economy, but the general trends
&'Co.,-management consultants.
of the Roosevelt

tinue.

~

Abnormally

banking in cooperation

Inflation¬ that includes

another.

already following their great ca¬ of - public works, . flood contrbl,
pacity to bring about readjust¬ public power projects and other
ment.
Another
is the generally government
expenditures. How¬
moderate character of Mr. Tru¬ ever, Truman will prove.to be ho

of

with

be

government inflatibn
or

instruction

looks for demand'for capital, induced by its greater

"

'

vanced

Trend of Interest Bates

Stead, Vice-President of Federal Reserve Bank

productivity, to force long-term rates up.
Sees government fiscal
policy as opposing factor.

.

the

favors

of St. Louis,

personnel needs
Other phases of

(1) Establishment through IBA
Groups of introductory and ad¬

too

But tnere will be
I

maintenance of the price

repeal," he government

no

added. "The coalition

and

Taft-

"(2) An Administration has just

larger hand in the draft¬

ing. of labor legislation.
"There

the

no repeal.
Republicans, ahd

of

strong for that,

of the Nov. 2 election. "It will de¬
a

coalition

amendment.

consequences

mand

of

case

There will be

an¬

an

alysis

drafting of labor -leg¬

favorable to labor to make this

are

whose address
was

larger

a

.

islation," -said
Mr.

demand

Hartley Act, it refused to cooper¬
ate; but in the amendment of the
Taft-Hartley Act, which we may
expect, it will certainly actively
participate, • since
enough
Con¬
gressmen have been elected who

in the demands

labor

will

Dr. William JH.

Committee, in order to

include:

vestment

•Thursday, November 11, 1948

Sees LongflangeDpward

the Education Committee program

confidence and stiffness in the de¬

i

"We may ex-

pect

cans

greatei

may .expect

York'

New

of

We

j

America

City.

"(1)

Co.,'President of

years ago
Chairman of the

was

meet 'the postwar
Of the industry.

try

■

?

he

Education

bring about stable readjustment. /Looks for amendment, but not
repeal, of Taft-Hartley Act.

CHRONICLE

Association, several

when

Former New Dealer predicts natural forces in economic life, together
with moderate character of President Truman's top advisers, will

sociation

FINANCIAL

Julien Collins .&

Holey Foresees No Business Disturbance
Arising From Election Results

Brassiere

&

that

for

country

the

the

half time

obvious to

seems

market

a

com¬

that

me

government
one where

debt securities must be

investors

deal

can

with confidence.

I

at

all

remain

times
of

(Special

to

The

Financial

Chronicle).

NEW

ORLEANS, LA.—William
Wallace Bouden, Jr. has opened
offices
engage

in

the Baiter Building to
in the securities business.

Mr.

Bouden

ner

in

was

formerly

a part¬
Newman & Co.

Randolph

Prior thereto he

was

with Weil &

Arnold.

Alexander C. Sterling Is
WRh Cruttenden & Co.
(Special

to

The

Financial

Chronicle)-

CHICAGO, ILL.—Alexander C.
Sterling has become associated
with Cruttenden & Co., 209 South
La Salle Street, members of the
New

York
and
Chicago
Stock
Exchanges. Mr. Sterling was for¬
merly with Carter H. Corbrey &
Co. and prior thereto was an of¬

ficer Of Joseph F.

Dixon & Co.

G. W. Ziller, Inc,,
RENO,
NEV.—G.
Inc., is engaging in

Reno

in
W:

"Ziller,

securities

a

business from offices at 730 Marsh
Avenue.

ler,

Officers

President

W.

McDonald,

and Rae G.

the

G.

are

and

W. -Zil¬

Treasurer; R.

Vice-President;

Ziller, Secretary.

-

conviction that for the foreseeable
future the support program should
be continued. • This conviction is

Mason, Moran Co. Adds
(Special

to

The

Financial

Brokers

shared by all the members of the
Board of Governors, the members

Association of the Twin City, In¬

of the /Federal Open Market Com¬

of

mittee,

Chronicle).

,

La Salle Street.

vestment

Bankers

corporated.-

-

and

'

>

-

Mr. Upgren commented
on

;general

economic

ahd then opened the
a

question and

for the annual

are

briefly

conditions

meeting for

answer

Arrangements

*

*

session.

under

meeting which will

be held in late November and will
be the first,

club.

"

-

-

anniversary, of. the
- V
'
**
-

.

.

.

by

the

Treasury.

is also supported by the
financial .opinion in the

international

hardly

conducive

Treasury look
very

very

It

dresen has been added to the staff

Mason, Moran & Co., 135 South

country
cur¬

situation

With Conrad, .Bruce & Co.
(Special

is

to

making the
kindly toward

much higher borrowing rates

•for the -Federal

CHICAGO, ILL.—James L. An-

weight oi

/"And I might add that the
rent

way

and

-

Government.

In

the event that military -expendi-

LOS
H.

Ohler

with

to

The

Financial

ANGELES,
has

Conrad,

Chronicle)

CALIF.—Ben

become -associated

Bruce

West Sixth Street.

-

&

He

Co.,

was

ously with Morgan & Co.

530

previ¬

Volume

168 ; Number

4750

THE

COMMERCIAL
well

as

&

FINANCIAL

related

as

banking

CHRONICLE

(1975)

23

oper¬

ations."
!l<

News About Banks

Walter

died

Bankers

and

ETC.

the

Peicu

.

York

National

27th

Bank's

of

New

City offices, was opened for

business

Nov. 10 at 23rd Street

bers viewed clippings tracing the

of

present

the

institution.

is

name

The

result

the

of

Village.

East

Cooper
Visitors at the branch on

opening day included Winthrop W. Aldrich, Chairman and
Arthur W. McCain, President of
Chase, and Frederick H. Ecker

merger

Leroy A. Lincoln, Chairman
and President, respectively, of the
Metropolitan Life Insurance Com¬

developers of the housing
projects of Peter Cooper Village
and
Stuyvesant
Town
on
the
East Side. Officers in charge of the
pany,

branch

Herbert

Tietjen,
Manager, and John Lundwall and
William H. Siddons, Jr., Assistant
Managers. Henry G. Staubach is
Manager of the Chase Safe De¬
posit Company at the new loca¬
tion.

The

the

by

are

building occupied

new

branch,

limestone

and

porates

steel

one-story

a

structure, incor¬
of innovations

number

a

in

design in both the banking
quarters and underground vaults.
■

.

■N.

The

of

^

«

Baxter

*

Jackson,

Chemical

Company of New York
Nov.

on

4,

at

Trust

&

host

was

dinner

a

the

of

Quarter Century Club of the bank

Bank

in

founded

-

•

*

The State Street Trust Company

of

Boston,

tion

Frank

of

Brighton
and

the

announces

to

J.

LaRoche

Assistant

Charles

promo¬

MacKinnon,

Mr.

LaRoche

perience

in

gained

various

broad

Avenue

and 59th St. The club has

a

mem¬

bership of 201 of which 156 are
actively employed and 45 have
election which

preceeded the meeting, Miss Edith
A. Adams succeeded Emil J. Horn

President of the club.-

as

being assigned
the Massachusetts Avenue Of¬

to

fice

several

been

with

where he

ago,

years

will continue.

Mr. MacKinnon has

the

since

bank

,/

/

*

,

*

•

* •

■

•

when

he

Forces.

in

served
He

will

the

U.

Air
the

sion of the Trust Department.
/
$ '
%
Kt
'' '
1

•

The

consolidation

Paterson
■Co.

of

National

Paterson,

$2,000,000)
tional

and

Bank

of

First

&

Trust

Bank

J.

N.

The

Company of New York
that

Stanley

Cashier

in

H.

announces

Grant,

the

Public

Assistant
Relations

Department, has been elected

(Capital

Second

Vice-President, and that
A. E. Kayruktis, Manager of the
Credit
Department,
has
been
Assistant Cashier.

an

Trust

(Capital
charter of

A directory of Brooklyn manu¬
facturers, merchants,
businesses
and services has been compiled
by 1 Colonial
Trust
Company's
Kingsboro Office at 69th Street

5th

Avenue, Brooklyn, it is
announced by Arthur S. Kleeman,

President. The directory, prepared
under the direction of William H.

Bassett, Vice-President in charge
of the Kingsboro Office, was com¬

piled from lists of the bank's de¬
positors. It will be maintained as
community service, Mr. Klee¬
said, to provide information

a

man

regarding
available

goods
in

services

and

Brooklyn.

The

di¬

rectory will not be published, but
will be used to provide answers
to

requests

information.

for

main office of the

Thb

Colonial Trust

Company is in New York.
*

Queens

.

#

Savings

President. The
known

as

Joseph

Bank,

Upton,

office will be

new

the Kew Gardens

Branch.

The

of which

are

bank,

main

and

Paterson*' be¬
Oct.

on

29.'

The

capital stock

common

a

$3,000,000, in 120,000 shares, of
(par) and a surplus of

$3,000,000. Reference to the pro¬
posed Consolidation appeared in
,

issue of Oct. 28,-page

Marvin

;

W.

Smith,

1766.

Committee

Executive

Locomotive

Baldwin

elected

a

Philadelphia

of

The

.

Works,

director

National

Philadelphia,

has

of

The

of

Bank,

Pa.,

according to
by
Frederic
A.
Potts, President of the bank. Be¬
fore going "to Baldwin lin August
of this year, Mr. Smith was VicePresident
of
the
Westinghouse
Electric Corp. in charge of. engi¬
neering and research, and an au¬
thority on plant design and de¬
velopment. On July 29 he was
announcement

elected
when

director

a

Baldwin

of

agreement

an

Hills

offices

located at 38-25 Main

Street, Flushing, also has
in

branches

Corona and Little

Neck, N. Y.
Queens
County
Savings
Bank,
with resources of over $90,000,000,
will

observe its

90th

anniversary

next year.
*

whereby Baldwin agreed
Westinghouse
500,000

addition

In

common

stock.

to

serving on The
National
Bank

Philadelphia

a director of
Company and Flan-

board, Mr. Smith is
the

Midvale

Bolt Company.

nery

Girard Trust Co. of Phila¬
a

clear¬

ing member of the Stock Clearing
Corporation

of

Philadelphia,

it

The

Community

Savings

Bank

announced

liam K.

delphia -"Evening Bulletin," from
which

the

/foregoing

added:

is

quoted,

'

"J./Malcolm
President
named

a

of

Girard

is

first

corporation.

A

of

Vice-

has

been

directors.

bank

to

join

subsidiary of

the Philadelphia Stock

kind in the

dent to P>e occasion, the Rochester

bank,

board

the

79th

Nov. 1. Inci¬

Johnston,.

member of the Clearing

the

on

the

Corporation's

of Rochester, N. Y., celebrated its

anniversary

of

manager

control,

in

and

foreign

Dealer"

also

reported

had

that

been

Sol

W.

Carson, President;
Heumann, Chairman of the

Exchange,

corporation is the oldest of its

$

Board of Trustees, and staff mem¬




from

in

part

all

to

Its functions

clerical

relieve

members

transactions

.

Mr.

that money

the

of

quotations

in

belief that the

the

government

.

.

.

portant changes in monetary policies

anticipated.

are

..

.

im¬

no

There is

(

also the opinion that if greater

I

of Treasuries within support limits, the monetary authorities

sive

has

been

that be

powers

in

their

holders.

4

required to keep prices

powers are

much better position to get them than in the past.

a

Also the

,

Chairman and Ralph P. Dixon,
Vice-President of the Citizens Na¬
tional Bank of St. Bernard, Ohio,
and President of the Ohio Bank¬

in

now

efforts

expected to be much

are

to

is**

Since

.

change in the political Administration,

no

.

market

"pegs" will be maintained and

rates will not be advanced too sharply.

there is to be

s-i

Association,

to

Assistant

Peoples National Bank, Grand Rap¬
ids, Mich., has
been
appointed

ers

turnabout

attributed

i

Ira A. Moore, President of the

;

.

The

1

retard

sales

more

bonds

of

...

by

are

.

.

.

aggres¬

non-bank

-

NO CHANGE IN MONETARY POLICIES

The reelection Of President Truman

ap¬

that current monetary-

means

pointed Vice-Chairman of the Ad¬

policies will be maintained in the foreseeable future.

visory

of the 2V2% rate for

.

.

.

Retention

long Treasury obligations appears to be assured,
While mildly restrictive measures such as moderately higher shortterm rates and larger reserve requirements will no doubt be con¬
tinued.
However, the future course of the money markets and
money rates will be determined by the pattern of business activity

of

which will

Council

of

the

School

of

Banking of the University of Wis¬
consin, sponsored by the Central
States

Conference,

the

Board

-of

as

announced

Trustees

the

of

School

and Secretary of the Illi¬
nois Bankers
Association, Chicago.
The Chairman and Vice-Chairman
of the Advisory Couneil of the
School

riod

1,

each hold office for

of

a

pe¬

beginning Nov.
The School of Banking,

one

1948.

year,

established in 1945 with
enrollment of 47

four. years

to

initial

an

students,

grew

Two

in¬

volved in the transfer of securities

be shaped in no small way by government
expenditures,
notably those for defense or military purposes.
If there are to
...

be abnormal appropriations for defense needs,

which will throw the
budget completely Qut of balance and bolster the inflation spiral, then
there is no doubt that counter measures will be sought and if obtained
Will be put into effect by the money managers in order to control or
curb the inflationary trend.
...

LIKELY STEPS

in

Excess profits or similar types of taxes would be

tainties under such conditions.

year's session,

practically

cer¬

committed to

from 26 States and the District of

Columbia.

.

.

enrollment^'of

an

450 students at this

weeks'

resident

.

.

The Administration is definitely

.

a program of halting the
high cost of living and one of
the best ways of doing this, politically at least, is by
increasing the
taxes of those that are rather impotent at the ballot box.
Along
...

session each
of three

for a period
together with ex¬

summer

years,

tension work throughout the in-r
terverring months of the first two
years, is required for a certificate
of graduation.

The school is

spon¬

by bankers' associations in

with

profits taxes, when,

excess

and if needed, would probably go

as

"recommendations to the Congress of greater power for the monetary
authorities over the money markets.
The power to further in¬
.

crease

be

extended

.

.

requirements of the commercial banks would

reserve

natural

a

to

seem

under such

to

conditions, with this authority likely to be
deposit banks and not just to members of the

all

'

System.

•

15 mid-Western States.
t-

The

t'fi

City

Trust

has

Mo.,

of

Bank

prepared

a

not be

and

Kansas

City,

as

of

display

inflation

of

which

j

Eccles suggested in

request the

any

came

indicated but many believe that "Special Reserves" such

Mr.

which shows the ruinous

currency

growth

Whether the higher requirements would be entirely cash can¬

!)!

National

Company

over

the

money

the

past will

be

very

prominent in

that be will make for increased controls

powers

markets.

...

to Greece and

Germany. The cur¬
rency's descriptive text is fastened
to

four

panels

hibited in

and

be

may

variety of

ex¬

The
wishing to
show this display for a short time
in lobbys, windows or fair booths
a

ways.

bank states that banks

without charge, get this dis¬
by writing City National

may,

play

BROADENED REGULATION

When, as and if there is need for greater control over the money
markets, it is believed that legislation will be asked for that will give
the authorities power to regulate the financial operations of insur¬
ance
companies, savings banks and all other unregulated lending
agencies.
The inflation spiral is evidently not going to be aggra¬
vated by the actions of those lenders that are not currently within the
,

range

Bank.

Paul

Crawford

sistant

Vice

Anglo
of

President

California

San

He

was

He

the

there

died

a

field.

On

Feb.

26, 1940, he returned to the
banking business, becoming asso¬
ciated With Anglo California Na¬
tional Bank.
He was appointed
an

Assistant Vice-President of the
in

bank

which

March,

he

Two
dents
the

until

held
-

«

new

were

1941,
#

'

a

his

position
death.

«

Assistant Vice-Presi¬
named

directors of

National Bank

on

the

of

Oct.

26 by

Seattle-First

Seattle, Wash.,

according to the Seattle ''Times"
of Oct, 27.
ner,

They

Manager

branch

the

since "New Deal Policies"

elections.

past

two

Broadway
years,

of

and
the

building-management de¬

Midland

Bank

#

announces

Ltd.

,

of

in many

.

..

fight inflation, it

seems as

over

though

are

much alive after last week's

very

,

industries, should continue?

Sadd,

.

tionary trend.,.

.

(This assuming

.

.

.

.

.

.

Expenditures by industrial concerns quite likely
readjustment" in business.
business and the selling
of government securities by non-bank holders;
There could even
be a demand for Treasury obligations-by banks as well as non-bank
.

.

would-be curtailed with the "rolling

.

.

.

This would relieve the need for financing by

investors.

,

;

/

.

.

.

.

.

/

,

■

NOTES
;

Industrial

concerns

have

been

sizable

buyers

of Treasury bills

since it is indicated that surplus funds,are

being put into this security
temporary investments.
The current rate on bills is attrac¬
tive to those that are interested in putting funds to work for short
periods. .
v "
'
as

.

money

Eccles Will be
to shape

a

market

more

.

,

followers

believe

for

deposit banks

his seat

authorities.

that

Marriner

S.

important force from here on in helping

future Federal Reserve policy.

Reserves"

consideration, if larger

the board of directors.

".

step-up in defense expenditures.)

owing to ill-health, has resigned
on

.:.

greater regulation

no impor¬
An increase in taxes
would be ruled out under such conditions, and the need for greater
power over the money markets undoubtedly would pass because the
inflationary spiral would be broken.
There would be less con¬
cern
over
Treasury obligations since the pressure of liquidation
should abate, if not entirely disappear, with a receding of the infla¬

tant

,

London

that Sir Clarence

.

.

Some
%

of

What is likely to happen if business activity does not follow the
inflationary pattern and the readjustment, which is already going on

partment.
❖

necessity

ON THE OTHER HAND

Fred C. Jen-

the

'L.. Sutherland

Howard
bank's

are

of

the

of

native

was

investment

be

on

actively en¬
gaged
in the banking business
from 1917 until 1922, when he en¬
the

should

the chances of getting it are much better with the new Congress,

Bank

49 years of age.

was

McKnight

California.

Cal.,

.

the money markets in order to

As¬

of

National

Francisco,

Oct. 30.
Mr.

-

McKnight,

.

of authority of the money managers.
If

country, having been

established in 1870.
are,

.

ment.
sis

.

.

.

.

Vice-President since January, 1946,
and
was
the
junior officer in
charge of its fiscal agency depart¬

"Times-Union" said:
"Charles

.

January,

,

on Oct. 25 by Wil¬
Barclay, Jr., President of
the corporation, and the Philadel¬
phia Stock Exchange. The Phila¬
was

.

.

1943, Assistant Cashier..The "Plain

com¬

was

sell

to

shares of unissued

the

*

s

department,
funds

.

pleted

advanced to Audit Super¬

visor, Assistant Auditor, Manager
of the
credits, loans and discounts

Vice-President and member of the

..

.

was

sored

-Executive

delphia has been elected

ings bank in Queens County, will
open a temporary new office at
76-02 Main Street, Flushing, upon
completion of alterations, it is
by

of

Bank

$25 each

The

**

County

Bank

Comptroller of the Currency, re¬
ports that the consolidated insti¬

our

as

Audit Clerk. From Audit Clerk

he

tered

of Flushing, N. Y., the oldest sav¬

announced

National

effective

came

the

Company and under the

Company

been

and

under

First

of

Na¬

Paterson

an

Assistant

elected

Trust

&

title

•'

,•

the

of

'
The government bond market has put on quite a show since the
elections, particularly'the longer partially-exempts.
The taxable
bank issues also moved away from
support levels, while the taps are
giving evidence of buying from sources other than the Central Banks.
Short covering tax protection
along with some position building
is responsible for the improved quotations in the
eligible obligations.
.:
Purchases of the ineligibles at prices just slightly above the pegs
are reportedly being done by non-bank
investors, in order to rebuild
holdings that were disposed of just prior to election day.

by Harry C. Hausman,1 Chairman

S.
in

remain

Investment Trust Custodian Divi¬

of

•

Sterling National Bank & Trust

.

1929

with the exception of three years
and a half during World War II

tution has

•

.

ex¬

departments

of the bank before

the First Paterson National

an

of

of

Beverly to Assistant Trust Officer.

Hotel

at Park

of

Secretary

$1,500,000)

been retired. At

Dealer"

1918, when he joined the staff

Findeisen

«

held in the grand ballroom of the
Delmonico

1869.

.

the founders.

among

Chairman

Bank

Side

Many men prominent in the de¬
velopment
of
Rochester
were

and

new

"Plain

Governments

on

By JOHN T. CHIPPENDALE, JR.

Oct. 24, it is learned from

on

Cleveland

a

in 1944 with the Mechanics
Bank, founded in 1867, and the old

the

Reporter

Ohio,

an

history

Our

,

and First Avenue, in Peter

on

Cleveland,

25, which noted that Mr.
Findeisen had been with the Fed¬
eral Reserve Bank since
February,

Branch,

cooper

Chase

of

Oct.

CAPITALIZATIONS

The

»

■

Findeisen, Assistant

Bank

serve

NEW BRANCHES

REVISED

L.

!}!

Vice-President of the Federal Re¬

CONSOLIDATIONS

NEW OFFICERS,

$

will

reserve

most

.

.

.

His plan of "Special

likely be

given greater

requirements are sought by tjhe

& FINANCIAL

COMMERCIAL

THE

<1976)

m

in First Half of Year
operating
Total net earnings

more

Autumn issue of "The

were

This
i

>

vestments

of

n c r ease

of

the gross

over

for
the first six
months of
tl 94 7.
The

and

losses

therefrom

earnings

;

previously charged out)
$59,849,000,
and
deducting

reserves

>$90,062,000
.

recoveries on loans and in¬
(including recovery of

and

an

was

charge-offs

Index,"

253,000, the net profits before div¬
idends for the six months ended

principal item
of operating
^earnings in
.

t

of

<

first

30, 1948, amounted to $196,866 000 which, at an annual rate,
amounts to 7.10% of capital funds.
June

half

1 9 4 8

the

t

was

■

?

net

interest

from

in

apparent reduction

an

dividends of
half of

before

profits

$44,832,000 from the first

discount

and

is

This

Delano

Preston

$423,091,000

'f

loans, which was an increase
of $94,262,000 compared with the
(Corresponding
period in 1947.

z^on'

comparison of the re¬
sults of the current period with
1947

but

a

r

operating

principal items of

Other

.

$294,780,000 from
(interest on United States Govern;\ment obligations and $54,604,000
interest and dividends on other
securities, a total of $349,384 000,

«earnings

were

'

in 1947 and
previous years is not practical
owing to reserve accounts amount¬
ing to $99,309,000 charged out of
current earnings, largely the re¬
serve
for bad debts utilized by
the

i;

reduction of $15,191,compared to the first half of

rWhfch
vOU0

was a

«'?■the previous year, and $47,561,000
irom service charges on deposit
'ccounts, an increase

of $7,358,000.

expenses, excluding
net income, were $570,-

on

.€83,000

'■the first half of

:

■

directors,

to

deposits,

53.07%

of

473,000.

was

an

of $6,611,000.

an increase

■'-Adding

the

to

operating

net

stock

preferred

in their
On

household
consumer

automobiles,

the

other
they have

and

of shortages grow¬

The
a

credit which account

of consumer

for

approximately

total

on

to¬

purchases

"One

1948, there were

effect

controls

may

the

of the
be in

what consumers get
goods covered by

determining

5,004 national banks in operation,
which was a decrease of 14 banks

on

one-half
credit.

significant

credit

new

available

the

new

regulation.

"There is

no

question about the

constant need for careful

30, 1947.

serve

scrutiny

requests for consumer credit.
new Regulation W will prob¬

on Nov. 5, released a by it.
The primary objection that
had adopted several amendments to proxy may be voiced to the restrictions
rules.
Last July the SEC published proposals for certain amend¬
ments to its Regulation X-14, relating to proxies set up under Sections

-has-iduly considered all comments
atuL suggestions received in con¬
nection with the proposed amend¬
ments and is taking action in. re¬
gard thereto.
\Among
the

amendments

adopted are a clarification of the
•term "last fiscal year."
"iThe

fiscal

"last

term

thedssuer

year"

of

the last fis¬

now means

the issuer ending prior
to (the date of the
meeting for
which proxies are to be solicited.

cal year of

AAnother

relates

amendment

to

the form of the proxies.

that proxies

JTtr-has been found

misleading in certain
they did not indi¬
cate- clearly whether or not the
solicitation was made on behalf

have

been

•oases

in

of The

that

management

Oft Other

behalf
order to

or

on

In

persons.

remedy this situation, the rule is
amended to require that there be
forth in bold face type on the
iform of proxy an

'Whether

or

indication
is

it

not

solicited

•hehalf of the management.
t

in

order

>

a

to

prevent

solicitation

mature

as

of

to
on

.

the pre¬
proxies at

time when material information

•bias not yet become available, the
rule provides that no

-Hgtmended

authority to
meeting other
sthaii the next annual meeting (or
shall

proxy

confer

vfrter at any annual

^adjournment thereof) which
be held after the date on
Which the solicitation is made.

H&to

VThe Commission has heretofore
;n
m

the position that the soliciof proxies constitutes an

y&tolied
■"sons

representation
making

the

by

the

solicitation




The

——

the

shares

represented

by

the proxy will be voted.

In order
to make this representation more
explicit, the amended rule re¬
quires that the proxy statement
3hall provide that the shares rep¬
resented by
the proxy will, be
voted, subject to reasonable spe¬
cified conditions.
A

new

rule

the Commission

of

the

requires

received
second
of

management to in¬
clude in its proxy material pro¬
posals seasonably submitted
by

sonal

ends

which

not

are

per¬

neces¬

sarily in the common interest of
the

issuer's

erally.

security holders gen¬

In order to

prevent

such

abuse of the

rule, but without un¬
duly
restricting
the
privilege
which it grants to security hold¬

New York says operation

management, the names of the
persons
on
whose
behalf it
is

the

it

clear

in

solicitation

behalf

of

the

In order to

such

is

not

that

cases

to

threat

became

It

recovery.

that

clear

countries,

European

all they would like
Western
Hemisphere,

unable to buy

the

from

with the

gain in national income
in the wholesale

and the increase

level,"

price

total

adds

Index"

"The

volume

of

consumer

outstanding would now be

neighborhood of $20 billion,
contrasted with the actual $14

in the
as

billion

reported."

and

tions,

•

were

tried

Sterling convert¬

could it have been sus¬
might have solved the
problem of compensating bilateral

ibility,

tained,

providing a
acceptable means of
payment.
Even so, the problem
of
financing net deficts would
have remained.
Sterling convert¬
ibility having failed, the problem

debits and credits by

next attacked through the

stitution of
ducted

national
did

a

for Inter¬
This, too,

by the Bank
Settlements.

not

in¬

clearing scheme con¬

results,

major

produce

because the countries that

became

"permanent
members"
of the
The current issue of the "Monthly Review of Credit and Business
clearing
(Belgium and Luxem¬
Conditions" published by the Federal Reserve Bank of New York,
bourg, France, Italy, Netherlands,
contains a description and analysis of the Intra-European Payments
and
the
Bizone)
did not firid
Plan, which was formally adopted by European nations participating
enough opportunities for clearing
in

the

European

Oct.

on

gram

and

clearest

Pro-<$

Recovery

16.

As this is the
authentic

most

ac¬

and

fluctuate

would

entirety:
The
Intra-European

any case over

Payments

Plan, proposed by the Organiza¬
tion for European Economic Co¬

prin¬
ciple by the Economic Coopera¬

operation

and approved in

Administration,

tion

been

has

ation

the

of

remove

plan is

expected to

part of the log jam that

increasingly

European
Before

clogged

intra-

uncertain

in

their

eco¬

or

in

the

agreed

usually to be
In view of the

trade

and

supply con¬

ditions, the size of the credit mar¬
gins usually had to be determined
arbitrarily
rather than on the
basis of

prospective trade currents

While in some instances the ex¬

pected two-way swings in trade
balances materialized, very often
the

reciprocal credits were util¬
only in one direction and
tended

to

manent. Pronounced
debtor

relations

creditor and

developed,

Bel¬

and Switzerland becoming
creditors, France a gen¬
debtor. The United Kingdom,

gium

the chief
eral

become per¬

while

themselves,

among

the

members"
motive for

usually
rejecting

clearing operations
to them by the BIS.

proposed

"occasional
found

some

the

third

A

line

of

approach

was

proposal of the
Committee of European Economic
Cooperation, in September, 1947,

implicit

in

the

aggregating

for stabilization funds

$3 billion which were to be added
to the amount of Marshall Plan
aid

proposed

by

committee.

the

While the proposal was
rated in detail and was

marily

and credit needs.

therefore

role

of

excess

paid off in gold.

ized

essential

seasonally,

short periods. Bal¬

credit margins were

the

trade among
the countries participating in the
ERP accounted for 51% of their

an

in

ances

trade channels.
war,

credit

reciprocal

the

helped to overcome the

with the text of this article in its

total exports and 38% of their
on
Item total imports, and therefore played

3(b) is amended to require a spe¬
cific statement to that effect,

without success.

was

need for more
European payments problem.

sees

Problem

solutions

Various

universally

limita¬
fundamental solution of intra-

made

management,

growing paralysis of intratrade was a
serious

The

clogging intra-European trade channels, but points out its

has

behalf of

the

make

the surpluses to offset

European

Review" of Federal Reserve Rank of
of plan is expected to relieve log jam

made otherwise than

made shall be stated.

surpluses

and

deficits

the deficits.

Infra-European Payments Plan

places reason¬
able
limitations
upon
the sub¬
mission of such proposals.
Item 3(b) of Schedule 14A in
the proxy rules has heretofore re¬
quired that if the solicitation is

the amendment

on

currencies, - which
country with equal

a

from using

November issue of "Monthly

formally adopted by the countries
participating in the European Re¬
covery
Program,
through
the
OEEC resolution of Oct. 16. Oper¬

ers

dollars

inconvertibility

the

European

bilateral

device
shortage
Underlying
holders.
The
Commission
has count available of the plan, which of foreign exchange.
found that in a few cases security is to be an integral part of the the reciprocal credits was the as¬
holders have abused this privilege operations of ECA, we print here¬ sumption that the balance of trade

security holders which are proper
subjects
of
action
by
security

by using the rule to achieve

group,

a

other sources. The

from
was

prevented

pointed out that dur¬
three years since V-J

as

debtor countries could

only by paying out

meet

consumer

credit

iThe Securities and Exchange Commission,

that

countries

ERP

other

which the

ceeds $14

"the

statement revealing that it

Securities-*'

of

publication observes that
credit now ex¬

The

One was the net deficit
individual countries with the

aspects.

Day, the United States public has
gone into debt more rapidly than
in any other period in history.
while

this impasse had two

viewpoint,

Board

the

ing

ably work no hardship upon the
majoritv of businessmen affected

SEC Amends Proxy Rules

Act of 1934, apd in¬
vited comments and' suggestions.
Tthis now stated the Commission

Regulation W requires

payment of one-third of

down

must increasingly buy from each
billion as compared with
other.
Furthermore, the most ef¬
the previous record volume of $10
fective distribution and use of re¬
billion in
September, 1941, na¬
sources required that, for a while
tional income in 1947 was almost
at least, some of the ERP coun¬
double that in 1941 and was about
tries be enabled to incur fairly
increase the total number of auto¬ three times that of the average
sizable deficits with the rest of
mobiles sold since it appears that for 1935-1939, and that the whole¬
the group.
This called for some
sale price level has approximately
so far as the immediate future is
means
of financing the balances.
concerned there is a ready.market doubled since 1941.
for every car. that can be produced.
"Had consumer credit kept pace
Earlier Approaches to the

The larger down
payment required may keep sopie
people from getting new automo¬
biles as soon as they otherwise
would, but it will probably not
the

of

14(a) and 23 (a) of the

of sterling con¬

failure

the

on

The

and Exchange

with

ing out of the war program. So the cash price on new automobiles,
long as the rate of flow of income of approximately one-third of the
price of used automobiles
to the public is greater than the cash
increase in supply of goods and and a one-fifth down payment on
services, prices cannot be kept 11 other categories of consumer
down merely by agreeing to do so. durable goods having a cash price
"The
new
regulation applies of $50 or more.
Testimony presented before the
only to a dozen lines of durable
Banking
and
Currency
goods bought on instalment credit. House
Committee for the Federal Re¬
It does not apply to other types

capital accounts.

since June

all

appliances

durable goods

or more

years

profits, or $104,retained by the banks
30,

consumers," the

unable to buy in the seven

been

net

June

States

months

few

$92,393,000 in comparison
with $86,640,000 in the first half
of 1947. The annual rate of cash
dividends was 3.33% of capital
funds and was 46.93% of the net
profits available.
The remaining

increase of
$27,128,000 oyer the first half of
1947,
and
$87,194,000 expended
<"or> interest on time and savings

maid

and

common

cipal operating expenses
were
£272,545,000 for salaries and wages
li officers and employees and fees
'

"United

study continues, "have been clam¬
oring to purchase in a relatively

taled

against $516 946,000 for
1947. The prin¬

as

declared

dividends

Cash

* -

deficit countries were forced to
by govern¬
cut their purchases to the level
private enterprise and the
of their sales; and the proportion
buying public,
of
trade
in
nonessential goods
"Greater production and a sound
Federal government financial and grew as surplus countries sought
means
of converting their out¬
budgetary policy remain the ulti¬
mate answer to the problem
of standing credits into imports.
From
a
balance of payments
rising prices."

ment

York Trust Co.

1,877 national banks under the
provisions of Mimeograph 6209
issued by the Bureau of Internal
Revenue in December, 1947.

(Operating
faxes

period

similar

'

encroachment

more

quarterly publication of The New

(including current charge-outs for
reserve purposes)
of $152,078,000,
and taxes on net income of $88,-

*

During 1947, however, the
unwillingness of credi¬
tors to advance new credits, and
the inability or unwillingness of
debtors to pay in gold, together
growing

Controls recently reimposed by the

earnings the profits on securities
sold or redeemed of $22,041,000,

i$926,190 000.

showed

vert i b i 1 i t y, made increasingly
Federal Reserve Board may
necessary the bilateral balancing
check the rate of expansion of instalment credit, but while the
of
trade
between each pair of
demand for automobiles and other consumer durable goods exceeds
trading countries.
Trade in the
the supply, the total volume of such credit will probably continue to
aggregate
began
to
shrink in
rise, according to a study in theA
terms of physical vclume, as the
is that they represent just one
Autumn
issue of
"The

earn¬

ings

considered.

are

as credit margins re¬
available, intra-European
remarkable recov¬

long

ery.

controls, such credit
will continue to rise. Points out present consumer credit volume,
though high, is less than prewar, if price level and industrial output

United States and possessions reported
,,net operating earnings of $355 307,000 for the six months ended June
'30, 1948, an increase of $36,125,000 over the first half of 1947.
Gross

Index," published by the New York Trust

Company, holds, despite recently imposed

$ithat the national banks in the

t

As

mained
trade

Delano announced on Nov. 5

Comptroller of the Currency Preston

•

bilateral positions.

Controls and Trends

than 10% over first part of 1947.
unmounted to 7.1% of capital funds, with slightly less than onehalf of amount paid out in cash dividends.

ftprofit of

creditors,
had
substantial <
debits and credits in their various
or

Appraises Consumer Credit

(Comptroller of Currency Delano reports increase in net

net debtors

large

being

without

tional Bank Earnings Up

1948

Thursday, November 11,

CHRONICLE

for

stabilization

purposes

in

the

not elabo¬
made pri¬

of internal
countries to

its effect on intra-Euro¬

be aided,

trade might have been to put
that trade on a dollar standard.

pean

As

long

scarce
as

an

as

the dollar remains a
however, its use

currency,

means of
easily have had

intra-European

might

payment
restrictive

effects.

Countries

might have endeavored to buy as
little from each other as possible,
in order to extract dollars from

When, at the end of which during 1947 and early 1948
their trade partners that could be
The text of the amended item the war, efforts were made to re¬ was heavily in debt to many ERP
sume this trade, it had to be done
countries, found its position im¬ spent in the United States, unless
is as follows:
the United States were prepared
"(b) If the solicitation is made largely on the basis of bilateral proving rapidly thereafter and is
to continue putting up enormous
otherwise than on behalf of the clearing agreements involving re¬ expected to run a large active bal¬
amounts of dollars, or the ERP
eredits.
They bilateral ance with ERP countries-gener¬
management, so state and give ciprocal
countries were willing to pursue
the names of the persons on whose trade
pattern- was (familiar, to ally during the year ending June,
deflationary / policies
A
number; of ^countries, severely
behalf it is made."
many countries from prewar days 1949.
nomic

life.

,

Volume

168

THE

Number 4750

which

to

COMMERCIAL

simultane- 1 used to

would mitigate the dollar
shortage. From a long-run view¬
point, the universal use of the

ously, although the timing of their
actual utilization may differ.
If

Hemisphere

dollar in world trade would

cer¬

the utilization of conditional dol¬

tainly be profitable to the United
States, as the similar role of ster¬
ling was at one time for Britain.

lars and hence the building up of

But

the

FINANCIAL

CHRONICLE

is the main

while

scarce

the

dollar

its

currency,

versal

of

remains

use

as

a

uni¬

a

be

available

&

made

country

of

the drawing rights,
is expected to pre-

creditor

finance

the

drawing

rights

and

later reimburse himself out of the

receiving "indirect aid"

beneficiary of the op¬
eration.
Likewise, of course, the
drawing rights granted by the
creditors are not gifts, but simply

counterpart funds lags behind the
utilization

part of the Western
deficit.: The debtor

cover

,

export

surpluses

creditors

for

receive

which

dollars.

the

This

is

not to

almost certainly prove restrictive,
and to make dollars sufficiently

counterpart

deny that some of the ERP
countries may be making a very

upon

valuable

available

to

of
their fellow-partici¬
pants. But this depends primarily,
not upon whether they are intra-

such

means

at

this

time

outcome

an

part

require

effort

the

on

of the United States,

al¬
deflation

most
on

avoid

to

would

disproportionate

a

would

payment

or

impossibly severe
part of the participating

'the

countries.

It

was

realized, however

soon

ERP

American

that

progressed,

aid

could

be

used

to

unblock European trade and pay¬
ments
without
a
special dollar

pool

and

without

to the United

ods,
the

"offshore

The

available,

were

method

"local currency"

method.

purchase

its

owes

shore

the

of

purchase"

offshore

which

cost

Two meth¬

variants

principle,

and the

additional

States.

essentially

same

method,

provisions of the
Cooperation Act, con¬
giving intra-European

in

debtors

the

dollars

required to
pay for their intra-European def¬
icits.
Under this method, which
ECA used during the third quar¬
ter of 1948, special "supplemental"
dollar

allotments

to

made

were

the debtor countries to meet these

deficits, in addition to the "basic"
allotments

which

their

covered

."Western Hemisphere deficits. The

supplemental
made

each

allotments

were

the basis of the bilateral

on

deficits

of

the

the

of

other

participating
in advance,

estimated

and

earmarked

were

with

recipients

countries,

for

expen¬

diture

in

specific

tries.

In

making its basic allot¬

ments

to

in

ECA

own

currency, just as if he
received a direct grant from

had

ECA.
In

addition

rights,

the

creditor

creditor

turn

countries,

into

took

coun¬

account

the dollars they were scheduled to
receive in payment of their pros¬

to

funds to
deficits

available

the

drawing
intra-Eu¬

cover

being

are

through the

existing

balances.

made

release

These

Continental

not

covered

should

be

countries

that

that

the

is

United

Kingdom surplus includes that of
the

entire

sterling

Both the

area.

drawing rights and the

existing balances will be used, not
direct

for

but via

is to be

creditors,

extension of the pres¬

an

BIS

ent

to

payments

clearing mechanism that

a

clearing. All ERP

coun¬

tries will participate in this clear¬

ing, Switzerland and Portugal en¬
tering it on a special footing. The
that

balances

accumulate

payment-agreements
a

result

of

current

in

the

accounts

as

will

be

trade

were

allotted dol¬

lars equal to their Western Hemi¬
sphere deficits minus their intra-

European surpluses.
Main

Features

of

-

the

Payment

Plan

It

is, however, the local cur¬
method which the OEEC
has row, for a variety of reasons,
rency

decided to

use

as

the basis of the

arising

balances will enter into this clear¬

ing,

old balances being consoli¬
dated, except those which are re¬

ing

for

the

deficits.

of

purpose

At

the

cover¬

the

outset

clearing will be limited to situa¬
tions where, with the aid. of the
drawing rights, closed chains of
indebtedness
which

each

be established in

can

country in the chain

holds the currency of the preced¬

ings

in which new credit -rela¬
tionships would
arise
("second
order clearing") may be proposed
by the agent (the BIS) but can
be vetoed by countries that feel
themselves adversely affected. It
is planned to broaden the scope
of the clearing
and reduce the
veto right later on.
For the time
being, however, the clearing as¬
pect seems likely to play only a
minor role within the payments

payments plan. Under this meth¬

plan.

od, the dollars, instead
given to the debtor as

of being
supple¬

The
essence
of the
payments
plan, in simplest terms, is to make

given

ERP dollars do double duty: once

"con¬

to

mental

allotment!,

are

directly to the creditor
ditional" allotment

bilateral
ERP

countries

vance

for

on

balances

for

each

one

as a

the basis of

from

ad¬

in

is

goods within Europe, and

to

move

the creditor must grant the debtor

need

of

"drawing rights" in the creditor's

aid.

The

equivalent

conditional dollars received.
debtor

rights
the

theq
to

uses

meet

creditor.

his

the

to

The

drawing

the

liabilities

to

The aid thus given

by ECA is referred to, from the
debtor's
viewpoint, as "indirect
aid."
The
drawing
rights
are
given on a "gross" basis. In other
words,
a
country that has sur¬
pluses with some of its trading
partners and deficits with others
will grant drawing rights equal
to the sum of the surpluses and
receive rights equal to the sum
of the deficits.
This will greatly
facilitate the offsetting of its deb¬
its against its credits. The creditor
will finance the drawing rights
he grants out of the "counterpart
funds" that he deposits upon re-

cepit of

an

ECA conditional allot¬

ment (or upon receipt of

"indirect
aid").
The
setting up
of the
drawing rights, however, is not
to
be
delayed
until
sufficient
counterpart funds have been built
up.
Drawing rights and condi¬
tional dollar allotments

are

rather




to

Europe

time,
plan effectively implements
the "net aid" concept, which is the
most

currency,

At the

overseas.

that

own

goods

the

The condition

allotment

move

again

the

between

estimated

year.

such

a

To

the

ensure

effective

aid

ern

or

in

criterion

each

that

only
on

rational

same

the

for foreign
of the net

country
magnitude

is required

of

depends, not

the
country's
West¬
Hemisphere deficit, but also
its
intra-European
deficit
on

surplus, i.e.,
its

on

over-all

the net deficit

who

is.
originally granted the
rights is assumed by some other
creditor, which implies that the
conditional

dollar

allotment

which

the

rights

are

from

the

balance

of

pay¬

on

based

is

original

and

given to the

out

creditor
one.
With¬

this

new

device, the plan might
intolerable rigidi¬
ties, and might also fail to protect
the legitimate needs, of the debt¬
ors.
At to the danger of rigidity,
easily

it

create

is to. be noted that the advance

estimates

of

trade

balances

on

drawing rights and condi¬
are

based

cover

other

aim

sought by
injecting
into the
plan.
The
debtor countries have pointed out
that their drawing rights will not
flexibility

worth

be

what

they seem unless
they are as effective as dollars
in securing goods.
They feared
that if they
were
placed on a
local-currency basis instead of on
dollar

the

basis

under

used

the

system,
the
creditor countries would gain a
considerable
bargaining
advan¬

offshore-purchase

Upon receiving the "condi¬
tional dollars" directly from ECA
tage.

after

setting

the

up

drawing

rights, the creditor countries, it
was
feared, might feel tempted
to go

supplying desirable
latter, through
use
of export licenses or by ex¬
cessive price demands.
To make
slow

on

goods against the

the

that

sure

would be

as

drawing

effective

as

rights

dollars in

bargaining for goods, it has there¬
that under cer¬

fore been agreed

tain conditions debtors

its

Western

needs aid to

try

with

deficit

of
deficit

top

on

Hemisphere
cover

both.

A

coun¬

intra-European sur¬
plus, on the other hand, can use
this surplus to reduce its dollar
aid
requirements, provided the
surplus can
be
converted
into
an

should be

allowed to seek some other credi¬
tor who would be

them

of

willing to grant

drawing rights, on condition

course

All that the

conditional allotment does for the

original to the new
creditor.
The
danger
for
the
creditor of losing dollars is likely
to make him willing to honor his

-

The

so

it

^an

be

cannot be

to

in

creditors

made

without severely
disturbing the planning of their
imports and eventually the work¬
ing of their entire economy. The
total

of

ERP

dollars

relative

to

the

utmost

left

be

deliberation and

in

any

major de¬

gree to the free play of intraEuropean trade balances.
A sec¬
ond

point is that easy transfer¬
ability of drawing rights, at the
debtor's
option, would give the
debtor free rein to "shop around"
with dollars.
This might have
the

restrictive

same

effects

as

dollar

trading, already discussed.
It might become a motive for cut¬
ting imports, particularly on the
of

part

the

cerditor

drawing rights

from

whom

being trans¬
Finally, it seems clear that
a creditor should not be
penalized
severely for having made too lib¬
were

ferred.

pected

valuable

this

make

and

tive

because

trade

it

the

Debtors

incentive,

exception

of

since

Greece)

too

(with
,

even

of

prob¬
effecv

more

will

the

remove

compulsion to balance accounts
bilaterally.
Trade
can
now
be'
made
as ^multilateral
as
is de¬

sired, yvithin
Nevertheless,

reasonable
one

limits.
doubt

may

whether the plan offers a lasting
solution to the problem of Euro¬

is

by-

no

condemnation of the plan.

a

will

It

This

payments.

pean
means

perform

extremely

an

valuable function by breaking the

present financial impasse in intraEuropean trade.
Its contribution,
,

in

terms

should

moved

order of half

indirectly
the

a

be

the

billion dollars, and

clearly

much

more.

limitations

present

plan

goods

least Of

at

perhaps

the

But

additional

of

j

that

mean

of

con¬

tinued thought and work must be
directed toward strengthening it,
well

as

toward

as

ment of

more

a

the

develop¬

fundamental solu¬

of

tion

the intra-European
problem.

ments

pay¬

eral

estimates of his prospective
surplus, if at the time that aid
was
being divided this liberality
had
earned
him
only moderate
concessions

in

added

issue o'f the

The

dollars.

the

creased

available

them.

themselves,

however
some
doubt

pressed

Group of ISA
ST.

transferability

amount

to

Greely Heads Miss. Vy.

of

net

The

has

have ex¬
as to their

hand, it is believed
quarters that Belgium

some

little

have

trouble

in

n

'

Missis

sippi

Valley

the

Group

of

I

tment

nve s

Bankers

As¬

sociation,
ceeding
H.

Hor

suc¬

Bert.
n

i

n

g,

Stifel, Nicolaus

&

Co.

John

H.

Cra-

Smith,,

g o,

Moore

&

was

chosen

Vice

rome

Co.*
Walter

Cham-

-

man,

J.

Creely

Je¬

and

Tegeler, Dempsey-Tegeler &

Co., Secretary-Treasurer.

G. Carroll

Joins Yarnall & Co.

On the other

in

nee

sleeted Chair-f
man
of
the

aid

British

ability to meet this commitment.

will

LOUIS, MO. — Walter J.
Goldman Sachs & Co.,

Creeley,

meet¬

PHILADELPHIA, PA.—Yarnall
&

Co., 1528 Walnut Street, mem¬
and Phila¬

bers of the New York

ing the commitment it has made
million, and could even
increase its exports if it received

delphia

payment in dollars. There is, con¬

of C. Carroll Seward.

sequently, a chance that drawing
rights and conditional dollars may
be transferred away from Britain.
Belgium^, on the other hand, is the

nel

creditor

the

of $207.5

most likely to gain from

transferability, and has been a
warm supporter of the device. The
Belgian point of view has also
appealed to the traditional Ameri¬
can
preference for multilateral¬
ism, with which concept trans¬
ferability has come to be identi¬
fied, although in the context of
the payments plan it really should
be looked
upon
as
an
element
simply of flexibility.
A

Mr. Seward, a

as

U. S. Army Colo¬

during World War II, served

Chief of the Control Section of

Supply Division.

He has a'long

association in the

securities business and
the original

1935.

now

of

Association,
President

in

His former associations

in¬

served

as

clude Arthur Perry

Webster

& Co.; Stone

Securities,

and

Inc.;

Wurts, Dulles & Co.

compromise ap¬
have been found

to

which

a

rights

modification
may

be

of

recom¬

mended

by OEEC only in three
cases: (1) force majeure; (2) proof
by the debtor that despite every
reasonable

effort he is unable

his rights

creditor;

and

to

against the original
(3) proof by the

that

are

no

last case,

sumably
go

was one

founders of the Phila¬

Securities

delphia
having

&

an¬

the association with them

nounce

satisfactory

pears

use

Exchanges,

Stock

rights granted by
longer needed. In the

Easlman, Dillon To
Admit Bogert,
Eastman,
Broad

Dillon

Street,

up

nave

the drawing rights pre¬
would be canceled and

correspondingly.

been granted. Since decisions

Young
&

New

Co.,

York

15

City,

members of the New York Stock

Exchange

and

other leading

Bogart has been

opportunity to

will

ably increase the volume of trade

In
all
other
cases
unused
drawing
rights are to remain in force after
the end of the year for which they

an

ex¬

number

It

to

offers countries

be

may

a

results.

the net aid to the creditor would

payments plan because it

conditional

plan

produce

to

into the

this

vertible into dollars

changes

allotments

of

Usefulness of the Plan
The payments

him

extra -dollars.

a

dollar

allotment

transferability of drawing
rights has the general effect of
injecting an incentive to export

earn

still

sizable

very

creditor

have

is

that

the

dollars, they will in any case be
subject to the approval of'ECA.

transfer¬

the actual operation of the trans¬
fer
of drawing
rights.
One is

under

good

it

Without

draw¬

are various
factors, how¬
that counsel moderation in

drawing

deal-—is to make the surplus con¬

creditor—and

some

25

affecting drawing rights also af-*
feet

There
ever,

conditional

dollars.

liver to its debtors.

rights.

sur¬

partners

ability, incentives" would be large¬
ly lacking.

transferred

ment"

The "conditional allot¬
dollars, though it has
the appearance of a grant, is no
gift at all. It is payment for goods
that the surplus country is to de¬

ing

be

the

plan does.
of

therefore extend

the

that

allotment

dollar
from

drawing right obligations as if the
debtor were in fact buying with

dollars. This is what the payments

and

trade

one-year

with other nonparticipating
countries.
A country that has an

intra-European

some

debtors

are

bilateral

of drawing rights caused some de¬
period.
The original
lay in the final approval of the
estimates
presented
by debtors
plans by OEEC, because of objec¬
and
creditors,
respectively,
for
tions by the Britsh.
Britain and
the year ending June
1949 dif¬
are
the only countries
fered remarkably, and their rec- Belgium
that have
scheduled
substantial
oncilation
by OEEC necessarily
net surpluses.
Britain, as appears
must have been based upon esti¬
in the table, has undertaken to
mates of a type subject to a high
supply a net surplus equivalent to
margin of error. A really effec¬
$491 million (of which $282 mil¬
tive
clearing mechanism would
lion is accounted for by net draw¬
give relief from rigidity if suf¬
ficient reciprocal credit margins ing rights,' and $209 million by
the release
of
existing sterling
or
existing balances were avail¬
A large part of the
able, but there is no information balances).
goods in question will come from
to indicate that they will be. Thus,
the
independent
sterling area,
the plan would put trade into a
which may cause Britain's indebt¬
strait-jacket which would be none
edness to that part of the sterling
the less irksome because it was
area to
go up.
This British un¬
multilateral.
This
danger
has
been overcome, to some extent, by dertaking was an important fac¬
tor in getting the other countries
making the drawing rights trans¬
to accept the distribution of aid
ferable.
The protection of debtors is an¬ proposed by OEEC, because it in¬
a

ments, disregarding possible bal¬
ances

pluses with

with

work¬

taken

that

have

recovery needs is so limited that
their allocation
must
be
made

ing of the payments plan, an ele¬
ment of flexibility has been add¬
ed through the limited transfer¬
ability of drawing
rights. The
transfer of drawing rights means
that the obligation of the creditor

which

leased

fair

a

countries

balance

on

cannot

tional allotments

currently

re¬

Transferability of Drawing
Rights

fications,

ing country while its currency
.in turn is held by the following
pective surpluses with other par¬
country ("first order clearing").
ticipating
countries.
In
other
In such a chain, all debits and
words,
intra-European
debtors
credits, if they are equal, can be
were
allotted
dollars
equal to
wiped out and no new debtortheir Western Hemisphere deficts
creditor relationship arises. Clear¬
plus their intra-European deficts,
while creditors

they demand relative to
appraisal of their needs.

cleared monthly. With some quali¬

only

the

of

by drawing rights. It

noted

to

European creditors or debtors, but
upon the amount of net aid that

are

sterling balances, aggre¬
gating the equivalent of $209 mil¬
lion
dollars, which the United
Kingdom will release for financ¬
ing that part of its surplus with
the

contribution

covery

mostly

off¬

the

to

name

purchase

Economic
sisted

his

ropean

the

as

funds.
The debtor,
using the drawing rights, is
establish a counterpart fund in

those

(1977)

ex¬

changes, will admit H. Lawrence

Bogert has been associated

with

Nov. 18.

Mr.

partnership

on

associated with,

the firm in the Syndicate

ment,

and

Mr. Young

utility analyst.

Depart-,

as' public

26

(1978)

COMMERCIAL

THE

FINANCIAL

&

CHRONICLE

and

The Foremost Problem of ESP
(Continued from first page)
European Recovery dollars will
be wasted.

should
to

reason

have

"dollar

shortage"
eyes.
For though the world had
always known about frontiers, the
multiplicity of currencies, inter¬
national trade,

and destitution

as

thing
for

as

"dollar

a

that

matter,

shortage"

shortage

a

countries

And

Bombay in exactly the same way
the people of Mississippi effectu¬

their

currencies have

currencies

they could dispose of
mestic

money

pected

to

they

as

collect.

rather that

was

were

Their

they

order

to

Thereupon
collected

the

and purchased

with

money

the

give

one

has

the world

"dollar

sent

melted

Hindustan
each

currencies.

paper
rupee

yet

be

may

than

the

long

as

and

establish

The

worth

Hindustan

the two

as

cur¬

will be freely convertible

of

amount
section

the

of

money

what

of
for¬

was

the

to

people

of

the

The

people of
used
to
spend a part
money
for goods
and

their

from Hindustan.

Debtors

in

of their
services

formerly di¬

payments in Bombay.
must

the

take

chase

Hindustan

two

effectuate

result of the expenses of the late
and the devastation caused
by

is

that

war

Now they
first pur¬

steps:

and then

rupees

their

payments.

there

is

all

to

But

it.

There

is no basic difference.
the former neutrals should
But if either of the two sov¬
have stronger currencies than the
United States.
For the latter has j ereign Indian nations should in¬
spent hundreds of billions of dol¬ troduce exchange controls a dif¬
lars for its war effort and has seri¬ ferent situation is likely to arise.

it,

ously depleted

be "dollar scarcity" in Mexico and
Buenos Aires,, but rather "peso

scarcity" in New York.
Shortage

the

Destitution

vs.

same

thing

The Swedes

poor.

The

have

being

the

on

far

a

does not
as

well-to-do.

are

Portuguese,

hand,

other

lower

living

standard than the Swedes, but
they
appear to have all the dollars
they
need.
The people of Britain or

Belgium

are not at

nourished. We
of

present under¬

would hardly think

subsidizing

them, otherwise
than possibly
through loans, were
they not "short of dollars."
-There

is,

acteristic

however,

which

ates

assume

is

all

the

"dollar
in

Every one of them
exchange controls.

to

com¬

oper¬

to

sell

that

It
desires, continue

so

rupees, dollars
currencies at their old

prices. But

soon even more people
try to exchange their Paki¬
stan
rupees
for
better
monies.
Only a few of these will succeed.

The

greater

cants

for

part

of

the

appli¬

foreign monies will be

turned away by the Pakistan gov¬
ernment because the
country will
be

now

but its
If

"short"

currencies

own.

the

various

Western

had

the

Euro¬

same

cur¬

unification

of

currencies.

achieved

in

It

the

Euro¬

fu¬

But that does not alter the

shortage.
only one

have

Of

these

two

theories

land

that

Intranational

International

vs.

Monetary problems

admit¬

are

tedly technical and complicated.
Tfyey are so particularly
when
several

Small

currencies
wonder

a

common

need

currency
they
fewer dollars;
and

are,

therefore, paying for

we

the

multiplicity of sovereign states
Europe which, though a his¬
torical fact, is from the economic
point of view a misfortune of the
in

Trade
•

France, Belgium, Hol¬
their neighbors would

and

would

be correct.

-that

veritable

a

mythology has

grown up in re¬
spect of the difficulties which
may
supposedly arise when payments

have to be made from

first order.

,

one

coun¬

Reasons For Exchange Controls
There
after

there

was

also

was

try to another.

for

To make this
point clear let
take a look at India.

not to

-

us

India, like

other countries, has sections
that
are wealthier than
other sections.
It is assumed that the Hindus

was

the

no

First

"dollar

World

Yet

There

good deal of inflation,

instance, in France

and

shortage"

War.

great destitution.
a

and

Italy,
mention Germany, Austria

Poland

currencies
values.

where

lost

time in

one

the

nearly

national

all

their

But at that time the Eu¬

tunes; and they

do not want the
convertibility of their cur¬

rencies

those

because

capitalists

able

and

it

would

who

to transfer

permit

willing

are

their capital

elsewhere, to do so.
Controls
block
the

Exchange
transfer

of

Controls
The ERP has several

•Some

of

these

chieve
achieved

all

at

to

cannot

be

others

and

objectives.

difficult

are

long

as

the

as

beneficiaries of the Marshall Plan

operate exchange controls.
first

Its

shall

that the

see

need

for relief

is higher under the system of ex¬
change controls than it would be
if

the

European

convertible.

currencies

Its

were

second

objective
is
general
reconstruction.
Ex¬
change controls make it impos¬
sible

know

to

rational

a

along which

lines

reconstruction

policy
third objec¬
tive is the reintegration of the
European
economies
into
the
should

proceed.

world

Its

But

exchange
controls work in the opposite di¬
rection. .They tend to make each
national economy to a major ex¬
economy.

tent self-sufficient and prevent the
achievement of an internationally
valid

price level.

We shall

demonstrate these

now

points in detail.

(1)

as

the whole country was

long
ruled by

Britain and the sole
currency was
the Indian rupee.
The

people of
Mohammedan Karachi made their




system

present

7has

that

aptly

prevails at
been named

"repressed inflation." There is
free

convertibility,

francs
Dutch

into

no

e.g. of French

British

pounds

or

guilders, firstly because the

does

by

not

our

means

any

European industries

earn

hard

the

ECA

such

food,

as

withheld

are

from

the legitimate markets and some¬
times even from the black mar¬
kets.

If the French farmers could

they

their

are

food

money

allowed to ask for

products

more

with the

goods

more

which

they would sell
cities, the aver¬

to the

would

be

better

would

not

be

large

as

it is.

(2) As

in

earning

erence

to

try to sponsor
projects in pref¬

other

projects it would
into a furious oppo¬

probably

run

sition

the part of the European
The ECA could for in¬

on

nations.

insist

that

slum

yields

no

foreign

clearing
money

should give precedence to the ex¬
tension and redecoration of lux¬

hotels

ury

French

in

Riviera;

another

exchange

result

controls

of

trade

their

among

to

France

them

do

no

goods and cannot convert
francs into pounds ster¬

Large

stocks

of

steel, ce¬
piled
The Dutch have

ment and machine tools have

in Belgium.

been

unable

sell

to

their

fresh

use.

Under

the

system

controls each

less

cut

world.
full

off

of

exchange

country is

from

the

more

rest

of

or

the

Its economy may work in

gear and yet

there

may

be

a

growing shortage of all the goods
that have to be imported.
This
explains why we may read in the
same

issue

producing

need
in

partly

billion

$2

1948.

the

less in

This

result

1949

reduction

of

the

is

trend

toward

self-sufficiency-and partly
of a shift
of both imports and
exports away from the hard cur¬
rency countries. (But ECA dollars
will

be

tries

assigned to certain

for

the

coun¬

of reviving

purpose

between

trade

the European na¬
reducing their demand
for American goods!)

tions

and

draw

whereas

against
haute

cannot

recover

nations must cooperate
a much larger
they have been will¬

than

ing to do in the past.

This is the

policy of the ERP.
It is also the
policy .of Governor Thomas E.

Dewey who said in a speech made
Sept. 30: "This program of Euro¬
pean aid must
not be just
We
of

means

.

.

.

relief.

shall

it

use

the

as

pushing, prodding and

encouraging the nations of West¬
Europe toward the goal of
European
union."
In
another
ern

speech he said:
"The amount of
aid we give should be specifically
related
free

American

the

to

the

made to¬

progress

goal

of the

unity of

a

Europe."

.

hard

currencies.

The

in

couture

Germany might be encouraged
the

expense

of

the

Political TJnion

tourists

few French books
paintings
are
sold

France, and the
production of optical instruments
at

Europe

European

fa¬

only

recent

in

(6)

through American help alone. The

the

that

or

European

automobile

Off

political union of Western
Europe is a goal that cannot pos¬

sibly be achieved in the
ture

Unless

nent

is

fu¬

near

the

European Conti¬
subjected by a victorious

aggressor—and

is

it

American

policy to prevent this from hap¬
pening. "Economic cooperation,"
though

part.

ally

But such ventures would be far

Far

The

industry which will
probably never equal the effi¬
ciency of its American counter¬

somewhat

a

cept, makes

between

not

in

unions

customs

vague

the
be

to

con¬

It is

more sense.

interpreted

fetched and unpopular. The bene¬
ficiaries of the Marshal] Plan can¬

usu¬

of

terms

established

ended

be

effectively

reintegrated

exchange controls persist.
country that wants to
its "unfavorable" into a

as

.'(5)

A

"favorable"

balance

of

payments

has the choice between two ways.
It may either increase its exports

it may decrease its imports or

or

it may do both.

Cuts

in, imports are easier to
than
additional exports.

achieve
The

latter

buyers

in

willing

presuppose

other

countries.;

tions.

various

European

before

Even

the

na¬

had

war

"Benelux,"1 the
customs
between
Belgium,
The
Nethe rlands, and
Luxembourg,
was under way.
Recently, nego¬
union

tiations

for

similar

a

tween France and

union

be¬

Italy have been

successfully concluded.
Now "Benelux,", though widely
advertised, actually amounts to
very little.
Goods do not by any
means

countries

Beligum

and

each

have

investors

trols

and

between

freely

move

several

Im¬

of -the

the

union.

The" Netherlands

their

They cannot be
compelled to part with their hard

exchange con¬
against ^ach
other the same way they use them
against outsiders. Time was when
tariffs

cut

international

porters,

tourists

must

lured.

be

and

But imports can be
by unilateral action.
import quotas and ex¬
restrictions
are
instru¬

down

Tariffs,

of

a

newpaper

more

than in

is

first
are

1938 and
countries

under-fed

the

ments

which

imported.
which
ward

fail.

never

They put the countries
them

use

the

on

way

to¬

self-sufficiency. Vested in¬

terests grew up which clamor for
tariff protection even after the

of

controls make it
to form a cor¬
the

potentialities

obstacle

infinitely

are

should

worse.

insist

not

customs

unions.

Euro¬

on

The objec¬

tive

of our
"pushing, prodding
.encouraging"
should be a
Europe in which each government
will decide by itself that it will
and

not in the future

tions

All

between

hamper transac¬

its

business¬

own

and those of other countries.

men

the

"cooperation"

we

need is

cooperation of the type that

trade
war

than

for

It

is

there

quite
the

before

was

time to

some

policy

the

of

the

come.

United

when

countries

other

itself;

benefits

of

the

international division of labor and
natural

opportunities. This

has led

to

policy

sponsorship of the
Organization.
But the world is moving in the
opposite direction and as long as
the import restricting policies of
our

International

the

Trade

beneficiaries

down "their

of

is

demand

the
for

ERP

cut

nothing ECA

dollars,

can

do

to

Its implications have apparently
not been

fully appreciated.
Sug¬
gestions have been heard that the

pre¬

inter¬

an

did

establish

not

the gold standard by international

treaties.

the

was

gold
standard.
The
United States, Britain, France and

States that the world should make
of

there

national

full

use

to

Exchange

vailed

exchange controls have been
Consequently,
we
may
easily
have
less
international

halt this unfortunate trend.

picture

main

trade.

lilted.

ago.

1(3) Exchange

the

the

there

almost impossible

We

them

use

were

controls

pean

people feel no bet¬
ter off than they did three years

rect

will
than

ward

Exchange restrictions make it
profitable to produce goods at
home, which would otherwise be

up

French farmers for

have

found strong sym¬
pathies with the ECA.
In October,
1943, the Organi¬
zation for European Economic Co¬
operation announced that Europe

the

exports

good if they need not French but

ling.

the

of

support

on

and

change

French

mands

festivals at Salzburg or Bay-

mous

reuth

or

Italy

the European nations has steadily
fallen off.
The Belgians find that

British

only with the help "of
high tariffs, the de¬

exceedingly

currencies.

Frenchman

fed and the demand for food from

as

currencies

would

dollar

change

still

as

inconvertible,

,are

those

controls

that

for

support

price

by black markets.

the past

with each other to

ways

consequently
Certain goods,

agriculture has held its
against foreign competition

own

extent

long

and

French

in

currencies

into the international economy as

population

pay

its

Canada where it is cheaper.
in
spite of the fact that

favor, since it leaves
the execution of every plan
to
foreign
nations
and
their fre¬
quently changing governments.
(4) As long as the European

Exchange controls are al¬
accompanied by domestic

and

they could

in

which

'

objective is relief. We

the

as

at

of in¬

case

stance

currencies convertible.

dus

little

If

not find

The

present operate in the

not

preference to those which do not.

Exchange

same

it difficult to buy such
goods and services from the Hin¬

mechanism
does

which

Consequences

second that in the

the average better off than the
Yet the latter did

the

market

bolster

that most European countries

on

of

capital.

Mohammedans.

ropean

free

result

a

nations imposed exchange
controls only on a minor
scale, if
at all.
Basically, they kept their

are

the

money

vegetables against any of the for¬
eign currencies which they can

involved.

are

As

foreign

free

be

foreseeable

the

cannot

fact that if

can

past.

allot

overseas

of

Since

of

can
do no other than to "plan"
they can
the
recovery
of
Europe.
The
only to a
American people would like noth¬
small percentage
of the people
who apply for it.
Secondly, ex¬ ing better than to see Western
change .controls make it possible Europe return to free enterprise.
to keep interest rates at a ma¬ Yet it is up to the ECA to deter¬
nipulated low level; and since the mine which foreign goods each
nation
shall
receive,
depression of the 1930's the belief European
in "easy money" has become well- how much of them it shall receive,
which
recovery
projects
are
nigh
universal.
Thirdly,
most
European governments believe in deemed worthy of support and
the nationalization of certain in¬ which shall be rejected.
Even if
dustries and in exceedingly high planning as such were our aim,
this type of planning would have
taxes
on
big incomes and for¬

the

mendous political obstacles in the

the exchange controls are the
cause
of the world-wide
dollar

or

-were

age

way

values.

former

Since

removed?

the United States, of all countries,

as

the intra-European trade
problem would disappear imme¬
diately. There are, of course, tre¬

rency

great part

a

valid at

cies

buy

nations

pean

all

of

their

that

know

lost

ternational transactions the para¬
doxical situation has arisen that

will

ture.

ex¬

ubiquitous;

re¬

Hindustan

other

and

shortage" is the
change controls

why

Pakistan

and

the money supply.

then, if it

pean

cause

the

inflated

balance its budget and

to

tighten

can

Now there are two theories as
regards the meaning of the "dollar
shortage."
Either
the
"dollar

are

that

being

the Pakistan government does not
want its citizens to know what is

char¬

one

shortage" countries have
mon.

us

rupee

luctant

Being short of dollars
mean

<

being done and is furthermore

.

.

Dollar

Let

of its natural

some

There should then not

resources.

to

Western
Europe is likely
produce, export or import once
currency
barriers have been

they are afraid that the people
might get panicky, they stick to
such quotations of foreign curren¬

other

Now

Karachi

their

of

their banks to make rupee

rected

citizens

Pakistan

they spend
the
same
money
to
purchase
money
with which to purchase
goods and services in Hindustan.

ac¬

were

if

less

or

able

ptherwise

shortage"

been

and

particular diffi¬

should

section.

tions: The Latin Americans and the
Swedes are also short of dollars.
If the

have

border

arise

either

fact which should

through avoidable human

Indian

one

merly British India will be avail¬

scarcity" is something that

overcome

would

own

any

supporters of the theory that the

than

In that

currency.

by the recipients.

rupee;

pause even to the most ardent

"dollar

own

as

the

rencies

French

of

money

silver

more

debtors.
There is

its

of effectuating payments gold

their

frequently
or

states

new

easy as before. In
where there was no cheaper

Parkistan

themselves

English

almost

ex¬

latter

these

assume

introduced

silver

or

us

remittances from

culties

excuse

taxes

those

gold

of

have

Pakistan

they needed
their creditors.

pay

each

Let

Nor would any

to assemble the taxes

in

that

would

down

unable

were

Pakistan.

across

much do¬

as

India
split into Hindustan

and

or

though

even

.

country

cases

Turkey or China
had sometimes stopped their
pay¬
ments to their foreign creditors.
But they had never claimed that
it was impossible for them to buy
"hard"

payments in the state of

York.

When the British gave up
the

way

like

Europeans should produce more
newsprint instead of importing it
from

been

(or
of

tell

can

what.

country to the other would have

pounds sterling or Swiss francs).
During the nineteenth century

economies

Who

to

case

the aftermath of wars, no one had
ever heard in
the past of such a

the
.

its

New

good
European
with
critical

of

them.

use

various .governments do not want

been

the

regard

prospects

which

payments to the people of Hindu

ate their

"Dollar Shortage"
There

Thursday, November 11, 1948

Each country

but

everyone
one

else

The

an

did it for
in which

cooperated with

was

one

every¬

the result.

step

we

should

insist

is that exchange controls be

upon

abolished.
our

economy

And

we

should

make

help under the Marshall Plan

conditional

Customs

on

this

unions

being done.

only

can

be

concluded when several countries
are

willing
country

every

to

convertible

rency

cooperate.

can

make its

by

But
cur¬

unilateral

action.

(7)

High interest rates

or

other-

Volume

wise

168

tight

Number 4750

policies have
the effect that prices level off.
A
country that balances its budget
and

money

whose

.profits

adequate

disposal

investors-

and

capital.

leave

taxes

the

at

of

attracts

savers

foreign

But where exchange

con¬

THE

who

the upgrade than on the down¬

'on

grade. As to the foreign investors
they naturally shun a country
that makes it difficult or impos¬
sible

them

for

withdraw

to

their

money when they want it back.
Par from establishing a new eco¬

nomic

equilibrium, exchange

con¬

trols aggravate the prevailing dis¬

equilibrium of which the "dollar
•scarcity" is the principal symptom.
tit is obvious that the goods that
have been allotted by ECA since

April, 1943, have helped to raise
the. standard of living in the bene¬
ficiary countries and have also
had a'favorable psychological ef¬
fect.

It

rsince

everyone

could

otherwise

be

not

is better off with
Ouftside help than without it. It
follows that the ERP is achieving
its purpose as a relief organiza¬
tion.
But
the
reintegration of
Western Europe into the world
economy
is a different matter.
'The question whether the present
"policy of the ECA will put the
beneficiary nations on their own
feet by
1952 and liberate them
from
their
"dollarr
shortage"
troubles jrrust be answered in the

If

negative.

exchange

controls

allowed to continue the "dol¬

are

lar

shortage"

be expected to

may

from bad to worse.
(8) In her book "The West at

grow

Barbara Ward has recently

■Bay"

'contended that, far

•result

from being the
The- imposition of ex¬

'Of

change controls, the "dollar short¬
age" indicates the shift of Eu¬
former
economic
power
toward the United States and that
rope's

tervail

persist for
She has not
hold this opinion.

to come.

many years

!been the first to

It is widely shared in Europe, in
Latin America and, curious to re¬

really
which

causes

the result of
beyond human

be
are

control it may easily last for an¬
four

other

ECA

Whatever

fifty

or

do

may

years.

and

re¬

with

generosity

of The

gardless
which

ten

or

into
Europe, the dollar scarcity prob¬
we

may

will

lem

solved

in

not

money

pour

that

be

case

exported

coun¬

goods

in

since

it

choose

difficult

which

stances

are

/instances v/here

up: the

dust

plain because
\

we

r

then

and

4

*

..

|

,

:

\

'

Objections

j

com¬

cannot see.

we
'

4

ourselves first

:
•
,

.

v

'The

suggestion

that

the

*

bene¬

ficiaries of the ERP should .abol¬

the .country

would

prefer to

What

call

we

live.

other

/and

to

the

the

free

pound

currencies

would

barm than good.

■more

The emphasis

is

on

con¬

sterling
do

•

extensive flight of
capital from Europe. It is feared
that so many Europeans will be
dangers of

an

in the market for dollars that the

value ctf the

European currencies

down to zero.

may go

These

apprehensions are much
To begin with, the
Term "capital flight" is quite mis¬
leading.
It conveys the concept
exaggerated.

of

when
from

This

unilateral

~

an

a
one

does

.capital.
There
who

to

person

movement

moves

his

as

body

location to another. Now

happen sometimes with
it happens rarely.

But
are

own

few

individuals

gold and

another

can

left

remove

it

country; and few are
and exporters

The manufacturers




the European currencies
mutually convertible Europe

need

fewer American

goods.

against

unilateral

-certain

sale.

Americans may be willing to take
French francs provided they get

flow

them cheap.

it

dollars,

and

The result of capital
flight from France will be firstly
that

Frenchmen
other

or

States;
will

francs

the

United

that

Americans

other assets in

or

franc

will

have

declined

But
governments
have
it
in
Their power to prevent the depre¬
ciation of currencies which they
-

control.

They

need

only

make

the national money scarce. Scarce

always has a value.
It Is
forgotten that most people
need domestic money to pay for
money

often

the

necessities
their

on

of

life

business.

is in excessive
money

Is

richest

can

of

whidh

But when

only

consider

to

carry-

money

supply.

scarce

capital

and

They will at¬

tempt to get rid of

the

the

foreign

very

transfer

countries.

There will rather be the apposite
trend'
Capital That has been hid¬
den

is

elsewhere

net.

will

This

return.

abstract

theory. It >has
happened several times in France
•

an

•

other

and

countries

in

the

between the two-Wars.

recently

a

When

in

Reichs-

by

which

Mark

was

Germany

worthless

replaced

was

•Deutsche

ruined

o'd

the

4

wark

years

Arid quite

veritable "miracle"

witnessed

the

new

hard

was

to obtain because its volume

restricted.
been

had not

legitimate

were immediatelysale.
'The new cur¬

for

rency

other

in

acceptable

generally

was

no

was

by

was

for.years

offered

for

which

Goods

obtainable

than

reason

that

it

beneficiaries

call

not

as

will

still

for

such

of

the

ERP

the

second

objective

As long as
exchange controls persist it is im¬
possible to know which invest¬
ments

the

are

long

tain:

most

The

promising in
thing is cer¬

One

run.

beneficiaries

of

continue

their

low

interest

to

be more realistic.

then

And it will

become obvious that certain

American

production

methods

which

have
made
this
country
great are not necessarily the best
methods for impoverished Europe.
In the United States there is

plenty

of

arrange

al¬

the

future itself

this task

in

nations

the

(after having turned
for the time being

over

currencies.
involved

TVlost of the countries

will

have

devaluation

But

devaluate.

to

should

not

by
any means be followed immedi¬
ately by a new stabilization on 'a
lower level.
Rather, the various
currencies should fluctuate up and
down
until they have found ja
level

that

promises to -last.

to

and

will

controls

exchange

r e c u r r

i

n

Pre¬
only

devastations.

g

There can, of course, be no doubt

that stable

values

preferable

are

to

fluctuating, quotations. How¬
ever, the choice is not between
unstable

or

currencies

but

one

between

plus instability

■"onvertibility
the

convertible

rather

hand

and

the

fake

on

sta¬

sterling

continuance

of

will make
its
present

capital.

American

policies impossible.
reintegration of the econ¬

The

of Western Europe into the
economy is The third ob¬
jective of the ERP. It may be ex¬

omy

world

lacks capital
superabundance of

rope

but

as

soon

yet be at hand.
The
ECA will be able to support them

by providing money for stabiliza¬
tion

funds.'

controls have been abolished.
Under the convertibility of cur¬
rencies those foreign
goods and

services which Europe needs most
will fetch good prices. It

will,
'therefore, be profitable to invest
capital in enterprises which earn
foreign currencies.
The export

otherwise

American

The

American

rificing

not inconsiderable part

a

their

of

national

Of

the

beneficiaries

vertible.

capital

dis¬

will

be

for the

monetary prejudices.

toward

Where

income

of helping Europe. They
are
not asking for much if they
expect the European nations to do
their
part 'by
sacrificing their

Marshall

self-sufficiency will

-Policy

people are sac¬

purpose

business and tourism will flourish
all over West Europe. The trend
appear.

It

may
also help
during the first
trying months of readjustment.

them

exchange

as

even though the
definite stabilization

a

to

Plan

some

their

make

To

ment should

of

the

decline

may

currencies

them

our

con¬

govern¬

in'the language
Dixi et salvuvi
• spoken and
soul. America has bfsupport but her offer
say

needed for the expansion df dollar

of the Middle Ages:

earning enterprises ECA may be
willing to supply it or it may give

animam
saved

certain

fered 'her

guaranties
investors.
After

to

American

my

refused.

was

having abolished their

'Those

ex¬

I have

meam:

countries, however, that

change coiitrdls and after having make their currencies convertible
taken steps To balance their
budg¬ will not only have the advantage
ets and tighten their
money sup¬ of American
support. They "vyill
ply the
European governments
also profit from the fact that" in
will
probably find it desirable
that the fluctuations of the vari¬ monetary ^matters
as
elsewhere
currencies

ous

be

kept

within

honesty is the best policy anyway.

Is

there

labor.

limits,

for

pected to take place almost auto¬

matically

27

not

may

the
highest
in
the
Contrariwise Western Eu¬
After

the-First World War'the Germans
took

over

American

many

ideas

and

procedures in spite of a rate
of interest which was much
higher
in

Germany than it

time

in

the

United

at

was

States.

that

There

was,great enthusiasm for "ration¬
alization;"
Of

the

When

1930's hit

obvious

came

the

depression
Germany it be¬

that

the

uncritical

transplantation of American
cedures into

vironment

pro¬

widely differing

a

"had

been

en¬

mistake

a

that cost the country dearly.
The restitution of normal
terest

in

rates

countries

the

of ERP

in¬

beneficiary

and

a

measure

economic

in

bound to

occur

the

future

which

are

under the present

cloudy conditions.
will

also

exchange con¬
far in solving

go

problem that is giving

a

people.

The

reference is to European so¬
cialism. Some months ago a prom¬
inent

member

o'f

bour

Cabinet,

Mr.

the

British

La¬

Hugh

Dalton,
could declare that everyone of the
beneficiary countries of the Mar¬
shall 'Plan is in
He

was

The
the

way

socialistic.

from

the Truth.

a

Tar

mot

result

is

that' through ERP
Slates is subsidizing

United

socialism in Europe.
That
be the

will,
case

currencies

Only

no

their

make

it

longer

are

convertible.

exchange
possible
for

same

socialist experiments.
will

As

are

Friday, after

on

surprise

had

ofii

worn

easily explained. Appar¬

so

ently the answer lies in the will1•ingness of speculators and inves¬
tors

under

conditions

present

to

believe almost anything.
Almost

immediately

the elections the

following

business elements in the Adminis¬
tration

to

got

the

press

work.

tive

excess

were

dusted off.

trols

to

were

Statements

flowed forth,, Puni¬
profits tax schemes
Strict price con¬
be
imposed, but

naturally, with the
people, no

tively
than
one

in :a far better position
industry generally. Despite
early post-election statement

it is hardly likely

profits

part

soon

become obvious that the

as

it
na¬

tionalization of significant indus¬
tries (followed, as in France, by

inadequate compensation for
the
dispossessed
stockholders)
and the
expropriation- of major
fortunes
by
high
taxes
brings
about the flight of capital. The
socialist
governments will then
either be compelled to raise the
very

rate of interest and otherwise cur¬

invested capital base

an

on

roads

be

on

would be far- less
than

to

onerous

to rail¬

other

most

major

industries.

mandate

The railroads would hardly suf¬
ceilings fer from imposition of controls
be set.
The Taft-Hartley that stabilized, or even deduced,
labor act would be repealed and their fuel and material costs. This
replaced by new labor legislation is particularly true inasmuch :as
unfavorable to industry. Little or it is
hardly conceivable that price
no consideration was given to the
controls would be imposed with¬
from the

new

wage

would

fact that there will still be
stantial
the

conservative

sub¬

a

element

in

Congress

new

and that this
conservative element will control

of the most important

com¬

mittees.

out

least

at

As is usual under

conditions of

optimism

pes¬

or

the

New

York .Stock

on

Exchange

pared 'by hundreds of millions

was

dollars.

of

shares listed

than

more

Santa

Fe

was

down

18 pomts from its

re¬

cent

high and Kansas City South¬
common,
which was being
pushed enthusiastically to succes¬
sive new highs just a short time
ago,
fell almost ten points, or
ern

19.7%.

Yet

neither

of

changed

The

basic

large

volume

More/speculative
North

Western;

issues

Gulf,

On

scarce

railroads
allocated

panies

Steel

or

is

the automobile

to

to

or

which the

re¬

election has

appear

least

at

are

get the

most

security
holders ]it
that the railroads

frightened
would

In

movement.
in

com¬

other industry.

some

either event they will

spects

t>e

to

it matters little to the
whether this
steel is

relatively

vul¬

less

nerable than other industries.

So far

as

continuation of

a

high

volume of traffic is concerned the
near

and

look

has,

term oiit-

intermediate

if anything,

of

status

these roads had been
in
that short
period.

cf

materials could hardly be a threat
to the carriers. For instance, if a

produced

indiscriminate

restraint

some

Allocation

rises.

wage

In

lifted

any excess

imposed
-earnings for a
period such as 1935-1939 without
any weight being given to the re¬
turn on
capital investment.
A
tax
based
entirely, or even in

freight

time in

that

would

tax

entirely

value of railroad

to

———*—

*

r—

railroads would be at least rela-

based

rabid antL

more

vulnerability to shock. That the

an<«>

along with the worst. The market

countries

indulge at the
controls

initial

is not

at

Britain,

and

their easy money policies

other

pace

and

simism, the best of stocks suffered

keep

exchange

accelerated
the

resumed,

was

controls

France

and to

decline

the Western Eu¬

ropean

up

months and has indicated its extreme

many

however,

once

All sections of the security markets reacted
violently to the unex¬
pected results of last week's elections. The initial sharp decline on
Wednesday was hardly surprising. The market has been jittery for

to

The abolition of

headache to the American

of dollars among the va¬

of

narrow

time

' are

wages

world.

should

European

rates

indefinitely. The convertibility of
their currencies will compel them

another

rious

the

Marshall Plan will not be able to

currencies convertible. If the ECA

lotment

the

ERP is reconstruction.

trols

to

care

of

their
exchange controls and make their
moment to abolish

decide

large

heretofore.

After relief has been taken
of

be

principal tasks. But

mistakes

should be requested at the earliest

possible

Relief

skepticism
should
make it possible for EGA to avoid

Program
The

funds

of

supply.

scarce

will

the

measured in dollars.

as

Tntra-European trade will
freely.
of ECA's

one

dollars

thirdly that the value

ana

the

own

in

secondly

France;
of

will

assets

own

Table

the dreaded

Once

will

It

economic

longer be hidden but offered for

an

a

stabilization

of

the

Frenchmen may offer their francs

not

'new

return

Under 'Convertible

come.

of the fact that free con¬

aware

vertibility

Within the various countries food
and
other
commodities will
no

rule,

a

lead

the

ERP

(1979)

trols for many years to
is

transaction.

as

and

mature

vertibility

they should

Currencies

are

"capital flight" is,
exchange of goods

by.

That

The

people to
where, they

ish their exchange controls

is met
various
objections.
British
■political leaders and writers have
been particularly'eager to declare

CHRONICLE

be overriden.

restrictions

,

beyond human
Rather, it is one of those

TcmtroU

•Stir

:

if this cannot be done

Tor

The ECA to the reluctant
beneficiaries) the
might then as well transform it¬
withholding of funds could be¬
self into a simple relief organiza¬
come an important instrument in
tion or fold up altogether since its
The fight against exchange con¬
more
ambitious objectives would
trols.
Only those nations should
be doomed.
'
'
be supported which take steps to
"Fortunately, the "dollar short¬ get rid of them.
age" is not the result of circum¬
We should aim at convertible
-

FINANCIAL

particularly

—

immigration

make

ERP.

the

by

&

*

late, in the United States.
'
Now
if the
"dollar
scarcity"
rhouid

of

countries

means

It may be expected to

afford to leave the

can

other

trols

prevail interest rates are
kept at an artificially low level,
inflationary policies are routine
and prices are far more frequently

COMMERCIAL

proved

generally

as

new

Mobile

&

might

im¬

expected

been

It had
that

Republican

such

been

election.

the

by

encourage

a

administration
a-

mild

defla¬

Louis-San Francisco, tionary recession almost immedi¬
for the pur¬ .Ohio; St.
pose of preventing the "flight" of
in
order
to
lessen the
etc., were down even more dras¬ ately
ter of the lesser evil.
capital, which will have certain
tically percentagewise.
The in¬ chances of a more severe reces¬
■effects on prices and employment
The
Bretton
Woods
Agree¬
come
bond
market and second sion toward the end-of the term.
ments put obstacles in the way of which They may find hard to sur¬
No such steps are likely now. . In
levaluation.
Furthermore
they vive; or they will have to go slow grade fixed interest bonds were
on their socialist experiments and
also hard hit all along the line.
make it obligatory to the partici¬
fact, if any signs of a recession

bility of the .exchange control
system on the other. It is a mat¬

pating nations in
valuate

cies

war

be

The

level.

they do de¬

made at

more

a

curren¬

newly

agreements

time when post¬
were

expected

"normal"

actually
Bretton

the

on

These

conditions

far

^ave

case

stabilize their

immediately

chosen
were

to

turned
Woods

hould, therefore,

than

to

they

out to be.
Agreements

be changed or

tail the money supply

make

it

more

attractive for their

Basically

it

is

the

opinion

of

domestic capital to stay at home.
It is likely that they will follow

many

railroad analysts that there

the

is no

justification for bearishness

second

course

will
leeway.

enterprise

given
It

is

present
more

and

once

that

free

be

more

toward

carrier

that

coincidence

the

once

on

develop

ment

continuation

declared

that

it

intends to keep its exchange con¬

matter of

fact, there is

con¬

traffic

siderable feeling that even if the

earnings

worst

table.

fears

were

realized

the

generally

is

govern¬

stituted almost immediately. With

As

a

it

heavy

that

expenditures would be in¬

the

has

than

merely

to

anticipated

the basis of the election returns.

British 'government

no

shaves

were

prospects
of

a

appears

bright,

so

high

level t>f

almost

inevi¬

28

THE

(1980)

COMMERCIAL

CHRONICLE

FINANCIAL

&

larged

The Money
too

manufactured

of them.

many

Not

have

we

Theory—Proven

History

by

That

prices are not going up,
the value of the dollar going

but

prices.

rency

because

failed and prices soared to
heights.
A pound of
bread sold at the equivalent of $9,

absurd

fantastic

in 1933-1934 there is

a

bushel of potatoes at $40 and

of

a

at. $12,50,.._Iq
stract
and hard to
1796, her currency became worth¬
In efforts to maintain prices
Those who do not understand in¬ less.
flation raise their eyebrows and fixed by law many black-market¬
incredulously remark: "Oh! - Yes! eers were beheaded, giving rise to
A very interesting theory."
Ye the French saying: "The guil¬
dojvn,

to many

ab¬
comprehend.

of

us

seems

pound

sugar

,

Gods

little

and

take

longer

■establish

history

fishes!

than
fact?

a

going

it

years

lotine

to

Does

2,000

press."

Financial

the

money

paper

France found herself be¬

tween the upper
stones

and nether mill¬

inflation

of

World

after

right!
Now, when
the piper for the

them
all
are paying

we

and

unsound

and cry

about high prices. Mean¬
while, the economic-illiterate politicos in Washington put on a

big "Who Dunit Show" and point
accuring fingers at every thing
and everybody but their own re¬
flection in the mirror.
Today's
prices were made inevitable in
the period from 1933 to 1939.
The
did

war

not

it

Before

cause

began

inflation.

our

already had

we

War I when her franc fell from 19

definite,' actual, measurable
inflation than we had experienced

and all the way down to present-

cents to two cents with the conse¬

in

day
world-wide
inflation,
has
fully proven that it is not theory,
but cold, hard, painful fact.
This

quent soaring of prices.

Now this
same
France is again caught in
the
inflation wringer
with her
political freedom at stake through

was

natural
B.

law
In

in

our

used

restrict

when

efforts

made

depreciation

prevent

"tobacco money."

Law

of

Is civilization

of

Supply and Demand

Germany
supply
cannot

end

exchanged

Throughout the

kings, dic¬

ages

rulers

and presidents have
delighted in monkeying with cur¬

rencies

when

law

the

proved

of

money

which

of

for

mark

her

the basis of

on

trillion

one

Meanwhile,

currency

her

costs climbed

the

of

index

At' the

cost

occupation and avoidance
of taxation, etc.
The results have

old.

900,000,000.

always been the

law that

of

The his¬

same.

torical inflation cycle begins with

"escape"

and

through a
well defined general pattern until
it ends up with depreciation, de¬
valuation or repudiation.
moves

Bourse

index

That this

of

from

soared

"Too

History Repeats
Again and Again

to

one

inflation

the

to

Christian

brought

was

money" will

Era

about

by

the value of coins or
metals, by debasing, clipping or
restamping coins.
Around
400
B. C., finding his kingdom heav¬
ily in debt, King Dionysius com¬
pelled his subjects under penalty
of death, to turn in their coins to
government.

He

then

re-

stamped
them,
doubling
value, returning the

their

face

value

coihk; turned

same

their

to

The half of the

owners.

of

face

of

amount

number

it he' kept,

with

whichto ;i pay
off
his.
debts.
Roosevblt did practically the same
.

thing in

this country when he
people turn in their gold

made

and then revalued it in 1933-1934.

China

the

was

what

prove

first

too

money would do
is credited with

the ideal

to prices.

thing to

methods

inflation

She

Here

was

in inflating

use

She

currency.

modern

paper

inventing felted

about 177 B. C.

paper

a

country to

much

fathered

the

of paper

when

money
1260-1263

in

Kublai-Khan issued paper money,

using
of

such

China

in

notes

which

those

his

parts

troops

hod

subdued.

Such notes proved to be
much
money"
and
their

"Too

purchasing
issues

fell.

power

Several

to put and and depre¬
continued With
the
in¬

were

ciation
evitable

prices

of

consequence

rising

and .ultimately

worthless
currency.
Today China is going
through the same wringer and is

trying
down

to

shrink

from

dollars
ratio

to

of

her

currency

$12,000,000
U.

one

four

-

S.

to

-

Chinese

dollar,

to

In

one.

a

the

meantime, it cost $55,000 in post¬
age

to send

the

U.

and
over

an

air-mail

letter

to

S., a lunch was $1,000,000
Lucky Strike cigarettes cost
$200,000.

France
proven

has

several

times

the inevitable laws of in¬

flation

results

the

greater part of
the world today.
It seems that
kings, dictators and political par¬
ties just will not learn from his¬

her
1720

ruinous
in

experience

John

Law's

in

by

1716-

expedition

into paper money inflation, but, in
.1789, again plunged into the realm
of

fiduciary

money

when she is¬




acterized

as

soft

money.-

This is

because in itself paper money has
no
value.
When it is a ware¬

house

receipt for

and you can go
get

much

so

gold

to your bank and

actual metal,

tne

same

United

of course it
value as gold.

States

is

on

a

gold bullion standard as far as
foreign
nations
are
concerned,
.

domestically
effective

we

gold

do not have an
standard.
Oui

countries the entire globe is in the
throes of currency depreciation.

backing of 25% in gold and 75%

Russia put her people

wringer

Japan,
been

in

hospitals,

allowed

that

so

through the
ago;
in
babies have

months

some

to

others

starve

could

have

their

government bonds.

It should be borne in mind that
money

ration cards, and

place
tical

a judge who re¬
patronize
the
black-

none

us
can get the gold.
We are
merely floating on a vast sea oi
paper money!

fused

to

But

of

death

to

Reserve

notes, the ones
bearing the green seals in com¬
mon use, are supposed to have a
in

Standard

For many years before the New
era
you could take any $5
bill to your bank and get a small

piece

gold

of

it—the

for

commodity—a $5

actual

gold piece.

others

paper

was

for

words, our
exchangeable

In

money

the

real

commodity—gold worth $20.67
The

ounce.

an

had no
knew you

paper money

value, but because you
get five dollars in gold at
any
time for five $1 bills, you
were
willing to take the bills.
Your grocer would take your dol¬
could

lar bill and

butter

of

give

and

dime

a

however,

invented to take the
of barter.
It is not prac¬
was

for the farmer to

bills.

All

from

country in

it

in

goid

the

to

hid

their

from

debtors

avoid

ciating
money

less,

being paid off in depre¬
When
our
became practically worth¬
currency.

barber

shops

with it and sailors

papered

were

returning from

trips

and

suits

of

In
was

being
clothes

paraded

the

off,

paid
of

such

streets in

deri¬

the early 'Thirties inflation
proudly called "reflation" by

the New Dealers and it

was

sciously fostered and built
the

made
money

avowed

purpose

of

con¬

for
raising
up

of the piece of metal.

When it is

possible, however, to pay in gold
coin, one actually trades a piece
of a commodity for whatever one
is buying.
Actually, such a trans¬
action is barter

is

as one

commodity

exchanged for another.

hard

This is

money!

For the past 6,000
gold has been the most
sought after commodity.
For its
possession every crime on the cal¬
years

endar

has

sands

of

been

committed

times.

It

is

thou¬

almost

in¬

was

a price

After

you

diminished

or

greatly

en¬

guillotine

S.

U.

matter

Treasurer,

it

ounce.

manufactured

dollars, of

too

a

fashionable

back.

will get but little change
is

This

effect

the

One

Cannot

A

Eat

of

too

Ceiling Prices

theory,

Currently

certain

class

with

of

in

favor

economists

and

politicians and which finan¬
history throughout the ages
proven wholly false, is tnat
prices can be controlled by law
in times of peace.
It just does not

cial
has

work.
in

It did not work under OPA

this

not

country

reveal

which

has

had

inflation itself

history does

and

large

any

country

much

as

definite

has been created

as

in the
United States, in which
price-fixing has worked except
under war psychology.
For

thousands of years efforts
prices by law have resulted
in the same way, the creation of
to fix

black

real
in

which

markets

market

which

and

prices

were

the

in

were

the

markets

fixed,

be¬

coming wholly fictitious.

Despite
the intense propaganda put out
in the days of the OPA and the

Black
For

thousands

riods
been

Markets—Death
of

inflation

of

made to

Penalty

years

in

efforts

pe¬

have

stop black markets

tated

led

the

been

the

failure.dies.
he

cropped
turned-back collar

who

in

the
avoids

his

and, the

gentlemen challenged their part¬
to the dance with

ners

peculiar

a

nod, intended to remind them of
the fall of the severed head."

the

Recently
decreed

was

The

threat

Hungary
one

the

black

the

of

in

and

dealing in

any

in

currency

sentence

death

in

Shanghai for

market.

supreme

pen¬

know

financial

selves,
people

or

history
them¬
think so many of the
unfamiliar with such

are

history that they
kidding them.

keep

can

on

Inflation

One

form

most

which

nomenon

flation

is

Anesthetic

an

the

of

that

peculiar phe¬
in¬

accompanies

it

acts

chloro¬

as

in

putting people to sleep
as
far as realizing what is hap¬
pening is concerned.
This is so
glaringly and alarmingly apparent
here in our own country at the
present time. It is probably a safe
estimate that 98% of our people
do

realize

not

trouble is that

that

real

the

dollar is going

our

down in

place of prices going up.
writing about Germany's in¬
orgy
of
1913-1923,
Dr.
Hjalmar Schacht says: "What the
public at large and all but a very
In

flation

few

the

of

economic
adequately to ap¬

country's

leaders

failed

preciate

was

on

the fact that inflation

heavy

a

scale

the

was

con¬

comitant of the whole of this form
of

finance."

war

the

When

the Ger¬

people finally awakened

man

that

fact

that

their

was

to

mark

going down, the flight
currency—the effort

was

from

it

their

get rid of their money for any¬

to

thing

tangible

of

intense.

value,

became

The lack of appreciation

of what is

happening in periods of

inflation

apparently

must

attributed to

a

of

functions

the

true

and the

ease

<

money

be

can

administrations
selfish ends.

by

seeking their

'6f

with which it.

manipulated

be

lack of knowledge

own

Inflation—Political

Dilemma

The

romping

inflation

along
a

this

in

hard

nut

to

now

country
crack

Republican and

for

presented
both

Democratic

the
par¬

ties in the Presidential campaign.
While it is manifestly unfair to>
blame

the

the

all

Democratic

sins and

for

party

ignorance of the

New Deal in the 'Thirties, the era,
of

absurdities, -nevertheless

party

and the

New

Deal

the

are

so

closely associated in the minds of
the people that President Truman

did

not

about
It

dare

the

tell

to

the

present inflation
be

cannot

truth
orgy.

emphasized

too

that our present infla¬
brought
about,
con¬
sciously,
purposely
and
deter¬
minedly for the avowed purpose
strongly
tion

of

was

raising prices.
On

the

other

inflation is such

side
a

of

the fence

hot subject that

Governor Dewey took it up in
two of his speeches early in

but
his
used

campaign.

Both
parties
gloves when courting
the farm and labor voters.
They

white

kid

dared

not alienate

the labor vote

celerating the inflationary soiral.

one

the
odds

that of
always
in peace time—
does not eat, he
If he eats*

black
favor

certain

government.

of

have

same

If

and the
those who

execution

to

imi¬

dress

hair

including

results

That is certain.

buys

Hence

sun,

The

death.

ball

the

were

by the guillotine;

by placing emphasis on increased
wage demands as a factor in ac¬

by decreeing every known penalty
under

relative

paper

many

kinds, your
to hand him
pound of butter

a

received who had not

was

the

various

dollar bill for

and you

"In other circles

Sybel says:

one

lost

grocer now wants you
a

overworked

The historian

of ridicule.

price-fixing by law either do not

had turned

arbitrarily valued at $35 an
Because Washington has

was

assignat inflation

was so

this

in

of $20.6/

markets.
the

man

death

and

destructible, its supply cannot be takes the chance of execution by
either

the

that the threat of death became a

taken

change.

people

the

1933 at

the

to

in

bring into multitudinous instances cited to
markets starved to death; Hun¬ the city three bushels of wheat,
show that food prices took a big
gary
wiped out her old pengo and trade them at his shoe shop
jump after the expiration of the
and issued a new currency fixing for a pair of shoes or, for the gold
law, they just do not square with
the death sentence for any one miner in Alaska to
bring an ounce actualities.
Every well-informed
who would offer the new money of
gold to New York to trade for person knows that much of the
at less than official figures;
in a radio.
Money was invented to food in OPA days had to be
Greece a pair of shoes cost the avoid such trades.
The miner in
bought "under the counter."
In
equivalent of $200,000 at prewar Alaska sells his ounce of gold and
the case of meat, it was reliably
rates; in Brazil and Mexico prices accepts 35 paper dollars for it.
estimated that 85% of the supply
are following the cow in
jumping He men sends the $35 to New
came
through the black market.
over the moon.
With the British York to
pay for the radio and It is
Naturally, no one kept a record of
pound selling in the free market shipped to him.
Thus on both such
prices, no indices were com¬
around
$2.85-$2.95,
against the sides of the trade the $35 repre¬
piled, neither were charts drawn
official rate of $4.03, rumors per¬ sented
commodities, or goods, in to show what
people were actu¬
sist that she will be compelled other
words.
The
money
was
ally paying to eat. Ceiling prices,
to revalue at no far distant
date, used merely to make the trade
however, proved wholly devoid of
despite repeated official denials. easy.
In effect, the miner traded nourishment.
One just could not
So it goes the world over.
There his ounce of gold for the radio.
eat them.
If one wanted butter
is scarcely a nation, outside of a
Hence, money!
it was necessary to pay from 96
few
small
ones,
that the hot.
When money
is made out of cents to $1 per pound for it;
feverish hand of inflation has not
gold, silver, copper, or even zinc, steak was from $1 to $1.25 and
touched.
it has a value in itself.
The metal sugar
was
50
cents
a
pound.
itself has
a
value
even
if not After the expiration, possibly it
Present U. S. Prices Inevitable in
stamped
by
some
government would be better to use the word
Early 'Thirties
of
the " OPA,
jnsignia.
In such money one is "extermination"
The - inflation
which
is
now
actually offering small pieces of prices took a decided drop from
romping along in this country a commodity in exchange for the such
figures.
Comparisons be¬
started
in
1932.
Oh!
yes!
We merchandise one is
buying.
Of tween fallacious markets under
have had other experiences with
course,
in nearly all instances, ceiling prices and actual markets
this Frankenstein monster in our
with the exception of gold coin, after the law expired are
wholly
national history!
In one of them the amount
stamped on the face of without value.
a
pair of shoes cost $5,000 and the coin is
greater than the value
creditors

In the French

alty seems to mark that stage of
inflation when a government has
reached the point of desperation.
However, it just does not work,
and those politicos who advocate

neither you nor
get gold for your

your grocer can

away

three pounds

you

government to execute all

of its nationals.

no

tion.

Money

the kind we have
much of today, is often char¬
money,

Federal

sion.

cured

even¬

tory, for inflation is almost world¬
wide at the present time.
With
the
exception
of
a
few
small

people.

not

de¬

for any

most

much money, is the effect of infla¬

Soft Versus Hard

the

and

was

be

positively.

for the

over

can

tually this natural law makes it¬
felt irresistibly, unavoidably

Paper

world

the

Deal

per ounce.

just cannot

temporarily abrogated, but

While

and
what
they do to
prices, writing the results in the
blood, sweat and tears of her

She

Results

passes

ultimate

its

proven

changing

his

fooled.

be

Exchange

sun

over

up

and

in

the

ferred, they can be held back and

the

v

Previous

come

and demand in money

268,-

law—the natural

much

that

as

same

on

always mark up the figures on the
price tags of every thing people
eat and wear; that this law is in¬
evitable in its operation, unavoid¬
able

95-cent
house

just as certain eventually in

pitiless in its execution, is being

Inflation

steak,

the eastern
horizon
on
Christmas
morning,
1948.
The natural law of supply

too
same

did

is

it

von

Gold

Now,

'Thirties

and

stocks

her

our

Dollar-a-pound

living

75,570,000,000.000.

arose

it

inflation

it*

1913 to

time

conditions

to

cause

self

of

100 in

from

was

one new

they wished to escape
—heavy debts, expense of wars,

from which

added

not

the

in her
inflation orgy of 1913-1923, at the

getting dumber and dumber about

tators

II

would

and
demand
in
be safely violated

money?

;

history since our currency
wiped out. While World War

our

eggs and $12,000 for a $4,000

Cannot Be Violated

to

in

grown

"

more

were

Virginia

were

amount

rising prices.

tobacco

in

money

the

to

by
century
early history

ninth

own

for

1619 and

order

the

recognized

was

was

understood

was

in

Greeks

C.

it

the

before

years

hence the

reasons

commodity
for
use
as
money or, in barter, if one wishes
to put it that way.

started
great hue

a

such

desired

policies

monetary

hundreds of
Christian Era,

the

back

follows

For

'They"raised

assignats. The explosive
stage was reached in 1793 when
all
efforts to support her cur¬

quickly,

supply of gold is relatively stable.

Mill and Prices

sued her

(Continued from page 3)

Thursday, November 11, 1948

It's impractical

Both
are

Democrats

and

Republicans

tarred with the same stick and

could

not acknowledge

that price

supports for farm commodities is
an

escalator

on

which prices pro¬

gressively ride upward.
These
factors, while currently important,
are

merely the effects of inflation

Volume 168

and have

with

Number 4750

THE

itself.

The

reme¬

can

be ap¬

dies for inflation itself

the
Secretary of the Treasury and the
Congress.

the

Truman

past

has

Scapegoat

a

President

year

been

frantically

Kf»flrr*hingv for
ar. wapoflnat „ on
which to place the blame for high

prices, aiming his heavy

guns

the

for

Eightieth

passing

Congress

at
not

legislation.
He is currently making practically
no attempt to stop inflation itself,

than

more

unworkable

boxing with the effects of infla¬
In

of

ends

Steel

entirely

an

cated rate

against

corporations for restraint of
trade; he brings action against the
country's sources of raising new

capital and he advocates new re¬
straints on free enterprise.
Cure -Still

If the

istration

Possible

would

Congress

and

Deal
financial
policies, would take the people of
the country into their confidence
and courageously tell them that
unsound monetary and fiscal poli¬
cies followed in the past had de¬

repudiate

was

98.5%.

1,695,700

tons,

increase of 0.5 of

a

ing

a

1,281,210 tons for the

Heavier receipts depressed corn prices but the decline
was.offset

by enlarged government buying,..,The export fk»ur market
slow; domestic flour business was inactive, with buyers
avoiding commitments beyond nearby requirements.
continued

With

supplies liberal, the undertone in butter continued weak*
prices registered a further sharp.drop to reach the lowest levels
since June 1947.- Cocoa declined 1 cent per pound during
the week, reflecting slow demand in the actual
market; sugar and
coffee remained steady.
Lard was easier in sympathy with lower
hog prices; cattle closed slightly lower and sheep remained
fairly
steady.
and

Sales in the ten spot markets were reported at
356,800 bales
during the latest week, against 403,200 in the previous week, and
438,800 in the like week a year ago. The cotton parity price for midOctober showed a drop of 12 points to 30.88 cents per
pound. This
decline was slightly less than had been
generally expected. The

month ago and

CCC reported entries of cotton into the
government loan of

the previous monthly record registered
7.826,257 tons of raw steel were turned out.

surpass

in

March,

1944,

season through Oct. 21.
This indicated entries during
the week of 321,955 bales,
compared with 229 959 the week previous.
Cotton textile markets were featured

by

Business

by the electric light
industry for the week ended Nov. 6, was 5,563,514,000
kwh., according to the Edison Electric Institute. This was an increase
of 8,260,000 kwh. above output in the preceding
week, an all-time
ligh record and 506,059,000 kwh., or 10.0% higher than the figure
power

two

in

of

excess

years

ended

activity

intelligently, carefully
retracing the steps which created
our
inflation, it is possible the
historic cycle might be stopped
short of completion.
As yet, they
have revealed neither sufficient

want

thinkers

ful

prices, money, wages, etc.,

level.

high

new

either

arises

from

on

Such thinking
a
superficial

analysis of inflation or acceptance
of the now

is

obsolete popular defi
The

of it.

nition

rampant

now

country

inflation which

throughout

about

brought

was

the

and

knowledge

all

courage

Production of

The increase from last week

resulting from

accusing

union labor points

"You're

saying:

ness,

You did it."

busi¬

big

at

finger

to

blame

Big business comes

prit for demanding progressively

Both accuse the

higher wages."
farmer of

the very

wanting to squeeze ou;

last penny he can while

the getting is good.
The truth about the

ter is that the only
of them did to

itself

whole mat¬

thing that any

bring

on

inflation

considerable

party which opened the Pandora
Box, liberating the greatest forces
of

inflation

the

world

has

ever

week

noted.

William

H.

Draper

Jr., Under Secretary of the Army
will be guest of honor and speaker
at a luncheon meeting of the Bone
Club of New York to be held at
The Bankers
Club on Monday
Nov. 22.
many

His subject

will be "Ger

Today."




.

TRADE

RECORD

SLIGHT CHANGES

ago

Fall

and

Winter

apparel

in

scattered

volume

sections

was

of

the

slightly above

rose

Flare-back unfitted coats and fur-trimmed coats
to be popular although £orne
slackening of demand was
Women's tailored worsted and gabardine suits were in
There

fairly
frequent requests for men's and women's

were

and

overcoats

The

Fall

sportswear.

The

demand

for

shoes

requests for many food items decreased slight¬

consumer

ly from that of

106,651 units, and

was

response,: the slight decline in volume

limited.

inventory period, Ward's explained.

output' consisted of 87,979 cars and 23,761 trucks
United States and 3,623 cars and 1,862 trucks made
•
"
"■! ' *'»•'
1 'V
■'

the
■'

•

•

a

week ago.

Total meat volume declined
fractionally; .chickens an$t some
low-priced meal cuts sold well.' Fresh, fruit and
vegetable volume
fell slightly during the week with demand for
apples and sw<eqt apple
cider moderately higher. Canned vegetable volume increased frac¬
tionally above^he level of the previous week. Candy, confectionery

,

and

Commercial

as

and

the

industrial

failures

numerous

104

in

the

in

as

the

corresponding week of

Manufacturing casualties
ago and 32 a year ago.
almost

1939.

numbered 34 compared with 24 a
Retail failures dipped to 40 from 45

as numerous as in 1947, while wholesaling
13, construction 6 and commercial service 11.

Atlantic
more

Central Region

Region,

than

2

casualties

from

last

and

a

level.

regions

did

not

fluctuate

represents

$6.24.

a

new

The

year ago.

volume.

ol'

index

compares

with

this

at

time

a

On the

&

seasonal goods.
There was a moderate increase in the
purchases of gift and novelty goods for the coming holiday season.
The order volume for jewelry was
slightly above that of the pre¬
ceding week.

Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week
ended Oct. 30, 1948,
advanced by 2% from the like
period of last

lower

up

side

in

the week

oats, cheese,

were
f

Bradstreet, Inc., declined to

past week, reflecting

were

flour, wheat,

a

a

on

year

weeks ended

year

to date by 7%.

cottonseed oil, beans,

Retail

new

Nov.

low for

the

year

sulted in

farm

prices.

1, compared with 270.31 a week

the Chicago Board of Trade

with all grains sharing in the rise.

Trading was

in

1948, sales increased by 9%

a

considerable slowing

to

the

of

was

up

of sales.

As

estimated at about

12%

increase of

1947.

For

18%

a

consequence,

10% under the

1947.

Federal

Reserve

Board's

index,

year.

of

For the

and for the
-

store sales in New York City for the
weekly period
increased by 7% from the same period last

week of

week.

trade here in New York was adversely affected
by
rainy weather the latter part of last week which re¬

According

an

This compared

year.

the preceding

.

corresponding week

week

on

recorded

Oct. 30,

department store volume

during the

ago.

last week.: Activity

increased sharply

and

warm

Prices of leading grains moved irregularly over a comparatively
range

increase of 12%

an

four

.

continued weakness in food and

closed at 269.45

earlier, and with 288.45

narrow

volume of wholesale orders the
past week remained
high level of the previous week and slightly surpassed that
the corresponding week last year. Many buyers strove to
acquire

♦additional

daily wholesale commodity price index, compiled by Dun

The index

total

the

with
moved

prunes and lambs.

The

,,

Regional estimates exceeded those of a year ago by the fol¬
lowing percentages: New England and East, 5 to 9; South, 2 to 6;
Middle West, 3 to 7; Northwest, 4 to 8;
Southwest, I to 5, and
Pacific Coast, 0 to 4.

of

barley, hams, bellies, lard, butter, cocoa, peas, eggs, potatoes

hogs.

ago.

year

The

1947, when it regis¬
$6.78

Retail volume for the country in the period ended on
Wednesday
week was estimated to be from 3 to
7% above that of a

last

near

*

corn, rye,

raisins,

low point since June 24,

latest

Commodities that

and

in draperies, curtains and bedding. Lamps
appliances were frequently requested. Automo¬
bile supplies and hunting and
fishing equipment were in large de¬
mand in many areas with
novelty and gift items sought in increased
and small electrical

by

Continuing to decline, the wholesale food price index, compiled
by Dun & Bradstreet, Inc., was off sharply in the past week to
stand at $6.36 on Nov. 2.
Down 1.7% from $6.47 last week, the
current figure marks a
drop of 8.5% from $6.95 in mid-September
and

interest largely centered

sharpest increases from
ago occurred in the New England and Middle Atlantic States.

year

in large demand prior to the Hallowe'en week-end.

furniture volume was moderately below that of
Home furnishings continued to sell well with consumer

week ago.

The

WHOLESALE FOOD PRICE INDEX DIPS SHARPLY TO NEW
LOW SINCE JUNE 24, 1947

tered

a

decline to 5 from 11 in the<3outh

other

in

week's

were

Hardware and

twice

The Middle Atlantic States reported 27 failures; the Pacific 26,
and New England 21.
Except for an increase to 6 from 2 in the
West North

nuts

week

same as

week

were

numbered

in the preceding week, Dun & Bradstreet,
This exceeded the 72 and 25 in the comparable weeks
1946, respectively.
Failures were less than one-half

Inc.. reports.
of 1947 and

■«

Hon.

'

week ago.

a

topcoats,

COMMODITY PRICE INDEX STRIKES NEW LOW FOR YEAR

The

was reported and
Imports of apparel wools received at
Philadelphia in the week ending Oct. 22 rep¬
clean pounds, as compared with 1,100,300 the

consumer

"arge demand.

witnessed.

Bond Club of N. Y. to Hear

business in worsted wools

new

declined.

continued

in

BUSINESS FAILURES REMAIN STEADY

to vote in the New Dea

was

wools, the bulk of
grade and used mostly in the manufacture

partly a result of unfavorable weather
country.

was

week's

in

in Canada.

You're the cul¬

"No!

Interest

CCC

.

This

made

a

back with:

market

revalued

furnishings and accessories. Interest in men's apparel centered chiefly

due to higher truck volume

was

Output in the similar period a year
93,585 units in the like period of 1941.

Pandora's Inflation Box

Meanwhile,

one

a

failures numbered

an

the

resumption of operations by International Har¬

a

vester Co. after

but

running its full course.

wool

scoured

but it was moderately above that of the
comparable 1947 week,
according to Dun &. Bradstreet, Inc., in its current summary of trade.
While Election Day promotions of seasonal merchandise
encouraged

Women's

and trucks in the United States and Canada

cars

moderately to 117,225 units from 116,968 (revised) units
previous week, according to "Ward's Automotive Reports."

available in our nation's

capitol to prevent the cycle from

on

Retail dollar volume during the period ended on
Wednesday
last week dipped slightly below the level of the
preceding week,

that of

rose

by ending Nov.

require

Boston

RETAIL AND WHOLESALE

of

TAKING PERIOD

the

powerful forces that it will

such

noils

2,926,200
previous week.

AUTO OUTPUT TURNS UPWARD FOLLOWING INVENTORY

stabilize

to

dull.

print

FOR THE WEEK

Loadings of revenue freight for the week ended Oct. 30, 1948
totaled 931,750
cars, according to the Association of American Rail¬
roads.
This was an increase of 4,218 cars or 0.5% above the pre¬
ceding week this year. However, it represented a decrease of 8,996
cars, or 1% under the corresponding week in 1947, but an increase
of 9,438 cars, or-1% above the similar period in 1946.

Some wish¬

to attack it.

Little

in

resented

problem

courage

continued

of

Boston. New York and

ago.

CAR LOADINGS ADVANCE A TRIFLE IN LATEST WEEK

knowledge of the subject nor the

the

largely

of medium

were

of woolens.

New

stroyed two-thirds of the value of
the dollar, and would attack the

sales

Nov.

8, 1947. It was also 881,429,000
output reported for the corresponding period

the

in

centered

was

which

The amount of electrical energy distributed

kwh.

expanding

cloths at firmer prices.

ELECTRIC OUTPUT BREAKS THROUGH TO NEW ALL-TIME
HIGH IN WEEK ENDED NOV. 6

and

1,315,053

bales for the

The Institute said steel production in November probably would
when

-

recorded

ceding week. The easiness was attributed to increased hedge
selling, liquidation in the December delivery, and uncertainties
surrounding the political situation abroad.

old capacity one year ago and
week in 1940, highest prewar year.

average

farmers

major produc- *

areas.

somewhat

A month ago the indi¬

week ago, 1,775,400 tons

influenced by freer offerings of cash wheat by

and reports of improved weather
conditions in the

a

96.9% of the

or

corn

The trend in cotton prices was generally lower in the
week
just ended with volume of sales declining from that in the
pre¬

,,

against 1,782,600 tons

reported for the week

Democratic Admin¬

new

to sag,

profit-pic¬

suits

starts

have

This week's operating rate is equivalent to
1,791,700 tons of
steel ingots and castings, 400 tons larger than the all-time
weekly
record of 1,791,300 tons in the wartime week of
April 24, 1944,

^capegoat Pres¬

erroneous

He

ture.

wiil

an

marketings of

from the country.

controversy
members in

demand, this trade authority concludes, is strong, wide,
no signs of faltering and it is
hitting every steel product.

ity for the week beginning Nov. 8, 1948,
point, or 0.5% above the preceding week.

ident Truman points out big busi¬
ness as the culprit.
He preaches

holding down profits, saying noth¬
ing about present profits being
recorded
in
his
party's
phony
dollars—such
dollars
presenting

It

29

featured by an advance in the December wheat contract to
above the
government loan level and by continued heavy

The American Iron and Steel Institute announced on
Monday
of this week the operating rate of steel
companies having 94% of
the steel-making capacity of the industry will be
99.4% of capac¬

fall of 1919.
a

Congress.

that

on

people

and shows

prosperity of the country
so
fully proven in the
handling of credit in the

In his hunt for

next

(1981)

Following the early strength shown in wheat, prices tended

action

any

next year may not come.

was

inept

the

since

think that will more than make up the answer for
capacity. The only fly in the ointment is that an important
slowup in steel demand expected by mosi steel officials by late

Such

branches.

await

to

of

the

dressing,

more

iand the
as

have

steel

dangerous to business

are

window

As for steel output, "The Iron Age" states, there is still a good
chance that 93 million tons of steel Will be turned out in 1949. And

attacking the
roots of the poison ivy vine, he
contents himself with clipping off
place

Industry

greater number who would be opposed to quickly disposing of the
pricing question. Some steel people do not look for any remedial
legislation for return of basing points and freight absorption for
some. time.—if -itaiL

but occupies himself with shadow-

the

CHRONICLE

(Continued from page 5)

will

Search for

methods

FINANCIAL

The State oi Trade and

plied only by the President,

tion.

&

nothing whatever to do

inflation

For

COMMERCIAL

(revised)

was

registered

the four weeks ended

Oct.

department

to Oct. 30, 1948,

In the preceding
over the similar

30, 1948,

an

advance

is recorded over that of last year and for the year to

volume increased by

6%.

date,

.

30

i'HF.

(1982)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, November 11-, 19T4&'

-T

r

Open-End Trusts Buy, Closed-Ends Sell
(Continued from page 2)
uncertainties created
such

also be

possibility of repeal of
Taft-Hartley Law,, price controls,
materials, and

OPEN-END

increased
taxes.

corporation

but

dent

income

Still too early to come

is

Fund—(Sept.
30
in stocks; 13.5%

all percentages of total net assets).
"Investment changes during Octo¬

would

conservative

...

77%

oils, 11.6% pulp and paper; 8.3%utilities, 7.8% metals, 6.3% rails-

prefer a
position until
atmosphere clarifies."
progress,

Gulf

STOCK FUNDS:

Fidelity

portfolio:

to
to

any
definite opinions as
whether or not a bear market

in

ber only of minor nature.

....

moment

Joseph E. Welch, Vice-President

no

policy

At the

shifts

of

the

Wellington Fund—"During Octo¬ type mentioned have been decided
ber there was very Lttie change upon."
William
A.
in the ratios in the
Parker, President
Wellington
Fund portfolio although we did Incorporated Investors—(Sept. 30
sell some
of
95.5% equities, 19.6%
the more volatile portfolio:
common
stocks
and
purchased rails, 15.1% oils, 11.0% pulp and
more
defensive
6.3% metals, 6.0% mercommons.
We paper,
have invested about $800,000 in cnanaising—percentages of total
the market weakness since elec¬ net assets).
"Very little change
tion day and plan to invest more in portfolio of Incorporated In¬
in

decline

further.

In

our

pur¬

will

give careful con¬
sideration
to
the
excess-profits
tax base in view of the possibility
we

of reinstatement

profits taxes.

of

some

pessimism

liked equities were those of Con¬
Natural Gas and Southern Natural

and

election.
not

excess-

Consideration must

Consider

prices

earnings and dividends and think

these carriers,

solidated

Phillips Pete contin¬

ued to be the most popuiar issues

the petroleum companies

among
in the

period

quarter, six funds
purchases of each issue.

making

Standard ofTndlafia

ties

Gas,

favored

Northern

during this

General Public Utili¬

were

Illinois

and

funds

also well

was

Natural

Utilities

third

Power,

purchasing

seven

totaluf 23,400

a

added

number buying 33,900 of the latter

25,500.

ments and

Chicago,

Standard of California and Stand¬
Ohio

ard of

by

three

total

each

were

trusts,

the

purchased

latter

in

funds

four

a

Power

to

also

and

a

portfolios, but
lightened

com¬

of
20,400 shares.
Barnsdall showed an
increase over the previous period,

mitments.

three
of

funds

13,000

hand,

panies

of

disposing

shares.

On

half

only

of

as

Southwest

total

a

the

many

lyn

com¬

cash

for

of

expansion

existing

four

more

other
Two

appeared

North

disposed

as

new

American,

of

other

Rails

16,400

trusts

one

shares.

completely

Cleveland

continued

popular

the natural gas

previous

industry, the best-

Electric

Il¬

evince

the

to

indicated

trend

quarter

in

the

Atchison,

as

Companies

Eaton & Howard

Grade Bonds & Pfds.

Per Cent*

Per Cent

End of-

10.0

8.0

4,136

3,717

11.2

10.4

80:4

like

61.7,-

City.

81.6

Trust

16.6

16.6

64.6-

4.1

3.1

13.7

15.3

82.2

1,471

705

12.7

,

r

5.9

32.3

29.7

55,0-

64.4

of

41

18.6

10.2

13.5

18.7

62.9

71.1

was

23.2

23.7

8.4

66.3

67.9

of

360

372

25.5-

27.9

13.3

61.6

58.8

observe

10.5

12:9'

t

64.9

9,677

13.5

t

16.5

33.3

28.4

53.2

55.1

18

32

3.9

6.3

41.6

42.7

54.5

51.0

589

417

23.3

5.0

4.0

63.7

72.7

'

.

'

V

Investment Co.-

31.3'

f

f >-■'

.

29:3

708

6.6

7.6

193
33

6,918

5,790

None

None

None.

None

4.3,

7.8'

3.3'

2.1

2.6

Institutional Shares-—
Investment Co. of" America.
Investors Management Fund^

______

Knickerbocker Fund-——

2.1

3.0

5.0

4.3

494

5.5

3,026

3:7?

4;5*

None

91

3.2

4:1

None-

1,219

22.7.

22.5-

None

517.

270

4.9

Insurance; Continental' Insurance,.'

84)5

Fidelity

95.7

Newark,

1.1

92.8

93.8

None

-

•

96.8'

None

77.3

None

•

None

-

None:

22*5)

4.0

210

4:0

4:1

None

23

15

3.2

2.2

4.1

419

652

2.3

4.0

None

521
133

1,844

757

46.

Investment Corp..

95.9

,;'77.5

-

95.1

Express

American

75.0

3,0

74:5

'*

•4*0.

'

76.0

'

None

92:7

'

General
Lehman
i National

...

Of

mercial- Credit,

proximately

Corporation
Shares

Corp

(Formerly National Bond

97.7

96.0

leled

5,5

3.9

77.41

7.7.4

managements

None

92:7

89.3

11.0

5.0

of the latter company : while there

None

None

89.0

'

„

95.0

*

1.2

5.0

9.8

86.0

17.1

None

None

83.6

82.9

21.5

23.0)

None

None

78.5

77.0

*

13.6

19.0

None

None-

22.3

None

None

75.6^

17.6

25.3

3,1

576

$10.5

$10.0

7.6

21 A1

24,0-

477

6.7

10.6;

If
18,104
2,05L

$8.0

If
20.0

2.9

**TrirContinenta! Corp.,.
§U. S. & Foreign Securities;.
U: S. & International Securities

2,009
2,419
1,568
2,548

0.4

78.2

IT

82.2

5.6

75.6
89.4

'

82.1

■

if

78.5

•

78.9

5,9

of shares

sales of the former.

no

rKennecott
favorites

was

still

-,

of

one

'

*

the;

the nonferrous..
noted, were less
popular than" earlier in the year
among

metals which, as

still

although
Aluminum

of

well;

thought

America

of.

-

also

was

the top preferences with
trusts.inoreasing their- hold¬
ings.
Aluminum, Ltd., however,
was
sold by three managements
among

and

"

■

'

1.5

However, two

disposed

-

.

seven

93.3

*

another.

one

72.6

purchased'by only one: Five
holdings of Amer¬
Smelting while three light-

•

trusts added to

ican

commitments.

ened

Two

.

trusts

'

$7.3
$7.0

1,886
2,711

4.2

5 6

6.3

7.5

Oct:




80.5

None

21.5

1,690

as; reported fr" company.
**September figures reflect merger
with-General Shareholders.
§Portfolio exclusive of securities in
subsidiary or associated companies.
^Merged with Tri-Continental Corp. effective as of
opening, of business on

revised.

15.5

2,957

^Investment
bonds
and
preferred stocks:
Moody's. Aaa
through Ba for bonds; Fitch's AAA through BB, and
approxirmate equivalents for preferreds.
fNo interim reports issued to
stockholders on this- date.
$Percent gross cash and governments

i June quarter figures

72.3

81.9

9.8

15.0

7.9.3

None

:

77.7

9.5

0.4

;

81.0

.

2.4

v;

were

89:0;

.

81.4

24.4

& Share)

Selected Industries

ap¬

paral¬

None

7,556

1,396
14,739
1,600

total; of

shares

10.7

9.0.

8,939

a,

13.7-

256

,

for

13,000

7:3

16.4

332

.

CIT Financial and Com- "

both

17.1,

4,017
7,714-

8,513

West-,
,

95.3

630

Shareholders

-

93.5

'

5,727
...

Marine;:

Purchases, by three trusts, each

75.0

96.7

4.3
None-

Life;,:

:

and;

Accident)

Standard

8,069

General American Investors
General Public Service

Fire ' and

Springfield
Chester, Fire.,-

4,757

International

BlUe: Ridge Corp
Capital Administration

National

Northwestern

97.9

Closed-End Companies:
Adams

ance,

97.2

'

5

239.

of:

Amsterdam,Casualty,rNorth River,

90.8

/

11,054

11,761

Investing Corp.

195.5

•

Firemen's:

1

None

None

3.3

84

1 96,3

Phoenix,

Great American Xnsur-r.
Hartford Fire, Home, New.j

*

8,604

included..
Y., Boston

o n.s

94.5

2.3

20.0:

ti

e c

87.3

2.1;

-

1

s e

American Surety of N.

95.0

12.5'*

1.7'

7,437

5L3.

•

?TWo,:

Newark and- Fireman's* Fund...

90.8

'

5.1

t

be

to

throughout

None

10j6

None

,

continued

previous " periods;

95.9

103

1,360

Massachusetts

Sovereign Investors.

r

of

two

,87.3

1,755

Selected'American Shares

<o£,

the

None

5.5

9.2

New England Fund
Republic Investors

list

the

trusts bought American Insurance';

None

4.1

2L0

____

.

96.7

91.2

167

Investors

to

noted

trend

a

90.3, Individual

1,063
1,718

Mutual Investment Fund

12

86.7

•

92.2

/

made,

82.8

737

Trust

to*

of- the

1

shares

surance

702

-

88,9

v

1,064

Investors

89.1.

6.2

1,008

98:

Loomis-Sayles Mutual: Fund.
Loomis-Sayles Second Fund--

.___

interest

out

dur-;
ing this period represented inrvestment in commercial bankings-

4.3

1,350

Capital Corp;
Incorporated- Investors

Wall Street

added

None

82

General

Opinion*;

Massachusetts investors Trust

0:3

2;781

First Mutual Trust Fundi

of

is

that; four

5.7

4,9.

135

784

_______

Fundamental. Investors

Street

It

Boston.

96:9

89.3

.None

15.1

9.7'

6.5,

614

—

10.8'

81

.

98.1
-

5.7;

None

1,688

Eaton &'HOward Stock—

Fidelity Fund

3.1

10.7

28

Shares.

1.9

173

507

Fund

2,234

670'

i Broad Street Investing;
Bullock Fund

1,379

,

the First. National

on

.Many scattered purchases,of in-

67

—

;

National.

managements.

divided

securities

•

of Guaranty

shares

institutions,

Fund

Bowling Green Fund

State

two

were

added to the portfolios^,

were

6,141

21.1

purchased

1,000

79

OpenrEnd Stock Funds:

National

number

6,228

7,791

*

in>

75.0

21.7

____

gone
•

78.3

19.0

Whitehall Fund

elections
•

70.9

373

14.0

the

York bank stocks

New

not
ex¬

8.6

501

Dividend

had

but

originally

7.6

3.1

3,520

future,
as

66.8

11.4

_____

the
soon

67.2

.

12.0

Delaware

seen, in
realized as

22.8

16.4

Affiliated

be

support- levels.»
action will,

such

21.6

10.3

...

of

particular
favor. • Three
funds
bought Bankers Trusty three more
acquired Chase National and a

21.0

Scudder Stevens & Clark

Federal

of

wisdom

70.8

75

Wisconsin

ering

69.1

803

„

govern-*

21.2

233

George Putnam Fund-—
Russell Berg Fund

longer-term

20.9

65

Wellington Fund.

their

ments in anticipation, of the low¬

64.3

963

Nesbett Fund

been ;

75.5

211

___

longer-

'10.6

General Investors Trust

Nation-Wide Securities

in

Undoubtedly,
other
be. attempted-to/;
restrict the inflationary e;xtension>
of credit, not so favorable to bank ♦
earnings.
Several trusts/likewise ;

pected

408

-

machanisms will

otherwise;

499

•

postponed.

87.6

3.4
13.4'

favor- '
bank stocks'

rates has

government

64,1

9.1

25.1

■

growing

tightening-

general
term

90.2

6.4'

breathed

was

-

63.1

11.1

National Securities—Income

life

new

felt
in
many
quarters that the
long-term trend of interest rates is
upward the. immediacy
of any":

3.2

475

the, Class-1;
inconsequen¬

the increased profit potentials because of the elections. * While it' is

14.3

Sept.

-

made

during
the
September quarter,
skepticism now exists as to

Sept.

June

Pacific.

-

some

16.6

748

Fund

of

were

already

21.6

Fully Administered Shares
Johnston Mutual

the

The

-End of

&

were

;

Although

20.3'

570

Balanced-

Sales

June

7,097

....

securities

Sept.

194

Commonwealth Investment

the

roads.

June

7,029
__

Com. Stks. Plus Lower

End of

Island

tial.

sold

Invest. Bonds &,

Preferred Stocks

Per Cent

three others picked up *

Rock

Gas

luminating.

and

of

by three manage- *

into

in

Among companies connected' with

Open-End Balanced Funds;

___

in

-

held.r
Pennsylvania

able outlook towards

eliminated

plant;

shares

acquired

Two

more

already

20,600 ahares of Brook¬

Union

interest

the

replacement

and

and

holdings in two portfolios.
Al¬
though three funds increased their

had sold this issue in

as

com¬

Central

Corp.

Utilities.

other

panies lightened their holdings of
Pure Oil

Four investment

bought

Sopac.

commitments in

Several other additions

added the securities of Gulf States

amount

Selling

End of

Axe-Houghton Fund___
Axe-Houghton. "B".

were

of

whde-two

blocks

to

Electric

Shell,

former

10,300 of the second
new

Central

company.
Five- trusts added a
total of 24,460 shares of Wisconsin

commitments.

new

Thous. of Dollars

American Business Shares.

Illinois

*

adding 4,500 shares'

4,600

made

Net Cash & Gov'ts

Sept.

and

like

the

End of Quarterly Periods June and September; 1948

June

road

shares of

Balance Between Gash and Investments of 5$ Investment
Net Cash & Gov'ts

Atchison,

Of

funds made

bought, five companies adding it
to their portfolios, three of which

conserve

stock

high in relation to prospective

Great. Northern and Southern Pacific lead in favorable acceptance.
Five managements bought each of

Gas.

will, prove

preceding three months.
vestors during October.
Do not Skelly and Texas fell in step with
contemplate any major change in current practice in the industry by
policy or portfolio as a result of declaring dividends in stock to

if the market should

commons

chases

prevailing

unwarranted."

Edward C. Johnson, 2nd*. Presi¬

allocations of bas.c

more

given to the possibility of

by elections price controls."

as

$5.4<
$7.3

10,9

each bought Nickel and St. Joseph

15.3

81.8

78.8

113

84.1

81.4

Lead.

None

None

05.8

94.4

Phelps Dodge, but the two trusts

None

-

None

93.7

92.5

which

8.9

'-v

Opinion
sold

was

divided

this copper

on
-

compahy,

American Business,Shares and the.
c

17

MM A

"R V

Bowling Green Fund, made pur-.

Changes in Cash Position,, 56 Investment Companies

chases-of Kennecott;

Balanced

Funds

_______

Stock Funds

___

____

Cliosed-End Companies-

' l\
12

Minus

711

Unchanged
3
4.

*

Totals
17'

Steels continued: their

27'

total of 22,700> shares.

4'

1

12

Steel

26

22:

8

56

Bethlehem shares

was

folios.
_

.

-

=

popular-.

ity with United States Steel prime
favorite; six trusts purchased: a.

7

1.

All Companies.

■

-

r

,

Plus,

Bethlehem.

also added to five porh-'

Three of the additions of
were

new. comr

.

Volume

168

mitments
of

U.

contrasted

as

S.

Number 4750

THE

pricing system has been consid¬
erably clouded since the elections
result in

FINANCIAL

CHRONICLE

(1983)

31

Shanges inCommoir Stock Holdings of 43 InYestftnesil Management Groups

legis¬

new

counteracting some of the
unsettling affects of the highest
court's ruling on the basing point

may

&

with four

Outlook for

lation

which

COMMERCIAL

future

some

(June 30-September 30, 1948)
Transactions in which

buyers exceed sellers—or sellers exceed buyers—by two or more management
groups.
Issues more, heavily
sold are in italics.
Numerals in parentheses indicate number of
managements making entirely new purchases of, an issue, or completely
eliminating the stock from their portfolios.

—Bought—

switching from United States Steel

-Sold^-

—Bought—

-Sold-

Sharon

Steel

No. of

No. of

No. of

No. of

No. of

No. of

No. of

No. of

company
with the
concerns in popularity

larger

Trusts

Shares

Shares

Trusts

Trusts

Shares

Shares

Trusts

2:500

3(2)

11(8)

900

2(1)

4(1)

into

Bethlehem.

kept

funds
two

increasing
these

of

ments, the
in

made

the

commit¬
as

previous
the

was

Agricultural Equipment:

holdings;

new

number

same

Youngstown

their

were

three

,

6(2)

35,900

None

None

quarter.

only

another

of

12

were

General Motors

Stratton_;___

and

None
500

_

None

2(2)

11000

Commonwealth

1(1)

7(6)

1,174
23,400

Detroit

6(1)

4(3)
Bendix

Boeing
North

2(1)

6,300
1,500

Airplane
American

5(2)

13,000

2(2)

None

None

Sperry Corp.
United Aircraft

None

None

200

Aviation

_.

.

5,900.

None

None

None

None

Dry

Ginger Ale___

11,500

Distillers

Corp.-Seagrams
Pepsi-Cola

contrasted with only three sold.

2,700
42,700

3(1)

3(1)

Buying of aircrafts outweighed
selling to a greater extent than

in
to

the
be

June

Aircraft

was

trusts adding

holdings.
ular

North

American

while

Bendix

leaders

equipment.

divided

Eastern

and

United,

there

27,400

were

3(1)
3

to

fair

division

portfolios..

of

light

paratively

favorites

were

facturers
tered

the

'

added

Sulphur

Carbide &

Carbon

lots

None

None

1

4(2)

7,500

American

3,700

Continental

2,400

Crown

Can

Co

300

Can

Cork

Co._—__

on

also

American

enthusiasm

Home

8(2)

24.100

3(1)

6,300

Svlvania

3

4,100

Westinghouse

General

Products-

1

None

—

Electric

Products

Electric

None

2,000
None

—;

None
1

*

None

4,300

American

3,100

Bankers

3(2)

2 200

Chase

liked

3(1)

13,900

2(1)

3,320

Fireman's- Fund

Insurance—___

2

1,000

them

None

None

C.

I.

Insurance

Trust

as

T.

Standard

None

United

None

American

None

Babcock

2,000

Dresser

field

indicated

Ward

for

seven:

by

preference

Montgomery
managements.

1

equal

to
of

trusts.

equity

by

two
Popular in the department
bought

sub-groun

store

of

number

the

Sears

7(1)

11.700

6(4)

22,700

United

1

None

_■

Machine

and

and

Wilcox

Fdry

__

_

Industries

_____

900

6(1)
1

Co; of America

American Smelting & Refining.
Kennecott Copper

22,900

6,500

Aluminum, LtdI

Office Equipment:.

•

-

,

1

Of

commitment.-

Deere

favor

shares;

Case,

ical

groun.

(Continued

1,200

1(1)
3(1)

None

Reynolds Tobacco

300

2

Greyhound Corp.
Greyhound

None

Southeastern

Lines

None
2

3,600

*

Received

Includes to great extent 10% dividend in
company's own stock.
Includes in part stock received as dividend from Standard Oil

3

in

exchange for Pantepec Oil Co. of Venezuela.

of Indiana.

None

4

5,864 J/2 shares received

as

Received

stock

2
3

partially

as

21/2 % stock dividend.
dividend

from

United

Light

&

Railways.

5,600

J

Includes

stock

received,

as

dividend

from

American

Gas

&

Electric.

None

7,600
6,500

,

13,000

Natural

Gas__

Phillips Petroleum
Shell Union OillCo
Sinclair

Oil

None

Corp
Co. £._

3,500

Socony Vacuum' OilSouthern

Natural

________

Standard

Oil of New Jersey3—

1'3(1)

21,286 V2

Barnsdall

None

Creole Petroleum

None

None

El Paso

Oil

Oil
Oil

Warren

100

11,529

1-

Petroleum

shares

Received

30,180 shares received

in

Public

NOTE—This
trusts
For

of

Louisville

Service of In¬

Gas

Electric

&

sponsored

from North American Co.

exchange for Public Service of

survey

by

one

as

covers

New

Jersey.

10% stock dividend.
59

trusts

management

but

group

purchases
are

sales of

or

treated

as

a

unit.

example,

the several trusts sponsored by Calvin Bullock are
considered as having the weight of one
manager. American European,
First York Corp. and Overseas Securities
are
included in addition
to companies listed in
companion tables.

1

■SUMMARY-

None

Balance Purchases and Sales Portfolio Securities
59 Investment Cos.

6(1)

600
———

NaturaLGas

Pure

None
None

4,500

2(2)

13,000
5,400

3(1)

3(1)

Balanced

700

2(2)

Stock

7,200

3

Closed-end companies

7,700

None

Ohio

None

None

Texas Company4

None
None

1,400

None

None

7,381 V2

None

None

for

12

1

1(1)

None

—

Gas_—

12(2)

1(1)

15,000
None

16,600

None

from

"A."

Liquidating dividend received

None

200
____

3(2)

100

dividend

as

11

None

None

_

Skelly

Oil

received

10

1

Pancoastal Oil Co. C. A. 1

Exchanged

(Del.)

2(1)

______

Corp.I.

7,600

1

None

None

r——

Oil

;

2

None

Corp._______

con¬




3,000
None

9

found

32)

2(1)
None

None

and Boat:

2,190 shares

of' Indiana

on page

3(1)

R. J.

1

1,400
None
None

Philip Morris and Co._

diana.

of' California

preference being

31,700
18,100

Transportation, Bus

3(1)

Petroleum and Natural Gas:

Oil

Buyers slightly favored the chem

None

Includes stock received as dividend.

Oil

sold

None

•

None

_______

8

Standard

was

1

Myers_____

4(1)

_

Standard

however,

2

and

1,000

2.800

among

Liggett

KD

6,200

equioment

American Tobacco

2.400

7

5(3)

agricul¬
companies, six
funds purchasing a total of 35.900
siderable

tural

9,410

1(1)

3

pur

3(1)

None
Mfrs. i2___

None

new

two

1

4,600

.

3,400

a

the

represented

Mills

United Merchants &

None

4.600

one

Colonial

2(1)

;

18,400

chases,

4,600
40,580

Register
Addressograph-Multigraph

6(2)

preference.

2(1)

4,100
1,100

1,500

Cash

3(1)
2(2)

indicated

None

200

National

also

an

States Steel

Youngstown Sheet & Tube_____

Burroughs Adding Machine

Northern

was

None

6,600

4,400

there

2

12,000

5,500

92,200

which

2

Corp

5

2(2)

Mill?
toward?

Steel

4(1)

3(1)

Colonial

3

Textiles:

2(1)

6

specialists,
three
management*
disposing of a
total of 16.200

company

None

4,600

5

Gulf

textiles,

None

11.400

600

—

6 830

only

3(1)

None

3,600

the

2,500

300

International Nickel

6

Among

1(1)

None

2

chandismg chains. Attitude to¬
wards Bond Stores was indicative
of current evaluation of apparel

was

1(1)

16,200-

Bethlehem Steel

1.300

4(2)

Natural Gas
Continental Oil;'--

lightened by two fupds..

3(1)

1,000

Supply

3

4(1)

None

Consolidated

was

1

7,700

—

None

29.500

Co

Amerada

Grant

1(1)
None

3,000
2,000

_

Stores—

Grant

T.

None

4.200

.

IV.

None

None

4,800

T.

None

None

2(1)

W.

300

None

Stores

Sharon

4

shares.

Shoe

.____

Auto

Bond

24,100
2,500

3

these

300

5(3)
3(2)

mer-

making
of

each

in

3(1)

1,700

Penney__

Western

2,500

"i

1

C.

None

com¬

trusts

four

mitments

None

*

Department
Montgomery Ward

None

Bank

Alliec

were

None

None

....

Stores

None

Supply

Aluminum

4,650

2

Stores and Federated Department

Stores,

3

Metals and Mining:

Only 8,300 shares were purchased,
however, which was practically
units

National

19,500

5

retail

the

In
was

2

represented

viously added.

None

None

RR.

Brake

J.

Allied

None

Machinery and Industrial Equipment:
None

pre¬

None

None

____,

Federated

None

Brands

Fruit

None

amount

American

Superheater

None

General Foods

the

which

None

Central

Pennsylvania

—

N.

for

during the previous three-

the

Pacific

Tobaccos:

period.
Eight trusts pur¬
chased 24,000 shares of GE, half

one-auarter

York

&

Ry. pfd._

Southern Pacific

Food Products

None

Westinghouse

New

13.800

5(1)
*

10,100

.

None

Y.____

(Newark).

of

Financial

2(1)

quantity added during the
June
quarter. while only three
funds
bought
3,000
shares
of

None

Northern

Illinois Central

None

Co.

National

None

month

None
None

7,400
12,700,
8,300

3(1)

None

4,100

Guaranty Trust Co. of N. Y.___
National, City Bank of N. Y.___

None

3(1)

displayed

None

None

Steels:

3(1)

Three

1

None

6,500

4(2)

Financial, Banking and Insurance:

Amer¬

4(1)

100

Pacific

4,400

4(1)

None

,

Electric

None

was

3(1)
4(1)

None

7,500

7(2)

the favorites with
but not as much

among

.managements,

19,600

Retail Trade:

General
Westinghouse were

and

None

Railroad Equipment:

Electrical Equipment:

'

Electric

1(1)

None

_____

None

Great

4,600

1

a

Continental.

in

--

—

Chicago, Rock Island

25,500

Drug Products:

2,300

<

r

Canadian

3 000

3(1)

5

None

Seal____

&

2(2)

5,800
Radio

Atchison, Topeka & Santa Fe__

8,600
10,300
8,500

2

None

ican Can and four increased hold¬

ings

7,100

Atlantic Coast Line___
Baltimore and Ohio___—

2,000
16,400

2

2

of

4,500
700

None

None

Illuminating

Railroads:

1

the two

were

Loew's, Inc.

3(2)
5(2)

2,600

Chemical

1700

Scat¬

leaders

small

Co.

Electric

Zenith

5(3)

manu¬

major can manufacturers.
trusts

Monsanto

2

|J.U

market

Among

1,800

Gulf

4(1)

com¬

equipment.

during the quarter

5,400

Union

Sc

Cleveland

___

2

None

2______—

_

Pfizer

3(1)

Borg
Stratton

other parts makers.
'

Chas.

500

—

None

Webster

Containers and Glass:

purchases and
sales ap¬
in the equities of several

peared

Koppers Co.
Texas

3(1)

activity.

among

of

Cyanamid

None

None

and

None

2(1)
American

None

Stone

Amusement:

5(1)

the

was

by

Briggs and

and

2

5,200

pur¬

sentiment

reoresented

.Chrysler,
Warner

There

of

5.100

Lead'

1

chases two represented new addi¬

tions

National

8,600

both
although

their

of

and

None

900

Public Service Electric & Gas 11

Philco

None

None

10,600

3(3)

only 3.000 purchased.
Seven managements liked Gen¬
Motors

None

on

shares

None

Minneapolis-Honeywell
Gypsum

3(2.)

latter company's stock sold against

eral

None

National

11,100

'

2

carriers,

Among

was

Cement

1

None

3,300

2

Sperry )were
the suppliers of

opinion

Portland

Chemicals:

and

among

General

None

16,400
None

13,600

2

725

None

well-bought

was

7,600

2

commitments.

new

3,900

4(2)

tended

United

also was pop¬
funds,
two
of

four

made

,

2(1)

the
favorite, five
13,000 shares to their

Boeing

with

which

and

quarter

concentrated.

more

Building Construction and Equipment:

None

None

None

_

____

None
and

None

None
None

_

Pacific Gas & Electric i°

1,500

Radio

2(1)
1(1)

None

___

_

154 000

'

3(1)

-

__

Co

4,820
6,500
8,705

None

2

Power

Louisville Gas & Eleptric (Ky.) 9
North
American Co

3

2

Gulf States Utilities.__

None

9,004,
13,000

General Public Utilities

'

None

None

Southern-

,

2(1)

None

Edison7

Illinois

None

22,700

3,582

3(3)
Canada

Corp
Commonwealth Edison (III.)

•'

None

None

Central and Southwest

and

1

2,800
None

__

Indiana Gas & Water Co, 8

15(13)

Beverages:
1 :

City Electric 6__
Brooklyn Union Gas_

33,900

4(2)

4,000

Traction 5___

Atlantic

10,300

6(4)

1

None

Aviation

1,200

1(1)

None

2 500

3(1)

port¬

management,
purchased as

lots

Briggs

800

_____________

3(2)

Liggett and Myers.
Altogether,
including the addition of 11,300

there

2

4(2)

4(2)

of American and two
each purchased Philip Morris and

the

1(1)

2(2)

Borg Warner

American Light &

20,860
1,438
20,600
36,500
6,000

Aviation:

holdings

folio

_______'

1,100

large tobaccos found
favor
among
the
more
bullish
companies.
Four
managements
bought Reynolds, three added to

to

Co

6,400

7(|2)

Four of the

Lorillard

Case

2,275

shares.

of

r.

Auto & Auto Parts:

com¬

noticeably in disfavor, three
managements disposing of 4,600

shares

J.

Public Utilities:

Co

and

were

pany

1

Deere

3(1)

1.500

2

Bought

All

funds

Balanced

Totals

__

1

4

17

16

funds

companies

Sold

12

6

5

27

2

11

2

15 :

30

18

11

59

32

Open-End Trusts Buy, Closed-Ends Sell
(Continued from page 31)
shown

for

Carbide,

Gulf

Texas

also

stocks

in

were

dis-

Dewey

strong ground in ridiculing the
of such spokesmen as Chester

idea

icies

operation.

If we could do that,
running serious risks in
a
dangerous world, there would
be no problem.
without

.

are

Core

It

would, however, be foolish to

not

sound and which must

is also clear that the
the

diate

later be corrected.

or

man

longer these factors remain in force,

do to correct

can

check the growth of conditions he

we

There

is

still

mistake to do

grave

enced

readily recognizes

something that he

so or

a

individual

of much influence in

public life who has not been deeply
perchance convinced by it. As to our cherished

The fact of the matter is that

and

Savings

of

con¬

business

have

not

been

other lenders, those
obtaining some of the
funds which they lent by selling
government securities to the Fed¬
and

lenders

eral

Reserve

System.
We have
trying to make capital out

been

Rigidities

American tradition of self-reliance and individual initiative,

plant

(a)

individuals

panies,

to permit himself to be influ¬

thinking by the glib phrases from the
mouths of the "crack-pots" — of which we seem still to
have a large surplus.

ticular, the New Deal version of these ideas, become that

for

large enough to finance this capi¬
tal formation, and some part of
it has been financed by borrow-*
ing from banks, insurance com¬

his

in

our.

and

as

It would certainly be

can.

of

commission, the core
problem, ^during the past
has been the fact that large
or

sumption.

do,

can

may

sins

services available for current

in

certain that he will not overlook any oppor¬

are

tunity to do whatever he

(Continued from first page)

to hold

even

or

earlier

equipment, (b) residential, com¬
mercial, and public construction,
(c) inventories, and (d) net for¬
eign expenditures, have increased
incomes without adding immedi¬
ately to the flow of goods and

It

really unfortunate part of the situation is the fact
existing conditions there is not a great deal

the business

imme¬

our

Whatever

our

expenditures

un¬

that under

and

been

Problem

of

core

problem?

•

have

year

we

quite

are

expensive the correction is certain to become.

more

The

sooner

that

suppose

accumulating factors which

now

Immediate

What is the

of

are

of

omission

"boom."

Dresser Industries.

it would be difficult if not impossible to find any

These notions

particularly vulner¬
in that they include as an integral part of them the
that the "bust" can be avoided by procedures and pol¬
which are responsible for the morbid elements in the

able

As We See It

or

on

theories

the President.

even

undesirable.

influenced

was

bust"

and

Thursday, November 11, 1948

Bowles, many of the labor leaders, and, it must be admitted,

favor, a trend which, as noted,
may increase as a direct result of
the elections.
Standard Brands

Sulphur, American Cyanamid and
Koppers Co., three trusts purchas¬
ing each.
Monsanto
was
the was sold by four investment com¬
underdog of the group, five man¬ panies and United Fruit disposed
On the other
agements decreasing their hold¬ of by three funds.
hand, 10,100 shares of General
ings.
'
Foods
were
purchased by two
Group unpopularity among the
beverage issues was still featured pther trusts.
Total transactions
in shares of industrial machinery
by Pepsi-Cola, three funds selling
and
equipment companies were
42,700 shares.
Canada Dry was
also" disposed of by three man¬ fairly well divided between pur¬
chases and sales, although there
agements, while among the alco¬
holic beverages, 2,700 shares of was some concentration of selling
in American Machine and Foun¬
Distillers
Corporation - Seagrams
were offered by two other trusts.
dry, Babcock and
Wilcox and
.Food

Governor

"boom

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(1984)

of

credit.

situation

This

and

building up rigid¬ growing discussion of it has led
ities in the economic structure and are so fortifying them to some public doubt as to the
one is tempted to say with the poet that not one is left "to
that one is obliged to wonder how needed readjustments desirability of our support of the
lave it in the blood that heroes gave it."
government security market, and
can occur when the time comes
as surely it will come —
increasing public doubt as to our
It would, however, be a waste of time to speculate
when market conditions demand them.
Perhaps the most willingness to continue that sup¬
about what Governor Dewey and a Republican Congress
significant of these conditions is found in the rapid rise in port if it means contributing to
would have done had they been chosen this year. In¬
inflationary pressures.
wages accompanied as it has been by the growth and
The situation calls first,
per¬
deed, it is too soon to feel any great certainty about
consolidation of union strength. Even in past decades it has
haps, for a resassessment of the
what in detail the Truman Administration and a Demo¬
prospects of further inflationary
always been a long, tedious and costly process to reduce
cratic Congress are likely to do. It probably can be said
The developing and
money wages in times when consumers flatly refused to buy pressures.
with considerable assurance that very considerable blocs
emerging weak spots in our econ¬
products at prices made necessary byl the excessive labor
from the Soiith in both the Senate and the House are
omy do not seem to be of the kind
costs in the production process.
The prospect is made no which would seriously endanger'
as
little in sympathy with the President's professed
brighter by the fact obvious on all sides that productivity— the underlying strength of the
ideas about many things as any group of similar size in
However, most
that is productivity in the sense of the willingness of men current position.
the Republican party — and as little obligated to the
of the basic
physical business in¬
to work and produce reasonably from day to day — is dis¬
dicators could be expected to level
occupant of the White House. What they will do if and
tressingly low7 and that this infirmity is being supported by off (as they have been doing in
when the President undertakes to swing them into line
the powerful labor unions whose leaders doubtless dare take recent months) rather than con¬
in support of any of the programs he promised during
tinue to rise, and prices (and all
no other
position.
his campaign remains to he seen. They are sufficiently
indicators including a price ele¬
On the financial side of things, the situation is no
numerous to block any legislation desired by the Chief
ment) would be likely to taper
off
somewhat—were
it
not
for
Executive if the "opposition" stands reasonably solidly
more encouraging,'
There is every prospect that public
the demands of preparedness for
against it.
spending will grow larger not smaller in the years im¬
war
and even the possibility of,
we

are

—

,

-

„

mediately ahead, which in the existing circumstances
scarcely fail to mean more inflation. The list might
be lengthened almost without limit.
For the conse¬

More New Deal

can

It is,

however, hardly likely that there will be any rad¬
ical movement away from the New Deal
program in general
-—and, of course, there may be a retracing of such faltering
steps

as

its best to

have been taken in return to traditional American

ideas and < doctrines.

partic¬
ularly, true of such questions as the Taft-Hartley Act, in
which the Southern members of
Congress have on the whole

to

seem

the aid of "Wall Street"

come to

or

"the interests"

they surely would be accused of doing if they made any
real effort to undo the most serious mischief which the New
Deal has inflicted upon the nation.
as

But American business

abundance of iron

an

cranium it
to

endure

could

tough.

ingenuity in its

have endured what it has had

during the past decade
a

Had it not had

in its blood and

never

confident, find

are

is

or

two.

It will, we

keep going — yes, keep go¬
ing with a vim and vigor far surpassing its socialized
or semi-socialized
counterparts in other regions of the
globe

until such time

-—

their

1°

way to

senses

conditions

in

as

and insist

which

the American

upon

American

people

come

the reestablishment of

productive genius can
capable in supplying

reach the ultimate of which it is

the
in

essentials of

this essential

an

abundant life.

truth,

sterility and futility of
our

part,

we are

Once

faith

is

lost

shall slide rapidly into the
totalitarian economy, but, for

we

a

confident that the country, particularly
keep the American economy going,

the elements which
are

still far from that point.

Face
At the

same

time

it

is

the Facts
as

well that

we

look the facts

of the current situation

squarely in the face. Policies of the
past have built up basic conditions in the
economy which
at

one

time

or

another

are

certain to

give serious trouble.

The outlook is that
many of the basic programs responsible
for these conditions are now to continue
at least for another
year or two, and

quite probably




a

good deal longer than that.

keep its house in order

It

can

only do

and hope for the

—

proviso imme¬
attention on the

we

blessed with

not

are

peace, no matter liow far we may
be from war, and our economy
can't and won't function as if we
at peace.

planning #£

The thinking and
and busi^

consumers

affected in varying

ness-merv>are

degrees by this situation,; and it is

Monetary Rkonsttuclion
(Continued from
because

no

knows

one

how

all

kinds and types of investors and
investments would react to such

price

a

yield

and

change

in

a

already

4)

page

spirit of prospec¬
tive buyers and sellers of govern¬
ment
securities, some of whom
purchases

make

may

considerable

a

factor

hv

the Federal budget.
In the imme¬
diate future months the changed

the competitive

or

defer

a

more

Treasury position (from one of
large surplus in the budget to one
surplus) is
likely to be the main element in

of small surplus or no
the effectiveness

or

This technique

tiveness

of

■

is said to be

and

will

be in

effective, sometimes,
corporate securities
which may be a little sticky. One
wonders whether it applies to a
$50 billion market as well as to
a
$50 million market? Taking a
much
broader
view, there are
those who say we should continue

program

in

which open market operations are

to support the government secur¬

market still subject to support and

sales

to administrative determination of

favorable

the level of that support.

Then

there

those

are

who

say

should

we

abandon our support
altogether, permitting a

program

"natural" market to determine its

prices and yields; by which
mean, I suppose, a market

own

they
as

"natural"

being

used

as a

as

market

an

can

instrument

of

credit policy. That suggestion has

ring of fundamentalism about it,
and it is, of course, a good longa

suggestion.

Eventually we
all want to get away from a sup¬

range

ported

market

commitments

advertised

and
to

in

the

hope

market.

of

floating

ity market, but that
should

our

support

directed

be

solely toward
maintaining orderly conditions in
the market, not toward maintain¬
ing particular prices and rates of
That

interest.

in, of

is

dicates

where

we

came

but experience in¬

course,

that

prices, and, in
peaceful world, it is not un¬
likely that we should find the

inherent

balance

than

existed

market for riskless

the

as

a

has

you

in

need
the

more

market

during most of

a

an

lack of effec¬

fiscal-monetary
element which

seriously
compromise
the
chances of attaining a balance of
demand
with

for

the

goods

and

services

available

supply.
In
other words, the cost of waging a
"cold war" and the possibility of
a "hot war" are the principal fac¬
tors disturbing the present gen¬
eral tendency toward stability in
prices and production.
If that is what

with,

we

have to cope

tougher monetary

policy
becoming
problem similar to the problems
a

isn't
a

of

the

finance

war

essential

—

the

remain

credit

which

that

past year to make such a
policy practical. Recognition of
this

operations,

which

it

is

government's

high

taxes

in
and

ation

theory is the idea that the

in

undisturbed;

continued

the
chief appeal of the abandonment

is

It

answer.

increased

long-term in¬

vestments
2

balancing
itself
Meanwhile, however,

V2 %.

way

at

to

let go of a bear's tail is to let go.
At
least you will resolve
your

problems
'

be blamed.

That

war.

diately focuses

were

rather little direct interest and which has

to

sure to

best.

TMs> would appear to be more

apparently cost a
number of legislators their seats in
Congress. There is also
a
large farm vote in the South. While most of the Southern
members of Congress are by nature and habit
"conservative,"
they are not immune to the pressures exerted by constit¬
uencies eager for largesse. Neither are
they usually eager

business is

quences,

actual

fact that

one

way or

another, al¬

though the solution may be a
pretty messy one.
I could go on. This is one of
those affairs which properly con¬
cerns

many

everyone,
and on
people find need to

their views. There
say

we

—not

—and

are

•

which

express

those who

should jiggle prices

be

so

thus

rigid in
take

our

a bit
support

advantage

fact

suggest
restore

has
a

led

many others to
variety of conversion
which would seek to

inherent

balance

to

the

market while

tapping of savings, will
required; and, should the situ¬
get worse, in which the
question of controls would again
be

have

this

to

be

faced, controls which
might need to includecontrol of capital expendi¬
or capital issues.
We must

time

retaining the essen¬ some
of present support tures
policy, and conceivably this might quit thinking and talking as if
be a way out of the present situa¬ the immediate reconversion after
tion. Finally, and on an almost war has been completed, and we
philosophical plane, there is the can now proceed as if we were at
suggestion that we should buy peace to do the things we might
government securities only when do if we were completely at peace.
we
wish to; put funds into the
tial

elements

market and sell
we

them, only when

wish to take funds out of the

of market

—

the

true

open

market

Soundness
There

is

of

Dollar

Continues

nothing in this whole

situation,- however,

which

pres-

*

Volume 168

Number 4750

ently threatens the soundness of
the dollar at home

world

nor as a

currency, and those who talk as if
there were are
using words loose¬

ly

inaccurately.

or

I

THE

this

on

aspect

of

monetary reconstruction, for your
purposes, but there is one other
feature

of

the

domestic

situation

which I would
emphasize, because
of its
bearing on problems of in¬

eration

ductive

structions and dislocations of that

Trade

the system

gave

a

body blow
current

on

account v/hich had been available

for British

lending abroad

was re¬

placed by a deficit during the
thirties, and Great Britain began
live

to

her

on

fat—liquidating

investments.

overseas

A

Second

tion.

tion.

Our present

Not

gestation

her

on

overseas

The

States but

she became

Even

long passed when

fondly
believed
that
by manipulating
one lever marked
credit, or money,
could

we

internal
We

maintain
and

can't

the

it

do

won't work
at

external
at

balance.

home

start, therefore,

abandon

and

it

internationally. Right

the

we

should

if

"these

that

idea

foreigners" would only adopt real¬
istic

values

and

then

for

tie

their

them

currencies,

to

gold,

we

could go on about the business of

getting

back to normal, without
monetary distractions and
aided, perhaps, by the workings
of some nearly automatic mone¬
tary
mechanism.
It
isn't
that
simple.
further

Conditioned

by

the

books,

this

stop

we

realize

now

economic

our

elementary

idea

to abandon.

when

are

developed in the
and by what was

century,

text

us

which

written about it in

one

of

international

situation
19th

most

as

is

hard

a

Yet most of us,

to think

about it,

that the combination

of factors which made

our

inter¬

monetary system work
fairly well for nearly a hundred
years no longer exists.
What we
have not been

perhaps,

so

is that

quick to realize,
the problem we

face is not the re-creation of

now

past situation, but the develop¬

a

ment of

ne w

work in

a

machinery which will
situation.

new

.

Very simply — too simply—
stated, the only smoothly working
international monetary system we
have known centered around the

position which Great Britain oc¬
cupied, during most of the 19th
century and the early part of the
20th

century, in the field of in¬
production, trade and
finance.
The British, taking ad¬
vantage of the possibilities of the
industrial revolution, decided to
rely on the rest of the world for
ternational

much

of their food

terials
the

and

world

products.
wide

to

and

raw

ma¬

supply the rest of

with

manufactured

The British market

was

to

imports; and su¬
perior skills and organization, and
political and financial ties wid¬
open

ened the market for exports.

ping

and

other

Ship¬

communication

services were developed, financ¬
ing methods were devised and
strengthened, and the British be¬
came

world

merchants

and

don became the center of

Trade

economy.

and

a

Lon¬

world

payments

moved

relatively freely through¬
out the world, and sterling was
the currency chiefly used in this
transactions. The British, as buy¬
ers, paid for their imports with
sterling,
and
foreigners
used
sterling to buy British goods, or
left their sterling balances in Lon¬
don until they needed some other
currency into which sterling was
freely
convertible.
And
the
growth of this system was lubri¬
cated by the use of favorable bal¬
ances, achieved by the British on
current

tal
1

account, to finance capi¬

investments

Other

abroad.

countries

rose

to

chal¬

lenge this position, of course; the
growth of industry in Germany
and Western Europe as a whole
had

to

be fitted

into

the

scheme of

British

things, and ,the United
States was. coming, fast; but by
and large-this: general scheme-of
things worked well, up to the time




cur¬

held together a world monetary
system no longer existed.

been

very

existed
the

Dual Monarchy of Dollar and

After the

immediate
uation

First World War, the
the

sit¬

were

recognized, but the
underlying changes which had
taken and were taking place were
only dimly perceived. A vigorous
attempt

was

made to restore ster¬

ling to something like its former
position, and to establish a dual
monarchy of sterling and the dol¬

lar, it being fairly clear that ster¬
ling

could

longer

no

bear

dollar

could

must be

banks

ignored,

This effort

loosely joined
tral

be

not

used.

but

was

a

led by the cen¬

one

of

England and the
United States, and participated in,
to

of

a

degree, by the central banks

other

countries.

ported

by

United

States

first

in

the

the

as

later

in

the

investments

tion

was

sup¬

of

the

foreign lender,

a

form

of

loans for relief and
and

It

emergence

government

rehabilitation,

form

abroad.

of

private

Whatever

this monetary reconstruc¬

might

have

had

—

and

its

not too
likely be¬
nostalgia for the good
old days, because of the uneasy
performance of the dual monarchy
of dollars and sterling and
be¬
success

cause

cause

was

of its

of

our

mistakes in the field

of

foreign lending—was lost in the
depression of the nineteen thir¬
ties, when international economic
relations degenerated and disinte¬

Great

this

last

there

war

lack of balance between

a

States

and the rest

reflected

as

in

of

the

balance of pay¬

our

current account to show

on

chronic

surplus

surplus

a

—

not

smoothly offset by
either our lending abroad or our
purchases of gold from abroad.
Underlying this imbalance was,
among
other factors, the tech¬
nological superiority of the United
States, which caused a heavy de¬
was

mand

for

ports,

and

manufactured

our

vast

our

ex¬

varied

and

natural resources,

which made us
relatively independent of imports
from the rest of the world.

This

the

whole burden, and that the strength
and international position of the

of

the United
up to now we have not
well cast in the role.

United

which

difficulties of

apparent

the
world,
tendency of

a

Sterling

am

course, was

before

ments

success

national

both

binder which had

The

we

approximate

on

capital account in large

amounts.

affect the money
supply and are,
in turn, affected by it.
The time

has

and

rent

debtor

a

I

heir

Britain, of

of

long-run develop¬
ments in production,
trade, prices,
profits, fiscal policy, labor mo¬
bility and wages, capital forma¬
tion and the
like, all of which

International

beyond all
talking rather
of the likelihood that, for a num¬
ber
of years, there may be no
entity, or combination of entities,
which can take the place which
Great Britain formerly occupied
in the. scheme of things, and that
we
may
be faced with a new
scheme of things, anyway.

investments,
she
also
incurred
large overseas liabilities, so that

and

the

of

Organization

seemliness.

only had Great Britain

to realize further

Administration; and which
prolonged the period of

monetary situation is the product
of the crazy economics of
war, and
short-

-

increase

have

World War completed the destruc¬

not exist in isolation.

' v

CHRONICLE

War, although
probably was on the down
grade then.
In any case the de¬

ternational

monetary reconstruc¬
Monetary phenomena do

FINANCIAL

it

war-

domestic

&

of the First World

probably have spent too much —the favorable balance

time

COMMERCIAL

imbalance

the

33

and, if their own pro¬
capacity were rising, ineir

The first consideration is to main¬
tain the position of the dollar as

need for dollars would be reduced.

a fixed point of reference
for all
currencies. The second considerat¬
ion is to direct our international

It may
of the

be that during the decade
fifties

national

such

some

equilibrium

inter¬

will

have

been achieved.

It won't happen,
fail to

however, if

recognize that

headed

back

commercial

policies

elimination

to

are

we

where

we

not

factors which
lar

the

make the dol¬

now

"scarce

a

toward

amelioration of the

or

currency",

that,

so

eventually, it can perform, to the
underlying, long-run changes
extent, the role of an in¬

that

we

were;

fullest

in. the whole fabric of world trade

ternational

and

third

finance

have

been

and

are

taking place; that we are prob¬
ably going to be playing baseball
not

cricket.

I

shall

mention

but

two

important factors
in
this
situation. The first is the question
of internal

ity in

the old

external stabil¬

versus

economic afafirs. Under

our

rules, and

as a

generality,

or key
currency.
The
consideration is the restor¬

ation of the Britsh pound
sterling
a similar
position, so that we

to

multiply the benefits which
already accrue from the transfer¬
ability of sterling over a wide
and increasing area; there is still
work for sterling to do, there is
may

still

for

need

the

experience

internal stability was supposed to

the

give

consideration is

that other

tries, which

relieved of

before external stability
—the exchange rate was more im¬
portant than, say, unemployment.
way

That idea has been seriously chal¬

lenged and is not likely to arise
again, at least in its old vigor.
Yet

must

we

order

in

have

economics

politics. We can't

world

some
as

move

well

the

and

task

practices
to

which

market.

are

The

of

fourth
coun¬

some

of the

special requirements which
with the maintenance of a true

go

international
this

use

as

necessary

in

disciplines,

an

do

currency,

an excuse

as

for

not

evading

internal and external
if the whole system

is to work.

increasing
measure
of
world
sovereignty in politics while re¬
viving
and
strengthening
the
ideas

London

toward

of

national

sovereignty in economics. That is

between

*

(1985)

the

Interna¬

If
in

keep these considerations

we

mind,

we
can make further
toward monetary recon¬
struction.
Over a period of years,
if the present untenable situation

progress

which

is

United States and the rest of the

tional Monetary Fund can devote

can

world has been

itself—developing and maintain¬

out

war

nor

peace

achieve

ing a willingness among its mem¬
bers, by consultation and guid¬
ance, to abide by the necessary
disciplines
of
an
international

neither

greatly intensified

since 1939, in view of the tremen¬
dous increase
in
this
country's

productive

capacities,

the

on

one

hand, and the destruction and dis¬
ruption of productive capacities
in

Europe and Asia

Partly in
in

consequence

addition,

tilateral
has
the

the

the other.

on

and partly

mul¬

pre-war

network

of

world

trade

been

badly mangled. Before
Europe had a substantial

war

deficit
but

with

the

able

was

United

to

States,

finance

this

monetary standard, while avoid¬
ing the rigidities and the disre¬
gard

of

internal

periodically
down

our

stability, which
helped
to
break

old arrangements.

ended,

again
monetary stability, with¬
much of the parapher¬
of exchange controls, im¬

under¬

we

nalia

port quotas, tariffs, export allo¬
cations, bilateral agreements, and
their

various

permutations

combinations.
know

is

a

that it

and

let's not

ing

it

that

road,

But

slogans.

our

your

currency"

trade

and

To

sirable

countries—notably

pean

East

—

the

which in turn had

Far

a

sur¬

plus with the United States. Since
the

war

Europe

account

States

and

the

has

greatly

deficit

developed
of

ters

has

its

United

creased
the

a

also

also

has

deficit with the rest

world. And

worse

in¬

with

the

rest

developed

make

to

of
a

the

mat¬

world

deficit with

the United States. This intensified

our

ideas of multi¬

Williams:
"The

be.

standard

theory was the monetary
counterpart, never took adequate¬

vamping

ly

are

into

account

the

problem

of

economic growth.
It was a theory
of
trade
between
countries
of
known resources, already existent

get

to

or

"multilateral

discrimination," de¬
things may

no

Ours

trying

theory

can't

all of these

as

of inter¬
national trade, of which the gold

classical

breath shout¬

we want to go by
repeating
"balance your budget" or "revalue

lies

non-discriminatory trade.
quote my associate, Dr. John

now

long, difficult
leads into new

We

lateral

much of

and

should

where

surplus

sc

we

In traversing this road,
waste

deficit, in

part, by reason of its
in trade with non-Euro¬

can

too

country.

This difficult task will have as
its counterpart a reorientation or
at least a reexamination of that

thinking and action which

be

is

the

find

to

harder

out

task

of

why

the old
order has changed, and what re¬

of

old

abandonment
necessary

of

in

ideas
old
a new

and

world.

With Investors Serv.
(Special

to

The

Financial

what

prejudices

Corp*

Chronicle)

and in use, and it asked

only how,
MIAMI BEACH, FLA.—Victor
lack of balance, so far as it is a
through international trade, such
Clifton,
Howard
A.
Long and
creature of war, can be repaired resources
might be most effec¬
The Difficult Road Ahead
George F. Ryan have been added
over
time by the restoration of
tively applied to mutual advan¬ to the staff of
It is
somewhat
Investors Service
surprising, in the productive capacity of Europe
tage. - It was, in other words, a
the light of this experience, that and Asia. So far as it
Corporation, 420 Lincoln" Road.
may repre¬
theory of maximizing national in¬
our preparations for monetary re¬
sent underlying structural changes
comes here and now,
and never
construction - after
the
Second in world
trade, the task will be took account of the fact that
With John L. Ahbe Co.
only
World War were so largely de¬ more difficult.
It is not likely
(Special to The Financial Chronicle)
by interfering with its processes
voted to changes in form rather that it will be solved
by 1952, the could
PALM BEACH, FLA.—Richard
young countries maximize
than in substance; that there was terminal
date
of
the
European their future incomes—and
by de¬ H. Landrum has become associ¬
still so much harking back to the
Recovery Program.
veloping more buying power in¬ ated with John L. Ahbe & Co.,
good old days, rather than search¬
crease the future incomes of their
268 South County Road.
ing out the difficult road ahead. Foreign Dollar Deficit to Continue
customers as well.
The classical
For .central
bank collaboration
In fact, it would appear on the
theory was a rationalization of
and cooperation in the field of
basis of
present estimates that, British practice and policy, uni¬ With
Robinson-Humphrey
monetary affairs, we substituted for some
(Special to The Financial Chronicle)
years beyond 1952, the versalized into economic law at a
a
new international organization,
world as a whole will continue time when it suited the
British
ATLANTA, GA. — Robert L.
the International Monetary Fund.
to
have a substantial deficit on national interest."
Jones is now associated with the
For public and private lending by
current account with the United
The young countries, including Robinson-Humphrey Co., Rhodesthe United States and its citizens
States, despite continuing econ¬
we
ourselves, never fully accepted Haverty Building.
attempted to substitute, - in omies in the use of
dollars, and this
idea; we couldn't if we were
part, a new international organi¬
taking advantage of the assump¬ to
Otto Weinmann to Open
grow and develop; but it tended
zation, the International Bank for tion that
high levels of income to control or
condition our eco¬
Reconstruction and Development.
Otto Weinmann is engaging in.
and employment will be main¬
nomic thinking.
And to try to put some solid sup¬
The young or a securities business firm from
tained here. Eventually, however,
the less developed countries are offices
ports of production and trade un¬ this
at 15 William Street, New
situation can be righted. If
now showing less and less inclina¬
der this new financial machinery,
York City.
the international political situa¬
tion to remain hewers of wood
we
began the creation of an In¬ tion is still
grave, some further
and drawers
of water,
ternational
Trade
colonial
Organization. extension of
government grants
With S. A. Sandeen & Co.
All of these innovations, no doubt
purveyors of
raw
materials for
and loans may be politically pos¬
(Special to The Financial Chronicle)
the more developed countries, and
were improvements
over the at¬
sible, and deemed desirable. If
ROCKFORD, ILL. — James M.
we shall
do well to bear this in
tempts at international coopera¬
not, the International Bank and,
mind as we try to develop further Hancock is now with S. A. San¬
tion which had gone before but,
perhaps, the Export-Import Bank
deen & Co., Talcott Building.
our
ideas of international trade.
in greater or lesser degree, they
can help
to bridge the gap. And
carried forward some of the same
Multilateral trade concepts which
finally some revival of private
rest too largely on a species of
old defects
and, in particular,
foreign investment may be hoped
Ellery WithSutro & Co.
they seemed to be laying down
specialization which freezes exist¬
(Special to The Financial Chronicle)
for, if not expected. To fill in be¬
the rules for cricket when, in the
hind these essentially temporary ing difference in skills and fa¬
BEVERLY
HILLS,
CALIF.—
cilities
as
between
countries,
future, we may be playing base¬
expedients, there is the prospect
Eugene Ellery, Jr., formerly with
ball.
won't go down.
We must avoid
that with
continued
growth in
Buckley Bros, as co-manager of
the old British habit of declaring
I
am
not
talking about the this country our demand for im¬
the Beverly Hills office, is now
difficulties
of
these
immediate ported goods, particularly primary that what suits our book is uni¬
associated with Sutro & Co., Van,
And
post-war years, which have ren¬ commodities, will increase at a versal and eternal truth.
Nuys Building, Los Angeles.
we must avoid the old
American
dered the International Monetary
steady rate, and the possibility
habit of proclaiming ideals and
Fund largely impotent in terms of that in
anticipation of the deple¬
With Herrick, WaddeU i
the claims originally made in its tion of some of our natural re¬ principles which do not conform
(Special to The Financial Chronicle)
behalf, which have subordinated sources, we may increase the pro¬ with our actual trading habits.
BEVERLY
the role of the International Bank
It is in the light of such reflec¬
HILLS,
CALIF.—
portion as well as the amount of
to that tremendous experiment in our imports. In this way the sup¬ tions as these, it seems to me, that Arnold D. Reilly has joined the *
grated.

—

international^assistance and col¬
laboration,

the

Economic

Coop¬

ply of dollars becoming available
foreign countries would steadily

to

we

must

further

approach the problem of
monetary reconstruction.

staff of Herrick, WaddeU & Reed,
Inc., 8943 Wilshire Boulevard.

*

34

COMMERCIAL

THE

(1986)

FINANCIAL

&

CHRONICLE

Investment Probabilities

Aspects of European Recovery
(Continued from page 19)
economic institutions and
Each

state

new

has

created

that

sought

of

the

been

fulfill its
within

to

aspirations by building
its borders all

policies.

has

attention because they have
as
yet received the public

your

up

appurtenances

not

consideration which they deserve.
The first may perhaps best be
described

for

their

Atomic

producers.

own

scientists tell

that

us

ing the purpose it has set out to

also

be

said

that

unit must attain
size" in
of

use

order to

permit-effective

modern

niques,

production tech¬
maximum volume of do¬

a

mestic trade and

rium

economic

an

in

its

relations.

stable equilio-

a

economic

external

And

in

general,

the

highly developed the eco¬
nomic unit is, the greater will be
the specialization
in production
and the larger the internal mar¬
ket required'for full efficiency.
more

The

basic

validity of the Eu¬
Recovery Program derives
in large part from its recognition

ropean

of the

need for the

creation

of

larger economic unit within Eu¬

ing

Perhaps its most
is

aspect

expressed

such

ordinating
vestment

tariffs

encourag¬

determination

by the countries par¬
in
the
program
to

ticipating
achieve

the

integration

their

import

co¬

in¬

by reducing
organizing

programs,

and

by
and

otherwise

trade within

Europe in more ra¬
tional fashion and by
establishing
stable and convertible currencies.
In order to accomplish
ever,

this, how¬
required than a

is

more

reconciliation

of

tional

The

for

claims.

a

conflicting
basic

revapiping

na¬

need

is

of

existing
mechanisms so as to 'provide for
unified thinking, planning and ac¬
tion in terms of the best interests
of Western
Europe as a whole.
It

a

well

may

mate

be

to

answer

that

this

the

ulti¬

problem

complete economic union

is

of the

Western European countries. But
such

economic

an

union, involving

it

does centralized control of
such vital matters as
currency, in¬

as

available

made

is

country

foreign trade, cannot, in my
judgment, be accomplished with¬
union

well.

as

And

in view of the historical and
deeprooted
differences in

language,

customs,

traditions

and

national

habits and prejudices
among

European
realistic

countries,

it

the

is

to

expect that
union can
be

political

not

such

a

quickly

is

country
criterion

believe,

would

be

through

led

Europe,

either

real

to

demonstrate how great

very

already
European

short

of

or

the many

of

integra¬

complete

union,
which
are
possible
of
prompt
realization. There is
already ap¬
parent

a new attitude of
mind, a
recognition of the essential inter¬

est

of

each

ERP

country

in

the

fate of all. There is also

common

emerging in the OEEC, I believe,
the type of
integrated thinking
and planning which the situation
demands.

The

gradual develop¬
trends, accompanied
by a corresponding willingness to
relinguish national sovereignty to
ment of these

the extent
necessary to make inte¬
grated action possible, seems to
me

to hold the best

achievement of
There

are

I

ultimate goal.

two other aspects of

the problem of

which

our

hope for the

European

should

like

to




recovery

bring to

socialistic

tne

concentrate

purposes

financing spe¬

on

cific

a

of

sea

and

and

labor
leftist

other

ucts in unit terms is probably up

10%

from

1941, which

in

not

are

of

figures

strictly

they

this is

way

a

makes the General Motors

isms. Now that the elections show
not to

rightfully
bridge,

be, I think

feel,

that,

crossed

we

again

now

a

we

can

we

in 1932
very special
have crossed

another, perhaps never to return.
Nov. 2, 1948, thus represented

typical.
However,
certainly very indicative

the situation.

Thus,

as

have

earnings

back the

clock, but

course, at this stage of the game,
to indicate just what loans we ex¬

gaps

dollar fig?

suggest.
There is much therefore

said

will not turn

the

as

ures

in the U. S. A.

come

much

as

in filling wartime

unit basis

a

ordinary "election" but the end
of Republicanism as we knew it
Elections to

overall basis, we

an

on

perhaps not made

progress
on

no

or a

the

for

idea

not

are

that

*

to

be

current

swollen

as

they look, expressed in

as

dol¬

paper

in

program.

recovery

The solution to this dilemma, is,
in

quite

theory,
of

amount

simple

assistance

reestablished

is

firm

It

the

pect
may

it

But I think
be said that, since the first

claim

ancing of reciprocal needs on the
one hand, and of accomplishments
and efforts at self-help
on
the
other. But there is

no

easy answer

the

to

much (we

how

or

be able to invest.

upon

should
be
determined
the basis of a careful bal¬

make

to

the

from

assumed

been

has

each

—

to

and

broad

a

on

base.

country

can

ERP funds is

necessarily
for imports of food, fuel, raw ma¬
on

other goods necessary

terials and

to maintain the existing levels

the Bank will

production,

of

prob¬

question of how, in prac¬
tice, this kind of delicate balanc¬
ing can most successfully be ac¬
complished. The problem is one

ably be able to make its most con¬

which

productive capacity, which, in the

obviously requires further

consideration

and
study.
One
thing is clear, however, and that
is that a penny-pinching philos¬
ophy—an approach that no coun¬
try should get .one cent more than
the

bare

minimum

it

needs

to

its
import
requirements,
subtracting its foreign ex¬
change earnings—removes the in¬
meet

after

centive

for

better
and

both

the

country

any

to

do

than

originally estimated
the end, results in
more
costly program for

thus, in
a

United

fective

one

States

and

a

less

ef¬

from the standpoint of

structive

One

final

of

thought

about

ERP

and that is this: It is essential that

there

be

continued

and

fact

that

upon

the

basic purpose of ERP is to restore
a

viable

as

Europe, and not to serve
temporary
stimulant
for

a

American
make

exports.

the

Any effort to
European
Recovery

and
the

would

hands

of

play
those

directly
who

are

trying to undermine the Program
in Europe. We all recognize that
American

dollars

made

available

for

European recovery should be
for equipment and tools,
raw
materials, and necessary sub¬
sistence items, and not for marshspent

mallows

and

cream

puffs.

Of

in certain specific cases
be that such products as
grapefruit,
tobacco
and
dried
course,

it

may

fruits

are

ropean

priority items for Eu¬

import.

In

such

cases,

these

items should be procured
by the European countries. There

Some

of

the

of

Europe

Bank's

operations
also be
tied closely to the ERP. The rais¬
ing of living standards in under¬
developed countries will not only
outside

provide

a

market

for

may

larger and

and

more

specialized
cheaper

abundant

open

of raw

sources

materials and food.
of such

more secure

Europe's

exports, but will also

Development

of supply in non¬

sources

will help directly to

areas

Europe's need for dollars
the long

in

promote

help .to
equilibrium in

better

a

may

run

world trade.
There

are

influences

great

at

work in the world today,

larly
a

particu¬
Western Europe, to build

m

unified and

more

economic

more

rational

than

before the

The Benelux

war.

ex¬

sign, the OEEC is
another, and there are many more.
Examine

one

each

closely and
ened

market

items just because
surplus of them at going
prices
in
the
United

two

the

main

stronger
ket.

election there

were

stumbling blocks to a
active stock mar¬

more

One

election

the

was

political.

The

of Governoi

Dewey sup¬
Republican controlled
Congress should have meant that

ported by

a

psychologically

that

to

extent

a

dollar of corporate book value

would have commanded

greater

a

be

generally

to conclude.

seem

It

be

must

:

remembered

that

stock

prices are quoted in • the
depreciated paper dollars as
anything ^else.
By some mathe¬

same

matical measures,

cheapest things

stocks

one

the

seem

buy to¬

can

For instance, on

day.

an earning
typical stocks
the Dow Jones In¬

basis,

power

the

that make up
dustrial

share

Average earned

in

the

so-called

period

of

In that

period, their

142

was

1935

a

inclusive.

price

average

times

I6V2

or

$8.60

"normal"

1939

to

earnings.

price. Analysts who deal The average price of the Dow
figures have long and often Jones Industrials so far this year
pointed out that stocks seemed is 178 or 8.9 times their estimated

market

"cheap" compared to the past.

Of

the political stumbling
block that existed before the elec¬

course now

earnings
if

way,

$20-.

of

in

Put

another

think of the earnings

we

expressed as 100 for 1935-1939,
bigger than ever. such an index would pew stand
To begin with, if becomes a rea¬ at about 232, but if we think of
son
to expect lower rather than
stock prices for 1935-1939 as 10Q,
it would stand at only 125 for this
higher valuations.
Markets
must
now
consider year.
These same stocks paid
prospects of
reduced
corporate $6 2.9 dividends averaged over the
earnings because of strong possi¬ 1935-1939 period and they prob?
tion

becomes

bilities of higher taxes, price con¬

trol, pro-labor legislation, etc.

be disheart¬

labeling oCscurrent high

earnings

"boom condition that

as a

would be followed by a bust.

Ac¬

tually, we can be sure now that
earnings in most cases will decline
but

it

is

decline

probable

ably will pay at
dends this year.

divi¬

least $10

If we look

and

stabilize at a fairly
high level and that any bust will
be postponed.
We are likely to
return
and

period

a

production

for world

as
a

to

shortages

of

for

war

well

as

rehabilitation.

Such

condition

coupled with the in¬
efficiency of labor and the ten¬
dency
to
work
shorter
hours

should ail tend to prolong the pe¬
riod of high activity.
The redis¬
tribution

of

effective

an

is

power

other

spending
along

factor

these lines that must be

given full

Looked

in

at

another

way,

it

well

be

that

the

un¬

prices

of

inflation

are

very

familiar

giving us an illusion of boom.-The
depreciation in the dollar and the
rise in the price- of
things has become an accepted
part of our lives in practically all

history,

directions,

you may

of

and

inevitable

the

light of

uncertain

swift
seem in

however

they

may

hindsight,

are

save in

the stock

mar¬

com¬

Let's take, for an example, Gen¬
eral

Motors, because a few days

ago,

they released

not what may

for the

or

may

complished this month
wards creation of
or

a

not be

next to¬

or

customs

union,

formulation of coordinated

vestment

plans,

stabilization
rather

that

of
all

faltering

as

manifest

an

wards

the

ac¬

in¬

or
international
currencies; it is
these endeavors,

they

may

still

be,

irresistible

urge

to¬

creation

of

sounder

a

economic structure.

it

can

the

never be final or complete.
hope and believe that when

record

to

comes

torian's
the

of

be

pen

this

postwar

and

frustrations

States.

which

I should be the last person to
suggest that America cut itself off

thinking, but rather the

now

era

written, the his¬
will underline, not

difficulties

loom

progress we are

so

earnings

large in
very

making.

our

real

for

months

three

the

ended Sept. 30 amounted to

391,550
and

$120,the sale of 557,868 ears

on

trucks.

Back

in

second

the

1941, which was the
best pre-war quarter, their net
earnings were $53,604 000 on the
sale of 732,314 vehicles. My point
quarter

is

is

of

maybe

in the

Success will not be easy to at¬
and in the nature of things

their earnings

third quarter of 1948. Net

case

the

sold,

dei'ds.

However, the value of the

tions has of

number

of

cars

built

and

simply

replaceable at anything like book
values.

In

a

income

other
cars,

is

sources

but

centages
enough to

Likewise,
total

derived
than

from

many

just

motor

nevertheless,
are

apt

to

the
be

per¬

make the point valid.
I also know that our

increases
of the

entrenched

corporations because
duplication of their facilities by
competitors becomes unlikely.
*.
Any comparison of stock prices
versus corporate profits or stock
yields versus bo-d yield o- cor?
praisals

replacement

plant

volume

of

ap-r

stock prices or the

versus

stock

trading

versus

savings deposits, etc., will end up

with

the

elusion
than

than

value
of

of

The

.

*

detailed

two

stock

common

reduced

margin

for one thing is
importance. The very
wealth,

of

through
been

a

wealth

taking
class

-

other fac-^

stocks

redistribution

has also

con?

cheaper

today.

are

the

affected

enormous

plished

stocks

there

just

that have

is

nothing

course,

tors

statistical

common

that

common

Of

the

accom¬

Deal,

New

bearish factor in

from

investor

the

and

giving it to population
groups that, do nol look with favor
on equities
and in fact save less
of their
incomes anyway.
The
loss

of. the

investor

foreign

eliminated

much

support

Thus

the

"cheapness"
fact

great

as

has
from

stock values.-

'

of

stocks

as

<

historical

apparent

is

appears

not

Nevertheless, there
undervaluation

in

the

on

may

but

cer¬

tainly not to the degree that

pure

be

statistical

yardsticks

show.

The

close

production of physical prod¬

it

sense,

the safety of the business

still

Motors'

of

higher dollar cost of every?
thing. This corporate pbnt is h>

of

General

anywhere

because

the

dollars received for them. I know,

that

corpora¬

increased much

shown

is

statistically,

surface.

course,

listed

our

course

than

more

the measure of bcom
of the motor industry

rather than the number of

built up

enormously
over
this
period,
mostly through the re-investment
of earnings 'not paid out as divi?

valuation.

ket.

general

same

values have

consequent

of halting steps and com¬
promises.
The significant fact is
posed

get the

we

Book

poraticn

weight.
may

capital,

propertied of

that they

But all the great move¬

progress.

ments

efforts

these

of

their slow and

at

But I

a

Before

existed

structure

periment is

countries to spend ERP money or
their own free dollars for the im¬

of these

appraise the present situation
in any hasty manner nor can I.

to

apt

as

people

as

dr;ft.

tain

there is

thus not be able

to

they

are

been the

underscore this—be .American
pressure
to force the European

port

Investors will

nor

transitory

poned!

should not, however—and I want
to

as

On the omer nand, the second
stumbling block to a more realis¬
tic appraisal of stock values lias

repeated

the

emphasis

lars.

moving to the left.

absence of Bank assistance, might
have to be abandoned or post¬

and

ERP

financ¬

by

will decide the pace at whicn we
continue

at it from the pomt
of view of book values or invested

reduce

Purpose

contribution

ing selected investment projects,
involving permanent additions to

dollar

European recovery.

should

accomplishments

between

in

an

as

supplement ERP financing in cer¬
tain areas.
That is certainly our
intention.
It
is
impossible,
of

into

be

semi-rightism
and

stand

years

semi-conservatism

dollar of corporate earning power
or a dollar of
corporate dividends

rope,

the

in my judgment, no con¬

more

of

when

and
operations of ERP and those of
the
International
Bank; to the
contrary, ERP enables the Bank
flict

four

island

beginning of the ERP discussions
that the Bank will make loans to

more

the need for American aid to Eu¬

we

there is,

for

assistance.
This
backward approach may be ap¬
propriate for the administration of
temporary relief measures, but it
is
entirely inappropriate for a
getting

the

on

0

May I state, in conclusion, that

to

Labor Government

a

(Continued from first p'age)

productive projects and re¬
lieves it from pressure to make
loans which are intended, in ef¬
fect, merely to meet balance of
payments deficits. The Bank will
continue to employ its available
capital and credit for productive
loans for which there is a good
prospect of repayment, and this
policy can be followed the more
successfully if Europe's economy

politically

a

Under

its need is
and thus to avoid taking the diffi¬
cult, perhaps even harsh, meas¬
ures
internally
to
reduce
its
dependence on external assistance.
In my opinion, a recovery pro¬
gram based solely upon respec¬
tive needs is unwise just because
of this negative incentive factor.
It need is made the only test, a
country which aids itself is penal¬
ized
by getting fewer
dollars,
while a country which does not
do what it should is rewarded by

it

made in the direction of

tion,

such

if,

overlook

economic cooperation
additional measures

there is every
country
to

need,

for

the

on

that

emphasis

ultimate objective of

federated

of

each

to

solely

mistake

therefore,
serious

a

undue

based

Program a vehicle for the dump¬
ing of American surpluses would
defeat the very objective of the
Program, would prolong unduly

achieved.
I

available

be made

aid to

achieve.

of that

excess

reasonable needs. On
the other hand, if the amount of

and

political

ERP

each

to

in

more

country's

vestment programs, wages, prices

out

not

spend

a

rope through a closer integration
of the
various European
econ¬
omies.

money

to

want

a

certain "critical

a

not

incentive

certain minimum quantity of fis¬
sionable material is required tor
a successful chain reaction. It may

spent for grapefruit
prunes cannot be spent for
machine tools and cotton, and that
unless a viable Europe is created
money

and

wants to be sure that the amount

than is

kets

markets,
that

on the Recovery Program
required; in other words, it

against foreign competition or the
impact of international economic

Meanwhile, the more highly
developed countries, increasingly
hampered
in
their
traditional
ways
of
doing
business,
have
adopted restrictive practices of
their own, hoping to reserve at
least their inadequate home mar¬

the

legitimate foreign
but we must recognize

from its normal

through the most elective possible
use
of ERP dollars, the United
States
will
be
footing
a
tre¬
mendous bill without accomplish¬

does

crisis.

of

dilemma

The dilemma
is this: The United States properly

modern economy, and to wall
itself
off
with
trade
barriers
a

the

as

incentive.

negative

Thursday, November 11, 1948

of
in

the

appear'

to
;

question arises, how much
remainder

of

values

still

existence analytically speaking

but

possibly unreflected in

mar-

THE

—

Number 4756

168

Volume

COMMERCIAL

of the human m.34&€twise. Some investors will
- will
be •begHanto. '•buy. where they see val¬
lopped off by the new policies to ues under the new setup.
My feeling now, as always, is to
Come out of Washington next year
realize that bottoms and tops in
and in the years to come?

ket prices because

psychological

The

element,

judgment

market

total

recently held actual stock

which

val¬

prices below their theoretical
ues

is

the

political count.

certainly

justified

now

on

Is it to be
idea of a com¬

equally justified on

ing "bust?"
It-seems to me that the weaken¬
.

ing: in prices of things in general
will, now tend to stop. This should
give, in itself, substantial support
to

stpeks values.
It is just too early to appraise
the net result marketwise. There

are

both ways as

..factors. pulling

made

is

some

and pur¬
think will be

some

after

lower.

.

:

■,

4

why some news

is also

marketwise,

discounted

under

about discounted and
much over discounted.

just
very

My guess at the moment is

that

the bad elements in the situation

■

•

of

It

time.

Dividends will
I

when the

moment

investment thought
leans a particular way and not at
all- at the moment of actuality.
The whims and vagaries of the
multitude of human minds that
settle
stock market
prices and
trends never act twice in the same
way or at the same rate of speed.
That is why some news is dis¬
counted way ahead of time, some
just ahead of time, some at the
time and
occasionally after the

the

chasable-yields

the

at

majority

outlined above and others such as

yield factor.
be .more sought

trends are

market and

stock

the

cess

the most emphasis
during the remainder of the year
and the more hopeful factors in
1949.
However, I always counsel

labor costs and

and

1

changes

industries.

between

as

great

develop

also

will

There

Shares with shelter- against an ex¬

profits tax will gain in pop¬
ularity, Shares vulnerable to high

price control will
los£ "popularity. - G o v e r n m en t
spending patterns will be closely

will

looking at the market every day
never arguing with the tape,
in

^industries.

It will

really know. For
year tax selling

year to begin to
the rest of. this

suggest

a

a

probabilities
labor government are for

a

continuation

over

the long pull

growth of factors detri¬
to
corporate ownership.

the

of

mental

may

yardsticks workable under a
favorable
political
climate will

least keep it

prove

class

and the fear of the investor

take the market lower or at
dull and draggy. In
January and February the view¬
point is apt to be more construc¬
tive.
Fears, always discounted
ahead, will be actualities with the
President's message and the con¬
vening of Congress.
"The baby
will De born," so to speak stock
:

x

:

Old

misleading

The near

now.

term outlook however

is that the

unfavorable side of the picture is
almost

that

and

winter

this

overdone

be

to

sure

speculative

op¬

as

likely to develop

are

result.

a

for European Economic Coopera¬

house without

tion, composed of representatives

watches

our

isfactorily settled.

from

interest,

and

the thorny

Russia is attempting to counter

unrelenting

close

contact.

Of Give and Take
(Continued from page 17)

can

By the same token, we
information.

more

use

Even

in these days of our ascendancy to
world

leadership,

10%

of

our

people do not understand what is

the United Nations and

meant by

67%

heard of the Reciprocal

never

Trade

Agreements.

been

slow

some

of

in

If

have
facts,

we

securing

the

neighbors have been

our

are

political upheavals and conspiracy
are a few of the tactics now being

France and
may well be
the signals of desperation.
It is
apparent that the Kremlin has
begun a world-wide economic of¬
employed in Italy,
England, but these

three-fold

the

with

fensive

ob¬

(1) creating political
instability
in
non - Communist
countries; (2) thwarting the
Marshall Plan, and (3) blocking
of

jective

rearmament
and

is

by the United States
One of these drives

Europe.

taking place in Malaya and an¬
America with the

other in South

preventing pur stockpiling
strategic materials such as rub¬

aim of
of

ber and tin.
Thus far all these
neuvers

political ma¬

haye been unable to stop

economic

our

Even

juggernaut.

countries behind the Iron Curtain
are

beginning to hear about it and
we're on the subject we

might take a look at its accom¬
plishments during the past five
months.
During that period, un¬
der the Marshall Plan, we have
supplied $300 million worth of
bread grains; most of the $56 mil¬
lion in cotton; half of the $25 mil¬
lion in fruits and vegetables and
the

all

tobacco.
supplied

$26 million in
industry has

American

than 65% of the $125 million

more

coal; 40% of the $119
petroleum products; all
the almost $2 million in trac¬

worth

of

million in

tors

agricultural machinery;
motor vehicles and

and

the

of

machinery
million.
And
the best
is yet to come.
Under the new system of procure¬

exceptionally busy distorting facts

and the planned
ladled out to the

American

age

misinformation

Russian. At least we are
position to secure facts—
is vitally important today

average

in

a

which

.there

because

be

can

no

mis¬

understanding about the perilous
business
at
hand.
We
are
not

fighting

a

We

war.

cold

war or a warm
not fighting a war

are

to defend Mom's apple

pie, or the

mining

and

participating nations which
up a four-year plan
covering the needs of Europe from

has

drawn

1949 to 1952.

in

inflation,

Strikes,

parts and all but $400,000 of con¬

Foreign Trade—A Case
motives.

by

conflict where our interests

struction

:

from our
instigating

pressure

machine

economic

most

:

»

question of shar¬

of

portunities

(1987)

ing military secrets has/been sat¬

even

while

investment

The

under

probably take until next

developments

case

change in this point of view.

studied for their effect on differ¬
ent

be given

'

FINANCIAL CHRONICLE

&

In

a

ECA is

sense,

tion of

culmina¬

a

overall foreign policy.

our

That

is, it consists of one part
expedient reaction to Russia; one
part humanitarian relief and one
part the

selling of products. Under

its program, each nation is to help

itself

and

countries.

ing

other

all

ECA is not

cooperating
a purchas¬

financing agency, simply

or

of

means

a

making available dollar

funds to countries

the basis of

on

their needs.

Contrary to popular
belief, private firms, not govern¬
contract for

ments,

the

bulk

of

goods through export-import trade
channels after proper screening
and authorization.

Furthermore, extension of our
aid to Europe is contingent on the
continuous effort by participating
nations
to
establish their
own

joint recovery program. This in¬
volves the promotion of agricul¬
tural and
industrial production,
stabilization

the

of

currency,

an

roof—a

a

actions
he

as

35
who

man

with

great

watches

seems to see more and more

he

planes

shuttling in the Berlin corridor
despite the buzzing of Yaks and
the bluster of Molotov.

What the
German really sees is the spear¬
head of our foreign policy; the
of

work

which
which
do

a

economic

an

does
is

the

even

job even

Out in

machine

impossible

and

preparing to

now

impossible.

more

Montana the Army* has
a
new
school called

established

"Little

Corridor"

to

train

crews

for what is called "Operation Vit-

ties."

Soon radar equipment will

be used; sometime later will

come

"green card" pilots—fellows with
than

more

2,000 hours in the air
a
hundred hours of

least

at

and

instrument-flying experience; then
10,000 veterans who will reenlist
at

their old

ranks

for immediate

assignment. Match this with man¬
power
and
back-power
in the
French

sector

17,000

of

Berlin

where

residents,

half of them
labored since last

have

women,

August to dig up and remove 500,000 cubic yards of earth, and who

interchange of goods
and resources, facilitating the pro¬
curement of raw materials by the

have

United

States, and depositing in
special account currency equal
to the cost of materials provided

airlift.

a

will be finished and another notch

by the United States for
payment is not required.

mass

increasing

which

aid

creasing not
and

to

is

be

on

a

de¬

increasing scale,

an

is not intended

to become

a

permanent underwriting of Euro¬
pean deficits. As the aid program
tapers off and European economy

regains strength, increasing op¬
portunities will present themselves
for private financing to resume
its normal function.

which also ran close to $2

and

laid thousands

of

runways

added

a new

big
airport for the

mid-December

By

this

to the accomplishments of
production.
'

We have served notice that our

Despite popular misconceptions,
American

crushed

of tons of rubble to make the

first line of defense is manned by

products

services.

and

We have

it known that we will

also made

keep both hands on top of the in¬

table and will
"give and take" on the basis of
dealing off the top of the deck
when anyone wants to talk in
terms of cooperation.
We hold

ternational trading

winning cards today but our only
that tomorrow will find

assurance

great
of
that 260 million people live in the the average American citizen. His
ment,
European countries will
estimation of world
European nations participating in intelligent
now
be able to plan their pur¬
this program.
What we do—to¬ affairs, more than any other single
chases more than a year in ad¬
gether with their own qualities- factor, will strengthen our hand
vance, which will permit them to
will help them regain faith in a as we shape the future course of
purchase durable wealth-produc¬ future when
they can again exert our foreign policy.
ing goods. Already, reports from their
There
are
four things that
full influence and authority
our
diplomatic and military in¬ in international life. Then
again everyone can do in helping to
telligence indicate widespread we must also realize that ECA is
bring about this general state of
unrest in Red-dominated areas. It
more of a force than it appears on
enlightenment:
is
admitted
that
forced labor the surface. Below the
surface, it
(1) Inform yourself of the im¬
camps are being set up in East¬ is a vast
political, economic move¬ portant bills
being considered.
ern
Europe "for the training of
whose

those

attitude

present

living and

people's

the

to

they

shown

have

state

of

mode

not

are

In

it is

evaluating the Marshall Plan
important for us to consider

us

Europe by driving it to¬

of

the same token,
ECA is not simply one

unity.

ward

the role of

By

fortunate depends to a

extent

ment that tends to change the na¬
ture

as

enlightenment

the

on

(2) Personally interview or send

letter or postal card
representative in Congress
inquiring about intent and scope
of a bill, or expressing your opin¬
ion and asking either support or
a

telegram,

to your

sodas willing to do their share of the
of providing hioney and determin¬
nation's
labor."
Even
Polish
ing how it will be used. It is more
ilege of enjoying the wonders of
people on earth.
peasants are being inspected for
the plastic age.
Perhaps we are traces of capitalism. The Czechs significantly an indication of the opposition as the case may be.
:
Yugoslav officials are reported
deep involvement of the United
to have changed the title of the really fighting for a childhood for were recently told by Prime Min¬
(3) If the bill is well handled,
States in world affairs,
tracing
every child
and a manhood for ister Zapotocky that the two-year
"Grapes of Wrath" to "The Pariback to the days of the Bretton express your appreciation; if not,
every man—free from the threat
dise That Is America" in order
plan had failed to raise living Woods Agreement. Since then the express your opinion.
and

^trying to picture us as the
grasping and unscrupulous

most

to

present the seamiest side of our

life.

'

what

But

audience

most

impressed
the

was

fact

that

in fabulous America even the

possessed rode

in

off

the

their

dis¬
own

jalopies.
Russian

that

people have been told
children

American

in

cated

shacks

edu¬

are

in

and

railroad

waiting rooms; that both teachers
and

children

shiver

the

in

cold

and that kerosene lamps are lux¬

uries used

only

on

festive and so¬

Pictures of crowds

cial occasions.

waiting for football tickets have
been captioned as breadlines and
have

These

they

restal

fantastic

more

sent

stadium

as

Communist

a

are

request

a

described

been

attending
are

inside

thousands

the

crowds

rally.

stories,

fantastic than the
to Secretary For-

by a New England farmer?
the

that

materially
Hiroshima

atomic

enriched

bomb

the

anid Nagasaki.

had

soil

of

Would

the

Secretary please drop one
bomb on his premises?
He, him¬

self, would like 24 hours' notice.
But would the Secretary please
refrain from telling
his neigh¬

buy

to

with cherries

of

■

At the

war.

ice

cream

top, or the priv¬

on

same

time we are

standards and that they would be
to face with
obliged to undertake a live-year
in the world,
plan. One of the first rips in the
determined
that this generation
Iron Curtain is the Yugoslav deci¬
will not see another Munich.
sion
to
get
along without the
Cominform, which means that it
Our Best Weapon
is almost ready to start punching
Our best weapon in this fight
its time clock in the West.
is
our
economic
machine—the

standing .face
Russia everywhere

also

most

instrument ever
devised
by man—which during
the war turned rash promises into
realistic performances
and
throughout our history has con¬
powerful

tinually developed a standard of
living without parallel. Last year
machine

this

drew

from

the

pocketbooks of Americans in taxes
the total

alone almost as much as

Russian people.

income of

but

The farmer had information to the
effect

right

If

machine take
the

of

six

past

find that

been

a

of

estimate the
.economic

this

look at events of

months.

You

will

since the inception

Plan

remarkable

a

national
tries

ever

of

Marshall

the

to

want

you

effectiveness

there

has

resurgence

of

feeling "among the coun¬
Western Europe and an

equally marked resistance to com¬
munism.

The economic and mili¬

tary federation discussed for years
by England, France, Belgium, the

nomic

take

a

look

at

the Eco¬

Cooperation Administration

which is demonstrating the power
of

our

economic machine.

from the viewpoint of

his pocket-

right to know how some $6 billion
of his money will be expended
a

year

for foreign aid.

But

only 61% of our people have ever
heard

25%

read

or

are

about ECA, while

frank to admit that they

cannot state its purpose.

First of

all, let's get acquainted

with
sents

the

ECA

terminology:
Economic

repre¬

Cooperation

spirit of the In¬

which

international

clears

and

settles

the International
Bank, an agency of rehabilitation
and industrialization. Both agen¬
cies fit into a pattern established
accounts;

by the

ago

Export-Import

been
making
countries on the
specific projects.

Bank

which
loans

basis of

has

to

The United States is also

breathe

to

is

life

into

an

trying

Interna¬

Organization which
aimed at tearing down the trad¬

tional

Trade

barriers which
tion from nation.
ing

separate

na¬

of international
unrest
and
freed many people
from fear and want. France is a
lated many causes

land of emergency

with

economic meas¬

governments

that die

still divided
subject of nationaliza¬

Administration, established by the

aborning; England is

Foreign Assistance Act of 1948 to

over

make

dollar

funds

Western Germany,

available

to

China and the

tion

the

of

program and

industry,

tinues to be in

and

thus spread the good

work.

Standing here in the twilight of
second world war, it is in¬

the

creasingly
evident that people
everywhere are interdependent;

problems are interwoven
collaboration is ab¬

that their

and that their

solutely essential if peace and
prosperity are to be achieved and
retained. Just to indicate the scope
of

suggestions put

the

forth by
I offer

the readers > of newspapers,
the

one

recommendation that we

abolish atom bombs and all means

producing them and another
a
particularly angry, indi¬
vidual who suggests that we abol¬

of

though
they have not
solved the internal problems of
nations these policies have iso¬
Even

ures

(4) Make it a point to interest
associates or friends in this

your

and

sound

If only

book, the average American has a

within

the guiding

come

ternational Monetary Fund

years

The ECA

Let's

United States has successively be¬

Italy

con¬

economic trouble,

from

ish

the

men

all

means

Of

course,

of

in the Kremlin

and

reproducing them.

our

angry

man,

like

many

people in the world today,

is net

really thinking of the con¬

sequences

of

his action, even

terms of his own

in

perfectly normal

desires.
In

closing, I want to express my

sincere belief that

with a greater

American back¬ appreciation of international real¬
16
Western
European
nations,
Netherlands and Luxembourg and
ities we can utilize our knowledge
Admittedly, lack of knowledge the
plans of France and Italy for while ERP—the European Recov¬ ing has helped slam shut the door
exists on both sides of the Iron
and resources to the fullest ex¬
on
communism.
a
customs union are now taking
ery
Program—deals solely with
Curtain, but there is certainly no
If we can do this, we can
Now we look at a man in a tent.
latter.
The
abbreviation
shape.
French and British rela¬ the
bors?

parallel

the facts

but in every case

between
on

unawareness

of

the part of Mr. Aver¬




tions

are

progressing

smoothly,

OEEC

represents the Organization

country

that

has been

called a

win

the

peace.

36

THE

(1988)

COMMERCIAL

CHRONICLE

FINANCIAL

&

And

to

Spahr
(Continued from page 6)
"managed credit and irredeemable
paper money, in so far as cur¬
rency is concerned, that contrib¬

so

far

as

the nature of their money is con¬

and that they lack such
in respect to foreign banks,
ute to booms which in end in governments, or individuals.
If
"busts." Gold reveals what is go¬ our government should
attempt
to thrust a money less valuable
ing on and may bring man's mis¬
management to a halt. But is not than gold on the foreigner, he
that desirable?
What some lead¬ would take it only at a discount.
ers
in government and business Therefore,
our
government,
finance want today is that the through the Reserve banks, stands
the
international
boundary
Treasury and Reserve banks Shall at
as
it
be free to "manage" credit as they line
were
and
pays
out
choose—to overexpand it at will— gold when demanded in order to
and at the same time be freed prevent depreciation of our dollar

since they have

cerned

been de¬

able paper money.,
The
current
widespread

prived of the right to choose be¬
tween gold, silver, and paper.
en¬
It is proposed that our gold be
dorsement
of
an
irredeemable
money is a very old type of pref¬ "conserved for the support of that
erence m human history.
In ad¬ [our]
currency."
What does a
dition to the tendency of the gen¬ "reserve" mean, what is it for, if
eral public to confuse the conve¬ it cannot be paid out? And, if it
nience of paper money as a me- should not be paid out to our peo¬
-dium of exchange with the other ple, why should it be paid out
functions of gold, only vaguely to foreigners?
And who are these foreigners
understood, if understood at all,
there is the hope that "this time" who can get it? ■ They are foreign
we shall do better with irredeem¬
central banks. They can exercise
able promises than with gold. But a control over our gold reserves
there is, apparently, no valid basis and credit structure that is de¬
for such a hope. And the func¬ nied our people.
Many of these
tions of gold, besides that of serv¬ foreign banks are dominated by
ing as a medium of exchange, are Socialist and similar types of dic¬
tatorial governments.
very important and have intricate
It is the
central
and far-flung implications.
banks of those
govern¬
ments that can exercise control
It has been said many times,
and I think accurately, that gold over our gold supply and bank
exists as money, and has done so reserve structure, to the extent of
for centuries, for the simple rea¬ their claims against them, while
our people
son that governments and central
are denied any right
banking systems cannot be trusted to exercise their claims though
With money that does not repre¬ they are much larger.
.

■

sent

a

labor

stored

have

and

does

not

world-wide demand.

Our

Treasury and Federal Re¬
authorities, as recently as

serve

and

of

foreign

central

their

governments, to
be whipped about as they see fit,

people of the United States.

Federal Reserve banks with power
to support over 14 times as much
credit

in

dollar

banking system.

our

cf

in

reserve

the

of

sup¬

deposits of
member banks.
This $2.85, at a
ratio of 20%, would support $14.25
in member bank deposits.)
As a
part of this manipulative transac¬
tion
the
Treasury • gave
itself
$660,000,000 in deposits in Fed¬
eral
-was

reserve

Reserve

banks

not entitled.

example

of

ment" cf

which

to

This is but

the

it

sufficient

served

"'

to

now

maintain

a

obligations."
Spahr: Under this principle our

.gold

reserves

to

are

be

meet the demands of

ernments
used to

but

they

meet the

is

used

to

foreign gov¬
not

may

be

should

be

The

issue,

and

it

understood.

"reserves"

Reserve banks

in

our

Federal

ostensibly held

are

against all Federal Reserve notes
and
deposits.
In fact, however,
only foreign banks can really ex¬
ercise

their

reserves.

is

claims

against these

Our people cannot. That

characteristic

a

national

gold

of

bullion

inter¬

our

standard.

discrimination against our people
in favor of foreign banks?
I, like
many others, contend that there
is not.

It

quite clear that

discrimination
fact that

our.

arises

from

the

+>

y

'.

* s

'

;

v,

.

/•*

j.;.

-

our

something that

are

Are reserves

against liabilities in
nonbank corporations something
that cannot be paid out?
If bank
depositors
have
claims
against
bank

reserves

erly,

have

claims

a

met

which

do

they not, prop¬
right to have their
of

out

the

reserves

said to be held against
On what proper grounds

are

banks create promises to pay
the

the

same

time be relieved

obligation
These

to

meet

basic

are

these

consid¬

„

t

fundamental

problem that

should
be
involved
here
is not
the question of the right of banks
to withhold their "reserves" but
rather

the
a

question

fractional

how

of

reserve

function properly. The answer to
that lies in the appropriate or¬

ganization

banking
credit

of

our

and

reserve

structure

and

national

clearing system.

•

Instead of concentrating on, and

attempting to solve, these prob¬
lems, as we should, we have
plunged ourselves into a cloud of
argument

which, in

involves

rather

opinion,

my

indifferent

en¬

dorsement by the defenders of

irredeemable
which

the

are

money

of

our

practices

in fact in conflict with

principles

of

Most of

promised
our

promises present such
Our "reserves"

up

monetary

system.
gold standard and
redeemable paper money system
should, and might, bring great
our

Although

a

benefits to this nation

matters

as

stand

now, it does
sonable to suppose

not seem rea¬
that it would
not work under great handicaps
unless these other problems are
at the same time dealt with.

like
for

providing

good

a

fine automobile.

a

like

cheap

It is

highway

The latter,

be wrecked
on
a
bad road; but there is no
reason
to supppose that a cheap
a

withstand

car can

ter than

thus

car, may

far

produced,

the
So it is with gold

driver.

same

bad road bet¬

a

the finest automobile

can

assuming

irredeemable

versus

an

money.

The latter is the cheapest

and

unreliable

most

paper

by

man.

Ill

Leffingwell:
the

of

rencies
on

will

The best hope

.

that

other

ultimately

dollar

a

That

.

is

future

be

exchange

would

mean

cur¬

based

standard.
gold re¬

our

would become in effect the

serves

world's gold reserve."

-

Spahr: The question arises here
as to
whether it is not best for

foreign
their

banking systems to keep

own

and to manage

reserves

their credit structures

It would

if

our

the

at

should

of

mercy

banks

be

foreign

their

and

accordingly.

unfortunate indeed

seem

reserves

with

placed
central

governments

are

a

their

out

their

share of cur

nation's

a

conflict.

not to be used

of other central

sound,

rency

have

gold

is

comfortable

can

be

-

to

cur¬

silver certificates,
that the
"re¬

except

irredeemable,

serves"

of

system

and

central
banking
Treasury (except for
silver) cannot be paid out domes¬
tically, and that the only asset
our

cash which the Reserve banks
pay

out is not

reserve

can

lawful money for

endorse

have and thereby avoid

centrate

V

-

[our

currency

system] has proved itself able to
meet the gold export demands of
war

of

Spahr: Under
that
no

prevailed
real

test

were

dented

people or is it, and should it be,
the property of the banks who
may
appropriately withhold
it
from the people, who have claims
against it, as the banks see fit?
It would seem to be quite clear
that it is the business of banks to
extend credit

made

of

the

our monetary system.
exporting an unprece¬

of

amount

was coming to
safety or to pay for
goods and services.

our

us

wealth.

either for

some

Our

of

exports.

our
.

of Congress

and the banks to de¬
appropriate fire escapes to
care of emergencies.
Banks may not properly take
the position that they should not
be required to pay out their re¬
serves to meet the people's claims
against them. There appears to

these

suspensions and
good institutions
of peacetime defensible grounds
on which to impose in peace what
may be necessary in time of war.
The statement that payment of

gold reserves "might convert
possible recession into a disas¬
deflation in time of peace"
is a case of holding gold respon¬
sible for the consequences flowing
from the mismanagement of credit
by government officials and bank¬
our
a

trous

.•

.'•* /

'<4

♦>>'

,

* '

-

«•>




i

'

J

'

A

ers.

run

mismanagement

vise

would

reasonable

be

defensible

no

basis

which

on

justify the principle that
banks should have the privilege of
issuing promises to pay without
being required to pay in good cash
one

Leffingwell: "The result of pay¬
ing gold out of our reserves, into
the

panic

insufficiency of

people
or

caused

is

banks

on

credit. It
proof that people prefer gold
to the banks' promises.
'
,
The question here is whether
the people should be deprived of
the power to hold in check mis¬
management of credit. A proposal
that they be denied such power
by

of

is

to

seem

is

course

a

without

be

any

justification.
Such a
genuinely dangerous

enterprise.

■

•.

*;

vm

Leffingwell: "The place for our
gold is in the
eral

of

reserves

Fed-^

our

Reserve

such
special
privilege without corresponding
responsibility to Treasury officials

banks, not in the
pockets of the people.'.'
Spahr: That is all right pro¬
vided the gold flows to the Re¬
serve banks as a
consequence of
the voluntary acts of people.
It
is not all right if the people wish
payment in gold of the banks and
Treasury's promises to pay. Gold
will, for the most part, remain
in banks

may

The problems inherent in

assets.
a

fractional

device

properly by

the

as

not

are

any

of

grant

banks.

We
in

system

reserve

to be solved

have

Federal

our

that

"reserve"

a

should

situation

Reserve

System

scrutinized.

be

is

It

monetary and banking contra¬
diction.
The Reserve banks are

and

The

fundamental

to the

notes and deposits.

gold

The only asset
banks

serve

their

It is

serve.

cash item.

banks
such

On Oct.

only
We

cash.

lawful

not

simply

held

out against

pay

is

re¬

a non-reserve

13, the Reserve
$257,832,000 of

do

hear

not

any

debate about the smallness of that

item

in

meeting
the
liabilities, but

banks'

much about the

gold
we

to

meet

On the

Reserve
hear

we

inadequacy of our
such liabilities if

return to

to

were

rency.

gold

a

cur¬

date, the Re¬

same

this

people

right to get and to hold
gives the people their
over the Treasury's
use of their public
purse and of
the
banks'
use
of
the
people's
gold for the extension and clear*
ing of credit.
Let the govern¬
that

ment and

banks deprive the peo¬
ple of the control which gold coin
and a redeemable currency give
them, and the people of a nation
lose a vital right in, and protec¬

tion of, property and liberty.
As

a

have

had

might

for

be

wartime,

reserves
Federal Reserve banks."

in

a

times

88

over

much

as

asset cash to pay out

against their

liabilities

on

Is it not
when

we

they had

as

a

that date!

paradoxical situation
on the ground of

argue,

scarcity, against the creation of
usable cash

reserve

which is

a

over

88 times

larger than the only cash
that now can perform the

assets

usable

of

our

which

is

would

be

coin

while

reserves

nothing about the small¬

say

a

under

come

do¬

ers

who

do

little

instituted

we

and usable

gold
system?

reserve

of the

weaken

recession
tion

defenses

our

in

and might convert
into

in time

a

case

disastrous

a

of

possible
defla¬

Spahr: One might just as well
that about a multitude of
peacetime practices—for example,
Constitution

bankers

Our

to

the

government's

permits

and

Con¬

many

institutions

IX

Leffingwell: "In the

[gold]

reserves

gives confidence at

is

available

to

meet

ligations, and perhaps
sities, abroad."

it

home

our

ob¬

neces¬

our

Spahr: This statement says that
gold is available to meet ob¬

our

ligations and perhaps

our /neces¬

sities abroad but it denies that.it
should be used to meet the banks'

Even in international

control

the

government and Federal Re¬

is

to

be

Now the

simple fact of the mat¬

that world
because

central

trade

banks have taken

tional transactions!;

rights to life are
Spahr: Logic would seem to re¬ less the peacetime rules
relating
quire r that the same observations to the use and maintenance of a

ment

and

to

interna¬

manage

central

and

it upon

Both

govern¬

need

banks

to

let private enterprise find its way
in foreign trade andjexchange ancj,

have gold for. use in ^private busi¬

gold standard would have to

be

ness.

suspended.

be

banks
■ " ' •

would

tied in

is

governments

themselves

Even people's
sacrificed. Doubt¬

reserved" to

banks.

serve

stitutional processes of peacetime

be suspended.

payments,

the

to

that

invites

.

knots

invaded,

Bpt

"reserve

and

and

an

be applied to the payment of our
gold reserves to foreign banks.

the

over

this
prodigal waste of the people's
substance, heavy taxation, the de¬
preciation of the purchasing pow¬
er
of our dollar,
and the great
impairment of the value of peo¬
ple's savings.

ter-is

may

abuse

spending.

would, if
adhered to, weaken defenses. Con¬

our

the

and

purse

have

They

over

monetary

system

attacked

and

it.

stop

control

public

wasteful

stitutional practices. When a na¬
tion goes to war, particularly if

peacetime

to

obligations at home.

of peace."

say

our

pressure

are

attendant response of the Reserve

a

Leffingwell: "This
[a possible
insufficiency of reserves if we pay
them
out
domestically]
would

of

throwing the peo*
pie's substance to the.four corners
of the world; and the people can

and

war,

control

the government spend¬

only usable cash asset
mere
1/88 of what it

if

of this system

consequence

in the United States, Congress and
the taxpayers have in large degree

lost their

gold currency
In this case they would

system.

or

It is the

groups and

been under

is

here

should belong
to the banks and

the Treasury.

$22,689,394,000
of gold
certificates as reserves.
This is what they could have paid
out had they been authorized and
required to do so, as they would

held

banks

serve

issue

gold

direct control

cash which Re¬

can

liabilities

out.

prudent

a

<

whether

required to hold a "reserve" in
gold certificates of not less than
25%
of their
Federal
Reserve
But these "re¬

S. Treas¬

the U.

follow

banks

course.

a

serves" cannot be paid

and in

if The government, Treasury,

ury

.

^ ■ 7*,

wartime

destruction of the

take

about

VI

of

that it is not the

right of banks to make people pay
the penalty for the banks' over¬
extensions of credit. It is the duty

our

buying

abroad did not begin to match

hands

that emergencies

so

be met and

can

VII

conditions

(and still prevail)
was

Gold

the

these:

are

do to make a
system function

we

reserve

all time."

the

strength of
We

attention

our

con¬

properly, even under highly ad¬
verse
conditions?
(b) Does the
gold of this nation really belong
—that is, should it belong—to the

ness

Leffingwell: "It

greatest

should

we

(a) What should
fractional

we

the

which

on

function of

purposes.

in

we

very

Spahr: Against this assertion are
placed the facts that all our paper

create,

and

a

standard,

not understand how any monetary
system that violates the principles

what

banking

today."

money,

lems

one
of
the
sacrifices
caused by war.
"
One does not, however, find in

merely

have

Leffingwell: "We
good,

circulation,

properly.

bank

systems, unless these reserves are
earmarked, set aside, and kept out
of its
reserve-deposit structure,
it encounters trouble, as past ex¬
perience reveals.1
'

mestic

performance

reserves.

central

(or banks) undertakes to hold the
reserves

I do

promised

held

reserves

and consequently a cor¬
responding amount of our re¬
serves, while our people are con¬
ducting their affairs properly and
are not rushing to banks to with¬
us,

draw

question of paying
people,
when they demand redemption of
the claims they hold, the prob¬

and

monetary

vehicle thus far devised

per¬

monetary

—except by foreign banks!

easy
.

of

to

system

Many people, obviously, find it

government officials

have the power to dictate to the
*

Is it not paradox¬

cannot be used to meet liabilities?

defended

such

ing

affairs, a clean¬
of the indefensible features

When

ical to insist that "reserves" in

of

seems

consideration

"reserves."

formance.

Is there any valid basis for this

lic debt and fiscal

been receiving.

also face the question of

us

make

demands of the

basic

a

for

ury

people of this country.
This

careful

calls

meaning of bank and Treas¬

The

if they are con¬
support of that
limited to use to

and

that

the

erations.

external

our

control of

the

reserves

currency,
for the

currency,

meet

Let

the

issue

an

more

claims?

Leffingwell: "Our gold

sound

much

of

11
,

is

and at

system.

are

under

than it has

may

irredeemable money

our

This

them?

one

"manage¬

poor

not

Reserve banks

Federal

■Reserve*'System then would
port $2.&5

(A

bank¬

our

sweep

control

banks

pronouncement when, by

bank
notes,
they im¬
properly and illegally pumped
#660,000,000 of fiat "National Cur¬
rency" notes into the reserves of

organization of

proper

ing structure, a proper program
for the administration of our pub¬

the

ulation in the issuance of Federal
Reserve

These problems involve the

which may overextend credit and

but

manip¬

a

I, for cue, do not wish to have
our gold reserve structure
under

1942-1943. provided an illustration
of the validity of this well-known
a

we

have

to

ture.

the pressures which objec¬
foreign exchange. To our own
values, as provided by gold, people, however, our government
;can exercise.
Because gold ex¬ says that they shall accept irre¬
poses and calls a halt to man's deemable paper, silver, and minor
mismanagement of credit, many coin; and our people can do no
people condemn gold. They rec¬ better in so far as money is con¬

"managed" irredeem¬

which

are

we

good and honest monetary struc¬

tive

a

if

deal

cerned,

in

ommend

"with

problems

should

power

_

from

the

to the

as

these reserves to our own

Leffingwell

people of this country in

Thursday, November 11, 1943

The

government and central

should
;

.

•-

.

return

to

'

thelt
:-:b

s.»•

►,

Volume 168

Number 4750

THE

<r

proper spheres.
It is not their
appropriate business to manage
itrade, investments, exchange rates,

they

can

from

government
regimentation
should, be theirs, then they

and

had best restore the curbs

those instruments

enterprise
their

used

business

in

of private
trade.
It is

aid

to

it

where

that

tuted

The

fect

,

governmentally

managed

-

people's hands.
When

of

level

international

fiscal

relations;
private enterprise has been re■duced to a passive, low estate;
chaos and stagnation in high de¬
gree are the result/ ...
t
V /;

'

••
.

/
a
.

gold coin

not

need,

a

gold certificate curgold standard cur-!

^/;;;

j

but

rency

i

-■.!,

X

Leffingwell: t'We' do

rency.",

or

•; ;■ •
Spahr: We. do not

deemable

currency

need

a

re¬

if the people
to

of the United States are ready

of their freedom

surrender much
the

to

government and the
If, however,

banks.

serve

Re¬
our

people have not been taken so far
along the road toward a governamentally-managed economy that

over

severed

with central bank co¬
has ' reached a high

in

on

the

all

-

-

government

:

.

instil

system of irredeemable
and cut the
people's

our

operation/

economy,

our "

currency

control

their

CHRONICLE

(1989)

all

Is there an
inqx-^ t!6s, troubles of all kinds. People
haustible pool, out of \jibiclTfringe who febl that
way are putting on
issues ar$ to .be financed? These a
society like ours a standard of
are critical questions.
I don't say conduct, a standard of perform¬

good one will have
thority that nobody

a

should

he

they

from him.

going to

are

rriorrow

or

our

attention

of much

it

but

overlook

to

solved

to-

the

direct

lines

people to the central
board of - monetary
and

No

on

less

is ,a

them

and

matters

turn

that

are

importance.

Now,

one more

With, these preliminaries, I go
now to the question of collective
;

bargaining,

preliminary ob¬
no such thing,

which

is

the

grand

purpose of organization.
That
what collective bargaining is.

is

It
is the end of labor
organization.

There is

We

talk

can

about

collective

have.

Once

37

lot of

au¬

intended

ho

has it,

it
pretty hard to get it away

will be
The

What Is Collective Bargaining?

great

Separate Solution of Problem

servation.

that cannot possibly be met.

ance,

after the election and

inauguration,
error

be

gold, it in ef¬

our

signal

"

^

still reclaim the freedom5 fects will be.

government and banks which a re¬
deemable currency places in the

profitable and wise without
attempting to manage what prop¬
erly belongs to nonbank private
enterprise.
The lessons .on this
point today should be obvious.
seems

«r.:#

f)

COMMERCIAL & FINANCIAL

•

,„.,•,//

history of labor relation®

,

is full of examples of this
process.
Last year, for

instance,

Motors announced
efit

or

welfare

a

General

revised ben¬

plan;

•

General

Motors revised their welfare
plan,
insurance, and other items, and
improved it or liberalized it, and
took

it out to the
shop and got
bargaining,labor organizations, each member to decide whether
policies of countries like labor relations, but if »we do
we; he wanted it or not, and most
peo¬
direct them, but all signal lights the United States or
England, as ought to know what those terms ple decided
they did. No sooner
went out in so far-as the. people's a separate solution of the labor mean
in practice; not a dictionary; was that
announced; when Mr.
power to send over their golden problem.
There is no sepaprate- definition, for- that Is riot what T Reuther V
called
General / Motor®
wires their individual messages to set of
policies that apply to labor am after, .but what in practice and said
they can't do that/ and
the central/signal board is con¬ and nobody else.- That is
impor-! happens in the long run under; General Motors said
they were
cerned.
i ;
tant to learn,
/. •
One of the great¬ collective
bargaining. We certain-, going to do it. The UAW. bailed
In; short, ;the government took est evils of modern times, modern! ly have enough,
Mr/ Denham and
ynateriai to piake!
lodged a' couH "
and
control of the central signal Sys¬ politics
economics, is the a pretty good guess as to what is plaint. He acted
promptly !bn-thafc
tem and- cut the people off:' As a division/ of ;the population*-of J--.al likely to' happen/ in/ thd^ future
complaint and told G e n e r a 1
consequence/ the- government and country into groups, each one of after seeing what ; has / happened Motofs tHey couldn't do it.
:
J *
Reserve authorities need not now which considers that it has a spe¬ in the past.
If we can't make a
Here was
something the man¬
cial problem and a special way of guess about the
be, and are not, responsive to the
outcome, there is agement had started many
year®
people. This governmental power solving it. There is in the United no use spending money on edu¬ before, started
voluntarily, ex¬
affairs.

It

left

intact

its

lines to the people so that it could

if we look at the

'•

■

,

economic prob¬

lems and

t

-

,

.

is
in

a

of

the

strongest

elements

highly-developed

one

manage¬

ment

by

tion's

economy

a

government of

a

na¬

States
cable
are

then

and people.

a

general

lem and there
to

wise

the

form will

economic

prob¬
solutions appli¬
If those solutions

cation

are

that.

and

research.

perimented

N'ov/j collective bargaining does thought

with,

should

improved, and

now

two

be liberalized.

things, and that is all it does. The union intervenes and
say®
and well administered, Those
things,
taken
together, that the company can no
loriger
policies applied in that worked out over a long period of do this alone.
You must sharebenefit labor and every¬ time,
are
beneficial
or
not. this authority with us.
Wha$ the
,

body else.' >•/;'

union

was concerned
about, wa®
/its prestige and its
right to have a
need do much less
policy today is production and the'
theorizing voice in anything the
compan^
incentives, to work. The most ad-' today because we have a fuhd of does.
; It wanted to participate in,
vanced
countries
in;.,the world,! experience .to.-judge' frombrrJ ;l
the making of a decision. •
Well,
and I mean those carrying on the
/.The / one thing ..that collective the United States are full of illusmost, extreme experiments, have;
bargaining does when it gets un¬ trations of this kind.' /' *' /'
}./ •' (Continued from first page)
now turned their attention to the
der way, and does it from the,
fiave nothing to do with econom¬ enough to know that wars are un¬ one thing which they know is the
How Competitive;
Economic /
very first minute, :is!that it'begins
If a country is in-, source of well-being. They know
ics.
They are psychological. .In controllable.
*System Works
an endless
!;
*
process of transferring
^ .
volved in two world wars in 30 that if they don't solve that prob¬
l -a free country people have aspira¬
authority from one agency to an¬ !, / Let us " look at a privately
tions and
dissatisfactions., They years,
then we must expect a lem all other solutions are mean¬
other.;
If it didn't do.; so trade owned/ privately managed/ com¬
countries .of' the unionism
aspire 'tn be something, different legacy of trouble no matter how ingless. ' The
.wouldn't .last 24 hours. petitive economic system and see
'■
well industry and labor relations world know that there is one item
or. to live differently and are dis¬
It
transfers
authority from " the what are its qualities. What are
satisfied with what is going on. are managed.; ../.».
,v - : in, .the operation of an economic employer; and management ;to the needed to
make it work? It has
system • that by and large counts union.
The labor problem/ like a good
Now, we know, enough about the
If it didn't do that, there: a/lot of attributes, but, one
of
for more than-all else as a solu¬
'World today!, to
know that free many other economic and political
them is, the people in
would be no trade unionism.*
Charge have
^countries
differ ; from countries problems, exists within that con¬ tion of the labor, problem, or the
Through the! whole history of got to be in a position to make*
that are not free in that the citi- text and is affected
by it. That agricultural problem, and that-is modern industrialism we
quick decisions.
Certainly.one of
operated
.zens
of free countries have the seems an unnecessary thing for increased production,
the questions
an economic
system in which em¬
requiring quick de¬
aright to express their dissatisfac¬ me to say in a country which has
cision is costs.
They have learned that the way ployers and
It is the funda¬
management
exer¬
tions and aspirations.
You can been through 15 years of rising to raise the material standard of
cised the authority. Now they may mental factor in the conduct of
•conduct your labor relations in prices and wages and which is
living of a country is to get more have exercised it
badly and poor¬ business, and if you take away the
the
best possible way and this today
in
a
tremendous
boom production. Russia has learned it.
ly. They may have been arbitrary right of an employer and manage¬
iproblem doesn't get solved.
It which the more venturesome of England is learning it now. She or reasonable. But
ment in this kind of
that is the way
competitive
•does get solved in foreign coun¬ us call an inflation.
in
for
redistribution
of we
economic system to make
Everything went
quick:
thought you had to run what
tries, but in ways which we don't done in labor relations is affected wealth and income.
But
that the NAM
decisions on their
calls the "free enter¬
costs, you may
want to follow.
There somebody by that inflation.
be doing a fatal
You are not source is now used up. The British
thing.. Yet that
prise system."
1 don't like the
tells people what they are to do free
is the essence of
agents and you do many are learning that it is hard to live
collective bar¬
name, and I choose to call it a
oand where they are to live., Well, things in an inflation which are on past wealth.
If England wants
privately owned, privately man-; gaining.
that is a peculiar kind of solution unwise to do.
'. I have often said
If we know any¬ to raise material standards of liv¬
that in col¬
aged,, competitive economic sys-"
which is not acceptable to the thing about inflations, it is that ing, they have to produce more.
lective
tern. /We always- figured in the
bargaining it is nauch more
•citizens of this
country,,: though they don't last.
That is what people in England
However, 1 dare
United States; maybe erroneously, important to; hold
oh ^o man¬
we may be moving that way.
now
say, if!we took a Gallup Poll in are
agerial '/lights /than it is to argue
talking about all the that in that
.system of private
The weekly journal, "The
V A second observation about the the United States -you would get time.
over two cents or five cents int
ownership and management the
the wage rate. The
•executive and collective bargain¬ the majority of the population to London Economist," every week owners and
thing to hold
managers would make
on to is the
say that the present economic sit¬ labors with the problem of physi¬
ing is that, and I say this because
right to manage, and
the important economic decisions.
if that is lost then the
I go to a lot of labor conferences uation in this country is a stable cal output.
It is a pity they didn't Now
foundation
organized labor, through col¬
I think they discover
of this kind of
it
25~ years
;and have been doing so all my one and will endure.
ago.
The lective
economic system r®
bargaining, , begins to eat
are wrong/ but whether they are
"Economist" now asks: "Why don't
weakened.
life, we get involved in too many
into that authority.
It takes it
The second feature of
What makes away.* I recommend to
■details.
There are some. things or not that is the environment we produce more?
collective
you as a
in which industry, trade unions people, work?
that are quite obvious, and once
What causes the subject for research in
bargaining is that it takes out off
personnel
and government are making labor coal industry to produce 200 mil-,
/you know them there/is no use
or
labor relations that you take competition everything related
talking about them unless some- policy.' Some of the great changes lion tons instead of 250 millions?". a company that began to bargain! labor costs. There is no mystery
about that. That is
V thing new is to be learned. Since in labor policy
are being
made
precisely what
People talk about getting an in-' collectively in 1937, and has been!
.it * is for and what it ' does.- That
./there are more fundamental prob- under inflationary conditions. For creased output and not distri'but-j
bargaining
collectively for
11
seems a
example, every one in the United ing it. Well, you "never gef it un-;
queer thing to do/in a
;/ Tern's that we ought to be turning
years,- and* analyze "the* successive
X«©ver in our"minds, we,might as States today is bargaining, about: less it is distributed.: That rIs! tHei labor contracts made during' that competitive society!. YOa .talk to> well
any Tabor leader and they all be¬
take the time to/' consider a thing that has a new name and greatest
error
in all
economic period. Then you can go a step
a
new
lieve in competition.
name,
that is
these more basic questions. Every¬ deserves
They say
thinking and in economic history. further, look into the shops and
isn't
body knows, for example, that in "fringe issues."
You get output because there is see if you can collect a list of there
enough competition.
But the purpose of collective bar¬
& big company, or in a small com¬
Fringe issues
include
every¬ somebody who wants it, and there what are technically called prece¬
gaining is to remove everything
pany, it is a good thing to know thing that is not wages, though are economic ways of expanding dents
that
are
in no

The

central

issue

of

economic;

liciai
lire

we

is

a

question

VlQQtl

wiiVnU

auuui

ilAKI.

wmcu

+U

"

,

,

.

'

„

-

,

,

'

,

t

.

,

the

what

and

about

humane

employee is thinking
there
ought
to
be

between

arrangements

-employers and labor. Well, if one
doesn't know that, there isn't any

'■/ way of learning it now.

V\

.

There

all kinds of methods, of
devices/today which are known
to be, and ought to be within the
reach of everybody, and I don't
see any point to continuing to talk

/are

also

pbout them.
Fixed

No

{

fiected
-

whatever is

collective
.

*

Set

of Conditions

a basic
with labor,

There is

,

problem conand

that

is,

done about labor or

bargaining

policy

is

done in a context.
It is no fixed
environment or set of conditions,

V within

which labor relations are

practiced. Conditions
changing and
changes
like

are

wars.

a

are

they all cost
fringe issues,

Now, these

by

historical

acci¬

may

do

many

things to avoid a war, but we know




There

and

was

increasing

never

output.
truth in the

any

things
cause

that
they

are

contract,
today be¬

done

were

that

bears

on

labor

costs

from

done

•

.

.

mean

an

that

I

emotional
don't

know

sense.

of

I

any¬

beyond our control, body who doesn't want improve¬
We

markets

competition.
yesterday
I was talking to a
dent, grew up in this period of statement that an economy pro¬ or because somebody said they,
representa¬
tive
of /the; joint
inflation and have flowered/dur-; duces and then has no way of were
congressional
done—yesterday, - and - list
ing the inflation. Since they are distributing,-We always distrib-' them. Try. to recall in your own Icqmmittee on labor relations that
is investigating nation-wide
numerous
and growing in num¬ uted our output.* We distributed mind how
bar/many of those prece¬
ber and magnitude,-they, add to the output of '29, and have today.! dents existed in
gaining, and he told me that ii»
.'37.
/' /.
'the industry he is
the cost of doing business. - The It has increased far more rapidly
investigating
If you do this you will get:a
there is no longer price
more
liberal the concessions on than the population of the coun¬
competi1picture of the evolution in col¬
tion, but there is quality compeffringe issues, the greater will be, try has increased.
.
:
<:
lective bargaining, of the transfer
tition. What he means is that a
the future
charges on business.
Of course, there have been pe¬ of
authority from management
All this is being done in a most,
system of bargaining »has growa
riods of decline and of trouble. and the employer to a union. Now,
up over the years that has rcL
unusual period, a period that has
But what
mature and
sensible the union knows that.
The first
moved competition.
two characteristics/ one, it is not
>/ - /'. !',. " •
person imagines that we can run! thing it does when it is organ¬
likely to last; two, it is likely to a
! Everything is important if * it
t> society,
of 140 million people ised. is to challenge the authority ■exists in a
be succeeded by a period in which
magnitude to make it
without difficulty, that everything ijf an employer. - The very first
it is going to be harder to absorb
will run smoothly, that all' prob¬ act of a union is to install in the important. That is a clear and actadded
costs.
People
don't say lems will be taken in their stride,
ceptable proposition. We wouldn't
shop its political machine made
much about that, but that is the
sit here and worry about collecr
discovered one by one, and solved up of shop stewards. This step is
central question.
tive bargaining and these thing®
,
the next morning. How can rea-, very,important.
Its purpose is to
I am talking about if we had the
Everybody is! in favor of these soning people in a time like this, challenge the authority of the

always things in

good many of the

money.

ments, but

very

few people stop

to think what their economic ef¬

.

_

,

when we have been through the
greatest period of destruction the

foremen.

I

am

not

saying a fore¬
shop steward,
world has ever seen and are still but I say that is a change, and a
in a state bordering on war, think pretty radical change. * What do
we can run this economic society
the shop stewards do?
They add
without having

problems,Mifficul-

man

is better than

to their

a

authority all the time. A

volume
we

tem

of

collective

had in 1929.

existed

on

bargaining

In 1929 this sys¬

the

railroads, int
industry, the building in¬
dustry, and scattered occupations

the coal

(Continued

on page

38)

*

38

will go

*

Says—
==By WALTER WHYTE=
week's

Last

break

made

stocks

avaif-

a

number

of stocks here, probably the
largest number I have men¬
tioned in a long time, to buy
and where they were to be
stopped. The day the column
appeared the market slipped
and went kerplunk on its well
padded derriere, a condition

political up¬ which scared other holders to
the beginning of the such an extent that they fol¬

able. Don't think

heaval is

with

lowed

end.
I didn't know there

In the past

few

days I've read a lot of
pieces, and seen a few ads, in
claims

which

they

knew

are

their sell

the very next
were so

many forecasters who knew
all about how the elections

would turn out.

made that

Truman

would

win.

day. It

orders

was

dur¬

age to
out of

me?

even

if I did

man¬

they

#

looked

It
two

during the

like

days

past

of

some

the

to this writing none have

the

it may,

as

immediate

future

with

at

bloodshot eyes.

The immedi¬
ate worry, to hear people tell
it, is the problem of taxes. I

don't

know

what

How

go up

or-

soon

*

where

better

the market

get

a

will

political

be, but I do know with the polltaker to tell. I don't know.

budget what it is I can't

see

I think the

stocks

#

#

have

selling of the

❖

going higher.

are

other

revocation

of

the

*

you

*

your

More next

Thursday.
—Walter

[The views expressed in this
article do not necessarily, at any
time coincide with those of the

(Special

mar¬

They are presented
author only.]

as

to

The

Financial

These

who does not follow them to

prosecuted and ef¬
fectively punished.

be aggressively

But

the

by

nition

LOS
ter R.

of business¬
men
want to obey the law as a
matter of public responsibility.
I
cannot
escape
the feeling that
many
of the present difficulties
majority

flow

administrative

from

grounded

To

2535

example: It is rec¬

an

that aggressive competi¬

tion may

result in a virtual iden¬
tity of prices. It is also suggested
that an unlawful price conspiracy
achieve

price identity., Yet
the Committee will discover that
considerable part of the present

of Government and particu¬

administrative officials in
assuming that where substantial
price identity is found there must
have been a conspiracy in fact.
larly

South

Financial

that where competitors
prices the
the same as though there

about the same

sell at

been

a

Robertson

Boulevard.

is not only a
American business, it

Any such theory
calumny
is

also

on

It

that

the

assumes

lower

of

I

effect

%




of

be¬

this

which few

country

have noticed and understood

us

that in 1937, the peak

was

recovery

of that

the physical

year,

factories

of

put

than

collusion.

the Committee will

operations
industries, the real

studying the

no

selier

one

to compete

can

another for the

get more

same

goods

free market and that the re¬

me

economic

an

off

throws

it

system

surplus

a

that

and

I

call

good system. You give me a
system that throws off a deficit
a

and

don't

I

it.

like

I

won't

tru£t

it very far.
When

United

the

in

out¬

talk

you.

of

collective

instances
been

where

in those

price fixihg has

attempted by conspiracy.

No

Conspiracy in Identity of
Prices

Capital Securities
to

The

Financial, Chronicle)

OAKLAND, CALIF.
Antonowitsch

—

is with

Lucien

Capital
Securities Co., 2038 Broadway.

Labor Relations

some

super

ernment,
Let

run

me

authority,
it.

sum

like

vert it into socialism.

collars

wear

men

wil 1

basis for

a

labor

ties

But there is

a

this attempt to

is

the

inference that

proper

so.

deeper fallacy in
regiment business

of

Those who do

almost

so

existence
fully matured rather than a

always
a

the

presuppose

1930's

when

the

proponents of

ica

talked

achieved
How

about

mature economy.

a

wrong

they

the

clusive

private

gross

investment
of

in

history

were

In the past 15

this

domestic

country—ex¬

Government

financing

In

1928,

almost 46,000,000.

was

In 1944—

effort—it

amounted

to

some

»

the

as

pos¬

resourcefulness

Industry.

of

Instead

of

America.
America

Needs

Confidence

for

Growth
But to continue this growth that

America needs there must be

confidence

—

con¬

'

fidence

that

freedom

of

trade and freedom of competition
will be maintained;
■

confidence that the

—

will

business

in

changed

rules of

be

not

casually
middle of the

the

>'

game;

confidence

—-

statistics

in the midst of our sustained war

it

that

wide freedom

as

for

treated

Government

tell us, total 'civilian employment

saying

am

employing a punitive policy to¬
ward business, perhaps1 we should
ask ourselves whether in the long
run
we
help
create
a
better

—totaled just under two hundred

billions of dollars.

This

Compete

sible

having

our

has demonstrated.
years

a

free Amer¬

a

con¬

system.

that way.

tives and

dynamic economy. The same fal¬
lacy was widely prevalent in the
planned rather than

I

but

moves

con¬

overnight, gentle¬

occur

American

activities to fit intricate economic
theories.

not

It will

regulated and

a

socialistic

trolled

men,

and

into

it

vert

gov¬

The

up.

that

all

that

energy

will

be

alike;

\

confidence

—

and

enterprise will not be frustrated
by legal uncertainties or adminis¬
trative tinkering.

54
,

I

not

am

millions. During the current year,
it is in the neighborhood of 60

you

millions.

missible

not

lawyer

a

competent. to

I

am

out

for

and

mark

the vague lines of legally per¬
business

conduct

found

growth in
terms of the production of goods.

in

The Federal Reserve Board Index

Niagara

of

ions about these recent court and

Look

briefly at

Industrial

our

Production for

99 and the comparable

was

for the

current

year

1928

figure

is well

over

the

court

trative

decisions,

determinations, and the
of comments and opin¬

administrative
you

adminis¬

decisions.

resolve these

can

Perhaps

legal rid¬

neither begin to under¬
them nor to measure fully

dles. I

Perhaps a simpler way of mak¬
ing the same point would be to

all of the possible troubles, trials,

one

can

assume—the

treble

lasting

lion

babies

born,

were

and

in

1947 almost four million.
Even

without

population
increased

by

of

immigration, the

the

United

between

1930

twenty-three

States

and

1948

one-half

and

millions—or just about twice the
total popuplation of Canada.
These are not the indicia of an

prefer to

any more

say

than the fact thaif most

threats and ever¬
litigation confronting the
individual businessman irr pricing
his goods.
damage

What

is

I

the

am

wholly clear about
lack
of
clarity.

current

is wrong when com¬
cannot say with
degree of certainty just what

Something
petent
any

the

lawyers

rules

the

of

game

are—or

and

be next week'.
problem businessmen
face
every
da.y, and they are
deeply concerned about it.

from

confidence

old economy or of a nation that
has reached its maximum growth

productivity and which must
rigidly fence in one enterprise
the competition of another.
No, the only planned economy
we need is the plan of
democracy
made by the American people—
consumer

from

one

buying

or

not buy¬

seller'~or

another,

each

producer everlastingly com¬
peting to secure greater produc¬
process

building in the

the most efficient indus¬

society

standard

of

and

the

living

highest

anywhere

found.

infer—that the
The danger of a stagnant econ¬
competitive hammering of prices
to a common level betoken^ con¬ omy here as elsewhere in many
spiracy instead of
competition; spotsin the world exists only if
yers

stand

try about three and one-half mil¬

trial

law¬

can

tell you that in 1946 in this coun¬

tion of goods, and

No

(Special

greater than it was

del¬
icate, sensitive, relationship that
exists in a free society is to have

each

CALIF.—Carl

no

The easiest way to upset a

ing

Chronicle)

was

Government in

than that which prevails

Financial

„

With

M.

States

sulting price level is always lower

The

New York S, N. Y.

Fresno

of

ders

to

ANGELES,

Street.

Teletype NY 1-928

by

of the freedom

is that

pro¬

with

hope

in

level

competition would be
the higher price

by

particular

a

price

produced

As

contrary to
without realism

conclusion

a

fact.

Chronicle)

Becker is with Walston, Hoffman
&
Goodwin, 550 South Spring

Private Wire* to Principal Officer

,

is

is sometimes put in terms

This

of saying

Chicago Board' of T.radse

•

that

States

One of the great won¬

1930s.

the

Walston, Hoffman

(Special

LOS

Sim' Francisco—Santa Barbara
Monterey
Oakland'—Sacramento

developments

economic system

an

tinct

190.

Thompson Opens

ANGELES, CALIF.—Les¬
Thompson is engaging in a

With

Schwabacher & Co.

14 WW! Street

action

upon

offer

ognized

in

OOMandt

recog¬

this fact that the over¬

of

duced

securities business from offices at

Exchange

token, there

same

Government a

be in

must

learn

Members

have

United

coming increasingly incapable of
swift adjustment.
This develop¬
ment was already under way in

the basic rules of the

are

which American business¬
men have adopted and want con¬
tinued.
They want the business¬
game

level
to' The

(Special

1Vam York Stock Exchange
JftV York Curb Exchange (Associate)

the

these

of

Because
we now

in

they have conspired to do

its people.

Chronicle)

CALIF.—John J.
Fetters,
formerly
Secretary
of
Thomas Kemp & Co., is now asso¬
ciated with Jones, Cosgrove &
Co.,

Lester

Pacific Coast Exchanges

America and

good loi

is

conspiracy and that
there must be some illegality.

PASADENA,

Securities

San Francisco Stock

it

identical

on

constantly, being
taken
out of
competition? How can a competi¬
tive system survive under that?

is not a separate, dis¬
problem. It isn't something
pick out of the economic sys¬
tem and say you have a solution
for it. It is an integral part of the
system. If the system works, labor
will
get
a
satisfactory reward,
and one of the qualities of this
system when it works well is that
it throws off a surplus.
You give
problem

you

Let's Have Freedom to

result is

i

Orders Executed

figure* and the

figure is 82 and one frac¬
cent, which leaves 17%
for something else. How can one
talk of a
competitive economic

had

234 East Colorado Street,

Pacific Coast

I

per

ence

Whyte

My problem isn't taxes, la¬
bor laws or tariff cuts, though
I'm affected by them as well Fetters With
as the next man.
My immedi¬ Jones, Cosgrove
ket, what it will do, where it

day

uncertainty flows from the insist¬

Chronicle.

is the stock

other

1947

tion

a

those of the

concern

true from 1919

the

looked at the 1947

will

Taft-

Hartley law. I remember that
under the old Wagner Act
there were a lot of strikes, but
earnings were up too.
*

If I

other opinions to

any

potential head¬ pass on to you, I'll let
ache people are said to be know. Meanwhile hold
shaking their heads about, is positions.
The

was

Just

goes.

the unwarranted
assumption that most businessmen
past are
inherently law violators.

a cut*
and it makes no dif¬ few
days was silly and I think
ference what political party

is at the helm.

That

1938.

income

national

the

whelming

,

from here is something

will you'd

taxes

national income,

the

the

cause

up

#

of

performance of an eco¬
nomic system. These figures show
or

*

the Re¬ done so. So until they do, or
publicans are out and the new stops are given, the ones
financial district is looking to above will
apply.

~

are

measures

of

that

to

answer

We have measures, and
pretty good. They are

question.

man
#

the

know

now

(Continued from page 7)

drag something right abovementioned stocks would
context, who'd believe break
through their stops, but

Be that

ate

unimportant, trivial, or is it a fact
overwhelming importance? We

of

to

pore

*

the

bargaining, as it works
labor
from com¬
petition, the question is how sig¬
nificant a fact that is. ,.Is the re¬
moval of labor from competition

system in which a great slice of
82% of the national income is

removes

income.

if

And

bargaining

If it is true that col¬

lective

out,

I'm too

through any old
columns, mine or somebody

collective

that

is universal.

stop 58; Briggs 32,

#

#

can

But don't be alarmed.

else's.

day is

it important to¬

bargaining, which is the grand
We know how large it is, whether in 1929, eight years earlier. That! goal of trade unionism, which we
wave
that the stocks in the
it is getting larger, and who gets is the first time in history that have now covering most of the
list became available.
it.
That is information of first- that ever happened.
We added important economic activities of
*
*
#
rate importance.
practically nothing to the produc¬ the United States, then collective
They show that year in and tion of the industries of this coun¬ bargaining is a device .which, un¬
Here are the stocks, their
year
out the compensation for try between 1929 and 1937. That less curbed, unless dealt with ap¬
buying points and stops: Boe¬ personal services to- labor, to pro¬ was a fact. It shows you how a propriately, through law and hu¬
ing at 24, stop 22; Chrysler 58. fessionals, to farmers and related productive system can be made man relations, will weaken th,e
less productive.
privately owned, privately man¬
stop 54; General Motors 62, occupations in the United States,
accounts for 82% of the national
aged, competitive system and con¬

ing this second day's selling

stop 29;
34; Inspira¬
say is I wish I had
tion Copper 19, stop 17; Celaknown.
I have a sneaking
nese 32,
stop 30, and Good¬
suspicion that if I searched
year 46, stop, 42. There were
through some of my old col¬ other
stocks
mentioned
umns I too could dig
up a
though not s p e c i f i c a 11 y;
couple
of
sentences
that
groups were given instead.
would make me out a crystal
Incidentally American Air¬
gazer
of political acumen. lines broke
63A, so that's out.

lazy to

But what makes

Anaconda 36, stop

♦

All I

VS.

*

*

Last week I listed

Whyte

Thursday, November 11, 1948

CHRONICLE

(Continued from page 37)

Markets

recommended

and what stocks can
advantage. '

be traded in to

Tomorrow's

Walter

FINANCIAL

&

COMMERCIAL

THE

(1990)

we

do not

allow adequate

incen¬

what

they

may

That is the

No

businessman

what

can

he

can

tell

with

do.

Nor,
suggested,
can management plan with confi¬
dence, or even the least prudent
Dr.

as

Copeland

investor

has

without

proceed

appre¬

hension.
7

Running through the confusion,

however,
and

are

certain unfortunate

dangerous ideas. These I
the

confident
scrutinize.

'

Committee

<*

am

will
.

It is suggested that

where prices

achieve substantial identity, there

necessarily
On

this

say that a oricing
"inherently collusive**

agency-may

method

is

be conspiracy.
an: administrative

must

basis

Volume 168

this

—and

-Number -4750

expert

THE "COMMERCIAL

determination

economic fiat, will be accepted
by the courts as satisfactory proof
of wrongdoing.
■
or

,

It is aserted that

;

one

of

where

even

no

conspires, the lawful conduct

businessman may be made
unlawful by the independent acts
one

of his

has

competitors
control.

no

realistic

than

to

the citizens of

whom he

over

This

is

more

no

that

say

all

community

one

of
are

either

righteous or criminal, de¬
pending
upon
what
people
in
other

in

towns

the

state

same

might do. If there is anything in
our system of government which
distinguishes it from others,' it is
that the responsibility of one man

is

measured

what he does—
punished ex¬
cept for >vhat he himself does.

that

seller?

As

buyer, is he to retain the
opportunity to have every seller
of the commodity compete for his
patronage by meeting the price
of other sellers—either

ing his factory price, charging the
same
delivered price as a com¬
petitor, absorbing freight, or in
other way?

any

As

be

indi¬

an

"systematically" meet
the competition of another by ab¬
sorbing freight because if he does
so
he cannot be acting in good
faith. In this case, is the buyer
or

who thus

lower prices also

secures

to be

Can this be possible where

people
wili?

/.

,

,

Faith

Good

-

free to buy where they
'

are

Should

/

.

,,

Reside

Government
•

Perhaps

the

is

shoe

the

on

foot.
Some
element
of
good faith should reside in Gov¬

wrong

ernment. Until

recently it was not
even remotely either an economic
or a legal wrong to use delivered
pricing or to compete by absorb¬
ing freight to distant markets.
Billions of
in

vested

of

jobs

dollars

created

reliance

have

factories

and

dom

in

faith

good

in

the idea of freedom to

on

I

most

constantly
what
ful

is

is

to

be

reasonably

but

economic

time

time

to

by

occur

by

about

which

to

the

from

minds

officials.

;
This is not a healthy situation
fpr American business. Adminis¬

trative

improvisation is not good

government.
and what is unlawful carries with

inevitably the

ecute

to

or

to

power

withhold

to favor

power

and

some

pros¬

action—the
to

hurt

others. As Prohibition should have

taught
in

rest
of

a

the

law.

nation

main

You
nor

to

comply
neither

can

incarcerate

people. Only when
individual conduct
with

the desire

upon

citizens

most

the

law enforcement must

us,

indict
entire

an

the
are

with

rules
set

of

forth

degree of certainty is
wish to

some

it possible for those who

comply to do so—either out of
of

sense

public

responsibility

a

or

of fear.

Bureaucracy—A Monopoly of

Irresponsibility
To leave the

.

authority to deter¬

mine rules of business conduct to

administrative officials
is to create a monopoly of irre¬
sponsibility. It is an invitation to
economic
tinkering. Unsound
regulation will prove ineffectual,
a

group of

yet it will always lead to further
regulations.
.

It

is

not

important

whether

those who seek to regulate a con¬
tinent or to write detailed rules

for
not
are
or

a

dynamic

is beside the point. The end result
of vague and unlimited authority
—with regulation breeding fur¬

regulation

statism.

Free

—

is

Committee

will

lence

pricing or competitive freight ab¬
sorptions throughout an industry

inherently

collusive. The idea
that one seller may meet some¬
body's competition but not every¬
body's is an economic fallacy.
Where an illegal price conspiracy
exists, it should be detected and
vigorously rooted out. But exist¬
ing methods of selling should not
be destroyed and the economy up¬
rooted

on

administrative

an

in¬

ference.
I

have

that

also

heard

it

suggested

buyer has an inherent ad¬
vantage in geographical location
in

a

proximity to
does

not

seller's factory.

a

have

seller

a

an

on

materials which

raw

brought in, and very oftert a
large amount of raw material pro¬
duces a relatively small amount
of finished product. In the matter
of freight alone we must not look
only at "outbound" freight and
overlook "inbound" freight. Men
are

who

build

blind

be

are

plants

new

to

those

must not

facts,

but

far

' considerations
these—demand for the

economy

management realize the basic is¬
in

this inquiry. In the long
Congress has the responsibil¬

such

as

workers, adequacy of raw ma¬
terial supply, and all other facts
that show a prospect for a fair
profit,

result in

or

loss of in¬

a

of free

In America

producer

the

leave each

we

freedom

to

for it in his own way.
seek

it

sales.

magic
tion

to

their

of

benefits

the

to

the

in the field of distribu¬

well

production.

as

If

one

generalize, he would prob¬

Government

to

seek

entitled under this line of reason¬

ing to the benefits flowing from
competent management, plant ef¬
ficiency,.
labor
efficiency,
and

and

new

efficient

production.

It is asserted that the use of de¬
livered
zation
to

pricing or freight equali¬
permits the distant buyer

be served

at

an

unfair advan¬

But

tage over the nearby buyer.
this again is unrealistic.

business

there

is

In

every

break-even

a

istrative

judgments
volume

make these
to when additional

agency
as

is worth

to

an

expenditure.

staying,

enterprise.




on

The

no

basis

on

which to sub¬

stitute the hindsight judgment

management

as

to the

proper

of

bal¬

labor,

as

omy.

well

nomic

theories

vague,

uncertain,

a

ness—economic

democracy; rather
hopes on the re¬

salutary effect

Doing

your

continued

will, I think, be truly

so

with

antitrust laws.
cution

lated

oly

administrative

the

spirit of

Relentless

of conspiracy

will

make

of

It

will

foster

encourage

competition,

investment, make

new

better

and

this

real

jobs, and

pre¬

industrial strength. Upon

depends

the

realization

of

our

prose¬

and monop¬
the Sherman

hopes

of

Americans

maining
in

believers

and

in

the

re¬

democracy

other lands.

will be told that the

you

unrestricted

freedom

to

On Behalf of Air

compete

results in economic waste—in

un¬

cross-hauling — and in
unnecessary
expenditure at the

necessary

But

consumer.

have

economic

if

we

freedom

who is to judge what is waste and
what is a sound expenditure?
By

the

American

upon

enterprise.

consistent

to

into

changing

rules to control the conduct of the
individual businessman—will have

enterprise of American busi¬

development of any new
enterprise which would be stimu¬

are

and

i •

and

competition.

cost of the

written

—

;

eco¬

sible limit in the free interplay of
economic forces and in the energy

serve our

by the existence of freight
differentials.

econ¬
.

evitable tyranny.

faith

the whole

as

Clearing the air of foggy

Those who seek to impose arbi¬
trary restraints do not believe in
no

for

■

more

They have

objective

interest of American business and

of

the

as consumers.

best

the

tinkering with the economy—in¬

in

in¬

your

What you do in their
long-range interest will be in the

they

be. I hope that you will place
confidence to the utmost pos¬

people

our

sults

reasoning, the erection
of
gravestones, the building of
churches, or the establishment of
same

Transportation

(Continued from
cruiser, to be delivered
cost

$1,700,000

us

figures

do

soon,

will

These

represent

not

each.

simply

4)

page

and

examine

for

yourself

the increased cost of construction.

built

The

in

cost

in

comes

air

transport

at

just

Observe

what

has. been
net cost of $49 million.
the technical and me¬

Appraise

difference

great part from the hundreds and

the

of the United States.

map

a

chanical

dependability of an airplane
is immeasurably greater
than that of the airplane of 20

accomplishment the gov¬
has
received
for
$49
million, and then consider that
during the war the government
advanced $23 million for the con¬
struction of a single flying boat.
Which was the better buy? Since
their inception, the railroads have
received $2V4 billion in subsidies.

man who spends the
better judge of what is
productive and what is wasteful

years ago.

I

Today millions of people are
traveling by air. Millions of com¬

against

know that represents a good buy.

than

munications

I

fiction libraries
In

waste.

the

could

be

deemed

fashion, the

same

production of volume by advertis¬
ing—rather than the absorption
of

freight—might

be

considered

waste.

Is not the

money

a

administrative official?

an

That's

strange

for

enough

ideas

he., reads

one

the

runs

records.

the

of

some

across

You

as

will

look at them all and find it strange

that

ideas

such

could

America.
One

almost

summarize

the whole story by a reference to
Holmes'
statement
that

Justice

ideas

of

for

the

improved efficiency and safety in
the operation of reliable air trans¬
portation incorporated in these
postwar airplanes.
And mechan¬
ical

today

hundreds

and

of

thousands *of cargo shipments are

being

On the other side of the coin, I

the

Committee

will

look

carefully at the effects which
flow

from

the

present

may

efforts

f

,You

will

'have

determine

to

abhorrence

of

social

of the

habits

Let's take

record

business

a

accomplished

past.
quick look at

very

air

of

by

and

travel

growth

the commercial

airlines during the past 20 years,
record that speaks for itself:

a

Carried

1947

13,180,000

Fare Per Mile

11c

5.5c

Miles Flown 10.400.000

330,000,000

We
we

this record.
also proud of the record

are

are

of

proud

have achieved in

has

come

two

our

mail and

Air transportation
long way indeed in

growth.

cargo

a

decades.

Those

form.

any

1928

47,800

Passengers

dustry is preferable to free trade
throughout the country.

of such a pro¬
gram in the early 1920's who had
the foresight to place commercial
air transportation in the hands of
private
back

on

operators can also look
that record with pride. In

You

might
have
to
decide fact, I would say there is no prece¬
by changing what was dent for such accomplishment in
formerly lawful, there will be any any government-fostered industry
benefit to the American economy over a short
period of 20 years.
which will offset the possible de¬ And what has this
20-year de¬
struction of savings invested in
velopment actually cost the gov¬
plant facilities and in the possible ernment?
Let us examine those
spe¬

cialized skills would soon have to
follow the dispersion of factories
matter

how

hard

may

be the

revenue

of

our

air mail. To¬

from

came

95%

receive only 7% of our
in payment for per¬
forming a vastly improved air

today oc¬
position of major impor¬
commerce

our

a

well

as

as

It'continues to

increase

constant

in vol¬

business

carried, and in
efficiency of operations. It has a
safety record second to no other
air transportation system in the
world.

continued prog¬

this

And

has been accomplished at rel¬

ress

atively

small

cost.

tines?

What's Wrong With Air
If all this is

tr,ue, then why are
the airlines of this country in dif¬
ficulty?

should

Success

produce

profitable operations. Well, I can
tell you in just a few moments
I

is

ment

the

of

"United

airlines.

advertise¬

an

me

Pennsylvania Rail¬
appeared
in
the

which

road

the

with

wrone

have before

World

and

News

States

The heading
this ad reads: "If this happened

Report" of Sept. 10.
of
in

business, then, like the
you
would need in¬
prices to meet increased

your

railroads,
creased

costs."

:

,

vania

Railroad

explanation

of

1939

since

creased

the

railroad

The

solution.

that

Pennsyl¬
gives a complete
its problems and

this,

Following

77%.

costs

During

shows

have

this

in¬
same

freight
fates have in¬
coal rates have in¬
creased 28%; passenger rates are
up 40%; mail rates have increased
25% and express rates have in¬

day,

we

period,

revenue

creased

will deny that unre¬
competition may go too
socially, but the danger in the

mail

service

No

one

field of legislation lies far more in
the
restraints
upon
competition

for

the

Post

Office

Department.
Over

1918

a
30-year period, from
(when the first government

days
attempts to lessen com¬
petition, and to protect those who

planes started scheduled air mail
flights) tc 1947, the government
paid out $405,000,000 for transpor¬
tation of air mail.
To that figure
they added $183,000,000 represent¬
ing overhead
or
other related

could

services

than from undue freedoms.

Gov¬

ernment should have observed the

dangers

in

revealed

NRA

from the

not

survive

stiff

competi¬

tion.

That

hope,

too,

that

will

you-

not

lose sight of the possible effect of

000

connected

gives
for

records

a

us a

with

newly

developed

adminis¬

trative theories upon the problem

defense,

that

and

will

you

carefully consider how economic
survival

factory
densely

will

be

located

possible
away

populated

for

from

areas

of

a

the
our

have

prepared an overlay to
problem confronting
company, United Air Lines,

I

depict
my

the

quite representative of
happening generally to
airlines.
Our costs have in¬

which

all

is

is

what

creased

86%.

The difference be¬

cost of 77%

tween

the

total of $588,000,period.
The

Pennsylvania Railroad and
Air Lines can, I

that

during

this

30-year period, $539,000,000
represented receipts from the sale
of postage stamps.
After

considering the revenues
and the expenses, we find that the
government has spent $49 million
in excess of receipts for the job
that we have accomplished over
these 20 years.

creased 46%.

of the

30-year

show

46%;

air mail.

same

these

of

I

comparative

for

of

total

strained

I

show
ume

the

Twenty years ago,

because

transportation
a

com¬

munities.

far

figures.

only

reflection

a

as

National Defense.

sponsors

whether

uprooting of workers whose

it

Air

what

in

monopoly

offer

cupies

the

on

not

railroads,

purposes.

tance to

traffic

We

whether the creation of thousands
of local monopolies is consistent

that

the

air

to

restrict the freedom to compete.

offer

transported

competition is worth what it costs.

hope

ernment

by air. Con¬
sider the impact of this volume of

the

could

thousands

even

in

exist

cleavage from their present

of

how wise

matter

no

by only

is

utors and consumers, too.

is

facilities for volume

few,

of planning

Hughes

legislation.

that is best for producers, distrib¬

sound labor policies? If the buyer

struction

the

all

That

rest

no

going to claim and to get vested
rights in his location — and the
producing seller frozen to one
trade area—many will pause be¬
fore approving plans for the con¬

concerned, I hope
conclude that we

than

You will have to decide whether

Federal

a

Justice

think most of the effect

you

to the conclusion that

come

the Balkanization of American in¬

guarantee the buyer's freight ad¬
vantage alone? Why is he not

am

will

ket—instead

may

nearness

throttled, why stop with one
element of cost? Why should the

quiry

planning of millions of
citizens, producing and
buying and selling in a free mar¬

your

way

I

as

you

Chief

what

May I suggest that in

Interplay of Economic

private

Many will

producer, one need only
ask what advantage did the local
buyer have before the local plant
was built? If by governmental ac¬
tion the forces of competition are
to be

As far

through large volume of
,That has been almost a

as

dared

search

can

Government officials for those of

path

profit.

with the deeply imbedded Ameri¬

economic

the

prices,

or of the
profits. There
magic method for making a

no

Going back to the belief that
local buyers have a natural right

There is

or

and

vestment.

ity of deciding whether the coun¬
try is going down the road to
statism

want

costs

nature of corporate

important

product,
capacity
of
available
management availability of

Act

39

termed it—"a charter of freedom."

Forces

tween

Again

suggest that the preva¬
of
competitive
delivered

point related to the volume of
cannot
production.
It is a function of
management and not of an admin¬

In large measure both labor and

sue

this

know

which

legally barred from

and

regularly absorbing freight.
Allow

economic

survive.

run,

conclusions

Some

economy are or are

well-meaning. Whether they
Communistic, Fascist-minded
profess a belief in Democracy

ther

compete offer arguments

more

The power to say what is lawful

it

free¬

duced but

theories

administrative

of

this

not

Congressional

market

that legal

or

restrict

unlaw¬

or

determined

clear

enactment
an

lawful

be

*

equally inherent right in the loca¬
tion
of his
factory? Freight is
paid not only on what is pro¬

disconcerting is the
repeated notion that

to

priv¬

(1991)

upon

scrutinize.

But

compete.
But

to

this

on

would

economic

and

in¬

been

thousands

be

to

located?

are

Those who

is

in

they

theory

charged with acting in bad

faith?

is he

of potential customers wher¬

ever

vidual businessman may not "reg¬

ularly"

seller,

a

country

that

ably

ileged to compete for the patron¬
age

It is also insisted that

;

by reduc¬

volume

additional freight absorption.

Unhappily, there is no general
understanding of the relations be¬

is

a

increased

CHRONICLE

No Understanding of Corporate
Profits

...

,

Fundamentally the question is
this: May an American business¬
man, who does not conspire with
anyone else, have freedom to com¬
pete either as a buyer or as a

FINANCIAL

between

ance

and

offers

by

cannot

one

challenge of this difficult problem
is a great responsibility but it
an
equally great oppor¬
tunity.
i

&

Stop for

a

moment

increased

for United

86%

believe, be explained by the fact
that
to

a

during this period we went
40-hour week for all em¬

ployes

in the company and paid
48 hours.
Our freight

for

them

volume has not

portions
tioned
the

in

where
the

volume

yet reached pro¬

it

can

same

of

Continued

be men¬

breath

the railroads
on

naffe

40)

with
and

COMMERCIAL &

THE

(1992)

40

amount

On Behalf of Ail Transportation
have very little of

that busi¬
those rates are
they would have been

although

ness,

lower than

We do not carry coal, so

in 1939.

comparison on
that point. However, we do carry
passengers and at the present mojrient our rates are 4% higher than
we

make

can

no

in 1939 as compared
Pennsylvania Railroad's

they

were

with

the

Our mail rates

of 40%.

increase

actually 56% less than in 1939

are

compared with the 25% increase
of the railroad, and our express
44%

decreased

have

rates

com¬

pared with a 46% increase on the

sufficient

be

riers

the

enable

to

car¬

honest, economical
efficient
management
to

and

the devel¬

maintain and continue

My
of that section of
responsibility upon

opment of air transportation.

interpretation
the act fixes
the

Civil

a

Board

Aeronautics

to

eliminate dishonesty where it may

exist, to eliminate uneconomical
operation, and to insist on im¬
proved efficiency v/here lack of
it

be shown to exist.

can

Now, the Board hasn't accused
of being dishonest. How¬
ever, the Board (and I have par¬
anyone

railroad.

bers

to

its

meet

,

rail

regulates

the

Commission

Commerce

Interstate

which

through

outgo

transporta¬

It received relief in the form

tion.

of higher rates.
We must apply
to the Civil Aeronautics
Board

relief do

airlines.
The
main difference is that the Inter¬
state Commerce Commission has
lor"

the

been realistic and

acted, whereas

Aeronautics Board has

Civil

the

,

appeared - to be
confused and
vacillating. So, I say the problem
today is not what is wrong with
the airlines, but what is wrong
With the Civil Aeronautics Board.

[Early in 1938, when air trans¬
portation had become an impor¬
tant part of the transportation of
the country, it was recognized by
all

should

it

that

concerned

be

in the public interest.
There was no argument from the
airlines on that point. There was
the usual debate concerning the

regulated

rate

is

the

of

tariff

and

implying

nomical

cient

staff

Board's

the

analysis division)

that

we

that

and

in

we

uneco¬

are

ineffi¬

are

charges

to

ice.

In

opinion,

my

Board

the

practical problems that would de¬
velop as a result of charging sep¬

arately for meals. Instead of our
preparation of the law and the present single menu type of meal
type of agency that should be service, separate in-flight charges
created to regulate this business. would lead to a demand for a
Some thought that
the already variety of meals which we haven't
established Interstate Commerce the space in our airplanes* to trans¬
Commission should assume this
port and which, in addition, would
responsibility. Others concluded increase the overall cost.
Also,
that
because
air
transportation this would lead to the nuisance of
was

and

new

rather

presented
problems,

unusual

some
en¬

an

tirely new agency that would be

dynamic and aggressive should be
selected

to

business

this

move

sponsoring

Those

forward.

separate agency were successful.
Legislation that I still consider to
be constructive and sound was

written, and the Civil Aeronautics
Board

established.

was

transportation
business looked upon this action
as
encouraging, and hoped that
we
could
proceed
in carrying
in

We

forward

air

-the

business

this

for

our

country and at the same time de¬
velop a reasonable return to our
stockholders, who have invested
in excess of $35 million in this
company.

Aeronautics Board

Civil
The

Aeronautics

Civil

Board

It would

started to function.

soon

Secondly, it is said that there
too many airline ticket offices

in

cities

certain

and

such

sales

offices should be consolidated. Let
consider this in relation to the

us

personnel to eliminate duplica¬ line difficulties today.
therefore, produce econ¬ ample, while the Interstate Com¬

of

members

now

Aeronautics Board.

Civil

the

Some of these

members have only recently taken

office,

have had no part
formulating the

and

whatsoever

in

policies

of the Civil Aeronautics
Board in the past.
Now let

us

look at just where

the Board stands.

During the past
air trans¬
port companies have suffered a
loss of
$36 million.
The Civil
18 months, the domestic

Aeronautics

Act

has

a

declara¬

tion of policy from which I quote:
"Assures the highest degree of
safety in and fosters sound eco¬
nomic conditions

nomic

conditions

such tremendous

That,

in

against

itself,
the

.

."

.

do

Sound

not

produce

financial

would

Civil

eco¬

losses.

reflect

Aeronautics

which made reference to

As

a

further declaration of pol¬

compe¬

particular suggestion is the most
dangerous of all. The first step
may not in itself be dangerous
but there is danger in steps to
follow. Let me review this point
A consolidation of

cilities
would

servicing fa¬
larger airports

the

at

bring

saving

real

no

the

peaks and valleys
the work load of the airlines

cause

be¬
in
are

their

and

revenues

maintain

perfect cartel that so many people
look upon with such distaste when

talking about such arrangements
in international trade.

are

being blamed for

having their own ticket offices in
each city to provide the comnetition

the
too

are

Board
many

If

created.

there

ticket offices in a

particular city, it may be that the
Board has certificated too many
airlines to serve that city.

in

the

competitive

corners

we

in

system.

occupy one

con¬

are

we

all required

are

certificates

of

under the

public convenience

necessity issued by the Civil
For example,

and

Aeronautics Board.
serve

we

United

38

Air

cities

small

Lines

the

on

system.

could discontinue service to those
38

cities

airline ticket offices.
two

blocks

west

offices where I

oartment

stores

can
on

I

can

those

of

by

walk

tidltet

find four defour

This is the American

air

ceive

and

$4,000,000 a
company.
However,
save

of

example

other

handed • brand-new healthy
industry in 1938? i If they would
was

the

trace

conduct'

Aernoautics Board

of

the

-

through

Civil

every

be

corrected

of failure

if

air

trans¬

portation, so vital to the economic
development and national defense
of

country, is to continue its

our

growth

on

basis.

sound

a

In

spite of anything, air trans¬
portation is indeed here to stay.
The industry's future development
must and will exceed its progress
to date.

People's concepts are be¬
ing steadily broadened ; with the
increasing speed and scope of air
transportation.
The transport
plane is creating new frontiers in

and

commerce,

spearheading

fundamental changes in our social
life.
And it will wield an even

decision they • made; they; would
find, some good decisions, but
they would also "find that certain
people looked upon the granting

speak

of

tion,

greater influence tomorrow.
j

That is why I have chosen to
behalf of air transporta¬

on

they would
political patronage father than on
the basis of sound economic justi¬

to answer its critics who
blame unfairly.- I. have every con¬
fidence in air transportation and

fication.

in

airline

by

routes

On

one

suggesting

consolidate

hand the Board,

that

is too

airlines

the

activities

uneconomical
there

as

reduce

and

operations, admits
service, yet it

much

I

confident that

am

an

my

our

I

company.

of

that,, with

proud of

am

accomplishments,

confident

and

future.

our

I

I

am

know

intelligent

the progress of air

regulation,
transportation

will be sound and sure.

continues to grant new routes.

objective

No

one

halt that progress.

can

High Rate oi Spending Will
Keep Business Going
(Continued from page 11)
will

take

plete.

several

to

years

At this time, I

am

com¬

inclined

will

year

relatively small. A small de¬
may even be welcome be¬
will

it

cause

pressure

and

relieve

the

on

will also

cut

some

steel
the

what.

financing
major decline in

A

the

demand for

corporate

new

of

industry
some¬

plant
equipment outlays would be
bring on
unemployment and might lead to
and

serious because it would

t h

well-advertised

e

This

is

I would guess that
be down further.

recession.

the figure will

•

inventories, the $3 billion

is

little feeder line known
west

It

Airways.

as

serves

in the population range of the 38
I have

just mentioned. I have told

that

you

month

cities.

we

Southwest

ceives

$20,000

received

a

in mail pay for serving 38

$108,000

Airways

re¬

month in

a

mail

to serve its 20 cities.

Let

me

We

son.

make

another

started

compari¬

this business 20

again, it may not.
On
the subject of inventories, it is in¬
teresting to note that increases in
units held have been relatively
small as compared to prewar. The
bulk

the

of

in

increase

the

book

value figures on inventories rep¬
resents price increases.
In terms
of

physical volume,

tories

are

many

inven¬

still low and may be in¬

inventory

further

by

year.

for

ton-mile.

use

receiving ,63c
with

all

a

ton-mile.

the

of

mechanical

and

in

its

and is

business

are

now-

Now,

pioneering
technical

Southwest

about

two

being paid $30

started

years
a

our

in

work

ago

ton-mile.

$6

a

ton-

but this is included
on

This

itures.

lion

We

may

be

to

expected

to the aggregate available
supply and even to exceed it in
up

some

cases.

Accordingly, I believe that the
cellent

always

—

will

be

assuming

no

ex¬

that

no

war,

lyzing strikes and
our

para¬

serious crop

no

Also, I am assuming that
monetary authorities will not

over-extend

to
of

be

leaves

financed

about

$3

bil¬

through

the

gold and dollar assets and

a

the
we

their operations and
recession unwittingly.

to

see further fluctua¬
adjustments throughout

tions and

economic structure
have

seen

like those

this year, but I be¬
occur within

lieve that these will
the

framework of

a

machine

op¬

erating at near-capacity levels for
the most part.
»•
On

balance, the year 1949 may
a levelling-out pe¬
riod in prices.
There will prob¬
turn out to be.

be

rections

in our
Federal expenditures.
Imports
will
cover
about $10
billion, but these are included
mostly under consumers' expend¬
lion,

figure

by carrying the air mail

a

demand

add

ably

years ago

$6

of

in

bring on
I expect

then

spending next

South¬

or

decrease

but

its

20 cities

less

balance a possible
private spending. In
the aggregate, the various factors
more

failures.

the

good

a

likely to continue at a total of
something like the high levels we
are
seeing in 1948. Higher gov¬
ernment
outlays
will
probably

being spent this year to increase
units held is a pretty small fig¬
ure.
It may decline next year,

Now as to
spending here byforeign purchasers—this year for¬
eigners will spend about $3 bil¬
lion of their own money in this
country. Total exports will prob¬
ably run between $17 billion and
$18 billion, but this will involve
duplications with some of the
other figures.
Federal Govern¬
ment assistance will cover $5 bil¬

there

it seems
spending

there

1949.
As to

lems of the air transport industry.
California

whole, then,
1949, aggregate

in

in

a

Foreign Purchases

In

the

outlook for business in 1949 is

creased

and

On

possibility, but
thus far it does not seem likely
always

an¬

how

Board

be

expenditures next

staff have contributed to the prob¬

accomplished,

competitive efforts arbi¬

found

just

Aeronautics

Civil

system in action, and United Air

own

is

communities

small

corners.

competitive

service.

transportation

And in this problem of service to

It is

occupied

Chicago

They would find that the Board

believe this record

cline

pay

of three

airlines.

the

I

must

nautics Board is that

We in United Air Lines believe

true that

Civil Aeron¬

the
over

within

conditions

industry.

is

to the advancement of year for our
technique and service in air trans¬ if such cities on our line were
portation. Competition invites abandoned it would be an obvious
comparisons as to equipment, cost, case of discrimination against those
personnel, method of operation, particular communities, because
solicitation of traffic, and the like. places of
similar size in other
All of which tend to assure the sections of the country also re¬

the airlines

of

Board

the

problems
transportation, and
carry out the Board's
responsibility
to
foster

ecnomic

sound

that

provides

destructive,

stewardship
autics

investigate

to

outstand¬

basic

to

stated

the

the

air

our

failure

ment

is

serving those 38 cities we receive
$20,000 a month in mail pay. We

and

the outstanding transportation
of the United States

economists

of

occasionally mentioned
by the advisors to the Civil Aero¬

Another criticism of the airlines
which

%

wasteful

of

evaluate

to believe that any decline which
takes place in plant and equip¬

"Economic regulation alone may

come

two

over

I would like to see two or three

produce the

creating more competi¬

necessary competition.
Now that
this excessive competition has be¬

acted

years.

I

expenses.

this would

in

place

of mail rates for

crease

gestion would be made that those
airlines operating between such
competitive
points
would
pool

of

of the stimulus which competition

has

quickly, intelligently and con¬
structively in assisting the rail¬
roads
with
their
problems, the

appointed

thoroughly.

more

tion:

not be relied on to take the

Commission

merce

and
in operations as well as competi¬ Civil Aeronautics Board has been
tion in solicitation of traffic. This holding airline cases for the- in¬

icy, the act states that rates shall trarily just because an;excessive (Compare that with




is

tition in benefits of personnel

Lines does not intend to restrain

Board.

suggestion

the Board's decision

to

contrary

this

action

to

me

impossible for any administra¬ development of air transportation
tive agency to be in operation for system properly adapted to the
over 10 years and not accomplish present and future needs of the
some
good things.
It would be Foreign and Domestic commerce
very unfair of me to say that they of the United States."
have
been
a
complete failure.
This is an example of the think¬
Furthermore, it would be unfair
ing of the Civil Aeronautics Board
for me to blame individuals who
at the time 1 it was creating un¬
are

Again,

omy.

cision

Permit

for air¬
For ex¬

tion and,

quote from a de¬
the Board justifying its

policy.

own

responsible

principally

would show

ing failure—failure to understand
and

The Civil Aeronautics Board is

ac¬

tivities at airports, using the same

Those
38 cities provide us with 8% of
our total revenue.
However, it is
necessary that 40% of our mileage
be flown to acquire that 8%. For

Board's

be

t

lines should consolidate their

which

are

persons of
Civil Aeronau¬

of the

tics Board

air¬

that

tipping from which our passengers
ducting unprofitable operations.
are now free. Frankly, the subject
We recognze that we are conduct¬
is a minor point in any analysis
ing some unprofitable operations
of our overall financial problem.

a

appraisal by qualified
the record

Board

is

.

hasn't,the least conception of the

present rate

our

ton-mile

a

Responsibility of Civil Aeronautics

next

that
identical during the 24-hour pe¬
effect. The public is left with the
riod of the day. When that would
impression that people in the air
be discovered, the next obvious
transport business are irrespon¬
suggestion would be that since no
sible and lack business judgment.
What are these charges and what economy had resulted from the
first
move,
the airlines should
is the, airlines' side of the story?
spread - their schedules
so
that
For one thing, the Board sug¬
there would be no overlapping or
gests that passengers should pay
competition, thereby eliminating
for their meals as a separate cash
the peaks in the work load. After
transaction when meals are served
a
short experience with that ar¬
in flight.
Somebody is naive
rangement, it would then be dis¬
enough to refer to the meals as covered that some airlines were
now being "free" because no such
benefiting more than others fi¬
meal charge is assessed. Actually,
nancially because of the advan¬
the price of meals is definitely
tageous times of the day they
considered in arriving at the tar¬
were
operating their schedules
iff we charge a passenger for serv¬
Then the third and crowning sug¬
certain

by

mile in 1930 and
of 63 cents

,

criticism

ticular reference to certain mem¬

Now, the Pennsylvania Railroad
was
able to increase its income

Thursday, November 11, 1948

Can Facilities Be Consolidated?
The

under

competition has been

of

created by Board action.

(Continued from page 39)
we

CHRONICLE

FINANCIAL

further
of

farm

downward

cor¬

food

and

prices
occurring
simultaneously
with
further upward pressure on the
prices of metals, thereby bringing
better

about

farm and

The

uneasy

boom

balance

between

industrial prices.

may

be

feeling

about the
expected to con¬

tinue, however, especially in re¬
pessimism. The

current waves of

typical businessman has been
vinced

that

there

will

be

con¬

a

re¬

cession along the lines
and this has been an

of 1920-21;
important
cause
for
the
basic
underlying
uneasiness.
This has provided.a
healthy restraint on speculation,
however, and may even help to
alleviate the extremes of

a

boom-

and-bust cycle.

private loans and gifts sent abroad
by American citizens.
The trend for

this, of
that

course,

gold

'/abroad; are

is due to the fact

and dollar assets
so

R. Hahn to

privately financed

foreign purchases is downward—

limited, j tfext

held

Open

R. Hahn will open an
30

office at
Street, New York City
in a securities business.
formerly with Alex Von

Broad

to engage

He

was

vtseF,rm
#
.4

,.,, +^

_

[Volume

168 -Number 4750

THE

COMMERCIAL &

CHRONICLE

FINANCIAL

(1993)

41

The

following statistical tabulations cover production and other figures for the latest week Or month available
(dates
shown in first column are either for
m
the week or month ended on that date, or, in cases of quotations, are as of that
date) :

AMERICAN IRON AND STEEL
INSTITUTE:

(percent

of

capacity)

Equivalent to—
Bteel

Latest

Crude

j

output

oii

-Nov. 14

and

I

Oct

distillate

30

Gas

~~~

_

fuel

(bbls.) at
oil and distillate

Residual fuel oii

10

Z_Oct

oil

fuel

(bbls.)

oil

(bbls.)

5,595,950

5,452,750
§4,965,000

5,274,250

5,556,000

17,238,000

§15,369,000
§2,320,000
§6,467,000
§6,689,000

6,793,000

2,109,000

2,077,000

7,679,000

7,331,000

8,853,000

9,227,000

end

CIVIL

at

of

91,074,000

§79,252,000

Total

27,329,000

§26,048,000

80,291,000

§63,529,000

62,749,000

§37,498,000

57,259,000

30

81,299,000

80,751,000

U.

8.

Federal

j

Beehive

CONSTRUCTION

—

S.

State

ENGINEERING

_

COTTON

coke

OF

GINNING

STORE

COTTON

741,805

FAILURES

(COMMERCIAL

STREET.

$109,319,000
52,328,000

Refined

$179,052,000

$170,200,000

$97,298,00C

103,421,000

101,031,000

75,631,000

.

'

12,418,000

69,169,000

50,554,000

61,253,000
7,916,000

9,203.00C

Oct. 30

12,250,000

"12,040,000

11,645,000

Cake

1,015,000

1,185,000

1,233,000

Domestic

"145,900

146,100

"344

327

313

s.

Govt.

,

Average

[

Sept.

A

6

5,563,514

5,555,254

5,481,632

5,057,455

Sept.

Shipped

BRAD-

&

4

104

104

107

3.75255c

3.75255c

3.19541c

2

$46.82

$46.82

$46.07

$36.96

2

$43.16

$43.16

$43.16

Nov.

3

23.200c

23.200C

23.200c

SERVE

j

23.425c

23.425c

23.425c

3

103.000c

103.000c

103.000c

Aug.

21.500c

19.500c

19.500c

3

21.300c

19.300c

19.300c

14.800c

Nov.

at

3

15.500c

15.500c

15.000c

:

¥

9

100.71

100.69

100.69

9

110.70

100.52

111.25

9

115.82

115.63

116.41

114.08

114.08

114.46

109.79

109.60

110.70

113.31

9

103.47

103.64

104.31

105.69

9

106.21

106.39

113.31

106.92

9

111.25

110.88

112.00

114.85

114.66

115.04

Nov.

9

2.45

2.45

2.45

2.34

-Nov.

DAILY

SALES

(FEDERAL

j

9

3.13

9

2.86

—Nov.

9

2.95

2.95

9

3.18

9

3.54

Nov.

9

3.38

Nov.

9

3.10

9

2.91

ZZ_..

Group

3.14
-

*

'

•

3.10

2.87

2.83

:

.

;

"? 2.99
i 2.74

325
,

of

(DEPT.

August:

ASSOCIATION—WHOLESALE

—

cancellation,

orders,

month,

of

end

9

(E.

M.

&

York

New-York

Sterling
.

.-Tin

York,

103.000c

102.400c

102.400c

price)—————.u—

$35,000

$35,000

of

$76,000

$75,040

$80,692
35.995c

3.27
2.90

Antimony,

2.90

2.80

Antimony

(per

pound),

in

(per

pound),

Chinese,

Platinum,

refined,

Nov.

214.0

6

256.3

Nov.

6

296.3

Nov.

_.

6

Nov.

Farm
products
Cotton
Grains

6

213.8

228.5

248.3

211.0

257,4

255,6

256,6

294.6

.

296.3

{

Metals

!

Building

!

Chemicals

commodities

"___I

Nov.

Textiles

|

Fertilizer

All

212.2

266.9
233.8

materials—

171.2

168.7

174.1

193.8

,

193.7

192.9

machinery
combined

6

189.5

188.3

187.8

230.5

230.5

232.5

6

156.6

"156.5

156.4

received

Production

6

142.4

142.4

142.2

149.8

149.8

Nov.

Percentage

of

6

151.3

151.3

146.0

221.8

222.4

220.1

OIL,

PAINT
AND
AVERAGE=10O

199,563

161,905

209,094

192,927

193,819

189,737

191,033

182,029

96

95

96

DRUG

30

Oct. 30

REPORTER

PRICE

365,928

359,739

375,884

436,178

5

commodities

Farm

144.2

143.0

144.4

Hides

Fuel

Building

products
lighting
metal

148.4

167.1

183.8

186.4

Miscellaneous

178.8

187.9

187.7

183.9

186.0

Oct. 30

195.9

145.7

146.2

146.5

$28,117,874

$28,055,225

$28,567,322

$844,773,591

$868,089,239

$727,086,538

620,993,418

637,361,854

588,760,243

73.51

73.42

80.98

$98,413,503

$99,842,934

$75,954,819

110,848,571

115,694,714

48,314,731

82,000,000

86,000,000

20,700,000

$275,000,000

$275,000,000

$275,000,000

252,460,249

252,687,363

259,071,042

52,360

50,484

83,483

$252,512,609

$252,737,847

$259,154,526

805,858

809,797

862,548

$251,706,751

$251,928,050

$258,291,977

$23,293,248

$23,071,949

$16,708,022

$252,512,609

$252,737,847

$259,154,526

4,802,239

5,582,956

138.1

138.2

118.3

172.7

172.6

171.8

151.3

203.5

203.7

203.1

4,106,957

$247,710,370
2.211%

$247,154,891

$255,047,569

Oct. 30

134.3

133.2

133.6

127.8

goods

Oct. 30

149.2

148.9

147.9

133.4

commodities

Oct. 30

119.0

118.6

119.1

EARNINGS
AMER.

.

comodities

CLASS

I

ROADS

(ASSOC.

RRS.)—Month of September:

operating

revenues—

operating

expenses

ratio

—

—

cent

per

—

railway operating income before charges
Net income after charges (est.)
S.

GOVT.

Total
at

STATUTORY DEBT

of Oct. 31

face
any

(000's omitted):

amount
one

LIMITATION

time

that may

be outstanding

_.

—

Outstanding—
Total

gross

public debt
obligations not owned

Treasury

by

Oct. 30

articles

176.2

Oct. 30

farm

products
All commodities other than farm products and foods

•Revised figure.
JStrike in California continues.
flncludes 352,000 barrels of foreign crude runs.




159.4

Oct. 30

160.0

178.2

158.2

:—Oct. 30

products
other than

the

—

gross

and

guaranteed

Deduct—Other

outstanding public debt obli¬
gations not subject to debt limitation

Grand

total

outstanding

Balance face amount of obligation issuable
under above authority
!

UNITED

STATES

GROSS

DEBT

GUARANTEED—(000's

General

materials

Manufactured

1.000'S omitted)—

—

DIRECT AND

117.2

Semi-manufactured
All

—

185.2

Special groups—
Raw

Louis

St.

142.7

138.0

Oct. 30

products

$1,800

173.8
-

Oct. 30

allied

Housefurnishings

174.8

187.4

157.4
.

Oct. 30

materials—
products

materials

Chemicals and

1

185.3

180.7

Oct. 30

leather products

and

Metal and

.

1G3.8

Oct. 30
Oct. 30

and

Textile

20.500c

public debt
obligations

Oct. 30

products

Foods

20.500c

10.500c

(WHOLESALE PRICES—U. S. DEPT. OF LABOR—1926=100;
All

20.500c

$1,775

Not avail.

Total

I

(per. pound)——.

—

Guaranteed

INDEX—1926-36
Nov.

15.000c

15.000c

100

1—_—Oct.

16.000c

Net

212.7

Oct. 30

at—.

(tons)

16.680c

ingot

pound)—East

Operating

128.3

6

Oct. 30

activity

Unfilled orders

(per pound)

plus,

Total

U.

——

$2,000

40,000c

OF

136.9

(tons)

$1,900

$1,950

Total

134.5

149.8

Nov.

(tons)—

$1,750

$1,900

—

15.240c

—As

Orders
!

$60,269

$2,000

—

pound)

As of Sept. 30

154.5

NATIONAL PAPERBOARD ASSOCIATION:

j

$93,000

33.000c

40.000c

RR.

232.5

6

.

Nominal

$1,950

——

pound)

(per

33.500c

Nominal

$93,000

—

35.500c

MONEY IN CIRCULATION—TREASURY DEPT.

159.5

6

.Nov.

groups

ounce,.

35.000c

Nominal

Spot

38.170c

38.160c

Laredo

Taxes

217.2

170.5

291.9

Nov.

.

t

40.830c
37.660c

Laredo

cases,

78.900c

$35,009-

196.2

-

Nov.

drugs

per

Magnesium,' ingot

245.0

244.1

Nov.

:

Fertilizers
Farm

6

205.9
272.2

Nov.

j.—

materials
and

6

Nov.

—.—

209.5

244.1

Miscellaneous

bulk,

80.000c

,

307.8

269.1

—

pounds)

pound)

(per

(per

Zinc
tper
""Nickel

76

5

f

—

(E. & M. J.)

pound),

Aluminum, 99%
235.8

S.

(per pound)
(per

71.625c

103.000C

,

--

J.

99

or

flask

(per

75.345c

43.375d

;

U.

77.213c
46.929d

$4.02727

3.06

23G.3

14.800c

45.932d

;—

Chinese

ounce

Quicksilver

tCadmium

15.000c

.

$4.02750

3.34

(pep

1!Antimony

19.500c

19.300c

$4.02750

3.12

Gold

21.209c
21.389c

19.300c

—»,

pound)—•

(per

New

23.200c
23.425c

19.500c

—

ounce)——_—

per

2.92

234.5

229,708

23.200c

(Check)

New Yprk Straits

^

§Cadmium
6

180,421

23.425c

;

ounce)

(per

(pence

Exchange

tCadmium

Nov.

33,208

176,824

.

3.41

COMMOD¬

36,601

sale

__——

3.49

446.8

24,239

37,491

Sterling Exchange—

J2.99

405.4

38,156

30,055

pound)—

3.13

399.7

62,395

34,940

J.

3.37

"■

64,995

sale

'

3.53

400.3

for

—:

3.19

'

o

—~—

2.82

•>.

for

73,273

32,185

tons)

less

.299

41,088

—

(short

use

279

319

OF

*

tons)

2.93

•

GROUPS—1935-39—100;

oils

3,669

.

—

Louis

St.

J

Nov.

.—

|

5,201
•

"312'

303

CASTINGS

tons)

Silver,

MOODY'S COMMODITY INDEX

j

12,045

2,187

„

variation

own

Silver, London

__—Nov.

Z

Group

and

743

RE¬

Average—100)

tons)

Silver and

AVERAGES:

Utilities Group

Fats

4,454

.

.——

Antimony

j
|

11,725

3,027

1,240

•

bales) —

tons)

(short

(per

New

117.00

Bonds

——.

270

13,186
7,221

798

540

2,806

Electrolytic, domestic refinery___
Electrolytic, export refinery
Lead

115.04

9

Nov.

Foods

4,735

Copper (per pound) —

108.16

Nov.

Znov.

.

Nov.

!

102,374-

440

QUOTATIONS)—
Average for Month of October:

116.61

9

IRON

METAL PRICES

118.20

9

Nov.

FERTILIZER

115,477
138,107

51,269

adjustment

(short

booked,

(short

102.39

Nov.

——

ITY INDEX BY

33,165

r

..

seasonal

producers'

(short

4ov.

corporate

NATIONAL

101,348

222,234

*

'

(500-lb.

STORE

sale

Orders

t

r

Nov.

—r

Public

92,274

October:

For

10.500c

Nov.

—.

Group
Group

Industrials

105,217

2,099

30

to Sept. 30
to Sept. 30

1
l

For

15.000C

Nov.

!

48,751

39,314
36,397

174,995

j.—i—~

;

SYSTEM—(1935-30
of

Shipments

80.000c

3

Nov.

Utilities

Railroad

44,219

144,135

——

Sept.

COMMERCE)—Month

21.425c

Vov.

Average

to

seasonal

■

YIELD

58,008
.160,841

to Sept. 30——;

1
1

for

21.200c

3

qov.

at

.

Govt.

205,323 '
213,840

,

Nov.

S.

88,375

—

—

QUOTATIONS):

Railroad Group-

U.

38,424

80,566

*

146,691

grabbots, etc.
Sept. 30

Month

PRICES DAILY AVERAGES:

MOODY'S BOND

74,554

329,672

$41.50

Z^ov.
<?ov!

Oct. 30

■

,

158.1

179.7
158.5

175.9
154.6

160.9

were

150.8

153.4

140.9

fund

omitted):

balance

Net

Computed annual interest rate

—

,

2.201%

2.129%

150.0

162.8

153.4

153.4

gExcluding California figures which

163.1

161.1

"•

unavailable due to refinery strike

*

322,559

Aug. 1 to Sept. 30
1 to Sept. 30—

30

Without

:

Public

91,817,000
81,149,000

Aug.

Aug.

Produced

72

Nov.

corporate

Industrials

60,695,000

40,299,000

75,250

1 to Sept. 30—

Aug.

DEPARTMENT

3/75255c

Baa

j

107,313,000

59,241,000
146,813,000

30

Stocks

Nov.

;L

Bonds

—

136,673,000

44,768,000

30__

Shipped Aug.

Aa

I

56,980,000

51,209,000

30—'.1

Aug. 1 to Sept. 30
Hull Fiber (500-lb. bales)—

Motes,
INDUSTRIAL)—DUN

Aaa

!

to Sept.

1

Shipped

Unfilled

U.

25,601,000

194,098,000

30—^—

30

Linters—running bales—

Produced

-Nov.

,

BOND

Aug.

Sept. 30

(tons)

(tons)

Produced Aug.
319

•1

MOODY'S

63,285,000
216,927,000

—

to Sept.

1

Sept. 30

Sept.

(tons)

Produced

Shipped

MALLEABLE

Lead (St. Louis) at
Zinc (East St. Louis)

30___

Aug.

(pounds)

(tons)

Stocks

Export refinery at
Etraits tin (New York) at
York)

6,714,545

Meal—

Stocks
'

SYS¬

Oct. 30

•

(New

8,149,278

COM¬

OF

(tons) Aug. 1 to Sept. 30—
Shipped (tons) Aug. 1 to Sept. 30

149,000

at

relinery

30,763,000

PRICES:

M. J.

&

193,590,000

77,803,000

Produced

940,000

153,300

Nov.

(E.

282,983,000

prior to

Aug. 1 to Sept.

(pounds)

and

Stocks

12,937,000

Electrolytic copper—

j
j

Sept.

(pounds)

Produced

Stocks

INDEX—FEDERAL RESERVE

AND

$575,089,000
350,736,000
224,353,000

COMMERCE):

PRODUCTS—DEFT

Adjusted
PRICES

OF

360,786,000

Oil—

Stocks

41,228,000

25,077,000

56,991,000

44,573,000

'

46,867,000
50,431.00C

Oct. 30

Finished steel (per lb.)
Pig iron (per gross ton)
Scrap steel (per gross ton)_

METAL

—

304,631,000

Hulls-

'J.

INC.

IRON AGE COMPOSITE

'

(DEPT.

(pounds)

Produced

;

kwh.)____

000

347,593,000

300,841,000
232,963,000

*—

Crude Oil—

AVERAGE=100

(in

$665,417,000

of

MERCE—

715,334

EDISON ELECTRIC INSTITUTE:
output

35,013

$648,434,000

Month

—

(exclusive of linters)

SEED

720,063

—Oct. 30

SALES

79,273

50,939

18

726,864

~Nov*

(tons)__

TEM— 1935-39

41.117

48,130

67,378,000

940,746

MINES):

lignite

(tons)
(tons)

68,850

44,431

Municipal

Running bales

NEWS-

_

Ago

71,745
129,046

CONSTRUCTION—EN¬

NEWS-RECORD

and

-Oct. 23

I

Year

64.721

67,402

(tons)-,—

period

Federal

908,581

.Nov.

BUREAU

70,716

(tons)

of

construction

927,532

ZZ_IINov.

and

'

construction

931,750

Nov.

anthracite

PEPARTMENT

Lead

end

Month

(tons

,

__:

coal

grades

construction

-Oct. 30

construction

Bituminous

Electric

S.

Private

22,566,000

81,593,000

U.

Public

82,092,000

26,565,000

all

lbs.)

period

at

ENGINEERING

Oct.

Private construction
Public
construction
State and municipal

Pennsylvania

i

2,000

of

Shipped (pounds)

,

j

output,

Previous

October;

8,364,000

91,925,000

.

—

orders

GINEERING

1,903,000

"0

Latest
Month

(tons

5,224,000

INC.—Month

lbs.)

2,000

Stocks

ENGINEERING

COAL OUTPUT (U.

,

INSTITUTE,

smelter

zinc

RAILROADS:

RECORD:

,

ZINC

October:

Shipment

15,926,000

30

0ct'

_

Revenue freight loaded (number of
cars)
Revenue freight rec'd from connections
(number of cars)

Total

I

1,695,700

1,775,400

t5.604.100
115,626,000

30

"Oct
I"oct

Z.IZZIZZ

at

at

ASSOCIATION OF AMERICAN

I

1,782,600

17,569,000

Opt
_ort

(bbls.)

Kerosene

I

1,791,700

fuel

i

,

of

Slab

Unfilled

output (bbls.)
I
Ort'30
oil output (bbls.)
ZZI-Oct'30
Stocks at refineries, at bulk
terminals, in transit and in pipe lines—
Finished and unfinished
gasoline (bbls.) at
Oct 30

CIVIL

AMERICAN

96.9

INSTITUTE:

(bbls.)

output

Residual

1

Year

Ago

98.5

oil

Gasoline

I

98.9

Stocks

PETROLEUM

Kerosene
Gas

Ago

99.4

of

output—dally average (bbls. of 42 gallons each)
Crude runs to stills—daily
average (bbls.)

I

Month

Week

-Nov. 14

__

ingots and castings (net tons)

AMERICAN

Previous

Week

Indicated steel operations
,

♦Revised

figure.,
tBased on: the . producers' quotation.
JBased on the average
of the producers' and platens' quotations.
IBased on platers' quotations* ft Domestic,
five tons or more but less than carload lot, packed in cases, f. 0. b. New York.
/■
•"F.O.B. * Port

Colborne, N. S.

U. S. duty Included.

42

(1994)

THE

COMMERCIAL

&

increased

gram

about

ahead

present

could

knocked

be

into

million

$950

procurement

,

under

schedules.

cocked hat by a swift, sudden up¬

Together

surge of military rearmament. If
the Russian situation were to be¬

billion for the full fiscal year, or
about
$220 million per month.

this

to

amounts

$2.65

and

menacingly dangerous over¬ 'Compare this figure with total
night, so that an immediate large- manufacturers' sales which are
scale expansion of our rearma¬ now running at the rate of $18
ment program became necessary,
billion per month. In other words,
obviously
inflationary forces .he present aircraft rearmament
would again rule the roost.
program will expand in somewhat
come

But

over

despite the hysterical
by radio commentators,
columnists
and
gossip sheets—
such a. swift upsurge in rearma¬
ment is not the probable devel¬
opment that lies ahead.
In my
—

will

statements

view,

the

most

likely

a

to

year

be

equal

manufacturers'
levels!

1.22%

sales

if Mr.

Even

of

at

of

actual

the

level of

present

$12 billion

is today.

have

were

the victims of almost

want continued boom—

you

and

think

I

of

most

important.
Any
addi¬
tional military program or mili¬
tary lend-lease authorized by the

beginning next July 1, by which
time the domestic business situation may be quite different than

at

it is

high

American

rearmament

of

overlook

important facts:

very

now.

Throwing Economic Gears in

tend to confuse proposal

They

Very understand¬
the armed services, like
recipients of government

other

If

satisfied

with

the

and fiscal authorities will not only
be stepping on the brake but ac¬

While the Truman

on

tually

a

gears

rearmament; it will insist on
scrupulous accounting for
every additional dollar spent.
very

additional

cur¬

demand, not supplement it.

of

economic

reverse.

;

bonds might well turn out to be
disastrous. I suppose the peg, now

slightly

Those who fear permanent infla¬
tion seem to be assuming that cur¬

levels

into

the

Accordingly, it is my judgment
tinkering with the present
peg
on
long-term
government

munitions

spending will merely replace

rent

throwing

that any

II

rent

not

inflation but rather that, by
trying to stop an imagined further
spurt in inflation, the government

Administration will not cut down

Much

the

more

eventu¬

sums

analysis is correct,
danger ahead is

our

immediate

funds, initially inflate their fiscal
requests so that they will be more

ally granted.

$6

million, must be found.
Meanwhile, we are faced with
rising
operating
expenses
and
investment

demand

for

above

conditions

could

par,

be

build

to

mand

Reverse

reality.

ably,

for

meet

costs.

goods

military

outlays

just

to

new

offset

In

the

same

any
forth¬
lend-lease pro¬

gram for

to be

Western Europe is apt
paid for in part by cuts in
Plan outlays.
Equally,

Marshall
of

the lend-lease
military
equipment will come out of sur¬
plus U. S. World War II stocks.
some

III

said

for

a

can't be

same

complete

removal

of

and
new

services for which
be

used.

military funds

Some

military
spending is t inflationary; other
military spending is not.
Thus,
almost 70% of
military spending
in 1949 will be for

"housekeeping

items"—military

pay, food, cloth¬
ing, repair and operation of mili¬
tary camps. That kind of spend¬

ing won't create bottlenecks. Less
than one-third of funds now allo¬
cated for 1949 will go for muni¬
tions proper.
And most of this
third

will be for aircraft—which

won't pinch the
economy as much
an equal amount
spent on big

steel-using items like tanks, ships
or

guns.

...

craft

connection, it's instruc¬
take the figures for air¬

procurement

they stack

up

and

how

see

against total

manu¬

facturing activity.
Thus, for the
beginning next July 1,
1949, and ending June 30, 1950,

fiscal year
the

present army plan for

group

air force is

involve

three

that'

70-

a

scheduled

to

spending for actual air¬

craft procurement

borrowing money,
obviously discourages

investment.

industry
growing de¬

the

service

of

about




$1,7

come

de¬

urgent issue. But let

more

a

close

me

by

repeating

again:

In

handling inflation, it is not "bet¬
late

ter

than

never."

Of

course, new business
is especially sensitive

to any prospect of reduced

(c) Higher
the

tend to
of

interest

resulting

credit

profits.

rates

and

contraction

cause

liquidation of stocks
goods at lower prices.

consumer

Since

prices

of

or

consumer

goods

correspondingly, postponed

Present Situation
But

to

understand

~

/

the

future

better,

let us again .consider the
present.
Two aspects of the cur¬

insurance
rates.

can

see

companies

banks would
In

why the

and

some

like

higher interest
short run, higher

the

interest rates would increase their

earnings

loans.

on

peg

would

give
bonds

those
make

a

on

neat

Also, removal

government

present

bonds

sellers

of

a
good chance to
capital gain. •If the

pegs are removed and bond prices
fall below par, insurance
compa¬
nies and other present sellers of
bonds would, if they

be able to
a

wished, then
buy the bonds back at

lower price.

them
well

a
as

handy

of

installation.

While
and

substantially

the

That would

capital

give
gain, as

permit them to enjoy

an

likely to be
what
they

are

we

to

Is there any
make elec¬

can

costs

Second, there -is the

sity of expansion

neces¬

in- the face

of

uncertain earnings and the rising
cost of construction.
With a few
far

so

been

able

to

meet

their increased operating expenses
without raising their rates.
How
has this been accomplished?

First,
each

relatively large part of

a

dollar

of

is spent for

electric

revenues

carrying charges and

depreciation
cilities
risen

investment in fa¬

on

This

cost

has

appreciably

not

While

fuel and other operating

yet

as

wages,

costs, of
sharply,

course,
have gone up
these have had less effect than in
the

transportation

industries

larly

where

take

larger

dollar.

Second

electric
made

a

and
wages

the

it

part

the

of

high level

very

revenues

possible for

the

of
has

compa¬

large part of their

a

increased costs.

Third,
have

been

that

the

been

increased

provided

normally
other

to

provide

needed

as

business

for

held

words,

companies

able
fast

as

With

of

nections,

we

such

as

ours

with

a

with accompanying fixed
charges,
has not as yet been proportional

today is fairly

Our group of companies

have

2,400,000 kilowatts of gen¬
erating capacity.. We have over
600,000 kilowatts under construc¬
or

on

the

drawing board to

be completed within the next five

This represents

years.

in

crease

a

generating

25% in¬

Transmission and distribution
tion
I

are

do

ex¬

propor¬

also under way.

not

have

to

tell

that
this current plant expansion is on
a

you

cost basis which makes obsolete

all old yardsticks.

How present-

day costs will look 10
now

safe

I dare not

in

of

system

a

safely

operate

two

of

our

On the basis of

kilowatt

this would
On the

present

our

total

mean a

capacity,

\2lk%

reserve.

basis of

pacity of
it

300,000 kilo¬

would

10%.

our projected ca¬
3,000,000 kilowatts,

over
mean

a

A" smaller

stand-by

proportion

kilowatts

system load factors which have

equalled before. Load
factor for our companies in 1927
was 47.6%, in
1939, 57.8% and in
1947, 61.6%.
Although cyclical
mercial

Industrial

use

are

and

com¬

inevitable, it is

probable that the
of

applications

new

electricity will prevent the

turn

the

to

lower load

of

means a

re¬

factors of

the twenties and thirties.
tion of

A

high
higher utiliza¬

investment in all kinds

our

A third and very

is

that

cannot

we

kilowatthours
sonal

meet

our

and

Therefore,

whichj is
relatively

our

sea¬

emer¬

normally

we

stand-by • capacity
operated only during
short periods of each

For this purpose
less

just

business

our

have

must

efficient

useful

as

as

our

older

equipment is
equipment.

new

matter of fact, it would be a

a

gross
the

efficiency. It

economically store
to

loads

peak

gencies.

As

important fac¬

matter of

characteristic of

a

economic

carrying
older

the

waste

charges

units

•

to

to

with

-

incur

replace
modern

equipment to be operated only
few

hours

mining

equipment is
Experimentation
to find ways of

by

easily

more

fuel.

gasification

the

is

One

line
of

igniting underground
collecting the resultant

Another

involves

Fischer-Tropseh
ducing

seams

gases.

of

use

in

process

the
pro¬

high heating value gas

a

above

the

of

coal

from

ground

Other ideas

mined

coal.

being studied.

are

'

Is

atomic

solution
When

search

is

the

energy

of

the

ultimate

fuel

problem?

applied to large plants, so
engineering and other re¬
remains to be done that it

difficult

to

this

answer

ques¬

tion.''■-However; if

atomic energy
is the answer, it will be welcomed

by the utility industryr; So far
we

now

heat

know, it will
and,

source

change

serve

a

such, will not

as

present jmethods

our

as

as

of

generating,

transmitting and dis¬
tributing electricity, but we will
be glad to substitute

ing fuels
on

if it

basis

a

it for

becomes

which

exist¬

available

will

result

in.'

operating economies.

f

Longer Life of New Plant
Construction

Transmission

and

V

distribution

plant

now being installed
is ex¬
pensive but it will have a longer,

life

and

be

equipment
service.

efficient

more

heretofore

into
pole costs twice'

A cedar

much today as in

as

cause

of

has

longer

a

than

improved

life

put

1920 but be-"

treatments it

and

lower per year cost.

actually a'
Improved al¬

loys have

the life

increased

of pole hardware.

stations
loaded

decreasing operating j

much

being

are

heavily

more

than

believed advisable before the

was

last

are

Transformers

costs.

also

Automatic sub¬

The precise effect of all

war.

of

facilities.

tor is the

research»

We understand that

attack

been

in

scrutiny in the

nation's

under test.

of

Second, the war and the present
postwar period have introduced us
never

the

going on
transforming coal into

of

capacity
will offset in part the high unit,
cost of installation.

to

in

al«o

of about

reserve

plants,

each

a

Under to¬

year.

day's

these'developments upon the
ultimate cost of supplying electricitv cannot now be
determined/
but this sort of progress will tend
to offset the effects of high prices.
Thus far

have observed that

we

the growing electric

try is adding

new

utility mdus-'
plant which is

high cost in relation to the past
but not necessarily in relation to
the

future.

It

in operation
do not

now

clude

more

no

we

have grounds to con¬

improved

efficiency

than offset the increased

capita] cost.
have

more

than the old but

that

will

that this
ecomonical

appears

plant will be

new

In other words,

assurance

we

that the utility

industry will be able to continue
its

historical

reduction.

record

The

of

unit

cost

years

from

predict but we are
saying that henceforth

conditions, however, with
practically no reserve, we are op¬
erating this less efficient equip¬
ment during all heavy-load pe¬

industry are not confined to build¬
ing its new capacity.
The newplant must also be paid for. New

riods. When

capacity.

penditures in equivalent

can

stand-by

2,400,000

and

tion

believe that

owned reserve of

an

year.

future.

typical.

capacity.
intercon¬

on

largest generators of 150,000-kilowatts capacity each.
This means

has

investment,

new

generating
reliance

some

presently

power

under

now

or

much

so

by facilities
reserve.' In

in

match

-

we expect to be able to
with a relatively smaller

operate

load factor

the .electric

not

facilities

new

will

factors.

j;.,'First,

declines

'

'

output and

nies to absorb

telephone
particu¬

machines for

new

which

Possibly not, but there
important counterbalancing

costs.

concern

is

and

offsets

those of past years or even of the
are

of

in

been
more

industry is not over-;
looking other important develop¬

improved

above

that

overall

fuels

laboratories.

these cost increases?
chance

burning

cer¬

utility

field

have been in the past.
Where can we find

utility
managements.
First, there is the
problem of maintaining earnings
in the face of a rising spiral of

situation

great strides have
being made in the

are

transportable

capital costs

our

of

saving,
of
cover
carrying

capacity but it would
tainly help.
'
'

available

too late.

This

the

process

reserve

efficient

now

in

charges, depreciation and operat¬
ing costs on 300 000 kilowatts of

of

inflation,! think it is

in

reserve

how

would not

course,

$3,000,-

had the benefit of

units

run

reserve

rent

Edison's position
we

form

just too bad. And for this

present?

can.

had

we

is

it

curtailed.
Of course,

if

300,000-kilowatt

late

tricity with the

customarily fall faster than prices
of
machinery
and
equipment, to the increase in revenues. While
prospective earnings from instal¬ this situation has helped current
lations of new equipment are re¬ earnings it has made more diffi¬
duced, and business investment cult the task of preparing for the
plans

000
a

Too

without injury
strong financial po¬
sition? Again, I say that I believe
to its present'

revenue

inventory

of the

In this

tive to

this in

(b) Higher interest rates cut
profits directly and indirectly: di¬
rectly, by raising the borrower's
costs; indirectly, by forcing prices
downward and causing

accurately the types of goods and
will

do

different ways:

investment

important to classify

larger

a

brings a semi-war
later in 1949 and in
1950, such control will again be¬

But the

losses.
It's highly

If

boom

a

ec'fonomy

recession.

(a) Higher interest rates would

way,

limits.

exceptions, the electric companies watts

hike the cost of

military

accompany

fense program

have

these various declines.

coming

that

within

or even to slightly
without precipitating a

would

considerable

Under

the

can

.

take

forces

dropped to par,

nitely, and that new demands will
government
price
supports
for
simply be piled on top of the
long-term bonds. Any such action
'present ones.
Actually, business would soon
sharply reduce the
requirements for plant and equipvolume of business
spending for
ment, business inventory expan- j
plant and equipment, which, at
sion, consumer spending for many
the rate of $18 billions a
year, is
types of goods, and the volume of
today—far more than rearmament
exports are all declining or sched¬
—the chief supporting force of the
uled to decline in the near future.
boom.
It
would

always has a
deep duty to control inflation, to
keep
the
inherent
inflationary

below par,

and services will continue indefi- !

It

would have been reduced

Of course, business

(Continued from page 8)

these

I

with

year

recession.

Approaching Matuiily?

commentators who parade the un-

four

ever

now

81st Congress is unlikely to go
into effect before the fiscal year

effects

and

for

Is Electric Utility Industiy

spent is also

highly

context, it seems to me
tip sheets and news

inflationary

want

demands

ments

authorizations will be

inside

ceasing

do

us

productivity

union

IV

Finally, proper dating of when

of months.

that

conditions

boom

that—the price of its continuance

about

to about $20
all this in¬
crease accomplished in a three or
four year period—not in a matter
a year up

billion per year—but

In this

is

it

a

If

1.5%

1949-50.

expansion in armament spending
from

spending will exceed

unless

continuous over-production.)

of current manufacturers' sales in

steady

have

can't

prices

gradually declining price
level.
But that was primarily be¬
cause industrial productivity was
rising sharply, and also because

procure¬

ment

slow but

to

seem

with

current

ministration is

You

lower

increasing much
(Some of
you will recall that in the five
years from 1924 to 1929 we did

Truman

war—aircraft

too.

productivity

steps
up
this program moderately, it
farmers
seems to me unlixely that—short

develop¬

it

and

faster than

total

ment under the new Truman Ad¬
a

eat

boom

a

point where it

a

to

Thursday, November 11, 1948

under today's conditions of indus¬

trial

long-term point of
view, it is definitely open to ques¬

jillion.

a

the

But from the

The navy's air force pro¬
during the same period will

cost

to

due

higher yield.

(Continued from page 13)
Of course, all
inflationary,
talk about a mildly deflationary
trend for the short
run
period

income

CHRONICLE

the; benefit wall be far greater
incessant than the difference between the
higher efficiency of the bulk of our
wage rates is firm or slightly ris¬ present equipment and the effici¬
tion whether an increase in in¬ ing industrial
prices, together ency of the new equipment.
terest
rates
which
provoked a with high, even if fortunately not
We will be shutting down
equip¬
downward turn in business ac¬ further increasing, farm prices. ment
which requires as much as
tivity would benefit either Ihe in¬ And, as I said at the beginning of three times the coal to
generate
surance companies or the banks.
this talk, such a slight, persisting
a
kilowatthour as the equipment
Actually, it's the old story of inflation is infinitely preferable we are
installing.
We estimate
not being able to have your cake to either mild deflation or
sharp roughly that our iuel bill this

What to Do Now About Inflation!
than

FINANCIAL

money

reserves

are

restored,
equipment
continuously and
the older equipment will
again be
held as stand- by.
The equipment
the new, more efficient
will be operated

we

are

installing will, of

be somewhat
any

more

equipment

we

course,

efficient than
now

have

but

problems

of the

must be raised.
New Capital Needed

During

the

thirties

funds

construction purposes were

:

foir

largely

derived from internal sources, de¬

preciation provisions and retained
earnings.

In

fact,

manv

comDa-

Volume 168

Number 4750

,

j

-

THE

COMMERCIAL

nies

actually were able to reduce those which have been permitted
their.; debt - to, some extent and increases ii* resident)al rates.
their construction pro¬
at the same time. This was

carry

on

grams

because the

for

need

facili¬

new

ties in the post-depression period
and up to the beginning of the
was relatively modest., Dur¬
ing the war, new money was not
a
problem because most compa-

nies

could

and

obtain

not

to carry out large

manpower

construction

granting a rate increase to principle
Detroit,
Edison,
the
Michigan ^development of the mass market
Commission made the ■„following through the -constant reduction of
interesting statement:
prices and costs.
".
■.
this Commission cannot
You Will recall that

faced with
which

completely

now

is

construction program

a

will

-involve

large

very

capital.

new

Interest

rates are still relatively low. Preferred dividend rates are much

•

•

higher than they

-

stocks

common

keted

were and

utility

only be

can

mar¬

relatively high yield

a

on

f

basis.

/

under present conditions will put
utility managements to the test.

The need

Some

for

pay; the .price

.

new

have

companies

demonstrated their

r

capital

already

wijlingness to

of maintaining

a

sound capital structure. A few is¬
sued
securities" convertible
and

subsequently converted into
;

stock

mon

to

com-

reduce their senior

•

capitalizations during the refund¬
ing era.
Many other companies
have announced plans for financ¬
ing their construction budgets in

•

-

part

through

the

issuance

equity securities.

•

In

the

of

recent

past management has appeared to
recognize the need to maintain

;

,

adequate
balance
between
equity and debt even if the imme¬

t an

.

these customers

beayily
a

upon debt expansion.

course

may

increase

,

cost

the
-

<

.

.

.

the

of money but it will permit
maintenance of the kind of

financial balance necessary to supgood credit.
Confidence in

port

of such

.

vital

to

concern

which

and

.

.

are

Pe¬

its proper-*
ties below all reasonable, safe and
proper levels.
;',

,

the

^

;

industry

the

.

fixed

be, fac ed

with

charges ard deprecia¬
tion on cacilities which are
being
built to restore a normal reserve.
Finally, every replacement of old
facilities at,: today's, high prices
will

tend

ment
ume

.

wili

to

increase

required to do

the

a

invest¬

given vol-

or business. If continued long

enough, the effect of these three

-

:

developments,

;

costs, the re-establishment of

that

is,

spiralling
re¬

and high priced replacements, would be to reduce earn¬

serves
.

ings to.
could

a

point where the investor

not

return

be

unless

paid

adequate

an

revenues

were

in-

'

creased

~

•

L
'

this Commission

can

.

the

last

rate

»numerous
f

over¬

year

have

granted to telephone and
transportation ' companies.
The
willingness of regulatory bodies

recognize^ the need for these

rate increases suggests

a

reason¬

ableness ef attitude which should

t be> encouraging
utility industry.

to

electric

the

•

:

\ As yoq know, electric utility
industrial fates frequently carry

elaqses which call for
adjustment of charges with a

the

rise

fall in the utility's cost of fuel.
The increases thus afforded have
or

•

been

of

material

assistance

It would

increases, 1 believe that the regu¬
latory bodies of the country will
undoubtedly grant them.

not be

appropriate for
me to leave this
subject of rates
without stating that the electric
utility industry is proud of its
long record of rate reductions.

Electric power is so closely re¬

lated

;to our .rising standard of
living and to the industrial prog¬

Those companies that can will un¬

doubtedly postpone as long as pos¬
sible application for rate increases
to

their

residential

commercial
tomers.

It

that

electric

the

is

and

,

worth

„

that'
havfe

a

are

also, probably

number- of

rate

actually, been

aware

increases

granted

to

electric utilities in recent months
and more have

been applied for.
The utilities serving Washington,

has

made

America

it

what

is today, that its future
should not be subject to question.

is

not

likely —world

the

enormous

collections

tax

which

government

make

can

a

great contribution to the welfare
of mankind.

Sooner

international

currency

or

later, the
chaos will

end, a world trade will revive and

nation, will have

we, as a

opportunity

Fed¬

the

of

capital, we have the produc¬
tive1 capacity, we. have the mili¬
tary power and, greatest of all,
we have
a people
and system of

for the fiscal year

a

golden

the

bring

to

world

embrace it.

ending June 30,

Is Lack of

together,

if

will

we

but

Equity Financing Overstressed?

industry it is alive, healthy
dynamic.
It has a long way

and

noting here
industry

to go.

power

(Continued from
dend

policy in some concerns has
probably been formulated with an
eye
to minimizing the personal
tax payments of large stockhold¬
ers who often have an important
voice in corporate affairs..., An¬
other reason

Election's Effect

than the $700
actually achieved.
In times of rising stock prices,
not only is investor receptiveness
to new issues stimulated, buf cor¬
porate management's willingness
to float new stock issues in. pref¬
million

for the retention of

large part of earnings after taxes

erence
to bonds is enhanced by
the fact that rising prices reduce
the yields on stocks and conse¬

quently

substantially

cost

money

in recent years has

Business

on

Funds set aside

allowances.

this

based

purpose,

low

on

replacing

fixed

worn-out

dollars." While powerfully back-- States Department of Commerce
stepped by the European Coopera¬ indicates that American business

will

not

unless,

reach

least

until,

or

year's

in 1948 will spend

it

program,,

on new plants
equipment, whiOh is $2.4 bil¬
lion more than last year. Lionel
Edie, the well-known economist

and

lend-

lease legislation.
The

estimates

urgent

as

As earlv

occupancy

disappeared

the next five years

houses estimates

of

-

82%

in

of

high, we do know
labor costs cause the
substitution of capital for labor,
that

208

cities covered in the semi-annual

the National Association

of Real Estate Boards.
ter

these

of

cities

so

that

reported

were

they

not be far out of line.

may

must

"Investor receptiveness
ingness to purchase new

assets.

standing

lower

judging current prices on
the ability, of people
to pay, not promise to pay, should
be

the

criterion.

will

you

the

In

be

connec¬

Federal
the

in.the

median

United

monthly

States

at

drastic-

demand

effect

on

will
such

have

a

business

of

these

supports, such as
the
agricultural
boom, are al¬
ready at an end. Others are show¬
ing signs of weakness. Only re¬
armament and
capital expendi¬

a.

derivative boom based

which

are

on

forces

beginning

rate of business

activity hides

sev¬

eral serious weaknesses in the

eco-

on

going

on in

To

be

of the things now -nomic
the field of real estate! others,

some

the great postwar
housing shortage has increased the
sure,

structure.

Among

many

refer especially to the
economic evils directly flowing
from our heavy and repressive
I

market value of all

houses,- .bat-# .taxes, particularly those on /the
support thatdh^- Creation Of capital. Adequate sav¬
creased valuation—in plain.
ings with continuing capital i in¬
lish, such valuation has.no lasting!' vestment in new and old enter¬
takes

income

basis

unless

to

there

is

net

income.- prises

And, although rents will continue
upward for some time, there is no
rent level
in
sight which will
maintain
of new

the

The

present

time

to

explore

:

j

„

...

-

capital

goods
In fact,
element in the boom

on

that

will be the increas¬

ing government expenditures for
rearmament and
the continuing
heavy investment by business in
plant and equipment. A joint sur¬

the

rates,

heavy

tion

of

.

of business
not subject to tax while divi¬

dends

as

an

ments

expense

stocks

on

are

taxable

Miller

believes

.

the Federal Reserve

as

not

that

.

outstanding

on

issues, as
set by the Board of Governors of

part of corporate profits."
Mr.

en¬

the ready investment Of
risk capital.
Margin require¬
courage

savings, and the fact that

interest
is

re¬

pessimistic views

atmosphere is hardly one to

institutionaliza¬

growing

These

have been recurrent despite their
contradiction by events. Such an

demand

debt instruments accompany¬

ing the

been

below

System, have

75%

of market
value of shares since July 5, 1945,

the

and for

damaging influence of high surtax
rates on the volume of venture

a

credit

no

little
at

incomes

on

in

the

than

more

all

has

upper

curtailed

issues

make

the

higher

ability of
dependent

have

greatly

income

there

groups,

a

been

year

avail¬

sav¬

ings in liquid form in all income

(including

groups

have

been

indirectly
ties

but

savings

which

invested

directly and
government securi¬

in
may

readily be

tapped

through sale to the banking
tem)

and

in

the

are

in

same

sort

business
of

existing

little

security

stockholders

s^the

difference;

new

at
margin

new.

largely

sal-

issues

common

is

the

on

SEC Appoints Holden

sys¬

The

Securities

Commission

middle income brackets. This

ex¬

pointment of Walter G. Holden

pansion

no¬

Assistant Director of the Division

has

been

very

especially

of

in„ the case of unincor¬
enterprises and in farm
incomes, two areas in which the
opportunities
to
minimize
tax

porated

pavments are greatest

.

.

stimulate

to

reasonable

risk

chances

taking,
of

feels
has

been

given

to

stock prices on the

venture capital.

the

effect

of

availability of

"The

course

of

prices is probably the most
of

Trading and Exchanges.

For

new common

stock issues.

Common stock flotations have in¬
creased substantially during

Director, Mr. Hol¬

six years

pointment

the other hand, the author
that
insufficient attention

as

June,

1940,
.

On

ap¬

in this field since his appointment

of

thq venture."

the

to the Commission's staff in

given

success

Exchange

den will be in charge of the di¬
vision's investigative and enforce¬
ment activities. He has specialized

Cer¬

.

and

announced

As Assistant

tainly. too, the lower, long-term
capital gains tax rate should tend

prior to his

the

to

ap¬

Commission's

staff, Mr. Holden was employed
by the Home Owners' Loan Cor¬
poration, where he served first
District Counsel in Sioux

later

as

Assistant

State

as

City and
Counsel

in Des Moines, Iowa.

He had been
engaged in the private practice of

law in

Jefferson, Iowa, during the

preceding 10 years.

sus¬

here and
The tained periods of rising prices of
activity
mentality "which outstanding 'equity securities. This
only of 1927-1929
plowed under the little pigs," now was true not
holds that shortages will continue but also of 1936-1937 and of 1945indefinitely; but I say that short¬ 1946 as well. One can almost cate¬
age, in an economic sense, is not gorically state thai had not the
an American word!
In my opin¬ bull market in common stocks
ion, barring war or heavily in¬ been cut short in the middle of
1946, the volume of new common
creased military expenditures, a
business readjustment is in the offerings would have been sub¬
there

on

re¬

placed

lower

marked
growth of income earners in the

ume

spots

to

been

much

price
trend of outstanding stocks, and
the high margins on the latter
have tended to restrain the in¬
crease in prices."

have been offsets in the substan¬
tial wartime accumulation of

have

The

volume of venture savings of

brackets

potent factor influencing the vol¬

..

quirements

the

stock

Summary

industrial

now

of
we

now.

Summarizing,* weak
Capital Goods
Boom••-^.a^-f.^beginning to appear

biggest

from

have

high prices

boom is still going strong.
the

is the very life-blood
competitive capitalism,
but

donrt

homes!
^

cession.

ticeable

beginning to weaken.

Unfortunately, the present high

$30!

light

approaching postwar business

of

requirements set

consumer

the

of this year was Only
This figure throws abril'liant

level

rates

Any consequential drop in

to

Reserves Board

low

100%.

tures/are still going strong, and
made the capital expenditures boom is

interested

recent survey

a

that

this

for

the

to

stock financing—low in¬

common

terest

financing cor¬
needs that have

capital

porate

contributed

dampened since the middle of 1946
by the many predictions of an

in

funds

been claimed that the high surtax

Some

estate,

internal

savings in the aggregate may have
been exaggerated.
"While it has

keep

earlier. Throughout the coun* spending..'- ,,
try, prices of new houses are so
Despite claims by some econo¬
high that they are no longer being mists to the contrary, this analy¬
snapped up the moment a builder sis shows that our present boom
exhibits plans.
In fact, builders has been caused by forces which
are
beginning to fail, here and will
not
continue
indefinitely.
When

in addition to the growing use of

out¬

stocks, further¬
been
considerably

common

has

more,

will¬

or

able to the stock market since

you

year

real

other factors

many

or

mand.

old houses than they were one

there.

are

reduce the
obtained in this

in
mind \ that
capital
expenditures
are very-sensitive to ultimate de¬

reportedthat

prices

seem

high

Nonetheless,

One-quar¬

they had caught up on new singlefamily houses. And the majority
on

need

capital during
to sustain busi¬

politicians claim. ness volume within 5% to 10% ol
July, the premium for the present level. Although these

as

survey of

business will
new

some

immediate
had

that

$105 billion of

matter what anyone tells
The demand is not nearly as

no

you.

record-break¬

ing $18,630,*000,000

levels

we pass new

a

"There

of

way.

.

Administration

higher

total

been to make
good the deficiency in deprecia¬

a

original costs of plant and equip¬
ment, have proved inadequate to
cover the
high postwar costs of

(Continued from page 9)

tion

na^e 13)

stantially

tion

As an

cus¬

D. C., Cincinnati, Detroit, Minne¬
vey by
the Securities and Ex¬
apolis, and St.. Paul are among change Commission and the United




which

closer

for

many

..." You

which

ress

small

industrial

and

^

,

—

.

to

electric utilities in the past
two years.
Most fuel clauses do
not apply on rates for small users.

in the past.

as

Now, in closing, just a word
about the long-range outlook. Un¬
less we turn again to isolationism

eral, state and local governments

that it may continue to be abbe, cause if further increases in
oper¬
to attract and obtain
funds.'N>.V ^ ating costs require general rate

rent

two

or

painfully clear why business ac¬
tivity cannot be permitted to drop

debt and military
machine require a high level of
economic
activity
to
maintain
them. So you may be certain that
the government will intervene be¬
fore deflation gets out of hand,
as it
did in the past. Then, too,
the fixed character of a large part
of government expenditures must
not be overlooked. Also, accord¬
ing to the Census Bureau, the
total

total

leadership is inevitable. We have

Our

so

shows

r,

'.increases

think that the

<

for

been

to
,

There is

Question of Rates

said that I

.

know that

/

have

industry can maintain its present
strong position because it is grow¬
ing today and it will not stop
ity
v whose
investments have growing in the foreseeable future,
made (it) possible,- and who. are- because the plant we are
building,
entitled to realize a fair, return although high
cost, is also effi¬
on
such
investments.
Similarly-,• cient;
because
utility
manage¬
we
cannot be insensible to the ments will, I believe, make
every
need of this utility for a Vgood;- effort to maintain balanced
capi¬
sound credit rating, and standing,
ta L ^structures,
and, finally, be¬
"Nor

industry

During

t

I

look the stockholders of this util¬

tion,

>

much

.

through higher rate sched¬
ules; ' Will th^ regulatory bodies
of the country authorize
promptly "jpich general increases as the

may, require?evidence that, they ,'will.

too

a

.

ing,

qualification.

If the inflationary trend of the
last few years continues
unabated,
utility costs will of necessity continue to rise.
At the same time,

.

with

high .cost plant, a lop¬
sided capitalization, and insuffi¬
cient earnings on invested capital.

reduce its return upon

the financial future of the indus-

•

one

future

capacity,

sharply

.

housing boom is also be¬
ginning to show signs of weaken¬

only

inflationary economy
burdening itself for the

an

indefinite

.

titioner

try needs

:

in

rising costs and prices which

'

•

rea¬

-

«

struction program without relying
Such

riods.

ginning of this address I asked
in,, fui^, whether the electric utility in-

.

entitled.

are

be¬

operating

....

without

1 believe that the public utility
industry will continue to succeed
in financing its current huge con¬
too

the

sonably adequate service to which

4

diate cost has been high.
'*

of

utility

nishing to its customers the

.

The entire industry

amounts of

sion

in the

unmindful

amazing

Contrast that
with the national income of
$39.6
billion
in
1933
and
it becomes

of

dustiy could survive the present
period of unprecedented expan¬

.

be

1947, reached the
$49,603,000,000.

*3

of

purchasing
power
through
widespread bank failures as in
1920 and 1932. Because of deposit
insurance, there will be no runs
on
banks, so. they will not be
forced to demand repayment ol
loans and further reduce purchas¬
ing power, as in those earlier pe¬

-

cost? of any

(1995)

haps the leading ex-, making. This does not mean a
most important repetition of 1920, 1932 or even
of American industry, 1937. There will be no reduction

Neither can it shut its eyes to the

projects.

The situation is

changed.

equipment

FINANCIAL CHRONICLE

;df £*that

poner.t *

In

war

~

has

&

Richards With Arthur Rand
(Special

to

The

BOSTON,
ards

has

Financial

Chronicle)

MASS.—Burr

become

Arthur

Rand

Street.

Mr.

&

Rich-,

associated with

Co.,

Richards

45
was

Milk
for¬

G. Newton & Co.
and did business as an individual
merly with C.

dealer in Boston.

44

Securities
•
•

Alabama Power Co.

in

Now

(12/7)

itive

bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Lehman Brothers; Harri¬

ISSUE

PREVIOUS

•

Ripley & Co.; Shields & Co. and Salomon Bros. &
(jointly); Morgan Stanley & Co.; Drexel &
Expected about Dec. 7.
Proceeds—For construction.

man

Nov. 1 filed 303,330 shares ($10 par) common stock.
Un¬
derwriter—Coffin & Burr, Inc.
Offering—To be offered

initially

to

stockholders both preferred and
To reduce outstanding short-term
payable to The First National Bank of Boston.
existing

Proceeds

common.

bank notes

Thursday, November 11, 1948

Registration

SINCE

ADDITIONS

INDICATES

Central Maine Power Co.

Nov. 5 filed $12,000,000 first mortgage bonds, due 1978.
Underwriters—Names to be determined through compet¬
*

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(1996)

—

Dorset

Nov.

American

Bemberg Corp.

holder.

Glore, Forgan & Co. (jointly); Kidder, Peabody & Co.;
Blyth & Co., Inc., and Merrill Lynch, Pierce, .Fenner &
Beane.
[For details regarding proposed changes in existing stock, see under North American Rayon Corp.
in issue of Oct. 21, page 45.]
Bids expected early in

■

December.
-

+

American

)

Metal

.

Finishing Co.,

,

Grand

.

Rapids,

Michigan

;

(letter of notification) 40,000 shares of common
stock (par, $1).
Price, par.
Underwriter — DeYoungTornga Co., Grand Rapids, Mich.
To enlarge manufactaring facilities and for additional working capital.
•
.

American Steel

-

&

Pump Corp.
6ept. 21 filed 200,000 shares ($2 par) convertible class A
stock. Underwriters—Herrick, Waddell & Reed, Inc. and
Bills, Minton & Co., Inc. Price—$8 per share. Proceeds
—To retire indebtedness and for working capital.
American Telephone & Telegraph Co.
Nov. 10 filed $150,000,000 25-year debentures, due Dec.
1, 1973.
Underwriters—Names will be determined by

competitive bidding.
Probable bidders: Morgan Stan¬
ley & Co., Halsey, Stuart & Co! and The First Boston

Corp.

(jointly).

Proceeds—For advances to subsidiary
companies; for the purchase of stock
offered for subscription by such companies; for exten¬
sions, additions and improvements to its own telephone
plant; and for general corporate purposes.
and

•

associated

.

Argus, Inc., Ann Arbor, Mich.
($10 par) 5V2%

Nov. 1 filed 115,315 shares
convertible preferred

stock.

Offering

—

initially for sale to stockholders at the

cumulative

To be offered

rate

of one pre¬

ferred stock and purchase warrant for each
3V2 shares
of common stock held.
With each share of preferred

purchased company will issue a purchase warrant en¬
titling the holder to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
Underwriters—Leason & Co., Inc., and First Securities
Co.
Proceeds—For working capital.
>

&

Co.; Dewar, Robertson & Pancoast negotiated a pur¬
contract in April, 1948, but the SEC on July 27,
1948, concluded that financing by the proposed preferred
Central

.

Basic Metals Corp. of Arizona,
Chloride, Ariz.
Nov. 4 (letter of notification)
295,000 shares of capital
stock.
Price—$1 per share. Underwriter—Jim Jamison.
To construct and
equip a flotation mill.

California Water Service Co.
(11/16)
Oct. 8 filed $1,500,000 first
mortgage 3*4% bonds, series
C, due Nov. 1, 1975. Underwriters—Names to be deter¬
mined

through competitive bidding: Blyth & Co., Inc.,
and
Dean Walter &
Co.
(jointly); Union Securities
Corp.; Halsey, Stuart & Co. Inc. Proceeds—For repay¬
ment of

bank loans and to

restore

working capital for

outlays put in property additions.

Bids—Bids for pur¬
chase of bonds will be received
up to 9:15 a.m. (Cali¬
fornia time) Nov. 16 at office of American Trust
Co.,
450 California Street, San Francisco.

California
Oct.

Water Service Co.

(11/16)
80,000 shares cumulative convertible pre¬
stock, series D (par $25). Underwriter—Dean,

15 filed

ferred

Witter & Co., San Francisco.
ment of bank loans.

Proceeds—For' part
Tentatively expected Nov. 16.

pay¬

Carolina Power & Light Co.
Oct. 14 filed 350,000 shares, of common
stock (np par)
plus not more than 17,500 additional shares which
may
be purchased in
stabilizing the stock. Underwriters
Electric Bond & Share Co.
(parent) is disposing of the
shares and has asked SEC permission for
sale of stock
by means of a negotiated sale to underwriters. Under¬

writers—Dillon, Read
The First Boston
Corp.

& Co., Inc.; W. C. Langley & Co.*
-

Central Louisiana Electric
Co., Inc.
Oct. 26 (letter of
notification) 12,100 shares ($10 par)
common stock.
Price—$24.75 per share.
No underwrit¬
er.
To reimburse the
treasury of the company for past
construction and to provide funds for
future construc¬
tion.
\

shares ($5 par) common stock.

held.

It is

expected that subscription warrants will be

issued Nov. 20 and that

rights will expire Dec. 5. Under¬
will invite bids for unsubscribed

writers—Company
Probable

bidders:

Blyth

&

Co., Inc., Smith,
Barney & Co. and Harriman Ripley & Co. (jointly);
Lehman: Brothers and Lazard Freres & Co. (jointly).
invest

Proceeds—To
Power &

in

the

stocks

common

.

.

.
.

„

...

■

Chicago Dr. Pepper Bottling Co.
Oct. 29 (letter of notification) 57,950 shares of Class "A"
common
stock ($5 par) and 2,050 shares of Class "B"
($5 par). Underwriter—Rodger,
For additional working capital.

common

Chicago.

Kipp

Products, Inc., Brooklyn, N. Y.Aug. 3 (letter of notification) 25,000 shares of common
stock and 20,000 warrants. Offering—10,000 shares and
15,000 warrants to.be offered, in units (one common
share and IV2 warrants) at $2.75 per unit, the balance
of 15,000 shares being reserved for exercise of 15,000
warrants, purchasers of which will have the right for
four years to purchase shares, at $2.75 per share.
Gen¬
eral corporate purposes.
Underwriter—Dunne & Co.,
New York.

Clarostat Mfg.

Co., Inc., Brooklyn, N. Y.
notification) 37,400 shares of 50#
cumulative convertible preferred stock. Underwriter—
Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc.

Aug.

26

(letter

of

Consumers Power

Co., Jackson, Mich.

Oct. 14 filed

458,158 shares (no par) common stock. Of¬
fering—Offered to stockholders of record Nov. 5 for sub¬
scription at rate of

one

Rights expire Nov.

share for each nine shares held.

Price—$33 per share.
Stock¬
right to subscribe to additional
shares not purchased by other stockholders.
Common¬
wealth & Southern Corp.
(parent) announced Nov. 9
that it had completed necessary financing arrangements
and had exercised its right to purchase
402,603 shares of
Consuumers common stock at $33 a share, or $13,285,899,
and also applied for an over-subscription of 9,456 addi¬
tional shares for $312,048.
Underwriting—None.
Pro¬
ceeds—For property additions and improvements and
other corporate purposes.,
•

also

have

the

Crader Gil

Nov.
stock

Co., Inc., Fort Worth, Tex.
1 (letter of notification) 31,000 shares of common
(par $1).
Price, par.. No underwriting. For main¬

tenance of the company.




ex¬

(Ohio)

Power & Light Co.

(11/30)

—

through competitive bidding.
Probable bidders: Halsey,
Stuart & Co. Inc.; Morgan Stanley & Co. and W. E. Hutton & Co. (jointly); Blyth & Co., Inc. and The First Bos¬
ton Corp.; Harriman Ripley &
Co.; Lehman Brothers;

•

Electrodril!

Nov.

4

stock

(letter

(10<? par).

Detroit Edison Co.
Oct.

19 filed $46,649,500 10-year 3% convertible deben¬
tures, dated Dec. 1, 1948, due Dec. 1, 1958.
Underwriting
—None.
Offering—Stockholders of record Nov. 10 are
given the rights to subscribe to $100 of debentures
for

each 15 shares of capital stock held.
Transferable
warrants will-be issued about Nov. '15 ^'and will expire

Dec. 1. Subscription price is par (flat). Proceeds—To re¬
tire bank loans and to meet construction costs.

Sold

Quoted

—

request

on

Y"KK

ST»«

1\

K

iMN

Ni

-i

;

•

m>

<«•

Chicago

120

I

•'! tu K

I'k;

HKOAlAV.-W
i

1'

\

\ I W

\

1

IMN

YOKk

(."i n

j-

e

,

l'

1

•»

/

"

}

t

»

!

'

J.

.

1 ' i

IV.HANCJ

h

A.

iGei

Principal Cities

>
.iu

N

Corp., Detroit, Mich.

V

!•<»■<%

j

corporation plans to exchange the 27,000 shares for 1,500
shares of $10 par common stock of the Robbins Engin¬

eering Co., Ex-Cell-O plans to operate the Robbins Engineering Co. as a wholly-owned, consolidated subsidiary.
Ferro

Enamel

—To be offered for
of

additional

one

Corp., Cleveland, Ohio
common shares ($1 par).
Offering
subscription by stockholders in ratio

shares

for

each

four

shares

held.

Underwriter—Merrill

Lynch, Pierce, Fenner & -Beane.
Proceeds—Company and subsidiaries will use the funds
for general corporate purposes.
•

Field

School

of

Offering postponed,

Upholstery

&

Allied

(■*

Trades, .*

Inc.,

New York
notification) 20 shares of 6% cumulative
preferred stock (par $500). Price, par. Underwriting—r
None. Working capital.
/
Nov. 4 (letter of

•

Florida

Power

Corp., St. Petersburg, Fla.
first mortgage bonds. Un¬
be determined through competi¬
tive bidding.
Probable bidders: Kidder, Peabody & Co.
and Merrill Lynch, Pierce, Fenner & Beane (jointly);
Halsey, Stuart & Co. Inc.; Smith, Barney & Co.; The First
Boston Corp.; W. C. Langley &_Co.
Proceeds—To fi¬
nance company's construction
program.

Nov. 5 filed $8,500,000 30-year

derwriters—Names

Oct.

to

Forest Lawn Co., Glendale, Calif.
12 (letter of notification) $295,000

tures, series "C," due June 1, 1968.
make

capital improvements

or

of

3%

deben¬

No underwriting.

To

to pay corporate obliga¬

tions.
•

Fuller Brush Co.,

Hartford, Conn.

Nov. 8 filed 11,606 shares of 4%%

first

preferred

Price,

par.

stock

($100

cumulative nonvoting

par).

Underwriting—None.
Proceeds—To increase working capital.

Georgia

Power Co., Atlanta, Ga.^
$12,000,000 30-year first mortgage bondsl
Underwriters
Names to be determined through com¬
petitive bidding.- Probable bidders: Halsey, Stuart &
Co.; The First Boston Corp.; Morgan Stanley & Co.;
Oct.

29

filed

—

Co. and Salomon Bros. & Hutzler. (jointly);
Brothers; Drexel & Co.; Harriman Ripley & Co.
To reimburse company's treasury for con¬
struction costs,
Expected about Nov. 30.
&

Lehman

Proceeds

•

—

Golden Dawn

Mining & Milling Co., Searchlight,

Nevada
Nov.

3

(letter of notification)

underwriting.

(jointly); Shields & Co. and Bear,
Stearns & Co. (jointly).
Proceeds—To repay $8,000,000
bank loans and to provide part of the funds for the com¬
pany's construction program. Expected about Nov. 30.

i

......

Bros,

—

Corp., Bartlesviile, Okla.
>/
2,500 shares of common
No underwriting.
To buy equipment.

Oct. 15 filed 27,000 shares of common stock (par $3). The *

mon

Hutzler

\

of notification)

Ex-Cell-O

Merrill Lynch, Pierce, Fenner & Beane and
White, Weld
& Co.
(jointly); Union Securities Corp. and Salomon
and

f

Products

25

Shields

Dayton

Oct. 29 filed $15,000,000 first mortgage bonds, Series A,
due 1978.
Underwriters
Names to
be
determined

Telephone W Orili

other

Ekco

19.

AM'

Private Wires to Offices in

office and plant and to

newspaper

Sept. 17 filed-79,080

Chieftain

*

.;

new

a

its normal operations.

Oct.

& Co.,

Rcvnolds & Co.

/ L

construct

Central

of

Light Co. and Southwestern Gas & Electric Co.,

subsidiaries.

MSMHEHS Ntvi

Pittsburgh

(Md.) Publishing Co.
;
(letter of notification) 300 shares ($10 par) capi¬
Price—$75 per share.
No underwriter.
To

1

stock.

Co., Chicago, III.
(letter of notification) 6,000 shares ($2.50 par)
common stock. Price—$12.50
per share. No underwriter,
For additional working capital.
/, 4

18, 1948, and for. a period of about 15 days,

Analysis

■

Easton

record Nov.

at the rate of one additional share for each 10 shares then

COMMON STOCK

Boston

•

to

tend

Bought

New York

Of¬

offered

be

fering—To be offered fdr subscription to stockholders of

EMERY AIR FREIGHT CORP.

r

To

tal

South West Corp.

&

Nov. 1 filed 659,606

holders

•

>

Nov.

40,000 shares ($100 par) cumulative pre¬
Underwriters—Lehman Brothers; Glore, Forgan

.

•

Midland, Mich.

stock issue is not necessary.

filed

shares.

Nov. 3

Co.,

Oct. 22 filed 105,176 shares of common stock.

chase

able bidders: Kuhn, Loeb & Co., Lehman Brothers and

i

Chemical

Dow

Light Co.

Offering—*
employees and subsidiaries and associated companies.
Price—$45.42 per share.
No underwriting. Proceeds—For general corporate purposes/.. i

Nov. 21

ferred.

Oct. 19 filed (by Attorney General of the United States)
6,175 shares of class B preferred, 91,851 shares of class C
common and 34,058 shares of class D common.
Undcrwriters—Stock will be sold at competitive bidding. Prob-

Power &

Central

<

(letter of notification) 13,200 shares of capital
(par $1).
Price—$2 per share.
Underwriters—
Blair & Co., Inc.; Maxwell Marshall &
Co.; Luckhurst
& Co., New York. Proceeds to Adolf Bleiman, a stocks

Hutzler
Co.

Fabrics, Inc., New York

5

stock

stock to

be sold at par,

500,000 shares of

common

For

1,000,000 shares of com¬
10 cents per share; and 2,-

stock to Homer C. Mills.

equipment, materials and

expenses.

-

-

No

operation
-

-j

Goldsmith Bros. Smelting &

Refining Co.
Sept. 27 filed 100,000 shares ($3.50 par) common stock,
of which 54,000 shares will be sold by the company and
46,000 by selling stockholders. Underwriter—A. C. Allyn
& Co., Inc. Price by amendment. Proceeds—Company's
proceeds for working capital. Expected this month.
Griesedieck Western

Brewery Co.
28 filed 50,000 shares of 5% cumulative convertible
preferred shares ($30 par).
Underwriter — Edward D.
,

Oct.

Jones

&

Co.

Proceeds—Mostly to

prepay

a

portion of

-

Volume 168

Number 4750

-

THE

COMMERCIAL &

Bros.

November

12,

stockholders of record Nov. 4 at rate of onesixth of a new share for each share held. Price of
stock
will be no less than $15. Sioux
City Gas & Electric Co.,
owner of 61.2% of the
stock, will purchase its pro rata
share of the new stock and take all
unsubscribed shares.
Proceeds—For construction program.
Bids—Bids for,
purchase of bonds will be received up to 11:30 a.m.
common

1948

______ _

_ _

_—Preferred

*

November

'

-

15,

1948

Iowa Public Service Co.:.

&

Hutzler; Otis & Co.; The First Boston Corp,
Offering—The stock will be offered for subscription by ;

NEW ISSUE CALENDAR
Peninsular Telephone Co.

FINANCIAL-CHRONICLE

.

Bonds and Common

November

16,

1948

Service Co.

Israel Corp. of
20 filed 250,000

Oct.

9:15

a.m;:f(PST)_--_:-__—-——--J

par)

Bonds "

par)

California Water Service Co.___—_—-. Preferred
Detroit Edison

Co., 11

New York Bay RR., noon

t

(EST)

a.m.

.(EST)—^

11

(EST).—

a.m.

__

.

'

11:30

.

'• -•;

a.m.

(EST)_—_________^_r--pebenture

'hi*"''-/ " -;*• November 17,

;

1948

-Southern Indiana Gas & Electric Co.__-_-Common

Dandy Mining Co., Colorado Springs, Colo.
8 (letter of
notification) 8,393,000 shares <10) com¬
stock.
Price—1^20 per share.
No underwriter.

at

1948

;.._-

rate

of

record

C.Traii9contineh'ta|LGas. Pipe Line Corp.—Notes, Com.
/ _•
.'>< November 23,. 1948
[- Bangor &Arqostook RR. i
„

Noon

.

one

Nov.

ployees.

■

:

.

(EST)————————Equip

Pennsylvania RR., noon (EST)—Equip. Trust Ctfs.
November
5

29,

9

new

1.

share

for

each

Unsubscribed

Price—$12.50

per

five

will

be

share.

shares held of
offered

to

em¬

Proceeds—For

con¬

1948
Debentures

Consumer

Co-operative, Inc.

4

(letter of notification) 9,483 shares of
stock (par $10).
Price, par.
No underwriting.

For ad¬

Stock

will

be

share.

sold

to

present

No" underwriting.

warrant

holders

December

-Bonds

—

7,

1948 '

,

Alabama Power Co

Bonds

Rochester Telephone Corp

.—Debentures

$3
additional

Proceeds—For

Livingston Mines, Inc., Seattle, Wash.
Oct. 21 (letter of notification) 90,000 shares
(50 par)
common stock
and $30,000 6% 2-year interest
bearing
promissory notes. Underwriter—Lobe, Inc. For operat¬
ing and general corporate expenses.

the long term bank loan to Hyde Park Breweries, Inc.,
with which company will merge, and to finance expan¬
sion.
9

Hajoca Corp., Philadelphia
Nov. 5 (letter of notification) 5,756 shares of common
stock (par $1) for sale to existing stockholders and 1,0Q0
shares for sale to employees.
Price—$35 to stockholders;
$40 to employees.
Stockholders of record Nov. 15 will
be given the right to subscribe in ratio of one new share
for each 20 shares held.
Rights expire Dec. 15.
Under¬
writing—None.
Working capital.
Harmonic

Reed Corp.,

Philadelphia

Nov. 5

(letter of notification) 16,667 shares of common
stock (par 500).
Price—$1.50 per share.
The stock will
be purchased by a group of less than 12 persons as an
investment and not for resale.
Harris

Working capital.

Brothers

Co.; Chicago, III.
Get. 27 (letter of notification) 10,000 shares of common
stock, * To be offered present stockholders in direct pro¬
portion to their present holdings at $10 per share.
No
underwriters.
For working capital.

Harwill, Inc., St. Charles, Mich.
(letter of notification) 125,000 shares of

Oct. 27

common

stock

(par $1).
Price, par.
Underwriter — Charles E.
Bailey & Co.
To pay current liabilities, purchase prop¬
erty, building and equipment and for working capital.
9; ' Hotelevision, Inc., Long Island City, N. Y.
Nov. 3 filed 160,000 shares ($1 par) class A stock.
derwriter

a

Un¬

Cantor, Fitzgerald & Co., Inc., New York.
Price—$3 per share. Proceeds—To develop, exploit and
9

television innovation.

Service, Inc., Clinton, N. Y.
Nov. 3 (letter of notification) 1,000 shares of preferred
stock (par $25) and 200 shares of common stock (par
—$10).
Underwriter—Mohawk Valley Investing Co.,
Inc., Utica, N. Y.
Price—$125 for five shares of pre¬
one

Inland
Oct.

19

share of

Service

Charlottesville, Va.
$150,000 bonds.
Under¬

(letter of notification)

writer—City Mortgage & Insurance Co.
To retire out¬
standing first mortgage bonds, to pay bank loans and
for general corporate purposes.
9

Insurograph, Inc., Birmingham, Ala.
stock.

mon

Price—$7.50

or

less

McDonald

per

share.

For the manufacture of additional

holders first and then to employees of the
company.

No under¬

vending

of additional retail stores.'

ma¬

Inter-Mountain Telephone Co., Bristol, Tenn.

(par $10).
Underwriters—Courts & Co.; Equitable Securities Corp.;
of common stock

Mason-Hagan, Inc.; Clement
Offering—Two principal stockholders
will acquire 42,776 shares of the proposed offering. The
remaining shares will be offered for subscription by
Horner

Evans

&

&

Mason;

Co.

stockholders of record Nov. 8

Price, by amendment.

on

a

share-for-share basis.

Proceeds—For expansion.

Iowa Public Service Co.

'

*

?

common

stock.

Price—$4.50

share.

per

Herrick, Waddell & Reed, Inc.
working capital.

par)
Underwriter—

Proceeds—For addition¬

al

Oct.

Marysville Water Co., Harrishurg, Pa.
14
(letter of notification) $60,000 first mortgage

series W\% bonds, due $2,000 annually Dec.
1, 1948-1978.
Underwriter—Warren W. York & Co., Inc., Allentown,

Pa.
ers

The underwriter will extend an
opportunity to hold¬
of first mortgage 5s, due
Oct.?l,

.1948/tb invest in the

new

•

issue.,Price—99lk to 101, according to maturity.

stock

(par $1) with holders of Marsh

common

lowed to exchange their holdings on the
shares for one share of Masonite stock.
•

MelJin's

Food

Co.

of

North

be al¬

to

basis of eight

(11/15)

under

competitive bidding.
Glore, Forgan & Co.; Halsey, Stuart

& Co.

Inc.; Kidder, Peabody & Co.; White, Weld & Co.;
A. C. Allyn & Co.; Harriman Ripley & Co.; Salomon




received
to 11

Bids—Bids for purchase of the bonds will be
at Harris Trust

a.m.

&

Savings Bank, Chicago, ufr
"
<:

(CST) Nov. 16. /

,

Northern Natural Gas Co.
Oct.

21

filed

(11/29)

$6,000,000 serial debentures, due 1966-69.
be determined through com¬

Underwriters —Names to

petitive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; Kidder, Peabody & Co.; Blyth & Co., Inc. Proceeds
—To replenish working capital and for construction ex¬
penses.

Bids—Bids

received Nov.

for

.purchase of the bonds will be

29.

Northwestern

Nov. 4
lative

of

(par $100).
For working capital.

Mercantile

Price, par.

cumu¬

No

un¬

29

•

Mercantile Acceptance Corp. of Calif.
29 (letter of notification) 3,376 shares of 5% first
preferred stock (par $20).
Price, par.
Underwriter—
Guardian

Securities

Corp.,

San

Francisco,

Calif.

For

general corporate purposes.

Michigan Bakeries,
Oct.

Inc., Grand Rapids, Mich.
67,500 shares 5y2% cumulative convertible

18 filed

stock

($20 par) and 67,000 shares ($1 par)
Underwriters — S. R. Livingstone & Co. and

common.

First of

Michigan Corp.

complete

a

Proceeds—To redeem stock and

plant.

Sept. 13 filed 26,000 shares of

American Telephone and Telegraph
Bids—Bids for purchase of the bonds will
be received up to 11:30 a.m. (EST) Nov. 16 at Room
2315,
195 Broadway, New York.
Oklahoma Gas & Electric Co*

Nov.

•

common

&

Co.,

Moritt

Nov.

(I. J.) Corp., Brooklyn, N. Y.
(letter of notification) 400 shares of common
Price—$600 per share.
Underwriting—None.

8

stock.
Cost of

Oct. 25

Vernon

Telephone Corp.,

Columbus,

To reimburse the treasury for
'

.

Halsey, Stuart
Inc.; The First Boston Corp.; Merrill Lynch, Pierce;
Beane; Equitable Securities Corp.
Proceeds—
To prepay notes and finance construction.
& Co.

®

'

Olamont

Nov.

Mining Co.,

Butte,

Mont.

5

(letter of notification) 50,000 shares of common
.
Price,: par.: No underwriting. TTor the
equipment, operation and development of minirfg prop¬
erty.
;
<;
U.
stock

(par $1).

,

Oct.

(N. Y.) Manufacturing Co., Inc.
(letter of notification) 2,000 shares of common
(par $10). Price—$16 per share.
Underwriter—
-

29

stock

Kebbon, McCormick & Co., Chicago.

Proceeds to selling

stockholders.
Northern

Airlines,

Inc., Anchorage,

Alaska

stock

(letter of notification)

(par $1).

Price,

par.

53,700 shares of common
No underwriter. For work¬

ing capital.
Oct.

20

Telephone Co. (11/12-15/17)
100,000 shares ($25 par) cumulative pre¬

filed

ferred stock.

Underwriters—Morgan Stanley & Co. andl
Coggeshall & Hicks. Price by amendment. Proceeds—
For general corporate purposes.

Peoples Gas Light & Coke Co. (12/2)
Sept. 24 filed $16,400,000 3% convertible debentures, due
Dec. 1, 1963.
Underwriter—Halsey, Stuart & Co. Inc.
(sole bidder Oct. 20) will pay company $1,000 for right
to take any unsubscribed debentures. Offering—Offered
for subscription by stockholders of record Oct. 22, in
ratio of $100 of debentures for each four shares held.
Rights will expire Dec. 1. Price, par (flat). Proceeds—
For construction and for the purchase of additional capi¬
tal stock of certain natural gas companies,
•

Picture

Finance

Corp., Los Angeles, Calif.
150 shares (no par) com¬

(letter of notification)

stock

(to be sold at $5 per share) and $150,000 of
notes, due Nov. 1, 1951.
No underwriting.
For general
corporate purposes.
•

Potomac

Edison

Co., Hagerstown, Md.

Nov. 9 filed $5,500,000 first mortgage and collateral trust,

bonds, due 1977 and 30,000 shares ($100 par) cumulative^
preferred stock, series B.
Underwriters — Names will:
be

determined

No
ex¬

iti§s Corp.; Lehman Brothers; Kidder, Peabody & Co.;

Ohio

capital

cu¬

and Alex. Brown & Son

,

National Battery Co.
July 14 filed 65,000 shares
ferred stock. Price and

$7,500,000 first mortgage bonds, due 1978.

ders:

(letter of notification) 3,000 shares of 4V4%
preferred stock (par $100).
Price, par.

underwriter.

filed

by competitive bidding.
Probable bid-!
Halsey, Stuart & Co. Inc. (bonds only); W. C. Lang-!
ley & Co., and the First Boston Corp. (jointly); Harriman
Ripley & Co., Blyth & Co., Inc., and Union Securities.
Corp. (jointly on stock); Shields & Co.; Equitable Secur-.'

tooling, working capital.

Mt.

4

Underwriters—Names to be determined through compet¬
itive bidding.
Probable bidders include

mon

stock (no par).
Inc. and Prescott,
Hawley, Shepard & Co., Inc. Proceeds—Stock being sold
by certain stockholders. Offering- indefinitely postponed.
Eberstadt

from

(parent).

Nov. 3

Machine Tool Co.

Underwriters—F.

$60,000,000

Peninsular

Acceptance Corp.

of Calif.
(letter of notification) 1,000 shares of 5% first
preferred stock (par $20).
Price, par.
No underwrit¬
ing.
To be offered as a bonus to employees only.
Oct.

filed

advances

Co.

Boston,

1,000 shares of 5%

preferred stock

derwriting.

15

Oct. 25

(letter of notification)

Bell

Telephone Co. (11/16)
0
31-year debentures, due Nov.
15, 1979. Underwriters—To be determined through com^
petitive bidding. Probable bidders*: Morgan Stanley &
Co.; Halsey, Stuart & Co. Inc. Proceeds—For repayment
Oct.

Pacific

America,

Massachusetts

penditures.

Probable bidders:

y ,*}<•;

:

through competitive bidding. Probable bidders: Halsey>
Stuart & Cp, .Inc.; "The First Boston Corp.; Harriman:
Ripley & Co. Inc.; Central Republic Co. and Merrill
Lynch, Pierce, Fenner & Beane.
Proceeds—For con¬

Orangeburg

Nov. 5 filed 81,250 shares (no par) common stock.
Pro¬
ceeds—To be exchanged for Marsh Wall
Products, Inc.,

—Bonds

offered

■>"

,

Public Service Co. (11/16)]
Octi 20 filed $11,000,000 first mortgage
bonds, series D,
due Nov. 1,1978. Underwriters—Names to be determined

Masonite Corp., Chicago, III.

Sept. 24 filed $3,000,000 first mortgage bonds, due 1978,
and 109,866 shares ($15 par) common stock. Underwriters
be

./•• ;/;.//

Indiana

Fenner &

mulative

will

.v.

1

;■

■

Northern

•

Mary Lee Candies, Inc., Norwaik, Ohio
Oct. 11 (letter of notification) 60,000 shares ($1

Monarch

Oct. 20 filed 95,000 shares

A.

No
For business operations and the opening

underwriting.

chines.

Scott,

(J. M.) Co., Hastings, Neb.
(letter of notification) 22,915 shares of common
Price—$13 per share.
To be offered to stock¬

1

stock.

preferred

Nov. 8 (letter of notification) 8,367 shares ($1 par) com¬
writer.

to be
None.

—

Oct.

Installations.

common.

Corp.,

•

Nov.

•

Household

ferred and

offered officers and employees.
Underwriting
Proceeds—For general corporate purposes.

r

—

distribute

:

,

•

Lockheed Aircraft Corp., Burbank, Cal.
Nov. 2 filed 34,750 shares ($1 par)
capital stock,

9

„

for

working capital.

1948

No underwriting. For

.

struction.

*

Dayton Power & Light Co

share.

.

common

ditional working capital.

per

30,

(Ohio)

Lithium Corp., of America,
Inc., Minneapolis
Aug. 13 filed 100,000 shares of common stock ($1 par).

Northern Natural Gas Co

November

'•

Lake wood

Nov.

Trust Ctfs.

per

,.

struction.

•/"

stock.;, Price—$10

t

.—Common

22,

Nineteen Hundred Corp., St. Joseph, Mich,

working capital.

Joe

,

•Youse.(E. S!) .& COif-'——-f

•

Nov. 2 (letter of notification) 10,000 shares
($5 par) com¬

North American Itayen Corp.
mon
Oct. 19 filed (by Attorney General of United
States)
177,398 shares of common stock, class C, and 88,853
Johnson Bronze Co., New
Castle, Pa,
shares of common stock, class D. Underwriters—Stocks
Oct. 27 filed 125,000 shares
(500 par) common on behalf •
will be sold at competitive
of executors of the estate of P. J.
bidding: Kuhn, Loeb & :Co;/
Flaherty. Underwriter }
Lehman. Brothers and Glore, Forgan & Co.
—McDonald & Co.
(jointly)';
Indefinitely postponed. W
\.7
Kidder/ peabody & Co.; Blyth & Co. and MerriU LynCh,
^
^ Kansas-Nebraska Natural Gas Co., Phillipsburg,
Pierce, Fenher-^ Beahe. fFor proposed changes in e*M
Kansas >,
•
■
••/,'
v;
isting stock, see under North American Rayoii Corp. in
Ctat. 18 filed 93,062 shares
($5 par) common stock. Of¬
issue of Oct. 21, pagq 45.]
/ Bids expected early in De¬
fering—To be offered for subscription by stockholders cember.;

p 111inois Terminal RR., -BOon^i:"4'-r JE&mp. Trust Ctfs.
,

which funds were borrowed for construction.

mon

Nov.

..

Northwestern Bell Telephone Co.
'<

America, N. Y. City

•

_Bonds

___

,

(Mass.)

bidding.
Prdbable bidders include Halsey, Stuart &' Co.
Inc.; Kidder, Peabody & Co. Proceeds—For payment of
outstanding notes held by First National Bank of Boston
and to repay the company's plant
replacement fund from

unit. Underwriting—None. Pro¬
ceeds—For working capital.

Bonds

Northern Indiana Public Service Co.

f

New Bedford

Gas & Edison Light Co«
Nov., 9 filed $5,000,000 25-year notes, series A, due 1973.
Underwriters — Names to be determined by competitive

share of each at $25
per

Common

45'

derwriters-rGoWman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis. Proceeds—To retiro
$3,000,000 of bank loans and general corporate purposes.
•

shares of 800 dividend series (no
cumulative preferred stock and 250,000 shares
($1
common.
Offering—To be offered in units of one

*

,

Temporarily deferred.

(EST) Nov. 15 at Room 3700, 30 Broad Street, New York.
California Water

,

(1997)

erty

($50 par)

convertible

dividend, by amendment.

pre¬

Un-

additions

and

(jointly).

improvements

Proceeds—For prop-j

by company

and its*

subsidiaries.

*

(Continued

on page

46)

,

t

"

Vr

4M

(1998)

,i

(Continued frorrrpage45)

r.

r

Southern Oil

'

■

June 11 filed 200,000 shares ($100 par)

cumulative pre¬
and im¬

Sale

(11/22)

Public Service Electric & Gas Co-

$o0,000,0U0 of debenture bonds, due 1963.
Underwriters—Names to be determined through com¬
Oct 18 filed

petitive bidding. Probable bidders; Halsey, Stuart & Co.
Inc., The First Boston Corp., Morgan Stanley & Co.,
Kuhn, Loeb & Co. and Lehman Brothers (jointly). Pro¬
ceeds—To retire $30,000,000 bank loans and for construc¬
tion expenses.
Bidding expected to be received Nov. 22.

Development Ltd., Montreal, Can.
Aug. 4 filed 2,000,000 shares of capital stock, ($1 pai
Canadian funds).
Underwriter—Hiscox, Van Meter &
Co., Inc. Price, $1 per share (United States funds). Foi
each 20,000 shares of stock sold, the company will de¬
liver to the underwriter stock purchase warrants en¬
titling the holder to purchase, on or before Sept. 1, 1950,
1,000 shares of capital stock of the company at $1.50 pel
share. Proceeds-rFor drilling operations.
Quebec Oil

•

Rec-Hall, Inc., Fanwood, N. J.
Nov. 4 (letter of notification) 200,000 shares of class A
stock.
Price—$1 per share.
Underwriter—Farrell Se¬
curities Co., New York.
Erect and operate a recreation

Southwestern

*

Renaissance Films

Distribution, Inc.,

Montreal, Que.
Oct. 29 filed 40,000 shares (par $25) 5% cumulative
convertible class B preferred stock and 10,000 shares of
C stock (no par). Underwriting—»None. Offering—Class
B preferred will be offered at $25 per share with one
share erf class C given as a bonus with each 4 shares of
class B purchased.
Proceeds—To pay balance of current
liabilities and working capital.
Rochester

(N. Y.)

(12/7)

Telephone Corp.

Nov. 3 filed $8,500,000

sinking fund debentures, due 1963.
Underwriters—Names to be determined through compet¬
itive bidding.
Probable bidders include Halsey, Stuart
& Go. Inc.; The First Boston Corp.; Glore, Forgan & Co.;
Shields & Co.; Union Securities Corp. and Kidder, Peabody & Co. (jointly).
Proceeds—To pay bank borrow¬
ings of $4,000,COO, to pay $1,700,000 of borrowings
from the trustee
of the
company's employees' pen¬
sion fund to pay $1,200,000 of indebtedness to New York
Telephone Co., and provide funds to pay indebtedness to
Federal Telephone & Radio Corp. Expected about Dec. 7.
St.

Anthony Mines Ltd., Toronto, Can.
Aug. 6 filed 1,088,843 common shares (par $1). Price,
40 cents per share. Underwriter—Old Colony Securities
Ltd. of Toronto.
Proceeds for gold mining operations,
t

San Jose

(Calif.)

Water Works

il

.

Standard Factors

Corp., New York

Nov. 5 (letter of

notification) 12,300 shares of 750y cumu¬
lative preferred stock (no par) and 20,000 shares of common
stock (par $1).
Price—Preferred, $15 per share;
common, $5.25 per share.« Underwriting^-None;
Addi¬
tional working capital.
•••;
,

Oct. 20 filed 15,913 shares ($25 par) common stock.
Un¬
derwriters—Dean Witter & Co., Blyth & Co., Inc., El-

,

Mines, Ltd., Toronto,

Canada

■

(par

Schroder

(H. J.)

& Co., South Bend, Ind.
Oct. 5 (letter of notification) 1,000 shares of 6% cumula¬
tive preferred stock (par $100) and 37,500 shares of class
B
(

(no par)

common.

Underwriter—Harrison & Austin,

Inc., South Bend, Ind. Price—Preferred

''"per

par; common

25c

share. For working capital and to carry conditional
Slice

Corp. of America, Columbus, O,
June 28 filed 25,000 shares of cumulative preferred stock
(no par), with class A

common

attached and 25,000 shares of

share purchase warrant!

common

stock reserved foi

warrants.

Underwriter—Lee Higginson Corp.
—For general corporate purposes. Indefinite.
•

Silver

Oct. 30

Proceeds

550,000 shares of assess¬

able stock.1'

Price—180 per share.
Underwriters—R. L.
Emacio- & Co., Inc., and Hachez & Brown, Inc., Spokane,
Wash.
For mining operations.

{

Silver Ridge Mining Co., Ltd., Nelson, B. C.

-

Aug. 24 filed 1,106,600 shares of common stock (500 par).
Underwriters—Harry P. Pearson, managing director of
company, and Richard K. Fudge and Victor Semenza, co¬
partners of Pennaluna & Co.
Price—300 per share U. S.
funds.
Proceeds—I'or exploration and other develop¬
ment work, tc -^y off loans and for other purposes.
Southern

•

Oct.

27

filed

California

Water

Co.

36,000 shares

($25 par) convertible pre¬
ferred stock and 20,925 shares ($25 par).
Underwriters
—Harris, Hall & Co. (Inc.), and Smith, Polian & Co. Of¬
fering—The common will first be offered for subscription

by

common Stockholders of record Nov. 16 at rate of one

new

share for each three shares held.

bank notes, to finance part of

.

a

Proceeds—To pay

construction project and

to feimlHirse the company's treasury for past construction
COSts. :
'•*
v

~

Oct

Southern Indiana Gas & Electric Co. (11/17)
2# filed 600,000 shares (no par) common stock

owned by the Commonwealth & Southern Corp. and 75,008 additional shares of stock for the benefit of the com*paflyv

Underwriter

—

Smith, Barney & Co.

Price, by

amendment.
Proceeds—Commonwealth will use its pro¬
ceeds to reduce indebtedness and Southern Indiana will
use

its proceeds for oroperty additions and betterments.

Tentatively set for Nov. 17,




,

..

.

gen¬

•

j, Arkansas-Missouri

-

.

.

.

,

i

Power Co/

|

Company has petitioned the Arkansas P. S. Commission !
to.sel) 15,000 shares of 5% cumulative pre- I
(par $100) and $1,000,000 30-year 3V2% «

for authority,
ferred stock

bonds (the latter to be sold privately-at
par to Mutual j
Life Insurance Co?, New York). " Stock will be under- S

• !

e

The company will issue, subject to ICC
000 serial equipmeht trust

Tele-Video Corp., Upper

arid

Additional

Theatre

Nov.

Stuart

Darby, Pa.

• <"

working capital.

stock

(par $1).

Price—$25

per

Securities to be issued
directors and officers to finance
expansion, etc.

common

stock

Underwriting—None.

(no par).

a

filed

unit.

through

,

stock

pany

first

3

mortgage

bonds

fund,

will

authorized
Interest

25-year term and carried

a

be

a

by
the

on

1% sink¬

specified

by the successful bidder, t
Blyth & Co.r Inc.; Halsey, Stuart & '

bidders;.

!

.

Cleveland Electric

Illuminating Co.

<

>

>

$127,000,000 new construction
Glore, Forgan & Co. and
W. C. Langley & Co.
(jointly); Blyth & Co., Inc.

•

.

Probable

Detroit

bidders:

Edison

-

common

shares of

for

Bids will be received

additional

•

Factors

Corp. of America
^
/
Npv. 5, the directors authorized, stibject to stockholder
approval, an increase in capitalization by 5,000 shares
of capital stock and the issuance in 1949 of
tip. to $250,000
10-year debentures.

for

each

share held.

"*

•

company

used to buy 300

steel box

cars

at

an

estimated

cost

of

for payment of dividends on company's preferred stock
before Dec. 31, 1950.
Tentatively scheduled for-week

& Co.

Pennsylvania RR. has issued invitations for bids to be
received before noon
(EST) Nov. 16 on $14,518,000
fi^st mortgage bonds of New York Bay RR.- The bonds

•

Unexcelled
8

one

new

share

for

each

expire 30 days after date.

five

shares

held.

Additional working

Rights

•'

Upper Peninsular Power Co.
Sept. 28 filed 200,000 shares of common stock (par $9).
Underwriters
Names to be determined through com¬
petitive bidding. Probable bidders include Kidder, Peabody & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine, Webber, Jackson & Curtis (jointly). ProceedsWill go to selling stockholders. Consolidated Electric &
and 34,000 shares, respectively; Copper Range Co.,
34,000
shares and several individual owners 11,200 shares.

Virginia Electric & Power Co.
filed

a

maximum

of

750,000 shares

common .stock.
Offering—To be offered for subscription
by stockholders of record Nov* 1*2 at rate of one share

for each four shares then

held.

Stockholders will also

have the right.to subscribe to -additional shares not pur¬

>

1, 1973.

as

to

Probable bidders:

*
-

The

by endorsement-by
principal, interest and sinking

Halsey, Stuart & Co. Inc.:

I

The

"
>

]

Corp.; Salomon Bros. & Hutzler; Harriman
Ripley & Co.; Kuhn, Loeb & Co: •
- -

•

Pennsylvania

RR.

V-'!

(11/23)

Bids for the purchase of
$7,935,000 equipment trust certificates series V, will be received at
office of Geo. H.

,

Pabst, Jr., Vice-President, at Room 1811/Broad Street
Station, Philadelphia, up to noon .(EST) Nov.' ,23.

I

1

'

Certificates will be dated Nov.

-

-

1, 1948 and will mature
$529,000 annually Nov. 1, 1949-1963.
Probable bidders:
Halsey, Stuart & Co. Inc.; Salomon Brothers &
Hutzler;
Harris, Hall & Co. (Inc:); Harriman Ripley & Co. and
Lehman Brothers; The First Boston
Corp.
•

-

■*

Nov.

Plywood, Inc., Detroit, Mich.
8

Traditional underwriter: P; W. Brooks &
Co,, Inc.
Nov.

4

J.
'

'

it

was stated
company contemplates further financing (in addition/to $500,000 debentures now
being
offered) through the sale of additional common stock.

•

((par $10)

»

*

issue will have the benefit of a
$300,000 annual sinking
The bonds will be guaranteed

fund.

fund.

—

Middle West Corp. will sell 120,000 shares

,

j

/"
(11/16)

First Boston

125,000 shares of common stock
(par $1) and 33,000 stock purchase warrants (to be sold
to underwriter at 10 cents each).
Underwriters—George
R. Cooley & Co., Inc., Albany, N.
Y., and others to be
named by amendment.
Price, market.
Proceeds—To
repay bank loans, working capital, etc.

22

4

.

Bay RR.

Pennsylvania RR.

capital.

United Utilities & Specialty Corp.

Oct.

York

will be dated Oct.
1, 1948, and mature Oct.

Oct. 15 (by amendment)

Gas Co. and

,

New

Chemical Corp., New York
(letter of notification) 52,095 shares of capital
stock (par $5). Price, par. Underwriting^-None, To be
offered existing stockholders of record Nov. 16 in ratio

of

;

$1,281,750, from American Car & Foundry Cof Probable bidders: Halsey, Stuart & Co.
Inc.; Harris, Hall & Co. /
(Inc.); Salomon Bros. & Hutzler; Harriman Ripley &
Co/and Lehman Brothers,
(jointly);. R. W.. Pressprich *

also contemplates private sale of $143,000,00(1 3%.,%. '•
mortgage pipe line bonds.
Underwriters—White;

Weld & Co: and Stone & Webster Securities Corp;
Pro¬
ceeds—For pipe line construction, working capital, and

Nov.

V

>

RR.
(11/17) /
V /
.has asked for bids by noon; NOv, 17 on
$1,000,000 equipment trust certificates, maturing semiannually to Nov. 1, 1958. Proceeds from the sale will be.

Com¬

f
-

Illinois Terminal

The

share of stock; also
stock to be offered to

stockholders at $10 per share at the

common

•

by the I

1730, 165 Broad¬
New York 6, N. Y., up to 11:00 a.m. (EST).
Prob^
able bidders: Blyth & Co., Inc.; The First Boston
Corp.,
Coffin & Burr and Spencer Trask & Co.
(jointly).
way,

one

common

;

American Light 8c Traction Co. at Room

principal amount) 265,000 shares of
an

;

Co.

of The Detroit Edison Co.

Price—$9.50 per share.

(500 par) and warrants for

-

(11/16)
;
American Light & Traction Co. is
inviting bids for the
purchase of 192,734 outstanding shares of capital stock *

preferred stock, $5 series, at rate of one

warrant to subscribe

of

\

program.

To be offered to employees.

2,250,000 shares of

rate

j

Nov. 8 reported company some time next
year will need
to issue $20,000,000 to $30,000,000 of new securities to finance in part its present

265,000 shares of common stock (exercisable between
Oct. 1, 1949 and Dec. 20, 1949, at $10 per
share), to be
offered in units of $100 of notes, one share of common
and

(11/23):;!

.

of cumulative

common

,

Co. Inc.

Packing Co., Inc., Rochester, N. Y.
(letter of notification) a maximum of 10,000

1

.

.

improvement

Probable

Tobin

Nov.

Bids f

I

and

•

Underwriting—None.

•

(Inc.).

Chesapeake & Ohio Ry.

ing

school of the theatre.

common

1949-63;

Hutchins, Presi- j

Nov. 23, 1948. >Probable bidders; Halsey, i
Inc.; Salomon Bros. & Hutzler, Harriman |
and Lehman Brothers (jointly); Harris, t

issue, which has

28

share of

Co.

directors Nov. 5 be returnable Nov. 23.

Square Stores Corp., Brooklyn, N. Y.
(letter of notification) ,10,000 units, each unit
consisting of 1 share of preferred stock (par $25) and
1

1,

M.

ing

Times

Oct.

Dec.

office of Curtis

at

Bids for the purchase of $40,000,000 new series refund-

(letter of notification) 12,500 shares of common
(par $10). Price, par.
Underwriting—None.
Es¬
a

&

Hall & Co.

Enterprises, Inc., New York

tablishment of

'

(11/23)

noon

& Co.

Ripley

19

stock

*

maturing $140,000 annually,

dent, until

(letter of notification) 115,480 common shares
(par 50) and 57,740 preferred shares (par $5). Price—
$5.10 per unit, consisting of two common shares and one
preferred share. Underwriter—^Gearhart & Co., Inc., New
•

*

will be -received

20

York.

Co. *

Bangor & Aroostook RR.

authority $2,100,- !
certificates, dated Dec. 1, 1948, '

Taylor Food Co./ Raleigh, N. C.
(letter of notification) 23,000 shares of common
stock (par $1).
Price—$1.75 per share.
Underwriter—
Griffin & Vaden, Inc., Raleigh, N. C.
For purchase of
additional machinery, to defray the costs of sales promo¬
tion and for working capital.
*
Oct.

probably by Edward D,-Jones & do. and G. H. i

of Nov. 22.

Crescent, Inc., Kellogg, Idaho

(letter of notification)

for

which 12,000 are, being offered
by the compafty and
45,000 by three stockholders.
Underwriter
Suplee,
Yjeatman & Co., Ine.y Philadelphia.
Price—$7.62 V2 each.
Proceeds—From company's offering will be used to
pay
far opening a new branch store in
Lancaster, Pa.
"

ments.

outstanding

sales contracts.
"

loans and

;
Youse (E. S.) Co., Inc. (11/17)
Sgpt. 27 filed 57,000 shares ($2 par) common stock, of

written

pected Nov. .16.
■

bank

Expected this month.

purposes.

Walker &

share for each $100

\

eral corporate

$1) preferred stock.
Underwriter—Mark Daniels & Co., Toronto, Canada.
Price—60 cents a share. Proceeds—For mine develop¬

repay bank loans and to restore

<

„

\\

Transcontinental Gas Pipe Line Corp. (11/22)
Nov. 9 (by amendment) $26,500,000 5% notes due
May '
1, 1951 (which will be payable at maturity by delivery

wOrthy & Co. and Schwabacher & Co.
Proceeds—To
working capital used for
extensions, additions and improvements. Tentatively ex¬

(.V

—

.

Corp., Washington,, D. Ci
Oct. 28 filed 60,000 shares of'6% convertible preferred
($25 par).
Underwriter—Johnston, Lemon & Co.
Pro-:!
ceeds—For additional working capital.
:
/,

shares

-v

.

State Loan A Finance

April 2 filed 300,000

'

Proceeds—To retire unsecured

Spokane (Wash.) Slocan Co.
Oct. 29 (letter of notification) 800,000 shares of common
stock.
Price—10 cents per share.
No underwriting.. To
meet
current
bills, accounts assumed, ' for additional !
equipment and for development of the company's mines
and for working capital.
e

'

70,000 shares (no pgr)
Underwriter—A. G. Becker &
Co., Inc.

stock.

cdmmon

e

shares of

(11/16)

'

Younker Brothers, Inc.
Oct. 18 filed 34,000-shares of 5%
sinking fund cumula¬
tive preferred stock ($50 par) and

Nov. 5

'

•

Telephone Co.

!
Wiegand (Edwin L.) Co., Pittsburgh
Sept. 28 filed 200,000 shares (no par) common stock.
Underwriter—Hemphill, Noyes & Co., New York. Price,
by amendment. Proceeds—Will go to selling stockhold¬
ers.
Offering indefinitely postponed.

,

.

Tabor Lake Gold

Regent Oil Corp., Oklahoma City, Okla.
Nov. I (letter of notification) 1,200,000 shares of com¬
mon stock
(par 1(f).
Price—$250 per share.
Under¬
writer—'Tellier & Co., New York.
For organizational
expense, drilling, etc., and working capital.

stockholders, subject to allotment. Price
by amendment. Underwriter—Stone & Webster Securi¬
Corp; Proceed*—For construction.
;v:
•

ties

Aug. 24 filed 22,000 shares Of $2.60 cumulative (no par)
preferred stock.
Underwriters — Paine, Webber,-Jack¬
son & Curtis; Stone & Webster Securities Corp.; Ttauscher, Pierce & Co. . Price by amendment. ■ Proceeds—
To pay, In part, bank loans used for construction pur¬
poses.
Indefinite.
'
'
*
.

center.
•

•

Associated

Thursday, November 11, 1948
chased by other

Corp., Jackson* Mis*.

writer—J.

provements. Underwriting—The company rejected bids
submitted Aug. 4. The SEC on Aug. 23 exempted the

bidding rule.

CHRONICLE

150,000 shares by W. G. Nelson Exploration Co.' Under¬
J. Le Done Co., New York.
Proceeds—For v
working capital and general corporate purposes.

Proceeds—For property additions

proposed sale from the competitive
on agency basis being discussed.

FINANCIAL

&

Oct 8 filed. 1,500,000 shares of common gtock:(parJc)
of which 1,350,000 shares will be sold by company apd

^

Public Service Electric & Gas Co.
ferred stock.

COMMERCIAL

THE

<

"

I
■*

,

Transcontinental & Western Air,. Inc.
12

directors

will

meet to consider a
proposal to
offer 400,000 to 500,000 shares' ;bf
commbn stock to present shareholders at
$10 a share:4 If the issue is

r

approved,

proceeds from the sale will be used'for
general corpo¬

rate purposes.

<

•

*

-

~

.Volume 168

Number 4750

THE

COMMERCIAL & FINANCIAL CHRONICLE

(1999)

47

'

usual and. adjusting
to circumstances as

.
.

..

.

as

.'

"

In

been returned to power with

since the

fortnight later the "Times" observer reported the composure
of London's City (her Wall
Street) over the new Government's early
steps; as follows:
\

of

the

lashing

markets has

which

endured

elections, the'high-grade

bond list has ridden out the storm

without

much

as

as

tremor.

a

CALLED

TOO

secondary and speculative
liens have reflected the unsettle-

STAID

victory and no revolution yet, people
relief.
After some flutterings in the dovecotes of the
City, the financial community has settled down to
accepting the
new state
of affairs, which at any rate is likely to continue for
five years at least. The market is steady, if not bullish.

ment

with

in

Accordingly

with

the

the

-

•

,

next

week,

for

there

of

way

new

marketing

is enough in
bond business

tap to make that period
interesting one.

Attlee

"Mr.

experiment.

has

Both

Co.'s

after all, gone in for boldness or for
personnel and in its structure, his new

not,

in

its

government is:

conservative,'Land pronounced that "The risk is not
that the Labor party will change British
society too much, but that
it will change itself too little."

r

,

']•

Reviewing the King's speech (a counterpart of

Presidential

our

messages)
an

the "Economist" chortled that it was "moderate and not
instalment of Red Revolution"-^this, 30 months before that
publi¬

cation's
•

inveighings against an actually-incurred capital levy, and
three years before its now-current issue
(Nov. 6, 1948) whose lead
editorial is devoted to
excoriating the Government for bringing in
the Steel Nationalization Bill.

r-

reassurances

Liberal

<!

that if it

Socialism it

was

..

Mr. Attlee

David Hume wrote two centuries ago, "It is

as

Detroit

liberty of any kind is lost all at once." Do not imagine
that planning is a medicine that can be added to the free market in
small doses, and that, it is easy to avoid eventually
creeping into
full collectivism through the back door of bastardized socialism.
Do

not

wishfully

disregard; the stated aims of the newly-authentieated leaders of the impending Greater New Deal: as
many
did in disregarding .the clearly-reiterated
philosophy of President
Roosevelt and his spending-taxing-spending lieutenants
(recorded in
detail

the

in

currently published volume, "Roosevelt and Hopkins,"
;by Robert E. Sherwood).
While "Wall Street gluttony" may be a
; figment of flippant campaign oratory,' the keystones of the voterapproved Truman New Deal

class division,

are

subsidization, and the

j general rearrangement cf the economy for the achievement of politijcal goals.
(In Argentina the military government in 1943 effected
ithe masterful "economic"

of

measure

j

Remember that irrespective of the exact nature of the "mandate"
which the voters have just; delivered to Mr. Truman; he has permajnently frozen the rule for office-seekers that for success at the polls,

.they must take full advantage of that flaw in
the

administration

that

i and savings to the benefit of
And

dissipates

shares of Carolina Power &
Light

Co.

politically-strong

groups.

Bond

and

now,

even

on

the

eve

August, 1945, to 140 in January,
of steel nationalization, is 121.

'Even English bonds have acted
satisfactorily
•declined from 136 in 1945 to* 133 now.

pricewise, having only

Issues

(Special

next

Tuesday,

with

now

lead

them

The

two

Financial

O'Brien has

into, still

another

; vitally ruinous to the entire future of

abortive

our

forecast—this

time

country's freedoms!

setting for

interest

by the parent

revised, will

are

be Northern Indiana Public Serv¬
ice Co.'s $11,000,000 of new first

The

to

Naylor

Bankers
well

as

substantial

any

undoubtedly

satisfied-

un¬

were

just

that

they were
bid for any
large new issues, in the circum¬
stances, and appeared to be sat¬
called

not

staff

Financial

to

upon

and create

a new

base from which

to start.

been

Peter

of

added

There is

probably

will go down as one of the dullest
weeks this

year

in

new

corporate

underwriting what with only

000,000

of

25-year
for bids

new

tures, will be up
next, just about

7

of

the

date

NOTICES

had

holders

ATLANTIC

E.

COMMON DIVIDEND

may

prove

schedule

meeting of the Board of Directors
held November 3,
1948, a dividend of
fifty cents (50c) per share and an extra
dividend

of

thirty-seven
(37!/2c) per share

cents

and

one

first

mortgage

collateral

gainsaying the fact
underwriters, like others who
hoping for a change in Ad¬
ministration, as a result of last
week's balloting, were keenly dis¬
appointed
with the way things

15,

bonds, due 1978 of Brockton Edi¬
Co. scheduled for market.

son

There

was

plaining

very

among

little

bit

a

Hollywood,
It

Fla.

that what
t

has

post-election
not

make

the

com¬

reason

happened in

stock

market

proper

kind




the

others

in

tire

is

week.

business

22,

1948.

1948, to
Checks

that

that

syndicates

the

scheduled

sight,

to sit

on

their

hands

to

open

this

and

organized

en¬

kind

of

twd huge

to

after

go

be

Draper, Sears & Co., 53 State
Street, members of the New York
Boston Stock

and
was

Exchanges.
with
Gordon

formerly

Hanlon & Co. and in the
past
a partner in Watson & White.

He
B.
was

CARBON COMPANY
One-Hundred and
Consecutive

the
did
of

The

Financial

MANCHESTER,
1VL

Campbell

are

N.

and

A

quarterly dividend of 50 cents

share will be

November 19,

1948, at 3 P. M.
GEORGE L. BUBB
Treasurer

principal of E. A.

Co.

"

UTILITIES COMPANY

go

the

back

As

outcome

Dividend

Box

of their number put it

"we'll be around
,

*

doing business
.*

»

..

4'

-

as
V

in

economic

J,

Z

1110,

Chronicle,
8, N. Y.¬

25

re¬

analysis

and selling,
future. Salary

Commercial

Park

Place,

on

the

whose

snares

Certificates

of

are

the

represented by
issue, will
the offices of
of November,

1929

f

.

The

Transfer books will be closed from the
day ui November, I9t8, to the 30th day of
November, 1948, both inclusive and. no Bearer
Chare

Warrants

denominations

will

of

be

Share

converted

Warrants

into

other

during

The

Income

Canada

Tax

provides
and

Act

that

of

deducted

the

tax

a

at

of

that

Dominion

15%

the

shall

aource

dividends

payable by Canadian debtors

residents

of

Canada.

The

from
all
dividend
resident shareholders
ers
will deduct the
to or for accounts of

tax

will

be

to

of

be
all

on

non¬

deducted

cheques

mailed
to
non¬
and the Company's Bank¬
tax when paying coupons

non-resident shareholders.
Certificates
(Form
No.
600)
must
all dividend coupons presented for

Ownership

by

advised

residents

of

resident

that

Canada.
in

credit

the

United

States

for

the Canadian tax
allowable against the tax
their United States Federal Income
Tax
return.
In
order
to
claim
such
credit
the United States tax authorities require evi¬
dence of the deduction of said tax, for which
at

a

is

source

on

Registered
Shareholders
will
receive
dividend cheques a Certificate of Tax De¬
and Bearers of Share Warrants must

Nptice

Common

Stock

of

the

complete
Ownership
Certificates
(Form
No.
601) in duplicate and the Bank cashing the
coupon^ will endorse both copies with a Cer¬
tificate relative to the deduction and payment
the tax and return one Certificate to the
Shareholder. If forms No. 601 are not available
at
local
United
States
banks,
can
be
they
from
the
Company's
office
or
The
of

secured

1948

Royal

to

stockholders

of

record

Bank of

Canada, Toronto.

Subject
to
Canadian
regulations affecting
aliens, non-residents of Canada may

November 15, 1948.

enemy

convert

SHUTTS,

United

this1 Canadian

States

currencies

currency

as

regulations

November 6, 1948.

of

Control

dollar
or

dividend

such

other

into

foreign

permitted by the general
Canadian Foreign Exchange
the official Canadian Foreign

are

the

Board

at

Exchange

control rates prevailing on the date
presentation.
Such conversion can be ef¬
fected
only
through
an
Authorized
Dealer,
I.e.,
a
Canadian
branch
of
any
Canadian
chartered
bank.
The
Agency
of The
Royal
Bank

Electric

a

mon

York

on

prepared

eign

68 William
to accept

Street, New York
dividend cheques

a

currency.

The
Secretary
availab'e forward

11, N. Y.

Share

of

Warrant

Company's

meet¬

quarterly dividend
one

Canada,

is

coupons for collection through an Authorized
Dealer and conversion into any permitted for¬

or

Corporation

55 W. 13th St., New York

of

City,

Noma

NOT

holder

of

and
any

when
Bearer/

Company a copy of the
report for the fiscal year.
HOLDERS
SHOULD
THAT COUPON NO.

WARRANT

NOTE

BY BOARD

AVAILABLE

request

on

the

the

annual

BEARER

PARTICULARLY
70 WAS

will
to

of

RESOLUTION DECLARED
DIVIDEND PURPOSES

FOR

BUT WAR

half

cents

the

Com¬

Stock, payable December

20, 1948 to stockholders of

rec¬

ord at the close of business De¬
cember

A1Financial
New

and

1948.

Company payable December 1,

Thirty-seven and
(371/2(') a share

or clerical
position with a
secondary. Married veteran.
Lynn Zimmerman, HA 4-9498

and

to work.

<?ne
.

in stride

WANTED

Interested

investment

negotiable
Royal-

The

duction,

The Board of Directors has de¬
clared a dividend of 250 a share

clared

1948.

®of

by cheque mailed from
Company on the 30th day

with

Delaware

ing .today (November 4th) de¬

Economist, Junior (25)
B.

also

are

purpose

of

The Board of Directors of Noma

*

and

A.

1

■

Branch,

payment to-, shareholders of record at
business on the 15th day of Novem¬

19.8,

Shareholders

Electric Corporation at

to

coupons

made

are

H.

was a

SITUATION

CANADA

Canada.

of

Campbell
&

OF

Streets

1,

at
any
branch
Canada
in
Canada.)

accompany

Locke

J.

BANK

Cnurch

cnarge

of

payment

Goddard & Co., Inc., 85 Devon¬
shire
Street.
In
the
past Mr.

search,

take

per

paid December 10, 194S

to stockholders of record

H.—Edwin
with

and

convenience

imposed

Chronicle)

Charles

connected

now

pay-

close ol

the

_

President.

to

be

period.

Eighth

Quarterly Dividend

EDWARD L.

With J. H. Goddard & Co.

will

16th

Chronicle)

BOSTON, MASS.—Gordon K.
White has become associated with

ROYAL

Registered

IOWA SOUTHERN

Financial

has

currency

1st

Toronto

The

situation.

The

dividend of

a

same

of
the Company of the 1929
presentation and delivery of coupons

King

shown

White With Draper, Sears

the

tne

at:

withheld

the

that

and

Warrants

Secretary

COLUMBIAN

given that
in Canadian

snare

alter

upon

71

of

that

prepared

are

issue
No.

the firms involved will be around
home diggings to take care

ber

they

Share

be

(For

issue, it's a certainty that
enough of the working forces of

Rather, it is obvious from
talking to some of their num¬
that

per
or

THE

1948.

SHAREHOLDERS AND THE
OF SHAKE WARRANTS

hereby

declared
on

Bank

IBA's

through the

run

But with

in

time.

is

day of December, 1948,
in respect of tne shares
specified in any Bearer

stock¬

will

cenls

been

RICHARD ROLLINS
November 3,

the

category, and they are legion it
appears, the bankers are not of a
mind

25

ab.e

mailed,.

disconcerting

at

.happens

so

Dec. 5 and

on

fret.

underwriters,

however, perhaps for the

like

NOTICE

Company,

here

Straw

turned out.
But

declared

the Common Stock of the

TO

HOLDERS

one-half

were

Toronto 1, Ontario
NOTICE

ex¬

to some of the members of the
Investment Bankers Association
who had counted on
being in

ATKINSON, Treasurer

Imperial Oil Limited

a

the

in

W.

THE ATLANTIC REFINING CO.

ber,

change

to stock¬

record

November S, 1948

pected.
The

of

November 30, 1948.
The stock transfer books
will remain open.

ahead

been

quarterly divi¬

payable December 15, 1948,

pany,

Without

which

'

.

dend of 75(! per share has'
been declared on the
Cap¬
ital Stock of this Com-

Dec.

on

week

a

ALEXANDER, Secretary.

COMPANY
A regular

DIVIDEND

November

deben¬

H.

1948.

lion oil

holders of record at the close of business

Crossing Up the Bankers

were

issue of any consequence, $4,000,000

Co.,

no

that

period

the

Sr.,

Silowan,

payable December

American-Telephone &* Tele¬
graph Co.'s huge • offering, $150,-

5,

B,

to

-

(Special

current

D.

November

Chronicle)

MASS. —Robert

has

isfied to let the situation level off

The

in

Hotel Touraine.

on

mortgage bonds due in 1978.

Manufacturing

Company

*

At

day, unless plans

Singer

Board of Directors has declared a
quar¬
terly dividend of $1.50 per share and an
extradividend of $1.50 per share payable on
December
14, 1948 to stockholders of record at the
close
of business on November
23, 1948.
>

'

com¬

The third issue up for bids that

H,:

.

with

The

With Peter Silowan Co.

mar¬

pany.

(Special, to

dertakings.

•

The

offices at

New

and

connected

now

DIVIDEND NOTICES

securities business.

large

$14,508,000 new bonds of the
York
Bay
Railroad
Co.,
guaranteed both as to principal

Chronicle)

Street.
He was formerly
duPont, Homsey Co.

with

Chronicle)

290 Western Avenue to
engage
a

Financial

MASS.—William

onshire

associated

opened

The

Clayton Securities Corp., 82 Dev¬

of C. P.

name

was

WESTFIELD, MASS.—Gather in
L.

signifi-

cance

to

BOSTON,

Bell Telephone Co.'s
$60,000,000 of new 31-year debentures on
which
tenders
will
be
opened

and

C. L. O'Brien in Westfield

Slate

on

Co.

to

BOSTON,
Mahoney is

investment busi¬

own

Clayton Securities.

(Special

con¬

their

And above all, let all Americans be dissuaded from
letting pleas¬
ant rationalizations and complacency over the election's true

1

With

P.

with Schirmer, Atherton & Co.

(Special

ern

convention

Mr.

in the Financial News Index in

1947,

Nelson &

common.

Among the bond issues slated
for bids the
largest is Northwest¬

nation's

i

105

Co.'s

and the potential
350,000

common

democracy which
production

our

the

Wall. Street Liberal—particularly in case our stock
I market does not collapse during the coming months and
you are
!
thereby made happy—bear in mind that British stock prices during
the period of the concurrent socialization and Fabianization rose from
•

Edison

formerly

under the firm

ness

Electric
common;

195,000
shares; Virginia Electric Light &
Co.'s
720,000
shares
of

lowering rent ceilings by 15%.).

<

^rewards

&

of

Power

seldom that

5

MASS.—Charles

Mr. Nelson

in Los An¬

geles and San Francisco.

ket

was

by the

was

people's consent, that Socialism is not communism, that
loved freedom and was not a revolutionary, etc.
Remember that,

Gas

shares

Railroad Co. is scheduled to

Remember, Mr. American Liberal, that Britain's Fabianism
ushered in with

Indiana

675,000

!

Chronicle)

groups in the running.
On the same day Pennsylvania

The Lesson for the American

.

Financial

,

'

the "Economist" of London in the early days of
Britain's Labor administration, under the
soothing caption, "Old
Wine in Old Bottles," editorialized:

The

ducted his

not, be delayed, include

may

Southern

Attlee's, "Conservatism"—The 1945 Pre-View

an

Stock deals which
could, though

-

•

they

Similarly,

to

BOSTON,

which

en

,.n

(Special

Street.

only carping diehards could challenge."

•

Nelson With J. P. Marto

warming up on the
the stove, several of,

,

,

Company with offices

sever¬

projects

scheduled

from the people that

E. W. Daniels Dirs.

Chronicle)

been

equity

them

reasonable."

Financial

have

big

,

would be "limited

.The

Nelson has become associated with
J. P. Marto & Co., 30 Federal

al

of

Two. months later Lord Catto, Governor of the Bank of England,
City that any; steps toward the Bank's nationalization

to

VE. W. Daniels, Chairman of the
CHICAGO,
ILL. 7—Robert
K. board announced
that, at a meet¬
Wallace has
become
associated ing of the board; of
directors of
with Merrill Lynch,
Pierce, Fen- Harbor Plywood Corp. held
yes¬
ner
&
Beane, Board of Trade terday., E. J, Evans had
been
Building. He was formerly with elected to lill a
vacancy on the
Ci J.
Devine &
Co., Inc., and board.
Mr. Evans
is Chairman
Harris Hall & Col
of the board of First

equities, but selling has

back

\

(Special

been limited to those
categories.

"This moderate reaction to the prospect
of a peaceable Socialist
revolution is a token of the
fact that the Labor party has reached
sober maturity and has received a mandate

reassured the

i

California

True

ATTLEE ACTS

"Two weeks after Labor

'

spite
stock

the

A

"FIRST

1

High Grades Ignore Stocks

full-fledged national political party, has
a secure Congressional
majority."
j-

a

Wallace With Merrill Lynch

right along."

(Continued from page 5)

attained the status of

.say

have

we

positions
theyv develop
our

REQUIRED TO BE SURRENDERED
OF
THE
ISSUANCE
OF
RIGHTS
IN
CONNECTION " WITH THE RE¬
CENT RAT,is
THE COMPANY'S HOLDINGS
IN INTERNATIONAL PETROLEUM COMPANY,
LUVIITED
AND
TN
CONSEQUENCE COUPON
NO. 71 IS DESIGNATED FOR THE PURPOSE
AS

OF

EVIDENCE

THIS

6, 1948.

By

Henri Sadacca

COLIN
56

D,

Church

November

Order of

CRICHTON.

the

Board,

General Secretary.

;

Street,

President
Toronto

,

DIVIDEND.

1,

Ontario,

3rd,

1948.

'

;4

48

THE COMMERCIAL

(2000)

FINANCIAL

&

CHRONICLE

Thursday, November 11, 1948
much

BUSINESS BUZZ

as

•

first
on
the
foreign
situation; emphasize this with the
old
gag
of "first things first."

•

•

Stall

Behind-the-Scene

the

,

rather spectacular paradoxes

This is not

cumstances involved in the election.

merely

The first of these is that President Truman may

but

forced

find himself all

to

-manded

and

spending, controls,
Of
course
by no

more

reforms.

flight of imagination may he be
expected to become the spokes¬

'

less, he
iFIs

,

inevitably find that

may

he

who

must

often, "take it

;

From

has

Neverthe¬

of. conservatives.

man

say,

and

go

slow."

easy;

say

Capitol Hill the President
said

"no"

heard

his

to

left-

wing proposals. Yet, henceforth
from Capitol Hill will come the
cry for action, and action now,

;

[on three or four broad fronts at
; least,

maybe_on

The

demand

for

controls,
in

ment

the

dozen fronts.
spending,

a

for

more

for

new

govern¬

more

business will

from

come

Congressional majority,

flush with victory, full of a sense
^of power, and impatient to enact

the proposals of the Left

i

of

fiction

apparent

the

will be thrown
and. the

out between

the

time

clined

and

as

he

a

-

infer, he is not for. any important
project for which he has com¬
mitted himself.
Many irrespon¬
sible

statements

issuing
Truman
do.

of

election

other

a

is

stances

President toward a.cautious at¬

It

i

titude are those which relate to
Mr.
Truman's
ap¬
Congress.

fear

*

*.

u

.

"The

other likely paradox is
that it is quite possible to ex¬
of

Congress

in

greater

terms

to

of

crude

no

the

of

large.

,

Indeed,

political

had

The

beating

which

the

sult—for

Hepublican. Congress—with

a

suppression

one

the

most

important change in
Mr. Truman's position is that for
the first time he acquires de jure
mi all-around responsibility. Un¬
der

U.

the

Truman
not

S,

Constitution,

heretofore

President

the

at

Mr.

and

was

was

time.

same

of

the

antagonism

Democrats,

Republicans

and

might

a

a

proves to

State. But he was often at

tally / conflicting

Left—but

which

in

practice

be too brittle to endure

long.
Mr. Truman's present following,
allured as it was by fundamen¬
.

commitments,

acquire the real backing in and
out of Congress his constitutional
position would seem to entitle

also is brittle. If the reports from
the provinces are correct, much

him

farm

to.

He

had

hostile

the

Con¬

gress.

places him
spot.

on

To

was

the

leadership

the

ignored
United

leadership
entirely differ¬

an

fimalL element
'

extent

all

over

of

his

the

as

had

he

but

party

a

and

President

States,

he

of

in

was

a

position of semi-irresponsibility
lor national policy. He operated
pretty much, in his variegated

legislative program, as an irre¬
sponsible political leader throw¬

ing out many lines to catch the
voting fish.
The position Mr. Truman

as

the

shell

of

power,

is

opposes, will have
with

effect

a

view

upon

now

country,

only

to

its

welfare

the

of

the

welfare

of

political party that he heads.
;

f-jf ♦"* #.-# #.!• ffir-

Jfff*

horse-backing of

JJ* ft# M * *

**

'*1*

•* "

'




* f*. W 4T, "f

to

farm

ones,

found

ing the supports for the long-run
good'of'tile farmers, found no
favor

with

■

their

members.
.

''

*

*if

,

n

dues-paying

/

-

if

if

instability of the Con¬
gressional following etches out
more closely in a bath of par¬
issues.

"farmer

If

the

will

not

large

returns

to

farmers

probably not

all

to

both

consumers

ducers—
seem

he

or

^

at

of

organized

to

on

for

many

got

and

away

it

one.

the

foremost

By

are

op¬

labor

and

Taft-Hartley. This goes

of

Democrats

of

the

the

new-born

farm

belt,

as

for hold-over Congress¬

as

men.

not

fundamentally

Finally there is that tough one,
rights, and coupled with it,
the corollary but nevertheless im¬
portant question of where the
civil

the

law.

there

if

tiveness

on

is

prob-

liked
by the National Association of
bably

be

to

wants

even

Manufacturers, whom

whipped
paign.

so

harshly in his cam¬
wants

He

This

is

the

he

build

to

and

strong Democratic party

a

for 1952, even if he doesn't run.

to

restoration

the

profits

excess

Finance is

tax

pro¬

Senator Georges

corporation

i

n c o m e •

taxes, if necessary, look at this
distance

like

a

doesn't

he

And

sticking

enjoy

Saudi Arabian

better

bet.

Mining Syn.

South Jersey

Gas

Belle Isle Corp.
U. S.

Finishing

Dorset Fabrics
Lonsdale Co.

pins into flies.

Soya Corp.

Nobody but the cocky boys be¬
lieve

write off the South. A determined

does

get
civil
rights
enacted,
par¬
ticularly a national FEPC law, the
scarcely scabbed wound of the

(perhaps not on some lesser civil
rights
proposals)
would
not
merely recreate, as in any case
it
will
tend
to
reappear,
the

southern

southern

lead

a

determined

revolt

will

drive

break

to

wide

open.

The cockier lefties
to

inclined

are

"so what, we-don't need
'em.
We 'licked,„ them and 'got
along.... without >: them." The high
and handsome boys are going to
say,

scream'
as

the

at

outset

when,
it has been reported .Mr. Tru-^
very

favors doing,: it is proposed
to let the southerners acquire the

important

committee

which
they
seniority.
What

to

are

posts

entitled

the

his

do

about

the

South

term.

one

difficulties

He

of

wants to put

the light in the window so they
will

drive

come

Truman

for

-

back from the South.

can

the

law

Deal

New

era,

it

m.s.wien&co.
ESTABLISHED
Members N.

Y.

Security

40 Exchange PL, N. Y. 5

1919

Dealers Ass'n

HA. 2-8780

Teletype N. Y. 1-1397

formalize that alliance,
it, and clear the way for
of parties.

may even

cement
an

entire realignment
If

Mr.

shoves

Truman

down

throat

he

the

element of his support,

grudging

civil

Congressional
will splinter a large

rights

even

Same
repeal. Same

support.

-Taft-Hartley

if

for
for

Trading Markets:

:

.

Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B

price control.
'

v.

if

if

the circumstances are
now sized up, the almost conven¬
tional pattern forced upon
Mr.
Truman

versial

as

is

to

issues.

delay

the

contro¬

Maybe some face-

saving amendments to Taft-Hart¬
ley.

Maybe something

HAnover 2-0050

Spokane Portland Cement
LERNER & CO.
/nMilment Securities

10 Post Office

Square, Boston 9, Mass.

Telephone Hubbard 1990

Teletype BS 69

(if not as

Teletype—NY 1-971
Firm

Trading Markets

FOREIGN SECURITIES

pro¬

to

conservative

northern

of

afford

FEPC

national

a

Hence,

greatest

new

to

under

presents Mr. Truman with
of

Mr.

alliance

ill, Thompson & Co., Inc.

All Issues

Market,

and Situations for Dealers

one

of

r.AK. MARKS & r.O. 1"C.

the

120 Broadway, New York

51

FOREIGN SECURITIES
f

the

much

scale. He wants

any

to be liked by people. He

granted, as the professionals as¬
sert, that if Mr. Trumarl actually

if

repeal of the

under

he

labor unions.
*

than

is
capable of sustained vindicthat

South will go. Let it be taken for

with it.

desires

his

from

in

predecessor

leave

would

Yet price control is now
of

late

Congress

farmers

the

fers

producing

least

Truman

premature, however,

too

the

ate

and large Mr. Truman dif¬

By

the

Yet

that

for

go

sold

so

was

quart'—I said 'quote'!"

con¬

be

one.

members"

and

well

that

with

man

The

ticular

will

promptly

man

fronted

compre¬

organization

that their realistic idea of lower¬

Then

This broad circumstance makes

for caution. The

this

In

considerable

interest
the

the

but the

of

leaders," the principal

to be selected

not

that

is

a

demand of the unions. Mr. Tru¬

Truman, in his former position
of irresponsibility, could appeal

really backs and what he really

.

philosophic

lower

party.
Truman

it

they would

supports.

'Go get

groups, if they worked. But Mr.

his responsibility and that of his

what Mr.

that

composed of dopes in opposing
price control, because the legis¬
lators knew that controls meant

Or, if he fails to achieve his
legislative objectives, there is
no practical political alibi. It is

Hence

the

90%

connection
hend

the

to

farmers

-will. Congress

thing he opposes, he may if he
tries hard enough, have his way.

;

their

in

that price control will not lower
food prices, farmers will fear it

look. In everything Mr. Truman
backs strongly, and in every-

/

of

swing

attributed

was

frightened by fear of
lowered supports, they certainly
Will not go for price control. No
matter how it may be argued

as

of immense fundamental impor¬
tance in gauging the future out¬

,

belt

were

now

occupies, with the substance
well

Democratic

lose

if

if

Mr. Truman's de jure
ent

the

fear
if

lost

of

is

Higher

posed

transitory basis is an amor¬
phous farmer-labor party — a
farmer-labor party which has al¬
ways been the
idealistic aim of
on

discharged the duties of office,
particularly the paramount re¬
sponsibility of conducting foreign
affairs through the Secretary of
loss

tip

What Mr. Truman has achieved

He legally occupied the office and

to

the

even

show

little punch drunk at first.

the

a

self-

of his most bitter critics among

exception to be mentioned later.

The

the

time—in

a

expenditures might arifee

Mr

note that the Chairman of Sen¬

did not say

"I

Presi¬

dent gave his opponents will re¬

him

with

of

even

time.

a

Gov. Dewey been elected Presi¬
carried

GOP Congress, something
N!ew
Deal
program

posal of 1948. In this connection

management

dent

and

of

Con¬

the

will not diminish it for

Left

been

than it might have

;
;

be

command

is

gress

pect the net result of the 1949
session

the;

t

parent

*

.

Dewey. This threatens the
possibility of increased taxes.
'

»

; .y-

*

Gov.

circum¬

impel

a

also would have been
The big difference, net,
probably two to three billion

'more conservative Congress.

may

on

-mild

a

'stymied by the former, relatively

which

off

go

^

*

under

The

with

infatuated

will

Mr. Dewey had been ejected

more

discounted.

be

must

and

probably
adopted.

be

the things Mr.
have the Congress

will

These

will

and

are

and

V

with

all

to

as

•

if

^

in¬

are

power

people who will fear

are

has become

tangent. ' ;

be doubted that, by as much
grimace, the President will

people

hope that

in

suspect.

will temper Mr. Truman

himself
-

He

which

enlarge his character than

there
:

re¬

is

to

now

more

to

success

really settles down to work. Ob¬
viously Mr. Truman cannot tell
of the pressure groups that
anything which he promised, he is
not 100%enthusiastic about It

and
new.

here

anyone

However,

Ix

party

have other ideas,

position

a

any

may

like

notions,

something

scarcely
4

now

the

MIGHT

Truman

fancy

Democratic

might

Congress

new

Mr.

some

building
itl.fl.

which

of

breaking up the old backing for

»

is gone. At this point
it is necessary to distinguish be¬
tween solid fact and the great

long

so

have

1948, also

deal

delineation

a

operate.

WVCSTflEUT BftOKfRS

has

forecast. This is

a

frame in which Mr. Truman will

MAC BURP* SOW

nearly reverse the<§>played in the past the political campaign is gone.
The
casual
throwing out of a
year or so. He has been the ag¬
gressive advocate of the measures legislative program of the mag¬
of the Left. It was he who de- nitude
Mr.
Truman
sought
in
he

role

controversial

meanwhile. Likewise

WASHINGTON, D. C.—Some of the older political heads see two
emerging as a direct result of the cir¬

'

.

the

on

things
something in
way of
a
relatively "mild"
New Deal—housing, Federal aid
to education, maybe medical aid.
This is a suggestive
list, not a
summary of possibilities.

And You

from (be Nation'
u'aCatftal

Board

of credit con¬
trol in lieu of price control. Con¬
way

centrate

on

«

the c Reserve

*

wants) in the

matter

*

of

Taft-Hartley
most

50 Brood Street

SPECIALISTS

,

New York 4, N. Y.

*

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

strident

•

Tel. REctor 2-2020

Tele. NY 1 -2660