The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ESTABLISHED1839
Reg. U. B. Pat. Office
Volume
168
Number 4752
Needed: A Program
For Strengthening
New
*
Should Government Bonds Be
By ALFRED P. SLOAN, JR.*
General Motors Corp.
by
supported
forces
future,
Mr. Sloan urges managers, edu¬
cators and government to work
toward
synthetic
strengthening
our
control power
j The fundamental question be¬
fore the leadership of the world
today is: Has it the will, the power
and
the understanding to rebuild
'
i
•
tion
of
adequate
banks.
Nor
ing
should
R
liv¬
before
cumb
almost
Alfred P. Sloan, Jr.
d
social
forces?
task before
to
country is to
continue
to
so as
lies,
as
you
know,
the
problem of
Claude L. Benner
(Continued
on
page
inflation,
ing prices
and
of interest
rates.
this
demonstrate
econ¬
It under¬
omy.
fundamental
own
economic affairs
manage our
whole
and
The
our
it
on
will affect our
of
structive
e
the
ris¬
general level
,
,
The Federal Reserve authorities
have sounded warnings about the
47)
dangers
inflation
of
Everyone
for
over
a
fears that prices
^Opening address by Mr. Sloan
year.
President of the Economic Club
as
may go still higher.
Our money
supply is increasing and is in ex-
of
New
York,
New
City,
York
,(Continued
Nov. 16, 1948.
-'An
the
by
the
tinued
on
page 32)
Bankers
of
12 months—recession
have
sur¬
We See It
"
these
Prices Will (Will Not) Come Down
to
We
are now entering a period of four years—or at the
least two years—in which it has been promised that
prices will come down and that prices will not come down.
Of course, pledges have not been made in such bluntly con¬
tradictory terms as this, but the net effect of what has been
said comes very nearly if not fully to being the equivalent
of it. The President again and again and again has asserted
that we should have price control, and that if we had given
him power to exercise these controls prices would never
have reached the level of today.
Since the elections, one
of those unofficial, official "leaks" out of the White House
has asserted that the President would give "business" an
opportunity to reduce prices — probably appeal officially to
"business" to reduce prices—before he again demands of a
Congress, which his party will dominate, a law giviiig him
the power to go to work in his own way to get the cost of
living down.
very
At the
the
same
time, the farmer
(Continued
seems
page
on
that
'Wr'
I results-
do not require
that all pre¬
vious
conclu¬
sions
in
>
/t>
""'00'
re-
gard to the
business
out-
;
look
-re-
|
be
considered.
The best
to
do
way
Prof. S. H. Slichter
this, I
think, is to
analyze the business outlook as it
appeared before the election and
-
(Continued
.
on page
42)
*An
address by Dr. Slichter at
Annual Convention of the
40th
Grocery Manufacturers of Amer¬
ica, New York City, Nov.
16,
1948.
to feel assured
36)
State and
Municipal
>
'
be
foolish
Jersey
.
It
would
pretend
Association^
con-^
almost
everyone.
"V / /
boom?
a
high level of production and employment at least until the
and probably longer.
The results of the election,
-<$>
however,
7 "
7
prised
As
or
middle of next year
EDITORIAL
by Mr. Benner at
Convention
or
Omaha, Neb., Nov. 11, 1948.
•
i
address
Annual
Nebraska
State of
New
Reserve
be determined
support
for
decision
taken
irre¬
sistible
Federal
term
-
The ulti¬
mate
enormous
pressure
or
What is ahead for the next six
Two weeks ago it seemed fairly clear that the prospect was
£<$•—-r
v
fundamental
inst the
ga
of
member
long-term
they
one.
done
a
r
they.
This
problem is a
this
be
public works, generous social services and defense outlays to
more production, which can be had
only by capital-saving
inventions and more rapid technical progress. Predicts fourth round
; of wage increases, more government spending and higher taxes..
stimulate
bonds
the
can
e
substitute
the
demagogue?
And
s
securities
de¬
of
e
short:
the
spair
to
the
enticing ap¬
peals
decision
to
suc¬
in
the
either
Banks' ability
.
standards
people
for
reserves
-
*
tolerant
for
abandoned.
were
the Government bond
banking problem,
It is not a ques¬
of
terms
if bond support policy
The problem of Federal Reserve
support of
market is more than a technical
economics
its
in
'
despite plausible reasoning that con¬
produce recession are here, heavy government
expenditures and larger outlays of businss and consumers are likely
to maintain level of economic activity.
Foresees greater demand
ing government bonds is unfair, and denies removing of peg on
government bond prices would impair bank and insurance sol¬
vency.
Contends Federal Reserve could restore its prewar credit
and rising living standards.
■\
Professor Slichter points out
excess of current
savings, and urges this be checked
by permitting interest rates to rise and prices drop. Says criticism
against banks, life insurance and other financial institutions for sell¬
econ¬
University Professor, Harvard University
ditions needed to
tal demands in
our
sustain high employment
omy to
By SUMNER H. SLICHTER*
Lamont
Claiming Federal Reserve bond support program is fostering infla¬
tion, Mr. Benner lays rapid expansion of bank credit to heavy capi¬
I In pointing out our prosperity is
ithat breed danger to
or
Vice-President, Continental American Life Insurance Company
Chairman of the Board,
Copy
a
Business Outlook
By CLAUDE L. BENNER*
*
,
Price 30 Cents
Supported at Present Prices?
Our Economy
I
York, N. Y., Thursday, November 18, 1948
Highway Bonds
!
Due,
•
July
1963-M
1,
'
R. H. Johnson & Co.
;
„
'
1927
yield
to
1.60%—1.70%
INVESTMENT SECURITIES
64 Wall Street, New
White,Weld&Co.
BOSTON
Members New York Stock
Troy
Exchange
Street, New York 5
Chicago Philadelphia
London
Providence
Bond
York S
THE NATIONAL CITY BANK
PHILADELPHIA
Albany
Harrisburg
40 Wall
Boston
Bonds-
'
Established
Prices
Buffalo
Syracuse
J
Scran ton
Wilkes-Barre
OF NEW YORK
HJUtT SMITH & CO.
52 WILLIAM ST., N. V. 5
Bell
Springfield
Woonsocket
Washington, D. C.
Teletype: NY 1-708
New York
NATIONAL BANE
We
have
prepared
memorandum
the
Government
Head
Office:
26,
London,
Branches
in
Colony,
Subscribed
Paid-Up
Reserve
The
Bar.*
Underwriters and
Bishopsgate,
E. C.
Zanzibar
Capital
Capital
Copy
OTIS & CO.
*
£2,500,000
every
description
undertaken
Established
„
of
THE
CITY OF NEW YORK
upon
New York
Cincinnati
-
Chicago
Columbus
GRPORATIOT*
1896
40
Exchange Place, New York 5, N.Y.
12C Broadway, New York 5
Denver
Buffalo
Light Co.
v
Telephone RBctor 2-7340
IRA HAUPT & CO.
Members
New
York
Stock
Exchange
and other Principal Exchangee
Members New York Stock Exchange
Toledo
&
request
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Est.
(Incorporated)
Wisconsin Power
BONDS & STOCKS
SUTRO BROS. & CO.
1899
CLEVELAND
banking and exchange business
Trusteeships and Executorships
also
OF
COMMON
and
Corporate Securities
£4,000,000
1_£2,000,000
Fund
conducts
NATIONAL BANK
Railroad Co.
Distributors of Municipal
India, Burma. Ceylon, Kenya
Kericho, Kenva, and Aden
and
Toronto
CANADIAN
Missouri Pacific
in
Kenya Colony and Uganda
<
Montreal
a
on
of INDIA. LIMITED
to
1-395
Connect
Buenos Aire*
Amsterdam
Bankers
Wires
THE CHASE
HAnovcr 2-OMO
Teletype NY
Private
Bond Dept.
Department
111
Broadway, N. Y. •
WOrth 4-6000
Bell Syicem
Teletype NY 1-702-3
Boston
Teletype NY 1-2706
Telephones Enterprise 1820
2
THE
(2062)
&
FINANCIAL^ CHRONICLE
Thursday, November 18, 1948
Fort Knox Gold Not Worthless
Polaroid Corp.
Alabama &
By ROY GARIS
Interstate Power
-
COMMERCIAL
Professor of Economics, University
of Southern California
6% Debenture Escrow Certificates
Dr. Garis reviews recent attacks
economists and
*
Stock
Common
BOUGHT
—
SOLD
—
QUOTED
New York Hanseatic
Corporation
On
120 Broadway, New York 5
amounted to
Teletype NY I -583
BArclay 7-5660
hind
on
points out their fallacies.
gold certificates.
,
A total of $13,429,000,000 of these gold certificates
Federal
Request
on
Re¬
outstanding on
June
Prospectus
30, 1948.
the
On
date
same
Members
Federal
York
Stock
York
Curb
Exchange
BROADWAY, NEW YORK 5
of
2-7815
Tel. REctor
Re¬
In
to
in
L.
Roy
gold
Garis
required
by
law
-
Joseph McManus & Co.
Members
New York Slock
Exchange
New York Curb
Exchange
After
setting forth criticisms of
the gold standard by D. H. Robert¬
son,
R. G. Hawtrey and Lord
Keynes — all British — Professor
G.
Halm
N.
DIgby 4-3122
^ew York 6 '
Tele. NY 1-1610
TRADING MARKETS IN;
Central States Elec.—Com.
Copper Canyon Mining
Standard Gas & Eiec.
Gaspe Oil Ventures
General
Tin
Inv.
we
Members Nat'l Ats'n of Securities Dealers, I nr.
1
William
St.,
Y. C, 5, N. Y.
N.
Teletype NY 1-1055
in
contraction
that "unlocked"
serves
could
watching
we
serve
as
cover
re¬
fund
a
of
are puzzled as
laboriously from
extract gold
in
H.
"the
us,
meaning for
the
nation."
any
Such
that the
assumes
gold
is without value to
Fort Knox
at
have
fifth, but the fact
no
in
statement
a
would
Knox
a
whereas the United States had
such
supply of free gold to
lend to England, virtually all of it
being pledged, as stated above, as
reserves behind
our
money and
no
credit.
It had
value
no
to
but
us
it
would have had great value to
Britain!
'
')
The
gold
value
Fort
has
Knox
a
$35 per fine ounce, al¬
this British writer con¬
though
tends that
no
at
of
treat it
we
value.
if it has
as
He stated, "This is
cer¬
tainly the effect which the steril¬
ization of
the
produces.
It
gold in Fort Knox
is bad business."5
Such statements
confusion
are
exists
that
beliefs that
roneous
typical of the
and
the
held
are
er¬
con¬
state
of
"anarchy
in
Keynes stated that under
the gold standard we lock away a
part,
sometimes
major
the
but for the entire world.
Professor
A.
G,
of the
Common
of the
monetary gold in the United
States' is
Knox
concentrated
at
Fort
he believes that everything
gold
In
his
recent
text
"The
book
Economics,"5 Profes¬
sor
Lorie Tarshis, a disciple of
Lord Keynes, states, "It is hard
to see. why any changes should
'
Bought and Sold
Standard Oil Ky.
result if gold reserves were done
Bought and Sold
with and if the Federal Re7
serve bank requirements were
reT
pealed.
The use of gold in the
away
present-day
m BANKERS BOND ££[
Incorporated
Mr.
economy
is somewhat
absurd."
C.
disappeared
the
of
instructor
Calsoyas,
loss
and
As
a
result of this
Long Distance 238-9
Bell Tele. LS 186
1 Halm
The
2,
p.
5
1856
p.
Keynes, "A Treatise
on
phenomenon he
in South Africa
or
the
1947,-
far
that
as
to submit the
unmined
proposition
its amount
All
that
were
would
be
gold
the
The
In
pp.
385.
American
SUGAR
j
Raw—Refined—Liquid
!
Exports—I m ports—Fu tures
that "well before the
World
DIgby
4-2727
could
War, it
be
not
re¬
.....
author
questions
these
of
the
ac¬
expressions
oi
Royal Bank of Scotland
Incorporated by Royal Charter 1727
HEAD
*
the
the
years
Federal
Reserve
transmitted
exchange
to
banks
3
49
64 Neiv Bond Street, W. 1
TOTAL ASSETS
time in large "excess" reserves.
Professor Whittlesly points out
that
indicate
to
seem
"excess"
word
function."
reaches
the
these
re¬
that
Banks:
Associated
very
However,
conclusion
£153,656,759
would,
performing "no
were
Smithfield, E. C. 1
Charing Cross, S. W. 1
Burlington Gardens, W. 1
certificates.
This increase in the gold stocks of
the United States- resulted at that
the
OFFICES:
Bishopsgate, E. C. 2
West
8
in
gold
throughout Scotland
LONDON
be
Treasury
the
for
to
OFFICE—Edinburgh
Branches
1933 to 1941 gold
reserves of the Treasury, "buried"
at Fort Knox, increased approxi¬
mately $16 billion. For, under the
law all gold receipts had to be
deposited by commercial banks in
Glyn
he
Williams
Mills
Co.
&
Deacon's
Bank, Ltd.
they
funds that should be thougiit
"as
funds
awaiting a more
profitable application."5 It would
to
seem
ment
be clear
that
its
from this
author
state¬
OLD
recognizes
that.the gold in the Treasury but
"buried"
only
future
no
for
credit
Common
One
system,
if
of
in
money
is
877,500
structures. Unquestionably it is in
part
a
more
is
psychological factor.
than
that.
The
ber
pro¬
prop¬
stock
common
as
31,
1947,
earned
of
$20.22.
share
share
100
shar*
n°r
per
$2.76
But
knowl¬
coal
distributing
nation.
shares of
value
Current
it
fuel
the
out¬
standing.
credit
and
Stock
bituminous
best
and
erties- in
the confidence of the
our
the
ducing
Book
public
COAL
our
reason.
to maintain
BEN
CORPORATION
not
potential
great
reserves
as
and
other
had
Knox
but
value,
monetary
for
Fort
at
present
dividend
Decem¬
^
in
1947.
payment
$0.15
estimated
coal
reserves
is
a
it
as
icscrves
be—that
may
are
major factor in
53
being kept
the
oil
producing
of confidence in the Ameri¬
If
the
(Continued
on
on
Market
10%
mainte¬
Descriptive
dollar.
wells.
Approximate
gold
at
page
brochure
interested
30)
available
Fort
COMSTOCK & CO.
CHICAGO 4, ILL.
8
Whittlesly, "Principles and Practices
of Money and
Banking." (1948). Macmillan Co., p. 28.
9 Ibid., p. 135.
231
So. LaSalle St.
DEarborn 2-1501
Teletype
CG
955
Markets For:
New
York
New
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LOS
to
dealers.
Members
CANADIAN
per
quarterly.
years'
owned.
edge—vague
the legal
can
Committee
5, N. Y.
j
j
common
Knox,
nance
National
STREET
YORK
value of the gold "buried" at Fort
the
6 Economists'
''
j
opinion.
However, they do raise
the question of the function and
the
<
offices
text he expresses
.
curacy
that
Monetary Policy, "Monetary Notes," Vol.
7, No. 8. August, 1947.
7 Hart,
"Money, Debt and Economic
Activity."
(1948).
Prentice-Hall,
Inc.,
WALL
NEW
f
Second
standard
vived."
pay
the
99
de-
no
of
been
mined,
branch
our
evident that the international
is to pretend
has
toward
was
necessary
p.
We Maintain
any¬
gold could be used
once
determined.
335-336.
H. Hentz & Co.
or
else
merely to bury it
again at Fort Knox. He even goes
Money." Vol.
Co.,
ques¬
mining gold
Canada
where
so
itself,
Now the purpose of reserves
raises
tion of the wisdom of
265.
Houghton-Mifflin
the
to
LAMB0RN & CO., Inc.
gold."8 On page
to
same
the opinion
gold
Theory" .(1946).
205.
2 Robertson, "Money,"
p. 155.
3 Hawtrey, "Trade Depression and
Way Out.'' 1931, p. 18.
4
Established
"Monetary
Blakiston Co.,
kept
psychological
1st
Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
pro¬
substance.'
wires
R.
end
secret from the public.
where it is.
D.
suddenly
vided the few persons who would
know
return
655 of the
were
"more and more strictly a psycho¬
logical phenomenon.'"? Since most
its
NY 1-1557
Mobile, Ala.
Direct
suspicion that
found
world
sire to
of
tended
lost
G.
standard but with
passing of
has
would go on undisturbed if all this
be used."4
Elements of
Stock
"The
to become
gold
for
the end of <he Second World War,
not only without an international
time
it
never
St, New York 4, N. Y.
Whittlesly, a
critic of the gold standard, states.
opinion that with the
part of the gold reserves "so that
Ashland Oil & Refining Co.
somehow
useful
is
Hart
"cause
Professor
serves
world credit control."3
can
has
that
a
"let
and
going through the motions
operating a gold system that
rendering service as the standard
of value not only for our economy
more
a
metal, originally
chosen as money because it tic¬
kled the fancy of savages."2
R. G. Hawtrey calls the gold
large
by
of
orderly
only to put
yellow
standard
sup-*
them go
are
different place."*
Robertson belittles gold
somewhat
a
Lord
writer
we
cerning the gold at Fort Knox.
The gold is not sterilized but is
the bowels of the earth
it
Fort
have
would
He
and
us
British
a
a
highest
international
liquidity.
"Then, but only then, could it be
suggested that gold production is
less foolish than it may seem to
observers
from
another
planet
who; through huge telescopes, are
Montgomery St., Jersey City 2, N. J,
TeLDI 4-2190
credit
argues
as
STEIN & COMPANY
re¬
cover
country which is losing gold.
D.
Soya Corp.
that
indispensable only if
want to achieve strictly auto¬
fashion, and in
Tybor Stores
27
states
are
matic
39 Broadway,
is its function?
What
Knox?
bil¬
Fort
at
at
decreased
individual
is this $23.5
"buried"
gold
serves
Chicago Slock Exchange
Reserve banks.
what value
in
(specie),
hoard
is
Federal
lion
effect
billion
(identity unknown), stated, "The
gold
behind these demand liabilities of
Of
the
to
dollars should have been made in
least
certificates
the
argument
an
that the British loan of 3%
reserve
at
25%
raise
these
as
value of tiie
Jgold deposited at Fort Knox.
'
$20175,977,000. A
such
Statements
Exchange
New
labor,
posed
there is
,the question of the
banks
amounted
New
120
in
serve
J miners and smelters for their
Eco-j
world."
;
de-
posits
frfc PONNELL & CO.
total
"American
the
Exchange
New Orleans. La- Birmingham, Ala.
1948, in j fishing."
The professor questions
an
article "Commodity Currency ! whether it is even necessary to
and
Commodity Storage," "The I insist on proof that the gold exI assume he means in an
unlimited demand for gold at a ists.
high price for monetary purposes uiimined state.
is an
As a„_ result he concludes that
absurdity of the modern
notes
serve
Bought—Sold—Quoted
in
wrote
University,
nomic Review" for June,
$503,332,000 of
York Stock
HAnwar 2-0700
at Yale
Economics
in
$24,-
New
25 Bread
<£-
collateral
behind
Memoers
set aside
were
Co!
Steiner,Rouse &
30, 1948, gold in the United States Treasury, "buried" at Fort Knox,
$23,532,000,000, of which $22,303,000,000 was pledged as a 100% reserve be¬
Reserve banks
as
Bought—Sold—Quoted
June
by Federal
Lonsdale Company
Louisiana Securities
gold standard and gold
reserves by both British and American
Contends gold at Fort Knox has inestimable value not only
for American people, but also for British and other non-communistic nations.
Cites linking of British
pound to dollar and lays attacks on Fort Knox gold reserve to "currency planners who do not want their*
mistakes made obvious."
Concludes Fort Knox gild is not sterilized, but by maintaining confidence
in dollar, serves as world value standard.
Interstate Power
FRANCISCO STOCK
ANGELES STOCK
EXCHANGE
EXCHANGE
1500
RUSS
SAN
BUILDING
FRANCISCO
TEL.
DO 2 0775
4
Yolume 168
Number 4752
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2063)
-
INDEX
Articles and News
Business Outlook—Recession
Should
Government
Bonds
Room?—Sumner II: Slichter
or
Be
Page
Supported
Present
at
Temporary Stay of
Administrative Juggernaut
Cover
Prices?
Cover
Needed:
A Program for
Strengthenirtg Our Economy
—Alfred P. Sloan, Jr
*
Worthless—Roy Curia
.....
,-
Incentives: The Foundation of Our
Economy— Gwilym A. Price..
6,
George
7
The Election and the Securities
Market—Harold E. Aid
*.
Peas
in
Pod:
a
—Robert G.
L.
Shillinglaw
After
14
G. Smola
16
Forecast—Roger IV. Bahson.....
17
19
Population Age Shifts—J. C. Capt
20~
The EC A and American Agriculture—W. L.
Myers.................
21
Howard.............
26
Temporary Stay of Administrative Juggernaut (Editorial)
Our
to
Discuss Securities
Analysis,.
3
NYSE Officials Urge SEC
Index
for
Quotation Bureau
1949
to
Industrials
.....
22
22
IB A Convention to Consider
Current Financial and Economic Problems
22
City Bank Named Paying Agent for
Copenhagen Bonds.....
Ryan, of Bache & Co., Proposes New Moves to Combat"
22
21
Makes
26
Principle" (Boxed)'
Permanent
Stockholders
Use
27
cfv Special
Prospectus for Offerings
34
Regular Features
We
See
Batik and
It
(Editorial)
Canadian
11
,
Securities
..
the
V
t....
...........
43.
20
1
Investment Field.........
38
Washington Ahead
o
23
of the News —Carlisle
Burgeron......
Indications.of Business Ailivity
.Mutual
......
"NSTA Notes
News
Banks and
,V..
lo
Reporter
1....
5
Securities Now
L
such
no
showing.
This is
U
S. Finishing Com. & Pfd.
previous editorial wherein
the
court
powerless to
Pfd.
request
on
*
Established 1908
,
Members N. Y. Security Dealers Assn.
REctor 2-4500—120
Bell
Broadway
System Teletype N. Y. 1-714
Empire State Oil
Equity OH
Mackinnie Oil &
Drilling
Utah Southern Oil
BOUGHT
Judge
applauded
industry by
going ahead with its hearing
was
&
Prospectus
J.K.Rlce,Jr.&Co.
for
victory but were disturbed for the securities
that part of the determination which in
effect held the SEC
would not be restrained from
because
Com.
SOLD
-
QUOTED
-
we
the
Orvis Brothers s G>
14 Wall St., New York 5, N.Y.
REctor
2-4930
New
York
1-1434
interfere with the
so
,
t
We pointed out that in the
average
.
disciplinary proceed¬
ing instituted by the Commission the adversaries were un¬
evenly matched. The SEC is government subsidized, while
the respondent
rarely has the means to
administrative strategy
through appellate channels to an ulti¬
mate conclusion.
This, we said, places the whole industry in
From
Judge Morris' refusal
to
enjoin further hearings
appealing, and the stay
granted by Judges Clark, Miller, and Prettyman is
temporary
until the final decision of this
appeal. ' •
before the SEC, Otis & Co. is
Seaboard Ice Co. 1st 4s
.
Victor Fuel Co. 1st 5s
27
•
.
.
industry. The victory it has already achieved is, as a
precedent, the victory of all brokers, dealers and under¬
writers. All may now be certain that in the
absence of
a
prima facie showing of fraud the Commission may not
•pierce privileged communications between attorney and
That Otis & Co. has the Will and the
46
;r........
fight is
happy augury, for these
important precedents.
21
16
v......
a
This conflict leads
releases
We
us
to
means
result in other
may
always felt that
City-Ada-Atoka Ry. 1st 6s
Hudson River Day
Line Pfd.
Bought—Sold—Qtioted
George Birkins Company
40 Exchange Place, New York 5
WHitehall
Pointers
For
for
Tele. NY 1-1404
on
Selling
clever, helpful hints
selling securities read
the
...
4-8957
"Securities
Sales¬
to another
disturbing element, the
promulgated by the SEC bearing upon its activities,
have
Okla.
now
passing upon any of the merits of the
Kaiser-Frazer, Otis & Co. controversy, we, in a sense,
regard Otis & Co. a champion for the entire securities
46
........
United Piece Dye Works
Court, Judge
Our readers also will recall
detailed discussion of
a
Corp.*
:
signal victory
a
Otis & Co.
25
Salesman's Corner............
some
should be found to
means
man's
Corner,"
feature
in
day's
issue
a
regular;
Thurs-
every
'
in
Registration.
The State of Trade and
Tomorrow's
made
client.
Securities
Securities
' 23
.V
Utility Securities
Railroad
j
16
'
:
Prospective Security Offerings...........
Public
IV................
/.
Governments,.......
on
.....
Bankers..
"Observations—A. Wilfred May
Our Reporter's
Report
Our
41
\.................
About
7
.......
Funds
:
Without
Dealer-Broker—Investment Recommendations.
Einzig—"Britain's Steel Nationalization".
From
•
YORK
4-6551
Tennessee Gas Trans. Co.*
underwriting
jeopardy.
Bookshelf.........,.;,..,.,,....,...;......,.......
Coming Events in
the
STREET, NEW
Texas Eastern Trans.
*
decided to uphold the
principle of privileged
communications between
attorney and client which he
held could not be
pierced in the absence of a prima facie
showing of fraud. He further held that the SEC had
..Cover
.....
Insurance Stocks
Business Man's
WALL
Telephone: WHitehatl
adequately combat
to
...........
................
As
of
Morris
23
Corporation Working Capital.
SEC
.
and
yours
quotation.
our
administrative process.
Communism
Evans Woolen, Jr., Protests Subsidization of
Farmer Cooperatives..,.
SEC Reports
Higher
on
termination
It will be recalled that in the
District
Morris' decision in
Marcus Nadler..
the
above matters."
21
Cleveland Trust Co. Notes Growth in
Business Failures
"Standing
involve
or
•
19
.•
*
to
underwriting contract;
*
(b)* taking any evidence,
compelling attendance at hear¬
ings, or taking any action
whatsoever, with respect to the
21
Payment 011 Panama Bonds...........
Analysis of Postwar French Economy Issued
by G. Rowland Collins
T.
99
of
security
.
under said
17
...
Endurance Limit Reached in Cost of
Government, Says F. E. Schluter.
Frank
-
plaintiff arid Kaiser-Frazer Corporation,
or the
alleged instigation of a j stockholder's derivative suit
for the
alleged purpose of avoiding plaintiff's obligations
13.
Funds Available for Interest
National
.-
agreement between
Compiled by National
Building Construction Forecast by F. W. Dodge Corp....,
and
relate
13
Amend Short Selling and
Trading Rules;
Over-the-Counter
solete
get
today about that ob¬
us
proceeding pursuant to the Commission's orders ol
August 11,1948, and October 2$, 1948,. insofar as those orders
410
.
Dynamic Capitalism As Viewed by
IJarry A. Bullis...
New
RATE RISE!
Call
(a)
Private Enterprise and World
Trade—lion. Charles Sawyer.
Economic Significance of
Benjamin Graham
.
18
Problem'of Synthetic Fuel
Industry-—Prank A•
ORDERED,
ADJUDGED
AND
pending the decision of this Court on
it is
Dunlop.
Election
HEREBY
that
appeal, the Securities and Exchange Commission be and
hereby enjoined from
;
.
■'
Prices, Profits, Productivity in Petroleum—
Controversy—Ferdinand
IS
DECREED
11
Economic Fallacies of Price
Supports—BM. Curtiss
The Gold
investigation. Remedies suggested.
proceeding wherein Otis & Co. is Appellant and
Securities and
Exchange Commission et ah, are Appellees
(United States Court of Appeals for the District of
Columbia)
the bench composed of
Judges Clark Miller and Pretty man
entered an
injunction order providing in part as follows:
10
BEAT THE
a
"IT
Higher Stock Market Under Truman—David
Three
♦
8
.".
Coming Tax Legislation—Joseph J. Klein
A
In
6
Saving Through Stock Switching—Sidney D. Cohn
Outlook for Hotels in
1949—Allan C.
and because of SEC methods of
4
through them
COMPANY
TELEPHONE
securities
to
industry being created. Public releases of Commission attacked.
No recoupment to the innocent for
damage suffered
■'
4
4..
Security Values—Clayton D. Qumv
.Economic Signs of Our
Times—-Raymond Rodgers,.
Tax
important
Cover
I
Fort Knox Gold Not
Faith in
"
.
AND
SEC hearings against Otis & Co.
stayed by Appelate Court pend¬
ing appeal. Court finds that unless so restrained SEC
may take
action injurious to
appellant Precedents
;
-^-Claude L. Benner
3
Markets
41
Industry.
(Walter Whyte Says)
Washington and You...............
5
,*T
38
i
control
these
respondents,
of any wrong
because
of
the
of whom
doing.
many
incalculable
are
!
,
-
-
a
of
'
<
the
"Chronicle."
•
,
Somewhere in almost
every release is
48
'
_
damage done to
ultimately found innocent
statement that
"
Published
I
The
Twice Weekly
COMMERCIAL
U.
S.
'
and
1
Drapers'
CHRONICLE
and,
25
B.
Park
Reentered
COMPANY, Publishers
Place, New York 8, N. Y.
2-9570
to
9576
HERBERT D. SEIBERT, Editor &
Publisher
WILLIAM
WILLIAM
DANA
D.
SEIBERT,
RIGGS,
President
Business
Manager
London,; E.
C.,
Smith.
&
second-class
as
25,'
1942,
N.
Y.,
8, 1879,
at
the
matter Febru
post
under
the
office
Act
at
of
Pan-American
Union
Dominion
Canada,
of
$35.00
Countries, $42.00
Other
Bank
plete statistical
issue
records, corporation
state
and
Other
Chicago
—
market
quotation
bank
city news, etc.).
Offices:
3,
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and
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in
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Trust
Bank
:
in
of
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Company
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&
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year.
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extra.)
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-
PREFERRED STOCKS'
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year.
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funds.
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Street, New York 4
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High Grade Public Utility and Industrial
exchange, remittances for for
eign subscriptions and advertisements must
be
page
March
Subscription Rates
Subscriptions in United States, U.
Possessions, Territories and Members
Thursday, November 18, 1948
on
New
1
Every Thursday (general news and ad¬
vertising issue) and every Monday (com¬
(Continued
t
by Wiliiam B. Dana
Company
York.
Other
*
Eng
1948
,
Patent Office
DANA
REctor
Edwards
•
ary
WILLIAM
c/o
7
Gardens,
Copyright
FINANCIAL
Reg.
"
Teletype—NY
Alhftnv
-
Bnston
-
Glens Falls'
1-5
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■
Worcester
Anal^Ees
C. E.
available
on
request
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Members N. Y.
Security Dealers Ass'n ;
61 Broadway, New York 6, N.Y,
Telephone BOwIing Green 9*3565
Teletype NY 1-1666
v
4
Thursday, November 18, 1048
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2064)
Faith in Security Values
Incentives—The Foundation of Our Economy
By CLAYTON D. QUAW
By GWILYM A. PRICE*
Penington, Colket & Co., New York City,
Members of the New York Stock Exchange
Corporation
President, Westinghouse Electric
spell doom to our economic system, prominent industrialist
says it is prime responsibility of American businessmen to study our capitalist system and keep it in
healthy condition.
Stresses need of incentives in industry and criticizes British socialism, while praising
Belgium's private enterprise policy. Holds in U. S. we have cut our incentives thin by inflation and un¬
wise taxation and urges giving workers more incentives through profit sharing.
Sees necessity of
greater incentives for management and stockholders by removal of high income taxes and double tax¬
Decrying predictions another depression will
ation
Recalling that under Democratic Administration most companies
have become stronger
.
be
stocks with little
your
capitalism—
working and working well?
industry—American
on
sets it apart from other sys¬
and
a
tems.
It is
matter of fact,
holds
the
as
do¬
been
has
ing all those
things most of
time
the
the
Reduce
are
the
A.
Gwilym
Price
society,
complex
one
might expect all groups to share
the obligation of
and
it
keeping
our econ¬
keel,
share responsibility should
to
reasonably
a
on
weaken.
If
mistake.
you
it
Remove
system.
give you the much-abused but
shining word "incentive."
To take advantage of our pres¬
I
-and
still
better than ever.
omy
and
will have something left,
but it will not be capitalism, and
I doubt if it will be democracy.
ex¬
our
cement which
and you
pected to continue to do so
In
a
element
that
weaken
,
for
years.
You
both
system together and a
which makes it grow.
nutriment
past hun¬
dred
others
all
above
element
One
characterizes American capitalism
American
industry7,
I
which
one
dwell
me
But
let
our
even
make
us
no
fails to
economy
ent-day opportunity and to meet
our
corresponding responsibility,
it is essential that we understand,
appreciate
maintain the
and
of
centives
In
system.
our
in¬
the
words of Winston Churchill, great¬
prophet of our age, "We must
of trying to build a so¬
est
produce steadily, businessmen will
beware
not only
ciety
share in the painful
re¬
sults of that failure;
in times past, be
Like
all
other
they will, as
blamed for it.
economies,
will have its downs
well
as
ours
as
its
But it has been said, in truth
more than jest, that our downs are
almost as good as the other fel¬
ups.
low's ups. I am
convinced that we
will handily survive any downs
we are likely to encounter, and I
deprecate the careless talk that
another
depression
would
spell
doom for our system. That system
is
a
great deal tougher and
sounder than many
believe. How¬
it is true that a severe dis¬
location such as we experienced in
ever,
the thirties would
to
lose their newly fortified faith in
American
and
to
cause
capitalist
experiment
,
-
many
democracy,
with
radical
changes in its institutions. Of fur¬
ther critical importance is the fact
that the
are
enemies
counting
of
this
country
failure
on
the
policies
of
American
system. Their
and actions are based on the
com¬
munist premise that capitalism is
inherently unstable
and.that
depressions
curring
will
re¬
bring
about its collapse.
.
.
Capitalist
System
Strong
It is therefore the prime respon¬
sibility of American businessmen
to
study
American
and
understand
capitalist
the
system,
to
work to keep it in a
healthy con¬
dition, and to fight the forces that
would weaken or destroy it.
;
How
we
are
we
to do it?
How
are
to keep American business and
where enterprise gains
.
reward."
no
ply
something worked out in
as
factory with a stop watch. The
study of incentives is much
broader
than work
curves
and
a
It has moved out
bonus rewards.
of the industrial
plant and is be¬
ing carried forward on an inter¬
national
We
scale.
seeing
are
throughout the western world, al¬
most as if under laboratory con¬
in the
tive
experiments
large-scale
ditions,
and
use
If I tried
to, I could not over¬
*An address by Mr. Price before
the Economic Club of
New,York,
New York City, Nov. 16, 1948.
and
goaded to harvest, and no
persuasion, threat or punishment
could keep him from selling his
product
on
the
black market,
where it brought him some of
the things he wanted.
Last June a currency with s.ome
and
value
introduced
was
into
time
we,
To
the
be
realistic,
it would
and
90%
tically all of
employer was embarrassed
first working day after
in
the
All his men
showed up for work, and there
wasn't
room
enough for all of
taxes
we
recall
past
that
prac¬
with great success
20
Security
bombarded
years.
for
them in the plant.
Ruhr coal
was
recognized
to
good companies
our
have survived
currency
the key
conversion.
as
it
dribbles.
When an in¬
centive plan was introduced, he
began to get the coal out of the
ground.
He received such real
wealth as extra food, two pairs of
shoes and
a
|
suit of clothes a year,
cigarettes a day, and CARE
packages
for
meeting
group
quotas.
Coal production in the
Ruhr in 1938 was 400,000 tons per
15
It is now being mined at a
over 300,000 tons.
As a descendant of Welshmen,
day.
well
rate
pains me when anyone other
than Gwilym Price criticizes the
not
should
to
now
be
vulnerable
great extent to any fur¬
a
ther "anti-big business
legislation"
incentives.
Is
this
stupid?
men
are
obvious
so
as
to
seem
Is it like discovering that
must breathe and eat if they
to
of
philosophy
sprung
denies
Weil
live?
up" in
in
a
whole
government
has
the world which
The
this.
movement
...
trade
union
Europe operates
on
premises which deny it. The gov¬
ernments of Europe have either
recently relearned it, or have not
In
seen
western
Germany
meaning.
eral paper, recently stated: "...
the most fundamental problem of
we
have
For
three
tion.
situation
today calls for
prodigious amounts of work, but
with little to buy, the Briton has
sufficient
announce
the formation of
incentive
to
work.
food, clothing and per¬
haps, in the words of the college
student
to
his
father,
"enough
which will not come into pro¬
duction for several years. The re¬
sult is national apathy, and this
ery
Garvin K. Shields
M.
export and for mills and machin¬
J. Shields
apathy, of course, is fought with
more controls—with compulsions,
penalties and punishments.
The
womb-totomb
economy
is dealing what
seem to be the finishing blows to
British cradle-to-grave,
(Continued
on page
40)
are
as
cheap today on the basis of two
to five
times earnings as they
unquestionably high in 1928-
were
12 to 25 times earn¬
1929-1946 at
Using another yardstick, we
ings.
must believe that
good stocks are
yield to the in¬
vestor from 7 to 10%, or about
two
or
three
times
the
yield
with the
cheap
available
On this
good bonds.
on
Louisiana
Arkansas
have wel¬
the influx of big business
comed
within; their borders, for the past
years.
It' is not reason-
several
abe
that they
lation
of
will support legis¬
^hat will restrict the growth
these
taxpayers and high
new
If one looks
back, it is easy to
business execu¬
that
may
below that obtainable on a repre¬
Why
and
are
bonds.
not
we
Mr.
Wallace
the fact that
only
polled
That is
of 47?
out
pleased
more
encouraged by
vote
1
pretty solid
a
majority for the American way of
life:—not a reason for alarm. Why
do
we
not enthuse more on proven
that
facts
wage payers.
remember
basis, it
they
and
have
health
better
in
laborers and
farmers,
corporations
wealth
more
than
tives and stockholders would have
fore
been frightened beyond imagina¬
if they were told that they
ever
be¬
don't
tors have faith in proven
tion
had
to absorb
and
the
the wage increases
increases
tax
sets, far
ties,
in
stronger
with
larger
are
positions,
before;
(2)
and
have
results
as¬
production facili¬
earning power than
more
higher
ever
financial
liquid
been
that
these
accomplished
history?
our
thousands
of
hundreds
Why
inves¬
of
increases
in earning power, increased div¬
idends
and
brilliant, far-seeing
management?
We
think
they
should.
Full
employment
with
consequent large income to sup¬
port record production of farm
and factory is no theory, it is a
fact.
Why should the party in
power
want to do anything to
destroy or tear down this huge
of revenue? We don't think
source
It
will.
they
much
seems
more
under Democratic Administrations
logical that most of their efforts
which
will be to promote a
are
we
other
four
now
facing for
an¬
We do not think it is logical to
believe,
fear, that the Demo¬
or
will enact
voters
Have faith in facts!
We do not think
that they will vote any legislation
Put and Call Brokers
To Honor
curities which have not advanced
in
price
not
seem
levels.
in
with
common
com¬
and materials, do
wages
risks
poor
Contra, they
at
are
current
fine in¬
producers.
come
At
the
risk
recognize
the
higher
may
prices
act
increases
bring
tinue
in
about
sales and
crease
come
a
as
a
Inc.,
Sidney Harnden
of
the
Put
and
Call
Association,
Dealers
tendering a testimonial
tonight (Nov. 18) to Sid¬
are
dinner
Harnden, who has been Pres¬
ney
ident of the Association since 1942.
of
Committee
The
Arrangements
repetition, we
probability
that
and higher wages
for the
damper to further
Charles S. Godnick of
business
some
and
may
decreases
feel
that
earnings
down materially
dividend
and
in
on
dinner, which will be held
the
Hotel New Yorker,
are
at
Son
and
Lawrence
Godnick &
G. Botts of
Thomas, Habb & Botts.
larger percentage de¬
prospects of
getting close to the
level
and
With Havener, Gill Co,
can
with little
that
Havener, Gill & Co., 61
way,
most
equity prices are reasonable even
if earnings declined by 30%.
We cannot find fault with com¬
pany
Members
Brokers
in net earnings, but we con¬
to
continuation
present prosperity so that
may give them credit, as
they did in the last election.
which will
laws
cripple business.
the
of
years.
.
to raise a little hell with."
Instead he is told to work for
that.
minds
our
equities
sound
good
in
doubt
and
modities,
Their
thought
always
no
sentative list of
Oklahoma,
which would result in many div¬
idend reductions.
Therefore, se¬
forcing partial liquida¬
that
Texas,
government has imposed rigid re¬
strictions on new enterprises and
a
tax
on
investments so heavy
is
is
There
like
crats
it
have
we
yield at that time on stocks was
faces the British
economy is the rate at which it
will create capital." And yet their
the long run that
that
incentive reduced to its most
primitive
industry has no incentive to pro¬
duce, to modernize or to expand.
The London "Economist," a lib¬
be exercised and both in¬
early in 1929 to the effect that the
today
operating under
the threat of socialization, British
that caution
think
We
Election.
fooled
friends in big business and
in some strong Democratic states
many
seeing living proof that every re¬
striction
lessens
incentive,
and
that without incentive a nation
moves toward
the brink of ruin.
or
all
were
we
but keep in
by the
future,
The Democratic law-makers have
Adminis¬
Democratic
be emphasized as strongly as pos¬
sible:
(1) That most companies
Socialized
mind
great bull market
any
near
tration may try to enact into law.
the
ing the logical result of a genera¬
tion of economic error.
We are
—
or
the
in
be well to remember
the late Andrew Mellon's warning
which
in
only
having been
almost all that time by new
restrictions, regulations and high
j
The j
to Europe's recovery.
was
producing
miner
markets
timism
dustry and company records fully
scrutinized before investing, but
however,
taxes
it is unreason¬
that
agree
able to look for any wave of op¬
already
are
wise
be
kind?
We
should
trials, tribulations, con¬
many
trols
the
agree
high.
think
workers on his payroll as
he needed, since each man spent
most of his time scrounging food.
many
this
articles,
many
materials
and
us
an
Britain, nevertheless, we are see¬
learned
have
we
STREET, NEW YORK 5, N. Y,
where most of
too
of
or
What
deal in unlisted securities
1948
are
prices of
foods
our
inves¬
are
that
the
of
well aware
inherent in
economy
Ger¬
You know the first results
operation. The experiences
factory owner are typical.
had
carried three times as
on
keep
the risks that
one
This
of
margin. Is there anything wrong
or
disturbing with
progress, of
that
rather, relearned—is simply that
people do'not work because they
want to,
but for what the.y can
get out of it.
Nations do not
flourish unless their people work
hard; and their people do not
work hard unless they have ade¬
Telephone DIgby 4-9755
November 15,
should
tors
of that
He
all
and
friends and clients who
many.
of
brokers,
as
believe
We,
controls.
that they
have managed to pay since 1941.
We think that two points should
G. K. Shields & Co.
15 WILLIAM
put on rose-colored
or to
blind ourselves. to
possibilities of higher taxes
wages and any renewed war¬
the
The
be driven
money
to
to
glasses
He wants
undersigned
stantial gains in sales, because
balance in
a
people with only slight increases
in net income—thereby serving
customers on a little lower profit
German
had to
no
The
This article is writ-^
enlarged property employing more
to plant
currency.
potential importance of British, and I do not criticize them
these experiments.
They are en¬ easily. I think I realize the price
has
paid in men and
abling this generation to base its Britain
conclusions on demonstrated money
in
fighting two
world
events
rather
than
on
theory. wars,
and
the
importance
of
Those conclusions may be a de¬ American cooperation with Great
cisive factor in our history.
Britain in world policy. In Great
learned it at all.
»
of those who were shocked have sold
curity and securities. We do not
think it is either practical or in¬
the
state
many
attention paid to favorable news of earnings
no
and strike
formative
it
measures.
that
or
people's minds with regard tp se¬
penalties, the. Ger¬
that
of incen¬
non-use
ten to try
operated
worker refused to work for
man
Ruhr
to incentive sim¬
I do not refer
quate
Keep
and
controls
farmer
dividends.
■
Let
eminent.
deliver
and
there are many
a moment
believe is pre¬
To that, I know
answers.
,
land
dividends.
or
with a
currency so debased that it had
almost no worth.
Despite laws,
that
years
surprised by the election.
Many were
of a Republican victory were so abun¬
was
assurances
It is apparent
dant.
sponsibilities are today.
Believe me, there is none in the minds of the public-at-large. You
to pay higher wages and make better products at lower selling prices.
You are to
productive ca¬
pacity," proVide
employ¬
ment, for,t all,
pay
taxes,
make a profit,
everybody
shocked because the
are
expand
risks but good income producers.
poor
what their re¬
disagreement among businessmen themselves on
some
therefore not
price along with commodities and wages, and are
Almost
There may
before, Mr. Quaw main-
ever
Points out stocks have not advanced in
business and securities.
dividends.
on
financially than
logical to believe Democrats will not enact laws to cripple
tains it is
t
after company showing sub¬
the
announce
now
a
Broad¬
New Y'ork City, members of
New York Stock Exchange,
that John F. Murray is
associated
with the
Customers' Broker.
firm
as
Volume
168
Number
4752
THE
COMMERCIAL &
FINANCIAL
CHRONICLE
(2065)
N. Y. Inv. Ass'n Gets
Steel Production
The
Electric
Output
Slate for
»
Carioadings
Retail
of Trade
State
Trade
The
Commodity Price Index
Industry
Business Failures
NEW METHODS FOR PROFIT IN THE STOCK MARKET*
J
the
industrial production for the country as a whole
held steady and almost without change from the
of
course
week
past
preceding week's level. It was noted that slight declines in
industries last week were offset by a stepping up of output in
Garfield A. Drew has just completed a new edition of his "New
for Profit in the Stock Market," first published in 1941.
Methods
Mr.
is
Drew
United
veteran
a
Securities for Recovery or Inflation."
So great has been the change in the invest¬
some
other^.
The week
not devoid of strikes,
was
of the market place, being associated with
Counsel, inc. and United Business Service, and
having won "Barron's Open Forum on the Best
Investment
longshoremen,
tion
rail
for
New
by the Association
Railroads, effective as of last Saturday.
Mr. Ryan, President of the longshoremen's union, gave the assur¬
ance
that Marshall Plan shipments to Europe and Army cargoes
"will go" and that New York need not "worry" about food.
of American
:j#
4:
#
As an offset to the unfavorable news of the longshoremen's
strike, D. P. Loomis, Chairman of the Western Railway's Wage Com¬
mittee, on behalf of the nation's carriers, announced the settlement
of the dispute between the three
operating railroad unions repre¬
senting 250 000 engineers, firemen and switchmen. The three rail
unions advised the
10-cent
A
hour
an
roads
they would accept the carriers' offer of
a
increase, retroactive to Oct. 16, 1948.
operating
unions,
representing
conductors
and
trainmen, with the
demands of the 16 non-operating unions, representing about
1,000,000
workers, for wage increases and rules changes still unsettled.
4:
A
fc
#
striking characteristic of the current economic situation, says
the November "Business Bulletin"
of
the
La
Salle
Extension
Uni¬
versity of Chicago, is the stability at a very high level in the rate
of total business activity.
Pointing to the fact that business as a whole is making steady
progress, it observes, that the advance during the last year in most
of the significant general indicators has been much less
than in
either of the two preceding years.
It further notes, that the gain
in industrial production, employment,
payrolls, steel production, com¬
modity prices at wholesale, cost of living and many other indexes
has
been
much
less
than
it
in
was
of them, the "Bulletin" states, are
Setting forth its
the previous
12 months.
advancing less than half
conclusions for the slower
own
as
Many
rapidly.
of business
pace
and
industry, it continues by saying, that not all this slowing down
is due to lack of demand for buyers are eagerly
bidding high prices
large numbers of commodities. Much of it, according to the
for
"Bulletin," is due to the fact that operations
of
plant capacity
and that additional
not available.
.
,
are
close
materials
raw
.
the limit
to
and
labor
are
.
being increased but such expansion on top of conditions
are already being quite fully utilized must come
very slowly.
Further increases in employment are difficult because
a
much larger percentage of the
population is now at work than
ever
before, and unemployment is close to the minimum. Plant
capacity is being increased by the heavy capital expenditures made
by business concerns. Although new plants are being put in opera¬
tion each month, a considerable portion of these
capital expenditures
have been used to replace obsolete plants and
equipment.
resources
Concluding, it states, current indications
are
that business spend¬
ing of this kind will continue at about the present rate and will
vide a strong supporting factor for an indefinite
period.
*
Continued
unseasonable
reflected
was
week.
the
in
Although
level
level in
of
a
*
pro¬
some areas.
to
be
fractionally above
ago, unit volume was slightly below
House furnishings and small electrical
the
1947
goods.
in
an
to
be
re-order
sizable
and
volume
orders
for
of
women's
Winter
Spring styles
were
long time
according to "The Iron
Age." national metalworking weekly, in its current
summary of the
Reports in the past few weeks of easing in steel require¬
ments have been generated by
people looking for only that.
Such
reports have appeared periodically since the end of the war.
at
country is closer
this
the demand
f
.
the
uninitiated what the technical methods really are, and
the experience providing with a common basis for discussion.
This
latter service is made particularly valuable
to
a
more
"normal"
flow
of steel
the
election
and
there has
pattern, the magazine notes.
^ anything, Midwest steel
-
users
(Continued
any
gestions from
members
sug¬
with re¬
spect to available openings in in-*
vestment banking and brokerage
firms. There is a real service to be
Approach
Drew's
descriptions
almost
in the "Street."
entirely
encompass
market
methods in the "technical" category—that is, internal market opera¬
tion which disregards so-called "fundamentals"
including business
and
economic
evidence
as
well
as
individual
security-appraisal.
approaches encompass (1) methods defining the
so-called "trend," (2) methods analyzing the character of the
market,
(3) formula plans, (4) cycle forecasting, and (5) measures of market
psychology.
These
the
trend-defining category, Mr. Drew includes detailed de¬
the highly-publicized Dow Theory and
explanations of such other "tools" as esoteric as the semaphore and
scription and commentary
technometer.
describes
index
For
analyzing the character of the market, he
supply-and-demand measures ranging from an
various
contrived
on
to
professional activity to Hood's group
action, whose basic idea is that market strength can be measured by
watching the continuing relative performance of its 38 component
sections for "signals." Attention to formula plans is not confined to
so-called
the
gauge
Vassar
Yale
and
procedures
but
is
extended
to
the
Keystone Seven-Step
Plan, the F. I. duPont Institutional Plan, the
Burlingame Plan, and simple Dollar Averaging.
Among the cycleforecasting attempts followed, the book describes methods ranging
from the popularly publicized nostrums of Dewey and Dakin to the
even more dubious attempts to relate stock market action to sidereal
radiation coming from-the stars.
Ironically, Mr. Drew's commendable self-restraint in refraining
making claims
on
behalf of the "technical"
market
approach
with which he sympathizes is highligted by the typical claims which
are contained on the volume's jacket and foreword.
For the "blurbs"
hold out to the reader the promise that market breaks, as that of 1946,
can
be foreseen by the market systems, and that
the market
can
following
members
new
Association:
John
technical
In
the
The
have recently been elected by the
L.
Carson
3rd,
Graham,
Parsons & Co.; Walter L. Emery,
Orvis Bros. & Co.; Walter Frank,
Schroder Rockefeller & Co.; Rob¬
ert
E.
Greene, W. E. Hutton &
Charles L. Grether, Good-
Co.;
body & Co.; Ralph Hornblower-,
Jr., Hornblower & Weeks; C. Dale
Keys, Orvis Bros. & Co.; William
B. Knowles, Goodbody & Co.; F.
Brent
Neale,
Carl
M.
Loeb,
Rhoades & Co.; James G. Nuland,
Carl
M.
Loeb, Rhoades & Co.;
Frederick C.
ers
&
Co.;
Dillon
man,
Palen, Wood, StruthPlimpton. East¬
Fred
&
Charles
Co.;
on
been
no
change in
*
claim this week that steel
'
■
*m—MB—ww
—»
—
With Miller, Kenower Co.
-
(Special
to
The
Financial
Chronicle)
DETROIT, MICH.—Raymond C.
Kerr
is with
Miller, Kenower &
Building, members of
the Detroit Stock Exchange.
Co.,
Ford
be
"beaten."
As
for
Mr.
Drew
himself, he neither makes claims for the
workability of the systems, nor does he set forth clearcut conclusions
their shortcomings—either generally or specifically.
In fact,
about
chief weakness of the
the
book
is the quite tantalizing withholding
from the reader of the concrete conclusions to which such
and
student
honest
the
of
field
has
himself
been
a
led.
thorough
The
book
this
To
this
writer
Mr.
Drew
seems
himself from calling attention to
nesses
almost
some
deliberately to inhibit
as a
he describes as well as in the
whole—despite giving the distinct impression that
(Continued
on
page 47)
*NEW METHODS FOR PROFIT IN THE STOCK
"Critical Analysis of Established Systems,"
300 pp.
Standard Oil of N. J.
in the specific systems which
methodology
a
International Petroleum Co.
of the little-concealed weak¬
MARKET, with
by Garfield A. Drew.
HART SMITH & CO.
62 WILLIAM ST., N. Y. 5
HAnover
2-0080'
Bell Teletype NY 1-395
The Metcalf Press, Boston., $4.50.
New York
Toronto
Montreal
DIVIDENDS
Kingan & Co.
McGraw (F. H.) & Co.
GALORE
American Maize Products Co.
Nothing
Bought—Sold—Quoted
than
page
31)
FREDERIC lb HATCH & CO., INC.
-
more
the
helpful
Monday
of
the
Issue
"Chronicle"
dividends
declared
for,
and
Established 1888
"
is
P.
Stetson, Union Securities Corp.
orders
two or three years ago. But that sis all that can be
time., There, just hasn't been
any falling off in total
since
Club, 63 Wall Street,
beginning at 3:45 p.m. Admission
will be $2 per member, which
by the growing pro¬
clivity of the respective systems' proponents to*reply to anyone
citing its shortcomings—either on the ground of logic or actual done
here, and it is hoped that the
operating results—that he does not understand the intricacies com¬
membership of over 200 can unprehensible to the inner sanctum.
cover
opportunities for younger
applicants interested in a career
The "Internal" Market
one,
business
The annual meeting will be held
at The Lunch
Time Inc.
steel trade.
said
important to
for
99% OF CAPACITY FOR
Steel demand is not ,yet ready to fall and it
may be a
it even shows signs of a slowdown,
steel
Highlighted
\
before
was
is
Difficulty
booked
CURRENT WEEK
-than it
book
Policy
apparel
increased volume.
STEEL OUTPUT SCHEDULED AT
The
_
in¬
of
owner
appliances
The
for
frequently requested.
The volume of wholesale orders last week remained near the
high level of previous weeks. Prompt delivery was requsted
by
many buyers as they sought to re-stock diminished inventories of
continued
"mandate"
intentionally) finds himself. It is "a will include drinks and refresh¬
,'J
capital to read and own, because of its com¬ ments. v.'
plete factual and objective coverage of the various systems which
The- Placement
Information
the market community has concocted in its
attempt to operate suc¬ Committee, under Howard Bruridcessfully. It performs a real service in putting between two covers
age of Morgan Stanley & Co., is
a
detailed and ordered explanation of market
methods, clarifying still anxious to receive
.
seasonal
its
"investor"
in
dollar volume continued
year
with
phase falls between the two stools of confinement to barefacts and completely subjective conclusions.
many parts of the country
slight decline in retail dollar volume during the
a
results
discuss primarily
because
it manifests
the great
difficulties in
which the buyer of securities (I bypass the word
May
must" for the
in
*
weather
continued to sell well with gift items
r.
The
from
All are
where
election
McDonnell & Co.
Mr.
like increase had previously been accepted by the other two
■
Fundamental
A. Wilfred
freight destined by
Vice-President—George Wash¬
burn, Eastman, Dillon & Co.
Executive Board: Vernon Lee,
anti-capitalism
and
anti-investorism
New York Curb Exchange; Robert
(with specific weapons like
"excess"
profits
C. Baldridge, Morgan Stanley &
taxation) further enhances the importance of
Paul Hallingby,- Jr., E. F,
fresh reconsideration of the problems which Mr. Co.;
Hutton & Co.; Donald McDonnell,
Drew covers.
dock workers' strike.
an embargo on almost all export
York City or Boston was ordered
Russell,
tensified
Monday of last week.
This action signalized the beginning of a
•complete tie-up of the nation's shipping with ports from Maine to
Virginia affected. Spokesmen for Gulf Coast stevedores said their
locals would follow suit. West Coast shipping has been tied up for
a
President—Stanley A.
Jr., Blyth & Co., Inc.
—
dropped nearly 5% and initial claims fell more than 8%
In keeping with the high employment
rate, payrolls continued near the high levels of the previous week.
A dark spot in the news the past week was the announcement
made at 12:01 a.m. on Saturday by Joseph P. Ryan, President of
the A. F. L. Longshoremen's Union that 65,000 of the unions members
had voted overwhelmingly to reject a wage increase offered on
result of the three-day-olcl wildcat strike of the A. F. L.
membership at the annualmeeting to be held Dec. 14, 1948:
Secretary—Roger T. Gilmartin,
background that has occurred in the eight Merrill Lynch, Pierce, Fenner &
since the author's earlier effort, that the Beane. "
'r';
.present volume is really a new work rather than
Treasurer
Dudley F. Cates,
just a "second edition." And the post-publica*Kidder, Peabody & Co.
* f!
for the period ended Oct. 16.
a
of
the
years
insurance
As
Association
presented the fol¬
lowing slate for consideration by
ment
being confined to scattered
areas, but employment in the main was unaffected and continued to
maintain an even and high rate.
Continued claims for unemployment
weeks because of
Nominating Committee of
Investment
New York has
Auto Production
X,
The
the
By A. WILFRED MAY
Food Price Index
and
S
MEMBERS N, Y. SECURITY DEALERS ASSOCIATION" V,
83 Wall Street, New York S,
N. Y.
-
Bel! Teletype NY 1-897
when
payable
coverage
6
(2066)
Economic Signs
\!"v
Tax
of Our Times
RAYMOND
By
York University
f
By SIDNEY D. CORN
Though maintaining election outcome does not materially change business trend, Dr. Rodgers contends,
war and disturbed international situation, a business readjustment is
inevitable and there are distinct signs time is running out on the boom.
Holds, however, barring war
and
Members of New
large increase in government spending, supply and demand should be in such balance as to make
lines again competitive and knowledge, ability and effort will again determine individual busi- >
ness man's profits.
Urges business men keep economically literate.
most
In
under
valuable inl'ormaiion
business
)ur
t
man
daily
Earn-
newspapers.
study of the large volume of
appearing in
trade publications is impera¬
made (and
little change that they
another
tive.
if great promises had been
they weren't), there is
could make
in the basic forces affecting our
even
economy.
"a
serpent in the
form of World
political news appearing in your
daily newspaper may mean the
communism
War
difference
u
t
s
did
"what
natu rail
But,
its
such
comes
y."
then,
I,
with
boom
bust,.. entered
the
A
which
America.
n
Rodsers
Raymond
little
later,
the secondary expansion flowing
from
the
War I culminated in
World
depression starting in
severe
1929.
This
sired
depression
the
New Deal, with its philosophy of
social
security and government
regulation
fore
we
of
business.
had
time
to
But, be¬
digest these
fundamental changes in the very
fabric of our economic system,
World
War
II
descended
on
us.
The economic heritage of World
War II is so staggering, that some
economists
whelm
claim
will
it
over¬
Certainly, the eco¬
nomic implications of an intransi¬
gent Russia, of a quarter of a
trillion dollar debt, of a three¬
fold
us.
increase in
our
money
sup¬
ply, of government control of
money and
our
credit, and of the great
increase
in
the
productive ca¬
pacity of the country, are in the
realm of imagination.
There are
no direct precedents to guide us.
In these economic "minefields/'
wc have to do as the army did in
the real minefields; that is,
put
up the guicleposts as we go along.
Business Mpst Be Economically
Literate
7All of this
ness
means
of
man
abreast
that the busi¬
(today
of the
must
times.
He
keep
can
no
longer afford the luxury of eco¬
nomic illiteracy!
How can the busy business man
keep up with the developments
vitally affecting his own activr
ities?
The
radio
offered
great
possibilities along these lines, but,
unfortunately, it has fallen short
of its opportunities. In
my opin¬
ion, it has not yet achieved that
calm
objectivity which is
sential
in
so
es¬
economic
reporting.
There has been too much
projec¬
tion of
the
personality of the
speaker. Also, their presentations
have tended to overflow with the
milk arid honey of the
promised
land, or, at the other extreme, to
reek
with
the
voice
of
inescap¬
able doom!
Some
to
the
i
business
men
subscribe
specialized economic
news
and
forecasting services. Others,
especially the larger companies,
maintain
statistical
to collect
completeness of the
newspaper—the effort to
print "all the news that's fit to
print," as one great newspaper
puts it—complicates the problem
somewhat,
Very properly, con¬
flicting views are presented.
In
fact, the more startling the view,
the more likely it is to be pub¬
lished
this
or
meetings such
experiences
future.
As
get
and
a
find
it
very
together
this
as
views
matter of
and
as
in
swap
to the
fact, it is
really
amazing how many trade
associations and similar meetings
are field by business men.
::
The great indispensable sources
of information
are
and
to
man
a
believe?
When
When
Doctors
Disagree
"
ing that this boom will continue
indefinitely, and other just as
distinguished economists an¬
nouncing
that
disaster
lurks
around the next corner, or maybe
the corner after that, what can
believe? When. the - doctors
disagree, what is the patient to
you
;
do?
In
;
economics,
there is
ization.
Most
the trade press
true
as
economists
sive.
have
This
means
in
as
on
continuation
a
of
heavy and increasing military ex¬
penditures, regardless of party, j
Financial Burdens
sumption, money and credit, or
taxation, and so on. Their special¬
ization naturally determines their
evaluation of economic phenom¬
ena.
And, no matter how hard
they fight against it, their special¬
ization
almost inevitably
colors
their judgment. But, in any event,
they can lot
possibly know as
much about your business as you
ought to know about it.
oi
The terrific financial burden
armed
is
not generally
realized. In the fiscal year ending
an
peace
July,
1949,
$13 billion
we
on
likelihood
strong
very
will
amount
shall spend some
the military estab¬
Furthermore, there is
be
that
increased
that the election is
a
this
now
In addi¬
over.
tion, we shall spend $7 billion on
foreign aid and foreign financing,
and
international
also
may
affairs, which
properly be considered
expenditure for national de¬
fense. This gives us a total annual
burden of $20 billion just to de4
possible that
The
OPA.
a
OPA
provea^
cannot
you
know which
to
the
fer
profits
tax.
from
taxation
relief
This
tax.
the
would
stock
selectivity
bound
be
dominate
ever
with
lowest
is
fray
the
cost
Interest
veterans'
of
preparing
;i'or
!
with
business^ and that
will be identical
On
the
basis
economic
there
many of them
quite similar.
rent
$13 billion in the
fiscal
total
the public debt and
on
additional
direct
cur¬
This gives
year.
annual
us
of
cost
an
a
$33
billion for past and future wars—
a
total
which
will
be
increased,
rather than reduced, if the present
world political uncertainty con-?
tinues—-and
hope
I
a
civilization
ieal
ray
of
political horizon.
It
sea
the
on
is indeed
of
no
bitter commentary on
that the biggest cost
government is the expendU
our
an
and
from full
there
include
to
profit
corporations
also
smaller investor.
Here
is
aren't
of
too
the
important
I said,
as
many—you
form your own judgment
your
can
can
thus, in
a
far
so
as
be your
sense,
economist
own
and, of course,
when you need help, you can ar¬
range with a consulting economist
to study your particular
problem
and give you specific advice on it.
Signs of the Times
Let
us
now, together,
these economic
the
take
signs
a
of
everyone
consequential changes.
As
a
/ :
matter of fact, there were
less promises of
change
this Presidential
made in
campaign
any
campaign
Specifically,
the
I
can
than
recall.
Republicans
largely confined themselves to a
"me too;
but I'll do it better"
position
in
their
curtail
them.
I
activities.
think
we
oratory.
And
might
well
frankly face the fact that
the Republicans have learned to
weep just as loud and as long for
the
underprivileged,
common
as the Democrats. The Re¬
publicans have learned that it
man,
off
pays
-
the
at
Democrats
in
polls,
so
the
have
invincible
professes to ex¬
pect great changes because of the
election; yet, if you read your
newspaper
carefully to get the
tacts, you know that there will be
no
such
apparently lost
the monopoly which made them
national
elections-
,
times.
First,
of
favor
to
seem
Certainly, I know of no official
Republican proposal to abolish or
as
business- is concerned.
own
You
expansion
an
The
government.
also
during the thirties. Regardless of
which party rescues thq common
from the storm of
man
it
will
cost
us
adversity;
deal oi
great
a
money.
accomplishing this
Short-term
or
and losses
or
th'ose held
For
individual
illustrative
actions,
short-term
on
50%
and
Capital losses
capital gains.
are
A
thing which no elec¬
change is our great na¬
can
tional
debt
billion.
may
will
be
of
more
Elections
come
and
with
us
and
go,
for
than
$250
politicians
but
a
the
debt
long, long
time.
pur¬
long-term.
deductible from
for
great expense factors in
budget mean that inevitably
must
investors with
many
term
The
re¬
such
short-
losses, and it is advisable to
opportunity now to re¬
take
the
cord
the
loss
and
the tax
saving.
Masonite;
Credit;
U.
look
.
Oil
of
Boeing
Oil;
Gulf
for
Grumman:
lor
Ruberoid
Standard
S.
Steel
for
Youngstown Sheet & Tube. etc. 7 }
,
The industries* which
the
way
the
groups
yet
caught
such
will lead
year will still be
where supply has not
next
demand
with the
up
steel, automobile and
as
ac¬
aluminum, oil, copper,
natural gas and television equip¬
cessories,
ment. A cut in the price structure
would
and
your
idea
be
a
boon
building
This
is
the
to
the
building
materials industry.
time to. reexamine
portfolio with the two-fold
securing tax savings and
switching to choose
of
of; careful
equities which will be of greater
eventual
benefit.
One dollar of short-term loss will
offset
gain,
two
dollars
ever,
long-term
long-term,
the total
are
Vincent M.
Doherty
benefit taxwise. How¬
tax loss, short-term
any
posing
of
that short-term losses
so
of greatest
or
is of value to reduce
liability. Thus, sup¬
tax
of
"X" stock for $2,500 and sold it
for $5,000 after six months. Only
one
bought
100 shares
With F. D. Newman So.
(Special
to
The
"X"
then
securities
sold
months
the
of
no
within
six
Co., Ingraham
for
Building.
Mr,
Doherty
was
formerly with
Leedy. Wheel¬
er
losses
establishes
Under
income
son
tax
the
tax
Federal
applicable to 1948, there is
effective
maximum
capital
tax of 25% on the excess of]
long-term
capital
gain
&
AUeman,
Inc., The Ran-
paid. Even if there
capital gains, the recording
capital
D.
purchase
for tax purposes off¬
setting the entire $2,500 profit in
the first transaction, and no tax:
are
it h
Newman &
3,750
recognized
at all would be
w
Fran k
and
for
stock
the
after
asso¬
come
ciated
of the $2,500 gain would be
taxable. If one bought 100 shares
of
Chronicle)
Financial
MIAMI, FLA.—Vincent M. Do¬
herty has be-
$l<$50
law,
forward, in the i an
foreseeable future, to a Federal
j gain
1
net
< Continued on page 43)
we
income.
Commercial
California
loss,
cent decline in the market has left
Electric
Storage
versa;
Electric
Morris; Philco for Zenith: C. I. T.
for
capital
in
General
Battery; R. J. Reynolds for Philip
trans¬
net
have
we
for
vice
for
-Davidson
Co., and Corrigan
&
Co.
savings.
These,
our
taxable
and
Auto-Lite
the
net
Chrysler
Motors,
six
on
what
of
mind:
the amount of gain or loss
100%
the
pos¬
thereby strengthen the entire
portfolio.
The
following
switches
are
over
tax
however,
and
less-j-long-term gain*
are
industry.
same
that,
ex¬
gains
sale
from
the
in
doing
and
purpose:
capital
result
poses,
to
want
sibility of switching into an in¬
dustry with even greater promise
in
change of capital assets held six
is.
not
investor should consider the
of certain provisions of
summary
months.
a
be
cannot
be. taken,, and
does
$2,500, the entire loss of $1,250 is
Another
tion
Before
short
a
the tax law which will aid you
months
should
loss
investor
securities
extremely impor¬
available
to
the
savings
losses
pres¬
However,
loss
a
31 days, and then sell his original
purchase and record the loss that
way. Another method, eliminating
the
necessity of
buying
more
stock, is to switch into similar
of the tax laws and
use
are
tant
the
the
equities which appear to
possess the most promise for the
coming year.
Investment trusts,
estates
at
it
available
benefits
and
of
Republicans
or
facts—and,
If
long
a
gain for
purposes.
sold
,
purchased for 30 days if ,the loss
is to be recognized for taxation.
tax law;
in
tax
stock
likely
one
new
rates
ent
those
;
benefits will require
services
your own
the recording of the
expedient
thai:
lose his position in the stock, .hie
examine his holdings
can Jauy an equivalent amount' of
eye to utilizing all the
stock, hold the double amount for
makes-
everyone
tax
the
profits. The
the
time,
net
wife
basis for future tax purposes, and
is
stocks"
and
file a joint return is equal
$44,000 or over.
„
;
An equity sold to record a gain
may
be purchased back imme¬
diately, the advantage being the
establishment of
a
higher, cost
Selectivity has always been the
keynote of the stock market's ac¬
tion, and the investor with the
"right
surtax
husband
a
who
stocks next year.
to show
combined
of
to
of
•
affecting
income
be
profits
bullish
action
the
the
where
exists
However,
than
more
to
very
market.
the
(including such"
$22,000 in the case of an individ.ual making a separate return or
may
excess
any
use
capital gains) is equal to at least
double
for
dividends
of
combined with
for
surtax net income
excess
an
possibility
A
limited
that
this
industries will suf¬
least
it is not profitable to
optional method unless
ever,
known, it is impossible
years are
excess
of capital losses over;
capital gains, whether short-term
ture necessary
to pay Top * past
or" long-term/ may
be deducted
wars and prepare for future ones:
from other income up to a maxi¬
And, as I said before, regardless
mum
The practical solution is to read
of $1,000 in any one year.
of the election, the chances are
and weigh all the facts in the
better for these expenditures to Any unused portion may be car¬
news and those
ried forward for five succeeding
presented by the
go up than to go down..
■;
•• :j
various
years.
7, 7
7 '
economists, - statisticians'
.The social activities of our gov4
and public figures, and arrive at
The above
illustrates the ad¬
ernment have become quite ex¬
your own opinion. That will not
visability of establishing capital
pensive
in
recent
years.
The
be too much of a task as you will
losses as an offset to capital gains
Democrats want to expand these
usually find that there are not
too many facts
r—
net short-term capital loss. How-
enforce a fixed
price structure without develop¬
ing a black market when demand
exceeds the supply. Until the base
that
an
are
highly specialized, devoting their
a particular field
of economics, such as labor, con¬
of
dangerous
the past.
the defentFrom
bitter
necessity, we
become a war-like peoplq.
today
Democracy is still
medicine,
main interest to
in
*An address by Dr. Rodgers at
the Annual Meeting of the Mo¬
hawk Carpet Mills
Distributors,
Amsterdam, N. Y., Nov, 17, 1948.
/
triumph
as
future wars!
in
as
high degree of special¬
a
'
just
as
lishment,
have distinguished
confidently announc¬
is
Kremlip
it was a month ago, or &
year ago. The Kremlin policy of
all mischief short Of war is just
today
,
you
economist
look, at
also
to
claims
of
departments
time consultants.
Businessmen
welter
great
world
the
of
dream
In the midst of
counterclaims, what is
interpret economic
retain economists as part-
worthwhile
"news "
as
notwithstanding,
Russia is still Russia. The
very
and
data,
and
success
modern
enjoyed
we
i
The
business
Eden
between
.
election
The
a
failure in your business.
and
years,'
modified excess profits tax may again be
imposed upon corporate profits.
Pressure for voluntary price cuts
will become more insistent, although we do not believe we will get
Likewise, now that we have
large element of govern¬
ment control in economic affairs,
close reading of the economic and
j
Cites examples
With the Truman Administration elected for the next four
it appears
the
dollar of short-term loss
and therefore taking advan-
one
of short-term losses is greatest benefit taxwise.
of profitable switches.
age
Far-reaching and basic changes have
great gulf between the past and the' future.
To those who claim otherwise, I
repeat the old adage: "None is so blind as he who will not see!"
Business used to be com¬
mcl
law, Mr. Cohn points out
new
will offset two dollars of long-term gain,
a
paratively
simple: As the
popular
song
puts
it, .the
Stock Exchange
York
Urging investors examine holdings with view to using all tax benefits
,
economic sense, we are in a new world.
an
created
.
Dept., Peter P. McDermott & Co.,
Investment Service
in view of burdens growing out of
,
Saving Through
Stock Switching
RODGERS*
Professor of Banking, New
„
Thursday, November 13, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
.
In
he
Vincent M.
Doherty
over[business 4n
the
'
past
coTiduct-
ed his
O W II
investment
Miami,:" Florida..
Volume 16"
Number 4752
From
THE
COMMERCIAL
of the News
Asserting hotel business closely parallels trend of general economic
activity, Mr. George says financial
now healthiest in history;
Contends rise in hotel rates has been lower than
in general price trend and must be adjusted further to meet
higher operating costs and provide
able profit. Points to improvement and modernization of hotel
properties.
"Republican
too
Party
astride
his
back
and
it
with
appraisers working
••
•
of
\vas
sidered
it
too
a
affords
a
The
beating
to
be
He
with
Carlisle
Bergeron
the
in
be* removed
can
to
Taft
it
is
He
has
liberals
other
for
to
in
In his
the
Martin
impression
too
another
deeply
story;
doesn't.
liberalism
to
that
follow the in-
tricate
that
would
he
if
Allan
have
agree
upon
enough respect
leadership. It is a commentary
liberalism, to the. cause of injecting
on
of
one
for
their
tion
the
number
but
that
he
is
"for
that because
One
.
of
the
peepul"
he has
the
lpng time
a
>apd
with the "liberal" mantle.
most
was
so.
He
.
must
has
seen
The
trouble
with
only
the
will,
therefore,
concern
when
I
was
signed the subject "The Outlook
Hotels in 1949." With the so-
'*
called
be
science
of
forecasting
in
bad repute because of recent
very
happenings,
I
the
when it
group,
up
now
inite statements I
may be tempted
to
support
Many Small Businesses Make
Large Hotel Industry
any
leadership except himself.
to
comes
their
First, let
organizing when
us
talk
we
what
see
about
we
mean
the
should have it is another and
Margaret
Smith, the
Senator
from
in the
When
she.
was
member
a
of
the
House, she
kept
shy of
there
con¬
troversy-, and it was this writer's observation that she confined her
activities to doing errands for the home folk and
writing them
friendly letters about what interesting experiences she was
having
in Washington.
The "liberals" in the Senate, however, have insisted
she
is
one
them
of
and
inasmuch
her, she probably will be.
,
You
as
they have
so
warmly greeted
project, but apparently he's
"liberal" because he accepts CIO
support.
a
the
Both of them voted for
Taft-Hartley bill.
It
will
to
probably
remove
take more than this motley, individualistic
Taft from his leadership.
But it may be done by
Vandenberg. He has been occupied with being President
of the Senate and
tee.
But both
as
the chairman of the
of those
are
pro temvore
with
approximately " 3 000
over
100
and
rooms
these, only 550 hotels
were over
300 rooms.,
It
is
estimated
Qver
now
that
does
the
$2 billion annually and
estimated
property
plish it by giving the leadership to Vandenberg.
Anything to "get"
Taft.
studies
the
over
and other forms of
are
ex¬
our
past
20
transportation,
take
care of the needs of the
pub¬
when they travel and move
about. Hotels are also the centers
lic
of
in
level,
1949
the
its
at
high
M.
J*.
Shields
partnership
G.
K.
under
formed
present
volume
of
High Occupancy Expected to
Continue
Room
of
occupancy
currently
88%.
securities.
the
maintain
offices
The
at
15
hotels
&
mo
the
Central
of
the
20
past
years,
find
occupancy ranged from
in 1929 down to the
depres-
lation, its geographical distribu¬
tion and the education of more of
the
public to use hotels have
greatly enlarged the occupancy
Also, during this period,
political and .governmental con¬
demand.
cepts have changed and with the
inflationary
look
for
pressures and the out¬
high economic
activity
there
is every reason to believe"
that hotels will continue to
oper¬
ate at
'
high occupancy levels;
It must be recognized that the
(Continued
For
on
page
38)
:
Primary Markets
TRY PHILADELPHIA
"The
City of Investors"
H. M. Byllesby &
PHILADELPHIA
Company
OFFICE
Stock Exchange BIdg., Phila. Z
Telephone
Teletype
RIttenhouse 6-3717
LYNCHBURG
has
PH 73
SPARTANBURG
'iiiiiiiiiiiiiiiiiiiiiiiiiMMiiiiiiiiiiimiii
great number of hotels
are
Southern
Trading Markets
American Furniture Co.
oper¬
Textile Securities
Moore-Handley Hdwe. Co.
directly by the proprietors.
The hotel business is
organized
into very active trade associations
in each State with
subsidiary or-
AND
Dan River Mills
—★—
Scott, Horner &
Mason, Inc.
/'An address by Mr. George be¬
fore the Convention of the Ameri¬
can
Institute
of
Real
Estate
Properties
Ap¬
A. M. LAW & COMPANY
(Established 1892)
Lynchburg, Va.
praisers/New York City, Nov. 17,
Tele. LY 83
SPARTANBURG, S. C.
LD
L. D. 151
33
CA.
Teletype SPBG 17
SPOKANfi, WASH.
PHILADELPHIA
CORAL GABLES
SECURITIES
For Immediate Execution of Orders
TAX
PARTICIPATION
or
Memo
!
J&jbittson-HttB
and
on
44
Philadelphia 2
Established
j
RHODES-HAVERTY BLDG.
Teletype AT 288
STANDARD SECURITIES
CORPORATION
CORPORATION
St)
ATLANTA
'
1,
GEORGIA
Long Distance 421
Private
Philadelphia,
York
Members Standard Stock.
Street
York
5
WHitehall 3-7253
Wire System
New
Wall
New
PEnnypacker 5-5976
1894
Floor
other hours.
Request
BUCKLEY SECURITIES
14^0 Walnut
on
Exchange from 10:45 to 11:30
A.M., Pac. Std. Time: Sp-82 at
LOCAL STOCKS
will
William
Quotes call TWX Sp-43
of
NOTES
Corporation he!
of the unlisted trad- !
hotel construction in Florida
and
California. The increase in popu¬
about 87 to
represents a decline
in
National
ing department.
exception of the growth and de¬
velopment of' motels and new
averaging
This
record
we
over
?6 billion. Although a
large and important business col¬
lectively, hotels are essentially in
the small business
category as a
t recent connection with
was manager
terial addition of new hotel rooms
the existing supply with the
to
of
valuation
prior fa that with Good body & Co.
In his
the
from
CORPORATE BONDS
of
name
Meeds
con¬
greatly im¬
occupancy
outlook;
Since 1930, there has been no ma¬
is
co¬
Street,. New York City. Garvin K.
Shields formerly was
manager of
tfie/rinvestment trust department
roiALaird,- Biss.ell
num¬
have
NORTHWEST MINING
a
firm
which
proved
;
the 90% average in 1947 and
the wartime peaks of 93% reached
in 1945 and 1946.
Going back over
STATE AND MUNICIPAL BONDS
and
Shields & Co. to deal
unlisted
a
changes in
ditions
of
ATLANTA,
Shields
have
since that time there are
ber of important
hotel business should continue.
Forms Own Inv. Firm
(Guy)
rooms
lllllttlllillltlllllllllllllllllllllllltllll
Garvin K. Shields
K.
caught
low
a
extreme economic activity;
in
continues
high
1948.
Garvin
was
What
.
cities and towns, small
large throughout* the coun¬
try.
It therefore may be
safely
predicted that if economic activity
-<$>-
I
business
oversupply of hotel
is normal occupancy is
difficult to say. CertUihly, it must *
be recognized that the
depression
conditions were not normal and
community life and entertain¬
ment
group
—~
and
,
so
it is not unlikely that the forces determined to
"get" Taft may accom¬
information
activity of the country generally.
This is not surprising when it is
realized that hotels, like railroads
hotel
volume
a
be
we
the
69%
business
of
can
basis,
have shown that the trend
hotel
business
closely
parallels the trend of economic
of
Foreign Relations Commit¬
He outranks Taft in* seniority
gone.
of
ated
,
,
group
hotels
an
to prying into George Aiken's record—Aiken of Ver¬
mont—to get the justification for his "liberal"
label.
Well, he's for
public power, wants the St. Lawrence waterway project.
Saltonsall
of Massachusetts is an
opponent of the
get
were
which
uniform
years
total
group that is going after Tail's scalp.
surprised to be so suddenly embraced in these "liberal" circles.,
a
a
hotel
of
approximately 1,300,000
rooms.
This would indicate an
Maine, is being listed average size of about 80
rooms per
She is probably quite hotel. It is
interesting to note that
seemingly insoluble question.,
new
figures
on
wealth
a
Our
against anything, is that they have acquired their liberal labels
business,
According to the 1939
by way of attracting ^attention to themselves.
In their pursuit of
census, there were 16,000 hotels of
recognition they have been critical of the Taft
leadership.
The idea over 25
rooms, accounting for a
was they should have
the leadership, but just which one of them
or
and
considered judgment of the future
outlook.
approach
to make.
System of Ac¬
Through the
Hotels.
for
We
therefore able to review the
perience of the past and form
die subject with great
trepidation.
in
asso¬
about the hotel business.
re¬
for¬
understand
hotel
was the adoption
Uniform
assembled
past,
considered
•
Tobey being lined
see
in that so-called liberal
group for the
one.
for
like to
well
a
He had been an isolationist
However, I believe that my con¬
Stearns, whose father was Calvin servative accounting -viewpoint
Foster had long been an internationalist.
will enable me to
qualify any def¬
,
should
facts
dol¬
Foster
was
Well
I
valua¬
for
sir, Tobey turned the thing around to make Stearns the
isolationist and he, the man who all
along had had the broad global
mind.
1
-
not
experience of
political
writer
must
natural
my
his campaign of 1944.
Coolidge's close friend.
.
the
have
You
*
fascinating exhibitions this
a
uncertain
principal concern is to give proper
weight to the facts of the past.
though,
seems,
against the "interests."
frequently .said
his opponent
now
as
It
in
ward look into the future. This
is
in contrast to the accountant
whose
funny that in his bouncing around in public life,
appear
counts
the
have
view
their professed devotion
There is the ineffable Senator Morse
who has frequently made
it plain that he accepts
nobody's leadership except his own.
Then
there is Senator Tobey who sounds so
much like Senator
Claghorn
on Fred Allen's
program as to be often mistaken for him.
now
expressed
Appraisers
more progressive blood into
that each individual: member of the group loses interest
he, himself, is not being considered for the
leadership.
It is downright
industry,
of
lars.
the party,
he should
other
the potential
imponderable future into
'
working
One of the outstanding
achievements, which goes much
beyond that accomplished by any
of
an
of
have
steps
—-i
depression demand to a
time wjien hotel rooms are
being
almost fully utilized in a period
member
ciations.
income of the
the so-called
any
the
when
George
progressive
hotel
and
aver¬
'
i together through their
the
in
translation
C.
the
with
approxi¬
an
;
we see the
swing of the economic
pendulum from the period when
containing
622,000 rooms, or
of 108 rooms per
Many
in¬
volved
be
But
is
hotels
been taken by the hotels
j
calcu¬
lations
pave
He
is.
to
5,700
hotel.
account¬
ing mind finds
making hay in
Republican
are
age
membership
—-
sion low of 49% in 1933, then up
to the 90's from 1944 to 1947.
Thus,
^
linked
The com¬
bined
that
difficult
cities.
are
about
it
*—
larger
ican Hotel Association.
of
mately
my
,jr
,
seem' to
don't
'
is
seem
The forces
the
the Amer¬
confess
latter./
intrenched.-, But
.
——^1
m
in
' together nationally into
values. I must
the
on
1
ganizations
definite opin¬
ions about
position of leadership in the Senate,
the fact
is
that
determined to
are
Europe and his enemies
favor
Senate
fellow's
and
V
.
the
to
expression
con¬
Also,- it. is
tide,
way, for his defeat in 1950.
for a hard
enough time as it
off to
gone
absence.
defeat.
moving against him
the skids will have been
greased.
his
be
associates.
propaganda
against Taft
making much
from his
now
his
tremendous
seems
are
close
willing to
selves
heavy load for him to carry.
But
Striking commentary on his think¬
ing and that of his
the explanation for
hotel valuation problems and have great admiration for
who*-
commit them- : These State associations
Inasmuch as it was the Republican nomi¬
nation which Dewey
sought and got, it is rather
been
on
men
are
much.
amazing that the party should have
reason¬
:
It is always a great pleasure for me to discuss the
'subject of hotels with members of
ithe American Institute of Real Estate
Appraisers.' A have had many interesting discussions
realized from the start that
Dewey had to carry
awmily heavy load in the Tafts and Martins
of the party.
In other words, Dewey had the
an
'
7
position of hotel industry is.
was
"
(2067)
By ALLAN C. GEORGE, C.P.A +
By CARLISLE BARGERON
saying that it
CHRONICLE
Partner, Harris, KenvForster & Company
There is probably nothing more illustrative of
the attitude which
prevailed in the minds of the Dewey high command than
the post¬
election remark of Mr. Ed Jaeckel.
He is quoted in a
news-magazine
as
FINANCIAL
Outlook for Hotels in 1949
Washington
Ahead
&
between
and
Los
of
Brokers
-
Peyton
-
Underwriter*
Building, Spokane
Branches
Anqeles
Exchange
Spokane
Dealers
at
Kellogg, Idaho and Yakima. Wn.
7
mm
&
COMMERCIAL
THE
(2068)
8
Thursday, November 18,-1948
CHRONICIE
FINANCIAL
The Election and the Securities Market
Dealer-Broker Investment
By HAROLD E. AUL*
Mr. Aul lists
as
consequences
Recommendations and Literature
*
Vice-President, Calvin Bullock
of election: (1) impetus to inflationary trend; (2) probable increase in
It is understood that the
of support of government bond market; (4) further decline in high grade cor¬
porate bond issues; and (5) a squeeze in operating profit margins and equity earnings.
Foresees no
immediate war with Russia, but if war should come, says equities would be preferred to cash or credit
instruments.
Points out business boom is frayed at fringes, and expresses concern regarding credit
situation.
Predicts government policy will be anti-inflationary but not deflationary, and common stocks
at present prices are good hedge.
taxes; (3) continuation
buisness
The prospect is hardly a cheer¬
one from the point of view of
ful
the
owner
is
that
enterprise,
stockholder.
should
common
enjoy
firmer
a
bonds
these
taxes,
market
tone.
light of these conclusions,
because
of the inadequate
In the
of American
the
income
in
tablished investment policies.
and
between the purchasing power of high-grade
higher wage oond yields in the present infla¬
environment, I
should
costs and taxes and the upper tionary
millstone
of
controlled
prices. hold the proportion of high-grade
bonds in the portfolio to the mini¬
What effect the ensuing squeeze
on
equity earnings margins will mum limit of prudent conceptions
have on the ability and willing¬ and would concentrate holdings
He
caught
be
may
millstone
nether
of
of corporate management to
ness
this
of
segment of the portfolio,
for
the
present,
in long-term
treasuries and also municipals to
the extent that the tax exempt
expansion pro¬
which the health of
our economy depends is a ques¬
tion to be weighed thoughtfully privilege of the latter is of sub¬
by all elements of our society— stantial value.
plant
carry
out
grams
upon
including labor.
Let
Consequences
take up in their order what
us
to be the major economic
of the victory of an
appear
consequences
Administration
may
which
in
ldbor
first
the
place it seems to
that this will give added im¬
me
the
basic
inflationary
of
further wage and other labor cost
increases, the maintenance of a
high floor under farm, that is,
fiood prices, increased government
spending for public works as well
a* defense with
the; consequent
probability
of
renewed
deficit
financing and continued pursuit of
an easy money policy through the
support of the government bond
market by the Federal Reserve,
all point to a further expansion
to
petus
The
trend.
encouragement
of the fundamental
tion.
of infla¬
cause
On -the other hand
contemplate
the
an
manifestations
may
inflation
of
through increased personal; and
corporate taxes and; some formqf
direct or indirect regulation of
consumers' goods prices.
The
victory of the Democratic
Administration
strengthens
the
of ...the
continued
probability
maintenance of the long-term gov¬
ernment bond market at
for
par
some
time
about
or
ahead.
How
long the Federal Reserve will be
able
willing to continue to
or
pur¬
chase huge.amounts of long-term
government bonds remains to be
In the
seen.
Federal
last
Reserve
12
months the;
has
been
called
upon to
purchase almost $10 biliiojr of long-term bonds in pur¬
suit
of
its
support
program,
a
part of which has come from
non-bank investors;
of this, if we are
recent
statements
financial
officers
istration,
But in spite
to
rely
of
upon
principal
no
ot
of
the
Admin¬
early abandonment
modification of long-term gov¬
bonds
ernment
seems
hand
•
support policies
On the other
probable.
we
nrevent
can
anticipate efforts to
further
credit
expansion
through
increased
reserve
re¬
quirements and a continued rise
in
short-term; rates.
It
is
probable that
we
shall
ther
in
long-term
decline
grade
corporate
see
also
a
bond
fur¬
high
prices
approaching at least a 3% yield
basis with a widening in the yield
spread
between
governments.
In
these
view
and
is
more
sition of
?
the
an
across-the-board rise
probable than the impo¬
an excess profits tax, for
an
equitable
not
we
shall
controls
Whether
base.
ahd
cise
be
there—and
restraining
pricing policies.
a
it
will
exer¬
influence
on
♦
Beyond the threat of domestic;,
policies ^ that might result in al
dilution
oT
corporate
earning
power, the market will also con-E
tinue to be exposed to the threat
of recurring crises in our relations
with Russia. Up until the debacle
of Nov. 2nd the major market de¬
pressant was the threat of war
York
term
think
I
to
the
ternational
come
environment of in¬
tension
shall
we
be¬
H.
nomics
a
Federal
of
investment
eco¬
Income
Tax
ing check lists of conclusions, ex¬
clusions,
deductions
and
non¬
items
from
Salle Street,
we
the
have
can
derive
election
removed
rela¬
comfort
some
results
the
under
last
vestiges of isolationism and have
given us a unified government
firmly committed to a dynamic
policy of international coopera¬
tion as the means of preserving
world peace.
Is Frayed at
Another
in
major
Memo
Buckley Securi¬
Corp., 1420 Walnut Street,
Philadelphia 2, Pa.
•<
—
—
ties
Detroit
Coffin
Edison
&
post-war
age
boom.
of the
Admit¬
tedly the boom is growing older
it
is
beginning to appear
and
frayed at the fringes.
Inc.,
Street, Boston 9, Mass.
for
ysis—Reynolds & Co., 120 Broad¬
way, New York 5, N. Y.
Wall
9, Mass., and 40
Street, New York 5, N.Y.
Emery Air Freight Corp.—Anal¬
Emery Air Freight Corp.—Cir¬
Graphic
j
Stocks—Book
900
of
cular—Gillen
&
than
It has
three
now
Stephens,
W.
Girdler
15
fin,
New Price Index of the Oldest
.
Securities
Mark et
—
Booklet
de -
Sullivan,
&
industrial
over-the-
counter securities—National
Quo¬
tation
Bureau,
Inc.,
46
Street, New York 4, N. Y.
Outlook
Stocks
&
•
—
for
Front
Circular
Meeds,
Insurance
Fire
Laird, Bissell
Broadway, New
120
—
Also available is
F.
Jacobs
L.
Analysis —
Straus & Blosser, 135 South La
Salle Street, Chicago 3, 111.
Rand Tower,
M.
Co.
Canning
Dain
& 1 Co.,
Minneapolis 2, Minn.
available
Also
is
a
circular
on
Missouri Pacific Railroad Co.—'
—Analysis of Polaroid Corp.,
Transmission
Beryllium
Corp.—
Street, New York 5, N. Y,.
Also available
mon
stocks for
list for
is
a
,
120 Broadway, New
list of
Mountain
.
com¬
investment, and
a
capital gain, and analysis
of Warren Foundry & Pipe Corp.
crest.
rent developments in the indus¬
Railroad
Memorandum—Sutro Bros. & Co.,
York 5, N. Y.;
15 Broad
activity
has
flattened
out
and
commodity
prices appear to have passed their
,■
Valley
—Circular—J.
—
^peculations
and
industrial
Co.
Co.
Over-the-Counter
Corp.,
of
write-up on
a
Tracerlab.
St. Paul Fire & Marine Insurance
York 5, N. Y.
Eastman, Dillon & Co.,
rate
South
123
Street, Philadelphia 9, Pa.
r;
scribing new 10-year
price index of
stock
without
any important interrup¬
Historically that is a long
time.
In industry after industry,
particularly
consumers
goods,
supply is coming into balance, or
overbalance, with demand, v The
120 Broad¬
Corp.—Write-up—Cof¬
Betz
Broad
tion.
years
Co.,
New York 5, N. Y.
way,
lows for 11 years—Single
$10.00—F.
Eastern
more
State
60
;
15 State Street,
Boston
Texas
run
Co.—Circular—•
Burr,
Estabrook & Co.,
.
negative factor
th<* outlook is the
primary
Fringes
La
Gables Tax Participation
Coral
Notes
Minnesota
Boom
South
"Tax
they
the
almost
as
231
Chicago. 4, 111.
Reduction"- Revenue Act of 1948—
copies,
Wil¬
liam Street, New York 5, N. Y.
of foreign
Co.—Circular—Lee
Corp.,
Higest &
should begin to assert themselves.
sphere
Mason
East
earnings
tax on
new
charts showing monthly highs and
the
225
Co.,
Street, Milwaukee 2, Wis.
Manual for Individuals—Contain¬
deductible
Co.—Circular—
Paper
&
Collins Radio
values
tions
Loewi
immunized against "headline
fever"; and the fundamental
.
Wall Street, New
•
representative companies—
Haupt & Co., Ill Broadway,
New York 6, N. Y.
readjustment beginning to take
place now. As we accustom our¬
selves
5, N. Y.
G.
—
Ira
that
see
can
ada.
of 100
readjustment to the state of "cold
I
list
Selected
of effect of
make the necessary psychological
and
Wall
Co., 36
Excess Profits Tax—Tabulation
Furthermore, the human spirit
saving gift of adaptation.
I believe that we shall gradually
war"
market—
stock
&
Higginson
credit instruments.
or
Analysis—Milner, Ross & Co., 330
Bay Street, Toronto 1, Ont., Can¬
Developments
--
Fuel
Supply—Anal-^
ysis—Write for copy attention of
R. H. Burton—Edward L- Burton
&
South
Main1, Utah.
160
Company,
Street, Salt Lake City
Co.—Circular.
Casket
National
Cur¬
As the rate of activity in our try—Vilas
&
Hiqkey,
49 Wall
capital goods industries is a stra¬ Street, New York 5, N. Y.
;
tegic element in our economy, the
actual and planned expenditures
Railroad Stocks — Analysis —
of industry for; plant and equip¬
Smith, Barney & Co.,14 Wall
ment should be scrutinized closely
Street, New York 5, N. Y.
for signs of ;a coming, readjust¬
Also available is a bulletin on
ment.
In the current year these
with Russia, The Communist lead¬
Missouri
Pacific
Railroad
Co.;
expenditures will reach a new all- New
ers have furnished us a clear blue¬
Orleans, Texas & v Mexico
time high of about $18.8 billion,
print of their designs for world
Railway
Co.' and ^International
conquest as
did
Hitler before comparing with about $12 billion Great Northern Railroad.
in 1946 and $5.2 billion in 1939;
them.
What troubles our minds
but there are signs currently of a
today is the certain knowledge
t
Security and Industry Survey—
tapering off of these expenditures.
that we can have no faith in any
Analytical guide ^foar investors—
Planned
expenditures
for
the
agreement with, an avowed and
MSrnlT Lynch, Pierce; Fenner &
fourth quarter of this year are at
utterly unmoral aggressor who en-'
Beahe/70 Pine Street, New York
of $18.7
billion
ters agreements only for the tem-" an annual rate
5, N Y.
as against actual expenditures in
i -*
*
*
porary
advantage to be gained
the second quarter at a. rate of
from
their
violation.
We
can
!
American Airlines
Leaflet
In a number of in¬
meet this threat only by being $19.2 billion.
Goodbody & Co., 115 Broadway,
strong—strong in our armed de¬ dustries, it appears that postwar New York 6, N. Y.
will
have
fenses—strong in a soundly con¬ expansion programs
I Also available' are
analysis of
been largely completed this year.
ceived and sustained world bal¬
Colonial Mills,
Erie, Petroleum
A recent check made by one of the
ance of power—strong in the vi¬
Heat & Power Co., Standard Oil
tality of our economic and social leading investment houses sug¬
Co. of Ohio, U. S. Steel and a cir¬
gests planned expenditures for
institutions at home.
cular on
Youngstown Sheet &
1949 in the neighborhood of $16.7
a
After
watching
the v market
Tube.
billion.
This check moreover was
break sharply on six successive
made prior to the national elec¬
"blue Mondays"
recently, as a
tion.
It is entirely conceivable
Amott-Baker Realty Bond Price
reflection of a profoundly dis¬
that the. outcome of the election
Averages — Tabulation — Amott,
turbed mass psychology, I have
and its implications may result in
Baker & Co., Inc., 150 Broadway,
found myself wishing wistfully
a sharp cut-back of plant expan¬
New York 7, N. Y.
that we could somehow find a
sion programs from here out, es¬
way of offsetting the Sunday hor¬
pecially in view of tightening
Buffalo Bolt Co.—Detailed cir¬
ror stories of
-McCarley
&
Co., Vanderbitt
Hotel Bldg., Asheville, N. C.^
,
Power
States
Northern
Minn.—Special
pany,
.
Com¬
write-up—\
Allyn and Company, Ine.,
W. Monroe Street, Chicago 3,
A.; C.
100
Illinois.
OId Ben Coal Corporation—De¬
;
scriptive brochure — Comstock &:
Co., 231 South La Salle Street,'
Chicago 4, 111..
V " ;
.
Public Service; Co. of Indianar—
Circular-r-R. W. Pressprich &
6& William-Street,
N.Y.
-
:
.
"
:
■
;
V*
Co.,-*
New Yorfe-5,L ;>;
■
'
"--V
,
,
^-
the
more
lurid radio
commentators.
Equities and War
?A talk .by Mr. Aul,before a
group of investment bankers at
tile Duquesne <, Club, Pittsburgh,
near
careful
canvass
ance
Pg., Nov. 16, 1948.
on a
of informed
opinion, that the bal¬
of probabilities is so
strongly
against the outbreak of war in the
future
as
credit
and
capital
market condi¬
tions, high construction costs, the
prospect of lower- earnings and
••
clusion based
longer
—
Walker & Co., 1
risk.
a
However, without attempting to
drastic decline in municipal bond minimize the
risks, it is my con¬
.
vestors
has the
or
return to price
rationing will de¬
see
pend, I believe, upon the course
of the cost of living from here.
If wage rises are moderate it is
conceivable, in the light of the
decline in farm prices and an
adequate supply of most
con¬
sumers
goods, that we shall see
some decline in consumers prices
arising from natural causes which
may avert a general application
of price controls.
But the threat
long
of
operating profit mar¬
which it would be difficult to find
will
we
effort to deal with
as
cash
In
gins and equity earnings are con¬
cerned, these appear to be in for
a squeeze.
Some increase in cor¬
porate taxes seems likely,, though
I believe
have a dominant voice.
In
So far
investment
a
Canadian Pacific Railway Co.—
American
Central
view, if war should come, I should
prefer to hold equities rather than
Earnings
Lower Equity
Economic
Major
poor
Moreover
from
a
Balance—
Common Stock Program for In¬
good common stocks, against this
particular
contingency
at
an,y
rate,
the
and
firms mentioned will be pleased
parlies the following literature:
Street, New York 5, N. Y.
The election of an Administration with a
strong labor bias requires a re-^
orientation of our thinking and prices during the past two years
a
careful reconsideration of es¬ and the prospect of some increase
Our
Brochure—Bache
the securities markets is the outcome
ably the greatest political upset in our history.
Regain
We
As
Study of the future of
scarcely debatable, I think, that the most important single factor in the outlook for
of the Presidential election on Nov. 2, which is prob¬
It is
send interested
to
to make the sale of
increase
taken
.v
place
Curiously enough there
who,
cular—Taussig, Day & Co., Inc.,
316 North Eighth Street, St. Louis
1, Mo.
which
has already
in
productive ca¬
pacity in relation to demand,
the
—
are
those,
in the midst of a strongly
environment would
inflationary
(Continued
on
page
35)
Canadian
Investment
"Investment Securities Review"—
Richardson
Main "
Street,
Canada.--
&
Sons,r 367
Winnipeg,
ties
Corp., 1420 Walnut
Philadelphia 2, Pa.
Street,'
South Carolina Electric & Gas
Co.—Brief analysis in current issue
of "The Public Utility Stock
v
,
Guide"—G. A. Saxton & Co., Inc.,
70 Pine
Street, New York 5, N. Y.
;
United Kingdom 4% Refunding
Loan—Write-up—Zippin & Com¬
pany, 208 South La Salle Street,
Chicago 4, 111.
'
Webster-Chicago
Corporation—;
Analysis—William A. Fuller & Co.,:
209 South La Salle Street, Chi¬
cago 4, 111.
Fund,
Ltd.—Analysis in current issue of
James
Puget Sound Power & Light Co. —Memorandum—Buckley Securi-•
Mam,
-
Winters
&
Crampton
Corp.—■ •
Analysis—C. E. Unterberg & Co^ i'
61 Broadway; New Yozfc 6, N. Y. i Also^available is en analysis
Miles Shoes, Ine.
•-•j
Volume
168
While you
■
Number 4752
THE
read this advertisement,
automobile will be
one new
COMMERCIAL
Kaiser and
one
new
&
FINANCIAL
CHRONICLE
old 'Big
now
Frazer
:
Three' is
-
(2069)
The Big 4! The
men
>9
who accomplished all this... in just
-
400
working days from absolute
poration wasn't even in production! But the very first car off Willow Run's:.:
and
planes, flat-tops and dams/ blast furnaces and aluminum mills. In the
assembly line set such completely
fires of war-time
:..in
completed
..
.yet 30 months ago, the Kaiser-Frazer Cor--
new
standards for the medium-price field
design, comfort, performance and value.,.that Kaisers and Frazers
are now
the most copied cars in history. K-F has become the
dent' passenger car
maker, and
even
largest/indepen¬
in Dealer-Service organizations, the
zero. ..are
builders. They have built ships
production, they learned how free
with imagination; in
men,
working together
dignity and mutual respect,-can accomplish miraclesi
By proving it again at Willow Run, they have written
Greatest Success Stories, and set
an
one
of America's
example for the whole industrial world!
{1141 KAISER-FAA2ER CORPORATION
|[aiscr*Fra»er
^
One of America's Greatest Success Stories!
*
Corporation
%
10
CHRONICLE
FINANCIAL
&
COMMERCIAL
THE
(2070)
Standard-Knapp Corporation of
of Klein, Hinds & Finke, CPA's
Member New
Tax
sepa-^
rate corporations.
Net earnings approximately 10% for all classes
of gas and electrifc customers.
for Hartford-Empire for the nine
of
$421,266 after a re¬
to
amortization
of $235,750 for
serve
cost
the
1940
30,
Sept.
ended
purchasing Stands
of
Tnis is equarto $1.56
ard-Knapp.
introduction
Brush
Fuller
The
November
on
filed
initially
marketed
ing
a
shares
8
in
New
York.
Company
November
on
a
The product is be¬
if
sion
proposed offering of 11,606
of
its 4%%
cumulative
Aircraft Divi¬
Pratt & Whitney
cover¬
United Aircraft Corpora¬
of
tion
its
that
announces
Turbo-
stock
Wasp jet engines are now begin¬
($100 par) at $100 a share.
No
underwriting is planned. The pro¬
ceeds of the sale will be used to
ning to roll off the assembly line.
capital
Output is in limited quantity but
will
increase
steadily.
Current
partially
to
and
call
sale
for
Rolls
engine represents the
Whitney version of the
Royce Nene engine.
*
■'*
/ "
within
stock
the
of
Pratt
&
creased inventories, Present plans
*
•
.
1
s
1 ative
leaders
may
e
i
g
tion
.you.
ents
the
why should
How
com¬
informed
I
Dr. Joseph
this
that
me
KJei*»
J.
expected exactly that and I agreed, in
accepting your invitation, to face
the music. ' ! ask you to bear in
group
_
C,
Woodbridge
King
has
suc¬
ceeded Merrill B. Sands as Presi¬
November
tinuing
is
Sands
Mr.
1.
con¬
}S. Air Force announced
The U.
28 that it had
October
Division
United Aircraft
of
from
The
Hotel
This
Bond.
amounts to $239,746.
if
if
*
*
Powdrell
000,000 first mortgage bonds. The
Connecticut Public Utilities Com¬
set November
the
1948
4,
hearing
Alexander,
&
Inc.,
outstanding
prior
5%
Graham to Talk
on
Benjamin Graham, President of
Graham-Newman Corporation and
The original com¬
lect u r e r
in
will
finance,
been initially turned down by the
"Pr
union,
in¬
Techniques for
cents/ : The dispute
was settled on the basis of wage
increases of from 9 to 14 cents.
Analyzing and
Appra i s i n g
Specific Is¬
wage
which
of
demanded
an
speak
25
„
if
if
has
Manufacturing
the
announced
contract
Company
signing
of
a
Heublein
Nov.
g
,
guest
"In¬
course,
vestment
New
Today,"
School
given
at
b.y A. Wilfred
the
May,
(Special
The
Financial
Chronicle)
MILWAUKEE, WIS.—Theodore
Gumina
is—reinstate¬
there
needs, an excess profits tax is to
be expected. Associated with this
reenactment there may be some
upping in the corporate rate, say,
to
40%.
believe
I
that
the
new
will exempt a
profits tax
excess
considerable group of more or less
small
businesses and
ill-defined
of
burden
is
associated
now
with
the
new
will
law
The
and
ally
device of
tax
burden
indi¬
gener¬
principally through the
splitting marital income.
Will these reductions continue? So
far
family income splitting is
concerned, the device makes avail¬
to
residents
of
non-commu¬
be positive of few things in taxa¬
confident that family
splitting for income tax,
gift tax, and estate tax purposes
I
tion,
am
income
undisturbed.
I believe that individual rates will
Gumina
has
Nor
do
has
applied
an
the
to
Utilities
increase; in
recently been with Loewi & Co.
Connecticut
Commission
rates
In
for
averaging
the
past
he
was
with
Paine,
is
Webber, Jackson & Curtis."
thejir needs vocal.
reason' why
no
to
relief
tax
in¬
any
refrain
should
heljb
seeking
from
every
and in every legiti¬
proper source
and
to
enterprises.
new
It
(2) Employee Stock Options:
is generally recognized that exec¬
utive incentive must be furnished
than through high an¬
compensation subject to high
rates. Executives (in common
otherwise
nual
with CPA's and members of other
device
But such
have
to
options
result (and
inordinately
may
in
burdens
tax
this
overcome
resulted)
heavy
the
on
em¬
ployee.
gain tax.
probably will, be brought in.
existing law, the present
1% tax contribution by employer
and by employee (frozen several
taxable
times
often been
Under
Congressional
action)
through 1949, then be¬
by
continues
1 lk % for the years
comes
1950 and
1951, and 2% thereafter.
So
much
the
for
be
And
selected
of
items which
particular
lieve
of
income.
that
interest
may¬
this
to
group.
a
me
who
inequity
be remedied by
has
I be¬
will
soon
the pro-ration de¬
bv the Treasury.'
(4) Small Corporations:
$25,000 and
ject to
up
on
with
and
the net in¬
rate
The
$25,000.
over
come
to $50,000 are sub¬
53% rate
a
net
is
over
on
income of
38%.
The
"notch" rate should be lowered
are
•
Corpo¬
rations with net incomes between
$50,000
that there
say
result
capital.
on
per
treated as
The
tax
the
corporations
The Tax Climate
is
annuity
an
vice sponsored
general
prospective
now
as
to
of
Three
(3) Annuity Income:
cent
more
features
some
or
solution should be found to
provide a more desirable relation¬
ship between the tax rate on cor¬
$25,000-$50,000
thing of the past, and that the porations in the
range and other corporations. Knutson-type attitude toward tax
ington
insist
tax
reduction \and
dead
that
climate
tax
Wash¬
the
1948
of
is
is
reform
door nail.
as a
ers
a
as
These observ¬
correct, for the time being,
are
as
to
in
error,
tax
form.
reduction, but they
I believe, as to tax
The
Revenue
enacted
2,
1948
Earlier
necessary
to
take
its
49
"the
eliminate
to
structure
the
New York
Recommendations
same
announced
rec¬
steps
the
from
Treasury,
the
further
a
was
in
list
course
of
of
j preparation. HR 6712 incorporated
number
of* the Treasury's pro¬
The Bill passed the House
on June 19, but was not considered
by the Senate.* One of the* two
a
a
Interest:
share of a'firm's
its, after the death of
to
the
decedent's
Pay¬
prof¬
partner,
a
estate
heirs,
or
result in tax to the surviving
The
payments.
continue
to
revision. ;
and
inequities
time,
that
ments of
partners. Equity would be served
the iffhe recipient, and not the pay¬
the ors, were liable for tax 6n such
in
the Treasury made
Account of De¬
on
Partner's
was
1948, ' over
veto.
ommendations
tax
re¬
(5) Payment
ceased
may
Act**of
April
President's
year,
are
I'll tell yoU why.
At
City, Nov. 17, 1948.
procedure while a carry-back,
involving refunds, is administra¬
tively
disturbing.
The
longer
carry-over is particularly helpful
The Treasury is now on
mate way.
This is democracy in record as favoring tax revision to
action.
ease
the
situation.. Perhaps the
And how abotit social security? Treasury may be willing to adopt
Social security coverage will un¬ the provision in
HR 6712 which
doubtedly be expanded both in the subjected the profit resulting from
sales of option stock held for more
measure of benefits and in cover¬
age.
The self-employed should, than three years to the capital
*Excerpt of an address before
Metropolitan Controllers' Ass'n,
^
tion
lawful
handbag in¬
administrative and other defects."
Connecticut Light & Power Co.
Public
not
did
as
nity property states the privilege
long enjoyed by a relatively small
group of citizens.
While we can
a
hardship was thought to exist in
options to employees to acquire
stock of the corporate emoloyer.
those
income
about
excess
Act reduced the
1948
or
The Treasury should find it rela¬
and the cosmetic and
First, let
vidual
year
by
ih
legislation.
profits.
carry-back and a fourfive-year carry-over.
one-year
battle for reduced excise tax rates,
certain
will remain
Mr.
well
over
tax
taxable
a
realize how utterly
appeals to the impossible it has become to create,
Eightieth Congress. Certainly, we out of compensation, a competence
may
expect the fur industry to for old age and for dependents. A
fare
A
of
said
which
groups
be considerably less than the old.
measure
carry-over
supplanted
be
professions)
of
basic
$50,000-$100,000 specific exemp¬
tion is quite
possible, but it is
quite
inconceivable
that
base
believe
two-year carry¬
two-year
behalf
and
Water
Street.
been
has
to
reason
will
tax
that, at least in its initial stages,
the
group has successfully
a
number of occa-
on
Much
and
Washington lobbies; they will continue, but more successfully on
tled
The Marshall Company, 762 North
'i
$
to
cjons.
profits tax on corpo¬
from
repealed for 1946 and
was
I be¬
dustry which belietes itself enti¬
excess
rations
able
With The Marshall Co.
new
-
is
economist and editor.
'
r" If
18, 5:30
Mr. Gra¬
lecturer in the
Graham
Benjamin
Food
^
•
ham
1
subsidiary, the
Importing
Co.,
which will engage in the import¬
ing of foods, particularly highly
specialized products.
Outlook
time
66 W.
r e e t,
Thursday,
p.m.
G. F. Heublehi & Bro., Inc., has
organized
Re¬
which this
combated
dustries to make
Excess Profits Tax
The
the
-
quite sure that there will be
general sales tax, a project
no
is
present
(forward)
am
There
■j
There
the
tively simple to function under a
likely liberal net loss carfy-over deduc¬
on
about excise taxes?
period income, instead of at least
50%
more,
will be the peace¬
on
tric, affiliated with Western Elec¬
trons one of the largest manu¬
facturing organizations in > Can¬
ada,
The Audograph wil be built
at the company's electronics divi¬
Belleville, Ontario.
preview of possible
12th S t
Ltd.,
graph in Canada. Northern Elec¬
in
So here's the
guess may occur.
search,
Montreal, under
which the latter will manufacture,
sell and service the Gray Audo-
sion
School
for Social
a
Electric
Northern
with
Company,
1
the
at
New
Gray
c a
,
.
,
on
t i
a c
sues"
$
or
profits tax will
be attempted as item number one
on the tax program.
Even in the
absence of immediate
budgetary
increases of
from 8 to 14 cents per hour had
crease
oppose, but merely what I believe
,
which commenced
of
offer
senting either what I advocate or
ment of the excess
October 11, was'settled on No¬
vember
1
and
operations have
pany
I am as objective as I can pos¬
sibly be and that I am not pre¬
balance—and
on
been resumed.
about to
at
Royal Typewriter's
Hartford plant,
am
say,
15,
as
'
#
#
I
and 6%
pre¬
thereafter. Will it be reenacted? I
j$25j and $105, respec¬
am
|pcUned to believe that if
tively, at First National? Bank;
there is danger of budgetary un¬
New Bedford, Mass.
ferred
■
The strike* at
what
season's first
the
on
that in
if
preferences stock
company's application.
#
its
1948
Connecticut i*ower Co. has
for
mind
Mills Corp., subsidiary
Gosnold
of
requested permission to issue $6,~
date
the
to
tate
called for redemption on Nov.
<■
mission
cancellation of
will be the
the entire indebtedness of the es¬
Cor¬
poration.
a
1,953
.
post-election taxes.
poration and Kellett Aircraft Cor¬
The
of
company
Harry S. Bdnd.
Aircraft
Sikorsky
the
between
placed
divided
36 helicopters,
orders for
pur¬
shares of the common stock
chase
on
authorizing
proposed consideration in the pur¬
%
Ki
*:
the
by
the estate of
director.
as a
resolution
a
chase
effective
dent of Dictaphone Corp.
meet November 22 to act
Co. will
on
two
number
lieve that, generally, they will be
retained. But, on the other hand,
chair¬
mittee
item
Washington tax program.
especial¬
after your
ly
receipts,
middle ranges, appears
be
to
you,
program
is needed because of expen¬
ditures threaten to exceed
hesitate to ask,
so
(1) Net Operating Loss Deduc¬
tion:
back
rev¬
upward adjustment of rates, first
in the upper brackets and then in
not
do
be
will
that
enue
ball
Cli¬
crystal
Considera¬
once.
adjustments
j today. However, if additional
to read the
for
at
rate
picture becomes clearer than it is
yet.
would like
me
of
deferred, I believe, until the fiscal
Nevertheless,
you
increased
oe
the
have
not
■
Stockholders of the Hotel Bond
Anticipates
one.
Despite 30 years' observation, contact and experience in the field of taxation as lec¬
author, editor, professor, practitioner and unofficial government and legislative
advisor, I hesitate to prognosticate future Congressional action. Even administrative and
man
'
the company.
Accountants
Public
turer,
in
The
new
in¬
bank loans incurred to finance
Grumman F-9-F fighter.
the
reduce
installation
is for
production
company's working
the
increase
preferred
fiist
non-voting
of Certified
Society
authority predicts Eighty-First Congress will reenact profits tax as' item number
answers
if
registration statement with
a
SEC
of
1
household deordorant called
if
the
Co.
Brass
"Good-Aire."
ing
President New York
Bar; former
fatally incomes-splitting will remain undisturbed, excise taxes will be retained, social security expanded,
and that Washington's favorable 1948 tax climate is "dead as a doornail."
'
"
*
has en¬
tered the chemical field with the
share.
per
*'
*
♦
Bridgeport
new
York
million, but the companies
pleted in December, 1947, at a price of $3.5
continued to be operated as
amounted
Legislation
By JOSEPH J. KLEIN*
Portland, Conn., are to be merged as of Dec. 1,.1948. Negotiations for
the acquisition of Standard-Knapp by Hartford Empire were com¬
months
Thursday, November 18, 1948
-
Tax
Connecticut Brevities
Hartford-Empire Company and
-
Among
revision
Treasury
favor
v
...
proposals
which
were
should
indicated
the
v
.
.
for
revenue
not
included
the Treasury's 49 recom¬
mendations, I selected a few which
should be enacted and which, X
•among
trust, may find Treasury support:
posals.
Tifft Brothers
Connecticut Securities
Mem'bei'S
York
and
Boston
Stock
Exchanges
;
PRIMARY MARKETS
New
Associate Members New York Curb
»
'
Exchange
~
•
Primaty Markets in
Statistical Information
Hartford
'
'
"
■
>
*
.
Chas. W. Scranton
NEW
New
New
London
Hartford
2-4301
New
7-2669
YORK
STOCK
&
Co,
Hartford
EXCHANGE
York
Canal 6-3662
194
Securities
7-3191
New
Danbury 5600
York;
BArfelay
Waterbury 3-3166
Bell
7-3542
System Teletype: HF 365
.
„
The question then becomes:
tax
Haven 6-0171
Teletype NH
and
'
Connecticut
MEMBERS
"
(1) Sale of Residence: An em¬
whose place of employ¬
ment has changed,* may have to
stated; purposes of the Bill was sell his residence and buy another.
p"to correct tax inequities." *. ■'* •' Because of inflation, he may have
In view of the Treasury's re¬ a cash profit on his sale but he
will be unable to use the. entire
cently expressed attitude toward
tax reform, I feel justified in be¬ proceeds in acquiring a new home,
lieving that the Treasury will per¬ perhaps worth no more (or even
sist in its recommendations
and less) than the old, because of his
that the Congress will cooperate. tax liability on the "profit." It has
ployee,
reform
amendments
expected from the
My
crystal
gazing
new
be
Congress?
shows
siderable number of early
Revenue Code changes.
What
may
a
con¬
Internal
been
in
urged that
such
cases
if
there
a
be
new
purchased shortly before
the sale
is
of the old.
The
no
home
or
on
page
after
proposal
manifestly meritorious.
(Continued
tax
is
38)
Volume
THE
Number 4752
168
COMMERCIAL
&
FINANCIAL CHRONICLE
net
A
Higher Stock Market
profits. Now that many cdrrn
panies have completed their post j
war expansion
programs and co i4
spidering that increased business
activity will probably be reflected
in larger pre-tax profits, we
can-j
reaction
(2071)
the
to
election
results
our
to
opinion Truman's elec¬
bull market.
jeopardized.
;
Financial
—
Monroe Street, members
Chicago Stock Exchange.
housing program!
price
policy. promise a imitinuutuvn of
the inflationary trend and hew
;
so1" Ibw ■ in relation to;
Describing post-election stock market break as due to emotional^
selling, Mr: Shillinglaw contends Truman's campaign policies will T .;bOth -earnings and dividends, Tq-i
day Kmapy high grade, issues may!
prove stimulant, and not deterrent j to higher stock prices.
Says
be purchased for less than 5 timesj
Dewey's victory might have produced deflation slump while present t
earnings with a yield of,, .7% .or
Administration's domestic and foreign commitments will strain i
better. We believe that the present
nation's productive capacity.
■
aid.
ery
a
Chronicle)
Robert
L.
connected/with
now
icy, rearmament, European recov¬
Seldom before have stocks sold
is
Harris, Hall & Co. Inc., Ill West
tion has set the stage for a new
present dividends are
The
CHICAGO/ ILL.
Sanders
in any way
President, Shillinglaw, Bolger & Co., Chicago
(Special
tageously.
In
Harris, Hall & Co.
'
opportunity to buy stocks advan¬
not see that
By DAVID L. SHILUNGLAW
With
will prove to offer an outstanding
11
The farm price pol¬
of
the
/
new
With Robert G. Lewis
and the government's bond
(Special
to
The
Financial
ROCK FORD,
Chsonicmj
ILL —Charles T.
.
The stock market's initial reaction to the most
upset 'in American history
ballots
were
tion
was
a n
and
rally
of
comes
such
put.
wiped
will
continue to
con¬
front the domestic consumer. The
pre¬
.
Consequently
reclamation.
land
shortages
return
the
election
expendi¬
tures 'for. rural electrification and
prices
down
%%%
over
governmental
enlarged
more-
Were
Building,
farm interests mean substantially
point S
average
Bank
probably require the diversion of
some $23 billion, worth of produc¬
tion annually. Promises made to
ma ny
d
Robert G. Lewis, Central National
upwards along with this trend.
completely counted. During the morning following elec¬
reached near panic proportions; After
leading stocks
had
declined
four
Smith has become affiliated with
lieve that stock prices wilt move;
startling political
even before the
clearly indicated
day, selling pressure
threefull
trading ses-:
sions
peaks of national income. We be¬
buyers'
a
even
be¬
market
remote.
more
Under
circumstances the outlook
continued high rate of in¬
Upon only two
occ as ions
for
hardly
bd
Pearl
Harbor had
considered less favorable than
be-j
!•
since'
the
activity
,
can;
t' ■
,■
;
It is reasonable to assume, that
fore..,
David L. ShilHitglaw
market
witnessed
a
dustrial
a
*
national income will continue ris¬
.
magnitude. Unlike ing. The, policy of supporting
thb market declines of February la rm prices at 90% of parity will
and September, 1946, recent sell- prevent the possibility of a sig¬
ing was not the reversal of a tech-, nificant .drop in farm income, Full
"nically overextended bull market, employment—certainly a neces¬
Instead' it was the result of the sity to meet the production goals
shock and dismay With which in-, of the "Administration's policy—]
vestors greeted the totally unex¬ appears assured,
R e tail sales
sell-Off'of like
should continue at extremely high
Democratic-victory.
■
opinion pollsters and
political pundits had promised industry and the stoek market a
new
and friendly administration
pected
•levels.'.
The public
■
in Washington fOr
►
";/ •"
In view of the above considera
tions the question arises as to thd
reason for the current market de-*
cline.
the first time
Primarily, stock prices are*
in 16 years. Some 23,000,000 voters
revoked that promise. The emo-
ensued has not,
reflected a careful
and
objective appraisal of just
-how the 1948 elections will prob¬
ably affect future levels of busi¬
ness activity, corporate earnings,
PERSONALIZED BOTTLE
reflecting the fear that the Ad¬
ministration will how turn com¬
pletely; pro-labor, that rigid price
controls will reappear, and that
excess "profits taxes Will be re-
i
tional selling that
in our opinion^
and dividends.
I
with 3
We believe these fears
instituted.
golden
Ignore considerations of basic im
.
'initials
Admittedly the atmos
phere in Washington will be cool!
to industry,- However, - the very!
portance.
.
We suggest that recent cam¬
paign promises have committed program to which the Administra¬
President ; Truman . to
policies tion is committed demand? an!
which ultimately will prove a alUout production effort that, can
stimulant,
not .a deterrent, to hardly be attained without the
'higher stock, prices. These poli¬ cooperation of management. Such
cies will necessitate a sharp: in- cooperation would obviously notj
be forthcoming if the government
crease in governmental expendi¬
tures-and the continuation, if not refuses to allow increased pro-;
acceleration, - of the inflationary duction to be profitable for in¬
-'"t
•
spiral. This, alone, is a good omen dustry. • ■' *
'
-
h
■
.
,
^
prices over the years
immediately ahead.
, •
;
There is quite a contrast be¬
tween the inflationary \ Implica¬
tions of Truman's victory and the
for
"
stock
course of events had
Governor Dewey been'elected. "A
probable
..The
Taft-Hartley Act will: be
revised, if hot; repealed entirely.;
However, it is admitted by Demo¬
crats
as
well
as
Republicans that
nationwide strikes cannot be al¬
lowed to tie up our economy.
Re-j
peal would only bring about new;
Republican administration would! legislation to prevent crippling
have emphasized a balanced bud¬ labor
stoppages.
Truman's de~s
get, debt reduction,* and decreased pendence upon labor support, now
expenditures by the government.; that the election is over, will not,
Many observers expected that' a prevent- him from acting again as;
mild degree of carefully controlled he did in the face of recent coal
deflation would set in soon after and rail strikes.
;
Vice-President-elect B a r k ley
Dewey took; office—-that stock
.prices would react accordingly recently indicated that price legis¬
lation -would' be in the form of
and at a later date stocks could
price controls.
Since
be purchased at; somewhat lower; stand-by
,
such
^controls would probably ap¬
Thus, in the face of what
was considered a certain Repubply only to,; cost of living items
lican victory, the stock market the effect, upon industry, is hardly
adopted a hesitant *and cautious; as serious as first appears. Some
'attitude.- Security i prices made increase in corporate taxes is to
be -expected;v However, fhe tech their highs for the year before
the national conventions and then nical problems of establishing a
''normal
profit base"
dropped off considerably. Until so-called
almost the last week of the cam- makes the practical application of
,-paign "the market moved within a excess profits taxes almost impos¬
levels.
.
marrow
price range with volume
of trading at subnormal
levels.
I
The outlook hag changed. Do¬
mestic and foreign' commitments
-made by the present Administra¬
tion
undoubtedly will place a
heavy strain upon the productive
capacity of the nation, "National
rearmament,
Lend-Lease,
covery
the
and
new
military
European
Re¬
program requirements will
Any man will be flattered to receive America's
richest
whiskey, Sir John Schenley,in this
handsome squai^
his
own
decanter, personalized with
initials.., and
in k deluxe
gift list to
your
■'
beautifully packaged
gift carton. Take
•/
your
"special"
liquor dealer, today!
09
'
'*
O 4/5
4/3
QT
sible during peacetime. We are of
the opinion that any more than
an increase from the present rate
of
38%
to
50%
is
unlikely.
4 Schenley
In
Mark of Merit
viewvof the present high levels of
corporate
would"
Mbst
earnings
not" be
this
overburdensome.
corporations
/
are
now
pay*
ing out less than 50% of earnings
as
compared
Whiskey
increase
with
prewar
dends averaging 70%
to
America's Richest Z/Jt^MClCCC, Jl
/tlXk€ ?/ 86 Proof. 62Grain
divi¬
80%
of
Neutral Spirits.
Copyright 1913, Schenley Distillers Corporation, New \ork City
»
COMMERCIAL
THE
(2072)
12
neering
the
loan
Hyde
of
the
A
Exchange
and
Com¬
first
Harvester Corp.,
Inde¬
shares
the
and
capitalization
$1,000,000, from $750,000.
A
special cash year-end dividend of
$1 per share was paid on Oct. 25,
both
payments being made to
stockholders of
record Oct. 11,
1948.
The net profits per share
after taxes were $8.42 for the year
to
90,000 square feet,
estimated cost of $500,000.
about
Stifel,
St.
Nicolaus
&
Co.,
Inc.,
of
United
Moore
*
Co., all
Sugar Corp. with two insurance
$2,500,000 4% mortgage
&
note
due
Warren Lee
Crane, Chairman of
the Board of St. Joseph Lead
Co.,
of
the
&
Clinton H.
Western
Board
announced
that
the
to
of
Mtasonjenenbaum Co.
BUILDING
1
..
Jones
4
Co.,
&
figures represent an increase over
188,620 shares
dollar value of $2,666,754
September
when
with
a,
traded.
offered
St.
ing
pub¬
•
common;
$10, of ,N. O. Nelson
of
plumbing heating,
and
has
and
mining
more
in¬
supplies
recently
&
if
Louis,
funding mortgage
first
St.
Co.,
15
and
re-
2ty>% to
3%
j
serial bonds, dated Nov. 1, 1948,
at 100 and interest, the net pro¬
common
pay
indebtedness
.*•&"
.
Co.,
&
out¬
and
to
for improvements.
the directors of the
Chemical
Dow
ceeds to be used to refund
Davis
2%%
a
common
Co.,
Midland,
de¬
stock dividend on
stock,
holders
to
also
of
Mountain Fuel
compares
*
*
Nov.
,
($10
par
shares
Dec.
Dow
15
the
Co.
—
the
on
Common Stock
DISPLAY
Quoted
FIXTURES
thereof to purchase 80/100ths of a
of its common' stock
(par
share
$1) on or before Dec. 1, 1950 at
price to be established before
the offering is made. The sub¬
scription offering will be condi¬
tioned upon the purchase by un¬
derwriters of at least 25,000 shares
a
of
the'preferred stock not sub¬
for by the stockholders.
The offering will be underwritten
by Leason & Co., Inc. and First
Securities Co. of Chicago. A regis¬
scribed
new
statement
shares
curities
sion
SCHERCK, mCHTER COMPANY
«
Bell
Teletype
SL 456
f.
*V*• !■
St.
X
Moreland & Co.
Member Detroit Stock Exchange
Building
;
J'
\
J
Louis 2, Mo.
was
and
covering
the
filed with the Se¬
Commis¬
Exchange
Nov. l.
on
'„r
\
*
«
*
Of the 100,000 shares of Yan¬
Tile
Fibre
kee
Detroit,
Co.,
Manufacturing
stoek
common
publicly offered in Oc¬
tober by Baker, Simonds & Co.,
$1)
par
at
Detroit
shares
$5 per share, 20,000
for account of the
were
company
of
80,000 shares for
and
account
certain
prineipal
stockholders. The Yankee Fibre
company
will
use
its part of the
net proceeds for the purchase
equipment and
new
in part
of
to replace
working capital expend¬
ed for the purchase
.
Avenue
'
of the
new
plant.
if
if
if
issue of $500,000
An
additional
sinking fund debentures due
Aug.
1, 1967, of Plywood Inc.,
Detroit, was publicly offered on
Nov. 8 by P. W. Brooks & Co.,
Inc., New York, N. Y., at 97% and
interest, a warrant to purchase
one share of common stock being
1051 Penobscot
Garfield 0223
....
L. D. J23
Building
DETROIT 26, MICH.
Bay City
..
r i
—
Lansing:
with
amount
PRECISION CASTING
'
Members St. Louis Stock Exchange
a
corporation will issue a pur¬
entitling the holder
1.
avail-
street
Landreth
on
basis,
chase warrant
Bellevue
Chemical
announced
stock
common
and with
each share of such preferred stock
issued
Sold
into
share-for-share
'
and
'■
stock held.
common
preferred stock will be con¬
vertible
*
L. A. DARLING
Southwest Gas Producing
St.Louis l.Mo,
5l/z%
3V2 shares of
The
with a net of
Supply
Southern Union Gas
Olive
share) for 115,315
cumulative con¬
per
of
5%
Rockwell Mfg.
509
*
vertible preferred stock at the rate
of one share of preferred for each
payable Dec.
record
Hugoton Production
—
*
*
Argus, Inc., Ann Arbor, pro¬
poses to offer to its common stock¬
holders the right to subscribe at
$4,396,398, or 79 cents per common
share, for the same period in 1947.
Black, Sivalls & Bryson ::
Bought
De¬
20
Co. of Colorado.
Service
quarterly cash dividend
share was also de¬
clared, payable Jan. 15, 1949 to
holders o'f record Jan. 3, 1949. For
the three months ended Aug. 31,
1948,
consolidated
net
income
amounted
to
$6,393,445,
after
charges
and
taxes.
This
was
equivalent to $1.15 per comrrjon
share, after providing for dividens on both classes of preferred
The
SECURITIES
Oct.
on
3VH% series due 1978, of Public
of 25 cents per
stocky and
LB. 240
INVESTMENT
'
Corp.,
partici¬
pated in the offering and sale of
$10,000,000 first mortgage bonds
troit,
The usual
Commonwealth Gas
& Co.
■
'
*
.
tration
Louis, just recently offered and <
sold
$2,500,000
Sister
of
St. ;
St.
'
Gerity-Michigan*
On Nov. 3,
the
Mary,
Edison Co.,
Corp.,
Southern
Corp.,
Sheller
Manufacturing Corp., McClanahan Oil Co., Gar Wood Indus¬
Commonwealth
Parke,
clared
&
Detroit
Manufacturing
Avco
>
e
Dempsey-Tegeler
Inc.,
Electromas-
tries, Inc. and Udylite Corp.
supplies and equipment.
di¬
ter,
were:
ex¬
panded its business into refrig¬
eration
and
air
conditioning
12
October
Corp.,
The Nel-..
wholesale distrib¬
a
Consolidated Dearborn
Stix
*
.
were
Berkshire Fine Spinning
ST. LOUIS 2, MO.
and Watling, Lerchen & Co.
if
stockholders.
standing
and
stock
common
shares of
firm is
son
s«
preferred
A
Co., St. Louis, for account of six
selling
n
The
T«Mmm—SIMS
board
par
dustrial
Nov.
of series
-
ff
Nov.
on
•'stockj-;
explore the possibility of offer¬
s's
of
D.
14,000
rectors has authorized .its officers,
sis
UNDRETH
Louis,
licly
utor
on
R.
The ten most active stocks dur¬
ing shares of its common stock to
stockholders
on
a
pro-rata
basis.
From
400,000
shares to
500,000 shares are expected to be
offered at $10 per share, the net
proceeds to be used for general
corporate purposes.
LOUIS
each ""share
Edward
Transcontinental
of
share
a
if
Pierson, Chairman
Air, Inc.
its
ST.
four-fifths of
'
;
.
S.
Corp.,
Michigan
Co., Jolm R. Schermer & Co.
&
.
Michigan
this of¬
Livingstone & Co., Mac Naugli-
.
$1.25 convertible prefefienSe stock
Arizona
Light & Power Co.
*
* .*v
*
on
J
.
of
Campbell,
were:
of
Corp.,
,
of
.
Sept. 1,
1959, and $1,500,000 serial notes
due Sept. 1, 1949 to 1951,
promissory
First
Radiator
*
First
Michigan
The
McCarty & Co., Inc., Crouse & Co.,
fering
$25)'for each share of
(no par) of Ohio..
Central
of
plant.
ald-Moore & Co., Wm. C. Roney
000 shares of no par value com¬
stock
shares.
ex¬
ton, Greenavvalt & Co., McDon¬
the
among
to
bankers participating in
preference
of
planned to issue
including
purposes,
ments
£
%
States
Detroit, under its recent invita¬
tion, accepted tenders of 5,813
shares, a little over 9% of its out¬
standing $50 par value preferred
stock at an average price of $42
per share. This involved an ag¬
gregate cost to the corporation of
$244,153,, and reduces the out¬
standing preferred stock to 57,331
American Telephone &
Telegraph Co., parent, for ad¬
vances received for general cor¬
prior preference stock (par 7
•; ','f
'
■'
*
$100)
of Ohio; four shares of
The Detroit Stock Exchange re¬
4V2% preference stock (par $25)
ports that trading volume in Oc¬
for each share of 4M>% preferred
tober was 240,597 shares with a
stock
(par^$100)
of Ohio; and dollar value of 3,372,256. These
St. Louis,
investment
bankers who on, Oct. 20 publicly
offered kt $11 per share $300,mon
firms:
the
are
lis
repay
the fol¬
& Co., A. Cr.
and
Smith,
Sons
&
were
is
for
Newhard, Cook
102.25% and interest,
net proceeds to be used to
porate
stock, (par
$
Edwards
on
Oct. 20 at
5%
cash.
*
offered
publicly
was
lowing basis: Four shares of series
A
$1.25
convertible
preference
Com¬
Oct. 28, it
on
Michi-
Oct. 15,
due
debentures
%
1988,
officers
United
tensions, additions and improve¬
It
proposed
and $61 in
Inc.,
States
3 Zh
H
stock in exchange for the stock
Examiner
Interstate
the
Commission
%
agents ill therpri¬
the following
of
coupons
$630.33 of series A 65-year gen¬
mortgage
income
4l/4%
bonds of Missouri Pacific RR.~
Rollins & Sons, Inc., New York,
securities
(par
share.
if
if
igan Bell Telephone Co. 40-year
creasing the authorized capitaliza¬
from 300,000 shares of pref¬
stock, par $25, and 1,800,000 shares of common stock, par
eral
an
vate placement of
per
-iS.
erence
each $1,000
A.
N. Y„ acted as
stock
common
''if'-
An issue of $75,000,000
tion
to
exchange t for
principal amount of
these bonds, $316 each of series
B 35-year and series C 50-year
first
mortgage
4%
bonds,
is
C. Atlyn & Co.,
Chicago, llll, and E. II.
Louis,
Co.
at
1,
'
/
public offering of
shares
of
Otter Tail
linois, St. Louis, will vote on in¬
4%
Dec.
Directors and
not eligible
6.
Dec.
from
1, 1948 on shortaggregate
cancel¬
or
to subscribe.
borrowed
purposes
term notes estimated to
On Nov. 23, the stockholders of
Investment Co. of Il¬
bonds, with all
b y
monies
of
construction
reducing
up,
ling subscriptions. The offer ex¬
will be used, to
available, first toward
repayment
American
X''
Xt
*
at
elected
in the
The Ohio Finance Co.
merce
with,$5.21 for the preceding fiscal
year.
Plans have been approved
for an addition to the factory of
pires
the
banks since July
indi¬
salary, payable over a year's
There
are
options of
or
The net proceeds
extent
The plan
employee's annual wage
paying
$1, to 500,000 shares of preference
stock,
par
$25,
and
2,500,000
shares of common stock, par $1.
Jewell
compared
ended Sept. 30, 1948, as
Barret, Fitch
recommended
outstanding common stock to 400,-
period.
vidual
1, Sept. 1 and Dec. 1,1949.
Prepayment may be made at any
time of all instalments payable.
Oct.* 20 partici¬
if
to
Ry.
and
on
$18.75
Pa¬
up
if
maturing oh
and after June 1, 1940 attached,
will be made at 80%
of the
principal amount. Under a mod¬
ified
plan of reorganization
unpaid
pendence, on Nov. 5 paid a 33 lk%
stock
dividend,
increasing
the
000
Inc.
$5)
the
bonds outstand¬
mortgage
Purchase of the
Gleaner
if
Co.
&
Co.,
pated
in the hands of the public.
ing
{f
*
*
Pacific
Union
Branch
Oct. 28.
on
Stix
&
Central
all
1
Dec.
of
noon
purchase
will
RE.
June
on
r
Louis,
of the Missouri
trustee
cific
exchange
share for each $200 of the
1948, $21,000,000, and
second toward financing construc¬
tion after Dec. 1, 1948, $25,269,500.
pro¬
of
order
an
$1
new
Upon subscription, payment
be made in full, or 20%
subscription
and the balance in four equal in¬
stalments On or before March 1,
permits subscriptions up to one
thereof at the time of
count.
141,490
U. S. District Court at St.
statement covering
these shares was filed with the
Securities
to
the
common
share of the
Power
registration
mission
authorized
ft
companies
associated
and
at $44.31 per share under a pay
check deduction plan.
for
ceeds of the gale.
Pursuant
change
500,000
.
aries
to
held, and
$252,205
was
transferred
from
stated capital to the surplus ac¬
com¬
net
the
receive
Park
Expansion.
finance
to
will
who
to
par stock was issued in
for each $2 par share
at
$20)
(par
employees of the com¬
certain of its subsidi¬
pany and
3%.
of the common stock
$1 per share and in¬
One
shares.
2.80%
from
debentures
new
shares (out¬
standing 252,205 shares) to 800,000
&
15,000
On
may
voted
from
stock
held.
capital stock
6, the directors voted to
change the interest rate on the
Co.,
&
of
Nov.
Louis.
the
crease
$34.25
per share. This stock represents
part of the 750,000 shares owned
by Standard Gas & Electric Co.
Breweries, Inc., St. Louis, with
h which Griesedieck will merge,
and
Electric Co.
&
stock
mon
shares of
bank
term
publicly
offer
50,000
Gas
homa
an issue
Griesedieck
Westerjn
Brewery
Co., Belle¬
ville, 111., 5% cumulative con¬
vertible
preferred
stock, par
$30, the net proceeds to be used
to prepay a portion of the long-
shortly
of
W. Brady
J.
C.
&
par value
from $2 to
public of¬
fering of 250,000 shares of Okla¬
& Co. may
D. Jones
E,
G.
the
in
and
Dec.
shares
The
On Sept. 18, the stockholders of
Co., all of St. Louis, on Oct. 21
participated
Edward
Stix
and
stock
common
or
of St.
both
and Newhard, Cook
Gardner
&
Co.
&
Co., A. G. Edwards & Sons,
Edward D. Jones & Co., Rein-
holdt
subscribe
due
Rights expired
on
offering was un¬
derwritten by Dempsey-Tegeler
&
$119,382,197 — approximately 13%
greater than those for the corre¬
sponding period of last year.*'
ap¬
tures,
new
stock for each share of
5.
Nov.
of
both
of
share
one
on
purposes.
and
Co.
&
of
share)
per
The net proceeds will be.
for
general
corporate
used
' j
MaeDonald,
&
Kansas City
amounted to
Sales for the period
Brothers
Stern
Burke
basis
held.
($1
par
preferred
added.
if
at
common
this consummation asvon Oct. 18 announced that opera¬
preferable to the only alternative
tions have been resumed at all
—long and costly litigation." He
further added "Excluding the in¬ mining milling and smelting prop¬
erties
of its Missouri Division,
surance recovery, earnings fo.r the
nine months ended Sept. 30, 1948 which were closed down by the
strike of July 7, 1948.
"Produc¬
were $11,568,483, equivalent, after
provision
for
preference
div¬ tion of lead is again at the rate
idends, to $2.51 per share on the prevailing prior to the strike," he
t}
Oct. 26
stockholders of record Nov. 10 have been given the right to
on or before Dec. 1, 1948 for $46,649,500 of such debentures
1, 1958 at par (flat) to^—
■ -, -.. - .
the
extent
of
$100
principal \ ability of 105,176 shares of its
common
stock for purchase by
amount of debentures for each 15
the
"regards
*t
stockholders of the Detroit Edison, having on
The
proved the issuance of up to $47,000,000 of 10-year convertible deben¬
stock
company's claims for loss resulting from the Texas City disaster have
been settled for $17,312,000.
Mr. Queeny said that the company
4,274,495
common
shares
out¬
standing at the end of the third
quarter. This compares with $12,395,367, or $2.79 per share earned
in
the
similar period
of 1947.
for 295,-
right to subscribe
000 shares of additional common
Oct. 29
on
Co.,
had
Manufacturing
&
St. Louis, of record Sept. 30
Stockholders of Monsanto Chemical Co., St. Louis, were advised
by Edgar M. Queeny, Chairman of the board, that the
J
General; Engi¬
of
stockholders
Missouri Brevities
Thursday, November 18, 1948
CHRONICLE
FINANCIAL
&
—
of
each
$10
debentures.
principal
The
net
to be used for addi¬
tional working capital and may be
proceeds
used
ing
are
for the
timber,
facilities,
or
acquisition of stand¬
or
additional
both.
plant
:
-
Plywood, Inc., Detroit, is also
contemplating further, finane-1
Muskegon
(Continued
on page
39)
Volume
THE
Number 4752
168
Our
COMMERCIAL
fiscal years by the company
plants
"This
ini
is
facilities
profession
a
in
faith
of
meetings
"Your
America
and
directors
wheel
ance
and
management
of
board
for
act
as
Never in recent years, at
least, lias there been
of
stration of dy¬
in a position of
each
of
these
"Management is
trusteeship
for
groups."
future.
the
a
to
want
phasize
em¬
,
that
American
Harry* A. Bullis
dustry
in¬
every¬
where is
using
the
sibilities of.
tive
principal
today,
Bullis
administration
in
is
the
in
problems
business is
ment
dynamic
It
this
is
ex¬
pansion which has made possible
high productive employment
increasing wages."
at
savings
in¬
for
vestment, business must continue
plow back a large share of
earnings into plants and equip¬
ment.
Oniy by producing more,
he said,
can
America maintain
and expand its standard of living
to
in the
face of
growing popula¬
a
more
who
tion.
the
Bullis
the
opened
saluting
meeting
Mr.
Bullis
constantly
General
improve
employee relations policies.
istic,
endeavor
to
have
humanistic,
which
does
not
its
policy
our
and
who
have
self
em¬
trends.
The
salaries
General
unless
based
governmental
restric¬
a
We
company's
books
must make
are
the
or
Hospitalization benefits, group in¬
surance, and other advantages are
offered
mind
in
the company
its operations
that
the
to
in
owners,
to
company
a
and
men
the
are
very
,
,
tion.
Thus to maintain reasonable
profits in
competitive industry,
a
the managers must be alert to im¬
proved
quality
creased
prices
rivals.
and
volumes
low
as
<
as
he said.
competitive
is not
economy
have
,
only
as
to
The hearth of the
buy.
Profits
portant
funds
serve
method
which
the
as
accumulating
of
are
im¬
most
needed
for
free
market
adjusts
(Continued
new
on
Exchange Commis¬
sion to discuss easing of the short
selling and floor trading rules now
effect.
Under present regula¬
in
is
above the last
sale.
Floor
traders
s,
a
t i
o n
are
prohibited
from
pur¬
chasing
of
lots
stock
the
for
Schram
on
"up-tick"
their
own
''account.
that
the
proposals
recom¬
by the New York Stock
Exchange delegation seek a rela¬
tionship between the last sale on
the previous day, or last transac¬
mended
tion in the security, instead of the
last
sale
on
the
same
day the
trade
is
made.
The
proposed
changes would allow short selling
on
the Exchange as long as the
price of the stock involved is
above that quoted at the close of
the previous day.
posal
was
A similar pro¬
made for amending the
floor trading rules, so that a floor
trader
woul<f be allowed to buy
stock
for
his
own
account if
the
price of the security is below the
close of the previous day.
■'
expressed
the
need,
National
graph,
industrial
stotk
indices.
price index
as
a
a
charted their
traded
on any
important corporaStock Exchange; and
tial
representative
volved,
market.
group
Of
the
than half
more
traded
in
the
a
in
the
are
significantly charted to,show
over-the-counter
And furthermore
market
—
an
for.
the
up-to-date
e investment industry,
/
A free copy
price action from October 1, 1938 to
October 1, 1948. These stocks constitute
trend
continuation of the index will be made available to
basis for their index, the National Quotation
or
or for comparison with other stock
Thus, the rate and amount of change of the
period covered.
Bureau selected the stocks of 35
tions, not listed
to read and easily adapted for individual
35 industrial stocks
the
THE BASIS OF THE NEW INDEX
As
easy
computations
Inc. has compiled a 10-year
service to investment firms and their customers.
counter
It is report¬
ed
over-the-counter
regu-
1
an
Quotation Bureau,
under
current
Emil
ANSWERING
one-
eighth point
-
I
be
only on
"up-tick,"
that
err:.1
short
may
Securities
substan¬
of
our
booklet "A New Price Index of the Oldest
Market", describing the development of this im¬
portant index, may be obtained by writing to the National
over-the-
Quotation Bureau, Inc., 46 Front Street, New York 4, TV. Y.
companies in¬
were
established
before the turn of the century. They are
well diversified into 20 major industrial
categories.
booklet is
The
published in order to better acquaint the investing public with the
Over-the-Counter
the
It
public
is
a
nor
Securities
does it
service
engage
organization
Market.
The
undersigned has
in the business of buying
or
for brokers and dealers
no
direct relations with
selling investment securities.
in
the
investment
business.
PREPARATION OF THE GRAPH
The average high bid of these 35 repre¬
sentative stocks is compiled for the 1st,
10th
and
20th
decade. After
of
average
month
in
NATIONAL QUOTATION
the
bid
present share.
figure is recorded
per
The
equivalent - of
result is
a
BUREAU
INCORPORATED
adjustment for stock splits
and dividends each
the
each
46 Front Street
as
NEW YORK 4,
one
simple
CHICAGO
profit system
is the price mechanism which in a
Exchange, headed
by Emil Schram, its President, met
in Washington, on Nov. 9, with the
made
and
their
over-expanded prices. They give people an incen¬
tive to invest their savings. Aqd
are in dimin¬
they act as a guide and a regulator
1
been
products
A delegation of officials of the
the
of
•
New York Stock
tions
sales
.
Trading Rules Eased
sales
services, in¬
of
those
Want Short Setting and
Securities and
been
enterprise, unless the latter en¬
joys some kind of monopoly posi¬
in-
at
person,
women,
has
of the flow of capital funds.
do profits signal the
As long as profits are permitted
expansion, buji profits in¬
duce people, to risk their savings to
perform,*these functions, our
in those
enterprises which will economy will remain dynamic and
produce goods and services that strong, serving the needs of the
the rest of us want and are able American people.
u
American
Petroleum
Institute,
Chicago, 111., Nov. 11, 1948.
cept
capital
sup¬
you
whose
Not
*An address by Mr. Dunlop be¬
fore the Annual Meeting of the
carries the story of
industrial expansion.
Once an investment
need for
misunderstanding. Our interest in
He
con¬
which'
ishing demand.
tive economy. And let there be no
Mills
of General Mills.
It is with this
as
which
it clear to
emphasized that each stockholder
is a part owner and a partner in
General Mills.
instance,
for
For example,
people that profits have
jobs to do that are vital
operation of our competi¬
our
retirement plan provides security
for employees in advancing years.
owners
and
But,
the
the
constitute • the
rental that a company
foundation of
definite
have increased in line with indus¬
trial
either
means
made, the margin of profit serves
plied by stockhoders—the plant as a recorder or yardstick of the
and tools on which productivity is efficiency of the
managers of the
all
respect
and
or
In
the
are
formation which is essential to all
for the plant and tools
pays
closed.
to
wages
wages
when
self confidence."
Company
they
Adequate profits are essential
profits when they
Consequently this subject become large, signal the need for for business and industry to ful¬
merits the attention and concern
fill their responsibilities to serve
expansion in those lines of pro¬
of each of us.
duction in which demand is in¬ the general welfare. They stimu¬
We must correct the widespread
creasing. Contrariwise, a lack of late expansion and competition,
popular belief that profits are just profits indicates the
thus providing more and better
necessity of
a residue paid out to stockholders
with
contraction
in
consequent
lower
those
industries goods
ployees as mere fixtures or cogs
in a machine, but honors them as
associates
sur¬
tions.
real¬
a
labor1
treat
people.
First, " profits
that
conceived
Mills
strives to
means
well-paying jobs.
well know, profits
in a competitive enterprise econ¬
standing can
be cleared
omy
perform many other func¬
Robert G. Dunlop
tions. They are the guages in our
away,' our
competitive '
general office control rooms which
enterprise system is in serious signal the economic temperatures
jeopardy of being disrupted by ill- and pressures of the times.
General Mills."
saicl
not
a
Functions of Profits
as
true
stockholders
by
of
is
as
b-
this ignorance
and misunder¬
payroll
our
they have worked
all of us who are
for
owners
itself, but
,
to know that
faithfully
in
end:
an
since
But
sales,
high production, and the good
earnings. To their neighbors and
to our customers,
they are the
company.
I want our stockhold¬
ers
u
so.
the
"We
"Good earnings are absolutely
essential," Bullis said, "if indus¬
try is to continue its high wage
payments, maintain its plants, fi¬
nance expansion, pay dividends to
stockholders, and prepare for a
possible
turn
in
the
business
cycle."
;
impor¬
more
on
end
stockholders.
s
this should be
than 12,000 men and
are
/
more
American
have
prising
have made possible the high
Mr. Bullis added that until the
provides
"The
women
^
capital investment. This is true
whether the profits are reinvested
in
the business Or paid out to
it
tant than ever before.
fashion.
an
to
the war's end,
The human ele¬
its earnings, just as we are, in this
<-..i,
the end being an im¬
proved standard of living for the
jected
execu¬
said,
of
human relations.
to
the
been
respon¬
corporation
a
\
,
people
Relations
of
;t s i
American
Cites Importance of Human
One
ganda
which
"I
continued.
.
lectivist prop-
namic
capital¬
ism," Bullis
'Ji
widespread ignorance and mis¬
understanding of the function of prices and profits as stimulators of productivity under our
competitive enterprise economy than exists today.
In view of the steady stream of col-
stockholders, employees and the
consuming
public,"
Bullis said.
It is a demon¬
in
* ''4
of line with prewar earnings.
bal¬
interests
the
p
Deploring popular misconceptions of both nature and function of profits, oil executive stresses influence
profits as gauges for greater productivity in industry and expanded capital investment* Points out
heart of profit system is a price mechanism which
adjusts supply and demand. Cites oil industry as 5
demonstrating prices, profits and productivity are interdependent. Says oil industry profits are not out
your
a
i
y
of
the
throughout
f f
President, Sun Oil Company
country.
produc¬
new
tion
formal
n
,ti
13
"
in new facilities and in improving present
stated:<i
vestment
Pod:
a
By ROBERT G. DUNLOP*
regional meeting of stockholders of General Mills held in
a
(2073)
Prices, Profits, Productivity in
New York City on Nov. 15, Harry A. Bullis, Chairman of the Board
of General Mills, in referring to the $17 million invested in past two
public
CHRONICLE
Peas in
America's future.
•
FINANCIAL
Dynamic Capitalism
Harry A. Bullis of General Mills tells stockholders company's heavy
investment in new production facilities is profession of faith in
At
&
N.Y.
SAN
FRANCISCO
the
page
supply
36)
14
COMMERCIAL & FINANCIAL CHRONICLE
THE
(2074)
Thursday, November 18, 1948
Economic Fallacies of Price Sapporis
Bank and Insurance Stocks
By W. M. CURTISS*
The Foundation for Economic Education, Inc.
By H. E. JOHNSON
Holding price supports are form of price control, Mr. Curtiss points out they are no aid to price stabili- zation, since major swings in price level lie in monetary and fiscal policy.
Holds free market system is
essential to free enterprise, and no administrative bureau can properly operate the delicate price mechan- v "
ism.
Concludes price fixing requires both production and consumption control and hampers progress
as well as leading to complete economic domination of population.
This Week—Insurance Stocks
old; discussions have been taking
With the elections two weeks
,
place in financial centers
as
to the shane of the economic and political
framework within which business will have to work out its problems
the next four years.
over
While the final
answers to many of the questions raised will not
be available until after Congress convenes in January, 1949, campaign
speeches and pronouncements of important officials offer substantial
evidence as to the nature, if not the extent, of prospective legislation.
any
demand meas-
Prominent among the subjects
mentioned for immediate action
labor relations, price controls, allocation
when Congress convenes are
Major swings in our price level such as occurred during the depression of the early
rapid inflation since the beginning of the recent war are forces which rock
economy on its foundation.
Not knowing the causes, pressure groups frequently
1930s and the
ures
of scarce materials and taxation of
corporations.
While it is dangerous at this time to generalize about the form
such a program will take and its effect upon business, certain obser¬
vations with respect to possible areas of impact would seem to have
some merit.
Obviously, different industries, because of the nature of
their operations,-may be affected in varying degrees according to the
type of regulations enacted.
'
^
For the most part, it appears that fire insurance companies would
not be ^directly concerned with the phases of the legislative program
relating to labor relations, price control or materials allocation. Only
in the field of taxation would such-insurance companies be directly
w
It
h ic h,
might be asserted that price
or price ceilings on indi¬
when adopted,
supports
change a vol¬
untary
econ¬
omy
into
a
vidual
ionary
controlled
oid end the discussion there.
commodities
ective
or
el¬
not
are
preventing major inflaand deflationary swings,
m
is important to
But
managed
t
economy,
y£ the harmful effects, of such pro¬
point cut
some
,
affected and even here they appear to be in a
relatively favorable
position-.'
'
In the first
place,
substantial portion of their investment income
is exempt from income taxes. 85% of the dividends received from
a
Stripped to
essentials,
grams.
its
basic
the
supports are a* form of
-They then become
i part of a broader arrd more im¬
portant question, namely-, whether
orice control.
jective of the
price
support
pro¬
gram for agri¬
over-all
is
culture
;he nation shall have
1921
duction
as
those 01
Few
1929.
persons
would disagree with the desirabilr
Thus, it would appear, the investment income of five insurance ity of the objective; the basic
companies, which is the primary determinant of dividends, would not "disagreement lies in whether or
feel the full impact of either an increase in the normal tax or restora¬ not the
price supports are. suited
tion of an excess profits tax.
to this' end;
Other stated objec¬
of
controls, such as
nation's food
largely lor the purpose
Indirectly, some loss of dividend income might be experienced
if the tax enacted was severe enough to force a reduction in dividend
tives
distribution.
supply are
of
making
the
palatable to
consumers.
•
more
program
*
»
..
The
general price level might
compared with the level o)
be
time, there is a continuing fjow of new funds from .water in a lake. The level mes
increased premiums which provides additional sources of income; and falls because - of. what hap:For these reasons the present level of investment income for most pens at the ihlet artd the outlet;
On- tne
surface
are
fire companies is believed relatively secure.
ripples of
1
For comparative purposes the following tabulation of a selected waves, corresponding to the price*
They
list of fire insurance companies is presented. It shows the underwrit¬ of individual, commodities,
rise and fall in some degree even
ing results, investment, income and net earnings for 1947 on a per
though the level of the lake does
share basis, together with current annual dividends, current
price,
not change,
A price support or
yield and 1948 price range.
- *•
ceiling, on one commodity may
-1947 Earnings——
Bid '
Uncferw.
Invest.
change the height of that .ripple,
Net
Annual
Price
1E48
Div.
Profit; Income Earn.
11-15-48
Yield
Price Range
but it is offset by others and has
At the
same
-
-
■
*
$
Aetna Insurance
American
$
'
little
1.80 '
45%
3.96
49
-
41
—4.52
3.00
62
4.84
67
-
51
.1,03
0.67
0.70
16 %
4.24.
18%-
14%
48%
—0.34
Insurance,
2.17
3.61
Insurance,,___
Federal.
V
,
2.13
544
4.31
2.28
1.91
4.18
0.94
4.63
2.23
3.54
Fidelity-Phenix
Fire
8
2.93
Ins. (Newark)
Continental
*
—0.83
Insurance, —10.00
Agricultural
,
Association,,,,
Fireman's
Fund
Fireman's
(Newark
.
5.50
2.00
58%
3.40
64
5.28
1,60
56
2,86
59
5.86
,
2.20
G5
3.38
69%-
.
5.42
2.50
55
6.03
:
2.60
74
-
44%
78
-
654
1.42
2.25
0.50
13%
3,70
15%.
11%
2.25
4.44
1.60
42%
3.74
47
40%
0.75
2.13
2.89
1.20'
30
—0.68
2.23
1.54
1.20
28
7.14,
5.40
11.87
2.50
112%
2.22
Home Insurance
1.84
1.97
3.48
1.30
27%
•4.73
Ins; Co, of
1,25
6.21
7.71
3.00
—5.93
3.79
—2.14
2.00
43%
4.60
0.26
1.86
2.12
1.40
32 %
4,31
36%- 29%
1.54
4.61
6.03
3.00
81
3.70
90
-
—0.09
1.80
1.71
1.40
30%
4.59
73%
35%- 30%
& Marine
5.59
3.80
9.07
2.25
75
3.00
81
-
65%
Security Insurance
Springfield Fire & Mar.
—1.55
2.52
1.39
1.40
27%
5.09
31
-
23
0.35
2.20
2.55
1.90
43
4.42.
46%-
39%
0,78
3.27
3.98
2.00
54
3.70
57
45%
—
American
Hanover
Fire
Hartlord
National
National
Phoenix
„
I
No, America
Fire
Union
Fire
;
Insurance
-
Washington
St, Paul Fire
Firc,^
S.
As
are
Insur.,
Fite
Providence
H,
Insur.
can
be
seen
from the above
4.00
Vi
102
30
20
23%
-100
-
122
29%- 23
2.94
108
•
92
-
49%- 41
-
'
.
figures, current dividend payments
generally conservative in relation to investment income.
same
•
32%.
-
4.25
At the
time, dividends and interest received for 1948 should be
con¬
siderably higher than last year, both because of larger payments by
most industrial companies and
higher interest rates
as
well
as
a
a
con¬
siderable increase in investment income for most fire
companies.for
the current period.
In the meantime insurance
stocks after reaching new highs sev¬
have declined in sympathy with the general market.
While the reaction has not been as severe as for some
groups of in¬
;
eral weeks ago
dustrial companies, a number of stocks
their previous
are
selling considerably below
peaks.
J. M. Alford
BANK
and
ness
from
Street.
INSURANCE
Opens
McCOMB, MISS.—J. M. Alford
is engaging in a securities busi¬
with
offices
Mr, Alford
Howard,
222
at
State
formerly
Labouisse, Friedwas
richs & Co.
Members New York Stock Exchange
LOS'•
Ben Teletype—NY
1-1248-42
(L. A. GJbbs, Manager Trading Dept.!
ANGELES, CALIF.—Ru-
fus Lee Carter is
ness
120; BROADWAY, NEW YORK 5, N. Y.
Telephone: BArclay 7-3500
on even
serve
in
prices, of' in¬
constantly
commodities.
in
a
stable
economy,
useful
and
We
a
this function in
see
important
operation this fall in the relation
of the price of hogs to corn. With
a
v.ery short coin crop in 1947,
corn prices
advanced relative: to
hogs and farmers economized in
the feeding of corn. Now with a
very large corn crop, farmers hav
the signal, cheaper corn; to ex¬
pand the feeding of corn to hogs.
These adjustments run all through
our
economy.
In a free market,
farmers will constantly shift their
production of cabbage, potatoes,
sweet
corn
and all other crops and
livestock products to meet chang¬
ing price relationships.
It
of
a
is not denied that the price
single commodity or several
,
commodities
above
or
can
be
from
Seventh
same of
was
now
offices
at
doing busi¬
215
previously
a
partner in Car¬
Mechanism
-<
•
A free-market
system is perhaps
ingredient of
;he voluntary economy. Without
his freedom to express his wants
and thus have a hand in guiding
production and consumption; man
he
most
essential
Even
if this Were done for
one
commodity, or. for many commod¬
ities, the major problem of pre¬
venting general inflation or de¬
of
the
hardly be called free.
pan
The
sole
purpose of
Production is to satisfy
:
the wants
tory method kdown bv which con¬
can
make their
prefer¬
sumers
ence known.to producers and
thus
guide * production, is through the
free-price system.' Millions Of in¬
dividuals
are
for
or
vote
thereby enabled
to
against individual
products by their acceptance or
rejection-,of items of consumption.
Another method of
guiding pro¬
isumption is to let
a single individual
central bureau be substi¬
duction and
co
the decision of
or
of
a
tuted for the decisions of millions
of
individuals
particular
There
is
or
no
interested
in
that
related commodity.
third choice.
Either
the free-price system will be per¬
mitted to do the job or it will not.
The
way in which there is
ground, is in the sense
that not all items of goods afad
services
may
be under control.
Some may be free and some con¬
trolled for a time, 'but there is
a
only
middle
evidence,
abundant
to
indicate
that, once started, price control
spreads because of > the complex
influence which products have on
each other. First, the price of a
single item may be controlled and
then it is found necessary to con¬
trol its substitute and then the
substitutes for the substitute, and
so on and on.
*
;
It
.
must, be
assumed
that; those
who favor
wise it would not be
price control.
free-price mechanism is
as delicate as a fine-precision in¬
strument with millions of moving
The
parts.
Each part contributes to
operation of the whole.
It
operates so smoothly that it is
the
sometimes" called
nation.
the
it
is
anything
sense
automatic;
But
but automatic
that it
runs
in
without di¬
rection.
*:iAn address by Mr. Curtiss be¬
the Northeastern Vegetable
and
Potato
Council,
City, Nov. 13, 1948.
New
York
sect
damage,; the availability oi
harvest help and machinery, the
burning of a few thousand Jjushels
in
of
local
a
elevator, the availability
■*
for
shipping, * the;
(-boxcars
.
of
amount
-
wheat ^'fed
stocky itiie production
to
-
live-
Wheat in
?
-
Canada; - China and ' Russia, and*
literally thousands of other things
that
are
call
suppply,: or prospective
wrapped up in what,
we
sup¬
ply.
.
The demand
is equally or
side
complex.
It is influ¬
by the price of oats, corn,
potatoes,
rye,
and many other
even
more
enced
competing
crops.
The
general
level of prosperity in the country;
the amount of ;wheat purchased
for foreign account, the price of
automobiles, and radios, and an
unknown number of other factors
all
have
No
bearing
a
one
person
on
or
)
demand.
bureau
can
possibly know all the contributing
why f reject a radio ofp
decide to.
reasons
fered at $12.98 and you
buy it.
economic
The most • satisfac¬
•>f consumers.
giant swings in the general
price level lies in the area of the
monetaiy-.and fiscal policy of the
fore
supply may be such factors as thd
prospects for ram' in the wheat
country, the amount of snow id
the mountains, the amount of in¬
-
price control of a com¬
modity, whether it be price sup¬
a
bushel, and if a large enough ports,
price
ceilings, subsidies,
number of
policemen were as
marketing
agreements,
forward
signed to the job of rationing the pricing or other form, believe the
very small production at. 25 cents,
price should be either higher or
or
of restricting the very great lower than it would be if volun¬
attempted production at $25, the tarily arrived at By a willing
price, eoufd be maintained.
buyer and a willing seller. Other¬
West
Street under the firm
Carter & Co. Mr, Carter
ter & Whitney.
.The Function of the Free-Price
maintained
be in a free market.
The price
of potatoes, for. example, could be
set at 25 cents a bushel or at $23
Socialism,
,
below where they would
The solution of the problem
Carter & Co. in L A.
.
the over-all
on
flation would not be solved.
STOCKS
Laird, Bissell & Meeds
effect
lake, the general price
V
changes
function.
geri-
This should result in
erally larger amount of invested funds.
The
going
,61
3.51
0.83
Great,
of the latter choice* is called
Socialized
Capitalism, State Socialism, M?rxlan Socialism, Collectivism or just
plain Communism;
*
'*■
...
dividual
2.22
Glens Falls
level.
53
4.55
'
'
or no
level of the
'
47%
•
come
Democratic
the protection of the
However, most industrial corporations are paying out
only about 50% -60% of earnings and it would appear that a consider¬
able reduction in earnings would have to take place before any mate-'
rial change in dividend payments from the levels of the past two
years would be necessary.
allocation of la-
control,
.x>r, and ultimately, socialism." it
natters little whether the out¬
price
•
economy
markets, or whether ■: it
shall be one of price control, pro¬
to
.and-
an
yfr free
W. M. Curtiss
preferred stocks is exempt and most insurance com-*
panics have large holdings of theSe types of equities. In addition,
five companies own considerable amounts of tax exempt securities
such as government, state and municipal bonds.
-
,
Price
ob¬
prevent a gen¬
eral
collapse ;
in
farm prices such
and
common
-
pressions—supply
and
demand:
sounds simple, but back oi
That
Consider, for example, some of
which, together, make
the- price of a bushel of wheat.
the factors
We boil them down into two
ex¬
Perhaps my wife wants a
hat, and yours doesn't. - Forr
new
tunatel.y
it is not
each- buyer
and
this information.
that,
necessary
seller have all
All that is nec4
ersary to consummate a sale/ is
for a seller to .say, "I am willing
to sell fcr this," and the buyer to,
"Lam willing to pay it"
say,
Th$
seller may conclude, "I can't con¬
tinue 1d sell for that and stay in
business,"
the buyer
or
may
say,
-
"I can't continue to pay
that much
and stay in business."
Suffice it
to say, the exchange .was made,'
with
and
to
alternatives knowtt
the
each
party, the exchange- was
agreeable to both.
Basic Question: Who Should Plan?
The
basic
involved
question-
here is not whether there should
be economic planning or not, but
rather who should do it: Economic
planning there-will be.
If either
will be done* by thousands and.
thousands of individuals who
are
directly concerned, each making
independent decisions, or by a;
central planning committee.
;
A central statistical bureau may
volumes
of data
con¬
assemble
a
demand and
the
cerning
of
certain commodity.
a
temptation
great
for
supply
There is
them
to
feel that they know so much more
conditions
than
a
single
producer or consumer can pos¬
sibly. knew, that they can there¬
fore decide the price more wisely.;
The fact is that they cannot have
all the pertinent facts and per¬
about
haps not eyen the most important
ones, and even if they had, they
could not move quickly erough to
change
with each changing situ¬
*
ation.
"
,
delicate
price mechanism
works miracles in guiding work¬
This
ers
into each branch of the
omy
and
m
guiding the
materials and other
use
econ¬
of raw
resources
ac-»
cording to the wishes of eensum-?
ers.
Some have argued that our
economy has become too complex
to
let
it
run
without
a
central
Actually, the more complex
it becomes, the more important
it is to have the economic plan¬
ning done by the individuals con-,
cefned, and .their decisions re¬
ported in a free market.
plan.
The
guide
free
to
market
persons
serves
in
as
a
deciding
Volume 168
Number 4752
whether they
THE
COMMERCIAL
should be
dentists, plate- this type of action.: In such
doctors, farmers, lawyers, school g situation, the signal to both proteachers, grocery clerks, or bank cjucers and consumers is wroqg,
Whe
this
i
function
of
price is tampered with it becomes
necessary to dictate to the work¬
what jobs
ers
they shall fill and
how
they shall fill them. England
already discovered this.
The free-price system is a
guide
has
with
the
arises.
The
home.
steel
should
ot.ier
whether, oil
be
used
serves
how
heating
guide
a
a
This system tells the
its
in
tells
and
use
the
the
producer, for
plant
to harvest all of his
the
small
how
much
use
and
whether
pay
him
to
system.
tells
to
lots
direction,
,•
result
that
in
to.market
moves
whether
All tnis
almost acciden¬
,
the-
irrigation
an
wholesale
-
to
will
packages.
guidance appears
a ud, without
with
it
not
him
in
crop
consumer
fertilizer
or
in
put
It
his
in
potatoes
ground at harvest time.. It
suggests
pack
econ¬
expand it.
many acres to
leave
or
to
or
potato
whether
crop
tal
It
users
commodity whether to
example, how
or
house.
a
in determining
feed,, grain should be
to dairy cows or hens, or to
omize
on
gas or coal should
.
much
fed
It
or
for
as
hogs.
of
It4'suggests
purposes.
but
the
an
crop
extremely
A
system
of
where prices
the
are
price
supports
maintained above
free
market ievel by govern¬
a system tried
by a number of agricultural mar¬
keting cooperatives 25 years ago.
They found that by keeping prices
ment is not unlike
too
high
and
more
aged
ered
and
crop
they encouraged more
production and discour¬
If
the
price of
commodity is
a
arbitrarily set by a central bureau
it. migvit conceivably
be at the
^s$me
level : that a free market
would place it, in one certain spot
at
certain
one
serves
to
no
be
It
purpose.
wrong
other
time, and
times
if
is
so
certain
at other spots
it
because
or
can't
sibly have the flexibility
tion differentials that
it
at
pos¬
or
loca¬
free
a
mar¬
ket provides.
There is no one
price for a commodity like pota¬
toes. There
literally thousands
of different prices,
depending on
different conditions, hiaking up
..what
are
think of
"the market
as
•
price.''' And strangely enough, in
free
market, each of the many
prices
is
the
"right"
price for the given situation.
a
different
Prices As
As
a
Keeping
dumps its
gives it away
or
into
other
of
uses *
low,
some
Producers
Suppose
in
above where it would be in
market
government
and
the
private coop¬
erative following such a policy is
that the government has taxing
power behind it and can' finan¬
cially
conceal
a
the
longer time.
Whereas
for
error
kind, of
a
trary
out
some
controls
acreage
controls,
find
we
and
the
potato
of
vidual
are
been
ten
of
records
cost to
toes
these
costs
produce
to
host farm.
75
cents
The
for
average
bushel.
a
The
they stimulate too much produc¬
on
the
$1.09
enterprise.
per
as
may
now
good as mine
a political foot¬
decide to scale
may
eliminate
producers.
the
It would be
up a formula
apply to nearby areas
from
far
areas
illustrates
This
tion
side
the
market,
free price would.
problems involved
whe
i
interfered with.
needs to where
ter but also shares in the produc¬
tion qf automobiles,
refrigerators,
transportation/enter¬
tainment, education, churches, and
bathtubs,
other goods and
many, many
This kind of progress
tinue
with
markets.
This announcement is neither
'
-
the repercussions affect all
interest %
Price
is
somewhat
•
an
The
"
It
that farm efficiency could develop
to a point where only one family
in twenty will be required to raise
the
nation's
progress
food
cannot
supply.
continue
It
has
been
the
estimated
nation's
food.
that
Price
farmers who
the food.
■
Price
is
a
ducers and
modity
signal
as
both
of
consumers
well
as
to
as
agencies involved
It isn't
to
though
in
of
some
on
free
the
the produc¬
markets
Problems
was
are
on
the
prevented from having a
directing production ac¬
cording to their wishes.
ers
average
are
hand
in
Over
farmers
them,
the
years,
have
thousands
found
that
of
Frqm a purely selfish stand¬
point, Northeastern farmers stand
to lose in another way from price
supports. Such supports would be
unmanageable if they took into
tend
to
encourage
duction in
located
areas
increased pro¬
distant from
-
•
at
Some
advantage of being
the
consumer's
the
our economy
advantage is indicated by the
that the acreage of potatoes
in upstate New York in 1948 was
fact
only half what it was on the aver¬
age from 1933 to 1942. They have
been "supported" right out- of the
market.
age
In contrast, potato acre¬
has been expanded greatly in
distant
areas
more
In
slightly
a
from
different
(Continued
on page
any
of these Shares.
no experience with
mixing up
signals, .We have seen potato
prices set too low with a resulting
potato famine before a new crop
the
along. "The
came
to
of
potatoes, failed
Rad
it
signal
economize
this faulty
would
also
in
to
to
signal
have
{Par value $25
.
in
which
the
use
continued,
been
rents of
fixed
were
signal to renters
omize
on
Price $26.40 a
inter¬
but
low.
build
given,
have had a
the
was
result
not
that
the Prospectus
of
these, Shares
eh)nem such of
obtained from only
as may legally offer
ewith moc,nsecurities .laics of the, respective States.
cnailp the i
housing famine. When
a .commodity is set
the market
it, the product becomes
its allocation
When
a
becomes
would
scarce
a
set
and
problem.
free price is not permitted
ration
a
product,
method must
be
,
some
used, and it
tickets,
may
soine
markets,, or with
special favoritism, or
or
other method.
In the other direction, we have
had
experience with arbitrarily
setting
trices
higher than
the in.
a
of
a
commodity
free market would
Price supports contem¬
,
MORGAN STANLEY & CO.
COGGESHALL & HICKS
other
be done in black
set
Copies
we
price of
lower than
to
The
econ¬
expand,
The signal
housing
new
with -the
to
to
and they did just that.
to
Share
dwellings
too
was not
space
Share)
them
preted by producers to cut future
production. A similar situation has
existed
a
con¬
the
reach
*
1
had
sumers
Telephone Company
$1.32 Cumulative Preferred, Stock
has
G.H.WALKER &. CO.
A. M. KIDDER & CO-.
MERRILL LYNCH, PIERCE, FENNER & BEANE
CHILDRESS AND COMPANY
LEEDY, WHEELER & ALLEMAN
Incorporated
Xovember 15, 10 !fS.
back
evidence of this loss
;
distribution.
mar¬
of
they
nor a solicitation of an offer to hay
offer is made only by the Prospectus.
offer to sell
Peninsular
com¬
of
■
t
pro¬
a
all
•
sup¬
produce only 4% of
100,000 Shares
■
one-
ports tend to keep in competition,
like
■
in¬
the least efficient one-third of the
the
is wrong, the ship may get out of
control.
Such
if
third of the farmers produce 80%
of
the
signal which the captain on
bridge of a ship sends to the
engine room. If the signal is right
the ship stays on its course the
way the.captain
intended.
If it
con¬
and free
is not inconceivable
rn
wrong,
can
competition
Signal,
arbitrarily set price for
commodity probably always is
ser¬
vices produced by nomfarmers. *
door.
consumption side are' just as in¬
volved and important.
Consum¬
highest-
of
is
that. will
the- way a
bushel and
Two
own
farm family now feeds itself
and five other families. The farm¬
er not only feeds his family bet¬
a
their economic
most of the growers made a profit
were
our
ket; nearby producers tend to lose
and
the
returns
on
point where
little more than
a
that would
1946,
indi¬
enough for its
elsewhere.
efficiency
farm produced
ex¬
very-difficult to iset
year.
cost
useful
seen
farms increase from
a
an
each
inefficient
and detailed
the
They
(method
this
cents for
services
have
In
they have found
grower's * acreage by account all of the various location
same-percentage: Any method factors that a free market con¬
chosen
is likely
not
to
be
a
siders. As a result, price supports
kept.
The
bushel of pota¬
a
their
We
economy
the
number
in
guess
ball.-
were
from 49
$1.92
a
drawn
do
down
Col¬
each
farms,
were grown
of
varied
lowest
on
farms
be
potatoes
-
because it is now
in
high,
too
Your
auto
kept
may
more
about the surplus
They- may- decide that
acreage
should he
reduced
or
marketing'quotas should be es¬
tablished. ; How will they do it?
to
production.
support
York State
accounts
York
potatoes
free-
If prices of
commodities
had
New
cost
New
On
because of the very nature of the
price system.
The
tailed
failure
to
lis'What
lege of Agriculture supervises de¬
prices,
without at the
same, time exercising some direct
control over production.
Such a
doomed
wayside,
point.
mqrket
seems
through
An illustration may serve at
Agricultural leaders have long
been trying to devise some sys¬
tem to raise the price of agricul¬
:earch
if,
buggy manufacturers in business.
sys¬
above
today
result,
I The problem of the planners
else¬
resources
eflicient farmers.
panding
nothing to fear from competition.:
producers!
a
continue to be produced than can
be sold at the designated price.
business. Suppose we had adopted
a system of
price support to keep
only
using
commodities
inefficient • producer to
more
efficient production is encouraged,
Efficient farm producers have
in. As
manufacturers that have fallen by
heavy applica¬
tions of fertilizer to produce po¬
tatoes
which
may
be used for
livestock feed or be destroyed. •
tural
the
prices, all of the hundreds of
With¬
farmers putting in irrigation
tems,
ness
sur¬
with
or
his talents and
in¬
could not meet the competition of
ficient
where. Think what would be the
situation in the automobile busi¬
kind of arbi¬
controls.
to
use
situation,
; 15
potato business but even less eih
keeping
types of business.
price serves as a sig¬
nal
a
some
rationing system,
effect / in
all
The market
scarcities," due to set¬
production
such
ficiency in
„
pluses require
its
this
Not only are the inefficient pro¬
ducers encouraged to stay in the
free
a
producers in. business.
competitive economy," based on
free market prices has been
an
important factor in improving ef¬
dif¬
between
course
is
in
of a free market for pota¬
toes, the price is arbitrarily set at,
say, $1.50.a bushel. What happens?
A
of.
com¬
stead
1
inefficient
ference
1946 the
in
bined judgment of potato growers
is. that for next year the-potato
Another consequence of k price
support
which
holds
a
price
their
An'important
situa¬
uncommon
an
Now, suppose
at
stimulus
Inefficient
other, cooperatives - based on this
principle either failed,, or changed
policy.
not
direct
or
Business
consumption. They discov¬
they were building up larger
larger carry-overs from one
to the next. One after an¬
orderly fashion just meeting the ting prices too low, require
demand, as well-as serving as a
guide to producers of next year's
crop.
\
--y»'/»■"/ •
type
subsidies
used for
for
it
is
such- as business doesn't look as, attractive
compulsion is as some- other crop and they- de¬
required to bring out the produc¬ cide to reduce
potato acreage.
tion assumed
necessary, It is but Which dnes should reduce?
We
a
short step from there to. the
will probably all agree that unlets
British system where prices are
the.hjgh-cpst producers had some
guaranteed and farmers told what
special situation that they can cor¬
10
produce.
It is a. still shorter
rect; they might better spend their
step from that to complete nation¬ time
growing < something
more
alization qf agriculture. Our own
profitable.: The firee market sug¬
Supreme Court has said that it is
gests this course of action and the
logical to expect government to
entire economy, as well as indi¬
control that which is subsidizes.
vidual producers, benefit.
Experience in Setting-High Price
much
necessary
If prices are too
other
for the avail¬
be
how
abroad
diverts
or
able commodity.
tractors, automobiles, for
housing, for toys, for railroads and
to
enterprise,
tion, even when average returns
are satisfactory.
are
the. government
surplus
The producer is
encouraged to expand production
beyond where he otherwise would.
as
the
on
This
unless
aged from expanding consumption
because of a price higher than he
would willingly pay
lost
however,
consumption at
(2075)
production controls'
"surplus'
is discour¬
consumer
CHRONICLE
that level of prices; some kind of
that 'a
result
FINANCIAL
tion and too little
-
clerks.
&
market.
way,
16)
we
Volume
168
whether
Number
THE
4752
they should, be dentists,
doctors, farmers, lawyers, school
teachers, grocery clerks, or bank
-
clerks.
When
1 his
function
of
price is tampered with it becomes
to dictate to the work¬
necessary
ers what jobs they shall fill and
how they.shall fill them. England
has already discovered this.
The freerprice.system is a guide
as
to how much steeh should be
COMMERCIAL
for
otxier
whether, oil
be
used
serves
It
purposes.
or
for
suggests
coal should
gas or
tion and too little consumption at
however,
a
that level of
This
In such
situation, the signal to both pro¬
ducers
with
and
is
consumers
that
result
the
arises.
The
'g
discour¬
for the avail¬
able commodity. The producer h
encouraged to expand production
beyond where he Otherwise would.
willingly
pay
heating
house.
a
It
where
the
prices
high
It
tells
use
the
potato
example, how
and
leave
or
econ¬
expand it.
producer, for
to plant
many acres
whether to
crop
to
or
harvest ail
the
small
of his
potatoes
It
the ground at harvest time..
on
how
suggests
and
use
him
pay
It
his
pack
in
tal
it
not
almost acciden¬
appears
andwithout.- direction,
,
with',
the
to
will
in wholesale lots
packages. All tnis
crop
consumer
guidance
fertilizer
or
put in an irrigation
tells him whether to
to
system.
or
much
whether
result
that
but
-
the
crop
to .market in an extremely
moves
orderly fashion just meeting the
demand, as well as serving ps a
guide to producers of next year's
crop.
'•
yy:;,Vn.'";
,
If the price of
arbitrarily set by
it
might
.
commodity is
a
central bureau
a
conceivably
level
that
;
be
free
a
the
at
market
no
be
time,
is
it
because
tion differentials that
provides.
price for
or
can't
sibly have the flexibility
ket
so
at
pos¬
or
loca¬
free
a
There
it
certain
at other spots
wrong
other times
if
and
It
purpose.
mar¬
is
no
one
commodity like pota¬
a
toes. There
tried
they encouraged more
production and discour¬
They
and
larger
.What
think of
"the market
as
the
to
of
ference
government
erative
next.
course
and
•
between
private
a
following such
a
the
coop¬
policy is
Prices
As
a
As
its
Whereas
pluses require some kind of arbi¬
trary production controls. With¬
out
such controls or with only
Not
keeping
serves
as
Think
situation in
what
the
would
be
in. As
automobile
fertilizer
which
livestock feed
to
be
may
or
produce
po¬
used
for
commodities
free-
above
market
prices,
without at the
same time exercising some
direct
control over production.
Such a
price
system.-
If
commodities
are
less efr
drawn
be
potatoes
may
New
of
On
York
of
ten
potatoes
of
lowest
to
as
be
es¬
They-may
down
each grower's jacreagq by
same-percentage. Any method
chosen I is. likely
not," to
be
a
the
method
that. will
inefficient
very
eliminate
producers.
difficult to-set
$1.92
cen-s
cents
for
The
the
It would be
a formula
up
the
on
tion
Two
when
the produc¬
on
free
the
of
some
markets
Problems
are
on
the
consumption side are' just as in¬
volved and important.
Consum¬
was
are prevented from having a
hand in directing production ac¬
cording to their wishes.
ers
$1.09 per bushel and
enterprise.
side
interfered with.
the
profit
illustrates
problems involved
average
most of the growers made a
much produc¬
The
cost
The
not
er
only feeds his family bet¬
ter but also shares in the produc¬
tion
of automobiles, refrigerators,
transportation,
enter¬
tainment, education, churches, and
many, many other goods and ser¬
vices produced by non-darmers.
bathtubs,
This
kind
progress
can
price
set
for
commodity probably always is
wrong, the repercussions affect all
interestPrice is somewhat
This announcement is neither
•l
and free
is not inconceivable
efficiency could develop
point where only one family
required to raise
food supply.
Such
a
in twenty will be
the
nation's
cannot
continue if in¬
production is encouraged.
Efficient farm
producers have
nothipg to fear from competition,;
progress
efficient
It
has
been,
estimated
that
.
an
Over
?
the
farmers
of them,
offer to sell
ports t$nd to keep in competition,
the least efficient one-third of the
farmers who prodpee only
the food.
years,
.have
thousands
that
found
From
factors
of
purely
that
siders.
tend
a
As
to
selfish
free
a
solicitation of
nor a
an
market
areas
distant from
is
a
modity
signal
to
their economic
located
of
at
Some
advantage of being
the
consumer's
evidence
well
as
to
as
all
Peninsular
com¬
of
the
■
agencies
It isn't
involved in
as
though
distribution.
■
:
..
'
■-
in
upstate New York in 1948 was
only half what it was on the aver¬
from 1933 to 1942. They have
"supported" right out'of the
market.
In contrast, potato acre¬
age
been
age
has been expanded greatly in
distant
from
areas
more
In
slightly different
a
(Continued
on
page
any
of these Shares.
had
no experience with
mixing up
signals..yWe have, seep potato
prices set too low with a resulting
along. :The
came
to
sumers
of
potatoes, tailed
Had
it
this
a
new
signal
economize
in
faulty signal
would
also
have
'
' '
'
j
;;
a
Share)
;
crop
to
con¬
the
reach
to
'
(Par value $25
the
potato famine before
Telephone Company
,■
$1.32 Cumulative Preferred Stock
has
our economy
V'.
use
them.
continued,
been
Price $26.40 a Share
inter¬
preted by producers to cut future
production. A similar- situation has
existed, in
which
the
rents
fixed
were
signal to renters
omize
on
space
,
of.
dwellings
too
was
low.
not- to
but
The
econ¬
to
expand,
they did just that. The signal
new
housing was not
given, with the result that we
have had a housing famine. When
and
to
the
build
price
of
lower than
,a
.commodity
the
market
it, the product becomes
its allocation
When
to
a
free
ration
a
becomes
is
set
would
set
scarce and
a
problem.
product,
,
some
used, and it
some
may
special
favoritism,
CO.
COGGESHALL & HICKS
-\
G. H. WALKER &
CO.
MERRILL LYNCH, PIERCE, FENNER & BEANE
or
other method.
In the other direction, we have
had
experience with arbitrarily
setting
prices
higher than
set
MORGAN STANLEY &
other
be done in black markets,, or with
or
be obtained from only such of the undersigned as may legally offer
compliance with the securities laws of the respective Stales.
may
these Shares in
price is not permitted
method must be
tickets,
Copies of Ihe Prospectus
them.
a
ol
a
commodity
free market would
Price supports contem¬
A. M. KIDDER & CO\CHILDRESS AND COMPANY
.
t
November 15,-19
'
■
1'
'
.
«■
LEEDY, WHEELER & ALLEMAN
'
•
,.
•
•'
'
.
"
>
•
r
loss
indicated by the
fact that the acreage of potatoes
advantage is
100,000 Shares
pro¬
a
back
of this
like
both
of
consumers
mar¬
ket; nearby producers tend to lose
control.
Price
con¬
result, price supports
encourage increased pro¬
duction in
they
offer to buy
stand¬
a
the
ducers and
4% of
'
the
signal which the captain on
bridge of a ship sends to the
engine room. If the signal is right
the ship stays on its course the
way
the captain intended.
If it
is wrong, the ship may get out of
one-
third of the farmers produce 80%
the nation's food.
Price sup¬
of
The offer is made only by the Pros pectus.
•
con¬
competition
It
markets.
that farm
to
of
with
tinue
door.
free price would./;
a
This
highest-
returns
were
1946,
for
the
average
bushel.
a
the-way
bushel of pota¬
49
enough for its own needs to where
a
farm family
now
feeds itself
and five, other families. The farm¬
supports. Such supports would be
unmanageable if they took into
account all of the various location
balls
year.
kept.
elsewhere.
efficiency on our
farms increase from a point where
a
farm produced little more than
a political foot¬
decide to scale
is
because it is now
Col¬
in
useful
seen
point, Northeastern farmers stand
to lose in another way from price
and detailed
were
a
from
farm.
cost
each
farms,
costs
produce
varied
toes
75
these
were grown
records
cost to
farms
ex¬
they clo it?
good as. mine
will
How
guess
lege of Agriculture supervises de¬ ithal would
apply to nearby areas
cost accounts on a number
and areas far from the market,
high,
too
even
i may
more
an
should
Yoyr
business. Suppose we had adopted
indi¬
prices of
result,
tailed
be destroyed.''
Agricultural leaders have long
been trying to devise some sys¬
tem to raise the price of agricul¬
tural
producers
a
services
have
In
they have found
tablished.
manufacturers that have fallen by
the
wayside, had been kept in
The New York State
pro*
We
economy
marketing i quotas
busi¬
if, through support
prices, all of the hundreds of auto
point.
inefficient
production. They' may decide that
acreage
should
be
reduced
or
the
a
of
the
are
The problem of the planners now
is "What to do about the surplus
system of price support to keep
controls, we find potato
farmers putting In irrigation sys¬ buggy manufacturers in business.
tems, and using heavy applica¬ y;- An illustration may serve at this
acreage
situation,
continue' to be produced than can
be sold at the designated price.
today
ness
only
ficient
inefficient producer to
his talents and resources else¬
use
this
potato business but
sig¬
a
in
ducers'encouraged to stay in the
the
where.
scarcities," due" to set*
price
We
reduce?
should
in¬
stead of a free market for pota¬
toes, the price is arbitrarily set at,
say, $1.50. a bushel. What happens?
producers in. business.
competitive economy, based on
free market prices rhas been
an
important factor in improving ef¬
ficiency in ail types of business.
to
and they- de¬
potato
acreage.
crop
reduce
ones
Suppose
A
nal
the- potato
year
that unless
the high-cost producers had some
special situation that they can cor¬
rect,- they might better spend their
time
growing
something
more
profitable. The free market sug¬
gests this course of action and the
entire economy, as well as indi¬
vidual producers, benefit.
free
a
next
other
to
Which
price
a
in
for
panding
15
competition of
eflicient farmers.
more
their
1946 the com¬
in
judgment of potato growers
some-
cide
inefficient
The market
ting prices too low, require some
kind, of a rationing system, sur¬
effect
returns
could not meet the
Signal.
arbitrarily
rn
is
finan¬
for- a
'
holds
above where it would be in
taxing
power
they stimulate too
"right"
price for the given situation.
which
support
average
will probably all agree
Business
market
situa¬
uncommon
suppose
that
as
in
Producers
enterprise.
the
on
an
business doesn't look as attractive
Another consequence of a price
behind it and can
cially conceal the error
longer time, y y
the
different
t.he
Inefficient
government * has
that
vidual
is
bined
is
direct
or
Keeping
larger
carry-overs
price."' And strangely enough, in
a
free market, each of the many
prices
at
uses
lost
not
Now,
prices are too low, some
type of stimulus such, as
subsidies
literally thousands
of different prices, .depending on
yearchf. seems doomed to failure
different
conditions, making up because of the very nature of the
are
other
away
If
discov¬
up
from one
One after an¬
other, cooperatives-based' on this
principle either failed, or changed
their policy.
Ah-:*important" dif¬
crop
tatoes
serves
by govern¬
system
they were building
tions
to
a
ered
at
certain
not unlike
consumption.
aged
would place it, in one certain spot
one
are
price
supports
maintained above
market ievel
free
Price
Setting High
of
system
more
its
in
it
control that which is subsidizes.
A
and
commodity whether to
gives
They found that by keeping prices
-
too
a
its
government dumps
is
(2075)
tion, even when
are satisfactory.
necessary
by a number of agricultural mar¬
keting cooperatives 25 years ago.
Experience ill
of
omize
home.
are
compulsion is
required to bring opt the produc¬
tion assumed necessary,
It is but
a
short step from there to the
British system where prices are
guaranteed and farmers told what
to
produce.
It is a still shorter
step from that to complete nation¬
alization of agriculture. Our own
Supreme Court has said that it is
logical to expect government to
ment is
guide in
a
the
kind of
some
controls'
abroad cr
diverts it into
other
you Id
prices;
surplus
or
determiningniuch.d:eed;Vgrain should be
fed to dairy cows or
hens, or to
hogs. Thus system tells the users
as
production
unless'
"surplus'
is
consumer
wrong,
aged from expanding consumption
because of a price higher than he
•
how
CHRONICLE
FINANCIAL
plate. this. type of action.
used
for tractors, automobiles, for
housing, for toys, for railroads and
&
Incorporated,
-
market.
way,
16)
we
COMMERCIAL
THE
&
CHRONIC7 E
FINANCIAL
•
Thursday, November 18, 1948
—
'
*
,
*
,
Economic Fallacies
Of Price
NSTA Notes
U.
seen
The Gold
Supports
(Continued from
have
S.
15)
Commenting
growers
The annual meeting of the Boston Securities Traders Association
will be held
Thursday, Dec. 2, 1948, in the Hawthorne Room at the
on
A
further
price
supports
obtain
to
ior
of special
area
them.r
Jr.
E. Sullivan,
Albert
G.
Woglom
Burton F. Whitcomb
Cocktails will be served from 5:30 to 7:00,
dinner at
7:00, with the meeting scheduled immediately after dinner.
Burton F.
articles
struggle to
merit of either
a
the
a/ man¬
of
ner
scien¬
Whitcomb, Blyth & Company.
conclusive
evidence
favor
in
of
one
school
thought
Ferdinand
G.
Governors
Edward E. Lawrence, Minot, Kepdall
/
J. Russell Potter, Arthur W. [Wood Co.
(two years):
Frederick L. Harson, Fraser, Phelps &
Co., Providence; W. Henry Lahti, Matthew Lahti & Co., Inc.;
Henry E. Tabb, Jr., Townsend, Dabney & Tyson.
\
While
arguments
amassed
Salesma
over a
dol¬
By this process
British
and
consumers
and have
reader
the
conceived with credit¬
are
able purpose and
clarity, the
con¬
troversial nature of the function of
singular treatment, and
accrues perhaps
participants in the
a
no
comfort
to either of the
debate and still less to those who
wish for
This
happened
in
a
country where farming is a lead¬
ing occupation.
An
argument
frequently used
agricultural leaders for vari¬
farm programs is that labor
by
other types
everybody that reads the "Chronicle" is interested in sell¬
ing securities—in fact, a good many of its readers are probably more
interested in buying them.
That is /why it is sometimes a little
difficult to write about all the ways that we stock and bond selling
fellows have to figure and contrive in order to get others to buy
of
"protection."
These
exactly the tactics used in a
group
-
the
this
end
right, and
a
leads
process
confused
thoroughly
Two
economy.
do not make
wrongs
a
and
devices
agriculture is entitled to
share
in
other
and
therefore
its
pressure
Not
to
situation
.
.
column
a
would
like
get
You
can't give
this—maybe
too wise.
out all the tricks of the trade in
of
some
long
our
suffering
customers
all joking aside, this is one week where
chance and tear the lid off of something that
have wanted to write about for a long, long time.
*
>
we
we
But
going to take
are
After
a
having since the
election, nearly everybody has some pretty sore spots in his invest¬
ment portfolio.
In fact, for the past two and a half years it hasn't
been an easy road.
Stock prices are in many cases below their
levels of January 1948, and in others far below 1946 highs.
Many
companies have had' difficulties.
Not all lines have been boom¬
ing. , Inflation has taken hold in some' cases and the pipe lines have
been filling in others.
Some of the securities that people bought
with high hopes in 1945 and 1946 have declined
drastically in value.
As
result
a
quite
few
a
securities
have
men
hesitated
call
to
those customers who have sustained some substantial losses.
Gradually they have pulled away from these accounts.
Now here
upon
is
of
one
the
strangest quirks in human nature that you can find.
In most cases, this natural human reaction to be afraid to
go back
and face the music, is just the exact opposite of what one should
db
in
situations
of
this
kind.
There
salesmen
are
who
build
up
a
completely false idea of the importance that their customer places
on some of these things.
Even in such instances where a security
buyer has become disturbed over some of his purchases that he
has made through a well meaning
salesman, the last thing in the
world
that
the best
should
anyone
do is
avoid the
to
issue.
In
most
tax
the
losses.
Either clean house, reinvest and start afresh—or
At any rate GO TO SEE YOUR CUSTOMER, talk to
up.
him and tell him how
is
too
things
pretty reasonable
a
In most
are.
human
cases
being and
that
And
letter
willing to turn the whole
over
to government
they are rapidly doing in Eng¬
mess
land
all
have.
Invite
to
might call..
latest
ness
about
go
over
them
tax
selling—it
customers and
your
to
Advise
you'll find that he
mis¬
a
tax
any
call
them
at
selling
your
that
you
is
to
send
other
na¬
of. eliminating major swings in
our general price level caused by
inflation
tion
and
deflation.
In
addi¬
to theft failure to reach this
objective, they rob us of the most
important function of free prices,
the
guiding of - production and
consumption of goods and services
in
with
accordance
those
the
wishes
of
and
this
duction and consumption.
not
be
lend
to
otherwise.
Such
It
can¬
controls
complete economic domi¬
nation of citizens by the State.
or
tell
bring them
are
There
are
uncovered
always
in
opportunities for
interviews
more
rewards.
new
we
:
can
of
this
kind.
*
wealth
Today
of today
is not the
chests
pieces in coffers and
gold
buried in secrecy,
.when
to
more
Ours
is
the
offer in service the greater
credit
good monetary
a
tem without sound
icies."
monetary pol¬
Bernstein
Dr.
denies
gofd standard involves
that
moral is¬
a
This contention
sue.
been
the
perhaps has
of those who
keynote
clamor for the return of
conversion.
gold coin
Bernstein
Dr.
that the
states
rectly
in
sys¬
cor¬
conversion
practice would be exercised in
times
when
could
inflict
the
injury to our monetary
banking systems, i. e., in
greatest
and
it
Reichart and Daniel A. Baldo
will
shortly form Reichart & Co., Inc.,
in
engage
Mr.
head
an
investment bus¬
Reichart
of
in
the
past
Reichart, De Witt &
As far back
history records,
a pretty
one.
From the gilded palaces of
Roman
Caesars
to the
days of
Spanish conquistadores, gold ^has
the
as
story of gold is not
been
the
marked by a
strife
has
It
long been
tawdry pomp and Cir¬
encrusted
cumstance
much
for
reason
and/ bloodshed.
with human
misery. Undeniably, in the earlier
society,
a
One
in
this
economic
the
in
primacy!
held
gold
factor
can
find
as
of
evidence
medieval
the
life
era
dis¬
tinguished by the absence of in¬
dustry and in the life of trading
people, but the economic function
here is directly traceable to the
kind of society which
then ex¬
One
isted.
remember that
to
has
lived under condi¬
populace
with small value
human life and small
time
That
while
the
price on
kings and
of Michel¬
for masterpieces
angelo and Raphael, the ugly in¬
trigue and cruelty of Borgias and
Medici vied for power in which
the
people
even
not included nor
were
thought of.
the
king,
power
Gold was the!
behind
the
In the smoky kitchens of
throne.
alchemists
words
over
of
necro¬
mancy,
Purpura-Townsend Formed
YUMA,- ARIZ.
—
Theodore -"P.
Purpura and James Townsend
are
forming the Purpura and Townsend
Investment. Co.
at
729
in
a
with- offices
Orange Avenue to engage
securities business.
,
/
'
Also, the
in
hoard
goal of material
is
or; success
gold,
the
but
ad¬
not a
flow of
goods and services from the well-
enterprise.
From
the
the largest industry,
managed
smallest
wealth
,
to
is
not represented
by the
the kinetic
material goods but by
function which gives it perpetuity
and which guarantees a general
living
standard
to
great
of people. One might say
high
masses
that
wealth
unless
produce
can
long pe¬
times of general business stress or riod of time, its existence is peril¬
ous
if not impossible.
a banking crisis.
The best
He chooses his¬
torical example to prove his point. examples
of
the • character
of
wealth as we know it today are
I believe he didn't go far enough
in using it.
One can
In the controversy the giants of industry.
over
gold standard or gold coin, scarcely imagine a Ford fortune
gold has been almost forgotten.* being converted into a hypotheti¬
our
Formed
Shortly
today'is largely
land,
plants,
equipment, material funds to keep
industry or commerce going but
more importantly, the skill,
com¬
petence, experience and integrity
vancement
provide
princes used gold to create pre¬
cious artpiecfcs by such goldsmiths
as
Cellini and for buying leisure
PLANDOME, N. Y.—Joseph A.
of
with
not
on
on
busi¬
of
labor.
-
date
share
Reichart & Co. to Be
Co., Inc., of New York City.
you
I believe
answer.
greater
wealth
concerned
of those identified with the effort.
the
they might
you
up
The
Wealth
and
to Dr. Bernstein for pointing
out that "the gold standard can¬
tions of serfdom
out
that
simple
a
the
goes
of
is most im¬
portant,. price controls must be
accompanied by controls of pro¬
Finally,
that
peoples.
directly concerned.
you
problems
office,
can
time
telling them that
now
prospects
developments concerning the capital gains taxes for the
year.
that
own
in
Summarizing briefly, price sup¬
like other forms of price
control, cannot solve the impor¬
tant problem of bringing reason¬
able
stability to our economy—
unavoidable.
was
sort of business where the*
our
done
the world.
of
ports,
was
speaking
to
like
current
have
and
tions
to
unfortunately
would
the
persons
become
sorry
as
iness.
a
of
regular fellow too.
a
If not, then you will at least have done your best to correct
take
numbers
thing to do is to
are
average
vast
cases
go back, face up to the losses (if losses
and they cannot be salvaged by holding).
Otherwise get
the facts, present them and go about the job of
averaging.
But
don't leave the pups die—take them out, get rid of them and take
they
where
a
few weeks like the last few we've been
on
,
Gold
or
paid what amounts to an
occupational tax to their own gov¬
are
By JOHN DUTTON
sell.
econ¬
gold and the pres¬
ent economy in which gold plays
an unimportant role.
based
omy
of
the
before
bring in
such
between
contrast
The
producers.
of .tariffs
we
purposely to
place
Self to
price well
a
than they have paid the
more
of business have
"enjoyed" advantages in the form
stuff
here
present
hence
ing for it
and
the
a
the
the gold standard does not lend it-
marketing the far¬
mers' wheat and has been receiv¬
ous
Securities
find
another.
Smola
very
ward¬
milady will
in museums.
Against the
backdrop of
such
economy, any contemporary term
as "consumers goods" sounds like
the burst of a bombshell.
It is
of
used
a
new-look
the
ever
the
to resolve
doubt
I
museums.
that
robe
and
ernment.
Recording Secretary:
much
it is not the im¬
poverished land, poorly cultivated,
the
primitive tools manned by
people toiling for long hours for
the price of meagre subsistence.
ment has been
wheat
Woglom, A. G. Woglom & Co., Inc.
Corresponding Secretary:
& Co., Inc.
v
various
tific disclosure
point of what
happening to wheat farmers
1ternative
after
minority. For
in Canada. The Canadian Govern¬
lar
John E. Sullivan, Jr., F. L. Putnam & Co., Inc.
Treasurer:
gold
Both
Canadian
Burr, Inc., submits the following nominations:
Albert G.
against the return of redemption
r$>—
—
in the ethnographical exhibits of
or
for
coin.
definethe
illustrate
been
p a p e
Canadian farmers have subsidized
Merrill Lynch, Pierce, Fenner & Beane, and Sumner R. Wolley, Coffin
Vice-President:
of
money
happen to minority groups,
have only to observe what has
we
Nominating Committee, composed of Arthur E. Engdahl,
Goldman, Sachs & Co., Chairman; Frank S. Breen, Schirmer, Atherton
& Co.; Edward F. Hormel, du Pont, Homsey
Co.; Carleton Needham,
President:
arguments in favor of
may
The
&
climactic
all, it would seem that agriculture
would gain more in the long
fun
by promoting the idea of no spe¬
cial privilege for any group.
J. Russell Potter
twin articles (see "Chronicle" of Oct. 28,
The currently published
7) by Dr. Spahr and Dr. Bernstein on gold coin conversion and gold
standard make very interesting reading.
In a sense, they contain
p.
preservation of the^ rights of
To
Parker House.
economic conditions.
Agriculture
smaller and smaller
John
J
s
gold has greatly diminished significance in present-day economy.
Holds its general distribution will not produce betterment of
and
litically.
Omaha, Neb.
regarding restoration of gold standard,
altered relation of gold to wealth and concludes
still is strong po¬
It is rapidly becoming a
been
the
Controversy
controversy
Mr. Smola reviews
against,
agricultural
privileges for minority
groups.
Under a political system such as
ours, there is a tendency for cer¬
tain groups to seek special privi¬
leges at the
expense
of other
groups,
and if they are strong
enough politically, they may be
able
<
argument
products is in the
has
on
market.
Sspecial Privileges for Minority
Groups
BOSTON SECURITIES TRADERS ASSOCIATION
' •
Investment Securities,
1
"supported" right out of the world
cotton
t
By FERDINAND G. SMOLA
page
cotton
.
strange masses were smol¬
dering
in the
perpetual
attempt
gold from other
metals:
The humble lowly serfs
had little to do with and what
of
man
they
to create
articles
Some
needed
had
of
of
long
these
to
be
used
in
and use.
endured through
wear
generations of constant service
and eventually may now be found
goods
consumers
over a
cal value in gold. The truth is that,
such
wealth no
longer .reflects
value in any kind of ac¬
ceptable
or
accepted
currency.
Perhaps
the
only
relation
to'
money that great wealth retains
money
is
the
need
of
society
to
collect
taxes for the maintenance of gov-:
The
ernment.
value
mated
it
power
millions; of
stem
gives
to
est!-:
from
earning
identified
those
with
it,
those
who
ever,
the direct benefits accruing
owners
are
grossly modi->
to
and
are
extent,
some
the
to
How-;
owners.
the
fied by the need of the enterprise;
for funds to keep alive through
bad times. In a sense,!
wealth, like the average
citizen, may live in freedom from
fear but hardly without a healthy
respect for the competitor.
It
would, seem, then, that the giants
of industry are the nearest thing
to industrial socialism in .private
hands
and
nominal
ownership.;
Great wealth cannot be liquidated
successfully; it cannot find its
price in gold. It is captive as are
and
good
the great
those
tion
who
own
it.
The
distinc-*
it
enjoys as compared with
public ownership is that it is op¬
erated
by individuals who
dependent for judgment
cess
and
failure
on
are
or
the
in
not
suc¬
discre-
tionary power of the public. Large:
industry, as well as the small,
owes
its existence to the ability
of the
eral
business to
public.
serve
the
gen-,
In relation of one to
the other under conditions of free
competition,
the
public
has
the
to favor success and pun¬
failure and thus secure the
power
ish
maximum
benefit^
for
itself.
(Continued on page 39)
Volume;<168
Number 4752,
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE.
(2077)
.17
New Index for Over-the-Gouiiler Industrials
L. E.
Walker, President of the National Quotation Bureau, reveals
index: comprises 35 stock issues,
The National Quotation
14
a
new
made
for
the
By ROGER W. BABSON
far
as
Bureau, Incorporated, announced
Nov.
on
It
I
back
am
again in New York City to get the pulse.
New York City is no longer the
long ago moved to the "Magic Circle," in¬
cluding the states of Illinois, Iowa, Kansas, Nebraska, Texas, Oklahoma and Missouri. On the
business center of the United States.
kind, comprises 35 industriai stock issues, none ■
of
which
is
listed
or
traded
on
any
stock
exchange.
•
;
"Everyone' recognizes the usefulness of the
various indexes, published by
newspapers and
other
organizations,
which
chart
historically
the
performance
of
listed
securities," L.; E.
Walker, President, said in commenting on the
Bureau's
both
the
from
similar
years
security
to
would
Mr.
threw
effort,
ability '' and
assisted in
a
only
well
as
the
assisted
on
entire
by
investors
for
research
facilities
several
far
as
industry."
statistician
the
of
"of
colleges.
I The latter
reached
was
are
common
capital
or
Mr.
substantial quotation records.
wide diversity of
industry.
/
In
.
num¬
addition,
small proportion of the old estab¬
a
lished companies represented in the over-the-counter
market.
year,
Industry has continued
capital for
"In
new
our
answer
industries
to
questions
over-the-counter
old.
as
often
market.
asked
about
Paramount
companies whose stocks
ancestry to
The
is
securities
the
traded
following table
Quotation
in
year
Bureau
which the
of the stock in
are
used
in
question:, 'Are
in the index
the
there
shows
the
35
Over-the-Counter
business
was
used
Industrial
started,
in
the
Stock
Optical Co
Corp._„
the
greatest
stock market, but to general busi¬
fairs.
will
Labor?
to
need
be
be made
can
so
that this
special favors from the
more
For
with
money
it could
about,
help
proVision;
capital
gains
excess
be
i;.;'';
New
a
York
'
hope
work.
no
place .to
just because has has been indus¬
been
able
to
hear
that
is found
worse
the
tration
boat
everywhere.
Opportunity
readers
of
this
one
tween
column
Mr.
ested
Commis¬
sions, Boards and other Organiza¬
associated
the
in
emphasizing
"annual
is
York
inter¬
Co.
wage" idea,
importance
the
This announcement is not
B..
with
has
the
$13,200
23,570
office
of
New York
of
the
of
Buffalo,
Marine
120
1851
105,750
City.
offer to sell or a solicitation of an offer to buy these securities.
offering is made only by life Prospectus.
73,470
1923
21,460
11,710
1891
22,000
13,140
1888
11,100
14,500
Spinning Ass'n, Inc.—.
1889
34,030
35,410
Philip Carey Manufacturing Co.——.
1888
15,620
26,900 I
Cro wel 1 - Collier»Pub.
1906
43,800
40,870 i
Corporation.
Berkshire Fine
Dun «Sc
Durez
...
Co..
_
_
£
_^
Bradstreet, Inc....
Plastics
&
1841
Chemicals, Inc.l—:_
-Grinnell Corporation
M.
A.
Ideal
Hanna
Cement
19,440
1921
22,500
50,610
1850
16,060
r
Company
1867
1908
Northwestern Bell
Telephone Company
Thirty-One Year ZlA% Debentures
Dated November 15, 1948
28,110;
-
•
Due November 15,1979
:
13,990
r
33,630;
-
90,160
Company—..-J—
$60,000,000
v
■: 46,180
84,140:«
v
'
Price 101.375% and accrued interest
-sv
29,290 f
International Cellucotton Pdts. Co
1926
31,350
Kellogg Company
1906
60,590
Landers, Frary & Clark.—.
1853
10,600
25,190
Long-Bell Lumber
1875
38,570
50,060
Ludlow Manufacturing & Sales Co..,.
1848
20,110
33,780
19,930
15,500
'
1_—
Marlin-Rockwell Corporation
File
1864
Plymouth
Cordage
Potash
Co.
Company..__ L
Company
...
Republic Natural .Gas Co...
Richardson
H. H. Robertson
11,530
1931
Remington Arms Co., Inc.—
The
21,510
-
1824
of America
Time
;
J
-
The
Prospectus may be obtained in any State in which this announcement is circulated from only such
of the undersigned and other dealers as may lawfully offer these securities in such State.
17,960
32,430
1816
32,780
HALSEY, STUART &. CO. INC.
BEAR, STEARNS &, CO.
14,150
A. G.
1928
59,470
10,600
10,610
Company..
1906
9,810
22,810
BLAIR &.
:
1845
Stanley Works
1843
Trico Products Corp..
...
33,190
LYNCH, PIERCE, FENNER &, BEANE ~
16,420
32,860
1866
14,200
West Point
53,820
211,500
195,140
Weyerhaeuser Timber Co
DICK &,
MERLE-SMITH
__$1,274,41G
.
BURR
HIRSCH & CO.
WM. E. POLLOCK & CO., INC.
&
'
$1,243,620
'
*3
.
i
;
„
'
•
•
.
.
.
.
-
.
COMPANY, INC.
CARL .M. LOEB, RHOADES &. CO.
WEEDEN
&. CO.
INCORPORATED
'
November 17, 1948
Total
WERTHEIM &. CO.
.
44,470
1900
SCHOELLKOPF, HUTTON &, POMEROY, INC.
AMERICAN SECURITIES CORPORATION
9,210
1888
L. F. ROTHSCHILD &. CO.
,
INCORPORATED
66,870
1917
Veeder-Root Incorporated
Manufacturing Co
OTIS &, CO.
(INCORPORATED)
E. H. ROLLINS &, SONS
29,960
52,400
PHELPS, FENN & CO.
40,520
37,480
1922
Incorporated
MERRILL
.
1913
...
CO., INC.
LADENBURG, THALMANN &, CO.
12,310
11,250
&, CO.
EQUITABLE SECURITIES CORPORATION
18,500
1858
BECKER
INCORPORATED
...
51,440
'
_
The
v-
17,970
.
Company
Saco-Lowell Shops
Talon, Inc.
32,8001
■
1915
Nicholson
22,560
,
,,
Trust
Broadway,
$23,180
-
become
Municipal
(000)
1833
Thit
Company
Dott
an
The
with
Securities Department of the New
I know that
personally
buying.
Marine Trust
in¬
and
own
applies to small; inde¬
Andrew
production.
Truman
It
wages
hold his
cooperative
correlation be¬
some
can
Dott With NY Office of
the
other.
the
or
way
rock
to
His
organization
and
harder
pendent merchants.
Adminis¬
Truman
try not
increased
creased
little realize the powerful govern¬
"Corporations,"
will
ask for
may
Truman
New
the labor situ¬
coun¬
try, this change in feeling for the
He
all
sledding.
better
efficiency
especially
ation.
Very few people here are
willing to take a broadminded im¬
partial view.
My own feeling is
So
ri
With
organized
big business, dictatorial labor and
selfish
politics
only
by
beinr
willing to employ expert advicr
get' into
is
on
businessman.
pressure groups
lies
and
City
forecast
a
big
greater
•
make
have jthem
to
he will have hard
no
we
small
the
profits taxes need
unless
necessary
war.
expect
group that I worry about
the New Administration is
the
hold
but
and
under
would come
If such relief
businessman will again be abused
throughout the
Secre¬
Marshall
fine
The
relief
some
Treasury.
further
claim that the Raw Deal will take
have
as
General
There will be other im¬
portant cabinet changes.
good divindend-paying stocks.
There will be no reduction in the
Truman
I
continue
obeyed.
by tax re¬
instance, it ic
up
,Administration,
they are convinced that they
will actually be persecuted.
They
as
will
of State.
had
accompanied
the
comes
interests here not only
from friends
surprise elec¬
long Mr.
Marshall
entirely possible that ad¬
be
dends,
into
agriculture and foreign af¬
successful.
States
in
England. two years ago
when the Labor Party there came
into power.
I doubt how
from the double taxation of divi¬
and
the
last
of
United
ders
Budget
and
pessimism riot only-applies to the
trious, thrifty
election
the
but it is
Dow-Jones
place of the New Deal and
in
like
tion
tary
is a
adjustments.
possible
that
the
much
was
the
here
week
oppor¬
Industrial Averages will gradually
now ^decline to 165 or under.
This
no
Act
amended.
or
greater during the next few years,
About Taxes
The
could
Second
pay."
Taft-Hartley
repealed
man, but he has never
previous experience negoti¬
ating.
He has always been in a
position where he could give or¬
What
me
here
expect
home
European Outlook Improving
this
justments
The big
the
Frankly,
right
own
power,
be
wageworker
"take
Mr.
As
,
you
that
New
York
believe- that the
itself.
will
power
sessed.
.
The Arrow-Hart & Hegeman Elec. Co.
:
the
feels bluer at, this writing than it
has for many years.- The people
Year 1947
Art Metal Construction Co..
.
when
column, let
...
more
However,
com¬
and responsibilities that
Administration has ever pos¬
any
tell
Asset Value
July 1948
1839
Argo Oil
,
be
read
you
bodies
the
to
than
Approximate
Market Value
Established
Anheuser-Busch, Inc.
-
rather
1947:
(000»
-
"security"
fact,
tunities
mar¬
may
doing
with
ment
National
Index,
Approximate
Hardware
In
into office in. his
goes
tever
a
the stock
Babson
these
wares.
W h
m \
trace their
approximate market value
Year
Stock.
American
their,
4
Most
stocks
July 1948 and the asset value for
American
regime.
to the membership of all
bodies, -Mr. Truman now
power
Twelve
prior to the Civil War."
years
instituted under
were
Roosevelt
Roosevelt arranged that the Pres¬
ident should have the appointing
New
City to
their
buy
far
new
research," Mr. Walker said, "we gathered data that will
many
the 35
venture
new
good, solid, substantial stocks in the over-the-counter field?'
of
Each
been the great supply point of
well
as
to this market for
come
has'
capital which history shows
to
but
,
Walker in conclusion said that he wanted to
make it clear
only
still
goods and sell
j
%
lo¬
—
York
# 4§
ness,
that the 35 companies were
go
.if'
,
f
Bureau
outstanding
1946 at 43.00, while the lowest level
holders, and most
a
Congress
I
IP
Roger
-
Oct. 1, 1938, giving it a
as
35 stocks selected for the index—all
they represent
than
1
A
M
T"-kAt
research
issues—are among those with the
largest market value, largest
ber of
actually have
ket
that
us
May 1, 1942 at 16.54.
The
■
Security Index
interesting but useful to
the securities
research
a
dt,S-'
securities in good times and
prove
as
working the index back
June 3,
on
bined
cated
.
of students from
group
and
10-year span, and preparing charts and graphs for the
past decade.
Highest point in .the index during the past 10 years was estab¬
lished
semi-official
rffJ*
over-the-counter
an
not
investing public
Walker
the
these
wherever
'
concerning the performance
inquiries convinced
supply
requests
many
...
"These
Walker
had
houses
information
in bad.
into
the
and bankers—
9
have
we
of over-the-counter
the entire
tions which
manufacturers
index.
new
."Over
;
E.
hand,^-
all merchants,
*
service
L.
This has
*
,
-
election outcome, and says big interests are convinced they will
Sees opportunity for Truman to help dividend paying stocks
by
on
giving relief from double taxation of dividends.
was
first time to traders
attending the 15th An¬
of the National Association of Securities
Dealers,
Inc., at Dallas, Texas, which started on Mon¬
day, Nov. 15. ,The new index, the first of its
Convention
Mr. Babson views current pessimism
be persecuted and given a raw deal.
*
i.:
:
price index for over-the-counter industrial stocks.
available
nual
and has been worked back
October 1, 1938.
as
18
COMMERCIAL
THE
(2078)
Thursday,November; 18, 1948
FINANCIAL CHRONICLE
&
tp act,
but
stocks
negativism will not bay the kind of returns that common
today/'".';- /
/ //'' /*"'/'. Z
:. /'
pay :
do' "not operate for the short-term' as /;
they are not so vitally affected by un¬
expected events. These managements dp;. not buy or sell merely on
the possible or actual outcome vof an election.
They make their
inveSthient decisions after experienced ancl due consideration of all
the
probabilities. Besides, investment companies offer the, added
By HENRY HUNT
i
protection of wide diversification and continuous competent supbrvision. It should surprise none of our readers to learn that the upset
The "Wait and See" Habit
of the Republicans' apple-cart has not strengthened our conviction
money have you made by delaying the purchase of
as to the many advantages of investment company shares."—Quoted
"Investment' companies
many
NATIONAL
SECURITIES SERIES
%
Prospectus
upon
NATIONAL
"How much
from
&
SECURITIES
CORPORATION
RESEARCH
120
or
from
Arthur
so
;///
request from
investment dealer,
your
individuals dci, and
BROADWAY, NEW YORK 5, N. Y.
security—waiting for it to decline to a iower price?
"How much money have you made by delaying the sale of a
security—waiting for it to rise to a higher price?
"It is very tempting, when you are considering making a purT
a
chase, to put it off—to 'wait and see' if the price won't drop just a
little more. And sometimes you wait until it is way past the price it
was—but
the up side
on
instead of the down/
tempting, when you are considering making a sale,
to delay just a little and see if it won't go higher. Sometimes it does.
Sometimes it goes a little lower instead—and then maybe a whole lot
•
"It is equally
Comments."
and
"Notes
Wiesenberger's
Accounting Practises
According
Selected
to
Investments
Company
of Accountants has issued
figures which
this
would
dicated
meant
the
There; was a day when
reports Wiiich in¬
public.
opposed
accountants
than
earned
was
more
a
mislead the
might
have
Things Seemed Important," issued by
of Chicago, the "American Institute
statement opposing the use of net income
"These
been, shown on
should have
con¬
a
basis/; Without question, that still applies today. But We
suspect ; the accountants;are:./currently more .concerned
with; a
tendency on the part of many corporations-to report earnings after,;/ ■ deducting special reserves not recognized by/thev Internal Revenue "
Department. In numerous instances such reserves are being set up
by. corporate managements who fear inventory risks, or who "recog¬
the net result—if you have broken even, you are to be congratulated.,
nize they can't replace plant and equipment at present costs out of
"For no one can consistently guess which way the market will
the depreciation rates they are permitted to charge. In other words,
move next and how far it will go.
And while it has its fascination—r. the boys are
getting too conservative to suit the accountants. Times
and may have a place in a speculative operation—this kind of guess¬
sure
change!"
;
"
'
ing game has no place whatever in the very serious business of a
D. G.'s Monthly Comment >
•
:
long-term nlan of putting ycur money to work.
"The common sense conclusion to be drawn from the election is
"So—if you are on the point of employing your capital to insti7
that we are about where we were before it happened. •'.'The1;--Adminis¬
tute not a gamble but an investment, and are inclined to delay 'a.
tration which will conduct our affairs for the next' four years has
little—what are you really waiting for?
Past experience seems /to
thoroughly aired its ideas before both a Democratic- Congress (the
indicate that the time to employ it is now."—Quoted from "Key¬
79th) and a Republican one (the 3Qtb.)//.These ideas - are essentially
notes." published by The Keystone Company of Boston.
inflationary. Hence it is reasonable to expect: (1) that the next gov¬
ernment budget will be higher than the last; (2)
that the money
Post-Election Market Outlook
supply in the country will increase rather than decrease; and (3). in
"What is the probable future course of stock prices after tfre general that inflationary trends, including the trend toward higher
v
recent amazing and unprecedented (in our times) political upset? lit
wages, will continue.
Z//:'/•/:;;:■*/;/•//..
was only natural that shocked disappointment caused
an immediate
"On the other band, dhere is question as to whether the new
sharp break, as the panicky ones clumped shares indiscriminately. Congress will go further than its predecessor in acceding to requests
Arid," at least for the time being, Truman's election may have snuffed for price controls, allocation of "aw materials and tax revision.
out. the increasing .investor-confidence apparent in the last month
There continue in the Congress generally, and in some key positions
It may effectively make businessmen and investors more cautious
in Congressional committees, an important group of conservatives of
lower.
servative
.,■•/". '///■ ■"/ /-.U-'-V
.
Seriously, it might be well for you tc. sit down and figure but
coldly and logically just how much money you have made and how
much you have lost by waiting lor a favorable price change.
When
you have totalled up all your gains and all your losses and found
/
.// /'v /;,/
...
,
Pl/ie
Scorye
PUTNAM
FUND
,
,
"
cljWoitrm
^Prospectus upon request
Putnam Fund Distributors, Inc.
50 State Street, Boston
-
and timid.
-
;
.
'
continued inflation are unchanged. /We
still believe
stock prices will eventually, reflect' tfyis
trend; although the period of low visibility may. stretch- out for
months. Ill other words, we do net "consider that Truman's election
alone will bring on a severe-bear market.
*
.
"The
current
level
of
stock
prices
not- highv
is
It,is too early to reach conclusions as to details, but
both parties.
prospects for
that common
longer-term
Investors Inc.
''
-
.
"Nevertheless, the reasons for a good intermediate and lohgtjdr
term outlook/ for stock prices are
not importantly changed.
The
/
historically,
future legislation would .appear certain to be
bi'-the-foud'than to the left.
/// "We
income
see
no
will
maintained
be
*
1
*
.
at
record
levels,
that this will be
and
high .levels of business activity.
dividends -should continue favorable and
investments
closed to the 'middle--
"
-
"to change our expectations that, national
reason
reflected in continued
'
.
retention
Earnings and
of
stock
common
is
fully justified."—Quoted from Distributor's
November "Investment Report."
:
/
/ ZC/ Z;..;,/,/^//-/.'■ •■
Group's
U U'l 'U/'ZZZ^
in the saddle. We. still feel
A 5% cr higher return; on belt-
whether Republicans or Democrats are
the same on this morning of Nov. 3.
Outlook for Aircraft Manufacturers ■[ /•
Z / /
grade stocks—especially when dividends amdunt to less than 40% Jof
/ In the' recent bulletin Hare's Ltd. quotes from .-'"Barrons". as
per-share earnings (compared with a normal 60-65%)—is ail excel¬ follows"r
_'_:; " Z
«
\
lent one. Even a minor recession in business activity, from -this level
/"The consensus in the aircraft industry is that, despite renego¬
should be no cause for worry. The election break may afford a iijne
tiation, manufacturers may be allowed to keep as much as 7%'to
stock-buying opportunity to those who can keep their heads.
/
,
HUGH W. LONG & CO.
INCOR'OOAt SO
48
IQS
WAU
wants to find it—but then, so is
optim¬
feeling of j*lobm
induced by the. Republican defeat will last very long.
We c&Utibn
investors against their "tendency to use day-to-day and; week-tor Week
events as an excuse for indecision. It is always easier not to act than
"Gloom is wherever
Prospectus from your Investment Deoler or
ism
and
cheer,
And
•
we
one
do
:
not believe that the
STREET, NEW YORK 5. N,Y.
of. gross earnings after income taxes on the military orders on
and on the business ahead in 1949;- 1950 and thereafter.
their books
It/is always, possible that political considerations ."may; tend, to force
ihis return flqwri, but few manufacturers think'-- it- will • go below
4%/'at least in the next few years.
:• /V _U:W/;Z/.y /';*/.-•./
■ /.
/ '/ "Significant,
CHICAGO
AN&HU
8%
which
craftrCo.
share paid
in this respect is the. recent .action by; Douglas Airdoubled its "dividend rate this year, from $2.50 .per
last year to $5.00 per share.- In the six months ended May
81, 1948, Douglas showed earnings of only $0.71 per share, while last
year's operations showed
American Business
"On
estimate
Keystone
Custodian
•
THE
.
tracts,
—
Chicago
some
1951.
—-
New Orleans
—
Los
but: Which
are
intent'
' in Zthe "letter, of
Zr Orders, Output, Probable
:
r
Angefcs
promise stage. It is
firm. The annual
•
'•
Approximate Earnings
Approx. Max.-
Annual
Output
Per Common Share
.-/
at n.'/c
J000 omitted)
.r.
'
,
Company'
SHARES OF CAPITAL STOCK OF
Earnings of Plane Makers
-.
Approximate
Buckl&g
Boeing
INVESTMENT FUNDS
-
Consolidated
at 4!io
net
$200,000
200,000 /"■90,000
$500,000
•
net
$13.00
-5.40
$7.40
3.00
,
240,000
100,000
11.60
Z
I
150.000
70,000
4.90
Fairchild
BONDS
_l
Grumman
IN
i
:
,85,000
40,000" > :
0.90
225,000
Z' ' 1'20,0'0'0"
95,000
6.30
50,000
'3.00
1.70
450,000
200,000
4.00
2,30
Douglas
Ld'ckhecd
North
.
r
Martin'
GSeries B1-B2-BS-B4)
PREFERRED STOCKS
(Series K1-K2)
;i
American
Northrop
//
Republic
Z
L
United
-
-100,000
.90,000
40,000
40,000
-
..
•
200,0(30
400,000
6.60
2.80
.
-
6.20
2.85 U
4.80
*
0.50
3.50
3.50
1.60
,
2.50
COMMON STOCKS
CSenes S1-S2-S3-S4)
Jas. R. McMaster With Leimert-Kimball & Co.
Prospectus from
few
Tke
;
local investment dealer er
F. S,
Keystone Company
of Boston
-
50
Congress Street
Roaton 9, Alassacliusette
Prospectus
your
THE
i
production; is hypothetical, but an attempt has been made to weigh,/
it in the light of known production possibilities."
.
/ . '
.
Certificates of Partlcipatioa in
investing tlxeir capital
For
even
believed that these contracts are going to be made
COMPANIES
INCORPORATED
New York
possible, to
the
in
"In the tabulation. b.eloW backlogs are obtained from available
data, plus estimates of value-of business not. yet-formalized by con-r .
Lord, Amsirrr & Co.
Funds
earnings
y
upon request
LOBD-ABBETT
INVESTMENT
fiscal year deficit of $3.57.
t
.
'Prospectus
a
basis of the following rates;of return,- it is
first year of full production.
companies that Will be 1949, for others as late af 1950 or
Shares, Inc.
v.-
the
may
be obtained from
local investment dealer, or
PARKER
CORPORATION
ONE COURT STREET, BOSTON 8,
To Be New Firm Name
Moseley & Co.
CHICAGO, ILL.—James R. McMaSter has become associated with
the
planned investment
program
F. S. Moseley. &
Co., 135 South La Salle Street. Mr.
McMaster
was
formerly Secre¬
department
of
LOS
ANGELES,
fective Dec.
become
a
mert-Krieger. & 5 Co.,
Grand
name
Avenue
Kimball
Master & Co.
been associated
solved.
•
w
•
some
and
in
Lei-
650
South
Jhe
firm's
will be changed to Leimert-
tary-Treasurer 'Of
Wilson, Mc¬
/Which is being dis¬
CALIF.—Ef¬
1, L. W. Kimball will
Vice-President
&
time.
Co.
Mr.
Kimball
has
with the firm for
Volume
168
Number 4752
1949
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2079)
19
Building Construction
Thomas S. ftolderi of F. W.
Dodge Cdtydratibh forecasts 7% less
dw:li»ng units than 1948, but some increase iii public
building and
,
By HON. CIIA&LES SAWYER*
*,"!
engineering projects.'
i
Secretary of Commerce
\ Supporting slogan "Private
Building and engineering volume estimates.for 1949
Enterprise Can Do the World's Job,"
just released
Secretary Sawyer reviews factors creby F. W. Dodge Corporation to construction
ating dollar shortage and exchange controls.
industry factors indicate ;
Outlines what business and
that moderate declines in
government can do to remphysical volume of private residential and
edy situation, and advocates action by Amefitahs to
nonresidential" building and moderate
increase U. S. imports and to
increases; in public building
encourage foreign
economic development.
and engineerSays, in dealing with problem of world
recovery, we must safeguard our
ing
projects
*
*
•
domestic economy: -Defends farm
economic aid; and,
price supports and agricultural
poSsibiy,.'to feare
export program.
likely
•
' :
armament assistance
to-friendly
next year,
j
You have chosen as the central theme of
'
,
foreign
governments, would tend
additional inflationary
on
commodity prices and
construction costs.
However, ac¬
j On the basis'
of
i
to
present
n
f
o r
mation
available
the
to
*
tual expenditures
Dodge
that
built
7%.
less
Thomas
for the 48 states to
S.
from. 950,000
mated for this
year.
units
for which declines
commercial
manufacturing
aiming to hold the Fed¬
budget in bounds. Consider¬
and
are
in
key industries.
other
dicate
buildings,
1949
our
an
It is expected, however, that
there will be increases in
educa¬
cial
tional
anticipated
and
10% and in hospitals and institu¬
buying resistance
some"
In
analysis'supporting
an
Thomas
President
tion,
-
of
paints
the
S.
,
credit
has
dence
DOdge corpora¬
our"
in
of
so¬
been
facts:
being felt in
already,
become in¬
mortgage
tightened,^ confi¬
many potential private
has
probably been
investors
analys's.
and
buildings.:
creasingly difficult,
out:
to
decline
Election Day found the American
shaken in
at or near the peak of
boom.
While such in¬
flationary aspects as vastly in¬
sults of the national election.
likely to
affect- the volume of
private resi¬
creased
dential
economy
a-
postwar
of
income, shortage's
money
categories of
many
services, and
and.7cost
"'The
goods
rising prices,
of
production
struction have been
con¬
boom
psychology.
There
no
significant
been
sale
ally cause
sanity and
cautious
inflation¬
wage
scales, .A
moderate
slowing; down of activity during
part of. the year would facilitate
f
.
.
I
'
enormous
production"
oil
"Needs; for rental housing con¬
tinue very great:
Recent legisla¬
tion may/stimulate? this type' of
farms and in factories has moved
in the direction of bal¬
activity.
ancing the supply of
ment
rapidly
and
services
demand;1
with
*
.
•:
•
"Approximate
\
With
te
a
prices, has
n
d
many goods
the enormous
•
"
market
e n c
to
y
lowered
vate
appeared principally in
products,
textiles
and
:textile
products. ' In most: capital- goods
lines, deferred demands" and back¬
log orders still prevail;' this is re¬
price
trends
of
metals and
metal products' which
continue to
tend slightly upward,
mixed trends are re¬
i
"Similar
flected
among
the construetibh
materials.' Lumber has been
plen¬
tiful!
and
lumber
other-:
wholesale
have
prices
of
been
fallingn Most
nonmetallicconstruction'
materials
have
been
in
adequate
supply; - with" competitive pricing
Building products fabricated of
metal-
'continue
in
tight
supply,
tending upward in price, tending"
to
limit;total construction volume.
\ "Th e 'Democratic victory poifit's
to
increased
rather'
than
•
hood
fields
of
of
action "in
There is likeli¬
early
legislation' in the
public' housing,: public
health, Federal aid to education,
enlarged social security Coverage.
Federal
purposes,
expenditures
added
to
for
the
to
effective
soon
such
already
people
We
those
who
govern
and" ther; policies
which/it is done:
shall I
never
I
stop
which
belong to
which
later date I
the
to
in
ways
and
this
to
time
which
business
can
with
and. prosperous
sound
a
gov¬
It
When
trade
private
are
some
averaged
year
billion
exported
in
before
have
of
excess"
in
address
by
the
and
hunt
a
for
exporter located his
order the
an
houses." .'We
This
have
estimated
a
moderate decline in
single-family
houses and
apartment buTd'ng
equal to the 1948 fate,; with the
net effect of a moderate
decline in
total new
dwelling .units.Hous¬
ing production, even at- the. re¬
duced
rate
"
"!'
rencies
such-
things,
as
could
at
in
the
great
the world..
tasks
The
banking
,w7
...
_.
network
which \v£ kng%
and
:
of
went
on
centers
'
X
of
a
huge
over
imports.
,time when this ex¬
have been called a
"favorable" balance of trade. But
when,
c6uiitii.es
made
their
up
,
most of the
world's
dollar
world
<
trade
world
wars.
destruction, the
second
is
to
spend their dollars
goods.
other
other
unable
to'
to
World
War.
.It
the
was
changed
most
every¬
The
assets, and have
buildings,-
.
nessmen
lars
,
for 'inessential
result
has
been
:(Continued
goods.
an
on
page
offit to sell or a solititiition of an offer to buy these securities.
offering is made only by the Pyos pectus. *'
First
grams and
ments.
Work
.
appropriation .commit¬
Maintenance" and repair
and
farm
building;
Mortgage Bonds, 3/4% Series due 1978
j.. b-y ;;.
Dated [November. L, 1948',
which
'
■
f
"
[not included in the estimates,
more likely to decline
some¬
what than
to
increase, we be-
•
'
»
'
>
•
'
f* 1
«
'
...
-v
•
d. :
are
'*
.
';
.
<1,
Price101.93%
a
.
.
-
.
.
-
Due November 1, 19X8
'accrued interest
are
lievie.-"
hW-7 .W
'
-
-
4*-
*' 1
>
'
Fiim Name
•
Changed1
■
The
Prospectus
the
may be obtained in any State in which this announcement is
Circulated from only
undersigned and 'such other dealers as may lawfully offer' these securities in such State.
To Gabieo & Go.
BIRMINGHAM,
firm
Co.,
name
First
been
ALA,.. — The
of Gaines, Br.odnax &
National Building, has
rchanged
Walter
military expenditures, * to foreign
the
B.
to
Gaines
Gaines
company.
'
&
is President
"
j.
-1:.....
v
Co.
of
..:
busi¬
HALSEY, STUART & CO. INC.
The
unparalleled
any
.'
own
from spending their dol¬
i-i
pro¬
been
As their supply of dollars,
foreign
countries
have befen forced to take drastic
hos¬
utilities, projects, all
seem
likely to increase, ill view
of the status of
authorized
our
that
shrunk,"
,000,000
and
buy
been
export enough goods to
their dollar re-:
not 'an
'
to
result .has
serves;
has (
r
works
in,
replenish
anticipate, would
go far toward
ending the acute
phase of the hbusing shortage.
"Educational;
become
nations
have
liquidated,
holdings of dollar securities
theiland
The
we
pitals. and institutions, and, public
gold and the-
has
happier aays has been torn*
by a world-Wide depres¬ steps to prevent their
devastating.
'■
deficits
in-
us
Ih those simpler
sion and two
great
Of these forces of
:
announcement
goods.
a
American
about
worry
dollars
Secretary
/,
\
such
exports
was
enough
probable declinfe in pri¬
building " of single-family
the'
international accounts by the
shipments of gold. Today we have
of
cannot
City; Nov. 3, 1948.
of
import -permits,-' export - licenses: effect the international medium
exchange permits and quota re¬ of exchange. With,our products
strictions.; The ternt "dollar short¬ in demand all. over the
world,"
age" was unknown. Foreign cur¬ other countries have been forced
Sawyer before the 35th National
Foreign Trade Convention, New
York
At
total of
a
peacetime
any
to tatters
"An
of
much
as
1938.
We 'seen
ex¬
worth
time we imported
only $5.7 billion worth
yeaf
$2.5
we
not:
we
accomplish without governmental
-
1947
It made little dif¬
ference whether he sold to China
or to .Chile.-In either case
he did
*
enterprise
we
There
almost that sim¬
was
an
as
market and received
The world's job is
big and it is
which
the
same
problem:
rest was easy.
right-.to discuss this matter
right of businessmen to
their, views. >
'
complicated. There
the
on
export surpluses were known as
favorable in tile clays-when cur¬
rencies
were
stable
and
ple.
we
and
includes
.
exported,
cess* would
markets.
business.
much
Europe
international
speech: about
so
in
goods, nearly five times
size
foreign currencies which
hear
we
$15.3
Never
the
before
years
war
years
In
ported
world
present
the
free
same
billion.
development
first
three
during
these
in
Problems
-
I
32%.
last
average, $3 billion worth of goods
each
year,
and
goods imported
into
the
United
States
as
.
the
of
the United States
I
and the
which
of
,
the
the'outbreak
assume
several; responsibilities
the
In
discus¬
a
be
changed into
relatively stable rates
exchange as a' result of the
continuous buying! and
selling of
right
of trade and made
States the
supply cen¬
Lhe world.
In
1938
the
States
supplied
14%
of
Not so many years
ago Amer¬
ican- btisinessmeh could look
upon
duties
government
belong
ex¬
-
-under
discussing
allocation,' of
proper
a
point out
and
difficulty
of' the
which confronts us.
■
great
hope that
the
,
the right at will to
change
both those who do our
government
work
of
May
We
■
of
United
all of
Size and Difficulty of World Trade
grows
us
ter
trade.
gov¬
place
trading and governIt
changed the
controls.
patterns
offset
high Federal budget/ to increased
otf
de-
creased; ^governmental
econ'omic affairs.*
housing program involving
subsidies,' it may .not bd large
enough
■
goods lines: farm prod¬
ucts-.,-foods, hidfes and "leather
the
Even if the next Cbnshould authorize a govern¬
'
balance.
j '
consumer,
flected;'"in
gress
our
of
to
At
of-
reserve
ing;
optimismf of
majority of people have
inflationary forces in check
While
difficult*: of
market adjustment.'
the
nothing.
all
empha¬
the United
good.
connection
everything.
that
do
complex.
select
The
renewed'
should
[the life of
mote
those
forces should tend to further
rises in material prices and bu'ld^
usu¬
the vast
held
lower price .tags
a large.pro¬
1948 output.
This
ary
reversals. ~ The
severe
houses with
attainment "if
security prices, real
or
commodity inventories.
This postwar boom has,
therefore,
.
estate
not generated the forces that
as
portion of the
will be; particularly
have
do
new
goods moving in world
In 1947 our share had
their
feel that* government is essential
and that its functions
must expand
than those attached to
speculative
in
excesses
home
.record
sity of produc'ng and offering i'or,
conspicuously
present, the boom has been
unique
in a very
important respect.
It
has not been
accompanied by a
should
a
increased
sion
unaware
powder in government because
housing production in 1948 now
rather generally realize, the neces¬
wages
and
The
i'or
responsible
not
Anjarchists" suggest
ernment
common
facilities of
placed
commerce.
ernment
gov¬
ernment
are
buildings
be¬
that throughout recent
years, and
especially during the past three
'decades, there have arisen and
stobd before the
world, strong ad¬
vocates of the totalitarian
theory.
They have suggested that the
degree by the" re¬
factors
same
builders
and
some
the
capitalism.
however,
old
It,
state
on
ihent
real
pect to
discuss the division of
functions - between
government
and business-as applied to our do-
tween communism and
capitalism.
and J believe in
are,
Our
that they work to¬
see
fundamental j megtic situation. At
P^cal shall restrict myself
Sawyer
You
We
spnere.
together.
sis
government.
the
conflict
.lines
equity financing has
the
Holden
;
"According
is
these
of
Charles
enterprise
But they
shall not
attempt to discuss
phases of this problem of co¬
operation between business and
pen e-
of
its
production
Europe.
ali
you
to
Work
thing. It destroyed and disrupted
the
I
In
s.
,
building
following
r e-
t
has
task is to
your
heart
con¬
anticipated reduc¬
the
are
c
trated
function
recreational
tional buildings by 11%.
estimates,
the
religious,
Bases of-these
by
t i
ra i r.
have
1
each
private
gether.. for the
selecting
estimates in¬
nonresidential
tions
I
/
t
and
must
so
theme
appraisal
our
in which
manufacturing,
.
buildings
of
•
classifications' which
arepre.-;
dominantly private: commercial,
■
science
',
industry; will
year,
those
religious purposes, 19%)
and
basis
climate
struction
next
structures
14%.
the
of the
anticipated
errjmerit
-bureau-
era
s
will undoubtedly be
given
price control legislation.
The
"On
social and reacreational
{
its
sary
esti¬
buildings, 9%;
buildings,
15%;
there are others which, by
their very
nature, private enter¬
prise cannot assume at all. Gov-
untrammelled
by '■ unneces¬
election result increases the
prob¬
ability of further wage increases
Other classifications of
building
for
in
right tb do
to
Holden
approximately
884,000
used
lieve
ation
than
.aid;
be¬
and those
1948, bring¬
ing the total
churches
I
eral
be
in
are:
needs.
j Congress between
forces
pushing . for lavish expenditures
next
will
year
to
our
81st
be
to
meet
....
dwelling
clear
a
modify that •>-
system
social
new
are not likely to be very:
large in the next calendar year.'
;
"There will be battles in the
the-number of
units
enterprise.
programs
corporation, it
appears:
for
your convention
and simple
proposi¬
Enterprise Can Do the World's Job," I have a
strong belief in private
I believe in its ability to maintain the
capitalist system under which we live and
to
tion—''Private
create
pressure
28)
i '* :•> fv
20
&
COMMERCIAL
THE
(2080)
FINANCIAL
Economic
Significance of Population Age Shifts
Canadian Securities
of the Dominion's
national loss
that will be
exceedingly difficult to fill.
It is consequently of particular interest
to note that, simultaneously with<$
The passing from the Canadian
political
scene
great Prime Minister, Mackenzie King, is not only a
but it also leaves a gap in the Liberal Administration
eral leader
madd
was
the
to
invited
to
the basis of the Canadian constitu¬
cabinet, but pressure of unfinished
business in his own province of
Manitoba had hitherto prevented
son
his acceptance.
the
i.
Thus the inclusion
addition
his
capable
markable
economic
made
will be
by
the
inactive.
country
stocks
ward
,
.
,
of
his
assumption
ficulty
in
ness
following ; the
report
of
further Imperial Oil drilling suc¬
berta.
decline
also
further
golds
despite
senior
of Al¬
a
issues.1-
In
that the Canadian markets during
the
recent
sharp decline in New
York displayed unusual indepen¬
dif¬
dent resilience.
|
Garson's activities however
dations
Sirois
contained
District
No.
Association
13
of
Committee
of
of
National
the
Securities
Dealers,
made
has also
Commission
minion-Provincial
Rowell-
in the
report
on
relations.
Manitoba Premier has long
Laird, Bissell & Meeds
District Committee: Raymond L.
DoThe
stitzer, Equitable Securities Corp.,
fought
to
strenuously.and eloquently for the
report of the unwieldly
Charles L.
succeed
R> w. Pressprich
general overhaul recommended m
this
Bergmann,
& Co.; Allen C.
Wertheim & Co., to suc-
Du Bois
an-
j ceed James j Lee; D. Frederick
Barton,. Eastman, Dillon & Co., to
succeed
George
&
Geyer
Geyer,
Co., Inc.; Stanton M. Weissenborn,
Parker & Weissenborn, Newark,
CANADIAN BONDS
to
succeed
J. S.
William/,C. Rommel,
Rippel & Co.; Newark.
Additional
candidates
nominated
candidates
posed,
PROVINCIAL
until
additional
GOVERNMENT
candidates
by
the
the
sidered
MUNICIPAL
Members
J. P.
A. E. AMES & CO.
INCORPORATED
.
.\
STREET
Y.
of
the
nominating
were;
Gordon Graves & Co.
John
P.
Doehling has rejoined
& Co., 30 Broad
Street, New York City, as man¬
ager of the municipal bond de¬
partment. Mr. Doehling, who was
Graves
WORTH
4-2400
NY
t-1045
manager,
has recently
Kobbe & Co.,
capacity.
v
been with
Incorporated, in this
;
about 9% and
a
record.
according to estimates.
/Because- ofvthe marked upward
trend during the 1940-1950 decade,
demographers may be compelled
to revise the:r predictions that the
United States population will level
millions,
new
The estimated
total
popula¬
about
of
tion
150 millions in
1950 compares
with
off by 1990 at about
131,669,J,
C.
Capt
and
begin
164.5 million
decline
slow
a
there¬
enumerated in
after.
1940.
tors, this leveling off and decline
of the
excluding armed
on July 1 of this
The estimated population
States,
United
forces
overseas
was
year,
146,114,000, an increase
and
14,445,000
of
1940
since
a
July 1 of last year of
2,732,000.
These
increases -are
chiefly due to the span between
births
and
deaths, immigration
gain
over
being only a relatively small fac¬
1940.
The nation's birth
rate in 1947 was the highest rate
tor since
establish¬
recorded since the
ever
national registration rec¬
ment of
1,000 of
births per
recorded
25.9
.population.
in 1947 was only
10.1
the
Both
population.
rate
1,000 of
death
The
per
birth and
Barring unforeseeable fac¬
It will not do to try to look
much
tury.
in
shifts
population.
nation's
the
on
This
informatioh
revealed
survey
a
continuing
the cities
trend from the farms to
the
and
While
a
nonfarm
areas.
decline- of about 9% % in
rural
indi¬
cated. rjhe .gain?)in
the urban
population was about 12J/2% and
the
gain in the rural-nonfarm
population was nearly 141/2%.
population
farm
the
was >
.
It
is
also
interesting
to
note
population shifts between various
sections of the country as indi¬
cated
in analyses of the April.
1947, survey. This survey showed
that in the seven years which en¬
the World War II pe¬
riod,
about 70
million persons
moved from the homes in which
compassed
were living at the time of
the 1940 census.
Of these 70 mil¬
they
lion
people, / about
had
same
one
44
million
house to another
county, but 13 million
same
changed counties within the
state and
12 million had
their state of residence.
comparison, about 52 million
still lived in the same dwelling
changed
In
occupied in 1940.
A large
part of the shifting of the popula¬
they
tion
came
the
war
years
another reshuffling came af¬
and
ter
during
the
war
when many millions
people moved for reasons con¬
nected with their jobs and other
millions because of reasons di¬
of
rectly or indirectly
housing conditions, ,
Since
relating
to
v
there has been a
of sharp population
1940,
continuation
gains in the Pacific Coast States
due
tion
in
part to westward popula¬
migration and in part to nat¬
ural
increase.
California
as
of
July 1 of'this year had joined New
York and Pennsylvania in the se¬
lect circle of states
with more
*Part of an address by Mr. Capt
at the Cooper
York
Union Forum, New
City, Nov. 9, 1948.
ployers and labor leaders,
as
government.
well
as
aged 20 to 25
23, the ages at
marriages are
made, will number about 16 mil¬
lions, as compared with about 14
million today.;Consider the effect
these changing numbers will have
1966,
By
males
18
females
and
which
to
first
most
demand for housing, for house¬
hold effects, for other things that
on
young
married ; couples buy. in
their first venture into setting up
their
homes.
own
The
largest rate of increase,
however, will be among the olderToday there are about
three-quarter
million
In the next
age group.
ten
and
65 and older.
persons
12
increase
the
years
their
in
number will be at least three mil¬
can
happen to upset the scheme of
lion.
The
things.
look
A
tances
lesser statistical dis¬
as
with
be taken
can
instance,
for
effect
the
trace
to
greater
is interesting,
It
confidence.
through the ensuing years of the
increased birth rate and lowered
death rate during the present
in the fall
When schools opened
there were estimated to be
a
little more than two and onehalf million school children of the
of 1947,
to enter the first grade.
an
increase of 350,000
usual age
was
there
year,
of
were
last year,
about
an
300,000 more
estimated total
and
two
three-quarter
1953, this
annual total of-first-year school
children will be almost a million
millions. By September,
of
with
today
than
greater
total
and
three
about
1953
a
three-
quarter millions. This will result
from
the
increased
number / of
births;which occurred during the
Following; 1953
be a decline. In
1950's and early 1960's, the
arid
war?
the
and
elderly ages over
adults and children
younger
will
after-,
.
t
there: is likely to
the late
increase
greater
long term in population
middle
of
have
effect
profound
a
demand for products of
Those
who
cater
tastes
of
market
on
industry.
needs
to
and
adults will find
changed
in
size, but those who give their at¬
tention
will
young
to
Here
little
goods for older groups
their market steadily
find
growing.
;
other
some
are
observa¬
tions demographers have made:
The
this
of
September
In
1940.
over
indicated
the
over
their
decade.
than
survey
1960. These facts are of
importance
to
both
em¬
by
vital
far into the future. Too
of
extensive sample
tain
too
This
are
early
the
to
the Twenty-first Cen¬
decades of
provi¬
sional rates announced by the Na¬
tional Office of Vital Statistics.
1947
for
rates
death
postponed
be
may
The 1947 rate was
1915.
in
ords
in the
pro¬
are
Central
North
States have gained
the Northeastern States about 8%
moved from
nominated
6%; Z The
about
and
be
formerly associated with Gordon
Graves & Co. as municipal bond
,
18
Mountain
and
For
the Pacific
States, the
gain since 1940 is about
33%; '.while the South had the
lowest/percentage gain with only,
ending in 1950
will t be
be¬
19
population.
combining
estimated
dur¬
ing the decade
tween
million
10
West,
Coast
gain ^in
no
Doehling Rejoins
Gordon
YORK 5f N.
If
I j ler, Mueller & Currier, Newark.
CANADIAN STOCKS
WALL
•
may
26.
Henry G. Riter
3rd, Riter & Co., Chairman; Irving
D.
Fish, Smith, Barney & Co.;
Joseph S. Nye, Freeman & Co.;
Stanley L. Roggenburg, Roggenburg & Co., and Joseph R. Muel-
CORPORATION
NEW
Now
Committee will be con¬
duly elected.
V
committee
TWO
the,
the
that
interesting
Inc., has presented the following
his mark in national politics as slate to fill vacancies occurring as
the leading spokesman on behalf of Jan.r 15, 1949:
'* '
T5 j'of the Western provinces and also
Board of Governors: James J.
as the
principal advocate for the Lee, Lee Higginson Corp., sucimplementation of the recommen- ceeding H e r b e r t F. Boynton,
,
indicate
population
of the
United
States made in April, 1947, by the
Census Bureau has yielded some
Gels Election Slate
have not been confined to the pro-
than
estimates
ent
An
Nominating
<S>
millions. Pres-
the
District 13 of NASD
Census
largest numerical increase in the nation's population was recorded between 1920
a gain of a little over 17 millions.
The'increase
1930 and 1940 was a little over half that of the preceding decade, being about 8.9
between
relin-j
can now
The
He
junior
the
of
area
general it is interesting to note
minion.
field.
The
the
leading provinces of the Do¬
vincial
few
A
met with support
the
his provincial duties with
the knowledge that the credit of
Manitoba now ranks with that of
.Mr.
the Redwater
in
cess
quish
the
moderate
way
in financing its indebted¬
this country.
The new
Minister of Justice
York
New
Western oils, however,
managed
to
make
head¬
still
....
the province had the greatest
the
recovery.
At the
of office
remarkable improvement.
of
course
the down¬
market before staging a
Province of Manitoba registered a
time
lesser degree
a
fol¬
issues
industrial
the
lowed to
also
of
slight¬
were
ly easier as a result of liquidation
of the proceeds of the Nov.
15
bond
redemption.
Among
the
result of his efforts, the credit
this
Free funds
of
Bureau
and 1930 after the First World War with
275 persons
steady but
bond market remained
notable reputation, and
in
definitely broken.
ternal and internal sections of the
vincial Treasurer, Mr. Garson
standing
relations
financial
and
tural, mineral and industrial pro¬
duction.
In his capacity as Pro¬
as a
every
During the week both the ex¬
prairie provinces of the drought
and depression years of the early
thirties, Mr. Garson successfully
implemented a far-reaching pol¬
icy of economic diversification.
Today Manitoba is no longer sole¬
ly dependent on favorable grain
harvests, and a healthy balance is
now maintained between
agricul¬
a
is
re¬
progress.
Deeply
impressed
the
disastrous
impact
on
achieved
there
Dominion-Provincial
on
the
direction
Manitoba
of
of
of the various conferences
failure
and Treasurer.
Province
development
likelihood
that it will not be long before the
existing deadlock created by the
ing the period when the new Min¬
ister of Justice directed its affairs
Under
the
depends, will not be neglected. In
especially dur¬
Prime Minister
cabinet will
Canadian West, on which the
future of the Dominion so much
During his association with the
as
that
Gar¬
Mr.
of
Dominion
the
ensure
government
of
Manitoba * since
1936 this province has made re¬
markable progress,
in
S.
U.
Analyzing growth and shifting of age groups in population, U. S. Census Director indicates industires
making goods for older age groups will find their markets steadily growing, while those catering to
young adults will find markets little changed.
Cites record postwar birth rate as a factor "with impli¬
cations" for business and industry in planning future operations.
numbers
tion.
Federal
join the
adoption of
suggestions that would go far to
remedy many defects in the Brit¬
ish North America Act, which is
many
newly appointed Dominion Minis¬
ter of Justice Stuart S. Garson had
been
system.
Commission
Rowell-Sirois
other
government
previous occa¬
sions it had been reported that the
On
ranks.
tax
He has also urged the
notable addition
new
a
Canadian
achronistic
the Lib¬
the formal retirement of
By J. C. CAPT*
J
Director,
v
By WILLIAM J. McKAY i
Thursday, November 18, 1948
CHRONICLE
of
to¬
number to be¬
million
47
by 1960.
families
of
the
during
crease
at
and
number
families
in
grow
tween 43
The
million
40
day will
in¬
will
15
next
years
higher rate than total popu¬
a
lation
chiefly
increased
because
births of the World War II period
will bring increased marriages.
The
ratio
sex
is likely to
show
little change from the present but,
without substantial immigration,
the
small
present
excess
fe¬
of
males may increase slightly.
The proportion of foreign-born
decline
will
greatly unless immi¬
prospective first grad¬
gration is considerably increased.
from two and a
The
ratio
of
non - whites
to
quarter millions to a little over
number of
ers
may
two
range
three-quarter -millions.
and
This will depend on
and
conditions
how economic
other
in¬
The crest
factors
fluence the birth rate.
-
whites
increase
will
slightly, but
substantial immigration
tribute
will con¬
maintenance
to
present ratio.
:
-
.
.
the
of
v
junior high
What is to be done when these
little under three and
three-quarter millions, will come
in the fall of 1959/ By 19-32, this
crest will bring about
3,700,090
into the senior high school fresh¬
changes come into full effect dur¬
ing the next two generations?
Suppose, as is predicted, we have
within 30 more years a phalanx of
for
entering
youths
school,
man
a
The story will repeat
group.
college
for
itself
in
fluctuations
mean
years. ;
school
These
population
that Federal, State and
local
authorities must prepare to meet
needs of these various groups
with
60
million
45
years
and
men
over
women
Consider, at the
same
time, the impact of con¬
tinued technological improvement,
the
of age.-
harnessing
atomic
of
power,
increased industrial production in
all
parts of the world.
How wrll
if
adequate school buildings, quali¬
fied teachers and appropriate
these oldsters be kept occupied
related com¬
munity services. They have their
implications too for business and
industry in planning future oper¬
groups
whose
enough
to
health programs and
ations.
all
businesses
go
farms?
and
a
is
Here
load?
Will,
system
old-age / security
such
\
to the younger
numbers may be
operate our factories,
jobs
the
our
carry
something
to which social scientists and the
I By 1965, the pumber becoming
governmental agencies must'give
lg, at which age very large num¬
their attention.* :
\ "
bers
of young people join * the
Vfi^ '
But the population problem,,is
labor force, will be nearly three
and
three-quarters
millions or bigger than the United States
We still have room within
about one and one-half millions alone.
more
than
in
1947. The
18 to 44
the best working age in
most occupations,
will probably
increase
only slightly over ' its
oresent size of about 60 millions
group,
by
1960
unless immigration
changes, the picture. Persons 45 to
64, the older working ages,/num¬
bered nearly 30 million
at the
beginning of this year and
tional gains
lions
are
addi¬
of four to five mil¬
considered
almost cer¬
our
boundaries for population
will
creases
and
time to
come.
be
able
to
much of the
we
ter.
our
now
It
are
is
have
for
(in¬
some
How long we will
feed
ourselves
and
rest of the world as
doing is another mat¬
that within
estimated
bounds
are
1,600.000
square
miles, or about one billion acres,
of
potential cropland.
This is
about one-fourth of the world's
/.
(Continued
on
page
27)
Volume
168
Number 4752
THE
COMMERCIAL
&
FINANCIAL
Sees Endurance Limit Reached in Cost of Govt.
F. E.
Sadler, Chairman of Committee
Federal Expenditures of
Association of State Chambers of Commerce, says per
capita tax bill of $420 is for first time higher than per capita food
expenditure of $360.
Sees danger in octopus-like spread of
Federal bureaucracy.
CHRONICLE
The EC A and American
on
>
By W. I. MYERS*
Dean, College of Agriculture, Cornell University
Myers, though stressing increased agricultural output in U. S. during last three
improved food production in Western Europe, foresees large American food
;
dol-<»>
every
income
for
Federal,
State
and
local, taxes."
Mr.
Schlu-
ter, who is
Chairman
the
tee
on
eral
Expendi-
t
u
N
r
of
s
t i
a
Fed¬
e
o
n
a
1
Association of
State
bers
ernment
Com¬
of
$420
E.
Governor
per
the
first
levels
ity
the
to
Council
aVeturn
State
Jer¬
nately,
time
If
bill
;ax
examined
you
years
in
while
the
less
in
bill
the $360
average cost for food per
of the
"the
he
declared,
high cost of food gets front
headlines," adding—"it is
desperately necessary to cut Fed¬
page
eral
government expenses now,
to make government more
solvent
in the event of war or
depres¬
sion."
"We
don't have the
bones that
fat
on
our
had in 1941 to wage
we
war," he pointed out.
"Today almost 70% of banks' re¬
sources
indirectly
limit
a
the
more
directly or
government bonds,
in
there is
so
invested
are
as
in
to how much
government
this
roots"
movement
people in
ful
believed
and
big spenders
—
the
central government theorists who
favor the welfare
order
to
for public
depression."
serves
a
"Over 85%
ment
of
income
sonal
and
excise
works
our
derives
"If
govern¬
from
per¬
taxes
and
Schluter
Mr.
dis¬
business
activity de¬
clines, and we have a depres¬
sion, this government income can
shrink $15 billion at
government needs
for
relief
time when
a
more
revenues
and
public. - works
projects to aid employment."
"Who
will
ment
to
stand
.
.
in
national
our
have
the
and
up
ment expense
govern¬
courage
reduce
in line with reduced
,
Schluter stated that the most in¬
"We
this
have
ernment
increased
of.
cause
in
is
country
taxes.
inflation in gov¬
in
living
costs.
more
than
,
While the cost of
the
nored
living is
up 80%
eight years, the cost of Fed¬
eral government* is up 450%."
saw
for alarm
.cause
octopus-like
spread
of
In the
Federal
bureaucracy, saying — "The vast
of Federal employees has
now reached
2,150,000, and is still
growing. While productive enter¬
army
prise
is
Federal
short
of' workers, the
government continues to
hire at the rate
a
As
factories,
warnings
ig¬
are
true
in
fact,
rallying point to
prove
be
a
the public
this
owe
turn."
can
effort
our
territory
and
much
gr'eater
the
production
great de¬
farm
fertilizers
of
machinery
that
are
livestock
The
ern
sixteen
Europe
many
war
and
of
most
exports of food.
the
calories
countries
In
oil
year
of
based
on
25
3
some
30
specific
of
the
waste in Federal government, Mr
Scjbluter pointed to the fact that
the
government
writers
for
buys
3.6
typist;
every
type¬
main-
the
of
pro¬
people of
consuming
were
farms
meat
more
livestock
not
pasture
nutritious
and
per
but
also
condenses four-fifths of
averaged
million tons
our
corn
and
other feed
and
eggs
million tons of
serves
as
.
grains into meat,
milk.
a
human
avoid
In
the
Livestock
also
of
feeding of wheat
the
time
same
grams
farmers
struggle in its fight to
duce
Federal
curb
it
and
"big government," but that
is
ready
"True
foil
the
greatness
struggle.
the !
expenditures
re¬
challenge.
from
emerges
Constructive
leaders
history; of: the!-world
born f of ^ crises
chaos
to
lead
and
the
were
above
rose
people
in
vic¬
to
tory," he concluded.
tons
Of this supply
something like 5 million
including
is
now
from
Eastern
Eastern
within
Europe,
Germany
the
Iron
Most of the remainder
meat
to
and livestock
soften
duced
and
the
supply
the
on
from
be
can
eaten
so
that
to
bring
numbers
overseas—Canada, the Argentine,
down to the available feed
and if necessary, release grain for
direct human consumption. >
country.,.
1•'
:
course,
<
/wm-uywy.l: I".n.
this
-yj:
Even with favorable weather in
i<
Under
natural
1946, the food production of West-
normal
use
million
two
from
New York
make up part
Science,
City, Nov. 10, 1948.
or
bushels
*An address by Dean Myers be¬
fore Academy of Political
this
supply
conditions
procedure
been to
Robert H. Huff Is
is
crops
Australia
and, Yof
products
impact
on
of
that
Robert
elected
a
ident.r
H.
14
domestic
Huff
has
Mr.
direct
a
Effects
The
of
first
Feed
Shortage
effect
of
this
Huff, will set up and
bank and insurance com¬
department
corporation
and
time
between
West
Coast
was
its
will
offices.
President
of
for
divide
East
Coast
of the
cause
flocks
their
that
and
numbers
could be
duced
feed
herds
down
York,
,
bank
and
both
insurance
supplies.
of the
scarcity of
feeds. As
a
would
the
have
three hundred
of
bountiful
extra
1947
wheat
crop
to
food
was
an
unnecessary
their personal
with
habits.
With
feed
and
scarce
farmers
.1948.
mally
forced to make sub¬
were
baby chicks
pigs raised in the Spring of
These meat supplies nor¬
move
and
mer
amounts
high
to market in the Sum¬
Fall
and
available
sponsible
of the deficiency of
for
prices
the
of
the
have
scarcity
meat
(Continued
on
and
page
of these
any
Heating Corporation
(No Par
Value)
Funds Available for Interest
Panama Bonds
City Bank of New
York,
as
Price $2.00
per
fiscaf agent, is notifying
year
budget is more than
5r times
1939's,, 12 times 1930's
higher than last year's and shows
continuing upswing.
"It
is
stated,
"that
tually
cost
than
hard
the
Civil
the cost
Mr.
•
this
believe,
"he
budget is ac¬
than 3,500
more
of
to
of
Schluter:
dangerous vand
War
times the
and
more
World War I."
>
said
that
this
fund
5% external secured sinking
gold bonds, series A, due
Share
•v
■*
x
T
■A.
* ''
'A
■:
Copies of the Prospectus may be obtained from the undersigned.
May
15, 1963, that funds have
been received and are now avail¬
able
for
distribution
as
an
addi¬
Mercer Hicks
tional payment on account of the
interest represented by the
May
15,
of
1943, coupons in the amount
$4.28 for each $25- coupon and
$2.14
for
each
$12.50
72 WALL
coupon.
Such distribution will be made at
the office of the fiscal
agent, 22
alarming,, peace-.. William Street, New.York City.
reduced
been
149,000 Shares
Continental Radiant Glass
^
,
November I J, 1948
7
&
Company
STREET, NEW YORK 5, N. Y.
DIgby 4-5700
ex¬
stantial reductions in
and in
COMMON STOCK
cerned
billion
at
tremely high prices United States
company
taihs' 22
$42
and other
corn
result many consumers
in
on
re¬
In addition
issue
his
The National
level
animals being fattened
fo^ market
were
sold more quickly because
offer to sell nor a solicitation of offers to buy
offering is made only by the Prospectus.
stocks.
Payment
bring
the
He
specialists
be¬
supported with
holders of Republic of Panama 35-
separate agencies con¬
with housing. Its present
to
to
the
formerly
Butler, Huff &
sup¬
selling off of breed¬
and
Co. of California and senior
part¬
ner
of Huff, Geyer & Hecht of
New
an
securities. The
new
feed
shortage was to increase the
ply of meat for consumers
director and Vice-Pres¬
stock
pany
This advertisement is neither
been
econ¬
omy.
Wall
announces
as
re¬
the cost of food
entire
Officer of Blair Go.
Blair
&
Co.,
Inc.,
Street, New York City,
so
the
great shock absorber to
when unfavorable weather results
in reduced crops the excess animals
that
Curtain.
came
wheat
undoubtedly felt that the program
minimize the unfavorable effects of
voluntary
economy
recom¬
of short crops on our food
supply. mended
by the
Citizens'
Food
oils, nearly 4 million tons
and more than llk mil¬
came
appeal
on
feeding and to consumers to econ¬
omize voluntarily in the use of
Committee
dif¬
a
pro¬
to
minimize
to
interference
ficult
to
to live stock. At
nation-wide
carried
were
The most effective method of stor¬
dedicated
food
ing the price of wheat above the
price of corn to discourage the
ing unusually large grain
by increasing livestock
is
this
to meet human
This resulted in rais--
of grains
Chambers
in Europe.
States
1947
needs first.
lion tons of meat.
State
of
to
not
by a vigorQus pro-,
buying wheat early in
of
Fall
if
met
was
the
Association
suffering
United
of sugar,
National
time,
needed
was
starvation
couritry; we owe this effort to our
heritage," he said, adding that
fats and
use
severe
the
ing
war.
industry of
only trans¬
forage into
foods
employees
examples
time
highly
war
States
liquida¬
that
good the world deficit and
actual
nearly a billion
previous year
grains severely.
forms
imports.
to
the
pounds
American
corn.
Summer
than before the
The
those
grain, about 5 million tons of
cakes,
same
person
third of
before the
the
corn
country
about
world
in
the
this
imports
about
below
demand
shortage of
and of other feed
the final
a
of
At
the
United
bushels
West-
the
About
years
agricultural
each
were
consumed
were
the five
of
direct
make
to
wheat to
our
of
in
reduced
duction
plus Western Gera
deficit food area
were
before the
nations
because
drought
1947
essen¬
to
great danger of
was
for meat and the
and
country
employment at high
feeding too much of
tial in modern farm production.
The
full
there
wages
railroads.
was
in
Heavy demands
this
on
crop
Europe from starvation.
With
especially of
and
there
made
keep
moralization of industrial produc¬
tion with consequent decreases in
of
to
were
more
homes,
result
a
been harvested
the United States.
destruction occurred,
As
largest wheat
ever
At
every bushel of wheat
could be spared above our
that
gram
that
livestock.
however,
crisis
in spite of the
Amer¬
of
two-thirds
of
day."
;
of 500
chance to set forth
a
but
"We
involved
was
crops
had
tion
pro¬
as
all
and thus reduce the
1 corn
level and yields of
were
reduced seri¬
North
Europe
destination
storm
will
in
He
publicity
govern¬
income?" he asked.
Decrying the cancerous growth
of
Federal
government,
Mr.
prices
achieved
in
In
ica.
wheat
than
ously. The result was an extreme¬
ly critical world food situation—
the
East
as
1947
less
was
Europe and
W. I. Myers
Winter
prewar
other
world
a
then
government
flationary
of
principles," he declared, "It is
obligation and duty to do so."
"If
re¬
during
Federal
corporate
taxes,"
closed.
build
be
"We have
which
in
could
program
Schluter stated.
eral expenditures
ployment
spending. He said he
this
a
The next two years before the
Congress election will provide the
opportunity for such a campaign
of
"public enlightenment," Mr.
there
em¬
American
education.
state," he said,
"recognize the need for low Fed¬
during full
of
effort to cut waste¬
an
Federal
the
the
country for marshalling
opinion through a "grass
public
can
borrow."
"Even
Schluter said there is need
through
possible
a
Mr.
of the
well
control."
"Nevertheless,"
was
Far
best evidence
destructive
decades,
many
duction
involved
influence of neighborhood
person."
the
first
this
World
really
gone
Driscoll
Governor
is
the
1946-47, and the drought in the
following Summer, the worst in
struggle which
has
"This
of
War
15
stated.
sult
second
communities,
Federal
900%,"
up
100%
the
place,
prewar
———
of
In
cate¬
your
than
many
didn't
way.
local
will find they have
you
it
this
quickly to
:
ern
Europe, especially of food
grains, was only about 80% of
prewar, because of the shortage
of fertilizer,
machinery, labor, and
almost everything else.
As a re¬
work otit that
which
many
first
War.
Unfortu¬
of tax author¬
in
it did $
after the
need^
winter the production of food would increase
one
as
World
gories.
increased
capita of this country for
time was
higher than
of other countries for
who spoke at the same meet¬
ing, praised the work of the Na¬
is seeking
assumed
gov¬
on
Driscoll of New
Governors'
too optimistic regarding the recovery of world food
production after
incorrectly that if this country could meet the emergency
was
was
sey,
tional
merce,
said
that "in 1947
Schluter
It
war.
further
encourages
the tax bill of
Frederic
this
ernment and nurtures the philos¬
ophy that the "government owes
us a living!"
Cham¬
'
Everyone
——
Federal gov-
our
dependence of the people
of
Commit¬
growth of
European deficit.
dicts gradual increase in production
30 cents
,
time
along with "
years
exports for two years or
Holds world outlook for adequate food supplies is not
bright but pre¬
through slow but sure methods of research, education and irrigation.
Looks for more poultry and meat in U. S. next Summer and
Fall.
to meet
more
Schluter, President of Thermoid Company, addressing the
annual meeting of the Directors of State Chambers of Commerce and
New Jersey state officials
recently stated: "Cost of government has
lar
,
Dean
F. E.
of
21
Agriculture
"
National
about reached the financial endurance of the
people, taking
(2081)
/,
■.
v.-*
*
Y
re¬
and
other
29)
.
22
(2082)
THE
of
Collins, Director and Dr. Marcus Nadler, Research
Director, of Institute tof International Finance of New York Univer¬
not been sufficient to
overcome
1947,
totaled
France
is political rather than
eco¬
<"£_—
deficits
have
been
the
huge
ex¬
penditures for
military purposes,
by
the na¬
enterprises,
and
the
paid to food producers
losses
incurred
tionalized
subsidies
state
industries
in
to
order
keep down the prices
products
and
services.
their
of
few
evasions,
particularly
:-.-I' ,f' *' V•••
"The
and
shortage of commodities
high prices have ham¬
the growth of exports to
pay
Dr.
Marcus
Nadler
New
York
for
This
has
the
Finance
of
.University. ;/.A;
>YYYY;
Although throughout the econ¬
omy, there is a serious gap be¬
the
tween
demand
for
the
and
supply Of goods, and the pricespiral still continues upward,
signs of progress are in evidence,
wage
the Bulletin stated.
:
-v
-
by a lengthening- of the
working, week and by the in¬
creased supply of raw materials
and
machinery furnished under
the Marshall Plan, a number' of
heavy industries havd increased
productivity to above fhe prewar
level, whil£ railway freight traffic
is now well beyond 'that level.
;
The better grain crop promises
a more abundant food
supply, thus
reducing the inflationary pressure
as well
as the need for imported
food, the Bulletin continues. Ef¬
forts are being made ta balance
the
budget by increasing taxes
and improving collection methods,
reducing the number of govern¬
ment
employees, increasing the
efficiency of state enterprises, and
overhauling the military estab¬
lishment. If these
measures
successful
and
should
continued
particularly
These
area.
of official
gold and dollar balances
together in 1946-1947 was $1,325
million, the largest sustained; by
any. nation and constituting a loss
of" 64%.
L'
'
The
with
deficits
ounce
000
on
000
on
a
the
have
by drawing on the na¬
gold and foreign-exchange
.
ofpeacetime competition a rising trend in failures is mot
abnormal, but is in accord with past experience alter earlier wars."
Continuing the "Business Bulletin" states:' "The .records on com¬
mercial failures, as compiled by Dun and Bradstreet, Inc., extend
reserve
calculated
at
$35
gold
pledged with the Fed¬
Bank of New York
was
Reserve
for
collateral
as
United
to
Next
States
the
Govern¬
United
King¬
dom, France is the largest recipi¬
ent
of American
aid
under the
Marshall Plan.
Formerly one of
the largest holders of gold, her
gold reserves and foreign assets
total number of failures according to the size of firms, broken uown
into four size-groups.
The data for this diagram are plotted by
months commencing with December, 1944.
All
lished, monthly in Dun's Statistical Review. '
short-term
a
crqdit. The ratio of unencumbered
gold to note and deposit liabilities,
59.42%
4.92%.
to
the
In
fold increase.
same
%; 'Y'?iYY
discussing credit control, ;the
stated that by ; a recent
decree banks are required to ob¬
to
approval of the Bank
extension of. credit
prior
individual
the
borrowers: if
been
now
progress is recorded in eliminating
the worst production bottlenecks,
visible
particularly the shortage of coal
and steel, a good start will have
mately $255 million, the principal
items being freight, administrative
been made in removing the basic
expenses,
responsible - for
economic difficulties.
on
the
basis of the
back
to. 1865
1945.
before
able
totals,
recorded,-one must" go all the way
as
"
comparison
finding
a
year
when failures were less than" in
/
"The second diagram shows, for the smallest
.
for
badly depleted and latter's total indebtedness to banks
the European Recovery Program would exceed 50 million, francs.
is relied on to furnish urgently The regulations promulgated .' .by
needed supplies from abroad. To the National Crd^it: Council stipu¬
stimulate exports and to encour¬ late that loans should be scrutin¬
ized with a view to granting credit
age dishoarding of gold- and re¬
patriation of French capital, the for essential productive purposes
franc was drastically devalued in and refusing loans for speculative
and
where
1948 and a free market in gold and purposes
borrowing
could be avoided by liquidating
in
dollars, escudos,
and
Swiss
francs was established."
Y^IYY"- excessive inventories, selling sur¬
plus assets and repatriating capiV
In analyzing the balance of
pay¬
tal. The banks were also;in structments, the Bulletin stated that the
ed
to
analyze loan applications
deficit
on
international
current
from the standpoint of security,
accounts for the years 1946 and
and profitability.
The
1947 aggregated 433 billion francs liquidity
Banking Control Commissionersor
approximately $3,638 million,
quires commercial banks to main¬
"In both years the deficit on in¬
tain a minimum ratio, at present
have
but
In
France
'
number of failures has
increased to around 4C0 or more per month, it is still less than half
of the 1939-1941 average.
For 1939 the monthly average was 1231.
The percentage drop during World War II was the largest for any war
period, for in 1945—the low year—the monthly average reached the.;
remarkably smallfigure; of 68./ The series on failures-is not strictly A
comparable throughout, due to changes in methods of compilation;
Bulletin
tain
figures are those pub¬
"The first diagram reveais that white the
declined between these dates from
of
most
during
through 1944, and the line represents the number by mQnths begin¬
ning with 1945.; The right-hand diagram show's the percentage of the
period the note circulation rose
by liquidation of assets
from 142 billion francs to 915 bil¬
abroad,
and Y by. large
foreign
lion francs, i. e., a more-than sixY
grants and credits, particularly
the
The
decline
:
reserves,
from
sharp
per
loss of four-fifths of the reserve.
eral
1857.
to
notable characteristic of this long series is
eacn major war, loUoweu oy- a p^tWaf
advance.
This V-shaped pattern is clearly defined during and after
the Civil War, World War I, and World War II.
It is noticeable to
a lesser extent in the
Spanisn-American War.
j
'•
j, V
"The reason why so few businesses become bankrupt during war
i is simply that the war demand for
goods is so great as to reduce com¬
petition to a minimum.
Even the weakest firms: have enough orders
the
of the Bank of
Of this amount about $104,000*000
of
back
to keep most of tnerri in operation.
When real ;eompetition appearsafter:'war activities are ended, the'curve of business insolvencies
'begins to turn upward. "P' •
-■'•'r■"
Y':/yYM YYYY ■■1
decreased from $2,714,000,)
f'V /'Tib the diagram at the left below, the bars represent the monthly
Aug. 31, 1939, to $548,000,-average number of
commercial failures for each year from 1939
Oct. 14, 1948, representing
gold
France
of
met
tion's
ment,
Aided
prove
been
balance
international
payments,
dollar
imports.
large deficits in
enormous
created
France's
national
the
VYYY.
the
pered
Geo. Rowland Collins
-
1947,
the holdings at the .end
of 1947 to $195 million.
The-loss
bringing
.
among
dustries where deterred demand has been largely eliminated. v» -m-tne
million
$100 million in
and
been growing* aithougn it is suxi iar omow trie
Competition has become keener, at least in those in¬
level.
return
past
The declines in dollar
years.
1946
.
prewar
rapidly in the
shrunk
rene
then the number has
-
the
accounts,
balances amounted to $223
the
On
hand, the antiquated tax
system nas led to widespread tax
farmeys.
international
have
other
i
|
,v
gold and dollar reserves of France
in
and
'
'
Because of the chronic deficit; in
nomic in character, according to a Bulletin on "The Postwar Economy
of France," issued Nov. 15 by Dean G. Rowland Collins, Director,
and Dr. Marcus Nadler, Research Director, of the Institute of Inter-
the
additional
shall Plan aid.
war
and reveals
years
According to the current issue of the "Business Bulletin," pub¬
lished by the Cleveland Trust Company, Cleveland, O., "in 1945 the
number of business failures was almost the lowest on record,.
Since
;
$1,300 million in interim,and Mar¬
her
problem of France today
of
jlh
of commercial bankrupic.es
wed competition, induced by end
activities, has given upward trend to commercial insolvencies
in last three
;
March, 1949,
receive
will
'v. Cleveland Trust Company reviews data
.'to
million,
$2,323
the 15 months ending
than economic.
real
Government
States
France
flames of inflation fanned by chron¬
ically large budget deficits and shortages of commodities.
Say
Marshall Plan aid has helped, but real problem is political rather
The
Notes Growth in Business Failures
1, 1945, to th^ehm'bf
loans
and grants; by:"the
United
since war's end has
progress
France
From July
Dean G. Rowland
sity, point out French reconstruction
in, private dollar assets
in-, the United States.
and
serves
Analyzes Postwar French Economy
Thursday, November 18, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
firms,
a
more
favor¬
thus far than might have been supposed.
Since
September, 1946, commercial enterprises with liabilities under $5,000
have accounted for less than 20% of the total number of failures, a
much lower ratio than in 1945 and the first nine months of 1946.
The
proportion of failures in the next group, with liabilities of $5,000 to
$25,000, has increased noticeably!
No pronounced change has taken
place in the two groups of larger, firms, although when combined
they have accounted for a slightly greater share of total failures in
1947 and 1948 than in the two preceding years."
./%/YY
.
PERCENT OF
NUMBER OF COMMERCIAL FAILURES
BY SIZE OF
TOTAL NUMBER
LIABILITIES
eign workers employed in France.
causes
.
France's
items
Income
Nevertheless, the Bulletin
con¬
averaged
approxi¬
and remittances of for¬
between the total of their
liabilities v and r the
short-term
;
amount of their
able assets.
liquid and realiz¬
•' .-V-
•%.
from
tourism, which be¬
a
major source
foreign exchange, totaling $340
million in 1929, amounted to only
fore
60%,
the
war
was
tinued, France, despite her notable
recovery from the enormous dev¬
astation caused by the war, is still
beset by many
acute economic
$22 million in 1946 and $60 million
in .1947.
problems.
exchange
Paul Cleveland
Withlp
of
fuel and
Being deficient in
raw
materials, she has to
rely on-imports to a considerable
extent
to
operate
her
For
-
1948
the
foreign-
from
earnings
tourism
pfficially .estimated at over
$150 million."
; >' \Y
were
The
industries.
deficit
on
current
account
Although formerly an exporter of
food, she has been compelled to
import large quantities of food¬
in 1946 and 1947
stuffs.
francs, respectively, accounted for
principally
by : contributions
to
Because of the slowness in
restoring exports, however,, it has
been impossible to import needed
goods in adequate quantities.
The
.European Recovery Program has
greatly alleviated this situation.
"Another
which
one
acute
problem,
has contributed
and
mate¬
rially to the internal political dif¬
ficulties, is the inflationary race
between
prices
and wages, with
consistently outrun¬
ning the latter.
The scarcity of
goods was aggravated by the dis¬
astrous grain crop failure in 1947
and by the withholding of com¬
the
former
modities from markets because
the
ing
of
constantly declining purchas¬
of the franc. This situ¬
power
ation
increased
black-market
op¬
a
net
reduction
assets of
the
26
in
increased by
foreign-capital
billion
Bretton
and
Woods
of
repayment
was
billion
12
institutions,
loans,- and
foreign
export of capital. This brought the
total debits to 270 billion francs
($2,268
million) in 1946 and 201
billion
($1,688 million) in 1947.
For the three years .1945-1947 they
amounted
1946
the
to
;
$5,512 million.
debits
the extent of
In
-covered
were
to
half
by drawing on
the gold and foreign-exchange re¬
serves and privately owned for¬
eign assets while the -remainder
a
United
reduction
living, causing repeated demands
higher wages and frequent
States.
In
1947
abroad 30%.
'
been
flames
of
inflation
.
have
fed
by the chronically large
budget ...deficits financed largely
by borrowing from the Bank of
France.
Important
causes
of
the
Organization,
Dearborn
70%
of the
of
total
charges and
reserves
and
1945
1946
-
1947
-
t94fr
v
South
608
IBA Convention Will Consider Current
Street, counsel
coif-?
and stockholder
'
" Y/YY-Y. ^//Y
porate, financial
relations.
.
'
Financial
.
Mr. Cleveland, law
in
Economic
Problems
CHICAGO, ILL.—The Thirty-Seventh Annual Convention of the
Investment Bankers Association .of America/to be held 5t the Holly¬
wood Beach Hotel, Hollywood, Fla., Dec. 5 to 10, will be devoted tp a
consideration of the financial and economic problems of the moment,
University, entered
the investment field in La Salje
Street
and
graduate at
Northwestern
1908-and continued
ac¬
tively in that business .until 1942.
national
defens, %■' YYY/-YYY/:-. .Y Y;Y . Y'Y /.
well as questions di¬ ranking Industry," sponsored by
the New York Financial Writers
Corps of Engineers, Great Lakes rectly pertinent to the investment
Association,, which will give all
:.v ;
i;
Division.
Since 1946, he has eri- banking industry.
In addition to the address by representatives of newspapers and
gaged in private practice as finan¬
magazines, as well as delegates", a
Julien H. Collins, Julien Collins &
cial consultant.
Y Y.t
chance to participate.
// L
Y
Co.,-Chicago, President of the As¬
Following shortly after the na¬
National City Bank Named sociation, and. the reports of the
tional election, the deliberations
National IBA Committees; the fol¬
In that year, he became
ator
of
war
contracts
renegotjfor; thje
the
including
program
as
,
,
Agt. for Copenhagen Bonds
The National
external
the
.'••y'3»'40'4l '42*43*44
associated with the Newey-
Ayers
the amount of $1,184 million made
from
official controls, raised the cost of
"The
come
foreign credits and investments to
loans
principally with foreign
and
credits,
particularly
up
strikes.
CHICAGO,
ILL. — ^ulYYWCleveland, a veteran in invest¬
ment banking in Chicago, has be¬
City Bank of Hew
York
has
been
appointed
sue-,
cessor paying agent in New York
for the jcity of Copenhagen ilk%
met
was
erations and, despite rationing and
for
Newey-Ayers Firm;Y-Y%
loan
of
lowing guest speakers will
pate in the program: ; 1 \
.
Commander
Eichelberger,
of
Allied
and
will, according to Mr. Collins,
vide
an
an
pro¬
excellent opportunity for
appraisal of the economic out¬
look and for an interpretation.of
Occupation Forces in
Japan
(Assistant to General fundamental financial trends in
Douglas Mac Arthur
the light of the ballot results;
f
U.' S".
Dec. 1, 1970.
assets
Clarence
With Penington, Colket
;Y/'
General Robert L.
bonds,! duje •Y '
1930
partici¬
;•
i
B.
Randall; Assistant
YY to the President, Inland Steel
Y/Company.
// :// ; r ■■■, 'f' W. C. Gibson Co. Now
Dr. Marcus Nadler, ProfeSsor of
Finance, New York Univer- Chicago Exch. Members
sity.
'
'■ ; • ; .
'' :
V Y CHICAGO, ILL.—W. C. G'bson
■
In
1947 about 90%
of the entire
PHILADELPHIA,
PA.
—
Pen-
deficit in the balance of payments
was
incurred in the dollar area.
ington,
Coiket &
Broad
Street,
The
deficit
New York and Philadelphia Stock
by
credits
was
made
received
up
largely
from
the
United States Government and in
part by the reduction in gold
re¬
Exchanges,-
Co.,
123
members
announce
South
of
the
the associa¬
tion with them of John C. Marti.ri
as .a
registered representative'.
.
^
t...
Another interesting feature
be
a
cial
will
& Co.,
231 South La Salle Street,
panel discussion, "The Finan¬ has -been admitted to membership
Press Views the Investment -in the Chicago- Stock Exchange!
Volume
163
Number 4752
COMMERCIAL
THE
&
FINANCIAL
CHRONICLE
Women Shareholders
Holding Bi!j to nationalize British steel industry is morp drastic ;
originally intended, Dr. pinzig contends Labor Government is'»
acting unconstitutionally in taking over large part of engineering
industry as this was not voted upon by the electorate. Says measure
does not provide for fair compensation to mill owners.
LONDON, ENG.—The long-awaited Iron
and Steel Bill has
ing
Inc.,
held
in
New
York
City,
announced.
'
Mrs.
Wilma
Soss,
founder
of
the
now
will
con-,;
firms
Bill
-would
come
indirect
nqne
but
ing
the; less
t h
o
e r
fact
Dr.
is
Paul
Einzig
,!
•
...
going to. nationalize
a
•'
.
sub¬
very
steel-using
The dividing line be¬
tween firms which
are
to
come un¬
der government control and
which
those
are; allowed- to
remain
privately-owned has been drawn
arbitrarily.
owns
If
an
engineer¬
steel-producing
a
firm then the latter is
nationalized
but not the former.
If, on the
other hand, it is the
steel-produc¬
the engineer¬
ing f:rm that owns
ing f'rm, then both
are
to be
are
itself
the steel
verdict
from
the
the
steel
firm
cases.
nationalization
industry arises from
the
of
for
divorcing the engi¬
exactly identical in both
In
na¬
Yet the argument
against
neering firm
British
of
the
electorate
the
at
general election of .1945.
The Labor party
clearly declared
its intention to nationalize steel
and, whether because of this or in
spite of this, the majority of the
electorate
Labor
the
a
voted
in •; favor
Government.
of
But,
government has
a
while
undoubtedly
mandate for
nationalizing steel,
legitimate to question its
it" is
right to
do.
go
The
so
far
Originally the
not
it intends to
as
method
chosen- is
also
to legitimate criticism.
open
intend
steel
to
go
nearly
far in
it is now
to*
the
Bill
Supply, Mr. John Wilmot, in 1947,
firms
which
manufacture
only
for
alized,
their
to
be nation¬
producing steel for
requirements would re¬
private - hands.
This
in
would
were
those
own
main
.
sale
have
-
meant
that
a
very
large section of the steel industry
would have remained privatelyowned, even though its continued
steel production would have been
subject to
license.
Moreover, a
very large part of the engineering
and
other
subsidiary .industries
which now come within the scope
of the Bill would
have escaned
nationalization. The terms of that
Bill did not satisfy the Left wing
of the Labor party and Mr.
WilT
mot
was
by the
of
owners
nation¬
Yet
.
replaced by Mr. George
Strauss, under whom the Ministry
of Supply
produced the present
Bill.
the
value
in
the
one
the
of
Steel Bill is well in
Stcck
and
na-
assets
of the
excess
Exchange prices of-equities
bonds
acquired.
tions
of
the
firms
to
be
For one thing, quota¬
low owing to the volun¬
are
tary 1 i m i t a t i o n.
Nevertheless, there
of
dividends,
be
can
;
no
compensation clauses.■*
I >'•
•
\
The attitude of American hold¬
ers of stocks and bonds in British
iron
and
steel
awaited
is
great
interest' on
Under the Marshall Aid
pact the
given
companies
with
this side.
British
Government has
undertaking
that
if
American property is nationalized
the
large part of the engineer¬
ing industry.
Under British
.
stitutional practice
is
not
supposed
controversial
to
a
con¬
government
adopt highly
measures
of
impor
tance unless it is authorized to do
so
Trustees.
of
Bonwit
nonprofit, nonmembership assoc.at on.
a
by the electorate.
said in the Labor
Nothing
was
party's electoral
program about
far
they
as
are - concerned ;tbe
compensation should be equal to
the full value of their share of
the
f'rms
concerned,
and
not
mands to that
Effect.
refuse
And
de^
States
quite plain that the former
do not
fair price for their
a
Meeting
of United
Corporation
when
Steel
It
is
in
order
difficulties
Bill
this
of
avoid
sort,
Board of Directors of
11%
are
a
company
more women
than
;men.
This
-
move, coupled with the announce¬
ment
the
of
founding of
feder¬
a
ation of shareholders created wide
attention - in the national
press.
The
London
"Telegraph"
long distance
"Star.";•
did
as
the
called
Toronto
..
This organizes for the first time
a
jgrpup solely of
women who have
an, economic stake in American
private
enterprise. •; U n d e r/: e
ican
business
bondholders,
stock
cover
bank
or
depositors, in¬
policy holders or bene¬
ficiaries, business or professional
surance
women—even
consumers—all
branch
factory
be
British
list
nationalized, in
the fact that this factory
duces
than
year
considerably
the
l'mit
of
pro¬
steel
more
20,000
of
spite
tons
a
fixed in the Bill.
There are,
however, other American interests
in British steel firms besides
Ford,
and it was impossible to dev5se a
formula under- which all nf them
could be left out of the Bill.
Wlide
whether
or
it
is
the
wrong
in
a
matter of opmmn
government
is
right
steel,
nationalizing
opponents of nationalization have
a
genuine grievance
op
the pround
of the departure of this Bill from
the mandate received
by the gov¬
ernment from the electorate!
Itds
largely for this
that
reason
steel
nationalization is likely to play an
important part in the next general
election.
Manage
Pureed Go. Dept.
Edward
A.
Purcell
&
announce
E. Joffe has been
ager
and
by
of
the
new
that
1947.
of
Carnegie,
noted
women.
■
The purposes of the Federation
economic enlightenment for
wjamen in woman's language
so as
to enable women to exercise their
economic
women;
franchise
intelli¬
more
improve
status
of
private enter¬
preserve
for their children and make
prise
it
the
;
;(2) To
productive, particularly of
more
hu'^an
satisfactions—in
time"
our
"
;(3)
To
towards
work
world
since economics more than
politics determine peace or war:
peace,
(4)
To
counteract
those forces
whether communistic
applied ip the,security field.
counter to the
of
Edwin
enter-'
prise. There
was
Frank
T.
Tatro to Form
Ryan
grave
danger,
cratic
he
added,
that
bureau¬
governments would be the
or
stead
of
reaction¬
of
the
*
Own Firm in New York
our
billions
industries
in¬
Edwin
L.
Tatro
will
shortly
form Edwin L. Tatro & Co. with
of
the
Mr.
Ryan, who recently re¬
cently returned from an extensive
tour of Europe, spoke before
a
meeting in
200
New
executives
Eastern
Nov.
York
of
including
pany,
States
of
Bache
nearly
&
Com¬
the
of
managers
branch
offices
on
"
11.
Among the political moves sug¬
gested by Mr. Ryan were recom¬
mendations
for
"restoration
of
full
diplomatic
relations
with
Spain and the inclusion of Spain
in
the
ECA
United
of
Nations
with
program
location
an
and
the
initial
al¬
$300,000,000"
with Russia and to
play down the
crisis in world news, thus
depriv¬
ing the communists of untold
vantages of free publicity."
ad¬
In the economic
that
ECA
ness
field, he urged
"placed on a busi¬
be
basis"
by
it
operating
thus
dustry-to-industry,"
out
the
handling
efforts
present
of
the
of
■
B.
"in¬
com¬
Tatro
business.
Mr. Tatro for the past
20 years has been with Hoit, Rose
& Co.
C.
(Special
wiping
economic
flood
L.
offices at 50 Broadway, New York
City, to engage in the securities
bureaucratic
America's
halt
to
Edwin
and
to
"discontinue further conversations
Christopher Adds
to
The
McCOOK,
Urling
munism throughout the world.
B.
Turning to the domestic finan¬
outlook, Mr. • Ryan asserted
that "we, as brokers, look to the
Main
C.
Financial
Chronicle)
has
joined
Christopher
the
&
staff
Co.,
administrative
Street.
McDonald & Co. Adds
fqture with a great deal of con¬
fidence." 'He said that the recent
(Special
L.
S.
wing support
&
Co.,
now
existing in this
country. "The market should have
boomed
serted,
ica's
on
the
results,"
he
security
out that Amer¬
internal threat to
apparently
has
been
stemmed.
The
meeting of the Bache
ganization
The
Financial
Chronicle)
CITY, MO.—Virginia
Sweitzer
is
with
McDonald.
1009 Baltimore Avenue.
as¬
pointing
greatest
to
KANSAS
election results strongly indicated
the
small
communist
and
left
or¬
officials represented
a
Thomas P. Payne Opens
ELMHURST, L. I., N. Y.—Thom¬
as
P.
Payne is engaging
curities
86-43
business
from
in
a
offices
Fifty-fifth Avenue.
NEW
ISSUE
and
advisory
job opportunities
boards and more
for
in the executive per¬
women
sonnel. with equal pay rank,
au¬
1,200,000 Shares
thority and responsibility in com¬
panies I f i n a n c e d .by * women's
money.
I"'No
,
.
membership
are
yith
;
\
,
estimate
6,000.000
voting
the
of
was
size of
the
given, but there
rights
Regent Oil Corporation
stockholder^
women
in
the
Common Stock
United
States.
Price: 25c per Share
Elected Directors
man¬
customers': brokers
department.
C.
Comstock
mund
Biair
and
of
Clayton
Vice-President,
Clavton
a^d
President
respectively,
Securities Corp.
Co.,
Boston.,
distributors
struments.
Tellier
Hawley,
been elected directors
A'j«h
Ed¬
and
of
of
42
have
BROADWAY,
&
Company
NEW
YORK
4,
N.
Y.
Jarrell-
manufacturers
scientific
in¬
of
4201/&
and security of the
family.., ,1
Among the goals of the Federa¬
tion are more qualified women on
L.
NEB. —Delbert
cial
which undermine the welfare
ary,
mem¬
Alexander
the
author
Bloomingrove, N. Y.
appointed
business
eligible in the Federa¬
are
are
of the New York Stock Ex¬
change,
prospects,
position
Co., ,50
Broadway, New York City,
bers
was
Among those attending the first
aqnual meeting was Mary Ritter
Beard,
Historian,
and
it
was
ooened
by
Rev.
Helen
Fisher
Congregational
Minister,
of
Me to
fiscal
and lecturer, addressed the ses¬
sion on the fundamental princi¬
ples of selljng,. particularly as
going directly
of
The Federation is financed only
that d^e
Ford's
from the
and
current
nations'being aided.
gently and effectively—
maior
the
IDale
upon "''Big Steel" for representa¬
tion of women's ownership on the
1(1) To
excludes
firms to
of
to
se¬
securities markets.
beneficiaries
na¬
tionalized property.
the
problems, the
political
outlook,,
and
legislative
and
ECA, or the
Marshall
Plan, wh i c h
free
for
a
business
ministering
principles
approach
basis.
industry. It is the .first
series which will feature in¬
vestors' needs and
of
the
said
global
a
curities
method of ad¬
he
on
sales
new
of accompish-
revise
system
' <$>-
in
Mrs. Soss, a small
stockholder, in
a David and Goliath
move called
if it is
accepted, the d'screpancv between
compensation paid to British and
American interests for the same
stocks and bonds would make it
Mr. Joffe has been with the firm
which
Stockholders'
46th Annual
tion
could
since
of
It-was born at the
whom
other
parts
of the privately held wealth.
ish
Government
enterprise
"
merely the stock exchange value.
It is difficult to see how the Brit¬
nationalizing engi¬
neering industry and the various
industries
.economic
owners
must
receive, fair
compensation.
It
is
considered
here probable that the American charter granted in October, 1947
in New York, said to be an his¬
interests involved will take .the,
toric one, shareholders in Amer¬
necessary steps to ensure that as
Clearly, the government is act
a
The FWSAB is
an
.
ing unconstitutionally in national¬
izing
president
was
^where there
doubt that the Bill will.be
passed
in spite of the unfairness
of the stockholders
so
as
According
did
drafted by the former Minister of
steel
of
Teller and Chairman of the board,
was. elected a trustee.
acquired under the Iron and
receive
government
nationalization
going,
endorsed
properties..'
'
that
to be
stantial part of the
engineering industfy/und more or less substantial
parts of various .other
and
Labor
Board
suffrage which is the
tionalization Bill, compensation is lqgical outgrowth of the women's
based on Stock Exchange quota--' political suffrage movement "In a
tions.
It is a' generally accepted countryi where women own 70%
industry,the
tionalized.
years
depart--,
received
free
ing this, he
declared, is to
the
of
pqlitical
,to
the
impor-
direction
Mrs. Hortense Odium, who for 10
in
The
present Bill, as in all but
'iron and steel
ing firm
is
mandate
country.
strengthen
One
the
It: is the official organization of a
feminine movement to use their
alized
alizing the
rather
the
the
tq
step
electorate provides for fair coriv-
nation¬
industries.
Steel
*
government
from
of Bache & Company and President of
Commerce Corporatiqn proposes a series of
economic and
designed to more effectively combat communism
and
moves
tant
pensation
words, in ad-.'
drtion" "to
government
the
political
elected Treasurer; Eleanor Bayuk
Green, Secretary. All were mem¬
ownership
this the only respect
party's program
control.
In
adopted. '
.^an^ L Ryan, partner
.
the World
bers
state
present" Iron and
is
from
govern¬
ment
is
whicn
f f e.ctive
e
the
Nor
under
under
come
when
.
Ryan, Bache & Co. partner, and President of World Com¬
Corporation, makes suggestions for revising ECA and for
including Spain in recovery program.
merce
is
"
,
panes
Frank J,
the Federation of Women Share¬
holders
in
American
Business,
Federation, was elected Pres¬
been published.
It confirms forecasts that the
government means ident;
Hon. Ruth Bryan Owen
to\acquire all large steel firms, that the outward form of these firms Rohde was elected
Vice-President;
would remain unaffected
by their nationalization, and that all sub¬ Mrs. G. Roebling, Chairman of the
sidiary
com.'
Trenton
Trust
Company,
was
trplled by the
nationalize J
To Combat Communism
The election of officers follow¬
the-first annual meeting of
.
..
than
23
Proposes New Moves
Elect Officers
By PAUL EINZIG
(2083)
Plgby
4-4500
Teletype:
NY
1-1171
se¬
at
(2084)
24
THE
)
government sub¬
sidy; v
■ ''
v'( / *Yv " "Despite this statement of posi¬
than
Protests Subsidization of Farmer Cooperatives
Woollen, Jr., ABA President, wants end of use of govern¬
in aiding competitors of private banks.
Denies
Evans
ment
resources
commercial banks
are
subsidized by receiving government
deposits.
the Annual Convention of the Nebraska Bankers
Omaha; Neb., on Nov. 11, Evans Woollen, Jr., Presi¬
dent of the American Bankers Association and Chairman of the
Board of Directors of the Fletcher Trust Co., Indianapolis, protested
Addressing
Association
in
against Fed¬
subsidies
in industry, in farming, or
in banking; and that when grants
of capital are made by the gov¬
ernment, they should be advanced
only on the condition that pay¬
ments should be made for their
merce,
eral
and aid
given
farmers' coop¬
erative
i
n s
credit
t i tutions,
operate
in competition
with private
that
c o m m e
pending return of the capital
to the United States Treasury.
"The
ABA
and
its
member
use
cial
r
recognize
the
right of
farmers or any other citizens to
banks
banks. On this
point,1
Mr.
organize cooperative credit insti¬
tutions, but holds that such insti¬
tutions should be self-supporting
Woollen
stated:
"As
the
of
one
of
segments
American
business
with
dependent upon subsidies
from the government.
It seems to
mfe" that this is a fair business
and not
Evans
Woollen, Jr.
agriculture, -•
also find ourselves having a
close relationship
with govern¬
we
depend
on
tion which has been
publicized by
bankers'
associations, there has been mis¬
representation about the position
the ABA and by the state
rate of 5% and
the
testimony
Administra¬
Credit
Farm
aging more than $18 billion which
the banks loan at a profit, is to
use
obsolete figures applying to
its
The
1948.
the*
of
:ompetition, and not use govern¬
Farm
the
Credit
to
Administration
prejudice the farmers
banks in this way
against the
by this kind of
technique."
con¬
.
years.
cooperative credit
1940 and 1948.
with September
hearings also bring tc
light the huge deposits of Federal
funds in commercial banks. Over
these deposits
The tables accompanying
the study
net operating income before Federal income
taxes, and the percent of gross carried through to net operating in¬
come before Federal iricome taxes for all Class I carriers, the vari¬
ous
regions and districts, and 36 major carriers individually.
The
individual roads are those having gross of more than $50 million in
1947 and account for about 85% of total industry operating revenues.
show
organizations.
long periods of time
Transportation
Economics and Statis¬
carries a most inter¬
article showing the shifts in railroad earning power in recent
The periods used in the comparisons are the 12 months ended
esting
'These
Monthly Comment on
the Bureau of Transport
tics of the Interstate Commerce Commission
Reconstruction Fi¬
deny the farm
issue of the
The November
.
Statistics released by
Corporation for their use
the
very
terms they would
and the
nance
"
Farm
agent of the
Administration in
Credit
engaged in com-
on
they are given the facts.! But
we do not concede the right of the
general
the
is
ration
On
the farmers will
of our position
if
profit-making
banks.
sincerity of those
long as they
By the same
so
facts.
grant the fairness
to meet .the current oper¬
ating needs of the government.
They were never intended to be
and have not been a
the
editor of this publication,
"The
.
citizens, whether
to
token, we believe
sary
for
disagree,
In the
funds.
consist of funds neces¬
main they
sometimes we are com¬
ment resources to favor any one
Omaha, wrote as follows:
peting for business with govof the contenders.
Banks expect
"'.
And you will also read
erhment-sponsored agencies. The
competition. Without it,*freedom this
testimony
of
commercial
position of banking with respect
would
ultimately vanish.
They bankers who represent the Ameri¬
to government in the agricultural
field
is simply this: except
in want their competition to come can Bankers Association. Un¬
from competitors who are selfdoubtedly you will become dis¬
times of dire emergency, it is not
supporting, who have faith in turbed over their willingness to
a proper function of government
their own ability to succeed, and accept government funds for the
to furnish capital to any of its
who stand on their own feet rather Federal Deposit Insurance Corpo¬
ment; and
who
repre¬
Treasury
sent most of these
device
payers.
of the
sure
stick
anticipated
two
question. While
that we are right,
any
on
concede the
we
1948 was
be drawn down in
The War Loan
Accounts
always room for
"There is
the months ahead.
by appropriations of
government
funds.
Hence, > its
magazine may be said to be pub¬
lished at the expense of the tax¬
who
may
of
supported
proposition. All the banks ask is
,;hat
the
government fulfill its
:ole of umpire in the game of
that this
is
It
$2,200,000,000.
government agency-
a
other business.
of its opinions
expenditures. The we are
stupendous war
figure for Midsummer
Credit Admin¬
Farm
istration is
issue
Summer
involve a great deal of
by the banks to
the Treasury in carrying out its
operations, the cost of which more
than offsets any possibility of a
profit derived from their use by
the banks.
Payment of interest
on these accounts is forbidden by
law.
The business of the U. S.
Government is an enormous busi¬
ness.
It should be remembered
that such an
enterprise as the
government has need of working
funds which exceed those of any
service rendered
because
balances
working
18,1948
trary, they
only two wartime years when the
Treasury had to maintain high
printed in the 'Farm Credit Lead¬
in
that the U. S. Treasury
deposit balances aver¬
"To say
maintains
at hearings before
committees of Congress.
I bring
this matter up here at Omaha be¬
cause
of the
attack
on
banks
Omaha
subsidy
no
here.
tion spokesmen
er,' published in this city by
Farm
Credit
Administration
earning on them.
an
certainly
is
There
by
has appeared in
the
of
made
RFC
the open mar¬
advances have
paid off, and the
long since been
same
attack
for funds in
Most of these
ket.
objecting to others having
benefits.
This line of
while
of
—
to pay
making it appear
that banks are enjoying generous
subsidies from
the
government
banks
the
later at the rate
rates which were higher
than that which the Treasury had
3%
discredit
efforts to
and
banks
of
Thursday," November
&-FINANCIAL CHRONICLE
COMMERCIAL
revenues,
gross
For Class I roads as a whole there was an increase of 123.4% in
than $18 billion—on
Net operating
which the banks pay no interest, Vross revenues between the 1940 and 1948 periods.
income before Federal income taxes was up 86.6% and the carrybut which they loan at a profit.'
through of gross to net operating income before Federal income taxes
"It is not necessary for me to
dropped from 17.2% to 14.4%.
There were wide variations in dif¬
say what might be said about such
ferent sections of the country.
The South and the West recorded
use of
a government publication,
average more
financed
public funds. But
with
this heart of the agricul¬
here in
belt from
tural
which these mis¬
no
one
will be deceived.
better control
expenses.
over
representations have been spread,
I want to state the facts so that
in gross and displayed
increases
wider
substantial
In the Eastern
District the carry-through
of gross to net dropped
the 1940 interval to 10.6% in the 1948 period.
Region also did poorly in a relative sense although
sharply from 16.8% in
The Pocahontas
the earlier
industry average. The Southern
Region (the Southern District after eliminating the Pocahontas coal
reads) slipped only slightly, from.15.0% to 14.6% and improved its
with the Farm Credit Adminis¬
standing in relation to the industry as a whole.
By far the best show¬
tration agencies, the FDIC is not
a lending
ing was in the Western District.
Gross revenues were up 149.7%,
agency. It is an insur¬
ance
fund for the protection of
net operating income before Federal income taxes was up 186.0%,
depositors, maintained. out of the and the carry-through jumped from 14.2% to 16.3%.
It was the
earnings of the banks, and is not
a
subsidy to the banks.
To get only section to carry a greater proportion of gross through in the
"Let's take the charge
that the
its
government subsidy
through the Federal Deposit In¬
surance Corporation.
In contrast
banks, en joy a
actual
period)
carry-through of 25.0%
was
(down from 38.2% in
still better than the
•
it
started,
required the
supply
Congress
$150 million and the Federal Re¬
serve
System, $139 million. Both
of these advances have been paid
Today the FDIC is an
off in full.
insurance
fund of a billion dollars,
million has
of which almost $850
supplied
been
-
banks
the
by
through regular assessments on
;heir deposits; and the remainder
represent this as a
to
"As
for
nance
when
Corporation,
it was
million
permanent capital and surplus, it
and
provide it with $350
was
The
telephone keeps right on
being a big
days of higher prices,
a
few pennies still buy a telephone call.
Increases in telephone rates are much less
than the increases in the cost of telephone
materials and' wages ... and much less than
the increases in other things you buy.
bargain. Even in these
the American Bankers
Asso¬
appeared before the
Senate
Banking
and Currency
Committee in Washington to in¬
sist that the RFC and all other
that
government lending agencies
should be compelled to pay the
Treasury
for
loans
or
use of public
advanced to them
the
funds, whether
as
Of
through
to net
in
the
carried a larger proportion
through
rose
operating income only one
1948 period.
fronv 10th
places
in
place
to
5th,
(19.8% to 21.4%) which
Only three others
maintained their '
the "highest third of the roads covered. Norfolk &
first in both periods, Chesapeake & Ohio was second
among
Western
That was Nickel Plate
was
1940 and seventh
earlier, period
in 1948, while Texas
& Pacific was 11th in
the
and dropped to 12th.
•
the Reconstruction Fi¬
proposed earlier this year to ex¬
tend the life of the corporation
ciation
the 12 roads ranking
1940 interval.
•
of the individual roads are interesting./
highest in 1940 in ability to carry gross
The records of some
Two eastern roads fared par¬
ticularly poorly.
Pennsylvania dropped from eighth to 33rd place
and Baltimore & Ohio from 12th to 27th.
V
' ;
Four of the roads that had been in the bottom third in 1940
subsidy to
were still there,
but with their relative positions changed, in 1948.
represents earnings from the in¬
vestment of these funds.
It is
difficult to understand how any
one would have the courage to try
the banks.
period than in the
1948
States Treasury to
United
invested
in them as
capital. It is true, of course, that
the RFC made loans to banks and
invested in the capital stock of
banks
back
in
the depression
New
York, New Haven &
with only
35th,
Chi-'
28th to 32nd place. On * the
Hartford dropped from 26th place to
through in the recent period.
6.7% of gross carried
dropped from
roads improved their relative positions
somewhat although remaining in the lowest third.
Seaboard went
from 33rd position to 26th and Atlantic Coast Line from 36th to 34th.
The lowest on the list in the 1948 period was New York Central
with a carry-through of only 3.7%.
In the 1940 interval it had
ranked 23rd with a carry-through of 12.1%.
On the bright side of the picture, there were four roads-that
went from the bottom third in 1940 to the top third in 1948.
The
most outstanding improvement was that of Denver & Rio Grande
Western which rose from 31st to third place.
However, this was
cago
other
& North Western
hand,
two
southern
credits in the 1948 period. Wabash im¬
30th to eighth and Chicago, Rock Island &
Pacific was-up from 32nd to 11th.
Texas & New Orleans (part of
these advances were not the Southern Pacific System) was up from 25th to 10th place." This
due in
part to maintenance
proved its position from
.
BELL
TELEPHONE
SYSTEM
fays; but
in the nature
of
a
subsidy. The
interest on all of them
whild they had them—first at the
banks paid
is of minor
significance, however,
Company itself
inasmuch as the Southern
dropped from 19th to 28th
place,
-
.
Pacific
; ;\\4
Volume 168
Number 4752
THE
COMMERCIAL
in
the
&
FINANCIAL
defunct
now
CHRONICLE
Manchester
Trust and
Safe Deposit Co., said
special Manchester advices to the
of
Nov.
He
1947,
became
succeeding
George Glenney, who became
Chairman of the board.
negotiations
for
the
board, as
Cashier.
Mr.
named
was
bank.
i'fi
formerly
Money and Banking
Branch, Finance Division, of Gen¬
eral
MacArthur's Military Gov¬
ernment headquarters in
Tokyo,
appointed
Far
Eastern
President
in
1928
Vice-President
Harvard
the
Execuuvc.
B. A.
in
by The Pennsylvania Company for
Minn.,
1919-1920.
He
Lieutenant in heavy artillery. He
was
a
member
of the
Repara¬
pending
establishment
service
saw
tions
overseas
Division
of
the
as
First
a
Far
Peace
Be¬
World
War
I.
plat, prior to his period of service
served
in
a
has
important
in the Armed Forces, had varied capacities
holding directorships in
■experience in the domestic and various industrial and banking or¬
foreign
banking
field,
having ganizations including that of the
been with J. W.
Edison
Seligman & Co., Boston
Company.
The
the
Bank
of
New
York,
and resignation of Mr. Wittemore as
Manufacturers Trust Company, President of the Reserve Bank
which bank he now rejoins.
Upon was noted in our issue of Oct. 14,
discharge from the
service
in page 1552.
Si
if
if
June 1946, he continued in a civ¬
ilian capacity with General MacNegotiations are under way in
Arthur's headquarters until July Providence, R. I., for the purchase
1948, when he resigned and re¬ by
the Rhode- Island
Hospital
turned to the United States.
if
retary
Keenan, Assistant Sec¬
the
of
Nov.
was
51
ployee
years.
mond
12.
Mr.
of age, was
the institution
of
of
the
Savings Bank
sistant
Brooklyn
elected
late
East
with
New
New
27
of
Nov.
10
stated
in
part:
total
Y.
As¬
an
the
was
succeeding
Savings
in
assets
$300,000,000,
of
York
in
the
The
Bank,
of
excess
addition
its
to
holders
of
the
and
Commerce
National
Trust Co.
Bank
chase
and
in
letter
a
signed
by
dated
Henry
be¬
are
ing informed of the offer of
of
pur¬
yesterday
Wilcox,
L.
main office at Atlantic and Penn¬
President of that bank. If the
chase of stock goes through it will
be a cash transaction, Mr. Trott
Avenues, operates two
branches in Brooklyn.
It is in
its 80th year of existence.
Mr.
Muller, who is now regional offi¬
cer
in charge of Brooklyn Trust
Company offices in the Broadway
region, first joined the staff of
old
Mechanics
Bank
of
Brooklyn in April, 1912, and con¬
tinued with Brooklyn Trust Com¬
pany; after
the" merger of the
Mechanics
1936
in
Bank
until June,
1929.
manager
of
the
"The
Bank
Mass., Executive VicpPresident
'
the
S h
National
a
w
Bank
ton,
,
of
m
of
u
t
Bos¬
be
office
pital
National
Trust
President
o
f
Co.
branch
a
Island
Hos¬
Bank
Reserve
s
Bank
t
o
Albert
n,
M.
Board
of
Directors,
an-
nounced
9.
on
Mr.
Erickson, who
52
years
of
age, was selected by the Federal
Reserve Bank's board of directors
to
serve
until Feb. 28,
signed to accept the Presidency of
the New
York, New Haven &
The
appointment
will become effective when Mr.
Erickson reports for duty in
early
December, Mr. Creighton said.
Widely known throughout New
E.n gland
banking circles, Mr.
Erickson has been associated with
the National Shawmut Bank for
the
past 28 years.
banking career in
Beginning his
a
clerical
ca¬
pacity with the Shawmut Bank, he
forged ahead to become Vice-.
the Security Bank
Company at a price
present indications, would
of
distribution of approx¬
a
holders.
share to
a
stock¬
our
If this
until
as
a
value of
par
The bank
was
in¬
as
1865, when it
the
for
the
of
the
sale
National
and
was
Bank
chartered
of
Com¬
Trust
Providence,
Company
of
adopted Jan. 13,
was
Sj!
.
Jjs
Jjl
Harold M. Kenyon, Treasurer of
the
Hartford
Connecticut
Trust
Security
tion
of
of
assets
L.
Company of all
our
deposit
liabilities."
M.
Mr. Chapman's letter states that
of Security's officers and em¬
ployees will be taken into the
organization of The Pennsylvania
Company. The Security Bank and
Company
two of¬
at Kensington and Alle¬
operates
fices, one
gheny Avenues, and the other at
Avenue
Franklin
and
The
Pennsylvania Com¬
plans to give up its present
pany
Girard Avenue office and to trans¬
those
fer
activities to
Girard
the
Security. The Kensington-Alle¬
gheny, office will be operated by
The Pennsylvania Company as a
part of its banking organization.
: Mr.
Kurtz stated that "we be¬
lieve that the plan is advantageous
from a public point of view in
that it will bring the broader ser¬
vices and facilities of our institu¬
tion to
a
very
Company of Hartford,
sary
important retail and
industrial section of Philadelphia."
As of. last Sept. 30, Security's de¬
of his service with the insti¬
have
in the capacity of Treasurer
been
—it;
which
of
in She
noted
was
"Courant"
of
Nov.
10.
Hartford
To
quote
from that paper:
"Mr. Kenyon began his
banking
career with the Connecticut Trust
and Safe Deposit Company, one of
the
banks
participating in the
of
"When
the
Hartford-Connec¬
consolidation
was
effected, Mr. Kenyon
was
the first Chief Clerk.
He became
Auditor
bank's
1926
m
named
1921 and organized the
auditing
he
department.
elected
was
In
Assistant
Treasurer and Treasurer in 1927."
>j!
Harold
C.
#
in
if
if
Gaddis,
The election
of Laqe
Taylor
as
director of the National Bank of
a
Germantown
of
Glenn
K.
Taylor
Trust
and
Philadelphia
is
Company
announced
Morris, President.
Vice-President
is
Treasurer
of
W.*
by
Mr.
and
Hamilton
G.'
&
Sons, paper manufacturers,
Miqucn, Pa. He also serves on the
W. C. Hamilton board of directors
and
is
a
the
member of
of
board
American
advisory
Mutual
Lia¬
bility Insurance Company.
v
!i<
The election of
liams
as
a
Eugene S. Wil¬
director of the
Central
December, 1907.
As
board
he
President
den
announced
on
Conference
a
years
in
messenger
of
if
if
informed
are
in
advices
from Osaka, Japan, that the Sumi¬
tomo Bank, Limited, has been re¬
be
T.
named
as
from
Oct.
1
"The
as
Bank of Osaka,
Limited," increas¬
ing its paid-up capital to Y 1,140,000.000.
Ko
Suzuki
is
President
of the Bank of Osaka.
The New Convertible" Issues
M;-!
Public
Service
Company
of
Colorado
recently forced the con¬
(by announcing redemption)
security—$6,600,000 4.40% preferred
stock.
In the 12 months ,ended
July 31 the company reported net
income of $5,003,370, but after
giving effect to the issuance of $10,000,000 new mortgage bonds and redemption of the debenture issue,
version
pro
of its 3%
issued
a
debentures due 1962
convertible
new
forma net income would be reduced
to
$4,925,000.
for full annual dividend requirements on both
cluding the new issue) the balance earned
$3,955,000. This would amount to about $3.65
>
After allowing
preferred stocks
for
(in¬
would
common
be
a share on the 1.085,000
shares currently outstanding (on the assumption that all of the con¬
vertible bonds have been converted into common stock). If conver¬
sion of the new preferred stock should
occur, the earnings, picture
would change again, i of course.
"\
,,4,
The convertible preferred stock was offered
by
a
! 'V;
syndicate headed
by Blyth & Co. at 102but due to general market conditions has
been quoted' over-counter around 101.
The stock is con¬
recently
vertible for about ten years
$40
a
share.
The
common
(unless redeemed) into
common
stock at
is
currently selling around 35% and is
paying dividends at the rate of $2.20, to yield about 6.2%. Based oil
the above pro forma share
earnings the price-earnings ratio would be
about 10.
I.
The
company
has enjoyed
sharp
a
gain in earnings
in
recent
years, net income for the 12 months ended July 31 being over twice
the amount for the calendar year 1944.
Some further gains seem
likely since the company is in the fortunate position of having
ample supply of natural gas to serve its customers.
Peoples
Gas
Light
&
Coke
Co.
of
Chicago
on
Oct.
29
3%
an
mailed
$16,400,000
convertible debentures due' 19-33, on the basis of $100 debentures
$100 flat for each four
privilege.' The debentures will be convertible into common stock at
$100 per share up to Dec. 1, 1953, at $105 in the next five years, and
at $110 in the third five-year period before maturity. The bonds are
callable initially at $103.
The stock is currently
rights at 15/16, and the debentures at 104.
In the
Nov.
9,
it
is
around
91V2, the
12 months ended Aug.
31, Peoples Gas reported earnings of
$9.41 per share. The indicated dividend rate is $6.00 and the current
on the stock about 6V2%.
"
1'
yield
■.
offering rights to stockholders of record Novem¬
ber 10 to buy $46,649,500 debenture 3s due 1958 (the original interest
rate of 2.80% was raised to 3%) at the rate of $100 debentures for
each 15 shares held, at $100 (rights expire Dec. I). Beginning Dec. 1,
the bonds will be
convertible into
The
common
common
stock
at $20 which
stock pays $1.20 to yield 6%.
Earnings in the 12 months ended Sept. 30 were $1.41 a share com¬
pared with $1.50 in the previous period. The company in June asked
for a rate increase of about $11,300,000, equivalent after income tax
adjustment to about $1 a share on the common stock. The bonds are
,
currently selling around 105 when issued, to yield about 2.43%
President of
the
Maryland Railway.
-
Detroit Edison is
short
Williams is
new
Bank
Mr.
Western
maturity being
a
(the
price factor).
Wis., by the board of directors on
Convertible utility debentures previously issued and now out¬
standing include those of 'American Telephone & Telegraph (two
issues), Public Service of Indiana, Consolidated Gas of Baltimore,
Consolidated Edison, Laclede Gas, and Virginia Electric. Convertible
preferred stocks have been issued by Southern California Edison
(two stocks), New England Gas & Electric* General Telephone, Cali¬
fornia Electric Power, Philadelphia
Electric, and Public ^Service
Nov. 8,
E. & G.
>f
16
his
supervise
the
operating departments.
Gate:
We
the
of
In
will
Auditors and Comptrollers.
the
J.
with
He is.a Past-President of the Gol¬
the
will
and
connected
learned from the Baltimore "Sun."
if
if
coln
of
National,
the
of
Nov. 8
Francisco,' Mr.
been
Auditor.
capacity
Capital
National, will be President of the
enlarged
institution; the latter,
said the "Daiiy News," will con¬
1950
Manchester, Conn., died suddenly
on Nov. 11.
He began his banking
age
of
is about the current price.
-f
Savings Bank of Baltimore, Md.,
was
*
Alvord, President of
the
Assistant
stated
President
National
on
common shares held. The offering is under¬
written by Halsey, Stuart & Co. of Chicago, who paid $1,000 for the
!•:
Francis X. Swietlik, Dean of the
Marquette University Law School,
at
has
head office
of $65,000,000.
excess
at
Francisco
Anglo Bank since 1920; during
past seven years he has been
at
-.
,
the Manchester Trust Company of
career
San
099.79.
Company in July, 1919.
the
is
ap¬
A.' Calkins, President.
of
warrants to stockholders of record Oct. 27 to subscribe for
Conn., ob¬
Nov. 9 the 45th anniver¬
years
It
in
San
California
bank will have total
new
Jackson-State
and
all
Trust
the
in
been
Cashier
the
Banking and Trusts and
assumption by The Pennsyl¬
vania
interests
Allard
the
i;<
has
announced
was
native
Riedel
consummated
history of Jackson.
pany for
the
by
office
Anglo
Bank, it
largest consolida¬
financial
the
A
if
Assistant
an
head
the
of
the plans for the
of the two
banks
this will be the
of
of
Harold Riedel
pointed
on
Bank and Trust Com¬
The Pennsylvania, Copii
to
pany
the
-
on
*
when
Bank
Nov.
if
ef¬
"Daily News" of Oct. 20
that
Security
posits totaled $14,570,769 and its
capital funds were listed at $868,-
1931."
'
new
of each bank will be held. The
reports
1766.
page
if
provide
agreement
of
of
the Bank of
Commerce and carried that name
ticut Trust
re¬
assets
Avenue and Franklin Street office
$50 per share.
Laurence
F, Whittemore who
the
ex¬
corporated in 1851
merger
RR.
ers
Jackson
resources
and
of
of
became
First
the
made
was
1
through a
$1,000,000, ac¬
cording to the Nov. 8 weekly bul¬
letin of the Office of the Comp¬
troller of the Currency.
under the name of the First Na¬
tional Bank, on Jan.
11, when the
annual meetings of the stockhold¬
that the
a proposal from
Pennsylvania Company for
Banking and Trusts to purchase
Girard
Its stock has
000.
1951, filling
out the unexpired five-year term of
Hartford
be
Commerce
tution—21
is
meeting to
17.
We have received
Street.
of $24,000,000, and capi¬
structure aggregating $2,050,-
the
Joseph A. Erickson
that
The
Bank,
excess
served
r e
Nov.
annual
at
In a letter to Security's stock¬
holders,
President
Charles
H.
Chapman said in part:
"The Security Bank and Trust
Company started in business July
9, 1934. Our original stockholders
paid $15.50 a share for their stock.
Rhode
of $22,000,000, total resources
cess
i g h t o n,
Chairman
of
C
stockholders
company's
held Jan.
the
the Federal
Bo
consolidation
bank's
showed deposits in
Co.
.
of
the
National
and
approval by Federal
banking authorities.
Se^t. 29, this year, the
of
been
appointed
National
to
State
"As
as
Rhode
Hospital
merce
has
the
Trust
subject
in
the
operated
of
Island
and
of
quarters
of Commerce and Trust Co.
would
tal
Joseph A. Erickson, of Welles-
ley Hills,
Miss., will act
pur¬
said.
From
1947, Mr. Muller
company's
26th Ward Office, at Atlantic and
Georgia Avenues.
was
Company, said that the
issue,
dividend
G.
*
transaction would be submitted to
terms
Co.
sylvania
the
sylvania
Bank
being available for
purchase by Dec. 10, 1948. Stock¬
sale
con¬
Reference to
if
effective
000
State National Bank and the Capi¬
tal
National
Bank
in
Jackson,
outstanding stock of the National
of Commerce and Trust
the
the agreement. William Ful¬
upon
Oct. 28
our
stock
$150,000, while
to the capital
ton Kurtz, President of The Penn¬
plan becomes ef¬
fective, a partial distribution will
be made as soon as possible after
Jan. 21, 1949, which is the pro¬
posed date of
settlement.* The
of Providence
from
The stockholders of the Jackson-
imately $35
Conclusion of the deal depends on
at
least two-thirds of the
total
Minneapolis,
increase
*
act
Brown,
Wadsworth.
York
to
on
of
trustee,
Charles H.
10
The
result in
Company,
Trust
a
Dec.
on
of
of
result
that,
of Brooklyn, N.
Vice-President
meeting
special
the
stock.
the
of
Idaho,
National
Association
at
Boise, Idaho, has increased
its
capital from $1,500,000 to $2,500,-
fective Nov, 1.
"Journal"
for
Muller,
board also
Marquette
increased
added
was
em¬
an
•»»
Nov. 11, Alfred
on
a
agreement
been
stock dividend of
$50,000
as
Chairman
price offered, Mr. Trott
said, is at the rate of $135 a share
East
the
The
Nov. 5.
on
a
Trust
meeting of the Board
Trustees
approved
of sale
Security
Company unani¬
and
"The
v
mously
Trust
Brown.
if
$500,000; part of the
($150,000) came through
Trott, President of the
Hospital Trust Company. In mak¬
ing this known, the Providence
■
a
H.
increase
and
in
suc¬
to
who
Keenan,
years
v
At
Trust Co. of the National Bank of
if
Irving Trust Com¬
of New York, died suddenly
pany
on
if
Commerce and Trust Company, it
was disclosed on Ncv. 9
by Ray¬
John J.
Tne
board of directors of the
Bank* and
shareholders
Erickson
$300,000
institutions.
two
authorized
Commission
Mr.
the
American
number of
Headquarters.
by
following
of
Mr.
Eastern
11
Nov.
the
of
result
a
proposed consolidation
The
of
Bank
has
on
announced
was
dis
director,
a
as
according to the joint
statement issued by Messrs. Gad¬
»:«
capital
Banking and Trusts, both of Phil¬
veteran of World War I where
a
The
adelphia,
of
a
Representative of. Manufacturers
Trust Company of New York. For
the present, Mr. Beplat will be
located at the bank's Head Office
he
purchase of the assets of the
Security Bank and Trust Company
Business
and
School
is
Dziennik,
if
attended
He
whatever
Max
was
was elected Vice-President to
ceed the late Martin J.
Daly.
National
1942.
graduate,
Harvard
Administration
is
and
in
of the present
Gapinski
managing head of the
the
Beplat,
the
been
banking operations at each
locations, and there
no interruption of service
Gapinski,
in- January,
Completion of
has
tinue
we
solidation
"Courant."
CAPITALIZATIONS
E.
which
named to
W.
Bankers
and
OFFICERS, ETC.
of
from
25
will be
Hartford
NEW BRANCHES
Tristan
9,
also take, the-following:
'
"He succeeds the late Anthony
Szczerbinski. Mr. Swietlik also was
Co.
REVISED
Chief
(2085)
President of the Manchester Trust
News About Banks
CONSOLIDATIONS
NEW
nal"
was
named
State
President of the Lin¬
Bank
of
Milwaukee,
said the Milwaukee "Jour¬
1
26
THE
(2086)
*
*
*
i
»
;
-
COMMERCIAL
CHRONICLE
FINANCIAL
&
If the program
Problems of
Synthetic Fuel Industry
sible
Industrial
.
Research
end'of two
Mr. Howard
day and 180,000
day of synthetic fuel
per
per
from oil and shale.
the
under contract. Says f
should adapt themselves to government research
already developing coal and shale processes
groups
considerations
other
or
required
on
immediate
experimental projects.
The role
of
become
to
assigned to me in this review of the synthetic fuel situation seems to be that
I hardly need to tell you that after the events of the last week prophecy has
lost art.
Instead of prophesying what-we can look forward to, I am going to try
a
present
to
locations
the main
you
for
practical
such
an
which
the
industry, these costs might be re¬
duced. The most hopeful estimates
synthetic
fuel
of
industry faces
to
have
in
of
coal
problems
the
United
in
help
your
ivi
a r r
n
at
g
rational
some
to meet them.
other
first
the
that
Howard
A.
on
'.
costly
development here are not
yet
plant de¬
But the President and the
signs.
into
freeze
to
ready
and Inte¬
of Defense
Secretaries
that
our national
defense requires an
immediate start on a
synthetic
fuel industry.
The fact that the
taken the position
have
rior
80th
to
seemed
Congress
agree
this was in no
issue. The Republican-sponsored Wolverton
made it clear that
political
a
sense
of the new in¬
founding
the
for
$350,000,000
appropriating
Bill,
last sum¬
dustry, failed of passage
of pressure of
other legislative business.
What can be done to reconcile
this governmental demand for
immediate action with the engi¬
because
only
mer
in
well adapted to Amer¬
is
and
the
this
conversion
thesis
only
It
seems
the pro¬
the synthesis
oil from
is
first
the
to
now
and in which
syn¬
second,
and,
of
the
into
which
step
the critical
be
one
development is most
active.
First there might be men¬
tioned
the
coal
continuous
powdered
in
gasification
pioneered
limited
experiments
very
by
Germany and devel¬
which is now being
financed by the Bureau of Mines
Koppers in
of
opment
that
propose
within
this
to
lowing:
■
First:
A
point
of
view
availability
fore
Oil
Shale
From
this
work
be
shale the problem seems
the
Second:
project
The
plans,
plants
for
great enough, be frozen into
commercial
the
designs at
but
once,
private
to
be
tunity
to
eliminate
and
uncover
latent troubles.
It is
;
contract with the RFC.,Each
to
ect
be
based
minimum
day
per
all
shale oil is per¬
foundation in
a
coal
use
South African
a
synthesis plant which
they
designing.
are
of
naturally have
tial
view
the
of
child
own
somewhat
a
status
,regards
as
of
its
par¬
their
avail¬
ability for immediate commercial
use, but I believe that the pre¬
dominant view
is that
of
one
no
ican
stage
conditions, has yet reached a
of development where it
such,
as
basis for any
a
of
program
governmental
expenditures as is called fpr by
the Wolverton Bill.
From one to
two
years
the high pressure
destructive hydrogenation process
work
should
out
before
any
and it would be possible to freeze
to
select
the
by
the designs
on
this equipment at
once.
Oil
Turning from shale to coal,
find
a
lem.
tion
much
this
is
process
developed
field
we
difficult prob¬
more
The destructive
the
hydrogena¬
highly
most
synthesis
process
in
and
plant designs fol¬
German and English
lowing
the
models
could
frozen
be
at
once,
but my own best guess is that
gasoline production from coal by
this
method
tection
cents
would
subsidy
or
gallon.
a
reserves
of
need
a
pro¬
of at least
If
we
process
had
But
before
of
the
address
the
chanical
Mr.
by
Metropolitan
American
City, Nov. 9, 1948.
is made
promising
and
processes
freeze
-
primary
immediate
circles
it
as
oil
back
urge
of
industry
synthetic
a
is
the
same
earlier in the year, the
industries will face
coal
demand
of
January is
next
was
and
some
immediate
for
kind
directed
action
toward
a
oil,
essential
data
A Recommendation
Me¬
York
suggest,
to agree
program
therefore,
upon
which
some
can
be
that
definite
initiated
at once and which will move for¬
ward
the
As
in
an
orderly
maximum
an
of
way
real
example of such
industrial
of
and
the. same
site or its duplication .at .othernamed sites up to a total of 25,000
to 30,000 barrels per day. The> de¬
signs and specifications, for each
on
which competi¬
be
could
obtained
specifica¬
general
I believe
of $10 to
lie in the
$20 million.
tracts
for
would
presumably
vate
projects
.The
made
were
be
execute such projects and operate
the completed plants.
Each con¬
tractor would obligate himself to
execute
and
requested, on
tially the same
the
RFC
in
building
of
industry.
Third:
his project,
basis substan¬
manage
if
a
as
that
used
with
connection
the
synthetic
by
to make
progress.
a program,
engi¬
Research
and
could
intelligently planned
ac¬
development work
so
that
an operative
design and proc¬
(even though it might not be
the best one or the utimate one)
ess
available for
inclusion
within
these project designs be¬
fore the end of the two-year pe¬
riod. It is contemplated that most
of the research and development
work
would continue
under
out
as
at
pres¬
private auspices with¬
financial
from
support
the
government.
This, however, does
not
exclude the possibility that
some concerns
wishing to prevent
projects might make arrangements
through
which
government-fi¬
nanced research and
work
would
be
development
relied
upon
part at least, and this would
the very useful purpose of
for
can
what
will be two years hence.
Our mil¬
believe
to
large
synthetic production. On the other
hand, military or economic con¬
ditions at the time might justify
intervention
governmental
is
Whether the need
support.
or
then
an
need for
emergency
have
be
whatever
need
no
for
industry,
whether
or
find
we
in
serve
getting
completion
up
to
tion
in
which there is
support
research
no
criticism of
and
develop¬
work, whether government
run
or
against
to
reason
small industry only
a
underground
plemented
reserve
every
I
cannot
?,
either
program,
a
here.
as
it
would
at
determine
extent
the
American
be
in¬
which
all
to
supplies and to fit into
such long-range plan, unless
that
decision-,;were based upon
any
integrated a;program along
lines of the one here
suggested.
' ; '<V": .•
the general
.' As many of you will probably
recognize, my thinking on this
problem has been influenced by
experience in the creation of a
,
synthetic
rubber
problem
only
there
programing
emergency.
but
thetic
be
fuel
the
of
the
of
ahead
I
do
the paullel too
press
most
to
had
period
and
not wish to
far,
nick
because
the
actual
the
seem
That
in
considerable
a
planning
of
industry.
solved
was
time
of
been
principles
The
same.
problem
is
syn¬
dif¬
more
ficult, both technically and from
the standpoint of
its
This could only lead,
than
rational
how
see
to
telligently
the
of
sort
some
greatly
by
synthetic production .would be a
practical expedient to supplement
the ' adoption
of
only
not
imports but also
be
other practical expedient.
possible
under any one of these three cases
SEC
;
conclusion
less,
that
rather
more,
advance
and better
magnitude.
however, to
preparation,
planning, is
necessary.
Reports Higher Corporation Working Capital
The net working capital
-
$63.9 billion
made
the
a
of U. S. corporations continued to in¬
in the second quarter of
crease
1948, reaching
time schedule.
record level of
new
public by the Securities and Exchange
months April through <•>-
Commission.
During
three
:
June,
1948 working, capital in¬
by $1.3 billion, reflecting
of $500 million in current
creased
rise
a
a
of June 30, 1948, according to the quarterly analysis
as
assets
and
decline of
a
$800 mil¬
lion in current liabilities.
Inventories
showed
approximating the
As for the other itnus
the
corporations'
tion there was,
the
largest
rela¬
pre-war
tion.
affecting
financial posi¬
during the second
quarter of 1948,
$3.3 billion in¬
a
current
crease
in
the
net
the
second quarter of 1948, increasing
by $800 million to a new level of
$43.0 billion. This reflected, to a
count.
On
the
other
of
and
large
item
any
liabilities
extent,
of
during
prices
higher
the
paid for goods included in inven¬
tories.
As
current
for
other
the
items
of
deposits
increased by $200 million, while
U. S. government securities de¬
clined by $500 million. Notes and
assets,
accounts
about
cash
and
receivable
$100
declined
while
million
by
other
current assets increased by about
the same amount.
'
sheet
balance
properly
side of
there
was
a
ac¬
the
$1.5
billion increase in long-term debt
and
equity securities.
debt
by
rose
$1.2
Long-term
billion
and
equity securities by $300 million.
The
aggregate increase in
work¬
ing capital and the net property
account
therefore,
was,
by retained
financed
corporate profits for
the most part.
1
.
On
ties,
the
side
notes
showed
million
of
decline
a
liabili¬
current
of
payable
about $200
while Federal income tax
liabilities
amount.
.
by about the
rose
Other
Fred W.
accounts
and
current
same
liabilities
The
Fairman', Sr., 71, who died at his
home, 2 Golf " Lane, Winnetka,
9, will be held
11
a.m.,
Nov."
drens
At the end of the second quar¬
ter
of
cash
1948
and
about
of
corporate holdings of
deposits
$22.4
U.
S.
amounted
billion
amounted
to
liquid
capital
preceding
cash
and
curities
to
at
the
quarter.
U.
S.
sales
a
Church,
Pine
Lincoln; Avenue,. Win¬
Interment will be at Me¬
morial
Park.
Fred
of
La
W.
Fairman
Salle
Street,
in
the
active
several
ratio
government
declined
of
was
founder
the well known brokerage firm
Fred W. Fairman & Co., 208
lished
of
the ChilWinnetka
Congregational
working
end
The
up
11, at
of the
netka.
of
made
Nov.
Cnapel
Street and
securities
$12.6 billion. These
items
than
to
holdings
and
government
Fairman, Sr., DeetcJ
funeral service of Fred W.
Thursday,
declined by $800 million.
some
privately sponsored,
to say that all such work needs,
at a certain stage of its
progress,
to be
our¬
selves in some intermediate posi¬
smaller proportion of net
ment
any
governmental support of such ah
two
sponsored
a
industry, whether conditions
so changed that there seems
great
to
at
only very modest interven¬
or
tion
very
time limit set. It is
industrial
available '•
against a
military emergency. Whether this
long-range plan > '.will be f found
workable or acceptable in whole '
or
in any part is still undeter¬
mined, so far as I know. If this
plan were to be actually followed,
immediately
an
some
with certainty
conditions
say
moment
assets
now
processes
would be expected to
adapt themselves to the two-year
time schedule above provided for.
ent
at nth is
change
The companies
be
Might Be Expected
one
the
tively developing coal and shale
would
No
rubber
",<■
be
mentioned—in order to
been
create
con¬
those pri¬
best able to plan and
concerns
has
the cost of these
six project plans would
rage
v
all
for.the .expan¬
on
What
•
useful, concrete result within the
we
of
each
of the indefinitely large
use
number
to-'.include
sion of the project
uled
I
diate
no
and
production in the United States
by gome very large figure—20%
increased
5,000.: barrels
the government work also sched¬
synthetic industry.
large
Section
New
the
18
Howard
Society of
Engineers,
most
the military urge, and if the opin¬
ion in executive and legislative
try
*An
attempt
the governmental pressure for an
low ash coal at
very
or
more
development
certainly be carried
the designs for the first commer¬
cial plants.
Coal
From
of
proj¬
unit of a
a
companies with whom these
The
haps /the worst product the oil
industry has ever had to handle,
but it can be hydrogenated suc¬
cessfully
upon
size
tions.
presumably
will
they
should be used
that
true
under
groups
the
involves
oil
from
concerns
itary authorities seem
by- that we might require
undertaken
industrial
bidding
promptly on
view is these coal
gasification processes
scale pilot plant tests suitable for wide use under Amer¬
should first be run to give oppor¬
shale oil
three coal synthesis
These project designs and
estimates
tive
conservative
more
that larger
three
program
cut-back of
for the imme¬
of
designs
and
plants.
ly proven for commercial use with
suitable
non-caking
coals,
and
processes
mentioned are
have given satisfactory only those which loom Up most
performance in small pilot plant prominently on the horizon. There
operation." These are the down- are several others which are un¬
draft, up flow, internal combus¬ der development by these same
tion retort'being pioneered by the concerns and by others as well.
Union Oil Company of California The
parents or foster parents of
and
the
fluidized retort being each of these various processes
were
preparation
including
estimates
has
long-range
also',?be"available
.
and
< a
however, it would §eem to require
that American oil supplies be sup¬
once
supervision of the Army,
Engineers, under general instruc¬ neering groups who would have
brought into the picture to
tions drafted or approved by the
Military Petroleum Advisory- .tr^te^v;any such capacity as one
or " two
million barrels per day
Committee. The cost of this'-sqi^r..
of synthetic .products.
vey might be $3,000,000.
ardized nature
processes
pioneered by Standard Oil De¬
velopment Company.
Either of
these two processes, and perhaps
some others, could, if the necessity
contract?
by
1
Board
Resources
prepared
thdse six
under the
tion regards as the one most near¬
promising new
At least two very
done
the
•
layout of addi¬
Complete designs
and;':technical information would
practical
basis for syn¬
thetic fuel plants. I suggest that
plan
tional projects.
a
American Koppers
Company; second, there is the
fluidized process which is favored
.project to be complete enough to
by the Standard Oil Development- serve, as
basis for widespread
Pittsburgh Consolidated coal competitive bidding for construc¬
group;
and, third, there is the tion contracts. This would not re¬
modified Lurgi process which the
quire the detailing of. engineering
Hydrocarbon Syhthesis Corpora¬ work or of equipment of a stand-.,
through
as
oil from
simplest.
production of
the
In
more
their
of
as
gin...at
from the
resources
master
a
least six competent organizations
Whov could be called upon to be¬
fol¬
"•4
;
American"
of
survey
shale and coal
the
'
■■
which
on
fpr ,the expansion could Joe based,
and there would be availabe at
years,
schedule
time
complete
■
resources
time
a
undertake
and
which
data be¬
plant construction begins?
neering need for
adopt
we
schedule, for example two
two
are
first,
process:
the coal
of
gas
duction
gas.
There
capital.
in
steps
I
ash.
2Vz%
as
conditions
private
■
carried out by
proven
and used
if
abroad and the new processes un¬
der
use
being actively developed with
one
method
the
the
on
hand, the Fischer-Tropsche
ican
Frank
coal and shale
too
low
as
seems very
syn¬
proces¬
based
ses
based
been
seem
hydrocarbon synthesis process
or
problem is
thesis
hydrogenation costs
ising foundation for an American
synthetic fuel industry.
On the
plan of action
The
coal
Certainly the weight of engineer¬
ing opinion is that the destruc¬
tive hydrogenation process is not
a
broad or economically prom¬
States and ask
are
as has been forecast in
military
analyses,
there
would
be
available
a
complete
survey of national shale and coal
day,
per
'
secret that the National
no
Securities
which
let
to,
up
some
prophet.
a
expansion
to two million barrels
one
spend
shale and coal.
on
It is
would
that if military
so
an
based
Furthermore,
foundation
necessary
have been laid
us'say,
Warns against immediate large scale expenditure
projects.
sound
$350,-
and
000,000 in the immediate erection
of
three
large synthetic plants
barrels
revje>vs problems ip connection with developing oil from shale and coal to supplement presand recommends a two-year survey of shale and oil resources, along wtih preparation
plans for construction of plants to be undertaken by private industrial
concerns
attempt- to
construction of anything between
ent oil resources,
of
economical
realistic;'
that
5,0p0 barrels
<
by others,; would seem much more v,
to
years
place immediate contracts for the
Development Consultant
&
the
at
suggested or as may be suggested
above suggested
be pos¬
it would
followed
were
By FRANK A. HOWARD*
J
Thursday; .November 18, 1948
.
,
>
health.
1908.
He
Chicago,
He
years
was
a
had
estab¬
been
in¬
owing to ill
member of the
Chicago Slock Exchange and the
se¬
some¬
what from the preceding quarter,
Chicago Board ol Trade, Chicago
and
Indian
Hill
Country
Club
Club.
»
Volume 163
Number
4752
THE: COMMERCIAL
v-
Z'r.
1
u
based
ti
on
"It
if'',"'--'
&
upon
FINANCIAL
national
a
itidn of 25,000
different
provides data
in
The
for
Our
American
distribution
a
Reporter
port
was
people to
reverse
1946 trend.
their fatally reactionary
//■'■:"
activities,
•'y/
ports
of
workers
less
and
in
for
voted
with
revival
emphasis
for
candidate
had forced him to compete
we
it
re¬
migration, education and
Before World War II,
used as a basis for policy
on
of
ment
an
Deal to
#
.
.
"We have
achieving effect¬
utilization.
s;«
lace
do not
or
and
feef inclined to
and in
political
must say
we
"standing
more
'
The
uncertainty.
for the
that
we
should like to
principle"
on
Other
politicians
among our
pling
1949 notes and
demand
a
(Continued from
estimated potential of between six
and seven
million square miles,
3.8 to 4.3 billion acres..
//'
page 20)
compiled, by this Bureau.
This
collecting of figures,
compiLng
and subsequent publication is the
for the
certificates
with one-year
higher yielding
.
.
Liquidation
.
eligible issues.
came
of the
of
as
Dec.
and
2
Ills, has created
.
.
Retention
.
miid surprise to
a
taps has slowed
the
with
down,
a
change in trend of purchases of the eligibles also being noted.
are being sold in order to buy
the longs.
The par¬
tially-exempts are jn sizable demand, with not too many of these
The shorts
bonds
around,
which
were
above
still
are
"
provide
in
sam¬
on
monthly
retail
and
In the in¬
field, monthly, quarterly
and annual surveys, issued
serially
in. 57 industry reports, cover tex¬
tile mills products, apparel,1 chem¬
icals,; wood products, .pulp and
ipaper/. primary
metals,
metal
products and machinery and
equipment.
Federal
OPTIMISTIC
in
.
.
ON
not
yet
letting
their
out
.
'
1.
*'
/.
.
'.- /
!;
•.
SUPPORT PRICES
followers
taking
are
a
.constructive
more
toward the government bond market despite the many
that still
have
holdings
instances, at quotations slightly
Despite the price advance, the longer
some
considered attractive.
'
/
Money market
based
trends
and
acquired,
current levels.
partials
to
be
cleared
up.
.
There
.
.
is
stand
uncertainties
less fear of
support
prices being changed from present levels, because it is believed that
the
"pegs" will be maintained
the
whole
dustrial
Population Age Shifts
bills, along with the refunding
lJ/i% rate for certificates
market.
is made.
wholesale distribution.
Economic Significance of
Treasury
.
surveys
on
of
of the
•sampling procedure
methods
data
elections.
our
.
.
...
tion
;
m population
as they take
place, thus providing an unbiased
sample of population at the time
much
see
.
Jan.
a' sample-is drawn which ref lects
the survey
.
Resumption of debt retirement through the partial redemp¬
shifts
career.
.
these securities.
the current
population
is an application of what is
frequently referred to as "area
sampling."
By such a procedure,
sur-u
.
.
.
survey
with Mr; Wal-/
reason
entire*
.
In the eligible list, the partially ^exempts still lead
parade, followed closely, however, by the 2V4Sj 2V2S and 2s.
The restricted obligations are
staying above pegged levels, because
institutional buyers seem to have changed some of their ideas about
in
used
;
of President Truman and his party,,
have no opinion to express about the future
we
investors.
on .the level of employment
unemployment from the
realm of
success
of Mr. Wallace's
But
1
argue
else about the
anyone
prising
*
1
expanding volume.
the
tistics
and
stronger, I am certain/from
long-run point of view by standing on principle
instead ,of
retreating before the Red-smear."—
We
This
continue to advance vigorously
Although die market has been largely
professional there are definite indications of a growing interest in
the intermediate and longer Treasuries by both bank ancl non-bank
of the 1930's and has removed sta¬
,
a
Henry A. Wallace..
war
Prices of government securities
with
replaced the estimates
of unemployment that were pub¬
lished during the depression years
out
come
the
ive
manpower
By JOHN T. CHIPPENDALE, JR.
survey has
antagonistic to the New'
themselves./
reverse
«
,
or
during
connection with
"We forced multitudes,of Democratic candidates;,
who had been lukewarm
problems;
and afterwards it has been used in
[expanded New Deal with
lower prices and housing.
on
was
formation in respect to unemploy¬
-
the peace program, on civil liberties and
lis oa
the
on
Democratic
the
only after
Governments
on
major
frequent
housing.
President
27
120
survey
monthly re¬
covering employment and
unemployment, labor force, and
our.all-out fight for the progressive cause ^
which was the chief
moving force in causing the-
(2087)
cross-sec-
households
counties.
CHRONICLE
financial
about
come
The
because
idea
of
better
and
lieved
with
them
will
tionary monetary
By, the 'use of sampling and a
trained field staff, the Census Bu¬
action
for
for the
power
prominent
more
need
greater
natural
more
control
over
which would
ways
readjustment in the business picture.
a
market
should he
there
of
either through
by
or
increased
to be the
appears
ing
system
Treasury
.
..
authorities
for the improved
reason
of
monetary
obligations.
feel¬
If
...
larger military expenditures, it is be¬
the
come
forces.
authority
restrict the
to
infla¬
...
reau is prepared to take quick but
.The work reliable national .or local sample
gpes on without intermission: day,
surveys to serve various continu¬
by clay.
Monthly, quarterly and* ing and changing needs of gov¬
annual surveys are made in many
ernment.
Timely information can
"NEW DEAL" POLICIES
In¬
cluding the potential acreage, the
economic and social fields,
terfere with the carrying out of certain policies that were advocated
ratio would
private enterprises.
or
According to the 1945;: census
of agriculture, the United States
acreage of arable land already in
farms
or
was
per
million acres,
511
over
about 3.5
acres per person.
be about
2.3billions
population* of
and-
million square
seven
miles
billion
4.5
estimated
an
maximum of
or
acres
Comparatively, witn
person.
estimated world
an
seven
of
acres
po-
Census Bureau's task.
Pressure
day's
especially from
comes
letters
of
scores
mail,
Business;- in
received
wrought in the
since the last full-scale
years
of the nation.
census
each
in
information
requests
about the changes
eight
/->/.;
As
a
result,
tentiaHy arable land, the rat'o is
less than two acre^ of potential
great variety of sample surveys
are carried on to furnish current
cropland per person.
Actually,
just befcre the last war, cropland
in use throughout the world was
'•
four
about
only
miles
acre
little
a
or
each
than
more,
of
acre
.an
population
xAs
person.
per
grows
million'-square
must
course
support a greater number.
As
already
population
being used is
now
is
in
suses
tries.
a
estimate and
an
sustained
not
by
actual
large number/of
Data
Asia
on
taken
mates of her
a
too
China has
and' esti¬
census
population
under 400 million to
cen-:
coun^
none
are
reliable, for instance.
never
world
billions
2.3
of
vary
over
facts for .current use.
The
from
500 mil¬
Census
has
years
tific
on
the Bureau
most
of-, a
simul¬
but
the world,
of
this hardly will occur in our time.
A step in th's direction has been
taken,
tion
with' considera¬
however,
of
plans for a census of the
population in the Western- Hemi¬
sphere.
To this end, the Census
has
Bureau
for
than
more
participating
been
years
two
in
the
training of statisticians from-Cen¬
tral
American
South
and
coun¬
tries in the art of
practiced
for
a
1950
in
census
census-taking as
this country.
Plans
of the
under
are
Americars
in
active considera¬
for
sample
surveys
the cost of
the
highly
useful
up-to-date
statistics,
which
canVbe
at
Most
Americans
aware
probably
are
that the Bureau of the
Census carries
complete
a
increasing
the
effectiveness
of
sample, surveys as a tool in policy
determination, in research, and in
taking
census.
a
involved
made and
errors
held to
are
Because Federal
quires absolute
census
able
to
obtain
current 1 work
basic
a.d
been
first
feasible
in
vane e s
methods and
The
made
by
sampling
large-scale
Bureau
scientific
conducted
was
businesses would reveal to others
in
taxation, regulation
tion.
Facts
In the brief
span
elapsed since 1940 the
Bureau has taken great strides in
both
development
of
sampling
tion
and
of
practice
sampling
utiliza¬
and
its
in
surveys
statistical activity.
Some form of
sampling is today to be found in
practically
af/feeu
phase
every
the
investiga¬
or
individuals
about
available only
reau
theory
given
or
individual business establishments
of
has
Information
law.
by
are
Population.
to make such sur¬
others not bound to secrecy
veys,
conjunction with the 1940 Census
which
nor
Census Bureau cannot be used for
practice.
sampling study undertaken by the
Census
individuals
to Census Bu¬
employees who
are sworn
with
or
data
from
combination
other
establishments
tities
to
only for sta¬
secrecy and are used
tistical purposes in
individuals
that all iden¬
so
Periodic inventories and current
operating statements are accepted
practice in any successful busi¬
on
ness.
As
in size, its economic activi¬
applied to
ties
census.
activities
many
parts of the 1950
have
complex,
One of the most
significant
ap¬
have
United
become
and
become
stand.
censuses.
its
other
However,
iar with the purpose
Census
realize
those
famil¬
and sfcop,e of
Bureau's
that hardly
periodic
operations
any
impQrtant
activity involving people
or
things
be undertaken without statis¬
information
-
collected
and
the
the
program
current
the
of
Bureau
is
population
survey.
This survey is conducted
monthly
and, in effect, is
sus
of
miniatureoien-:-.
a
population.
The
population survey
current
is designed ,to
produec
national
current,
rapid-fire
statistics
basis.
Measuring
to
the
under¬
-as., a
relatively
^may
well
has
be
is"
ation.
now.
to
seem
fall
are
in
.
.
simple
count
called
the
AS
going
be
adopted
to
Mr.
.
regulate
Allan
tion.
.
.
It is
.
meas¬
whole
a
a
it
.
minor bit to the forces of inflation,
on
they have
as
Z
*-••
..
IT
President
of
the
Federal
Reserve
speech recently said: "The cost of waging
of
is
markets,
money
scott free to carry
go
SEES
Sproul,
a
possibility
and the
a
If these
.
as
'
SPROUL
York, in
.
.
business
.
.
the present general
'hot war'
are
of
Bank
'cold war',
a
the principal factors disturbing
tendency toward stability in prices and produc¬
becoming
problem similar to the problems of
a
war
finance—in which it is essential that the government's credit remain
undisturbed;
in which continued high taxes
increased
and,
tapping
of
savings will be required; and should the situation get worse, in
which the question of controls would again have to be
faced, controls
Which this time might need to fn elude
penditures
as
capital issues.
or
we
can
might do if
the
proceed
now
we were
remarks
of
the
if
as
after the
we
'
of
of
capital
the
has been
war
"Central
...
.
Bank
.
things
we
These excerpts from
.
of
New
some
•
shrewd followers of the money markets.
ex¬
talking
completed,
at peace to do the
were
completely at peace."
head
control
some
We must quit thinking and
...
if the immediate reconversion
and
York"
of the
are
more
.
NOTES
It would be
institute
little ironical
a
controls
expensive
over
the
if the United
capital
markets,
without resort to such
war
States
been
rationed by the government.
Because
companies
companies
sion
are
measures.
.
.
such
have to
a
very
The British have
.
there have
over
...
of securities with
large
life
insurance
proportions and since
these
expected to expand in the administration of pen¬
in certain quarters that
regulation of these
irrespective
conditions should
r
placement
assumed
funds, it is believed
government
time
private
has
should
after financing
experience along these lines, since capital flotations
of
oper¬
excess
...
important factors in the
very
to be allowed to
past?
ALLAN
New
what
world's
classifi¬
that
Increased taxes, whether of the
.
goods to keep prices within set limits.
should
the
economic
grown.into
into
larger surtaxes,
or
which have contributed just
the nation is.
biggest continuous statistical
Tt
time
likely that certain
What started out in 1790
population
of
one
big busi¬
.
.
ures
the present-day job of the Census
Bureau.
will
banks, insurance companies, savings banks
lending institutions would
some
scarce
Ms
interrelationships
harder
and social changes of
and
States
increasingly
plications of the sampling method
count
It should not be lost sight of that
.
'
grown
some
.
...
the
.
being given plenty of consideration and weight by
concealed.
are
in
tical
information
undertaking
most * ofthese
neither
fol¬
are
are distinct possibilities.
Price ceilings and even rollbacks of prices may come into being.
There may also be allocations of materials and
rationing of
concerning
secrecy
details relating to each establish¬
ment and person, the Bureau is
that
to believe they
reason
...
foi
011
low
re¬
.
Commercial
.
.
profits variety
in
law
those
power
no
Ic is being pointed out in. some .quarters that greater
regula¬
tion of business in general is to he expected unless there should
a continuation of the economic
adjustment that lias been going
leyel, thus insuring quality of the
wpjr k ^ Tips -is accomplished at a
smaW ; fraction, of . the cost of a
complete verification.
tion
can
a
to
be
A sample veri¬
.
.
other
cation.
fication of editing, coding, cardpunching and other operations is
which
in
ness."
and
addition, the Census Bureau
has employed sampling methods
for /quality
control
of
various
operations
restored
regulate those segments 9! the economy that might in¬
during the campaign.
In
routine
2
the main features of the "New Deal" has been to
"regulate
administration.
completed inexpensively and
quickly are taken in a number of
subject fields. ..Development of
has
hesitate to
At
census.
time, scientific sampling
methods used make it possible to
insure
reliable
results, thus
REMAIN
Nov.
of
lowers of the "New Deal" and there is
of
same
in addition to the 10-year popula¬
the
fraction
a
Census Bureau's work and will be
tion.
not
.This provided
censuses.
demand
recent
part
as
for
taking ..of
tively little current data. Today's
picture is quite different, To meet
populations
census
decade
a
engaged
the
in
extensive', and
fields
taneous
was
part
be obtained
.-
historical record, but offered rela¬
There may come a day when
all countries will enumerate their
lion.
important ad¬
development of scien¬
sample basis. Until
compLete
an
recent
methods for making surveys
a
ago
;
in
Bureau
made
in
vances
the
the
stated,
figure
a
thus
election
The
of
what
change,
concerns
develops
so
that
no
in
is
the
some
largely
near
a
future.
greater controls
type
of
matter of
are
...
If
needed
over the money markets, it is felt that the growing importance
of life insurance companies in the money and capital markets
will result in
authorities.
more
attention
being given them by
the monetary
>.WW *
<'
THE
(2088)
28
COMMERCIAL
.
&
CHRONICLE
FINANCIAL
omy
Private Enterprise and World Trade
The
of
result
abroad
on
cline
to
in
a
steadily,
the year, the
if
and,
in
of what is go¬
unaware
The Marshall Plan,
ers.
v
the hands of foreign
in
lars
'
They,
on.
the
check
decline
buy¬
our
have fallen far
tically—possibly
as
Even with
lion.
available
1948
terprise
countries
ex¬
of
dras¬
dollars made
shall
we
value
in Europe.
war
we
Private
"air
the
ers
view
have almost doubled
,
that
the fact
of
our
the
we
merchandise exports
billion
.
in
prices.
fair;
next
repeated
and
States
will
perhaps
have
the
soon
ind
an
own.
businessmen sponsor
If American
manage
fair in
trade
a
the
States, one of its purposes
be to acquaint Americans
the goods which they can
terms
Plan
the
In
books
accounts
as
are
international
of
travel
does
not
item of merchandise.
an
of
side
the
the
ledger.
It
spent
for
amount
two
rubber,
ports.
coffee
leading
of *our
Encouraging Foreign Economic
Development
be reached
aid
Of
all the ways in which pri¬
enterprise can help do the
job, none is more im¬
portant than the encouragement
r£ foreign economic development.
vate
1948
they will have
that
a
is
It
more.
reasonable
citizens
our
billion dollars
a
to
proportion of
income than
year
And
this
United
for an indefinite
period in the future, and because
with our high level of national
income and production we will
investment
means
States
nations.
sorbed
dollars
;ional
increased amount
and
in
the
of
ex¬
people for the consumer goods
at
be offered
can
we
increase,
our
to
the
and
the
of
that
we
the
Tnterna-
rehabilitation
development of foreign
work
copper,
imports of goods and services and
increase the investment of
have
econ¬
tended
in
many
as
of
parts
so
Americans realize
natural
capital abroad,
sustain
our
lead, zinc, tin,
and iron
petroleum,
private
American
can
contribution
Plan
ab¬
so
a
the
world—helping to
develop
and
expand
foreign
production
of
abroad.
then
been
people to forget the importance of
private investment.
But private
capital from the United States is
materials and the desires of
How
have
the
in
Bank
omies
industries for
We
-
Marshall
the world to satisfy
can
that
in foreign
a
present national
our
-
resources
many
can
)
.
jii'
;
*■!,.*.
:n t j..
needs
products, than
supply.
We
'>;•
;f'
it
for people to travel, and ed¬
ucate them in'its advantages and
attractions.
This has already been
undertaken
on
an
international
The
scale.
membership
International
Travel
Union
sents more
now
repre¬
than 30 countries
the
includes
the
of
Official
of
Organizations
active
and
participation
of 20 others.
Travel should be
reach
the
Its
book.
the
of
brought within
pocket-
average
appeal
should
limited to the rich.
The
not
be
with
man
we
are
i.
it'
' -t
'I
problem in adminis¬
controls
is
the
tion.
needs
and
economy
foreign
There
of
our
the needs
countries
'materials.
bal¬
reasonable
a
of.
scarce
those
are
who
growing popula¬
clear, however, that
our
is
It
this
revised
be
revision.
It
the light of
needs
program
should
in
experience.
Recognition
should
be given to the original and still
important objective of aiding the
export,
the
for
duction
farmer
well
as
furnishing
to the need for
as
relief to the tax-,
some
payer
and the housewife. / The
Bill, while not perfect, gave
recognition to this need. It will
not be
effective, however, until
Aiken
advocate complete abolition of ex¬
Jan.
port
control
hand
those
Personally, I believe we should
continue in large volume our ex¬
who
the
on
advocate
other
embar¬
all shipments of goods in
supply from this country.
Neither
a
and
of
these
sound solution.
of
ports
believe
I
that
hand
Export controls
Food
and
the
on
in
fats
other
should
restraint
some
exercised
be
needed to protect the economy
from the impact of unrestrained
are
grains
bread
oils.
and
offers
extremes
1950.
1,
connection.
this
the
throughout
production
the promotion of our foreign pol¬
world, and in particular in West¬
European countries, this year
is high. The potato crop is ade¬
quate to- meet all needs; bread
grain production has been excel¬
lent.
Furthermore, the time has
arrived to make it plain that we
icy.
have
foreign demand.
also
that
bution
supplies
scarce
from
made
United
States
the
considerable
of
ern
the international distri¬
of
available
is
It is self-evident
An.
significance
in
embargo,
of
would provide a cure for
export surplus—and smother
foreign trade in the process.
export
our
our
If
of
left
we
distribution
and
of
shipments
world.
and
from
tribution be made
dislo¬
acute
It
made
That
by
decision
In
what
it
decides.
For
This
is
balance
are
indicate
that
least
at
million bushels of wheat will
be available for export in 1948-49..
This is certainly no small amount.
The largest annual export of wheat
the
during
the
is
my
that
export controls should
war
It
fully aware
than I of the work, and frequently
the annoyance, which these con¬
trols impose upon exporters.
We
try daily to improve our proced¬
ures, and
I hope h^ve achieved
some
success.
I am not by any
one
In
Report,
more
be continued.
No
'
dated
July 30, 1948, I stated that current
these
convinced
conditions
relief.
true.
Quarterly
estimates
thoroughly
con¬
our
the basis of
not
from
far
Fourth
400
world
that
on
and
matter, implications have
all
shipment of bread grains abroad.
Congress authorized for
definite period the control' of
exports from the United States.
am
the
been made that I have opposed
be
reasons,
until
years
previous discussions of
some
a
I
recent
this
impartial govern¬
with power to en¬
an
mental agency
force
should
starvation
reconstruction
any
whole.-
the
tremendous
time—when
now
domestic situation
is not fair to impose
individual the reconcil¬
ing of his own business interests
with those of the community as a
upon
It is
suffer
our
well would
cation.
during
feed
to
Our
nations of the world, and in par¬
ticular Western Europe, are far
scarce
goods abroad, our foreign aid pro¬
gram
forever.
have sprung from the desire of
America to help feed a starving
entirely to the play
business forces the
ordinary
flow
undertaken
not
world
course,
more
is
five
consideration to
ter which
preceding
years
87
was
million
necessary,
an
has not
bushels.
also, to give
important matbeen
too
care-
'
carryover of
In 1941 it was 385 million
fully surveyed—the
wheat.
bilshels
—
in
1942,
million
631
bushels—a very fortunate circum¬
I have suggested a carry¬
350 million bushels from
means,
however,
satisfied with
and am not only will¬
ing but eager to receive sugges¬
tions
or
even
complaints
with
reference to what we are doing.
The job is, of course, a large ohe.
We are now receiving over 14,000
applications per week for export
stance.
the result,
over
terprise, we have set up 40 advis¬
ory
panels, each one including
stabilization
of
this
year's crop. If the estimated
domestic disappearance is 700 mil¬
lion instead of the previously as¬
million
750
sumed
may
bushels,
we
have available for export 25
million bushels in excess of the
only a few hundred dollars to
spend should not be overlooked. licenses,
the mere handling of figure Which I mentioned previ¬
Other countries can provide im^ which; >■' aside -'from
questions of ously.1 "In1 connection , with the
proved bus transportation and; in¬ policy,! calls for large personnel matter of carryover, we must not
and
skill
and
experience.' Only fail to consider two important
expensive roadside accommoda¬
tions for
tourists.
International
recently have we been able to add possibilities—war and a bad crop.
travel organizations should work to the personnel and, as you well I know of no insurance or guar¬
to remove the clutter of official
know, skill and experience do antee against either.
red tape which now makes for¬ not come quickly.
Stabilization of World Currencies
eign travel inconvenient. We are
We
still
wish,
however,
to
pleased to note that Belgium and avail ourselves of help from pri¬
There is, I submit, another field
Italy have announced recently a vate business. As a means of se¬ in which government must take
withdrawal of visa requirements.
curing the advice of private en¬ the primary responsibility — the
The
Foreign
Assistance
Act
provides that the Administrator of
shall
with
the
Commerce to facili¬
tate and encourage through.pri¬
vate and public travel, transport,
and
other
agencies,
travel
of
cooperate
States residents abroad.
United
In
effort to stimulate private
an
travel
promotion,
I have estab¬
lished a
Travel Advisory
Com¬
mittee to the Department of Com¬
merce,
whose
membership
has
the
travel
intention
industry.
segments
It is not
to suggest
that
the government should shoulder
this
burden.
Private
enterprise
our
even
should take the initiative and
sume
the responsibility.
ernment
and,
will
sary
the
part
from
will
furnish
as¬
The gov¬
information
conditions
tices
with
the financing, should
private business.
Our
While
of
we
deal
world
In
prob¬
and the
balancing of our foreign trade at
a high level,
we must not fail to
safeguard our own domestic econ-.?»*i
(
;,
.
*
recovery
"i.
i•.
t
and
every
children
-
Price
have
erated
the
a
for
several
price
support
which
ac¬
to increase and stabilize the farm¬
er's income and to provide an in¬
increased
in
financial
it pos¬
their
clear
balances
with
each
other
through the Bank for Inter¬
national Settlements. C r e d i to r
countries will receive oartial set¬
tlement in dollars which may then
be used to buy
goods in the United
This arrangement may cut
States.
through the web of bilateral- trad-
j
ing agreements which have ham¬
pered the return to open; multi¬
trade.
lateral
>
:
government
must be responsible for this coun¬
try's participation in the Interna¬
tional Bank and. the International
It
These
Fund.
!
us
clear that
seems
to work
institutions
for
qnable
the economic da-
program | velopment of the world's resources
de¬ and the stabilization of its curren¬
complished, two major objectives:
for
a
was
signed to accomplish, and has
centive
reached
op¬
years
farmer
agreement
an
of trade in Europe, making
of
Support Program
has al-
progress
sible for the member countries to
must
discussion
cur¬
Mar¬
clearing system for the promotion
mounting prices and inflation, the
critical factor is the price of food.
for
the
wife
some
the
of
have established
tries
building of a new house—but he
cannot postpone
meal time.
He
Farm
Domestic
with
Under
problem of administering
controls
is
typified
by
bread
grains. Food has been in critical
shortage thrqughout the world for
several, years.
The price of food
has been a large factor in the high
cost of living here at home.
A
man can postpone the purchase of
his
automobile; he can live in
discomfort
and
postpone
the
his
world's
result
July of this year the ECA coun¬
come
Economy
lem
certain
The
We
Safeguarding
a
the
of
a
ready been made in tl)is direction.
group
or
As
shall Plan,
the
prac¬
These groups
eat.
undertake
to
rencies.
of commod¬
have met with
us frequently
and have been ex¬
tremely helpful.
ities.
to provide neces¬
coordination, but the ideas,
energies, and for the most
requested,
with
trade
and
reference
commodity
advice—-and
if
familiar
businessmen
trade
and
v,
.
A1'
our
limited.
are
of,
ourselves
.
i
today that
industrial, machine
•
>
of
in
years.
agencies must make
Most
ore.
more
export trade
,i,q
smaller
easy
manganese,
Our
without continuing to .extend gov-
over
the amount spent on
foreign travel in past
Private
assume
spend
can
That amount is
travel.
much
spent
of
and services which
for¬
on
eign travel.
In 1946 they spent
$479 million; in 1947, $597 million,
excluding
the
fares
spent
on
American ships and planes.
In
been taken from various
the appetite of our
or
im¬
Americans have
spent increasing amounts
world's
us
main
domestic
as
the war,
mines, the oil wells, the railroads
and the timbpr resources of other
of goods from
twice
was
amount
want to buy an
But it
considerable purchas¬
ing power for our exports.
Be¬
tween
1920
and
1940,
foreign
travel was larger than.any single
merchandise item on the import
generates
ploration and improvement of the
goods from
appear
Secretary of
the 1 present
can
loans
ex¬
assisting
in these tasks, but private invest¬
ors
should examine with partic¬
ular
care
the
opportunities
in
foreign transportation. The world's
job
cannot
be
done
properly
without
great
improvement
in
the methods of moving what the
world produces.
ECA
import from other < countries.
to
of about $13
of
This, level
with
the termi¬
want to buy at least this
we
success¬
so
must rehabilitate and
war
believe that the world will
We
from
dis¬
United
imports to $10 to $11 billion
and stimulate the flow of
private investment abroad.
our
The prod¬
were
nternational trade fair of its
year,
raw
be
year's
our
of
it will
that
United
only as we maintain high levels
of employment at home, increase
*
countries
32
Even
areas.
ex¬
Perhaps there will be more
\merican
participation in next
without further governmental
a
73 countries.
of
the
were
year.
domestic
Marshall
needs
transportation.
be
restored
and
must
tleground
should
ward in the years after
of
the
at
business
do
The Toronto Fair was
It is not unrealistic to look for¬
nation
look
to
to
the
at
1,000 Were from the United States.
ful
considerably.
v-
Present
.
imports must be accelerated
our
staged in Toron¬
Of
played by 1,455 exhibitors.
.he 31,000 buyers and sellers only
production since the prewar years,
this increase in imports is rela¬
tively small. If we are to achieve
eventually a balanced trade at
high levels, the rate of increase
in
Western
than 31,000 buyers and sell¬
from
ucts
was
Fair
the
in
June.
and
more
find that imports dur¬
in terms of. goods
into the country.; This
tendency is certainly encouraging.
in
last
hibits
brought
But
held
ever
Toronto
Mak¬
trade
international
in
Hemisphere
to
years
t
help to
can
The first international trade
'airs.
have been running at a rate
21% above, what they were in the
prewar
reverse
enterprise
business
year
;
selling
is still experi¬
export
imports by encouraging
Tie full participation of American
ing the first eight months of this
"
of
use
oromote
ing due allowance for the rise in
prices,
the
imaginative and practical attempt
to increase our volume of imports
the three years preceding the out¬
break of the
of
Some
work.
mental, it deserves approval as an
imports during
of
value
this
channels in
im¬
times
than
more
United
the
businessmen have already
our
While
more
average
to
markets within the United States.
than $7 billion worth
goods in this calendar year—a
of
other
ways
larger exporters have assisted
their foreign customers in finding
the
continues
rate
in
best
in
goods
undertaken
Fortunately,
our
imports are
increasing.
During the first six
months of 1948 they totaled $3.5
billion. If, as we believe probable,
this
the
our
pared with $15.3 billion in 1947.
port
Bridges-
Since
States. It is encouraging that some
1948,
than
en¬
help
can
producers
to
as
their
sell
Foreign Assist¬
our exports in
likely to total much
$13 billion, as com¬
by
world's great
improved*
rolling stock replaced in the bat¬
do much to help.
can
advising
by
$10 bil¬
as
de¬
private
American businessmen
not
are
more
the
of
Act
ance
more
low
not insoluble, and
are
ports; without it, the total value
of -our exports for the year 1948
would
the
their goods was already
These prob¬
lems are
real, and there is no
simple solution. But the problems
by mak¬
in
risk
established.
firmly
ing available to the countries of
Western Europe the dollars they
need for recovery, has also helped
to
where
countries
the
mand for
better than any
other group, know that it is neces¬
sary to find ways of placing dol¬
ing
than
Rather
levels.
trying to sell in America,- they
preferred to continue their selling
gov¬
of course, have
exporters,
been
not
and
markets
our
country and on different in¬
come
ernment do about it?
Our
eff
size
baffled by the wide range of con¬
sumer tastes in various sections of
What can
neeessary,
the
whole.
a
between
ance
Governmental
the
business
foreign buyers.
of
The
tering
going
dous
physical volume of goods
declined by approximately
-That is the situation.
One
is
as
achievement of
short
of
marketing methods.
They said
they were awed by the tremen¬
28%.
•
hands of
Nation
pand their transportation systems.
Department
from
men
imports of Eu¬
ropean products into the United
States. European businessmen told
them again and again that they
were hesitant about attempting to
compete
with
American
mass-
actual
had
what
conserve
by drawing upon the re¬
sources of others; by so doing we
will
place more dollars in the
Commerce
two
year
ways to, encourage
of 1948, the
value of our exports was 23% be¬
low the similar quarter of 1947.
In
view
of
the
rise
in
prices
over
opportunity to
have
It requires
a
judicious use of governmental
authority in the interest of the
made an
extended trip through
Europe for the purpose of finding
lit the second quarter
which occurred
and
with the necessity and
presented
against excessive exports of
in short supply.
This in¬
volves export controls.
those
countries not directly affected by
the
In the sec¬
they have dropped
encouragement
Last
country.
of
our
exports reached an all-time
Since that
peak of $4.2 billion.
time
need
help to market their goods in this
quarter of 1947 the value
ond
as¬
bility for promoting imports into
United States.
Foreign pro¬
the
pronounced de¬
exports.
our
should
the
itself during
show
present year in
begun
Promoted
Be
large part of the responsi¬
ducers
dollar short¬
the
enterprise
sume a
of drastic restrictions
the, use of dollars has
and
age
to
the
Should
Private
Exports
Our
grants
we
Imports
I
in
and
other countries?
of all t.ypes of trade re¬
strictions, including exchange
controls, import permits, quota
restrictions,
preferential trading
and many others.
•
growth
Decline
loans
ernmental
(Continued from page 19)
goods
Thursday, November 18, 1948
food
pro¬
cies.
In
loans and
will be
to
the
administration
of
grants, the government
held, and should be held*
account
by private enterprise*.,
Volume 168
Number 4752
THE
Private enterprise should, by con¬
structive comment and criticism,
to
give
it
COMMERCIAL
sympathetic
a
under¬
support the efforts of government
standing and support, at the same
time' insisting
that government
to
make
create
free
climate
a
enterprise
favorable
throughout
to
the
world.
I
with you that private
do the world's job.
agree
can
I have tried
briefly to explain why
I think if necessary that the gov¬
ernment assist in, and participate
in—and, at times, direct—the do¬
ing of this job. When the govern¬
does
assist, or participate,
direct, businessmen should try
or
doing of private busi¬
easier and not harder, assume
ness
that
enterprise
ment
the
businessmen
and
honest,
knows
should
well
busi¬
own
far
as
the
so
leave
as
businessman
a
government employee,
a
that
and
that
about his
more
than
ness
intelligent
are
world's
possible
domestic
our
as
the
job, to
initiative and
individual
we
job,
industry
livestock
products
is
recent
always, since farming
biological industry, the im¬
a
pact of
reach
drought
a
weather
to
during
As
or
feed supplies does not
on
until
consumers
twelve
curred
of favorable
months
six
from
after
it
oc¬
and
by that time most of
them had forgotten all about the
The
cause.
stock
as
shown
shock
a
by
feed
effectiveness of live¬
crop
absorber
is
the fact that although
production
declined
result
and
Spring.
increase
about
are
10
below 1947,
pounds
they
above
pounds
per
capita
still about 20
are
average
consump¬
tion during the years 1935 to 1939.
The third round of wage in¬
in this
creases
country was based
living costs, largely
Unfortunately the public
increased
on
food.
doesn't
understand
that
these
supplies
The first substantial
in
meat
supplies cannot
until- the Fall of
occur
next
Spring's pig
1949 when
begins to
crop
to market.
move
Wheat
production in Western
year is the best since
Europe this
the
but is still about 10
war,
12% below the prewar level.
the
most
important
developments
of the
one
construc¬
since the
but its effect
war
States
or
This
improved food production is
tive
only 7% from 1947 to 1948. While
meat supplies for the year 1948
increased
will
There
mated.
be
re¬
imports into West¬
ern
Europe, and some saving of
dollars on that account, but more
important
grain
is
and
dinary
for
efforts
of farm
maximum
food
families
production.
The meat shortage this year is the
inevitable delayed result of our
small
the
to
corn
in
crop
and
1947
of
heavy grain shipments abroad
as
so
in¬
to provide the energy
Again in 1948, assisted by favor¬
able weather, United States farm
families have performed a mir¬
The
work.
best
that could be hoped for last Win¬
ter
to keep
was
vation.
their
also
is
It
production of food,
begin to correct
since
their,
will
this
abnormal
not
hope
ship
in
With
1946,
be
did
in
1948.
the
best
and
expected would be
to
two
it
as
weather
average
could
that
1947,
three
mil¬
hundred
lion bushels of wheat
case
of
able
to
big
city
these
since
papers
early July
expected
consumers
prospects to be trans^
rosy
lated
immediately, into increased
supplies
at, lower prices.
Much publicity has been given to
meat
the
{
that
fact
for
December delivery was selling at
or
below support prices.
While
cash feed prices declined slowly
in response to the favorable out¬
look they remained high during
the
new
crop
Summer because
scar¬
city of old grain and even a start
increased
meat
production
on
not be made
could
corn
States: wheat
until the
new
became available in October.
of
is
crop
United
the
in
sub¬
grown
semi-arid regions which are
ject to wide variatipns ;in. rainfall
and yield.
-
corn
of the
a year.
In
drought we might be
ship very little or none
a
two-thirds
since
Production
Food
in
Europe
Recovery in food production has
been
than
slower
expected
in
U.
Production
S.
130% Above
For the fifth year
food
total
in succession
^production
.
the
of
United States in 1948 will exceed
130% of average output from 1935
the aggregate crop
while
to
1939
of
feed
grains
highest
is the
in
These splendid harvests
will stopi the decline in livestock
and will eventually result in in¬
creased meat supplies but this ef¬
history.
fect, cannot be realized until the
late Summer and Fall of 1949. An
increase
chicks
;
in
has
of
hatching
baby
occurred and
already
larger supplies of poultry can be
within
expected
months.
few
a
However, the first effect of these
bountiful crops will be to reduce
somewhat the number of hogs for
market
this
Fall
because
more
order
in
the
duction
offset
weights
keted.
ers
Spring
will
by
the
of
1949.
probably
feeding
pigs
This
be
about
heavier
to
that
re¬
are
mar¬
With abundant feed, farm¬
will hold back
more
cattle for
fattening than last year. This will
production have been fully dem¬
onstrated, ;,the
extension
im¬
of
proved methods will probably be
very slow because of illiteracy in
much of the world.
The
principal
hope in the next few years lies in
Western
Europe
and
North
America
where
climate and
favorable
are
and
soils
illiteracy
is
low.
very
During
much
the
thirties
publicity
able
terms.
that
world
It
during
will
tinuing
was
food
sur¬
Europe
imports on
food
favorable
there
about
Western
be
ob¬
very
prob¬
fifties the
the
with
problem.
con¬
a
Malthus
may
tainly
supply. Cer¬
principle has
been
that
true in the last decade, and there
is no reason to believe that it will
The United States has
kept
with
pace
world with
the
than
more
rest
of
an
population
capita
per
all-time
production
has not declined
as
stock
because
creased
much
production
Consumption
of
production
animal.
livestock
because
•
More
build
as
reduced
will
be
re¬
quired for livestock for our grow¬
ing population and also, of course,
there
be
will
greater
a.
for other foods.
As
demand
result, there
will be less food for export. There
seems
to be no danger of a socalled general overproduction of
a
food in this country until the next
to
and
numbers
livestock
normal
restore
grain reserves. Large food imports
expected by Western European
are
countries
after
even
With
1951.
land
million
people to be fed, there
a
heavy deficit in food
and
resources
270
after full recovery has been
even
attained.
The
essential food im¬
ports are those needed for direct
human
consumption
wheat,
vegetable
such.
The
pend
on
sugar
of
imports
level
livestock
and
oils,
livestock
for
feed
such
and
of
as
and
of
meat
products' will
de¬
their industrial exports.
What they can
buy with their ex¬
ports will affect their livestock
production and, therefore, their
diet.
The real question in regard
to
the
agricultural
imports
of
Western Europe beyond the foods
necessary for direct human con¬
sumption is how high a standard
of living Europe will be able to
after
earn
the
end
of
the
recov¬
program.
ery
As
cline
in
United
States
a
food
de¬
ex¬
ports is to be expected, but it will
be
less
the
is
abrupt than in 1920-21 if
European
continued
tained.
for
our
and
Their
fruit
cost foods
recovery
program
recovery
increased
and
depends
demand
other
upon
is at¬
higher
the pro¬
and
two
is
the
in
the
Food
Production
decades
strikingly
good
effectiveness
of
about
1940, United
production started
riod
has
in
occurred
production
ceeded
better.
equalled
ranging from
age
or
125 to
to
its food
crease
ing
major
a
been
able
to
population
serious
meat
of
per
person
tables
than
before
increase-in
tion
of
the
vege¬
This
consump¬
high
quality foods
been due largely to increased
has
pur¬
chases
by families whose con¬
sumption was formerly limited by
low
incomes.
The
so-called
"shortage" of food in this coun¬
try in recent years has been a
shortage only in relation to what
with
consumers
incomes
greatly increased
able and
were
io
willing
buy.
This
crease
rapid
in
and
United
sustained
States food
in¬
pro¬
>
■"
*'■
.
j
t
•
■
*
i
i''
.*
t
/1.i
t
■
widespread weather catastrophe
caused seriQus reduction in United
following eleven
The ad¬
1947
been
followed
such
of
by
25%
has
was
again
favorable
very
While continua¬
good' fortune
is
surpluses
and
about
government
than
in
other period in the
Even with this
any
present century.
low
production, food prices
New
Improved
pro¬
correct
to
them, our per
capita food production was lower
grams
in
Progress
Rapid
tained.
and
for food
farm
velopment
of
in the de¬
better
varieties
of
improved
and
million
to
acres
for
already been released
feed
grow
production since 1920 but
has
been
completed
10
tional
23
if present
mechanization
largely
than
50
high
to be main¬
are
60
used
horses have
and hot more
15 million acres addi¬
to
be
can
million
released
expected.
have
acres
from
About
also
been
cotton
production
since 1930, part of which is being
for
used
food
Little
production.
additional acreage can be expected
from this source.
A very limited
area
be
can
obtained
by irriga¬
The principal
obtaining increased food
production, however, is by higher
tion at heavy cost.
of
yields from the land and animals
already in
This goal is at¬
vigorous programs of
agricultural research and exten¬
sion
continued
are
How
use.
if
into
rapidly
duction
farmers
will
relation
the
receive
to
of
will
apply'
of
pro¬
largely on
prices they
the
costs.
put
farmers.
methods
depend
these
are
by
use
intensive
more
if
and
! practices'
There
will
be
plenty of food for United States
in
event
any
of
but
milk,
meatj,
the
eggs
and other choice foods in the diet
will
largely
be
determined
by
weather and prices.
La Salle Street Women
To Hear S.
Methods
decades
25 years
About
formerly
that
of
to
progress%has been made
in the last two
crops
Crops
prices of farm
acres
levels of nutrition
proportion
and
mainten¬
levels of
less favorable
estimated
next
consumers
crop
reversal
the
land will be needed
crop
the
over
about
corn
first
of
talk
yielding
weather which reduced the
verse
tion
during the
years.
increase
to
high
additional
promptly
Although severe droughts were
experienced in 1934 and 1936 no
the
incessant
million
improved
»
tion.
long
face
been
tainable
be hoped for, it is not a safe basis
depression of the* for making plans.
v
During that decade, in
the
has
weather, better varieties.of crops,
improved methods, of production,
favorable prices and mechaniza!•£>
i
to
present
duction during the last decade has
been
due
largely to favorable
thirties.
by
It
way
weather in 1948.
in per capita food production was
obscured by declining exports and
as
poul¬
war.
capita
per
population.
This downward trend
well
as
larger quantities of
eggs, milk, fruit and
threats
of
weather and lower
more
much
continues
products.
during these years of
shortage. In
1947
we
pounds
now
allowance for
no
food production are
the
30
farms are
our
or less exports, or a dimin¬
ishing quality of diet.
The most
ance
about
consumed
provide
people with the
capita diet will take
ports,
in¬
States have been consuming about
10 to 12% more pounds of food
capita
popula¬
succeeding years there must
be higher production, or more im¬
"surpluses"
apparent
a.
To
over
years of
during the
thirties, the people of the United
per
have
substantial food exports except a
moderate amount of wheat. As the
consumption dur¬
with
more
of
nearly all that
war.
contrast
In
so-called
30%
millions.
producing with
of
providing for the needs
of our armed forces, lend lease,
and foreign relief.- -Never before
nation
number
150
present per
ex¬
after
any
of
this
Due to this phenom¬
production food supplies per
capita have attained a new high
has
certainly
tion
enal
even
about
By 1950 the United States will
level.
that
capita
per
present popu¬
our
1939.
almost
aver¬
141%
current
production than in the period 1935
most
of the prewar
The
consumption of
requires
lation
any
has
125%
1947.
food
supply
has
been
largely to feed more people
used
consecutive years total food
seven
through
creased
country at
time in modern history. For
any
1939
to
in per capita
including both quantity and
quality amounted to 16% during
the same period.
Thus, this in¬
food
the
on
improvement
diet
livestock
States
1935
The
uni¬
rapid and sustained increase that
the
war,
No
discovered,
in
evening out production of
and bad years.
Beginning
prior to the
United States food
production did not keep pace with
recent
methods
of
Salle
La
have
as
Women
will
guest speaker at their din¬
meeting
ner
McMurray
Street
Cordon
22
Nov.
on
the
at
Club, Chicago, Samuel A.
Account
Executive
were
production of plants and animals
McMurray,
depressed and city consumers be¬
by agricultural colleges and ex¬
periment stations.
Although this
knowledge of better practices was
taken promptly to United States
with
farmers by the Extension Service,
Mr. McMurray has been identified
accustomed
came
that
were
tained
in
too
to
low
good
to
be
period
any
of
prices
main¬
active
business which would provide al¬
ternative
jobs
farm workers.
increased,
the
for
farmers
consumption
so-called
and
When employment
food
rose
and
surpluses dis¬
appeared quickly.
the
world's
best
market.
In
ordinary times they eat the food
they want and the remainder, if
any, is exported.
Hence, as per
capita food production declined,
food
its
widespread use in production
apparently delayed because
of very low prices of farm prod¬
was
ucts
the
The people of the United States
are
result of these factors
a
For
States
"States farm production
will
crops
up
to
prod¬
much
as
of
feed
in¬
yields.
been
yet
pro¬
decreased in depressions. This
stability is due largely to the bio¬
logical nature of agriculture and
live¬
of
per
ucts has not decreased
exports.
greater
or
live¬
as
improved
has
while
form from year to year and can¬
not be increased quickly in booms
Live¬
kept
and
thus
way
The total food production of the
The
numbers
increase
from
came
United
approaching
per capita
livestock products
of
this
and
1919.
•
is
low.
of
in
.
in population from 132 million in
1940 to 145 million this year.
stock
numbers
have
not
with
half
17%
unfavorable effects of wet weather
the
,
phenomenal increase
a
to
in
29
however, of eliminating the effects
of inadequate
moisture and the
the
other
half problem of drought has not been
came
from reduced civilian consolved by mechanization.
The population of the United
sumption
made
possible
by
States increased 11% from the pe¬
changes in eating habits.
the
depression.
of good
About
try,
be true in the' next.
not
production
seems
faced
food
Population
female
pigs will be retained in
to produce a larger pig crop
search, education and irrigation.
Although the results of the appli¬
cation of science to agricultural
Several years
be needed to
will* be
Prewar Average
con¬
are
in food production through
slow but sure methods of re¬
Europe and the rest of the world.
limited
J
human
formerly fed
no
possi¬
bilities of a quick, large, sustained
increase in world food production.
The prospect is for a gradual in¬
stock
to
food
in
grain
There
ship
continue
to
much
as
the
and j many
resulted
farms.
of
years
duction
prewar
States
of
pace
has
outlook
United
livestock.
can¬
feed.
favorable
of
has
country
This
States.
United
acle in the production of food and
The
This
the
some
been front page news even in
output
on
dependence
yet regained
faster than the food
fact
near-starvation
productive
abroad
prevent starvation.
not
bread-
people from star¬
helpful that
European countries have increased
disaster
has
be
can
the
food
tion
again become popular. Mal¬
thus taught, you may remember,
that population tends to increase
the
be enough
above
creased
levels
this
than
now
that rations
so
food
levels in spite of the phenomenal
its
some
in
demand, while world food produc¬
tained
for
European
population and
and
duction in food
there will
increase of about 10%
an
world
pluses
price increases were due to
drought and to our efforts to meet
in spite of the continued extraor¬
has been
United
on
8%
to
exports
end
exports has been overesti¬
6%
supplies for the two billion people
in the world is not bright.
Since
the. beginning of the war there
in
(2089)
States food exports increased from
prewar
the
of better quality beef next Winter
of
decreased
in
for .adequate
crease
reduce meat supplies this Fall but
will
CHRONICLE
food
ity to America.
of
products
outlook
to
23% from 1946 to 1947, the supply
livestock
The
sumption
(Continued from page 21)
months.
FINANCIAL
duction of exports to pay for these
commodities.
which have brought such prosper¬
EC A and American Agriculture
&
exports decreased, food
im¬
stimulus
occurred
crops,
of
methods
exceeded
our
food
ex¬
ports.
During
World
War
I,
United
price
use
new
of
and
corn
more
pest
and other
effective
control,
ling of fertilizer use, and
increase
imports
of-favorable
proved varieties of
farms.
annual food
Under
extremely rapid and
of new and im¬
an
widespread
to the recent
our
thirties.
relationships since 1940 there has
ports rose, and for 16 years prior
war
the
during
in
a
a
doub¬
rapid
mechanization
of
principal
advantage of farm mechanization
has been increased production per
worker rather than per acre, the
use
Although
'
the
of tractors has minimized the
Merrill
Lynch, Pierce, FenBeane, who will discuss
&
ner
"The
Overall
Stock
and
with.,the
for
meat
than
more
Picture
Commodity
country
of
Trade and
packing
35
years
in Canada.
and
member
of
the
Live
Markets."
industry
in this
He
is
a
Chicago Board of
serves
on
its Provision
Committee.
New York Stock Exchange
Weekly Firm Changes
The New York Stock
Exchange
has announced the following firm
changes:
James
as
Interest
McKeon
Taylor & Co. will be
B.
dissolved
in
of Nov. 30.
of
the
Chas.
late
W.
Co. ceased Nov. 10.
John
J.
Scranton &
30
COMMERCIAL
THE
(2090)
FINANCIAL
&
CHRONICLE
penalties. The present
acted their
Fort Knox Gold Not Worthless
(Continued from
Knox
served
other
no
2)
page
purpose
this it would justify
than
itself a
However, it is
also a basic limiting factor in the
expansion of credit by the Federal
thousand
Reserve
*
system for Great Britain,
gold was put into an equalization
or stabilization fund
to keep the
i
fold.
banks.
ency
tary Fund.14 He takes the position,
possible
Britain
it
and give
success
any
Great
for
the domestic pound
any
to
with
sta¬
of Lord Keynes'
bility.
skepticism of gold he was never
able to get away from it, as a
is
It
ance.
still
of
one
the
great
symbols of stability in the econ¬
omy."to
In
spite
of
source
exists
the
Hitler had, prior to World War II,
Knox
the
of
German
far
"how
that
fear
learning
people
they had
from a
come
gold-based
currency."
Unques¬
tionably the removal of the legal
behind
from
reserves
mone¬
our
tary and financial structure would
"shake" and even destroy public
confidence
probably
as
other
no
public act could do. The New Deal
dared
never
violate
to
these
re¬
Since the American dollar is the
since it is today
the international
confidence
They
gone
no
was
trying,to
use
gold
by
trade
international
on
carry
rules, because the United
went
off
with
all
the
standard
Bevin has sug¬
V-E day that the
Mr.
However,
since
gested
the
in
loss
a
of
In
currencies—it
consider
should
States
Bevin's sug¬
Lawrence Fertig,
discussing
Mr.
gestions,
in
wrote
Mr.
the
York
New
"World-
Telegram" of Sept. 15, 1947, "Mr.
Bevin was wrong in saying that
its im¬
portance to the American public.
It logically follows that this gold
gold is* doing nothing.
It is
doing plenty, acting as a founda¬
tion for the strongest currency of
beyond
foundation
the
whatever
for
confidence there is in the'curren¬
of
cies
world.
the
It
measures
their
purchasing power, the ex¬
tent of their depreciation, their
strength and their weaknesses, the
The world has not gotten away
of
It is still the "arbiter
destiny."
<
Every
currency
is
quoted in terms of the American
dollar—in
of
of
terms
13.714
"buried"
gold
pure
grains
at
Fort
In
i
discussion of the dollar and
a
the pound,
Professor R. G. Hawadmitted
in
the
London
trey
"Times"
June
11,
that
1948,
is linked to the
pound
V—a .link that he wishes to sever
the
to
to
that inflation
fact
the United
mitted
if the
England.
On
the other
out that
pound were no longer sta¬
bilized
of the
in terms
dollar
fall
in
is being trans¬
States
it must be pointed
hand
address
an
Political
at
in
value.
This
would cause American exporters
to raise prices accordingly, there¬
by making higher prices in Eng¬
land inevitable to
greater
an even
Academy
1946,
7,
stated that the
Gutt
gold standard is out of date and
cannot function properly.
"The
gold standard was funda¬
a means of securing a
common
international
monetary
mentally
the
more
rigid
present industrial
gold standard can
With
structure of the
the
economy,
longer perform this function."
no
statement
This
from
this
dis¬
tinguished international authority
ignores the fact that the dollar is
the
international monetary unit
June
011
ficials
who
insight into realities
evidenced
by Dr. J.
van
Editor of an Amsterdam
paper,
who wrote on April 10,
1947, "Although many believed in
was
Galen,
dethronement
a
of
gold,
it
ap¬
the
stated
Haney
have
—mistakes that would
be obvious
in time to be dealt with construc¬
fThe planners do not want their
mistakes made obvious.
monetary system that
their mistakes promptly
accurately.
they
out,
"rigid"
They do
As Halm
object
points
to
gold as too
standard.15 It limits their
a
ambitions and keeps the spotlight
their manipulations. It is the
upon
public's
measuring
no
failures.
and
success
their
It permits
rod
of
That is why critics of
gold standard wish to destroy
public's confidence in gold.
escape.
the
the
Planners
and
Keynesian econo¬
mists find it an insuperable ob¬
stacle to tneir plans for a managed
mise.
tion
For, under existing legisla¬
we
fits
a
denied the full bene¬
are
of
gold
a
available only
standard. Gold is
for two purposes—
foreign exchange
(export)
and
legitimate industrial and commer¬
cial uses. The Treasury maintains
a rigid and strict monopoly.
Title
to the gold at Fort Knox is with
the
the gold
Treasury,/ although
certificates certify that it is a
behind
certificates
these
the
are
Federal Reserve
banks;
the
of
property
an
obvious
conflict of ownership.
Foreigners
gold from the Treas¬
ury but an American citizen can¬
not do so except for the limited
can
secure
The
author
>
Pro-
a
standard of value, for the Ameri¬
can
dollar is by law 13.714 grains
Chamber
1947:
-
of ppre
and
gold
modern
gold. This being true the
at Fort Knox has inestim¬
able value hot only for the Ameri¬
people, but also for the Brit¬
ish, and for the peoples of the
can
nondommunistic
countries
of
the
world.
Professor Hart admits that many
economists regard gold-"as much
fundamental
more
to
the
mone¬
tary structure"
than he does. He
explains his rather skeptical posi¬
tion
gold as being due to the
strong influenbe of J. M. Keynes.11
on
Yet
'
gold
Lord
serving
as
or
a
very
international
tion—an
as
Keynes conceived
stabilization, fund
the
vital func¬
chest
wa.r(
to
used
be
international
basis for
of
fi¬
nancial transactions. At the World
Economic
proposed
ation
of
Conference
in
1933
he
simultaneous devalu¬
a
currencies
all
and
re¬
a
Under
10 Hjlrt,
11 Ibid.,
not
op.
cit.,
389
June
6,
human appeal
a
which
of
some
economists
and will
instead
but
have
our
as
#oid is concerned."16
E.
Spahr has
em¬
phasized the fact that the gold at
Fort
is
Knox
there
not
sterilized
since
claims
against almost
all of it.
It is deposited in Fort
Knox for safekeeping—primarily
because it has such great value.
"In its service as reserves, it ex¬
are
ercises
some
influence
certificates
Silver
by reveal¬
ing the reserve ratios and in
maintenance of confidence in
the
our
and other money for rea¬
probably only vaguely and
r 1 y
understood by most
people." 12
managed
cur-
p.
.
386.
f
1
.
re¬
bullion,
points out that all of our
is simply promises
Spahr
money
paper
which are "redeemed" by
giving in exchange other promises
to pay which, likewise, are irre¬
to
pay
is
rency
ating
that
true
our
present
cur¬
"system" can and is "gener¬
a
multitude of ills."
Our
Federal
authorities have
Reserve
inability and an un¬
willingness to, cope with these
ills. They have made many mis¬
exhibited
an
that
takes
would
possible—-or
have
been
have
least
at
obvious
ican
people—if
gold
standard
hence would
we
been
im¬
that
would
the
Amer¬
to
had had
since
a
1933-
true
and
rected.
A.
M.
Sakolski
12
"Monetary
No.
Notes,"
7,
No.
7.
Vol.
7,
are
*
becoming
after they have
now
fmd
icle," April 10, 1947.
15
1947.
Spahr, "Monetary
August,- 1947.
8,
Notes,"
which
not
of
still in circulation, does
are
speak
well
to, their
test
for the integrity
agencies or at¬
Federal
these
ability to act wisely
vast extension, of
a
gained,
from
and
the
responsibility
other
and
the
of
immunity
forever
pain function of money.
again should people suffer
foi-
want of money. The govern¬
ment could always provide Enough
of, it.
.
able
So
.
.
the
now
delusion
vicious
cycle of rising
for
wages
higher prices must be taken
and
into, account.
Inexcusable
agement of
mistakes,
misman¬
fiscal and
our
mone¬
tary affairs, a continuous stooping
to
political
to
expediency
in
day nowhere in the world
Gold
would
the
of it
use
as
evaluation
lems that confront
Professor
view
of
such
that
stated
after
true
the
Civil
World
has
War
War
and
debasement of the
the
gold
in
dollar
gold
a
convince
of
developments
In
standard
this country.
in
out that the Federal
reluctant
been
United
.
Treasury has
let gold leave
to
in
States
order
to
strengthen
the
dollar when it
"startling signs of weak¬
ness when measured against gold
showed
in various
V-J day.
The
foreign markets" since
V
;
*
■'
<
Dispatch" of June 20,1948, thought¬
fully notes that ".
high prices
.
is
.
decried and economic stability
are
advocated
by all hands, but
the
manipulation of. currencies,
which is at the bottom of all in¬
the
only
abroad, is
here and
both
flation,
ignored .
gold is
stable, basic, standard
to
use
value?
no
discussing the limitations to
status
under
the
present
of
gold, Professor
states,- "Our international
Spahr
gold-
bullion standard places some lim¬
its upon the volume of money and
deposits
this
that
country
would
issued
be
may
long
so
not 'as
these
but
great
under
a
in
reserve
as
respected,
be
.
as they
gold-coin
standard; under which system the
people
mist
draw
can
of
reserves
gold
and
treasury
Thurman
-
Sensing,
Director
and
the
down
the
!
banks."18'
of
Econo-/
Research
of
industrial agency in Nashville,
an
Tennessee, has recently misquoted
Professor Spahr as stating that
the;gold at Fort- Knox has no
value;
Instead, Professor Spahr
recognizes that this gold has in¬
dispensable
value.
maintains
It
the parity of our currency.
Professor
—desire
Fort
Spahr—and the
is
to
What
author
this
make
gold at
more
useful by
free gold market,
making this gold ."avail¬
Knox
setting
thereby
up
even
a
able to the American
If-this
people.
gold did not have value
it would not be necessary to guard
it
so
closely.
Nor 'would
Mr.
Bevin and others want
us
it
would
witlr
them.
American
Nor
people
dence they now
and
currency
not
the
as
monetary
What
we
of
structure.
is
of
to
do
the
restraints
Irr
upon
that
of
the
world.
to
make
to render
removing
have
been
it since 1933.:;
article,
an
Role
for
the
U
it possible for this gold
its maximum service by
placed
It
being used
value
systems
need
'the
do have in their
credit
standard
to share
have the confi¬
sterilized—it
.
.
want
longer necessary—
"buried" at Fort
gold
safeguards
is
Richmond, Virginia, "lames-
Dealers
public that the
no
the
Knox has
Indeed, Professor Anderson points
the
the
gold is
that
Mr.
Anderson
"after
First
the
after
mists, and New
us.
M.
B.
1933
any-
economic prob¬
the
of
since
in
is forbid¬
money
here and abroad is it any wonder
that planners, Keynesian econo¬
are
official?
;
.
make
*
In
limits
included
be
must
.
den."
are
Federal
our
...
exchange
sound; but although there is more'
gold than ever before in the world
and remain in power,
conquer
in¬
an
telligible price for anything.
Deeply the problem is moral.
ratios
for power itself, and an
unwillingness to face realities by
sequel.
a
Planned money has-oam its course
well and true that there is to¬
order
the. lust
incompar¬
to
comes
so
President
officials
Federal
in
was
the
Never
'
programs
power,
people gained, or thought they had
inr^iscai:/ and; /monetary,; affairs.
"The
Post
War
Gold,"
(1944), Dr. C. O.
Hardy, Vice-President of the Fed¬
international confi¬
eral Reserve Bank of Kansas City,
can
be established."
has written, "The gold; standard
Nashville, "Tennessee Ban¬
fits Vin/- badly with
the current
ned," for June 23, 1948, states:
trend of thought in the direction
"A peculiarity of the economic
of social control and government
times is the precedence given the
thinking and theories of those ab¬ planning. It reflects the attitudes ;
of ipeople who
believe that the
horring gold as a currency basis,
government is best which governs
They raise their hands in horror
least.
The fact that it requires the
when it is mentioned.
They con¬
minimum of managerial direction
cur
in the belief that the goldwas
a
vrrture in the days of its
buying program of the 'New Deal'
was
calculated
to
accomplish origin, but now that very Charac¬
which
upon
dence
The
Halm,
16
"Monetary
February,
something, but like all concerned
are
unable
is
"It
op.
Financial
ex-
p. 202.
Notes," Vol.
Chron¬
to
explain it.
significant that
the fol¬
this line of reasoning,
and the listening to these theorists,
have
of
progressively
monetary
worsened
situation
on
a
the
world
scale; and it should be significant
that
the
eras
of relative progress
economically have been those in
which World currency had a fixed
and
recognized standard.
If
cur¬
is to be stabilized; it must
a standard.
Why not?
Why not gold NOW?" • ...
rency
be
on
such
teristic has become
vice.
a
.
.1
The;
only merit of the gold standard is
that it reduces the need for credit
management."
"
1
X
y
r
It is interesting to note that our
planners
of
are.
the
leading
our
is
gold standard.
To them
"buried" gold at Fort Knox
sheer
waste—a
gated by
policy promul¬
"Simple Simons." • : y
Yet the character of the
opposiy
excellent testi¬
monial to the merits of a policy or
program!
' V
- \
tioii is
usually
an
'In
Garret wrote in
the
April,
1948, issue of "American Affairs"
that
the
planned
money.
New
;
Deal
money
substituted
for
a
a
sound
"What government gained
Vr\Y»tr
V/icJiil+nrl'
iVV"
n
/Heicfr/Siic
breakdown in the currency atid fi¬
nancial
system in
Islands in
1920;
the Philippine
y
Under Act No, 2776
•;
y
passed Aug.
cit.,;
1948.
8,
No.
2,
17 "Commercial
icle," May 29,
and
1947.
Financial
Chron¬
;;
critics-
the
The dissipation by the Philip¬
pojhting out that our govern-." pine- National Bank -of the cur¬
ment is at heart a counterfeiter,
rency reserves deposited in New
•
Garet
mistakes
These
obvious
have had to be cor¬
points out
Vol.
by the
Tieasury and the Federal Reserve
authorities in 1942, $358,000,000 of
lowing
deemable.
paper
o c
"national currency':
wgs
'the- economic dimension, and what
.
is greatly overval¬
exception, Professor
metal
but the
ued. With this
sons
p
13
,
■
be
can
deemed in silver dolars or
com¬
not endure."12
W.
that is irredeemable insofar
rency
It
Professor
international gold bul¬
a domestic cur¬
restricted
14 "Commercial
Keynes'
p.
Commerce,
pletely failed to understand. This
extraordinary value of gold has
been recognized in the statutes of
the International Monetary Fund,
The exile of gold in the 30's did
July,
\
of
power
Dr.
turn to gold.
International
the
"Gold has
standard currency"
"we
have a highly
"gold
lion standard and
Burgess stated in an
to
pegr-
issuance of $660,000,-
illegal
000 of
completely
stipulated above.
agrees ' with
purposes
Spahr that today we do not
R.
The
100%
have
W.
be
to
government's
1933, free gold markets
could
register promptly qualita¬
tive, deterioration in a country's
But these markets are
must
abolish this obstinate and currency.
so tied up with restrictions today
unwavering^ standard' of
value
uncertain
which shows up their shortcomi that they tell a very
ings and mistakes with relentless story."1,1
The ■ absence of free gold and
honesty and accuracy.
foreign exchange markets means
Since 1933 these critics of a gold
that most certainly we are not on
standard have forced a compro¬
totalitarian state.
The gold "buried" at Fort Knox
has no value!
It must go!
We
economy—for
fessr
Dr.
The
ging of its own bonds at par is; a
continuous
inflationary
factor.
a
gold had lost
address
said
interest
the
times
saved."
the
gold standard.
a
magic power and it is
therefore not surprising that, after
the war, a lively black market 111
»°ld developed. \
people, through a depreciation in
purchasing power, "many
their
years
ond World War that
structure depends directly
upon the conversion rote of $4.03
for the pound.
Thus the English
economy is based on gold as a
American
the
cost
sought to effect
Although England boasts of a
managed domestic currency, her
price
have
rates
.
peared during and after the Sec¬
of its
practical limit on currency in¬
Artificially low interest
no
flation.
economy
degree.
none
pos¬
the debt places'
monetize
to
during the! un\vfJ4'ihgness of the Federal au¬
thorities: .to effect .a drastic re¬
"treat money as a
trenchment
in
public
spending
mere
unit of account, subject to
while criticizing rising prices in¬
manipulation by the State." In his
dicate
clearly that political ex¬
opinion many of our ills are- due
is their master.
The
to mistakes in these manipulations pediency
14
past
which
keener
—
24, 1948, that Federal of¬
reserve
A
Lewis
managed
a
"buried"
at Fort Knox.
the
which is 13.714
gold by act of
pure
Professor
today and that the dollar is 13.714
grains of pure gold.
His state¬
ment in
no
way
subtracts from
or weakens the value of the gold
American
$4.03, the pound would
drastically
the
to
Science Nov.
Camiile
Mr.
the.
dollar at
the fixed rate of exchange of $4.03
due
In
.
policy.
Knox.
power
dollar,"
of
monetary authorities;
from gold.
in the world,"
for, "to some extent there is an
automatic
safeguard against in¬
flation in the law requiring a per¬
centage of gold backing for the
great
any
mistakes of their
wisdom and the
!
our
to
linked
standard
dollar,
of
cur¬
Congress.
and
Knox.
gold
magni¬
is
grains
measures
"buried" at Fort Knox is
times
American
a
world financial chaos. Thus
many
international
othCr
to
it is
unless
United
Fort
the function and value of the
fied
rencies
tively under
marbles.
ratio
fixed
a
redistribution of its gold buried at
contrary
means
all
in
international.
never
there
at
international
to
dollar
American
transaction—do¬
every
and
and at the same time keep
rency
it
not want
confidence
of
loss
—any
it measures their
with relentless ac¬
correctly in the opinion of the au¬
thor, that no nation can have an
independent domestic paper cur¬
the
value—the
of
standard—critics
the
plagues
quite as far as
the
ridiculous
Nazi propaganda
went which was to the effect that
have
world—
of the
of value
standard
means
in
curacy
Fort
currencies under pro¬
visions of the International Mone¬
as
shortcomings
States
serves.
unit
Kcynesians
economy.
"buried" at
and
the
as
confidence
British
the
gold
haunts
mestic
and
whatever
in
Thus,
the
value
of
standard
even
He discusses
internationally,
and
gold is the basis for fixing parities
it
psychological,
great deal of
gold is merely
such it, has a
economic import¬
abandoned
of national
he states, "although
as
was never
pound stable at $4.03 in terms of
the dollar.
Only in this way was
manage
Professor Hart admits this when
that the gold standard
it
mechanismr which' makes
sible
Thursday, November 18, 1948
y
"18
No.
Spahr, "Monetary Notes,"
December, 1947.
12.
Voll
7,
«
Volume
163
Number
;
4752
•
■
15,
1918,
Bank
■
000.
During
1920
transferred
were
utilized
in
the
business in
the
these
(Continued from page 5)
harder, to
The check
and
the
mood
Luthringer has pointed out
resulting breakdown has
erroneously been at¬
on
would
had
even
have
sound,
as
in
resulted
been
withdrawn
vaults
of
the.
held
and
Insular
"badly
a
credit
inflated
structure,
left
monetary
with
and
in, the currency reserve."
t
the currency
system."; The dollar
funds in New York—equivalent to
gold—seemed of no value—an idle
hoard.
;
•
There is
lesson here
a
-
'"'
we
cases
bankruptcy
called, managed
should
1930
in
Dr.
O.
W.
situation."20
Instead of
dissipating
our
"bur-
its
utility by the restoration of
gold to its proper place in. our
currency
system
whereby
ail
forms of money are freely inter¬
changeable at
for gold coin or for gold bars of
a weight and fineness Suitable for
exportation;without fees or pen¬
alties.-?.'
•
V.
sor
bf
month
one
with-Profes¬
Sprague when he states/"I do
observe that the acceptability
and
ago
year
ago
1,697,400 tons,
and
prewar
a
1,281,210 tons for the
average
week
year.
of
currencies."
disordered
with
'
LOADINGS
Loadings of
which
included
Association
cars
sented
of
95.5%
or
week
Professor B.
OFF
freight for the week ended Nov. 6, 1948.
Election Day, totaled 843,166 cars, according to the
American Railroads.
This was a decrease of 88,584
.revenue
below
decrease
of
1947, and
a
in
a
the
preceding week this
It
year,
also
repre¬
67,004 cars, or 7.4% under the corresponding
drop of 70,179 cars/ or 7.7% below the similar
"buried"
gold at Fort Knox is an asset of
the greatest
significance.
In discussing the subject, "Our
Irredeemable Paper Money," Con¬
H. Buffett
Howard
gressman
of
Nebraska stated,22 "The American
heritage of art honest money re¬
deemable in gold was not given to
this
generation
was
entrusted
Production of cars and trucks in the; United States and Canada
dropped to 116,468" units from 118,229 (revised) units the previous
week, according to "Ward's Automotive^ R^pbHs/';
The
wildcat
strike
of
UAW-CIO
workers:
at
Chrysler
was
custodians.
shall
be
Unless
recorded
-
Output in the similar period a year ago
92,980 units in the like period of T941.
,-This week's output consisted of 85,751
v
-
made
in
the
United
States
and
3,683
cars
19
the
110,663 units,
was
cars
and
and
1,882
anu
"The
Gold
Philippines."
Commercial
Nov.
11
Inc., reports.
of
1947
but it
one-third
as
and
industrial
failures dipped to 96 in the week
preceding week, Dun & Bradstreet,
This slightly exceeds the 847in the comparable week
from .104
was
in
by history
as
and
Exchange
(1934),
Standard
p.
liabilities
under
18 in 1947,
as
as
in the
large
same
as
in 1946.
Casualties
were
week of 1939.
$5,000 dropped to
;
'
.
>.
delivery reported strong.
Gold
V. No. 30.
Prices
\
/. ,?
; A';'
Some improvement was noted in the Boston wool market
were
..
the past week.
ing to
during
Small lots of greasy domestic combing wools, amount¬
There was also more activity
moderate weight, were sold.
a
in
sales of revalued medium grade CCC wools.
Foreign
kets continued active with prices strong to higher.
in
wool
mar¬
AFFECTED BY
fractional dip in retail dollar volume below the level of the
pre¬
a
Dollar volume was sustained at a level slightly above
the level of the corresponding week a
year ago, states Dun & Brad¬
were
sought in increased quantities.
in winter apparel increased
fractionally
women's~t>roadcloth and wool coats and covert removable
receiving favorable attention.
Women's worsted
and
with
lining coats
gabardine suits
and skirts were also
frequently requested. Sweaters and blouses were
increased demand. In men's apparel topcoats and overcoats con¬
tinued to be most popular, and in general, men's
furnishings sold well.
Children's apparel volume decreased slightly and consumer demand
for men's and women's shoes remained limited
during the week.
in
was
steady to somewhat higher than that
of the previous week.
The volume of meat
consumption continued to increase fraction¬
the country with low-priced meat cuts and
meat and butter substitutes in large demand. Fresh fruit and
vege¬
ally
in
parts
many
table-volume
of
decreased
slightly, while the volume of canned fruits
moderately. The consumer demand for poultry
vegetables
dairy products increased fractionally and bakers' products
17
from 21
and
*
year ago.
In
the
Pacific
compared
with
'
States, Middle Atlantic States and New England
a rise.
Almost no change from
the East North Central States showed
1947 level occurred in any
of the geographic regions.
FOOD PRICE INDEX HIGHER FOLLOWING 7-WEEK DECLINE
After
almost
two
months
of
steady decline, the Dun & Bradstreet wholesale food price index turned upward the
past week to
stand at $6.39 as of Nov. 9.
This was slightly higher than the 16-
higher prices for flour, wheat, corn,
rye, oats, beef, hams, butter, coffee, eggs, potatoes, rice and lambs.
On the down side were lard, bellies,
cocoa, peanuts and hogs.
were
Hardware and major appliance volume decreased a trifle
during the week while furniture and most small electrical appli-
GAINS
SLIGHTLY AFTER
Retail volume for the
last
week
The daily wholesale commodity price index, compiled
by Dun &
Bradstreet, Inc., edged slightly higher the past week following the
declining trend of previous weeks. The index figure for Nov. 9 stood
270.93, comparing with 269.45
corresponding date a year ago..
on
was
country in the period ended on Wednesday :
estimated to be from 1 to 5% above that of a
year ago.
;
Regional estimates exceeded those of a year ago by the fol¬
lowing percentages: New England, 3 to 7; East and Middle West,
1 to 5; South, 4 to 8; Northwest and
Southwest, 0 to 4; the Pacific
Coast region varied from
Nov, 1, and
with 291.81
on
the
2% below to 2% above
a year
ago.
As
slight declines in wholesale order volume in some areas were %
offset by advances in others, total order volume the
past week re¬
mained close to the high level of recent weeks.
/
It exceeded moderately the dollar volume of wholesale
orders in
the comparable week last year. Deliveries were
slightly more prompt
than in the previous week. Buyers attending
many wholesale mar¬
kets were almost twice as numerous as in the week
preceding and
exceeded the number reported in the like week
a
year
ago
by
about 30%.
\ '
4
Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended Nov.
6, 1948,
decreased by 8% from the like period of last year.
This
compared
with
an
increase
of
four
weeks
2%
recorded
in
the
preceding week. For the
6, 1948, sales increased by 4% and for the
to date by 7%.
ended
Nov.
Retail trade in New York last week was set back by unsea-
sonally warm and rainy weather notwithstanding heavy Armis¬
tice Day sales.
Estimates placed department store volume at
10% under that of
According
RECORDING NEW YEARLY LOW IN PREVIOUS WEEK
at
in increased demand.
gift items.
of
about
INDEX
*
con¬
tinued to sell well.
year
recorded the previous week and compared with
Aiding in the advance
rose
"
/
in
118.
Problem and
World Trade." (1940), pamphlet.
21 "Gold,
Stabilization
Funds
and
Prices." (1937), pamphlet.
22 "Human
Events,"" July '28,
1948.
Vol.
brisk with demand for prompt
the
three times
numerous
COMMODITY PRICE
American
gain of 87,000 bales over the Oct. 1 estimate. Business in
cotton cloth markets showed a substantial increase in
activity last week. Inquiries for certain print cloth constructions were
gray
Bedroom furniture, bedding and rugs were
frequently requested.
Heating equipment and automobile supplies sold well as did toys and
$6.89 On the comparable date a year ago.
we
in
a
carded
25,152 trucks
trucks made
BUSINESS FAILURES FALL SLIGHTLY
month low of $6.36
posterity?'
20 "The
bales,
in Canada.
It
faithless both to our ancestors
bur
cial crop
ances were
as
restored,
Government loan continued
volume, totaling 339,551 bales during the week ended
compared with 321,955 the week previous. The latest offi¬
report as of Nov. 1 placed the 1948 cotton crop at 15,166,000
as
and
hands
our
the
and
responsible for the week's decline.
squander.
to
to
.
aid
substantial
Retail food volume
M. An¬
our
foreign
-
The movement of cotton into
AUTO OUTPUT AFFECTED BY WILDCAT STRIKE AT CHRYSLER
Manufacturing and commercial service failures declined in the
derson
when
he
writes, ' "The
world is coming back to gold be¬ 'week, while other industry and trade group failures increased slightly.
Both retailing and wholesaling failures were
cause
the
world will riot trust
considerably above the
1947 level, but manufacturing failures were less numerous than a
anything else."21
true,
accelerated
Consumer interest
9.5% IN LATEST WEEK
-
,
being
of
UNSEASONABLE WEATHER
period in 1946.
;
." This
expectation
RETAIL AND WHOLESALE TRADE ADVERSELY
gold hag in the slightest degree .Failures.involving liabilities of $5,000 declined fractionally to 81,
during ■; these ' recent but were well above the 66- reported a year ago.
Failures with
And
the
shipments.
1,784,500 tons of
week ago, 1,786,-
97.0% of the old
or
diminished
years
and
street, Inc., in its current summary of trade. While unit volume in
some
areas dipped
below that of the comparable 1947 week, some
x\nded
The author agrees
not
a
level
firm.
1940, highest
CAR
fixed price either
a
indicated
15, 1947. - It was also 870,832,000 kwh. in excess of the output
reported for the corresponding period two years ago.
the critics would
should maximize
as
the
high
a
ceding week.
to do, we
us
at
items of seasonal merchandise
agers;-that they will find in pe¬
of stress that they are un¬
able to give their currencies just
the
desired
degree of elasticity
that they think desirable from the
point of view of their domestic
led" ' gold
ago
net rise of 28 points for the period.
Nov.
Sprague of Har¬
riods
have
month
a
Leading factors in the upturn were the general belief that the
next Congress would continue the farm price-support
program
7,253,000 kwh. above output in the preceding Week, and 486,427,000
kwh., or 9.6% higher than the figure reported for the week endec
.
.
quotation showing
of
additional
Unhersity has expressed it
thus. "T venture to suggest- that,
without gold as a foundation or as
a
cushion,. currencies cannot be
controlled by the currency man¬
„
the least decline.
Unseasonably rainy and mild weather in many parts of the coun¬
try during the period ended on Wednesday of last week was reflected
vard
"
A
99.1%.
and
gold.
M.
Livestock receipts of all kinds in the
holiday
substantially below the preceding week, with hogs showing
Despite the drop in marketings, hog prices declined
more than
$1 per hundredweight during the week, with lower pbrk
prices exerting a bearish influence. Lamb prices were firmer; steers
held about steady.
Cotton prices turned stronger last week with the New York
spot
week fell
V. The amount of electrical energy distributed by the electric light
power industry for'the week ended Nov. 13, was 5,570,767,000
kwh., according to the Edison Electric Institute.
This was an increase
of /every ,sosince
should listen to the critics of
' buried"
better demand from large users with prices
tending to
Stiffen in parts Of the list. Small buyers as a rule continued to hold
aloof. PMA buying of flour for export was in good volume.
HIGH IN WEEK ENDED NOV. 13
some
.
we
somewhat
Oct. 28
ELECTRIC OUTPUT AGAIN ESTABLISHES NEW ALL-TIME
proof* if such is necesary, of'the
dangers that we would encounter
our
tons
capacity
r
currency
furnish
money
was
1,791,700 tons
cannot
The virtual failure and in
it
ago
below the preceding week.
was
300
jAV--;
ignore.
picture. That is why oil companies will pay the
through the conversion route for more steel.
This week's operating rate is equivalent to
steel ingots and castings against
is evident' in the criticisms of the
'
0.4%
or
gold "buried" at Fort Knox. Why
bury These funds in New York?
Why not: nut them to use in the
j --i
Southwest .indicates that oil firms
fancy freight charges, the magazine concludes,
some
rate
Much of the-same attitude
Philippines?
and
.n
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 99.0% of capac¬
ity for the week beginning Nov. 15, 1948, a decrease of 0.4 point,
ignorance of
crass
keeps
or gray markets.
Many of their planned projects,
pipeline and expansion programs, are tied up in the steel
as
added
"indicative of the in¬
reserves was
demand
strong that spot prices range from $90 to $100 or more a ton.
By the same token free market plates, skelp and tube rounds for
pipe in the conversion market command high prices—to which is
The dissipation of the currency
efficiency and
Export business in wheat cohtinued in gobd volume. Cash corn
showed strength despite large receipts during the week.
Shipping de¬
mand for the yellow cereal was steady and some sizable
export ship¬
ments were reported. The domestic flour market was featured
by a
so
a
hopelessly inadequate dollar bal¬
ance
Exports have been less than
said/ according to this trade paper, that
ingots would be a drug on the market, but ingots are not now a
drug on. any market—if they are good quality and the right sizes for
big conversion jobs. Prices for ingots in the free market are strong—
the
were
home
the Midwest
necessary to go
Six months
Treasury.
result the Islands
a
with
irv
as
country.
firms, "The Iron Age" points out. :;,v.r.
procurement
Philip¬
should have
which
money
that
only partly right.
much steel as possible
far from satisfied with the amount of steel they are getting from
such
paying
out into circulation in the
pines
see
been
mills, conversion
banking point of view" since these
investments
users
expected—but
News from
possible from the
as
to
in this
.
,
weaker tone at the close.
been
oc¬
are
been
.
change in
Actual coffee prices showed marked
strength at the week-end,
reflecting limited offerings of quality grades from primary markets
and fears of a longshoremen's strike. The butter market was
irregu¬
lar. Under increased speculative buying, prices advanced
4V2 cents
per pound over the
recent low point but developed a somewhat
investments
the
any
automobile
invested unwisely.19
breakdown
curred
done
have
dema.nd
narrow
going at top speed.
Yet, with more steel being made and shipped now than ever before,
gray markets flourish
and conversion deals are
increasing with
tough competition in these deals between the oil companies and
had
its currency reserve
were
steel
been
has
up
went to domestic
tributed to the fact that the pesos
which, the Bank received against
"The
hold
Everything
the
deposits
•
,
by "The Iron Age" editors fails to find
of
to
fairly
leading grains was curtailed by the holiday
both the futures and cash markets moved
limits.
Was stimulated by a bullish interpretation to last
Tuesday's election results, and prices for leadihg grains recorded
moderate net gairts for thfe wfcek.
steady
a
-
sometimes
drafts sold
that all along there has been
be
may
steel-hungry customers in the East, the Midwest, in
Detroit or at the byways and highways of the country.
The flow
of. steel orders is wide, strong and appears never-ending.
Those who said that the Marshall Plan and other exports would
regular course of
making of loans
continue
G. F.
It
get.
31
Demand
growth in normal steel demand, the, paper adds.
funds
Manila
to
(2091)
Volume of trading in
week and prices in
within
in the .islands.
if
CHRONICLE
last
and advances to various borrowers
and
FINANCIAL
was
deposited in the Fund and at the
end of 1919 it contained $38,000,-
"As
&
the Philippine National
required to establish the
Currency Reserve Fund.
By the
ehd vf 19x3. $39,000,000 had been
that
COMMERCIAL
THE
-
-
to
the
a year ago.
Federal
Reserve
.
'
Board's
index, department
store sales in New York City for the weekly period to Nov.
6, 1948,
declined by 3% from the same period last year.
In the preceding
week an increase of 7% was registered over the similar week of
1947.
For the four weeks ended Nov. 6, 1948, an advance of 8% is recorded
over
that
of
last year
and for the year to date, volume in¬
creased
by 5%.
.
32
(2092)
THE
/ »V>
COMMERCIAL
ond
Should Government Bonds Be
(Continued from first page)
cess
of
a
No one denies
needs,
our
i
System, the Advisory Council and
Secretary of the Treasury,
net addition of Federal Re¬
the
serve
bank
holdings
bonds
builds
of govern¬
bank re¬
should manage our Central banks
ment
the
way
money
Nevertheless, for reasons
supply.
which
to
adds
and
serves
up
Federal
the
Reserve
feels '
compelling, it continues to support the government bond market and, in particular, the longterni bonds
little
a
above par.
While I do not want to bore you
the
and
Federal
that
in
Debt
such
individual
the
could not, if it wanted to,
a
bank
pursue
credit policy detrimental to the
a
public interest without doing real
harm to itself. That is what our
banking authorities were established for.
They cannot dodge
their responsibility by exhorting
figures, the immensity of i hanks and insurance companies to
this problem is illustrated by the! pursue credit policies detrimental
fact
that
during the past two jto their own interests.
I do not
weeks the Federal Reserve banks have much respect for the sowith
_
have purchased almost a billion of
these bonds. And,since they start-
Cd; their supports tittle less than
bought over
,$11 billion worth.
Recently the
selling has shown no signs of de¬
clining.
No one apparently has
"any idea when it will.
And if
bank reserves are increased again,
you may be certain that the sell¬
year ago; they. have
a
ing will also increase.
deal of evidence
that our banking authorities are
not only showing confused think¬
ing on this problem but that they
are pursuing, conflicting practices.
Since mid-1947 they have wanted
to restrict the expansion of bank
credit
and
have
taken various
steps looking toward this end.
In
spite of all the talk about the
necessity of qualitative restric¬
tions of bank credit through con¬
Regulation W rather
restriction
quantitative
a
through permitting interest rates
to
last
apparently realize
rise,- they
at
that
difficult if not
it is
impossible, in practice, to restrict
the
expansion
of bank
credit
without letting interest rates rise.
to the
the
the interest rates rise
when
But
extent that they endanger
present prices of government
bonds, the Federal Reserve seems
to feel that it has a commitment
maintain
the
may.
,
can
.
_
Federal
The
come
follows:
It
bank credit
/
,-y
to
of
what
,
Reserve's position
somewhat
summarized
be
prices
present
bonds,
government
Federal
Reserve
that it had
Previous
to
Federal
the
to believe
came
duty to support gov¬
at present levels.
of
its
II
War
World
Reserve
one
was
a
About
how
bonds
ernment
that
consider
now
us
never
the
thought
legitimate activi¬
to maintain the price of
bonds at any fixed
whatsoever.
It
actually
so stated in its 1939 report. It was
in order to aid in financing the
war that it turned its primary at¬
tention to the support of govern¬
ment securities.
After fixing the
government
Conflicting Practices
trols such as
How Support Policy Came
ties
There is a good
than
«aHed '^Open-Mouth" method of
credit control.
Let
as
would like to have
expansion stopped. It
figure
pattern of- interest rates i'rom
of
1%
short bills to 2 Vz %
on
%
on
long-term bonds, the Federal Re¬
serve banks themselves purchased
sufficient
create
to
reserves
interest
government securities
member bank
so
that this pattern of
enough
rates
was
maintained
In fact, dur¬
throughout the war.
ing the war and in spite of the
huge
War
loans, the
problem
seemed
to be
to keep
interest
rates from going down rather than
up, so ample and
Federal Reserve
ber bank
meant
one
that the
CHRONICLE
Federal
abundant did the
mem¬
circles of
ment
sion
and
a
large
a
business
volume
reces¬
of
un¬
employment. Such a situation, of
course, does not call for a con¬
traction of bank credit but just"
the reverse, and this may be one
of the reasons why little, if any,
attention was paid to the problem
of bank credit expansion during
the
1946.
In any event, we
know that during this year bank
credit expanded atva phenomenal
rate.
In fact, it is almost unbe¬
year
lievable
the
but
rate
two-
was
thirds of the expansion that took
place during an average war year.
Bank reserves during 1946 were
likewise
there
abundant
so
was
problem of maintaining the
prices of government bonds. In
fact, the.long-term eligibles.sold
well above par.
This was the pe¬
riod when the Treasury was actu¬
no
ally
refunding
short-term
maturing
bonds
certificates
and
refusing to raise the
so
could
Reserve, Government securities in
the shape of bills yielding only %
assets into
higher yielding securi¬
ties, particularly the longest term
bonds which the Treasury per¬
.
'
is
both.
I
"
""
'
'
am'inclined
'
to
'
~
•"
think
that it is neither—that the cause
is to be found in
some
fundament¬
economic forces at work.
al
But
ernments at the moment—and use
the proceeds to make other types
of private investments.
It states,
and
states
"that
correctly,
this,
reasonably certain that in our
competitive unit banking system,
matter who* sells the
with such free
access
to the funds
of the Federal Reserve offered at
The
Rise
credit
in
Interest Rates
toward restricting
expansion plus, the strong,
steps
such ridiculously low rates as % of demand for investment funds to
finance the expansion and equip¬
1%, that the banks would shift out
ment of business led to a rise in
of this low rate paper into higher
com¬
interest yielding assets whenever the interest rates on other types
of
securities
than
government
the occasion permitted.
The ex¬
practice tends to be inflationary,
no
matter
who
carries it on,
whether
panies
„
insurance
individuals.
banks,
or
Here, I wish to make it clear tent
to
which
the
long-term
am not going to take any
eligible 2V2s of 1967-72 rose in
part in that unfortunate contro¬
price after the war showed the
versy about whether the lending
pressure of this force.
I believe
policies pursued by the banks or that
they went up to 109.
the insurance companies are the
more
inflationary.
That
con¬
Federal Reserve's Alternatives
troversy cpnfuses and misses the
When the war was over, the
real point at issue.
The question Federal Reserve was confronted
before us is the proper conduct
with
two
alternatives—(1) At¬
of our central banks which estab¬
tempt to regain control of the ex¬
lish the over-all credit environ¬
pansion of bank credit through
ment within which each bank and
restricting the ease with which
.
that I
credit
institution
its business.
must
Under
our
conduct
free com¬
petitive system it is too much to
expect the management of any
one
bank
do
other
or
insurance company to
than
institution
in
manage
what
it
will be the
best
institution.
Our duly
its
own
considers
interests of that
constituted
could
build
up
their reserves; or
support
on
the
(2) Continue to
interest rate curve
which the
war
From the outset
serve
saw
was
financed.
the Federal Re¬
that to
adopt the first
alternative might make it impos¬
sible to support the government
bond
banking authorities, the Board of
we
Governors .of the Federal Reserve
stood
banks
member
prices at
par.
may assume
And I think
that they .under¬
fully that to adopt the-sec¬
The
bonds.
for
demand
capital
higher price for it. : Do not
will
rates
terest
demand
not
the
restrict
for capital.
this
.
much
worse.
A year ago
the President of
that life in¬ your organization put on an ex¬
surance
companies
as
well
as cellent campaign to restrict-sobanks are selling some of their called
inflationary bank loans.
government-bonds because they Recently Secretary of the Treas¬
need the funds to make loans for
ury Snyder has requested the life
other purposes, which loans yield insurance companies not to,make
them a higher rate of interest than
any loans which they deem infla¬
do the government securities they
tionary.
But this is a situation
sell.
Let us be open, frank and that cannot be handled in the final
truthful about the situation. I will analysis by an individual bank or
speak primarily for a life insur¬ by an individual life insurance
ance company because it is a life
company.
Imagine the criticism
insurance portfolio that I manage, the
life
insurance
companies
although I am also a member of would get if we refused to make
the
executive
committee
of
a
mortgage loans because we stated
commercial bank and in a posi¬ that we did not have
any funds to
tion, I believe, to understand the make them. Recently I spoke on
motives which have led bankers a program before a convention*
I hazard the guess
likewise to sell
some
of their gov¬
ernment bonds.
where
a
Senator
The simple fact
is that life in¬
surance companies have sold their
government bonds during the past
But by mid-1947 prices were
year to get the funds in order to
rising so rapidly that some positive make mortgage loans or to buy
steps were at last taken to re¬ the bonds of public utility com¬
strain the expansion of money and
panies, railroad or other industries
credit.
The Treasury in its pro¬ that need capital to expand their
gram of debt retirement paid off plant
and equipment. By and
securities held by the Federal Re¬ large, the life insurance companies
serve banks and also permitted an
have not sold the bonds for specu¬
These
the
let anyone tell you that rising in¬
It is beside
bonds, if
paper to explain how dear
the Federal buys them, member money always has done its work
bank reserves are increased and in this regard but history shows it
the inflation potential made that always has.
no
mitted them to buy.
It was obvi¬
apparently would not object to
having interest rates on private ous, therefore, to any competent
student of the
banking system
debts increased, if necessary, for
this purpose.
But it is unwill¬ right from the start of this policy
that the decision to support gov¬
ing that such an increase should
on lative purposes nor have they con¬
ernment securities at fixed prices upward adjustment of rates
make the government bonds de¬
short term Government securities. sciously
and
knowingly
made
would result in the Federal Re¬
cline in value below present lev¬
The rediscount rate of the Federal loans to aid in speculative activ¬
serve
losing all control of the
els.
Therefore, it is calling upon
Reserve banks was .increased. And ities that are inflationary.
I also
money market, because so long as
banks, insurance companies, and
likewise there was an increase in believe that there is little reason
the member banks had govern¬
other
holders
of
government
reserve
requirements on demand for thinking that the banks have
ment securities, they could build
bonds not to sell them to the
deposits of the member banks in not followed a similar line of con¬
Federal Reserve—practically the up their reserves to any level they New York
City and Chicago.
duct in this connection.
desired.
Moreover, One could be
only purchaser of long-term gov¬
•
•
have, supported
'
stubbornly
centive to do this and shift their
banks
Serve
.
long as member short-term interest rate.
Rumors
sell, to the Federal were
actually circulated that there
were those in the Treasury who
wanted the long term rate to be
of 1 % and thereby build up their
forced down to 2 or at least 2!/4%
reserves, there was always an in¬
at this time.
Obviously
banks
levels; Since then the Federal Re-
.
into
maintain
reserves.
Thursday, November. 10. 1948
capacity,' when there are no men,
the unemployed, when commodities
government, bond market at these are scarce to such an extent that
pansion of bank credit. In an at¬ prices until to date they have ac¬ they are hampering productive ef¬
tempt to avoid either horn of this cumulated some 11 billion, 137 mil¬ ficiency, in such a situation to add
dollars
of
United
States to current savings by an expansion
dilemma,
the
Federal
Reserve lion
made a demand for what it called Treasury
bonds.
Eight
billion, of bank credit only leads to in¬
qualitative restrictions on bank seven hundred seventy-four mil¬ flation and rising prices.
This
credit.
In
case
the
necessity lion dollars of these at the close situation hasbeen apparent in
of October were in issues having many lines of industry, during the
arose, it did not want to be com¬
pelled
to
restrict
bank
credit maturities longer than five years. past two years and particularly in
quantitatively by permitting the To date the selling of these bonds | the housing industry. An attempt
interest rate to rise but rather it continues and the Federal is ap
was made to put more money into
wanted to be. given the power in parently accumulating them at an
housing than - there was building
essence
to say
who should get increasing rate. The third largest materials to build houses or labor¬
credit and who should not.
It
weekly increase for the year took ers to erect them.
This attempt
hoped to be given the power to place at the close of October when has been one, of the vital factors
prevent undue credit expansion the Federal Reserve bank holdings in pushing upward the prices of
by continuation of such restric¬ were expanded by over one-half residential real estate.
tions as that provided in Regula¬ billion dollars.
In a free economy there is no
tion W, loans on stock market col¬
other way to cut down an excess
lateral and the establishment of
Why Private Holders Sell
demand for capital except by rais¬
special reserves in the shape of
Let us now consider why these
ing its price—the interest rate. Soshort-term government securities. bonds are
being sold by private called qualitative controls over
Although financing the war had holders and then why the Federal credit simply puts into the hands
increased bur total money supply thinks its has to buy them at the of some government board the de¬
in the shape of bank deposits and present peg pricfes.
cision as to who is to have the
Here I want to reiterate that I loanable funds and takes that de¬
currency in circulation by about
300%, and although the potential am not going to get into any dis¬ cision away from the market.
If
inflation in this huge money sup¬
cussion as to whether the member the interest rate is permitted to
ply was recognized, for a time in banks are * responsible for this go up, the market will decide who
1945 and early in 1946 there was situation or whether it is life in¬ is to
get the available capital by
a
general expectation in govern¬ surance companies or whether it restricting it to those who can pay
Reserve would have little, or no
control whatsoever over the ex¬
Supported at Present Prices?
that
FINANCIAL
&
well known United States
also
was
and where this
effect
if
that
companies
did
on
the program,
stated in
Senator
the
life
insurance
become
not
even
liberal than
they now were
in the making of residential loans,
the government might have to go
into this lending field itself.
more
What else
is
a
can we
do when there
legitimate demand for pri¬
vate loans in excess of our current
income
except to sell some of our
government bonds.
We would be
criticized much worse if we turned
the
ness
loan? down. When total busi¬
investment exceeds total
sav¬
ings, the over-all economic situa¬
tion is
tion
inflationary.
of the Federal
It is the func¬
Reserve
thorities to correct such
a
au¬
situa¬
tion
through permitting interest
They should not at¬
tempt to thwart the working of
rates is to be found in the fact that economic-forces through manipu¬
business investment has been go¬ lating our central banks and then
upon
individual
member
ing on at a rate in excess of total call
savings. To make up this gap be¬ banks and individual life insur¬
tween savings and business invest¬ ance companies to. remedy a situa¬
ment of all kinds, bank credit has tion that they
are eneou ragjng.
The bottom
cause
for the infla
tion
during the past two years as
well as for the rise in interest
rates to rise.
-
•
Let me
repeat,1 the over-aU econ¬
today fpr gome
work in this field'.
Equilibrium reduction in the expansion • of
can only be restored either by in¬
business investment so that sav¬
highest in the country's history. creasing our savings or decreasing ings and investment can agjain be
Such a situation inevitably leads the demand for
brought into equilibrium, and to
capital.
to rising interest rates.
The result
bring about that situation rising
was
that beginning late
Danger of Current Expanding
interest rates are needed.
in the
Nojt only
Bank Credit
year, the holders of government
rising interest rates on short term
bonds began to sell them in order
Bank credit is a dangerous sub¬ government paper but alsp rising
to reinvest their funds in pther stitute for a
scarcity of capital in interest rates on long term bonds
types of assets. At the then prices a period such as this. No doubt in and real estate mortgages,
there
were
no
buyers for the a period of depression when there
The Federal Reserve authorities
during 1947 not only for bank
loans but in the shape of stocks,
bonds
and
mortgages
was
the
bonds
made
and
the
the
stand under the
ernment
Federal
Reserve
decision to
momentous
market for gov¬
securities
as
war
and
approximatelytheir
to
-
on a large scale.
The
supply and demand is at
law
of
is
large number of unemployed
commodities are abundant
a
when
and when the economy
omic situation calls
frankly admit that
so long as they
support the present pegs for gov¬
ernment
bonds
they have lost
controjl of the money market.
Moreover, they honestly state, to
the extent that their purchases of
long term government bonds ex¬
ceed, the sales of their short terni
is not run¬
ning at full capacity, bank credit
can be substituted for savings with
little danger.
It. tends to add to
the total money supply, increases
demand for goods and has a ten¬
dency, other things being equal ones the net effect of their oper¬
to
step up. production, increase ation is. to increase the money
output and not disturb prices. But supply and add to the fires of in¬
.p r esen t when business is operating at full flation. r Let us, therefore, - turn
was
done
establish
their values at certain peg prices.
The selling, which began in vol¬
ume
in November, increased in
December and you will recall on
Christmas Eve of '1947 the "pegs"
were lowered
by the Federal to
during the.
used
been
.
Volume
168
&
COMMERCIAL
THE
Number 4752
FINANCIAL
CHRONICLE
(2093)
J
attention
our
which
sons
briefly to
the
rea¬
advancedfor
are
.
maintaining the' present
pegs
on
Fallacy of Cost of Federal Debt
....
Upon
is
always
examination
well
excess of $30 billion could
the
small
increase
stand
necessary to
interest
market rate of
indebtedness. More¬
pay a
its
on
long
the present hold¬
as
of these bonds feel certain that
ers
they
them
sell
can
will not
decline
95
to
shape of increased taxes. If it pays
the increase to
banks, you will re¬
turn at least 38% of it to
the gov¬
ernment in your
and then after
corporation taxes,
you
pay
out what
is left in dividends to
your stock-
holders^tbh^tfe^verage
they will
another 38'%" of the dividends
pay
in
...their,, personal income taxes.
Obviously, ;the ' government deb.t
.
should
be
not
managed
solely to
It
reduce its cost to the:
Treasury.
should be managed in such a
way
as
to
do
the
least
harm
whole economy and
to
the
its over-all
so
burden,
everything
taken
into
consideration, shall be as light as
possible.
•
,
'
,
bonds
companies
two
are
permitted
to go below par, this will encour¬
age individuals who own E, F and
G
bonds to cash them.
However,
it is difficult indeed to follow this
line of reasoning.
E, F and G
bonds
cannot
decline
in
price.
Their
the life
as
are
con¬
ad¬
be
can
reasons
vanced which will
clearly indicate
price of 95 or 96 would
materially dry up, if not absolute¬
ly stop, the selling by insurance
companies.
In the first place, the
the
that
insurance
companies
desire
take
to
Which
off
would
would
the
have
sold
were
to
loss
written
be
after the
these prices.
at
not
capital
immediately
bonds
Again
it has been felt for a long time by
many of the investment officers
the
of
that
life
insurance
companies
not
sufficient
there
spread
was
the
yield
between a
government bond and a corporate
bond having the same maturity.
on
But
life
3%
have
bond
had
been
offered
to
yield
approximately
would
not
porate
bond
3V2%.
A decline in the long-term
2 V2%
well
have
3%,
they
bought the
at
yield
a
of
cor¬
even
bonds
government
lead
is
in
makes for inflation in that it gen¬
erates purchasing power for con¬
might
companies to
insurance
To
bring this about, the
bonds
government
ered.
must
the
of
it
and
market
bonds
ernment
put
trial
free
really
another
the
demand
ment.
not
The
for
"pegs"
risk
of
without
if the
Federal
the
at
in addition to
in
at
market
bonds
in
large amounts only if
they became fearful of two things.
First, that the
could
government
not pay
them off when they ma¬
or, second, and I wish to
tured
this second reason, because
fearful that when the
stress
they
were
bonds
matured
were
paid
value.
in
the
would
Obviously,
made
War when
Liberty Bonds declined
in price, the insurance companies
lor a time put the largest per¬
centage
them
stop the upward move¬
prices would
cause
a
thinking individual to retain his
savings bonds. Is it not a fact that
the value of money has decreased
much since the bonds were
so
pur¬
chased
during the
that it has
war
their
of
rather
funds
new
than
in
high
in
grade
I
have
that have been made by our Fed¬
Reserve authorities on this
eral
subject, and running through all
these utterances,
there is basic
going to get their
terest:'
money when the bonds mature but
what they will worry about in a
the present upward
movement in prices is not
stopped,
is what the money will be worth
in purchasing power when
they
eventually get it.
who: is
the
years
shrewd
in¬
trader
and crafty in his dealings
bring in
his savings bonds, convert them
into cash to invest in other
types
of assets better able to withstand
the ravages of a rising price level
than the low-interest-bearing
gov¬
ernment
bond.
There is
no
rea¬
for thinking that the average
holder of a savings bond consid¬
ers
his bond any different from
son
his savings account.
would
not
country
.
Certainly
that
argue
we
will
we
withdraw
his
savings
deposit
merely because long term govern-;
ment bonds happen to decline four
or five points below
par.
Unpegging and Financial
Again,
below
if
you
par.
and
their long
amortized
law and
would
This
silly.
is
companies
course,
carry
hear
it
stated
institutions
a
not
values
that
might
government bonds
savings
as
sides that savings were accumulat¬
ing faster than there
of
commercial banks
banks
bonds
far
view,
fundamental
a
that
will
we
up,
In
this
to
save
ception of
a
its whole existence than it has
during the past two
We
plus
are
accumulation
sur¬
nation
With the world
world.
in
its present state of upheaval, the
chances of investing our. savings
abroad
in
the
large scale
so
are
situated
as
have
ahead
years
on
a
not good.
A nation
the United States
over
long
a
funds,
social
security
secured.
doubt
probably the sole
capital
in the
years.
period
and
huge
Beyond
they
a
better
are
were
in the late 20s
War
I.
ment
Consumer
credit
and
doubt high
no
standards
volume
not
as
but
of
as
or
relation
and
If
on
as
the
savings
seems
flush
of
once
over,
post
longer, the
secure.
war
which
with it the economic
are
ing for higher interest rates.
not
the
so
have
thing.
their
never
They
own
momentum
how
IVz %
with
bearing
will
an
need
war.
such
and vicious
spirals until something is done to
want
to
state
authorities
these
two
govern¬
that
rider
a
eral
has
be
found
supply.
done
stituting
in
our
in¬
ex¬
The Federal
good job in sub¬
a
short
term
government
long ones which
they have purchased, the question
arises, how long will they be able
to do so.
Moreover, it must not
be forgotten that by making this
exchange they
are
carrying
a
much
larger proportion of the
until
and
ing to hold it
vestment.
about
more
"
It is not in the in¬
higher interest rates
rates
that
a
or
freer
market is needed than
we
It is because that
freer money market is essential to
stopping
inflation.
It
should
be
remembered that the Federal Re¬
serve
System
was
not established
maintain the prices of govern¬
ment bonds. Nor was it established
to
to
keep the interest
the
When the
rate
government debt low.
on
Federal
Reserve System was
tablished, the Federal Reserve
thorities
minister
were
it
in
es¬
au¬
admonished to ad¬
the
interests
of
"agriculture, commerce and indus¬
try." In other words, in the inter¬
est of all the people.,
To
put the argument for main¬
taining present peg prices on gov¬
ernment bonds
on
any
other plane
the
will¬
permanent in¬
means
that
sav¬
that would normally
long term bonds should
increase
their
term
holdings
of^ long
than
decrease
rather
bonds
them.
(2) The demand for capital to
enlarge and equip our factories,
public utilities and railroads, and
to finance a large volume of busi¬
ness
on
the
current high
price
level
has
led
deal
a
in
are
institutions
bank
good
as
This
rest
invest in
has
a
comes: to
<
ings institutions, insurance com¬
panies and all types of financial
of
money
,
larger proportion of it is
a
cess
have at present.
ex¬
generate
I
to
for
they maintain for
interest
any
our
securities for the
a
bonds.
of
to,
of
imminent. While to date the Fed¬
United
long to main¬
handle
to
lower
done
tend
a
bond
Reserve
terest
for it is futile to
'r
cause
portfolios of those who
Fedef-al
the
inflationary movement
will stop itself. - Inflations in the
past
time
are
the
sum¬
is augmenting our money
supply and, therefore, making the
danger of further inflation more
of
rate
pure
years
of
out of control.
past
more
indebtedness piles up, the
is more
difficult.it will be to put on
take a year the brakes when it is
necessary.
of funds for And some
day it wiil be impera¬
pect
20
of
rate
to
be able to stop with not too much
tive to do
the
problem today is to stop an infla¬
tionary movement before it gets
are
expansion
forces mak¬
be
program
world.
the workings of money and credit
than we knew at that time.
Our
When the
business investment will relax and
the
is
money
know
a
may
pressure
cess
No
one
in his right mind
is
arguing for a repetition of what
took place in'1920-21.
All of us
will put on the brakes now,
there is yet time, we may
we
(1) The bottom
most
trying to ride two
horses, each going in opposite di¬
danger is in the trends. We
going in the wrong direction.
while
in
the
rections.
The
are
call
income
before the
may now
follows:
as
funded
of
instal¬
to
marized,
government's
made
have been recently
that they can stop the
present dangerous trends and con¬
tinue their present bond market
support.
They are in a position
they
inventories
Summary
My discussion
Under such conditions it
no
schemes
after World
loans,
govern¬
disaster later.
the
what
proposed
yet
of
than
according
in
trade
high
shadow
of
by the Reserve Banks
mar¬
It is very doubtful
indeed in spite of all the ingenious
unsatisfactory urban
situation, there is little
as
purchases
net
no
there, should
Government
which
in the reached dangerous
proportions. It
amount of additions to plant and
has been years since farm mort¬
equipment, and not merely consid¬
gage indebtedness was in better
ering savings as an increase in so- condition in
relation to long term
called liquid assets — money and
average farm income.
Bank loans,
bank deposits—and it is apparent
while they have had a phenomenal
that this nation never saved more
increase, on the average are well
in
be
conclusion,
ment
it
evidence of debts that have
the
has made this increase possible.
Everyone admits this trend must
be stopped, or we will face real
in the open
about
investment
is
know
an
real estate
be
problems if they want to abandon
present artificial
market
is still not out of
hand, far from it.
With the ex¬
far,
total
money
supply has
rising
rapidly
since
last
March, the increase in this period
being over $3 billion. The increase
been
make
the
good deal just the same.
While
have let the present situation
too
even
modification of
a
The:
we
go
entails
prices needs stopping and that our
present money supply is excessive.
less
continue
to'go much farther,
this
dogmatism in government debt in short term
handling this problem. The man¬ paper, just exactly the type of
agement technique called for is paper that ought not to be carried
one
of experimentation and trial. with a debt so large as ours. The
What we do know for certain is disturbing
effects
of
our
huge
that
the
upward
movement
of public debt will never be lessened
the
be
is,
Our capital markets are suffer¬
concerned,
tell you that others
ing today on the one hand from
majority of our long term the tremendous increase in the
government bonds.
They are notv money supply which took place
need
own
and
lets
savings
be
Reserve government bond support
maturity
demand
will
expansion
for
allowed
attractive
liquidity,
the
way
should
interest
plowing back of profits into in¬ of a
jar.
But the longer we fol¬
dustry by our large corporations, low the
present inflationary road,
certainly the long term growth of the
of
higher prices get, and the
required
so
outlets
for govern¬
Looking at capital
accumulation from
point
were
was
plant
doubt
is to
must
value
Federal support for
for consumer goods
begins to decline, it is not
long before the demand for plant
expansion
likewise
follows
the
demand
There
Likewise,
little
States
demand
for
i
as
is difficult to believe that
go
by
decline of a few points
even show
up in their
balance Sheets. > And
our¬
the
will
Our
tain its price near par.
When
something
correct the
present infla¬
tionary tendencies before they are
danger
debt
their
about
interest.
once
course.
that
to
flation
When the increase in the money
same
hope
if
real
a
economists
went
argument,
The
insurance
term
a
of time high interest rates.
With
the growth of insurance, pension
Restrictions
broke
passing into
capital
deficit nation?
Was it not only a
few years ago that we heard on all
cannot
financial
is
and that the need
a
of in¬
Why this fear? Are there
reasons for thinking that this
ment deficits?
dur¬
seen
rate
*
Already, I dare
ing the past three
dividual
market
have
many of you
say,
any
free
a
to
done
They will then sell at the lowest
possible rate of interest or what
Supply
the
Re¬
utterances
by them lead me
to believe that it is not too much
Real Danger
is
possible.
secure
/
v
cent
:
government
bonds
conjuring up
possibly might
what
authorities is fairly obvious.
possible
supply is once stopped and when
its velocity stops increasing, there
Banking and Currency Committee will be a marked
drop in the de¬
and practically all the addresses
mand for consumer goods.
When
fear of
year or two if
of
scare
That the present
value of the money will be when
the bonds havfe matured. In every
of
not
inflexible
inflationary
dangers
are
fully
comprehended
by
our
banking
breach
a
present
withdrawn, these dan¬
not sufficient to warrant
gers are
sell bonds
such
its
is
its continuance.
destroy the
one
in
gram
manner
private
government's
our
It is clear that the bond
support program hinders the Fedreral Reserve authorities in
doing
what they admittedly would like
in
be
to
a
:
market.
by
to pass.
come
read the testimony that
given before the Senate
has been
T]hese holders
are
images
us
chance
withdrawal
a
death
to
Free Bond Market?
a
E, F and G bonds.
they
selves
to
Let
pegs.
had
once
to
as
ketability and
Effects of Decreased Money
Why Fear
caused real losses to the holders of
know
the
has
itself
little
attempt
in
I
the
cheerfully surprised in the
place
adjust
way
How could
doubt
government bonds after the
our
of
stopping of the forces making for
inflation.
ment bonds
our
corporate bonds.
to
ment
they
money
have
any
stopping the further
We know,
least, that after the first World
a
government securities
small decline that would take
sale of these securities.
forms
problem—bond prices—the larger
problem is being neglected.
It should be crystal clear that
the present situation calls for a
to do in this connection.
Freely
admitting that there are
some
dangers if the bond support pro¬
attain¬
building
the credit of the Treasury is
destroying it. The way to get the
lowest possible interest rate on
can
buy additional government bonds
People would cash these
other
to confuse ^he issue.
danger today that in
paying too much attention to one
a
up
More¬
bonds.
be
ex¬
is
is
ernment bonds instead of
prices, it can just as
support
them
at
lower
My guess is that we would
easily
prices.
of
today
that this whole attempt of main¬
taining the present price of gov¬
present
all
credit
present free banking
The
support
prices for government bonds
over,
for
There
can¬
running
undue
this
There
the present bond support program.
invest¬
inflation.
in¬
a high
private
on
impossible
our
of faith?
support the pres¬
further
rate
in the future after
gov¬
Reserve
is
in
such
as
continue to
ent
business
Federal
restrict
to
bonds.
is.
Or to
where the
way,
time have
same
marketability of
error
for
at the
that
so
low
a
the government debt
on
interest
in
low¬
pletely from, supporting the mar¬
ket.
It should continue to provide
an
orderly market for government
bonds., But it is only by lowering
the pegs that we can find out by
process
terest rate
bonds
have
can
that
any
Congress
would break faith with the people
It is not necessary for the
Federal Reserve to withdraw com¬
where
Treasury
vestors it is profitable for them to
make the substitution. It seems in¬
,
the
the
conceivable
pegs on
be
this unpleasant medicine
long. The present attempt
peg government
continue when in the minds of in¬
of prices.
movement
to
investment their substitution will
goods without producing
such goods.
The need of the hour
certainly is to curtail our money
supply if we want to stop the up¬
prices are fixed in the re¬
demption
values
stated
in
the
_
tering
far too
than
,
have been trying to stop adminis¬
bonds
sumer
ward
,
system.
So long as there is a pos¬
sibility of substituting government
itself
in
\
.
Our Federal Reserve authorities
ment
equipment
and
progress
;
pansion
ex¬
market rate of interest is that will
real
a
bought cor¬
porate bonds when, if a govern¬
ment
plant
of
it
money.
debt
equate the supply of savings with
is
them
of
many
pansion
fact-of the
mere
In the past that some¬
thing has always had to be dearer
enough
expand their plant and equip¬
The
stop them.
and
demand
businesses
of
need
there
insurance
around
earn
kinds
all
companies to
on
their assets
because
for
.
Again, much is made of the fact
that if the marketable long term
government
insurance
far
so
insatiable
This
when
cerned,
government debt
will return to the
Treasury in the
to
selling might well take place; It,
est
the
avalanche
an
that
that could not be
demand
a
filled.
motivated
of course, is impossible to answer
this question for certain before it
has been tried but
on
permitted to
96
or
.for
up
place not only during the
during the depression of
the 30s.
In essence, the attempt
to spend the surplus money result¬
ed in
they
par,
make
to
construction
but
war
ment.
of
over, it must not be forgotten that
a
good deal of the increased inter¬
cost
at
dispose of them but that
if the price was once
in
deficit
argument that if the pegs
permitted to go oelow par tnai took
so
expansion
plant
the
this will lead to increased selling.
That
this
argument has very little validity.
A Federal budget that is now run¬
ning in
continue to date, and on the other
hand from the large demand for
billion have
50
over
and with some ups
been permitted to
war,
downs has
and
bonds
the
are
foremost
mentioned the need to keep down
the interest cost on the Federal
debt,
own,
during the
Of the 65 bil¬
that the
portfolios.
government
banks
of
Service
and
lion
maturities of less than five years.
Much has recently been made
government bonds.
First
in your
33
called
our
to
for
sums
in
ex¬
current
savings.
This
rapid expansion of
a
credit
as
substitute
a
for
savings and is in itself a mighty
force making for inflation.
Criti¬
cism
of
by government authorities
banks, life insurance companies,
other
and
financial
institutions-
for
selling government bonds and
reinvesting the proceeds there¬
from in private debt is unfair. It
is
an attempt on their part, con¬
sciously or not, to put a burden of
responsibility
tutions
upon
private insti¬
rightfully belongs
upon
which
them. For the banks and life
companies to effective¬
insurance
ly cooperate so as to conduct their
lending operations free from all
inflationary dangers would neces¬
sarily be acting in such close col¬
lusion
as
to make
them liable for
under the Sherman;
Anti-Trust Act.
Imagine the pub¬
prosecution
lic outcry
life
that would result if the
companies called a
insurance
meeting for the purpose of formu¬
lating a program not to make any
mortgage loans or bpy ahy
more
(Continued
on
page
34)
,
34
Goodbody Heads flss'n
Should Government Bonds Be
Of Stock Exch, Firms
Supported at Present Prices?
Harold
Goodbody & Co., New York City,
(Continued from page 33)
more
public
utility
bonds
their current cash income
unless
suf¬
was
was
dated and long term paper.
ficient for that purpose.
support government
means delving into the un¬
known, nevertheless, there is little
will
for
thinking
Federal Reserve
that
can
bonds
ernment
if
the
support govat
they
par,
the
bringing
true
The main
for dropping the pegs is to
the market to see just
out
where
free
a
market
is
for
our
bonds. My position
is
that that market, after a transition
has once
been
made
from
the
eral
market to
peg
Reserve
is
gram
bond
inflation
on
it
as
now
—
awarded
We
a
not
are
arguing for
pro¬
in
free
an
let
to
impossi¬
that is at all
economy
interest
rates
rise
on
private debt and keep them low
on
D.
Stout, partner Dom-
inick & Dominick, New York
City,
Stokes, Jr., partner
plenty of powers to and Walter W.
about under existing Stokes, Hoyt & Co., New York
laws ami that it can be done with¬ City,
were
elected First Viceout purling our credit institutions President, Second Vice-President,
this
into
and
strait-jacket or by rais¬
Treasurer, respectively.
Sidney • L.
(5) It must not be. forgotten that ing minimum banking reserves to
Parry,
Henry W;
banks cannot create capi* such an extent as to destory a Putnam and R. Michael Charters
government debt.
a
central
tal;
they
In
period
a
such
to
only
can
substitute
and bank credit for capital.
money
full
of
substitution
inflation.
employment
inevitably leads
To
attempt
to per¬
manently alter the structure of in¬
bank's earning power.
We doubt, were reappointed Executive ViceVice-President , and
however, if it can be done if our President,
authorities merely sit tight, buy Secretary, respectively.
all
The Board approved Mr. Goodthe
long
term
government
bonds at present
be
offered
levels which may
appointments of
body's
Standing
Committees for the ensuing year;
Chairman
of
which
are
as
them, and thereby try
the
technique to
capital de- follows: Banking Relations, Gard¬
mand-and-supply situation which ner D. Stout, Dominick & Domi¬
shifting the maturity of the gov¬
at the moment is calling for high¬ nick, New York.
ernment debt from long bonds to
er
interest rates to bring it into
Bond,
Leonard
D.
Newborg,
shorts only changes the ratio of balance.
Hallgarten & Co., New York.
rates
terest
by
technique
a
of
by
banking
central
alter
fundamental
a
Business
Michael
SEC Makes Permanent Use of Special
&
Office
W.
New
Co.
101.93%
at
interest.
The
/V
York.
Harold
L. Bache,
Bache & Co., New York.
f
.
.
Cutomers' Brokers, Maynard C.
July 19, 1948, the Securities and Exchange Commission pub¬
lished a proposed rule which would permit the use of a special form Ivison, Abbott, Proctor & Paine,
New York.
of prospectus in offerings of securities
by an issuer to its existing
Employee Relations, M. Donald
stockholders.
The Commission has now duly considered all com¬
Grant, Fahnestock & Co., New
ments and suggestions received i; ^
ber
connection with the proposed rule
has determined that the rule
spect to the offering price, under¬
writing discounts or commissions,
Should be adopted.
discounts
The Commis¬
sion finds that the rule
is appro¬
priate in the. public interest and
for the protection of
investors and
necessary to carry out the pro¬
is
commissions to deal¬
or
the
the
of
Act.
The
is
ing price.
New York.
This rule also requires
that the copy
adopted pursuant to the provisions
legend
that
the
statement should
not
be the sub¬
ticularly sections
10
1933,
par¬
19
and
(a)
thereof.
The
and
ject of
new
existing stockholders,
pros¬
a
8
contain
8
or
(b),
from
shares
of
stock
and
order
(d) or
consist of a copy of
the proposed prospectus meeting
the requirements of Rule
131, and
a document containing such addi¬
tional
information
that
both
to¬
gether contain all the information
required to be included in
pectus
for
registered
a
pros¬
securities,
provided
that the document in¬
the proposed form of
prospectus by reference, that both
corporates
sent to the stockholders of the
issuer,
sent
that the document is
and
or
given within 20 days after
the copy of
prospectus
the proposed form of
sent
was
rule is not
an
underwriter
or
of
a
statement
copy of
prospectus
such
given.
The
dealer.
The
text
the
of
manufactured for the company
Atlantic Steel Castings Co. at
the
of
rate
common
funds
derived
before
or
of the funds
struction
nent
required for the- con¬
acquisition of perma¬
or
improvements,
additions
and
extensions
company's
the
to
property
or
to
reimburse
its
treasury in part for expenditures
made for such purposes.
The
while
from
104.93%
prices
Company,
public utility operating wholly
within
the
of
State
Iowa, is
en¬
gaged in the purchase, production,
transmission^distribution and sale
of
electricity for.*light, heat
power.-.
and
of
As
July 31, 1948, it rendered elec¬
tric
service
tomers
29,472
about
to
and
79,857..cus¬
service
gas
to
as
a
an
The
the
The
Rule 131 and
ing
149,000
share
a
cluded
the
is
a
prospectus for regis¬
information
omission
of
be
or
substantially
except
information
for
with
in¬
prospectus for regis¬
a
form
proposed
(2)
a
the
Relations,
James
of
prospectus
cago.
whom
III,
The
Alex.
H.
Brown
&
GrisSons,
following were elected to
on the Board of Gov¬
membership
ernors
first
the
the
Davies
131,
by
to
is
subse¬
term:
&
Witter
&
Eugene
to
their
serve
New
Co., Los Angeles.
ett,
L,
second
Bache,
terms
are:
&
Co.,
Bache
York
City; F. Dewey Ever¬
Hornblower & Weeks, New'
York
Singer; Deane
days
given
of
the
given by the
stockholder
after the date
stockholder
a copy
shall
re¬
underwriter
not
which
sent
or
of the proposed form
prospectus.
the
was
on
within
However, this rule
apply
or
to
sales
dealer."
by
an
.
"
G.
H.
Walker
offering
M.
& Beqne,
Kidder & Co., Childress &•
Co., and Leedy,
Inc.,
man,
.
Merrill;
Co.,"
&
T
A.
in-
areas
_
Lynch, Pierce, Fenner
Wheeler & Alle*
in
participated
the
underwriting.
Commission has done
•
or
3)A
.
,
,
.
,
intends to do is in the
the additional legend in
benefit of investors.
:
City;
Joseph M. Scribner;
& Scribner, Pitts¬
burgh; Laurence P. Smith, Ben¬
nett, Smith & Co., Detroit; Walter
W. Stokes7 Jr., Stokes, Hoyt & Co.,
New York
City; Gardner D. Stout,
Dominick & Dominick, New York
City;
C. Newbold
Newbold's
Son
&
Taylor, W. H.
Co., Philadel¬
phia.
Messrs.
Amyas
Ames,
Kidder,
so
public
press
getting- these releases, which in
injurious enough, sometimesembellishes
that a respondent frequently finds his business.
are
views with
$
respondent's customers. The artfully trained
do plenty of damage be*
and briefed SEC investigators
fore, the matter gets to the
M.
Members of the Board reelected
quently sent or given, and (3) the
to
other
practically destroyed before the issues have approached ^
a hearing.
That constitutes so much additional damage,
|
for in many, if not most, instances proceedings for revocation of broker-dealer registration are based upon pre¬
vious SEC examination of books and records and inter* / |
release stage.
the fact that a respondent is ultimately
successful, there is no relief. There can be no redress,
no recoupment for such extensive damage.
•r
,
For all of
this, despite
Mejia,
document is sent
or
.
San Francisco;
James P. Nolan, Folger, Nolan &
given,
stockholder
document
the
content
Geddes, Clark, Dodge & Co., New
York
City;
Arthur
R;
Mejia,
Harold
tp
and
Florida.
shares-pf Continental
The
of the Association to serve
their
Dean
or
Tampa,' St.
The company serves
public interest.^ In some there is
substance that the action is for the
.
Benjamin
Taxation,
part of the document,
sent
at $27.15
thereafter
and
share.
(Continued from page
what
them
Regional Exchanges, Ralph W.
Davis, Paul H. Davis & Co., Chi¬
Co., Washington, D. C.; Walter S.
Robertson, Scott & Stringfellow,
Richmond; Phelps Witter, Dean
was
stock is subject to re*:
until Nov. 15 at $27.65
Administrative Juggernaut
F,
of the proposed form
a
copy
issuer
such
securities,
be
to
incorporated by reference into
in¬
cluded in
in
required
tered securities, provided that (1)
20
to
of
information
compliance with Rule
offer to
an
that both together contain all the
information
the pro-,
use
expansion.
Temporary Stay of
York.
New
document contain¬
a
additional
such
new
a
Radiant Glass Heating Corp. com¬
New-
Legislation, Frank C. Trubee,
Trubee, Collins & Co., Buf¬
wold,
in
substantially
required
by
requirements
prospectus
of
C.
Banking,
Baltimore.
the
meeting
the
information
securities
of
of
part
-
tus
pectus
that
Thomas
Taylor, W. H. Newbold's Son
Co., Philadelphia.
&
prospectus may consist of a copy
of the proposed form of prospec¬
issuer
tered
of
share, to yield
will
company
demption
Co.. announce
with
connection
in
The stock;*
Co.
a
oversubscribed, the un¬
was
bold
a
sell if the proposed form of pros¬
contains
sales
Sales
issuer to its existing stockholders,
regis¬
registration statement would
not in itself constitute
"In
for
$26.40
ceeds to finance
Radiant Glass Stock
&
is¬
$1.32
preferred stock of Penn
Petersburg
Hicks
new
a
derwriting managers reported.
about
Mercer Hicks Co. Offers
15
of 100,000 $25 par value
offered at
customers.
Mercer
Nov.
the market
dividend
It serves about 212 com-'
over 9,250 farms in
with electricity.
Coggeshall & Hicks placed
Co. and
munities and
this territory
Morgan Stanley &
cate headed by
5%
i
syndi-
banking
investment
An
insular Telephone
Service
Public
Iowa
a
•
sue
from 101.93% to 100%.
range
Peninsular Telephone
prices
to 100%
redemption
special
v
Sells 100,000 Shares
on
redemption
general
scaled
are
as
Stockholders.
to
Issuer
effec¬
a
becomes
giv¬
the proposed form
filed
431—Prospectus
week and
a
Morgan Stanley Group
company's
'
Investment
Public
by
units
of 500
109,866
operations^
will be used to provide a portion
Burns, Jr., Harris, Upham & Co.,
"Rule
by
the
falo.
is
rule
new
follows:
and made
sending
any person,
tration
tive,
or
applicable to sales by
Under Rule 131
ing to
Advisory,
Jr.,
(e) of the Act.
billing of more than $430,000,
heating systems are being
a
was
company's
from
the
from
sale
the
the
Lennon, Delafield & Delafield;
an
8
pectus may
are
Investment
a
proceeding
a
Sections
under
rule
provides that, in
sales of securities by an issuer to
its
Hans
A.
M. Loeb,
Rhoades & Co., New York.
F.
of the Securities Act of
\
Foreign
Business,
Widenmann, Carl
sion
prescribed
registration
rule
give the company
at
bonds
,
visions
sufficient nunr-l
a
units to
York.
amount of proceeds, commis¬
rates, call prices, dr other
matters dependent upon the offer¬
ers,
of
The
•
and
12 months
next
ac¬
firm
•
$125,000.
Distributors have
agreed tp purchase during the
first
and
total billing of mpre
a
than
& Beane,
Fenner
Commodity,
;
Procedure,
Merrill
On
'
hand have
McCarthy,.
Lynch,.1 Pierce,
Prospectus for Offerings to Stockholders
1978
those
Goodbody
P.
has
bring
is engaged in the
glass electric home
sysetms.
Units
already
The company
.
Harold
Gardner
serve
a
competi-- plans are under way to step, this
production up to 1,000 units per
tive bidding on a bid of 101.07999;
Net
proceeds,
together
with week..
deflation.^
We believe that the Federal Re¬
1,
crued
sudden
of the
We are
a
withdrawal
complete
Service
Public
danger is imminent. The situation
is obviously fraught with danger.
and
at
15
For¬
the stock was
price of $2 a
of
offering
sub¬
a
stock.
share.
mortgage bonds 314% Series due
To¬
has been.
ever
of the
block
heating
Nov.
in
company's
purchased
have
Nov.
the
sale of radiant
period of full employ¬
ment and scarce commodities, that
keen all in¬
terest rates low, for it is
ble
&
Co., New York City, were elected
serve
on
the 1948 Nominating
Iowa.
is just as
mar¬
support
program to
a
free
a
Maynard
Stillman,
Remick,
Halsey, Stuart & Co. Inc. of¬
fered pqbljcly Nov. 17 $3,000,000
bond support program.
only arguing for its modification sociation of Stock Exchange Firms
at the annual organization meet¬
ked will be at much higher levels to such an extent as will stop the
than our fearful banking authori* present
monetary
forces
from ing of the Board of Governors.
Russell E. Gardner, Jr., partner
ties would lead us to believe.
feeding further the fires of infla¬
(4) In the final anlysis, the Fed¬ tion without bringing about severe Reinholdt & Gardner, St. Louis-
present
mal
made
Iowa Pub. Serv. Bonds
only be done at the risk of
disturbing
the
price level and
day,
under par.
government
Thomas J. Hickey, Vilas &
Hickey, New York City; J. Gould
Halsey Stuart Offers
could
cannot support them likewise at a
feel,
stantial
old
few points
reason
Co., Richmond; Walter W. Cruttenden, Cruttenden & Co., Chi¬
value)
par
delivered and firm orders now op
ly, that if an attempt was made to
regulate the banking system in the
interest of low interest rates,' it
drop
a
bonds
reason
products
(no
of
Committee.
—
Federal
at which the
pegs
Reserve
&
stock
distributors
to
banking axiom that went
unchallenged for a century—name¬
in the
mon
(6) In conclusion, may I say that
(3) Freely admitting that
"
President of the As-
elected
of interest between short
the rate
Reabody & Co;> New. York City;
Wymond Cabell, Branch, Cabell
cago;
partner,
Goodbody,
P.
Thursday, November 13, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(2094)
:
.
J
given to the charges, only a!
attesting vindication.
be done about all this manifest injustice doing
Whereas wide
publicity
was
few bare lines Will be carried
What
can
irretrievable
wrong? How can the administrative juggernaut
or directed to adopt a more enlightened policy?
There is of course a legislative remedy. The Congress
can and should by an appropriate bill circumscribe the activities of these self-seeking publicity hunters. This could bp the
be
compelled
perfect mandate. Another method would be by adoption of;
an SEC rule urged upon it by the securities industry.
< .
Each
of
these
requires solidarity
among
dealers,
,
brokers and underwriters who should achieve unanimity
for the purpose
of investors.
in the public interest and for the benefit
*
It must be clear that
fear cannot do its
harried
profession subsisting on'
best for the public.
a
Volume
Number 4752
16"
THE
COMMERCIAL
FINANCIAL
&
»
CHRONICLE
(Continued from page 8)
entering
now
witnessed
as
deflationary phase
a
by rising short-term
Interest rates and the fairly sharp
break
tural
recently- in some agricul¬
prices.
As to the latter I
this
regard
than
On
favorable rather
a
as
unfavorable development.
an
the
will
it
hand
one
tend
to
remedy the existing imbalance in
our
economy as beiween agricul¬
tural and industrial prices and in¬
of
leave
and
comes
disposable
wider
a
margin
income
consumer
for the purchase of products other
than food.
It may also serve to
forestall
demand
the
for
imposi¬
tion of price control. On the other
hand parity price floors, which it
calls for the prevention of further
inflation rather than the adoption
of
drastic
deflation
which would
be
catastrophic. There is no doubt
in my mind but what the sudden
of. all
removal
government
support from the
market or
a
bond
drastic contraction
would
sion;
of bank credit
precipitate deep depres¬
but on the basis of recent
statements
officials
of
this
responsible
to
seems
fiscal
alto¬
me
gether unlikely. What seems more
likely is a further moderate in¬
in
crease
reserve
requirements,
continued rise in short-term
ernment
rates
and
commercial
followed
in
crease
by
gov¬
paper
further
a
a
in¬
the discount rate.
It is
sales
date
have
sonal
the
for
shown
a
store
ment
increase
Fall
normal
the
over
to
sea¬
Summer
est
time.
While
debt
about
was
recently
seen some slight sag in building
contracts and starts, construction
activity
remains
near
recordbreaking levels.
It probably will
gain
added
impetus
from
ex¬
panded low cost housing projects
and
other
public works in the
coming year.
The Federal Re¬
production
being
is
industrial
of
Index
Board
serve
sustained
the
at
the
near
.
V
assets.-
2xk
times liquid
The credit situation is
sential
element
depression
has
liquidation
of
of
positions
to
cannot
we
rise
in
debt
been
reduce
In
es¬
major
the
forced
speculative
swollen
this
bank
connection
ignore the recent sharp
business
the
and
The
every
large
indebtedness.
matter
a
inventories
evidence
of
and
official
policy to forestall further'infla¬
tion
through the instrument of
credit
control.
inventories
Total
stood at about $52 billion in
1948
comparing with: only
$26 billion
cember, 1945.
over
that
While
inventories
erally- below
a
recently
as
it
July,
little
De¬
as
is
true
today are gen¬
in relation
normal
to sales it is also true
that
sub¬
a
stantial decline in sales-would
many businesses
readjustments.
Pari
to
pose
this
increase
have
in
ex¬
painful
with
passu
inventories
witnessed
a
sharp rise in
debt, corporate and per¬
sonal, amounting to over $40 bil¬
dollars
1945
and
between ,the
mid-1948
to
end
of
all-
new
a
time record level.
It is
only fair to point out, how¬
in private debt
than a cause of
inflation which has arisen es¬
ever, that the rise
is a product rather
sentially from the huge expansion
of
the
war,
public debt to 'finance the
a
condition that we shall
have
with
into
us
indefinite
the
future.-
Moreover, • viewing
the
total of private debt against the
background of the present infla¬
tionary environment it should be
noted that
lated
to
income
private debt when
is
rather
level of
the
currently
than
time
total
82%
of
the
the
re¬
national
sub-normal
excessive.
private
national
this
At
debt
is
about
income
as
with the low point of
about 77% in 1945, 187% in 1939,
200% in 1928, and 206% in 1921.
compared
There- has been widspread dis¬
cussion recently of -measures of
credit
control
tinued
have
prevent
a
spiraling of prices.
advocated
crease
to
to
in
limit
the
con¬
Some
substantial
a
required
bank
siderable
in¬
reserves
availability of credit
removal of government support of
the bond market to permit a ris¬
ing
interest- rate
expansion
to
exercise
influence
and
the
flow
its
credit
on
of
sav¬
ings.
However. I believe it can
be predicted with confidence that
government policy will be anti-in¬
flationary rather than deflation¬
ary.
Having in mind the disas¬
trous
consequences
of
sudden
sharp
contraction
of
credit
in
1920, 1929 and 1937, it is alto¬
gether unlikely that government
officials will again use a meat
on
the
Wise
delicate
and
credit
equitable
axe
structure.
policy today
a con¬
decline1., in
profits with only a
in production
cline
supply catches
view of the
corporate
moderate de¬
and
sales
as
with demand, in
high break-even point
up
of
industry. This; of course, is ac-»
centuated by the prospect of fur¬
ther increases in wages and pres¬
sure for lower prices.
I believe,
however, that this point of view
fails
the
to
give sufficient
material
weight, to
increase
recently Jn
labor productivity,arising from the
great improvements in productive
equipment and processes and the
further great savings that will be
effected with the completion of
current
plant improvement pro¬
grams and
the abandonment of
inefficient high-cost facilities. To
my mind this simply points up the
argument that the period ahead
will be marked by intensive
petition,
com¬
profits margins
narrower
the
and
elimination
of
the
mar¬
ginal operator; and
suggests a
persistent up-grading of equity
investments at this time.
This is an imposing array 'of
negative factors — the threat of
war; the advanced age and-de¬
celerated rate of the boom; and a
number
industries
a
of 'consumers
are
goods
going through
now
readjustment to the normal
ditions of
economy.
^
.
Common
It may surprise you to hear that
despite these gloomy forebodings
I
am
quite prepared,
for
the
industry
nition
of
the^ risks
the
to
me
continua¬
a
adjustment,
industry, over the
this
But
year.
correction
a
recession
that
over
suggests
rather
than
a
period involv¬
moderate over-all decline in
industrial
production and com¬
ing
a
prices,
modity
the
degree
of
by the
wage and price policies of the ad¬
will
which
be
influenced
ministration.
I
!
do
not, however, perceive as
yet the elements of a major de¬
I believe that we
relatively stable and
pression; .and
could .have
a
healthy ..economy for a consider¬
able, period of time ahead.
The
"bust"1
fully
invested
portfolio;
over-all
a
position" in
stock
common
of
the
of
the
segment
and to suggest as an
policy for conservative
balanced investment programs an
allocation of not less than 50% to
carefully selected broadly diversi¬
fied
investment
stocks.
For
the
be greater
may
holding cash
income
good
grade
common
longer run there
risk of loss in
high grade fixed
or
securities than in
common
avoid risk—we
stocks.
ceeds
that
follows
from
boom
a
pro¬
period of buoyant
excessive specula¬
tion.
I certainly would not char¬
acterize
the
postwar period to
date as one .of excessive optimism
a
speculation.
Quite the con¬
The conspicuous feature of
this period has been the marked
sobriety of conduct on the part of
or
trary.
holding
We
can't
hold
this
opinion
for
these
of the business situation. We have
60 million employed and a
neglig¬
ible
number
unemployed.
The
income
and
consumer
spending continue
to
rise
and
though some changes may occur
in
the incidence of the national
income under the policies
of the
has
been
aptly
boom."
So
unhappy
continue
we
Inventories
to
Debt
and
Dangerous
While
the
Levels
of
rise
inventories
private debt in the past two
years suggests the need for con¬
tinuing caution, these cannot be
said,
in
the
present
en¬
money
vironment, to have reached dan¬
gerous levels.
In this connection
it is well to note that business bor¬
rowing has recently been rising at
a
decelerated
rate
as
compared
with last year; and the latest Fed¬
Reserve figures, at the end
of
August, reveal .that forward
eral
commitments of department stores
13% below
were
Moreover
large
for
continue
to
have
of
automobiles
and
we
show
still
to go to catch
have
no
a
with
deferred needs for adequate hous¬
ing, The major heavy industries
way
up
orders; and the steel in¬
dustry is under continuing social
pressure to expand its capacity to
an
acute
bottleneck.
It
will be sustained at about its
be permitted to preserve its
rent
high level—more than three
to
'come.
People;
are
some
time
employed
While
on
earning
finance
own
armament,
ex¬
prob¬
supplies for West¬
goods under the ECA.
based
boom
a
frail
a
might
such
on
reed
ex¬
while
and
that
our
wish
could be devoted to
much
as
of
socially
aggre¬
our
their
sober
I
corporate
equipment and working capital
during this period.
As against a
rise
the
omy
who
be
power
eauity
if it is to be able to
soundly
requirements.
these
16%
these
Dow
the
estimate
I
increase
average
of
value
the
in
since
Industrials
period
war
pre¬
that
the
in
stocks
the
book
has
v
been
60%.
Indeed, this index is
fully representative.* In many
over
not
cases
stock
common
book
values
through
earnings
investment of retained
have increased 200 to
300% in this period.
If, then, we
relate earnings to invested cap¬
rent
find
shall
that
they
are
of New York
points out that cor¬
profits in 1948 are at a
porate
rate
equivalent
9.1%
to
of
the
national income which is less than
the
in
rate
decline
A
1929.
of
to the 1943 level as related to the
market
not
am
ap¬
one
inflation
regard
major elements in our
today common stocks
do not reflect the
about
of
Jones
one-third would bring the propor¬
tion of corporate net profits down
praisal in the current inflationary
environment.
the
major share of
earnings in plant and
a
gross
in the favorable outlook for
is
values—through
significance
equi¬
national production.
Another factor of
ties
book
we
more
10%
as
stock
reinvestment of
unduly inflated.
In its cur¬
issue, the National City Bank
likely to absorb in the
gate
great
increase which has taken place in
invested equity—mat is, common
ital
as a prop of the economy
the next year at least, as they
over
the
nor
not
activities
are
the
ensuing decline in
we
ends, we cannot ig¬
importance of defense
the
nore
ac¬
the
value of the dollar
production
constructive
of
National
as
that in
is
well
to
1943 corpo¬
net profits were held down
by price controls, renegotiations of
contracts and excess profits taxes.
rate
Good Yields of Common Stocks
And,
is well to re¬
holding common
you
are
well paid
finally,
econ¬
stock
that
member
alone
degree of infla¬
It
Income.
bear in mind
it
in
today
while
you wait.
Common stock
yields from conservative dividend
outbreak of the war.
The money payouts
are
extraordinarily lib¬
supply is now about three times eral, particularly as related to the
the
prewar
volume,
Wholesale yields
of
high
grade
bonds.
commodity prices are about 125% Moody's 200 representative com¬
above the prewar level and fac¬ mon stocks, which are for the most
tory wages are 116% higher.
In part of a conservative character,
contrast, cpmmoit stock prices as are currently providing a yield of
measured by the Dow Jones In¬
about 6% and the ratio of this
dustrial
Average, are
currently yield to the yield of its AAA cor¬
only about 1-6% above the average porate bonds, is more than 2-to-l.
tion that has taken place since the
level of
1936-39.
rising threat of
As
have
pressure
behaved
the
uncongenial .atmosphere of
a
ordinary
share prices in Great
Certainly, socialism there
much farther than
proceeded
have the
here
at
rather
right to contemplate
sthis
time.
Austerity
than
prosperity has been
their national keynote. The threat
of war touches them more closely
than it does
And
seem,
us.
f-
yet, incredible as it might
we find that the financial
Times
of
Index
British
Ordinary
there have
years
only
ing this period has been less than
1V2 -to-1.
The present high ratio
common
stock yields to high
labor
government, it should be instruc¬
to
observe
the
course
of
20
two
short periods,
namely, the spring of 1940 and
the spring of 1942, when this ratio
has been h:gher than at present;
and the average relationship dur¬
despite the
tive
Britain.
been
common
under
inflation
of
Over the past
war.
example of how
an
stocks
period of sub¬
activity and the
a
normal industrial
of
grade
bond
state
of
yields
and furnishes
the
reflects
investment
low
a
confidence
further evidence of
prevailing sobriety.
investment process is one
weighing probabilities and
striking a balance — reaching a
reasoned conclusion as to policy.
My own reasoned conclusion
based on the foregoing premises is
The
of
that
investor
the
maintaining
is justified in
fully invested po¬
a
Share Prices
sition
ment of his
portfolio; and that this
segment in
a
(Adjusted) is today
49% above the level of
Dec. 31, 1938, as compared with a
rise of only
12% for the Dow
Jones
industrials; and during the
life of the labor government
expansion
from
July, 1945, to date, this Index of
Ordinary
Shares
has
actually
risen 7%.
Even
granting that
economic
period of
a
correction accompanied
by lower corporate earnings might
in
the
seg¬
balanced investment
should be not less than*
program
50%
stock
common
whole
the
of
this
at
time.
Selection continues in my opinion
to be more important than tim¬
ing; and selection should have due
regard for the characteristics of
each
industry
essentially
a
as
a war
related to what is
environment and
laboristic economy.
be further squeezed as a result of
wage, tax and
present
not
be
ent
price, policies of the
administration,
overlooked
it
that
should
the
sober capi¬
earnings
already
of
liberal
allowance
for this
prospect.
The
Dow
Jones
Industrials
are
selling at about 8V2
times this year's probable earn¬
ings—a conspicuous example of
sobriety of investment senti¬
ment.
Dow
Under
normal
especially
money
Jones
worth
15
in
the
present
environment, the
Industrials
16
or
conditions,
should
times
and
be
may
therefore be said to be discounting
a
decline of
as
much
in the present rate
as
40 to 50%
of earnings.
Moreover, how "abnormal" are
current "abnormal" corporate
earnings?
We get a false impres¬
sion if
lute
we
Regent Oil Stock
compare
figures
with
current abso¬
those
of
pre¬
&
Tellier
making
1
Co.,
New
offering
York,
is
of
1,200,000
stock, par value
cent, of Regent Oil Corp. at 25c
an
shares of
currently
the
Tellier & Go. Offers
pres¬
extraordinarily
makes
cheap
unfilled
might
national
penditures might be said to lean
and
to struggle with short¬
meet the huge volume of
added parenthetically
here that the steel industry must
times that of 1939—for
capital
ages to
present administration, it appears
probable that the national income
cur¬
of
the
are
our
our
we
Europe, and the heavy export
ern
continue
relieve
for
talization
year ago.
demand for
durable goods. Unfilled
diminution
long
we
a
backlog
consumer
including
penditures
yet
as
what
This does not take into
count
(Nov. 8)
at
Not
and
orders
First, I do not yet perceive the
signs of an over-all deterioration
national
This
"the
display
such becoming sobriety I shall not
worry about a "bust."
a
I
defense,
able lend-lease
has
as
for
huge requirements of
we
men, bankers, investors
speculators. All through this
period
of
extraordinarily
high
long
this
on
demand
call "civilian goods"
may
business
try to minimize it.
reasons:
unsatisfied
and
only hedge and
can
was
Defense Requirements
Superimposed
optimism -and
assumed—to
maintenance
worker than there
per
35
war.
necessarily bullish for common
stocks; but it is of the utmost sig¬
nificance to note that among all
see
seriatim
by
coming
present, and at this level of com¬
mon
stock prices, in full recog¬
recommend
less
those
this
called
Hedge
as
today
buyer's market and I
we
cession."
Stocks
still
shall
a
believe
tion
of
con¬
prospective declining share of the- rate--of business
activity and cor¬
nutional income accruing to the
porate profits we have continued
stockholder
under
a
laboristic
to worry about the "coming re¬
and others have recommended the
traditional
possibility of
the
we
private
lion
negative factor in
outlook is the
<
Of more serious concern.
A
Another
•
*
Credit Situation
-
.
Profits
farm
war
actually
National
have
we
..
debt whereas before the
is
20 years ago.
recently made the great¬
gains over last year for some
also
possible, but not likely in the
future,, that we shall adopt a
policy of flexible, rather,- than
rigid price support of long gov¬
there
capital
and have
high level of about 190% of
1936-39 average.
Our Index
of Incoming Orders after dipping
appears probable will be con¬
tinued at prevailing levels, insure
from its peak postwar level dur¬
a
y
ing the first half of this year, has
relatively mild decline in agri« ernments,
cultural prices, which, with bump¬
'In any event I do not think^we remained on an uneven but high
er
crops,- will sustain the current need
contemplate at this time plateau for the past three months,
extraordinary prosperity ofn the* measures of credit control of such suggesting a continued level of
farmer
who has never been -in
industrial activity at or, about 190
a nature as to touch off a
majorsounder financial position: Roughs depression. ---4,
in the Federal Reserve Board In¬
■■
dex
for
at
least
the
next
six
ly the estimated liquid assets of
Possible Decline in
Corporate
iarmers are today 2x/z times their
months.
now
'-,(2095)
industrial
plant expan¬
sion has been in record-breaking
volume over the past three years,
and
have money.
This is sus¬ we have not yet made up the
taining retail trade at extraordi¬ •ravages of the depression of the
narily favorable levels; depart¬ 30's and the war of the 40's; and
,
The Election and the Securities Market
list among tne negative lactors in
the outlook the possibility of our
While
_
per
as
a
common
share.
The shares
There
are
no
free stock to
or
are
offered
speculation.
moters
or
options, warrants
underwriter, pro¬
directors.
The company owns an
which
is
less
away
from
than
two
oil lease
one-half
producing
mile
oil
wells.
With the experience of Berkley
C. Deardorf,
the President of the
and independent oil
operator, and the other officers
and directors, it is believed that
corporation
this
ful.
company
should be
success¬
36
&
COMMERCIAL
THE
(2096)
Thursday, November 13, 1948
FINANCIAL CHRONICLE
world" which must be nourished for years to come,
As We See It
a
shudder, at the mere
thought of any diminution of the output of food in this
country at any time in the foreseeable future. Now, in all
this there is, of course, a large element of sheer nonsense.
campaign shuddered, or affected to
that he will not be made
the cost
substantial part dominated by
products made directly from what the farmer has to sell.
Over and over again the farmer has been assured that
"price supports" will protect him from the workings of
natural economic forces—and he has had several concrete illustrations of the workings of this scheme, some
of which, if not all of which, appear to many non-farm¬
ing citizens to be but little short of a national scandal.
Meanwhile,
Washington
officials have apparently
started the old refrain, "pity the poor wage earner,"
again with the rather probable result that the movement toward another "round" of wage increases will
be strengthened whether or not it was the intention of
the officials in question that such should be the case.
from this drive to reduce
to suffer in any way
of
'
-
living, which is in very
There is
would
but
a
A review and restatement of some of
price situation can, there¬
margins
ourselves at the moment to
on
reduce the cost to
that many
ure
in
fact, of
course,
gained in this
tend to create
or
control all but
The
induce states of affairs which render such
humanly impossible of attainment.
farmer, of
than
more
a
course,
mere
agriculturist.
pears
as
No
of
one
limit in any way the
these
On the contrary, the current idea
re¬
of
from them that the glib promisers of a millennium
find
a
That is
observation.
more
deter¬
place
through the free and competitive
bidding of many buyers and many
sellers.
Short-run market prices
and
can
to
will
has
not been sufficiently
yield a return on invest¬
all producers, the less
for
firms
producing
that
rise
because. of
insufficient
supply, and profit margins will be
hoped that the housewife generally is not in¬
Such
Pod:
a
are
the
his
"take" from the
...
.
.
A continuance of
in
an
On
.
defended
to
disguise
-Sheer Nonsense
high farm prices—-or their equivalent
amid
or
of his products.
supplemental subsidies to farmers
erally
more
effort to conceal
consumer
crocodile
—
tears
is
now
about
a
has
receive
not
us
shall
not
our¬
get onAsolid
that fact is fully
people and gov¬
our
the
to
courage
money
stop
supply.
now
witness
an
to the oil business,
outstanding exam¬
fundamental economic laws which
we
have
just
reviewed
their
in
general operation.
In
last
of
the
demonstrate
be¬
industry
our
three
years
events
yond all possibility of dispute that
prices, profits and productivity
are interdependent. I have likened
them to "three peas in- a pod"—
and
Like the peas in
is separate in itself;
is
joined to the
Factors affecting any one
they
each
so
pod,
a
each
but
other.
of them,
are.
also
influence the others. The
pod, of course, is our competitive
enterprise system.
Much
has
been
said
about oil's
have
done
to
in
meet
stepping up
the postwar
It is
superficial and meaningless
that 1947 oil industry dollar
profits were approximately 60%
greater than in 1946 and that this
year's net earnings are running
at substantially higher levels.
Such
the
our
competitive enter¬
Nor is the effect
of these laws nullified by the in¬
prise
economy.
flation
that
dollar
earnings
the
are
the history of the oil
industry. But whether it is evi¬
dence of a healthy economic situ¬
greatest in
has
at work
been
in
remains to
ation
For
be
attendant
the
of
be
to
seen
in
view
circumstances.
properly
these earnings must be
appraised,
related not
only to the general economic sit¬
uation, but also to the general oil
this
aggravated by huge
the
ket price for a
when
mar¬
commodity is high
spending.
of record-
breaking industrial achievement,
production of goods has in¬
creased 78%. This increase in the
the
output of our, factories
shops, coupled with that of
mines
and
farms, has,
no
physical
and
our
doubt, helped to make the mani¬
festations
than
they
of
inflation
otherwise
less
a
have
would have
inevitable
result has
increased
commodities
been
demand
that
could
for
not
quite gen¬
"starving
contributed
to
the
oil
in¬
dustry's profit picture. It should
be emphasized that both, in large
part,
out of the inflation
increased supplies of
grow
created
money
by
and price disparity caused
by government controls. *
The
elements
demand
needs
greatly
most
for the most part, capacity
operations and increased prices
ing,
acute
been.
The
other hand,
war
Since 1939, as a result
of
the
,
'
increased
for
no
petroleum products
demonstration
before
this
gathering. However, factors
underlying the price increase ilieed
to be repeated because they are
exceptionally be met by supplies, with sharply top often forgotten.
Foremost is the fact that war¬
good profit, existing firms start increasing prices bid up by those
expanding,
and,
perhaps
new with the money to do so. While time price controls for all prac¬
firms are started. The supply is increased
tical purposes froze oil prices. You
production is helpful,
thus increased. Competition there¬
only a correction of the unsound know the refusal of Q.P.A. to
upon grows sharper and prices fall monetary policies of the past and permit any increase in the price
when the supply reaches a point an end to deficit financing by the of crude oil, despite rising costs
slightly in excess of the demand government can stop this inflation. resulting from inflation. Product
And that, too, gentlemen, is a prices were permitted only to rise
at the existing price level. This
slightly. For instance, whereas in
results from the competition of j story that needs to be told far the
1941-45 period,
coal prices
sellers in disposing of their pro-1 and wide. Business and industry were permitted to rise approxi¬
duction.
carniot
hope to achieve public mately 27%, prices for petroleum
enough to yield
an
.
cultural producer in
Let
we
to say
.the traditional opera¬
laws of supply and
are
of
demand in
restored.
likely, both),
greater by the amount of subsidy paid the agri¬
the taxes of her husband (or,
in
demand factors,
production of. that particular com¬
modity. As a result, fewer units
will be produced, the market price
reduction in the cost of living for the housewife.
or
approximately
supply-demand
picture,
to
the
country for several years.
volume of sales, to prices, to the
Simply stated, inflation is the in¬
purchasing power of the dollar
the
cost
of
crease
in the supply, or quantity,
and finally but most importantly,
commodity or of the profits which of money. We have today, includ¬
to the obligations (involving re¬
may result from selling it. A too ing both money in circulation and
little-appreciated fact is that cus¬ in deposits in commercial and placement and expansion prob¬
lems) resting on the industry to
tomers, through the pressure of savings banks, two and one-half
their demand, determine prices in times as much,money as in 1939. supply the oil needs of the con¬
suming public. Only as this is
a competitive economy.
This sharply increased supply of
done can current oil profits be
Of course, in the long-run—say, money is a direct consequence of
made meaningful and significant.
loose monetary policies and Fed¬
over a period of several years —
Increased sales volume, requir¬
if the market price for a com¬ eral Government deficit financing
supply
regardless of
producing
a
given
result from the interplay of
commodity will be forced out of
business
or
they will abandon
part of the cost of existence in this country, and that her
taxes,
cut
generally, we shall be on
way to solving our chief diffi¬
women
tions
words,
prices... are
mined)
in
the
market
efficient
con¬
telligent enough or sufficiently well acquainted with the
facts to understand, or to realize, that taxes are also a
been
sharply
increased
profits.
Not
enough has been said about the
tremendous job that oil men and
other
demand for
ment
his
It is to be
one
Effect of Increased Money Supply
and
products. In such cases, naturally, it is
only out of the profits of the processors, transporters,
and distributors of farm products and the goods made
sumer
other aspects of this price
We shall, however, confine
high to cover costs of production
ap¬
gardless of what has been promised the ultimate
pre¬
value of the American dollar
•
goods and serv¬
ices. This adjustment is made (in
and
modity
profits of
to be to guarantee high prices to the farmer
government debt. Thus the
war
-
something other than
businessman.
or
,
is regarded by most poli-
day-dreamers
would wish to reduce
the
'
(Continued Irom page 13)
that profits are not uniform
an
ticians and many
or
v
In Petroleum
It will be at once recognized that con¬
attempt to control prices in this way
way.
imposed by
of
Cites Competition In Oil
Prices, Profits and Productivity
throughout the economy, industry to industry, or even from
one enterprise to another in the same industry.
Reductions
in prices made at the expense of profits might leave' the
more efficient plants running at capacity, but oblige others
to curtail or even to suspend production. Here a reduction
in the supply of goods might well be, probably would be,
accompanied b}' a corresponding decline in the ability of
consumers to absorb them.
Certainly, not much would be
ditions
increase in the quantity of money
that resulted from the monetizing
Turning
realization of this fact.
Profits and the Farmer
a
sion—are but consequences of the
demand.
production possible tomorrow.
But it is
after
round
—
ple of competitive enterprise and
the specific application of these
Three Peas in
of those outlays which make greater
expense
creased
increasing the
politicians and day-dreamers would have
public believe. A reduction in price at the expense
of profit would, moreover, tend to increase the propor¬
tion of current income expended for consumers' goods,
the
step
...
prices and in¬
wages and credit expan¬
production
the
at
a
pro¬
of increased
round
ernment
as a
coming to
a
one
outright printing press
an
ground until
recognized by
politics are adjourned, more or less, for a
time, it is earnestly to be hoped there will be no delay
in anything like the meas¬
of
is
operation.
Everything else
selves:
Now that
if surrendered in their entirety to
consumers
in¬
of
cause
into circulation by
short of
culties.
to be one and only one process by which
practical matter, can be held in check or reduced
without inflicting painful injuries upon the economy. That
is by substantial increases in the quantity of • goods produced
for each dollar expended in their creation. Doubtless man¬
agement will as time passes find means of increasing "pro¬
ductivity," by various means at its disposal. Major improve¬
ment will, we suspect, await a greater willingness on the
part of labor either to work longer hours or to cooperate
more fully in enlarging output per man hour.
volume of business being done.
sales, even when at record levels, are
The
which has been but
cess
our
that there appears
profits is, however, in large measure a
even
many
needlessly injuring ourselves.
of
inflation
money
we
naturally,
results
and
cause.
precisely the in¬
jection of increased quantities of
and almost certainly will be two quite different
.
prices,
manifestations
flation for its
this
as long as
mistake
the
generally
people
stood
situation which must be fullv considered if we are to avoid
enormous
sufficient
hundreds of mil¬
One Way Out
price reductions out of current profits are largely a
and a delusion. Earnings are substantial as a rule,
and in some instances extraordinarily large. The mag¬
not
even
wealth and our own feeling of superiority,
necessary for full health and vigor, has almost
There are,
snare
Profit
yes,
our
may
acceptance of
and
one-half. When that fact is under¬
millions,
things.
all, let it be positively asserted that hopes
the%
at this moment.
produce to the limit. What the world may need and
what the world is willing'or able to buy from our farm¬
ers
understanding
their current operations
has
nothing to do with the wisdom of stimulating the farm¬
ers of the United
States by purely artificial means to
of
result of
in
believe
.
nitude of these
and unmistakably be
lions, of people on this globe do not enjoy a diet which
we,
fore, hardly be amiss.
Such a survey, if it accomplishes
nothing more, should definitely tend to put the unwary on
guard against vague and glowing promises of fruitful re¬
sults from a return to the more extensive controls of war¬
First of
products away to the remainder of the
number of these
The fact that
the vital elements in this current
or the early months immediately following the end
fighting.
will
during the earlier days of the New Deal. Indeed,
for the fact that we have been giving large amounts of
under way
confusing "explanations" daily come forth that a baffled
and uncertain state of mind among the rank and file is
time
of the size of the past few years
world, the process would definitely
preachments or promises are so obvious as to need little
Quite possibly some of them are. Others may not
be.
At least so many superficially plausible excuses -and
the
time is coming
farmer out
comment.
hardly surprising.
whatever to doubt that the
surpluses of precisely the kind" that plagued agri¬
and all the others who were obliged to bail the
up
culture
these
that the inconsistencies in
suppose
no reason
when successive crops
pile
Inconsistencies
One
perpetuity, far better apparently than ever before. Not
few of those who felt the need of the farm vote during the
in
(Continued from first page)
from what has been said to him
indeed
Volume
168
Number
4752
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2097)7 37
,
its products were
and
advance only
allowed
to
Admittedly this increase consti¬ age
for' the
war
period
and
a
sharp rise in price but ac¬ approximately
three
times
the
tually it is less than the deprecia¬ average for the five years imme¬
12%.
tutes
Importantly, the
disparity thus
created
tion
was responsible in part for
postwar rush to install oil
the
burners
and
dustrial
plants burning coal.
When
to
convert to
O.P.A.
petroleum
oil in¬
controls
its
and
ties.
were
average
of
base.
the
In
and
the
selling
13%
above
face
of
on
the
and
the
1926
adjust¬
badly needed
have since been taking place.
Since
crude
1946
Oil
the
oil
these
stations
of
granted
by
O.P.A.)
sulted from the fact that
merely thought
be
each
instance
real and
by
sure
there
and
re¬
aggressive demand
it
risen
prices
their
in¬
situation
leading
price increases
demand
gradually
was
for
products,
quired
prices
indicated
duction
that
quirement could not
by
oil
Study
this
a
as
are
than
between
gap
created
,r
oil
and
coal
by O.P.A. action.
'
-
'
l
prices
,
".
•
.
'
Oil and Other Fuel Prices
Certainly oil
well
on
as
yet has not
com¬
though de¬ menced to price itself out of cus¬
price increases, tomers, as coal has been doing for
it was believed that they would years. Although the rate of in¬
prove to be incentives for stimu¬ creased demand for furnace oils
this year, as estimated, is not as
lating increased production.
This
precisely
has happened." great as it was last year, the in¬
Since the first 1947 price increase, crement is higher than normal.
drilling.
Thus,
even
mand dictated the
March a year ago,
domestic oil
production has increased from a
daily average of 4,784,000 barrels
to a new high of 5,604,000 for the
week ending October 30 this year,
the
latest figure available. This
latter figure was 820,000 barrels
of daily average production over
March, 1947—an increase of 17%.
Preliminary to that production
was
the fact that well
year
and
13%
was
this
show
an
wells
even
Actually
become
the
industry
oil
quired
not
to
undertaken
only has been re¬
keep up its existing
is the
in
the
Therein
past.
of the
industry's prob¬
The
replacement
of
existing
plant and the expansion of facili¬
ties must be made
at costs which
•.>' today are greater than twice
pre¬
has war construction and equipment
This
constitutes
serious
a
ployee
sales is
increased only
and
its
products
output
11%;
lumber
17%;
automobiles 31%; bituminous coal
22%, and all manufacturing pro¬
duction but 19%.
Obviously, therefore, increased
prices have had the effect of in¬
creasing supplies of oil and this
is what the consuming public has
But
has
the
public, as a
few critics have suggested, been
forced to pay "through the nose"
to get these increased supplies?
answer
is
to
be
found
in
a
frank
comparison of oil prices
with prices for other commodities
general price pattern
of
the nation.
Altogether since the war's end,
generally posted crude oil prices
have
on
advanced
$1.40
the basis of East
a
barrel,
or,
Texas crude,
112%. Actually this represents the
increase in crude oil prices since
1941
is
provided
for
reinvest
large portion of a com¬
earnings in the hope of
profits through increased
pany's
future
a
volume
and
to
safeguard their
original investment through main¬
taining the dynamic structure of
the5 enterprise.
1
While capital funds
may be se¬
in various ways,
cured
because
the
O.P.A.
froze
dollar
per
annual
of
substantially greater than
in other industries, as illustrated
by comparison with steel, rubber
and
;
automobiles.
Further,
ciation
v'
while
allowances
depre¬
recognized by
steps
are
limiting the national
Bureau
of
Internal
Revenue
major industries since 1941.
(8) Increased prices and capa¬
city sales volume .together have
than
more
doubled
pressing
holders.
as
great and
the end the
In
now.
would
be
forced
to
(9) Profits reinvested in the oil
products, which in vol¬
oil
industry have made possible a $4,000,000,000
capital
expenditures
program for 1947-48—a rate twice
would grow less and less. The
would
Oil
As
be
that
everyone
be
hurt,
par¬
Profits Not Excessive
would
matter of fact, oil industry
profits in 1946 and 1947, were not
out of line with prewar net earn¬
a
ings when reduced to
of
the sales
trated
by
dollar
of
the
of
per
cent
This is illus¬
net
sales
a
1934
earnings per
Pogue-Co-
the
last
to
Peak
year.
war
made
capital expenditures averaging $2
crude oil prices at the level of the
billion
tures
annually.
are
at
a
Such
expendi¬
rate twice the aver¬
and almost
years
not
have
been
possible.
provides for
existing plants
constructed and developed prior to
(10) This
program
the replacement of
the war at costs about one-half of
what they are today, thus
making
it
possible for the
industry
maintain output.
Study of Thirty Companies
queron
from
dollar.
that of the
three times that of the prewar
pe¬
riod.
Without
such
profits this
consumer.
(11)
Included
is
gram
to
j
.
also
in
this
pro¬
expansion of facilities
an
earning years were 1937 with 11.9 for
increasing supplies needed to
cents; 1947 with 11.6 cents; and meet demand
ahd to set in motion
1941
with
10.9
cents.
Earnings forces that make for increased
somewhat
for
this
indicate
year
higher
ratio
of
a
return
competition and lower prices.
(12)
1948
but the specific data will
not
be
available
until
the year
ends.
Of
course,
none
can
say
how
long such
tained.
'
■
ratio will be
a
can
conclusion, to those
challenge our opera¬
would
tions,
let
make
us
crystal
these points:
this
v
utilization
of
people for oil products and
a
better standard of living.
This,
And now, in
who
With
profits, the oil industry can and is
satisfying the desire of thb Ameri¬
sus¬
'
'''
<*
clear
'
I
submit,
is
competitive
enterprise in action. When told to
the American people it will
appeal
to them for they believe in it as a
(1) An excess supply of money, system superior to all others.
Today we face the danger of
resulting
from
loose
monetary
policies, is responsible for,spiral- having.imposed on us a callectfvist
ing demand for most commodities economy in the form of measures
and
consequent' inflationary disguised • as- mere remedies for
current and temporary ills.
prices.
"
•
Be¬
f
It
earned.
that
cept
survive
create,
the
is
fundamental
a
con¬
corporate
in1
as a
enterprise to
long-run
must
the
creased
only
yield
result of its operations,
capital necessary to effect its
reproduction.
Therefore,
the
population, desirability of government controls
products and price disparities also
have been factors.
(3)
oil
Per
capita
consumption of
in the United States
products
since
1941
has
increased
about
higher the degree of internal cre¬
ation of capital, the sounder the
industry ' is ' generally and the
34%, thus raising living standards.
(4)
This
demand, outrunning
the supply 'of petroleum products,
greater its
has
most of the capital needed for its
expansion
more
ers
taxation
the
industry,
and
current
credit
re¬
strictions
place limitations on the
availability of outside financing.
But
irrespective
of
whether
funds
come
from
within
outside
the
profits
commensurate
industry,
from
or
level
a
with
level
meet
of
profits
with
the
is
of
not
need
to
demand, then the expansion
essential to meet that demand
Despite
rials
and
can¬
oil
retail
petroleum prod¬
ucts prices taken
together, have
lagged
behind
the
Consumers'
Price Index.
not
take
place.
the
to
to
shall lead
that
to
us
of
foundation
be deferred
sult
would
or
be
supply-demand
a
continued
situation.
re¬
tight
Prices
we
voices, they
opportunity
which
national
our
and
the
is
well-
being.
Let us,
with all
hearts and
our
strength, with facts and truth, be¬
fore it is too late, point out to the
American people that a
competi¬
tive, progressive petroleum indus¬
try, operating in a free market
place,
will
best
their
serve
wel¬
fare by
providing to the consum¬
ing public and to the Armed Serv¬
ices
adequate supplies of petro¬
leum products, at reasonable
prices
now and in the
years ahead.
Tel. Debentures-Issue Oversubscribed
Halsey, Stuart & Co. Inc. and associated underwriters offered
publicly Nov. 17, $60,000,000 Northwestern Bell
Telephone Co. 31-year
3V4% debentures due Nov. 15, 1979 at
101.375% and accrued interest.
The
bid
group
awarded
was
of.100.68999.
The
the
issue
debentures
at
competitive
heavily oversubscribed.
phones
Net proceeds will be
applied by
the company -toward the
payment
of
Minnesota,
kota
31,
and
1948,
Nebraska,
South
it
.
North
Da¬
Dakota. On Aug.
had
1,386,938
sale .on, its
was
As
abandoned. The
If
the destruction of
choice
of
lead
can
state.
siren
individual
freedom
that
police
these
Halsey Stuart Group Wins Northwestern
the
tional stock issues require addi¬
tional earnings in order to main¬
tain the value of the securities.
IT the
prices
hind
Entirely aside from the historic
of
oil
,than
sharp
increases,
prices have lagged be¬
prices for other raw mate¬
crude
of
crude
have not risen nearly as much.
(5)
Outside Capital Lacking
practice
in
doubling since 1941,. al¬
though product prices to consum¬
the years.
over
resulted
.
has
industry
but last year only one-third
of these profits was paid to stock¬
in
service,
proximately 44%
apolis,
St.
Moines
tele¬
of
were
Paul,
and
which
ap-^
in Minne¬
Omaha,
Duluth,
.
years
oil
dollar profits since the end of the
capital it¬
(2) This general economic conT guiling
voices
are
calling
the
self
cannot
be
created
except dition is the basic cause for an un¬ American people to turn their
through savings, that is, expend¬ precedented postwar demand for backs on a free, competitive mar¬
ing
less
than
Is
produced
or petroleum products,
although/ in¬ ket place and put their faith in
commensurate
1
current
v,
...
unless
approximately $71,000,000 of
long as the
advances
from
the
forces of'supply and demand, op¬ outstanding
are
sufficient
to
recover
the
American
Telephone and Tele¬
original cost of plant construction, erating in a free market place, graph
Co., its parent.
These ad¬
are
left unrestricted
(except by vances
they are grossly inadequate to
were
obtained
in
con¬
the free choice of consumers), the
provide
for
its
replacement at
formity with an established prac¬
today's prices. Failure of industry industry can generate the means tice of the
company of borrowing
to replace and keep modern and of meeting the demand of these
from the parent, as need therefor
consumers.
efficient
its
existing
facilities
But this is not possible should arises, for general corporate pur¬
means
retrenchment, less produc¬
poses, including extensions, addi¬
tion, fewer jobs and a consequent artificial controls be imposed on
tions
and
improvements to its
inability to meet customer de¬ the free market. Should the Fed¬
telephone plant.
eral Government
mand.
sharply increase
The new debentures will be re¬
of
corporate
In order to keep existing plant taxation
profits,
radically reducing their net in¬ deemable at prices ranging from
and
equipment
up
to
present
standards and to expand facilities come, the means for expanding the 104.375% to 100%, according to
oil industry would be hobbled and
to meet the increased demands for
maturity.
'
to the extent that this takes
place,
petroleum products the industry
The
needed expansion would have to
company
serves
Iowa,
in the last two
the
end of that year.
and
crude
war,
statements
re¬
extermely
steel
the
allowances and of
pansion
of
deprecia¬
plant ex¬
problem for all industry, but it is capital funds needed to meet de¬
mand is essential to obtain them.
serious for petroleum
where capital investment per em¬ Loans must be repaid, and addi¬
Federal
Reserve
that
since
1941
crude oil production has increased
and
of
costs. ;
46%. But in that period iron and
The
cost
excess
leader of industrial ex-r
reports
desired.
enterprises.
the
rates
crux
lems.
will
industry
tion
facilities but to pursue an expan¬
sion program far greater than any
estimated the
larger increase,
profits, leaving vir¬
stabilizing influence on
ing into account the increases in the entire economy. Traditionally
demand for motor fuels, the oil the
oil
industry has generated
1946
completed
companies
than one-
more
prices for
pansion, having increased output
subtsantially
more ' than
other
credit and money
supply, demand
for oil would remain as
year
The
a
pansion.
Board
it is
year
additional
Even to keep up with a normal
increase in demand,-tak¬
annual
drilling last
greater than
the
of
placements in
disparity and therefore have
well as increased pro¬
dependent
a
Company
last
these
Consequently,
at
provided incentives for refiners to
produce these products. Likewise
these increases have closed
the
dustry predilection.
Historically the trend of well
drilling follows the pattern of
crude
prices, as I shall subse¬
quently demonstrate. New oil dis¬
coveries
of
in their respective
as long as there is a market
for such gasoline. Recent increases
in fuel oil prices have eliminated
result of governmental edict or in¬
duction
reinvest
that
only slightly
third
line
re¬
achieved
as
computed
stockholders
took
oil should be processed into
gaso¬
pro¬
came
sold
•;
ticularly the
to
by the
operations, under such stockholders through foregoing a
circumstances, generally require dividend return that rightfully
that the maximum amount techni¬
belongs to them. In other words
cally possible, of a barrel of crude the stockholders are willing to
stationary price, irrespective
a
whether such action
of
less
degree
v
Meanwhile,
taken toward
concerned, would
companies
mere
winter
drilling
danger had
the
result
refinery
re¬
this
be
varying
passed,
—
ratio of profits to the sales dollar.
their value for
conversion into gasoline. Efficient
of
economic
crude oil. Both proved
concept and the history of oil
in
until
programs,
ume
industry
tually two-thirds for reinvestment
oils
overwhelming
larger supplies of
which, of course,
increasing
supplies
oil
last
caused deferment of
many
money
postwar price readjustments, fuel
supply. The obvious public desire
was
the
The
action
the stockholders—to whom
profits
however, demand in
supply is the factor re¬
of
one
of
Thirty
of
production.
such
ration
fulfill that demand.
major
portion
of
their * profitto provide facilities for
meeting the demand and thus, in
lowering prices, and the
of time,
to
up
re¬
of
rightfully belong, have permitted
We all recall that
prior to recent
price would not have held.
The
these
the
for
all
their
sponsible for price increases.
true,
use
affect
threat
government
Owners
pointed out,
a
not
time
same
(6) .Increased
oil have greatly stimulated
explo¬
Imposition of governmental ration and drilling, have
stepped
price
controls, however, would up supplies from secondary recov¬
most certainly limit or reduce the
ery sources and
have increased
output of high cost or marginal over-all production to
peak levels.
producers. In fact, it would, by
(7) The petroleum industry thus
destroying incentives,
adversely has been a leader of industrial ex¬
to
sharply risen, outrunning
supply. As previously
If
were
facilities, at the
pre¬
excess
that
de¬
of
higher unless fcontrolled
by government.
placement and expansion of plant
heavy
more
tight indus¬
try-wide supply-demand situation.
creased
critical
a
forces
have generated greater dollar net
average
and
the
Joseph E. Pogue and Frederick
than
have
gasoline G. Coqueron of the Chase National
Demand for these heating Bank
in their
prices.
someone
reflected
have
But
earnings available for
oils had
needing oil that
the price up. In each in¬
stance
oil
that
have
cipitously
pres¬
forced
retail
kerosine, furnace oils
fuel
very*
a
creased
Government's
and
fact
mand,
which have
resulted
in
higher prices and a need for in¬
motor¬
66%.
Wholesale
someone
was
problem.
things as clothing, groceries
furniture) in the same period
rose
the
penditure would create
more,
the
for
not
been
funds
for the replacement and
expansion
reflected by this huge capital ex¬
raw
including tax,
gasoline than they did in 1941.
such
good idea and then acted. In
a
an
it
industry profits
rising, the source of
130%,
nation
paying
are
Meanwhile
price rise would
a
Were
petroleum
Consumers' Price Index (covering
that
directly
wholesale
the
across
only 35%
for
general level of
has been, raised
(except
fall
war.
Profits Finance Expansion
oils and other
products.
At
service
ists today
Prices
increases
diately preceding the
heating
petroleum
prices
five
times
(one
authorized
by
O.P.A.) for a total of $1.40. None
of
this
gasoline,
corrective
in
of
place
Increase in crude oil prices have
been reflected
only in part in in¬
creased prices to
consumers
for
this situation
were so
Rise
to
farm products increased
an
postwar de¬
mand, oil prices began to rise in
1946
power
taken
material prices on an average in¬
creased 116.2%
and the average
increase of wholesale prices for
intensive
ments which
has
many other commodi¬
instance, in the period
For
1941
were
purchasing
which
for
creases
ended,
products
less than their 1926 average prices,
but all
commodities making up
index
the
dollar
evidenced by greater price in¬
as
selling at wholesale for one-third
the
of
the
would go
Des
approxi¬
mately 28% being in Minneapolis
and
St. Paul.
With Herrick, Waddell Co.
(Special
to
The
KANSAS
L.
Financial
CITY,
Chronica)
MO.—George
Sperry has been added to the
staff of
Inc..
Herrick, Waddell & Reed,
1012
Baltimore
Avenue,
With Herrick Waddell Firm
(Special
to
The
HASTINGS,
Davis is
rick,
now
Financial
ChronicvliO
NEB. —Mary
A.
connected with Her¬
Waddell
&
Reed,
Inc.,
55
Liberty Street, New York City.
i
t
38
COMMERCIAL
THE
(2098)
counted
Tomorrow's
Markets
Walter
is
Fear of the
in the process
Some
ation.
Whyte
of
of form1
fears
these
be overexaggerated. But
whether they are or not, the
fact remains .that
they are
may
Says—
„
=sBy WALTER WHYTE=
Undiscounted fears
only
and
present
point to allay them.
time
can
...
.
■
.
the stops were
batch of
a
to
excuses
tape is always a fruitless pas¬
explain away my mistakes. time. 4
*
*
*
Unfortunately I can't fool my¬
self with any hastily patched
As of this writing. Briggs
up excuses, so I won't try to Manufacturing
is the only
fool
'
you.
:
stock left in the list.
^
All the
through their crit¬
rest broke
The
only out I have is the ical points. Having done that
fact that all buys had stops. it is likely that some sort of a
Yet the fact that practically rally will be seen; one that
all the stops were broken is will
carry
some
issues up
a
bitter pill to swallow.
I maybe three-four points. But
knew, for example, that it is I don't think any rally now
practically
impossible
to will engender any enthusi¬
A rally followed by a
gauge a public selling or a asm.
buying surge. I have said that dull downward trend is the
here time and again.
Panic more plausible market to ex¬
and the form
can't
advise
I do know that when
about.
such
it will take is
I
something
is
condit;on
a
likely I
Truman delivers his message
to the
its
run
•
think
will
be
More next
a
in the
It wasn't. I
bring this up because the op¬
timism
of
the
pre-election
days has now changed to pes¬
simism. By the same sort of
reasoning, it is now quite
likely that a bottom is cur¬
rently in the process of forma¬
me.
tion.
stockholders then sell the
the
distributed
sets
alone
a
well be
forming
it doesn't
now
will
bearishness
that
mean
may
decrease for at least the next
few weeks anyway.
seldom
twice.
the
act
Markets
—Walter
Ordinarily
news
way
Whyte
this
in
necessarily
article do not
at any
the
Chronicle. They are presented as
those of the author only.];v •
:
with
coincide
time
in
nor
the
stockholders
year,
count for
■
those
Exchanges
between
cial and industrial
commer¬
corporations on
hand, and smaller partner¬
one
will undoubtedly
problem. How success¬
Congress
new
attack the
chance
of
.
^
•
(1) Accelerated Depreciation: It
taxpayers,
es¬
immediate
the
tax
EVENTS
benefit
that
redounding to the
taxpayer's good because his pro¬
ductive facilities would be kept
replacements,
Investment Field
(New York City)
18, 1948
Firms
Exchange
Stock
of
elec¬
and
meeting
annual
it has been
rapid tax ex¬
encourage earlier
more
would
and modern
tion.
and, at the same
industry,
defense;
would be kept in operation,
time,
heavy goods
military
the
essential
for
Consolidated Returns: The
2% additional tax for the privilege
(2)
Nov.
(New York City)
18, 1948
&
Put
Call
&
Brokers
testimonial
Dealers
dinner
at
Hotel New Yorker.
for filing consolidated returns
been under attack for
The tax
(New York, N. Y.)
Bond Club of New York lunch¬
Nov. 22, 1948
meeting at the Bankers Club.
Bond
(Newark, N. J.)
1948
Club
of
luncheon meeting at
New
In
cation.
turns
Robert Treal
be
re-^
But
mandatory.
no
likelihood
that
be
will
least of all
Jersey
consolidated
fact,
appears
tax
equitable justifi¬
no
should
there
abolished,
not
because the Treasury
.
estimates that about $95,000,000
Dec, 2, 1948
(Boston, Mass.)
ciation annual meeting and
the
Hawthorne
Room
dinner
of the
Parker House.
Dec.
1948 convention at the Hollywooc
Beach Hotel.
Fifteen per
dividends
tions
York
Stock
Exchange
San
Francisco
Chicago
(Associate)
Stock Exchange
Board
of Trade
14 Wall Street
New York 5, N. Y.
COrtlandt 7-4150
Teletype NY 1-928
Private Wires to principal Offices
.
San
Francisco-—Santa
Barbara
Montereys—Oakland—Sacramento
Fresno
Commissioner, with the approval
of the
Secretary of the Treasury,
could
amend his regulations so
as
to
permit such filing, but would
taxpayers elect to go on LIFO in
are
taxable.
to
pay
a
tacked
taxation.
the
current
Corpora¬
the 38%
rate
tax of 5.7% on
The tax has been at¬
The
tax
Dec.
10, 1948
New
(New York, N. Y.)
Security
York
Dealers
Association Annual Dinner at the
Waldorf-Astoria.
1948 (New York, N. Y.)
Investment Association of New
York
Lunch
A
n n u a
1
at the
Street, be¬
Meeting
Club, 63 Wall
ginning 3:45 p.m.- ■
appears
some
consolidated
company
abolished
of
Dec. 14,
for
unjustifiable
yield
-as-
$160,000,000;
destined to
If
time.
both
re-;
the
return and the inter¬
dividends tax
were
to be
simultaneously, because
of you
know that the ideal
point in the price scale.
Theoreti¬
cally, when prices have completed
full
mained unchanged, total taxes for
Will
all
retailers
elect
LIFO
re¬
1941?
Of
be
permitted to
retroactively to
now
the
course,
Revenue
Bureau's
interpretation of the law
wrong. The Tax Court has so
was
held
in
the
Hutzler
Bros,
case.
ernment and did not wish to
con¬
test
Treasury
action, especially
during the war period. Shall they
suffer the penalty of their patri¬
otic
cooperation?
I believe the
yourselves!
(Continued from
demand for hotel accommodations
the
with
fluctuates
and
seasons
its /height
whereas, in other cities the week¬
mercial
annual
(4) Multiple Taxation of Corpo¬
Possibly more criti¬
at
businesses favorable
end
vacation
due
to
and
travel.
pleasure-seeking
In the major cities, con¬
vention
business
is
vital factor
a
In.supporting the larger hotels.
v
,
•..
.
:
.
n
7)
page
injustices
of
perpetuating
rentals
cost
below
received
have
and
only inadequate rate adjustments.
^
Since decontrol of hotel rooms
in
risen only
1941 - as a
1947, rates have
moderately.
Taking
basis,
tual
it is
estimate that
my
rates have
room
about 40 to 50%<
ized
that
operating
than
more
ac¬
been raised
WThen it is real¬
have
costs
doubled,* it
be
must
occupancy
recognized that hotel room rates
have not yet been properly ad¬
the wartime peaks has been
justed to general price levels. This
principally in the vacation and
pleasure type of , travel and the!
situation is mainly attributable to
decline of
.The
from
room
.
elimination of business from mili¬
travel
convention" busi-i
the
and
has held
ness
It
The commercial
personnel.
tary
extremely well]
up
is,
therefore, my opinion that
the immediate outlook for .1949 in
room
that
the
will
continue
the
•:...
,
Rate
in
levels
1948
high 80's.
Room
indicate
business
room
about
at
would
occupancy
Rise
Lower
Price
the.Teliance of hotel operators on
a '
continuanee
mixed
to
room
picture
interpret.
sion
years,
;
rates'
present
a
is difficult
the rate structures of
ion,
the
residential
not
class
of business
normally belong in the
does
tran-',
sient hotels but many hotels found
themselves caught by rent control
early 1947.
local
tels
rent
are
bargain
controls
rates
were
in
In some cities, where
control
continues,
ho¬
still struggling against the
volume
high
fact .that .they
In
my
opin¬
never
has
been
does it
nor
rec¬
ognize the true comparative worth
hotel
of
room
accommodations.
rates
are
Hotel
small part of the
a
travel expense but
necessary
the' average
complain
for
paying
about
hotel
a
un¬
person
>
$1
will
yet
worn
squander many times that amount
in
lavish
expenditures for enter¬
tainment and gratuities.'
It
is
therefore
that hotel
justed
room
further
rates
room
provide
at
a
a
more
on
to
be
J '
^
>
expected
rates must be ad¬
meet
to
operating costs
an$
a
to
higher
establish
sound .'basis
to
reasonable profit return
normal
level
pancy.
of
occu¬
•
;
.
Restaurant Business Vital to Hotel
Profit*
;
frozen
lifted
public
fully educated to
hotels
practically collapsed with
rooms
being sold for whatever
they would bring with fantastic
discounts being given ,to attract;
business on a weekly, monthly or
longer term of occupancy. This
of
creasing room rates.
will
During the depres-;
,
the
have been very cautious about in¬
fortunately,
Than
Trend
which
and
business
more
Hotel
these
$206,000,000.
is
travel
rent
rate Income:
that
assume
Outlook lor Hotels in 1949
with
as
to
if
until
ury
realistic
alike
are
loss
the
it
payment hardship will be avoided
by future special legislation?
;
Oh, yes, I started to try to find
a final answer in the crystal ball:
cycle, the aggregate profits
Treasury cannot remedy the
under LIFO and FIFO,*
wrong; I do not believe that the
inventory quantities* at begin-*
courts can. Congress alone has the
ning and end of the cycle are ap-.
power to do so. Will it? Not with-*
proximately the same; LIFO tends
out
tremendous
pressure.
Such
to
"spread" profits by shifting
pressure will be especially needed
them from high-price periods to
if the national budget is badly in
low-price periods. If tax rates re¬ disbalance.
Look
into
the
ball
a
has been estimated by the Treas¬
over-lapping
Is
year
time to elect LIFO is at the lowest
General
double
The Treasury estimates
as
Would it not be
well-founded.
vvise for controllers and treasurers
patriotic taxpayers, who
for Many
to*elect LIFO, refrained
which refund can still be lawfully wished
claimed
within
the
three-year fi;om doing so, because they con¬
statute of limitations?
I doubt it. sistently cooperated with the Gov¬
earliest fiscal
the
1945,
of
Dividends:
cent of inter-company
subject
therefore
main
Members
New
years
which are still
Without research I venture
curbstone
opinion that the
the
Inter-Company
such income.
(Hollywood, Fla.)
5-10, 1948
Investment Bankers Associatior
New York Curb Exchange
AncT
for
is involved currently.
revenue
is
olstores which report on LIFO to
open?
>
(3)
in
has
has
long while.
a
J,
Schwabacher & Co.
then
•
adverse
with the days of the week* Some
pecially small businesses, be per¬
mitted to deduct depreciation at cities enjoy good business fo# only
so-called accelerated rates. Aside three or four days when the coith
argued
Association
>
.
the following:
has been urged that
of
by those who elect LIFO initially
now,
adoption 'are
early
and
because
how about filing amended returns
urged pleas
repeatedly
it
ity to grant equitable relief.
for revision which appear to have
haustion
Boston Securities Traders Asso¬
Pacific Coast
It is im¬
artificial tax
avoid
to
claimed by proponents,
-In
under LIFO and FIFO.
Treasury ; action?
They, could have protected them¬ give serious thought to the ques¬
selves by filing of refund. claims, tion whether some provision is
but if they failed to do so, the desirable or necessary because of
Commissioner is without author¬ such prospective tax repayments?
All
Small Businesses:
(4)
differentiation
LIFO
adopted
and v mistaken
unfairness.
ened without
of
Hotel.
on
The propo¬
loss.
or
ac¬
sal is practical and meritorious,
although the interval* between sale
and liquidation might be short¬
the
Orders Executed
gain
alone should
COMING
Nov. 24,
Securities
a
neither corporate gain
loss should be recognized, but
a
from
s
be the
would
complete cycle
same
any
.
eon
Pacific Coast
if
sells its assets and dissolves with¬
Among
is dis¬
counted ahead of the market.
It has been
corporation
events.
that,
proposed
no
expressed
views
[The
Association
same
of
sequence
fully remains to be seen.
Thursday.
-
Nov.
bottom
a
they
subject to tax.
are
ally be taxed as corporations, the
inequity would disappear. The so^
lution is not quite so simple. The
in
*
while
them,
In some
situations, there is doubt as to the
new
But
to
as¬
that if the latter two could option¬
near
V
❖
the stockholders on theirs; if
corporation first liquidates and
fu¬
in the
Long ago I learned that
opinion is unanimous in position to jump fast I'd let
the market, the chances are them alone.
warning to
the
opportunities
new
seen
when
change in the trend is
making. When every¬
body thought. Dewey was a
cinch, it should have been a
and
corporation sells its assets
then liquidates, the corpora¬
is subject to tax on its profit
ships and sole proprietorships on
other.
It has been suggested
sis
ture. »But unless you are
that
and
tion
who
abandoned
the
I
•
sis
Sis
course.
*
a
the
Congress
new
prefer to stand aside and let
it
after President
or
year,
may prove
(3) Double Tax on Liquidation:
If'
pect until maybe the first of possible
the
the
Looking backwards, it is now
single feature of
the law.
To tax a corporation on seen that 1941 was a good year—
pressure recently was brought to
but not the best—to go on LIFO.
its earnings and stockholders on
bear on corporations to distribute
Normally, election of LIFO inprofits.
The situation has been receipt of a distribution of all or
.volves* aiTeap in the dark. Many
changed. In Tax Court proceed¬ parj.,94^
retailers,are understanding^ eager
as^.ypcopsciqn^ble.:
ings arising under Sec. 102, the ►
Valrousrf&me£Tfes have been sug- to secure permission to elect LIFO
Code provides that the burden of
ge«tedr-The problem is much more retroactively to 1941. Tax refunds
disproving the justification of
result.
Retailers
believe
some .assume. would
Commissioner's assertion oL*the cojapiicated than
that when prices fall below the
additional surtax "penalty" is on Nevertheless, an equitable solu¬
tion should be found, and soon. - r LIFO level their then "repaymenrtthe taxpayer (petitioner). This is
LIFO Inventorying: -The final tax'; on then non-existent current
an unnecessarily harsh burden.
It
profits will be at rates lower than^
has been
suggested that, if the item sought .in the crystal ball
those which prevailed in the years
taxpayer makes available to the deals with LIFO. Will the Treas¬
when taxes were deferred.
Fur¬
Commissioner, at the administra.- ury permit retroactive adoption?
ther, they look upon the deferred
tive level, the facts on which it Refunds for outlawed years ap¬
tax at worst as borrowing without
relies, the Commissioner should pear clearly to be beyond the
interest. Most guessers guess that
power
to grant.
have the burden of justifying his, Commissioner's
the optimistic view as to lower
assessment.
The proposal should Remedial legislation would be re¬
rates during tax repayment years
be given a fair trial, although in quired. But how about taxpayers
cumulation
despite the fact that most of
broken. By the
Last week I haw-hawed at
same token, however, I would
the pollsters. This week I'm be
ready to run if, after a bad
looking for a hole to hide In. intra-day
break,
the
tide practice the difference
Like the political seers, I too didn't turn.
Arguing with the merely psychic.
ing.
find
the
at
dividends"
of
.
*
*
*
possibly more down before
On
a
day-to-day basis I
any
sustained up
market.
Daily trading in such markets would be tempted to favor the
can
be profitable. But it re¬ buying side despite the vio¬
quires constant tape watch¬ lent breaks of last week, and
can
leveled
been
taxation
"double
(Unreasonable Ac¬
than against
of
Profits):
Undue
Sec, 102
(2)
has
cism
(Continued from page 10)
Administration
Truman
now
dis¬
enough; sometimes it
is overdiscounted.
new
isn't
it
sometimes
But
Thursday, November 18, 1948
CHRONICLE
FINANCIAL
&
Aside
the
from
rooms
ognized
that
operation
the
importance
business, it must be
of
of
rec¬
the
success
of
the
each
hotel
will
be
Volume
168
Number 4752
"
THE
measured
by its ability to realize
the lull income poientiblities from
all of its available
facilities, such
bs
restaurants,
bars, stores and
The restaurant busi¬
Other space.
ness comprising
ahd
the sale of food
beverages is
integral part
operation .and. when
successfully operated is a source
an
Of each hotel
of
considerable income which will
add
greatly
value
the
the
'to
the
of
investment
hotel
property.
At
time, the restaurant divi¬
same
sion of the hotel business
presents
many difficult operating problems
under present day conditions.
war period, it
experience that
general
was
the
volume of food and beverage sales
ran
borne in mind that the break-even
point is
a theoretical one which
varies with each hotel and changes
with conditions.
The break-even
point
slightly under the volume of
be lowered
by an
in rates and prices in
can
vance
8f FINANCIAL
CHRONICLE
taxes, interest on a 50% mortgage
at 41/2 %, depreciation on
building
tiotel
and
the
corporate
ad¬
10%
ex¬
rate of
38%
9%
at
and
a
the
on
50%
equity,
charges.
cates that at
by reduc¬
On the other hand, the
Dreak-even point will be raised
if costs advance faster than rev¬
enues
if there is
or
of more profitable
falling off
a
in¬
of
sources
come.
the
a r.e
studies
to
conducting
oper¬
detailed
gain greater efficiency
waste of labor and
and eliminate
materials.
the
hotel
These studies result in
elimination
of
unnecessary
sales but during the war and
postwar boom, food and beverage
became greater than room
services, improved physical lay¬
outs, increase in productivity of
employees through better work
sales.
thinking toward utili¬
sales
that
It
therefore
was
when
natural
the
peak of the war¬
boom passed and the free
spending for food, liquor and en¬
tertainment receded, hotel restau¬
time
levels for other
rant
sales
show
be
expected to
greater decline than room
a
Sales.
would
mechanization where possible.
Hotel
Properties Improved
sales has held up because
of menu
from
price increases resulting
the
advance
in
food
cost
decline
the
in
actual
number
most
of
On the other hand,
beverages, which is the
profitable part of the hotel
restaurant
operation, reflects
cline of about 12%
reached
in
de¬
a
from the peak
1946.
~
.
tered
The
falling off of restaurant
business,
particularly
beverage
of
on
is
luxury
dine
most
type
and
These
noticeable
dining
dance
in
the
rooms,
and
rooms
bars.
the rooms which
were
particularly
the
patronized
were
by
the
casual customer in the free-spend¬
ing
era.
^Undoubtedly, the high
.cabaret tax, which adds 20% to
check
every
and
where
music
dance
entertainment
has had
a
are furnished,
deterring effect on this
$ype of business. As
hotels
result many
a
curtailing
are
closing
and concentrating on
or
these
rooms
other
types of restaurant service.
High
Food
equipment.
mates ior 9,000 hotels of 50
mor^ffndicate
or
billion
dollars
The rise in food cost prices pre¬
sents
a
hotel
difficult problem in
very
restaurant
operation..
The
necessary advances in menu
prices
have reached the point of public
price resistance. 'Hotel operators
have
been "forced
consideration
to
give serious
methods
to
off¬
to
set high food and labor costs, such
hs,
better planning
of menus,
elimination of ..unnecessay items,
improved
tion
efficiency, in
and
service,
prepara¬
and
greater
mechanization of equipment.
The
outlook
for
the
food
and
penditures
radios
and
tive
to
which has
stores,
maintenance.
The result of this is
that hotels, by and
large; are
excellent physical condition.
sort
sections
Califonria
growth
motel
and
Florida
the
They
indicates
about
then, 350
The
approach.
Hotel
from
new
the
gained
not
take
this
that
the
hotel
business?
estimate
averaging
hotel room,
the
oc¬
Based
of
On
property
rates
so
taxes
have
into
went
many cases
by institu¬
evidence of
will
over
new
conditions.
there
areas
building and
is
no
type of hotel busi¬
through/a difficult
''growing pain" period. • They are
not
go
refinanced
operators have already
tered
this
or
are
en¬
considering entering
preferred
($20
67,000 shares of
com¬
stock
($1
to
par),
outstanding
prior
per share
of
$1
non-cumulative
preference
$7
stock
and the
preferred
etc. Michigan
25
paid
Bakeries
stockholders of
common
.
The
directors
of
Gerity-Mich-
igan Corp., Adrian,
clared
cents
Oct. 29 de¬
on
a
quarterly dividend of 10
per
share ,on the capital
stock, payable Nov. 30 .to holders
return
There is
five
,,
,
,,
considering
<
,
-
,
investment
.
.
risk
of
has
the
that
than
in
the
been
last
decide
month
over-
decade.
tional
moderate fixed
conservative
on
mortgages
and
institu-
the
I safety feature of the old
|
ized
bond
j
ness
is
issues, the hotel busithe heaithiest financial
in
1 condition
income
reorgan-
cents, paid
.•//""> ' / >
Lamp
Co.,
scribed
Aug.
31,
W.
holders
scribe
shares.-
had
on
one
the
profits tax,
excess
has
bination
cerned. :
the
•V'v
,
"Motor
'
The
enced
,
v/
Burden
/
hotel business
a
doubled
costs of
rials
used
heavy
cost
offset up to
ume
■
1941
hotels
and
increases
the
and mate¬
have
100 to 300%,
now
in
Hotel wage rates
since
by
experi¬
increase
other supplies
creased from
,"i,"•
/ .;//.
has
tremendous
operating costs.
have
'
in¬
These
have
been
by the large vol¬
of business and the moderate
increases in room rentals, and food
and
liquor prices.
with many other
hotel
even
business has
point.
As is the
industries,
a
case
the
high break¬
However, it must be
to
a
described,
which
is
as
a
com¬
a
the
best features of
fashioned inn with the
motel.
Perhaps the
'
.•/•/.■
of
old
modern
Operating Cost Increases Heavy
,
been
Hotel"
right
additional
for
to
deterrent
resumption of hotel construc¬
tion has
vestment
been
the prohibitive in¬
required due to high
construction costs.
It is estimated
that eveft non-fireprobf
two-story
will now cost
up to
construction
$7,000 per room, which is com¬
parable with what the modern
!city hotel cost before 1941.
mates for modern
struction
$15,000
charges
are
per
on
city hotel
now
running
room.
such
Esti¬
an
The
The
Controversy
gold.
evolve from
a
set of factors
Little Relationship Between Gold
and
the
economy.
Even
the
defenders
of
the
the
-
present-day
most
ardent
thought that
capitalism
is
the
The
over
investment
sound
a
better may
self
*
confusion
those
who
gold coinage.
that
that
be required.
cannot
generate
is
nothing
gold
,
clamor
per¬
for
free
In view of the fact
is
not
wealth
Co.,
$5
shares
declared
in
our
society, it is difficult to
*
of
Clark
Buchanan,
10%
a
Gold it¬
either.
In
society, it is purely
a
the
thought
produce
better¬
any
conditions. It is
surely true that resting
number
as
79 in the atomic
scale, flanked by
platinum
stock
dividend
stock, both payable Dec.
common
to
15
No
holders
of
record
Nov,
script certificates will
sued.
Fractions
cash
based
on
will
be
the
■•
price of, if there
the
on one
other, it is
an
metal
in
ergy.
The modern alchemist will
sound
search
monetary policy
unknown
of
were
the
either
poorly operative, and
or
scale
the
up
with
when banking did not enjoy either
any
controls
gold yields
its
or
present-day
effi¬
and
ciency.
All these
day wealth
conditions of presentare
fairly well known
and understood by the proponents
socialism.
bor
ator
as
Marxists
the true basis
of, all wealth.
stress
for, and
Yet the
la¬
cre¬
onus
other
day si of atomic
and
down
better
metal.
the
en¬
atomic
hope
in
most
The
fact
that
isotopeS of morality
no
honesty, that it radiates
general
well-being, should
be
more
interest
but it
certainly should not be
glected
by
sociologist
case
in the
the
as
to
the
no
of
sociologist,
economist
ne¬
turned
it would appear the
gold standard debate.
in
sale
transac¬
no
the New York Stock
on
29, 1948.
/;/./'. /./"
*
Eaton
land
*
'I
is
listed
New York
Stock
'
/■//■•'■
*
Manufacturing
stock
Detroit,
Exchange
'
Nov.
Co.,
the
upon
Cleve¬
and
Exchanges,
plans
shortly to split each of its exist¬
ing
outstanding
value
if
shares
a
896,260
into
value
par
authorized
holders
011
$4
par
shares
two
•
of $2 each. It
by
split up,
stock¬
the
Nov. 22 will be
com¬
pleted in December.
*
*
♦
■
/.
Chrysler Corp., Detroit, for the
uninteresting
times when sound currency and a
is¬
paid
closing
are
29.
be
tions, the last recorded bid price
side and mercury
portance
by
can
Equip¬
Nov. 5
on
and the usual quarterly cash divi¬
dend of 50 cents per share on the
whose
■-/■■;
harasses,
ment of economic
on
of
estate
and
policy
traditional symbol elevated to im¬
make it extremely difficult to be
real
monetary
is needed
what
successful as a pure
tion.
Allowing for
hotel'opera¬
at
five
*
directors
ment
present and plural incarnation of
Midas.
standard •modern
gold
believe it
in the street to
man
modern
where gold has' haps
see
to
relation
unfair to the
I
encourage him in the
This
Present Economy
It is hard to
any
'
*
Cold
operating without the consent and
knowledge of those affected by
them.
.//>■•/•//
con¬
fixed
sub¬
1, 1948
share
each
un¬
held.
the modern
greatest
011
stock¬
before Oct.
or
share
The
what
proposed
sub- >
Johnson,
is anticipated that the
hotels may derive some benefit as
far as volume of business is con¬
•«
of the
them
cided against issance of the
subscribed
for
history.
Roy
-O"
Hall
have
shares
offered
by
'
M.
President, announced on Oct. 16.
The directors, he stated, have de¬
per
of its
Detroit,
for 46,077
shares
53,770
C.
with
be
the
of
.
of
bution
will
divi¬
July 30.
on
,!♦/.
•
Stockholders
dehy¬
1920
and with the
10
V
the
substantial amount
now a
charges
Certainly
which should be recognized in the
to
ing the close of the quarter, rather
was
said
equity money in the hotel busi¬
ness
period
year
.
the
of
remaining
would approximate 9%.
be
business
financing
Corporate rate
the
on
agreed
understand how its general distri¬
cities
record
Oct. 15, 1948.
by*
and
Oct.
on
50% stock dividend to
a
admit that sound currency backed
towns
$20
shares
stock at $100 per share, and the
remainder to pay for expansion,
smaller
considered
at
$4,425
cumulative
that the hotel of the future for the
It ;iis
un¬
Corporation,
both
of
Detroit.
The net proceeds would be used
to redeem the 5,968 shares of
to the
field.
new
be
derwritten by S. R. Livingstone
&
Co.
and
First of Michigan
expendi¬
tures, higher wages and the spend¬
ing Of profits Otherwise subject
'■
con¬
stock
and
/
safely
may
drated of the water from the
-
at
38%,
(although
taxes
were
higher during the war years), the
particular threat to the es¬
tablished hotels in the larger cit¬
many
5l/>% cumulative
dend actions in the month follow¬
hotel
of-
a
cities,
67,500
shares of
directors
„It
conservative
50%
4 V2 %. and
income
on/ a
taxes at the current
some
climatic
Exchange
a
type§ of investments.
averaged
the five years from 1943
to 1947 inclusive.
Allowing for irt-
year round business due
these
and
covering
of
excess
construction, elimination of many
(Continued from page 16)
operating costs for elevators, heat¬
ing, heavy equipment, etc., acces¬ Whether or not this contempla¬ of the opprobium still rests
heavy
tion is an accurate account of eco¬
sibility to the motor traveling
upon the private enterprise after
nomic substance and fact, I believe it has
become more or less obvi¬
public, convenience to guests in
it permissible in light of a
charge ous that capital in the present so¬
handling of baggage and parking
that private enterprise favors an
of motor cars. "Their growth has
ciety is not the hoard in gold. The
been fnbst pronounced in the so- unfettered, irresponsible conduct attack on
millionaires, on "Wall
carried on from the days of lais¬
called Sun Belt area of the
Street," is replete with examples
South,
sez-faire.
Economics and social of bitterness
and criticism as in
particularly
in
Florida,
Texas,
changes are not always brought the day when
Arizona and California where
gold was wealth or
they about
by force of a revolution— no wealth but
enjoy all
of
Securities
Commission
with
Dividends
through quarter as previously.
in 1948
will total 60 cents per
foreclosed
mortgages eventually
worked them out without loss and share, as against 65 cents in 1947.
realized a return in excess of other The previous quarterly payment
over
average
filed
control of hotel properties
fixed indebtedness
on
income
tere'st
interest
in
type
of
mortgage
financing.
As a matter of fact,
many institutions which retained
about $5,500 per
studies .show that
our
fore interest
9.3%
income basis
on an
earnings
been
Inc.,
18
statefnent
stitutional
percentage of profit return be¬
and
the
Oct.
on
registration
a
return to the hotel field of the in¬
overall
value
the
Bakeries,
Rapids,
of record Nov. 15, 1948.
This ac¬
An encouraging
tion conformed to a policy
adopted
of
the
renewed
financial
by the board on Sept. 28 when the
health of the hotel business es the
What is the actual profit picture
an
addi¬
stock.
sign
cupancy.
of
of
tional mortgages.
wartime
peak, hotels reached only 93%
modernization
have
year
the
and
greatly reduced and in
when
Evidence of
at
even
in
expenditures for the
sinking fund for the retirement of
bonds. Through this device, these
once
heavy bond issues have been
consideration
vacancies.
are
is
into
days of the
many
been
business
properties, for reduction in
stated
events, national conventions,
etc., when rooms have not been
readily available. This viewpoint
there
have
indebtedness, and
that
ing
does
of
reorganized
the publicity given to those occa¬
sions such as, outstanding sport¬
the
date
building
up
of
working
capital.
Many
hotels were financed by mortgage
bonds
which subsequently
were
doubt, from
no
to
the
periods
of the
ly that the hotel business has been
rolling in wealth. This impression
been
1942
form
profits
during
boom
fixed
mistaken impression
in the minds of the public
general¬
has
business
postwar
improvement
Profits Not Excessive
a
Position
History
plowed, back into the
-
There is
hotel
and
war
in
greater part of the
the
of
rooms
forerunner of this
a
Michigan
Gland
mon
Motels and
motor courts have certain advan¬
hotel
by-
the
tages in the low cost of land and
there
stimulated
be,
may be said
ies but in the smaller
defense
must
increases,
continue
Financial
Healthiest
Cincinnati,
12)
page
sale
vertible
horizontal rather
taper off somewhat.
boom
and
distinct part of
on a
and
use
above, is
exceptional equity for this
of the'
Motels
vertical plane.
a
ness
go vern mental
store
mortgage
development
a
to be hotels
than
in
as
and
business.
spending attitude of the public. If
flationary
in
There has been very little con¬
struction of new hotels since 1930
with the exception of certain re¬
doubt this
resumption of. the in¬
dining
ducing facilities. In addition, each
year
hotels
spend
considerable
sums
for
regular
repairs
and
pends upon the trend of food
cpst prices and the psychological
be a
unproduc¬
cost
1949
for
profits will
Hotels
floors devoted to
seven
the
common
par)
income pro¬
more
Terrace Plaza in
new
ex¬
rooms, bars and other-income pro¬
some
probably' continue to
But, should
spent or
this mod¬
Many hotels
convert
into
space
favorable
business will,
rooms
for air conditioning,
television^ studio type
and
rooms
In
conditions continue as at present,
the volume of food and beverage
Esti¬
have been making substantial
to
de¬
much
on
ernization program.
beverage business of hotels is dif¬
so
been
will shortly be spent
ficult to forecast
as
en¬
their
that almost two
has
hotel business.
Problem
//
of
properties and
considered
Prices Difficult
hotels
war,
rehabilitation
.
sales,
the
program of moderniza¬
a
and
a
meals served.
the sale of
Immediately following the ter¬
mination
tion
prices, although there has been
and
Modernized
However, the dollar volume
of food
increased
operating
outlook
or
at this level.
ductive uses, such as department
stores and office buildings.
The
tions and working hours, improve¬
ment of facilities through more
modern equipment and
conditions
zation of the valuable lower floor
methods and rescheduling of posi¬
room
slightly lower. Barring
business
drastic
through
tional
that the results for
are
1948 will be
the
(Continued from
ing
average
indications
fixed
39
Michigan Brevities
not
for the five
period, namely, 9%, and the
year
charges,'-there is developing
is
return
the
adverse
trend of
equity
basis of calculation,
for ,1947
was
same
profit
about
of about
occupancy
profit return of
a
investment
75%, it would require an average
rate per occupied room of about
$12 per day. To offset these high
a
Many of the leading hotel
an
business,
on
On the
the fixed
return
tions in operating costs and fixed
or
(2099)
excessive.
equipment, 'income taxes
charges will run to 16%
of the investment. Using standard
hotel operating figures,, this indi¬
of cost increases
cess
ators
Prior to the
the
COMMERCIAL
nine months ended
reported
Sept. 30, 1948
consolidated
net
ings, after charges and
$59,887,601,
$6.88
or
earn¬
taxes,
per
of
common
share, compared with $47,873,089,
or
$5.50
the
year.
30,
per
share, for
common
corresponding
period,
last
Net current assets at Sept.
amounted
to
$393,696,048,
against current liabilities of $159,-
376,786.
Cash
marketable
$211,251,283.
and
short-term
securities
totaled
40
THE' COMMERCIAL
(2100)
CHRONICLE
FINANCIAL
&
Incentives—T1 ie
(Continued from
dynamic British capitalism.
It is
apparently doing the same thing
to
make
to
up
'
•
Incentives
*
It is
The fourth group
of
on
economic
instructive
most
.To
work and
stories
also
time.
our
the
from
recover
ard
and
incentive
least
used
which
be
to
are—or
.
familiar
—
at
to
other
American.
It encouraged
investment and production by al¬
lowing a reasonable profit.
In¬
stead
of
piling up unworkable
laws to restrain the black market,
and.using valuable manpower to
enforce them, it ignored the black
market except for the basic food
every
With
first
its
added
their wages.*
„/•.
•
mendous
surprise
and
to much of the world.
discovery
Belgium's
13
leading industries operated in
1947
at
ail
average volume 7%
above 1938.
Under private man¬
agement, the people are investing
in' personal savings to
millions
The
their steel mills.
modernize
country, is exporting three times
much
as
as
which
ports
the
before
war—ex¬
properly from
come
Of production and
miserably inadequate
excess
an
put
of
not
ra¬
tions of her people. Her trade is
almost in balance despite heavy
them
,•
i
.Living
.
conditions
as
good
almost
are
in
'.
Belgium
our
as
The store shelves are full.
own.
There
is virtually no black market.
currency
Europe.
The
is the third hardest in
The communist vote is
small.
/
-
*
That, gentlemen, is what incen¬
can do when they are prop¬
erly employed.
a
-
program
in
interest
vested
•
their
the
the
at
company
that it-gives
time
same
Westing-
house sound working capital.
If I
seem
<
to put major stress on
material
of
rewards
our
of incentives
ance
man's mind
to
and spirit as well as to his pock-
Material and spiritual in¬
etbook.
centives
cannot, in the long dayroutine of working and
living, be entirely separated—nor
should they be. Like you, I have
seeii how human nature responds
to-day
.
to
spiritual incentives.
too, I realize that all
freedoms
must
Like you,
the other
based
be
on
Incentives
The
third
eco¬
'
nomic freedom.
for
'
/
chairman
the
of
board
the
quote
Motors
General
Corporation, "It may well be said
that the important difference, be¬
tween
business
one
and
another
operating in the same general
field, is the people who manage
business."
the
Our
own
country, of course, has
special dispensation from rules
are
universally applicable.
no
which
We have:cut
incentives
our
dan¬
gerously thin by inflation and an
unwise tax system. The continued
success
and stability of our sys¬
tem demands those incentives.
is
both
It
the
opportunity and the
responsibility of business states¬
manship
today to restpre incen¬
they have been taken
to maintain them where
tives where
away,
they
now
them
operate; and to expand
wherever
practicable.
In¬
centive must operate for all of the
tour overlapping groups of the
American
One
liim,
people.
is the customer. To
American
capitalism
has
group
given the incentives of
better
products,
services.
better
and
new
and
new
It has done this
the
over
at
progressively
lower
prices; and, under proper condi¬
tions, will continue to do so in
years
the future.
As nowhere
has
consumer
been
else,
in
is
system
our
to
wants,
When and where he wants it.
customer
our
educated
expect—and get—what he
The
boss.
We take that for granted; and yet
it., is one of the keystones of our
economy.
standard
past
100.
times
years
of
40
every
His
living
years
real
over
wages
are
has
higher than they were 100
in the year when Karl
ago,
Marx,
that
declared
very
law
must
become
of
things
by
the
poorer and
the
the
world's
American
turning out
labor
industrial
more
poorer.
force*
worker
the
is;
than one-third I
of
:
realize that
We
stands
major roadblock
a
the
between
for
need
equity capital and the willingness
our
citizens
to
provide
it.
of
In my opinion, then, this is the
primary responsibility of business
—to keep our system healthy by
maintaining its incentives for cus¬
tomer, employee,
manager
and
stockholder.
May I, in addition,
which
—by
mean the meager
return to the owner" of
cash
net
I
individual
and
A
taxes
are:.,paidro-
limitation
50%
income tax will -in
corporate
personal
on
measure
some
relieve the dearth of venture cap*ital.
fairest
the
But
raising the stockholder's
eliminate
to
the
of dividends by
on
This
for
would
common
wages
is
taxation
double
removing the tax
stockholder.
the
of
method
provide
stock
incentive
ownership, and
result in increased investment, re¬
duced debt and fixed charges, en¬
larged and modernized production
stockholder
by
those
for
shared
whose
millions
would
standards
be
living
would
raised.' .and
be
whom
jobs would be created
preserved.
and
I
opinions of other
on this matter
respect the
schools of thought
of double taxation.
that
position
Some take the
second
the
dividends would be of
on
income
if
tax
50%
a
were
tax
„on
practical
limitation
no
put into ef¬
are
First,
of our people saw a state
whose cruel efficiency, singleness
many
recognize
thai
eve
they and a few others like
can
figure it all out bettei
than the generality of the popula¬
can. There is something abouj
tion
has
Washington
come
and
and
and technicians
owners, managers
What
plan
we
or
want, therefore, is not
even
want millions
few
a.
plans.
f
what
public is asking
whose livelihoods depend or
for,
their
ing provision,
tax
come
in-,
exist¬
top of high in¬
on
rates, is bound
to
per¬
petuate the undesirable condition
ta
which
management
incentive' and
vital
panying
which
of
sense
lacks
the
the
accom-,
responsibility
ownership.
inherent in
are
Further, in order to give the
manager
adequate incentive, we
should place a fixed reasonable
on
the share of
which
take
in
the
man's
a
government
income
This
taxes.
limitation should be fixed at 50%,
■=ince any man deserves at least
half of
the
Taxation
ously
tive,
of
his
efforts.
individual
and
in ,the
less
tax
I
more.
initia¬
long /run
revenue
agree
will
rather
with
Mr.
Stassen, who said last spring, "A
government
than
which
50%* of
a
takes
man's
more
income
in
statism., The
have been dis¬
era
Those who insisted
capitalism
that,
dead have found
was
lively-corpse
under our
a
their hands.
on
"mature economy" had
ended;; v'and
t h a t:
;
within
it
proved
opportunity
have been
They have been
wrong.
was
.
gone,
proved wrong both in their doubt
of the
on
system and in their theories
replacing it with another.
»;
,
The
dictators
Russia
/ Secondly, the businessman who
really believes in free enterprise
rule
Soviet
sure
they know
the future.
I strongly
the world
these
should
who
quite
are
will
corruption,
,
.
his
solve
problems
own
refrain from asking the gov¬
ernment to solve them for him
and
The
businessman
is
held
respon¬
who
owns
that
suspect
one
discover
day
that
there
is
a
rivalry
and
indecision
among
leaders, ah inefficiency and
comparable
found
we
in
Kremlin
sible for the results of his bus'ness
belongs
actions;
to
Germany
Nevertheless,
the
believe
14
that
what
in
in
men
the
1945.
the
future
nism.
he
had
control
much
the
as
best
will
allow.
businessman
a
them
gets
nublic law
for
or
help,
and
and
gets,
he
If
more.
—
tc
runs
Washington for advice
he
as
actions
government
When
retain
those
over
something'
instance,
a
executive order
an
international
to
We believe
,
in this
not
belong
in this country and
to
communism.
know that the great
periment of
our
munism,
We
,
advancing
fascism
or
commu¬
that the future does
room
time is not
ex¬
com¬
socialism,
or
but-
liberal
democracy under a
regulated but not controlled capi¬
he
talist economy.
venture
which he ends, businesswise, with
his neck in a noose. The volun¬
tary program he asked for begins
to become compulsory.
The gov¬
committed
I ,cannot agree., The main
issue is how to raise badly needed
quate
;
taxes
capital, how to induce in¬
incentive,
to
pays
so
These
limit income
None of them
50%.
high
many
a
investors
tax.
The
of them
the second tax on
are
now
sets
up
a
chain of
decides
ernment
who
events
shall
bv
give
and who shall
get. and how much
of it, and what it shall be used for.
And the
an
which began ps
continues
program
emergency
measure
way
tonight.
the
ness
the
of
Soviet
ag¬
ators:
budget will not fall
below its present level. Naturally
I believe -in -a
balanced budge*
debt.
reduction of the
And
I
believe
equally that if tax rates must br
high, it is better that they be high
when national
income is at its
peak.
I hope
and
Time
We should remember, neverthe¬
obvious but
too-often forgotten law at work
on
our economy—the
law of di¬
an
returns.
There
is
a
likelihood that these two
improvements in our tax structure
would
of its average
ment
result
in
revenues,
the
two
greater
because
govern¬
of
you
cus¬
the
and
capitalist democracy is
to a foreign program
has no parallel in history.
that
We have taken
nomic leadership and to
bring it
safely to solid ground. Our capi¬
talist economy is now being called
upon to supply a substantial
part
of what is needed for
major
part
The time
is
Remedying
ripe,
as
this contest
no
are no
the
of
the
institutions
of
freedom.
Can
American capitalism and
capitalists live up to the obliga¬
tion and promise of the perilous
tasks
to
which
they
have
committed?
is
by no
means
foregone
a
I
we can.
been
A
'
am con¬
vinced, however, that there is
he-
a
less—the issues
com plica ted^-tban
more
survival
condition
never
rebuilding
the
of
noncapitalist
world.
We have set out to defend
free enterprise against strong and
persistent attack.
The stakes of
It
far
the colossal job
enabling Europe to survive. We
propose
to give the world eco¬
•
Rine
on
of
his
Capitalisms Defects
must meet if
we
to reach the
ourselves.
goals
we
one
are
we
have set for
: ', ;'
for -successfully explaining
capitalist system
and for remedying the conditions
which are hampering it.
Both on
the record and in the realm o*
incentives and permit the
system
to
operate as it was"*ftieant to
promise, that system is infinitely
superior to any that has preceded
it and to any which is now trying
nothing within economic " reason
that the system will not do for us.
fore,
the
.
American
the past
incomnarable
a n d
decade with
indisputable
It has overcome
a
series
world admits this,
however grudgingly;, the prestige
The
of American
been
is
so
capitalism has never
high.,
The United States
everywhere- envied for
the
chance.
operate.
To
of fantastically difficult chal¬
lenges.
We must give our system
cent
results.
over
triumph.
.
,
American capitalism has proved
itself
minishing
on
President
the
to match its
Returns
strong
me
Our
conclusion that
Taxation and Law of Diminishing
less, that there is
the American
for example
advisers.
federal
national-
obli¬
and
economic
of
associates, stockholders,
western Eurone
and in consistent
patiently
employees and any labo»
organization
which
represent
them, your Congressmen and Sen¬
and must finance om
rearmament and underwrite
economy
with
no
tomers,
-
gression,
own
agree
If,
f
-
hqs
will explain
and advocate them to all within
vour sphere of influence—busi¬
advancing these two tax pro¬
with
work.
\
us
dividends.
the people who are-most
threatened
system
te: you'
posals,. I recognize the realities of
the federal budget. As long as we
are
Finally, each of
gation to explain
..
no'rits of tax reform I have made
only a 20% or 25% rate.In
it has disappeared.
is to re-
severely affected by double taxa¬
tion, even where it is imposed at
time of peace is killing the future
citizen and weak-
a
re¬
sultant trend toward
credited*:
fect.
beyond that point seri¬
weakens
produce
than
results
depression and the
of
being right.
That is the
meaning and the strength of free
enterprise. '
'
move
as
home, Ave have survived
cynics of lhat
the
make
the
At
Wc
of individual plans
These plans come out of the heads
ofinen who are on the scene, :wbc
be
than
at
clowns, and at
worst sadists and criminals.
Those who insisted that expansion '
life—what, makes
of
stern,
were
all the! rich, experience cf <
million
staff
men
who
are
the
lack
such people: is not to
rtather
the
leaders
or
most
the enterprise for which it is re¬
sponsible can be so productive of
good to the national economy that
the Federal
Government would
basis
that
Nazi
men
experience of
effectively the facts
Continuance
determined
decade
experience, alone,. - plus the
a few advisws. They
almost unbeliev¬
was
found
We
best weak
the basis of their
on
we
country,
system
a
which
sense
able.
straightway be¬
matter what their politics
no
found
which was
cruel, but which was not wise,
single in purpose, nor efficient.
We found
corruption, indecision
and
a
lack of elementary good
No matter how well-intentioned,
they operate
democracy." When
drove to the heart of that
government planners.
I, Now the proper inducement.to
come.
muddling
we
tc
move
long after the need which evoked
capital
purpose and dynamic strength
threatened to ove r w helm our
normal
seen
level-headed businessmen,
in these
lower income brackets might be¬
come investors, or larger investors
than they now are.
* !> , ; -
acting in the public interest if
it were to tax gains made through
preferential stock purchases on a
of
the
atmosphere' of Washington
apparently, which works mysteri¬
ous
changes ip. people., v Each ,oi
probably
political ideas, they
In German Nazism,
represented.
always be individuals who bel
you
the
degree
government planning bug' k
hardy creature which we snal"
always have with us. There wil
that
What is
important, we have defeatecl
the political systems, and to some
the
them
our economy
more
Planning
must
we
have emerged
basically sound,
and
civil liberties intact.
our
re¬
a
enemies,
with
a
"7""', know
^
believe
I
Government
own
after
stocK
common
which
have just defeated
we
machines of three power¬
war
ful
lated part of that picture?
Venture
capital will not go to
work for today's starvation wages
Abroad,
the
briefly mention three other
very
duties
themselves — is > ex¬
panded opportunity for manage¬
ment personnel to obtain a share
in ownership.
Management's acquisiton of a substantial stake in
worker
Though he comprises lefes than 6%
of
shortage
a
managers
the
11
of-capital expenaitur.es,
only 2%
dividual Americans to add to their
sonnel—needs the
incentives
of present stake or to make their
recognition, promotion, and pay first investment in their country's
While much
investment
in proportion to his performance.; future.
Of perhaps paramount importance capital comes from-the wealthy,
—to
the
employing corporation a great deal comes also from those
With ade¬
and its stockholders as much as to with smaller incomes.
may
is the employee.
Through American capitalism he
has earned unparalleled benefits.
from
to
than includes all supervisory per¬
earnings
Incentives for Workers
His
suffering
today
good management men
Like any
other, worker, the manager—and
limitation
A second group
doubled
is
business
that
know
capital
venture
to
consequence
tives
You
look
prime the pump. But when, in
the flourishing year 1847, invest¬
ment in common stocks supplied
the
Managers
for whom-in¬
centives must be provided are the
To
funds and by
borrowing. Both of these reser¬
voirs
are
running low, and we
own
facilities, and ultimately in lower
costs and prices. The benefits tc
group
managers.
peacetime
of- industry's
sys¬
tem, please believe that it is not
I fail to see the import¬
because
history — has
financed almost entirely out
must
offered our
we
on
our
been
i
'
has just
in this di¬
a
of
juccess
the
in
be
can
preferential option
on
Westinghouse common stock.
More than 17,000 of our people, or
about
16%,
signed
up
to buy
nearly 300,000 shares. This gives
imports of machinery and equip¬
ment.
a
This fall,
employees'
>
/;
,
the
ownership and
Westinghpuse
rection.
buy with
Any capitalist here could have
predicted the results; but appar¬
ently they have come as a tre¬
in
share
a
carried out
postwar
for, something to
incentives
these
profits.
credits, it bought consumer goods
instead of capital goods in order
to give its
people something* to
work
of
must
the basis of private
money
pouring into private in¬
dustry. That situation no longer
exists.
Capital expansion since
the war—the greatest expansion
grown
part of the enterprise.
To
.
ration.
incentives
system—reward for extra accom¬
plishment; recognition and pro¬
motion; information on* the mean¬
ing of his job and its interde¬
pendent
relationship
to
every
the
war,
Government used stand¬
methods
of
free
enterprise
Belgian
centives
for whom in¬
be provided is the
This
country
has
stockholder.
He should have
wages.
other
the
Stockholders
for
responsibility to main¬
our
the other hand, tain and improve worker incen¬
has proved itself in at least one tive. The worker needs, first, the
of
a
steady
economy
European country. What has hap¬ security
pened in Belgium is one of the under which he receives steady
Incentive,
taxes which
ening the long-range strength of
its economic system."
product and helps
one-third of its total
market.
socialism.
textbook
world's
of the
4) *
page
wealth it has created.uhder capi¬
talism.
'
enterprises created and.the
they would pay.
new
Foundation of Our Economy
Thursday.. November 18, 1948
If
We
must
do
we
a
keep
that,
de¬
our
there
protect and cherish the
is
eco¬
nomic machine known
as capital¬
democracy—"the most power¬
ful instrument ever devised by
ist
man
for
creating
the moral and
wealth
within
political framework
of, liberty nnder law"*—is the first
responsibility of economic states¬
manship today.
.
_j..
♦"Fortune"
*
•
■
■
editorial, Feb. 9,
,
\
1948.
IVolume-168 "Number 4752
THE
CHRONICLE
FINANCIAL
&
COMMERCIAL
(2101)
41
Indications of Current Business Activity
The
following statistical tabulations
shown in first column
cover
Previous
Latest
AMERICAN
IRON
Indicated
AND
steel
STEEL
operations
INSTITUTE:
(percent of
Week
capacity)
ingots and castings
(net
Nov. 21
tons)
Ago
Latest
Year
99.1
1,791,700
1,786,300
v
1,784,500
97.0
DEBITS —BOARD
OF
THE
Month
PETROLEUM
Crude
oil
Crude
output—daily average (bbls. of 42 gallons each)
to stills—daily average (bbls.)
output
Kerosene
f
Gas
oil
(bbls.)
output
and
Residual
oil
output
6
15,626,700
5,604,100
5,534,800
5,239,550
6
115,600,000
5,626,000
5,551,000
5,189,000
Retail
17,569,000
17,045,000
16,270,000
Nov!
I
i
Residual
fuel oil
ASSOCIATION
OF
6
17,213,000
I_Inov!
6
Nov.
6
7,549,000
7,679,000
7,234.060
6
8,902,000
8,853,000
8,798,000
8,650,000
(bbls.)
(bbls.)
Inov!
Nov!
at
AMERICAN
2,387,000
2,109,000
2,415,000
6
91,377,000
91,925,000
91,411.000
82,007,000
6
26,740,000
26,565,000
27,061,000
22,593,000
6
83,150,000
81,593,000
77,879,000
81,947,000
"81,195,000
78,166,000
COTTON
57,172,000
OF
6
843,106
—Nov.
6
700,182
891,811
ENGINEERING
Nov.
731,110
CROP
CONSTRUCTION
ENGINEERING
—
NEWS-
$137,751,000
Nov. II
construction—
State
and
Federal
COAL
Nov. 11
63,561,000
52,328,000
87.937,000
500-lb.
74,190,000
56,991,000
82,237,000
85,586.000
11
51,724,000
44,573,000
58,628.000
64.537,000
Nov. U
22,466,000
12,418,000
23,609,000
1
Inov.
_
1_
OUTPUT
(U.
coal
S. BUREAU
and
lignite
coke
DEPARTMENT
OF
$170,174,000
$159,327,000
...
;—Nov.
6
Nov.
6
6
(tons)
10,240,000
*12,300,000
11,850,000
863,000
1,015,000
1,188,000
STORE
ELECTRIC
output
SALES
137,900
*153,400
150,600
(bushel)
147,200
Flaxseed
INDEX—FEDERAL
RESERVE
Nov.
6
320
319
^
336
347
.
(in
kwh.)„
000
!
AND
INDUSTRIAL)—DUN
(bushel)
Hay, all
Nov. 13
5,563,514
5,570,767
5,482,030
5,084,340
—
—Nov. 11
...
"
96
:
104
94
84
wild
3.75628C
*3.75628c
3.75628c
3.19541c
9
$46.82
$46.82
$46.82
$37.06
Nov.
9
$43.00
$43.16
$43.16
(E.
M. J.
&
Electrolytic copper—
QUOTATIONS):
•
(New
(St.
Zinc
(East
MOODY'S
U.
York)
Govt.
S.
Average
_Nov. 10
21.500c
Nov. 10
at
PRICES
DAILY
21.500c
19.500c
21.300c
19.300c
15.000c
100.96
corporate-
IOC.71
100.69
110.88
110.70
111:25
115.82
116.41
.Nov. 16
■114.66
114.08
114.27
Nov. 16
Group-
Group-!
Industrials Group—
U.
BOND
Govt.
S.
YIELD
110.52
103:47
104.31
106.21
106.74
i.
111.25
112.00
114.66
J
.Nov. 16
Nov. 16
2.43
V
2.45
3.12
.* *
:•
^
2.86
2.83
.A.,-.
.Nov.16
2.92
-;^-;y;2.95
3.18
3.18
Baa
j-Nov.
16'
3.54
-'5:
•
2.45
.v'-V'A
2.83
'
•"
3.49
■(
73.35
V;
•:
Group.
Utilities
Industrials
_>—
Group
LNov. 16
.Nov. 16
Group..
3.09
.Nov. 16
-
7"
3.37
2.90
—
^—:
.-.,3.38
.
V-" 310
v, 2.91
3.06
J
INDEX-...:
ASSOCIATION—WHOLESALE
ITY. INDEX BY GROUPS—1935-39=100:
ri
,
|
57,178
8,393
/•.
vX;
"
'' 2.83
,
and
j
products..
Farm
oils—
Inov.
Zl-j——_
—Nov. 13
,
405.1
Grains
„
448.3
236.5
-"
*
*
297.1 1
208.7
296.3
v
Miscellaneous y
Nov.
—
v*206.5
i.
;1
commodities———
13
261.9
244.1 %
Nov. 13
7
13
Chemicals
Fertilizer
and drugs
materials
J
,—
Nov. 13
,——__r—-.jy——.Nov.
13
13
Farm
machinery.
193.9
.
>
,170.5
of
188.1
•
"
156.6
142.3
35,312
3,072
250
250
-•922
899
790
162,722
169,684
118,639
*$54.12
$50.45
•
.
.
———————
Month
of
U.
—
S.
DEPT.
173
1
198
,v
OF
September:
-
.
'
;
goods
firms
$54.06
-i——
—
—-
goods
,..
—»c.—-li.-—
/-•
....
.<
'
A
40.7
39.4
•;
40.6
*39.5
'
40.1
$1,363
;-*$1,349
$1,248
1.449
*1.432
1.331
"1.274
•'•*1.262
1.165
$579,535
*$570,876
A—
-——i.t——
—
40.4
46.77
*J-
L't
___
goods
54.05
*40.1
40.0
———
goods
•
*49.80
,
1
—
*58.34
,
39.7
'..'.I
/,
:
57.92
50.13
——
30
omitted):
(000's
carrying
margin-accounts—
customers'-net debit
extended
to
balances—
-
•A,'..-.
customers——
hand and in
on
*150.1
*150.1
146.0
223.2
U.
-•
$606,499
44,639
46,755
325,657
341,195
383,20T
539,563
550,298
615,504
72,185,619
68,614,412
,68,883.699
130,944,936
131,127,665
138,336,335
S—
'I■
.1—
bonds—L
78,693
FARMERS
BY
U.
—
S.
DEPT.
Oct,. 15:
All
OF
78.8 l/o
~
.
—-
,
"
.
75.0 >/o
$50,841
252,386
•.,',,
..
farm
$11033R
*233,238
221,106
290
289
INDEX
—
AGRICUL-
i
v.
....
•
-
■.'-
,.
-
•
products
277
'
■■
227
Food
214.3
78.7'o
$72,406
August, 1909-July, 1014^100—As of
Unadjusted—I
-
128.3
*221.6
in
12-31-24^100—
RECEIVED
140.6
151.3
banks
listed
of
Index,
NUMBER
TURE
134.5
220.8
82,603
201
_i-
(bbl.)
ESTIMATE
October
157.1
142.4
150.1
(ton)— -.v——
goods
price
PRICES
)
159.5
•156.6
151.3 :
2,956
1137041
4
{
201 !
Member borrowings on U. S. Govt, issues
Member borrowings on other collateral
235.3
152.2
-
|
175.4
142.5
,
26,358
(ton)——
value
218.6
-
67,467
2,935
-—
50,098
,
96~319
26,190
States)
33
50,125
67,467
value, of listed shares——
.
233.6
28
.J
90,~28¥
———
Market
300.3
198.2
169.0
189.5
29
12,504
————:—
<■
—
of
Cash
Stock
; :-245.2
194.3
230.5
Nov. 13
—
'
.
189.5 -i
Nov. 13
—
.
*.
244.1
229.0
-—Nov. 13
:
313.3
193.7
171.6
x
13.V
1
materials—
Building
259.0
272.2
.
>
5,437
20,270
50,125
——
—s
Market
260.7
259,4
214.9
269.1
244.1
6,191
10,016
9,942
—
A Total of customers? free credit ^balances—
229.5
-
•
297.1
*255.7
13'
—
'
210.1
<
384,407
"
'
—Nov. 13
—
Livestock
I
234.5
.,214.0
2,187,983
'
STOCK EXCHANGE—
Total
i
235.21
181,362
17,985
—
'As
s
251.8
13
}
?
v
13
6,191
—
j———
...A-*
manufacturing
Member
-
212.0 L
13
1-1.'V Fats
(ton)—
(gal.)
*-j
(.5
.
NEW
2.92
;
*»>
;;a.
and seed
sugar
'Nondurable
COMMOD-
.
6,513
2,107,763
9,885
vAll manufacturing
■V sX'V Durable goods
■j
FERTILIZER
6,769
17,164
1
1,820,032
—
manufacturing
Credit
NATIONAL
3,536
3,536
3.29
,
2.89
-
400.3
398.8
—Nov. 16
—
19,258
•
.
1,871,844
States)
(lb.)
•
6,933
19,789
—
;VHourly earnings—A
•i
COMMODITY
6,933
——
13,306
52,665
Nondurable
1
3.44
".
-
32,569
418,355
v
-Railroad
MOODY'S
(3
Durable
3.01
3.00
.
33,478
29,503
2,293,985
Nondurable
•A; • 2.75
;•:•;-;• 2.84
''.-X'' '2:94-'
r
3.14 :/
-
3.54
:
33,765
11,857
52,409
(bushel)
Durable
2.37
"
•
33,765
_
u_—
LABOR;—
All
116.41
7'.*<■■■<■* 3.10
3.13
——Nov. 16
————
1 .Public
115.24
12,916
29,503
—.—
——i
...Earnings—•
All
A
.
113.12
DAILY AVERAGES:
Bonds
.Nov. 16
j..'Aa
I
114.85
12,916
431,401
Hours—
* Average ^corporate—
,
115.04
,—Nov. 16
102,500
(qal.)-_^-_——————
AVERAGE
107.80
111.44
95,609
99,094
FACTORY EARNINGS AND HOURS—WEEKLY
105.17
106.39
...
Public '-Utilities
MOODY'S
109.79
103.47
Nov. 16
—Nov. 16
—-—
109.79
Nov. 16
Railroad
*
Pecans
116.22
.127,654
99,094
—
commercial crop'(bushel)
Apricots
7,334
15,166
,
——_.———
——
(ton)
Cranberries
,118.00
128,442
43,983
252,966
2,288,075
—:
Pears (bushel)
Grapes (ton)
Cherries "(12 States)
112.93
116.41
—
79,343.
.(ton)_—£——i——-l-
Peaches
102.03
Nov. 16
—Nov. 16
1
39,763,
78,766
296,949
„
(bushel)——
(pet,.)
Apples,
:
,
—Nov. 16
49,975
80,137
(bushel)
(lb.)
(
10.500c
AVERAGES:
Bonds
25,977
6,308
49,975
————
(lb.)
Pasture
i
14.800c
15.500c
279,182
26,664
6,384
,
—_—•-
(bushel)
beets
Hops
:
15.000c
21.300c
15.500c
317,240
26,664
——
Sirup
.
-21.425c
80.000c
Nov. 10
,
1,215,970
1,067,970
205,820
(lb.)
Broomcorn
21.200c
23.425c
103.000c
Nov. 10
Louis)
BOND
23.200c4
23.425c
103.000c
at
St.
23.200c
23.425c
103.000c
at
Louis)
23.200c
Nov. 10
1.492,957
2,400,952
1,364,910
210,475
for
Sugar
—Nov. 10
;
1,492,957
317,240
——
—i—
Sugarcane
at—
rexinery
256,417
—_——
,
peas
Sorgo .Sirup,
;
:
Export refinery at
Straits tin (New York) at
(bushel)--
(ton)
for
Tobacco,
!
,
'
,
45,938
——j——————
Sweetpotatoes
$41.50
302,355
49,938
———
——————
(ton)
Potatoes
9
Nov.
302,355
—
—
———l
(ton)
Peanuts
-
Nov.
1,283,770
981,415
—
Peas, dry field (bag)—
—w——
1—
Soybeans for beans (bushel)—————
„
!
3,567,955
1,283,770
981,415
256,417
—
Ilay, clover and timothy (ton)—
Hay, Lespedeza (ton) ——^
Beans, dry edible (100 lb. bag)
-
BRAD-
&
3,649.510
—-—
—
Sugarcane
METAL PRICES
Lead
(in
(bushel)
Hay, alfalfa
steel (per lb.)_
Pig iron (per gross ton)
Ecrap "steel (per gross ton)
Lead
1
—*
Sorghums for grain (bushel)—
:—
Cotton, (500 lb. bale)-—___—i—
*
SYS-
——
Finished
Domestic
8,368,643
AGRI-
Nov,
(bushel)
Cowpeas
;
10,432,934
—
OF
—
(bushel)
Buckwheat
INSTITUTE:
(COMMERCIAL
STREET, INC.
,
11,857,000
REPORTING
of
as
(bushel)
spring
Rye
12,894,000
"1,189,000
"
IRON AGE COMPOSITE PRICES:
,
CROP
—
__
Other
■
t
21,148,000
15,079,000
prior to
—
DEPARTMENT
S.
(bushel)
Durum
Hay,
FAILURES
U.
Winter
All
MINES):
(tons).
(tons)_
TEM—1935-3f> AVERAGE=100
Electric
23,323,000
1
*—
(exclusive of linters)
spring
Oats, (bushel)
Barley
(bushel)
Nov.
anthracite
$109,319,000
Rice
EDISON
23,323,000
S.
COMMERCE):
—————
PRODUCTION
21,049,000
;
municipal
Pennsylvania
Beehive
1
1
Bituminous
U.
Nov.
bales
gross
(DEPT. OF
Corn, all (bushel)
1Wheat, all (bushel)—
73,741,000
Nov. 11
construction
Public
of
thousands)
construction
s.
Private
v
$283,000
15,166,000
PRODUCTION
CULTURE—Estimate
-
RECORD:
U.
AND
GINNING
BOARD
Total
$305,000
7,068
YORK—
j
Production
910,170
722,639
931,750
738,232
$45,934
$285,000
NEW
AGRICULTURE—As
Running bales
—Nov.
$51,760
millions)
(in
Acreage
RAILROADS:
cars)_.
11,815
$52,642
OUTSTANDING—FED¬
BANK OF
29
ACREAGE
DEPT.
63,358,000
6
October
COTTON
Revenue freight loaded (number of cars)
Revenue freight rec'd from connections (number of
"CIVIL
PAPER
RESERVE
of
$27,051
8,044
13,493
—
2,089,000
ERAL
$30,218
8,223
-
—
As
$105,290,000
13,985
—
—
COMMERCIAL
$104,729,000
$30,434 '
'
-
——
;
——
—
-
$107,141,000
—
COM¬
OF
(million* of $):
Total
6,256,000
Nov!
oil output
(bbls.)
(Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished apd unfinished gasoline (bbls.) at
Nov.
Kerosene (bbls.) at
Inov.
Gas oil and distillate fuel oil (bbls.) at
1
DEPT.
_*
.
Wholesale
Nov
(bbls.)
distillate fuel
fuel
Manufacturing
Nov.
;
Ago
SYSTEM—
thousands)-
(in
INVENTORIES,
MERCE—Month of August
INSTITUTE:
runs
Gasoline
Year
Month
GOVERNORS
OF
RESERVE
FEDERAL
October
of
1,697,400
BUSINESS
AMERICAN
Previous
•
Month
Ago
99.4
99.0
Nov. 21
1
Month
Week
*
BANK
Equivalent to—
Bteel
production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of quotations, are as of that date) :
either for the week
are
grain
226
231
261.
223
..
303
'
Feed
hay——
grain and
Feed grain
192
223
1
groups
NATIONAL PAPERBOARD
1
284
(tons)
received
.Percentage
(tons)
of
Nov.
—__——
activity.—
Unfilled orders (tons)
6
244.488
199,563
214,291
222,903
Nov.-: 6
—
189,639
193,819
192,340
:185,873
—
——r,
Nov.
6
—
.
at
Nov.
6
96
419,248
365,928
.»r
9G
Oil-bearing
•
.
102
395,953
•
467,636
•
crops
Livestock
Meat
OIL,
PAINT
DRUG
AND
AVERAGE—100
REPORTER
——
PRICE
INDEX —1926-3(1
—————
144.4
144.2
144.0
Seasonally
148.8
products
and
247
185
150
238
282
344
L-
All
PRICES—U.
S.
DEPT.
OF
LABOR—1926—100:
commodities
Farm
:
j
I
Fuel
6
178.9
180.7
181.5
186.1
6
171.6
174.8
178.0
176.3
Nov.
I
1
)
6
6
145.7
6
-
185.7
Nov.
.Nov.
and
138.0
187.4
:
v
187.8
146.9
142.9
138.0
138.3
118.4
—
—
__
6
173.0
172.7
171.9
6
203.6 '
203.5
202.7
185.2
Nov.
6
135.0 V<
134.3
133.5
129.1
and
OF
and
Insurance
Banks
!
'
6
149.3
149.2
148.5
133.4
Nov.
6
118.5
119.0
118.4
117.9
360
253
251
and
-
U.
S.
Loan
—
of
IN
—Nov.
175.1
176.2
176.7
175.2
Manufactured
_
;
products
figure.
JStrike
Nov.
in
HOME
Aug.
LOAN
(000's
'Associations
'
174
314.
298
270
242
227
$319,534
$322,524
$315,305
BANK
omitted):
._—
—
!—
Trust
Companies
Mutual Savings Banks
^———
Miscellaneous
lending
:
84,479
83,710
70,277
222,673
——
221,489
73,074
250,612
73,550
'
51,378
184,270
—
158.2
158.3
155.2
158.1
159.4
160.5
151.0
—Nov.
159.0
160.0
160.8
151.6
UNITED
STATES
BUREAU
OF
EXPORTS
products and foods—I—Nov:
continues.
153.4
^Includes 404,000 barrels of foreign
153.4
crude runs.
153.3
141.3
-
• •
————A— -A
135,093
$1,018,397
$988,446
of
$926,500
" 558,200
$988,2Q0
Sept.":
-
■—>,—-r—-r
—
165,781'
130,806
IMPORTS—»'
CENSUS—Month
(000's' omitted):
Exports.
Imports
AND
186,794
139,817
—
institutions
"
California
:
158.7
j.-_Nov.
.
farm products
All commodities other than farm
•Revised
187
220
$1,024,323
Raw materials——
Semi-manufactured Articles-;
All coinodities ."other than
'
NON-FARM
companies
Individuals
•
236
eggs
FINANCING
Bpecial groups—'
t
:
313?-'
283
276
—
Nov.
„
408
302
229
BOARD—Month
151.3
Jfov.
AREAS
343
adjusted—
ESTATE
Savings
16fr
260
eggs,
crops
Poultry
REAL
198.7
145.7
Nov.
Building materials—.
Chemicals ond. allied products
Housefurnishlngs goods.—
Miscellaneous
commodities—
l
"157.9
6
Nov.
lighting materials—
Metal and metal products.
.
162.7 ;
—Nov.
327
373
Dairy .products
164.6
.—Nov.
products—jL—
Foods ———^
Hides and leather products.—
Textile products—
|
163.8
-
289
—
182
(WHOLESALE
Truck
*.
323
<
^
products
Poultry
Nov. 12
—
and
animals
Dairy
250
270
.i
-
357
176
Truck crops
406
174
ASSOCIATION:
Fruit
Orders
Production
248
251
combined-
204
418
All
.
598,400
$1,185,000;
473,128
42
(2102)
THE
COMMERCIAL
Business Outlook—Recession
(Continued from first page)
then
to
seek
difference,
determine
to
if
tures on
plant, equipment, and in¬
ventory?
At the time
•
postwar
for
had
running
been
spending has risen by 25% dur¬
ing the last year and is now quite
high
in
relation
to
consumer
1929.
people believe that
many
spending.
A drop in the rate of
expenditures
would
business
mean
some
would
unemployment,
produce
sumer
would
and
this
in
drop
a
incomes
hence
con¬
spending and
cause
more
unem¬
ployment
a reces¬
which,
produce
Hence
and
business
practice, especially since business
years.
1918
to be
seem
conservative
the
During
this
period industrial production had
increased 17%, personal incomes
about
28%,
expenditures
for
goods about 25%, wholesale prices
about 58 %. Three years is longer
than most periods of expansion
have lasted—longer than any of
the four periods of expansion be¬
tween
That would
merely
-
the election
of
boom
three
'
many
concerns bound to make
reductions in their expendi¬
some
has made.
II
not
are
business
what
election
the
any,
the price structure,
|
further drop in spend¬
a
in
turn,
would
By the time the downward
ing.
sion is overdue. A year ago 75 out
of 100 economists polled by the
would be in the midst of at least
F.
a
W.
Corporation
Dodge
dicted that
spiral
pre¬
recession would be-
a
halted,
moderate
conditions
gin in 1948—the most usual guess
in February or March. Last
spring 75 economists polled by
■
had
recession
was
not
needed
are
country
Since
recession.
to
the
produce
a
in
now
existence, is
likely to start at
recession
a
the
Montgomery Ward and Company
reached
that
consensus
a
sion would start this fall.
forth
set
for
the
best
expecting
it
as
possible
me
case
early recession
before the elec-*
tion, and then let me indicate
why, as conditions were before
the election, this case was not
convincing.
The case for an early recession
before
several
the
election
had
One part was that
levelling off. There
increasing signs that this is
the
parts.
boom
are
is
happening. It is indicated by com¬
paring changes during the third
of the boom with those dur¬
year
ing
the second year. It is true
that, in the third year of boom,
government purchases of goods
and
services
increased
whereas,
in the year before, they decreased
and
that the
increase in gross
private
investment
of
year
the
in
boom
the
third
much
was
greater than in the second—about
25% between the third-quarter of
1947
and
the
third-quarter of
1948
in
12.6%
of
1946
with only
third-quarter
third-quarter of
comparison
the
between
1947.
and the
Consumer
expenditures,
hourly earnings and prices, how¬
ever, are all leveling off. For ex¬
ample, during the second year of
boom, consumer expenditures in¬
creased
12.4%,, during the third
year,
8.1%; during the
second
year of the boom hourly earnings
of
factory
workers
increased
10.9%, cduring the third year,
9.1%; during the
the
boom
creased
year
of
prices in¬
during the third
during the second
18:2%,
of the boom
year
second
wholesale
4.3%;
year,
the consumers'
price index increased 12.3%, dur¬
ing the third year, 6.3%. The
wholesale price level today is just
about
where
it
in
was
January,
nearly 11 months-ago.
A
second
expecting
part
of
the
case
for
an
vulnerable
to
from
12.3%
number
of all
expendi¬
it
of
fails
consider
to
a
important facts—facts
which indicate that there will not
be
early
an
z*ecession.
that the boom is
not in
the
dence
of
tive
made
the
absence
likely to
cause
business
vorable.
of
is
evi¬
are
ti-ouble if the out¬
becomes
unfa¬
As matters stood before
the
election, there were two prin¬
cipal reasons for not expecting an
early depression.
One was that
large
no
high
was
in
.hat
a
from
drop
rate
the
business
of
prospect.
moderate
present
spending
The other
was
drop in business
spending, if
it occurred, was al¬
most certain to be offset by a rise
in spending by consumers, local
state
and
federal
governments,
and
the
Government.
drop in the pres¬
ent high rate of business spend¬
ing was in sight because enterare
plant
on
planning to spend more
and equipment during
large
relative
to
kinds
all
of
spending as in
1929.
Business
spending is the kind which is most
sensitive
to
both
favorable
and
unfavorable influences.
J
A
third
part. of
the
case
for
expecting an early recession was
record-breaking crops of
that the
this
and
year
in
greater
the
farm
United
output
States
in
Eu¬
bringing about a drop in
price
of
new
agricultural
rope are
the
products. In fact, after nine years
of
a
more
less
steady rise, the
drop in the prices of most farm
products is likely to be regarded
as
a
or
forerunner
of
a
fall
in
all
With the boom obviously
ing
off
and
veloping in
with
an
level¬
weakness
de-
such
some
and
prices
have
developed.
This
which
they
they
able
are
spend.
to
As
and
matter
a
willing^'
:"fact*,'
of
which
amounts
prises could spend
election
che
present
before
Even
drop from the
some
high
spending
equipment
on
construction.
enter¬
rate
business
of
likely
in early
1949.
It did not appear probable,
however, that the drop in busi¬
ness spending would be large be¬
seemed
present
business
spending
does not in the main represent an
attempt to anticipate
a
growth in
demand.
- On
the contrary, it is
attempt to catch up—to replace
an
obsolete
be
not
equipment which could
replaced during the long
depression of the thirties
or
dur¬
ing the war and to adjust the size
of plants to the great increase in
the
since
last
tures
1929.
nineteen
During most of
expendi¬
years
plant
and
equipment
abnormally low—in
some
years not large enough to
offset depreciation.
In the mean¬
on
have
been
time the labor force of the counti*y
has grown by 12 million and the
population by
a
result, thei-e is
capital
per
20 million. As
over
now
worker
in
even
less
American
industry than 20 years ago. In ad¬
dition, many plants are far too
small
to
meet
economically
the
deposits
and
cash
times
the
of
course
holdings
of
cash.
bank
deposits
'
•;
"
;
The year 1939, it is
:
•
business
spending
is
far
less
ments than the
speculative spend¬
ing which often
occui-s
in
booms
victory
Cash
have
lion
$45
for
about
lend-lease
Europe
about
1949-50. ' This
year
includes
amount
of
estimated
been
fiscal
bdl-<
$1.5
military-aid
a/billion
about
and
un¬
administration.'
expenditures
billion
the
spend¬
support of farm prices.
probably have been
necessary un¬
Republican administration.
a
history," extension
our
electrification
rural
1948-49
in the
Seaway, Federal aid to education,
will
assumes
and
old
benefits.
age
and
50%
a
medical
increase in
Some
of these
increased
expenditures may not?
get into the cash budget for 194950
but
of
them
substantial part of
most
Consequently the
budget for 1949-50 is likely
to be at least $47 billion and to
be running well above that rate
by the end of the fiscal year.
.:
be
a
will.
•
cash
increase
an
of
insurance
benefits,
$4 billion larger than last
advance of about 10.3%.
This estimate
the>
and
conservation
program,
full
development of the St. Lawrence
year—an
important to
which
had not
tional defense and very moderate
aid to agriculture. Relations with
have larger cash receipts from
Russia
community.
not
was
a
in
year
spending was stimulated
by buoyant optimism. The country
the
completely emei'ged from
depression
million
9
over
international
ing—it
the
and
Second
were
unemployed.
outlook
was
Munich
there
and
outbreak
the
Woidd
were
between
year
of
in
the
to
one
is
if
indication
strong
a-
would
be
the
willing to
output
larger.
a
;
household
sumer
between
the
were
goods,
and
$38.5
this
than
for
,
$172.0
A
goods
consumer
billion
drop
to
in
in
the
are
such
during the
result
the
as
of
of
increase
wartime
population, the rise
medical;
Others
changes,
war.
recent
in
in
standards
the
postwar
growth in the number of cars and
trucks, and the great geographical
shifts in population which seem
to
have
cai*e,
been
accelerated by the
large number of chil¬
dren
born
during the war are
beginning to enter schools and
will require
considerable
addi¬
war.
The
tions
to
great
schools.
inci-ease
and
cars
increase
in
Likewise,
the
particularly
in
trucks
number
the
the
of
rapid
is
causing the
country's mad system rapidly to
truck
clear
is
.more
being
today
that
transported by
than in 1941: It is
for
many
parts of the
country the old 18-foot, two-lane,
cement
All
of
highway
these
aggravated
is
inadequate.
problems have been
in
some
parts
$15
ceeded.
States
of the
re¬
connection
with the
lib¬
eralization and extension of social
to
ask
the yield should be in the neighj borhood of $46 billion a year,
the
the
unpleasant fact, Consequently the cash budget for
and
stockpiling
1949-1950
year
billion.
In
.
Unless
addition,
will
make
budget
be
a
surplus,
debt will be
and j order to make most of the exthis penditures which President Tru¬
ex¬
man
had
promised
United
the
v.
should, show
[otherwise the public
rela- ' growing in the midst of boom. In
ance
the
administrative
and
bal¬
to
budget,new
taxes yielding about $3 bil¬
lion a year will be required. Con-gross may insist that many, ex¬
penditures be postponed but the
considerable
a
western Europe.
,
iv
Democratic Congress can
What
difference
result
expected
make in this
very
facilities
cash
security
plans.
The i.yield
of
present taxes is rising as incomes.
fact: increase.
Given
good
business,
this country
greatly
improve,
will undoubtedly be
figure
,
of failure to make normal expen¬
ditures on local public works and
in
United
between
Russia
other
large, much larger than is
generally realized. Many of these
are accumulated needs, the result
in
taxes
contribution to the rearmament of
governments. The needs of
and statd governments are
local
fiscal
to
tions
spending
counties, states, and
local
inci'ease
Some
ceipts by the government will be
obtained
from
higher
payroll
slowly in
just ahead,
refused
less.
likeli¬
its defenses. In
defense
on
the
held
would also be pi*omptly offset, at
least in part, by larger outlays of
cities,
attempt by the
an
peace.
tures
from
billion.
$175.1
business
spending
country is not in reality; 1949-50 could pi'obably be balAfter the election, ex- anced by new taxes yielding about
penditures on the country's de- a billion a year,
fenses must be expected to rise
j it \s not enough merely to balsubstantially. President Truman ance the cash budget. At present
recently suggested that expendi- (levels of employment, the cash
offset
by a
of spend¬
the1
At the present level
of goods and pri-:
production
that the
happened
quarter and
in the annual i*ate
z'ise
ing
up
an
victory
government must
government to spend more would
abandoii
the
very
people to face the
dropped from
$37.2 billion, but
to
more
vate
western:
no
soon
far
moved
election
at
spending
billion
was
Thus
has
government
This
first
they
were
country
of
,
is
will
building
the^ second quarter of 1948. Dur¬
ing that time the annual rate of
business
there
she
with
they
drop in business
outlays.
countries
and
aim.
States
this
of
more
industry
of
Hence,
that
spend
the
that
this
they
as
of
hood
not spending money as
did before the war
are
fast
of
Democratic
that the
is
institutions
Europe,
faster than they
The fact that
money
doing in 1939.
were
than
fall
they
The
will
and
unemployment is much
would expecTsconsumers
spend
worse
and
ago
that
(3)
means
little prospect simply force up prices.
Hence if
the government spends more, it
improve at
an
Russia is determined1 must force someone else to spend
There
they
ical
and when
less,
year
then
or
na¬
early date.
to destroy the economic and polit¬
far greater than in 1939
are
1.946.
this
worse
a
worse
that
Wai\
Sui*ely, to¬
day, when accumulated needs for
goods
steadily getting
are
—they are
they were
The
lower¬
was
to
for
It would
only
about
$1.9 billion,
18.2%, in expenditures on
i*emembei*,
freight
of
of
year
about
and
.
The
type
Democratic
Republican
a
soil
a
fiscal
personal
become obsolete. About 50%
"catching-up"
(on
a
times
spending
greatly be¬
larger government
of
government
$102.8 billion, but
consumer
expenditures are only
running at the rate of $175 billion
about
1.70
The
ment in all
Federal
They have been rising ever
since, and are now about 14%
above a year ago. President Tru¬
man
recently estimated that ac1
tual cash outlays of the Federal
government j during the present
year—or
not
sickness
personal
are
der
der
last quarter of 1947.
holdings of bank
deposits and cash. Today personal
holdings of bank deposits and of
cash
(2)
imFederal spending. Expenditures
?1.90
were
Consumer
the normal rate.
low
ofn.the
kind^^e^
year
created.
at the moment is
President Truman has"
about*
were
be
promised a
Finally, " a
drop
in
business,
spending would be offset in con- large public housing program, "the
.siderable measure by an increase most ambitious' irrigation develop¬
expenditp4repfor'
goods of all
current demand for their product.
present
In¬
v
veterans;,
con¬
steel, which will be several mil¬
lion tons larger.,this year than
last.
Lack of steel has long lim¬
and
materials.
and
men
the states within the next year as
_a
result
of
bonus
payments to
other
the
running
leases
not
spending money less rap¬
idly today than before the war.
In 1939, personal holdings of bank
$35.5 billion and
the
ing that would have occurred
about 19% larger
than
last
year
and is steadily
growing. It will rise still higher
if a drop in business spending re¬
are
consumer
if
chance
any
means
however, that consumers cidentally, there will be consider¬
able increase in - expenditures by
spending all of the money"
are
by
were
large, it might push prices
high than unemployment would
so
fi¬
or
mean,
:
ited
completed
arranged. Spending by
and
local
governments is
now
dropped
does
been
mention
state
mild kind of buyers' market
a
nas
that
by the fact that plans
cases
not
in
and
shall
very
governments
by shoi'tages
labor
and
I
Furthermore,
nancing
shoes,
tires,
shirts, and radios, have become so
abundant
during
the
last few
months
materials
had
as
able
important part of j and which is intended to antici¬
articles,
the
items, would lead to larger
sensitive to unfavorable develop¬
prices.
before
local
and
state
of
which
presently.
since
fourth round
have been held down
the pros¬
election.
Some
the first half. They are ^as¬
sisted in increasing their expendi¬
cured
now^ as
pect
statement
in popu¬
40%
than
more
Expenditui*es to meet the needs
of
was
tures by the rise in the output of
quarter
are
At least that
ing
the labor force and in the popula¬
tion o'f the country which has oc-
1948, and
ment.
by
1940.
spending, by making possible a
larger output o'f automobiles, dur¬
ihe second half of 1948 than dur¬
tures for goods in the third-quar¬
ter of 1947 to 15.0% in the third-
of
ments,
they
No immediate
pi'ises
lation
growth
a
state and local govern¬
and the Federal Gpvern-
sumers,
Each., of
Pacific^ states has grown
or
If some drop in business
spend¬
ing occurs, it will be quickly off¬
set
by larger outlays by con¬
specula¬
margins which
look
for
it
commitments
and
thin
on
an
because
buying
fact
early re¬
it may indicate
Indeed,
contrary,
The
leveling off does
itself indicate
cession.
unfavorable
developments. This is a result of
the rapid rise in business
spend¬
ing. Expenditures by business on
plant, equipment, and inventories
rose
but
cause
early recession was
that the economy during the last
year
has
become
considerably
more
ible,
rise in prices
a
There is an
shifts in than deflationai*y.
the three impoi'tant qualilication to this
great
the
Thursday, November 10, 1948
•
-
by
country
population.
markets.
xn
the
This reasoning may seem plaus¬
an
appeared
even
HI
reces¬
Let
CHRONICLE
reached
a
postwar
low
$67.5 billion. In. other word'
penditures for consume# gw® Seasonally ad j usted basis)
moment?
any
FINANCIAL
Boom?
or
pate
&
the
the
scarcely
beginning promtply to ful¬
least a large part of the
party's promises.
Hence fairly
avoid
un¬
election
fill
analysis of the busi¬
outlook?
ness
of
does
introduces three
It
large
principal changes:
round
of
pushed
ously;
(1) the fourth
wage increases will be
somewhat
more
vigor¬
(4)
fall
(2)
government expendi¬
be
larger; (3) taxes
higher;and (4) taxes will
fall more largely upon business.
(1) The success of unions in
will
the
to
make
will
somewhat
stiffer
tax
ask
in
The
sufficient
a
spending
vent
In
rise
a
view
of
consumers
at
money
lieve
that
able
to
any
in
and
prices
to
.
that
a-
on
concerns
most
or
or
be
of
increases in the form
prices without reduc-
likely to prefer
to
indirectly through tax¬
rather than
higher
di¬
income
of higher
One
un¬
will
cause
many
.con¬
pi*omptly to make deep ruts
capital expenditures in
in;,their
.
order to
large
be in
increases
bilities.
a
position to meet
their tax lia-
in
Consequently the drop in
of higher
j business spending which seemed
ing employment. Hence the fourth I likely within the next nine months
round
will
be
>
excise taxes.
certainties, which are likely to
persist until late spring or early
cerns
-
of
How will the prospect
most. summer,
all
are
taxes
members
and
possibility is that major tax
pre¬
will
corporation
form
short-run business outlook?
in
not yet spending
normal rate, I be¬
most
higher
expenditures
and
stiffer corporation taxes affect the
unemployment.
fact
will
taxes
government
,are
pass
wage
in
the
increase
for
some
taxes
There is
some
question as to whether a
fourth
round
of
wage increases
will be inflationary or deflationary, that is whether it will in¬
duce
be
or
ing corporations
rectly
through
difference, how¬
will not be great.
ever,
will
proposals indicate that he will
tax voters
they would press if
the community were less friendly
unions.
taxes
entirely on busi¬
probably upon corporate
Mr. Truman's previous
Congress
wage
demands than
to
—
profits.
them
encourage
in
increased
The
largely
ness
be
election
increases
necessary.
will
tures
at
inflationary rather ieven before tne election
may come
,
Volume
168
and
sooner
would
Number
.
be
much
otherwise
4752
larger than
have
been
do
the
by larger government or consumer
spending. Far* more likely is the
that
will
program
the
President's
convince
business¬
so
substantial
capacity—that
executives do not
for
goods
smaller
worried
the
managers
needs
of
will
their
concerns for more
*
gram
makes
-prices
of
i
goods
higher.
and
scarcer
They will
borrow
necessary in order to buy now.
Thus the prospect of
larger gov¬
ernment. spending, of
higher taxes
(and of a fairly substantial fourth
roud of wage
.
be
turns
to
out
Great
their
set
sights
.alleged
chronically
private demand.
deficient
The nation that
private demand has been chroni¬
government
spending.
Conse
by
the
huge scale
which
on
-
that
spending
will
recession.
.
a
drop
in
produce
/
early
an
;•••«.
conclusion
briefly
:
to
one
let
or
V'""refer
me
two
long-fun
matters.
The economic meaning
of the election is that the Amer¬
ican people intend to
make far
greater
demands upon
,
industry
than many people in the com.munity, including most- business
;
^executives,
have
expected.-Not
only do they expect industry to
produce enough to pay high and
steadily rising real wages to all
.of its employees, but
they also
^expect it to produce enough to
(make
possible
giving
large
a
establishment, aid
on
defense
an unprece¬
dented scale to
Europe and Asia,
large public works, and a large
the-
their
up
enormous
for
old
ever
and
services, q- demand
large defense establishment,
a
and
in
whether
meet
still
all
of
these
provide real
stantial
of
and
income in sub-
'
amounts
*
demands
for
the
owners
business—though
"that
the
it is
plain
demands of the
great
•community cannot be met unless.
industry is also sufficiently pro¬
*
ductive to give its
owners
good
a
'return.-
'
has
tunately
the
wait
not
time
make
and
creases
policy 'Which
Unfor*
it.
on
provided
it
to
be
plans to
$35
to
$40
billion, or
/ ; %)/
more.
"It follows
as
the
night the day"
that taxes will be
heavy in tne
.years
ahead.
In
fact, if
some
settlement
of
the
international
political difficulties cannot be
.
ranged, the tax
J to be
almost unbearable
an
ar¬
burden promises
one.
tIn such event, rigid economy in
.the non-military phases of Fed¬
eral expenditures and in state and
local spending will be
necessary,
if we are, in an economic
sense,
not. to bleed to death.
But, may
I
emphasize, war or no war, taxes
;
inevitably
will
be
several
times
their
pre-war levels.
Our swollen money
4
supply
was
'not
reduced on Nov. 2. The $95
billion of deposits in our commer¬
cial banks and pocket
money in
the
hands
had
at
of
the
end
War, in. 1945
to
As
a
can
people that
of
has
the
we
Japanese
increased
of
purchasing
power.
the
effort to reduce
purchasing power,.
No
real
politician
will
take
the
responsibility
for .causing
"bad
business," and, of course,
-that
is
what
deflation
means.
So
.
Federal budget of $35 to
$40 bil¬
lion,-
which
according
to
our
know
we
busi¬
a
inevitable.
when
the
read¬
don't
we
it
will be, but
do know that it is on its
way.
severe
I, personally, feel
justment is more
that
read¬
a
than
a
year
overdue: That is, it is my
opinion,
that if we had not had worldwide
'failures in 1947 and food
shipments" for *' European
relief
despite our own short crops, the
crop
since
been
would
under
have
long
Also, in
way.
six months,
it became
pamfuliy->clear that we must start
theses-expenditures
further' in--
-
improvements in plant
be needed./; Hence
may
industry must resort
vices
and
to
such
to
de¬
capital-saving inventions
rapid technological
as
more
American
the
industry, I
tremendous
am
con¬
to meet
demands
which
about to be made on it.
My
doubts relate to the kind of mar¬
are
ket analysis which business lead¬
ers
likely to make.
are
men
Will these
the tremendous increase
see
that
is
occurring in the demand
for
goods and will they make
proper plans to increase the ca¬
pacity of industry to meet these
demands?
That is the paramount
this
generation
American
present
to
delayedittbe
plans,
have
further
inevitable
readjust¬
prob¬
military expenditures
are/sharply increased and deficit
financing, is again utilized on
'-r.
business.
consequential
tionary
On
budgetary
until
other
military
maximum
of
T*Y1V;
*.
was
new
td
boom.
A
V
last
of
previous
^ye already
all-time
prices will,
dropped to the
been
manage¬
co¬
operation of the Federal Reserve
System with its monetary and
credit powers, can bring tremen¬
dous pressure to bear to
prevent'1
reaction.
I
gov¬
a
Lower
way.
remove
inflationary
which
because of its effect
The
has
serious
one
pressure
:•
food
important
an
particularly
mands.
on
wage
personal income is currently
j me tell you what happened in just
billion a year; j one line in 1920 when
competition
can be wide dif¬
an(j the i3Usjness
CyCie were both
ference of opinion as to the exact
and, while there
economic
wants
action?
which
accumulated
now
some
would
than
turers
replacement
getting ciose to its
have
$53 bil¬
to
seem
adequate.
inventories
be
Manufac¬
alone
exceed
$30 billion which is indeed
thing to think about under
Let
some¬
takes demand.
Another news
tional sales of
this
automatic
reported
serious
defla¬
Congress
will
-them
such
give
be
tempo.
for
well
not
stops
saying that the business cycle has
falls
off /
been
itures
I
repealed.
rooted
in
eliminated.
can
is
human
I
I
too
nature
am
deeply
to
be
am
saying that we
expect quicker and more ef¬
fective
on
It
me.
the
cycle
government
intervention
downswing of the business
than
in
the
past.
So long
the Federal government has a
budget of $40 billion or there¬
abouts, and so long as it continues
as
$2,400,000,000
inventory
tion
what
year
It must not
flows from the strong demand for
of
on
Don't get ahead
this
overlooked, however, that the
capital ■„ goods
boom
jump to conclu¬
have just said.
sions
not
is
industrial
as
do
poses.
as
for
replacement
consumption
pur¬
Once inventory accumula¬
or
consumer
demand
"capital
goods expend¬
quickly curtailed.
In other
words, it is a derivative
boom
will
be
ancLfhe
moment
the
sup¬
ports weaken, industry will dras¬
tically revise all plans for ex¬
pansion.
Well, how
goods boom?
falling
goes
views.
Labor
another
had
15%
in¬
big blow, however, came in November, when the Federal Courts
over¬
some
ordered forced sale of the mer¬
chandise inventories of 19 Roches¬
ex¬
columns of
news
ter
clothing
manufacturers, who
bankruptcy.
October
But
were
peak.
item says that na¬
vacuum
tion
15.5%
washing machines are
clogging the ware¬
accountants
for
in
Here's
another
same
and
item
in
began
week's
a
yarn
I
been
that
busi¬
in the beginning, we
business world. You
choice
of
being
a
new
or
has-been! As for me,
see to it that 1949
a
going to
great year.
a
John J. Farrell Is
Forming Own Company
shut¬
John J. Farrell is
recently had
with ac¬
forming Far¬
rell Securities Co. with offices at
below production,
cumulating inventories.
am
is
said
sales
fact
be two or three
the
President
cotton
a
your
pioneer
stage of the business cycle that 1
quote it: "The
Mills here
down.
in
have
paper which is so character¬
of
developments
at
this
istic
But
the
As I said
are
getting pretty 'tough'."
news
earlier,
pre-war
level, those
try to use the same methods
they did during the easy money
goods shortage days will not
last long.
some
manufacturers
"cite
facts which indicate that
they are
scraping the bottom of the un¬
filled order barrel and that con¬
are
you
question.
who
that
ditions
the
increasing competi¬
increasing failures in
Despite the
times
the
September
showed
of
volume will
ness
industry announce that
although
shipments
exceeded
1947, factory orders were down
"somewhat"
I
out
and
1949.
September, 1947. Non-
The
is
will have
we
as
houses.
As
that
sweepers
were
why look back? We are
going to have a repetition of
1920.
summer
He added
that
management would use the
shutdown to speed up installation
of new
equipment." (No comment
is needed
actions
as
to
the effect of such
future supply!)
on
"
Viewing
consumer
demand in
terms, cotton tex¬
began to overtake
demand last spring and has now
reached the point where
lay-offs
more
general
and
short work
in
sary
some
weeks
areas.
are
neces¬
Old-fashioned
price cutting has started in men's
clothing, one chain recently going
far
so
20%.
an
to
cut
retail
prices by
Even
housing has passed its
peak. Furs, nylons, perfumes and
most luxury goods have been on
a
high
competitive
basis
for
than
more
a
Although
dollar
sales
those
of
are
figures
at
levels
the
consumer
last year, that
for
ple are consuming at the rate of
$175.billion a year. Their dispos¬
Farrell
New
was
York City.
previously with
Middlebrook.
is almost
physical volume is
lower. To put it bluntly, soft
spots
E. K. and F. K. Easter
cases,
are
beginning to appear in prac¬
tically all consumer goods lines
with, of course, the big exception
Join Dean Witter
SEATTLE, WASH.—Edward K.
Easter
have
of automobiles.
Dean
and
Avenue.
I
do
not
large
in¬
F.
become
Witter
Both
Kenneth
associated
&
Co..
1221
Easter
with
Fourth
formerly of¬
were
ficers of F. K. Easter &
Co., which
has been dissolved.
in government
spending,
is entirely possible,
supply
demand should be in such
crease
which
that
most
lines
will
be
competitive by 1949. The return
of competition will be welcomed
by all good business men. Once
more, the ability and effort of the
individual. business man will be
the
determining factors in his
profits. Allocations, gray markets,
and "chiseling" will no
longer set
ceilings for him. But, of course,
he will have to go to work. And
it has been
had
so
long since
real
many business
competition, that
men have forgotten
what it is like. When they once
more
encounter it, you will hear
a great deal of
wailing, but don t
let
it
Lconcmics of Strip Coal Mining
have
we
any
„
The American peo¬
Broadway,
Mr.
above
entirely due to higher prices. In
most
John J. Farrell
115
the New York office of Coburn &
year.
Barring war, which
expect, and barring a
boom is in¬
Surveys in¬
$18,630,000,000
than last year.
goods
Please
are
furniture
if
a
are
supply
September
less than in
more,
the
his
received
not
and
stem
for
just
frigerator sales in
20% behind their
balance
tide,
undoubtedly
basis
had filed petitions in
(1948),
to
for
our
Several types of stores in New
York City report that electric re¬
need
needed
base
would increase 25 to 40%." At the
time he seemed to have a sound
the newspapers:
the
more
as
Here
amples from the
when
are
lines
many
dicate that American business will
powers
to
widely used; yet sales
off in
spend
additional
around
which
1949 Prospects
N^The capital goods
which
look
us
on
(and I quote) "confident¬
predicted that spring clothes
ly
crease;
and
materials
were
at
Glance at the
advertisements in ! record levels, cotton, in
particular,
any newspaper and you will see
| having reached 45 cents a pound,
that the "heat is on." Some of
the Production costs were
very high,
advertising claims are becoming j Yet, before the end of
the year,
shrill
and
exaggerated.
Sales
Chicago
jobbers
were
selling
pressure of all sorts is
men's clothing at 10 to
being ap
50% less
plied.
Contests, bonuses, dollar than the wholesale price. Whole¬
sales, one cent sales, and all kinds salers,
also, were offering dis¬
of sales razzle-dazzle
are
being counts of as much as 50%, The
exercise
those powers
arises. Further¬
vention
holds
pres¬
Capital Goods Boom
its
human
still
a
answer.
ent-conditions!
creasing
that
insatiable
facts
some
hesitate to
they will not
principle
are
going
strong. In January,
speaker at the National
Retail Clothiers Association Con¬
true, will not these high levels of
purchasing power prevent a re¬
retail
inventory
as we
really
1920,
amount, their liquid assets cer¬
tainly exceed $100 billion.
If the
de¬
■:
boom must be
lion,
convinced that
peak
support level and others
their
on
more
to slow up very much
government can possibly
prevent it.
And, remember, the
the
am
13% greater
8%'greater
and
year
43
tile production
bumper crop,
than
(2103)
at the rate of
$187
.
permitted
business
bil¬
as
product
prices, I think a business read¬
justment is in the making. '
There are many distinct
signs
that "time is running out" on the
if
serious
such
farm
support
total inventories of
any
extraordinary
expenditures,
lions
the economic machine will not be
the
can
to
say
end,"
with
we
$15 billion as
promised by President Tru¬
ernment
why
and
if
'
»
able
yesterday
subside.
hand,
$40 billion with the total
national income of $39.6 billion in
1936 and you will understand
powers
infla¬
expenditures
man, and can avoid
some
ment
those
yield of 1946, has brought the
agricultural boom to an end. Some
agricultural
commodity
prices
needs
Treasury, 'with its debt
seems
by the gov¬
readjustment will
pressures
the
hold
now
scale
ernment, the
be postponed
are
these
pare
faetyit
than -the
analysis cannot be avoided, will
require a continuation of high
level business activity to secure
the necessary tax revenues. Com¬
I
anticipate no serious efforts by
the government to end
inflation!
On the contrary, a minmium
don't
is
very
large
>
powers.
party is willing to < risk
political danger of a.-serious
readjustment
a
able that if
have little effect on this
huge
supply
activity.
ment.. In
these
nearly $110 billion.
practical matter, the election
Neither
a
business
having difficulty in
"above water." In fact,
ly
tionary
of
of
are
and equipment—however
urgent¬
16%,
total
a
our
lines
im¬
(Continued from page 6)
of
of
and
Economic Signs of Our Times
-budget
rate
billion
perialistic f expansion
will
of
'made
•
ness'
question which the political trends
going
$250
re-arming to counter Russia's
-demands
'mands
are
unprecedented
industry has had
new
until,,
to
.
pursued,
American industry can prob'ably meet- the trerpendous de-
*
which
product
then last
foreign
nation
any
;
which
the
nationalist
fident, has the know-how
interested
at
approximately
year, there are
readjustment
'be
much
times."
national
gross
a
demand for goods to im¬
plement the most ambitious inter¬
progress.
industry is productive enough to
is
the
know how
before/
widespread
generous social
for
that
We
kinds
new
for public works than
demand
"hard
justment will set in, and
of demand—a far greater demand
a
of
today, with business activity
an
extremely high level
Business Readjustment Inevitable
,
social welfare
program. The peo¬
ple of the country do not seem to
'
companiments
Even
at .such
are
beginning to increase
despite the stratospheric level of
kinds of demand for goods; how¬
"the American people are
developing
severe
a
in
business
ever,
v
In
Without
business
though
kept
up,
failures
.quently I conclude that the result- United States has
imported labor
of the election diminishes the from abroad.
chance
Even
Although business is at
desire,Aor* high level, we know that
'$
,
activity.
keeping
cally deficient is not substantiated
by evidence—by
the course of
Naturally,
refers to general
activity, with failures,
unemployment, and the other ac¬
by advocates of public spend¬
ing who have urged public spend-*
ing as a necessary supplement to
an
activity.
general
level
is
lines may suffer
drop
too
low
CHRONICLE
will be in a
serious break
some
unduly about the demand
They have been en¬
increases)-will tem- prices during . the last hundred
.porarily stimulate business spend¬ years,
by
the
almost
constant
ing. When higher taxes
eventually willingness of- people to- spend
force a drop in business
more than their incomes in order
spending
.this drop will be offset by a rise' to get the
goods they
.in
the
be.
Depression
goods.
to
economic
business
much
thirties, businessmen have
couraged
plant and equip¬
before the President's
pro--
ment
the
it
the
in
it
any
this observation
community
to
FINANCIAL
product prices,
position to stem
assume that
the
going
than
for
Hence
cover
of
of
is
since
expensive.
to
busi¬
demands
that materials and labor are
about to become scarcer and
more
seek
iil!Its-
provided
the
&
to control interest rates and farm
increases
is
ness
Ever
men
the-next' few years to
oyer
-
make
It might be so large that it
could not be
immediately offset
case.
possibility
COMMERCIAL
"THE
get you down.
Herman D.
Economic
Graham—Bureau of
and
University
of
Illinois—paper.
Business
Illinois,
price Problems: An
^
■
Research,
Urbana,
Accounting
.
Report—Franzy Eakm—Economic
will not get too:
y
discouraged with the competition Accounting, Inc., Decatur, Illinois
you are going to face in 1949, let
—paper
$1.00.
So
,,
,
that
...
,
,
,
you
A
T11.
.
.
'
44
THE
(2104)
•
Alabama Power 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¬
5
(12/7)
filed $12,000,000
itive
bidding.
Probable
Halsey, Stuart & Co.
bidders:
Inc.; The First Boston Corp.; Lehman Brothers; Harriman Ripley & Co.; Shields & Co. and Salomon Bros. &
Hutzler
(jointly); Morgan Stanley & Co.; Drexel &
Co.
Proceeds—For construction.
Expected about Dec. 7.
tion.
initially
ferred.
&
Co., Inc., and Merrill Lynch, Pierce, Fenner & Beane.
Bids—Bids for the purchase of the stock will be received
at the Department of Justice, Office of Alien Property,
120 Broadway, New York, up to 3.30 p.m. (EST) Dec. 13.
Co.,
Grand
indebtedness
record Nov.
Price—$8 per share. Proceeds
and for working capital.
In¬
Lehman
(12/7)
20
Wackeiv
N.
Nov.
•
Nov.
filed
5^% cumulative
— To
be offered
No under¬
Dr. Pepper Bottling Co.
"A"
"B"
Underwriter—Rodger, Kipp & Co:,
(letter of notification) 57,950 shares of Class
stock ($5 par) and 2,050 shares of Class
($5
Chicago.
par).
Inc., Brooklyn, N. Y.
of 15,000
right for
Gen¬
& Co.,
New York.
($1 par).
Clarostat
Mfg. Co., Inc., Brooklyn, N. Y.
(letter of notification) 37,400 shares of 500
cumulative eonvertible,,preferred stock. UnderwriterCantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc,
r
Y ^
Aug.
:Y,C;Y
(letter of notification) /l,500,000 shares (5c, par)
26
,
Prifce—2O,0efitS phr 'share., Underwriter
—Batkin & Co., New York.
To repair and renovate mine
of company and to exercise option to purchase processing
mill and move and erect such mill on the company's
;
stock.
Cobalt
Mines
Corp., Newark, N. J.
stock.
per share. Underwriter—Charles
Newark, N. J. To meet obligations.
Price—$1
Warshoff & Co.,
W.
to $100 of debentures
capital stock held. Transferable
15 and will expire Dec. 1,
subscribe
to
of
shares
issued
wore
price
bank loans and
Nov.
is
retire:
Proceeds—To
(flat).
par;
meet
to
construction costs.
yYv/yy/y-v;;
•
Dominquez Oil Fields Co., Los Angeles, Calif.
(letter of notification) 500 shares of capital stocky
(no par).
Price—$27.25 per share.
Underwriter—Blyth
& Co., Inc., will act as broker.
Proceeds to selling stock¬
holders.
Y Y' ■_ YYYy:
: Y ■;v>:..-Y; YyY: • vl :•
Nov. 8
,
Dorset Fabrics,
Nov.
5
stock
Inc., New York
of notification) 13,200 shares of capital
(letter
Price—$2 per share.
Underwriters—
Co., Inc.; Maxwell Marshall & Co.; Luckhurst
Co., New York. Proceeds to Adolf Bleiman, a stock¬
(par $1).
&
holder.
•
1
Dustex Corp.,
Buffalo, N. Y.
*
Nov. 12 (letter of notification) 1,500 shares of 6% cum¬
ulative preference stock (par $25) (convertible into two
shares common stock prior to Jan. 1, 1959) and 1,500,
shares of common stock (no par).
Price—$30 per unit,
consisting of one share of each. Underwriting—None.
To pay off notes payable and increase working capital.
25
Products
III.
Co., Chicago,
(letter of notification) 6,000 shares ($2.50 par)
stock. Price—$12.50 per share. No underwriter.
For additional working
capital.
Ex-Cell-O Corp.,
Detroit, Mich.
Oct. 15 filed 27,000 shares of common stock (par $3). The
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-0 plans to operate the Robbins En¬
gineering Co. as a wholly-owned, consolidated subsidiary.
Family Finance Corp.
,
Sept. 2 filed 25,000 shares 41/£% cumulative preference
stock, series A (par $50) (convertible to and including
Aug. 1, 1956) and 97,580 shares ($1 par) common stock
to be reserved for conversion of the preferred stock,
Underwriter—E.
reduce
Rollins & Son, Inc. - Proceeds—To
bank loans and commercial paper.
H.
outstanding
,
Temporarily'postponed. /. -V1'1,v'' y1
Ferro
July 26 (letter of notification) 290,000 shares of common
property and for working capital.
rights
15
Subscription
common
four years to purchase shares at $2.75 per share.
eral corporate purposes.
Underwriter—Dunne
9
the
each
Ekco
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
Big Horn-Powder River Corp., Denver, Colo.
common
given
for
warrants
Oct.
of 15,000 shares being reserved for exercise
warrants, purchasers of which will have the
!
10-year 3% convertible deben4
tures, dated Dec. 1, 1948, due Dec. 1, 1958. Underwriting
—None.
Offering—Stockholders of record Nov. 10 are
For additional working capital.
Chieftain Products,
(letter of notification) 75,000 shares of common
Price—$2 per share.
No underwriting.
For exploration, development and production of oil prop¬
erties,
v
; y" /
:
(CST)
a.m.
share.
common
company
Mining Co., Tonopah, Nev.
11
Champion Mines Co., Denver, Colo.
12 (letter of notification) 2,000,000 shares (10 par)
common
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.
YYYy''Y;Y
8
(jointly).
Central
of
19 filed $46,649,500
Blair
Chicago
"
initially for sale to stockholders at the rate of one pre¬
ferred stock and purchase warrant for each 34/2 shares
of common stock held.
With each share of preferred
Bradshaw
to
up
capital stock.
Price—2% cents per
writing.
For mining operations.
.
'
Chicago,
Drive,
International, Inc.,
Supply
Pasadena, Calif.
Nov. 12 (letter of notification) 75,000 shares of common
stock.
Price—$1 per share.
No underwriting.
For the
purchase of capital equipment, inventory and raw mate¬
rials and to establish a certain factory and shop.
&
telephone
Expected Dec. 7.
115,315 shares ($10 par)
convertible preferred stock.
Offering
Oct.
Co.
stocks
common
18.
Oct. 29
stock
the
Light Co. and Southwestern Gas & Electric Co.,
Bids—Bids for purchase of unsubscribed
shares will be received at company's office, Room 2158,
$150,000,000 25-year debentures, due Dec.
Argus, Inc., Ann Arbor, Mich.
•
in
Co.
&
Freres
Lazard
and
invest
(jointly);
&
Power &
Telephone & Telegraph Co.
Decorators
subsidiaries.
sions, additions and improvements to its own
Nov.
each 10 shares then
Harriman Ripley
and
Brothers
Proceeds—To
'/yy/b/
plant; and for corporate purposes.
& Co.
Barney
companies; for the purchase of stock
offered for subscription by such companies; for exten¬
purchased
Of¬
stockholders of
period of about 15 days,
($5 par) common stock.
18, 1948, and for a
determined
Detroit Edison Co.
(11/18)
Corp.
Dec. 5. Under¬
writers—Company will invite bids for unsubscribed
shares.
Probable bidders:
Blyth & Co., Inc., Smith,
associated
1
preferred
be
Probable bidders: Halsey,
Inc.; Morgan Stanley & Co. and W. E. Hutton & Co. (jointly); Blyth & Co., Inc. and The First Bos¬
ton Corp.; Harriman Ripley & Co.; Lehman Brothers;
Merrill Lynch, Pierce, Fenner & Beane and White, Weld
& Co.
(jointly); Union Securities Corp. and Salomon/5
Bros, ar.d Hutzler
(jointly); Shields & Co. and Bear,
Stearns & Co. (jointly).
Proceeds—To repay $8,000,000
bank loans and tp provide part of the funds for the com¬
pany's construction program.
Expected about Nov. 30.
Stuart & Co.
Y
issued Nov. 20 and that rights will expire
determined by
Morgan Stan¬
ley & Co., Halsey, Stuart & Co. and The First Boston
Corp. (jointly).
Proceeds—For advances to subsidiary
Nov.
T
It is expected that subscription warrants will be
held.
1, 1973.
Underwriters—Names will be
competitive bidding.
Probable bidders:
and
West
South
&
at the rate of one additional share for
Pump Corp.
''
10 filed
Nov.
/
fering—To be offered for subscription to
Sept. 21 filed 200,000 shares ($2 par) convertible class A
Underwriters—Herrick, Waddell & Reed, Inc. and
American
Co.; Dewar, Robertson & Pancoast negotiated a pur¬
contract in April, 1948, but the SEC on July 27,
Rapids,
itock.
retire
40,000 shares ($100 par) cumulative pre¬
Underwriters—Lehman Brothers; Glore, Forgan
(11/30)
bonds, Series A,
through competitive bidding.
Oct.
To enlarge manufac¬
turing facilities and for additional working capital. -
definite.
Oct. 29 filed $15,000,000 first mortgage
due 1978.
Underwriters — Names
to
•
Light Co.
&
Power
Central
(letter of notification) 40,000 shares of common
(par, $1).
Price, par.
Underwriter — DeYoung-
—To
of Boston.
filed
stock issue is not necessary.
Tornga Co., Grand Rapids, Mich.
Sills, Minton & Co., Inc.
Un¬
par) common stock.
—
Nov. 1 filed 659,606 shares
Steel &
Y
" /, V ] ■/
^
1948, concluded that financing by the proposed
Michigan
American
'Y
^
chase
3
stock
;
payable to The First National Bank
Central
Nov. 21
&
Finishing
Proceeds
bank notes
Kuhn, Loeb & Co., Lehman Brothers and Glore,
Forgan & Co. (jointly); Kidder, Peabody & Co.; Blyth
Metal
Y ■;
Inc.
Offering—To be offered
stockholders both preferred and
To reduce outstanding short-term
existing
to
common.
bidders:
American
,
Power Co.
derwriter—Coffin & Burr,
Bemberg Corp.
34,083 shares of class D common (no par). Underwriters
-—Stock will be sold at competitive bidding.
Probable
Nov.
!
•
.
Maine
Nov. 1 filed 303,330 shares ($10
(12/13)
Oct. 19 filed (by Attorney General of the United States)
6,175 shares of class B 4y2% cumulative preferred (par
$100), 91,851 shares of class C common (no par) and
American
Y
•'
Central
Power & Light Co.
(Ohio)
Dayton
Central. Louisiana Electric Co.,
first mortgage bonds, due 1978.
Underwriters—Names to be determined through compet¬
Nov.
ISSUE
PREVIOUS
SINCE
ADDITIONS
INDICATES
Registration
in
Now
Securities
Thursday, November 18, 1948
CHRONICLE
FINANCIAL
&
COMMERCIAL
Yy
,
'.;YY
Enamel
Corp., Cleveland, Ohio
Sept. 17 filed 79,080 common shares ($1 par).
Offering
—To be offered for subscription by stockholders in ratio
of
additional
one
shares
for
each
four
shares
held.
Underwriter—Merrill
•
Bethesda, Md.
Briggs Filtration Co.,
Nov. 8 (letter of notification)
shares of
new
stock.
common
200,000 shares of capital stock.
Price—
50 cents per share in Canadian Currency.
Underwriter
—P. E. Frechette.
Proceeds—For drilling operations.
Aug. 16 filed
exercisable before Nov. 30, 1953. -
No underwriting.
For
YYyy/ '--Y Y :yy>
, y,'
>.■.• >/.
y/—y
working" capital.
•
Canada
Nov.
12
stock
(letter of notification)
(no par).
To
ing.
machines.
14
Oct.
bottles,
850
shares of common
per
lry;'
...
..
filed
of Cincinnati, Inc.
share.
No underwrit¬
wooden cases and vending
Price—$100
purchase
y, y./.y;
Carolina
:
Power &
of common
stock
(no 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 & Co., Inc.; W. C. Langley & Co.*
The First Boston Corp.
Temporarily postponed.
Co., Jackson, Mich.
Power
First Discount
wealth
&
purchased by other stockholders.
Common¬
Corp. (parent) announced Nov. 9
Southern
financing arrangements
and had exercised its right to purchase 402,603 shares of
Consumers 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¬
that it had completed necessary
ceeds—For
other
additions
property
improvements and
and
.
i
5%
preferred stock and 3,015 shares of $50 cumu¬
preferred stock being substituted for the
5%
no par common stock of the corporation.
Underwriter—Albert McGann Securities Co., Inc., South
outstanding
Bend, Ind.
To purchase instalment contracts, make loans
to
and
dealers
Florida
•
Sold
—
derwriters—Names
1
to
Halsey, Stuart & Co. Inc.; Smith, Barney & Co.; The First
Boston
nance
Corp.; W. C. Langley & Co.
Proceeds—To fi¬
company's construction program. Expected Dec. 1.
p,
Kl N •
' P \ 1
Co.
&
\:
|
\ 1
•
foundl
^'bcrSOlStck^hanl'\^
BO'10" S
P"^0^
request
,
y6P>8°
«0°6&CO-
Quoted
—
on
I'v
H f K
(12/1)
first mortgage bonds. Un¬
be determined through competi¬
Corp.
'
Reynolds
• f 1
Power
v-
Prospectus
A N i>
partially retire out¬
tive bidding.
Probable bidders: Kidder, Peabody & Co.
and Merrill Lynch, Pierce, Fenner & Beane
(jointly);
COMMON AND PREFERRED
St<«.k
to
Nov. 5 filed $8,500,000 30-year
Georgia-Pacific Plywood & Lumber Co.
Members'New Yokk
and
r
•
-.v.
Bought
individuals
standing loans.
corporate purposes.
X'/. Y
Corp., South Bend, Ind.
(letter of notification) 985 shares of $50 cumula¬
lative
(no par) common stock. Of¬
fering—Offered to stockholders of. record Nov. 5 for sub¬
scription at rate of one 9hare for each nine shares held.
Rights expire Nov. 19.
Price—$33 per share.
Stock¬
holders also have the right to subscribe to additional
Oct. 14 filed 458,158 shares
shares not
Light Co.
350,000 shares
•
Nov. 9
tive
Consumers
Dry Bottling Co.
Ltd., Montreal, Canada
Coleraine Asbestos Co.
stock warrants for 813,440
Price—25 cents per share
Lynch, Pierce, Fenner & Beane,
Proceeds—Company and subsidiaries will use the funds
for general corporate purposes. Offering postponed.
•>
Y'-hK (
c*G°
C*v
■
KM
1V IIANOS
$1*
||v\l,|s
*
KvivS
New York
Boston*
Pittsburgh
Chicago
! ?0
BRO \ 1)W VT
Telephone VOrtn
M W
V>KK
■
V
V
'lucr.pe N. V
-<,55
M
.
*
Private Wires to
Offices in other Principal Cities
m
I M
M*
m
111
Volume 168
COMMERCIAL
THE
Number 4752
&
FINANCIAL
CHRONICLE
Hey.den Chemical Corp., New York,
June
NEW ISSUE CALENDAR
November
Central & South West
shares
59,579
preferred stock
shares
Corp., 11 a.m.(CST) Common
of
(no par)
one
stock
Co.,
Noon
(EST)
Debentures
Transcontinental Gas Pipe Line Corp. Notes & Com.
of
N. Y.
1948
complete
to be offered common stock¬
share of preferred for each 20
held.
Underwriter—A.
of
manufacturing
Inc., Long Island City,
Nov. 3 filed 160,000 shares ($1 par) class A
derwriter
Cantor, Fitzgerald & Co., Inc.,
Price—$3 per share.
Proceeds—To develop,
Hottelevision,
Chesapeake & Ohio Ry
Bonds
Pennsylvania RR., Noon (EST)_____Equip. Tr. Ctfs.
distribute
San
facilities.
Un¬
New York.
exploit and
Nov. 3
Jose
Water Works
Common
November 29,
1948
Northern Natural Gas Co
Debentures
1948
Service, Inc., Clinton, N. Y.
(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¬
Georgia Power Co.__
•
Equip. Tr. Ctfs.
Bonds
1
December
_______Bonds
Nov.
9
(letter of notification)
Bonds
December
stock.
1948
2,
December 6,
-.Debentures
Underwriter
Mont.
Price—$300
1948
Co
____Bonds & Pref.
December
7,
200-ton per day
__
December 13,
15,
p.m.
1948
Cigarette & Machine Co
•
Intermountain
Forbes &
Stock
10,000 shares of class "B"
Working capital.
Brush
Co., Hartford, Conn.
11,606 shares of 4V2 % cumulative nonvoting
first preferred stock ($100 par).
Underwriting—None.
Price, par.
Proceeds—To increase working capital.
Georgia
29
filed
Underwriters
Power Co., Atlanta, Ga. (11/30)
$12,000,000 30-year first mortgage bonds.
Horner
&
Names to
remaining
shares
Johnson
Bronze
be determined
Salomon
Bros, &
Hutzler
(jointly);
Brothers; Drexel & Co.; Harriman Ripley & Co.
Proceeds
To reimburse company's treasury for con¬
struction costs.
Expected about Nov; 30.
"r>*y >//'•
Lehman
—
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.
•
Greenwood
Furniture, Inc., Seattle, Wash.
Nov. 10 (letter of notification) 450 shares of preferred
stock, and 4,500 shares of class "A" common.
Price—$10
per share for each class.
No underwriting.
To finance
increasing accounts receivable and for inventory.
Griesedieck
Western
Brewery Co.
Oct. 28 filed
50,000 shares of 5% cumulative convertible
preferred shares ($30 par).
Underwriter
Edward D.
—
Jones
&
Co.
Proceeds—Mostly to prepay a portion of
the long term bank loan to Hyde Park Breweries,
Inc.,
with which company will
merge, and to finance expan¬
sion.
Nov.
Corp., Philadelphia
5 (letter of notification) 5,756 shares of common
(par $1) for sale to existing stockholders and 1,000
shares for sale to employees.
Price—$35 to stockholders;
$40 to employees. Stockholders of record Nov. 15 were
given the right to subscribe in ratio of one nQw share
for each 20 shares held.
writing—None.
«
Rights .expire Dec. 15.
Working capital.
Under¬
Co., San Francisco, Calif.
Nov. 12 (letter of notification) 7,000 shares
($20 par)
stock.
To be sold to employees at $42.50
per share.
No
underwriting.
For working capital.
Harris
Brothers Co., Chicago, III.
(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
Get. 27
For
Harwill, Inc., St. Charles, Mich.
(letter of notification) 125,000 shares
Oct. 27
Nov.
of
Proceeds—To selling stockholders.
Proceeds—For expansion.
19
Indefinitely postponed.
'
-
-
V /
Co., Phillipsburg,
18 filed
93,062 shares ($5 par) common stock. Of¬
fering—To be offered for subscription by stockholders
at
rate
record
of
one
Nov.
share
new
1.
for
Unsubscribed
Underwriter—The
For
five
will
First
Price—$12.50
construction.
•
each
be
Trust
shares
Co.
share.
per
held
offered
of
to
of
em¬
Lincoln
Proceeds—
of
stock
common
Nov.
8
.' '
to
whicli
Expected Dec. 13.;
j
<
States)
class C, and
Under¬
competitive bidding:
Kuhn, Loeb & Co., Lehman Brothers and Glore, Forgan
88,853 shares of
&
Co.
stock
common
writers—Stocks
will
be
(no'par)
(no par) class D.
sold
at
(jointly); Kidder, Peabody & Co.; Biyth & Co.
Lynch, Pierce, Fenner & Beane. Bids—Bids
and Merrill
for
the
purchase of the stock will be received at the
Department, of Justice, Office of Alien Property, 120
Broadway, New York, up to £:30 p.m. (EST), Dec. 13. :
Oct.
21
filed
Gas Co.
$6,000,000
Underwriters
serial
(11/29)
debentures, due
Names to be determined
—
1966-69.
through
com¬
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 for purchase of the bonds will be
received
Old
June
Nov.
29.
North
24
State
Insurance
Co.
filed
100,000 shares of capital stock (par $5).
Price—$15
per
share.
Underwriter—First
Securities
Corp., 'Durham, N. C.
Offering—26,667 shares will be
initially offered on a "when, as and if issued" basis;
13,333 shares will be purchased by underwriter for pub¬
lic or private offerings; and the
remaining 40,000 sharee
will
be publicly offered on a "best efforts basis" on
completion of the subscription of the first 40,000 shares
and the company's receipt of a license to do business In
Carolina.
•
Proceeds—For
general
Oklahoma Gas & Electric Co.
filed
4
business
pur¬
/
(12/7)
$7,500,000 first mortgage bonds,
due
1978.
Underwriters:—Names to be determined through compet¬
itive bidding.
Probable bidders include Halsey, Stuart
& Co. Inc.; The First Boston
Corp.; Merrill
Lynch, Pierce,
& Beane; Equitable Securities Corp.; Harriman
& Co.
Proceeds—To repay notes and finance
construction,
Expected Dec. 1.
Fenner
Ripley
Orangeburg (N. Y.)
Manufacturing Co., Inc.
29 (letter of notification) 2,000 shares of common
stock (par $10).
Price—$16 per share.
Underwriter—
Oct.
Kimball
»
from
Rayon Corp. (12/13)
(by Attorney General of United
shares
and
Boston
fund
American
filed
177.398
of
borrowed for construction.
North
North
Co., New Castle, Pa.
Kebbon, McCormick & Co., Chicago.
Mines, Inc., Spokane; Wash.
V'
(letter of notification) 500 ore production/10,%, /stockholders/
certificates to be sold at $100 each and 125,000 shares of
Pacific Northern Airlines,
the fully
Proceeds to selling
Inc., Anchorage,
paid and nonassessable capital stock which a
stockholder has donated to special account so that 250
shares can be given to each 10% certificate holder.
No
underwriting.
To purchase property, and construct and
operate mine plant and buildings.
stock
Livingston Mines, Inc., Seattle, Wash.
Oct. 21 (letter of notification) 90,000 shares
Nov. 12 filed $30,000,000 25-year sinking fund debentures.
Underwriters
Kidder, Peabody & Co.; Merrill Lynch,
(50 par)
common
stock and $30,000 6% 2-year interest
bearing
promissory notes. Underwriter—Lobe, Inc. For operat¬
ing and general corporate expenses.
Nov.
Lockheed Aircraft Corp., Burbank, Cal.
2 filed 34,750 shares ($1 par) capital stock, to be
offered officers and employees.
Proceeds—For general corporate
•
Underwriting
purposes.
Loomis-Sayles Second Fund, Inc.,
—
None.
1
12
filed
—
25,000
Shares
are
benefit of constant supervision.
McDonald
(J.
.
."
•.
,
Marysville Water Co., Harrisburg, Pa.
Oct." 14 (letter of notification) $60,QOO first mortgage
series 414% bonds, due $2,000
annually Dec. 1, 1948-1978.
Pa.
ers
W. York &
The underwriter will extend
an
Co., Inc., Allentown.
opportunity to hold¬
of first
new
mortgage 5s, due Oct. 1, 1948, to invest in the
issue. Price—99 V2 to 101,
according to maturity.
ceeds—To
stock
be
Corp., Chicago, III.
common
shares for
stock.
Pro¬
exchanged for Marsh Wall Products, Inc.,
(par $1) with holders of Marsh
lowed to
common
to
be al¬
exchange their holdings on the basis of eight
one share of Masonite stock.
Michigan
Bakeries, Inc., Grand Rapids, Mich.
filed 67,500 shares 5 V2% cumulative convertible
preferred stock ($20 par) and 67,000 shares ($1 par)
Oct.
18
common.
Underwriters
•
Panhandle
Eastern
Pipe
Line
Co.
—
Pierce, Fenner & Beane; Halsey, Stuart & Co., Inc. Pro¬
ceeds
To prepay $17,800,000
outstanding promissory
notes and 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
unsubscribed debentures.
Offering—Offered
—
subscription by stockholders of record Oct. 22, in
of $100 of debentures for each four shares held.
Rights will expire Dec. 1. Price, par (flat). Proceeds—
ratio
For construction and for the
S. R. Livingstone & Co. and
purchase of additional capi¬
companies.
tal stock of certain natural gas
Potomac
No
For business operations and the opening
of additional retail stores.
Underwriter—Warren
ing capital.
Price, market.
M.)
Co., Hastings, Neb.
Nov. 1 (letter of notification) 22,915 shares of common
stock.
Price—$13 per share.
To be offered to stock¬
underwriting.
(letter of notification) 53,700 shares of common
(par $1).
Price, par. No underwriter. For work¬
for
shares of capital stock (par $10).
being offered by officers of the
company at net asset value, to make available to invest¬
ors
a
"well diversified investment medium
having the
Offering
Alaska
Oct. 25
to take any
Boston,
Massachusetts
Nov. 5 filed 81,250 shares (no par)
common
—
Hercules Steel Products
Corp., Galion, Ohio
8
(letter of notification) 3,000 shares (100 par)
stock. Underwriter—Van
Alstyne, Noel & Co.
common
share-for-share basis.
a
Kansas
Oct.
Masonite
(par $1).
Price, par.
Underwriter
Charles E.
Bailey & Co.
To pay current liabilities, purchase
prop¬
erty, building and equipment and for working capital.
•
on
Kansas-Nebraska Natural Gas
working capital.
stock
Mason-Hagan, Inc.; Clement
principal stockholders
holders first and then to employees of the
company.
Hammond Lumber
underwriters.
were
Nov.
Nov.
Hajoca
stock
by First National Bank
company's plant replacement
funds
—McDonald & Co.
and other dealers.
and
held
repay
poses.
Shields
Co.
Co.,
shares of the proposed offering. The
will be offered for subscription by
Price, by amendment.
ployees.
&
Insurance
Offering—Two
stockholders of record Nov. 8
by competitive
Probable bidders include Halsey, Stuart & Co.
Inc.; Kidder, Peabody & Co.
Proceeds—For payment of
bidding.
Northern Natural
Indemnity
Mason;
Co.
&
through com¬
petitive bidding.
Probable bidders: Halsey, Stuart &
Co.; The First Boston Corp.; Morgan Stanley & Co.;
—
Helena,
Underwriters—Courts & Co.; Equitable Securities Corp.;
Evans
Un¬
New Bedford Gas & Edison
Light Co. (12/13)'
Nov. 9 filed $5,000,000 25-year
notes, series A, due 1973.
Underwriters — Names to be determined
Oct. 27 filed 125,000 shares (500 par) common on behalf
of executors of the estate of P. J. Flaherty. Underwriter
Nov. 8 filed
Oct.
Co.,
Mont.
will acquire 42,776
Wallace, Inc., Springfield, Mass.
common (no par).
Price—$16 per share.
Underwriters
—Tifft Brothers and F. S. Moseley & Co.
For additional
Fuller
Insurance
Inter-Mountain Telephone Co.,
Bristol, Tenn.
Oct. 20 filed 95,000 shares of common stock (par $10).
A.
•
a
658 shares of capital stock.
Price—$150 per share.
No underwriting.
To operate a
casualty and indemnity insurance company.
Scott,
Nov. 10 (letter of notification)
sulphate pulp mill with
Nov. 4 (letter of notification)
(EST)__Stocks
New
Bedford Gas & Edison Light Co.__
Bonds
North Amer. Rayon Corp., 3:30
p.m. (EST)—Stocks
December
Proceeds—To
share.
Helena,
1948
Bemberg Coi'p., 3:30
stock.
common
658 shares of capital stock.
No underwriting.
To operate a
fire insurance company.
'
/
per
pre¬
Jaffray & Hop wood, Minneapolis. Proceeds—To retire
$3,000,000 of bank loans and general corporate purpose*.
Oct.
Nov. 4 (letter of notification)
Price—$150
Co.,
derwriters—Goldman, Sachs & Co., New York; Piper,
ex¬
Montana
Bonds
American Telephone & Telegraph Co.__Debentures
Oklahoma Gas & Electric Co
Bonds
Rochester Telephone Co.__
Debentures
common
65,000 shares ($50 par) convertible
Price and dividend, by amendment.
stock.
/
unit, consisting of two shares ot
Fire
Co.
National Battery Co.
-
4
capacity.
Intermountain
1948
Alabama Power Co
Comas
For
Tom G. Taylor & Co., Missoula,
—
per
and operate a bleached
erect
•
American
common
May 17 filed 100,000 shares of 4% cumulative preferred
($100 par) and 500,000 shares ($10 par) common
preferred and 10 shares of
Edison
25,000 shares of
stock
Peoples Gas Light & Coke Co._
Machine Tool
stock (no par).
Inc. and Prescott,
Hawley, Shepard & Co., Inc. Proceeds—Stock being sold
by certain stockholders. Offering' indefinitely postponed.
notes
Mines, Inc., Seattle, Wash.
Idaho-Montana Pulp & Paper Co., Poison, Mont.
Florida Power Corp
Potomac
Installations.
common.
stock.
Price—$1 per share.
No underwriting.
ploration, development and equipment.
1948 1
1,
share of
one
Idaho Consolidated
Proceeds—To redeem stock and
Temporarily deferred.
Household
ferred and
November 30,
Bangor & Aroostook RR., Noon_
Dayton Power & Light Co._
Monarch
ferred
stock.
45
plant.
a
July 14 filed
N. Y.
television innovation.
a
Michigan Corp.
Sept. 13 filed 26,000 shares of
Underwriters—F. Eberstadt &
»
—
November 23,
First of
convertible
cumulative
Price—By amendment-.
G. Becker & Co. will acquire the un¬
subscribed shares. Proceeds—To be used in part for im¬
common
provement and expansion
Offering postponed.
1948
Public Service Electric & Gas
filed
holders in the ratio of
18, 1948
November 22,
29
(2105)
Ddison
Co.
(12/6)
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 by competitive biddiiyj.
Probable bid¬
ders: Halsey, Stuart & Co. Inc. (bonds only); W. C. Langley & Co., and the First Boston Corp. (jointly); Harriman
Ripley & Co., Blyth & Co., Int., and Union Securities
Corp. (jointly on stock); Shields & Co.; Equitable SeeurI ities
Corp.;*Lehman Brothers; Kidder, Peabody & Co.
and Alex. Brown & Son
erty
additions
subsidiaries.
•
Nov.
and
(jointly).
improvements
Priestley
Mining
Washington
12
(letter
of
&
Milling
notification)
stock
Public
June
company
and its
Expected Dec. 6.
(par $1).
working capital.
mon
Proceeds—For prop¬
by
Service
Price,
100,000
Inc.,
Seattle,
shares of
No underwriting.
par.
Electric
11 filed 200,000 shares
Co.,
&
com¬
For
Gas Co.
($100 par) cumulative pre¬
ferred stock.
Proceeds—For property additions and im¬
Underwriting—The company rejected bids
submitted Aug. 4.
The SEC on Aug. 23 exempted the
provements.
(Continued
on
page
46)
46
proposed sale from the competitive bidding
on agency basis being discussed.
Public
,
Oct.
Service
filed
18
Electric &
(11/22)
Co.
to
($25 par).
be
Francisco, Calif.
notification) 10,000 shares ($1 par)
capital stock.
Price—$5 per share. No underwriting. To
buy materials, to acquire additional oil and gas leases
10
of
(letter
$5.10 per unit,
Transcontinental Gas Pipe Line Corp.
Water
(Calif.)
and
par) common stock. Un¬
Co., Blyth & Co., Inc., El-
Oct. 20 filed 15,913 shares ($25
Witter &
derwriters—Dean
pected Nov. 23.
ceeds—For
Nov.
Spokane,
Wash.
one
Oct. 15 (by
20,000 shares of nonassessable re¬
12% cents per unit.
No un¬
To purchase one-auarter interest in a com¬
Southern
20
R.
equip¬
par)
(no
shares
repay
Underwriter — Smith, Barney & Co. Price, by
Proceeds—Commonwealth will use its pro¬
ceeds to reduce indebtedness and Southern Indiana will
use its proceeds for property additions and betterments.
Offering deferred. • v '
amendment.
Done
Le
Telephone Co.
a
par) common stock. Un¬
derwriters—Schneider, Bernet & Hickman; G. H. Walker
Oct.
Price—$16.75 per share.
tive
Telegraph
&
into
ran
hard-sledding,
institutional
aloof
buyers
initial
the
on
Northwestern's
been
had
considered, North¬
western Bell Telephone Co.'s big
jiew financing this week proved
the most successful of a number
of more or less similar under¬
All
things
I
theirs
and
of
At
takings in recent months.
It must be viewed as
ing
the
wisdom
of
reflect¬
company
officials in recognizing the
change in investment conditions
ideas
to maturity in the wake of
and revising their original
as
the "backing
up" which devel¬
this
ably
officials
up
with
maturity
their
a
ideas
maturity
years.
the
same
time
bankers,
in
realistic in their ideas
of
price and there
of
more
than
posing bids
was no
"cover"
a
point between op¬
as
in the case of the
Michigan Bell issue.
matter' of
On the con¬
only
about
oped in connection with several
trary,
recent Bell System issues.
$3 per $1,000 bond separated the
Operating companies in the
bids
a
a
bid 100.3899 for the
interest
same
rate.
which
took
syndicate
the
the
issue
down
able to reoffer publicly at a
of
101%
to
the
return
was
price
buyer
a
yield of around 3.18%.
this time.
•
immediately
almost
though there
was
no
even
indication
the
"big-five" New York
activity
so-called
on
the
of
part
In
the new issue rose
premium of almost a
over the offering price;
indicating either that some deal¬
fact,
quickly to
full point
ers
a
had gone "short" against their
positions
to
institutional
have
some
extent
portfolio
or
men
that
may
"guessed" this one wrong.
The head of the
partment
of
one
distributing de¬
of
underwriting firms had
the
a
large
visitor
Yale & Towne
•
13
Dec.
The visitor
ment
stockholders will vote
West
late
last
at
expressed amaze¬
the
community
declare
to
Wall Street
take in
he
the
went
that
was
and
he
thought
making
letting the
a
mis¬
election re¬
said
the
investors
in
his
territory, and that embraces sev¬
eral middle western states, have
money
and
are
and
looking for oppor¬
that
Edison
to
192,734 shares of Detroit
stock
common
moved
out'
buyers.
Bankers
paid
the
company
and priced ther
stock at 20 % for reoffering, meet-:
$19,546
ing
the
a
share
a demand which soaked up
entire block within a matter
of minutes.
produced a number
interesting situations, among
them another of those infrequent
situations where an issue brings!
.The week
sults get it down.
tunities
:
;
increasing authorized-
on
block of
which
pall
seemed to find hanging over
on
-
,
capital stock from 486,656 to 686,656 shares.... Under the
plan, the directors would be authorized to issue such;
additional shares as they may consider advisable.
Middle
the
Department
Mfg. Co.
week, another investment banker.
He
The debentures were snapped
up
of
from
Massachusetts
Co.
of Public Utilities'
company's extension program.
for
financial
Accordingly,
insurance companies.
instance, appeared consider¬
more
paid the
$60,000,000 issue, specifying
3%% coupon.
The runners-up
who
make
to
45-year
revamp
came
31
with
holding
offering,
prepared
a
to
moved
3%s
group
price of 100.68999 for
a
»
Gas Light
(Mass.)
bonds, to be sold at competitive sale.
Proceeds wouldbe
used to refund $1,000,000
bonds, retire $1,000,000'
bank loans and the balance to replace funds borrowed!
einkipg fund cumula¬
the
Tele¬
Co.'s
successful
The
company
500,000 shares at
(
authorized company to issue $2,150,000 20-year mortgage'
iti
5%
34.000 shares of
18 filed
10
Nov.
pay
preferred stock ($50 par) and 70,000 shares (no par)t
System have been shooting more
or less consistently at a maturity
of 40 to 45 years, frequently the
longer, and bankers it appeared
had been a bit ambitious in going
after such offerings.
after the Pacific
Brothers, Inc.
directors authorized the officers to explore the
Worcester
•
'
4
Younker
Dewar, Robertson & Pancoast; Underwood, Neuhaus & Co.
Proceeds — To increase working capital.
& Co.;
12
.
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 postponed.
V / ;
Investment Co., Amarillo, Texas
phone
Proceeds—To
Neb.
bidders:'
Brothers; The First Boston Corp.
pected to cover between 400,000 and
$10 per share.
,,
\
loan and to finance part of construction'
current bank
Probable
1949-1963.
possibility of offering shares of its common stock to its
stockholders on a pro-rata basis. The offering is ex¬
Underwriters—Harris, Hall & Company (Inc.) and
costs.
Nov. 12 filed 33,880 shares (no
§oon
'f
Transcontinental & Western Air, Inc.
Nov.
Kan.
$2,500,000
filed
The First Trust Co. of Lincoln,
Indefinite.
Southwestern
10
held.
of $2.60 cumulative (no par)
preferred stock.
Underwriters — Paine, Webber, Jack¬
son & Curtis; Stone & Webster Securities Corp.; Rauscher, Pierce & Co.
Price by amendment. Proceeds—
To pay, in part, bank loans used for construction pur¬
•
•
Inc.* Kansas
Light & Telephone. Co,,
first mortgage 30-year bonds,,
series "C," and 47,206 shares ($25 par) common stock.
Offering—The stock will be offered to stockholders on
the basis of one additional share for each five shares
Aug. 24 filed 22,000 shares
poses.
&'
Hutzler;
Harris, Hall & Co. (Inc.); Harriman Ripley & Co. and[
Lehman
Western
City,
corporate purposes.
Southwestern Associated
$529,000 annually Nov. 1,
34,000 shares, respectively; Copper Range Co., 34,000
shares.
Nov.
Proceeds—For
Co., New York.
of
date
Halsey, Stuart & Co. Inc.; Salomon Brothers &
•
lc)
and
150,000 shares by W. G. Nelson Exploration Co. Under¬
J.
early
an
Pabst, Jr., Vice-President, at Room 1811, Broad Street
Station,
Philadelphia, up to noon
(EST) 'Nov. 23/
Certificates will be dated Nov. 1, 1948 and will mature
shares and several individual owners 11,200
1,500,000 shares of common stock (par
of which 1,350,000 shares^ will be sold by company
writer—J.
at
sale
company
Pennsylvania RR. (11/23)
Bids for the purchase of $7,935,000 equipment trust cer¬
tificates series V, will be received at office of Geo. H.
and
Miss.
8 filed
working capital and general
reported
•
—
pany.
Southern Oil Corp., Jackson,
11
Nov.
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 &
Gas Co. and Middle West Corp. will sell 120,000 shares
the Commonwealth & Southern Corp. and 75,000 additional shares of stock for the benefit of the com¬
owned by
Oct.
Price,
amendment.
$7,500,000 bonds.
Probable bidders: Halsey, Stuart
Co. Inc.; The First Boston Corp.; Glore, Forgan & Co.
Proceeds—-To i
market.
bank loans, working capital, etc.
by
Upper Peninsular Power Co.
Sept. 28 filed 200,000 shares of common stock (par $9).
Underwriters
Names to be determined through com¬
stock
common
^
Cooley & Co., Inc., Albany, N. Y., and others to be
named
;
\
Cigarette Machine Co., Inc.
Mississippi Power & Light Co.
•
to underwriter at 10 cents
Indiana Gas & Electric Co.
600,000
filed
amendment) 125,000 shares of common stock
(par $1) and 33,000 stock purchase warrants (to be sold
each). Underwriters—George
claimed stock, to be sold at
plete bucket line dredging outfit and incidental
ment for testing and operating placed claims.
Utilities & Specialty Corp.
United
and
stock
Additional working capital.
expire 30 days after date.
,
.
(letter of notification) 1,349,200 shares of non¬
assessable common stock. 145.200 shares of nonassessable
Oct.
Of¬
Underwriting—None.
par.
■
r;.
(12/15)
1;
The Attorney General of the United States invites bids
for the purchase of all or any part of 250 shares of the*
common
stock (par $50) (said shares constituting 5%«
of the total issued and outstanding capital stock) of the!
company.
All bids must be presented at the Office of?
Alien Property,. Department of Justice, 120 Broadway,.
New York 5, N. Y., on or before noon Dec. 15 (EST).
existing stockholders of record Nov, 16 in ratio
new
share for each five shares held.
Rights
Price,
bidders:
Comas
•
(par $5).
specified by
be
will
Inc.
Co.
fered
12
derwriting.
Probable
Chemical
stock
of
fund,
ing
Corp., New York
(letter of notification) 52,095-shares-of-capital
8
and carried a 1% sink-:
the successful bidder.!
Blyth & Co., Inc.; Halsey, Stuart &
issue, which has a 25-year term
1950.
Unexcelled
-v
,
Chesapeake & Ohio Ry. (11/23)
Bids for the purchase of $40,000,000 new series refund-'
ing and improvement mortgage bonds authorized by
directors Nov. 5 will be returnable Nov. 23. Int. on the*
.
pipe line construction, working capital, and
Dec. 31.
before
Inc.,
Mining & Leasing Co.,
South Fork
treasury
6% debentures.
payment of dividends on company's preferred stock
for
sales contracts.
Nov.
also
also contemplates private sale of $143,000,000 3%% mortgage pipe line bonds.
Underwriters—White,
Weld & Co. and Stone & Webster Securities Corp.
Pro¬
Ind.
shares!
value changed to 50 cents from $1. Stockholders,
approved the creation of an issue of $300,000 oL
and par
pany
of notification) 1,000 shares
struc-j
capital!
proposed financing. The authorized
increased to 2,000,000 shares from 800,000
was
first
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 par; common 25c
per share. For working capital and to carry conditional
•
.
ture for new
2,250,000 shares of common stock to be offered to
outstanding common stockholders at $10 per share at the
rate of 3 shares of common for each share held. Com¬
^
& Co., South Bend,
(H. J.)
Schrader
Oct. 5 (letter
Chemical Research Corp.
authorized changes in capital
•
Nov. 12 stockholders
filed
worthy & Co. and Schwabacher & Co.
Proceeds—To
repay bank loans and to restore working capital used for
extensions, additions and improvements. Tentatively ex¬
(Inc.).
Hall & Co.
also
warrant to subscribe for one share of stock;
a
(jointly); Harris,'
Co. and Lehman Brothers
&
Ripley
of $100 of notes, one share of common
in units
offered
(11/23)
Works
,i
dent, until noon Nov. 30, 1948. Probable bidders: Halsey,i
Stuart & Co. Inc.; Salomon Bros. & Hutzler, Harriman' "
due May
(which will be payable at maturity by delivery
of cumulative preferred stock, $5 series, at rate of one
share for each $100 principal amount) 265,000 shares of
common stock (50$ par) and warrants for an additional
265,000 shares of common stock (exercisable between
Oct. 1, 1949 and Dec. 20, 1949, at $10 per share), to be
1, 1951
$1,200,000 of indebtedness to New
lose
(11/22)
(by amendment) $26,500,000 5% notes
9
Nov.
(11/30)
Aroostook RR.
Bangor &
-
.
will issue, subject to ICC authority $2,100,-1
000 serial equipment trust certificates, dated Dec. 1, 1948,1
and maturing $140,000 annually, Dec. 1, 1949-63.
Bids'
will be received at office of Curtis M. Hutchins, PrCsi-j
Additional working capital.
York,
York
Telephone Co., and provide funds to pay indebtedness to
Federal Telephone & Radio Corp. Expected about Dec. 7.
San
i
issued
be
The company
Underwriter—Gearhart & Co., Inc., New
preferred share.
body & Co. (jointly)!
Proceeds—To pay bank borrow¬
ings of $4,000,(00, to
pay
$1,700,000 of borrowings
from
the trustee .of the company's employees' pen¬
sion fund to pay
115,480 common shares
preferred shares'(par $5). Price—
consisting of two common-shares and one
(letter of notification)
20
(par 5$) and 57,740
(12/7)
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
& Co. Inc.; The First Boston Corp.; Glore, Forgan & Co.;
Shields & Co.; Union Securities Corp. and Kidder, PeaTelephone Corp.
(N. Y.)
Rochester
privately and about 45,817 preferred shares.i
upon conversion of present preferred*
of American Buslines and 54,183 preferred would be:
sold to underwriters, probably Hayden, Stone & Co.
placed
be
would
Upper Darby, Pa.
Tele-Video Corp.,
Oct.
capital.
and to add to working
into its principal subsidiary, Burlington Transper-*'
tation Co., and change name of latter to American Bus¬
lines Corp.
The plan provides for sale of $1,500,000!
• sinking fund debentures and the issuance of 100,000!
shares of new preferred stock.
The debentures would*
(letter of notification) 23,000 shares of common
stock (par $1).
Price—$1.75 per share. UnderwriterGriffin & Vaden, Inc., Raleigh, N. C.
For purchase of
additional machinery, to defray the costs of sales promo¬
tion and for working capital.
Reserve Oil & Gas Co., San
•
Nov.
this com-*
stockholders approved a plan to merge
5
pany
•
Raleigh, N. C.
Inc.
American Bus Lines;
"
•
Nov
Nov. 5
received
1
<
Prospective Offerings
;
Corp., Washington, D.
working capital.
Taylor Food Co.,
Bids—Bids for purchase of debentures
at company's office, 80 Park Place,
Newark, N. J., up to noon (EST) Nov. 22.
expenses.
will
Addi¬
C.
convertible preferred
Underwriter—Johnston, Lemon & Co. Pro¬
ceeds—For additional
■
j
60,000 shares of 6%
28 filed
Oct.
eral corporate purposes.
v
State Loan & Finance
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
Underwriting—None.
$5.25 per share.
tional'working capital.
common,
of debenture bonds, due 1963.
be determined through com¬
$50,000,000
Underwriters—Names
Gas
Proceeds—To retire unsecured bank
(letter of notification) 12,300 shares of 75$ cumu¬
lative preferred stock (no par) and 20,000 shares of com¬
mon
stock (par $1).
Price—Preferred, $15 per share;
Nov. 5
Sale
rule.
Underwriter—A. G. Becker & Co., Inc.
loans and for gen¬
stock.
common
New York
Standard Factors Corp.,
(Continued from page 45)
Thursday, November 18, 1948
CHRONICLE
FINANCIAL
&
COMMERCIAL
THE
(2106)
they
were
of
out almost identical bids.
This
not.
particularly concerned, from what
he could see, about the political
angle.
.
the
was
virtually the
instance
of
•
;
case
in*
Iowa. Public
Service Co.'s offering of $3,000,000.
of
new
first mortgage bonds.
.
His advice to underwriters here
was
to
ge.t down to business and
recognize that there is a new
money,
class in the nation,* the
farmer,
the / workers, who are
making money and looking for
the opportunity to invest it.
The
point
middle
of .view
western
appeared
bankers
to find
support in the manner in which
American Light & Traction Co.'s
The
winning
101.07999
and it
for
was
a
group
3*4%
bid
coupon
the decimal which captured the
issue
as
,
that fifth digit after
the
next
nearest
,
bid
turned out to be 101.0799.
This left
a
differential
of only,
all told between the two
top bidders fdr the bonds.
There
were, of course, several other bidsrunning down to a low of 100.1997.'
$2.70
Volume
168
Number 4752 '
THE
COMMERCIAL
&
fundamental
knowledge,,, through
research.
pure
CHRONICLE
FINANCIAL
And
it
ia
is
the
expansion of fundamental knowl¬
he is well
edge upon which all human prog¬
ress
in the final analysis must
is
depend.
'
.
(Continued from page 5)
-
aware of them.
In fact, one cannot be quite sure that he
intentionally, if somewhat,..deviously, demolishing, some of
the systems, via reductio ad
absurdum; by merely describing them.
This, for example, seems true of his factual citations of the use of
not
the
solar
system and
the particularly fancy
of
some
niques.
.
charting tech¬
_
determination
the
national
of
policy- creates
of
opportunity,
cli¬
the
an
evidently
uncritical linking of cyclical changes in nature; sunspots, etc., to the stock market, which he says "is not too hard to
accept" (p. 144). Similarly Mr. Drew's friendliness toward the con¬
ready to impel a free society for¬
ward
to
In
his
makes
over-all
treatment
of
the
field Mr.
Drew
quite typically
the
important omission of failing to point put the various
contradictions between various of the individual systems which he
discusses.
of
this
Some of these have been pointed out in detail in previous
columns.
Other self-contradictions that seem to be
writer's
inherent in Mr. Drew's
sistencies
between
descriptions include:
own
different
fundamental' incon¬
tatives?
greater levels of accom¬
And
'
:
superimposed
educational
facts
by which
liberties
our
to
the
the
economic
be brought home
consciousness
the
grass
live and enjoy
we
may
for
need
the
at
that
so
these and
on
is
effort
level
roots
to
The
of
all
Also there
by
Dow
of
external
Theorists
encounter
and
factors;
Ratio-ists
just plain-personal
or
when
their
intuition,
principles
established
Financial
has
South
with
been
the
On
■
■
other
hand, the
reader
dees
derive
the
significant
very
implication from the depiction of these doubtful methods for achiev¬
ing
njarkei
which
success
popularly
are
pursued
the
of
now,
perate situation in which the present-day investor as well
lator finds himself.
added
the
to
of
the
Chicago
holders
of
the
at
close
of
business
1948,
II.
lv.
DODGE, Treasurer.
NOTICES
The United
Johns-Manville
m
Corporation
The Board of Directors declared
of
Directors
of
The
has declared the
quarterly dividend of 756
per share upon the outstanding $3
Cumulative Preference Stock, pay¬
regular
of record November 29, 1948.
able
"kOGER HACKNEY, Treasurer
of
January 1, 1949 to the holders
at
the close of business
record
December ?2, 1948.
The Board of Directors oi
THOMAS II. STACY,
PITTSBURGH
COMPANY
COAL
r
meeting held today, declared a quarterly
dividend of 75 cents per share on the Com¬
mon
Stock
of
the
Company, payable on
a
December
1948,
11,
shareholders of
to
Wilmington, Delaware
I
CONSOLIDATION
at
Secretary.
November 17, 1948
rec¬
ord at the close of business on November
26,
mailed.
Checks will be
Charles E. Beachley,
UNITED FRUIT COMPANY
1948
1048
dividend
share
fBRIGGS &STRATTON)
THE Boarddividend of 37lias declared a
of Directors 95c per share
quarterly
this
on
'on
of
fifty cents
the capital
has
per
stock of
payable
been
de¬
January
Company
clared
198
NO.
DIVIDEND
A
the outstanding Common Stock of the
Copipany, payable on December 31st,
1948, to stockholders of record at the close
of "business on
December
10th,
1948.
...Checks will,,U^nuiiled.
•
Stock'
Preference
United Corporation
year-end
dividend of 956 per share on the Common
Stock payable December 10. 1948, to holders
a
EVERYWHERE"
17th,
Board
The
Secretary-T reasurer
November
Corporation
Cumulative
$3
DIVIDEND
PR.ODUGTJ
November 15,
14,
1949 to stockholders of record
BRIGGS & STRATTON
«•
December 9, 1948.
EMERY
CHARLES C. MOSKOWITZ,
i'icc /'resilient & Treasurer
des¬
record
November 26,
Exchange.
Stock
DIVIDEND
105
Gapitai Stock of MAGMA COPPER COM¬
PANY, payable December 15, 1948, to stock¬
LOEWS INCORPORATED
omission
investment.
No.
On November 17, 1.948, a dividend of Twentylive Gents (25c) )>er share was declared on the
Collins & Co., 105
Salle Street, members
La
dividend notices
"THEATRES
annoying to this column, which can be no
surprise to our readers, is the neglect to point out that this entire
sphere of activity—irrespective ox its worth—has nothing to do
Marina Copper Company
Chronicle)
CHICAGO, ILL. —Josephus R.
Corbus
1948.
rough going.
Another
f
dividend notices
our
following (as Dow), and others' of opposing, indicated trend; between destroy little by little the greatest
following the crowd and bucketting it on the theory that the majority
human asset—freedom—in the be¬
are habitually wrong (as in "the theory of
contrary opinion"); and all
lief that it will result in more
kinds of contradictions about the significance of the behavior of small
progress and security.
traders#and of the "cat-and-dog" issues.
addendum
72.
abdominal
staff of Julien
plans, such as between the
people. It is an appalling fact that
Burlingame system which embodies buying on the way up as well
on
the way down, as contrasted with the general formula tech¬ here and elsewhere free people
nique of bucking the trend; between many methods' principle of are using their political powers to
the
of
and
Dividend
(Special
formula
are many contradictions in basic method through the
piling on of so-called refinements, such as the taking into account
of business indexes by formula
plans, which is cited by Mr. Drew; and
ago
Julien Collins Co. Adds
as
_
in his busi¬
weeks
Gregory, President
Gregory & Son, Inc., New York
City, died at his home at the age
JOHNS MANVUII
other factors
all
few
a
had
undergone
an
operation on Nov. 2.
more
cept of stock market rhythms is based on an analogy with emotional plishment. Have our people the
rhythms which is fallacious.
Thus his statement
(on page 145): economic understanding to do this,
"emotional rhythm in individuals has been, a subject of medical psy¬ or even- permit it to be done
chiatric study and the persistence of such rhythms
appears beyond through • their^ political represen¬
dispute." on which premise he bases conclusions about mass psy¬
chology of the market place,, is actually completely antithetical to
the currently recognized basic
principle of psychiatric method.
had been active
until
H.
of
im¬
thus
effectively to release
the dynamic force that is always
move
William
Nuveen, senior partner iu
John Nuveen & Co., Chicago, died
Nov. 14 at the age of 84. Mr. Nu¬
portantly influencing the vitality
of the economy. Government must
Another example of unwitting debunking of the "systems" is
-
in
economic
mate
,
Sell-Contradictions
Sun-Spots and
John
veen
government, which
comes
47
William H. Gregory Dead
John Nuveen Dead
j
ness
Third,
(2107)
LEONARD
N.
CORPORATION
Treasurer
K.
as specu¬
87th DIVIDEND
International Salt
Needed: A Program for
company
The
Board
quarterly
(25c) per
of
Directors
dividend
of
share and an
cne
dollar
less
declared
lias
twenty-five
a
cents
dividend
extra
of
2.89
and
ten
cents
($1.10) per share,
per cent Wisconsin privilege divi¬
tax,
on
the capital stock
(without
value)
of
the
Corporation,
payable
December 15, 1948, to stockholders of record
November 29,
1948.
dend
DIVIDEND
Strengthening Our Economy
A
ent and human
termined
permitted
are
initiative,
their
happiness i§ de¬
by the extent that
exercise
to
their
their
imagination
and
industry in the atmosphere
f
a
e
accomplished in the face of in-
free society.
istent
which
demands
group
to
rve
How is this to
hamstring
business
the
nterprise system—even to ignore
themselves
in
And,
breed danger 10 our
It
men
difficult
is
sustained
they
believe
stockholders
close
rising living standards can evolve
basically from the economic con¬
sequences of a great and destruc¬
tive war.
What, therefore, is to
be
our
program
in
our
sustained
of
terms
7,
of
record
of business
The
1948.
books
L.
November
the
on
law?
I Our economic burdens
nherent
extravagance
of
iciency
are
and
.
k>
great,
inef-
increas¬
ing demand for expanded social
rvices; the burden of a great
avoid
ill
we
attempt
develop
all
at
times
what
be accepted
arge
as
a
by the world at
predominance of mili¬
expressed always in
technology of to-
power,
ary
the
of
erms
orrow.
ur
to
must
are
we
war,
maintain
nd
o
if
And
ebt.
o
government,
of the
HERVEY
GREATEST NAME
DIVIDEND
This is
country has
a
burden such
never
accept in times
of
Dry
tick
taxation,
society, and prejudicing
information—the
yard-
Today
we
progress.
employment.
Production is
highest level in our history,
iving standards are rising. The
conomy is supported at the moent by the shortages of war, by
t the
called
acity
vel
to
of
sured
on.
the
industrial
for
But
the
we
in
They
This
activity
are
to exercise economic
limit their
longer
no
before.
never
as
horizon to the
industrial
of
the
must
not
S 1.0625
area
narrow
of the.,
November 16,
1948, Newmont Mining
Corporation declared
year-end dividend in
the amount of fifty cents (50c) per share in
cash, and one-twenty-fifth (l/25th) of a share
of the capital stock of Hudson Bay Mining
and Smelting Co., Limited, upon each share
of Newmont Mining Corporation stock issued
and outstanding on November 26, 1948, pay¬
able
December
policy
people
achieve
on
as
a
the
welfare
whole. They
15,
1948,
to
stockholders
of
high
seems
posifail to
cognize that in part these suporting forces are synthetic in
rigin and non-recurring in char¬
dividend of
on
the
Common
able
Stock;
business
on
December 8,
books
will
Next,
our
cash
at
prices prevailing
GUS
on
accept
a
far
ever
a
Treasurer.
Preferred
1948.
WANTED
search,
Interested
investment
in
clerical
Chronicle,
8, N. Y.
25
Park
quarterly
and
New
York
dividend of
an
25c
business
of
V,
1948, declared
per
1.
the
at
December
transfer books of the
3,
close
1948.
of
The
Company will
at
the close of business December
J. E. REEVES, Treasurer
1 948
1,
and
2.
A special
shares of
.
November 16,*
.
the
Common Stock
of
1948;
-
,
.
dividend of fifty cents (506)
per
share
on
the outstanding
3,
the Company, payable January
1949, to the holders of such stock of record at the close of business
December 1,
1948.
W.
not be closed.
November 1 5,
record
pay¬
,
quarterly dividend of thirty-seven and one-half cents (37V2^)
per share on the outstanding shares of the Common Stock of the
Company, payable January 3, 1949, to the holders of such stock of
A
1949, to stock¬
record
Dividends
The Board of Directors of American Cyanamid Company on
extra dividend of 25c
January
holders
inc.
NOTICE
share have been declared,
able
re¬
selling,
future. Salary
Place,
a
share
Common
per
position with a
secondary.
Married veteran.
Lynn Zimmerman, HA 4-9498
Box
Z
1110,
Commercial &
Financial
or
November 16,
quarterly dividend of eighty-seven and one-half cents
on the outstanding shares of the Company's 3V2%
Cumulative Preferred Stock, Series A, payable January 3, 1949, to the
holders of such stock of record at the close of business December 1, 1948.
declared
(87per
A
economic
analysis
v
Dividend
The Board of Directors of American Cyanamid Company on
share and
B.
1948
Cyanamid Company
American
REEVES BROTHERS,
of
CONNETT,
greater
before to
stockpile of
Economist, Junior (25)
A.
Company
•
DIVIDEND
SITUATION
Trust
F. S.
.November 17.
1948,
create and maintain
.Guaranty
New York.
V. Pres. &■. Secretary
MRKVICKA, Treasurer.
New York, N, Y.
November 16, 1948,
universities and
research institutions.
responsibility than
I bo
the record date.
come our
They must
Transfer books will not be closed.
Dividend checks will be mailed by
be
Wm, J. Williams,
,
Stock
to stoekr
shares will be settled in
stimulate progress and
great
1948,
not
Preference
A quarterly dividend of
$1.50 per
share,on the Common Stock payable
,December 15, 1048 to stockholders of
record December 1, 1948.
Checks will be mailed.
terms of concrete policy, what is
needed to
pay¬
January 1, 1949 to stock¬
closed.
Prior
per share on the 7 % Cumula¬
tive- Prei erred Stock payable
January
14, p)4f> to stockholders of record
.December 31, 1048.
holders of record at the close of
Transfer
declared:
$1.75
the $4.25
both
were
holders of record December 1, 1948,
A
regular quarterly dividend of
Mining and Smelting Co., Limited stock will
be issued. Fractional
fundamental
a more
share
per
a-
i
payable December 15, 1948
declared
1948
dividend of $0.15 per share on
record at the close of business November 26,
1948. No fractional shares of Hudson Bay
understanding of economic law.
They must forcibly present in
ca-
short-term
must
can
managers
the ag-
productive
limit.
upon
statesmanship
capital investments, by forign relief and by a developing
our
These
system.
rge
program;
to¬
concerned
are
26,
■
regular quarterly dividend of
per share on the $4 Cumulative
Convertible
meeting thereof held
a
October
Cumulative Preferred Stock and
<S I
promote stability.
ull
armament
We
night with three. First, the man¬
agers of the American enterprise
enjoy the benefits of
regate taxing
Dividend No.
A'
$1.00
Incorpo¬
Ale,
the regular quarterly
Corporation
They must consider the impact of
already discouraging inmotivating power of
of economic
problem.
factors in this
many
before had
The
peace.
entive—the
free
are
Ginger
■
Company, held today, the following
Board of Directors of Can¬
a
production of goods and services.
lready at the point of confisca-
apital
Newmont Mining
On
There
NOTICE
The
rated, at
that
as
•ost must be reflected in
ion and
hazards
the
and
-.•/
AT the meetingAmerican Board of
of the Woolen
Directors of
dividends
J. OSBORN, Secretary
em¬
beset us?
-"v'n
CANADA DRY
transfer
stock
Company will not
ada
ployment, and for advancing liv¬
ing standards in the face of the
handicaps
REGNER, Secretary
IN WOOLENS"
economy
high
G.
1948
the
at
on
he effects of economic
16,
December
on
be closed.
for strengthening
the fundamentals of
DOLLAR
payable December 22, 1948, to
that
employment with
high
par
capital stock of this Company,
future.
to
ONE
share has been declared
a
acter.
of
138
AND TWENTY-FIVE CENTS
(Continued from first page)
truth: That economic accomplish-
dividend
NO.
P. STURTEVANT, Secretary.
48
COMMERCIAL
THE
(2108)
FINANCIAL
&
Thursday, November 18, 1948
CHRONICLE
ened the rank and file may have
BUSINESS BUZZ
standing
of
become
the
to
up
remains
unions and to spending,
to be seen.
on.
savings
began
Day is probably only a
30-day Treasury
campaign
which
The
•
•
bond
Armistice
Behind-the-Scene Interpretations
from the Nation's
J
y|
to
serve
ters
Winter, probably will
Truman last
hang
Thomas
made
Eccles
who
demoted.
was
two—could
change this. Not even Presiden¬
resignation
could guaran¬
Members of the
Board hold fiked terms and are
change.
a
tive
of
The Hoover Commission has de¬
cided to "open
word
organizing the government. Just
before the election the Commis¬
be the domi¬
.
McCabe
Chairman
Even
telling nothing before it makes its
official report to Congress around
Jan. 10.
The Commission decided
same
conclusions
matters
the
as
buried
monetary
on
lions like members of the Cabi¬
net, both with a new term or a
esses
to come to the same
by the same proc¬
of reasoning as Gov. Ec¬
cles,
pany.
conclusions
and
submit resigna?
not required to
of
the
l»Vhite House.
Ever since the
court upheld the tenure of a
member of the Federal Trade
in
change
occupancy
Commission also holding a fixed
Roosevelt
him, it has been-
term, after President
fire
to
tried
that
established
fire any one on
cannot legally
independent commission
an
holding
$
President
a
So
fixed term of office.
a
Truman called
if Mr.
even
also appears
next
to
people,
•
developing
is
leaders
responsible quarter that he
lias anything of this sort in mind
—he could get such a resignation
only if his victim were willing.
The first Federal Reserve Board
any
that of Ernest G. Draper,
expire by law until Feb.
term,
does not
1.1950.
situation of
the
So
'
than
rather
Board's
the
is
with
discussions
in
Treasury,
tion.
Mr.
Gov. Eccles would
time after the elec¬
Eccles was displeased
with
his
demotion.
ticipated that
resign
some
When
his
four-year term as Chairman came
for renewal, the President re¬
to designate Mr. Eccles to
continue to head the Bodrd.
The
up
the
approach
same
past. The Board's pitch will still
be directed at credit restriction,
affect
not
does
ber's
term
as
Board
the
Governor
a
mem¬
of the
Federal Reserve system.
At the
Eccles
time, however, Mr.
same
Truman
promised
to
name
Vice-Chairman.
as
Mr.
When
by April this designation had not
been made, Eccles with some heat
released the
White House from
this
promise.
-
White
The
Eccles
demoted
House
the
of
because
aggres¬
siveness of the latter's advocacy
of the Board's
secondary reserve
current at that time.
proposal the Board
proposal
higher
would have been empowered to
Capehart's subcommit¬
Senator
absorption
has
brought to life one of those rare
things—an
issue
which
scares
every one.
The parade of wit¬
nesses and
prospective witnesses
before the Capehart subcommittee
tee
price
on
has disclosed
wide fear that the
a
abolition of basing point
pricing systems by the Supreme
alleged
Court decision in the cement case,
from the walk¬
has got every one
ing delegates to small town busi¬
ness
men
afraid
that
in
due
of time their factories will
course
shut
rials.
this
close
raw
to
mate¬
;
.
There
move,
industrial
of
sources
to
and
down
is
a
prairie fire aspect
hysteria.
The
fear
and
people's
short-term
ments,
not
and
conventional
govern¬
merely
form
of
de¬
posits with FR banks.
restriction
credit
Although
headed the list of the general antiinflation
last
Truman
Winter,
House rejected
the
by
Mr.
White
the secondary re¬
proposal out of the fear it
serve
would
ger a
asked
controls
be
drastic
so
as
to
endan¬
depression.
*
Now
that
composition
the
over
Reserve
seems
likely
Board
to
the
So
the
to
the
end
industry
American
of
prospect
a
who
fear
price
sys¬
those
what
be
of delivered
tems think
century
general
the
"labor
new
widespread is the fear over
of delivered pricing
of
of the
the
Committees,
of
take
will
over
Michigan
John
Rep.
and
Saudi Arabian
Belle Isle Corp.
U. S.
Senate
are
of
Senate
the'
for complete,
among
as
if the Re¬
alternative to offer
\
of
the
provisions of
that
a
M. S. Wien & Co.
ESTABLISHED
Members N.
40
unions,
-
Thomas"
party
following. In the
element
"liberal"
the
Republicans is so strong
to offer
1919
Security Dealers Ass'n
Exchange PL, N. Y. 5
HA. 2-8780
Teletype N. Y. 1-1397
Trading Markets:;f
'
'
no
hope for anything
law.
but
'.
■
.
•
i
Ralston Steel Car
Oregon Portland Cement
Riverside Cement A & B
Spokane Portland Cement
couple of issues.
stronger'
under the name of
"Lesinski
Y.
little
leadership will emerge
a
In the House
law, modified somewhat to suit
the
Lonsdale Co.
Soya Corp.
for election in
like party discipline on any
law and the substitution of
some
the
of
to be little
desires
the
Finishing
Dorset Fabrics
pro¬
which will command the respect
now appears
that
Mining Syn.
South Jersey Gas
.
There
a
,
hope that in either the House or
Elbert
Senator
cause
or
the
less
the leadership is
was *
stronger
left-wing
virulent
Some of the provisions stricken
was
out, like the closed shop, will be
Representative.
organize the
the pros¬
pective Chairman, Ed Johnson of
Colorado, of the entire Interstate
Commerce Committee, are report¬
Senate
next
year,
be -
sentiment
among
the
LERNER & CO.
Investment Securities
10 Post Office
Square, Boston 9, Mass.
Telephone Hnbbard 1990
How
fright-
Teletype BS 09
leaning favorably toward the
plea of those who want/"to
something about it."
man
Teletype—NY 1-971
HAnover 2-0050
and
Firm
_
Trading Markets
FOREIGN SECURITIES
1
do
,
Markets ami Situations for Dealers
loudest
120 Broadway, New
York 5
FOREIGN SECURITIES
Tel. REetor 2-2020
„
of Texas, one of the
Hill, Thompson & Co., Inc.
,
All Issues
P.ARL MARES & r.O. INC.
the"whoTe
Truman
At the moment there is
Lesinski
Thomas of Utah.
re¬
the j
long one.
1950.
Labor
Senate
and
no
coming up
have
it will Be
subcommittee
the
when the Democrats
,
between
when
prospective Chairman
House
have
will
of
gov¬
systems, that even Senator Brien
McMahan
of
Connecticut,
who
Just
how
legislation can be
unchanged, there is a pros¬ framed so as to legalize freight
for
harmony
within
the absorption without at the same
Board.
In some other government
time" opening 'up"
issue
quarters,
there
was
also hope!,
•
+
^
that the replacement of Eccles by |
demagogues, remains
McCabe would lead to a. greater seen.
Already Rep. Wright Pat-
policy
the
to
publicans vote as individuals and
not as party members, their party
It will bear the
ski-Thomas act."
name
inning—and
Republican
other hand,
the
On
name
carta"
magna
repealing
"the
iniquitous TaftHartley law," will be the "Lesin-
main
of
the
reference
future
For
of
the
ending
the
course
alternative
they are.
pect
concert
vested
of the
future
gram.
ley
„
tariff reduction.
ed
*
*
that
used to have for over a
in the
cash
ef¬
formal repeal of the Taft-Hart¬
businesses
creates,all the vague apprehen-
or
by
the
make clear that its effects are
net
their
minority will never be able to
stop those proposals which the
majority seriously wants.
How¬
ever;
the
minority,
by firmly
sticking to a viewpoint, may often
modify legislation in important
respects and offer a clear, distinct
of
jobs
items,
Of
Su¬
may
action,
circumscribe
Administration
to people's
sions
or
doubt
might happen
been in the form of cash, cash
hand, the
fects of its cement case decision,
equivalent to 25%
of demand and 10% of time de¬
posits. This reserve could have
;
demagogues
ernment
solid front to the Administration.
other
Congressional
to the
as
Republican opposition in the 81st
Congress.
This speculation cen¬
ters on the question of whether
the minority will be able to con¬
solidate as a party and present a
Court, well in advance of
decision
what
reserve
the
On
here
tion
sit
require banks to keep on hand
an additional special or second¬
ary
the
from
preme
with less enthusiasm.
lowed
this
Under
attack
way
would diminish.
short-term interest
rates, policies which, if support¬
ed by the Treasury, will be fol¬
and
fused
designation of Chairman is made by
the President, but this designation
the
in
as
to
industry-labor relationships.
There is a great deal of specula¬
Capehart
of trying to
break up the anti-trust laws and
promote monopoly.
Of course if
the President interpreted a change
in the laws to legalize freight ab¬
sorption, the danger of successful
"sly"
a
importance
considerable
of
business,"
whole
the
termed
hearing
Mr. Eccles
the
"small
for
spokesmen
the Board will still be following
recently it had been an¬
Until
that all
a
continuance
bureaus and
spending
will
'
has
spokesman
the
government
On the other hand, while Mr.
McCabe
which have
in
interest
two
is to
report
public. After
the groups
Pembroke I that's not quite how we do it!"
no!
'No,
a
before the
made
be
Eccles, the
$
v
comes
There is scarcely
months
policy, and McCabe,
its capable salesman, makes for
harmony within the Board.'
:
o
late,
little
reversal
however.
formulator of
a
reports will
real economy
While the Commission has re¬
throughout the country.
resignation or two — and
there is no suggestion as yet from
for.
later
versed its policy of secrecy, the
and financial
with bankers
counsels
however,
that
closer to being
proposals.
special facility for getting across
the Reserve Board's policies. Gov.
McCabe travels a great deal and
has hundreds of person-to-person
talks
have
patience,
come
a
the
Federal activities
beern expected. The
Commission,
getting
lifetime salesman's way of
that
in
cuts
which
however,
McCabe,
less-abrupt manner and a
a
in
and
Commission will propose
the
deep
Chairman
recom¬
trivial
were
themselves lead to little hope
well.
with
announced
first
The
mendations
there is developing
kinship
in language as
some
was loaned
Commission by a big com¬
to the
McCabe
Mr.
unless they were kept
publicity man
grade
he succeed- "
man
enough
Often
ed.
proposals would likely be
be¬
fore the public.
Hence a highthat its
ap¬
reflect the.
frequently to
reversed its stand of
sion finally
this capital city in many years.
pears
up" and spread the
to what it is thinking of
as
proposing in the way of saving
money by cutting down and re¬
de¬
Ec¬
officials to appear in
top
next
#
*
♦
nant
or
intervention
tial
tee
•
for
tentatively
Spring.
figure in the economic and
fiscal thinking of the Bdard. He
is rated as one of the most posi¬
tion—in the form of asking for
a
some
Gov.
to
been
disappointed.
cles still appears to
interven¬
Presidential
Only
Mr.
after
Chairman
have
gree
was
member of the Board and
a
designated
f
'Chairman
So
will
B.
McCabe,
on. -
drive is
similar 30-day
A
scheduled
Instead, those quar¬
Board.
keep the sales of E bonds go¬
ing.
leadership and Federal
Reserve thinking, barring Unexpected Presidential intervention, is
likely to continue "as is" into President Tinman's new term.
The present composition of the Board is expected to remain
unchanged. In particular Marriner^
S.
Eccles,
despite
the
affront Treasury and the Federal Re¬
WASHINGTON, D. C.—Federal Reserve
which he suffered from President
short,
similar,
of
quick drives to be undertaken by
the Treasury from time to time.
The idea will be periodic drives
JL 1/ U/
/l § mJ\AJ
Capital
forerunner
m/£~\-* J
gJ
SO Broad Street
—
.
New York 4, N. Y.
AFFILIATE: CARL MARKS A CO. Inc. CHICA60
Tele. NY 1-2660
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